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government funds, which are appropriated or allocated for the payment of such an obligation. If funding levels are <br />significantly affected by Federal budgeting or if funds are not allocated and available for the continuance of the <br />function performed by the SUBRECIPIENT, this AGREEMENT may be terminated by the CITY at the end of <br />the period for which funds are available. At the earliest opportunity, the CITY shall notify the SUBRECIPIENT <br />of any service which may be affected by a shortage of funds. No penalty shall accrue to the CITY in the event this <br />provision is exercised and the CITY shall not be liable for any damages as a result of termination under this <br />provision of this AGREEMENT. Nothing herein shall be construed as obligating the CTfY to expend funds in <br />excess of appropriations authorized by law. <br />2) The SUBRECIPIENT shall allow representatives of the CITY or HUD to inspect facilities which are used <br />in connection with the AGREEMENT or which implement programs funded under this AGREEMENT. <br />F. Matching <br />The SUBRECIPIENT is required to make matching contributions to supplement the ESG program in an amount <br />that equals or exceeds the amount of ESG funds provided by HUD through the CITY. Such contributions shall be <br />entirely consistent with the Matching Requirements as outlined by 24 CFR § 576.201. The anticipated source and <br />amount of all matching funds contributed by the SUBRECIPIENT will be enumerated in Exhibit B, Final <br />Budget. <br />G. Program Income <br />1) Definition. Program income means, as provided by 2 CFR 200.80, gross income received by the <br />SUBRECIPIENT directly generated by a grant supported activity, or earned only as a result of the grant <br />agreement during the grant period. For purposes of ESG, program income will also include any amount of a <br />security or utility deposit returned to the SUBRECIPIENT. <br />2) Use. The SUBRECIPIENT shall use all income received from said funds only for the same purposes for <br />which said funds may be expended pursuant to the terms and conditions of this AGREEMENT. <br />3) Counts toward Matching. Costs paid by program income may count toward meeting the matching <br />requirements, provided the costs are eligible ESG costs that supplement the program. <br />H. Separation of Accounts <br />All funds received by the SUBRECIPIENT from the C1TY pursuant to this AGREEMENT shall be maintained <br />separate and apart from any other funds of the SUBRECIPIENT, or of any principal or member of the <br />SUBRECIPIENT, in an account (the "Account') at a federally insured banking or savings and loan institution with <br />record keeping of such Accounts maintained pursuant to applicable legal requirements. The SUBRECIPIENT shall <br />keep all records of the Account in a manner that is consistent with generally accepted accounting principles. No <br />monies shall be withdrawn from the Account except for expenditures relating to essential services, homeless <br />prevention, and/or operations costs, as authorized hereunder. All disbursements from the Account shall be for <br />obligations incurred in the performance of this AGREEMENT and shall be supported by contracts, invoices, <br />vouchers, and other data, as appropriate, evidencing the necessity of such expenditure. The CITY may withhold <br />payment allocation requests if the SUBRECIPIENT fails to comply with the above requirements until such <br />compliance is demonstrated. <br />I. Expenditure of Funds <br />Much like how HUD requires the CITY, pursuant to 24 CFR 576.203, to expend all of the grant funds for eligible <br />activity costs within 24 months after the date that HUD signs the grant agreement with the CITY, it is a <br />requirement for the SUBRECIPIENT to expend all of the grant funds for eligible activity costs within the <br />Z' • <br />EXHIBIT 1