Box 15, Folder 2, Document 51

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HUD:-96. (7.66) .

~ Memorandum te

TO CDA DIRECTORS DATE: December 30, 1968
In reply refer to:

Attention: ARA for Mociel Cities ; ADMINISTRATIVE MEMO NO. 13

Walter G. Farr
Model Cities Administration

SUBJECT: Letters to Proceed for Administrative Costs Incurred after
Submission of Comprehensive City Demonstration Program

It is essential that the period between the submission by the CDA of its
comprehensive demonstration program arid the date of execution of the grant
egreement for the execution phase be used effectively in gearing up for the
administration of the program. This memorandum sets forth the procedure for
the issuance of Letters to Proceed, which are designed to provide the CDA
with a statement from HUD that funds expended in conformance with an approved
budget are eligible for reimbursement from the administration grant payable
under the grant agreement. This grant will pay for a maximum of 80 percent
of the eligible costs cf program administration.

1. The CDA's Request

a. The chief executive of the City may request a Letter to Proceed. as
soon as (a) the City's comprehensive demonstration program has been submitted
to the Department of Housing and Urban Development and (b) the local governing
body has authorized that submission. This request may appropriately be filed
with the comprehensive demonstration program.

b. The CDA's letter of request (See Attachment A) should be filed with
the following back-up documents:

(1) Budget Schedule (Use Attachment 1 to CDA Letter No. 6, HUD 7039*)

(ii) Justifications (Use Attachments 3a and 3b to CDA Letter No. 6,
HUD 7042 and 7043%*)

(iii) Work Programs -- The work programs may be brief and need not
present detailed time schedules nor provide work descriptions
for individual staff members. The work program may include
such items as;

* In the heading of column B, strike out the phrase "Year of Program",
and insert in lieu thereof "90 days".

** Insert in line 2 of each form the following: "Program administration prior
to execution of grant agreement”.

(1) Prepare amendments or additions to the comprehensive
program subsequent to discussion with Federal officials.

(2) Prepare fund applications for categorical grant-in-aid

(3) Develop administrative procedures for execution period.

(4) Survey possible locations for neighborhood facility.

ec. It is expected that grant agreements will be executed for most cities
within 90 days from the date the local governing body authorizes submission
of the program. However, times will vary and no CDA will know exactly the.
length or time in which administrative costs will be incurred prior to
execution of the grant agreement. All budgets supporting Letters to Proceed
should be for a 90 day period.

2. HUD Action

HUD Model Cities Regional staff will provide cities with any assistance
needed in requesting Letters to Proceed. Requests will be reviewed promptly
and when approved, Letters to Proceed will be issued by the Regional Admini-
strators, in the form indicated in Attachment B. The Letter is effective as
of the date of issue. It should be noted that the issuance of the Letter to
Proceed does not represent a Federal commitment of funds. Accordingly, if the
city's program is not approved, there is no basis on which reimbursement can
be obtained by the CDA.

3. Allowable Costs

a. Continuing Items. Most expense items which will be necessary for
this period in which the administration of the program commences are continuing
items; salaries for staff of CDA, delegate agencies and neighborhood groups,
travel, rent, etc. Many of these items have been eligible planning costs
during the planning period. It is, of course, assumed that eligible planning
costs will be paid for under the planning budget until planning funds (both
the Federal planning grant and the non-Federal contribution) are exhausted.

b. New Items. In addition, CDA's may, during this period, add certain
central staff which will be essential to the operation, and preparation for
operation, of the comprehensive program. These may include fiscal, legal and
central administrative personnel who will be needed regardless of the exact pattern
of First Year Action components. However, the Letter to Proceed should not
cover costs in connection with new capital projects and activities. The
Letter to Proceed may cover costs of reproducing the federally-required number

of copies of the comprehensive program. is
4, Non-Allowable Costs
While the following list. does not purport to be exhaustive, you should be :
alerted to the fact that the sorte costs should not be covered by the
Letter to Proceed: : 7
@. Costs payable under the planning budget for which planning funds are
b. Costs incurred in connection with new projects and activities. +
c. New third party contracts or significant amendments to exteb ine

d. Costs not allowable under CDA Letter No. 8.
5. Relationship to First Year Action Budget

In preparing its first year action budget in accordance with CDA Letter No.

6, CDA's may prepare an administrative budget for a period up to 15 months--

the presumed 90 day period under the Letter to Proceed plus the 12-month

period commencing with the execution of the grant agreement. In the alternative,
the CDA may submit a 12 month administrative budget at the time the comprehensive
program is submitted, and then amend this before the execution of the grant
amendment so as to add the period for which reimbursement is sought for expendi-

tures under the Letter to Proceed. tK.
Sea YE- ‘Y

eS et




Request for Letter to Proceed

Dear (Regional Admin: :trator )

The City of i requests a Letter to Proceed
for a 90 day period so that costs incurred in preparing for the administration
of our comprehensive city demonstration program may be eligible for reimburse-
ment from the grar/t for administrative costs under section 105(b) of the

A budget and work program for costs estimated to be incurred during this
period to sustain such activities is attached. This attachment includes a
statement of the 20 percent non-Federal share of these costs.

I understand that reimbursement cannot take place unless and until the
Secretary of the Department of Housing and Urban Development has approved
(city name)'s program and a Grant Agreement is executed between (city name)
and HUD.

Sincerely yours,

(Local chief executive)



Letter to Proceed, for Execution Phase

Name of Chief Executive



Dear :

Your comprehensive demonstration program submission has been received.
Although the Department has not yet acted upon your program, it has no objection
to your commencing preparation for the execution phase. Costs incurred

on and after the date of this letter which are in accordance with the attached


budget and work program will be eligible for reimbursement if a grant agree-
ment is executed and if the terms and conditions of the agreement and CDA

Letter No. 8 (copies of both attached) are satisfied.”*

Sincerely yours,

Regional Administrator Me

*Modify this sentence appropriately if CDA Letter No. 8 has already been {
sent to the CDA or if a draft has been or is being sents

ao .

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