Section 120.10  Legislative Base

 

a)         Federal

 

1)         On July 31, 1981, Congress passed the Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35).  This Act established 7 block grant programs, including the Community Services Block Grant.  These block grants replace a large number of programs previously administered by the Federal Government.  The Omnibus Budget Reconciliation Act also transferred primary responsibility for the administration of the block grant programs to the states and conferred substantial discretion on the states as to use of the block grant funds.

 

2)         The Community Services Block Grant (CSBG) Act (Act) was enacted as Subtitle B of Title VI of the Omnibus Budget Reconciliation Act (Sections 671-683) and replaced the following programs formerly administered by the Community Services Administration under the Economic Opportunity Act of 1964 (42 USC 2701 et seq.):

 

A)        Community Action/Local Initiative

 

B)        Senior Opportunities and Services

 

C)        Community Food and Nutrition

 

3)         The Omnibus Budget Reconciliation Act authorized to be appropriated $389,375,000 for fiscal year 1982 and such sums as may be determined by Congress for the succeeding fiscal years to carry out the provisions of that Act.

 

4)         States were eligible to receive funds under the Community Services Block Grant on October 1, 1981.

 

b)         State

 

1)         On September 9, 1981, the Governor officially requested the Secretary of the U. S. Department of Health and Human Services to delegate to the State responsibility for administering the Community Services Block Grant Program in Illinois.  At this time, he also designated the Illinois Department of Commerce and Community Affairs as the agency to administer the program for the State.  On September 29, 1981, the Department of Commerce and Community Affairs submitted the application document consisting of the assurances and plan required under Section 675 of the law, and the pre-expenditure report for fiscal year 1982 as required by Section 1742(a).

 

2)         The State must hold at least one legislative hearing every three years in conjunction with the development of the State Plan (42 USC 99087(a)(3)).

 

3)         As part of its application, the State certified that it agreed to use funds available under the Community Services Block Grant:

 

A)        to support activities that are designed to assist low-income families and individuals, including families and individuals receiving assistance under Part A of Title IV of the Social Security Act (42 USC 601 et seq.), homeless families and individuals, migrant or seasonal farmworkers, and elderly low-income individuals and families, and a description of how such activities will enable the families and individuals:

 

i)          to remove obstacles and solve problems that block the achievement of self-sufficiency (including self-sufficiency for families and individuals who are attempting to transition off a State program carried out under Part A of Title IV of the Social Security Act);

 

ii)         to secure and retain meaningful employment;

 

iii)        to attain an adequate education, with particular attention toward improving literacy skills of the low-income families in the communities involved, which may include carrying out family literacy initiatives;

 

iv)        to make better use of available income;

 

v)         to obtain and maintain adequate housing and a suitable living environment;

 

vi)        to obtain emergency assistance through loans, grants, or other means to meet immediate and urgent family and individual needs; and

 

vii)       to achieve greater participation in the affairs of the communities involved, including the development of public and private grassroots partnerships with local law enforcement agencies, local housing authorities, private foundations, and other public and private partners to: document best practices based on successful grassroots intervention in urban areas, to develop methodologies for widespread replication; and  strengthen and improve relationships with local law enforcement agencies, which may include participation in activities such as neighborhood or community policing efforts;

 

B)        to address the needs of youth in low-income communities through youth development programs that support the primary role of the family, give priority to the prevention of youth problems and crime, and promote increased community coordination and collaboration in meeting the needs of youth, and support development and expansion of innovative community-based youth development programs that have demonstrated success in preventing or reducing youth crime, such as:

 

i)          programs for the establishment of violence-free zones that would involve youth development and intervention youth mediation, youth mentoring, life skills training, job creation, and entrepreneurship programs; and

 

ii)         after-school child care programs;

 

C)        to make more effective use of, and to coordinate with, other programs related to the purposes of the federal statute (including State welfare reform efforts) (42 USC 9908(b)(1)(A)-(C));

 

D)        to provide on an emergency basis for the provision of such supplies and services, nutritious foodstuffs, and related services, as may be necessary to counteract conditions of starvation and malnutrition among the poor;

 

E)        to coordinate and establish linkages between governmental and other social services programs in order to assure the effective delivery of such services to low-income individuals; and

 

F)         to encourage the use of private sector entities of the community in efforts to ameliorate poverty in the community.

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.20  Purpose and Scope

 

The purpose of this Part is to develop regulations and guidelines relative to requirements for the administration of the Community Services Block Grant Program within the State of Illinois.  The promulgation of clear-cut program guidelines for the Community Services Block Grant Program will ensure the maximum and efficient use of funds for the anti-poverty effort within the State.

 

(Source:  Amended at 10 Ill. Reg. 8666, effective May 13, 1986)

 

Section 120.30  Definitions

 

“Act” means the federal Community Service Block Grant Act (42 USC 9901).

 

"Administering Board" – a tripartite, community based administering board shall be established when a local government or combination of governments is the grantee.  All related policies and decisions adopted and implemented by the governmental body shall be based upon recommendations of the administering board.  This board shall be established in accordance with Section 120.70(b) of this Part as required in Section 676B(b) of the Act (42 USC 9910(b)).

 

"Community" – The geographic area served by the Grantee and may be a county, a city, or multi-county unit.

 

"Community Action Agency (CAA)" – A governmental or not-for-profit agency established to carry out anti-poverty activities and possessing a unique governing or administering board structure as outlined in Section 676B(a) and (b) of the Act (42 USC 9910(a) and (b)).

 

"Department" – The Illinois Department of Commerce and Community Affairs.

 

"Designating Official" – Chief elected official of the political subdivision encompassed by the CAA.  If a multi-jurisdictional CAA, the designating officials shall be the highest elected official from each of the member political subdivisions.

 

"Eligible Entity" – Any organization that was officially recognized as a Community Action Agency under the provisions of Section 210 of the Economic Opportunity Act of 1964 or recognized by the Governor or his duly authorized representative under the provisions of the Illinois Economic Opportunity Act and Sections 673 and 676A of the Act (42 USC 9902(1) and 9909).

 

"Equipment" – Nonexpendable personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.

 

"Grant Document" – Community Services Block Grant contract documents between the Department and the Grantee for a specific program period that details the responsibility of each party.

 

"Grantee" – The local organization administering the Community Services Block Grant in a specified geographic area.

 

"Program Income" – Earnings by the grantee realized from grant supported activities.

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.40  Allocation

 

a)         General Allocation – Under the conditions of the Community Services Block Grant, the State disbursed, for fiscal year 1982 only, 90 percent of the funds allotted thereto for purposes described in Section 120.10 of this Part to eligible entities as defined in this Part; to disburse for fiscal year 1983, and for each subsequent fiscal year, not less than 90 percent of the funds allotted to the State in grants to eligible entities as defined in Sections 673 and 675C of the Act (42 USC 9902 and 9907) and in Section 120.60 and to expend not more than 5 percent of its allotment for administrative expenses at the State level.

 

b)         Grantee Allocation for Calendar Year 1982 – The State disbursed 90 percent of the CSBG program funds to existing Community Action Agencies by a formula based on the average of two amounts:  one calculated on the basis of the previous federal fiscal year 1981 Community Services Administration funding and the other amount based on the Grantee's jurisdictional share of the State's poverty population according to the most recent decennial census.

 

c)         Grantee Allocation for Calendar Year 1983 and Subsequent Fiscal Years – The State will allocate 90 percent of the CSBG program funds to eligible entities who collectively represent all of Illinois' 102 counties and the City of Chicago.  Ninety percent of this allocation will be based upon the Grantee's jurisdictional share of the State's poverty population.  The remaining ten percent will be similarly allocated, however, in such a manner as to best enhance the CSBG program objectives, and will include consideration of agency performance evaluations and State program priorities. 

 

d)         CSBG Discretionary Funds – The 5% non-earmarked or discretionary funds will be used to fund various types of low-income assistance projects. This includes but is not limited to the following:

 

1)         provide training and technical assistance to those entities in need of such training and assistance;

 

2)         coordinating State-operated programs and services, and at the option of the State, locally-operated programs and services, targeted to low-income children and families with services provided by eligible entities and other organizations funded under the federal statute, including detailing appropriate employees of State or local agencies to entities funded under the federal statute to ensure increased access to services provided by such State or local agencies;

 

3)         supporting statewide coordination and communication among eligible entities;

 

4)         analyzing the distribution of funds made available under the federal statute within the State to determine if such funds have been targeted to the areas of greatest need;

 

5)         supporting asset-building programs for low-income individuals, such as programs supporting individual development accounts;

 

6)         supporting innovative programs and activities conducted by community action agencies or other neighborhood-based organizations to eliminate poverty, promote self-sufficiency, and promote community revitalization; and

 

7)         supporting other activities, consistent with the purposes of the federal statute (42 USC 9907(b)(1)(A)-(G)).

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.50  Grant Application Requirements

 

a)         Preapplication Requirements

 

1)         Applicants for "90% CSBG funding" as indicated in Section 120.40 will be required to meet certain requirements prior to submitting an application.  These requirements are:

 

A)        a properly structured and functioning tripartite board as indicated in Section 120.70;

 

B)        an undelegated (to any other corporate entity) basic central administrative capacity to receive, hold, expend or transfer and account for federal and State assistance funds, to procure facilities, goods and services, to enforce delegation agreements and procurement contracts and to accept, use and account for contributions from non-federal sources;

 

C)        an effective outreach and referral program;

 

D)        a continuing planning process and capability;

 

E)        a centralized fiscal management system; and

 

F)         an effective citizen participation/community involvement program.

 

2)         Applications will not be processed nor grants awarded prior to the Department's review of the applicant's compliance in these five areas.

 

b)         Application Requirements

In preparing its application for funding assistance under the CSBG program, the grant applicant is required to submit the following items:

 

1)         Community Action Plan:  With its submission of an application for funding under the CSBG program, the applicant must submit a Community Action Plan which includes information identified in subsections (b)(1)(A) through (G).  Subsequent to the Department's receipt of the Community Action Plan, a letter will be transmitted acknowledging receipt and prescribing corrective action for any inadequacies in the plan.

 

A)        Community Action Plan Summary:  This section is submitted annually and should summarize the entire Community Action Plan (CAP) and describe how CSBG funds are used to support the operations of the agency beyond the specific programs provided.  Its purpose is to describe the agencywide or CSBG-specific process used to develop the Plan, how the Board, client population and the community were involved in the process, and type of data collected and provide narrative of the needs identified.

 

B)        Needs Assessment: Community Action Agencies (CAAs) must conduct a community-wide needs assessment, including food and nutrition needs, of the low-income population.  On an annual basis, the results of the survey, changes, and trends are to be submitted to the Department. Triennially, grantees must compile and analyze data such as demographics, family types, school dropout rates, availability of status of low-income housing stock, youth and domestic violence, and transportation availability and provide a narrative of the needs identified. 

 

C)        Service Delivery System:  The Community Action Plan should identify the service delivery in the CAA service area that is targeted toward low-income citizens.  It should also identify the accessibility and effectiveness of that system in meeting the needs of low-income clients.  This component is to be submitted with the triennial comprehensive CAP and updated annually if there are significant changes in the service delivery system.

 

D)        Linkages:  The CAP must contain a description of how the agency reaches out to its client community and how it provides information and referral services, case management and follow-up to ensure comprehensive services to its low-income population.  This component is to be submitted with the triennial comprehensive CAP and be updated annually if the process changes.

 

E)        Coordination:  This section describes how CSBG funded services are coordinated with other resources (internal and external), how the coordination is accomplished (both formal and informal), and identify any local groups the agency participates in that enhances coordination.  This section is submitted with the triennial comprehensive CAP and updated annually if there are significant changes in coordination.

 

F)         Community and Neighborhood-Based Initiatives:  This section is a requirement that should describe how the agency will use funds to support community and neighborhood-based initiatives, which may include fatherhood initiatives, or other initiatives with the goal of strengthening families and encouraging effective parenting.  This section should be submitted with the triennial comprehensive CAP and updated annually if there are significant changes in the initiatives.

 

G)        Youth Programming:  This Section is a new requirement that should describe how the agency will address the needs of youth in low-income communities through youth development programs that support the primary role of family, give priority to the prevention of youth problems and crime and promote increased community coordination and collaboration in meeting the needs of youth.  This Section should be submitted with the triennial comprehensive CAP and updated annually if there are significant changes in the programming and coordination.

 

H)        Outcome:  This Section describes the outcome measures to be used to evaluate the success of the applicant in promoting self-sufficiency, family stability and community revitalization.  This Section is to be addressed annually.

 

2)         Affirmative Action Plan:  The applicant agency must submit an affirmative action plan with its annual application for assistance.  The affirmative action plan may follow such format as designed by the applicant, but must include information required by the Department.

 

3)         Annual Work Plan:  The work program will narrate the objectives and activities proposed to be undertaken with grant funds.  The work program will detail specific annual CSBG goals, objectives that include performance and outcome measures, the activities proposed to meet each objective, and the costs to be incurred in carrying out the activities (including non-CSBG costs).

 

4)         Annual Budget:  The applicant shall submit a grant budget by cost categories and line items on budget forms provided by the Department.

 

5)         Cost Allocation Plan:  The Department requires grantees who do not have a negotiated indirect cost rate under the jurisdiction of a federal cognizant agency to submit an annual cost allocation plan either for a calendar year or in conjunction with the Grantee’s corporate year.

 

6)         Assurances and Certifications:  The applicant will be required to assure compliance with cost and accounting standards of the Office of Management and Budget in addition to certifying its compliance with all applicable State and federal laws and regulations dealing with the receipt and expenditure of grant monies.

 

c)         Application Schedule

At least 30 days before the beginning of its funding year: applicants must submit the Community Action Plan, Affirmative Action Plan, Annual Work Program, Annual Grant Budget, Board information, corporate status documentation and bylaws to the Department.

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.55  Grantee Termination or Reduction in Funding

 

For the purpose of this Part, Section 676 (Assurance 13) and 678C of the Act (42 USC 9908(13) and 9915), administrative requirements of 47 Ill. Adm. Code 1.110, and the provisions of this Section are applicable.

 

a)         Any Community Action Agency (CAA) shall not have its funding reduced or terminated and shall be awarded continuing CSBG program administering responsibilities in its established jurisdiction unless one or more of the following shall occur:

 

1)         written communication to the Department stating its desire to discontinue operation of the program;

 

2)         material failure by the CAA to comply with Sections 673, 675, 676  and 678  of the Act (42 USC 9902, 9904, 9908 and 9912) and 45 CFR 96; and

 

3)         Failure to comply with provisions of the grant agreement and the provisions of this Part.

 

Examples of material failure and failure to comply include, but are not limited to, fraud, disallowance of costs that could render the CAA insolvent, denial of access to records of grant-related transactions, false reporting, serving ineligible clients, not meeting State-mandated service priorities and disregard for timeliness and accuracy in the submittal of grant required documents.

 

b)         Upon discovery of one of the conditions noted in subsection (a), the Department will take the following action:

 

1)         For reduction in funding, other than due to allocation changes, the Department will notify the CAA in writing of its initiation of the reduction, stating the reason, the amount and the process, including corrective action provisions when applicable, and appeal provisions.

 

2)         For termination of funding, the Department will provide notice to the CAA of the deficiency causing the initiation of termination proceedings, require the agency to correct the deficiency, and offer training and technical assistance to the agency to assist in correcting the deficiency.  The notice will also advise the CAA of its right to a hearing on the matter in accordance with Section 678C of the Act (42 USC 9915) and this Part.  If the Department is concerned with potential audit disallowances, it will advise the CAA that in order to receive continued CSBG funding throughout the termination process, it must agree to submit to a Department appointed official as a reviewer of all CSBG-related expenditures.  The only CSBG costs that will be approved by the reviewer are those that are allowable under this Part.  In the event that the CAA does not agree to the Department’s review of expenditures, notice of funding suspension pending termination will be provided to the CAA and simultaneously to the Secretary of the U.S. Department of Health and Human Services.  The Department will also advise the CAA of its right to seek direct funding from the U.S. Department of Health and Human Services.

 

c)         The hearing shall be conducted in accordance with the Department’s administrative hearing rules found at 56 Ill. Adm. Code 2605.

 

d)         The Director of the Department will review the hearing officer's recommendation and will base his/her decision on findings of fact and conclusions of laws that substantiate grant termination pursuant to Section 120.55(a).  The Department will notify the CAA of the Department's final determination.

 

e)         Secretary's Review

If the Department's decision is to terminate funding to the CAA, the Department shall also, with its notice to the CAA, advise the CAA of the provisions for review of the termination proceedings by the Secretary of the Federal Department of Health and Human Services pursuant to Section 678C  of the Act (42 USC 9915).

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.60  Grantee Selection

 

a)         In areas of the State where the grantee's CSBG funding has been terminated in accordance with Section 120.55, the Department will initiate a process to select a successor agency in accordance with Sections 673 and 676 of the Act (42 USC 9902 and 9908).  The grantee selection process will be initiated in a timely manner (process to select successor agency as defined in this Section shall not exceed 120 days) so as not to cause undue program delays or interruptions.

 

1)         The following are eligible for CSBG 90% funding:

 

A)        Any organization which was officially recognized as a Community Action agency (CAA) under the provisions of Section 210 of the Economic Opportunity Act of 1964 as amended, unless such organization lost its recognition as a result of failure to comply with the Act. 

 

B)        Any organization officially recognized as a CAA by the Governor, or his duly authorized representative, under the provisions of this Part and in accordance with the Illinois Economic Opportunity Act.  Organizations eligible for State CAA recognition include:

 

i)          Any non-profit private community organization serving a jurisdiction of at least 100,000 population, designated by the governments of the jurisdiction, determined to be capable of planning, conducting and administering a community services program under criteria described in Section 120.50 and having a Board which meets the provisions outlined in Section 120.70.

 

ii)         Any city within the State with a population in excess of 100,000 or a county or group of contiguous counties with a minimum population base of 100,000.  The governmental unit must be capable of planning, conducting and administering a community services program under criteria described in Section 120.50 and must have an Administering Board in accordance with Section 120.70.  (The 100,000 population base referenced in subsections (a)(1)(B)(i) and (ii) is waived for CAAs designated and recognized prior to this amendatory rulemaking.)

 

2)         Notification and Special Solicitation

 

A)        The Department shall notify, in writing, each contiguous existing CSBG eligible entity and others within reasonable proximity (corporate headquarters of the eligible entity is within 50 miles of the boundary of the area to be served), that the area is presently unserved by the CSBG program, and the Department is seeking a successor agency.  In its notification, the Department shall advise the agency to request, if interested, an application package in order to apply for CSBG service provision in the area to be served.  The agency shall have 10 days from date of notice to request the application package.  The requests shall be directed to the Manager of the Division of Economic Opportunity.

 

B)        The Department will allow the requesting agency 45 days from the date of mailing the application package, to complete the application and submit three copies to the Department.  The Department will adhere to this 45 day period, unless the agency which requested the application package communicates to the Department its lack of interest in applying.

 

C)        The Department will respond in writing indicating acceptance or rejection of any application from an existing eligible entity within 10 days after receipt of the application.

 

D)        If the special solicitation period for the existing eligible entities produces no interest or no acceptable service delivery applications (applications did not meet the criteria specified in Sections 120.50 and 120.60(a)(3)), the Department will solicit applications from organizations within the service delivery areas as specified in subsections (a)(1)(B)(i) and (ii) of this Section.

 

3)         Application Contents

In addition to the requirements found in Section 120.50, the application for CSBG service delivery shall include the following:

 

A)        The applicant must demonstrate the support of the public, private and client sectors of the population in the service delivery area (e.g., results of public hearings, letters of support).

 

B)        The applicant must obtain the formal designation (documented resolution) or intent to designate from the principal governing bodies in the service delivery area.

 

C)        The application must include detailed information on how the required community action agency board will be constituted (see Section 120.70). (For existing eligible entities applying for the new service delivery area, this information must specify how the representatives of the new area will become a part of the of the applicant's existing CSBG administering/governing board.)

 

D)        The application must demonstrate how service delivery will be made available to all geographic areas of the service delivery area and how all elements of the area's eligible population will be reached.

 

E)        The applicant agency must supply the following information that describes its base and purpose:

 

i)          statement of the mission of the agency;

 

ii)         organizational chart of the agency; and

 

iii)        written assurances that the applicant agency is a legally established entity with authority to operate in the service area for which the application is being submitted.

 

F)         The applicant agency must supply the following information that describes agency experience:

 

i)          a history;

 

ii)         a description of past experience (if any) in providing services to the proposed target group (i.e., impoverished population); and

 

iii)        a description of services currently delivered by the agency that are related or complementary to this program.

 

G)        The applicant agency must provide the following information regarding its Equal Employment Opportunity/Affirmative Action Policies:

 

i)          written documentation which indicates compliance with equal opportunity and affirmative action regulations (Affirmative Action Plan, see Section 120.50(b)(2)); and

 

ii)         the applicant must supply a written statement as to whether the applicant has been party to any proceedings or litigation with regard to equal employment opportunity or affirmative action investigations or complaints conducted by or filed with the Illinois Department of Human Rights or the U.S. Equal Employment Opportunity Commission.  If so, a description of the nature of the investigation or complaint and the case resolution or anticipated date of resolution if such case is pending.

 

4)         Application Format

The format for the application will be in accordance with Section 120.50.  Forms will be provided by the Department and will be a part of the application package provided to the applicant.

 

5)         Evaluation of Applications

 

A)        Applications must meet all the requirements of Sections 120.50 and 120.60(a)(3) to be placed in consideration for funding.

 

B)        The decision process will include an evaluation of the following agency attributes:

 

i)          ability to conduct multiple programs, with a variety of staff members and funding sources;

 

ii)         have traditionally served impoverished populations in their area (e.g., low-income minorities, youth, elderly, etc.);

 

iii)        have coordinated their programs with other area antipoverty programs;

 

iv)        have included the recipients of their services in agency decision-making (see Section 120.70);

 

v)         have the support of the local governments of the counties that shall be evidenced through formal resolutions, letters of endorsement;

 

vi)        can demonstrate that they have effectively provided those services to their clients that are specified by the agency's mission (e.g., agency performance records);

 

vii)       provide the highest ratio between the amount of grant funds to be used for direct services and the amount to be used for administrative expenses (i.e., project low administrative costs);

 

viii)      propose multiple programs which emphasize the priorities of the Department (see Section 120.110);

 

ix)        address specific local needs (e.g., job creation, housing, education);

 

x)         have well-defined outcome measures that can be monitored and used to evaluate the success in promoting self-sufficiency, family stability, and community revitalization;

 

xi)        utilize CSBG funding to leverage other funds and services that will benefit the poor in the community; and

 

xii)       propose coordination and form partnerships with other low-income residents of the communities, including religious organizations.

 

C)        Applications must address one or more of the program priorities described in Section 120.110, with the highest priority being placed on economic development programs which create jobs.

 

D)        The Department will give special consideration, in its selection, to agencies with prior experience in operating similar or other Department funded programs and with documented records of compliance with rules, regulations, and grant conditions relating to their program operation.

 

E)        The Department will conduct and give special consideration to the results of a public hearing in which competing agencies are provided the opportunity to present their case for selection to the public in the area to be served by the program.

 

F)         The Department will consult with and take into account the recommendations of the principal governing bodies in the service delivery area.

 

G)        The final decision will be based upon the weight of the facts and recommendations found in subsections (a)(5)(A)-(F).  The most effective, efficient and well coordinated program delivery system available will be selected.

 

b)         Interim Service Provision

When the CSBG funding of an eligible entity is suspended, pending termination (in accordance with Section 120.55) and expected to undergo federal review, appeals, and/or litigation, the Department will, within 30 days after its decision to terminate funding, initiate the following steps to establish an interim provider.

 

1)         First preference for interim service provision will be given to a fiscal/operating agreement with the Illinois Community Action Association (ICAA).  The Department will select another interim service mechanism only if the ICAA declines or if agreement cannot be reached on the interim services contract.

 

2)         Establish the services for an interim period through a fiscal/operating agreement with:

 

A)        a contiguous Community Action Agency, or

 

B)        contracted services of a local public or not-for-profit agency with experience in human service delivery (e.g., Head Start Program, Food Commodity Program, and Women, Infants, Children (WIC) Program), or

 

C)        directly provide the services.

 

c)         Discretionary Funding Eligibility

CSBG discretionary funds may be awarded to entities other than those listed in this Part when it is determined by the Department to be in the best interest of the CSBG program and consistent with the Governor's CSBG assurances and Section 120.40 of this Part.

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.70  Required Board Structure

 

a)         Grantee Board Requirement

 

1)         Each Grantee participating in the "90% funding" category of the Community Services Block Grant Program is required to establish a broadly representative Board of Directors as outlined under section 211(a) of the Economic Opportunity Act of 1964, as amended, and as required in Section 676B of the Act (42 USC 9910).

 

2)         When a private non-profit corporation or a separate public agency is the Grantee, the Board of Directors is a Governing Board with full corporate powers and authority.  When a local government or combination of governments is the Grantee, it shall operate the program through an Administering Board with powers and responsibilities delegated to it by the local governments.

 

b)         Composition of the Board

 

1)         The Grantee must certify that its governing or administering board will be constituted so as to assure that:

 

A)        ⅓ of the members of the board are elected public officials, currently holding office, or their representatives, except if the number of elected officials reasonably available and willing to serve is less than ⅓ of the membership of the board, membership on the board of appointive public officials may be counted in meeting the ⅓ requirement; public officials shall be appointed by and serve at the pleasure of the designating officials;

 

B)        not fewer than ⅓ of the members are persons chosen in accordance with democratic selection procedures adequate to assure that these members are representative of low-income individuals and families (see Section 120.120 of this Part) in the neighborhood served;

 

C)        each representative of low-income individuals and families selected to represent a specific neighborhood within a community under subsection (b)(1)(B) resides in the neighborhood represented by the member; and

 

D)        the remainder of the members are officials or members of business, industry, labor, religious, law enforcement, education, or other major groups and interests in the community served (42 USC 9910(a)(2)(B)-(C)).

 

2)         The board shall have at least 15 and no more than 51 members.  It shall meet at least 4 times a year and maintain official meeting records.

 

3)         Tenure for board representatives described in subsections (b)(1)(B) through (D) shall be at the discretion of the local entity.

 

4)         If a Grantee board is determined by the State, to be improperly seated, the State will prescribe necessary remedial action.  The notice of finding and required corrective action shall be provided the Grantee in writing.  The Grantee shall have 30 days from notice to bring the board into compliance with this Section.  Failure by the Grantee to fully respond to the corrective action demand will result in grant termination procedures as specified in Section 120.55 of this Part.

 

5)         The board shall establish procedures under which a low-income individual, community organization, or religious organization, or representative of low-income individuals that considers its organization, or low-income individuals, to be inadequately represented on the board (or other mechanism) of the eligible entity to petition for adequate representation (42 USC 9908(b)(10)).

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.80  Administrative Requirements

 

For the purpose of this Part, administrative requirements specified in 47 Ill. Adm. Code 1 and this Section are applicable.

 

a)         Compensation – The Grantee cannot be reimbursed for costs which exceed the total approved budget.  If the Grantee believes its operation for the grant period will exceed a budgeted line item or cost category, it shall request approval of the Department in writing and give justification for the requested variation prior to exceeding any approved budget line item or cost category.  However, Program Support and Client Assistance cost categories and all inclusive line items may vary up to 20% from the approved budget amount.  In no event shall the Administration cost category be increased without prior written approval from the Department and the Special Category may only be increased.  The Department will grant approval to modify budgeted amounts when the modification is necessary to achieve program objectives.

 

b)         Carry-over

 

1)         Unexpended Funds – CSBG fund balance from the previous fiscal year will be, subject to written approval of the Department, carried into the Grantee’s succeeding fiscal year CSBG program.  The carry-over funds will not reduce the succeeding fiscal year allocation, but the carry-over amount should not exceed 20% of the agency’s annual CSBG allocation and the succeeding year’s work program must reflect additional planned program achievements with reasonable probability of accomplishing those planned achievements so as to eliminate future substantive unexpended balances.

 

2)         Limitation Waiver – CAAs may request the Department to waive the 20% limitation when unforeseen circumstances, such as a project not materializing, high staff turnover or other similar reasonable causes contributed to an excess carry-over.  If the CAA has no reasonable excuse for the excess carryover, the Department will allow the CAA to reprogram the total carry-over amount, including excess, for one succeeding year.  If the CAA violates the 20% limitation the second succeeding year, without a valid, reasonable excuse, the Department will deobligate the excess funds and redistribute them to CAAs, through either a competitive, pilot program solicitation or formula allocation process.

 

3)         Economic Development Requirement (Section 120.110(b)(1)) Carry-over Exception – CAAs are considered by the Department to be not in compliance with their grant agreement when during the grant period they spend less then 50% of their required 10% earmark for job creating economic development (Budget Category “D” funds).  In this case, the entire remaining Category “D” balance will be excluded from allowable carry-over and will be deobligated by the Department.  CAAs that spend at least 50%, but less than the earmarked amount, will be required to place that carry-over portion into Category “D” of the subsequent grant agreement.

 

c)         Reporting

 

1)         Monthly Reports – An expenditure report shall be submitted to the Department at the time of each cash request, but no less frequently than the 10^th  calendar day of each month after the first month of the grant period.  The report shall be in a format established by the Department and shall contain such financial information required by the Department.

 

2)         Quarterly Reports – A Quarterly Program Report, prepared in a form and manner prescribed by the Department, shall be submitted to the Department by the 30^th  day following the end of each calendar quarter.  The report shall include, but not be limited to, the name of the work program, the estimated number of individuals to be served by the program, and the number of individuals actually served by the program.

 

3)         The Grantee shall submit other programmatic reports as may be required by the Department.

 

d)         Subcontracts and Subgrants – The Grantee’s services, duties and responsibilities under CSBG shall not be subcontracted or subgranted by the Grantee without prior written approval of the Department.  Any subcontracts or subgrants shall be subject to and conform with all applicable State and federal laws and the terms and conditions of Department grant agreements. 

 

e)         Publication, Reproduction and Use of Material – Any publication produced as a result of a CSBG grant shall include in its title page the following citation:  "This project was conducted with funds provided by the Illinois Department of Commerce and Community Affairs and does not necessarily represent in whole or in part the viewpoint of the Illinois Department of Commerce and Community Affairs."

 

f)          Assurances – The State and Grantees must comply, as applicable, with the provisions of section 676(b)(1) through (13) of the Act (42 USC 9908(b)(1)-(13)).

 

g)        Monitoring – In order to determine whether grantees meet the performance goals, administrative standards and financial requirements established by the State, the Department shall conduct the following reviews of grantees:

 

1)         a full onsite review at least once every 3 years;

 

2)         an onsite review of each newly designated grantee during or immediately after the completion of the first year of funding; and

 

3)         follow up reviews including prompt return visits to grantees that fail to meet the goals, standards and requirements established by the Department (42 USC 9914(a)).

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.90  Nondiscrimination

 

a)         Equal Employment Opportunity

 

1)         In carrying out the program, the Grantee shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, ancestry, age, physical or mental disability unrelated to ability, marital status, or unfavorable discharge from military service.  The Grantee shall take affirmative action to insure that applicants for employment are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, national origin, ancestry, age, physical or mental disability unrelated to ability, marital status, or unfavorable discharge from military service.  Such action shall include, but not be limited to, the following:  recruitment, advertisement, application, interview, medical inquiry, employment, rates of pay or other compensation; promotion, training, layoff, benefits, and privileges of employment.  The Grantee shall post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause.  The Grantee shall state that all qualified applicants shall receive consideration  for employment without regard to race, color, religion, sex, national origin, ancestry, age, physical or mental disability unrelated to ability, marital status, or unfavorable discharge from military service.  The Grantee shall incorporate the foregoing requirements of this subsection (a) in all of its contracts for program work.

 

2)         The Grantee shall cause or require to be inserted in full in any contract and subcontract for work, or modification thereof, all applicable federal and State Equal Employment Opportunity Provisions.

 

b)         Discrimination – The Grantee shall refrain from unlawful discrimination in employment and shall undertake affirmative action to assure equality of employment opportunity and eliminate the effects of past discrimination in accordance with the Illinois Human Rights Act [775 ILCS 5].  The Grantee shall also adhere to the nondiscrimination provisions of rules issued by the Illinois Department of Human Rights entitled "Procedures Applicable to All Agencies" (44 Ill. Adm. Code 750. Appendix A); Section 504 of the Rehabilitation Act of 1973 (29 USC. 794); the Age Discrimination Act of 1975 (42 USC 6106-6107); Title VI of the Civil Rights Act of 1964 (24 CFR Part I) as amended in 1991; Title IX of the Education Amendments of 1972 (20 USC 1134); Section 677(a) of the Act; Executive Order 11246 (30 FR 12319, September 24, 1965) as amended by Executive Order 11375 (32 FR 14303, October 13, 1967); and Title VIII of the Civil Rights Act of 1968 (42 USC 3601).

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.100  Complaint Process

 

In the event of an Applicant, Grantee, or CSBG program eligible client complaint, the Department will follow the procedures outlined in the 56 Ill. Adm. 2605 with the exception of complaints relating to funding termination of Community Action Agencies.  Those complaints and appeals will follow the process described at Section 120.55 of this Part which is in accordance with the federal Community Services Block Grant Act.

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.110  Program Types-Description

 

a)         General Program Purposes – The Grantee will use the Community Services Block Grant available through the State of Illinois for purposes as described under Section 676  of the Act (42 USC 9908).

 

b)         Program Priorities – The Department's priorities parallel those of the Act, and fall into the following categories:

 

1)         Economic Development – Reflecting the importance of a community's economic viability for the poor, the Department has placed its highest CSBG priority on job creating economic development programs which result in the employment and self-sufficiency of low-income persons.  Each CAA designs and operates an individualized economic development program.  At least 10 percent of each CAA's annual CSBG funding is allocated for economic development/job creation activities.  Most CAAs operate a loan program through which below market rate loans are made for business expansion and start-up which results in the hiring of low-income persons.  Various other job-creating activities are undertaken, including self-employment training.

 

2)         Education – Recognizing the importance of education in breaking the cycle of poverty, priority is given to education programs which are designed to increase the capability of the poor to function productively in society. A broad spectrum of educational assistance is provided through the CSBG program.  Specific examples include:  workplace orientation, vocational skills training, family planning education, cultural opportunities for disadvantaged children, energy conservation education, post-secondary education scholarships, GED assistance for high school dropouts, adult and youth literacy training and nutrition education for single parents and the elderly.

 

3)         Income Management – Counseling and instructing low income individuals and families in the management of their income is an acceptable program activity.  This could take the form of addressing consumer education issues, assistance in preparation of federal and State income tax reports, and the provision of workshops on income savings measures.  Many CAAs offer programs to encourage better use of available income.  A majority of this assistance is in the form of family budget counseling.  Information also is provided through workshops or brochures on such topics as financial management, credit, income taxes and Social Security.

 

4)         Housing – The primary housing activities include aid to renters seeking a residence, landlord/tenant rights education and arbitration, information about purchasing/financing a home, packaging housing and housing rehabilitation loans and providing for minor energy efficiency or health and safety related home repair.  These activities may be linked with other housing related assistance in the community, such as the Energy Assistance and Weatherization programs.

 

5)         Emergency Assistance – Recognizing that crisis situations (some life threatening) frequently occur within the low income population, priority is given to programs that intervene for purposes of alleviating the crisis situation.  Most CAAs maintain clothes closets and food pantries, many of them in conjunction with other community groups and local churches.  Some agencies provide redeemable vouchers or grants to clients that enable them to meet immediate and urgent family needs such as health services, nutritious food, housing, employment-related assistance, day care, medical services and transportation.

 

6)         Nutrition – Poor nutrition and/or lack of proper diet are often synonymous with the effects of poverty.  Activities designed to increase eligible clients' awareness of proper diet and food preparation is a concern to the total community.  CSBG funding is a primary resource for leveraging and providing nutritional assistance.  Typical programs include:  federal surplus food distribution, community gardening projects, food banks, senior citizen and youth feeding projects, Christmas food packages and assistance in accessing food stamps, WIC and other nutrition-related programs.  These activities may include the storing and distribution of surplus United States Department of Agriculture (USDA) agricultural commodities; preparation and service of hot meals; food baskets; and programs designed to prevent malnutrition.

 

7)         Linkages – CSBG funding regularly supports extensive outreach, information and referral services, transportation services, youth recreation and self-sufficiency programs for low-income citizens.

 

8)         Self-Sufficiency – Many CAAs provide for comprehensive family case management programs that promote, empower and nurture family members toward self-sufficiency.

 

9)         Health – CAAs provide many health related activities in the form of transportation to medical services, medical/dental screening, immunization, drug and alcohol abuse prevention and other services which promote good health.

 

10)         Community Involvement – CAAs conduct programs to encourage and facilitate low-income clients to achieve greater participation in the affairs of their communities, including the development of local partnerships with law enforcement agencies, schools, housing authorities and private sector businesses, clubs and other community organizations.

 

11)         Youth Development Programs – CAAs conduct programs that support the primary role of the family in youth development and the prevention of youth problems and youth crime.  Additionally, programs such as after school child care and linking grade school students with senior mentors and tutors are targeted to preteen youth.

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.115  CSBG Loan Programs

 

a)         CSBG Revolving Loan

 

1)         CSBG funds are loaned through Grantees to an Illinois business in a separate but companion agreement to a conventional loan.

 

2)         The CSBG loan represents no more than 49% of the total loan package (combined borrowing and equity).

 

3)         The conventional loan is obtained from a licensed Illinois lending institution.

 

4)         The benefiting local government and/or other public resources may be used in the project.

 

5)         The CSBG loan term may not exceed 10 years but may be for a shorter term at the discretion of the Grantee.

 

6)         CSBG Loan interest rate (Fixed-Flexible option)

 

A)        When CSBG grant funds are used, the loan shall have a fixed interest rate of no more than Prime plus 4% (“Prime” as used in this subsection (a)(6) is the National Prime Interest Rate as published in the Wall Street Journal on the date the parties agree to the loan provisions).

 

B)        When recaptured funds are used from a previous CSBG loan, the loan shall have a fixed rate of no more than Prime plus 4%. 

 

7)         The CSBG financing must be committed simultaneously or prior to the closing of other financing.

 

b)         Hiring and Job Retention

 

1)         Establishing a Pre-Loan Base Number of Employees – The Grantee shall have the right to review the borrower's employment records at the time of the loan closing to establish the pre-loan employment level in order to assure that no personnel cuts were made by the business in anticipation of the pending loan and its hiring requirements.

 

2)         Hiring Requirements

 

A)                Businesses accepting CSBG loan funds must hire at least one new full-time equivalency (minimum 37½ hour work week, averaged annually) CSBG eligible (in accordance with Section 120.120) employee for each $20,000 or any portion thereof of CSBG monies borrowed.

 

Example:

	Minimum
$1-$20,000	1 Job
$20,001-$40,000	2 Jobs
$40,001-$60,000	3 Jobs

 

B)        The Department will allow, based on presentation of written verifiable jobs (to be created) salary data submitted as part of its loan application, the Grantee to set the amount loaned per job at 75% of the entry level salary (which may include non-required benefits) for each job.  (For example:  an entry level salary of $50,000 would warrant lending of $37,500; a $60,000 entry salary would warrant lending of $45,000; a $10,000 entry salary would warrant lending of $7,500.)  The Department will, upon request, consider the inclusion of fringe benefits (e.g., health insurance) in the salary calculation. (Any combination of subsections (b)(2)(A) and (B) is allowed.

 

C)        If part-time employment is involved in the created jobs (under either subsection (b)(2)(A) or (B)), the full-time equivalency shall be no more than two employees making up one 37½ hour work week.

 

D)        A hiring schedule must be a part of each loan agreement.  The required hiring must be completed within the first 24 months of the loan, with at least 50% of the new employees hired in the first 12 month period.  (For purposes of this hiring timeframe, the loan is considered consummated the date the borrower first receives the loan funds.)

 

E)        The job positions for CSBG eligible clients created by the loan must be retained and filled by an eligible client for at least 24 months from the date the job was first created.  Grantees should attempt to retain the availability of the loan-created jobs for CSBG eligible clients over the full loan term by maintaining professional contact with the business and tracking the jobs.  Grantees, through their individual loan agreements, may negotiate more restrictive hiring requirements than stated in this subsection (b)(2).

 

c)         Loan Fund Use

CSBG funds loaned may only be used to purchase machinery, equipment or inventory or to provide working capital.  CSBG loans may not be used to purchase or improve real property (per Section 120.130 of this Part).  This real property restriction does not apply to loans made with "Recaptured Loan Funds" (as described in subsection (i) of this Section).

 

d)        Loan Security

Provisions (collateral) shall be made for first position on loan security. If first position is impossible because of the primary lender's claims, the Grantee should negotiate shared position with the private lender.  Subordinate position for loan security should be the CSBG lender's last resort.  Loan agreements shall contain precise listings and assignment of collateral established as security for the loan.

 

e)         Loan Contract Provisions

Each Grantee's loan contract with a borrower shall clearly, and in detail, specify the following:

 

1)         Employment Plan (consisting of mechanism to assure GSBG client eligibility, timeframes, job descriptions);

 

2)         Payment Schedule;

 

3)         Interest Rate Charged;

 

4)         Late Payment Penalty Provision (optional);

 

5)         Default Provisions.

 

A)        Events of Default:

 

i)          Payment Default:  the Department shall consider a loan to be in default when payment arrearage reaches 90 days.  Grantees may place more restrictive payment arrearage provisions in their loan contracts.

 

ii)         Hiring Default:  a loan shall be considered in default when the hiring provisions specified in this Part and in the loan agreement have not been met.

 

B)        Default Remedies:

 

i)          Payment Default:  the loan will be called or renegotiated (loan renegotiation approval must be requested of the Department and will be approved when the Grantee's written request states that the renegotiation is the only practical means of loan recovery and/or will prevent bankruptcy and/or will prevent a loss of jobs to the local area).

 

ii)         Hiring Default:  an interest acceleration clause shall be a part of each loan contract.  At a minimum the clause shall provide that after notice by the Grantee to the borrower that the hiring provisions have not been met, the interest rate for the loan will increase by 5 percentage points.  Such increased rate shall remain in effect until hiring deficiencies have been corrected or the loan is called.  (The Department will allow a one-time waiver per loan to the interest acceleration provision when the Grantee, in writing, shows that such acceleration will cause borrower bankruptcy and further loss of jobs and submits a proposed renegotiated hiring schedule that meets the CSBG job creation and hiring requirements through no more than a 24 month extension.)  The Department will allow other equally punitive hiring noncompliance interdictions in grantees' loan contracts in lieu of the interest acceleration penalty.  Such other interdictions may include (but are not limited to) fines, partial loan recall and pre-scheduled interim balloon payments;

 

6)         Loan Security Provision (The Grantee shall perfect the loan security. For example:  hold title to vehicles; secure a mortgage on pledged real property; require Uniform Commercial Code (U.C.C.) [810 ILCS 5] filing for pledged equipment, fixtures and inventory.);

 

7)         Collateral Description;

 

8)         Prepayment Provisions (optional);

 

9)         Hiring Schedule;

 

10)         Use of Loan (Machinery, Working Capital, Equipment);

 

11)         Hiring Noncompliance Penalty;

 

12)        Other documentation necessary to assure compliance (e.g., hiring reports);

 

13)        Primary lender – amount; and

 

14)        Wetland Certification Statement [20 ILCS 830].

 

f)         Loan Payment Provisions

 

1)         The interest rate for a recaptured principal or Category “D” CSBG loan shall have a fixed rate not to exceed Prime plus 4% (“Prime” as used in this Section is the National Prime Interest Rate as published in the Wall Street Journal on the date the parties agree to the loan provisions).  Interest for loans made with repaid principal from previous CSBG loans may not exceed 7.5%.

 

2)         Payment Schedules

 

A)        Payments shall include principal and interest calculated in accordance with standard loan tables.

 

B)        Loan payments shall not be deferred, unless written permission is given by the Department.

 

C)        Grantees, through their individual loan agreements, shall impose a late payment penalty of not less than 5% of any monthly installment not received from the borrower within 15 days after the installment is due.

 

g)         Micro-Loan Provisions

The Department has established, within the CSBG Loan Program, a Micro-Loan Program.  This program is designed to enable Grantees to assist entrepreneurs in establishing and expanding business ventures.  It provides for up to 100% CSBG lending, makes less demand for collateral and gives lending discretion to Grantees.  To operate a CSBG Micro-Loan Program, a Grantee must have "preferred lender" status, approved loan criteria and an approved lending process.

 

1)         Preferred Lender

To obtain preferred lender status, the Grantee must establish and maintain a loan review committee, with a minimum of 3 members who represent the financial and economic development professions and should include the legal profession.  In lieu of legal profession membership, the Grantee must include in their micro-loan procedures a provision for legal review of loans.  The committee may be attached to the Grantee's CSBG Board.  The Department will, upon receipt of documentation, formally recognize preferred lender status.

 

2)         Micro-Loan Criteria

 

A)        Businesses eligible for micro-loans may be a proprietorship, partnership or corporation with no more than 5 employees.  If proprietors, eligible borrowers must own all business assets; if partners or corporations, eligible borrowers must own more than 50% of the business assets.

 

B)        Eligible borrowers must agree to create and fill a minimum of one job for a CSBG eligible client for the micro-loan lending.  The job creation may include the borrower if he/she is CSBG eligible and will gain full-time employment through the borrowing.

 

C)        The business must be located in the CSBG jurisdiction of the Grantee, and the borrowers must demonstrate that they cannot access the funds from other sources.

 

D)        Maximum lending is $20,000 and may be entirely CSBG funded.

 

E)        Recaptured principal will be used for all micro lending.  (Exceptions to this provision must be requested in writing and approved in writing by the Department.)

 

F)         The interest rate may not exceed Prime plus 4% and may be set lower at the discretion of the Grantee.

 

G)        Lenders shall make every attempt to fully collateralize the micro-loan and the collateral should be secured.

 

H)        The term of the loan may not exceed 10 years.  The term of the loan should not exceed the life of the loan collateral.

 

I)         A hiring schedule must be a part of each micro-loan agreement.  The required hiring must be completed within the first 12 months of the loan.

 

J)         Funds loaned may be used to purchase machinery, equipment and inventory, to provide working capital and to purchase or improve real property.

 

3)         Micro-Loan Forms and Procedures

The Grantee must establish and maintain DCCA approved loan application forms, loan agreements, loan applicant requirements and screening process, loan review process and loan monitoring procedures.

 

4)         Micro-Loan Administration

 

A)        Since the Grantee must be a "preferred lender" in order to participate in the program, final decisions for lending are at the Grantee level.

 

B)        Recaptured principal disbursed for micro-loans must be so noted in accounting records at the time of fund transfer.

 

C)        Monitoring will be conducted by the Grantee.

 

D)        Reporting will be on the CSBG Quarterly Loan Program Status Report (Hiring and Financial), and the lending will be included in Recaptured Loans on the Reconciliation Form.

 

E)        The file for a micro-loan shall consist of:

 

i)          the application;

 

ii)         committee approval;

 

iii)        the loan agreement/contract;

 

iv)        amortization schedule;

 

v)         hiring schedule;

 

vi)        monitoring information; and

 

vii)       CSBG Loan Project Fact Sheet.

 

F)         The micro-loan repaid principal must be maintained in the same account as all other CSBG Loan Program repaid principal.

 

h)         Loan Approval Process for Loans Under Current Grants

 

1)         All Grantee CSBG funded loans must be submitted to the Department for approval.  The Department's review and determination to approve or disapprove the loan will be given in writing within 20 working days after receipt of a complete set of the loan documents. (Loans submitted for approval after November 15 run the risk of not being processed by the December 31 cut-off due to insufficient time to complete the review.  Loans approved after the December 31 date will be obligated against new program funds effective January 1.)

 

2)         The loan application documents to be submitted, and upon which the decision of the Department will be based, consist of:

 

A)        The loan agreement containing all provisions in compliance with this Part.

 

B)        Application documents:

 

i)         History of the Company – a brief history of the business and past employment growth.

 

ii)         Market Information – information on the company's products or services and identification of existing and potential major customers and competitors.

 

iii)        Corporate Financial Statements – historical corporate financial statements for the past three years and interim statements dated no more than 90 days prior to application including:  Profit and Loss Statements, Balance Sheets, Cash Flow Statements, and Disclosure of Contingent Liabilities.

 

iv)        Three Year Projections – three year projections of the Profit and Loss Statement and Balance Sheet and a one year Monthly Cash Flow Projection.

 

v)         Description of Inventory – a list of inventory to be purchased using CSBG funds. 

 

vi)        Description of Machinery and Equipment (if applicable) – major equipment or classes of equipment to be acquired with the CSBG loan funds, including model and serial numbers where possible; for acquisition of new machinery and equipment, attachments of reliable vendor cost estimates; for moving and installation costs, attachments of written estimates; for used machinery and equipment acquisition, an independent appraisal demonstrating that the fair market value is in line with the purchase price.

 

vii)       Description of Working Capital (if applicable) – a detailed explanation of the need for and use of funds.

 

viii)      Company Management – a listing of those people that are responsible for the management of the company, their positions, and percentages of ownership.

 

ix)        Principals Resumes – a resume of each principal.

 

x)         Personal Financial Statement – a personal financial statements for each principal owning more than 20%  of the company.

 

xi)        Letters of Commitment – commitment letters documenting all sources of leveraging; loans from financial institutions must have language indicating the loan amount, the specified term and interest, collateral, conditions attendant to the loan, and the fact that the loan is approved; any commitment to purchase a revenue bond must have an executed inducement resolution and the rates, terms, and conditions of approval by the buyer.

 

3)         Financial Evaluation Component – The applicant's financial statements, including annual balance sheets and profit and loss statements for the past three years as well as the most recent 90 days; a three year projected balance sheet and profit and loss statement as well as a one year monthly cash flow statement will be reviewed through a standard credit analysis (as prescribed in the Business Credit Analysis Textbook, 1985, published by the National Development Council) that will determine the:  liquidity and debt coverage for the project; ability of the company to manage debt; business trends and projected earnings.  This data will be compared to similar data for companies in the same industry using "Robert Morris Associates Annual Statement Studies" (1990) if such industry is evaluated by this source. This standard credit analysis will determine the financial stability of the company.  Determination of the loan approval will also be based on compliance with Section 9-4(a), (d), (e), and (f) of the Small Business Development Act [30 ILCS 750/9-4].

 

i)         Loan Approval Process for Recaptured Loan Funds

 

1)         All Grantee loans using repaid principal from previous CSBG loans (recaptured loan funds) must be submitted to the Department for approval.

 

2)         The Grantee may, at its option, request the Department to review the complete loan application.  When this request occurs, the documents upon which the Department will judge its approval or disapproval and the process for this determination will be in accordance with subsection (g) of this Section.

 

3)         If the Grantee chooses to conduct its own loan review, the loan document to be submitted and upon which the decision of the Department will be based is the "Pre-Loan Closing Form" which includes the following information:  

 

A)        Grantee Agency name, address and date of submittal;

 

B)        Name and address of borrowing business;

 

C)        Loan amount;

 

D)        Source of funds;

 

E)        Loan period;

 

F)         Interest rate;

 

G)        Hiring schedule;

 

H)        Loan use;

 

I)         Collateral description and position;

 

J)         Primary lender, amount, and term; and

 

K)        Signature of submitting officials.

 

4)         The approval or disapproval of the Department will be based on the loan period, interest rate, hiring schedule, loan use, collateral description and position, and primary lender amount being in compliance with this Part.  A letter, with the Department's determination and signature, will be returned to the Grantee within 10 working days after receipt of a completed Pre-Loan Closing Form.  (Loans submitted after November 15 run the risk of not being processed by the December 31 cut-off due to insufficient time to complete the review.  Recaptured loans approved after the December 31 date will not prevent the declaration of "lapsed principal" and the demand for its return.)

 

j)          Processing a Micro-Loan

 

1)         All micro-loans are approved at the Grantee level.

 

2)         Once the funds have been disbursed, a CSBG Loan Project Fact Sheet must be submitted to the Department.  This will be the mechanism for advising the Department that action has taken place.

 

k)         Loan Fund Recovery/Held Principal Limits/Disposition/Reversionary Right

 

1)         Recovery

The repaid loan principal is considered by the Department to be a Community Services Block Grant-related asset, held in trust by the Grantee.  The Grantee must place the repaid loan principal in a corporate revolving loan account to continue business assistance efforts in compliance with this Part.  This continuation requirement shall be perpetually binding on the Grantee, its successors and assignees until such time as the Department formally negotiates with the agency other CSBG related uses for the recovered loan principal.  The interest earned on the CSBG supported business loans is not required to be a part of the perpetuation of the loan program nor subject to the provisions of the Illinois Grant Funds Recovery Act [30 ILCS 705] and may be used for any corporate purpose.

 

2)         Held Principal Limits

Recaptured principal amounts will be reported quarterly to the Department.  The Grantee shall actively pursue new business start up or expansion loan opportunities for the recaptured principal and maintain a written record of such efforts, which the Department may review, upon request.  The grantee is allowed to hold the greater of $20,000 or 20% of the total repaid principal in its CSBG loan program portfolio.  In its review of 4^th quarter loan reports, the Department will determine if the grantee is holding excess repaid principal (as of the end of the calendar year), excluding any balloon loan payments, and declare the excess “lapsed principal”.  Additionally, the Department will impose a penalty on Grantees that do not reduce their repaid principal, through lending or approved wavered use, by at least 25% over a two-year period.  At the end of the second year and each subsequent two-year period in which the 25% reduction is not met, the Department will declare the balance of the 25% as lapsed principal.  However, the Department will allow the Grantee to maintain the “floor” level ($20,000) repaid principal without lapse declaration.  The Department will require, by written notice, lapsed principal to be reduced to these stated limits through a grant fund transfer.

 

3)         Disposition

The Grantee may not sell, transfer or in any way dispose of the CSBG funded loans without DCCA's written approval.

 

4)         Reversionary Right

If Grantee funding terminates (as specified in Section 120.55 of this Part) the Grantee's repaid principal loan fund balance and all current loans shall revert to the Department for transfer to the successor (Section 120.60 of this Part) agency.

 

5)         Loan Settlement

In the event of a loan settlement due to bankruptcy or other closing, the cash settlement shall be applied 100% to principal after expenses are paid.  Expenses are defined as unplanned costs incurred as a result of the closing/bankruptcy (i.e., storage or attorney) and are not covered by the CSBG grant or earned interest.

 

l)          Reporting/Recordkeeping/Monitoring

 

1)         The Grantee is required to submit two reports to the Department for tracking purposes.

 

A)        The CSBG Loan Project Fact Sheet is to be submitted immediately following the closing of the loan (loan agreement signed and funds disbursed to the borrowing business).  If the loan agreement is amended (i.e., changing the term or interest rate), a revised CSBG Loan Project Fact Sheet shall be submitted.

 

B)        Quarterly CSBG Loan Status Report (6 parts) – This 6 part report (on forms provided by the Department) is to be submitted as part of the CSBG Quarterly Report, due the 30^th calendar day following the end of each calendar quarter.  The report must include all loan projects that have been closed (loan agreement signed and funds disbursed to business) since the inception of the CSBG Loan Program. 

 

2)         Records – The Grantee is required to maintain a CSBG Loan Program file with separate sections for each loan.  Each loan file shall contain the loan agreement that encompasses all elements specified in this Section, all correspondence relating to the loan, copies of all forms submitted to the Department, verification of loan payback and monitoring, and, if the loan is in default, documentation of efforts made to return the loan to compliance or to call the loan.

 

3)         Monitoring

 

A)        The Grantee agency is responsible for monitoring the following provisions of each CSBG loan (including loans made with repaid loan principal):

 

i)          hiring schedule compliance, including CSBG eligibility verification;

 

ii)         replacement of employees;

 

iii)        use of loan monies

 

iv)        loan repayment; and

 

v)         Wetland Act compliance.

 

B)        The Department's program monitoring and annual auditing will include verification of the Grantee's report on the status of each consummated loan.

 

m)       Carry-over of Loan Program Funds – At least 50% of the grantee’s earmarked (in the grant agreement) loan program funds must be obligated, with a Department approval letter, by December 31 of the grant year.  Obligated funds must be disbursed for loans no later than January 31 of the succeeding grant year.  The remaining 50% or less of the earmarked loan funds shall be carried over to the succeeding year’s grant, through modification, and placed with the earmarked loan funds in the grant agreement.  Any Grantee who has not obligated or disbursed at least 50% of its earmarked loan program funds by the respective December or January 31 cutoff dates shall have the remaining balance deobligated by the Department.  All CSBG Grantee funding deobligated by the Department shall be returned to CAAs through a competitive or formula distribution process.

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.120  Eligibility Requirements

 

Client eligibility for the Illinois Community Services Block Grant Program is limited to the 3 listed categories.

 

a)         Clients served must be “low-income” which is at or below 125% of the poverty line as determined annually and published in the Federal Register by the U.S. Department of Health and Human Services (HHS).  CAAs may set more restrictive eligibility provisions (i.e., majority, at least 51% of clients served must be at or below 100% of HHS’ poverty level with the remainder of the clients served at 125% of the poverty line).  Client income may be determined by actual annual income or a projection of income based on the prior 90 days (whichever is most beneficial to the client).

 

            At client intake: disregard CSBG scholarship funds, training stipends and other student financial aid when determining family income.

 

            Ongoing/long-term programs: clients eligible at intake and enrolled in a CAA Family and Community Development program may remain eligible for up to five years or until they reach 185% of the poverty line as long as they are progressing in the program and there is at least quarterly client contact.  Clients eligible at intake and enrolled in other multi-year programs may remain eligible for up to two years or until they reach 185% of the poverty line as long as they are progressing in the program.  The CAA must assess and document the income each year for the participants in the multi-year programs; however, original eligibility prevails until the thresholds and conditions described in this subsection are reached.

 

b)         Extreme emergency assistance may be provided to individuals and families who are victims of natural or manmade disasters without regard to income eligibility.  This category is included to allow CAAs to quickly respond to sudden events that cause swift and temporary poverty.  This category includes victims of fire, floods, tornadoes and other disasters.  Special written authorization from DCCA must be obtained if clients in this category will exceed 10% of the total CSBG clients served in a grant period.

 

c)         Each CAA is given discretion to calculate income for selected clients net of extreme expenses in areas such as medical, housing, child care and transportation and to waive income restrictions for clients who have experienced a substantial loss of income through an employment or family related crisis.  These discretional provisions fall under the same limitation that is in place for victims of natural or manmade disasters.  Special written authorization from DCCA must be obtained if clients in this category and the preceding category (Section 120.120(a)(2)) will exceed 10% of the total CSBG clients served in a grant period.

 

(Source:  Amended at 27 Ill. Reg. 7986, effective April 28, 2003)

 

Section 120.130  Limitations On Use of CSBG Funds

 

CSBG funds shall not be used by the State or its Grantees for the purchase or improvement of land or the purchase, construction, or permanent improvement (other than low-cost residential weatherization or other energy-related home repairs) of any building or other facility.  The U.S. Department of Health and Human Services may waive this limitation upon the State's request for such a waiver if the request describes extraordinary circumstances to justify the purchase of land or the construction of facilities (or the making of permanent improvements) and that permitting  the waiver will contribute to the State's ability to carry out the purposes of this Act.

 

(Source:  Amended at 20 Ill. Reg. 4611, effective February 28, 1996)

 

Section 120.140  Incorporation by Reference

 

Any incorporation by reference in this Part of the rules and regulations of any agency of the United States or of standards of a nationally recognized organization or association includes no new amendments or editions after the date specified.

 

(Source:  Added at 11 Ill. Reg. 7937, effective April 20, 1987)