Finding Text
Section 105(a)(8) of the HCDA and 24 CFR 570.201(e) of the CDBG entitlement regulations clarify the 15 percent limitation for public services activities. If the City does not adhere to the requirements for eligible activities, costs incurred under the program may be deemed ineligible and need to be returned to the grantor. Based on the grantor?s preliminary review for the fiscal year 2021 Consolidated Annual Performance and Evaluation Report (CAPER), it?s noted that the percent of funds obligated for public service activities was reported at 28.66%, which was over the 15% cap by $118,138.19 in the PR26 Part IV Public Service Cap Calculation section. This coverage appears to be caused by $158,746.65 expended for a coronavirus-related public service activity. These expenditures are not exempt from the public services cap because the CARES act stipulated that only 2019 and 2020 funds expended for the prevention, preparation, or response to coronavirus are exempt from the public service cap, however, this portion of activity was funded with 2021 grant funds. The preliminary finding states the city exceeded the 15% public service cap by $118,138.19, which upon the finalization of the CAPER review, would need to be repaid to HUD with non-federal funds. Staff should review and update policies and procedures to ensure compliance specifically with Section 105(a)(8) of the HCDA and 24 CFR 570.201(e) of the CDBG entitlement regulations.