Circular CDBG 2014-01
Related to: CDBG Housing
Subject: CDFA Interpretation of “new construction” under CDBG program
Contact: George Hunton, Director of Housing and Community Development
Issuance date: January 14, 2015
This CDFA Circular provides information for housing developers on how grants may be used for new construction under CDBG. Eligible activities are: acquisition, clearance, site improvements, and street improvements.
CDFA seeks to set forth a consistent interpretation of CDBG rules related to “new construction” projects using the Housing program.
Both HUD CDBG rules and CDFA administrative rules state that construction of new housing is an ineligible activity. However, there are activities that HUD has deemed to be eligible in support of new housing construction. In a review of program rules and practices it was noted that there was no CDFA interpretation of what activities are eligible.
HUD gives maximum feasible deference to the state's interpretation of the statutory requirements and the requirements of this regulation, provided that these interpretations are not plainly inconsistent with the Housing and Community Development Act. Based on available rules and guidance from HUD CDFA has determined that the following activities are eligible for activities in support of new construction.
• Acquisition. A grantee or nonprofit may acquire property and resell it to an affordable housing developer [24 CFR 570.201(a) and (b)]. A CBDO may also acquire property for housing development.
• Clearance. Grantees may clear a site in preparation for housing [24 CFR 570.201(d)].
• Site improvements. Grantees can make public improvements on publicly-owned property [24 CFR 570.201(c)]. As examples, grantees can install water lines, sewer lines, and utility lines on public property in support of housing. Grantees may also install public improvements on privately-owned land, but only if they obtain an easement on the property before carrying out the improvements. The easement enables the grantee to carry out the improvements on what is considered publicly-owned property.
• Street improvements. The construction or reconstruction of publicly-owned streets, bridges, and alleys is eligible as a public facilities and improvements activity [24 CFR 570.201(c)].
Under federal regulations, certified Community Development Benefit Organizations (CBDOs) are eligible to utilize CDBG programs for certain new construction purposes. CDFA certifies CBDOs on an ongoing basis. Contact CDFA for specific eligibility information and requirements for certification.1
January 14, 2015
1 This certification process will be available after May, 2015. Until such time, CDFA considers certified Community Housing Development Organizations as certified CBDOs for the purposes addressed in this circular.