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A SUMMARY OF ELIGIBLE CDBG ACTIVITIES

Determination -- Eligible Activities -- Ineligible Activities  -- Explanations of Direct Benefit and Area Benefit

This summary of eligible Community Development Block Grant activities was prepared in November 1996 by
staff of the City of Spokane Community Development Department for use by the Community Development
Neighborhoods. Please note that it is a summary of applicable CDBG federal regulations. This summary
should not he presented as replacements for or, or interpretations of the regulations themselves, but only as
complimentary to the regulations.

The following steps are involved in the process of determining if CDBG funds may be used to assist
a proposed activity. They are:

1) Determine if the activity is included within the listing of eligible activities in the following
  summary.

2) Determine if the proposed activity falls within a category of explicitly ineligible activities, despite
  its apparent inclusion within the listing of eligible activities. For example, while many public
  facilities are eligible for assistance, there is an explicit statutory and regulatory prohibition against
  providing assistance to "buildings for the general conduct of government."

3) Determine if the proposed activity meets one of the national objectives of the program:

Benefiting low and moderate (L/M) income persons
Addressing slums and blight
Meeting a particularly urgent community development need
4) Review your proposed project to determine if it fits within the neighborhood's most recently
  adopted "needs and priorities."

5) Review proposed costs of the activity to determine if they appear to be necessary and reasonable
  and there will be sufficient funds allocated to complete the project in a reasonable period of time.

Eligible Activities

Please note: Some activities, which are only eligible as "area benefit" (as described in a later
section), are only eligible when they are located in certain qualified areas of a neighborhood. A
neighborhood may contain both types of areas, those qualified for "area benefit activities," and those
not qualified. Check with the CD Department staff if there is a question regarding qualified areas.

CDBG funds may be used to:

a. Acquire real property in whole or in part by purchase, long-term lease or donation for any
  purpose that meets a national objective of the CDBG program.

b. Pay costs incidental to disposing of real property acquired with CDBG funds, provided the
  property will be used to meet a national objective.

c. Acquire, construct, reconstruct, rehabilitate or install public improvements or facilities provided
  such improvement or facility meets a national objective. Public facilities or improvements may
  include: shelters for homeless, water and sewer facilities, community, senior and health centers,
  parking, streets, curbs, gutters and sidewalks, parks and playgrounds.

d. Acquire, reconstruct, rehabilitate, or install the distribution lines and facilities of privately-owned
  utilities, provided such activity meets a national objective of the CDBG program.

e. Demolish, clear, remove buildings and improvements and move structures to other sites,
  provided such activities meet a national object of the CDBG program.

f.  Provide public services which may include labor, supplies, materials, and maintenance &
  operation costs for that part of a facility in which the public service operates, provided the public
  service meets a national objective of the CDBG program and provided that each of the following
  criteria is met:

1) The public service must be either:
      A new service; or
      A quantifiable increase in the level of a service above that which has been provided by
        or on behalf of the unit of general local government.

2) The amount of CDBG funds to support public service may not exceed 15% of the total grant.

Public services include, but are not limited to: child care, health care, job training, recreational
programs, education programs, public safety services, fair housing activities, services for senior
citizens, services for homeless persons, drug abuse counseling and treatment, energy
conservation counseling and testing. (Note: Neighborhood cleanups must be included in the
public service category.)

g. Provide interim assistance, limited improvements to a deteriorating area as a prelude to
  permanent improvements, provided these interim assistance activities meet a national objective of
  the CDBG program.

1) The area must be exhibiting objectively determinable signs of physical deterioration.

2) The grantee must determine and maintain documentation that immediate action is needed to
  arrest the deterioration and that permanent improvements will be undertaken as soon as
  practicable.

3) The activities that may be carried out with CDBG funds under this category are to:
  repair of streets, sidewalks, public buildings, parks and playgrounds; and, publicly owned
  utilities, and the execution of special garbage, trash, and debris removal.

 h. Fund relocation payments and assistance to displaced persons, families, businesses, non-profit
    organizations, and farm operations when determined to be necessary and appropriate in the
    process of carrying out necessary, appropriate and eligible CDBG activities.

i.  Pay housing owners for losses of rental income incurred in holding, for temporary periods,
    housing units to be used for the relocation of individuals and families displaced by CDBG-
    assisted activities. Compliance of this activity with the national objectives ofthe CDBG program
    should be determined based on the underlying relocation activity.

j.  Provide funds for the removal of material and architectural barriers which restrict the mobility
    and accessibility of elderly and handicapped persons to publicly or privately owned buildings,
    facilities and improvements, provided such barrier removal meets a national objective of the
    CDBG program. Note: National data shows a majority of disabled persons have low or
    moderate incomes.)

k. Finance the rehabilitation of any publicly or privately owned residential property, including the
    conversion of non-residential property for housing, provided such rehabilitation meets the
    national objective of the CDBG program.

1.  Finance or subsidize the construction of new permanent residential structures under limited
    circumstances, provided such new construction meets the national objective of the CDBG
    program. Limitations include that the funds are used by a local development company, Small
    Business Investment Company, or neighborhood based nonprofit organization.

m. Pay salaries and overhead costs directly related to the enforcement of local codes, but only in
    deterioration or deteriorated areas where such enforcement, together with public improvements,
    rehabilitation and services to be provided, may be expected to arrest the decline of the area, and
    provided the code enforcement meets a national objective of the CDBG program.

n. Rehabilitate, preserve, and restore publicly or privately owned historic properties (officially
    designated), provided such activities meet a national objective of the CDBG program.

o. Finance the rehabilitation of privately owned for-profit commercial or industrial buildings,
    however, such rehabilitation may only qualify under the "Rehabilitation" category if it is limited
    to improvements to the exterior of the building and to correction of code violations, and
    provided such activities meet a national objective of the CDBG program.

p. Finance the following Special Economic Development activities, provided such activities meet a
    national objective of the CDBG program:

    1) Commercial or industrial improvements carried out by the grantee, or a nonprofit
  subrecipient, including: acquisition, construction, reconstruction, or installation of
  commercial or industrial buildings or structures and other real property equipment and
  improvements. (Note: The City of Spokane is the grantee for our CDBG program.)

     2) Assistance to private for-profit entities for an activity determined to be necessary and
  appropriate to carry out an eligible economic development project. This assistance may be in
  the form of grants, loans, loan guarantees, interest supplements, technical assistance and
  other forms of support.

q. Fund studies, analyses, data gathering, preparation of plans, identification of actions that will
    implement plans, and activities designed to improve the grantee's capacity to plan and manage
    programs and activities, subject to the limitation on planning and administrative cost.

r. Fund the cost of program administration, including program management, coordination,
    monitoring and evaluation. However, the total amount of CDBG funds that may be used for
    program administration is subject to the statutory limitation on planning and administrative costs
    (i.e., 20% CAP).

Ineligible Activities

a. Acquisition of buildings, or the construction or rehabilitation of space in a building, or portion of
    a building, which is used for the general conduct of government, not including the removal of
    architectural barriers involving any such building.

b. Payment of general government expenses, including operating and maintenance of public
    facilities, with the exceptions of operating and maintenance expenses associated with public
    service activities, interim assistance, and office space for program staff employed in carrying out
    the CDBG program.

c. Financing of political activities.

d. Financing of religious activities.

e.  The purchase of equipment is generally ineligible, including construction and fire protection
    equipment. Also, furnishings and personal property are generally ineligible, except when
    necessary for use by a recipient or its subrecipients in the administration of activities assisted with
    CDBG finds.

f   Financing new housing construction, except for activities in support of the development of low
    or moderate income housing including clearance, site assemblage, provision of site improvements
    and provision of public improvements and certain housing pre construction costs.

g. Income payments to an individual or family.

Explanations of Direct Benefit and Area Benefit

Direct Benefit
An eligible CDBG fUnded activity is considered to be a direct benefit when the beneficiary of the
activity has an income that is equal to or less than the low (0-50% MFI) or moderate (50-80% MFI)
income limits for the Spokane area. (See HUD income table below.) An example of "direct benefit"
is CDBG assistance for a single family, owner occupied housing rehabilitation.

Area Benefit
An area benefit activity is an eligible CDBG activity that meets the identified needs of low or
moderate income persons residing in an area where at least 51% of the residents are low or moderate
income persons as determined by the last U.S. Census. An example of "area benefit" is a park
improvement constructed in an area serving 51% or greater low and moderate income residents.
 

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