RES 2001-1159 - Agmt with NCDC for housing project in Concord Square target area 1�
oMAHA yEe i ,F t ;L`��� Ki
, � Planning Department
`� 5°s� Omaha/Douglas Civic Center
c� tr,r �sa� I p' O 1819 Farnam Street,Suite 1100
'�P� t 9Omaha,Nebraska 68183-0110
f-VY I jgM (402)444-5200
(402)444-5150
A°4rEn R�r��ry May 1, 2001 CO'Y CLERK Telefax(402)444-6140
FEB
OMBHA,
CityofOmahaNE R SK .:
Hal Daub,Mayor
Honorable President
and Members of the City Council,
The attached proposed Resolution approves a Community Development Block Grant Program
(CDBG) loan agreement in the amount of $450,000.00 between the City of Omaha and New
Community Development Corporation, a Nebraska Non-Profit Corporation. (NCDC), located at
3147 Ames Avenue, Omaha,Nebraska 68111, Michael B. Maroney, President/CEO. NCDC will
use the CDBG funds as partial financing for new construction of ten (10) single-family houses in
the Concord Square Target Area bounded by Clark Street on the north, Nicholas Street on the
south, 20th Street on the east, and 24th Street on the west. The City will convey by Warranty
Deed parcels of land sufficient in number for the development of this housing project.
This Project is included in the 2001 Consolidated Submission for Community Planning and
Development Programs approved by the City Council on December 19, 2000,by Resolution No.
3377, as amended. Funds shall be payable from the FY 2001 Housing Development Program,
Agency No. 200, Fund No. 193, Organization No. 8319.
Total project cost is estimated at $1,570,000.00 consisting of $450,000.00 in CDBG funds and
$1,120,000.00 in private funds.
The CDBf.s Funds will be used by NCDC for the construction of ten (10) new single-family -
houses, and the marketing and selling of these housing units to low and moderate income
homebuyers in the Concord Square Target Area. The CDBG Loan Fund will be provided to
NCDC for Deferred Payment Loans and Development Subsidy Grants for construction financing
and Deferred Payment Loans to assist qualified homebuyers in purchasing the homes.
Fier (4) of the homes must be purchased by households whose annual incomes are at or below
80% of the Median Income by Family Size. Any qualified homebuyer may purchase the
remaining six (6) homes.
NCDC has a current. Annual Contract Compliance Report Form (CC-1) on file. As is City
policy, the Human Relations Director will review the Contract Compliance Ordinance to ensure
Conti actor i,; in compliance.
t� Y
Honorable President
and Members of the City Council
Page 2
Authorizing the approval of this proposed Agreement will allow NCDC to successfully
complete this worthwhile housing development project. We urge your favorable consideration
of this Agreement.
Respectfully submitted, Referred to City Cou it for
Con ' eration:
L I.4/ 7-q
Robert C. Peters Date Mayor's Office/Title Ubs' Date
Acting Planning Director
Approved: Approved:
Cl)iivev0 /14 , -eAA. 44-ovt4r/‘ qI7/0/
Stanley P. T. Date Kellie Paris-Asaka Date
Acting Finance Director Human Relations Director
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CDBG AGREEMENT
BETWEEN CITY OF OMAHA AND NEW COMMUNITY DEVELOPMENT
CORPORATION,A NEBRASKA NON-PROFIT CORPORATION
FOR
NEW CONSTRUCTION OF TEN (10)
SINGLE FAMILY HOMES IN CONCORD SQUARE
Fiscal Year 2001
•
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ABBREVIATIONS
SECTION 2 RESPONSIBILITIES OF DEVELOPER
2.01 Overall Project Performance
2.02 Project Budget
2.03 Term of Agreement
SECTION 3 CONDITIONS FOR RECEIPT OF CITY FINANCING
3.01 Conveyance of Land
3.02 Documents Required by City
3.02.1 Property Insurance
3.02.2 Contracts
3.02.3 Bonding/Letter of Credit
3.02.4 Matching Funds
3.02.5 Plans Submission
3.02.6 Affirmative Marketing Plan
3.02.7 MBE/WBE Plan
3.02.8 Eligible Contractors
3.02.9. Property Security
3.02.10 Funding Compliance Deadline
3.02.11 Use Restrictions
3.02.12 Contractors'Insurance and Workers'Compensation
SECTION 4 PROJECT RESPONSIBILITIES OF THE DEVELOPER
4.01 Eligible Use of Funds
4.02 Terms and Conditions
4.03 Breach of Agreement
4.04 Lien Waivers
4.05 Ineligible/Eligible Cost
4.06 Security for Deferred Payment Loan
4.07 Speculation or Model Home
4.08 Pre-Sold Home
4.09 Lead-Base Paint Prohibition
4.10 Ongoing Property Restrictions
4.11 Davis-Bacon Labor Standards
4.12 Property Standards
4.13 Affirmative Marketing Policy
4.14 Maintenance of Property
4.15 National Environmental Policy Act of 1969
4.16 Homebuyer First Mortgage Financing
4.17 Homebuyer Counseling Services
SECTION 5 GENERAL ADMINISTRATION REQUIREMENTS OF DEVELOPER
5.01 Financial Management
5.02 Documentation and Record-Keeping
5.03 Records
5.04 Financial Status Report
5.05 Record Retention
5.06 Personnel and Participant Conditions
SECTION 6 DEVELOPER'S COMPLIANCE WITH OTHER FEDERAL
REGULATIONS
6.01 Environmental Review
6.02 Uniform Relocation Act
SECTION 7 RESPONSIBILITIES OF THE CITY
7.01 Performance Monitoring
7.02 Payments
7.03 Progress Payments
7.04 Eligible Operating Costs
7.05 Evidence of Loss
7.06 Inspections
7.07 Technical Assistance
SECTION 8 MUTUAL AGREEMENTS BETWEEN CITY AND DEVELOPER
8.01 Release of Information Laws
8.02 Applicable Laws
8.03 Interest of the City
8.04 Independent Contractor
8.05 Project Roles
8.06 Captions
8.07 Merger
8.08 Modification
8.09 Assignment
8.10 Strict Compliance
8.11 Termination
8.12 Reversion of Assets
8.13 Indemnification
8.14 Unenforceable Provisions
8.15 Disclosure of Lobbying
8.16 Notices
8.17 Applicability
SECTION 9 DEFAULT PROVISIONS
9.01 Remedies
9.02 Foreclosure
SECTION 10 AGREEMENT TERM
SCHEDULE OF EXHIBITS AND ATTACHMENTS
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/
CDBG AGREEMENT
(FOR NEW CONSTRUCTION)
THIS AGREEMENT is entered into by and between the City of Omaha and the New
Community Development Corporation, a Nebraska non-profit Corporation, 3147 Ames Avenue,
Omaha, Nebraska 68111 (sometimes hereinafter referred to as "NCDC") based on terms,
conditions and provisions as set forth below.
RECITALS:
WHEREAS, the City of Omaha (hereinafter referred to as "the City") 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, the City of Omaha has applied for and received Community Development
Block Grant (hereinafter referred to as "CDBG") Funds under Title I of the Housing and
Community Development Act of 1974, as amended, for the purpose of benefiting low and
moderate income residents, eliminating slums and blight; and for other urgent community
development needs; and,
WHEREAS, the City's FY 2001 Consolidated Submission for Community Planning and
Development Programs (hereinafter referred to as "Consolidated Plan"), outlining priorities,
programs and funding allocations for the 2001 program year, was approved, as amended, on
December 19, 2000,by City Council Resolution No. 3377; and,
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WHEREAS, NCDC has submitted an application that provides for the provision of
Deferred Payment Loans to NCDC for construction financing and development subsidies for ten
(10) new homes and the provision of Deferred Payment Loans to qualified low and moderate
income homebuyers to assist in purchasing newly constructed single-family homes in the
Concord Square Target Area(hereafter referred to as the "Project"); and,
WHEREAS, the Consolidated Plan identified that this Project provides or improves
housing which is determined to benefit low and moderate income persons or addresses slums and
blighted conditions on a spot basis and therefore the Project is consistent with the Consolidated
Plan; and,
WHEREAS, the City wishes to enter into an Agreement with NCDC to assist the City in
utilizing such CDBG funds; and,
WHEREAS, the NCDC Loan Fund was included in the FY 2001 CDBG Program, as
amended, and $450,000.00 was allocated to the Project; and,
WHEREAS, NCDC has been involved in the construction of housing units for low and
moderate income residents within the Concord Square Housing Development Program Target
Area bounded by Clark Street on the North,Nicholas Street on the South, 20th Street on the East,
and 24th Street on the West; and,
WHEREAS, NCDC proposed to construct and market for sale ten (10) homes during the
term of this Agreement; and,
WHEREAS, four (4) of the homes shall be purchased by households whose annual
incomes are at or below 80% of the Median Income by Family Size and any qualified homebuyer
may purchase six (6) of the homes; and,
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WHEREAS, the City will convey to NCDC by Warranty Deed parcels of land sufficient
in number for this housing development project;and,
WHEREAS, it is in the best interest of the City and the residents thereof that the City
enter into an Agreement with NCDC to provide funding in the amount not to exceed
$450,000.00 for the Project.
NOW, THEREFORE, IN CONSIDERATION OF THESE MUTUAL COVENANTS,
the parties do hereby agree as follows:
SECTION 1. DEFINITIONS AND ABBREVIATIONS.
The following terms shall have the following meanings for all purposes in this
Agreement:
1.01 "City" shall mean -the City of Omaha, a Nebraska Municipal Corporation.
1.02 "Developer" shall mean — the New Community Development Corporation, a
Nebraska Non-profit Corporation, (NCDC), 3147 Ames Avenue, Omaha,
Nebraska 68111 (see Exhibit "A").
1.02.1 "NCDC" shall mean the New Community Development Corporation.
1.03 "Director" shall mean- the Planning Director of the City of Omaha.
1.04 "Recipient" shall mean—the City of Omaha.
1.05 "Subrecipient" shall mean - a public or private non-profit agency, authority or
organization receiving CDBG funds to undertake eligible activities. In this
Agreement, the Subrecipient is the New Community Development Corporation.
1.06 "HUD" shall mean—the U.S. Depailrnent of Housing and Urban Development.
1.07 "CDBG Funds" shall mean - that portion of the Community Development Block
Grant Program funds awarded to the City, subject to and conditioned upon actual
receipt of same by the City of Omaha, as may be available to loan during the FY
2001 program year for the use specified herein in an amount not to exceed
$450,000.00 payable from the CDBG Housing Development Program, Agency
No. 200, Fund No. 193, Organization No. 8319, subject to the terms, conditions
and requirements of said Loan Fund Agreement.
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1.08 "Deferred Payment Loan (DPL) for Construction Financing" shall mean - a
$450,000.00 loan fund without interest to the Developer in an amount not to
exceed $35,000.00 in FY 2001 CDBG funds for a pre-sold property as described
herein in Section 4.08, made subject to the terms, conditions and provisions of the
loan agreement under which said loan is made, secured by no less than a second
mortgage/deed of trust, which shall provide, inter-alia, that same shall become
due and payable without interest upon the sale or transfer of ownership of the
property, or portion thereof, or interest therein by the Developer. In the case of a
speculation or model property, the DPL cannot exceed $100,000.00 each, secured
by no less than a second mortgage/deed of trust, as described in Section 4.07
•
herein.
1.08.1 "Construction Financing" shall mean, but is not limited to, bills for
acquisition, rehabilitation, construction, closing costs, profit and
overhead, predevelopment and public improvements costs, financing,
legal, accounting, architectural or construction supervision costs,
developer fees, development subsidies (losses) as described in Section
1.08.2 herein, costs for materials, labor, utility hookups and site
preparation associated with the construction of properties in the Target
Area.
1.08.2 Profit and overhead may not exceed 15% of hard construction cost.
1.08.3 "Development Subsidy Grant" shall mean — the difference between the
actual cost to develop the property and the appraised fair market value of
the property. The Subsidy shall be grants paid directly to the Developer
in an amount not to exceed $10,000.00 on any individual property.
1.09 "Deferred Payment Loan to Assist Homebuyer" shall mean — a loan without
interest of CDBG funds in amounts ranging from $20,000.00 to $35,000.00, as
defined in Section 1.09.1 herein, for a newly constructed property, made subject
to the terms, conditions and provisions of the loan agreement under which said
loan is made, secured by no less than a second mortgage/deed of trust on an
individual property, which shall provide, inter-alia, that same shall become due
and payable without interest upon the sale or transfer of ownership of the
property, or portion thereof, or interest therein by the Owner with ten (10) years
from the date of loan closing.
After ten (10) years, the Deferred Payment Loan amount will depreciate 50%with
the remaining depreciated balance due upon sale or transfer of ownership of the
property. Following the initial depreciation, the Owner may choose to repay the
50% DPL balance over a period of time. Upon written request by the Owner to
repay the DPL balance, the Director will determine the terms and conditions of
repayment..
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1.09.1 Maximum Deferred Payment Loans to Assist Homebuyers may not
exceed the following:
Median Income DPL Amount
80% and Below $35,000.00
81% - 110% $25,000.00
111% - 120% $20,000.00
Over 120% -0-
1.10 "Construction Completion" shall mean—the date the Project has been certified by
the City as meeting all state, federal and local laws, ordinances, regulations and
codes, including but not limited to, Section 8 Housing Quality Standards for
Existing Homes (HQS) as established by HUD, the City of Omaha Property
Rehabilitation Standards, and accessibility requirements, where applicable.
1.11 "Project Completion" shall mean — the date leveraged funds have been received
by the Developer and allocated to the Project, Construction Completion has been
certified and approved by the City, all CDBG funds have been disbursed, and all
units have been purchased by qualified low and moderate income homebuyers.
1.12 "Affordability Period" shall mean—that time period, five years after expiration of
this Agreement, in which Developer shall keep homes affordable. During the
affordability period, the Developer must ensure that CDBG-assisted units
continue to meet occupancy requirements and property standards as described
herein. For this Agreement, the Affordability Period shall commence at loan
closing with the homebuyer and continue until December 31, 2007. In the event
the term of the Agreement would be extended, the affordability period would be
extended for the additional time.
1.13 "Project Close Out" shall mean — the dates all project CDBG funds have been
disbursed and City has completed HUD close out procedures (24 CFR 570.509
and OMB Circular A-110 Subpart A(g)) (Exhibit "B"). The distinction between
Project Close Out and Project Completion is that occupancy requirements are
required to be satisfied for Project Completion. As a result, Project Close Out
shall typically occur prior to Project Completion.
1.14 "Target Area" shall mean - an area bounded by Clark Street on the North,
Nicholas Street on the South, 20th Street on the East and 24th Street on the West.
1.15 "Property" or "Project" shall mean - those ten (10) dwelling units constructed or
those scheduled for construction in the Target Area.
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1.16 "Low and Moderate Income Family" shall mean - a family whose annual income
does not exceed 80 percent of the median income for the Omaha NE-IA
Metropolitan Statistical Area as determined by HUD (Exhibit "C".).
1.17 "CDBG shall mean - that portion of the Community Development Block Grant
awarded to the City, subject to and conditioned upon actual receipt of same by the
City of Omaha, as may be available to loan during the FY 2001 program year for
the use specified herein in an amount not to exceed $450,000.00, subject to the
terms, conditions and requirements of said Loan Fund Agreement.
1.18 "Client" shall mean - a qualified participant making application to NCDC
Housing Development Loan Program.
1.19 "Authorized Projects" shall mean—those projects selected by the NCDC staff and
approved by the Director.
1.20 "Program Income" shall mean - the gross income received by the Recipient or
Subrecipient and directly generated from the use of CDBG funds (24 CFR
570.500). When such income is generated by an activity that is only partially
assisted with CDBG funds, the income shall be prorated to reflect the percentage
of CDBG funds used (see Exhibit "D" attached hereto and incorporated herein by
this reference as though fully set forth). Any program income fund received
during the term of this Agreement shall be returned to the City within thirty (30)
days of receipt and prior to any additional distribution of CDBG funds.
SECTION 2. RESPONSIBILITIES OF DEVELOPER.
2.01 Overall Project Performance
2.01.1 The Developer shall use the $450,000.00 CDBG funds for the new
construction of ten (10) single-family properties in the Target Area and
the marketing and selling of approximately Six (6) of the properties to
qualified low and moderate income homebuyers whose annual incomes
are 80% and below the Median Family Income. Any qualified
homebuyer may purchase the remaining four (4) properties (Exhibit
IIC"")
2.01.2 Total Project Total Assisted Total Low/Moderate
Units Units Income Units
10 10 4
2.01.3 Number of Low/Moderate Maximum Percent of Area
Households Median Income Permitted
4 80%
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2.01.4 Number Above Low/Moderate Maximum Percent of Area
Households Median Income Permitted
6 None
2.02 Project Budget
2.02.1 The Developer asserts that the funding sources and amounts listed below
are committed as of this date or will be committed to the Project during
the term of this Agreement. Private funding for this project shall meet
or exceed the CDBG participation.
FY 2001 CDBG $ 450,000.00
Private Funds 1,120,000.00
Estimated Project Cost $1,570,000.00
2.03 Term of the Agreement
2.03.1 This Agreement shall be in full force and effect and shall end on
December 31, 2002. Services of the Developer shall start effective the
date of the proceed order issued by the City and Levels of Project
Performance stated in Section 2 herein shall be completed as of
December 31, 2002. The Planning Director may extend the term of this
Agreement, but in no event shall the date extend beyond July 1, 2003.
SECTION 3. CONDITIONS FOR RECEIPT OF CITY FINANCING.
3.01 Subject to and conditioned upon actual receipt of same, the City agrees to convey
by Warranty Deed platted vacant lots in the Target Area to NCDC for the sum of
One Dollar($1.00) and other valuable considerations. The lots conveyed shall be
free of any and all encumbrances. The number of lots conveyed shall be
sufficient in number to enable the construction of ten(10) single family homes.
3.01.1 The Developer shall reconvey to the City any unused lots and/or parcels
of land which have not been utilized, through the performance of this
Agreement, upon the date the parties reach mutual decision to terminate
this Agreement and before full development of the project or upon the
expiration date of this Agreement,whichever date or event first occurs.
3.02 In no event shall the City assume any obligation to make any or all of the above-
referenced funding available, nor shall the City incur any liability hereunder,
unless and until the Developer has submitted for and received the prior approval
of the Director of all of the documents listed below.
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3.02.1 Property Insurance. Developer shall procure and maintain, at a
minimum, fire and extended coverage insurance in an amount sufficient
to protect the City's interest in the property during the term of the
Agreement and financing security documents (OMB Circular A-110)
(Exhibit "B"). The insurance policy shall include the City of Omaha as
an additional insured. Written evidence of such insurance shall be
submitted to the City for approval. In the event of damage of the
property, any insurance proceeds are to be applied, at the discretion of
the Director, to the reconstruction of the property or repayment, in full,
of the funding.
3.02.2 Contracts. The Developer shall submit duly executed contracts for all
Construction Work to the Director for approval prior to the start of
construction.
3.02.3 Performance and Labor Material Payment Bond and/or an Irrevocable
Letter of Credit. Exempt for this Project.
3.02.4 Evidence of Leveraged/Matching Funds. Developer shall provide
written evidence that funds detailed in the Project Budget described in
Section 2.02.1 herein have been committed or secured for this Project.
3.02.5 Plan Submissions. Developer shall submit all plans, working drawings
and/or specifications necessary or incidental to this Project to the
Director for review and approval.
3.02.6 Affirmative Marketing Plan. A copy of the Developer's and its
subcontractors' affirmative action plans shall be submitted to the City's
Contract Compliance Officer for review and approval.
3.02.7 Minority/Women Owned Business Enterprise Plan. Developer shall
submit to the Director for his review and approval a minority and
women business participation plan which discusses economic
development and employment opportunities. These plans shall ensure
that the Developer and its subcontractors will make their best efforts to
ensure that construction services, contracts and employment
opportunities are affirmatively marketed to women and members of
minority groups.
3.02.8 Eligible Contractors. Developer shall obtain a certificate from each
contractor or subcontractor to be used on this Project to the effect that
each contractor or subcontractor has not been disbarred or disqualified
by HUD (24 CFR Part 5 and 24 CFR 570.609). The Director shall
approve all contractors and subcontractors prior to being hired by the
Developer.
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3.02.9 Property Security. Developer shall execute a deed of trust, promissory
note or any other document to secure the City's interest in the Property.
3.02.10 Funding Compliance Deadline. In the event that all conditions of
funding are not met on or before July 1, 2001, then this Agreement shall
automatically become null and void and the City shall not be deemed to
have assumed any obligation or liability hereunder. Upon the sole
discretion of the Director, this date may be extended up to December 31,
2002.
3.02.11 Use Restrictions. Developer agrees that each of the housing units
developed pursuant to this Agreement:
a) is the principal residence of the owners at the time of purchase;
and,
b) is subject to the repayment/recapture provisions of the Deferred
Payment Loan Deed of Trust and Promissory Note, including the
terms requiring payment in accordance with Section 1.08 and 1.09
of this Agreement.
3.02.12 Contractors' Insurance and Workers' Compensation. The Developer or
its contractors and subcontractors shall submit certificates of Insurance
in favor of the City for review and approval by the Director. The
insurance coverage shall include, at a minimum, $200,000.00 bodily
injury or death, $200,000.00 property damage, $200,000.00 pollutant
liability for lead reduction work, if applicable, and Workers'
Compensation
SECTION 4. PROJECT RESPONSIBILITIES OF THE DEVELOPER.
4.01 Eligible Use of Funds. The Developer does hereby certify, contract and agree that
any and all funding obtained or made available hereunder shall be used solely and
exclusively for the purposes described herein.
4.02 Terms and Conditions. The Developer shall abide by all terms and conditions of
this Agreement and shall be responsible for the security and maintenance of the
sites in the Target Area conveyed by the City for this housing development
Project.
4.03 Breach of Agreement. If through breach of this Agreement the Developer fails to
maintain the occupancy, affordability and use restrictions of this Agreement, all
CDBG funds previously provided to the Developer through fulfillment of this
Agreement shall promptly be returned to the City.
4.04. Lien Waivers. Developer agrees to obtain the appropriate lien waivers prior to
each construction payment.
4.05 Ineligible Costs. The Developer shall be responsible for payment of any Project
costs that exceed those specified in this Agreement.
4.05.1 Eligible Costs. The Developer shall not request disbursement of funds
under this Agreement until the funds are needed for payment of eligible
costs as described herein, financing for each single family house at no
interest as follows.
4.06 Security for DPL. Partial mortgage or deed of trust financing to qualified low and
moderate income buyers through the use of CDBG Deferred Payment Loans shall
be secured by no less than a second mortgage or deed of trust on individual
properties and shall not exceed $35,000.00 for a newly constructed property in
accordance with the Subrecipient Underwriting Guidelines (Exhibit "E"). The
DPL amount will be provided in accordance with the Deferred Loan
Deteiiiiination Process attached hereto as (Exhibit "F"). Both Exhibits are
attached hereto and incorporated herein as though fully set forth.
4.07 Speculation or Model Home. In the case of speculation or model houses (houses
for which no buyer is identified and obligated to purchase), such construction
financing shall be made to the Developer without interest, in an amount as
described in Section 1.08 herein, for the cost of constructing two houses. Such
loan shall be secured by no less than a second mortgage/deed of trust and become
due and payable to the City at the loan closing as each individual house is sold.
The Developer may construct at least one additional housing unit for each
speculation or model-housing unit as each house is sold, subject to the limitations
on outstanding City Construction Financing se forth in Section 1.08 herein.
4.08 Pre-sold Houses. In the case of pre-sold houses (houses in which a buyer has
been identified, approved for partial mortgage financing, and has become
obligated to purchase regardless to whether the sale has been closed), such
construction financing shall be made without interest in an amount not to exceed
$35,000.00 in accordance with Section 1.08 herein and the Subrecipient
Underwriting Guidelines (Exhibit"E"), attached hereto and incorporated herein as
though fully set forth..
4.09 Lead-Based Paint Prohibition. Developer shall not use lead-based paint in the
performance of this Agreement, including the performance of any subcontractor
(24 CFR 570.608 and 24 CFR 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
Developer further agrees to abide by Federal requirements regarding lead-based
paint poison prevention.
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0 -
4.10 Ongoing Property Restrictions. During the construction period and the term of
this Agreement and that of any grant, deed of trust/mortgage, covenant
documents, the Developer shall:
4.10.1 Maintain the Property in a safe and sanitary conditions at all times.
4.10.2 Ensure that all real estate taxes and special assessments are paid and
kept current.
4.10.3 Maintain insurance against loss or damage to the Property in an
aggregate amount sufficient to protect the City's interest in the Property.
Such property insurance policy must be properly endorsed showing the
City as an additional insured. In the event of loss or damage, the
Developer shall provide immediate written notification to the City of
any loss. Proceeds from any claim under this policy may, at the
discretion of the Director, be either applied to restore or replace the
improvements damaged or be paid to the City to satisfy the Developer's
obligation to the City under the terms of this Agreement.
4.11 Davis-Bacon Labor Standards. Developer agrees to comply with the requirements
of the Secretary of Labor in accordance with the Davis-Bacon Act as amended
(40 U.S.C. 276a-a-7), the provisions of Contract Work Hours, the Safety
Standards Act, the Copeland "Anti-Kickback" Act (18 U.S.C. 874 and 40 U.S.C.
276(c) and all other applicable federal, state and local laws and regulations
pertaining to labor standards insofar as those acts apply to the performance of this
Agreement. Developer shall comply with and ensure that all bid documents,
contracts, and subcontracts contain the HUD-4010 Federal Labor Standards
provisions and applicable Department of Labor Wage Determination (Exhibit
"G"), attached hereto and incorporated herein by this reference as though fully set
forth). In addition, Developer shall certify that no contractor is ineligible for
federally assisted work. The wage determination may be modified to keep it
current. All actions modifying a general wage determination apply unless notice
of such action is published less than 10 days before contract award for the Project.
The City will send these modifications to the Developer as needed.
4.12 Property Standards. During the construction period, the Developer shall ensure
that all work performed and the Construction Work meets all state, federal and
local laws, ordinances, regulations and codes, including but not limited to, Section
8 Housing Quality Standards for Existing Homes (HQS) as established by HUD,
the City of Omaha Property Rehabilitation Standards, and accessibility
requirements,where applicable.
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4.12.1 After completion of Construction Work, the Property must comply with
all appropriate City codes and ordinances, Federal Section 8 Housing
Quality Standards (24 CFR 570.202 and 24 CFR 570.606) and with fire
safety codes (24 CFR 570.02), City of Omaha Property Rehabilitation
Standards and accessibility requirements, where applicable.
4.13 Affirmative Marketing Policy. The Developer agrees to comply with the City's
Affirmative Marketing Policy, attached hereto as Exhibit "H" and incorporated
herein by this reference as though fully set forth. These affirmative marketing
procedures must be employed in the advertising and marketing of this Project. In
marketing, the Developer shall also conform to the nondiscrimination provisions
hereinafter set forth.
4.14 Maintenance of Property. The Developer shall maintain the Property in a safe and
sanitary condition to the extent possible during the construction phase of the
Project. In addition, the Developer shall maintain the property at all times in a
safe and sanitary condition until the loan closing for each sold house. Upon sale
of a house, the Developer shall have no further responsibility for such housing
unit and real estate lot.
4.15 National Environment Policy Act of 1969. The Developer shall not begin any
rehabilitation or construction of a Property until it receives approval by the City
that all provisions of the National Environmental Policy Act of 1969 (NEPA) and
related authorities listed in HUD's implementing regulations at 24 CFR Parts 50
and 58 have been met regarding said Property.
4.16 Homebuyer First Mortgage/Deed of Trust Financing. The Developer shall assist a
first mortgage/deed of trust lender to ensure that all loans are made in compliance
with first mortgage or deed of trust lending institution's policies and underwriting
standards similar to content to the Subrecipient Underwriting Standards attached
hereto as Exhibit "C" and incorporated herein by this reference as though fully set
forth.
4.17 Homebuyer Counseling Services. The Developer shall ensure that clients referred
to Family Housing Advisory Services (FHAS) for housing counseling services
identical to that received by qualified or approved clients.
SECTION 5. GENERAL ADMINISTRATIVE REQUIREMENTS OF DEVELOPER.
Developer agrees to comply with the following requirements:
- 12 L
5.01 Financial Management.
5.01.1 Accounting Standards. The Developer agrees to comply with OMB
Circular A-110 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. (Exhibit
"B", attached hereto and incorporated herein as though fully set forth).
5.01.2 Cost Principals. The Developer shall comply with the requirements and
the standards of OMB Circular No. A-122, "Cost Principles for the
Nonprofit Organizations" (Exhibit "I"), and with the requirements of
OMB Circular A-110 (Exhibit `B"). Both Exhibits are attached hereto
and incorporated herein as though fully set forth.
5.01.3 Audits. The Developer shall comply with all provisions and regulations
of Program and have an annual audit completed in compliance with
OMB Circular A-133. A copy of the audit shall be provided to the
Director. OMB Circular A-133 is attached hereto as Exhibit "J", and
incorporated herein as though fully set forth. 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 $300,000.00 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 $300,000.00 in
each fiscal year.
5.01.3.1 Any deficiencies rioted in audit reports must be fully cleared by
the Developer within 30 days after receipt of audit by the
Developer. Failure of the Developer 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.
5.02 Documentation and Record-Keeping. All Developer records with respect to any
matters covered in this Agreement shall be made available to the City, its
designees or the Federal Government, at any time during normal business hours,
as often as the City deems necessary, to audit, examine, and make excerpts or
transcripts of all relevant data. Any contract entered into by the Developer with
any contractor or subcontractors shall include this Section to ensure said access.
5.03 Records. The Developer shall submit to the City the following reports in
accordance with 24 CFR 570.506 with the submission timelines as specified.
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5.03.1 Construction Progress Reports. The Developer shall provide reports to
the Director (AIA G702 Form or comparable document) describing the
progress of construction, and any significant problems and/or delays in
construction on this project. Reports will be submitted at the time of
each pay request, or by the 15t'' day of each month if no pay request is
made before the 15th day of the month (or upon written request from the
Director, but no more frequently than monthly). The progress reports
are required until such time as all Construction Work is completed and
the City issues the final payment of construction to the Developer.
5.03.2 Occupancy Report. The Developer shall provide to the Director an
initial report, and annual reports thereafter for the period of affordability,
identifying the occupants/occupancy of the property, annual income of
occupants, and respective rents and utilities charged for the units in the
property. Annual reports shall be due January 31 and shall include all
infoiivation up to and including the end of the previous calendar year.
Attached as Exhibit "K", and incorporated herein by this reference as
though fully set forth, is a copy of the requisite form.
5.03.3 For each household or individual occupying a unit/bedroom in the
Property, the Developer shall retain the following records for five (5)
years after the required period of affordability as specified in Section
1.12 of this Agreement:
5.03.3.1 name(s) of buyer(s)
5.03.3.2 address of property
5.03.3.3 household income as a percent of Median Family Income
(MFI) as determined by HUD, income verification forms
used in determining MFI including the City's Asset Form
(Exhibit "C")
5.03.3.4 household size
5.03.3.5 gender of head of household member
5.03.3.6 name and age of each household member
5.03.3.7 race/ethnicity of head of household
5.03.3.8 disability status of any household member
5.04 Financial Status Reports. Developer shall submit financial status reports (OMB
Circular A-110) (Exhibit "B") from time of loan closing until project completion
date as defined herein. These reports shall be due 15 calendar days from the end
of the calendar year quarter. Attached as Exhibit "L", and incorporated herein by
this reference as though fully set forth, is a sample financial status report.
5.05 Record Retention. The Developer, its contractors and subcontractors shall
maintain such records and accounts, including 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
- 14
authorized representatives, or any duly authorized representatives of the City, as
approved by the Director, shall have access to any books, documents, papers,
records and accounts of the Developer, Contractor, 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 after expiration of the period of affordability (OMB Circular A-110)
(Exhibit "B").
5.06 Personnel and Participant Conditions.
5.06.1 Contract Compliance Clause.
5.06.1.1 Section 10-192 of the Omaha Municipal Code, Equal
Employment Opportunity Clause. The Developer and its
contractor shall not discriminate against any employee or
applicant for employment because of race, religion, color, sex,
age, 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 Developer and its
contractor 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.
5.06.1.2 The Developer and its contractors 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,handicap or familial status.
5.06.1.3 The Developer and its contractors 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.
5.06.1.4 The Developer and its contractors 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
- 15
information required by Sections 10-192 to 10-194, inclusive,
and shall permit reasonable access to his records. Records
accessible to the Human Relations Director shall be those
which related to paragraphs 5.06.1.1 through 5.06.1.7 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.
5.06.1.5 The Developer and its contractors shall take such actions with
respect to any subcontractor as the City may direct as a means
of enforcing the provisions of paragraphs 5.06.1.1 through
5.06.1.7 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.
5.06.1.6 The Developer and its contractors shall file and shall cause his
subcontractors, if any, to file compliance reports with the
Developer 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 Relations Director. Compliance
reports filed at such times as directed shall contain information
as to the employment practices, policies, programs and
statistics of the Developer, contractor and his subcontractors.
5.06.1.7 The Developer and its contractors shall include the provisions
of paragraphs 5.06.1.1 through 5.06.1.7 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 190,
Section 10-192; Ord. No. 35344, Sections 1, 9-26-00,
Executive Order 11246).
5.06.2 Living Wage Contract Clause. The Developer and its contractors
acknowledge that if this contract is over $75,000.00 it may be subject to
the Living Wage Ordinance of the City of Omaha. The Ordinance
requires that, unless specific exemptions apply or a waiver is granted, all
employers under certain contracts shall provide payment of a minimum
living wage to employees. Included among exemptions set out in
- 16 -
Section 10-319 of the Omaha Municipal Code are nonprofit
corporations, governmental entities, contracts funded by community
development block grant funds and others. Under the provisions of the
Omaha Living Wage Ordinance, the City has the authority, under
appropriate circumstances, to terminate a contract and to seek other
remedies as set forth therein, for violations of the Ordinance. The
Developer and its contractors further acknowledge that a copy of the
Ordinance and the Interpretive Regulations is available upon request
from the City of Omaha, Living Wage Compliance Officer, Room 1003,
1819 Farnam Street, Omaha, Nebraska 68183, Attention: Joe Couch,
Phone Number(402) 444-5409.
5.06.3 Workers' Compensation. The Developer shall provide Workers'
Compensation Insurance coverage for all employees involved in the
performance in this Agreement.
5.06.4 Employment Insurance and Bonding. The Developer shall purchase a
blanket fidelity bond covering all employees, at a minimum, in an
amount equal to cash advances from the City. The Developer shall
comply with bonding and insurance requirements of Attachment B of
OMB Circular A-110, Bonding and Insurance.
5.06.5 Minority Business/Women Business Enterprise Plan. The Developer
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 (Si%) owned and controlled by minority group
members or women.
5.06.6 Section 3 — Employment of Low-Income Persons (Section 3 of HUD
Act of 68, as amended, 1 U.S.C. 170lu1). The Developer 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.
5.06.7 Conflict of Interest. The Developer agrees to abide by the provisions of
24 CFR 570.611 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
Developer further covenants that in the performance of this Agreement
no person having such a financial interest shall be employed or retained
- 17 -
•
by the Developer 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.
SECTION 6. DEVELOPER'S COMPLIANCE WITH OTHER FEDERAL REGULATIONS.
6.01. Environmental Review. The Developer agrees to comply with the following
regulations insofar as they apply to the performance of this Agreement:
6.01.1 Clean Air Act, 42,U.S.C., 1857, et seq.
6.01.2 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.
6.01.3 Environmental Protection Agency (EPA) regulations pursuant to 40
C.F.R. Part 50, as amended.
6.01.4 National Environmental Policy Act of 1969.
6.01.5 HUD Environmental Review Procedures (24 CFR Part 58).
6.01.6 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:
6.01.7 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 CFR, Part 800, Advisory Council on Historic
Preservation Procedures for Protection of Historic Properties, 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 fifty years
old or older or that are included on a Federal, State or local historic
property list.
6.02 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 resident owners, 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
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immediately notify the City in writing of the circumstances surrounding said
displacement.
SECTION 7. RESPONSIBILITIES OF THE CITY.
7.01 Performance Monitoring. The City will monitor the performance standards of the
Developer as stated herein. 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 Developer within a reasonable period
of time after being notified by the City, contract suspension or termination
procedures will be initiated.
7.02 Payments. It is expressly agreed and understood that the total amount to be paid
by the City under this Agreement shall not exceed $450,000.00 in CDBG funds.
The payment of these funds is subject to and conditioned upon actual receipt by
the City of the same. Should adequate funding not be available to the City, the
City shall notify the Developer as soon as reasonably possible and the Agreement
will be terminated.
7.02.1 Funds Allocated to the Developer. Funds allocated to the Developer
shall be in the form of a deferred payment loan for the purposes set forth
in this Agreement. Payments will be contingent on Duties and
Conditions specified herein. Drawn downs for the payment of eligible
expenses shall not be made until the funds are needed based upon the
value of the construction, administration, or professional services work
completed at the time the payment request is made.
7.02.2 Obligation for Payment. In no event shall the City become obligated to
make any payments for any work performed, materials furnished,
expense incurred, or any other expenditure of any kind whatsoever,
unless same is expressly included in this Agreement, nor shall the City
incur any liability hereunder, unless and until the Developer has timely
and fully complied with its duties and obligations hereunder. No
payments shall be made for any work, labor, material or expenses
incurred the Director deems to be:
7.02.2.1 Not in conformance with applicable state, federal and/or local
laws, including but not limited to, the building, plumbing
and/or electrical codes; or,
7.02.2.2 Not in conformance with all plans, working drawings and/or
specifications as approved.
7.02.2.3 Unacceptable or substandard; or,
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7.02.2.4 Not in accordance with this Agreement or related contracts as
approved for this Project.
7.03 Progress Payments. Progress payments and final payment, as may be authorized
by the Director or his designated representative, are subject to:
7.03.1 Receipt, verification and approval of an AIA Document G702
"Application and Certificate for Payment" or comparable document,
such document being prepared by the Developer's architect or
authorized person and approved by the Developer and the City
rehabilitation specialist before being submitted to the Planning
Department for payment.
7.03.2 Receipt of requisite financial status reports.
7.03.3 A 10% retainage, held by the City until all punch list items have been
corrected to the satisfaction of the Developer and the City rehabilitation
specialist assigned to this project.
7.04 Eligible Operating Costs. The City will determine whether Developer may be
eligible to receive payment towards profit and overhead in an amount not to
exceed 15% of the new construction costs of the project.
7.05 Evidence of Loss. The City will determine whether the Developer may receive
reimbursement for eligible expenses for a newly constructed property. The
reimbursement may not exceed the development subsidy grant described in
Section 1.08.2 herein. The Developer will issue a disposition of funds statement
that must be certified and submitted to the City along with written documentation
of costs.
7.06 Inspections. The City may perform periodic inspections at any reasonable time to
ensure compliance with this Agreement. The City shall perform final inspection
to certify Project completion prior to final disbursement of loan/grant proceeds.
7.07 Technical Assistance. The Director or City staff shall assist the Developer in the
same manner the Director provides technical assistance to other developers during
the construction phase to ensure compliance with such housing quality standards
and property rehabilitation standards.
SECTION 8. MUTUAL AGREEMENTS BETWEEN CITY AND DEVELOPER.
8.01 Release of Information Laws. The Developer 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
- 20 -
humiliate any person. The information released shall be used for the limited
purposes stated, and the Developer further agrees to indemnify and hold harmless
the City of Omaha for any liability arising out the improper use by the Developer
of information provided.
8.02 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.
8.03 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.
8.04 Independent Contractor. Nothing contained in this Agreement is intended to, or
shall be construed in any manner, as creating or establishing the relationship of
employer/employee between the parties. The Developer shall at all times remain
an independent contractor with respect to the services to be performed under this
Agreement. The City shall be exempt from payment of all Unemployment
Compensation, FICA, retirement, life and/or medical insurance and Worker's
Compensation Insurance as the Developer is an Independent Contractor.
8.05. Project Roles. The Developer shall ensure that the Project meets the objectives
stated herein. The City has selected the Developer to assist in the Project since it
is consistent with the Consolidated Plan. With respect to this Project, the City is
not acting as the Developer's architect or engineer. The City makes no
warranties, express or implied, as to the Construction Work. The City owes no
duty to the Developer or any other persons that shall arise because of any
inspection of the premises by the City's agents or employees.
8.06 Captions. Captions used in this Agreement are for convenience and are not used
in the construction of this Agreement.
8.07 Merger. This Agreement shall not be merged into any other oral or written
agreement, lease or deed of any type.
8.08 Modification. This Agreement and any related documents securing the financing
contain 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.
- 2 10.
1 -
8.09 Assignment. The Developer may not assign its rights or obligations under this
Agreement without the express prior written consent of the City; except that the
Mayor may, without City Council approval, approve, in writing, the assignment to
a limited partnership so long as the Developer is and remains a general partner.
8.10 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 upon written direction from authorized
representatives of the parties.
8.11 Termination. This Agreement may be suspended or terminated in accordance
with 24 CFR 85.43, Enforcement or CFR 85.44, Termination for Convenience
(Exhibit "M", attached hereto and incorporated herein by this reference as though
fully set forth). 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.
8.12 Reversion of Assets. Upon the expiration of this Agreement, the Developer shall
transfer to the City of Omaha any CDBG funds on hand at the time of expiration
and any accounts receivable attributable to the use CDBG funds (24 CFR
570.503(b)(8)). Additionally, the Developer shall ensure that any real property
under the Developer's control that was acquired or improved in whole or in part
with CDBG funds in excess of$25,000.00 is either:
8.12.1 Used to meet on the national objectives in 4 CFR 570.208 until ten (10)
years after expiration of the Agreement, or such longer period of time as
determined appropriate by the City; or,
8.12.2 Is disposed of in a manner which results in the City being reimbursed in
the amount of the current fair market value of the property less any
portion thereof attributable to expenditures of non-CDBG funds for
acquisition of, or improvement to, the property. Such reimbursement is
not required after the period of time specified in accordance with Section
8.12.1 above.
8.13 Indemnification. The Developer shall indemnify and hold the City harmless from
and against: (1) any and all claims arising from contracts between the Developer
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.
8.14 Unenforceable Provisions. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be in effect to
the extent of such prohibition or enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision in
any other jurisdiction.
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8.15 Disclosure of Lobbying. The Developer shall certify and disclose, to the best of
its knowledge and belief, that:
8.15.1 No Federal appropriated funds have been paid or will be paid, by or on
behalf of the Developer, 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,
continuation, renewal, amendment or modification of any Federal
contract, grant, loan, or cooperative agreement.
8.15.2 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 of
employee of Congress, or an employee of a Member of Congress in
connection with this Federal contract, grant, loan, or cooperative
agreement, the Developer shall complete and submit standard Form-
LLL, "Disclosure Form to Report Lobbying", in accordance with its
instructions.
8.15.3 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.
8.16 Notices. The City and the Developer hereby expressly agree that for purposes of
notice, including legal service or process, during the term of this Agreement, and
for the period of any applicable statute of limitations thereafter, the following
named individuals shall be authorized representatives of the parties:
1) City:
City of Omaha
Planning Department
1819 Farnam Street, Room 1111
Omaha,Nebraska 68183
2) Developer:
Michael B. Maroney, President/CEO
New Community Development Corporation,
A Nebraska Non-profit Corporation
3147 Ames Avenue
Omaha,Nebraska 68111
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In the event the authorized representative changes during the term of this
Agreement, prior written notice will be given to the respective party at the address
noted above.
8.17 Applicability. This Agreement shall be binding upon the parties hereto and shall
run with the Property.
SECTION 9. DEFAULT PROVISIONS.
9.01 Remedies. If, through any cause, the Developer 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 Developer liable for any damages caused to the City by reasons of such
default and termination.
9.02 Foreclosure. In the case of a foreclosure or upon receipt of a Deed in Lieu of
Foreclosure, the Developer may buy out the first mortgage/deed of trust and the
City's second mortgage/deed of trust using "CDBG Funds". No additional
"CDBG Funds" will be disbursed to rehabilitate the property. After the
rehabilitation of the property, the maximum DPL to assist the homebuyer in
purchasing the property is $35,000.00 on a foreclosed newly construction
property (See Section 1.09.1 herein); however, the Developer may be eligible to
receive a Subsidy Grant as described in Section 1.08.2 herein.
SECTION 10. AGREEMENT TERM.
This Agreement shall be in full force and effect through December 31, ,2002. The
Director may extend this date but in no event shall the term of the Agreement extend beyond
July 1, 2003.
L
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated below:
•
ATTEST ,t'' ' , CITY OF DJ/AB• : 0
•
LERK OF THE CITY OF OMAHA MAYOR OF THE CITY OF OMAHA
/pei,
WITNESS: NEW COMMUNITY DEVELOPMENT
CORPORATION,
a Nebraska Non-profit Corporation
AA-1( OC ' i)4)A-Vit) By:
Michael B.Maroney, resident/CEO
afA,Le, /A, g60 / /' /
Date Date
APPROVED AS TO FORM:
ASSISTANT CITY ATTORN Date
P:\PLN1\1690sap.doc
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-
SCHEDULE OF EXHIBITS
Exhibit Agreement Location Description
A 1.02 Article of Incorporation, Bylaws, Corporation
Resolution, Board Members
B 1.13, 3.02.1, 5.01.1, OMB Circular A-110
5.03.3.3, 5.04 and 5.05
C 1.16, 2.01.1 Median Income by Family Size and Asset Foiiu
D 1.20 Definition—Program Income
E 4.06, 4.08 Subrecipient Underwriting Standards
F 4.06 Deferred Payment Loan Determination Process
G 4.11 Davis-Bacon &HUD-4010
H 4.13 Affirmative Marketing Policy
. I 5.01.2 OMB Circular No. A-122
J 5.01.3 OMB Circular No. A-133
K 5.03.2 Occupancy Reports (Demographic Form)
L 5.04 Financial Status Report
M 8.11 Termination—CFR 85.43 — 85.44
ATTACHMENTS '
1 City of Omaha Definition of Income
2 Equal Opportunity
3 Section 3 Clause
4 Minority and Women Business Plan
P:\PLN1\1690sap.doc
L
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i-t 0 _1 e — 9 1 M O N 1 5 = . 7' _ 0 2
I ('.
EXHIBIT "A"
•
ARTICLE OF 1NCORP'ORATION
OP
NEW COMMUNITY DEVELOPMENT ,CORPORATION •
•
The undersigned citizen of the tntei - of Nebraska, acting. an
Incorporator of a corporation organized under the Nebraska
Nonprofit Corporation Act, adopts the following Articles of
Incorporation:
ARTICLE I.
NAME
The name of this corporation in: New Community Development
Corporation.
ARTICLE 11.
.DURATION
The corporation shall have perpetual existence.
ARTICLE III.
MEMBERS
The corporation shall havA no members.
ARTICLE IV.
PURL'OL tab
The corporation is organized exclusively for charitah)e
purposes, including, for such purposes, the making of distributions
to orgnnt?ntionn that qualify as exempt organization_^. •under Section
50l(c) (3) of the Internal Revenue Code nr corresponding section of
any future Federal Tax Code, and also including, without
limitation, the devolopacnt, construction, financing, and
- management of affordable housing for low-income persons, and any
. lawful activity appropriate -or otherwise related to the
accoaplishnent of such purposes.
ARTICLE V.
• ORGANIZATION 7..Nn OPERATION IH AUPPORT OF
UNITED METHODIST COMMUNITY CENTERS, INC.
The corporation is hereby organized, and shall at All titles be
operated, exclusively for the benefit of, to perform the functions
of, or to parry out the purposea of United Methodist Community
Centers, Inc. of Omaha, Nebraska, an existing Section 501(c) (1) •
corporation of the kind described in Sections 509(a) (1) and
09(n) (2) of the Internal Revenue Code, and shall At all times be
operated, supervised or controlled- by or in connection with said
United Methodist Community Centers, Inc_ The corporation shall
never be controAed by one or more disqualified persons (as defined
in Section 444G of the Internal Revenue Code), other than as may be
exprutuly permitted by the provisions of Section 509(a) (3) (C) of
• the Code, or corresponding section of any future Federal Tax Code.
ARTICLE VI.
BOARD OF DIRECTORS
The management and direction of this corporation shall be
Vested in its Board of Directors,
The nuAber of Directors oC the corporation shall be fixed by
the bylaws of the corporation, but shall not be lees than three
(3) . The names and addresses of tho persons who shall nerve an the
initinl nirectnrn Are ns follows: _
Deborah L. Brockman
FAHILY HOUSING ADVISORY SERVICES, INC.
2416 Lake Str.e.et
Omaha, Nebraska 68111
Rodney A. Conner
AT&T NETWORK RY?TE1-S
120th & ^'I" Streets
• Omaha, Nebracka 68137
Chnrlen P. Fike
SCHMID, MOONEY 4 FREDERICK, PC
11404 Wet Dodge !toad
700 First National Plnzn
Omnhn, Nel,ragka 68154
Delmar R. Givehand, Jr.
HUMAN COMMUNITY RELATIONS DRPARTHRNT
OMAHIA PUAr,TC 4CH0OL$
3215 Cueing Slreext
Omaha, Nebraska 68131
Michael 11. Mnrnnay
UNITED METHODIST COMMUNITY CENTERS, INC.
2001 North 35th Street
• Omaha, Nebraska 68111
Charles A. Peters
MEGA CORPORATION
12046 Pacific street
Omaha, Nebraska 68154
ARTICLE VIT.
POWERS
Subject to the express limitation that the corporation shall
neither have nor exercise any power, nor shall it engage directly
or indirectly in any activity that shall invalidate its Etatulc (a)
as a corporation that is exempt from federal income taxation es nn
organization described in Section 5U1(c) (3) of the Internal Revenue
Code, or corresponding section of any future Federal Tux Cods, or
(b) ao a corporation to which contributions are deductible under
Section 170(c) (2) or the Internal Revenue Codo, or corresponding
section of any future Federal Tax Code, the corporation shall have
and possess all powers and rights conferred upon corporations by
the Nebraska Nonprofit Corporation Act and any enlargement of such
powers conferred by subsequent legislative clots/ and, in addition,
the corporation shall have and exercise all powers and rights, net
otherwiso denied nonprofit corporations by the laws of the State of
Nebraska, as are necessary, auitabla, proper, convenient or
expedient to the attainment of the. purpopeo set forth in Article
IV. hereof.
ARTICLE VIII.
LIMITATIONS 01 POWER
No part of the net earnings of the corporation shall inure to
the benefit of, or be distributable to its members, directors,
officers or other private persona, except that the corporation
shall be Authorized and empowered to pay reasonable compensation
for service, rendered and to make payments and distributions in
furtherance of the purposes set forth in these Articles. NO
substantial part of the activities of the corporation shall be the
carrying on of propaganda, or otherwise attempting to influence
legislation, and the oorporation shall not participate in, or
intervene in (including the publishing or distribution of
otatamenta) any political campaign on behalf of or in opposition to
any candidate for public office. NotWithstanding any other
provision of these Articles, the corporation shall not carry on any
activities not permitted to he carried on (a) by a corporation
exempt from :Federal Income Tax under Section 5U1(c) (3) of the
Internal Revenue Code, or corresponding section of any future
Federal Tar_ Law, or (b) by a corporation, contributions to which
are deductible under Section 170(c) (2) of l_he Internal Revenue Code (JD
or corresponding erection of a future Internal Revenue Code.
Ala.l.CLS IX.
fTgPOSTTTON OP AS5T:TS UPON DT^,SOLUTION
Upon the dieeolution of the corporation, the Board of
Directors shall, attar paying or making provision for the payment
of e11 of the liabilities of the corporation, diepose ;ofall of the
assets or the corporation, exclusively to organizationrs which
qualify under the provisions of section 501(c) (3) of the Internal
Rcvcnuc Code and its regulation, or to a local or state government
or the fedarnl government, or an agency thereof for a public
purpose.
ARTICLE X.
TNTTTAT. RT•'-oTSTRRED OPPTCR ANT) TNTTTAT. RF-GT STRRRT) AOF.NT
The etroct addreec of the initial registered office of the
corporation is 700 First National Plaza, 11404 West Dodge Road,
Omaha, Nebraska 68154.
The name of its initial registered agent at ouch address is
Chart e_n P. Pike.
The Board of Directors by appropriate resolution shall have
the power and authority to change the location of the registered
office of the f_nrporAtion and to change the demignzttion of the
regist.erea agent or the corporation.
•
ARTICLE XI.
• BYLAWS
The initial Bylaws of the corporation shall be adopted by the
Board of Directors and may be amended by tha 'Board of Directors at
any regular or,special meeting called for that purpose.
ARTICLE XII.
AMENDMENT
These Articles of Incorporation may be amended upon adoption
by the Board of Directors of a resolution setting forth the
amendment in the manner provided by law; provided, however, no
amendment of the Art_i r.1 e►_z may be adopted which changes or affects
in any way the exempt t lalu&i of the corporation as an organization
existing exclusively for charitable purposes.
ARTICLE XIII.
• INCORPORATOR
The names and addroccoc of the incorporator is as follows:
•
Address: Charles P. Fiko
SCHMID, 2i00NEY & FREDERICK, V.C.
700 First National Plaza •
71404 Kest Dodge Road
Omaha, Nebraska 68154
TN WITNESS WHEREOF, ' the above and foregoing Articles of
Incorporation are executed this 18th day of November, 1991.
•
Charles P. Pike, Incorporator
-3-
BYLAWS
OF
NEW COMMUNITY DEVELOPMENT CORPORATION
•
TABLE OF CONTENTS
Page
Cover Page i
Table of contents ii
TEXT
ARTICLE I
Offices 1
ARTICLE II
Purposes and Operation in Support of
United Methodist Community Centers, Inc. . . 1
ARTICLE III
Membership 2
ARTICLE IV
Board of Directors 2
Section 1 General Powers 2
Section 2 Number 3
Section 3 Tenure and Election 3
Section 4 Qualifications
4
Section 5 Regular Meetings 4
Section 6 Special Meetings 5
Section 7 Telephonic and Other
Electronic Meetings 6
Section 8 Notice 6
Section 9 Quorum 7
Section 10 Manner of Acting 7
Section, 11 Vacancies 7
Section 12 Informal Action by Directors . 8
ARTICLE V
Officers 8
Section 1 Officers 8
Section 2 Election and Term of Office. . 8
Section 3 Removal. . . . . . . . . . . . 9
Section 4 Vacancies 9
Section 5 President 9
Section 6 Vice President 10
Section 7 Treasurer. . . . . . . . . . . 10
Section 8 Secretary 10
Section 9 Assistant Trdasurers and
Assistant Secretaries. . . . . 11
ARTICLE VI
Committees 11
Section 1 Committees of Directors 11
Section 2 Other Committees 12
Section 3 Term of Office 13
Section 4 Chairman 13
Section 5 Vacancies 13
Section 6 Quorum 13
Section 7 Rules 13
ARTICLE VII
Contracts, Checks, Deposits and Funds 13
Section 1 Contracts 14
Section 2 Checks, Drafts, etc 14
Section 3 Deposits 14
Section 4 Gifts 14
ARTICLE VIII
Books, Records and Fiscal Year 14-15
ARTICLE IX
Seal 16
ARTICLE X
Waiver of Notice 16
ARTICLE XI
Amendments to Bylaws 16
11111
BYLAWS
OF
NEW COMMUNITY DEVELOPMENT CORPORATION
ARTICLE I.
Offices
The principal office of the corporation in the State of
Nebraska shall be located in the City of Omaha, County of Douglas.
The corporation may have such other offices, either within or
without the State of Nebraska as the Board of Directors may
determine or as the affairs of the corporation may require from
time to time.
The corporation shall have and continuously maintain in the
State of Nebraska a registered office, and a registered agent
whose office is identical with such registered office, as required
by the Nebraska Nonprofit Corporation Act. The registered office
may be, but need not be, identical with the principal office in
.the State of Nebraska, and the address of the registered office
may be changed from time to time by the Board of Directors.
ARTICLE II.
Purposes and Operation in Support of
United Methodist Community Centers, Inc.
The corporation is organized exclusively for charitable
purposes, including, for such purposes, the making of
distributions to organizations that qualify as exempt
organizations under Section 501(c) (3) of the Internal Revenue Code
11111
or corresponding Section of any future Federal Tax Code, and also
including, without limitation, the development, construction,
financing, and management of affordable housing for low-income
persons, and any lawful activity appropriate or otherwise related
to the accomplishment of such purposes.
The Corporation shall at all times be operated exclusively
for the benefit of, to perform the functions of, or to carry out
the purposes of United Methodist Community Centers, Inc. of Omaha,
Nebraska, an existing Section 501(c) (3) corporation of the kind
described in Sections 509 (a) (1) and 509 (a) (2) of the Internal
Revenue Code, and shall at all times be operated, supervised or
controlled by or in connection with said United Methodist
Community Centers, Inc. The corporation shall never be controlled
by one or more disqualified persons (as defined in Section 4946 of
the Internal Revenue Code) , other than as may be expressly
permitted by the provisions of Section 509 (a) (3) (C) of the Code,
or corresponding Section of any -future Federal Tax Code.
ARTICLE III.
Membership
The corporation shall have no members, but shall be operated
and managed by its Board of Directors as set forth herein.
ARTICLE IV.
Board of Directors
Section 1. General Powers. The affairs of the corporation
shall be managed by its Board of Directors. Directors need not be
residents of the State of Nebraska or members of the corporation.
-2-
Section 2 . Number. The number of Directors shall be no less
than five (5) nor more than seven (7) .
Section 3 . Tenure and Election. Except as provided
hereafter in this Section 3 , or in Section 11 of this Article,
Directors shall be elected at the annual meeting of directors for
a stated term of two years, or until their successors are elected
and qualified.
Notwithstanding the foregoing, the Directors shall be
classified into two classes. If the total number of Directors
authorized is even, the Directors shall be divided equally between
each class. If the total number of Directors authorized is odd,
the class shall be arranged so that Class II has one more Director
than Class I.
The Class I Directors shall serve until the election of their
successors at the annual meeting of Directors in 1993. The Class
II Directors shall serve until election of their successors at the
annual meeting of Directors in 1994.
From and after the election of Class I Directors in 1993 and
Class II Directors in 1994, members of each Class shall serve for
terms of two years from the date of election of such members.
Subject to the requirement for appointment or approval of a
majority of the Board of Directors of United Methodist Community
Centers, Inc. , as more specifically provided in Section 4
hereafter, election of new Directors of either class shall be by
majority vote of the entire then-existing Board of Directors.
-3-
Section 4. Qualifications. Directors need not be residents
of the State of Nebraska.
A majority of the Board of Directors serving at any time,
whether elected at an annual meeting of the Board, appointed to
fill a vacancy, or otherwise, must consist of Directors appointed
or otherwise approved by. United Methodist Community Centers, Inc. ,
of Omaha, Nebraska, to the end that this corporation is operated,
supervised or controlled by said United Methodist Community
Centers, Inc. within the meaning of Section 509 (a) (3) (B) of the
Internal Revenue Code, or any corresponding Section of any future
Federal Tax Code.
With regard to a Board consisting of five (5) Directors, one
(1) Director from Class I and two (2) Directors from Class II
shall be appointed or otherwise approved by United Methodist
Community Centers, Inc. With regard to a Board consisting of
either six (6) or seven (7) Directors, two Directors from Class I
and two Directors from Class II shall be appointed or otherwise
approved by United Methodist Community Centers, Inc.
It is contemplated and encouraged, but not required, that one
or more members of the Board of Directors of this corporation also
be members of the Board or staff of United Methodist Community
Centers, Inc.
Section 5. Regular Meetings. A regular annual meeting of
the Board of Directors shall be held on the second Tuesday in the
month of June in each year, beginning with the year 1993, at the
hour of 5: 00 P.M. for the purpose of electing Directors for the
-4-
transaction of such other business as may come before the meeting.
If the day fixed for the annual meeting shall be a legal holiday
in the State of Nebraska, such meeting shall be held on the next
succeeding business day. If the election of Directors shall not
be held on the day designated herein for any annual meeting, or at
any adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the members as soon
thereafter as conveniently may be.
As provided in Section 4 of this Article IV, at least two
Directors in each Class who are elected (out of a total Board of
seven members) must be appointed or otherwise approved by United
Methodist Community Centers, Inc. , to the end that a majority of
the Board serving at any time must have been so appointed or
approved.
The Board of Directors may provide by resolution the time and
place, either within or without the State of Nebraska, for the
holding of additional regular meetings of the Board without other
notice than such resolution.
Section 6. Special Meetings. Special meetings of the Board
may be called by or at the request of the Chairman, the President
or any two Directors. The person or persons authorized to call
special meetings of the Board may fix any place, either within or
without the State of Nebraska, as the place for holding any
special meeting of the Board called by them.
-5-
Section 7 . Telephonic and Other Electronic Meetings. To the
extent permitted by the laws of the State of Nebraska, any regular
or special meeting of the Board may be held by means of
communication in which all persons can simultaneously hear each
other during the meeting, including such meetings held by means of
telephonic communication.
Section 8 . Notice. Notice of any special meeting of the
Board shall be given at least seven (7) days previously thereto by
written notice delivered personally or sent by mail or telegram to
each Director at his or her address as shown by the records of the
Corporation. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail in a sealed
envelope so addressed, with postage thereon prepaid. Any Director
may waive notice of any meeting. The attendance of a Director at
any meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special
meeting of the Board need be specified in the notice or waiver of
notice of such meeting, unless specifically required by law or by
these Bylaws.
-6-
Section 9 . Quorum. A majority of the Board shall constitute
a quorum for the transaction of business at any meeting of the
Board; but if less than a majority of the Directors are present at
said meeting, a majority of the Directors present may adjourn the
meeting from time to time without further notice.
Section 10. Manner of Acting. The act of a majority of the
Directors present at a meeting at which a quorum is present shall
be the act of the Board, unless the act of a greater number is
required by law or by these Bylaws.
Section 11. Vacancies. Any vacancy occurring in the Board
of Directors, and any directorship to be filled by reason of any
increase in the number of Directors, shall be filled by the Board
of Directors. A Director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office.
Notwithstanding any provision in this Section 11 to the contrary,
any such election or appointment shall be governed by the
- -- provisions of Section 4 of this Article IV, regarding the
necessity that a majority of the Board serving at any time be
appointed or otherwise approved by United Methodist Community
Centers, Inc. , and regarding the necessity that such appointment
or approval be of the number of each class of Directors as
specified in said Section 4 _
Section 12 . Informal Action by Directors. Any action
required by law to be taken at a meeting of Directors, or any
action which may be taken at a meeting of Directors, may be taken
without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the Directors.
ARTICLE V.
Officers
Section 1. Officers. The officers of the corporation shall
be a President, one or more Vice Presidents (the number thereof to
be determined by the Board of Directors) , a Secretary, a Treasurer
and such other officers as may be elected in accordance with the
provisions of this Article. The Board of Directors may elect or
appoint such other officers, including one (1.) or more Assistant
Secretaries and one (1) or more Assistant Treasurers, as it shall
deem desirable, such officers to have the authority and perform
the duties prescribed, from time to time, by the Board of
Directors. Any two (2) or more offices may be held by the same
person, except the offices of President and Secretary.
Section 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at
the regular annual meeting of the Board of Directors. If the
election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as conveniently may be.
New offices may be created and filled at any meeting of the Board
of Directors. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified.
-8-
1110
Section 3 . Removal. Any officer elected or appointed by the
Board of Directors may be removed by the Board of Directors
whenever in its judgment the best interests of the corporation
would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the officer so
removed.
Section 4 . Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise may be
filled by the Board of Directors for the unexpired portion of the
term.
Section 5. President. The President shall be the principal
executive officer of the corporation and shall in general
supervise and control all of the business and affairs of the
corporation. He shall preside at all meetings of the members and
of the Board of Directors. He may sign, with the Secretary or any
other proper officer of the corporation authorized by the Board of
Directors, any - deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be
executed, except in cases where the signing and execution thereof
shall be expressly delegated by the Board of Directors or by these
Bylaws or by statute to some other officer or agent of the
corporation; and in general he shall perform all duties incident
to the office of the President and such other duties as may be
prescribed by the Board of Directors from time to time.
-9_
Section 6. Vice President. In the absence of the President
or in event of his inability or refusal to act, the Vice President
(or in the event there be more than one (1) Vice President, the
Vice Presidents in the order of their election) shall perform the
duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the
President. Any Vice President shall perform such other duties as
from time to time may be assigned to him by the President or by
the. Board of Directors.
Section 7. Treasurer. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine. He shall have
charge and custody of and be responsible for all funds and.
securities of the corporation; receive and give receipts for
moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries
as shall be selected in accordance with the provisions of Article
VII of these Bylaws; and in general perform all the duties
incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the
Board of Directors.
Section 8 . Secretary. The Secretary shall keep the minutes
of the meetings of the members and of the Board of Directors in
one (1) or more books provided for that purpose; see that all
-10-
notices are duly given in accordance with the provisions of these
Bylaws or as required by law; be custodian of the corporate
records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly
authorized in accordance with the provisions of these Bylaws; keep
a register of the post-office address of each member which shall
be furnished to the Secretary by such member; and in general
perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to the Secretary
by the President or by the Board of Directors.
Section 9 . Assistant Treasurers and Assistant Secretaries.
If required by the Board of Directors, the Assistant Treasurers
shall give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall
determine. The Assistant Treasurers and Assistant Secretaries, in
• general, shall perform such duties as shall be assigned to them by
the Treasurer or the Secretary or by the President or the Board of
Directors.
ARTICLE VI.
Committees
Section 1. Committees of Directors. The Board of Directors,
by resolution adopted by a majority of the Directors in office,
may designate and appoint one (1) or more committees, each of
which shall consist of two (2) or more Directors, which
committees, to the extent provided in said resolution, shall have
-11-
and exercise the authority of the Board of Directors in the
management of the corporation; provided, however, that no such
committee shall have the authority of the Board of Directors in
reference to amending, altering or repealing the Bylaws; electing,
appointing or removing any member of any such committee or any
Director or officer of the corporation; amending the articles of
incorporation; adopting a plan or merger or adopting a plan of
consolidation with another corporation; authorizing the sale,
lease, exchange or mortgage of all or substantially all of the
property and assets of the corporation; authorizing the voluntary
dissolution of the corporation or revoking proceedings therefor;
adopting a plan for the distribution of the assets of the
corporation; or amending, altering or repealing any resolution of
the Board of Directors which by its terms provides that it shall
not be amended, altered or repealed by such committee. The
designation and appointment of any such committee and the
delegation thereto of authority shall not operate to relieve the
Board of Directors, or any individual Director of any
responsibility imposed upon it or him by law.
Section 2 . Other Committees. Other committees not having
and exercising the authority of the Board of Directors in the
management of the corporation may be designated by a resolution
adopted by a majority of the Directors present at a meeting at
which a quorum is present. Except as otherwise provided in such
resolution, members of each such committee shall be members of the
corporation, and the President of the corporation shall appoint
-12 -
the members thereof. Any member thereof may be removed by the
person or persons authorized to appoint such member whenever in
their judgment the best interests of the corporation shall be
served by such removal.
Section 3 . Term of Office. Each member of a committee shall
continue as such until the next annual meeting of the members of
the corporation and until his successor is appointed, unless the
committee shall be sooner terminated, or unless such member be
removed from such committee, or unless such member shall cease to
qualify as a member thereof.
Section 4. Chairman. One (1) member of each committee shall
be appointed chairman by the person or persons authorized to
appoint the members thereof.
Section 5. Vacancies. Vacancies in the membership of any
committee may be filled by appointments made in the same manner as
provided in the case of the original appointments.
Section 6. Quorum. Unless otherwise provided in the-
resolution of the Board of Directors designating a committee, a
majority of the whole committee shall constitute a quorum and the
act of a majority of the members present at a meeting at which a
quorum is present shall be the act of the committee.
Section 7. Rules. Each committee may adopt rules for its
own government not inconsistent with these Bylaws or with rules
adopted by the Board of Directors.
ARTICLE VII.
Contracts, Checks, Deposits and Funds
-13-
Section 1. Contracts. The Board of Directors may authorize
any officer or officers, agent or agents of the corporation, in
addition to the officers so authorized by these Bylaws, to enter
into any contract or execute and deliver any instrument in the
name of and on behalf of the corporation, and such authority may
be general or confined to specific instances.
Section 2 . Checks, Drafts, etc. All checks, drafts or
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors. In the
absence of such determination by the Board of Directors, such
instruments shall be signed by the Treasurer or an Assistant
Treasurer and countersigned by the President or a Vice President
of the corporation.
Section 3 . Deposits. All funds of the corporation shall be
deposited from time to time to the credit of the corporation in
such banks, trust companies or other depositaries as the Board of
Directors may select.
Section 4. Gifts. The Board of Directors may accept on
behalf of the corporation any contribution, gift, bequest or
devise for the general purposes or for any special purpose of the
corporation.
ARTICLE VIII.
Books, Records and Fiscal Year
-14-
The fiscal year of the corporation shall be a calendar year.
The corporation shall keep correct and complete books and records
of account and shall also keep minutes of the proceedings of its
members, Board of Directors and committees having any of the
authority of the Board of Directors, and shall keep at the
registered or principal office a record giving the names and
dresses of the members entitled to vote. All books and records of
the corporation may be inspected by any member, or his agent or
attorney for any proper purpose at any reasonable time.
In addition, all books and records of the corporation may be
inspected by the President or the Treasurer of United Methodist
Community Centers, Inc. , or by any duly authorized or designated
agent appointed for such purposes by the President, or by the
Board of Directors. Further, this corporation shall furnish to
United Methodist Community Centers, Inc. , such financial
statements and reports as it may request from time to time.
This corporation shall also furnish United Methodist
Community Centers, Inc. , at least annually, and no less than sixty
(60) days following termination of its fiscal year, the audited
financial statements of this corporation for such fiscal year,
together with the audited financial statements of any partnership
of which this corporation is a general partner [unless the fiscal
year of such partnership is other than the fiscal year of this
corporation, in which case such partnership statements will be
furnished within sixty (60) days following the termination of such -
partnership's fiscal year] .
-15-
ARTICLE IX.
Seal
The Board of Directors shall provide a corporate seal, which
shall be in the form of a circle and shall have inscribed thereon
the name of the corporation .
ARTICLE X.
Waiver of Notice
Whenever any notice is required to be given under the
provisions of the Nebraska Nonprofit Corporation Act or under the
provisions of the Articles of Incorporation or the Bylaws of the
corporation, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such
notice.
ARTICLE XI.
Amendments to Bylaws
Except as otherwise provided hereafter, these Bylaws may be
altered, amended or repealed and new Bylaws may be adopted to a
majority of the Directors present at any regular meeting or at any
special meeting, if at least seven (7) days' written notice is
given of intention to alter, amend or repeal or to adopt new
Bylaws at such meeting.
Notwithstanding the foregoing, neither the provisions of
Article IV, Section 4 (Qualifications) , nor the provisions of
Article VIII (Fiscal Year Books and Records) , may be amended
-16
without the additional consent of a majority of the Board of
Directors of United Methodist Community Centers, Inc. present at a
duly authorized meeting of such Board.
We, the undersigned Directors of the .New Community
Development Corporation, do hereby assent' to the foregoing Bylaws
and do adopt the same as the Bylaws of the Corporation; and in
witness whereof, we have hereunto subscribed our names, this
;2)A day of November, 1991.
2� >7
4(441713
fr
- -/ ///,'
-17-
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
P. O. BOX 2508
CINCINNATI, OH 45201
�A 2 �99� Employer Identification Number:
Date: 47-0754453
DLN:
17053053900007
NEW COMMUNITY DEVELOPMENT - Contact Person:
CORPORATION D. A. DOWNING
C/O HAYES & ASSOCIATES CPAS Contact Telephone Number:
6655 SORESON PKY (513) 241-5199
OMAHA, NE 68152-2139
Our Letter Dated:
July 9, 1993
Addendum Applies:
No
Dear Applicant:
This modifies our letter of the above date in which we stated that you
would be treated as an organization that is not a private foundation until the
expiration of your advance ruling period.
Your exempt status under section 501(a) of the Internal Revenue Code as an
organization described in section 501(c) (3) is still in effect. Based on the
information you submitted, we have determined that you are not a private
foundation within the meaning of section 509(a) of the Code because you are an
organization of the type described in section 509(a) (2) .
Grantors and contributors may rely on this determination unless the
Internal Revenue Service publishes notice to the contrary. However, if you
lose your section 509(a) (2) status, a grantor or contributor may not rely on
this determination if he or she was in part responsible for, or was aware of,
the act or failure to act, or the substantial or material change on the part of
the organization that resulted in your loss of such status, or if he or she
acquired knowledge that the Internal Revenue Service had given notice that you
would no longer be classified as a section 509(a) (2) organization.
If we have indicated in the heading of this letter that an addendum
applies, the addendum enclosed is an integral part of this letter.
Because this letter could help resolve any questions about your private
foundation status, please keep it in your permanent records.
If you have any questions, please contact the person whose name and
telephone number are shown above.
Sincerely yours,
141.1rZge
lam'
Distrikt Director
Letter 1050 (DO/CG)
New Community Development Corporation
Board Approved Budget
For the Twelve Months Ending December 31,2000
Year to Date
Budget
Revenues
ANATHOTH RENTAL INCOME 55,200.00
MAPLELEAF RENTAL INCOME 45,000.00
MEREDITH MANOR DEVELOPMENT FEE 65,000.00
NE-MICRO PARTNSH 12,000.00
OTHER REVENUE 50,000.00
DEVELOPMENT FEES-SINGLE FAMILY 165,000.00
GRANTS-IDA PROGRAM 12,000.00
GRANTS MICRO LENDING 60,000.00
CONTRACT FEE INCOME 18,000.00
RESTRICTED DONATIONS 10,000.00
INTEREST INCOME 1,880.00
INTEREST INCOME 100.00
CONSTRUCTION MANAGEMENT INCOME 176,250.00
Total Projected Revenues 670,430.00
Expenses
DEVELOPMENT EXPENSE 22,500.00
PROFESSIONAL SERVICES 3,500.00
PROFESSIONAL SERVICES 24,000.00
AUDIT FEE 6,500.00
RENT 12,150.00
RENT MICRO 4,050.00
OFFICE EXPENSE/POSTAGE 11,700.00
SALARIES-NCDC 151,295.00
SALARIES-IDA Program 30,999.00
SALARIES MICOBUSINESS 41,801.00
Salaries--NE Micro 10,855.00
PAYROLL TAXES 18,079.00
ORGANIZATIONAL&MEMBERSHIP 3,500.00
DISCRETIONARY FUND 6,000.00
IDA CONTRIBUTION 9,000.00
STAFF TRAINING AND DEVELOPMENT 24,000.00 ,
UTILITIES&TELEPHONE 8,400.00
BENEFITS 35,444.00
TRAVEL/AUTO EXP. 4,400.00
RENTAL EXPENSE" 15,336.00
RENTAL EXPENSE 15,336.00
SUTA EXPENSE 2,419.00
Net Oper Expenses-Anathoth_ 15,304.00
Net Operating Expenses-Maple 19,527.00
REAL ESTATE&PERSONAL TAXES 600.00
REAL ESTATE TAXES-ANATHOTH 5,968.00
Real Estate Taxes-Mapleleaf 2,634.00
INSURANCE 3,900.00
INSURANCE-ANATHOTH 1,575.00
INSURANCE-MAPLELEAF 1,655.00
DEPRECIATION 9,560.00
DEPRECIATION-ANATHOTH ,,. 23,280.00
DEPRECIATION 12,168.00
INTEREST EXPENSE • 2,166.00
INTEREST MORTGAGE 21,180.00
Interest Expense Micro 1,400.00
INTEREST MORTGAGE MAPLELEAF 7,440.00
MARKETING&ADVERTISING 10,000.00
LEGAL FEES 7,500.00
Total Projected Expenses 607,121.00
Projected Increase in Fund Balance $ 63,309.00
Approved February 2000
NEW COMMUNITY DEVELOPMENT CORPORATION
RESOLUTION
At its meeting on January 29, 2001 the Board of Directors unanimously approved the
following resolution:
BE IT RESOLVED,that New Community Development Corporation(NCDC) enter
into an agreement with the City of Omaha's Community Development Block Grant program to
construct up to ten(10) single family housing for sale in the Concord Square Redevelopment
area,
BE IT FURTHER RESOLVE, that Michael B. Maroney,President/CEO is authorize to
execute such documents as are necessary for and on behalf of the corporation.
kso -�C
Mil r, Secret
Board of Directors
New Community Development Corporation
OMB Circular A-110 Page 1 of 41
•
,l
EXHIBIT "B"
CIRCULAR A-110
(REVISED 11/19/93, As Further Amended 9/30/99)
CIRCULAR NO. A-110
Revised
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Uniform Administrative Requirements for Grants and Agreements With Institutions of
Higher Education,Hospitals, and Other Non-Profit Organizations
1. Purpose. This Circular sets forth standards for obtaining consistency and uniformity among
Federal agencies in the administration of grants to and agreements with institutions of higher
education, hospitals, and other non-profit organizations.
2. Authority. Circular A-110 is issued under the authority of 31 U.S.C. 503 (the Chief Financial
Officers Act), 31 U.S.C. 1111,41 U.S.C. 405 (the Office of Federal Procurement Policy Act),
Reorganization Plan No. 2 of 1970, and E.O. 11541 ("Prescribing the Duties of the Office of
Management and Budget and the Domestic Policy Council in the Executive Office of the President").
3. Policy. Except as provided herein,the standards set forth in this Circular are applicable to all
Federal agencies. If any statute specifically prescribes policies or specific requirements that differ
from the standards provided herein, the provisions of the statute shall govern.
The provisions of the sections of this Circular shall be applied by Federal agencies to recipients.
Recipients shall apply the provisions of this Circular to subrecipients performing substantive work
under grants and agreements that are passed through or awarded by the primary recipient, if such
subrecipients are organizations described in paragraph 1.
This Circular does not apply to grants, contracts, or other agreements between the Federal
Government and units of State or local governments covered by OMB Circular A-102, "Grants and
Cooperative Agreements with State and Local Governments," and the Federal agencies'grants
management common rule which standardized and codified the administrative requirements Federal
agencies impose on State and local grantees. In addition, subawards and contracts to State or local
governments are not covered by this Circular. However, this Circular applies to subawards made by
State and local governments to organizations covered by this Circular. Federal agencies may apply
the provisions of this Circular to commercial organizations, foreign governments, organizations under
the jurisdiction of foreign governments, and international organizations.
4. Definitions.Definitions of key terms used in this Circular are contained in Section .2 in the
Attachment.
5. Required Action. The specific requirements and responsibilities of Federal agencies and
institutions of higher education,hospitals, and other non-profit organizations are set forth in this
Circular. Federal agencies responsible for awarding and administering grants to and other agreements
with organizations described in paragraph 1 shall adopt the language in the Circular unless different
provisions are required by Federal statute or are approved by OMB.
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6. OMB Responsibilities. OMB will review agency regulations and implementation of this Circular,
and will provide interpretations of policy requirements and assistance to insure effective and efficient
implementation. Any exceptions will be subject to approval by OMB, as indicated in Section_.4 in
the Attachment. Exceptions will only be made in particular cases where adequate justification is
presented.
7. Information Contact. Further information concerning this Circular may be obtained by contacting
the Office of Federal Financial Management, Office of Management and Budget, Washington,DC
20503, telephone (202) 395-3993.
8. Termination Review Date. This Circular will have a policy review three years from date of
issuance.
9. Effective Date. The standards set forth in this Circular which affect Federal agencies will be
effective 30 days after publication of the final revision in the Federal Register. Those standards
which Federal agencies impose on grantees will be adopted by agencies in codified regulations within
six months after publication in the Federal Register. Earlier implementation is encouraged.
Attachment
Grants and Agreements with Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations
SUBPART A- GENERAL
Sec.
.1 Purpose.
.2 Definitions.
.3 Effect on other issuances.
.4 Deviations.
.5 Subawards.
SUBPART B -PRE-AWARD REQUIREMENTS
.10 Purpose.
.11 Pre-award_.policies.
.12.Fonns for applying for Federal assistance.
.13 Debarment.._and suspension.
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.14 Special award conditions.
.15 Metric_.system_of measurement.
.16 Resource Conservation and Recovery Act:
•
.17 Certif cations and representations.
SUBPART C -POST-AWARD REQUIREMENTS
Financial and Program Management
•
.20 Purpose of financial and program management.
.21 Standards for financial management systems.
.22 Pay_ment.
.23 Cost sharing or matching.
.24 Programincome.
.25 Revision of budget and program._plans.
.26 Non-Federal audits.
.27 Allowable costs.
.28 Period of availability of filds.
.29 Conditional exemptions.
Property Standards
.30 Purpose of property standards.
.31 Insurance coverage.
.32 Real property.
.33 Federally-owned and exempt property.
.34 Equipment. •
.35 SU.pplies and other expendable_property.
_.36 Intangible property.
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applicable administrative actions and all required work of the award have been completed by the
recipient and Federal awarding agency.
(h) Contract means a procurement contract under an award or subaward, and a procurement
subcontract under a recipient's or subrecipient's contract.
(i) Cost sharing or matching means that portion of project or program costs not borne by the
Federal Government.
(j) Date of completion means the date on which all work under an award is completed or the
date on the award document, or any supplement or amendment thereto, on which Federal sponsorship
ends.
(k) Disallowed costs means those charges to an award that the Federal awarding agency
determines to be unallowable, in accordance with the applicable Federal cost principles or other terms
and conditions contained in the award.
(1) Equipment means tangible nonexpendable personal property including exempt property
charged directly to the award having a useful life of more than one year and an acquisition cost of
$5000 or more per unit. However, consistent with recipient policy, lower limits may be established.
(m)Excess property means property under the control of any Federal awarding agency that, as
determined by the head thereof, is no longer required for its needs or the discharge of its
responsibilities.
(n) Exempt property means tangible personal property acquired in whole or in part with
Federal funds, where the Federal awarding agency has statutory authority to vest title in the recipient
without further obligation to the Federal Government. An example of exempt property authority is
contained in the Federal Grant and Cooperative Agreement Act(31 U.S.C. 6306), for property
acquired under an award to conduct basic or applied research by a non-profit institution of higher
education or non-profit organization whose principal purpose is conducting scientific research.
(o) Federal awarding agency means the Federal agency that provides an award to the
recipient.
(p) Federal funds authorized means the total amount of Federal funds obligated by the
Federal Government for use by the recipient. This amount may include any authorized carryover of
unobligated funds from prior funding periods when permitted by agency regulations or agency
implementing instructions.
(q) Federal share of real property, equipment, or supplies means that percentage of the
property's acquisition costs and any improvement expenditures paid with Federal funds.
(r) Funding period means the period of time when Federal funding is available for obligation
by the recipient.
(s) Intangible property and debt instruments means, but is not limited to, trademarks,
copyrights, patents and patent applications and such property as loans, notes and other debt
instruments, lease agreements, stock and other instruments of property ownership, whether
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considered tangible or intangible.
(t) Obligations means the amounts of orders placed, contracts and grants awarded, services
received and similar transactions during a given period that require payment by the recipient during
the same or a future period.
(u)Outlays or expenditures means charges made to the project or program. They may be
reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of cash
disbursements for direct charges for goods and services, the amount of indirect expense charged, the
value of third party in-kind contributions applied and the amount of cash advances and payments ,
made to subrecipients. For reports prepared on an accrual basis, outlays are the sum of cash
disbursements for direct charges for goods and services, the amount of indirect expense incurred, the
value of in-kind contributions applied, and the net increase(or decrease)in the amounts owed by the
recipient for goods and other property received, for services performed by employees, contractors,
subrecipients and other payees and other amounts becoming owed under programs for which no
current services or performance are required.
(v) Personal property means property of any kind except real property. It may be tangible,
having physical existence, or intangible,having no physical existence, such as copyrights, patents, or
securities.
(w) Prior approval means written approval by an authorized official evidencing prior consent.
(x) Program income means gross income earned by the recipient that is directly generated by a
supported activity or earned as a result of the award(see exclusions in paragraphs .24 (e)and(h)).
Program income includes,but is not limited to, income from fees for services performed, the use or
rental of real or personal property acquired under federally-funded projects, the sale of commodities
or items fabricated under an award, license fees and royalties on patents and copyrights, and interest
on loans made with award funds. Interest earned on advances of Federal funds is not program
income. Except as otherwise provided in Federal awarding agency regulations or the terms and
conditions of the award,program income does not include the receipt of principal on loans,rebates,
credits, discounts, etc., or interest earned on any of them.
(y) Project costs means all allowable costs, as set forth in the applicable Federal cost
principles, incurred by a recipient and the value of the contributions made by third parties in
accomplishing the objectives of the award during the project period.
(z) Project period means the period established in the award document during which Federal
sponsorship begins and ends.
(aa) Property means,unless otherwise stated, real property, equipment, intangible property and
debt instruments.
(bb) Real property means land, including land improvements, structures and appurtenances
thereto, but excludes movable machinery and equipment.
(cc) Recipient means an organization receiving financial assistance directly from Federal
awarding agencies to carry out a project or program. The term includes public and private institutions
of higher education, public and private hospitals, and other quasi-public and private non-profit
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organizations such as, but not limited to, community action agencies, research institutes, educational
associations, and health centers. The term may include commercial organizations, foreign or
international organizations(such as agencies of the United Nations) which are recipients,
subrecipients, or contractors or subcontractors of recipients or subrecipients at the discretion of the
Federal awarding agency. The term does not include government-owned contractor-operated facilities
or research centers providing continued support for mission-oriented, large-scale programs that are
government-owned or controlled, or are designated as federally-funded research and development
centers.
(dd) Research and development means all research activities, both basic and applied, and all
development activities that are supported at universities, colleges, and other non-profit institutions.
"Research" is defined as a systematic study directed toward fuller scientific knowledge or
understanding of the subject studied. "Development" is the systematic use of knowledge and
understanding gained from research directed toward the production of useful materials, devices,
systems, or methods, including design and development of prototypes and processes. The term
research also includes activities involving the training of individuals in research techniques where
such activities utilize the same facilities as other research and development activities and where such
activities are not included in the instruction function.
(ee) Small awards means a grant or cooperative agreement not exceeding the small purchase
threshold fixed at 41 U.S.C. 403(11) (currently$25,000).
(ff) Subaward means an award of financial assistance in the form of money, or property in lieu
of money,made under an award by a recipient to an eligible subrecipient or by a subrecipient to a
lower tier subrecipient. The term includes financial assistance when provided by any legal agreement,
even if the agreement is called a contract,but does not include procurement of goods and services nor
does it include any form of assistance which is excluded from the definition of"award" in paragraph
(e).
(gg) Subrecipient means the legal entity to which a subaward is made and which is
accountable to the recipient for the use of the funds provided. The term may include foreign or
international organizations(such as agencies of the United Nations) at the discretion of the Federal
awarding agency.
(hh) Supplies means all personal property excluding equipment, intangible property, and debt
instruments as defined in this section, and inventions of a contractor conceived or first actually
reduced to practice in the performance of work under a funding agreement("subject inventions"), as
defined in 37 CFR part 401, "Rights to Inventions Made by Nonprofit Organizations and Small
Business Firms Under Government Grants, Contracts, and Cooperative Agreements."
(ii) Suspension means an action by a Federal awarding agency that temporarily withdraws
Federal sponsorship under an award,pending corrective action by the recipient or pending a decision
to terminate the award by the Federal awarding agency. Suspension of an award is a separate action
from suspension under Federal agency regulations implementing E.O.s 12549 and 12689,
"Debarment and Suspension."
(jj) Termination means the cancellation of Federal sponsorship, in whole or in part, under an
agreement at any time prior to the date of completion.
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(kk) Third party in-kind contributions means the value of non-cash contributions provided
by non-Federal third parties. Third party in-kind contributions may be in the form of real property,
equipment, supplies and other expendable property, and the value of goods and services directly
benefiting and specifically identifiable to the project or program.
(11) Unliquidated obligations, for financial reports prepared on a cash basis, means the amount
of obligations incurred by the recipient that have not been paid. For reports prepared on an accrued
expenditure basis,they represent the amount of obligations incurred by the recipient for which an
outlay has not been recorded.
(mm) Unobligated balance means.the portion of the funds authorized by the Federal awarding
agency that has not been obligated by the recipient and is determined by deducting the cumulative
obligations from the cumulative funds authorized.
(nn) Unrecovered indirect cost means the difference between the amount awarded and the •
amount which could have been awarded under the recipient's approved negotiated indirect cost rate.
(oo) Working capital advance means a procedure where by funds are advanced to the
recipient to cover its estimated disbursement needs for a given initial period.
_.3 Effect on other issuances. For awards subject to this Circular, all administrative requirements
of codified program regulations, program manuals,handbooks and other nonregulatory materials
which are inconsistent with the requirements of this Circular shall be superseded, except to the extent
they are required by statute, or authorized in accordance with the deviations provision in
Section .4.
.4 Deviations. The Office of Management and Budget(OMB)may grant exceptions for classes of
grants or recipients subject to the requirements of this Circular when exceptions are not prohibited by
statute. However, in the interest of maximum uniformity, exceptions from the requirements of this
Circular shall be permitted only in unusual circumstances. Federal awarding agencies may apply
more restrictive requirements to a class of recipients when approved by OMB. Federal awarding
agencies may apply less restrictive requirements when awarding small awards, except for those
requirements which are statutory. Exceptions on a case-by-case basis may also be made by Federal
awarding agencies.
.5 Subawards.Unless sections of this Circular specifically exclude subrecipients from coverage,
the provisions of this Circular shall be applied to subrecipients performing work under awards if such
subrecipients are institutions of higher education, hospitals or other non-profit organizations. State
and local government subrecipients are subject to the provisions of regulations implementing the
grants management common rule,"Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments," published at 53 FR 8034 (3/11/88).
SUBPART B-Pre-Award Requirements
__.10 Purpose. Sections .11 through .17 prescribes forms and instructions and other pre-
award matters to be used in applying for Federal awards.
_.11 Pre-award policies.
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(a) Use of Grants and Cooperative Agreements, and Contracts. In each instance, the Federal
awarding agency shall decide on the appropriate award instrument (i.e., grant, cooperative agreement,
or contract). The Federal Grant and Cooperative Agreement Act(31 U.S.C. 6301-08) governs the use
of grants, cooperative agreements and contracts. A grant or cooperative agreement shall be used only
when the principal purpose of a transaction is to accomplish a public purpose of support or
stimulation authorized by Federal statute. The statutory criterion for choosing between grants and
cooperative agreements is that for the latter, "substantial involvement is expected between the
executive agency and the State, local government, or other recipient when carrying out the activity
contemplated in the agreement." Contracts shall be used when the principal purpose is acquisition of
property or services for the direct benefit or use of the Federal Government.
(b)Public Notice and Priority Setting. Federal awarding agencies shall notify the public of its
intended funding priorities for discretionary grant programs, unless funding priorities are established
by Federal statute.
.12 Forms for applying for Federal assistance.
(a)Federal awarding agencies shall comply with the applicable report clearance requirements
of 5 CFR part 1320, "Controlling Paperwork Burdens on the Public," with regard to all forms used by
the Federal awarding agency in place of or as a supplement to the Standard Form 424 (SF-424) series.
(b)Applicants shall use the SF-424 series or those forms and instructions prescribed by the
Federal awarding agency.
(c) For Federal programs covered by E.O. 12372, "Intergovernmental Review of Federal
Programs," the applicant shall complete the appropriate sections of the SF-424 (Application for
Federal Assistance) indicating whether the application was subject to review by the State Single Point
of Contact (SPOC). The name and address of the SPOC for a particular State can be obtained from
the Federal awarding agency or the Catalog of Federal Domestic Assistance. The SPOC shall
advise the applicant whether the program for which application is made has been selected by that
State for review.
(d)Federal awarding agencies that do not use the SF-424 form should indicate whether the
application is subject to review by the State under E.O. 12372.
.13 Debarment and suspension. Federal awarding agencies and recipients shall comply with the
nonprocurement debarment and suspension common rule implementing E.O.s 12549 and 12689,
"Debarment and Suspension." This common rule restricts subawards and contracts with certain
parties that are debarred, suspended or otherwise excluded from or ineligible for participation in
Federal assistance programs or activities.
.14 Special award conditions. If an applicant or recipient: (a)has a history of poor performance,
(b) is not financially stable, (c)has a management system that does not meet the standards prescribed
in this Circular, (d)has not conformed to the terms and conditions of a previous award, or(e)is not
otherwise responsible, Federal awarding agencies may impose additional requirements as needed,
provided that such applicant or recipient is notified in writing as to: the nature of the additional
requirements, the reason why the additional requirements are being imposed, the nature of the
corrective action needed, the time allowed for completing the corrective actions, and the method for
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requesting reconsideration of the additional requirements imposed. Any special conditions shall be
promptly removed once the conditions that prompted them have been corrected.
.15 Metric system of measurement. The Metric Conversion Act, as amended by the Omnibus
Trade and Competitiveness Act(15 U.S.C. 205) declares that the metric system is the preferred
measurement system for U.S. trade and commerce. The Act requires each Federal agency to establish
a date or dates in consultation with the Secretary of Commerce, when the metric system of
measurement will be used in the agency's procurements, grants, and other business-related activities.
Metric implementation may take longer where the use of the system is initially impractical or likely to
cause significant inefficiencies in the accomplishment of federally-funded activities. Federal
awarding agencies shall follow the provisions of E.O. 12770, "Metric Usage in Federal Government
Programs."
.16 Resource Conservation and Recovery Act(RCRA) (Pub. L. 94-580 codified at 42 U.S.C.
6962). Under the Act, any State agency or agency of a political subdivision of a State which is using
appropriated Federal funds must comply with Section 6002. Section 6002 requires that preference be
given in procurement programs to the purchase of specific products containing recycled materials
identified in guidelines developed by the Environmental Protection Agency(EPA) (40 CFR parts
247-254). Accordingly, State and local institutions of higher education,hospitals, and non-profit
organizations that receive direct Federal awards or other Federal funds shall give preference in their
procurement programs funded with Federal funds to the purchase of recycled products pursuant to the
EPA guidelines.
.17 Certifications and representations. Unless prohibited by statute or codified regulation, each
Federal awarding agency is authorized and encouraged to allow recipients to submit certifications and
representations required by statute, executive order, or regulation on an annual basis, if the recipients
have ongoing and continuing relationships with the agency. Annual certifications and representations
shall be signed by responsible officials with the authority to ensure recipients'compliance with the
pertinent requirements.
SUBPART C-Post-Award Requirements
Financial and Program Management
.20 Purpose of financial and program management. Sections .21 through .28 prescribe
standards for financial management systems,methods for making payments and rules for: satisfying
cost sharing and matching requirements, accounting for program income,budget revision approvals,
making audits,determining allowability of cost, and establishing fund availability.
.21 Standards for financial management systems.
(a) Federal awarding agencies shall require recipients to relate financial data to performance
data and develop unit cost information whenever practical.
(b) Recipients' financial management systems shall provide for the following.
(1)Accurate, current and complete disclosure of the financial results of each federally-
sponsored project or program in accordance with the reporting requirements set forth in Section
.52. If a Federal awarding agency requires reporting on an accrual basis from a recipient
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that maintains its records on other than an accrual basis, the recipient shall not be required to
establish an accrual accounting system. These recipients may develop such accrual data for its
reports on the basis of an analysis of the documentation on hand.
(2) Records that identify adequately the source and application of funds for federally-
sponsored activities. These records shall contain information pertaining to Federal awards,
authorizations, obligations, unobligated balances, assets, outlays, income and interest.
(3) Effective control over and accountability for all funds,property and other assets.
Recipients shall adequately safeguard all such assets and assure they are used solely for
authorized purposes.
(4) Comparison of outlays with budget amounts for each award. Whenever appropriate,
financial information should be related to performance and unit cost data.
(5) Written procedures to minimize the time elapsing between the transfer of funds to the
recipient from the U.S. Treasury and the issuance or redemption of checks,warrants or
payments by other means for program purposes by the recipient. To the extent that the
provisions of the Cash Management Improvement Act(CMIA) (Pub. L. 101-453) govern,
payment methods of State agencies, instrumentalities, and fiscal agents shall be consistent with
CMIA Treasury-State Agreements or the CMIA default procedures codified at 31 CFR part
205, "Withdrawal of Cash from the Treasury for Advances under Federal Grant and Other
Programs."
(6) Written procedures for determining the reasonableness, allocability and allowability
of costs in accordance with the provisions of the applicable Federal cost principles and the
terms and conditions of the award.
(7)Accounting records including cost accounting records that are supported by source
documentation.
(c) Where the Federal Government guarantees or insures the repayment of money borrowed by
the recipient, the Federal awarding agency, at its discretion, may require adequate bonding and
insurance if the bonding and insurance requirements of the recipient are not deemed adequate to
protect the interest of the Federal Government.
(d) The Federal awarding agency may require adequate fidelity bond coverage where the
recipient lacks sufficient coverage to protect the Federal Government's interest.
(e) Where bonds are required in the situations described above, the bonds shall be obtained
from companies holding certificates of authority as acceptable sureties, as prescribed in 31 CFR part
223, "Surety Companies Doing Business with the United States."
.22 Payment.
(a)Payment methods shall minimize the time elapsing between the transfer of funds from the
United States Treasury and the issuance or redemption of checks, warrants, or payment by other
means by the recipients. Payment methods of State agencies or instrumentalities shall be consistent
with Treasury-State CMIA agreements or default procedures codified at 31 CFR part 205.
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(b)Recipients are to be paid in advance, provided they maintain or demonstrate the willingness
to maintain: (1)written procedures that minimize the time elapsing between the transfer of funds and
disbursement by the recipient, and (2) financial management systems that meet the standards for fund
control and accountability as established in Section .21. Cash advances to a recipient organization
shall be limited to the minimum amounts needed and be timed to be in accordance with the actual,
immediate cash requirements of the recipient organization in carrying out the purpose of the approved
program or project. The timing and amount of cash advances shall be as close as is administratively
feasible to the actual disbursements by the recipient organization for direct program or project costs
and the proportionate share of any allowable indirect costs.
(c) Whenever possible, advances shall be consolidated to cover anticipated cash needs for all
awards made by the Federal awarding agency to the recipient.
(1)Advance payment mechanisms include, but are not limited to, Treasury check and
electronic funds transfer.
(2)Advance payment mechanisms are subject to 31 CFR part 205.
(3)Recipients shall be authorized to submit requests for advances and reimbursements at
least monthly when electronic fund transfers are not used.
(d) Requests for Treasury check advance payment shall be submitted on SF-270, "Request for
Advance or Reimbursement," or other forms as may be authorized by OMB. This form is not to be
used when Treasury check advance payments are made to the recipient automatically through the use
of a predetermined payment schedule or if precluded by special Federal awarding agency instructions
for electronic funds transfer.
(e) Reimbursement is the preferred method when the requirements in paragraph(b) cannot be
met. Federal awarding agencies may also use this method on any construction agreement, or if the
major portion of the construction project is accomplished through private market financing or Federal
loans, and the Federal assistance constitutes a minor portion of the project.
(1)When the reimbursement method is used, the Federal awarding agency shall make
payment within 30 days after receipt of the billing,unless the billing is improper.
(2)Recipients shall be authorized to submit request for reimbursement at least monthly
when electronic funds transfers are not used.
(f) If a recipient cannot meet the criteria for advance payments and the Federal awarding
agency has determined that reimbursement is not feasible because the recipient lacks sufficient
working capital,the Federal awarding agency may provide cash on a working capital advance basis.
Under this procedure, the Federal awarding agency shall advance cash to the recipient to cover its
estimated disbursement needs for an initial period generally geared to the awardee's disbursing cycle.
Thereafter, the Federal awarding agency shall reimburse the recipient for its actual cash
disbursements. The working capital advance method of payment shall not be used for recipients
unwilling or unable to provide timely advances to their subrecipient to meet the subrecipient's actual
cash disbursements.
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(g) To the extent available, recipients shall disburse funds available from repayments to and
interest earned on a revolving fund, program income, rebates, refunds, contract settlements, audit
recoveries and interest earned on such funds before requesting additional cash payments.
(h)Unless otherwise required by statute, Federal awarding agencies shall not withhold
payments for proper charges made by recipients at any time during the project period unless (1) or(2)
apply.
(1)A recipient has failed to comply with the project objectives, the terms and conditions
of the award, or Federal reporting requirements.
(2) The recipient or subrecipient is delinquent in.a debt to the United States as defined in
OMB Circular A-129, "Managing Federal Credit Programs."Under such conditions,the
Federal awarding agency may, upon reasonable notice, inform the recipient that payments shall
not be made for obligations incurred after a specified date until the conditions are corrected or
the indebtedness to the Federal Government is liquidated.
(i) Standards governing the use of banks and other institutions as depositories of funds
advanced under awards are as follows.
(1)Except for situations described in paragraph(i)(2), Federal awarding agencies shall
not require separate depository accounts for funds provided to a recipient or establish any
eligibility requirements for depositories for funds provided to a recipient. However,recipients
must be able to account for the receipt, obligation and expenditure of funds.
(2)Advances of Federal funds shall be deposited and maintained in insured accounts
whenever possible.
(j) Consistent with the national goal of expanding the opportunities for women-owned and
minority-owned business enterprises, recipients shall be encouraged to use women-owned and
minority-owned banks (a bank which is owned at least 50 percent by women or minority group
members).
(k) Recipients shall maintain advances of Federal funds in interest bearing accounts,unless (1),
(2) or(3) apply.
(1)The recipient receives less than$120,000 in Federal awards per year.
(2)The best reasonably available interest bearing account would not be expected to earn
interest in excess of$250 per year on Federal cash balances.
(3) The depository would require an average or minimum balance so high that it would
not be feasible within the expected Federal and non-Federal cash resources.
(1) For those entities where CMIA and its implementing regulations do not apply, interest
earned on Federal advances deposited in interest bearing accounts shall be remitted annually to
Department of Health and Human Services,Payment Management System, Rockville,MD 20852.
Interest amounts up to $250 per year may be retained by the recipient for administrative expense.
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State universities and hospitals shall comply with CMIA, as it pertains to interest. If an entity subject
to CMIA uses its own funds to pay pre-award costs for discretionary awards without prior written
approval from the Federal awarding agency, it waives its right to recover the interest under CMIA.
(m) Except as noted elsewhere in this Circular, only the following forms shall be authorized for
the recipients in requesting advances and reimbursements. Federal agencies shall not require more
than an original and two copies of these forms.
(1)SF-270, Request for Advance or Reimbursement. Each Federal awarding agency
shall adopt the SF-270 as a standard form for all nonconstruction programs when electronic
funds transfer or predetermined advance methods are not used. Federal awarding agencies,
however,have the option of using this form for construction programs in lieu of the SF-271,
"Outlay Report and Request for Reimbursement for Construction Programs."
(2)SF-271, Outlay Report and Request for Reimbursement for Construction Programs.
Each Federal awarding agency shall adopt the SF-271 as the standard form to be used for
requesting reimbursement for construction programs. However, a Federal awarding agency may
substitute the SF-270 when the Federal awarding agency determines that it provides adequate
information to meet Federal needs.
.23 Cost sharing or matching.
(a) All contributions,including cash and third party in-kind, shall be accepted as part of the
recipient's cost sharing or matching when such contributions meet all of the following criteria.
(1)Are verifiable from the recipient's records.
(2)Are not included as contributions for any other federally-assisted project or program.
(3)Are necessary and reasonable for proper and efficient accomplishment of project or
program objectives.
•
(4)Are allowable under the applicable cost principles.
(5)Are not paid by the Federal Government under another award, except where
authorized by Federal statute to be used for cost sharing or matching.
(6)Are provided for in the approved budget when required by the Federal awarding
agency.
(7)Conform to other provisions of this Circular, as applicable.
(b) Unrecovered indirect costs may be included as part of cost sharing or matching only with
the prior approval of the Federal awarding agency.
(c) Values for recipient contributions of services and property shall be established in
accordance with the applicable cost principles. If a Federal awarding agency authorizes recipients to
donate buildings or land for construction/facilities acquisition projects or long-term use, the value of
the donated property for cost sharing or matching shall be the lesser of(1) or(2).
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(1) The certified value of the remaining life of the property recorded in the recipient's
accounting records at the time of donation.
(2) The current fair market value. However, when there is sufficient justification,the
Federal awarding agency may approve the use of the current fair market value of the donated
property, even if it exceeds the certified value at the time of donation to the project.
(d)Volunteer services furnished by professional and technical personnel, consultants, and other
skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral
and necessary part of an approved project or program. Rates for volunteer services shall be consistent
with those paid for similar work in the recipient's organization. In those instances in which the
required skills are not found in the recipient organization, rates shall be consistent with those paid for
similar work in the labor market in which the recipient competes for the kind of services involved. In
either case,paid fringe benefits that are reasonable, allowable, and allocable may be included in the
valuation.
(e) When an employer other than the recipient furnishes the services of an employee, these
services shall be valued at the employee's regular rate of pay(plus an amount of fringe benefits that
are reasonable, allowable, and allocable,but exclusive of overhead costs),provided these services are
in the same skill for which the employee is normally paid.
(f) Donated supplies may include such items as expendable equipment, office supplies,
laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included
in the cost sharing or matching share shall be reasonable and shall not exceed the.fair market value of
the property at the time of the donation.
(g) The method used for determining cost sharing or matching for donated equipment,
buildings and land for which title passes to the recipient may differ according to the purpose of the
award, if(l) or(2) apply.
(1)If the purpose of the award is to assist the recipient in the acquisition of equipment,
buildings or land, the total value of the donated property may be.claimed as cost sharing or
matching.
(2) If the purpose of the award is to support activities that require the use of equipment,
buildings or land, normally only depreciation or use charges for equipment and buildings may
be made. However, the full value of equipment or other capital assets and fair rental charges for
land may be allowed,provided that the Federal awarding agency has approved the charges.
(h)The value of donated property shall be determined in accordance with the usual accounting
policies of the recipient, with the following qualifications.
(1) The value of donated land and buildings shall not exceed its fair market value at the
time of donation to the recipient as established by an independent appraiser(e.g., certified real
property appraiser or General Services Administration representative) and certified by a
responsible official of the recipient.
(2) The value of donated equipment shall not exceed the fair market value of equipment
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of the same age and condition at the time of donation.
(3)The value of donated space shall not exceed the fair rental value of comparable space
as established by an independent appraisal of comparable space and facilities in a privately-
owned building in the same locality.
(4)The value of loaned equipment shall not exceed its fair rental value.
(5)The following requirements pertain to the recipient's supporting records for in-kind
contributions from third parties.
(i)Volunteer services shall be documented and, to the extent feasible, supported
by the same methods used by the recipient for its own employees.
(ii) The basis for determining the valuation for personal service, material,
equipment,buildings and land shall be documented.
.24 Program income.
(a) Federal awarding agencies shall apply the standards set forth in this section in requiring
recipient organizations to account for program income related to projects financed in whole or in part
with Federal funds.
(b) Except as provided in paragraph (h) below,program income earned during the project
period shall be retained by the recipient and, in accordance with Federal awarding agency regulations
or the terms and conditions of the award, shall be used in one or more of the ways listed in the
following.
(1)Added to funds committed to the project by the Federal awarding agency and
recipient and used to further eligible project or program objectives.
(2)Used to finance the non-Federal share of the project or program.
(3)Deducted from the total project or program allowable cost in determining the net
allowable costs on which the Federal share of costs is based.
(c) When an agency authorizes the disposition of program income as described in paragraphs
(b)(1) or(b)(2),program income in excess of any limits stipulated shall be used in accordance with
paragraph (b)(3).
(d) In the event that the Federal awarding agency does not specify in its regulations or the terms
and conditions of the award how program income is to be used, paragraph(b)(3) shall apply
automatically to all projects or programs except research. For awards that support research,paragraph
(b)(1) shall apply automatically unless the awarding agency indicates in the terms and conditions
another alternative on the award or the recipient is subject to special award conditions, as indicated in
Section .14.
(e) Unless Federal awarding agency regulations or the terms and conditions of the award
provide otherwise,recipients shall have no obligation to the Federal Government regarding program
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income earned after the end of the project period.
(f) If authorized by Federal awarding agency regulations or the terms and conditions of the
award, costs incident to the generation of program income may be deducted from gross income to
determine program income,provided these costs have not been charged to the award.
(g)Proceeds from the sale of property shall be handled in accordance with the requirements of
the Property Standards (See Sections .30 through .37).
(h) Unless Federal awarding agency regulations or the terms and condition of the award
provide otherwise, recipients shall have no obligation to the Federal Government with respect to
program income earned from license fees and royalties for copyrighted material,patents,patent
applications, trademarks, and inventions produced under an award. However, Patent and Trademark
Amendments (35 U.S.C. 18) apply to inventions made under an experimental, developmental, or
research award.
.25 Revision of budget and program plans.
(a) The budget plan is the financial expression of the project or program as approved during the
award process. It may include either the Federal and non-Federal share, or only the Federal share,
depending upon Federal awarding agency requirements. It shall be related to performance for
program evaluation purposes whenever appropriate.
(b)Recipients are required to report deviations from budget and program plans, and request
prior approvals for budget and program plan revisions, in accordance with this section.
(c)For nonconstruction awards, recipients shall request prior approvals from Federal awarding
agencies for one or more of the following program or budget related reasons.
(1) Change in the scope or the objective of the project or program (even if there is no
associated budget revision requiring prior written approval).
(2) Change in a key person specified in the application or award document.
(3)The absence for more than three months, or a 25 percent reduction in time devoted to
the project,by the approved project director or principal investigator.
(4)The need for additional Federal funding.
(5)The transfer of amounts budgeted for indirect costs to absorb increases in direct costs,
or vice versa, if approval is required by the Federal awarding agency.
(6)The inclusion, unless waived by the Federal awarding agency, of costs that require
prior approval in accordance with OMB Circular A-21, "Cost Principles for Educational
Institutions," OMB Circular A-122, "Cost Principles for Non-Profit Organizations," or 45 CFR
part 74 Appendix E, "Principles for Determining Costs Applicable to Research and
Development under Grants and Contracts with Hospitals," or 48 CFR part 31, "Contract Cost
Principles and Procedures," as applicable.
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(7)The transfer of funds allotted for training allowances (direct payment to trainees) to
other categories of expense.
(8)Unless described in the application and funded in the approved awards, the subaward,
transfer or contracting out of any work under an award. This provision does not apply to the
purchase of supplies,material, equipment or general support services.
(d) No other prior approval requirements for specific items may be imposed unless a deviation
has been approved by OMB.
(e) Except for requirements listed in paragraphs (c)(1) and(c)(4) of this section,Federal
awarding agencies are authorized, at their option, to waive cost-related and administrative prior
written approvals required by this Circular and OMB Circulars A-21 and A-122. Such waivers may
include authorizing recipients to do any one or more of the following.
(1)Incur pre-award costs 90 calendar days prior to award or more than 90 calendar days
with the prior approval of the Federal awarding agency. All pre-award costs are incurred at the
recipient's risk(i.e., the Federal awarding agency is under no obligation to reimburse such costs
if for any reason the recipient does not receive an award or if the award is less than anticipated
and inadequate to cover such costs).
(2)Initiate a one-time extension of the expiration date of the award of up to 12 months
unless one or more of the following conditions apply. For one-time extensions, the recipient
must notify the Federal awarding agency in writing with the supporting reasons and revised
expiration date at least 10 days before the expiration date specified in the award. This one-time
extension may not be exercised merely for the purpose of using unobligated balances.
(i) The terms and conditions of award prohibit the extension.
(ii) The extension requires additional Federal funds.
(iii) The extension involves any change in the approved objectives or scope of the
project.
(3)Carry forward unobligated balances to subsequent funding periods.
(4)For awards that support research, unless the Federal awarding agency provides
otherwise in the award or in the agency's regulations,the prior approval requirements described
in paragraph(e) are automatically waived (i.e.,recipients need not obtain such prior approvals)
unless one of the conditions included in paragraph(e)(2) applies.
(f) The Federal awarding agency may, at its option, restrict the transfer of funds among direct
cost categories or programs, functions and activities for awards in which the Federal share of the
project exceeds$100,000 and the cumulative amount of such transfers exceeds or is expected to
exceed 10 percent of the total budget as last approved by the Federal awarding agency. No Federal
awarding agency shall permit a transfer that would cause any Federal appropriation or part thereof to
be used for purposes other than those consistent with the original intent of the appropriation.
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(g) All other changes to nonconstruction budgets, except for the changes described in
paragraph(j), do not require prior approval.
(h) For construction awards, recipients shall request prior written approval promptly from
Federal awarding agencies for budget revisions whenever(1), (2) or(3) apply.
(1) The revision results from changes in the scope or the objective of the project or
program.
(2) The need arises for additional Federal funds to complete the project.
(3)A revision is desired which involves specific costs for which prior written approval
requirements may be imposed consistent with applicable OMB cost principles listed in
Section .27.
(i)No other prior approval requirements for specific items may be imposed unless a deviation
has been approved by OMB.
(j) When a Federal awarding agency makes an award that provides support for both
construction and nonconstruction work, the Federal awarding agency may require the recipient to
request prior approval from the Federal awarding agency before making any fund or budget transfers
between the two types of work supported.
(k) For both construction and nonconstruction awards, Federal awarding agencies shall require
recipients to notify the Federal awarding agency in writing promptly whenever the amount of Federal
authorized funds is expected to exceed the needs of the recipient for the project period by more than
$5000 or five percent of the Federal award,whichever is greater. This notification shall not be
required if an application for additional funding is submitted for a continuation award.
(1) When requesting approval for budget revisions,recipients shall use the budget forms that
were used in the application unless the Federal awarding agency indicates a letter of request suffices.
(m) Within 30 calendar days from the date of receipt of the request for budget revisions,
Federal awarding agencies shall review the request and notify the recipient whether the budget
revisions have been approved. If the revision is still under consideration at the end of 30 calendar
days, the Federal awarding agency shall inform the recipient in writing of the date when the recipient
may expect the decision.
.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher education or other non-profit
organizations(including hospitals) shall be subject to the audit requirements contained in the Single
Audit Act Amendments of 1996 (31 USC 7501-7507) and revised OMB Circular A-133, "Audits of
States, Local Governments, and Non-Profit Organizations."
(b) State and local governments shall be subject to the audit requirements contained in the
Single Audit Act Amendments of 1996 (31 USC 7501-7507) and revised OMB Circular A-133,
"Audits of States, Local Governments, and Non-Profit Organizations."
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(c)For-profit hospitals not covered by the audit provisions of revised OMB Circular A-133
shall be subject to the audit requirements of the Federal awarding agencies.
(d) Commercial organizations shall be subject to the audit requirements of the Federal
awarding agency or the prime recipient as incorporated into the award document.
.27 Allowable costs. For each kind of recipient, there is a set of Federal principles for determining
allowable costs. Allowability of costs shall be determined in accordance with the cost principles
applicable to the entity incurring the costs. Thus, allowability of costs incurred by State, local or
federally-recognized Indian tribal governments is determined in accordance with the provisions of
OMB Circular A-87, "Cost Principles for State, Local, and Indian Tribal Governments." The
allowability of costs incurred by non-profit organizations is determined in accordance with the
provisions of OMB Circular A-122, "Cost Principles for Non-Profit Organizations." The allowability
of costs incurred by institutions of higher education is determined in accordance with the provisions
of OMB Circular A-21, "Cost Principles for Educational Institutions." The allowability of costs
incurred by hospitals is determined in accordance with the provisions of Appendix E of 45 CFR part
74, "Principles for Determining Costs Applicable to Research and Development Under Grants and
Contracts with Hospitals." The allowability of costs incurred by commercial organizations and those
non-profit organizations listed in Attachment C to Circular A-122 is determined in accordance with
the provisions of the Federal Acquisition Regulation(FAR) at 48 CFR part 31.
.28 Period of availability of funds. Where a funding period is specified, a recipient may charge to
the grant only allowable costs resulting from obligations incurred during the funding period and any
pre-award costs authorized by the Federal awarding agency.
.29 Conditional exemptions.
(a) OMB authorizes conditional exemption from OMB administrative requirements and cost
principles circulars for certain Federal programs with statutorily-authorized consolidated planning
and consolidated administrative funding, that are identified by a Federal agency and approved by the
head of the Executive department or establishment. A Federal agency shall consult with OMB during
its consideration of whether to grant such an exemption.
(b)To promote efficiency in State and local program administration, when Federal non-
entitlement programs with common purposes have specific statutorily-authorized consolidated
planning and consolidated administrative funding and where most of the State agency's resources
come from non-Federal sources, Federal agencies may exempt these covered State-administered, non-
entitlement grant programs from certain OMB grants management requirements. The exemptions
would be from all but the allocability of costs provisions of OMB Circulars A-87 (Attachment A,
subsection C.3), "Cost Principles for State, Local, and Indian Tribal Governments," A-21 (Section C,
subpart 4), "Cost Principles for Educational Institutions," and A-122 (Attachment A, subsection A.4),
"Cost Principles for Non-Profit Organizations," and from all of the administrative requirements
provisions of OMB Circular A-110, "Uniform Administrative Requirements for Grants and
Agreements with Institutions of Higher Education,Hospitals, and Other Non-Profit Organizations,"
and the agencies' grants management common rule.
(c) When a Federal agency provides this flexibility, as a prerequisite to a State's exercising this
option, a State must adopt its own written fiscal and administrative requirements for expending and
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accounting for all funds,which are consistent with the provisions of OMB Circular A-87, and extend
such policies to all subrecipients. These fiscal and administrative requirements must be sufficiently
specific to ensure that: funds are used in compliance with all applicable Federal statutory and
regulatory provisions, costs are reasonable and necessary for operating these programs, and funds are
not be used for general expenses required to carry out other responsibilities of a State or its
subrecipi ents.
Property Standards
.30 Purpose of property standards. Sections .31 through .37 set forth uniform standards
governing management and disposition of property furnished by the Federal Government whose cost
was charged to a project supported by a Federal award. Federal awarding agencies shall require
recipients to observe these standards under awards and shall not impose additional requirements,
unless specifically required by Federal statute. The recipient may use its own property management
standards and procedures provided it observes the provisions of Sections .31 through .37.
.31 Insurance coverage. Recipients shall, at a minimum,provide the equivalent insurance
coverage for real property and equipment acquired with Federal funds as provided to property owned
by the recipient. Federally-owned property need not be insured unless required by the terms and
conditions of the award.
.32 Real property. Each Federal awarding agency shall prescribe requirements for recipients
concerning the use and disposition of real property acquired in whole or in part under awards.Unless
otherwise provided by statute, such requirements, at a minimum, shall contain the following.
(a)Title to real property shall vest in the recipient subject to the condition that the recipient
shall use the real property for the authorized purpose of the project as long as it is needed and shall
not encumber the property without approval of the Federal awarding agency.
(b) The recipient shall obtain written approval by the Federal awarding agency for the use of
real property in other federally-sponsored projects when the recipient determines that the property is
no longer needed for the purpose of the original project. Use in other projects shall be limited to those
under federally-sponsored projects (i.e., awards) or programs that have purposes consistent with those
authorized for support by the Federal awarding agency.
(c) When the real property is no longer needed as provided in paragraphs (a) and(b),the
recipient shall request disposition instructions from the Federal awarding agency or its successor
Federal awarding agency. The Federal awarding agency shall observe one or more of the following
disposition instructions.
(1) The recipient may be permitted to retain title without further obligation to the Federal
Government after it compensates the Federal Government for that percentage of the current fair
market value of the property attributable to the Federal participation in the project.
(2) The recipient may be directed to sell the property under guidelines provided by the
Federal awarding agency and pay the Federal Government for that percentage of the current fair
market value of the property attributable to the Federal participation in the project (after
deducting actual and reasonable selling and fix-up expenses, if any, from the sales proceeds).
When the recipient is authorized or required to sell the property,proper sales procedures shall
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be established that provide for competition to the extent practicable and result in the highest
possible return.
(3)The recipient may be directed to transfer title to the property to the Federal
Government or to an eligible third party provided that, in such cases, the recipient shall be
entitled to compensation for its attributable percentage of the current fair market value of the
property.
_.33 Federally-owned and exempt property.
(a) Federally-owned property.
(1)Title to federally-owned property remains vested in the Federal Government.
Recipients shall submit annually an inventory listing of federally-owned property in their
custody to the Federal awarding agency. Upon completion of the award or when the property is
no longer needed, the recipient shall report the property to the Federal awarding agency for
further Federal agency utilization.
(2)If the Federal awarding agency has no further need for the property, it shall be
declared excess and reported to the General Services Administration, unless the Federal
awarding agency has statutory authority to dispose of the property by alternative methods(e.g.,
the authority provided by the Federal Technology Transfer Act(15 U.S.C. 3710 (I))to donate
research equipment to educational and non-profit organizations in accordance with E.O. 12821,
"Improving Mathematics and Science Education in Support of the National Education Goals.")
Appropriate instructions shall be issued to the recipient by the Federal awarding agency.
(b) Exempt property. When statutory authority exists, the Federal awarding agency has the
option to vest title to property acquired with Federal funds in the recipient without further obligation
to the Federal Government and under conditions the Federal awarding agency considers appropriate.
Such property is "exempt property." Should a Federal awarding agency not establish conditions,title
to exempt property upon acquisition shall vest in the recipient without further obligation to the
Federal Government.
_.34 Equipment.
(a) Title to equipment acquired by a recipient with Federal funds shall vest in the recipient,
subject to conditions of this section.
(b) The recipient shall not use equipment acquired with Federal funds to provide services to
non-Federal outside organizations for a fee that is less than private companies charge for equivalent
services, unless specifically authorized by Federal statute, for as long as the Federal Government
retains an interest in the equipment.
(c) The recipient shall use the equipment in the project or program for which it was acquired as
long as needed,whether or not the project or program continues to be supported by Federal funds and
shall not encumber the property without approval of the Federal awarding agency. When no longer
needed for the original project or program, the recipient shall use the equipment in connection with
its other federally-sponsored activities, in the following order of priority: (i) Activities sponsored by
the Federal awarding agency which funded the original project, then (ii) activities sponsored by other
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Federal awarding agencies.
(d) During the time that equipment is used on the project or program for which it was acquired,
the recipient shall make it available for use on other projects or programs if such other use will not
interfere with the work on the project or program for which the equipment was originally acquired.
First preference for such other use shall be given to other projects or programs sponsored by the
Federal awarding agency that financed the equipment; second preference shall be given to projects or
programs sponsored by other Federal awarding agencies. If the equipment is owned by the Federal
Government, use on other activities not sponsored by the Federal Government shall be permissible if
authorized by the Federal awarding agency. User charges shall be treated as program income.
(e) When acquiring replacement equipment, the recipient may use the equipment to be replaced
as trade-in or sell the equipment and use the proceeds to offset the costs of the replacement
equipment subject to the approval of the Federal awarding agency.
(f) The recipient's property management standards for equipment acquired with Federal funds
and federally-owned equipment shall include all of the following.
(1)Equipment records shall be maintained accurately and shall include the following
information.
(i)A description of the equipment.
(ii)Manufacturer's serial number, model number, Federal stock number, national
stock number, or other identification number.
(iii) Source of the equipment, including the award number.
(iv) Whether title vests in the recipient or the Federal Government.
(v)Acquisition date (or date received, if the equipment was furnished by the
Federal Government) and cost.
(vi)Information from which one can calculate the percentage of Federal
participation in the cost of the equipment(not applicable to equipment furnished by the
Federal Government).
(vii) Location and condition of the equipment and the date the information was
reported.
(viii)Unit acquisition cost.
(ix) Ultimate disposition data, including date of disposal and sales price or the
method used to determine current fair market value where a recipient compensates the
Federal awarding agency for its share.
(2)Equipment owned by the Federal Government shall be identified to indicate Federal
ownership.
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(3)A physical inventory of equipment shall be taken and the results reconciled with the
equipment records at least once every two years. Any differences between quantities
determined by the physical inspection and those shown in the accounting records shall be
investigated to determine the causes of the difference. The recipient shall, in connection with
the inventory,verify the existence, current utilization, and continued need for the equipment.
(4)A control system shall be in effect to insure adequate safeguards to prevent loss,
damage, or theft of the equipment. Any loss, damage, or theft of equipment shall be
investigated and fully documented; if the equipment was owned by the Federal Government,
the recipient shall promptly notify the Federal awarding agency.
(5)Adequate maintenance procedures shall be implemented to keep the equipment in
good condition.
(6)Where the recipient is authorized or required to sell the equipment, proper sales
procedures shall be established which provide for competition to the extent practicable and
result in the highest possible return.
(g) When the recipient no longer needs the equipment, the equipment may be used for other
activities in accordance with the following standards. For equipment with a current per unit fair
market value of$5000 or more, the recipient may retain the equipment for other uses provided that
compensation is made to the original Federal awarding agency or its successor. The amount of
compensation shall be computed by applying the percentage of Federal participation in the cost of the
original project or program to the current fair market value of the equipment. If the recipient has no
need for the equipment,the recipient shall request disposition instructions from the Federal awarding
agency. The Federal awarding agency shall determine whether the equipment can be used to meet the
agency's requirements. If no requirement exists within that agency, the availability of the equipment
shall be reported to the General Services Administration by the Federal awarding agency to determine
whether a requirement for the equipment exists in other Federal agencies. The Federal awarding
agency shall issue instructions to the recipient no later than 120 calendar days after the recipient's
request and the following procedures shall govern.
(1)If so instructed or if disposition instructions are not issued within 120 calendar days
after the recipient's request, the recipient shall sell the equipment and reimburse the Federal
awarding agency an amount computed by applying to the sales proceeds the percentage of
Federal participation in the cost of the original project or program. However, the recipient shall
be permitted to deduct and retain from the Federal share $500 or ten percent of the proceeds,
whichever is less, for the recipient's selling and handling expenses.
(2)If the recipient is instructed to ship the equipment elsewhere, the recipient shall be
reimbursed by the Federal Government by an amount which is computed by applying the
percentage of the recipient's participation in the cost of the original project or program to the
current fair market value of the equipment,plus any reasonable shipping or interim storage
costs incurred.
(3)If the recipient is instructed to otherwise dispose of the equipment, the recipient shall
be reimbursed by the Federal awarding agency for such costs incurred in its disposition.
L
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(4)The Federal awarding agency may reserve the right to transfer the title to the Federal
Government or to a third party named by the Federal Government when such third party is
otherwise eligible under existing statutes. Such transfer shall be subject to the following
standards.
(i)The equipment shall be appropriately identified in the award or otherwise made
known to the recipient in writing.
(ii)The Federal awarding agency shall issue disposition instructions within 120
calendar days after receipt of a final inventory. The final inventory shall list all
equipment acquired with grant funds and federally-owned equipment. If the Federal
awarding agency fails to issue disposition instructions within the 120 calendar day
period, the recipient shall apply the standards of this section, as appropriate.
(iii) When the Federal awarding agency exercises its right to take title,the
equipment shall be subject to the provisions for federally-owned equipment.
.35 Supplies and other expendable property.
(a) Title to supplies and other expendable property shall vest in the recipient upon acquisition.
If there is a residual inventory of unused supplies exceeding$5000 in total aggregate value upon
termination or completion of the project or program and the supplies are not needed for any other
federally-sponsored project or program, the recipient shall retain the supplies for use on non-Federal
sponsored activities or sell them, but shall, in either case, compensate the Federal Government for its
share. The amount of compensation shall be computed in the same manner as for equipment.
(b) The recipient shall not use supplies acquired with Federal funds to provide services to non-
Federal outside organizations for a fee that is less than private companies charge for equivalent
services, unless specifically authorized by Federal statute as long as the Federal Government retains
an interest in the supplies.
.36 Intangible property.
(a) The recipient may copyright any work that is subject to copyright and was developed, or for
which ownership was purchased, under an award. The Federal awarding agency(ies)reserve a
royalty-free,nonexclusive and irrevocable right to reproduce,publish, or otherwise use the work for
Federal purposes, and to authorize others to do so.
(b) Recipients are subject to applicable regulations governing patents and inventions, including
government-wide regulations issued by the Department of Commerce at 37 CFR part 401, "Rights to
Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants,
Contracts and Cooperative Agreements."
(c) The Federal Government has the right to:
(1)obtain, reproduce,publish or otherwise use the data first produced under an award;
and
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(2)authorize others to receive,reproduce, publish, or otherwise use such data for Federal
purposes.
(d) (1) In addition, in response to a Freedom of Information Act(FOIA)request for research
data relating to published research findings produced under an award that were used by the Federal
Government in developing an agency action that has the force and effect of law, the Federal awarding
agency shall request, and the recipient shall provide, within a reasonable time,the research data so
that they can be made available to the public through the procedures established under the FOIA:If
the Federal awarding agency obtains the research data solely in response to a FOIA request, the
agency may charge the requester a reasonable fee equaling the full incremental cost of obtaining the
research data. This fee should reflect costs incurred by the agency, the recipient, and applicable
subrecipients. This fee is in addition to any fees the agency may assess under the FOIA(5 U.S.C. 552
(a)(4)(A)).
(2)The following definitions apply for purposes of paragraph (d) of this section:
(i)Research data is defined as the recorded factual material commonly accepted in
the scientific community as necessary to validate research findings,but not any of the
following: preliminary analyses, drafts of scientific papers,plans for future research,peer
reviews, or communications with colleagues. This "recorded" material excludes physical
objects (e.g., laboratory samples). Research data also do not include:
(A)Trade secrets, commercial information, materials necessary to be held
confidential by a researcher until they are published,or similar information which
is protected under law; and
(B)Personnel and medical information and similar information the
disclosure of which would constitute a clearly unwarranted invasion of personal
privacy, such as information that could be used to identify a particular person in a
research study.
(ii) Published is defined as either when:
(A)Research findings are published in a peer-reviewed scientific or
technical journal; or
(B)A Federal agency publicly and officially cites the research findings in
support of an agency action that has the force and effect of law.
(iii) Used by the Federal Government in developing an agency action that has the
force and effect of law is defined as when an agency publicly and officially cites the
research findings in support of an agency action that has the force and effect of law.
(e) Title to intangible property and debt instruments acquired under an award or subaward vests
upon acquisition in the recipient. The recipient shall use that property for the originally-authorized
purpose, and the recipient shall not encumber the property without approval of the Federal awarding
agency. When no longer needed for the originally authorized purpose, disposition of the intangible
property shall occur in accordance with the provisions of paragraph .34(g).
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.37 Property trust relationship. Real property, equipment, intangible property and debt instruments
that are acquired or improved with Federal funds shall be held in trust by the recipient as trustee for
the beneficiaries of the project or program under which the property was acquired or improved.
Agencies may require recipients to record liens or other appropriate notices of record to indicate that
personal or real property has been acquired or improved with Federal funds and that use and
disposition conditions apply to the property.
Procurement Standards
.40 Purpose of procurement standards. Sections .41 through .48 set forth standards for use
by recipients in establishing procedures for the procurement of supplies and other expendable
property, equipment,real property and other services with Federal funds. These standards are
furnished to ensure that such materials and services are obtained in an effective manner and in
compliance with the provisions of applicable Federal statutes and executive orders. No additional
procurement standards or requirements shall be imposed by the Federal awarding agencies upon
recipients, unless specifically required by Federal statute or executive order or approved by OMB.
.41 Recipient responsibilities. The standards contained in this section do not relieve the recipient
of the contractual responsibilities arising under its contract(s). The recipient is the responsible
authority,without recourse to the Federal awarding agency, regarding the settlement and satisfaction
of all contractual and administrative issues arising out of procurements entered into in support of an
award or other agreement. This includes disputes, claims,protests of award, source evaluation or
other matters of a contractual nature. Matters concerning violation of statute are to be referred to such
Federal, State or local authority as may have proper jurisdiction.
.42 Codes of conduct. The recipient shall maintain written standards of conduct governing the
performance of its employees engaged in the award and administration of contracts. No employee,
officer, or agent shall participate in the selection, award, or administration of a contract supported by
Federal funds if a real or apparent conflict of interest would be involved. Such a conflict would arise
when the employee, officer, or agent, any member of his or her immediate family, his or her partner,
or an organization which employs or is about to employ any of the parties indicated herein, has a
financial or other interest in the firm selected for an award. The officers, employees, and agents of the
recipient shall neither solicit nor accept gratuities, favors, or anything of monetary value from
contractors, or parties to subagreements. However,recipients may set standards for situations in
which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The
standards of conduct shall provide for disciplinary actions to be applied for violations of such
standards by officers, employees, or agents of the recipient.
.43 Competition. All procurement transactions shall be conducted in a manner to provide, to the
maximum extent practical, open and free competition. The recipient shall be alert to organizational
conflicts of interest as well as noncompetitive practices among contractors that may restrict or
eliminate competition or otherwise restrain trade. In order to ensure objective contractor performance
and eliminate unfair competitive advantage, contractors that develop or draft specifications,
requirements, statements of work, invitations for bids and/or requests for proposals shall be excluded
from competing for such procurements. Awards shall be made to the bidder or offeror whose bid or
offer is responsive to the solicitation and is most advantageous to the recipient,price, quality and
other factors considered. Solicitations shall clearly set forth all requirements that the bidder or offeror
shall fulfill in order for the bid or offer to be evaluated by the recipient. Any and all bids or offers
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may be rejected when it is in the recipient's interest to do so.
.44 Procurement procedures.
(a) All recipients shall establish written procurement procedures. These procedures shall
provide for, at a minimum, that (1), (2) and(3) apply.
(1)Recipients avoid purchasing unnecessary items.
(2)Where appropriate, an analysis is made of lease and purchase alternatives to
determine which would be the most economical and practical procurement for the Federal
Government.
(3) Solicitations for goods and services provide for all of the following. •
(i)A clear and accurate description of the technical requirements for the material,
product or service to be procured. In competitive procurements, such a description shall
not contain features which unduly restrict competition.
(ii) Requirements which the bidder/offeror must fulfill and all other factors to be
used in evaluating bids or proposals.
(iii) A description, whenever practicable, of technical requirements in terms of
functions to be performed or performance required, including the range of acceptable
characteristics or minimum acceptable standards.
(iv) The specific features of"brand name or equal" descriptions that bidders are
required to meet when such items are included in the solicitation.
(v) The acceptance, to the extent practicable and economically feasible, of
products and services dimensioned in the metric system of measurement.
(vi)Preference, to the extent practicable and economically feasible, for products
and services that conserve natural resources and protect the environment and are energy
efficient.
(b) Positive efforts shall be made by recipients to utilize small businesses, minority-owned
firms, and women's business enterprises,whenever possible. Recipients of Federal awards shall take
all of the following steps to further this goal.
(1)Ensure that small businesses, minority-owned firms, and women's business
enterprises are used to the fullest extent practicable.
(2)Make information on forthcoming opportunities available and arrange time frames
for purchases and contracts to encourage and facilitate participation by small businesses,
minority-owned firms, and women's business enterprises.
(3)Consider in the contract process whether firms competing for larger contracts intend
to subcontract with small businesses,minority-owned firms, and women's business enterprises.
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(4)Encourage contracting with consortiums of small businesses, minority-owned firms
and women's business enterprises when a contract is too large for one of these firms to handle
individually.
(5) Use the services and assistance, as appropriate, of such organizations as the Small
Business Administration and the Department of Commerce's Minority Business Development
Agency in the solicitation and utilization of small businesses, minority- owned firms and
women's business enterprises.
(c).The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable
contracts,purchase orders, and incentive contracts) shall be determined by the recipient but shall be
appropriate for the particular procurement and for promoting the best interest of the program or
project involved. The "cost-plus-a-percentage-of-cost" or"percentage of construction cost"methods
of contracting shall not be used.
(d) Contracts shall be made only with responsible contractors who possess the potential ability
to perform successfully under the terms and conditions of the proposed procurement. Consideration
shall be given to such matters as contractor integrity,record of past performance, financial and
technical resources or accessibility to other necessary resources. In certain circumstances, contracts
with certain parties are restricted by agencies'implementation of E.O.s 12549 and 12689, "Debarment
and Suspension."
(e)Recipients shall, on request,make available for the Federal awarding agency,pre-award
review and procurement documents, such as request for proposals or invitations for bids, independent
cost estimates, etc., when any of the following conditions apply.
(1)A recipient's procurement procedures or operation fails to comply with the
procurement standards in the Federal awarding agency's implementation of this Circular.
(2) The procurement is expected to exceed the small purchase threshold fixed at 41
U.S.C. 403 (11) (currently$25,000) and is to be awarded without competition or only one bid
or offer is received in response to a solicitation.
(3) The procurement,which is expected to exceed the small purchase threshold, specifies
a"brand name" product.
(4) The proposed award over the small purchase threshold is to be awarded to other than
the apparent low bidder under a sealed bid procurement.
(5)A proposed contract modification changes the scope of a contract or increases the
contract amount by more than the amount of the small purchase threshold.
.45 Cost and price analysis. Some form of cost or price analysis shall be made and documented in
the procurement files in connection with every procurement action. Price analysis may be
accomplished in various ways, including the comparison of price quotations submitted,market prices
and similar indicia, together with discounts: Cost analysis is the review and evaluation of each
element of cost to determine reasonableness, allocability and allowability.
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.46 Procurement records.Procurement records and files for purchases in excess of the small
purchase threshold shall include the following at a minimum: (a)basis for contractor selection, (b)
justification for lack of competition when competitive bids or offers are not obtained, and (c)basis
for award cost or price.
_.47 Contract administration. A system for contract administration shall be maintained to ensure
contractor conformance with the terms, conditions and specifications of the contract and to ensure
adequate and timely follow up of all purchases. Recipients shall evaluate contractor performance and
document, as appropriate, whether contractors have met the terms, conditions and specifications of
the contract.
_.48 Contract provisions. The recipient shall include, in addition to provisions to define a sound
and complete agreement, the following provisions in all contracts. The following provisions shall also
be applied to subcontracts.
(a) Contracts in excess of the small purchase threshold shall contain contractual provisions or
conditions that allow for administrative, contractual, or legal remedies in instances in which a
contractor violates or breaches the contract terms, and provide for such remedial actions as may be
appropriate.
(b)All contracts in excess of the small purchase threshold shall contain suitable provisions for
termination by the recipient,including the manner by which termination shall be effected and the
basis for settlement. In addition, such contracts shall describe conditions under which the contract
may be terminated for default as well as conditions where the contract may be terminated because of
circumstances beyond the control of the contractor.
(c) Except as otherwise required by statute, an award that requires the contracting(or
subcontracting)for construction or facility improvements shall provide for the recipient to follow its
own requirements relating to bid guarantees, performance bonds, and payment bonds unless the
construction contract or subcontract exceeds $100,000. For those contracts or subcontracts exceeding
$100,000, the Federal awarding agency may accept the bonding policy and requirements of the
recipient, provided the Federal awarding agency has made a determination that the Federal
Government's interest is adequately protected. If such a determination has not been made, the
minimum requirements shall be as follows. •
(1)A bid.guarantee from each bidder equivalent to five percent of the bid price. The "bid
guarantee" shall consist of a firm commitment such as a bid bond, certified check,or other
negotiable instrument accompanying a bid as assurance that the bidder shall, upon acceptance
of his bid, execute such contractual documents as may be required within the time specified.
(2)A performance bond on the part of the contractor for 100 percent of the contract
price. A"performance bond" is one executed in connection with a contract to secure fulfillment
of all the contractor's obligations under such contract.
(3)A payment bond on the part of the contractor for 100 percent of the contract price. A
"payment bond" is one executed in connection with a contract to assure payment as required by
statute of all persons supplying labor and material in the execution of the work provided for in
the contract.
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(4) Where bonds are required in the situations described herein, the bonds shall be
obtained from companies holding certificates of authority as acceptable sureties pursuant to 31
CFR part 223, "Surety Companies Doing Business with the United States."
(d)All negotiated contracts (except those for less than the small purchase threshold) awarded
by recipients shall include a provision to the effect that the recipient, the Federal awarding agency,
the Comptroller General of the United States, or any of their duly authorized representatives, shall
have access to any books, documents,papers and records of the contractor which are directly
pertinent to a specific program for the purpose of making audits, examinations, excerpts and
transcriptions.
(e) All contracts, including small purchases, awarded by recipients and their contractors shall
contain the procurement provisions of Appendix A to this Circular, as applicable.
Reports and Records
.50 Purpose of reports and records. Sections .51 through .53 set forth the procedures for
monitoring and reporting on the recipient's financial and program performance and the necessary
standard reporting forms. They also set forth record retention requirements.
.51 Monitoring and reporting program performance.
(a)Recipients are responsible for managing and monitoring each project,program, subaward,
function or activity supported by the award. Recipients shall monitor subawards to ensure
subrecipients have met the audit requirements as delineated in Section .26.
(b) The Federal awarding agency shall prescribe the frequency with which the performance
reports shall be submitted. Except as provided in paragraph .51(f),performance reports shall not
be required more frequently than quarterly or, less frequently than annually. Annual reports shall be
due 90 calendar days after the grant year; quarterly or semi-annual reports shall be due 30 days after
the reporting period. The Federal awarding agency may require annual reports before the anniversary
dates of multiple year awards in lieu of these requirements. The final performance reports are due 90
calendar days after the expiration or termination of the award.
(c) If inappropriate, a final technical or performance report shall not be required after
completion of the project.
(d) When required,performance reports shall generally contain, for each award,brief
information on each of the following.
(1)A comparison of actual accomplishments with the goals and objectives established
for the period, the findings of the investigator, or both. Whenever appropriate and the output of
programs or projects can be readily quantified, such quantitative data should be related to cost
data for computation of unit costs.
(2)Reasons why established goals were not met,if appropriate.
(3) Other pertinent information including, when appropriate, analysis and explanation of
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cost overruns or high unit costs.
(e) Recipients shall not be required to submit more than the original and two copies of
performance reports.
(f) Recipients shall immediately notify the Federal awarding agency of developments that have
a significant impact on the award-supported activities. Also, notification shall be given in the case of
problems, delays, or adverse conditions which materially impair the ability to meet the objectives of
the award. This notification shall include a statement of the action taken or contemplated, and any
assistance needed to resolve the situation.
(g) Federal awarding agencies may make site visits, as needed.
(h) Federal awarding agencies shall comply with clearance requirements of 5 CFR part 1320
when requesting performance data from recipients.
.52 Financial reporting.
(a) The following forms or such other forms as may be approved by OMB are authorized for
obtaining financial information from recipients.
(1) SF-269 or SF-269A, Financial Status Report.
(i) Each Federal awarding agency shall require recipients to use the SF-269 or SF-
269A to report the status of funds for all nonconstruction projects or programs. A Federal
awarding agency may,however, have the option of not requiring the SF-269 or SF-269A
when the SF-270,Request for Advance or Reimbursement, or SF-272,Report of Federal
Cash Transactions, is determined to provide adequate information to meet its needs,
except that a final SF-269 or SF-269A shall be required at the completion of the project
when the SF-270 is used only for advances.
(ii) The Federal awarding agency shall prescribe whether the report shall be on a
cash or accrual basis. If the Federal awarding agency requires accrual information and
the recipient's accounting records are not normally kept on the accrual basis, the recipient
shall not be required to convert its accounting system, but shall develop such accrual
information through best estimates based on an analysis of the documentation on hand.
(iii)The Federal awarding agency shall determine the frequency of the Financial
Status Report for each project or program, considering the size and complexity of the
particular project or program. However, the report shall not be required more frequently
than quarterly or less frequently than annually. A final report shall be required at the
completion of the agreement.
(iv) The Federal awarding agency shall require recipients to submit the SF-269 or
SF-269A(an original and no more than two copies) no later than 30 days after the end of
each specified reporting period for quarterly and semi-annual reports, and 90 calendar
days for annual and final reports. Extensions of reporting due dates may be approved by
the Federal awarding agency upon request of the recipient.
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(2) SF-272, Report of Federal Cash Transactions.
(i) When funds are advanced to recipients the Federal awarding agency shall
require each recipient to submit the SF-272 and,when necessary, its continuation sheet,
SF-272a. The Federal awarding agency shall use this report to monitor cash advanced to
recipients and to obtain disbursement information for each agreement with the recipients.
(ii)Federal awarding agencies may require forecasts of Federal cash requirements
in the "Remarks" section of the report.
(iii) When practical and deemed necessary, Federal awarding agencies may require
recipients to report in the "Remarks" section the amount of cash advances received in
excess of three days. Recipients shall provide short narrative explanations of actions
taken to reduce the excess balances.
(iv)Recipients shall be required to submit not more than the original and two
copies of the SF-272 15 calendar days following the end of each quarter. The Federal
awarding agencies may require a monthly report from those recipients receiving
advances totaling$1 million or more per year.
(v)Federal awarding agencies may waive the requirement for submission of the
SF-272 for any one of the following reasons: (1)When monthly advances do not exceed
$25,000 per recipient,provided that such advances are monitored through other forms
contained in this section; (2)If, in the Federal awarding agency's opinion,the recipient's
accounting controls are adequate to minimize excessive Federal advances; or, (3)When
the electronic payment mechanisms provide adequate data.
(b) When the Federal awarding agency needs additional information or more frequent reports,
the following shall be observed.
(1) When additional information is needed to comply with legislative requirements,
Federal awarding agencies shall issue instructions to require recipients to submit such
information under the "Remarks" section of the reports.
(2)When a Federal awarding agency determines that a recipient's accounting system
does not meet the standards in Section .21, additional pertinent information to further
monitor awards may be obtained upon written notice to the recipient until such time as the
system is brought up to standard. The Federal awarding agency, in obtaining this information,
shall comply with report clearance requirements of 5 CFR part 1320.
(3)Federal awarding agencies are encouraged to shade out any line item on any report if
not necessary.
(4)Federal awarding agencies may accept the identical information from the recipients in
machine readable format or computer printouts or electronic outputs in lieu of prescribed
formats.
(5) Federal awarding agencies may provide computer or electronic outputs to recipients
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when such expedites or contributes to the accuracy of reporting.
.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention and access to records for awards to
recipients. Federal awarding agencies shall not impose any other record retention or access
requirements upon recipients.
(b)Financial records, supporting documents, statistical records, and all other records pertinent
to an award shall be retained for a period of three years from the date of submission of the final
expenditure report or, for awards that are renewed quarterly or annually, from the date of the
submission of the quarterly or annual financial report, as authorized by the Federal awarding agency.
The only exceptions are the following.
(1)If any litigation, claim, or audit is started before the expiration of the 3-year period,
the records shall be retained until all litigation, claims or audit findings involving the records
have been resolved and final action taken.
(2)Records for real property and equipment acquired with Federal funds shall be
retained for 3 years after final disposition.
(3)When records are transferred to or maintained by the Federal awarding agency,the 3-
year retention requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc. as specified in
paragraph .53(g).
(c) Copies of original records may be substituted for the original records if authorized by the
Federal awarding agency.
(d) The Federal awarding agency shall request transfer of certain records to its custody from
recipients when it determines that the records possess long term retention value. However, in order to
avoid duplicate recordkeeping, a Federal awarding agency may make arrangements for recipients to
retain any records that are continuously needed for joint use.
(e) The Federal awarding agency,the Inspector General, Comptroller General of the United
States, or any of their duly authorized representatives, have the right of timely and unrestricted access
to any books,documents,papers, or other records of recipients that are pertinent to the awards, in
order to make audits, examinations, excerpts, transcripts and copies of such documents. This right
also includes timely and reasonable access to a recipient's personnel for the purpose of interview and
discussion related to such documents. The rights of access in this paragraph are not limited to the
required retention period,but shall last as long as records are retained.
(f) Unless required by statute, no Federal awarding agency shall place restrictions on recipients
that limit public access to the records of recipients that are pertinent to an award, except when the
Federal awarding agency can demonstrate that such records shall be kept confidential and would have
been exempted from disclosure pursuant to the Freedom of Information Act(5 U.S.C. 552) if the
records had belonged to the Federal awarding agency.
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(g) Indirect cost rate proposals, cost allocations plans, etc. Paragraphs (g)(1) and(g)(2) apply to
the following types of documents, and their supporting records: indirect cost rate computations or
proposals, cost allocation plans, and any similar accounting computations of the rate at which a
particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe
benefit rates).
(1)If submitted for negotiation. If the recipient submits to the Federal awarding agency
or the subrecipient submits to the recipient the proposal,plan, or other computation to form the
basis for negotiation of the rate, then the 3-year retention period for its supporting records starts
on the date of such submission.
(2)If not submitted for negotiation. If the recipient is not required to submit to the
Federal awarding agency or the subrecipient is not required to submit to the recipient the
proposal,plan, or other computation for negotiation purposes, then the 3-year retention period
for the proposal, plan, or other computation and its supporting records starts at the end of the
fiscal year(or other accounting period) covered by the proposal,plan, or other computation.
Termination and Enforcement
.60 Purpose of termination and enforcement. Sections .61 and .62 set forth uniform
suspension, termination and enforcement procedures.
.61 Termination.
(a) Awards may be terminated in whole or in part only if(1), (2) or(3) apply.
(1)By the Federal awarding agency, if a recipient materially fails to comply with the
terms and conditions of an award.
(2)By the Federal awarding agency with the consent of the recipient, 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.
(3)By the recipient upon sending to the Federal awarding agency written notification
setting forth the reasons for such termination,the effective date, and, in the case of partial
termination, the portion to be terminated. However, if the Federal awarding agency determines
in the case of partial termination that the reduced or modified portion of the grant will not
accomplish the purposes for which the grant was made, it may terminate the grant in its entirety
under either paragraphs(a)(1) or(2).
(b) If costs are allowed under an award, the responsibilities of the recipient referred to in
paragraph .71(a), including those for property management as applicable, shall be considered in
the termination of the award, and provision shall be made for continuing responsibilities of the
recipient after termination, as appropriate.
.62 Enforcement.
(a) Remedies for noncompliance. If a recipient materially fails to comply with the terms and
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conditions of an award, whether stated in a Federal statute, regulation, assurance, application, or
notice of award,the Federal awarding agency may, in addition to imposing any of the special
conditions outlined in Section .14, 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
recipient or more severe enforcement action by the Federal awarding agency.
(2)Disallow(that is, deny both use of funds and any applicable 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.
(4)Withhold further awards for the project or program.
(5)Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, the awarding agency shall provide
the recipient an opportunity for hearing, appeal, or other administrative proceeding to which the
recipient is entitled under any statute or regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of a recipient resulting from obligations
incurred by the recipient 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 recipient costs during suspension or after termination which are necessary and
not reasonably avoidable are allowable if(1) and(2) apply.
(1)The costs result from obligations which were properly incurred by the recipient
before the effective date of suspension or termination, are not in anticipation of it, and in the
case of a termination, are noncancellable.
(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 a recipient from being subject to
debarment and suspension under E.O.s 12549 and 12689 and the Federal awarding agency
implementing regulations (see Section .13).
SUBPART D-After-the-Award Requirements
_.70 Purpose. Sections .71 through .73 contain closeout procedures and other procedures
for subsequent disallowances and adjustments.
.71 Closeout procedures.
(a) Recipients shall submit,within 90 calendar days after the date of completion of the award,
all financial, performance, and other reports as required by the terms and conditions of the award. The
Federal awarding agency may approve extensions when requested by the recipient.
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OMB Circular A-110 Page 38 of 41
(b) Unless the Federal awarding agency authorizes an extension, a recipient shall liquidate all
obligations incurred under the award not later than 90 calendar days after the funding period or the
date of completion as specified in the terms and conditions of the award or in agency implementing
instructions.
(c) The Federal awarding agency shall make prompt payments to a recipient for allowable
reimbursable costs under the award being closed out.
(d) The recipient shall promptly refund any balances of unobligated cash that the Federal
awarding agency has advanced or paid and that is not authorized to be retained by the recipient for
use in other projects. OMB Circular A-129 governs unreturned amounts that become delinquent
debts.
(e) When authorized by the terms and conditions of the award, the Federal awarding agency
shall make a settlement for any upward or downward adjustments to the Federal share of costs after
closeout reports are received.
(f) The recipient shall account for any real and personal property acquired with Federal funds or
received from the Federal Government in accordance with Sections .31 through .37.
(g) In the event a final audit has not been performed prior to the closeout of an award, the
Federal awarding agency shall retain the right to recover an appropriate amount after fully
considering the recommendations on disallowed costs resulting from the final audit.
.72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following.
(1)The right of the Federal awarding agency to disallow costs and recover funds on the
basis of a later audit or other review.
(2) The obligation of the recipient to return any funds due as a result of later refunds,
corrections, or other transactions.
(3)Audit requirements in Section .26. •
(4) Property management requirements in Sections_.31 through .37.
(5)Records retention as required in Section. .53.
(b) After closeout of an award, a relationship created under an award may be modified or ended -
in whole or in part with the consent of the Federal awarding agency and the recipient, provided the
responsibilities of the recipient referred to in paragraph .73(a), including those for property
management as applicable, are considered and provisions made for continuing responsibilities of the
recipient, as appropriate.
.73 Collection of amounts due.
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OMB Circular A-110 Page 39 of 41
(a) Any funds paid to a recipient in excess of the amount to which the recipient is finally
determined to be entitled under the terms and conditions of the award constitute a debt to the Federal
Government. If not paid within a reasonable period after the demand for payment, the Federal
awarding agency may reduce the debt by(1), (2) or(3).
(1)Making an administrative offset against other requests for reimbursements.
(2)Withholding advance payments otherwise due to the recipient.
(3)Taking other action permitted by statute.
(b) Except as otherwise provided by law,the Federal awarding agency shall charge interest on
an overdue debt in accordance with 4 CFR Chapter II, "Federal Claims Collection Standards."
Appendix A
Contract Provisions
All contracts, awarded by a recipient including small purchases, shall contain the following
provisions as applicable:
1. Equal Employment Opportunity - All contracts shall contain a provision requiring compliance
with E.O. 11246, "Equal Employment Opportunity," as amended by E.O. 11375, "Amending
Executive Order 11246 Relating to Equal Employment Opportunity," and as supplemented by
regulations at 41 CFR part 60, "Office of Federal Contract Compliance Programs, Equal Employment
Opportunity, Department of Labor."
2. Copeland "Anti-Kickback" Act(18 U.S.C. 874 and 40 U.S.C. 276c) -All contracts and
subgrants in excess of$2000 for construction or repair awarded by recipients and subrecipients shall
include a provision for compliance with the Copeland "Anti-Kickback" Act (18 U.S.C. 874), as
supplemented by Department of Labor regulations (29 CFR part 3, "Contractors and Subcontractors
on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United
States"). The Act provides that each contractor or subrecipient shall be prohibited from inducing,by
any means, any person employed in the construction, completion, or repair of public work,to give up
any part of the compensation to which he is otherwise entitled. The recipient shall report all suspected
or reported violations to the Federal awarding agency.
3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)- When required by Federal program
legislation, all construction contracts awarded by the recipients and subrecipients of more than$2000
shall include a provision for compliance with the Davis-Bacon Act(40 U.S.C. 276a to a-7) and as
supplemented by Department of Labor regulations (29 CFR part 5, "Labor Standards Provisions
Applicable to Contracts Governing Federally Financed and Assisted Construction"). Under this Act,
contractors shall be required to pay wages to laborers and mechanics at a rate not less than the
minimum wages specified in a wage determination made by the Secretary of Labor. In addition,
contractors shall be required to pay wages not less than once a week. The recipient shall place a copy
of the current prevailing wage determination issued by the Department of Labor in each solicitation
and the award of a contract shall be conditioned upon the acceptance of the wage determination. The
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OMB Circular A-110 Page 40 of 41
recipient shall report all suspected or reported violations to the Federal awarding agency.
4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333) - Where applicable, all
contracts awarded by recipients in excess of$2000 for construction contracts and in excess of$2500
for other contracts that involve the employment of mechanics or laborers shall include a provision for
compliance with Sections 102 and 107 of the Contract Work Hours and Safety Standards Act(40
U.S.C. 327-333), as supplemented by Department of Labor regulations (29 CFR part 5). Under
Section 102 of the Act, each contractor shall be required to compute the wages of every mechanic and
laborer on the basis of a standard work week of 40 hours. Work in excess of the standard work week
is permissible provided that the worker is compensated at a rate of not less than 1 %2 times the basic
rate of pay for all hours worked in excess of 40 hours in the work week. Section 107 of the Act is
applicable to construction work and provides that no laborer or mechanic shall be required to work in
surroundings or under working conditions which are unsanitary,hazardous or dangerous. These
requirements do not apply to the purchases of supplies or materials or articles ordinarily available on
the open market, or contracts for transportation or transmission of intelligence.
5. Rights to Inventions Made Under a Contract or Agreement- Contracts or agreements for the
performance of experimental, developmental, or research work shall provide for the rights of the
Federal Government and the recipient in any resulting invention in accordance with 37 CFR part 401,
"Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts and Cooperative Agreements," and any implementing regulations
issued by the awarding agency.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act(33
U.S.C. 1251 et seq.), as amended - Contracts and subgrants of amounts in excess of$100,000 shall
contain a provision that requires the recipient to agree to comply with all applicable standards, orders
or regulations issued pursuant to the Clean Air Act(42 U.S.C. 7401 et seq.) and the Federal Water
Pollution Control Act as amended(33 U.S.C. 1251 et seq.). Violations shall be reported to the
Federal awarding agency and the Regional Office of the Environmental Protection Agency(EPA).
7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352) - Contractors who apply or bid for an award
of$100,000 or more shall file the required certification. Each tier certifies to the tier above that it will
not and has not used Federal appropriated funds to pay any person or organization for influencing or
attempting to influence an officer or employee of any agency, a member of Congress, officer or
employee of Congress, or an employee of a member of Congress in connection with obtaining any
Federal contract, grant or any other award covered by 31 U.S.C. 1352. Each tier shall also disclose
any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award.
Such disclosures are forwarded from tier to tier up to the recipient.
8. Debarment and Suspension (E.O.s 12549 and 12689) -No contract shall be made to parties
listed on the General Services Administration's List of Parties Excluded from Federal Procurement or
Nonprocurement Programs in accordance with E.O.s 12549 and 12689, "Debarment and
Suspension." This list contains the names of parties debarred, suspended, or otherwise excluded by
agencies, and contractors declared ineligible under statutory or regulatory authority other than E.O.
12549. Contractors with awards that exceed the small purchase threshold shall provide the required
certification regarding its exclusion status and that of its principal employees.
I OMB...Home;Page Budget Information I Legislative Information I Management Reform/GPRA
Grants Management I Financial Management I Procurement Policy
http://www.whitehouse.gov/OMB/circulars/a110/a110.html 6/20/00
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EXHIBIT "Du
Community Development Block Grant Program Handbook 6500
Entitlement Grant Regulations September 1988
"Program income" means gross income received by the Recipient or a
Subrecipient directly generated from the use of CDBG funds. When such income
is generated by an activity that is only partially assisted with CDBG funds,
the income shall be prorated to reflect the percentage of CDBG funds used .
(1) Program income includes, but is not limited to the following:
(i) Proceeds from the disposition by sale or long term lease of real
property purchased or improved with CDBG funds ;
(ii) Proceeds from the disposition of equipment purchased with CDBG
funds;
(iii) Gross income from the use or rental of real or personal property
acquired by the Recipient or. a Subrecipient with CDBG funds, less
the costs incidental to the generation of such income ;
(iv) Gross income from the use or rental of real property owned by the
Recipient or a Subrecipient that was constructed or improved with
CDBG funds, less the costs incidental to the generation of such
income;
(v) Payments of principal and interest on loans made using CDBG funds;
(vi) Proceeds from the sale of loans made with CDBG funds;
(vii) Proceeds from the sale of obligations secured by loans made with
CDBG funds;
(viii) Interest earned on funds held in a revolving fund account;
(ix) Interest earned on program income pending disposition of such
income; and,
(x) Funds collected through special assessments made against
properties owned and occupied by households not of low and
moderate income, where such assessments are used to recover all
or part of the CDBG portion of a public improvement.
(2) Program income does not include interest earned (except for interest
described in § 570.513) on cash advances from the U.S. Treasury. Such
interest shall .be remitted to HUD for transmittal to the U. S. Treasury
and will not be reallocated under section 106(c) or (d) of the Act.
Examples of other receipts that are not considered program income are
proceeds from fundraising activities carried out by Subrecipients
receiving CDBG assistance; funds collected through special assessments
used to recover the non-CDBG portion of a public improvement ; and
proceeds from the disposition of real property acquired or improved with
CDBG funds when such disposition occurs after the applicable time period
specified in § 570.503(b)(8) for Subrecipient-controlled property or §
570.505 for Recipient-controlled property.
ED
. ham'
EXHIBIT "E"
CDBG PROGRAM
SU.BRECIPIENT UNDERWRITING GUIDELINES
CITY OF OMAHA DEFERRED PAYMENT LOANS
Effective Date: March 20, 1998
Revised: March 15, 2000
These Underwriting guidelines provide a general overview of the City of Omaha requirements
applicable to Deferred Payment Loans for homes purchased through Subrecipients including, but
not limited to, Holy Name Housing Corporation; South Omaha Affordable Housing Corporation;
Housing and Neighborhood Developers, Inc., formerly known as United Ministries of Northeast
Omaha, Inc.; Omaha 100, Inc.; New Community Development Corporation; Omaha Economic
• Development Corporation and United Minority Contractor's Association of Nebraska' While it •
is not possible to mention all requirements, these guidelines answer most questions concerning
the City's Deferred Payment Loan.
A. PURPOSE
• The purpose of the Planning Department's Community Development Division is to
• promote the growth, development and revitalization of the City of Omaha through the
elimination of slums and blight; to assist low and moderate income persons and families in
attaining decent, affordable housing; and to create job opportunities for lower income
persons through economic development activities.
• This is accomplished by 1) formulating and implementing plans and programs designed to
revitalize neighborhoods, commercial areas and industrial areas; upgrade the housing stock
in the inner city; and create homeownership opportunities; 2) administering home
renovation, home construction, economic developing, real estate development and
revitalization programs and activities; and 3) providing services and improved service
facilities for housing counseling, home maintenance, homelessness,job training, education,
elderly persons, handicapped and other socio-economic assistance activities.
B. DEFINITIONS
In order to provide guidance and consistency in providing Deferred Payment Loans to
homebuyers, the following definitions shall apply:
1. Borrower — shall mean one or more persons purchasing a property and any other
persons co-signing on the promissory note.
2. Debt-to-Income Ratio (DIR) — shall mean the monthly total of all mortgage
payments, real estate taxes, special assessments, property insurance premiums and
liabilities (excluding utilities, federal income taxes, state income taxes and social
security payments) divided by the gross monthly income. The maximum DIR shall
1 Rev. 3/15/2000
be 42%. In computing the DIR, installment debts extending ten months or more and
all revolving accounts shall be considered.
3. Deferred Payment Loan (DPL) — shall mean a loan without interest of CDBG funds
in an amount not to exceed the amount approved by the City Council for a
rehabilitated and a newly constructed property, made subject to the terms, conditions
and provisions of the loan agreement under which said loan is made, secured by no
less than a second mortgage/deed of trust on an individual property, which shall
provide, inter-alia, that same shall become due and payable without interest upon the
sale or transfer of ownership of the property, or portion thereof, or interest therein by
the Owner within five (5) years from the date of loan closing for a rehabilitated
. property and ten (10) years from the date of loan closing on a newly constructed
property.
After 5 years on the rehabilitated properties and 10 years on newly constructed
properties, the Deferred Payment loan amount will depreciate 50% with the
remaining depreciated balance due upon sale or transfer of the property. Following
the initial depreciation, the Owner may choose to repay the 50% DPL balance over a
period of time. Upon written request by the Owner to repay the DPL balance, the
Planning Department will deteuiune the terms and conditions or repayment.
Deferred Payment Loan amounts may not exceed the following:
a. New Property: Median Income DPL Amount
80% and Below $35,000.00
81%-110% $25,000.00
• 111%-120% $20,000.00
Over 120% -0-
b. Rehabilitated Property: Median Income DPL Amount
80% and Below $15,000.00
Over 80% -0-
4. Employment History — shall mean a verifiable and continuous two-year work
history, or a verifiable source of other income including, but not limited to, social
security, pension, annuities, child support, alimony, etc. In some instances, education
may be substituted for employment if Borrower has been employed at current job for
six months.
5. Household - shall mean all persons who will occupy the property. The occupants
may be a single family, one person living alone, two or more families living together
or any other group of related or unrelated persons who share living arrangements and
includes:
a. any dependent child under the age of 19. If a child is claimed for income tax
Rev. 3/15/2000
(IRS) purposes, the City will consider the child a dependent.
. b. any dependent member over the age of 62 who has lived in the household full
time for a minimum of 6 months immediately prior to application date and
will continue to live in the household full time, does not own other property
and is dependent upon the borrower.
6. Housing-Income-Ratio (HIR) — shall mean the monthly total of all mortgage
payments, real estate taxes, special assessments and property insurance premiums
divided by the gross monthly income. The maximum HIR shall be 33% or the
percentage established by the lender providing the first mortgage financing.
7. Income — (See attached sheet for computing annual income) Annual income shall
include:
a. Wages, salaries, tips, commissions, etc.,
b . Self-employment income from owned non-farm business, including
proprietorships and partnerships,
c. Farm self-employment income
d. Interest, dividends, net rental income or income from estates or trusts,
e. Social security or railroad retirement
f. Supplemental security income, Aid to Families with Dependent Children or
other public assistance or public welfare programs,
g. Retirement, survivor or disability pensions
h. Any other sources of income received regularly including Veterans' (VA)
payments, unemployment compensation, child support and alimony, and
• i. Income from assets as shown below:
1. amounts in savings or checking accounts.
2. stocks, bonds, savings certificates, money market funds and other
investment accounts.
3. Equity in real property or other capital investments. Equity is the
estimated current market value of the asset less the unpaid balance on
all loans secured by the asset and reasonable costs (such as broker
fees) that would be incurred in selling the asset. Do not include equity
• in principle residence (home equity).
4. The cash value of trusts that are available to the household.
5. IRA, Keogh and similar retirement savings accounts, even though
withdrawal would result in a penalty.
6. Contributions to company retirement/pension funds that can be
withdrawn without retiring or terminating employment.
7. Assets which, although owned by more than one person, allow
unrestricted access by the applicant.
8 . Lump sum receipts such as inheritances, capital gains, lottery
winnings, insurance settlements and other claims.
3 Rev. 3/15/2000
9. Personal property held as an investment such as gems, jewelry, coin
collections, antique cars, etc.
10. Cash value of life insurance policies.
11. Assets disposed of for less than fair market value during two years
preceding certification or recertification.
j. Actual income from assets if total assets are $5,000 or less.
k. If assets are more than $5,000, the greater of actual income from assets or
total assets times passbook rate.
1. Assets do not include:
1. Necessary personal property except personal property held as an
investment such as gems,jewelry, coin collections, antique cars, etc.
2. Interest in Indian trust lands.
3. Assets that are a part of an active business or farming operation.
NOTE: Rental properties are considered personal assets held as an
investment rather than business assets unless real estate is the
applicant's/tenant's main occupation.
4. Assets no accessible to the family and which provide no income for
the family.
5. Vehicles especially equipped for the handicapped.
6. Equity in owner-occupied cooperatives and manufactured homes in
which the family lives.
7. Equity in principle residence (home equity)
NOTE: Income averaging is not acceptable.
8. Median Income — shall mean the Median Income by Family Size income data as
published by the United States Department of Housing and Urban Development and
as further updated and revised to reflect the current or most recent income level
statistics. A copy of the median incomes is available upon request at the City of
Omaha Planning Department.
9. Subrecipient — shall mean a public or private non-profit agency, authority or
organization receiving HOME Funds to undertake eligible activities.
10. Verifications — shall mean all supporting documentation obtain within the past six
months for preliminary loan approval by the City. These documents include, but
are not limited to, employment, bank deposits, credit information and property title
commitments.
4 Rev. 3/15/2000
C. 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 the City
Council.
D. BANKRUPTCY
Borrowers who have filed a bankruptcy must have established a verifiable form of credit
over a six month period commencing after the Bankruptcy Court entered its Order of
Discharge. A copy of the bankruptcy document, Court Order of Discharge and a detailed
• letter explaining the reason for filing bankruptcy and the circumstances surrounding it must
be submitted with the initial application for preliminary loan approval by the City.
E. INSURANCE
The Borrower must have at least a hazard insurance policy in force for one year at the time
of loan closing. The policy must have a proper endorsement naming the City of Omaha as
• an additional mortgagee. Proper mortgage endorsement is available at the City of Omaha
Planning Department.
F. SALE OF PROPERTY
• In the event of sale of the property, the deferred payment loan must be repaid to the City of
Omaha as specified in the Promissory Note and Section B, Number 3 above.
G. LOAN ASSUMPTION •
Some Homeowners who have received financial assistance from the City of Omaha for a
Deferred Payment loan to purchase their homes may, at some point, desire to transfer their
homes and have your loan assumed by a new buyer. The following criteria will apply
when a homeowner desires to sell his/her property and requests that the loan be assumed by
a new buyer:
•
1. The family who assumes a City of Omaha Deferred Payment Loan:
a. must be creditworthy; and
b. must meet all underwriting criteria contained in these guidelines; and,
c. must agree to live in the house for the remaining term of the Deferred Payment
Loan.
5 Rev:3/15/2000
2. The purchase price, including the downpayment, must be negotiated and agreed upon
between the buyer and the seller.
3. The incomes of families assuming a DPL may not exceed the limits of the median
family income contained in the agreement under which the Seller's DPL was
approved.
4. The new buyer assuming a DPL must assume liability for the balance of the loan at
the time of loan closing.
5. When an Owner of a property with a DPL wishes to transfer his/her property through
an assumption, the Owner must:
a. Secure a potential borrower who is willing to assume the DPL.
•
b. Negotiate a selling (purchase) price with the potential buyer: The amount of the
downpayment would be paid to the.Owner by the new buyer at the time of loan
closing. The City of Omaha will not negotiate with either party over the amount
of this repayment.
c. Write a letter to the Subrecipient requesting that an assessment be made of the
prospective borrower's qualifications to assume the DPL.
d. After this assessment is completed, the present Owner will be notified of the
prospective buyer's eligibility to assume the loan.
6. In the event of the death of an owner, the heirs will have the same assumption options
as the Owner.
H. CREDIT HISTORY
1. Judgments
Judgments must be paid or satisfied prior to loan approval.
2. -Collection Accounts
Collection accounts should be paid or a repayment agreement must be in effect. If a
repayment agreement is in effect, the Borrower must have established a minimum of
six months payment history. •
3. Divorce — In the case of a divorce, any debts remaining in both names originating
prior to the Court granting of a decree shall be considered a financial obligation
against the borrower.
6 Rev. 3/15/2000
4. Legal Separation — Borrower that is legally separated will be subjected to the same
underwriting criteria as a married person; therefore, both signatures (husband and
wife) shall e required on the Promissory Note.
I. NON-DISCRIMINATION BASED ON HANDICAP
1. The Subrecipient shall not discriminate or permit discrimination in violation of
federal or state laws or local ordinances because of race, color, sex, age, political or
religious opinions, affiliations, national origin, familial status or handicap.
2. The Subrecipient shall not discriminate in admission or access to, or treatment or
employment in, its federally assisted programs and activities. To this end, no
otherwise qualified individual with a handicap shall, solely by reason of his or her
handicap, be excluded from participation in, or be denied the benefits of, or be
subjected to discrimination under this or any other City-sponsored program or
activity. The person responsible for coordinating the Planning Department's efforts
to comply with its non-discrimination policies is Marian Todd, Section 504
Coordinator, Planning Department, Suite 1111, 1819 Farnam Street, Omaha,
Nebraska, 68183, (402) 444-5217 (V/TDD) 444-5150).
Persons desiring to file a complaint with the City of Omaha concerning an allegation of
discrimination shall contact the Human Relations Department at (402) 444-5025 (B/TDD
444-5055).
•
7 Rev. 3/15/2000
Exhibit F
New Community Development Corporation
Deferred Payment Loan Determination Process
The prospective home purchaser in the New Community Development Corporation's (NCDC)
home ownership program will proceed through the following loan approval process:
Initial assessment by NCDC representative to insure that the client's intent is home
ownership. If so, the home ownership program is briefly described and an application
is completed.
The NCDC Housing Developer reviews the completed application for eligibility.
Employment history, income and level of debt are reviewed for initial eligibility.
Apparent application difficulties and strengths are reviewed. If no obvious
disqualifying issues are identified, the applicants are asked to obtain a credit report.
The credit report is examined with the applicants. Any blemishes on the credit report
are discussed and a plan of action is implemented to clear credit problems. If no
difficulties are found, or when the problems are cleared up, the applicants are
provided a list of NCDC houses, which the applicants would be qualified to purchase,
based on the total household income.
When the applicants have selected a home they would like to purchase, they are
referred- to Omaha 100, Inc. or any lender of their choice to complete the loan
application process and secure permanent mortgage financing.
During the loan approval process, all income sources are identified and verified. The
Housing to Income Ratio usually cannot exceed 33% and the Debt to Income Ratio
usually cannot exceed 42% of the applicant's monthly income.
When all conditions are met and first mortgage financing is tentatively approved, the
application is routed to the City Planning Department for a request for second
mortgage deferred payment loan (DPL) financing approval.
DPL Formula:
The DPL request is for an amount that will reduce the purchase price of the house to
an amount where the monthly housing payment of the first mortgage is affordable.
- - - RXHTRIT "Gn
New Community Development Corp.
GENERAL DECISION NE010009 04/13/2001 NE9 Concord Square Target Area
Date: April 13, 2001
General Decision Number NE010009
Superseded General Decision No. NE000009
State: Nebraska
Construction Type:
RESIDENTIAL
County(ies) :
CASS DOUGLAS SARPY
RESIDENTIAL CONSTRUCTION PROJECTS (consisting of single family
homes and apartments up to and including 4 stories)
Modification Number Publication Date
0 03/02/2001
1 04/13/2001
COUNTY(i e s) :
CASS DOUGLAS SARPY
BRNE0001D 06/01/2000
Rates Fringes
BRICKLAYER 20.85 5.60
* CARP0444C 11/01/2000
Rates Fringes
CARPENTER (includes acoustical
ceiling and batt insulation) :
Work on 4 story apartment
buildings 18.36 5.40
CARP0444G 06/01/2000
Rates Fringes
CARPENTER (includes acoustical
ceiling and batt insulation) :
Work on single family homes
and apartments up to and
including 3 stories 13.65 4 .08
ELEC0022C 06/01/2000
Rates Fringes
ELECTRICIAN:
Work on 4-story apartment buildings 23 .25 3 .75% + 7.24
ELEC0022E 04/01/2000
Rates Fringes
ELECTRICIAN:
Work on single family homes
and apartments up to and —
including 3 stories 14 .69 3 .75% + 4.44
\(E
1 of4 4/13/01 10:05 AM
ELEC0022M 12/01/2000
Rates Fringes
ELECTRICIANS:
Sound and voice transmission,
transference systems;
television and video
systems; security systems;
communication systems that
transmit or receive
information and/or control
systems; energy
management systems; and
fire alarm systems (does
not include raceway systems
(excluding cable tray for
the purpose of the above
listed systems; Also, chases
and/or nipples (not to exceed
10 ft. ) may be installed on
open wiring systems) ; Note:
Fire alarm systems when
installed in raceways in any
new or remodel project when
other building trades are
present shall be the work
of the inside electrician) 17.75 4% + 3 .59
PLAS0538B 10/01/1999
Rates Fringes
CEMENT MASON 18.36 2 .20
PLUM0016E 06/01/2000
Rates Fringes
PLUMBER 24.32 6.35
SUNE4003A 06/01/1984
Rates Fringes
DRYWALL:
Hanger 13.57 2 .10
Finisher & taper 8.64
INSULATOR 11.21
IRONWORKER 13.00 2.00
LABORERS:
General 10.41 1.80
Mason tender 10.585 1.80
PAINTER 10.00
POWER EQUIPMENT OPERATORS:
Loader 13 .49
SHEET METAL WORKER 11.89 1.34
TRUCK DRIVER 10.27
WELDERS - Receive rate prescribed for craft performing operation
to which welding is incidental.
Unlisted classifications needed for work not included within
the scope of the classifications listed may be added after
award only as provided in the labor standards contract clauses
(29 CFR 5.5 (a) (1) (v) ) .
2 of 4 4/13/01 10:05 AM
_�
In the listing above, the "SU" designation means that rates
listed under that identifier do not reflect collectively
bargained wage and fringe benefit rates. Other designations
indicate unions whose rates have been determined to be
prevailing.
WAGE DETERMINATION APPEALS PROCESS
1. ) Has there been an initial decision in the matter? This can
be:
* an existing published wage determination
* a survey underlying a wage determination
* a Wage and Hour Division letter setting forth a
position on a wage determination matter
* a conformance (additional classification and rate)
ruling
On survey related matters, initial contact, including requests
for summaries of surveys, should be with the Wage and Hour
Regional Office for the area in which the survey was conducted
because those Regional Offices have responsibility for the
Davis-Bacon survey program. If the response from this initial
contact is not satisfactory, then the process described in 2. )
and 3 . ) should be followed.
With regard to any other matter not yet ripe for the formal
process described here, initial contact should be with the Branch
of Construction Wage Determinations. Write to:
Branch of Construction Wage Determinations
Wage and Hour Division
U. S. Department of Labor
200 Constitution Avenue, N. W.
Washington, D. C. 20210
2. ) If the answer to the question in 1. ) is yes, then an
interested party (those affected by the action) can request
review and reconsideration from the Wage and Hour Administrator
(See 29 CFR Part 1.8 and 29 CFR Part 7) . Write to:
Wage and Hour Administrator
U.S. Department of Labor
200 Constitution Avenue, N. W.
Washington, D. C. 20210
The request should be accompanied by a full statement of the
interested party's position and by any information (wage payment
data, project description, area practice material, etc. ) that the
requestor considers relevant to the issue.
3 .) If the decision of the Administrator is not favorable, an
interested party may appeal directly to the Administrative Review
Board (formerly the Wage Appeals Board) . Write to:
Administrative Review Board
U. S. Department of Labor
200 Constitution Avenue, N. W.
Washington, D. C. 20210
4. ) All decisions by the Administrative Review Board are final.
END OF GENERAL DECISION
(F)
3 of 4 4/13/01 10:05 AM
EXHIIBIT "G"
Federal Labor Standards Provisions Ht'D go /
U. S. Department of Housing and Urban Development
Applicability
The Project or Program to which the construction work covered by this contract pertains is being
assisted by the United States of America and the following Federal Labor Standards Provisions are
included in this Contract pursuant to the provisions applicable to such Federal assistance.
A. 1. (i) Minimum Wages. All laborers and mechanics employed or working upon the site of the
work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the
construction or development of the project), will be paid unconditionally and not less often than once
a week, and without subsequent deduction or rebate on any account (except such payroll deductions
as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR
Part 3), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at
time of payment computed at rates not less than those contained in the wage determination of the
Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual
relationship which may be alleged to exist between the contractor and such laborers and mechanics. .
Contributions made or costs reasonably anticipated for bona fide fringe benefits under Section
1(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics are considered wages paid to
such laborers or mechanics, subject to the provisions of 29 CFR 5.5(a)(1)(iv); also, regular
contributions made or costs incurred for more than a weekly period (but not less often than quarterly)
under plans, funds, or programs, which cover the particular weekly period, are deemed to be
constructively made or incurred during such weekly period.
Such laborers and mechanics'shall be paid the appropriate wage rate and fringe benefits on the
wage determination for the classification of work actually performed, without regard to skill, except
as provided in 29 CFR Part 5.5(a)(4). Laborers or mechanics performing work in more than one
classification may be compensated at the rate specified for each classification for the time actually
worked therein: Provided, That the employer's payroll records accurately set forth the time spent in
each classification in which work is performed. The wage determination (including any additional
classification and wage rates conformed under 29 CFR Part 5.5(a)(1)(ii) and the Davis-Bacon poster
(WH-1321) shall be posted at all times by the contractor and its subcontractors at the site of the work
in a prominent and accessible place where it can be easily seen by the workers.
(ii) (a) Any class of laborers or mechanics which is not listed in the wage determination and
which is to be employed under the contract shall be classified in conformance with the wage
determination, HUD shall approve an additional classification and wage rate and fringe benefits
therefore only when the following criteria have been met:
(1) The work to be performed by the classification requested is not performed by a
classification in the wage determination; and
(2) The classification is utilized in the area by the construction industry; and
(3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable
relationship to the wage rates contained in the wage determination.
(b) If the contractor and the laborers and mechanics to be employed in the classification (if
known), or their representatives, and HUD or its designee agree on the classification and wage rate
(including the amount designated for fringe benefits where appropriate), a report of the action taken
shall be sent by HUD or its designee to the Administrator of the Wage and Hour Division,
Employment Standards Administration, U.S. Department of Labor, Washington, D.C. 20210. The
Administrator, or an authorized representative, will approve, modify, or disapprove every additional
classification action within 30 days of receipt and so advise HUD or its designee or will notify HUD or
its designee within the 30-day period that additional time is necessary. (Approved by the Office of
Management and Budget under OMB control number 1215-0140.)
1
(c) In the event the contractor, the laborers or mechanics to be employed in the classification or
their representatives, and HUD or its designee do not agree on the proposed classification and wage
rate (including the amount designated for fringe benefits, where appropriate), HUD or its designee
shall refer the questions, including the views of all interested parties and the recommendation of
HUD or its designee, to the Administrator for determination. The Administrator, or an authorized
representative, will issue a determination within 30 days of receipt and so advise HUD or its
designee or will notify HUD or its designee within the 30-day period that additional time is necessary.
(Approved by the Office of Management and Budget under OMB Control Number 1215-0140.)
(d) The wage rate (including fringe benefits where appropriate) determined pursuant to
subparagraphs (1)(b) or (c) of this paragraph, shall be paid to all workers performing work in the
classification under this contract from the first day on which work is performed in the classification.
(iii) Whenever the minimum wage rate prescribed in the contract for a class of laborers or
mechanics includes a fringe benefit which is not expressed as an hourly rate, the contractor shall
either pay the benefit as stated in the wage determination or shall pay another bona fide fringe
benefit or an hourly cash equivalent thereof.
(iv) If the contractor does not make payments to a trustee or other third person, the contractor
may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably
anticipated in providing bona fide fringe benefits under a plan or program, Provided, That the
Secretary of Labor has found, upon the written request of the contractor, that the applicable
standards of the Davis-Bacon Act have been met. The Secretary of Labor may require the
contractor to set aside in a separate account assets for the meeting of obligations under the plan or
program. (Approved by the Office of Management and Budget under OMB Control Number 1215-
0140.)
2. Withholding. HUD or its designee shall upon its own action or upon written request of an
authorized representative of the Department of Labor withhold or cause to be withheld from the
contractor under this contract or any other Federal contract with the same prime contractor, or any
other Federally-assisted contract subject to Davis-Bacon prevailing wage requirements, which is
held by the same prime contractor so much of the accrued payments or advances as may be
considered necessary to pay laborers and mechanics, including apprentices, trainees and helpers,
employed by the contractor or any subcontractor the full amount of wages required by the contract.
In the event of failure to pay any laborer or mechanic, including any apprentice, trainee or helper,
employed or working on the site 'of the work (or under the United States Housing Act of 1937 or
under the Housing Act of 1949 in the construction or development of the project), all or part of the
wages required by the contract. HUD or its designee may, after written notice to the contractor,
sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any
further payment, advance, or guarantee of funds until such violations have ceased. HUD or its
designee may, after written notice to the contractor, disburse such amounts withheld for and on
account of the contractor or subcontractor to the respective employees to whom they are due. The
Comptroller General shall make such disbursements in the case of direct Davis-Bacon Act contracts.
3. (i) Payrolls and basic records. Payrolls and basic records relating thereto shall be
maintained by the contractor during the course of the work preserved for a period of three years
thereafter for all laborers and mechanics working at the site of the work (or under the United States
Housing Act of 1937, or under the Housing Act of 1949, in the construction or development of the
project). Such records shall contain the name, address, and social security number of each such
worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or
costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in
Section 1(b)(2)(B) of the Davis-Bacon Act), daily and weekly number of hours worked, deductions
made and actual wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5
(a)(1)(iv) that the wages of any laborer or mechanic include the amount of any costs reasonably
anticipated in providing benefits under a plan or program described in Section 1(b)(2)(B) of the
Davis-Bacon Act, the contractor shall maintain records which show that the commitment to provide
2
such benefits is enforceable, that the plan or program is financially responsible, and that the plan or
program has been communicated in writing to the laborers or mechanics affected, and records which
show the costs anticipated or the actual cost incurred in providing such benefits. Contractors
employing apprentices or trainees under approved programs shall maintain written evidence of the
registration of apprenticeship programs and certification of trainee programs, the registration of the
apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs.
(Approved by the Office of Management of Budget under OMB Control Numbers 1215-0140 and
1215-0017.)
(ii) (a) The contractor shall submit weekly for each week in which any contract work is performed
a copy of all payrolls to HUD or its designee if the agency is a party to the contract, but if the agency
is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the
case may be, for transmission to HUD or its designee. The payrolls submitted shall set out
accurately and completely all of the information required to be maintained under 29 CFR Part
5.5(a)(3)(i). This information may be submitted in any form desired. Optional Form WH-347 is
available for this purpose and may be purchased from the Superintendent of Documents (Federal
Stock Number 029-005-00014-1), U.S. Government Printing Office, Washington, D.C. 20402. The
prime Contractor is responsible for the submission of copies of payrolls by all subcontractors.
(Approved by the Office of Management and Budget under OMB Control Number 1215-0149).
(b) Each payroll submitted shall be accompanied by a "Statement of Compliance,"signed by the
contractor or subcontractor or his or her agent who pays or supervises the payment of the persons
employed under the contract and shall certify the following:
(1) That the payroll for the payroll period contains the information required to be maintained
under 29 CFR Part 5.5(a)(3)(i) and that such information is correct and complete;
(2) That each laborer or mechanic (including each helper, apprentice, and trainee) employed
on the contract during the payroll period has been paid the full weekly wages earned, without rebate,
either directly or indirectly, and that no deductions have been made either directly or indirectly from
the full wages earned, other than permissible deductions as set forth in 29 CFR Part 3;
(3) That each laborer or mechanic has been paid not less than the applicable wage rates and
fringe benefits or cash equivalents for the classification of work performed, as specified in the
applicable wage determination incorporated into the contract.
(c) The weekly submission of a properly executed certification set forth on the reverse side of
Optional Form WH-347 shall satisfy the requirement for submission of the "Statement of
Compliance"required by paragraph A.3(ii)(b) of this section.
(d) The falsification of any of the above certifications may subject the contractor or subcontractor
to civil or criminal prosecution under Section 1001 of Title 18 and Section 231 of Title 31 of the
United States Code.
(iii) The contractor or subcontractor shall make the records required under paragraph A.3(i) of
this section available for inspection, copying, or transcription by authorized representatives of HUD
or its designee or the Department of Labor, and shall permit such representatives to interview
employees during working hours on the job. If the contractor or subcontractor fails to submit the
required records or to make them available, HUD or its designee may, after written notice to the
contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the
suspension of any further payment, advance, or guarantee of funds: Furthermore, failure to submit
the required records upon request or to make such records available may be grounds for debarment
action pursuant to 29 CFR Part 5.12.
3
4. (i) Apprentices and Trainees. Apprentices will be permitted to work at less than the
predetermined rate for the work they performed when they are employed pursuant to and individually
registered in a bona fide apprenticeship program registered with the U.S. Department of Labor,
Employment and Training Administration, Bureau of Apprenticeship and Training, or with a State
Apprenticeship Agency recognized by the Bureau, or if a person is employed in his or her first 90
days of probationary employment as an apprentice in such an apprenticeship program, who is not
individually registered in the program, but who has been certified by the Bureau of Apprenticeship
and Training or a State Apprenticeship Agency (where appropriate) to be eligible for probationary
employment as an apprentice. The allowable ratio of apprentices to journeymen on the job site in
any craft classification shall not be greater than the ratio permitted to the contractor as to the entire
work force under the registered program. Any worker listed on a payroll at an apprentice wage rate,
who is not registered or otherwise employed as stated above, shall be paid not less than the
applicable wage rate on the wage determination for the classification of work actually performed. In
addition, any apprentice performing work on the job site in excess of the ratio permitted under the
registered program shall be paid not less than the applicable wage rate on the wage determination
for the work actually performed. Where a contractor is performing construction on a project in a
locality other than that in which its program is registered, the ratios and wage rates (expressed in
percentages of the journeyman's hourly rate) specified in the contractor's or subcontractor's
registered program shall be observed. Every apprentice must be paid at not less than the rate
specified in the registered program for the apprentice's level of progress, expressed as a percentage
of the journeymen hourly rate specified in the applicable wage determination. Apprentices shall be
paid fringe benefits in accordance with the provisions of the apprenticeship program. If the
apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of
fringe benefits listed on the wage determination for the applicable classification. If the Administrator
determines that a different practice prevails for the applicable apprentice classification, fringes shall
be paid in accordance with that determination. In the event the Bureau of Apprenticeship and
Training, or a State Apprenticeship Agency recognized by the Bureau, withdraws approval of an
apprenticeship program, the contractor will no longer be permitted to utilize apprentices at less than
the applicable predetermined rate for the work performed until an acceptable program is approved.
(ii) Trainees. Except as provided in 29 CFR 5.16, trainees will not be permitted to work at less
than the predetermined rate for the work performed unless they are employed pursuant to and
individually registered in a program which has received prior approval; evidenced by formal
certification by the U.S. Department of Labor, Employment and Training Administration. The ratio of
trainees to journeymen on the job site shall not be greater than permitted under the plan approved
by the Employment and Training Administration. Every trainee must be paid at not less than the rate
specified in the approved program for the trainee's level of progress, expressed as a percentage of
the journeyman hourly rate specified in the applicable wage determination. Trainees shall be paid
fringe benefits in accordance with the provisions of the trainee program. If the trainee program does
not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the
wage determination unless the Administrator of the Wage and Hour Division determines that there is
an apprenticeship program associated with the corresponding journeyman wage rate on the wage
determination which provides for less than full fringe benefits for apprentices. Any employee listed
on the payroll at a trainee rate who is not registered and participating in a training plan approved by
the Employment and Training Administration shall be paid not less than the applicable wage rate on
the wage determination for the work actually performed. In addition, any trainee performing work on
the job site in excess of the ratio permitted under the registered program shall be paid not less than
the applicable wage rate on the wage determination for the work actually performed. In the event
the Employment and Training Administration withdraws approval of a training program, the
contractor will no longer be permitted to utilize trainees at less than the applicable predetermined
rate for the work performed until an acceptable program is approved.
(iii) Equal employment opportunity. The utilization of apprentices, trainees and journeymen
under this part shall be in conformity with the equal employment opportunity requirements of
Executive Order 11246, as amended, and 29 CFR Part 30.
4
•
5. Compliance with Copeland Act requirements. The contractor shall comply with the
requirements of 29 CFR Part 3 which are incorporated by reference in this contract.
6. Subcontracts. The contractor or subcontractor will insert in any subcontracts the clauses
contained in 29 CFR 5.5(a)(1) through (10) and such other clauses as HUD or its designee may by
appropriate instructions require, and also a clause requiring the subcontractors to include these
clauses in any lower tier subcontracts. The prime contractor shall be responsible for the compliance
by any subcontractor or lower tier subcontractor with all the contract clauses in 29 CFR Part 5.5
7. Contracts termination; debarment. A breach of the contract clauses in 29 CFR 5.5 may be
grounds for termination of the contract, and for debarment as a contractor and a subcontractor as
provided in 29 CFR 5.12.
8. Compliance with Davis-Bacon and Related Act Requirements. All rulings and
interpretations of the Davis-Bacon and Related Acts contained in 29 CFR Parts 1, 3, and 5 are
herein incorporated by reference in this contract.
9. Disputes concerning labor standards. Disputes arising out of the labor, standards
provisions of this contract shall not be subject to the general disputes clause of this contract. Such
disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in
29 CFR Parts 5, 6, and 7. Disputes within the meaning of this clause include disputes between the
contractor (or any of its subcontractors) and HUD or its designee, the U.S. Department of Labor, or
the employees or their representatives.
10. (i) Certification of Eligibility. By entering into this contract, the contractor certifies that
neither it (nor he or she) nor any person or firm who has an interest in the contractor's firm is a
person or firm ineligible to be awarded Government contracts by virtue of Section 3(a) of the Davis-
Bacon Act or 29 CFR 5.12(a)(1) or to be awarded HUD contracts or participate in HUD programs
pursuant to 24 CFR Part 24.
(ii) No part of this contract shall be subcontracted to any person or firm ineligible for award of a
Government contract by virtue of Section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1) or to be
awarded HUD contracts or participate in HUD programs pursuant to 24 CFR Part 24.
(iii) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C.
1001. Additionally, U.S. Criminal Code, Section 1010, Title 18, U.S.C. "Federal Housing
Administration transactions", provides in part "Whoever, for the purpose of...influencing in any way
the action of such Administration...makes, utters or publishes any statement knowing the same to be
false...shall be fined not more than $5,000 or imprisoned not more than two years, or both."
11. Complaints, Proceedings, or Testimony by Employees. No laborer or mechanic to whom
the wage, salary, or other labor standards provisions of this Contract are applicable shall be
discharged or in any other manner discriminated against by the contractor or any subcontractor
because such employee has filed any complaint or instituted or caused to be instituted any
proceeding or has testified or is about to testify in any proceeding under or relating to the labor
standards applicable under this Contract to his employer.
B Contract Work Hours and Safety Standards Act. As used in this paragraph, the terms
"laborers"and "mechanics" include watchmen and guards.
(1) Overtime requirements. No contractor or subcontractor contracting for any part of the
contract work which may require or involve the employment of laborers or mechanics shall require or
permit any such laborer or mechanic in any workweek in which he or she is employed on such work
to work in excess of forty hours in such workweek unless such laborer or mechanic receives
compensation at a rate not less than one and one-half times the basic rate of pay for all hours
worked in excess of forty hours in such workweek.
5
(2) Violation; liability for unpaid wages; liquidated damages. In the event of any violation of
the clause set forth in subparagraph (1) of this paragraph, the contractor and any subcontractor
responsible therefor shall be liable for the unpaid wages. In addition, such contractor and
subcontractor shall be liable to the United States (in the case of work done under contract for the
District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such
liquidated damages shall be computed with respect to each individual laborer or mechanic, including
watchmen and guards, employed in violation of the clause set forth in subparagraph (1) of this
paragraph, in the sum of $10 for each calendar day on which such individual was required or
permitted to work in excess of the standard workweek of forty hours without payment of the overtime
wages required by the clause set forth in subparagraph (1) of this paragraph.
(3) Withholding for unpaid wages and liquidated damages. HUD or its designee shall upon
its own action or upon written request of an authorized representative of the Department of Labor
withhold or cause to be withheld, from any moneys payable on account of work performed by the
contractor or subcontractor under any such contract or any other Federal contract with the same
prime contractor or any other Federally-assisted contract subject to the Contract Work Hours and
Safety Standards Act, which is held by the same prime contractor such sums as may be determined
to be necessary to satisfy any liabilities of such contractor or subcontractor for unpaid wages and
liquidated damages as provided in the clause set forth in subparagraph (2) of this paragraph.
(4) Subcontracts. The contractor or subcontractor shall insert in any subcontracts the clauses
set forth in subparagraph (1) through (4) of this paragraph and also a clause requiring the
subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be
responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set
forth in subparagraphs (1) through (4) of this paragraph.
C. Health and Safety
(1) No laborer or mechanic shall be required to work in surroundings or under working conditions
which are unsanitary, hazardous, or dangerous to his health and safety as determined under
construction safety and health standards promulgated by the Secretary of Labor by regulation.
(2) The Contractor shall comply with all regulations issued by the Secretary of Labor pursuant to
Title 29 Part 1926 (formerly part 1518) and failure to comply may result in imposition of sanctions
pursuant to the Contract Work Hours and Safety.Standards Act{Public Law 91-54, 83 Stat. 96).
(3) The Contractor shall include the provisions of this Article in every subcontract so that such
provisions will be binding on each subcontractor. The Contractor shall take such action with respect
to any subcontract as the Secretary of Housing and Urban Development or the Secretary of Labor
shall direct as a means of enforcing such provisions.
6 410
HUD 4010 (2-84)
EXHIBIT "II"
CITY OF OMAHA
AFFIRMATIVE MARKETING POLICY
AND MONITORING PROCEDURES
Effective: October 1, 1999
Affirmative Marketing Policy
In furtherance of the City of Omaha's commitment to non-discrimination and equal opportunity
in housing, the City of Omaha establishes procedures to affirmatively market units constructed or
rehabilitated under any City-assisted program or project. These procedures are intended to
further the objectives of Title VIII of the Civil Rights Act of 1968 and Executive Order 11063.
It is the affirmative marketing goal of the City of Omaha to assure that individuals who normally
might not apply for vacant rehabilitated or constructed units because of their race or ethnicity:
• know about the vacancies . .,
• feel welcome to apply
• have the opportunity to rent or purchase the units
This policy will be carried'out through the following procedures.
1. Informing the public, potential tenants and owners about Federal fair housing laws and
affirmative marketing policies
• The City of Omaha will inform the public, potential tenants, purchasers and owners
about its affirmative marketing policy, Title VIII and Executive Order 11063.
• The City will place public notices in the Omaha World Herald and the North
Omaha Star to inform owners of the program.
• City representatives will meet with property owners and assist them in preparing
program applications as requested and necessary
• 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:
1. Remain in the present unit during rehabilitation.
2. Move temporarily to another unit within the project while his/her unit is being
rehabilitated.
3. Permanently relocate or voluntarily abandon the unit during the rehabilitation.
• Owners shall post the HUD Equal Housing Opportunity Logo in the project
building and display the Fair Housing Poster in their rental office.
1
• Owners shall use media accessible to minorities when advertising the availability of
units.
• Owners shall use the Equal Housing Opportunity logo, slogan or statement in all
advertising.
• Owners shall maintain a non-discriminatory hiring policy.
• Owners shall adopt a fair housing policy.
2. Informing low and moderate income persons about available units
Property Owners having vacant units may call the Omaha Housing Authority (OHA) at
1'11-6900 and place units on OHA's "Available Unit" list. This list is distributed to
families who have received Certificates of Family Participation and are looking for units
to rent. The listing will remain on the "Available" list for 35 calendar days, then be
removed. If still vacant, the property may be relisted.
If the property is not listed with OHA when rehabilitated or constructed units are
available for initial occupancy, the owner shall inform the following outreach agencies
and/or other agencies of this fact in writing and submit a copy of the letters to the City of
• Omaha, Planning Department, Housing and Community Development Division, Loan
Section, 1819 Farnam Street, Room 1111, Omaha, Nebraska, 68183.
Chicano Awareness, Inc.
4821-South 24th Street
Omaha, NE 68107
Family Housing Advisory Services
2416 Lake Street
Omaha, NE 681111
Urban League of Nebraska
3022 North 24th Street
Omaha,NE 68111
3. Recordkeeping
The Owner shall keep records of the following:
• Local media advertisements of the vacant unit
• Contact dates with outreach agencies and Omaha Housing Authority
• Correspondence informing outreach agencies of vacancies
• Race and gender data of occupants and persons inquiring about availability of units
• Tenant Survey forms, signed and dated by Owner
2
• Name and age of all household members
• Verified income for each household
• Copy of lease
• Determination of utilities
4. Assessment of Actions
The Owner's affirmative marketing efforts will be assessed by the City to:
• determine good faith efforts of Owners to affirmatively market vacant units to
individuals who normally might not apply; and,
• determine whether a sufficient number of racial and ethnic families have applied for
vacant units
The City will take corrective action if it is found that property owners are not carrying out
established procedures of the City's Affirmative Marketing Policy and Monitoring Procedures.
Affirmative Marketing Policy Monitoring Procedures
1. Duties and Responsibilities of the Owner
a) The Owner shall post the H.U.D. Equal Housing Opportunity Logo in the building
project and in the rental office.
b) The Owner shall submit to the City a copy of all letters notifying the outreach
agencies of vacancies. Outreach agencies may include, but are not limited to, the
following:
Omaha Housing Authority Chicano Awareness, Inc.
540 South 27th Street 4821 South 24th Street
Omaha, NE 68105 Omaha, NE 68107
Urban League of Nebraska Family Housing Advisory Services
3022 North 24th Street 2416 Lake Street
Omaha, NE 68111 Omaha, NE 68111
Community Alliance Eastern Nebraska Human Services
4001 Leavenworth Street 900 South 74th Plaza, Suite 200
Omaha, NE 68105 Omaha NE 68114
3
•
Family Service Greater Omaha Community Action
2101 South 42nd Street 2406 Fowler Avenue
Omaha, NE 68105 Omaha, NE 68111
Family Service Greater Omaha Community Action
6720 North 30th Street 5211 South 31st Street
Omaha, NE 68112 Omaha, NE 68107
•
Family Service Housing & Neighborhood Developers
116 E. Mission Avenue 2319 Ogden Street
Bellevue, NE 68005 Omaha, NE 68110
Family Service So. Omaha Affordable Housing Corp.
2580 South 90th Street 1704 South 10th Street
Omaha, NE 68124 Omaha, NE 68108
Omaha Assn. for the Blind NE Commission for the Deaf
1024 South 32nd Street 1313 Farnam on the Mall
Omaha, NE 68105 Omaha, NE 68102
Paralyzed Vets of America Mayor's Commission for Citizens
7612 Maple Street with Disabilities
Omaha, NE 68134 1819 Farnam, Room 304
Omaha, NE 68183
Holy Name Housing Corp. League of Human Dignity
3014 North 45th Street 5513 Center Street
•
Omaha, NE 68104 Omaha, NE 68106
c) The Owner shall submit to the City a copy of all advertisements placed in the local
newspapers. All advertisements must include the Equal Housing Opportunity
Logo, Slogan or Statement.
d) The Owner shall submit to the City a Racial/Gender Form, attached as Exhibit 1,
which includes the name, racial/ethnic characteristics, income, family size and
gender for each person responding to the advertisement.
e) The Owner shall meet with each in-place tenant and all tenants of the occupied
vacant units and complete a Tenant Survey Form, a copy of which is attached and
marked Exhibit 2.
f) The Owner shall submit to the City the original Tenant Survey Form (signed and
dated by Owner) and retain a copy for proper recordkeeping.
g) The Owner shall provide each in-place tenant in the project with a copy of the City
of Omaha's written Tenant Assistance Policy (TAP) and shall advise said tenant(s)
4
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.
h) After completion of the project, the Owner shall submit a Tenant Survey Form for
each occupied unit.
i) Owner shall insure that the rents, including utilities and Median Family Income, are
consistent with the terms and conditions in the approved Agreement between the
Owner and the City of Omaha.
2. Duties and Responsibilities of the City
a) The City shall assess the affirmative marketing procedures to determine good faith
efforts of the Owner to affirmatively market the vacant units by monitoring the
Owner's performance in carrying out the Duties and Responsibilities of the Owner
as outlined in Section 1.
b) 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 Racial/Gender form and Tenant Survey Form to determine the proportion of
raciaUgender participation versus overall participation.
c) 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.
5
EXHIBIT 2
CITY OF OMAHA
TENANT SURVEY FORM
A. GENERAL INFORMATION RACE
Name Telephone
Address Apt. No.
DATE FIRST OCCUPIED UNIT:
Head of Household is: Male Female Elderly Handicapped
Number of Occupants: Total No. Adults No. Children Under 18
GROSS MONTHLY INCOME OF ALL HOUSEHOLD MEMBERS
• Name of Household Member Age Monthly Gross Income
TOTAL GROSS MONTHLY INCOME
MEDIAN FAMILY INCOME PERCENT
B. HOUSING CHARACTERISTICS
Monthly Housing Cost:
Monthly Contract Rent $
Average Monthly Utility Cost $
Monthly Housing Cost $
Subsidized Rent Assistance Received: Section 8 Other Assistance No Assistance
Unit Size: Efficiency 1 BR 2BR 3 BR Other
C. TENANT ASSISTANCE FOR IN-PLACE TENANT ONLY
Remain in Present Dwelling Move to Another Dwelling, in Building
Rent Elsewhere Purchase Subsidized Housing None
D. REMARKS:
Owner Date
EXHIBIT 1
CITY OF OMAHA
RACE/GENDER FORM
Loan No. Date No. of Vacant Units
Owner Project Address
Person Completing Persons Phone No.
This Report Home: Work:
Female
Race/Ethnicity Head of
Family Monthly of Head of Household
Applicant Size Income Household Yes/No
•
NOTE: This form is a list of everyone who inquired about renting the unit(s).
OMB Circular A-122 http://www.whitehouse.gov/omb/circulars/a122/a122.htm1
f
OFFICE OF MANAGEMENT AND BUDGET EXHIBIT "I"
Cost Principles for Non-Profit Organizations
AGENCY: Office of Management and Budget
ACTION: Final revision of OMB Circular A-122, "Cost Principles for Non-Profit Organizations"
SUMMARY: The Office of Management and Budget(OMB)revises OMB Circular A-122 by amending
the definition for equipment; requiring the breakout of indirect costs into two categories(facilities and
administration) for certain non-profit organizations;modifying the multiple allocation basis; and, clarifying
the treatment of certain cost items.
DATES: The revision is effective on June 1, 1998.
FOR FURTHER INFORMATION CONTACT: Federal agencies should contact Gilbert Tran, Office of
Federal Financial Management, Office of Management and Budget, (202) 395-3993. Non-Federal
organizations should contact the organization's Federal cognizant agency.
SUPPLEMENTARY INFORMATION:
A. Background
On October 6, 1995,the Office of Management and Budget(OMB) issued a final revision to OMB
Circular A-122, "Cost Principles for Non-Profit Organizations," in the Federal Register(60 FR 52516)
regarding interest allowability. The revision was made in a continuing effort to increase consistency across
OMB's cost principles circulars A-122, A-21, "Cost Principles for Educational Institutions," and A-87,
"Cost Principles for State, Local and Indian Tribal Governments." To further the goals of consistency,
OMB proposed on the same date(60 FR 52522) to revise the definition of equipment, to clarify the
treatment of certain types of costs, to modify the multiple allocation base method for computing indirect
cost rate(s), and to place an upper-limit on payments of administrative expenses for certain non-profit
organizations.
With this final revision,Circular A-122 consists of the Circular as issued in 1980 (45 FR 46022; July 8,
1980), as amended in 1984 (49 FR 18260; April 27, 1984), in 1987 (52 FR 19788; May 27, 1987), in 1995
(60,FR 52516; October 6, 1995), in 1997 (62 FR 45934; August 29, 1997), and in this notice. A
recompilation of the entire Circular A-122,with all its amendments, accompanies the notice and is
available in electronic form on the OMB Home Page at http://www.whitehouse.gov/OMB.
B. Current Revisions
Circular A-122 is revised in this notice to:
1. Amend the definition of equipment by increasing the capitalization threshold to the lesser amount used
for financial statement purposes or$5,000 (see paragraph 15).
2. Require major non-profit organizations (those receiving more than$10 million in direct Federal funding)
to report indirect cost rates by two major component categories: facilities and administration (see paragraph
D, Attachment A).
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T J
costs, with a unit cost of$1,000 or more. This requirement is not consistent with the higher threshold of
$5,000 allowed in the proposed revision. This requirement should be revised to be consistent with the
proposed revision.
Response: OMB agrees. The Circular is revised to require prior Federal approval only for special purpose
equipment with a unit cost of$5,000 or more.
Unallowable Cost Items
These ten revised cost items are already unallowable under OMB Circulars A-21, "Cost Principles for
Educational Institutions," and A-87, "Cost Principles for State, Local and Indian Tribal Governments,"
and/or the Federal Acquisition Regulations. OMB addressed the issue of trustees'travel in response to the
comments received. For the other items, consistency across Federal cost regulations was a more significant
issue than most of the commenters'concerns. Comments related to specific cost items are presented below,
followed by OMB's responses.
Advertising and Public Relations Costs
Comment: Current paragraph 37, Public information service costs, should be combined with the
"Advertising" paragraph to be consistent with other OMB cost principles in Circulars A-21 and A-87.
Response: The commenter is correct. The treatment of public information service costs is now addressed in
revised paragraph 1,Advertising and public relations costs. Current paragraph 37 is deleted.
Comment: Clarify the types of activities that are allowable as public relations costs. Public relations costs
to carry out certain functions, such as legitimate program outreach, that are required under sponsored
programs and contracts should be allowable.
Response: The Circular is revised to clarify that certain public relations costs for the purpose of
communicating specific activities related to the sponsored programs to the public or the press are allowable
costs. When they are necessary for program outreach effort as required by sponsored programs,public
relations costs are allowable. Costs of advertising and public relations incurred solely to promote the
organization are unallowable.
Comment: Clarify whether advertising media costs such as radio and television are allowable.
Response: As long as the public relations costs are specifically required by the sponsored programs or are
related to the promotion of sponsored programs, any reasonable advertising media, including magazines,
newspapers, radio, television, direct mail, exhibits, and the like,can be used and its costs are allowable.
See paragraph l.a.
Comment: Community relation costs should be allowable as part of program outreach effort for Federal
sponsored programs.
Response: Community relations are defined in subparagraph 1.b as "those activities dedicated to maintain
the image of the organization or promoting understanding and favorable relations with the community or
public at large or any segment of the public." Costs related to community relations are allowable when the
costs are required or necessary to the performance of the sponsored programs.
Organization-furnished automobiles for personal use
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.
Comment: Legal expenses to defend against lawsuits brought by a foreign government for violation of that
country's law should be allowable.
Response: The Circular is revised in subparagraph 10.d to authorize Federal agencies to allow legal
expenses to defend against lawsuits brought by a foreign government for violation of its law when such
costs were necessary or were direct results of the performance of Federal sponsored programs. The same
authorizations apply for legal costs for defense against lawsuits brought by state or local governments.
Comment: Legal fees to defend against lawsuits filed by former employees for termination or by
subrecipients should be allowable.
Response: Legal fees incurred in defense of lawsuits not brought by a Federal, State, local or foreign
government, except when the suits are brought by former employees under Section 2 of the Major Fraud
Act of 1988 (Pub. L. 100-700), are allowable.
Housing and living expenses
Comment: For security and economic reasons, non-profit organizations often furnish automobiles and
housing for its personnel working on overseas Federal projects (e.g., overseas projects sponsored by the
U.S. Agency for International Development). These costs should be allowable as direct costs.
Response: As previously noted(in the discussion of automobiles), the Circular is revised to allow these
costs when they are necessary to perform the Federal projects and when they are approved by the Federal
awarding agency. These costs are allowable only as direct costs to the Federal projects, and not as fringe
benefit or indirect costs.
Insurance
Comment: General and casualty liability insurance costs for organization's directors and administrators
should be allowable.
Response: General and casualty liability insurance costs for organization's directors and administrators are
allowable, subject to limitations, as described in subparagraph 22.a.(2). New subparagraph 22.a.(2).f,
Insurance against defects,prohibits the reimbursement of costs against Federally sponsored awards for
product (or services)liability insurance costs.
Comment: Medical liability insurance costs for participants in Federal training programs should be
allowable.
Response: Medical liability insurance costs associated with participants in Federal training programs are
allowable to Federal programs as direct costs.
Comment: Malpractice insurance costs for physicians should be direct charged to Federal programs while
malpractice insurance costs for nurses or laboratory assistants, which are immaterial in most cases, should
be charged as indirect costs.
Response: Subparagraph B.2 of Attachment A provides that when a direct cost is of minor amounts, it may
be treated as an indirect cost for reasons of practicality and efficiency,provided that the accounting
treatment for such cost is consistently applied to all final cost objectives. Therefore, when malpractice
insurance costs for nurses or lab technicians are immaterial in relation to its effect on the overall indirect 400
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deals only with severance policy, i.e., dismissal, and the reimbursement of its costs.
Comment: Guidelines for costs of severance pay to foreign nationals in excess of customary or prevailing
practices should be consistent with section 2151 of the Federal Acquisition Streamlining Act of 1994
(FASA).
Response:OMB agrees. The Circular is revised to be consistent with FASA guidelines for severance pay to
foreign nationals in excess of customary or prevailing practices. As a result, the Federal awarding agency
may allow these costs when they are necessary for the performance of the Federal sponsored programs.
Trustees' Travel
Comment: Several commenters opposed the proposal to disallow trustees'travel costs citing the difficulty
of retaining or obtaining members to serve voluntarily on the Board of Trustees (or Directors) of a
non-profit organization, if Board members have to pay for their own travel expenses to attend Board
meetings. The commenters added that since serving on a non-profit organization's Board is often not as
prestigious and desirable as serving on a University's Board(where trustees'travel costs are unallowable
under Circular A-21), non-reimbursement of the travel costs would inhibit the recruitment-of Board
members.
Response: OMB concurs that disallowing the reimbursement of trustees'travel costs could inhibit the
recruitment of qualified Board members (particularly at smaller non-profit organizations), thereby
hampering the operations of a non-profit organization. OMB also recognizes that trustees'travel costs are
reasonable and necessary business costs. As a result,trustees' travel costs remain allowable.
Comment: Trustees'travel costs should be allowable if they are reasonable. Some suggested tests for
reasonableness of trustees'travel costs are: limit number of allowed trips per year,restriction of trips to
organization's principal place of business or reasonable surroundings, distinction between scheduled Board
meetings and emergency Board meetings, and disallowance of first-class airfare travels.
Response: All costs charged to Federal projects must satisfy a reasonableness test. Although some of the
suggested reasonableness tests appear to be good, OMB does not believe it is necessary at this time to
impose specific restrictions on trustees'travel expenses. The reasonableness of a particular travel expense
remains at the judgement of Federal negotiators.
Comment: At Head Start organizations, some Trustee members are first sent for training in the operations
of a Head Start program. These travel costs related to training should be allowable.
Response: Travel costs related to training and education are allowable, subject to limitations, and are
addressed in paragraph 53 of the Circular, Training and education costs.
Comment: At Head Start organizations, there often are several advisory boards in addition to the Board of
Trustees (or Directors). These advisory boards are involved in day-to-day operations of the organizations
and often incur travel costs. Are these costs subject to the same restrictions as trustees' travel?
Response: Travel costs for members of advisory groups are allowable, subject to the limitations in
paragraph 55, Travel costs.
Multiple Allocation Basis (MAB)
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costs applicable to non-profit organizations, if an administrative cap is to be implemented at non-profit
organizations.
Response: Based on the comments against the implementation of an administrative cap at non-profit
organizations, OMB defers the consideration of establishing any administrative cap until better data on
indirect costs at non-profit organizations can be collected. If OMB believes that an administrative cap
should be implemented, it would be proposed in a subsequent notice.
Other
Comment: Attachment C of the Circular should be updated since a few listed organizations no longer exist.
Response: OMB agrees. Attachment C is updated to delete those organizations that no longer exist or are
no longer exempted from OMB Circular A-122.
Franklin D. Raines
Director
Attachments A,B and C of Circular A-122 are revised as follows:
A. Attachment A
1. Add subparagraph 3 to paragraph C ("Indirect Costs").
•
3. Indirect costs shall be classified within two broad categories: "Facilities" and "Administration."
"Facilities" is defined as depreciation and use allowances on buildings, equipment and capital
improvement, interest on debt associated with certain buildings, equipment and capital improvements, and
operations and maintenance expenses. "Administration" is defined as general administration and general
expenses such as the director's office, accounting,personnel, library expenses and all other types of
expenditures not listed specifically under one of the subcategories of"Facilities" (including cross
allocations from other pools, where applicable). See indirect cost rate reporting requirements in
subparagraphs D.2.e and D.3.g.
2.Add subparagraph 2.e to paragraph D.
e. For an organization that receives more than$10 million in Federal funding of direct costs in a fiscal year,
a breakout of the indirect cost component into two broad categories, Facilities and Administration as
defined in subparagraph C.3, is required. The rate in each case shall be stated as the percentage which the
amount of the particular indirect cost category(i.e.,Facilities or Administration) is of the distribution base
identified with that category.
3. Replace subparagraph D.3 with the following:
3. Multiple allocation base method.
a. General. Where an organization's indirect costs benefit its major functions in varying degrees, indirect
costs shall be accumulated into separate cost groupings, as described in subparagraph b. Each grouping
shall then be allocated individually to benefitting functions by means of a base which best measures the
relative benefits. The default allocation bases by cost pool are described in subparagraph c.
410
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through the use of a selected base which produces results that are equitable to both the Federal Government
and the organization. The distribution shall be made in accordance with the bases described herein unless it
can be demonstrated that the use of a different base would result in a more equitable allocation of the costs,
or that a more readily available base would not increase the costs charged to sponsored awards. The results
of special cost studies (such as an engineering utility study) shall not be used to determine and allocate the
indirect costs to sponsored awards.
(1)Depreciation and use allowances. Depreciation and use allowances expenses shall be allocated in the
following manner: -
(a)Depreciation or use allowances on buildings used exclusively in the conduct of a single function, and on
capital improvements and equipment used in such buildings, shall be assigned to that function.
(b)Depreciation or use allowances on buildings used for more than one function, and on capital
improvements and equipment used in such buildings, shall be allocated to the individual functions
performed in each building on the basis of usable square feet of space, excluding common areas, such as
hallways, stairwells, and restrooms.
(c)Depreciation or use allowances on buildings, capital improvements and equipment related space (e.g.,
individual rooms, and laboratories)used jointly by more than one function(as determined by the users of
the space) shall be treated as follows. The cost of each jointly used unit of space shall be allocated to the
benefitting functions on the basis of:
(i)the employees and other users on a full-time equivalent(FTE)basis or salaries and wages of those
individual functions benefitting from the use of that space; or
(ii) organization-wide employee FTEs or salaries and wages applicable to the benefitting functions of the
organization.
(d)Depreciation or use allowances on certain capital improvements to land, such as paved parking areas,
fences, sidewalks,and the like, not included in the cost of buildings, shall be allocated to user categories on
a FTE basis and distributed to major functions in proportion to the salaries and wages of all employees
applicable to the functions.
(2) Interest. Interest costs shall be allocated in the same manner as the depreciation or use allowances on
the buildings, equipment and capital equipments to which the interest relates.
(3) Operation and maintenance expenses. Operation and maintenance expenses shall be allocated in the
same manner as the depreciation and use allowances.
(4) General administration and general expenses. General administration and general expenses shall be
allocated to benefitting functions based on modified total direct costs (MTDC), as described in
subparagraph D.3.f. The expenses included in this category could be grouped first according to major
functions of the organization to which they render services or provide benefits. The aggregate expenses of
each group shall then be allocated to benefitting functions based on MTDC.
d. Order of distribution.
(1) Indirect cost categories consisting of depreciation and use allowances, interest, operation and
maintenance, and general administration and general expenses shall be allocated in that order to the L
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ti
14. Entertainment costs
15. Equipment and other capital expenditures
16. Fines and penalties
17. Fringe benefits
18. Goods or services for personal use
19. Housing and personal living expenses
20. Idle facilities and idle capacity
21. Independent research and development(reserved)
22. Insurance and indemnification
23. Interest, fund raising, and investment management costs
24. Labor relations costs
25. Lobbying costs
26. Losses on other awards
27. Maintenance and repair costs
28. Materials and supplies
29. Meetings and conferences
• 30. Memberships, subscriptions, and professional activity costs
31. Organization costs
32. Overtime, extra-pay shift,and multi-shift premiums
33. Page charges in professional journals
34. Participant support costs
35. Patent costs
36. Pension plans
37. Plant security costs
38. Pre-award costs
39. Professional service costs
40. Profits and losses on disposition of depreciable property or other capital assets
41. Publication and printing costs
42. Rearrangement and alteration costs
43. Reconversion costs
44. Recruiting costs
45. Relocation costs
46. Rental costs
47. Royalties and other costs for use of patents and copyrights
48. Selling and marketing
49. Severance pay
50. Specialized service facilities
51. Taxes
52. Termination costs
53. Training and education costs
54. Transportation costs
55. Travel costs
56. Trustees
2. Revise and retitle paragraph 1 to read:
1. Advertising and public relations costs.
a. The term advertising costs means the costs of advertising media and corollary administrative costs.
Advertising media include magazines,newspapers, radio and television programs, direct mail, exhibits,
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(3) Costs of promotional items and memorabilia, including models, gifts, and souvenirs;
(4) Costs of advertising and public relations designed solely to promote the organization.
3. Renumber current paragraphs 2 through 8 as paragraphs 3 through 9, respectively.
4. Add the following new paragraph 2:
2. Alcoholic beverages.Costs of alcoholic beverages are unallowable.
5. In paragraph 7 ("Compensation for personal services"), as renumbered above in item 3, rename the
current subparagraph g("Pension costs"), as subparagraph h. Add a new subparagraph g:
g. Organization-furnished automobiles. That portion of the cost of organization-furnished automobiles
that relates to personal use by employees(including transportation to and from work) is unallowable as.
fringe benefit or indirect costs regardless of whether the cost is reported as taxable income to the
employees. These costs are allowable as direct costs to sponsored award when necessary for the
performance of the sponsored award and approved by awarding agencies.
6. Renumber current paragraphs 9 through 15 as paragraphs 11 through 17, respectively.
7. Add new paragraph 10:
10. Defense and prosecution of criminal and civil proceedings, claims, appeals and patent
infringement.
a. Definitions.
(1) Conviction, as used herein, means a judgment or a conviction of a criminal offense by any court of
-competent jurisdiction, whether entered upon as a verdict or a plea, including a conviction due to a plea of
nolo contendere.
(2) Costs include,but are not limited to, administrative and clerical expenses; the cost of legal services,
whether performed by in-house or private counsel; and the costs of the services of accountants, consultants,
or others retained by the organization to assist it; costs of employees, officers and trustees, and any similar
costs incurred before, during, and after commencement of a judicial or administrative proceeding that bears
a direct relationship to the proceedings.
(3)Fraud, as used herein,means (i) acts of fraud corruption or attempts to defraud the Federal Government
or to corrupt its agents, (ii) acts that constitute a cause for debarment or suspension(as specified in agency
regulations), and(iii) acts which violate the False Claims Act, 31 U.S.C., sections 3729-3731, or the
Anti-Kickback Act, 41 U.S.C., sections 51 and 54. .
(4)Penalty does not include restitution, reimbursement, or compensatory damages.
(5)Proceeding includes an investigation.
b. (1) Except as otherwise described herein, costs incurred in connection with any criminal, civil or
administrative proceeding(including filing of a false certification) commenced by the Federal Government,
or a State, local or foreign government, are not allowable if the-proceeding: (1) relates to a violation of, or
4.
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f. Costs incurred by the organization in connection with the defense of suits brought by its employees or
ex-employees under section 2 of the Major Fraud Act of 1988 (Pub. L. 100-700), including the cost of all
relief necessary to make such employee whole, where the organization was found liable or settled, are
unallowable.
g. Costs of legal, accounting, and consultant services, and related costs, incurred in connection with
defense against Federal Government claims or appeals, antitrust suits, or the prosecution of claims or
appeals against the Federal Government, are unallowable.
h. Costs of legal, accounting, and consultant services, and related costs, incurred in connection with patent
infringement litigation, are unallowable unless otherwise provided for in the sponsored awards.
i. Costs which may be unallowable under this paragraph, including directly associated costs, shall be
segregated and accounted for by the organization separately. During the pendency of any proceeding
covered by subparagraphs b and f, the Federal Government shall generally withhold payment of such costs.
However, if in the best interests of the Federal Government, the Federal Government may provide for
conditional payment upon provision of adequate security, or other adequate assurance, and agreements by
the organization to repay all unallowable costs,plus interest, if the costs are subsequently determined to be
unallowable.
8. In paragraph 15 ("Equipment and other capital expenditures"), as renumbered in item 6 above,replace
subparagraphs 15.a.(1) and 15.b.(2)to read:
15.a.(1) "Equipment" means an article of nonexpendable, tangible personal property having a useful life of
more than one year and an acquisition cost which equals or exceeds the lesser of(a) the capitalization level
established by the organization for the financial statement purposes, or(b) $5000. The unamortized portion
of any equipment written off as a result of a change in capitalization levels may be recovered by continuing
to claim the otherwise allowable use allowances or depreciation on the equipment, or by amortizing the
amount to be written off over a period of years as-negotiated with the Federal cognizant agency.
15.b.(2) Capital expenditures for special purpose equipment are allowable as direct costs,provided that
items with a unit cost of$5000 or more have the prior approval of awarding agency.
9. Renumber current paragraphs 16 through 36 as paragraphs 20 through 40,respectively.
10. Add new paragraph 18:
18. Goods or services for personal use. Costs of goods or services for personal use of the organization's
employees are unallowable regardless of whether the cost is reported as taxable income to the employees.
11. Add new paragraph 19:
19. Housing and personal living expenses.
a. Costs of housing(e.g., depreciation,maintenance, utilities, furnishings,rent, etc.), housing allowances
and personal living expenses for/of the organization's officers are unallowable as fringe benefit or indirect
costs regardless of whether the cost is reported as taxable income to the employees. These costs are
allowable as direct costs to sponsored awards when necessary for the performance of the sponsored award
and approved by awarding agencies.
CID
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program. Where the organization uses employment agencies, costs that are not in excess of standard
commercial rates for such services are allowable.
b. In publications, costs of help wanted advertising that includes color, includes advertising material for
other than recruitment purposes, or is excessive in size (taking into consideration recruitment purposes for
which intended and normal organizational practices in this respect), are unallowable.
c. Costs of help wanted advertising, special emoluments, fringe benefits, and salary allowances incurred to
attract professional personnel from other organizations that do not meet the test of reasonableness or do not
conform with the established practices of the organization, are unallowable.
d. Where relocation costs incurred incident to recruitment of a new employee have been allowed either as
an allocable direct or indirect cost, and the newly hired employee resigns for reasons within his control.
within twelve months after being hired, the organization will be required to refund or credit such relocation
costs to the Federal Government.
18. Renumber current paragraphs 45 through 51 as paragraphs 49 through 55,respectively.
19. Add new paragraph 48:
48. Selling and marketing. Costs of selling and marketing any products or services of the organization
(unless allowed under paragraph 1 as allowable public relations costs) are unallowable. These costs,
however, are allowable as direct costs,with prior approval by awarding agencies,when they are necessary
for the performance of Federal programs.
20. Add new subparagraphs c, d and e to paragraph 49 ("Severance pay"), as renumbered in item 18, as
follow.:
c. Costs incurred in certain severance pay packages(commonly known as "a golden parachute"payment)
which are in an amount in excess of the normal severance pay paid by the organization to an employee
upon termination of employment and are paid to the employee contingent upon a change in management
control over, or ownership of, the organization's assets are unallowable.
d. Severance payments to foreign nationals employed by the organization outside the United States, to the
extent that the amount exceeds the customary or prevailing practices for the organization in the United
States are unallowable,unless they are necessary for the performance of Federal programs and approved by
awarding agencies.
e. Severance payments to foreign nationals employed by the organization outside the United States due to
the termination of the foreign national as a result of the closing of, or curtailment of activities by,the
organization in that country, are unallowable, unless they are necessary for the performance of Federal
programs and approved by awarding agencies.
21. Add new paragraph 56:
56. Trustees. Travel and subsistence costs of trustees (or directors) are allowable. The costs are subject to
restrictions regarding lodging, subsistence and air travel costs provided in paragraph 55.
C. Attachment C
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r
cost is outside the scope of this Circular.
2. Supersession. This Circular supersedes cost principles issued by individual agencies for non-profit
organizations.
3. Applicability.
a. These principles shall be used by all Federal agencies in determining the costs of work performed by
non-profit organizations under grants, cooperative agreements, cost reimbursement contracts, and other
contracts in which costs are used in pricing, administration, or settlement. All of these instruments are
hereafter referred to as awards. The principles do not apply to awards under which an organization is not
required to account to the Federal Government for actual costs incurred.
b. All cost reimbursement subawards (subgrants, subcontracts, etc.) are subject to those Federal cost
principles applicable to the particular organization concerned. Thus, if a subaward is to a non-profit
organization, this Circular shall apply; if a subaward is to a commercial organization, the cost principles
applicable to commercial concerns shall apply; if a subaward is to a college or university, Circular A-21
shall apply; if a subaward is to a State, local, or federally-recognized Indian tribal government, Circular
A-87 shall apply.
4. Definitions.
a. Non-profit organization means any corporation,trust, association, cooperative, or other organization
which:
(1) is operated primarily for scientific, educational, service, charitable, or similar purposes in the public
interest;
(2) is not organized primarily for profit; and
(3)uses its net proceeds to maintain,improve, and/or expand its operations. For this purpose, the term
"non-profit organization" excludes (i) colleges and universities; (ii) hospitals; (iii) State, local, and
federally-recognized Indian tribal governments; and(iv)those non-profit organizations which are excluded
from coverage of this Circular in accordance with paragraph 5.
b. Prior approval means securing the awarding agency's permission in advance to incur cost for those
items that are designated as requiring prior approval by the Circular. Generally this permission will be in
writing. Where an item of cost requiring prior approval is specified in the budget of an award, approval of
the budget constitutes approval of that cost.
5. Exclusion of some non-profit organizations. Some non-profit organizations, because of their size and
nature of operations, can be considered to be similar to commercial concerns for purpose of applicability of
cost principles. Such non-profit organizations shall operate under Federal cost principles applicable to
commercial concerns. A listing of these organizations is contained in Attachment C. Other organizations
may be added from time to time.
6. Responsibilities. Agencies responsible for administering programs that involve awards to non-profit
organizations shall implement the provisions of this Circular. Upon request, implementing instruction shall
be furnished to OMB. Agencies shall designate a liaison official to serve as the agency representative on
matters relating to the implementation of this Circular. The name and title of such representative shall be
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Sr
3. Multiple allocation base method
4. Direct allocation method
5. Special indirect cost rates
E. Negotiation and Approval of Indirect Cost Rates
1. Definitions
2. Negotiation and approval of rates
ATTACHMENT A
Circular No. A-122
GENERAL PRINCIPLES
A. Basic Considerations
1. Composition of total costs. The total cost of an award is the sum of the allowable direct and allocable
indirect costs less any applicable credits.
2. Factors affecting allowability of costs. To be allowable under an award, costs must meet the following
general criteria:
a. Be reasonable for the performance of the award and be allocable thereto under these principles.
b. Conform to any limitations or exclusions set forth in these principles or in the award as to types or
amount of cost items.
c. Be consistent with policies and procedures that apply uniformly to both federally-financed and other --
activities of the organization.
•
d. Be accorded consistent treatment.
e. Be determined in accordance with generally accepted accounting principles (GAAP).
f. Not be included as a cost or used to meet cost sharing or matching requirements of any other
federally-financed program in either the current or a prior period.
• g. Be adequately documented.
3. Reasonable costs. A cost is reasonable if, in its nature or amount, it does not exceed that which would be
incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur
the costs. The question of the reasonableness of specific costs must be scrutinized with particular care in
connection with organizations or separate divisions thereof which receive the preponderance of their
support from awards made by Federal agencies. In determining the reasonableness of a given cost,
consideration shall be given to:
a. Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the
organization or the performance of the award.
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6.Advance understandings. Under any given award, the reasonableness and allocability of certain items of
costs may be difficult to determine. This is particularly true in connection with organizations that receive a
preponderance of their support from Federal agencies. In order to avoid subsequent disallowance or dispute
based on unreasonableness or nonallocability, it is often desirable to seek a written agreement with the
cognizant or awarding agency in advance of the incurrence of special or unusual costs. The absence of an
advance agreement on any element of cost will not, in itself, affect the reasonableness or allocability of that
element.
7. Conditional exemptions.
a. OMB authorizes conditional exemption from OMB administrative requirements and cost principles
circulars for certain Federal programs with statutorily-authorized consolidated planning and consolidated
administrative funding, that are identified by a Federal agency and approved by the head of the Executive
department or establishment. A Federal agency shall consult with OMB during its consideration of whether
to grant such an exemption.
b. To promote efficiency in State and local program administration, when Federal non-entitlement
programs with common purposes have specific statutorily-authorized consolidated planning and
consolidated administrative funding and where most of the State agency's resources come from non-Federal
sources, Federal agencies may exempt these covered State-administered,non-entitlement grant programs
from certain OMB grants management requirements. The exemptions would be from all but the allocability
of costs provisions of OMB Circulars A-87 (Attachment A, subsection C.3), "Cost Principles for State,
Local, and Indian Tribal Governments," A-21 (Section C, subpart 4), "Cost Principles for Educational
Institutions," and A-122 (Attachment A, subsection A.4), "Cost Principles for Non-Profit Organizations,"
and from all of the administrative requirements provisions of OMB Circular A-110, "Uniform
Administrative Requirements for Grants and Agreements with Institutions of Higher Education,Hospitals,
and Other Non-Profit Organizations," and the agencies'grants management common rule.
c. When a Federal agency provides this flexibility, as a prerequisite to a State's exercising this option, a
State must adopt its own written fiscal and administrative requirements for expending and accounting for
all funds, which are consistent with the provisions of OMB Circular A-87, and extend such policies to all
subrecipients. These fiscal and administrative requirements must be sufficiently specific to ensure that:
funds are used in compliance with all applicable Federal statutory and regulatory provisions, costs are
reasonable and necessary for operating these programs, and funds are not be used for general expenses
required to carry out other responsibilities of a State or its subrecipients.
B. Direct Costs
1. Direct costs are those that can be identified specifically with a particular final cost objective, i.e., a
particular award, project, service, or other direct activity of an organization. However, a cost may not be
assigned to an award as a direct cost if any other cost incurred for the same purpose, in like circumstance,
has been allocated to an award as an indirect cost. Costs identified specifically with awards are direct costs
of the awards and are to be assigned directly thereto. Costs identified specifically with other final cost
objectives of the organization are direct costs of those cost objectives and are not to be assigned to other
awards directly or indirectly.
2. Any direct cost of a minor amount may be treated as an indirect cost for reasons of practicality where the
accounting treatment for such cost is consistently applied to all final cost objectives.
3. The cost of certain activities are not allowable as charges to Federal awards (see, for example,
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•
1. General.
a. Where a non-profit organization has only one major function, or where all its major functions benefit
from its indirect costs to approximately the same degree, the allocation of indirect costs and the
computation of an indirect cost rate may be accomplished through simplified allocation procedures, as
described in subparagraph 2.
b. Where an organization has several major functions which benefit from its indirect costs in varying
degrees, allocation of indirect costs may require the accumulation of such costs into separate cost
groupings which then are allocated individually to benefiting functions by means of a base which best
measures the relative degree of benefit. The indirect costs allocated to each function are then distributed to
individual awards and other activities included in that function by means of an indirect cost rate(s).
c. The determination of what constitutes an organization's major functions will depend on its purpose in
being; the types of services it renders to the public, its clients, and its members; and the amount of effort it
devotes to such activities as fundraising,public information and membership activities.
d. Specific methods for allocating indirect costs and computing indirect cost rates along with the conditions
under which each method should be used are described in subparagraphs 2 through 5.
e. The base period for the allocation of indirect costs is the period in which such costs are incurred and
accumulated for allocation to work performed in that period. The base period normally should coincide
with the organization's fiscal year but, in any event, shall be so selected as to avoid inequities in the
allocation of the costs.
2. Simplified allocation method.
a. Where an organization's major functions benefit from its indirect costs to approximately the same
degree, the allocation of indirect costs may be accomplished by(i)separating the organization's total costs -
for the base period as either direct or indirect, and(ii) dividing the total allowable indirect costs (net of
applicable credits)by an equitable distribution base. The result of this process is an indirect cost rate which
is used to distribute indirect costs to individual awards. The rate should be expressed as the percentage
which the total amount of allowable indirect costs bears to the base selected. This method should also be
used where an organization has only one major function encompassing a number of individual projects or
activities, and may be used where the level of Federal awards to an organization is relatively small.
b. Both the direct costs and the indirect costs shall exclude capital expenditures and unallowable costs.
However, unallowable costs which represent activities must be included in the direct costs under the
conditions described in subparagraph B.3.
c. The distribution base may be total direct costs (excluding capital expenditures and other distorting items,
such as major subcontracts or subgrants), direct salaries and wages, or other base which results in an
equitable distribution. The distribution base shall generally exclude participant support costs as defined in
paragraph 34 of Attachment B.
d. Except where a special rate(s) is required in accordance with subparagraph 5, the indirect cost rate
developed under the above principles is applicable to all awards at the organization. If a special rate(s) is
required, appropriate modifications shall be made in order to develop the special rate(s).
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particular program. The salaries and wages of administrative and pooled clerical staff should normally be
treated as indirect costs. Direct charging of these costs may be appropriate where a major project or activity
explicitly requires and budgets for administrative or clerical services and other individuals involved can be
identified with the program or activity. Items such as office supplies,postage, local telephone costs,
periodicals and memberships should normally be treated as indirect costs.
c. Allocation bases. Actual conditions shall be taken into account in selecting the base to be used in
allocating the expenses in each grouping to benefitting functions. The essential consideration in selecting a
method or a base is that it is the one best suited for assigning the pool of costs to cost objectives in
accordance with benefits derived; a traceable cause and effect relationship; or logic and reason, where
neither the cause nor the effect of the relationship is determinable. When an allocation can be made by
assignment of a cost grouping directly to the function benefited, the allocation shall be made in that
manner. When the expenses in a cost grouping are more general in nature, the allocation shall be made
through the use of a selected base which produces results that are equitable to both the Federal Government
and the organization. The distribution shall be made in accordance with the bases described herein unless it
can be demonstrated that the use of a different base would result in a more equitable allocation of the costs,
or that a more readily available base would not increase the costs charged to sponsored awards. The results
of special cost studies (such as an engineering utility study) shall not be used to determine and allocate the
indirect costs to sponsored awards.
(1)Depreciation and use allowances. Depreciation and use allowances expenses shall be allocated in the
following manner:
(a)Depreciation or use allowances on buildings used exclusively in the conduct of a single function, and on
capital improvements and equipment used in such buildings, shall be assigned to that function.
(b)Depreciation or use allowances on buildings used for more than one function, and on capital
improvements and equipment used in such buildings, shall be allocated to the individual functions
performed in each building on the basis of usable square feet of space, excluding common areas, such as
hallways, stairwells, and restrooms.
(c)Depreciation or use allowances on buildings, capital improvements and equipment related space (e.g.,
individual rooms, and laboratories) used jointly by more than one function(as determined by the users of
the space) shall be treated as follows. The cost of each jointly used unit of space shall be allocated to the
benefitting functions on the basis of:
(i)the employees and other users on a full-time equivalent(FTE)basis or salaries and wages of those
individual functions benefitting from the use of that space; or
(ii) organization-wide employee FTEs or salaries and wages applicable to the benefitting functions of the
organization.
(d)Depreciation or use allowances on certain capital improvements to land, such as paved parking areas,
fences, sidewalks, and the like, not included in the cost of buildings, shall be allocated to user categories on
a FTE basis and distributed to major functions in proportion to the salaries and wages of all employees
applicable to the functions.
(2)Interest. Interest costs shall be allocated in the same manner as the depreciation or use allowances on
the buildings, equipment and capital equipments to which the interest relates.
till
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of facilities, telephone expenses, and the like are prorated individually as direct costs to each category and
to each award or other activity using a base most appropriate to the particular cost being prorated.
b. This method is acceptable, provided each joint cost is prorated using a base which accurately measures
the benefits provided to each award or other activity. The bases must be established in accordance with
reasonable criteria, and be supported by current data.,This method is compatible with the Standards of
Accounting and Financial Reporting for Voluntary Health and Welfare Organizations issued jointly by the
National Health Council, Inc., the National Assembly of Voluntary Health and Social Welfare
Organizations, and the United Way of America.
c. Under this method, indirect costs consist exclusively of general administration and general expenses. In
all other respects, the organization's indirect cost rates shall be computed in the same manner as that
described in subparagraph 2.
5. Special indirect cost rates. In some instances, a single indirect cost rate for all activities of an
organization or for each major function of the organization may not be appropriate, since it would not take
into account those different factors which may substantially affect the indirect costs applicable to a
particular segment of work. For this purpose, a particular segment of work may be that performed under a
single award or it may consist of work under a group of awards performed in a common environment.
These factors may include the physical location of the work, the level of administrative support required,
the nature of the facilities or other resources employed, the scientific disciplines or technical skills
involved, the organizational arrangements used, or any combination thereof. When a particular segment of
work is performed in an environment which appears to generate a significantly different level of indirect
costs,provisions should be made for a separate indirect cost pool applicable to such work. The separate
indirect cost pool should be developed during the course of the regular allocation process, and the separate
indirect cost rate resulting therefrom should be used,provided it is determined that(i)the rate differs
significantly from that which would have been obtained under subparagraphs 2,3, and 4, and(ii) the
volume of work to which the rate would apply is material.
E. Negotiation and Approval of Indirect Cost Rates
1. Definitions. As used in this section, the following terms have the meanings set forth below:
a. Cognizant agency means the Federal agency responsible for negotiating and approving indirect cost
rates for a non-profit organization on behalf of all Federal agencies.
b. Predetermined rate means an indirect cost rate, applicable to a specified current or future period,
usually the organization's fiscal year. The rate is based on an estimate of the costs to be incurred during the
period. A predetermined rate is not subject to adjustment.
c. Fixed rate means an indirect cost rate which has the same characteristics as a predetermined rate, except
that the difference between the estimated costs and the actual costs of the period covered by the rate is
carried forward as an adjustment to the rate computation of a subsequent period.
d. Final rate means an indirect cost rate applicable to a specified past period which is based on the actual
costs of the period. A final rate is not subject to adjustment.
e. Provisional rate or billing rate means a temporary indirect cost rate applicable to a specified period
which is used for funding, interim reimbursement, and reporting indirect costs on awards pending the
establishment of a final rate for the period. L
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i. To the extent that problems are encountered among the Federal agencies in connection with the
negotiation and approval process, OMB will lend assistance as required to resolve such problems in a
timely manner.
ATTACHMENT B
Circular No. A-122
SELECTED ITEMS OF COST
Table of Contents
1. Advertising and public relations costs
2. Alcoholic beverages
3. Bad debts
4. Bid and proposal costs (reserved)
5. Bonding costs
6. Communication costs
7. Compensation for personal services
8. Contingency provisions
9. Contributions
10. Defense and prosecution of criminal and civil proceedings, claims, appeals and patent infringement
11. Depreciation and use allowances
12. Donations
13. Employee morale, health, and welfare costs and credits
14. Entertainment costs
15. Equipment and other capital expenditures
16. Fines and penalties
17. Fringe benefits
18. Goods or services for personal use
19. Housing and personal living expenses
20. Idle facilities and idle capacity
21. Independent research and development (reserved)
22. Insurance and indemnification
23. Interest, fund raising, and investment management costs
24. Labor relations costs
25. Lobbying
26. Losses on other awards
27. Maintenance and repair costs
28. Materials and supplies
29. Meetings and conferences
30. Memberships, subscriptions, and professional activity costs
31. Organization costs
32. Overtime, extra-pay shift, and multi-shift premiums
33. Page charges in professional journals
34. Participant support costs
35. Patent costs
36. Pension plans
37. Plant security costs
38. Pre-award costs
411
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(4) Other specific purposes necessary to meet the requirements of the sponsored award.
d. The only allowable public relations costs are:
(1) Costs specifically required by sponsored awards;;
(2) Costs of communicating with the public and press pertaining to specific activities or accomplishments
which result from performance of sponsored awards (these costs are considered necessary as part of the
outreach effort for the sponsored awards); or
(3) Costs of conducting general liaison with news media and government public relations officers, to the
extent that such activities are limited to communication and liaison necessary to keep the public informed
on matters of public concern, such as notices of contract/grant awards, financial matters, etc.
e. Costs identified in subparagraphs c and d if incurred for more than one sponsored award or for both
sponsored work and other work of the organization, are allowable to the extent that the principles in
paragraphs B ("Direct Costs") and C ("Indirect Costs") of Attachment A are observed. -
f. Unallowable advertising and public relations costs include the following:
(1)All advertising and public relations costs other than as specified in subparagraphs c, d, and e;
(2) Costs of meetings or other events related to fund raising or other organizational activities including:
(i)Costs of displays, demonstrations, and exhibits;
(ii) Costs of meeting rooms,hospitality suites, and other special facilities used in conjunction with shows
and other special events; and
(iii) Salaries and wages of employees or cost of services engaged in setting up and displaying exhibits,
making demonstrations, and providing briefings;
(3) Costs of promotional items and memorabilia, including models, gifts, and souvenirs;
(4) Costs of advertising and public relations designed solely to promote the organization.
2. Alcoholic beverages. Costs of alcoholic beverages are unallowable.
3. Bad debts. Bad debts, including losses(whether actual or estimated) arising from uncollectible accounts
and other claims,related collection costs, and related legal costs, are unallowable.
4. Bid and proposal costs. (reserved)
5. Bonding costs.
a.Bonding costs arise when the Federal Government requires assurance against financial loss to itself or
others by reason of the act or default of the organization. They arise also in instances where the
organization requires similar assurance. Included are such bonds as bid,performance,payment, advance
payment, infringement, and fidelity bonds.
410
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specific types of compensation due to changes in Federal policy.
e. Unallowable costs. Costs which are unallowable under other paragraphs of this Attachment shall not be
allowable under this paragraph solely on the basis that they constitute personal compensation.
f. Fringe benefits.
(1) Fringe benefits in the form of regular compensation paid to employees during periods of authorized
absences from the job, such as vacation leave, sick leave, military leave, and the like, are allowable,
provided such costs are absorbed by all organization activities in proportion to the relative amount of time
or effort actually devoted to each.
(2)Fringe benefits in the form of employer contributions or expenses for social security, employee
insurance,workmen's compensation insurance,pension plan costs (see subparagraph h), and the like, are
allowable,provided such benefits are granted in accordance with established written organization policies.
Such benefits whether treated as indirect costs or as direct costs, shall be distributed to particular awards
and other activities in a manner consistent with the pattern of benefits accruing to the individuals or group
of employees whose salaries and wages are chargeable to such awards and other activities.
(3) (a)Provisions for a reserve under a self-insurance program for unemployment compensation or
workers' compensation are allowable to the extent that the provisions represent reasonable estimates of the
liabilities for such compensation, and the types of coverage,extent of coverage, and rates and premiums
would have been allowable had insurance been purchased to cover the risks. However,provisions for
self-insured liabilities which do not become payable for more than one year after the provision is made
shall not exceed the present value of the liability.
(b) Where an organization follows a consistent policy of expensing actual payments to, or on behalf of,
employees or former employees for unemployment compensation or workers'compensation, such
payments are allowable in the year of payment with the prior approval of the awarding agency,provided
they are allocated to all activities of the organization.
(4) Costs of insurance on the lives of trustees, officers, or other employees holding positions of similar
responsibility are allowable only to the extent that the insurance represents additional compensation. The
costs of such insurance when the organization is named as beneficiary are unallowable.
g. Organization-furnished automobiles. That portion of the cost of organization-furnished automobiles
that relates to personal use by employees(including transportation to and from work)is unallowable as
fringe benefit or indirect costs regardless of whether the cost is reported as taxable income to the
employees. These costs are allowable as direct costs to sponsored award when necessary for the
performance of the sponsored award and approved by awarding agencies.
h. Pension plan costs.
(1) Costs of the organization's pension plan which are incurred in accordance with the established policies
of the organization are allowable,provided:
(a) Such policies meet the test of reasonableness;
(b) The methods of cost allocation are not discriminatory;
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(b) Each report must account for the total activity for which employees are compensated and which is
required in fulfillment of their obligations to the organization.
(c) The reports must be signed by the individual employee, or by a responsible supervisory official having
first hand knowledge of the activities performed by the employee, that the distribution of activity represents
a reasonable estimate of the actual work performed by the employee during the periods covered by the
reports.
(d) The reports must be prepared at least monthly and must coincide with one or more pay periods.
(3) Charges for the salaries and wages of nonprofessional employees, in addition to the supporting
documentation described in subparagraphs (1) and (2),must also be supported by records indicating the
total number of hours worked each day maintained in conformance with Department of Labor regulations
implementing the Fair Labor Standards Act(FLSA) (29 CFR Part 516). For this purpose, the term
"nonprofessional employee" shall have the same meaning as "nonexempt employee," under FLSA.
(4) Salaries and wages of employees used in meeting cost sharing or matching requirements on awards
must be supported in the same manner as salaries and wages claimed for reimbursement from awarding
agencies.
8. Contingency provisions. Contributions to a contingency reserve or any similar provision made for
events the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance
of their happening, are unallowable. The term "contingency reserve" excludes self-insurance reserves (see
subparagraphs 7.f(3) and 22.a(2)(d);pension funds (see subparagraph 7.h); and reserves for normal
severance pay(see subparagraph 49.b(1)).
9. Contributions. Contributions and donations by the organization to others are unallowable.
10. Defense and prosecution of criminal and civil proceedings, claims, appeals and patent
infringement.
a. Definitions.
(1) Conviction, as used herein, means a judgment or a conviction of a criminal offense by any court of
competent jurisdiction, whether entered upon as a verdict or a plea, including a conviction due to a plea of
nolo contendere.
(2) Costs include,but are not limited to, administrative and clerical expenses; the cost of legal services,
whether performed by in-house or private counsel; and the costs of the services of accountants,consultants,
or others retained by the organization to assist it; costs of employees, officers and trustees, and any similar
costs incurred before, during, and after commencement of a judicial or administrative proceeding that bears
a direct relationship to the proceedings.
(3) Fraud, as used herein, means(i) acts of fraud corruption or attempts to defraud the Federal Government
or to corrupt its agents, (ii) acts that constitute a cause for debarment or suspension(as specified in agency
regulations), and(iii) acts which violate the False Claims Act, 31 U.S.C., sections 3729-3731, or the
Anti-Kickback Act,41 U.S.C., sections 51 and 54.
(4)Penalty does not include restitution,reimbursement, or compensatory damages.
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official to be appropriate, considering the complexity of the litigation, generally accepted principles
governing the award of legal fees in civil actions involving the United States as a party, and such other
factors as may be appropriate. Such percentage shall not exceed 80 percent. However, if an agreement
reached under subparagraph c has explicitly considered this 80 percent limitation and permitted a higher
percentage, then the full amount of costs resulting from that agreement shall be allowable.
f. Costs incurred by the organization in connection with the defense of suits brought by its employees or
ex-employees under section 2 of the Major Fraud Act of 1988 (Pub. L. 100-700), including the cost of all
relief necessary to make such employee whole,where the organization was found liable or settled, are
unallowable.
g. Costs of legal, accounting, and consultant services, and related costs, incurred in connection with
defense against Federal Government claims or appeals, antitrust suits, or the prosecution of claims or
appeals against the Federal Government, are unallowable.
h. Costs of legal, accounting, and consultant services, and related costs, incurred in connection with patent
infringement litigation, are unallowable unless otherwise provided for in the sponsored awards.
i. Costs which may be unallowable under this paragraph, including directly associated costs, shall be
segregated and accounted for by the organization separately. During the pendency of any proceeding
covered by subparagraphs b and f,the Federal Government shall generally withhold payment of such
costs. However, if in the best interests of the Federal Government, the Federal Government may provide
for conditional payment upon provision of adequate security, or other adequate assurance, and agreements
by the organization to repay all unallowable costs,plus interest, if the costs are subsequently determined to
be unallowable.
11. Depreciation and use allowances.
a. Compensation for the use of buildings, other capital improvements, and equipment on hand may be
made through use allowances or depreciation. However, except as provided in subparagraph f, a
combination of the two methods may not be used in connection with a single class of fixed assets (e.g.,
buildings, office equipment, computer equipment, etc.).
b. The computation of use allowances or depreciation shall be based on the acquisition cost of the assets
involved. The acquisition cost of an asset donated to the organization by a third party shall be its fair
market value at the time of the donation.
c. The computation of use allowances or depreciation will exclude:
(1) The cost of land;
(2)Any portion of the cost of buildings and equipment borne by or donated by the Federal Government
irrespective of where title was originally vested or where it presently resides; and
(3) Any portion of the cost of buildings and equipment contributed by or for the organization in satisfaction
of a statutory matching requirement.
d. Where the use allowance method is followed, the use allowance for buildings and improvement
(including land improvements, such as paved parking areas, fences, and sidewalks)will.be computed at an
annual rate not exceeding two percent of acquisition cost. The use allowance for equipment will be
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(a) The aggregate value of the services is material;
(b) The services are supported by a significant amount of the indirect costs incurred by the organization;
(c) The direct cost activity is not pursued primarily for the benefit of the Federal Government,
(3) In those instances where there is no basis for determining the fair market value of the services rendered,
the recipient and the cognizant agency shall negotiate an.appropriate allocation of indirect cost to the
services.
(4) Where donated services directly benefit a project supported by an award, the indirect costs allocated to
the services will be considered as a part of the total costs of the project. Such indirect costs may be
reimbursed under the award or used to meet cost sharing or matching requirements.
(5) The value of the donated services may be used to meet cost sharing or matching requirements under
conditions described in Sec._.23 of Circular A-110. Where donated services are treated as indirect costs,
indirect cost rates will separate the value of the donations so that reimbursement will not be made.
(6)Fair market value of donated services shall be computed as follows:
(a) Rates for volunteer services. Rates for volunteers shall be consistent with those regular rates paid for
similar work in other activities of the organization. In cases where the kinds of skills involved are not
found in other activities of the organization, the rates used shall be consistent with those paid for similar
work in the labor market in which the organization competes for such skills.
(b) Services donated by other organizations. When an employer donates the services of an employee,
these services shall be valued at the employee's regular rate of pay(exclusive of fringe benefits and indirect
costs),provided the services are in the same skill for which the employee is normally paid. If the services
are not in the same skill for which the employee is normally paid, fair market value shall be computed in
accordance with subparagraph (a).
b. Goods and space. •
(1)Donated goods; i.e., expendable personal property/supplies, and donated use of space may be furnished
to an organization. The value of the goods and space is not reimbursable either as a direct or indirect cost.
(2) The value of the donations may be used to meet cost sharing or matching share requirements under the
conditions described in Sec._.23 of Circular A-110. The value of the donations shall be determined in
accordance with Sec. .23 of Circular A-110. Where donations are treated as indirect costs, indirect cost
rates will separate the value of the donations so that reimbursement will not be made.
13. Employee morale,health, and welfare costs and credits. The costs of house publications, health or
first-aid clinics, and/or infirmaries,recreational activities, employees'counseling services, and other
expenses incurred in accordance with the organization's established practice or custom for the improvement
of working conditions, employer-employee relations, employee morale, and employee performance are
allowable. Such costs will be equitably apportioned to all activities of the organization. Income generated
from any of these activities will be credited to the cost thereof unless such income has been irrevocably set
over to employee welfare organizations. �.
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awarding agency.
17. Fringe benefits. See subparagraph 7.f.
18. Goods or services for personal use. Costs of goods or services for personal use of the organization's
employees are unallowable regardless of whether the cost is reported as taxable income to the employees.
19. Housing and personal living expenses.
a. Costs of housing(e.g., depreciation, maintenance, utilities, furnishings, rent, etc.),housing allowances
and personal living expenses for/of the organization's officers are unallowable as fringe benefit or indirect
costs regardless of whether the cost is reported as taxable income to the employees. These costs are
allowable as direct costs to sponsored award when necessary for the performance of the sponsored award
and approved by awarding agencies.
b. The term"officers" includes current and past officers and employees..
20. Idle facilities and idle capacity.
a. As used in this paragraph,the following terms have the meanings set forth below:
(1) Facilities means land and buildings or any portion thereof, equipment individually or collectively, or
any other tangible capital asset,wherever located, and whether owned or leased by the organization.
(2) Idle facilities means completely unused facilities that are excess to the organization's current needs.
(3) Idle capacity means the unused capacity of partially used facilities. It is the difference between that
which a facility could achieve under 100 percent operating time on a one-shift basis less operating
interruptions resulting from time lost for repairs, setups, unsatisfactory materials, and other normal delays,
and the extent to which the facility was actually used to meet demands during the accounting period. A
multi-shift basis may be used if it can be shown that this amount of usage could normally be expected for
the type of facility involved.
(4) Costs of idle facilities or idle capacity means costs such as maintenance,repair,housing,rent, and
other related costs, e.g.,property taxes, insurance, and depreciation or use allowances.
b. The costs of idle facilities are unallowable except to the extent that:
(1) They are necessary to meet fluctuations in workload; or
(2)Although not necessary to meet fluctuations in workload, they were necessary when acquired and are
now idle because of changes in program requirements, efforts to achieve more economical operations,
reorganization, termination, or other causes which could not have been reasonably foreseen. Under the
exception stated in this subparagraph, costs of idle facilities are allowable for a reasonable period of time,
ordinarily not to exceed one year, depending upon the initiative taken to use, lease, or dispose of such
facilities (but see subparagraphs 48.b and d).
c. The costs of idle capacity are normal costs of doing business and are a factor in the normal fluctuations
of usage or indirect cost rates from period to period. Such costs are allowable, provided the capacity is
reasonably anticipated to be necessary or was originally reasonable and is not subject to reduction or
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(a) Costs incurred because of losses not covered under nominal deductible insurance coverage provided in
keeping with sound business practice are allowable.
(b) Minor losses not covered by insurance, such as spoilage, breakage, and disappearance of supplies,
which occur in the ordinary course of operations, are allowable.
b. Indemnification includes securing the organization against liabilities to third persons and any other loss
or damage, not compensated by insurance or otherwise. The Federal Government is obligated to indemnify
the organization only to the extent expressly provided in the award.
23. Interest, fundraising, and investment management costs.
a. Interest. -
(1) Costs incurred for interest on borrowed capital or temporary use of endowment funds, however
represented, are unallowable. However, interest on debt incurred after the effective date of this revision to
acquire or replace capital assets (including renovations, alterations, equipment, land, and capital assets •
acquired through capital leases), acquired after the effective date of this revision and used in support of
sponsored agreements is allowable,provided that:
(a)For facilities acquisitions(excluding renovations and alterations)costing over$10 million where the
Federal Government's reimbursement is expected to equal or exceed 40 percent of an asset's cost, the
non-profit organization prepares,prior to the acquisition or replacement of the capital asset(s), a
justification that demonstrates the need for the facility in the conduct of federally-sponsored activities.
Upon request, the needs justification must be provided to the Federal agency with cost cognizance
authority as a prerequisite to the continued allowability of interest on debt and depreciation related to the
facility. The needs justification for the acquisition of a facility should include, at a minimum, the
following:
A statement of purpose and justification for facility acquisition or replacement
A statement as to why current facilities are not adequate
A statement of planned future use of the facility
A description of the financing agreement to be arranged for the facility
A summary of the building contract with estimated cost information and statement of source and use of
funds
A schedule of planned occupancy dates
(b)For facilities costing over$500,000,the non-profit organization prepares, prior to the acquisition or
replacement of the facility, a lease/purchase analysis in accordance with the provisions of Sec. _.30
through_.37 of Circular A-110, which shows that a financed purchase or capital lease is less costly to the
organization than other leasing alternatives, on a net present value basis. Discount rates used should be
equal to the non-profit organization's anticipated interest rates and should be no higher than the fair market
rate available to the non-profit organization from an unrelated ("arm's length") third-party. The
lease/purchase analysis shall include a comparison of the net present value of the projected total cost
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(iv) The allowable costs to acquire facilities and equipment are limited to a fair market value available to
the non-profit organization from an unrelated("arm's length") third party.
(2) For non-profit organizations subject to "full coverage"' under the Cost Accounting Standards (CAS) as
defined at 48 CFR 9903.201, the interest allowability provisions of subparagraph a do not apply. Instead,
these organizations' sponsored agreements are subject to CAS 414 (48 CFR 9903.414), cost of money as an
element of the cost of facilities capital, and CAS 417 (48 CFR 9903.417), cost of money as an element of
the cost of capital assets under construction.
(3) The following definitions are to be used for purposes of paragraph 23:
(a) Re-acquired assets means assets held by the non-profit organization prior to the effective date of this
revision that have again come to be held by the organization, whether through repurchase or refinancing. It
does not include assets acquired to replace older assets.
(b)Initial equity contribution means the amount or value of contributions made by non-Federal entities
for the acquisition of the asset or prior to occupancy of facilities.
(c) Asset costs means the capitalizable costs of an asset,including construction costs, acquisition costs, and
other such costs capitalized in accordance with GAAP.
b. Costs of organized fundraising, including financial campaigns, endowment drives, solicitation of gifts •
and bequests, and similar expenses incurred solely to raise capital or obtain contributions are unallowable.
c. Costs of investment counsel and staff and similar expenses incurred solely to enhance income from
investments are unallowable.
d. Fundraising and investment activities shall be allocated an appropriate share of indirect costs under the
conditions described in subparagraph B.3 of Attachment A.
24. Labor relations costs. Costs incurred in maintaining satisfactory relations between the organization
and its employees, including costs of labor management committees, employee publications, and other
related activities are allowable.
25. Lobbying.
a. Notwithstanding other provisions of this Circular, costs associated with the following activities are
unallowable:
(1) Attempts to influence the outcomes of any Federal, State, or local election, referendum,initiative, or
similar procedure, through in kind or cash contributions, endorsements, publicity, or similar activity;
(2) Establishing, administering, contributing to, or paying the expenses of a political party, campaign,
political action committee, or other organization established for the purpose of influencing the outcomes of
elections;
(3)Any attempt to influence: (i) The introduction of Federal or State legislation; or(ii) the enactment or
modification of any pending Federal or State legislation through communication with any member or
employee of the Congress or State legislature (including efforts to influence State or local officials to
engage in similar lobbying activity), or with any Government official or employee in connection with a
(C)
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disallowing costs by contesting estimates of lobbying time spent by employees during a calendar month.
(5) Agencies shall establish procedures for resolving in advance, in consultation with OMB, any significant
questions or disagreements concerning the interpretation or application of paragraph 25. Any such
advance resolution shall be binding in any subsequent settlements, audits or investigations with respect to
that grant or contract for purposes of interpretation of this Circular; provided, however, that this shall not
be construed to prevent a contractor or grantee from contesting the lawfulness of such a determination.
26. Losses on other awards. Any excess of costs over income on any award is unallowable as a cost of
any other award. This includes,but is not limited to, the organization's contributed portion by reason of
cost sharing agreements or any under-recoveries through negotiation of lump sums for, or ceilings on,
indirect costs.
27. Maintenance and repair costs. Costs incurred for necessary maintenance, repair, or upkeep of
buildings and equipment(including Federal property unless otherwise provided for)which neither add to
the permanent value of the property nor appreciably prolong its intended life,but keep it in an efficient
operating condition, are allowable. Costs incurred for improvements which add to the permanent value of •
the buildings and equipment or appreciably prolong their intended life shall be treated as capital
expenditures (see paragraph 15).
28. Materials and supplies. The costs of materials and supplies necessary to carry out an award are
allowable. Such costs should be charged at their actual prices after deducting all cash discounts, trade
discounts,rebates, and allowances received by the organization. Withdrawals from general stores or
stockrooms should be charged at cost under any recognized method of pricing consistently applied.
Incoming transportation charges may be a proper part of material cost. Materials and supplies charged as a
direct cost should include only the materials and supplies actually used for the performance of the contract
or grant, and due credit should be given for any excess materials or supplies retained, or returned to
vendors.
29. Meetings and conferences.
a. Costs associated with the conduct of meetings and conferences include the cost of renting facilities,
meals, speakers' fees, and the like. But see paragraph 14,Entertainment costs, and paragraph 34,
Participant support costs. •
b. To the extent that these costs are identifiable with a particular cost objective,they should be charged to
that objective (see paragraph B of Attachment A). These costs are allowable,provided that they meet the
general tests of allowability, shown in paragraph A of Attachment A to this Circular.
c. Costs of meetings and conferences held to conduct the general administration of the organization are
allowable.
30. Memberships, subscriptions, and professional activity costs.
a. Costs of the organization's membership in business, technical, and professional organizations are
allowable.
b. Costs of the organization's subscriptions to business,professional, and technical periodicals are
allowable.
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necessary to make disclosures, if not required by the award, are unallowable. Costs in connection with (i)
filing and prosecuting any foreign patent application, or(ii) any United States patent application,where the
award does not require conveying title or a royalty-free license to the Federal Government, are unallowable
(also see paragraph 47).
36. Pension plans. See subparagraph 7.h.
37. Plant security costs.Necessary expenses incurred to comply with Federal security requirements or for
facilities protection, including wages, uniforms, and equipment of personnel are allowable.
38. Pre-award costs. Pre-award costs are those incurred prior to the effective date of the award directly
pursuant to the negotiation and in anticipation of the award where such costs are necessary to comply with
the proposed delivery schedule or period of performance. Such costs are allowable only to the extent that
they would have been allowable if incurred after the date of the award and only with the written approval
of the awarding agency.
39. Professional service costs.
a. Costs of professional and consultant services rendered by persons who are members of a particular
profession or possess a special skill, and who are not officers or employees of the organization, are
allowable, subject to subparagraphs b and c when reasonable in relation to the services rendered and
when not contingent upon recovery of the costs from the Federal Government.
b. In determining the allowability of costs in a particular case,no single factor or any special combination
of factors is necessarily determinative. However, the following factors are relevant:
(1) The nature and scope of the service rendered in relation to the service required.
(2) The necessity of contracting for the service, considering the organization's capability in the particular
area.
(3) The past pattern of such costs,particularly in the years prior to Federal awards.
(4) The impact of Federal awards on the organization's business(i.e.,what new problems have arisen).
(5) Whether the proportion of Federal work to the organization's total business is such as to influence the
organization in favor of incurring the cost,particularly where the services rendered are not of a continuing
nature and have little relationship to work under Federal grants and contracts.
(6) Whether the service can be performed more economically by direct employment rather than contracting.
(7) The qualifications of the individual or concern rendering the service and the customary fees charged,
especially on non-Federal awards.
(8)Adequacy of the contractual agreement for the service (e.g., description of the service, estimate of time
required, rate of compensation, and termination provisions).
c. In addition to the factors in subparagraph b, retainer fees to be allowable must be supported by
evidence of bona fide services available or rendered.
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44. Recruiting costs.
a. Subject to subparagraphs b, c, and d, and provided that the size of the staff recruited and maintained is
in keeping with workload requirements, costs of"help wanted" advertising, operating costs of an
employment office necessary to secure and maintain an adequate staff, costs of operating an aptitude and
educational testing program, travel costs of employees while engaged in recruiting personnel, travel costs
of applicants for interviews for prospective employment, and relocation costs incurred incident to
recruitment of new employees, are allowable to the extent that such costs are incurred pursuant to a
well-managed recruitment program. Where the organization uses employment agencies, costs that are not
in excess of standard commercial rates for such services are allowable.
b. In publications, costs of help wanted advertising that includes color, includes advertising material for
other than recruitment purposes, or is excessive in size(taking into consideration recruitment purposes for
which intended and normal organizational practices in this respect), are unallowable.
c. Costs of help wanted advertising, special emoluments, fringe benefits, and salary allowance's incurred to
attract professional personnel from other organizations that do not meet the test of reasonableness or do not
conform with the established practices of the organization, are unallowable.
d. Where relocation costs incurred incident to recruitment of a new employee have been allowed either as
an allocable direct or indirect cost, and the newly hired employee resigns for reasons within his control
within twelve months after being hired, the organization will be required to refund or credit such relocation
costs to the Federal Government.
45. Relocation costs.
a. Relocation costs are costs incident to the permanent change of duty assignment (for an indefinite period
or for a stated period of not less than 12 months) of an existing employee or upon recruitment of a new
-- employee. Relocation costs are allowable, subject to the limitation described in subparagraphs b, c, and -
d,provided that:
(1) The move is for the benefit of the employer. •
(2) Reimbursement to the employee is in accordance with an established written policy consistently
followed by the employer.
(3) The reimbursement does not exceed the employee's actual (or reasonably estimated) expenses.
b. Allowable relocation costs for current employees are limited to the following:
(1) The costs of transportation of the employee, members of his immediate family and his household, and
personal effects to the new location.
(2) The costs of finding a new home, such as advance trips by employees and spouses to locate living
quarters and temporary lodging during the transition period, up to maximum period of 30 days, including
advance trip time.
(3) Closing costs, such as brokerage, legal, and appraisal fees, incident to the disposition of the employee's
former home. These costs, together with those described in(4), are limited to 8 per cent of the sales price
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lease agreement was executed, i.e., to the amount that minimally would pay for depreciation or use
allowances, maintenance, taxes, and insurance. Interest costs related to capitalized leases are allowable to
the extent they meet criteria in subparagraph 23.a. Unallowable costs include amounts paid for profit,
management fees, and taxes that would not have been incurred had the organization purchased the facility.
47. Royalties and other costs for use of patents and copyrights.
a. Royalties on a patent or copyright or amortization of the cost of acquiring by purchase a copyright,
patent, or rights thereto, necessary for the proper performance of the award are allowable unless:
(1) The.Federal Government has a license or the right to free use of the patent or copyright.
(2) The patent or copyright has been adjudicated to be invalid, or has been administratively determined to
be invalid.
(3) The patent or copyright is considered to be unenforceable.
(4) The patent or copyright is expired.
b. Special care should be exercised in determining reasonableness where the royalties may have arrived at
as a result of less-than-arm's-length bargaining, e.g.:
(1)Royalties paid to persons, including corporations, affiliated with the organization.
(2) Royalties paid to unaffiliated parties, including corporations, under an agreement entered into in
contemplation that a Federal award would be made.
(3) Royalties paid under an agreement entered into after an award is made to an organization.
c. In any case involving a patent or copyright-formerly owned by the organization, the amount of royalty
allowed should not exceed the cost which would have been allowed had the organization retained title
thereto.
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48. Selling and marketing. Costs of selling and marketing any products or services of the organization
(unless allowed under paragraph 1 as allowable public relations costs) are unallowable. These costs,
however, are allowable as direct costs,with prior approval by awarding agencies,when they are necessary
for the performance of Federal programs.
49. Severance pay.
a. Severance pay, also commonly referred to as dismissal wages, is a payment in addition to regular salaries
and wages,by organizations to workers whose employment is being terminated. Costs of severance pay are
allowable only to the extent that in each case, it is required by(i) law, (ii) employer-employee agreement,
(iii) established policy that constitutes, in effect, an implied agreement on the organization's part, or(iv)
circumstances of the particular employment.
b. Costs of severance payments are divided into two categories as follows:
(1)Actual normal turnover severance payments shall be allocated to all activities; or, where the
organization provides for a reserve for normal severances, such method will be acceptable if the charge to el
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b. Any refund of taxes, and any payment to the organization of interest thereon, which were allowed as
award costs, will be credited either as a cost reduction or cash refund, as appropriate, to the Federal
Government.
52. Termination costs. Termination of awards generally give rise to the incurrence of costs, or the need for
special treatment of costs,which would not have arisen had the award not been terminated. Cost principles
covering these items are set forth below. They are to be used in conjunction with the other provisions of
this Circular in termination situations.
a. Common items. The cost of items reasonably usable on the organization's other work shall not be
allowable unless the organization submits evidence that it would not retain such items at cost without
sustaining a loss. In deciding whether such items are reasonably usable on other work of the organization,
the awarding agency should consider the organization's plans and orders for current and scheduled activity.
Contemporaneous purchases of common items by the organization shall be regarded as evidence that such
items are reasonably usable on the organization's other work. Any acceptance of common items as
allocable to the terminated portion of the award shall be limited to the extent that the quantities of such
items on hand, in transit, and on order are in excess of the reasonable quantitative requirements of other
work.
b. Costs continuing after termination. If in a particular case, despite all reasonable efforts by the
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organization, certain costs cannot be discontinued immediately after the effective date of termination, such
costs are generally allowable within the limitations set forth in this Circular, except that any such costs
continuing after termination due to the negligent or willful failure of the organization to discontinue such
costs shall be unallowable.
c. Loss of useful value. Loss of useful value of special tooling,machinery and equipment which was not
charged to the award as a capital expenditure is generally allowable if:
(1) Such special tooling,machinery, or equipment is not reasonably capable of use in the other work of the
organization.
(2)The interest of the Federal Government is protected by transfer of title or by other means deemed •
appropriate by the awarding agency;
d. Rental costs. Rental costs under unexpired leases are generally allowable where clearly shown to have
been reasonably necessary for the performance of the terminated award less the residual value of such
leases, if(i)the amount of such rental claimed does not exceed the reasonable use value of the property
leased for the period of the award and such further period as may be reasonable, and(ii) the organization
makes all reasonable efforts to terminate, assign, settle, or otherwise reduce the cost of such lease. There
also may be included the cost of alterations of such leased property,provided such alterations were
necessary for the performance of the award, and of reasonable restoration required by the provisions of the
lease.
e. Settlement expenses. Settlement expenses including the following are generally allowable:
(1)Accounting, legal, clerical, and similar costs reasonably necessary for:
(a) The preparation and presentation to awarding agency of settlement claims and supporting data with
respect to the terminated portion of the award, unless the termination is for default(see Sec. .61 of
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emoluments)in connection with full-time education, including that provided at the organization's own
facilities, at a post-graduate (but not undergraduate) college level, are allowable only when the course or
degree pursued is related to the field in which the employee is now working or may reasonably be expected
to work, and only where the costs receive the prior approval of the awarding agency. Such costs are limited
to the costs attributable to a total period not to exceed one school year for each employee so trained. In
unusual cases the period may be extended.
d. Costs of attendance of up to 16 weeks per employee per year at specialized programs specifically
designed to enhance the effectiveness of executives or managers or to prepare employees for such positions
are allowable. Such costs include enrollment fees, training materials,textbooks and related charges,
employees' salaries, subsistence, and travel. Costs allowable under this paragraph do not include those for
courses that are part of a degree-oriented curriculum,which are allowable only to the extent set forth in
subparagraphs b and c.
e. Maintenance expense, and normal depreciation or fair rental, on facilities owned or leased by the
organization for training purposes are allowable to the extent set forth in paragraphs 11,27, and 46.
f. Contributions or donations to educational or training institutions, including the donation of facilities or
other properties, and scholarships or fellowships, are unallowable.
g. Training and education costs in excess of those otherwise allowable under subparagraphs b and c may
be allowed with prior approval of the awarding agency. To be considered for approval, the organization
must demonstrate that such costs are consistently incurred pursuant to an established training and education
program,and that the course or degree pursued is relative to the field in which the employee is now
working or may reasonably be expected to work.
54. Transportation costs. Transportation costs include freight, express, cartage, and postage charges
relating either to goods purchased, in process, or delivered. These costs are allowable. When such costs can
readily be identified with the items involved, they may be directly charged as transportation costs or added
to the cost of such items (see paragraph 28). Where identification with the materials received cannot
readily be made, transportation costs may be charged to the appropriate indirect cost accounts if the
organization follows a consistent, equitable procedure in this respect.
55. Travel costs.
a. Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by
employees who are in travel status on official business of the organization. Travel costs are allowable
subject to subparagraphs b through e,when they are directly attributable to specific work under an award
or are incurred in the normal course of administration of the organization.
b. Such costs may be charged on an actual basis, on a per diem or mileage basis in lieu of actual costs
incurred, or on a combination of the two,provided the method used results in charges consistent with those
normally allowed by the organization in its regular operations.
c. The difference in cost between first-class air accommodations and less than first-class air
accommodations is unallowable except when less than first-class air accommodations are not reasonably
available to meet necessary mission requirements, such as where less than first-class accommodations
would(i)require circuitous routing, (ii)require travel during unreasonable hours, (iii) greatly increase the
duration of the flight, (iv)result in additional costs which would offset the transportation savings, or (v)
offer accommodations which are not reasonably adequate for the medical needs of the traveler.
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Information &Regulatory Policy I Special Topics
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OMB Circular No. A-133 Page 1 of 33
•
EXHIBIT "J"
Circular No. A-133 - Revised June 24, 1997
Audits of States, Local Governments, and Non-Profit
Organizations
(Accompanying Federal Register Materials --Audits of States,Local Governments, and Non-
Profit Organizations June 30, 1997)
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Audits of States, Local Governments, and Non-Profit Organizations
1. Purpose. This Circular is issued pursuant to the Single Audit Act of 1984, P.L. 98-502, and the
Single Audit Act Amendments of 1996,P.L. 104-156. It sets forth standards for obtaining
consistency and uniformity among Federal agencies for the audit of States, local governments, arid
non-profit organizations expending Federal awards.
2. Authority. Circular A-133 is issued under the authority of sections 503, 1111, and 7501 et seq. of
' title 31, United States Code, and Executive Orders 8248 and 11541.
3. Rescission and Supersession. This Circular rescinds Circular A-128, "Audits of State and Local
Governments,"issued April 12, 1985, and supersedes the prior Circular A-133, "Audits of
Institutions of Higher Education and Other Non-Profit Institutions," issued April 22, 1996. For
effective dates,see paragraph 10.
4. Policy. Except as provided herein, the standards set forth in this Circular shall be applied by all
Federal agencies. If any statute specifically prescribes policies or specific requirements that differ -
from the standards provided herein, the provisions of the subsequent statute shall govern.
Federal agencies shall apply the provisions of the sections of this Circular to non-Federal entities,
whether they are recipients expending Federal awards received directly from Federal awarding
agencies, or are subrecipients expending Federal awards received from a pass-through entity(a
recipient or another subrecipient).
This Circular does not apply to non-U.S. based entities expending Federal awards received either
directly as a recipient or indirectly as a subrecipient.
5.Definitions.The definitions of key terms used in this Circular are contained in § .105 in the
Attachment to this Circular.
6. Required Action. The specific requirements and responsibilities of Federal agencies and non-
Federal entities are set forth in the Attachment to this Circular. Federal agencies making awards to
non-Federal entities, either directly or indirectly, shall adopt the language in the Circular in codified
regulations as provided in Section 10 (below),unless different provisions are required by Federal
statute or are approved by the Office of Management and Budget(OMB).
7. OMB Responsibilities. OMB will review Federal agency regulations and implementation of this
Circular, and will provide interpretations of policy requirements and assistance to ensure uniform,
411
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OMB Circular No. A-133 Page 2 of 33
effective and efficient implementation.
8. Information Contact. Further information concerning Circular A-133 may be obtained by
contacting the Financial Standards and Reporting Branch, Office of Federal Financial Management,
Office of Management and Budget, Washington, DC 20503, telephone (202) 395-3993.
9. Review Date. This Circular will have a policy review three years from the date of issuance.
10. Effective Dates. The standards set forth in § .400 of the Attachment to this Circular, which
apply directly to Federal agencies, shall be effective July 1, 1996, and shall apply to audits of fiscal
years beginning after June 30, 1996, except as otherwise specified in § .400(a).
The standards set forth in this Circular that Federal agencies shall apply to non-Federal entities shall
be adopted by Federal agencies in codified regulations not later than 60 days after publication of this
final revision in the Federal Register, so that they will apply to audits,of fiscal years beginning after
June 30, 1996, with the exception that § .305(b)of the Attachment applies to audits of fiscal years
beginning after June 30, 1998. The requirements of Circular A-128, although the Circular is
rescinded, and the 1990 version of Circular A-133 remain in effect for audits of fiscal years beginning
on or before June 30, 1996.
Franklin D. Raines
Director
Attachment
PART --AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON-PROFIT
ORGANIZATIONS
Subpart A--General
Sec. .
.100 Purpose.
.105 Definitions.
SubpartB--Audits
_.200 Audit requirements.
_.205 Basis for determining Federal awards expended.
_.210 Subrecipient and vendor determinations.
_.215 Relation to other audit requirements.
.220 Frequency of audits.
.225 Sanctions.
_.230 Audit costs.
.235 Program-specific audits.
Subpart C.--Auditees
.300 Auditee responsibilities.
.305 Auditor selection.
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.310 Financial statements.
.315 Audit findings follow-up.
.320 Report submission.
Subpart D--Federal.._Agencies and Pass-Through Entities
,
_.400 Responsibilities.
.405 Management decision.
Subpart E--Auditors
_.500 Scope of audit.
_.505 Audit reporting.
_.510 Audit findings.
.515 Audit working papers.
_.520 Major program determination.
.525 Criteria for Federal program risk.
.530 Criteria for a low-risk auditee.
Appendix A to Part_-Data Collection Form (Form SF-SAC).
Appendix B to Part_-Circular A-133 Compliance Supplement.
Subpart A--General
§_.100 Purpose.
This part sets forth standards for obtaining consistency and uniformity among Federal agencies for
the audit of non-Federal entities expending Federal awards.
§ .105 Definitions.
Auditee means any non-Federal entity that expends Federal awards which must be audited under this
part. Auditor means an auditor,that is a public accountant or a Federal, State or local government
audit organization,which meets the general standards specified in generally accepted government
auditing standards (GAGAS). The term auditor does not include internal auditors of non-profit
organizations.
Audit finding means deficiencies which the auditor is required by§ .510(a) to report in the
schedule of findings and questioned costs.
CFDA number means the number assigned to a Federal program in the Catalog of Federal
Domestic Assistance (CFDA).
Cluster of programs means a grouping of closely related programs that share common compliance
requirements. The types of clusters of programs are research and development(R&D), student
financial aid (SFA), and other clusters. "Other clusters" are as defined by the Office of Management
and Budget(OMB) in the compliance supplement or as designated by a State for Federal awards the
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State provides to its subrecipients that meet the definition of a cluster of programs. When designating
an "other cluster," a State shall identify the Federal awards included in the cluster and advise the
subrecipients of compliance requirements applicable to the cluster, consistent with §_.400(d)(1)
and §_.400(d)(2),respectively. A cluster of programs shall be considered as one program for
determining major programs, as described in§_.520, and,with the exception of R&D as described
in § .200(c), whether a program-specific audit may be elected.
Cognizant agency for audit means the Federal agency designated to carry out the responsibilities
described in§_.400(a).
Compliance supplement refers to the Circular A-133 Compliance Supplement, included as
Appendix B to Circular A-133, or such documents as OMB or its designee may issue to replace it.
This document is available from the Government Printing Office, Superintendent of Documents,
Washington, DC 20402-9325.
Corrective action means action taken by the auditee that:
(1) Corrects identified deficiencies;
(2)Produces recommended improvements; or
(3)Demonstrates that audit findings are either invalid or do not warrant auditee action.
Federal agency has the same meaning as the term agency in Section 551(1) of title 5,United States
Code.
Federal award means Federal financial assistance and Federal cost-reimbursement contracts that
non-Federal entities receive directly from Federal awarding agencies or indirectly from pass-through
entities.It does-not include procurement contracts, under grants or contracts, used to buy goods or
services from vendors. Any audits of such vendors shall be covered by the terms and conditions of
the contract. Contracts to operate Federal Government owned, contractor operated facilities (GOCOs)
are excluded from the requirements of this part.
Federal awarding agency means the Federal agency that provides an award directly to the recipient.
Federal financial assistance means assistance that non-Federal entities receive or administer in the
form of grants, loans, loan guarantees,property(including donated surplus property), cooperative
agreements, interest subsidies, insurance, food commodities,direct appropriations, and other
assistance,but does not include amounts received as reimbursement for services rendered to
individuals as described in §_.205(h) and § .205(i).
Federal program means:
(1)All Federal awards to a non-Federal entity assigned a single number in the CFDA.
(2)When no CFDA number is assigned, all Federal awards from the same agency made for the same
purpose should be combined and considered one program.
(3)Notwithstanding paragraphs (1) and (2) of this definition, a cluster of programs. The types of
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clusters of programs are:
(i) Research and development (R&D);
(ii) Student financial aid (SFA); and
(iii) "Other clusters," as described in the definition of cluster of programs in this section.
GAGAS means generally accepted government auditing standards issued by the Comptroller General
of the United States,which are applicable to financial audits.
Generally accepted accounting principles has the meaning specified in generally accepted auditing
standards issued by the American Institute of Certified Public Accountants (AICPA).
Indian tribe means any Indian tribe,band, nation, or other organized group or community, including
any Alaskan Native village or regional or village corporation(as defined in, or established under, the
Alaskan Native Claims Settlement Act) that is recognized by the United States as eligible for the
special programs and services provided by the United States to Indians because of their status as
Indians.
Internal control means a process, effected by an entity's management and other personnel, designed
to provide reasonable assurance regarding the achievement of objectives in the following categories:
(1) Effectiveness and efficiency of operations;
(2) Reliability of financial reporting; and
(3) Compliance with applicable laws and regulations.
Internal control pertaining to the compliance requirements for Federal programs (Internal
control over Federal programs)means a process--effected by an entity's management and other
personnel--designed to provide reasonable assurance regarding the achievement of the following
objectives for Federal programs:
(1) Transactions are properly recorded and accounted for to:
(i)Permit the preparation of reliable financial statements and Federal reports;
(ii) Maintain accountability over assets; and
(iii) Demonstrate compliance with laws, regulations, and other compliance requirements;
(2) Transactions are executed in compliance with:
(i) Laws, regulations, and the provisions of contracts or grant agreements that could have a direct and
material effect on a Federal program; and
(ii) Any other laws and regulations that are identified in the compliance supplement; and
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(3)Funds,property, and other assets are safeguarded against loss from unauthorized use or
disposition.
Loan means a Federal loan or loan guarantee received or administered by a non-Federal entity.
Local government means any unit of local government within a State, including a county,borough,
municipality, city, town, township,parish, local public authority, special district, school district,
intrastate district, council of governments, and any other instrumentality of local government.
Major program means a Federal program determined by the auditor to be a major program in
accordance with §_.520 or a program identified as a major program by a Federal agency or pass-
through entity in accordance with§ .215(c).
Management decision means the evaluation by the Federal awarding agency or pass-through entity
of the audit findings and corrective action plan and the issuance of a written decision as to what
corrective action is necessary.
Non-Federal entity means a State, local government, or non-profit organization.
Non-profit organization means:
(1) any corporation,trust, association, cooperative, or other organization that:
(i) Is operated primarily for scientific, educational, service, charitable, or similar purposes in the
public interest;
(ii)Is not organized primarily for profit; and
(iii) Uses its net proceeds to maintain, improve, or expand its operations; and
(2) The term non-profit organization includes non-profit institutions of higher education and
hospitals.
OMB means the Executive Office of the President, Office of Management and Budget.
Oversight agency for audit means the Federal awarding agency that provides the predominant
amount of direct funding to a recipient not assigned a cognizant agency for audit. When there is no
direct funding, the Federal agency with the predominant indirect funding shall assume the oversight
responsibilities. The duties of the oversight agency for audit are described in §_.400(b).
Pass-through entity means a non-Federal entity that provides a Federal award to a subrecipient to
carry out a Federal program.
Program-specific audit means an audit of one Federal program as provided for in§ .200(c)and
§ .235.
Questioned cost means a cost that is questioned by the auditor because of an audit finding:
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(1) Which resulted from a violation or possible violation of a provision of a law, regulation, contract,
grant, cooperative agreement,or other agreement or document governing the use of Federal funds,
including funds used to match Federal funds;
(2) Where the costs, at the time of the audit, are not supported by adequate documentation; or
(3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person
would take in the circumstances.
Recipient means a non-Federal entity that expends Federal awards received directly from a Federal
awarding agency to carry out a Federal program.
Research and development(R&D)means all research activities, both basic and applied, and all
development activities that are performed by a non-Federal entity. Research is defined as a
systematic study directed toward fuller scientific knowledge or understanding of the subject studied.
The term research also includes activities involving the training of individuals in research techniques
where such activities utilize the same facilities as other research and development activities and
where such activities are not included in the instruction function. Development is the systematic use
of knowledge and understanding gained from research directed toward the production of useful
materials,devices, systems,or methods, including design and development of prototypes and
processes.
Single audit means an audit which includes both the entity's financial statements and the Federal
awards as described.in§_.500.
State means any State of the United States, the District of Columbia,the Commonwealth of Puerto
Rico, the Virgin Islands,Guam,American Samoa,the Commonwealth of the Northern Mariana
Islands, and the Trust Territory of the Pacific Islands, any instrumentality thereof, any multi-State,
regional, or interstate entity which has governmental functions, and any Indian tribe as defined in this
section.
Student Financial Aid(SFA)includes those programs of general student assistance, such as those
authorized by Title IV of the Higher Education Act of 1965, as amended, (20 U.S.C. 1070 et seq.)
which is administered by the U.S. Department of Education, and similar programs provided by other
Federal agencies. It does not include programs which provide fellowships or similar Federal awards
to students on a competitive basis, or for specified studies or research.
Subrecipient means a non-Federal entity that expends Federal awards received from a pass-through
entity to carry out a Federal program,but does not include an individual that is a beneficiary of such a
program. A subrecipient may also be a recipient of other Federal awards directly from a Federal
awarding agency. Guidance on distinguishing between a subrecipient and a vendor is provided in
§ .210.
Types of compliance requirements refers to the types of compliance requirements listed in the
compliance supplement. Examples include: activities allowed or unallowed; allowable costs/cost
principles; cash management; eligibility; matching, level of effort, earmarking; and, reporting.
Vendor means a dealer, distributor, merchant, or other seller providing goods or services that are
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required for the conduct of a Federal program. These goods or services may be for an organization's
own use or for the use of beneficiaries of the Federal program. Additional guidance on distinguishing
between a subrecipient and a vendor is provided in § .210.
Subpart B--Audits
§_.200 Audit requirements.
(a) Audit required. Non-Federal entities that expend$300,000 or more in a year in Federal awards
shall have a single or program-specific audit conducted for that year in accordance with the
provisions of this part. Guidance on determining Federal awards expended is provided in § .205.
(b) Single audit. Non-Federal entities that expend$300,000 or more in a year in Federal awards shall
•
have a single audit conducted in accordance with §_.500 except when they elect to have a program-
specific audit conducted in accordance with paragraph(c)of this section.
(c) Program-specific audit election. When an auditee expends Federal awards under only one
Federal program (excluding R&D) and the Federal program's laws, regulations, or grant agreements
do not require a financial statement audit of the auditee, the auditee may elect to have a program-
specific audit conducted in accordance with § .235. A program-specific audit may not be elected
for R&D unless all of the Federal awards expended were received from the same Federal agency, or
the same Federal agency and the same pass-through entity, and that Federal agency, or pass-through
entity in the case of a subrecipient, approves in advance a program-specific audit.
(d)Exemption when Federal awards expended are less than $300,000. Non-Federal entities that
expend less than$300,000.a year in Federal awards are exempt from Federal audit requirements for
that year, except as noted in § .215(a),but records must be available for review or audit by
appropriate officials of the Federal agency, pass-through entity, and General Accounting Office
(GAO).
(e) Federally Funded Research and Development Centers (FFRDC). Management of an auditee
that owns or operates a FFRDC may elect to treat the FFRDC as a separate entity for purposes of this
part.
§_.205 Basis for determining Federal awards expended.
(a) Determining Federal awards expended. The determination of when an award is expended
should be based on when the activity related to the award occurs. Generally, the activity pertains to
events that require the non-Federal entity to comply with laws, regulations, and the provisions of
contracts or grant agreements, such as: expenditure/expense transactions associated with grants, cost-
reimbursement contracts, cooperative agreements, and direct appropriations; the disbursement of
funds passed through to subrecipients; the use of loan proceeds under loan and loan guarantee
programs; the receipt of property; the receipt of surplus property; the receipt or use of program
income; the distribution or consumption of food commodities; the disbursement of amounts entitling
the non-Federal entity to an interest subsidy; and, the period when insurance is in force.
(b) Loan and loan guarantees (loans). Since the Federal Government is at risk for loans until the
debt is repaid, the following guidelines shall be used to calculate the value of Federal awards
expended under loan programs, except as noted in paragraphs(c)and (d) of this section:
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(1)Value of new loans made or received during the fiscal year;plus
(2)Balance of loans from previous years for which the Federal Government imposes continuing
compliance requirements; plus
(3)Any interest subsidy, cash, or administrative cost allowance received.
(c)Loan and loan guarantees (loans) at institutions of higher education. When loans are made to
students of an institution of higher education but the institution does not make the loans, then only the
value of loans made during the year shall be considered Federal awards expended in that year. The
balance of loans for previous years is not included as Federal awards expended because the lender
accounts for the prior balances.
(d)Prior loan and loan guarantees (loans). Loans, the proceeds of which were received and
• expended in prior-years, are not considered Federal awards expended under this part when the laws,
regulations, and the provisions of contracts or grant agreements pertaining to such loans impose no
continuing compliance requirements other than to repay the loans.
(e)Endowment funds. The cumulative balance of Federal awards for endowment funds which are
federally restricted are considered awards expended in each year in which the funds are still
restricted.
(f)Free rent. Free rent received by itself is not considered a Federal award expended under this part.
However, free rent received as part of an award to carry out a Federal program shall be included in
determining Federal awards expended and subject to audit under this part.
(g)Valuing non-cash assistance. Federal non-cash assistance, such as free rent, food stamps, food
commodities, donated property, or donated surplus property, shall be valued at fair market value at
the time of receipt or the assessed value provided by the Federal agency.
•
(h)Medicare.Medicare payments to a non-Federal entity for providing patient care services to
Medicare eligible individuals are not considered Federal awards expended under this part.
(i)Medicaid. Medicaid payments to a subrecipient for providing patient care services to Medicaid
eligible individuals are not considered Federal awards expended under this part unless a State
requires the funds to be treated as Federal awards expended because reimbursement is on a cost-
reimbursement basis.
(j) Certain loans provided by the National Credit Union Administration. For purposes of this
part, loans made from the National Credit Union Share Insurance Fund and the Central Liquidity
Facility that are funded by contributions from insured institutions are not considered Federal awards
expended.
§_.210 Subrecipient and vendor determinations.
(a)General. An auditee may be a recipient, a subrecipient, and a vendor. Federal awards expended as
a recipient or a subrecipient would be subject to audit under this part. The payments received for
goods or services provided as a vendor would not be considered Federal awards. The guidance in
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paragraphs (b) and(c) of this section should be considered in determining whether payments
constitute a Federal award or a payment for goods and services.
(b) Federal award. Characteristics indicative of a Federal award received by a subrecipient are when
the organization:
(1) Determines who is eligible to receive what Federal financial assistance;
(2) Has its performance measured against whether the objectives of the Federal program are met;
(3) Has responsibility for programmatic decision making;
(4) Has responsibility for adherence to applicable Federal program compliance requirements; and
(5)Uses the Federal funds to carry out a program of the organization as compared to providing goods
or services for a program of the pass-through entity.
(c) Payment for goods and services. Characteristics indicative of a payment for goods and services
received by a vendor are when the organization:
(1) Provides the goods and services within normal business operations;
(2)Provides similar goods or services to many different purchasers;
(3) Operates in a competitive environment;
(4)Provides goods or services that are ancillary to the operation of the Federal program; and
(5) Is not subject to compliance requirements of the Federal program.
(d) Use of judgment in making determination. There may be unusual circumstances or exceptions
to the listed characteristics. In making the determination of whether a subrecipient or vendor
relationship exists, the substance of the relationship is more important than the form of the
agreement. It is not expected that all of the characteristics will be present and judgment should be
used in determining whether an entity is a subrecipient or vendor.
(e) For-profit subrecipient. Since this part does not apply to for-profit subrecipients,the pass-
through entity is responsible for establishing requirements, as necessary, to ensure compliance by for-
profit subrecipients. The contract with the for-profit subrecipient should describe applicable
compliance requirements and the for-profit subrecipient's compliance responsibility. Methods to
ensure compliance for Federal awards made to for-profit subrecipients may include pre-award audits,
monitoring during the contract, and post-award audits.
(f) Compliance responsibility for vendors. In most cases, the auditee's compliance responsibility
for vendors is only to ensure that the procurement,receipt, and payment for goods and services
comply with laws, regulations, and the provisions of contracts or grant agreements. Program
compliance requirements normally do not pass through to vendors. However, the auditee is
responsible for ensuring compliance for vendor transactions which are structured such that the vendor
is responsible for program compliance or the vendor's records must be reviewed to determine
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program compliance. Also,when these vendor transactions relate to a major program, the scope of
the audit shall include determining whether these transactions are in compliance with laws,
regulations, and the provisions of contracts or grant agreements.
§ .215 Relation to other audit requirements.
(a)Audit under this part in lieu of other audits. An audit made in accordance with this part shall
be in lieu of any financial audit required under individual Federal awards. To the extent this audit
meets a Federal agency's needs, it shall rely upon and use such audits. The provisions of this part
neither limit the authority of Federal agencies, including their Inspectors General, or GAO to conduct
or arrange for additional audits (e.g., financial audits,performance audits, evaluations, inspections, or
reviews) nor authorize any auditee to constrain Federal agencies from carrying out additional audits.
Any additional audits shall be planned and performed in such a way as to build upon work performed
by other auditors.
(b) Federal agency to pay for additional audits. A Federal agency that conducts or contracts for
additional audits shall, consistent with other applicable laws and regulations, arrange for funding the
full cost of such additional audits.
(c)Request for a program to be audited as a major program. A Federal agency may request an
auditee to have a particular Federal program audited as a major program in lieu of the Federal agency
conducting or arranging for the additional audits. To allow for planning, such requests should be
made at least 180 days prior to the end of the fiscal year to be audited. The auditee, after consultation
with its auditor, should promptly respond to such request by informing the Federal agency whether
the program would otherwise be audited as a major program using the risk-based audit approach
described in§_.520 and,if not, the estimated incremental cost. The Federal agency shall then
promptly confirm to the auditee whether it wants the program audited as a major program. If the
program is to be audited as a major program based upon this Federal agency request, and the Federal
agency agrees to pay the full incremental costs, then the auditee shall have the program audited as a
major program. A pass-through entity may use the provisions of this paragraph for a subrecipient.
§_.220 Frequency of audits.
Except for the provisions for biennial audits provided in paragraphs (a) and (b) of this section, audits
required by this part shall be performed annually. Any biennial audit shall cover both years within the
biennial period.
(a)A State or local government that is required by constitution or statute, in effect on January 1,
1987, to undergo its audits less frequently than annually, is permitted to undergo its audits pursuant to
this part biennially. This requirement must still be in effect for the biennial period under audit.
(b)Any non-profit organization that had biennial audits for all biennial periods ending between July
1, 1992, and January 1, 1995, is permitted to undergo its audits pursuant to this part biennially.
§ .225 Sanctions.
No audit costs may be charged to Federal awards when audits required by this part have not been
made or have been made but not in accordance with this part. In cases of continued inability or
unwillingness to have an audit conducted in accordance with this part, Federal agencies and pass-
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through entities shall take appropriate action using sanctions such as:
(a) Withholding a percentage of Federal awards until the audit is completed satisfactorily;
(b) Withholding or disallowing overhead costs;
(c) Suspending Federal awards until the audit is conducted; or
(d) Terminating the Federal award.
§ .230 Audit costs.
(a)Allowable costs. Unless prohibited by law,the cost of audits made in accordance with the
provisions of this part are allowable charges to Federal awards. The charges may be considered a
direct cost or an allocated indirect cost, as determined in accordance with the provisions of applicable
OMB cost principles circulars, the Federal Acquisition Regulation(FAR) (48 CFR parts 30 and 31),
or other applicable cost principles or regulations.
(b) Unallowable costs. A non-Federal entity shall not charge the following to a Federal award:
(1) The cost of any audit under the Single Audit Act Amendments of 1996 (31 U.S.C. 7501 et seq.)
not conducted in accordance with this part.
(2)The cost of auditing a non-Federal entity which has Federal awards expended of less than
$300,000 per year and is thereby exempted under§_.200(d) from having an audit conducted under
this part. However, this does not prohibit a pass-through entity from charging Federal awards for the
cost of limited scope audits to monitor its subrecipients in accordance with §_.400(d)(3), provided
the subrecipient does not have a single audit. For purposes of this part, limited scope audits only
include agreed-upon procedures engagements conducted in accordance with either the AICPA's
generally accepted auditing standards or attestation standards, that are paid for and arranged by a
pass-through entity and address only one or more of the following types of compliance requirements:
activities allowed or unallowed; allowable costs/cost principles; eligibility; matching, level of effort,
earmarking; and, reporting.
§ .235 Program-specific audits.
(a) Program-specific audit guide available. In many cases, a program-specific audit guide will be
available to provide specific guidance to the auditor with respect to internal control, compliance
requirements, suggested audit procedures, and audit reporting requirements. The auditor should
contact the Office of Inspector General of the Federal agency to determine whether such a guide is
available. When a current program-specific audit guide is available, the auditor shall follow GAGAS
and the guide when performing a program-specific audit.
(b) Program-specific audit guide not available. (1) When a program-specific audit guide is not
available, the auditee and auditor shall have basically the same responsibilities for the Federal
program as they would have for an audit of a major program in a single audit.
(2) The auditee shall prepare the financial statement(s) for the Federal program that includes, at a
minimum, a schedule of expenditures of Federal awards for the program and notes that describe the
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significant accounting policies used in preparing the schedule, a summary schedule of prior audit
findings consistent with the requirements of§_.315(b), and a corrective action plan consistent with
the requirements of§_.315(c).
(3) The auditor shall:
(i)Perform an audit of the financial statement(s) for the Federal program in accordance with
GAGAS;
(ii) Obtain an understanding of internal control and perform tests of internal control over the Federal
program consistent with the requirements of§ .500(c) for a major program;
(iii)Perform procedures to determine whether the auditee has complied with laws,regulations, and
the provisions of contracts or grant agreements that could have a direct and material effect on the
Federal program consistent with the requirements of§ .500(d) for a major program; and
(iv)Follow up on prior audit findings,perform procedures to assess the reasonableness of the
summary schedule of prior audit findings prepared by the auditee, and report, as a current year audit
finding, when the auditor concludes that the summary schedule of prior audit findings materially
misrepresents the status of any prior audit finding in accordance with the requirements of§ .500
(e).
(4) The auditor's report(s)may be in the form of either combined or separate reports and may be
organized differently from the manner presented in this section. The auditor's report(s) shall state that
the audit was conducted in accordance with this part and include the following:
(i)An opinion(or disclaimer of opinion) as to whether the financial statement(s) of the Federal
program is presented fairly in all material respects in conformity with the stated accounting policies;
(ii)A report on internal control related to the Federal program, which shall describe the scope of
testing of internal control and the results of the tests;.
(iii)A report on compliance which includes an opinion(or disclaimer of opinion) as to whether the
auditee complied with laws, regulations, and the provisions of contracts or grant agreements which
could have a direct and material effect on the Federal program; and
(iv)A schedule of findings and questioned costs for the Federal program that includes a summary of
the auditor's results relative to the Federal program in a format consistent with§_.505(d)(1) and
findings and questioned costs consistent with the requirements of§_.505(d)(3).
(c)Report submission for program-specific audits.
(1)The audit shall be completed and the reporting required by paragraph(c)(2) or(c)(3) of this
section submitted within the earlier of 30 days after receipt of the auditor's report(s), or nine months
after the end of the audit period,unless a longer period is agreed to in advance by the Federal agency
that provided the funding or a different period is specified in a program-specific audit guide.
(However, for fiscal years beginning on or before June 30, 1998, the audit shall be completed and the
required reporting shall be submitted within the earlier of 30 days after receipt of the auditor's report
(s), or 13 months after the end of the audit period, unless a different period is specified in a program-
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specific audit guide.)Unless restricted by law or regulation,the auditee shall make report copies
available for public inspection.
(2) When a program-specific audit guide is available, the auditee shall submit to the Federal
clearinghouse designated by OMB the data collection form prepared in accordance with §_.320(b),
as applicable to a program-specific audit, and the reporting required by the program-specific audit
guide to be retained as an archival copy. Also, the auditee shall submit to the Federal awarding
agency or pass-through entity the reporting required by the program-specific audit guide.
(3) When a program-specific audit guide is not available, the reporting package for a program-
specific audit shall consist of the financial statement(s) of the Federal program, a summary schedule
of prior audit findings, and a corrective action plan as described in paragraph (b)(2)of this section,
and the auditor's report(s)described in paragraph (b)(4)of this section. The data collection form
prepared in accordance with §_.320(b),as applicable to a program-specific audit, and one copy of
this reporting package shall be submitted to the Federal clearinghouse designated by OMB to be
retained as an archival copy. Also,when the schedule of findings.and questioned costs disclosed audit
findings or the summary schedule of prior audit findings reported the status of any audit findings,the
auditee shall submit one copy of the reporting package to the Federal clearinghouse on behalf of the
Federal awarding agency,or directly to the pass-through entity in the case of a subrecipient. Instead
of submitting the reporting package to the pass-through entity, when a subrecipient is not required to
submit a reporting package to the pass-through entity, the subrecipient shall provide written
notification to the pass-through entity,consistent with the requirements of§_.320(e)(2). A
subrecipient may submit a copy of the reporting package to the pass-through entity to comply with
this notification requirement.
(d) Other sections of this part may apply. Program-specific audits are subject to §_.100 through
§ .215(b), § .220 through§_.230, §_.300 through§_.305, § .315, § .320(f)
through § .320(j), § .400 through § .405, § .510 through §_.515, and other referenced
provisions of this part unless contrary to the provisions of this section, a program-specific audit
guide, or program laws and regulations.
Subpart C--Auditees
§_.300 Auditee responsibilities.
The auditee shall:
(a) Identify, in its accounts, all Federal awards received and expended and the Federal programs
under which they were received. Federal program and award identification shall include, as
applicable, the CFDA title and number, award number and year,name of the Federal agency, and
name of the pass-through entity.
(b)Maintain internal control over Federal programs that provides reasonable assurance that the
auditee is managing Federal awards in compliance with laws, regulations, and the provisions of
contracts or grant agreements that could have a material effect on each of its Federal programs.
(c) Comply with laws, regulations, and the provisions of contracts or grant agreements related to each
of its Federal programs.
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(d) Prepare appropriate financial statements, including the schedule of expenditures of Federal
awards in accordance with§_.310.
(e) Ensure that the audits required by this part are properly performed and submitted when due. When
extensions to the report submission due date required by§ .320(a) are granted by the cognizant or
oversight agency for audit,promptly notify the Federal clearinghouse designated by OMB and each
pass-through entity providing Federal awards of the extension.
(f) Follow up and take corrective action on audit findings, including preparation of a summary
schedule of prior audit findings and a corrective action plan in accordance with § .315(b) and
§ .315(c),respectively.
§_.305 Auditor selection.
• (a) Auditor procurement. In procuring audit services, auditees shall follow the procurement
standards prescribed by the Grants Management Common Rule(hereinafter referred to as the "A-102
Common Rule") published March 11, 1988 and amended April 19, 1995 [insert appropriate CFR
citation],Circular A-110, "Uniform Administrative Requirements for Grants and Agreements with
Institutions of Higher Education, Hospitals and Other Non-Profit Organizations," or the FAR(48
CFR part 42), as applicable(OMB Circulars are available from the Office of Administration,
Publications Office, room 2200,New Executive Office Building, Washington, DC 20503). Whenever
possible,auditees shall make positive efforts to utilize small businesses,minority-owned firms, and
women's business enterprises, in procuring audit services as stated in the A-102 Common Rule, OMB
Circular A-110, or the FAR(48 CFR part 42), as applicable. In requesting proposals for audit
services,the objectives and scope of the audit should be made clear. Factors to be considered in
evaluating each proposal for audit services include the responsiveness to the request for proposal,
relevant experience, availability of staff with professional qualifications and technical abilities, the
results of external quality control reviews, and price.
(b) Restriction on auditor preparing indirect cost proposals. An auditor who prepares the indirect
cost proposal or cost allocation plan may not also be selected to perform the audit required by this
part when the indirect costs recovered by the auditee during the prior year exceeded$1 million. This
restriction applies to the base year used in the preparation of the indirect cost proposal or cost
allocation plan and any subsequent years in which the resulting indirect cost agreement or cost
allocation plan is used to recover costs. To minimize any disruption in existing contracts for audit
services,this paragraph applies to audits of fiscal years beginning after June 30, 1998.
(c) Use of Federal auditors. Federal auditors may perform all or part of the work required under this
part if they comply fully with the requirements of this part.
§ .310 Financial statements.
(a) Financial statements.The auditee shall prepare financial statements that reflect its financial
position,results of operations or changes in net assets, and, where appropriate, cash flows for the
fiscal year audited. The financial statements shall be for the same organizational unit and fiscal year
that is chosen to meet the requirements of this part. However, organization-wide financial statements
may also include departments, agencies, and other organizational units that have separate audits in
accordance with § .500(a)and prepare separate financial statements.
•
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(b) Schedule of expenditures of Federal awards. The auditee shall also prepare a schedule of
expenditures of Federal awards for the period covered by the auditee's financial statements. While not
required, the auditee may choose to provide information requested by Federal awarding agencies and
pass-through entities to make the schedule easier to use. For example,when a Federal program has
multiple award years, the auditee may list the amount of Federal awards expended for each award
year separately. At a minimum, the schedule shall:
(1) List individual Federal programs by Federal agency. For Federal programs included in a cluster of
programs, list individual Federal programs within a cluster of programs. For R&D, total Federal
awards expended shall be shown either by individual award or by Federal agency and major
subdivision within the Federal agency. For example, the National Institutes of Health is a major
subdivision in the Department of Health and Human Services.
(2)For Federal awards received as a subrecipient, the name of the pass-through entity and identifying
number assigned by the pass-through entity shall be included.
(3)Provide total Federal awards expended for each individual Federal program and the CFDA
number or other identifying number when the CFDA information is not available.
(4)Include notes that describe the significant accounting policies used in preparing the schedule.
(5) To the extent practical,pass-through entities should identify in the schedule the total amount
provided to subrecipients from each Federal program.
(6)Include, in either the schedule or a note to the schedule,the value of the Federal awards expended
in the form of non-cash assistance, the amount of insurance in effect during the year, and loans or
loan guarantees outstanding at year end. While not required, it is preferable to present this
information in the schedule.
§ .315 Audit findings follow-up.
(a) General. The auditee is responsible for follow-up and corrective action on all audit findings. As
part of this responsibility,the auditee shall prepare a summary schedule of prior audit findings. The
auditee shall also prepare a corrective action plan for current year audit findings. The summary
schedule of prior audit findings and the corrective action plan shall include the reference numbers the
auditor assigns to audit findings under § .510(c). Since the summary schedule may include audit
findings from multiple years, it shall include the fiscal year in which the finding initially occurred.
(b) Summary schedule of prior audit findings. The summary schedule of prior audit findings shall
report the status of all audit findings included in the prior audit's schedule of findings and questioned
costs relative to Federal awards. The summary schedule shall also include audit findings reported in
the prior audit's summary schedule of prior audit findings except audit findings listed as corrected in
accordance with paragraph(b)(1) of this section, or no longer valid or not warranting further action in
accordance with paragraph(b)(4) of this section.
(1) When audit findings were fully corrected, the summary schedule need only list the audit findings
and state that corrective action was taken.
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(2)When audit findings were not corrected or were only partially corrected, the summary schedule
shall describe the planned corrective action as well as any partial corrective action taken.
(3)When corrective action taken is significantly different from corrective action previously reported
in a corrective action plan or in the Federal agency's or pass-through entity's management decision,
the summary schedule shall provide an explanation.
(4)When the auditee believes the audit findings are no longer valid or do not warrant further action,
the reasons for this position shall be described in the summary schedule. A valid reason for
considering an audit finding as not warranting further action is that all of the following have
occurred:
(i)Two years have passed since the audit report in which the finding occurred was submitted to the
Federal clearinghouse;
(ii)The Federal agency or pass-through entity is not currently following up with the auditee on the
audit finding; and
(iii)A management decision was not issued.
(c)Corrective action plan. At the completion of the audit,the auditee shall prepare a corrective
action plan to address each audit finding included in the current year auditor's reports. The corrective
action plan shall provide the name(s) of the contact person(s)responsible for corrective action,the
corrective action planned, and the anticipated completion date. If the auditee does not agree with the
audit findings or believes corrective action is not required, then the corrective action plan shall
include an explanation and specific reasons.
§_.320 Report submission.
(a)General. The audit shall be completed and the data collection form described in paragraph(b) of
this section and reporting package described in paragraph(c) of this section shall be submitted within
the earlier of 30 days after receipt of the auditor's report(s), or nine months after the end of the audit
period,unless a longer period is agreed to in advance by the cognizant or oversight agency for audit.
(However, for fiscal years beginning on or before June 30, 1998, the audit shall be completed and the
data collection form and reporting package shall be submitted within the earlier of 30 days after
receipt of the auditor's report(s), or 13 months after the end of the audit period.)Unless restricted by
law or regulation,the auditee shall make copies available for public inspection.
(b)Data Collection. (1) The auditee shall submit a data collection form which states whether the
audit was completed in accordance with this part and provides information about the auditee, its
Federal programs, and the results of the audit. The form shall be approved by OMB, available from
the Federal clearinghouse designated by OMB, and include data elements similar to those presented
in this paragraph. A senior level representative of the auditee (e.g., State controller, director of
finance, chief executive officer, or chief financial officer) shall sign a statement to be included as part
of the form certifying that: the auditee complied with the requirements of this part, the form was
prepared in accordance with this part (and the instructions accompanying the form), and the
information included in the form, in its entirety, are accurate and complete.
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(2) The data collection form shall include the following data elements:
(i) The type of report the auditor issued on the financial statements of the auditee (i.e., unqualified
opinion, qualified opinion, adverse opinion, or disclaimer of opinion).
(ii)Where applicable, a statement that reportable conditions in internal control were disclosed by the
audit of the financial statements and whether any such conditions were material weaknesses.
(iii)A statement as to whether the audit disclosed any noncompliance which is material to the
financial statements of the auditee.
(iv) Where applicable, a statement that reportable conditions in internal control over major programs
were disclosed by the audit and whether any such conditions were material weaknesses.
(v) The type of report the auditor issued on compliance for major programs (i.e., unqualified opinion,
qualified opinion, adverse opinion, or disclaimer of opinion).
(vi) A list of the Federal awarding agencies which will receive a copy of the reporting package
pursuant to § .320(d)(2) of OMB Circular A-133.
(vii)A yes or no statement as to whether the auditee qualified as a low-risk auditee under§ .530 of
OMB Circular A-133.
(viii) The dollar threshold used to distinguish between Type A and Type B programs as defined in
§ .520(b)of OMB Circular A-133.
(ix)_The Catalog of Federal Domestic Assistance (CFDA)number for each.Federal program, as. __
applicable.
(x)The name of each Federal program and identification of each major program. Individual programs
within a cluster of programs should be listed in the same level of detail as they are listed in the
schedule of expenditures of Federal awards.
(xi) The amount of expenditures in the schedule of expenditures of Federal awards associated with
each Federal program.
(xii)For each Federal program, a yes or no statement as to whether there are audit findings in each of
the following types of compliance requirements and the total amount of any questioned costs:
(A)Activities allowed or unallowed.
(B) Allowable costs/cost principles.
(C) Cash management.
(D)Davis-Bacon Act.
(E)Eligibility.
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(F)Equipment and real property management.
(G) Matching, level of effort, earmarking.
(H)Period of availability of Federal funds.
(I)Procurement and suspension and debarment.
(J)Program income.
(K)Real property acquisition and relocation assistance.
(L)Reporting.
(M) Subrecipient monitoring.
(N) Special tests and provisions.
(xiii) Auditee Name, Employer Identification Number(s),Name and Title of Certifying Official,
Telephone Number, Signature, and Date.
(xiv) Auditor Name,Name and Title of Contact Person, Auditor Address, Auditor Telephone
Number, Signature, and Date.
(xv)Whether the auditee has either a cognizant or oversight agency for audit.
(xvi) The name of the cognizant or oversight agency for audit determined in accordance with
§_.400(a) and§_.400(b),respectively.
(3)Using the information included in the reporting package described in paragraph(c) of this section,
the auditor shall complete the applicable sections of the form. The auditor shall sign a statement to be
included as part of the data collection form that indicates, at a minimum,the source of the
information included in the form,the auditor's responsibility for the information, that the form is not
a substitute for the reporting package described in paragraph(c)of this section, and that the content
of the form is limited to the data elements prescribed by OMB.
(c) Reporting package. The reporting package shall include the:
(1)Financial statements and schedule of expenditures of Federal awards discussed in§ .310(a)
and§_.310(b),respectively;
(2) Summary schedule of prior audit findings discussed in§ .315(b);
(3)Auditor's report(s) discussed in § .505; and
(4) Corrective action plan discussed in § .315(c).
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(d) Submission to clearinghouse. All auditees shall submit to the Federal clearinghouse designated
by OMB the data collection form described in paragraph(b) of this section and one copy of the
reporting package described in paragraph(c)of this section for:
(1)The Federal clearinghouse to retain as an archival copy; and
(2) Each Federal awarding agency when the schedule of findings and questioned costs disclosed audit
findings relating to Federal awards that the Federal awarding agency provided directly or the
summary schedule of prior audit findings reported the status of any audit findings relating to Federal
awards that the Federal awarding agency provided directly.
(e)Additional submission by subrecipients. (1) In addition to the requirements discussed in
paragraph(d) of this section, auditees that are also subrecipients shall submit to each pass-through
entity one copy of the reporting package described in paragraph(c) of this section for each pass-
. through entity when the schedule of findings and questioned costs disclosed audit findings relating to
Federal awards that the pass-through entity provided or the summary schedule of prior audit findings
reported the status of any audit findings relating to Federal awards that the pass-through entity
provided.
(2)Instead of submitting the reporting package to a pass-through entity, when a subrecipient is not
required to submit a reporting package to a pass-through entity pursuant to paragraph(e)(1)of this
section, the subrecipient shall provide written notification to the pass-through entity that: an audit of
the subrecipient was conducted in accordance with this part(including the period covered by the audit
and the name, amount, and CFDA number of the Federal award(s)provided by the pass-through
entity); the schedule of findings and questioned costs disclosed no audit findings relating to the
Federal award(s) that the pass-through entity provided; and,the summary schedule of prior audit
findings did not report on the status of any audit findings relating to the Federal award(s)that the
pass-through entity provided. A subrecipient may submit a copy of the reporting package described in
paragraph(c) of this section to a pass-through entity to comply with this notification requirement.
(f)Requests for report copies. In response to requests by a Federal agency or pass-through entity,
auditees shall submit the appropriate copies of the reporting package described in paragraph(c)of
this section and, if requested, a copy of any management letters issued by the auditor.
(g) Report retention requirements. Auditees shall keep one copy of the data collection form
described in paragraph(b) of this section and one copy of the reporting package described in
paragraph (c) of this section on file for three years from the date of submission to the Federal
clearinghouse designated by OMB. Pass-through entities shall keep subrecipients' submissions on file
for three years from date of receipt.
(h) Clearinghouse responsibilities. The Federal clearinghouse designated by OMB shall distribute
the reporting packages received in accordance with paragraph (d)(2) of this section and §_.235(c)
(3)to applicable Federal awarding agencies, maintain a data base of completed audits,provide
appropriate information to Federal agencies, and follow up with known auditees which have not
submitted the required data collection forms and reporting packages.
(i) Clearinghouse address. The address of the Federal clearinghouse currently designated by OMB is
Federal Audit Clearinghouse, Bureau of the Census, 1201 E. 10th Street, Jeffersonville, IN 47132.
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(j)Electronic filing.Nothing in this part shall preclude electronic submissions to the Federal
clearinghouse in such manner as may be approved by OMB. With OMB approval, the Federal
clearinghouse may pilot test methods of electronic submissions.
Subpart D--Federal Agencies and Pass-Through Entities
§_.400 Responsibilities.
(a)Cognizant agency for audit responsibilities. Recipients expending more than$25 million a year
in Federal awards shall have a cognizant agency for audit. The designated cognizant agency for audit
shall be the Federal awarding agency that provides the predominant amount of direct funding to a
recipient unless OMB makes a specific cognizant agency for audit assignment. To provide for
continuity of cognizance, the determination of the predominant amount of direct funding shall be
based upon direct Federal awards expended in the recipient's fiscal years ending in 1995, 2000, 2005,
and every fifth year thereafter. For example, audit cognizance for periods ending in 1997 through
2000 will be determined based on Federal awards expended in 1995. (However, for States and local
governments that expend more than$25 million a year in Federal awards and have previously
assigned cognizant agencies for audit, the requirements of this paragraph are not effective until fiscal
years beginning after June 30, 2000.)Notwithstanding the manner in which audit cognizance is
determined, a Federal awarding agency with cognizance for an auditee may reassign cognizance to
another Federal awarding agency which provides substantial direct funding and agrees to be the
cognizant agency for audit. Within 30 days after any reassignment, both the old and the new
cognizant agency for audit shall notify the auditee, and, if known, the auditor of the reassignment.
The cognizant agency for audit shall:
(1)Provide technical audit advice and liaison to auditees and auditors.
(2)Consider auditee requests for extensions to the report submission due date required by§_.320
(a).The cognizant agency for audit may grant extensions for good cause.
(3)Obtain or conduct quality control reviews of selected audits made by non-Federal auditors, and
provide the results,when appropriate, to other interested organizations.
(4)Promptly inform other affected Federal agencies and appropriate Federal law enforcement
officials of any direct reporting by the auditee or its auditor of irregularities or illegal acts, as required
by GAGAS or laws and regulations.
(5)Advise the auditor and, where appropriate, the auditee of any deficiencies found in the audits
when the deficiencies require corrective action by the auditor. When advised of deficiencies, the
auditee shall work with the auditor to take corrective action. If corrective action is not taken, the
cognizant agency for audit shall notify the auditor, the auditee, and applicable Federal awarding
agencies and pass-through entities of the facts and make recommendations for follow-up action.
Major inadequacies or repetitive substandard performance by auditors shall be referred to appropriate
State licensing agencies and professional bodies for disciplinary action.
(6) Coordinate,to the extent practical, audits or reviews made by or for Federal agencies that are in
addition to the audits made pursuant to this part, so that the additional audits or reviews build upon
audits performed in accordance with this part.
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(7) Coordinate a management decision for audit findings that affect the Federal programs of more
than one agency.
(8) Coordinate the audit work and reporting responsibilities among auditors to achieve the most cost-
effective audit.
(9)For biennial audits permitted under§_.220, consider auditee requests to qualify as a low-risk
auditee under§_.530(a).
(b) Oversight agency for audit responsibilities. An auditee which does not have a designated
cognizant agency for audit will be under the general oversight of the Federal agency determined in
accordance with § .105. The oversight agency for audit:
(1) Shall provide technical advice to auditees and auditors as requested.
(2)May assume all or some of the responsibilities normally performed by a cognizant agency for
audit.
(c) Federal awarding agency responsibilities. The Federal awarding agency shall perform the
following for the Federal awards it makes:
(1) Identify Federal awards made by informing each recipient of the CFDA title and number, award
name and number, award year, and if the award is for R&D. When some of this information is not
available, the Federal agency shall provide information necessary to clearly describe the Federal
award.
(2) Advise recipients of requirements imposed on them by Federal laws, regulations, and the
provisions of contracts or grant agreements.
• (3) Ensure that audits are completed and reports are received in a timely manner and in accordance.
with the requirements of this part.
(4)Provide technical advice and counsel to auditees and auditors as requested.
(5) Issue a management decision on audit findings within six months after receipt of the audit report
and ensure that the recipient takes appropriate and timely corrective action.
(6) Assign a person responsible for providing annual updates of the compliance supplement to OMB.
(d) Pass-through entity responsibilities. A pass-through entity shall perform the following for the
Federal awards it makes:
(1) Identify Federal awards made by informing each subrecipient of CFDA title and number, award
name and number, award year, if the award is R&D, and name of Federal agency. When some of this
information is not available, the pass-through entity shall provide the best information available to
describe the Federal award.
(2) Advise subrecipients of requirements imposed on them by Federal laws, regulations, and the
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provisions of contracts or grant agreements as well as any supplemental requirements imposed by the
pass-through entity.
(3) Monitor the activities of subrecipients as necessary to ensure that Federal awards are used for
authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant
agreements and that performance goals are achieved.
(4) Ensure that subrecipients expending $300,000 or more in Federal awards during the subrecipient's
fiscal year have met the audit requirements of this part for that fiscal year.
(5) Issue a management decision on audit findings within six months after receipt of the
subrecipient's audit report and ensure that the subrecipient takes appropriate and timely corrective
action.
(6) Consider whether subrecipient audits necessitate adjustment of the pass-through entity's own
records. -.
(7) Require each subrecipient to permit the pass-through entity and auditors to have access to the
records and financial statements as necessary for the pass-through entity to comply with this part.
§_.405 Management decision.
(a) General. The management decision shall clearly state whether or not the audit finding is
sustained,the reasons for the decision, and the expected auditee action to repay disallowed costs,
make financial adjustments,or take other action. If the auditee has not completed corrective action, a
timetable for follow-up should be given. Prior to issuing the management decision, the Federal
agency or pass-through entity may request
additional information or documentation from the auditee,including a request for auditor assurance
related to the documentation, as a way of mitigating disallowed costs. The management decision
should describe any appeal process available to the auditee.
(b) Federal agency. As provided in§ .400(a)(7),the cognizant agency for audit shall be
responsible for coordinating a management decision for audit findings that affect the programs of
more than one Federal agency. As provided in § .400(c)(5), a Federal awarding agency is
responsible for issuing a management decision for findings that relate to Federal awards it makes to
recipients. Alternate arrangements may be made on a case-by-case basis by agreement among the
Federal agencies concerned.
(c) Pass-through entity.As provided in §_.400(d)(5), the pass-through entity shall be responsible
for making the management decision for audit findings that relate to Federal awards it makes to
subrecipients.
(d) Time requirements. The entity responsible for making the management decision shall do so
within six months of receipt of the audit report. Corrective action should be initiated within six
months after receipt of the audit report and proceed as rapidly as possible.
(e) Reference numbers. Management decisions shall include the reference numbers the auditor
assigned to each audit finding in accordance with §_.510(c).
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Subpart E--Auditors
§_.500 Scope of audit.
(a) General. The audit shall be conducted in accordance with GAGAS. The audit shall cover the
entire operations of the auditee; or, at the option of the auditee, such audit shall include a series of
audits that cover departments, agencies, and other organizational units which expended or otherwise
administered Federal awards during such fiscal year, provided that each such audit shall encompass
the financial statements and schedule of expenditures of Federal awards for each such department,
agency, and other organizational unit,which shall be considered to be a non-Federal entity. The
financial statements and schedule of expenditures of Federal awards shall be for the same fiscal year.
(b) Financial statements. The auditor shall determine whether the financial statements of the auditee
are presented fairly in all material respects in conformity with generally accepted accounting
principles. The auditor shall also determine whether the schedule of expenditures of Federal awards is
presented fairly in all material respects in relation to the auditee's financial statements taken as a
whole.
(c)Internal control. (1)In addition to the requirements of GAGAS, the auditor shall perform
procedures to obtain an understanding of internal control over Federal programs sufficient to plan the
audit to support a low assessed level of control risk for major programs.
(2)Except as provided in paragraph(c)(3) of this section, the auditor shall:
(i) Plan the testing of internal control over major programs to support a low assessed level of control
risk for the assertions relevant to the compliance requirements for each major program; and
(ii) Perform testing of internal control as planned in paragraph(c)(2)(i) of this section.
(3) When internal control over some or all of the compliance requirements for a major program are
likely to be ineffective in preventing or detecting noncompliance, the planning and performing of
testing described in paragraph(c)(2) of this section are not required for those compliance
requirements. However, the auditor shall report a reportable condition(including whether any such
condition is a material weakness) in accordance with§_.510, assess the related control risk at the
maximum, and consider whether additional compliance tests are required because of ineffective
internal control.
(d) Compliance. (1) In addition to the requirements of GAGAS, the auditor shall determine whether
the auditee has complied with laws, regulations, and the provisions of contracts or grant agreements
that may have a direct and material effect on each of its major programs.
(2)The principal compliance requirements applicable to most Federal programs and the compliance
requirements of the largest Federal programs are included in the compliance supplement.
(3) For the compliance requirements related to Federal programs contained in the compliance
supplement, an audit of these compliance requirements will meet the requirements of this part. Where
there have been changes to the compliance requirements and the changes are not reflected in the
compliance supplement,the auditor shall determine the current compliance requirements and modify
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the audit procedures accordingly. For those Federal programs not covered in the compliance
supplement, the auditor should use the types of compliance requirements contained in the compliance
supplement as guidance for identifying the types of compliance requirements to test, and determine
the requirements governing the Federal program by reviewing the provisions of contracts and grant
agreements and the laws and regulations referred to in such contracts and grant agreements.
(4) The compliance testing shall include tests of transactions and such other auditing procedures
necessary to provide the auditor sufficient evidence to support an opinion on compliance.
(e)Audit follow-up. The auditor shall follow-up on prior audit findings,perform procedures to
assess the reasonableness of the summary schedule of prior audit findings prepared by the auditee in
accordance with§_.315(b), and report, as a current year audit finding, when the auditor concludes
that the summary schedule of prior audit findings materially misrepresents the status of any prior
audit finding. The auditor shall perform audit follow-up procedures regardless of whether a prior
audit finding relates to a major program in the current year.
(f) Data Collection Form. As required in§ .320(b)(3),the auditor shall complete and sign
specified sections of the data collection form.
§ .505 Audit reporting.
The auditor's report(s)may be in the form of either combined or separate reports and may be
organized differently from the manner presented in this section. The auditor's report(s) shall state that
the audit was conducted in accordance with this part and include the following:
(a)An opinion(or disclaimer of opinion) as to whether the financial statements are presented fairly in
all material respects in conformity with generally accepted accounting principles and an opinion (or
disclaimer of opinion) as to whether the schedule of expenditures of Federal awards is presented
fairly in all material respects in relation to the financial statements taken as a whole.
(b) A report on internal control related to the financial statements and major programs. This report
shall describe.the scope of testing of internal control and the results of the tests, and,where
applicable,refer to the separate schedule of findings and questioned costs described in paragraph(d)
of this section.
(c) A report on compliance with laws,regulations, and the provisions of contracts or grant
agreements, noncompliance with which could have a material effect on the financial statements. This
report shall also include an opinion(or disclaimer of opinion) as to whether the auditee complied
with laws, regulations, and the provisions of contracts or grant agreements which could have a direct
and material effect on each major program, and, where applicable, refer to the separate schedule of
findings and questioned costs described in paragraph (d) of this section.
(d) A schedule of findings and questioned costs which shall include the following three components:
(1) A summary of the auditor's results which shall include:
(i)The type of report the auditor issued on the financial statements of the auditee(i.e., unqualified
opinion, qualified opinion, adverse opinion, or disclaimer of opinion);
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(ii) Where applicable, a statement that reportable conditions in internal control were disclosed by the
audit of the financial statements and whether any such conditions were material weaknesses;
(iii) A statement as to whether the audit disclosed any noncompliance which is material to the
financial statements of the auditee;
(iv) Where applicable, a statement that reportable conditions in internal control over major programs
were disclosed by the audit and whether any such conditions were material weaknesses;
(v)The type of report the auditor issued on compliance for major programs (i.e., unqualified opinion,
qualified opinion, adverse opinion, or disclaimer of opinion);
(vi) A statement as to whether the audit disclosed any audit findings which the auditor is required to
report under§_.510(a);
(vii)An identification of major programs;
(viii)The dollar threshold used to distinguish between Type A and Type B programs, as described in
§ .520(b); and
(ix)A statement as to whether the auditee qualified as a low-risk auditee under§_.530.
(2)Findings relating to the financial statements which are required to be reported in accordance with
GAGAS.
(3)Findings and questioned costs for Federal awards which shall include audit findings as defined in
§_.510(a).
(i)Audit findings (e.g.,internal control findings, compliance findings, questioned costs, or fraud)
which relate to the same issue should be presented as a single audit finding. Where practical,audit
findings should be organized by Federal agency or pass-through entity.
(ii)Audit findings which relate to both the financial statements and Federal awards, as reported under
paragraphs (d)(2) and(d)(3) of this section, respectively, should be reported in both sections of the
schedule. However, the reporting in one section of the schedule may be in summary form with a
reference to a detailed reporting in the other section of the schedule.
§ .510 Audit findings.
(a) Audit findings reported. The auditor shall report the following as audit findings in a schedule of
findings and questioned costs:
(1)Reportable conditions in internal control over major programs. The auditor's determination of
whether a deficiency in internal control is a reportable condition for the purpose of reporting an audit
finding is in relation to a type of compliance requirement for a major program or an audit objective
identified in the compliance supplement. The auditor shall identify reportable conditions which are
individually or cumulatively material weaknesses.
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(2)Material noncompliance with the provisions of laws, regulations, contracts, or grant agreements
related to a major program. The auditor's determination of whether a noncompliance with the
provisions of laws, regulations,contracts, or grant agreements is material for the purpose of reporting
an audit finding is in relation to a type of compliance requirement for a major program or an audit
objective identified in the compliance supplement.
(3)Known questioned costs which are greater than$10,000 for a type of compliance requirement for
a major program. Known questioned costs are those specifically identified by the auditor. In
evaluating the effect of questioned costs on the opinion on compliance, the auditor considers the best
estimate of total costs questioned(likely questioned costs),not just the questioned costs specifically.
identified (known questioned costs). The auditor shall also report known questioned costs when
likely questioned costs are greater than$10,000 for a type of compliance requirement for a major
program. In reporting questioned costs, the auditor shall include information to provide proper
perspective for judging the prevalence and consequences of the questioned costs.
(4)Known questioned costs which are greater than$10,000 for a Federal program which is not
audited as a major program.Except for audit follow-up,the auditor is not required under this part to
perform audit procedures for such a Federal program; therefore, the auditor will normally not find
questioned costs for a program which is not audited as a major program. However, if the auditor does
become aware of questioned costs for a Federal program which is not audited as a major program
(e.g., as part of audit follow-up or other audit procedures) and the known questioned costs are greater
than $10,000,then the auditor shall report this as an audit finding.
(5)The circumstances conceming why the auditor's report on compliance for major programs is other
than an unqualified opinion, unless such circumstances are otherwise reported as audit findings in the
schedule of findings and questioned costs for Federal awards.
(6)Known fraud affecting a Federal award, unless such fraud is otherwise reported as an audit
finding in the schedule of findings and questioned costs for Federal awards. This paragraph does not
require the auditor to make an additional reporting when the auditor confirms that the fraud was
reported outside of the auditor's reports under the direct reporting requirements of GAGAS.
(7)Instances where the results of audit follow-up procedures disclosed that the summary schedule of
prior audit findings prepared by the auditee in accordance with§ .315(b)materially misrepresents
the status of any prior audit finding.
(b)Audit finding detail. Audit findings shall be presented in sufficient detail for the auditee to
prepare a corrective action plan and take corrective,action and for Federal agencies and pass-through
entities to arrive at a management decision. The following specific information shall be included, as
applicable, in audit findings:
(1) Federal program and specific Federal award identification including the CFDA title and number,
Federal award number and year,name of Federal agency, and name of the applicable.pass-through
entity. When information, such as the CFDA title and number or Federal award number, is not
available, the auditor shall provide the best information available to describe the Federal award.
(2) The criteria or specific requirement upon which the audit finding is based, including statutory,
regulatory, or other citation.
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(3) The condition found, including facts that support the deficiency identified in the audit finding.
(4) Identification of questioned costs and how they were computed.
(5) Information to provide proper perspective for judging the prevalence and consequences of the
audit findings, such as whether the audit findings represent an isolated instance or a systemic
problem. Where appropriate, instances identified shall be related to the universe and the number of
cases examined and be quantified in terms of dollar value.
(6) The possible asserted effect to provide sufficient information to the auditee and Federal agency, or
pass-through entity in the case of a subrecipient, to permit them to determine the cause and effect to
facilitate prompt and proper corrective action.
(7) Recommendations to prevent future occurrences of the deficiency identified in the audit finding.
(8)Views of responsible officials of the auditee when there is disagreement with the audit findings, to
the extent practical.
(c) Reference numbers. Each audit finding in the schedule of findings and questioned costs shall
include a reference number to allow for easy referencing of the audit findings during follow-up.
§ .515 Audit working papers.
(a) Retention of working papers. The auditor shall retain working papers and reports for a minimum
of three years after the date of issuance of the auditor's report(s)to the auditee, unless the auditor is
notified in writing by the cognizant agency for audit, oversight agency for audit,or pass-through
entity to extend the retention period. When the auditor is aware that the Federal awarding agency,
pass-through entity, or auditee is contesting an audit finding,the auditor shall contact the parties
contesting the audit finding for guidance prior to destruction of the working papers and reports.
(b)Access to working papers. Audit working papers shall be made available upon request to the
cognizant or oversight agency for audit or its designee, a Federal agency providing direct or indirect
funding, or GAO at the completion of the audit, as part of a quality review,to resolve audit findings,
or to carry out oversight responsibilities consistent with the purposes of this part. Access to working
papers includes the right of Federal agencies to obtain copies of working papers, as is reasonable and
necessary.
§ .520 Major program determination.
(a) General. The auditor shall use a risk-based approach to determine which Federal programs are
major programs. This risk-based approach shall include consideration of: Current and prior audit
experience, oversight by Federal agencies and pass-through entities, and the inherent risk of the
Federal program. The process in paragraphs (b) through(i) of this section shall be followed.
(b) Step 1. (1) The auditor shall identify the larger Federal programs, which shall be labeled Type A
programs. Type A programs are defined as Federal programs with Federal awards expended during
the audit period exceeding the larger of:
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(i) $300,000 or three percent(.03) of total Federal awards expended in the case of an auditee for
which total Federal awards expended equal or exceed $300,000 but are less than or equal to $100
million.
(ii)$3 million or three-tenths of one percent (.003) of total Federal awards expended in the case of an
auditee for which total Federal awards expended exceed$100 million but are less than or equal to
$10 billion.
(iii)$30 million or 15 hundredths of one percent(.0015) of total Federal awards expended in the case
of an auditee for which total Federal awards expended exceed $10 billion.
(2)Federal programs not labeled Type A under paragraph(b)(1) of this section shall be labeled Type
B programs.
(3)The inclusion of large loan and loan guarantees (loans) should not result in the exclusion of other
programs as Type A programs. When a Federal program providing loans significantly affects the
number or size of Type A programs, the auditor shall consider this Federal program as a Type A
program and exclude its values in determining other Type A programs.
(4)For biennial audits permitted under§ .220,the determination of Type A and Type B programs
shall be based upon the Federal awards expended during the two-year period.
(c)Step 2. (1)The auditor shall identify Type A programs which are low-risk. For a Type A program
to be considered low-risk, it shall have been audited as a major program in at least one of the two
most recent audit periods(in the most recent audit period in the case of a biennial audit), and, in the
most recent audit period, it shall have had no audit findings under§ .510(a). However, the auditor
may use judgment and consider that audit findings from questioned costs under§ .510(a)(3) and
§_.510(a)(4),fraud under§_.510(a)(6), and audit follow-up for the summary schedule of prior
audit findings under§_.510(a)(7) do not preclude the Type A program from being low-risk. The
auditor shall consider: the criteria in§_.525(c), § .525(d)(1), §_.525(d)(2), and §_.525(d)
(3);the results of audit follow-up; whether any changes in personnel or systems affecting a Type A
program have significantly increased risk; and apply professional judgment in determining whether a
Type A program is low-risk.
(2)Notwithstanding paragraph(c)(1) of this section, OMB may approve a Federal awarding agency's
request that a Type A program at certain recipients may not be considered low-risk. For example,it
may be necessary for a large Type A program to be audited as major each year at particular recipients
to allow the Federal agency to comply with the Government Management Reform Act of 1994(31
U.S.C. 3515). The Federal agency shall notify the recipient and, if known, the auditor at least 180
days prior to the end of the fiscal year to be audited of OMB's approval.
(d)Step 3. (1)The auditor shall identify Type B programs which are high-risk using professional
judgment and the criteria in §_.525. However, should the auditor select Option 2 under Step 4
(paragraph (e)(2)(i)(B)of this section), the auditor is not required to identify more high-risk Type B
programs than the number of low-risk Type A programs. Except for known reportable conditions in
internal control or compliance problems as discussed in§ .525(b)(1), § .525(b)(2), and
§_.525(c)(1), a single criteria in §_.525 would seldom cause a Type B program to be considered
high-risk.
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(2) The auditor is not expected to perform risk assessments on relatively small Federal programs.
Therefore, the auditor is only required to perform risk assessments on Type B programs that exceed
the larger of:
(i) $100,000 or three-tenths of one percent(.003) of total Federal awards expended when the auditee
has less than or equal to $100 million in total Federal awards expended.
(ii) $300,000 or three-hundredths of one percent(.0003) of total Federal awards expended when the
auditee has more than $100 million in total Federal awards expended.
(e) Step 4. At a minimum,the auditor shall audit all of the following as major programs:
(1)All Type A programs, except the auditor may exclude any Type A programs identified as low-risk
under Step 2,(paragraph(c)(1) of this section).
(2) (i)High-risk Type B programs as identified under either of the following two options:
(A) Option 1. At least one half of the Type B programs identified as high-risk under Step 3
(paragraph(d) of this section), except this paragraph(e)(2)(i)(A) does not require the auditor to audit
more high-risk Type B programs than the number of low-risk Type A programs identified as low-risk
under Step 2.
(B) Option 2. One high-risk Type B program for each Type A program identified as low-risk under
Step 2.
(ii) When identifying which high-risk Type B programs to audit as major under either Option 1 or 2
in paragraph(e)(2)(i)(A) or(B), the auditor is encouraged to use an approach which provides an
opportunity for different high-risk Type B programs to be audited as major over a period of time.
(3) Such additional programs as may be necessary to comply with the percentage of coverage rule
discussed in paragraph(f)of this section. This paragraph(e)(3)may require the auditor to audit more
programs as major than the number of Type A programs.
(f) Percentage of coverage rule. The auditor shall audit as major programs Federal programs with
Federal awards expended that, in the aggregate, encompass at least 50 percent of total Federal awards
expended. If the auditee meets the criteria in § .530 for a low-risk auditee, the auditor need only
audit as major programs Federal programs with Federal awards expended that, in the aggregate,
encompass at least 25 percent of total Federal awards expended.
(g) Documentation of risk. The auditor shall document in the working papers the risk analysis
process used in determining major programs.
(h)Auditor's judgment. When the major program determination was performed and documented in
accordance with this part, the auditor's judgment in applying the risk-based approach to determine
major programs shall be presumed correct. Challenges by Federal agencies and pass-through entities
_ shall only be for clearly improper use of the guidance in this part. However, Federal agencies and
pass-through entities may provide auditors guidance about the risk of a particular Federal program
and the auditor shall consider this guidance in determining major programs in audits not yet
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completed.
(i) Deviation from use of risk criteria. For first-year audits, the auditor may elect to determine
major programs as all Type A programs plus any Type B programs as necessary to meet the
percentage of coverage rule discussed in paragraph(f) of this section. Under this option, the auditor
would not be required to perform the procedures discussed in paragraphs (c), (d), and(e) of this
section.
(1)A first-year audit is the first year the entity is audited under this part or the first year of a change
of auditors.
(2) To ensure that a frequent change of auditors would not preclude audit of high-risk Type B
programs,this election for first-year audits may not be used by an auditee more than once in every
three years.
§ .525 Criteria for Federal program risk.
(a) General. The auditor's determination should be based on an overall evaluation of the risk of
noncompliance occurring which could be material to the Federal program. The auditor shall use
auditor judgment and consider criteria, such as described in paragraphs(b), (c), and(d) of this
section, to identify risk in Federal programs. Also, as part of the risk analysis,the auditor may wish to
discuss a particular Federal program with auditee management and the Federal agency or pass-
through entity.
(b) Current and prior audit experience. (1) Weaknesses in internal control over Federal programs
would indicate higher risk. Consideration should be given to the control environment over Federal
programs and such factors as the expectation of management's adherence to applicable laws and
regulations and the provisions of contracts and grant agreements and the competence and experience
of personnel who administer the Federal programs.
(i) A Federal program administered under multiple internal control structures may have higher risk.
When assessing risk in a large single audit, the auditor shall consider whether weaknesses are isolated
in a single operating unit(e.g., one college campus) or pervasive throughout the entity.
(ii) When significant parts of a Federal program are passed through to subrecipients, a weak system
for monitoring subrecipients would indicate higher risk.
(iii) The extent to which computer processing is used to administer Federal programs, as well as the
complexity of that processing, should be considered by the auditor in assessing risk. New and
recently modified computer systems may also indicate risk.
(2)Prior audit findings would indicate higher risk, particularly when the situations identified in the
audit findings could have a significant impact on a Federal program or have not been corrected.
(3) Federal programs not recently audited as major programs may be of higher risk than Federal
programs recently audited as major programs without audit findings.
(c) Oversight exercised by Federal agencies and pass-through entities. (1)Oversight exercised by
Federal agencies or pass-through entities could indicate risk. For example, recent monitoring or other
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reviews performed by an oversight entity which disclosed no significant problems would indicate
lower risk. However, monitoring which disclosed significant problems would indicate higher risk.
(2)Federal agencies,with the concurrence of OMB, may identify Federal programs which are higher
risk. OMB plans to provide this identification in the compliance supplement.
(d) Inherent risk of the Federal program. (1)The nature of a Federal program may indicate risk.
Consideration should be given to the complexity of the program and the extent to which the Federal
program contracts for goods and services. For example, Federal programs that disburse funds through
third party contracts or have eligibility criteria may be of higher risk. Federal programs primarily
involving staff payroll costs may have a high-risk for time and effort reporting,but otherwise be at
low-risk.
(2) The phase of a Federal program in its life cycle at the Federal agency may indicate risk. For
example, a new Federal program with new or interim regulations may have higher risk than an
established program with time-tested regulations. Also, significant changes in Federal programs,
laws, regulations, or the provisions of contracts or grant agreements may increase risk.
(3)The phase of a Federal program in its life cycle at the auditee may indicate risk. For example,
during the first and last years that an auditee participates in a Federal program,the risk may be higher
due to start-up or closeout of program activities and staff.
(4)Type B programs with larger Federal awards expended would be of higher risk than programs
with substantially smaller Federal awards expended.
§_.530 Criteria for a low-risk auditee.
An auditee which meets all of the following conditions for each of the preceding two years (or, in the
case of biennial audits,preceding two audit periods) shall qualify as a low-risk auditee and be eligible
for reduced audit coverage in accordance with §_.520:
(a) Single audits were performed on an annual basis in accordance with the provisions of this part. A
non-Federal entity that has biennial audits does not qualify as a low-risk auditee, unless agreed to in
advance by the cognizant or oversight agency for audit.
(b)The auditor's opinions on the financial statements and the schedule of expenditures of Federal
awards were unqualified. However,the cognizant or oversight agency for audit may judge that an
opinion qualification does not affect the management of Federal awards and provide a waiver.
(c)There were no deficiencies in internal control which were identified as material weaknesses under
the requirements of GAGAS. However, the cognizant or oversight agency for audit may judge that
any identified material weaknesses do not affect the management of Federal awards and provide a
waiver.
(d)None of the Federal programs had audit findings from any of the following in either of the
preceding two years (or, in the case of biennial audits,preceding two audit periods) in which they
were classified as Type A programs:
(1) Internal control deficiencies which were identified as material weaknesses;
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(2)Noncompliance with the provisions of laws, regulations, contracts, or grant agreements which
have a material effect on the Type A program; or(3) Known or likely questioned costs that exceed
five percent of the total Federal awards expended for a Type A program during the year.
Appendix A to Part_-Data Collection Form (Form SF-SAC) [['G_ (56KB)
Appendix B to Part_- Circular A-133 Compliance Supplement
Note: Provisional OMB Circular A-133 Compliance Supplement is available from the Office of
Administration, Publications Office, room 2200,New Executive Office Building, Washington,DC
20503.
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Borrower Income $
Head of
Household Members Relationship House
Name to Applicant Hold Ape Sex Race Handicap
Applicant Demographics
Co-Borrower Demographics
Total Number in Household:
Household Median Family Income:
% Borrower Median Family Income:
Census Tract:
No. of Bedrooms:
Unit Handicap Accessible: Yes No
Prepared By: Date:
form date:1/30/2001
EXHIBIT "L"
FINANCIAL STATUS REPORT FORM
(Please attach AIA G702 form and other supporting documentation for expenditures)
Subrecipient/Contractor: Program: CDBG
HOME
Address: (Circle) ESG
SHP
Grant #: Other
Grant Period:
Reimbursement Period: Project Type: Acquisition
Circle all New Construction
that apply Rehabilitation
PROJECT TOTAL PREVIOUS CURRENT % BUDGET
GRANT FUNDS BUDGET EXPENDITURES MONTH'S COMPLETE REMAINING
EXPENDITURES
Construction Hard Costs % _ •
Architect
Engineering
Legal
Appraisal %
Audit
Developer Overhead
Construction Contingency %
Other—Please Specify •
TOTALS %
Reimbursement Requested: $
Program Income This Month $
• TOTAL PAY REQUEST $
PROJECT TOTAL PREVIOUS CURRENT % BUDGET
MATCHING FUNDS BUDGET EXPENDITURES MONTH'S COMPLETE REMAINING
EXPENDITURES
Owner Cash Equity
LIHTC
Private Funds
Other
TOTAL MATCHING
I certify to the best of my knowledge that the above information is correct and complete and is for the
purpose set forth in the award documents. Financial records are available for audit or review.
Authorized Certifying Officer Title Date Form 3/01
EXHIBIT "M
24 CFR 85.43 ENFORCEMENT
(a) Remedies for noncompliance. If a grantee or subgrantee 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 subgrantee 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 subgrantee '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 subgrantee an opportunity for such hearing,
appeal, or other administrative proceeding to which the grantee or
subgrantee is entitled under any statute or regulation applicable to the
action involved.
(c) Effects of suspension and termination. Costs of grantee or subgrantee
resulting from obligations incurred by the grantee or subgrantee 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 subgrantee 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 subgrantee before the effective date of suspension
or termination, are not in anticipation of it, and, in the case of
a termination, are noncancellable, 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 subgrantee from being subject to "Debarment and
Suspension" under E.O. 12549 (see § 85.35) .
ATTACHMENT 1
CITY OF ONIAH A
DEFINITION OF INCOME
Annual Income Includes:
1. Wages, salaries, tips, commissions, etc.:
2. Self-employment income from owned non-farm business, including proprietorships and partnerships;
3. Faun self-employment income;
4. Interest, dividends, net rental income, or income from estates or trusts;
5. Social security or railroad retirement;
6. Supplemental Security Income, Aid to Families with Dependent Children, or other public assistance or
public welfare programs;
7. Retirement, survivor, or disability pensions;
8. Any other sources of income received regularly, including Veterans' (VA) payments, unemployment
compensation, child support and alimony; and
9. Income from assets, as shown below:
a. Amounts in savings and checking accounts.
b. Stocks, bonds, savings certificates,money market funds and,other investment accounts.
c. Equity in real property or other capital investments. Equity is the estimated current market value of
the asset less the unpaid balance on all loans secured by the asset and reasonable costs- (such as
broker fees) that would be incurred in selling the asset. Do not include equity in principle residence
(home equity).
d. The cash value of trusts that are available to the household.
e. IRA, Keogh and similar retirement savings accounts, even though withdrawal would result in a
penalty.
f. Contributions to company retirement/pension funds that can be withdrawn without retiring 'or
terminating employment.
g. Assets which, although owned by more than one person, allow unrestricted access by the applicant.
- h. Lump sum receipts such as inheritances, capital gains, lottery winnings, insurance settlements and
other claims.
i. Personal property held as an investment such as gems,jewelry, coin collections, antique cars, etc.
j. Cash value of life insurance policies.
k. Assets disposed of for less than fair market value during two years preceding certification or
recertification.
10. Actual income from assets if total assets are $5,000 or less.
11. If assets are more than $5,000, the greater of (a) actual income from assets, or (b) total assets times
passbook rate.
Annual Income Does Not Include the Following Assets:
a. Necessary personal property, except as noted in 9 (i).
b. Interest in Indian trust lands.
c. Assets that are a part of an active business or fainting operation.
NOTE: Rental properties are considered personal assets held as an investment rather than business
assets unless real estate is the applicant's/tenant's main occupation.
d. Assets not accessible to the family and which provide no income for the family.
e. Vehicles especially equipped for the handicapped.
f. Equity in owner-occupied cooperatives and manufactured homes in which the family lives.
g. Equity in principle residence (home equity).
Revised 10/8/9-9-.,�
ATTACHMENTS 2 & 3
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 I-lousing 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 BUD 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 135,
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 135 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 135, an 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 135. 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 135.
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
135 require employment opportunities to be directed were not filled to circumvent the
contractor's obligations under 24 CFR part 135.
F. Noncompliance with HUD's regulations in 24 CFR part 135 may result in sanctions,
termination of this contract for default, and debarment or suspension from future HUD-
assisted contracts.
Effective August 1, 1994
ATTACHMENT 4
MINORITY BUSINESS & WOMEN BUSINESS
ENTERPRISE PLAN
pMAHA,N
�4\ itFB,p'
2Cv art
L ry
0�9� D FE$WP4� PLANNING • OMAHA
March 2001
City of Omaha City of Omaha
Hal Daub,Mayor Planning Department
Omaha/Douglas Civic Center
1819 Farnam Street
Omaha,Nebraska 68183
PLANNING DEPARTMENT
CITY OF OMAHA
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, creed,
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.
1
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 develop and provide a
MBE/WBE Utilization Plan.
2. Ensure that Requests for Proposals require the submission of MBE/WBE Utilization Plans.
3. Ensure that the programs of the Planning Department are advertised in the appropriate new media
whose markets are targeted toward MBE/WBE.
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
Relations Department and the Purchasing Department. In addition, require these entities to:
A. Complete CC-1 (Human Relations Department)
B. Complete Bid List Registration(Finance Department, Purchasing Division
C. Complete Business Certification(Human Relations Department)
7. Require developers, corporations, partnerships and/or sole proprietors to provide registration
information on all sub-contractors.
8. Require loan agreements to include a statement that jobs created will be made available to low-to-
moderate income persons.
The following application package has been developed to assist you in complying with our request for
information on your business and all sub-contractors providing goods and/or services on projects financed
by and/or implemented through an agreement with the City of Omaha. If you have any questions or
require further assistance in completing the application package, please contact Mr. Kenneth Johnson, Sr.
at 444-5165.
2 00-
MBE/WBE FOR EMPLOYMENT
The following list of organizations is provided to assist you in identifying low-to-moderate income
persons for employment opportunities. You must make concerted efforts to hire low-to-moderate income
persons and document specific actions taken to achieve these objectives.
To help accomplish the above goals, the following agencies should be notified of initial employment
opportunities for low to moderate income persons:
Nebraska Department of Labor-Omaha Job Service Laraza Job Training
5036 Ames Avenue 4911 South 25th Street
Omaha,NE 68111 Omaha, NE 68107
Jack Meyers, Office Supervisor Enrique Brodsky, Executive Director
595-3123 734-1321
Work Force Development of Greater Omaha Omaha Opportunities Industrialization Center
Blue Lion Centre 2724 North 24th Street
2421-23 North 24th Street Omaha,NE 68110
Omaha, NE 68110 Dr. Bernice Dodd, Executive Director
David Catalan, Director 457-4222
444-4700
Urban League of Nebraska, Inc. Girls Incorporated of Omaha
3022-24 North 24th Street 2811 North 45th Street
Omaha,NE 68110 Omaha,NE 68104
William Thompkins, President Norma Deeb, Executive Director
453-9730 457-4676
YWCA
222 South 29th Street •
Omaha, NE 68131
Peg Harriott, Executive Director
345-6555
3
MBE/WBE FOR GOODS AND SERVICES
Your company must make vendors aware of your policy to support 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.
Omaha Small Business Network, Inc.
2505 North 24th Street
Omaha,NE 68110
Executive Director
453-5336
Housing and Community Development Division
City Planning
1819 Farnam Street, Room 1111
Omaha,NE 68183
Kenneth E. Johnson, Sr., Economic Development Manager
444-5165
Nebraska Department of Economic Development
Small Business (MBE/WBE/DBE)Assistance
301 Centennial Mall South
Lincoln,NE 68509-4666
Steve Williams, Business Assistance Manager
471-3778
Purchasing Department
1819 Farnam Street,Room 1003
Omaha,NE 68183
Pat Burke, Purchasing Agent
444-5408
Human Relations Department Kellie Paris-Asaka, Director (444-5050)
Contract Compliance (MBE/WBE)
1819 Farnam Street, Room 502
Omaha, NE 68183
Rita Vlademar; Contract Compliance Manager
444-5067
41111
MBE/WBE FOR GOODS AND SERVICES
Great Plains Minority Supplier Development Council
Greater Omaha Chamber of Commerce
1301 Harney Street
Omaha,NE 68102
Terrie Miller, Director
345-5000
Laraza Job Training
4911 South 25th Street
Omaha,NE 68107
Enrique.Brodsky, Executive Director
734-1321
United Minority Contractors Association
2221 North 24th Street
Omaha, NE 68110
Al Epps, Executive Director
341-2177
Donna B. Hayes, ADDMSB
Capital Ownership Development
Small Business Administration
11145 Mill Valley Road
Omaha,NE 68154
221-4691
Hubert J. Carter, Jr., Deputy for Small Business
U.S. Corps of Engineers
215 North 17th Street
Omaha,NE 68102
221-4110
5
City of Omaha
BUSINESS QUALIFICATION RESUME
DATE:
I. FIRM IDENTIFICATION:
COMPANY NAME
STREET ADDRESS
CITY STATE ZIP CODE
BUSINESS PHONE HOME PHONE
MONTH &YEAR ESTABLISHED
II. OWNERSHIP OF FIRM:
IS THE FIRM OWNED AND CONTROLLED BY MEMBER OF MINORITY OR OTHER
DISADVANTAGED GROUP?: YES NO MINORITY
WOMAN N/A
TYPE OF OWNERSHIP: INDIVIDUAL PARTNERSHIP CORPORATION
IS 51% OWNED BY A MINORITY? YES NO
NAME AND ADDRESS OF ALL STOCKHOLDERS AND/OR PARTNERS:
NAME, TITLE, HOME ADDRESS % OF OWNERSHIP
III. MANAGEMENT (USE SAME FORMAT FOR ADDITIONAL MANAGEMENT PERSONNEL):
NAME POSITION
EDUCATION
MANAGEMENT OR TECHNICAL TRAINING
6/22/90
6 c
City of Omaha
CONTRACTOR INFORMATION FORM:
DATE: PROJECT ADDRESS
OWNER INFORMATION: (To be filled out by the City of Omaha)
OWNER'S NAME
OWNER'S ADDRESS
CITY/STATE/ZIP CODE
OWNER'S PHONE NUMBER
OWNER'S FEDERAL TAX IDENTIFICATION NUMBER: MINORITY INFORMATION:
The Owner meets the following criteria:
MINORITY WOMAN N/A
(If the company does not have a Federal Tax Identification
Number, then provide the Owner's Social Security Number.)
GENERAL CONTRACTOR INFORMATION:
COMPANY'S NAME
COMPANY'S ADDRESS
CITY/STATE/ZIP CODE
COMPANY'S PHONE NUMBER
COMPANY'S FEDERAL TAX IDENTIFICATION NUMBER: MINORITY INFORMATION:
The Company meets the following criteria:
• MINORITY WOMAN N/A
CONTRACT AMOUNT:
SUBCONTRACTOR LIST:
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE # MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
7
City of Omaha
SUBCONTRACTOR LIST:
(Continuation)
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE # MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
kjohnson/reports/mbe-2.doc
8
C-25A
CITY OF OMAHA
LEGISLATIVE CHAMBER
Omaha,Nebr may...1,...200].
RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
WHEREAS, the City annually receives Community Development Block Grant
funds under Title 1 of the Housing and Community Development Act of 1974, as amended, for
the purpose of benefiting low and moderate income residents, eliminating slums and blight, and
for other urgent community development needs; and,
WHEREAS, the Mayor recommended various projects in the 2001 Consolidated
Submission for Community Planning and Development Programs (Consolidated Plan), including
the Concord Square Housing Development Program; and,
WHEREAS, the City Council approved the 2001 Consolidated Plan on
December 19, 2000, by Resolution No. 3377, as amended, and $450,000.00 was allocated to this
Project; and,
WHEREAS, New Community Development Corporation, a Nebraska Non-profit
Corporation (NCDC), has submitted an application that provides for the provision of Deferred
Payment Loans and Development Subsidy Grants to NCDC for construction financing for ten
(10) new single-family homes and the provision of Deferred Payment Loans to qualified low and
moderate income homebuyers to assist in purchasing the homes in the Concord Square Target
Area bounded by Clark Street on the north, Nicholas Street on the south, 20th Street on the east,
and 24th Street on the west; and,
WHEREAS, four (4) of the homes constructed by NCDC shall be purchased by
households whose annual incomes are 80% or below the Median Income by Family Size and any
qualified homebuyer may purchase the remaining six (6) homes; and,
WHEREAS, the Consolidated Plan identified that this Project provides or
improves housing which is determined to benefit low and moderate income persons or addresses
slums and blighted conditions on a spot basis and therefore the Project is consistent with the
Consolidated Plan; and,
WHEREAS, NCDC has indicated the total estimated project cost to be
$1,570,000.00, consisting of $450,000.00 in CDBG Funds and $1,120,000.00 in private funds;
and,
By
Councilmember
Adopted
City Clerk
Approved
Mayor
kr
c-ZSA CITY OF OMAHA
-
LEGISLATIVE CHAMBER
Omaha,Nebr May 1, 2001
PAGE 2
WHEREAS, the City will convey by Warranty Deed parcels of land sufficient in
number to NCDC for the development of this housing project; and,
WHEREAS, it is in the best interest of the City of Omaha and the residents
thereof to enter into an Agreement with NCDC for the development of this housing project.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF OMAHA:
THAT, as recommended by the Mayor, the attached Agreement between the City
of Omaha and New Community Development Corporation, a Nebraska Non-profit Corporation
(NCDC), Michael B. Maroney, President/CEO, 3147 Ames Avenue, Omaha, Nebraska 68111,
authorizing the City to convey by Warranty Deed parcels of land sufficient in number to NCDC
for the development of this housing project in the Concord Square Target Area bounded by Clark
Street on the north, Nicholas Street on the south, 20th Street on the east and 24th Street on the
west; and to provide a $450,000.00 Loan/Grant Fund to NCDC to construct ten (10) new single-
family homes in the Concord Square Target Area and the marketing and selling of four (4) of
these homes to low and moderate income homebuyers whose annual incomes are 80% or below
the Median Income by Family Size and the remaining six (6) homes to any qualified
homebuyer, is hereby approved. Funds shall be payable from the Community Development
Block Grant Program, Concord Square Housing Development Program, Agency No. 200, Fund
No. 193, Organization 8319.
P:\PLN1\1689sap.doc APPROVED AS
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CITY ATTORNEY DATE
By
Councilmember
Adopted MAY 1 2001
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