COMMUNITY DEVELOPMENT BLOCK GRANT

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM AND APPLICATION GUIDE For additional program details or questions contact: Meena Gyawali, Director of Community Development Community Development Finance Authority Main: 603-226-2170 Email: mgyawali@nhcdfa.org www.nhcdfa.org 11/9/2017

TABLE OF CONTENTS Introduction... 4 CDFA s Vision & Mission... 4 CDBG Program Overview... 4 Chapter 1: Funding Methods of Distribution... 6 Chapter 2: Eligible Applicants/Limits on Applications... 9 Chapter 3: Meeting Federal National Objectives... 11 Qualification and Documentation of Federal National Objectives... 11 Chapter 4: Eligible Activities... 17 Community Development Grants - Housing... 17 Community Development Grants - Public Facility Grant Requirements... 21 Economic Development Grant Requirements... 24 Eligible Activities: Economic Development - Technical Assistance for Businesses Grants Requirements 26 Eligible Activities: Economic Development - Microenterprise Development Grant Assistance Requirements... 27 Eligible Activities: Urgent Need Grant Requirements... 28 Eligible Activities: Feasibility Grant Requirements... 29 Chapter 5: Federal Requirements... 31 Chapter 6: Citizen Participation Plan... 33 Chapter 7: CDBG Application Procedures... 35 Chapter 8: Program Policies... 39 Chapter 9: Grant Administration... 47 Chapter 10: Rating and Ranking Criteria... 50 Scoring of Community Development and Urgent Need Grant Applications... 50 Scoring of Economic Development Grants... 55 Scoring of Microenterprise Development Assistance Grants... 67 Appendix A: Housing & Public Facilities Survey... 73 Appendix B: Economic Development Survey... 74 2

Appendix C: Scoring of Community Development and Urgent Need Grant Applications.... 75 APPENDIX D: Minimum Underwriting Standards for Economic Development Financing... 86 Appendix E: LMI Percentage Numbers... 90 Appendix F: Chapter Definitions... 99 3

INTRODUCTION The Community Development Finance Authority (CDFA) is a statewide nonprofit public authority focused on maximizing the value and impact of community development, economic development and clean energy initiatives throughout New Hampshire. The organization leverages a variety of financial and technical resources, including the competitive deployment of grant, loan and equity programs. CDFA S VISION & MISSION CDFA envisions New Hampshire s future with economically and socially resilient communities that reflect and respect their natural surroundings and represent places where people want to live and work. In working towards this vision, CDFA invests in the people of New Hampshire by: Enabling its partners to make transformational and sustainable changes; Meeting the evolving needs of New Hampshire communities; Deploying a well-tuned, effective investment system which directly impacts local communities; and Taking an innovative and collaborative approach to development finance. CDBG PROGRAM OVERVIEW CDFA administers the State of New Hampshire s annual federal allocation of Community Development Block Grant (CDBG) funds for eligible municipalities. The Community Development Block Grant (CDBG) Program is designed to provide assistance to units of general local government in improving economic opportunities and meeting community revitalization needs, particularly for persons of low and moderate income. The CDBG program has been funded through the State since 1982 by the U.S. Department of Housing and Urban Development (HUD) under the Housing and Community Development Act of 1974, as amended (Title I). The CDBG program is governed by Title I of the Housing and Community Development Act of 1974, as amended, and implementing regulations for the State Program at 24 CFR Part 570, Subpart I. All CDBG activities must be carried out in accordance with the requirements of Title I, Subpart I, the State Consolidated Plan, created in accordance with 24 CFR Part 91, and this Application and Program Description. In the following sections, a description of New Hampshire s CDBG Program is presented along with the amount of funds available and the MOD of those funds. Also presented are the categories of grants to be made available, selection criteria, eligible activities, and the eligibility requirements for applicants. CDFA will conduct workshops to assist local governments and other interested parties in the preparation of grant applications and the administration and management of funded projects in accordance with program requirements. In addition, CDFA is available to provide technical assistance to local governments and nonprofit organizations regarding the CDBG program. Funding Objectives The primary objective of the CDBG program is the development of viable communities by expanding economic opportunities, providing decent housing and a suitable living environment principally for persons of low and moderate income. National Objectives To carry out the primary objective specified in 42 U.S.C. 5301(c) of the federal act, community development activities shall address at least one of the following broad national objectives specified in 42 U.S.C. 5304(b) of the federal act: 1. Benefiting low- and moderate- income persons; 4

2. Prevention or elimination of slums or blight; or 3. Meeting other community development needs having particular urgency that pose a serious and immediate threat to the health or welfare of the community. Eligible Activities Eligible federal activities shall be those activities which are listed as eligible in 42 U.S.C. 5305(a) of the federal act and described in Chapter 4. Ineligible Activities Ineligible activities shall be those activities which are not authorized in the list of eligible activities in 42 U.S.C. 5305(a) of the federal act. Activities not authorized shall include, but not be limited to, the following: 1. General expense of conducting government; 2. Political activities; 3. New housing construction except as provided under the last resort housing provisions set forth in 24 CFR 49; 4. Buildings for the general conduct of government, such as city halls, courthouses, or other local government office buildings except where the activity shall only provide elderly and handicapped access to such buildings; 5. Expense of operating and maintaining public facilities such as water and sewer systems and public property, except for the limited costs for public services as described in Chapter 4; and 6. Purchase of equipment, furnishings, motor vehicles and other personal property, except for purchases and costs related to administration of the CDBG grant in accordance with 2 CFR 200. Administration of Activities Activities which are eligible may be undertaken by the grantee/recipient through: 1. Its employees; or 2. Agreements with a contractor or subrecipient through procurement procedures governed by 24 CFR 85.36 or OMB Circular A-110, whichever applies. Financial Assistance Subject to the specific requirements of each type of grant or subcategory, the following uses may be eligible for CDBG funds: 1. A direct grant to a grantee or eligible individual; 2. Grants, loan guarantees, interest rate subsidies or loans to an eligible subrecipient by the grantee; 3. Interest rate subsidies or other favorable terms from a bank participating in the project with the grantee; or 4. Any other innovative financing used either singly or in combination with items listed above, with permission from CDFA. Use of the Application and Program Guide No single chapter is a standalone chapter. The Application Guide must be read and used in its entirety to obtain the necessary program information and requirements. 5

CHAPTER 1: FUNDING METHODS OF DISTRIBUTION New Hampshire s CDBG program is offered to eligible cities and counties for a wide range of activities as authorized under Section 105(a) of the Housing and Community Development Act (HCDA) of 1974, as amended. The state annually expects to receive new CDBG funds for distribution to non-entitlement cities and counties for eligible projects. The CDBG funds covered by this Method of Distribution (MOD) includes: new funds, unobligated program year funds, any program income received and grant funds recaptured from projects funded in prior grant years. In accordance with State of New Hampshire s Administrative Rules CDFA 300, CDFA will manage the competitive award and funding process for eligible projects under this Method of Distribution. Administrative Rule This Method of Distribution (MOD) provides information to assist eligible entities prepare grant applications and is adopted as part of New Hampshire s Administrative Rule 300 by reference. Consistency with New Hampshire s Consolidated Plan Priorities for Community Development Block Grant (CDBG) funds must be consistent with the policies and priorities contained in the State of New Hampshire Consolidated Plan for Housing and Community Development. The Consolidated Plan is approved by the U.S. Department of Housing and Urban Development (HUD). The Annual Action Plan, which includes the MOD for the CDBG funds, is the annual update to the Consolidated Plan and has been developed with participation from New Hampshire Housing Finance Authority, State of New Hampshire Department of Health and Human Services, the Housing and Community Development Planning Council and the public input received during the 30-day public comment period. Priorities Section 106(d)(2)(C)(iii) of the Housing and Community Development Act (HCDA) prohibits a state from declaring certain statutorily eligible activities as ineligible for funding under the state s program, but allows a state to establish funding priorities among the types of eligible activities. The State of New Hampshire s funding priorities for each year will be described within the MOD in Chapter 1. In accordance with the HCDA the state will consider applications for funding consistent with the identified funding priorities within the MOD. There is a broad range of activities that may be assisted with CDBG funds as defined in Section 105(a) of the Housing and Community Development Act (HCDA) of 1974, as amended. States that administer a nonentitlement CDBG program are required to establish procedures for distributing the funds and identification of the activities (priorities) which will be eligible for funding under the state s program. These priorities are described within the MOD. The priorities eligible for funding under New Hampshire s Community Development Block Grant program are described below. State Objectives Grants shall also include as many of the following additional state objectives as appropriate: 1. Implementing the housing and community development plan and conforming to the municipality's master plan and ordinances; 2. Preserving and promoting existing neighborhoods and community centers; 3. Restoring and preserving properties which have historic, cultural, architectural or aesthetic value; 4. Solving community problems with long term benefits and innovative solutions; 5. Successfully raising funds or securing matching funds and resources from public and private sources; or 6. Funding needed projects for which other private or public funding is not available and is consistent with the national objectives; or 6

7. Community development grants shall, at a minimum, provide improved housing in accordance with section 8 standards, public facilities or employment opportunities primarily to low and moderate income persons or households. Grants shall not benefit moderate-income persons to the exclusion of low-income persons. Eligible Program Areas Offered through CDFA s CDBG Program To accomplish the national and state objectives, there shall be 4 grant categories, as follows: 1. Community development grants, which shall consist of the following subcategories: a. Housing b. Public facilities 2. Economic development grants, which shall consist of the following subcategories: a. Business Loan b. Real Estate Development c. Public Infrastructure d. Grant to a non-profit e. Microenterprise Development f. Job Training g. Business Technical Assistance 3. Urgent Need grants 4. Feasibility grants Targets CDFA receives an annual allocation from HUD for the CDBG program. After subtracting amounts allowed for Administration (2% plus $100,000) and Technical Assistance (1%), CDFA intends to award available new funds along with program income and recaptured grant funds from prior year grants to projects in the categories listed below, using the percentages shown. Funding priority target percentages may be adjusted annually to be more in line with the increased demand for certain types of projects, current trends and based on citizen participant plan conducted through the Consolidated and Action Plan process. Annual Allocation From HUD Target % Housing / Public Facilities 46% Economic Development 46% Urgent Need 4% Feasibility 1% Technical Assistance / Administration 3% The final yearly fiscal year allocation amount will be posted on CDFA s website for access by eligible applicants and distributed to the CDBG list serve. Program Year CDFA s program year (Fiscal Year-FY) is from July 1 st through June 30. A draft annual Action Plan is typically available to the public in November/December. The final Action Plan is not prepared and sent to HUD until there is a final federal appropriation and transmittal of the funding amount from HUD. Funds Remaining 7

On January 1 st of any given year, any un-obligated or recaptured funds, earlier program year funds or program income will be applied in conformance with the proposed or HUD approved fiscal year target percentages and will be awarded in accordance with either the proposed or HUD approved MOD. Recaptured Funds and Program Income Recaptured funds are those funds that are returned to CDFA through closeout of a grant, termination for cause or other means. 1. Recaptured and liquidated funds on hand will be obligated in conformance with the MOD and HUD requirements. 2. Program income - Proceeds from program income comply with 24 CFR 570.489. Obligating Funds CDFA has two federal requirements which must be met: 24 CFR 570.494(b)(2) and 24 CFR Part 570.494(b)(1) which requires each state to obligate and announce (excluding state administration) 100% of each annual grant to Units of General Local Government (UGLG s) within 15 months of the state signing its grant agreement with HUD. To comply with the requirements CDFA prioritizes its obligation and announcement of CDBG funds as follows: 1. CDBG awards will be obligated and announced from the current annual grant within 15 months of the state signing the grant agreement with HUD (24 CFR Part 494(b)(1); and 2. Any recaptured, liquidated funds and program income on hand will be expeditiously obligated and announced in accordance with (24 CFR Part 570.494(b)(2). Any recaptured, liquidated funds and program income received by the organization will be tracked and disbursed to projects eligible for funding under the current MOD. Funds received after December 31 st will be disbursed as described above. Recaptured funds remaining after the last day of the program year will be added to the next program year s total allocation and disbursed through the regular grant award process for that year. 8

CHAPTER 2: ELIGIBLE APPLICANTS/LIMITS ON APPLICATIONS Eligible Applicants All 10 counties along with incorporated cities and towns, except for the entitlement communities, shall be eligible to apply for funding under the CDBG program. Entitlement Communities are not included in the state s Community Development Block Grant (CDBG) program because they receive CDBG funds directly from the U.S. Department of Housing and Urban Development (HUD). Those entitlement communities are: Manchester, Nashua, Portsmouth, Dover, and Rochester. Non-Entitlement/Entitlement Boundaries When an eligible non-entitlement city or county applicant applies for and is awarded CDBG funds for a project that will be located within the boundaries of a CDBG entitlement municipality, whose residents are also residents of the non-entitlement applicant area, eligible project costs are limited to the estimated pro rata share of the project activity beneficiaries who reside in the non-entitlement portion of the project s service area. Applications on Behalf of Another Eligible Applicant A city or county may not apply for a project where the project to be constructed will be owned and operated by another eligible applicant, a state or a federal agency. Facilities Owned by Other Public Bodies Cities and counties may undertake projects to improve existing facilities owned by other public bodies such as sanitary districts and water districts, including water supply authorities, or other political subdivisions of the state and organizations operated on a not-for-profit basis such as associations and cooperatives that provide drinking water to primarily residential areas. These other public or nonprofit organizations must own the facilities to be upgraded and need to contact the appropriate city or county to discuss application sponsorship. The respective city or county where the system is located must sponsor the application for an other public or nonprofit organization. Joint Projects Two or more local governments (for example, a city and a county, or two cities) may work on an application for a regional project. In such cases, only one jurisdiction can be the primary applicant and act as the responsible party under the contract with the state. Joint applications where two or more parties are equally responsible will not be accepted. Regional projects are activities that benefit more than one jurisdiction and address a common problem in a region. The maximum funding available for a joint application shall be the same as for an individual applicant. Pass Through Cities and counties cannot pass through the awarded funds to another city or county to carry out the project activities. The recipient must carry out the project activities and remain fully responsible for the grantfunded project s compliance with all federal and state requirements. In other words, the project must be under the direct control of the grant recipient at all times. 9

Project Phasing Projects cannot be divided into phases to obtain multiple CDBG grants for the same facility. Some examples of project phasing not allowed under the program include: 1. Separating a public works project into phases, such as collection system improvements in onephase and treatment system improvements into another phase in order to apply for more than the maximum grant within a five-year period; or 2. Building one portion of a public/community facility now, and then building the remaining portion later, in order to qualify for two grants for the same facility. Limits on Applications To assist the state in complying with federal requirements pertaining to the timely distribution and expenditure of funds, the Community Development Block Grant program will have the following application limits for all projects assisted in whole or in part with Community Development Block Grant funds: 1. Unresolved Performance Issues - Grantees with unresolved performance issues under prior open or closed CDBG awards may be restricted by CDFA from receiving additional CDBG awards. 2. Risk Assessment - CDFA may restrict funding after an evaluation of the risk of an applicant or the project. Application Limit 1. Community Development Grants including Housing and Public Facilities- A Grantee may only apply for projects from the following categories: a. Public Facilities for the total limit of $500,000; or b. Housing for the total limit of $500,000. 2. Economic Development Grants- A Grantee may only apply for projects from the following categories and shall not exceed $500,000 per program year: a. Business Loan b. Real Estate Development c. Public Infrastructure d. Grant to a non-profit e. Job Training f. Microenterprise Development - Grantee may also apply for additional $500,000 for projects in this category in addition to the $500,000 limit for categories listed in a through e. g. Business Technical Assistance - Grantee may also apply for additional $500,000 for projects in this category in addition to the $500,000 limit for categories listed in a through f. 3. Feasibility Grantsa. The maximum grant award of $12,000 shall be made only for feasibility studies, which include architectural, or engineering redesign, or economic analysis and a plan or approach to the study, which has the potential for achieving the goals stated in the proposal. b. There shall be no yearly limit on the number of feasibility grant applications, which can be submitted and received. 4. Urgent Need Grants- A Grantee may only apply for one project per year from one of the following categories: a. A municipality with a population of 10,000 or under shall not exceed $350,000 for a oneyear grant(s); or b. A municipality in this category with a population above 10,000 shall not exceed $500,000 for a one year grant(s). 10

CHAPTER 3: MEETING FEDERAL NATIONAL OBJECTIVES There are three federal national objectives for the Community Development Block Grant (CDBG) Program. However, the State of New Hampshire only qualifies projects for funding under two of the three national objectives. All projects and the individual activities funded in whole or in part with CDBG funds must meet one of these national objectives: 1. Benefiting Low- and Moderate-Income Persons This is the primary program objective. The state must ensure that no less than 70 percent of the CDBG funds that it administers are spent for projects that meet this objective. CDFA requires that all applicants must ensure that no less than 51% of those being served through CDBG funds will be of low and moderate household incomes. 2. Urgent Need There is a limited amount of funding per grant year and project available to address applications of urgent need. An urgent need is defined as a community development need that has particular urgency due to recently developed conditions that pose a serious and immediate threat to the health or the welfare of the community. Municipalities should contact CDFA prior to applying to ensure all HUD requirements are met for this objective. QUALIFICATION AND DOCUMENTATION OF FEDERAL NATIONAL OBJECTIVES Benefiting Low- and Moderate-income Persons The federal regulations provide that in any case where there is substantial evidence that an activity might not principally benefit low- and moderate-income persons, even though the activity conforms to the literal reading of the low- and moderate-income benefit criteria, the presumption that the activity meets the national objective will be rebutted. The grant applicant/recipient must document how the activity will meet the lowand moderate-income benefit national objective. There are four ways a project can meet the low- and moderate-income national objective. These qualifications are: 1. Area Wide (LMA) 2. Limited Clientele (LMC) 3. Housing Activities (LMH) 4. Jobs LMI (LMJ) 1. Area Wide Qualification (LMA) The Area Wide Qualification applies to an activity, the benefits of which are available to all the residents in a particular area, where at least 51 percent of the residents are low- and moderate-income persons. Such an area need not be conterminous with census tracts or other officially recognized boundaries but must be the entire area served by the activity. It is critical that the service area proposed by the applicant and approved by the state is the entire area served by that activity. Units of general local government may, at the discretion of the state, use either U.S. Department of Housing and Urban Development (HUD) provided data comparing census data with appropriate low- and moderate-income levels or survey data that is methodologically sound and pre-approved by CDFA. An activity that serves an area that is not primarily residential in character will not qualify under this criterion. A. Area Wide Documentation (LMA) All applicants must provide a map with their application showing the proposed project s entire service area. The easiest way for applicants to document low- and moderate-income benefit for area-wide projects is to use the Low and Moderate-Income Survey Data form provided by CDFA. B. Survey Methodology All surveys must be conducted in compliance with HUD Community Planning and Development (CPD) Notice 14-013 dated September 25, 2014 and any other more current methodology developed by HUD. A copy of the survey methodology and a sample questionnaire is available by request from CDFA. 11

In accordance with HUD CPD Notice 14-013, the HUD issued American Community Survey (ACS) derived Low and Moderate Income Summary Data (LMISD) must be used to the fullest extent feasible unless it can be documented that the data does not provide enough information regarding the income levels in the service area. In this case, a survey may be necessary. Applicants must secure approval from CDFA on the survey instrument and process in order for the authority to recognize the results of local income surveys. As soon as the LMISD data is published by HUD, the most recent LMISD data must be utilized by the program, and is immediately effective. The most recent LMISD data and income survey forms are on CDFA s website or Appendix A. 2. Limited Clientele Qualification (LMC) To qualify for the limited clientele national objective, an activity must benefit a limited clientele, at least 51 percent of whom are low- and moderate-income persons. The activity must meet one or more of the following tests: Test 1 Limited Clientele Based on Presumed Benefit It must benefit a clientele who are generally presumed to be principally low and moderate-income persons. Activities that exclusively serve a group of persons in any one or a combination of the following categories may be presumed to benefit persons, 51 percent of whom are low- and moderate- income: a. Abused children; b. Battered spouses; c. Elderly persons - Persons 60 years of age and older; d. Severely disabled adults - Adults meeting the Bureau of the Census Current Population Reports definition of severely disabled, e. Homeless persons - Persons living on the street or in an emergency shelter, or who i. will be living on the street or in an emergency shelter without assistance; f. Illiterate adults; g. Persons living with AIDS; and h. Migrant farm workers. Test 2 Limited Clientele Based on Family Size and Income HUD requires information on family size and income from every client so that it is evident that at least 51 percent of the clientele are persons whose family income does not exceed the low- and moderateincome limit. CDFA Income Certification Form must be completed using income limits in Table D; and Test 3 -Limited Clientele Based on Income Eligibility - If the facility does not serve a clientele that consists solely of presumed low- and moderate- income persons, it must demonstrate that the applicant may have income eligibility requirements that limit the activity exclusively to low and moderate-income persons; or Test 4 Limited Clientele Based on Nature and Location of the Facility It must be of such a nature, and be in such a location, that it may be concluded the activity s clientele will primarily be low- and moderate- income persons. (Note: The use of this criteria under the state s program is a rarity.) A. Limited Clientele Documentation (LMC) Applicants must document how proposed activities will benefit low- and moderate- income persons in conformance with federal law. The type of documentation necessary depends upon the users of the facility. Some proposed projects may involve more than one program/activity with different clientele and different documentation. The following describes what information must be submitted for different types of limited clientele activities: Test 1 Limited Clientele Based on Presumed Benefit Documentation establishing that the facility or service is designed exclusively to serve a group of persons in any one or a combination of the following 12

categories may be presumed to benefit persons, 51 percent of whom are low and moderate income: abused children, battered spouses, elderly persons, adults meeting the Bureau of the Census Current Population Reports definition of severely disabled, homeless persons, illiterate adults, persons living with AIDS and migrant farm workers; or Test 2 Limited Clientele Based on Family Size and Income Documentation that at least 51 percent of the clientele are persons whose family income does not exceed the low- and moderate- income limit (e.g., child care center that is not exclusively for low- and moderate-income persons). The current income limits are on CDFA s website. Required documentation shall be one or more of the following, as appropriate: a. A summary that shows how many current users have family incomes above and below the low- and moderate-income limits. The summary must be based on information about the family size and family income of each user. This information may be from existing program forms (e.g., application for day care) or it can be collected using the CDFA income survey form. Individual information forms gathered by the applicant do not have to be included with the application but may be reviewed during a site visit by department staff and/or must be available upon request at any time from department staff. b. The applicant also must certify that, if funded, it will ensure that family size and income data is collected on all current and future beneficiaries and that no less than 51 percent of the beneficiaries of the facility will be income qualified for the time period the grantee stated in their application. Test 3 Limited Clientele Based on Income Eligibility Documentation of the income eligibility requirements that limit, or will limit, benefits from the facility exclusively to low- and moderate- income persons. The income limits must be included with the application; or provided before project closeout. Test 4 Limited Clientele Based on Nature and Location of the Facility Documentation describing how the nature and, if applicable, the location of the facility or service establishes that it is used or will be used predominantly by low- and moderateincome persons. Note: Facilities must provide one year of family size and income data for the facility to be assisted. If one year of data is not available (new facility with no clientele history) the applicant must demonstrate how the services offered at the facility will be limited to lowand moderate-income persons so that the use of the facility will meet the national objective. This is done by the applicant providing the department application forms, policies and other documents and procedures that will be used to limit the use of the facility so that 51% or more of the use of the facility is for low- and moderate- income persons. 3. Housing Activities Qualification (LMH) An eligible activity carried out for the purpose of providing or improving permanent residential structures which, upon completion, will be occupied by low- and moderate- income households. This would include, but not necessarily be limited to, the acquisition or rehabilitation of property and conversion of nonresidential structures to residential. If the structure contains two dwelling units, at least one must be occupied by a lowand moderate-income household, and if the structure contains more than two dwelling units, at least 51 percent of the units must be occupied by low- and moderate- income households A. Housing Documentation (LMH) For each activity carried out for the purpose of rehabilitating or constructing housing which is determined to benefit low- and moderate-income households, each applicant must provide a description of how local program policies will ensure that only income qualified households will benefit along with a copy of the client intake and screening forms and applicable income limits to be used. 13

Note: Only the housing program gathers data by household size and household income. Household size and income is an aggregate of multiple families residing within the same residence. To determine LMI status, the household size and income is compared against the family size and income chart contained in CDFA s income survey forms 4. Jobs LMI Qualification (LMJ) Jobs are to be held by, or made available to, persons of LMI. LMI persons shall be those whose incomes are equal to or less than 80% of the area median income (AMI) limits defined and published by HUD. Jobs will qualify for these purposes only if: a. special skills that can only be acquired with substantial training or work experience or education beyond high-school are not a prerequisite to fill such jobs; or the Business agrees to hire unqualified persons and provide training; and b. the Grantee and Business take actions to ensure that LMI persons receive first consideration for filling such jobs. Jobs that are not held (filled) by L/M income persons may be claimed to be available to L/M income person only when both of the following are met: 1. The jobs do not require special skills that can only be acquired with substantial training or work experience and education beyond high school is not a prerequisite to fill such a job, unless the business agrees to hire unqualified person and train them. 2. The assisted business takes actions to ensure that L/M income persons receive first consideration for filling such jobs. Evidence must include a description of how first consideration was given to LMI persons for filling the jobs. The description shall include what hiring process was used, which LMI persons were interviewed for each job, and which LMI persons were hired The business is obligated to prove that they met the following criteria of providing first consideration : The business must use a hiring practice that under usual circumstances would result in over 51 percent of L/M income persons interviewed for applicable jobs being hired; The business must seriously consider a sufficient number of L/M income job applicants to give reasonable opportunity to fill the position with such a person and provide evidence; and The distance from residence and availability of transportation to the job site must be reasonable before a particular L/M income person may be considered a serious applicant for the job. A. Jobs LMI Documentation The following requirements must be met for jobs to be considered created or retained. a. If grantees fund activities that create jobs, there must be documentation indicating that at least 51 percent of the jobs will be held by, or made available to, LMI persons. b. For funded activities that retain jobs, there must be sufficient information documenting that the jobs would have been lost without the CDBG assistance and that one or both of the following applies to at least 51 percent of the jobs: i. The job is held by a LMI person; or ii. The job can reasonably be expected to turn over within the following two years and steps will be taken to ensure that the job will be filled by, or made available to, a LMI person 14

Area Wide/Sub-Area 24 CFR 570.483 (b)(1)(i) Limited Clientele in general 24 CFR 570.483 (b)(2)(ii) Summary Table Low and Moderate Income Definition The activity must serve an area that is primarily a low- and moderate-income permanent residential area (at least 51% low-and moderate-income.) Examples Public Works projects, Libraries, Fire Stations, Health Clinics, Community Centers and Family Resource Center projects. Definition The activity benefits a specific group(s) of low- and moderate-income persons (excludes housing). An activity may meet this criteria if it serves a 51% low- and moderate-income clientele, exclusively serves a presumed group (see definition below), be of such a nature and location that it can be concluded to serve a lowand moderate-income clientele, or remove material or architectural barriers for the mobility or accessibility of elderly persons or adults meeting the definition of severely disabled. To assist an entire facility, all services in a facility must be limited to those serving a clientele that is at least 51% low and moderate income. (Facilities that are open and available to everyone in the area must qualify under the area wide national objective. Under the limited clientele national objective, the facility must qualify based on services to limited clientele, not by use of the facility, and each user must be income qualified.) Presumed Limited Clientele 24 CFR 570.483 (b)(2)(ii)(a) Test 1 Limited Clientele based on Presumed Benefit. Definition Clientele that are generally presumed to be low- and moderate-income as determined by Housing and Urban Development. These are abused children, elderly persons, battered spouses, homeless persons, severely disabled adults, illiterate adults, persons living with AIDS, migrant farm workers. Examples Senior Centers 60+, Homeless Shelters and Domestic Violence Shelters. Family Size and Income Eligibility Limited Clientele 24 CFR 570.483 (b)(2)(ii)(c) or 24 CFR 570.483 (b)(2)(ii)(b) Test 2-Limited Clientele based on Family Size and Income and Test 3-Limited Clientele based on Income Eligibility. Nature and Location Limited Clientele 24 CFR 570.483 (b)(2)(ii)(d) Definition Activities require information on family size and income that confirm at least 51% of clientele are low- and moderate-income. Information on family size and income can be determined by clients completing the Community Facility User Certification Form (Test 2) or having income eligibility requirements (Test 3). Examples Head Start Centers, education or training, program, and Microenterprise Assistance. Definition Facility of such a nature, and be in such a location, that it may be concluded that the facility s clientele will be primarily low- and moderate-income persons. 15

Test 4-Limited Clientele based on Nature and Location of the facility Housing/Direct Benefit 24 CFR 570.483 (b)(3) Example Food Banks and Head Start Centers Low and Moderate Income Definition Activities carried out for purpose of providing or improving permanent residential structures, that upon completion, will be occupied by low- and moderate-income persons. Example Housing Rehabilitation. Low and Moderate Job Creation and Retention Activities 24 CFR 570.483 (4) Low and Moderate Income Definition An activity designed to create or retain permanent jobs where at least 51 percent of the jobs, computed on a full time equivalent basis, involve the employment of low- and moderate-income persons. Examples Clearance activities on a site slated for a new business; Financial assistance to a manufacturer for the expansion of its facilities that is expected to create permanent; and assistance to expand a small house cleaning service with four employees that agrees to hire three additional LMI employees. 16

CHAPTER 4: ELIGIBLE ACTIVITIES To accomplish the national and state objectives, funds will be distributed under the following four categories and their subcategories: 1. Community development grants, which shall consist of the following subcategories: a. Housing b. Public facilities 2. Economic development grants, which shall consist of the following subcategories: a. Business Loan b. Real Estate Development c. Public Infrastructure d. Grant to a non-profit e. Microenterprise Development f. Job Training g. Business Technical Assistance 3. Urgent Need grants 4. Feasibility grants COMMUNITY DEVELOPMENT GRANTS - HOUSING Eligible housing activities shall include: 1. Homeowner Rehabilitation, rehabilitating housing which does not meet physical condition standards for HUD housing that is decent, safe, sanitary and in good repair as defined in 24 CFR 5.703 including: a. Improving the efficient use of water and energy; b. Inspecting, testing and abating lead-based paint; c. Exterior painting; d. Providing elderly or handicapped access; e. Water, sewer, street and sidewalk improvements; and f. Maintenance of a housing inspection program, including a provision for a housing inspector. 2. Rental Housing Activities, rehabilitating housing which does not meet physical condition standards for HUD housing that is decent, safe, sanitary and in good repair as defined in 24 CFR 5.703 including: a. Historic preservation. 3. Infrastructure in support of housing. 4. Any other activity that the authority determines to be consistent with the national objectives in 42 U.S.C. 5304 (b) of the federal act. Maximum Grant Amount The maximum CDBG grant in this category is $500,000. A grantee or a subrecipient may only apply for one housing grant per year. Project Timeline All grants from the CDBG funded housing award must be completed within 18 months after execution of the funding contract with CDFA. Any unobligated funds, in the CDBG award may be recaptured by the state after this time period. Matching Funds Requirement There is no minimum match requirement. Any matching funds necessary to complete the proposed CDBG project, must be in the form of cash or debt service. All project funds necessary to complete the proposed project must be available and committed at the time the application is received by the department. Financial Review During staff review of the application, if direct and clear evidence is obtained by the department that the CDBG funds are not needed and that the project can or will be carried out by the applicant or non-profit subgrantee, whether or not the funding is awarded, the application will not be rated and ranked or recommended for an award. 17

Sub-Grant The city or county grant recipient enters into a sub-grant agreement with an eligible nonprofit organization to implement and carryout the housing activities. All federal CDBG compliance requirements assigned to the (sub-grantee) eligible non- profit remain the obligation of the original city/county funding recipient until administrative closeout of the CDBG grant with the state. Grantee Requirements Grantees must sub-grant the funds to a 501(c)(3) or (c)(4) nonprofit organization or for profit that is eligible under 105(a)(15) of the Housing and Community Development Act (HCDA)to carry-out housing activities. The municipal or county grant recipient enters into a sub-grant agreement with an eligible nonprofit organization to implement and carryout the housing activities. All federal CDBG compliance requirements assigned to the (sub-grantee) eligible non- profit remain the obligation of the original city/county funding recipient until administrative closeout of the CDBG grant with the state. Housing Activities and Program Requirements The rent shall meet one of the criteria below: a. Not exceed 100 percent of the Fair Market Rent for Existing Housing published by HUD under 24 CFR 888 in the Federal Register for no less than 5 years following completion of the project; or b. For rehabilitated housing and infrastructure improvements in combination with capital from entities which target low and moderate income beneficiaries, rents (including utility allowance) for CDBG assisted units shall be as defined by HUD in 42 U.S.C. 1437a(a)(1) of the United States Housing Act of 1937, as amended for the State of New Hampshire; and Housing Rehabilitation Neighborhood Revitalization Program Requirements The following shall be eligible for financial assistance: 1. Landlords; and 2. Low and Moderate Income Homeowners; 3. Public Housing Authorities 4. Private or Public Nonprofit Additional Conditions for Landlord Eligibility Landlords shall be eligible to receive financial assistance in order to rehabilitate housing units under the following conditions: A. At least 51 percent of the units in the building are occupied or if vacant, shall be reserved for low and moderate income households; B. The landlord agrees to rent vacant units rehabilitated with CDBG funds to low and moderate income household(s) for no less than 5 years following completion of the project; C. The rent shall meet one of the criteria below: a. Not exceed 100 percent of the Fair Market Rent for Existing Housing published by HUD under 24 CFR 888 in the Federal Register for no less than 5 years following completion of the project; or b. For rehabilitated housing and infrastructure improvements in combination with capital from entities which target low and moderate income beneficiaries, rents (including utility allowance) for CDBG assisted units shall be as defined by HUD in 42 U.S.C. 1437a(a)(1) of the United States Housing Act of 1937, as amended for the State of New Hampshire; and D. All other units in the same building meet the standards defined above whether or not all units utilize CDBG funds. E. To meet the requirements described above in the case of a 2-unit structure, only one of the units shall be required to be occupied by a low and moderate income household. 18

F. Landlords shall be eligible to receive financial assistance for the housing unit(s) actually rented to a low and moderate income household(s) in a building in which less than 51 percent of the units are occupied by such households, provided that: a. The landlord agrees to adhere to the requirements above; and b. CDBG funds shall not be used to rehabilitate the units in the building that will not be occupied by low and moderate income households. G. Landlords shall be eligible to rent at the full fair market rent level to tenants with section 8 certificates or vouchers. H. Landlords shall rent at no more than the fair market rent for a one-bedroom unit for an independent group residence, shared or congregate housing unit. I. Landlords shall rent at no more than 60 percent of the fair market rent for an efficiency housing unit or a single room occupancy housing unit. J. Low and moderate income households that acquire housing units as a result of a project shall pay no more than 30 percent of their gross income on housing cost that shall include, but not be limited to, the following: a. Monthly mortgage payments; b. Property taxes; c. Insurance; and d. Heat. K. Housing units rehabilitated with CDBG funds shall meet the following standards: a. Housing that is decent, safe, sanitary and in good repair as defined in 24 CFR 5.703, or state and municipal housing or building, electrical and plumbing codes where they exceed the HUD standards; b. The state's life safety code pursuant to RSA 153:5 and SAF-C 6000; c. The state energy code pursuant to RSA 155-D and PUC 1800; and d. Where applicable, the state's architectural barrier free design code pursuant to RSA 275- C:10 through C:18 and ABFD 300. L. The relevant rehabilitation standards above shall not apply where the sole activity consists of: a. Painting the exterior of residences of low and moderate income households; b. Removing material or architectural barriers from the residences of the elderly or handicapped; or c. Water, sewer, street and sidewalk improvements on private property in support of housing. M. The following funding limits shall apply to housing rehabilitated or assisted with CDBG funds: a. For rehabilitation of apartment units, single family and mobile/manufactured homes CDBG funds shall not exceed $18,000 per unit; and b. For single room occupancy housing CDBG funds shall be limited to $7,000 per residential unit. N. The relevant limits above shall not apply where the rehabilitated multi-family housing shall provide a long term benefit primarily to low and moderate income households by: a. Providing housing at rent levels specified in (C)(1); or b. Providing homeownership opportunities at costs no greater than those described in (J). O. For all buildings with either 8 or more residential units for which a minimum of $100,000 in CDBG funds is proposed, the applicant shall submit a proforma analysis to show revenues and expenses that will be generated from the building. The proforma and supporting information shall be submitted with the application. P. The following funding limits shall apply to shared, group and congregate housing rehabilitated with CDBG funds: 19

a. For a building of up to 8 units, CDBG funds shall be limited to $40,000 for the building plus $10,000 per unit; and b. For a building with 8 or more units, CDBG funds shall be limited to $15,000 per unit after the $40,000 base for the building provided that the applicant shall document financial solvency of the building by submission of a proforma analysis. Q. Exterior paint programs shall not exceed $300 in CDBG funds per housing unit. Paint and equipment rental shall be the only allowable costs. R. The grantee shall place a 5-year lien on any residential building which has been rehabilitated with CDBG funds. S. A municipality may operate a revolving loan fund for a housing project provided: a. That low as well as moderate income households will benefit; b. At least an equal amount of matching loan funds will be available from banks and/or other financial institutions at market or below market interest rates; c. The municipality has the long term capability to administer the revolving loan fund after the grant closeout; and d. Evidence of such long term capability may be a contract with a bank or administering agency to provide such services. 20

COMMUNITY DEVELOPMENT GRANTS - PUBLIC FACILITY GRANT REQUIREMENTS Eligible Public Facility activities shall include: 1. Public Facilities Grants for Water and Sewer 2. Public Facilities Grants for Public Property 3. Public Facilities Grant for Public Services Requirements 4. Any other activity that the authority determines to be consistent with the national objectives in 42 U.S.C. 5304 (b) of the federal act. A. Public Facilities Grants for Water and Sewer Eligible activities for public facilities grants for water and sewer shall include: 1. Extending or replacing water or sewer lines; 2. Constructing water or sewer treatment facilities; 3. Constructing water storage tanks or reservoirs; 4. Digging of wells; and 5. Any other activity that the authority determines to be consistent with the national objectives in 42 U.S.C. 5304 (b) of the federal act. Maximum Grant Amount The maximum CDBG grant in this category is $500,000. A grantee or a subrecipient may only apply for one public facility grant per year. Project Timeline All grants from the CDBG funded housing award must be completed within 18 months after execution of the funding contract with CDFA. Any unobligated funds, in the CDBG award may be recaptured by the state after this time period. Matching Funds Requirement Notwithstanding any additional requirements which might apply to a specific public facilities grant for public property, all of the activities listed as eligible shall have a minimum match ratio of 1:1 of CDBG funds to non- CDBG funds. If the applicant cannot raise the required matching funds, the applicant shall not apply. Any matching funds necessary to complete the proposed CDBG project, must be in the form of cash or debt service. All project funds necessary to complete the proposed project must be available and committed at the time the application is received by the department. Financial Review During staff review of the application, if direct and clear evidence is obtained by the department that the CDBG funds are not needed and that the project can or will be carried out by the applicant or non-profit subgrantee, whether or not the funding is awarded, the application will not be rated and ranked or recommended for an award. Sub-Grant The city or county grant recipient enters into a sub-grant agreement with an eligible nonprofit organization to implement and carryout the housing activities. All federal CDBG compliance requirements assigned to the (sub-grantee) eligible non- profit remain the obligation of the original city/county funding recipient until administrative closeout of the CDBG grant with the state. Although an eligible activity, assistance for water and sewer systems serving primarily medical facilities and nursing homes shall be of low priority and shall receive 0 points when scored, as compared to the 50 points which an eligible activity otherwise shall receive. 21