U.S. Department of Housing and Urban Development

**Community Planning and Development**

Special Attention of: **Notice:** CPD-00-7

All Secretary\'s Representatives

All State/Area Coordinators Issued: May 22, 2000

All CPD Division Directors Expires: May 22, 2001

[Supersedes: CPD Notice 99-3]{.underline}

SUBJECT: Instructions for Urban County Qualification for Participation
in the Community Development Block Grant (CDBG) Program for Fiscal Years
(FY) 2001-2003

INTRODUCTION

This Notice establishes requirements, procedures and deadlines to be
followed in the urban county qualification process for Fiscal Years
2001-2003, as well as information concerning specific considerations and
responsibilities for urban counties. Please note that delay in
establishing the participating population in just one urban county may
result in delays in determining the final allocations of CDBG funds for
all entitlement and State CDBG grantees. Therefore, HUD Field Offices
and urban counties are expected to adhere to the deadlines in this
Notice.

Basically, this Notice provides guidance for counties wishing to qualify
or requalify for entitlement status as urban counties as well as
existing urban counties that wish to include previously
non-participating communities. Please send copies of this Notice to all
presently qualified urban counties, to each county that can qualify for
the first time or requalify for Fiscal Years 2001-2003, and to each
State administering the State CDBG program which includes a potentially
eligible urban county. This Notice includes five attachments which
contain listings of all currently qualified urban counties (Attachment
A); counties that can potentially qualify for the first time or
requalify this qualification period (Attachment B); counties scheduled
to qualify or requalify in FY 2001 for FY 2002-2004 (Attachment C);
counties scheduled to qualify or requalify in FY 2002 for FY 2003-2005
(Attachment D); and currently qualified urban counties that can add
nonparticipating units of government for the remaining two or three
years of their qualification period (Attachment E). HUD expects to
receive 1999 population estimates which may result in the addition of
new counties.

DGBE: Distribution: W-3-1

The schedule for qualifying urban counties is coordinated with
qualifying HOME consortia in order to be able to operate both the CDBG
and HOME programs using the same urban county configurations. The CDBG
urban county qualification process for the FY 2001-2003 qualification
period will start April 28, 2000, and run through September 15, 2000.
This will provide HUD sufficient time before the September 30 deadline
for FY 2001 funding under the HOME Program to notify counties that they
qualify as urban counties under the CDBG Program.

This Notice contains information relevant to the Consolidated Plan
requirements (see Section I, General Requirements, paragraphs B and C,
and Section V., Cooperation Agreements, paragraph J.) and terminating
cooperation agreements with automatic renewals at the end of the third
year of the qualification period (see Section H, Qualification Schedule,
paragraphs D and F; Section III, Qualification Actions to be Taken by
County, paragraph E; and Section IV, Documents to be Submitted to HUD by
County, paragraphs A and D).

Whenever agreements without end dates are executed, the urban county is
required to notify participating units of government that the agreement
will be automatically renewed unless the agreement is specifically
terminated in writing before the end of the urban county\'s
Qualification period (see Section H, paragraph D.). Any unit of
government that participated with an urban county (see Attachment B)
under such an agreement during the 1998-2000 qualification period and
decides to stop participating with the urban county, must notify the
urban county that it will not participate during the 2001-2003
qualification period (see Section II, paragraph F.).

Qualifying and requalifying urban counties (see Attachment B) and
qualified counties that add non-participating units of government (see
Attachment E) that use an agreement with an automatic renewal must
include a provision that the agreement remains in effect until CDBG (and
HOMIE, where applicable) funds and program income received with respect
to the three-year qualification period are expended and the funded
activities completed. The urban county and participating unit of general
local government cannot terminate or withdraw from the agreement while
the agreement remains in effect (see Section V., paragraph E.).

Urban counties with executed agreements without end dates that are
requalifying during the 2001-2003 qualification period (see Attachment
B) do not have to execute and submit to HUD new cooperation agreements
unless the agreement has been amended. In such cases, only copies of
executed amendments to such cooperation agreements must be submitted to
HUD (see Section IV, paragraph E). Also, this Notice has been revised to
make clear that when using renewable agreements, regardless of whether
such agreement is being amended, the county must submit a legal opinion
from the County\'s Counsel that the terms and provisions of the
renewable agreement continue to be authorized and that the agreement
provides full legal authority for the county (see Section IV, E.).

Language in Section I, General Requirements, paragraph I.A., and Section
V, Cooperation Agreements, paragraphs B. and G., explains that counties
that do not have powers under State law to carry out community
development and housing assistance activities may enter into cooperation
agreements with local governments that do have such powers under State
law essential to carry out the Urban County\'s CDBG program. This
clarification is intended to avoid the misperception that counties that
have no unincorporated areas that are not units of general local
government, such as counties in New York, must have power to carry out
these activities.

The information provided in Section II, paragraph C; Section IH,
paragraph B.2.; Section V, paragraph D.2.; and Section VIH, paragraph D
has been revised to make clear that in becoming part of an urban county,
a participating unit of government may only receive a formula allocation
under the HOME Program as part of the urban county. However, that does
not preclude the urban county or a participating unit of government from
applying for State HOME funds.

Section V, paragraph E. has been changed to clarify that cooperative
agreements must specify the three years covered by the agreement.

A new Section IX has been added to review the actions required by HUD
Field Office Counsel to complete Determinations of Essential Powers.

Departmental guidance on the process for transferring programmed grant
funds from an urban county to a newly qualified metropolitan city which
was previously part of the urban county, pursuant to the provisions of
24 CFR 570.510, was provided in a memorandum dated May 23, 1997. The
memorandum was addressed to the Director of HUD\'s Office of Accounting
Operations, Field Accounting Directors, and CPD Field Directors on the
subject of \"Procedure for Processing Transfers of Prior Fiscal Year
Funds. \"

Questions from Field Offices related to this Notice should be directed
to the Entitlement

Communities Division at (202) 708-1577 or to the Systems Development and
Evaluation

Division at (202) 708-0790. Requests for deadline extensions should be
directed to the

Entitlement Communities Division. The TDD number for both divisions is
(202) 708-2565.

OMB Information Collection Number: 2506-0170

Expiration Date: 9/30/2002

TABLE OF CONTENTS

I. GENERAL REQUIREMENTS 1

A. Threshold 1

B. Consolidated Plan Requirements 1

C. Consolidated Plan Requirements Where the Urban County is in a HOME

Consortium 2

D. Synchronization of Urban County and HOME Qualification Periods 2

II\. QUALIFICATION SCHEDULE 3

III\. QUALIFICATION ACTIONS TO BE TAKEN BY COUNTY 5

A. Cooperation Agreements/Amendments 5

B. Notification of Opportunity to be Excluded 6

C. Notification of Opportunity to be Included 6

D. Notification of Split Places 7

E. Notification of Opportunity to Terminate Agreement 7

IV\. DOCUMENTS TO BE SUBMITTED TO HUD 8

V. COOPERATION AGREEMENTS 9

VI\. PERIOD OF QUALIFICATION 12 A. General 12

B. Retaining Urban County Classification 13

VII\. URBAN COUNTY PROGRAM RESPONSIBILITIES 13

VIII\. SPECIAL CONSIDERATIONS 13

A. Metropolitan City/Urban County Joint Recipients 13

B. Subrecipient Agreements 14

C. Ineligibility for State and Small Cities CDBG Program 15

D. Eligibility for a HOME Consortium 15

IX\. DETERMINATIONS OF ESSENTIAL POWERS

Attachments A thru E\--County Lists

COMMUNITY DEVELOPMENT BLOCK GRANT

URBAN COUNTY QUALIFICATION

Fiscal Years 2001-2003

I. GENERAL REQUIREMENTS

A. [Threshold]{.underline}

In order to be entitled to receive Community Development Block Grant
(CDBG) funds as an urban county, the county must qualify as an urban
county under one of the following thresholds:

1\. Having a total combined population of 200,000 or more (excluding
metropolitan cities) from the unincorporated areas and participating
incorporated areas; or

2\. Having a total combined population of at least 100,000 but less than
200,000 from the unincorporated areas and participating incorporated
areas, provided that, in the aggregate, those areas include the majority
of persons of low and moderate income that reside in the county (outside
of any metropolitan cities). Under this provision the county itself must
still have a potential combined population of 200,000 (excluding
metropolitan cities); or

3\. Meeting specific requirements of Sec. 102(a)(6)(C) or (D) of the
Housing and Community Development Act of 1974, as amended.

HUD must make a review to determine that an urban county possesses
essential community development and housing assistance powers in any
unincorporated areas that are not units of general local government. HUD
must review all of the units of general local government within the
county to determine those, if any, in which the county lacks such
powers. The county would have to enter into cooperation agreements with
any such units of government that are to become part of the urban
county. Such agreements would bind the unit of general local government
to cooperate in the use of its powers in the carrying out of the
essential activities in accordance with the urban county\'s program.
(See paragraph IX for additional information on Determinations of
Essential Powers.)

B. [Consolidated Plan Requirements]{.underline}

In order to receive an Entitlement Grant in FY 2001, an urban county
must have an approved Consolidated Plan (pursuant to 24 CFR Part 91).
This includes urban counties newly qualifying during this qualification
period; urban counties that continue to include the same communities
previously included in the urban county;

and those urban counties that are amending their urban county
configurations to add communities that chose not to participate
previously. Where an urban county enters into a joint agreement with a
metropolitan city for CDBG purposes, a Consolidated Plan is submitted by
the urban county to cover both governmental entities.

24 CFR Part 91 calls for submission of a jurisdiction\'s Consolidated
Plan no earlier than November 15, and no later than August 16, of the
Program Year for which CDBG, HOME, ESG and HOPWA funds are appropriated
to cover the Federal fiscal period of October 1, 2000, through September
30, 2001. An urban county\'s failure to submit its Consolidated Plan by
August 16, 2001, will automatically result in a loss of CDBG funds for
the 2001 program year. The Consolidated Plan must meet all requirements
of 24 CFR Part 91, including all required certifications, and cannot
cover more than a five-year period, with annual updates of the action
plan and certifications.

C. [Consolidated Plan Requirements Where the Urban County is in a HOME
Consortium]{.underline}

Where units of general local government form a \"consortium\" to receive
HOME funding, the Consortium submits the Consolidated Plan for the
entire geographic area encompassed by the consortium. Therefore, if an
urban county is a member of a HOME consortium, the consortium submits
the Consolidated Plan, and the urban county, like all other CDBG
entitlement grantees in the consortium, is only required to submit its
own nonhousing Community Development plan (91.215(e)), an Action Plan
(91.220) and the required Certifications (91.225 (a) and (b)), as part
of the Consortium\'s Consolidated Plan. If an urban county has a CDBG
joint agreement with a metropolitan city, they must form a HOME
Consortium to become one entity for HOME purposes.

D. [Synchronization of Urban County and HOME Qualification
Periods]{.underline}.

The urban county\'s and HOME consortium\'s qualification periods are for
three years, unless HUD revokes the consortium\'s designation for HOME
participation, or until an urban county member fails to requalify as an
urban county for a fiscal year that it is included in the consortium\'s
qualification period. If a member urban county\'s CDBG three-year cycle
is not the same as the HOME consortium\'s, the consortium may elect a
shorter qualification period than three years to get in sync with the
urban county\'s CDBG three-year qualification cycle, as permitted in 24
CFR 92.101(c).

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II\. QUALIFICATION SCHEDULE

> The following schedule will govern the procedure for urban county
> qualification for Fiscal Years 2001-2003. Unless noted otherwise,
> deadlines may only be extended by prior written authorization from
> Headquarters. Deadlines in paragraphs D, E, G, and I may be extended
> by the Field Office as specified below. However, no extension may be
> granted by the Field Office if it would have the effect of extending a
> subsequent deadline that the Field Office is not authorized to extend.
>
> A. By [April 28, 2000]{.underline}, the HUD Field Office shall notify
> counties that may seek to qualify or requalify as an urban county of
> HUD\'s Determination of Essential Powers (see paragraph IX.) as
> certified by the Field Office Counsel (see Attachment B, Counties
> Scheduled to Qualify or Requalify in 2000 for the 2001-2003
> Qualification Period).

B. By [May 5, 2000]{.underline}, counties must notify split places of
their options for exclusion from or participation in the urban county
(see Attachment B and Section III, paragraph D, for an explanation of
split places).

C. By [May 5, 2000]{.underline}, counties must notify each included unit
of general local government, where the county is authorized to undertake
essential community development and housing assistance activities
without the consent of the governing body of the locality, of its right
to elect to be excluded from the urban county, and the date by which it
must make such election (see Attachment B and paragraph E, below.).
Included units of government must also be notified that they are not
eligible to apply for grants under the HUD-Administered Small Cities or
State CDBG programs while they are part of the urban county, and that,
in becoming a part of the urban county, they automatically participate
in the HOME program if the urban county receives HOME funding. While
they may only receive a formula allocation under the HOME Program as
part of the urban county, this does not preclude the urban county or a
unit of government participating with the urban county from applying for
State HOME funds. A county which is already qualified as an urban county
in FY 2001 (see Attachment E, Counties Qualified through 2001 or 2002
that Contain Non-Participating Communities), may elect to notify
nonparticipating units of government that they now have an opportunity
to join the urban county for the remainder of the urban county\'s
qualification period (see paragraph H. below.).

D. By [May 5, 2000]{.underline}, any county which has executed
cooperation agreements with no specified end date is required to notify
affected participating units of government in writing that the agreement
will automatically be renewed unless the unit of government terminates
the agreement in writing (see Attachment B). [Any]{.underline} extension
of this deadline must be authorized in writing by the Field Office. An
extension of more than seven days requires notification of Headquarters
by telephone.

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E. By [June 2, 2000]{.underline}, any included unit of general local
government, where the county does not need the consent of its governing
body to undertake essential community development and housing assistance
activities, that elects to be excluded from an urban county must notify
the county [and]{.underline} HUD, in writing, that it elects to be
excluded. Any extension of this deadline must be authorized in writing
by the Field Office. An extension of more than seven days requires
notification of Headquarters by telephone.

F. By [June 2, 2000]{.underline}, any unit of government that has
entered into a cooperation agreement with no specified end date with the
county and elects not to continue participating with the county during
the FY 2001-2003 qualification period must notify the county
[and]{.underline} HUD in writing that it is terminating the agreement at
the end of the current period. The county may allow additional time
provided any such extension does not interfere with the county\'s
ability to meet the deadline in Paragraph I, below.

G. By [June 2, 2000]{.underline}, any unit of general local government
that meets \"metropolitan city\" status for the first time and wishes to
defer such status and stay, or to accept such status and become a joint
recipient with the urban county, must notify the county
[and]{.underline} the HUD Field Office in writing that it elects to
defer its metropolitan city status or to accept its status and join with
the urban county in a joint agreement. Any metropolitan city that had
deferred its status previously or had accepted its status and entered
into a joint agreement with the urban county, and wishes to maintain the
same relationship with the county for this next qualification period,
must notify the county [and]{.underline} the HUD Field Office in writing
by this date. [Any]{.underline} extension of this deadline must be
authorized in writing by the Field Office. An extension of more than
seven days requires notification of Headquarters by telephone.

H. By [June 2, 2000]{.underline}, any unit of general local government
that is not currently participating in an urban county and chooses to
participate for the remaining 2nd or 3rd year of the county\'s
qualification period must notify the county and HUD in writing that it
elects to be included. The county may allow additional time provided any
such extension does not interfere with the county\'s ability to meet the
deadline in paragraph I, below.

I. By [July 14, 2000]{.underline}, any county seeking to qualify as an
urban county (see Attachment B) or to include any previously
non-participating units of general local government into its
configuration (see Attachment E) must submit to the appropriate HUD
Field Office all qualification documentation described in Section IV.,
Documents to be Submitted to HUD by County. [Any]{.underline} extension
of this deadline must be authorized in writing by the Field Office, and
should not interfere with the Field Office\'s ability to meet the
deadline in paragraph J. Headquarters should be notified by telephone if
an extension of more than seven days is needed.

4

J. By [August 6, 2000]{.underline}, Field Office Counsel should complete
the reviews of all cooperation agreements and related authorizations and
certify that each cooperating agreement meets the requirements of
Section V., Cooperation Agreements. [Any]{.underline} delay in
completion of the review must not interfere with the Field Office\'s
ability to meet the deadline in paragraph L. Headquarters should be
notified by telephone of any delay in the Field Counsel\'s review.
(Note: If a county is using renewable agreements and has submitted a
legal opinion that the terms and conditions of the agreement continue to
be authorized (see Section IV, paragraph E.), review of such opinion by
Field Office Counsel is optional.)

K. During late July or early August, Headquarters will send worksheets
via e-mail to Field Offices for each requalifying urban county listed on
Attachment B.

L. By [August 18, 2000]{.underline}, Field Offices shall update and
complete the worksheet for each county and send a copy of the revised
worksheet, concurrently, to the appropriate county for verification of
data and to the CPD Systems Development and Evaluation Division in
Headquarters (via e-mail). [Field Offices shall also concurrently
forward to the Systems Development and Evaluation Division and the urban
county a memorandum (or an e-mail message) that identifies any urban
county already qualified for FY 2001 that is adding any new units of
government, together with the names of the newly included units of
government (see Attachment E)]{.underline}. THIS DEADLINE MAY NOT BE
EXTENDED WITHOUT PRIOR WRITTEN AUTHORIZATION FROM HEADQUARTERS.

M. By [September 8, 2000]{.underline} (or as soon as possible
thereafter), Headquarters will complete its review of the urban county
status worksheets and memoranda for those urban counties adding new
units of government and return via e-mail the updated worksheets to
Field Offices with an accompanying memorandum notifying the Field Office
of any apparent discrepancies, problems or questions. The Field Office
is to verify the data and notify the Systems Development and Evaluation
Division within seven days if any problems exist. If there are no
problems, Field Offices will notify each county seeking to qualify as an
urban county of its urban county status for Fiscal Years 2001 through
2003 by September 15, 2000.

III\. QUALIFICATION ACTIONS TO BE TAKEN BY COUNTY

The following actions are to be taken by the urban county:

A. [Cooperation Agreements/Amendments]{.underline}. Urban counties that
must enter into cooperation agreements or amendments, as appropriate,
with the units of general local government located in whole or in part
within the county, must submit to HUD executed cooperation agreements,
together with evidence of authorization by the governing bodies of both
parties (county and included unit) executed by the proper

5

officials in sufficient time to meet the deadline for submission
indicated in the schedule (see Section V., Cooperation Agreements,
paragraph A). Cooperation agreements must meet the standards in Section
V. of this Notice.

B. [Notification of Opportunity to be Excluded]{.underline}. Units of
general local government m which counties have authority to carry out
essential community development and housing activities without the
consent of the local governing body are automatically included in the
urban county unless they elect to be excluded at the time of
qualification or requalification. Any county that has such units of
general local government must notify each such unit that it may elect to
be excluded from the urban county. The unit of government must be
notified:

1 . That if it chooses to remain with the urban county, it is ineligible
to apply for grants under the HUD-Administered Small Cities or State
CDBG programs while it is part of the urban county;

2\. That if it chooses to remain with the urban county, it is also a
participant in the HOME program if the urban county receives HOME
funding and may only receive a formula allocation under the HOME Program
as a part of the urban county, although this does not preclude the urban
county or a unit of government within the urban county from applying for
State HOME funds;

3\. That if it chooses to be excluded from the urban county, it must
notify both the county and HUD of its election to be excluded by the
date specified in Section II, Qualification Schedule, paragraph E.

> Such election to be excluded will be effective for the entire
> three-year period for which the urban county qualifies, unless the
> excluded unit specifically elects to be included in a subsequent year
> for the remainder of the urban county\'s three-year qualification
> period.

C. [Notification of Opportunity to be Included]{.underline}. If a
currently qualified urban county has one or more non-participating units
of general local government, the county may notify, in writing, any such
unit of local government during the second or third year of the
qualification period that the local government has the opportunity to be
included for the remaining period of urban county qualification. This
written notification must include the deadline for such election, and
must state that the unit of general local government must notify the
county and HUD, in writing, of its official decision to be included. If
cooperation agreements are necessary, the unit

6

electing to be included in the county for the remainder of the
qualification period must also execute, with the county, a cooperation
agreement meeting the standards in Section V., Cooperation Agreements.
The agreement must be received by HUD by the date specified in Section
II, Qualification Schedule, paragraph I.

D. [Notification of Split Places]{.underline}. Counties seeking
qualification as urban counties and having units of general local
government with any population located only partly within the county
must notify these units of their rights by the date provided in Section
H, Qualification Schedule, paragraph B. Specifically, the county must
provide the following notifications:

1\. Where a split place is partly located within only one urban county,
one of the following rules applies:

a\. If it is a split place in which the county has essential powers, the
entire area of the split place will be included in the urban county for
the urban county qualification period unless the split place has opted
out; or

b\. If the split place can only be included in the county upon the
execution of a cooperation agreement, the entire area of the split place
will be included in the urban county for the urban county qualification
period upon execution of such an agreement.

2\. Where the split place is partially located within two or more urban
counties, the split place may elect one of the following:

a\. to be excluded from all urban counties;

b\. to be entirely included in one urban county and excluded from all
other such counties; or

c\. to participate as a part of more than one of the urban counties in
which it is partially located provided that a single portion of the
split place cannot be included in more than one entitled urban county at
a time, and all parts of the split place are included in the urban
counties.

E. [Notification of Opportunity to Terminate Agreement]{.underline}.
Urban counties that have agreements that will be automatically renewed
at the end of the current qualification period unless action is taken by
the unit of government to terminate the agreement, must, by the date
provided in Section II, Qualification Schedule, paragraph D, notify such
units that they can terminate the agreement and not participate during
the 2001-2003 qualification period.

7

IV\. DOCUMENTS TO BE SUBMITTED TO HUD BY COUNTY

> Any county seeking to qualify as an urban county for Fiscal Years
> 2001-2003 or that wishes to exercise its option to include units of
> government that are not currently in the urban county\'s CDBG program
> must submit to the responsible HUD Field Office:

A. A copy of the letter that notified applicable units of general local
government (and a list of applicable units of government) of their right
to decide to be excluded from the urban county along with a copy of
letters submitted to the county from any such units of general local
government requesting exclusion (see Section III, Qualification Actions
to Be Taken by County, paragraph B.). This does not apply to an already
qualified urban county adding communities.

B. A copy of the letter from any unit of general local government
joining an already qualified county that officially notifies the county
of its election to be included. (See Section III, paragraph C.)

C. Where applicable, a copy of the letter from:

1\. Any city that may newly qualify as a metropolitan city but that
seeks to defer that status, or

2\. Any city currently deferring metropolitan city status that seeks to
continue to defer such status.

(See Section II, Qualification Schedule, paragraph G.)

D. A copy of the letter sent by the county that notified affected units
of government that the agreement will be renewed unless the county is
notified by the unit of government to terminate the agreement; and a
copy of any such letter from any unit(s) of government requesting
termination (see Section III, paragraph E.).

E. Where applicable, copies of fully executed cooperation agreements
between the county and its included units of general local government,
including any cooperation agreements from applicable units of general
local government covered under Section III, Qualification Actions to be
Taken by County, paragraph C., and the opinions of county counsel and
governing body authorizations required in Section V., Cooperation
Agreements, paragraphs B and C.

8

For a county that has cooperation agreements in effect that provide for
automatic renewal of the urban county qualification period as provided
under Section V. , Cooperation Agreements, paragraph E., at the time of
such automatic renewal, the documents to be submitted are: a legal
opinion from the county\'s counsel that the terms and provisions
continue to be authorized under state and local law, and that the
agreement continues to provide full legal authority for the county;
copies of any executed amendments to automatically renewed cooperation
agreement (if any); and if locally required, governing body
authorizations.

F. Any joint request(s) for inclusion of a metropolitan city as a part
of the urban county as permitted by Section VIII., paragraph A.,
Metropolitan City/Urban County Joint Recipients, along with a copy of
the required cooperation agreement(s). If either the urban county or the
metropolitan city fall under the "exception criteria\" at 24 CFR
570.208(a)(1)(ii) for activities that benefit low- and moderate-income
residents of an area, the urban county must notify, in writing, the
metropolitan city of the potential effects of such joint agreements on
such activities. See Section VIII., paragraph A., for further
clarification.

V. COOPERATION AGREEMENTS

> All cooperation agreements must meet the following standards in order
> to be found acceptable:

A. The governing body of the county and the governing body of the
cooperating unit of general local government shall authorize the
agreement and the chief executive officer of each body shall execute the
agreement.

B. The agreement must contain, or be accompanied by, a legal opinion
from the county\'s counsel that the terms and provisions of the
agreement are fully authorized under State and local law and that the
agreement provides fun legal authority for the county. Where the county
does not have such authority, the legal opinion must state that the
participating jurisdiction has the authority to undertake, or assist in
undertaking, essential community development and housing assistance
activities, specifically urban renewal and publicly-assisted housing. A
mere certification by the county\'s counsel that the agreement is
approved as to form is insufficient and unacceptable.

C.  The agreement must state that the agreement covers the CDBG
    Entitlement program and, where applicable, the HOME Investment
    Partnership Program (i.e., where the urban county receives funding
    under the HOME program as an urban county or as a member of a HOME
    consortium).

9

D. The agreement must state that, by executing the CDBG cooperation
agreement, the included unit of general local government understands
that it:

1\. may not apply for grants from appropriations under the Small Cities
or State CDBG Programs for fiscal years during the period in which it
participates in the urban county\'s CDBG program; and

2\. may receive a formula allocation under the HOME Program only through
the urban county. Thus, even if the urban county does not receive a HOME
formula allocation, the participating unit of local government cannot
form a HOME consortium with other local governments. (Note: this does
not preclude the urban county or a unit of government participating with
the urban county from applying for State HOME funds. An existing
renewable agreement need not be amended to add this Note. It is included
here only for purposes of clarification.)

E. The agreement must specify the three years covered by the urban
county qualification period (e.g., Federal Fiscal Years 2001-2003), for
which the urban county is to qualify to receive CDBG entitlement funding
or, where applicable, specify the remaining one or two years of an
existing urban county\'s qualification period. At the option of the
county, the agreement may provide that it will automatically be renewed
for participation in successive three-year qualification periods, unless
the county or the participating unit of general local government
provides written notice it elects not to participate in a new
Qualification period. A copy of that notice must be sent to the HUD
Field Office.

Where such agreements are used, the agreement must state that, by the
date specified in HUD\'s urban county qualification notice for the next
qualification period, the urban county will notify the participating
unit of general local government in writing of its right not to
participate. A copy of the county\'s notification to the jurisdiction
must be sent to the HUD Field Office by the date specified in the urban
county qualification schedule in Section II.

Cooperation agreements with automatic renewal provisions must include a
stipulation that requires either party to adopt any amendment to the
agreement incorporating changes necessary to meet the requirements for
cooperation agreements set forth in an Urban County Qualification Notice
applicable for a subsequent three-year urban county qualification
period, and to submit such amendment to HUD as provided in the urban
county qualification notice (See Section IV., Documents to be Submitted
to HUD, paragraph E.), and that such failure to comply will void the
automatic renewal for such qualification period.

10

F. The agreement must provide that it remains in effect until the CDBG
(and HOME, where applicable) funds and program income received with
respect to activities carried out during the three-year qualification
period (and any successive qualification periods under agreements that
provide for automatic renewals) are expended and the funded activities
completed, and that the county and participating unit of general local
government cannot terminate or withdraw from the cooperation agreement
while it remains in effect.

G. The agreement must expressly state that the county and the
cooperating unit of general local government agree to \"cooperate to
undertake, or assist in undertaking, community renewal and lower income
housing assistance activities, specifically urban renewal and publicly
assisted housing.\" If the county does not have such powers, the
agreement must expressly state that the cooperating unit of general
local government agrees to \"undertake, or assist in undertaking,
community renewal and lower income housing assistance activities,
specifically urban renewal and publicly assisted housing.\" As an
alternative to this wording, the cooperation agreement may reference
State legislation authorizing such activities, but only with the
approval of the specific alternative wording by HUD Field Counsel.

H. The agreement must contain a provision obligating the county and the
cooperating unit of general local government to take all actions
necessary to assure compliance with the urban county\'s certification
required by section 104(b) of Title I of the Housing and Community
Development Act of 1974, as amended, including Title VI of the Civil
Rights Act of 1964, the Fair Housing Act, section 109 of Title I of the
Housing and Community Development Act of 1974, and other applicable
laws. The agreements shall also contain a provision prohibiting urban
county funding for activities, in or in support of, any cooperating unit
of general local government that does not affirmatively further fair
housing within its own jurisdiction or that impedes the county\'s
actions to comply with the county\'s fair housing certification. This
provision is required because noncompliance by a unit of general local
government included in an urban county may constitute noncompliance by
the grantee (i.e., the entire urban county) which can, in turn, provide
cause for funding sanctions or other remedial actions by the Department.

I. The agreement must expressly state \"that the cooperating unit of
general local government has adopted and is enforcing:

1\. a policy prohibiting the use of excessive force by law enforcement
agencies within its jurisdiction against any individuals engaged in
non-violent civil rights demonstrations; and

2\. a policy of enforcing applicable State and local laws against
physically

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barring entrance to or exit from a facility or location which is the
subject of such non-violent civil rights demonstrations within
jurisdictions.\"

J. The agreement may not contain a provision for veto or other
restriction that would allow any party to the agreement to obstruct the
implementation of the approved Consolidated Plan during the period
covered by the agreement. The county has final responsibility for
selecting CDBG (and HOME, where applicable) activities and submitting
the Consolidated Plan to HUD, unless the county is a member of a HOME
consortium, and then the consortium submits the Plan (see Section I,
General Requirements, paragraph C.).

K. The agreement must contain provisions specifying that, pursuant to 24
CFR 570.501(b), the unit of local government is subject to the same
requirements applicable to subrecipients, including the requirement of a
written agreement described in 24 CFR 570.503. (See Section VIII,
Special Considerations, paragraph B.)

L. A county may also include in the cooperation agreement any provisions
authorized by State and local laws that legally obligate the cooperating
units to undertake the necessary actions, as determined by the county,
to carry out a community development program and the approved
Consolidated Plan and/or meet other requirements of the CDBG (and HOME,
where applicable) programs and other applicable laws.

VI\. PERIOD OF QUALIFICATION

A. General. Any county that qualifies as an urban county will be
entitled to receive funds as an urban county for three consecutive
Fiscal Years regardless of changes in its population or boundary or
population changes in any communities contained within the urban county
during that period, provided funds are appropriated by Congress.
However, during the period of qualification, no included unit of general
local government may withdraw from the urban county unless the urban
county does not receive a grant for any year during such period.

The urban county\'s grant amount is calculated annually and will reflect
the addition of any new units of general local government during the
second and third years of the period of qualification.

Any unincorporated portion of the county that incorporates during the
urban county qualification period will remain part of the urban county
through the end of the three-year period.

Any unit of general local government that is part of an urban county
will continue to be included in the urban county for that county\'s
qualification period, even if it is designated a central city of a
metropolitan area or its population surpasses 50,000

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during that period. Such an included unit of general local government
cannot become eligible for a separate entitlement grant as a
metropolitan city while participating as a part of an urban county.

B. [Retaining Urban County Classification]{.underline}. Any county that
has been classified as an urban county for at least 2 years, will retain
its classification as an urban county, unless the urban county qualified
under section 102(a)(6)(A) of the Housing and Community Development Act
of 1974, as amended (the Act), and fails to requalify under that section
due to the election of a currently participating non-entitlement
community to opt out or not to renew a cooperation agreement.

VII\. URBAN COUNTY PROGRAM RESPONSIBILITIES

The county, as the CDBG grant recipient, either for the urban county or
a joint recipient (see Section VIII, paragraph A., Metropolitan
City/Urban County Joint Recipients) has full responsibility for the
execution of the community development program, for following its
Consolidated Plan, and for meeting the requirements of other applicable
laws (e.g., National Environmental Policy Act, Uniform Relocation Act,
Fair Housing Act, Title VI of the Civil Rights Act of 1964, Sec. 504 of
the Rehabilitation Act of 1973, Sec. 109 of the Housing and Community
Development Act of 1974, the Americans with Disabilities Act of 1990,
and for affirmatively furthering fair housing). The county\'s
responsibility must include these functions even where, as a matter of
administrative convenience or State law, the county permits the
participating units of general local government to carry out essential
community development and housing assistance activities. The county will
be held accountable for the accomplishment of the community development
program, for following the Consolidated Plan, and for ensuring that
actions necessary for such accomplishment are taken by cooperating units
of general local government.

VIII\. SPECIAL CONSIDERATIONS

A. [Metropolitan City/Urban County Joint Recipients]{.underline}

Any urban county and any metropolitan city located in whole or in part
within that county can ask HUD to approve the inclusion of the
metropolitan city as a part of the urban county for purposes of planning
and implementing a joint community development and housing assistance
program. HUD will consider approving a joint request only if it is
submitted at the time the county is seeking its qualification as an
urban county. An urban county may be joined by more than one
metropolitan city, but a metropolitan city located in more than one
urban county may be a joint recipient with only one urban county at a
time.

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Upon urban county qualification and HUD approval of the joint request
and cooperation agreement, the metropolitan city becomes a part of the
urban county for purposes of program planning and implementation for the
entire period of the urban county qualification, and for the CDBG
program, will be treated by HUD as any other unit of general local
government that is a part of the urban county. When a metropolitan city
joins an urban county in this manner, the grant amount is the sum of the
amounts authorized for the individual metropolitan city and urban
county. The urban county becomes the grant recipient. A joint request
will be deemed approved unless HUD notifies the city and the county
otherwise within 30 days following submission of the joint request and a
cooperation agreement meeting the requirements specified under Section
V., Cooperation Agreements.

Counties and metropolitan cities considering a joint request should be
aware that significant effects could occur where either the urban county
or the metropolitan city would otherwise fall under the \"exception
rule\" criteria for activities that benefit low-and moderate-income
residents on an area basis \[see 24 CFR 570.208(a)(1)(ii)\]. Joint
agreements result in a modification to an urban county\'s configuration,
and a change in the mix of census block groups in an urban county is
likely to change the relative ranking of specific block groups by
quartile, thus affecting the minimum concentration of low- and
moderate-income persons under the \"exception rule.\" HUD will make a
rank ordering computer run available to counties and metropolitan cities
considering joint participation to assist them in determining the
possible effects of inclusion and how such agreements may impact their
respective programs.

B. [Subrecipient Agreements]{.underline}

The execution of cooperation agreements meeting the requirements of
Section V., Cooperation Agreements, herein between an urban county and
its participating units of local government does not in itself satisfy
the requirement for a written subrecipient agreement required by the
regulations at 24 CFR 570.503. Where a participating unit of general
local government carries out an eligible activity funded by the urban
county, the urban county is responsible, prior to disbursing any CDBG
funds for any such activity or project, for executing a written
subrecipient agreement with the unit of government containing the
minimum requirements found at 24 CFR 570.503. The subrecipient agreement
must remain in effect during any period that the unit of local
government has control over CDBG funds, including program income.

C. [Ineligibility for State and Small Cities CDBG Program]{.underline}

An urban county\'s included units of general local government are
ineligible to apply for grants from appropriations under the
HUD-Administered Small Cities or State CDBG Programs for fiscal years
during the period in which they are participating in the Entitlement
CDBG program with the urban county.

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D. [Eligibility for a HOME Consortium]{.underline}.

When included units of local government become pall of an urban county
for the CDBG Program, they are part of the urban county for the HOME
Program and may receive a formula allocation under the HOME Program only
as part of the urban county. Thus, even if the urban county does not
receive a HOME formula allocation, the participating unit of local
government cannot form a HOME consortium with other local governments.
However, this does not preclude the urban county or a unit of government
within an urban county from applying for State HOME funds.

IX\. DETERMINATIONS OF ESSENTIAL POWERS

> For new urban counties, the Field Office Counsel must determine
> whether each county within its jurisdiction that is eligible to
> qualify as an urban county has powers to carry out essential community
> development and housing assistance activities. In making the required
> determinations, Field Office Counsel must consider both the county\'s
> authority and, where applicable, the authority of its designated
> agency or agencies. Field Office Counsel shall make such
> determinations as identified below and concur in notifications to the
> county(ies) about these issues.

A. The notification by the Field Office required under Section II.A.
must include the following determinations:

1\. Whether the county is authorized to undertake essential community
development and housing assistance activities in its unincorporated
areas, if any, which are not units of general local government. For
these purposes, the term \"essential community development and housing
assistance activities\" means community renewal and lower income housing
assistance activities, specifically urban renewal and publicly assisted
housing;

2\. In which of the county\'s units of general local government the
county is authorized to undertake essential community development and
housing assistance activities without the consent of the governing body
of the locality. The population of these units of local government will
be counted towards qualification of the urban county unless they
specifically elect to be excluded from the county for purposes of the
CDBG program and so notify both the county and HUD in writing by the
date specified in Section II, paragraph E; and,

3\. In which of the county\'s units of general local government the
county is either not authorized to undertake essential community
development and housing assistance activities or may do so only with the
consent of the governing body of the locality. The population of these
units of local government will only be counted if they have signed
cooperation agreement with the county which meet the standards set forth
in Section V of this Notice.

Attachments

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