CDBG 301 Training Program: Building Better Communities

1. Community Development Block Grant CDBG 301 Training Program Day 3 Building Better Communities One Project at a Time

2. Day Three Agenda • 8:30 Registration • 9:00 CDBG 301 Day One and Day Two Re-Cap • 9:30 Certified Payroll Monitoring Activity (Exercise #1) • 10:15 Break • 10:30 Month 10 – 16 • Monitor Certified Payroll Reports • Resolve Underpayment Issues • Restitution of Underpayment (Exercise #2) • Conduct Employee Interviews • Process Pay Applications & Drawdowns • Financial Management Activity (Exercise #3) • 12:00 Lunch • 1:00 Month 10 – 16 (Continued) • Attend Project Progress Meetings • Submit Semi-Annual Reports • Track Contract Amendments • Track Project Change Orders • 1:45 Month 17 • Process Grant Modifications

3. Day Three Agenda • 2:15 Break • 2:30 Grant Modification (Exercise #4) • 3:00 Month 18 • Complete Final Wage Compliance • Complete Final Inspection/Project Completion • Obtain Section 3 Reports • Complete Certificate of Accessibility • Process Final Pay Claims / Update Financials • 3:30 Month 19 • Submit Phase 1 Close-Out Documentation • Prepare for Grant Monitoring • 3:45 Month 20 • Submit Phase 2 Close-Out Documentation • Maintain Records • Submit Sub-Recipient Semi-Annual Reports • 4:00 Break (You May Leave If You Want) • 4:15 301 Review / 401 Overview • 4:45 Class Dismissal

4. Introductions Shannon McLeod Priority Project Resources, Inc. 531 Sycamore Trace Greensburg, IN 47240 Phone: (812) 663-7385 Mobile: (317) 695-4434 Email: Shannon@pprgrant.com Certified: Since 1992

5. CDBG Project Administration The Administrative Process !!

6. Construction Grant Administration • FEEPS Review • Proof of Bidder’s Registration • Direct Deposit Form • Local Match Update • Format II Environmental Record (Environmental Form 8) • Update of Engineering Status • Update on Permit Status • Site Control Documentation (Acquisition Form 1 & Form 2) • Income Survey Documentation (Methodology, Sampling of Survey Forms, etc.) • Civil Rights Officer Notification (Civil Rights Form 1) • Affirmatively Furthering Fair Housing (Civil Rights Form 1) • Labor Standards Officer Notification (Labor Standards Form 1)

7. Construction Grant Administration • Month 1 • Project Kick-Off Meeting • Establish Grant File System • Publish Environmental Releases (Environmental Forms 10 ( if HUD 8 Step 11 & 12) • Procure Professional Service Providers (Procurement Forms 1 thru 8) • Month 2 • Execution of Professional Service Contracts (Federal Third Party Contract Provisions) • Completion of Land Acquisition (Proof of Purchase & Recorded Deeds) • Financial Management Set-Up (Financial Forms 1 thru 5)

8. Construction Grant Administration • Month 3 • Check in with Engineer/Architect on Design Status – Project Timeline • Month 4 • Coordinate with Grantee CFO, Rate Consultant, Attorney and Bond Counsel on Local Match Obtainment • Month 5 • Coordinate with Grantee and Engineer/Architect on Bidding Process • Methods of Procurement – (Sealed Bid) • Bid Specification Preparation (Federal Contract Provisions, Davis Bacon Wage Scale & Labor Form 2) • Bid Advertisement (Procurement Form 17)

9. Construction Grant Administration • Month 6 • MBE/WBE Solicitation • Section 3 Encouragement - (Area Workforce Development) • Conduct Pre-Bid Meeting (Minutes & Labor Forms 3 & 4) • Verify Wage Scale Lock-In (Labor Form 5) • Conduct Bid Opening (Minutes & Sign-In Sheet) • Month 7 • Obtain Certified Bid Tabulation • Verify Contractor’s Eligibility (SAM/HUD Websites & Labor Form 6) • Obtain Engineer/Architect Recommendation Letter • Coordinate with CEO, CFO, Rate Consultant, Attorney & Bond Counsel on Obtainment of Local Match

10. Construction Grant Administration • Month 8 • Secure Local Financing (Loan Closing Documentation) • Obtain Release of Funds from OCRA (Financial Form 6) • Execute Construction Contracts (Lump-Sum, Performance & Payment Bonds, Insurance, Federal Contract Provision (HUD 4010), Davis Bacon Wage Scale, Labor Form 7) • Conduct Pre-Construction Meeting (Minutes, Sign-In Sheet & Labor Form 8) • Issue Notice to Proceed / Start of Construction (Labor Form 12) • Update Financial Management Forms (Financial Forms 1 thru 5) • Month 9 • Establish Labor File for Each Prime Contractor & Subcontractor • Obtain Labor Release from OCRA (Pre-Construction Minutes & Sign-In Sheet, Labor Forms 7, 8, 9 with Verification of Benefits, 10, 11 & 12) • Monitor Certified Weekly Payroll Reports

11. Exercise #1 Certified Payroll Monitoring Activity

12. 15 Minute Break People say, “Are you an optimist?” And I say, “I hope so.”

13. Month 10 - 16 • Monitor Certified Payroll Reports • Resolve Underpayment Issues • Conduct Employee Interviews • Process Pay Applications & Drawdown Request • Keep Financial Management Up-to-Date • Attend Construction Progress Meetings • Submit Semi-Annual Reports • Track Project Contract Amendments • Track Project Change Orders

14. Monitor Certified Payroll Reports (Labor Standards ) Once construction begins, the prime contractor(s) and all subcontractors are required to submit certified payroll reports to the Labor Standards Officer for review. This is done to verify that the federal wages, set forth in the applicable Davis Bacon Wage Determination, are being paid to all employees working on the project.

15. Certified WEEKLY Payroll Reports Must be Submitted Weekly Must be Numbered & Dated First Must be Marked “Initial” Last Must be Marked “Final” No Skipping Weeks – Even If No Work Performed Must Contain Name and Last 4 Digits of Social Security # for All Persons Performing Work on Project Workers Classification, Rate of Pay, and Deductions Must Be Listed Owners and Their Hours Need to Be Listed On Payroll

16. (Labor Standards) As a tool to assist the Labor Standards Officer with Monitoring the receipt of the Certified Payroll Reports, the Labor Standards Form 13: Monthly Payroll Report Summary may be maintained. This is NOT a required form, but it does help summarize the information submitted.

17. (Labor Standards)

18. Resolve Underpayment Issues The amount identified by the contractor for the wage and fringe benefit paid by the employer must be equal to or greater than the amount specified in the applicable wage determination. • If, it is determined that there is an underpayment issue and the employee is NOT exempt from receiving Davis Bacon wages, the contractor will have to pay the employee restitution. • The Labor Standards Officer should calculate the amount owed and notify the contractor as soon as possible regarding the issue. In order to resolve the issue, the contractor will need to: • Issue a Check in the Amount Owed to the Employee (taxes & regular deductions should be taken from the amount owed); and • Have the Employee Sign an Affidavit that Funds were Received • This Documentation Will Need to Be Attached to the • Final Wage Compliance Report – Labor Form 15

19. Exceptions to Davis Bacon • Truck Drivers – Special Circumstances • a.Material Delivery Truck Drivers • b. Drivers of a contractor or subcontractor traveling between a Davis Bacon job and a commercial supply facility while they are off the “site of work”. • c. Truck drivers whose time spent on site of work is MINIMAL, • such as only a few minutes at a time merely to pick up or drop • off materials and supplies. • Site of Work • a.Employees working off the “site of work” such as in fabrication plants, tool yards, batch plants, borrow pits, job headquarters, etc. • Construction Projects At or Below $2,000

20. Exceptions to Davis Bacon • Rehabilitation or New Construction of Residential Structures Containing Less than 8 Units • Installation of Purchased Equipment as Long as Installation Cost does not exceed 20% of the purchase cost • Apprentices • Must be in a State Recognized Program and provide verification of their enrollment. • Foreman or Supervisors Who Do Not Spend More than 20% of their time performing actual construction work • Company Owners

21. Exceptions to Davis Bacon • Demolition work, which is not related to construction, is not subject to the prevailing wage requirements for DBRA. Tearing Down Only Not Building Another Facility In Place Of

22. Overtime All employees who work more than 40 hours in one (1) work week are eligible for overtime pay. If the overtime hours occur on the CDBG project, the employees must be paid time and one-half on the base wage plus straight time fringe benefits for every hour over 40 worked. If the overtime occurs on other jobs, the overtime should be calculated at the employee’s regular rate of pay. It is not the Labor Standards Officer’s responsibility to enforce the overtime law for work done other than on the CDBG project. If violations of this or any other labor law are suspected, they may be reported to the DOL.

23. Exercise #2 Restitution of Underpayment Issues

24. Conduct Employee Interviews It is the Labor Standards Officer’s responsibility to conduct on-site employee interviews of at least 10% of the workers under each contract. The interview is conducted to verify that the information being reported on the certified payroll is true and accurate. Additionally, it provides employees an opportunity to ask questions regarding their wages and / or employer’s practices. Please Utilize Labor Standards Form 14: Record of Employee Interview

25. Labor Standards Form 14: Record of Employee Interview

26. Process Pay Applications & Drawdowns • At the pre-construction meeting, establish a timeline for the submittal of contractor invoices (Needs to be approved by engineer/architect, then submitted to grant administrator for calculation, then presented to Grantee for approval, then claim voucher sent to OCRA for processing, tell them to hope for 15 to 30 day turn-around); • Make sure that retainage is deducted from each contractor’s pay claim; and • Make sure that drawdown amounts for the contractor are calculated on a pro-rated stand-point (e.g. Draw the percentage that was established in the grant application/grant agreement).

27. (Financial Management) Retainage (Escrow) Accounts • When a contract is equal to or exceeds $100,000 it is necessary to withhold retainage. This is a state statute and OCRA recommends holding retainage on all contracts; • Retainage may be withheld in either of the following ways: • 10% of the total contract amount through 50% completion • 5% of the total contract amount through 100% completion Who Holds the Retainage • In an escrow account at a bank or other federally insured institution*, or • In a bank account belonging to Grantee*, so long as a separate ledger account is maintained, or • At OCRA** *Any interest earned on the retained funds belong to the contractor. **OCRA does not hold these funds in a separate account, nor will they accumulate interest

28. (Financial Management) How Long Can You Hold Retainage?? The retained funds must be held in escrow until a notice is received from the contractor, and approved by the Project Architect or Engineer and the Grantee, specifying the part of the retained funds to be released and to whom that portion is to be released. If upon substantial completion of the public work minor items remain incomplete, an amount equal to 200% of the value of each item as determined by the Architect or Engineer shall be withheld until the item is completed. Under the direction of legal counsel, if the contractor or a subcontractor refuses to make restitution of unpaid wages, the Grantee may use funds from the retainage account to compensate the employees to whom funds are due.

29. (Financial Management) • Before releasing retainage, Grantee should be sure: • Construction has been satisfactorily completed; • Suppliers and subcontractors have been paid in full; and • No violations of payment of Davis-Bacon Wages exist. What If Something Goes Wrong: If the project construction is not completed in accordance with the project specifications, it may become necessary to foreclose on the contractor’s Performance Bond. The Bond Company will attach the retainage account to be used toward the satisfactory completion of the project, including engaging a new contractor if necessary.

30. (Financial Management) When ordering grant funds, the drawdown request has to be based upon the percentage of the budget line item being drawn. For example, if the budget page in the application indicated that 60% of the construction activities would be covered by the CDBG funds and the remaining 40% would be covered by the local funds; only 60% of the invoice to be paid can be ordered. The Grant Administrator should check the Grant Application and Grant Agreement prior to ordering any federal funds.

31. (Financial Management) Financial Management Form 7

32. Lunch

33. Update Financial Management • Throughout the construction of the project, the Grant Administrator needs to assist the Grantee CFO in getting these invoices processed and paid. • Federal Cash Control Register – Financial Form 1 • Contractor Obligation Ledger – Financial Form 2 • Contractor Expenditure Ledger – Financial Form 3 • Property Inventory Ledger – Financial Form 4 • Local Match Ledger – Financial Form 5 FEDERAL CASH DEPOSITS HAVE TO BE DISBURSED WITHIN 5 BUSINESS DAYS OF DEPOSIT. $5,000/5 DAY RULE

34. Exercise #3 Financial Management Activity

35. Attend Project Progress Meetings At the pre-construction meeting, a schedule of construction progress meetings will more than likely be established. It is a good idea for the Grant Administrator to periodically attend these meetings to hear first hand how the project is progressing.

36. Submit Semi-Annual Reports Semi Annual Reports • This report must be submitted once the grant agreement is fully executed and is submitted until the project has entered Stage 2 of the grant closeout process. The form is due by January 31st(recording period of July 1st through December 30th) and July 31st(recording period of January 1st through June 30th) of each year; • Do not forget your sub-recipient semi annual report. This report must be submitted for five years after the administrative close out. • Be sure all sections are completed. Only report on the current period’s activities. • Do not cut and paste from a previous report. • If you have questions, please contact OCRA’s Grant Services Office. • Email Reports to Grant Services on or prior to the due date. Reporting and Recordkeeping FORM 1: Semi-Annual Report FORM 2: Subrecipient Semi-Annual Report

39. Track Contract Amendments Can Contracts Be Amended? Yes! If the need should arise and was an unforeseeable circumstance. However, documentation and justification is required. Professional Service Agreements An Amendment to Contract (written explanation of change in scope and cost) must be signed by professional & Grantee if change results in additional costs. Grantee should be prepared to cover that expense with local funds.

40. Track Project Change Orders Can Construction Contracts Be Amended ? Yes, if the need should arise and was an unforeseeable circumstance. However, documentation and justification is required. This is considered to be a Change Order and is only to be executed in unforeseeable circumstances – Written explanation of change in scope and cost – must be signed by contractor, engineer and Grantee – if change results in additional costs – Grantee should be prepared to cover that expense with local funds – Additionally, the total amount of change(s) to the construction cost can not exceed more than 20% of the bid amount.

41. (Contract Development) Change Order General Information • Project must remain confined to the project area identified in the grant application; • The grant award was based upon a project area which was certified to be within the parameters of the National Objective of the grant award; • No changes may ever be made to the project area or beneficiaries without the express written consent of the Office of Community and Rural Affairs; • A change order may NOT be issued before construction begins except in the case of an emergency, which has been declared by the governing body and the nature of the emergency is documented in the board’s meeting minutes. • ALL change orders must be directly related to the original public work project. • If additional units of materials included in the original contract are needed, the cost of the additional units must be the same as those listed in the original contract.

42. Month 17 • Process Grant Modifications if Need Be

43. Grant Modifications • Sometimes, your project does not go as planned, thereby requiring you to make a change. When this happens, it becomes necessary to modify your grant agreement with the OCRA. There are several reasons you may need to request a grant modification, some include: • Time Extensions; • Reallocate Funds Between Line Items; • Change in Project Activities; • Change in Investment or Job-Creation Goals; • Change in Project Beneficiaries

44. Grant Modifications • As you prepare your grant modification request, try to address all of following OCRA review criteria: • Did you make every effort to complete the project in a timely manner; • Will the modification present new problems in meeting federal and / or state requirements; • Would the request change the point total given to the project at the time of grant award; and • Does the Grantee have any overdue reports

45. Grant Modifications • Three (3) Types of Grant Modifications • Category 1 Modifications; • Category 2 Modifications; and • Category 3 Modifications

46. Grant Modifications • Category 1 Modification • Utilize Contract Development Form 2 – Category 1 Modification Letter • Time Extension • Could Delays Been Foreseen; • Were Attempts made to Overcome Delay; • Can Project Be Completed in Short Period of Time; • Has The Grantee Spent Most of the CDBG Funds

47. Grant Modifications • Category 1 Modification • Utilize Contract Development Form 3 – Category 1 Modification Letter • Budget Line Item Transfer • Budget Line Item Transfer of CDBG or Local Funds Less than 10% from Original Budgeted Line Item; and • CEO and Project Engineer Need to Sign Letter.

48. Grant Modifications • Category 2 Modification • Utilize Contract Development Form 5 – Category 2/3 Modification Letter • Budget Line Item Transfer • Budget Line Item Transfer of CDBG or Local Funds Greater than 10% from Original Budgeted Line Item; or • Change in Grant Goals of More than 10%(examples: Economic Development or Day Care Projects).

49. Grant Modifications • Category 2 Modification • Steps Needed to Execute a Category 2 Modification: • Publish Notice of Grant Modification • One (1) Time in Local Newspaper; • Legal Ad for Public Hearing Must Be Published 10 Days Prior to Meeting (Utilize Contract Development Form 6 – Sample Hearing Notice); • 2. Conduct Public Meeting; • 3. Submit Letter from CEO/Engineer Requesting Modification; • 4. Submit Packet Outlining Justification and Documentation

50. Grant Modifications