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standards and HUD Handbook 1344.1. These provisions apply whether HOME funds are used for construction or non -construction costs. Lead-based Paint: Housing assisted with HOME funds constitutes HUD -associated housing for the purpose of the Lead -Based Paint Poisoning Prevention Act and the Lead Safe Housing Rule, and is therefore subject to 24 CFR Part 35. Unless otherwise provided, borrowers are responsible for testing and abatement. For more information, please see 24 CFR Part 92. VI. COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM Source of Funds Funding for this program is provided through the U.S. Department'of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) program (including program income and residual receipts), and therefore is subject to the federal rules and regulations found in 24 CFR Part 570, as amended from time to time. Eligible Borrowers/Grantees Eligible borrowers are community-based nonprofit hou"sing development corporations (CBDO's) duly organized orwith capacity to promote and undertake community development activities on,a not-for-profit basis, with proven capacity to develop, own and operate affordable housing, ,within a.neighborhood identified in the Community Development plan (Annual Action Plan). Such organizations are defined in CDBG, regulations (24 CFR 570.204(a)(2)(c)(1)). Nonprofit housing development corporations (HDC's) and social'service agencies with proven capacity to develop, own, and operate affordable housing, and limited partnerships whose general partner(s) is otherwise eligible under the above provisions, are also eligible to borrow Program funds if the nonprofit partner is the managing general parfrienthroughbut the term of the loan and will receive at least 51 % of the developer fee. Nonprofit corporations must have a,valid 501(c)(3) or (4) designation from the Internal Revenue Service. Eligible Projects Eligible projects will: (1) have four or more apartment units or fewer than four units in the case of congregate housing, mobile home units or where the Housing Division Manager finds that the project will provide a substantial public benefit; (2) if new construction,.have 51 % of the units occupied by low income tenants; (3) be free from significant adverse environmental impacts, except those that can be mitigated; and, (4) avoid permanent involuntary tenant displacement to the greatest degree feasible in order to carry out the program. Transitional or permanent supportive housing may be provided. Rents of assisted units shall be affordable to households whose'incomes do not exceed 80% of the area median income. Eligible Uses and Activities Funds can be used to make loans to eligible borrowers to provide affordable housing, principally for low and moderate income household`s; including, but not limited to: 1) acquisition and/or rehabilitation of eligible rental properties; 2) new construction of rental or limited equity cooperative housing by a CBDO is eligible, provided the construction activity is carried out as part of a neighborhood revitalization, community economic development or energy conservation project. New housing construction carried out by an eligible CBDO must be part of a larger effort to revitalize the neighborhood (i.e., a plan for the community's revitalization efforts based on a comprehensive plan, not just for the sake of the CDBG project); Ineligible Uses and Activities Funds may not be used for the following activities: 1) the construction of new rental housing or for any program to subsidize or assist such housing, except when carried out by a CBDO, provided the construction activity is carried out as part of a neighborhood City of Santa Ana Community Development Agency Request for Proposals for Affordable Housing Development Page 20 19D-24