Approximately $3 million in federal Community Development Block Grant (CDBG) funds are available on an annual basis to cities and counties through the state of Iowa’s Economic Development Set Aside (EDSA) Fund.
This program provides financial assistance to those businesses and industries requiring such assistance in order to create new job opportunities. Assistance is provided to encourage new business start-ups, expansion of existing businesses and/or the relocation of out-of-state businesses into Iowa. Assistance may be provided in the form of direct loans or forgivable loans. Priority is given to projects that will create manufacturing jobs, add value to Iowa resources and/or increase exports out of state. Preference will be given to those businesses which will create or retain the greatest number of jobs with the least amount of program dollars.
All incorporated cities and all counties in the State, except those designated as HUD entitlement areas, are eligible to apply for and receive funds under this program. Cities/counties apply for funding on behalf of the participating business.
To be eligible for funding, 51 percent of the jobs created or retained be filled by low and moderate income persons or first consideration must be given to hiring low and moderate-income persons. For purposes of the CDBG program, “low and moderate income” is defined at persons with incomes at or below 80% of the area median income as defined by the U.S. Department of Housing and Urban Development (HUD). Current income levels can be found on the IEDA website: http://www.iowaeconomicdevelopment.com/Community/CDBG.
Federal guidelines require that funding for projects under CDBG economic development programs be "necessary and appropriate" to accomplish the project. EDSA assistance may only be provided to a business demonstrate a need for public assistance and only the minimum amount of EDSA funds necessary to meet this may be provided to a project. The only three valid criteria to determine this need are: a financing gap, insufficient return on investment or locational disadvantages.
Jobs to be created or retained under the EDSA program must have a starting wage of at least 80% of the area’s laborshed wage. Wage thresholds can be found on the IEDA website: http://www.iowaeconomicdevelopment.com/Business/WageRequirements
The maximum grant award for individual applications is $1,000,000 per application.
Applications are accepted and reviewed on a continuous basis.
Prior to submitting an application on IowaGrants.gov, you must contact IEDA to ensure that the project is appropriate for EDSA funding. Please contact Nichole Hansen, Community Investments Team Leader, at email@example.com or 515.725. 3081.
2 CFR 200 Audit Requirements
CDBG contracts may be subject to audit. Federal Code (2 CFR 200) requires that recipients that expend $750,000 or more in federal funds within a fiscal year must have a single or program specific audit. When budgeting for CDBG funds, applicants should be aware of these audit requirements:
- For recipients of $750,000 or more in federal funds received from more than one source of federal funding, an organization-wide audit must be conducted in accordance with federal requirements outlined in 2 CFR 200.514
- For recipients of $750,000 or more in federal funds received from a single source, a project audit, targeting only transactions dealing specifically with the project, may be performed in lieu of an organization-wide audit.
Communities should consult with their accountants regarding the applicability of an audit and audit requirements.
Audit costs are a CDBG-eligible expense. Organization-wide audits can be paid with CDBG funds proportional to the amount of all other funds included in the audit. The total cost of a project audit can be paid with CDBG funds.
Davis Bacon and Related Acts
Projects that include construction may be subject to the requirements of the Davis-Bacon Act and related laws and regulations. The Davis-Bacon Act applies to all contracts for construction, alteration and/or repairs in excess of $2,000 that involve CDBG funds. Cost estimates for the proposed project should reflect compliance with these requirements.
Uniform Relocation Assistance and Real Property Acquisition Policies Act
For projects that include acquisition and relocation, all recipients given the authority to acquire property are required to follow the guidelines in HUD Handbook 1378 – Tenant Assistance, Relocation and Real Property Acquisition. Cost estimates for the proposed project should reflect compliance with these requirements.
Historic Preservation Review Requirements
Federally funded activities are subject to the review requirements of Section 106 of the National Historic Preservation Act. The goal of the review process is to identify historic properties, both above and below the ground potentially affected by the undertaking, assess the effects of the undertaking and seek ways to avoid, minimize or mitigate any adverse effects on historic properties.
The review process involves review by IEDA and possible consultation with various agencies, groups and individuals, including the State Historical Preservation Office (SHPO), located in the Department of Cultural Affairs. Although consultation is not required prior to a CDBG award, if the project includes a property that may have historical significance, it is a good idea to contact IEDA early in the project development. For more information regarding Section 106 review and compliance, you may call IEDA at 515.725.3078.
Environmental Review and project initiation
No HUD Funds or non-HUD funds may be committed to the project until the applicant has secured environmental approval from the State, as provided in HUD regulation 24 CFR Part 58. In addition, pending environmental approval and pursuant to 24 CFR Part 58.22(a), no grant recipient or participant in the development process, including contractors or sub-contractors, may undertake an activity that may limit the choice of reasonable alternatives. Such choice limiting actions include real property acquisition, conducting a competitive sealed bid process for the project, leasing, rehabilitation, repair, demolition, conversion, and new construction.
For more information on the EDSA program and applicable requirements, contact firstname.lastname@example.org or 515.725.3081.