CDBG Entitlement FAQ

Is there a requirement to do a financial analysis to determine the amount of CDBG funds to provide to a subrecipient for the acquisition of real property?

Date Published: October 2018

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The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) requirement addresses value and the CDBG portion acknowledges the OMB requirement of cost reasonableness.

CDBG regulations do not mandate a financial analysis, except that grantees must ensure that costs are reasonable. In addition, real property acquired with CDBG funds and real property acquired with other funds for a CDBG-funded project are subject to the URA which is implemented for the CDBG program at 24 CFR 570.606 and 49 CFR Part 24. The URA real property acquisition regulations that apply to CDBG at 24 CFR 570.606(e) and 49 CFR Part 24, Subpart B, generally require both an appraisal and appraisal review to establish the fair market value of real property to be acquired, with the exception of real property acquisitions that meet the criteria at 49 CFR 24.101(b)(1)-(5), often referred to as "voluntary acquisitions." Even though the URA does not require an appraisal and appraisal review for these "voluntary acquisitions," grantees must still be able to demonstrate that the acquisition cost, if funded under CDBG, is reasonable and necessary.

Complex issues can be brought to the local HUD field office for assistance. For additional information and guidance on the URA, including real property acquisition and valuation matters, visit HUD's Acquisition and Relocation website. For direct assistance on URA real property acquisition matters, contact your HUD Regional Relocation Specialist.

Tags: CDBG Entitlement Program Acquisition-Disposition-Demolition

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