CDBG Entitlement FAQ

A landlocked company wants to move from the south part of town to the north to expand their operations.  The new location is away from the homes of the current employees, but it would allow the company to create 50 new jobs.  Will this still qualify for the national objective of job creation?

Date Published: May 2015

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Your question is concerning the national objective as it relates to a company that wishes to relocate from the south of city to the north of the city in order to expand operations. Our answer is based on a previous correspondence in which you clarified that the site for the company's new location is in a non-entitlement, State Program area. In order to respond to your question, we have made several assumptions, as follows:

  • The eligible activity for the transaction is special economic development. Consequently, the project must conform not only to the Eligibility and National Objective requirements, but also to the appropriateness criteria (Public Benefit and Appendix A).
  • The documentation for evidencing compliance with the Public Benefit criterion is cost per job created. 
  • Eligibility will need to be based on job creation; In your question you note that existing jobs are held by residents of the entitlement community. Therefore job retention would not benefit the State Program and thus cannot be used. 
  • The forecast of 50 new jobs must be based on "reasonable" assumptions.

You also need to determine that you are in compliance with the anti-piracy provisions of the CDBG Program. The U.S. Bureau of Labor Statistics determines market areas. We reviewed the Market Areas based on BLS statistics and confirmed with you that the old and new locations are both within the same county and therefore the move to the new location will not result in a significant job loss as defined by the Anti-Pirating Rule found at Section 588 of the Quality Housing and Work Responsibility Act of 1998. The documentation for national objective is LMI benefit via the creation of jobs (24 CFR 570.483(a)(4). For this activity to be eligible the jobs created must be held by residents of the non-entitlement area.

Please refer to the following regulatory citation for further guidance: CFR 570.486 b) Activities serving beneficiaries outside the jurisdiction of the unit of general local government. Any activity carried out by a recipient of State CDBG program funds must significantly benefit residents of the jurisdiction of the grant recipient, and the unit of general local government must determine that the activity is meeting its needs in accordance with section 106(d)(2)(D) of the Act. For an activity to significantly benefit residents of the recipient jurisdiction, the CDBG funds expended by the unit of general local government must not be unreasonably disproportionate to the benefits to its residents. To meet this requirement the funds provided through the unit of local government would need to be conditional to the hiring of local residents. Assuming these assumptions are true, and you have gone through the appropriate due diligence, then the assistance may be provided, so long as the origination file documents three primary eligibility criteria: 1) eligible activity; 2) national objective and 3) appropriateness (Appendix A and Public Benefit).

Tags: CDBG Entitlement Program Economic Development