.01 City Representative and Department of Commerce contracts fund Economic Development Programs using Federal, State and City funds. The Federal Funding source is the U.S. Department of Housing and Urban Development's Community Development Block Grant Funds (CDBG) and the Economic Development Administration. The source of State funding is the Commonwealth of Pennsylvania's Department of Community and Economic Development (DCED).

.02 The Economic Development Programs require that all subrecipients of Community Development Block Grant (CDBG) funds either create employment opportunities for low and moderate income people, provide goods or services to low and moderate income neighborhoods, provide benefits to an area where a majority of the residents are low and moderate income persons, undertake general improvements to a neighborhood business area which services a primarily residential area with a majority of low and moderate income persons or prevents or eliminates slum or blight.

.03 Subrecipients who receive CDBG funds for job generation, under Commerce's Financial or Technical Assistance Programs must provide Commerce with a time schedule for the job positions which are anticipated to be created during the two years after the completion of this project. This information is provided to public employment agencies which attempt to place low and moderate income individuals. Philadelphia Industrial Development Corporation (PIDC) and Philadelphia Commercial Development Corporation (PCDC), each have a close-working relationship with the Private Industry Council of Philadelphia to ensure the placement of low and moderate income Philadelphia residents. The subrecipients of loans or grants have to report their current employment situation for at least two years after completing their CDBG funded activity. (In some cases, these subrecipients receive on-going technical assistance for two to three years to ensure the successful expansion of a subrecipient).

.04 The Enterprise Zone Areas, Neighborhood Commercial Revitalization, and Neighborhood and Special Commercial Programs provide a mixture of job generation, employment placement and public improvement programs. Subrecipients must provide an array of data on program beneficiaries contingent upon the individual project design. For example, the Lighthouse Job Bank Program requires that the number of job referrals and placements must be reported, and that the types of jobs must be reported. Enterprise Zone Area Programs are involved in three low income neighborhoods in the City: American Street, Hunting Park West, and West Parkside and a fourth Enterprise Zone is located at the Port of Philadelphia.

.01 The City Representative and Department of Commerce administer various programs as detailed in the following section.

.01 Subrecipients shall actively support revitalization by providing service to the businesses in the district through the operation of a Business Service Center. Through the Business Association, subrecipients shall respond to informational requests, city services requests, and/or complaints from individual businesses and refer business to appropriate economic development agencies such as PCDC or PIDC.

.02 Subrecipients operate a Job Resource Center (JRC) in cooperation with and in conjunction with the local Job Network and other community/service organizations and businesses to maximize employment opportunities for low and moderate income area residents.

.03 The Philadelphia Industrial Development Corporation - Local Development Corporation (PIDC-LDC) may undertake Community Development Block Grant (CDBG) funded activities to provide financial assistance to for-profit and non-profit businesses located in Philadelphia. These activities shall be undertaken in accordance with the Federal Regulations under 24 CFR 570.203.b and 24 CFR 570.204.c.3. The various programs are fundable under the following tasks:

· Commercial Assistance in Low and Moderate Income Neighborhood Programs:

· Prevention or Elimination of Slums or Blight Programs:

.04 In order to assist the City in the implementation of its economic development strategy, PCDC-ULDC shall work in thirty-three (33) low and moderate income neighborhoods throughout the City. PCDC-ULDC shall provide direct assistance to for-profit businesses and non-profit organizations which act as key service providers and employers in these areas. The principal goals of the Neighborhood Economic Development Division are to enable these businesses to remain and to expand while providing needed goods, services and employment opportunities for Philadelphia's low and moderate income residents.

.05 In the NCR process, PCDC-ULDC shall work with local businesses, their representative organizations (the local business associations), and with local neighborhood organizations, when appropriate, to aid in the stabilization and revitalization of the targeted low and moderate income neighborhoods.

.06 The Philadelphia Commercial Development Corporation - Urban Local Development Corporation (PCDC-ULDC) shall assist small businesses in obtaining financing for business expansion and start-up. Funds shall be secured from private and public lending agencies and the Small Business Revolving Loan Fund (SBRLF) to assist firms with financing for business start-up or expansion. In addition, PCDC-ULDC shall provide limited technical assistance.

.07 PCDC-ULDC shall assist small businesses in obtaining financing for business expansion and start-up, working capital, and real estate for business uses. Funds shall be secured from private and public lending agencies and the Small Business Revolving Loan Fund (SBRLF) to assist firms with financing for business start-up or expansion. In addition, PCDC-ULDC shall provide limited technical assistance, as necessary, to complete financing packaging activities.

.08 PCDC-ULDC shall work to maximize the Small Business Revolving Loan Fund (SBRLF). The SBRLF is designed primarily to aid commercial firms, neighborhood service firms, and small firms requiring venture capital to overcome obstacles to starting up, expanding and/or increasing or retaining employment in Philadelphia.

.09 PCDC-ULDC shall assist in combatting crime which affects for-profit and non-profit firms which provide goods or services to the low and moderate income neighborhoods located in the NCR areas.

.10 Micro-Enterprise Assistance ñ PCDC-ULDC shall provide and complete technical and non-CDBG funded loan packaging assistance services through its Micro Loan Program.

.11 PCDC-ULDC shall provide technical assistance to six (6) neighborhood-based non-profit organizations to assist in the financial packaging of for-profit business projects. These for-profit business projects shall create and/or retain employment opportunities for low and moderate income people.

.12 PCDC-ULDC shall implement a program of technical and financial assistance to minority and small contractors in order to increase the participation of these contractors in City-funded housing.

.13 PCDC-ULDC shall manage property acquired by PCDC-ULDC using CDBG funds, as needed.

.14 PCDC-ULDC shall administer and monitor special neighborhood-commercial development projects. PCDC-ULDC shall be responsible to ensure that these projects are successfully completed and closed-out in accordance with all applicable federal, state and municipal statutes, ordinances and regulations. PCDC-ULDC shall follow-up with any and all findings against such projects until they are resolved.

.15 Subrecipients shall acquire and/or construct properties for commercial and residential units. The commercial space shall be occupied by businesses which provide additional retail goods and services to the low and moderate income neighborhood. The residential units shall be available for low and moderate income families.

.16 Subrecipients, in cooperation with the Commerce Department, will undertake a feasibility analysis and a predevelopment plan for various projects. Refer to the specific Statement of Services and Materials of the Contract.

.17 PIDC-LDC will undertake the administration of the UDAG Program which shall include the preparation of UDAG applications and supporting documentation, negotiations with HUD and UDAG developers, project management and monitoring, reporting to HUD, contracting with and/or coordinating with UDAG consultants, disbursing UDAG loans to developers and collecting UDAG

loan repayments. All agreements with developers negotiated by PIDC-LDC which affect, concern, or relate to the disbursement and/or collection of UDAG loan repayments shall be subject to the approval of the Director of Commerce and shall be reviewed by the Law Department of the City of Philadelphia prior to the execution of said agreements.

.18 In addition, the PIDC-LDC staff funded under this agreement may undertake administrative work in connection with activities which are eligible under the Title I of the Federal Housing and Community Development Act of 1974, as amended, with the prior written approval of the Director of Commerce.

.19 Miscellaneous revenue generated from the UDAG loan repayments may be utilized to fund the cost for the administration of the UDAG Program. Prior to the use of miscellaneous revenue for administration, an administrative budget must be submitted to and approved by the Director of Commerce. The balance of UDAG miscellaneous revenue and all program income from all UDAG projects must be utilized consistent with program income regulations.

.20 The Department of Community and Economic Development (DCED) funds several Economic Development Projects including the Enterprise Zones and contracts used for acquisition, construction and rehabilitation of commercial, industrial and mixed use properties. In addition to the requirements set forth in 1130.34 refer to the CDBG section for requirements on specific types of service.

.21 Subrecipients shall provide technical assistance in entrepreneurial skills and business management to micro-businesses. Entrepreneurs that complete this program shall be eligible to participate in the low interest non-CDBG funded loan program. Participants must be certified as low or moderate income upon in-take into the program.

.01 The Federal CFDA Number is 14.218 for all programs listed in Section 1110 except the Housing Rehabilitation Assistance Program and UDAG. The UDAG Federal CFDA Number is 14.221. The Housing Rehabilitation Assistance Program is all City funds; therefore, a Federal CFDA Number is not applicable.

.02 All programs listed in Section 1110 are subject to the Administrative and Financial Management Guidelines for the Office of Housing and Community Development and its Delegate Agencies.

.01 As discussed in Sections 300 and 500 of this Audit Guide, each City of Philadelphia Department program has specific auditing requirements. These requirements are in addition to those areas of audit specified in Sections 300 and 500 of this Guide. The audit requirements listed on the following pages are not all inclusive and do not represent an audit program for conducting a financial and compliance audit of the program(s). The audit requirements listed are presented as highlights of areas of special interest to the Department. Any deficiencies noted as a result of the procedures are to be disclosed in the Schedule of Findings and Questioned Costs.

.02 The following reporting requirements are applicable to all programs listed in Section 1110:

The audit procedures for reporting requirements are:

.03 Generally subrecipients shall perform the following tasks (refer to the statement of Services and Materials in the Contract):

The audit procedure for the above is:

.04 Generally, subrecipients who operate a Job Resource Center (JRC) in cooperation with and in conjunction with the local Job Network and other community/service organizations and businesses shall perform the following tasks (refer to the Statement of Services and Materials of the contract for specific details):

The audit procedure for the above is:

.05 Subrecipients who provide assistance for job creation activities are to use the following definition in order to define employment opportunities which are expected to be available to low and moderate income people:

.06 The City requires that the assisted business agree to provide the Private Industry Council (PIC) a detailed listing of all employment opportunities that shall be created as result of the CDBG assistance. This information shall include the job title, skills and experience necessary, and the time frame for filling the positions. PIC shall refer Jobs Training Partnership Act (JTPA) eligible persons to the business and the business shall give them first consideration for filling such jobs.

.07 The subrecipient business shall be required to submit summary reports with the attached family income data forms for at least the first and second years following the completion of the funded activity.

.08 If necessary, the Company may be given up to two additional years to comply with the job creation objectives set forth under the original project description, if the additional time is justified and may result in the achievement of the original goals.

.09 If the Company fails to meet the projections, then the agencies shall impose all available legal remedies and, when appropriate, the uniform sanction policy and/or debarment.

The audit procedures for the above are:

.10 The NCR service areas are divided into four categories (primary, secondary, on-call and special project areas). The primary areas are those which have the strongest development potential, and where economic development and housing resources have been committed within the City's revitalization strategy. These are the fifteen (15) areas in which PCDC-ULDC shall focus its most intense Technical Assistance, Small Business Lending, Real Estate Development, Public Improvements and Storefront and Security Rebate activities.

The audit procedure for the above is:

.11 PCDC-ULDC shall assist in the disposition of publicly and privately owned vacant commercial and/or mixed use properties in PCDC-ULDC's project areas, including neighborhood development projects and NCR areas. PCDC-ULDC shall prepare and distribute three (3) times during the contract year a Hot List of commercial properties located in NCR areas which are available for rent, lease or purchase. The Hot List shall be distributed to real estate brokers, developers and retailers. The goal is to reduce and maintain a lower vacancy rate in project areas where vacancy is a problem. The marketing of these properties shall be undertaken by the Real Estate Development Unit.

The audit procedure for the above is:

.12 PCDC-ULDC shall assist in the delivery of public improvement projects in the coordination of City-funded public improvements provided by the City and/or the Redevelopment Authority and/or PIDC in such a way as to maintain the confidence of the business and residential communities. This task shall be performed only if sufficient public improvement resources are available through other contracts or funding sources to undertake these activities.

.13 PCDC-ULDC shall provide financial and technical assistance to for-profit firms which provide goods or services to neighborhoods at least fifty-one percent (51%) of whose residents are low and moderate income persons. This assistance is not limited solely to NCR areas.

.14 PCDC-ULDC shall provide and complete technical assistance services regarding start-up or expansion, which provide goods or services to low/moderate income neighborhoods. (Negative feasibility studies for projects shall not be included in completed technical assistance.)

.15 On-going technical assistance shall not be provided to firms for which PCDC-ULDC has arranged financing in Year XV or in prior years. If a firm has previously been assisted by PCDC-ULDC, PCDC-ULDC must qualify and quantify the new technical assistance that the firm is to be provided and report it as a new activity, in accordance with the "Technical Assistance Guidelines".

.16 PCDC-ULDC shall provide limited technical assistance to individual firms in the NCR area in order to facilitate their private investment, viability or participation in the NCR process. Various types of assistance shall be provided, including but not limited to management, sales promotions, public relations, inventory and financing. This technical assistance shall be principally delivered by the NCR Manager's staff. Assistance is considered to be successfully completed when a business implements the recommendation(s) developed by PCDC-ULDC staff.

.17 PCDC-ULDC shall provide technical assistance to certified for-profit minority and female-owned businesses which receive City of Philadelphia contracts to do public improvements in low and moderate income areas.

The audit procedure for the above is:

.18 Subrecipients who provide assistance for job creation activities are to use the following definition in order to define employment opportunities which are expected to be available to low and moderate income people:

.19 The City requires that the assisted business agree to provide the Private Industry Council (PIC) a detailed listing of all employment opportunities that shall be created as result of the CDBG assistance. This information shall include the job title, the skills and experience necessary and the time frame for filling the positions. PIC shall refer Jobs Training Partnership Act (JTPA) eligible persons to the business and the business shall give them first consideration for filling such jobs.

.20 The subrecipient business shall be required to submit summary reports with the attached family income data forms for at least the first and second years following the completion of the funded activity.

.21 If necessary, the Company may be given up to two additional years to comply with the job creation objectives set forth under the original project description, if the additional time is justified and may result in the achievement of the original goals.

.22 If the Company fails to meet the projections, then the agencies shall impose all available legal remedies and, when appropriate, the uniform sanction policy and/or debarment.

The audit procedures for the above are:

.23 The SBRLF shall be utilized for loans and grants. It is anticipated that at least one job shall be created for every $15,000 used, unless otherwise approved by the City. PCDC-ULDC shall service and collect SBRLF loans and ATC investments/loans. Refer to the contract for detail on the "Terms and Conditions for Providing Financial Assistance".

The audit procedure for the above is:

.24 PCDC-ULDC shall assist in combatting crime which affects for-profit and non-profit firms which provide goods or services to the low and moderate income neighborhoods located in the NCR areas. This activity shall be carried out through the provision of technical assistance which shall be provided for interior or exterior, nonfacade security deficiencies of the firm that could lead to criminal victimization. (This type of assistance is normally provided through individual security audits.)

The audit procedure for the above is:

.25 Micro-Enterprise Assistance ñ Area Benefit

PCDC-ULDC shall provide and complete technical and non-CDBG funded loan packaging assistance services through its Micro-Loan Program to at least four (4) firms, regarding start-up or expansion, which provide goods or services to low and moderate income neighborhoods. (Negative feasibility studies for projects shall not be included in completed technical assistance).

.26 Micro-Enterprise Assistance

PCDC-ULDC shall provide and complete technical and non-CDBG funded loan packaging assistance service through its Micro Loan Program to at least twenty-four (24) firms, regarding start-up or expansion. A firm shall qualify as a micro-enterprise if the number of people employed on a full or part-time basis, including the owner(s) of the firm, is equal to or less than five persons and at least 51% of those persons are either low or moderate income, pursuant to 24 CFR 570-201 (c). Once a firm is qualified as a small business, then PCDC-ULDC shall continue to provide assistance to the firm for a period up to three years without recertifying it. Assistance may include the provision of direct or indirect lending. (Negative feasibility studies for projects shall not be included in completed technical assistance). In addition to the Micro Loan Program, PCDC-ULDC shall design and implement a program to assist firms utilizing available funding from but not limited to, the Philadelphia Contractors Assistance (Loan) and Comcast (Loan) program which meet the micro-enterprise criteria pursuant to 24 CFR 570.201(c). PCDC-ULDC shall undertake this work through the Small Business Support Center/One Stop Capital Shop, the Micro Loan Fund and the Skilled Tradesperson facility.

The audit procedure for the above is:

• Select a sample of Micro-Enterprise transactions and determine that the requirements were met.

.27 In order to facilitate PCDC-ULDC's neighborhood development and commercial revitalization efforts, and in response to the City's concerns for vacant business properties and targeting of development sites, PCDC-ULDC shall initiate a coordinated series of real estate activities. PCDC-ULDC shall work with neighborhood based organizations (NBO) to identify and assemble vacant or improved parcels of land in low and moderate income neighborhoods for commercial and/or mixed-use residential and commercial development. These efforts may include the analysis of ownership, usage, structural soundness, value, rehabilitation costs, etc. of selected properties in low and moderate income neighborhoods.

.28 In the implementation of this activity, PCDC-ULDC shall undertake the following:

This assistance shall be principally delivered by the Real Estate Development Unit.

The audit procedures for the above are:

.29 PCDC-ULDC shall assist twelve (12) small and minority housing contractors with managerial assistance delivered through individual consultations. The goal is to increase the managerial and technical capabilities of the assisted small contractors to enable the firms to successfully perform housing rehabilitation projects. This shall entail assisting at least three (3) contractors in the completion of the bonding package and bonding negotiations. It is anticipated that seven (7) of these contractors shall be minority-owned construction contracting firms.

.30 PCDC-ULDC shall evaluate the contractor's financing needs and recommend financing in the amount and form required. This shall include the preparation of a short term financial assistance plan with technical assistance recommendations and sources from which the technical assistance can be obtained. This short term financial assistance plan might include:

.31 Projects under this task shall be fundable in accordance with 24 CFR 570.208.a.1, principally benefiting low and moderate income people.

The audit procedure for the above is:

.32 The City Commerce Department's Contract Administrator, or his designee, shall review and approve all reports, obligations and/or disbursement of funds, close-out agreements and finding resolutions for the projects covered under this part of the agreement, in conjunction with PCDC-ULDC staff, prior to the final project close-out.

.33 At least fifty-one percent (51%) of the residential units shall be available for low or moderate income families.

The audit procedure for the above is:

.34 Refer to the Statement of Services and Materials in the contract for specific compliance requirements.

.35 Program Income and Miscellaneous Revenue generated by Urban Development Action ("UDAG") Grants is governed by OMB Circular A-102, Attachment E and the applicable UDAG Grant Agreement for each UDAG Project.

The audit procedures for the above is:

.36 For contracts funded with both CDBG and DCED funds refer to the CDBG Programmatic Compliance Procedures. Generally contracts funded only with DCED funds provide for Support Revitalization, Business Services, Acquisition and Site Development. The guidelines for CDBG are also applicable for these types of service. Refer to the Statement of Services and Materials of the contract for specific details.

The audit procedures for the above are:

.37 Refer to the Statement of Services and Materials of the contract for specific contract compliance.

.01 As discussed in Sections 300 and 500 of this Audit Guide, each City of Philadelphia Department program has specific auditing requirements. These requirements are in addition to those areas of audit specified in Sections 300 and 500 of this Guide. The audit requirements listed on the following pages are not all inclusive and do not represent an audit program for conducting a financial and compliance audit of the program(s). The audit requirements listed are presented as highlights of areas of special interest to the Department. Any deficiencies noted as a result of the procedures are to be disclosed in the Schedule of Findings and Questioned Costs.

.02 The financial compliance procedures specified in Section 1140.03 to 1140.05 are applicable to all programs listed in Section 1110.

.03 Non-profit organizations that contract with the Commerce Department using Community Development Block Grant Funds are required to follow the Administrative and Financial Management Guidelines issued by the Office of Housing and Community Development including maintaining the Uniform Program Management System (UPMS). The UPMS describes the procedures and controls that the organization is following for Accounting and Internal Control Procedures, Filing Systems, Personnel Policies, Personal Property, Procurement, Conflict of Interest Policies and the Cost Allocation Plan.

The audit procedures for the above are:

.04 Agencies using indirect costs are required to develop and follow their indirect cost plan in accordance with OMB Circular A-87 or A-122.

The audit procedure for the above is:

.05 The monthly subrecipient invoice shall reflect the administrative/planning and programmatic costs for the period in a format provided by the City. The Subrecipient invoice forms are to be submitted no later than ten (10) days after the report period. The City shall reimburse subrecipients solely for costs which have been paid.

The audit procedure for the above:

.06 Auditors performing an audit of UDAG funds must complete the following questionnaire and include such in their audit working papers along with appropriate supporting documentation.

Working

Paper

YES NO N/A Ref.

employment reporting information to the

City/PIDC, in compliance with the terms of

the contract?

reliable and accurate?

3. Has the Developer submitted all applicable

housing unit reporting information to the

City/PIDC, in compliance with the terms of

the contract?

4. Is the information contained in No. 3, above,

reliable and accurate?

5. Has the Developer submitted to the City/PIDC,

all documentation necessary to report Federal,

State and Local taxes, as specified in the

contract?

6. Is the information contained in No. 5, above,

reliable and accurate?

7. Has the Developer paid all taxes to the appro-

priate authorities, as specified in the contract,

and as required by Federal, State and Local laws

and regulations? (If no, provide a schedule of

delinquent taxes as a part of this report.)

.01 The organization's audit report must include the following supplemental financial schedules for each City of Philadelphia contract with $300,000 or more of expenditures, in addition to the financial statements and auditor's reports as specified in Sections 400 and 500 of this Audit Guide. In addition, the supplementary schedules must contain all contract funding sources. A designation has been made for those supplemental schedules required for a "single audit" report (Section 400) or a "program audit" report (Section 500). . The auditorís report on the Supplemental Schedules listed below will be an agreed-upon procedures report as specified in Section 400 of this Audit Guide.

Section

Ref. to Single Program

Supplemental Sample Audit Audit

Financial Schedule Format Report Report

· Statement of Source and Status of

Funds 1150.02 Yes Yes

· Reconciliation Schedule 1150.05 Yes Yes

ABC NONPROFIT CORPORATION

CONTRACT NUMBER XXXX

STATEMENT OF SOURCE AND STATUS OF FUNDS

FOR THE PERIOD JULY 1, 19XX TO JUNE 30, 19XX

ABC NONPROFIT CORPORATION

ABC NONPROFIT CORPORATION

CONTRACT NUMBER XXXX

SCHEDULE OF PROGRAM INCOME

FOR THE PERIOD JULY 1, 19XX TO JUNE 30, 19XX

ABC NONPROFIT CORPORATION

CONTRACT NUMBER XXXX

RECONCILIATION SCHEDULE

FOR THE PERIOD JULY 1, 19XX TO JUNE 30, 19XX