[Code of Federal Regulations]
[Title 45, Volume 4]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR1309.21]

[Page 192-193]
 
                        TITLE 45--PUBLIC WELFARE
 
CHAPTER XIII--OFFICE OF HUMAN DEVELOPMENT SERVICES, DEPARTMENT OF HEALTH 
                           AND HUMAN SERVICES
 
PART 1309_HEAD START FACILITIES PURCHASE, MAJOR RENOVATION AND 
CONSTRUCTION--Table of Contents
 
                Subpart C_Protection of Federal Interest
 
Sec. 1309.21  Recording of Federal interest and other protection of 
Federal interest.

    (a) The Federal government has an interest in all real property and 
equipment acquired or upon which major renovations have been undertaken 
with grant funds for use as a Head Start facility. The responsible HHS 
official may subordinate the Federal interest in such property to that 
of a lender, which financed the acquisition or major renovation costs 
subject to the conditions set forth in paragraph (f) of this section.
    (b) Facilities acquired with grant funds may not be mortgaged or 
used as collateral, or sold or otherwise transferred to another party, 
without the written permission of the responsible HHS official.
    (c) Use of the facility for other than the purpose for which the 
facility was funded, without the express written approval of the 
responsible HHS official, is prohibited.
    (d)(1) A grantee receiving funds to acquire or make major 
renovations to a facility that is or will be sited on land not owned by 
the grantee must have a lease or other arrangement which protects the 
Federal interest in the facility and ensures the grantee's undisturbed 
use and possession of the facility. The lease or document evidencing 
another arrangement shall include provisions to protect the right of the 
grantee, or some other organization designated by ACF in the place of 
the grantee, to occupy the facility for the term of the lease or other 
arrangement and such other terms required by the responsible HHS 
official. The designation of an alternate tenant or occupant of the 
facility by ACF shall be subject to approval by the Lessor, which will 
not be withheld except for good reason, not including the willingness of 
another party to pay a higher rent. A grantee receiving funds for the 
major renovation or acquisition of a facility, on land belonging to 
another party, must have a land lease or other similar interest in the 
underlying land which is long enough to allow the Head Start program to 
receive the full value of those permanent grant-supported improvements.
    (2) Except as required under Sec. 1309.31 for certain modular 
units, the grantee must record the Notice of Federal Interest in the 
appropriate official records for the jurisdiction where a facility is or 
will be located immediately upon: purchasing a facility or land on which 
a facility is to be constructed; receiving permission to use funds to 
continue purchase of a facility; commencing major renovation of a 
facility or construction of a facility. In the case of a leased facility 
undergoing major renovations, the Notice of Federal Interest shall be a 
copy of the executed lease and all amendments. In the case of a facility 
now sited or to be constructed on land not owned by the grantee, the 
Notice of Federal Interest shall be the land lease or other document 
protecting the Federal interest. The lease or other document must ensure 
the right of the grantee to have undisturbed use and possession of the 
facility. In the event that filing of a lease is prohibited by State 
law, the grantee shall file an affidavit signed by the representatives 
of the grantee and the Lessor stating that the lease includes terms 
which protect the right of the grantee, or some other organization 
designated by ACF in the place of the grantee, to occupy the facility 
for the term of the lease.
    (3) The Notice of Federal Interest for property sited on land not 
owned by the grantee shall include the following information:
    (i) The date of the award of grant funds for the acquisition or 
major renovation of the property to be used as a Head Start facility, 
and the address and legal description of the property to be acquired or 
renovated;
    (ii) That the grant incorporated conditions which included 
restrictions on the use of the property and provide for a Federal 
interest in the property;
    (iii) That the property may not be used for any purpose inconsistent 
with that authorized by the Head Start Act and applicable regulations;
    (iv) That the property may not be mortgaged or used as collateral, 
sold or otherwise transferred to another party, without the written 
permission of the responsible HHS official;

[[Page 193]]

    (v) That these grant conditions and requirements cannot be altered 
or nullified through a transfer of ownership; and
    (vi) The name (including signature) and title of the person who 
completed the Notice for the grantee agency, and the date of the Notice.
    (4) A lease, serving as a Notice of Federal Interest, an affidavit 
filed in the land records as a substitute for the lease, or other 
document protecting the Federal interest in a facility acquired with 
grant funds and sited on land not owned by the grantee, shall include 
the following information:
    (i) The address and legal description of the property;
    (ii) That the grant incorporated conditions which include 
restrictions on the use of the property and provide for a Federal 
interest in the property for the term of the lease or other arrangement; 
and
    (iii) That the property may not be used for any purpose during the 
lease or other arrangement that is inconsistent with that authorized by 
the Head Start Act and applicable regulations.
    (e) Grantees must meet all of the requirements in 45 CFR parts 74 or 
92 pertaining to the purchase and disposition of real property, or the 
use and disposal of equipment, as appropriate.
    (f) In subordinating its interest in a facility acquired or upon 
which major renovations have been undertaken with grant funds, the 
responsible HHS officials does not waive application of paragraph (d) of 
this section and Sec. 1309.22. A written agreement by the responsible 
HHS official to subordinate the Federal interest must provide:
    (1)(i) The lender shall notify the Office of the Regional 
Administrator, Administration for Children and Families, the Office of 
the Commissioner, Administration on Children, Youth and Families, 
Washington, D.C., and the Office of the General Counsel, Department of 
Health and Human Services, Washington, DC, or their successor agencies, 
immediately, both telephonically and in writing of any default by the 
Head Start grantee;
    (ii) Written notice of default must be sent by registered mail 
return receipt requested; and,
    (iii) The lender will not foreclose on the property until at least 
60 days after the required notice by the lender has been sent.
    (2) Such notice will include:
    (i) The full names, addresses, and telephone numbers of the lender 
and the Head Start grantee;
    (ii) The following statement prominently displayed at the top of the 
first page of the notice: ``The Federal Interest in certain real 
property or equipment used for the Head Start Program may be at risk. 
Immediately give this notice to the appropriate government official'';
    (iii) The date and nature of the default and the manner in which the 
default may be cured; and
    (iv) In the event that the lender will be exercising its remedy of 
foreclosure or other remedies, the date or expected date of the 
foreclosure or other remedies.
    (3) Head Start grantees which purchase facilities with respect to 
which the responsible HHS official has subordinated the Federal Interest 
to that of the lender must keep the lender informed of the current 
addresses and telephone numbers of the agencies to which the lender is 
obligated under paragraph (b) of this section to give notice in the 
event of a default.

[64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23221, May 1, 2003]