having excessive housing abandonment or deterioration. Among the factors HUD will consider in determining whether or not an otherwise ineligible activity will be funded are the following: The necessity of the activity in stimulating private investment in the proposed project; the amount of longterm employment accessible to lowand moderate-income persons generated by the proposed project; the degree of impact of the proposed project on the economic condition of the community; and the effectiveness of the proposed project as a stimulus to area revitalization. New housing construction may be assisted if the applicant demonstrates, in addition to the factors specified above, that the proposed new housing is consistent with the applicant's community development and housing strategy and that other resources are not adequate.

§ 570.454 Ineligible activities and limitations on eligible activities.

(a) Metropolitan cities and urban counties may not use assistance under this subpart for planning the project or developing the application. However, they may use entitlement community development block grant funds for this purpose. Any small city which submits a project application which is selected for funding may devote up to three (3) percent of the approved amount of its action grant to defray its actual costs in planning the project and preparing its application.

(b) Assistance under this subpart may not be used for public services as described in § 570.200(a)(8).

(c) Consultants may be paid for the reasonable costs of personal services, which shall be charged on an hourly basis per person and which shall in no case on a per person basis exceed the maximum daily rate of compensation for a GS-18 as established by Federal law.

(d) Except as specified herein, no assistance will be provided for projects intended to facilitate the relocation of industrial or commercial plants or facilities from one area to another, unless the Secretary finds that such relocation does not significantly and adversely affect the unemployment or

economic base of the area from which such industrial or commercial plant or facility is to be relocated. However, moves within a metropolitan area shall not be subject to this provision.

§ 570.455 Actions which must be taken prior to submission of an application. (a) Determination of eligibility. In order to provide applicants with a full competitive opportunity to qualify for assistance under this subpart, applicants shall request a determination from the HUD Area Office on their eligibility for assistance prior to submitting an application. The request for determination shall be submitted on Standard Form 424, as modified by HUD. Small cities (excluding towns and townships) which intend to apply during May 1978, must request a determination of eligibility from the appropriate HUD Area Office no later than April 14, 1978. Towns and townships will be advised of submission deadlines at a later date in conjunction with notifications of potential eligibility. All potential applicants (except those which have previously been notified of their eligibility) which intend to apply during July 1978, or thereafter, must request a determination of eligibility at least 60 days prior to the beginning of the month in which the applicant's first application is expected to be submitted.

(b) Environmental assessment. Metropolitan cities and urban counties submitting applications after January 31, 1978, and small cities submitting applications after February 28, 1978, must have a level of clearance finding in accordance with 24 CFR Part 58, 15(d).

(c) Citizen participation. Applicants must comply with the citizen participation requirements described in § 570.456(c)(11)(i).

(d) Modified OMB Circular A-95 procedure for applications. Applicants must comply with all procedures set forth in Part I of OMB Circular No. A-95 except as modified below. Those procedures also require that program amendments submitted to HUD in accordance with paragraph 570.460(b) shall be submitted to clearinghouses.

(1) Notification. Applicants shall submit a copy of the request for determination of eligibility to all appropriate State and areawide clearinghouses at the time the request is submitted to HUD. This shall serve as the Notification of Intent to file an application. HUD will provide clearinghouses with a copy of its notification to the applicant of its eligibility status. For all subsequent application submissions, applicants must follow the normal notification procedures set forth in Part I of OMB Circular No. A-95, with a copy forwarded simultaneously to the appropriate HUD Area Office.

(2) Application review. (i) Small city applicants (excluding towns and townships) which intend to submit aplications in May, 1978, must submit applications to all clearinghouses no later than April 24, 1978.

(ii) For all subsequent quarters, unless the requirement is waived by a clearinghouse, applicants shall provide the clearinghouse a period of thirty days to review the completed application and to transmit to the applicant any comments or recommendations, prior to submission of the application to HUD.

(iii) The applicant shall transmit all comments with the application to HUD. In instances where comments are not received by the applicant within the thirty-day period, the applicant shall include a statement indicating that the State and areawide clearinghouses were notified and no comments were received.

(iv) If the A-95 review comments contain any findings of inconsistency with State, areawide, or local plans or noncompliance with environmental or civil rights laws, the applicant must state how it proposes to resolve the finding or state its justification for proposing to proceed with the project despite the findings developed through the A-95 review process.

[43 FR 1605, Jan. 10, 1978, as amended at 43 FR 13342, Mar. 29, 1978]

§ 570.456 Applications.

(a) Application submission date. Applications will be accepted by HUD Area Offices during the first month of each quarter for metropolitan cities

and urban counties (January, April, July, and October), and during the second month of each quarter for small cities (February, May, August, and November).

(b) Scope. Applicants must submit a separate application for each proposed project. The proposed project must be able to be carried out in a timely fashion, which generally HUD expects not to exceed four years. The applicant shall apply for action grant funds in an amount which, together with other public and private resources that will be available, will be adequate to complete the project without additional action grant funds. While a recipient remains eligible for action grant funding for activities in support of other projects in subsequent years, no additional funding will be available in subsequent years to complete a project approved in a prior year. Should additional funding be required to complete a previously approved project, the applicant must provide such funding from other community development block grants (if the activities are eligible under Subpart C), local general purpose funds, or other public or private resources.

(c) Submission requirements. Applications must be submitted on HUD forms to the appropriate HUD Area Office and must consist of the following:

(1) Standard Form 424, prescribed by OMB Circular No. A-102.

(2) A community development plan and a housing assistance plan, as specified in Subpart D. Applicants which have an approved Community Development Program in effect may incorporate this information by reference.

(3) A brief description of the applicant's Urban Development Action Program, which shall consist of an action plan and strategy and related projects to alleviate physical and economic distress. This program: (i) Must be consistent with the Community Development Program and the Housing Assistance Plan described in Subpart D; and (ii) must describe unique opportunities to (A) attract private investment; (B) stimulate investment in restoration of deteriorated or abandoned housing stock; or (C) solve critical problems re

(5) The status of environmental review of the proposed project, and a proposed timetable for the completion of any required environmental actions pursuant to 24 CFR Part 58.

(6) Evidence of commitment of public and private resources which will be available for completing the project, pursuant of § 570.457 (e), (f), and (g). Such evidence may be in the form of a letter of intent or a legally binding commitment between the applicant and public/private entities.

(7) A summary of proposed expenditures for the activities to be undertaken with assistance under this subpart.

(8) A schedule for accomplishing the proposed project.

(9) A statement containing appropriate information pursuant to the criteria for selection set forth in § 570.457.

(10) A map or maps of the applicant's jurisdiction as submitted in the latest HUD-approved community development block grant application, with the following additional information: (i) Location of the proposed project, and (ii) access to and from the proposed project and surrounding land

uses.

(11) Certifications. The applicant shall submit certifications, in such form a HUD may prescribe, providing assurances that:

(i) Prior to submission of its application, it has:

(A) Prepared and followed a written citizen participation plan, which plan provides the opportunity for citizens to participate in the development of the application, with special attention to measures to encourage the statement of views and the submission of proposals by low- and moderateincome persons, minorities, and residents of blighted neighborhoods, and to scheduling hearings at times and locations which are convenient to all citizens;

(B) Provided citizens with adequate information concerning the amount of funds available for proposed activities, the range of activities that may be undertaken, and other important program requirements;

(C) Held public hearings to obtain the views of citizens, of which at least one hearing was held on needs which may be dealt with under this subpart, and at least one hearing was held on the application prior to official action authorizing submission of the application.

(ii) The proposed project is consistent with the Community Development Program and the Housing Assistance Plan.

(iii) The following assurances required pursuant to Subpart D concerning: the legal authority of the applicant; action by the local governing body; A-95; NEPA; FMC-74-4 and OMB Circular No. A-102; labor standards; HUD requirements; flood hazards; equal opportunity; opportunities for training, employment and contracts for residents of the project area; real property acquistion; relocation; standards of conduct; the Hatch Act; access to books and records; and other assurances concerning EPA's list of violating facilities; flood insurance purchase requirements; and physical design of facilities accessible to and usable by the physically handicapped.

§ 570.457 Criteria for selection.

Grant assistance will be made available so as to achieve a reasonable balance for the program as a whole among projects that are designed primarily to restore deteriorated neighborhoods; to reclaim for industrial purposes underutilized real property; and to renew commercial employment centers. The nature and purpose of the proposed project will determine the extent to which each of the selection criteria in paragraphs (c) through (k) of the section will apply.

(a) Selection of projects for funding: metropolitan cities and urban counties. HUD shall in each calendar quarter review all proposals received and pending consideration, and shall determine which among such proposals are feasible and effective. HUD shall

select from such feasible and effective proposals those to be funded on the following bases: (1) As the primary criterion, the comparative degree of physical and economic distress among applicants, as measured by the differences in the factors set forth below, which shall be assigned the relative weights as follows:

(i) The percentage of their total housing stock that was built prior to 1940: .5;

(ii) The percentage of their total current population that was in poverty in 1970: .3; and

(iii) The degree to which their population growth rate lags behind that of all metropolitan cities: .2.

(2) Such additional factors as the Secretary may determine to be relevant to an assessment of the comparative degree of physical and economic deterioration of applicants, including but not limited to, per capita income, unemployment, and job lag/decline; and (3) the factors contained in paragraphs (c) through (k) of this section.

(b) Selection of projects for funding: small cities. HUD shall in each calendar quarter review all applications received and pending consideration, and shall determine which among such proposals are feasible and effective. HUD shall select from such feasible and effective proposals those to be funded on the following basis:

(1) As the primary criterion, the comparative degree of physical and economic distress among applicants as measured by the differences in the factors set forth below, which shall be assigned the relative weights set forth below:

Age of housing, 0.5; Poverty, 0.3; Population lag/decline, 0.2.

(2) Such additional factors as the Secretary may determine to be relevant to an assessment of the comparative degree of physical and economic deterioration of applicants, including, but not limited to, per capita income, and, where applicable, job lag/decline; and (3) the factors contained in paragraphs (c) through (k) of this section.

(c) The demonstrated performance of the applicant in carrying out housing and community development programs. Performance shall be evaluated

using such considerations as: past compliance with HUD regulations and statutory requirements; progress in carrying out programs as planned; and the ability to complete programs in a timely fashion.

(d) The impact of the proposed project on the special problems of low- and moderate-income persons and minorities. (1) HUD will consider the extent to which the proposed project eliminates or reduces the magnitude of the special problems of low- and moderateincome persons and minorities (e.g., the relative levels of unemployment and underemployment, discrimination in housing and employment, locational impaction, and lack of sufficient supportive services and facilities). In making this determination, HUD will consider the benefits of the project to low- and moderate-income persons and minorities, such as the provision of employment or entrepreneurial opportunities, housing opportunities, or public or private facilities and improvements. HUD will also consider plans for recruiting and training unemployed low- and moderate-income residents, especially minorities, in conjunction with existing programs (e.g., the Comprehensive Employment and Training Act of 1973). Location of the proposed project, when it is clearly relevant to the question of what groups benefit, can be used as one of the factors to show that the proposed project benefits low- and moderate-income persons and minorities. While not required, priority will be given to projects in which minorities hold an equity interest.

(2) If the project includes activities which generate relocation, HUD will consider how the applicant's relocation process, including any proposed relocation advisory services, will provide the opportunity for such persons to relocate outside areas of low-income or minority concentration.

(3) Consideration will be given to (i) whether and how low- and moderateincome persons and minorities will share in the opportunity to reside in the area; and (ii) whether and how displaced businesses will be given the opportunity to relocate in the area, once the project is completed.

(4) Relocation of industrial and commercial plants within a jurisdiction or metropolitan area will be reviewed to determine the impact on low- and moderate-income and minority persons who are presently employed, and if the move will have a significantly negative impact on the area from which the facility is moved.

(5) HUD will also consider the extent of citizen participation in the development and review of the application, as well as the pre vision of technical assistance to citizens' groups if such assistance has been requested and is appropriate. HUD also encourages the involvement of private nonprofit entities, local development corporations, or small business investinent corporations in the implementation of projects.

(e) The nature and extent of financial participation by private entities in the proposed project. No activities will be funded under this subpart unless there is a firm commitment of private resources to the proposed project. The private commitment must have a clear, direct relationship to the activities for which funding is being requested. The necessary private commitment must be identified in the application. Examples of acceptable forms of private commitment include the commitment of a company to remain in the locality if the company is financially committed to invest in expansion or modernization of its facilities, the commitment of a developer, or a commitment of financing from such lending sources as banks, savings and loan institutions, credit unions, pension funds, insurance funds, or other investors. The following characteristics will be considered in determining the nature and extent of financial participation by private entities:

(1) Whether the applicant will be able to recapture its financial participation in the project for additional economic development or neighborhood revitalization uses, through such mechanisms as loan or lease repayments and participation in profits realized by the project;

(2) Whether the project includes a greater amount of private investment in relationship to the requested grant

amount than projects of a similar nature which are being considered for action grant funding. In calculating the amount of private investment, HUD will include such investment as equity investments, the cost of capital improvements, the total value of new leases, the amount of financing provided by private entities to specific applicants for such financing, and similar net investments;

(3) Whether the private commitment is more firm than for other projects being considered for action grant funding; and

(4) Whether the applicant has sought proposals from more than one developer and has considered all proposals received from developers in regard to the proposed project.

(f) The extent of financial assistance to be made available by the State. Projects which include financial assistance from the State will receive more favorable consideration. The extent of such assistance will also be considered.

(g) The nature and extent of financial participation by other public entities in the proposed projects. Projects which include financial assistance from other public entities will receive more favorable consideration. Other public resources may be provided by matching other Federal grants, or by firm commitments of other Federal or local resources, such as those from the Economic Development Administration, the Small Business Administration, the Urban Mass Transportation Administration, or from the applicant's general purpose funds.

(h) The impact of the proposed project on the physical, fiscal, or economic deterioration of the community. The nature and purpose of the proposed project will determine which of the following measures will apply:

(1) Physical impact of the project will be measured by such factors as the extent of improvement in the applicant's housing stock; provision of public improvements or facilities; and the provision or improvement of commercial and industrial facilities; and the extent that other public and private facilities and services exist or will be provided to support the project. Ap