[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR1003.208]

[Page 765-769]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 1003--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND ALASKA NATIVE VILLAGES--Table of Contents
 
                     Subpart C--Eligible Activities
 
Sec. 1003.208  Criteria for compliance with the primary objective.

    The Act establishes as its primary objective the development of 
viable communities by providing decent housing and a suitable living 
environment and expanding economic opportunities, principally for 
persons of low and moderate income. Consistent with this objective, not 
less than 70 percent of the expenditures of each single purpose grant 
shall be for activities which meet

[[Page 766]]

the criteria set forth in paragraphs (a), (b), (c) and (d) of this 
section. Activities meeting these criteria as applicable will be 
considered to benefit low and moderate income persons unless there is 
substantial evidence to the contrary. In assessing any such evidence, 
the full range of direct effects of the assisted activity will be 
considered. (The grantee shall appropriately ensure that activities that 
meet these criteria do not benefit moderate income persons to the 
exclusion of low income persons.)
    (a) Area benefit activities. (1) An activity, the benefits of which 
are available to all the residents in a particular area, where at least 
51 percent of the residents are low and moderate income persons. Such an 
area need not be coterminous with census tracts or other officially 
recognized boundaries but must be the entire area served by the 
activity. An activity that serves an area that is not primarily 
residential in character shall not qualify under this criterion.
    (2) For purposes of determining qualification under this criterion, 
activities of the same type that serve different areas will be 
considered separately on the basis of their individual service area.
    (3) In determining whether there is a sufficiently large percentage 
of low and moderate income persons residing in the area served by an 
activity to qualify under paragraph (a) (1) or (2) of this section, the 
most recently available decennial census information shall be used to 
the fullest extent feasible, together with the Section 8 income limits 
that would have applied at the time the income information was collected 
by the Census Bureau. Grantees that believe that the census data does 
not reflect current relative income levels in an area, or where census 
boundaries do not coincide sufficiently well with the service area of an 
activity, may conduct (or have conducted) a current survey of the 
residents of the area to determine the percent of such persons that are 
low and moderate income. HUD will accept information obtained through 
such surveys, to be used in lieu of the decennial census data, where it 
determines that the survey was conducted in such a manner that the 
results meet standards of statistical reliability that are comparable to 
that of the decennial census data for areas of similar size. Where there 
is substantial evidence that provides a clear basis to believe that the 
use of the decennial census data would substantially overstate the 
proportion of persons residing there that are low and moderate income, 
HUD may require that the grantee rebut such evidence in order to 
demonstrate compliance with section 105(c)(2) of the Act.
    (b) Limited clientele activities. (1) An activity which benefits a 
limited clientele, at least 51 percent of whom are low or moderate 
income persons. (The following kinds of activities may not qualify under 
paragraph (b) of this section: Activities, the benefits of which are 
available to all the residents of an area; activities involving the 
acquisition, construction or rehabilitation of property for housing; or 
activities where the benefit to low and moderate income persons to be 
considered is the creation or retention of jobs except as provided in 
paragraph (b)(4) of this section.) To qualify under paragraph (b) of 
this section, the activity must meet one of the following tests:
    (i) Benefit a clientele who are generally presumed to be principally 
low and moderate income persons. Activities that exclusively serve a 
group of persons in any one of the following categories may be presumed 
to benefit persons, 51 percent of whom are low-and moderate-income: 
abused children, battered spouses, elderly persons, adults meeting the 
Bureau of the Census' current Population Reports definition of 
``severely disabled'', homeless persons, illiterate adults, persons 
living with AIDS, and migrant workers; or
    (ii) Require information on family size and income so that it is 
evident that at least 51 percent of the clientele are persons whose 
family income does not exceed the low and moderate income limit; or
    (iii) Have income eligibility requirements which limit the activity 
exclusively to low and moderate income persons; or
    (iv) Be of such nature and be in such location that it may be 
concluded that

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the activity's clientele will primarily be low and moderate income 
persons.
    (2) An activity that serves to remove material or architectural 
barriers to the mobility or accessibility of elderly persons or adults 
meeting the Bureau of the Census' Current Population Reports definition 
of ``severely disabled'' will be presumed to qualify under this 
criterion if it is restricted, to the extent practicable, to the removal 
of such barriers by assisting:
    (i) The reconstruction of a public facility or improvement, or 
portion thereof, that does not qualify under Sec. 1003.208(a); or
    (ii) The rehabilitation of a privately-owned nonresidential building 
or improvement that does not qualify under Sec. 1003.208 (a) or (d); or
    (iii) The rehabilitation of the common areas of a residential 
structure that contains more than one dwelling unit.
    (3) A microenterprise assistance activity carried out in accordance 
with the provisions of Sec. 1003.201(l) with respect to those owners of 
microenterprises and persons developing microenterprises assisted under 
the activity during the grant period who are low and moderate income 
persons. For purposes of this paragraph, persons determined to be low 
and moderate income may be presumed to continue to qualify for up to a 
three year period.
    (4) An activity designed to provide job training and placement and/
or other employment support services, including but not limited to, peer 
support programs, counseling, child care, transportation, and other 
similar services, in which the percentage of low and moderate income 
persons assisted is less than 51 percent may qualify under this 
paragraph in the following limited circumstance:
    (i) In such cases where such training or provision of supportive 
services assists business(es), the only use of ICDBG assistance for the 
project is to provide the job training and/or supportive services; and
    (ii) The proportion of the total cost of the project borne by ICDBG 
funds is no greater than the proportion of the total number of persons 
assisted who are low or moderate income.
    (c) Housing activities. An eligible activity carried out for the 
purpose of providing or improving permanent residential structures 
which, upon completion, will be occupied by low and moderate income 
households. This would include, but not necessarily be limited to, the 
acquisition or rehabilitation of property, conversion of non-residential 
structures, and new housing construction. Funds expended for activities 
which qualify under the provisions of this paragraph shall be counted as 
benefiting low and moderate income persons but shall be limited to an 
amount determined by multiplying the total cost (including ICDBG and 
non-ICDBG costs) of the acquisition, construction or rehabilitation by 
the percent of units in such housing to be occupied by low and moderate 
income persons. If the structure assisted contains two dwelling units, 
at least one must be occupied by low and moderate income households, and 
if the structure contains more than two dwelling units, at least 51 
percent of the units must be so occupied. Where two or more rental 
buildings being assisted are or will be located on the same or 
contiguous properties, and the buildings will be under common ownership 
and management, the grouped buildings may be considered for this purpose 
as a single structure. For rental housing, occupancy by low and moderate 
income households must be at affordable rents to qualify under this 
criterion. The grantee shall adopt and make public its standards for 
determining ``affordable rents'' for this purpose. The following shall 
also qualify under this criterion:
    (1) When less than 51 percent of the units in a structure will be 
occupied by low and moderate income households, ICDBG assistance may be 
provided in the following limited circumstances:
    (i) The assistance is for an eligible activity to reduce the 
development cost of the new construction of a multifamily, non-elderly 
rental housing project;
    (ii) Not less than 20 percent of the units will be occupied by low 
and moderate income households at affordable rents; and
    (iii) The proportion of the total cost of developing the project to 
be borne by ICDBG funds is no greater than the

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proportion of units in the project that will be occupied by low and 
moderate income households.
    (2) When ICDBG funds are used for housing services eligible under 
Sec. 1003.201(j), such funds shall be considered to benefit low-and 
moderate-income persons if the housing for which the services are 
provided is to be occupied by low-and moderate-income households.
    (d) Job creation or retention activities. An activity designed to 
create or retain permanent jobs where at least 51 percent of the jobs, 
computed on a full time equivalent basis, involve the employment of low 
and moderate persons. For purposes of determining whether a job is held 
by or made available to a low or moderate income person, the person may 
be presumed to be a low or moderate income person if: he/she resides 
within a census tract (or block numbering area) where not less than 70 
percent of the residents have incomes at or below 80 percent of the area 
median; or, if he/she resides in a census tract (or block numbering 
area) which meets the Federal Empowerment Zone or Enterprise Community 
eligibility criteria; or, if the assisted business is located in and the 
job under consideration is to be located in such a tract or area. As a 
general rule, each assisted business shall be considered to be a 
separate activity for purposes of determining whether the activity 
qualifies under this paragraph. However, in certain cases such as where 
ICDBG funds are used to acquire, develop or improve a real property 
(e.g., a business incubator or an industrial park) the requirement may 
be met by measuring jobs in the aggregate for all the businesses which 
locate on the property, provided such businesses are not otherwise 
assisted by ICDBG funds. Where ICDBG funds are used to pay for the staff 
and overhead costs of a CBDO under the provisions of Sec. 1003.204 
making loans to businesses from non-ICDBG funds, this requirement may be 
met by aggregating the jobs created by all of the businesses receiving 
loans during any one year period. For an activity that creates jobs, the 
grantee must document that at least 51 percent of the jobs will be held 
by, or will be available to, low and moderate income persons. For an 
activity that retains jobs, the grantee must document that the jobs 
would actually be lost without the ICDBG assistance and that either or 
both of the following conditions apply with respect to at least 51 
percent of the jobs at the time the ICDBG assistance is provided: The 
job is known to be held by a low or moderate income person; or the job 
can reasonably be expected to turn over within the following two years 
and that steps will be taken to ensure that it will be filled by, or 
made available to, a low or moderate income person upon turnover. Jobs 
will be considered to be available to low and moderate income persons 
for these purposes only if:
    (1) Special skills that can only be acquired with substantial 
training or work experience or education beyond high school are not a 
prerequisite to fill such jobs, or the business agrees to hire 
unqualified persons and provide training; and
    (2) The grantee and the assisted business take actions to ensure 
that low and moderate income persons receive first consideration for 
filling such jobs.
    (e) Additional criteria. (1) Where the assisted activity is 
acquisition of real property, a preliminary determination of whether the 
activity addresses the primary objective may be based on the planned use 
of the property after acquisition. A final determination shall be based 
on the actual use of the property, excluding any short-term, temporary 
use.
    (2) Where the assisted activity is relocation assistance that the 
grantee is required to provide, such relocation assistance shall be 
considered to address the primary objective as addressed by the 
displacing activity.
    (3) In any case where the activity undertaken for the purpose of 
creating or retaining jobs is a public improvement and the area served 
is primarily residential, the activity must meet the requirements of 
paragraph (a) of this section as well as those of paragraph (d) of this 
section in order to qualify as benefiting low and moderate income 
persons.
    (4) Expenditures for activities meeting the criteria for benefiting 
low and moderate income persons shall be used in determining the extent 
to which the

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grantee's overall program benefits such persons. In determining the 
percentage of funds expended for such activities:
    (i) Costs of administration and planning, eligible under 
Sec. 1003.205 and Sec. 1003.206 respectively, will be assumed to benefit 
low and moderate income persons in the same proportion as the remainder 
of the ICDBG funds and, accordingly, shall be excluded from the 
calculation.
    (ii) Funds expended for the acquisition, new construction or 
rehabilitation of property for housing those qualified under 
Sec. 1003.208(c) shall be counted for this purpose, but shall be limited 
to an amount determined by multiplying the total cost (including ICDBG 
and non-ICDBG costs) of the acquisition, construction, or rehabilitation 
by the percent of units in such housing occupied by low and moderate 
income persons.
    (iii) Funds expended for any other activity which qualifies under 
Sec. 1003.208 shall be counted for this purpose in their entirety.