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Community Development Block Grant

Acquisition

Relocation

Disposition

 
 

Our Goal

 

To provide comprehensive and a flexible source of funding for you to address your local housing and community development needs. 

 
 

Program Profile

 

Community Development Block Grant Program (CDBG) is a Federal Grant Program funded by the Department of Housing and Urban Development (HUD) that has withstood the rigors of time and the changing face of our Nation while providing such an impressive range of benefits to our low and moderate income citizens. 

 

Objective:

  • Provide maximum advantage of the CDBG program's flexibility in achieving your community's strategic vision.
  • Provide public officials and citizens the information that's needed to understand what activities are eligible to be assisted under the CDBG Entitlement Program.
  • To guide citizens in making wise choices among certain alternatives available within the program for carrying out particular activities.
  • Provide description of criteria which must be met and the records which must be maintained in order for an activity to be considered to have met a national objective of the CDBG program.
 
 

Acquisition

 


Acquisition of Real Property:

The statute and regulations authorize the use of CDBG funds by a grantee or a public or private nonprofit entity to acquire real property in whole or in part by purchase, long-term lease, donation, or otherwise.  In order to be considered acquisition, a permanent interest in the property much be obtained.  Long-term leases are considered to constitute a permanent interest for this purpose if the lease is for a period of 15 years or more.

More specifically, CDBG funds may be used under this category by: 

  • The grantee,
  • Any other public Agency,
  • A public nonprofit entity, or
  • A private nonprofit entity

to acquire real property for any public purpose.  This authority is subject to the limitations  which would preclude the acquisition cost attributable to a building to be used for the general conduct of government and which would preclude the acquisition of property to be used for political activities. 

Real Property to be acquired may be: 

  • Land,
  • Air rights,
  • Easements,
  • Water rights
  • Rights-of-ways,
  • Buildings and other real property improvements, or
  • Other interests in the real property.

Costs that may be paid for with CDBG funds under this category include the cost of surveys to identify the property to be acquired, appraisals, the preparation of legal documents, recordation fees, and other costs that are necessary to effect the acquisition.

Acquisition of real property that does not meet the limitations for eligibility under real property may be eligible for CDBG assistance under other categories of basic eligibility. 

Complying with National Objectives - Acquisition of Real Property 

Qualifying an acquisition activity under one of the CDBG national objectives depends entirely on the use of the acquired real property following its acquisition.  A preliminary determination of compliance may be based on the planned use.  The final determination must be based on the actual use of the property, excluding any short-term, temporary use.  Where the acquisition is for the purpose of clearance, which will eliminate specific conditions of blight or physical decay, the clearance activity may be considered the actual use of the property.  However, any subsequent use or disposition of the cleared property must be treated as a "change of use" as applicable.  If property is to be acquired for a general purpose, such as housing or economic development, and the actual specific project is not yet identified, the grantee must document the general use it intends for the property, the national objective category it expects will be met, and make a written commitment to use the property only for a specific project under that general use that will meet the specified national objective. 

 

NATIONAL OBJECTIVES - ACQUISITION OF REAL PROPERTY

Objective

Qualifies If

Example

L/M Income Area Benefit

The property will be used for an activity, the benefits of which are available to all the residents in a particular area that is primarily residential, and at least 51% of those residents (or fewer if the exception criteria apply) are L/M income persons.

Purchasing  land to be used as a park serving a primarily residential neighborhood that is predominantly L/M income.

L/M Income Limited

The property will be used for an activity, the benefits of which will be limited to a specific group of people, at least 51% of whom are L/M income persons.

Buying a building to be converted into a shelter for the homeless.

L/M Income

The property will be used for housing to be occupied by L/M income persons.

Buying an apartment house to provide dwelling units to L/M income households at affordable rents, where at least 51% of the units will be occupied by L/M income households.     

* L/M - Low and Moderate

NATIONAL OBJECTIVES - ACQUISITION OF REAL PROPERTY

Objective

Qualifies If

Example

L/M Income Jobs

The property acquired is to be used for an economic development project that will create or retain permanent jobs to at least 51% of which will benefit L/M income persons.

Acquiring vacant property that is planned to be used for a commercial purpose, and will be made available for that purpose only if the business commits to provide at least 51% of the new permanent jobs that will be created to L/M income person

Slum or Blighted Area

The acquired property is in an area designated by the grantee as a slum or blighted area, and the property will be used in a manner which addresses one or more of the conditions which contributed to the deterioration of the area.

Using CDBG funds to acquire several deteriorated buildings located in a slum/blight area for rehabilitation or demolition.

Spot Blight

The acquisition of property is located outside a designated slum/blight area and the acquisition is a prerequisite for clearance which will eliminate specific conditions of blight or physical decay on a spot basis.

The acquisition of a dilapidated property being used as a "crack house" for the purpose of eliminating that use, which is detrimental to Public health and safety, through demolition and clearance.

Urban Renewal Completion

The real property acquired is located within an urban renewal project area or an NDP (Neighborhood Development Program) action area designated under Title 1 of the Housing Act of 1949 and the acquisition is necessary to complete the current urban renewal plan.

The current, approved plan calls for a specific property to be used for middle-income housing which is currently being used for other purposes.  The acquisition will allow the property to be cleared and to be included with other contiguous parcels for sale to an interested housing developer.

Urgent Needs

The acquisition is part of an activity designated to alleviate existing conditions and the grantee certifies that those conditions are a serious and immediate threat to the health or welfare of the community, they are of recent origin or recently became urgent, the grantee is unable to finance the activity on its own, and other sources of funds are not available.

Acquisition of property located in a flood plain which was severely damaged by a recent flood.

     

Relocation

Uniform Relocation Assistance Program (URA)

The purpose of the Uniform Act is to provide displaced persons with fair, equitable treatment and protection from disproportionate injury by projects designed to benefit the public as a whole.

There are three major types of requirements that cover relocation and acquisition in HUD Programs:  

  • The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA);
     
  • Section 104(d) of the Housing and Community Development Act of 1974; and
     

  • Individual HUD program regulations.

URA Policies Act of 1970 applies to displacement that results from acquisition, demolition or rehabilitation for HUD assisted projects carried out by public agencies, nonprofit organizations, private developers, or others.   Chapter 1 through 6 of HUD Handbook 1378, Tenant Assistance, Relocation and Real Property Acquisition implement URA and the government-wide rule, which became effective 4/2/89 for HUD assisted programs.  The URA protects all persons who are displaced by a federally assisted project, regardless of their income. This is in contrast to section 104(d), which only protects displaced persons whose income is at or below 80% of the area median income. 

Section 104(d) Relocation Requirements

 

Section 104(d) requirements apply to some (but not all) CDBG or HOME funded projects.  It is different from URA in several ways, including who is eligible for assistance and what assistance is provided.  Chapter 7 of HUD Handbook 1378 implements section 104(d).

CDBG funds may be used for relocation payments and assistance to displaced persons, including: 

  • Individuals,
  • Families,
  • Businesses,
  • Non-profit organizations, and
  • Farms

CDBG funds may be used for optional relocation payments and assistance to persons (individuals, families, businesses, non-profit organizations, and farms) displaced by an activity that is not subject to the requirements described above.  This may include payments and other assistance for temporary relocation (when persons are not permanently displaced).

Optional relocation payments and assistance may also include payments and assistance at levels higher than those required.

Unless optional payments and assistance are made pursuant to State or local law, the grantee may make such payments and assistance only upon the basis of a written determination that such payments and assistance are appropriate, and only if the grantee adopts a written policy available to the public setting forth the relocation payments and assistance it elects to provide. 

Complying with National Objectives - Relocation 

The compliance of relocation activities with the national objectives of the CDBG program must be determined in one or two ways, depending on whether the relocation assistance is mandatory for the grantee. 

Where such assistance is required under the Uniform Act or the CDBG statute, the activity may qualify as meeting the national objective of benefiting L/M income persons only where the acquisition or rehabilitation causing the relocation can also qualify under that objective. 

In any case where the payment of such assistance is voluntary on the part of the grantee, however, the relocation payments could qualify either on the basis of the re-use of the property or the income of the recipients of the relocation assistance, at the grantee's option. 

Thus, HUD would accept a claim of addressing the L/M income benefit objective where the voluntary payment of relocation benefits is made to L/M income persons who were displaced by an activity that could not be considered to meet that objective.  This is because the payment of such benefits clearly would not be needed to make possible the activity causing the displaced. 

Because of the relocation of the optional versus mandatory aspects of relocation payments to the national objectives determinations, it is critical that the grantee makes this distinction in its program files and identifies the displacing project.  Relocation requirements applies to any HUD provided grant, loan or contribution, and HOME, CDBG or Section 108 loan guarantees. 

 

Disposition

Under this category, CDBG funds may be used to pay costs incidental to disposing of real property acquired with CDBG funds, including its disposition at less than fair market value, provided the property will be used to meet a national objective of the CDBG program. 

The property may be disposed of through: 

  • Sale,

  • Lease,

  • Donation, or

  • Otherwise

CDBG Funds may also be used under this category to pay reasonable costs of temporarily managing such property (or property acquired with Urban Renewal funds) until final disposition of the property is made. 

Disposition costs include preparation of legal documents, as well as fees paid for: 

  • Appraisals,

  • Surveys,

  • Marketing,

  • Financial service, and

  • Transfer taxes and other costs involved in the transfer of ownership of property.

Because this category only authorizes the costs of temporarily managing property pending its disposition, care should be taken to avoid spending CDBG funds to manage properties for which there are no plans for disposition in the near future or where the market is such that it is not likely to be sold in the near future, such as properties acquired many years ago under the Urban Renewal program. 

For disposition costs to be eligible, the use of the CDBG-acquired property after disposition must meet a national objective of the CDBG program.  When property is disposed of for the same purpose as that for which it was acquired, the costs of disposition will be considered to meet the same national objective ascribed to the CDBG funds spent on its acquisition.   

If the property is being disposed of for a purpose other than that for which it was acquired, the new activity must be reviewed to determine whether a national objective will be met by the new use.  Gross proceeds from the disposition of real property acquired with CDBG funds that are received by the grantee or a sub-recipient are program income. 

     

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