Compliance Review

The environmental review process produces an environmental review record. This process must be completed before project-related actions are taken as federal law prohibits the commitment or expenditure of federal funds until the environmental review process is complete. 

Developers may not spend public, private or federal funds, or execute a legally binding agreement for property acquisition, rehabilitation, conversion, repair, or construction pertaining to the project until environmental clearance has been achieved through the environmental review process.

Developers must avoid any action that would preclude the selection of alternative
choices before a project clears the environmental review process.

Activities that have physical impacts or which limit the choice of alternatives cannot be undertaken, even with the developer or other project participant’s own funds, prior to obtaining environmental clearance. 

For the purposes of the environmental review process, “commitment of funds” includes:

1. Execution of a legally binding agreement (such as a property purchase or construction
   contract);
2. Expenditure of federal funds;
3. Use of non-federal funds on actions that would have an adverse impact--- e.g., demolition, dredging, filling, excavating; and
4. Use of non-federal funds on actions that would be “choice limiting”--- e.g., acquisition of real property; leasing property; rehabilitation, demolition, construction of buildings or structures; relocating buildings or structures, conversion of land or buildings/structures.

Documents that may be needed to complete the environmental review process include Phase I studies, Phase II studies, lead studies, asbestos studies, noise studies, site pictures, and market studies. 

Mitigation plans may need to be developed for the project to move forward.

The environmental review process timeframe may last 60 days, or longer, depending on the complexity of the project.

Section 3 projects are housing rehabilitation, housing construction, and other public construction projects assisted under HUD programs that provide housing and community development financial assistance when the total amount of assistance to the project exceeds 

• a threshold of $200,000 in federal funding, or, 
• $100,000 of funding from HUD Lead Hazard Control and Healthy Home resource.

The benchmark for ‘Section 3 Workers’ is set at 25% or more of the total number of labor hours worked by all workers on a Section 3 project.  The benchmark for ‘Targeted Section 3 Workers’ is set at 5% or more of the total labor hours worked by all workers on a Section 3 project. 

The Davis-Bacon Act requires the payment of prevailing wage rates (which are determined by the U.S. Department of Labor) to all laborers and mechanics on Federal government and District of Columbia construction projects in excess of $2,000. 

Construction includes alteration and/or repair, including painting and decorating of public buildings or public works. HOME funds used for construction costs on a new construction or rehabilitation housing project with 12 or more ‘assisted units’ will trigger the Davis-Bacon Act.

To ensure that tenants are paying rents in accordance with HUD-established income limits for the year. HUD Rents and Income Limits for the year will be used during the audit. All mandatory supporting documents to the annual Rent report will be reviewed and validated for verification purposes. This section also includes Utility Allowance review.

HUD requires all assisted units must be decent, safe, sanitary, and in good repair.  Owners may be required to provide documentation evidencing assisted units are suitable for occupancy, taking into consideration State and local health, safety, and other applicable codes, ordinances, and requirements during the affordability period for the project. 

The accounting section will require, receive, and assess the financial health of a project during its affordability period. Required documentation includes an operating budget, balance sheet, income statement, tenant accounts payable and receivables, beginning and ending cash balances, and replacement reserves. 

The City reviews the Property Manager’s Affirmative Marketing Plan, asks for a report that evidences the race/ethnicity of tenants and applicants for the project and requests changes to be made if any are required. 

The City collects and reviews a sample of leases for the assisted units in the project. The City reviews the leases to make sure they are for the appropriate terms and are in compliance with the prohibited terms under the CFR