Community Development Block Grant – Neighborhood Revitalization (CDBG-NR) program

Community Development Block Grant – Neighborhood Revitalization (CDBG-NR) program is sponsored by U.S. Department of Housing and Urban Development (administered by N. C. Department of Commerce's Rural Economic Development Division).

Supports housing, infrastructure, and community improvement projects benefiting low- and moderate-income residents. Requires at least 70% of funds to be used for activities serving low- and moderate-income households.

Rural Economic Development Division/State CDBG Program 301 N. Wilmington Street, 4 th Floor # Community Development Block Grant # Neighborhood Revitalization Program (CDBG -NR) # with Rural Community Development Set -Aside # Program Guidelines │ Application Please submit applications by 4:00 pm on October 13 , 2026 . All applications must be sent by USPS mail or an overnight service.

Hand -delivered applications will not be accepted. CDBG Neighborhood Revitalization (CDBG -NR) Program CDBG Neighborhood Revitalization (CDBG -NR) Program ................................ ................................

..... 2 PROGRAM GUIDELINES ................................ ................................

................................ ............................... 5 INTRODUCTION ................................

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............... 6 NATIONAL OBJECTIVES ................................ ................................

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6 PROJECTS WITH MULTIPLE ACTIVITIES ................................ ................................ ................................

...... 7 THRESHOLD REQUIREMENTS ................................ ................................

................................ ......................... 7 AWARD AMOUNTS ................................

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......... 8 GRANT PERIOD AND EXTENSIONS ................................ ................................

................................ ............... 8 MATCHING FUNDS REQUIREMENT ................................

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8 ALLOWABLE PROJECTS ................................ ................................ ................................

................................ .. 8 DESCRIPTION OF PROJECT CATEGORIES ................................

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8 Community Revitalization Activities Description ................................ ................................ ...........................

8 Housing Rehabilitation Activities Description ................................ ................................ ......................

9 REQUIREMENTS IMPACTING ALL CATEGORIES WITH HOUSING ACTIVITIES ................................ .... 10 Eligible Properties for Rehabilitation ................................

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10 Scattered -Site Housing Defined ................................ ................................ ................................

............... 10 Public Facilities Activities Defined ................................ ................................

................................ ....... 10 Housing Development/New Construction of Housing Defined ................................

...................... 11 Single -Family Homeownership Developments ................................ ................................

............................ 11 Multi -Family Rental Housing Developments ................................ ................................

.......................... 11 Eligible Developers for Housing Development Projects ................................ ................................

.. 12 Water and Sewer Connections to Existing Housing ................................ ................................

.......... 13 Basic Criteria for Water and Sewer Connections ................................ ................................

.......................... 13 Eligible Activities for Water and Sewer Connections ................................ ................................

................... 13 Benefit Requirements for Water and Sewer Connections ................................ ................................

............ 14 Housing Distribution Plan for Housing Rehabilitation ................................ ................................

........ 14 Housing Selection Committee Responsibilities ................................ ................................

................. 14 Housing Selection Committee Guidance ................................ ................................

.......................... 14 CDBG Financial Assistance ................................ ................................

................................ ................... 17 Housing Financial Design Model ................................

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17 CDBG Applicable Notices and Bulletins ................................ ................................ .............................

18 Clarification of Program Activity Terms (Bulletin 10 -2) ................................ ................................ ....

18 Note and Deed of Trust Requirements (Bulletin 10 -9) ................................ ................................ ......

18 LEAD -BASED PAINT REQUIREMENTS ................................ ................................ ................................

........... 19 REDD Lead -Based Paint Requirements ................................ ................................

............................... 19 PRE -AWARD AND ADMINISTRATION COSTS ................................ ................................

............................ 19 LOCAL GOVERNMENT ROLES AND RESPONSIBILITIES ................................ ................................

............. 19 USE OF AN EXPERIENCED CDBG ADMINISTRATOR ................................ ................................

................. 20 PROGRAM AMENDMENTS, BUDGET AMENDMENTS AND BUDGET REVISIONS ................................ ....

20 EVALUATION CRITERIA ................................ ................................ ................................

................................ 20 Pro gram Purpose, Project Design, and Performance Measure & Evaluation .............................. 21 Project Feasibility, Sustainability, and Readiness ................................

................................ ............. 21 Project Need, Market Demand, and Benefit ................................

................................ ..................... 21 Capacity, Experience, and Organization Structure ................................

................................ ......... 22 PUBLIC HEARINGS ................................

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........ 23 COMPLIANCE REQUIREMENTS (Revised in FY2024) ................................ ................................

............... 23 APPLICATION PROCESS AND SUBMISSION REQUIREMENTS ................................ ................................

.. 30 PROGRAM CONTACT ................................ ................................

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31 SAMPLE Citizen Participation Template ................................ ................................ ................................

.. 31 CITIZEN PARTICIPATION PLAN ................................ ................................

................................ ................... 31 SAMPLE RESOLUTION ................................

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.... 33 INCOME and NEED SURVEY GUIDANCE and SAMPLE SURVEY ................................ .............................

34 CDBG Neighborhood Revitalization APPLICATION CHECKLIST ................................ ............................ 43 A.

Application Submission Requirements and Process Adherence ................................ .......................... 43 B.

Required Attachments for All CDBG Neighborhood Revitalization Projects ................................ ........ 43 APPLICATION SUMMARY – 2026 CDBG Neighborhood Revitalization Program ................................

. 46 CDBG Neighborhood Revitalization PROGRAM CATEGORY SELECTION FORM ................................ .................

47 Housing Development ................................ ................................ ................................

................................ . 49 □ Single -Family Homeownership Developments ................................

................................ ......................... 49 □ Multi -Family Rental Housing Developments ................................

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49 Water and Sewer Connections to Existing Housing ................................ ................................ ......................

49 Eligible Activities for Water and Sewer Connections ................................ ................................ ...................

49 PUBLIC INFORMATION FOR CDBG NEIGHBORHOOD REVITALIZATION ................................ ............................. 50 PROJECT DESCRIPTION - CDBG Neighborhood Revitalization ................................

................................ ............ 53 SOURCES AND USES OF FUNDS CHART ................................

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54 PROJECT BUDGET –NEIGHBORHOOD REVITALIZATION ................................ ................................ ..........

55 CDBG NEIGHBORHOOD REVITALIZATION BENEFIT: LOW AND MODERATE INCOME ........................... 56 CDBG -NR Benefit: Low and Moderate -Income ................................ ................................

................................ . 56 COMMUNITY DEVELOPMENT PLAN ................................

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57 HOUSING DISTRIBUTION PLAN (Housing Rehabilitation Only) ................................ ............................. 58 CONFLICT OF INTEREST CHECKLIST ................................

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59 FEDERAL REQUIREMENTS AND CERTIFICATIONS ................................ ................................ ......................

60 Disclosure Report Instructions ................................ ................................ ................................

................... 62 DISCLOSURE REPORT ................................ ................................

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65 STATE CDBG PROGRAM REGULATIONS ................................ ................................ ................................

.... 67 DISCLOSURE OF CIVIL RIGHTS COMPLAINTS/LAWSUITS ................................ ................................

......... 71 Instructions for Debarment Certifications ................................ ................................

............................... 72 CERTIFICATIONS REGARDING DEBARMENT, SUSPENSION AND OTHER RESPONSIBILITY MATTERS .. 73 SAMPLE: Implementation Schedule ................................

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74 ACTIVITIES IMPLEMENTATION SCHEDULE -SAMPLE ................................ ................................ .................

74 ACTIVITIES IMPLEMENTATION SCHEDULE ................................ ................................ ................................

.. 74 ACTIVITY NUMBERS AND CODES ................................ ................................

................................ ............... 75 ACTIVITY CODE DEFINITIONS ................................

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77 ACTIVITY PERFORMANCE MEASURES ................................ ................................ ................................

........ 78 HUD IDIS: ACCOMPLISHMENTS & BENEFICIARIES FORM ................................ ................................

........ 83 PROGRAM GUIDELINES INTRODUCTION The Community Development Block Grant Neighborhood Revitalization Program (CDBG -NR) ) will offer a non -entitlement municipality or county the opportunity to tailor a project to meet the housing and community development needs specific and most critical to their locality .

The CDBG Neighborhood Revitalization Program incorporates several previous Rural Economic Development Division (REDD) Community Development Block Grant (CDBG) programs and activities such as Scattered Site Housing and North Carolina received $46,162,390 in CDBG funds for the 202 5 allocation. Of this amount, approximately $12. 28 million will be made available for the 2025 CDBG Neighborhood Revitalization Program.

The state makes these funds available through awarding grants to non -entitlement governments throughout North Carolina. The CDBG -NR program will include a set -aside of approximately 5 million for the Rural Community Development Fund (RCDF) projects. These funds will not require a housing -focused activity and are available to the 40 most economically distressed counties (Tier 1) and its municipalities only.

A list of the 2025 Tier 1 counties is located on the NC Commerce website at www. commerce. nc.

gov . Use the Application Summary to request the funding amount and clearly state the project is for the RCDF. The CDBG Neighborhood Revitalization Program will support the three livability principles that help guide sustainability and resiliency throughout areas that receive funding.

Regardless of the program activity or activities local governments pursue, CDBG Neighborhood Revitalization Program projects must incorporate at least one of the following three livability principles as an area of focus: # NC Neighborhood Revitalization 3 Livability Principles • Promote equitable, affordable housing .

Expand location and energy -efficient housing choices for people of all ages, incomes, races, and ethnicities to increase mobility and lower the combined cost of housing and transportation. • Support existing communities .

Target federal funding toward existing communities - through strategies like transit -oriented, mixed -use development, and land recycling - to increase community revitalization and the efficiency of public works investments and safeguard rural landscapes. • Value communities and neighborhoods . Enhance the unique characteristics of all communities by investing in healthy, safe, and walkable neighborhoods - rural, urban, or suburban.

Since the CDBG Neighborhood Revitalization Program uses Community Development Block Grant (CDBG) funds, all project activities must meet at least one of three national objectives to be eligible.

The three national objectives in the CDBG program are: (1) benefiting low -and -moderate income (LMI) persons; ( 2) preventing or eliminating slums or blight; and (3) meeting other community development needs that are deemed to be urgent because of existing conditions pose a serious and immediate threat to the health and welfare of the community, and other financial resources are not available to meet the need.

Please note that CDBG -NR activities generally will not qualify for the urgent need national objective . # National Objectives Defined: 1. Benefit to LMI persons : Benefit to LMI persons may be either direct or area -wide benefit.

□ Direct benefits are those activities that serve certain persons (e.g., housing rehabilitation). □ Area -wide benefits are those activities that benefit communities and are not participant specific (e.g., neighborhood parks). Please note that applicants must ensure that both area -wide benefit at least 51% low and moderate - income (LMI) persons, and direct activities benefit 100% low and moderate -income (LMI) persons.

If proposing economic development activities, 60% of benefici aries must be LMI. Additionally, applicants must ensure that CDBG -NR Program projects do not benefit moderate -income persons to the exclusion □ Slum or Blight: The elimination of slum and blighting conditions may be undertaken on an area or spot basis. Activities on an area basis must have an area officially designated by the grantee.

Activities to be assisted with CDBG funds must be limited to those that addr ess the conditions which contribute to the deterioration of the area. Activities on a spot basis (those outside an officially designated slum and blight area) are limited to acquisition, clearance, relocation, historic preservation, and rehabilitation of buildings to the extent that it is causing detriment to public health and safety.

Local governments are encouraged to certify areas under the North Carolina Redevelopment Law (G. S. 160A.

500).

Please note that slum or blight activities proposed in the CDBG -NR Revitalization grant application are only eligible if there is a redevelopment plan for that space to be completed within the life cycle (30 months) of this grant (e.g., new and affordable housing development, community garden, community park, etc.) In addition, slums, or blight activities with a plan for redevelopment must benefit LMI # Low - and Moderate -Income (LMI) Households Defined: Low -and -moderate -income households in metropolitan areas are defined as those with incomes equal to or less than eighty percent (80%) of the median family income of the metropolitan area.

For families residing in non -metropolitan areas, low and moderate i ncome is defined as eighty percent (80%) or less of the median income of the county. “202 6 or the most current Income Limits,” published by the Department of Housing and Urban Development (HUD), defines income limits for low and moderate - income families per family size for non -metropolitan and metropolitan areas of the state.

The document is available on the HUD Exchange Website using this link https://www. huduser. gov/portal/datasets/il.

html . ## PROJECTS WITH MULTIPLE ACTIVITIES Applicants may complete projects that include multiple activities in the CDBG -NR Program . Excluding administration, each activity funded must meet a national objective.

There are instances when activities can qualify under more than one national objective category. When this happens applicants must select Note : Proposed activities that fail to meet a national objective and/or program requirement may result in REDD eliminating the activity from the project and disqualifying the project for funding.

Threshold requirements address the minimum expectations pertaining to the application process, submission requirements, and minimum program requirements.

The Rural Economic Development Division (REDD) will not consider any CDBG -NR Program applications for competition if one or more of the following requirements are not met: Application will be deemed ineligible for the following reasons : • Application is physically received by the REDD past the deadline; • Applicant is not an eligible non -entitlement local government; • Applicant did not submit two complete original applications bound as instructed; • The Application Summary form in each application was not completed and signed by the chief elected official or another documented authorized certifying officer; • All required attachments were not included in the application; • All or some identified eligible activities in the application did not address a national objective; • The project does not include housing and housing -related activities; • Previous CDBG grants were not administered in compliance with applicable regulations, and all monitoring and audit findings on closed or open grants were not resolved; and • Applicant or identified sub -recipient appears on the Federal or State Suspension of Funds list.

Note: A waiver may be granted by the NC Department of Commerce if current funding including the request exceeds $1,250,000 in applications for local governments in any of the CDBG categories and demonstration programs except Urgent Needs, Contingency, Coro navirus, Neighborhood Revitalization, and Capacity Building grants. All non -entitlement municipalities are eligible to receive State CDBG funds.

Entitlement communities receive funds directly from HUD. North Carolina's 24 entitlement municipalities are: Asheville, Burlington, Cary, Chapel Hill, Charlotte, Concord, Durham, Fayetteville, Gastonia, Goldsboro, Greensboro, Greenville, Hickory, High Point, Jacksonville, Kannapolis, Lenoir, Morganton, New Bern, Raleigh, Rocky Mount, Salisbury, Wilmington, and Winston -Salem.

In addition, all counties are eligible to receive State CDBG funds except Mecklenburg County, Wake County, Union County, and Cumberland County, which have been designated by HUD as urban entitlement counties. As entitlement counties, neither the counties nor their municipalities are eligible for Small Cities funding, except for the towns of Holly Springs and Linden.

For the 2025 CDBG -NR round, projects that have or are seeking Low -Income Housing Tax Credits and/or are restoring housing in storm impacted areas may be considered for up to $5 million . Please discuss the proposed project with the CDBG Director or CDBG Section Chief to confirm eligibility prior to the ## GRANT PERIOD AND EXTENSIONS The grant period is 30 months for the CDBG Neighborhood Revitalization Program projects .

Applicants should allow up to four months for start -up and two months for close -out within the 30 months. Extensions to milestones during the grant period must be requested and will only be approved based on circumstances beyond the grantee’s control o r a change in the grant administrator. ## MATCHING FUNDS REQUIREMENT The CDBG -NR Program does not have a matching fund requirement; however, leverage is encouraged.

CDBG -NR activities must be based on need or needs substantiated by the local government applicant. Each activity must meet one of following two national objectives: low -and -moderate -income (LMI), or elimination of area -wide/spot slum and blight. Since the State must meet a 70% low and moderate - income requirement for its yearly allocation from HUD, most single activity projects will need to meet the LMI national objective.

Please note that proposed projects funded by the CDBG -NR must consist of housing and housing - related activities to be completed within the life cycle of the grant (30 months). ## DESCRIPTION OF PROJECT CATEGORIES Community Revitalization Activities Description The primary purpose of Community Revitalization activities is to revitalize an area, through improvements, preservation, or development in a residential neighborhood.

Eligible Community Revitalization activities include: Infrastructure and public improvements that support existing housing in the designated area (e.g., streets, sidewalks/pedestrian ways, curbs and gutters, parks, playgrounds, greenways, water and sewer lines, flood and drainage improvements, and trees).

Note: The community revitalization area must be defined by boundaries that are clearly defined and mapped in the CDBG -NR application. At least two needs in the area must be identified with housing as one need .

All housing activities must benefit 100% LMI persons or meet the slum or blight national Please note that slum or blight activities proposed in the CDBG -NR application are only eligible if there is a redevelopment plan for that space to be completed within the lifecycle (30 months) of this grant (e.g., new and affordable housing development, c ommunity garden, community park, etc.) In addition, slum, or blight activities with a plan for redevelopment must benefit LMI households.

Housing Rehabilitation Activities Description A. Rehabilitation - The purpose of rehabilitation is to take an existing unit and bring it up to the required standards set by HUD and REDD. To qualify as rehabilitation, parts of the existing house must be used in the process.

B. Clearance/Remediation - Clearance, demolition, and removal of buildings and improvements, including movement of structures to other sites and remediation of known or suspected environmental contamination related to rehabilitation activities. (Please note that this activity must be directly tied to a housing activity to be completed within the 30 -month grant period.)

This activity is eligible if it is determined that the housing unit cannot be rehabilitated. C. Relocation - Relocation payments and other assistance for temporarily relocated individual families related to rehabilitation activities.

(Please note that this activity must be directly tied to a housing rehabilitation activity to be completed within the 30 months gr ant timeline.) D. Substantial rehabilitation - Projects are defined as the ones that have rehabilitation costs above $72,000 per unit or $70 per square foot including Lead Based Paint treatment costs and any other additional eligible costs associated with substantial rehabilitation projects.

Grantees are required to submit such projects to REDD for prior approval. E. Reconstruction.

Reconstruction is defined as the rebuilding of a structure on the same lot in substantially the same manner. Reconstruction will be used when high cost (lead base paint cost, high building material cost, etc.) makes rehabilitation not feasible and replaci ng it on the same site. F.

Replacement housing - Replacement Low/Moderate -Income units may be provided by any government agency or private developer but, only after it is determined that rehabilitation, substantial rehabilitation, or reconstruction on the same lot is not feasible.

Replacement units must be located within the Sub -recipient’s jurisdiction, and to the extent feasible and consistent with other statutory priorities, the units shall be in the same neighborhoods as the units replaced. Replacement units must be comparable in size and number to th ose units demolished or converted so that at least the same number of individuals can be housed in the replacement units.

Replacement units must not be smaller than those they replace (e.g., demolition of one 2 -bedroom unit and construction of two 1 -bedroo m units). Replacement units must be in standard condition.

Replacement units may include vacant units that have been raised to standard conditions if a) no person was displaced from the unit because of an assisted project activity, and b) the unit was vaca nt for at least 3 months before execution of the agreement between the Sub -recipient and the Property Owner. Replacement units can be counted if available 1 year prior to the demolition and ending 3 years after the demolition or conversion.

Replacement uni ts must be designed to remain as Low/Moderate -Income dwelling units for at least 10 years from the date of initial occupancy, and replacement units may include public housing or existing housing receiving Section 8 assistance under the Housing Act of 1937. G.

Emergency repairs - Emergency repair that provides for the repair of certain elements of a housing unit in emergency situations, such as repairs to a roof that is leaking, but the whole house is not Please see 24 CFR 570. 201 for a complete list of eligible housing activities.

Eligible Properties for Rehabilitation Owner occupied units that are designated as real property whether stick built, manufactured after 1978 or modular housing may be rehabilitated in the CDBG -NR Program . However, manufactured homes rehabilitated with CDBG funds must be converted into real property (according to G. S.

105 -273 paragraph 13) that is owned and occupied by the homeowner prior to selection . Clearance and relocation are an option if the local government determines and documents that rehabilitation of the property is not feasible. Substantial rehabilitation - Projects that have rehabilitation costs above $72,000 per unit or $70 per square foot including Lead Based Paint treatment costs and any other additional funds.

Grantees are required to submit such projects to REDD for prior approval. ## Scattered -Site Housing Defined Note: There are no project boundaries within the applicant’s jurisdiction for any of the activities in the housing category. The applicant may choose to do scattered site housing or housing in a concentrated area or a combination.

There is no limit on the numbe r of houses or the number of activities for the project. The applicant will need to decide how many houses can be treated during the 30 -month grant period. The applicant can also design their housing project to meet their own special needs.

This project can be very well defined with boundaries, scattered or a combination of both contiguous and scattered boundaries. Housing projects in this category must benefit 100% LMI persons. ## Public Facilities Activities Defined A public facility is defined as a place open to the public that provides services that are traditionally provided by the government or owned and operated by a nonprofit.

Funds may be spent on shelters for victims of domestic violence or homeless/homeless families, transitional facilities/housing for the homeless/homeless families, senior and community/ neighborhood/recreational centers. The benefit must be limited cliente le or 51% low -and -moderate - income. The applicant must be able to complete the facility prior to the end of the 30 -month grant period.

Please note that transitional facilities and shelters for special populations are defined as housing. Applicants, therefore, may submit applications for these developments as a sole housing activity. In certain cases, nonprofit entities and sub -recipients including those specified in § 570.

204 may acquire title to public facilities. When such facilities are owned by nonprofit entities or sub -recipients, they shall be operated to be open for use by the public during all normal hours of operation. Public facilities and improvements eligible for assistance under this paragraph are subject to the policies in § 570.

200(b). Eligible Activities for Public Facilities: A. Acquisition , construction , reconstruction , rehabilitation or installation of public facilities and improvements , per guidance provided in § 24 CFR, Part 570.

207(a), carried out by the recipient or other public or private nonprofit entities. B. Removal of material and architectural barriers that restrict the mobility and accessibility of elderly or severely disabled persons to public facilities and improvements, including those provided for in § 570.

207(a)(1).) C. Inclusion of design features and improvements which promote energy efficiency may be included.

D. Inclusion of the execution of architectural design features , and similar treatments intended to enhance the aesthetic quality of facilities and improvements receiving CDBG assistance , such as decorative pavements , railings , sculptures , pools of water and fountains , and other works of art . E.

Facilities designed for use in providing shelter for persons having special needs are considered public facilities and not subject to the prohibition of new housing construction described in § 570. 207(b)(3).

Such facilities include shelters for the homeless ; convalescent homes ; hospitals , nursing homes ; battered spouse shelters ; halfway houses for run -away children , drug offenders or parolees ; group homes for mentally challenged/disabled persons and temporary housing for disaster victims . F. Improvements such as parks , playgrounds , and greenways .

Benefit Requirements for Public Facilities Project must benefit 51% of LMI households or Limited Clientele that are presumed by HUD to be principally LMI income persons such as elderly, youth, domestic violence victims, severely disabled adults, persons living with HIV/AIDS, homeless persons, illit erate adults, and migrant farm workers.

# Housing Development/New Construction of Housing Defined # Single -Family Homeownership Developments The maximum grant for infrastructure support to single -family homeownership development is $950,000. 00 maximum grant not to exceed $75,000 per unit . Activities eligible for funding under the single -family projects are limited to: A.

Installation of public infrastructure that supports housing development category may include water and sewer lines, parks, playgrounds, streets, curb and gutters, flood and drainage, and sidewalks/pedestrian improvements. Applicants are not limited to just one activity but should keep in mind the time frames for the grant to ensure that the project can be completed in the 30 -month grant period.

These projects must be in a project area with boundaries and must be residential. All infrastructure funded with CDBG funds must be owned and maintai ned by the unit of local government with benefit as follows: □ On -site: 51% of the units must benefit low and moderate -income (LMI) people □ Off -site: 51% of the units must benefit low and moderate -income (LMI) people □ Census tract must be 51% LMI. B.

Removal of hazardous material C. Land acquisition (vacant only) must benefit 100% LMI persons and be done in partnership with eligible Community -based Development Organizations (CBDO) as described in 24 CFR 570. 204.

REDD will determine if an organization is an eligible CBDO, and applicants should contact REDD for this determination and further information. D. Historic vacant building acquisition (on a case -by -case basis) by for profit or non -profit E.

Historic vacant building rehabilitation (on a case -by -case basis) # Multi -Family Rental Housing Developments The maximum grant for infrastructure support to multi -family projects is $950,000 not to exceed $30,000. 00 per unit. The maximum grant for the rehabilitation of properties for multi -family housing with 5 or more units is $950,000 not to exceed $30,000 per unit.

Multi -family projects can be used with the North Carolina Housing Tax Credit Program. Activities eligible for funding under the multi -family rental housing project are the same as for single -family except for rent -to -own. The following activities are allowed under this category: A.

Rehabilitation (including substantial rehabilitation and reconstruction), F. Historic vacant building acquisition (on a case -by -case basis) by for -profit or non -profit G. Historic vacant building rehabilitation (on a case -by -case basis) # Eligible Developers for Housing Development Projects 1.

Non -Profit Developers A non -profit must have already been designated a 501(c)(3) organization by the IRS for federal tax purposes and have the characteristics of an eligible community -based development organization (CBDO) to participate in the Small Cities CDBG Program as a sub -recipient.

An eligible organization must have the following characteristics: ✓ Be a non -profit association or corporation organized under State or local law to engage in community development activities within an identified geographic area of operation including the jurisdiction of the recipient in addition to having the 501(c)(3). ✓ Be a non -profit organization with federal tax status as a 501(c) (3) organization.

✓ Have as its primary purpose the improvement of the physical, economic, or social environment of its geographic area with particular attention to the needs of people of low -and -moderate ✓ Maintain at least 51% of its governing body’s membership for low and moderate -income residents of its geographic area of operation or representatives of low and moderate -income organizations located in its geographic area of operation.

✓ Not be an agency or instrumentality of the recipient and does not permit more than one -third of the membership of its governing body to be appointed by, or to consist of, elected or other public officials or employees or officials of an ineligible entity. ✓ Require members of its governing body to be nominated and approved by the general membership of the organization, or by its permanent governing body.

✓ Be an active and substantive partner of the project development team. ✓ Not be subject to requirements under which its assets revert to the recipient upon dissolution. ✓ Be free to contract goods/vendors of your own choosing.

✓ Also note that a Community Housing Development Organization (CHDO); an entity organized under the Small Business Investment Act (non -profit only); and a Small Business Administration approved Section 501 State Development Company or Section 502 Local Devel opment Company or Section 503 Company (all non -profit only) will also qualify as a CBDO. 2.

For -Profit Developers □ Developer is limited to 15% profit; and □ If a loan is made to the developer, the local government must have a plan for reuse of CDBG funds (program income) subject to REDD approval. Program income over $25,000 in a year must If the project is funded, as part of the agreement, the local government is required to execute a Legally Binding Commitment (LBC) contract with the developer.

The LBC outlines the duties of each (local government and developer).

This document at a minimum should include the ✓Reference to the release of CDBG conditions ✓Roles and responsibilities of each party ✓Use of funds (both grant and loan) ✓Project requirements for Housing Development grants ✓Enforcement of the agreement ✓CDBG program requirements (State and Federal) It is recommended that legal counsel should be used to prepare this document.

The purpose of the LBC is to make sure all parties are clear on their responsibilities in undertaking this HD project. Ultimate responsibility for meeting all state and federal regulations, however, rests with the local Water and Sewer Connections to Existing Housing The water and sewer connection category is viewed as rehabilitation and includes the activities allowed under the REDD former Infrastructure Hook -Up Program.

Local governments may use funds to connect or “hook -up” low -and -moderate (LMI) households to non -CDBG funded existing public water and/or sewer line(s). CDBG funds may only be used to connect LMI owner -occupied and LMI tenant -occupied dwellings provided the landlord is also LMI.

Low -and -moderate income households are defined as households at 80% or l ess of the median family income for the county or Metropolitan Statistical Area (MSA) in which the residence is located. CDBG funds may also be used to connect manufactured homes that LMI owner -occupied, but the lot is rented. However, the owner of the rented lot must also be LMI.

Also, if an LMI unit is located on a corner lot with a line on either of the unit’s sides and/ or its front, that unit may be connected if the unit is eligible per the CDBG guidelines. Basic Criteria for Water and Sewer Connections A. The line is completely installed in the ground and in use by households along the line prior to the submission of the CDBG -NR application.

B. Installation of the line was not funded in whole or in part by CDBG funds. C.

Funds can be used only to connect LMI household to the public line. D. Residences to be connected must