Federal Requirements

This Chapter describes all the federal requirements that apply to the CDBG program, except for the Environmental and Section 106 Historic Review. Recipients should review this Chapter carefully and refer to it as necessary to ensure compliance. The various chapter components include:

• National Objective
• Procurement
• Civil Rights and Fair Housing
• Labor Standards
• Required Contract Provisions
• Project Construction Sign
• Build America, Buy America
• Site and Easement Acquisition and Relocation
• Acquisitions Procedure
• Relocation Procedure
• Prohibited Activities
• Monitoring Policy

National Objective

The authorizing statute of the CDBG program requires that each activity funded, except for program administration and planning activities, meet one of three national objectives. The three national objectives are:

1. Benefit to low- and moderate- income (LMI) persons. The LMI national objective is often referred to as the primary national objective because statute requires that recipients expend 70 percent of their CDBG funds to meet the LMI national objective. There are four subcategories that can be used to meet the LMI national objective:
   1. Area benefit activities (Low/Mod Area or LMA): An area benefit activity is one that benefits all residents in a particular area (primarily residential), where at least 51 percent of the residents are LMI persons.
      1. Programs that use this National Objective: Water and Sewer Fund, Community Facilities and Services Fund, Opportunities and Threats Fund, and/or CDBG-CV (Covid)
   2. Limited clientele activities (Low/Mod Limited Clientele or LMC): Under the LMC national objective, at least 51 percent of the beneficiaries of an activity must be LMI persons. Activities in this category provide benefits to a specific group of persons rather than everyone in an area or benefit a clientele that is generally presumed to be principally LMI.
      1. LMI cliente includes:
         1. abused children
         2. battered spouses
         3. elderly persons
         4. severely disabled adults
         5. homeless persons
         6. illiterate adults
         7. persons living with AIDS, and
         8. migrant farm workers
         9. or have income eligibility requirements limiting the activity to LMI persons only; or be of such a nature and in such a location that it can be concluded that clients are primarily LMI.
      2. Programs that use this National Objective: Community Facilities and Services Fund benefiting a certain clientele like Senior Centers and Childcare Centers, and/or CDBGCV (Covid).
   3. Housing activities (Low/Mod Housing Activities or LMH): The LMH national objective applies to activities that provide or improve permanent residential structures which, upon completion, will be occupied by LMI households.
      1. Programs that use this National Objective: Housing Fund and/or CDBG-CV (Covid)
   4. Job creation or retention activities (Low/Mod Job creation or retention activities or LMJ): The LMJ national objective applies to activities designed to create or retain permanent jobs. Under this objective, at least 51 percent of created or retained jobs will be held by or made available to LMI persons.
      1. Programs that use this National Objective: CDBG-CV (Covid)

2. Aid in the prevention or elimination of slums or blight. Activities under this national objective must address one or more of the conditions which have contributed to the deterioration of a blighted building or area. The focus of activities is a change in the physical environment of a deteriorating area. Under the elimination of slum and blight national objective, determining the extent of, and physical conditions that contribute to, blight is central to qualifying an activity. 

   There are two categories that can be used to qualify activities under this national objective:

   1. Prevent or eliminate slums and blight on an area basis (SBA): This category covers activities that aid in the prevention or elimination of slums or blight in a designated area. The designated area in which the activity occurs must meet the definition of a slum, blighted, deteriorated or deteriorating area under state or local law. Additionally, the area must meet either one of the two conditions specified below:
      1. Public improvements throughout the area are in a general state of deterioration; or
      2. At least 25 percent of the properties throughout the area exhibit one or more of the following:
         1. Physical deterioration of buildings/improvements;
         2. Abandonment of properties;
         3. Chronic high occupancy turnover rates or chronic high vacancy rates in commercial or industrial buildings;
         4. Significant declines in property values or abnormally low property values relative to other areas in the community; or
         5. Known or suspected environmental contamination.
      3. Programs that use this National Objective: Downtown Revitalization Fund, Opportunities and Threats Fund, and/or CDBG-CV (Covid)
   2. Prevent or eliminate slum and blight on a spot basis (SBS). These are activities that address issues of public health and safety by eliminating specific conditions of blight or physical decay on a “spot” basis and are not necessarily located in a designated slum or blighted area.
      1. Programs that use this National Objective: Opportunities and Threats Fund and/or CDBG-CV (Covid)
3. Meet a need having a particular urgency (referred to as urgent need). Use of the urgent need national objective category is rare. It is designed only for activities that alleviate emergency conditions. Urgent need qualified activities must meet the following criteria:
   1. The existing conditions must pose a serious and immediate threat to the health or welfare of the community;
   2. The existing conditions are of recent origin or recently became urgent (generally, within the past 18 months);
   3. The grantee is unable to finance the activity on its own; and
   4. Other sources of funding are not available.
   5. Programs that use this National Objective: Opportunities and Threats Fund and/or CDBG-CV (Covid)

Procurement

CDBG recipients must comply with the procurement policy/standards in Appendix 2 of this guide. These regulations direct that all supplies, equipment, construction, and services be acquired efficiently and economically, through open and fair competition. You must use sound business judgment, not only in the acquisition of supplies, equipment, construction, and services, but in the settlement of all contractual and administrative issues, protests, disputes, and claims. 

As required by the Procurement Standards (Replaces 2 CFR 200 Part 318), recipients must adopt the IEDA written procurement policy and a code of conduct. The policies are included in the appendix to this Chapter and should be uploaded to IowaGrants.gov prior to the first draw. 

Recipients will need to certify that CDBG project procurement was and will be completed throughout the duration of the contract following the requirements. The Certification of Compliance form, available in Appendix 2, should be signed and uploaded into IowaGrants.gov prior to the first draw.

Recipients must ensure nondiscrimination in the solicitation and award of contracts funded in whole or in part with CDBG funds. Nondiscriminatory practices must be incorporated into the advertising and distribution of solicitations, bid specifications and bid evaluation criteria, and contracting processes. Recipients and subrecipients must take affirmative steps to use small businesses and minority- and women-owned businesses when possible as sources of supplies, equipment, construction, and services. For clearinghouses for solicitation of minority-owned and female-owned businesses, see Appendix 2.

All contracts involved in a CDBG project, regardless of how they are funded or whether or not they are included in the grant budget, must include the required CDBG federal language provisions.

Types of Procurement (Replaces 2 CFR 200.320) (based on Iowa Code section 11.117 & 11.118)

The procurement method used by the subrecipient is determined by what is being procured: construction, professional services (such as architectural, engineering, or technical services), or other general goods and/or services.

For construction, subrecipients shall refer to and follow Iowa Code chapter 26 (https://www.legis.iowa.gov/docs/code/26.pdf). Be aware that there are differing contract dollar thresholds depending upon the type of project and the type of subrecipient (e.g., county, city with a population of less than 50,000, city with a population over 50,000, etc.). These thresholds are periodically updated; please check the Code for the most current information. Please also note that regardless of Iowa Code chapter 26, HUD still requires that formal, competitive procurement, including construction bid notices, is published in a newspaper of general circulation.

For professional services (such as architectural, engineering, or technical services), subrecipients shall use a formal competitive selection process to procure the services. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost-reimbursement type contract is awarded. For more detail, see the fourth method of procurement below, “competitive proposals.”

For other general goods and/or services, subrecipients shall adhere to one of the four following methods depending upon anticipated aggregate total purchase cost, not individual line-item cost. Note that this may result in utilizing several methods of procurement. For example, if certain goods/services can be procured from a particular pool of vendors, that group of goods/services should be batched together, and the anticipated total purchase price of those items would determine the procurement method. The process would then be repeated for any remaining goods/services. (Please note that regardless of price or source of funding, any service [e.g., asbestos testing, archeological survey, etc.] requires a contract be drawn up and signed; the contract must include the CDBG required contract provisions. Purchases of goods/materials only, if less than $5,000, do not require a contract.)

1. Small: Estimated annual value does not exceed $5,000 and does not exceed $15,000 for multiyear contracts: The subrecipient does not need to solicit competitive quotations if the subrecipient considers the price to be reasonable. To the extent practicable, the subrecipient must distribute such procurement equitably among qualified suppliers.
2. Simple: Estimated annual value exceeds $5,000 but less than $50,000 per year and does not exceed $150,000 for multiyear contracts: The subrecipient may use an informal competitive selection process to engage a service provider. Informal selection means price or rate quotations must be obtained from an adequate number of qualified sources. The subrecipient may contact the prospective service providers in person, by telephone, fax, email, or letter. The subrecipient should solicit at least three prospective service providers. The subrecipient must justify, to IEDA’s satisfaction, contacting fewer than three service providers. The justification shall be included in the contract file.

3. Sealed bids: (formal advertising): Estimated annual value exceeds $50,000 per year and exceeds $150,000 for multiyear contracts: Bids are publicly solicited (i.e., published in a newspaper of general circulation) and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. A complete, adequate, and realistic specification or purchase description will be developed before bidding.

   If this method is used, the following requirements apply:

   1. Bids must be solicited from an adequate number of known suppliers, providing them sufficient response time prior to the date set for opening the bids, and the invitation for bids must be publicly advertised in a newspaper of general circulation (not required for nonprofit entities);
   2. The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond;
   3. All bids will be opened at the time and place prescribed in the invitation for bids, and the bids must be opened publicly.
   4. The subrecipient shall enter into a firm fixed price contract award with the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and
   5. Any or all bids may be rejected if there is a sound documented reason.

4. Competitive Proposals: Estimated annual value exceeds $50,000 per year and exceeds $150,000 for multiyear contracts: The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or costreimbursement type contract is awarded. It is generally used when a sealed bidding process is not appropriate, generally for service contracts. Apart from professional services such as architectural/engineering (A/E) services or technical assistance (which uses this method regardless of contract price), this method is not commonly used for traditional CDBG projects. If you believe your projects warrants this method for anything other than the professional services identified above, please consult with your IEDA project manager prior to initiating the process.

   If this method is used, the following requirements apply:

   1. Requests for proposals must be publicized (i.e., in a newspaper of general circulation) and must identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical;
   2. Proposals must be solicited from an adequate number of qualified sources;
   3. The subrecipient must have a written method for conducting technical evaluations of the proposals received and for selecting recipients;
   4. Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and
   5. The subrecipient may use competitive proposal procedures for qualificationsbased procurement of architectural/engineering (A/E) professional services whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.

Note: Noncompetitive proposals: Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply:

1. The item is available only from one possible source. This type of procurement is referred to as sole-source procurement but it is incredibly rare; 2
2. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
3. The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or
4. After solicitation of a number of sources, competition is determined inadequate. This type of procurement is referred to as single-source procurement.

If a Recipient has undergone the appropriate formal, competitive procurement process but has only received one response (i.e., “single-source procurement”), they must request and receive IEDA approval prior to entering into a contract with the lone bidder. A letter, signed by the authorized signatory of the city/county, must be sent to IEDA describing the procurement process and the resulting single response/bid. The following four items of backup documentation should be included with the letter: a) the bid specifications or RFP, b) proof of publication newspaper affidavit, c) bid/response tabulation sheet, and d) the single bid/proposal received. If the single bid came in over budget, the letter should also communicate the funding source(s) and amount that has been committed to cover the overage. After IEDA has reviewed the request letter and supporting documentation, a letter from IEDA will be returned communicating either the approval or denial of the single-source procurement.

Exception for Certain Administrative Contracts

Recipients who plan to contract for administrative services with their local regional or planning commission or councils of government, established pursuant to Chapter 28H, Code of Iowa, may do so without regard to the provisions of 2 CFR 200.320. Services must be billed on an actual cost basis. IEDA has determined that a primary function of regional planning commissions/councils of governments, under Iowa Code Chapters 28E and 28H, is to provide assistance to units of local government, under the direct supervision and control of elected officials from the local units of government served. The public purpose served by the regional planning commissions or councils of governments, combined with their local control, tends to provide protection equal to those contemplated by the provisions of Subpart 320. However, nothing prevents any recipient from complying with the provisions of Subpart 320 when procuring administrative services if the recipient deems compliance to be equitable and in the best interest of the program.

Conflicts of Interest

Recipients must avoid conflicts of interest, in the procurement of property and services. If a person is an employee, agent, consultant, elected official or appointed official of a recipient or subrecipient of CDBG funds and has project-related responsibilities or access to inside information, he or she may not obtain a financial benefit or interest from the project for himself or herself or those with whom he or she has family or business ties during his or her tenure or for one year thereafter. For more detail, see the Procurement Policy in Appendix 2.

Recipients Considered to be “State”

200.317 Procurements by states. 24 CFR 570.489(g) (which supersedes 200.317) states: 

(g) Procurement. When procuring property or services to be paid for in whole or in part with CDBG funds, the state shall follow its procurement policies and procedures. The state shall establish requirements for procurement policies and procedures for units of general local government, based on full and open competition. Methods of procurement (e.g., small purchase, sealed bids/formal advertising, competitive proposals, and noncompetitive proposals) and their applicability shall be specified by the state. Cost plus a percentage of cost and percentage of construction costs methods of contracting shall not be used. The policies and procedures shall also include standards of conduct governing employees engaged in the award or administration of contracts. (Other conflicts of interest are covered by §570.489(h).) The state shall ensure that all purchase orders and contracts include any clauses required by Federal statutes, executive orders and implementing regulations.

Entities that are considered “State” include state agencies such as Iowa Department of Natural Resources (DNR), Iowa Department of Agriculture and Land Stewardship (IDALS), and Iowa Homeland Security and Emergency Management (HSEMD), and the Iowa Civil Rights Commission (ICRC). These agencies should follow the state’s procurement policy as interpreted by their respective agencies.

Iowa State University (ISU), University of Iowa (UI), and University of Northern Iowa (UNI) are considered state agencies and are governed by the Board of Regents, State of Iowa. Purchasing authority is delegated from the Board of Regents through the Universities in accordance with the statutes and administrative rules of the State of Iowa and the procedures of the Board of Regents. All University purchases are made in accordance with University Policy, regardless of source of funds.

If goods are procured by entities defined as “State” Iowa Code 8A.316 and 11.117 as interpreted by their respective state agencies will apply.

Civil Rights and Fair Housing

CDBG contracts with IEDA include several federal regulations related to civil rights, equal opportunity, and fair housing. These regulations mandate that no person in the United States shall, on the grounds of race, color, national origin, religion, creed, age, sex, disability, familial status, political affiliation, citizenship, gender identity, or sexual orientation be denied benefits or be subjected to discrimination under any program funded in whole or in part with federal funds. By signing a contract, recipients certify they will comply with the laws and regulations listed. Recipients should contact their project manager with questions regarding these requirements. While some of the civil rights and fair housing regulations simply prohibit discrimination, others require recipients to take affirmative steps or action, such as are addressed below.

Affirmatively Furthering Fair Housing

Title VIII of the Civil Rights Act of 1968 and Title I of the Housing and Community Development Act of 1974 require that recipients take some action to affirmatively further fair housing in their communities. Acceptable actions range from using the equal housing opportunity logo on your letterhead to sponsoring fair housing training for landlords, real estate agents and lenders.

A list of mandatory & elective affirmative fair housing actions is included in the appendix to this chapter. All grantees receiving CDBG funds through the State must complete all mandatory actions and at least one elective strategy regardless of the CDBG funded project. This requirement is not limited to CDBG housing projects. Recipients should document all activities and results, including date(s) actions were taken. At project monitoring, the project manager will review the actions taken by the recipient to affirmatively further fair housing, so grant administrators should ensure that all fair housing actions have been taken and documented by the time the project reaches 50% expended.

Affirmative Action in Soliciting Minority/Women Business Enterprises

Executive Orders 11625, 12432 and 12138 require recipients to make every effort to solicit the participation of minority- and women-owned business enterprises (MBE/WBE) in their projects. Recipients must specify the outreach actions they will take to ensure the inclusion, to the maximum extent possible, of minorities and women and entities owned by minorities and women, in all contracts.

Per the CDBG procurement policy in Appendix 2, recipients must take the following affirmative steps to solicit MBE/ WBEs:

1. Place qualified small and minority businesses and women's business enterprises on solicitation lists,
2. Assure that small and minority businesses and women's business enterprises are solicited whenever they are potential sources,
3. Divide total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority businesses and women's business enterprises,
4. Establish delivery schedules, where the requirement permits, which encourage participation by small and minority businesses and women's business enterprises,
5. Use the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce, and
6. Require the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in in the steps above.

Recipients should include qualified MBEs and WBEs on your solicitation lists and solicit their participation whenever they are potential sources of goods or services you need. A list of clearinghouses for solicitation of MBEs and WBEs is included in the appendix to this Chapter.

Recipients should also utilize the state of Iowa’s Targeted Small Business (TSB) directory to help identify MBE/ WBEs that can provide services associated with your CDBG project. Iowa’s TSB directory can be found online. Recipients should share Section 3 information with those businesses on the State’s TSB directory to see if they may also qualify as a Section 3 business.

At project monitoring, the project manager will review the efforts taken to solicit MBE/WBE participation and the results. Recipients will also be asked to report on achievements in this area after your project is completed.

Section 3

The purpose of Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) (Section 3) is to ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing Federal, State and local laws and regulations, be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to businesses which provide economic opportunities to low- and very low-income persons.

Section 3 applies to CDBG funding and required Section 3 language must be incorporated into all procurement documents. Section 3 requirements and documentation are covered in Chapter 8 and Appendix 8 of the Management Guide.

Section 504 of the Rehabilitation Act of 1973 / Americans with Disabilities Act

Section 504 and the ADA require accessibility of CDBG projects to persons with disabilities. The law requires that new facilities assisted with federal funds be designed and constructed to be readily available to and usable by individuals with disabilities. Alterations to existing (nonhousing) facilities shall, to the maximum extent feasible, be made to be readily accessible to and usable by individuals with disabilities. For existing (non-housing) facilities, recipients shall operate programs and activities receiving CDBG assistance so that the program or activity, when viewed in its entirety, is readily accessible to and usable by individuals with disabilities. In order for housing projects to comply with Section 504, a minimum of five (5) percent of the total dwelling units in a multi-family (8 or more units) housing project shall be made accessible for persons with mobility impairments. An additional two (2) percent of units in such a project shall be accessible for persons with hearing or vision impairments.

Recipients should work closely with their architect/engineer to ensure plans comply with Section 504 and ADA.

Labor Standards

Federal laws and regulations relating to labor standards include the following:

• The Davis-Bacon Act
• The Copeland “Anti-Kickback” Act
• The Contract Work Hours and Safety Standards Act

As applicable, recipients must comply with these laws, and make sure contractors and subcontractors comply as well. These laws apply to all construction contracts in excess of $2,000.

Davis-Bacon Act

Davis-Bacon requires that the wage paid to employees must be equal to or higher than the U.S. Department of Labor’s (DOL) determination of the prevailing wage rates for the project type and locality in which the work is being done. Note that housing conversion projects with seven (7) or fewer units are exempt from Davis-Bacon.

Copeland "Anti-Kickback" Act

The basic requirements of the Copeland “Anti-Kickback” Act are as follows:

1. Payment to employees must be made at least once a week and without subsequent deductions or rebate on any account, except for “permissible” salary deductions.
2. You must obtain and review payroll forms, including the “Statement of Compliance” from contractors and subcontractors, on a weekly basis.
3. You must retain these documents for five years after work completion; each employer must maintain records supporting the payrolls for three years after work completion.

Contract Work Hours and Safety Standards Act

The basic requirements of the Contract Work Hours and Safety Standards Act are as follows:

1. Employees shall not work in excess of 40 hours in any workweek unless they receive overtime compensation at a rate not less than one and one-half times the basic rate of pay for those overtime hours worked. The contractor or subcontractor shall be liable to any affected employee for unpaid wages. 2)
2. Contractors in violation of the Contract Work Hours and Safety Standards Act (overtime law) are liable to the United States government for liquidated damages, computed at $25 per day for each employee who worked overtime and was not paid overtime wages. The contractor must submit a certified check for the total amount of liquidated damages to IEDA upon request. Funds may be withheld from contractors and subcontractors to satisfy unpaid wages and liquidated damages only after the contractor or subcontractor receives written notification that funds will be withheld to satisfy labor standards provisions.

Labor Standards Compliance Officer

The labor standards described in this section are complicated and require thorough documentation. Therefore, recipients must designate a Labor Standards Compliance Officer. This person has overall responsibility for labor compliance and for maintaining the project’s labor files. The Labor Standards Compliance Officer must do the following:

1. Visit the construction site to confirm the required posters (“Notice to Employees,” “Job Safety and Health Protection” and “Equal Employment Opportunity”) and correct wage determinations are posted in clear view of employees. Copies for your reference are included in the appendix to this chapter; you may receive a complete packet upon request with your wage determination.
2. Collect and examine weekly payrolls as they are submitted so that any necessary corrective action can be initiated immediately. Items to be reviewed include classification of workers, comparison between the classification and wage to verify that the rate is at least equal to that required by the wage rate determination; overtime pay, if applicable; deductions; apprentice/trainee information, and statement of compliance signature by owner or an officer of the construction company If the compliance signature is from a representative other than the owner or an officer, an authorization for the alternative signature must be provided.
3. Conduct employee interviews. The number of interviews must be sufficient to establish compliance and must represent all classifications of employees.
4. Maintain the labor standards file. The file should include the following:
   1. Verification of eligibility of each contractor
   2. Wage rate determination
   3. Construction bid package
   4. Public advertisements for bids
   5. Documentation of efforts to solicit minority/women contractor participation
   6. List from the general contractor of all subcontractors and lower-tier subcontractors that will work on project
   7. Scope of work statement for each contractor and subcontractor
   8. Contract documents (with required federal language)
   9. Pre-construction conference minutes
   10. Indication of construction start date
   11. Contractor/subcontractor employee payroll sheets/statement of compliance
   12. Employee interview forms (including Section 3 interviews, if applicable)
   13. Other related correspondence

Resource Documents

• Federal Labor Standard Requirements in Housing and Urban Development Programs: HUD Handbook 1344.1 Rev. 2: Federal Labor Standards Requirements in HUD Programs (1344.1 https://www.hud.gov/program_offices/administration/hudclips/handbooks/sech/13441
• Davis-Bacon and Labor Standards Agency and Contractor Guide, plus the Contractor Guide Addendum: https://www.hudexchange.info/resource/6717/davis-bacon-and-laborstandards-agency-contractor-guide-and-contractor-addendum/

Requesting Wage Rate Determinations

Recipients obtain wage rate determinations by making a request in Iowagrants.gov. The request should be submitted 30 days in advance of the bid advertisement date. Upon receipt of the request, IEDA will review the information provided and issue the appropriate wage rate determination.

General wage rate determinations published by the DOL Employment Standards Administration, Wage and Hour Division, are effective until superseded or modified in a subsequent published wage rate determination. You must contact IEDA 10 days before the bid opening date to verify that your wage rate is still current. Changes to wage rate determinations published less than 10 days before bid opening do not apply if your files include a statement of justification or other documentation establishing that there was not reasonable time available to notify all the contractors planning to submit bids. You must also contact IEDA for an update if you have not awarded a contract within 90 days after the bid opening.

Wage rate determinations must be included in all bid solicitations and construction contracts. The construction bid solicitation should include language that the project is a federal project subject to the Davis-Bacon prevailing wage requirements. Contractors must post the wage rate determination in a prominent work site location that is accessible to all workers employed on the project.

Requesting Approval of Additional Classifications

After award, if a contractor or subcontractor must use a craft or category of worker that is not listed on the wage rate determination, the contractor or subcontractor must submit to you, on the company’s letterhead, a description of the craft to be employed and the hourly basic rate and fringe benefits to be paid. The rate must fall within the range of other skilled classification rates in the wage determination. 

Recipients must forward the information described above to IEDA. A sample form is included in the appendix to this chapter for requesting approval of additional classifications. IEDA will review the request and forward it to the Department of Labor for approval. Please allow six weeks for this process.

Contractor Eligibility

Recipients must verify the eligibility status of all contractors and subcontractors to ensure they are not listed on HUD’s Consolidated List of Debarred, Suspended and Ineligible Contractors or DOL’s Consolidated List of Debarred and Suspended Contractors. This requirement also applies to engineers, architects, other professional service providers, and grant administrators. Recipients must also verify that all contractors are registered in the State of Iowa and have a valid registration number. Verification must be completed before any contract is awarded.

Recipients must check the federal SAM database (www.sam.gov) prior to awarding or entering into a contract to ensure contractors are not on the debarred list. Recipients should enter the date that SAM was checked for contractor eligibility in Iowagrants.gov. Recipients must then request verification of contractor eligibility by submitting the request in Iowagrants.gov as a Contractor Clearance form. Upon receipt, IEDA will verify the listed contractor and confirm contractor eligibility to the recipient by approving the form.

Labor Standards Administration and Compliance

Other DOL administration and compliance activities which recipients and their contractors and subcontractors are responsible for include the following:

• The prime contractor shall be responsible for compliance by any subcontractor or lower-tier subcontractor with all labor provisions.
• You must hold a pre-construction conference with the prime contractor and available subcontractors before the start of construction. Participants must be advised of their responsibilities to abide by labor standards provisions and the wage determination contained in the contract documents. Minutes documenting each conference must contain the project name, location, and description; wage determination number; name of contractor; contract amount; date and place of conference; conference participants; and a summary of items discussed. You should retain minutes of each pre-construction conference in your labor standards file.
• Contractors must make pertinent records available for review and permit on-the-job interviews of employees.
• Contractors and subcontractors may be terminated for noncompliance with labor standards and will be liable for any excess cost involved in completing the work.
• Contractors must be able to furnish certificates from the Bureau of Apprenticeship and Training for apprentices or trainees employed on a particular project. All apprentices must be identified in each payroll submission. The ratio of apprentices to journeymen must not exceed the approved ratio under their respective program and their wage rate must not be less than prescribed under those programs. A DOL Summer Youth Program allows contractors to hire 18-22 year old workers at lower than the prevailing wage. Contractors must secure IEDA approval before using these workers and the lower pay scale.
• All construction contracts covered by Davis-Bacon and subject to labor standards must contain standard provisions and certifications. A copy of the “Federal Labor Standards Provisions” is included in the appendix to this chapter. All subcontracts must include the same provisions and certifications as those of the major contract with respect to federal laws.
• Contractors and subcontractors may use DOL Form WH-347 (“Payroll”) or any other alternate form which provides the same information. If an alternate payroll form is used, the certification language on the back of WH-347 must also be attached. Each contractor and subcontractor and any lower-tier subcontractor must submit weekly payrolls to your designated Labor Standards Compliance Officer for each workweek from the time work starts until it is completed. If no work is performed during a workweek, weekly payrolls need not be submitted. Weekly payrolls shall be numbered sequentially, and the final payrolls marked “final.” A sample payroll form with instructions is included in Appendix 2. Any subcontractor whose owner is working without any employees on a given work week must be listed on the general contractor’s weekly certified payroll.
• You must examine payrolls and related records to ensure compliance with DOL labor standards clauses and applicable federal statutes. You should examine payrolls, related records and employee interviews; verify that apprentices and trainees are registered or certified; ensure the wage rate determination was posted at the worksite; and check the handling of labor-related complaints.
• Employee interviews are required to verify compliance with the prevailing wage requirements. These interview forms (HUD-11 Employee Interview Form) must be compared with the corresponding weekly Certified Payroll Report for the period the interviews are conducted. Once reviewed, the HUD-11 Employee Interview Form must be singed by the person completing the review/payroll examination and any discrepancies noted between the HUD-11 information and that on the payroll report should be noted in the “Remarks” section. If discrepancies are noted, follow-up actions to resolve the discrepancies must be taken.
• Underpayments of $1,000 or more per employer, contractor or subcontractor must be reported to DOL through IEDA. For further information on reporting requirements, contact IEDA’s labor specialist.

Summer Youth Employment

Contractors employing workers aged 18-22 (who are bona fide high school, technical school, or college students) on HUD-insured or assisted HUD construction projects during the summer (May 15 through September 30) may be exempt from Davis-Bacon and related labor acts. Requirements and stipulations that must be met before summer youth are employed at less than Davis-Bacon rates are as follows:

1. Youth must be sponsored by a responsible employment, training and/or community outreach organization, such as the National Association of Home Builders, Associated Builders and Contractors, Urban Coalition, Private Industry Council, National Urban League, organized labor, a local school, or similar organization, as part of a bona fide Youth Opportunity Program.
2. Youth must be bona fide students employed on a temporary basis for the summer.
3. Where collective bargaining agreements exist that cover workers performing similar or related activities at the worksite to which youth are stationed, the union or unions representing those workers must provide concurrence as to the design of the employment project and the use of the youth.
4. The employment must be provided in accordance with state and federal statutory safety, child labor and minimum wage requirements.
5. Competent supervision must be provided to all youth employed on the project worksites. Ratios of youth to such supervisors should be no greater than four to one.

To ensure that the administration of summer youth employment complies with DOL policies and regulations, requests for exceptions to Davis-Bacon must be made to IEDA, which will review the request for its appropriateness and forward it the HUD Field Office Labor Relations Staff for final disposition. Requests must meet the requirements listed above and include the number of youth to be employed and the name of the referring organization. IEDA will advise the requesting contractor in writing of the HUD Labor Relations Office decision. 

Programs sponsored by the Workforce Investment Act of 1998 (which replaced the Job Training Partnership Act) that are registered with the Bureau of Apprenticeship and Training would be recognized as bona fide training programs. Therefore, they could be exempt from complying with Davis-Bacon requirements. Check with IEDA's Labor Standards Officer if the project employs apprentices under the WIA.

Required Contract Provisions

Recipients must certify that all federal requirements listed in their contracts with IEDA are satisfied. Further, the certifications must be part of every contract and subcontract the recipient executes. A full listing of required contract language is included in the appendix to this chapter.

If the required language is not embedded into the body of the contract but rather included as an attachment or appendix, then that attachment or appendix needs to have a signature/date block and the contractor must sign to agree to the CDBG provisions.

Recipients must ensure that all contracts include the following provisions, as applicable:

• Davis-Bacon Act
• Copeland “Anti-Kickback” Act
• Contract Work Hours and Safety Standards Act
• Access to records by government officials
• Maintenance of records for three years after the closeout of the CDBG grant between HUD and IEDA
• Termination clauses
• Federal Labor Standards Provisions – Form 4010
• Required civil rights provisions
• Equal Employment Opportunity provisions
• Executive Order 11246, for Contracts in excess of $10,000
• Required provisions for contracts in excess of $100,000
• Required provisions for contracts in excess of the simplified acquisition threshold currently set at $150,000
• Clean Air Act and Federal Water Pollution Control Act for contracts in excess of $150,000 Section 3 clause
• Build America, Buy America
• Debarment and Suspension
• Byrd Anti-Lobbying Amendment
• Mandatory standards and policies relating to energy efficiency
• Procurement of recovered materials Rights to Inventions Made Under a Contract or Agreement.

Project Construction Sign

In order to increase awareness of the benefit that CDBG funds provide to communities, please have a sign placed at the construction site during construction. Specifications for the sign can be found in Appendix 2. You should give these sign specifications to the project architect or engineer so they can be included in the construction specifications book that will be given to each contractor bidding on the project. If you have questions about the project construction sign, please call your project manager.

Build America, Buy America

The Build America, Buy America Act (BABA) applies a domestic content procurement preference to federally funded public infrastructure projects. The goal of BABA is to increase a resilient domestic supply chain and manufacturing supply for critical materials both for emerging and existing industries in the United States. 

The Buy America Preference was enacted under Division G, Title IX of the Infrastructure Investment and Jobs Act (IIJA). Per Section 70914 of the IIJA, a federal agency may not obligate funds for an “infrastructure project” unless all iron, steel, manufactured products, and construction materials used in the project are produced in the United States or a waiver applies to the domestic content procurement preference.

The following applicable federal guidance regarding BABA has been issued:

1. M-24-02 Guidance Update from the Office of Management and Budget (OMB) dated October 2023
2. The US Department of Housing and Urban Development (HUD) has outlined their implementation of the Buy America Preference in a document dated November 2, 2023 (CPD-2023-12), and titled CPD Implementation Guidance for the Build America, Buy America Act.

A certification or proof of compliance must be provided, to the satisfaction of IEDA/IFA, by all the suppliers and manufacturers of iron or steel products, manufactured products, and construction materials used in each project. See Definitions of Categories for more information.

Implementation of BABA and subsequent expectations varies by each federal agency and is subject to change. This management guide provides summaries of guidance from HUD, several appendices to assist with compliance of the Buy America Preference for HUD programs managed by IEDA/IFA and associated procedures and records requirements. Not every project implementation scenario and circumstances can be foreseen. Therefore, staying in contact with IEDA/IFA about experiences, challenges, and questions is recommended.

The Buy America Preference

Recipients of an award of Federal financial assistance are notified that no funds provided under their award may be used for an infrastructure project unless:

1. All iron and steel used in the project are produced in the United States - this means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.
2. All manufactured products used in the project are produced in the United States - this means the manufactured product was manufactured in the United States; and the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, and
3. All construction materials are manufactured in the United States - this means all manufacturing processes for the construction material occurred in the United States.

The Buy America Preference only applies to articles, materials, and supplies that are consumed in, incorporated into, or affixed to an infrastructure project. The Buy America Preference does not apply to:

1. Tools, equipment, and supplies, such as temporary scaffolding, brought to the construction site and removed at or before the completion of the infrastructure project
2. Equipment and furnishings, such as movable chairs, desks, and portable computer equipment, which are used at or within the finished infrastructure project but are not an integral part of the structure or permanently affixed to the infrastructure project.
3. Materials defined as Section 70917(c) materials, meaning cement and cementitious materials; aggregates such as stone, sand, or gravel; or aggregate binding agents or additives. See Section 70917(c) of the IIJA for more information.

Additional guidance on the definition of an infrastructure project is provided in the M-24-02 and CPD-2023-12 memos. Any questions regarding whether BABA applies to a certain project or component should be directed to IEDA/IFA.

Categories of Infrastructure Items

Identifying the category that each infrastructure item meets is a critical step for compliance with BABA. The following are definitions that have relevance to the interpretation and implementation of the Buy America Preference for HUD programs.

For all items planned to be permanently affixed to the infrastructure project, grantees will need to identify the applicable category for each item. An article, material or supply should not be classified into more than one category and must be made based on the status of the article, material, or supply upon arrival to the work site for use on an infrastructure project. The definitions for each category are as follows:

1. “Iron or Steel Products” means articles, materials, or supplies that consist wholly or predominantly of iron or steel or a combination of both.
2. “Predominantly of Iron or Steel or a Combination of Both” means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components.
3. “Construction Materials” means articles, materials, or supplies that consist of only one of the following items listed in paragraph (1) of this definition, except as provided in paragraph (2) of this definition. To the extent one of the items listed in paragraph (1) contains as inputs other items listed in paragraph (1), it is nonetheless a construction material. Minor additions of articles, materials, supplies, or binding agents to a construction material do not change the categorization of the construction material.
   1. The listed items are:
      1. Non-ferrous metals.
      2. Plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables).
      3. Glass (including optic glass).
      4. Fiber optic cable (including drop cable).
      5. Optical fiber.
      6. Lumber.
      7. Engineered wood.
      8. Drywall.
   2. “Not-Listed Construction Materials” means the category of construction materials that are subject to the Buy America Preference, but not included in HUD’s specifically listed construction materials, as defined in the Phased Implementation Waiver. These materials are automatically waived from the BABA requirements until projects with obligated funding on October 1, 2024.
      1. Plastic and polymer-based products other than composite building materials or plastic and polymer-based pipe and tube.
      2. Glass (including optic glass).  
      3. Drywall.
4. “Manufactured Products” means:
   1. Articles, materials, or supplies that have been processed into a specific form and shape or combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies.
   2. If an item is classified as an iron or steel product, a construction material, or a Section 70917(c) material under 2 CFR 184.4(e) and the definitions set forth in 2 CFR 184.3, then it is not a manufactured product. However, an article, material, or supply classified as a manufactured product under 2 CFR 184.4(e) and paragraph (1) of this definition may include components that are construction materials, iron or steel products, or Section 70917(c) materials. See guidance on the cost of components for manufactured products to help determine compliance with the Buy America Preference.
5. “Manufactured Products - Cost of Components” means for items that fit the definition of manufactured products, the Buy America Requirement specifies that the cost of components from domestic sources must be greater than 55 percent. In determining whether the cost of components for manufactured products is greater than 55 percent of the total cost of all components, the following instructions must be used by manufacturers:
   1. For components purchased by the manufacturer, the acquisition cost, including transportation costs to the place of incorporation into the manufactured product (whether such costs are paid to a domestic firm), and any applicable duty (whether a duty-free entry certificate is issued), or
   2. For components manufactured by the manufacturer, all costs associated with the manufacture of the component, including transportation costs as described in paragraph (1), plus allocable overhead costs, but excluding profit. Cost of components does not include any costs associated with the manufacture of the manufactured product (example: labor costs).
6. “Section 70917(c) Materials” means cement and cementitious materials; aggregates such as stone, sand, or gravel; or aggregate binding agents or additives. See Section 70917(c) of the IIJA. These materials are specifically excluded from the definition of construction materials, so projects using those materials do not need to procure them in compliance with the domestic preference requirement under BABA. However, the materials need to be identified and classified as Section 70917(c) materials in project records.

IEDA/IFA recommends that grantees and their representatives confirm manufacturers’ understanding regarding the cost of components guidance when reviewing certifications.

Compliance Procedures (Procurement, Classification and Claims)

Procurement

Grantees must incorporate BABA into procurement procedure and bid solicitations which follow federal regulations under 2 CFR 200. See separate Management Guide chapter on Procurement Standards. All contracts, including administration, engineering and construction, must include the BABA language available in Appendix 2 Required Contract Provisions. 

In addition, the bid packet, prepared by the project engineer or architect, should list all products which are part of the project that are required to meet BABA regulations. This includes all iron and steel, defined construction materials and manufactured products that are part of the project. This is to ensure bidders are prepared to submit manufacturer certifications on each BABA-covered item based on its applicable category. 

Manufacturers of iron or steel, construction materials, and manufactured products are expected to provide certification of compliance with Build America Buy America to your project’s general contractor. Examples of information that may be included in a certification:

1. A reference to the project.
2. Specific item information.
3. Reference to BABA requirement, classification and how any specific requirements relate to their item (for example, the cost of components of a manufactured product).
4. Location of where item is manufactured or produced.
5. A company representative signature and contact information.

The winning contractor will take the engineer or architect BABA-covered list and provide certifications for each BABA-covered product on the project.

Grant administrators should take the list of BABA-covered products from the engineer or architect and the certifications that the contractor submitted for each product in the project and include them in IEDA/IFA’s Project Items BABA Status Worksheet throughout the project. The worksheet should be filled out and uploaded to Iowa Grants under the BABA-compliance tab.

No construction activity claim will be approved without certification that the contractor has met BABA requirements for that respective claim. The expectation is that the certification submittal should begin prior to the start of construction. For each construction activity claim, the contractor and engineer will certify that the materials used in that particular pay request are BABAcompliant. Grantees will provide the form for the engineer and contractor to certify.

Upon submitting a claim on Iowa Grants, the grantee will certify that the claim is BABA-compliant. Grantees should have the certifications on file documenting compliance. The grantee will be required to keep records of the certification documentation consistent with existing records retention.

Classification

For each project, grant administrators must use IEDA/IFA’s Project Items BABA Status Worksheet to identify and track all project items and which category they are to be classified. The required certification from each manufacturer regarding BABA compliance may provide additional information regarding product classification based on how it was made and its contents.

Federal requirements provide that the classification of each item as falling into one of the categories must be made on its status at the time it is brought to the work site for incorporation into an infrastructure project. Grantees will need to ensure this requirement as each item is delivered and incorporated into the project.

Records

Grantees should document the process used to analyze if the Buy America Preference applies to your project and collect records to demonstrate compliance with BABA requirements. This can be part of the Project Items BABA Status Worksheet. Records should be consistent with existing records retention requirements.

IEDA/IFA requires use of the Project Items BABA Status Worksheet as minimum documentation. However, grantees are free to develop any system for tracking items used on the project and the accompanying compliance documentation if it helps with implementation and compliance. Helpful data may include product description, quantity required/used, product category (i.e., iron and steel, manufactured product, or construction material as otherwise required), specifications and standards required, status of obtaining certification letter, product cost, and whether the item might qualify under another applicable waiver.

You may find that market research is important in determining compliance. While this is not required, IEDA/IFA encourages innovative research and compliance tools to assist with meeting BABA regulations.

Education is another critical component to successfully administering these new requirements. Grantees should educate engineers and contractors on the process to help you administer the project faster, easier and more successfully.

Waivers

The Buy America Preference applies to all infrastructure spending unless HUD issues a waiver in three limited situations:

1. When applying the domestic content procurement requirement would be inconsistent with the public interest.
2. When types of iron, steel, manufactured products, or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality.
3. Where the inclusion of those products and materials will increase the cost of the overall project by more than 25%.

The following steps are required to be considered for a waiver:

1. The waiver request process will require a significant amount of research and effort. All waiver requests must include a detailed justification for the use of goods, products, or materials mined, produced, or manufactured outside the United States and a certification that there was a good faith effort to solicit bids for domestic products supported by terms included in requests for proposals, contracts, or nonproprietary communications with potential suppliers. First, contact your IEDA/IFA program manager or IEDA/IFA’s BABA Coordinator before you begin the waiver process.
2. Documentation of efforts to identify compliant items for the project will need to be summarized and attached to the waiver request form required by IEDA/IFA. Information from suppliers, manufacturers, and bids (if applicable) should be used to develop the waiver request. You must work with your program manager or IEDA/IFA’s BABA Coordinator to prepare the waiver form for submittal to HUD. Prior to submission to HUD, the latest Project Items BABA Status Worksheet should be submitted to IEDA for a full picture of the status of BABA compliance for the project.
3. IEDA/IFA will review the information and determine whether to submit the waiver request to HUD. If additional research is warranted, IEDA/IFA will provide additional instructions to complete the waiver request form prior to submittal or guidance regarding potential BABA-compliant alternatives for the project.
4. IEDA/IFA will finalize and submit the waiver request form to HUD. The estimated turnaround time for federal review of the request is at least 90 days. However, it may take longer. This process could significantly delay the project.
5. You must receive HUD approval of the waiver before construction on your project begins, and/or any time during the project when it becomes apparent that a waiver is necessary. If the waiver request is denied, IEDA/IFA will consult with each project on next steps.

Non-Compliance

Additional guidance from HUD on non-compliance may be forthcoming. Below is some information on non-compliance and potential remedies for education purposes only. IEDA/IFA anticipates involvement of HUD when non-compliance is identified.

Examples of non-compliance are provided below:

1. Improper Implementation: The award recipient or sub-recipient attempted to comply with the Buy American provisions but did so in an improper manner. Often occurs because of process problems, oversight problems, confusion, or lack of resources.
2. Mislead by Contractor, Vendor, or Manufacturer: The award recipient or sub-recipient has been misled by a contractor, vendor, or manufacturer. 3
3. Award Recipient Misconduct: The award recipient or sub-recipient made no genuine attempt to comply with the Buy American provisions.
4. Fraud: A vendor/manufacturer knowingly certifies falsely that their product is Buy American Compliant, or an award recipient or sub-recipient states that they are using compliant goods, when they knowingly are not.

Potential remedies for non-compliance:

1. Cancellation of purchase: If materials that are non-compliant have been procured, but not installed into the project, those items should not be used.
2. Removal of the non-compliant materials.
3. Absorption of the cost of non-compliant items.
4. Reduction of award value by procurement cost of non-compliant materials.
5. Withhold payment, suspend, or terminate award.
6. Withhold or restrict future awards or debarment from federal assistance, contracts, and subcontracts.

Appendices

The following files can be found in the Appendix 2 of this Guide: 

1. Waiver request form.
2. Sample certification form.
3. Project Items BABA Status Worksheet.
4. Sample language for inclusion in contracts.

Site and Easement Acquisition and Relocation

The requirements in this section apply to acquisition of real property and permanent easements necessary for CDBG projects. The primary source for HUD real estate acquisition and relocation policy is HUD Handbook 1378, available on the HUD website: https://www.hud.gov/program_offices/administration/hudclips/handbooks/cpd/13780

There are two laws that govern property acquisition when CDBG funds are involved: The Uniform Relocation and Real Property Acquisition Act of 1970 (URA) and Section 104(d) of the Housing and Community Development Act of 1974. The following sections provide a general summary of the most common requirements of CDBG recipients under these laws.

Acquisition and relocation requirements are applicable to the CDBG recipient (City or County government) or the subrecipient (e.g., non-profit organization or Rural Water District, etc.). Regardless of whether property is purchased with CDBG funds or local funds, the purchase must still follow the acquisition and relocation requirements outlined in the following pages.

Section 104(d) requires recipients to provide a one-for-one replacement of all occupied and vacant, occupiable lower-income dwelling units that are demolished or converted to another use in connection with a CDBG-assisted activity, unless the State determines that objective data indicates that there is an adequate supply of vacant lower-income dwellings in standard condition available.

Acquisitions Procedure

If the entity purchasing the property does NOT have the power of eminent domain (such as nonprofits, Rural Water Districts, etc.), the following process should be followed:

1. The subrecipient notifies the property owner in writing by certified mail that it does not have the power of eminent domain and therefore, it will be unable to acquire the property in the event negotiations fail.
2. Inform the owner in writing by certified mail of the fair market value for the property; an appraisal is not necessary, but the offer must include an explanation of how the value was reached.

A sample notice is included in Appendix 2 of this guide. 

If the entity purchasing the property DOES have the power of eminent domain (City or County), the recipient must determine if the purchase is voluntary or involuntary.

A voluntary purchase must meet all of the following criteria:

1. No specific property is needed, but the search for alternative sites may be limited to a general geographic area.
2. The property is not part of a planned or designated area where all the property in the area will eventually be acquired.
3. The recipient agrees that it will not use its power of eminent domain even if negotiations fail.
4. There are no tenants currently or recently living at the property.

If all of the above is true, the recipient must inform the property owner in writing by way of certified mail:

6. The power of eminent domain will not be used if negotiations fail, and
7. Fair market value for the property; an appraisal is not necessary, but the offer must include an estimate of Fair Market Value. The offer does not have to equal the Fair Market Value.

A sample notice is included in Appendix 2 of this guide. 

If all of the above criteria for voluntary acquisition are not met, the purchase is involuntary. The recipient must then complete the following:

7. Provide Notice of Interest to the Property Owner: This notice tells the owner of the recipient’s interest in acquiring the property. It should be issued as soon as is feasible, following the recipient’s identification of the real property in which it has an interest. The notice must outline the protection available to the owner and should include information on the recipient’s process and obligation in conducting an appraisal. The HUD brochure “When a Public Agency Acquires Your Property” found in Appendix 2 (Form HUD-1041-CPD) explains the URA policies. The text of this brochure is included in the appendix to this chapter. Copies of the printed brochure are available upon request from IEDA. This must be given to the property owners.
8. Notice: Recipient must provide notice, as required, to tenants throughout the process.

9. Appraisal: After the owner has been notified of the recipient’s interest in the property, an appraisal must be conducted. The appraisal should be done before negotiating the purchase price. The property owner or a representative must be given the opportunity to accompany the appraiser while on site.

   Appraisals are defined as written statements setting forth the market value of a specific property on a specific date. This analysis must be conducted independently and impartially by a certified appraiser and must be supported by analysis of relevant market information. The market value of a partial acquisition is the value of the whole property less the value of the remaining property. To the extent possible under the law, the appraiser should disregard any enhanced or decreased value to the property to be caused by the project.

   Appraisals conducted for the acquisition of property for federally funded projects must follow the Uniform Standards of Professional Appraisal Practice (USPAP). These standards can be found online. 

   Appraisals are not required if the owner is donating the property and releases the recipient from its obligation after being informed in writing of the right to an appraisal. Appraisals are also not necessary when the Agency (i.e., Responsible Entity, in consultation with IEDA) determines that the property valuation problem will be uncomplicated and the available data indicate a market value of less than $10,000 (up to $25,000 if the Agency offers the landowner an appraisal and he refuses it in writing). If the above criteria are met, then the Agency will prepare a waiver valuation drafted by a person having sufficient understanding of the local real estate market. If the property owner requests an appraisal, one will be conducted.

   Recipients must establish minimum qualifications for appraisers. These vary according to the difficulty of the review. Inexperienced appraisers should not be asked to examine complex properties. The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) standards apply to URA. Fee appraisers making a detailed appraisal must be state certified. For a list of state certified appraisers, go to https://www.asc.gov/appraiser.

   Appraisers must not have any conflicts of interest with the owner or property they are to review. This includes direct and indirect ties. Payment for conducting the appraisal may not be tied to the resulting property value. 

   The appraiser shall disregard any decrease or increase in the market value of the real property caused by the project for which the property is to be acquired, or by the likelihood that the property would be acquired for the project, other than that due to physical deterioration within the reasonable control of the owner

10. Review of Appraisal: After the initial appraisal is conducted, the appraisal must be examined by a qualified review appraiser. The review appraiser must examine all appraisals to check for accuracy, documentation, and soundness of opinion. If the review appraiser does not accept an appraisal, a second full appraisal must be sought. If the review appraiser does not agree with the original appraisal and it is not practical to do a second appraisal, the review appraiser may present and analyze market value information to support a recommended value. The reasons for the change and the new value must be set out in a certified document.

11. Purchase Offer and Summary Statement of the Basis for Just Compensation: After an appraisal determines the fair market value of the property and is approved by the review appraiser, the recipient should promptly deliver a Purchase Offer and a Summary Statement of the Basis for Just Compensation to the owners. The Purchase Offer should be an amount not less than the approval appraisal. The Summary Statement of the Basis for Just Compensation is a written explanation of the purchase offer. Please review Helpful Acquisition Information found in Appendix 2 for what it should contain.

    If the acquisition will leave the owner with an “uneconomic remnant,” the recipient must offer to buy the full property (an uneconomic remnant is considered to be a parcel of property left after acquisition that has little or no value to the owner). If the owners retain or remove property improvements from the site, the salvage of the improvements should be deducted from the offer of just compensation.

12. Negotiation of Purchase Price: When feasible, negotiations should be conducted in person. Owners have the right to suggest alternatives or additions to the Offer of Just Compensation and to suggest changes in the appraisal. If the owner’s information or suggestions warrant a new appraisal, one must be conducted. A review appraisal also may be needed if significant time has passed since the original appraisal. If the second appraisal suggests an increase in the fair market value, this must be communicated to the owner and a new Offer of Just Compensation must be made.

    Recipients may not take any coercive action (e.g., advancing the time of condemnation or depositing just compensation funds with the court) to rush or influence the owner’s decision.

    Recipients may allow an owner or tenant to remain on the purchased site at a market rent for the property. However, recipients should ensure that this lease would enable them to legally and readily take possession of the property as required by the project plans.

    Recipients may authorize an administrative settlement that exceeds the amount of just compensation. The recipient should document such action with information such as court awards exceeding market value, estimated legal costs or valuation errors. Recipients must not pressure appraisers to change the value of their estimates.

    Before taking possession of a property, the recipient must pay the owner the agreed upon price. In the case of a condemnation, money must be deposited with the court for the owner. This amount should be no less than the market value or court award of compensation. Only in exceptional circumstances and with the owner’s approval may the recipient enter the property before payment.

    The owner of the real property shall be reimbursed for all reasonable expenses the owner necessarily incurred for the following (the final two expenses in this list are less common):

    1. Recording fees, transfer taxes, documentary stamps, evidence of title, boundary survey and legal description of the real property (however, the recipient is not required to pay costs solely required to perfect the owner’s title to the real property);
    2. Penalty costs and other charges for prepayment of any pre-existing recorded mortgage entered into in good faith encumbering the real property; and
    3. The pro rata portion of any prepaid real property taxes allocable to the period after the recipient obtains title to the property or effective possession of it, whichever is earlier.
    4. Whenever feasible, the recipient shall pay for the incidental expenses directly so the owner will not have to pay such costs and then seek reimbursement from the recipient. To avoid duplicate expenditures, the property owner should be informed early in the acquisition process of the recipient’s intent to make such arrangements.
    5. Tenant Assistance: The Recipient must provide advisory services, moving assistance, and relocation payment as applicable

Condemnation Proceedings

If a property is to be taken by eminent domain, the recipient must initiate formal condemnation proceedings. Recipients may not require the owner to prove the taking of his/her property. Inverse condemnations are takings in fact, but not through legal means. For example, an airport is placed next to a property and the noise from planes makes the property unusable. Even though this property has not been taken through legal means, the use of it has been lost and the owner is entitled to compensation.

The owner of the real property shall be reimbursed for any reasonable expenses which the owner actually incurred because of a condemnation proceeding, including reasonable attorney, appraisal, and engineering fees, if:

• The final judgment of the court is that the recipient cannot acquire the real property by condemnation; or
• The condemnation is abandoned by the recipient other than under an agreed upon settlement; or
• The court having jurisdiction renders a judgment in favor of the owner in an inverse condemnation proceeding or the recipient affects a settlement of such proceeding

Property Donation

If a property owner wishes to donate their property, no appraisal is necessary. The property owner must release the recipient from the obligation to conduct an appraisal in writing. The property owner must also be informed of their rights and be sent a copy of “When a Public Agency Acquires Your Property.” This document is included in Appendix 2.

Relocation Procedure

Relocation Requirements for Acquisition

If the property that is acquired for the CDBG project includes tenants (households, businesses, non-profit organizations, or farm operations) the buyer must provide to each tenant one of the following Notifications: Notice of Relocation Eligibility (NOE) (49 CFR 24.203(b)) or Notice of Nondisplacement.

Tenant households, businesses, non-profit organizations, or farm operations that occupy the property and are “displaced persons” as defined in the regulations are eligible for all advisory services and financial benefits under either the URA or Section 104(d). The buyer must provide all the required notifications in a timely manner. Property owners cannot waive these rights for tenants of their properties on a voluntary transaction. 

The buyer must provide all the required notices to tenant households, businesses, non-profit organizations, or farm operations that occupy the property and are “displaced persons” as defined in the regulations either at URA or 104d. The notices are in the appendices to Handbook 1378 (see link in previous section entitled “Site and Easement Acquisition and Relocation”).

Requirements for Temporary Relocation

The URA is triggered if a tenant is required to be temporarily relocated due to results of rehabilitation. 

Tenants are entitled to be paid for out-of-pocket costs incurred during temporary relocation, such as the fees charged for the temporary unit above their costs for their existing unit, costs to move back and forth from the temporary unit, storage costs for personal belongings. In addition, reasonable advance notice must be provided to the tenant before the tenant is required to move into or out of the temporary unit. Further, the temporary unit they move to must be suitable, decent, safe, sanitary, and similarly accessible. (For more information on URA, consult HUD Handbook 1378.)

Rehabilitation of an owner-occupied housing unit does not trigger the URA. However, a recipient can adopt optional policies that define “hardship” situations for homeowners and pay certain costs related to temporary relocation, such as-per day maximum for costs actually incurred for housing needs and meals.

Prohibited Activities

In accordance with 24 CFR 570.207 (a): The following activities may not be assisted with CDBG funds:

1. (a) BUILDINGS OR PORTIONS THEREOF, USED FOR THE GENERAL CONDUCT OF GOVERNMENT AS DEFINED AT § 570.3(D). This does not include, however, the removal of architectural barriers under § 570.201(c) involving any such building. Also, where acquisition of real property includes an existing improvement which is to be used in the provision of a building for the general conduct of government, the portion of the acquisition cost attributable to the land is eligible, provided such acquisition meets a national objective described in § 570.208.
2. (b) GENERAL GOVERNMENT EXPENSES. Except as otherwise specifically authorized in this subpart or under 2 CFR part 200, subpart E, expenses required to carry out the regular responsibilities of the unit of general local government are not eligible for assistance under this part.
3. (c) POLITICAL ACTIVITIES. CDBG funds shall not be used to finance the use of facilities or equipment for political purposes or to engage in other partisan political activities, such as candidate forums, voter transportation, or voter registration. However, a facility originally assisted with CDBG funds may be used on an incidental basis to hold political meetings, candidate forums, or voter registration campaigns, provided that all parties and organizations have access to the facility on an equal basis, and are assessed equal rent or use charges, if any.

Monitoring Policy

All CDBG projects will be monitored by an IEDA project manager during the life of the project. CDBG project monitoring provides IEDA with the opportunity to provide technical assistance, determine the status of grant funded activities, review the recipient’s grant management system, and evaluate compliance with state and federal rules and regulations. It is IEDA policy to conduct at least one monitoring visit for every CDBG project. This may include a desk monitoring or onsite monitoring or a combination of both. IEDA staff will set-up an on-site monitoring date with the recipient and grant administrator.

Risk Based Monitoring

IEDA will conduct a risk-based assessment annually for all contracts. While each of the activities will be monitored at least once during the life of the grant, the risk-based assessment will assist project managers in determining the timing and frequency of documented monitoring.

The Risk based assessment will be conducted through IowaGrants.gov as a component titled “Risk Assessment.” This form will be filled out once a year by the project manager, and based on the outcome score, the project manager will determine when the next monitoring is required. Per 200.331(b), IEDA will evaluate each recipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate level of monitoring, the risk-based assessment will include:

• Financial Risk – how large is the grant
• Submitted Draws – are claims on schedule as outlined in contract
• Program Management/Capacity – is administrator familiar with CDBG and is certified
• Compliance – with all applicable federal/state/IEDA laws and regulations

Monitoring Thresholds

Regardless of the outcome of the risk-based assessment, IEDA will schedule projects for monitoring when the project has drawn 50% of the CDBG funds and the construction is 50% complete. Once a project has met this threshold, the project manager should begin making plans to monitor the project.

Monitoring Procedures

Project managers will complete the relevant fields in the Site Visit component form in www.iowagrants.gov for each monitoring. Monitoring can be documented either in-person on-site with the recipient (and subrecipient, as applicable), or from the Project Manager’s desktop. Each monitoring will be recorded in IowaGrants.gov and dated to differentiate monitoring events. Monitoring can assess one, multiple, or all of the areas of review. The final monitoring must make sure the following specific areas have been reviewed at least once during the project contract:

• National Objective / Project Progress
• Citizen Participation
• Environmental  Financial Management
• Procurement
• Duplication of Benefits (as applicable)
• Administration
• Contract Management (Architectural/Engineering)
• Contract Management (Professional Services)
• Contract Management (Construction)
• Labor Standards  Housing Review (as applicable)
• Civil Rights (Section 3, EEO, Fair Housing, MBE/WBE)
• Acquisition and Relocation  Property Management and Photos (as applicable)

While both on-site and desk monitoring will look the same in iowagrants.gov, project managers will ensure the following policies are applied to both types of reviews.

Desk or On-Site Monitoring

Desk monitoring, or sometimes referred to as off-site monitoring, can be used as a substitute for on-site monitoring during the life of the grant. If desk monitoring will be used to replace onsite monitoring the project manager will discuss this decision with the team leader and get their approval. If a desk monitoring is decided upon all the criteria normally reviewed for an on-site visit will be conducted from the office. This process will entail a virtual meeting and/ or uploading all required documents into IowaGrants for review. It will also involve an interview with City officials regarding grant management and financial review. Project managers will also schedule a virtual meeting with the City/County staff and grant administrator following this comprehensive review to go over any deficiencies discovered during the monitoring visit. The project manager will provide a final monitoring report outlining the findings of the visit and any corrective actions required by the recipient.

Desk monitoring can also be conducted on an ongoing basis and may include general review of project activities and communications to determine if the project is on track and the rules and regulations are being followed.

Project managers may conduct an on-site visit to review materials and inspect the project site. All items discussed during a desk monitoring will be covered at an on-site monitoring.

Project managers may request additional information from the recipient or grant administrator during the monitoring process. Recipients and grant administrators should respond to requests for information in a timely manner.

Monitoring Form

Monitoring forms are generated by IowaGrants and are program specific. Download an example monitoring form.

Monitoring Follow-Up

IEDA project managers will send a final monitoring report following every monitoring visit. Project managers will send this correspondence no later than two months following the date that all monitoring visit information was provided. The monitoring report will include a list of satisfactory activities, areas for improvements and any corrections needed. If the monitoring report identifies significant compliance issues, the report will be reviewed by the Team Leader prior to being sent to the recipient. If the monitoring report includes the need for penalties or repayments, the report will be reviewed by IEDA’s Chief Programs officer and COO or Director prior to being sent to the recipient.