RES 2022-0886 - Agreement with OHA for Rental Assistance Program (January 1, 2022 to December 31, 2022) RESOLUTION NO. 2_D2L NW City Clerk Office Use Only:
Publication Date,' pplic ble):
Agenda Date: 202Z
Department: Pit2flIlLi94
Submitter: 4 7
CITY OF OMAHA
LEGISLATIVE CHAMBER
Omaha, Nebraska
RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
WHEREAS, on May 18, 2021, by Resolution No. 2021-0524, the City Council approved an
Agreement between the City of Omaha and the Housing Authority of the City of Omaha (OHA), 1823 Harney
Street, Omaha, Nebraska 68102, which provided $400,000.00 in 2021 HOME Funds for the purpose of
providing rental assistance to homeless and disabled individuals and families; and,
WHEREAS, the Omaha Housing Authority possesses the administrative capability and agrees
to administer the City's Rental Assistance Program; and,
WHEREAS, it is in the best interest of the City to enter into an Agreement with the Omaha
Housing Authority for administration of the City's Rental Assistance Program for the total amount of
$400,000.00.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
THAT, the attached Agreement, as recommended by the Mayor, between the City of Omaha
and the Housing Authority of the City of Omaha (OHA), 1823 Harney Street, Omaha, Nebraska, 68102, in the
amount of $400,000.00 comprised of 2021 HOME Funds, which will assist a minimum of 40 low-income
households including households from transitional programs for homeless persons and programs for persons
with disabilities, for the period from January 1, 2022 through December 31, 2022 is hereby approved. Rental
assistance payments totaling $400,000.00 shall be paid from Fund No. 12179, Organization No. 128071, Award
No. 100865.
3273 dlh APPROV S TO FORM:
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ASSISTANT CITY ATTOR EY ATE
Adopted: SEP 13 2022 LQD
Attest:
City Cle C/
Approved:
Mayor
AGREEMENT
BETWEEN THE CITY OF OMAHA AND THE
HOUSING AUTHORITY OF THE CITY OF OMAHA FOR
THE CITY'S RENTAL ASSISTANCE PROGRAM
Table of Contents
SECTION 1. DEFINITIONS AND ABBREVIATIONS
SECTION 2. RESPONSIBILITIES OF THE SUBRECIPIENT
SECTION 3. GENERAL ADMINISTRATION REQUIREMENTS OF THE
SUBRECIPIENT
SECTION 4. RESPONSIBILITIES OF THE CITY
SECTION 5. MUTUAL AGREEMENTS BETWEEN CITY AND SUBRECIPIENT
THIS AGREEMENT is entered into by and between the City of Omaha, a Municipal
Corporation in Douglas County, Nebraska, and the Housing Authority of the City of Omaha, a
Body Politic and Corporate (hereinafter referred to as the "Omaha Housing Authority"), a
governmental entity that administers the Housing Assistance Payments Program under Section 8
of the United States Housing Act of 1937 (also known as the Section 8 Program).
RECITALS:
WHEREAS, the City of Omaha is a Municipal Corporation located in Douglas County,
Nebraska, and is organized and existing under the laws of the State of Nebraska, and is
authorized and empowered to exercise all powers conferred by the State Constitution, laws,
Home Rule Charter of the City of Omaha, 1956, as amended, and local ordinances, including,
but not limited to, the power to contract; and,
WHEREAS, on February 12, 1992, the City was designated as a Participating
Jurisdiction for the Home Investment Partnerships Program (HOME) by the U.S. Department of
Housing and Urban Development; and,
WHEREAS, the Omaha Housing Authority possesses the administrative capability and
agrees to administer the City's Rental Assistance Program; and,
WHEREAS, it is in the best interest of the City to enter into an Agreement with the
Omaha Housing Authority for administration of the City's Rental Assistance Program for the
total amount of$400,000.00 using Funding Year 2021 HOME funds for Program Year 2022.
NOW, THEREFORE, IN CONSIDERATION OF THESE MUTUAL COVENANTS,
the City of Omaha and the Omaha Housing Authority do hereby agree as follows:
SECTION 1. DEFINITIONS AND ABBREVIATIONS
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1.1 "City" shall mean- the City of Omaha.
1.2 "Director" shall mean—the Planning Director of the City of Omaha.
1.3 "OHA" shall mean-the Omaha Housing Authority.
1.4 "HOME" shall mean - the program conducted under the provisions of the
Cranston-Gonzalez National Affordable Housing Act, Title II, Subtitle A -
HOME Investment Partnerships (P.L. 101-625) and the Code of Federal
Regulations 24 CFR, Part 92, dated July 24, 2013 of the HOME Investment
Partnerships Program, Final Rule is attached hereto as Exhibit "B" and
incorporated herein as though fully set forth.
1,5 "Subrecipient" shall mean - a public or private non-profit agency, authority or
organization receiving HOME Funds to undertake eligible activities. In this
Agreement, the subrecipient is the Housing Authority of the City of Omaha, a
Body Politic and Corporate (referred to herein as the "Omaha Housing
Authority", OHA), 1823 Harney Street, Omaha, Nebraska 68102 (see Exhibit
«A„
1.6 "Recipient" shall mean - the City of Omaha.
1.7 "Tenant-based rental assistance" shall mean—a form of rental assistance in which
the assisted tenant may move from a dwelling unit with a right to continued
assistance. (24 CFR 92.2)
1.7.1 The term of the rental assistance contract may not exceed 24 months, but
may be renewed, subject to the availability of HOME funds. The term of
the rental assistance contract must begin on the first day of the term of the
lease. For a rental assistance contract between OHA and an owner, the
term of the contract must terminate on termination of the lease. For a
rental assistance contract between OHA and a household, the term of the
contract need not end on termination of the lease, but no payments may be
made after termination of the lease until a household enters into a new
lease. (24 CFR 92.209 (e))
1.7.2 The contract between the tenant and OHA must be for not less than one
year, unless by mutual agreement by the tenant and OHA.
1.8 "TBRA" shall mean—tenant-based rental assistance.
1.9 "Rental Assistance Program" shall mean— a tenant-based rental assistance project
operated by the OHA under the terms of this Agreement.
1.10 "Client" shall mean — qualified very low- and low- income participants in the
Rental Assistance Program.
1.10.1 "Low-Income" shall mean -- a household whose annual household income
does not exceed 80 percent of the median income for the Omaha NE-IA
Metropolitan Statistical Area as determined by HUD (Exhibit "C").
1.10.2 "Very Low-Income" shall mean a household whose annual household
income does not exceed 50 percent of the median income for the Omaha
NE-IA Metropolitan Statistical Area as determined by HUD (Exhibit"C").
1.11 "Person with disabilities" shall mean — a household composed of one or more
persons, at least one of whom is an adult, who has a physical, mental or emotional
impairment that: 1) is expected to be of long-continued and indefinite duration; 2)
substantially impedes his or her ability to live independently; and 3) is of such a
nature that such ability could be improved by more suitable housing conditions.
A person will also be considered to have a disability if he or she has a
developmental disability, which is a severe, chronic disability. (24 CFR 92.2)
1.12 "Transitional housing"shall mean -- housing that: 1) is designed to provide
housing and appropriate supportive services to persons, including (but not limited
to) deinstitutionalized individuals with disabilities, homeless individuals with
disabilities, and homeless households with children; and 2) has as its purpose
facilitating the movement of individuals and households to independent living
within a time period that is set by the project owner before occupancy (24 CFR
92.2). Assistance in transitional housing shall not exceed 24 months except in the
event that the needs meet 1.8.1.
1.13 "HOME Funds" shall mean - that portion of the Program Year 2020 HOME
Investment Partnerships Program Entitlement awarded to the City as may be
available during calendar year 2022 for rental assistance payments and project
delivery costs as described in Section 3 of this Agreement.
1.14 Program Income" shall mean - the gross income received by the Recipient or
Subrecipient directly generated from the use of HOME Funds (24 C.F.R. 92.503).
When such income is generated by an activity that is only partially assisted with
HOME Funds, the income shall be prorated to reflect the percentage of HOME
Funds used. Any program income fund received during the term of this
Agreement shall be returned to the City within thirty (30) days prior to any
additional distribution of HOME Funds.
1.15 "Maximum TBRA" shall mean — the amount of monthly assistance paid to, or on
behalf of, a household may not exceed the difference between the HOME Rents
For the Omaha NE-IA Metropolitan Statistical Area as determined by HUD (see
Exhibit "D") and 30 percent of the household's monthly adjusted income.
1.16 "Minimum tenant contribution to rent" shall mean— 30 percent of the household's
monthly adjusted income which may be $0.00.
1.17 "Housing Quality Standards" shall mean — Section 8 Housing Quality Standards
for Existing Homes (HQS) as established by HUD.
1.18 "Project" shall mean — tenant-based rental assistance provided to one or more
households. (24 CFR 92.2)
1.19 "Project Completion" shall mean—at least 40 households on an annual basis have
been enrolled in the Rental Assistance Program and the final drawdown has been
disbursed for the project.
1.20 "Scope of Work" shall mean — the housing and/or supportive services to be
provided to eligible persons for the term of this Agreement (Exhibit"C").
SECTION 2. RESPONSIBILITIES OF THE SUBRECIPIENT
2.01 Overall Project Performance.
The OHA shall administer the Rental Assistance Program as required in the
summary below.
2.01.1 The Rental Assistance Program Plan shall include:
2.01.1.1 A written tenant selection policies with preferences for
households that are in transitional programs for homeless
persons and persons with disabilities. The tenant selection
policies should also allow this Rental Assistance Program to
serve households selected from the OHA Section 8 waiting list
(Attachment 1).
2.01.1.2 Outlines tenant selection procedures including referrals from
organizations which serve people in transitional programs for
homeless persons and persons with disabilities, application
processing and eligibility determination (Attachment 1).
2.01.1.3 A plan to affirmatively market the availability of rental
assistance to low and very low income households which
details organizations to be contacted and outreach activities to
potential eligible clients (Attachment 2).
2.01.2 Insure that the Rental Assistance Program is properly operated and
administered; dedicating the FTE's needed to do so.
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2.01.3 Inspect housing units occupied by clients initially and re-inspect annually
to insure the housing meets Housing Quality Standards and lead-based
paint requirements.
2.01.4 Provide Rental Assistance to a minimum of 40 low-income households on
an annual basis beginning within 60 days from the date of execution of
this Agreement.
2.01.5 At a minimum, 90 percent of the HOME Funds disbursed for rental
assistance shall be provided to households whose incomes do not exceed
60 percent of the median household income for the Omaha, Nebraska-
Iowa area, as determined and made available by the U.S. Department of
Housing and Urban Development, at the time of occupancy or at the time
HOME Funds are invested, whichever is later; and, the remainder of the
HOME Funds shall be provided to households whose incomes do not
exceed 80% of the median household income at the time of occupancy or
at the time HOME Funds are invested, whichever is later.
2.02 Program Budget.
Rental Assistance Payments $360,000.00
Project Delivery Cost to include:
(represents 10% of allocation)
▪ underwriting of eligibility of TBRA clients
• housing inspections
• determination of housing expenses for TBRA clients
Total Project Delivery Costs $ 40.000.0{)
Total Program Budget $400,000.00
2.03 Project Responsibilities. Subrecipient shall:
2.03.1 Submit a quarterly progress report to the City of Omaha, Program
Manager within 20 days from the end of the calendar year quarter. The
progress report will delineate OHA accomplishments for the previous 90
day period on the specific activities listed in Section 2.01 herein and
projected accomplishments for the following quarter.
2.03.2 Submit to the City monthly a financial report (income statement) and
request for reimbursement delineating the revenue and line item
expenditures as outlined in Section 2.02 herein for the Rental Assistance
Program. In addition, a monthly check register is to be submitted listing
each expenditure by check number, payee, date, and amount. Monthly
billing shall be submitted by OHA no later than twenty (20) days
following the first of each month reporting period.
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2.03.3 Submit a Tenant Survey for each household at the time that the household
is enrolled into the Rental Assistance Program and update annually and
shall include (Exhibit"E"):
2.03.3.1 copy of rental assistance contract,
2.03.3.2 contract end date,
2.03.3.3 tenant's last name,
2.03.3.4 number of bedrooms,
2.03.3.5 tenant contribution to rent,
2.03.3.6 subsidy amount,
2.03.3.7 total rent,
2.03.3.8 monthly gross income,
2.03.3.9 % of area median income,
2.03.3.10 race/ethnicity of head of household,
2.03.3.11 size of household,
2.03.3.12 head of household characteristic,
2.03.3.13 type of contract whether owner or tenant contract,
2.03.3.14 whether the tenant is in a HOME assisted unit.
2.03.4 Whenever it makes a determination based on household income or
adjusted household income, the OHA must use the definitions of "annual
income, adjusted income, monthly income, and monthly adjusted income",
as those terms are defined by 24 CFR 5.609 Annual Income. (24 CFR
5.609 is attached hereto as Exhibit "F".) Income eligibility must be
recertified annually.
2.03.5 Comply with all requirements of the HOME Investment Partnerships
Program, Final Rule (24 CFR, Part 92, dated July, 24, 2013, as amended),
in particular 92.209 concerning the provision of tenant-based rental
assistance.
2.03.6 Subrecipient shall not use lead-based paint in the performance of this
Agreement, including the performance of any subcontractor (42 USC 4821
et seg. 24 C.F.R. 92.355 and 24 C.F.R. Part 35). "Lead-based Paint"
means any paint containing more than six one-hundredths of one (1) per
centum of lead by weight (calculated as lead metal) in the total nonvolatile
content of the paint, or the equivalent measure of lead in the dried film of
paint already applied. The Subrecipient further agrees to abide by Federal
requirements regarding lead-based paint poisoning prevention.
2.03.7 The Subrecipient agrees to affirmatively market the availability of rental
assistance to low and very low income households and submit a written
Affirmative Marketing Plan to the Director (Attachment 2).
2.03.8 Subrecipient shall establish procedures that ensure that potential clients
are informed of the differences between this Rental Assistance Program
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and OHA's standard Section 8 assistance. Such procedures shall ensure
that applicants who are on OHA's Section 8 waiting list and who enroll in
this Rental Assistance Program remain eligible for Section 8 assistance to
the same extent as before they enrolled in this Rental Assistance Program.
2.04 Term of the Agreement.
This Agreement shall be in full force and effect for a period from January 1,
2022 through December 31, 2022.
SECTION 3. GENERAL ADMINISTRATION REQUIREMENTS OF THE SUBRECIPIENT
3.01 Financial Management.
3.01.1 Audits. The Subrecipient shall comply with all provisions and
regulations of the Program and have an annual audit completed in
compliance with 2 CFR, Part 200.5 — Audit Requirements, attached
hereto as Exhibit "B", and incorporated herein as though fully set forth.
A copy of the audit shall be provided to the Director. The auditor shall
determine the appropriate type of audit to be conducted; i.e., limited
scope or full compliance. A single audit is not an allowable expense
unless the Subrecipient expends total federal funds over $750,000.00 in
each fiscal year. A limited-scope audit may be allowable provided the
auditor conducts the audit in accordance with generally accepted
auditing standards and the recipient expends less than $750,000.00 in
each fiscal year.
3.01.1.1 Any deficiencies noted in audit reports must be fully cleared
by the Subrecipient within 30 days after receipt of audit by
the Subrecipient. Failure of the Subrecipient to comply with
the above audit requirements will constitute a violation of
this Agreement and may result in the withholding of future
payments and may constitute a default subject to default
remedies referenced herein in Section 9.
3.01.2 Reimbursement. The Subrecipient shall request disbursement/
reimbursement of HOME Funds only when such funds are needed for
payment of eligible costs pursuant to Section 2.02 of this Agreement.
The amount of such requests must be limited to the actual amount
needed.
3.02 Record Retention. The Subrecipient shall maintain such records and accounts,
including household characteristics, property, personnel and financial records, as
are deemed necessary by the City to assure a proper accounting for all expenses.
The Comptroller General of the United States, or any of their duly authorized
representatives, or any duly authorized representatives of the City, as approved by
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the Director, shall have access to any books, documents, papers, records and
accounts of the Subrecipient, Subrecipient, or subcontractors'which are directly
pertinent to this Project for the purpose of making audit, examination, excerpts
and transcriptions. Such records and accounts shall be retained for five (5) years
from project completion. (See Sections 92.508 (a)(2)(v), (vi) and 92.508(a)(5) of
Exhibit "B" attached hereto for record keeping requirements.)
3.03 Accounting Standards. The Subrecipient agrees to comply with the requirements
of CFR 2, Part 200 — Cost Principles for State, Local, and Indian Tribal
Governments (attached hereto as Exhibit "B") and agrees to adhere to the
accounting principles and procedures required therein, utilize adequate internal
controls, and maintain necessary source documentation for all costs incurred.
3.04 Personnel and Participant Conditions.
3.04.1 Contract Compliance Clause.
3.04.1.1 Section 10-192 of the Omaha Municipal Code, Equal
Employment Opportunity Clause. The Subrecipient and its
contractors shall not discriminate against any employee or
applicant for employment because of race, religion, color,
sex, age, sexual orientation, gender identity, national origin,
familial or handicap status. As used herein, the word
"treated" shall mean and include, without limitation, the
following: recruited, whether by advertising or by other
means; compensated; selected for training, including
apprenticeship; promoted; upgraded; demoted; downgraded;
transferred; laid off; and terminated. The Subrecipient and
its contractors agree to and shall post in conspicuous places,
available to employees and applicants for employment,
notices to be provided by the contracting officers setting forth
the provisions of this nondiscrimination clause
3.04.1.2 The Subrecipient or its subcontractors shall, in all
solicitations or advertisements for employees placed by or on
behalf of the contractor, state that all qualified applicants will
receive consideration for employment without regard to race,
religion, color, sex, age, national origin, familial or handicap
status.
3.04.1.3 The Subrecipient or its subcontractors shall send to each
representative of workers with which he has a collective
bargaining agreement or other contract or understanding a
notice advising the labor union or workers' representative of
the contractor's commitments under the equal employment
opportunity clause of the city and shall post copies of the
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notice in conspicuous places available to employees and
applicants for employment.
3.04.1.4 The Subrecipient or its subcontractors shall furnish to the
Human Relations Director all federal forms containing the
information and reports required by the federal government
for federal contracts under federal rules and regulations,
including the information required by sections 10-192 to 10-
194, inclusive, of the Omaha Municipal Code and shall
permit reasonable access to his records. Records accessible
to the Human Relations Director shall be those which related
to paragraphs 3.04.1.1 through 3.04.1.8 of this subsection and
only after reasonable notice is given the contractor. The
purpose of this provision is to provide for investigation to
ascertain compliance with the program provided herein.
3.04.1.5 The Subrecipient or its subcontractors shall take such actions
with respect to any subcontractor as the City may direct as a
means of enforcing the provisions of paragraphs 3.04.1.1
through 3.04.1.8 herein, including penalties and sanctions for
noncompliance; however, in the event the contractor
becomes involved in or is threatened with litigation as the
result of such directions by the City, the City will enter into
such litigation as is necessary to protect the interests of the
City and to effectuate the provisions of this division, and, in
the case of contracts receiving federal assistance, the
contractor or the City may request the United States to enter
into such litigation to protect the interests of the United
States.
3.04.1.6 The Subrecipient or its subcontractors shall file and shall
cause his subcontractors, if any, to file compliance reports
with the Subrecipient in the same form and to the extent as
required by the federal government for federal contracts
under federal rules and regulations. Such compliance reports
shall be filed with the City's Human Relations Director.
Compliance reports filed at such times as directed shall
contain information as to the employment practices, policies,
programs and statistics of the Subrecipient, and it's
subcontractors.
3.04.1.7 The Subrecipient or its subcontractors shall include the
provisions of paragraphs 3.04.1.1 through 3.04.1.8 of this
section, "Equal Employment Opportunity Clause," and
Section 10-193 in every contract, subcontract or purchase
order so that such provisions will be binding upon each
.9.,
subcontractor or vendor. (Code 190, Section 10-192; Ord.
No. 35344, Sections 1, 9-26-00, Executive Order 11246)
(Exhibit"I").
3.04.2 Workers' Compensation. The Subrecipient shall provide Workers'
Compensation Insurance coverage for all employees involved in the
performance in this Agreement.
3.04.3 Employment Insurance and Bonding. The Subrecipient shall purchase a
blanket fidelity bond covering all employees, at a minimum, in an
amount equal to cash advances from the City. The Subrecipient shall
comply with bonding and insurance requirements of 2 CFR, Part 200 —
Cost Principles for Non-Profit Organizations (attached hereto as Exhibit
''B»
).
3.04.4 Section 3 — Employment of Low-Income Persons Section 3 of HUD
Act of 68, as amended, 1 U.S.C. 1701u). The Subrecipient shall make
its best efforts to comply with Section 3. The purpose of Section 3 is to
ensure that employment and other economic opportunities generated by
HUD assistance or HUD-assisted projects covered by Section 3 shall, to
the greatest extent feasible, be directed to low and very low-income
persons, particularly persons who are recipients of HUD assistance for
housing (Attachment 3)
3.04.5 Minority Business/Women Business Enterprise Plan. The Contractor
shall make its best efforts to ensure that construction services, contracts
and employment opportunities are affirmatively marketed to women and
members of minority groups. As used in this Agreement, the term
"women and members of minority groups" means a business at least
fifty-one percent (51%) owned and controlled by minority group
members or women (Exhibit"P").
3.04.6 Conflict of Interest. The Subrecipient agrees to abide by the provisions
of 24 C.F.R. 92.356 with respect to conflicts of interest, and covenants
that it presently has financial interest and shall not acquire any financial
interest, direct or indirect, which would conflict in any manner or degree
with the performance of services required under this Agreement. The
Subrecipient further covenants that in the performance of this
Agreement no person having such a financial interest shall be employed
or retained by the Subrecipient hereunder. These conflict of interest
provisions apply to any person who is an employee, agent, consultant,
officer or elected official or appointed official of the City or any
designated public agencies or subrecipients which are receiving funds
under the CDBG entitlement program.
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3.04.7 Attestation of Citizenship. To comply with Neb. Rev. Stat. 4-108
through 4-114, the Subrecipient agrees to comply with the requirements
below.
The Subrecipient shall comply with and include the following language
in all contracts and subcontracts for the physical performance of
services: "The Subrecipient is required and hereby agrees to use a
federal immigration verification system to determine the work
eligibility status of new employees physically performing services
within the State of Nebraska. A federal immigration verification system
means the electronic verification of the work authorization program
authorized by the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996, 8 U.S.C. 1324a, known as the E-Verify
Program, or an equivalent federal program designated by the United
States Department of Homeland Security or other federal agency
authorized to verify the work eligibility status of a newly hired
employee. If the Subrecipient is an individual or sole proprietorship,
the following applies:
a) The Subrecipient must complete the United States Citizenship
Attestation Form available on the Department of Administrative
Services website at www.das.state.ne.us.
b) If the Subrecipient indicates on such attestation form that he or
she is a qualified alien, the Subrecipient agrees to provide the
U.S. Citizenship and Immigration Services documentation
required to verify the Subrecipient's lawful presence in the
United States using the Systematic Alien Verification for
Entitlements (SAVE) Program.
c) The Subrecipient understands and agrees that lawful presence in
the United States is required and the Subrecipient may be
disqualified or the contract terminated if such lawful presence
cannot be verified as required by Neb. Rev. Stat. 4-108."
The Subrecipient shall have each person/applicant signing the
application for a benefit under this agreement execute a United States
Citizenship Attestation Form for Public Benefit (Exhibit "K") verifying
eligibility status for the purposes of receiving a public benefit.
3.04.8 Employee Classification Act. To comply with the Nebraska Employee
Classification Act, all general contractors and subcontractors who
perform construction or delivery services pursuant to this contract shall
submit to the City an Affidavit for Employee Classification Act (Exhibit
"L") attesting that (1) each individual performing services for such
Subrecipient is properly classified under the Nebraska Employee
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Classification Act, 2010 LB 563 ("the Act"), (2) such Subrecipient has
completed a federal I-9 immigration form and has such form on file for
each employee performing services, (3) such Subrecipient has complied
with Neb. Rev. Stat. section 4-114 (federal immigration verification
system), (4) such Subrecipient has no reasonable basis to believe that
any individual performing services for such Subrecipient is an
undocumented worker, and (5) as of the time of the contract, such
Subrecipient is not barred from contracting with the state or any
political subdivision pursuant to the Act. The Subrecipient shall follow
the provisions of the Act. A violation of the Act by a Subrecipient is
grounds for rescission of the contract by the City.
3.04.9 Eligible Contractors. Contractor shall submit a certificate verifying that
Contractor is an eligible recipient for federal funding, i.e., has not been
debarred or suspended by HUD. In addition, certification shall be
submitted from each contractor or subcontractor to be used on the
Project to the effect that each contractor or subcontractor has not been
debarred or disqualified by HUD (24 C.F.R. Part 5 and 24 C.F.R.
570.609 —see Exhibit"0"). In addition, Contractor hereby certifies that
it is in good standing with the Department of Health and Human
Services. The Director shall approve all contractors and subcontractors
prior to being hired by the Contractor.
3.04.10 Federal Funding Accountability and Transparency Act. The
Subrecipient shall comply with applicable regulations of the Federal
Funding and Accountability and Transparency Act (FFATA) (75 Reg
55663 (September 14, 2020) and (to be codified at 2 CFR, Part 170)
Subrecipient shall complete and provide to the City (Exhibit"M").
SECTION 4. RESPONSIBILITIES OF THE CITY
4.01 Performance Monitoring.
The City shall monitor the performance standards of the OHA as stated in Section
2. Substandard Performance as determined by the City will constitute non-
compliance with this Agreement. If action to correct such substandard
performance is not taken by the OHA within a reasonable period of time after
being notified by the City, contract suspension or termination procedures may be
initiated.
4.02 Payments.
4.02.1 It is expressly agreed and understood that the total amount to be paid by
the City under this Agreement shall not exceed $400,000.00, comprised of
$400,000.00 in HOME Funds. The Payment of these funds is subject to
and conditioned upon actual receipt by the City of the same. Should
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adequate funding not be available to the City, the City shall notify the
OHA as soon as reasonably possible and the Agreement will be
terminated.
4.02.2 City agrees to reimburse the OHA the actual amount of Rental Assistance
Payments disbursed by the OHA to eligible households in an amount not
to exceed $360,000.00 and$40,000.00 in Project Delivery Costs for a total
amount of$400,000.00 from the HOME Program Entitlement grant during
the term of this Agreement. Reimbursement shall be on a monthly basis in
response to monthly reimbursement requests submitted by the OHA for
the budget line item expenditures shown in Section 2.02.
SECTION 5. MUTUAL AGREEMENTS BETWEEN CITY AND SUBRECIPIENT
5.01 Release of Information Laws. The Subrecipient specifically hereby states, agrees
and certifies that it is familiar with the limited purpose set forth in the Federal
Laws, Rules and Regulations, and in the laws of the State of Nebraska, for which
personal information requested may be used, and that the information received
will be used solely for those limited purposes and not to harass, degrade, or
humiliate any person. The information released shall be used for the limited
purposes stated and the Subrecipient further agrees to indemnify and hold
harmless the City of Omaha for any liability arising out of the improper use by the
Subrecipient of the information provided.
5.02 Captions. Captions used in this Agreement are for convenience and are not used
in the construction of this Agreement.
5.03 Applicable Laws. Parties to this Agreement shall conform with all existing and
applicable City ordinances, resolutions, state laws, federal laws, and all existing
and applicable rules and regulations. Nebraska law will govern the terms and the
performance under this Agreement.
5.04 Interest of the City. Pursuant to Section 8.05 of the Home Rule Charter, no
elected official or any officer or employee of the City shall have a financial
interest, direct or indirect, in any City Agreement. Any violation of this section
with the knowledge of the person or corporation contracting with the City shall
render the Agreement voidable by the Mayor or Council.
5.05 Merger. This Agreement shall not be merged into any other oral or written
agreement, lease, or deed of any type.
5.06 Modification. This Agreement contains the entire agreement of the parties. No
representations were made or relied upon by either party other than those that are
expressly set forth herein. No agent, employee or other representative of either
party is empowered to alter any of the terms herein unless done in writing and
signed by an authorized officer of the respective parties, pursuant to Section 10-
142 of the Omaha Municipal Code.
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5.07 Assignment. The Subrecipient may not assign its rights under this Agreement
without the express prior written consent of the City.
5.08 Strict Compliance. All provisions of this Agreement and each and every
document that shall be attached shall be strictly complied with as written, and no
substitution or change shall be made except upon written direction from
authorized representatives of the parties, pursuant to Section 10-142 of the Omaha
Municipal Code.
5.09 Termination and Enforcement. This Agreement may be suspended or terminated
in accordance with Appendix II to 2 CFR, Part 200(B), 215.61 and 215.62,
Termination for Convenience (Exhibit "B"). If through any cause, the
Subrecipient shall fail to fulfill in a timely and proper manner any obligations
under this Agreement, or violate any of the covenants, representations or
agreements hereof, the City may upon written notice terminate this Agreement or
such parts thereof as to this Agreement, and may hold the Subrecipient liable for
any damages caused to the City by reason of such default and termination. Upon
termination of this Agreement, all funds and interest in any account hereunder
shall become the property of the City and shall be returned to the City.
5.10 Reversion of Assets. Upon the expiration of this Agreement the Subrecipient
shall transfer to the City of Omaha any HOME Funds on hand at the time of
expiration and any accounts receivable attributable to the use of HOME Funds.
5.11 Indemnification. The Subrecipient, to the extent permitted by law and HUD
requirements, shall indemnify and hold the City harmless from and against: (1)
any and all claims arising from contracts between the Subrecipient and third
parties made to effectuate the purposes of this Agreement; and, (2) any and all
claims, liabilities or damages arising from the preparation or presentation of any
of the work covered by this Agreement.
5.12 Unenforceable Provisions. Any provision of this Agreement, which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition of enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision in
any other jurisdiction.
5.13 Disclosure of Lobbying. The OHA shall certify and disclose, to the best of its
knowledge and belief, that:
a) No Federal appropriated funds have been paid or will be paid, by or on
behalf of the OHA, to any person for influencing or attempting to
influence an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal
contract, the making of any Federal grant, the making of any Federal loan,
the entering into of any cooperative agreement, and the extension,
-I4-
continuation, renewal, amendment or modification of any Federal
contract, grant, loan, or cooperative agreement.
b) If any funds other than Federal appropriated funds have been paid or will
be paid to any person for influencing or attempting to influence an officer
or employee of any agency, a Member of Congress, an officer or
employee of Congress, or an employee of a Member of Congress in
connection with this Federal contract, grant, loan, or cooperative
agreement, the OHA shall complete and submit Standard Form-LLL,
"Disclosure Form to Report Lobbying", in accordance with its
instructions.
c) The language of this certification be included in the award documents for
all subawards at all tiers (including subcontracts, subgrants, and contracts
under grants, loans, and cooperative agreements) and that all subrecipients
shall certify and disclose accordingly.
5.14 Notices. The City and Subrecipient hereby expressly agree that for purposes of
notice, including legal service of process, during the term of this Agreement and
for the period of any applicable statute or limitations thereafter, the following
named individuals shall be authorized representatives of the parties:
5.13 Subrecipients. The Contractor shall comply with the requirements and the
standards of 2 CFR, Part 200 "Cost Principles for the State, Local, and Indian
Tribal Governments" (Exhibit"B"),
5.14 Personnel and Participant Conditions.
5.14.1 Contract Compliance Clause.
5.14.1.1 Section 10-192 of the Omaha Municipal Code, Equal
Employment Opportunity Clause (Attachment 2). The
Contractor and its contractors shall not discriminate against
any employee or applicant for employment because of race,
religion, color, sex, age, sexual orientation, gender identity,
national origin, familial or handicap status. As used herein,
the word "treated" shall mean and include, without
limitation, the following: recruited, whether by advertising
or by other means; compensated; selected for training,
including apprenticeship; promoted; upgraded; demoted;
downgraded; transferred; laid off; and terminated. The
Contractor and its contractors agree to and shall post in
conspicuous places, available to employees and applicants
for employment, notices to be provided by the contracting
officers setting forth the provisions of this nondiscrimination
clause.
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5.14.1.2 The Contractor and its contractors or subcontractors shall, in
all solicitations or advertisements for employees placed by or
on behalf of the contractor, state that all qualified applicants
will receive consideration for employment without regard to
race, religion, color, sex, age, sexual orientation, gender
identity, national origin, familial or handicap status.
5.14.1.3 The Contractor and its contractors or subcontractors shall
send to each representative of workers with which he has a
collective bargaining agreement or other contract or
understanding a notice advising the labor union or workers'
representative of the contractor's commitments under the
equal employment opportunity clause of the city and shall
post copies of the notice in conspicuous places available to
employees and applicants for employment.
5.14.1.4 The Contractor and its contractors or subcontractors shall
furnish to the Human Rights and Relations Department all
federal forms containing the information and reports required
by the federal government for federal contracts under federal
rules and regulations, including the information required by
sections 10-192 to 10-194, inclusive, of the Omaha
Municipal Code and shall permit reasonable access to his
records. Records accessible to the Human Rights and
Relations Department shall be those which related to
Paragraphs 5.14.1.1 through 5.14.1.7 of this subsection and
only after reasonable notice is given the contractor. The
purpose of this provision is to provide for investigation to
ascertain compliance with the program provided herein.
5.14.1.5 The Contractor and its contractors or subcontractors shall
take such actions with respect to any subcontractor as the
City may direct as a means of enforcing the provisions of
paragraphs 5.14.1.1 through 5.14.1.7 herein, including
penalties and sanctions for noncompliance; however, in the
event the contractor becomes involved in or is threatened
with litigation as the result of such directions by the City, the
City will enter into such litigation as is necessary to protect
the interests of the City and to effectuate the provisions of
this division, and, in the case of contracts receiving federal
assistance, the contractor or the City may request the United
States to enter into such litigation to protect the interests of
the United States.
5.14.1.6 The Contractor and its contractors shall file and shall cause
his subcontractors, if any, to file compliance reports with the
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Contractor's contractor in the same form and to the extent as
required by the federal government for federal contracts
under federal rules and regulations. Such compliance reports
shall be filed with the City's Human Rights and Relations
Director. Compliance reports filed at such times as directed
shall contain information as to the employment practices,
policies, programs and statistics of the Contractor and its
subcontractors.
5.14.1.7 The Contractor and its contractors or subcontractors shall
include the provisions of paragraphs 5.14.1.1 through
5.14.1.7 of this section, "Equal Employment Opportunity
Clause," and Section 10-193 in every contract, subcontract or
purchase order so that such provisions will be binding upon
each subcontractor or vendor. (Code 1980, Section 10-192;
Ord. No. 35344, Sections 1, 9-26-00).
5.14.2 Workers' Compensation. The Contractor shall provide Workers'
Compensation Insurance coverage for all employees as required by the
State of Nebraska.
5.14.3 Section 3 — Employment of Low-Income Persons (Section 3 of HUD
Act of 68, as amended, 1 U.S.C. 1701u). The Contractor shall make its
...............
best efforts to comply with Section 3. The purpose of Section 3 is to
ensure that employment and other economic opportunities generated by
HUD assistance or HUD-assisted projects covered by Section 3 shall, to
the greatest extent feasible, be directed to low and very low-income
persons, particularly persons who are recipients of HUD assistance for
housing (Attachment 3).
5.14.4 Conflict of Interest. The Contractor agrees to abide by the provisions of
24 C.F.R. 92.356 with respect to conflicts of interest, and covenants that
it presently has financial interest and shall not acquire any financial
interest, direct or indirect, which would conflict in any manner or degree
with the performance of services required under this Agreement. The
Contractor further covenants that in the performance of this Agreement
no person having such a financial interest shall be employed or retained
by the Contractor hereunder. These conflict of interest provisions apply
to any person who is an employee, agent, consultant, officer or elected
official or appointed official of the City or any designated public
agencies or subrecipients which are receiving funds under the
entitlement program.
5.14.5 Attestation of Citizenship. To comply with Neb. Rev. Stat. 4-108
through 4-114, the Contractor agrees to comply with the requirements
below.
-17-
The Contractor shall comply with and include the following language in
all contracts and subcontracts for the physical performance of services:
"The Contractor is required and hereby agrees to use a federal
immigration verification system to determine the work eligibility status
of new employees physically performing services within the State of
Nebraska. A federal immigration verification system means the
electronic verification of the work authorization program authorized by
the Illegal Immigration Reform and Immigrant Responsibility Act of
1996, 8 U.S.C. 1324a, known as the E-Verify Program, or an equivalent
federal program designated by the United States Department of
Homeland Security or other federal agency authorized to verify the
work eligibility status of a newly hired employee. If the Contractor is
an individual or sole proprietorship, the following applies:
d) The Contractor must complete the United States Citizenship
Attestation Form available on the Department of Administrative
Services website at www.das.state.ne.us.
e) If the Contractor indicates on such attestation form that he or she
is a qualified alien, the Contractor agrees to provide the U.S.
Citizenship and Immigration Services documentation required to
verify the Contractor's lawful presence in the United States
using the Systematic Alien Verification for Entitlements
(SAVE) Program.
f) The Contractor understands and agrees that lawful presence in
the United States is required and the Contractor may be
disqualified or the contract terminated if such lawful presence
cannot be verified as required by Neb. Rev. Stat. 4-108."
The Developer/Owner/Subrecipient shall have each person/applicant
signing the application for a benefit under this agreement execute a
United States Citizenship Attestation Form for Public Benefit (Exhibit
"K") verifying eligibility status for the purposes of receiving a public
benefit.
5.14.6 Employee Classification Act. To comply with the Nebraska Employee
Classification Act, all general contractors and subcontractors who
perform construction or delivery services pursuant to this contract shall
submit to the City an Affidavit for Employee Classification Act (Exhibit
"L") attesting that (1) each individual performing services for such
contractor is properly classified under the Nebraska Employee
Classification Act, 2010 LB 563 ("the Act"), (2) such contractor has
completed a federal I-9 immigration form and has such form on file for
each employee performing services, (3) such contractor has complied
-18-
with Neb. Rev. Stat. section 4-114 (federal immigration verification
system), (4) such contractor has no reasonable basis to believe that any
individual performing services for such contractor is an undocumented
worker, and (5) as of the time of the contract, such contractor is not
barred from contracting with the state or any political subdivision
pursuant to the Act. The contractor shall follow the provisions of the
Act. A violation of the Act by a contractor is grounds for rescission of
the contract by the City.
SECTION 6. CONTRACTOR'S COMPLIANCE WITH OTHER FEDERAL
REGULATIONS
6.l Environmental Review. The Contractor agrees to comply with the following
regulations insofar as they apply to the performance of this Agreement:
6.1.1 Clean Air Act, 42, U.S.C., 1857, et seq.
6.1.2 Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et
seq., as amended 1318 relating to inspection, monitoring entry, reports
and information as well as other requirements specified in Section 114
and Section 308, and all regulations and guidelines issued thereunder.
6.1.3 Environmental Protection Agency (EPA) regulations pursuant to 40
C.F.R. Part 50, as amended.
6.1.4 National Environmental Policy Act of 1969.
6.1.5 HUD Environmental Review Procedures (24 C.F.R. Part 58).
6.1.6 Flood Disaster Protection Act of 1973 (24 U.S.C. 4106 and P.L. 2234) in
regard to the sale, lease or other transfer of land acquired, cleared or
improved under the terms of the Agreement as it may apply to
provisions of this Agreement.
6.1.7 Lead-Based Paint Regulations at 24 C.F.R. 570.608 and 24 C.F.R. Part
35 and in particular Sub-Part B thereof. Such regulations pertain to all
HUD-assisted housing and require that all owners, prospective owners
and tenants of properties constructed prior to 1978 be properly notified
that such properties may include lead-based paint and require specific
treatments according to the amount of HUD funding allocated to the
Project.
6.1.8 Historic Preservation requirements set forth in the National Historic
Preservation Act of 1966, as amended (16 U.S.C. 470) and the
procedures set forth in 36 C.F.R., Part 800, Advisory Council on
Historic Preservation Procedures for Protection of Historic Properties,
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insofar as they apply to the performance of this Agreement. In general,
this requires concurrence from the State Historic Preservation Office for
all rehabilitation and demolition of historic properties that are 45 years
old or older or that are included on a Federal, State or local historic
property list.
6.2 Uniform Relocation Act. The Developer shall comply with the applicable
regulations of the Uniform Relocation Act of 1970, as amended (URA) (42
U.S.C. 4601-4655), or Section 104 (d) of the Housing and Community
Development Act of 1974, as amended (Section 104 (d)), which require relocation
assistance be provided to residents, tenants, businesses and other occupants that
are displaced as a result of a federally-assisted project. In the event that the
Developer or its agent displaces any tenant-occupant of the property, it shall
immediately notify the City in writing of the circumstances surrounding said
displacement and comply with 24 C.F.R. 92.353.
6.3 Accessibility Requirements. The Contractor must comply with The Fair Housing
Act and with Section 504 of the Rehabilitation Act of 1973 in the provision of
reasonable accommodation to prospective clients and must adopt procedures to
make available information on the existence and locations of facilities and
services that are accessible to persons with a handicap and maintain evidence of
implementation of the procedures.
6.4 Non-Discrimination. The Contractor shall not, in the performance of this
Agreement, discriminate or permit discrimination in violation of federal or state
laws or local ordinances because of race, color, handicap, familial status, sex, age,
gender identity, sexual orientation, political or religious opinions, affiliations or
national origin.
6.5 Federal Funding Accountability and Transparency Act. The Contractor shall
comply with the applicable regulations of the Federal Funding Accountability and
Transparency Act (FFATA) (75 Fed Reg 55663 (Sept 14, 2010) to be codified at
2 CFR, Part 170). Contractor shall complete and provide to the City (Exhibit"L").
-20-
SECTION 7. DEFAULT PROVISIONS
7.1 Default. A default under this Continuum of Care Homeless Assistance Grant
Agreement shall consist of using grant funds for a purpose other than as
authorized by this Agreement, any noncompliance with legislative, regulatory, or
other requirements applicable to this Agreement, any other material breach of this
Agreement, or any material misrepresentation in the application submission.
7.1.1 Remedies. If, through any cause, the Contractor shall fail to fulfill
in a timely and proper manner any obligations under this
Agreement, or violate any of the covenants, representations or
agreements hereof, the City may upon written notice terminate this
Agreement or such parts thereof as to this Agreement, and may
hold the Contractor liable for any damages caused to the City by
reasons of such default and termination.
SECTION 8. AUTHORIZED REPRESENTATIVES
In further consideration of the mutual covenants herein contained, the parties hereto
expressly agree that for the purposes of notice, including legal service of process, during the term
of this Agreement, and for the period of any applicable statute or limitations thereafter, the
following named individuals shall be authorized representatives of the parties:
1) City of Omaha 2) Housing Authority of the City of Omaha
Director Chief Executive Officer
Planning Department Joanie Poore
Omaha Douglas Civic Center 1823 Harney Street
1819 Farnam Street, 11th Floor Omaha,Nebraska 68102
Omaha, Nebraska 68183
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates indicated below.
HOUSING AUTHORITY OF THE CITY
OFdi
OOMiAHA, a Bod �cu Politic and Corporate
l v .A rn' u ---
2022
Soanie Poore Date
Chief Executive Officer
921.
ATTEST: CITY OF OMAHA:
+/1144- Z
City Clerk of th y of Omaha Date Mayor of the City of Omaha Date
APPR D AS TO FORM:
OZ4•
City Attorney Date
SCHEDULE OF EXHIBITS
Agreement
Exhibit Location Description
A 1.5 Articles of Incorporation, Corporate Resolution
B 1.4, 2.03.5
3.01,3.03.3.04.3 2 CRF Part 200
24 CFR, Part 92, HOME Investment
Partnerships Program, Final Rule
C 1.10.1, 1.10.2 Median Family Income Chart
D 1.15 HOME Rents
i 2.03.3 Tenant Survey Form
F 2.03.4 24 CFR 5.609 Annual Income
I 3.04.1.7 Equal Employment Opportunity Clause
I 3.04.7 United States Citizenship Attestation Form for
Public Benefit
L 3.04.8 Affidavit for Employee Classification
Act
lv1 3.04.10 Federal Funding Accountability and
Transparency Act
N 3.03, 5.09 Termination and Enforcement — Appendix II to
2 CFR, Part 200(B), 215.61 and 215.62
0 3,04.9 Debarment, Suspension Certification
P 3,0.4.5 Minority Business/Women Business Enterprise
Plan
Attachments
1. Tenant Selection Policies
2. Affirmative Marketing Plan
3. Section 3 Employment or Low Income Persons
-23-
rstu,166-
AN mem=:Dretials,._ tiff uitoguirfr or °Rims A HOMING
I " ,_AIWISELT110.311011•101111NO ausaanz OF tiffl
4 " OMR lib O'r viling 01 TIE PliOVISIONS
UP 51, Vs& xi km OF TEE sine= wesiog
ay Tut. .11;1 - .1- ),,ww witi, or"amino
BE IT 'ataLliiiEr tut Orts wits fillrbilt OF ()Mt
BoOtion I. That it Ii ntiefififtry aniL eqieU1e1 and It ii
hareur analog ttecifforr galpitaiett to create & ui1ug Autii*Ltr
for the eltit'Ot.ditht, • SW* the.PurPoew of .titniqig Inuaitat.
and •eongesited tenting.conditions existing within tiai City of Osgin, . .*
• and to aid in the housing of• fad..1.1.es of low. inwomews
0,411,01101,L, et That *Mint,to the govisitrag of fiats 111,0
Nr4.,;,50,-.jantlaigormg yittiteth,isotfon
tate, of retivitass tbe . i herebycreated a lfóuairig AntitorlitW rOr
the 01*,er teethittD bit,10 .1411 known aM desianattgtaa the ,snaing
Autbintitgt,the City of ito have aM to pociec. far of the
palms, rights and privileges, !aid to 9.saime all of the obligations
ancutritene,00460a in the ealpi.,swiete Iiie,110, 256,
Sewkion. 3. That this'Ordinance shall be in full force
and effect frOm and utter fifteen days after its passage.
J.',I A dr6.10.0"""iicouticiti
r°717i
•.* PASSED:
JUN 11 1935 . •
ATTEST: ,„:41-444,41,_ `44.
Exhibit A
a9> c Created byOrd nce '14)0 Il 1 t
No, 14292, passed by City Co. i t .1 1y 11 1.935.
By—tows Adopted Aug' 2, 1938.
6f z SS.V'
.,,17.76• .8;`/', ,AP
AWtuot 1933
1 r ..4*7-7:""f S lt's : C I'r
7i1n't3,Aa, ?1>o caty;Counoti of;i;lw Citr of Ovaas lfobrnoln, hn1d,
p duly authoriaqd r,i,^ular i votin;;_In tho Counnf l hnnbor on tho 11t'i
day CL' ‘Tune. 19313;•
'f:;.k;11l70A3,;at .snid mtoting tho 'tolloutiz brdineutoe !To. 14202 *Ka
epnotoe
t11YZrhut%l. :To. 14202
ht-t OltItTNAIICl; .`F,C1sltT Al ;1ra.?t."C .1:1T..7;T t)1fi CtttlAT'WI
A Ain:110U1T? A (U og,.vi l;ll7 tUCil }iuusIna
Atrp;.NcIr'Y ( ' :it; CXiY ar Q!1.1.11.'1 u4r ll;t h}xa `;lY
Vlliilr+? (4' iiM S'ittr,rI:;I,);1;i ili+ ;.a:1,1Ti; i'U)1 110. 256,
All ACT ((' `,5;;,.;Ii)11 Ui, 'i'111' Li /41..1.1:itr,
OF Till; :1f41.7 i
/gt'I11 Alt l)En) By 1-.11;: t`.11'Y CQUU CIL f ' (:I 'Y 017 0;44V1At
,�oota,oxi;1, t i{t it io nnoeaacu Auld o):potlie t, told it
ia doolorod,ngooadnry w.ryd oxpodio it to az'oa10 a !oueinr;,'
AtAtioritt for tho Ci;,r c' (,)m►lm, for tho purpooe of olintim.tint;
wiaoratory n oant;ootod houotn; gondi;,iono. oxiatin; rotithin tho
City of 1ant1, And to.nid in tho houeini, o'.ta)ai,lios of 10i iaooroaor
Boo!;ioa 2. 1.1•At pltreur to tho pi•oV40,1,0o4 or "Micro �i10
ilo• 25B tin A t t rI,Vti a...' i f i
a1; o. era ..,. �,�.�,, •e�c�or� o. ,,la �.o�ia,mt�ire of the
F
orityo,, f t o to nvo an to poaeans ail of the
�poaors, r1;hfrs rota'put"iloro0, and to nsaumv all, of tho oolarali'iooia
aryl burdono provided'iix cold fionote 'ild 11o. 256.
seotipn.3: 'rkY►t title Ordinanoa 01u411 be in 1'u11 torso and
et'aot troto and.`al!`tor 3'ittoon days Am`tor itG pace ge,
Polo'#!'. 7on7
I(njror and ilrosid4tit of the 'Qi y (:ouno
PAatu$ Jtuuo l),j 1936
A 1'1 3*
C i,tV 140TrIc.
11t 1ii11'•krC (1 11Y'
ttoy.11.
A ¢i N'i°ti':1.° TO c0it:xi
3ointraur 1s, �_m11rh
toot
1'tff3';A1, the tarrno of offioo of *ho fol;~os°l.nd.ner, ro of' the liouoinp
Aut}hori,ty of tho 1:1t,r of c)cn1u1; t;n:r.,*nl J. 1(o•ao).1, Jot J. =1T;4,,n, <rAut
Banton, V. Ray ';ould";nu !iioa t;nthnrix►o ::arrictk andtod'on July 2, 1V3,1 g
110.1/0 `.iy;!r:�,fr llt,`, � ors G io or*ov n ;on+ 'o " 0oot' 5
lh of tho
'st o •� G3tit3r �x 3t k rc, soor.tioa ,4.01 Of ;lice ;seta oi` Zlo'lu1 c1*;f
1+�4bro0:i r bat, r,,; 010'0,,o +kilo ice') 041provod flay s 1035,
tho " I hotaXt cpriaizit,
tho, ro11 -+r1u3 poroona
r,a111+ltrl S. :',low011
John J'. Ici7ain
Gl rr4 730:a0on
V.: 'iEty Cloutd
jas.Cittherino 'Carrick •
to,euc000d t1 otasolves as rinTillors of tho Itoucring Authority.ar.tllo City •
of 'Qrxilsf4 for c' period,of ono yoar 'bezituilblit, July u. ;193O ai 1 oa 1inF;
July 2.
121 WX!fl ir, '.0fig;'st:.:O?, I }xwo horot to a1i �ac1 t j u mo ho ?h:to ' or the
City of rt , aaursoki tho of floial corporato seal on 0034
City of alnho. to bo imaros sod lioroon this 10 rlay of Au;;uet, 1938.
Pon But1pr ,
tsayor
ATx13&.e
1; t ai ern+ ri,
1247.
(SEAL
•
144)
§ 2-216 OMAHA CODE,
(b) Developnle.nt or maintenance of a clear- Secs, 2-233-2-250. Reserved,
inghouse of irifornlation on actiyities
affecting youth within areas of concern;
ARTICLE VII. INI)EIVINITY OF
Establiallinent or maintenance of coin.rnu-
L u L PERSONNP..1..4
nication channels between minority youth
and state Or local governrnel)t structkireS;
(d) Stimulation of state or local institutions Sec, 2,.251. Purpose.
to be more .responsive to the young rt is th purpose of this article to encourage
people; arid elected and appointed city officials,municipal
(a) Assist in the establishment and mainte- employees, API)oint0d officers, members of
.
nonce of the metropolitan youth advisory appointed boards and commissions, and
commission which will also serve as a administrative personnel to efficiently per-
functional manpower area planning form their duties and to protect the individual
council sub4coininittee, (Code 1959, § in the performance of such duty. (Code 1959 §
4.14.090; Ord. No. 26788, § 1 5.1-73)
1..30.010; Ord. No. 28322, 5-16-78)
Sees. 2-217-2-230. Reserved. Sec. 2-252, Ideintaity of personnel—Defi-
.
DIVISION 4, HOUSING AUTHORITY*
For the purposes of this article, the words
''City personnel" shell mean and include any
See. 2-231. l'Yecessity declared, elected or appointed city official, municipal
employee, appointed officers, members of
It" is necessary and expedient end it is boards and commissions, and administrative
hereby declared necessary and expec,lierit, to i)ersonnel of the city.
create a housing authority for the city, for the
Purpose of eliminating unsanitary and con. sec. 2.25s, same,._vaynleat of claims,
gested liousing coraditions.existing within the
The city shall pay on behalf of any city
city, and to nid in the housing of families f
low incomes, (Ord. N . 14924, g 20-1.11 Persenl'eF all sums which such city personnel
5-13-41; Code 1959, § 4.04.010). 1)ecome obligated to pay by reason of liability
imposed by law upon such city personnel
Sec. 2-232. Created. individually, except as provided in section
2-254, for claims or other cause of action
Pursuant to the provisions of Revised committed
good faith within the scope of
Statutes of Nebraska, 1943,section 71.1518 et their employment end duties, and which
sect,, as amended, there i,s hereby created a claim was not the result of any wailful or
housing authority for the city to be legally wanton act of such city PerSonnel in the
known and designated as the Housing discharge of such duty. (Code 1959, §
AtitheritY of the City of Omaha, to have end 1.30.020; Ord. No. 28322, 5-16-78)
to possess all of the powers, rights and
privileges, and to assume all or the oblige' Sec. 2-254, Same—ExcePtione.
*ions and burdens provided by such statute,
(Ord. No. 14924, § 20-1.2, 5-13-41; Code 1959, The provisions of section 2.263 shall not be
§ 4.04.020) applicable in the event the city procures and
carries insurance policies covering such acts
"charter reference—Housing autl)ority. 4.02.
Annotation—Legislation creating housing authority, tcross references—insurance, surety coverage,
and ii4haintaatilt, Ittiolation viii(.4400# *eel, origintil 10.221 et seq.;bonds for police division rneinbers,
legislation, held valid. 1.,ennux u. Housing Af4tharity of State law referente-,Official bon , R.R.S. 1042, §
City of Omaha, 137 Nob 582,2U0 NW 451 (1940). 14.102(8).
224
Exhibit B
PART 200-UNIFORM ADMINISTRA- 200.50 Generally Accepted Government Au-
TIVE REQUIREMENTS, COST PRIN- diting Standards(GAGAS).
200.51 Grant agreement.
CIPLES, AND AUDIT REQUIRE- 200.52 Hospital.
MENTS FOR FEDERAL AWARDS 200.53 Improper payment.
200.54 Indian tribe(or "federally recognized
Subpart A-Acronyms and Definitions Indian tribe").
200.55 Institutions of Higher Education
ACRONYMS (IHEs).
200.56 Indirect (facilities & administrative
Sec. (F&A))costs.
200.0 Acronyms. 200.57 Indirect cost rate proposal.
200.1 Definitions. 200.58 Information technology systems.
200.2 Acquisition cost. 200.59 Intangible property.
200.3 Advance payment. 200.60 Intermediate cost objective.
200.4 Allocation. 200.61 Internal controls.
200.5 Audit finding. 200.62 Internal control over compliance re-
200.6 Auditor. quirements for Federal awards.
200.7 Auditor. 200.63 Loan.
200.8 Budget. 200.64 Local government.
200.9 Central service cost allocation plan. 200.65 Major program.
200.10 Catalog of Federal Domestic Assist- 200.66 Management decision.
ance(CFDA)number. 200.67 Micro-purchase.
200.11 CFDA program title. 200.68 Modified Total Direct Cost(MTDC).
200.12 Capital assets. 200.69 Non-Federal entity.
200.14 Capital expenditures.200.14 Claim. 200.70 Nonprofit organization.
200.15 Class of Federal awards. 200.71 Obligations.
200.16 Closeout. 200.72 Office of Management and Budget
200.17 Cluster of programs. (OMB).
200.18 Cognizant agency for audit. 200.73 Oversight agency for audit.
200,19 Cognizant agency for indirect costs. 200.74 Pass-through entity.
200.20 Computing devices. 200.75 Participant support costs.
200.21 Compliance supplement. 200.76 Performance goal.
200.22 Contract. 200.77 Period of performance.
200.23 Contractor. 200.78 Personal property.
200.24 Cooperative agreement, 200.79 Personally Identifiable Information
200.25 Cooperative audit resolution. (PII).
200.26 Corrective action. 200.80 Program income.
200.27 Cost allocation plan. 200.81 Property.
200.28 Cost objective. 200.82 Protected Personally Identifiable In-
200.29 Cost sharing or matching. formation(Protected PII),
200.30 Cross-cutting audit finding. 200.83 Project cost.
200.31 [Reserved] 200.84 Questioned cost.
200.32 Data Universal Numbering System 200.85 Real property.
(DUNS)number. 200.86 Recipient.
200.33 Equipment. 200.87 Research and Development(R&D).
200.34 Expenditures. 200.88 Simplified acquisition threshold.
200.35 Federal agency. 200.89 Special purpose equipment.
200.36 Federal Audit Clearinghouse(FAC). 200.90 State.
200.37 Federal awarding agency. 200.91 Student Financial Aid(SFA).
200.38 Federal award. 200.92 Subaward.
200.39 Federal award date. 200.93 Subrecipient.
200.40 Federal financial assistance. 200.94 Supplies.
200.41 Federal interest. 200.95 Termination.
200.42 Federal program. 200.96 Third-party in-kind contributions.
200.43 Federal share. 200.97 Unliquidated obligations.
200.44 Final cost objective. 200.98 Unobligated balance.
200.45 Fixed amount awards. 200.99 Voluntary committed cost sharing.
200.46 Foreign public entity.
200.47 Foreign organization. Subpart B-General Provisions
200.48 General purpose equipment.
200.49 Generally Accepted Accounting Prin- 200.100 Purpose.
ciples(GAAP). 200.101 Applicability.
81
Pt. 200 • 2 CFR Ch. II (1-1-21 Edition)
200.102 Exceptions. 200.312 Federally-owned and exempt prop-
200.103 Authorities. erty.
200.104 Supersession. 200.313 Equipment.
200.105 Effect on other issuances. 200.314 Supplies.
200.106 Agency implementation. 200,315 Intangible property.
200.107 OMB responsibilities. 200.316 Property trust relationship.
200.108 IriqulrleS. PROCUREMENT STANDARDS
200.109 Review date.
200.110 Effective/applicability date. 200.317 Procurements by states.
200.111 English language. 200.318 General procurement standards.
200.112 Conflict of interest. 200.319 Competition.
200.113 Mandatory disclosures. 200.320 Methods of procurement to be fol-
lowed.
Subpart C-Pre-Federal Award Require- 200.321 Contracting with small and minority
ments and Contents of Federal Awards businesses,women's business enterprises,
and labor surplus area firms.
200.200 Purpose. 200.322 Domestic preferences for procure-
200.201 Use of grant agreements (including ments.
fixed amount awards),cooperative agree- 200.323 Procurement of recovered materials.
ments,and contracts. 200.324 Contract cost and price.
200.202 Program planning and design. 200.325 Federal awarding agency or pass-
200.203 Requirement to provide public no- through entity review.
tice of Federal financial assistance pro- 200.326 Bonding requirements.
grams. 200.327 Contract provisions.
200.204 Notices of funding opportunities. PERFORMANCE AND FINANCIAL MONITORING
200.205 Federal awarding agency review of AND REPORTING
merit of proposals.
200.206 Federal awarding agency review of 200.328 Financial reporting.
risk posed by applicants. 200.329 Monitoring and reporting program
200.207 Standard application requirements. performance.
200.208 Specific conditions. 200.330 Reporting on real property.
200.209 Certifications and representations.
200.210 Pre-award costs. SUBRECIPIENT MONITORING AND MANAGEMENT
200.211 Information contained in a Federal 200.331 Subrecipient and contractor deter-
award. minations.
200.212 Public access to Federal award infor- 200.332 Requirements for pass-through enti-
mation. ties.
200.213 Reporting a determination that a 200.333 Fixed amount subawards.
non-Federal entity is not qualified for a
Federal award. RECORD RETENTION AND ACCESS
200.214 Suspension and debarment. 200.334 Retention requirements for records.
200.215 Never contract with the enemy. 200.335 Requests for transfer of records.
200.216 Prohibition on certain telecommuni- 200.336 Methods for collection, trans-
cations and video surveillance services or mission,and storage of information.
equipment. 200.337 Access to records.
Subpart D-Post Federal Award 200.338 Restrictions on public access to
records.
Requirements
REMEDIES FOR NONCOMPLIANCE
200.300 Statutory and national policy re-
quirements. 200.339 Remedies for noncompliance.
200.301 Performance measurement. 200.340 Termination.
200.302 Financial management. 200.341 Notification of termination require-
200.303 Internal controls. ment.
200.304 Bonds. 200.342 Opportunities to object, hearings,
200.305 Federal payment. and appeals.
200.306 Cost sharing or matching. 200.343 Effects of suspension and termi-
200.307 Program income. nation.
200.308 Revision of budget and program CLOSEOUT
plans.
200.309 Modifications to period of perform- 200.344 Closeout.
ance.
POST-CLOSEOUT ADJUSTMENTS AND
PROPERTY STANDARDS CONTINUING RESPONSIBILITIES
200.310 Insurance coverage. 200.345 Post-closeout adjustments and con-
200.311 Real property. tinuing responsibilities.
82
OMB Guidance Pt. 200
COLLECTION OF AMOUNTS DUE 200.435 Defense and prosecution of criminal
200.346 Collection of amounts due. and civil proceedings, claims, appeals
and patent infringements.
Subpart E-Cost Principles 200.436 Depreciation.
200.437 Employee health and welfare costs.
GENERAL PROVISIONS 200.438 Entertainment costs.
200.439 Equipment and other capital expend-
200.400 Policy guide. itures.
200.401 Application. 200.440 Exchange rates.
200.441 Fines, penalties, damages and other
BASIC CONSIDERATIONS settlements.
200.402 Composition of costs. 200.442 Fund raising and investment man-
200.403 Factors affecting allowability of agement costs.
costs. 200.443 Gains and losses on disposition of de-
200.404 Reasonable costs. preciable assets.
200.405 Allocable costs. 200.444 General costs of government.
200.406 Applicable credits. 200.446 Goods or services for personal use.
200.446 Idle facilities and idle capacity.
200.407 Prior written approval (prior ap-
200.447 Insurance and indemnification.
proval). 200.448 Intellectual property.
200.408 Limitation on allowance of costs. 200.449 Interest.
200.409 Special considerations. 200.450 Lobbying.
200.410 Collection of unallowable costs. 200.451 Losses on other awards or contracts.
200.411 Adjustment of previously negotiated 200.452 Maintenance and repair costs.
indirect (F&A) cost rates containing un- 200.453 Materials and supplies costs, includ-
allowable costs. ing costs of computing devices.
DIRECT AND INDIRECT(F&A)COSTS 200.454 Memberships,subscriptions,and pro-
fessional activity costs.
200.412 Classification of costs. 200.455 Organization costs.
200.413 Direct costs. 200.456 Participant support costs.
200.414 Indirect(F&A)costs. 200.457 Plant and security costs.
200.415 Required certifications. 200.458 Pre-award costs.
200.459 Professional service costs.
SPECIAL CONSIDERATIONS FOR STATES,LOCAL 200.460 Proposal costs.
GOVERNMENTS AND INDIAN TRIBES 200.461 Publication and printing costs.
200.416 Cost allocation plans and indirect 200.462 Rearrangement and reconversion
cost proposals. costs.
200.463 Recruiting costs.
200.417 Interagency service. 200.464 Relocation costs of employees.
SPECIAL CONSIDERATIONS FOR INSTITUTIONS OF 200.465 Rental costs of real property and
HIGHER EDUCATION equipment.
200.466 Scholarships and student aid costs.
200.418 Costs incurred by states and local 200.467 Selling and marketing costs.
governments. 200.468 Specialized service facilities.
200.419 Cost accounting standards and dis- 200.469 Student activity costs.
closure statement. 200.470 Taxes(including Value Added Tax).
GENERAL200.471 Telecommunication costs and video
PROVISIONS FOR SELECTED ITEMS OF
surveillance costs.
COST 200.472 Termination costs.
200.420 Considerations for selected items of 200.473 Training and education costs.
cost. 200.474 Transportation costs.
200.421 Advertising and public relations. 200.475 Travel costs.
200.422 Advisory councils. 200.476 Trustees.
200.423 Alcoholic beverages. Subpart F-Audit Requirements
200.424 Alumni/ae activities. p q
200.425 Audit services. GENERAL
200.426 Bad debts.
200.427 Bonding costs. 200.500 Purpose.
200.428 Collections of improper payments. AUDITS
200.429 Commencement and convocation
costs. 200.501 Audit requirements.
200.430 Compensation-personal services. 200.502 Basis for determining Federal
200.431 Compensation-fringe benefits. awards expended.
200.432 Conferences. 200.503 Relation to other audit require-
200.433 Contingency provisions. , ments.
200.434 Contributions and donations. 200.504 Frequency of audits.
83
§200.0 2 CFR Ch. II (1-1-21 Edition)
200.505 Sanctions. Subpart A—Acronyms and
200.506 Audit costs. Definitions
200.507 Program-specific audits.
AUDITEES ACRONYMS
200.508 Auditee responsibilities. §200.0 Acronyms.
200.509 Auditor selection. ACRONYM TERM
200.510 Financial statements.
200.511 Audit findings follow-up. CAS Cost Accounting Standards
200.512 Report submission. CFR Code of Federal Regulations
FEDERAL AGENCIES CMIA Cash Management Improve-
ment Act
200.513 Responsibilities. COG Councils Of Governments
AUDITORS COSO Committee of Sponsoring Orga-
nizations of the Treadway Commis-
200.514 Scope of audit. Sion
200.515 Audit reporting.
200.516 Audit findings.
200.517 Audit documentation. EPA Environmental Protection Agen
200.518 Major program determination. cy
200.519 Criteria for Federal program risk. ERISA Employee Retirement Income
200.520 Criteria for a low-risk auditee. Security Act of 1974 (29 U.S.C. 1301-
MANAGEMENT DECISIONS 1461)
EUI Energy Usage Index
200.521 Management decision. F&A Facilities and Administration
APPENDIX I TO PART 200—FULL TEXT OF No- FAC Federal Audit Clearinghouse
TICE OF FUNDING OPPORTUNITY FAIN Federal Award Identification
APPENDIX II TO PART 200--CONTRACT PROVI- Number
SIGNS FOR NON-FEDERAL ENTITY CON- FAPIIS Federal Awardee Perform-
TRACTS UNDER FEDERAL AWARDS ance and Integrity Information Sys-
APPENDIX III TO PART 200—INDIRECT (F&A) tern
COSTS IDENTIFICATION AND ASSIGNMENT, FAR Federal Acquisition Regulation
AND RATE DETERMINATION FOR INSTITU-
TIONS OF HIGHER EDUCATION(IHES) FFATA Federal Funding Account-
APPENDIX IV TO PART 200—INDIRECT (F&A) ability and Transparency Act of 2006
COSTS IDENTIFICATION AND ASSIGNMENT, or Transparency Act—Public Law
AND RATE DETERMINATION FOR NONPROFIT 109-282, as amended by section 6202(a)
ORGANIZATIONS of Public Law 110-252 (31 U.S.C. 6101)
APPENDIX V TO PART 200—STATE/LOCAL Gov- FICA Federal Insurance Contribu-
ERNMENTWIDE CENTRAL SERVICE COST AL- tions Act
LOCATION PLANS FOIA Freedom of Information Act
APPENDIX VI TO PART 200—PUBLIC ASSIST- FR Federal Register
ANCE COST ALLOCATION PLANS FTE Full-time equivalent
APPENDIX VII TO PART 220—STATES AND GAAP Generally Accepted Account-
LOCAL GOVERNMENT AND INDIAN TRIBE IN-
DIRECT COST PROPOSALS ing Principles
APPENDIX VIII TO PART 200—NONPROFIT OR- GAGAS Generally Accepted Govern-
GANIZATIONS EXEMPTED FROM SUBPART E ment Auditing Standards
OF PART 200 GAO Government Accountability Of-
APPENDIX IX TO PART 200—HOSPITAL COST fice
PRINCIPLES GOCO Government owned, contractor
APPENDIX X TO PART 200—DATA COLLECTION operated
FORM(FORM SF-SAC) GSA General Services Administration
APPENDIX XI TO PART 200—COMPLIANCE SUP- IBS Institutional Base Salary
PLEMENT IHE Institutions of Higher Education
APPENDIX XII TO PART 200—AWARD TERM AND IRC Internal Revenue Code
CONDITION FOR RECIPIENT INTEGRITY AND ISDEAA Indian Self-Determination
PERFORMANCE MATTERS
and Education and Assistance Act
AUTHORITY:31 U.S.C.503 MTC Modified Total Cost
SOURCE: 78 FR 78608, Dec. 26, 2013, unless MTDC Modified Total Direct Cost
otherwise noted. NFE Non-Federal Entity
84
OMB Guidance §200.1
OMB Office of Management and Budg- before the non-Federal entity disburses
et the funds for program purposes.
PII Personally Identifiable Informa- Allocation means the process of as-
tion signing a cost, or a group of costs, to
PMS Payment Management System one or more cost objective(s), in rea-
PRHP Post-retirement Health Plans sonable proportion to the benefit pro-
PTE Pass-through Entity vided or other equitable relationship.
REUI Relative Energy Usage Index The process may entail assigning a
SAM System for Award Management cost(s)directly to a final cost objective
SFA Student Financial Aid or through one or more intermediate
SNAP Supplemental Nutrition Assist- cost objectives.
ance Program Assistance listings refers to the pub-
SPOC Single Point of Contact licly available listing of Federal assist-
TANF Temporary Assistance for ance programs managed and adminis-
Needy Families tered by the General Services Adminis-
TFM Treasury Financial Manual tration, formerly known as the Catalog
U.S.C. United States Code of Federal Domestic Assistance
VAT Value Added Tax (CFDA).
[78 FR 78608, Dec. 26, 2013, as amended at 79 Assistance listing number means a
FR 75880, Dec. 19, 2014; 80 FR 43308, July 22, unique number assigned to identify a
2015;85 FR 49529,Aug.13,2020] Federal Assistance Listings, formerly
§200.1 Definitions. known as the CFDA Number.
Assistance listing program title means
These are the definitions for terms the title that corresponds to the Fed-
used in this part. Different definitions eral Assistance Listings Number, for-
may be found in Federal statutes or merly known as the CFDA program
regulations that apply more specifi- title.
cally to particular programs or activi- Audit finding means deficiencies
ties. These definitions could be supple- which the auditor is required by
mented by additional instructional in- §200.516(a) to report in the schedule of
formation provided in governmentwide findings and questioned costs.
standard information collections. For Auditee means any non-Federal enti-
purposes of this part, the following ty that expends Federal awards which
definitions apply: must be audited under subpart F of
Acquisition cost means the cost of the this part.
asset including the cost to ready the Auditor means an auditor who is a
asset for its intended use. Acquisition public accountant or a Federal, State,
cost for equipment, for example, means local government, or Indian tribe audit
the net invoice price of the equipment, organization, which meets the general
including the cost of any modifica- standards specified for external audi-
tions, attachments, accessories, or aux- tors in generally accepted government
iliary apparatus necessary to make it auditing standards (GAGAS). The term
usable for the purpose for which it is auditor does not include internal audi-
acquired. Acquisition costs for soft- tors of nonprofit organizations.
ware includes those development costs Budget means the financial plan for
capitalized in accordance with gen- the Federal award that the Federal
erally accepted accounting principles awarding agency or pass-through enti-
(GAAP). Ancillary charges, such as ty approves during the Federal award
taxes, duty, protective in transit incur- process or in subsequent amendments
ance, freight, and installation may be to the Federal award. It may include
included in or excluded from the acqui- the Federal and non-Federal share or
sition cost in accordance with the non- only the Federal share, as determined
Federal entity's regular accounting by the Federal awarding agency or
practices. pass-through entity.
Advance payment means a payment Budget period means the time inter-
that a Federal awarding agency or val from the start date of a funded por-
pass-through entity makes by any ap- tion of an award to the end date of that
propriate payment mechanism, includ- funded portion during which recipients
ing a predetermined payment schedule, are authorized to expend the funds
85
•
§200.1 2 CFR Ch. II (1-1-21 Edition)
awarded, including any funds carried (i) The payment of money in a sum
forward or other revisions pursuant to certain;
§200.308. (ii) The adjustment or interpretation
Capital assets means: of the terms and conditions of the Fed-
(1) Tangible or intangible assets used eral award; or
in operations having a useful life of (iii) Other relief arising under or re-
more than one year which are capital- lating to a Federal award.
ized in accordance with GAAP, Capital (2) A request for payment that is not
assets include: in dispute when submitted.
(i) Land, buildings (facilities), equip- Class of Federal awards means a group
ment, and intellectual property (in-
cluding software) whether acquired by of Federal awards either awarded under
purchase, construction, manufacture, a specific program or group of pro-
exchange, or through a lease accounted grams or to a specific type of non-Fed-
eral entity or group of non-Federal en-
for as financed purchase under Govern-
tities to which specific provisions or
ment Accounting Standards Board exceptions may apply.
(GASB) standards or a finance lease
under Financial Accounting Standards Closeout means the process by which
Board(FASB)standards;and the Federal awarding agency or pass-
(ii) Additions, improvements, modi- through entity determines that all ap-
fications, replacements, rearrange- plicable administrative actions and all
ments, reinstallations, renovations or required work of the Federal award
alterations to capital assets that mate- have been completed and takes actions
rially increase their value or useful life as described in§200.344.
(not ordinary repairs and mainte- Cluster of programs means a grouping
nance). of closely related programs that share
(2) For purpose of this part, capital common compliance requirements. The
assets do not include intangible right- types of clusters of programs are re-
to-use assets (per GASB) and right-to- search and development(R&D),student
use operating lease assets (per FASB). financial aid (SFA), and other clusters.
For example, assets capitalized that "Other clusters" are as defined by OMB
recognize a lessee's right to control the in the compliance supplement or as
use of property and/or equipment for a designated by a State for Federal
period of time under a lease contract. awards the State provides to its sub-
See also§200.465. recipients that meet the definition of a
Capital expenditures means expendi- cluster of programs. When designating
tures to acquire capital assets or ex- an "other cluster," a State must iden-
penditures to make additions, improve- tify the Federal awards included in the
ments, modifications, replacements, cluster and advise the subrecipients of
rearrangements, reinstallations, ren- compliance requirements applicable to
ovations, or alterations to capital as- the cluster, consistent with §200.332(a).
sets that materially increase their A cluster of programs must be consid-
value or useful life. ered as one program for determining
Central service cost allocation plan major programs, as described in
means the documentation identifying, §200.518, and, with the exception of
accumulating, and allocating or devel- R&D as described in §200.501(c), wheth-
oping billing rates based on the allow- er a program-specific audit may be
able costs of services provided by a elected.
State or local government or Indian Cognizant agency for audit means the
tribe on a centralized basis to its de- Federal agency designated to carry out
partments and agencies. The costs of the responsibilities described in
these services may be allocated or §200.513(a). The cognizant agency for
billed to users. audit is not necessarily the same as the
Claim means, depending on the con- cognizant agency for indirect costs. A
text, either: list of cognizant agencies for audit can
(1) A written demand or written as- be found on the Federal Audit Clear-
sertion by one of the parties to a Fed- inghouse (FAC)website.
eral award seeking as a matter of Cognizant agency for indirect costs
right: means the Federal agency responsible
86
OMB Guidance §200.1
for reviewing, negotiating, and approv- (1) Is used to enter into a relation-
ing cost allocation plans or indirect ship the principal purpose of which is
cost proposals developed under this to transfer anything of value to carry
part on behalf of all Federal agencies. out a public purpose authorized by a
The cognizant agency for indirect cost law of the United States (see 31 U.S.C.
is not necessarily the same as the cog- 6101(3)); and not to acquire property or
nizant agency for audit. For assign- services for the Federal Government or
ments of cognizant agencies see the pass-through entity's direct benefit or
following: use;
(1) For Institutions of Higher Edu- (2) Is distinguished from a grant in
cation (IHEs): Appendix III to this that it provides for substantial involve-
part,paragraph C.11. ment of the Federal awarding agency
(2) For nonprofit organizations: Ap- in carrying out the activity con-
pendix IV to this part, paragraph C.2.a. templated by the Federal award.
(3) For State and local governments: (3)The term does not include:
Appendix V to this part, paragraph F.1. (i) A cooperative research and devel-
(4) For Indian tribes: Appendix VII to opment agreement as defined in 15
this part, paragraph D.1. U.S.C. 3710a; or
Compliance supplement means an an- (ii) An agreement that provides only:
nually updated authoritative source for (A) Direct United States Government
auditors that serves to identify exist- cash assistance to an individual;
ing important compliance require- (B)A subsidy;
ments that the Federal Government (C)A loan;
expects to be considered as part of an (D)A loan guarantee; or
audit. Auditors use it to understand (E)Insurance.
the Federal program's objectives, pro- Cooperative audit resolution means the
cedures, and compliance requirements, use of audit follow-up techniques which
as well as audit objectives and sug- promote prompt corrective action by
gested audit procedures for deter- improving communication, fostering
mining compliance with the relevant collaboration, promoting trust, and de-
Federal program. veloping an understanding between the
Computing devices means machines Federal agency and the non-Federal en-
used to acquire, store, analyze, process, tity.This approach is based upon:
and publish data and other information (1) A strong commitment by Federal
electronically, including accessories agency and non-Federal entity leader-
(or "peripherals") for printing, trans- ship to program integrity;
mitting and receiving, or storing elec- (2) Federal agencies strengthening
tronic information. See also the defini- partnerships and working coopera-
tions of supplies and information tech- tively with non-Federal entities and
nology systems in this section. their auditors; and non-Federal enti-
Contract means, for the purpose of ties and their auditors working coop-
Federal financial assistance, a legal in- eratively with Federal agencies;
strument by which a recipient or sub- (3) A focus on current conditions and
recipient purchases property or serv- corrective action going forward; •
ices needed to carry out the project or (4) Federal agencies offering appro-
program under a Federal award. For priate relief for past noncompliance
additional information on subrecipient when audits show prompt corrective
and contractor determinations, see action has occurred; and
§200.331. See also the definition of (5) Federal agency leadership sending
subaward in this section. a clear message that continued failure
Contractor means an entity that re- to correct conditions identified by au-
ceives a contract as defined in this sec- dits which are likely to cause improper
tion. payments, fraud, waste, or abuse is un-
Cooperative agreement means a legal acceptable and will result in sanctions.
instrument of financial assistance be- Corrective action means action taken
tween a Federal awarding agency and a by the auditee that:
recipient or a pass-through entity and (1)Corrects identified deficiencies;
a subrecipient that, consistent with 31 (2) Produces recommended improve-
U.S.C. 6302-6305: ments; or
87
§200.1 2 CFR Ch. II (1-1-21 Edition)
(3) Demonstrates that audit findings sets, computing devices, general purpose
are either invalid or do not warrant equipment, information technology sys-
auditee action. tems, special purpose equipment, and sup-
Cost allocation plan means central plies in this section.
service cost allocation plan or public Expenditures means charges made by
assistance cost allocation plan. a non-Federal entity to a project or
Cost objective means a program, func- program for which a Federal award was
tion, activity, award, organizational received.
subdivision, contract, or work unit for (1) The charges may be reported on a
which cost data are desired and for cash or accrual basis, as long as the
which provision is made to accumulate methodology is disclosed and is con-
and measure the cost of processes, sistently applied.
products, jobs, capital projects, etc. A (2) For reports prepared on a cash
cost objective may be a major function basis, expenditures are the sum of:
of the non-Federal entity, a particular (i) Cash disbursements for direct
service or project, a Federal award, or charges for property and services;
an indirect (Facilities & Administra- (ii) The amount of indirect expense
tive (F&A)) cost activity, as described charged;
in subpart E of this part. See also the (iii) The value of third-party in-kind
definitions of final cost objective and in- contributions applied;and
termediate cost objective in this section. (iv)The amount of cash advance pay-
Cost sharing or matching means the ments and payments made to sub-
portion of project costs not paid by recipients.
Federal funds or contributions (unless
ac-
otherwise authorized by Federal stat- For reports prepared on an
ute). See also §200.306. crual basis, expenditures are the sum
of:
Cross-cutting audit finding means an
audit finding where the same under- (i) Cash disbursements for direct
lying condition or issue affects all Fed- charges for property and services;
eral awards (including Federal awards (ii) The amount of indirect expense
of more than one Federal awarding incurred;
agency or pass-through entity). (iii) The value of third-party in-kind
Disallowed costs means those charges contributions applied;and
to a Federal award that the Federal (iv) The net increase or decrease in
awarding agency or pass-through enti- the amounts owed by the non-Federal
ty determines to be unallowable, in ac- entity for:
cordance with the applicable Federal (A) Goods and other property re-
statutes, regulations, or the terms and ceived;
conditions of the Federal award. (B) Services performed by employees,
Discretionary award means an award contractors, subrecipients, and other
in which the Federal awarding agency, payees; and
in keeping with specific statutory au- (C) Programs for which no current
thority that enables the agency to ex- services or performance are required
ercise judgment ("discretion"), selects such as annuities, insurance claims, or
the recipient and/or the amount of Fed- other benefit payments.
eral funding awarded through a com- Federal agency means an "agency" as
petitive process or based on merit of defined at 5 U.S.C. 551(1) and further
proposals. A discretionary award may clarified by 5 U.S.C. 552(f).
be selected on a non-competitive basis, Federal Audit Clearinghouse (FAC)
as appropriate. means the clearinghouse designated by
Equipment means tangible personal OMB as the repository of record where
property (including information tech- non-Federal entities are required to
nology systems) having a useful life of transmit the information required by
more than one year and a per-unit ac- subpart F of this part.
quisition cost which equals or exceeds Federal award has the meaning, de-
the lesser of the capitalization level es- pending on the context, in either para-
tablished by the non-Federal entity for graph(1) or(2) of this definition:
financial statement purposes, or $5,000. (1)(i)The Federal financial assistance
See also the definitions of capital as- that a recipient receives directly from
88
OMB Guidance §200.1
a Federal awarding agency or indi- (ii) Cooperative agreements;
rectly from a pass-through entity, as (iii)Loans; and
described in§200.101; or (iv)Loan Guarantees.
(ii) The cost-reimbursement contract (4) Federal financial assistance does
under the Federal Acquisition Regula- not include amounts received as reim-
tions that a non-Federal entity re- bursement for services rendered to in-
ceives directly from a Federal award- dividuals as described in§200.502(h)and
ing agency or indirectly from a pass- (i),
through entity, as described in§200.101. Federal interest means, for purposes of
(2) The instrument setting forth the §200.330 or when used in connection
terms and conditions. The instrument with the acquisition or improvement of
is the grant agreement, cooperative real property, equipment, or supplies
agreement, other agreement for assist- under a Federal award, the dollar
ance covered in paragraph (2) of the amount that is the product of the:
definition of Federal financial assistance (1) The percentage of Federal partici-
in this section, or the cost-reimburse- pation in the total cost of the real
ment contract awarded under the Fed- proper in i total cost the real
eral Acquisition Regulations. property, equipment, or supplies; and
(3) Federal award does not include (2) Current rovair meanmarks, value hf thet
property, improvements, or both, to
other contracts that a Federal agency the extent the costs of acquiring or im-
uses to buy goods or services from a proving the property were included as
contractor or a contract to operate
project costs.
Federal.Government owned, contractor Federal program means:
operated facilities(GOCOs).
(4) See also definitions of Federal fi- (1) All Federal awards which are as-
nancial assistance, grant agreement, signed a single Assistance Listings
and cooperative agreement. Number.
Federal award date means the date (2) When no Assistance Listings
when the Federal award is signed by Number is assigned, all Federal awards
the authorized official of the Federal from the same agency made for the
awarding agency. same purpose must be combined and
Federal financial assistance means considered one program.
(1) Assistance that non-Federal enti- (3) Notwithstanding paragraphs (1)
ties receive or administer in the form and (2) of this definition, a cluster of
of: programs. The types of clusters of pro-
(i)Grants; grams are:
(ii)Cooperative agreements; (i) Research and development (R&D);
(iii) Non-cash contributions or dona- (ii) Student financial aid(SFA); and
tions of property (including donated (iii) "Other clusters," as described in
surplus property); the definition of cluster of programs in
(iv)Direct appropriations; this section.
(v)Food commodities; and Federal share means the portion of
(vi) Other financial assistance (ex- the Federal award costs that are paid
cept assistance listed in paragraph (2) using Federal funds.
of this definition). Final cost objective means a cost ob-
(2) For §200.203 and subpart F of this jective which has allocated to it both
part, Federal financial assistance also in- direct and indirect costs and, in the
eludes assistance that non-Federal en- non-Federal entity's accumulation sys-
tities receive or administer in the form tem, is one of the final accumulation
of: points, such as a particular award, in-
(i)Loans; ternal project, or other direct activity
(ii)Loan Guarantees; of a non-Federal entity. See also the
(iii)Interest subsidies; and definitions of cost objective and inter-
(iv)Insurance. mediate cost objective in this section.
(3) For §200.216, Federal financial as- Financial obligations, when ref-
sistance includes assistance that non- erencing a recipient's or subrecipient's
Federal entities receive or administer use of funds under a Federal award,
in the form of: means orders placed for property and
(i)Grants; services, contracts and subawards
89
§200.1 2 CFR Ch. II (1-1-21 Edition)
made, and similar transactions that re- (4) Any other entity consisting whol-
quire payment. ly or partially of one or more foreign
Fixed amount awards means a type of governments or foreign governmental
grant or cooperative agreement under entities.
which the Federal awarding agency or General purpose equipment means
pass-through entity provides a specific equipment which is not limited to re-
level of support without regard to ac- search, medical, scientific or other
tual costs incurred under the Federal technical activities. Examples include
award. This type of Federal award re- office equipment and furnishings, mod-
duces some of the administrative bur- ular offices, telephone networks, infor-
den and record-keeping requirements mation technology equipment and sys-
for both the non-Federal entity and tems, air conditioning equipment, re-
Federal awarding agency or pass- production and printing equipment,
through entity. Accountability is based and motor vehicles. See also the defini-
primarily on performance and results. tions of equipment and special purpose
See§§200.102(c),200.201(b), and 200.333. equipment in this section.
Foreign organization means an entity Generally accepted accounting prin-
that is: ciples(GAAP) has the meaning specified
(1) A public or private organization in accounting standards issued by the
located in a country other than the GASB and the FASB.
United States and its territories that is Generally accepted government auditing
subject to the laws of the country in standards (GAGAS), also known as the
which it is located, irrespective of the Yellow Book,means generally accepted
citizenship of project staff or place of government auditing standards issued
performance; by the Comptroller General of the
(2) A private nongovernmental orga- United States, which are applicable to
nization located in a country other financial audits.
than the United States that solicits Grant agreement means a legal instru-
and receives cash contributions from ment of financial assistance between a
the general public; Federal awarding agency or pass-
(3) A charitable organization located through entity and a non-Federal enti-
in a country other than the United ty that, consistent with 31 U.S.C. 6302,
States that is nonprofit and tax ex- 6304:
empt under the laws of its country of (1) Is used to enter into a relation-
domicile and operation, and is not a ship the,principal purpose of which is
university, college, accredited degree- to transfer anything of value to carry
granting institution of education, pri- out a public purpose authorized by a
vate foundation, hospital, organization law of the United States (see 31 U.S.C.
engaged exclusively in research or sci- 6101(3)); and not to acquire property or
entific activities, church, synagogue, services for the Federal awarding agen-
mosque or other similar entities orga- cy or pass-through entity's direct ben-
nized primarily for religious purposes; efit or use;
or (2) Is distinguished from a coopera-
(4)An organization located in a coun- tive agreement in that it does not pro-
try other than the United States not vide for substantial involvement of the
recognized as a foreign public entity. Federal awarding agency in carrying
Foreign public entity means: out the activity contemplated by the
(1) A foreign government or foreign Federal award.
governmental entity; (3) Does not include an agreement
(2) A public international organiza- that provides only:
tion, which is an organization entitled (i) Direct United States Government
to enjoy privileges, exemptions, and cash assistance to an individual;
immunities as an international organi- (ii)A subsidy;
zation under the International Organi- (iii)A loan;
zations Immunities Act (22 U.S.C. 288- (vi)A loan guarantee; or
288f); (v)Insurance.
(3) An entity owned (in whole or in Highest level owner means the entity
part) or controlled by a foreign govern- that owns or controls an immediate
ment; or owner of the offeror, or that owns or
90
OMB Guidance §200.1
controls one or more entities that con- ered an improper payment until the
trol an immediate owner of the offeror. transaction has been completely re-
No entity owns or exercises control of viewed and is confirmed to be im-
the highest-level owner as defined in proper.
the Federal Acquisition Regulations (v) The term "payment" in this defi-
(FAR) (48 CFR 52.204-17). nition means any disbursement or
Hospital means a facility licensed as transfer of Federal funds (including a
a hospital under the law of any state or commitment for future payment, such
a facility operated as a hospital by the as cash, securities, loans, loan guaran-
United States, a state, or a subdivision tees, and insurance subsidies) to any
of a state. non-Federal person, non-Federal enti-
Improper payment means: ty, or Federal employee, that is made
(1) Any payment that should not by a Federal agency, a Federal con-
have been made or that was made in an tractor,a Federal grantee, or a govern-
incorrect amount under statutory, con- mental or other organization admin-
tractual, administrative, or other le- istering a Federal program or activity.
gaily applicable requirements. (vi) The term "payment" includes
(i) Incorrect amounts are overpay- disbursements made pursuant to prime
ments or underpayments that are made contracts awarded under the Federal
to eligible recipients (including inap- Acquisition Regulation and Federal
propriate denials of payment or serv- awards subject to this part that are ex-
ice, any payment that does not account pended by recipients.
for credit for applicable discounts, pay- (2) See definition of improper pay-
ments that are for an incorrect ment in OMB Circular A-123 appendix
amount, and duplicate payments). An C, part I A (1) "What is an improper
improper payment also includes any payment?" Questioned costs, including
payment that was made to an ineli- those identified in audits, are not an
gible recipient or for an ineligible good improper payment until reviewed and
or service, or payments for goods or ,confirmed to be improper as defined in
services not received (except for such OMB Circular A-123 appendix C.
payments authorized by law). Indian tribe means any Indian tribe,
Note 1 to paragraph (1)(i) of this defini- band, nation, or other organized group
tion. Applicable discounts are only or community, including any Alaska
those discounts where it is both advan- Native village or regional or village
tageous and within the agency's con- corporation as defined in or established
trol to claim them. pursuant to the Alaska Native Claims
(ii) When an agency's review is un- Settlement Act (43 U.S.C. Chapter 33),
able to discern whether a payment was which is recognized as eligible for the
proper as a result of insufficient or special programs and services provided
lack of documentation, this payment by the United States to Indians be-
should also be considered an improper cause of their status as Indians (25
payment. When establishing docu- U.S.C. 450b(e)). See annually published
mentation requirements for payments, Bureau of Indian Affairs list of Indian
agencies should ensure that all docu- Entities Recognized and Eligible to Re-
mentation requirements are necessary ceive Services.
and should refrain from imposing addi- Institutions of Higher Education (IHEs)
tional burdensome documentation re- is defined at 20 U.S.C. 1001.
quirements. Indirect (facilities & administrative
(iii) Interest or other fees that may (F&A)) costs means those costs incurred
result from an underpayment by an for a common or joint purpose benefit-
agency are not considered an improper ting more than one cost objective, and
payment if the interest was paid cor- not readily assignable to the cost ob-
rectly. These payments are generally jectives specifically benefitted, with-
separate transactions and may be nec- out effort disproportionate to the re-
essary under certain statutory, con- sults achieved. To facilitate equitable
tractual, administrative, or other le- distribution of indirect expenses to the
gaily applicable requirements. cost objectives served, it may be nec-
(iv) A "questioned cost" (as defined essary to establish a number of pools of
in this section) should not be consid- indirect (F&A) costs. Indirect (F&A)
91
§200.1 2 CFR Ch. II (1-1-21 Edition)
cost pools must be distributed to bene- (1) The term "direct loan" means a
fitted cost objectives on bases that will disbursement of funds by the Federal
produce an equitable result in consider- Government to a non-Federal borrower
ation of relative benefits derived. under a contract that requires the re-
Indirect cost rate proposal means the payment of such funds with or without
documentation prepared by a non-Fed- interest. The term includes the pur-
eral entity to substantiate its request chase of, or participation in, a loan
for the establishment of an indirect made by another lender and financing
cost rate as described in appendices III arrangements that defer payment for
through VII and appendix IX to this more than 90 days, including the sale of
part. a Federal Government asset on credit
Information technology systems means terms. The term does not include the
computing devices, ancillary equip- acquisition of a federally guaranteed
ment, software, firmware, and similar loan in satisfaction of default claims or
procedures, services (including support the price support loans of the Com-
services), and related resources. See modity Credit Corporation.
also the definitions of computing devices (2) The term "direct loan obligation"
and equipment in this section. means a binding agreement by a Fed-
Intangible property means property eral awarding agency to make a direct
having no physical existence, such as loan when specified conditions are ful-
trademarks, copyrights, patents and filled by the borrower.
patent applications and property, such (3)The term "loan guarantee" means
as loans, notes and other debt instru- any Federal Government guarantee, in-
ments, lease agreements, stock and surance, or other pledge with respect
other instruments of property owner- to the payment of all or a part of the
ship (whether the property is tangible principal or interest on any debt obli-
or intangible). gation of a non-Federal borrower to a
Intermediate cost objective means a non-Federal lender, but does not in-
cost objective that is used to accumu- chide the insurance of deposits, shares,
late indirect costs or service center or other withdrawable accounts in fi-
costs that are subsequently allocated nancial institutions.
to one or more indirect cost pools or (4) The term "loan guarantee corn-
final cost objectives. See also the defi- mitment" means a binding agreement
nitions of cost objective and final cost ob- by a Federal awarding agency to make
jective in this section. a loan guarantee when specified condi-
Internal controls for non-Federal enti- tions are fulfilled by the borrower, the
ties means: lender, or any other party to the guar-
(1) Processes designed and imple- antee agreement.
mented by non-Federal entities to pro- Local government means any unit of
vide reasonable assurance regarding government within a state, including a:
the achievement of objectives in the (1)County;
following categories: (2)Borough;
(i) Effectiveness and efficiency of op- (3)Municipality;
erations; (4)City;
(ii) Reliability of reporting for inter- (5)Town;
nal and external use; and (6)Township;
(iii) Compliance with applicable laws (7)Parish;
and regulations. (8) Local public authority, including
(2) Federal awarding agencies are re- any public housing agency under the
quired to follow internal control corn- United States Housing Act of 1937;
pliance requirements in OMB Circular (9) Special district;
No. A-123, Management's Responsi- (10) School district;
bility for Enterprise Risk Management (11)Intrastate district;
and Internal Control. (12) Council of governments, whether
Loan means a Federal loan or loan or not incorporated as a nonprofit cor-
guarantee received or administered by poration under State law; and
a non-Federal entity, except as used in (13) Any other agency or instrumen-
the definition of program income in this tality of a multi-, regional, or intra-
section. State or local government.
92
OMB Guidance §200.1
Major program means a Federal pro- ity the agency has no ability to exer-
gram determined by the auditor to be a cise judgement ("discretion"). A non-
major program in accordance with discretionary award amount could be
§200.518 or a program identified as a determined specifically or by formula.
major program by a Federal awarding Non-Federal entity (NFE) means a
agency or pass-through entity in ac- State, local government, Indian tribe,
cordance with§200.503(e). Institution of Higher Education (IHE),
Management decision means the Fed- or nonprofit organization that carries
eral awarding agency's or pass-through out a Federal award as a recipient or
entity's written determination, pro- subrecipient.
vided to the auditee, of the adequacy of Nonprofit organization means any cor-
the auditee's proposed corrective ac- poration, trust, association, coopera-
tions to address the findings, based on tive, or other organization, not includ-
its evaluation of the audit findings and ing IHEs, that:
proposed corrective actions. (1) Is operated primarily for sci-
Micro-purchase means a purchase of entific, educational, service, chari-
supplies or services, the aggregate table, or similar purposes in the public
amount of which does not exceed the interest;
micro-purchase threshold. Micro-pur- (2) Is not organized primarily for
chases comprise a subset of a non-Fed- profit;and
eral entity's small purchases as defined (3) Uses net proceeds to maintain,
in§200.320. improve, or expand the operations of
Micro-purchase threshold means the the organization.
dollar amount at or below which a non- Notice of funding opportunity means a
Federal entity may purchase property formal announcement of the avail-
or services using micro-purchase proce- ability of Federal funding through a fi-
dures (see §200.320). Generally, the nancial assistance program from a Fed-
micro-purchase threshold for procure- eral awarding agency. The notice of
ment activities administered under funding opportunity provides informa-
Federal awards is not to exceed the tion on the award, who is eligible to
amount set by the FAR at 48 CFR part apply, the evaluation criteria for selec-
2, subpart 2.1, unless a higher threshold tion of an awardee, required compo-
is requested by the non-Federal entity nents of an application, and how to
and approved by the cognizant agency submit the application. The notice of
for indirect costs. funding opportunity is any paper or
Modified Total Direct Cost (MTDC) electronic issuance that an agency uses
means all direct salaries and wages, ap- to announce a funding opportunity,
plicable fringe benefits, materials and whether it is called a "program an-
supplies, services, travel, and up to the nouncement," "notice of funding avail-
first $25,000 of each subaward (regard- ability," "broad agency announce-
less of the period of performance of the ment," "research announcement,"
subawards under the award). MTDC ex- "solicitation," or some other term.
cludes equipment, capital expendi- Office of Management and Budget
tures, charges for patient care, rental (OMB) means the Executive Office of
costs, tuition remission, scholarships the President, Office of Management
and fellowships, participant support and Budget.
costs and the portion of each subaward Oversight agency for audit means the
in excess of $25,000. Other items may Federal awarding agency that provides
only be excluded when necessary to the predominant amount of funding di-
avoid a serious inequity in the dis- rectly (direct funding) (as listed on the
tribution of indirect costs, and with schedule of expenditures of Federal
the approval of the cognizant agency awards, see §200.510(b)) to a non-Fed-
for indirect costs. eral entity unless OMB designates a
Non-discretionary award means an specific cognizant agency for audit.
award made by the Federal awarding When the direct funding represents less
agency to specific recipients in accord- than 25 percent of the total Federal ex-
ance with statutory, eligibility and penditures (as direct and sub-awards)
compliance requirements, such that in by the non-Federal entity, then the
keeping with specific statutory author- Federal agency with the predominant
93
§200.1 2 CFR Ch. II (1-1-21 Edition)
amount of total funding is the des- PII and includes, for example, first and
ignated cognizant agency for audit. last name, address, work telephone
When there is no direct funding, the number, email address, home telephone
Federal awarding agency which is the number, and general educational cre-
predominant source of pass-through dentials. The definition of PII is not
funding must assume the oversight re- anchored to any single category of in-
sponsibilities. The duties of the over- formation or technology. Rather, it re-
sight agency for audit and the process quires a case-by-case assessment of the
for any reassignments are described in specific risk that an individual can be
§200.513(b). identified. Non-PII can become PII
Participant support costs means direct whenever additional information is
costs for items such as stipends or sub- made publicly available, in any me-
sistence allowances, travel allowances, dium and from any source, that, when
and registration fees paid to or on be- combined with other available infor-
half of participants or trainees(but not mation, could be used to identify an in-
employees) in connection with con- dividual.
ferences, or training projects. Program income means gross income
Pass-through entity (PTE) means a earned by the non-Federal entity that
non-Federal entity that provides a is directly generated by a supported ac-
subaward to a subrecipient to carry out tivity or earned as a result of the Fed-
part of a Federal program. eral award during the period of
per-
Performance goal means a target level of performance expressed as a tangible, §2formance except as provided in
measurable objective, against which of
performance. (See the definitionseon ofPr period
m
actual achievement can be compared, incomeincludesin this isscnot limited to
including a goal expressed as a but not r-
quan- income from fees for services per-
titative standard, value, or rate. In formed, the use or rental or real or per-
some instances (e.g., discretionary re- sonal property acquired under Federal
search awards), this may be limited to awards, the sale of commodities or
the requirement to submit technical items fabricated under a Federal
performance reports (to be evaluated in award, license fees and royalties on
accordance with agency policy).
Period of performance means the total patents and copyrights, and principal
estimated time interval between the and interest on loans made with Fed-
start of an initial Federal award and eral award funds. Interest earned on
the planned end date, which may in- advances of Federal funds is not pro
dude one or more funded portions, or gram income. Except as otherwise pro-
budget periods. Identification of the vided in Federal statutes, regulations,
period of performance in the Federal or the terms and conditions of the Fed-
award per §200.211(b)(5) does not com- eral award, program income does not
mit the awarding agency to fund the include rebates, credits, discounts, and
award beyond the currently approved interest earned on any of them. See
budget period. also §200.407. See also 35 U.S.C. 200-212
Personal property means property "Disposition of Rights in Educational
other than real property. It may be Awards" applies to inventions made
tangible, having physical existence, or under Federal awards.
intangible. Project cost means total allowable
Personally Identifiable Information costs incurred under a Federal award
(PII) means information that can be and all required cost sharing and vol-
used to distinguish or trace an individ- untary committed cost sharing, includ-
ual's identity, either alone or when ing third-party contributions.
combined with other personal or iden- Property means real property or per-
tifying information that is linked or sonal property. See also the definitions
linkable to a specific individual. Some of real property and personal property in
information that is considered to be this section.
PII is available in public sources such Protected Personally Identifiable Infer-
as telephone books, public websites, mation (Protected PII) means an individ-
and university listings. This type of in- ual's first name or first initial and last
formation is considered to be Public name in combination with any one or
94
OMB Guidance §200.1
more of types of information, includ- the same facilities as other research
ing, but not limited to, social security and development activities and where
number, passport number, credit card such activities are not included in the
numbers, clearances, bank numbers, instruction function. "Research" is de-
biometrics, date and place of birth, fined as a systematic study directed to-
mother's maiden name, criminal, med- ward fuller scientific knowledge or un-
ical and financial records, educational derstanding of the subject studied.
transcripts. This does not include PII "Development" is the systematic use
that is required by law to be disclosed. of knowledge and understanding gained
See also the definition of Personally from research directed toward the pro-
Identifiable Information (PI I) in this sec- duction of useful materials, devices,
tion. systems, or methods, including design
Questioned cost means a cost that is and development of prototypes and
questioned by the auditor because of an processes.
audit finding: Simplified acquisition threshold means
(1)Which resulted from a violation or the dollar amount below which a non-
possible violation of a statute, regula- Federal entity may purchase property
tion, or the terms and conditions of a or services using small purchase meth-
Federal award, including for funds used ods (see §200.320). Non-Federal entities
to match Federal funds; adopt small purchase procedures in
(2) Where the costs, at the time of order to expedite the purchase of items
the audit, are not supported by ade- at or below the simplified acquisition
quate documentation; or threshold. The simplified acquisition
(3) Where the costs incurred appear threshold for procurement activities
unreasonable and do not reflect the ac- administered under Federal awards is
tions a prudent person would take in set by the FAR at 48 CFR part 2, sub-
the circumstances. part 2.1. The non-Federal entity is re-
(4) Questioned costs are not an im- sponsible for determining an appro-
proper payment until reviewed and priate simplified acquisition threshold
confirmed to be improper as defined in based on internal controls, an evalua-
OMB Circular A-123 appendix C. (See tion of risk, and its documented pro-
also the definition of Improper payment curement procedures. However, in no
in this section). circumstances can this threshold ex-
Real property means land, including ceed the dollar value established in the
land improvements, structures and ap- FAR(48 CFR part 2, subpart 2.1)for the
purtenances thereto, but excludes simplified acquisition threshold. Re-
moveable machinery and equipment. cipients should determine if local gov-
Recipient means an entity, usually ernment laws on purchasing apply.
but not limited to non-Federal entities Special purpose equipment means
that receives a Federal award directly equipment which is used only for re-
from a Federal awarding agency. The search, medical, scientific, or other
term recipient does not include sub- technical activities. Examples of spe-
recipients or individuals that are bene- cial purpose equipment include micro-
ficiaries of the award. scopes, x-ray machines, surgical instru-
Renewal award means an award made ments, and spectrometers. See also the
subsequent to an expiring Federal definitions of equipment and general
award for which the start date is con- purpose equipment in this section.
tiguous with, or closely follows, the State means any state of the United
end of the expiring Federal award. A States, the District of Columbia, the
renewal award's start date will begin a Commonwealth of Puerto Rico, U.S.
distinct period of performance. Virgin Islands, Guam, American
Research and Development (R&D) Samoa, the Commonwealth of the
means all research activities, both Northern Mariana Islands, and any
basic and applied, and all development agency or instrumentality thereof ex-
activities that are performed by non- elusive of local governments.
Federal entities. The term research Student Financial Aid (SFA) means
also includes activities involving the Federal awards under those programs
training of individuals in research of general student assistance, such as
techniques where such activities utilize those authorized by Title IV of the
95
§200.2 2 CFR Ch. II (1-1-21 Edition)
Higher Education Act of 1965, as Third-party in-kind contributions
amended, (20 U.S.C. 1070-1099d), which means the value of non-cash contribu-
are administered by the U.S. Depart- tions(i.e., property or services)that—
ment of Education, and similar pro- (1) Benefit a federally-assisted
grams provided by other Federal agen- project or program; and
cies. It does not include Federal awards (2) Are contributed by non-Federal
under programs that provide fellow- third parties, without charge, to a non-
ships or similar Federal awards to stu- Federal entity under a Federal award.
dents on a competitive basis, or for Unliquidated financial obligations
specified studies or research. means, for financial reports prepared
Subaward means an award provided on a cash basis, financial obligations
by a pass-through entity to a sub- incurred by the non-Federal entity
recipient for the subrecipient to carry that have not been paid (liquidated).
out part of a Federal award received by For reports prepared on an accrual ex-
the pass-through entity. It does not in- penditure basis, these are financial ob-
clude payments to a contractor or pay- ligations incurred by the non-Federal
ments to an individual that is a bene- entity for which an expenditure has
ficiary of a Federal program. A not been recorded.
subaward may be provided through any Unobligated balance means the
form of legal agreement, including an amount of funds under a Federal award
agreement that the pass-through enti- that the non Federal entity has not ob-
ty considers a contract. ligated. The amount is computed by
subtracting the cumulative amount of
Subrecipient means an entity, usually the non-Federal entity's unliquidated
but not limited to non-Federal entities, financial obligations and expenditures
that receives a subaward from a pass- of funds under the Federal award from
through entity to carry out part of a the cumulative amount of the funds
Federal award; but does not include an that the Federal awarding agency or
individual that is a beneficiary of such pass-through entity authorized the
award. A subrecipient may also be a re- non-Federal entity to obligate.
cipient of other Federal awards di- Voluntary committed cost sharing
rectly from a Federal awarding agency. means cost sharing specifically pledged
Subsidiary means an entity in which on a voluntary basis in the proposal's
more than 50 percent of the entity is budget on the part of the non-Federal
owned or controlled directly by a par- entity and that becomes a binding re-
ent corporation or through another quirement of Federal award. See also
subsidiary of a parent corporation. §200.306.
Supplies means all tangible personal [85 FR 49529,Aug.13,2020]
property other than those described in
the definition of equipment in this sec- §200.2 Acquisition cost.
tion. A computing device is a supply if Acquisition cost means the cost of the
the acquisition cost is less than the asset including the cost to ready the
lesser of the capitalization level estab- asset for its intended use. Acquisition
lished by the non-Federal entity for fi- cost for equipment, for example, means
nancial statement purposes or $5,000, the net invoice price of the equipment,
regardless of the length of its useful including the cost of any modifica-
life. See also the definitions of com-
x-
puting devices and equipment in this sec- tions,y attachments,necessary
tos,maker it
tion. iliary apparatus necessary to it
Telecommunications cost means the usable for the purpose for which it is
acquired. Acquisition costs for soft-
cost of using communication and te- ware includes those development costs
lephony technologies such as mobile capitalized in accordance with gen-
phones, land lines, and internet. erally accepted accounting principles
Termination means the ending of a (GAAP). Ancillary charges, such as
Federal award, in whole or in part at taxes, duty, protective in transit insur-
any time prior to the planned end of ance, freight, and installation may be
period of performance. A lack of avail- included in or excluded from the acqui-
able funds is not a termination. sition cost in accordance with the non-
96
OMB Guidance §200.13
Federal entity's regular accounting termined by the Federal awarding
practices. agency or pass-through entity.
200.3 Advance payment. §200.9 Central service cost allocation
Advance payment means a payment plan.
that a Federal awarding agency or Central service cost allocation plan
pass-through entity makes by any ap- means the documentation identifying,
propriate payment mechanism, includ- accumulating, and allocating or devel-
ing a predetermined payment schedule, oping billing rates based on the allow-
before the non-Federal entity disburses able costs of services provided by a
the funds for program purposes. state, local government, or Indian tribe
200.4 Allocation, on a centralized basis to its depart-
ments and agencies. The costs of these
Allocation means the process of as- services may be allocated or billed to
signing a cost, or a group of costs, to users.
one or more cost objective(s), in rea-
sonable proportion to the benefit pro- §200.10 Catalog of Federal Domestic
vided or other equitable relationship. Assistance(CFDA)number.
The process may entail assigning a CFDA number means the number as-
cost(s) directly to a final cost objective signed to a Federal program in the •
or through one or more intermediate CFDA.
cost objectives.
§200.5 Audit finding. §200.11 CFDA program title.
Audit finding means deficiencies CFDA program title means the title of
which the auditor is required by the program under which the Federal
§200.516 Audit findings, paragraph (a) award was funded in the CFDA.
to report in the schedule of findings §200.12 Capital assets.
and questioned costs.
Capital assets means tangible or in-
§200.E Auditee. tangible assets used in operations hav-
Auditee means any non-Federal enti- ing a useful life of more than one year
ty that expends Federal awards which which are capitalized in accordance
must be audited under Subpart F— with GAAP. Capital assets include:
Audit Requirements of this part. (a) Land, buildings (facilities), equip-
ment, and intellectual property (in-
§200.7 Auditor. eluding software) whether acquired by
Auditor means an auditor who is a purchase, construction, manufacture,
public accountant or a Federal, state, lease-purchase, exchange, or through
local government, or Indian tribe audit capital leases; and
organization, which meets the general (b) Additions, improvements, modi-
standards specified for external audi- fications, replacements, rearrange-
tors in generally accepted government ments, reinstallations, renovations or
auditing standards (GAGAS). The term alterations to capital assets that mate-
auditor does not include internal audi- rially increase their value or useful life
tors of nonprofit organizations. (not ordinary repairs and mainte-
[79 FR 75880,Dec.19,2014] nance).
§200.8 Budget. §200.13 Capital expenditures.
Budget means the financial plan for Capital expenditures means expendi-
the project or program that the Fed- tures to acquire capital assets or ex-
eral awarding agency or pass-through penditures to make additions, improve-
entity approves during the Federal ments, modifications, replacements,
award process or in subsequent amend- rearrangements, reinstallations, ren-
ments to the Federal award. It may in- ovations, or alterations to capital as-
elude the Federal and non-Federal sets that materially increase their
share or only the Federal share, as de- value or useful life.
97
§200.14 2 CFR Ch. II (1-1-21 Edition)
§200.14 Claim. determination, and, with the exception
Claim means, depending on the con- of R&D as described in §200.501 Audit
text, either: requirements, paragraph (c), whether a
(a) A written demand or written as program-specific audit may be elected.
sertion by one of the parties to a Fed- §200.18 Cognizant agency for audit.
eral award seeking as a matter of Cognizant agency for audit means the
right:
(1) The payment of money in a sum Federal agency designated to carry out
certain; the responsibilities described in
(2) The adjustment or interpretation §200.513 Responsibilities, paragraph (a).
of the terms and conditions of the Fed- The cognizant agency for audit is not
eral award; or necessarily the same as the cognizant
agency for indirect costs. A list of cog-
(3) Other relief arising under or relat-
ing to a Federal award. nizant agencies for audit may be found
at the FAC Web site.
(b) A request for payment that is not
in dispute when submitted. §200.19 Cognizant agency for indirect
costs.
200.15 Class of Federal awards. Cognizant agency for indirect costs
Class of Federal awards means a group means the Federal agency responsible
of Federal awards either awarded under for reviewing, negotiating, and approv-
a specific program or group of pro- ing cost allocation plans or indirect
grams or to a specific type of non-Fed- cost proposals developed under this
eral entity or group of non-Federal en- part on behalf of all Federal agencies.
tities to which specific provisions or The cognizant agency for indirect cost
exceptions may apply. is not necessarily the same as the cog-
nizant agency for audit. For assign-
ments of cognizant agencies see the
Closeout means the process by which following:
the Federal awarding agency or pass- (a) For IHEs: Appendix III to Part
through entity determines that all ap- 200—Indirect (F&A) Costs Identifica-
plicable administrative actions and all tion and Assignment, and Rate Deter-
required work of the Federal award mination for Institutions of Higher
have been completed and takes actions Education(IHEs), paragraph C.11.
as described in§200.343 Closeout. (b) For nonprofit organizations: Ap-
pendix IV to Part 200—Indirect (F&A)
§200.17 Cluster of programs. Costs Identification and Assignment,
Cluster of programs means a grouping and Rate Determination for Nonprofit
of closely related programs that share Organizations, paragraph C.2.a.
common compliance requirements. The (c) For state and local governments:
types of clusters of programs are re- Appendix V to Part 200—State/Local
search and development(R&D), student Governmentwide Central Service Cost
financial aid (SFA), and other clusters. Allocation Plans, paragraph F.1.
"Other clusters" are as defined by OMB (d) For Indian tribes: Appendix VII to
in the compliance supplement or as Part 200—States and Local Govern-
designated by a state for Federal ment and Indian Tribe Indirect Cost
awards the state provides to its sub- Proposal, paragraph D.1.
recipients that meet the definition of a [78 FR 78608, Dec. 26, 2013, as amended at 79
cluster of programs. When designating FR 75880, Dec. 19, 2014; 80 FR 54407, Sept. 10,
an "other cluster," a state must iden- 2015]
tify the Federal awards included in the
cluster and advise the subrecipients of §200.20 Computing devices.
compliance requirements applicable to Computing devices means machines
the cluster, consistent with §200.331 used to acquire, store, analyze, process,
Requirements for pass-through enti- and publish data and other information
ties, paragraph (a). A cluster of pro- electronically, including accessories
grams must be considered as one pro- (or "peripherals") for printing, trans-
gram for determining major programs, mitting and receiving, or storing elec-
as described in §200.518 Major program tronic information. See also §§200.94
98
OMB Guidance §200.28
Supplies and 200.58 Information tech- (ii)A subsidy;
nology systems. (iii)A loan;
§200.21 Compliance supplement. (v)(v) A loan guarantee; or
Insurance.
Compliance supplement means Appen-
dix XI to Part 200—Compliance Supple- §200.25 Cooperative audit resolution.
ment (previously known as the Cir- Cooperative audit resolution means the
cular A-133 Compliance Supplement). use of audit follow-up techniques which
§200.22 Contract. promote prompt corrective action by
improving communication, fostering
Contract means a legal instrument by collaboration, promoting trust, and de-
which a non-Federal entity purchases veloping an understanding between the
property or services needed to carry Federal agency and the non-Federal en-
out the project or program under a tity. This approach is based upon:
Federal award. The term as used in (a) A strong commitment by Federal
this part does not include a legal in- agency and non-Federal entity leader-
strument, even if the non-Federal enti- ship to program integrity;
ty considers it a contract, when the (b) Federal agencies strengthening
substance of the transaction meets the partnerships and working coopera-
definition of a Federal award or tively with non-Federal entities and
subaward(see§200.92 Subaward). their auditors; and non-Federal enti-
ties and their auditors working coop-
§200.23 Contractor. eratively with Federal agencies;
• Contractor means an entity that re- (c) A focus on current conditions and
ceives a contract as defined in §200.22 corrective action going forward;
Contract. (d) Federal agencies offering appro-
priate relief for past noncompliance
§200.24 Cooperative agreement. when audits show prompt corrective
Cooperative agreement means a legal action has occurred; and
instrument of financial assistance be- (e) Federal agency leadership sending
tween a Federal awarding agency or a clear message that continued failure
pass-through entity and a non-Federal to correct conditions identified by au-
entity that, consistent with 31 U.S.C. dits which are likely to cause improper
6302-6305: payments, fraud, waste, or abuse is un-
(a) Is used to enter into a relation- acceptable and will result in sanctions.
ship the principal purpose of which is §200.26 Corrective action.
to transfer anything of value from the
Federal awarding agency or pass- Corrective action means action taken
through entity to the non-Federal enti- by the auditee that:
ty to carry out a public purpose au- (a)Corrects identified deficiencies;
thorized by a law of the United States (b) Produces recommended improve-
(see 31 U.S.C. 6101(3)); and not to ac- ments;or
quire property or services for the Fed- (c) Demonstrates that audit findings
eral Government or pass-through enti- are either invalid or do not warrant
ty's direct benefit or use; auditee action.
(b) Is distinguished from a grant in §200.27 Cost allocation plan.
that it provides for substantial involve-
ment between the Federal awarding Cost allocation plan means central
agency or pass-through entity and the service cost allocation plan or public
non-Federal entity in carrying out the assistance cost allocation plan.
activity contemplated by the Federal
award. §200.28 Cost objective.
(c)The term does not include: Cost objective means a program, func-
(1) A cooperative research and devel- tion, activity, award, organizational
opment agreement as defined in 15 subdivision, contract, or work unit for
U.S.C. 3710a; or which cost data are desired and for
(2) An agreement that provides only: which provision is made to accumulate
(i) Direct United States Government and measure the cost of processes,
cash assistance to an individual; products, jobs, capital projects, etc. A
99
§200.29 2 CFR Ch. II (1-1-21 Edition)
cost objective may be a major function methodology is disclosed and is con-
of the non-Federal entity, a particular sistently applied.
service or project, a Federal award, or (b) For reports prepared on a cash
an indirect (Facilities & Administra- basis, expenditures are the sum of:
tive (F&A)) cost activity, as described (1) Cash disbursements for direct
in Subpart E—Cost Principles of this charges for property and services;
Part. See also §§200.44 Final cost objec-
tive and 200.60 Intermediate cost objec- (2) The amount of indirect expense
charged;
tive.
(3) The value of third-party in-kind
§200.29 Cost sharing or matching. contributions applied;and
Cost sharing or matching means the (4) The amount of cash advance pay-
portion of project costs not paid by menu and payments made to sub-
Federal funds (unless otherwise author- recipients.
ized by Federal statute). See also (c) For reports prepared on an ac-
§200.306 Cost sharing or matching. crual basis, expenditures are the sum
of:
§200.30 Cross-cutting audit finding. (1) Cash disbursements for direct
Cross-cutting audit finding means an charges for property and services;
audit finding where the same under- (2) The amount of indirect expense
lying condition or issue affects Federal incurred;
awards of more than one Federal (3) The value of third-party in-kind
awarding agency or pass-through enti- contributions applied;and
ty. (4) The net increase or decrease in
the amounts owed by the non-Federal
§200.31 Disallowed costs. entity for:
Disallowed costs means those charges (i) Goods and other property re-
to a Federal award that the Federal ceived;
awarding agency or pass-through enti- (ii) Services performed by employees,
ty determines to be unallowable, in ac- contractors, subrecipients, and other
cordance with the applicable Federal payees;and
statutes, regulations, or the terms and (iii) Programs for which no current
conditions of the Federal award. services or performance are required
§200.32 [Reserved] such as annuities, insurance claims, or
other benefit payments.
§200.33 Equipment. §200.35 Federal agency.
Equipment means tangible personal
property (including information tech- Federal agency means an "agency" as
nology systems) having a useful life of defined at 5 U.S.C. 551(1) and further
more than one year and a per-unit ac- clarified by 5 U.S.C. 552(f).
quisition cost which equals or exceeds
the lesser of the capitalization level es- §200.36 Federal Audit Clearinghouse
tablished by the non-Federal entity for (FAC):
financial statement purposes, or $5,000. FAC means the clearinghouse des-
See also §§200.12 Capital assets, 200.20 ignated by OMB as the repository of
Computing devices, 200.48 General pur- record where non-Federal entities are
pose equipment, 200.58 Information required to transmit the reporting
technology systems, 200.89 Special pur- packages required by Subpart F—Audit
pose equipment, and 200.94 Supplies. Requirements of this part. The mailing
§200.34 Expenditures. address of the FAC is Federal Audit
Clearinghouse, Bureau of the Census,
Expenditures means charges made by 1201 E. 10th Street, Jeffersonville, IN
a non-Federal entity to a project or 47132 and the web address is: http://har-
program for which a Federal award was vester.census.gov/sac/. Any future up-
received. dates to the location of the FAC may
(a) The charges may be reported on a be found at the OMB Web site.
cash or accrual basis, as long as the
100
OMB Guidance §200.42
§200.37 Federal awarding agency. (6) Other financial assistance (except
Federal awarding agency means the assistance listed in paragraph (b) of
Federal agency that provides a Federal this section).
award directly to a non-Federal entity. (b) For §200.202 Requirement to pro-
vide public notice of Federal financial
§200.35 Federal award. assistance programs and Subpart F—
Federal award has the meaning, de- Audit Requirements of this part, Fed-
pending on the context, in either para- eral financial assistance also includes as-
graph(a)or(b)of this section: sistance that non-Federal entities re-
(a)(1) The Federal financial assist- ceive or administer in the form of:
ance that a non-Federal entity receives (1)Loans;
directly from a Federal awarding agen- (2)Loan Guarantees;
cy or indirectly from a pass-through (3)Interest subsidies;and
entity, as described in §200.101 Applica- (4)Insurance.
bility; or (c) Federal financial assistance does
(2) The cost-reimbursement contract not include amounts received as reim-
under the Federal Acquisition Regula- bursement for services rendered to in-
tions that a non-Federal entity re- dividuals as described in §200.502 Basis
ceives directly from a Federal award- for determining Federal awards ex-
ing agency or indirectly from a pass- pended, paragraph (h) and (i) of this
through entity, as described in §200.101 part.
Applicability.
(b) The instrument setting forth the [78 FR 78608, Dec. 26, 2013, as amended at 80
terms and conditions. The instrument FR 54407,Sept.10,2015]
is the grant agreement, cooperative
agreement, other agreement for assist- §200.41 Federal interest.
ance covered in paragraph (b) of§200.40 Federal interest means, for purposes of
Federal financial assistance, or the §200.329 Reporting on real property or
cost-reimbursement contract awarded when used in connection with the ac-
under the Federal Acquisition Regula-
tions, quisition or improvement of real prop-
erty, equipment, or supplies under a
(c) Federal award does not include
other contracts that a Federal agency Federal award, the dollar amount that
uses to buy goods or services from a is the product of the:
contractor or a contract to operate (a) Federal share of total project
Federal Government owned, contractor costs; and
operated facilities(GOCOs). (b) Current fair market value of the
(d) See also definitions of Federal fi- property, improvements, or both, to
nancial assistance, grant agreement, the extent the costs of acquiring or im-
and cooperative agreement. proving the property were included as
project costs.
§200.39 Federal award date.
Federal award date means the date §200.42 Federal program.
when the Federal award is signed by Federal program means:
the authorized official of the Federal (a) All Federal awards which are as-
awarding agency. signed a single number in the CFDA.
§200.40 Federal financial assistance. (b) When no CFDA number is as-
signed, all Federal awards to non-Fed-
(a) Federal financial assistance means eral entities from the same agency
assistance that non-Federal entities re- made for the same purpose must be
ceive or administer in the form of: combined and considered one program.
(1)Grants; (c) Notwithstanding paragraphs (a)
(2)Cooperative agreements; and (b) of this definition, a cluster of
(3) Non-cash contributions or dona- programs. The types of clusters of pro-
tions of property (including donated grams are:
surplus property); (1) Research and development (R&D);
(4)Direct appropriations;
(5) Food commodities; and (2) Student financial aid(SFA);and
101
§200.43 2 CFR Ch. II (1-1-21 Edition)
(3) "Other clusters," as described in governments or foreign governmental
the definition of Cluster of Programs. entities.
[78 FR 78608, Dec. 26, 2013, as amended at 79 §200.47 Foreign organization.
FR 75880,Dec.19,2014]
Foreign organization means an entity
§200.43 Federal share. that is:
Federal share means the portion of (a) A public or private organization
the total project costs that are paid by located in a country other than the
Federal funds. United States and its territories that is
subject to the laws of the country in
§200.44 Final cost objective, which it is located, irrespective of the
citizenship of project staff or place of
Final cost objective means a cost ob- performance;
jective which has allocated to it both (b) A.private nongovernmental orga-
direct and indirect costs and, in the nization located in a country other
non-Federal entity's accumulation sys- than the United States that solicits
tern, is one of the final accumulation and receives cash contributions from
points, such as a particular award, in- the general public;
ternal project, or other direct activity (c) A charitable organization located
of a non-Federal entity. See also in a country other than the United
§§200.28 Cost objective and 200.60 Inter- States that is nonprofit and tax ex-
mediate cost objective. empt under the laws of its country of
200.45 Fixed amount awards. domicile and operation, and is not a
university, college, accredited degree-
Fixed amount awards means a type of granting institution of education, pri-
grant agreement under which the Fed- vate foundation, hospital, organization
eral awarding agency or pass-through engaged exclusively in research or sci-
entity provides a specific level of sup- entific activities, church, synagogue,
port without regard to actual costs in- mosque or other similar entities orga-
curred under the Federal award. This nized primarily for religious purposes;
type of Federal award reduces some of or
the administrative burden and record- (d) An organization located in a
keeping requirements for both the non- country other than the United States
Federal entity and Federal awarding not recognized as a Foreign Public En-
agency or pass-through entity. Ac- tity.
countability is based primarily on per-
[78formance and results. See §§200.201 Use FR 78608, Dec. 26, 2013, as amended at 79
FR 75880,Dec.19,2014]
of grant agreements (including fixed
amount awards), cooperative agree- §200.48 General purpose equipment.
menus, and contracts, paragraph (b) General purpose equipment means
and 200.332 Fixed amount subawards. equipment which is not limited to re
§200.46 Foreign public entity. search, medical, scientific or other
technical activities. Examples include
Foreign public entity means: office equipment and furnishings, mod-
(a) A foreign government or foreign ular offices, telephone networks, infor-
governmental entity; mation technology equipment and sys-
(b) A public international organiza- tems, air conditioning equipment, re-
tion, which is an organization entitled production and printing equipment,
to enjoy privileges, exemptions, and and motor vehicles. See also Equip-
immunities as an international organi- ment and Special Purpose Equipment.
zation under the International Organi-
zations Immunities Act (22 U.S.C. 288- §200.49 Generally Accepted Account-
288f); ing Principles(GAAP).
(c) An entity owned (in whole or in GAAP has the meaning specified in
part) or controlled by a foreign govern- accounting standards issued by the
ment; or Government Accounting Standards
(d) Any other entity consisting whol- Board (GASB) and the Financial Ac-
ly or partially of one or more foreign counting Standards Board(FASB).
102
OMB Guidance §200.56
§200.50 Generally Accepted Govern- tractual, administrative, or other le-
ment Auditing Standards(GAGAS). gaily applicable requirements; and
GAGAS, also known as the Yellow (b) Improper payment includes any
Book, means generally accepted gov- payment to an ineligible party, any
ernment auditing standards issued by payment for an ineligible good or serv-
the Comptroller General of the United ice, any duplicate payment, any pay-
States, which are applicable to finan- ment for a good or service not received
cial audits. (except for such payments where au-
[78 FR 78608, Dec. 26, 2013, as amended at 79 thorized by law), any payment that
FR 75880,Dec.19,2014] does not account for credit for applica-
ble discounts, and any payment where
§200.51 Grant agreement. insufficient or lack of documentation
Grant agreement means a legal instru- prevents a reviewer from discerning
ment of financial assistance between a whether a payment was proper.
Federal awarding agency or pass-
through entity and a non-Federal enti- §200.54 Indian tribe (or"federally rec-
ty that, consistent with 31 U.S.C. 6302, ognized Indian tribe").
6304: Indian tribe means any Indian tribe,
(a) Is used to enter into a relation- band, nation, or other organized group
ship the principal purpose of which is or community, including any Alaska
to transfer anything of value from the Native village or regional or village
Federal awarding agency or pass- corporation as defined in or established
through entity to the non-Federal enti- pursuant to the Alaska Native Claims
ty to carry out a public purpose au- Settlement Act (43 U.S.C. Chapter 33),
thorized by a law of the United States which is recognized as eligible for the
(see 31 U.S.C. 6101(3)); and not to ac- special programs and services provided
quire property or services for the Fed- by the United States to Indians be-
eral awarding agency or pass-through cause of their status as Indians (25
entity's direct benefit or use; U.S.C. 450b(e)). See annually published
(b) Is distinguished from a coopera Bureau of Indian Affairs list of Indian
tive agreement in that it does not pro-
vide for substantial involvement be- Entities Recognized and Eligible to Be-
tween the Federal awarding agency or ceive Services.
pass-through entity and the non-Fed-
§200.55 Institutions of Higher Edu-
eral entity in carrying out the activity cation(IHEs).
contemplated by the Federal award.
(c) Does not include an agreement IHE is defined at 20 U.S.C. 1001.
that provides only:
(1) Direct United States Government §200.56 Indirect (facilities & adminis-
cash assistance to an individual; trative(F&A))costs.
(2)A subsidy; Indirect(F&A)costs means those costs
(3)A loan; incurred for a common or joint purpose
(4)A loan guarantee; or benefitting more than one cost objec-
(5)Insurance. tive, and not readily assignable to the
200.52 Hospital. cost objectives specifically benefitted,
without effort disproportionate to the
Hospital means a facility licensed as results achieved. To facilitate equi-
a hospital under the law of any state or table distribution of indirect expenses
a facility operated as a hospital by the to the cost objectives served, it may be
United States, a state, or a subdivision necessary to establish a number of
of a state.
pools of indirect (F&A) costs. Indirect
§200.53 Improper payment. (F&A)cost pools must be distributed to
(a) Improper payment means any pay- benefitted cost objectives on bases that
ment that should not have been made will produce an equitable result in con-
or that was made in an incorrect sideration of relative benefits derived.
amount (including overpayments and [78 FR 78608, Dec. 26, 2013, as amended at 79
underpayments) under statutory, con- FR 75880,Dec.19,2014]
103
§200.57 2 CFR Ch. II (1-1-21 Edition)
§200.57 Indirect cost rate proposal. (c) Compliance with applicable laws
Indirect cost rate proposal means the and regulations.
documentation prepared by a non-Fed- §200.62 Internal control over compli-
eral entity to substantiate its request ance requirements for Federal
for the establishment of an indirect awards.
cost rate as described in Appendix III Internal control over compliance re-
to Part 200—Indirect (F&A) Costs Iden- guirements for Federal awards means a
tification and Assignment, and Rate
Determination for Institutions of High- process implemented by a non-Federal
er Education (IHEs) through Appendix entity designed to provide reasonable
VII to Part 200—States and Local Gov-
assurance regarding the achievement
ernment and Indian Tribe Indirect Cost of the following objectives for Federal
Proposals of this part, and Appendix IX awards:
re-
to Part 200—Hospital Cost Principles. (a) Transactions are properly
corded and accounted for, in orderer to:
[78 FR 78608, Dec. 26, 2013, as amended at 79 (1) Permit the preparation of reliable
FR 75880,Dec.19,2014] financial statements and Federal re-
ports;§200.58 Information technology sys.
terns. (2) Maintain accountability over as-
sets; and
Information technology systems means (3) Demonstrate compliance with
computing devices, ancillary equip- Federal statutes, regulations, and the
ment, software, firmware, and similar terms and conditions of the Federal
procedures, services (including support award;
services), and related resources. See (b)Transactions are executed in com-
also §§200.20 Computing devices and pliance with:
200.33 Equipment. (1) Federal statutes, regulations, and
§200.59 Intangible property. the terms and conditions of the Federal
award that could have a direct and ma-
Intangible property means property terial effect on a Federal program; and
having no physical existence, such as (2) Any other Federal statutes and
trademarks, copyrights, patents and regulations that are identified in the
patent applications and property, such Compliance Supplement; and
as loans, notes and other debt instru- (c) Funds, property, and other assets
ments, lease agreements, stock and are safeguarded against loss from un-
other instruments of property owner- authorized use or disposition.
ship (whether the property is tangible
or intangible). §200.63 Loan.
§200.60 Intermediate cost objective. Loan means a Federal loan or loan
guarantee received or administered by
Intermediate cost objective means a a non-Federal entity, except as used in
cost objective that is used to accumu- the definition of §200.80 Program in-
late indirect costs or service center come.
costs that are subsequently allocated (a) The term "direct loan" means a
to one or more indirect cost pools or disbursement of funds by the Federal
final cost objectives. See also §200.28 Government to a non-Federal borrower
Cost objective and §200.44 Final cost under a contract that requires the re-
objective. payment of such funds with or without
§200.61 Internal controls. interest. The term includes the pur-
chase of, or participation in, a loan
Internal controls means a process, im- made by another lender and financing
plemented by a non-Federal entity, de- arrangements that defer payment for
signed to provide reasonable assurance more than 90 days, including the sale of
regarding the achievement of objec- a Federal Government asset on credit
tives in the following categories: terms. The term does not include the
(a) Effectiveness and efficiency of op- acquisition of a federally guaranteed
orations; loan in satisfaction of default claims or
(b) Reliability of reporting for inter- the price support loans of the Corn-
nal and external use; and modity Credit Corporation.
104
OMB Guidance §200.69
(b)The term "direct loan obligation" §200.66 Management decision.
means a binding agreement by a Fed- Management decision means the eval-
eral awarding agency to make a direct uation by the Federal awarding agency
loan when specified conditions are ful- or pass-through entity of the audit
filled by the borrower. findings and corrective action plan and
(c)The term "loan guarantee" means the issuance of a written decision to
any Federal Government guarantee, in- the auditee as to what corrective ac-
surance, or other pledge with respect tion is necessary.
to the payment of all or a part of the
principal or interest on any debt obli- §200.67 Micro-purchase.
gation of a non-Federal borrower to a Micro-purchase means a purchase of
non-Federal lender, but does not in- supplies or services using simplified oc-
clude the insurance of deposits, shares, quisition procedures, the aggregate
or other withdrawable accounts in fi- amount of which does not exceed the
nancial institutions. micro-purchase threshold. Micro-pur-
(d) The term "loan guarantee corn- chase procedures comprise a subset of a
mitment" means a binding agreement non-Federal entity's small purchase
by a Federal awarding agency to make procedures. The non-Federal entity
a loan guarantee when specified condi- uses such procedures in order to expe-
tions are fulfilled by the borrower, the dite the completion of its lowest-dollar
lender, or any other party to the guar- small purchase transactions and mini-
antee agreement. mize the associated administrative
burden and cost. The micro-purchase
§200.64 Local government. threshold is set by the Federal Acquisi-
Local government means any unit of tion Regulation at 48 CFR Subpart 2.1
(Defgovernment within a state, including a: erwise
It is $3,000Subpartexc 2.1pt as that
erwise discussed in 2.1 of that
(a)County; regulation, but this threshold is peri-
(b)Borough; odically adjusted for inflation.
(c)Municipality;
(d)City; §200.68 Modified Total Direct Cost
(e)Town; (MTDC).
(f)Township; MTDC means all direct salaries and
(g)Parish; wages, applicable fringe benefits,mate-
(h) Local public authority, including rials and supplies, services, travel, and
any public housing agency under the up to the first$25,000 of each subaward
United States Housing Act of 1937; (regardless of the period of perform-
(i)Special district; ance of the subawards under the
(j)School district; award). MTDC excludes equipment,
capital expenditures, charges for pa-
(k)Intrastate district; tient care, rental costs, tuition remis-
(1) Council of governments, whether sion, scholarships and fellowships, par-
or not incorporated as a nonprofit cor- ticipant support costs and the portion
poration under state law;and of each subaward in excess of $25,000.
(m) Any other agency or instrumen- Other items may only be excluded
tality of a multi-, regional, or intra- when necessary to avoid a serious in-
state or local government. equity in the distribution of indirect
costs, and with the approval of the cog-
§200.65 Major program. nizant agency for indirect costs.
Major program means a Federal pro- [79 FR 75880,Dec.19,2014]
gram determined by the auditor to be a
major program in accordance with §200.69 Non-Federal entity.
§200.518 Major program determination Non-Federal entity means a state,
or a program identified as a major pro- local government, Indian tribe, institu-
gram by a Federal awarding agency or tion of higher education (IHE), or non-
pass-through entity in accordance with profit organization that carries out a
§200.503 Relation to other audit re- Federal award as a recipient or sub-
quirements, paragraph(e). recipient.
105
§200.70 2 CFR Ch. II (1-1-21 Edition)
§200.70 Nonprofit organization. half of participants or trainees(but not
Nonprofit organization means any cor- employees) in connection with con-
poration, trust, association, coopera-
tive, or other organization, not includ- §200.76 Performance goal.
ing IHEs,that: Performance goal means a target level
(a) Is operated primarily for sci-
entific, educational, service, chari- of performance expressed as a tangible,
table, or similar purposes in the public measurable objective, against which
interest; actual achievement can be compared,
(b) Is not organized primarily for including a goal expressed as a quan-
profit;and titative standard, value, or rate. In
(c) Uses net proceeds to maintain, some instances (e.g., discretionary re-
improve, or expand the operations of search awards), this may be limited to
the organization. the requirement to submit technical
performance reports(to be evaluated in
§200.71 Obligations. accordance with agency policy).
When used in connection with a non- §200.77 Period of performance.
Federal entity's utilization of funds Period of performance means the time
under a Federal award, obligations during which the non-Federal entity
means orders placed for property and may incur new obligations to carry out
services, contracts and subawards the work authorized under the Federal
made, and similar transactions during award. The Federal awarding agency or
a given period that require payment by pass-through entity must include start
the non-Federal entity during the same and end dates of the period of perform-
or a future period. ance in the Federal award(see§§200.210
§200.72 Office of Management and Information contained in a Federal
Budget(OMB). award paragraph (a)(5) and 200.331 Re-
OMB means the Executive Office of quirements for pass-through entities,
paragraph (a)(1)(iv)).
the President, Office of Management
and Budget. §200.78 Personal property.
§200.73 Oversight agency for audit. Personal property means property
other than real property. It may be
Oversight agency for audit means the
Federal awarding agency that provides tangible, having physical existence, or
inntangibble.
the predominant amount of funding di-
rectly to a non-Federal entity not as- §200.79 Personally Identifiable Infor-
signed a cognizant agency for audit. mation(PII).
When there is no direct funding, the PII means information that can be
Federal awarding agency which is the used to distinguish or trace an individ-
predominant source of pass-through ual's identity, either alone or when
funding must assume the oversight re- combined with other personal or iden-
sponsibilities. The duties of the over- tifying information that is linked or
sight agency for audit and the process linkable to a specific individual. Some
for any reassignments are described in information that is considered to be
§200.513 Responsibilities, paragraph(b). PII is available in public sources such
§200.74 Pass-through entity. as telephone books, public Web sites,
and university listings. This type of in-
Pass-through entity means a non-Fed- formation is considered to be Public
eral entity that provides a subaward to PII and includes, for example, first and
a subrecipient to carry out part of a last name, address, work telephone
Federal program. number,email address, home telephone
§200.75 Participant support costs. number, and general educational cre-
dentials. The definition of PII is not
Participant support costs means direct anchored to any single category of in-
costs for items such as stipends or sub- formation or technology. Rather, it re-
sistence allowances, travel allowances, quires a case-by-case assessment of the
and registration fees paid to or on be- specific risk that an individual can be
106
OMB Guidance §200.87
identified. Non-PII can become PII §200.79 Personally Identifiable Informa-
whenever additional information is tion(PII)).
made publicly available, in any me-
dium and from any source, that, when §200.83 Project cost.
combined with other available infor- Project cost means total allowable
mation, could be used to identify an in- costs incurred under a Federal award
dividual. and all required cost sharing and§200.80 Program income. vol-
untary committed cost sharing,includ-
ing third-party contributions.
Program income means gross income
earned by the non-Federal entity that §200.84 Questioned cost.
is directly generated by a supported ac- Questioned cost means a cost that is
tivity or earned as a result of the Fed- questioned by the auditor because of an
eral award during the period of per- audit finding:
formance except as provided in§200.307 (a) Which resulted from a violation
paragraph (f). (See §200.77 Period of or possible violation of a statute, regu-
performance.) Program income in- lation, or the terms and conditions of a
cludes but is not limited to income Federal award, including for funds used
from fees for services performed, the to match Federal funds;
use or rental or real or personal prop- (b) Where the costs, at the time of
erty acquired under Federal awards, the audit, are not supported by ade-
the sale of commodities or items fab- quate documentation;or
ricated under a Federal award, license (c) Where the costs incurred appear
fees and royalties on patents and copy- unreasonable and do not reflect the ac-
rights, and principal and interest on tions a prudent person would take in
loans made with Federal award funds. the circumstances.
Interest earned on advances of Federal
funds is not program income. Except as §200.85 Real property.
otherwise provided in Federal statutes, Real property means land, including
regulations, or the terms and condi- land improvements, structures and ap-
tions of the Federal award, program in- purtenances thereto, but excludes
come does not include rebates, credits, moveable machinery and equipment.
discounts, and interest earned on any
of them. See also§200.407 Prior written §200.86 Recipient.
approval (prior approval). See also 35 Recipient means a non-Federal entity
U.S.C. 200-212 "Disposition of Rights in that receives a Federal award directly
Educational Awards" applies to inven- from a Federal awarding agency to
tions made under Federal awards. carry out an activity under a Federal
[78 FR 78608, Dec. 26, 2013, as amended at 79 program. The term recipient does not
FR 75880,Dec.19,2014] include subrecipients. See also §200.69
§200.8I Property. Non-Federal entity.
Property means real property or per- §200.87 Research and Development
sonal property. (R&D).
R&D means all research activities,
§200.82 Protected Personally Identifi- both basic and applied, and all develop-
able Information(Protected PII). ment activities that are performed by
Protected PII means an individual's non-Federal entities. The term re-
first name or first initial and last name search also includes activities involv-
in combination with any one or more ing the training of individuals in re-
of types of information, including, but search techniques where such activities
not limited to, social security number, utilize the same facilities as other re-
passport number, credit card numbers, search and development activities and
clearances, bank numbers, biometrics, where such activities are not included
date and place of birth, mother's maid- in the instruction function.
en name, criminal, medical and finan- "Research" is defined as a system-
cial records, educational transcripts. atic study directed toward fuller sci-
This does not include PII that is re- entific knowledge or understanding of
quired by law to be disclosed. (See also the subject studied. "Development" is
107
§200.88 2 CFR Ch. 1I (1-1-21 Edition)
the systematic use of knowledge and programs provided by other Federal
understanding gained from research di- agencies. It does not include Federal
rected toward the production of useful awards under programs that provide
materials, devices, systems, or meth- fellowships or similar Federal awards
ods, including design and development to students on a competitive basis, or
of prototypes and processes. for specified studies or research.
§200.88 Simplified acquisition thresh- §200.92 Subaward.
old.
Simplified acquisition threshold means Subaward means an award provided
the dollar amount below which a non- by a pass through entity to a sub-
Federal entity may purchase property recipient for the subrecipient to carry
or services using small purchase meth- out part of a Federal award received by
ods. Non-Federal entities adopt small the pass-through entity. It does not in-
purchase procedures in order to expe- payments to a contractor or pay-
dite the purchase of items costing less ments to an individual that is a bene-
than the simplified acquisition thresh- ficiary of a Federal program. A
old. The simplified acquisition thresh- subaward may be provided through any
old is set by the Federal Acquisition form of legal agreement, including an
Regulation at 48 CFR Subpart 2.1 (Defi- agreement that the pass-through enti-
nitions) and in accordance with 41 ty considers a contract.
U.S.C. 1908. As of the publication of
this part, the simplified acquisition §200.93 Subrecipient.
threshold is $150,000, but this threshold Subrecipient means a non-Federal en-
is periodically adjusted for inflation. tity that receives a subaward from a
(Also see definition of §200.67 Micro- pass-through entity to carry out part
purchase.) of a Federal program; but does not in-
§200.89 Special purpose equipment. ciude an individual that is a bene-
§ of such program. A subrecipient
Special purpose equipment means may also be a recipient of other Fed-
equipment which is used only for re- eral awards directly from a Federal
search, medical, scientific, or other awarding agency.
technical activities. Examples of spe-
cial purpose equipment include micro- §200.94 Supplies.
scopes,x-ray machines, surgical instru-
ments, and spectrometers. See also Supplies means all tangible personal
§§200.33 Equipment and 200.48 General property other than those described in
purpose equipment. §200.33 Equipment. A computing device
is a supply if the acquisition cost is
§200.90 State. less than the lesser of the capitaliza-
State means any state of the United tion level established by the non-Fed-
States, the District of Columbia, the eral entity for financial statement pur-
Commonwealth of Puerto Rico, U.S. poses or$5,000, regardless of the length
Virgin Islands, Guam, American of its useful life. See also §§200.20 Corn-
Samoa, the Commonwealth of the puting devices and 200.33 Equipment.
Northern Mariana Islands, and any
agency or instrumentality thereof ex- §200.95 Termination.
clusive of local governments. Termination means the ending of a
[78 FR 78608, Dec. 26, 2013, as amended at 79 Federal award, in whole or in part at
FR 75880,Dec.19,2014] any time prior to the planned end of
period of performance.
§200.91 Student Financial Aid(SFA).
SFA means Federal awards under §200.96 Third-party in-kind contribu-
those programs of general student as- tions.
sistance, such as those authorized by Third-party in-kind contributions
Title IV of the Higher Education Act of means the value of non-cash contribu-
1965, as amended, (20 U.S.C. 1070-1099d), tions (i.e., property or services) that—
which are administered by the U.S. De- (a) Benefit a federally assisted
partment of Education, and similar project or program; and
108
OMB Guidance §200.100
(b) Are contributed by non-Federal It also establishes Federal policies re-
third parties, without charge, to a non- lated to the delivery of this informa-
Federal entity under a Federal award., tion to the public, including through
the use of electronic media. It pre-
§200.97 Unliquidated obligations. scribes the manner in which General
Unliquidated obligations means, for fi- Services Administration (GSA), OMB,
nancial reports prepared on a cash and Federal agencies that administer
basis, obligations incurred by the non- Federal financial assistance programs
Federal entity that have not been paid are to carry out their statutory respon-
(liquidated). For reports prepared on an sibilities under the Federal Program
accrual expenditure basis, these are ob- Information Act(31 U.S.C. 6101-6106).
ligations incurred by the non-Federal (b) Administrative requirements. Sub-
entity for which an expenditure has parts B through D of this part set forth
not been recorded. the uniform administrative require-
ments for grant and cooperative agree-
§200.98 Unobligated balance. ments, including the requirements for
Unobligated balance means the Federal awarding agency management
amount of funds under a Federal award of Federal grant programs before the
that the non-Federal entity has not ob- Federal award has been made, and the
ligated. The amount is computed by requirements Federal awarding agen-
subtracting the cumulative amount of cies may impose on non-Federal enti-
the non-Federal entity's unliquidated ties in the Federal award.
obligations and expenditures of funds (c) Cost principles. Subpart E of this
under the Federal award from the cu- part establishes principles for deter-
mulative amount of the funds that the mining the allowable costs incurred by
Federal awarding agency or pass- non-Federal entities under Federal
through entity authorized the non-Fed- awards. The principles are for the pur-
eral entity to obligate. pose of cost determination and are not
intended to identify the circumstances
§200.99 Voluntary committed cost or dictate the extent of Federal Gov-
sharing. ernment participation in the financing
Voluntary committed cost sharing of a particular program or project. The
means cost sharing specifically pledged principles are designed to provide that
on a voluntary basis in the proposal's Federal awards bear their fair share of
budget or the Federal award on the cost recognized under these principles
part of the non-Federal entity and that except where restricted or prohibited
becomes a binding requirement of Fed- by statute.
eral award. (d) Single Audit Requirements and
Audit Follow-up. Subpart F of this part
Subpart B—General Provisions is issued pursuant to the Single Audit
Act Amendments of 1996, (31 U.S.C.
§200.100 Purpose. 7501-7507). It sets forth standards for
(a) Purpose. (1) This part establishes obtaining consistency and uniformity
uniform administrative requirements, among Federal agencies for the audit
cost principles, and audit requirements of non-Federal entities expending Fed-
for Federal awards to non-Federal enti- eral awards. These provisions also pro-
ties, as described in §200.101. Federal vide the policies and procedures for
awarding agencies must not impose ad- Federal awarding agencies and pass-
ditional or inconsistent requirements, through entities when using the results
except as provided in §§200.102 and of these audits.
200.211, or unless specifically required (e) Guidance on challenges and prizes.
by Federal statute, regulation, or Ex- For OMB guidance to Federal awarding
ecutive order. agencies on challenges and prizes,
(2) This part provides the basis for a please see memo M-10-11 Guidance on
systematic and periodic collection and the Use of Challenges and Prizes to
uniform submission by Federal agen- Promote Open Government, issued
cies of information on all Federal fi- March 8,2010,or its successor.
nancial assistance programs to the Of- [78 FR 78608, Dec. 26, 2013, as amended at 85
fice of Management and Budget (OMB). FR 49536,Aug.13,2020]
109
§200.101 2 CFR Ch. II (1-1-21 Edition)
§200.101 Applicability. cates a best practice or recommended
(a) General applicability to Federal approach rather than a requirement
agencies. (1) The requirements estab- and permits followingdttab.
lished in this part apply to Federal po(2)The partrble describes what
agencies that make Federal awards to types ofns eo this apply tor which
types of Federal awards. The terms and
non-Federal entities. These require- conditions of Federal awards(including
ments are applicable to all costs re- this part) flow down to subawards to
lated to Federal awards. subrecipients unless a particular sec-
(2) Federal awarding agencies may tion of this part or the terms and con-
apply subparts A through E of this part ditions of the Federal award specifi-
to Federal agencies, for-profit entities, cally indicate otherwise. This means
foreign public entities, or foreign orga- that non-Federal entities must comply
nizations, except where the Federal with requirements in this part regard-
awarding agency determines that the less of whether the non-Federal entity
application of these subparts would be is a recipient or subrecipient of a Fed-
inconsistent with the international re- eral award. Pass-through entities must
sponsibilities of the United States or comply with the requirements de-
the statutes or regulations of a foreign scribed in subpart D of this part,
government. §§200.331 through 200.333, but not any
(b) Applicability to different types of requirements in this part directed to-
Federal awards. (1) Throughout this wards Federal awarding agencies un-
part when the word "must" is used it less the requirements of this part or
indicates a requirement. Whereas, use the terms and conditions of the Federal
of the word "should" or "may" indi- award indicate otherwise.
TABLE 1 TO PARAGRAPH (b)
Are applicable to the following types of
Federal Awards and Fixed-Price Con- Are NOT applicable to the following
The following portions of this Part tracts and Subcontracts(except as types of Federal Awards and Fixed-Price
noted in paragraphs(d)and(e)of this Contracts and Subcontracts:
section):
Subpart A—Acronyms and Definitions —All.
Subpart B—General Provisions, except —All.
for §§200.111 English Language,
200.112 Conflict of Interest, 200.113
Mandatory Disclosures.
§§200.111 English Language, 200.112 —Grant Agreements and cooperative —Agreements for loans, loan guaran-
Conflict of Interest,200.113 Mandatory agreements. tees,interest subsidies and insurance.
Disclosures. —Procurement contracts awarded by
Federal Agencies under the Federal
Acquisition Regulation and sub-
contracts under those contracts.
Subparts C—D,except for§§200.203 Re- —Grant Agreements and cooperative —Agreements for loans, loan guaran-
quirement to provide public notice of agreements. tees,interest subsidies and insurance.
Federal financial assistance programs, —Procurement contracts awarded by
200.303 Internal controls,200.331-333 Federal Agencies under the Federal
Subrecipient Monitoring and Manage- Acquisition Regulation and sub-
ment. contracts under those contracts.
§200.203 Requirement to provide public —Grant Agreements and cooperative —Procurement contracts awarded by
notice of Federal financial assistance agreements. Federal Agencies under the Federal
programs. —Agreements for loans, loan guaran- Acquisition Regulation and sub-
tees,interest subsidies and insurance. contracts under those contracts.
§§200.303 Internal controls,200.331-333 —All.
Subrecipient Monitoring and Manage-
ment.
Subpart E—Cost Principles —Grant Agreements and cooperative —Grant agreements and cooperative
agreements, except those providing agreements providing foods commod- '..
food commodities. ities.
—All procurement contracts under the —Fixed amount awards.
Federal Acquisition Regulations ex- —Agreements for loans, loans guaran-
cept those that are not negotiated. tees,interest subsidies and insurance.
—Federal awards to hospitals(see Ap-
pendix IX Hospital Cost Principles).
110
OMB Guidance §200.101
TABLE 1 TO PARAGRAPH (b)—Continued
Are applicable to the following types of
Federal Awards and Fixed-Price Con- Are NOT applicable to the following
The following portions of this Part tracts and Subcontracts(except as types of Federal Awards and Fixed-Price
noted in paragraphs(d)and(e)of this Contracts and Subcontracts:
section):
Subpart F—Audit Requirements —Grant Agreements and cooperative —Fixed-price contracts and subcontracts
agreements. awarded under the Federal Acquisition
—Contracts and subcontracts,except for Regulation.
fixed price contacts and subcontracts,
awarded under the Federal Acquisition
Regulation.
—Agreements for loans, loans guaran-
tees,interest subsidies and insurance
and other forms of Federal Financial
Assistance as defined by the Single
Audit Act Amendment of 1996.
(c) Federal award of cost-reimbursement (ISDEAA), as amended, 25 U.S.0 450-
contract under the FAR to a non-Federal 458ddd-2.
entity. When a non-Federal entity is (e) Program applicability. Except for
awarded a cost-reimbursement con- §§200.203 and 200.331 through 200.333, the
tract, only subpart D, §§200.331 through requirements in subparts C,D, and E of
200.333, and subparts E and F of this this part do not apply to the following
part are incorporated by reference into programs:
the contract, but the requirements of (1) The block grant awards author-
subparts D,E, and F are supplementary ized by the Omnibus Budget Reconcili-
to the FAR and the contract. When the ation Act of 1981(including Community
Cost Accounting Standards (CAS) are Services), except to the extent that
applicable to the contract, they take subpart E of this part apply to sub-
precedence over the requirements of recipients of Community Services
this part, including subpart F of this Block Grant funds pursuant to 42
part, which are supplementary to the U.S.C. 9916(a)(1)(B);
CAS requirements. In addition, costs (2) Federal awards to local education
that are made unallowable under 10 agencies under 20 U.S.C. 7702-7703b,
U.S.C. 2324(e) and 41 U.S.C. 4304(a) as (portions of the Impact Aid program);
described in the FAR 48 CFR part 31, (3) Payments under the Department
subpart 31.2, and 48 CFR 31.603 are al- of Veterans Affairs' State Home Per
ways unallowable. For requirements Diem Program(38 U.S.C.1741);and
other than those covered in subpart D, (4) Federal awards authorized under
§§200.331 through 200.333, and subparts the Child Care and Development Block
E and F of this part, the terms of the Grant Act of 1990, as amended:
contract and the FAR apply. Note that (i)Child Care and Development Block
when a non-Federal entity is awarded a Grant(42 U.S.C.9858).
FAR contract, the FAR applies, and (ii) Child Care Mandatory and Match-
the terms and conditions of the con- ing Funds of the Child Care and Devel-
tract shall prevail over the require- opment Fund(42 U.S.C. 9858).
ments of this part. (f) Additional program applicability.
(d) Governing provisions. With the ex- Except for §200.203, the guidance in
ception of subpart F of this part, which subpart C of this part does not apply to
is required by the Single Audit Act, in the following programs:
any circumstances where the provi- (1) Entitlement Federal awards to
sions of Federal statutes or regulations carry out the following programs of the •
differ from the provisions of this part, Social Security Act:
the provision of the Federal statutes or (i) Temporary Assistance for Needy
regulations govern. This includes, for Families(title IV-A of the Social Secu-
agreements with Indian tribes, the pro- rity Act,42 U.S.C. 601-619);
visions of the Indian Self-Determina- (ii) Child Support Enforcement and
tion and Education and Assistance Act Establishment of Paternity (title IV-D
111
§200.102 2 CFR Ch. II (1-1-21 Edition)
of the Social Security Act, 42 U.S.C. (6) Entitlement awards for State Ad-
651-669b); ministrative Expenses under The Food
(iii)Foster Care and Adoption Assist- and Nutrition Act of 2008 (section 16 of
ance (title IV-E of the Act, 42 U.S.C. the Act,7 U.S.C.2025).
670-679c); (7) Non-discretionary Federal awards
(iv) Aid to the Aged, Blind, and Dis- under the following non-entitlement
abled (titles I, X, XIV, and XVI-AABD programs:
of the Act,as amended); (i) Special Supplemental Nutrition
(v) Medical Assistance (Medicaid) Program for Women, Infants and Chil-
(title XIX of the Act, 42 U.S.C. 1396- dren (section 17 of the Child Nutrition
1396w-5) not including the State Med- Act of 1966)42 U.S.C. 1786;
icaid Fraud Control program author-
ized by section 1903(a)(6)(B) of the So- (ii) The Emergency Food Assistance
cial Security Act (42 U.S.C. Programs (Emergency Food Assistance
1396b(a)(6)(B)); and Act of 1983)7 U.S.C. 7501 note;and
(vi) Children's Health Insurance Pro- (iii) Commodity Supplemental Food
gram (title XXI of the Act, 42 U.S.C. Program (section 5 of the Agriculture
1397aa-1397mm). and Consumer Protection Act of 1973) 7
(2) A Federal award for an experi- U.S.C. 612c note.
mental, pilot, or demonstration project [85 FR 49536,Aug.13,2020]
that is also supported by a Federal
award listed in paragraph (f)(1) of this §200.102 Exceptions.
section.
(a)With the exception of subpart F of
(3) Federal awards under subsection
412(e) of the Immigration and Nation- this part, OMB may allow exceptions
for classes of Federal awards or non-
ality Act and subsection 501(a) of the
Refugee Education Assistance Act of Federal entities subject to the require-
1980 (Pub. L. 96-422, 94 Stat. 1809), for ments of this part when exceptions are
cash assistance, medical assistance, not prohibited by statute. In the inter-
and supplemental security income ben- est of maximum uniformity, exceptions
efits to refugees and entrants and the from the requirements of this part will
administrative costs of providing the be permitted as described in this sec-
assistance and benefits (8 U.S.C. tion.
1522(e)). (b)Exceptions on a case-by-case basis
(4) Entitlement awards under the fol- for individual non-Federal entities may
lowing programs of The National be authorized by the Federal awarding
School Lunch Act: agency or cognizant agency for indirect
(i) National School Lunch Program costs, except where otherwise required
(section 4 of the Act,42 U.S.C. 1753); by law or where OMB or other approval
(ii) Commodity Assistance (section 6 is expressly required by this part.
of the Act,42 U.S.C. 1755); (c)The Federal awarding agency may
(iii) Special Meal Assistance (section apply adjust requirements to a class of
11 of the Act,42 U.S.C. 1759a); Federal awards or non-Federal entities
(iv) Summer Food Service Program when approved by OMB, or when re-
for Children (section 13 of the Act, 42 quired by Federal statutes or regula-
U.S.C. 1761); and tions, except for the requirements in
(v) Child and Adult Care Food Pro- subpart F of this part. A Federal
gram (section 17 of the Act, 42 U.S.C. awarding agency may apply less re-
1766). strictive requirements when making
(5) Entitlement awards under the fol- fixed amount awards as defined in sub-
lowing programs of The Child Nutri- part A of this part, except for those re-
tion Act of 1966: quirements imposed by statute or in
(i) Special Milk Program(section 3 of subpart F of this part.
the Act, 42 U.S.C. 1772); (d) Federal awarding agencies may
(ii) School Breakfast Program (sec- request exceptions in support of inno-
tion 4 of the Act,42 U.S.C. 1773);and vative program designs that apply a
(iii) State Administrative Expenses risk-based, data-driven framework to
(section 7 of the Act,42 U.S.C. 1776).
112
OMB Guidance §200.106
alleviate select compliance require- (d)A-102, "Grant Awards and Cooper-
ments and hold recipients accountable ative Agreements with State and Local
for good performance. See also §200.206. Governments";
[85 FR 49538,Aug.13,2020] (e) A-110, "Uniform Administrative
Requirements for Awards and Other
§200.103 Authorities. Agreements with Institutions of Higher
Education, Hospitals, and Other Non-
This part is issued under the fol- profit Organizations" (codified at 2
lowing authorities. CFR 215);
(a) Subparts B through D of this part (f) A-122, "Cost Principles for Non-
are authorized under 31 U.S.C. 503 (the Profit Organizations" (2 CFR part 230);
Chief Financial Officers Act, Functions (g) A-133, "Audits of States, Local
of the Deputy Director for Manage- Governments and Non-Profit Organiza-
ment), 41 U.S.C. 1101-1131 (the Office of tions";and
Federal Procurement Policy Act), Re- (h) Those sections of A-50 related to
organization Plan No. 2 of 1970, and Ex- audits performed under subpart F of
ecutive Order 11541 ("Prescribing the this part.
Duties of the Office of Management
and Budget and the Domestic Policy [78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75882, Dec. 19, 2014; 85 FR 49538, Aug. 13,
Council in the Executive Office of the 2020]
President"), the Single Audit Act
Amendments of 1996, (31 U.S.C. 7501- §200.105 Effect on other issuances.
7507), as well as The Federal Program
(a) Superseding inconsistent require-
Information Act (Pub. L. 95-220 and ments. For
Pub. L. 98-169, as amended, codified at all administrativeeral awards subject to
31 U.S.C. 6101-6106). this part, ' require-
ments, program manuals, handbooks
(b) Subpart E of this part is author- and other non-regulatory materials
ized under the Budget and Accounting that are inconsistent with the require-
Act of 1921, as amended; the Budget ments of this part must be superseded
and Accounting Procedures Act of 1950, upon implementation of this part by
as amended (31 U.S.C. 1101-1125); the the Federal agency, except to the ex-
Chief Financial Officers Act of 1990 (31 tent they are required by statute or au-
U.S.C. 503-504); Reorganization Plan thorized in accordance with the provi-
No. 2 of 1970; and Executive Order 11541, sions in§200.102.
"Prescribing the Duties of the Office of (b)Imposition of requirements on recipi-
Management and Budget and the Do- ents. Agencies may impose legally
mestic Policy Council in the Executive binding requirements on recipients
Office of the President." only through the notice and public
(c) Subpart F of this part is author- comment process through an approved
ized under the Single Audit Act agency process, including as authorized
Amendments of 1996, (31 U.S.C. 7501- by this part, other statutes or regula-
7507). tions, or as incorporated into the terms
of a Federal award.
[85 FR 49538,Aug.13,2020]
[85 FR 49538,Aug.13,2020]
§200.104 Supersession.
As described in §200.110, this part su- §200.106 Agency implementation.
persedes the following OMB guidance The specific requirements and re-
documents and regulations under title sponsibilities of Federal agencies and
2 of the Code of Federal Regulations: non-Federal entities are set forth in
(a) A-21, "Cost Principles for Edu- this part. Federal agencies making
cational Institutions" (2 CFR part 220); Federal awards to non-Federal entities
(b) A-87, "Cost Principles for State, must implement the language in sub
Local and Indian Tribal Governments" parts C through F of this part in codi-
(2 CFR part 225)and also FEDERAL REG- fied regulations unless different provi-
ISTER notice 51 FR 552(January 6, 1986); sions are required by Federal statute
(c) A-89, "Federal Domestic Assist or are approved by OMB.
ance Program Information"; [85 FR 49538,Aug.13,2020]
113
§200.107 2 CFR Ch. 11 (1-1-21 Edition)
§200.107 OMB responsibilities. guage. Applications must be submitted
OMB will review Federal agency reg- in the English language and must be in
ulations and implementation of this the terms of U.S. dollars. If the Federal
part, and will provide interpretations awarding agency receives applications
of policy requirements and assistance in another currency, the Federal
to ensure effective and efficient imple- awarding agency will evaluate the ap-
mentation. Any exceptions will be sub- plication by converting the foreign cur-
ject to approval by OMB. Exceptions rency to United States currency using
will only be made in particular cases the date specified for receipt of the ap-
where adequate justification is pre- plication.
sented. (b) Non-Federal entities may trans-
§200.1OS Inquiries. late the Federal award and other docu-
ments into another language. In the
Inquiries concerning this part may be event of inconsistency between any
directed to the Office of Federal Finan- terms and conditions of the Federal
cial Management Office of Manage- award and any translation into another
ment and Budget, in Washington, DC. language, the English language mean-
Non-Federal entities' inquiries should ing will control. Where a significant
be addressed to the Federal awarding
agency, cognizant agency for indirect portion of the non-Federal entity's em-
costs, cognizant or oversight agency ployees who are working on the Fed-
for audit, or pass-through entity as ap- eral award are not fluent in English,
propriate. the non-Federal entity must provide
the Federal award in English and the
§200.109 Review date. language(s) with which employees are
OMB will review this part at least more familiar.
every five years after December 26, §200.112 Conflict of interest.
2013.
The Federal awarding agency must
§200.110 Effective/applicability date. establish conflict of interest policies
(a) The standards set forth in this for Federal awards. The non-Federal
part that affect the administration of entity must disclose in writing any po-
Federal awards issued by Federal tential conflict of interest to the Fed-
awarding agencies become effective eral awarding agency or pass-through
once implemented by Federal awarding entity in accordance with applicable
agencies or when any future amend- Federal awarding agency policy.
ment to this part becomes final.
(b) Existing negotiated indirect cost §200.113 Mandatory disclosures.
rates (as of the publication date of the The non-Federal entity or applicant
revisions to the guidance) will remain for a Federal award must disclose, in a
in place until they expire. The effective timely manner, in writing to the Fed-
date of changes to indirect cost rates eral awarding agency or pass-through
must be based upon the date that a entity all violations of Federal crimi-
newly re-negotiated rate goes into ef- nal law involving fraud, bribery, or
feet for a specific non-Federal entity's
fiscal year. Therefore, for indirect cost gratuity violations potentially affect
rates and cost allocation plans, the re ing the Federal award. Non-Federal en-
vised Uniform Guidance (as of the pub- tities that have received a Federal
lication date for revisions to the guid- award including the term and condi-
ance) become effective in generating tion outlined in appendix XII to this
proposals and negotiating a new rate part are required to report certain
(when the rate is re-negotiated). civil, criminal, or administrative[35 FR 49538,Aug.13,2020] pro-
ceedings to SAM (currently FAPIIS).
Failure to make required disclosures
§200.111 English language. can result in any of the remedies de-
(a) All Federal financial assistance scribed in§200.339. (See also 2 CFR part
announcements and Federal award 180, 31 U.S.C. 3321,and 41 U.S.C.2313.)
in-
formation must be in the English lan- [85 FR 49539,Aug.13,2020]
114
OMB Guidance §200.202
Subpart C—Pre-Federal Award vance, and the "milestone" or event
Requirements and Contents of triggering the payment also agreed
Federal Awards upon in advance, and set forth in the
Federal award;
SOURCE: 85 FR 49539, Aug. 13, 2020, unless (ii) On a unit price basis, for a de-
otherwise noted. fined unit or units, at a defined price or
prices, agreed to in advance of perform-
§200.200 Purpose. ance of the Federal award and set forth
Sections 200.201 through 200.216 pre- in the Federal award; or,
scribe instructions and other pre-award (iii) In one payment at Federal award
matters to be used by Federal awarding completion.
agencies in the program planning, an- (2) A fixed amount award cannot be
nouncement, application and award used in programs which require manda-
processes. tory cost sharing or match.
(3) The non-Federal entity must cer-
§200.201 Use of grant agreements (in- tify in writing to the Federal awarding
cluding fixed amount awards), co-
operative agreements, and con- agency or pass-through entity at the
tracts. end of the Federal award that the
(a)Federal award instrument.The Fed- project or activity was completed or
eral awarding agency or pass-through the level of effort was expended. If the
entity must decide on the appropriate required level of activity or effort was
instrument for the Federal award (i.e., not carried out, the amount of the Fed-
grant agreement, cooperative agree- eral award must be adjusted.
ment, or contract) in accordance with (4) Periodic reports may be estab-
the Federal Grant and Cooperative lished for each Federal award.
Agreement Act(31 U.S.C. 6301-08). (5) Changes in principal investigator,
(b) Fixed amount awards. In addition project leader, project partner, or scope
to the options described in paragraph of effort must receive the prior written
(a) of this section, Federal awarding approval of the Federal awarding agen-
agencies, or pass-through entities as cy or pass-through entity.
permitted in §200.333, may use fixed
amount awards (see Fixed amount §200.202 Program planning and de-
awards in§200.1) to which the following sign.
conditions apply: The Federal awarding agency must
(1) The Federal award amount is ne design a program and create an Assist-
gotiated using the cost principles (or
other pricing information) as a guide. ance Listing before announcing the No
The Federal awarding agency or pass- tice of Funding Opportunity. The pro
through entity may use fixed amount gram must be designed with clear goals
awards if the project scope has measur- and objectives that facilitate the deliv-
able goals and objectives and if ade- ery of meaningful results consistent
quate cost, historical, or unit pricing with the Federal authorizing legisla-
data is available to establish a fixed tion of the program. Program perform-
amount award based on a reasonable ance shall be measured based on the
estimate of actual cost. Payments are goals and objectives developed during
based on meeting specific requirements program planning and design. See
of the Federal award. Accountability is §200.301 for more information on per-
based on performance and results. Ex- formance measurement. Performance
cept in the case of termination before measures may differ depending on the
completion of the Federal award, there type of program. The program must
is no governmental review of the ac- align with the strategic goals and ob-
tual costs incurred by the non-Federal jectives within the Federal awarding
entity in performance of the award. agency's performance plan and should
Some of the ways in which the Federal support the Federal awarding agency's
award may be paid include, but are not performance measurement, manage-
limited to: ment, and reporting as required by
(i) In several partial payments, the Part 6 of OMB Circular A-11 (Prepara-
amount of each agreed upon in ad- tion, Submission, and Execution of the
115
§200.203 2 CFR Ch. 11 (1-1-21 Edition)
Budget). The program must also be de- performance plan and should support
signed to align with the Program Man- the Federal awarding agency's per-
agement Improvement Accountability formance measurement, management,
Act(Pub. L.114-264). and reporting as required by Part 6 of
§200.203 Requirement to provide pub- OMB Identification.
dent fi A-o1;
lie notice of Federal financial as- (2)eIr the progr IdentificationasFederal of
sistance programs. whether the program makes
awards on a discretionary basis or the
(a) The Federal awarding agency Federal awards are prescribed by Fed-
must notify the public of Federal pro- eral statute, such as in the case of for-
grams in the Federal Assistance List- mula grants.
ings maintained by the General Serv- (3) Projected total amount of funds
ices Administration(GSA). available for the program. Estimates
(1)The Federal Assistance Listings is based on previous year funding are ac-
the single, authoritative, government- ceptable if current appropriations are
wide comprehensive source of Federal not available at the time of the sub-
financial assistance program informa- mission;
tion produced by the executive branch (4) Anticipated source of available
of the Federal Government. funds. The statutory authority for
(2) The information that the Federal funding the program and, to the extent
awarding agency must submit to GSA possible, agency, sub-agency, or, if
for approval by OMB is listed in para- known, the specific program unit that
graph (b) of this section. GSA must will issue the Federal awards, and asso-
prescribe the format for the submission ciated funding identifier(e.g., Treasury
in coordination with OMB. Account Symbol(s));
(3) The Federal awarding agency may (5) General eligibility requirements. The
not award Federal financial assistance statutory, regulatory or other eligi-
without assigning it to a program that bility factors or considerations that de-
has been included in the Federal As- termine the applicant's qualification
sistance Listings as required in this for Federal awards under the program
section unless there are exigent cir- (e.g., type of non-Federal entity);and
cumstances requiring otherwise, such (6) Applicability of Single Audit Re-
as timing requirements imposed by quirements. Applicability of Single
statute. Audit Requirements as required by
(b) For each program that awards subpart F of this part.
discretionary Federal awards, non-dis-
cretionary Federal awards, loans, in- §200.204 Notices of funding opportuni-
surance, or any other type of Federal ties.
financial assistance, the Federal For discretionary grants and cooper-
awarding agency must, to the extent ative agreements that are competed,
practicable, create, update, and man- the Federal awarding agency must an-
age Assistance Listings entries based nounce specific funding opportunities
on the authorizing statute for the pro- by providing the following information
gram and comply with additional guid- in a public notice:
ance provided by GSA in consultation (a) Summary information in notices of
with OMB to ensure consistent, accu- funding opportunities. The Federal
rate information is available to pro- awarding agency must display the fol-
spective applicants. Accordingly, Fed- lowing information posted on the OMB-
eral awarding agencies must submit designated governmentwide website for
the following information to GSA: funding and applying for Federal finan-
(1) Program Description, Purpose, cial assistance, in a location preceding
Goals, and Measurement. A brief sum- the full text of the announcement:
mary of the statutory or regulatory re- (1)Federal Awarding Agency Name;
quirements of the program and its in- (2)Funding Opportunity Title;
tended outcome. Where appropriate, (3) Announcement Type (whether the
the Program Description, Purpose, funding opportunity is the initial an-
Goals, and Measurement should align nouncement of this funding oppor-
with the strategic goals and objectives tunity or a modification of a pre-
within the Federal awarding agency's viously announced opportunity);
116
OMB Guidance §200.206
(4) Funding Opportunity Number (re- (7) Applicable terms and conditions
quired, if applicable). If the Federal for resulting awards, including any ex-
awarding agency has assigned or will ceptions from these standard terms.
assign a number to the funding oppor-
tunity announcement, this number §200.205 Federal awarding agency re-
must be provided; view of merit of proposals.
(5)Assistance Listings Number(s); For discretionary Federal awards,
(6) Key Dates. Key dates include due unless prohibited by Federal statute,
dates for applications or Executive the Federal awarding agency must de-
Order 12372 submissions, as well as for sign and execute a merit review process
any letters of intent or pre-applica- for applications, with the objective of
tions. For any announcement issued selecting recipients most likely to be
before a program's application mate- successful in delivering results based
rials are available, key dates also in- on the program objectives outlined in
elude the date on which those mate- section §200.202. A merit review is an
rials will be released; and any other ad- objective process of evaluating Federal
ditional information, as deemed appli- award applications in accordance with
cable by the relevant Federal awarding written standards set forth by the Fed-
agency. eral awarding agency. This process
(b) Availability period. The Federal must be described or incorporated by
awarding agency must generally make reference in the applicable funding op-
all funding opportunities available for portunity(see appendix I to this part.).
application for at least 60 calendar See also§200.204. The Federal awarding
days. The Federal awarding agency agency must also periodically review
may make a determination to have a its merit review process.
less than 60 calendar day availability
period but no funding opportunity §200.206 Federal awarding agency re-
should be available for less than 30 cal- view of risk posed by applicants.
endar days unless exigent cir- (a) Review of OMB-designated reposi-
cumstances require as determined by tories of governmentwide data. (1) Prior
the Federal awarding agency head or to making a Federal award, the Fed-
delegate. eral awarding agency is required by the
(c) Full text of funding opportunities. Improper Payments Elimination and
The Federal awarding agency must in- Recovery Improvement Act of 2012, 31
elude the following information in the U.S.C. 3321 note, and 41 U.S.C. 2313 to
full text of each funding opportunity. review information available through
For specific instructions on the con- any OMB-designated repositories of
tent required in this section, refer to governmentwide eligibility qualifica-
appendix I to this part. tion or financial integrity information
(1) Full programmatic description of as appropriate. See also suspension and
the funding opportunity. debarment requirements at 2 CFR part
(2) Federal award information, in- 180 as well as individual Federal agency
eluding sufficient information to help suspension and debarment regulations
an applicant make an informed deci- in title 2 of the Code of Federal Regula-
sion about whether to submit an appli- tions.
cation. (See also§200.414(c)(4)). (2) In accordance 41 U.S.C. 2313, the
(3) Specific eligibility information, Federal awarding agency is required to
including any factors or priorities that review the non-public segment of the
affect an applicant's or its applica- OMB-designated integrity and perform-
tion's eligibility for selection. ance system accessible through SAM
(4) Application Preparation and Sub- (currently the Federal Awardee Per-
mission Information, including the ap- formance and Integrity Information
plicable submission dates and time. System (FAPIIS)) prior to making a
(5) Application Review Information Federal award where the Federal share
including the criteria and process to be is expected to exceed the simplified ac-
used to evaluate applications. See also quisition threshold, defined in 41 U.S.C.
§§200.205 and 200.206. 134, over the period of performance. As
(6) Federal Award Administration In- required by Public Law 112-239, Na-
formation. See also§200.211. tional Defense Authorization Act for
117
§200.207 2 CFR Ch. II (1-1-21 Edition)
Fiscal Year 2013, prior to making a terms and conditions of previous Fed-
Federal award, the Federal awarding eral awards, and if applicable, the ex-
agency must consider all of the infor- tent to which any previously awarded
mation available through FAPIIS with amounts will be expended prior to fu-
regard to the applicant and any imme- ture awards;
diate highest level owner, predecessor (iv) Audit reports and findings. Re-
(i.e.; a non-Federal entity that is re- ports and findings from audits per-
placed by a successor), or subsidiary, formed under subpart F of this part or
identified for that applicant in FAPIIS, the reports and findings of any other
if applicable. At a minimum, the infor- available audits; and
mation in the system for a prior Fed- (v) Ability to effectively implement re-
eral award recipient must demonstrate quirements. The applicant's ability to
a satisfactory record of executing pro- effectively implement statutory, regu-
grams or activities under Federal latory, or other requirements imposed
grants, cooperative agreements, or pro- on non-Federal entities.
curement awards; and integrity and (c) Risk-based requirements adjustment.
business ethics. The Federal awarding The Federal awarding agency may ad-
agency may make a Federal award to a just requirements when a risk-evalua-
recipient who does not fully meet these tion indicates that it may be merited
standards, if it is determined that the either pre-award or post-award.
information is not relevant to the cur- (d) Suspension and debarment compli-
rent Federal award under consideration (d) Suspension era debarment agency
ante. (1) The Federal awarding agency
or there are specific conditions that must comply with the guidelines on
can appropriately mitigate the effects
debar-
of the non-Federal entity's risk in ac- governmentwide suspension80 andandmust cordance with§200.208. ment in 2 CFR part 180, re-
(b) Risk evaluation. (1) The Federal quire non-Federal entities to comply
awarding evalumust. have i Federal
e a with these provisions. These provisions
framework agencyfor evaluating the risksa restrict Federal awards, subawards and
posed by applicants before they receive contractsad withs certaine parties that are
Federal awards. This evaluation may debarred, suspended n eli bor otherwise paex-
incorporate results of the evaluation of eluded from a ineligible for participa.
the applicant's eligibility or the qual-
ity tion in Federal programs or activities.
of its application. If the Federal §200.207 Standard application re-
awarding agency determines that a quirements.
Federal award will be made, special
conditions that correspond to the de (a) Paperwork clearances. The Federal
applica-
gree of risk assessed may be applied to awarding agency may only use the Federal award. Criteria to be evalu- tion information collections approved
must be described in the an- by OMB under the Paperwork Reduc-
atednouncement of funding opportunity de- tion Act of 1tio995 and OMB's rt 132
scribed in§200.204. menting regulations in 5 CFR part 1320
(2)In evaluating risks posed by appli- and in alignment with OMB-approved,
cants, the Federal awarding agency governmentwide data elements avail-
may use a risk-based approach and able from the OMB-designated stand
may consider any items such as the fol- ards lead. Consistent with these re
lowing: quirements, OMB will authorize addi-
(i) Financial stability. Financial sta- tional information collections only on
bility; a limited basis.
(ii) Management systems and stand- (b) Information collection. If applica-
ards. Quality of management systems ble, the Federal awarding agency may
and ability to meet the management inform applicants and recipients that
standards prescribed in this part; they do not need to provide certain in-
(iii) History of performance. The appli- formation otherwise required by the
cant's record in managing Federal relevant information collection.
awards, if it is a prior recipient of Fed-
eral awards, including timeliness of §200.208 Specific conditions.
compliance with applicable reporting (a) Federal awarding agencies are re-
requirements, conformance to the sponsible for ensuring that specific
118
OMB Guidance §200.211
Federal award conditions are con- tions that prompted them have been
sistent with the program design re- satisfied.
fleeted in §200.202 and include clear
performance expectations of recipients §200.209 Certifications and represen-
as required in§200.301. tations.
(b) The Federal awarding agency or Unless prohibited by the U.S. Con-
pass-through entity may adjust spe- stitution, Federal statutes or regula-
cific Federal award conditions as need- tions, each Federal awarding agency or
ed, in accordance with this section, pass-through entity is authorized to re-
based on an analysis of the following quire the non-Federal entity to submit
factors: certifications and representations re-
(1) Based on the criteria set forth in quired by Federal statutes, or regula-
§200.206; tions on an annual basis. Submission
(2) The applicant or recipient's his- may be required more frequently if the
tory of compliance with the general or non-Federal entity fails to meet a re-
specific terms and conditions of a Fed- quirement of a Federal award.
eral award;
(3) The applicant or recipient's abil- §200.210 Pre-award costs.
ity to meet expected performance goals For requirements on costs incurred
as described in§200.211; or by the applicant prior to the start date
(4) A responsibility determination of of the period of performance of the
an applicant or recipient. Federal award,see§200.458.
(c) Additional Federal award condi-
tions may include items such as the §200.211 Information contained in a
following: Federal award.
(1)Requiring payments as reimburse-
A Federal award must include the
ments rather than advance payments; following information:
(2) Withholding authority to proceed (a) Federal award performance goals.
to the next phase until receipt of evi Performance goals, indicators, targets,
dence of acceptable performance within and baseline data must be included in
a given performance period;
(3) Requiring additional, more de- the Federal award, where applicable.
tailed financial reports; The Federal awarding agency must
(4) Requiring additional project mon also specify how performance will be
itoring; assessed in the terms and conditions of
(5) Requiring the non-Federal entity the Federal award, including the tim-
to obtain technical or management as- ing and scope of expected performance.
sistance;or See §§200.202 and 200.301 for more infor-
(6) Establishing additional prior ap- mation on Federal award performance
provals. goals.
(d) If the Federal awarding agency or (b) General Federal award information.
pass-through entity is imposing addi- The Federal awarding agency must in-
tional requirements, they must notify elude the following general Federal
the applicant or non-Federal entity as award information in each Federal
to: award:
(1) The nature of the additional re- (1) Recipient name (which must
quirements; match the name associated with its
(2) The reason why the additional re- unique entity identifier as defined at 2
quirements are being imposed; CFR 25.315);
(3)The nature of the action needed to (2) Recipient's unique entity identi-
remove the additional requirement, if fier;
applicable; (3) Unique Federal Award Identifica-
(4) The time allowed for completing tion Number(FAIN);
the actions if applicable; and (4) Federal Award Date (see Federal
(5) The method for requesting recon- award date in§200.201);
sideration of the additional require- (5) Period of Performance Start and
ments imposed. End Date;
(e)Any additional requirements must (6) Budget Period Start and End
be promptly removed once the condi- Date;
119
§200.212 2 CFR Ch. II (1-1-21 Edition)
(7) Amount of Federal Funds Obli- (v) Termination provisions. Federal
gated by this action; awarding agencies must make recipi-
(8) Total Amount of Federal Funds ents aware, in a clear and unambiguous
Obligated; manner, of the termination provisions
(9) Total Approved Cost Sharing or in §200.340, including the applicable
Matching, where applicable; termination provisions in the Federal
(10) Total Amount of the Federal awarding agency's regulations or in
Award including approved Cost Sharing each Federal award.
or Matching; (2) The Federal award must incor-
(11) Budget Approved by the Federal porate, by reference, all general terms
Awarding Agency; and conditions of the award, which
(11) Federal award description, (to must be maintained on the agency's
comply with statutory requirements website.
(e.g., FFATA)); (3) If a non-Federal entity requests a
(12) Name of Federal awarding agen- copy of the full text of the general
cy and contact information for award terms and conditions, the Federal
ing official, awarding agency must provide it.
(13) Assistance Listings Number and (4) Wherever the general terms and
Title; conditions are publicly available, the
Federal awarding agency must main-
(14) Identification of whether the tain an archive of previous versions of
award is R&D; and the general terms and conditions, with
(15) Indirect cost rate for the Federal effective dates, for use by the non-Fed-
award(including if the de minimis rate eral entity, auditors,or others.
is charged per§200.414). (d) Federal awarding agency, program,
(c) General terms and conditions. (1) or Federal award specific terms and con-
Federal awarding agencies must incor- ditions. The Federal awarding agency
porate the following general terms and must include with each Federal award
conditions either in the Federal award any terms and conditions necessary to
or by reference, as applicable: communicate requirements that are in
(i)Administrative requirements. Admin- addition to the requirements outlined
istrative requirements implemented by in the Federal awarding agency's gen-
the Federal awarding agency as speci- eral terms and conditions. See also
fied in this part. §200.208. Whenever practicable, these
(ii)National policy requirements. These specific terms and conditions also
include statutory, executive order, should be shared on the agency's
other Presidential directive, or regu- website and in notices of funding op-
latory requirements that apply by spe- portunities (as outlined in §200.204) in
cific reference and are not program- addition to being included in a Federal
specific. See §200.300 Statutory and na- award. See also§200.207.
tional policy requirements. (e) Federal awarding agency require-
(iii) Recipient integrity and perform- ments. Any other information required
ance matters. If the total Federal share by the Federal awarding agency.
of the Federal award may include more
than $500,000 over the period of per- §200.212 Public access to Federal
formance, the Federal awarding agency award information.
must include the term and condition (a) In accordance with statutory re-
available in appendix XII of this part. quirements for Federal spending trans-
See also§200.113. parency (e.g., FFATA), except as noted
(iv) Future budget periods. If it is an- in this section, for applicable Federal
ticipated that the period of perform- awards the Federal awarding agency
ance will include multiple budget peri- must announce all Federal awards pub-
ods, the Federal awarding agency must licly and publish the required informa-
indicate that subsequent budget peri- tion on a publicly available OMB-des-
ods are subject to the availability of ignated governmentwide website.
funds, program authority, satisfactory (b) All information posted in the des-
performance, and compliance with the ignated integrity and performance sys-
terms and conditions of the Federal tern accessible through SAM (currently
award. FAPIIS) on or after April 15, 2011 will
120
OMB Guidance §200.213
be publicly available after a waiting (c) If a Federal awarding agency re-
period of 14 calendar days, except for: ports a determination that a non-Fed-
(1)Past performance reviews required eral entity is not qualified for a Fed-
by Federal Government contractors in eral award, as described in paragraph
accordance with the Federal Acquisi- (a) of this section, the Federal award-
tion Regulation (FAR) 48 CFR part 42, ing agency also must notify the non-
subpart 42.15; Federal entity that—
(2) Information that was entered (1) The determination was made and
prior to April 15,2011; or reported to the designated integrity
(3) Information that is withdrawn and performance system accessible
during the 14-calendar day waiting pe- through SAM, and include with the no-
riod by the Federal Government offi- tification an explanation of the basis
cial. for the determination;
(c) Nothing in this section may be (2) The information will be kept in
construed as requiring the publication the system for a period of five years
of information otherwise exempt under from the date of the determination, as
the Freedom of Information Act (5 required by section 872 of Public Law
U.S.0 552), or controlled unclassified 110-417, as amended (41 U.S.C. 2313),
information pursuant to Executive then archived;
Order 13556. (3) Each Federal awarding agency
that considers making a Federal award
§200.213 Reporting a determination to the non-Federal entity during that
that a non-Federal entity is not five year period must consider that in-
qualified for a Federal award. formation in judging whether the non-
(a)If a Federal awarding agency does Federal entity is qualified to receive
not make a Federal award to a non- the Federal award when the total Fed-
Federal entity because the official de- eral share of the Federal award is ex-
termines that the non-Federal entity pected to include an amount of Federal
does not meet either or both of the funding in excess of the simplified ac-
minimum qualification standards as quisition threshold over the period of
described in §200.206(a)(2), the Federal performance;
awarding agency must report that de- (4) The non-Federal entity may go to
termination to the designated integ- the awardee integrity and performance
rity and performance system accessible portal accessible through SAM (cur-
through SAM (currently FAPIIS), only rently the Contractor Performance As-
if all of the following apply: sessment Reporting System (CPARS))
(1) The only basis for the determina- and comment on any information the
tion described in this paragraph (a) is system contains about the non-Federal
the non-Federal entity's prior record of entity itself; and
executing programs or activities under (5) Federal awarding agencies will
Federal awards or its record of integ- consider that non-Federal entity's
rity and business ethics, as described in comments in determining whether the
§200.206(a)(2) (i.e., the entity was deter- non-Federal entity is qualified for a fu-
mined to be qualified based on all fac- ture Federal award.
tors other than those two standards); (d) If a Federal awarding agency en-
and ters information into the designated
(2) The total Federal share of the integrity and performance system ac-
Federal award that otherwise would be cessible through SAM about a deter-
made to the non-Federal entity is ex- mination that a non-Federal entity is
pected to exceed the simplified acquisi- not qualified for a Federal award and
tion threshold over the period of per- subsequently:
formance. (1) Learns that any of that informa-
(b) The Federal awarding agency is tion is erroneous, the Federal awarding
not required to report a determination agency must correct the information in
that a non-Federal entity is not quali- the system within three business days;
fied for a Federal award if they make and
the Federal award to the non-Federal (2) Obtains an update to that infor-
entity and include specific award terms mation that could be helpful to other
and conditions, as described in§200.208. Federal awarding agencies, the Federal
121
§200.214 2 CFR Ch. II (1-1-21 Edition)
awarding agency is strongly encour- §200.216 Prohibition on certain tele-
aged to amend the information in the communications and video surveil-
system to incorporate the update in a lance services or equipment.
timely way. (a) Recipients and subrecipients are
(e) Federal awarding agencies must prohibited from obligating or expend-
not post any information that will be ing loan or grant funds to:
made publicly available in the non- (1)Procure or obtain;
public segment of designated integrity (2)Extend or renew a contract to pro-
and performance system that is cov- cure or obtain;or
ered by a disclosure exemption under (3) Enter into a contract (or extend
the Freedom of Information Act. If the or renew a contract) to procure or ob
recipient asserts within seven calendar tain equipment, services, or systems
days to the Federal awarding agency that uses covered telecommunications
that posted the information that some equipment or services as a substantial
or all of the information made publicly or essential component of any system,
available is covered by a disclosure ex- or as critical technology as part of any
system. As described in Public Law
emption under the Freedom of Infor- 115-232, section 889, covered tele-
mation Act, the Federal awarding communications equipment is tele-
agency that posted the information communications equipment produced
must remove the posting within seven by Huawei Technologies Company or
calendar days of receiving the asser- ZTE Corporation (or any subsidiary or
tion. Prior to reposting the releasable affiliate of such entities).
information, the Federal awarding (i) For the purpose of public safety,
agency must resolve the issue in ac- security of government facilities,phys-
cordance with the agency's Freedom of ical security surveillance of critical in-
Information Act procedures. frastructure, and other national secu-
rity purposes, video surveillance and
§200.214 Suspension and debarment. telecommunications equipment pro-
Non-Federal entities are subject to duced by Hytera Communications Cor-
the non-procurement debarment and poration, Hangzhou Hikvision Digital
suspension regulations implementing Technology Company, or Dahua Tech-
Executive Orders 12549 and 12689, 2 CFR nology Company (or any subsidiary or
part 180. The regulations in 2 CFR part affiliate of such entities).
restrict at subawards, and (ii)Telecommunications or video sur-
veillance services provided by such en-
contracts with certain parties that are tities or using such equipment.
debarred, suspended, or otherwise ex- (iii) Telecommunications or video
eluded from or ineligible for participa- surveillance equipment or services pro-
tion in Federal assistance programs or duced or provided by an entity that the
activities. Secretary of Defense, in consultation
§200.215 Never contract with the with the Director of the National Intel-
ligence or the Director of the Federal
enemy. Bureau of Investigation, reasonably be-
Federal awarding agencies and re- lieves to be an entity owned or con-
cipients are subject to the regulations trolled by, or otherwise connected to,
implementing Never Contract with the the government of a covered foreign
Enemy in 2 CFR part 183. The regula- country.
tions in 2 CFR part 183 affect covered (b) In implementing the prohibition
contracts, grants and cooperative under Public Law 115 232, section 889,
agreements that are expected to exceed subsection (f), paragraph (1), heads of
$50,000 within the period of perform- executive agencies administering loan,
ance, are performed outside the United grant, or subsidy programs shall
States and its territories, and are in prioritize available funding and tech-
Statesnical support to assist affected busi-
support of a contingency operation in
nesses, institutions and organizations
which members of the Armed Forces as is reasonably necessary for those af-
are actively engaged in hostilities. footed entities to transition from cov-
ered communications equipment and
122
OMB Guidance §200.301
services, to procure replacement equip- information. Where appropriate, the
ment and services, and to ensure that Federal award may include specific
communications service to users and program goals, indicators, targets,
customers is sustained. baseline data, data collection, or ex-
(c) See Public Law 115-232, section 889 pected outcomes (such as outputs, or
for additional information. services performance or public impacts
(d)See also§200.471. of any of these) with an expected
timeline for accomplishment. Where
Subpart D—Post Federal Award applicable, this should also include any
Requirements performance measures or independent
sources of data that may be used to
SOURCE: 85 FR 49543, Aug. 13, 2020, unless measure progress. The Federal award-
otherwise noted. ing agency will determine how per-
formance§200.300 Statutoryand national policy progress is measured, which
may differ by program. Performance
requirements. measurement progress must be both
(a) The Federal awarding agency measured and reported. See§200.329 for
must manage and administer the Fed- more information on monitoring pro-
eral award in a manner so as to ensure gram performance. The Federal award-
that Federal funding is expended and ing agency may include program-spe-
associated programs are implemented cific requirements, as applicable. These
in full accordance with the U.S. Con- requirements must be aligned, to the
stitution, Federal Law, and public pol- extent permitted by law, with the Fed-
icy requirements: Including, but not eral awarding agency strategic goals,
limited to, those protecting free strategic objectives or performance
speech, religious liberty, public wel- goals that are relevant to the program.
fare, the environment, and prohibiting See that also OMB
reB rcu to the program.
SeeCircular A-11, Prepara-
discrimination. The Federal awarding tion, Submission, and Execution of the
agency must communicate to the non- Budget Part 6.
Federal entity all relevant public pol- (b) The Federal awarding agency
icy requirements, including those in
general appropriations provisions, and should provide recipients with clear
incorporate them either directly or by performance goals, indicators, targets,
reference in the terms and conditions and baseline data as described in
of the Federal award. §200.211. Performance reporting fre-
(b) The non-Federal entity is respon- quency and content should be estab-
sible for complying with all require- lashed to not only allow the Federal
ments of the Federal award. For all awarding agency to understand the re-
Federal awards, this includes the provi- cipient progress but also to facilitate
sions of FFATA, which includes re- identification of promising practices
quirements on executive compensation, among recipients and build the evi-
and also requirements implementing dence upon which the Federal awarding
the Act for the non-Federal entity at 2 agency's program and performance de-
CFR parts 25 and 170. See also statu- cisions are made. See §200.328 for more
tory requirements for whistleblower information on reporting program per-
protections at 10 U.S.C. 2409, 41 U.S.C. formance.
4712, and 10 U.S.C. 2324, 41 U.S.C. 4304 (c)This provision is designed to oper-
and 4310. ate in tandem with evidence-related
statutes(e.g.;The Foundations for Evi-
§200.301 Performance measurement. dence-Based Policymaking Act of 2018,
(a) The Federal awarding agency which emphasizes collaboration and co-
must measure the recipient's perform- ordination to advance data and evi-
ance to show achievement of program dence-building functions in the Federal
goals and objectives, share lessons government). The Federal awarding
learned, improve program outcomes, agency should also specify any require-
and foster adoption of promising prac- ments of award recipients' participa-
tices. Program goals and objectives tion in a federally funded evaluation,
should be derived from program plan- and any evaluation activities required
ping and design. See §200.202 for more to be conducted by the Federal award.
123
§200.302 2 CFR Ch. II (1-1-21 Edition)
§200.302 Financial management. federally-funded activities. These
(a) Each state must expend and ac- records must contain information per-
count for the Federal award in accord- taining to Federal awards, authoriza-
ance with state laws and procedures for tions, financial obligations, unobli-
expending and accounting for the gated balances, assets, expenditures,
state's own funds. In addition, the income and interest and be supported
state's and the other non-Federal enti- by source documentation.
ty's financial management systems, in- (4) Effective control over, and ac
-
eluding records documenting compli- countability for, all funds, property,
ance with Federal statutes, regula- and other assets. The non-Federal enti-
tions, and the terms and conditions of ty must adequately safeguard all assets
the Federal award, must be sufficient and assure that they are used solely for
to permit the preparation of reports re- authorized purposes. See§200.303.
quired by general and program-specific (5) Comparison of expenditures with
terms and conditions; and the tracing budget amounts for each Federal
of funds to a level of expenditures ade- award.
quate to establish that such funds have (6) Written procedures to implement
been used according to the Federal the requirements of§200.305.
statutes, regulations, and the terms (7) Written procedures for deter-
and conditions of the Federal award. mining the allowability of costs in ac-
See also§200.450. cordance with subpart E of this part
(b) The financial management sys- and the terms and conditions of the
tem of each non-Federal entity must Federal award.
provide for the following (see also
§§200.334,200.335,200.336, and 200.337): §200.303 Internal controls.
(1) Identification, in its accounts, of The non-Federal entity must:
all Federal awards received and ex- (a) Establish and maintain effective
pended and the Federal programs under internal control over the Federal
which they were received. Federal pro- award that provides reasonable assur-
gram and Federal award identification ance that the non-Federal entity is
must include, as applicable, the Assist- managing the Federal award in compli-
ance Listings title and number, Fed- ance with Federal statutes, regula-
eral award identification number and tions, and the terms and conditions of
year, name of the Federal agency, and the Federal award. These internal con-
name of the pass-through entity, if trols should be in compliance with
any. guidance in "Standards for Internal
(2) Accurate, current, and complete Control in the Federal Government"
disclosure of the financial results of issued by the Comptroller General of
each Federal award or program in ac- the United States or the "Internal Con-
cordance with the reporting require- trol Integrated Framework", issued by
ments set forth in §§200.328 and 200.329. the Committee of Sponsoring Organiza-
If a Federal awarding agency requires tions of the Treadway Commission
reporting on an accrual basis from a re- (COSO).
cipient that maintains its records on (b) Comply with the U.S. Constitu-
other than an accrual basis, the recipi- tion, Federal statutes, regulations, and
ent must not be required to establish the terms and conditions of the Federal
an accrual accounting system. This re- awards.
cipient may develop accrual data for (c) Evaluate and monitor the non-
its reports on the basis of an analysis Federal entity's compliance with stat-
of the documentation on hand. Simi- utes, regulations and the terms and
larly, a pass-through entity must not conditions of Federal awards.
require a subrecipient to establish an (d) Take prompt action when in-
accrual accounting system and must stances of noncompliance are identified
allow the subrecipient to develop ac- including noncompliance identified in
crual data for its reports on the basis audit findings.
of an analysis of the documentation on (e) Take reasonable measures to safe-
hand. guard protected personally identifiable
(3) Records that identify adequately information and other information the
the source and application of funds for Federal awarding agency or pass-
124
OMB Guidance §200.305
through entity designates as sensitive (1) The non-Federal entity must be
or the non-Federal entity considers paid in advance, provided it maintains
sensitive consistent with applicable or demonstrates the willingness to
Federal, State, local, and tribal laws maintain both written procedures that
regarding privacy and responsibility minimize the time elapsing between
over confidentiality. the transfer of funds and disbursement
§200.304 Bonds. by the non-Federal entity, and finan-
cial management systems that meet
The Federal awarding agency may in- the standards for fund control and ac-
elude a provision on bonding, insur- countability as established in this part.
ance, or both in the following cir- Advance payments to a non-Federal en-
cumstances: tity must be limited to the minimum
(a) Where the Federal Government amounts needed and be timed to be in
guarantees or insures the repayment of accordance with the actual, immediate
money borrowed by the recipient, the cash requirements of the non-Federal
Federal awarding agency, at its discre- entity in carrying out the purpose of
tion, may require adequate bonding the approved program or project. The
and insurance if the bonding and insur- timing and amount of advance pay-
ance requirements of the non-Federal ments must be as close as is adminis-
entity are not deemed adequate to pro- tratively feasible to the actual dis-
tect the interest of the Federal Govern- bursements by the non-Federal entity
ment. for direct program or project costs and
(b)The Federal awarding agency may the proportionate share of any allow-
require adequate fidelity bond coverage able indirect costs. The non-Federal
where the non-Federal entity lacks suf- entity must make timely payment to
ficient coverage to protect the Federal contractors in accordance with the
Government's interest. contract provisions.
(c) Where bonds are required in the (2) Whenever possible, advance pay-
situations described above, the bonds ments must be consolidated to cover
must be obtained from companies hold- anticipated cash needs for all Federal
ing certificates of authority as accept- awards made by the Federal awarding
able sureties, as prescribed in 31 CFR agency to the recipient.
part 223. (i) Advance payment mechanisms in-
clude, but are not limited to, Treasury
payment. check and electronic funds transfer and
(a) For states, payments are gov- must comply with applicable guidance
erned by Treasury-State Cash Manage- in 31 CFR part 208.
ment Improvement Act (CMIA) agree- (ii) Non-Federal entities must be au-
ments and default procedures codified thorized to submit requests for advance
at 31 CFR part 205 and Treasury Finan- payments and reimbursements at least
cial Manual (TFM) 4A-2000, "Overall monthly when electronic fund transfers
Disbursing Rules for All Federal Agen- are not used, and as often as they like
cies". when electronic transfers are used, in
(b) For non-Federal entities other accordance with the provisions of the
than states, payments methods must Electronic Fund Transfer Act (15
minimize the time elapsing between U.S.C. 1693-1693r).
the transfer of funds from the United (3) Reimbursement is the preferred
States Treasury or the pass-through method when the requirements in this
entity and the disbursement by the paragraph (b) cannot be met, when the
non-Federal entity whether the pay- Federal awarding agency sets a specific
ment is made by electronic funds condition per§200.208, or when the non-
transfer, or issuance or redemption of Federal entity requests payment by re-
checks, warrants, or payment by other imbursement. This method may be
means. See also §200.302(b)(6). Except used on any Federal award for con-
as noted elsewhere in this part,Federal struction, or if the major portion of the
agencies must require recipients to use construction project is accomplished
only OMB-approved, governmentwide through private market financing or
information collection requests to re- Federal loans, and the Federal award
quest payment. constitutes a minor portion of the
125
§200.305 2 CFR Ch. II (1-1-21 Edition)
project. When the reimbursement (i) The non-Federal entity has failed
method is used, the Federal awarding to comply with the project objectives,
agency or pass-through entity must Federal statutes, regulations, or the
make payment within 30 calendar days terms and conditions of the Federal
after receipt of the billing, unless the award.
Federal awarding agency or pass- (ii) The non-Federal entity is delin-
through entity reasonably believes the quent in a debt to the United States as
request to be improper. defined in OMB Circular A-129, "Poli-
(4) If the non-Federal entity cannot cies for Federal Credit Programs and
meet the criteria for advance payments Non-Tax Receivables." Under such con-
and the Federal awarding agency or ditions, the Federal awarding agency
pass-through entity has determined or pass-through entity may, upon rea-
that reimbursement is not feasible be- sonable notice, inform the non-Federal
cause the non-Federal entity lacks suf- entity that payments must not be
ficient working capital, the Federal made for financial obligations incurred
awarding agency or pass-through enti- after a specified date until the condi-
ty may provide cash on a working cap- tions are corrected or the indebtedness
ital advance basis. Under this proce- to the Federal Government is liq-
dure, the Federal awarding agency or uidated.
pass-through entity must advance cash (iii) A payment withheld for failure
payments to the non-Federal entity to to comply with Federal award condi
cover its estimated disbursement needs tions, but without suspension of the
for an initial period generally geared Federal award, must be released to the
to the non-Federal entity's disbursing non-Federal entity upon subsequent
cycle. Thereafter, the Federal award- compliance. When a Federal award is
ing agency or pass-through entity must suspended, payment adjustments will
reimburse the non-Federal entity for be made in accordance with§200.343.
its actual cash disbursements. Use of (iv) A payment must not be made to
the non-Federal entity for amounts that
working capital advance method of
payment requires that the are withheld by the non-Federal entity
pass- from payment to contractors to assure
through entity provide timely advance satisfactory completion of work. A
payments to any subrecipients in order payment must be made when the non-
to meet the subrecipient's actual cash Federal entity actually disburses the
disbursements.The working capital ad- withheld funds to the contractors or to
vance method of payment must not be escrow accounts established to assure
used by the pass-through entity if the satisfactory completion of work.
reason for using this method is the un- (7) Standards
willingness or inability of the pass- governing the use of
through entity to provide timely ad- banks andfadvancether institutions as r -
tories of payments under Fed-
vance payments to the subrecipient to eral awards are as follows.
meet the subrecipient's actual cash dis- (i) The Federal awarding agency and
bursements. pass-through entity must not require
(5) To the extent available, the non- separate depository accounts for funds
Federal entity must disburse funds provided to a non-Federal entity or es-
available from program income (in- tablish any eligibility requirements for
eluding repayments to a revolving depositories for funds provided to the
fund), rebates, refunds, contract settle- non-Federal entity. However, the non-
ments, audit recoveries, and interest Federal entity must be able to account
earned on such funds before requesting for funds received, obligated, and ex-
additional cash payments. pended.
(6) Unless otherwise required by Fed- (ii) Advance payments of Federal
eral statutes, payments for allowable funds must be deposited and main-
costs by non-Federal entities must not tained in insured accounts whenever
be withheld at any time during the pe- possible.
riod of performance unless the condi- (8) The non-Federal entity must
tions of§200.208, subpart D of this part, maintain advance payments of Federal
including §200.339, or one or more of awards in interest-bearing accounts,
the following applies: unless the following apply:
126
OMB Guidance §200.305
(i) The non-Federal entity receives (i) Payee Account Number (PAN), if
less than$250,000 in Federal awards per the payment originated from PMS, or
year. Agency information to indicate whom
(ii) The best reasonably available in- to credit the funding if the payment
terest-bearing account would not be ex- originated from ASAP, NSF, or an-
pected to earn interest in excess of$500 other Federal agency payment system.
per year on Federal cash balances. (ii) PMS document number and sub-
(iii) The depository would require an account(s), if the payment originated
average or minimum balance so high from PMS, or relevant account num-
that it would not be feasible within the bers if the payment originated from an-
expected Federal and non-Federal cash other Federal agency payment system.
resources. (iii) The reason for the return (e.g.,
(iv) A foreign government or banking excess cash, funds not spent, interest,
system prohibits or precludes interest- part interest part other,etc.)
bearing accounts. (11) When returning funds or interest
(9)Interest earned amounts up to$500 to PMS you must include the following
per year may be retained by the non- as applicable:
Federal entity for administrative ex- (i)For ACH Returns:
pense. Any additional interest earned Routing Number:051036706
on Federal advance payments deposited Account number: 303000
in interest-bearing accounts must be Bank Name and Location: Credit Gate-
remitted annually to the Department way—ACH Receiver St. Paul, MN
of Health and Human Services Pay-
ment Management System (PMS) (ii)For Fedwire Returns':
through an electronic medium using ei- Routing Number: 021030004
ther Automated Clearing House (ACH) Account number: 75010501
network or a Fedwire Funds Service Bank Name and Location: Federal Re-
payment. serve Bank Treas NYC/Funds Trans-
(i) For returning interest on Federal fer Division New York,NY
awards paid through PMS, the refund "Please note that the organization
should: initiating payment is likely to incur a
(A) Provide an explanation stating charge from their Financial Institution
that the refund is for interest; for this type of payment.
(B) List the PMS Payee Account (iii)For International ACH Returns:
Number(s)(PANS); Beneficiary Account: Federal Reserve
(C) List the Federal award number(s) Bank of New York/ITS (FRBNY/ITS)
for which the interest was earned; and
Bank:Citibank N.A. (New York)
(D) Make returns payable to: Depart- Swift Code: CITIUS33
ment of Health and Human Services.
Account Number: 36838868
(ii) For returning interest on Federal
Bank Address:
awards not paid through PMS, the re- New York,NY
388 Greenwich Street,
NY 10013 USA
fund should: Payment Details (Line 70): Agency Lo-
(A) Provide an explanation stating cator Code(ALC):75010501
that the refund is for interest; Name (abbreviated when possible) and
(B) Include the name of the awarding ALC Agency POC
agency;
(C) List the Federal award number(s) (iv) For recipients that do not have
for which the interest was earned; and electronic remittance capability,
(D) Make returns payable to: Depart- please make check2 payable to: "The
ment of Health and Human Services. Department of Health and Human
(10) Funds, principal, and excess cash Services."
returns must be directed to the origi- Mail Check to Treasury approved
nal Federal agency payment system. lockbox:
The non-Federal entity should review HHS Program Support Center, P.O.
instructions from the original Federal Box 530231, Atlanta,GA 30353-0231
agency payment system. Returns 2Please allow 4-6 weeks for proc-
should include the following informa- essing of a payment by check to be ap-
tion: plied to the appropriate PMS account.
127
§200.306 2 CFR Ch. II (1-1-21 Edition)
(v) Questions can be directed to PMS and the amount which could have been
at 877-614-5533 or charged to the Federal award under the
PMSSupport@psc.hhs.gov. non-Federal entity's approved nego-
tiated
§200.306 Cost sharing or matching.
(d) indirect cost rate.
Values for non-Federal entity
(a) Under Federal research proposals, contributions of services and property
voluntary committed cost sharing is must be established in accordance with
not expected. It cannot be used as a the cost principles in subpart E of this
factor during the merit review of appli- part. If a Federal awarding agency au-
cations or proposals, but may be con- thorizes the non-Federal entity to do-
sidered if it is both in accordance with nate buildings or land for construction/
Federal awarding agency regulations facilities acquisition projects or long-
and specified in a notice of funding op- term use, the value of the donated
portunity. Criteria for considering vol- property for cost sharing or matching
untary committed cost sharing and must be the lesser of paragraph (d)(1)
any other program policy factors that or(2)of this section.
may be used to determine who may re- (1) The value of the remaining life of
ceive a Federal award must be explic- the property recorded in the non-Fed-
itly described in the notice of funding eral entity's accounting records at the
opportunity. See also §§200.414 and time of donation.
200.204 and appendix I to this part. (2) The current fair market value.
(b) For all Federal awards, any However, when there is sufficient jus-
shared costs or matching funds and all tification, the Federal awarding agen-
contributions, including cash and cy may approve the use of the current
third-party in-kind contributions, fair market value of the donated prop-
must be accepted as part of the non- erty, even if it exceeds the value de-
Federal entity's cost sharing or match- scribed in paragraph (d)(1) of this see-
ing when such contributions meet all tion at the time of donation.
of the following criteria: (e) Volunteer services furnished by
(1) Are verifiable from the non-Fed- third-party professional and technical
eral entity's records; personnel, consultants, and other
(2) Are not included as contributions skilled and unskilled labor may be
for any other Federal award; counted as cost sharing or matching if
(3) Are necessary and reasonable for the service is an integral and necessary
accomplishment of project or program part of an approved project or program.
objectives; Rates for third-party volunteer serv-
(4) Are allowable under subpart E of ices must be consistent with those paid
this part; for similar work by the non-Federal en-
(5) Are not paid by the Federal Gov- tity. In those instances in which the
ernment under another Federal award, required skills are not found in the
except where the Federal statute au- non-Federal entity, rates must be con-
thorizing a program specifically pro- sistent with those paid for similar
vides that Federal funds made avail- work in the labor market in which the
able for such program can be applied to non-Federal entity competes for the
matching or cost sharing requirements kind of services involved. In either
of other Federal programs; case, paid fringe benefits that are rea-
(6) Are provided for in the approved sonable, necessary, allocable, and oth-
budget when required by the Federal erwise allowable may be included in
awarding agency;and the valuation.
(7) Conform to other provisions of (f) When a third-party organization
this part, as applicable. furnishes the services of an employee,
(c) Unrecovered indirect costs, in- these services must be valued at the
eluding indirect costs on cost sharing employee's regular rate of pay plus an
or matching may be included as part of amount of fringe benefits that is rea-
cost sharing or matching only with the sonable, necessary, allocable, and oth-
prior approval of the Federal awarding erwise allowable, and indirect costs at
agency. Unrecovered indirect cost either the third-party organization's
means the difference between the approved federally-negotiated indirect
amount charged to the Federal award cost rate or, a rate in accordance with
128
OMB Guidance §200.307
§200.414(d) provided these services em- (42 U.S.C. 4601-4655) (Uniform Act) ex-
ploy the same skill(s) for which the cept as provided in the implementing
employee is normally paid. Where do- regulations at 49 CFR part 24, "Uni-
nated services are treated as indirect form Relocation Assistance And Real
costs, indirect cost rates will separate Property Acquisition For Federal And
the value of the donated services so Federally-Assisted Programs".
that reimbursement for the donated (2) The value of donated equipment
services will not be made. must not exceed the fair market value
(g) Donated property from third par- of equipment of the same age and con-
ties may include such items as equip- dition at the time of donation.
ment, office supplies, laboratory sup- (3) The value of donated space must
plies, or workshop and classroom sup- not exceed the fair rental value of com-
plies. Value assessed to donated prop- parable space as established by an inde-
erty included in the cost sharing or pendent appraisal of comparable space
matching share must not exceed the and facilities in a privately-owned
fair market value of the property at building in the same locality.
the time of the donation. (4) The value of loaned equipment
(h) The method used for determining must not exceed its fair rental value.
cost sharing or matching for third- (j) For third-party in-kind contribu-
party-donated equipment, buildings tions, the fair market value of goods
and land for which title passes to the and services must be documented and
non-Federal entity may differ accord- to the extent feasible supported by the
ing to the purpose of the Federal same methods used internally by the
award, if paragraph (h)(1) or (2) of this non-Federal entity.
section applies. (k) For IHEs, see also OMB memo-
(1) If the purpose of the Federal randum M-01-06, dated January 5, 2001,
award is to assist the non-Federal enti- Clarification of OMB A-21 Treatment
ty in the acquisition of equipment, of Voluntary Uncommitted Cost Shar-
buildings or land, the aggregate value ing and Tuition Remission Costs.
of the donated property may be
claimed as cost sharing or matching. §200.307 Program income.
(2) If the purpose of the Federal (a) General. Non-Federal entities are
award is to support activities that re- encouraged to earn income to defray
quire the use of equipment, buildings program costs where appropriate.
or land, normally only depreciation (b) Cost of generating program income.
charges for equipment and buildings If authorized by Federal regulations or
may be made.However, the fair market the Federal award, costs incidental to
value of equipment or other capital as- the generation of program income may
sets and fair rental charges for land be deducted from gross income to de-
may be allowed, provided that the Fed- termine program income, provided
eral awarding agency has approved the these costs have not been charged to
charges. See also§200.420. the Federal award.
(i) The value of donated property (c) Governmental revenues. Taxes, spe-
must be determined in accordance with cial assessments, levies, fines, and
the usual accounting policies of the other such revenues raised by a non-
non-Federal entity, with the following Federal entity are not program income
qualifications: unless the revenues are specifically
(1) The value of donated land and identified in the Federal award or Fed-
buildings must not exceed its fair mar- eral awarding agency regulations as
ket value at the time of donation to program income.
the non-Federal entity as established (d) Property. Proceeds from the sale
by an independent appraiser (e.g., cer- of real property, equipment, or supplies
tified real property appraiser or Gen- are not program income; such proceeds
eral Services Administration rep- will be handled in accordance with the
resentative) and certified by a respon- requirements of the Property Stand-
sible official of the non-Federal entity ards §§200.311, 200.313, and 200.314, or as
as required by the Uniform Relocation specifically identified in Federal stat-
Assistance and Real Property Acquisi- utes,regulations, or the terms and con-
tion Policies Act of 1970, as amended, ditions of the Federal award.
129
§200.308 2 CFR Ch. I1 (1-1-21 Edition)
(e) Use of program income. If the Fed- come earned after the end of the period
eral awarding agency does not specify of performance for the Federal award,
in its regulations or the terms and con- unless the Federal awarding agency
ditions of the Federal award, or give regulations or the terms and condi-
prior approval for how program income tions of the Federal award provide oth-
is to be used, paragraph (e)(1) of this erwise. The Federal awarding agency
section must apply. For Federal awards may negotiate agreements with recipi-
made to IHEs and nonprofit research ents regarding appropriate uses of in-
institutions, if the Federal awarding come earned after the period of per-
agency does not specify in its regula- formance as part of the grant closeout
tions or the terms and conditions of process. See also§200.344.
the Federal award how program income (g) License fees and royalties. Unless
is to be used, paragraph (e)(2) of this the Federal statute, regulations, or
section must apply. In specifying alter- terms and conditions for the Federal
natives to paragraphs (e)(1) and (2) of award provide otherwise, the non-Fed-
this section, the Federal awarding eral entity is not accountable to the
agency may distinguish between in- Federal awarding agency with respect
come earned by the recipient and in- to program income earned from license
come earned by subrecipients and be- fees and royalties for copyrighted ma-
tween the sources, kinds, or amounts terial, patents, patent applications,
of income. When the Federal awarding trademarks, and inventions made
agency authorizes the approaches in under a Federal award to which 37 CFR
paragraphs (e)(2)and(3) of this section, part 401 is applicable.
program income in excess of any
amounts specified must also be de- §200.308 Revision of budget and pro-
ducted from expenditures. gram plans.
(1) Deduction. Ordinarily program in-
come must be deducted from total al- (a) The approved budget for the Fed-
lowable costs to determine the net al- eral award summarizes the financial
lowable costs. Program income must be aspects of the project or program as ap-
used for current costs unless the Fed- proved during the Federal award proc-
eral awarding agency authorizes other- ess. It may include either the Federal
wise. Program income that the non- and non-Federal share (see definition
Federal entity did not anticipate at the for Federal share in §200.1) or only the
time of the Federal award must be used Federal share, depending upon Federal
to reduce the Federal award and non- awarding agency requirements. The
Federal entity contributions rather budget and program plans include con-
than to increase the funds committed siderations for performance and pro-
to the project. gram evaluation purposes whenever re-
(2) Addition. With prior approval of quired in accordance with the terms
the Federal awarding agency (except and conditions of the award.
for IHEs and nonprofit research insti- (b) Recipients are required to report
tutions, as described in this paragraph deviations from budget or project scope
(e)) program income may be added to or objective, and request prior approv-
the Federal award by the Federal agen- als from Federal awarding agencies for
cy and the non-Federal entity.The pro- budget and program plan revisions, in
gram income must be used for the pur- accordance with this section.
poses and under the conditions of the (c) For non-construction Federal
Federal award. awards, recipients must request prior
(3) Cost sharing or matching. With approvals from Federal awarding agen-
prior approval of the Federal awarding cies for the following program or budg-
agency, program income may be used et-related reasons:
to meet the cost sharing or matching (1) Change in the scope or the objec-
requirement of the Federal award. The tive of the project or program (even if
amount of the Federal award remains there is no associated budget revision
the same. requiring prior written approval).
(f) Income after the period of perform- (2) Change in a key person specified
ance. There are no Federal require- in the application or the Federal
ments governing the disposition of in- award.
130
OMB Guidance §200.308
(3) The disengagement from the months unless one or more of the con-
project for more than three months, or ditions outlined in paragraphs (e)(2)(i)
a 25 percent reduction in time devoted through (iii) of this section apply. For
to the project, by the approved project one-time extensions, the recipient
director or principal investigator. must notify the Federal awarding
(4) The inclusion, unless waived by agency in writing with the supporting
the Federal awarding agency, of costs reasons and revised period of perform-
that require prior approval in accord- ance at least 10 calendar days before
ance with subpart E of this part as ap- the end of the period of performance
plicable. specified in the Federal award. This
(5) The transfer of funds budgeted for one-time extension must not be exer-
participant support costs to other cat-
egories of expense. cised merely for the purpose of using
(6) Unless described in the applica- unobligated balances. Extensions re-
tion and funded in the approved Fed- quire explicit prior Federal awarding
eral awards, the subawarding, transfer- agency approval when:
ring or contracting out of any work (i) The terms and conditions of the
under a Federal award, including fixed Federal award prohibit the extension.
amount subawards as described in (ii)The extension requires additional
§200.333. This provision does not apply Federal funds.
to the acquisition of supplies, material, (iii) The extension involves any
equipment or general support services. change in the approved objectives or
(7) Changes in the approved cost- scope of the project.
sharing or matching provided by the (3) Carry forward unobligated bal-
non-Federal entity. ances to subsequent budget periods.
(8) The need arises for additional (4) For Federal awards that support
Federal funds to complete the project. research, unless the Federal awarding
(d) No other prior approval require- agency provides otherwise in the Fed-
ments for specific items may be im-
posed unless an exception has been ap- eral award or in the Federal awarding
proved by OMB. See also §§200.102 and agency's regulations, the prior ap-
200.407. proval requirements described in this
(e) Except for requirements listed in paragraph (e)are automatically waived
paragraphs (c)(1) through (8) of this (i.e., recipients need not obtain such
section, the Federal awarding agency is prior approvals) unless one of the con-
authorized, at its option, to waive ditions included in paragraph (e)(2) of
other cost-related and administrative this section applies.
prior written approvals contained in (f) The Federal awarding agency
subparts D and E of this part. Such may, at its option, restrict the transfer
waivers may include authorizing re- of funds among direct cost categories
cipients to do any one or more of the or programs, functions and activities
following: for Federal awards in which the Fed-
(1) Incur project costs 90 calendar eral share of the project exceeds the
days before the Federal awarding agen- simplified acquisition threshold and
cy makes the Federal award. Expenses the cumulative amount of such trans-
more than 90 calendar days pre-award fers exceeds or is expected to exceed 10
require prior approval of the Federal percent of the total budget as last ap-
awarding agency. All costs incurred be- proved by the Federal awarding agen-
fore the Federal awarding agency cy. The Federal awarding agency can-
makes the Federal award are at the re- not permit a transfer that would cause
cipient's risk (i.e., the Federal award- any Federal appropriation to be used
ing agency is not required to reimburse for purposes other than those con-
such costs if for any reason the recipi-
ent does not receive a Federal award or sistent with the appropriation.
if the Federal award is less than antici- (g) All other changes to non-con-
pated and inadequate to cover such struction budgets, except for the
costs). See also§200.458. changes described in paragraph (c) of
(2) Initiate a one-time extension of this section, do not require prior ap-
the period of performance by up to 12 proval(see also§200.407).
131
§200.309 2 CFR Ch. II (1-1-21 Edition)
(h) For construction Federal awards, newal award is issued, a distinct Period
the recipient must request prior writ- of Performance will begin.
ten approval promptly from the Fed-
eral awarding agency for budget revi- PROPERTY STANDARDS
sions whenever paragraph (h)(1), (2), or
(3)of this section applies: §200.310 Insurance coverage.
(1) The revision results from changes The non-Federal entity must, at a
in the scope or the objective of the minimum, provide the equivalent in-
project or program. surance coverage for real property and
(2) The need arises for additional equipment acquired or improved with
Federal funds to complete the project. Federal funds as provided to property
(3) A revision is desired which in- owned by the non-Federal entity. Fed-
volves specific costs for which prior erally-owned property need not be in-
written approval requirements may be sured unless required by the terms and
imposed consistent with applicable conditions of the Federal award.
OMB cost principles listed in subpart
E. §200.311 Real property.
(4) No other prior approval require- (a) Title. Subject to the requirements
ments for budget revisions may be im- and conditions set forth in this section,
posed unless an exception has been ap- title to real property acquired or im-
proved by OMB. proved under a Federal award will vest
(5) When a Federal awarding agency upon acquisition in the non-Federal en-
makes a Federal award that provides tity.
support for construction and non-con- (b) Use. Except as otherwise provided
struction work, the Federal awarding by Federal statutes or by the Federal
agency may require the recipient to ob- awarding agency, real property will be
tain prior approval from the Federal used for the originally authorized pur-
awarding agency before making any pose as long as needed for that purpose,
fund or budget transfers between the during which time the non-Federal en-
two types of work supported. tity must not dispose of or encumber
(i) When requesting approval for its title or other interests.
budget revisions, the recipient must (c) Disposition. When real property is
use the same format for budget infor- no longer needed for the originally au-
mation that was used in the applica- thorized purpose, the non-Federal enti-
tion,unless the Federal awarding agen- ty must obtain disposition instructions
cy indicates a letter of request suffices. from the Federal awarding agency or
(j) Within 30 calendar days from the pass-through entity. The instructions
date of receipt of the request for budg- must provide for one of the following
et revisions, the Federal awarding alternatives:
agency must review the request and (1) Retain title after compensating
notify the recipient whether the budget the Federal awarding agency. The
revisions have been approved. If the re- amount paid to the Federal awarding
vision is still under consideration at agency will be computed by applying
the end of 30 calendar days, the Federal the Federal awarding agency's percent-
awarding agency must inform the re- age of participation in the cost of the
cipient in writing of the date when the original purchase (and costs of any im-
recipient may expect the decision. provements) to the fair market value
§200.309 Modifications to Period of of the property.However,in those situ-
ations where the non-Federal entity is
Performance. disposing of real property acquired or
If a Federal awarding agency or pass- improved with a Federal award and ac-
through entity approves an extension, quiring replacement real property
or if a recipient extends under under the same Federal award, the net
§200.308(e)(2), the Period of Perform- proceeds from the disposition may be
ance will be amended to end at the used as an offset to the cost of the re-
completion of the extension. If a termi- placement property.
nation occurs, the Period of Perform- (2) Sell the property and compensate
ance will be amended to end upon the the Federal awarding agency. The
effective date of termination. If a re- amount due to the Federal awarding
132
OMB Guidance §200.313
agency will be calculated by applying (c) Exempt property means property
the Federal awarding agency's percent- acquired under a Federal award where
age of participation in the cost of the the Federal awarding agency has cho-
original purchase (and cost of any im- sen to vest title to the property to the
provements) to the proceeds of the sale non-Federal entity without further re-
after deduction of any actual and rea- sponsibility to the Federal Govern-
sonable selling and fixing-up expenses. ment, based upon the explicit terms
If the Federal award has not been and conditions of the Federal award.
closed out, the net proceeds from sale The Federal awarding agency may ex-
may be offset against the original cost ercise this option when statutory au-
of the property. When the non-Federal thority exists. Absent statutory au-
entity is directed to sell property, sales thority and specific terms and condi-
procedures must be followed that pro- tions of the Federal award, title to ex-
vide for competition to the extent empt property acquired under the Fed-
practicable and result in the highest eral award remains with the Federal
possible return. Government.
(3) Transfer title to the Federal
awarding agency or to a third party §200.313 Equipment.
designated/approved by the Federal See also§200.439.
awarding agency. The non-Federal en- (a) Title. Subject to the requirements
tity is entitled to be paid an amount and conditions set forth in this section,
calculated by applying the non-Federal title to equipment acquired under a
entity's percentage of participation in Federal award will vest upon acquisi-
the purchase of the real property (and tion in the non-Federal entity. Unless
cost of any improvements) to the cur- a statute specifically authorizes the
rent fair market value of the property. Federal agency to vest title in the non-
Federal entity without further respon-
§200.312 Federally-owned and exempt sibility to the Federal Government,
property. and the Federal agency elects to do so,
(a) Title to federally-owned property the title must be a conditional title.
remains vested in the Federal Govern- Title must vest in the non-Federal en-
ment. The non-Federal entity must tity subject to the following condi-
submit annually an inventory listing of tions:
federally-owned property in its custody (1)Use the equipment for the author-
to the Federal awarding agency. Upon ized purposes of the project during the
completion of the Federal award or period of performance, or until the
when the property is no longer needed, property is no longer needed for the
the non-Federal entity must report the purposes of the project.
property to the Federal awarding agen- (2) Not encumber the property with-
cy for further Federal agency utiliza- out approval of the Federal awarding
tion. agency or pass-through entity.
(b) If the Federal awarding agency (3) Use and dispose of the property in
has no further need for the property, it accordance with paragraphs (b), (c),
must declare the property excess and and(e)of this section.
report it for disposal to the appropriate (b) General. A state must use, manage
Federal disposal authority, unless the and dispose of equipment acquired
Federal awarding agency has statutory under a Federal award by the state in
authority to dispose of the property by accordance with state laws and proce-
alternative methods (e.g., the author- dures. Other non-Federal entities must
ity provided by the Federal Technology follow paragraphs (c) through (e) of
Transfer Act (15 U.S.C. 3710 (i)) to do- this section.
nate research equipment to edu- (c) Use. (1) Equipment must be used
cational and nonprofit organizations in by the non-Federal entity in the pro-
accordance with Executive Order 12999, gram or project for which it was ac-
"Educational Technology: Ensuring quired as long as needed, whether or
Opportunity for All Children in the not the project or program continues
Next Century."). The Federal awarding to be supported by the Federal award,
agency must issue appropriate instruc- and the non-Federal entity must not
tions to the non-Federal entity. encumber the property without prior
133
§200.313 2 CFR Ch. II (1-1-21 Edition)
approval of the Federal awarding agen- Federal award, until disposition takes
cy. The Federal awarding agency may place will, as a minimum, meet the fol-
require the submission of the applica- lowing requirements:
ble common form for equipment. When (1) Property records must be main-
no longer needed for the original pro- tained that include a description of the
gram or project, the equipment may be property, a serial number or other
used in other activities supported by identification number, the source of
the Federal awarding agency, in the funding for the property (including the
following order of priority: FAIN), who holds title, the acquisition
(i) Activities under a Federal award date, and cost of the property, percent-
from the Federal awarding agency age of Federal participation in the
which funded the original program or project costs for the Federal award
project, then under which the property was acquired,
(ii) Activities under Federal awards the location, use and condition of the
from other Federal awarding agencies. property, and any ultimate disposition
This includes consolidated equipment data including the date of disposal and
for information technology systems. sale price of the property.
(2)During the time that equipment is (2) A physical inventory of the prop-
used on the project or program for erty must be taken and the results rec-
which it was acquired, the non-Federal onciled with the
entity must also make equipment property years.
records at
least once every two
available for use on other projects or must A control system must be devel-
programs currently or previously sup- oped to ensure adequate safeguards to
ported by the Federal Government,
provided that such use will not inter- prevent loss, damage, or theft of the
fere with the work on the projects or property. Any loss, damage, or theft
program for which it was originally ac- must be investigated.
quired. First preference for other use (4) Adequate maintenance procedures
must be given to other programs or must be developed to keep the property
projects supported by Federal awarding in good condition.
agency that financed the equipment (5) If the non-Federal entity is au-
and second preference must be given to thorized or required to sell the prop-
programs or projects under Federal erty, proper sales procedures must be
awards from other Federal awarding established to ensure the highest pos-
agencies. Use for non-federally-funded sible return.
programs or projects is also permis- (e) Disposition. When original or re-
sible. User fees should be considered if placement equipment acquired under a
appropriate. Federal award is no longer needed for
(3) Notwithstanding the encourage- the original project or program or for
ment in §200.307 to earn program in- other activities currently or previously
come, the non-Federal entity must not supported by a Federal awarding agen-
use equipment acquired with the Fed- cy, except as otherwise provided in
eral award to provide services for a fee Federal statutes, regulations, or Fed-
that is less than private companies eral awarding agency disposition in-
charge for equivalent services unless structions, the non-Federal entity
specifically authorized by Federal stat- must request disposition instructions
ute for as long as the Federal Govern- from the Federal awarding agency if
ment retains an interest in the equip- required by the terms and conditions of
ment. the Federal award. Disposition of the
(4) When acquiring replacement equipment will be made as follows, in
equipment, the non-Federal entity may accordance with Federal awarding
use the equipment to be replaced as a agency disposition instructions:
trade-in or sell the property and use (1)Items of equipment with a current
the proceeds to offset the cost of the per unit fair market value of $5,000 or
replacement property. less may be retained, sold or otherwise
(d) Management requirements. Proce- disposed of with no further responsi-
dures for managing equipment (includ- bility to the Federal awarding agency.
ing replacement equipment), whether (2) Except as provided in §200.312(b),
acquired in whole or in part under a or if the Federal awarding agency fails
134
OMB Guidance §200.315
to provide requested disposition in- §200.315 Intangible property.
structions within 120 days, items of
equipment with a current per-unit fair (a) Title to intangible property (see
definition for Intangible property in
market value in excess of$5,000 may be §200.1) acquired under a Federal award
retained by the non-Federal entity or vests upon acquisition in the non-Fed-
sold. The Federal awarding agency is eral entity. The non-Federal entity
entitled to an amount calculated by must use that property for the origi-
multiplying the current market value nally-authorized purpose, and must not
or proceeds from sale by the Federal encumber the
awarding agency's percentage of par- property without cy.
When
ticipation in the cost of the original proval of the Federal awarding agency.
purchase. If the equipment is sold, the When un longer needed for the origif
nally authorized purpose, disposition of
Federal awarding agency may permit the intangible property must occur in
the non-Federal entity to deduct and accordance with the
retain from the Federal share $500 or provisions in
§200.313(e).
ten percent of the proceeds, whichever (b)The non-Federal entity may copy-
is less, for its selling and handling ex- right any work that is subject to copy-
penses. right and was developed, or for which
(3) The non-Federal entity may ownership was acquired, under a Fed-
transfer title to the property to the eral award.The Federal awarding agen-
Federal Government or to an eligible cy reserves a royalty-free, nonexclu-
third party provided that, in such sive and irrevocable right to reproduce,
cases, the non-Federal entity must be publish, or otherwise use the work for
entitled to compensation for its attrib- Federal purposes, and to authorize oth-
utable percentage of the current fair ers to do so.
market value of the property. (c) The non-Federal entity
(4) In cases where a non-Federal enti- is subject
to applicable regulations governing
ty fails to take appropriate disposition patents and inventions, including gov-
actions, the Federal awarding agency ernmentwide regulations issued by the
may direct the non-Federal entity to Department of Commerce at 37 CFR
take disposition actions. part 401, "Rights to Inventions Made
§200.314 Supplies. by Nonprofit Organizations and Small
Business Firms Under Government
See also§200.453. Awards, Contracts and Cooperative
(a) Title to supplies will vest in the Agreements."
non-Federal entity upon acquisition. If (d) The Federal Government has the
there is a residual inventory of unused right to:
supplies exceeding$5,000 in total aggre- (1) Obtain, reproduce, publish, or oth-
gate value upon termination or com- erwise use the data produced under a
pletion of the project or program and Federal award; and
the supplies are not needed for any (2)Authorize others to receive,repro-
other Federal award, the non-Federal duce, publish, or otherwise use such
entity must retain the supplies for use data for Federal purposes.
on other activities or sell them, but (e)(1) In response to a Freedom of In-
must, in either case, compensate the formation Act (FOIA) request for re-
Federal Government for its share. The search data relating to published re-
amount of compensation must be corn- search findings produced under a Fed-
puted in the same manner as for equip- eral award that were used by the Fed-
ment. See§200.313(e)(2)for the calcula- eral Government in developing an
tion methodology. agency action that has the force and
(b) As long as the Federal Govern- effect of law, the Federal awarding
ment retains an interest in the sup- agency must request, and the non-Fed-
plies, the non-Federal entity must not eral entity must provide, within a rea-
use supplies acquired under a Federal sonable time, the research data so that
award to provide services to other or- they can be made available to the pub-
ganizations for a fee that is less than lic through the procedures established
private companies charge for equiva- under the FOIA. If the Federal award-
lent services, unless specifically au- ing agency obtains the research data
thorized by Federal statute. solely in response to a FOIA request,
135
§200.316 2 CFR Ch. II (1-1-21 Edition)
the Federal awarding agency may quire the non-Federal entity to record
charge the requester a reasonable fee liens or other appropriate notices of
equaling the full incremental cost of record to indicate that personal or real
obtaining the research data. This fee property has been acquired or improved
should reflect costs incurred by the with a Federal award and that use and
Federal agency and the non-Federal en- disposition conditions apply to the
tity. This fee is in addition to any fees property.
the Federal awarding agency may as-
sess under the FOIA (5 U.S.C. Procurement Standards
552(a)(4)(A)).
(2)Published research findings means §200.317 Procurements by states.
when:
(i) Research findings are published in When procuring property and serv-
a peer-reviewed scientific or technical ices under a Federal award, a State
journal; or must follow the same policies and pro-
(ii)A Federal agency publicly and of- cedures it uses for procurements from
ficially cites the research findings in its non-Federal funds. The State will
support of an agency action that has comply with §§200.321, 200.322, and
the force and effect of law. "Used by 200.323 and ensure that every purchase
the Federal Government in developing order or other contract includes any
an agency action that has the force and clauses required by §200.327. All other
effect of law" is defined as when an non-Federal entities, including sub-
agency publicly and officially cites the recipients of a State, must follow the
research findings in support of an agen- procurement standards in §§200.318
cy action that has the force and effect through 200.327.
of law.
(3) Research data means the recorded §200.318 General procurement stand-
factual material commonly accepted in ards•
the scientific community as necessary (a)The non-Federal entity must have
to validate research findings, but not and use documented procurement pro-
any of the following: Preliminary anal- cedures, consistent with State, local,
yses, drafts of scientific papers, plans and tribal laws and regulations and the
for future research, peer reviews, or standards of this section, for the acqui-
communications with colleagues. This sition of property or services required
"recorded" material excludes physical under a Federal award or subaward.
objects (e.g., laboratory samples). Re The non-Federal entity's documented
search data also do not include:
(i) Trade secrets, commercial infor- procurement procedures must conform
mation, materials necessary to be held to the procurement standards identi-
confidential by a researcher until they fled in§§200.317 through 200.327.
are published, or similar information (b) Non-Federal entities must main-
which is protected under law;and tain oversight to ensure that contrac-
(ii) Personnel and medical informa- tors perform in accordance with the
tion and similar information the dis- terms, conditions, and specifications of
closure of which would constitute a their contracts or purchase orders.
clearly unwarranted invasion of per- (c)(1) The non-Federal entity must
sonal privacy,such as information that maintain written standards of conduct
could be used to identify a particular covering conflicts of interest and gov-
person in a research study. erning the actions of its employees en-
gaged 200.316 Property trust relationship. in the selection, award and ad-
ministration of contracts. No em-
Real property, equipment, and intan- ployee, officer, or agent may partici-
gible property, that are acquired or im- pate in the selection, award, or admin-
proved with a Federal award must be istration of a contract supported by a
held in trust by the non-Federal entity Federal award if he or she has a real or
as trustee for the beneficiaries of the apparent conflict of interest. Such a
project or program under which the conflict of interest would arise when
property was acquired or improved. the employee, officer, or agent, any
The Federal awarding agency may re-
136
OMB Guidance §200.318
member of his or her immediate fam- using strategic sourcing, shared serv-
ily, his or her partner, or an organiza- ices, and other similar procurement ar-
tion which employs or is about to em- rangements.
ploy any of the parties indicated here- (f) The non-Federal entity is encour-
in, has a financial or other interest in aged to use Federal excess and surplus
or a tangible personal benefit from a property in lieu of purchasing new
firm considered for a contract. The of- equipment and property whenever such
ficers, employees, and agents of the use is feasible and reduces project
non-Federal entity may neither solicit costs.
nor accept gratuities, favors, or any- (g)The non-Federal entity is encour-
thing of monetary value from contrac- aged to use value engineering clauses
tors or parties to subcontracts. How- in contracts for construction projects
ever, non-Federal entities may set of sufficient size to offer reasonable op-
standards for situations in which the portunities for cost reductions. Value
financial interest is not substantial or engineering is a systematic and cre-
the gift is an unsolicited item of nomi- ative analysis of each contract item or
nal value. The standards of conduct task to ensure that its essential func-
must provide for disciplinary actions tion is provided at the overall lower
to be applied for violations of such cost.
standards by officers, employees, or (h) The non-Federal entity must
agents of the non-Federal entity. award contracts only to responsible
(2) If the non-Federal entity has a contractors possessing the ability to
parent, affiliate, or subsidiary organi- perform successfully under the terms
zation that is not a State,local govern- and conditions of a proposed procure-
ment, or Indian tribe, the non-Federal ment. Consideration will be given to
entity must also maintain written such matters as contractor integrity,
standards of conduct covering organi- compliance with public policy, record
zational conflicts of interest. Organiza- of past performance, and financial and
tional conflicts of interest means that technical resources. See also§200.214.
because of relationships with a parent (i) The non-Federal entity must
company, affiliate, or subsidiary orga- maintain records sufficient to detail
nization, the non-Federal entity is un- the history of procurement. These
able or appears to be unable to be im- records will include, but are not nec-
partial in conducting a procurement essarily limited to, the following: Ra-
action involving a related organiza- tionale for the method of procurement,
tion. selection of contract type, contractor
(d) The non-Federal entity's proce- selection or rejection, and the basis for
dures must avoid acquisition of unnec- the contract price.
essary or duplicative items. Consider- (j)(1)The non-Federal entity may use
ation should be given to consolidating a time-and-materials type contract
or breaking out procurements to ob- only after a determination that no
tain a more economical purchase. other contract is suitable and if the
Where appropriate, an analysis will be contract includes a ceiling price that
made of lease versus purchase alter- the contractor exceeds at its own risk.
natives, and any other appropriate Time-and-materials type contract
analysis to determine the most eco- means a contract whose cost to a non-
nomical approach. Federal entity is the sum of:
(e) To foster greater economy and ef- (i) The actual cost of materials; and
ficiency, and in accordance with efforts (ii) Direct labor hours charged at
to promote cost-effective use of shared fixed hourly rates that reflect wages,
services across the Federal Govern- general and administrative expenses,
ment, the non-Federal entity is encour- and profit.
aged to enter into state and local inter- (2) Since this formula generates an
governmental agreements or inter-en- open-ended contract price, a time-and-
tity agreements where appropriate for materials contract provides no positive
procurement or use of common or profit incentive to the contractor for
shared goods and services. Competition cost control or labor efficiency. There-
requirements will be met with applied fore, each contract must set a ceiling
to documented procurement actions price that the contractor exceeds at its
137
§200.319 2 CFR Ch. II (1-1-21 Edition)
own risk. Further, the non-Federal en- product to be offered and describing
tity awarding such a contract must as- the performance or other relevant re-
sert a high degree of oversight in order quirements of the procurement; and
to obtain reasonable assurance that (7) Any arbitrary action in the pro-
the contractor is using efficient meth- curement process.
ods and effective cost controls. (c) The non-Federal entity must con-
(k) The non-Federal entity alone duct procurements in a manner that
must be responsible, in accordance prohibits the use of statutorily or ad-
with good administrative practice and ministratively imposed state, local, or
sound business judgment, for the set- tribal geographical preferences in the
tlement of all contractual and adminis- evaluation of bids or proposals, except
trative issues arising out of procure- in those cases where applicable Federal
ments. These issues include, but are statutes expressly mandate or encour-
not limited to, source evaluation, pro- age geographic preference. Nothing in
tests, disputes, and claims. These this section preempts state licensing
standards do not relieve the non-Fed- laws. When contracting for architec-
eral entity of any contractual respon- tural and engineering (A/E) services,
sibilities under its contracts. The Fed- geographic location may be a selection
eral awarding agency will not sub- criterion provided its application
stitute its judgment for that of the leaves an appropriate number of quail-
non-Federal entity unless the matter is fied firms, given the nature and size of
primarily a Federal concern. Viola- the project, to compete for the con-
tions of law will be referred to the tract.
local, state, or Federal authority hav- (d)The non-Federal entity must have
ing proper jurisdiction. written procedures for procurement
§200.319 Competition. transactions. These procedures must
P ensure that all solicitations:
(a) All procurement transactions for (1) Incorporate a clear and accurate
the acquisition of property or services description of the technical require-
required under a Federal award must ments for the material, product, or
be conducted in a manner providing service to be procured. Such descrip-
full and open competition consistent tion must not, in competitive procure-
with the standards of this section and ments, contain features which unduly
§200.320. restrict competition. The description
(b) In order to ensure objective con- may include a statement of the quali-
tractor performance and eliminate un- tative nature of the material, product
fair competitive advantage, contrac- or service to be procured and, when
tors that develop or draft specifica- necessary, must set forth those min-
tions, requirements, statements of imum essential characteristics and
work, or invitations for bids or re- standards to which it must conform if
quests for proposals must be excluded it is to satisfy its intended use. De-
from competing for such procurements. tailed product specifications should be
Some of the situations considered to be avoided if at all possible. When it is
restrictive of competition include but impractical or uneconomical to make a
are not limited to: clear and accurate description of the
(1) Placing unreasonable require- technical requirements, a "brand name
ments on firms in order for them to or equivalent" description may be used
qualify to do business; as a means to define the performance
(2) Requiring unnecessary experience or other salient requirements of pro-
and excessive bonding; curement. The specific features of the
(3) Noncompetitive pricing practices named brand which must be met by of-
between firms or between affiliated fers must be clearly stated;and
companies; (2) Identify all requirements which
(4) Noncompetitive contracts to con- the offerors must fulfill and all other
sultants that are on retainer contracts; factors to be used in evaluating bids or
(5) Organizational conflicts of inter- proposals.
est; (e) The non-Federal entity must en-
(6) Specifying only a "brand name" sure that all prequalified lists of per-
product instead of allowing "an equal" sons, firms, or products which are used
138
OMB Guidance §200.320
in acquiring goods and services are cur- (iii) Micro-purchase thresholds. The
rent and include enough qualified non-Federal entity is responsible for
sources to ensure maximum open and determining and documenting an ap-
free competition. Also, the non-Federal propriate micro-purchase threshold
entity must not preclude potential bid- based on internal controls, an evalua-
ders from qualifying during the solici- tion of risk, and its documented pro-
tation period. curement procedures. The micro-pur-
(f) Noncompetitive procurements can chase threshold used by the non-Fed-
only be awarded in accordance with eral entity must be authorized or not
§200.320(c). prohibited under State, local, or tribal
laws or regulations. Non-Federal enti-
§200.320 Methods of procurement to ties may establish a threshold higher
be followed. than the Federal threshold established
The non-Federal entity must have in the Federal Acquisition Regulations
and use documented procurement pro- (FAR) in accordance with paragraphs
cedures, consistent with the standards (a)(1)(iv)and(v)of this section.
of this section and §§200.317, 200.318, (iv) Non Federal entity increase to the
and 200.319 for any of the following micro-purchase threshold up to $50,000.
methods of procurement used for the Non-Federal entities may establish a
acquisition of property or services re- threshold higher than the micro-pur-
quired under a Federal award or sub- chase threshold identified in the FAR
award. in accordance with the requirements of
(a) Informal procurement methods. this section. The non-Federal entity
to
When the value of the procurement for $50,000may self-certifyanannual a threshold up must
property or services under a Federal maintain on o basis and muse
award does not exceed the simplified ac- ae documentation to be made
quisition threshold (SAT), as defined in available to the Federal awarding
§200.1, or a lower threshold established agency and auditors in accordance with
anon Federal entity, formal pro- §200.334. The self-certification must in-
byclude a justification, clear identifica-
curement methods are not required. tion of the threshold, and supporting
The non-Federal entity may use infor- documentation of any of the following:
mal procurement methods to expedite (A) A qualification as a low-risk
the completion of its transactions and auditee, in accordance with the criteria
minimize the associated administra- in§200.520 for the most recent audit;
tive burden and cost. The informal (B) An annual internal institutional
methods used for procurement of prop- risk assessment to identify, mitigate,
erty or services at or below the SAT in- and manage financial risks; or,
elude: (C) For public institutions, a higher
(1) Micro-purchases—(i) Distribution. threshold consistent with State law.
The acquisition of supplies or services, (v) Non-Federal entity increase to the
the aggregate dollar amount of which micro-purchase threshold over $50,000.
does not exceed the micro-purchase Micro-purchase thresholds higher than
threshold (See the definition of micro- $50,000 must be approved by the cog-
purchase in §200.1). To the maximum nizant agency for indirect costs. The
extent practicable, the non-Federal en- non-federal entity must submit a re-
tity should distribute micro-purchases quest with the requirements included
equitably among qualified suppliers. in paragraph (a)(1)(iv) of this section.
(ii) Micro-purchase awards. Micro-pur- The increased threshold is valid until
chases may be awarded without solic- there is a change in status in which the
iting competitive price or rate justification was approved.
quotations if the non-Federal entity (2) Small purchases—(i) Small purchase
considers the price to be reasonable procedures. The acquisition of property
based on research, experience, purchase or services, the aggregate dollar
history or other information and docu- amount of which is higher than the
ments it files accordingly. Purchase micro-purchase threshold but does not
cards can be used for micro-purchases exceed the simplified acquisition
if procedures are documented and ap- threshold. If small purchase procedures
proved by the non-Federal entity. are used, price or rate quotations must
139
§200.320 2 CFR Ch. II (1-1-21 Edition)
be obtained from an adequate number (ii) If sealed bids are used, the fol-
of qualified sources as determined ap- lowing requirements apply:
propriate by the non-Federal entity. (A) Bids must be solicited from an
(ii) Simplified acquisition thresholds. adequate number of qualified sources,
The non-Federal entity is responsible providing them sufficient response
for determining an appropriate sim- time prior to the date set for opening
plified acquisition threshold based on the bids, for local, and tribal govern-
internal controls, an evaluation of risk ments, the invitation for bids must be
and its documented procurement proce- publicly advertised;
dures which must not exceed the (B) The invitation for bids, which
threshold established in the FAR. will include any specifications and per-
When applicable, a lower simplified ac- tinent attachments, must define the
quisition threshold used by the non- items or services in order for the bidder
Federal entity must be authorized or to properly respond;
not prohibited under State, local, or (C) All bids will be opened at the
tribal laws or regulations. time and place prescribed in the invita-
(b) Formal procurement methods. When tion for bids, and for local and tribal
the value of the procurement for prop
erty or services under a Federal finan- governments, the bids must be opened
cial assistance award exceeds the SAT, publicly;
or a lower threshold established by a (D) A firm fixed price contract award
non-Federal entity, formal procure- will be made in writing to the lowest
ment methods are required. Formal responsive and responsible bidder.
procurement methods require following Where specified in bidding documents,
documented procedures. Formal pro- factors such as discounts, transpor-
curement methods also require public tation cost, and life cycle costs must
advertising unless a non-competitive be considered in determining which bid
procurement can be used in accordance is lowest. Payment discounts will only
with §200.319 or paragraph (c) of this be used to determine the low bid when
section. The following formal methods prior experience indicates that such
of procurement are used for procure discounts are usually taken advantage
ment of property or services above the of; and
simplified acquisition threshold or a (E) Any or all bids may be rejected if
value below the simplified acquisition there is a sound documented reason.
threshold the non-Federal entity deter- (2) Proposals. A procurement method
mines to be appropriate: in which either a fixed price or cost-re-
(1)Sealed bids. A procurement method imbursement type contract is awarded.
in which bids are publicly solicited and Proposals are generally used when con-
a firm fixed-price contract (lump sum ditions are not appropriate for the use
or unit price) is awarded to the respon- of sealed bids. They are awarded in ac-
sible bidder whose bid, conforming with cordance with the following require-
all the material terms and conditions ments:
of the invitation for bids, is the lowest (i) Requests for proposals must be
in price. The sealed bids method is the publicized and identify all evaluation
preferred method for procuring con- factors and their relative importance.
struction,if the conditions. Proposals must be solicited from an
(i) In order for sealed bidding to be adequate number of qualified offerors.
feasible, the following conditions Any response to publicized requests for
should be present: proposals must be considered to the
(A) A complete, adequate, and real- maximum extent practical;
istic specification or purchase descrip- (ii) The non-Federal entity must
tion is available; have a written method for conducting
(B) Two or more responsible bidders technical evaluations of the proposals
are willing and able to compete effec- received and making selections;
tively for the business;and (iii) Contracts must be awarded to
(C) The procurement lends itself to a the responsible offeror whose proposal
firm fixed price contract and the selec- is most advantageous to the non-Fed-
tion of the successful bidder can be eral entity, with price and other fac-
made principally on the basis of price. tors considered; and
140
OMB Guidance §200.323
(iv) The non-Federal entity may use tasks or quantities to permit max-
competitive proposal procedures for imum participation by small and mi-
qualifications-based procurement of ar- nority businesses, and women's busi-
chitectural/engineering (A/E) profes- ness enterprises;
sional services whereby offeror's quali- (4) Establishing delivery schedules,
fications are evaluated and the most where the requirement permits, which
qualified offeror is selected, subject to encourage participation by small and
negotiation of fair and reasonable corn- minority businesses, and women's busi-
pensation. The method, where price is ness enterprises;
not used as a selection factor, can only (5) Using the services and assistance,
be used in procurement of A/E profes- as appropriate, of such organizations as
sional services. It cannot be used to the Small Business Administration and
purchase other types of services though the Minority Business Development
A/E firms that are a potential source to Agency of the Department of Com-
perform the proposed effort. merce; and
(c) Noncompetitive procurement. There (6)Requiring the prime contractor, if
are specific circumstances in which subcontracts are to be let, to take the
noncompetitive procurement can be affirmative steps listed in paragraphs
used. Noncompetitive procurement can (b)(1)through(5)of this section.
only be awarded if one or more of the
following circumstances apply: §200.322 Domestic preferences for pro-
(1) The acquisition of property or curements.
services, the aggregate dollar amount (a) As appropriate and to the extent
of which does not exceed the micro- consistent with law, the non-Federal
purchase threshold (see paragraph entity should, to the greatest extent
(a)(1)of this section); practicable under a Federal award, pro-
(2) The item is available only from a vide a preference for the purchase, ac-
single source;
(3) The public exigency or emergency materialson, or use of goods, thpreducts, ord
for the requirement will not permit a materials produced in the United
States (including but not limited to
delay resulting from publicizing a com- iron, aluminum, steel, cement, and
petitive solicitation; other manufactured products). The re-
(4) The Federal awarding agency or quirements of this section must be in-
pass-through entity expressly author- cluded in all subawards including all
izes a noncompetitive procurement in contracts and purchase orders for work
response to a written request from the
non-Federal entity;or or products under this award.
(5) After solicitation of a number of (b)For purposes of this section:
sources, competition is determined in- (1) Produced in the United States"
adequate. means, for iron and steel products, that
all manufacturing processes, from the
§200.321 Contracting with small and initial melting stage through the appli-
minority businesses, women's busi- cation of coatings, occurred in the
ness enterprises, and labor surplus United States.
area firms. (2) "Manufactured products" means
(a)The non-Federal entity must take items and construction materials com-
all necessary affirmative steps to as- Posed in whole or in part of non-ferrous
sure that minority businesses,women's metals such as aluminum; plastics and
business enterprises, and labor surplus polymer-based products such as poly-
area firms are used when possible. vinyl chloride pipe; aggregates such as
(b)Affirmative steps must include: concrete; glass, including optical fiber;
(1) Placing qualified small and mi- and lumber.
nority businesses and women's business
enterprises on solicitation lists; §200.323 Procurement of recovered
(2) Assuring that small and minority materials.
businesses, and women's business en- A non-Federal entity that is a state
terprises are solicited whenever they agency or agency of a political subdivi-
are potential sources; sion of a state and its contractors must
(3) Dividing total requirements,when comply with section 6002 of the Solid
economically feasible, into smaller Waste Disposal Act, as amended by the
141
§200.324 2 CFR Ch. II (1-1-21 Edition)
Resource Conservation and Recovery (d)The cost plus a percentage of cost
Act. The requirements of Section 6002 and percentage of construction cost
include procuring only items des- methods of contracting must not be
ignated in guidelines of the Environ- used.
mental Protection Agency (EPA) at 40
CFR part 247 that contain the highest §200.325 Federal awarding agency or
percentage of recovered materials prac- entity review.
ticable, consistent with maintaining a (a) The non-Federal entity must
satisfactory level of competition, make available, upon request of the
where the purchase price of the item Federal awarding agency or pass-
exceeds $10,000 or the value of the through entity, technical specifica-
quantity acquired during the preceding tions on proposed procurements where
fiscal year exceeded $10,000; procuring the Federal awarding agency or pass-
solid waste management services in a through entity believes such review is
manner that maximizes energy and re- needed to ensure that the item or serv-
source recovery;and establishing an af- ice specified is the one being proposed
firmative procurement program for for acquisition. This review generally
procurement of recovered materials will take place prior to the time the
identified in the EPA guidelines. specification is incorporated into a so-
licitation document. However, if the
§200.324 Contract cost and price. non-Federal entity desires to have the
(a) The non-Federal entity must per- review accomplished after a solicita
form a cost or price analysis in connec tion has been developed, the Federal
tion with every procurement action in awarding agency or pass-through enti
excess of the Simplified Acquisition ty may still review the specifications,
Threshold including contract modifica- with icalh aspectew usually the pliroposed
to the
tions. The method and degree of anal-
chase.
aspects of proposed pur-
ysis is dependent on the facts sur- (b)chase.
rounding the particular procurement make The non-Federalupnrequest,entt muste
situation, but as a starting point, the available upon for the
pass-
non-Federal entity must make inde- thrFederal awarding agency or pendent estimates before receiving bids view,
procurement entity pre-procurement re
view, documents, such as
or proposals. requests for proposals or invitations
(b) The non-Federal entity must ne- for bids, or independent cost estimates,
gotiate profit as a separate element of when:
the price for each contract in which (1) The non-Federal entity's procure-
there is no price competition and in all ment procedures or operation fails to
cases where cost analysis is performed. comply with the procurement stand-
To establish a fair and reasonable prof- ards in this part;
it, consideration must be given to the (2) The procurement is expected to
complexity of the work to be per- exceed the Simplified Acquisition
formed, the risk borne by the con- Threshold and is to be awarded without
tractor, the contractor's investment, competition or only one bid or offer is
the amount of subcontracting, the received in response to a solicitation;
quality of its record of past perform- (3) The procurement, which is ex-
ance, and industry profit rates in the pected to exceed the Simplified Acqui-
surrounding geographical area for sition Threshold, specifies a "brand
similar work. name"product;
(c)Costs or prices based on estimated (4) The proposed contract is more
costs for contracts under the Federal than the Simplified Acquisition
award are allowable only to the extent Threshold and is to be awarded to
that costs incurred or cost estimates other than the apparent low bidder
included in negotiated prices would be under a sealed bid procurement; or
allowable for the non-Federal entity (5) A proposed contract modification
under subpart E of this part. The non- changes the scope of a contract or in-
Federal entity may reference its own creases the contract amount by more
cost principles that comply with the than the Simplified Acquisition
Federal cost principles. Threshold.
142
OMB Guidance §200.329
(c) The non-Federal entity is exempt contract price. A "performance bond"
from the pre-procurement review in is one executed in connection with a
paragraph (b)of this section if the Fed- contract to secure fulfillment of all the
eral awarding agency or pass-through contractor's requirements under such
entity determines that its procurement contract.
systems comply with the standards of (c)A payment bond on the part of the
this part. contractor for 100 percent of the con-
(1) The non-Federal entity may re- tract price. A "payment bond" is one
quest that its procurement system be executed in connection with a contract
reviewed by the Federal awarding to assure payment as required by law
agency or pass-through entity to deter- of all persons supplying labor and ma-
mine whether its system meets these terial in the execution of the work pro-
standards in order for its system to be vided for in the contract.
certified. Generally, these reviews
must occur where there is continuous §200.327 Contract provisions.
high-dollar funding, and third-party The non-Federal entity's contracts
contracts are awarded on a regular must contain the applicable provisions
basis;
(2) The non-Federal entity may self- described in appendix II to this part.
certify its procurement system. Such PERFORMANCE AND FINANCIAL
self-certification must not limit the MONITORING AND REPORTING
Federal awarding agency's right to sur-
vey the system. Under a self-certifi- §200.328 Financial reporting.
cation procedure, the Federal awarding
agency may rely on written assurances Unless otherwise approved by OMB,
from the non-Federal entity that it is the Federal awarding agency must so-
complying with these standards. The licit only the OMB-approved govern-
non-Federal entity must cite specific mentwide data elements for collection
policies, procedures, regulations, or of financial information (at time of
standards as being in compliance with publication the Federal Financial Re-
these requirements and have its system port or such future, OMB-approved,
available for review. governmentwide data elements avail-
able from the OMB-designated stand-
§200.326 Bonding requirements. ards lead. This information must be
For construction or facility improve- collected with the frequency required
ment contracts or subcontracts exceed- by the terms and conditions of the Fed-
ing the Simplified Acquisition Thresh- eral award, but no less frequently than
old, the Federal awarding agency or annually nor more frequently than
pass-through entity may accept the quarterly except in unusual cir-
bonding policy and requirements of the cumstances, for example where more
non-Federal entity provided that the frequent reporting is necessary for the
Federal awarding agency or pass- effective monitoring of the Federal
through entity has made a determina- award or could significantly affect pro-
tion that the Federal interest is ade- gram outcomes, and preferably in co-
quately protected. If such a determina- ordination with performance reporting.
tion has not been made, the minimum The Federal awarding agency must use
requirements must be as follows: OMB-approved common information
(a) A bid guarantee from each bidder collections, as applicable, when pro-
equivalent to five percent of the bid viding financial and performance re-
price. The "bid guarantee" must con- porting information.
sist of a firm commitment such as a
bid bond, certified check, or other ne- §200.329 Monitoring and reporting
gotiable instrument accompanying a program performance.
bid as assurance that the bidder will, (a) Monitoring by the non-Federal enti-
upon acceptance of the bid, execute ty. The non-Federal entity is respon-
such contractual documents as may be sible for oversight of the operations of
required within the time specified. the Federal award supported activities.
(b)A performance bond on the part of The non-Federal entity must monitor
the contractor for 100 percent of the its activities under Federal awards to
143
§200.329 2 CFR Ch. II (1-1-21 Edition)
assure compliance with applicable Fed- Federal entity and/or pass-through en-
eral requirements and performance ex- tity must be due no later than 90 cal-
pectations are being achieved. Moni- endar days after the reporting period.
toring by the non-Federal entity must Reports submitted quarterly or semi-
cover each program, function or activ- annually must be due no later than 30
ity. See also§200.332. calendar days after the reporting pe-
(b) Reporting program performance. riod. Alternatively, the Federal award-
The Federal awarding agency must use ing agency or pass-through entity may
OMB-approved common information require annual reports before the anni-
collections, as applicable, when pro- versary dates of multiple year Federal
viding financial and performance re- awards. The final performance report
porting information. As appropriate submitted by the non-Federal entity
and in accordance with above men- and/or pass-through entity must be due
tioned information collections, the no later than 120 calendar days after
Federal awarding agency must require the period of performance end date. A
the recipient to relate financial data subrecipient must submit to the pass-
and accomplishments to performance through entity, no later than 90 cal-
goals and objectives of the Federal endar days after the period of perform-
award. Also, in accordance with above ance end date, all final performance re-
mentioned common information collec- ports as required by the terms and con-
tions, and when required by the terms ditions of the Federal award. See also
and conditions of the Federal award, §200.344. If a justified request is sub-
recipients must provide cost informa- mitted by a non-Federal entity, the
tion to demonstrate cost effective Federal agency may extend the due
practices (e.g., through unit cost data). date for any performance report.
In some instances (e.g., discretionary (2) As appropriate in accordance with
research awards), this will be limited above mentioned performance report-
to the requirement to submit technical ing, these reports will contain,for each
performance reports(to be evaluated in Federal award, brief information on
accordance with Federal awarding the following unless other data ele-
agency policy). Reporting require- ments are approved by OMB in the
ments must be clearly articulated such agency information collection request:
that, where appropriate, performance (i) A comparison of actual accom-
during the execution of the Federal plishments to the objectives of the
award has a standard against which Federal award established for the pe-
non-Federal entity performance can be riod. Where the accomplishments of
measured. the Federal award can be quantified, a
(c) Non-construction performance re- computation of the cost (for example,
ports. The Federal awarding agency related to units of accomplishment)
must use standard, governmentwide may be required if that information
OMB-approved data elements for col- will be useful. Where performance
lection of performance information in- trend data and analysis would be in-
cluding performance progress reports, formative to the Federal awarding
Research Performance Progress Re- agency program, the Federal awarding
ports. agency should include this as a per-
(1) The non-Federal entity must sub- formance reporting requirement.
mit performance reports at the inter- (ii) The reasons why established
val required by the Federal awarding goals were not met,if appropriate.
agency or pass-through entity to best (iii) Additional pertinent information
inform improvements in program out- including, when appropriate, analysis
comes and productivity. Intervals must and explanation of cost overruns or
be no less frequent than annually nor high unit costs.
more frequent than quarterly except in (d) Construction performance reports.
unusual circumstances, for example For the most part, onsite technical in-
where more frequent reporting is nec- spections and certified percentage of
essary for the effective monitoring of completion data are relied on heavily
the Federal award or could signifi- by Federal awarding agencies and pass-
cantly affect program outcomes. Re- through entities to monitor progress
ports submitted annually by the non- under Federal awards and subawards
144
OMB Guidance §200.331
for construction. The Federal awarding SUBRECIPIENT MONITORING AND
agency may require additional per- MANAGEMENT
formance reports only when considered
necessary. §200.331 Subrecipient and contractor
(e) Significant developments. Events
determinations.
may occur between the scheduled per- The non-Federal entity may concur-
formance reporting dates that have sig- rently receive Federal awards as a re-
nificant impact upon the supported ac- cipient, a subrecipient, and a con-
tivity. In such cases, the non-Federal tractor, depending on the substance of
entity must inform the Federal award- its agreements with Federal awarding
ing agency or pass-through entity as agencies and pass-through entities.
soon as the following types of condi- Therefore, a pass-through entity must
tions become known: make case-by-case determinations
(1) Problems, delays, or adverse con- whether each agreement it makes for
ditions which will materially impair the disbursement of Federal program
the ability to meet the objective of the funds casts the party receiving the
Federal award. This disclosure must in- funds in the role of a subrecipient or a
clude a statement of the action taken, contractor. The Federal awarding
or contemplated, and any assistance agency may supply and require recipi-
needed to resolve the situation. ents to comply with additional guid-
(2) Favorable developments which en- ance to support these determinations
provided such guidancec does not con-
able meeting time schedules and objec-
flict with this section.
tives sooner or at less cost than antici- (a) Subrecipients. A subaward is for
pated or producing more or different (a)purposerecof s.carrying sout a is for
the of out a portion of
beneficial results than originally a Federal award and creates a Federal
planned. assistance relationship with the sub-
(f) Site visits. The Federal awarding recipient. See definition for Subaward
agency may make site visits as war- in §200.1 of this part. Characteristics
ranted by program needs. which support the classification of the
(g) Performance report requirement non-Federal entity as a subrecipient
waiver. The Federal awarding agency include when the non-Federal entity:
may waive any performance report re- (1) Determines who is eligible to re-
quired by this part if not needed. ceive what Federal assistance;
(2) Has its performance measured in
§200.330 Reporting on real property. relation to whether objectives of a Fed-
The Federal awarding agency or pass- eral program were met;
through entity must require a non-Fed- (3) Has responsibility for pro-
eral entity to submit reports at least grammatic decision-making;
annually on the status of real property (4)Is responsible for adherence to ap-
in which the Federal Government re- plicable Federal program requirements
tains an interest, unless the Federal in- specified in the Federal award; and
terest in the real property extends 15 (5) In accordance with its agreement,
years or longer. In those instances uses the Federal funds to carry out a
where the Federal interest attached is program for a public purpose specified
for a period of 15 years or more, the in authorizing statute, as opposed to
Federal awarding agency or pass- providing goods or services for the ben-
through entity, at its option, may re- efit of the pass through entity.
quire the non-Federal entity to report (b) Contractors. A contract is for the
at various multi-year frequencies (e.g., purpose of obtaining goods and services
for the non-Federal entity's own use
every two years or every three years, and creates a procurement relationship
not to exceed a five-year reporting pe- with the contractor. See the definition
riod; or a Federal awarding agency or of contract in §200.1 of this part. Char-
pass-through entity may require an- acteristics indicative of a procurement
nual reporting for the first three years relationship between the non-Federal
of a Federal award and thereafter re- entity and a contractor are when the
quire reporting every five years). contractor:
145
§200.332 2 CFR Ch. II (1-1-21 Edition)
(1) Provides the goods and services (vi) Subaward Budget Period Start
within normal business operations; and End Date;
(2) Provides similar goods or services (vii) Amount of Federal Funds Obli-
to many different purchasers; gated by this action by the pass-
(3) Normally operates in a competi- through entity to the subrecipient;
tive environment; (viii)Total Amount of Federal Funds
(4) Provides goods or services that Obligated to the subrecipient by the
are ancillary to the operation of the pass-through entity including the cur-
Federal program;and rent financial obligation;
(5) Is not subject to compliance re- (ix) Total Amount of the Federal
quirements of the Federal program as a Award committed to the subrecipient
result of the agreement,though similar by the pass-through entity;
requirements may apply for other rea- (x)Federal award project description,
sons. as required to be responsive to the Fed-
(c) Use of judgment in making deter- eral Funding Accountability and
mination. In determining whether an Transparency Act(FFATA);
agreement between a pass-through en- (xi) Name of Federal awarding agen-
tity and another non-Federal entity cy, pass-through entity, and contact
casts the latter as a subrecipient or a information for awarding official of the
contractor, the substance of the rela Pass-through entity;
tionship is more important than the (xii) Assistance Listings number and
form of the agreement. All of the char- Title; the pass through entity must
acteristics listed above may not be identify the dollar amount made avail-
present in all cases, and the pass- able under each Federal award and the
through entity must use judgment in Assistance Listings Number at time of
classifying each agreement as a disbursement;
subaward or a procurement contract. (xiii) Identification of whether the
award is R&D;and
§200.332 Requirements for pass- (xiv) Indirect cost rate for the Fed-
through entities. eral award (including if the de minimis
All pass-through entities must: rate is charged)per§200.414.
(2) All requirements imposed by the
(a) Ensure that every subaward is
sub-
clearly identified to the subrecipient as pass-through entitye on the
s
a subaward and includes the following recipient so thatn the withFedFederal award t-
information at the time of the used in accordance the termser stat-
information
subaward and if any of these data ele- condes, regulations and and
ments change, include the changes in conditions of the Federal award;
subsequent subaward modification. (3) Any additional requirements that
the pass-through entity imposes on the
When some of this information is not subrecipient in order for the pass-
available, the pass-through entity through entity to meet its own respon-
must provide the best information sibility to the Federal awarding agency
available to describe the Federal award including identification of any required
and subaward. Required information
includes: financial and performance reports;
(1)Federal award identification. (4)(i) An approved federally recog-
1 Federal
went name nized indirect cost rate negotiated be-
(i) e' (which must tween the subrecipient and the Federal
match the name associated with its Government.If no approved rate exists,
unique entity identifier); the pass-through entity must deter-
(ii) Subrecipient's unique entity mine the appropriate rate in collabora-
identifier; tion with the subrecipient, which is ei-
(iii) Federal Award Identification ther:
Number(FAIN); (A) The negotiated indirect cost rate
(iv)Federal Award Date (see the defi- between the pass-through entity and
nition of Federal award date in §200.1 of the subrecipient;which can be based on
this part) of award to the recipient by a prior negotiated rate between a dif-
the Federal agency; ferent PTE and the same subrecipient.
(v) Subaward Period of Performance If basing the rate on a previously nego-
Start and End Date; dated rate, the pass-through entity is
146
OMB Guidance §200.332
not required to collect information jus- achieved. Pass-through entity moni-
tifying this rate, but may elect to do toring of the subrecipient must in-
so; elude:
(B) The de minimis indirect cost (1) Reviewing financial and perform-
rate. ance reports required by the pass-
(ii)The pass-through entity must not through entity.
require use of a de minimis indirect (2) Following-up and ensuring that
cost rate if the subrecipient has a Fed- the subrecipient takes timely and ap-
erally approved rate. Subrecipients can
elect to use the cost allocation method propriate action on all deficiencies per-
to account for indirect costs in accord- taining to the Federal award provided
to the subrecipient from the pass-
ance with§200.405(d). through entity detected through au-
(5) A requirement that the sub dits, on-site reviews, and written con-
recipient permit the pass-through enti firmation from the subrecipient, high-
ty and auditors to have access to the lighting the status of actions planned
subrecipient's records and financial
statements as necessary for the pass- or taken to address Single Audit find-
through entity to meet the require- ings related to the particular
ments of this part;and subaward.
(6) Appropriate terms and conditions (3)Issuing a management decision for
concerning closeout of the subaward. applicable audit findings pertaining
(b) Evaluate each subrecipient's risk only to the Federal award provided to
of noncompliance with Federal stat- the subrecipient from the pass-through
utes, regulations, and the terms and entity as required by§200.521.
conditions of the subaward for purposes (4)The pass-through entity is respon-
of determining the appropriate sub- sible for resolving audit findings spe-
recipient monitoring described in para- cifically related to the subaward and
graphs (d)and(e)of this section,which not responsible for resolving cross-cut-
may include consideration of such fac- ting findings. If a subrecipient has a
tors as: current Single Audit report posted in
(1) The subrecipient's prior experi- the Federal Audit Clearinghouse and
ence with the same or similar sub- has not otherwise been excluded from
awards; receipt of Federal funding
(2) The results of previous audits in- (e.g., has
debarred or suspended), the pass-
cluding whether or not the sub- through entity may rely on the sub-
recipient receives a Single Audit in ac- recipient's cognizant audit agency or
cordance with Subpart F of this part, cognizant oversight agency to perform
and the extent to which the same or audit follow-up and make management
similar subaward has been audited as a decisions related to cross-cutting find-
major program; ings in accordance with section
(3) Whether the subrecipient has new
personnel or new or substantially §300.513(a)(3)(vii). Such reliance does
changed systems; and not eliminate the responsibility of the
(4) The extent and results of Federal pass-through entity to issue subawards
awarding agency monitoring (e.g., if that conform to agency and award see-
the subrecipient also receives Federal cific requirements, to manage risk
awards directly from a Federal award- through ongoing subaward monitoring,
ing agency). and to monitor the status of the find-
(c) Consider imposing specific ings that are specifically related to the
subaward conditions upon a sub- subaward.
recipient if appropriate as described in (e) Depending upon the pass-through
§200.208. entity's assessment of risk posed by
(d) Monitor the activities of the sub- the subrecipient (as described in para-
recipient as necessary to ensure that graph (b) of this section), the following
the subaward is used for authorized monitoring tools may be useful for the
purposes, in compliance with Federal pass-through entity to ensure proper
statutes, regulations, and the terms accountability and compliance with
and conditions of the subaward; and program requirements and achieve-
that subaward performance goals are ment of performance goals:
147
§200.333 2 CFR Ch. II (1-1-21 Edition)
(1) Providing subrecipients with (a) If any litigation, claim, or audit
training and technical assistance on is started before the expiration of the
program-related matters; and 3-year period, the records must be re-
(2) Performing on-site reviews of the tained until all litigation, claims, or
subrecipient's program operations; audit findings involving the records
(3) Arranging for agreed-upon-proce- have been resolved and final action
dures engagements as described in taken.
§200.425. (b) When the non-Federal entity is
(f) Verify that every subrecipient is notified in writing by the Federal
audited as required by Subpart F of awarding agency, cognizant agency for
this part when it is expected that the audit, oversight agency for audit, cog-
subrecipient's Federal awards expended nizant agency for indirect costs, or
during the respective fiscal year Pass through entity to extend the re
equaled or exceeded the threshold set tention period.
forth in§200.501. (c) Records for real property and
(g) Consider whether the results of equipment acquired with Federal funds
the subrecipient's audits, on-site re- must be retained for 3 years after final
views, or other monitoring indicate disposition.
conditions that necessitate adjust (d)When records are transferred to or
ments to the pass-through entity's own maintained by the Federal awarding
records. agency or pass-through entity, the 3-
Consider taking enforcement ac- year retention requirement is not ap-
(h)tion against noncompliant subrecipi- plicablee) o the non-Federal foror entity.
ents as described in§200.339 of this part an Recordssprogram income
r-
and in program regulations. transactions after the sesiod ipof pets
formance. In some cases recipients
§200.333 Fixed amount subawards. must report program income after the
period of performance. Where there is
With prior written approval from the such a requirement, the retention pe-
Federal awarding agency, a pass- riod for the records pertaining to the
through entity may provide subawards earning of the program income starts
based on fixed amounts up to the Sim- from the end of the non-Federal enti-
plified Acquisition Threshold, provided ty's fiscal year in which the program
that the subawards meet the require- income is earned.
ments for fixed amount awards in (f) Indirect cost rate proposals and
§200.201. cost allocations plans. This paragraph
RETENTION AND ACCESS applies to the following types of docu-
RECORDments and their supporting records:§200.334 Retention requirements for In-
direct cost rate computations or pro-
records. posals, cost allocation plans, and any
similar accounting computations of
Financial records, supporting docu- the rate at which a particular group of
ments, statistical records, and all costs is chargeable (such as computer
other non-Federal entity records perti- usage chargeback rates or composite
nent to a Federal award must be re- fringe benefit rates).
tained for a period of three years from (1) If submitted for negotiation. If the
the date of submission of the final ex- proposal, plan, or other computation is
penditure report or, for Federal awards required to be submitted to the Federal
that are renewed quarterly or annu- Government (or to the pass-through
ally, from the date of the submission of entity) to form the basis for negotia-
the quarterly or annual financial re- tion of the rate,then the 3-year reten-
port, respectively, as reported to the tion period for its supporting records
Federal awarding agency or pass- starts from the date of such submis-
through entity in the case of a sub- sion.
recipient. Federal awarding agencies (2) If not submitted for negotiation. If
and pass-through entities must not im- the proposal, plan, or other computa-
pose any other record retention re- tion is not required to be submitted to
quirements upon non-Federal entities. the Federal Government (or to the
The only exceptions are the following: pass-through entity) for negotiation
148
OMB Guidance §200.338
purposes, then the 3-year retention pe- §200.337 Access to records.
riod for the proposal,plan, or computa-
tion and its supporting records starts (a)Records of non Federal entities. The
from the end of the fiscal year (or Federal awarding agency, Inspectors
General, the Comptroller General of
other accounting period) covered by the United States, and the pass-
the proposal, plan, or other computa- through entity, or any of their author-
tion. ized representatives, must have the
§200.335 Requests for transfer of right of access to any documents, pa-
records. pers, or other records of the non-Fed-
eral entity which are pertinent to the
The Federal awarding agency must Federal award, in order to make au-
request transfer of certain records to dits, examinations, excerpts, and tran-
its custody from the non-Federal enti- scripts. The right also includes timely
ty when it determines that the records and reasonable access to the non-Fed-
possess long-term retention value. eral entity's personnel for the purpose
However, in order to avoid duplicate of interview and discussion related to
recordkeeping, the Federal awarding such documents.
agency may make arrangements for (b) Extraordinary and rare cir-
the non-Federal entity to retain any cumstances. Only under extraordinary
records that are continuously needed and rare circumstances would such ac-
for joint use. cess include review of the true name of
victims of a crime.Routine monitoring
§200.336 Methods for collection, trans- cannot be considered extraordinary and
mission,and storage of information. rare circumstances that would neces-
The Federal awarding agency and the sitate access to this information. When
non-Federal entity should, whenever access to the true name of victims of a
practicable, collect, transmit, and crime is necessary,appropriate steps to
store Federal award-related informa- protect this sensitive information must
tion in open and machine-readable for- be taken by both the non-Federal enti-
mats rather than in closed formats or ty and the Federal awarding agency.
on paper in accordance with applicable Any such access, other than under a
legislative requirements. A machine- court order or subpoena pursuant to a
readable format is a format in a stand- bona fide confidential investigation,
and computer language (not English must be approved by the head of the
text)that can be read automatically by Federal awarding agency or delegate.
a web browser or computer system. The (c) Expiration of right of access. The
Federal awarding agency or pass- rights of access in this section are not
through entity must always provide or limited to the required retention pe-
accept paper versions of Federal award- riod but last as long as the records are
related information to and from the retained. Federal awarding agencies
non Federal entity upon request. If and pass-through entities must not im-
paper copies are submitted, the Federal pose any other access requirements
awarding agency or pass-through enti- upon non-Federal entities.
ty must not require more than an §200.338 Restrictions on public access
original and two copies. When original to records.
records are electronic and cannot be al-
tered, there is no need to create and re- No Federal awarding agency may
tain paper copies. When original place restrictions on the non-Federal
records are paper, electronic versions entity that limit public access to the
may be substituted through the use of records of the non-Federal entity perti-
duplication or other forms of elec- nent to a Federal award, except for
tronic media provided that they are protected personally identifiable infor-
subject to periodic quality control re mation (PH) or when the Federal
views, provide reasonable safeguards awarding agency can demonstrate that
against alteration, and remain read- such records will be kept confidential
able. and would have been exempted from
disclosure pursuant to the Freedom of
149
§200.339 2 CFR Ch. II (1-1-21 Edition)
Information Act (5 U.S.C. 552) or con- §200.340 Termination.
trolled unclassified information pursu-
ant to Executive Order 13556 if the (a) The Federal award may be termi-
records had belonged to the Federal nated in whole or in part as follows:
awarding agency. The Freedom of In- (1) By the Federal awarding agency
formation Act (5 U.S.C. 552) (FOIA) or pass-through entity, if a non-Fed-
does not apply to those records that re- eral entity fails to comply with the
main under a non-Federal entity's con- terms and conditions of a Federal
trol except as required under §200.315. award;
Unless required by Federal, state, (2) By the Federal awarding agency
local, and tribal statute, non-Federal or pass-through entity, to the greatest
entities are not required to permit pub- extent authorized by law, if an award
lic access to their records. The non- no longer effectuates the program
Federal entity's records provided to a goals or agency priorities;
Federal agency generally will be sub- (3) By the Federal awarding agency
ject to FOIA and applicable exemp- or pass-through entity with the con-
tions. sent of the non-Federal entity, in
which case the two parties must agree
REMEDIES FOR NONCOMPLIANCE upon the termination conditions, in-
cluding the effective date and, in the
§200.339 Remedies for noncompliance. case of partial termination, the portion
If a non-Federal entity fails to com- to be terminated;
ply with the U.S. Constitution, Federal (4) By the non-Federal entity upon
statutes, regulations or the terms and sending to the Federal awarding agen-
conditions of a Federal award, the Fed- cy or pass-through entity written noti-
eral awarding agency or pass-through fication setting forth the reasons for
entity may impose additional condi- such termination, the effective date,
tions, as described in §200.208. If the and, in the case of partial termination,
Federal awarding agency or pass- the portion to be terminated. However,
through entity determines that non- if the Federal awarding agency or pass-
compliance cannot be remedied by im- through entity determines in the case
posing additional conditions, the Fed- of partial termination that the reduced
eral awarding agency or pass-through or modified portion of the Federal
entity may take one or more of the fol- award or subaward will not accomplish
lowing actions, as appropriate in the the purposes for which the Federal
circumstances: award was made, the Federal awarding
(a) Temporarily withhold cash pay- agency or pass-through entity may ter-
ments pending correction of the defi- minate the Federal award in its en-
ciency by the non-Federal entity or tirety; or
more severe enforcement action by the (5) By the Federal awarding agency
Federal awarding agency or pass- or pass-through entity pursuant to ter-
through entity. mination provisions included in the
(b) Disallow(that is, deny both use of Federal award.
funds and any applicable matching (b)A Federal awarding agency should
credit for) all or part of the cost of the clearly and unambiguously specify ter-
activity or action not in compliance. mination provisions applicable to each
(c) Wholly or partly suspend or ter- Federal award, in applicable regula-
minate the Federal award. tions or in the award, consistent with
(d) Initiate suspension or debarment this section.
proceedings as authorized under 2 CFR (c) When a Federal awarding agency
part 180 and Federal awarding agency terminates a Federal award prior to
regulations (or in the case of a pass- the end of the period of performance
through entity, recommend such a pro- due to the non-Federal entity's mate-
ceeding be initiated by a Federal rial failure to comply with the Federal
awarding agency). award terms and conditions, the Fed-
(e) Withhold further Federal awards eral awarding agency must report the
for the project or program. termination to the OMB-designated in-
(f) Take other remedies that may be tegrity and performance system acces-
legally available. sible through SAM (currently FAPIIS).
150
OMB Guidance §200.341
(1) The information required under §200.341 Notification of termination
paragraph (c) of this section is not to requirement.
be reported to designated integrity and
pass-
performance system until the non-Fed- (a) The Federal agency or
through entity must provide to the
eral entity either— non-Federal entity a notice of termi-
(i)Has exhausted its opportunities to nation.
object or challenge the decision, see (b)If the Federal award is terminated
§200.342;or for the non-Federal entity's material
(ii) Has not, within 30 calendar days failure to comply with the U.S. Con-
after being notified of the termination, stitution, Federal statutes, regula-
informed the Federal awarding agency tions, or terms and conditions of the
that it intends to appeal the Federal Federal award, the notification must
awarding agency's decision to termi- state that—
nate. (1) The termination decision will be
(2) If a Federal awarding agency, reported to the OMB-designated integ-
after entering information into the rity and performance system accessible
designated integrity and performance through SAM(currently FAPIIS);
system about a termination, subse- (2) The information will be available
quently: in the OMB-designated integrity and
(i) Learns that any of that informa- performance system for a period of five
tion is erroneous, the Federal awarding years from the date of the termination,
agency must correct the information in then archived;
the system within three business days; (3) Federal awarding agencies that
(ii) Obtains an update to that infor- consider making a Federal award to
mation that could be helpful to other the non-Federal entity during that five
Federal awarding agencies, the Federal year period must consider that infor-
awarding agency is strongly encour- mation in judging whether the non-
aged to amend the information in the Federal entity is qualified to receive
system to incorporate the update in a the Federal award, when the Federal
timely way. share of the Federal award is expected
(3) Federal awarding agencies, must to exceed the simplified acquisition
not post any information that will be threshold over the period of perform-
made publicly available in the non- ance;
public segment of designated integrity (4) The non-Federal entity may corn-
and performance system that is cov- ment on any information the OMB-des-
ered by a disclosure exemption under ignated integrity and performance sys-
the Freedom of Information Act. If the tern contains about the non-Federal en-
non-Federal entity asserts within tity for future consideration by Fed-
seven calendar days to the Federal eral awarding agencies. The non-Fed-
awarding agency who posted the infor- eral entity may submit comments to
mation, that some of the information the awardee integrity and performance
made publicly available is covered by a portal accessible through SAM (cur-
disclosure exemption under the Free- rently(CPARS).
dom of Information Act, the Federal (5) Federal awarding agencies will
awarding agency who posted the infor- consider non-Federal entity comments
mation must remove the posting with- when determining whether the non-
in seven calendar days of receiving the Federal entity is qualified for a future
assertion. Prior to reposting the releas- Federal award.
able information, the Federal agency (c) Upon termination of a Federal
must resolve the issue in accordance award, the Federal awarding agency
with the agency's Freedom of Informa- must provide the information required
tion Act procedures. under FFATA to the Federal website
(d) When a Federal award is termi- established to fulfill the requirements
nated or partially terminated, both the of FFATA, and update or notify any
Federal awarding agency or pass- other relevant governmentwide sys-
through entity and the non-Federal en- terns or entities of any indications of
tity remain responsible for compliance poor performance as required by 41
with the requirements in §§200.344 and U.S.C. 417b and 31 U.S.C. 3321 and im-
200.345. plementing guidance at 2 CFR part 77
151
§200.342 2 CFR Ch. II (1-1-21 Edition)
(forthcoming at time of publication). fails to complete the requirements, the
See also the requirements for Suspen- Federal awarding agency or pass-
sion and Debarment at 2 CFR part 180. through entity will proceed to close
out the Federal award with the infor-
§200.342 Opportunities to object,hear- mation available. This section specifies
ings,and appeals. the actions the non-Federal entity and
Upon taking any remedy for non- Federal awarding agency or pass-
compliance, the Federal awarding through entity must take to complete
agency must provide the non-Federal this process at the end of the period of
entity an opportunity to object and performance.
provide information and documenta- (a) The recipient must submit, no
tion challenging the suspension or ter- later than 120 calendar days after the
mination action, in accordance with end date of the period of performance,
written processes and procedures pub- all financial, performance, and other
lished by the Federal awarding agency. reports as required by the terms and
The Federal awarding agency or pass- conditions of the Federal award. A sub-
through entity must comply with any recipient must submit to the pass-
requirements for hearings, appeals or through entity, no later than 90 cal-
other administrative proceedings to endar days (or an earlier date as agreed
which the non-Federal entity is enti- upon by the pass-through entity and
tled under any statute or regulation subrecipient) after the end date of the
applicable to the action involved. period of performance, all financial,
§200.343 Effects of suspension and ter- performance, and other reports as re-
mination. quired by the terms and conditions of
the Federal award. The Federal award-
Costs to the non-Federal entity re- ing agency or pass-through entity may
sulting from financial obligations in- approve extensions when requested and
curred by the non-Federal entity dur- justified by the non-Federal entity, as
ing a suspension or after termination applicable.
of a Federal award or subaward are not
n-
allowable unless the Federal awarding (b)Unlessr ss the Federal ya authorizesg ag an
agency or pass-through entity ex- cy ension,to non-ugh entity entitym st
pressly authorizes them in the notice extension, a non-Federal a must
of suspension or termination or subse-
liquidate all financial obligations in-
quently. However, costs during suspen- curred under the Federal award no
sion or after termination are allowable later than 120 calendar days after the
if: end date of the period of performance
(a) The costs result from financial as specified in the terms and conditions
obligations which were properly in- of the Federal award.
curred by the non-Federal entity before (c) The Federal awarding agency or
the effective date of suspension or ter- pass-through entity must make prompt
mination, are not in anticipation of it; payments to the non-Federal entity for
and costs meeting the requirements in Sub-
(b) The costs would be allowable if part E of this part under the Federal
the Federal award was not suspended award being closed out.
or expired normally at the end of the (d) The non-Federal entity must
period of performance in which the ter- promptly refund any balances of unob-
mination takes effect. ligated cash that the Federal awarding
agency or pass-through entity paid in
CLOSEOUT advance or paid and that are not au-
thorized to be retained by the non-Fed-
§200.344 Closeout. eral entity for use in other projects.
The Federal awarding agency or pass- See OMB Circular A-129 and see
through entity will close out the Fed- §200.346, for requirements regarding
eral award when it determines that all unreturned amounts that become de-
applicable administrative actions and linquent debts.
all required work of the Federal award (e) Consistent with the terms and
have been completed by the non-Fed- conditions of the Federal award, the
eral entity. If the non-Federal entity Federal awarding agency or pass-
152
OMB Guidance §200.346
through entity must make a settle- the non-Federal entity within the
ment for any upward or downward ad- record retention period.
justments to the Federal share of costs (2) The requirement for the non-Fed-
after closeout reports are received. eral entity to return any funds due as
(f) The non-Federal entity must ac- a result of later refunds, corrections, or
count for any real and personal prop- other transactions including final indi-
erty acquired with Federal funds or re- rect cost rate adjustments.
ceived from the Federal Government in (3) The ability of the Federal award-
accordance with §§200.310 through ing agency to make financial adjust-
200.316 and 200.330. ments to a previously closed award
(g) When a recipient or subrecipient such as resolving indirect cost pay-
completes all closeout requirements, ments and making final payments.
the Federal awarding agency or pass- (4) Audit requirements in subpart F
through entity must promptly com- of this part.
plete all closeout actions for Federal (5) Property management and dis-
awards. The Federal awarding agency position requirements in §§200.310
must make every effort to complete through 200.316 of this subpart.
closeout actions no later than one year (6) Records retention as required in
after the end of the period of perform- §§200.334 through 200.337 of this sub-
ance unless otherwise directed by au- part.
thorizing statutes. Closeout actions in- (b) After closeout of the Federal
clude Federal awarding agency actions award, a relationship created under the
in the grants management and pay- Federal award may be modified or
ment systems. ended in whole or in part with the con-
(h)If the non-Federal entity does not sent of the Federal awarding agency or
submit all reports in accordance with pass-through entity and the non-Fed-
this section and the terms and condi- eral entity, provided the responsibil-
tions of the Federal Award, the Federal ities of the non-Federal entity referred
awarding agency must proceed to close to in paragraph (a) of this section, in-
out with the information available cluding those for property management
within one year of the period of per- as applicable, are considered and provi-
formance end date. sions made for continuing responsibil-
(i) If the non-Federal entity does not ities of the non-Federal entity, as ap-
submit all reports in accordance with propriate.
this section within one year of the pe-
riod of performance end date, the Fed- COLLECTION OF AMOUNTS DUE
eral awarding agency must report the §200.346 Collection of amounts due.
non-Federal entity's material failure
to comply with the terms and condi- (a)Any funds paid to the non-Federal
tions of the award with the OMB-des- entity in excess of the amount to
ignated integrity and performance sys- which the non-Federal entity is finally
tern (currently FAPIIS). Federal determined to be entitled under the
awarding agencies may also pursue terms of the Federal award constitute
other enforcement actions per §200.339. a debt to the Federal Government. If
not paid within 90 calendar days after
POST-CLOSEOUT ADJUSTMENTS AND demand, the Federal awarding agency
CONTINUING RESPONSIBILITIES may reduce the debt by:
§200.345 Post-closeout adjustments (1) Making an administrative offset
against other requests for reimburse-
and continuing responsibilities. ments;
(a) The closeout of a Federal award (2) Withholding advance payments
does not affect any of the following: otherwise due to the non-Federal enti-
(1) The right of the Federal awarding ty; or
agency or pass-through entity to dis- (3) Other action permitted by Federal
allow costs and recover funds on the statute.
basis of a later audit or other review. (b) Except where otherwise provided
The Federal awarding agency or pass- by statutes or regulations, the Federal
through entity must make any cost awarding agency will charge interest
disallowance determination and notify on an overdue debt in accordance with
153
§200.400 2 CFR Ch. II (1-1-21 Edition)
the Federal Claims Collection Stand- See the definition of indirect(facilities&
ards(31 CFR parts 900 through 999). The administrative (F&A)) costs in §200.1 of
date from which interest is computed this part.
is not extended by litigation or the fil- (f) For non-Federal entities that edu-
ing of any form of appeal. cate and engage students in research,
the dual role of students as both train-
Subpart E—Cost Principles ees and employees (including pre- and
post-doctoral staff) contributing to the
GENERAL PROv1SIONS completion of Federal awards for re-
search must be recognized in the appli-
§200.400 Policy guide. cation of these principles.
The application of these cost prin- (g) The non-Federal entity may not
ciples is based on the fundamental earn or keep any profit resulting from
premises that: Federal financial assistance, unless ex-
(a) The non-Federal entity is respon- plicitly authorized by the terms and
sible for the efficient and effective ad- conditions of the Federal award. See
ministration of the Federal award also§200.307.
through the application of sound man- [78 FR 78608, Dec. 26, 2013, as amended at 79
agement practices. FR 75885, Dec. 19, 2014; 85 FR 49561, Aug. 13,
(b) The non-Federal entity assumes 20207
responsibility for administering Fed-
eral funds in a manner consistent with §200.401 Application.
underlying agreements, program objec- (a) General. These principles must be
tives, and the terms and conditions of used in determining the allowable costs
the Federal award. of work performed by the non-Federal
(c) The non-Federal entity, in rec- entity under Federal awards. These
ognition of its own unique combination principles also must be used by the
of staff, facilities, and experience, has non-Federal entity as a guide in the
the primary responsibility for employ- pricing of fixed-price contracts and
ing whatever form of sound organiza- subcontracts where costs are used in
tion and management techniques may determining the appropriate price. The
be necessary in order to assure proper principles do not apply to:
and efficient administration of the (1) Arrangements under which Fed-
Federal award. eral financing is in the form of loans,
(d)The application of these cost prin- scholarships, fellowships, traineeships,
ciples should require no significant or other fixed amounts based on such
changes in the internal accounting items as education allowance or pub-
policies and practices of the non-Fed- lished tuition rates and fees.
eral entity. However, the accounting (2) For IHEs, capitation awards,
practices of the non-Federal entity which are awards based on case counts
must be consistent with these cost or number of beneficiaries according to
principles and support the accumula- the terms and conditions of the Federal
tion of costs as required by the prin- award.
ciples, and must provide for adequate (3) Fixed amount awards. See also
documentation to support costs §200.1 Definitions and 200.201.
charged to the Federal award. (4) Federal awards to hospitals (see
(e) In reviewing, negotiating and ap- appendix IX to this part).
proving cost allocation plans or indi- (5) Other awards under which the
rect cost proposals, the cognizant agen- non-Federal entity is not required to
cy for indirect costs should generally account to the Federal Government for
assure that the non-Federal entity is actual costs incurred.
applying these cost accounting prin- (b) Federal contract. Where a Federal
ciples on a consistent basis during contract awarded to a non-Federal en-
their review and negotiation of indirect tity is subject to the Cost Accounting
cost proposals. Where wide variations Standards (CAS), it incorporates the
exist in the treatment of a given cost applicable CAS clauses, Standards, and
item by the non-Federal entity, the CAS administration requirements per
reasonableness and equity of such the 48 CFR Chapter 99 and 48 CFR part
treatments should be fully considered. 30 (FAR Part 30). CAS applies directly
154
OMB Guidance §200.404
to the CAS-covered contract and the lowing general criteria in order to be
Cost Accounting Standards at 48 CFR allowable under Federal awards:
parts 9904 or 9905 takes precedence over (a) Be necessary and reasonable for
the cost principles in this subpart E the performance of the Federal award
with respect to the allocation of costs. and be allocable thereto under these
When a contract with a non-Federal principles.
entity is subject to full CAS coverage, (b) Conform to any limitations or ex-
the allowability of certain costs under elusions set forth in these principles or
the cost principles will be affected by in the Federal award as to types or
the allocation provisions of the Cost
Accounting Standards (e.g., CAS 414— amount of cost items.
48 CFR 9904.414, Cost of Money as an (c) Be consistent with policies and
Element of the Cost of Facilities Cap- procedures that apply uniformly to
ital, and CAS 417-48 CFR 9904.417, Cost both federally-financed and other ac-
of Money as an Element of the Cost of tivities of the non-Federal entity.
Capital Assets Under Construction), (d)Be accorded consistent treatment.
apply rather the allowability provi-
sions of §200.449. In complying with eral award as a direct cost if any other
those requirements, the non-Federal cost incurred for the same purpose in
entity's application of cost accounting like circumstances has been allocated
practices for estimating, accumu- to the Federal award as an indirect
lating, and reporting costs for other cost.
Federal awards and other cost objec- (e) Be determined in accordance with
tives under the CAS-covered contract generally accepted accounting prin-
still must be consistent with its cost ciples (GAAP), except, for state and
accounting practices for the CAS-cov- local governments and Indian tribes
ered contracts. In all cases, only one only, as otherwise provided for in this
set of accounting records needs to be part.
maintained for the allocation of costs (f) Not be included as a cost or used
by the non-Federal entity. to meet cost sharing or matching re-
(c) Exemptions. Some nonprofit orga- quirements of any other federally-fi-
nizations, because of their size and na- nanced program in either the current
ture of operations, can be considered to or a prior period. See also§200.306(b).
be similar to for-profit entities for pur- (g) Be adequately documented. See
pose of applicability of cost principles. also §§200.300 through 200.309 of this
Such nonprofit organizations must op- part.
erate under Federal cost principles ap- (h) Cost must be incurred during the
plicable to for-profit entities located at approved budget period. The Federal
48 CFR 31.2. A listing of these organiza- awarding agency is authorized, at its
tions is contained in appendix VIII to discretion, to waive prior written ap-
this part. Other organizations, as ap- provals to carry forward unobligated
proved by the cognizant agency for in- balances to subsequent budget periods
direct costs, may be added from time pursuant to§200.308(e)(3).
to time.
[78 FR 78608, Dec. 26, 2013, as amended at 85
[78 FR 78608, Dec. 26, 2013, as amended at 85 FR 49562,Aug.13,2020]
FR 49562,Aug.13,2020]
BASIC CONSIDERATIONS §200.404 Reasonable costs.
A cost is reasonable if, in its nature
§200.402 Composition of costs. and amount, it does not exceed that
Total cost. The total cost of a Federal which would be incurred by a prudent
award is the sum of the allowable di- person under the circumstances pre-
rect and allocable indirect costs less vailing at the time the decision was
any applicable credits. made to incur the cost. The question of
§200.403 Factors affectingallowabilit reasonableness is particularly impor
Y tant when the non-Federal entity is
of costs. predominantly federally-funded. In de-
Except where otherwise authorized termining reasonableness of a given
by statute, costs must meet the fol- cost,consideration must be given to:
155
§200.405 2 CFR Ch. II (1-1-21 Edition)
(a)Whether the cost is of a type gen- (c) Any cost allocable to a particular
erally recognized as ordinary and nec- Federal award under the principles pro-
essary for the operation of the non- vided for in this part may not be
Federal entity or the proper and effi- charged to other Federal awards to
cient performance of the Federal overcome fund deficiencies, to avoid re-
award. strictions imposed by Federal statutes,
(b) The restraints or requirements regulations, or terms and conditions of
imposed by such factors as: sound busi- the Federal awards, or for other rea-
ness practices; arm's-length bar- sons. However, this prohibition would
gaining; Federal, state, local, tribal, not preclude the non-Federal entity
and other laws and regulations; and from shifting costs that are allowable
terms and conditions of the Federal under two or more Federal awards in
award. accordance with existing Federal stat-
(c) Market prices for comparable utes,regulations, or the terms and con-
goods or services for the geographic ditions of the Federal awards.
area. (d) Direct cost allocation principles:
(d) Whether the individuals con- If a cost benefits two or more projects
cerned acted with prudence in the cir- or activities in proportions that can be
cumstances considering their respon- determined without undue effort or
sibilities to the non-Federal entity, its cost, the cost must be allocated to the
employees, where applicable its stu- projects based on the proportional ben-
dents or membership, the public at efit. If a cost benefits two or more
large,and the Federal Government. projects or activities in proportions
(e) Whether the non-Federal entity that cannot be determined because of
significantly deviates from its estab- the interrelationship of the work in-
lished practices and policies regarding volved, then, notwithstanding para-
the incurrence of costs, which may graph (c) of this section, the costs may
unjustifiably increase the Federal be allocated or transferred to bene-
award's cost. fitted projects on any reasonable docu-
[78 FR 78608, Dec. 26, 2013, as amended at 79 mented basis. Where the purchase of
FR 75885,Dec.19,2014] equipment or other capital asset is spe-
cifically authorized under a Federal
§200.405 Allocable costs. award, the costs are assignable to the
(a) A cost is allocable to a particular Federal award regardless of the use
Federal award or other cost objective if that may be made of the equipment or
the goods or services involved are other capital asset involved when no
chargeable or assignable to that Fed- longer needed for the purpose for which
eral award or cost objective in accord it was originally required. See also
ance with relative benefits received. §§200.310 through 200.316 and 200.439.
This standard is met if the cost: (e) If the contract is subject to CAS,
(1) Is incurred specifically for the costs must be allocated to the contract
Federal award; pursuant to the Cost Accounting
(2) Benefits both the Federal award Standards. To the extent that CAS is
and other work of the non-Federal en- applicable, the allocation of costs in
tity and can be distributed in propor- accordance with CAS takes precedence
tions that may be approximated using over the allocation provisions in this
reasonable methods;and part.
(3) Is necessary to the overall oper- [78 FR 78608, Dec. 26, 2013, as amended at 79
ation of the non-Federal entity and is FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
assignable in part to the Federal award 2020]
in accordance with the principles in
this subpart. §200.406 Applicable credits.
(b) All activities which benefit from (a) Applicable credits refer to those
the non-Federal entity's indirect (F&A) receipts or reduction-of-expenditure-
cost, including unallowable activities type transactions that offset or reduce
and donated services by the non-Fed- expense items allocable to the Federal
eral entity or third parties,will receive award as direct or indirect(F&A)costs.
an appropriate allocation of indirect Examples of such transactions are:pur-
costs. chase discounts, rebates or allowances,
156
OMB Guidance §200.409
recoveries or indemnities on losses, in- (f)§200.313 Equipment;
surance refunds or rebates, and adjust- (g) §200.333 Fixed amount subawards;
ments of overpayments or erroneous (h) §200.413 Direct costs, paragraph
charges. To the extent that such cred- (c);
its accruing to or received by the non- (i) §200.430 Compensation—personal
Federal entity relate to allowable services,paragraph(h);
costs, they must be credited to the (j)§200.431 Compensation—fringe ben-
Federal award either as a cost reduc- efits;
tion or cash refund,as appropriate. (k)§200.438 Entertainment costs;
(b) In some instances, the amounts (1) §200.439 Equipment and other cap-
received from the Federal Government ital expenditures;
to finance activities or service oper- (m)§200.440 Exchange rates;
ations of the non-Federal entity should (n) §200.441 Fines, penalties, damages
be treated as applicable credits. Spe- and other settlements;
cifically, the concept of netting such (o) §200.442 Fund raising and invest-
credit items (including any amounts ment management costs;
used to meet cost sharing or matching (p) §200.445 Goods or services for per-
requirements) must be recognized in sonal use;
determining the rates or amounts to be (q) §200.447 Insurance and indem-
charged to the Federal award. (See nification;
§§200.436 and 200.468, for areas of poten- (r) §200.454 Memberships, subscrip-
tial application in the matter of Fed- tions, and professional activity costs,
eral financing of activities.) paragraph(c);
[78 FR 78608, Dec. 26, 2013, as amended at 79 (s)§200.455 Organization costs;
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13, (t) §200.456 Participant support costs;
2020] (u)§200.458 Pre-award costs;
(v) §200.462 Rearrangement and re-
§200.407 Prior written approval (prior conversion costs;
approval). (w) §200.467 Selling and marketing
Under any given Federal award, the costs;
reasonableness and allocability of cer- (x) §200.470 Taxes (including Value
tain items of costs may be difficult to Added Tax);and
determine. In order to avoid subse- (y)§200.475 Travel costs.
quent disallowance or dispute based on [78 FR 78608, Dec. 26, 2013, as amended at 79
unreasonableness or nonallocability, FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
the non-Federal entity may seek the 2020]
prior written approval of the cognizant
agency for indirect costs or the Federal §200.408 Limitation on allowance of
awarding agency in advance of the in- costs.
currence of special or unusual costs. The Federal award may be subject to
Prior written approval should include statutory requirements that limit the
the timeframe or scope of the agree- allowability of costs. When the max-
ment. The absence of prior written ap- imum amount allowable under a limi-
proval on any element of cost will not, tation is less than the total amount de-
in itself, affect the reasonableness or termined in accordance with the prin-
allocability of that element, unless ciples in this part, the amount not re-
prior approval is specifically required coverable under the Federal award may
for allowability as described under cer- not be charged to the Federal award.
tain circumstances in the following §200.409 Special considerations.
sections of this part:
(a) §200.201 Use of grant agreements In addition to the basic consider-
. (including fixed amount awards), coop- ations regarding the allowability of
erative agreements, and contracts, costs highlighted in this subtitle, other
paragraph(b)(5); subtitles in this part describe special
(b)§200.306 Cost sharing or matching; considerations and requirements appli-
(c)§200.307 Program income; cable to states, local governments, In-
d) §200.308 Revision of budget and dian tribes, and IHEs. In addition, cer-
program plans; tain provisions among the items of cost
(e)§200.311 Real property; in this subpart are only applicable to
157
§200.410 2 CFR Ch. II (1-1-21 Edition)
certain types of non-Federal entities, (c) For rates covering a past period,
as specified in the following sections: the Federal share of the unallowable
(a) Direct and Indirect (F&A) Costs costs will be computed for each year
(§§200.412-200.415) of this subpart; involved and a cash refund (including
(b) Special Considerations for States, interest chargeable in accordance with
Local Governments and Indian Tribes applicable regulations) will be made to
(§§200.416 and 200.417) of this subpart; the Federal Government. If cash re-
and funds are made for past periods covered
(c) Special Considerations for Insti- by provisional or fixed rates, appro-
tutions of Higher Education (§§200.418 priate adjustments will be made when
and 200.419)of this subpart. the rates are finalized to avoid dupli-
cate[85 FR 49562,Aug.13,2020] recovery of the unallowable costs
by the Federal Government.
§200.410 Collection of unallowable (d) For rates covering the current pe-
costs. riod, either a rate adjustment or a re-
Payments made for costs determined fund, as described in paragraphs(b)and
(c)to be unallowable by either the Federal the c this cognizant
agencyg must be requiredcco by
cognizant for indirect costs.
awarding agency, cognizant agency for The choice of method must be at the
indirect costs, or pass-through entity, discretion of the cognizant agency for
either as direct or indirect costs, must indirect costs,based on its judgment as
be refunded (including interest) to the to which method would be most prac-
Federal Government in accordance tical.
with instructions from the Federal
unal-
agency that determined the costs are (e)The amount or proportion of loveable costs included in each year's
unallowable unless Federal statute or
rate will be assumed to be the same as
regulation directs otherwise. See also
thelow-
§§200.300 through 200.309 in subpart D of able amount cr proportion of n base year
this part. costs included in the year
proposal used to establish the rate.
[85 FR 49562,Aug.13,2020]
DIRECT AND INDIRECT(F&A)COSTS
§200.411 Adjustment of previously ne-
gotiated indirect (F&A) cost rates §200.412 Classification of costs.
containing unallowable costs. There is no universal rule for
(a) Negotiated indirect (F&A) cost classifying certain costs as either di-
rates based on a proposal later found to rect or indirect (F&A) under every ac-
have included costs that: counting system. A cost may be direct
(1) Are unallowable as specified by with respect to some specific service or
Federal statutes, regulations or the function, but indirect with respect to
terms and conditions of a Federal the Federal award or other final cost
award; or objective. Therefore, it is essential
(2) Are unallowable because they are that each item of cost incurred for the
not allocable to the Federal award(s), same purpose be treated consistently
must be adjusted, or a refund must be in like circumstances either as a direct
made, in accordance with the require- or an indirect (F&A) cost in order to
ments of this section. These adjust- avoid possible double-charging of Fed-
ments or refunds are designed to cor- eral awards. Guidelines for determining
rect the proposals used to establish the direct and indirect(F&A)costs charged
rates and do not constitute a reopening to Federal awards are provided in this
of the rate negotiation. The adjust- subpart.
ments or refunds will be made regard-
less of the type of rate negotiated (pre- §200.413 Direct costs.
determined, final, fixed, or provi- (a) General. Direct costs are those
sional). costs that can be identified specifically
(b) For rates covering a future fiscal with a particular final cost objective,
year of the non-Federal entity, the un- such as a Federal award, or other inter-
allowable costs will be removed from nally or externally funded activity, or
the indirect (F&A) cost pools and the that can be directly assigned to such
rates appropriately adjusted. activities relatively easily with a high
158
OMB Guidance §200.414
degree of accuracy. Costs incurred for indirect (F&A) cost rates and be allo-
the same purpose in like circumstances cated their equitable share of the non-
must be treated consistently as either Federal entity's indirect costs if they
direct or indirect(F&A) costs. See also represent activities which:
§200.405. (1)Include the salaries of personnel,
(b) Application to Federal awards. (2)Occupy space,and
Identification with the Federal award (3)Benefit from the non-Federal enti-
rather than the nature of the goods and ty's indirect(F&A)costs.
services involved is the determining (f) For nonprofit organizations, the
factor in distinguishing direct from in- costs of activities performed by the
direct (F&A) costs of Federal awards. non-Federal entity primarily as a serv-
Typical costs charged directly to a ice to members, clients, or the general
Federal award are the compensation of public when significant and necessary
employees who work on that award, to the non-Federal entity's mission
their related fringe benefit costs, the must be treated as direct costs whether
costs of materials and other items of or not allowable, and be allocated an
expense incurred for the Federal award. equitable share of indirect(F&A)costs.
If directly related to a specific award, Some examples of these types of activi-
certain costs that otherwise would be ties include:
treated as indirect costs may also be (1) Maintenance of membership rolls,
considered direct costs. Examples in- subscriptions, publications, and related
elude extraordinary utility consump- functions. See also§200.454.
tion, the cost of materials supplied (2) Providing services and informa-
from stock or services rendered by spe- tion to members, legislative or admin-
cialized facilities, program evaluation istrative bodies, or the public. See also
costs, or other institutional service op- §§200.454 and 200.450.
erations. (3) Promotion, lobbying, and other
(c)The salaries of administrative and forms of public relations. See also
clerical staff should normally be treat- §§200.421 and 200.450.
ed as indirect (F&A) costs. Direct (4) Conferences except those held to
charging of these costs may be appro- conduct the general administration of
priate only if all of the following condi- the non-Federal entity. See also
tions are met: §200.432.
(1) Administrative or clerical serv- (5) Maintenance, protection, and in-
ices are integral to a project or activ- vestment of special funds not used in
ity; operation of the non-Federal entity.
(2) Individuals involved can be spe- See also§200.442.
cifically identified with the project or (6) Administration of group benefits
activity; on behalf of members or clients, in-
(3) Such costs are explicitly included eluding life and hospital insurance, an-
in the budget or have the prior written nuity or retirement plans, and finan-
approval of the Federal awarding agen- cial aid. See also§200.431.
cy;and [78 FR 78608, Dec. 26, 2013, as amended at 79
(4) The costs are not also recovered FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
as indirect costs. 2020]
(d) Minor items. Any direct cost of
minor amount may be treated as an in- §200.414 Indirect(F&A)costs.
direct (F&A) cost for reasons of practi- (a) Facilities and administration classi-
cality where such accounting treat- fication. For major Institutions of
ment for that item of cost is consist- Higher Education (IHE)and major non-
ently applied to all Federal and non- profit organizations, indirect (F&A)
Federal cost objectives. costs must be classified within two
(e) The costs of certain activities are broad categories: "Facilities" and
not allowable as charges to Federal "Administration." "Facilities" is de-
awards. However, even though these fined as depreciation on buildings,
costs are unallowable for purposes of equipment and capital improvement,
computing charges to Federal awards, interest on debt associated with cer-
they nonetheless must be treated as di- tain buildings, equipment and capital
rect costs for purposes of determining improvements, and operations and
159
§200.414 2 CFR Ch. II (1-1-21 Edition)
maintenance expenses. "Administra- (2)The Federal awarding agency head
tion" is defined as general administra- or delegate must notify OMB of any ap-
tion and general expenses such as the proved deviations.
director's office, accounting, personnel (3) The Federal awarding agency
and all other types of expenditures not must implement, and make publicly
listed specifically under one of the sub- available, the policies, procedures and
categories of "Facilities" (including general decision-making criteria that
cross allocations from other pools, their'programs will follow to seek and
where applicable). For nonprofit orga- justify deviations from negotiated
nizations,library expenses are included rates.
in the "Administration" category; for (4) As required under §200.204, the
IHEs, they are included in the "Facili- Federal awarding agency must include
ties" category. Major IHEs are defined in the notice of funding opportunity
as those required to use the Standard the policies relating to indirect cost
Format for Submission as noted in ap rate reimbursement, matching, or cost
pendix III to this part, and Rate Deter- share as approved under paragraph
urination for Institutions of Higher (e)(1) of this section. As appropriate,
Education paragraph C. 11. Major non- the Federal agency should incorporate
Fed-
profit organizations are those which re- eral awardingan of these policies into eral agency outreach activi-
ceive more than $10 million dollars in ties with non-Federal entities prior to
direct Federal funding. the posting of a notice of funding op-
(b)Diversity of nonprofit organizations. portunity.
Because of the diverse characteristics (d) Pass-through entities are subject
and accounting practices of nonprofit to the requirements in§200.332(a)(4).
organizations, it is not possible to (e) Requirements for development
specify the types of cost which may be and submission of indirect (F&A) cost
classified as indirect (F&A) cost in all rate proposals and cost allocation
situations. Identification with a Fed- plans are contained in Appendices III-
eral award rather than the nature of VII and Appendix IX as follows:
the goods and services involved is the (1) Appendix III to Part 200—Indirect
determining factor in distinguishing (F&A) Costs Identification and Assign-
direct from indirect (F&A) costs of ment, and Rate Determination for In-
Federal awards. However, typical ex- stitutions of Higher Education(IHEs);
amples of indirect(F&A)cost for many (2) Appendix IV to Part 200—Indirect
nonprofit organizations may include (F&A) Costs Identification and Assign-
depreciation on buildings and equip- ment, and Rate Determination for Non-
ment, the costs of operating and main- profit Organizations;
taining facilities, and general adminis- (3) Appendix V to Part 200—State/
tration and general expenses, such as Local Governmentwide Central Service
the salaries and expenses of executive Cost Allocation Plans;
officers, personnel administration, and (4) Appendix VI to Part 200—Public
accounting. Assistance Cost Allocation Plans;
(c) Federal Agency Acceptance of Nego- (5) Appendix VII to Part 200—States
Indirect Cost Rates. (See also and Local Government and Indian
tiated
Tribe Indirect Cost Proposals;and
06.)
(6) Appendix IX to Part 200—Hospital
(1) The negotiated rates must be ac-
Cost Principles.
cepted by all Federal awarding agen- (I) In addition to the procedures out-
cies. A Federal awarding agency may lined in the appendices in paragraph(e)
use a rate different from the negotiated of this section, any non-Federal entity
rate for a class of Federal awards or a that does not have a current nego-
single Federal award only when re- tiated (including provisional) rate, ex-
quired by Federal statute or regula- cept for those non-Federal entities de-
tion, or when approved by a Federal scribed in appendix VII to this part,
awarding agency head or delegate paragraph D.1.b, may elect to charge a
based on documented justification as de minimis rate of 10% of modified
described in paragraph (c)(3) of this total direct costs (MTDC) which may
section. be used indefinitely. No documentation
160
OMB Guidance §200.415
is required to justify the 10% de mini- and objectives set forth in the terms
mis indirect cost rate. As described in and conditions of the Federal award. I
§200.403, costs must be consistently am aware that any false, fictitious, or
charged as either indirect or direct fraudulent information, or the omis-
costs, but may not be double charged sion of any material fact, may subject
or inconsistently charged as both. If me to criminal, civil or administrative
chosen, this methodology once elected penalties for fraud, false statements,
must be used consistently for all Fed- false claims or otherwise. (U.S. Code
eral awards until such time as a non- Title 18, Section 1001 and Title 31, Sec-
Federal entity chooses to negotiate for tions 3729-3730 and 3801-3812)."
a rate, which the non-Federal entity (b) Certification of' cost allocation
may apply to do at any time. plan or indirect (F&A) cost rate pro-
(g)Any non-Federal entity that has a posal. Each cost allocation plan or in-
current federally-negotiated indirect direct (F&A) cost rate proposal must
cost rate may apply for a one-time ex- comply with the following:
tension of the rates in that agreement (1)A proposal to establish a cost allo-
for a period of up to four years. This cation plan or an indirect (F&A) cost
extension will be subject to the review rate, whether submitted to a Federal
and approval of the cognizant agency cognizant agency for indirect costs or
for indirect costs. If an extension is maintained on file by the non-Federal
granted the non-Federal entity may entity, must be certified by the non-
not request a rate review until the ex- Federal entity using the Certificate of
tension period ends. At the end of the Cost Allocation Plan or Certificate of
4-year extension, the non-Federal enti- Indirect Costs as set forth in appen-
ty must re-apply to negotiate a rate. dices III through VII, and IX of this
Subsequent one-time extensions (up to part. The certificate must be signed on
four years) are permitted if a renegoti- behalf of the non-Federal entity by an
ation is completed between each exten- individual at a level no lower than vice
sion request. president or chief financial officer of
(h) The federally negotiated indirect the non-Federal entity that submits
rate, distribution base, and rate type the proposal.
for a non-Federal entity(except for the (2) Unless the non-Federal entity has
Indian tribes or tribal organizations,as elected the option under§200.414(f), the
defined in the Indian Self Determina- Federal Government may either dis-
tion, Education and Assistance Act, 25 allow all indirect (F&A) costs or uni-
U.S.C. 450b(1)) must be available pub- laterally establish such a plan or rate
licly on an OMB-designated Federal when the non-Federal entity fails to
website. submit a certified proposal for estab-
[78 FR 78608, Dec. 26, 2013, as amended at 79 lishing such a plan or rate in accord-
FR 75886, Dec. 19, 2014; 85 FR 49563, Aug. 13, ance with the requirements. Such a
2020] plan or rate may be based upon audited
historical data or such other data that
§200.415 Required certifications. have been furnished to the cognizant
Required certifications include: agency for indirect costs and for which
(a) To assure' that expenditures are it can be demonstrated that all unal-
proper and in accordance with the lowable costs have been excluded.
terms and conditions of the Federal When a cost allocation plan or indirect
award and approved project budgets, cost rate is unilaterally established by
the annual and final fiscal reports or the Federal Government because the
vouchers requesting payment under the non-Federal entity failed to submit a
agreements must include a certifi- certified proposal, the plan or rate es-
cation, signed by an official who is au- tablished will be set to ensure that po-
thorized to legally bind the non-Fed- tentially unallowable costs will not be
eral entity,which reads as follows: "By reimbursed.
signing this report,I certify to the best (c) Certifications by nonprofit orga-
of my knowledge and belief that the re- nizations as appropriate that they did
port is true, complete, and accurate, not meet the definition of a major non-
and the expenditures, disbursements profit organization as defined in
and cash receipts are for the purposes §200.414(a).
161.
§200.416 2 CFR Ch. II (1-1-21 Edition)
(d) See also §200.450 for another re- fringe benefits) may be used in lieu of
quired certification. determining the actual indirect costs
[78 FR 78608, Dec. 26, 2013, as amended at 79 of the service. These services do not in-
FR 75886, Dec. 19, 2014; 85 FR 49563, Aug. 13, elude centralized services included in
2020] central service cost allocation plans as
described in Appendix V to Part 200.
SPECIAL CONSIDERATIONS FOR STATES,
LOCAL [85 FR 49564,Aug.13,2020]
GOVERNMENTS AND INDIAN
TRIBES SPECIAL CONSIDERATIONS FOR
§200.416 Cost allocation plans and in- INSTITUTIONS OF HIGHER EDUCATION
direct cost proposals. §200.418 Costs incurred by states and
(a) For states, local governments and local governments.
Indian tribes, certain services, such as Costs incurred or paid by a state or
motor pools, computer centers, pur- local government on behalf of its IHEs
chasing, accounting, etc., are provided for fringe benefit programs, such as
to operating agencies on a centralized pension costs and FICA and any other
basis. Since Federal awards are per- costs specifically incurred on behalf of,
formed within the individual operating and in direct benefit to, the IHEs, are
agencies, there needs to be a process allowable costs of such IHEs whether
whereby these central service costs can or not these costs are recorded in the
be identified and assigned to benefitted accounting records of the institutions,
activities on a reasonable and con- subject to the following:
sistent basis. The central service cost (a) The costs meet the requirements
allocation plan provides that process. of§200.402-411 of this subpart;
(b) Individual operating agencies (b) The costs are properly supported
(governmental department or agency), by approved cost allocation plans in ac-
normally charge Federal awards for in- cordance with applicable Federal cost
direct costs through an indirect cost accounting principles in this part; and
rate. A separate indirect cost rate(s) (c) The costs are not otherwise borne
proposal for each operating agency is directly or indirectly by the Federal
usually necessary to claim indirect Government.
costs under Federal awards. Indirect [98 FR 78608, Dec. 26, 2013, as amended at 85
costs include: FR 49564,Aug.13,2020]
(1) The indirect costs originating in
each department or agency of the gov- §200.419 Cost accounting standards
ernmental unit carrying out Federal and disclosure statement.
awards and (a) An IHE that receive an aggregate
(2)The costs of central governmental total $50 million or more in Federal
services distributed through the cen- awards and instruments subject to this
tral service cost allocation plan and subpart (as specified in §200.101) in its
not otherwise treated as direct costs. most recently completed fiscal year
(c)The requirements for development must comply with the Cost Accounting
and submission of cost allocation plans Standards Board's cost accounting
(for central service costs and public as- standards located at 48 CFR 9905.501,
sistance programs) and indirect cost 9905.502, 9905.505, and 9905.506. CAS-cov-
rate proposals are contained in appen- ered contracts and subcontracts award-
dices IV,V and VI to this part. ed to the IHEs are subject to the broad-
er§200.417 Interagency service. range of CAS requirements at 48
CFR 9900 through 9999 and 48 CFR part
The cost of services provided by one 30(FAR Part 30).
agency to another within the govern- (b) Disclosure statement. An IHE that
mental unit may include allowable di- receives an aggregate total $50 million
rect costs of the service plus a pro- or more in Federal awards and instru-
rated share of indirect costs. A stand- ments subject to this subpart(as speci-
ard indirect cost allowance equal to fied in §200.101) during its most re-
ten percent of the direct salary and cently completed fiscal year must dis-
wage cost of providing the service (ex- close their cost accounting practices
eluding overtime, shift premiums, and by filing a Disclosure Statement (DS-
162
•
OMB Guidance §200.419
2), which is reproduced in Appendix III priate by the cognizant agency for indi-
to Part 200. With the approval of the rect costs. Under the terms of CAS cov-
cognizant agency for indirect costs, an ered contracts, adjustments in the
IRE may meet the DS-2 submission by amount of funding provided may also
submitting the DS-2 for each business be required when the estimated pro-
unit that received $50 million or more posal costs were not determined in ac-
in Federal awards and instruments. cordance with established cost ac-
(1) The DS-2 must be submitted to counting practices.
the cognizant agency for indirect costs
with a copy to the IHE's cognizant (4) Overpayments. Excess amounts
agency for audit. The initial DS-2 and paid in the aggregate by the Federal
revisions to the DS-2 must be sub- Government under Federal awards due
mitted in coordination with the IHE's to a noncompliant cost accounting
indirect (F&A) rate proposal, unless an practice used to estimate, accumulate,
earlier submission is requested by the or report costs must be credited or re-
cognizant agency for indirect costs. funded, as deemed appropriate by the
IHEs with CAS-covered contracts or cognizant agency for indirect costs. In-
subcontracts meeting the dollar terest applicable to the excess amounts
threshold in 48 CFR 9903.202-1(f) must paid in the aggregate during the period
submit their initial DS-2 or revisions of noncompliance must also be deter-
no later than prior to the award of a mined and collected in accordance with
CAS-covered contract or subcontract. applicable Federal agency regulations.
(2) An IHE must maintain an accu- (5) Compliant cost accounting practice
rate DS-2 and comply with disclosed changes. Changes from one compliant
cost accounting practices. An IHE cost accounting practice to another
must file amendments to the DS-2 to compliant practice that are approved
the cognizant agency for indirect costs by the cognizant agency for indirect
in advance of a disclosed practice being costs may require cost adjustments if
changed to comply with a new or modi- the change has a material effect on
fied standard, or when a practice is Federal awards and the changes are
changed for other reasons.An IHE may deemed appropriate by the cognizant
proceed with implementing the change agency for indirect costs.
after it has notified the Federal cog (6) Responsibilities. The cognizant
nizant agency for indirect costs. If the agency for indirect cost must:
change represents a variation from 2
CFR part 200, the change may require (i) Determine cost adjustments for
approval by the Federal cognizant all Federal awards in the aggregate on
agency for indirect costs, in accordance behalf of the Federal Government. Ac-
with §200.102(b). Amendments of a DS- tions of the cognizant agency for indi-
2 may be submitted at any time. Re- rect cost in making cost adjustment
submission of a complete, updated DS- determinations must be coordinated
2 is discouraged except when there are with all affected Federal awarding
extensive changes to disclosed prac- agencies to the extent necessary.
tices. (ii)Prescribe guidelines and establish
(3) Cost and funding adjustments. Cost internal procedures to promptly deter-
adjustments must be made by the cog- mine on behalf of the Federal Govern-
nizant agency for indirect costs if an ment that a DS-2 adequately discloses
IHE fails to comply with the cost poli- the IHE's cost accounting practices
cies in this part or fails to consistently and that the disclosed practices are
follow its established or disclosed cost compliant with applicable CAS and the
accounting practices when estimating, requirements of this part.
accumulating or reporting the costs of
Federal awards, and the aggregate cost (iii) Distribute to all affected Federal
impact on Federal awards is material. awarding agencies any DS-2 determina-
The cost adjustment must normally be tion of adequacy or noncompliance.
made on an aggregate basis for all af- (78 FR 78608, Dec. 26, 2013, as amended at 79
fected Federal awards through an ad- FR 75886, Dec. 19, 2014; 85 FR 49564, Aug. 13,
justment of the IHE's future F&A costs 2020]
rates or other means considered appro-
163
§200.420 2 CFR Ch. II (1-1-21 Edition)
GENERAL PROVISIONS FOR SELECTED those activities dedicated to maintain-
ITEMS OF COST ing the image of the non-Federal entity
or maintaining or promoting under-
§200.420 Considerations for selected
standing and favorable relations with
items of cost. the community or public at large or
This section provides principles to be any segment of the public.
applied in establishing the allowability (d) The only allowable public rela-
of certain items involved in deter- tions costs are:
mining cost, in addition to the require- (1) Costs specifically required by the
ments of Subtitle II of this subpart. Federal award;
These principles apply whether or not a (2) Costs of communicating with the
particular item of cost is properly public and press pertaining to specific
treated as direct cost or indirect(F&A) activities or accomplishments which
cost. Failure to mention a particular result from performance of the Federal
item of cost is not intended to imply award (these costs are considered nec-
that it is either allowable or unallow- essary as part of the outreach effort for
able;rather, determination as to allow- the Federal award); or
ability in each case should be based on (3) Costs of conducting general liai-
the treatment provided for similar or son with news media and government
related items of cost, and based on the public relations officers, to the extent
principles described in §§200.402 that such activities are limited to com-
through 200.411. In case of a discrep- munication and liaison necessary to
ancy between the provisions of a spe- keep the public informed on matters of
cific Federal award and the provisions public concern, such as notices of fund-
below, the Federal award governs. Cri- ing opportunities, financial matters,
teria outlined in §200.403 must be ap- etc.
plied in determining allowability. See (e) Unallowable advertising and pub-
also§200.102. lie relations costs include the fol-
[85 FR 49564,Aug.13,2020] lowing:
(1) All advertising and public rela-
§200.421 Advertising and public rela- tions costs other than as specified in
tions. paragraphs(b)and(d)of this section;
(a) The term advertising costs means (2) Costs of meetings, conventions,
the costs of advertising media and cor- convocations, or other events related
ollary administrative costs. Adver- to other activities of the entity (see
tising media include magazines, news- also§200.432), including:
papers, radio and television, direct (i) Costs of displays, demonstrations,
mail, exhibits, electronic or computer and exhibits;
transmittals,and the like. (ii) Costs of meeting rooms, hospi-
(b) The only allowable advertising tality suites, and other special facili-
costs are those which are solely for: ties used in conjunction with shows
(1) The recruitment of personnel re- and other special events;and
quired by the non-Federal entity for (iii) Salaries and wages of employees
performance of a Federal award (See engaged in setting up and displaying
also§200.463); exhibits, making demonstrations, and
(2) The procurement of goods and providing briefings;
services for the performance of a Fed- (3) Costs of promotional items and
eral award; memorabilia, including models, gifts,
(3) The disposal of scrap or surplus and souvenirs;
materials acquired in the performance (4) Costs of advertising and public re
of a Federal award except when non- lations designed solely to promote the
Federal entities are reimbursed for dis-
posal costs at a predetermined amount; [78 FR 76808, Dec. 26, 2013, as amended at 85
or FR 49564,Aug.13,2020]
(4) Program outreach and other spe-
cific purposes necessary to meet the re- §200.422 Advisory councils.
quirements of the Federal award. Costs incurred by advisory councils
(c) The term "public relations" in- or committees are unallowable unless
eludes community relations and means authorized by statute, the Federal
164
OMB Guidance §200.428
awarding agency or as an indirect cost (3) Limited in scope to one or more of
where allocable to Federal awards. See the following types of compliance re-
§200.444,applicable to States,local gov- quirements: activities allowed or
ernments, and Indian tribes. unallowed; allowable costs/cost prin-
[85 FR 49564,Aug.13,2020] ciples; eligibility;and reporting.
[78 FR 78608, Dec. 26, 2013, as amended at 85
§200.423 Alcoholic beverages. FR 49564,Aug.13,2020]
Costs of alcoholic beverages are unal-
lowable. §200.426 Bad debts.
Bad debts (debts which have been de-
§200.424 Alumni/ae activities. termined to be uncollectable), includ-
Costs incurred by IHEs for, or in sup- ing losses (whether actual or esti-
port of, alumni/ae activities are unal- mated) arising from uncollectable ac-
lowable. counts and other claims, are unallow-
able. Related collection costs, and re-
§200.425 Audit services. lated legal costs, arising from such
(a) A reasonably proportionate share debts after they have been determined
unallow-
of the costs of audits required by, and to be See also
§200.uncollectable are also performed in accordance with, the Sin-
gle able. also§200.428.
Audit Act Amendments of 1996 (31 [85 FR 49565,Aug.13,2020]
U.S.C. 7501-7507), as implemented by re-
quirements of this part, are allowable. §200.427 Bonding costs.
However, the following audit costs are (a)Bonding costs arise when the Fed-
unallowable: eral awarding agency requires assur-
(1)Any costs when audits required by ance against financial loss to itself or
the Single Audit Act and subpart F of others by reason of the act or default
this part have not been conducted or of the non-Federal entity. They arise
have been conducted but not in accord- also in instances where the non-Fed-
ance therewith;and eral entity requires similar assurance,
(2) Any costs of auditing a non-Fed- including: bonds as bid, performance,
eral entity that is exempted from hav- payment, advance payment, infringe-
ing an audit conducted under the Sin- ment, and fidelity bonds for employees
gle Audit Act and subpart F of this and officials.
part because its expenditures under (b) Costs of bonding required pursu-
Federal awards are less than $750,000 ant to the terms and conditions of the
during the non-Federal entity's fiscal Federal award are allowable.
year. (c) Costs of bonding required by the
(b)The costs of a financial statement non-Federal entity in the general con-
audit of a non-Federal entity that does duct of its operations are allowable as
not currently have a Federal award an indirect cost to the extent that such
may be included in the indirect cost bonding is in accordance with sound
pool for a cost allocation plan or indi- business practice and the rates and pre-
rect cost proposal. miums are reasonable under the cir-
(c) Pass-through entities may charge cumstances.
Federal awards for the cost of agreed-
upon-procedures engagements to mon- §200.428 Collections of improper pay-
itor subrecipients (in accordance with ments.
subpart D, §§200.331-333) who are ex-
empted from the requirements of the The costs incurred by a non-Federal
Single Audit Act and subpart F of this entity to recover improper payments
part. This cost is allowable only if the are allowable as either direct or indi-
agreed-upon-procedures engagements olt c costs, as appropriate. Amounts
are: collected may be used by the non-Fed-
(1) Conducted in accordance with eral entity in accordance with cash
GAGAS attestation standards; management standards set forth in
(2) Paid for and arranged by the pass- §200.305.
through entity; and [85 FR 49565,Aug.13,2020]
165
§200.429 2 CFR Ch. II (1-1-21 Edition)
§200.429 Commencement and convoca- Federal awarding agency, a non-Fed-
tion costs. eral entity must follow its written non-
For IHEs, costs incurred for corn- Federal entity-wide policies and prac-
mencements and convocations are un- tices concerning the permissible extent
allowable, except as provided for in of professional services that can be pro-
(B)(9) Student Administration and vided outside the non-Federal entity
Services, in appendix III to this part, for non-organizational compensation.
as activity costs. Where such non-Federal entity-wide
written policies do not exist or do not
[85 FR 49565,Aug.13,2020] adequately define the permissible ex-
§200.430 Compensation—personal tent of consulting or other non-organi-
services. national activities undertaken for
General. Compensation for extra outside pay, the Federal Govern-
(a) per- ment may require that the effort of
sonal services includes all remunera- professional staff working on Federal
tion, paid currently or accrued, for awards be allocated between:
services of employees rendered during (1)Non-Federal entity activities, and
the period of performance under the
Federal award, including but not nec- (2) Non-organizational professional
activities. If the Federal awarding
essarily limited to wages and salaries.
Compensation for personal services agency considers the extent of non-or-
may also include fringe benefits which ganizational professional effort exces
are addressed in §200.431. Costs of com- sive or inconsistent with the conflicts-
pensation are allowable to the extent of-interest terms and conditions of the
that they satisfy the specific require- Federal award, appropriate arrange-
ments of this part, and that the total ments governing compensation will be
compensation for individual employ negotiated on a case-by-case basis.
ees: (d) Unallowable costs. (1) Costs which
(1) Is reasonable for the services ren-
dered and conforms to the established these principles must not be allowable
written policy of the non-Federal enti- under this section solely on the basis
ty consistently applied to both Federal that they constitute personnel corn-
and non-Federal activities; pensation.
(2) Follows an appointment made in (2) The allowable compensation for
accordance with a non-Federal entity's certain employees is subject to a ceil-
laws and/or rules or written policies ing in accordance with statute. For the
and meets the requirements of Federal amount of the ceiling for cost-reim-
statute, where applicable; and bursement contracts, the covered corn-
(3) Is determined and supported as pensation subject to the ceiling, the
provided in paragraph (i) of this sec- covered employees, and other relevant
tion,when applicable. provisions, see 10 U.S.C. 2324(e)(1)(P),
(b) Reasonableness. Compensation for and 41 U.S.C. 1127 and 4304(a)(16). For
employees engaged in work on Federal other types of Federal awards, other
awards will be considered reasonable to statutory ceilings may apply.
the extent that it is consistent with (e) Special considerations. Special con-
that paid for similar work in other ac- siderations in determining allowability
tivities of the non-Federal entity. In of compensation will be given to any
cases where the kinds of employees re- change in a non-Federal entity's com-
quired for Federal awards are not found pensation policy resulting in a substan-
in the other activities of the non-Fed- tial increase in its employees' level of
eral entity, compensation will be con- compensation (particularly when the
sidered reasonable to the extent that it change was concurrent with an in-
is comparable to that paid for similar crease in the ratio of Federal awards to
work in the labor market in which the other activities) or any change in the
non-Federal entity competes for the treatment of allowability of specific
kind of employees involved. types of compensation due to changes
(c) Professional activities outside the in Federal policy.
non-Federal entity. Unless an arrange- (f) Incentive compensation. Incentive
ment is specifically authorized by a compensation to employees based on
166
OMB Guidance §200.430
cost reduction, or efficient perform- activities, such activities must either
ance, suggestion awards, safety awards, be specifically provided for in the Fed-
etc., is allowable to the extent that the eral award budget or receive prior writ-
overall compensation is determined to ten approval by the Federal awarding
be reasonable and such costs are paid agency.
or accrued pursuant to an agreement (2)Salary basis. Charges for work per-
entered into in good faith between the formed on Federal awards by faculty
non-Federal entity and the employees members during the academic year are
before the services were rendered, or allowable at the IBS rate. Except as
pursuant to an established plan fol- noted in paragraph (h)(1)(ii) of this sec-
lowed by the non-Federal entity so tion, in no event will charges to Fed-
consistently as to imply, in effect, an eral awards, irrespective of the basis of
agreement to make such payment. computation, exceed the proportionate
(g) Nonprofit organizations. For com- share of the IBS for that period. This
pensation to members of nonprofit or- principle applies to all members of fac-
ganizations, trustees, directors, associ- ulty at an institution. IBS is defined as
ates, officers, or the immediate fami- the annual compensation paid by an
lies thereof, determination must be IHE for an individual's appointment,
made that such compensation is rea- whether that individual's time is spent
sonable for the actual personal services on research, instruction, administra-
rendered rather than a distribution of tion, or other activities. IBS excludes
earnings in excess of costs. This may any income that an individual earns
include director's and executive corn- outside of duties performed for the
mittee member's fees, incentive IHE. Unless there is prior approval by
awards, allowances for off-site pay, in- the Federal awarding agency, charges
centive pay, location allowances, hard- of a faculty member's salary to a Fed-
ship pay, and cost-of-living differen- eral award must not exceed the propor-
tials. tionate share of the IBS for the period
(h) Institutions of Higher Education during which the faculty member
(IHEs). (1) Certain conditions require worked on the award.
special consideration and possible limi- (3) Intra-Institution of Higher Edu-
tations in determining allowable per- cation (IHE) consulting. Intra-IHE con-
sonnel compensation costs under Fed- sulting by faculty should be under-
eral awards. Among such conditions taken as an IHE responsibility requir-
are the following: ing no compensation in addition to
(i) Allowable activities. Charges to IBS. However, in unusual cases where
Federal awards may include reasonable consultation is across departmental
amounts for activities contributing lines or involves a separate or remote
and directly related to work under an operation, and the work performed by
agreement, such as delivering special the faculty member is in addition to
lectures about specific aspects of the his or her regular responsibilities, any
ongoing activity, writing reports and charges for such work representing ad-
articles, developing and maintaining ditional compensation above IBS are
protocols (human, animals, etc.), man- allowable provided that such con-
aging substances/chemicals, managing sulting arrangements are specifically
and securing project-specific data, co- provided for in the Federal award or
ordinating research subjects, partici- approved in writing by the Federal
pating in appropriate seminars, con- awarding agency.
sulting with colleagues and graduate (4) Extra Service Pay normally rep-
students, and attending meetings and resents overload compensation, subject
conferences. to institutional compensation policies
(ii) Incidental activities. Incidental for services above and beyond IBS.
activities for which supplemental corn- Where extra service pay is a result of
pensation is allowable under written Intra-IHE consulting, it is subject to
institutional policy (at a rate not to the same requirements of paragraph(b)
exceed institutional base salary) need above. It is allowable if all of the fol-
not be included in the records described lowing conditions are met:
in paragraph (i) of this section to di- (i) The non-Federal entity estab-
rectly charge payments of incidental lishes consistent written policies which
167
§200.430 2 CFR Ch. II (1-1-21 Edition)
apply uniformly to all faculty mem- (ii) Where sabbatical leave is in-
bers, not just those working on Federal eluded in fringe benefits for which a
awards. cost is determined for assessment as a
(ii) The non-Federal entity estab- direct charge, the aggregate amount of
lishes a consistent written definition of such assessments applicable to all
work covered by IBS which is specific work of the institution during the base
enough to determine conclusively when period must be reasonable in relation
work beyond that level has occurred. to the IHE's actual experience under
This may be described in appointment its sabbatical leave policy.
letters or other documentations. (8) Salary rates for non-faculty mem-
(iii) The supplementation amount bers. Non-faculty full-time professional
paid is commensurate with the IBS personnel may also earn "extra service
rate of pay and the amount of addi- pay" in accordance with the non-Fed-
tional work performed. See paragraph eral entity's written policy and con-
(h)(2)of this section. sistent with paragraph (h)(1)(i) of this
(iv) The salaries, as supplemented, section.
fall within the salary structure and (i)Standards for Documentation of Per-
pay ranges established by and docu- sonnel Expenses (1) Charges to Federal
mented in writing or otherwise applica- awards for salaries and wages must be
ble to the non-Federal entity. based on records that accurately re-
(v)The total salaries charged to Fed- fleet the work performed. These
eral awards including extra service pay records must:
are subject to the Standards of Docu- (i) Be supported by a system of inter-
mentation as described in paragraph(i) nal control which provides reasonable
of this section. assurance that the charges are accu-
(5) Periods outside the academic year. rate, allowable, and properly allocated;
(i) Except as specified for teaching ac- (ii) Be incorporated into the official
tivity in paragraph(h)(5)(ii) of this sec- records of the non-Federal entity;
tion, charges for work performed by (iii) Reasonably reflect the total ac-
faculty members on Federal awards tivity for which the employee is corn-
during periods not included in the base pensated by the non-Federal entity,
salary period will be at a rate not in not exceeding 100% of compensated ac-
excess of the IBS. tivities(for IHE, this per the IHE's def-
(ii) Charges for teaching activities inition of IBS);
performed by faculty members on Fed- (iv) Encompass federally-assisted and
eral awards during periods not included all other activities compensated by the
in IBS period will be based on the nor- non-Federal entity on an integrated
mal written policy of the IHE gov- basis, but may include the use of sub-
erning compensation to faculty mem- sidiary records as defined in the non-
bers for teaching assignments during Federal entity's written policy;
such periods. (v) Comply with the established ac-
(6) Part-time faculty. Charges for work counting policies and practices of the
performed on Federal awards by fac- non-Federal entity (See paragraph
ulty members having only part-time (h)(1)(ii) above for treatment of inci-
appointments will be determined at a dental work for IHEs.);and
rate not in excess of that regularly (vi)[Reserved]
paid for part-time assignments. (vii) Support the distribution of the
(7) Sabbatical leave costs. Rules for employee's salary or wages among spe-
sabbatical leave are as follow: cific activities or cost objectives if the
(i) Costs of leaves of absence by em- employee works on more than one Fed-
ployees for performance of graduate eral award; a Federal award and non-
work or sabbatical study, travel, or re- Federal award; an indirect cost activ-
search are allowable provided the IHE ity and a direct cost activity; two or
has a uniform written policy on sab- more indirect activities which are allo-
batical leave for persons engaged in in- cated using different allocation bases;
struction and persons engaged in re- or an unallowable activity and a direct
search. Such costs will be allocated on or indirect cost activity.
an equitable basis among all related (viii) Budget estimates (i.e., esti-
activities of the IHE. mates determined before the services
168
OMB Guidance §200.430
are performed) alone do not qualify as (4) Salaries and wages of employees
support for charges to Federal awards, used in meeting cost sharing or match-
but may be used for interim accounting ing requirements on Federal awards
purposes,provided that: must be supported in the same manner
(A) The system for establishing the as salaries and wages claimed for reim-
estimates produces reasonable approxi- bursement from Federal awards.
mations of the activity actually per- (5) For states, local governments and
formed; Indian tribes, substitute processes or
(B) Significant changes in the cor- systems for allocating salaries and
responding work activity(as defined by wages to Federal awards may be used
the non-Federal entity's written poli- in place of or in addition to the records
cies)are identified and entered into the described in paragraph (1) if approved
records in a timely manner. Short term by the cognizant agency for indirect
(such as one or two months) fluctua- cost. Such systems may include, but
tion between workload categories need are not limited to, random moment
not be considered as long as the dis- sampling, "rolling" time studies, case
tribution of salaries and wages is rea- counts, or other quantifiable measures
sonable over the longer term; and of work performed.
(C) The non-Federal entity's system (i) Substitute systems which use
of internal controls includes processes sampling methods (primarily for Tern-
to review after-the-fact interim porary Assistance for Needy Families
charges made to a Federal award based (TANF), the Supplemental Nutrition
on budget estimates. All necessary ad- Assistance Program (SNAP), Medicaid,
justment must be made such that the and other public assistance programs)
final amount charged to the Federal must meet acceptable statistical sam-
award is accurate, allowable, and prop- pling standards including:
erly allocated. (A) The sampling universe must in-
(ix) Because practices vary as to the elude all of the employees whose sala-
activity constituting a full workload ries and wages are to be allocated
(for IHEs, IBS), records may reflect based on sample results except as pro-
categories of activities expressed as a vided in paragraph (i)(5)(iii) of this sec-
percentage distribution of total activi- tion;
ties. (B) The entire time period involved
(x) It is recognized that teaching, re- must be covered by the sample; and
search, service, and administration are (C) The results must be statistically
often inextricably intermingled in an valid and applied to the period being
academic setting. When recording sala- sampled.
ries and wages charged to Federal (ii) Allocating charges for the sam-
awards for IHEs, a precise assessment pled employees' supervisors, clerical
of factors that contribute to costs is and support staffs, based on the results
therefore not always feasible, nor is it of the sampled employees, will be ac-
expected. ceptable.
(2) For records which meet the stand- (iii) Less than full compliance with
ards required in paragraph (i)(1) of this the statistical sampling standards
section, the non-Federal entity will not noted in subsection (5)(i) may be ac-
be required to provide additional sup- cepted by the cognizant agency for in-
port or documentation for the work direct costs if it concludes that the
performed, other than that referenced amounts to be allocated to Federal
in paragraph(i)(3) of this section. awards will be minimal, or if it con-
(3) In accordance with Department of cludes that the system proposed by the
Labor regulations implementing the non-Federal entity will result in lower
Fair Labor Standards Act (FLSA) (29 costs to Federal awards than a system
CFR part 516), charges for the salaries which complies with the standards.
and wages of nonexempt employees, in (6) Cognizant agencies for indirect
addition to the supporting documenta- costs are encouraged to approve alter-
tion described in this section, must native proposals based on outcomes
also be supported by records indicating and milestones for program perform-
the total number of hours worked each ance where these are clearly docu-
day. mented.Where approved by the Federal
169
§200.431 2 CFR Ch. II (1-1-21 Edition)
cognizant agency for indirect costs, tary leave, administrative leave, and
these plans are acceptable as an alter- other similar benefits, are allowable if
native to the requirements of para- all of the following criteria are met:
graph(i)(1)of this section. (1) They are provided under estab-
(7) For Federal awards of similar pur- lished written leave policies;
pose activity or instances of approved (2) The costs are equitably allocated
blended funding, a non-Federal entity to all related activities, including Fed-
may submit performance plans that in- eral awards;and,
corporate funds from multiple Federal
ac-
awards and account for their combined (3) The accounting basis (cash or crual) selected for costing each type of
use based on performance-oriented
metrics, provided that such plans are leave is consistently followed by the
non-Federal entity or specified group-
approved in advance by all involved ing of employees.
Federal awarding agencies. In these in-
stances, the non-Federal entity must (i) When a non Federal entity uses
submit a request for waiver of the re- the cash basis of accounting, the cost
quirements based on documentation of leave is recognized in the period that
that describes the method of charging the leave is taken and paid for. Pay-
costs, relates the charging of costs to ments for unused leave when an em-
the specific activity that is applicable ployee retires or terminates employ-
to all fund sources, and is based on ment are allowable in the year of pay-
quantifiable measures of the activity ment.
in relation to time charged. (ii) The accrual basis may be only
(8) For a non-Federal entity where used for those types of leave for which
the records do not meet the standards a liability as defined by GAAP exists
described in this section, the Federal when the leave is earned. When a non-
Government may require personnel ac- Federal entity uses the accrual basis of
tivity reports,including prescribed cer- accounting, allowable leave costs are
tifications, or equivalent documenta- the lesser of the amount accrued or
tion that support the records as re- funded.
quired in this section. (c) Fringe benefits. The cost of fringe
[78 FR 78608, Dec. 26, 2013, as amended at 79 benefits in the form of employer con-
FR 75886, Dec. 19, 2014; 85 FR 49565, Aug. 13, tributions or expenses for social secu-
2020] rity; employee life, health, unemploy-
ment, and worker's compensation in-
§200.431 Compensation—fringe bene- surance (except as indicated in
fits. §200.447); pension plan costs (see para-
(a) General. Fringe benefits are allow- graph (i) of this section); and other
antes and services provided by employ- similar benefits are allowable, provided
ers to their employees as compensation such benefits are granted under estab-
in addition to regular salaries and lished written policies. Such benefits,
wages. Fringe benefits include, but are must be allocated to Federal awards
not limited to, the costs of leave (vaca- and all other activities in a manner
tion, family-related, sick or military), consistent with the pattern of benefits
employee insurance, pensions, and un- attributable to the individuals or
employment benefit plans. Except as group(s) of employees whose salaries
provided elsewhere in these principles, and wages are chargeable to such Fed-
the costs of fringe benefits are allow- eral awards and other activities, and
able provided that the benefits are rea- charged as direct or indirect costs in
sonable and are required by law, non- accordance with the non-Federal enti-
Federal entity-employee agreement, or ty's accounting practices.
an established policy of the non-Fed- (d) Cost objectives. Fringe benefits
eral entity. may be assigned to cost objectives by
(b) Leave. The cost of fringe benefits identifying specific benefits to specific
in the form of regular compensation individual employees or by allocating
paid to employees during periods of au- on the basis of entity-wide salaries and
thorized absences from the job, such as wages of the employees receiving the
for annual leave, family-related leave, benefits. When the allocation method
sick leave, holidays, court leave, mili- is used, separate allocations must be
170
OMB Guidance §200.431
made to selective groupings of employ- (2)The methods of cost allocation are
ees, unless the non-Federal entity dem- not discriminatory.
onstrates that costs in relationship to (3) Except for State and Local Gov-
salaries and wages do not differ signifi- ernments, the cost assigned to each fis-
cantly for different groups of employ- cal year should be determined in ac-
ees. cordance with GAAP.
(e) Insurance. See also §200.447(d)(1) (4) The costs assigned to a given fis-
and(2). cal year are funded for all plan partici-
(1) Provisions for a reserve under a pants within six months after the end
self-insurance program for unemploy- of that year.However, increases to nor-
ment compensation or workers' corn- mal and past service pension costs
pensation are allowable to the extent caused by a delay in funding the actu-
that the provisions represent reason- arial liability beyond 30 calendar days
able estimates of the liabilities for after each quarter of the year to which
such compensation, and the types of such costs are assignable are unallow-
coverage, extent of coverage, and rates able. Non-Federal entity may elect to
and premiums would have been allow- follow the "Cost Accounting Standard
able had insurance been purchased to for Composition and Measurement of
cover the risks. However,provisions for Pension Costs" (48 CFR 9904.412).
self-insured liabilities which do not be- (5) Pension plan termination insur-
come payable for more than one year ance premiums paid pursuant to the
after the provision is made must not Employee Retirement Income Security
exceed the present value of the liabil- Act(ERISA) of 1974(29 U.S.C. 1301-1461)
ity. are allowable. Late payment charges
(2) Costs of insurance on the lives of on such premiums are unallowable. Ex-
trustees, officers, or other employees cise taxes on accumulated funding defi-
holding positions of similar responsi- ciencies and other penalties imposed
bility are allowable only to the extent under ERISA are unallowable.
that the insurance represents addi- (6) Pension plan costs may be com-
tional compensation. The costs of such puted using a pay-as-you-go method or
insurance when the non-Federal entity an acceptable actuarial cost method in
is named as beneficiary are unallow- accordance with established written
able. policies of the non-Federal entity.
(3)Actual claims paid to or on behalf (i) For pension plans financed on a
of employees or former employees for pay-as-you-go method, allowable costs
workers' compensation, unemployment will be limited to those representing
compensation, severance pay, and simi- actual payments to retirees or their
lar employee benefits (e.g., post-retire- beneficiaries.
ment health benefits), are allowable in (ii) Pension costs calculated using an
the year of payment provided that the actuarial cost-based method recognized
non-Federal entity follows a consistent by GAAP are allowable for a given fis-
costing policy. cal year if they are funded for that
(f) Automobiles. That portion of auto- year within six months after the end of
mobile costs furnished by the non-Fed- that year. Costs funded after the six-
eral entity that relates to personal use month period (or a later period agreed
by employees(including transportation to by the cognizant agency for indirect
to and from work) is unallowable as costs) are allowable in the year funded.
fringe benefit or indirect (F&A) costs The cognizant agency for indirect costs
regardless of whether the cost is re- may agree to an extension of the six-
ported as taxable income to the em- month period if an appropriate adjust-
ployees. ment is made to compensate for the
(g) Pension plan costs. Pension plan timing of the charges to the Federal
costs which are incurred in accordance Government and related Federal reim-
with the established policies of the bursement and the non-Federal enti-
non-Federal entity are allowable, pro- ty's contribution to the pension fund.
vided that: Adjustments may be made by cash re-
(1) Such policies meet the test of rea- fund or other equitable procedures to
sonableness. compensate the Federal Government
171
§200.431 2 CFR Ch. II (1-1-21 Edition)
for the time value of Federal reim- compensate the Federal Government
bursements in excess of contributions for the time value of Federal reim-
to the pension fund. bursements in excess of contributions
(iii) Amounts funded by the non-Fed- to the PRHP fund.
eral entity in excess of the actuarially (3) Amounts funded in excess of the
determined amount for a fiscal year actuarially determined amount for a
may be used as the non-Federal enti- fiscal year may be used as the non-Fed-
ty's contribution in future periods. eral entity contribution in a future pe-
(iv) When a non-Federal entity con- riod.
verts to an acceptable actuarial cost (4) When a non-Federal entity con-
method, as defined by GAAP, and funds verts to an acceptable actuarial cost
pension costs in accordance with this method and funds PRHP costs in ac-
method, the unfunded liability at the cordance with this method, the initial
time of conversion is allowable if am- unfunded liability attributable to prior
ortized over a period of years in accord- years is allowable if amortized over a
ance with GAAP. period of years in accordance with
(v)The Federal Government must re- GAAP, or, if no such GAAP period ex-
ceive an equitable share of any pre- ists, over a period negotiated with the
viously allowed pension costs (includ- cognizant agency for indirect costs.
ing earnings thereon) which revert or (5) To be allowable in the current
inure to the non-Federal entity in the year, the PRHP costs must be paid ei-
form of a refund, withdrawal, or other ther to:
credit.
pro-
(h) Post-retirement health. Post-retire- de asn insurer or year costsr btneor pre-
ment health plans (PRHP) refers to eider current or costs of health insurance or health miums,(iAn or
services not included in a pension plan trust fundinnrer s trusteeheforthet maintain
covered by paragraph(g)of this section aposeo or reserve for sole bene-
forpur-
retirees and their spouses, depend- of retiprovrees
andg post-retirement beneficiaries.
ents, and survivors. PRHP costs may
fits to retirees other beneficiaries.
be computed using a pay-as-you-go (6) The Federal Government must re
method or an acceptable actuarial cost ceive an equitable share of any
amounts of previously allowed post-re-
method in accordance with established
written policies of the non-Federal en- tirement benefit costs (including earn-
tity. ings thereon) which revert or inure to
(1) For PRHP financed on a the non-Federal entity in the form of a
pay-as- refund,withdrawal, or other credit.
you-go method, allowable costs will be
limited to those representing actual (i) Severance pay. (1) Severance pay,
payments to retirees or their belie- also commonly referred to as dismissal
ficiaries. wages, is a payment in addition to reg-
(2) PRHP costs calculated using an ular salaries and wages,by non-Federal
actuarial cost method recognized by entities to workers whose employment
GAAP are allowable if they are funded is being terminated. Costs of severance
for that year within six months after pay are allowable only to the extent
the end of that year. Costs funded after that in each case, it is required by
the six-month period (or a later period (i)Law;
agreed to by the cognizant agency) are (ii)Employer-employee agreement;
allowable in the year funded. The Fed- (iii) Established policy that con-
eral cognizant agency for indirect costs stitutes, in effect, an implied agree-
may agree to an extension of the six- ment on the non-Federal entity's part;
month period if an appropriate adjust- or
ment is made to compensate for the (iv) Circumstances of the particular
timing of the charges to the Federal employment.
Government and related Federal reim- (2) Costs of severance payments are
bursements and the non-Federal enti- divided into two categories as follows:
ty's contributions to the PRHP fund. (i) Actual normal turnover severance
Adjustments may be made by cash re- payments must be allocated to all ac-
fund,reduction in current year's PRHP tivities; or, where the non-Federal en-
costs, or other equitable procedures to tity provides for a reserve for normal
172
OMB Guidance §200.432
severances, such method will be ac- an equitable basis. Tuition benefits for
ceptable if the charge to current oper- family members other than the em-
ations is reasonable in light of pay- ployee are unallowable.
ments actually made for normal (2) Fringe benefits in the form of tui-
severances over a representative past tion or remission of tuition for indi-
period, and if amounts charged are al- vidual employees not employed by
located to all activities of the non-Fed- IHEs are limited to the tax-free
eral entity. amount allowed per section 127 of the
(ii) Measurement of costs of abnor- Internal Revenue Code as amended.
mal or mass severance pay by means of (3) IHEs may offer employees tuition
an accrual will not achieve equity to waivers or tuition reductions, provided
both parties. Thus, accruals for this that the benefit does not discriminate
purpose are not allowable. However, in favor of highly compensated employ-
the Federal Government recognizes its ees. Employees can exercise these ben-
responsibility to participate, to the ex- efits at other institutions according to
tent of its fair share, in any specific institutional policy. See §200.466, for
payment. Prior approval by the Fed- treatment of tuition remission pro-
eral awarding agency or cognizant vided to students.
agency for indirect cost, as appro- (k) Fringe benefit programs and other
priate,is required. benefit costs. For IHEs whose costs are
(3) Costs incurred in certain sever- paid by state or local governments,
ance pay packages which are in an fringe benefit programs (such as pen-
amount in excess of the normal sever- sion costs and FICA) and any other
ance pay paid by the non-Federal enti- benefits costs specifically incurred on
ty to an employee upon termination of behalf of, and in direct benefit to, the
employment and are paid to the em- non-Federal entity, are allowable costs
ployee contingent upon a change in of such non-Federal entities whether or
management control over, or owner- not these costs are recorded in the ac-
ship of, the non-Federal entity's assets, counting records of the non-Federal en-
are unallowable. tities, subject to the following:
(4)Severance payments to foreign na- (1) The costs meet the requirements
tionals employed by the non-Federal of Basic Considerations in §§200.402
entity outside the United States, to through 200.411;
the extent that the amount exceeds the (2) The costs are properly supported
customary or prevailing practices for by approved cost allocation plans in ac
the non-Federal entity in the United cordance with applicable Federal cost
States, are unallowable, unless they accounting principles;and
are necessary for the performance of (3) The costs are not otherwise borne
Federal programs and approved by the directly or indirectly by the Federal
Federal awarding agency. Government.
(5) Severance payments to foreign na- [85 FR 49565,Aug.13,2020]
tionals employed by the non-Federal
entity outside the United States due to §200.432 Conferences.
the termination of the foreign national A conference is defined as a meeting,
as a result of the closing of, or curtail- retreat, seminar, symposium, work-
ment of activities by, the non-Federal shop or event whose primary purpose is
entity in that country, are unallow- the dissemination of technical infor-
able, unless they are necessary for the mation beyond the non-Federal entity
performance of Federal programs and and is necessary and reasonable for
approved by the Federal awarding successful performance under the Fed-
agency. eral award. Allowable conference costs
(j) For IHEs only. (1) Fringe benefits paid by the non-Federal entity as a
in the form of undergraduate and grad- sponsor or host of the conference may
uate tuition or remission of tuition for include rental of facilities, speakers'
individual employees are allowable, fees, costs of meals and refreshments,
provided such benefits are granted in local transportation, and other items
accordance with established non-Fed- incidental to such conferences unless
eral entity policies, and are distributed further restricted by the terms and
to all non-Federal entity activities on conditions of the Federal award. As
173
§200.433 2 CFR Ch. II (1-1-21 Edition)
needed, the costs of identifying, but with certainty as to the time or inten-
not providing, locally available depend- sity, or with an assurance of their hap-
ent-care resources are allowable. Con- pening, are unallowable, except as
ference hosts/sponsors must exercise noted in§§200.431 and 200.447.
discretion and judgment in ensuring
that conference costs are appropriate, [78 FR 78608, Dec. 26, 2013, as amended at 79
necessary and managed in a manner FR 75886, Dec. 19, 2014; 85 FR 49567, Aug. 13,
that minimizes costs to the Federal 2020]
award. The Federal awarding agency §200.434 Contributions and donations.
may authorize exceptions where appro-
priate for programs including Indian (a) Costs of contributions and dona-
tribes, children, and the elderly. See tions, including cash, property, and
also§§200.438,200.456,and 200.475. services, from the non-Federal entity
[85 FR 49567,Aug.13,2020] to other entities,are unallowable.
(b) It is permissible for contingency
§200.433 Contingency provisions. amounts other than those excluded in
Contingency is that part of a paragraph (a) of this section to be ex-
(a)budget estimate of future costs (typi- toplfthe tent theyncluded in budget aryest to s,
im-
cally of large construction projects, IT prove the extent areof thoseneosesest to systems, or other items as approved by the precision of estimates.
the Federal awarding agency) which is Amounts must be estimated using
associated with possible events or con- broadly-accepted cost estimating
ditions arising from causes the precise methodologies, specified in the budget
outcome of which is indeterminable at documentation of the Federal award,
the time of estimate, and that experi-
ence shows will likely result, in aggre- agency. As such, contingency amounts
gate, in additional costs for the ap- are to be included in the Federal
proved activity or project. Amounts for award. In order for actual costs in-
major project scope changes, unfore curred to be allowable, they must corn-
seen risks, or extraordinary events ply with the cost principles and other
may not be included. requirements in this part (see also
(b) It is permissible for contingency §§200.300 and 200.403 of this part); be
amounts other than those excluded in necessary and reasonable for proper
paragraph (a) of this section to be ex- and efficient accomplishment of
plicitly included in budget estimates, project or program objectives, and be
to the extent they are necessary to im- verifiable from the non-Federal enti-
prove the precision of those estimates. ty's records.
Amounts must be estimated using (c) Payments made by the Federal
broadly-accepted cost estimating awarding agency to the non-Federal
methodologies, specified in the budget entity's "contingency reserve" or any
documentation of the Federal award, similar payment made for events the
and accepted by the Federal awarding occurrence of which cannot be foretold
agency. As such, contingency amounts with certainty as to the time or inten-
are to be included in the Federal sity, or with an assurance of their hap-
award. In order for actual costs in- pening, are unallowable, except as
curred to be allowable, they must corn- noted in§§200.431 and 200.447.
ply with the cost principles and other (d) To the extent feasible, services
requirements in this part (see also donated to the non-Federal entity will
§§200.300 and 200.403 of this part); be be supported by the same methods used
necessary and reasonable for proper to support the allocability of regular
and efficient accomplishment of personnel services.
project or program objectives, and be (e) The following provisions apply to
verifiable from the non-Federal enti- nonprofit organizations. The value of
ty's records. services donated to the nonprofit orga-
(c) Payments made by the Federal nization utilized in the performance of
awarding agency to the non-Federal a direct cost activity must be consid-
entity's "contingency reserve" or any ered in the determination of the non-
similar payment made for events the Federal entity's indirect cost rate(s)
occurrence of which cannot be foretold and, accordingly, must be allocated a
174
OMB Guidance §200.435
proportionate share of applicable indi- including a conviction due to a plea of
rect costs when the following cir- nolo contendere.
cumstances exist: (2) Costs include the services of in-
(1) The aggregate value of the serv- house or private counsel, accountants,
ices is material; consultants, or others engaged to as-
(2) The services are supported by a sist the non-Federal entity before, dur-
significant amount of the indirect ing, and after commencement of a judi-
costs incurred by the non-Federal enti- cial or administrative proceeding, that
ty; bear a direct relationship to the pro-
(i) In those instances where there is ceeding.
no basis for determining the fair mar- (3) Fraud means:
ket value of the services rendered, the (i) Acts of fraud or corruption or at-
non-Federal entity and the cognizant tempts to defraud the Federal Govern-
agency for indirect costs must nego- ment or to corrupt its agents,
tiate an appropriate allocation of indi-
rect cost to the services. (ii) Acts that constitute a cause for
debarment or suspension (as specified
(ii) Where donated services directly in agency regulations),and
benefit a project supported by the Fed
eral award, the indirect costs allocated (iii) Acts which violate the False
Claims Act (31 U.S.C. 3729-3732) or the
to the services will be considered as a
Anti-kickback Act (41 U.S.C. 1320a-
part of the total costs of the project.
Such indirect costs may be reimbursed 7b(b)).
under the Federal award or used to (4) Penalty does not include restitu-
meet cost sharing or matching require- tion, reimbursement, or compensatory
ments. damages.
(f) Fair market value of donated (5) Proceeding includes an investiga-
services must be computed as described tion.
in§200.306. (b) Costs. (1) Except as otherwise de-
(g) Personal Property and Use of scribed herein, costs incurred in con-
Space. nection with any criminal, civil or ad-
(1) Donated personal property and ministrative proceeding (including fil-
use of space may be furnished to a non- ing of a false certification) commenced
Federal entity. The value of the per- by the Federal Government, a state,
sonal property and space may not be local government, or foreign govern-
charged to the Federal award either as ment, or joined by the Federal Govern-
a direct or indirect cost. ment(including a proceeding under the
(2)The value of the donations may be False Claims Act), against the non-
used to meet cost sharing or matching Federal entity, (or commenced by third
share requirements under the condi- parties or a current or former em-
tions described in §200.300 of this part. ployee of the non-Federal entity who
The value of the donations must be de- submits a whistleblower complaint of
termined in accordance with §200.300. reprisal in accordance with 10 U.S.C.
Where donations are treated as indirect 2409 or 41 U.S.C.4712),are not allowable
costs, indirect cost rates will separate if the proceeding:
the value of the donations so that re- (i)Relates to a violation of,or failure
imbursement will not be made. to comply with, a Federal, state, local
[78 FR78608, Dec. 26, 2013, as amended at 79 or foreign statute, regulation or the
FR 75886, Dec. 19, 2014; 85 FRs ae7, Aug. terms and conditions of the Federal
2020] award, by the non-Federal entity (in-
cluding its agents and employees); and
§200.435 Defense and prosecution of (ii) Results in any of the following
criminal and civil proceedings, dispositions:
claims,appeals and patent infringe- (A) In a criminal proceeding, a con-
ments. viction.
(a) Definitions for the purposes of this (B) In a civil or administrative pro-
section. (1)Conviction means a judgment ceeding involving an allegation of
or conviction of a criminal offense by fraud or similar misconduct, a deter-
any court of competent jurisdiction, mination of non-Federal entity liabil-
whether entered upon verdict or a plea, ity.
175
§200.435 2 CFR Ch. II (1-1-21 Edition)
(C) In the case of any civil or admin- (2) Payment of the reasonable, nec-
istrative proceeding, the disallowance essary, allocable and otherwise allow-
of costs or the imposition of a mone- able costs incurred is not prohibited by
tary penalty, or an order issued by the any other provision(s) of the Federal
Federal awarding agency head or dele- award;
gate to the non-Federal entity to take (3) The costs are not recovered from
corrective action under 10 U.S.C. 2409 the Federal Government or a third
or 41 U.S.C.4712. party, either directly as a result of the
(D)A final decision by an appropriate proceeding or otherwise;and,
Federal official to debar or suspend the
non-Federal entity, to rescind or void a must etn authorizedepercentageFe official
Federal award, or to terminate a Fed determine the of costs
eral award by reason of a violation or allowed considering the complexity of
failure to comply with a statute, regu- litigation, generally accepted prin-
• lation, or the terms and conditions of ciples governing the award of legal fees
the Federal award. in civil actions involving the United
(E) A disposition by consent or com- States, and such other factors as may
promise, if the action could have re-
sulted in any of the dispositions de- not exceed 80 percent. However, if an
scribed in paragraphs (b)(1)(ii)(A) agreement reached under paragraph (c)
through(D)of this section. of this section has explicitly consid-
(2) If more than one proceeding in- ered this 80 percent limitation and per-
volves the same alleged misconduct, mitted a higher percentage, then the
the costs of all such proceedings are full amount of costs resulting from
unallowable if any results in one of the that agreement are allowable.
dispositions shown in paragraph (b) of (f) Costs incurred by the non-Federal
this section. entity in connection with the defense
(c)If a proceeding referred to in para- of suits brought by its employees or ex-
graph (b) of this section is commenced employees under section 2 of the Major
by the Federal Government and is re- Fraud Act of 1988 (18 U.S.C. 1031), in-
solved by consent or compromise pur- cluding the cost of all relief necessary
suant to an agreement by the non-Fed- to make such employee whole, where
eral entity and the Federal Govern- the non-Federal entity was found liable
ment, then the costs incurred may be or settled, are unallowable.
allowed to the extent specifically pro- (g) Costs of prosecution of claims
vided in such agreement. against the Federal Government, in-
(d)If a proceeding referred to in para- cluding appeals of final Federal agency
graph (b) of this section is commenced decisions,are unallowable.
by a state, local or foreign government, (h) Costs of legal, accounting, and
the authorized Federal official may consultant services, and related costs,
allow the costs incurred if such author- incurred in connection with patent in-
ized official determines that the costs fringement litigation, are unallowable
were incurred as a result of:
(1)A specific term or condition of the unless otherwise provided for in the
Federal award, or Federal award.
(2) Specific written direction of an (i) Costs which may be unallowable
authorized official of the Federal under this section, including directly
awarding agency. associated costs, must be segregated
(e) Costs incurred in connection with and accounted for separately. During
proceedings described in paragraph (b) the pendency of any proceeding covered
of this section, which are not made un- by paragraphs (b) and (f) of this sec-
allowable by that subsection, may be tion, the Federal Government must
allowed but only to the extent that: generally withhold payment of such
(1) The costs are reasonable and nec- costs. However, if in its best interests,
essary in relation to the administra- the Federal Government may provide
tion of the Federal award and activi- for conditional payment upon provision
ties required to deal with the pro- of adequate security, or other adequate
ceeding and the underlying cause of ac- assurance, and agreement to repay all
tion; unallowable costs, plus interest, if the
176
OMB Guidance §200.436
costs are subsequently determined to lowed for the individual items or class-
be unallowable. es of assets involved.
[78 FR 78608, Dec. 26, 2013, as amended at 79 (2) The depreciation method used to
FR 75886,Dec.19,2014] charge the cost of an asset (or group of
assets) to accounting periods must re-
§200.436 Depreciation. flect the pattern of consumption of the
(a)Depreciation is the method for al- asset during its useful life. In the ab-
locating the cost of fixed assets to peri- sence of clear evidence indicating that
ods benefitting from asset use. The the expected consumption of the asset
non-Federal entity may be corn- will be significantly greater in the
pensated for the use of its buildings, early portions than in the later por-
capital improvements, equipment, and tions of its useful life, the straight-line
software projects capitalized in accord- method must be presumed to be the ap-
ance with GAAP, provided that they propriate method. Depreciation meth-
are used, needed in the non-Federal en- ods once used may not be changed un-
tity's activities, and properly allocated less approved in advance by the cog-
to Federal awards. Such compensation nizant agency. The depreciation meth-
must be made by computing deprecia- ods used to calculate the depreciation
tion. amounts for indirect (F&A) rate pur-
(b) The allocation for depreciation poses must be the same methods used
must be made in accordance with Ap- by the non-Federal entity for its finan-
pendices III through IX. cial statements.
(c) Depreciation is computed apply- (3) The entire building, including the
ing the following rules. The computa- shell and all components, may be treat-
tion of depreciation must be based on ed as a single asset and depreciated
the acquisition cost of the assets in- over a single useful life. A building
volved. For an asset donated to the may also be divided into multiple com-
non-Federal entity by a third party, its ponents. Each component item may
fair market value at the time of the do- then be depreciated over its estimated
nation must be considered as the acqui- useful life. The building components
sition cost. Such assets may be depre- must be grouped into three general
ciated or claimed as matching but not components of a building: building
both. For the computation of deprecia- shell (including construction and de-
tion, the acquisition cost will exclude: sign costs), building services systems
(1)The cost of land; (e.g., elevators, HVAC, plumbing sys-
(2) Any portion of the cost of build- tem and heating and air-conditioning
ings and equipment borne by or do- system) and fixed equipment (e.g.,
nated by the Federal Government, irre- sterilizers, casework, fume hoods, cold
spective of where title was originally rooms and glassware/washers). In ex-
vested or where it is presently located; ceptional cases, a cognizant agency
(3) Any portion of the cost of build- may authorize a non-Federal entity to
ings and equipment contributed by or use more than these three groupings.
for the non-Federal entity that are al- When a non-Federal entity elects to de-
ready claimed as matching or where preciate its buildings by its compo-
law or agreement prohibits recovery; nents, the same depreciation methods
(4) Any asset acquired solely for the must be used for indirect (F&A) pur-
performance of a non-Federal award; poses and financial statements pur-
and poses, as described in paragraphs (d)(1)
(d) When computing depreciation and(2) of this section.
charges, the following must be ob- (4) No depreciation may be allowed
served: on any assets that have outlived their
(1) The period of useful service or depreciable lives.
useful life established in each case for (5) Where the depreciation method is
usable capital assets must take into introduced to replace the use allow-
consideration such factors as type of ance method, depreciation must be
construction, nature of the equipment, computed as if the asset had been de-
technological developments in the par- preciated over its entire life (i.e., from
ticular area, historical data, and the the date the asset was acquired and
renewal and replacement policies fol- ready for use to the date of disposal or
177
§200.437 2 CFR Ch. II (1-1-21 Edition)
withdrawal from service). The total either in the approved budget for the
amount of use allowance and deprecia- Federal award or with prior written ap-
tion for an asset(including imputed de- proval of the Federal awarding agency.
preciation applicable to periods prior
to the conversion from the use allow- §200.439 Equipment and other capital
ance method as well as depreciation expenditures.
after the conversion) may not exceed (a) See §200.1 for the definitions of
the total acquisition cost of the asset. capital expenditures, equipment, special
(e) Charges for depreciation must be purpose equipment, general purpose
supported by adequate property equipment, acquisition cost, and capital
records, and physical inventories must assets.
be taken at least once every two years (b) The following rules of allow-
to ensure that the assets exist and are ability must apply to equipment and
usable, used, and needed. Statistical other capital expenditures:
sampling techniques may be used in (1) Capital expenditures for general
taking these inventories. In addition, purpose equipment, buildings, and land
adequate depreciation records showing are unallowable as direct charges, ex-
the amount of depreciation must be cept with the prior written approval of
maintained. the Federal awarding agency or pass-
[78 FR 78608, Dec. 26, 2013, as amended at 79 through entity.
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13, (2) Capital expenditures for special
2020] purpose equipment are allowable as di-
rect costs, provided that items with a
unit cost of $5,000 or more have the
costs. prior written approval of the Federal
(a) Costs incurred in accordance with awarding agency or pass-through enti-
the non-Federal entity's documented ty.
policies for the improvement of work- (3) Capital expenditures for improve-
ing conditions, employer-employee re- ments to land, buildings, or equipment
lations, employee health,and employee which materially increase their value
performance are allowable. or useful life are unallowable as a di-
(b) Such costs will be equitably ap- rect cost except with the prior written
portioned to all activities of the non- approval of the Federal awarding agen-
Federal entity. Income generated from cy, or pass-through entity. See§200.436,
any of these activities will be credited for rules on the allowability of depre-
to the cost thereof unless such income ciation on buildings, capital improve-
has been irrevocably sent to employee ments, and equipment. See also
welfare organizations. §200.465.
(c) Losses resulting from operating (4) When approved as a direct charge
food services are allowable only if the pursuant to paragraphs (b)(1) through
non-Federal entity's objective is to op- (3) of this section, capital expenditures
erate such services on a break-even will be charged in the period in which
basis. Losses sustained because of oper- the expenditure is incurred, or as oth-
ating objectives other than the above erwise determined appropriate and ne-
are allowable only: gotiated with the Federal awarding
(1) Where the non-Federal entity can agency.
demonstrate unusual circumstances; (5) The unamortized portion of any
and equipment written off as a result of a
(2) With the approval of the cog- change in capitalization levels may be
nizant agency for indirect costs. recovered by continuing to claim the
§200.438 Entertainment costs. otherwise allowable depreciation on
the equipment, or by amortizing the
Costs of entertainment, including amount to be written off over a period
amusement, diversion, and social ac- of years negotiated with the Federal
tivities and any associated costs are cognizant agency for indirect cost.
unallowable, except where specific (6) Cost of equipment disposal. If the
costs that might otherwise be consid- non-Federal entity is instructed by the
ered entertainment have a pro- Federal awarding agency to otherwise
grammatic purpose and are authorized dispose of or transfer the equipment
178
OMB Guidance §200.443
the costs of such disposal or transfer §200.442 Fund raising and investment
are allowable. management costs.
(7) Equipment and other capital ex- (a) Costs of organized fund raising,
penditures are unallowable as indirect including financial campaigns, endow-
costs. See§200.436. ment drives, solicitation of gifts and
[78 FR 78608, Dec. 26, 2013, as amended at 79 bequests, and similar expenses incurred
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13, to raise capital or obtain contributions
2020] are unallowable. Fund raising costs for
the purposes of meeting the Federal
§200.440 Exchange rates. program objectives are allowable with
Fed-
(a) Cost increases for fluctuations in prior written approval from the exchange rates are allowable costs sub- eral awardding agency. Proposal costs
60.
ject to the availability of funding. are ) Costs inf§investment
Prior approval of exchange rate flue a f andts of investment counsel to
staff similar expenses incurred to
tuations is required only when the enhance income from investments are
change results in the need for addi- unallowable except when associated
tional Federal funding, or the in- with investments covering pension,
creased costs result in the need to sig- self-insurance, or other funds which in-
nificantly reduce the scope of the elude Federal participation allowed by
project. The Federal awarding agency this part.
must however ensure that adequate (c) Costs related to the physical cus-
funds are available to cover currency tody and control of monies and securi-
fluctuations in order to avoid a viola- ties are allowable.
tion of the Anti-Deficiency Act. (d) Both allowable and unallowable
(b) The non-Federal entity is re- fund-raising and investment activities
quired to make reviews of local cur- must be allocated as an appropriate
rency gains to determine the need for share of indirect costs under the condi-
additional federal funding before the tions described in§200.413.
expiration date of the Federal award. [85 FR 49568,Aug.13,2020]
Subsequent adjustments for currency
increases may be allowable only when §200.443 Gains and losses on disposi-
the non-Federal entity provides the tion of depreciable assets.
Federal awarding agency with ade- (a) Gains and losses on the sale, re-
quate source documentation from a tirement, or other disposition of depre-
commonly used source in effect at the ciable property must be included in the
time the expense was made, and to the year in which they occur as credits or
extent that sufficient Federal funds are charges to the asset cost grouping(s) in
available. which the property was included. The
amount of the gain or loss to be in-
[78 FR 78608, Dec. 26, 2013, as amended at 79 eluded as a credit or charge to the ap-
FR 75886,Dec.19,2014] propriate asset cost grouping(s) is the
§200.441 Fines, penalties, damages difference between the amount realized
and other settlements. on the property and the undepreciated
basis of the property.
Costs resulting from non-Federal en- (b) Gains and losses from the disposi-
tity violations of, alleged violations of, tion of depreciable property must not
or failure to comply with, Federal, be recognized as a separate credit or
state, tribal, local or foreign laws and charge under the following conditions:
regulations are unallowable, except (1) The gain or loss is processed
when incurred as a result of compli- through a depreciation account and is
ance with specific provisions of the reflected in the depreciation allowable
Federal award, or with prior written under§§200.436 and 200.439.
approval of the Federal awarding agen- (2) The property is given in exchange •
cy. See also§200.435. as part of the purchase price of a simi-
lar item and the gain or loss is taken
[85 FR 49568,Aug.13,2020] into account in determining the depre-
ciation cost basis of the new item.
179
§200.444 2 CFR Ch. II (1-1-21 Edition)
(3) A loss results from the failure to Local government in §200.1 of this part),
maintain permissible insurance, except up to 50% of salaries and expenses di-
as otherwise provided in§200.447. rectly attributable to managing and
(4) Compensation for the use of the operating Federal programs by the
property was provided through use al- chief executive and his or her staff can
lowances in lieu of depreciation. be included in the indirect cost cal-
(5) Gains and losses arising from culation without documentation.
mass or extraordinary sales, retire-
ments, or other dispositions must be [78 FR 78608, Dec. 26, 2013, as amended at 79
considered on a case-by-case basis. FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
(c) Gains or losses of any nature aris-
ing 2020]
from the sale or exchange of prop- §200.445 Goods or services for per-
erty other than the property covered in sonal use.
paragraph (a) of this section, e.g., land,
must be excluded in computing Federal (a) Costs of goods or services for per-
award costs. sonal use of the non-Federal entity's
(d) When assets acquired with Fed- employees are unallowable regardless
eral funds, in part or wholly, are dis-
posed of whether the cost is reported as tax-
posed of, the distribution of the able income to the employees.
pro-
ceeds must be made in accordance with (b) Costs of housing (e.g., deprecia-
§§200.310 through 200.316 of this part. tion, maintenance, utilities, fur-
nishings, rent), housing allowances and
[78 FR 78608, Dec. 26, 2013, as amended at 79 personal living expenses are only al-
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13, lowable as direct costs regardless of
2020] whether reported as taxable income to
§200.444 General costs of government. the employees. In addition, to be allow-
(a) For states, local governments, able direct costs must be approved in
and Indian Tribes, the general costs of advance by a Federal awarding agency.
government are unallowable (except as §200.446 Idle facilities and idle capac-
provided in§200.475). Unallowable costs ity.
include:
(1) Salaries and expenses of the Office (a) As used in this section the fol-
of the Governor of a state or the chief lowing terms have the meanings set
executive of a local government or the forth in this section:
chief executive of an Indian tribe; (1) Facilities means land and build-
(2) Salaries and other expenses of a ings or any portion thereof, equipment
state legislature, tribal council, or individually or collectively, or any
similar local governmental body, such other tangible capital asset, wherever
as a county supervisor, city council, located, and whether owned or leased
school board, etc., whether incurred for by the non-Federal entity.
purposes of legislation or executive di- (2) Idle facilities means completely
rection; unused facilities that are excess to the
(3) Costs of the judicial branch of a non-Federal entity's current needs.
government; (3) Idle capacity means the unused
(4) Costs of prosecutorial activities capacity of partially used facilities. It
unless treated as a direct cost to a spe- is the difference between:
cific program if authorized by statute (i) That which a facility could
or regulation (however, this does not achieve under 100 percent operating
preclude the allowability of other legal time on a one-shift basis less operating
activities of the Attorney General as interruptions resulting from time lost
described in§200.435);and for repairs, setups, unsatisfactory ma-
(5) Costs of other general types of terials, and other normal delays and;
government services normally provided (ii) The extent to which the facility
to the general public, such as fire and was actually used to meet demands
police, unless provided for as a direct during the accounting period. A multi-
cost under a program statute or regula- shift basis should be used if it can be
tion. shown that this amount of usage would
(b) For Indian tribes and Councils of normally be expected for the type of fa-
Governments (COGs) (see definition for cility involved.
180
OMB Guidance §200.447
(4) Cost of idle facilities or idle ca- tivities are allowable subject to the
pacity means costs such as mainte- following limitations:
nance, repair, housing, rent, and other (1) Types and extent and cost of cov-
related costs, e.g., insurance, interest, erage are in accordance with the non-
and depreciation. These costs could in- Federal entity's policy and sound busi-
clude the costs of idle public safety ness practice.
emergency facilities, telecommuni- (2) Costs of insurance or of contribu-
cations, or information technology sys- tions to any reserve covering the risk
tem capacity that is built to withstand of loss of, or damage to, Federal Gov-
major fluctuations in load, e.g., con- ernment property are unallowable ex-
solidated data centers. cept to the extent that the Federal
(b) The costs of idle facilities are un- awarding agency has specifically re-
allowable except to the extent that: quired or approved such costs.
(1) They are necessary to meet work- (3) Costs allowed for business inter-
load requirements which may fluctuate ruption or other similar insurance
and are allocated appropriately to all must exclude coverage of management
benefiting programs;or fees.
(2) Although not necessary to meet (4) Costs of insurance on the lives of
fluctuations in workload, they were trustees, officers, or other employees
necessary when acquired and are now holding positions of similar respon-
idle because of changes in program re- sibilities are allowable only to the ex-
quirements, efforts to achieve more ec- tent that the insurance represents ad-
onomical operations, reorganization, ditional compensation (see §200.431).
termination, or other causes which The cost of such insurance when the
could not have been reasonably fore- non-Federal entity is identified as the
seen. Under the exception stated in beneficiary is unallowable.
this subsection, costs of idle facilities (5)Insurance against defects. Costs of
are allowable for a reasonable period of insurance with respect to any costs in-
time, ordinarily not to exceed one curred to correct defects in the non-
year, depending on the initiative taken Federal entity's materials or work-
to use, lease, or dispose of such facili- manship are unallowable.
ties.
(6) Medical liability (malpractice) in-
(c) The costs of idle capacity are nor- surance. Medical liability insurance is
mal costs of doing business and are a an allowable cost of Federal research
factor in the normal fluctuations of programs only to the extent that the
usage or indirect cost rates from period Federal research programs involve
to period. Such costs are allowable, human subjects or training of partici-
provided that the capacity is reason- pants in research techniques. Medical
ably anticipated to be necessary to liability insurance costs must be treat-
carry out the purpose of the Federal ed as a direct cost and must be as-
award or was originally reasonable and signed to individual projects based on
is not subject to reduction or elimi- the manner in which the insurer allo-
nation by use on other Federal awards, cates the risk to the population cov-
subletting, renting, or sale, in accord- ered by the insurance.
ance with sound business, economic, or (c) Actual losses which could have
security practices. Widespread idle ca- been covered by permissible insurance
pacity throughout an entire facility or (through a self-insurance program or
among a group of assets having sub- otherwise) are unallowable, unless ex-
stantially the same function may be pressly provided for in the Federal
considered idle facilities. award.However, costs incurred because
of losses not covered under nominal de-
§200.447 Insurance and indemnifica- ductible insurance coverage provided
lion. in keeping with sound management
(a) Costs of insurance required or ap- practice, and minor losses not covered
proved and maintained, pursuant to by insurance, such as spoilage, break-
the Federal award, are allowable. age, and disappearance of small hand
(b) Costs of other insurance in con- tools, which occur in the ordinary
nection with the general conduct of ac- course of operations,are allowable.
181
§200.448 2 CFR Ch. II (1-1-21 Edition)
(d)Contributions to a reserve for cer- or other techniques resulting in an eq-
tain self-insurance programs including uitable allocation.
workers' compensation, unemployment (5) Whenever funds are transferred
compensation, and severance pay are from a self-insurance reserve to other
allowable subject to the following pro- accounts (e.g., general fund or unre-
visions: stricted account), refunds must be
(1) The type of coverage and the ex- made to the Federal Government for
tent of coverage and the rates and pre- its share of funds transferred, including
miums would have been allowed had in- earned or imputed interest from the
surance (including reinsurance) been date of transfer and debt interest,if ap-
purchased to cover the risks. However, plicable, chargeable in accordance with
provision for known or reasonably esti- applicable Federal cognizant agency
mated self-insured liabilities, which do for indirect cost, claims collection reg-
not become payable for more than one ulations.
year after the provision is made, must (e) Insurance refunds must be cred-
not exceed the discounted present ited against insurance costs in the year
value of the liability. The rate used for the refund is received.
discounting the liability must be deter- (� Indemnification includes securing
mined by giving consideration to such the non-Federal entity against liabil-
factors as the non-Federal entity's set- hits to third persons and other losses
tlement rate for those liabilities and not compensated by insurance orroth-
investment rate of return. erwise. The Federal Government is ob-
itsligated to indemnify the non-Federal
(2) Earnings or investment income on entity only to the extent expressly pro-
reserves must be credited to those re- vided for in the Federal award, except
serves. as provided in paragraph(c) of this sec-
(3)(i) Contributions to reserves must tion.
be based on sound actuarial principles
using historical experience and reason- [78 FR 78608, Dec. 26, 2013, as amended at 85
able assumptions. Reserve levels must FR 49568,Aug.13,2020]
be analyzed and updated at least bien- §200.448 Intellectual property.
nially for each major risk being in-
sured and take into account any rein- (a) Patent costs. (1) The following
surance, coinsurance, etc. Reserve lev-
els related to securing patents and
els related to employee-related cov- copyrights are allowable:
erages will normally be limited to the (i) Costs of preparing disclosures, re
value of claims: ports, and other documents required by
(A) Submitted and adjudicated but the Federal award, and of searching the
art to the extent necessary to make
not paid;
such
(B) Submitted but not adjudicated; disc
and (ii) Costsosures;
of preparing documents and
any other patent costs in connection
(C)Incurred but not submitted. with the filing and prosecution of a
(ii) Reserve levels in excess of the United States patent application where
amounts based on the above must be title or royalty-free license is required
identified and justified in the cost allo- by the Federal Government to be con-
cation plan or indirect cost rate pro- veyed to the Federal Government; and
posal. (iii) General counseling services re-
(4) Accounting records, actuarial lating to patent and copyright matters,
studies, and cost allocations (or bil- such as advice on patent and copyright
lings) must recognize any significant laws, regulations, clauses, and em-
differences due to types of insured risk ployee intellectual property agree-
and losses generated by the various in- ments(See also§200.459).
sured activities or agencies of the non- (2) The following costs related to se-
Federal entity. If individual depart- curing patents and copyrights are unal-
ments or agencies of the non-Federal lowable:
entity experience significantly dif- (i) Costs of preparing disclosures, re-
ferent levels of claims for a particular ports, and other documents, and of
risk, those differences are to be recog- searching the art to make disclosures
nized by the use of separate allocations not required by the Federal award;
182
OMB Guidance §200.449
(ii) Costs in connection with filing acquire, construct, or replace capital
and prosecuting any foreign patent ap- assets are allowable, subject to the
plication, or any United States patent conditions in this section.
application, where the Federal award (b) Capital assets. (1) Capital assets is
does not require conveying title or a defined as noted in §200.1 of this part.
royalty-free license to the Federal An asset cost includes (as applicable)
Government. acquisition costs, construction costs,
(b) Royalties and other costs for use of and other costs capitalized in accord-
patents and copyrights. (1) Royalties on ance with GAAP.
a patent or copyright or amortization (2) For non-Federal entity fiscal
of the cost of acquiring by purchase a years beginning on or after January 1,
copyright, patent, or rights thereto, 2016, intangible assets include patents
necessary for the proper performance and computer software. For software
of the Federal award are allowable un- development projects, only interest at-
less: tributable to the portion of the project
(i) The Federal Government already costs capitalized in accordance with
has a license or the right to free use of GAAP is allowable.
the patent or copyright.
(ii) The patent or copyright has been (c) Conditions for all non-Federal enti-
adjudicated to be invalid, or has been ties. (1)The non-Federal entity uses the
administratively determined to be in- capital assets in support of Federal
valid. awards;
(iii) The patent or copyright is con- (2) The allowable asset costs to ac-
sidered to be unenforceable. quire facilities and equipment are lim-
(iv) The patent or copyright is ex- ited to a fair market value available to
pired. the non-Federal entity from an unre-
(2) Special care should be exercised in lated(arm's length)third party.
determining reasonableness where the (3) The non-Federal entity obtains
royalties may have been arrived at as a the financing via an arm's-length
result of less-than-arm's-length bar- transaction (that is, a transaction with
gaining, such as: an unrelated third party); or claims re-
(i) Royalties paid to persons, includ- imbursement of actual interest cost at
ing corporations, affiliated with the a rate available via such a transaction.
non-Federal entity. (4) The non-Federal entity limits
(ii) Royalties paid to unaffiliated claims for Federal reimbursement of
parties, including corporations, under interest costs to the least expensive al-
an agreement entered into in con- ternative. For example, a lease con-
templation that a Federal award would tract that transfers ownership by the
be made. end of the contract may be determined
(iii) Royalties paid under an agree- less costly than purchasing through
ment entered into after a Federal other types of debt financing, in which
award is made to a non-Federal entity. case reimbursement must be limited to
(3) In any case involving a patent or the amount of interest determined if
copyright formerly owned by the non- leasing had been used.
Federal entity, the amount of royalty (5) The non-Federal entity expenses
allowed must not exceed the cost which or capitalizes allowable interest cost in
would have been allowed had the non- accordance with GAAP.
Federal entity retained title thereto. (6) Earnings generated by the invest-
[78 FR 78608, Dec. 26, 2013, as amended at 79 ment of borrowed funds pending their
FR 75886, Dec. 19, 2014; 85 FR 49569, Aug. 13, disbursement for the asset costs are
2020] used to offset the current period's§200.449 Interest. al-
lowable interest cost, whether that
cost is expensed or capitalized. Earn-
(a) General. Costs incurred for inter- ings subject to being reported to the
est on borrowed capital, temporary use Federal Internal Revenue Service
of endowment funds, or the use of the under arbitrage requirements are ex-
non-Federal entity's own funds, how- cludable.
ever represented, are unallowable. Fi- (7) The following conditions must
nancing costs (including interest) to apply to debt arrangements over $1
183
§200.450 2 CFR Ch. II (1-1-21 Edition)
million to purchase or construct facili- (c)(5), above) also applies to earnings
ties, unless the non-Federal entity on debt service reserve funds.
makes an initial equity contribution to (2) The non-Federal entity will nego-
the purchase of 25 percent or more. For tiate the amount of allowable interest
this purpose, "initial equity contribu- cost related to the acquisition of facili-
tion" means the amount or value of ties with asset costs of $1 million or
contributions made by the non-Federal more, as outlined in paragraph (c)(7) of
entity for the acquisition of facilities this section. For this purpose, a non-
prior to occupancy. Federal entity must consider only cash
(i) The non-Federal entity must re- inflows and outflows attributable to
duce claims for reimbursement of in- that portion of the real property used
terest cost by an amount equal to im- for Federal awards.
puted interest earnings on excess cash (e) Additional conditions for IHEs.
flow attributable to the portion of the For costs to be allowable, the IHE
facility used for Federal awards. must have incurred the interest costs
(ii) The non-Federal entity must im- after July 1, 1982, in connection with
pute interest on excess cash flow as fol- acquisitions of capital assets that oc-
lows: curred after that date.
(A) Annually, the non-Federal entity (f) Additional condition for nonprofit
organizations. For costs to be allow-
must prepare a cumulative (from the able, the nonprofit organization in-
inception of the project) report of curred the interest costs after Sep-
monthly cash inflows and outflows, re- tember 29, 1995, in connection with ac-
gardless of the funding source. For this quisitions of capital assets that oc-
purpose, inflows consist of Federal re- curred after that date.
imbursement for depreciation, amorti- (g) The interest allowability provi-
zation of capitalized construction in- sions of this section do not apply to a
terest, and annual interest cost. Out- nonprofit organization subject to "full
flows consist of initial equity contribu- coverage" under the Cost Accounting
tions,debt principal payments(less the Standards (CAS), as defined at 48 CFR
pro-rata share attributable to the cost 9903.201-2(a). The non-Federal entity's
of land), and interest payments. Federal awards are instead subject to
(B)To compute monthly cash inflows CAS 414 (48 CFR 9904.414), "Cost of
and outflows, the non-Federal entity Money as an Element of the Cost of Fa-
must divide the annual amounts deter- cilities Capital", and CAS 417 (48 CFR
mined in step (i) by the number of 9904.417), "Cost of Money as an Element
months in the year (usually 12) that of the Cost of Capital Assets Under
the building is in service. Construction".
(C) For any month in which cumu- [78 FR 78608, Dec. 26, 2013, as amended at 80
lative cash inflows exceed cumulative FR 54409, Sept. 10, 2015;85 FR 49569, Aug. 13,
outflows, interest must be calculated 2020]
on the excess inflows for that month
and be treated as a reduction to allow- §200.450 Lobbying.
able interest cost. The rate of interest (a)The cost of certain influencing ac-
to be used must be the three-month tivities associated with obtaining
Treasury bill closing rate as of the last grants,contracts, or cooperative agree-
business day of that month. ments, or loans is an unallowable cost.
(8)Interest attributable to a fully de- Lobbying with respect to certain
preciated asset is unallowable. grants, contracts, cooperative agree-
(d) Additional conditions for states, ments, and loans is governed by rel-
local governments and Indian tribes. evant statutes, including among oth-
For costs to be allowable, the non-Fed- ers, the provisions of 31 U.S.C. 1352, as
eral entity must have incurred the in- well as the common rule, "New Re-
terest costs for buildings after October strictions on Lobbying" published on
1, 1980, or for land and equipment after February 26, 1990, including definitions,
September 1,1995. and the Office of Management and
(1)The requirement to offset interest Budget "Governmentwide Guidance for
earned on borrowed funds against cur- New Restrictions on Lobbying" and no-
rent allowable interest cost (paragraph tices published on December 20, 1989,
184
•
OMB Guidance §200.450
June 15, 1990, January 15, 1992, and Jan- sions or committee hearings, gathering
uary 19, 1996. information regarding legislation, and
(b) Executive lobbying costs. Costs in- analyzing the effect of legislation,
curred in attempting to improperly in- when such activities are carried on in
fluence either directly or indirectly, an support of or in knowing preparation
employee or officer of the executive for an effort to engage in unallowable
branch of the Federal Government to lobbying.
give consideration or to act regarding a (2) The following activities are ex-
Federal award or a regulatory matter cepted from the coverage of paragraph
are unallowable. Improper influence (c)(1)of this section:
means any influence that induces or (i) Technical and factual presen-
tends to induce a Federal employee or tations on topics directly related to
officer to give consideration or to act the performance of a grant, contract,
regarding a Federal award or regu- or other agreement (through hearing
latory matter on any basis other than testimony, statements, or letters to
the merits of the matter. the Congress or a state legislature, or
(c) In addition to the above, the fol- subdivision, member, or cognizant staff
lowing restrictions are applicable to member thereof), in response to a docu-
nonprofit organizations and IHEs: mented request (including a Congres-
(1) Costs associated with the fol- sional Record notice requesting testi-
lowing activities are unallowable: mony or statements for the record at a
(i) Attempts to influence the out- regularly scheduled hearing) made by
comes of any Federal, state, or local the non-Federal entity's member of
election, referendum, initiative, or congress, legislative body or a subdivi-
similar procedure, through in-kind or sion, or a cognizant staff member
cash contributions, endorsements, pub- thereof, provided such information is
licity, or similar activity; readily obtainable and can be readily
(ii) Establishing, administering, con- put in deliverable form, and further
tributing to, or paying the expenses of put in dehat costs form, thishe section
a political party, campaign, political provided that under section
action committee, or other organiza for travel, lodging or meals are unal-
tion established for the purpose of in- loveable unless incurred to offer testi-
fluencing the outcomes of elections in mony at a regularly scheduled Congres-
the United States; sional hearing pursuant to a written
(iii)Any attempt to influence: request for such presentation made by
(A) The introduction of Federal or the Chairman or Ranking Minority
state legislation; Member of the Committee or Sub-
(B) The enactment or modification of committee conducting such hearings;
any pending Federal or state legisla- (ii) Any lobbying made unallowable
tion through communication with any by paragraph (c)(1)(iii) of this section
member or employee of the Congress or to influence state legislation in order
state legislature (including efforts to to directly reduce the cost, or to avoid
influence state or local officials to en- material impairment of the non-Fed-
gage in similar lobbying activity); eral entity's authority to perform the
(C) The enactment or modification of grant, contract, or other agreement; or
any pending Federal or state legisla- (iii) Any activity specifically author-
tion by preparing, distributing, or ized by statute to be undertaken with
using publicity or propaganda, or by funds from the Federal award.
urging members of the general public, (iv) Any activity excepted from the
or any segment thereof, to contribute definitions of "lobbying" or "influ-
to or participate in any mass dem- encing legislation" by the Internal
onstration, march, rally, fund raising Revenue Code provisions that require
drive, lobbying campaign or letter nonprofit organizations to limit their
writing or telephone campaign; or participation in direct and "grass
(D) Any government official or em- roots" lobbying activities in order to
ployee in connection with a decision to retain their charitable deduction sta-
sign or veto enrolled legislation; tus and avoid punitive excise taxes,
(iv) Legislative liaison activities, in- I.R.C. §§501(c)(3), 501(h), 4911(a), includ-
cluding attendance at legislative ses- ing:
185
§200.451 2 CFR Ch. II (1-1-21 Edition)
(A) Nonpartisan analysis, study, or any significant questions or disagree-
research reports; ments concerning the interpretation or
(B) Examinations and discussions of application of this section. Any such
broad social, economic, and similar advance resolutions must be binding in
problems; and any subsequent settlements, audits, or
(C) Information provided upon re- investigations with respect to that
quest by a legislator for technical ad- grant or contract for purposes of inter-
vice and assistance, as defined by I.R.C. pretation of this
w-
§4911(d)(2) and 26 CFR 56.4911-2(c)(1)- part, provided,
ever, that this must nottbee u
construed
(c)(3). to prevent a contractor or non-Federal
(v) When a non-Federal entity seeks entity from contesting the lawfulness
reimbursement for indirect (F&A) of such a determination.
costs, total lobbying costs must be sep-
arately identified in the indirect(F&A) [78 FR 78608, Dec. 26, 2013, as amended at 85
cost rate proposal, and thereafter FR 49569,Aug.13,2020]
treated as other unallowable activity
costs in accordance with the proce- §200.451 Losses on other awards or
dures of§200.413. contracts.
(vi)The non-Federal entity must sub- Any excess of costs over income
mit as part of its annual indirect under any other award or contract of
(F&A)cost rate proposal a certification any nature is unallowable. This in-
that the requirements and standards of cludes, but is not limited to, the non-
this section have been complied with. Federal entity's contributed portion by
(See also§200.415.) reason of cost-sharing agreements or
(vii)(A)Time logs, calendars, or simi- any under-recoveries through negotia-
lar records are not required to be ore- tion of flat amounts for indirect (F&A)
ated for purposes of complying with costs. Also, any excess of costs over au-
the record keeping requirements in
§200.302 with respect to lobbying costs thorized funding levels transferred
during any particular calendar month from any award or contract to another
when: award or contract is unallowable. All
(1)The employee engages in lobbying losses are not allowable indirect (F&A)
(as defined in paragraphs (c)(1) and costs and are required to be included in
(c)(2) of this section) 25 percent or less the appropriate indirect cost rate base
of the employee's compensated hours of for allocation of indirect costs.
employment during that calendar
month; and §200.452 Maintenance and repair
(2) Within the preceding five-year pe- costs.
riod, the non-Federal entity has not Costs incurred for utilities, insur-
materially misstated allowable or un- ance, security, necessary maintenance,
allowable costs of any nature, includ- janitorial services, repair, or upkeep of
ing legislative lobbying costs. buildings and equipment (including
(B) When conditions in paragraph Federal property unless otherwise pro-
(c)(2)(vii)(A)(1) and (2) of this section vided for)which neither add to the per-
are met, non-Federal entities are not manent value of the
required to establish records to support pproperty nor ap-
required allowability of claimed costs in ad- keep
it iny prolong itsn tintended operatingl fe, but
ndi-
dition to records already required or keep it lla eable. C stinur edfor
maintained. Also, when conditions in tion, are allowable. Costs incurred for
paragraphs (c)(2)(vii)(A)(1) and (2) of improvements which add to the perma-
this section are met, the absence of nent value of the buildings and equip-
time logs, calendars, or similar records ment or appreciably prolong their in-
will not serve as a basis for disallowing tended life must be treated as capital
costs by contesting estimates of lob- expenditures (see §200.439). These costs
bying time spent by employees during are only allowable to the extent not
a calendar month. paid through rental or other agree-
(viii) The Federal awarding agency ments.
must establish procedures for resolving [85 FR 49569,Aug.13,2020]
in advance, in consultation with OMB,
186
OMB Guidance §200.458
§200.453 Materials and supplies costs, §200.455 Organization costs.
including costs of computing de- Costs such as incorporation fees, bro-
vices. kers' fees, fees to promoters,organizers
(a) Costs incurred for materials, sup- or management consultants, attorneys,
plies, and fabricated parts necessary to accountants, or investment counselor,
carry out a Federal award are allow- whether or not employees of the non-
able. Federal entity in connection with es-
(b) Purchased materials and supplies tablishment or reorganization of an or-
must be charged at their actual prices, ganization, are unallowable except
net of applicable credits. Withdrawals with prior approval of the Federal
from general stores or stockrooms awarding agency.
must be charged at their actual net
cost under any recognized method of §200.456 Participant support costs.
pricing inventory withdrawals, consist- Participant support costs as defined
ently applied. Incoming transportation in §200.1 are allowable with the prior
charges are a proper part of materials approval of the Federal awarding agen-
and supplies costs. cy.
(c) Materials and supplies used for
the performance of a Federal award [85 FR 49569,Aug.13,2020]
may be charged as direct costs. In the §200.457 Plant and security costs.
specific case of computing devices,
charging as direct costs is allowable for Necessary and reasonable expenses
devices that are essential and allo- incurred for protection and security of
cable, but not solely dedicated, to the facilities, personnel,and work products
performance of a Federal award. are allowable. Such costs include, but
(d) Where federally-donated or fur- are not limited to, wages and uniforms
nished materials are used in per- of personnel engaged in security activi-
forming the Federal award, such mate- ties; equipment; barriers; protective
rials will be used without charge. (non-military)gear, devices, and equip-
[78 FR 78608, Dec. 26, 2013, as amended at 79 ment; contractual security services;
and consultants. Capital expenditures
FR 75887,Dec.19,2014] for plant security purposes are subject
§200.454 Memberships, subscriptions, to§200.439.
and professional activity costs. [85 FR 49569,Aug.13,2020]
(a) Costs of the non-Federal entity's
membership in business, technical, and §200.458 Pre-award costs.
professional organizations are allow- Pre-award costs are those incurred
able. prior to the effective date of the Fed-
(b) Costs of the non-Federal entity's eral award or subaward directly pursu-
subscriptions to business, professional, ant to the negotiation and in anticipa-
and technical periodicals are allowable. Mon of the Federal award where such
(c) Costs of membership in any civic costs are necessary for efficient and
or community organization are allow- timely performance of the scope of
able with prior approval by the Federal work. Such costs are allowable only to
awarding agency or pass-through enti- the extent that they would have been
ty. allowable if incurred after the date of
(d) Costs of membership in any coun- the Federal award and only with the
try club or social or dining club or or- written approval of the Federal award-
ganization are unallowable. ing agency. If charged to the award,
(e) Costs of membership in organiza- these costs must be charged to the ini-
tions whose primary purpose is lob- tial budget period of the award, unless
hying are unallowable. See also otherwise specified by the Federal
§200.450. awarding agency or pass-through enti-
[78 FR 78608, Dec. 26, 2013, as amended at 85 ty.
FR 49569,Aug.13,2020] [85 FR 49569,Aug.13,2020]
187
§200.459 2 CFR Ch. II (1-1-21 Edition)
§200.459 Professional service costs. by evidence of bona fide services avail-
(a) Costs of professional and consult- able or rendered.
ant services rendered by persons who [78 FR 78608, Dec. 26, 2013, as amended at 85
are members of a particular profession FR 49569,Aug.13,2020]
or possess a special skill, and who are §200.460 Proposal costs.
not officers or employees of the non-
Federal entity, are allowable, subject Proposal costs are the costs of pre-
to paragraphs (b)and(c) of this section paring bids, proposals, or applications
when reasonable in relation to the on potential Federal and non-Federal
services rendered and when not contin- awards or projects, including the devel-
gent upon recovery of the costs from opment of data necessary to support
pro-
the Federal Government. In addition, the non-Federal entity's bids or
legal and related services are limited posals. Proposal costs of the current
under§200.435. accounting period of both successful
(b)In determining the allowability of and unsuccessful bids and proposals
costs in a particular case,no single fac- (Fnormally costsi anduld allocated treated s currentlyindirectto
tor or any special combination of fac- all activities and enon-non-Federal
enti y.
tors is necessarily determinative. How- Nall ofo she non-Federal entity.
ever, the following factors are relevant: periods proposalwillcosts allocableo past the accountingrrt
will be to current
(1) The nature and scope of the serv- period.
ice rendered in relation to the service
required. §200.461 Publication and printing
(2) The necessity of contracting for costs.
the service, considering the non-Fed- (a) Publication costs for electronic
eral entity's capability in the par- and print media, including distribu-
ticular area. tion, promotion, and general handling
(3) The past pattern of such costs, are allowable. If these costs are not
particularly in the years prior to Fed- identifiable with a particular cost ob-
eral awards. jective, they should be allocated as in-
(4) The impact of Federal awards on direct costs to all benefiting activities
the non-Federal entity's business (i.e., of the non-Federal entity.
what new problems have arisen). (b) Page charges for professional
(5)Whether the proportion of Federal journal publications are allowable
work to the non-Federal entity's total `here:
business is such as to influence the (1) The publications report work sup-
non-Federal entity in favor of incur- ported by the Federal Government; and
ring the cost, particularly where the (2)The charges are levied impartially
services rendered are not of a con- on all items published by the journal,
tinuing nature and have little relation- whether or not under a Federal award.
ship to work under Federal awards. (3) The nochargen-Federal the Federal award during entity may
ring close-
(6) Whether the service can be per- out for the costs of publication or shar-
formed more economically by direct ing of research results if the costs are
employment rather than contracting. not incurred during the period of per-
(7) The qualifications of the indi- formance of the Federal award. If
vidual or concern rendering the service charged to the award, these costs must
and the customary fees charged, espe- be charged to the final budget period of
cially on non-federally funded activi- the award, unless otherwise specified
ties. by the Federal awarding agency.
(8) Adequacy of the contractual [78 FR 78608, Dec. 26, 2013, as amended at 85
agreement for the service(e.g., descrip- FR 49569,Aug.13,2020]
tion of the service, estimate of time re-
quired, rate of compensation, and ter- §200.462 Rearrangement and recon-
mination provisions). version costs.
(c) In addition to the factors in para- (a) Costs incurred for ordinary and
graph (b) of this section, to be allow- normal rearrangement and alteration
able, retainer fees must be supported of facilities are allowable as indirect
188
OMB Guidance §200.464
costs. Special arrangements and alter- that may be proposed as a direct cost.
ations costs incurred specifically for a Since short-term visas are issued for a
Federal award are allowable as a direct specific period and purpose, they can be
cost with the prior approval of the Fed- clearly identified as directly connected
eral awarding agency or pass-through to work performed on a Federal award.
entity. For these costs to be directly charged
(b) Costs incurred in the restoration to a Federal award, they must:
or rehabilitation of the non-Federal en- (1) Be critical and necessary for the
tity's facilities to approximately the conduct of the project;
same condition existing immediately (2) Be allowable under the applicable
prior to commencement of Federal cost principles;
awards, less costs related to normal (3) Be consistent with the non-Fed-
wear and tear,are allowable. eral entity's cost accounting practices
and non-Federal entity policy;and
§200.463 Recruiting costs. (4) Meet the definition of "direct
(a) Subject to paragraphs (b) and (c) cost" as described in the applicable
of this section, and provided that the cost principles.
size of the staff recruited and main- [78 FR 78608, Dec. 26, 2013, as amended at 79
tamed is in keeping with workload re- FR 75887, Dec. 19, 2014; 85 FR 49569, Aug. 13,
quirements, costs of"help wanted" ad- 2020]
vertising, operating costs of an em-
ployment office necessary to secure §200.464 Relocation costs of employ-
and maintain an adequate staff, costs ees.
of operating an aptitude and edu- (a) Relocation costs are costs inci-
cational testing program, travel costs dent to the permanent change of duty
of employees while engaged in recruit- assignment (for an indefinite period or
ing personnel, travel costs of appli- for a stated period of not less than 12
cants for interviews for prospective months) of an existing employee or
employment, and relocation costs in- upon recruitment of a new employee.
curred incident to recruitment of new Relocation costs are allowable, subject
employees, are allowable to the extent to the limitations described in para-
that such costs are incurred pursuant graphs (b), (c), and (d) of this section,
to the non-Federal entity's standard provided that:
recruitment program. Where the non- (1) The move is for the benefit of the
Federal entity uses employment agen- employer.
cies, costs not in excess of standard (2) Reimbursement to the employee
commercial rates for such services are is in accordance with an established
allowable. written policy consistently followed by
(b) Special emoluments, fringe bene- the employer.
fits, and salary allowances incurred to (3) The reimbursement does not ex-
attract professional personnel that do ceed the employee's actual (or reason-
not meet the test of reasonableness or ably estimated)expenses.
do not conform with the established (b) Allowable relocation costs for
practices of the non-Federal entity,are current employees are limited to the
unallowable. following:
(c) Where relocation costs incurred (1) The costs of transportation of the
incident to recruitment of a new em- employee, members of his or her imme-
ployee have been funded in whole or in diate family and his household, and
part to a Federal award, and the newly personal effects to the new location.
hired employee resigns for reasons (2) The costs of finding a new home,
within the employee's control within 12 such as advance trips by employees and
months after hire, the non-Federal en- spouses to locate living quarters and
tity will be required to refund or credit temporary lodging during the transi-
the Federal share of such relocation tion period, up to maximum period of
costs to the Federal Government. See 30 calendar days.
also§200.464. (3) Closing costs, such as brokerage,
(d) Short-term, travel visa costs (as legal, and appraisal fees, incident to
opposed to longer-term, immigration the disposition of the employee's
visas) are generally allowable expenses former home. These costs, together
189
§200.465 2 CFR Ch. II (1-1-21 Edition)
with those described in (4), are limited this section, rental costs are allowable
to 8 per cent of the sales price of the to the extent that the rates are reason-
employee's former home. able in light of such factors as: rental
(4)The continuing costs of ownership costs of comparable property, if any;
(for up to six months) of the vacant market conditions in the area; alter-
former home after the settlement or natives available; and the type, life ex-
lease date of the employee's new per- pectancy, condition, and value of the
manent home, such as maintenance of property leased. Rental arrangements
buildings and grounds (exclusive of fix- should be reviewed periodically to de-
ing-up expenses), utilities, taxes, and termine if circumstances have changed
property insurance. and other options are available.
(5) Other necessary and reasonable (b)Rental costs under "sale and lease
expenses normally incident to reloca- back" arrangements are allowable only
tion, such as the costs of canceling an up to the amount that would be al-
unexpired lease, transportation of per- lowed had the non-Federal entity con-
sonal property, and purchasing insur- tinued to own the property. This
ance against loss of or damages to per- amount would include expenses such as
sonal property. The cost of canceling depreciation, maintenance, taxes, and
an unexpired lease is limited to three insurance.
times the monthly rental. (c) Rental costs under "less-than-
(c)Allowable relocation costs for new arm's-length" leases are allowable only
employees are limited to those de- up to the amount (as explained in para-
scribed in paragraphs (b)(1) and (2) of graph (b) of this section). For this pur-
this section. When relocation costs in- pose, a less-than-arm's-length lease is
curred incident to the recruitment of one under which one party to the lease
new employees have been charged to a agreement is able to control or sub-
Federal award and the employee re- stantially influence the actions of the
signs for reasons within the employee's other. Such leases include, but are not
control within 12 months after hire, limited to those between:
the non-Federal entity must refund or
credit the Federal Government for its (1) Divisions of the non Federal enti-
ty;
share of the cost. If dependents are not
(2permitted at the location for any rea- The non-Federal entity under
offi-
son and the costs do not include costs common control through common of transporting household goods, the cers, directors, or members; and
costs of travel to an overseas location (3) The non-Federal entity and a di-
must be considered travel costs in ac- rector, trustee, officer, or key em-
cordance with §200.474 Travel costs, ployee of the non-Federal entity or an
and not this relocations costs of em- immediate family member, either di-
ployees(See also§200.464). rectly or through corporations, trusts,
(d) The following costs related to re- or similar arrangements in which they
location are unallowable: hold a controlling interest. For exam-
(1) Fees and other costs associated ple, the non-Federal entity may estab-
with acquiring a new home. lish a separate corporation for the sole
(2) A loss on the sale of a former purpose of owning property and leasing
home. it back to the non-Federal entity.
(3) Continuing mortgage principal (4) Family members include one
and interest payments on a home being party with any of the following rela-
sold. tionships to another party:
(4) Income taxes paid by an employee (i)Spouse,and parents thereof;
related to reimbursed relocation costs. (ii)Children, and spouses thereof;
[78 FR 78608, Dec. 26, 2013, as amended at 79 (iii)Parents, and spouses thereof;
FR 75887, Dec. 19, 2014; 85 FR 49570, Aug. 13, (iv)Siblings, and spouses thereof;
2020] (v) Grandparents and grandchildren,
and spouses thereof;
§200.465 Rental costs of real property (vi) Domestic partner and parents
and equipment. thereof, including domestic partners of
(a) Subject to the limitations de- any individual in 2 through 5 of this
scribed in paragraphs (b) through (d) of definition;and
190
OMB Guidance §200.466
(vii) Any individual related by blood for purposes such as the home office
or affinity whose close association with workspace is unallowable.
the employee is the equivalent of a [78 FR 78608, Dec. 26, 2013, as amended at 85
family relationship. FR 49569,Aug.13,2020]
(5) Rental costs under leases which
are required to be treated as capital §200.466 Scholarships and student aid
leases under GAAP are allowable only costs.
up to the amount(as explained in para-
graph (b) of this section) that would be (a) Costs of scholarships, fellowships,
allowed had the non-Federal entity and other programs of student aid at
purchased the property on the date the IHEs are allowable only when the pur-
lease agreement was executed. The pro- pose of the Federal award is to provide
visions of GAAP must be used to deter- training to selected participants and
mine whether a lease is a capital lease. the charge is approved by the Federal
Interest costs related to capital leases awarding agency. However, tuition re-
are allowable to the extent they meet mission and other forms of compensa-
the criteria in §200.449 Interest. Unal- Lion paid as, or in lieu of, wages to stu-
lowable costs include amounts paid for dents performing necessary work are
profit, management fees, and taxes allowable provided that:
that would not have been incurred had (1) The individual is conducting ac
the non-Federal entity purchased the tivities necessary to the Federal
property. award;
(6) The rental of any property owned (2) Tuition remission and other sup-
by any individuals or entities affiliated port are provided in accordance with
with the non-Federal entity, to include established policy of the IHE and con-
commercial or residential real estate, sistently provided in a like manner to
for purposes such as the home office students in return for similar activities
workspace is unallowable. conducted under Federal awards as
(d) Rental costs under leases which well as other activities; and
are required to be accounted for as a fi- (3) During the academic period, the
nanced purchase under GASB stand- student is enrolled in an advanced Be-
ards or a finance lease under FASB gree program at a non-Federal entity
standards under GAAP are allowable or affiliated institution and the activi-
only up to the amount (as explained in ties of the student in relation to the
paragraph (b) of this section) that Federal award are related to the degree
would be allowed had the non-Federal program;
entity purchased the property on the (4)The tuition or other payments are
date the lease agreement was executed. reasonable compensation for the work
Interest costs related to these leases performed and are conditioned explic-
are allowable to the extent they meet itly upon the performance of necessary
the criteria in §200.449. Unallowable work; and
costs include amounts paid for profit, (5) It is the IHE's practice to simi-
management fees,and taxes that would larly compensate students under Fed-
not have been incurred had the non- eral awards as well as other activities.
Federal entity purchased the property. (b) Charges for tuition remission and
(e) Rental or lease payments are al- other forms of compensation paid to
lowable under lease contracts where students as, or in lieu of, salaries and
the non-Federal entity is required to wages must be subject to the reporting
recognize an intangible right-to-use requirements in §200.430, and must be
lease asset (per GASB) or right of use treated as direct or indirect cost in ac-
operating lease asset (per FASB) for cordance with the actual work being
purposes of financial reporting in ac- performed. Tuition remission may be
cordance with GAAP. charged on an average rate basis. See
(f) The rental of any property owned also§200.431.
by any individuals or entities affiliated [78 FR 78608, Dec. 26, 2013, as amended at 85
with the non-Federal entity, to include FR 49569,Aug.13,2020]
commercial or residential real estate,
191
§200.467 2 CFR Ch. II (1-1-21 Edition)
§200.467 Selling and marketing costs. §200.469 Student activity costs.
Costs of selling and marketing any Costs incurred for intramural activi-
products or services of the non-Federal ties, student publications, student
entity (unless allowed under §200.421) clubs, and other student activities, are
are unallowable, except as direct costs, unallowable, unless specifically pro-
with prior approval by the Federal vided for in the Federal award.
awarding agency when necessary for §200.470 Taxes (including Value
the performance of the Federal award. Added Tax).
[85 FR 49570,Aug.13,2020] (a) For states, local governments and
Indian tribes:
§200.468 Specialized service facilities. (1) Taxes that a governmental unit is
(a) The costs of services provided by legally required to pay are allowable,
highly complex or specialized facilities except for self-assessed taxes that dis-
operated by the non-Federal entity, proportionately affect Federal pro
such as computing facilities, wind tun- grams or changes in tax policies that
disproportionately affect Federal pro-
nels, and reactors are allowable, pro- grams.
vided the charges for the services meet (2) Gasoline taxes, motor vehicle
the conditions of either paragraph (b) fees, and other taxes that are in effect
or (c) of this section, and, in addition, user fees for benefits provided to the
take into account any items of income Federal Government are allowable.
or Federal financing that qualify as ap- (3) This provision does not restrict
plicable credits under§200.406. the authority of the Federal awarding
(b) The costs of such services, when agency to identify taxes where Federal
material, must be charged directly to participation is inappropriate. Where
applicable awards based on actual the identification of the amount of un-
usage of the services on the basis of a allowable taxes would require an inor-
schedule of rates or established meth- dinate amount of effort, the cognizant
odology that: agency for indirect costs may accept a
(1) Does not discriminate between ac- reasonable approximation thereof.
tivities under Federal awards and other (b) For nonprofit organizations and
activities of the non-Federal entity, in- IHEs:
eluding usage by the non-Federal enti- (1) In general, taxes which the non-
ty for internal purposes,and Federal entity is required to pay and
accord-
(2)Is designed to recover only the ag- which are paid GAAP, accruedpaymentsandinmadegregate costs of the services. The costs ante with m ts inlieu
to local governments lieu of taxes
of each service must consist normally which are commensurate with the local
of both its direct costs and its allocable government services received are al-
share of all indirect (F&A) costs. Rates lowable, except for:
must be adjusted at least biennially, (i) Taxes from which exemptions are
and must take into consideration over/ available to the non-Federal entity di-
under-applied costs of the previous pe- rectly or which are available to the
riod(s). non-Federal entity based on an exemp-
(c) Where the costs incurred for a tion afforded the Federal Government
service are not material, they may be and, in the latter case, when the Fed-
allocated as indirect(F&A)costs. eral awarding agency makes available
(d) Under some extraordinary cir- the necessary exemption certificates,
cumstances, where it is in the best in- (ii) Special assessments on land
terest of the Federal Government and which represent capital improvements,
the non-Federal entity to establish al- and
ternative costing arrangements, such (iii)Federal income taxes.
arrangements may be worked out with (2) Any refund of taxes, and any pay
the Federal cognizant agency for indi- ment to the non-Federal entity of in
rect costs. terest thereon, which were allowed as
Federal award costs, will be credited
[78 FR 78608, Dec. 26, 2013, as amended at 85 either as a cost reduction or cash re-
FR 49569,Aug.13,2020] fund, as appropriate, to the Federal
192
OMB Guidance §200.472
Government. However, any interest ac- §200.472 Termination costs.
tually paid or credited to an non-Fed- Termination of a Federal award gen-
eral entity incident to a refund of tax, erally gives rise to the incurrence of
interest, and penalty will be paid or costs, or the need for special treatment
credited to the Federal Government of costs, which would not have arisen
only to the extent that such interest had the Federal award not been termi-
accrued over the period during which nated. Cost principles covering these
the non-Federal entity has been reim- items are set forth in this section.
bursed by the Federal Government for They are to be used in conjunction
the taxes,interest, and penalties. with the other provisions of this part
(c) Value Added Tax (VAT) Foreign in termination situations.
taxes charged for the purchase of goods (a) The cost of items reasonably usa-
or services that a non-Federal entity is ble on the non-Federal entity's other
legally required to pay in country is an work must not be allowable unless the
allowable expense under Federal non-Federal entity submits evidence
awards. Foreign tax refunds or applica that it would not retain such items at
ble credits under Federal awards refer cost without sustaining a loss. In de-
to receipts, or reduction of expendi- ciding whether such items are reason-
ablytures, which operate to offset or reduce usable other work the non-
tures,
Federal entity, the Federall awarding
expense items that are allocable to agency should consider the non-Federal
Federal awards as direct or indirect entity's plans and orders for current
costs. To the extent that such credits and scheduled activity. Contempora-
accrued or received by the non-Federal neous purchases of common items by
entity relate to allowable cost, these the non-Federal entity must be re-
costs must be credited to the Federal garded as evidence that such items are
awarding agency either as costs or cash reasonably usable on the non-Federal
refunds. If the costs are credited back entity's other work. Any acceptance of
to the Federal award, the non-Federal common items as allocable to the ter-
entity may reduce the Federal share of minated portion of the Federal award
costs by the amount of the foreign tax must be limited to the extent that the
reimbursement, or where Federal quantities of such items on hand, in
award has not expired, use the foreign transit, and on order are in excess of
government tax refund for approved ac- the reasonable quantitative require-
tivities under the Federal award with ments of other work.
prior approval of the Federal awarding (b) If in a particular case, despite all
agency. reasonable efforts by the non-Federal
entity, certain costs cannot be discon-
§200.471 Telecommunication costs and tinued immediately after the effective
video surveillance costs. date of termination, such costs are
(a) Costs incurred for telecommuni- generally allowable within the limita-
tions set forth in this part, except that
cations and video surveillance services any such costs continuing after termi-
or equipment such as phones, internet, nation due to the negligent or willful
video surveillance, cloud servers are al- failure of the non-Federal entity to dis-
lowable except for the following cir- continue such costs must be unallow-
cumstances: able.
(b) Obligating or expending covered (c) Loss of useful value of special
telecommunications and video surveil- tooling, machinery, and equipment is
lance services or equipment or services generally allowable if:
as described in§200.216 to: (1) Such special tooling, special ma-
(1) Procure or obtain, extend or chinery, or equipment is not reason-
renew a contract to procure or obtain; ably capable of use in the other work of
(2) Enter into a contract (or extend the non-Federal entity,
or renew a contract)to procure; or (2) The interest of the Federal Gov-
(3) Obtain the equipment, services, or ernment is protected by transfer of
systems. title or by other means deemed appro-
priate by the Federal awarding agency
[85 FR 49570,Aug.13,2020] (see also§200.313(d)),and
193
§200.473 2 CFR Ch. II (1-1-21 Edition)
(3) The loss of useful value for any the amount allocated is otherwise con-
one terminated Federal award is lim- sistent with the basic guidelines con-
ited to that portion of the acquisition tained in§200.414. The indirect costs so
cost which bears the same ratio to the allocated must exclude the same and
total acquisition cost as the termi- similar costs claimed directly or iodi-
nated portion of the Federal award rectly as settlement expenses.
bears to the entire terminated Federal
award and other Federal awards for [78 FR 78608, Dec. 26, 2013. Redesignated and
amended at 85 FR 49570,Aug.13,2020]
which the special tooling, machinery,
or equipment was acquired. §200.473 Training and education costs.
(d) Rental costs under unexpired
leases are generally allowable where The cost of training and education
clearly shown to have been reasonably provided for employee development is
necessary for the performance of the allowable.
terminated Federal award less the re- [78 FR 78608,Dec.26,2013.Redesignated at 85
sidual value of such leases, if: FR 49570,Aug.13,2020]
(1) The amount of such rental
claimed does not exceed the reasonable §200.474 Transportation costs.
use value of the property leased for the
period of the Federal award and such Costs incurredostae for freight, anspos-
cartage, postage, and other transpor-
further period as may be reasonable, tation services relating either to goods
• and
(2) The non Federal entity makes all purchased, in process, or delivered, are
allowable. When such costs can readily
reasonable efforts to terminate, assign, be identified with the items involved,
settle, or otherwise reduce the cost of they may be charged directly as trans-
such lease. There also may be included portation costs or added to the cost of
the cost of alterations of such leased such items. Where identification with
property, provided such alterations the materials received cannot readily
were necessary for the performance of be made, inbound transportation cost
the Federal award, and of reasonable may be charged to the appropriate in-
restoration required by the provisions direct (F&A) cost accounts if the non-
of the lease. Federal entity follows a consistent, eq-
(e) Settlement expenses including the uitable procedure in this respect. Out-
following are generally allowable: bound freight, if reimbursable under
(1) Accounting, legal, clerical, and the terms and conditions of the Federal
similar costs reasonably necessary for: award, should be treated as a direct
(i) The preparation and presentation cost.
to the Federal awarding agency of set-
tlement claims and supporting data [78 FR 78608, Dec.26,2013.Redesignated at 85
with respect to the terminated portion FR 49570,Aug.13,2020]
of the Federal award, unless the termi-
nation is for cause (see subpart D, in- §200.475 Travel costs.
cluding§§200.339-200.343);and (a) General. Travel costs are the ex-
(ii) The termination and settlement penses for transportation, lodging, sub-
of subawards. sistence, and related items incurred by
(2) Reasonable costs for the storage, employees who are in travel status on
transportation, protection, and disposi- official business of the non-Federal en-
tion of property provided by the Fed- tity. Such costs may be charged on an
eral Government or acquired or pro- actual cost basis, on a per diem or
duced for the Federal award. mileage basis in lieu of actual costs in-
(f)Claims under subawards, including curred, or on a combination of the two,
the allocable portion of claims which provided the method used is applied to
are common to the Federal award and an entire trip and not to selected days
to other work of the non-Federal enti- of the trip, and results in charges con-
ty, are generally allowable. An appro- sistent with those normally allowed in
priate share of the non-Federal entity's like circumstances in the non-Federal
indirect costs may be allocated to the entity's non-federally-funded activities
amount of settlements with contrac- and in accordance with non-Federal en-
tors and/or subrecipients, provided that tity's written travel reimbursement
194
OMB Guidance §200.500
policies. Notwithstanding the provi- sive unrestricted accommodations
sions of §200.444, travel costs of offi- class offered by commercial airlines
cials covered by that section are allow- are unallowable except when such ac-
able with the prior written approval of commodations would:
the Federal awarding agency or pass- (i)Require circuitous routing;
through entity when they are specifi- (ii) Require travel during unreason-
cally related to the Federal award. able hours;
(b) Lodging and subsistence. Costs in- (iii)Excessively prolong travel;
curred by employees and officers for (iv) Result in additional costs that
travel, including costs of lodging, other would offset the transportation say-
subsistence, and incidental expenses, ings;or
must be considered reasonable and oth- (v)Offer accommodations not reason-
erwise allowable only to the extent ably adequate for the traveler's med-
such costs do not exceed charges nor- ical needs. The non-Federal entity
mally allowed by the non-Federal enti- must justify and document these condi-
ty in its regular operations as the re- tions on a case-by-case basis in order
suit of the non-Federal entity's written for the use of first-class or business-
travel policy. In addition, if these costs class airfare to be allowable in such
are charged directly to the Federal cases.
award documentation must justify (2) Unless a pattern of avoidance is
that: detected, the Federal Government will
(1) Participation of the individual is generally not question a non-Federal
necessary to the Federal award;and entity's determinations that cus-
(2) The costs are reasonable and con- tomary standard airfare or other dis-
sistent with non-Federal entity's es- count airfare is unavailable for specific
tablished travel policy. trips if the non-Federal entity can
(c)(1) Temporary dependent care demonstrate that such airfare was not
costs (as dependent is defined in 26 available in the specific case.
U.S.C. 152) above and beyond regular (f) Air travel by other than commercial
dependent care that directly results carrier. Costs of travel by non-Federal
from travel to conferences is allowable entity-owned, -leased, or -chartered
provided that: aircraft include the cost of lease, char-
(i)The costs are a direct result of the ter, operation (including personnel
individual's travel for the Federal costs), maintenance, depreciation, in-
award; surance, and other related costs. The
(ii) The costs are consistent with the portion of such costs that exceeds the
non-Federal entity's documented tray- cost of airfare as provided for in para-
el policy for all entity travel;and graph (d) of this section, is unallow-
(iii) Are only temporary during the able.
travel period. [78 FR 78608, Dec. 26, 2013, as amended at 79
(2) Travel costs for dependents are FR 75887, Dec. 19, 2014. Redesignated and
unallowable, except for travel of dura- amended at 85 FR 49570,Aug.13,2020]
tion of six months or more with prior
approval of the Federal awarding agen- §200.476 Trustees.
cy. See also§200.432. • Travel and subsistence costs of trust-
(d) In the absence of an acceptable, ees(or directors)at IHEs and nonprofit
written non-Federal entity policy re- organizations are allowable. See also
garding travel costs, the rates and §200.475.
amounts established under 5 U.S.C.
5701-11, ("Travel and Subsistence Ex- [85 FR 49571,Aug.13,2020]
penses; Mileage Allowances"), or by
the Administrator of General Services, Subpart F—Audit Requirements
or by the President (or his or her des-
ignee) pursuant to any provisions of GENERAL
such subchapter must apply to travel
under Federal awards (48 CFR 31.205- §200.500 Purpose.
46(a)). This part sets forth standards for ob-
(e) Commercial air travel. (1) Airfare taining consistency and uniformity
costs in excess of the basic least expen- among Federal agencies for the audit
195
§200.501 2 CFR Ch. II (1-1-21 Edition)
of non-Federal entities expending Fed- (f) Subrecipients and contractors. An
eral awards. auditee may simultaneously be a re-
cipient, a subrecipient, and a con-
AUDITS tractor. Federal awards expended as a
§200.501 Audit requirements. recipient or a subrecipient are subject
to audit under this part. The payments
(a)Audit required. A non-Federal enti- received for goods or services provided
ty that expends$750,000 or more during as a contractor are not Federal awards.
the non-Federal entity's fiscal year in Section§200.331 sets forth the consider-
Federal awards must have a single or
pay-
program-specific audit conducted for ations in determining whether that year in accordance with the provi- ments constitute a Federal award or a
sions of this part. payment for goods or services provided
(b) Single audit. A non-Federal entity as a contractor.
that expends $750,000 or more during (g) Compliance responsibility for con-
the non-Federal entity's fiscal year in tractors. In most cases, the auditee's
Federal awards must have a single compliance responsibility for contrac-
audit conducted in accordance with tors is only to ensure that the procure-
§200.514 except when it elects to have a ment, receipt, and payment for goods
program-specific audit conducted in ac- and services comply with Federal stat-
cordance with paragraph(c) of this sec- utes, regulations, and the terms and
tion. conditions of Federal awards. Federal
(c) Program-specific audit election. award compliance requirements nor-
When an auditee expends Federal mally do not pass through to contrac-
awards under only one Federal pro- tors. However, the auditee is respon-
gram (excluding R&D) and the Federal sible for ensuring compliance for pro-
program's statutes, regulations, or the curement transactions which are struc-
terms and conditions of the Federal tured such that the contractor is re-
award do not require a financial state- sponsible for program compliance or
ment audit of the auditee, the auditee the contractor's records must be re-
may elect to have a program-specific
li-
audit conducted in accordance with viewed Also,to determinethese programo coment
§200.507. A program-specific audit may ance. n when procurement
pro-
not be elected for R&D unless all of the transactions relate to a major pro
in-
Federal awards expended were received gram, the scope of the audit must from the same Federal agency, or the elude determining whether these trans
same Federal agency and the same actions are in compliance with Federal
pass-through entity, and that Federal statutes, regulations, and the terms
agency, or pass-through entity in the and conditions of Federal awards.
case of a subrecipient, approves in ad- (h) For-profit subrecipient. Since this
vance a program-specific audit. part does not apply to for-profit sub-
(d) Exemption when Federal awards ex- recipients, the pass-through entity is
pended are less than$750,000. A non-Fed- responsible for establishing require-
eral entity that expends less than ments, as necessary, to ensure compli-
$750,000 during the non-Federal entity's ance by for-profit subrecipients. The
fiscal year in Federal awards is exempt agreement with the for-profit sub-
from Federal audit requirements for recipient must describe applicable
that year, except as noted in §200.503, compliance requirements and the for-
but records must be available for re- profit subrecipient's compliance re-
view or audit by appropriate officials sponsibility. Methods to ensure compli-
of the Federal agency,pass-through en- ance for Federal awards made to for-
tity, and Government Accountability profit subrecipients may include pre-
Office(GAO). award audits, monitoring during the
(e) Federally Funded Research and De- agreement, and post-award audits. See
velopment Centers (FFRDC). Manage- also§200.332.
ment of an auditee that owns or oper-
ates a FFRDC may elect to treat the [78 FR 78608, Dec. 26, 2013, as amended at 79
FFRDC as a separate entity for pur- FR 75887, Dec. 19, 2014; 85 FR 49571, Aug. 13,
poses of this part. 2020]
196
OMB Guidance §200.503
§200.502 Basis for determining Fed- awards expended under this part when
eral awards expended, the Federal statutes, regulations, and
(a) Determining Federal awards ex- the terms and conditions of Federal
pended. The determination of when a awards pertaining to such loans impose
Federal award is expended must be no continuing compliance require-
based on when the activity related to ments other than to repay the loans.
the Federal award occurs. Generally, (e) Endowment funds. The cumulative
the activity pertains to events that re- balance of Federal awards for endow-
quire the non-Federal entity to comply ment funds that are federally re-
,with Federal statutes, regulations, and stricted are considered Federal awards
the terms and conditions of Federal expended in each audit period in which
awards, such as: expenditure/expense the funds are still restricted.
transactions associated with awards in- (f) Free rent. Free rent received by
eluding grants, cost-reimbursement itself is not considered a Federal award
contracts under the FAR, compacts expended under this part. However, free
with Indian Tribes, cooperative agree- rent received as part of a Federal
ments, and direct appropriations; the award to carry out a Federal program
disbursement of funds to subrecipients; must be included in determining Fed-
the use of loan proceeds under loan and eral awards expended and subject to
loan guarantee programs; the receipt of audit under this part.
property; the receipt of surplus prop- (g) Valuing non-cash assistance. Fed-
erty; the receipt or use of program in- eral non-cash assistance, such as free
come; the distribution or use of food rent, food commodities, donated prop-
commodities; the disbursement of erty, or donated surplus property,must
amounts entitling the non-Federal en- be valued at fair market value at the
tity to an interest subsidy; and the pe- time of receipt or the assessed value
riod when insurance is in force. provided by the Federal agency.
(b) Loan and loan guarantees (loans). (h) Medicare. Medicare payments to a
Since the Federal Government is at non-Federal entity for providing pa-
risk for loans until the debt is repaid, tient care services to Medicare-eligible
the following guidelines must be used individuals are not considered Federal
to calculate the value of Federal awards expended under this part.
awards expended under loan programs, (i) Medicaid. Medicaid payments to a
except as noted in paragraphs (c) and subrecipient for providing patient care
(d)of this section: services to Medicaid-eligible individ-
(1) Value of new loans made or re- uals are not considered Federal awards
ceived during the audit period;plus expended under this part unless a state
(2) Beginning of the audit period bal- requires the funds to be treated as Fed-
ance of loans from previous years for eral awards expended because reim-
which the Federal Government imposes bursement is on a cost-reimbursement
continuing compliance requirements; basis.
plus
(3) Any interest subsidy, cash, or ad- (j) Certain loans provided by the No-
ministrative cost allowance received. tional Credit Union Administration. For
(c) Loan and loan guarantees (loans) at purposes of this part, loans made from
nsur-
the When loans are made to students the Fund andCre Centralnion Share Iidity
of an IHE but the IHE does not make Facilityate Fund the Liquidity
ibu-
the loans, then only the value of loans tio that are funded er l nt entities
made during the audit period must be are nots considered insured non-Federalawardsex-
considered Federal awards expended in are not Federal that audit period. The balance of loans pended.
for previous audit periods is not in- [78 FR 78608, Dec. 26, 2013, as amended at 79
eluded as Federal awards expended be- FR 75887,Dec.19,2014]
cause the lender accounts for the prior
balances. §200.503 Relation to other audit re-
(d) Prior loan and loan guarantees quirements.
(loans). Loans, the proceeds of which (a) An audit conducted in accordance
were received and expended in prior with this part must be in lieu of any fi-
years, are not considered Federal nancial audit of Federal awards which
197
§200.504 2 CFR Ch. II (1-1-21 Edition)
a non-Federal entity is required to un- agency may request that an auditee
dergo under any other Federal statute have a particular Federal program au-
or regulation. To the extent that such dited as a major program in lieu of the
audit provides a Federal agency with Federal awarding agency conducting or
the information it requires to carry arranging for the additional audits. To
out its responsibilities under Federal allow for planning, such requests
statute or regulation, a Federal agency should be made at least 180 calendar
must rely upon and use that informa- days prior to the end of the fiscal year
tion. to be audited. The auditee, after con-
(b) Notwithstanding subsection (a), a sultation with its auditor, should
Federal agency, Inspectors General, or promptly respond to such a request by
GAO may conduct or arrange for addi- informing the Federal awarding agency
tional audits which are necessary to whether the program would otherwise
carry out its responsibilities under be audited as a major program using
Federal statute or regulation. The pro- the risk-based audit approach de-
visions of this part do not authorize scribed in §200.518 and, if not, the esti-
any non-Federal entity to constrain, in mated incremental cost. The Federal
any manner, such Federal agency from awarding agency must then promptly
carrying out or arranging for such ad- confirm to the auditee whether it
ditional audits, except that the Federal wants the program audited as a major
agency must plan such audits to not be program. If the program is to be au-
duplicative of other audits of Federal dited as a major program based upon
awards. Prior to commencing such an this Federal awarding agency request,
audit, the Federal agency or pass- and the Federal awarding agency
through entity must review the FAC agrees to pay the full incremental
for recent audits submitted by the non- costs, then the auditee must have the
Federal entity, and to the extent such program audited as a major program.A
audits meet a Federal agency or pass- pass-through entity may use the provi-
through entity's needs, the Federal sions of this paragraph for a sub-
agency or pass-through entity must recipient.
rely upon and use such audits. Any ad- [78 FR 78608, Dec. 26, 2013, as amended at 85
ditional audits must be planned and FR 49570,Aug.13,2020]
performed in such a way as to build
upon work performed, including the §200.504 Frequency of audits.
audit documentation, sampling, and Except for the provisions for biennial
testing already performed, by other audits provided in paragraphs (a) and
auditors. (b) of this section, audits required by
(c) The provisions of this part do not this part must be performed annually.
limit the authority of Federal agencies Any biennial audit must cover both
to conduct, or arrange for the conduct years within the biennial period.
of, audits and evaluations of Federal (a) A state, local government, or In-
awards, nor limit the authority of any dian tribe that is required by constitu-
Federal agency Inspector General or tion or statute, in effect on January 1,
other Federal official. For example, re- 1987, to undergo its audits less fre-
quirements that may be applicable quently than annually, is permitted to
under the FAR or CAS and the terms undergo its audits pursuant to this
and conditions of a cost-reimbursement part biennially. This requirement must
contract may include additional appli- still be in effect for the biennial period.
cable audits to be conducted or ar- (b) Any nonprofit organization that
ranged for by Federal agencies. had biennial audits for all biennial pe-
(d)Federal agency to pay for additional riods ending between July 1, 1992, and
audits. A Federal agency that conducts January 1, 1995, is permitted to under-
or arranges for additional audits must, go its audits pursuant to this part bi-
consistent with other applicable Fed- ennially.
eral statutes and regulations, arrange
for funding the full cost of such addi- §200.505 Sanctions.
tional audits. In cases of continued inability or un-
(e) Request for a program to be audited willingness to have an audit conducted
as a major program. A Federal awarding in accordance with this part, Federal
198
OMB Guidance §200.507
agencies and pass-through entities Federal statutes, regulations, and the
must take appropriate action as pro- terms and conditions of Federal awards
vided in§200.339. that could have a direct and material
[85 FR 49571,Aug.13,2020] effect on the Federal program con-
sistent with the requirements of
§200.506 Audit costs. §200.514(d)for a major program;
See§200.425. (iv)Follow up on prior audit findings,
perform procedures to assess the rea-
[85 FR 49571,Aug.13,2020] sonableness of the summary schedule
of prior audit findings prepared by the
§200.507 Program-specific audits. auditee in accordance with the require-
(a) Program-specific audit guide avail- ments of§200.511, and report, as a cur-
able. In some cases, a program-specific rent year audit finding, when the audi-
audit guide will be available to provide tor concludes that the summary sched-
specific guidance to the auditor with ule of prior audit findings materially
respect to internal controls, compli- misrepresents the status of any prior
ance requirements, suggested audit audit finding; and
procedures, and audit reporting re- (v) Report any audit findings con-
quirements. A listing of current pro- sistent with the requirements of
gram-specific audit guides can be found §200.516.
in the compliance supplement, Part 8, (4) The auditor's report(s) may be in
Appendix VI, Program-Specific Audit the form of either combined or sepa-
Guides, which includes a website where rate reports and may be organized dif-
a copy of the guide can be obtained. ferently from the manner presented in
When a current program-specific audit this section. The auditor's report(s)
guide is available, the auditor must must state that the audit was con-
follow GAGAS and the guide when per- ducted in accordance with this part
forming a program-specific audit. and include the following:
(b) Program-specific audit guide not (i) An opinion (or disclaimer of opin-
available. (1) When a current program- ion) as to whether the financial state-
specific audit guide is not available, ment(s) of the Federal program is pre-
the auditee and auditor must have ba- sented fairly in all material respects in
sically the same responsibilities for the accordance with the stated accounting
Federal program as they would have policies;
for an audit of a major program in a (ii) A report on internal control re-
single audit. lated to the Federal program, which
(2) The auditee must prepare the fi- must describe the scope of testing of
nancial statement(s) for the Federal internal control and the results of the
program that includes, at a minimum, tests;
a schedule of expenditures of Federal (iii)A report on compliance which in-
awards for the program and notes that eludes an opinion (or disclaimer of
describe the significant accounting opinion) as to whether the auditee
policies used in preparing the schedule, complied with laws, regulations, and
a summary schedule of prior audit find- the terms and conditions of Federal
ings consistent with the requirements awards which could have a direct and
of §200.511(b), and a corrective action material effect on the Federal pro-
plan consistent with the requirements gram; and
of§200.511(c). (iv) A schedule of findings and ques-
(3)The auditor must: tioned costs for the Federal program
(i) Perform an audit of the financial that includes a summary of the audi-
statement(s) for the Federal program tor's results relative to the Federal
in accordance with GAGAS; program in a format consistent with
(ii) Obtain an understanding of inter- §200.515(d)(1) and findings and ques-
nal controls and perform tests of inter- tioned costs consistent with the re-
nal controls over the Federal program quirements of§200.515(d)(3).
consistent with the requirements of (c) Report submission for program-spe-
§200.514(c)for a major program; cific audits. (1) The audit must be com-
(iii)Perform procedures to determine pleted and the reporting required by
whether the auditee has complied with paragraph (c)(2) or (c)(3) of this section
199
§200.508 2 CFR Ch. II (1-1-21 Edition)
submitted within the earlier of 30 cal- audit guide, or program statutes and
endar days after receipt of the audi- regulations.
tor's report(s), or nine months after [48 FR 78608, Dec. 26, 2013, as amended at 79
the end of the audit period, unless a FR 75887, Dec. 19, 2014; 85 FR 49571, Aug. 13,
different period is specified in a pro- 2020]
gram-specific audit guide. Unless re-
stricted by Federal law or regulation, AUDITEES
the auditee must make report copies
available for public inspection. §200.508 Auditee responsibilities.
Auditees and auditors must ensure The auditee must:
that their respective parts of the re- (a) Procure or otherwise arrange for
porting package do not include pro- the audit required by this part in ac-
tected personally identifiable informa- cordance with §200.509, and ensure it is
tion. properly performed and submitted
(2) When a program-specific audit when due in accordance with§200.512.
guide is available, the auditee must (b) Prepare appropriate financial
electronically submit to the FAC the statements, including the schedule of
data collection form prepared in ac- expenditures of Federal awards in ac-
cordance with §200.512(b), as applicable cordance with§200.510.
to a program-specific audit, and the re- (c) Promptly follow up and take cor-
porting required by the program-spe- rective action on audit findings, in-
cific audit guide. eluding preparation of a summary
(3) When a program-specific audit schedule of prior audit findings and a
guide is not available, the reporting corrective action plan in accordance
package for a program-specific audit with§200.511(b)and(c),respectively.
must consist of the financial state- (d)Provide the auditor with access to
ment(s) of the Federal program, a sum- personnel, accounts, books, records,
mary schedule of prior audit findings, supporting documentation, and other
and a corrective action plan as de- information as needed for the auditor
scribed in paragraph (b)(2) of this sec to perform the audit required by this
tion, and the auditor's report(s) de- part.
scribed in paragraph (b)(4) of this sec- [78 FR 78608, Dec. 26, 2013, as amended at 85
tion. The data collection form prepared FR 49572,Aug.13,2020]
in accordance with§200.512(b), as appli- §200.509 Auditor selection.
cable to a program-specific audit, and
one copy of this reporting package (a) Auditor procurement. In procuring
must be electronically submitted to audit services, the auditee must follow
the FAC. the procurement standards prescribed
(d) Other sections of this part may by the Procurement Standards in
apply. Program-specific audits are sub- §§200.317 through 200.326 of subpart D of
ject to: this part or the FAR (48 CFR part 42),
(1)200.500 Purpose through 200.503 Re- as applicable. When procuring audit
lation to other audit requirements, services, the objective is to obtain
paragraph(d); high-quality audits. In requesting pro-
(2) 200.504 Frequency of audits posals for audit services, the objectives
through 200.506 Audit costs; and scope of the audit must be made
(3) 200.508 Auditee responsibilities clear and the non-Federal entity must
through 200.509 Auditor selection; request a copy of the audit organiza-
(4)200.511 Audit findings follow-up; tion's peer review report which the
auditor is required to provide under
(5) 200.512 Report submission, para- GAGAS. Factors to be considered in
graphs(e)through(h); evaluating each proposal for audit
(6)200.513 Responsibilities; services include the responsiveness to
(7) 200.516 Audit findings through the request for proposal, relevant expe-
200.517 Audit documentation; rience, availability of staff with profes-
(8)200.521 Management decision; and sional qualifications and technical
(9) Other referenced provisions of this abilities, the results of peer and exter-
part unless contrary to the provisions nal quality control reviews, and price.
of this section, a program-specific Whenever possible, the auditee must
200
OMB Guidance §200.511
make positive efforts to utilize small auditee may list the amount of Federal
businesses, minority-owned firms, and awards expended for each Federal
women's business enterprises, in pro- award year separately. At a minimum,
curing audit services as stated in the schedule must:
§200.321, or the FAR (48 CFR part 42), (1) List individual Federal programs
as applicable. by Federal agency. For a cluster of pro-
(b) Restriction on auditor preparing in- grams, provide the cluster name, list
direct cost proposals. An auditor who individual Federal programs within the
prepares the indirect cost proposal or cluster of programs, and provide the
cost allocation plan may not also be se- applicable Federal agency name. For
lected to perform the audit required by R&D, total Federal awards expended
this part when the indirect costs recov- must be shown either by individual
ered by the auditee during the prior Federal award or by Federal agency
year exceeded $1 million. This restric- and major subdivision within the Fed-
tion applies to the base year used in eral agency. For example, the National
the preparation of the indirect cost Institutes of Health is a major subdivi-
proposal or cost allocation plan and sion in the Department of Health and
any subsequent years in which the re- Human Services.
sulting indirect cost agreement or cost (2) For Federal awards received as a
allocation plan is used to recover costs. subrecipient, the name of the pass-
(c) Use of Federal auditors. Federal through entity and identifying number
auditors may perform all or part of the assigned by the pass-through entity
work required under this part if they must be included.
comply fully with the requirements of (3) Provide total Federal awards ex-
this part. pended for each individual Federal pro-
[78 FR 78608, Dec. 26, 2013, as amended at 85 gram and the Assistance Listings Num-
FR 49572,Aug.13,2020] ber or other identifying number when
the Assistance Listings information is
§200.510 Financial statements. not available. For a cluster of pro-
(a) Financial statements. The auditee grams also provide the total for the
must prepare financial statements that cluster.
reflect its financial position, results of (4)Include the total amount provided
operations or changes in net assets, to subrecipients from each Federal pro-
and, where appropriate, cash flows for gram.
the fiscal year audited. The financial (5) For loan or loan guarantee pro-
statements must be for the same orga- grams described in §200.502(b), identify
nizational unit and fiscal year that is in the notes to the schedule the bal-
chosen to meet the requirements of ances outstanding at the end of the
this part. However, non-Federal entity- audit period. This is in addition to in-
wide financial statements may also in- cluding the total Federal awards ex-
clude departments, agencies, and other pended for loan or loan guarantee pro-
organizational units that have separate grams in the schedule.
audits in accordance with §200.514(a) (6) Include notes that describe that
and prepare separate financial state- significant accounting policies used in
ments. preparing the schedule, and note
(b) Schedule of expenditures of Federal whether or not the auditee elected to
awards. The auditee must also prepare use the 10% de minimis cost rate as
a schedule of expenditures of Federal covered in§200.414.
awards for the period covered by the [78 FR 78608, Dec. 26, 2013, as amended at 79
auditee's financial statements which FR 75887, Dec. 19, 2014; 85 FR 49572, Aug. 13,
must include the total Federal awards 2020]
expended as determined in accordance
with §200.502. While not required, the §200.511 Audit findings follow-up.
auditee may choose to provide infor- (a)General. The auditee is responsible
mation requested by Federal awarding for follow-up and corrective action on
agencies and pass-through entities to all audit findings. As part of this re-
make the schedule easier to use. For sponsibility, the auditee must prepare
example, when a Federal program has a summary schedule of prior audit find-
multiple Federal award years, the ings. The auditee must also prepare a
201
§200.512 2 CFR Ch. II (1-1-21 Edition)
corrective action plan for current year (ii) The Federal agency or pass-
audit findings. The summary schedule through entity is not currently fol-
of prior audit findings and the correc- lowing up with the auditee on the audit
tive action plan must include the ref- finding; and
erence numbers the auditor assigns to (iii) A management decision was not
audit findings under §200.516(c). Since issued.
the summary schedule may include (c) Corrective action plan. At the com-
audit findings from multiple years, it pletion of the audit, the auditee must
must include the fiscal year in which prepare, in a document separate from
the finding initially occurred. The cor- the auditor's findings described in
rective action plan and summary §200.516, a corrective action plan to ad-
schedule of prior audit findings must dress each audit finding included in the
include findings relating to the finan- current year auditor's reports. The cor-
cial statements which are required to rective action plan must provide the
be reported in accordance with name(s) of the contact person(s) re-
GAGAS. sponsible for corrective action, the cor-
(b) Summary schedule of prior audit rective action planned, and the antici-
findings. The summary schedule of pated completion date. If the auditee
prior audit findings must report the does not agree with the audit findings
status of all audit findings included in or believes corrective action is not re-
the prior audit's schedule of findings quired, then the corrective action plan
and questioned costs. The summary must include an explanation and spe-
schedule must also include audit find- cific reasons.
ings reported in the prior audit's sum- [78 FR 78608, Dec. 26, 2013, as amended at 85
mary schedule of prior audit findings FR 49572,Aug.13,2020]
except audit findings listed as cor-
rected in accordance with paragraph §200.512 Report submission.
(b)(1) of this section, or no longer valid (a) General. (1) The audit must be
or not warranting further action in ac- completed and the data collection form
cordance with paragraph (b)(3) of this described in paragraph (b) of this sec-
section. tion and reporting package described in
(1) When audit findings were fully paragraph (c) of this section must be
corrected, the summary schedule need submitted within the earlier of 30 cal-
only list the audit findings and state endar days after receipt of the audi-
that corrective action was taken. tor's report(s), or nine months after
(2) When audit findings were not cor- the end of the audit period. If the due
rected or were only partially corrected, date falls on a Saturday, Sunday, or
the summary schedule must describe Federal holiday, the reporting package
the reasons for the finding's recurrence is due the next business day.
and planned corrective action, and any (2) Unless restricted by Federal stat-
partial corrective action taken. When utes or regulations, the auditee must
corrective action taken is significantly make copies available for public in-
different from corrective action pre- spection. Auditees and auditors must
viously reported in a corrective action ensure that their respective parts of
plan or in the Federal agency's or pass- the reporting package do not include
through entity's management decision, protected personally identifiable infor-
the summary schedule must provide an mation.
explanation. (b)Data collection. The FAC is the re-
(3) When the auditee believes the pository of record for subpart F of this
audit findings are no longer valid or do part reporting packages and the data
not warrant further action, the reasons collection form. All Federal agencies,
for this position must be described in pass-through entities and others inter-
the summary schedule. A valid reason ested in a reporting package and data
for considering an audit finding as not collection form must obtain it by ac-
warranting further action is that all of cessing the FAC.
the following have occurred: (1) The auditee must submit required
(i) Two years have passed since the data elements described in Appendix X
audit report in which the finding oc- to Part 200, which state whether the
curred was submitted to the FAC; audit was completed in accordance
202
OMB Guidance §200.512
with this part and provides informa- paragraph (c) of this section, the audi-
tion about the auditee, its Federal pro- tor must complete the applicable data
grams, and the results of the audit. elements of the data collection form.
The data must include information The auditor must sign a statement to
available from the audit required by be included as part of the data collec-
this part that is necessary for Federal tion form that indicates, at a min-
agencies to use the audit to ensure in- imum, the source of the information
tegrity for Federal programs. The data included in the form, the auditor's re-
elements and format must be approved sponsibility for the information, that
by OMB, available from the FAC, and the form is not a substitute for the re-
include collections of information from porting package described in paragraph
the reporting package described in (c) of this section, and that the content
paragraph (c) of this section. A senior of the form is limited to the collection
level representative of the auditee(e.g., of information prescribed by OMB.
state controller, director of finance, (c) Reporting package. The reporting
chief executive officer, or chief finan- package must include the:
cial officer) must sign a statement to
sched-
be included as part of the data collet- ule Financial res ofenes andalrs
of expenditures Federal awards
tion that says that the auditee com-
plied with the requirements of this discussed in §200.510(a) and (b), respec-
tively;
part, the data were prepared in accord-
ante with this part (and the instruc- (2) Summary scheduleof prior audit
tions accompanying the form), the re- findings discussed ine§200.511(b);
porting package does not include pro (3) Auditor's report(s) discussed in
tected personally identifiable informa- §200.515;and
tion, the information included in its (4) Corrective action plan discussed
entirety is accurate and complete, and in§200.511(c).
that the FAC is authorized to make the (d) Submission to FAC. The auditee
reporting package and the form pub- must electronically submit to the FAC
licly available on a website. the data collection form described in
(2) Exception for Indian Tribes and paragraph (b) of this section and the
Tribal Organizations. An auditee that is reporting package described in para-
an Indian tribe or a tribal organization graph(c)of this section.
(as defined in the Indian Self-Deter- (e) Requests for management letters
mination, Education and Assistance issued by the auditor. In response to re-
Act (ISDEAA), 25 U.S.C. 450b(1)) may quests by a Federal agency or pass-
opt not to authorize the FAC to make through entity, auditees must submit a
the reporting package publicly avail- copy of any management letters issued
able on a Web site,by excluding the au- by the auditor.
thorization for the FAC publication in (f) Report retention requirements.
the statement described in paragraph Auditees must keep one copy of the
(b)(1) of this section. If this option is data collection form described in para-
exercised, the auditee becomes respon- graph (b) of this section and one copy
sible for submitting the reporting of the reporting package described in
package directly to any pass-through paragraph (c) of this section on file for
entities through which it has received three years from the date of submis-
a Federal award and to pass-through sion to the FAC.
entities for which the summary sched- (g)FAC responsibilities.The FAC must
ule of prior audit findings reported the make available the reporting packages
status of any findings related to Fed- received in accordance with paragraph
eral awards that the pass-through enti- (c) of this section and§200.507(c) to the
ty provided. Unless restricted by Fed- public, except for Indian tribes exer-
eral statute or regulation, if the cising the option in (b)(2) of this sec-
auditee opts not to authorize publica- tion, and maintain a data base of corn-
tion,it must make copies of the report- pleted audits, provide appropriate fin-
ing package available for public inspec- formation to Federal agencies, and fol-
tion. low up with known auditees that have
(3) Using the information included in not submitted the required data collec-
the reporting package described in tion forms and reporting packages.
203
§200.513 2 CFR Ch. II (1-1-21 Edition)
(h) Electronic filing. Nothing in this tions. Cooperate and provide support to
part must preclude electronic submis- the Federal agency designated by OMB
sions to the FAC in such manner as to lead a governmentwide project to
may be approved by OMB. determine the quality of single audits
(78 FR 78608, Dec. 26, 2013, as amended at 79 by providing a reliable estimate of the
FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13, extent that single audits conform to
2020] applicable requirements, standards,
and procedures; and to make rec-
FEDERAL AGENCIES ommendations to address noted audit
§200.513 Responsibilities. quality issues, including recommenda-
P tions for any changes to applicable re-
(a)(1) Cognizant agency for audit re- quirements, standards and procedures
sponsibilities. A non-Federal entity ex- indicated by the results of the project.
pending more than$50 million a year in The governmentwide project can rely
Federal awards must have a cognizant on the current and on-going quality
agency for audit. The designated cog- control review work performed by the
nizant agency for audit must be the agencies, State auditors, and profes-
Federal awarding agency that provides sional audit associations. This govern-
the predominant amount of funding di- mentwide audit quality project must
rectly (direct funding) (as listed on the be performed once every 6 years (or at
Schedule of expenditures of Federal such other interval as determined by
awards, see §200.510(b)) to a non-Fed- OMB), and the results must be public.
eral entity unless OMB designates a (iii) Promptly inform other affected
specific cognizant agency for audit. Federal agencies and appropriate Fed-
When the direct funding represents less eral law enforcement officials of any
than 25 percent of the total expendi- direct reporting by the auditee or its
tures (as direct and subawards) by the auditor required by GAGAS or statutes
non-Federal entity, then the Federal and regulations.
agency with the predominant amount (iv) Advise the community of inde-
of total funding is the designated cog- pendent auditors of any noteworthy or
nizant agency for audit. important factual trends related to the
(2) To provide for continuity of cog- quality of audits stemming from qual-
nizance, the determination of the pre- ity control reviews. Significant prob-
dominant amount of direct funding lems or quality issues consistently
must be based upon direct Federal identified through quality control re-
awards expended in the non-Federal en- views of audit reports must be referred
tity's fiscal years ending in 2019, and to appropriate state licensing agencies
every fifth year thereafter. and professional bodies.
(3) Notwithstanding the manner in (v) Advise the auditor, Federal
which audit cognizance is determined, awarding agencies, and, where appro-
a Federal awarding agency with cog- priate, the auditee of any deficiencies
nizance for an auditee may reassign found in the audits when the defi-
cognizance to another Federal award- ciencies require corrective action by
ing agency that provides substantial the auditor. When advised of defi-
funding and agrees to be the cognizant ciencies, the auditee must work with
agency for audit. Within 30 calendar the auditor to take corrective action.
days after any reassignment, both the If corrective action is not taken, the
old and the new cognizant agency for cognizant agency for audit must notify
audit must provide notice of the the auditor, the auditee, and applicable
change to the FAC, the auditee, and, if Federal awarding agencies and pass-
known, the auditor. The cognizant through entities of the facts and make
agency for audit must: recommendations for follow-up action.
(i)Provide technical audit advice and Major inadequacies or repetitive sub-
liaison assistance to auditees and audi- standard performance by auditors must
tors. be referred to appropriate state licens-
(ii) Obtain or conduct quality control ing agencies and professional bodies for
reviews on selected audits made by disciplinary action.
non-Federal auditors, and provide the (vi) Coordinate, to the extent prac-
results to other interested organiza- tical, audits or reviews made by or for
204
OMB Guidance §200.513
Federal agencies that are in addition (i) Issue a management decision as
to the audits made pursuant to this prescribed in§200.521;
part, so that the additional audits or (ii) Monitor the recipient taking ap-
reviews build upon rather than dupli- propriate and timely corrective action;
cate audits performed in accordance (iii) Use cooperative audit resolution
with this part. mechanisms (see the definition of coop-
(vii) Coordinate a management deci- erative audit resolution in §200.1 of this
sion for cross-cutting audit findings part) to improve Federal program out-
(see in §200.1 of this part) that affect comes through better audit resolution,
the Federal programs of more than one follow-up, and corrective action; and
agency when requested by any Federal (iv) Develop a baseline, metrics, and
awarding agency whose awards are in- targets to track, over time, the effec-
cluded in the audit finding of the tiveness of the Federal agency's proc-
auditee. ess to follow-up on audit findings and
(viii) Coordinate the audit work and on the effectiveness of Single Audits in
reporting responsibilities among audi- improving non-Federal entity account-
tors to achieve the most cost-effective ability and their use by Federal award-
audit. ing agencies in making award deci-
(ix) Provide advice to auditees as to sions.
how to handle changes in fiscal years. (4) Provide OMB annual updates to
(b) Oversight agency for audit respon- the compliance supplement and work
sibilities. An auditee who does not have with OMB to ensure that the compli-
a designated cognizant agency for ance supplement focuses the auditor to
audit will be under the general over- test the compliance requirements most
sight of the Federal agency determined likely to cause improper payments,
in accordance with §200.1 oversight fraud, waste, abuse or generate audit
agency for audit. A Federal agency with finding for which the Federal awarding
oversight for an auditee may reassign agency will take sanctions.
oversight to another Federal agency (5) Provide OMB with the name of a
that agrees to be the oversight agency single audit accountable official from
for audit. Within 30 calendar days after among the senior policy officials of the
any reassignment, both the old and the Federal awarding agency who must be:
new oversight agency for audit must (i) Responsible for ensuring that the
provide notice of the change to the agency fulfills all the requirements of
FAC, the auditee, and, if known, the paragraph (c) of this section and effec-
auditor. The oversight agency for tively uses the single audit process to
audit: reduce improper payments and improve
(1) Must provide technical advice to Federal program outcomes.
auditees and auditors as requested. (ii) Held accountable to improve the
(2) May assume all or some of the re- effectiveness of the single audit process
sponsibilities normally performed by a based upon metrics as described in
cognizant agency for audit. paragraph(c)(3)(iv)of this section.
(c) Federal awarding agency respon- (iii) Responsible for designating the
sibilities. The Federal awarding agency Federal agency's key management sin-
must perform the following for the gle audit liaison.
Federal awards it makes (See also the (6) Provide OMB with the name of a
requirements of§200.211): key management single audit liaison
(1) Ensure that audits are completed who must:
and reports are received in a timely (i) Serve as the Federal awarding
manner and in accordance with the re- agency's management point of contact
quirements of this part. for the single audit process both within
(2) Provide technical advice and and outside the Federal Government.
counsel to auditees and auditors as re- (ii) Promote interagency coordina-
quested. tion, consistency, and sharing in areas
(3) Follow-up on audit findings to en- such as coordinating audit follow-up;
sure that the recipient takes appro- identifying higher-risk non-Federal en-
priate and timely corrective action. As tities; providing input on single audit
part of audit follow-up, the Federal and follow-up policy; enhancing the
awarding agency must: utility of the FAC; and studying ways
205
§200.514 2 CFR Ch. II (1-1-21 Edition)
to use single audit results to improve ed fairly in all material respects in re-
Federal award accountability and best lation to the auditee's financial state-
practices. ments as a whole.
(iii) Oversee training for the Federal (c) Internal control. (1) The compli-
awarding agency's program manage- ance supplement provides guidance on
ment personnel related to the single internal controls over Federal pro-
audit process. grams based upon the guidance in
(iv) Promote the Federal awarding Standards for Internal Control in the
agency's use of cooperative audit reso- Federal Government issued by the
lution mechanisms. Comptroller General of the United
(v) Coordinate the Federal awarding States and the Internal Control—Inte-
agency's activities to ensure appro-
priate and timely follow-up and correc grated Framework, issued by the Corn-
tive action on audit findings. mittee of Sponsoring Organizations of
(vi) Organize the Federal cognizant the Treadway Commission(COSO).
agency for audit's follow-up on cross- (2) In addition to the requirements of
cutting audit findings that affect the GAGAS, the auditor must perform pro-
Federal programs of more than one cedures to obtain an understanding of
Federal awarding agency. internal control over Federal programs
(vii) Ensure the Federal awarding sufficient to plan the audit to support
agency provides annual updates of the a low assessed level of control risk of
compliance supplement to OMB. noncompliance for major programs.
(viii) Support the Federal awarding (3) Except as provided in paragraph
agency's single audit accountable offi- (c)(4) of this section, the auditor must:
cial's mission. (i) Plan the testing of internal con-
[78 FR 78608, Dec. 26, 2013, as amended at 79 trol over compliance for major pro-
FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13, grams to support a low assessed level
2020] of control risk for the assertions rel-
AUDITORS evant to the compliance requirements
for each major program;and
§200.514 Scope of audit. (ii) Perform testing of internal con-
(a) General. The audit must be con- trol as planned in paragraph (c)(3)(i) of
ducted in accordance with GAGAS. The this section.
audit must cover the entire operations (4) When internal control over some
of the auditee, or, at the option of the or all of the compliance requirements
auditee, such audit must include a se- for a major program are likely to be in-
ries of audits that cover departments, effective in preventing or detecting
agencies, and other organizational noncompliance, the planning and per-
units that expended or otherwise ad- forming of testing described in para-
ministered Federal awards during such graph (c)(3) of this section are not re-
audit period, provided that each such quired for those compliance require-
audit must encompass the financial ments. However, the auditor must re-
statements and schedule of expendi- port a significant deficiency or mate-
tures of Federal awards for each such rial weakness in accordance with
department, agency, and other organi- §200.516 Audit findings, assess the re-
zational unit, which must be consid- lated control risk at the maximum,
ered to be a non-Federal entity. The fi- and consider whether additional corn-
nancial statements and schedule of ex- pliance tests are required because of
penditures of Federal awards must be ineffective internal control.
for the same audit period.
(b) Financial statements. The auditor (d) Compliance. (1) In addition to the
must determine whether the financial requirements of GAGAS, the auditor
statements of the auditee are presented must determine whether the auditee
fairly in all material respects in ac has complied with Federal statutes,
cordance with generally accepted ac regulations, and the terms and condi-
counting principles. The auditor must tions of Federal awards that may have
also determine whether the schedule of a direct and material effect on each of
expenditures of Federal awards is stat- its major programs.
206
OMB Guidance §200.515
(2) The principal compliance require- §200.515 Audit reporting.
ments applicable to most Federal pro-
grams and the compliance require- The auditor's report(s) may be in the
ments of the largest Federal programs form of either combined or separate re
are included in the compliance supple- ports and may be organized differently
ment. from the manner presented in this sec-
(3) For the compliance requirements tion. The auditor's report(s) must state
related to Federal programs contained that the audit was conducted in ac-
in the compliance supplement,an audit cordance with this part and include the
of these compliance requirements will following:
meet the requirements of this part. (a) Financial statements. The auditor
Where there have been changes to the must determine and provide an opinion
compliance requirements and the (or disclaimer of opinion) whether the
changes are not reflected in the com- financial statements of the auditee are
pliance supplement, the auditor must presented fairly in all materials re-
determine the current compliance re- spects in accordance with generally ac-
quirements and modify the audit proce- cepted accounting principles (or a spe-
dures accordingly. For those Federal cial purpose framework such as cash,
programs not covered in the compli- modified cash, or regulatory as re-
ance supplement, the auditor must fol- quired by state law). The auditor must
low the compliance supplement's guid- also decide whether the schedule of ex-
ance for programs not included in the penditures of Federal awards is stated
supplement. fairly in all material respects in rela-
(4) When internal control over some tion to the auditee's financial state-
or all of the compliance requirements ments as a whole.
for a major program are likely to be in- (b) A report on internal control over
effective in preventing or detecting financial reporting and compliance
noncompliance, the planning and per- with provisions of laws, regulations,
forming of testing described in para- contracts, and award agreements, non-
graph (c)(3) of this section are not re- compliance with which could have a
quired for those compliance require- material effect on the financial state-
ments. However, the auditor must re- ments. This report must describe the
port a significant deficiency or mate- scope of testing of internal control and
rial weakness in accordance with
§200.516, assess the related control risk compliance and the results of the tests,
at the and, where applicable, it will refer to
(e) Audit follow-up. The auditor must the separate schedule of findings and
follow-up on prior audit findings, per- questioned costs described in para-
form procedures to assess the reason- graph(d)of this section.
ableness of the summary schedule of (c) A report on compliance for each
prior audit findings prepared by the major program and a report on internal
auditee in accordance with §200.511(b), control over compliance. This report
and report, as a current year audit must describe the scope of testing of
finding, when the auditor concludes internal control over compliance, in-
that the summary schedule of prior elude an opinion or disclaimer of opin-
audit findings materially misrepre- ion as to whether the auditee complied
sents the status of any prior audit find- with Federal statutes, regulations, and
ing. The auditor must perform audit the terms and conditions of Federal
follow-up procedures regardless of awards which could have a direct and
whether a prior audit finding relates to material effect on each major program
a major program in the current year. and refer to the separate schedule of
(f) Data collection form. As required in findings and questioned costs described
§200.512(b)(3), the auditor must com- in paragraph(d)of this section.
plete and sign specified sections of the (d) A schedule of findings and ques-
data collection form. tioned costs which must include the
[78 FR 78608, Dec. 26, 2013, as amended at 79 following three components:
FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13, (1) A summary of the auditor's re-
2020] sults,which must include:
207
§200.516 2 CFR Ch. II (1-1-21 Edition)
(i) The type of report the auditor awards, as reported under paragraphs
issued on whether the financial state- (d)(2) and (d)(3) of this section, respec-
ments audited were prepared in accord- tively, must be reported in both sec-
ance with GAAP (i.e., unmodified opin- tions of the schedule. However, the re-
ion, qualified opinion, adverse opinion, porting in one section of the schedule
or disclaimer of opinion); may be in summary form with a ref-
(ii) Where applicable, a statement erence to a detailed reporting in the
about whether significant deficiencies other section of the schedule.
or material weaknesses in internal con- (e) Nothing in this part precludes
trol were disclosed by the audit of the combining of the audit reporting re-
financial statements; quired by this section with the report-
(iii) A statement as to whether the ing required by §200.512(b) when al-
audit disclosed any noncompliance lowed by GAGAS and appendix X to
that is material to the financial state- this part.
ments of the auditee; [78 FR 78608, Dec. 26, 2013, as amended at 79
(iv) Where applicable, a statement FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13,
about whether significant deficiencies 2020]
or material weaknesses in internal con-
trol over major programs were dis- §200.516 Audit findings.
closed by the audit; (a) Audit findings reported. The audi-
(v) The type of report the auditor tor must report the following as audit
issued on compliance for major pro- findings in a schedule of findings and
grams (i.e., unmodified opinion, quali- questioned costs:
fied opinion, adverse opinion, or dis- (1) Significant deficiencies and mate-
claimer of opinion); rial weaknesses in internal control
(vi) A statement as to whether the over major programs and significant
audit disclosed any audit findings that instances of abuse relating to major
the auditor is required to report under programs. The auditor's determination
§200.516(a); of whether a deficiency in internal con-
(vii) An identification of major pro- trol is a significant deficiency or a ma-
grams by listing each individual major terial weakness for the purpose of re-
program; however, in the case of a clus- porting an audit finding is in relation
ter of programs, only the cluster name to a type of compliance requirement
as shown on the Schedule of Expendi- for a major program identified in the
tures of Federal Awards is required; Compliance Supplement.
(viii) The dollar threshold used to (2) Material noncompliance with the
distinguish between Type A and Type B provisions of Federal statutes, regula-
programs, as described in §200.518(b)(1) tions, or the terms and conditions of
or (3) when a recalculation of the Type Federal awards related to a major pro-
A threshold is required for large loan gram. The auditor's determination of
or loan guarantees; and whether a noncompliance with the pro-
(ix) A statement as to whether the visions of Federal statutes, regula-
auditee qualified as a low-risk auditee tions, or the terms and conditions of
under§200.520. Federal awards is material for the pur-
(2) Findings relating to the financial pose of reporting an audit finding is in
statements which are required to be re- relation to a type of compliance re-
ported in accordance with GAGAS. quirement for a major program identi-
(3) Findings and questioned costs for fied in the compliance supplement.
Federal awards which must include (3) Known questioned costs that are
audit findings as defined in §200.516(a). greater than $25,000 for a type of com-
(i) Audit findings (e.g., internal con- pliance requirement for a major pro-
trol findings, compliance findings, gram. Known questioned costs are
questioned costs, or fraud) that relate those specifically identified by the
to the same issue must be presented as auditor. In evaluating the effect of
a single audit finding. Where practical, questioned costs on the opinion on
audit findings should be organized by compliance, the auditor considers the
Federal agency or pass-through entity. best estimate of total costs questioned
(ii) Audit findings that relate to both (likely questioned costs), not just the
the financial statements and Federal questioned costs specifically identified
208
OMB Guidance §200.516
(known questioned costs). The auditor auditee to prepare a corrective action
must also report known questioned plan and take corrective action, and
costs when likely questioned costs are for Federal agencies and pass-through
greater than $25,000 for a type of corn- entities to arrive at a management de-
pliance requirement for a major pro- cision. The following specific informa-
gram. In reporting questioned costs, tion must be included, as applicable, in
the auditor must include information audit findings:
to provide proper perspective for judg- (1) Federal program and specific Fed-
ing the prevalence and consequences of eral award identification including the
the questioned costs. Assistance Listings title and number,
(4) Known questioned costs that are Federal award identification number
greater than $25,000 for a Federal pro- and year, name of Federal agency, and
gram which is not audited as a major name of the applicable pass-through
program. Except for audit follow-up, entity. When information, such as the
the auditor is not required under this Assistance Listings title and number
part to perform audit procedures for or Federal award identification num-
such a Federal program; therefore, the ber, is not available, the auditor must
auditor will normally not find ques- provide the best information available
tioned costs for a program that is not to describe the Federal award.
audited as a major program. However, (2) The criteria or specific require-
if the auditor does become aware of ment upon which the audit finding is
questioned costs for a Federal program based, including the Federal statutes,
that is not audited as a major program regulations, or the terms and condi-
(e.g., as part of audit follow-up or other tions of the Federal awards. Criteria
audit procedures) and the known ques- generally identify the required or de-
tioned costs are greater than $25,000, state rexpectation the o i with s respect
then the auditor must report this as an sired or respect
to the program or operation. Criteria
audit finding. provide a context for evaluating evi-
(5) The circumstances concerning dence and understanding findings.
why the auditor's report on compliance
for each major program is other than (3) The condition found, including
an unmodified opinion, unless such cir- facts that support the deficiency iden-
cumstances are otherwise reported as tified in the audit finding.
audit findings in the schedule of find- (4) A statement of cause that identi-
ings and questioned costs for Federal fies the reason or explanation for the
awards. condition or the factors responsible for
(6) Known or likely fraud affecting a the difference between the situation
Federal award, unless such fraud is that exists (condition) and the required
otherwise reported as an audit finding or desired state (criteria), which may
in the schedule of findings and ques- also serve as a basis for recommenda-
tioned costs for Federal awards. This tions for corrective action.
paragraph does not require the auditor (5) The possible asserted effect to
to report publicly information which provide sufficient information to the
could compromise investigative or auditee and Federal agency, or pass-
legal proceedings or to make an addi- through entity in the case of a sub-
tional reporting when the auditor con- recipient, to permit them to determine
firms that the fraud was reported out- the cause and effect to facilitate
side the auditor's reports under the di- prompt and proper corrective action. A
rect reporting requirements of GAGAS. statement of the effect or potential ef-
(7) Instances where the results of fect should provide a clear, logical link
audit follow-up procedures disclosed to establish the impact or potential
that the summary schedule of prior impact of the difference between the
audit findings prepared by the auditee condition and the criteria.
in accordance with §200.511(b) materi- (6) Identification of questioned costs
ally misrepresents the status of any and how they were computed. Known
prior audit finding. questioned costs must be identified by
(b) Audit finding detail and clarity. applicable Assistance Listings num-
Audit findings must be presented in ber(s) and applicable Federal award
sufficient detail and clarity for the identification number(s).
209
§200.517 2 CFR Ch. II (1-1-21 Edition)
(7)Information to provide proper per- quality review, to resolve audit find-
spective for judging the prevalence and ings, or to carry out oversight respon-
consequences of the audit findings, sibilities consistent with the purposes
such as whether the audit findings rep- of this part. Access to audit docu-
resent an isolated instance or a sys- mentation includes the right of Federal
temic problem. Where appropriate, in- agencies to obtain copies of audit docu-
stances identified must be related to mentation, as is reasonable and nec-
the universe and the number of cases essary.
examined and be quantified in terms of
dollar value. The auditor should report §200.518 Major program determina-
whether the sampling was a statis- tion.
tically valid sample. (a) General. The auditor must use a
(8) Identification of whether the risk-based approach to determine
audit finding was a repeat of a finding which Federal programs are major pro-
in the immediately prior audit and if grams. This risk-based approach must
so any applicable prior year audit find- include consideration of: current and
ing numbers. prior audit experience, oversight by
(9) Recommendations to prevent fu- Federal agencies and pass-through en-
ture occurrences of the deficiency iden- tities,and the inherent risk of the Fed-
tified in the audit finding. eral program. The process in para-
(10) Views of responsible officials of graphs (b) through (h) of this section
the auditee. must be followed.
(c) Reference numbers. Each audit (b) Step one. (1) The auditor must
finding in the schedule of findings and identify the larger Federal
questioned costs must include a ref- programs,
which must
pro-
erence number in the format meeting be labeled TypeA
the requirements of the data collection grams. Typee A programs e are defined as
d
Federal programs with Federal awards
form submission required by§200.512(b) expended during the audit period ex-
to allow for easy referencing of the ceeding the levels outlined in the table
audit findings during follow-up. in this paragraph(b)(1):
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49574,Aug.13,2020] Total Federal awards ex- Type NB threshold
pended
§200.517 Audit documentation. Equal to or exceed$750,000 $750,000.
(a) Retention of audit documentation. but 5 less than or equal to
liThe auditor must retain audit docu- $eon.
Exceed$25 million but less Total Federal awards ex-
mentation and reports for a minimum than or equal to$100 mil- pended times.03.
of three years after the date of lion.
issuance of the auditor's report(s) to Exceed$100 million but less $3 million.
than or equal to$1 billion.
the auditee, unless the auditor is noti- Exceed$1 billion but less Total Federal awards ex-
fied in writing by the cognizant agency than or equal to$10 billion. pended times.003.
for audit, oversight agency for audit, Exceed
thanor$10e ual billionto$20 but lessbillion. $30 million.
q
cognizant agency for indirect costs, or Exceed$20 billion Total Federal awards ex-
pass-through entity to extend the re- pended times.0015.
tention period. When the auditor is
aware that the Federal agency, pass- (2) Federal programs not labeled
through entity, or auditee is con- Type A under paragraph (b)(1) of this
testing an audit finding, the auditor section must be labeled Type B pro-
must contact the parties contesting grams.
the audit finding for guidance prior to (3) The inclusion of large loan and
destruction of the audit documentation loan guarantees(loans)must not result
and reports. in the exclusion of other programs as
(b) Access to audit documentation. Type A programs. When a Federal pro-
Audit documentation must be made gram providing loans exceeds four
available upon request to the cognizant times the largest non-loan program it
or oversight agency for audit or its des- is considered a large loan program, and
ignee, cognizant agency for indirect the auditor must consider this Federal
cost, a Federal agency, or GAO at the program as a Type A program and ex-
completion of the audit, as part of a elude its values in determining other
210
OMB Guidance §200.518
Type A programs. This recalculation of ticular recipient to allow the Federal
the Type A program is performed after awarding agency to comply with 31
removing the total of all large loan U.S.C. 3515. The Federal awarding
programs. For the purposes of this agency must notify the recipient and,
paragraph a program is only considered if known, the auditor of OMB's ap-
to be a Federal program providing proval at least 180 calendar days prior
loans if the value of Federal awards ex- to the end of the fiscal year to be au-
pended for loans within the program dited.
comprises fifty percent or more of the (d) Step three. (1) The auditor must
total Federal awards expended for the identify Type B programs which are
program. A cluster of programs is high-risk using professional judgment
treated as one program and the value and the criteria in §200.519. However,
of Federal awards expended under a the auditor is not required to identify
loan program is determined as de- more high-risk Type B programs than
scribed in§200.502. at least one fourth the number of low-
(4) For biennial audits permitted risk Type A programs identified as low-
under §200.504, the determination of risk under Step 2 (paragraph (c) of this
Type A and Type B programs must be section). Except for known material
based upon the Federal awards ex- weakness in internal control or compli-
pended during the two-year period. ance problems as discussed in
(c) Step two. (1) The auditor must §200.519(b)(1) and (2) and (c)(1), a single
identify Type A programs which are criterion in risk would seldom cause a
low-risk. In making this determina- Type B program to be considered high-
tion, the auditor must consider wheth- risk. When identifying which Type B
er the requirements in §200.519(c), the programs to risk assess, the auditor is
results of audit follow-up, or any encouraged to use an approach which
changes in personnel or systems affect- provides an opportunity for different
ing the program indicate significantly high-risk Type B programs to be au-
increased risk and preclude the pro- dited as major over a period of time.
gram from being low risk. For a Type (2)The auditor is not expected to per-
A program to be considered low-risk, it form risk assessments on relatively
must have been audited as a major pro- small Federal programs. Therefore, the
gram in at least one of the two most auditor is only required to perform risk
recent audit periods (in the most re- assessments on Type B programs that
cent audit period in the case of a bien- exceed twenty-five percent (0.25) of the
nial audit), and, in the most recent Type A threshold determined in Step 1
audit period, the program must have (paragraph(b)of this section).
not had: (e) Step four. At a minimum, the
(i) Internal control deficiencies auditor must audit all of the following
which were identified as material as major programs:
weaknesses in the auditor's report on (1) All Type A programs not identi-
internal control for major programs as fied as low risk under step two (para-
required under§200.515(c); graph(c)(1)of this section).
(ii) A modified opinion on the pro- (2) All Type B programs identified as
gram in the auditor's report on major high-risk under step three (paragraph
programs as required under §200.515(c); (d) of this section).
or (3) Such additional programs as may
(iii)Known or likely questioned costs be necessary to comply with the per-
that exceed five percent of the total centage of coverage rule discussed in
Federal awards expended for the pro- paragraph (f) of this section. This may
gram. require the auditor to audit more pro-
(2) Notwithstanding paragraph (c)(1) grams as major programs than the
of this section, OMB may approve a number of Type A programs.
Federal awarding agency's request that (f) Percentage of coverage rule. If the
a Type A program may not be consid- auditee meets the criteria in §200.520,
ered low risk for a certain recipient. the auditor need only audit the major
For example,.it may be necessary for a programs identified in Step 4 (para-
large Type A program to be audited as graphs (e)(1)and(2) of this section)and
a major program each year at a par- such additional Federal programs with
211
§200.519 2 CFR Ch. II (1-1-21 Edition)
Federal awards expended that, in ag- ence to Federal statutes, regulations,
gregate, all major programs encompass and the terms and conditions of Fed-
at least 20 percent (0.20) of total Fed- eral awards and the competence and
eral awards expended. Otherwise, the experience of personnel who administer
auditor must audit the major programs the Federal programs.
identified in Step 4 (paragraphs (e)(1) (i) A Federal program administered
and (2) of this section) and such addi-
Federal under multiple internal control struc-
tionalprograms with Federal tures may have higher risk. When as-
awards expended that, in aggregate, all sensing risk in a large single audit, the
major programs encompass at least 40
percent (0.40) of total Federal awards auditor must consider whether weak-
expended. nesses are isolated in a single oper-
(g) Documentation of risk. The auditor ating unit (e.g., one college campus) or
must include in the audit documenta- pervasive throughout the entity.
tion the risk analysis process used in (ii) When significant parts of a Fed-
determining major programs. eral program are passed through to
(h) Auditor's judgment. When the subrecipients, a weak system for moni-
major program determination was per- toring subrecipients would indicate
formed and documented in accordance higher risk.
with this Subpart, the auditor's judg- (2) Prior audit findings would indi-
ment in applying the risk-based ap- cate higher risk, particularly when the
proach to determine major programs situations identified in the audit find-
must be presumed correct. Challenges ings could have a significant impact on
by Federal agencies and pass-through a Federal program or have not been
entities must only be for clearly im- corrected.
proper use of the requirements in this (3) Federal programs not recently au-
part. However, Federal agencies and dited as major programs may be of
pass-through entities may provide higher risk than Federal programs re-
auditors guidance about the risk of a cently audited as major programs with-
particular Federal program and the out audit findings.
auditor must consider this guidance in (c) Oversight exercised by Federal agen-
determining major programs in audits cies and pass-through entities. (1) Over-
not yet completed. sight exercised by Federal agencies or
[78 FR 78608, Dec. 26, 2013, as amended at 79 pass-through entities could be used to
FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13, assess risk. For example, recent moni-
2020] toring or other reviews performed by
§200.519 Criteria for Federal program an oversight entity that disclosed no
risk, significant problems would indicate
(a) General. The auditor's determina- lower risk, whereas monitoring that
tion should be based on an overall eval- disclosed significant problems would
uation of the risk of noncompliance oc- indicate higher risk.
curring that could be material to the (2) Federal agencies,with the concur-
Federal program. The auditor must rence of OMB, may identify Federal
consider criteria, such as described in programs that are higher risk. OMB
paragraphs (b), (c), and (d) of this sec will provide this identification in the
tion, to identify risk in Federal pro- compliance supplement.
grams. Also, as part of the risk anal- (d) Inherent risk of the Federal pro-
ysis, the auditor may wish to discuss a gram. (1) The nature of a Federal pro-
particular Federal program with gram may indicate risk. Consideration
auditee management and the Federal should be given to the complexity of
agency or pass-through entity. the program and the extent to which
(b) Current and prior audit experience. the Federal program contracts for
(1) Weaknesses in internal control over goods and services. For example, Fed-
Federal programs would indicate high- eral programs that disburse funds
er risk. Consideration should be given through third-party contracts or have
to the control environment over Fed- eligibility criteria may be of higher
eral programs and such factors as the risk. Federal programs primarily in-
expectation of management's adher- volving staff payroll costs may have
212
OMB Guidance §200.521
high risk for noncompliance with re- (d) The auditor did not report a sub-
quirements of §200.430, but otherwise stantial doubt about the auditee's abil-
be at low risk. ity to continue as a going concern.
(2)The phase of a Federal program in (e) None of the Federal programs had
its life cycle at the Federal agency audit findings from any of the fol-
may indicate risk. For example, a new lowing in either of the preceding two
Federal program with new or interim audit periods in which they were classi-
regulations may have higher risk than fied as Type A programs:
an established program with time-test (1) Internal control deficiencies that
ed regulations. Also, significant were identified as material weaknesses
changes in Federal programs, statutes, in the auditor's report on internal con-
regulations, or the terms and condi- trol for major programs as required
tions of Federal awards may increase under§200.515(c);
risk. (2) A modified opinion on a major
(3)The phase of a Federal program in program in the auditor's report on
its life cycle at the auditee may indi- major programs as required under
§200.51no); or
cate risk. For example, during the first (3) Known or likely questioned costsa
and last years that an auditee partici- that exceeded five percent of the total
pates in a Federal program, the risk Federal awards expended for a Type A
may be higher due to start-up or close- program during the audit period.
out of program activities and staff.
(4) Type B programs with larger Fed- [78 FR 78608, Dec. 26, 2013, as amended at 85
eral awards expended would be of high- FR 49575,Aug.13,2020]
er risk than programs with substan- MANAGEMENT DECISIONS
tially smaller Federal awards ex-
pended. §200.521 Management decision.
[78 FR 78608, Dec. 26, 2013, as amended at 85 (a) General. The management deci-
FR 49575,Aug.13,2020] sion must clearly state whether or not
the audit finding is sustained, the rea-
§200.520 Criteria for a low-risk sons for the decision, and the expected
auditee. auditee action to repay disallowed
An auditee that meets all of the fol- costs, make financial adjustments, or
lowing conditions for each of the pre- take other action. If the auditee has
ceding two audit periods must qualify not completed corrective action, a
as a low-risk auditee and be eligible for timetable for follow-up should be
reduced audit coverage in accordance given. Prior to issuing the manage-
with§200.518. ment decision, the Federal agency or
Single audits were performed on pass-through entity may request addi-
(a) on
an annual basis in accordance with the tonal information c ding a request
from the auditee, including a request
provisions of this Subpart, including for auditor assurance related to the
submitting the data collection form documentation, as a way of mitigating
and the reporting package to the FAC disallowed costs. The management de-
within the timeframe specified in cision should describe any appeal proc-
§200.512. A non-Federal entity that has ess available to the auditee. While not
biennial audits does not qualify as a required, the Federal agency or pass-
low-risk auditee. through entity may also issue a man-
(b) The auditor's opinion on whether agement decision on findings relating
the financial statements were prepared to the financial statements which are
in accordance with GAAP, or a basis of required to be reported in accordance
accounting required by state law, and with GAGAS.
the auditor's in relation to opinion on (b) Federal agency. As provided in
the schedule of expenditures of Federal §200.513(a)(3)(vii), the cognizant agency
awards were unmodified. for audit must be responsible for co-
(c) There were no deficiencies in in- ordinating a management decision for
ternal control which were identified as audit findings that affect the programs
material weaknesses under the require- of more than one Federal agency. As
ments of GAGAS. provided in §200.513(c)(3)(i), a Federal
213
Pt. 200, App. I 2 CFR Ch. II (1-1-21 Edition)
awarding agency is responsible for announcement). For example, a Federal
issuing a management decision for awarding agency may want to include Sec-
findings that relate to Federal awards tion A information about the types of non-
it makes to non-Federal entities. Federal entities who are eligible to apply.
(c) Pass-through entity. As provided in The format specifies a standard location for
§200.332(d), the pass-through entity that information in Section C.1 but does not
Sec-
must be responsible for issuing a man- preclude repeating the information in Sec-
tion A or creating a cross reference between
agement decision for audit findings Section A and C.1, as long as a potential ap-
that relate to Federal awards it makes plicant can find the information quickly and
to subrecipients. easily from the standard location.
(d) Time requirements. The Federal The sections of the full text of the an-
awarding agency or pass-through enti- nouncement are described in the following
ty responsible for issuing a manage- paragraphs.
ment decision must do so within six A.PROGRAM DESCRIPTION—REQUIRED
months of acceptance of the audit re-
port by the FAC. The auditee must ini- This section contains the full program de-
tiate and proceed with corrective ac- scription of the funding opportunity. It may
Mon as rapidly as possible and correc- be as long as needed to adequately commu-
tive action should begin no later than nicate to potential applicants the areas in
upon receipt of the audit report. which funding may be provided. It describes
(e) Reference numbers. Management the Federal awarding agency's funding prior-
decisions must include the reference ities or the technical or focus areas in which
pro-
numbersthe the auditor assigned to each vide
Federal assistance. As agency intends mayo audit finding in accordance with elude any program
As historyappr (e.g., it in-
200.516(c). Y program (e.g.,whether this
§ is a new program or a new or changed area of
[78 FR 78608, Dec. 26, 2013, as amended at 85 program emphasis). This section must in-
FR 49575,Aug.13,2020] elude program goals and objectives, a ref-
erence to the relevant Assistance Listings, a
APPENDIX I TO PART 200—FULL TEXT OF description of how the award will contribute
NOTICE OF FUNDING OPPORTUNITY to the achievement of the program's goals
and objectives, and the expected perform-
The full text of the notice of funding op- ance goals,indicators,targets,baseline data,
portunity is organized in sections. The re- data collection, and other outcomes such
quired format outlined in this appendix indi- Federal awarding agency expects to achieve,
Cates immediately following the title of each and may include examples of successful
section whether that section is required in projects that have been funded previously.
every announcement or is a Federal award- This section also may include other informa-
ing agency option.The format is designed so tion the Federal awarding agency deems nec-
that similar types of information will appear essary,and must at a minimum include cita-
in the same sections in announcements of tions for authorizing statutes and regula-
different Federal funding opportunities. To- tions for the funding opportunity.
ward that end, there is text in each of the
following sections to describe the types of in- B.FEDERAL AWARD INFORMATION—REQUIRED
formation that a Federal awarding agency This section provides sufficient informa-
would include in that section of an actual
announcement. tion to help an applicant make an informed
A Federal awarding agency that wishes to decision about whether to submit a proposal.
include information that the format does not Relevant information could include the total
specifically discuss may address that subject amount of funding that the Federal awarding
in whatever section(s) is most appropriate. agency expects to award through the an-
For example, if a Federal awarding agency nouncement; the expected performance indi-
chooses to address performance goals in the cators, targets, baseline data, and data col-
announcement, it might do so in the funding lection; the anticipated number of Federal
opportunity description,the application con- awards; the expected amounts of individual
tent,or the reporting requirements. Federal awards (which may be a range); the
Similarly, when this format calls for a amount of funding per Federal award, on av-
type of information to be in a particular sec- erage,experienced in previous years;and the
tion, a Federal awarding agency wishing to anticipated start dates and periods of per-
address that subject in other sections may formance for new Federal awards. This sec-
elect to repeat the information in those sec- tion also should address whether applica-
tions or use cross references between the sec- tions for renewal or supplementation of ex-
tions (there should be hyperlinks for cross- isting projects are eligible to compete with
references in any electronic versions of the applications for new Federal awards.
214
OMB Guidance Pt. 200, App. I
This section also must indicate the type(s) 2. Cost Sharing or Matching—Required. An-
of assistance instrument(e.g., grant, cooper- nouncements must state whether there is re-
ative agreement) that may be awarded if ap- quired cost sharing, matching, or cost par-
plications are successful. If cooperative ticipation without which an application
agreements may be awarded, this section ei- would be ineligible (if cost sharing is not re-
ther should describe the "substantial in- quired, the announcement must explicitly
volvement" that the Federal awarding agen- say so). Required cost sharing may be a cer-
cy expects to have or should reference where tain percentage or amount, or may be in the
the potential applicant can find that infor- form of contributions of specified items or
mation (e.g., in the funding opportunity de- activities(e.g., provision of equipment).It is
scription in Section A. or Federal award ad- important that the announcement be clear
ministration information in Section D. If about any restrictions on the types of cost
procurement contracts also may be awarded, (e.g., in-kind contributions) that are accept-
this must be stated. able as cost sharing.Cost sharing as an eligi-
bility criterion includes requirements based
C.ELIGIBILITY INFORMATION in statute or regulation, as described in
This section addresses the considerations §200.306 of this Part. This section should
or factors that determine applicant or appli- refer to the anyapp pre-awardate portion(s)eg of nsectionr
D. stating requirements for
cation eligibility. This includes the eligi- submission of letters or other documentation
bility of particular types of applicant organi- to verify commitments to meet cost-sharing
zations, any factors affecting the eligibility requirements if a Federal award is made.
of the principal investigator or project direc- 3. Other—Required,if applicable. If there are
tor, and any criteria that make particular other eligibility criteria (i.e., criteria that
projects ineligible. Federal agencies should have the effect of making an application or
make clear whether an applicant's failure to project ineligible for Federal awards, wheth-
meet an eligibility criterion by the time of er referred to as "responsiveness" criteria,
an application deadline will result in the `go-no go" criteria, "threshold" criteria, or
Federal awarding agency returning the ap- in other ways), must be clearly stated and
plication without review or, even though an must include a reference to the regulation of
application may be reviewed, will preclude requirement that describes the restriction,
the Federal awarding agency from making a as applicable. For example, if entities that
Federal award.Key elements to be addressed have been found to be in violation of a par-
are: ticular Federal statute are ineligible, it is
1. Eligible Applicants—Required. Announce- important to say so. This section must also
ments must clearly identify the types of en- state any limit on the number of applica-
tities that are eligible to apply. If there are tions an applicant may submit under the an-
no restrictions on eligibility, this section nouncement and make clear whether the
may simply indicate that all potential appli- limitation is on the submitting organization,
cants are eligible.If there are restrictions on individual investigator/program director, or
eligibility, it is important to be clear about both. This section should also address any
the specific types of entities that are eligi- eligibility criteria for beneficiaries or for
ble, not just the types that are ineligible. program participants other than Federal
For example, if the program is limited to award recipients.
nonprofit organizations subject to 26 U.S.C.
501(c)(3) of the tax code (26 U.S.C. 501(c)(3)), D.APPLICATION AND SUBMISSION INFORMATION
the announcement should say so. Similarly, 1. Address to Request Application Package—
it is better to state explicitly that Native Required. Potential applicants must be told
American tribal organizations are eligible how to get application forms, kits, or other
than to assume that they can unambiguously materials needed to apply(if this announce-
infer that from a statement that nonprofit ment contains everything needed, this sec-
organizations may apply.Eligibility also can tion need only say so). An Internet address
be expressed by exception, (e.g., open to all where the materials can be accessed is ac-
types of domestic applicants other than indi- ceptable. However, since high-speed Internet
viduals). This section should refer to any access is not yet universally available for
portion of Section D specifying documenta- downloading documents, and applicants may
tion that must be submitted to support an have additional accessibility requirements,
eligibility determination (e.g., proof of there also should be a way for potential ap-
501(c)(3)status as determined by the Internal plicants to request paper copies of materials,
Revenue Service or an authorizing tribal res- such as a U.S. Postal Service mailing ad-
olution). To the extent that any funding re- dress, telephone or FAX number, Telephone
striction in Section D.6 could affect the eli- Device for the Deaf (TDD), Text Telephone
gibility of an applicant or project, the an- (TTY) number, and/or Federal Information
nouncement must either restate that restric- Relay Service(FIRS)number.
tion in this section or provide a cross-ref- 2. Content and Form of Application Submis-
erence to its description in Section D.6. sion—Required. This section must identify
215
Pt. 200, App. I 2 CFR Ch. II (1-1-21 Edition)
the required content of an application and if an applicant has not fully complied with
the forms or formats that an applicant must the requirements by the time the Federal
use to submit it. If any requirements are awarding agency is ready to make a Federal
stated elsewhere because they are general re- award, the Federal awarding agency may de-
quirements that apply to multiple programs termine that the applicant is not qualified to
or funding opportunities, this section should receive a Federal award and use that deter-
refer to where those requirements may be mination as a basis for making a Federal
found. This section also should include re- award to another applicant.
quired forms or formats as part of the an- 4. Submission Dates and Times—Required.
nouncement or state where the applicant Announcements must identify due dates and
may obtain them. times for all submissions. This includes not
This section should specifically address only the full applications but also any pre-
content and form or format requirements liminary submissions (e.g., letters of intent,
for: white papers, or pre-applications).It also in-
i. Pre-applications, letters of intent, or cludes any other submissions of information
white papers required or encouraged (see before Federal award that are separate from
Section D.4), including any limitations on the full application. If the funding oppor-
the number of pages or other formatting re- tunity is a general announcement that is
quirements similar to those for full applica- open for a period of time with no specific due
tions. dates for applications, this section should
ii. The application as a whole. For all sub- say so. Note that the information on dates
missions, this would include any limitations that is included in this section also must ap-
on the number of pages, font size and type- pear with other overview information in a lo-
face, margins, paper size, number of copies, cation preceding the full text of the an-
and sequence or assembly requirements. If nouncement(see§200.204 of this part).
electronic submission is permitted or re- 5.Intergovernmental Review—Required,if ap-
quired, this could include special require- plicable.If the funding opportunity is subject
ments for formatting or signatures. to Executive Order 12372, "Intergovern-
iii. Component pieces of the application mental Review of Federal Programs," the
(e.g., if all copies of the application must notice must say so and applicants must con-
bear original signatures on the face page or tact their state's Single Point of Contact
the program narrative may not exceed 10 (SPOC) to find out about and comply with
pages).This includes any pieces that may be the state's process under Executive Order
submitted separately by third parties (e.g., 12372, it may be useful to inform potential
references or letters confirming commit- applicants that the names and addresses of
ments from third parties that will be con- the SPOCs are listed in the Office of Manage-
tributing a portion of any required cost shar- ment and Budget's website.
ing). 6. Funding Restrictions—Required. Notices
iv. Information that successful applicants must include information on funding restric-
must submit after notification of intent to tions in order to allow an applicant to de-
make a Federal award,but prior to a Federal velop an application and budget consistent
award. This could include evidence of corn- with program requirements. Examples are
pliance with requirements relating to human whether construction is an allowable activ-
subjects or information needed to comply ity, if there are any limitations on direct
with the National Environmental Policy Act costs such as foreign travel or equipment
(NEPA)(42 U.S.C.4321-4370h). purchases, and if there are any limits on in-
3. Unique entity identifier and System for direct costs (or facilities and administrative
Award Management (SAM)—Required. This costs).Applicants must be advised if Federal
paragraph must state clearly that each ap- awards will not allow reimbursement of pre-
plicant(unless the applicant is an individual Federal award costs.
or Federal awarding agency that is excepted 7. Other Submission Requirements—Required.
from those requirements under 2 CFR This section must address any other submis-
25.110(b) or(c), or has an exception approved sion requirements not included in the other
by the Federal awarding agency under 2 CFR paragraphs of this section. This might in-
25.110(d)) is required to: (i) Be registered in elude the format of submission,i.e.,paper or
SAM before submitting its application; (ii) electronic, for each type of required submis-
Provide a valid unique entity identifier in its sion. Applicants should not be required to
application; and (iii) Continue to maintain submit in more than one format and this sec-
an active SAM registration with current in- tion should indicate whether they may
formation at all times during which it has an choose whether to submit applications in
active Federal award or an application or hard copy or electronically,may submit only
plan under consideration by a Federal award- in hard copy, or may submit only electroni-
ing agency. It also must state that the Fed- tally.
eral awarding agency may not make a Fed- This section also must indicate where ap-
eral award to an applicant until the appli- plications(and any pre-applications)must be
cant has complied with all applicable unique submitted if sent by postal mail, electronic
entity identifier and SAM requirements and, means, or hand-delivery. For postal mail
216
OMB Guidance Pt. 200, App. I
submission,this must include the name of an tant that the announcement be clear about
office, official, individual or function (e.g., any restrictions on the types of cost(e.g.,in-
application receipt center) and a complete kind contributions) that are acceptable as
mailing address. For electronic submission, cost sharing.
this must include the URL or email address; 2. Review and Selection Process—Required.
whether a password(s) is required; whether This section may vary in the level of detail
particular software or other electronic capa- provided. The announcement must list any
bilities are required; what to do in the event program policy or other factors or elements,
of system problems and a point of contact other than merit criteria, that the selecting
who will be available in the event the appli- official may use in selecting applications for
cant experiences technical difficulties., Federal award(e.g., geographical dispersion,
E.APPLICATION REVIEW INFORMATION program balance, or diversity). The Federal
awarding agency may also include other ap-
1. Criteria—Required. This section must ad- propriate details. For example, this section
dress the criteria that the Federal awarding may indicate who is responsible for evalua-
agency will use to evaluate applications. tion against the merit criteria(e.g.,peers ex-
This includes the merit and other review cri- ternal to the Federal awarding agency or
teria that evaluators will use to judge appli- Federal awarding agency personnel) and/or
cations,including any statutory,regulatory, who makes the final selections for Federal
or other preferences(e.g.,minority status or awards.If there is a multi-phase review proc-
Native American tribal preferences) that ess(e.g., an external panel advising internal
will be applied in the review process. These Federal awarding agency personnel who
criteria are distinct from eligibility criteria make final recommendations to the deciding
that are addressed before an application is official),the announcement may describe the
accepted for review and any program policy phases. It also may include: the number of
or other factors that are applied during the people on an evaluation panel and how it op-
selection process, after the review process is erates, the way reviewers are selected, re-
completed. The intent is to make the appli- viewer qualifications, and the way that con-
cation process transparent so applicants can flicts of interest are avoided. With respect to
make informed decisions when preparing electronic methods for providing informa-
their applications to maximize fairness of tion about funding opportunities or accept-
the process.The announcement should clear- ing applicants' submissions of information,
ly describe all criteria, including any sub- each Federal awarding agency is responsible
criteria. If criteria vary in importance, the for compliance with Section 508 of the Reha-
announcement should specify the relative bilitation Act of 1973(29 U.S.C.794d).
percentages,weights, or other means used to In addition,if the Federal awarding agency
distinguish among them. For statutory, reg- permits applicants to nominate suggested re-
ulatory, or other preferences, the announce- viewers of their applications or suggest those
ment should provide a detailed explanation they feel may be inappropriate due to a con-
of those preferences with an explicit indica- flict of interest, that information should be
tion of their effect(e.g., whether they result included in this section.
in additional points being assigned). 3. For any Federal award under a notice of
If an applicant's proposed cost sharing will funding opportunity, if the Federal awarding
be considered in the review process (as op- agency anticipates that the total Federal
posed to being an eligibility criterion de- share will be greater than the simplified ac-
scribed in Section C.2), the announcement quisition threshold on any Federal award
must specifically address how it will be con- under a notice of funding opportunity may
sidered (e.g., to assign a certain number of include, over the period of performance, this
additional points to applicants who offer section must also inform applicants:
cost sharing, or to break ties among applica- i.That the Federal awarding agency,prior
tions with equivalent scores after evaluation to making a Federal award with a total
against all other factors).If cost sharing will
not be considered in the evaluation, the an- amount of Federal n threshold,r greater than the
nouncement should say so, so that there is simplified acquisition is requiredmi
to review and consider any information
no ambiguity for potential applicants.Vague about the applicant that is in the designated
statements that cost sharing is encouraged, integrity and performance system accessible
without clarification as to what that means, through SAM (currently FAPIIS) (see 41
are unhelpful to applicants. It also is impor- U.S.C.2313);
ii.That an applicant,at its option,may re-
1 With respect to electronic methods for view information in the designated integrity
providing information about funding oppor- and performance systems accessible through
tunities or accepting applicants'submissions SAM and comment on any information about
of information, each Federal awarding agen- itself that a Federal awarding agency pre-
cy is responsible for compliance with Section viously entered and is currently in the des-
508 of the Rehabilitation Act of 1973 (29 ignated integrity and performance system
U.S.C.794d). accessible through SAM;
217
Pt. 200, App. I 2 CFR Ch. II (1-1-21 Edition)
iii. That the Federal awarding agency will how to obtain it) or Internet site where ap-
consider any comments by the applicant, in plicants can see the terms and conditions. If
addition to the other information in the des- this funding opportunity will lead to Federal
ignated integrity and performance system, awards with some special terms and condi-
in making a judgment about the applicant's tions that differ from the Federal awarding
integrity, business ethics, and record of per- agency's usual (sometimes called "general")
formance under Federal awards when corn- terms and conditions, this section should
pleting the review of risk posed by appli- highlight those special terms and conditions.
cants as described in§200.206. Doing so will alert applicants that have re-
4. Anticipated Announcement and Federal ceived Federal awards from the Federal
Award Dates—Optional. This section is in- awarding agency previously and might not
tended to provide applicants with informa- otherwise expect different terms and condi-
tion they can use for planning purposes. If tions. For the same reason, the announce-
there is a single application deadline fol- ment should inform potential applicants
lowed by the simultaneous review of all ap- about special requirements that could apply
plications, the Federal awarding agency can to particular Federal awards after the review
include in this section information about the of applications and other information, based
anticipated dates for announcing or noti- on the particular circumstances of the effort
fying successful and unsuccessful applicants to be supported(e.g., if human subjects were
and for having Federal awards in place.If ap- to be involved or if some situations may jus-
plications are received and evaluated on a tify special terms on intellectual property,
"rolling" basis at different times during an data sharing or security requirements).
extended period, it may be appropriate to 3. Reporting—Required. This section must
give applicants an estimate of the time need- include general information about the type
ed to process an application and notify the
applicant of the Federal awarding agency's and
financial of submissiono perfo (paperpa), frequency,
decision. and means of or elec-
tronic) of post-Federal award reporting re-
F.FEDERAL AWARD ADMINISTRATION quirements. Highlight any special reporting
INFORMATION requirements for Federal awards under this
funding opportunity that differ (e.g., by re-
f. Federal Award Notices—Required. This port type, frequency, form/format, or cir-
section must address what a successful appli- cumstances for use) from what the Federal
cant can expect to receive following selec- awarding agency's Federal awards usually
tion. If the Federal awarding agency's prac- require.Federal awarding agencies must also
tice is to provide a separate notice stating describe in this section all relevant require-
that an application has been selected before ments such as those at 2 CFR 180.335 and
it actually makes the Federal award, this 1.80.350.
section would be the place to indicate that If the Federal share of any Federal award
the letter is not an authorization to begin may include more than$500,000 over the pe-
performance (to the extent that it allows riod of performance, this section must in-
charging to Federal awards of pre-award form potential applicants about the post
costs at the non-Federal entity's own risk). award reporting requirements reflected in
This section should indicate that the notice appendix XII to this part.
of Federal award signed by the grants officer
(or equivalent)is the authorizing document, G.FEDERAL AWARDING AGENCY CONTACT(S)—
and whether it is provided through postal REQUIRED
mail or by electronic means and to whom. It
also may address the timing, form, and con- The announcement must give potential ap-
tent of notifications to unsuccessful appli- plicants a point(s) of contact for answering
cants.See also§200.211. questions or helping with problems while the
2. Administrative and National Policy Re- funding opportunity is open. The intent of
quirements—Required.This section must iden- this requirement is to be as helpful as pos-
tify the usual administrative and national sible to potential applicants, so the Federal
policy requirements the Federal awarding awarding agency should consider approaches
agency's Federal awards may include. Pro- such as giving:
viding this information lets a potential ap- i.Points of contact who may be reached in
plicant identify any requirements with multiple ways (e.g.,by telephone, FAX, and/
which it would have difficulty complying if or email,as well as regular mail).
its application is successful. In those cases, ii. A fax or email address that multiple
early notification about the requirements al- people access, so that someone will respond
lows the potential applicant to decide not to even if others are unexpectedly absent dur-
apply or to take needed actions before re- ing critical periods.
ceiving the Federal award. The announce- iii. Different contacts for distinct kinds of
ment need not include all of the terms and help(e.g.,one for questions of programmatic
conditions of the Federal award, but may content and a second for administrative
refer to a document(with information about questions).
218
OMB Guidance Pt. 200, App. II
H.OTHER INFORMATION—OPTIONAL Compliance Programs, Equal Employment
This section may include any additional Opportunity,Department of Labor."
information that will assist a potential ap- (D)Davis-Bacon Act,as amended(40 U.S.C.
plicant.For example,the section might: 3141-3148).When required by Federal program
i. Indicate whether this is a new program legislation, all prime construction contracts
or a one-time initiative. in excess of $2,000 awarded by non-Federal
ii. Mention related programs or other up- entities must include a provision for compli-
coming or ongoing Federal awarding agency once with the Davis-Bacon Act (40 U.S.C.
funding opportunities for similar activities. 3141-3144, and 3146-3148) as supplemented by
iii. Include current Internet addresses for Department of Labor regulations (29 CFR
Federal awarding agency Web sites that may Part 5, Labor Standards Provisions Appli-
be useful to an applicant in understanding cable to Contracts Covering Federally Fi-
the program. nanced and Assisted Construction"). In ac-
iv.Alert applicants to the need to identify cordance with the statute, contractors must
proprietary information and inform them be required to pay wages to laborers and me-
about the way the Federal awarding agency charncs at a rate not less than the prevailing
will handle it, wages specified in a wage determination
v. Include certain routine notices to appli- made by the Secretary of Labor.In addition,
cants (e.g., that the Federal Government is contractors must be required to pay wages
not obligated to make any Federal award as not less than once a week. The non-Federal
a result of the announcement or that only entity must place a copy of the current pre-
grants officers can bind the Federal Govern- vailing wage determination issued by the De-
ment to the expenditure of funds). partment of Labor in each solicitation. The
decision to award a contract or subcontract
[78 FR 78608, Dec. 26, 2013, as amended at 80 must be conditioned upon the acceptance of
FR 43310, July 22, 2015; 85 FR 49575, Aug. 13, the wage determination.The non-Federal en-
2020] tity must report all suspected or reported
violations to the Federal awarding agency.
APPENDIX II TO PART 200—CONTRACT The contracts must also include a provision
PROVISIONS FOR NON-FEDERAL ENTI- for compliance with the Copeland "Anti-
TY CONTRACTS UNDER FEDERAL Kickback" Act (40 U.S.C. 3145), as supple-
AWARDS mented by Department of Labor regulations
(29 CFR Part 3, "Contractors and Sub-
In addition to other provisions required by contractors on Public Building or Public
the Federal agency or non-Federal entity,all Work Financed in Whole or in Part by Loans
contracts made by the non-Federal entity or Grants from the United States").The Act
under the Federal award must contain provi- provides that each contractor or sub-
sions covering the following,as applicable. recipient must be prohibited from inducing,
(A) Contracts for more than the simplified by any means, any person employed in the
acquisition threshold, which is the inflation construction, completion, or repair of public
adjusted amount determined by the Civilian work, to give up any part of the compensa-
Agency Acquisition Council and the Defense tion to which he or she is otherwise entitled.
Acquisition Regulations Council (Councils) The non-Federal entity must report all sus-
as authorized by 41 U.S.C.1908, must address pected or reported violations to the Federal
administrative, contractual, or legal rem- awarding agency.
edies in instances where contractors violate (E) Contract Work Hours and Safety
or breach contract terms, and provide for Standards Act (40 U.S.C. 3701-3708). Where
such sanctions and penalties as appropriate. applicable,all contracts awarded by the non-
(B) All contracts in excess of$10,000 must Federal entity in excess of$100,000 that in-
address termination for cause and for con- volve the employment of mechanics or labor-
venience by the non-Federal entity including ers must include a provision for compliance
the manner by which it will be effected and with 40 U.S.C.3702 and 3704,as supplemented
the basis for settlement. by Department of Labor regulations(29 CFR
(C) Equal Employment Opportunity. Ex- Part 5).Under 40 U.S.C.3702 of the Act, each
cept as otherwise provided under 41 CFR contractor must be required to compute the
Part 60, all contracts that meet the defini- wages of every mechanic and laborer on the
tion of"federally assisted construction con- basis of a standard work week of 40 hours.
tract"in 41 CFR Part 60-1.3 must include the Work in excess of the standard work week is
equal opportunity clause provided under 41 permissible provided that the worker is corn-
CFR 60-1.4(b), in accordance with Executive pensated at a rate of not less than one and a
Order 11246, "Equal Employment Oppor- half times the basic rate of pay for all hours
tunity" (30 FR 12319,12935, 3 CFR Part, 1964- worked in excess of 40 hours in the work
1965 Comp.,p. 339), as amended by Executive week.The requirements of 40 U.S.C.3704 are
Order 11375, "Amending Executive Order applicable to construction work and provide
11246 Relating to Equal Employment Oppor- that no laborer or mechanic must be re-
tunity," and implementing regulations at 41 quired to work in surroundings or under
CFR part 60, "Office of Federal Contract working conditions which are unsanitary,
219
Pt. 200, App. III 2 CFR Ch. II (1-1-21 Edition)
hazardous or dangerous. These requirements Such disclosures are forwarded from tier to
do not apply to the purchases of supplies or tier up to the non-Federal award.
materials or articles ordinarily available on (J)See§200.323.
the open market, or contracts for transpor- (K)See§200.216.
tation or transmission of intelligence. (L)See§200.322.
(F) Rights to Inventions Made Under a
Contract or Agreement.If the Federal award [78 FR 78608, Dec. 26, 2013, as amended at 79
meets the definition of"funding agreement" FR 75888, Dec. 19, 2014; 85 FR 49577, Aug. 13,
under 37 CFR§401.2 (a) and the recipient or 2020]
subrecipient wishes to enter into a contract APPENDIX III TO PART 200—INDIRECT
with a small business firm or nonprofit orga-
nization regarding the substitution of par- (F&A) COSTS IDENTIFICATION AND
ties, assignment or performance of experi- ASSIGNMENT, AND RATE DETERMINA-
mental, developmental, or research work TION FOR INSTITUTIONS OF HIGHER
under that "funding agreement," the recipi- EDUCATION(IHES)
ent or subrecipient must comply with the re-
quirements of 37 CFR Part 401,"Rights to In- A.GENERAL
ventions Made by Nonprofit Organizations This a
identi-
and Small Business Firms Under Govern- fyappendix provides criteria(orfor
ment Grants, Contracts and Cooperative (F&A))and computing indirect s) indirect
Agreements," and any implementing regula- rates are IHEs thattare(institutions). Indirectref
tions issued by the awarding agency. (F&A) costs those that are incurred for
common or joint objectives and therefore
(G)Clean Air Act(42 U.S.C.7401-7671q.)and
the Federal Water Pollution Control Act (33 cannot be identified readily and specifically
U.S.C.1251-1387), as amended—Contracts and with a particular sponsored project, an in-
subgrants of amounts in excess of $150,000 structional activity, or any other institu-
must contain a provision that requires the tional activity. See subsection B.1 for a dis-
non-Federal award to agree to comply with cussion of the components of indirect(F&A)
all applicable standards, orders or regula- costs.
tions issued pursuant to the Clean Air Act 1.Major Functions of an Institution
(42 U.S.C. 7401-7671q) and the Federal Water
Pollution Control Act as amended (33 U.S.C. Refers to instruction, organized research,
1251-1387). Violations must be reported to the other sponsored activities and other institu-
Federal awarding agency and the Regional tional activities as defined in this section:
Office of the Environmental Protection a. Instruction means the teaching and
Agency(EPA). training activities of an institution. Except
(H) Debarment and Suspension (Executive for research training as provided in sub-
Orders 12549 and 12689)—A contract award section b,this term includes all teaching and
(see 2 CFR 180.220)must not be made to par- training activities, whether they are offered
ties listed on the governmentwide exclusions for credits toward a degree or certificate or
in the System for Award Management on a non-credit basis, and whether they are
(SAM), in accordance with the OMB guide- offered through regular academic depart-
lines at 2 CFR 180 that implement Executive ments or separate divisions, such as a sum-
Orders 12549 (3 CFR part 1986 Comp., p. 189) mer school division or an extension division.
and 12689 (3 CFR part 1989 Comp., p. 235), Also considered part of this major function
"Debarment and Suspension." SAM Exclu- are departmental research, and, where
sions contains the names of parties debarred, agreed to,university research.
suspended, or otherwise excluded by agen- (1)Sponsored instruction and training means
cies, as well as parties declared ineligible specific instructional or training activity es-
under statutory or regulatory authority tablished by grant, contract, or cooperative
other than Executive Order 12549. agreement. For purposes of the cost prin-
(I) Byrd Anti-Lobbying Amendment (31 ciples, this activity may be considered a
U.S.C. 1352)—Contractors that apply or bid major function even though an institution's
for an award exceeding$100,000 must file the accounting treatment may include it in the
required certification. Each tier certifies to instruction function.
the tier above that it will not and has not (2) Departmental research means research,
used Federal appropriated funds to pay any development and scholarly activities that
person or organization for influencing or at- are not organized research and, con-
tempting to influence an officer or employee sequently, are not separately budgeted and
of any agency,a member of Congress, officer accounted for. Departmental research, for
or employee of Congress,or an employee of a purposes of this document, is not considered
member of Congress in connection with ob- as a major function, but as a part of the in-
taining any Federal contract, grant or any struction function of the institution.
other award covered by 31 U.S.C. 1352. Each (3) Only mandatory cost sharing or cost
tier must also disclose any lobbying with sharing specifically committed in the project
non-Federal funds that takes place in con- budget must be included in the organized re-
nection with obtaining any Federal award. search base for computing the indirect(F&A)
220
OMB Guidance Pt.200,App. III
cost rate or reflected in any allocation of in- rate groupings of cost within one or more of
direct costs. Salary costs above statutory the indirect (F&A) cost categories referred
limits are not considered cost sharing. to in subsection B.1. In general, the cost
b. Organized research means all research groupings established within a category
and development activities of an institution should constitute, in each case, a pool of
that are separately budgeted and accounted those items of expense that are considered to
for.It includes: be of like nature in terms of their relative
(1) Sponsored research means all research contribution to (or degree of remoteness
and development activities that are spon- from)the particular cost objectives to which
sored by Federal and non-Federal agencies distribution is appropriate. Cost groupings
and organizations.This term includes activi- should be established considering the general
ties involving the training of individuals in guides provided in subsection c of this sec-
research techniques (commonly called re- tion.Each such pool or cost grouping should
search training)where such activities utilize then be distributed individually to the re-
the same facilities as other research and de- lated cost objectives, using the distribution
velopment activities and where such activi- base or method most appropriate in light of
ties are not included in the instruction func- the guidelines set forth in subsection d of
tion. this section.
(2) University research means all research c. General considerations on cost groupings.
and development activities that are sepa- The extent to which separate cost groupings
rately budgeted and accounted for by the in- and selective distribution would be appro-
stitution under an internal application of in- priate at an institution is a matter of judg-
stitutional funds. University research, for ment to be determined on a case-by-case
purposes of this document, must be com- basis.Typical situations which may warrant
bined with sponsored research under the the establishment of two or more separate
function of organized research. cost groupings (based on account classifica-
c.Other sponsored activities means programs tion or analysis) within an indirect (F&A)
and projects financed by Federal and non- cost category include but are not limited to
Federal agencies and organizations which in- the following:
valve the performance of work other than in- (1)If certain items or categories of expense
struction and organized research. Examples relate solely to one of the major functions of
of such programs and projects are health the institution or to less than all functions,
service projects and community service pro- such expenses should be set aside as a sepa-
grams.However,when any of these activities rate cost grouping for direct assignment or
are undertaken by the institution without selective allocation in accordance with the
outside support, they may be classified as guides provided in subsections b and d.
other institutional activities. (2)If any types of expense ordinarily treat-
d. Other institutional activities means all ac- ed as general administration or depart-
tivities of an institution except for instruc- mental administration are charged to Fed-
tion, departmental research, organized re- eral awards as direct costs, expenses applica-
search, and other sponsored activities,as de- ble to other activities of the institution
fined in this section; indirect(F&A) cost ac- when incurred for the same purposes in like
tivities identified in this Appendix para- circumstances must, through separate cost
graph B,Identification and assignment of in- groupings, be excluded from the indirect
direct (F&A) costs; and specialized services (F&A) costs allocable to those Federal
facilities described in§200.468 of this part. awards and included in the direct cost of
2.Criteria for Distribution other activities for cost allocation purposes.
(3)If it is determined that certain expenses
a. Base period. A base period for distribu- are for the support of a service unit or facil-
tion of indirect (F&A) costs is the period ity whose output is susceptible of measure-
during which the costs are incurred. The ment on a workload or other quantitative
base period normally should coincide with basis,such expenses should be set aside as a
the fiscal year established by the institution, separate cost grouping for distribution on
but in any event the base period should be so such basis to organized research, instruc-
selected as to avoid inequities in the dis- tional,and other activities at the institution
tribution of costs. or within the department.
b. Need for cost groupings. The overall ob- (4) If activities provide their own pur-
jective of the indirect(F&A)cost allocation chasing, personnel administration, building
process is to distribute the indirect (F&A) maintenance or similar service, the distribu-
costs described in Section B, Identification tion of general administration and general
and assignment of indirect (F&A) costs, to expenses, or operation and maintenance ex-
the major functions of the institution in pro- penses to such activities should be accom-
portions reasonably consistent with the na- plished through cost groupings which include
tare and extent of their use of the institu- only that portion of central indirect (F&A)
tion's resources. In order to achieve this ob- costs (such as for overall management)
jective, it may be necessary to provide for which are properly allocable to such activi-
selective distribution by establishing sepa- ties.
221
Pt. 200, App. III 2 CFR Ch. II (1-1-21 Edition)
(5) If the institution elects to treat fringe than that in Section B must not be used to
benefits as indirect (F&A) charges, such distribute utility or student services costs.
costs should be set aside as a separate cost Instead,subsection B.4.c,may be used in the
grouping for selective distribution to related recovery of utility costs.
cost objectives. e.Order of distribution.
(6) The number of separate cost groupings (1) Indirect(F&A) costs are the broad cat-
within a category should be held within egories of costs discussed in Section B.1.
practical limits, after taking into consider- (2) Depreciation, interest expenses, oper-
ation the materiality of the amounts in- ation and maintenance expenses,and general
volved and the degree of precision attainable administrative and general expenses should
through less selective methods of distribu- be allocated in that order to the remaining
tion. indirect (F&A) cost categories as well as to
d.Selection of distribution method. the major functions and specialized service
(1) Actual conditions must be taken into facilities of the institution. Other cost cat-
account in selecting the method or base to egories may be allocated in the order deter-
be used in distributing individual cost mined to be most appropriate by the institu-
groupings.The essential consideration in se- tions. When cross allocation of costs is made
lecting a base is that it be the one best suit- as provided in subsection(3),this order of al-
ed for assigning the pool of costs to cost ob- location does not apply.
jectives in accordance with benefits derived; (3) Normally an indirect (F&A) cost cat-
with a traceable cause-and-effect relation- egory will be considered closed once it has
ship; or with logic and reason,where neither been allocated to other cost objectives, and
benefit nor a cause-and-effect relationship is costs may not be subsequently allocated to
determinable. it. However, a cross allocation of costs be-
(2) If a cost grouping can be identified di- tween two or more indirect (F&A) cost cat-
rectly with the cost objective benefitted, it egories may be used if such allocation will
should be assigned to that cost objective. result in a more equitable allocation of
(3) If the expenses in a cost grouping are costs. If a cross allocation is used, an appro-
more general in nature,the distribution may priate modification to the composition of
be based on a cost analysis study which re- the indirect (F&A) cost categories described
sults in an equitable distribution of the in Section B is required.
costs. Such cost analysis studies may take
into consideration weighting factors, popu- B.IDENTIFICATION AND ASSIGNMENT OF
lation,or space occupied if appropriate. Cost INDIRECT(F&A)COSTS
analysis studies,however,must(a)be appro- 1 Definition of Facilities and Administration
priately documented in sufficient detail for
subsequent review by the cognizant agency See §200.414 which provides the basis for
for indirect costs, (b) distribute the costs to these indirect cost requirements.
the related cost objectives in accordance
with the relative benefits derived, (c)be sta- 2.Depreciation
tistically sound,(d)be performed specifically a. The expenses under this heading are the
at the institution at which the results are to portion of the costs of the institution's
be used,and(e)be reviewed periodically,but buildings, capital improvements to land and
not less frequently than rate negotiations, buildings, and equipment which are corn-
updated if necessary, and used consistently. puted in accordance with§200.436.
Any assumptions made in the study must be b. In the absence of the alternatives pro-
stated and explained. The use of cost anal- vided for in Section A.2.d, the expenses in-
ysis studies and periodic changes in the eluded in this category must be allocated in
method of cost distribution must be fully the following manner:
justified. (1) Depreciation on buildings used exclu-
(4) If a cost analysis study is not per- sively in the conduct of a single function,
formed, or if the study does not result in an and on capital improvements and equipment
equitable distribution of the costs, the dis- used in such buildings, must be assigned to
tribution must be made in accordance with that function.
the appropriate base cited in Section B, un- (2)Depreciation on buildings used for more
less one of the following conditions is met: than one function, and on capital improve-
(a)It can be demonstrated that the use of ments and equipment used in such buildings,
a different base would result in a more equi- must be allocated to the individual functions
table allocation of the costs, or that a more performed in each building on the basis of
readily available base would not increase the usable square feet of space, excluding corn-
costs charged to Federal awards,or mon areas such as hallways, stairwells, and
(b)The institution qualifies for,and elects rest rooms.
to use, the simplified method for computing (3) Depreciation on buildings, capital im-
indirect (F&A) cost rates described in Sec- provements and equipment related to space
tion D. (e.g., individual rooms, laboratories) used
(5) Notwithstanding subsection (3), effec- jointly by more than one function(as deter-
tive July 1,1998,a cost analysis or base other mined by the users of the space) must be
222
OMB Guidance Pt. 200,App. III
treated as follows. The cost of each jointly natives in paragraphs (c)(1) and (2) of this
used unit of space must be allocated to bene- section:
fitting functions on the basis of: (1)Where space is devoted to a single func-
(a) The employee full-time equivalents tion and metering allows unambiguous meas-
(FTEs) or salaries and wages of those indi- urement of usage related to that space,costs
vidual functions benefitting from the use of must be assigned to the function located in
that space;or that space.
(b)Institution-wide employee FTEs or sal- (2) Where space is allocated to different
aries and wages applicable to the benefitting functions and metering does not allow unam-
major functions (see Section A.1) of the in- biguous measurement of usage by function,
stitution. costs must be allocated as follows:
(4) Depreciation on certain capital im- (i) Utilities costs should be apportioned to
provements to land, such as paved parking functions in the same manner as deprecia-
areas,fences,sidewalks,and the like,not in- tion, based on the calculated difference be-
cluded in the cost of buildings,must be allo- tween the site or building actual square foot-
cated to user categories of students and em- age for monitored research laboratory space
ployees on a full-time equivalent basis. The (site, building, floor, or room), and a sepa-
amount allocated to the student category rate calculation prepared by the IHE using
must be assigned to the instruction function the "effective square footage" described in
of the institution. The amount allocated to subsection(c)(2)(ii)of this section.
the employee category must be further alto- (ii) "Effective square footage" allocated to
cated to the major functions of the institu- research laboratory space must be calculated
tion in proportion to the salaries and wages as the actual square footage times the rel-
of all employees applicable to those func- ative energy utilization index (REUI)posted
tions. on the OMB Web site at the time of a rate
determination.
3.Interest A. This index is the ratio of a laboratory
Interest on debt associated with certain energy use index (lab EUI) to the cor-
responding index for overall average college
buildings, equipment and capital improve- or university space(college EUI).
ments, as defined in§200.449, must be classi- B.In July 2012,values for these two indices
Pied as an expenditure under the category (taken respectively from the Lawrence
Facilities. These costs must be allocated in BerkeleyLaboratory
the same manner as the depreciation on the "Labs fore e 2 -
tury"benchmarking tool and the US Depart-
buildings, equipment and capital improve- ment of Energy "Buildings Energy
ments to which the interest relates. Databook" and were 310 kBtu/sq ft-yr. and
4.Operation and Maintenance Expenses 155 kBtu/sq ft-yr., so that the adjustment
ratio is 2.0 by this methodology. To retain
a. The expenses under this heading are currency, OMB will adjust the EUI numbers
those that have been incurred for the admin- from time to time(no more often than annu-
istration, supervision, operation, mainte- ally nor less often than every 5 years), using
nance,preservation,and protection of the in- reliable and publicly disclosed data. Current
stitution's physical plant. They include ex- values of both the EUIs and the REUI will be
penses normally incurred for such items as posted on the OMB website.
janitorial and utility services; repairs and 5.General Administration and General Expenses
ordinary or normal alterations of buildings, p
furniture and equipment; care of grounds; a. The expenses under this heading are
maintenance and operation of buildings and those that have been incurred for the general
other plant facilities; security; earthquake executive and administrative offices of edu-
and disaster preparedness; environmental cational institutions and other expenses of a
safety; hazardous waste disposal; property, general character which do not relate solely
liability and all other insurance relating to to any major function of the institution;i.e.,
property; space and capital leasing; facility solely to (1) instruction, (2) organized re-
planning and management; and central re- search, (3) other sponsored activities, or (4)
ceiving. The operation and maintenance ex- other institutional activities. The general
pense category should also include its allo- administration and general expense category
cable share of fringe benefit costs, deprecia- should also include its allocable share of
tion,and interest costs. fringe benefit costs, operation and mainte-
b. In the absence of the alternatives pro- nance expense, depreciation, and interest
vided for in Section A.2.d, the expenses in- costs. Examples of general administration
cluded in this category must be allocated in and general expenses include:Those expenses
the same manner as described in subsection incurred by administrative offices that serve
2.b for depreciation. the entire university system of which the in-
c. A utility cost adjustment of up to 1.3 stitution is a part; central offices of the in-
percentage points may be included in the ne- stitution such as the President's or
gotiated indirect cost rate of the IHE for or- Chancellor's office, the offices for institu-
ganized research, per the computation alter- tion-wide financial management, business
223
Pt. 200, App. III 2 CFR Ch. II (1-1-21 Edition)
services, budget and planning, personnel travel, office supplies, stockrooms, and the
management, and safety and risk manage- like.
ment; the office of the General Counsel; and (3) Other fringe benefit costs applicable to
the operations of the central administrative the salaries and wages included in sub-
management information systems. General sections (1) and (2) are allowable, as well as
administration and general expenses must an appropriate share of general administra-
not include expenses incurred within non- tion and general expenses, operation and
university-wide deans' offices, academic de- maintenance expenses,and depreciation.
partments,organized research units,or simi- (4) Federal agencies may authorize reim-
lar organizational units.(See subsection 6.) bursement of additional costs for department
b. In the absence of the alternatives pro- heads and faculty only in exceptional cases
vided for in Section A.2.d, the expenses in- where an institution can demonstrate undue
eluded in this category must be grouped first hardship or detriment to project perform-
according to common major functions of the ance.
institution to which they render services or b.The following guidelines apply to the de-
provide benefits. The aggregate expenses of termination of departmental administrative
each group must then be allocated to serv- costs as direct or indirect(F&A)costs.
iced or benefitted functions on the modified (1) In developing the departmental admin-
total cost basis. Modified total costs consist istration cost pool,special care should be ex-
of the same elements as those in Section C.2. ercised to ensure that costs incurred for the
When an activity included in this indirect same purpose in like circumstances are
(F&A) cost category provides a service or treated consistently as either direct or indi-
product to another institution or organiza- rect (F&A) costs. For example, salaries of
tion, an appropriate adjustment must be technical staff, laboratory supplies (e.g.,
made to either the expenses or the basis of chemicals), telephone toll charges, animals,
allocation or both,to assure a proper alloca- animal care costs, computer costs, travel
tion of costs. costs, and specialized shop costs must be
treated as direct costs wherever identifiable
6.Departmental Administration Expenses to a particular cost objective. Direct charg-
a. The expenses under this heading are ing of these costs may be accomplished
those that have been incurred for adminis- through specific identification of individual
trative and supporting services that benefit costs to benefitting cost objectives, or
common or joint departmental activities or through recharge centers or specialized serv-
objectives in academic deans' offices, aca- ice facilities, as appropriate under the cir-
demic departments and divisions, and orga- cumstances. See§§200.413(c)and 200.468.
nized research units. Organized research (2) Items such as office supplies, postage,
units include such units as institutes, study local telephone costs,and memberships must
centers, and research centers. Departmental normally be treated as indirect(F&A) costs.
administration expenses are subject to the c. In the absence of the alternatives pro-
following limitations. vided for in Section A.2.d, the expenses in-
(1) Academic deans' offices. Salaries and eluded in this category must be allocated as
operating expenses are limited to those at- follows:
tributable to administrative functions. (1) The administrative expenses of the
(2)Academic departments: dean's office of each college and school must
(a) Salaries and fringe benefits attrib- be allocated to the academic departments
utable to the administrative work(including within that college or school on the modified
bid and proposal preparation) of faculty(in- total cost basis.
eluding department heads)and other profes- (2) The administrative expenses of each
sional personnel conducting research and/or academic department, and the department's
instruction, must be allowed at a rate of 3.6 share of the expenses allocated in subsection
percent of modified total direct costs. This (1)must be allocated to the appropriate func-
category does not include professional busi- tions of the department on the modified
ness or professional administrative officers. total cost basis.
This allowance must be added to the com- 7.Sponsored Projects Administration
putation of the indirect (F&A) cost rate for
major functions in Section C; the expenses a.The expenses under this heading are lim-
covered by the allowance must be excluded ited to those incurred by a separate organi-
from the departmental administration cost zation(s)established primarily to administer
pool. No documentation is required to sup- sponsored projects, including such functions
port this allowance. as grant and contract administration (Fed-
(b) Other administrative and supporting eral and non-Federal), special security, pur-
expenses incurred within academic depart- chasing,personnel,administration, and edit-
ments are allowable provided they are treat- ing and publishing of research and other re-
ed consistently in like circumstances. This ports.They include the salaries and expenses
would include expenses such as the salaries of the head of such organization, assistants,
of secretarial and clerical staffs, the salaries and immediate staff, together with the sala-
of administrative officers and assistants, ries and expenses of personnel engaged in
224
OMB Guidance • Pt. 200,App. III
supporting activities maintained by the or- (2) The amount in the professional em-
ganization,such as stock rooms,print shops, ployee category must be assigned to the
and the like. This category also includes an major functions of the institution in propor-
allocable share of fringe benefit costs, gen- tion to the salaries and wages of all faculty
eral administration and general expenses, members and other professional employees
operation and maintenance expenses,and de- applicable to those functions.
preciation. Appropriate adjustments will be (3)The amount in the other users category
made for services provided to other functions must be assigned to the other institutional
or organizations. activities function of the institution.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in- 9.Student Administration and Services
cluded in this category must be allocated to a. The expenses under this heading are
the major functions of the institution under those that have been incurred for the admin-
which the sponsored projects are conducted istration of student affairs and for services
on the basis of the modified total cost of to students, including expenses of such ac-
sponsored projects. tivities as deans of students,admissions,reg-
c. An appropriate adjustment must be istrar, counseling and placement services,
made to eliminate any duplicate charges to student advisers, student health and infir-
Federal awards when this category includes mary services, catalogs, and commence-
similar or identical activities as those in- ments and convocations. The salaries of
cluded in the general administration and
general expense category or other indirect members of the academic staff whose respon-
(F&A) cost items, such as accounting, pro- sibilities to the institution require adminis-
curement,or personnel administration, trative work that benefits sponsored projects
may also be included to the extent that the
8.Library Expenses portion charged to student administration is
determined in accordance with subpart E of
a. The expenses under this heading are this Part. This expense category also in-
those that have been incurred for the oper- eludes the fringe benefit costs applicable to
ation of the library, including the cost of the salaries and wages included therein, an
books and library materials purchased for appropriate share of general administration
the library, less any items of library income and general expenses, operation and mainte-
that qualify as applicable credits under nance,interest expense,and depreciation.
§200.406.The library expense category should b. In the absence of the alternatives pro-
also include the fringe benefits applicable to vided for in Section A.2.d, the expenses in
the salaries and wages included therein, an this category must be allocated to the in-
appropriate share of general administration struction function,and subsequently to Fed-
and general expense, operation and mainte- eral awards in that function.
nance expense, and depreciation. Costs in-
curred in the purchases of rare books (mu- W. Offset for Indirect (F&A) Expenses Other-
seum-type books) with no value to Federal wise Provided for by the Federal Govern-
awards should not be allocated to them. ment
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in- a. The items to be accumulated under this
cluded in this category must be allocated heading are the reimbursements and other
first on the basis of primary categories of payments from the Federal Government
users, including students, professional em- which are made to the institution to support
ployees,and other users. solely,specifically,and directly,in whole or
(1) The student category must consist of in part, any of the administrative or service
full-time equivalent students enrolled at the activities described in subsections 2 through
institution, regardless of whether they earn 9•
credits toward a degree or certificate. b. The items in this group must be treated
(2) The professional employee category as a credit to the affected individual indirect
must consist of all faculty members and (F&A) cost category before that category is
other professional employees of the institu- allocated to benefitting functions.
tion, on a full-time equivalent basis. This
category may also include post-doctorate C.DETERMINATION AND APPLICATION OF
fellows and graduate students. INDIRECT(F&A)COST RATE OR RATES
(3) The other users category must consist 1.Indirect(F&A)Cost Pools
of a reasonable factor as determined by insti-
tutional records to account for all other a. (1) Subject to subsection b, the separate
users of library facilities. categories of indirect (F&A) costs allocated
c.Amount allocated in paragraph b of this to each major function of the institution as
section must be assigned further as follows: prescribed in Section B, must be aggregated
(1) The amount in the student category and treated as a common pool for that func-
must be assigned to the instruction function tion. The amount in each pool must be di-
of the institution. vided by the distribution base described in
225
Pt. 200, App. III 2 CFR Ch. II (1-1-21 Edition)
subsection 2 to arrive at a single indirect tiated indirect(F&A)costs will be treated as
(F&A)cost rate for each function. an offset before allocation to instruction,or-
(2) The rate for each function is used to ganized research, other sponsored activities,
distribute indirect (F&A) costs to individual and other institutional activities. The base
Federal awards of that function. Since a on which such remaining expenses are allo-
common pool is established for each major cated should be appropriately adjusted.
function of the institution, a separate indi-
rect(F&A)cost rate would be established for 4.Predetermined Rates for Indirect(F&A)Costs
each of the major functions described in Sec- Public Law 87-638(76 Stat.437)as amended
tion A.1 under which Federal awards are car- (41 U.S.C. 4708) authorizes the use of pre-
ried out. determined rates in determining the "indi-
(3) Each institution's indirect (F&A) cost rect costs" (indirect(F&A) costs)applicable
rate process must be appropriately designed under research agreements with educational
to ensure that Federal sponsors do not in institutions.The stated objectives of the law
any way subsidize the indirect(F&A)costs of are to simplify the administration of cost-
other sponsors, specifically activities spun- type research and development contracts(in-
sured by industry and foreign governments. eluding grants) with educational institu-
Accordingly, each allocation method used to tions, to facilitate the preparation of their
identify and allocate the indirect(F&A)cost budgets, and to permit more expeditious
pools, as described in Sections A.2 and B.2 closeout of such contracts when the work is
through B.9,must contain the full amount of completed. In view of the potential advan-
the institution's modified total costs or tages offered by this procedure, negotiation
other appropriate units of measurement used of predetermined rates for indirect (F&A)
to make the computations. In addition, the costs for a period of two to four years should
final rate distribution base (as defined in be the norm in those situations where the
subsection 2) for each major function (orga- cost experience and other pertinent facts
nized research,instruction,etc.,as described available are deemed sufficient to enable the
in Section A.1 functions of an institution) parties involved to reach an informed judg-
must contain all the programs or activities ment as to the probable level of indirect
which utilize the indirect (F&A) costs allo- (F&A) costs during the ensuing accounting
cated to that major function.At the time an periods.
indirect(F&A)cost proposal is submitted to
a cognizant agency for indirect costs, each 5.Negotiated Fixed Rates and Carry-Forward
institution must describe the process it uses Provisions
to ensure that Federal funds are not used to
subsidize industry and foreign government forWhenfiscal a fixed rate is other negotiatedm inr advance), th
a year (or time period), the
funded programs. over-or under-recovery for that year may be
2.The Distribution Basis included as an adjustment to the indirect
Indirect(F&A)costs must be distributed to (F&A) cost for the next rate negotiation.
When the rate is negotiated before the carry-
applicable Federal awards and other benefit- forward adjustment is determined,the carry-
ting activities within each major function forward amount may be applied to the next
(see section A.1) on the basis of modified subsequent rate negotiation. When such ad-
total direct costs (MTDC), consisting of all justments are to be made,each fixed rate ne-
salaries and wages,fringe benefits,materials gotiated in advance for a given period will be
and supplies, services, travel, and up to the computed by applying the expected indirect
first $25,000 of each subaward (regardless of (F&A) costs allocable to Federal awards for
the period covered by the subaward). MTDC the forecast period plus or minus the carry-
is defined in§200.1.For this purpose,an indi- forward adjustment(over-or under-recovery)
rect (F&A) cost rate should be determined from the prior period, to the forecast dis-
for each of the separate indirect (F&A) cost tribution base. Unrecovered amounts under
pools developed pursuant to subsection 1. lump-sum agreements or cost-sharing provi-
The rate in each case should be stated as the sions of prior years must not be carried for-
percentage which the amount of the par- ward for consideration in the new rate nego-
ticular indirect (F&A) cost pool is of the tiation. There must, however, be an advance
modified total direct costs identified with understanding in each case between the in-
such pool. stitution and the cognizant agency for indi-
3.Negotiated Lump Sum for Indirect(F&A) rect costs as to whether these differences
Costs will be considered in the rate negotiation
rather than making the determination after
A negotiated fixed amount in lieu of indi- the differences are known. Further, institu-
rect(F&A)costs may be appropriate for self- tions electing to use this carry-forward pro-
contained, off-campus, or primarily subcon- vision may not subsequently change without
tracted activities where the benefits derived prior approval of the cognizant agency for
from an institution's indirect(F&A)services indirect costs. In the event that an institu-
cannot be readily determined. Such nego- tion returns to a post-determined rate, any
226
OMB Guidance Pt.200,App. III
over-or under-recovery during the period in 8.Limitation on Reimbursement of
which negotiated fixed rates and carry-for- Administrative Costs
ward provisions were followed will be in-
cluded in the subsequent a. Notwithstanding the provisions of oats
q post-determined section C.l.a, the administrative costs
rates. Where multiple rates are used, the charged to Federal awards awarded or
same procedure will be applicable for deter- amended (including continuation and re-
mining each rate. newal awards)with effective dates beginning
on or after the start of the institution's first
6.Provisional and Final Rates for Indirect fiscal year which begins on or after October
(F&A)Costs 1, 1991, must be limited to 26% of modified
Where the cognizant agency for indirect total direct costs(as defined in subsection 2)
costs determines that cost experience and for the total of General Administration and
other pertinent facts do not justify the use General Expenses, Departmental Adminis-
tration, Sponsored Projects Administration,
of predetermined rates, or a fixed rate with and Student Administration and Services
a carry-forward, or if the parties cannot (including their allocable share of deprecia-
agree on an equitable rate,a provisional rate tion, interest costs, operation and mainte-
must be established. To prevent substantial nance expenses, and fringe benefits costs, as
overpayment or underpayment, the provi- provided by Section B,and all other types of
sional rate may be adjusted by the cognizant expenditures not listed specifically under
agency for indirect costs during the institu- one of the subcategories of facilities in Sec-
tion's fiscal year. Predetermined or fixed tion B.
rates may replace provisional rates at any b. Institutions should not change their ac-
time prior to the close of the institution's counting or cost allocation methods if the ef-
fiscal year. If a provisional rate is not re- feet is to change the charging of a particular
placed by a predetermined or fixed rate prior type of cost from F&A to direct,or to reclas-
to the end of the institution's fiscal year, a sify costs, or increase allocations from the
final rate will be established and upward or administrative pools identified in paragraph
downward adjustments will be made based on B.1 of this Appendix to the other F&A cost
the actual allowable costs incurred for the pools or fringe benefits. Cognizant agencies
period involved. for indirect cost are authorized to allow
changes where an institution's charging
7.Fixed Rates for the Life of the Sponsored practices are at variance with acceptable
Agreement practices followed by a substantial majority
of other institutions.
a. Except as provided in paragraph(c)(1)of
§200.414,Federal agencies must use the nego- 9.Alternative Method for Administrative Costs
tiated rates in effect at the time of the ini- a. Notwithstanding the provisions of sub-
tial award throughout the life of the Federal section C.1.a, an institution may elect to
award. Award levels for Federal awards may claim a fixed allowance for the "Adminis-
not be adjusted in future years as a result of tration"portion of indirect(F&A)costs.The
changes in negotiated rates. "Negotiated allowance could be either 24% of modified
rates" per the rate agreement include final, total direct costs or a percentage equal to
fixed, and predetermined rates and exclude 95% of the most recently negotiated fixed or
provisional rates. "Life" for the purpose of predetermined rate for the cost pools in-
this subsection means each competitive seg- eluded under"Administration" as defined in
ment of a project. A competitive segment is Section B.1,whichever is less. Under this al-
a period of years approved by the Federal ternative, no cost proposal need be prepared
awarding agency at the time of the Federal for the "Administration"portion of the indi-
award. If negotiated rate agreements do not rect(F&A)cost rate nor is further identifica-
extend through the life of the Federal award tion or documentation of these costs re-
at the time of the initial award,then the ne- quired(see subsection c).Where a negotiated
gotiated rate for the last year of the Federal indirect (F&A) cost agreement includes this
award must be extended through the end of alternative, an institution must make no
the life of the Federal award. further charges for the expenditure cat-
egories described in Section B.5, Section B.6,
b. Except as provided in §200.414, when an Section B.7,and Section B.9.
educational institution does not have a nego- b. In negotiations of rates for subsequent
tiated rate with the Federal Government at periods, an institution that has elected the
the time of an award (because the edu- option of subsection a may continue to exer-
cational institution is a new recipient or the cise it at the same rate without further iden-
parties cannot reach agreement on a rate), tification or documentation of costs.
the provisional rate used at the time of the c. If an institution elects to accept a
award must be adjusted once a rate is nego- threshold rate as defined in subsection a of
tiated and approved by the cognizant agency this section, it is not required to perform a
for indirect costs. detailed analysis of its administrative costs.
227
Pt. 200, App. III 2 CFR Ch. II (1-1-21 Edition)
However, in order to compute the facilities d. Resolving questioned costs. The cog-
components of its indirect (F&A) cost rate, nizant agency for indirect costs must con-
the institution must reconcile its indirect duct any necessary negotiations with an edu-
(F&A) cost proposal to its financial state- cational institution regarding amounts ques-
ments and make appropriate adjustments tioned by audit that are due the Federal
and reclassifications to identify the costs of Government related to costs covered by a ne-
each major function as defined in Section gotiated agreement.
A.1,as well as to identify and allocate the fa- e. Reimbursement.Reimbursement to cog-
cilities components. Administrative costs nizant agencies for indirect costs for work
that are not identified as such by the insti- performed under this Part may be made by
tution's accounting system(such as those in- reimbursement billing under the Economy
curred in academic departments) will be Act,31 U.S.C.1535.
classified as instructional costs for purposes f. Procedure for establishing facilities and
of reconciling indirect (F&A) cost proposals administrative rates must be established by
to financial statements and allocating facili- one of the following methods:
ties costs. (1) Formal negotiation. The cognizant
agency for indirect costs is responsible for
10.Individual Rate Components negotiating and approving rates for an edu-
In order to provide mutually agreed-upon cational institution on behalf of all Federal
information for management purposes, each agencies. Federal awarding agencies that do
indirect (F&A) cost rate negotiation or de- not have cognizance for indirect costs must
termination must include development of a notify the cognizant agency for indirect
rate for each indirect(F&A)cost pool as well costs of specific concerns(i.e., a need to es-
as the overall indirect(F&A)cost rate. tablish special cost rates)which could affect
the negotiation process.The cognizant agen-
11.Negotiation and Approval of Indirect(F&A) cy for indirect costs must address the con-
Rate cerns of all interested agencies, as appro-
priate. A pre-negotiation conference may be
a. Cognizant agency for indirect costs is scheduled among all interested agencies, if
defined in Subpart A. necessary.The cognizant agency for indirect
(1) Cost negotiation cognizance is assigned costs must then arrange a negotiation con-
to the Department of Health and Human ference with the educational institution.
Services (HHS) or the Department of De- (2)Other than formal negotiation.The cog-
fense's Office of Naval Research (DOD),nor- nizant agency for indirect costs and edu-
mally depending on which of the two agen- cational institution may reach an agreement
cies (HHS or DOD) provides more funds di- on rates without a formal negotiation con-
rectly to the educational institution for the ference; for example, through correspond-
most recent three years. Information on ence or use of the simplified method de-
funding must be derived from relevant data scribed in this section D of this Appendix.
gathered by the National Science Founda- g. Formalizing determinations and agree-
tion. In cases where neither HHS nor DOD ments. The cognizant agency for indirect
provides Federal funding directly to an edu- costs must formalize all determinations or
cational institution, the cognizant agency agreements reached with an educational in-
for indirect costs assignment must default to stitution and provide copies to other agen-
HHS. Notwithstanding the method for cog- cies having an interest. Determinations
nizance determination described in this sec- should include a description of any adjust-
tion, other arrangements for cognizance of a ments, the actual amount, both dollar and
particular educational institution may also percentage adjusted,and the reason for mak-
be based in part on the types of research per- ing adjustments.
formed at the educational institution and h. Disputes and disagreements. Where the
must be decided based on mutual agreement cognizant agency for indirect costs is unable
between HHS and DOD.Where a non-Federal to reach agreement with an educational in-
entity only receives funds as a subrecipient, stitution with regard to rates or audit reso-
see§200.332. lution, the appeal system of the cognizant
(2)After cognizance is established, it must agency for indirect costs must be followed
continue for a five-year period. for resolution of the disagreement.
b.Acceptance of rates.See§200.414. 12.Standard Format for Submission
c. Correcting deficiencies. The cognizant
agency for indirect costs must negotiate For facilities and administrative (indirect
changes needed to correct systems defi- (F&A)) rate proposals, educational institu-
ciencies relating to accountability for Fed- tions must use the standard format, shown
eral awards. Cognizant agencies for indirect in section E of this appendix,to submit their
costs must address the concerns of other af- indirect (F&A) rate proposal to the cog-
fected agencies,as appropriate, and must ne- nizant agency for indirect costs. The cog-
gotiate special rates for Federal agencies nizant agency for indirect costs may, on an
that are required to limit recovery of indi- institution-by-institution basis,grant excep-
rect costs by statute. tions from all or portions of Part II of the
228
OMB Guidance Pt.200,App. III
standard format requirement. This require- ries and wages included in the indirect(F&A)
ment does not apply to educational institu- cost pool must be separately identified.
tions that use the simplified method for cal- c. Establish a salary and wage distribution
culating indirect(F&A)rates,as described in base,determined by deducting from the total
Section D of this Appendix. of salaries and wages as established in sub-
As provided in section 0.10 of this appen- section a from the amount of salaries and
dix,each F&A cost rate negotiation or deter- wages included under subsection b.
mination must include development of a rate d. Establish the indirect (F&A) cost rate,
for each F&A cost pool as well as the overall determined by dividing the amount in the in-
F&A rate, direct (F&A) cost pool, subsection b, by the
amount of the distribution base, subsection
D.SIMPLIFIED METHOD FOR SMALL
INSTITUTIONS e.Apply the indirect(F&A)cost rate to di-
1.General rect salaries and wages for individual agree-
ments to determine the amount of indirect
a. Where the total direct cost of work cov- (F&A)costs allocable to such agreements.
ered by this Part at an institution does not
exceed$10 million in a fiscal year, the sim- 3.Simplified Procedure—Modified Total Direct
plified procedure described in subsections 2 Cost Base
or 3 may be used in determining allowable a.Establish the total costs incurred by the
indirect (F&A) costs. Under this simplified institution for the base period.
procedure, the institution's most recent an- b. Establish an indirect (F&A) cost pool
nual financial report and immediately avail-
consisting of the expenditures (exclusive
exclusive of
able supporting information must be utilized capital items and other costs specifically
as a basis for determining the indirect(F&A) identified as unallowable)which customarily
cost rate applicable to all Federal awards. are classified under the following titles or
The institution may use either the salaries their equivalents:
and wages (see subsection 2) or modified
total direct costs (see subsection 3) as the (1) General administration and general ex-
distribution basis. penses(exclusive of costs of student adminis-
b. The simplified procedure should not be tration and services, student activities, stu-
used where it produces results which appear dent aid,and scholarships).
inequitable to the Federal Government or (2) Operation and maintenance of physical
the institution. In any such case, indirect plant and depreciation(after appropriate ad-
(F&A) costs should be determined through justment for costs applicable to other insti-
use of the regular procedure. tutional activities).
(3)Library.
2.Simplified Procedure—Salaries and Wages (4) Department administration expenses,
Base which will be computed as 20 percent of the
a. Establish the total amount of salaries salaries and expenses of deans and heads of
and wages paid to all employees of the insti- departments. In those cases where expendi-
tution. tures classified under subsection (1) have
b. Establish an indirect (F&A) cost pool previously been allocated to other institu-
consisting of the expenditures (exclusive of tional activities,they may be included in the
capital items and other costs specifically indirect(F&A)cost pool. The modified total
identified as unallowable)which customarily direct costs amount included in the indirect
are classified under the following titles or (F&A) cost pool must be separately identi-
their equivalents: fied.
(1) General administration and general ex- c. Establish a modified total direct cost
penses(exclusive of costs of student adminis- distribution base, as defined in Section C.2,
tration and services, student activities, stu- The distribution basis, that consists of all
dent aid,and scholarships). institution's direct functions.
(2) Operation and maintenance of physical d. Establish the indirect (F&A) cost rate,
plant and depreciation(after appropriate ad- determined by dividing the amount in the in-
justment for costs applicable to other insti- direct (F&A) cost pool, subsection b, by the
tutional activities). amount of the distribution base, subsection
(3)Library. c.
(4) Department administration expenses, e. Apply the indirect (F&A) cost rate to
which will be computed as 20 percent of the the modified total direct costs for individual
salaries and expenses of deans and heads of agreements to determine the amount of indi-
departments. rect (F&A) costs allocable to such agree-
In those cases where expenditures classi- ments.
fied under subsection (1) have previously E.DOCUMENTATION REQUIREMENTS
been allocated to other institutional activi-
ties, they may be included in the indirect The standard format for documentation re-
(F&A) cost pool. The total amount of sala- quirements for indirect(indirect(F&A))rate
229
Pt. 200, App. IV 2 CFR Ch. II (1-1-21 Edition)
proposals for claiming costs under the reg- Certificate of Indirect(F&A)Costs
ular method is available on the OMB This is to certify that to the best of my
website. knowledge and belief:
F.CERTIFICATION (1)I have reviewed the indirect(F&A)cost
proposal submitted herewith;
1.Certification of Charges (2)All costs included in this proposal[iden-
tifyTo assure that expenditures for Federal date] to establish billing or final indi-
awards are proper and in accordance with rectcovered(F by costs ratallowablee foa [identify period
the agreement documents and approved with requirements ratr] are fthe in accordancelagree-
project budgets, the annual and/or final fis- men the of Federal cal reports or vouchers requesting payment cost principless) to which they apply and with the
agree-
under the agreements will include a certifi- cost applicable to those cation, signed by an authorized official of menu.
the university,which reads "By signing this (3)iThis proposal dole not include any E costs
of
report,I certify to the best of my knowledge which are suchunaas(withoutw under subpartlimitation): E is
and belief that the report is true, complete, this part , osand oPublic
ons,
and accurate,and the expenditures,disburse- relationsntericosts, contributions fines ns and penalties,lob-
ments and cash receipts are for the purposes entertainment costs,fines and ob-
bying costs, and defense of fraud pro-
and intent set forth in the award documents. ceedings;and
I am aware that any false, fictitious, or (4) All costs included in this proposal are
fraudulent information, or the omission of properly allocable to Federal agreements on
any material fact, may subject me to crimi- the basis of a beneficial or causal relation-
nal, civil or administrative penalties for ship between the expenses incurred and the
fraud, false statements, false claims or oth- agreements to which they are allocated in
erwise. (U.S. Code, Title 18, Section 1001 and accordance with applicable requirements.
Title 31,Sections 3729-3733 and 3801-3812)". I declare that the foregoing is true and cor-
2.Certification of Indirect(F&A)Costs rect.
Institution of Higher Education:
a. Policy. Cognizant agencies must not ac- Signature:
cept a proposed indirect cost rate unless Signature:
such costs have been certified by the edu- Name of Official:
cational institution using the Certificate of Title:
indirect (F&A) Costs set forth in subsection Date of Execution:
F.2.c [78 FR 78608, Dec. 26, 2013, as amended at 79
b. The certificate must be signed on behalf FR 75888, Dec. 19, 2014; 80 FR 54409, Sept. 10,
of the institution by the chief financial offi- 2015;85 FR 49577,Aug.13,2020]
cer or an individual designated by an indi-
vidual at a level no lower than vice president APPENDIX IV TO PART 200—INDIRECT
or chief financial officer.
An indirect(F&A)cost rate is not binding COSTS IDENTIFICATION AND
ASSIGNMENT, AND RATE DETERMINA-
upon the Federal Government if the most re- TION FOR NONPROFIT ORGANIZA-
cent required proposal from the institution TIONS
has not been certified. Where it is necessary
to establish indirect (F&A) cost rates, and A.GENERAL
the institution has not submitted a certified
proposal for establishing such rates in ac- 1. Indirect costs are those that have been
cordance with the requirements of this sec- incurred for common or joint objectives and
tion, the Federal Government must unilater- cannot be readily identified with a par-
ally establish such rates. Such rates may be ticular final cost objective. Direct cost of
based upon audited historical data or such minor amounts may be treated as indirect
other data that have been furnished to the costs under the conditions described in
cognizant agency for indirect costs and for §200.413(d). After direct costs have been de-
which it can be demonstrated that all unal- termined and assigned directly to awards or
lowable costs have been excluded.When indi- other work as appropriate, indirect costs are
rect(F&A) cost rates are unilaterally estab- those remaining to be allocated to benefit-
lished by the Federal Government because of ting cost objectives. A cost may not be allo-
failure of the institution to submit a cer- cated to a Federal award as an indirect cost
tified proposal for establishing such rates in if any other cost incurred for the same pur-
accordance with this section, the rates es- pose, in like circumstances, has been es-
tablished will be set at a level low enough to signed to a Federal award as a direct cost.
ensure that potentially unallowable costs 2. "Major nonprofit organizations" are de-
will not be reimbursed. fined in paragraph (a) of §200.414. See Indi-
c. Certificate. The certificate required by rect cost rate reporting requirements in sec-
this section must be in the following form: tions B.2.e and B.3.g of this Appendix.
230
OMB Guidance Pt. 200, App. IV
B.ALLOCATION OF INDIRECT COSTS AND used where the level of Federal awards to an
DETERMINATION OF INDIRECT COST RATES organization is relatively small.
b. Both the direct costs and the indirect
1.General costs must exclude capital expenditures and
a. If a nonprofit organization has only one unallowable costs. However, unallowable
major function, or where all its major func- costs which representitactivitiessnd must o diin-
tions benefit from its indirect costs to ap- eluded inthe direct costs under the condi-
tions described in§200.413(e).
proximately the same degree, the allocation c. The distribution base may be total di-
of indirect costs and the computation of an rect costs (excluding capital expenditures
indirect cost rate may be accomplished
sub-
through simplified allocation and other distorting,000r items, such as s
p procedures, as awards for $25,000 or more), direct salaries
described in section B.2 of this Appendix. and wages,or other base which results in an
b. If an organization has several major equitable distribution. The distribution base
functions which benefit from its indirect must exclude participant support costs as de-
costs in varying degrees, allocation of indi- fined in§200.1.
rect costs may require the accumulation of d. Except where a special rate(s) is re-
such costs into separate cost groupings quired in accordance with section B.5 of this
which then are allocated individually to ben- Appendix, the indirect cost rate developed
efitting functions by means of a base which under the above principles is applicable to
best measures the relative degree of benefit. all Federal awards of the organization. If a
The indirect costs allocated to each function special rate(s)is required, appropriate modi-
are then distributed to individual Federal fications must be made in order to develop
awards and other activities included in that the special rate(s).
function by means of an indirect cost rate(s). e. For an organization that receives more
c. The determination of what constitutes than$10 million in direct Federal funding in
an organization's major functions will de- a fiscal year, a breakout of the indirect cost
pend on its purpose in being; the types of component into two broad categories,Facili-
services it renders to the public, its clients, ties and Administration as defined in para-
and its members;and the amount of effort it graph (a)of§200.414, is required. The rate in
devotes to such activities as fundraising, each case must be stated as the percentage
public information and membership activi- which the amount of the particular indirect
ties. cost category (i.e., Facilities or Administra-
d. Specific methods for allocating indirect tion) is of the distribution base identified
costs and computing indirect cost rates with that category.
along with the conditions under which each 3.Multiple Allocation Base Method
method should be used are described in sec-
tion B.2 through B.5 of this Appendix. a. General. Where an organization's indi-
e. The base period for the allocation of in- rect costs benefit its major functions in
direct costs is the period in which such costs varying degrees,indirect costs must be accu-
are incurred and accumulated for allocation mulated into separate cost groupings, as de-
to work performed in that period. The base scribed in subparagraph b. Each grouping
period normally should coincide with the or- must then be allocated individually to bene-
ganization's fiscal year but, in any event, fitting functions by means of a base which
must be so selected as to avoid inequities in best measures the relative benefits. The de-
the allocation of the costs. fault allocation bases by cost pool are de-
scribed in section B.3.c of this Appendix.
2.Simplified Allocation Method b. Identification of indirect costs. Cost
groupings must be established so as to per-
a. Where an organization's major functions mit the allocation of each grouping on the
benefit from its indirect costs to approxi- basis of benefits provided to the major func-
mately the same degree,the allocation of in- tions. Each grouping must constitute a pool
direct costs may be accomplished by(i)sepa- of expenses that are of like character in
rating the organization's total costs for the terms of functions they benefit and in terms
base period as either direct or indirect, and of the allocation base which best measures
(ii) dividing the total allowable indirect the relative benefits provided to each func-
costs (net of applicable credits) by an equi- tion.The groupings are classified within the
table distribution base. The result of this two broad categories: "Facilities" and "Ad-
process is an indirect cost rate which is used ministration," as described in section A.3 of
to distribute indirect costs to individual this Appendix.The indirect cost pools are de-
Federal awards.The rate should be expressed fined as follows:
as the percentage which the total amount of (1) Depreciation. The expenses under this
allowable indirect costs bears to the base se- heading are the portion of the costs of the
lected. This method should also be used organization's buildings, capital improve-
where an organization has only one major ments to land and buildings, and equipment
function encompassing a number of indi- which are computed in accordance with
vidual projects or activities, and may be §200.436.
231
Pt. 200, App. IV 2 CFR Ch. II (1-1-21 Edition)
(2) Interest. Interest on debt associated in accordance with benefits derived; a trace-
with certain buildings, equipment and cap- able cause and effect relationship; or logic
ital improvements are computed in accord- and reason, where neither the cause nor the
ance with§200.449. effect of the relationship is determinable.
(3) Operation and maintenance expenses. When an allocation can be made by assign-
The expenses under this heading are those ment of a cost grouping directly to the func-
that have been incurred for the administra- tion benefitted,the allocation must be made
tion, operation, maintenance, preservation, in that manner.When the expenses in a cost
and protection of the organization's physical grouping are more general in nature, the al-
plant. They include expenses normally in- location must be made through the use of a
curred for such items as: janitorial and util- selected base which produces results that are
ity services; repairs and ordinary or normal equitable to both the Federal Government
alterations of buildings,furniture and equip- and the organization. The distribution must
ment; care of grounds; maintenance and op- be made in accordance with the bases de-
eration of buildings and other plant facili- scribed herein unless it can be demonstrated
ties; security; earthquake and disaster pre- that the use of a different base would result
paredness; environmental safety; hazardous in a more equitable allocation of the costs,
waste disposal; property, liability and other or that a more readily available base would
insurance relating to property; space and not increase the costs charged to Federal
capital leasing; facility planning and man- awards. The results of special cost studies
agement; and central receiving. The oper- (such as an engineering utility study) must
ation and maintenance expenses category not be used to determine and allocate the in-
must also include its allocable share of direct costs to Federal awards.
fringe benefit costs, depreciation, and inter- (1) Depreciation. Depreciation expenses
est costs. must be allocated in the following manner:
(4) General administration and general ex- (a) Depreciation on buildings used exclu-
penses. The expenses under this heading are sively in the conduct of a single function,
those that have been incurred for the overall and on capital improvements and equipment
general executive and administrative offices used in such buildings, must be assigned to
of the organization and other expenses of a that function.
general nature which do not relate solely to (b)Depreciation on buildings used for more
any major function of the organization. This than one function, and on capital improve-
category must also include its allocable ments and equipment used in such buildings,
share of fringe benefit costs, operation and must be allocated to the individual functions
maintenance expense, depreciation, and in- performed in each building on the basis of
terest costs. Examples of this category in- usable square feet of space, excluding corn-
elude central offices, such as the director's mon areas, such as hallways, stairwells, and
office, the office of finance, business serv- restrooms.
ices, budget and planning, personnel, safety (c) Depreciation on buildings, capital im-
and risk management,general counsel,man- provements and equipment related space
agement information systems, and library (e.g., individual rooms, and laboratories)
costs. used jointly by more than one function (as
In developing this cost pool, special care determined by the users of the space) must
should be exercised to ensure that costs in- be treated as follows. The cost of each joint-
curred for the same purpose in like cir- ly used unit of space must be allocated to
cumstances are treated consistently as ei- the benefitting functions on the basis of:
ther direct or indirect costs. For example, (i)the employees and other users on a full-
salaries of technical staff, project supplies, time equivalent (FTE) basis or salaries and
project publication, telephone toll charges, wages of those individual functions benefit-
computer costs, travel costs, and specialized ting from the use of that space;or
services costs must be treated as direct costs (ii) organization-wide employee FTEs or
wherever identifiable to a particular pro- salaries and wages applicable to the benefit-
gram.The salaries and wages of administra- ting functions of the organization.
tive and pooled clerical staff should nor- (d) Depreciation on certain capital im-
mally be treated as indirect costs. Direct provements to land, such as paved parking
charging of these costs may be appropriate areas,fences,sidewalks,and the like,not in-
as described in §200.413. Items such as office eluded in the cost of buildings,must be allo-
supplies,postage,local telephone costs,peri- cated to user categories on a FTE basis and
odicals and memberships should normally be distributed to major functions in proportion
treated as indirect costs. to the salaries and wages of all employees
c. Allocation bases. Actual conditions applicable to the functions.
must be taken into account in selecting the (2) Interest. Interest costs must be allo-
base to be used in allocating the expenses in cated in the same manner as the deprecia-
each grouping to benefitting functions. The tion on the buildings, equipment and capital
essential consideration in selecting a method equipment to which the interest relates.
or a base is that it is the one best suited for (3) Operation and maintenance expenses.
assigning the pool of costs to cost objectives Operation and maintenance expenses must
232
OMB Guidance Pt.200, App. IV
be allocated in the same manner as the de- egories: "Facilities" and "Administration,"
predation. as described in§200.414(a).
(4) General administration and general ex-
penses. General administration and general 4.Direct Allocation Method
expenses must be allocated to benefitting a. Some nonprofit organizations treat all
functions based on modified total costs costs as direct costs except general adminis-
(MTC).The MTC is the modified total direct tration and general expenses. These organi-
costs(MTDC),as described in§200.1,plus the zations generally separate their costs into
allocated indirect cost proportion. The ex- three basic categories: (i) General adminis-
penses included in this category could be tration and general expenses, (ii) fund-
grouped first according to major functions of raising, and (iii) other direct functions (in-
the organization to which they render serv- cluding projects performed under Federal
ices or provide benefits. The aggregate ex- awards). Joint costs, such as depreciation,
penses of each group must then be allocated rental costs, operation and maintenance of
to benefitting functions based on MTC. facilities, telephone expenses, and the like
d.Order of distribution. are prorated individually as direct costs to
(1) Indirect cost categories consisting of each category and to each Federal award or
depreciation,interest,operation and mainte- other activity using a base most appropriate
nance, and general administration and gen- to the particular cost being prorated.
eral expenses must be allocated in that order b.This method is acceptable,provided each
to the remaining indirect cost categories as joint cost is prorated using a base which ac-
well as to the major functions of the organi- curately measures the benefits provided to
zation. Other cost categories should be allo- each Federal award or other activity. The
cated in the order determined to be most ap- bases must be established in accordance with
propriate by the organization. This order of reasonable criteria and be supported by cur-
allocation does not apply if cross allocation rent data. This method is compatible with
of costs is made as provided in section B.3.d.2 the Standards of Accounting and Financial
of this Appendix. Reporting for Voluntary Health and Welfare
(2)Normally,an indirect cost category will Organizations issued jointly by the National
be considered closed once it has been allo- Health Council, Inc., the National Assembly
cated to other cost objectives, and costs of Voluntary Health and Social Welfare Or-
must not be subsequently allocated to it. ganizations,and the United Way of America.
However,a cross allocation of costs between c. Under this method, indirect costs con-
two or more indirect costs categories could sist exclusively of general administration
be used if such allocation will result in a and general expenses. In all other respects,
more equitable allocation of costs. If a cross the organization's indirect cost rates must
allocation is used, an appropriate modifica- be computed in the same manner as that de-
tion to the composition of the indirect cost scribed in section B.2 of this Appendix.
categories is required.
e. Application of indirect cost rate or 5.Special Indirect Cost Rates
rates. Except where a special indirect cost In some instances, a single indirect cost
rate(s)is required in accordance with section rate for all activities of an organization or
B.5 of this Appendix, the separate groupings for each major function of the organization
of indirect costs allocated to each major may not be appropriate, since it would not
function must be aggregated and treated as a take into account those different factors
common pool for that function.The costs in which may substantially affect the indirect
the common pool must then be distributed to costs applicable to a particular segment of
individual Federal awards included in that work. For this purpose,a particular segment
function by use of a single indirect cost rate. of work may be that performed under a sin-
f. Distribution basis. Indirect costs must gle Federal award or it may consist of work
be distributed to applicable Federal awards under a group of Federal awards performed
and other benefitting activities within each in a common environment. These factors
major function on the basis of MTDC (see may include the physical location of the
definition in§200.1). work, the level of administrative support re-
g. Individual Rate Components. An indi- quired, the nature of the facilities or other
rect cost rate must be determined for each resources employed,the scientific disciplines
separate indirect cost pool developed. The or technical skills involved, the organiza-
rate in each case must be stated as the per- tional arrangements used, or any combina-
centage which the amount of the particular tion thereof. When a particular segment of
indirect cost pool is of the distribution base work is performed in an environment which
identified with that pool. Each indirect cost appears to generate a significantly different
rate negotiation or determination agreement level of indirect costs, provisions should be
must include development of the rate for made for a separate indirect cost pool appli-
each indirect cost pool as well as the overall cable to such work. The separate indirect
indirect cost rate. The indirect cost pools cost pool should be developed during the
must be classified within two broad cat- course of the regular allocation process, and
233
Pt. 200, App. IV 2 CFR Ch. II (1-1-21 Edition)
the separate indirect cost rate resulting rates.Once an agency is assigned cognizance
therefrom should be used, provided it is de- for a particular nonprofit organization, the
termined that (i) the rate differs signifi- assignment will not be changed unless there
cantly from that which would have been ob- is a shift in the dollar volume of the Federal
tained under sections B.2,B.3,and B.4 of this awards directly funded to the organization
Appendix, and (ii) the volume of work to for at least three years. All concerned Fed-
which the rate would apply is material. eral agencies must be given the op
portunity
C.NEGOTIATION AND APPROVAL OF INDIRECT to participate in the negotiation process but,
COST RATES after a rate has been agreed upon, it will be
accepted by all Federal agencies. When a
I.Definitions Federal agency has reason to believe that
special operating factors affecting its Fed-
As used in this section,the following terms eral awards necessitate special indirect cost
have the meanings set forth in this section: rates in accordance with section B.5 of this
a. Cognizant agency for indirect costs means Appendix, it will,prior to the time the rates
the Federal agency responsible for negoti- are negotiated, notify the cognizant agency
ating and approving indirect cost rates for a for indirect costs. (See also §200.414.) If the
nonprofit organization on behalf of all Fed- nonprofit does not receive any funding from
eral agencies. any Federal agency, the pass-through entity
b.Predetermined rate means an indirect cost is responsible for the negotiation of the indi-
rate, applicable to a specified current or fu- rect cost rates in accordance with
ture period, usually the organization's fiscal §200.332(a)(4).
year.The rate is based on an estimate of the b. Except as otherwise
costs to be incurred during the period.A pre- p provided in
determined rate is not subject to adjust- §200.414(f), a nonprofit a it organization which
ment. has not previously established an indirect
c. Fixed rate means an indirect cost rate cost rate with a Federal agency must submit
its initial indirect cost proposal immediately
which has the same characteristics as a pre- after the organization is advised that a Fed-
determined rate, except that the difference eral award will be made and, in no event,
between the estimated costs and the actual later than three months after the effective
costs of the period covered by the rate is car- date of the Federal award.
ried forward as an adjustment to the rate c.Unless approved by the cognizant agency
computation of a subsequent period.
d. Final rate means an indirect cost rate for indirect costs in accordance with
applicable to a specified past period which is §200.414(g), organizations that have pre-
based on the actual costs of the period. A viously established indirect cost rates must
final rate is not subject to adjustment. submit a new indirect cost proposal to the
e. Provisional rate or billing rate means a cognizant agency for indirect costs within
temporary indirect cost rate applicable to a six months after the close of each fiscal year.
specified period which is used for funding,in- d.A predetermined rate may be negotiated
terim reimbursement, and reporting indirect for use on Federal awards where there is rea-
costs on Federal awards pending the estab- sonable assurance, based on past experience
lishment of a final rate for the period. and reliable projection of the organization's
f. Indirect cost proposal means the docu- costs, that the rate is not likely to exceed a
mentation prepared by an organization to rate based on the organization's actual costs.
substantiate its claim for the reimbursement e. Fixed rates may be negotiated where
of indirect costs. This proposal provides the predetermined rates are not considered ap-
basis for the review and negotiation leading propriate.A fixed rate,however,must not be
to the establishment of an organization's in- negotiated if(i) all or a substantial portion
direct cost rate. of the organization's Federal awards are ex-
g. Cost objective means a function,organiza- pected to expire before the carry-forward ad-
tional subdivision, contract, Federal award, justment can be made;(ii)the mix of Federal
or other work unit for which cost data are and non-Federal work at the organization is
desired and for which provision is made to too erratic to permit an equitable carry-for-
accumulate and measure the cost of proc- ward adjustment; or (iii) the organization's
esses, projects,jobs and capitalized projects. operations fluctuate significantly from year
to year.
2.Negotiation and Approval of Rates f.Provisional and final rates must be nego-
a. Unless different arrangements are tiated where neither predetermined nor fixed
agreed to by the Federal agencies concerned, rates are appropriate. Predetermined or
the Federal agency with the largest dollar fixed rates may replace provisional rates at
value of Federal awards directly funded to an any time prior to the close of the organiza-
organization will be designated as the cog- tion's fiscal year. If that event does not
nizant agency for indirect costs for the nego- occur,a final rate will be established and up-
tiation and approval of the indirect cost ward or downward adjustments will be made
rates and, where necessary, other rates such based on the actual allowable costs incurred
as fringe benefit and computer charge-out for the period involved.
234
OMB Guidance Pt. 200, App. V
g. The results of each negotiation must be Date of Execution:
formalized in a written agreement between [78 FR 78608, Dec. 26, 2013, as amended at 80
the cognizant agency for indirect costs and FR 54410, Sept. 10, 2015;85 FR 49579, Aug. 13,
the nonprofit organization. The cognizant 2020]
agency for indirect costs must make avail-
able copies of the agreement to all concerned APPENDIX V TO PART 200—STATE/LOCAL
Federal agencies. GOVERNMENTWIDE CENTRAL SERVICE
h.If a dispute arises in a negotiation of an COST ALLOCATION PLANS
indirect cost rate between the cognizant
agency for indirect costs and the nonprofit A.GENERAL
organization,the dispute must be resolved in
accordance with the appeals procedures of 1.Most governmental units provide certain
the cognizant agency for indirect costs. services, such as motor pools,computer cen-
i.To the extent that problems are encoun- ters, purchasing, accounting, etc., to oper-
tered among the Federal agencies in connec- ating agencies on a centralized basis. Since
tion with the negotiation and approval proc- federally-supported awards are performed
ess, OMB will lend assistance as required to within the individual operating agencies,
resolve such problems in a timely manner, there needs to be a process whereby these
central service costs can be identified and
D.Certification of Indirect(F&A)Costs assigned to benefitted activities on a reason-
(1) Required Certification. No proposal to able and consistent basis.The central service
establish indirect (F&A) cost rates must be cost allocation plan provides that process.
acceptable unless such costs have been cer- All costs and other data used to distribute
tified by the nonprofit organization using the costs included in the plan should be sup-
the Certificate of Indirect (F&A) Costs set ported by formal accounting and other
forth in section j. of this appendix. The cer- records that will support the propriety of the
tificate must be signed on behalf of the orga- costs assigned to Federal awards.
nization by an individual at a level no lower 2. Guidelines and illustrations of central
than vice president or chief financial officer service cost allocation plans are provided in
for the organization, a brochure published by the Department of
(2) Each indirect cost rate proposal must Health and Human Services entitled "A
be accompanied by a certification in the fol- Guide for State, Local and Indian Tribal Gov-
lowing form: ernments: Cost Principles and Procedures for
Developing Cost Allocation Plans and Indirect
Certificate of Indirect(F&A)Costs Cost Rates for Agreements with the Federal
This is to certify that to the best of my Government."A copy of this brochure may be
knowledge and belief: obtained from the HHS Cost Allocation Serv-
(1)I have reviewed the indirect(F&A)cost
ices or at their website.
proposal submitted herewith; B.DEFINITIONS
(2)All costs included in this proposal[iden-
tifydate] to establish billing or final indi-
rect (F&A) costs rate for [identify period ganizational unit or sub-division within a
covered by rate] are allowable in accordance governmental unit that is responsible for the
with the requirements of the Federal awards performance or administration of Federal
to which they apply and with subpart E of awards or activities of the governmental
this part. unit.
(3)This proposal does not include any costs 2. Allocated central services means central
which are unallowable under subpart E of services that benefit operating agencies but
this part such as(without limitation):Public are not billed to the agencies on a fee-for-
relations costs, contributions and donations, service or similar basis.These costs are allo-
entertainment costs,fines and penalties,lob- cated to benefitted agencies on some reason-
bying costs, and defense of fraud pro- able basis. Examples of such services might
ceedings;and include general accounting, personnel ad-
(4) All costs included in this proposal are ministration,purchasing,etc.
properly allocable to Federal awards on the 3.Billed central services means central serv-
basis of a beneficial or causal relationship ices that are billed to benefitted agencies or
between the expenses incurred and the Fed- programs on an individual fee-for-service or
eral awards to which they are allocated in similar basis.Typical examples of billed cen-
accordance with applicable requirements. tral services include computer services,
transportation services, insurance, and
I declare that the foregoing is true and cor- fringe benefits.
rect. 4. Cognizant agency g y for indirect costs is de-
Nonprofit Organization: fined in §200.1. The determination of cog-
Signature: nizant agency for indirect costs for states
Name of Official: and local governments is described in section
Title: F.1.
235
Pt. 200, App. V 2 CFR Ch. II (1-1-21 Edition)
5. Major local government means local gov- submitted only once; subsequent plans
ernment that receives more than$100 million should merely indicate any changes since the
in direct Federal awards subject to this Part. last plan.
C.SCOPE OF THE CENTRAL SERVICE COST 1.General
ALLOCATION PLANS All proposed plans must be accompanied by
The central service cost allocation plan the following: an organization chart suffi-
will include all central service costs that ciently detailed to show operations including
will be claimed(either as a billed or an allo- the central service activities of the state/
cated cost)under Federal awards and will be local government whether or not they are
documented as described in section E. omit- shown as benefitting from central service
ted from the plan will not be reimbursed. functions; a copy of the Comprehensive SUBMISSION REQUIREMENTS An-
nual Financial Report(or a copy of the Exec-
D. utive Budget if budgeted costs are being pro-
1. Each state will submit a plan to the De- posed)to support the allowable costs of each
partment of Health and Human Services for central service activity included in the plan;
each year in which it claims central service and, a certification (see subsection 4.) that
costs under Federal awards. The plan should the plan was prepared in accordance with
include(a)a projection of the next year's al- this Part,contains only allowable costs, and
located central service cost (based either on was prepared in a manner that treated simi-
actual costs for the most recently completed lar costs consistently among the various
year or the budget projection for the coming Federal awards and between Federal and
year),and(b)a reconciliation of actual allo- non-Federal awards/activities.
cated central service costs to the estimated 2.Allocated Central Services
costs used for either the most recently com-
pleted year or the year immediately pre- For each allocated central service*, the
ceding the most recently completed year. plan must also include the following: a brief
2. Each major local government is also re- description of the service, an identification
quired to submit a plan to its cognizant of the unit rendering the service and the op-
agency for indirect costs annually. erating agencies receiving the service, the
3. All other local governments claiming items of expense included in the cost of the
central service costs must develop a plan in service, the method used to distribute the
accordance with the requirements described cost of the service to benefitted agencies,
in this Part and maintain the plan and re- and a summary schedule showing the alloca-
lated supporting documentation for audit. tion of each service to the specific benefitted
These local governments are not required to agencies. If any self-insurance funds or
submit their plans for Federal approval un- fringe benefits costs are treated as allocated
less they are specifically requested to do so (rather than billed) central services, docu-
by the cognizant agency for indirect costs. mentation discussed in subsections 3.b. and
Where a local government only receives c.must also be included.
funds as a subrecipient,the pass-through en-
tity will be responsible for monitoring the 3.Billed Services
subrecipient's plan. a. General. The information described in
4. All central service cost allocation plans this section must be provided for all billed
will be prepared and, when required, sub- central services, including internal service
mitted within six months prior to the begin- funds, self-insurance funds, and fringe ben-
ning of each of the governmental unit's fis- efit funds.
cal years in which it proposes to claim cen- b.Internal service funds.
tral service costs. Extensions may be grant- (1) For each internal service fund or Simi-
ed by the cognizant agency for indirect costs lar activity with an operating budget of $5
on a case-by-case basis. million or more, the plan must include: A
E.DOCUMENTATION REQUIREMENTS FOR brief description of each service; a balance
SUBMITTED PLANS sheet for each fund based on individual ac-
counts contained in the governmental unit's
The documentation requirements described accounting system;a revenue/expenses state-
in this section may be modified,expanded,or ment, with revenues broken out by source,
reduced by the cognizant agency for indirect e.g., regular billings, interest earned, etc.; a
costs on a case-by-case basis. For example, listing of all non-operating transfers (as de-
the requirements may be reduced for those fined by GAAP) into and out of the fund; a
central services which have little or no im- description of the procedures (methodology)
pact on Federal awards. Conversely, if a re- used to charge the costs of each service to
view of a plan indicates that certain addi- users, including how billing rates are deter-
tional information is needed, and will likely mined; a schedule of current rates; and, a
be needed in future years, it may be rou- schedule comparing total revenues (includ-
tinely requested in future plan submissions. ing imputed revenues)generated by the serv-
Items marked with an asterisk (*) should be ice to the allowable costs of the service, as
236
OMB Guidance Pt. 200, App. V
determined under this part, with an expla- allowable in accordance with the require-
nation of how variances will be handled. ments of this Part and the Federal award(s)
(2) Revenues must consist of all revenues to which they apply. Unallowable costs have
generated by the service, including unbilled been adjusted for in allocating costs as indi-
and uncollected revenues. If some users were cated in the cost allocation plan.
not billed for the services(or were not billed (2) All costs included in this proposal are
at the full rate for that class of users), a properly allocable to Federal awards on the
schedule showing the full imputed revenues basis of a beneficial or causal relationship
associated with these users must be pro- between the expenses incurred and the Fed-
vided. Expenses must be broken out by ob- eral awards to which they are allocated in
ject cost categories (e.g., salaries, supplies, accordance with applicable requirements.
etc.). Further, the same costs that have been
c. Self-insurance funds. For each self-insur- treated as indirect costs have not been
ance fund, the plan must include: the fund claimed as direct costs. Similar types of
balance sheet; a statement of revenue and costs have been accounted for consistently.
expenses including a summary of billings I declare that the foregoing is true and cor-
and claims paid by agency; a listing of all
non-operating transfers into and out of the rect.
fund; the type(s) of risk(s) covered by the Governmental Unit:
fund (e.g., automobile liability, workers' Signature:
compensation, etc.); an explanation of how Name of Official:
the level of fund contributions are deter- Title:
mined, including a copy of the current actu- Date of Execution:
arial report(with the actuarial assumptions
used) if the contributions are determined on F.NEGOTIATION AND APPROVAL OF CENTRAL
an actuarial basis; and, a description of the SERVICE PLANS
procedures used to charge or allocate fund 1.Federal Cognizant Agency for Indirect Costs
contributions to benefitted activities. Re- Assignments for Cost Negotiation
serve levels in excess of claims(1)submitted
and adjudicated but not paid, (2) submitted In general, unless different arrangements
but not adjudicated,and(3)incurred but not are agreed to by the concerned Federal agen-
submitted must be identified and explained. cies, for central service cost allocation
d. Fringe benefits. For fringe benefit costs, plans, the cognizant agency responsible for
the plan must include:a listing of fringe ben- review and approval is the Federal agency
efits provided to covered employees, and the with the largest dollar value of total Federal
overall annual cost of each type of benefit; awards with a governmental unit. For indi-
current fringe benefit policies; and proce- rect cost rates and departmental indirect
dures used to charge or allocate the costs of cost allocation plans, the cognizant agency
the benefits to benefitted activities. In addi- is the Federal agency with the largest dollar
tion, for pension and post-retirement health value of direct Federal awards with a govern-
insurance plans, the following information mental unit or component, as appropriate.
must be provided: the governmental unit's Once designated as the cognizant agency for
funding policies, e.g., legislative bills, trust indirect costs, the Federal agency must re-
agreements, or state-mandated contribution main so for a period of five years. In addi-
rules, if different from actuarially deter- tion,the following Federal agencies continue
mined rates;the pension plan's costs accrued to be responsible for the indicated govern-
for the year; the amount funded, and date(s) mental entities:
of funding; a copy of the current actuarial Department of Health and Human Services—
report(including the actuarial assumptions); Public assistance and state-wide cost alloca-
the plan trustee's report; and, a schedule tion plans for all states (including the Dis-
from the activity showing the value of the trict of Columbia and Puerto Rico), state
interest cost associated with late funding. and local hospitals, libraries and health dis-
4.Required Certification tricts.
Department of the Interior—Indian tribal
Each central service cost allocation plan governments, territorial governments, and
will be accompanied by a certification in the state and local park and recreational dis-
following form: tricts.
CERTIFICATE OF COST ALLOCATION Department of Labor—State and local labor
PLAN departments.
Department of Education—School districts
This is to certify that I have reviewed the and state and local education agencies.
cost allocation plan submitted herewith and Department of Agriculture—State and local
to the best of my knowledge and belief: agriculture departments.
(1)All costs included in this proposal[iden- Department of Transportation—State and
tify date] to establish cost allocations or bil- local airport and port authorities and transit
lings for[identify period covered by plan]are districts.
237
Pt. 200, App. V 2 CFR Ch. II (1-1-21 Edition)
Department of Commerce—State and local able in accordance with applicable cognizant
economic development districts. agency claims collection regulations. These
Department of Housing and Urban Develop- adjustments or refunds are designed to cor-
ment—State and local housing and develop- rect the plans and do not constitute a re-
ment districts. opening of the negotiation.
Environmental Protection Agency—State and
local water and sewer districts. G.OTHER POLICIES
2.Review 1.Billed Central Service Activities
All proposed central service cost allocation Each billed central service activity must
plans that are required to be submitted will separately account for all revenues (includ-
be reviewed,negotiated,and approved by the ing imputed revenues)generated by the serv-
cognizant agency for indirect costs on a ice, expenses incurred to furnish the service,
timely basis. The cognizant agency for indi- and profit/loss.
rect costs will review the proposal within six
months of receipt of the proposal and either 2. Working Capital Reserves
negotiate/approve the proposal or advise the
governmental unit of the additional docu- Internal service funds are dependent upon
mentation needed to support/evaluate the a reasonable level of working capital reserve
proposed plan or the changes required to to operate from one billing cycle to the next.
make the proposal acceptable. Once an Charges by an internal service activity to
agreement with the governmental unit has provide for the establishment and mainte-
been reached,the agreement will be accepted !lance of a reasonable level of working cap-
and used by all Federal agencies, unless pro- ital reserve, in addition to the full recovery
hibited or limited by statute. Where a Fed- of costs,are allowable.A working capital re-
eral awarding agency has reason to believe serve as part of retained earnings of up to 60
that special operating factors affecting its calendar days cash expenses for normal oper-
Federal awards necessitate special consider- ating purposes is considered reasonable. A
ation, the funding agency will, prior to the working capital reserve exceeding 60 cal-
time the plans are negotiated, notify the endar days may be approved by the cog-
cognizant agency for indirect costs. nizant agency for indirect costs in excep-
tional cases.
3.Agreement
3.Carry-Forward Adjustments of Allocated
The results of each negotiation must be Central Service Costs
formalized in a written agreement between
the cognizant agency for indirect costs and Allocated central service costs are usually
the governmental unit. This agreement will negotiated and approved for a future fiscal
be subject to re-opening if the agreement is year on a "fixed with carry-forward" basis.
subsequently found to violate a statute or Under this procedure, the fixed amounts for
the information upon which the plan was ne- the future year covered by agreement are
gotiated is later found to be materially in- not subject to adjustment for that year.
complete or inaccurate. The results of the However, when the actual costs of the year
negotiation must be made available to all involved become known, the differences be-
Federal agencies for their use. tween the fixed amounts previously approved
and the actual costs will be carried forward
4.Adjustments and used as an adjustment to the fixed
Negotiated cost allocation plans based on a amounts established for a later year. This
proposal later found to have included costs "carry-forward"procedure applies to all cen-
that: (a) are unallowable (i) as specified by tral services whose costs were fixed in the
law or regulation,(ii)as identified in subpart approved plan. However, a carry-forward ad-
F, General Provisions for selected Items of justment is not permitted,for a central serv-
Cost of this Part, or (iii) by the terms and ice activity that was not included in the ap-
conditions of Federal awards,or(b)are unal- proved plan, or for unallowable costs that
lowable because they are clearly not allo- must be reimbursed immediately.
cable to Federal awards,must be adjusted,or 4.Adjustments of Billed Central Services
a refund must be made at the option of the
cognizant agency for indirect costs, includ- Billing rates used to charge Federal awards
ing earned or imputed interest from the date must be based on the estimated costs of pro-
of transfer and debt interest, if applicable, viding the services, including an estimate of
chargeable in accordance with applicable the allocable central service costs. A corn-
Federal cognizant agency for indirect costs parison of the revenue generated by each
regulations. Adjustments or cash refunds billed service (including total revenues
may include, at the option of the cognizant whether or not billed or collected) to the ac-
agency for indirect costs, earned or imputed tual allowable costs of the service will be
interest from the date of expenditure and de- made at least annually, and an adjustment
linquent debt interest, if applicable, charge- will be made for the difference between the
238
OMB Guidance Pt.200, App. VI
revenue and the allowable costs. These ad- rect)are normally charged to Federal awards
justments will be made through one of the by implementing the public assistance cost
following adjustment methods: (a) a cash re- allocation plan.This Appendix extends these
fund including earned or imputed interest requirements to all Federal awarding agen-
from the date of transfer and debt interest,if cies whose programs are administered by a
applicable, chargeable in accordance with state public assistance agency. Major feder-
applicable Federal cognizant agency for indi- ally-financed programs typically adminis-
rect costs regulations to the Federal Govern- tered by state public assistance agencies in-
ment for the Federal share of the adjust- elude: Temporary Aid to Needy Families
ment, (b) credits to the amounts charged to (TANF), Medicaid, Food Stamps, Child Sup-
the individual programs, (c) adjustments to port Enforcement, Adoption Assistance and
future billing rates,or(d)adjustments to al- Foster Care, and Social Services Block
located central service costs.Adjustments to Grant.
allocated central services will not be per-
B.DEFINITIONS
mitted where the total amount of the adjust-
ment for a particular service (Federal share 1. State public assistance agency means a
and non-Federal) share exceeds $500,000. Ad- state agency administering or supervising
justment methods may include,at the option the administration of one or more public as-
of the cognizant agency, earned or imputed sistance programs operated by the state as
interest from the date of expenditure and de- identified in Subpart E of 45 CFR Part 95.
linquent debt interest, if applicable, charge- For the purpose of this Appendix, these pro-
able in accordance with applicable cognizant grams include all programs administered by
agency claims collection regulations. the state public assistance agency.
2. State public assistance agency costs means
5.Records Retention all costs incurred by, or allocable to, the
All central service cost allocation plans state public assistance agency, except ex-
and related documentation used as a basis penditures for financial assistance, medical
for claiming costs under Federal awards contractor payments, food stamps, and pay-
must be retained for audit in accordance ments for services and goods provided di-
with the records retention requirements con- rectly to program recipients.
tained in subpart D of this part. C.POLICY
6.Appeals State public assistance agencies will de-
If a dispute arises in the negotiation of a velop, document and implement, and the
plan between the cognizant agency for indi- Federal Government will review, negotiate,
rect costs and the governmental unit, the and approve, public assistance cost alloca-
dispute must be resolved in accordance with tion plans in accordance with Subpart E of 45
the appeals procedures of the cognizant CFR Part 95. The plan will include all pro-
agency for indirect costs. grams administered by the state public as-
sistance agency. Where a letter of approval
7.OMB Assistance or disapproval is transmitted to a state pub-
To the extent that problems are encoun- lic assistance agency in accordance with
tered among the Federal agencies or govern- Subpart E, the letter will apply to all Fed-
mental units in connection with the negotia- eral agencies and programs. The remaining
tion and approval process, OMB will lend as- sections of this Appendix (except for the re-
sistance, as required, to resolve such prob- quirement for certification) summarize the
lems in a timely manner, provisions of Subpart E of 45 CFR Part 95.
[78 FR 78608, Dec. 26, 2013, as amended at 80 D. SUBMISSION, DOCUMENTATION, AND AP-
FR 54410, Sept. 10,2015; 85 FR 49581, Aug. 13, PROVAL OF PUBLIC ASSISTANCE COST ALLO-
2020] CATION PLANS
APPENDIX VI TO PART 200—PUBLIC 1. State public assistance agencies are re-
ASSISTANCE COST ALLOCATION PLANS quired to promptly submit amendments to
the cost allocation plan to HHS for review
A.GENERAL and approval.
2. Under the coordination process outlined
Federally-financed programs administered in section E, affected Federal agencies will
by state public assistance agencies are fund- review all new plans and plan amendments
ed predominately by the Department of and provide comments, as appropriate, to
Health and Human Services (HHS). In sup- HHS. The effective date of the plan or plan
port of its stewardship requirements, HHS amendment will be the first day of the cal-
has published requirements for the develop- endar quarter following the event that re-
ment, documentation, submission, negotia- quired the amendment, unless another date
tion, and approval of public assistance cost is specifically approved by HHS.HHS,as the
allocation plans in Subpart E of 45 CFR Part cognizant agency for indirect costs acting on
95. All administrative costs (direct and indi- behalf of all affected Federal agencies, will,
239
Pt. 200, App.VII 2 CFR Ch. II (1-1-21 Edition)
as necessary, conduct negotiations with the APPENDIX VII TO PART 200—STATES AND
state public assistance agency and will in- LOCAL GOVERNMENT AND INDIAN
form the state agency of the action taken on TRIBE INDIRECT COST PROPOSALS
the plan or plan amendment.
A.GENERAL
E.REVIEW OF IMPLEMENTATION OF APPROVED 1. Indirect costs are those that have been
PLANS
incurred for common or joint purposes.
1. Since public assistance cost allocation These costs benefit more than one cost ob-
plans are of a narrative nature, the review jective and cannot be readily identified with
during the plan approval process consists of a particular final cost objective without ef-
evaluating the appropriateness of the pro- fort disproportionate to the results achieved.
posed groupings of costs (cost centers) and After direct costs have been determined and
the related allocation bases. As such, the assigned directly to Federal awards and
Federal Government needs some assurance other activities as appropriate,indirect costs
that the cost allocation plan has been imple- are those remaining to be allocated to bene-
mented as approved.This is accomplished by fitted cost objectives. A cost may not be act
located to a Federal award as an indirect
reviews by the Federal awarding agencies, cost if any other cost incurred for the same
single audits, or audits conducted by the purpose, in like circumstances, has been as-
cognizant agency for indirect costs. signed to a Federal award as a direct cost.
2. Where inappropriate charges affecting 2. Indirect costs include (a) the indirect
more than one Federal awarding agency are costs originating in each department or
identified, the cognizant HHS cost negotia- agency of the governmental unit carrying
tion office will be advised and will take the out Federal awards and(b) the costs of cen-
lead in resolving the issue(s)as provided for tral governmental services distributed
in Subpart E of 45 CFR Part 95. through the central service cost allocation
3. If a dispute arises in the negotiation of plan(as described in Appendix V to this part)
a plan or from a disallowance involving two and not otherwise treated as direct costs.
or more Federal awarding agencies, the dis- 3. Indirect costs are normally charged to
pute must be resolved in accordance with the Federal awards by the use of an indirect cost
appeals procedures set out in 45 CFR Part 16. allyrate A essesarytfe indirect cost rate(s) is usuusu-
ally necessary for each department or agen-
Disputes involving only one Federal award- cy of the governmental unit claiming indi-
ing agency will be resolved in accordance rect costs under Federal awards. Guidelines
with the Federal awarding agency's appeal and illustrations of indirect cost proposals
process. are provided in a brochure published by the
4.To the extent that problems are encoun- Department of Health and Human Services
tered among the Federal awarding agencies entitled"A Guide for States and Local Govern-
or governmental units in connection with ment Agencies: Cost Principles and Procedures
the negotiation and approval process,the Of- for Establishing Cost Allocation Plans and Indi-
fice of Management and Budget will lend as- rect Cost Rates for Grants and Contracts with
sistance, as required, to resolve such prob- the Federal Government."A copy of this bro-
lems in a timely manner. chure may be obtained from HHS Cost Allo-
cation Services or at their website.
F.UNALLOWABLE COSTS 4. Because of the diverse characteristics
ed under approvedand accounting practices of governmental
Claims develop
ed cost allo- units,the types of costs which may be classi-
cation plans will be based on allowable costs fied as indirect costs cannot be specified in
as identified in this Part.Where unallowable all situations. However, typical examples of
costs have been claimed and reimbursed, indirect costs may include certain state/
they will be refunded to the program that re- local-wide central service costs, general ad-
imbursed the unallowable cost using one of ministration of the non-Federal entity ac-
the following methods: (a) a cash refund, (b) counting and personnel services performed
offset to a subsequent claim,or(c)credits to within the non-Federal entity, depreciation
the amounts charged to individual Federal on buildings and equipment, the costs of op-
awards. Cash refunds, offsets, and credits erating and maintaining facilities.
may include at the option of the cognizant 5. This Appendix does not apply to state
agency for indirect cost, earned or imputed public assistance agencies. These agencies
interest from the date of expenditure and de- should refer instead to Appendix VI to this
linquent debt interest, if applicable, charge- part.
able in accordance with applicable cognizant B.DEFINITIONS
agency for indirect cost claims collection
regulations. 1.Base means the accumulated direct costs
(normally either total direct salaries and
[78 FR 78608, Dec. 26, 2013, as amended at 85 wages or total direct costs exclusive of any
FR 49581,Aug.13,2020] extraordinary or distorting expenditures)
240
OMB Guidance Pt. 200, App. VII
used to distribute indirect costs to indi- available are deemed sufficient to enable the
vidual Federal awards. The direct cost base parties involved to reach an informed judg-
selected should result in each Federal award ment as to the probable level of indirect
bearing a fair share of the indirect costs in costs during the ensuing accounting periods.
reasonable relation to the benefits received 10.Provisional rate means a temporary indi-
from the costs. rect cost rate applicable to a specified period
2. Base period for the allocation of indirect which is used for funding,interim reimburse-
costs is the period in which such costs are in- ment, and reporting indirect costs on Fed-
curred and accumulated for allocation to ac- eral awards pending the establishment of a
tivities performed in that period. The base "final"rate for that period.
period normally should coincide with the
governmental unit's fiscal year, but in any C.ALLOCATION OF INDIRECT COSTS AND
event,must be so selected as to avoid inequi- DETERMINATION OF INDIRECT COST RATES
ties in the allocation of costs. i.General
3. Cognizant agency for indirect costs means
the Federal agency responsible for reviewing a. Where a governmental unit's depart-
and approving the governmental unit's indi- ment or agency has only one major function,
rect cost rate(s)on the behalf of the Federal or where all its major functions benefit from
Government. The cognizant agency for indi- the indirect costs to approximately the same
rect costs assignment is described in Appen- degree, the allocation of indirect costs and
dix V,section F. the computation of an indirect cost rate may
4. Final rate means an indirect cost rate ap- be accomplished through simplified alloca-
plicable to a specified past period which is tion procedures as described in subsection 2.
based on the actual allowable costs of the pe- b. Where a governmental unit's depart-
riod. A final audited rate is not subject to ment or agency has several major functions
adjustment. which benefit from its indirect costs in vary-
5. Fixed rate means an indirect cost rate ing degrees, the allocation of indirect costs
which has the same characteristics as a pre- may require the accumulation of such costs
determined rate, except that the difference into separate cost groupings which then are
between the estimated costs and the actual, allocated individually to benefitted func-
allowable costs of the period covered by the tions by means of a base which best meas-
rate is carried forward as an adjustment to ures the relative degree of benefit.The indi-
the rate computation of a subsequent period. rect costs allocated to each function are
6. Indirect cost pool is the accumulated then distributed to individual Federal
costs that jointly benefit two or more pro- awards and other activities included in that
grams or other cost objectives. function by means of an indirect cost rate(s).
7. Indirect cost rate is a device for deter- c. Specific methods for allocating indirect
mining in a reasonable manner the propor- costs and computing indirect cost rates
tion of indirect costs each program should along with the conditions under which each
bear. It is the ratio (expressed as a percent- method should be used are described in sub-
age) of the indirect costs to a direct cost sections 2,3 and 4.
base.
8. Indirect cost rate proposal means the doc- 2.Simplified Method
umentation prepared by a governmental unit a. Where a non-Federal entity's major
or subdivision thereof to substantiate its re- functions benefit from its indirect costs to
quest for the establishment of an indirect approximately the same degree, the alloca-
cost rate. tion of indirect costs may be accomplished
9.Predetermined rate means an indirect cost by (1) classifying the non-Federal entity's
rate, applicable to a specified current or fu- total costs for the base period as either di-
ture period, usually the governmental unit's rect or indirect,and(2)dividing the total al-
fiscal year.This rate is based on an estimate lowable indirect costs (net of applicable
of the costs to be incurred during the period. credits) by an equitable distribution base.
Except under very unusual circumstances, a The result of this process is an indirect cost
predetermined rate is not subject to adjust- rate which is used to distribute indirect
ment. (Because of legal constraints, pre- costs to individual Federal awards. The rate
determined rates are not permitted for Fed- should be expressed as the percentage which
eral contracts; they may, however, be used the total amount of allowable indirect costs
for grants or cooperative agreements.) Pre- bears to the base selected. This method
determined rates may not be used by govern- should also be used where a governmental
mental units that have not submitted and unit's department or agency has only one
negotiated the rate with the cognizant agen- major function encompassing a number of in-
cy for indirect costs.In view of the potential dividual projects or activities, and may be
advantages offered by this procedure, nego- used where the level of Federal awards to
tiation of predetermined rates for indirect that department or agency is relatively
costs for a period of two to four years should small.
be the norm in those situations where the b. Both the direct costs and the indirect
cost experience and other pertinent facts costs must exclude capital expenditures and
241
Pt. 200, App.VII 2 CFR Ch. II (1-1-21 Edition)
unallowable costs. However, unallowable e. The distribution base used in computing
costs must be included in the direct costs if the indirect cost rate for each function may
they represent activities to which indirect be(1)total direct costs(excluding capital ex-
costs are properly allocable. penditures and other distorting items such
c.The distribution base may be(1)total di- as pass-through funds,subawards in excess of
rect costs (excluding capital expenditures $25,000, participant support costs, etc.), (2)
and other distorting items, such as pass- direct salaries and wages,or(3)another base
through funds, subcontracts in excess of which results in an equitable distribution.
$25,000, participant support costs, etc.), (2) An indirect cost rate should be developed for
direct salaries and wages,or(3)another base each separate indirect cost pool developed.
which results in an equitable distribution. The rate in each case should be stated as the
Multiple Allocation Base Method percentage relationship between the par-
3. ticular indirect cost pool and the distribu-
a. Where a non-Federal entity's indirect tion base identified with that pool.
costs benefit its major functions in varying
degrees, such costs must be accumulated 4.Special Indirect Cost Rates
into separate cost groupings. Each grouping a.In some instances,a single indirect cost
must then be allocated individually to bene- rate for all activities of a non-Federal entity
fitted functions by means of a base which or for each major function of the agency may
best measures the relative benefits. not be appropriate. It may not take into ac-
b.The cost groupings should be established count those different factors which may sub-
so as to permit the allocation of each group- stantially affect the indirect costs applicable
ing on the basis of benefits provided to the
pro-
major functions. Each grouping should con- gr a particular program or group ho i
stitute a pool of expenses that are of like locagrams.The the factorso may includelevel the phystra-
character in terms of the functions they ben- tive p support work,the level natureo of theetra-
efit and in terms of the allocation base till required, cesthe employed, ofr-
which best measures the relative benefits cilities or other resources the corn-
provided -
to each function. The number of ganizational arrangements used,or any separate groupings should be held within bination thereof. When a particular Federal
practical limits, taking into consideration award is carried out in an environment
the materiality of the amounts involved and which appears to generate a significantly
the degree of precision needed. different level of indirect costs, provisions
c.Actual conditions must be taken into ac- should be made for a separate indirect cost
count in selecting the base to be used in allo- pool applicable to that Federal award. The
Gating the expenses in each grouping to ben- separate indirect cost pool should be devel-
efitted functions. When an allocation can be oped during the course of the regular alloca-
made by assignment of a cost grouping di- tion process, and the separate indirect cost
rectly to the function benefitted, the alloca- rate resulting therefrom should be used,pro-
tion must be made in that manner.When the vided that: (1) The rate differs significantly
expenses in a grouping are more general in from the rate which would have been devel-
nature, the allocation should be made oped under paragraphs (C)(2) and (C)(3) of
through the use of a selected base which pro- this Appendix, and (2) the Federal award to
duces results that are equitable to both the which the rate would apply is material in
Federal Government and the governmental amount.
unit.In general, any cost element or related b. Where Federal statutes restrict the re-
factor associated with the governmental imbursement of certain indirect costs, it
unit's activities is potentially adaptable for may be necessary to develop a special rate
use as an allocation base provided that: (1)it for the affected Federal award.Where a"re-
can readily be expressed in terms of dollars stricted rate" is required, the same proce-
or other quantitative measures (total direct dure for developing a non-restricted rate will
costs, direct salaries and wages, staff hours be used except for the additional step of the
applied, square feet used, hours of usage, elimination from the indirect cost pool those
number of documents processed, population costs for which the law prohibits reimburse-
served,and the like),and(2)it is common to ment.
the benefitted functions during the base pe-
riod. D.SUBMISSION AND DOCUMENTATION OF
d. Except where a special indirect cost PROPOSALS
rate(s) is required in accordance with para-
graph (C)(4) of this Appendix, the separate I.Submission of Indirect Cost Rate Proposals
groupings of indirect costs allocated to each a. All departments or agencies of the gov-
major function must be aggregated and ernmental unit desiring to claim indirect
treated as a common pool for that function. costs under Federal awards must prepare an
The costs in the common pool must then be indirect cost rate proposal and related docu-
distributed to individual Federal awards in- mentation to support those costs. The pro-
eluded in that function by use of a single in- posal and related documentation must be re-
direct cost rate. tamed for audit in accordance with the
242
OMB Guidance Pt. 200, App.VII
records retention requirements contained in c. The approximate amount of direct base
§200.334. costs incurred under Federal awards. These
b. A governmental department or agency costs should be broken out between salaries
unit that receives more than $35 million in and wages and other direct costs.
direct Federal funding must submit its indi- d. A chart showing the organizational
rect cost rate proposal to its cognizant agen- structure of the agency during the period for
cy for indirect costs.Other governmental de- which the proposal applies, along with a
partment or agency must develop an indirect functional statement(s) noting the duties
cost proposal in accordance with the require- and/or responsibilities of all units that com-
ments of this Part and maintain the proposal prise the agency. (Once this is submitted,
and related supporting documentation for only revisions need be submitted with subse-
audit. These governmental departments or quent proposals.)
agencies are not required to submit their 3.Required certification.
proposals unless they are specifically re-
quested to do so by the cognizant agency for Each indirect cost rate proposal must be
indirect costs. Where a non-Federal entity accompanied by a certification in the fol-
only receives funds as a subrecipient, the lowing form:
pass-through entity will be responsible for
negotiating and/or monitoring the subrecipi- CERTIFICATE OF INDIRECT COSTS
ent's indirect costs. This is to certify that I have reviewed the
c. Each Indian tribal government desiring indirect cost rate proposal submitted here-
reimbursement of indirect costs must submit with and to the best of my knowledge and
its indirect cost proposal to the Department belief:
of the Interior(its cognizant agency for indi- (1)All costs included in this proposal[iden-
rect costs). tify date] to establish billing or final indi-
d. Indirect cost proposals must be devel- rect costs rates for [identify period covered
oped (and, when required, submitted) within by rate]are allowable in accordance with the
six months after the close of the govern- requirements of the Federal award(s) to
mental unit's fiscal year,unless an exception which they apply and the provisions of this
is approved by the cognizant agency for indi- Part. Unallowable costs have been adjusted
rect costs. If the proposed central service for in allocating costs as indicated in the in-
cost allocation plan for the same period has direct cost proposal
not been approved by that time, the indirect (2) All costs included in this proposal are
cost proposal may be prepared including an properly allocable to Federal awards on the
amount for central services that is based on basis of a beneficial or causal relationship
the latest federally-approved central service between the expenses incurred and the agree-
cost allocation plan. The difference between ments to which they are allocated in accord-
these central service amounts and the ance with applicable requirements. Further,
amounts ultimately approved will be corn- the same costs that have been treated as in-
pensated for by an adjustment in a subse- direct costs have not been claimed as direct
quent period. costs. Similar types of costs have been ac-
counted for consistently and the Federal
2.Documentation of Proposals Government will be notified of any account-
The following must be included with each ing changes that would affect the predeter-
indirect cost proposal: mined rate.
a. The rates proposed, including subsidiary I declare that the foregoing is true and cor-
work sheets and other relevant data, cross rect.
referenced and reconciled to the financial Governmental Unit:
data noted in subsection b.Allocated central Signature:
service costs will be supported by the sum- Name of Official:
mary table included in the approved central Title:
service cost allocation plan. This summary Date of Execution:
table is not required to be submitted with E.NEGOTIATION AND APPROVAL OF RATES
the indirect cost proposal if the central serv- E.NEGOTIATION AND APPROVAL OF RATES
ice cost allocation plan for the same fiscal 1. Indirect cost rates will be reviewed, ne-
year has been approved by the cognizant gotiated, and approved by the cognizant
agency for indirect costs and is available to agency on a timely basis. Once a rate has
the funding agency. been agreed upon, it will be accepted and
b. A copy of the financial data (financial used by all Federal agencies unless prohib-
statements, comprehensive annual financial ited or limited by statute. Where a Federal
report, executive budgets, accounting re- awarding agency has reason to believe that
ports, etc.)upon which the rate is based.Ad- special operating factors affecting its Fed-
justments resulting from the use of eral awards necessitate special indirect cost
unaudited data will be recognized,where ap- rates, the funding agency will, prior to the
propriate, by the Federal cognizant agency time the rates are negotiated,notify the cog-
for indirect costs in.a subsequent proposal. nizant agency for indirect costs.
243
Pt. 200, App. VIII 2 CFR Ch. II (1-1-21 Edition)
2. The use of predetermined rates, if al- made on a case-by-case basis as warranted by
lowed, is encouraged where the cognizant the circumstances involved.
agency for indirect costs has reasonable as-
surance based on past experience and reli- 3.Indirect Cost Allocations Not Using Rates
able projection of the non-Federal entity's In de-
costs, that the rate is not likely to exceed a certain situations,agenciesmpon ns governmentalf e
rate based on actual costs.Long-term agree-
partments or (components of the
ments utilizing predetermined rates extend- governmental unit), because of the nature of
ing over two or more years are encouraged, their Federal awards, may be required to de-
where appropriate. velop a cost allocation plan that distributes
3. The results of each negotiation must be indirect (and, in some cases, direct) costs to
formalized in a written agreement between the specific funding sources.In these cases,a
the cognizant agency for indirect costs and narrative cost allocation methodology
the governmental unit. This agreement will should be developed, documented, main-
be subject to re-opening if the agreement is tamed. for audit, or submitted, as appro-
subsequently found to violate a statute, or priate, to the cognizant agency for indirect
the information upon which the plan was ne- costs for review,negotiation,and approval.
gotiated is later found to be materially in-
4.Appeals
complete or inaccurate. The agreed upon
rates must be made available to all Federal If a dispute arises in a negotiation of an in-
agencies for their use. direct cost rate (or other rate) between the
4. Refunds must be made if proposals are cognizant agency for indirect costs and the
later found to have included costs that (a) governmental unit, the dispute must be re-
are unallowable(i)as specified by law or reg- solved in accordance with the appeals proce-
ulation, (ii) as identified in §200.420, or (iii) dures of the cognizant agency for indirect
by the terms and conditions of Federal costs.
awards, or (b) are unallowable because they
are clearly not allocable to Federal awards. 5.Collection of Unallowable Costs and
These adjustments or refunds will be made Erroneous Payments
regardless of the type of rate negotiated Costs specifically identified as unallowable
(predetermined,final,fixed,or provisional). and charged to Federal awards either di-
F.OTHER POLICIES rectly or indirectly will be refunded(includ-
ing interest chargeable in accordance with
1.Fringe Benefit Rates applicable Federal cognizant agency for indi-
If overall fringe benefit rates are not ap- rect costs regulations).
proved for the governmental unit as part of
6.OMB Assistance
the central service cost allocation plan,
these rates will be reviewed, negotiated and To the extent that problems are encoun-
approved for individual recipient agencies tered among the Federal agencies or govern-
during the indirect cost negotiation process. mental units in connection with the negotia-
In these cases, a proposed fringe benefit rate tion and approval process,OMB will lend as-
computation should accompany the indirect sistance, as required, to resolve such prob-
cost proposal. If fringe benefit rates are not lems in a timely manner.
used at the recipient agency level (i.e., the
agency specifically identifies fringe benefit [78 FR 78608, Dec. 26, 2013, as amended at 79
costs to individual employees), the govern- FR 75889, Dec. 19, 2014; 85 FR 49581, Aug. 13,
mental unit should so advise the cognizant 2020]
agency for indirect costs. APPENDIX VIII TO PART 200— NON-
2.Billed Services Provided by the Recipient PROFIT ORGANIZATIONS EXEMPTED
Agency FROM SUBPART E OF PART 200
In some cases, governmental departments
or agencies (components of the govern- 1. Advance Technology Institute (ATI),
mental unit) provide and bill for services Charleston,South Carolina
similar to those covered by central service 2. Aerospace Corporation, El Segundo, Cali-
cost allocation plans (e.g., computer cen- fornia
ters). Where this occurs, the governmental 3. American Institutes of Research (AIR),
departments or agencies (components of the Washington,DC
governmental unit)should be guided by the 4. Argonne National Laboratory, Chicago,Il-
requirements in Appendix V relating to the linois
development of billing rates and documenta- 5. Atomic Casualty Commission, Wash-
tion requirements, and should advise the ington,DC
cognizant agency for indirect costs of any 6. Battelle Memorial Institute,
billed services. Reviews of these types of Headquartered in Columbus,Ohio
services (including reviews of costing/billing 7. Brookhaven National Laboratory, Upton,
methodology, profits or losses, etc.) will be New York
244
Exhibit B cont.
•
§91.600 24 CFR Subtitle A(4-1-20 Edition)
(4) Extent to which the jurisdiction 92.66 Reallocation.
made progress towards the statutory
goals identified in§91.1;and Subpart C-Consortia; Designation and
(5) Efforts to ensure that housing as- Revocation of Designation as a Partici
sisted under programs administered by pacing Jurisdiction
HUD is in compliance with contractual 92.100 [Reserved]
agreements and the requirements of 92.101 Consortia.
law. 92.102 Participation threshold amount.
(b) Report by HUD. HUD shall report 92.103 Notification of intent to participate.
on the performance review in writing, 92.104 Submission of a consolidated plan
and Assessment of Fair Housing.
stating the length of time the jurisdic- 92.105 Designation as a participating juris-
tion has to review and comment on the diction.
report, which will be at least 30 days. 92.106 Continuous designation as a partici-
HUD may revise the report after con- gating jurisdiction.
sidering the jurisdiction's views, and 92.107 Revocation of designation as a par-
shall make the report, the jurisdic- ticipating jurisdiction.
tion's comments, and any revisions Subpart D-Submission Requirements
available to the public within 30 days
after receipt of the jurisdiction's corn- 92.150 Submission requirements.
ments. Subpart E-Program Requirements
§91.600 Waiver authority. 92.200 Private-public partnership.
Upon determination of good cause, 92.201 Distribution of assistance.
HUD may, subject to statutory limita- 92.202 Site and neighborhood standards.
Lions, waive any provision of this part. 92.203 Income determinations.
such waiver must be in writing 92.204 Applicability of requirements to enti-
Eachand must be supported bydocumenta- ties that receiveh a reallocation of HOME
pP funds, other than participating jurisdic-
tion of the pertinent facts and grounds. tions.
[60 FR 50802,Sept.29,1995] ELIGIBLE AND PROHIBITED ACTIVITIES
92.205 Eligible activities:General.
PART 92-HOME INVESTMENT 92.206 Eligible project costs.
PARTNERSHIPS PROGRAM 92.207 Eligible administrative and planning
costs.
A-General 92.208 Eligible community housing develop-
Subpartment organization (CHDO) operating ex-
Sec. pense and capacity building costs.
92.1 Overview. 92.209 Tenant-based rental assistance:Eligi-
ble costs and requirements.
92.2 Definitions. 92.210 Troubled HOME-assisted rental hous-
92.3 Applicability of 2013 regulatory ing projects.
changes. 92.212 Pre-award costs.
92.4 Waivers and suspension of requirements 92.213 HOME funds and public housing.
for disaster areas. 92.214 Prohibited activities and fees.
Subpart B-Allocation Formula 92.215 Limitation on jurisdictions under
P court order.
92.50 Formula allocation. INCOME TARGETING
INSULAR AREAS PROGRAM 92.216 Income targeting: Tenant-based rent-
al assistance and rental units.
92.60 Allocation amounts for insular areas. 92.217 Income targeting:Homeownership.
92.61 Program description.
92.62 Review of program description and MATCHING CONTRIBUTION REQUIREMENT
certifications. 92.218 Amount of matching contribution.
92.63 Amendments to program description. 92.219 Recognition of matching contribu-
92.64 Applicability of requirements to insu- tion.
lar areas. 92.220 Form of matching contribution.
92.65 Funding sanctions. 92.221 Match credit.
92.222 Reduction of matching contribution
requirement.
536
Office of the Secretary, HUD §92.1
Subpart F-Project Requirements 92.502 Program disbursement and informa-
tion system.
92.250 Maximum per-unit subsidy amount, 92.503 Program income,repayments,and re-
underwriting,and subsidy layering. captured funds.
92.251 Property standards. 92.504 Participating jurisdiction respon-
92.252 Qualification as affordable housing: sibilities;written agreements; on-site in-
Rental housing. spections.
92.253 Tenant protections and selection. 92.505 Applicability of uniform administra-
92.254 Qualification as affordable housing: tive requirements.
Homeownership. 92.506 Audit.
92.255 Converting rental units to homeown- 92.507 Closeout.
ership units for existing tenants. 92.508 Recordkeeping.
92.256 [Reserved] 92.509 Performance reports.
92.257 Equal participation of faith-based or-
ganizations. Subpart L-Performance Reviews and
92.258 Elder cottage housing opportunity Sanctions
(ECHO)units.
92.550 Performance reviews.
Subpart G-Community Housing 92.551 Corrective and remedial actions.
Development Organizations 92.552 Notice and opportunity for hearing;
sanctions.
92.300 Set-aside for community housing de-
velopment organizations(CHDOs). Subpart M-American Dream
92.301 Project-specific assistance to commu- Downpayment Initiative
nity housing development organizations.
92.302 Housing education and organizational 92.600 Purpose.
support. 92.602 Eligible activities.
92.303 Tenant participation plan. 92.604 ADDI allocation formula.
92.606 Reallocations.
Subpart H-Other Federal Requirements 92.608 Consolidated plan.
92.610 Program requirements
92.350 Other Federal requirements and non- 92.612 Project requirements.
discrimination. 92.614 Other Federal requirements.
92.351 Affirmative marketing;minority out- 92.616 Program administration.
reach program. 92.618 Performance reviews and sanctions.
92.352 Environmental review.
92.353 Displacement, relocation, and acqui- AUTHORITY:42 U.S.C.3535(d),12 U.S.C.1701x
sition. and 4568.
92.354 Labor. SOURCE: 61 FR 48750, Sept. 16, 1996, unless
92.355 Lead-based paint. otherwise noted.
92.356 Conflict of interest.
92.357 Executive Order 12372. Subpart A-General
92.358 Consultant activities. p
92.359 VAWA requirements.
§92.1 Overview.
Subpart I-Technical Assistance This part implements the HOME In-
92.400 Coordinated Federal support for haus- vestment Partnerships Act (the HOME
ing strategies. Investment Partnerships Program). In
general, under the HOME Investment
Subpart J-Reallocations Partnerships Program, HUD allocates
funds by formula among eligible State
92.450 General. and local
92.451 Reallocation of HOME funds from a governments to strengthen
Public private partnerships and to ex-
jurisdiction that is not designated a par-
ticipating jurisdiction or has its designa- pand the supply of decent, safe, sani-
tion revoked. tary, and affordable housing, with pri-
92.452 Reallocation of community housing mary attention to rental housing, for
development organization set-aside. very low-income and low-income fami-
92.453 Competitive reallocations. lies. Generally, HOME funds must be
92.454 Reallocations by formula. matched by nonfederal resources. State
Subpartand local governments that become
K-Program Administration
participating jurisdictions may use
92.500 The HOME Investment Trust Fund. HOME funds to carry out multi-year
92.501 HOME Investment Partnership housing strategies through acquisition,
Agreement. rehabilitation, and new construction of
537
§92.2 24 CFR Subtitle A(4-1-20 Edition)
housing, and tenant-based rental as- HOME funds to produce affordable
sistance. Participating jurisdictions housing, provide downpayment assist-
may provide assistance in a number of ance, or provide tenant-based rental as-
eligible forms, including loans, ad- sistance;
vances, equity investments, interest (ii)With a community housing devel-
subsidies and other forms of invest- opment organization to provide oper-
ment that HUD approves. ating expenses;
§92.2 Definitions. (iii) With a community housing de-
velopment organization to provide
The terms 1937 Act, ALJ, Fair Housing project-specific technical assistance
Act, HUD, Indian Housing Authority and site control loans or project-spe-
(IHA), Public housing, Public Housing cific seed money loans, in accordance
Agency (PHA), and Secretary are defined with§92.301;
in 24 CFR 5.100. (iv) To develop the capacity of corn-
Act means the HOME Investment munity housing development organiza-
Partnerships Act at title II of the tions in the jurisdiction, in accordance
Cranston-Gonzalez National Affordable with§92.300(b); or
Housing Act, as amended, 42 U.S.C. (v) To commit to a specific local
12701 et seq. project, as defined in paragraph (2) of
ADDI funds means funds made avail- this definition.
able under subpart M through alloca- (2) Commit to a specific local project
tions and reallocations. means:
Adjusted income. See§92.203. (i) If the project consists of rehabili-
Annual income. See§92.203. tation or new construction (with or
CDBG program means the Community without acquisition) the participating
Development Block Grant program jurisdiction (or State recipient or sub
under 24 CFR part 570. recipient) and project owner have exe-
Certification shall have the meaning cuted a written legally binding agree-
provided in section 104(21) of the Cran- ment under which HOME assistance
ston-Gonzalez National Affordable will be provided to the owner for an
Housing Act, as amended, 42 U.S.C. identifiable project for which all nec-
12704. essary financing has been secured, a
Commitment means: budget and schedule have been estab-
(1) The participating jurisdiction has lished, and underwriting has been corn-
executed a legally binding written pleted and under which construction is
agreement (that includes the date of scheduled to start within twelve
the signature of each person signing months of the agreement date. If the
the agreement) that meets the min- project is owned by the participating
imum requirements for a written jurisdiction or State recipient, the
agreement in §92.504(c). An agreement project has been set up in the disburse-
between the participating jurisdiction ment and information system estab-
and a subrecipient that is controlled by lished by HUD, and construction can
the participating jurisdiction (e.g., an reasonably be expected to start within
agency whose officials or employees twelve months of the project set-up
are official or employees of the partici- date.
pating jurisdiction)does not constitute (ii)(A) If the project consists of ac-
a commitment. An agreement between quisition of standard housing and the
the representative unit and a member participating jurisdiction (or State re-
unit of general local government of a cipient or subrecipient) is acquiring
consortium does not constitute a corn- the property with HOME funds, the
mitment. Funds for administrative and participating jurisdiction (or State re-
planning costs of the HOME program cipient or subrecipient) and the prop-
are committed based on the amount in erty owner have executed a legally
the program disbursement and infor- binding contract for sale of an identifi-
mation system for administration and able property and the property title
planning. The written agreement must will be transferred to the participating
be: jurisdiction (or State recipient or sub-
(i) With a State recipient or a sub- recipient) within six months of the
recipient to use a specific amount of date of the contract.
538
Office of the Secretary, HUD §92.2
(B) If the project consists of acquisi- (4) Has a tax exemption ruling from
tion of standard housing and the par- the Internal Revenue Service under
ticipating jurisdiction (or State recipi- section 501(c)(3) or (4) of the Internal
ent or subrecipient) is providing HOME Revenue Code of 1986 (26 CFR
funds to a family to acquire single fam- 1.501(c)(3)-1 or 1.501(c)(4)-1)), is classi-
ily housing for homeownership or to a fied as a subordinate of a central orga-
purchaser to acquire rental housing, nization non-profit under section 905 of
the participating jurisdiction (or State the Internal Revenue Code of 1986, or if
recipient or subrecipient) and the fam- the private nonprofit organization is
ily or purchaser have executed a writ- an wholly owned entity that is dis-
ten agreement under which HOME as- regarded as an entity separate from its
sistance will be provided for the pur- owner for tax purposes (e.g., a single
chase of the single family housing or member limited liability company that
rental housing and the property title is wholly owned by an organization
will be transferred to the family or that qualifies as tax-exempt), the
purchaser within six months of the owner organization has a tax exemp-
agreement date. tion ruling from the Internal Revenue
(iii) If the project consists of tenant- Service under section 501(c)(3) or (4) of
based rental assistance, the partici- the Internal Revenue Code of 1986 and
pating jurisdiction (or State recipient, meets the definition of "community
or subrecipient) has entered into a housing development organization;"
rental assistance contract with the (5) Is not a governmental entity (in-
owner or the tenant in accordance with eluding the participating jurisdiction,
the provisions of§92.209. other jurisdiction, Indian tribe, public
Community housing development orga- housing authority, Indian housing au-
nization means a private nonprofit or- thority, housing finance agency, or re-
ganization that: development authority) and is not con-
(1) Is organized under State or local trolled by a governmental entity. An
laws; organization that is created by a gov-
(2) Has no part of its net earnings in- ernmental entity may qualify as a
uring to the benefit of any member, community housing development orga-
founder,contributor, or individual; nization; however, the governmental
(3)Is neither controlled by,nor under entity may not have the right to ap-
the direction of, individuals or entities point more than one-third of the mem-
seeking to derive profit or gain from bership of the organization's governing
the organization. A community hous- body and no more than one- third of
ing development organization may be the board members may be public offi-
sponsored or created by a for-profit en- cials or employees of governmental en-
tity,but: tity. Board members appointed by a
(i) The for-profit entity may not be governmental entity may not appoint
an entity whose primary purpose is the the remaining two-thirds of the board
development or management of hous- members. The officers or employees of
ing, such as a builder, developer, or a governmental entity may not be offi-
real estate management firm. cers or employees of a community
(ii) The for-profit entity may not housing development organization;
have the right to appoint more than (6) Has standards of financial ac-
one-third of the membership of the or- countability that conform to 2 CFR
ganization's governing body. Board 200.302, `Financial Management' and 2
members appointed by the for-profit CFR 200.303, `Internal Controls;'
entity may not appoint the remaining (7)Has among its purposes the provi-
two-thirds of the board members; sion of decent housing that is afford-
(iii)The community housing develop- able to low-income and moderate-in-
ment organization must be free to con- come persons, as evidenced in its char-
tract for goods and services from yen- ter, articles of incorporation, resolu-
dors of its own choosing;and tions or by-laws;
(iv)The officers and employees of the (8) Maintains accountability to low-
for-profit entity may not be officers or income community residents by:
employees of the community housing (i) Maintaining at least one-third of
development organization. its governing board's membership for
539
§92.2 24 CFR Subtitle A(4-1-20 Edition)
residents of low-income neighborhoods, (1)Is an adult;
other low-income community resi- (2)Has not worked full-time full-year
dents, or elected representative of low- in the labor force for a number of years
income neighborhood organizations. but has, during such years, worked pri-
For urban areas, "community" may be marily without remuneration to care
a neighborhood or neighborhoods, city, for the home and family;and
county or metropolitan area; for rural (3) Is unemployed or underemployed
areas, it may be a neighborhood or and is experiencing difficulty in ob-
neighborhoods, town, village, county, taining or upgrading employment.
or multi-county area (but not the en- Family has the same meaning given
tire State); and that term in 24 CFR 5.403.
(ii) Providing a formal process for First-time homebuyer means an indi-
low-income program beneficiaries to vidual and his or her spouse who have
advise the organization in its decisions not owned a home during the three-
regarding the design, siting, develop- year period prior to purchase of a home
ment, and management of affordable with assistance under the American
housing; Dream Downpayment Initiative (ADDI)
(9) Has a demonstrated capacity for described in subpart M of this part.The
carrying out housing projects assisted term first-time homebuyer also in-
with HOME funds. A designated organi- cludes an individual who is a displaced
nation undertaking development ac-
tivities as a developer or sponsor must homemaker or single parent, as those
satisfy this requirement by having paid terms are defined in this section. An
employees with housing development individual shall not be excluded from
experience who will work on projects consideration as a first-time home
assisted with HOME funds. For its first buyer on the basis that the individual
year of funding as a community hous owns or owned, as a principal residence
ing development organization, an orga-
nization during the three-year period, adwell-
nization may satisfy this requirement ing unit whose structure is not perma-
through a contract with a consultant nently affixed to a permanent -
who has housing development experi tion in accordance with local orr other
ence to train appropriate key staff of applicable regulations or is not in com-
the organization. An organization that pliance with State, local, or model
will own housing must demonstrate ca- building codes, or other applicable
codes, and cannot be brought into com-
pacity to act as owner of a project and pliance with the codes for less than the
meet the requirements of §92.300(a)(2). cost of constructing a permanent
A nonprofit organization does not meet structure.
the test of demonstrated capacity
based on any person who is a volunteer HOME funds means funds made avail-
or whose services are donated by an- able under this part through alloca-
other organization;and tions and reallocations, plus program
(10)Has a history of serving the com- income.
munity within which housing to be as- Homebuyer counseling has the same
sisted with HOME funds is to be lo- meaning as homeownership counseling
cated. In general, an organization must in 24 CFR 5.100, and is a type of housing
be able to show one year of serving the counseling.
community before HOME funds are re- Homeownership means ownership in
served for the organization. However, a fee simple title in a 1- to 4-unit dwell-
newly created organization formed by ing or in a condominium unit, or equiv-
local churches, service organizations or alent form of ownership approved by
neighborhood organizations may meet HUD.
this requirement by demonstrating (1)The land may be owned in fee sim-
that its parent organization has at Ple or the homeowner may have a 99-
least a year of serving the community. year ground lease.
Consolidated plan means the plan sub- (i) For housing located in the insular
mitted and approved in accordance areas, the ground lease must be 40
with 24 CFR part 91. years or more.
Displaced homemaker means an indi- (ii) For housing located on Indian
vidual who: trust or restricted Indian lands or a
540
Office of the Secretary, HUD §92.2
Community Land Trust, the ground Jurisdiction means a State or unit of
lease must be 50 years or more. general local government.
(iii) For manufactured housing, the Low-income families means families
ground lease must be for a period at whose annual incomes do not exceed 80
least equal to the applicable period of percent of the median income for the
affordability in§92.254. area, as determined by HUD, with ad-
(2) Right to possession under a con- justments for smaller and larger fami-
tract for deed, installment contract, or lies, except that HUD may establish in-
land contract (pursuant to which the come ceilings higher or lower than 80
deed is not given until the final pay- percent of the median for the area on
ment is made) is not an equivalent the basis of HUD findings that such
form of ownership. variations are necessary because of
(3) The ownership interest may be prevailing levels of construction costs
subject only to the restrictions on re- or fair market rents, or unusually high
sale required under §92.254(a); mort- or low family incomes. An individual
gages, deeds of trust, or other liens or does not qualify as a low-income fam-
instruments securing debt on the prop- ily if the individual is a student who is
erty as approved by the participating not eligible to receive Section 8 assist-
jurisdiction; or any other restrictions
ance under 24 CFR 5.612.
or encumbrances that do not impair Metropolitan city has the meaning
the good and marketable nature of given the term in 24 CFR 570.3.
title to the ownership interest. Neighborhood means a geographic lo-
(4) The participating jurisdiction cation designated in comprehensive
determine whether or not owner- plans, ordinances, or other local docu-
mustship or membership in a cooperative or similarmeils asg a neighborhood, village,ionor
mutual housing geographical designation that
project constitutes is within the boundary but does not en-
homeownership under State law; how- compass the entire area of a unit of
ever, if the cooperative or mutual
housing project receives Low Income general localgovernment; xvept that
if the unit off general local government
Housing Tax Credits, the ownership or has a population under 25,000, the
membership does not constitute home- neighborhood may, but need not, en-
ownership. compass the entire area of a unit of
Household means one or more persons general local government.
occupying a housing unit. Participating jurisdiction means a ju-
Housing includes manufactured hous- risdiction (as defined in this section)
ing and manufactured housing lots, that has been so designated by HUD in
permanent housing for disabled home- accordance with§92.105.
less persons, transitional housing, sin- Person with disabilities means a house-
gle-room occupancy housing, and group hold composed of one or more persons,
homes.Housing also includes elder cot- at least one of whom is an adult, who
tage housing opportunity (ECHO) units has a disability.
that are small, free- standing, barrier- (1) A person is considered to have a
free, energy-efficient, removable, and disability if the person has a physical,
designed to be installed adjacent to ex- mental, or emotional impairment that:
isting single-family dwellings. Housing (i)Is expected to be of long-continued
does not include emergency shelters and indefinite duration;
(including shelters for disaster victims) (ii) Substantially impedes his or her
or facilities such as nursing homes, ability to live independently;and
convalescent homes, hospitals, residen- (iii) Is of such a nature that such
tial treatment facilities, correctional ability could be improved by more suit-
facilities, halfway houses, housing for able housing conditions.
students, or dormitories (including (2)A person will also be considered to
farmworker dormitories). have a disability if he or she has a de-
Housing counseling has the meaning velopmental disability, which is a se-
given the term in 24 CFR 5.100. vere,chronic disability that:
Insular areas means Guam, the North- (i) Is attributable to a mental or
ern Mariana Islands, the United States physical impairment or combination of
Virgin Islands, and American Samoa. mental and physical impairments;
541
§92.2 24 CFR Subtitle A(4-1-20 Edition)
(ii) Is manifested before the person or sponsor, unless the funds are paid by
attains age 22; the project owner, developer, or spon-
(iii) Is likely to continue indefi- sor to the participating jurisdiction,
nitely; subrecipient or State recipient);
(iv) Results in substantial functional (3) Payments of principal and inter-
limitations in three or more of the fol- est on loans made using HOME funds or
lowing areas of major life activity: matching contributions;
self-care, receptive and expressive Ian- (4) Proceeds from the sale of loans
guage, learning, mobility, self-direc- made with HOME funds or matching
tion, capacity for independent living, contributions;
and economic self-sufficiency;and (5) Proceeds from the sale of obliga-
(v) Reflects the person's need for a tions secured by loans made with
combination and sequence of special, HOME funds or matching contribu-
interdisciplinary, or generic care, tions;
treatment, or other services that are of (6) Interest earned on program in-
lifelong or extended duration and are come pending its disposition;and
individually planned and coordinated. (7) Any other interest or return on
Notwithstanding the preceding provi- the investment permitted under
sions of this definition, the term "per- §92.205(b) of HOME funds or matching
son with disabilities" includes two or contributions.
more persons with disabilities living Project means a site or sites together
together, one or more such persons liv- with any building (including a mann-
ing with another person who is deter- factured housing unit) or buildings lo-
mined to be important to their care or cated on the site(s)that are under corn-
well-being, and the surviving member mon ownership, management, and fi-
or members of any household described nancing and are to be assisted with
in the first sentence of this definition HOME funds as a single undertaking
who were living, in a unit assisted with under this part. The project includes
HOME funds, with the deceased mem- all the activities associated with the
ber of the household at the time of his site and building. For tenant-based
or her death. rental assistance, project means assist-
Program income means gross income ance to one or more families.
received by the participating jurisdic- Project completion means that all nec-
tion, State recipient, or a subrecipient essary title transfer requirements and
directly generated from the use of construction work have been per-
HOME funds or matching contribu- formed; the project complies with the
tions. When program income is gen- requirements of this part (including
erated by housing that is only partially the property standards under §92.251);
assisted with HOME funds or matching the final drawdown of HOME funds has
funds, the income shall be prorated to been disbursed for the project; and the
reflect the percentage of HOME funds project completion information has
used. Program income includes, but is been entered into the disbursement and
not limited to, the following: information system established by
(1) Proceeds from the disposition by HUD, except that with respect to rent-
sale or long-term lease of real property al housing project completion, for the
acquired, rehabilitated, or constructed purposes of §92.502(d) of this part,
with HOME funds or matching con- project completion occurs upon corn-
tributions; pletion of construction and before oc-
(2) Gross income from the use or cupancy. For tenant-based rental as-
rental of real property, owned by the sistance, project completion means the
participating jurisdiction, State recipi- final drawdown has been disbursed for
ent, or a subrecipient, that was ac- the project.
quired, rehabilitated, or constructed, Reconstruction means the rebuilding,
with HOME funds or matching con- on the same lot, of housing standing on
tributions, less costs incidental to gen- a site at the time of project commit-
eration of the income (Program income ment, except that housing that was de-
does not include gross income from the stroyed may be rebuilt on the same lot
use, rental or sale of real property re- if HOME funds are committed within 12
ceived by the project owner, developer, months of the date of destruction. The
542
Office of the Secretary, HUD §92.2
number of housing units on the lot participating jurisdiction to admin-
may not be decreased or increased as ister all or some of the participating
part of a reconstruction project, but jurisdiction's HOME programs to
the number of rooms per unit may be produce affordable housing, provide
increased or decreased. Reconstruction downpayment assistance, or provide
also includes replacing an existing sub- tenant-based rental assistance. A pub-
standard unit of manufactured housing lic agency or nonprofit organization
with a new or standard unit of manu- that receives HOME funds solely as a
factured housing. Reconstruction is re- developer or owner of a housing project
habilitation for purposes of this part. is not a subrecipient. The participating
Single family housing means a one-to jurisdiction's selection of a sub-
four-family residence, condominium recipient is not subject to the procure-
unit, cooperative unit, combination of ment procedures and requirements.
manufactured housing and lot, or man- Tenant-based rental assistance is a
ufactured housing lot. form of rental assistance in which the
Single parent means an individual assisted tenant may move from a
who: dwelling unit with a right to continued
(1) Is unmarried or legally separated assistance. Tenant-based rental assist-
from a spouse; and ance under this part also includes secu-
(2)Has one or more minor children of rity deposits for rental of dwelling
whom the individual has custody or units.
joint custody, or is pregnant. Transitional housing means housing
Single room occupancy (SRO) housing that:
means housing (consisting of single- (1)Is designed to provide housing and
room dwelling units) that is the pri- appropriate supportive services to per-
mary residence of its occupant or occu- sons, including (but not limited to) de-
pants. The unit must contain either institutionalized individuals with dis-
food preparation or sanitary facilities abilities, homeless individuals with
(and may contain both) if the project disabilities, and homeless families with
consists of new construction, conver- children;and
sion of nonresidential space, or recon- (2)Has as its purpose facilitating the
struction. For acquisition or rehabili- movement of individuals and families
tation of an existing residential struc- to independent living within a time pe-
ture or hotel, neither food preparation riod that is set by the participating ju-
nor sanitary facilities are required to risdiction or project owner before occu-
be in the unit. If the units do not con- pancy.
tain sanitary facilities, the building Uniform Physical Condition Standards
must contain sanitary facilities that (UPCS) means uniform national stand-
are shared by tenants. A project's des- ards established by HUD pursuant to 24
ignation as an SRO cannot be incon- CFR 5.703 for housing that is decent,
sistent with the building's zoning and safe, sanitary, and in good repair.
building code classification. Standards are established for inspect-
State means any state of the United able items for each of the following
States, the District of Columbia, the areas: site, building exterior, building
Commonwealth of Puerto Rico, or any systems, dwelling units, and common
agency or instrumentality thereof that areas.
is established pursuant to legislation Unit of general local government means
and designated by the chief executive a city, town, township, county, parish,
officer to act on behalf of the state village, or other general purpose polit-
with regard to the provisions of this ical subdivision of a State; a consor-
part; however, for purposes of the tium of such political subdivisions rec-
American Dream Downpayment Initia- ognized by HUD in accordance with
tive (ADDI) described in subpart M of §92.101; and any agency or instrumen-
this part, the term "state" does not in- tality thereof that is established pursu-
clude the Commonwealth of Puerto ant to legislation and designated by
Rico(except for FY2003 ADDI funds). the chief executive to act on behalf of
State recipient. See§92.201(b)(2). the jurisdiction with regard to provi-
Subrecipient means a public agency or sions of this part. When a county is an
nonprofit organization selected by the urban county, the urban county is the
543
§92.3 24 CFR Subtitle A(4-1-20 Edition)
unit of general local government for deadlines that occur on or after that
purposes of the HOME Investment date; and
Partnerships Program. (e) Section 92.504(a), for written poli-
Urban county has the meaning given cies, procedures, and systems, will be
the term in 24 CFR 570.3. applicable on July 24,2014.
Very low-income families means low- (f) Section 92.504(d)(2), for financial
income families whose annual incomes oversight of projects assisted with
do not exceed 50 percent of the median HOME funds, will be applicable on July
family income for the area, as deter- 24, 2014.
mined by HUD with adjustments for
smaller and larger families, except [78 FR 44666,Aug.22,2013]
that HUD may establish income ceil-
ings higher or lower than 50 percent of §92.4 Waivers and suspension of re-
the median for the area on the basis of quirements for disaster areas.
HUD findings that such variations are HUD's authority for waiver of regula-
necessary because of prevailing levels tions and for the suspension of require-
of construction costs or fair market ments to address damage in a Presi-
rents, or unusually high or low family dentially declared disaster area is de-
incomes.An individual does not qualify scribed in 24 CFR 5.110 and in section
as a very low-income family if the indi- 290 of the Act,respectively.
vidual is a student who is not eligible
to receive CFR 5.612.Section 8 assistance under 24 Subpart B—Allocation Formula
[61 FR 48750, Sept. 16, 1996, as amended at 67 §92.50 Formula allocation.
FR 61755, Oct. 1, 2002; 69 FR 16765, Mar. 30,
2004; 72 FR 16685, Apr. 4, 2007; 78 FR 44664, (a) Jurisdictions eligible for a formula
July 24, 2013; 80 FR 75934, Dec. 7, 2015; 81 FR allocation. HUD will provide allocations
86952, Dec. 2, 2016; 81 FR 90657, Dec. 14, 2016] of funds in amounts determined by the
§92.3 Applicability of 2013 regulatory formula described in this section to
changes. units of general local governments
regulations of this that, as of the end of the previous fis-
Theg part, as re- cal year, are metropolitan cities, urban
vised by final rule published on July 24, counties, or consortia approved under
2013 are applicable to projects for
which HOME funds are committed on §92.101; and States.
or after August 23,2013, with the excep (b) Amounts available for allocation;
tion of the following provisions; State and local share. The amount of
(a) Section 92.2, for the definition of funds that are available for allocation
commitment, the change which elimi- by the formula under this section is
nates reservations of funds that are not equal to the balance of funds remaining
project-specific to CHDO5 as a commit- after reserving amounts for insular
ment will be applicable on October 22, areas, housing education and organiza-
2013 and will be implemented by HUD tional support, other support for State
for deadlines that occur on or after and local housing strategies, and other
January 1,2015; purposes authorized by Congress, in ac-
(b) Section 92.251, Property Stand- cordance with the Act and appropria-
ards, will apply to projects to which tions.
funds are committed on or after Janu- (c) Formula factors. The formula for
ary 24,2015; determining allocations uses the fol-
(c) Section 92.254(f). Homebuyer pro- lowing factors. The first and sixth fac-
gram policies, for written policies re- tors are weighted 0.1; the other four
lated to underwriting, responsible lend- factors are weighted 0.2.
ing, and refinancing, will be applicable (1) Vacancy-adjusted rental units
on January 24, 2014; where the household head is at or
(d) Section 92.500(d)(1)(C), estab- below the
lishing the separate 5-year deadline for poverty level. Theserental
s
by
expenditure of CHDO set-aside funds units are multiplied the ratio of the
will be applicable on January 1, 2015 national rental vacancy rate over a ju-
and will be implemented by HUD for all risdiction's rental vacancy rate.
544
Office of the Secretary, HUD §92.50
(2) Occupied rental units with at only one jurisdiction (the unit of gen-
least one of four problems (over- eral local government with the small-
crowding, incomplete kitchen facili- est allocation of HOME funds) is
ties, incomplete plumbing, or high rent dropped from the pool of eligible juris-
costs). Overcrowding is a condition that dictions on each successive recalcula-
exists if there is more than one person tion, except that jurisdictions that are
per room occupying the unit. Incom- participating jurisdictions (other than
plete kitchen facilities means the unit consortia that fail to renew the mem-
lacks a sink with running water, a bership of all of their member jurisdic-
range, or a refrigerator. Incomplete tions) are not dropped. Then the
plumbing means the unit lacks hot and amount of funds available for units of
cold piped water, a flush toilet, or a general local government is redistrib-
bathtub or shower inside the unit for uted to all others. This recalculation/
the exclusive use of the occupants of redistribution continues until all re-
the unit. High rent costs occur when maining units of general local govern-
more than 30 percent of household in- ment receive an allocation of $500,000
come is used for rent. or more or are participating jurisdic-
(3) Rental units built before 1950 oc- tions. Only units of general local gov-
cupied by poor households. ernment which receive an allocation of
(4) Rental units described in para- $500,000 or more under the formula or
graph (c)(2) of this section multiplied which are participating jurisdictions
by the ratio of the cost of producing will be awarded an allocation. In fiscal
housing for a jurisdiction divided by years in which Congress appropriates
the national cost. less than $1.5 billion of HOME funds,
(5) Number of families at or below $335,000 is substituted for$500,000.
the poverty level. (4) The allocation amounts deter-
(6) Population of a jurisdiction mul- mined under paragraph (d)(3) of this
tiplied by a net per capita income (pci). section are reduced by any amounts
To compute net pci for a jurisdiction or that are necessary to provide increased
for the nation, the pci of a three person allocations to States that have no unit
family at the poverty threshold is sub- of general local government receiving a
tracted from the pci of the jurisdiction formula allocation(see paragraph(e)(4)
or of the nation. The index is con- of this section). These reductions are
structed by dividing the national net made on a pro rata basis, except that no
pci by the net pci of a jurisdiction. unit of general local government allo-
(d) Calculating formula allocations for cation is reduced below $500,000 (or
units of general local government. (1) Ini- $335,000 in fiscal years in which Con-
tial allocation amounts for units of gress appropriates less than$1.5 billion
general local government described in of HOME funds) and no participating
paragraph (a) of this section are deter- jurisdiction allocation which is below
mined by multiplying the sum of the this amount is reduced.
shares of the six factors in paragraph (e) Calculating formula allocations for
(c) of this section by 60 percent of the States. (1) Forty percent of the funds
amount available under paragraph (b) available for allocation under para-
of this section for formula allocation. graph (b) of this section are allocated
The shares are the ratio of the weight- to States. The allocation amounts for
ed factor for each jurisdiction over the States are calculated by determining
corresponding factor for the total for initial amounts for each State, based
all of these units of general local gov- on the sum of the shares of the six fac-
ernment. tors. For 20 percent of the funds to be
(2) If any of the initial amounts for allocated to States, the shares are the
such units of general local government ratio of the weighted factor for the en-
in Puerto Rico exceeds twice the na- tire State over the corresponding fac-
tional average, on a per rental unit tor for the total for all States. For 80
basis, that amount is capped at twice percent of the funds to be allocated to
the national average. States, the shares are the ratio of the
(3) To determine the maximum num- weighted factor for all units of general
ber of units of general local govern- local government within the State that
ment that receive a formula allocation, do not receive a formula allocation
545
§92.60 24 CFR Subtitle A(4-1-20 Edition)
over the corresponding factor for the tions currently under administration,
total for all States. HUD may reduce the insular area's ini-
(2) If the initial amounts for Puerto tial allocation amount.
Rico (based on either or both the 80 (c) Previous audit findings and out-
percent of funds or 20 percent of funds standing monetary obligations. HUD
calculation) exceed twice the national shall not make an allocation to an in-
average, on a per rental unit basis, sular area that has either an out-
each amount that exceeds the national standing audit finding for any HUD
average is capped at twice the national program, or an outstanding monetary
average,and the resultant funds are re- obligation to HUD that is in arrears, or
allocated to other States on a prorata for which a repayment schedule has
basis. not been established. This restriction
(3) If the initial amounts when corn- does not apply if the HUD Field Office
bined for any State are less than the finds that the insular area has made a
$3,000,000, the allocation to that State good faith effort to clear the audit and,
is increased to the $3,000,000 and all when there is an outstanding monetary
other State allocations are reduced by obligation to HUD, the insular area has
an equal amount on a prorata basis, ex- made a satisfactory arrangement for
cept that no State allocation is re- repayment of the funds due HUD and
duced below$3,000,000. payments are current.
(4) The allocation amount for each (d) Increases to the initial allocation
State that has no unit of general local amount. If funds reserved for the insu-
government within the State receiving lar areas are available because HUD
an allocation under paragraph (d) of has decreased the amount for one or
this section is increased by $500,000. more insular areas in accordance with
Funds for this increase are derived paragraphs (b) or (c) of this section, or
from the funds available for units of for any other reason, HUD may in-
general local government, in accord- crease the allocation amount for one or
ance with paragraph (d)(4) of this sec- more of the remaining insular areas
tion. based upon the insular area's perform-
[61 FR 48750, Sept. 16, 1996, as amended at 62 ance in committing HOME funds with-
FR 28928, May 28, 1997; 67 FR 61755, Oct. 1, in the 24 month deadline, producing
2002] housing units described in its program
description, and meeting HOME pro-
INSULAR AREAS PROGRAM gram requirements. Funds that become
available but which are not used to in-
§92.60 Allocation amounts for insular crease the allocation amount for one or
areas. more of the remaining insular areas
(a) Initial allocation amount for each will be reallocated in accordance with
insular area. The initial allocation §92.66.
amount for each insular area is deter- (e) Notice of allocation amounts. HUD
mined based upon the insular area's will notify each insular area, in writ-
population and occupied rental units ing, as to the amount of its HOME allo-
compared to all insular areas. cation.
(b) Threshold requirements. The HUD
Field Office shall review each insular §92.61 Program description.
area's progress on outstanding alloca- (a) Submission requirement. Not later
tions made under this section, based on than 90 days after HUD notifies the in-
the insular area's performance report, sular area of the amount of its alloca-
the timeliness of close-outs, and com- tion, the insular area must submit a
pliance with fund management require- program description and certifications
ments and regulations, taking into to HUD.
consideration the size of the allocation (b)Content of program description. The
and the degree and complexity of the program description must contain the
program. If HUD determines from this following:
review that the insular area does not (1)An executed Standard Form 424;
have the capacity to administer effec- (2) The estimated use of HOME funds
tively a new allocation, or a portion of and a description of projects and eligi-
a new allocation, in addition to alloca- ble activities, including number of
546
Office of the Secretary, HUD §92.62
units to be assisted, estimated costs, implementing regulations at 49 CFR
and tenure type (rental or owner occu- part 24 and the requirements of§92.353;
pied) and, for tenant assistance, num- (5) A certification that the insular
ber of households to be assisted; area will use HOME funds in compli-
(3) A timetable for the implementa- ance with all requirements of this part;
tion of the projects or eligible activi- (6)The certification required with re-
ties; gard to lobbying required by 24 CFR
(4) If the insular area intends to use part 87, together with disclosure forms,
HOME funds for homebuyers, the if required by 24 CFR part 87.
guidelines for resale or recapture as re-
quired in§92.254(a)(5); [61 FR 48750, Sept. 16, 1996, as amended at 72
(5) If the insular area intends to use FR 73493,Dec.27,2007]
HOME funds for tenant-based rental as-
sistance, a description of how the pro- §92.62 Review of program description
gram will be administered consistent and certifications.
with the minimum guidelines described (a) Review of program description. The
in§92.209; responsible HUD Field Office will re-
(6) If an insular area intends to use view an insular area's program descrip-
other forms of investment not de- tion and will approve the description
scribed in §92.205(b), a description of unless the insular area has failed to
the other forms of investment; submit information sufficient to allow
(7)A statement of the policy and pro- HUD to make the necessary determina-
cedures to be followed by the insular tions required for §92.61 (b)(4), (b)(6),
area to meet the requirements for af- and(b)(7), or the guidelines under(b)(8)
firmative marketing, and establishing are not satisfactory to HUD, if applica-
and overseeing a minority and women ble; or if the level of proposed projects
business outreach program under or eligible activities is not within the
§92.351; management capability demonstrated
(8) If the insular intends to use by past performance in housing and
HOME funds for refinancing along with community development programs. If
rehabilitation, the insular area's guide- the insular area has not submitted in-
lines described in§92.206(b). formation on §92.61 (b)(4), (b)(6), and
(c) Certifications. The following cer- (b)(7), or the guidelines under (b)(8) are
tifications must accompany the pro- not satisfactory to HUD, if applicable;
gram description: or if the level of proposed projects or
(1) A certification that, before com- eligible activities is not within the
mitting funds to a project, the insular management capability demonstrated
area will evaluate the project in ac- by past performance in housing and
cordance with guidelines that it adopts community development programs, the
for this purpose and will not invest any insular area may be required to furnish
more HOME funds in combination with such further information or assurances
other governmental assistance than is as HUD may consider necessary to find
necessary to provide affordable hous- the program description and certifi-
ing; cations satisfactory. The HUD Field
(2) If the insular area intends to pro- Office shall work with the insular area
vide tenant-based rental assistance, to achieve a complete and satisfactory
the certification required by§92.209; program description.
(3) A certification that the submis- (b) Review period. Within thirty days
sion of the program description is au- of receipt of the program description,
thorized under applicable law and the the HUD Field Office will notify the in-
insular area possesses the legal author- sular area if determinations cannot be
ity to carry out the HOME Investment made under§92.61 (b)(4), (b)(6), (b)(7), or
Partnerships Program, in accordance (b)(8) with the supporting information
with the HOME regulations; submitted, or if the proposed projects
(4)A certification that it will comply or activities are beyond currently dem-
with the acquisition and relocation re- onstrated capability. The insular area
quirements of the Uniform Relocation will have a reasonable period of time,
Assistance and Real Property Acquisi- agreed upon mutually, to submit the
tion Policies Act of 1970, as amended, necessary supporting information or to
547
§92.63 24 CFR Subtitle A(4-1-20 Edition)
revise the proposed projects or activi- insular areas in an amount not to ex-
ties in its program description. Geed 15 percent of the HOME funds pro-
(c) HOME Investment Partnership vided to the insular area. The match-
Agreement. After HUD Field Office ap- ing contribution requirements in this
proval under this section, a HOME part do not apply.
funds allocation is made by HUD exe- (2) Subpart K (Program Administra-
cution of the agreement, subject to tion):
execution by the insular area. The (i) Section 92.500 (The HOME Invest-
funds are obligated on the date HUD ment Trust Fund) does not apply. HUD
notifies the insular area of HUD's exe- will establish a HOME account in the
cution of the agreement. United States Treasury for each insu-
lar 92.63 Amendments to program de- area and the HOME funds must be
script P used for approved activities.A local ac-
count must be established for program
An insular area must submit to HUD income. Each insular area may use ei-
for approval any substantial change in ther a separate local HOME account or
its HUD-approved program description a subsidiary account within its general
that it makes and must document any fund (or other appropriate fund) as the
other changes in its file. A substantial local HOME account. HUD will recap-
change involves a change in the guide- ture HOME funds in the HOME Treas-
lines for resale or recapture ury account by the amount of:
(§92.61(b)(4)), other forms of investment (A) Any funds that are not corn-
(§92.61(b)(6)), minority and women busi- mitted within 24 months after the last
ness outreach program (§92.61(b)(7)) or day of the month in which HUD noti-
refinancing(§92.61(b)(8)); or a change in fies the insular area of HUD's execu-
the tenure type of the project or activi- tion of the HOME Investment Partner-
ties; or a funding increase to a project ship Agreement;
or activity of $100,000 or 50% (which- (B) Any funds that are not expended
ever is greater). The HUD Field Office within five years after the last day of
will notify the insular area if its pro- the month in which HUD notifies the
gram description, as amended, does not insular area of HUD's execution of the
permit determinations to be made HOME Investment Partnership Agree-
under §92.61 (b)(4), (b)(6), (b)(7), or ment; and
(b)(8), or if the level of proposed (C) Any penalties assessed by HUD
projects or eligible activities is not under§92.552.
within the management capability (ii) Section 92.502 (Program disburse-
demonstrated by past performance in ment and information system) applies,
housing and community development except that references to the HOME In-
programs, within 30 days of receipt. vestment Trust Fund mean HOME ac-
The insular area will have a reasonable count. In addition, §92.502(c) does not
period of time, agreed upon mutually, apply, and instead compliance with
to submit the necessary supporting in- Treasury Circular No. 1075(31 CFR part
formation to revise the proposed 205)and 2 CFR 200.305 is required.
projects or activities in its program de- (iii) Section 92.503 (Program income,
scription. repayments, and recaptured funds) ap-
plies, except that the funds may be re-
Pp Y q tained provided the funds are used for
to insular areas. eligible activities in accordance with
(a) Insular areas are subject to the the requirements of this section.
same requirements in subpart E (Pro- (3) Section 92.504(Participating juris-
gram Requirements), subpart F diction responsibilities; written agree-
(Project Requirements), subpart K ments; on-site inspections) applies, ex-
(Program Administration), and subpart cept that the written agreement must
L (Performance Reviews and Sanc- ensure compliance with the require-
tions) of this part as participating ju- ments in this section.
risdictions, except for the following: (4) Section 92.508 (Recordkeeping) ap-
(1) Subpart E (Program Require- plies with respect to the records that
ments): Administrative costs, as de- relate to the requirements of this sec-
scribed in §92.207, are eligible costs for tion.
548
Office of the Secretary, HUD §92.101
(5) Section 92.509 (Performance re- Subpart C—Consortia; Designation
ports) applies, except that a perform- and Revocation of Designa-
ance report is required for the fiscal tion as a Participating Juris-
year allocation only after completion diction
of the approved projects funded by the
allocation. §92.100 [Reserved]
(6) Subpart L (Performance Reviews
and Sanctions): Section 92.552 does not §92.101 Consortia.
apply. Instead,§92.65 applies. (a) A consortium of geographically
(b) The requirements of subpart H contiguous units of general local gov-
(Other Federal Requirements) of this ernment is a unit of general local gov-
part apply as follows: §92.357 Executive ernment for purposes of this part if the
Order 12372 applies as written, and the requirements of this section are met.
requirements of the remaining sections (1) One or more members of a pro-
which apply to participating jurisdic-
tions are applicable to the insular sortium whose consortium qualifica-
tion terminates at the end of the fiscal
areas.
(c) Subpart B (Allocation Formula), year, must provide written notification
to the HUD Field Office of its intent to
subpart C (Consortia; Designation and participate as a consortium in the
Revocation as a Participating Jurisdic- HOME Program for the following fiscal
tion), subpart D (Submission Require- year. HUD shall establish the deadline
ments), and subpart G (Community for this submission.
Housing Development Organizations)of (2) The proposed consortium must
this part do not apply. provide, at such time and in a manner
(d) Subpart A (General) applies, ex- and form prescribed by HUD, the quali-
cept that for the definitions of commit- fication documents, which will include
ment, program income, and subrecipient, submission of:
"participating jurisdiction" means (i) A written certification by the
"insular area." State that the consortium will direct
its activities to alleviation of housing
[69 FR 15673, Mar. 26, 2004, as amended at 80 problems within the State; and
FR 75935,Dec.7,2015] (ii) Documentation which dem-
onstrates that the consortium has exe-
§92.65 Funding sanctions. cuted one legally binding cooperation
Following notice and opportunity for agreement among its members author-
informal consultation, HUD may with- izing one member unit of general local
hold, reduce or terminate the assist- government to act in a representative
ance where any corrective or remedial capacity for all member units of gen-
actions taken under§92.551 fail to rem- eral local government for the purposes
edy an insular area's performance defi- of this part and providing that the rep-
ciencies, and the deficiencies are suffi- resentative member assumes overall
ciently substantial, in the judgment of responsibility for ensuring that the
HUD, to warrant sanctions. consortium's HOME Program is carried
out in compliance with the require-
§92.66 Reallocation. ments of this part.
Any HOME funds which are reduced (3)Before the end of the fiscal year in
which the notice of intent and docu-
or recaptured from an insular area's al- mentation are submitted, HUD must
location and which are not used to in- determine that a proposed consortium
crease the allocation amount for one or has sufficient authority and adminis-
more of the remaining insular areas as trative capability to carry out the pur-
provided in §92.60 of this part, will be poses of this part on behalf of its mem-
reallocated by HUD to the States in ac- ber jurisdictions. HUD will endeavor to
cordance with the requirements in sub- make its determination as quickly as
part J for reallocating funds initially practicable after receiving the consor-
allocated to a State. tium's documentation in order to pro-
vide the consortium an opportunity to
correct its submission, if necessary. If
549
§92.102 24 CFR Subtitle A(4-1-20 Edition)
the submission is deficient, HUD will period. During the period of qualifica-
work with the consortium to resolve tion, additional units of general local
the issue, but will not delay the for- government may join the consortium,
mula allocations. HUD, at its discre- but no included unit of general local
tion, may review the performance of an government may withdraw from the
existing consortium that wishes to re- consortium. See 24 CFR part 91, sub-
qualify to determine whether it con- part E, for consolidated plan require-
tinues to have sufficient authority and ments for consortia, including the re-
administrative capacity to successfully quirement that all members of the con-
administer the program. sortia must be on the same program
(b) A metropolitan city or an urban year.
county may be a member of a consor- (f) The consortium agreement may,
tium. A unit of general local govern- at the option of its member units of
ment that is included in an urban general local government, contain a
county may be part of a consortium, provision that authorizes automatic re-
only if the urban county joins the con- newals for the successive qualification
sortium. The included local govern- period of three Federal fiscal years.
ment cannot join the consortium ex- The provision authorizing automatic
cept through participation in the urban renewal must require the lead consor-
county. tium member to give the consortium
(c) A non-urban county may be a members written notice of their right
member of a consortium. However, the to elect not to continue participation
county cannot on its own include the for the new qualification period.
whole county in the consortium.A unit [61 FR 48750, Sept. 16, 1996, as amended at 67
of local government located within the FR 61756,Oct.1,2002]
non-urban county that wishes to par-
ticipate as a member of the consortium §92.102 Participation threshold
must sign the HOME consortium agree- amount.
ment. (a)To be eligible to become a partici-
(d) If the representative unit of gen- pating jurisdiction, a unit of general
eral local government distributes local government must have a formula
HOME funds to member units of gen- allocation under §92.50 that is equal to
eral local government, the representa- or greater than$750,000; or
tive unit is responsible for applying to (b) If a unit of general local govern-
the member units of general local gov- ment's formula allocation is less than
ernment the same requirements as are $750,000,HUD must find:
applicable to subrecipients. (1) The unit of general local govern-
(e) The consortium's qualification as ment has a local PHA and has dem-
a unit of general local government con- onstrated a capacity to carry out the
tinues for a period of three successive provisions of this part, as evidenced by
Federal fiscal years, or until HUD re- satisfactory performance under one or
yokes its designation as a participating more HUD-administered programs that
jurisdiction, or until an urban county provide assistance for activities com-
member fails to requalify under the parable to the eligible activities under
CDBG program as an urban county for this part; and
a fiscal year included in the consor- (2) The State has authorized HUD to
tium's qualification period, or the con- transfer to the unit of general local
sortium fails to receive a HOME alloca- government a portion of the State's al-
tion for the first Federal fiscal year of location or the State, the unit of gen-
the consortium's qualification period eral local government, or both, has
and does not request to be considered made available its own resources such
to receive a HOME allocation in each that the sum of the amounts trans-
of the subsequent two years. However, ferred or made available are equal to or
if a member urban county's three year greater than the difference between the
CDBG qualification cycle is not the unit of general local government's for-
same as the consortium, the consor- mula allocation and$750,000.
tium may elect a shorter qualification (c) In fiscal years in which Congress
period than three years to synchronize appropriates less than $1.5 billion for
with the urban county's qualification this part, $500,000 is substituted for
550
Office of the Secretary, HUD §92.150
$750,000 each time it appears in this §92.106 Continuous designation as a
section. participating jurisdiction.
§92.103 Notification of intent to par- Once a State or unit of general local
ticipate. government is designated a partici-
pating Not later than 30 days after re- jurisdiction, it remains a par-
(a) ticipating jurisdiction for subsequent
ceiving notice of its formula allocation fiscal years and the requirements of
amount, a jurisdiction must notify §§92.102 through 92.105 do not apply, un-
HUD in writing of its intention to be- less HUD revokes the designation in
come a participating jurisdiction. accordance with§92.107.
(b) A unit of general local govern-
ment that has a formula allocation of §92.107 Revocation of designation as a
less than $750,000, or less than $500,000 participating jurisdiction.
in fiscal years in which Congress appro- HUD may revoke a jurisdiction's des-
priates less than $1.5 billion for this ignation as a participating jurisdiction
part, must submit, with its notice, one if:
or more of the following, as appro- (a)HUD finds, after reasonable notice
priate, as evidence that it has met the and opportunity for hearing as pro-
threshold allocation requirements in vided in §92.552(b) that the jurisdiction
§92.102(b): is unwilling or unable to carry out the
(1) Authorization from the State to provisions of this part, including fail-
transfer a portion of its allocation to ure to meet matching contribution re-
the unit of general local government; quirements; or
(2)A letter from the governor or des- (b) The jurisdiction's formula alloca-
ignee indicating that the required tion falls below $750,000 (or below
funds have been approved and budgeted $500,000 in fiscal years in which Con-
for the unit of general local govern- gress appropriates less than$1.5 billion
ment; for this part) for three consecutive
(3) A letter from the chief executive years, below $625,000 (or below $410,000
officer of the unit of general local goy- in fiscal years in which Congress appro-
ernment indicating that the required priates less than $1.5 billion for this
funds have been approved and budg- part) for two consecutive years, or the
eted. jurisdiction does not receive a formula
allocation in any one year.
§92.104 Submission of a consolidated (c) When HUD revokes a partici-
plan and Assessment of Fair Hous- pating jurisdiction's designation as a
ing. participating jurisdiction, HUD will re-
A jurisdiction that has not submitted allocate any remaining funds in the ju-
a consolidated plan to HUD must sub- risdiction's HOME Investment Trust
mit to HUD, not later than 90 calendar Fund established under §92.500 in ac-
days after providing notification under cordance with§92.451.
§92.103, a consolidated plan in accord-
ance with 24 CFR part 91 and an Assess- Subpart D—Submission
ment of Fair Housing (AFH) in accord- Requirements
ance with 24 CFR 5.150 through 5.180.
[80 FR 42366,July 16,2015] §92.150 Submission requirements.
§92.105 Designation as a participating In order to receive its HOME alloca-
p p g tion, a participating jurisdiction must
jurisdiction. submit a consolidated plan in accord-
When a jurisdiction has complied ance with 24 CFR part 91. That part in-
with the requirements of §§92.102 eludes requirements for the content of
through 92.104 and HUD has approved the consolidated plan, the process of
the jurisdiction's consolidated plan in developing the consolidated plan, in-
accordance with 24 CFR part 91, HUD eluding citizen participation, the sub-
will designate the jurisdiction as a par- mission date, HUD approval, and
ticipating jurisdiction. amendments.
551
§92.200 24 CFR Subtitle A(4-1-20 Edition)
Subpart E—Program Requirements (2) A State may carry out its own
HOME program without active partici-
§92.200 Private-public partnership. pation of units of general local govern-
Each participating jurisdiction must ment or may distribute HOME funds to
make all reasonable efforts to maxi- units of general local government to
mize participation by the private sec- carry out HOME programs in which
tor in accordance with section 221 of both the State and all or some of the
the Act. units of general local government per-
form specified program functions. A
§92.201 Distribution of assistance. unit of general local government des-
(a) Local. (1) Each local participating ignated by a State to receive HOME
jurisdiction must, insofar as is feasible, funds from a State is a State recipient.
distribute HOME funds geographically (3)(i) A State that uses State recipi-
within its boundaries and among dif- ents to perform program functions
ferent categories of housing need, ac- shall ensure that the State recipients
cording to the priorities of housing use HOME funds in accordance with
need identified in its approved consoli- the requirements of this part and other
dated plan. applicable laws. The State may require
(2) The participating jurisdiction the State recipient to comply with re-
may only invest its HOME funds in eli- quirements established by the State or
gible projects within its boundaries, or may permit the State recipient to es-
in jointly funded projects within the tablish its own requirements to comply
boundaries of contiguous local jurisdic- with this part.
tions which serve residents from both (ii) The State shall conduct such re-
jurisdictions. For a project to be joint- views and audit of its State recipients
ly funded, both jurisdictions must as may be necessary or appropriate to
make a financial contribution to the determine whether the State recipient
project. A jurisdiction's financial con- has committed and expended the
tribution may take the form of a grant HOME funds in the United States
or loan (including a loan of funds that Treasury account as required by
comes from other federal sources and §92.500, and has met the requirements
that are in the jurisdiction's control, of this part, particularly eligible ac-
such as CDBG program funds) or relief tivities, income targeting, afford-
of a significant tax or fee (such as ability, and matching contribution re-
waiver of impact fees, property taxes, quirements.
or other taxes or fees customarily im- (4)A State and local participating ju-
posed on projects within the jurisdic- risdiction may jointly fund a project
tion). within the boundaries of the local par-
(b)State. (1) Each State participating ticipating jurisdiction. The State may
jurisdiction is responsible for distrib- provide the HOME funds to the project
uting HOME funds throughout the or it may provide the HOME funds to
State according to the State's assess- the local participating jurisdiction to
ment of the geographical distribution fund the project.
of the housing needs within the State,
In-
as identified in the State's approved A State mayfund projects
dian reservationss locateddwithinn the
consolidated plan. The State must dis- State provided that the State includes
tribute HOME funds to rural areas in Indian reservations in its consolidated
amounts that take into account the plan.
non-metropolitan share of the State's
total population and objective meas- [61 FR 48750, Sept. 16, 1996, as amended at 78
ures of rural housing need, such as pov- FR 44666,July 24,2013]
erty and substandard housing, as set
forth in the State's approved consoli- §92.202 Site and neighborhood stand-
dated plan. To the extent the need is ards.
within the boundaries of a partici- (a) General. A participating jurisdic-
pating unit of general local govern- tion must administer its HOME pro-
ment, the State and the unit of general gram in a manner that provides hous-
local government shall coordinate ac- ing that is suitable from the stand-
tivities to address that need. point of facilitating and furthering full
552
Office of the Secretary, HUD §92.203
compliance with the applicable provi- family size and state the amount of the
sions of title VI of the Civil Rights Act family's annual income; or alter-
of 1964 (42 U.S.C. 2000d-2000d-4), the natively, the statement must indicate
Fair Housing Act (42 U.S.C. 3601 et seq., the current dollar limit for very low-
E.O. 11063 (3 CFR, 1959-1963 Comp., p. or low-income families for the family
652), and HUD regulations issued pursu- size of the tenant and state that the
ant thereto; and promotes greater tenant's annual income does not exceed
choice of housing opportunities. this limit.
(b) New rental housing. In carrying (2) For all other families (i.e., home-
out the site and neighborhood require- owners receiving rehabilitation assist-
ments with respect to new construc- ance, homebuyers, and recipients of
tion of rental housing, a participating HOME tenant-based rental assistance),
jurisdiction is responsible for making the participating jurisdiction must de-
the determination that proposed sites termine annual income by examining
for new construction meet the require- at least 2 months of source documents
ments in 24 CFR 983.57(e)(2)and(3). evidencing annual income (e.g., wage
[61 FR 48750, Sept. 16, 1996, as amended at 62 statement, interest statement, unem-
FR 28928, May 28, 1997; 78 FR 44666, July 24, ployment compensation statement) for
2013] the family.
(b)When determining whether a fam-
§92.203 Income determinations. ily is income eligible, the participating
(a) The HOME program has income jurisdiction must use one of the fol-
targeting requirements for the HOME lowing two definitions of "annual in-
program and for HOME projects. There- come":
fore, the participating jurisdiction (1) Annual income as defined at 24
must determine each family is income CFR 5.609 (except when determining
eligible by determining the family's the income of a homeowner for an
annual income. owner-occupied rehabilitation project,
(1) For families who are tenants in the value of the homeowner's principal
HOME-assisted housing and not receiv- residence may be excluded from the
ing HOME tenant-based rental assist- calculation of Net Family Assets, as
ance, the participating jurisdiction defined in 24 CFR 5.603); or
must initially determine annual in- (2) Adjusted gross income as defined
come using the method in paragraph for purposes of reporting under Inter-
(a)(1)(i) of this section. For subsequent nal Revenue Service Form 1040 series
income determinations during the pe- for individual Federal annual income
riod of affordability, the participating tax purposes.
jurisdiction may use any one of the fol- (c) Although the participating juris-
lowing methods in accordance with diction may use either of the defini-
§92.252(h): tions of "annual income" permitted in
(i) Examine at least 2 months of paragraph (b) of this section to cal-
source documents evidencing annual culate adjusted income, it must apply
income (e.g., wage statement, interest exclusions from income established at
statement, unemployment compensa- 24 CFR 5.611. The HOME rents for very
tion statement)for the family. low-income families established under
(ii) Obtain from the family a written §92.252(b)(2) are based on adjusted in-
statement of the amount of the fam- come. In addition, the participating ju-
ily's annual income and family size, risdiction may base the amount of ten-
along with a certification that the in- ant-based rental assistance on the ad-
formation is complete and accurate. justed income of the family. The par-
The certification must state that the ticipating jurisdiction may use only
family will provide source documents one definition for each HOME-assisted
upon request. program (e.g., downpayment assistance
(iii) Obtain a written statement from program) that it administers and for
the administrator of a government pro- each rental housing project.
gram under which the family receives (d)(1) The participating jurisdiction
benefits and which examines each year must calculate the annual income of
the annual income of the family. The the family by projecting the prevailing
statement must indicate the tenant's rate of income of the family at the
553
§92.204 24 CFR Subtitle A(4-1-20 Edition)
time the participating jurisdiction de- day of the month in which HUD noti-
termines that the family is income eli- fies the entity of HUD's execution of
gible. Annual income shall include in- the HOME Investment Partnership
come from all persons in the house- Agreement;
hold. Income or asset enhancement de- (B) Any funds that are not expended
rived from the HOME-assisted project within five years after the last day of
shall not be considered in calculating the month in which HUD notifies the
annual income. entity of HUD's execution of the HOME
(2) The participating jurisdiction is Investment Partnership Agreement;
not required to re-examine the family's and
income at the time the HOME assist- (C) Any penalties assessed by HUD
ance is provided, unless more than six under§92.552.
months has elapsed since the partici- (ii) Section 92.502 (Program disburse-
pating jurisdiction determined that the ment Section rmat (nr yst m applies,
and information system) applies,
family qualified as income eligible. except that references to the HOME In-
(3) The participating jurisdiction vestment Trust Fund mean HOME ac-
must follow the requirements in §5.617 count and the reference to 24 CFR part
when making subsequent income deter-
minations of persons with disabilities does8 does not apply.ly, In addition,§9 compli-
who -
are tenants in HOME-assisted not apply, and instead,ance with Treasury Circular No. 1075
rental housing or who receive tenant- (31 CFR part 205) and 2 CFR 200.305 is
based rental assistance. required.
[61 FR 48750, Sept. 16, 1996, as amended at 62 (iii) Section 92.503 (Program income,
FR 28928, May 28, 1997; 66 FR 6224, Jan. 19, repayments, and recaptured funds) ap-
2001;78 FR 44666,July 24,2013] plies, except that program income may
§92.204 Applicability of requirements be retained provided the funds are used
to entities that receive a realloca- for eligible activities in accordance
tion of HOME funds, other than with the requirements of this section.
participating jurisdictions. (3) Section 92.504 (Participating juris-
(a) Jurisdictions other than partici- diction responsibilities; written agree-
pating jurisdictions and community ments; on-site inspections) applies, ex-
housing development organizations re- cept that the written agreement must
ceiving competitive reallocations from ensure compliance with the require
HUD are subject to the same require ments in this section.
ments in subpart E (Program Require- (4) Section 92.508 (Recordkeeping) ap-
ments), subpart F (Project Require- plies with respect to the records that
ments), subpart K (Program Adminis- relate to the requirements of this sec-
tration), and subpart L (Performance tion.
Reviews and Sanctions) of this part as (5) Section 92.509 (Performance re-
participating jurisdictions, except for ports) applies, except that a perform-
the following: ance report is required only after com-
(1) Subpart E (Program Require- pletion of the approved projects.
ments): the matching contribution re- (b) The requirements in subpart H
quirements in §92.218 through §92.221 (Other Federal Requirements) of this
do not apply. part apply as written, except that ju-
(2) Subpart K (Program Administra- risdictions and community housing de-
tion): velopment organizations receiving re-
(i) Section 92.500 (The HOME Invest- allocations from HUD must comply
ment Trust Fund) does not apply. HUD with affirmative marketing require-
will establish a HOME account in the ments, labor requirements, and lead-
United States Treasury and the HOME based paint requirements, applicable to
funds must be used for approved activi- participating jurisdictions.
ties. A local account must be estab- (c) Subpart B (Allocation Formula),
lished for program income. HUD will subpart C (Consortia; Designation and
recapture HOME funds in the HOME Revocation of Designation as a Partici-
Treasury account by the amount of: pating Jurisdiction), and subpart G
(A) Any funds that are not com- (Community Housing Development Or-
mitted within 24 months after the last ganizations) of this part do not apply.
554
Office of the Secretary, HUD §92.205
(d) Subpart A (General) applies, ex- unit, or purchase the land upon which
cept that for the definitions of commit- a manufactured housing unit is 10-
ment, program income, and subrecipient, cated. Except for existing, owner-occu-
"participating jurisdiction" means ju- pied manufactured housing that is re-
risdiction or community housing devel- habilitated with HOME funds, the man-
opment organization receiving the ufactured housing unit must, at the
competitive reallocation. time of project completion, be con-
[69 FR 15673, Mar. 26, 2004, as amended at 80 netted to permanent utility hook-ups
FR 75935,Dec.7,2015] and be located on land that is owned by
the manufactured housing unit owner
ELIGIBLE AND PROHIBITED ACTIVITIES or land for which the manufactured
§92.205 Eligible activities:General. housing owner has a lease for a period
(a) Eligible activities. (1) HOME funds at least equal to the applicable period
atin of affordability.
may be used by a particip
ating g juris- (b) Forms of assistance. (1) A partici-
diction to provide incentives to develop
and support affordable rental housing pating jurisdiction may invest HOME
and homeownership affordability funds as equity investments, interest-
through the acquisition (including as bearing loans or advances, non-inter-
sistance to homebuyers),new construe- est-bearing loans or advances, interest
tion, reconstruction, or rehabilitation subsidies consistent with the purposes
of nonluxury housing with suitable of this part, deferred payment loans,
amenities, including real property ac- grants, or other forms of assistance
quisition, site improvements, conver- that HUD determines to be consistent
sion, demolition, and other expenses, with the purposes of this part and spe-
including financing costs, relocation cifically approves in writing. Each par-
expenses of any displaced persons, fam- ticipating jurisdiction has the right to
ilies, businesses, or organizations; to establish the terms of assistance, sub-
provide tenant-based rental assistance, ject to the requirements of this part.
including security deposits; to provide (2) A participating jurisdiction may
payment of reasonable administrative invest HOME funds to guarantee loans
and planning costs; and to provide for made by lenders and, if required, the
the payment of operating expenses of participating jurisdiction may estab-
community housing development orga- lish a loan guarantee account with
nizations. The housing must be perma- HOME funds. The HOME funds may be
nent or transitional housing. The spe- used to guarantee the timely payment
cific eligible costs for these activities of principal and interest or payment of
are set forth in §§92.206 through 92.209. the outstanding principal and interest
The activities and costs are eligible upon foreclosure of the loan. The
only if the housing meets the property amount of the loan guarantee account
standards in §92.251 upon project com- must be based on a reasonable estimate
pletion. of the default rate on the
(2)Acquisition of vacant land or dem- guarant
eed
loans, but under no circumstances may
olition must be undertaken only with the amount on deposit exceed 20 per-
respect to a particular housing project cent of the total outstanding principal
intended to provide affordable housing amount guaranteed; except that the ac-
within the time frames established in
paragraph (2) of the definition of count may include a reasonable min-
"commitment" in§92.2. imum balance. While loan funds guar-
(3) Conversion of an existing
strut—anteed with HOME funds are subject to
ture to affordable housing is rehabilita- all HOME requirements, funds which
tion, unless the conversion entails add- are used to repay the guaranteed loans
ing one or more units beyond the exist- are not.
ing walls, in which case, the project is (c) Minimum amount of assistance. The
new construction for purposes of this minimum amount of HOME funds that
part. must be invested in a project involving
(4) Manufactured housing. HOME rental housing or homeownership is
funds may be used to purchase and/or $1,000 times the number of HOME-as-
rehabilitate a manufactured housing sisted units in the project.
555
§92.206 24 CFR Subtitle A(4-1-20 Edition)
(d) Multi-unit projects. HOME funds (2) If a participating jurisdiction does
may be used to assist one or more not complete a project within 4 years
housing units in a multi-unit project. of the date of commitment of funds,
(1) Only the actual HOME eligible de- the project is considered to be termi-
velopment costs of the assisted units nated and the participating jurisdic-
may be charged to the HOME program. tion must repay all funds invested in
If the assisted and nonassisted units the project to the participating juris-
are not comparable, the actual costs diction's HOME Investment Trust
may be determined based on a method Fund in accordance with§92.503(b). The
of cost allocation. If the assisted and participating jurisdiction may request
non- assisted units are comparable in a one-year extension of this deadline in
terms of size, features, and number of writing, by submitting information
bedrooms, the actual cost of the about the status of the project, steps
HOME- assisted units can be deter- being taken to overcome any obstacles
mined by prorating the total HOME el- to completion, proof of adequate fund-
igible development costs of the project ing to complete the project, and a
so that the proportion of the total de- schedule with milestones for comple-
velopment costs charged to the HOME tion of the project for HUD's review
program does not exceed the propor- and approval.
tion of the HOME-assisted units in the [61 FR 48750, Sept. 16, 1996, as amended at 62
project. FR 28928, May 28, 1997; 78 FR 44667, July 24,
(2) After project completion, the 2013]
number of units designated as HOME-
assisted may be reduced only in accord- §92.206 Eligible project costs.
ance with §92.210, except that in a HOME funds may be used to pay the
project consisting of all HOME- as- following eligible costs:
sisted units, one unit may be subse- (a)Development hard costs. The actual
quently converted to an on-site man- cost of constructing or rehabilitating
ager's unit if the participating jurisdic- housing. These costs include the fol-
tion determines that the conversion lowing:
will contribute to the stability or ef- (1) For new construction projects,
fectiveness of the housing and that, costs to meet the new construction
notwithstanding the loss of one HOME- standards in§92.251;
assisted unit, the costs charged to the (2) For rehabilitation, costs to meet
HOME program do not exceed the ac- the property standards for rehabilita-
tual costs of the HOME- assisted units tion projects in§92.251;
and do not exceed the subsidy limit in (3) For both new construction and re-
§92.250(b). habilitation projects, costs:
(e) Terminated projects. A HOME as- (i)To demolish existing structures;
sisted project that is terminated before (ii) To make utility connections in-
completion, either voluntarily or in- cluding off-site connections from the
voluntarily, constitutes an ineligible property line to the adjacent street;
activity, and the participating jurisdic- and
tion must repay any HOME funds in- (iii) To make improvements to the
vested in the project to the partici- project site that are in keeping with
pating jurisdiction's HOME Investment improvements of surrounding, standard
Trust Fund in accordance with projects. Site improvements may in-
§92.503(b) (except for project- specific clude on-site roads and sewer and
assistance to community housing de- water lines necessary to the develop-
velopment organizations as provided in ment of the project. The project site is
§92.301(a)(3)and(b)(3)). the property, owned by the project
(1) A project that does not meet the owner, upon which the project is lo-
requirements for affordable housing cated.
must be terminated and the partici- (4) For both new construction and re-
pating jurisdiction must repay all habilitation of multifamily rental
HOME funds invested in the project to housing projects, costs to construct or
the participating jurisdiction's HOME rehabilitate laundry and community
Investment Trust Fund in accordance facilities that are located within the
with§92.503(b). same building as the housing and
556
Office of the Secretary, HUD §92.206
which are for the use of the project (v)Specify whether the investment of
residents and their guests. HOME funds may be jurisdiction-wide
(5) Costs to make utility connections or limited to a specific geographic
or to make improvements to the area, such as a neighborhood identified
project site, in accordance with the in a neighborhood revitalization strat-
provisions of §92.206(a)(3) (ii) and (iii) egy under 24 CFR 91.215(e)(2) or a Fed-
are also eligible in connection with ac- erally designated Empowerment Zone
quisition of standard housing. or Enterprise Community;and
(b)Refinancing costs. The cost to refi- (vi) State that HOME funds cannot
nance existing debt secured by a hous- be used to refinance single family or
ing project that is being rehabilitated multifamily housing loans made or in-
with HOME funds. These costs include sured by any Federal program, includ-
the following: ing CDBG.
(1) For single-family (one- to four- (c) Acquisition costs. Costs of acquir-
family) owner-occupied housing, when ing improved or unimproved real prop-
loaning HOME funds to rehabilitate erty, including acquisition by home-
the housing, if the refinancing is nec- buyers.
essary to reduce the overall housing (d)Related soft costs. Other reasonable
costs to the borrower and make the and necessary costs incurred by the
housing more affordable and if the re-
habilitation cost is greater than the owner or participating jurisdiction and
amount of debt that is refinanced. associated with the financing, or devel-
opment (or both) of new construction,
(2) For single family or multifamily rehabilitation or acquisition of housing
projects, when loaning HOME funds to
rehabilitate the units if refinancing is assisted with HOME funds. These costs
necessary to permit or continue afford- include,but are not limited to:
ability under §92.252. The participating (1) Architectural, engineering, or re-
jurisdiction must establish refinancing lated professional services required to
guidelines and state them in its con- prepare plans, drawings, specifications,
solidated plan described in 24 CFR part or work write-ups. The costs may be
91. Regardless of the amount of HOME paid if they were incurred not more
funds invested, the minimum afford- than 24 months before the date that
ability period shall be 15 years. The HOME funds are committed to the
guidelines shall describe the conditions project and the participating jurisdic-
under which the participating jurisdic- tion expressly permits HOME funds to
tions will refinance existing debt. At be used to pay the costs in the written
minimum, the guidelines must: agreement committing the funds.
(i)Demonstrate that rehabilitation is (2) Costs to process and settle the fi-
the primary eligible activity and en- nancing for a project, such as private
sure that this requirement is met by lender origination fees, credit reports,
establishing a minimum level of reha- fees for title evidence, fees for recorda-
bilitation per unit or a required ratio tion and filing of legal documents,
between rehabilitation and refi- building permits, attorneys fees, pri-
nancing; vate appraisal fees and fees for an inde-
(ii) Require a review of management pendent cost estimate, builders or de-
practices to demonstrate that dis- velopers fees.
investment in the property has not oc- (3) Costs of a project audit, including
curred, that the long term needs of the certification of costs performed by a
project can be met and that the feasi- certified public accountant, that the
bility of serving the targeted popu- participating jurisdiction may require
lation over an extended affordability with respect to the development of the
period can be demonstrated; project.
(iii) State whether the new invest- (4) Costs to provide information serv-
ment is being made to maintain cur- ices such as affirmative marketing and
rent affordable units, create additional fair housing information to prospective
affordable units, or both; homeowners and tenants as required by
(iv) Specify the required period of af- §92.351.
fordability, whether it is the minimum (5) For new construction or rehabili-
15 years or longer; tation, the cost of funding an initial
557
§92.207 24 CFR Subtitle A(4-1-20 Edition)
operating deficit reserve, which is a re- ten notices to occupants, referrals to
serve to meet any shortfall in project comparable and suitable replacement
income during the period of project property, property inspections, coun-
rent-up (not to exceed 18 months) and seling, and other assistance necessary
which may only be used to pay project to minimize hardship.
operating expenses, scheduled pay- (g) Costs relating to payment of loans.
ments to a replacement reserve, and If the HOME funds are not used to di-
debt service. Any HOME funds placed rectly pay a cost specified in this sec-
in an operating deficit reserve that re- tion,but are used to pay off a construe-
main unexpended after the period of tion loan, bridge financing loan, or
project rent-up may be retained for guaranteed loan, the payment of prin-
project reserves if permitted by the cipal and interest for such loan is an
participating jurisdiction. eligible cost only if:
(6) Staff and overhead costs of the (1) The loan was used for eligible
participating jurisdiction directly re- costs specified in this section, and
lated to carrying out the project, such (2) The HOME assistance is part of
as work specifications preparation, the original financing for the project
loan processing inspections, and other and the project meets the requirements
services related to assisting potential of this part.
owners, tenants, and homebuyers, e.g., [61 FR 48750, Sept. 16, 1996, as amended at 62
housing counseling, may be charged to FR 28928, May 28, 1997; 64 FR 50224, Sept. 15,
project costs only if the project is fund- 1999;78 FR 44667,July 24,2013]
ed and the individual becomes the
owner or tenant of the HOME-assisted §92.207 Eligible administrative and
project. For multi-unit projects, such planning costs.
costs must be allocated among HOME- A participating jurisdiction may ex-
assisted units in a reasonable manner pend,for payment of reasonable admin-
and documented. Although these costs istrative and planning costs of the
may be charged as project costs, these HOME program and ADDI, an amount
costs (except housing counseling) can- of HOME funds that is not more than
not be charged to or paid by low-in- ten percent of the sum of the Fiscal
come families. Year HOME basic formula allocation
(7) For both new construction and re- plus any funds received in accordance
habilitation, costs for the payment of with §92.102(b) to meet or exceed par-
impact fees that are charged for all ticipation threshold requirements that
projects within a jurisdiction. Fiscal Year. A state that transfers any
(8)Costs of environmental review and HOME funds in accordance with
release of funds in accordance with 24 §92.102(b) must exclude these funds in
CFR part 58 which are directly related calculating the amount it may expend
to the project. for administrative and planning costs.
(e) Community housing development or- A participating jurisdiction may also
ganization costs. Eligible costs of expend, for payment of reasonable ad-
project-specific assistance are set forth ministrative and planning costs of the
in§92.301. HOME program and the ADDI de-
(f)Relocation costs.The cost of reloca- scribed in subpart M of this part, a sum
tion payments and other relocation as- up to ten percent of the program in-
sistance to persons displaced by the come deposited into its local account
project are eligible costs. or received and reported by its state re-
(1) Relocation payments include re- cipients or subrecipients during the
placement housing payments, pay- program year. A participating jurisdic-
ments for moving expenses, and pay- tion may expend such funds directly or
ments for reasonable out-of-pocket may authorize its state recipients or
costs incurred in the temporary reloca- subrecipients, if any, to expend all or a
tion of persons. portion of such funds, provided total
(2) Other relocation assistance means expenditures for planning and adminis-
staff and overhead costs directly re- trative costs do not exceed the max-
lated to providing advisory and other imum allowable amount. Reasonable
relocation services to persons displaced administrative and planning costs in-
by the project, including timely writ- elude:
558
Office of the Secretary, HUD §92.207
(a) General management, oversight and eral legal services, accounting services,
coordination. Reasonable costs of over- and audit services;
all program management, coordina- (4) Other costs for goods and services
tion, monitoring, and evaluation. Such required for administration of the pro •
-
costs include, but are not limited to, gram, including such goods and serv-
necessary expenditures for the fol- ices as rental or purchase of equip-
lowing: ment, insurance, utilities, office sup-
(1) Salaries, wages, and related costs plies, and rental and maintenance (but
of the participating jurisdiction's staff. not purchase)of office space;and
In charging costs to this category the (5) Costs of administering tenant-
participating jurisdiction may either based rental assistance programs.
include the entire salary, wages, and (b)Staff and overhead. Staff and over-
related costs allocable to the program head costs of the participating jurisdic-
of each person whose primary respon- tion directly related to carrying out
sibilities with regard to the program the project,such as work specifications
involves program administration as- preparation, loan processing, inspec-
signments, or the prorated share of the tions, lead-based paint evaluations
salary, wages,and related costs of each (visual assessments, inspections, and
person whose job includes any program risk assessments)and other services re-
administration assignments. The par- lated to assisting potential owners,
ticipating jurisdiction may use only tenants, and homebuyers (e.g., housing
one of these methods. Program admin- counseling); and staff and overhead
istration includes the following types costs directly related to providing ad-
of assignments: visory and other relocation services to
(i) Developing systems and schedules persons displaced by the project, in-
for ensuring compliance with program cluding timely written notices to occu-
requirements;
pants,referrals to comparable and suit-
(ii) Developing interagency agree- able replacement property, property
ments and agreements with entities re- inspections, counseling, and other as-
ceiving HOME funds; sistance necessary to minimize hard-
(iii) Monitoring HOME-assisted hous- ship. These costs may be charged as ad-
ing for progress and compliance with ministrative costs or as project costs
program requirements; under §92.206(d)(6) and (f)(2), at the dis-
(iv) Developing agreements and mon- cretion of the participating jurisdic-
itoring housing not assisted with tion;however, these costs(except hous-
HOME funds that the participating ju- ing counseling) cannot be charged to or
risdiction designates as a matching paid by the low-income families.
contribution in accordance with (c) Public information. The provision
§92.219(b) for compliance with applica- of information and other resources to
ble program requirements; residents and citizen organizations par-
(v) Preparing reports and other docu- ticipating in the planning, implemen-
ments related to the program for sub- tation, or assessment of projects being
mission to HUD; assisted with HOME funds.
(vi) Coordinating the resolution of (d) Fair housing. Activities to affirm-
audit and monitoring findings; atively further fair housing in accord-
(vii) Evaluating program results ance with the participating jurisdic-
against stated objectives;and tion's certification under 24 CFR part
(viii) Managing or supervising per- 91.
sons whose primary responsibilities (e) Indirect Costs. Indirect costs may
with regard to the program include be charged to the HOME program
such assignments as those described in under a cost allocation plan prepared
paragraphs(a)(1)(i) through(vii) of this in accordance with 2 CFR part 200, sub-
section; part E.
(2) Travel costs incurred for official (f)Preparation of the consolidated plan.
business in carrying out the program; Preparation of the consolidated plan
(3)Administrative services performed required under 24 CFR part 91. Prepara-
under third party contracts or agree- tion includes the costs of public hear-
ments, including such services as gen- ings,consultations,and publication.
559
§92.208 24 CFR Subtitle A (4-1-20 Edition)
(g) Other Federal requirements. Costs §92.209 Tenant-based rental assist-
of complying with the Federal require- ance: Eligible costs and require-
ments in subpart H of this part. ments.
Project-specific environmental review (a)Eligible costs. Eligible costs are the
costs may be charged as administrative rental assistance and security deposit
costs or as project costs in accordance payments made to provide tenant-
with §92.206(d)(8), at the discretion of based rental assistance for a family
the participating jurisdiction. pursuant to this section. Eligible costs
(h) Preserving affordable housing al- also include utility deposit assistance,
ready assisted with HOME funds. Costs but only if this assistance is provided
specified under §92.254(a)(9) may be with tenant-based rental assistance or
charged as an administrative cost or security deposit payment. Administra-
may be charged to the project as pro- tion of tenant-based rental assistance
vided in §92.254(a)(9). In addition, the is eligible only under general manage-
foreclosure cost of a HOME-assisted ment oversight and coordination at
rental housing project with a HOME §92.207(a), except that the costs of in-
loan in default is an eligible adminis- specting the housing and determining
trative cost. the income eligibility of the family are
eligible as costs of the tenant-based
[61 FR 48750, Sept. 16, 1996, as amended at 67 rental assistance.
FR 61756, Oct. 1, 2002; 69 FR 16766, Mar. 30,
2004; 72 FR 16685, Apr. 4, 2007; 78 FR 44668, (b) General requirement. A partici-
2004;
July 24,2013;80 FR 75935,Dec.7,2015] pating jurisdiction may use HOME
funds for tenant-based rental assist-
§92.208 Eligible community housing ance only if the participating jurisdic-
development organization (CHDO) tion makes the certification about in-
operating expense and capacity elusion of this type of assistance in its
building costs. consolidated plan in accordance with 24
(a) Up to 5 percent of a participating CFR 91.225(d)(1), 91.325(d)(1), or
mar-
jurisdiction's fiscal year HOME alloca- ket conditio, and specifiesatolocal tion may be used for the operating ex- of conditions that lead the choice
penses of community housing develop- of this option.
ment organizations (CHDOs). This (c) Tenant selection. The participating
amount is in addition to amounts set jurisdiction must select low-income
withwritten
tenant
aside for housing projects that are families in accordance
owned, developed, or sponsored by selection policies and criteria
that are based on local housing needsia
CHDOs as described in §92.300(a). These and priorities established in the par-
funds may not be used to pay operating ticipating jurisdiction's consolidated
expenses incurred by a CHDO acting as plan.
a subrecipient or contractor under the (1) Low-income families. Tenant-based
HOME Program. Operating expenses rental assistance may only be provided
means reasonable and necessary costs to very low- and low-income families.
for the operation of the community The participating jurisdiction must de-
housing development organization. termine that the family is very low- or
Such costs include salaries, wages, and low-income before the assistance is
other employee compensation and ben- provided. During the period of assist-
efits; employee education, training, ance, the participating jurisdiction
and travel; rent; utilities; communica- must annually determine that the fam-
tion costs; taxes; insurance; equip- ily continues to be low-income.
ment; materials; and supplies. The re- (2) Targeted assistance. (i)The partici-
quirements and limitations on the re- pating jurisdiction may establish a
ceipt of these funds by CHDOs are set preference for individuals with special
forth in§92.300(e)and(f). needs (e.g., homeless persons or elderly
(b) HOME funds may be used for ca- persons) or persons with disabilities.
pacity building costs under§92.300(b). The participating jurisdiction may
offer, in conjunction with a tenant-
[61 FR 48750, Sept. 16, 1996, as amended at 78 based rental assistance program, par-
FR 44668,July 24,2013] titular types of nonmandatory services
560
Office of the Secretary, HUD §92.209
that may be most appropriate for per- HOME funds may be provided for down-
sons with a special need or a particular payment assistance in accordance with
disability. Generally, tenant-based the requirements of this part.
rental assistance and the related serv- (v) Preferences cannot be adminis-
ices should be made available to all tered in a manner that limits the op-
persons with special needs or disabil- portunities of persons on any basis pro-
ities who can benefit from such serv- hibited by the laws listed under 24 CFR
ices. Participation may be limited to 5.105(a). For example, a participating
persons with a specific disability if jurisdiction may not determine that
necessary to provide as effective hous- persons given a preference under the
ing, aid, benefit, or services as those program are therefore prohibited from
provided to others in accordance with applying for or participating in other
24 CFR 8.4(b)(1)(iv). programs or forms of assistance. Per-
(ii) The participating jurisdiction sons who are eligible for a preference
may also provide a preference for a spe- must have the opportunity to partici-
cific category of individuals with dis- pate in all programs of the partici-
abilities (e.g., persons with HIV/AIDS pating jurisdiction, including programs
or chronic mental illness) if the spe- that are not separate or different.
cific category is identified in the par- (3) Existing tenants in the HOME-as-
ticipating jurisdiction's consolidated listed projects. A participating jurisdic-
plan as having unmet need and the tion may select low-income families
preference is needed to narrow the gap currently residing in housing units
in benefits and services received by that are designated for rehabilitation
such persons. or acquisition under the participating
(iii) Self-sufficiency program. The par- jurisdiction's HOME program. Partici-
ticipating jurisdiction may require the pating jurisdictions using HOME funds
family to participate in a self- suffi- for tenant-based rental assistance pro-
ciency program as a condition of selec- grams may establish local preferences
tion for assistance.The family's failure for the provision of this assistance.
to continue participation in the self- Families so selected may use the ten-
sufficiency program is not a basis for ant-based assistance in the rehabili-
terminating the assistance; however, tated or acquired housing unit or in
renewal of the assistance may be condi- other qualified housing.
tioned on participation in the program. (d) Portability of assistance. A partici-
Tenants living in a HOME- assisted pating jurisdiction may require the
rental project who receive tenant- family to use the tenant-based assist-
based rental assistance as relocation ance within the participating jurisdic-
assistance must not be required to par- tion's boundaries or may permit the
ticipate in a self- sufficiency program family to use the assistance outside its
as a condition of receiving assistance. boundaries.
(iv) Homebuyer program. HOME ten- (e) Term of rental assistance contract.
ant-based rental assistance may assist The term of the rental assistance con-
a tenant who has been identified as a tract providing assistance with HOME
potential low-income homebuyer funds may not exceed 24 months, but
through a lease-purchase agreement, may be renewed, subject to the avail-
with monthly rental payments for a pe- ability of HOME funds.The term of the
riod up to 36 months (i.e., 24 months, rental assistance contract must begin
with a 12-month renewal in accordance on the first day of the term of the
with paragraph (e) of this section). The lease. For a rental assistance contract
HOME tenant-based rental assistance between a participating jurisdiction
payment may not be used to accumu- and an owner, the term of the contract
late a downpayment or closing costs must terminate on termination of the
for the purchase; however, all or a por- lease. For a rental assistance contract
tion of the homebuyer-tenant's month- between a participating jurisdiction
ly contribution toward rent may be set and a family, the term of the contract
aside for this purpose. If a partici- need not end on termination of the
pating jurisdiction determines that the lease, but no payments may be made
tenant has met the lease-purchase cri- after termination of the lease until a
teria and is ready to assume ownership, family enters into a new lease.
561
§92.210 24 CFR Subtitle A(4-1-20 Edition)
(f) Rent reasonableness. The partici- loan repayments are program income
pating jurisdiction must disapprove a to be used in accordance with§92.503.
lease if the rent is not reasonable, (5)Paragraphs(b), (c), (d), (f), (g), and
based on rents that are charged for (i) of this section are applicable to
comparable unassisted rental units. HOME security deposit assistance, ex-
(g) Tenant protections. The tenant cept that income determinations pur-
must have a lease that complies with suant to paragraph(c)(1)of this section
the requirements in §92.253 (a) and (b). and Housing Quality Standard inspec-
(h) Maximum subsidy. (1) The amount tions pursuant to paragraph (i) of this
of the monthly assistance that a par- section are required only at the time
ticipating jurisdiction may pay to, or the security deposit assistance is pro-
on behalf of, a family may not exceed vided.
the difference between a rent standard (k) Program operation. A tenant-based
for the unit size established by the par- rental assistance program must be op-
ticipating jurisdiction and 30 percent of erated consistent with the require-
the family's monthly adjusted income. ments of this section. The partici-
(2) The participating jurisdiction pating jurisdiction may operate the
must establish a minimum tenant con- program itself, or may contract with a
tribution to rent. PHA or other entity with the capacity
(3) The participating jurisdiction's to operate a rental assistance program.
rent standard for a unit size must be The tenant-based rental assistance
based on: may be provided through an assistance
(i)Local market conditions; or contract to an owner that leases a unit
(ii) The Section 8 Housing Choice to an assisted family or directly to the
Voucher Program(24 CFR part 982). family. In either case, the partici-
(i) Housing quality standards. Housing pating jurisdiction (or entity operating
occupied by a family receiving tenant- the program)must approve the lease.
based assistance under this section (1) Use of Section 8 assistance. In any
must meet the requirements set forth case where assistance under section 8
in 24 CFR 982.401. The participating ju- of the 1937 Act becomes available, re-
risdiction must inspect the housing ini- cipients of tenant-based rental assist-
tially and re-inspect it annually. ance under this part will qualify for
(j) Security deposits. (1) A partici- tenant selection preferences to the
pating jurisdiction may use HOME same extent as when they received the
funds provided for tenant-based rental HOME tenant-based rental assistance
assistance to provide loans or grants to under this part.
very low- and low-income families for [61 FR 48750, Sept. 16, 1996, as amended at 62
security deposits for rental of dwelling FR 28928, May 28, 1997; 67 FR 61756, Oct. 1,
units whether or not the participating 2002;78 FR 44668,July 24,2013]
jurisdiction provides any other tenant-
based rental assistance under this sec- §92.210 Troubled HOME-assisted rent-
tion. al housing projects.
(2) The relevant State or local defini- (a) The provisions of this section
tion of "security deposit" in the juris- apply only to an existing HOME- as-
diction where the unit is located is ap- sisted rental project that, within the
plicable for the purposes of this part, HOME period of affordability, is no
except that the amount of HOME funds longer financially viable. For purposes
that may be provided for a security de- of this section, a HOME assisted rental
posit may not exceed the equivalent of project is no longer financially viable
two month's rent for the unit. if its operating costs significantly ex-
(3) Only the prospective tenant may teed its operating revenue. HUD may
apply for HOME security deposit as- approve one or both of the actions de-
sistance, although the participating ju- scribed in paragraphs (b) and (c) of this
risdiction may pay the funds directly section to strategically preserve a
to the tenant or to the landlord. rental project after consideration of
(4) HOME funds for security deposits market needs, available resources, and
may be provided as a grant or as a the likelihood of long-term viability of
loan. If they are provided as a loan, the the project.
562
Office of the Secretary, HUD §92.213
(b) Notwithstanding §92.214, a par- (c) Project costs. Eligible project costs
ticipating jurisdiction may request and may be incurred during the current
HUD may permit, pursuant to a writ- program year in an amount not to ex-
ten memorandum of agreement, a par- ceed 25% of the current HOME alloca-
ticipating jurisdiction to invest addi- tion amount, to be charged to the fol-
tional HOME funds in the existing lowing year's HOME allocation. Before
HOME-assisted rental project. The incurring the pre-award costs, the par-
total HOME funding for the project ticipating jurisdiction must comply
(original investment plus additional in- with its citizen participation plan re-
vestment)must not exceed the per-unit quirements addressing 24 CFR
subsidy limit in §92.250(a). The use of 91.105(b)(2), (4), (5) and (g) (local gov-
HOME funds may include, but is not ernments) or 24 CFR 91.115(b)(2), (4), (5)
limited to, rehabilitation of the HOME and (f) (States). In lieu of a full action
units and recapitalization of project re- plan, the participating jurisdiction
serves for the HOME units(to fund cap- may develop a mini-action plan which
ital costs). If additional HOME funds describes the proposed pre-award
are invested, HUD may require the pe- projects and costs in accordance with
riod of affordability to be extended, 24 CFR 91.220(c) and includes, if appli-
based on such considerations as the cable, 24 CFR 91.220(g)(2) (local govern-
amount of additional HOME funds or ments)or 24 CFR 91.320(c) and, if appli-
additional units. cable, 24 CFR 91.320(g)(2) (States). The
(c) HUD Headquarters may, through mini-action plan must state that
written approval, permit the partici- HOME funding for the project(s) is sub-
pating jurisdiction to reduce the num- ject to the future availability of HOME
ber of HOME-assisted units, if the funds. The subsequent action plan (i.e.,
project contains more than the min- action plan for the HOME allocation to
imum number of units required to be which the costs will be charged) must
designated as HOME-assisted under also include the use of HOME funds
§92.205(d). In determining whether to contained in the mini-action plan.
permit a reduction in the number of (d)Subrecipient or State recipient costs.
HOME-assisted units, HUD will take The participating jurisdiction may au-
into account the required period of af- thorize its subrecipient or State recipi-
fordability and the amount of HOME ent to incur pre-award costs in accord-
assistance provided to the project. ance with the requirements of this sec-
[78 FR 44669,July 24,2013] tion. The authorization must be in
writing.
§92.212 Pre-award costs. (e) Other pre-agreement costs. Pre-
(a) General. Before the effective date agreement costs in excess of the
of the HOME Investment Partnership amount set forth in paragraph (c) of
Agreement, the participating jurisdic- this section must be approved, in writ-
tion may incur costs which may be ing, by the HUD Field Office before the
charged to the HOME allocation after costs are incurred.
the award of the HOME allocation, pro-
vided the costs are in compliance with §92.213 HOME Funds and Public
the requirements of this part (includ- Housing.
ing environmental review require- (a)General rule. HOME funds may not
ments)and with the statutory and reg- be used for public housing units.
ulatory requirements in effect at the HOME-assisted housing units may not
time the costs are charged to the receive Operating Fund or Capital
HOME allocation. Fund assistance under section 9 of the
(b) Administrative and planning costs. 1937 Act during the HOME period of af-
Eligible administrative and planning fordability.
costs may be incurred as of the begin- (b) Exception. HOME funds may be
ning of the participating jurisdiction's used for the development of public
consolidated program year (see 24 CFR housing units, if the units are devel-
91.10) or the date the consolidated plan oped under section 24 of the 1937 Act
describing the HOME allocation to (HOPE VI) and no Capital Fund assist-
which the costs will be charged is re- ance under section 9(d) of the Act is
ceived by HUD,whichever is later. used for the development of the unit.
563
§92.214 24 CFR Subtitle A(4-1-20 Edition)
Units developed with both HOME and funds may be committed to a project
HOPE VI may receive operating assist- for up to one year after project comple-
ance under section 9 of the 1937 Act. tion (see §92.502), but the amount of
Units developed with HOME and HOPE HOME funds in the project may not ex-
VI funds under this paragraph may sub- ceed the maximum per-unit subsidy
sequently receive Capital Funds for re- amount established under§92.250.
habilitation or modernization. (7) Pay for the acquisition of prop-
(c) Using HOME funds in public hous- erty owned by the participating juris-
ing projects. Consistent with §92.205(d), diction, except for property acquired
HOME funds may be used for affordable by the participating jurisdiction with
housing units in a project that also HOME funds, or property acquired in
contains public housing units, provided anticipation of carrying out a HOME
that the HOME funds are not used for project; or
the public housing units(except as pro- (8) Pay delinquent taxes, fees or
vided in paragraph (b) of this section) (8) Pay delinquent taxes, fees or
and HOME funds are used only for eli- charges on properties to be assisted
gible costs in accordance with this with HOME funds.
part. (9) Pay for any cost that is not eligi-
(d) The HOME funds must be used in ble under§§92.206 through 92.209.
accordance with the requirements of (b)(1) Participating jurisdictions may
this part and the project must meet not charge (and must prohibit State re-
the requirements of this part, includ- cipients, subrecipients, and community
ing rent requirements in§92.252. housing development organizations
[78 FR 44669,July 24,2013] from charging) servicing, origination,
or other fees for the purpose of cov-
§92.214 Prohibited activities and fees. ering costs of administering the HOME
(a) HOME funds may not be used to: program(e.g., fees on low-income fami-
lies for construction management or
(1) Provide project reserve accounts, for inspections for compliance with
except as provided in §92.206(d)(5), or
operating subsidies; property standards) (see §92.206(d)(6)
(2) Provide tenant-based rental as- and§92.207),except that:
sistance for the special purposes of the (i) Participating jurisdictions and
existing section 8 program, in accord State recipients may charge owners of
ance with section 212(d)of the Act; rental projects reasonable annual fees
(3)Provide non-federal matching con- for compliance monitoring during the
tributions required under any other period of affordability. The fees must
Federal program; be based upon the average actual cost
(4) Provide assistance for uses au- of performing the monitoring of
thorized under section 9 of the 1937 Act HOME-assisted rental projects. The
(Public Housing Capital and Operating basis for determining the amount of for
Funds); the fee amount must be documented
(5) Provide assistance to eligible low- and the fee must be included in the
income housing under 24 CFR part 248 costs of the project as part of the
(Prepayment of Low Income Housing project underwriting;
Mortgages), except that assistance may (ii) Participating jurisdictions, sub-
be provided to priority purchasers as recipients and State recipients may
defined in 24 CFR 248.101; charge nominal application fees (al-
(6) Provide assistance (other than though these fees are not an eligible
tenant-based rental assistance, assist- HOME cost) to project owners to dis-
ance to a homebuyer to acquire hous- courage frivolous applications. The
ing previously assisted with HOME amount of application fees must be ap-
funds, or assistance to preserve afford- propriate to the type of application and
ability of homeownership housing in may not create an undue impediment
accordance with §92.254(a)(9)) to a to a low-income family's, subrecipi-
project previously assisted with HOME ent's, State recipient's, or other enti-
funds during the period of affordability ty's participation in the participating
established by the particular jurisdic- jurisdiction's program;and
tion in the written agreement under (iii) Participating jurisdictions, sub-
§92.504. However, additional HOME recipients and State recipients may
564
Office of the Secretary, HUD §92.218
charge homebuyers a fee for housing time of occupancy or at the time funds
counseling. are invested,whichever is later;or
(2) All fees charged under paragraph (2) The dwelling units assisted with
(b)(1) of this section are applicable such funds are occupied by families
credits under 2 CFR 200.406. having such incomes; and
(3) The participating jurisdiction (b)The remainder of:
must prohibit project owners from (1) The families receiving such rental
charging fees that are not customarily assistance are households that qualify
charged in rental housing(e.g., laundry as low-income families (other than
room access fees), except that rental families described in paragraph(a)(1)of
project owners may charge: this section) at the time of occupancy
(i) Reasonable application fees to or at the time funds are invested,
prospective tenants; whichever is later; or
(ii) Parking fees to tenants only if (2) The dwelling units assisted with
such fees are customary for rental such funds are occupied by such house-
housing projects in the neighborhood; holds.
and
(iii) Fees for services such as bus §92.217 Income targeting: Homeown-
transportation or meals, as long as the ership.
services are voluntary and fees are Each participating jurisdiction must
charged for services provided. invest HOME funds made available dur-
ing[61 FR 48750, Sept. 16, 1996, as amended at 62 a fiscal year so that with respect to
FR 28929, May 28, 16 1 6 as end, Oct. 2 homeownership assistance, 100 percent
2002; 72 FR 16685, Apr. 4, 2007; 78 FR 44669, of these funds are invested in dwelling
July 24,2013;80 FR 75935,Dec.7,2015] units that are occupied by households
that qualify as low-income families.
§92.215 Limitation on jurisdictions [67 FR 61756,Oct.1,2002]
under court order.
Limitations on the use of HOME MATCHING CONTRIBUTION REQUIREMENT
funds in connection with litigation in-
volving discrimination or fair housing §92.218 Amount of matching contribu-
are set forth in section 224 of the Act. tion.
INCOME TARGETING (a) General. Each participating juris-
diction must make contributions to
housing that qualifies as affordable
§92.216 Income targeting: Tenant- housing under the HOME program,
based rental assistance and rental throughout a fiscal year. The contribu-
units. tions must total not less than 25 per-
Each participating jurisdiction must cent of the funds drawn from the juris-
invest HOME funds made available dur- diction's HOME Investment Trust
ing a fiscal year so that, with respect Fund Treasury account in that fiscal
to tenant-based rental assistance and year, excluding funds drawn for pur-
rental units: poses identified in paragraph (c) of this
(a)Not less than 90 percent of: section.
(1) The families receiving such rental (b) Shortfall amount from State or local
assistance are families whose annual resources. Amounts made available
incomes do not exceed 60 percent of the under §92.102(b)(2) from the resources
median family income for the area, as of a State (other than a transfer of the
determined and made available by HUD State's formula allocation), the local
with adjustments for smaller and larg- participating jurisdiction, or both, to
er families (except that HUD may es- enable the local participating jurisdic-
tablish income ceilings higher or lower tion to meet the participation thresh-
than 60 percent of the median for the old amount are not required to be
area on the basis of HUD's findings matched and do not constitute match-
that such variations are necessary be- ing contributions.
cause of prevailing levels of construe- (c) HOME funds not required to be
tion cost or fair market rent, or unusu- matched. HOME funds used for adminis-
ally high or low family income) at the trative and planning costs (pursuant to
565
§92.219 24 CFR Subtitle A(4-1-20 Edition)
§92.207); community housing develop- (ii) The participating jurisdiction
ment organization operating expenses must demonstrate in writing that such
(pursuant to §92.208); capacity building assistance meets the provisions of
(pursuant to §92.300(b)) of community §§92.203 and 92.209(except§92.209(e)).
housing development organizations; (2) For affordable housing that is not
and project specific assistance to corn- HOME-assisted:
munity housing development organiza- (i) The contribution must be made
tions (pursuant to §92.301) when the with respect to housing that qualifies
participating jurisdiction waives re- as affordable housing under §92.252 or
payment under the provisions of §92.254.
§92.301(a)(3) or §92.301(b)(3) are not re- (ii) The participating jurisdiction or
quired to be matched. its instrumentality must execute, with
(d) Match contribution for other pro- the owner of the housing(or, if the par-
grams. Contributions that have been or ticipating jurisdiction is the owner,
will be counted as satisfying a match- with the manager or developer), a writ-
ing requirement of another Federal ten agreement that imposes and enu-
grant or award may not count as satis- merates all of the affordability require-
fying the matching contribution re- ments from §92.252 and §92.253(a) and
quirement for the HOME program. (b) (Tenant protections), or §92.254,
whichever are applicable; the property
§92.219 Recognition of matching con- standards requirements of §92.251; and
tribution.
income determinations made in accord-
(a) Match contribution to HOME-as- ance with §92.203. This written agree-
sisted housing. A contribution is recog- ment must be executed before any
nized as a matching contribution if it match contributions may be made.
is made with respect to: (iii) A participating jurisdiction
(1) A tenant who is assisted with must establish a procedure to monitor
HOME funds; HOME match-eligible housing to en-
(2)A HOME-assisted unit; sure continued compliance with the re-
(3) The portion of a project that is quirements of §§92.203 (Income deter-
not HOME-assisted provided that at minations), 92.252 (Qualification as af-
least 50 percent of the housing units in fordable housing: Rental housing),
the project are HOME-assisted. If the 92.253(a) and (b) (Tenant protections)
match contribution to the portion of and 92.254 (Qualification as affordable
the project that is not HOME-assisted housing: Homeownership). No other
meets the affordable housing require- HOME requirements apply.
ments of §92.219(b)(2), the percentage (iv)The match may be in any eligible
requirement for HOME-assisted units form of match except those in
does not apply; or §92.220(a)(2) (forbearance of fees), (a)(4)
(4) The commercial space in a mixed- (on-site and off-site infrastructure),
use project in which at least 51 percent
of the floor space is residential pro- ices) (direct cost of supportivefhome-
videdserv-
that at least 50 percent of the ices) and rein1) servicect costs of dwelling units are HOME-assisted. buyer counseling services).
(b) Match contribution to affordable (v) Match contributions to mixed-use
or mixed-income projects that contain
housing that is not HOME-assisted. The
recog-
following requirements apply for rec- affordable thehousing units will
ognition of matching contributions nized only if contribution is made
made to affordable housing that is not to the project's affordable housing
HOME-assisted: units.
(1)For tenant-based rental assistance [61 FR 48750, Sept. 16, 1996, as amended at 62
that is not HOME-assisted: FR 28929,May 28,1997]
(i) The contribution must be made
with respect to a tenant who is assisted §92.220 Form of matching contribu-
with tenant-based rental assistance tion.
that meets the requirements of§92.203 (a) Eligible forms. Matching contribu-
(Income determinations) and para- tions must be made from nonfederal re-
graphs (a), (c), (f), and (i) of §92.209 sources and may be in the form of one
(Tenant-based rental assistance); and or more of the following:
566
Office of the Secretary, HUD §92.220
(1) Cash contributions from nonfederal (A) If the loan is made from funds
sources. To be recognized as a cash con- borrowed by a jurisdiction or public
tribution, funds must be contributed agency or corporation the contribution
permanently to the HOME program (or is the present discounted cash value of
to affordable housing not assisted with the difference between the payments to
HOME funds), regardless of the form of be made on the borrowed funds and
investment provided to the project. payments to be received from the loan
Therefore, to receive match credit for to the project based on a discount rate
the full amount of a loan to a HOME equal to the interest rate on the bor-
project, all repayment, interest, or rowed funds.
other return on investment of the con- (B) If the loan is made from funds
tribution must be deposited in the other than funds borrowed by a juris-
local account of the participating ju- diction or public agency or corpora-
risdiction's HOME Investment Trust tion, the contribution is the present
Fund to be used for eligible HOME ac- discounted cash value of the yield fore-
tivities in accordance with the require- gone. In determining the yield fore-
ments of this part. A cash contribution gone, the participating jurisdiction
to affordable housing that is not as- must use as a measure of a market rate
sisted with HOME funds must be con- yield one of the following, as appro-
tributed permanently to the project. priate:
Repayments of matching contributions (1) With respect to one- to four-unit
in affordable housing projects, as de- housing financed with a fixed interest
fined in §92.219(b), that are not HOME- rate mortgage, a rate equal to the 10-
assisted, must be made to the local ac- year Treasury note rate plus 200 basis
count of the participating jurisdic- points;
tion's HOME Investment Trust Fund to (2) With respect to one- to four-unit
get match credit for the full loan housing financed with an adjustable in-
amount. terest rate mortgage, a rate equal to
(i) A cash contribution may be made the one-year Treasury bill rate plus 250
by the participating jurisdiction, non- basis points;
Federal public entities, private enti- (3) With respect to a multifamily
ties, or individuals, except as prohib- project, a rate equal to the 10-year
ited under paragraph (b)(4) of this sec- Treasury note rate plus 300 basis
tion. A cash contribution made to a points; or
nonprofit organization for use in a (4) With respect to housing receiving
HOME project may be counted as a financing for rehabilitation, a rate
matching contribution. equal to the 10-year Treasury note rate
(ii) A cash contribution may be made plus 400 basis points.
from program income (as defined by 2 (iv) Proceeds of bonds that are not
CFR 200.80) from a Federal grant repaid with revenue from an affordable
earned after the end of the award pe- housing project (e.g., general obliga-
riod if no Federal requirements govern tion bonds) and that are loaned to a
the disposition of the program income. HOME-assisted or other qualified af-
Included in this category are repay- fordable housing project constitute a
ments from closed out grants under the cash contribution under this para-
Urban Development Action Grant Pro- graph.
gram (24 CFR part 570, subpart G) and (v) A cash contribution may be
the Housing Development Grant Pro- counted as a matching contribution
gram (24 CFR part 850), and from the only if it is used for costs eligible
Rental Rehabilitation Grant Program under §§92.206 or 92.209, or for the fol-
(24 CFR part 511) after all fiscal year lowing (which are not HOME eligible
Rental Rehabilitation grants have been costs): the cost of removing and relo-
closed out. eating an ECHO housing unit during
(iii) The grant equivalent of a below- the period of affordability in accord-
market interest rate loan to the ance with §92.258(d)(3)(ii), payments to
project that is not repayable to the a project reserve account beyond pay-
participating jurisdiction's HOME In- ments permitted by §92.206(d)(5), oper-
vestment Trust Fund may be counted ating subsidies, or costs relating to the
as a cash contribution,as follows: portion of a mixed-income or mixed-
567
§92.220 24 CFR Subtitle A(4-1-20 Edition)
use HOME-assisted project not related individuals, except as prohibited under
to the affordable housing units. paragraph(b)(4)of this section.
(2) Forbearance of fees—(i) State and (i) Donated property not acquired
local taxes, charges or fees. The value with Federal resources is a contribu-
(based on customary and reasonable tion in the amount of 100% of the
means for establishing value) of State value.
or local taxes, fees, or other charges (ii) Donated property acquired with
that are normally and customarily im- Federal assistance may provide a par-
posed or charged by a State or local tial contribution as follows. The prop-
government on all transactions or erty must be acquired with Federal as-
projects in the conduct of its oper- sistance specifically for a HOME
ations, which are waived, foregone, or project (or for affordable housing that
deferred (including State low-income will be counted as match pursuant to
housing tax credits) in a manner that §92.219(b)(2)). The property must be ac-
achieves affordability of HOME-as-
sisted projects, may be counted as quiredwith theFederal assistance
demonstrably at
appraised
match. The amount of any real estate belowthe
taxes may be based on post-improve- value andd must be acknowledged by the
seller as a donation to affordable hous-
ment property value. For taxes,fees, or ing at the time of the acquisition with
charges that are forgiven for future the Federal assistance. The amount of
years, the value is the present dis- the contribution is the difference be-
counted cash value, based on a rate tween the acquisition price and the ap-
equal to the rate for the Treasury secu-
rity with a maturity closest to the praised value at the time of acquisition
number of years for which the taxes, with the Federal assistance. If the
fees, or charges are waived, foregone, property is acquired with the Federal
or deferred. assistance by someone other than the
(ii) Other charges or fees. The value of HOME project (or affordable housing)
fees or charges associated with the owner, to continue to qualify as a con-
transfer or development of real estate tribution, the property must be given
that are normally and customarily im- to the HOME project (or affordable
posed or charged by public or private housing) owner at a price that does not
entities, which are waived or foregone, exceed the amount of the Federal as-
in whole or in part, in a manner that sistance used to acquire the property.
achieves affordability of HOME-as- (iii) Property must be appraised in
sisted projects, may be counted as conformance with established and gen-
match. Fees and charges under this erally recognized appraisal practice
paragraph do not include fees or and procedures in common use by pro-
charges for legal or other professional fessional appraisers. Opinions of value
services; professional services which must be based on the best available
are donated, in whole or in part, are an data properly analyzed and interpreted.
eligible matching contribution in ac- The appraisal of land and structures
cordance with paragraph (a)(7) of this must be performed by an independent,
section. certified appraiser.
(iii) Fees or charges that are associ- (4) The cost, not paid with Federal
ated with the HOME Program only resources, of on-site and off-site infra-
(rather than normally and customarily structure that the participating juris-
imposed or charged on all transactions diction documents are directly re-
or projects) are not eligible forms of quired for HOME-assisted projects. The
matching contributions. infrastructure must have been com-
(3) Donated Real Property. The value, pleted no earlier than 12 months before
before the HOME assistance is provided HOME funds are committed to the
and minus any debt burden, lien, or project.
other encumbrance, of donated land or (5) Proceeds from multifamily and
other real property may be counted as single family affordable housing
match. The donation may be made by project bond financing validly issued
the participating jurisdiction,non-Fed- by a State or local government, or an
eral public entities, private entities, or agency or instrumentality of a State or
568
Office of the Secretary, HUD §92.221
local government or a political subdivi- case management, mental health serv-
sion of a State and repayable with rev- ices, assistance with the tasks of daily
enues from the affordable housing living, substance abuse treatment and
project financed as follows: counseling, day care, and job training
(i) Fifty percent of the loan amount and counseling.
made from bond proceeds to a multi- (11) The direct cost of homebuyer
family affordable housing project counseling services provided to fami-
owner may qualify as match. lies that acquire properties with HOME
(ii) Twenty-five percent of the loan funds under the provisions of§92.254(a),
amount from bond proceeds made to a including ongoing counseling services
single-family affordable housing provided during the period of afford-
project owner may qualify as match. ability. These services may be provided
(iii) Loans made from bond proceeds as part of a homebuyer counseling pro-
may not constitute more than 25 per- gram that is not specific to the HOME
cent of a participating jurisdiction's Program, but only the cost of services
total annual match contribution. to families that complete purchases
(6) The reasonable value of donated with HOME assistance may be counted
site-preparation and construction ma- as match.
terials, not acquired with Federal re- (b) Ineligible forms. The following are
sources. The value of site-preparation examples that do not meet the require-
and construction materials is to be de- ments of paragraph (a) of this section
termined in accordance with the par- and do not count toward meeting a par-
ticipating jurisdiction's cost estimate ticipating jurisdiction's matching con-
procedures. tribution requirement:
(7)The reasonable rental value of the (1) Contributions made with or de-
donated use of site preparation or con- rived from Federal resources or funds,
struction equipment. regardless of when the Federal re-
(8)The value of donated or voluntary sources or funds were received or ex-
labor or professional services (see pended. CDBG funds (defined in 24 CFR
§92.354(b)) in connection with the pro- 570.3) are Federal funds for this pur-
vision of affordable housing. A single pose;
rate established by HUD shall be appli- (2) The interest rate subsidy attrib-
cable for determining the value of un- utable to the Federal tax-exemption on
skilled labor. The value of skilled labor financing or the value attributable to
or professional services shall be deter- Federal tax credits;
mined by the rate that the individual
or entity performing the labor or serv- (3) Ownerequity or investment in a
ice normally charges. project; and
(9) The value of sweat equity (see (4) Cash or other forms of cipiebu-
tions from applicants for or reecipie
§92.354(c))provided to a homeownership nts
project, under an established compo- of HOME assistance or contracts,or in-
nent of a participating jurisdiction's vestors who own, are working on, or
program, up until the time of project are proposing to apply for assistance
completion (i.e., submission of a for a HOME-assisted project. The pro-
project completion form). Such labor hibition in this paragraph (b)(4) does
shall be valued at the rate established not apply to contractors (who do not
for unskilled labor at paragraph (a)(8) own any HOME project) contributing
of this section. professional services in accordance
(10) The direct cost of supportive with paragraph (a)(8) of this section or
services provided to families residing to persons contributing sweat equity in
in HOME-assisted units during the pe- accordance with paragraph (a)(9) of
this section.
rind of affordability or receiving HOME
tenant-based rental assistance during [61 FR 48750, Sept. 16, 1996, as amended at 62
the term of the tenant-based rental as- FR 28929, May 28, 1997; 62 FR 44840, Aug. 22,
sistance contract. The supportive serv- 1997;80 FR 75935,Dec.7,2015]
ices must be necessary to facilitate §92.221 Match credit.
independent living or be required as
part of a self-sufficiency program. Ex- (a) When credit is given. Contributions
amples of supportive services include: are credited on a fiscal year basis at
569
§92.222 24 CFR Subtitle A(4-1-20 Edition)
the time the contribution is made, as for the fiscal year in which they were
follows: made may be carried over and applied
(1) A cash contribution is credited to future fiscal years' match liability.
when the funds are expended. Loans made from bond proceeds in ex-
(2) The grant equivalent of a below- cess of 25 percent of a participating ju-
market interest rate loan is credited at risdiction's total annual match con-
the time of the loan closing. tribution may be carried over to subse-
(3) The value of state or local taxes, quent fiscal years as excess match, sub-
fees, or other charges that are nor- ject to the annual 25 percent limita-
mally and customarily imposed but are to the annual 25 percent don.
waived, foregone, or deferred is cred- tion.
ited at the time the state or local gov- (c) Credit for match contributions
ernment or other public or private en- shall be assigned as follows:
tity officially waives, forgoes, or defers (1) For HOME-assisted projects in-
the taxes, fees, or other charges and volving more than one participating ju-
notifies the project owner. risdiction, the participating jurisdic-
(4)The value of donated land or other tion that makes the match contribu-
real property is credited at the time tion may decide to retain the match
ownership of the property is trans- credit or permit the other partici-
ferred to the HOME project (or afford- pating jurisdiction to claim the credit.
able housing)owner. (2) For HOME match contributions to
(5) The cost of investment in infra- affordable housing that is not HOME-
structure directly required for HOME- assisted (match pursuant to §92.219(b))
assisted projects is credited at the time involving more than one participating
funds are expended for the infrastruc- jurisdiction, the participating jurisdic-
ture or at the time the HOME funds are tion that makes the match contribu-
committed to the project if the infra- tion receives the match credit.
structure was completed before the
commitment of HOME funds. (3) A State that provides non-Federal
funds to a local participating jurisdic-
(6) The value of donated material is
credited as match at the time it is used tion to be used for a contribution to af-
for affordable housing. fordable housing, whether or not
(7)The value of the donate use of site HOME-assisted, may take the match
preparation or construction equipment credit for itself or may permit the
is credited as match at the time the local participating jurisdiction to re-
equipment is used for affordable hous- ceive the match credit.
ing. (d) Match credit for the development
(8) The value of donated or voluntary of affordable homeownership housing
labor or professional services is cred- for sale to homebuyers. Contributions
ited at the time the work is performed. to the development of homeownership
(9) A loan made from bond proceeds housing may be credited as a match
under §92.220(a)(5) is credited at the only to the extent that the sales price
time of the loan closing. of the housing is reduced by the
(10) The direct cost of social services amount of the contribution or, if the
provided to residents of HOME-assisted development costs exceed the fair mar-
units is credited at the time that the ket value of the housing, the contribu-
social services are provided during the tion may be credited to the extent that
period of affordability. the contributions enable the housing to
(11) The direct cost of homebuyer be sold for less than the cost of devel-
counseling services provided to fami- opment.
lies that purchase HOME-assisted units
is credited at the time that the home- [61 FR.48750, Sept. 16, 1996, as amended at 78
buyer purchases the unit or for post- FR 44670,July 24,2013]
purchase counseling services, at the
time the counseling services are pro- §92.222 Reduction of matching con-
vided. tribution requirement.
(b) Excess match. Contributions made (a) Reduction for fiscal distress. HUD
in a fiscal year that exceed the partici- will determine match reductions annu-
pating jurisdiction's match liability ally.
570
Office of the Secretary, HUD §92.222
(1)Distress criteria for local government year for which the most recent data
participating jurisdictions. If a local gov- are available, as determined according
ernment participating jurisdiction sat- to information from the Bureau of the
isfies both of the distress factors in Census.
paragraphs (a)(1)(i) and (ii) of this sec- (iii) Personal income growth. The aver-
tion, it is in severe fiscal distress and age personal income growth rate in the
its match requirement will be reduced State over the most recent four guar-
by 100% for the period specified in ters for which the data are available
paragraph (a)(3) of this section. If a was less than 75 percent of the average
local government participating juris- national personal income growth rate
diction satisfies either distress factor during that period, as determined ac-
in paragraphs(a)(1)(i)or(ii)of this sec- cording to information from the Bu-
tion, it is in fiscal distress and its reau of Economic Analysis.
match requirement will be reduced by (3) Period of match reduction for severe
50 percent, for the period specified in fiscal distress. A 100% match reduction
paragraph(a)(4)of this section. is effective for the fiscal year in which
(i) Poverty rate. The average poverty the severe fiscal distress determination
rate in the participating jurisdiction
is made and for the following fiscal
was equal to or greater than 125 per year.
cent of the average national poverty (4) Period of match reduction for fiscal
rate during the calendar year for which distress.A 50% match reduction is effec-
the most recent data are available, as tive for the fiscal year in which the fis-
determined according to information of cal distress determination is made and
the Bureau of the Census.
(ii)Per capita income. The average per for the following fiscal year, except
capita income in the participating ju- that if a severe fiscal distress deter-
risdiction was less than 75 percent of mination is published in that following
the average national per capita in- fiscal year, the participating jurisdic-
come, during the calendar year for tion starts a new two-year match re-
which the most recent data are avail- duction period in accordance with the
able, as determined according to infor- provisions of paragraph (a)(3) of this
mation from the Bureau of the Census. section.
(2) Distress criteria for participating ju- (b) Reduction of match for partici-
risdictions that are States. If a State sat- pating jurisdictions in disaster areas.If
isfies at least 2 of the 3 distress factors a participating jurisdiction is located
in paragraphs (a)(2)(i) through (iii) of in an area in which a declaration of
this section, it is in severe fiscal dis- major disaster is made pursuant to the
tress and its match requirement will be Robert T. Stafford Disaster Relief and
reduced by 100% for the period specified Emergency Assistance Act (42 U.S.C.
in paragraph (a)(3) of this section. If a 5121-5206), the participating jurisdic-
State satisfies any 1 of the 3 distress tion may request a reduction of its
factors in paragraphs (a)(2)(i) through matching requirement.
(iii) of this section, it is in fiscal dis- (1) In determining whether to grant
tress and its match requirement will be the request and the amount and dura-
reduced by 50 percent, for the period tion of the reduction, if any,HUD must
specified in paragraph (a)(4)of this sec- consider the fiscal impact of the dis-
tion. aster on the participating jurisdiction.
(i) Poverty rate. The average poverty (i) For a local participating jurisdic-
rate in the State was equal to or great- tion, the HUD Field office may reduce
er than 125 percent of the average na- the matching requirement specified in
tional poverty rate during the calendar §92.218 by up to 100 percent for the fis-
year for which the most recent data cal year in which the declaration of
are available, as determined according major disaster is made and the fol-
to information from the Bureau of the lowing fiscal year.
Census. (ii) For a State participating juris-
(ii)Per capita income. The average per diction, the HUD Field office may re-
capita income in the State was less duce the matching requirement speci-
than 75 percent of the average national fied in §92.218, by up to 100 percent for
per capita income, during the calendar the fiscal year in which the declaration
571
§92.250 24 CFR Subtitle A(4-1-20 Edition)
of major disaster is made and the fol- (1)An examination of the sources and
lowing fiscal year with respect to any uses of funds for the project and a de-
HOME funds expended in an area to termination that the costs are reason-
which the declaration of a major dis- able; and
aster applies. (2) An assessment, at minimum, of
(2) At its discretion and upon request the current market demand in the
of the participating jurisdiction, the neighborhood in which the project will
HUD Field Office may extend the re- be located, the experience of the devel-
duction for an additional year. oper, the financial capacity of the de-
[61 FR 48750, Sept. 16, 1996, as amended at 78 veloper, and firm written financial
FR 44670,July 24,2013] commitments for the project.
(3) For projects involving rehabilita-
tion of owner-occupied housing pursu-
Subpart F—Project Requirements ant to§92.254(b):
§92.250 Maximum per-unit subsidy (i) An underwriting analysis is re-
amount, underwriting, and subsidy quired only if the HOME-funded reha-
layering. bilitation loan is an amortizing loan;
and
(a) Maximum per-unit subsidy amount. (ii) A market analysis or evaluation
The total amount of HOME funds and of developer capacity is not required.
ADDI funds that a participating juris- (4) For projects involving HOME-
diction may invest on a per-unit basis funded downpayment assistance pursu-
in affordable housing may not exceed ant to §92.254(a) and which do not in-
the per-unit dollar limitations estab- clude HOME-funded development activ-
lished under section 221(d)(3)(ii) of the ity, a market analysis or evaluation of
National Housing Act (12 developer capacity is not required.
U.S.C.17151(d)(3)(ii)) for elevator- type
projects that apply to the area in [78 FR 44670,July 24,2013]
which the housing is located. HUD will
allow the per-unit subsidy amount to §92.251 Property standards.
be increased on a program-wide basis (a) New construction projects. (1) State
to an amount, up to 240 percent of the and local codes, ordinances, and zoning
original per unit limits, to the extent requirements. Housing that is newly
that the costs of multifamily housing constructed with HOME funds must
construction exceed the section meet all applicable State and local
221(d)(3)(ii)limit. codes, ordinances, and zoning require-
(b) Underwriting and subsidy layering. ments. HOME-assisted new construe-
Before committing funds to a project, tion projects must meet State or local
the participating jurisdiction must residential and building codes, as appli-
evaluate the project in accordance with cable or, in the absence of a State or
guidelines that it has adopted for de- local building code, the International
termining a reasonable level of profit Residential Code or International
or return on owner's or developer's in- Building Code (as applicable to the
vestment in a project and must not in- type of housing) of the International
vest any more HOME funds, alone or in Code Council. The housing must meet
combination with other governmental the applicable requirements upon
assistance, than is necessary to provide project completion.
quality affordable housing that is fi- (2) HUD requirements. All new con-
nancially viable for a reasonable period struction projects must also meet the
(at minimum, the period of afford- requirements described in this para-
ability in §92.252 or §92.254) and that graph:
will not provide a profit or return on (i) Accessibility. The housing must
the owner's or developer's investment meet the accessibility requirements of
that exceeds the participating jurisdic- 24 CFR part 8, which implements Sec-
tion's established standards for the tion 504 of the Rehabilitation Act of
size, type, and complexity of the 1973(29 U.S.C. 794), and Titles II and III
project. The participating jurisdic- of the Americans with Disabilities Act
tion's guidelines must require the par- (42 U.S.C. 12131-12189) implemented at
ticipating jurisdiction to undertake: 28 CFR parts 35 and 36, as applicable.
572
Office of the Secretary, HUD §92.251
Covered multifamily dwellings, as de- rehabilitation standards for all HOME-
fined at 24 CFR 100.201, must also meet assisted housing rehabilitation activi-
the design and construction require- ties that set forth the requirements
ments at 24 CFR 100.205, which imple- that the housing must meet upon
ments the Fair Housing Act (42 U.S.C. project completion. The participating
3601-3619). jurisdiction's description of its stand-
(ii) [Reserved] ards must be in sufficient detail to de-
(iii) Disaster mitigation. Where rel- termine the required rehabilitation
evant, the housing must be constructed work including methods and materials.
to mitigate the impact of potential dis- The standards may refer to applicable
asters (e.g., earthquakes, hurricanes, codes or they may establish require-
flooding, and wildfires), in accordance ments that exceed the minimum re-
with State and local codes, ordinances, quirements of the codes. The rehabili-
or other State and local requirements, tation standards must address each of
or such other requirements as HUD the following:
may establish. (i) Health and safety. The partici-
(iv) Written cost estimates, construction pating jurisdiction's standards must
contracts and construction documents. identify life-threatening deficiencies
The participating jurisdiction must en- that must be addressed immediately if
sure the construction contract(s) and the housing is occupied.
construction documents describe the (ii) Major systems. Major systems are:
work to be undertaken in adequate de-
tail so that inspections can be con- structural support; roofing; cladding
ducted. The participating jurisdiction and weatherproofing (e.g., windows,
must review and approve written cost doors, siding, gutters); plumbing; elec-
estimates for construction and deter- trical; and heating, ventilation, and air
mining that costs are reasonable. conditioning. For rental housing, the
(v) Construction progress inspections. participating jurisdiction's standards
The participating jurisdiction must must require the participating jurisdic-
tion to estimate(based on age and con-
ofconduct progress and final inspections
construction to ensure that work is dition) the remaining useful life of
done in accordance with the applicable these systems,upon project completion
codes, the construction contract, and of each major systems. For multi-
construction documents. family housing projects of 26 units or
(vi) Broadband infrastructure. For new more, the participating jurisdiction's
commitments made after January 19, standards must require the partici-
2017 for a new construction housing pating jurisdiction to determine the
project of a building with more than 4 useful life of major systems through a
rental units, the construction must in- capital needs assessment of the project.
elude installation of broadband infra- For rental housing, if the remaining
structure, as this term is defined in 24 useful life of one or more major system
CFR 5.100, except where the partici- is less than the applicable period of af-
pating jurisdiction determines and, in fordability, the participating jurisdic-
accordance with §92.508(a)(3)(iv), docu- tion's standards must require the par-
ments the determination that: ticipating jurisdiction to ensure that a
(A) The location of the new construe- replacement reserve is established and
tion makes installation of broadband monthly payments are made to the re-
infrastructure infeasible;or serve that are adequate to repair or re-
(B) The cost of installing the infra- place the systems as needed. For home-
structure would result in a funda- ownership housing, the participating
mental alteration in the nature of its jurisdiction's standards must require,
program or activity or in an undue fi- upon project completion, each of the
nancial burden. major systems to have a remaining
(b) Rehabilitation projects. All reha- useful life for a minimum of 5 years or
bilitation that is performed using for such longer period specified by the
HOME funds must meet the require- participating jurisdiction, or the major
ments of this paragraph(b). systems must be rehabilitated or re-
(1) Rehabilitation standards. The par- placed as part of the rehabilitation
ticipating jurisdiction must establish work.
573
§92.251 24 CFR Subtitle A(4-1-20 Edition)
(iii) Lead-based paint. The partici- 26 or more total units, the partici-
pating jurisdiction's standards must pating jurisdiction must determine all
require the housing to meet the lead- work that will be performed in the re-
based paint requirements at 24 CFR habilitation of the housing and the
part 35. long-term physical needs of the project
(iv)Accessibility. The participating ju- through a capital needs assessment of
risdiction's standards must require the the project.
housing to meet the accessibility re- (x) Broadband infrastructure. For new
quirements in 24 CFR part 8, which im- commitments made after January 19,
plements Section 504 of the Rehabilita- 2017 for a substantial rehabilitation
tion Act of 1973 (29 U.S.C. 794), and Ti- project of a building with more than 4
tles II and III of the Americans with rental units, any substantial rehabili-
Disabilities Act (42 U.S.C. 12131-12189) tation, as defined in 24 CFR 5.100, must
implemented at 28 CFR parts 35 and 36, provide for installation of broadband
as applicable. Covered multifamily infrastructure, as this term is also de-
dwellings, as defined at 24 CFR 100.201, fined in 24 CFR 5.100, except where the
must also meet the design and con- participating jurisdiction determines
struction requirements at 24 CFR and, in accordance with
100.205, which implements the Fair §92.508(a)(3)(iv), documents the deter-
Housing Act(42 U.S.C. 3601-3619). Reha- mination that:
bilitation may include improvements (A) The location of the substantial
that are not required by regulation or rehabilitation makes installation of
statute that permit use by a person broadband infrastructure infeasible;
with disabilities.
(v) [Reserved] (B) The cost of installing broadband
(vi) Disaster mitigation. Where rel- infrastructure would result in a funda-
evant, the participating jurisdiction's mental alteration in the nature of its
standards must require the housing to program or activity or in an undue fi-
be improved to mitigate the impact of nancial burden;or
potential disasters (e.g., earthquake, (C)The structure of the housing to be
hurricanes, flooding, and wildfires) in substantially rehabilitated makes in
accordance with State and local codes, stallation of broadband infrastructure
ordinances, and requirements. infeasible.
(vii) State and local codes, ordinances, (2) Construction documents and cost es-
and zoning requirements. The partici- timates. The participating jurisdiction
pating jurisdiction's standards must must ensure that the work to be under-
require the housing to meet all appli- taken will meet the participating juris-
cable State and local codes, ordi- diction's rehabilitation standards. The
nances, and requirements or, in the ab- construction documents (i.e., written
sence of a State or local building code, scope of work to be performed)must be
the International Existing Building in sufficient detail to establish the
Code of the International Code Council. basis for a uniform inspection of the
(viii) Uniform Physical Condition housing to determine compliance with
Standards. The standards of the partici- the participating jurisdiction's stand-
pating jurisdiction must be such that, ards. The participating jurisdiction
upon completion, the HOME-assisted must review and approve a written cost
project and units will be decent, safe, estimate for rehabilitation after deter-
sanitary, and in good repair as de- mining that costs are reasonable.
scribed in 24 CFR 5.703. HUD will estab- (3) Frequency of inspections. The par-
lish the minimum deficiencies that ticipating jurisdiction must conduct an
must be corrected under the partici- initial property inspection to identify
pating jurisdiction's rehabilitation the deficiencies that must be ad-
standards based on inspectable items dressed. The participating jurisdiction
and inspected areas from HUD-pre- must conduct progress and final inspec-
scribed physical inspection procedures tions to determine that work was done
(Uniform Physical Conditions Stand- in accordance with work write-ups.
ards)pursuant to 24 CFR 5.705. (c) Acquisition of standard housing. (1)
(ix) Capital Needs Assessments. For Existing housing that is acquired with
multifamily rental housing projects of HOME assistance for rental housing,
574
Office of the Secretary, HUD §92.251
and that was newly constructed or re- (d) Occupied housing by tenants receiv-
habilitated less than 12 months before ing HOME tenant-based rental assistance.
the date of commitment of HOME All housing occupied by tenants receiv-
funds, must meet the property stand- ing HOME tenant-based rental assist-
ards of paragraph (a) or paragraph (b) ance must meet the standards in 24
of this section, as applicable, of this CFR 982.401, or the successor require-
section for new construction and reha- ments as established by HUD.
bilitation projects. The participating (e) Manufactured housing. Construc-
jurisdiction must document this com- tion of all manufactured housing in-
pliance based upon a review of ap- cluding manufactured housing that re-
proved building plans and Certificates places an existing substandard unit
of Occupancy, and an inspection that is under the definition of "reconstruc-
conducted no earlier than 90 days be- tion" must meet the Manufactured
fore the commitment of HOME assist- Home Construction and Safety Stand-
ance. ards codified at 24 CFR part 3280. These
(2) All other existing housing that is standards preempt State and local
acquired with HOME assistance for codes which are not identical to the
rental housing must meet the rehabili- federal standards for the new construc-
tation property standards require- tion of manufactured housing. Partici-
ments of paragraph (b) of this section. pating jurisdictions providing HOME
The participating jurisdiction must funds to assist manufactured housing
document this compliance based upon units must comply with applicable
an inspection that is conducted no ear- State and local laws or codes. In the
lier than 90 days before the commit- absence of such laws or codes, the in-
ment of HOME assistance. If the prop- facturer'sstallation must comply instructionswth the for in-
n-
erty does not meet these standards, stallation written tud ng
HOME funds cannot be used to acquire of manufacturd housing
the property unless it is rehabilitated units. All new manufacturedng housing
and all manufactured housing that re-
to meet the standards of paragraph (b) places an existing substandard unit
of this section. under the definition of "reconstruc-
(3) Existing housing that is acquired tion" must be on a permanent founda-
for homeownership (e.g., downpayment tion that meets the requirements for
assistance) must be decent, safe, sani- foundation systems as set forth in 24
tary, and in good repair. The partici- CFR 203.43f(c)(i). All new manufactured
pating jurisdiction must establish housing and all manufactured housing
standards to determine that the hous- that replaces an existing substandard
ing is decent, safe, sanitary, and in unit under the definition of "recon-
good repair. At minimum, the stand- struction" must, at the time of project
ards must provide that the housing completion, be connected to permanent
meets all applicable State and local utility hook-ups and be located on land
housing quality standards and code re- that is owned by the manufactured
quirements and the housing does not housing unit owner or land for which
contain the specific deficiencies pro- the manufactured housing owner has a
scribed by HUD based on the applicable lease for a period at least equal to the
inspectable items and inspected areas applicable period of affordability. In
in HUD-prescribed physical inspection HOME-funded rehabilitation of exist-
procedures (Uniform Physical Condi- ing manufactured housing the founda-
tion Standards) issued pursuant to 24 tion and anchoring must meet all ap-
CFR 5.705. The participating jurisdic- plicable State and local codes, ordi-
tion must inspect the housing and doc- nances, and requirements or in the ab-
ument this compliance based upon an sence of local or state codes, the Model
inspection that is conducted no earlier Manufactured Home Installation
than 90 days before the commitment of Standards at 24 CFR part 3285. Manu-
HOME assistance. If the housing does factured housing that is rehabilitated
not meet these standards, the housing using HOME funds must meet the prop-
must be rehabilitated to meet the erty standards requirements in para-
standards of this paragraph (c)(3) or it graph (b) of this section, as applicable.
cannot be acquired with HOME funds. The participating jurisdiction must
575
§92.252 24 CFR Subtitle A(4-1-20 Edition)
document this compliance in accord- quirements, and if there are no such
ance with inspection procedures that standard or code requirements, the
the participating jurisdiction has es- housing must meet the housing quality
tablished pursuant to §92.251, as appli- standards in 24 CFR 982.401.
cable. (3) Inspections. The participating ju-
(f) Ongoing property condition stand- risdiction must undertake ongoing
ards: Rental housing. (1) Ongoing prop- property inspections, in accordance
erty standards. The participating juris- with§92.504(d).
diction must establish property stand- (4) Corrective and remedial actions. The
ards for rental housing(including man- participating jurisdiction must have
ufactured housing) that apply through- procedures for ensuring that timely
out the affordability period. The stand- corrective and remedial actions are
ards must ensure that owners maintain taken by the project owner to address
the housing as decent, safe, and sani- identified deficiencies.
tary housing in good repair. The par- (5) Inspection procedures. The partici-
ticipating jurisdiction's description of pating jurisdiction must establish writ-
its property standards must be in suffi- ten inspection procedures inspections.
cient detail to establish the basis for a The procedures must include detailed
uniform inspection of HOME rental inspection checklists, description of
projects. The participating jurisdic- how and by whom inspections will be
tion's ongoing property standards must carried out, and procedures for training
address each of the following: and certifying qualified inspectors. The
(i) Compliance with State and local procedures must also describe how fre-
codes, ordinances, and requirements. The quently the property will be inspected,
participating jurisdiction's standards consistent with this section, §92.209,
must require the housing to meet all and§92.504(d).
applicable State and local code require- [78 FR 44670, July 24, 2013, as amended at 81
ments and ordinances. In the absence FR 92635,Dec.20,2016]
of existing applicable State or local
code requirements and ordinances, at a §92.252 Qualification as affordable
minimum, the participating jurisdic- housing:Rental housing.
tion's ongoing property standards must The HOME-assisted units in a rental
include all inspectable items and in- housing project must be occupied by
spectable areas specified by HUD based households that are eligible as low- in-
on the HUD physical inspection proce- come families and must meet the re-
dures (Uniform Physical Condition quirements of this section to qualify as
Standards (UPCS)) prescribed by HUD affordable housing. If the housing is
pursuant to 24 CFR 5.705. The partici- not occupied by eligible tenants within
pating jurisdiction's property stand- six months following the date of
ards are not required to use any scor- project completion, HUD will require
ing, item weight, or level of criticality the participating jurisdiction to sub-
used in UPCS. mit marketing information and, if ap-
(ii) Health and safety. The partici- propriate, submit a marketing plan.
pating jurisdiction's standards must HUD will require the participating ju-
require the housing to be free of all risdiction to repay HOME funds in-
health and safety defects. The stand- vested in any housing unit that has not
ards must identify life-threatening de- been rented to eligible tenants 18
ficiencies that the owner must imme- months after the date of project com-
diately correct and the time frames for pletion. The affordability requirements
addressing these deficiencies. also apply to the HOME- assisted non-
(iii) Lead-based paint. The partici- owner-occupied units in single-family
pating jurisdiction's standards must housing purchased with HOME funds in
require the housing to meet the lead- accordance with §92.254. The tenant
based paint requirements in 24 CFR must have a written lease that corn-
part 35. plies with§92.253.
(2) Projects to which HOME funds (a) Rent limitation. HUD provides the
were committed before January 24, 2015 following maximum HOME rent limits.
must meet all applicable State or local The rent limits apply to the rent plus
housing quality standards or code re- the utilities or the utility allowance.
576
Office of the Secretary, HUD §92,252
The maximum HOME rents (High both sanitary and food preparation fa-
HOME Rents)are the lesser of: cilities, the maximum HOME rent is
(1) The fair market rent for existing based on the zero-bedroom fair market
housing for comparable units in the rent. The project must meet the re-
area as established by HUD under 24 quirements of paragraphs (a) and (b) of
CFR 888.111; or this section.
(2)A rent that does not exceed 30 per- (2) For SRO units that have no sani-
cent of the adjusted income of a family tary or food preparation facilities or
whose annual income equals 65 percent only one of the two, the maximum
of the median income for the area, as HOME rent is based on 75 percent of
determined by HUD, with adjustments the zero-bedroom fair market rent. The
for number of bedrooms in the unit. project is not required to have low
The HOME rent limits provided by HOME rents in accordance with para-
HUD will include average occupancy graph (b)(1) or (2) of this section, but
per unit and adjusted income assump- must meet the occupancy requirements
tions. of paragraph(b)of this section.
(b) Additional rent limitations (Low (d) Initial rent schedule and utility al-
' HOME Rents). The participating juris- lowances. (1)The participating jurisdic-
diction may designate (in its written tion must establish maximum monthly
agreement with the project owner) allowances for utilities and services
more than the minimum HOME units (excluding telephone) and update the
in a rental housing project, regardless allowances annually. The participating
of project size, to have Low HOME jurisdiction must use the HUD Utility
Rents that meet the requirements of Schedule Model or otherwise determine
this paragraph (b). In rental projects the utility allowance for the project
with five or more HOME-assisted rent- based on the type of utilities used at
al units, at least 20 percent of the the project.
HOME-assisted units must be occupied (2) The participating jurisdiction
by very low-income families and meet must review and approve rents pro-
one of the following rent requirements: posed by the owner for units, subject to
(1) The rent does not exceed 30 per- the maximum rent limitations in para-
cent of the annual income of a family graphs (a) or(b) of this section. For all
whose income equals 50 percent of the units subject to the maximum rent
median income for the area, as deter- limitations in paragraphs (a) or (b) of
mined by HUD, with adjustments for this section for which the tenant is
smaller and larger families. HUD pro- paying utilities and services, the par-
vides the HOME rent limits which in- ticipating jurisdiction must ensure
clude average occupancy per unit and that the rents do not exceed the max-
adjusted income assumptions. How- imum rent minus the monthly allow-
ever, if the rent determined under this ances for utilities and services.
paragraph is higher than the applicable (e) Periods of affordability.The HOME-
rent under paragraph (a) of this sec- assisted units must meet the afford-
tion, then the maximum rent for units ability requirements for not less than
under this paragraph is that calculated the applicable period specified in the
under paragraph(a)of this section. following table, beginning after project
(2) The rent does not exceed 30 per- completion.
cent of the family's adjusted income. If (1)The affordability requirements:
the unit receives Federal or State (i) Apply without regard to the term
project-based rental subsidy and the of any loan or mortgage, repayment of
very low-income family pays as a con- the HOME investment, or the transfer
tribution toward rent not more than 30 of ownership;
percent of the family's adjusted in- (ii) Must be imposed by a deed re-
come, then the maximum rent (i.e., striction, a covenant running with the
tenant contribution plus project-based land, an agreement restricting the use
rental subsidy) is the rent allowable of the property, or other mechanisms
under the Federal or State project- approved by HUD and must give the
based rental subsidy program. participating jurisdiction the right to
(c) Additional rent limitations for SRO require specific performance (except
projects. (1) For SRO units that have that the participating jurisdiction may
577
§92.252 24 CFR Subtitle A(4-1-20 Edition)
provide that the affordability restric- nal terms if, during the original afford-
tions may terminate upon foreclosure ability period, the owner of record be-
or transfer in lieu of foreclosure); and fore the foreclosure, or deed in lieu of
(iii) Must be recorded in accordance foreclosure, or any entity that includes •
with State recordation laws. the former owner or those with whom
(2) The participating jurisdiction the former owner has or had family or
may use purchase options, rights of business ties, obtains an ownership in-
first refusal or other preemptive rights terest in the project or property.
to purchase the housing before fore (4) The termination of the restric-
closure or deed in lieu of foreclosure in tions on the project does not terminate
order to preserve affordability.
(3) The affordability restrictions the participating jurisdiction's repay-
shall be revived according to the origi- ment obligation under§92.503(b).
Rental housin activit Minimum period
9 Y of affordability in
years
Rehabilitation or acquisition of existing housing per unit amount of HOME funds:Under$15,000 5
$15,000 to$40,000 10
Over$40,000 or rehabilitation involving refinancing 15
New construction or acquisition of newly constructed housing 20
(f) Subsequent rents during the afford- prior written notice before imple-
ability period. (1) The maximum HOME menting any increase in rents.
rent limits are recalculated on a peri- (g) Adjustment of HOME rent limits for
odic basis after HUD determines fair an existing project. (1) Changes in fair
market rents and median incomes. market rents and in median income
HUD then provides the new maximum over time should be sufficient to main-
HOME rent limits to participating ju- tain the financial viability of a project
risdictions. Regardless of changes in within the HOME rent limits in this
fair market rents and in median in- section.
come over time, the HOME rents for a (2) HUD may adjust the HOME rent
project are not required to be lower limits for a project, only if HUD finds
than the HOME rent limits for the that an adjustment is necessary to sup-
project in effect at the time of project port the continued financial viability
commitment. of the project and only by an amount
(2) The participating jurisdiction that HUD determines is necessary to
must provide project owners with in- maintain continued financial viability
formation on updated HOME rent lim- of the project. HUD expects that this
its so that rents may be adjusted (not authority will be used sparingly.
to exceed the maximum HOME rent (h) Tenant income. The income of each
limits in paragraph (f)(1) of this sec- tenant must be determined initially in
tion) in accordance with the written accordance with §92.203(a)(1)(i). In ad-
agreement between the participating dition, each year during the period of
jurisdiction and the owner. Owners affordability the project owner must
must annually provide the partici- re-examine each tenant's annual in-
pating jurisdiction with information on come in accordance with one of the op-
rents and occupancy of HOME-assisted tions in §92.203 selected by the partici-
units to demonstrate compliance with pating jurisdiction. An owner of a mul-
this section. The participating jurisdic- tifamily project with an affordability
tion must review rents for compliance period of 10 years or more who re-ex-
and approve or disapprove them every amines tenant's annual income
year. through a statement and certification
(3) Any increase in rents for HOME- in accordance with §92.203(a)(1)(ii),
assisted units is subject to the provi- must examine the income of each ten-
sions of outstanding leases, and in any ant, in accordance with §92.203(a)(1)(i),
event, the owner must provide tenants every sixth year of the affordability pe-
of those units not less than 30 days riod. Otherwise, an owner who accepts
578
Office of the Secretary, HUD §92.253
the tenant's statement and certifi- to the originally designated HOME-as-
cation in accordance with sisted unit.
§92.203(a)(1)(ii) is not required to exam- (k) Tenant selection. The tenants
ine the income of tenants in multi- must be selected in accordance with
family or single-family projects unless §92.253(d).
there is evidence that the tenant's (1) Ongoing responsibilities. The par-
written statement failed to completely ticipating jurisdiction's responsibil-
and accurately state information about ities for on-site inspections and finan-
the family's size or income. cial oversight of rental projects are set
(i) Over-income tenants. (1) HOME-as- forth in§92.504(d).
sisted units continue to qualify as af- [61 FR 48750, Sept. 16, 1996, as amended at 62
fordable housing despite a temporary FR 28929, May 28, 1997; 62 FR 44840, Aug. 22,
noncompliance caused by increases in 1997;78 FR 44672,July 24,2013]
the incomes of existing tenants if ac-
tions satisfactory to HUD are being §92.253 Tenant protections and selec-
taken to ensure that all vacancies are tion.
filled in accordance with this section (a) Lease. There must be a written
until the noncompliance is corrected. lease between the tenant and the owner
(2) Tenants who no longer qualify as of rental housing assisted with HOME
low-income families must pay as rent funds that is for a period of not less
the lesser of the amount payable by the than 1 year, unless by mutual agree-
tenant under State or local law or 30 ment between the tenant and the
percent of the family's adjusted in- owner a shorter period is specified. The
come, except that tenants of HOME-as- lease must incorporate the VAWA lease
sisted units that have been allocated term/addendum required under
low-income housing tax credits by a §92.359(e), except as otherwise provided
housing credit agency pursuant to sec- by§92.359(b).
tion 42 of the Internal Revenue Code of (b) Prohibited lease terms. The lease
1986 (26 U.S.C. 42) must pay rent gov- may not contain any of the following
erned by section 42. In addition, in provisions:
projects in which the Home units are (1) Agreement to be sued. Agreement
designated as floating pursuant to by the tenant to be sued, to admit
paragraph (j) of this section, tenants guilt, or to a judgment in favor of the
who no longer qualify as low-income owner in a lawsuit brought in connec-
are not required to pay as rent an tion with the lease;
amount that exceeds the market rent (2) Treatment of property. Agreement
for comparable, unassisted units in the by the tenant that the owner may
neighborhood. take, hold, or sell personal property of
(j) Fixed and floating HOME units. In household members without notice to
a project containing HOME-assisted the tenant and a court decision on the
and other units, the participating ju- rights of the parties. This prohibition,
risdiction may designate fixed or float- however, does not apply to an agree-
ing HOME units.This designation must ment by the tenant concerning disposi-
be made at the time of project commit- tion of personal property remaining in
ment in the written agreement be- the housing unit after the tenant has
tween the participating jurisdiction moved out of the unit. The owner may
and the owner, and the HOME units dispose of this personal property in ac-
must be identified not later than the cordance with State law;
time of initial unit occupancy. Fixed (3) Excusing owner from responsibility.
units remain the same throughout the Agreement by the tenant not to hold
period of affordability. Floating units the owner or the owner's agents legally
are changed to maintain conformity responsible for any action or failure to
with the requirements of this section act,whether intentional or negligent;
during the period of affordability so (4) Waiver of notice. Agreement of the
that the total number of housing units tenant that the owner may institute a
meeting the requirements of this sec- lawsuit without notice to the tenant;
tion remains the same, and each sub- (5) Waiver of legal proceedings. Agree-
stituted unit is comparable in terms of ment by the tenant that the owner
size, features, and number of bedrooms may evict the tenant or household
579
§92.253 24 CFR Subtitle A(4-1-20 Edition)
members without instituting a civil tions of the lease (i.e., to pay the rent,
court proceeding in which the tenant not to damage the housing; not to
has the opportunity to present a de- interfere with the rights and quiet en-
fense, or before a court decision on the joyment of other tenants);
rights of the parties; (3) Limit eligibility or give a pref-
(6) Waiver of a jury trial. Agreement erence to a particular segment of the
by the tenant to waive any right to a population if permitted in its written
trial by jury; agreement with the participating juris-
(7) Waiver of right to appeal court deci- diction (and only if the limitation or
sion. Agreement by the tenant to waive
ici-
the tenant's right to appeal, or to oth- preference is described in the consolidated
erwise challenge in court, a court deci- plan). jurisdiction's consolidated
sion in connection with the lease; Plan).
(8) Tenant chargeable with cost of legal (i)Any limitation or preference must
actions regardless of outcome. Agreement not violate nondiscrimination require
by the tenant to pay attorneys fees or ments in §92.350. A limitation or pref-
other legal costs even if the tenant erence does not violate nondiscrimina-
wins in a court proceeding by the tion requirements if the housing also
owner against the tenant. The tenant, receives funding from a Federal pro-
however, may be obligated to pay costs gram that limits eligibility to a par-
if the tenant loses;and ticular segment of the population (e.g.,
(9) Mandatory supportive services. the Housing Opportunity for Persons
Agreement by the tenant (other than a with AIDS program under 24 CFR part
tenant in transitional housing) to ac- 574, the Shelter Plus Care program
cept supportive services that are of- under 24 CFR part 582, the Supportive
fered. Housing program under 24 CFR part
(c) Termination of tenancy. An owner 583, supportive housing for the elderly
may not terminate the tenancy or. or persons with disabilities under 24
refuse to renew the lease of a tenant of CFR part 891), and the limit or pref-
rental housing assisted with HOME erence is tailored to serve that seg-
funds, except for serious or repeated ment of the population.
violation of the terms and conditions (ii)If a project does not receive fund-
of the lease; for violation of applicable ing from a Federal program that limits
Federal, State, or local law; for com- eligibility to a particular segment of
pletion of the tenancy period for tran- the population, the project may have a
sitional housing or failure to follow limitation or preference for persons
any required transitional housing sup- with disabilities who need services of-
portive services plan; or for other good fered at a project only if:
cause. Good cause does not include an
increase in the tenant's income or re- (A) The limitation or preference is
fusal of the tenant to purchase the limited to the population of families
housing. To terminate or refuse to (including individuals)with disabilities
renew tenancy, the owner must serve that significantly interfere with their
written notice upon the tenant speci- ability to obtain and maintain housing;
fying the grounds for the action at (B) Such families will not be able to
least 30 days before the termination of obtain or maintain themselves in hous-
tenancy. ing without appropriate supportive
(d) Tenant selection. An owner of rent- services;and
al housing assisted with HOME funds (C) Such services cannot be provided
must comply with the affirmative mar- in a nonsegregated setting. The fami-
keting requirements established by the lies must not be required to accept the
participating jurisdiction pursuant to services offered at the project. In ad-
§92.351(a). The owner must adopt and vertising the project, the owner may
follow written tenant selection policies advertise the project as offering serv-
and criteria that: ices for a particular type of disability;
(1) Limit the housing to very low- in- however, the project must be open to
come and low-income families; all otherwise eligible persons with dis-
(2) Are reasonably related to the ap- abilities who may benefit from the
plicants' ability to perform the obliga- services provided in the project.
580
Office of the Secretary, HUD §92.254
(4) Do not exclude an applicant with vide limits for affordable newly con-
a certificate or voucher under the Sec- structed housing based on 95 percent of
tion 8 Tenant-Based Assistance: Hous- the median purchase price for the area
ing Choice Voucher Program (24 CFR using Federal Housing Administration
part 982) or an applicant participating (FHA) single family mortgage program
in a HOME tenant-based rental assist- data for newly constructed housing,
ance program because of the status of with a minimum limit based on 95 per-
the prospective tenant as a holder of cent of the U.S. median purchase price
such certificate, voucher, or com- for new construction for nonmetropoli-
parable HOME tenant-based assistance tan areas. HUD will provide limits for
document. affordable existing housing based on 95
(5) Provide for the selection of ten- percent of the median purchase price
ants from a written waiting list in the for the area using Federal FHA single
chronological order of their applica- family mortgage program data for ex-
tion,insofar as is practicable; isting housing data and other appro-
(6) Give prompt written notification nation-
topriap -
any rejected applicant of the wide data sales that are available grounds for any rejection;and a forminimum limit f existing bae 95 percentng, with
f
(7) Comply with the VAWA require- a ebased roon o a
ments prescribed in§92.359. the state-wide nonmetropolitan area
median purchase price using this data.
[61 FR 48750, Sept. 16, 1996, as amended at 67 In lieu of the limits provided by HUD,
FR 61756, Oct. 1, 2002; 78 FR 44674, July 24, the participating jurisdiction may de-
2013;81 FR 80803,Nov.16,2016] termine 95 percent of the median area
§92.254 Qualification as affordable purchase price for single family hous-
housing:Homeownership. ing in the jurisdiction annually, as fol-
lows. The participating jurisdiction
(a)Acquisition with or without rehabili- must set forth the price for different
tation. Housing that is for acquisition types of single family housing for the
by a family must meet the afford- jurisdiction. The participating jurisdic-
ability requirements of this paragraph tion mction. The ne pe l mits for
tion may determine separate limits for
(a). existing housing and newly constructed
(1)The housing must be single family housing. For housing located outside of
housing. metropolitan areas, a State may aggre-
(2)The housing must be modest hous-
ing as follows: gate sales data from more than one
county, if the counties are contiguous
(i)In the case of acquisition of newly and similarly situated. The following
constructed housing or standard hous-
ing, the housing has a purchase price information must be included in the
for the type of single family housing annual action plan of the Consolidated
that does not exceed 95 percent of the Plan submitted to HUD for review and
median purchase price for the area, as updated in each action plan.
described in paragraph (a)(2)(iii) of this (A) The 95 percent of median area
section. purchase price must be established in
(ii) In the case of acquisition with re- accordance with a market analysis
habilitation, the housing has an esti- that ensured that a sufficient number
mated value after rehabilitation that of recent housing sales are included in
does not exceed 95 percent of the me- the survey.
dian purchase price for the area, de- (B) Sales must cover the requisite
scribed in paragraph (a)(2)(iii) of this number of months based on volume:
section. For 500 or more sales per month, a one-
(iii) If a participating jurisdiction in- month reporting period; for 250 through
tends to use HOME funds for home- 499 sales per month, a 2-month report-
buyer assistance or for the rehabilita- ing period; for less than 250 sales per
tion of owner-occupied single- family month, at least a 3-month reporting pe-
properties, the participating jurisdic- riod. The data must be listed in ascend-
tion must use the HOME affordable ing order of sales price.
homeownership limits provided by (C) The address of the listed prop-
HUD for newly constructed housing erties must include the location within
and for existing housing. HUD will pro- the participating jurisdiction. Lot,
581
§92.254 24 CFR Subtitle A(4-1-20 Edition)
square, and subdivision data may be must specifically approve them in writ-
substituted for the street address. ing.
(D) The housing sales data must re- (i) Resale. Resale requirements must
fleet all, or nearly all, of the one- fam- ensure, if the housing does not con-
ily house sales in the entire partici- tinue to be the principal residence of
pating jurisdiction. the family for the duration of the pe-
(E) To determine the median, take riod of affordability that the housing is
the middle sale on the list if an odd made available for subsequent pur-
number of sales, and if an even number, chase only to a buyer whose family
take the higher of the middle numbers qualifies as a low-income family and
and consider it the median. After iden- will use the property as the family's
tifying the median sales price, the principal residence. The resale require-
amount should be multiplied by 0.95 to ment must also ensure that the price
determine the 95 percent of the median at resale provides the original HOME-
area purchase price. assisted owner a fair return on invest-
(3) The housing must be acquired by ment (including the homeowner's in-
a homebuyer whose family qualifies as vestment and any capital improve-
a low-income family, and the housing ment) and ensure that the housing will
must be the principal residence of the
family throughout the period described remain affordable to a reasonable
range of low- income homebuyers. The
in paragraph (a)(4) of this section. If
there is no ratified sales contract with participating jurisdiction must specifi-
an eligible homebuyer for the housing cally define "fair return on invest-
within 9 months of the date of comple- ment" and "affordability to a reason-
tion of construction or rehabilitation, able range of low-income homebuyers,"
the housing must be rented to an eligi- and specifically address how it will
ble tenant in accordance with §92.252. make the housing affordable to a low-
In determining the income eligibility income homebuyer in the event that
of the family, the participating juris- the resale price necessary to provide
diction must include the income of all fair return is not affordable to the sub-
persons living in the housing. The sequent buyer. The period of afford-
homebuyer must receive housing coun- ability is based on the total amount of
seling. HOME funds invested in the housing.
(4)Periods of affordability. The HOME- (A) Except as provided in paragraph
assisted housing must meet the afford- (a)(5)(i)(B) of this section, deed restric-
ability requirements for not less than tions, covenants running with the land,
the applicable period specified in the or other similar mechanisms must be
following table, beginning after project used as the mechanism to impose the
completion. The per unit amount of resale requirements. The affordability
HOME funds and the affordability pe- restrictions may terminate upon occur-
riod that they trigger are described rence of any of the following termi-
more fully in paragraphs (a)(5)(i) (re- nation events: foreclosure, transfer in
sale) and (ii) (recapture) of this sec- lieu of foreclosure or assignment of an
tion. FHA insured mortgage to HUD. The
pur-
Homeownership assistance HOME Minimum period of participating jurisdiction may use amount per-unit affordability in chase options, rights of first refusal or
years other preemptive rights to purchase
Under$15,000 s the housing before foreclosure to pre-
$15,000 to$40,000 10 serve affordability. The affordability
Over$40,000 15 restrictions shall be revived according
to the original terms if, during the
(5) Resale and recapture. The partici- original affordability period, the owner
pating jurisdiction must establish the of record before the termination event,
resale or recapture requirements that obtains an ownership interest in the
comply with the standards of this sec- housing.
tion and set forth the requirements in (B) Certain housing may be presumed
its consolidated plan. HUD must deter-
mine that they are appropriate and to meet the resale restrictions(i.e., the
582
Office of the Secretary, HUD §92.254
housing will be available and afford- ticipating jurisdiction continues to
able to a reasonable range of low-in- provide homeownership assistance for
come homebuyers; a low-income home- housing in the neighborhood, it must
buyer will occupy the housing as the periodically update the market anal-
family's principal residence; and the ysis to verify the original presumption
original owner will be afforded a fair of continued affordability.
return on investment) during the pe- (ii) Recapture. Recapture provisions
riod of affordability without the impo- must ensure that the participating ju-
sition of enforcement mechanisms by risdiction recoups all or a portion of
the participating jurisdiction. The pre- the HOME assistance to the home-
sumption must be based upon a market buyers, if the housing does not con-
analysis of the neighborhood in which tinue to be the principal residence of
the housing is located. The market the family for the duration of the pe-
analysis must include an evaluation of riod of affordability. The participating
the location and characteristics of the jurisdiction may structure its recap-
housing and residents in the neighbor- ture provisions based on its program
hood (e.g., sale prices, age and amen- design and market conditions. The pe-
ities of the housing stock, incomes of riod of affordability is based upon the
residents, percentage of owner-occu- total amount of HOME funds subject to
pants) in relation to housing and in- recapture described in paragraph
comes in the housing market area. An (a)(5)(ii)(A)(5) of this section. Recap-
analysis of the current and projected ture provisions may permit the subse-
incomes of neighborhood residents for quent homebuyer to assume the HOME
an average period of affordability for assistance (subject to the HOME re-
homebuyers in the neighborhood must quirements for the remainder of the pe-
support the conclusion that a reason- riod of affordability) if the subsequent
able range of low-income families will homebuyer is low-income, and no addi-
continue to qualify for mortgage fi- tional HOME assistance is provided.
nancing. For example, an analysis (A) The following options for recap-
shows that the housing is modestly ture requirements are acceptable to
priced within the housing market area HUD. The participating
and that families with incomes of 65% jurisdiction
to 80% of area median can afford may adopt, modify or develop its own
monthly payments under average FHA recapture requirements for HUD ap
terms without other government as- proval. In establishing its recapture re
sistance and housing will remain af- quirements, the participating jurisdic-
fordable at least during the next five to tion is subject to the limitation that
seven years compared to other housing when the recapture requirement is
in the market area; the size and amen- triggered by a sale (voluntary or invol-
ities of the housing are modest and untary) of the housing unit, the
substantial rehabilitation will not sig- amount recaptured cannot exceed the
nificantly increase the market value; net proceeds, if any. The net proceeds
the neighborhood has housing that is are the sales price minus superior loan
not currently owned by the occupants, repayment (other than HOME funds)
but the participating jurisdiction is en- and any closing costs.
couraging homeownership in the neigh- (1) Recapture entire amount. The par-
borhood by providing homeownership ticipating jurisdiction may recapture
assistance and by making improve- the entire amount of the HOME invest-
ments to the streets, sidewalks, and ment from the homeowner.
other public facilities and services. If a (2) Reduction during affordability pe-
participating jurisdiction in preparing nod. The participating jurisdiction
a neighborhood revitalization strategy may reduce the HOME investment
under §91.215(e)(2) of its consolidated amount to be recaptured on a prorata
plan or Empowerment Zone or Enter- basis for the time the homeowner has
prise Community application under 24 owned and occupied the housing meas-
CFR part 597 has incorporated the type ured against the required affordability
of market data described above, that period.
submission may serve as the required (3) Shared net proceeds. If the net pro-
analysis under this section. If the par- ceeds are not sufficient to recapture
583
§92.254 24 CFR Subtitle A(4-1-20 Edition)
the full HOME investment (or a re- may share the net proceeds. The net
duced amount as provided for in para- proceeds are the sales price minus loan
graph (a)(5)(ii)(A)(2) of this section) repayment (other than HOME funds)
plus enable the homeowner to recover and closing costs. The net proceeds
the amount of the homeowner's down- may be divided proportionally as set
payment and any capital improvement forth in the following mathematical
investment made by the owner since formulas:
purchase, the participating jurisdiction
HOME investment
x Net proceeds=HOME amount to be recaptured
HOME investment+homeowner investment
homeowner investment
x Net proceeds=amount to homeowner
HOME investment+homeowner investment
(4) Owner investment returned first. requirements of §92.252 apply to as-
The participating jurisdiction may per- sisted rental units,except that the par-
mit the homebuyer to recover the ticipating jurisdiction may impose re-
homebuyer's entire investment (down- sale or recapture restrictions on all as-
payment and capital improvements sisted units(owner-occupied and rental
made by the owner since purchase) be- units) in the single family housing. If
fore recapturing the HOME invest- resale restrictions are used, the afford-
ment. ability requirements on all assisted
(5) Amount subject to recapture. The units continue for the period of afford-
HOME investment that is subject to re- ability. If recapture restrictions are
capture is based on the amount of used, the affordability requirements on
HOME assistance that enabled the the assisted rental units may be termi-
homebuyer to buy the dwelling unit. nated, at the discretion of the partici-
This includes any HOME assistance pating jurisdiction, upon recapture of
that reduced the purchase price from the HOME investment. (If HOME funds
fair market value to an affordable are used to assist only the rental units
price,but excludes the amount between in such a property then the require-
the cost of producing the unit and the ments of §92.252 would apply and the
market value of the property (i.e., the owner-occupied unit would not be sub-
development subsidy). The recaptured ject to the income targeting or afford-
funds must be used to carry out HOME- ability provisions of§92.254.)
eligible activities in accordance with (7) Lease-purchase. HOME funds may
the requirements of this part. If the be used to assist homebuyers through
HOME assistance is only used for the lease-purchase programs for existing
development subsidy and therefore not housing and for housing to be con-
subject to recapture, the resale option structed. The housing must be pur-
must be used. chased by a homebuyer within 36
(6) Special considerations for single- months of signing the lease'purchase
family properties with more than one agreement. The homebuyer must qual-
unit. If the HOME funds are only used ify as a low-income family at the time
to assist a low-income homebuyer to the lease-purchase agreement is signed.
acquire one unit in single-family hous- If HOME funds are used to acquire
ing containing more than one unit and housing that will be resold to a home-
the assisted unit will be the principal buyer through a lease-purchase pro-
residence of the homebuyer, the afford- gram, the HOME affordability require-
ability requirements of this section ments for rental housing in §92.252
apply only to the assisted unit. If shall apply if the housing is not trans-
HOME funds are also used to assist the ferred to a homebuyer within forty-two
low-income homebuyer to acquire one months after project completion.
or more of the rental units in the sin- (8) Contract to purchase. If HOME
gle-family housing, the affordability funds are used to assist a homebuyer
584
Office of the Secretary, HUD §92.254
who has entered into a contract to pur- (1) The estimated value of the prop-
chase housing to be constructed, the erty, after rehabilitation, does not ex-
homebuyer must qualify as a low-in- ceed 95 percent of the median purchase
come family at the time the contract is price for the area, described in para-
signed. graph(a)(2)(iii)of this section;and
(9) Preserving affordability of housing (2) The housing is the principal resi-
that was previously assisted with HOME dence of an owner whose family quali-
funds. fies as a low-income family at the time
(i) To preserve the affordability of HOME funds are committed to the
HOME-assisted housing a participating housing. In determining the income
jurisdiction may use additional HOME eligibility of the family, the partici-
funds for the following costs: pating jurisdiction must include the in-
(A) The cost to acquire the housing come of all persons living in the hous-
through a purchase option, right of ing.
first refusal, or other preemptive right
before foreclosure, or at the foreclosure (c) Ownership interest.assistedThe ownership
sale. (The foreclosure costs to acquire in the housingurtthe under this se of
housing with a HOME loan in default "homeownership"
tion must meet the definition of
are eligible. However,HOME funds may houmeg that is rehabilitated in §92.2, except thatn
not be used to repay a loan made with housing rhpt is pursuant
HOME funds.) to paragraph (b) of this section may
(B)M The cost to undertake any nee- also include inherited property with
essary rehabilitation for the housing multipleowners, life estates, living
acquired. trusts and beneficiary deeds under the
(C) The cost of owning/holding the following conditions. The participating
jurisdiction
housing pending resale to another of assistance.hasthe right to establish
thheeterms o
homebuyer.
(D) The cost to assist another home- (1) Inherited property. Inherited prop-
buyer in purchasing the housing. erty with multiple owners: Housing for
(ii) When a participating jurisdiction `Which title has been passed to several
uses HOME funds to preserve the af- individuals by inheritance, but not all
fordability of such housing, the addi- heirs reside in the housing, sharing
tional investment must be treated as ownership with other nonresident
an amendment to the original project. heirs. (The occupant of the housing has
The housing must be sold to a new eli a divided ownership interest.) The par-
gible homebuyer in accordance with ticipating jurisdiction may assist the
the requirements of§92.254(a) within a owner-occupant if the occupant is low-
reasonable period of time. income, occupies the housing as his or
(iii)The total amount of the original her principal residence, and pays all
and additional HOME assistance may the costs associated with ownership
not exceed the maximum per unit sub- and maintenance of the housing (e.g.,
sidy amount established under §92.250. mortgage, taxes,insurance, utilities).
Alternatively to charging the cost to (2) Life estate. The person who has the
the HOME program under §92.206, the life estate has the right to live in the
participating jurisdiction may charge housing for the remainder of his or her
the cost to the HOME program under life and does not pay rent. The partici-
§92.207 as a reasonable administrative pating jurisdiction may assist the per-
cost of its HOME program, so that the son holding the life estate if the person
additional HOME funds for the housing is low-income and occupies the housing
are not subject to the maximum per- as his or her principal residence.
unit subsidy amount. To the extent ad- (3) Inter vivos trust, also known as a
ministrative funds are used, they may living trust. A living trust is created
be reimbursed, in whole or in part, during the lifetime of a person. A liv-
when the housing is sold to a new eligi- ing trust is created when the owner of
ble homebuyer. property conveys his or her property to
(b)Rehabilitation not involving acquisi- a trust for his or her own benefit or for
tion. Housing that is currently owned that of a third party (the bene-
by a family qualifies as affordable ficiaries). The trust holds legal title
housing only if: and the beneficiary holds equitable
585
§92.254 24 CFR Subtitle A(4-1-20 Edition)
title. The person may name him or her- forms and amounts of homeownership
self as the beneficiary. The trustee is assistance that the participating juris-
under a fiduciary responsibility to hold diction authorizes the lender to provide
and manage the trust assets for the to families and any conditions that
beneficiary. The participating jurisdic- apply to the provision of such home-
tion may assist if all beneficiaries of ownership assistance.
the trust qualify as a low-income fam- (2) Before the lender provides any
ily and occupy the property as their m Before theeownership assistance to a provi family,
des any
homeownership
principal residence (except that contin-
the participating jurisdiction must
gent beneficiaries, who receive no ben- verify that the family is low-income
efit from the trust nor have any con- and must inspect the housingfor com-
trol over the trust assets until the ben-
eficiary
eficiary is deceased,need not be low-in- pliance with the property standards in
come). The trust must be valid and en- §92.251.
forceable and ensure that each bene- (3) No fees (e.g., origination fees or
ficiary has the legal right to occupy points) may be charged to a family for
the property for the remainder of his or the HOME homeownership assistance
her life. provided pursuant to this paragraph
(4) Beneficiary deed. A beneficiary (e), and the participating jurisdiction
deed conveys an interest in real prop- must determine that the fees and other
erty, including any debt secured by a amounts charged to the family by the
lien on real property, to a grantee ben- lender for the first mortgage financing
eficiary designated by the owner and are reasonable. Reasonable administra-
that expressly states that the deed is tive costs may be charged to the HOME
effective on the death of the owner. program as a project cost. If the par-
Upon the death of the owner, the
grantee beneficiary receives ownership ticipating jurisdiction requires lenders
in the property, subject to all convey- to pay a fee to participate in the HOME
ances, assignments, contracts, mort Program, the fee is program income to
gages, deeds of trust, liens, security the HOME program.
pledges, and other encumbrances made (4) If the nonprofit lender is a sub-
by the owner or to which the owner recipient or contractor that is receiv-
was subject during the owner's life- ing HOME assistance to determine that
time. The participating jurisdiction the family is eligible for homeowner-
may assist if the owner qualifies as ship assistance, but the participating
low-income and the owner occupies the jurisdiction or another entity is mak-
property as his or her principal resi- ing the assistance to the homebuyer
dence. (e.g., signing the documents for the
(d) New construction without acquisi- loan or the grant), the requirements of
tion. Newly constructed housing that is paragraphs (e)(2) and (3) of this section
built on property currently owned by a are applicable.
family which will occupy the housing
upon completion, qualifies as afford- (� Homebuyern isdprogram pmust haveTve
able housing if it meets the require participating jurisdiction must
ments under paragraph (a) of this sec-
(1)follow written policies for:
tion. (1) Underwriting standards for home-
(e) Providing homeownership assistance ownership assistance that evaluate
through lenders. Subject to the require- housing debt and overall debt of the
ments of this paragraph (e), the par- family, the appropriateness of the
ticipating jurisdiction may provide amount of assistance, monthly ex-
homeownership assistance through for- penses of the family, assets available
profit or nonprofit lending institutions to acquire the housing, and financial
that provide the first mortgage loan to resources to sustain homeownership;
a low-income family. (2)Responsible lending, and
(1) The homeownership assistance (3)Refinancing loans to which HOME
may be provided only as specified in a loans are subordinated to ensure that
written agreement between the partici-
pating jurisdiction and the lender. The
written agreement must specify the
586
Office of the Secretary, HUD §92.258
the terms of the new loan are reason- ing opportunity (ECHO) units that
able. meet the requirements of this section,
[61 FR 48750, Sept. 16, 1996, as amended at 67 and that are small, free-standing, bar-
FR 61756, Oct. 1, 2002; 68 FR 10161, Mar. 4, rier-free, energy-efficient, removable,
2003; 69 FR 16766, Mar. 30, 2004; 69 FR 68052, and designed to be installed adjacent to
Nov. 22, 2004; 72 FR 16685, Apr. 4, 2007; 78 FR existing single-family dwellings.
44674,July 24,2013] (b) Eligible owners. The owner of a
HOME-assisted ECHO unit may be:
§92.255 Converting rental units to (1) The owner-occupant of the single-
homeownership units for existing family host property on which the
tenants.
ECHO unit will be located;
(a) The participating jurisdiction (2)A participating jurisdiction; or
may permit the owner of HOME-as- (3)A non-profit organization.
sisted rental units to convert the rent- (c) Eligible tenants. During the afford-
al units to homeownership units by ability period, the tenant of a HOME-
selling, donating, or otherwise con- assisted ECHO unit must be an elderly
veying the units to the existing ten- or disabled family as defined in 24 CFR
ants to enable the tenants to become 5.403 and must also be a low-income
homeowners in accordance with the re- family.
quirements of §92.254. However, refusal (d) Applicable requirements. The re-
by the tenant to purchase the housing quirements of §92.252 apply to HOME-
does not constitute grounds for evic- assisted ECHO units, with the fol-
tion or for failure to renew the lease. lowing modifications:
(b) If no additional HOME funds are (1) Only one ECHO unit may be pro-
used to enable the tenants to become i
vded per host property.
homeowners, the homeownership units (2)The ECHO unit owner may choose
are subject to a minimum period of af- whether or not to charge the tenant of
fordability equal to the remaining af- the ECHO unit rent, but if a rent is
fordable period if the units continued
require-
as rental units. If additional HOME charged, it must meet the funds are used to directly assist the ments of§92.252.
tenants to become homeowners, the (3) The ECHO housing must remain
minimum period of affordability is the affordable for the period specified in
affordability period under §92.254(a)(4), perio2(e). If within the affordability
based on the amount of direct home Period the original occupant no longer
ownership assistance provided. occupies the unit, the ECHO unit
owner must:
[78 FR 44676,July 24,2013] (i) Rent the unit to another eligible
occupant on site;
§92.256 [Reserved] (ii) Move the ECHO unit to another
§92.257 Equal participation of faith- site for occupancy by an eligible occu-
based organizations. pant;or
The HUD program requirements in (iii) If the owner of the ECHO unit is
the host property owner-occupant, the
§5.109 apply to the HOME program, in- owner may repay the HOME funds in
cluding the requirements regarding accordance with the recapture provi-
disposition and change in use of real sions imposed by the participating ju-
property by a faith-based organization. risdiction consistent with
[81 FR 19418,Apr.4,2016] §92.254(a)(5)(ii). The participating juris-
diction must use the recaptured HOME
§92.255 Elder cottage housing oppor- funds for additional HOME activities.
tunity(ECHO)units. (4) The participating
p g jurisdiction has
(a) General. HOME funds may be used the responsibility to enforce the
for the initial purchase and initial project requirements applicable to
placement costs of elder cottage hous- ECHO units.
587
§92.300 24 CFR Subtitle A(4-1-20 Edition)
Subpart G—Community Housing progress of the work and determining
Development Organizations the reasonableness of costs. The com-
munity housing development organiza-
§92.300 Set-aside for community hous- tion must own the rental housing dur-
ing development organizations ing development and for a period at
(CHDOs). least equal to the period of afford-
(a) Within 24 months after the date ability in §92.252. If the CHDO acquires
that HUD notifies the participating ju- housing that meets the property stand-
risdiction of HUD's execution of the ards in§92.251, the CHDO must own the
HOME Investment Partnerships Agree- rental housing for a period at least
ment, the participating jurisdiction equal to the period of affordability in
must reserve not less than 15 percent of §92.252.
the HOME allocation for investment (3) Rental housing is "developed" by
only in housing to be owned, developed the community development housing
or sponsored by community housing organization if the community housing
development organizations. For a development organization is the owner
State, the HOME allocation includes of multifamily or single family housing
funds reallocated under §92.451(c)(2)(i) in fee simple absolute (or has a long
and, for a unit of general local govern- term ground lease)and the developer of
ment,includes funds transferred from a new housing that will be constructed
State under §92.102(b). The partici- or existing substandard housing that
pating jurisdiction must certify the or- will be rehabilitated for rent to low-in-
ganization as meeting the definition of come families in accordance with
"community housing development or- §92.252. To be the "developer," the
ganization" and must document that community development housing orga-
the organization has capacity to own, nization must be in sole charge of all
develop, or sponsor housing each time aspects of the development process, in-
it commits funds to the organization. eluding obtaining zoning, securing non-
For purposes of this paragraph: HOME financing, selecting architects,
(1) Funds are reserved when a partici- engineers and general contractors,
pating jurisdiction enters into a writ- overseeing the progress of the work
ten agreement with the community and determining the reasonableness of
housing development organization (or costs. At a minimum, the community
project owner as described in para- housing development organization
graph(a)(4) of this section) committing must own the housing during develop-
the funds to a specific local project in ment and for a period at least equal to
accordance with paragraph (2) of the the period of affordability in§92.252.
definition of"commitment"in§92.2. (4) Rental housing is "sponsored" by
(2) Rental housing is "owned" by the the community development housing
community housing development orga- organization if it is rental housing
nization if the community housing de- "owned" or "developed" by a sub-
velopment organization is the owner in sidiary of a community housing devel-
fee simple absolute of multifamily or opment organization, a limited part-
single family housing (or has a long nership of which the community hous-
term ground lease) for rental to low-in- ing development organization or its
come families in accordance with subsidiary is the sole general partner,
§92.252. If the housing is to be rehabili- or a limited liability company of which
tated or constructed, the community the community housing development
housing development organization organization or its subsidiary is the
hires and oversees the developer that sole managing member.
rehabilitates or constructs the hous- (i) The subsidiary of the community
ing. At minimum, the community housing development organization may
housing development organization be a for-profit or nonprofit organiza-
must hire or contract with an experi- tion and must be wholly owned by the
enced project manager to oversee all community housing development orga-
aspects of the development, including nization. If the limited partnership or
obtaining zoning, securing non-HOME limited liability company agreement
financing, selecting a developer or gen- permits the community housing devel-
eral contractor, overseeing the opment organization to be removed as
588
Office of the Secretary, HUD §92.300
general partner or sole managing mem- and be in sole charge of construction.
ber, the agreement must provide that The community housing development
the removal must be for cause and that organization may provide direct home-
the community housing development ownership assistance (e.g., downpay-
organization must be replaced with an- ment assistance) when it sells the
other community housing development housing to low-income families and the
organization. community housing development orga-
(ii) The HOME funds must be pro- nization will not be considered a sub-
vided to the entity that owns the recipient. The HOME funds for down-
project. payment assistance shall not be great-
(5) HOME-assisted rental housing is er than 10 percent of the amount of
also "sponsored" by a community HOME funds for development of the
housing development organization if housing.
the community housing development (ii) The participating jurisdiction
organization "developed" the rental must determine and set forth in its
housing project that it agrees to con- written agreement with the commu-
vey to an identified private nonprofit nity housing development organization
organization at a predetermined time the actual sales prices of the housing
after completion of the development of or the method by which the sales prices
the project. Sponsored rental housing, for the housing will be established and
as provided in this paragraph (a)(5), is whether the proceeds must be returned
subject to the following requirements: to the participating jurisdiction or
(i)The private nonprofit organization may be retained by the community
may not be created by a governmental housing development organization.
entity. (A) While proceeds that the partici-
(ii) The HOME funds must be in- pating jurisdiction permits the corn-
vested in the project that is owned by munity housing development organiza-
the community housing development tion to retain are not subject to the re-
organization. quirements of this part, the partici-
(iii) Before commitment of HOME pating jurisdiction must specify in the
funds, the community housing develop- written agreement with the commu-
ment organization sponsor must select nity housing development organization
the nonprofit organization that will ob- whether the proceeds are to be used for
tain ownership of the property. HOME-eligible activities or other hous-
(A) The nonprofit organization as- ing activities to benefit low-income
sumes the community housing develop- families.
ment organization's HOME obligations (B) Funds that are recaptured be-
(including any repayment of loans) for cause the housing no longer meets the
the rental project at a specified time affordability requirements under
after completion of development. §92.254(a)(5)(ii) are subject to the re-
(B) If the housing is not transferred quirements of this part in accordance
to the nonprofit organization, the corn- with§92.503.
munity housing development organiza- (7) The participating jurisdiction de-
tion sponsor remains responsible for termines the form of assistance (e.g.,
the HOME assistance and the HOME grant or loan) that it will provide to
project. the community housing development
(6) Housing for homeownership is organization receives or, for rental
"developed" by the community devel- housing projects under paragraph (a)(4)
opment housing organization if the of this section, to the entity that owns
community housing development orga- the project.
nization is the owner(in fee simple ab- (b) Each participating jurisdiction
solute) and developer of new housing must make reasonable efforts to iden-
that will be constructed or existing tify community housing development
substandard housing that will be reha- organizations that are capable, or can
bilitated for sale to low-income fami- reasonably be expected to become ca-
lies in accordance with§92.254. pable, of carrying out elements' of the
(i)To be the "developer" the commu- jurisdiction's approved consolidated
nity development housing organization plan and to encourage such community
must arrange financing of the project housing development organizations to
589
§92.301 24 CFR Subtitle A(4-1-20 Edition)
do so. If during the first 24 months of §92.301 Project-specific assistance to
its participation in the HOME Program community housing development
a participating jurisdiction cannot organizations.
identify a sufficient number of capable (a) Project-specific technical assistance
community housing development orga- and site control loans—(1) General. With-
nizations, up to 20 percent of the min- in the percentage specified in
imum community housing develop- §92.300(c), HOME funds may be used by
ment organization setaside of 15 per- a participating jurisdiction to provide
cent specified in paragraph (a) of this technical assistance and site control
section, above, (but not more than loans to community housing develop-
$150,000 during the 24 month period) ment organizations in the early stages
may be committed to develop the ca- of site development for an eligible
pacity of community housing develop- project. These loans may not exceed
ment organizations in the jurisdiction. amounts that the participating juris-
(c) Up to 10 percent of the HOME diction determines to be customary
funds reserved under this section may and reasonable project preparation
be used for activities specified under costs allowable under paragraph (a)(2)
§92.301. of this section. All costs must be re-
d) HOME funds required to be re- lated to a specific eligible project or
served under this section are subject to projects.
reduction,as provided in§92.500(d). (2) Allowable costs. A loan may be pro-
(e)If funds for operating expenses are vided to cover project costs necessary
to determine project feasibility (in-
provided under §92.208 to a community eluding costs of an initial feasibility
housing development organization that study), consulting fees, costs of pre-
is not also receiving funds under para- liminary financial applications, legal
graph (a) of this section for housing to fees, architectural fees, engineering
be owned, developed or sponsored by fees, engagement of a development
the community housing development
team, option to acquire property, site
organization, the participating juris- control and title clearance. General
diction's written agreement with the operational expenses of the community
community housing development orga- housing development organization are
nization must provide that the commu- not allowable costs.
nity housing development organization (3) Repayment. The community hous-
is expected to receive funds under para- ing development organization must
graph (a) of this section for a project repay the loan to the participating ju-
within 24 months of the date of receiv- risdiction from construction loan pro-
ing the funds for operating expenses, ceeds or other project income. The par-
and specifies the terms and conditions ticipating jurisdiction may waive re-
upon which this expectation is based. payment of the loan, in part or in
(f) The participating jurisdiction whole, if there are impediments to
must ensure that a community housing project development that the partici-
development organization does not re- pating jurisdiction determines are rea-
ceive HOME funding for any fiscal year sonably beyond the control of the bor-
in an amount that provides more than rower.
50 percent or $50,000, whichever is (b) Project-specific seed money loans—
greater, of the community housing de- (1)General. Within the percentage spec-
velopment organization's total oper- ified in §92.300(c), HOME funds may be
ating expenses in that fiscal year. This used to provide loans to community
also includes organizational support housing development organizations to
and housing education provided under cover preconstruction project costs
section 233(b)(1), (2), and(6) of the Act, that the participating jurisdiction de-
as well as funds for operating expenses termines to be customary and reason-
provided under§92.208. able, including, but not limited to the
costs of obtaining firm construction
[61 FR 48750, Sept. 16, 1996, as amended at 62 loan commitments, architectural plans
FR 28930, May 28, 1997; 78 FR 44677, July 24, and specifications, zoning approvals,
2013] engineering studies,and legal fees.
590
Office of the Secretary, HUD §92.351
(2) Eligible sponsors. A loan may be equal opportunity; disclosure require-
provided only to a community housing ments; debarred, suspended or ineli-
development organization that has, gible contractors; drug-free work; and
with respect to the project concerned, housing counseling.
site control (evidenced by a deed, a (b) The nondiscrimination require-
sales contract, or an option contract to ments at section 282 of the Act are ap-
acquire the property), a preliminary fi- plicable. These requirements are
nancial commitment, and a capable de- waived in connection with the use of
velopment team. HOME funds on lands set aside under
(3) Repayment. The community hous- the Hawaiian Homes Commission Act,
ing development organization must 1920(42 Stat. 108).
repay the loan to the participating ju- [62 FR 28930, May 28, 1997, as amended at 81
risdiction from construction loan pro- FR 90657,Dec.14,2016]
ceeds or other project income. The par-
ticipating jurisdiction may waive re- §92.351 Affirmative marketing; minor-
payment of the loan, in whole or in ity outreach program.
part, if there are impediments to (a)Affirmative marketing. (1)Each par-
project development that the partici- ticipating jurisdiction must adopt and
pating jurisdiction determines are rea- follow affirmative marketing
proce-
sonably beyond the control of the corn-
dures and requirements for rental and
munity housing development organiza- homebuyer projects containing five or
tion. more HOME-assisted housing units. Af-
§92.302 Housing education and orga- firmative marketing requirements and
nizational support. procedures also apply to all HOME-
HUD is authorized to funded programs, including, but not
provide edu- limited to, tenant-based rental assist-
cation and organizational support as- ance and downpayment assistance pro-
sistance, in conjunction with HOME grams. Affirmative marketing steps
funds made available to community consist of actions to provide informa-
housing development organizations in tion and otherwise attract eligible per-
accordance with section 233 of the Act. sons in the housing market area to the
HUD will publish a notice in the FED- available housing without regard to
ERAL REGISTER announcing the avail- race, color, national origin, sex, reli-
ability of funding under this section, as gion, familial status, or disability. If
appropriate. The notice need not in- participating jurisdiction's written
elude funding for each of the eligible jurisdiction's written
agreement with the project owner per-
activities,but may target funding from mits the rental housing project to
among the eligible activities. limit tenant eligibility or to have a
§92.303 Tenant participation plan. tenant preference in accordance with
A community housing development §92.253(d)(3), the participating jurisdic-
tion must have affirmative marketing
organization that receives assistance
under this part must adhere to a fair procedurespy and requirements that
pre-
lease and grievance procedure approved apply in then eligibilityxt of the tlhe project.
by the participatingferred tenant for the project.
jurisdiction and (2) The affirmative marketing re-
provide a plan for and follow a program quirements and procedures adopted
of tenant participation in management must include:
decisions.
(i) Methods for informing the public,
owners, and potential tenants about
Subpart H—Other Federal Federal fair housing laws and the par-
Requirements ticipating jurisdiction's affirmative
marketing policy (e.g., the use of the
§92.350 Other Federal requirements Equal Housing Opportunity logotype or
and nondiscrimination. slogan in press releases and solicita-
(a) The Federal requirements set tions for owners, and written commu-
forth in 24 CFR part 5, subpart A, are nication to fair housing and other
applicable to participants in the HOME groups);
program. The requirements of this sub- (ii) Requirements and practices each
part include: nondiscrimination and subrecipient and owner must adhere to
591
§92.352 24 CFR Subtitle A(4-1-20 Edition)
in order to carry out the participating lations describes actions to be taken by
jurisdiction's affirmative marketing a participating jurisdiction to assure
procedures and requirements (e.g., use that minority business enterprises and
of commercial media, use of commu- women business enterprises are used
nity contacts,use of the Equal Housing when possible in the procurement of
Opportunity logotype or slogan, and property and services.
display of fair housing poster);
(iii) Procedures to be used by sub- [61 FR 48750, Sept. 16, 1996, as amended at 78
recipients and owners to inform and so- FR 44678, July 24, 2013; 80 FR 75935, Dec. 7,
licit applications from persons in the 2015]
housing market area who are not like §92.352 Environmental review.
ly to apply for the housing program or
the housing without special outreach (a) General. The environmental ef-
(e.g., through the use of community or- fects of each activity carried out with
ganizations, places of worship, employ- HOME funds must be assessed in ac-
ment centers, fair housing groups, or cordance with the provisions of the Na-
housing counseling agencies); tional Environmental Policy Act of
(iv)Records that will be kept describ- 1969 (NEPA) (42 U.S.C. 4321) and the re-
ing actions taken by the participating lated authorities listed in HUD's imple-
jurisdiction and by subrecipients and menting regulations at 24 CFR parts 50
owners to affirmatively market the and 58. The applicability of the provi-
program and units and records to as- sions of 24 CFR part 50 or part 58 is
sess the results of these actions; and based on the HOME project (new con-
(v) A description of how the partici- struction, rehabilitation, acquisition)
pating jurisdiction will annually assess or activity (tenant-based rental assist-
the success of affirmative marketing ance)as a whole, not on the type of the
actions and what corrective actions cost paid with HOME funds.
will be taken where affirmative mar-
keting requirements are not met. (b)Responsibility for review. (1)The ju-
(3) A State that distributes HOME risdiction (e.g., the participating juris-
funds to units of general local govern- diction or State recipient) or insular
ment must require each unit of general area must assume responsibility for en-
local government to adopt affirmative vironmental review, decisionmaking,
marketing procedures and require- and action for each activity that it Gar-
ments that meet the requirement in ries out with HOME funds, in accord-
paragraphs(a)and(b)of this section. ance with the requirements imposed on
(b) Minority outreach. A participating a recipient under 24 CFR part 58. No
jurisdiction must prescribe procedures funds may be committed to a HOME
acceptable to HUD to establish and activity or project before the comple-
oversee a minority outreach program tion of the environmental review and
within its jurisdiction to ensure the in- approval of the request for release of
elusion, to the maximum extent pos- funds and related certification, except
sible, of minorities and women, and en- as authorized by 24 CFR part 58.
tities owned by minorities and women, (2) A State participating
including, without limitation, real es- P i jurisdiction
lit for must also assume responsibility for ap-
tate firms, construction firms, ap- proval of requests for release of HOME
praisal firms, management firms, fi- sb requests S release HOME
funds
nancial institutions, investment bank-
ing funds submitted by State recipients.
firms, underwriters, accountants, (3) HUD will perform the environ-
and providers of legal services, in all mental review, in accordance with 24
contracts entered into by the partici CFR part 50,for a competitively award-
pating jurisdiction with such persons ed application for HOME funds sub-
or entities, public and private, in order mitted to HUD by an entity that is not
to facilitate the activities of the par- a jurisdiction.
ticipating jurisdiction to provide af- [61 FR 48750, Sept. 16, 1996, as amended at 78
fordable housing authorized under this FR 44678,July 24,2013]
Act or any other Federal housing law
applicable to such jurisdiction. Section
200.321 of title 2 Code of Federal Regu-
592
Office of the Secretary, HUD §92.353
§92.353 Displacement, relocation, and to establish the amount of the replace-
acquisition. ment housing payment to be provided
(a) Minimizing displacement. Con- to a minority person is located in an
sistent with the other goals and objec- area of minority concentration, the mi-
tives of this part, the participating ju- nority person also must be given, if
risdiction must ensure that it has possible, referrals to comparable and
taken all reasonable steps to minimize suitable, decent, safe, and sanitary re-
the displacement of persons (families, placement dwellings not located in
individuals, businesses, nonprofit orga- such areas.
nizations, and farms) as a result of a (2) Displaced Person. (i) For purposes
project assisted with HOME funds. To of paragraph (c) of this section, the
the extent feasible, residential tenants term displaced person means a person
must be provided a reasonable oppor- (family individual, business, nonprofit
tunity to lease and occupy a suitable, organization, or farm, including any
decent, safe, sanitary, and affordable corporation, partnership or associa-
dwelling unit in the building/complex tion) that moves from real property or
upon completion of the project. moves personal property from real
(b) Temporary relocation. The fol- property, permanently, as a direct re-
lowing policies cover residential ten- sult of acquisition, rehabilitation, or
ants who will not be required to move demolition for a project assisted with
permanently but who must relocate HOME funds. This includes any perma-
temporarily for the project. Such ten- nent, involuntary move for an assisted
ants must be provided: project, including any permanent move
(1) Reimbursement for all reasonable from the real property that is made:
out-of-pocket expenses incurred in con- (A) After notice by the owner to
nection with the temporary relocation, move permanently from the property,
including the cost of moving to and if the move occurs on or after:
from the temporarily occupied housing (1) The date of the submission of an
and any increase in monthly rent/util- application to the participating juris-
ity costs. diction or HUD, if the applicant has
(2) Appropriate advisory services, in-
cluding reasonable advance written no- site control and the application is later
approved; or
tice of:
(i) The date and approximate dura- (2)The date the jurisdiction approves
tion of the temporary relocation; the applicable site, if the applicant
(ii) The location of the suitable, de does not have site control at the time
cent, safe, and sanitary dwelling to be of the application; or
made available for the temporary pe- (B) Before the date described in para-
riod; graph (c)(2)(i)(A) of this section, if the
(iii) The terms and conditions under jurisdiction or HUD determines that
which the tenant may lease and occupy the displacement resulted directly
a suitable, decent, safe, and sanitary from acquisition, rehabilitation, or
dwelling in the building/complex upon demolition for the project; or
completion of the project; and (C) By a tenant-occupant of a dwell-
(iv)The provisions of paragraph(b)(1) ing unit, if any one of the following
of this section. three situations occurs:
(c) Relocation assistance for displaced (1) The tenant moves after execution
persons—(1) General. A displaced person of the agreement covering the acquisi-
(defined in paragraph (c)(2) of this sec- tion, rehabilitation, or demolition and
tion) must be provided relocation as- the move occurs before the tenant is
sistance at the levels described in, and provided written notice offering the
in accordance with the requirements of tenant the opportunity to lease and oc-
the Uniform Relocation Assistance and cupy a suitable, decent, safe, and sani-
Real Property Acquisition Policies Act tary dwelling in the same building/
of 1970 (URA) (42 U.S.C. 4201-4655) and complex upon completion of the
49 CFR part 24. A "displaced person" project under reasonable terms and
must be advised of his or her rights conditions. Such reasonable terms and
under the Fair Housing Act and, if the conditions must include a term of at
comparable replacement dwelling used least one year at a monthly rent and
593
§92.353 24 CFR Subtitle A(4-1-20 Edition)
estimated average monthly utility (D) HUD determines that the person
costs that do not exceed the greater of: was not displaced as a direct result of
(i) The tenant's monthly rent before acquisition, rehabilitation, or demoli-
such agreement and estimated average tion for the project.
monthly utility costs;or (iii) The jurisdiction may, at any
(ii) The total tenant payment, as de- time, ask HUD to determine whether a
termined under 24 CFR 5.628, if the ten- displacement is or would be covered by
ant is low-income, or 30 percent of this rule.
gross household income, if the tenant (3) Initiation of negotiations. For pur-
is not low-income; poses of determining the formula for
(2) The tenant is required to relocate computing replacement housing assist-
temporarily, does not return to the ance to be provided under paragraph(c)
building/complex,and either of this section to a tenant displaced
(i) The tenant is not offered payment from a dwelling as a direct result of
for all reasonable out-of-pocket ex- private-owner rehabilitation, demoli-
tion or acquisition of the real property,
penses incurred in connection with the the term initiation of negotiations means
temporary relocation; or
(ii)Other conditions of the temporary the execution of the agreement cov-
ering are not reasonable;or demg the acquisition, rehabilitation, or
demolition.
(3) The tenant is required to move to (d) Optional relocation assistance. The
another dwelling unit in the same
building/complex but is not offered re- reloparticipating paymentsjuridction may provide
reloca-
imbursement for all reasonable out-of- tion assistancets faand other individuals,
tion to families, individuals,
pocket expenses incurred in connection businesses, nonprofit organizations,
with the move, or other conditions of and farms displaced by a project as-
the move are not reasonable. sisted with HOME funds where the dis-
(ii) Notwithstanding paragraph placement is not subject to paragraph
(c)(2)(i) of this section, a person does (c) of this section. The jurisdiction
not qualify as a displaced person if: may also provide relocation assistance
(A) The person has been evicted for to persons covered under paragraph (c)
cause based upon a serious or repeated of this section beyond that required.
violation of the terms and conditions For any such assistance that is not re-
of the lease or occupancy agreement, quired by State or local law, the juris-
violation of applicable federal, State or diction must adopt a written policy
local law, or other good cause, and the available to the public that describes
participating jurisdiction determines the optional relocation assistance that
that the eviction was not undertaken it has elected to furnish and provides
for the purpose of evading the obliga- for equal relocation assistance within
tion to provide relocation assistance. each class of displaced persons.
The effective date of any termination (e) Residential antidisplacement and re-
or refusal to renew must be preceded location assistance plan. The partici-
by at least 30 days advance written no- pating jurisdiction shall comply with
tice to the tenant specifying the the requirements of 24 CFR part 42,
grounds for the action. subpart C.
(B) The person moved into the prop- (f) Real property acquisition require-
erty after the submission of the appli- ments. The acquisition of real property
cation but, before signing a lease and for a project is subject to the URA and
commencing occupancy, was provided the requirements of 49 CFR part 24,
written notice of the project, its pos- subpart B.
sible impact on the person (e.g., the (g) Appeals. A person who disagrees
person may be displaced, temporarily with the participating jurisdiction's
relocated, incur a rent increase), and determination concerning whether the
the fact that the person would not person qualifies as a displaced person,
qualify as a "displaced person" (or for or the amount of relocation assistance
any assistance under this section) as a for which the person may be eligible,
result of the project; may file a written appeal of that deter-
(C) The person is ineligible under 49 mination with the jurisdiction. A low-
CFR 24.2(g)(2); or income person who is dissatisfied with
594
Office of the Secretary, HUD §92.355
the jurisdiction's determination on his (3) Participating jurisdictions, con-
or her appeal may submit a written re- tractors, subcontractors, and other
quest for review of that determination participants must comply with regula-
to the HUD Field Office. tions issued under these acts and with
[61 FR 48750, Sept. 16, 1996, as amended at 61 other Federal laws and regulations per-
FR 51760, Oct. 3, 1996; 62 FR 28930, May 28, taining to labor standards, as applica-
1997; 67 FR 61756, Oct. 1, 2002; 78 FR 44678, ble. Participating jurisdictions shall be
July 24,2013] responsible for ensuring compliance by
§92.354 Labor. contractors and subcontractors with
labor standards described in this sec-
(a) General. (1)Every contract for the tion. In accordance with procedures
construction (rehabilitation or new specified by HUD, participating juris-
construction) of housing that includes dictions shall:
12 or more units assisted with HOME (i) Ensure that bid and contract doc-
funds must contain a provision requir- uments contain required labor stand-
ing the payment of not less than the ards provisions and the appropriate De-
wages prevailing in the locality, as pre- partment of Labor wage determina-
determined by the Secretary of Labor tions;
pursuant to the Davis-Bacon Act (40 (ii) Conduct on-site inspections and
U.S.C. 3141), to all laborers and me- employee interviews;
chanics employed in the development (iii) Collect and review certified
of any part of the housing. Such con- weekly payroll reports;
tracts must also be subject to the over- (iv) Correct all labor standards viola-
time provisions, as applicable, of the tions promptly;
Contract Work Hours and Safety (v) Maintain documentation of ad-
Standards Act(40 U.S.C.3701). ministrative and enforcement activi-
(2) The contract for construction ties; and
must contain these wage provisions if
com-
HOME funds are used for any project ian Require the provisionson asf to costs in §92.206, including construction pliance beforee with provisions of paymentth us seer
or nonconstruction costs, of housing such e making any under
such contracts.
with 12 or more HOME-assisted units.
When HOME funds are only used to as- (b) Volunteers. The prevailing wage
silt homebuyers to acquire single-fam- provisions of paragraph (a) of this sec-
tion do not apply to an individual who
ily housing, and not for any other receives no compensation or is paid ex-
project costs, the wage provisions penses, reasonable benefits, or a nomi-
apply to the construction of the hous- nal fee to
ing if there is a written agreement perform the services for
which the individual volunteered and
with the owner or developer of the who is not otherwise employed at any
housing that HOME funds will be used time in the construction work. See 24
to assist homebuyers to buy the hous- CFR part 70.
ing and the construction contract cov- (c) Sweat equity. The prevailing wage
ers 12 or more housing units to be pur-
chased with HOME assistance. The provisions of paragraph (a) of this sec-
wage provisions apply to any construe- tion do not apply to members of an elu-
tion contract that includes a total of 12 chatble family who provide labor in ex-
for •
or more HOME-assisted units, whether change for acquisition of a property for
homeownership or provide labor in lieu
one or more than one project is covered
by the construction contract. Once of, or as a supplement to, rent pay-
they are determined to be applicable, ments.
the wage provisions must be contained [61 FR 48750, Sept. 16, 1996, as amended at 78
in the construction contract so as to FR 44678,July 24,2013]
cover all laborers and mechanics em-
ployed in the development of the entire §92.355 Lead-based paint.
project, including portions other than Housing assisted with HOME funds is
the assisted units. Arranging multiple subject to the Lead-Based Paint Poi-
construction contracts within a single soning Prevention Act (42 U.S.C. 4821-
project for the purpose of avoiding the 4846), the Residential Lead-Based Paint
wage provisions is not permitted. Hazard Reduction Act of 1992(42 U.S.C.
595
§92.356 24 CFR Subtitle A(4-1-20 Edition)
4851-4856), and implementing regula- pating jurisdiction's program or
tions at part 35, subparts A, B, J, K, M project. An exception may be consid-
and R of this title. ered only after the participating juris-
[64 FR 50224,Sept.15,1999] diction has provided the following:
(1) A disclosure of the nature of the
§92.356 Conflict of interest, conflict, accompanied by an assurance
(a) Applicability. In the procurement that there has been public disclosure of
of property and services by partici- the conflict and a description of how
pating jurisdictions, State recipients, the public disclosure was made;and
and subrecipients, the conflict of inter- (2)An opinion of the participating ju-
est provisions in 2 CFR 200.317 and 2 risdiction's or State recipient's attor-
CFR 200.318, apply. In all cases not gov- ney that the interest for which the ex-
erned by 2 CFR 200.317 and 2 CFR ception is sought would not violate
200.318, the provisions of this section State or local law.
apply. (e) Factors to be considered for excep-
(b) Conflicts prohibited. No persons de- tions. In determining whether to grant
scribed in paragraph (c) of this section a requested exception after the partici-
who exercise or have exercised any pating jurisdiction has satisfactorily
functions or responsibilities with re- met the requirements of paragraph (d)
spect to activities assisted with HOME of this section, HUD will consider the
funds or who are in a position to par- cumulative effect of the following fac-
ticipate in a decision-making process tors,where applicable:
or gain inside information with regard (1) Whether the exception would pro-
to these activities may obtain a finan- vide a significant cost benefit or an es-
cial interest or financial benefit from a sential degree of expertise to the pro-
HOME-assisted activity, or have a fi- gram or project which would otherwise
nancial interest in any contract, sub- not be available;
contract, or agreement with respect to (2) Whether the person affected is a
the HOME-assisted activity, or the pro- member of a group or class of low-in-
ceeds from such activity, either for come persons intended to be the bene-
themselves or those with whom they ficiaries of the assisted activity, and
have business or immediate family the exception will permit such person
ties, during their tenure or for one year to receive generally the same interests
thereafter. Immediate family ties in- or benefits as are being made available
elude (whether by blood, marriage or or provided to the group or class;
adoption) the spouse, parent (including (3) Whether the affected person has
a stepparent), child (including a step- withdrawn from his or her functions or
child), brother, sister(including a step- responsibilities, or the decisionmaking
brother or stepsister), grandparent, process with respect to the specific as-
grandchild, and in-laws of a covered sisted activity in question;
person. (4) Whether the interest or benefit
(c) Persons covered. The conflict of in- was present before the affected person
terest provisions of paragraph (b) of was in a position as described in para-
this section apply to any person who is graph(c)of this section;
an employee, agent, consultant, officer, (5) Whether undue hardship will re-
or elected official or appointed official sult either to the participating juris-
of the participating jurisdiction, State diction or the person affected when
recipient, or subrecipient which are re- weighed against the public interest
ceiving HOME funds. served by avoiding the prohibited con-
(d) Exceptions: Threshold requirements. flict;and
Upon the written request of the par- (6) Any other relevant consider-
ticipating jurisdiction, HUD may grant ations.
an exception to the provisions of para- (f) Owners and developers. (1) No
graph (b) of this section on a case-by- owner, developer, or sponsor of a
case basis when it determines that the project assisted with HOME funds (or
exception will serve to further the pur- officer, employee, agent, elected or ap-
poses of the HOME Investment Part- pointed official, or consultant of the
nerships Program and the effective and owner, developer, or sponsor or imme-
efficient administration of the partici- diate family member or immediate
596
Office of the Secretary, HUD §92.359
family member of an officer, employee, tion, including the timing of the re-
agent, elected or appointed official, or quested exception.
consultant of the owner, developer, or
[61 FR 48750, Sept. 16, 1996, as amended at 62
sponsor) whether private, for-profit or FR 28930, May 28, 1997; 78 FR 44679, July 24,
nonprofit (including a community 2013;80 FR 75935,Dec.7,2015]
housing development organization
(CHDO) when acting as an owner, de- §92.357 Executive Order 12372.
veloper, or sponsor) may occupy a (a) General. Executive Order 12372, as
HOME-assisted affordable housing unit amended by Executive Order 12416 (3
in a project during the required period CFR, 1982 Comp., p. 197 and 3 CFR, 1983
of affordability specified in§92.252(e)or Comp., p. 186) (Intergovernmental Re-
§92.254(a)(4). This provision does not view of Federal Programs) and HUD's
apply to an individual who receives implementing regulations at 24 CFR
HOME funds to acquire or rehabilitate part 52, allow each State to establish
his or her principal residence or to an its own process for review and com-
employee or agent of the owner or de- ment on proposed Federal financial as-
veloper of a rental housing project who sistance programs.
occupies a housing unit as the project (b) Applicability. Executive Order
manager or maintenance worker. 12372 applies to applications submitted
(2) Exceptions. Upon written request with respect to HOME funds being com-
of a housing owner or developer, the petitively reallocated under subpart J
participating jurisdiction (or State re- of this part to units of general local
cipient, if authorized by the State par- government.
ticipating jurisdiction) may grant an §92.358 Consultant activities.
exception to the provisions of para-
graph(f)(1)of this section on a case-by No person providing consultant serv-
case basis when it determines that the ices in an employer-employee type re-
exception will serve to further the pur- lationship shall receive more than a
poses of the HOME program and the ef- reasonable rate of compensation for
fective and efficient administration of fundspersonal servicespaid with HOME
the owner's or developer's HOME-as- compensationIn noevent, however, shall such
exceed the limits in ef-
sisted project. In determining whether fect under the provisions of any appli-
to grant a requested exception, the par- cable statute (e.g., annual HUD appro-
ticipating jurisdiction shall consider priations acts which have set the limit
the following factors: at the equivalent of the daily rate paid
(i) Whether the person receiving the for Level IV of the Executive Schedule,
benefit is a member of a group or class see the Departments of Veterans Af-
of low-income persons intended to be fairs and Housing and Urban Develop-
the beneficiaries of the assisted hous- ment, and Independent Agencies Ap-
ing, and the exception will permit such propriations Act, 1997, Pub. L. 104-204
person to receive generally the same (September 26, 1996)). Such services
interests or benefits as are being made shall be evidenced by written agree-
available or provided to the group or ments between the parties which detail
class; the responsibilities, standards, and
(ii) Whether the person has with- compensation. Consultant services pro-
drawn from his or her functions or re- vided under an independent contractor
sponsibilities, or the decisionmaking relationship are not subject to the
process with respect to the specific as- compensation limitation of Level IV of
sisted housing in question; the Executive Schedule.
(iii) Whether the tenant protection [62 FR 28930,May 28,1997]
requirements of §92.253 are being ob-
served; §92.359 VAWA requirements.
(iv) Whether the affirmative mar- (a) General. (1) The Violence Against
keting requirements of §92.351 are Women Act (VAWA) requirements set
being observed and followed;and forth in 24 CFR part 5, subpart L, apply
(v) Any other factor relevant to the to all HOME tenant-based rental as-
participating jurisdiction's determina- sistance and rental housing assisted
597
§92.359 24 CFR Subtitle A(4-1-20 Edition)
with HOME funds, as supplemented by also provide the notice and certifi-
this section. cation form described in 24 CFR
(2) For the HOME program, the 5.2005(a) to a tenant receiving HOME
"covered housing provider," as this tenant-based rental assistance when
term is used in HUD's regulations in 24 the participating jurisdiction provides
CFR part 5, subpart L,refers to: the tenant with notification of termi-
(i) The housing owner for the pur- nation of the HOME tenant-based rent-
poses of 24 CFR 5.2005(d)(1), (d)(3), and al assistance, and when the partici-
(d)(4)and§5.2009(a);and pating jurisdiction learns that the ten-
(ii) The participating jurisdiction ant's housing owner intends to provide
and the owner for purposes of 24 CFR the tenant with notification of evic-
5.2005(d)(2), 5.2005(e), and 5.2007, except tion.
as otherwise provided in paragraph (g) (d) Bifurcation of lease requirements.
of this section. For the purposes of this part, the fol-
(b) Effective date. The core statutory lowing requirements shall apply in
protections of VAWA that prohibit de-
nial or termination of assistance or place of the requirements at 24 CFR
eviction solely because an applicant or 5.2009(b):
tenant is a victim of domestic violence, (1) If a family living in a HOME-as-
dating violence, sexual assault, or sisted rental unit separates under 24
stalking became applicable upon enact- CFR 5.2009(a), the remaining tenant(s)
ment of VAWA 2013 on March 7, 2013. may remain in the HOME-assisted
Compliance with the VAWA regulatory unit.
requirements under this section and 24 (2)If a family who is receiving HOME
CFR part 5, subpart L, are required for tenant-based rental assistance sepa-
any tenant-based rental assistance or rates under 24 CFR 5.2009(a), the re-
rental housing project for which the maining tenant(s) will retain the
date of the HOME funding commitment HOME tenant-based rental assistance.
is on or after December 16,2016. The participating jurisdiction must de-
(c) Notification requirements. The par- termine whether the tenant that was
ticipating jurisdiction must provide a removed from the unit will receive
notice and certification form that meet HOME tenant-based rental assistance.
the requirements of 24 CFR 5.2005(a) to (e) VAWA lease term/addendum. The
the owner of HOME-assisted rental participating jurisdiction must develop
housing. a VAWA lease term/addendum to incor-
(1) For HOME-assisted units. The porate all requirements that apply to
owner of HOME-assisted rental housing the owner or lease under 24 CFR part 5,
must provide the notice and certifi-
cation form described in 24 CFR subpart L, and this section, including
5.2005(a) to the applicant for a HOME- the prohibited bases for eviction and
assisted unit at the time the applicant restrictions on construing lease terms
is admitted to a HOME-assisted unit, under 24 CFR 5.2005(b) and (c). This
or denied admission to a HOME-as- VAWA lease term/addendum must also
sisted unit based on the owner's tenant provide that the tenant may terminate
selection policies and criteria. The the lease without penalty if the par-
owner of HOME-assisted rental housing ticipating jurisdiction determines that
must also provide the notice and cer- the tenant has met the conditions for
tification form described in 24 CFR an emergency transfer under 24 CFR
5.2005 with any notification of eviction 5.2005(e). When HOME tenant-based
from a HOME-assisted unit. rental assistance is provided, the lease
(2) For HOME tenant-based rental as- term/addendum must require the owner
sistance. The participating jurisdiction to notify the participating jurisdiction
must provide the notice and certifi- before the owner bifurcates the lease or
cation form described in 24 CFR provides notification of eviction to the
5.2005(a) to the applicant for HOME tenant. If HOME tenant-based rental
tenant-based rental assistance when assistance is the only assistance pro-
the applicant's HOME tenant-based vided (i.e., the unit is not receiving
rental assistance is approved or denied. project-based assistance under a cov-
The participating jurisdiction must ered housing program, as defined in 24
598
Office of the Secretary, HUD §92.451
CFR 5.2003), the VAWA lease term/ad- Subpart I—Technical Assistance
dendum may be written to expire at
the end of the rental assistance period. §92.400 Coordinated Federal support
(f) Period of applicability. For HOME- for housing strategies.
assisted rental housing, the require- (a) General. HUD will provide assist-
ments of this section shall apply to the ance in accordance with Subtitle C of
owner of the housing for the duration the Act.
of the affordability period. For HOME (b) Notice of funding. HUD will pub-
tenant-based rental assistance, the re- lish a notice in the FEDERAL REGISTER
quirements of this section shall apply announcing the availability of funding
to the owner of the tenant's housing under this section as appropriate.
for the period for which the rental as-
sistance is provided. Subpart J—Reallocations
(g) Emergency Transfer Plan. (1) The
participating jurisdiction must develop §92.450 General.
and implement an emergency transfer (a)This subpart J sets out the condi-
plan and must make the determination tions under which HUD reallocates
of whether a tenant qualifies under the HOME funds that have been allocated,
plan. The plan must meet the require- reserved, or placed in a HOME Invest-
ments in 24 CFR 5.2005(e), as supple- ment Trust Fund.
mented by this section. (b) A jurisdiction that is not a par-
(2) For the purposes of §5.2005(e)(7), ticipating jurisdiction but is meeting
the required policies must specify that the requirements of§§92.102, 92.103, and
for tenants who qualify for an emer- 92.104, (participation threshold, notice
gency transfer and who wish to make of intent, and submission of consoli-
an external emergency transfer when a dated plan) is treated as a partici-
safe unit is not immediately available, pating jurisdiction for purposes of re-
the participating jurisdiction must ceiving a reallocation under subpart J
provide a list of properties in the juris- of this part.
diction that include HOME-assisted §92.451 Reallocation of HOME funds
units. The list must include the fol- from a jurisdiction that is not des-
lowing information for each property: ignated a participating jurisdiction
The property's address, contact infor- or has its designation revoked.
mation, the unit sizes (number of bed- (a) Failure to be designated a partici-
rooms) for the HOME-assisted units, pating jurisdiction. HUD will reallocate,
and, to the extent known, any tenant under this section, any HOME funds al-
preferences or eligibility restrictions located to or reserved for a jurisdiction
for the HOME-assisted units. In addi- that is not a participating jurisdiction
tion, the participating jurisdiction if:
may: (1)HUD determines that the jurisdic-
(i) Establish a preference under the tion has failed to:
participating jurisdiction's HOME pro- (i) Meet the participation threshold
gram for tenants who qualify for emer- amount in§92.102;
gency transfers under 24 CFR 5.2005(e); (ii) Provide notice of its intent to be-
(ii)Provide HOME tenant-based rent- come a participating jurisdiction in ac-
al assistance to tenants who qualify for cordance with§92.103; or
emergency transfers under 24 CFR (iii) Submit its consolidated plan, in
5.2005(e); or accordance with 24 CFR part 91; or
(iii) Coordinate with victim service (2) HUD after providing for amend
ments and resubmissions in accordance
providers and advocates to develop the with 24 CFR part 91 disapproves the ju-
emergency transfer plan, make refer- risdiction's consolidated plan.
rals,and facilitate emergency transfers
to safe and available units. (b) Designation revoked. HUD will re-
allocate, under this section, any funds
[81 FR 80803,Nov.16,2016] remaining in a jurisdiction's HOME In-
vestment Trust Fund after HUD has re-
voked the jurisdiction's designation as
599
§92.452 24 CFR Subtitle A(4-1-20 Edition)
a participating jurisdiction under of a Notice of Funding Availability
§92.107. (NOFA), in accordance with section 102
(c) Manner of reallocation. HUD will of the Department of Housing and
reallocate funds that are subject to re- Urban Development Reform Act of 1989
allocation under this section in the fol- (42 U.S.C. 3545) and the requirements of
lowing manner: sec. 217(c) of the Cranston-Gonzalez Na-
(1) If the funds to be reallocated tonal Affordable Housing Act (42
under this section are from a State, U.S.C. 12747(c)), for HOME funds that
HUD will: become available for competitive re-
(i) Make the funds available by com- allocation under §92.451 or §92.452, or
petition in accordance with criteria in both. The NOFA will describe the ap-
§92.453 among applications submitted plication requirements and procedures,
by units of general local government including the total funding available
within the State and with preference for the competition and any maximum
being given to applications from units amount of individual awards. The
of general local government that are NOFA will also describe the selection
not participating jurisdictions,and criteria and any special factors to be
(ii) Reallocate the remainder by for- evaluated in awarding points under the
mula in accordance with§92.454. selection criteria.
(2) If the funds to be reallocated are (b) The NOFA will include the selec-
from a unit of general local govern- tion criteria at sec. 217(c) of the Cran-
ment: ston-Gonzalez National Affordable
(i) Located in a State that is partici- Housing Act (42 U.S.C. 12747(c)), with
pating jurisdiction, HUD will reallo- the following maximum number of
cate the funds to that State. The points awarded for each category of
State,in distributing these funds, must criteria:
give preference to the provision of af- (1) Commitment. Up to 25 points for
fordable housing within the unit of the criteria at sec. 217(c)(1)of the Cran-
general local government; or ston-Gonzalez National Affordable
(ii) Located in a State that is not a Housing Act(42 U.S.C. 12747(c)(1));
participating jurisdiction, HUD will re- (2)Actions. Up to 50 points for the cri-
allocate the funds by competition teria at sec. 217(c)(2) of the Cranston-
among units of general local govern- Gonzalez National Affordable Housing
ment and community housing develop- Act(42 U.S.C.12747(c)(2)); and
ment organizations within the State, (3)Policies. Up to 25 points for the ell-
with priority going to applications for teria at sec. 217(c)(3) of the Cranston
affordable housing within the unit of Gonzalez National Affordable Housing
general local government; and reallo- Act(42 U.S.C. 12747(c)(3)).
cate the remainder by formula in ac- [62 FR 44840,Aug.22,1997]
cordance with§92.454.
§92.454 Reallocations by formula.
§92.452 Reallocation of community (a) HUD will reallocate under this
housing development organization section:
set-aside.
(1)Any HOME funds remaining avail-
HUD will reallocate, under this sec-
able for reallocation after HUD has
tion, any HOME funds reduced or re- made competitive reallocations under
captured by HUD from a participating §92.451 and§92.452;
jurisdiction's HOME Investment Trust (2) Any HOME funds available for re-
Fund under §92.300(d). HUD will reallo- allocation because HUD reduced or re-
cate these funds by competition in ac- captured funds from participating ju-
cordance with criteria in §92.453 to risdiction under§92.500(d) for failure to
other participating jurisdictions for af- commit the funds within the time spec-
fordable housing developed, sponsored, ified;
or owned by community housing devel- (3) Any HOME funds withdrawn by
opment organizations. HUD from a participating jurisdiction
§92.453 Competitive reallocations. under 24 CFR 91.520(f) for failure to
submit in a timely manner a perform-
(a) HUD will invite applications ance report required by 24 CFR 91.520
through FEDERAL REGISTER publication that is satisfactory to HUD;and
600
Office of the Secretary, HUD §92.500
(4)Any HOME funds remitted to HUD allocated to the participating jurisdic-
under §92.503(b) when a jurisdiction tion under §92.50 (including for a local
ceases to be a participating jurisdic- participating jurisdiction, any transfer
tion. of the State's allocation pursuant to
(b) Any reallocation of funds from a §92.102(b)(2)) and funds reallocated to
State must be made only among all the participating jurisdiction, either
participating States, and any realloca- by formula or by competition, under
tion of funds from units of general subpart J of this part;and
local government must be made only (c) Local account. (1) The local ac-
among all participating units of gen- count of the HOME Investment Trust
eral local government, except those
participating jurisdictions that HUD Fund includes deposits of HOME funds
has removed from participating in re- disbursed from the Treasury account;
allocations under§92.552. the deposit of any State funds (other
(c) A local participating jurisdic- than HOME funds transferred pursuant
tion's share of a reallocation is cal- to §92.102(b)(2)) or local funds that en-
culated by multiplying the amount able the jurisdiction to meet the par-
available for reallocation to units of ticipating threshold amount in §92.102,
general local government by a factor any program income (from both the al-
that is that ratio of the participating located funds and matching contribu-
jurisdiction's formula allocation pro- tions in accordance with the definition
vided under §92.50 to the total of the of program income), and any repay-
formula allocations provided for all ments or recaptured funds as required
local participating jurisdictions shar- by §92.503. The local account must be
ing in the reallocation.A State partici- interest-bearing.
pating jurisdiction's share is com- (2) The participating jurisdiction
parably determined using the amount may establish a second local account of
available for reallocation to States. the HOME Investment Trust Funds if:
(d) HUD will make reallocations (i) The participating jurisdiction has
under this section quarterly, unless the its own affordable housing trust fund
amount available for such reallocation that the participating jurisdiction will
is insufficient to warrant making a re- use for matching contributions to the
allocation. In any event, HUD will HOME program;
make a reallocation under this section (ii)The statute or local ordinance re-
at least once a year. The minimum
amount of a reallocation is$1000. quires repayments from its own trust
fund to be made to the trust fund;
Subpart K—Program (iii)The participating jurisdiction es-
tablishes a separate account within its
Administration own trust fund for repayments of the
§92.500 The HOME Investment Trust matching contributions;and
Fund. (iv)The funds in the account are used
(a) General. A HOME Investment solely for investment in eligible jurisdic-
Trustactivi-
Fund consists of the accounts de- ties within the participating scribed in this section solely for invest-
the boundaries in accordance with
ment in accordance with the provisions the provisions of this part, except as
of this part. HUD will establish a provided under§92.201(a)(2).
HOME Investment Trust Fund United (3) The funds in the local account
States Treasury account for each par- cannot be used for the matching con-
ticipating jurisdiction. Each partici- tribution and do not need to be
pating jurisdiction may use either a matched.
separate local HOME Investment Trust (d)(1) Reductions of Fiscal Year 2015
Fund account or, a subsidiary account and subsequent fiscal year allocations.
within its general fund(or other appro- HUD will reduce or recapture HOME
priate fund) as the local HOME Invest- funds in the HOME Investment Trust
ment Trust Fund account. Fund,as follows:
(b) Treasury Account. The United (i) Any funds from a specific fiscal
States Treasury account of the HOME year allocation that are in the United
Investment Trust Fund includes funds States Treasury account that are not
601
§92.501 24 CFR Subtitle A(4-1-20 Edition)
committed (including funds for corn- are not committed within 24 months
munity housing development organiza- after the last day of the month in
tions under §92.300) within 24 months which HUD notifies the participating
after the last day of the month in jurisdiction of HUD's execution of the
which HUD notifies the participating HOME Investment Partnership Agree-
jurisdiction of HUD's execution of the ment;
HOME Investment Partnership Agree- (C) Any funds from Fiscal Year 2014
ment for the specific fiscal year alloca- and prior fiscal year allocations in the
tion; United States Treasury account that
(ii) Any funds from a specific fiscal are not expended within 5 years after
year allocation that were committed to
a State recipient or subrecipient that the last day of the month in which
are not committed to a specific local HUD notifies the participating jurisdic-
project within 36 months after the last tion of HUD's execution of the HOME
day of the month in which HUD noti- Investment Partnership Agreement;
fies the participating jurisdiction of and
HUD's execution of the HOME Invest- (D) Any penalties assessed by HUD
ment Partnership Agreement for the under§92.552.
specific fiscal year allocation; (ii) For purposes of determining the
(iii) Any funds from a specific fiscal amount by which the HOME Invest-
year allocation that are in the United ment Trust Fund will be reduced or re-
States Treasury account that are not captured under paragraphs (d)(2)(i)(A),
expended (drawn down) by September (B), and (C) of this section, HUD will
30 of the fifth year after the end of the consider the sum of commitments to
period of availability of the fiscal year CHDOs, commitments, or expenditures,
allocation for obligation by HUD. Due as applicable, from all fiscal year allo-
to end-of-year financial system close- cations through the Fiscal Year 2014 al-
outs that begin before this date and location. This sum must be equal to or
prevent electronic access to the pay- greater than the sum of all fiscal year
ment system, requests to draw down allocations through the fiscal year al-
the funds must be made at least 7 full location being examined (minus pre-
business days before this date to ensure vious reductions to the HOME Invest-
that the funds still can be drawn from ment Trust Fund), or in the case of
the United States Treasury account commitments to CHDOs, 15 percent of
through the computerized disburse those fiscal year allocations.
ment and information system;and
(iv) Any penalties assessed by HUD (iii) HUD will reduce or recapture
under§92.552. HOME funds in the HOME Investment
(2)(i) Reductions of Fiscal Year 2014 Trust Fund by the amount of all fiscal
and prior fiscal year allocations. HUD Year allocations through the Fiscal
will reduce or recapture HOME funds in Year 2014 allocation that are uncom-
the HOME Investment Trust Fund by mitted by the commitment deadline
the amount of: for the Fiscal Year 2015 allocation.
(A) Any funds from Fiscal Year 2014
and prior fiscal year allocations in the [61 FR 48750, Sept. 16, 1996, as amended at 62
FR 28930, May 28, 1997; 78 FR 44679, July 24,
United States Treasury account that 2013;81 FR 86952,Dec.2,2016]
are required to be reserved (i.e., 15 per-
cent of the funds)by a participating ju- §92.501 HOME Investment Partner-
risdiction, under §92.300, and which are ship Agreement.
not committed to a community hous- Allocated and reallocated funds will
ing development organization project
within 24 months after the last day of be made available pursuant to a HOME
the month in which HUD notifies the Investment Partnership Agreement.
participating jurisdiction of HUD's exe- The agreement ensures that HOME
cution of the HOME Investment Part- funds invested in affordable housing
nership Agreement; are repayable if the housing ceases to
(B) Any funds from Fiscal Year 2014 qualify as affordable housing before the
and prior fiscal year allocations in the period of affordability expires.
United States Treasury account that
602
Office of the Secretary, HUD §92.502
§92.502 Program disbursement and in- (2) HOME funds drawn from the
formation system. United States Treasury account must
(a) General. The HOME Investment be expended for eligible costs within 15
Trust Fund account established in the days. Any interest earned within the
United States Treasury is managed 15-day period may be retained by the
through a computerized disbursement participating jurisdiction as HOME
and information system established by funds. Any funds that are drawn down
HUD. The system disburses HOME and not expended for eligible costs
funds that are allocated or reallocated, within 15 days of the disbursement
and collects and reports information on must be returned to HUD for deposit in
the use of HOME funds in the United the participating jurisdiction's United
States Treasury account. (For purposes States Treasury account of the HOME
of reporting in the Integrated Disburse- Investment Trust Fund. Interest
ment and Information System, a earned after 15 days belongs to the
HOME project is an activity.) The par- United States and must be remitted to
ticipating jurisdiction must report all the United States as provided in 2 CFR
program income in HUD's computer- 200.305(b)(9), except interest amounts
ized disbursement and information sys- up to $500 per year may be retained for
tern. administrative expenses.
(b) Project set-up. After the partici- (3) HOME funds in the local account
pating jurisdiction executes the HOME of the HOME Investment Trust Fund
Investment Partnership Agreement, must be disbursed before requests are
submits the applicable banking and se- made for HOME funds in the United
curity documents, complies with the States Treasury account. Beginning
environmental requirements under 24 with the Fiscal Year 2015 allocation,
CFR part 58 for release of funds and the specific funds that are committed
commits funds to a specific local to a project will be disbursed for that
project, the participating jurisdiction project. If both funds in the local ac-
may identify (set up) specific invest- count and funds in the United States
ments in the disbursement and infor- Treasury account are committed to a
mation system. Investments that re- project, the funds in the local account
quire the set-up of projects in the sys- must be disbursed before requests are
tern are the acquisition, new construc- made for HOME funds in the United
tion, or rehabilitation of housing, and States Treasury account for the
the provision of tenant-based rental as- project.
sistance. The participating jurisdiction (4) A participating jurisdiction will
is required to enter complete project be paid on an advance basis provided it
set-up information at the time of complies with the requirements of this
project set-up. part.
(c) Disbursement of HOME funds. (1) (d) Project completion. (1) Complete
After complete project set-up informa- project completion information must
tion is entered into the disbursement be entered into the disbursement and
and information system, HOME funds information system, or otherwise pro-
for the project may be drawn down vided, within 120 days of the final
from the United States Treasury ac- project drawdown. If satisfactory
count by the participating jurisdiction project completion information is not
by electronic funds transfer. The funds provided, HUD may suspend further
will be deposited in the local account project set-ups or take other corrective
of the HOME Investment Trust Fund of actions.
the participating jurisdiction within 48 (2) Additional HOME funds may be
to 72 hours of the disbursement re- committed to a project up to one year
quest. Any drawdown of HOME funds after project completion, but the
from the United States Treasury ac- amount of HOME funds in the project
count is conditioned upon the provision may not exceed the maximum per-unit
of satisfactory information by the par- subsidy amount established under
ticipating jurisdiction about the §92.250.
project or tenant-based rental assist- (e) Access by other participants. Access
ance and compliance with other proce- to the disbursement and information
dures, as specified by HUD. system by other entities participating
603
§92.503 24 CFR Subtitle A(4-1-20 Edition)
in the HOME program (e.g., State re- funds to the HOME Investment Trust
cipients) will be governed by proce- Fund Treasury account or the local ac-
dures established by HUD. Only par- count. If the jurisdiction is not a par-
ticipating jurisdictions and State re- ticipating jurisdiction at the time the
cipients (if permitted by the State) repayment is made, the funds must be
may request disbursement. remitted to HUD and reallocated, in
[61 FR 48750, Sept. 16, 1996, as amended at 78 accordance with§92.454.
FR 44679, July 24, 2013; 80 FR 75935, Dec. 7, (c) Recaptures. HOME funds recap-
2015;81 FR 86952,Dec.2,2016] tured in accordance with
§92.254(a)(5)(ii) must be used in accord-
§92.503 Program income, repayments, ance with the requirements of this
and recaptured funds. part. Recaptured funds must be depos-
(a) Program income. (1) Program in- ited in the participating jurisdiction's
come must be used in accordance with HOME Investment Trust Fund local ac-
the requirements of this part. Program count unless the participating jurisdic-
income must be deposited in the par- tion permits the State recipient, sub-
ticipating jurisdiction's HOME Invest- recipient, or community housing devel-
ment Trust Fund local account unless opment organization to retain the re-
the participating jurisdiction permits captured funds for additional HOME
the State recipient or subrecipient to projects pursuant to the written agree-
retain the program income for addi- ment required by §92.504. If the juris-
tional HOME projects pursuant to the diction is not a participating jurisdic-
written agreement required by §92.504. tion when the recaptured funds are re-
(2) If the jurisdiction is not a partici- ceived, the funds must be remitted to
pating jurisdiction when the program HUD and reallocated in accordance
income is received, the funds are not with§92.454.
subject to the requirements of this (d)Commitment of funds in the local ac-
part. count. Beginning with the Fiscal Year
(3) Program income derived from 2017 action plan, as provided in 24 CFR
consortium activities undertaken by or 91.220(1)(2) and 91.320(k)(2), program in-
within a member unit of general local come, repayments, and recaptured
government which thereafter termi- funds in the participating jurisdiction's
nates its participation in the consor- HOME Investment Trust Fund local ac-
tium continues to be program income count must be used in accordance with
of the consortium. the requirements of this part, and the
(b) Repayments. (1) Any HOME funds amount of program income, repay-
invested in housing that does not meet ments,and recaptured funds in the par-
the affordability requirements for the ticipating jurisdiction's HOME Invest-
period specified in §92.252 or §92.254, as ment Trust Fund local account at the
applicable, must be repaid by the par- beginning of the program year must be
ticipating jurisdiction in accordance committed before HOME funds in the
with paragraph(b)(3)of this section. HOME Investment Trust Fund United
(2) Any HOME funds invested in a States Treasury account, except for
project that is terminated before corn- the HOME funds in the United States
pletion, either voluntarily or other- Treasury account that are required to
wise, must be repaid by the partici- be reserved (i.e., 15 percent of the
pating jurisdiction, in accordance with funds), under §92.300(a), for investment
paragraph (b)(3) of this section, except only in housing to be owned, developed,
for repayments of project-specific corn- or sponsored by community housing
munity housing development organiza- development organizations. The dead-
tion loans that are waived, in accord- line for committing program income,
ance with §§92.301(a)(3) and (b)(3). In repayments, and recaptured funds re-
addition, any HOME funds used for ceived during a program year is the
costs that are not eligible under this date of the participating jurisdiction's
part must be repaid by the partici- commitment deadline for the subse-
pating jurisdiction, in accordance with quent year's grant allocation.
paragraph(b)(3)of this section. [61 FR 48750, Sept. 16, 1996, as amended at 78
(3) HUD will instruct the partici- FR 44680, July 24, 2013; 81 FR 86952, Dec. 2,
pating jurisdiction to either repay the 2016]
604
Office of the Secretary, HUD §92.504
§92.504 Participating jurisdiction re- its own requirements to comply with
sponsibilities; written agreements; this part, including requirements for
on-site inspection. income determinations and under-
(a) Responsibilities. The participating writing subsidy layering guidelines, re-
jurisdiction is responsible for man- habilitation standards, refinancing
aging the day-to-day operations of its guidelines, homebuyer program poli-
HOME program, ensuring that HOME cies,and affordability.
funds are used in accordance with all (i) Use of the HOME funds. The agree-
program requirements and written ment must describe the amount and
agreements, and taking appropriate ac- use of the HOME funds to administer
tion when performance problems arise.
The use of State recipients, subrecipi- one or more programs to produce downpay-
ents, af-
or contractors does not relieve fordable housing, provide ment assistance, or provide tenant-
the participating jurisdiction of this based rental assistance, including the
responsibility. The performance and type and number of housing projects to
compliance of each contractor, State be funded (e.g. the number of single-
recipient, and subrecipient must be re-
viewed at least annually. The partici- family homeowner loans to be made or
pating jurisdiction must have and fol- number of homebuyers to receive
low written policies, procedures, and downpayment assistance), tasks to be
systems, including a system for assess- performed, a schedule for completing
ing risk of activities and projects and a the tasks (including a schedule for
system for monitoring entities con- committing funds to projects that
sistent with this section, to ensure meet the deadlines established by this
that the requirements of this part are part), a budget for each program, and
met. any requirement for matching con-
(b) Executing a written agreement. Be- tributions. These items must be in suf-
fore disbursing any HOME funds to any ficient detail to provide a sound basis
entity, the participating jurisdiction for the State to effectively monitor
must enter into a written agreement performance under the agreement.
with that entity. Before disbursing any (ii) Affordability. The agreement must
HOME funds to any entity, a State re- require housing assisted with HOME
cipient, subrecipient, or contractor funds to meet the affordability require-
which is administering all or a part of ments of §92.252 or §92.254, as applica-
the HOME program on behalf of the ble, and must require repayment of the
participating jurisdiction, must also funds if the housing does not meet the
enter into a written agreement with affordability requirements for the spec-
that entity. The written agreement ified time period. The agreement must
must ensure compliance with the re- state if repayment of HOME funds or
quirements of this part. recaptured HOME funds must be remit-
(c) Provisions in written agreements. ted to the State or retained by the
The contents of the agreement may State recipient for additional eligible
vary depending upon the role the enti- activities.
ty is asked to assume or the type of
project undertaken. This section de- (iii) Program income. The agreement
tails basic requirements by role and must state if program income is to be
the minimum provisions that must be remitted to the State or to be retained
included in a written agreement. by the State recipient for additional el-
(1) State recipient. The provisions in igible activities.
the written agreement between the (iv) Uniform administrative require-
State and a State recipient will depend ments. The agreement must require the
on the program functions that the State recipient to comply with applica-
State specifies the State recipient will ble uniform administrative require-
carry out in accordance with§92.201(b). ments,as described in§92.505.
In accordance with §92.201, the written (v)Project requirement.The agreement
agreement must either require the must require compliance with project
State recipient to comply with the re- requirements in subpart F of this part,
quirements established by the State or as applicable in accordance with the
require the State recipient to establish type of project assisted.
605
§92.504 24 CFR Subtitle A(4-1-20 Edition)
(vi) Other program requirements. The HOME requirements. The agreement
agreement must require the State re- must specify that, in accordance with 2
cipient to carry out each activity in CFR 200.338, suspension or termination
compliance with all Federal laws and may occur if the State recipient mate-
regulations described in subpart H of rially fails to comply with any term of
this part, except that the State recipi- the agreement. The State may permit
ent does not assume the State's respon- the agreement to be terminated in
sibilities for release of funds under whole or in part in accordance with 2
§92.352 and the intergovernmental re- CFR 200.339.
view process in §92.357 does not apply (xi) Written agreement. Before the
to the State recipient. If HOME funds State recipient provides funds to for-
are provided for development of rental profit owners or developers, nonprofit
housing or provision of tenant-based owners or developers or sponsors, sub-
rental assistance, the agreement must recipients, homeowners, homebuyers,
set forth all obligations the State im- tenants(or landlords)receiving tenant-
poses on the State recipient in order to based rental assistance, or contractors
meet the VAWA requirements under who are providing services to the State
§92.359, including notice obligations recipient, the State recipient must
and any obligations with respect to the have a written agreement with such
emergency transfer plan (including entities that meets the requirements of
whether the State recipient must de- this section.
velop its own plan or follow the State's
plan). (xii) Duration of the agreement. The
(vii) Affirmative marketing. The agree- duration of the agreement will depend
ment must specify the nte recThe pient'sagree- on which functions the State recipient
re-
affirmative marketing responsibilities performs (e.g., whether the State
in accordance with§92.351. cipient or the State has responsibility
(viii) Requests for disbursement of for monitoring rental projects for the
funds. The agreement must specify period of affordability) and which ac
that the State recipient may not re- tivities are funded under the agree-
quest disbursement of HOME funds ment.
under this agreement until the funds (xiii) Fees. The agreement must pro-
are needed for payment of eligible hibit the State recipient and its sub-
costs. The amount of each request recipients and community housing de-
must be limited to the amount needed. velopment organizations from charging
Program income must be disbursed be- servicing, origination, processing, in-
fore the State recipient requests funds spection, or other fees for the costs of
from the State. administering a HOME program, except
(ix) Records and reports. The agree- as permitted by§92.214(b)(1).
ment must specify the particular (2) Subrecipient. A subrecipient is a
records that must be maintained and public agency or nonprofit organiza-
the information or reports that must tion selected by the participating juris-
be submitted in order to assist the diction to administer all or some of the
State in meeting its recordkeeping and Participating jurisdiction's HOME pro-
reporting requirements. grams to produce affordable housing,
(x) Enforcement of the agreement. The Provide downpayment assistance, or
agreement must provide for a means of provide tenant-based rental assistance.
enforcement of affordable housing re- The agreement must set forth and re-
quirements by the State or the in- quire the subrecipient to follow the
tended beneficiaries, if the State re- participating jurisdiction's require-
cipient will be the owner at project ments, including requirements for in-
completion of the affordable housing. come determinations,underwriting and
The means of enforcement may include subsidy layering guidelines, rehabilita-
liens on real property, deed restric- tion standards, refinancing guidelines,
tions, or covenants running with the homebuyer program policies, and af-
land. The affordability requirements in fordability requirements. The agree-
§92.252 must be enforced by deed re- ment between the participating juris-
striction. In addition, the agreement diction and the subrecipient must in-
must specify remedies for breach of the elude:
606
Office of the Secretary, HUD §92.504
(i) Use of the HOME funds. The agree- affirmative marketing responsibilities
ment must describe the amount and in accordance with§92.351.
use of the HOME funds for one or more (vi) Requests for disbursement of funds.
programs, including the type and num- The agreement must specify that the
ber of housing projects to be funded subrecipient may not request disburse-
(e.g., the number of single-family ment of funds under the agreement
homeowners loans to be made or the until the funds are needed for payment
number of homebuyers to receive of eligible costs. The amount of each
downpayment assistance), tasks to be request must be limited to the amount
performed, a schedule for completing needed. Program income must be dis-
the tasks (including a schedule for
committing funds to projects in ac- burled before the subrecipient requests
cordance with deadlines established by funds from the participating jurisdic
this part), a budget, any requirement tion.
for matching contributions and the pe- (vii) Reversion of assets. The agree-
riod of the agreement. These items ment must specify that upon expira-
must be in sufficient detail to provide tion of the agreement, the subrecipient
a sound basis for the participating ju- must transfer to the participating ju-
risdiction to effectively monitor per- risdiction any HOME funds on hand at
formance under the agreement. the time of expiration and any ac-
(ii) Program income. The agreement counts receivable attributable to the
must state if program income is to be use of HOME funds.
remitted to the participating jurisdic- (viii) Records and reports. The agree-
tion or to be retained by the sub- ment must specify the particular
recipient for additional eligible activi- records that must be maintained and
ties. the information or reports that must
(iii) Uniform administrative require- be submitted in order to assist the par-
ments. The agreement must require the ticipating jurisdiction in meeting its
subrecipient to comply with applicable recordkeeping and reporting require-
uniform administrative requirements, ments.
as described in§92.505. (ix) Enforcement of the agreement. The
(iv) Other program requirements. The agreement must specify remedies for
agreement must require the sub-
recipient to carry out each activity in breach of the provisions of the agree
compliance with all Federal laws and ment. The agreement must specify
regulations described in subpart H of that, in accordance with 2 CFR 200.338,
this part, except that the subrecipient suspension or termination may occur if
does not assume the participating ju- the subrecipient materially fails to
risdiction's responsibilities for envi- comply with any term of the agree-
ronmental review under§92.352 and the ment. The participating jurisdiction
intergovernmental review process in may permit the agreement to be termi-
§92.357 does not apply. The agreement nated in whole or in part in accordance
must set forth the requirements the with 2 CFR 200.339.
subrecipient must follow to enable the (x) Written agreement. Before the sub-
participating jurisdiction to carry en- recipient provides HOME funds to for-
vironmental review responsibilities be- profit owners or developers, nonprofit
fore HOME funds are committed to a owners or developers or sponsors, sub-
project. If HOME funds are being pro- recipients, homeowners, homebuyers,
vided to develop rental housing or pro- tenants (or landlords)receiving tenant-
vide tenant-based rental assistance, based rental assistance, or contractors,
the agreement must set forth all obli- the subrecipient must have a written
gations the participating jurisdiction agreement that meets the require-
imposes on the subrecipient in order to ments of this section. The agreement
meet the VAWA requirements under
§92.359, including notice obligations must state if repayment of HOME
and obligations under the emergency funds or recaptured HOME funds must
transfer plan. be remitted to the participating juris-
(v) Affirmative marketing. The agree- diction or retained by the subrecipient
ment must specify the subrecipient's for additional eligible activities.
607
§92.504 24 CFR Subtitle A(4-1-20 Edition)
(xi) Fees. The agreement must pro- the procedures for rent increases pur-
hibit the subrecipient and any commu- suant to §92.252(f)(2), the number of
nity housing development organiza- HOME units, the size of the HOME
tions from charging servicing, origina- units, and the designation of the HOME
tion, or other fees for the costs of ad- units as fixed or floating, and include
ministering the HOME program, except the requirement that the owner or de-
as permitted by§92.214(b)(1). veloper provide the address (e.g., street
(3) For-profit or nonprofit housing address and apartment number) of each
owner, sponsor, or developer (other than HOME unit no later than the time of
single-family owner-occupant). The par- initial occupancy.
ticipating jurisdiction may prelimi- (B) If the owner or developer is un-
narily award HOME funds for a pro- dertaking a homeownership project for
posed project, contingent on conditions sale to homebuyers in accordance with
such as obtaining other financing for §92.254(a), the agreement must set
the project. This preliminary award is forth the resale or recapture require-
not a commitment to a project. The ments that must be imposed on the
written agreement committing the housing, the sales price or the basis
HOME funds to the project must meet upon which the sales price will be de-
the requirements of "commit to a spe- termined, and the disposition of the
cific local project" in the definition of sales proceeds. Recaptured funds must
"commitment" in§92.2 and contain the be returned to the participating juris-
following: diction.
(i) Use of the HOME funds. The agree- (iii) Project requirements. The agree-
ment between the participating juris- ment must require compliance with
diction and a for-profit or nonprofit project requirements in subpart F of
housing owner, sponsor, or developer this part, as applicable in accordance
must describe the address of the with the type of project assisted. The
project or the legal description of the agreement may permit the owner to
property if a street address has not limit eligibility or give a preference to
been assigned to the property, the use a particular segment of the population
of the HOME funds and other funds for in accordance with§92.253(d).
the project, including the tasks to be (iv) Property standards. The agree-
performed for the project, a schedule ment must require the housing to meet
for completing the tasks and the the property standards in §92.251, upon
project, and a complete budget. These project completion. The agreement
items must be in sufficient detail to must also require owners of rental
provide a sound basis for the partici- housing assisted with HOME funds to
pating jurisdiction to effectively mon- maintain the housing compliance with
itor performance under the agreement §92.251 for the duration of the afford-
to achieve project completion and corn- ability period.
pliance with the HOME requirements. (v) Other program requirements. The
(ii)Affordability. The agreement must agreement must require the owner, de-
require housing assisted with HOME veloper or sponsor to carry out each
funds to meet the affordability require- project in compliance with the fol-
ments of §92.252 or §92.254, as applica- lowing requirements of subpart H of
ble, and must require repayment of the this part:
funds if the housing does not meet the (A) The agreement must specify the
affordability requirements for the spec- owner or developer's affirmative mar-
ified time period. The affordability re- keting responsibilities as enumerated
quirements in §92.252 must be imposed by the participating jurisdiction in ac-
by deed restrictions, covenants running cordance with§92.351.
with the land,use restrictions, or other (B) The federal requirements and
mechanisms approved by HUD under nondiscrimination established in
which the participating jurisdiction §92.350.
has the right to require specific per- (C)Any displacement,relocation, and
formance. acquisition requirements imposed by
(A) If the owner or developer is un- the participating jurisdiction con-
dertaking rental projects, the agree- sistent with§92.353.
ment must establish the initial rents, (D)The labor requirements in§92.354.
608
Office of the Secretary, HUD §92.504
(E)The conflict of interest provisions ment until the funds are needed for
prescribed in§92.356(f). payment of eligible costs. The amount
(F) If HOME funds are being provided of each request must be limited to the
to develop rental housing, the agree- amount needed.
ment must set forth all obligations the (ix) Duration of the agreement. The
participating jurisdiction imposes on agreement must specify the duration of
the owner in order to meet the VAWA the agreement. If the housing assisted
requirements under §92.359, including under this agreement is rental housing,
the owner's notice obligations and the agreement must be in effect
owner obligations under the emergency through the affordability period re-
transfer plan. quired by the participating jurisdiction
(vi) Records and reports. The agree- under §92.252. If the housing assisted
ment must specify the particular under this agreement is homeowner-
records that must be maintained and ship housing, the agreement must be in
the information or reports that must effect at least until completion of the
be submitted in order to assist the par-
low-in-
ticipating jurisdiction in meeting its projectfand ownership by the comme family.
recordkeeping and reporting require (x) Community housing development or
menu. The owner of rental housing ganization provisions. If the nonprofit
must annually provide the partici-
pating jurisdiction with information on owner or developer is a community
rents and occupancy of HOME-assisted housing development organization and
units to demonstrate compliance with is using set-aside funds under §92.300,
§92.252. If the rental housing project the agreement must include the appro-
has floating HOME units, the owner priate provisions under §§92.300, 92.301,
develop-
must provide the participating juris-
diction and 92.303. If the community with information regarding ment organization is receiving HOME
unit substitution and filling vacancies funds as a developer of homeownership
so that the project remains in compli- housing, the agreement must specify if
ance with HOME rental occupancy re the organization may retain proceeds
quirements. The agreement must speci- from the sale of the housing and
fy the reporting requirements (includ whether the proceeds are to be used for
ing copies of financial statements) to HOME-eligible or other housing activi-
enable the participating jurisdiction to ties to benefit low-income families. Re-
determine the financial condition (and captured funds are subject to the re-
continued financial viability) of the quirements of §92.503. If the commu-
rental project. nity housing development organization
(vii)Enforcement of the agreement. The is receiving assistance for operating
agreement must provide for a means of expenses, see paragraph (c)(6) of this
enforcement of the affordable housing section.
requirements by the participating ju- (xi) Fees. The agreement must pro-
risdiction and the intended bene- hibit project owners from charging fees
ficiaries. This means of enforcement that are not customarily charged in
may include liens on real property, rental housing such as laundry room
deed restrictions, or covenants running access fees, and other fees. However,
with the land. The affordability re- rental project owners may charge rea-
quirements in §92.252 must be imposed sonable application fees to prospective
by deed restrictions, covenants running tenants may charge parking fees to
with the land,use restrictions, or other tenants only if such fees are customary
mechanisms approved by HUD under for rental housing projects in the
which the participating jurisdiction neighborhood; and may charge fees for
has the right to require specific per- services such as bus transportation or
formance. In addition, the agreement meals, as long as such services are vol-
must specify remedies for breach of the untary. The agreement must also pro-
provisions of the agreement. hibit the developer that is undertaking
(viii) Requests for disbursement of a homeownership project from charg-
funds. The agreement must specify ing servicing, origination, processing,
that the developer may not request dis- inspection, or other fees for the costs
bursement of funds under the agree- of providing homeownership assistance.
609
§92.504 24 CFR Subtitle A(4-1-20 Edition)
(4) Contractor. The participating ju- provisions. The agreement must speci-
risdiction selects a contractor through fy the amount of HOME funds, the
applicable procurement procedures and form of assistance, e.g., grant, amor-
requirements. The contractor provides tizing loan, deferred payment loan, the
goods or services in accordance with a use of the funds (e.g., down-payment,
written agreement (the contract). For closing costs, rehabilitation) and the
contractors who are administering all time by which the housing must be ac-
or some of the participating jurisdic- quired.
tion's HOME programs or specific serv- (ii) For homeowners, the agreement
ices for one or more programs, the con- must conform to the requirements in
tract must include at a minimum the §92.254(b) and specify the amount and
following provisions: form of HOME assistance, rehabilita-
(i) Use of the HOME funds. The agree- tion work to be undertaken, date for
ment must describe the use of the completion, and property standards to
HOME funds, including the tasks to be be met.
performed, a schedule for completing (iii) For tenants, the rental assist-
the tasks, a budget, and the length of ance contract or the security deposit
the agreement. contract must conform to §§92.209 and
(ii) Program requirements. The agree- 92.253.
ment must provide that the contractor
is subject to the requirements in part (6) Community housing development or-
92 that are applicable to the partici- ganization receiving assistance for oper-
pating jurisdiction, except §§92.505 and ating expenses. The agreement must de-
92.506 do not apply, and the contractor scribe the use of HOME funds for oper-
cannot assume the participating juris-
diction responsibilities for environ- and other employee compensation and
mental review, decisionmaking, and benefits; employee education, training,
action under §92.352. Where the con- and travel; rent; utilities; communica-
tractor is administering only a portion tion costs; taxes; insurance; equip-
of the program, the agreement must ment; and materials and supplies. If
list the requirements applicable to the the community housing development
activities the contractor is admin- organization is not also receiving funds
istering. If applicable to the work for a housing project to be developed,
under the contract, the agreement sponsored, or owned by the community
must set forth all obligations the par- housing development organization, the
ticipating jurisdiction imposes on the agreement must provide that the com-
contractor in order to meet the VAWA munity housing development organiza-
requirements under §92.359, including tion is expected to receive funds for a
any notice obligations and any obliga- project within 24 months of the date of
tions under the emergency transfer receiving the funds for operating ex-
plan. penses, and must specify the terms and
(iii)Duration of agreement. The agree- conditions upon which this expectation
ment must specify the duration of the is based and the consequences of failure
contract. Generally, the duration of a to receive funding for a project.
contract should not exceed two years. (7) Community housing development or-
(5)Homebuyer, homeowner or tenant re- ganization receiving assistance for
ceiving tenant-based rental or security de- project-specific technical assistance and
posit assistance. When a participating site control loans or project-specific seed
jurisdiction provides assistance to a money loans. The agreement must iden-
homebuyer, homeowner or tenant the tify the specific site or sites and de-
written agreement may take many scribe the amount and use of the
forms depending upon the nature of as- HOME funds (in accordance with
sistance. As appropriate, it must in- §92.301), including a budget for work, a
dude as a minimum: period of performance, and a schedule
(i) For homebuyers, the agreement for completion. The agreement must
must conform to the requirements in also set forth the basis upon which the
§92.254(a), the value of the property, participating jurisdiction may waive
principal residence, lease-purchase, if repayment of the loans, consistent
applicable, and the resale or recapture with§92.301, if applicable.
610
Office of the Secretary, HUD §92.504
(8) Technical assistance provider to de- (e.g., paid invoice for work order)rath-
velop the capacity of community housing er than re-inspection. Health and safe-
development organizations in the jurisdic- ty deficiencies must be corrected im-
tion. The agreement must identify the mediately, in accordance with §92.251.
specific nonprofit organization(s) to re- The participating jurisdiction must
ceive capacity building assistance. The adopt a more frequent inspection
agreement must describe the amount schedule for properties that have been
and use (scope of work) of the HOME found to have health and safety defi-
funds, including a budget, a period of ciencies.
performance, and a schedule for com- (C) The property owner must annu-
pletion. ally certify to the participating juris-
(d) On-site inspections and financial diction that each building and all
oversight. (1) Inspections. The partici- HOME-assisted units in the project are
pating jurisdiction must inspect each suitable for occupancy, taking into ac-
project at project completion and dur- count State and local health, safety,
ing the period of affordability to deter- and other applicable codes, ordinances,
mine that the project meets the prop- and requirements, and the ongoing
erty standards of§92.251. property standards established by the
(i) Completion inspections. Before com- participating jurisdiction to meet the
pleting the project in the disbursement requirements of§92.251.
and information system established by (D) Inspections must be based on a
HUD, the participating jurisdiction statistically valid sample of units ap-
must perform an on-site inspection of
HOME-as-
HOME-assisted housing to determine sistedate for the size of the that all contracted work has been com- ime project,ce Fora set projectsforth withy HUD
one-
pleted and that the project complies through notice. un partici-
with the property standards of §92.251. pating
to-four HOME-assisted units, ct10
(ii) Ongoing periodic inspections of percen jurisdiction must inspect 100
HOME-assisted rental housing. During percent of the HOME-assisted units and
the period of affordability, the partici- the inspectable items(site,building ex-
pating jurisdiction must perform on areas, building systems, and common
site inspections of HOME-assisted rent- areas) for each building housing
al housing to determine compliance HOME-assisted units.
with the property standards of §92.251 (iii)Annual inspections. Tenant-based
and to verify the information sub- rental assistance (TBRA). All housing
mitted by the owners in accordance occupied by tenants receiving HOME
with the requirements of §92.252. The tenant-based rental assistance must
inspections must be in accordance with meet the standards in 24 CFR 982.401 or
the inspection procedures that the par- the successor requirements as estab-
ticipating jurisdiction establishes to lished by HUD. The participating juris-
meet the inspection requirements of diction must perform annual on-site in-
§92.251. spections of rental housing occupied by
(A) The on-site inspections must tenants receiving HOME-assisted
occur within 12 months after project TBRA to determine compliance with
completion and at least once every 3 these standards.
years thereafter during the period of (2) Financial oversight. During the pe-
affordability. riod of affordability, the participating
(B) If there are observed deficiencies jurisdiction must examine at least an-
for any of the inspectable items in the nually the financial condition of
property standards established by the HOME-assisted rental projects with 10
participating jurisdiction, in accord- units or more to determine the contin-
ance with the inspection requirements ued financial viability of the housing
of §92.251, a follow-up on-site inspec- and must take actions to correct prob-
tion to verify that deficiencies are cor- lems, to the extent feasible.
rected must occur within 12 months. [61 FR 48750, Sept. 16, 1996, as amended at 64
The participating jurisdiction may es- FR 50224, Sept. 15, 1999; 67 FR 61757, Oct. 1,
tablish a list of non-hazardous defi- 2002; 68 FR 56404, Sept. 30, 2003; 78 FR 44680,
ciencies for which correction can be July 24, 2013; 80 FR 75935, Dec. 7, 2015; 81 FR
verified by third party documentation 80804, Nov. 16, 2016; 81 FR 86952, Dec. 2, 2016]
611
§92.505 24 CFR Subtitle A(4-1-20 Edition)
§92.505 Applicability of uniform ad- $750,000 (or $500,000 in fiscal years in
ministrative requirements. which Congress appropriates less than
The requirements of 2 CFR part 200 $1.5 billion)as required by§92.102(b).
apply to participating jurisdictions, (2) Program records. (i) Records of the
State recipients, and subrecipients re- efforts to maximize participation by
ceiving HOME funds, except for the fol- the private sector as required by
lowing provisions: §§200.306, 200.307, §92.200.
200.308 (not applicable to participating (ii) The forms of HOME assistance
jurisdictions), 200.311 (except as pro- used in the program, including any
vided in §92.257), 200.312, 200.329, 200.333, forms of investment described in the
and 200.334. The provisions of 2 CFR Consolidated Plan under 24 CFR part 91
200.305 apply as modified by §92.502(c). that are not identified in§92.205(b), and
If there is a conflict between defini- which are specifically approved by
tions in 2 CFR part 200 and 24 CFR part HUD.
92, the definitions in 24 CFR part 92 (iii) The underwriting and subsidy
govern. layering guidelines adopted in accord-
ance with §92.250 that support the par-
[80 FR 75935,Dec.7,2015] ticipating jurisdiction's Consolidated
§92.506 Audit. Plan certification.
(iv) If existing debt is refinanced for
Audits of the participating jurisdic- multi-family rehabilitation projects,
tion, State recipients, and subrecipi- the refinancing guidelines established
ents must be conducted in accordance in accordance with §92.206(b), described
with 2 CFR part 200,subpart F. in the Consolidated Plan.
[67 FR 61757,Oct.1,2002,as amended at 80 FR (v) If HOME funds are used for ten-
75935,Dec.7,2015] ant-based rental assistance, records
supporting the participating jurisdic-
§92.507 Closeout. tion's Consolidated Plan certification
HOME funds will be closed out in ac- in accordance with§92.209(b), including
cordance with 2 CFR part 200, subpart documentation of the local market
D. conditions that led to the choice of this
option; written selection policies and
[80 FR 75935,Dec.7,2015] criteria; supporting documentation for
§92.508 Recordkeeping. preferences for specific categories of
individuals with disabilities; and
(a) General. Each participating juris- records supporting the rent standard
diction must establish and maintain and minimum tenant contribution es-
sufficient records to enable HUD to de- tablished in accordance with §92.209(h).
termine whether the participating ju- (vi) If HOME funds are used for ten-
risdiction has met the requirements of ant-based rental assistance or rental
this part. At a minimum, the following housing, records evidencing that not
records are needed: less than 90 percent of the families re-
(1) Records concerning designation as a ceiving such rental assistance meet the
participating jurisdiction. (i) For a con- income requirements of§92.216.
sortium, the consortium agreement (vii) If HOME funds are used for
among the participating member units homeownership housing, the proce-
of general local government as re- dures used for establishing 95 percent
quired by§92.101. of the median purchase price for the
(ii) For a unit of general local gov- area in accordance with§92.254(a)(2), in
ernment receiving a formula allocation the Consolidated Plan.
of less than $750,000 (or less than (viii) If HOME funds are used for ac-
$500,000 in fiscal years in which Con- quisition of housing for homeowner-
gress appropriates less than$1.5 billion ship, the resale or recapture guidelines
for this part), records demonstrating established in accordance with
that funds have been made available §92.254(a)(5),as set forth in the Consoli-
(either by the State or the unit of gen- dated Plan.
eral local government, or both) equal (ix) Records demonstrating compli-
to or greater than the difference be- ance with the matching requirements
tween its formula allocation and of §92.218 through §92.222 including a
612
Office of the Secretary, HUD §92.508
running log and project records docu- (v) Records demonstrating that each
menting the type and amount of match family is income eligible in accordance
contributions by project. with§92.203.
(x) Records documenting compliance (vi) Records demonstrating that each
with the 24 month commitment dead- tenant-based rental assistance project
line of§92.500(d). meets the written tenant selection
(xi) Records demonstrating compli- policies and criteria of §92.209(c), fin-
ance with the fifteen percent CHDO eluding any targeting requirements,
set-aside requirement of§92.300(a). the rent reasonableness requirements
(xii) Records documenting compli of§92.209(f), the maximum subsidy pro-
ance with the ten percent limitation on visions of §92.209(h), property inspec-
administrative and planning costs in tion reports, and calculation of the
accordance with§92.207. HOME subsidy.
(xiii) Records documenting objec (vii) Records demonstrating that
tions to the religious character of an each rental housing project meets the
organization that provides services affordability and income targeting re
under the HOME program, and the rea- quirements of §92.252 for the required
sonable efforts undertaken to identify period. Records must be kept for each
and refer the program participant to an family assisted.
alternative provider to which the pro- (viii) Records demonstrating that
spective program participant has no each multifamily rental housing
objection,as provided in§92.257(d). project involving rehabilitation with
refinancing complies with the refi-
(3) Project records. (i) A full deserip- nancing guidelines established in ac-
tion of each project assisted with cordance with§92.206(b).
HOME funds, including the location
(address of each unit), form of HOME (ix)Records demonstratingthat each
lease for a tenant receiving tenant-
assistance, and the units or tenants as- based rental assistance and for an as-
sisted with HOME funds. sisted rental housing unit complies
(ii) The source and application of with the tenant and participant protec-
funds for each project, including sup- tions of §92.253. Records must be kept
porting documentation in accordance for each family.
with 2 CFR 200.302; and records to docu- (x) Records demonstrating that the
ment the eligibility and permissibility purchase price or estimated value after
of the project costs, including the doe- rehabilitation for each homeownership
umentation of the actual HOME-eligi- housing project does not exceed 95 per-
ble development costs of each HOME- cent of the median purchase price for
assisted unit (through allocation of the area in accordance with
costs, if permissible under §92.205(d)) §92.254(a)(2). The records must dem-
where HOME funds are used to assist onstrate how the estimated value was
less than all of the units in a multi- determined.
unit project. (xi)Records demonstrating that each
(iii)Records demonstrating that each homeownership project meets the af-
rental housing or homeownership fordability requirements of §92.254 for
project meets the minimum per-unit the required period.
subsidy amount of §92.205(c), the max- (xii) Records demonstrating that any
imum per-unit subsidy amount of pre-award costs charged to the HOME
§92.250(a), and the subsidy layering and allocation meet the requirements of
underwriting evaluation adopted in ac- §92.212.
cordance with§92.250(b). (xiii) Records demonstrating that a
(iv) Records (e.g., inspection reports) site and neighborhood standards review
demonstrating that each project meets was conducted for each project which
the property standards of §92.251 at includes new construction of rental
project completion. In addition, during housing assisted under this part to de-
the period of affordability, records for termine that the site meets the re-
rental projects demonstrating compli- quirements of 24 CFR 983.57(e)(2) and
ance with the property standards and (e)(3), in accordance with§92.202.
financial reviews and actions pursuant (xiv) Records (written agreements)
to§92.504(d). demonstrating compliance with the
613
§92.508 24 CFR Subtitle A(4-1-20 Edition)
written agreements requirements in risk of activities and projects and a
§92.504. system for monitoring entities con-
(4) Community Housing Development sistent with this section, to ensure
Organizations(CHDOs)Records. (i)Writ- that the requirements of this part are
ten agreements committing HOME met.
funds to CHDO projects in accordance (ii) Records demonstrating compli-
with§92.300(a). ance with the written agreements re-
(ii) Records setting forth the efforts quired by§92.504.
made to identify and encourage (iii) Records demonstrating compli-
CHDOs,as required by§92.300(b). ance with the applicable uniform ad-
(iii) The name and qualifications of ministrative requirements required by
each CHDO and amount of HOME §92.505.
CHDO set-aside funds committed. (iv) Records documenting required
(iv)Records demonstrating that each inspections, monitoring reviews and
CHDO complies with the written agree- audits, and the resolution of any find-
ments required by§92.504. ings or concerns.
(v) Records concerning the use of (7) Records concerning other Federal re-
CHDO setaside funds, including funds
used to develop CHDO capacity pursu- quirements—(i) Equal opportunity and
ant to§92.300(b). fair housing records. (A) Data on the ex-
(vi) Records concerning the use of tent to which each racial and ethnic
funds for CHDO operating expenses and group and single headed households (by
demonstrating compliance with the re- gender of household head) have applied
quirements of §§92.208, 92.300(e) and for, participated in, or benefited from,
92.300(f). any program or activity funded in
(vii) Records concerning the tenant whole or in part with HOME funds.
participation plan required by§92.303. (B) Documentation of actions under-
(viii)Records concerning project-spe taken to meet the requirements of 24
cific assistance to CHDOs pursuant to CFR part 135 which implements section
§92.301, including the impediments to 3 of the Housing Development Act of
repayment, if repayment is waived. 1968,as amended(12 U.S.C. 1701u).
(5) Financial records. (i) Records, in (C) Documentation of the actions the
accordance with 2 CFR 200.302, identi- participating jurisdiction has taken to
fying the source and application of affirmatively further fair housing, in-
funds for each fiscal year, including the eluding documentation related to the
formula allocation, any reallocation participating jurisdiction's Assessment
(identified by federal fiscal year appro- of Fair Housing as described in 24 CFR
priation), and any State or local funds 5.168.
provided under§92.102(b). (ii) Affirmative marketing and MBE/
(ii)Records concerning the HOME In- WBE records.
vestment Trust Fund Treasury account (A) Records demonstrating compli-
and local account required to be estab- ance with the affirmative marketing
lished and maintained by §92.500, in- procedures and requirements of§92.351.
eluding deposits, disbursements, bal- (B) Documentation and data on the
antes, supporting documentation and steps taken to implement the jurisdic-
any other information required by the tion's outreach programs to minority-
program disbursement and information owned (MBE) and female-owned (WBE)
system established by HUD. businesses including data indicating
(iii) Records identifying the source the racial/ethnic or gender character of
and application of program income, re- each business entity receiving a con-
payments and recaptured funds. tract or subcontract of$25,000 or more
(iv) Records demonstrating adequate paid, or to be paid, with HOME funds;
budget control and other records re- the amount of the contract or sub-
quired by 2 CFR 200.302, including evi- contract, and documentation of par-
dence of periodic account reconcili- ticipating jurisdiction's affirmative
ations. steps to assure that minority business
(6) Program administration records. (i) and women's business enterprises have
Written policies, procedures, and sys- an equal opportunity to obtain or corn-
terns, including a system for assessing pete for contracts and subcontracts as
614
Office of the Secretary, HUD §92.508
sources of supplies, equipment, con- the most recent five year period, ex-
struction,and services. cept as provided below.
(iii) Records demonstrating compli- (1) For rental housing projects,
ance with the environmental review re- records may be retained for five years
quirements of §92.352 and 24 CFR part after the project completion date; ex-
58, including flood insurance require- cept that records of individual tenant
ments. income verifications, project rents and
(iv) Records demonstrating compli- project inspections must be retained
ance with the requirements of §92.353 for the most recent five year period,
regarding displacement, relocation, until five years after the affordability
and real property acquisition, includ- period terminates.
ing project occupancy lists identifying (2) For homeownership housing
the name and address of all persons oc- projects, records may be retained for
cupying the real property on the date maybe retained for
five years after the project completion
described in §92.353(c)(2)(i)(A), moving date, except for documents imposing
into the property on or after the date
described in §92.353(c)(2)(i)(A), and oc-
must restrictions which
cupying the property upon completion must be retained for five years after
of the project. the affordability period terminates.
(v) Records demonstrating compli- (3)For tenant-based rental assistance
ance with the labor requirements of projects, records must be retained for
§92.354, including contract provisions five years after the period of rental as-
and payroll records. sistance terminates.
(vi) Records demonstrating compli- (4) Written agreements must be re-
ance with the lead-based paint require- tained for five years after the agree-
ments of part 35, subparts A, B, J,K, M ment terminates.
and R of this title. (5) Records covering displacements
(vii) Records supporting exceptions and acquisition must be retained for
to the conflict of interest prohibition five years after the date by which all
pursuant to§92.356. persons displaced from the property
(viii) Records demonstrating compli- and all persons whose property is ac-
ance with debarment and suspension quired for the project have received the
requirements in 2 CFR part 2424. final payment to which they are enti-
(ix) Records concerning intergovern- tled in accordance with§92.353.
mental review,as required by§92.357. (6) If any litigation, claim, negotia-
(x) Records of emergency transfers tion, audit, monitoring, inspection or
requested under 24 CFR 5.2005(e) and other action has been started before
92.359 pertaining to victims of domestic the expiration of the required record
violence, dating violence, sexual as- retention period records must be re-
sault, or stalking, including data on tained until completion of the action
the outcomes of those requests. and resolution of all issues which arise
(b) States with State Recipients. A from it, or until the end of the required
State that distributes HOME funds to period,whichever is later.
State recipients must require State re- (d) Access to records. (1) The partici-
cipients to keep the records required pating jurisdiction must
citi-
by paragraphs (a)(2), (a)(3), (a)(5), (a)(6) providethr
zens, public agencies, and other inter-
and (a)(7) of this section, and such ested parties with reasonable access to
other records as the State determines records, consistent with applicable
to be necessary to enable the State to state and local laws regarding
carry out its responsibilities under this privacy
part. The State need not duplicate the and obligations of confidentiality.
records kept by the State recipients. (2) HUD and the Comptroller General
The State must keep records con- of the United States, any of their rep-
cerning its review of State recipients resentatives, have the right of access
required under§92.201(b)(3). to any pertinent books, documents, pa-
(c) Period of record retention. All pers or other records of the partici-
records pertaining to each fiscal year pating jurisdiction, state recipients,
of HOME funds must be retained for
615
§92.509 24 CFR Subtitle A(4-1-20 Edition)
and subrecipients, in order to make au- (1) For local participating jurisdic-
dits, examinations, excerpts, and tran- tions and State participating jurisdic-
scripts. tions administering their own HOME
[61 FR 48750, Sept. 16, 1996, as amended at 64 programs, whether the participating
FR 50224, Sept. 15, 1999; 67 FR 61757, Oct. 1, jurisdiction has committed the HOME
2002; 72 FR 73493, Dec. 27, 2007; 78 FR 44682, funds in the United States Treasury ac-
July 24,2013;80 FR 42366, July 16,2015;80 FR count as required by §92.500 and ex-
75935, Dec. 7, 2015; 81 FR 80805, Nov. 16, 2016] pended the funds in the United States
§92.509 Performance reports. Treasury account as required by
(a) Management reports. Each partici- §92.500, and has met the requirements
ac-
patingof jurisdiction must submit man- tivities,this part,ipancome ularly
eligible d-
agement reports on its HOME Invest- ability,
d matc targeting, nts; or
ment Partnerships Program in such ability, and matching requirements; or
format and at such time as HUD may (2) For State participating jurisdic
prescribe. tions distributing HOME funds to State
(b) Annual performance report. For an- recipients, whether the State has met
nual performance report requirements, the matching contribution and other
see 24 CFR part 91. requirements of this part; has distrib-
uted the funds in accordance with the
Subpart L—Performance Reviews requirements of this part; and has
and Sanctions made such reviews and audits of its
State recipients as may be appropriate
§92.550 Performance reviews. to determine whether they have satis-
(a) General. HUD will review the per fied the requirements of paragraph
formance of each participating juris (b)(1)of this section.
diction in carrying out its responsibil-
ities under this part whenever deter- §92.551 Corrective and remedial ac-
mined necessary by HUD, but at least tions.
annually. In conducting performance (a) General. HUD will use the proce-
reviews, HUD will rely primarily on in- dures in this section in conducting the
formation obtained from the partici- performance review as provided in
pating jurisdiction's and, as appro- §92.550 and in taking corrective and re-
priate, the State recipient's records medial actions.
and reports, findings from on-site mon- (b) Performance review. (1) If HUD de-
itoring, audit reports, and information termines preliminarily that the par-
generated from the disbursement and ticipating jurisdiction has not met a
information system established by requirement of this part, the partici-
HUD. Where applicable, HUD may also
consider relevant information of thising jurisdiction will abnd
given notice
per- of determination and an oppor-
taining to a participating jurisdiction's tunity to demonstrate, within the time
or State recipient's performance
gained from other sources, including prescribed by HUD (not to exceed 30
citizen comments, complaint deter- days) and on the basis of substantial
minations, and litigation. Reviews to facts and data, that it has done so.
determine compliance with specific re- (2) If the participating jurisdiction
quirements of this part will be con- fails to demonstrate to HUD's satisfac-
ducted as necessary, with or without tion that it has met the requirement,
prior notice to the participating juris- HUD will take corrective or remedial
diction or State recipient. Comprehen- action in accordance with this section
sive performance reviews under the or§92.552.
standards in paragraph (b) of this sec- (c) Corrective and remedial actions.
tion will be conducted after prior no- Corrective or remedial actions for a
tice to the participating jurisdiction. performance deficiency(failure to meet
(b) Standards for comprehensive per- a provision of this part) will be de-
formance review. A participating juris- signed to prevent a continuation of the
diction's performance will be corn- deficiency; mitigate, to the extent pos-
prehensively reviewed periodically, as sible, its adverse effects or con-
prescribed by HUD, to determine: sequences; and prevent its recurrence.
616
Office of the Secretary, HUD §92.552
(1) HUD may instruct the partici- may be legally available, including
pating jurisdiction to submit and corn- remedies under 2 CFR 200.338.
ply with proposals for action to cor-
rect, mitigate and prevent a perform-cor-
[61 FR 48750, Sept. 16, 1996, as amended at 78
FR 44683, July 24, 2013; 80 FR 75935, Dec. 7,
ance deficiency,including: 2015]
(i) Preparing and following a sched-
ule of actions for carrying out the af- §92.552 Notice and opportunity for
fected activities, consisting of sched- hearing;sanctions.
ules, timetables, and milestones nec- (a) If HUD finds after reasonable no-
essary to implement the affected ac- tice and opportunity for hearing that a
tivities; participating jurisdiction has failed to
(ii) Establishing and following a comply with any provision of this part
management plan that assigns respon- and until HUD is satisfied that there is
sibilities for carrying out the remedial no longer any such failure to comply:
actions; (1) HUD shall reduce the funds in the
(iii) Canceling or revising activities participating jurisdiction's HOME In-
likely to be affected by the perform- vestment Trust Fund by the amount of
ance deficiency, before expending any expenditures that were not in ac-
HOME funds for the activities; cordance with the requirements of this
(iv) Reprogramming HOME funds part;and
that have not yet been expended from (2) HUD may do one or more of the
affected activities to other eligible ac- following:
tivities; (i)Prevent withdrawals from the par-
(v) Reimbursing its HOME Invest- ticipating jurisdiction's HOME Invest-
ment Trust Fund in any amount not ment Trust Fund for activities affected
used in accordance with the require- by the failure to comply;
ments of this part; (ii) Restrict the participating juris-
(vi) Suspending disbursement of diction's activities under this part to
HOME funds for affected activities;and activities that conform to one or more
(vii) Establishing procedures to en- model programs which HUD has devel-
sure compliance with HOME require- oped in accordance with section 213 of
ments; the Act;
(viii) Making matching contributions (iii) Remove the participating juris-
as draws are made from the partici- diction from participation in alloca-
pating jurisdiction's HOME Investment tions or reallocations of funds made
Trust Fund United States Treasury Ac available under subpart B or J of this
count and establishing a remedial plan part;
to make up the matching contributions (iv) Require the participating juris-
deficit;and diction to make matching contribu-
(ix) If the participating jurisdiction tions in amounts required by §92.218(a)
is a metropolitan city, forming a con- as HOME funds are drawn from the par
sortium with the urban county if the ticipating jurisdiction's HOME Invest-
urban county is willing to carry out ment Trust Fund United States Treas-
ury Account. Provided, however, that
city. HUD may on due notice suspend pay-
tan HUD may change ments at any time after the issuance of
(2)p HUD from alsoa change
the to et methodm- a notice of opportunity for hearing pur-
ofbursement basis and may require sup- tion,
suant to pendingpar suchha hearing1) af this seal
al
porting documentation to be submitted decin, tte ex ntH and a fines
for HUD review for each decision, to the extent HUD determines
payment re- such action necessary to preclude the
quest before payment is made; deter- further expenditure of funds for activi-
mine the participating jurisdiction to ties affected by the failure to comply.
be high risk and impose special condi- (b) Proceedings. When HUD proposes
tions or restrictions on the next year's to take action pursuant to this section,
allocation in accordance with 2 CFR the respondent in the proceedings will
200.207; and take other remedies that be the participating jurisdiction or, at
617
§92.600 24 CFR Subtitle A(4-1-20 Edition)
HUD's option, the State recipient. Pro- a leasehold interest with a term equal
ceedings will be conducted in accord- to at least the term of the mortgage fi-
ance with 24 CFR part 26. nancing on the unit or the period of af-
[61 FR 48750, Sept. 16, 1996, as amended at 62 fordability(whichever is greater).
FR 44840, Aug. 22, 1997; 78 FR 44683, July 24, (b) Eligible project costs. ADDI funds
2013] may be used for the following eligible
costs:
Subpart M—American Dream (1) Acquisition costs. The costs of ac-
quiring Initiative quiring single family housing.
(2) Rehabilitation costs. The eligible
development hard costs for rehabilita-
SOURCE: 69 FR 16766, Mar. 30, 2004, unless tion projects described in§92.206(a) and
otherwise noted. the costs for reduction of lead paint
§92.600 Purpose. hazards and the remediation of other
home health hazards. FY2003 ADDI
This subpart describes the require- funds may not be used for rehabilita-
ments for the HOME Program Amer- tion.
ican Dream Downpayment Initiative (3) Related soft costs. Reasonable and
(ADDI). Through the ADDI, HUD necessary costs incurred by the home-
makes formula grants to participating buyer or participating jurisdiction and
jurisdictions that qualify for alloca- associated with the financing of single
tions to assist low-income families family housing acquisition and reha-
achieve homeownership in accordance bilitation. These costs include, but are
with the provisions of this subpart. Un- not limited to:
less otherwise noted in this subpart, (i) Costs to process and settle the fi-
the HOME Program requirements con- nancing for purchase of a home, such
tained in subparts B through L of this as private lender origination fees, cred-
part do not apply to the ADDI. it report fees, fees for title evidence,
§92.602 Eligible activities. fees for recordation and filing of legal
documents, attorneys fees, and private
(a) Eligible activities. ADDI funds may appraisal fees.
only be used for: (ii) Architectural, engineering, or re-
(1) Downpayment assistance towards lated professional services required to
the purchase of single family housing prepare plans, drawings, specifications,
by low-income families who are first- or work write-ups.
time homebuyers;and (iii) Costs to provide information
(2) Rehabilitation that is completed services, such as fair housing informa-
in conjunction with the home purchase tion to prospective homeowners.
assisted with ADDI funds. The rehabili- (iv) Staff and overhead costs directly
tation assisted with ADDI funds, in- related to carrying out the project,
cluding the reduction of lead paint haz- such as work specifications prepara-
ards and the remediation of other home tion, loan processing inspections, and
health hazards, must be completed other services related to assisting a po-
within one year of the purchase of the tential homebuyer (e.g., housing coun-
home. Total rehabilitation shall not soling), which may be charged to
exceed 20 percent of the participating project costs only if the individual pur-
jurisdiction's ADDI fiscal year formula chases single family housing with
allocation. FY2003 ADDI funds may not ADDI assistance.
be used for rehabilitation. (v) Costs of environmental review
(3) Manufactured housing. ADDI funds and release of funds (in accordance
may be used to purchase a manufac- with 24 CFR part 58) that are directly
tured housing unit and purchase a related to the project.
manufactured housing lot. The manu- (4) Ineligible costs. ADDI funds may
factured housing unit must, at the not be used for the development costs
time of project completion, be con- (hard costs or soft costs) of new con-
nected to permanent utility hook-ups struction of housing or for rental as-
and be located on land that is owned by sistance.
the manufactured housing owner, (c) Forms of investment. A partici-
owned as a cooperative, or is subject to pating jurisdiction may invest ADDI
618
Office of the Secretary, HUD §92.606
funds as interest-bearing loans or ad- risdiction, as determined on the basis
vances, non-interest bearing loans or of the most recent available U.S. cen-
advances, interest subsidies consistent sus data(as adjusted by HUD).
with the purposes of this subpart, de- (d) Limitation on allocations to local
ferred payment loans, grants, or other participating jurisdictions. (1) Alloca-
forms of assistance that HUD deter- tions under paragraph (c) of this sec-
mines to be consistent with this sub- tion shall be made only if the local par-
part. Each participating jurisdiction ticipating jurisdiction:
has the right to establish the terms of (i) Has a total population of 150,000
assistance, subject to the requirements individuals or more, as determined on
of this subpart. the basis of the most recent available
(d)Minimum amount of assistance. The U.S. census data (as adjusted by HUD);
minimum amount of ADDI funds in or
combination with HOME funds that (ii) Would receive an allocation of
must be invested in a project is $1,000. $50,000 or more.
(e)Maximum amount of assistance. The (2) Any allocation that would have
amount of ADDI funds provided to any otherwise been made to a local partici-
family shall not exceed the greater of pating jurisdiction that does not meet
six percent of the purchase price of the the requirements of paragraph (d)(1) of
single family housing or $10,000. This this section shall revert back to the
limitation does not apply to FY2003 state in which the participating juris-
ADDI funds. diction is located.
(f) Limitation on subrecipients and con- (e) Consortia with members in more
tractors. A participating jurisdiction than one state. A consortium with mem-
may not provide ADDI funds to an en- bers in more than one state will receive
tity or organization that provides an allocation if the consortium meets
downpayment assistance, if the activi- the requirements described in para-
ties of that entity or organization are graph(d)of this section.
financed in whole or in part, directly or (f) Allocation of FY2003 ADDI funds.
indirectly, by contributions, service For the allocation of FY2003 ADDI
fees, or other payments from the sell- funds, HUD will consider a partici-
ers of housing, whether or not made in pating jurisdiction's need for, and prior
conjunction with the sale of specific commitment to, assistance to home-
housing acquired with ADDI funds. buyers. Puerto Rico is a "state" for
[69 FR 16766, Mar. 30, 2004, as amended at 72 FY2003 ADDI funds.
FR 16685,Apr.4,2007] (1) Need. The need of the partici-
pating jurisdiction for assistance to
homebuyers is measured by its ADDI
(a) General. HUD will provide ADDI formula allocation, as calculated under
funds to participating jurisdictions in paragraphs (b) through (e) of this sec-
amounts determined by the formula de- tion.
scribed in this section. (2) Prior commitment. Only those par-
(b) Allocation to states that are partici- ticipating jurisdictions that have dem-
pating jurisdictions. HUD will provide onstrated prior commitment to assist-
ADDI funds to each state in an amount ance to homebuyers will receive FY2003
that is equal to the percentage of the ADDI funds. A participating jurisdic-
national total of low-income house- tion has demonstrated prior commit-
holds residing in rental housing in the ment to homebuyers if it has pre-
state, as determined on the basis of the viously committed funds to such pur-
most recent available U.S. census data pose under the HOME program, the
(as adjusted by HUD). Community Development Block Grants
(c) Local participating jurisdictions. (CDBG) program, mortgage revenue
Subject to paragraph (d) of this sec- bonds, or existing funding from state
tion, HUD will further allocate to each and local governments.
local participating jurisdiction located
within a state an amount equal to the §92.606 Reallocations.
percentage of the state-wide total of If any funds allocated to a partici-
low-income households residing in pating jurisdiction under §92.604 be-
rental housing in such participating ju- come available for reallocation, the
619
§92.608 24 CFR Subtitle A(4-1-20 Edition)
funds shall be reallocated in the next ticipate in the ADDI as subrecipients
fiscal year in accordance with§92.604. or contractors as provided in§92.257.
§92.608 Consolidated plan. §92.614 Other Federal requirements.
To receive an ADDI formula alloca- (a) The following Federal require-
tion, a participating jurisdiction must ments contained in subpart H of this
address the use of the ADDI funds in its part apply to the ADDI:
consolidated plan submitted in accord- (1) Other Federal requirements and
ance with 24 CFR part 91. nondiscrimination. The Federal and non-
discrimination requirements contained
§92.610 Program requirements. in§92.350 apply to the ADDI.
The following program requirements (2)Environmental review. The environ-
contained in subpart E of this part mental review requirements contained
apply to the ADDI: in§92.352 apply to the ADDI.
(a) Private-public partnership. The pri- (3) Affirmative marketing. The affirma-
tivevate-public partnership provisions con- in§ marketing requirements contained
§92.351(a).
tained in§92.200 apply to the ADDI. (4) Labor. The labor requirements
(b) Distribution of assistance. The dis- contained in§92.354 apply to ADDI.
tribution of assistance requirements (5) Lead-based paint. The lead-based
contained in§92.201 apply to the ADDI. paint prevention and abatement re-
(c) Income determinations. The income quirements contained in §92.355 apply
determination requirements contained to the ADDI.
in§92.203 apply to the ADDI. (6) Conflict of interest. The conflict of
(d) Pre-award costs. The requirements interest requirements contained in
regarding pre-award costs contained in §92.356 apply to the ADDI.
§92.212 apply to the ADDI. (7) Consultant activities. The require-
(e) Matching contribution requirement. ments regarding consultant activities
The matching contribution require- contained in§92.358 apply to the ADDI.
ments contained in §§92.218 through (b) The following Federal require-
92.222 apply to FY2003 ADDI funds only. ments contained in subpart H of this
part do not apply to the ADDI:
§92.612 Project requirements.
(1) Displacement, relocation, and acqui-
The following project requirements sition. The displacement, relocation,
contained in subpart F of this part and acquisition requirements imple-
apply to the ADDI: menting the Uniform Relocation As-
(a) Maximum per-unit subsidy amount sistance and Real Property Acquisition
and subsidy layering. The maximum Policies Act (42 U.S.C. 4201-4655) and
per-unit subsidy limits and subsidy the implementing regulations at 49
layering requirements contained in CFR part 24, contained in§92.353 do not
§92.250 apply to the total HOME and apply to ADDI, except the require-
ADDI funds in a project. ments do apply to FY2003 ADDI funds.
(b) Property standards. Housing as- (2) Executive Order 12372. The require-
sisted with ADDI funds must meet the ments of Executive Order 12372 (enti-
property standards contained in tled "Intergovernmental Review) de-
§92.251. scribed in§92.357.
(c) Qualification as affordable housing. [69 FR 16766, Mar. 30, 2004, as amended at 78
Housing assisted with ADDI funds must FR 44683,July 24,2013]
meet the affordability requirements
contained in §92.254(a) and (c). If a §92.616 Program administration.
project receives both HOME and ADDI The following program administra-
funds, the total of HOME and ADDI tion requirements contained in subpart
funds in the project is used for calcu- K of this part apply to the ADDI:
lating the period of affordability de- (a) HOME Investment Trust Fund. The
scribed in §92.254(a)(4) and applied to requirements regarding the HOME In-
resales (§92.254(a)(5)(i)) and recaptures vestment Trust Fund contained in
(§92.254(a)(5)(ii)). §92.500 apply to the ADDI, with the ex-
(d) Faith-based organizations. Faith- ception of paragraphs (c)(2) and
based organizations are eligible to par- (d)(1)(A).
620
•
Office of the Secretary, HUD Pt. 93
(b) HOME Investment Partnership (c)(5) apply to FY2003 ADDI funds
Agreement. The requirements regarding only).
HOME Investment Partnership Agree- (j) Performance reports. The require-
ments contained in§92.501 apply to the ments regarding performance reports
ADDI. contained in§92.509 apply to the ADDI.
(c) Program disbursement and informa-
tion system. The requirements regarding §92.618 Performance reviews and
program disbursement and information sanctions.
systems contained in §92.502 apply to HUD will review the performance of
the ADDI. participating jurisdictions in carrying
(d)Program income,repayments and re- out its responsibilities under the ADDI
captured funds. The requirements re- in accordance with the policies and
garding program income, repayments, procedures contained in subpart L of
and recaptured funds contained in this part.
§92.503 apply to the ADDI, except the
program income and recaptured funds PART 93—HOUSING TRUST FUND
must be deposited in the participating
jurisdiction's HOME investments trust Subpart A—General
fund local account and used in accord-
ance with the HOME program require- Sec.
ments. 93.1 Overview.
(e) Participating jurisdiction respon- 93.3 Definitions.
93.3 Waivers.
sibilities and written agreements. The re-
quirements regarding participating ju- Subpart B—Allocation Formula;
risdiction responsibilities and written Reallocations
agreements contained in §92.504 apply 93.50 Formula allocation.
to the ADDI, with the modification 93.50 Formula factors.
that the written agreement is not re-
quired to cover any HOME requirement 93.52 Minimum allocations.
93.53 FEDERAL REGISTER notice of formula
that is not applicable to the ADDI. allocations.
(f) Applicability of uniform administra- 93.54 Reallocations by formula.
tive requirements. The uniform adminis-
trative requirements contained in Subpart C—Participation and Submission
§982.505 apply to the ADDI. Requirements; Distribution of Assistance
(g) Audit. The audit requirements 93.100 Participation and submission require-
contained in§92.506 apply to the ADDI. ments.
(h) Closeout. The closeout require- 93.101 Distribution of assistance.
ments contained in§92.507 apply to the
ADDI. Subpart D—Program Requirements
(i) Recordkeeping. The project records 93.150 Site and neighborhood standards.
must include records demonstrating 93.151 Income determinations.
that the family qualifies as a first-time
homebuyer.The recordkeeping require- Subpart E—Eligible and Prohibited
ments contained in§92.508 apply to the Activities
ADDI, with the exception of the fol-
lowing paragraphs: 93.200 Eligible activities:General.
(1)Paragraph(a)(1); 93.201 Eligible project costs.
93.202 Eligible administrative and planning
(2) Paragraphs (a)(2)(iv), (a)(2)(v), costs.
(a)(2)(vi), (a)(2)(xi),and(a)(2)(xii); 93.203 HTF funds and public housing.
(3) Paragraphs (a)(3)(vi), (a)(3)(vii), 93.204 Prohibited activities and fees.
(a)(3)(viii), (a)(3)(ix),and(a)(3)(xiii); Subpart F—Income Targeting
(4)Paragraph(a)(4);
(5) Paragraphs (a)(7)(i)(B), (a)(7)(i)(C), 93.250 Income targeting.
(a)(7)(ii)(A), and (a)(7)(ix) (in addition,
the requirements of paragraph(a)(7)(iv) Subpart G—Project Requirements
apply to FY2003 ADDI funds only); and 93.300 Maximum per-unit subsidy amount,
(6) Paragraphs (c)(1) and (c)(3) (in ad- underwriting,and subsidy layering.
dition, the requirements of paragraph 93.301 Property standards.
621
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PLEASE COMPLETE THE ENTIRE FORM. Exhibit E
Choose Funding Program: (Circle all applicable) CDBG HOME ESG NAHTF SHP Other
CITY OF OMAHA-TENANT SURVEY FORM
20
A. GENERAL INFORMATION
Tenant Name(s) Telephone
Address Apt.No.
Initial Date of Lease Recertification Lease Date
DEMOGRAPHICS&ANTICIPATED INCOME OF ALL HOUSEHOLD MEMBERS
Head of Household is: Male ❑ Female ❑ Elderly ❑
Number of Occupants: Total No.Adults No. Children Under 18
Please enter ethnicity and race for each household member in accordance with the attached definitions.
Ethnicity—Choose either H or NH.Enter H for Hispanic or Latino. Enter NH for Not Hispanic or Latino.
Race Categories—Choose all that apply for each household member. Enter one or more of the following
abbreviations: W,B,A,AI,PI, O.
White(W);Black or African American(B);Asian(A);American Indian or Alaska Native(AI);
Native Hawaiian or Other Pacific Islander(PI)
Other(0)(Please specify)
Anticipated Anticipated
Name of Household Member (H or NH) (See Above) Monthly Annual
Age Ethnicity Race Handicap Income Income
$ $
$ $
$ $
$ $
$ $
$ $
TOTAL $ $
100%MEDIAN FAMILY INCOME(MFI)FOR HH SIZE $
%OF MFI FOR HE SIZE
B. HOUSING CHARACTERISTICS
Housing Costs HUD Rent Limits
Monthly Housing Cost:
Actual Contract Rent $
Average Monthly Utility Cost $
Total Monthly Housing Cost $ $
Subsidized Rent Assistance Received(Please list source and amount): Section 8: $
Other Assistance: Source Amount $ No Assistance
Unit Type: Efficiency ❑ 1BR❑ 2 BR❑ 3 BR❑ 4 BR❑ Other❑
Handicap Accessible Unit: Yes ❑ No ❑ Check one: 50%Unit❑ 60%Unit❑ 80%Unit❑ 120%Unit❑
C. TENANTS IN-PLACE AT TIME OF LOAN CLOSING -Non-disclosure Form Required
Tenant Signature Date
Owner or Authorized Representative Phone Date
EQUAL HOUSING
OPPORTUNITY
Q:Library/HCD Forms/Tenant Survey Form 8/1/2016
Page 1 of 2
DEFINITIONS:
1. American Indian or Alaska Native. A person having origins in any of the original peoples of North and
South America(including Central America), and who maintains tribal affiliation or community attachment.
2. Asian. A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian
subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the
Philippine Islands, Thailand and Vietnam.
3. Black or African American. A person having origins in any of the black racial groups of Africa. Terms
such as "Haitian" or"Negro"can be used in addition to "Black" or"African American".
4. Native Hawaiian or Other Pacific Islander. A person having origins in any of the original peoples of
Hawaii, Guam, Samoa or other Pacific Islands.
5. White. A person having origins in any of the original peoples of Europe, the Middle East or North Africa.
Q:Library/HCD Forms/Tenant Survey Form 8/1/2016
Page 2 of 2
AUTHENTICATED
U.S.GOVERNMENT
INFORMATION
GPO Exhibit F
Office of the Secretary, HUD §5.609
(5) For the Shelter Plus Care Pro- programs funded, separately or jointly,
gram, the "Recipient" as defined in 24 by Federal, State or local governments
CFR 582.5; (including assistance provided under
(6) For the Supportive Housing Pro- the Temporary Assistance for Needy
gram, the "recipient" as defined in 24 Families (TANF) program, as that
CFR 583.5; term is defined under the imple-
(7) For the Section 202 Supportive menting regulations issued by the De-
Housing Program for the Elderly, the partment of Health and Human Serv-
"Owner" as defined in 24 CFR 891.205; ices at 45 CFR 260.31).
(8) For the Section 202 Direct Loans Work activities. See definition at sec-
for Housing for the Elderly and Persons tion 407(d) of the Social Security Act
with Disabilities), the "Borrower" as (42 U.S.C.607(d)).
defined in 24 CFR 891.505;and
(9) For the Section 811 Supportive [61 FR 54498, Oct. 18, 1996, as amended at 65
FR 16716, Mar. 29, 2000; 65 FR 55161, Sept. 12,
Housing Program for Persons with Dis- 2000; 66 FR 6223, Jan. 19, 2001; 67 FR 47432,
abilities, the "owner" as defined in 24 July 18,2002;81 FR 12370,Mar.8,2016]
CFR 891.305.
Tenant rent. The amount payable FAMILY INCOME
monthly by the family as rent to the
unit owner (Section 8 owner or PHA in §5.609 Annual income.
public housing). (This term is not used (a)Annual income means all amounts,
in the Section 8 voucher program.) monetary or not, which:
Total tenant payment. See§5.628. (1) Go to, or on behalf of, the family
Utility allowance. If the cost of utili- head or spouse (even if temporarily ab-
ties (except telephone) and other hous- sent) or to any other family member;
ing services for an assisted unit is not or
included in the tenant rent but is the (2) Are anticipated to be received
responsibility of the family occupying from a source outside the family dur-
the unit, an amount equal to the esti- ing the 12-month period following ad-
mate made or approved by a PHA or mission or annual reexamination effec-
HUD of the monthly cost of a reason- tive date; and
able consumption of such utilities and (3) Which are not specifically ex-
other services for the unit by an en- cluded in paragraph (c) of this section.
ergy-conservative household of modest (4) Annual income also means
circumstances consistent with the re- amounts derived (during the 12-month
quirements of a safe, sanitary, and period) from assets to which any mem-
healthful living environment. ber of the family has access.
Utility reimbursement. The amount, if (b) Annual income includes, but is
any, by which the utility allowance for not limited to:
a unit, if applicable, exceeds the total (1) The full amount, before any pay-
tenant payment for the family occu- roll deductions, of wages and salaries,
pying the unit. (This definition is not overtime pay, commissions, fees, tips
used in the Section 8 voucher program, and bonuses, and other compensation
or for a public housing family that is for personal services;
paying a flat rent.) (2) The net income from the oper-
Very low income family. A family ation of a business or profession. Ex-
whose annual income does not exceed penditures for business expansion or
50 percent of the median family income amortization of capital indebtedness
for the area, as determined by HUD shall not be used as deductions in de-
with adjustments for smaller and larg- termining net income. An allowance
er families, except that HUD may es- for depreciation of assets used in a
tablish income ceilings higher or lower business or profession may be de-
than 50 percent of the median income ducted, based on straight line deprecia-
for the area if HUD finds that such tion, as provided in Internal Revenue
variations are necessary because of un- Service regulations. Any withdrawal of
usually high or low family incomes. cash or assets from the operation of a
Welfare assistance. Welfare or other business or profession will be included
payments to families or individuals, in income, except to the extent the
based on need, that are made under withdrawal is reimbursement of cash
97
§5.609 24 CFR Subtitle A(4-1-20 Edition)
or assets invested in the operation by cally designated for shelter or utilities;
the family; plus
(3) Interest, dividends, and other net (B) The maximum amount that the
income of any kind from real or per- welfare assistance agency could in fact
sonal property. Expenditures for amor- allow the family for shelter and utili-
tization of capital indebtedness shall ties. If the family's welfare assistance
not be used as deductions in deter- is ratably reduced from the standard of
mining net income. An allowance for need by applying a percentage, the
• depreciation is permitted only as au- amount calculated under this para-
thorized in paragraph (b)(2) of this sec- graph shall be the amount resulting
tion. Any withdrawal of cash or assets from one application of the percentage.
from an investment will be included in (7) Periodic and determinable allow-
income, except to the extent the with- ances, such as alimony and child sup-
drawal is reimbursement of cash or as- port payments, and regular contribu-
sets invested by the family. Where the tions or gifts received from organiza-
family has net family assets in excess tions or from persons not residing in
of $5,000, annual income shall include the dwelling;
the greater of the actual income de- (8) All regular
rived from all net family assets or a allowag pay, special pay and
percentage of the value of such assets Forces (exceptes o a memberr of the Armed
para-
based on the current passbook savings Forces as provided in rate,as determined by HUD; graph(c)(7)of this section).
(4) The full amount of periodic (9) For section 8 programs only and
amounts received from Social Secu as provided in 24 CFR 5.612, any finan-
rity, annuities, insurance policies, re- cial assistance, in excess of amounts
tirement funds, pensions, disability or received for tuition and any other re-
death benefits, and other similar types quired fees and charges, that an indi-
of periodic receipts, including a lump- vidual receives under the Higher Edu-
sum amount or prospective monthly cation Act of 1965 (20 U.S.C. 1001 et
amounts for the delayed start of a peri- seq.), from private sources, or from an
odic amount (except as provided in institution of higher education (as de-
paragraph(c)(14)of this section); fined under the Higher Education Act
(5)Payments in lieu of earnings, such of 1965 (20 U.S.C. 1002)), shall be consid-
as unemployment and disability com- ered income to that individual, except
pensation, worker's compensation and that financial assistance described in
severance pay (except as provided in this paragraph is not considered annual
paragraph(c)(3)of this section); income for persons over the age of 23
(6) Welfare assistance payments. (i) with dependent children. For purposes
Welfare assistance payments made of this paragraph, "financial assist-
under the Temporary Assistance for ance" does not include loan proceeds
Needy Families (TANF) program are for the purpose of determining income.
included in annual income only to the (c) Annual income does not include
extent such payments: the following:
(A) Qualify as assistance under the (1) Income from employment of chil-
TANF program definition at 45 CFR dren (including foster children) under
260.31; and the age of 18 years;
(B) Are not otherwise excluded under (2) Payments received for the care of
paragraph(c)of this section. foster children or foster adults(usually
(ii) If the welfare assistance payment persons with disabilities, unrelated to
includes an amount specifically des- the tenant family, who are unable to
ignated for shelter and utilities that is live alone);
subject to adjustment by the welfare (3) Lump-sum additions to family as-
assistance agency in accordance with sets, such as inheritances, insurance
the actual cost of shelter and utilities, payments (including payments under
the amount of welfare assistance in- health and accident insurance and
come to be included as income shall worker's compensation), capital gains
consist of: and settlement for personal or property
(A) The amount of the allowance or losses (except as provided in paragraph
grant exclusive of the amount specifi- (b)(5)of this section);
98
Office of the Secretary, HUD §5.609
(4) Amounts received by the family the period during which the family
that are specifically for, or in reim- member participates in the employ-
bursement of, the cost of medical ex- ment training program;
penses for any family member; (9) Temporary, nonrecurring or spo-
(5)Income of a live-in aide, as defined radic income (including gifts);
in§5.403; (10) Reparation payments paid by a
(6) Subject to paragraph (b)(9) of this foreign government pursuant to claims
section, the full amount of student fi- filed under the laws of that govern-
nancial assistance paid directly to the ment by persons who were persecuted
student or to the educational institu- during the Nazi era;
tion; (11) Earnings in excess of $480 for
(7) The special pay to a family mem- each full-time student 18 years old or
ber serving in the Armed Forces who is older (excluding the head of household
exposed to hostile fire; and spouse);
(8)(i) Amounts received under train- (12) Adoption assistance payments in
ing programs funded by HUD; excess of$480 per adopted child;
(ii) Amounts received by a person (13) [Reserved]
with a disability that are disregarded (14) Deferred periodic amounts from
for a limited time for purposes of Sup- supplemental security income and So-
plemental Security Income eligibility cial Security benefits that are received
and benefits because they are set aside in a lump sum amount or in prospec-
for use under a Plan to Attain Self-Suf- tive monthly amounts, or any deferred
ficiency(PASS); Department of Veterans Affairs dis-
(iii) Amounts received by a partici- ability benefits that are received in a
pant in other publicly assisted pro- lump sum amount or in prospective
grams which are specifically for or in monthly amounts.
reimbursement of out-of-pocket ex- (15) Amounts received by the family
penses incurred (special equipment, in the form of refunds or rebates under
clothing, transportation, child care, State or local law for property taxes
etc.) and which are made solely to paid on the dwelling unit;
allow participation in a specific pro- (16) Amounts paid by a State agency
gram; to a family with a member who has a
(iv) Amounts received under a resi- developmental disability and is living
dent service stipend. A resident service at home to offset the cost of services
stipend is a modest amount (not to ex- and equipment needed to keep the de-
ceed$200 per month)received by a resi- velopmentally disabled family member
dent for performing a service for the at home; or
PHA or owner, on a part-time basis, (17) Amounts specifically excluded by
that enhances the quality of life in the any other Federal statute from consid-
development. Such services may in- eration as income for purposes of deter-
elude, but are not limited to, fire pa- mining eligibility or benefits under a
trol, hall monitoring, lawn mainte- category of assistance programs that
nance, resident initiatives coordina- includes assistance under any program
tion, and serving as a member of the to which the exclusions set forth in 24
PHA's governing board. No resident CFR 5.609(c) apply. A notice will be
may receive more than one such sti- published in the FEDERAL REGISTER
pend during the same period of time; and distributed to PHAs and housing
(v) Incremental earnings and benefits owners identifying the benefits that
resulting to any family member from qualify for this exclusion. Updates will
participation in qualifying State or be published and distributed when nee-
local employment training programs essary.
(including training programs not affili- (d)Annualization of income. If it is not
ated with a local government) and feasible to anticipate a level of income
training of a family member as resi- over a 12-month period (e.g., seasonal
dent management staff. Amounts ex- or cyclic income), or the PHA believes
eluded by this provision must be re- that past income is the best available
ceived under employment training pro- indicator of expected future income,
grams with clearly defined goals and the PHA may annualize the income an-
objectives, and are excluded only for ticipated for a shorter period, subject
99
§5.611 24 CFR Subtitle A(4-1-20 Edition)
to a redetermination at the end of the §5.612 Restrictions on assistance to
shorter period. students enrolled in an institution
of higher education.
[61 FR 54498, Oct. 18, 1996, as amended at 65
FR 16716, Mar. 29, 2000; 67 FR 47432, July 18, No assistance shall be provided under
2002; 70 FR 77743, Dec. 30, 2005; 79 FR 36164, section 8 of the 1937 Act to any indi-
June 25,2014;81 FR 12370,Mar.8,2016] vidual who:
(a) Is enrolled as a student at an in-
§5.611 Adjusted income. stitution of higher education, as de-
Adjusted income means annual in- fined under section 102 of the Higher
come (as determined by the responsible Education Act of 1965(20 U.S.C. 1002);
entity, defined in §5.100 and §5.603) of (b)Is under 24 years of age;
(c) Is not a veteran of the United
the members of the family residing or States military;
intending to reside in the dwelling (d)Is unmarried;
unit, after making the following deduc- (e) Does not have a dependent child;
tions: (f) Is not a person with disabilities,
(a) Mandatory deductions. In deter- as such term is defined in section
mining adjusted income, the respon- 3(b)(3)(E) of the 1937 Act and was not
sible entity must deduct the following receiving assistance under section 8 of
amounts from annual income: the 1937 Act as of November 30, 2005;
(1)$480 for each dependent; and
(2) $400 for any elderly family or dis- (g) Is not otherwise individually eli-
abled family; gible, or has parents who, individually
(3) The sum of the following, to the or jointly, are not eligible on the basis
extent the sum exceeds three percent of income to receive assistance under
of annual income:.. section 8 of the 1937 Act.
(i) Unreimbursed medical expenses of [70 FR 77743, Dec. 30, 2005, as amended at 73
any elderly family or disabled family; FR 49333,Aug.21,2008]
and §5.613 Public housing program and
(ii) Unreimbursed reasonable attend- Section 8 tenant-based assistance
ant care and auxiliary apparatus ex- program: PHA cooperation with
penses for each member of the family welfare agency.
who is a person with disabilities, to the (a) This section applies to the public
extent necessary to enable any member housing program and the Section 8 ten-
of the family (including the member ant-based assistance program.
who is a person with disabilities) to be (b) The PHA must make best efforts
employed. This deduction may not ex- to enter into cooperation agreements
ceed the earned income received by with welfare agencies under which such
family members who are 18 years of age agencies agree:
or older and who are able to work be- (1) To target public assistance, bene-
cause of such attendant care or auxil- fits and services to families receiving
iary apparatus; and assistance in the public housing pro-
(4) Any reasonable child care ex- gram and the Section 8 tenant-based
penses necessary to enable a member of assistance program to achieve self-suf-
the family to be employed or to further ficiency;
his or her education. (2) To provide written verification to
(b) Additional deductions. (1) For pub- the PHA concerning welfare benefits
lic housing, a PHA may adopt addi- for families applying for or receiving
tional deductions from annual income. assistance in these housing assistance
The PHA must establish a written pol- programs.
icy for such deductions. [65 FR 16717,Mar.29,2000]
(2) For the HUD programs listed in
§5.601(d), the responsible entity shall §5.615 Public housing program and
calculate such other deductions as re- Section 8 tenant-based assistance
Program: How welfare benefit re-
quired and permitted by the applicable
duction affects family income.
program regulations.
(a) Applicability. This section applies
[66 FR 6223,Jan.19,2001] to covered families who reside in public
100
Exhibit I
EQUAL EMPLOYMENT OPPORTUNITY CLAUSE
During the performance of this Contract,the Contractor agrees as follows:
(1) The Contractor and its subcontractors shall not discriminate against any employee
or applicant for employment because of race, religion, color, sex, age, sexual
orientation, gender identity, national origin, disability or familial status. As used
herein, the work "treated" shall mean and include, without limitation, the
following: Recruited, whether by advertising or by other means; compensated;
selected for training, including apprenticeship; promoted; upgraded; demoted;
downgraded; transferred; laid off; and terminated. The Contractor agrees to and
shall post in conspicuous places, available to employees and applicants for
employment, notices to be provided by the contracting officers setting forth the
provisions of this nondiscrimination clause.
(2) The Contractor and its subcontractors shall, in all solicitations or advertisements
for employees placed by or on behalf of the Contractor, state that all qualified
applicants will receive consideration for employment without regard to race,
religion, color, sexual orientation, gender identity, sex, national origin, age,
disability or familial status.
(3) The Contractor and its subcontractors shall send to each representative of workers
with which he has a collective bargaining agreement or other contract or
understanding a notice advising the labor union or worker's representative of the
Contractor's commitments under the equal employment opportunity clause of the
City and shall post copies of the notice in conspicuous places available to
employees and applicants for employment.
(4) The Contractor and its subcontractors shall furnish to the City's Human Rights
and Relations Contract Compliance Officer all federal forms containing the
information and reports required by the federal government for federal contracts
under federal rules and regulations, including the information required by Omaha
Municipal Code Sections 10-192 to 10-194, inclusive, and shall permit reasonable
access to his records. Records accessible to the Human Rights and Relations
Contract Compliance Officer shall be those which are related to Paragraphs (1)
through (7) of this Exhibit and only after reasonable notice is given to the
Contractor. The purpose for this provision is to provide for investigation to
ascertain compliance with the program provided for herein.
(5) The Contractor and its subcontractors shall take such actions with respect to any
subcontractor as the City may direct as a means of enforcing the provisions of
Paragraphs (1) through (7) herein, including penalties and sanctions for
noncompliance; however, in the event the Contractor becomes involved in or is
threatened with litigation as the result of such directions by the City, the City will
enter into such litigation as is necessary to protect the interests of the City and to
Revised and approved 5/23/2012
effectuate the provisions of this division; and in the case of contracts receiving
federal assistance, the Contractor or the City may request the United States to
enter into such litigation to protect the interests of the United States.
(6) The Contractor shall file and shall cause his subcontractors, if any, to file
compliance reports with the Contractor in the same form and to the same extent as
required by the federal government for federal contracts under federal rules and
regulations. Such compliance reports shall be filed with the Human Rights and
Relations Contract Compliance Officer. Compliance reports filed at such times as
directed shall contain information as to the employment practices, policies,
programs and statistics of the Contractor and his subcontractors.
(7) The Contractor shall include the provisions of Paragraphs (1) through (7) of this
Section, "Equal Employment Opportunity Clause", and Omaha Municipal Code
Section 10-193 in every contract, subcontract or purchase order so that such
provisions will be binding upon each subcontractor or vendor. (Code 1980,
Section 10-192; Ordinance No. 35344, Sections 1, 9-26-00)
Revised and approved 5/23/2012
Exhibit K
UNITED STATES CITIZENSHIP ATTESTATION FORM FOR PUBLIC BENEFIT
For the purposes of complying with Neb. Rev. Stat. §§ 4-108 through 4-114, I attest as follows:
❑ I am a citizen of the United States.
OR
❑ I am a qualified alien under the Federal Immigration and Nationality Act. My
immigration status and alien number as follows:
, and I agree to provide
a copy of my USCIS (United States Citizenship and Immigration Services)
documentation upon request.
I hereby attest that my response and the information provided on this form and any related
application for public benefits are true, complete and accurate and I understand that this
information may be used to verify my lawful presence in the United States.
PRINT NAME:
By:
SIGNATURE:
DATE:
O
ONIMrTAR Q:Library/I-ICD Forms/Citizenship-Attestation Form for Public Benefit 10/26/2009
Exhibit L
AFFIDAVIT FOR EMPLOYEE CLASSIFICATION ACT
STATE OF )
)§
COUNTY OF )
I, ,being first duly sworn under oath,state and
depose as follows:
1. I am competent to testify to,and have personal knowledge of,the matters stated in this affidavit.
2. I am(a contractor)(the authorized agent of the contractor ).
I attest to the following: (a) each individual performing services for such contractor is properly classified under the
Nebraska Employee Classification Act, 2010 LB 563 ("the Act"), (b) such contractor has completed a federal I-9
immigration form and has such form on file for each employee performing services, (c) such contractor has
complied with Neb. Rev. Stat. section 4-114 (federal immigration verification system), (d) such contractor has no
reasonable basis to believe that any individual performing services for such contractor is an undocumented worker,
and(e) as of the time of the contract, such contractor is not barred from contracting with the state or any political
subdivision pursuant to the Act.
FURTHER AFFIANT SAYETH NAUGHT.
Affiant
SUBSCRIBED AND SWORN TO before me this day of ,20
Notary Public
A
EQUAL HOUSING
OPPORTUNITY Approved 6/1/10
Exhibit M
Federal Sub-award Reporting System(FSRS)
9 Digit DUNS Number:
Organization Name:
Address:
Address/City/State/Zip+4
Question 1: During your organization's preceding completed fiscal year,did the legal entity to which the
DUNS number belongs receive(1) 80 percent or more of its annual gross revenues in U.S.federal
contracts,subcontracts, loans,grants, subgrants,and/or cooperative agreements; and (2) $25,000,000
or more in annual gross revenues from U.S.federal contracts,subcontracts, loans,grants,subgrants,
and/or cooperative agreements?
OYES ONO
If YES please answer Question 2
Question 2:Does the public have access to information about the compensation of the executives in
your organization (the legal entity to which the DUNS number provided belongs)through periodic
reports filed under section 13(a)or 15(d)of the Securities Exchange Act of 1934(15 U.S.C.78m(a),
78o(d))or section 6104 of the Internal Revenue Code of 1986?
AYES ONO
If NO please answer Question 3
Question 3:What are the Names and Total Compensation for the top 5 employees in your organization?
Name Compensation
1
2
3
4
5
Signature of Authorized Official Date
Requirements for Federal Funding
Accountability and Transparency Act
Implementation
In September 2010,the Office of Management and Budget,issued Interim Final
Guidance in the Federal Register(Volume 75, No. 177, September 14, 2010, 2 CFR
Part 170)to establish reporting requirements necessary for the implementation of the
Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282), as
amended by section 6202 of Public Law 110-252. This award term implements those
requirements and is located at 2 CFR Part 170. Learn more
Appendix A to Part 170—Award Term
Reporting Subawards and Executive Compensation.
a. Reporting of first-tier subawards.
1, Applicability. Unless you are exempt as provided in paragraph d. of this award
term, you must report each action that obligates$25,000 or more in Federal
funds that does not include Recovery funds(as defined in section 1512(a)(2) of
the American Recovery and Reinvestment Act of 2009, Pub. L. 111-5)for a
subaward to an entity (see definitions in paragraph e. of this award term).
2. Where and when to report.
I. You must report each obligating action described in paragraph a.1. of this
award term to the Federal Funding Accountability and Transparency Act
Subaward Reporting System (FSRS).
U. For subaward information, report no later than the end of the month
following the month in which the obligation was made. (For example, if
the obligation was made on November 7, 2010, the obligation must be
reported by no later than December 31, 2010.)
3. What to report. You must report the information about each obligating action that.
the submission instructions posted at http:/lwww.fsrs.gov specify.
b. Reporting Total Compensation of Recipient Executives.
1. Applicability and what to report. You must report total compensation for each of
your five most highly compensated executives for the preceding completed fiscal
year, if—
I, the total Federal funding authorized to date under this award is$25,000
or more;
ii, in the preceding fiscal year, you received—
A. 80 percent or more of your annual gross revenues from Federal
procurement contracts(and subcontracts) and Federal financial
assistance subject to the Transparency Act, as defined at 2 CFR
170.320 (and subawards); and
B. $25,000,000 or more in annual gross revenues from Federal
procurement contracts (and subcontracts) and Federal financial
assistance subject to the Transparency Act, as defined at 2 CFR
170.320 (and subawards); and
fit. The public does not have access to information about the compensation
of the executives through periodic reports filed under section 13(a)or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d))
or section 6104 of the Internal Revenue Code of 1986. (To determine if
the public has access to the compensation information, see the U.S.
Security and Exchange Commission total compensation filings at the
Executive Compensation page of the SEC website.)
2. Where and when to report. You must report executive total compensation
described in paragraph b.1. of this award term:
i, As part of your registration profile at the Central Contractor Registry.
ii. By the end of the month following the month in which this award is made,
and annually thereafter.
c, Reporting of Total Compensation of Subrecipient Executives.
1. Applicability and what to report. Unless you are exempt as provided in paragraph
d. of this award term,for each first-tier subrecipient under this award,you shall
report the names and total compensation of each of the subrecipient's five most
highly compensated executives for the subrecipient's preceding completed fiscal
year, if
i. in the subrecipient's preceding fiscal year, the subrecipient received—
A. 80 percent or more of its annual gross revenues from Federal
procurement contracts(and subcontracts)and Federal financial
assistance subject to the Transparency Act, as defined at 2 CFR
170.320 (and subawards); and
B. $25,000,000 or more-in annual gross revenues from Federal
procurement contracts(and subcontracts), and Federal financial
assistance subject to the Transparency Act(and subawards); and
IL The public does not have access to information about the compensation
of the executives through periodic reports filed under section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d))
or section 6104 of the Internal Revenue Code of 1986. (To determine if
the public has access to the compensation information, see the U.S,
Security and Exchange Commission total compensation filings at the
Executive Compensation page of the SEC website.)
2. Where and when to report.You must report subrecipient executive total
compensation described in paragraph c.1. of this award term:
i. To the recipient.
By the end of the month following the month during which you make the
subaward. For example, if a subaward is obligated on any date during the
month of October of a given year(i.e., between October 1 and 31), you
must report any required compensation information of the subrecipient by
November 30 of that year.
d. Exemptions
IIf, in the previous tax year, you had gross income,from all sources, under$300,000, you
are exempt from the requirements to report:
i. Subawards,and
j. The total compensation of the five most highly compensated executives
of any subrecipient.
e.Definitions.
For purposes of this award term:
1. "Entity"means all of the following, as defined in 2 CFR part 25:
I, A Governmental organization, which is a State, local government, or
Indian tribe;
ii, A foreign public entity;
Hi, A domestic or foreign nonprofit organization;
iv, A domestic or foreign for-profit organization;
v, A Federal agency, but only as a subrecipient under an award or
subaward to a non-Federal entity.
2. "Executive"means officers, managing partners, or any other employees in
management positions.
3, "Subaward":
i. This term means a legal instrument to provide support for the
performance of any portion of the substantive project or program for
which you received this award and that you as the recipient award to an
eligible subrecipient.
The term does not include your procurement of property and services
needed to carry out the project or program(for further explanation, see
Sec. Il .210 of the attachment to OMB Circular A-133, "Audits of States,
Local Governments, and Non-Profit Organizations").
iii, A subaward may be provided through any legal agreement, including an
agreement that you or a subrecipient considers a contract.
4. "Subrecipient" means an entity that:
i. Receives a subaward from you (the recipient) under this award; and
ii. Is accountable to you for the use of the Federal funds provided by the
subaward.
6, "Total compensation" means the cash and noncash dollar value earned by the
executive during the recipient's or subrecipient's preceding fiscal year and
includes the following (for more information see 17 CFR 229.402(c)(2)):
i, Salary and bonus.
ii. Awards of stock, stock options, and stock appreciation rights. Use the
dollar amount recognized for financial statement reporting purposes with
respect to the fiscal year in accordance with the Statement of Financial
Accounting Standards No. 123 (Revised 2004) (FAS 123R), Shared
Based Payments.
lll. Earnings for services under non-equity incentive plans. This does not
include group life, health, hospitalization or medical reimbursement plans
that do not discriminate in favor of executives, and are available generally
to all salaried employees.
iv, Change in pension value. This is the change in present value of defined
benefit and actuarial pension plans.
v. Above-market earnings on deferred compensation which is not tax-
qualified.
vi. Other compensation, if the aggregate value of all such other
compensation (e.g. severance,termination payments, value of life
insurance paid on behalf of the employee,perquisites or property)for the
executive exceeds$10,000.
2 CFR Part 200.338-340 Exhibit N
TERMINATION AND ENFORCEMENT
(a) Remedies for non-compliance. If a grantee or sub-grantee materially fails to comply with any term of
an award, whether stated in a federal statute or regulation, an assurance,in a State plan or application,
a notice of award, or elsewhere, the awarding agency may take one or more of the following actions,
as appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the deficiency by the grantee or
sub-grantee or more severe enforcement action by the awarding agency,
(2) Disallow(that is, deny both use of funds and matching credit for)all or part of the cost of the
activity or action not in compliance,
(3) Wholly or partly suspend or terminate the current award for the grantee's or sub-grantee's
program,
(4) Withhold further awards for the program,or,
(5) Take other remedies that may be legally available.
(b) Hearings, appeals. In taking an enforcement action, the awarding agency will provide the grantee or
sub-grantee an opportunity for such hearing, appeal or other administrative proceeding to which the
grantee or sub-grantee is entitles under any statute or regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of grantee or sub-grantee resulting from obligations
incurred by the grantee or sub-grantee during a suspension or after termination of an award are not
allowable unless the awarding agency expressly authorizes them in the notice of suspension or
termination or subsequently. Other grantee or sub-grantee costs during suspension or after
termination which are necessary and not reasonably avoidable are allowable if:
(1) The costs result from obligations which were properly incurred by the grantee or sub-
grantee before the effective date of suspension or termination, are not in anticipation of it,
and, in the case of a termination, are non-cancelable,and,
(2) The costs would be allowable if the award were not suspended or expired normally at the
end of the funding period in which the termination takes effect.
(d) Relationship to Debarment and Suspension. The enforcement remedies identified in this section,
including suspension and termination, do not preclude grantee or sub-grantee from being subject to
"Debarment and Suspension"under EO 12549(2 CFR Part 200.213).
TERMINATION FOR CONVENIENCE
Except as provided in Appendix 11, 2 CFR, Part 200.338-340 awards may be terminated in whole or in
part only as follows:
(a) By the awarding agency with the consent of the grantee or sub-grantee in which case the two parties
shall agree upon the termination conditions, including the effective date and in the case of partial
termination,the portion to be terminated,or
(b) By the grantee or sub-grantee upon written notification to the awarding agency, setting forth the
reasons for such termination, the effective date, and in the case of partial termination, the portion to
be terminated. However, if, in the case of a partial termination, the awarding agency determines that
the remaining portion of the award will not accomplish the purposes for which the award was made,
the awarding agency may terminate the award in its entirety under either 2 CFR Part 200.339 or
Paragraph(a)of this section.
O
EQUAL HOUSING
OPPORTUNITY Rev. 09/30/19
Certification Regarding U.S. Department of Housing
Exhibit 0
and Urban Development
Debarment and Suspension
Certification A: Certification Regarding Debarment,Suspension, and
Other Responsibility Matters - Primary Covered Transactions
1. The prospective primary participant certifies to the best of its knowl- 4. The prospective primary participant shall provide immediate writ-
edge and belief that its principals; ten notice to the department or agency to whom this proposal is
a. Are not presently debarred,suspended,proposed for debarment, submitted if at any time the prospective primary participant learns that
declared ineligible, or voluntarily excluded from covered transactions its certification was erroneous when submitted or has become errone-
by any Federal debarment or agency; ous by reason of changed circumstances.
5. The terms covered transaction, debarred, suspended,ineligible,b. Have not within a three-year period preceding this proposal,
been convicted of or had a civil judgment rendered against them for lower tier covered transaction, participant, person, primary cov-
commission of fraud or a criminal offense in connection with obtain- ered transaction,principal,proposal,and voluntarily excluded, as
ing, attempting to obtain, or performing a public (Federal, State, or used in this clause, have the meanings set out in the Definitions and
local) transaction or contract under a public transaction; violation of Coverage sections of the rules implementing Executive Order 12549.
Federal or State antitrust statutes or commission of embezzlement,theft, You may contact the department or agency to which this proposal is
forgery, bribery, falsification, or destruction of records, making false being submitted for assistance in obtaining a copy of these regulations.
statements, or receiving stolen property; 6. The prospective primary participant agrees by submitting this
proposal that,should the proposed covered transaction be entered into,c. Are not presently indicted for or otherwise criminally or civilly
charged by a governmental entity (Federal, State, or local) with it shall not knowingly enter into any lower tier covered transaction
commission of any of the offenses enumerated in paragraph (1)(b) of with a person who is debarred, suspended, declared ineligible, or
this certification; and voluntarily excluded from participation in this covered transaction,
unless authorized by the department or agency entering into this
d. Have not within a three-year period preceding this application/ transaction.
proposal had one or more public transactions(Federal,State, or local)
terminated for cause or default. 7. The prospective primary participant further agrees by submitting
this proposal that it will include the clause titled "Certification
2. Where the prospective primary participant is unable to certify to Regarding Debarment, Suspension, Ineligibility and Voluntary Exclu-
any of the statements in this certification,such prospective participant sion - Lower Tier Covered Transaction,"provided by the department
shall attach an explanation to this proposal. or agency entering into this covered transaction,without modification,
Instructions for Certification (A) in all lower tier covered transactions and in all solicitations for lower
tier covered transactions.
1. By signing and submitting this proposal, the prospective primary
participant is providing the certification set out below. 8. A participant in a covered transaction may rely upon a certification
of a prospective participant in a lower tier covered transaction that it
2. The inability of a person to provide the certification required below is not debarred,suspended,ineligible,or voluntarily excluded from the
will not necessarily result in denial of participation in this covered covered transaction,unless it knows that the certification is erroneous.
transaction. The prospective participant shall submit an explanation A participant may decide the method and frequency by which it
of why it cannot provide the certification set out below. The certifi- determines this eligibility of its principals. Each participant may,but
cation or explanation will be considered in connection with the is not required to, check the Nonprocurement List.
department or agency's determination whether to enter into this
transaction. However,failure of the prospective primary participant to 9. Nothing contained in the foregoing shall be construed to require
furnish a certification or an explanation shall disqualify such person establishment of a system of records in order to render in good faith the
from participation in this transaction. certification required by this clause. The knowledge and information
of a participant is not required to exceed that which is normally
3. The certification in this clause is a material representation of fact possessed by a prudent person in the ordinary course of business
upon which reliance was place when the department or agency deter- dealings.
mined to enter into this transaction. If it is later determined that the
prospective primary participant knowingly rendered an erroneous 10. Except for transactions authorized under paragraph(6)of these
certification, in addition to other remedies available to the Federal instructions,if a participant in a covered transaction knowingly enters
Government, the department or agency may terminate this transaction into a lower tier covered transaction with a person who is suspended,
for cause of default. debarred, ineligible, or voluntarily excluded from participation in this
transaction, in addition to other remedies available to the Federal
Government,the department or agency may terminate this transaction
for cause of default.
P 1 of 2 form HUD-2992(3/98)
Certification B: Certification Regarding Debarment,Suspension,Ineli-
gibility and Voluntary Exclusion-Lower Tier Covered Transactions
1. The prospective lower tier participant certifies, by submission of 5. The prospective lower tier participant agrees by submitting this
this proposal, that neither it nor its principals is presently debarred, proposal that,should the proposed covered transaction be entered into,
suspended,proposed for debarment,declared ineligible,or voluntarily it shall not knowingly enter into any lower tier covered transaction
excluded from participation in this transaction by any Federal depart- with a person who is debarred, suspended, declared ineligible, or
ment or agency. voluntarily excluded from participation in this covered transaction,
unless authorized by the department or agency with which this trans-
2. Where the prospective lower tier participant is unable to certify to action originated.
any of the statements in this certification,such prospective participant
shall attach an explanation to this proposal. 6. The prospective lower tier participant further agrees by submitting
this proposal that it will include this clause titled "Certification
Instructions for Certification (B) Regarding Debarment, Suspension,Ineligibility and Voluntary Exclu-
1. By signing and submitting this proposal,the prospective lower tier sion - Lower Tier Covered Transaction," without modification, in all
participant is providing the certification set out below. lower tier covered transactions and in all solicitations for lower tier
covered transactions.
2. The certification in this clause is a material representation of fact
upon which reliance was placed when this transaction was entered into. 7. A participant in a covered transaction may rely upon a certification
If it is later determined that the prospective lower tier participant of a prospective participant in a lower tier covered transaction that it
knowingly rendered an erroneous certification, in addition to other is not debarred,suspended,ineligible,or voluntarily excluded from the
remedies available to the Federal Government, the department or covered transaction,unless it knows that the certification is erroneous.
agency with which this transaction originated may pursue available A participant may decide the method and frequency by which it
remedies, including suspension and/or debarment. determines the eligibility of its principals. Each participant may,but
is not required to, check the Nonprocurement List.
3. The prospective lower tier participant shall provide immediate
written notice to the person to which this proposal is submitted if at any 8. Nothing contained in the foregoing shall be construed to require
time the prospective lower tier participant learns that its certification establishment of a system of records in order to render in good faith the
was erroneous when submitted or has become erroneous by reason of certification required by this clause. The knowledge and information
changed circumstances. of a participant is not required to exceed that which is normally
possessed by a prudent person in the ordinary course of business
4. The terms covered transaction, debarred,suspended,ineligible, dealings.
lower tier covered transaction, participant, person, primary cov-
ered transaction,principal,proposal,and voluntarily excluded,as 9. Except for transactions authorized under paragraph (5) of these
used in this clause, have the meanings set out in the Definitions and instructions,if a participant in a lower covered transaction knowingly
Coverage sections of rules implementing Executive Order 12549. You enters into a lower tier covered transaction with a person who is
may contact the person to which this proposal is submitted for assis- suspended, debarred, ineligible, or voluntarily excluded from partici-
tance in obtaining a copy of these regulations. pation in this transaction,in addition to other remedies available to the
Federal Government, the department or agency with which this trans-
action originated may pursue available remedies including suspension
and/or debarment.
Applicant Date
Signature of Authorized Certifying Official Title
Page 2 of 2 form HUD-2992(3/98)
Exhibit P
MINORITY BUSINESS & WOMEN BUSINESS
ENTERPRISE PLAN
June 2021
PLANNING DEPARTMENT
CITY OF OMAHA
o�aMaen„�a omaha
tow
ot 'To
Died
. 04Ftt., An,
- .
CITY PLANNING
•Q eean•5r
Jean Stothert, David K.Fanslau
Mayor City of Omaha
City of Omaha Planning Department
Omaha/Douglas
Civic Center
1 Reviewed and approved 6/24/2021
MINORITY BUSINESS/WOMEN BUSINESS ENTERPRISE PLAN
INTRODUCTION
Minority and women business sectors play an important part in Omaha's overall plans for future growth,
progress, and prosperity. It is vital to the City's economic condition and well-being that minority and
women businesses expand, thrive and prosper, generating economic stability and increased job
opportunities. Towards the fulfillment and accomplishment of these important objectives, the City of
Omaha remains committed to minority and women business development.
The City of Omaha's approach to minority/women business development is embedded in its policy of non-
discrimination in the conduct of City business including the procurement of goods, materials and services,
construction and community and economic development projects. The City recognizes its obligations to
each segment of the various communities it serves. It is in recognition of these responsibilities that the City
established the City's Contract Compliance Ordinance.
The Ordinance commits the City to:
1. Require contractors and/or vendors to provide employment opportunities without regard to race,
color, sex,religion, or national origin;
2. Monitor contractor and vendor equal opportunity performance; and
3. Increase the total number and total dollar volume of City contracts awarded to minority-owned and
women-owned firms.
GOALS AND OBJECTIVES
The following represents a summary of the goals and objectives of the Planning Department as they relate
to minority and women-owned businesses:
1. Encourage, increase and promote business and procurement opportunities for women-owned
businesses;
2. Increase and expand the awareness and understanding regarding the concerns, obstacles, and
hindrances preventing increased MBE/WBE participation in Planning Department activities;
3. Assist MBE's/WBE's through the revitalization of business districts;
4. Assist minority and female entrepreneurs in the formation and growth of new small businesses; and
5. Provide technical assistance to neighborhood organizations, MBE's and WBE's to increase their
participation in the Planning Department programs and activities at all levels.
SCOPE OF WORK
In order to accomplish these objectives,the Planning Department will:
1. Require that recipients of grant awards,consulting contracts,or loans to adopt the City's MBE/WBE
Enterprise Plan. The Minority Business/Women Business Enterprise and Fair Housing plan must
be filled out by contractors, developers, corporations,partnerships and/or sole proprietors.
2. Ensure that Requests for Proposals have the MBE/WBE Enterprise Plan.
3. Ensure that the programs of the Planning Department are advertised in the appropriate new media
whose markets are targeted toward MBE/WBE.
2 Reviewed and approved 6/24/2021
4. Implement an outreach effort informing MBE and WBE firms and capture information on these
firms doing business with the Planning Department.
5. Implement a system to identify MBE and WBE firms and capture information on these firms doing
business with the Planning Department.
6. Require developers, corporations, partnerships and/or sole proprietors to register with the Human
Rights & Relations Department. In addition, require these entities to complete CC-1 (Human
Relations Department).
The following information has been developed to assist you in complying with the MBE/WBE requirements
in the agreement with the City of Omaha. If you have any questions, please contact Edward Dantzler at
(402) 444-5150 Ext. 2009.
3 Reviewed and approved 6/24/2021
MBE/WBE FOR GOODS AND SERVICES
Your company must make vendors aware of equal opportunity utilization of minority,disabled and women-
owned businesses. To accomplish this goal, you must provide a copy of the approved MBE/WBE
Participation Plan to all businesses providing goods and/or services to the project.
Your company must provide the opportunity for Minority Business Enterprises and Women Business
Enterprises to provide goods and services through all phases of the project. A concerted effort must be
made to allow these businesses to actively compete for project contracts. This effort will include utilization
of the following resources and documentation of your actions to achieve these objectives.
City of Omaha
Housing and Community Development Division
1819 Farnam Street Room 1111
Omaha,NE 68183
Edward Dantzler, Construction Manager
hcdbidcompliance(cr�cityofomaha.org
(402) 444-5150 Ext. 2009 Fax: (402) 444-5201
City of Omaha
Human Rights &Relations
1819 Farnam Street Room 502
Omaha,NE 68183
Christian Espinosa Torres, City of Omaha SEB Program Administrator
christian.espinosa(a,cityofomaha.org
(402) 444-5052 Fax: (402)444-5058
REACH
Greater Omaha Chamber of Commerce
808 ConAgra Drive Suite 400
Omaha,NE 68102
Winsley Durand, Executive Director
wdurand@selectgreateromaha.com
(402) 346-5000 Fax: (402) 346-7050
4 Reviewed and approved 6/24/2021
MBE/WBE FOR GOODS AND SERVICES
Urban League of Nebraska, Inc.
3040 Lake Street
Omaha,NE 68110
Wayne Brown, Interim President/CEO
wayne.brownnurbanleagueneb.org
(402) 453-9730
U.S. Small Business Administration
10675 Bedford Avenue Suite 100
Omaha,NE 68134
Melissa(Lisa)Tedesco, Deputy District Director
Melissa.tedesco@sba.gov
(402) 221-7229
College of Business Administration
Mammel Hall Suite 200
67th and Pine Streets
Omaha,NE 68182
Veronica Doga, Director, Procurement Technical Assistance Program
vdoga@unomaha.edu
(402) 554-6253
Goodwill Industries, Inc.
4805 North 72nd Street
Omaha,NE 68134
Sarah Alba, Employment Solutions Coordinator
salba@goodwillomaha.org
(402) 951-2919
Paralyzed Veterans of America
Great Plains Chapter
7612 Maple Street
Omaha,NE 68134
Amanda Vazquez, Government Relations Director
vazquez@greatplainspva.org
(402) 398-1422
5 Reviewed and approved 6/24/2021
CITY OF OMAHA
CONTRACTOR INFORMATION FORM
Date:
Project Address:
Owner Information
Name:
Address:
City,St.,Zip:
Phone:
General Contractor Information
Name:
Address:
City,St.,Zip:
Phone:
Federal Tax ID or SSN
Contract Amount $
Woman Owned Business ❑Yes El No
BRE(Business Owned Race/Ethnic)Code:
(BRE Code: 1 White American; 2 Black American; 3 Native American; 4 Hispanic American 5 Asian/Pacific American; 6 Hasidic Jews
Subcontractor Information (Complete for each subcontractor for the project)
Name/Address Fed Tax Contract Woman Own BRE
ID/SSN Amt. Code
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
6
Reviewed and approved 6/24/2021
Date:
Project Address:
Owner Information
Name:
General Contractor Information
Name:
(BRE Code: 1 White American; 2 Black American; 3 Native American; 4 Hispanic American 5 Asian/Pacific American; 6 Hasidic Jews
Name/Address Fed Tax Contract Woman Own BRE
ID/SSN Amt.
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
Name: $ ❑Yes ❑No
Address:
City,St.,Zip:
Phone:
7
Reviewed and approved 6/24/2021
DEFINITIONS:
1. American Indian or Alaska Native. A person having origins in any of the original peoples of North
and South America (including Central America), and who maintains tribal affiliation or community
attachment.
2. Asian. A person having origins in any of the original peoples of the Far East, Southeast Asia, or the
Indian subcontinent including,for example, Cambodia, China, India,Japan,Korea,Malaysia,Pakistan,
the Philippine Islands, Thailand and Vietnam.
3. Black or African American. A person having origins in any of the black racial groups of Africa.
Terms such as "Haitian" or"Negro" can be used in addition to "Black" or"African American".
4. Native Hawaiian or Other Pacific Islander. A person having origins in any of the original peoples
of Hawaii, Guam, Samoa or other Pacific Islands.
5. White. A person having origins in any of the original peoples of Europe, the Middle East or North
Africa.
8 Reviewed and approved 06/24/2021
MINORITY BUSINESSWOMEN BUSINESS ENTERPRISE
AND FAIR HOUSING PLAN
As Owner(s), , I/we agree that my/our contractors
and subcontractors will make our best efforts to ensure the construction services, contracts and
employment opportunities are affirmatively marketed to women and members of minority groups
as outlined in the City of Omaha's Policy for Minority Business/Women Business Enterprise and
to further Fair Housing, where applicable, in the following manner.
1. Provide employment opportunities without regard to race, color, sex, age, religion,
national origin, familial or handicap status;
2. Encourage, increase and promote business and procurement opportunities for women-
owned businesses;
3. Award contracts to eligible minority-owned and women-owned firms;
4. Monitor contractor and vendor equal opportunity performance.
As Owner(s), , I/we agree that our contractors and
subcontractors will not discriminate against any employee or applicant for employment because
of race, color, sex, age, religion, national origin, familial or handicap status.
As Owner(s), , I/we agree that my/our contractors
and subcontractors shall in all solicitations or advertisements for employment give all qualified
applicants consideration for employment without regard to race, color, sex, age, religion, national
origin, familial or handicap status.
As Owner(s), , I/we certify that I/we support the
furtherance of fair housing choice and that I/we will not discriminate on the basis of race, color,
religion, sex, national origin, familial status, marital or handicap status in the rental or sale of the
assisted property nor in any activities related to the sale, rental, and operation of the assisted
property in accordance with the applicable laws and regulations.
Dated this day of , 20
Business or Corporation(if applicable)
By:
Signature of Owner/Authorized Representative Name
Print Owner/Authorized Representative Name
A
WPM
9 Reviewed and approved 06/24/2021
Invitation to Bid to MBE/WBE Sub-contractors and Suppliers
The attached sample notice for "Invitation to Bid to Sub-contractors and Suppliers" must be used to
advertise opportunity for minority, disabled and women-owned businesses to provide goods and
services for the project being bid. Proof of this effort is shown by contractor emailing a copy of the
notice to the service resources in this document and all others being advertised to for this project shall
be included in the bid submitted.
NOTE: Email a copy of notice to the following:
hcdbidcompliance(acityofomaha.org
christian.espinosa(acityofomaha.org
wdurand@selectgreateromaha.com
wayne.brown@urbanleagueneb.org
melissa.tedesco@sba.gov
vdoga@unomaha.edu
salbac goodwillomaha.org
vazquez@greatplainspva.org
10 Reviewed and approved 06/24/2021
NOTE: Contractor must submit a copy of this notice with bid submitted.
SAMPLE NOTICE
PROJECT: (project name)
(COMPANY NAME)
General Contractor
(Address)
(Phone)
(Email)
INVITATION TO BID FOR SUB-CONTRACTORS AND SUPPLIERS:
(COMPANY NAME)WILL BE BIDDING AS A GENERAL CONTRACTOR ON:
(PROJECT NAME)
(PROJECT ADDRESS)
PROJECT BIDS AT (BID TIME, BID DAY, BID DATE)
(DESCRIPTION)
11 Reviewed and approved 06/24/2021
Attachment 01
omaha CITY OF OMAHA
TENANT SELECTION PLAN
• • = �' Effective: August 1,2021
it •
IN��NG EQUAL HOUSING
OPPORTUNITY
Properties managed by the City of Omaha are HUD-subsidized affordable rental properties. HUD requires that
all applicants have equal access to affordable housing and that all tenants are treated equitably. The occupancy
requirements and procedures governing this property are found in HUD Occupancy Handbook 4340.3. The
federal regulations and statutes are found in 24 CFR, Part 880, as modified by the City of Omaha requirements.
The Purpose of the Tenant Selection Plan is to ensure that tenants are selected for occupancy in accordance with
HUD requirements and established management policies and procedures.
1. Project Eligibility Requirements
Project eligibility describes the criteria by which the City of Omaha must determine whether a household is
eligible to reside in a specific property(e.g. limited to a specific population,unit size, and occupancy standards).
A. Citizenship/immigration status requirements — all applicants must be a U.S. citizen or national, or have
eligible immigration status. All family members, regardless of age, must declare their citizenship or
immigration status. The required documents of citizenship/immigration status shall be:
a. U.S. Citizen—a signed declaration of citizenship, and a birth certificate, or passport, or any other
government issued documentation.
b. Non-citizens claiming eligible status—a signed declaration of eligible immigration status and one
of the Department of Homeland Security documents as evidence of eligible immigration status.
(Forms 1-441, 1-93, 1-688, 1-668B, 1151).
c. Social security number requirements—applicants and tenants are required to disclose and provide
verification of their social security number(SSN)
i. Applicants do not need to disclose or provide verification of an SSN for all non-exempt
household members at the time of application and for placement on the waiting list.
However, applicant must disclose and provide verification an SSN, for all non-exempt
household members, before they can be housed. If a unit becomes available and the
required SSNs have not been verified, the next eligible applicant must be offered the unit.
The applicant will then be given 90 days from the unit offer date to verify the required
SSNs. The applicant will retain their place on the waiting list during the 90-3ay period. If
the required SSNs are not verified after the 90-day period,the applicant will be determined
ineligible and removed from the waiting list.
ii. Tenants must provide verification of their SSN at the time of their interim or annual
recertification if: they have not previously disclosed an SSN;previously disclosed an SSN
that HUD or the SSA determined was invalid; or been issued a new SSN. If the tenant fails
to verify SSNs, the household tenancy may be terminated.
iii. Adding a household member requires verification of their SSN at the time of the request
or at recertification when the new household member is processed. If the new household
member is six years of age and does not have an SSN, the verification should be provided
within 90 days. An additional 90 days will be granted if failure to provide verification of
the SSN is beyond the control of the tenant. During this time period, the child is included
as part of the household. If verification of the SSN is not provided,the household tenancy
may be terminated.
1
2. Income Limits
In order for an applicant to be eligible for occupancy,the applicant's total family annual income must not exceed
the applicable income limit, established yearly by HUD. Income limits are available at the City of Omaha or
from HUD's website at www.huduser.gov.
Income limits are based on the median income for a metropolitan statistical area(MSA), as follows:
Income Limit Median income for the Area _
Low-income limit 80%of median income
Very low-income limit 50%of median income
Extremely low-income limit 30%of median income
3. Income Targeting
City of Omaha properties are required to ensure that 90% of households in all rental units with City funding do
not have incomes that exceed 60%of the area median income.Rental units cannot assist households with incomes
that exceed 80% of the area median income. If a property has five or more City-assisted units, at least 20%must
be occupied by households with annual incomes that are 50%or less than the median income.
In order to achieve the goal of no more than 10% of households above 60% of the area median income, the City
of Omaha will use the following tenant selection method:
A. Alternate between selecting tenants below 60%area median income on the waiting list(which may mean
skipping over higher income families); then select the family at the top fo the waiting list (regardless of
income level) for the next available unit.
When determining family size for establishing income eligibility, all persons expected to live in the unit are
considered, except live-in aides. When determining family size for income limits, the following individuals are
counted, even though they are not living in the unit:
A. Temporarily absent household members who are still considered household members(i.e.working out of
state, long term visits out of state, etc.)
B. Household members in the hospital or rehabilitation facility for periods of limited or fixed duration.
C. Persons permanently confined to a hospital or nursing home
4. Outreach and Marketing
The City of Omaha will conduct outreach as necessary to ensure that the City of Omaha has a sufficient number
of applicants on the waiting list to fill anticipated vacancies and to assure that the City of Omaha is affirmatively
furthering fair housing and complying with the Fair Housing Act.
Because HUD requires the City of Omaha to serve a specified percentage of low income households,the City of
Omaha may need to conduct special outreach to ensure that an adequate number of such households apply for
housing.
The City of Omaha outreach efforts must comply with fair housing requirements and the Affirmative Marketing
Policies and Procedures.
2
5. Procedures for Accepting Applications
All applicants must complete an application which is used to determine if the applicant should be placed on the
waiting list. This full application is completed so that the City of Omaha has enough information to determine
the applicant's complete eligibility.
A. All interested persons are required to complete an application and include the voluntary HUD Race and
Ethnicity Demographic Form and Authorization and Consent to Release Information Form. Applications
are available at the offices of the Community Development Division of the City of Omaha's Urban
Planning Department at 1819 Farnam Street,Suite 1110,Omaha,NE 68183,Monday through Friday from
8:30am to 4:30pm. If requested, applications can be mailed to an interested applicant.
B. Completed applications must be returned by mail,by FAX(402-444-6140),or submitted in person during
normal business hours. When the completed application is received at the management office, it will be
dated and time stamped, which will indicate placement on the waiting list.
C. Each application is placed on a waiting list by date and time of application. The wait list will also show:
client number, elderly and/or disabled; annual income; and need for accessible unit. Additional
information listed will include: withdrawn date and time; withdrawal reason, and move-in date and time.
D. A preliminary eligible determination will be made to determine if the applicant's family size is suitable
for the unit bedroom size requested, and listed preferences are verified by staff.
E. All applicants will be notified via mail indicated receipt of their application. Those withdrawn for
incomplete applications, not eligible will also receive a written letter.
F. While the household is on the waiting list, the household must inform the City of Omaha, within 10
business days,of changes in family circumstances. These include: family size or composition,preference
status, contact information, including mailing address and phone number. When an applicant reports a
change, it may affect bedroom size, entitlement to a preference,and their position on the waiting list. The
waiting list will be updated accordingly.
G. The applicant will be required to sign various HUD forms, including income and asset verification forms.
6. Screening
All applicants will be screened in accordance with HUD regulations and City of Omaha policies and procedures.
Such screening will entail the receipt and review of credit reports, landlord reports, and criminal background
reports (to the extent allowable under federal, state, or local laws).
A. Credit reports-only as it relates to timely payments of rent and utilities and any history of evictions; fraud
(credit activity for five years prior to the date of application).
B. Landlord reports- history of disruptive behavior; poor housekeeping habits; late and ore missed rent
payments; lease violations;violation of house rules (current and past two landlords).
C. Criminal Background Records—standards that prohibit admission are:
a. Normally any household containing a member who was evicted in the last three years from
federally assisted housing for drug-related criminal activity,unless:the evicted household member
has successfully completed an approved, supervised drug rehabilitation program; or, the
circumstances leading up to the eviction no longer exists (member no longer resides with the
applicant household)
b. A household in which any member is currently engaged in illegal use of drugs or for which the
owner has reasonable cause to believe that a member's illegal use or patter of illegal use of a drug
may interfere with the health, safety, and right to peaceful enjoyment of the property by other
residents.
3
c. Any household member who is subject to a state sex offender lifetime registration requirement.
This information will be verified by searching the Dru Sjodin national Sex Offender Database:
www.nsopw.gov
d. Any household member convicted of manufacturing or producing methamphetamine on the
premises of any federally assisted housing.
e. Convictions for the following felony crimes: (i) for a period of one year from completion of
sentencing: drug-related criminal activity; and (ii) for a period of two years from the completion
of sentencing: Aggravated Murder, Felonious Assault, Child Abuse, Abduction, Criminal Child
Enticement,Gross Sexual Imposition,Unlawful Sexual Conduct with Minor,Domestic and Dating
Violence, Murder, Aggravated Assault, Kidnapping, Rape, Sexual Battery, Aggravated Arson,
Endangering children, and Stalking. However, applicants may address and present mitigating
circumstances regarding criminal convictions prior to admissions decisions.
7. Procedures for Rejecting Applicants
Applicants may be rejected for housing based on the following reasons:
A. Family members who did not declare citizenship or non-citizenship status
B. Is unable to disclose and document SSNs of all household members, or does not execute a certification
stating that no SSN has been assigned.
C. Does not sign the Authorization and Consent to Release Information, verification forms, or any other
form used by the City of Omaha to determine eligibility.
D. If family size exceeds the established occupancy requirements.
E. Total family income exceeds established HUD income limits.
F. Failed the screening process.
G. In accordance with the Violence Against Women Act, being a victim of domestic violence, dating
violence,or stalking(a"victim of abuse"), is not a basis for denial of admission if the applicant otherwise
qualifies for admission. The Agent may require that the victim of abuse certify the abuse in accordance
with applicable HUD guidance.
All rejected applicants will be sent, via postal mail, a Rejected/Withdrawn letter, stating the reason for the
rejection/withdrawal. The applicant will have 10 business days, from the date of the letter, to respond in writing
requesting a meeting to dispute the rejection.
8. Updating Waiting List and Removing/Withdrawing Names from the Waiting List
The City of Omaha shall update,or purge,the waiting list at least once a year,to ensure that applicant information
is current and that any names that should no longer be on the list are removed.
Names may be removed from the waiting list for the following reasons:
A. The applicant no longer meets the eligibility requirements for the property or program.
B. The applicant fails to respond to a written notice for an eligibility interview to lease a unit or to update
their application.
C. The applicant is offered,and rejects a unit for the second time;a first unit rejection will move the applicant
to the bottom of the waiting list(only two offers per applicant will be made).
D. Mail sent to the applicant's address is returned as undeliverable.
E. Applicant is no longer interested.
4
If an applicant's name is removed from the waiting list and it is then determined that an error was made by the
City of Omaha, the applicant will be reinstated at their original place on the waiting list. When a name is
withdrawn from the waiting list, the waiting list will indicate the date and time of the withdrawal, as well as the
reason for the withdrawal. When applicants have leased a unit, the waiting list shall show the date and time the
unit was leased.
9. Closing and Opening the Waiting List
When the waiting list has become excessive (average wait time of one year or more). The waiting list shall be
closed. A notice will be advertised indicted the effective date when the waiting list will be closed. While the
waiting list is closed,the City of Omaha may exhaust the current waiting list in order to provide that all applicants
are served,prior to opening and accepting new applicants. When it has been determined that new applicants will
be accepted, a notice will be advertised per the Affirmative Marketing Procedures.
10. Occupancy Standards
Occupancy standards serve to prevent the over and underutilization of units that can result in an inefficient use of
housing assistance. The standards also ensure that residents are treated fairly and consistently, and receive
adequate housing space.
The policy will assign one bedroom for each two persons within the household. Persons of different generations
will not be required to share a bedroom. Live-in aids will be allocated a separate bedroom. Single person
households will be allocated a zero or one bedroom. Foster children will be included in determining unit size.
11. Notification of Selection
When the household has been selected from the waiting list, the City of Omaha must notify the family by mail.
The notice will inform the family the:
Date,time,and location of the scheduled application interview,including any procedures for rescheduling
the interview.
Who is required to attend the interview.
Documents that must be provided at the interview to document the legal identify of household members,
including information about what constitutes acceptable documentation
Time allotted for the family to respond to the notice.
If a notification letter is returned to the City of Omaha with no forwarding address, or the household fails to
respond to the notice with 10 business days,the household will be removed from the waiting list.
Households selected from the waiting list are required to participate in an eligibility interview.
Eligibility Determination:
When a determination is made that a household is eligible and satisfies all requirements for admission, including
tenant selection criteria,the applicant must be notified of the approximate date of occupancy insofar as that date
can be reasonably determined. The City of Omaha will notify a family in writing of their eligibility within 10
5
business days of the determination and will provide the approximate date of occupancy insofar as that date can
be reasonably determined.
The City of Omaha must also promptly notify any family determined to be ineligible for admission of the basis
for such determination, and must provide the applicant upon request, within 10 business days after the
determination is made,with an opportunity for an informal hearing on such determination. The notice will specify
the reasons for ineligibility.
If the City of Omaha uses a criminal record or sex offender registration information as the basis of a denial, a
copy of the records must precede the notice to deny,with an opportunity for the applicant to dispute the accuracy
and relevance of the information before the City of Omaha can deny the application.
12. Unit Transfers
Requests from Residents
Once an applicant has become a resident, a transfer of units may be warranted. If a resident has an increase in
family size, or has a medical/health condition that warrants a larger unit or a unit that has special design features
for a person with disabilities, a transfer may be requested. On occasion there may be other requests for transfers
that City of Omaha will consider on a case-by-case basis.All transfer requests must be made in writing, and must
state the reason for the request.
Requirement by the City of Omaha
On occasion the City of Omaha may require a resident to transfer to a smaller unit size. This may occur when the
household composition decreases and the household no longer qualifies for the unit size in which they are
dwelling. If a unit of appropriate size is not available, the City of Omaha will not evict the resident and will not
increase the resident's rent to the market rent. However, if an appropriately sized unit is available and the
household refuses to move, the household may stay in their current unit and pay the HUD-approved market rent.
The City of Omaha may evict the household if the household fails to pay the market rent in accordance with the
lease.
Acceptable Reasons for Transfers
Current tenants may qualify for a unit transfer for one of the following conditions: medical/health conditions,
including inability to use stairs, or the need for a live-in attendant; household size increases or decreases, or
composition changes; there is a need for a unit with special design features for a person with disabilities; or other
potential conditions not related to health,which will be reviewed on a case-by-case basis by the City of Omaha.
Placement on Transfer Waiting List
If the City of Omaha approves a request for a transfer to a different unit, and there is no current unit available,the
resident will be placed on the transfer waiting list.In-house residents that must be transferred due to overcrowding
will be transferred first. Residents needing transfers due to medical reasons must have a written statement from a
qualified medical professional.
Priority for Filling Vacancies
6
The City of Omaha will fill its vacant units with current residents awaiting transfers before applicants from the
waiting list. Unit transfers that are required by the City of Omaha will take priority over resident requested
transfers.
13. Eligibility of Students for Assisted Housing
The student rule applies to all individuals enrolled as students at an institution of higher education for the purpose
of obtaining a degree, certificate, or other program leading to a recognized educational credential. However, the
student rule does not apply to any student who is living with his/her parents who are applying for or receiving
Section 8 assistance.
The City of Omaha shall deny admission, on the basis of program ineligibility,to any individual who is: enrolled
as a student at an institution of higher education; under the age of 24 and is not a veteran of the United States
Military; unmarried; not responsible for a dependent child; not a person with disabilities, as defined in section
3(b)(3)(F) of the U.S. Housing Act of 1937 and not receiving Section 8 assistance as of November 30, 2005; or
not otherwise eligible,or has parents who,individually or jointly,are not eligible on the basis of income to receive
Section 8 assistance.
14. Annual Recertification
To ensure that assisted residents pay rents commensurate with their ability to pay,HUD requires a recertification
of household income and composition at least annually. Tenant rents must be recomputed based on the
information gathered. Tenants are required to supply information requested by management for use in the
recertification process.
15. Interim Recertifications
Interim re-certifications are performed when a tenant experiences a change in income or household composition
between annual re-certifications. The City of Omaha must process an interim recertification if a tenant reports:
A. A change in household composition
B. An increase in a family's cumulative income more than$200 per month
C. An increase in allowances (medical expenses, disability assistance expenses)
D. Most decreases in income(except if the decrease was caused by a deliberate action of the resident to avoid
paying rent, or if the decrease will last one month or less).
16. Unreported or Underreported Income
If the City of Omaha determines the tenant unreported or underreported their income,the City of Omaha must go
back to the time the unreported or underreporting of income started,not to exceed the five-year limitation that the
tenant was receiving assistance. A calculation must be made to determine the difference between the amount of
rent the tenant should have paid and the amount of rent the tenant was charged. The City of Omaha will notify
the tenant of any amount due and their obligation to reimburse the City of Omaha. A record of the calculation
will be given to the tenant and a copy placed in the tenant file.
17. Repayment Options/Agreement
Tenants can repay amounts due in a lump sum payment, or by entering into a repayment agreement with the City
of Omaha, or a combination of both. Tenants who do not agree to repay amounts due will be in non-compliance
7
with their lease and the lease may be terminated. The tenant and the City of Omaha must both agree on the terms
of the repayment agreement
18. Section 504 of the Rehabilitation Act of 1973,the Fair Housing Act Amendments of 1988 and Title VI
of the Civil Rights Act of 1964.
There are multiple laws that address the rights of residents in HUD-subsidized housing:
A. Section 504 of the Rehabilitation Act of 1973 prohibits discrimination on the basis of disability in
any program or activity receiving federal financial assistance from HUD.
B. The Fair Housing Act prohibits discrimination in housing and housing related transactions based
on race, color, religion, sex, national origin, disability and familial status. It applies to housing,
regardless of the presence of federal financial assistance.
C. Title VI of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color or
national origin in any program or activity receiving financial assistance from HUD.
D. The City of Omaha's policies and practices will be designed to provide assurance that all persons
with disabilities will be provided reasonable accommodations so that they may fully access and
utilize the full range of the management rental-housing program and related services.
E. Management will ensure that a qualified individual with a disability be provided reasonable
modification(s) to the premises (i.e., dwelling unit) unless management can demonstrate the
proposed physical modifications will result in an undue administrative and financial burden or a
fundamental alteration in the program or activity.
F. All requests for reasonable accommodations must be submitted in writing to the City of Omaha.
Verification of the need for a unit with special features (reasonable accommodations) must be
submitted in writing from a qualified professional with knowledge of the resident's disability.
8
Attachment 02
• maha CITY OF OMAHA
AFFIRMATIVE MARKETING POLICY
AND MONITORING PROCEDURES
Effective: October 1, 1999
CITY PLANNING Revised:
HOUSING
Revised: August 1,2021 OPPORTUNITY
To further the commitment to nondiscrimination and equal opportunity in housing, and in accordance with the
regulations of the HOME Investments Partnerships Program (HOME) of the United States Department of
Housing and Urban Development,the Community Development Division of the City of Omaha's Urban Planning
Department has established procedures to affirmatively market housing assisted with federal, state, and city
funding. All recipients of City funding must comply with the City's affirmative marketing requirements, either
by crafting an individual plan(as in the case of projects with 5+HOME units),or contributing towards the City's
affirmative marketing plan.
Affirmative marketing consists of efforts to inform persons that are "least likely to apply" or under-represented
groups in a neighborhood or community about opportunities for housing. The affirmative marketing efforts target
individuals who—due to their race,color,national origin,sex,gender identity,sexual orientation,religion,familial
status,disability, and/or limited English proficiency- may not know about housing opportunities or feel welcome
to apply for housing. To encourage opportunities for all community members participate in housing-related
services and rent or purchase affordable housing units,Affirmative Marketing Plans identify community members
for targeted marketing strategies and special outreach through social service organizations. Additionally,
Affirmative Marketing Plans include training and professional development opportunities to increase awareness
and knowledge of fair housing and affirmative marketing strategies for potential tenants, staff, community
partners, and others. Plans also detail how entities carrying out affirmative marketing assess their efforts for
ongoing improvement.
The following policy fulfills the requirement established by the HOME final rule(24 CFR 92.351(a))to develop
written affirmative marketing procedures and requirements for all HOME-funded programs (homeowner
rehabilitation and homebuyer assistance). There are five elements for the City of Omaha's affirmative marketing
procedure:
1. Description of the City's plans to inform the public, subrecipients, owners, and potential applicants and
tenants about Federal, State, and Local fair housing and civil rights laws and the City's Affirmative
Marketing Plan and policy.
2. Requirements and practices that each subrecipient and owner of City-funded housing must adhere to in
order to carry out the City's affirmative marketing procedures and requirements.
3. Procedures used by subrecipients and owners to inform and solicit applications from persons in the
housing market area who are least likely to apply for the housing without special outreach.
4. List of records the City and owners must keep to document and assess efforts made to affirmative market
units.
5. Description of how the City will assess success of affirmative marketing actions and what corrective
actions will be taken when requirements are not met.
1. Description of the City's plans to inform the public,subrecipients,owners,and potential applicants and
tenants about Federal, State, and Local fair housing and civil rights laws and the City's Affirmative
Marketing Plan and policy.
The Community Development Division of the City of Omaha's Planning Department will:
• Include the Equal Housing Opportunity logo and/or slogan, and a logo and/or slogan indicating
accessibility to persons with disabilities, in all press releases,solicitations,and program information
materials.
• Work in partnership with the Mayor's Office of Human Rights and Relations and fund
community partners (e.g. Family Housing Advisory Services) to provide the public with
information, referral, case investigation services and counseling regarding fair housing laws and
policies.
• Post the Affirmative Marketing Policy and Affirmative Marketing Plan on the Department's website:
https://planninghcd.cityofomaha.org/ and include Fair Housing information on a scrolling digital
display in the Department's reception area.
• Provide and require all funded agencies to provide homeowners,tenants,and rental property owners
copies of Fair Housing brochures.
• Provide ongoing trainings to subrecipients about Fair Housing laws and affirmative marketing
requirements.
• Make housing and program information available in multiple languages and work with community
partners to provide oral and written translation services, as needed.
• Partner with groups to provide written translations and oral and signed interpretations for individuals
with visual and/or auditory impairments.
• Place public notices in the major distribution news media, such as Omaha World Herald, and in
media serving individuals and groups that are least likely to apply for housing opportunities.
Additionally, the City will provide a list of these diverse media outlets to subrecipients.
• Meet with property owners and assist them in preparing program applications as requested and
necessary.
2. Requirements and practices that each subrecipient and owner of City-funded housing must adhere to
in order to carry out the City's affirmative marketing procedures and requirements.
• Inform and solicit applications from persons in the housing market area who are least likely to
apply for housing without special outreach.
• Project owners with 5 or more HOME-funded units must submit an Affirmative Marketing Plan to
the City of Omaha for review 120 days prior to initiating sales or rental marketing activities and
revise the plan at least every five years throughout the affordability period. Alternatively,project
owners can elect to further the City of Omaha's Affirmative Marketing Plan. Under either option,
the owner will provide annual reports on affirmative marketing efforts to the City.
• Use the Equal Housing Opportunity logo and/or slogan on all correspondence and advertising(signs,
advertisements,brochures,direct mail solicitations,press releases,websites, etc.)relating to the sale
or rental of units or in promoting housing programs.
• Prominently display the HUD-approved Fair Housing poster and Equal Housing Opportunity logo
in all project sites and offices in which housing-related transactions (Exhibit 1).
• Advertise housing opportunities in a local citywide newspaper of general circulation, such as the
Omaha World Herald, and in minority and non-English language newspapers. Submit to the City
copies of such advertisements annually.
• Circulate flyers and advertisements (at least six weeks prior to the opening of any waiting lists) to
the City of Omaha Community partners list.
• All advertising depicting persons shall depict persons of majority and minority groups, including a
diversity of race, gender, sexual orientation, age, religion, family status or any other protected class.
• Submit and retain records documenting efforts to affirmatively market and assess the results of these
efforts, including copies of all letters notifying the outreach agencies of vacancies. Outreach
agencies may include, but are not limited to, the agencies in the Community Contacts list (Exhibit
2). The owner will submit a Demographics Form for Applicants (Exhibit 3), which includes the
name, racial/ethnic characteristics, income and family size for each person responding to the
advertisement.
• Maintain a nondiscriminatory hiring policy for staff engaged in the sale or rental of properties or
provision of housing-related services.
• Owners must comply with affirmative marketing requirements and take corrective actions when the
City determines the results of such actions do not satisfactorily achieve Fair Housing goals.
• Adopt antidiscrimination tenant selection policies and maintain waitlist protocols that encourage
participation for individuals least likely to apply.
• Owners selected for a rehabilitation program shall notify in-place tenants in writing of their
involvement in the program and provide them with the following options in accordance with
provisions of the Uniform Relocation Act, including options to: remain in the present unit during
rehabilitation; move temporarily to another unit within the project while his/her unit is being
rehabilitated;or permanently relocate or voluntarily abandon the unit during the rehabilitation. Each
in-place tenant in the project will receive a copy of the City of Omaha's written Tenant Assistance
Policy(TAP) and shall advise said tenant(s)of the impact of the project on him or her. The Owner
shall provide the TAP to the tenant immediately after submission of the Owner's application for
participation in the City's program.
3. Procedures used by subrecipients and owners to inform and solicit applications from persons in the
housing market area who are least likely to apply for the housing without special outreach.
• Identify populations least likely to apply based on census-tract level demographic data compared to
demographic information of current residents, applicants, and/or participants.
• Develop an outreach strategy and advertising materials that include pertinent information to the
individual or group (e.g. accessibility features of the unit) in an effective tactic (e.g. non-English
language flyers)
• Outreach to Omaha Housing Authority and at least three community contacts that work with the
identified population about housing opportunities. See Community Contact List.
• Document advertisements and outreach activities and place in the project's Affirmative Marketing
file.
• Record the demographics of those responding to outreach efforts using the City's Demographics Form
for Applicants.
• Annually assess the current population served in the housing program or project relative to
surrounding demographics to determine changes in target populations.
• Submit annual assessment,copies of marketing materials, and demographic information to the City of
Omaha for review.
4. List of records the City and owners must keep to document and assess efforts made to affirmative market
units.
The City will retain the following records regarding efforts made to affirmatively market HOME-Assisted
Units for five years following the affordability period:
• Copies of Affirmative Marketing Plans and Policies written by the City and subrecipients
▪ Copies of advertisements and program materials promoting housing-related programs and services,
including those produced by the City and subrecipients.
• Trainings and technical assistance provided to staff, subrecipients, and the public related Federal,
State, and local civil rights laws and fair housing laws.
• Assessments of affirmative marketing efforts for City activities and housing-related services provided
by subrecipients.
• Correspondence related to corrective actions taken to resolve affirmative marketing issues and
evidence used to verify compliance.
Owners will retain the following records in an "Affirmative Fair Marketing" file to document efforts
furthering affirmative marketing for five years following the period of affordability:
• Advertisements for vacant units and housing-related services
• Contact dates and correspondence with outreach agencies and Omaha Housing Authority
• Annual assessments of affirmative marketing efforts
• Race and other demographic data of occupants and persons inquiring about availability of units
through the City's Demographic Form for Applicants
• Dates and types of trainings provided to project management/staff on Federal, State, and local civil
rights laws and fair housing laws
• Written records of how all applicants and tenants can file complaints regarding fair marketing and/or
allege discriminatory practices, evidence of investigating all applicant or tenant complaints and
corrective actions taken, and correspondence notifying the City of complaints.
• Examples of documents that should be maintained include:
• Copies of newspaper advertisements and flyers or other printed material used
• Copies of mailing lists to organizations hat were sent flyers and other materials
• Photographs of site signs
• Racial, ethnic, and gender characteristics of tenants
• List the names and addresses of groups or organization identified as serving least likely to apply
populations and those serving special populations who may be served by the project, including
those with disabilities.
5. Description of how the City will assess success of affirmative marketing actions and what corrective
actions will be taken when requirements are not met.
Assessment responsibilities of the City:
• Annually review Owners' affirmative marketing records for compliance and progress towards
soliciting applications and participants from individuals who normally might not apply and/or who
represent target demographics.
• Annually review demographic data of housing-related programs and services administered by the
City to identify underrepresented populations in both applications and participation.
• Update the City's Affirmative Marketing Plan every five years,publish updated Plans,and provide
Plans to Owners utilizing the City's Plan in housing-related services, sales, and/or rental
transactions.
• Evaluate effectiveness of affirmative marketing and fair housing trainings.
• Assess the affirmative marketing procedures to determine whether the Owner has affirmatively
marketed the vacant units by monitoring the Owner's performance in carrying out the Duties and
Responsibilities of the Owner as outlined in Section 2.
• The City shall assess the affirmative marketing efforts of the Owner to determine whether a
sufficient number of racial and ethnic families have applied for vacant units. This determination
will be made by reviewing the information provided on the Demographics Form for Applicant and
Tenant Survey Forms to compare the proportions of protected class participation (e.g. disability,
family status,English language proficiency, race and/or ethnicity)versus overall participation.
Assessment responsibilities of owners:
• Review affirmative marketing plans at least every five years and update as needed to ensure
compliance.
• Annually assess the success of affirmative marketing actions for each project. If the demographic
data of the applicants and resident vary significantly from the jurisdiction's population data for the
target income group, advertising efforts and outreach should be targeted to underrepresented
groups in an attempt to balance the applicants and residents with the demographics of the
jurisdiction.
The City shall take the following corrective action if it is found that the Owner is not carrying out
established procedures of affirmatively marketing units:
• Notify the Owner in writing of any violations of the Owner's Duties and Responsibilities.
• The Owner will be given thirty(30) days upon receipt of written notification to provide evidence
of compliance. Upon the Owner's request, the City will provide technical assistance.
• If the Owner fails to comply with the Affirmative Marketing Policy and Monitoring Procedures,
the City may declare the loan/grant in default.
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AFFIRMATIVE MARKETING POLICY PLAN
The Undersigned does/do hereby agree to comply with all terms and conditions of and adopt the City of Omaha's
Affirmative Marketing Policy(attached hereto and incorporated herein by this reference as though fully set forth)
for the Project located at as approved by the City of Omaha on October 1, 1999 and revised
on August 1, 2021.
Date:
Name of Business or Corporation:
(f applicable)
By:
Signature
Printed Name:
Attachment 03
SECTION 3 CLAUSE
All Section 3 covered contracts shall include the following clause (referred to as the Section 3
clause):
A. The work to be performed under this contract is subject to the requirements of Section 3
of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u
(Section 3). The purpose of Section 3 is to ensure that employment and other economic
opportunities generated by HUD assistance or HUD-assisted projects covered by Section
3 shall, to the greatest extent feasible, be directed to low- and very low-income persons,
particularly persons who are recipients of HUD assistance for housing.
B. The parties to this contract agree to comply with HUD's regulations in 24 CFR Part 75,
which implement Section 3. As evidenced by their execution of this contract, the parties
to this contract certify that they are under no contractual or other impediment that would
prevent them from complying with the Part 75 regulations.
C. The contractor agrees to send to each labor organization or representative of workers with
which the contractor has a collective bargaining agreement or other understanding, if any,
a notice advising the labor organization or workers' representative of the contractor's
commitments under this Section 3 clause, and will post copies of the notice in
conspicuous places at the work site where both employees and applicants for training and
employment positions can see the notice. The notice shall describe the Section 3
preference, shall set forth minimum number and job titles subject to hire, availability of
apprenticeship and training positions, the qualifications for each; and the name and
location of the person(s) taking applications for each of the positions; and the anticipated
date the work shall begin.
D. The contractor agrees to include this Section 3 clause in every subcontract subject to
compliance with regulations in 24 CFR Part 75, and agrees to take appropriate action, as
provided in an applicable provision of the subcontract or in this Section 3 clause, upon a
finding that the subcontractor is in violation of the regulations in 24 CFR Part 75. The
contractor will not subcontract with any subcontractor where the contractor has notice or
knowledge that the subcontractor has been found in violation of the regulations in 24
CFR Part 75.
E. The contractor will certify that any vacant employment positions, including training
positions, that are filled (1) after the contractor is selected but before the contract is
executed, and (2) with persons other than those to whom the regulations of 24 CFR Part
75 require employment opportunities to be directed were not filled to circumvent the
contractor's obligations under 24 CFR Part 75.
F. Noncompliance with HUD's regulations in 24 CFR Part 75 may result in sanctions,
termination of this contract for default, and debarment or suspension from future HUD-
assisted contracts.
G. With respect to work performed in connection with Section 3 covered Indian housing
assistance, Section 7(b) of the Indian Self-Determination and Education Assistance Act
(25 U.S.C. 450e) also applies to the work to be performed under this contract. Section
7(b) requires that to the greatest extent feasible (i) preference and opportunities for
training and employment shall be given to Indians, and (ii) preference in the award of
contracts and subcontracts shall be given to Indian organizations and Indian-owned
Economic Enterprises. Parties to this contract that are subject to the provisions of
Section 7(b) agree to comply with Section 3 to the maximum extent feasible, but not in
derogation of compliance with Section 7 (b).
Providing Other Economic Opportunities.
(a) General. In accordance with the findings of the Congress, as stated in Section 3,
that other economic opportunities offer an effective means of empowering low-
income persons, a recipient is encouraged to undertake efforts to provide to low-
income persons economic opportunities other than training, employment and
contract awards, in connection with Section 3 covered assistance.
(b) Other training and employment-related opportunities. Other economic opportunities
to train and employ Section 3 residents include, but need not be limited to, use of
"upward mobility", "bridge" and trainee positions to fill vacancies; and hiring
Section 3 residents in part-time positions.
(c) Other business-related economic opportunities: (1) A recipient or contractor may
provide economic opportunities to establish, stabilize or expand Section 3 business
concerns, including micro-enterprises. Such opportunities include, but are not
limited to formation of Section 3 joint ventures, financial support for affiliating with
franchise development, use of labor only contracts for building trades, purchase of
supplies and materials from housing authority resident-owned businesses, purchase
of materials and supplies from PHA resident-owned businesses and use of
procedures under 24 CFR part 963 regarding HA contracts to HA resident-owned
businesses. A recipient or contractor may employ these methods directly or may
provide incentives to non-Section 3 businesses to utilize such methods to provide
other economic opportunities to low-income persons. (2) A Section 3 joint venture
means an association of business concerns, one of which qualifies as a Section 3
business concern, formed by written joint venture agreement to engage in and carry
out a specific business venture for which purpose the business concerns combine
their efforts, resources and skills for joint profit, but not necessarily on a continuing
or permanent basis for conducting business generally, and for which the Section 3
business concern:
(i) Is responsible for a clearly defined portion of the work to be performed and
holds management responsibilities in the joint venture; and
(ii) Performs at least 25 percent of the work and is contractually entitled to
compensation proportionate to its work.