[Federal Register Volume 62, Number 241 (Tuesday, December 16, 1997)]
[Notices]
[Pages 65970-65984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32851]



[[Page 65969]]

_______________________________________________________________________

Part III





Department of Housing and Urban Development





_______________________________________________________________________



Funding Availability for: The HUD-Administered Small Cities Community 
Development Block Grant (CDBG) Program--Fiscal Year 1997 and Fiscal 
Year 1998; and the Section 108 Loan Guarantee Program for Small 
Communities in New York State; Notice

Federal Register / Vol. 62, No. 241 / Tuesday, December 16, 1997 / 
Notices

[[Page 65970]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4256-N-01]


Notice of Funding Availability for: The HUD-Administered Small 
Cities Community Development Block Grant (CDBG) Program--Fiscal Year 
1997 and Fiscal Year 1998; and the Section 108 Loan Guarantee Program 
for Small Communities in New York State

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice of Funding Availability for Fiscal Years 1997 and 1998.

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SUMMARY: This Notice of Funding Availability (NOFA) announces: (1) the 
availability of approximately $49,456,000 in Fiscal Year (FY) 1997 
funding and approximately $54,000,000 in Fiscal Year 1998 funding for 
the HUD-administered Small Cities Program in New York State under the 
Community Development Block Grant (CDBG) Program; and (2) the 
availability of a maximum of approximately $200,000,000--$250,000,000 
in FY 1998 funding under the Section 108 Loan Guarantee program for 
small cities in New York State. Amounts available under the Section 108 
Loan Guarantee program are not awarded competitively and are not rated 
under the criteria of this NOFA. Grants awarded under this NOFA for 
activities and projects for which Section 108 assistance will also be 
needed, however, will be conditioned upon approval of the requisite 
Section 108 application within a stated time.
    The exact amount of funds that will be available from the 
approximately $49,456,000 of FY 1997 funds and the approximately 
$54,000,000 of FY 1998 funds that communities will be able to compete 
for under this NOFA is not known at this time. This amount will not be 
known until HUD receives applications and makes determinations for 
grants based on multiyear plans approved in FY 1995 and FY 1996. In 
addition, in FY 1997 HUD carried out the Canal Corridor Initiative (see 
the NOFA for this initiative in the Federal Register on December 3, 
1996 (61 FR 64196) and the amendment published in the Federal Register 
on December 12, 1996 (61 FR 66692)). Pursuant to that NOFA, HUD 
approved Canal Corridor applications for approximately $6.5 million in 
Fiscal Year 1997 New York Small Cities funds. HUD must also be 
prepared, pursuant to 24 CFR 570.432, to use CDBG funds each year, as 
necessary, for the sole purpose of paying any amounts due on debt 
obligations, for up to 20 years, issued by units of general local 
government (or their designated public agencies) and guaranteed by the 
Secretary pursuant to section 108 of the Housing and Community 
Development Act of 1974, as amended, for projects approved under the 
Canal Corridor Initiative NOFA. At this time, the exact amount of CDBG 
funds that will be needed to meet required debt obligation payments 
during Fiscal Year 1998 is not known. However, in the December 3, 1996 
NOFA, HUD estimated that the average amount of CDBG funds required to 
meet the debt obligation payments would not exceed an average of $3 
million per year over a 20-year period.
    The funds announced in this NOFA provide small communities and 
counties in New York State with an opportunity to propose programs that 
focus on creating or expanding job opportunities, addressing housing 
needs, or meeting local public facilities needs. HUD encourages 
communities to propose programs that are creative and innovative in 
addressing the needs of their community. A community may propose a 
program that is ``single purpose'' in nature addressing a specific area 
of need. In the final rule published in the Federal Register on 
November 25, 1997 (62 FR 62912), HUD decreased the maximum grant amount 
for a Single Purpose grant to $400,000, except for applications from a 
county. The maximum amount for a Single Purpose grant to a county is 
$600,000. However, because this NOFA covers funding for two fiscal 
years, applicants may submit and be funded for up to two applications. 
The $400,000 (or $600,000 in the case of a county) maximum grant award 
limit will apply to each application and grant awarded. Each 
application will be rated and ranked independently and must be for 
independent projects. HUD will not make any Single Purpose multiyear 
awards with FY 1997 or FY 1998 funds under this NOFA. HUD will honor 
previous multiyear plans approved in FY 1995 and FY 1996. Multiyear 
recipients should carefully review the limitations and requirements 
contained in section I.D. of this NOFA.

DATES: Applications (including applications from recipients approved 
for a multiyear plan for second or third component in FY 1997 or FY 
1998) are due by March 2, 1998. Application kits may be obtained from 
and must be submitted to either HUD's New York or Buffalo Office. (The 
addresses for these offices are provided in Section II. of this NOFA.)
    Applications, if mailed, must be postmarked no later than midnight 
on March 2, 1998. If an application is hand-delivered to the New York 
or the Buffalo Office, the application must be delivered to the 
appropriate office by no later than 4:00 p.m. (local time) on March 2, 
1998.
    Application kits will be made available by a date that affords 
applicants no fewer than 45 days to respond to this NOFA. For further 
information on obtaining and submitting applications, please see 
Section II. of this NOFA.
    The above-stated application deadline is firm as to date and hour. 
In the interest of fairness to all competing applicants, HUD will treat 
as ineligible for consideration any application that is not received by 
4:00 p.m. on, or postmarked by, March 2, 1998. Applicants should take 
this procedure into account and make early submission of their 
materials to avoid any risk of loss of eligibility brought about by 
unanticipated delays or other delivery-related problems.

FOR FURTHER INFORMATION CONTACT: Cornelia B. Robertson-Terry, State and 
Small Cities Division, Office of Community Planning and Development, 
Department of Housing and Urban Development, Room 7184, 451 Seventh 
Street SW, Washington, DC 20410; telephone (202) 708-1322 (this is not 
a toll-free number). Hearing or speech-impaired individuals may access 
this number via TTY by calling the toll-free Federal Information Relay 
Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

Contents

I. Purpose and Substantive Description
    A. Authority and Background
    1. Authority
    2. Background
    3. Other Program Requirements
    a. Abbreviated Consolidated Plan
    b. Section 3
    4. Accountability in the Provision of HUD Assistance
    a. HUD Responsibilities
    (1) Documentation and Public Access
    (2) Disclosures
    b. Units of Local Government Responsibilities
    B. Allocation Amounts
    1. Total Available Funding
    2. Imminent Threats
    C. Eligibility
    1. Eligible Applicants
    2. Previous Grantees
    3. Eligible Activities and National Objectives
    4. Environmental Review Requirements
    D. Types of Grants
    1. Comprehensive Grants
    2. Single Purpose Grants
    a. General

[[Page 65971]]

    b. Grant Limits and Funding Requirements
    c. Special Limitations for Multiyear Plan Recipients
    3. Applications with Multiple Projects
    4. Multiyear Plans
    a. General
    b. Previously Funded Multiyear Plans
    E. Selection Criteria/Ranking Factors and Final Selection
    1. General
    2. Performance Evaluation
    a. Community Development Activities
    b. Compliance with Applicable Laws and Regulations
    c. Performance Assessment Reports
    3. Five Factor Rating
    a. Need--Absolute Number of Persons in Poverty
    b. Need--Percent of Persons in Poverty
    c. Program Impact--Single Purpose Grants
    (1) Program Impact--Single Purpose--Housing
    (a) Housing Rehabilitation
    (b) Creation of New Housing
    (c) Direct Homeownership Assistance
    (2) Program Impact--Single Purpose--Public Facilities Affecting 
Public Health and Safety
    (3) Program Impact--Single Purpose--Economic Development
    (a) Scoring
    (b) The Appropriate Determination
    (c) CDBG Assistance Must Minimize Business and Job Displacement
    (d) Section 105(a)(17) Requirements
    (e) National Objectives
    (f) Application Requirements
    d. Fair Housing and Equal Opportunity Evaluation
    (1) Housing Achievements
    (a) Provision of Fair Housing Choice
    (b) Implementation of a Fair Housing Strategy that Affirmatively 
Furthers Fair Housing
    (2) Entrepreneurial Efforts and Local Equal Opportunity 
Performance
    (3) Equal Opportunity Employment
    e. Welfare to Work Initiative
    4. Final Selection
II. Application and Funding Award Process
    A. Obtaining Applications
    B. Submitting Applications
    C. The Application
    1. Application Requirements
    2. Streamlined Application Requirements for Certain Applicants
    D. Funding Award Process
III. Technical Assistance
IV. Checklist of Application Submission Requirements
V. Corrections to Deficient Applications
VI. Findings and Certifications

I. Purpose and Substantive Description

A. Authority and Background

1. Authority
    Title I, Housing and Community Development Act of 1974 (42 U.S.C. 
5301-5320) (1974 HCD Act); 24 CFR part 570, subpart F, for the New York 
State Small Cities program, and subpart M for the Section 108 Loan 
Guarantee program.
2. Background
    Title I of the 1974 HCD Act authorizes the Community Development 
Block Grant (CDBG) Program. Section 106(d) of Title I permits States, 
in such manner and at such time as the Secretary shall prescribe, to 
elect to assume the administrative responsibility for the CDBG Program 
for nonentitled areas within their jurisdiction. Section 106 provides 
that HUD will administer the CDBG Program for nonentitled areas within 
any State that does not elect to assume the administrative 
responsibility for the program. HUD's regulations at 24 CFR part 570, 
subpart F describe the requirements for HUD's administration of the 
CDBG Program in nonentitled areas (Small Cities Program). This NOFA 
supplements subpart F of 24 CFR part 570.
    In accordance with 24 CFR 570.421(b), and with the requirements of 
section 102 of the Housing and Urban Development Reform Act of 1989 
(HUD Reform Act), HUD is issuing this NOFA for New York State's Small 
Cities Program for FY 1997 and FY 1998. This NOFA announces the 
allocation of funds for a Single Purpose grant competition, and 
establishes the deadline for filing grant applications. The NOFA 
explains how HUD will apply the regulatory threshold requirements for 
funding eligibility, and the selection criteria for rating and scoring 
applications for Single Purpose grants.
    HUD has issued final regulations at 24 CFR 570.420--570.432 which 
govern the HUD-administered Small Cities program in New York. HUD will 
no longer approve new multiyear plans. HUD will honor previous 
multiyear plans approved in FY 1995 and FY 1996. HUD intends to fund 
future years of previously approved multiyear plans on a noncompetitive 
basis, based on satisfactory past performance and a continuing capacity 
for carrying out the proposed CDBG program activities and submission of 
an acceptable application and certifications.
    Other information about the Small Cities Program will be provided 
in the application kit, which will be made available to applicants by 
HUD's New York Office and Buffalo Office (see Section II. of this 
NOFA).
3. Other Program Requirements
    a. Abbreviated Consolidated Plan. Each jurisdiction that applies 
for funds under this NOFA must have submitted a consolidated plan, as 
provided in 24 CFR part 91. An applicant under this NOFA for more than 
one grant need submit only one consolidated plan or abbreviated 
consolidated plan, as applicable, covering the activities proposed in 
both applications. A jurisdiction that does not expect to be a 
participating jurisdiction in the HOME program under 24 CFR part 92 may 
submit an abbreviated consolidated plan that is appropriate to the 
types and amounts of assistance sought from HUD (see 24 CFR 91.235). 
Any applicant that plans to undertake a housing activity with funds 
under this NOFA needs to prepare and submit, at a minimum, an 
abbreviated consolidated plan that is appropriate to the types and 
amounts of housing assistance sought under this NOFA.
    Even if the community's Small Cities application is approved, HUD 
must also approve an abbreviated consolidated plan that covers 
activities proposed in such application(s) before the community may 
receive Small Cities funding. Further, that applicant must also include 
a certification that the housing activities in its CDBG Small Cities 
application are consistent with the consolidated plan. The applicant's 
consolidated plan must describe the jurisdiction's priority nonhousing 
community development needs eligible for assistance under the CDBG 
program by eligibility category, reflecting the needs of families for 
each type of activity, as appropriate, in terms of dollar amounts 
estimated to meet the priority need for the type of activity (see 24 
CFR 91.235(c)(2)).
    The abbreviated consolidated plan is subject to the same citizen 
participation requirements as is the jurisdiction's Small Cities CDBG 
application. Both must meet the citizen participation requirements 
before they may be submitted to HUD (see 24 CFR 570.431). A Section 108 
Loan Guarantee application would also have to meet citizen 
participation requirements, as described in 24 CFR 570.704, if the 
jurisdiction submits one to HUD for consideration.
    If possible, an applicant should submit the abbreviated 
consolidated plan in advance of the Small Cities application due date. 
The latest time at which the abbreviated consolidated plan will be 
accepted by HUD for the HUD-administered Small Cities Program in New 
York will be March 2, 1998 (the application due date for the Small 
Cities application). Failure to submit the abbreviated consolidated 
plan by the due date is not a curable technical deficiency. Questions 
regarding the abbreviated consolidated plan should be directed to the 
appropriate HUD field office.
    Any application that is fundable but does not have an approved 
consolidated

[[Page 65972]]

plan will receive a conditional approval subject to HUD's approval of 
the abbreviated consolidated plan. If HUD is unable to approve the 
abbreviated consolidated plan within a reasonable period of time (but 
not more than 60 days from the date that the conditional approval is 
announced), HUD will rescind the award. In such event the funding will 
be awarded to the highest rated fundable applicant that did not receive 
funding under this competition.
    b. Section 3. Assistance provided under this NOFA is subject to the 
requirements of section 3 of the Housing and Urban Development Act of 
1968 (12 U.S.C. 1701u), and HUD's implementing regulations in 24 CFR 
part 135. One of the purposes of this NOFA, which is consistent with 
section 3, is to give, to the greatest extent feasible and consistent 
with Federal, State, and local laws and regulations, job training, 
employment and other contracting opportunities generated from certain 
HUD financial assistance to low- and very low-income persons. Public 
entities awarded funds under this NOFA that intend to use the funds for 
housing rehabilitation, housing construction, or other public 
construction must comply with the applicable requirements set forth in 
24 CFR part 135.
4. Accountability in the Provision of HUD Assistance: Documentation and 
Public Access Requirements; Applicant/Recipient Disclosures
    Section 102 of the Department of Housing and Urban Development 
Reform Act of 1989 (42 U.S.C. 3545) (HUD Reform Act) and the 
regulations codified in 24 CFR part 4, subpart A, contain a number of 
provisions that are designed to ensure greater accountability and 
integrity in the provision of certain types of assistance administered 
by HUD. On January 14, 1992 (57 FR 1942), HUD published a notice that 
also provides information on the implementation of section 102. The 
documentation, public access, and disclosure requirements of section 
102 are applicable to assistance awarded under this NOFA as follows:
    a. HUD Responsibilities. (1) Documentation and Public Access. HUD 
will ensure that documentation and other information regarding each 
application submitted pursuant to this NOFA are sufficient to indicate 
the basis upon which assistance was provided or denied. This material, 
including any letters of support, will be made available for public 
inspection for a 5-year period beginning not less than 30 days after 
the award of the assistance. Material will be made available in 
accordance with the Freedom of Information Act (5 U.S.C. 552) and HUD's 
implementing regulations at 24 CFR part 15. In addition, HUD will 
include the recipients of assistance pursuant to this NOFA in its 
Federal Register notice of all recipients of HUD assistance awarded on 
a competitive basis.
    (2) Disclosures. HUD will make available to the public for 5 years 
all applicant disclosure reports (HUD Form 2880) submitted in 
connection with this NOFA. Update reports (also Form 2880) will be made 
available along with the applicant disclosure reports, but in no case 
for a period less than 3 years. All reports--both applicant disclosures 
and updates--will be made available in accordance with the Freedom of 
Information Act (5 U.S.C. 552) and HUD's implementing regulations at 24 
CFR part 15.
    b. Units of General Local Government Responsibilities. Units of 
general local government awarded assistance under this NOFA must ensure 
that documentation and other information regarding each application 
submitted to the recipient by a subsequent recipient applicant are 
adequate to indicate the basis upon which assistance was provided or 
denied. The unit of general local government must make this material, 
including any letters of support, available for public inspection for a 
5-year period beginning not less than 30 days after the award of the 
assistance. Unit of general local government recipients must also 
notify the public of the subsequent recipients of the assistance. Each 
recipient will develop documentation, public access, and notification 
procedures for its programs.

B. Allocation Amounts

1. Total Available Funding
    The nonentitlement CDBG funds for New York State for FY 1997 total 
approximately $56,022,000 and for FY 1998 total approximately 
$54,000,000. The exact amount of funds available for the Small Cities 
CDBG is not known at this time. The final amount available will not be 
known until HUD receives applications and makes grants based on 
multiyear plans approved in FY 1995 and FY 1996. This amount will not 
be known until the communities have submitted their applications to HUD 
and determinations have been made by HUD regarding each community's 
past performance and the community's continuing capacity to carry out 
additional CDBG activities; however, the total amount of previously 
approved multiyear plans, if submitted and approved by HUD, would be 
approximately $24.6 million in FY 1997 funds and approximately $12 
million in FY 1998 funds. In addition, in FY 1997 HUD carried out the 
Canal Corridor Initiative (see the NOFA for this initiative in the 
Federal Register on December 3, 1996 (61 FR 64196) and as amended on 
December 18, 1996 (61 FR 66692)). HUD must be prepared, pursuant to 24 
CFR 570.432, to use CDBG funds each year, as necessary, for the sole 
purpose of paying any amounts due on debt obligations, for up to 20 
years, issued by units of general local government (or their designated 
public agencies) and guaranteed by the Secretary pursuant to section 
108 of the Housing and Community Development Act of 1974, as amended, 
for projects approved under the Canal Corridor Initiative NOFA. HUD 
approved approximately $6.55 million in FY 1997 Small Cities funds for 
Canal Corridor grants. However, at this time, the exact amount of CDBG 
funds that will be needed to meet required debt obligation payments 
during Fiscal Year 1998 is not known. Of the approximately $103,456,000 
available under this NOFA, approximately $90,835,000 is allocated for 
distribution to eligible units of general local government within the 
jurisdiction of HUD's New York Buffalo Field Office. Approximately 
$12,621,000 is allocated for distribution to eligible units of general 
local government within the jurisdiction of HUD's New York Office. Once 
HUD has determined the final amount of funds available for competitive 
distribution under this NOFA, HUD will allocate such funds in the same 
ratio as above to HUD's Buffalo and New York Offices. However, HUD has 
the option to revise these final allocations between offices by up to 
$400,000 in order to assure full distribution of funds. Finally, HUD 
reserves the right, in its sole discretion, not to award all of the 
funds available under this NOFA and to make any such funds available in 
a future NOFA, if an insufficient number of applications are determined 
fundable under this NOFA.
2. Imminent Threats
    All imminent threat projects must meet the national objective of 
benefitting low-and moderate-income persons. HUD may elect to set aside 
up to 15 percent of the FY 1997 and/or the FY 1998 allocations for 
imminent threat projects. These funds will be available until the 
rating and ranking process for funds distributed under this NOFA is 
completed.

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C. Eligibility

1. Eligible Applicants
    Eligible applicants are units of general local government in New 
York State, excluding: (1) metropolitan cities; (2) urban counties; (3) 
units of government which are participating in urban counties or 
metropolitan cities even if only part of the participating unit of 
government is located in the urban county or metropolitan city; and (4) 
Indian tribes (as defined in section 102(a)(17) of the 1974 HCD Act). 
Applications may be submitted individually, or jointly, as described in 
24 CFR 570.422. However, applicants that were approved for a 2- or 3-
year comprehensive plan in FY 1995 or FY 1996 may submit the required 
application by the deadline date set above for applications under this 
NOFA in order to receive the second and/or third year increment as 
applicable (see sections I.D.2.b. and I.D.4.b. of this NOFA), but may 
not submit a separate application for single purpose grant under this 
NOFA unless they notify HUD no later than the deadline for receipt of 
applications under this NOFA that they are relinquishing their second 
or third year multiyear funds.
2. Previous Grantees
    Eligible applicants that previously have been awarded Small Cities 
Program CDBG grants are also subject to an evaluation of capacity and 
performance (see generally, section I.E.2. of this NOFA). Numerical 
thresholds for drawdown of funds have been established to assist HUD in 
evaluating a grantee's progress in implementing its program activities. 
(These standards apply to all CDBG Program grants received by the 
community.) In FY 1996 an additional threshold was established which 
relates to the submission of annual Performance Assessment Reports 
(PARs). A PAR was due on October 31, 1997, for each grant which a local 
government received prior to April 1, 1996. Failure to submit a PAR is 
not a curable technical deficiency.
    Applicants generally will be determined to have performed 
adequately in the area(s) where the thresholds are met. Where a 
threshold has not been met, HUD will evaluate the documentation of any 
mitigating factors, particularly with respect to actions taken by the 
applicant to accelerate the implementation of its program activities.
3. Eligible Activities and National Objectives
    Eligible activities under the Small Cities CDBG Program are those 
identified in subpart C of 24 CFR part 570. With respect to the Section 
108 Loan Guarantee program, eligible activities are identified in 
Sec. 570.703. Note that Sec. 570.703 does not include all CDBG-eligible 
activities. Each activity under both programs must meet one of the 
national objectives (i.e., benefit to low- and moderate-income persons, 
elimination of slums or blighting conditions, or meeting imminent 
threats to the health and safety of the community; see Sec. 570.208), 
and each grant and use of Section 108 Loan Guarantee proceeds must meet 
the requirements for compliance with the primary objective of 
principally benefitting low- and moderate-income persons, as required 
under Sec. 570.420(e). The principal benefit requirement under the CDBG 
program is 70 percent. The method of calculating the use of these funds 
for compliance with the 70 percent overall benefit requirement is set 
forth in Sec. 570.420(e). In general, all applications must describe 
the projects and activities proposed in sufficient detail that 
compliance with these and other applicable statutory, regulatory, and 
NOFA provisions can be determined.
4. Environmental Review Requirement
    The HUD environmental review procedures contained in 24 CFR part 58 
apply to this program. Under part 58, grantees assume all of the 
responsibilities for environmental review, decisionmaking and action 
pursuant to the National Environmental Policy Act of 1969 (42 U.S.C. 
4321 et seq.) and the other provisions of law specified by the 
Secretary in 24 CFR part 58 that would apply to the Secretary were he 
to undertake such projects as Federal projects.

D. Types of Grants

1. Comprehensive Grants
    There will not be a competition for new comprehensive grant awards 
for FY 1997 or FY 1998. However, HUD will honor those existing 
multiyear commitments awarded in FY 1995 and FY 1996, provided the 
community submits to HUD an acceptable application and HUD's review of 
the community's past performance is satisfactory. HUD's review must 
also indicate that the community has sufficient continuing capacity to 
carry out the proposed CDBG activities.
2. Single Purpose Grants
    a. General. Single Purpose grants are designed to address and 
resolve a specific community development need. A Single Purpose grant 
may consist of more than one project. A project may consist of one 
activity or a set of activities. Each project must address community 
development needs in one of the following problem areas:
    <bullet> Housing.
    <bullet> Public Facilities.
    <bullet> Economic Development.
    Each project will be rated against all other projects addressing 
the same problem area, according to the criteria outlined below. It 
should be noted that each project within an application will be given a 
separate impact rating, if each one is clearly designated by the 
applicant as a separate and distinct project (i.e., separate Needs 
Description, Community Development Activities, Impact Description and 
Program Schedule forms have been filled out, indicating project names). 
In some cases, it may be to the applicant's advantage to designate 
separate projects for activities that can ``stand on their own'' in 
terms of meeting the described need, especially where a particular 
project would tend to weaken the impact rating of the other activities, 
if they were rated as a whole, as has been the case with some economic 
development and housing projects. If, however, the projects tend to 
meet impact criteria to the same extent, or the weaker element is only 
a small portion of the overall project, there is no discernable benefit 
in designating separate projects.
    b. Grant Limits and Funding Requirements. The maximum annual grant 
for a Single Purpose grant is $400,000, except that counties may apply 
for up to $600,000 in Single Purpose funds, if the project will be 
carried out in more than one community. If other sources of funds are 
to be used with respect to a project, the source of those funds must be 
identified and the level of commitment indicated. With respect to grant 
limits for joint applicants, the maximum amount that may be awarded 
pursuant to a joint application is the maximum single grant limit 
established above for communities and counties multiplied by the number 
of participants in the cooperation agreement, provided that for 
purposes of determining such a multiple grant limit, and in order to 
receive that amount, a participating joint applicant must receive a 
substantial direct benefit from the activities proposed in the 
application and must not be acting solely on behalf of or in 
conjunction

[[Page 65974]]

with another jurisdiction for the sole purpose of raising the maximum 
grant amount that may be awarded. In addition, the statistics of each 
participant counted for maximum grant limits purposes shall also be 
used for purposes of the selection factors under section I.E.3. of this 
NOFA.
    Because this NOFA covers funding for two fiscal years, applicants 
may submit up to two applications and receive two grants. The $400,000 
(or $600,000 in the case of a county) maximum grant award limit will 
apply to each application and grant awarded. Each application will be 
rated and ranked independently, and must be for independent projects.
    c. Special Limitations for Multiyear Plan Recipients. With respect 
to a 3-year multiyear plan approved for FY 1995, FY 1996 and FY 1997, 
in which the applicant still wishes to apply for and receive its FY 
1997 increment, the applicant may apply for and receive approval for 
one Single Purpose grant of $400,000 (or $600,000 in the case of a 
county) under this NOFA. Similarly, a grantee that received approval of 
a 2-year, multiyear plan for FY 1996 and FY 1997, and for which the 
applicant still wishes to apply for and receive its FY 1997 increment, 
that community may apply for and receive approval for one Single 
Purpose grant of $400,000 (or $600,000 in the case of a county) under 
this NOFA. However, an applicant that received approval of an FY 1996 
multiyear plan for FY 1996, 1997, and 1998, and that still wishes to 
apply for and receive approval for its FY 1997 and FY 1998 increments, 
may not apply for a Single Purpose grant under this NOFA. Similarly, a 
multiyear applicant that wishes to forgo applying for its FY 1997 or FY 
1998 multiyear grant increment(s) may do so and would thus be eligible 
to apply for and receive up to one or two Single Purpose grants, as 
applicable.
3. Applications With Multiple Projects
    If an application contains more than one project, each project will 
be rated separately for program impact. Applicants should note that 
regardless of the number of projects, the total grant amount cannot 
exceed the limits identified in section I.D.2.b. of this NOFA.
4. Multiyear Plans
    a. General. Multiyear plan grants will not be awarded for FY 1997 
or FY 1998. However, multiyear plan grants awarded in FY 1995 and FY 
1996 will be honored for the FY 1997 and FY 1998 funding increments, 
provided HUD's review indicates that the grantee has acceptable past 
performance, the grantee has continuing capacity to carry out the CDBG 
activities proposed in the application, and the grantee submits an 
acceptable application and certifications. HUD reserves the right to 
lower the amount of funds for succeeding years if grantees are not in 
compliance with performance requirements and applicable regulations. 
Note that a multiyear applicant that received a 3-year multiyear plan 
approval in FY 1996 for FY 1996, 1997, and 1998, should submit two 
separate applications: one application for the FY 1997 increment; and 
one application for the FY 1998 increment. See section I.D.2.b., above, 
regarding grant limits and funding requirements for guidance on when a 
previously approved multiyear applicant may submit an application for a 
Single Purpose Grant under this NOFA. All applications for funding of a 
second or third year increment of a previously approved multiyear plan 
must be submitted by the deadline date for applications established by 
this NOFA.
    b. Previously Funded Multiyear Plans. The maximum annual grant 
available for a FY 1996 multiyear plan was $1,900,000. The maximum 
funding for implementing an entire multiyear plan was $3,100,000 for a 
2-year multiyear plan, and $5,000,000 for a 3-year multiyear plan. The 
maximum grant awarded in FY 1996 was $1,200,000. Grant funds requested 
must have been sufficient, either by themselves or in combination with 
funds from other sources (including any Section 108 Loan Guarantee 
resources requested in conjunction with a Small Cities application 
under this NOFA), to complete the project within a reasonable amount of 
time. If other sources of funds were to have been used with respect to 
a project, the source of those funds should have been identified and 
the level of commitment indicated. The maximum grant for a multiyear 
plan that was originally funded in FY 1995 and which was not revised in 
FY 1996 was $900,000.
E. Selection Criteria/Ranking Factors and Final Selection
1. General
    Complete applications received from eligible applicants by March 2, 
1998 will be rated and scored by HUD. Applications are rated and scored 
against five factors. These five factors are discussed in more detail 
in section I.E.3. of this NOFA. Note that when an applicant proposes to 
use Section 108 Loan Guarantee assistance as a partial funding resource 
for a proposed project under this NOFA, HUD, when applying the rating 
factors to such projects, will consider the applicant's description of 
the Section 108 assisted project in arriving at the score for a 
particular factor. An applicant may either have an approved 108 Loan 
Guarantee application, submit a full Section 108 Loan Guarantee 
application or provide a description of the Section 108 Loan Guarantee 
application. (The description must be specific as to the amount of the 
Section 108 Loan Guarantee commitment that the applicant will request 
and the purpose for which the 108 Loan Guarantee proceeds will be used. 
See section II.C.1. of this NOFA for more information on this subject.) 
However, any such CDBG application under this NOFA that is fundable and 
relies upon Section 108 Loan Guarantee assistance to partially carry 
out the activities and does not have an approved Section 108 Loan 
Guarantee commitment will receive a conditional approval. If the 
applicant does not submit and HUD does not approve the required Section 
108 Loan Guarantee application within a reasonable period of time (see 
section II.C.1.(f)(2) of this NOFA), HUD may rescind the award. In such 
event the funding will be awarded to the highest rated fundable 
applicant that did not receive funding under this competition.
2. Performance Evaluation
    As noted in section I.C. of this NOFA, previous grantees of Small 
Cities Program CDBG grants are subject to an evaluation of performance 
and continuing capacity to undertake the proposed program. For purposes 
of making performance evaluations, HUD will use any information that 
becomes available before grant awards are announced. Performance also 
will be evaluated using information which may be available already to 
HUD, including previously submitted performance reports, site visit 
reports, audits, monitoring reports and annual community assessments. 
The HUD Office may request and consider additional information in cases 
where it is essential to make the required performance judgments (see 
24 CFR 570.423(d), Thresholds). No grants will be made to an applicant 
that does not have the capacity to undertake the proposed program. A 
performance determination will be made by an evaluation of the 
following areas:
    a. Community Development Activities. The following thresholds for 
performance in expending CDBG funds have been established for FY 1997 
and FY 1998 and pertain to all Single Purpose and Comprehensive Grants,

[[Page 65975]]

including grants pursuant to approved multiyear plans:

FY 1992 and earlier--Grants must be closed out
FY 1993--Grant funds 100 percent expended
FY 1994--Grant funds 75 percent expended
FY 1995--Grant funds 30 percent expended
FY 1996--Recipients must be on target with respect to the latest Small 
Cities Program Schedule received by HUD.

    Note: These standards will be used as benchmarks in judging 
program performance, but will not be the sole basis for determining 
whether the applicant is ineligible for a grant due to a lack of 
capacity to carry out the proposed project or program. Any applicant 
that fails to meet the percentages specified above may wish to 
provide updated data to HUD, either in conjunction with the 
application submission or under separate cover, but in no case will 
data received by HUD after March 2, 1998 be accepted, unless 
specifically requested by HUD.

    b. Compliance With Applicable Laws and Regulations. An applicant 
will be considered to have performed inadequately if the applicant:
    (1) Has not substantially complied with the laws, regulations, and 
Executive Orders applicable to the CDBG Program, including applicable 
civil rights laws as may be evidenced by: (1) an outstanding finding of 
civil rights noncompliance, unless the applicant demonstrates that it 
is operating in compliance with a HUD-approved compliance agreement 
designed to correct the area(s) of noncompliance; (2) an adjudication 
of a civil rights violation in a civil action brought against it by a 
private individual, unless the applicant demonstrates that it is 
operating in compliance with a court order designed to correct the 
area(s) of noncompliance; (3) a deferral of Federal funding based upon 
civil rights violations; (4) a pending civil rights suit brought 
against it by the Department of Justice; or (5) an unresolved charge of 
discrimination issued against it by the Secretary under section 810(g) 
of the Fair Housing Act, as implemented by 24 CFR 103.400;
    (2) Has not resolved or attempted to resolve findings made as a 
result of HUD monitoring; or
    (3) Has not resolved or attempted to resolve audit findings.
    An applicant will be ineligible for a grant where the inadequate 
performance in compliance with applicable laws and regulations 
evidences a lack of capacity to carry out the proposed project or 
program. For example, an application will not be accepted from a unit 
of general local government which has an outstanding audit finding or 
monetary obligation for any HUD program. Additionally, applications 
will not be accepted from any entity which proposes an activity in a 
unit of general local government that has an outstanding audit finding 
or monetary obligation for any HUD program. The Director of the 
Community Planning and Development Division of the HUD field office may 
provide an exception to this prohibition if the unit of general local 
government has made a good faith effort to clear the audit finding. No 
exception will be provided if funds are due HUD, unless a satisfactory 
arrangement for repayment of the debt has been made.
    c. Performance Assessment Reports. Under 24 CFR 570.507, Small 
Cities CDBG grantees are required to submit Performance Assessment 
Reports (PARs) on October 31st, for the period ended September 30th, 
for all open grants awarded before April 1st of the same year. For an 
application for FY 1997/1998 funds to be considered for funding, the 
applicant must be current in its submission of PARs. Failure to submit 
a PAR is not a curable technical deficiency under section V. of this 
NOFA.
3. Five Factor Rating
    As noted in section I.E.1. of this NOFA, all applications are rated 
and scored against five factors. These five factors are:
    <bullet> Need based on absolute number of persons in poverty;
    <bullet> Need based on the percent of persons in poverty;
    <bullet> Program Impact;
    <bullet> Outstanding performance in fair housing and equal 
opportunity; and
    <bullet> Welfare to Work Initiative.
    A maximum of 605 points is possible under this system with the 
maximum points for each factor being:

------------------------------------------------------------------------
                                                                  Points
------------------------------------------------------------------------
Need--absolute number of persons in poverty....................       75
Need--percent of persons in poverty............................       75
Program Impact.................................................      400
Outstanding performance--FHEO:                                          
  a. Provision of fair housing choice..........................       20
  b. New Horizons Fair Housing Assistance Project..............       20
  c. Equal opportunity employment..............................       10
Welfare to Work Initiative.....................................        5
    Total......................................................      605
------------------------------------------------------------------------

    Each of the five factors is outlined below. All awarded points for 
each factor will be rounded to the nearest whole number.
    a. Need--Absolute number of persons in poverty. HUD uses 1990 
census data to determine the absolute number of persons in poverty 
residing within the applicant unit of general local government. 
Applicants which are county governments are rated separately from all 
other applicants. For applications from joint applicants, data from 
each participating unit of general local government (as described in 24 
CFR 570.422) will be aggregated. Applicants in each group are compared 
in terms of the number of persons whose incomes are below the poverty 
level. Individual scores are obtained by dividing each applicant's 
absolute number of persons in poverty by the greatest number of persons 
in poverty of any applicant and multiplying by 75.
    b. Need--Percent of persons in poverty. HUD uses 1990 census data 
to determine the percent of persons in poverty residing within the 
applicant unit of general local government. Applicants in each group 
are compared in terms of the percentage of their population below the 
poverty level. For applications from joint applicants, data from each 
participating unit of general local government will be aggregated. 
Individual scores are obtained by dividing each applicant's percentage 
of persons in poverty by the highest percentage of persons in poverty 
of any applicant and multiplying by 75.
    c. Program Impact--Single Purpose Grants. In evaluating program 
impact, HUD will consider various factors. Within each activity type 
described below is a set of factors and scoring weights that will be 
used. Each proposal will be rated using the factors and scoring weights 
described in the selection criteria below.
    Assessments are done on a comparative basis and, as a result, it is 
important that each applicant present information in a detailed and 
uniform manner.
    For projects consisting of more than one activity, the activity 
that directly addresses the need must represent at least the majority 
of funds requested. Other activities must be incidental to and in 
support of the principal activity. For example, public improvements 
included in a rehabilitation project that addresses housing need must: 
(1) be a relatively small amount in terms of funds requested; (2) 
clearly be in support of the housing objective; and (3) demonstrate a 
positive and direct link to the national objective. For incidental 
activities claiming benefit to low- and moderate-income persons on an 
area basis, the application must document that at least 51 percent of 
the residents of the service area meet the low- and moderate-income 
requirement. Funds should not be requested for activities

[[Page 65976]]

that are not incidental to and in support of the principal activity.
    In addressing Program Impact criteria, applicants should adhere to 
the following general guidelines for quantification. Where appropriate, 
absolute and percentage figures should be used to describe the extent 
of community development needs and the impact of the proposed program. 
This includes, but is not limited to, appropriate units of measure 
(e.g., number of housing units or structures, linear feet of pipe, 
pounds per square inch, etc.), and costs per unit of measure. These 
quantification guidelines apply to the description of need, the nature 
of proposed activities and the extent to which the proposed program 
will address the identified need.
    Appropriate documentation should be provided to support the degree 
of need described in the application. Basically, the sources for all 
statements and conclusions relating to community needs should be 
included in the application or incorporated by reference. Examples of 
appropriate documentation include planning studies, letters from public 
agencies, newspaper articles, photographs and survey data.
    Generally, the most effective documentation is that which 
specifically addresses the subject matter and has a high degree of 
credibility. Applicants which intend to conduct surveys to obtain data 
are advised to contact the appropriate HUD office prior to conducting 
the survey for a determination as to whether the survey methodology is 
statistically acceptable.
    There are a number of program design factors related to feasibility 
which can alter significantly the award of impact points. Accordingly, 
it is imperative that applicants provide adequate documentation in 
addressing these factors. Common feasibility issues include site 
control, availability of other funding sources, validity of cost 
estimates, and status of financial commitments as well as evidence of 
the status of regulatory agency review and approval.
    Past productivity and administrative performance of prior grantees 
will be taken into consideration when reviewing the overall feasibility 
of the program. Overall program design, administration and guidelines 
are other feasibility issues that should be articulated and presented 
in the application, since they are critical in assessing the 
effectiveness and impact of the proposed program.
    Each project will be rated against other projects addressing the 
same problem area, so that, for example, housing projects only will be 
compared with other housing projects, according to the criteria 
outlined below. It should be noted that each project within an 
application will be given a separate impact rating, if each one is 
clearly designated by the applicant as a separate and distinct project 
(i.e., separate Needs Descriptions, Community Development Activities, 
and Impact Description and Program Schedule forms have been filled out, 
indicating separate project names).
    In some cases, it may be to the applicant's advantage to designate 
separate projects for activities that can ``stand on their own'' in 
terms of meeting the described need, especially where a particular 
project would tend to weaken the impact rating of the other activities, 
if they were all related as a whole, as has been the case with some 
economic development projects. If, however, the projects tend to meet 
the impact criteria to the same extent, or the weaker element is only a 
small portion of the overall program, there is no discernable benefit 
in designating separate projects.
    Applicants should bear in mind that the impact of the proposed 
project will be judged by persons who may not be familiar with the 
particular community. Accordingly, individual projects will be rated 
according to how well the application demonstrates in specific, 
measurable terms, the extent to which the impact criteria are met. 
General statements of need and impact alone will not be sufficient to 
obtain a favorable rating. HUD will not make a Small Cities grant when 
it determines that the grant will only have a minimal or insignificant 
impact on the grantee. For the purposes of this NOFA, any application 
not scoring above 100 points of the possible 400 points for the Program 
Impact factor will be deemed to have a minimal or insignificant impact 
on the grantee and will not be funded regardless of the number of 
points the applicant may otherwise receive or the ranking it attains as 
a result of its score due to points received on other rating factors.
    For purposes of this NOFA, Champion Community means an urban or 
rural area that: (1) was designated by the Secretary of HUD as an urban 
Empowerment Zone or Enterprise Community, or designated by the 
Secretary of Agriculture as a rural Empowerment Zone or Enterprise 
Community; or (2) was nominated by one or more local governments and 
the State or States in which it is located for consideration of 
designation as an Empowerment Zone or Enterprise Community pursuant to 
24 CFR part 597 or 7 CFR part 25, meets the eligibility requirements in 
24 CFR part 597, subpart B, or 7 CFR part 25, subpart B, but was not so 
designated because of statutory limits on the number of such 
designations. The Champion Communities in New York State are: Kingston, 
Steuben County, Chenango County, Sullivan County and Chautauqua County.
    (1) Program Impact--Single Purpose--Housing. There are three 
distinct types of Single Purpose Housing projects: Housing 
Rehabilitation, Creation of New Housing and Direct Homeownership 
Assistance. Separate rating criteria are provided for each type of 
project.
    (a) Housing Rehabilitation. The following factors and weights will 
be used evaluate proposed housing rehabilitation projects:
    (i) Severity of Need (proportion of units that are substandard and 
extent of disrepair) (up to 160 points of the total Program Impact 
score). Each application should provide information on the total number 
of units in the project area, the number that are substandard, and the 
number of substandard units occupied by low- and moderate-income 
households. The purpose of this information is to establish the 
relative severity of housing conditions within the designated project 
area compared to other housing rehabilitation applications. The 
application also should describe the date and methodology of any 
surveys used to obtain the information, including any explicit and 
detailed definition of ``substandard.''
    Surveys of Housing Conditions. Surveys of housing conditions serve 
several purposes in evaluating applications for housing rehabilitation 
activities. These include establishing the seriousness of need for such 
assistance in the project area, providing a basis for estimating 
overall budgetary needs, and providing an indication of the 
marketability of the project.
    (ii) Extent to which proposed program will resolve the identified 
problem (up to 40 points of the total Program Impact score). Note that 
programs that propose minimal rehabilitation may not necessarily be 
addressing the identified problem.
    (iii) Feasibility (marketability, project design affecting timely 
completion of the project) (up to 40 points of the total Program Impact 
score). The application should describe the project in sufficient 
detail to allow the reviewer to assess its feasibility and its probable 
impact on the conditions described. It also should describe project 
requirements in such a

[[Page 65977]]

way that regulatory and policy concerns will be addressed.
    HUD encourages communities to support a new Secretarial initiative, 
called Healthy Homes. Applicants applying for Small Cities CDBG funds 
to rehabilitate housing and/or construct new housing units may support 
these initiatives by including Healthy Homes features in their program 
design, such as window locks, deadbolt locks on doors, locks or safety 
latches on medicine cabinets, smoke detectors, carbon monoxide 
detectors, energy efficient windows, elimination of lead-based paint, 
and any other activities that contribute to Healthy Homes, especially 
regarding children.
    (iv) Leveraging of other resources (up to 60 points of the total 
Program Impact score). HUD encourages communities to design projects 
supplementing Small Cities rehabilitation funds with private funds 
wherever feasible and appropriate, especially in the case of rental 
units and housing not occupied by lower-income persons. In such cases, 
the Small Cities grant subsidy should be as low as possible, while 
retaining sufficient incentive to attract local participants. On the 
other hand, projects designed for low-income homeowners should not 
require private contributions at a level that puts the project out of 
reach of potential participants.
    (v) Cost per unit (up to 80 points of the Program Impact score). 
HUD will review the applicant's documentation to determine whether the 
applicant's cost-per-unit is lower than other applicants' costs-per-
unit. All applications should provide documentation to justify the 
cost-per-unit estimates, particularly grantees where past performance 
does not support the estimates in the applications. In reviewing 
applications from grantees with prior housing rehabilitation projects, 
reasonableness of cost-per-unit, stated in the application, will be 
compared against the grantee's actual past performance.
    (vi) Extent to which the project supports the strategic plan of a 
Champion Community (up to 20 points of the total Program Impact score).
    (b) Creation of New Housing. CDBG funds may be used to support the 
construction of new housing units, the creation of new units proposed 
through conversion of existing structures (currently vacant structures 
or conversion of nonresidential structures for residential use) and, in 
certain circumstances, to finance the actual cost of constructing new 
units. New construction may be carried out by an eligible nonprofit 
entity pursuant to 24 CFR 570.204, or as last resort housing. Note that 
for purposes of specific uses of Section 108 Loan Guarantee proceeds, 
eligibility is limited to assistance for community economic development 
projects under Sec. 570.204(a)(2). See also 24 CFR 570.703(i)(2). 
Support of new construction could include nonconstruction assistance 
such as the acquisition and/or clearance of land, the provision of 
infrastructure, or the payment of certain planning costs.
    The following factors and weights will be used to evaluate proposed 
projects for the creation of new housing:
    (i) Severity of need for new housing affordable to low- and 
moderate-income persons shown in the project area (up to 160 points of 
the total Program Impact score). Where the creation of new units is 
proposed, the application should document the need for additional units 
based on vacancy rates, waiting lists, and other pertinent information.
    (ii) Extent to which the proposed program will create new housing 
units affordable to low- and moderate-income persons (up to 40 points 
of the total Program Impact score). The proposed project clearly must 
support, or result in, additional units for low- and moderate-income 
persons. The units may result from new construction projects for which 
the proposed project will provide nonconstruction assistance.
    (iii) Feasibility (marketability, project design affecting timely 
completion of the project) (up to 40 points of the total Program Impact 
score). Applicants should address issues of site control and 
marketability, in addition to addressing feasibility from the 
standpoint of market financing.
    (iv) Leveraging of other resources (up to 60 points of the total 
Program Impact score). Where the proposed project involves the use of 
Federally assisted housing, the applicant must identify and document 
the current commitment status of the Federal assistance. Lack of a firm 
financial commitment for assistance may adversely affect project 
impact.
    (v) Cost per unit (up to 60 points of the total Program Impact 
score). HUD will review the applicant's documentation to determine 
whether the applicant's cost-per-unit is lower than other applicants' 
costs-per-unit. All applications should provide documentation to 
justify the cost-per-unit estimates, particularly grantees where past 
performance does not support the estimates in the applications. In 
reviewing applications from grantees with prior housing projects, 
reasonableness of cost-per-unit, stated in the application, will be 
compared against the grantee's actual past performance.
    (vi) Extent to which the project would affirmatively further fair 
housing (either through spatial deconcentration of minorities 
throughout the community or through spatial deconcentration of low-and 
moderate-income households if there are no areas of minority 
concentration) (up to 20 points of the total Program Impact score).
    (vii) Extent to which the project supports the strategic plan of a 
Champion Community (up to 20 points of the total Program Impact score).
    (c) Direct Homeownership Assistance. Homeownership activities are 
defined as activities which would promote homeownership within the 
applicant jurisdiction, focusing particularly on aiding low- and 
moderate-income persons in becoming homeowners. This may include 
activities authorized under 24 CFR 570.201(n) for purposes of use of 
Small Cities grant funding. However, activities eligible solely under 
24 CFR 570.201(n) are not permitted uses of Section 108 loan guarantee 
proceeds. While declining to identify any particular type of proposed 
project as superior, HUD is identifying several criteria which must be 
addressed within the project design, in order for the application to 
receive the maximum project impact.
    Applications must include a well developed description of 
homeownership needs in the applicant jurisdiction, focusing 
particularly on the needs of low- and moderate-income persons. The 
description also should include, if applicable, any alternative 
approaches which have been considered in meeting homeownership needs. 
Project feasibility must be addressed as part of the application.
    The application must demonstrate that the proposed project would 
make effective use of all available funds. This would include any 
local, State or other Federal funds which would be utilized by the 
proposed project. If other such funds are included as part of the 
proposed project, the applicant must demonstrate that such funds are 
committed and truly available for the project. Any efforts which would 
affirmatively further fair housing, by promoting homeownership among 
minorities as well as homeownership throughout the community, must be 
outlined in the application.
    The application must explain how the project would benefit low- and 
moderate-income homebuyers, particularly focusing on first-time and 
minority homebuyers. The application also should address any 
homeownership counseling services, including counseling pertaining to 
Federal, State, and local fair housing

[[Page 65978]]

laws and requirements, which would be provided to persons selected to 
participate in the proposed project. Finally, the application should 
describe how the project would utilize public/private partnerships to 
promote homeownership, particularly in the sense that private sector 
financing would be accessible, as necessary, to project participants to 
complement available public sector funds, including CDBG money.
    The following factors and weights will be used to evaluate proposed 
direct homeownership assistance projects:
    (i) The extent to which the application demonstrates severity of 
homeownership needs in the community (up to 160 points of the total 
Program Impact score).
    (ii) The extent to which: the project design is appropriate to meet 
demonstrated homeownership needs; the project would make effective us 
of available funds; alternative approaches to meeting the homeownership 
needs have been considered; and the proposed project would target 
first-time homebuyers (up to 60 points of the total Program Impact 
score).
    (iii) The extent to which the project is feasible and likely to be 
implemented in accordance with a project schedule (up to 40 points of 
the total Program Impact score).
    (iv) The extent to which the proposed project would: complement 
other Federal, State or local programs that promote homeownership; and 
utilize public/private partnerships in attempting to promote 
homeownership, particularly in regard to participation by local 
financial institutions considering the cost per unit (up to 80 points 
of the total Program Impact score).
    (v) The extent to which the proposed project would provide 
homeownership counseling to project participants (up to 20 points of 
the total Program Impact score).
    (vi) The extent to which the project would affirmatively further 
fair housing through proposed initiatives to reach out to potential 
minority homeowners and/or to promote homeownership opportunities 
throughout the community (up to 20 points of the total Program Impact 
score).
    (vii) The extent to which the project supports the strategic plan 
of a Champion Community (up to 20 points of the total Program Impact 
score).
    (2) Program Impact--Single Purpose--Public Facilities Affecting 
Public Health and Safety. In the case of public facility projects, 
documentation of the problem by outside, third-party sources is of 
primary importance. In the case of water and sewer projects, 
documentation from public agencies is particularly helpful, especially 
where such agencies have pinpointed the exact cause of the problem and 
have recommended courses of action which would eliminate the problem. 
Such supporting documentation should be as up-to-date as possible; the 
older the supporting material, the more doubt arises that the need is 
current and immediate. Applicants also should be sure to indicate how 
the project would address public health and safety needs and 
conditions. Quantification also is essential in describing needs. 
Documentation from those affected should be included.
    The following factors and weights will be used to evaluate proposed 
public facilities projects affecting the public health and safety:
    (a) Severity of Need (up to 160 points of the total Program Impact 
score). The applicant should describe, including appropriate 
documentation, as best as possible, the degree to which the need is 
serious, current and requires prompt attention.
    (b) Extent to which the proposed program will resolve the 
identified problem and public health and safety concerns (up to 40 
points of the total Program Impact score). The applicant should 
demonstrate that the project will completely solve the problem and, if 
applicable, the applicant should address whether the proposal would be 
satisfactory to other State/local agencies which have jurisdiction over 
the problem.
    (c) Feasibility (up to 40 points of the total Program Impact 
score). The applicant should address whether the proposal is the most 
cost effective and efficient among the possible alternatives 
considered, and the funding requested will be sufficient to resolve the 
problem. Total project costs should be documented by qualified third-
party estimates, and be as recent as possible.
    (d) Extent of benefit to affected persons and the cost per 
household (up to 80 points of the total Program Impact score).
    (e) Leveraging other resources to minimize project costs (up to 40 
points of the total Program Impact score). To the extent that Small 
Cities grant funds will not cover all costs, the source of other funds 
should be identified and committed. If local funds are to be used, the 
applicant should show both the willingness and the ability to provide 
the funds.
    (f) Extent to which the project addresses deficiencies in 
accessibility for disabled persons and/or provides a significant 
increase in the number of public facilities accessible to disabled 
persons (up to 20 points of the total Program Impact score).
    (g) Extent to which the project supports the strategic plan of a 
Champion Community (up to 20 points of the total Program Impact score).
    (3) Program Impact--Single Purpose--Economic Development Projects. 
As discussed earlier in this section of the NOFA, each individual 
Single Purpose project will receive a separate impact rating. 
Applicants whose proposed economic development program will include 
multiple proposals should determine the most appropriate form of 
submission. This determination will require a choice as to either the 
incorporation of all proposals into a single project or the submission 
of separate projects for each proposal (each transaction will be 
considered a separate project). The single project format presents an 
``all or nothing'' situation. In determining the appropriate submission 
format, applicants should consider the ability of a transaction to rate 
well on its own, based on the magnitude of employment impact, size of 
the financial transaction and the other factors discussed in this 
section.
    The submission of proposals as separate projects must be clearly 
designated by the applicant with individual Needs Descriptions, 
Community Development Activities, Impact Descriptions and Program 
Schedule forms, including an appropriate name for each project on HUD 
Form 4124.1.
    Section 807(c)(3) of the Housing and Community Development Act of 
1992 (42 U.S.C. 5305 note) provides that it is the sense of Congress 
that each grantee should devote one percent of its grant for the 
purpose of providing assistance under section 105(a)(23) of the 1974 
HCD Act to facilitate economic development through commercial 
microenterprises. A ``microenterprise'' is defined as a commercial 
enterprise with five or fewer employees, one or more of whom owns the 
enterprise. While not a requirement, this intent should be considered 
in developing an economic development application.
    It is noted that in accordance with section 105 of the 1974 HCD 
Act, HUD published on January 5, 1995 (60 FR 1922), a final rule 
relating to evaluation and selection of Economic Development activities 
by grantees, including evaluation of public benefit (generally codified 
at 24 CFR 570.209). Economic Development applications must be specific 
enough to permit a determination that such threshold public benefit 
standards are met.

[[Page 65979]]

    (a) Scoring. The following factors and weights will be used to 
evaluate proposed economic development projects:
    (i) The extent to which the project will have a direct and positive 
impact on employment opportunities for persons from low-and moderate-
income households (up to 160 points of the total Program Impact score). 
Applicants are reminded that for an activity to be consistent with the 
statutory objective of low-and moderate-income benefit, as a result of 
the creation or retention of jobs, at least 51 percent of created or 
retained employment opportunities must be held by, or made available 
to, persons from low-and moderate-income families. Applicants must 
fully document and describe employment benefits. In addition, 
applicants should address the following issues:
    a. All employment data must be expressed in terms of full-time 
equivalents (FTEs). Only permanent jobs may be counted, and applicants 
must take into account such factors as seasonal and part-time 
employment. A seasonal job may be considered permanent if the season is 
long enough to be considered the person's principal occupation; 
permanent part-time jobs must be converted to the full-time equivalent.
    b. The amount of CDBG assistance required to produce each full-time 
equivalent job will affect the impact assessment by HUD. Lower CDBG 
costs per job are preferable to higher CDBG costs per job. Such 
assessments of impact will be done on a comparative basis among all 
projects submitted, rather than by comparison to a given standard.
    c. The use of CDBG funds to assist a business with transferring to 
a different community will generally be considered as having no 
employment impact. Exceptions to this rule may include an expansion to 
the business as a result of, or concurrent with, the transfer; or if 
the business can demonstrate that it is infeasible to continue 
operations at the current site. An applicant that fails to document a 
basis for such an exception could receive a substantially lower score 
under this ranking factor. Applicants are encouraged to use CDBG funds 
for projects that provide as many jobs as possible for individuals that 
are currently receiving public assistance. Providing employment to 
recipients of public assistance will help break the cycle of dependency 
and empower low-income citizens to take control of their lives.
    (ii) The extent to which market analysis and other risk data 
provides assurance that the proposed project will be successful (up to 
40 points of the total Program Impact score).
    (iii) The extent to which the proposed project addresses all 
appropriate feasibility issues (including extent of firm private 
financing commitments) and the extent to which there is reasonable 
assurance that the project will be completed in a timely manner (up to 
40 points of the total Program Impact score). Projects that are likely 
to encounter feasibility issues which would hinder the timely 
completion of the project will receive a lower score under this 
criterion. Such issues include, but are not limited to: site control, 
zoning, public approvals and permits, infrastructure, environment, and 
relocation. Applicants should address these and any other applicable 
issues and provide documentation where appropriate.
    Applicants also must demonstrate the reasonable likelihood of the 
project's success, from both a financial and employment standpoint. An 
analysis or market data, which indicates an inordinate risk in the 
undertaking of the project, will affect the overall rating of program 
impact. In order to receive a higher rating, the costs must be 
reasonable (i.e., not inflated).
    (iv) Extent to which the project provides Public Benefits relative 
to other proposals' cost per job (up to 80 points of the total Program 
Impact score).
    (v) The extent to which Small Cities grant funds will leverage the 
investment of private and other dollars and the extent to which Small 
Cities grant funds are NOT used to substitute for private financing (up 
to 60 points of the total Program Impact score). Leverage is defined as 
the amount of private debt and equity to be invested as a direct result 
of the CDBG-funded activity. Projects which provide the maximum 
feasible level of private investment will be considered as having 
appropriate leverage. The extent of firm commitments for private 
financing will be reviewed as well as the amount of equity investment. 
The project will be reviewed to determine whether CDBG funds are 
replacing private sources of funds. In order to receive maximum impact 
CDBG funds may not replace private financing, CDBG assistance must be 
limited to the amount necessary to fund the project without replacing 
CDBG funds for private funds, and equity funds should bear the greatest 
risk in the project.
    (vi) The extent to which the project supports the strategic plan of 
a Champion Community (up to 20 points of the total Program Impact 
score).
    In addition to the standard submission requirements, HUD will 
evaluate the following as part of its Eligibility Review prior to 
considering an application for funding in the FY 1997/1998 competition.
    (b) The Appropriate Determination. HUD has developed guidelines for 
review of economic development activities undertaken with CDBG funds. 
These guidelines are composed of two components: guidelines for 
evaluating project costs and financial requirements; and standards for 
evaluating public benefit. The standards for evaluating public benefit 
are mandatory, but the guidelines for evaluating project costs and 
financial requirements are not. The guidelines for evaluating project 
costs are to ensure:
    (i) Reasonableness of Proposed Costs. The applicant must review 
each project cost element and determine that the cost is reasonable and 
consistent with third-party, fair-market prices for that cost element. 
The general principle is that the level of CDBG assistance cannot be 
adequately determined if the project costs are understated or inflated.
    (ii) Commitment of Other Sources of Funds. The applicant shall 
review all projected sources of funds necessary to complete the project 
and shall verify that all sources (in particular private debt and 
equity financing) have been firmly committed to the extent practicable, 
and are available to be invested in the project. Verification means 
ascertaining that: the source of funds is committed; that the terms and 
conditions of the committed funds are known; and the source has the 
capacity to deliver.
    (iii) No Substitution of CDBG Funds (including Section 108 Loan 
Guarantee proceeds) for Private Sources of Funds. The applicant shall 
financially underwrite the project and ensure to the extent possible 
that CDBG funds are not being substituted for available private debt 
financing or equity capital. The analysis must be tailored to the type 
of project being assisted (e.g., real estate, user project, capital 
equipment, working capital, etc.). Real estate projects require 
different financial analysis than working capital or machinery and 
equipment projects. Applicants should ensure that both a significant 
equity commitment by the for-profit business exists and that the level 
of certainty of the end use of the property or project is sufficient to 
ensure the achievement of national objectives within a reasonable 
period of time.
    (iv) Establishment of Small Cities Grant Financing Terms. The 
amount of Small Cities grant assistance provided to a for-profit 
business ideally should be

[[Page 65980]]

limited to the amount, with appropriate repayment terms, sufficient to 
go forward without substituting Small Cities grant funds for available 
private debt or cash equity. The applicant should structure its 
repayment terms so that the business is allowed a reasonable rate of 
return on invested equity, considering the level of risk of the 
project. Equity funds generally should bear the greatest risk of all 
funds invested in a project.
    (v) Public Benefit Determination. The applicant's activities must 
meet the public benefit standards found in 24 CFR 570.209(b). 
Activities covered by these guidelines (subject to certain exceptions) 
must, in the aggregate, either:
    <bullet> Create or retain at least one full-time equivalent, 
permanent job per $35,000 of CDBG funds used; or
    <bullet> Provide goods or services to residents of an area, such as 
the number of low- and moderate-income persons residing in the areas 
served by the assisted businesses amounts to at least one low- and 
moderate-income person per $350 of CDBG funds used.
    (c) CDBG Assistance Must Minimize Business and Job Displacement. 
Each applicant will evaluate the potential of each economic development 
project for causing displacement of existing businesses and lost jobs 
in the neighborhood where the project is proposed to be located. When 
the grantee concludes that the potential exists to cause displacement, 
given the size, scope or nature of the business, then the grantee must, 
to the extent practicable, take steps to minimize such displacement. 
The project file must document the grantee's review conclusions and, if 
applicable, the steps the grantee will take to minimize displacement.
    (d) Section 105(a)(17) Requirements. Section 105(a)(17) of the 1974 
HCD Act requires that an activity assisted under that section achieve 
one of the following criteria:
    (i) Creates or retains jobs for low- and moderate-income persons 
(note that a project which meets the national objective of principally 
benefitting low- and moderate-income persons by creating or retaining 
jobs, 51 percent of which are for low- and moderate-income persons, 
will be deemed to have met this criterion without any additional 
documentation);
    (ii) Prevents or eliminates slums or blight (note that a project 
which meets the national objective of aiding in the prevention or 
elimination of slums or blight on an area basis will be deemed to have 
met this criterion without any additional documentation);
    (iii) Meets an urgent need (note that a project which meets the 
national objective of meeting community development needs having a 
particular urgency will be deemed to have met this criterion without 
any additional documentation);
    (iv) Creates or retains businesses owned by community residents;
    (v) Assists businesses that provide goods or services needed by and 
affordable to low- and moderate-income residents;
    (vi) Provides technical assistance to promote any of the activities 
under (i) through (v) of this subsection.
    (e) National Objectives. As previously stated in this NOFA, all 
CDBG-assisted activities must address one of the three broad national 
objectives. Since economic development projects usually result in new 
employment or the retention of existing jobs, these activities most 
likely would be categorized as principally benefitting low- and 
moderate-income persons in this manner. Such projects will be 
considered to benefit low- and moderate-income persons where the 
criteria of 24 CFR 570.208(a)(4) are met. HUD will consider an activity 
to qualify under this provision where the activity involves jobs at 
least 51 percent of which are taken by or made available to such 
persons, or retained by such persons. The extent to which the proposed 
project will directly address employment opportunities for low- and 
moderate-income persons in the applicant jurisdiction will be a primary 
factor in HUD's assessment of the proposed program.
    The application must contain adequate documentation to explain 
fully, and to support, the process that will be used to ensure that 
project(s) comply with the low- and moderate-income employment 
requirements. The documentation must be sufficient to show that the 
process has been developed and that program participants have agreed to 
adhere to that process. In determining whether the person is a low- and 
moderate-income person for these activities, it is the person's family 
income at the time the CDBG assistance is provided that is 
determinative. When making judgments concerning whether an individual 
qualifies as a low- and moderate-income person, both family size and 
the income of the entire family must be considered. This consideration 
is necessary because a ``low- and moderate-income person'' is defined 
as a member of a low- and moderate-income family.
    HUD will accept a written certification by a person of his or her 
family income and size to establish low- and moderate-income status. 
The certification may simply state that the person's family income is 
below that required to be low- and moderate-income in that area. The 
form for such certification must include a statement that the 
information is subject to verification.
    In addition to person-by-person income certifications discussed 
above, under section 105(c)(4) of the 1974 HCD Act, an employee may be 
presumed to be a low- and moderate-income person if the employee 
resides in a census tract where not less than 70 percent of the 
residents are low- and moderate-income persons, and a presumption of 
low- and moderate-income may also be made if the business is located in 
and/or the employee resides in a census tract (or block numbering 
group) where 20 percent of the residents are in poverty. The key 
consideration in this presumption is the location of the business or 
employee. The documentation to support the presumption must contain the 
location. (See 24 CFR 570.209(b)(2)(v) for more information on this 
subject.)
    In cases where an activity (e.g., a shopping center or a super 
market) provides goods and services to residents of an area, the low- 
and moderate-income objective may be met by the area benefit 
requirements at 24 CFR 570.208(a)(1). To document low and moderate 
income, 51 percent of the residents of the area or block numbering 
group must be low- and moderate-income persons.
    (f) Application Requirements. To the extent feasible, the material 
listed below should be submitted for economic development projects. The 
material should be submitted for each proposed activity, whether the 
proposed activity is presented as a separate project or as part of a 
project involving multiple activities. Since economic development 
projects are rated against each other, the more completely these 
submission requirements are met, the greater the potential exists for 
enhancing the impact score of the project.
    (i) A letter from each appropriate developmental entity which 
includes at least the following information:
    a. A detailed physical description of the project with a schedule 
of events and maps or drawings as appropriate.
    b. The estimated costs for the project, including any working 
capital requirements.
    c. A discussion of all financing sources, including the need for 
CDBG, the terms of the CDBG assistance, and the proposed lien 
structure. The amount, source, and nature of any equity investment(s) 
must also be

[[Page 65981]]

provided as well as a commitment to invest the equity.
    d. A discussion of employment impact which includes a schedule of 
newly created positions. The schedule should identify the number, 
salary and skill level of each permanent position to be created. If 
jobs are made available to low- and moderate-income persons, the 
applicant must also demonstrate and document how persons from low- and 
moderate-income households will be accorded first consideration for 
employment opportunities.
    e. A discussion of all appropriate feasibility issues including, 
but not limited to: site control, zoning, public approvals and permits, 
impact fees, corporate authorizations, infrastructure, environment and 
relocation.
    f. An analysis and summary of market and other data which supports 
the anticipated success of the project.
    (ii) A development budget showing all costs for the project, 
including professional fees and working capital.
    (iii) Documentation to support project costs. Documentation 
generally should be from a third-party source and be consistent with 
the following guidelines:
    a. Acquisition costs should be supported by an appraisal.
    b. Construction/renovation costs should be certified by an 
architect, engineer or contractor. Use of Federal Prevailing Wage Rates 
should be cited where applicable.
    c. Machinery and equipment costs should be supported by vendor 
quotes.
    d. Soft costs (e.g., legal, accounting, title insurance) need be 
substantiated only where such costs are anticipated to be abnormally 
high.
    (iv) Letters from all financing sources discussing (at a minimum) 
the amount and terms of the proposed financing, and the current status 
of the application for funding.
    (v) Historical financial data of the development entity, preferably 
for the last 3 years. This information may be submitted under separate 
cover with confidentiality requested. It is recognized that historical 
financial data may be unavailable or inappropriate for some projects 
(e.g., start-up companies and real estate transactions).
    (vi) A 2- to 5-year cash flow pro forma with accompanying notes 
citing basic assumptions.
    (vii) The applicant's assessment of the project's consistency with 
the CDBG program eligibility requirements and standards for evaluating 
project cost, financial requirements and public benefit.
    d. Fair Housing and Equal Opportunity Evaluation. Documentation for 
the 50 points for these items is the responsibility of the applicant. 
Claims of outstanding performance must be based upon actual 
accomplishments. Clear, precise documentation will be required. Maps 
must have a census tract or block numbering area (BNA), and they must 
be in accordance with the 1990 Census data. Additionally, maps must 
identify the locations of areas with minorities by census tract or BNA. 
If there are no minority areas, state so on the map. Only population 
data from the 1990 Census will be acceptable for purposes of this 
section.
    Please note that a ``minority'' is a person belonging to, or 
culturally identified as, a member of any one of the following racial/
ethnic categories: Black, Hispanic, Asian or Pacific Islander, and 
American Indian or Alaskan Native. For the purposes of this section, 
the separate category of ``women'' is not considered a minority.
    Counties claiming points under this criterion must use county-wide 
statistics (excluding entitlement communities). In the case of joint 
applications, points will be awarded based on the performance of the 
lead entity only.
    The following factors will be used to judge outstanding performance 
in these areas. Please note that points for outstanding performance may 
be claimed under each criterion:
    (1) Housing Achievements (40 points total).
    (a) Provision of Fair Housing Choice (20 points)
    (i) HUD will consider the extent to which the applicant 
demonstrates that it has provided housing assistance for low and 
moderate income families that results in housing choice in areas 
outside of minority or low- and moderate income concentration. Such 
actions may include the construction or rehabilitation of housing in 
areas outside of minority or low and moderate income concentration; the 
provision of Section 8 Existing Certificate or Voucher assistance in 
ways that lessen concentration of such assisted units within minority 
and low- and moderate income concentrated areas; or the provision of 
direct homeownership assistance such as homeownership counseling, 
downpayment assistance, or first-time homebuyer assistance. If 
applicable, the applicant may use a map to show the general location(s) 
of individual projects and/or housing occupied by Section 8 Existing 
Program participants.
    (ii) Points also may be awarded for efforts which enable low- and 
moderate-income persons to remain in their neighborhood when such 
neighborhoods are experiencing revitalization and substantial 
displacement as a result of private reinvestment. Applicants requesting 
points under this criterion would not need to meet the requirements of 
paragraphs (a) and (b) in order to receive points. Points will be 
awarded where more than one-half of the families displaced were able to 
remain in their original neighborhood through the assistance of the 
applicant. Applicants must show that:
    <bullet> The neighborhood experienced revitalization;
    <bullet> The amount of displacement was substantial;
    <bullet> Displacement was caused by private reinvestment;
    <bullet> Low- and moderate-income persons were permitted to remain 
in the neighborhood as a result of action taken by the applicant.
    If the community is inhabited predominantly by persons who are 
members of minority and/or low-income groups, points will be awarded 
where there is a balanced distribution of assisted housing throughout 
the community.
    (b) Implementation of a Fair Housing Strategy that Affirmatively 
Furthers Fair Housing (20 points). The applicant must demonstrate that 
it is implementing or plans to implement a Fair Housing Strategy on its 
own or demonstrate that it does or plans to participate in a county/
State or regional analysis of impediments to fair housing choice. A 
fair housing strategy must include the following elements:
    <bullet> Local compliance activities;
    <bullet> Educational programs to enhance the clarity and 
understanding of the community's fair housing policy. For communities 
with few or no minorities, this should include publication in the 
surrounding communities of the applicant's policy of fair housing for 
minorities and persons with disabilities;
    <bullet> Assistance to minority families; and
    <bullet> Special programs (e.g., utilization of Community Housing 
Resource Board (CHRB) Programs, efforts to encourage local realtors to 
enter into voluntary agreements to encourage equal access to financial 
institutions, etc.).
    <bullet> Assistance to minority families through mobility 
counseling programs and other activities that encourage such families 
to pursue such housing opportunities outside of minority concentrated 
areas;
    <bullet> Special programs targeted at lenders, builders, realtors, 
and other housing industry groups;
    <bullet> Affirmative marketing strategies targeted at those groups 
in the eligible population considered least likely to apply without 
special outreach.

[[Page 65982]]

    The fair housing strategy must include goals for each of the above 
elements. The date of adoption or development of the strategy should be 
indicated, as well as the date proposed activities will be or have been 
implemented.
    (2) Entrepreneurial Efforts and Local Equal Opportunity 
Performance. HUD encourages the use of minority contracting, although 
it will not be used as an evaluation factor in this NOFA.
    (3) Equal Opportunity Employment. (10 points) Under this factor, 
the applicant must document that its percentage of minority, permanent 
full-time employees is greater than the percentage of minorities within 
the county or the community, whichever is higher. Applicants with no 
full-time employees may claim points based on part-time employment 
provided that they document that the only permanent employment is on a 
part-time basis.
    e. Welfare to Work Initiative. (5 points) Five bonus points will be 
added to proposals which support the Welfare to Work Initiative. These 
points will be added to those proposals that include activities which 
will provide assistance to persons moving from welfare to work. 
Examples of such activities are: jobs, day care slots, training or 
transportation assistance.
    4. Final Selection. The total points received by a project for all 
of the selection factors are added, and the project is ranked against 
all other projects from all applications, regardless of the program 
areas in which the projects were rated. The highest ranked projects 
will be funded to the extent funds are available. If an applicant 
submits two applications under this NOFA, it may receive up to two 
single grants in the amounts of the project or projects applied for in 
those applications which were ranked high enough to be funded. In the 
case of ties at the funding line, HUD will use the following criteria 
in order to break ties:
    <bullet> The project receiving the highest program impact rating 
will be funded;
    <bullet> If tied projects have the same program impact rating, the 
project having the highest combined score on the needs factors will be 
funded;
    <bullet> If tied projects have the same program impact ratings and 
equal needs factor scores, the project having the highest score on the 
percent of persons in poverty needs factor will be funded; and
    <bullet> If tied projects have the same program impact ratings, 
equal needs factor scores, and an equal percent of persons in poverty 
needs factor score, the application having the most outstanding 
performance in fair housing and equal opportunity will be funded.
    As soon as possible after the rating and ranking process has been 
completed, HUD will notify all applicants regarding their rating scores 
and funding status. Thereafter, applicants may contact HUD to discuss 
scores or any aspects of the selection process.

II. Application and Funding Award Process

A. Obtaining Applications

    All nonentitled communities in New York State may obtain 
application kits through HUD's New York or Buffalo Offices. The 
addresses for HUD's Buffalo and New York offices are:

Department of Housing and Urban Development, Office of Community 
Planning and Development, Attention: Small Cities Coordinator, 26 
Federal Plaza, New York, NY 10278-0068, Telephone (212) 264-2885
Department of Housing and Urban Development, Community Planning and 
Development Division, Attention: Small Cities Coordinator, 465 Main 
Street, Lafayette Court, Buffalo, NY 14203, Telephone (716) 551-5768

B. Submitting Applications

    A final application must be submitted to HUD no later than March 2, 
1998. A final application includes an original and two photocopies. 
Final applications may be mailed, and if they are received after the 
deadline, must be postmarked no later than midnight, March 2, 1998. If 
an application is hand-delivered to the New York or Buffalo Offices, 
the application must be delivered by 4:00 p.m. on the application 
deadline date. Applicants in the counties of Sullivan, Ulster, Putnam, 
and in nonparticipating jurisdictions in the urban counties of 
Dutchess, Orange, Rockland, Westchester, Nassau, and Suffolk should 
submit applications to the New York Office. All other nonentitled 
communities in New York State should submit their applications to the 
Buffalo Office. Applications must be submitted to the HUD office at the 
addresses listed above in section II.A.
    The above-stated application deadline is firm as to date and hour. 
In the interest of fairness to all competing applicants, HUD will treat 
as ineligible for consideration any application that is not received 
on, or postmarked by March 2, 1998. Applicants should take this 
practice into account and make early submission of their materials to 
avoid any risk of loss of eligibility brought about by unanticipated 
delays or other delivery-related problems.

C. The Application

1. Application Requirements
    An application for the Small Cities Program CDBG Grants is made by 
the submission of:
    (a) A completed HUD Form 4124, including HUD Forms 4124.1 through 
4124.6 and all appropriate supporting material;
    (b) A completed Standard Form 424;
    (c) A signed copy of certifications required under the CDBG 
Program, including, but not limited to the Drug-Free Workplace 
Certification, and the Certification Regarding Lobbying pursuant to 
section 319 of the Department of Interior Appropriations Act for Fiscal 
Year 1990 (31 U.S.C. 1352), generally prohibiting use of appropriated 
funds, and, if applicable, Disclosure of Lobbying Activities (SF-LLL);
    (d) Form HUD-2880, Applicant/Recipient Disclosure/Update Report, as 
required under subpart A of 24 CFR part 4 (Accountability in the 
Provision of HUD Assistance); and, if applicable,
    (e) Abbreviated Consolidated Plan.
    (f) A Section 108 Loan Guarantee application or request, if 
applicable, consisting of one of the following:
    (1) A formal application for Section 108 Loan Guarantee(s), 
including the documents listed at Sec. 570.704(b);
    (2) A brief description of a Section 108 Loan Guarantee 
application(s) to be submitted within 60 days (with HUD reserving the 
right to extend such period for good cause on a case-by-case basis) of 
a notice of CDBG Small Cities grant award. (The CDBG grant award will 
be conditioned on approval of actual Section 108 Loan Guarantee 
commitments within a stated period of time.) This description must be 
sufficient to support the basic eligibility of the proposed project or 
activities for Section 108 assistance; or
    (3) If applicable, a copy of a Section 108 Loan Guarantee approval 
document with grant number and date of approval.
2. Streamlined Application Requirements for Certain Applicants
    Single Purpose applications submitted under the FY 1996 NOFA but 
not selected for funding will be reactivated for consideration under 
this NOFA, if the applicant notifies HUD in writing by March 2, 1998 
that the applicant wishes the prior application to be considered in 
this competition. Applications which are reactivated may be updated, 
amended or supplemented by the applicant provided that such

[[Page 65983]]

amendment or supplementation is received no later than the due date for 
applications under this NOFA. If there is no significant change in the 
application involving new activities or alteration of proposed 
activities that will significantly change the scope, location or 
objectives of the proposed activities or beneficiaries, there will be 
no further citizen participation requirement to keep the application 
active for a succeeding round or competition.
    D. Funding Award Process. In accordance with section 102 of the HUD 
Reform Act and HUD's regulation in 24 CFR part 4, HUD will notify the 
public by notice published in the Federal Register of all award 
decisions made by HUD under this competition. In accordance with the 
requirements of section 102 of the Reform Act and HUD's regulations at 
24 CFR part 4, HUD also will ensure that documentation and other 
information regarding each application submitted under this NOFA is 
sufficient to indicate the basis upon which assistance was provided or 
denied. Additionally, in accordance with Sec. 4.5(b) of these 
regulations, HUD will make this material available for public 
inspection for a period of 5 years, beginning not less than 30 calendar 
days after the date on which assistance is provided.

III. Technical Assistance

    Prior to the application deadline, the Buffalo and New York offices 
will provide technical assistance on request to individual applicants, 
including explaining and responding to questions regarding program 
regulations, and defining terms in the application package. In 
addition, HUD will conduct informational meetings around the State to 
discuss the Small Cities Program, and will conduct application 
workshops in conjunction with these meetings. Please contact the New 
York or Buffalo Office for further information regarding these 
meetings. Application kits will be available at these meetings, as well 
as from the New York or Buffalo Offices. In order to ensure that the 
application deadline is met, it is strongly suggested that applicants 
begin preparing their applications immediately and not wait for the 
informational meetings.

IV. Checklist of Application Submission Requirements

    The following checklist is intended to aid applicants in 
determining whether their application is complete:

Application Completeness Checklist

Applicant:-------------------------------------------------------------

Amount Requested $-----------------------------------------------------
    1. Is amount of funds requested within established maximum?
    2. Part I--Needs Description (HUD Form 4124.1).

a. Program Area
    ______ Housing
    ______ Target Area
    ______ Nontarget Area
    ______ Public Facilities
    ______ Economic Development (If an ``appropriate'' analysis is 
required but is not included, the application cannot be rated.)
b. Is description of community development needs included in 
application?

    3. Part II--Community Development Activities (HUD Form 4124.2).
    a. Has national objective been identified for each activity? b. 
Will 70 percent of grant funds primarily benefit low-and moderate-
income persons? (If not, the application cannot be rated.)
    4. Part III--Impact Description (HUD Form 4124.3).
    5. Part IV--Outstanding Performance (HUD Form 4124.4).
    6. Part V--Program Schedule (HUD Form 4124.5).
    7. Part VI--Maps.
    a. Location of proposed activities. (Applicants must show the 
boundaries of the defined area or areas.)
    b. Location of areas with minorities by census tract. (If there 
are no minority areas, state so on the map.)
    c. Housing conditions if project involves housing 
rehabilitation. (Number and location of each standard and 
substandard unit should be clearly identified.)
    8. a. Is Standard Form 424 complete?

    Yes    No

    b. Is original signature on at least one copy?

    Yes    No

    9. Is Certification signed with original signature?

    Yes    No

    10. Has the abbreviated consolidated plan been prepared and 
submitted to HUD (or included with this application)?
    11. Form HUD-2880, Application/Recipient Disclosure/Update 
Report.
    12. Do proposed economic development activities meet the public 
benefit standards as defined in 24 CFR 570.209?

V. Corrections to Deficient Applications

    Under no circumstances will HUD accept from the applicant 
unsolicited information regarding the application after the application 
deadline has passed.
    HUD may advise applicants of technical deficiencies in applications 
and permit them to be corrected. A technical deficiency would be an 
error or oversight which, if corrected, would not alter, in either a 
positive or negative fashion, the review and rating of the application. 
Examples of curable technical deficiencies would be a failure to submit 
the proper certifications or failure to submit an application 
containing an original signature by an authorized official. Situations 
not considered curable would be, for example, a failure to submit 
program impact descriptions.
    HUD will notify applicants in writing of any curable technical 
deficiencies in applications. Applicants will have 14 calendar days 
from the date of HUD's correspondence to reply and correct the 
deficiency. If the deficiency is not corrected within this time period, 
HUD will reject the application as incomplete.
    Applicants should note that if an abbreviated consolidated plan is 
not submitted, the failure to submit it in a timely manner is not 
considered a curable deficiency.

VI. Findings and Certifications

Paperwork Reduction Act Statement

    The information collection requirements related to this CDBG 
program have been approved by the Office of Management and Budget (OMB) 
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520), and have been assigned OMB approval number 2506-0020. An agency 
may not conduct or sponsor, and a person is not required to respond to, 
a collection of information unless the collection displays a valid 
control number.

Environmental Impact

    This NOFA provides funding under, and does not alter environmental 
requirements of, a regulation previously published in the Federal 
Register. Accordingly, under 24 CFR 50.19(c)(5), this NOFA is 
categorically excluded from environmental review under the National 
Environmental Policy Act. The environmental review provisions of this 
regulation are in 24 CFR 570.604.

Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that this NOFA 
will not have substantial, direct effects on States, on their political 
subdivisions, or on their relationship with the Federal Government, or 
on the distribution of power and responsibilities between them and 
other levels of government. While the NOFA will provide financial 
assistance to the Small Cities Program of New York State, none of its 
provisions will have an effect on the relationship between the Federal 
Government and New York State, or the State's political subdivisions.

[[Page 65984]]

Accountability in the Provision of HUD Assistance

    See Section I.A.4. of this NOFA.

Prohibition Against Lobbying Activities

    Applicants for funding under this NOFA are subject to the 
provisions of section 319 of the Department of Interior and Related 
Agencies Appropriation Act for Fiscal Year 1991 (31 U.S.C. 1352) (the 
Byrd Amendment) and to the provisions of the Lobbying Disclosure Act of 
1995 (Pub. L. 104-65; December 19, 1995).
    The Byrd Amendment, which is implemented in regulations at 24 CFR 
part 87, prohibits applicants for Federal contracts and grants from 
using appropriated funds to attempt to influence Federal executive or 
legislative officers or employees in connection with obtaining such 
assistance, or with its extension, continuation, renewal, amendment or 
modification. The Byrd Amendment applies to the funds that are the 
subject of this NOFA. Therefore, applicants must file a certification 
stating that they have not made and will not make any prohibited 
payments and, if any payments or agreement to make payments of 
nonappropriated funds for these purposes have been made, a form SF-LLL 
disclosing such payments must be submitted. The certification and the 
SF-LLL are included in the application package.
    The Lobbying Disclosure Act of 1995, which repealed section 112 of 
the HUD Reform Act and resulted in the elimination of the regulations 
at 24 CFR part 86, requires all persons and entities who lobby covered 
executive or legislative branch officials to register with the 
Secretary of the Senate and the Clerk of the House of Representatives 
and file reports concerning their lobbying activities.

Prohibition Against Advance Information on Funding Decisions

    HUD's regulations implementing section 103 of the Department of 
Housing and Urban Development Reform Act of 1989 (42 U.S.C. 3537a), 
codified in 24 CFR part 4, apply to this funding competition. The 
regulations continue to apply until the announcement of the selection 
of successful applicants. HUD employees involved in the review of 
applications and in the making of funding decisions are limited by the 
regulations from providing advance information to any person (other 
than an authorized employee of HUD) concerning funding decisions, or 
from otherwise giving any applicant an unfair competitive advantage. 
Persons who apply for assistance in this competition should confine 
their inquiries to the subject areas permitted under 24 CFR part 4.
    Applicants or employees who have ethics related questions, such as 
whether particular subject matter can be discussed with persons outside 
HUD, should contact the HUD Office of Ethics (202) 708-3815. (This is 
not a toll-free number.)

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance Number for this program 
is 14.219.

    Date: December 11, 1997.
Fred Karnas, Jr.,
Deputy Assistant Secretary for Economic Development.
[FR Doc. 97-32851 Filed 12-12-97; 9:27 am]
BILLING CODE 4210-29-P