YouthBuild match and construction costs

Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2010/TEGL05-10acc.pdf

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                Allowable Costs
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
                                                         OFAM/TMG
          U.S. DEPARTMENT OF LABOR
                                                         DATE
             Washington, D.C. 20210                      August 9, 2010



ADVISORY:         TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 5-10

TO:               STATE WORKFORCE AGENCIES
                  STATE WORKFORCE LIAISONS
                  STATE WORKFORCE ADMINISTRATORS
                  STATE AND LOCAL WORKFORCE INVESTMENT BOARDS
                  ALL YOUTHBUILD GRANTEES

FROM:             JANE OATES /s/
                  Assistant Secretary

SUBJECT:          Match and Allowable Construction and Other Capital Asset Costs for the
                  YouthBuild Program

1. Purpose. To provide clarification on match requirements and allowable construction costs
under the YouthBuild Program.

2. References.
    • YouthBuild Transfer Act (PL 109-281 September 2006)
    • Workforce Investment Act of 1998 (WIA), as amended (29 USC 2801 et seq.)
    • WIA regulations at 20 CFR 667.200
    • WIA regulations at 20 CFR 667.260
    • Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-
       Profit Organizations, and with Commercial Organizations, Foreign Governments,
       Organizations under the Jurisdiction of Foreign Governments and International
       Organizations, 29 CFR Part 95
    • Uniform Administrative Requirements for Grants and Cooperative Agreements to State
       and Local Governments, 29 CFR Part 97
    • Notice of Availability of Funds and Solicitation for Grant Applications (SGA) for
       YouthBuild Grants, Federal Register/ Vol. 73, No. 195/ Tuesday, October 7, 2008/
       Notice, pages 58653 -58667

3. Background. A main objective of the YouthBuild program is to expand the supply of
permanent affordable housing for homeless individuals and low-income families by utilizing the
energies and talents of disadvantaged youth while providing youth with training in the
construction and rehabilitation of residential, community or public facilities. Although
construction costs are not normally permitted in ETA funded grants, and are specifically
prohibited in the WIA regulations at 20 CFR 667.260, the nature of the Youthbuild programs


 RESCISSIONS                                            EXPIRATION DATE
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requires that certain construction costs essential to the mission of the program be allowable.
Therefore, this TEGL provides the conditions under which these types of costs will be allowable.
Furthermore, YouthBuild grants are required to provide cash and/or in-kind resources equivalent
to 25 percent of the grant award amount as matching funds. Funds are considered matching
funds if non-grant funds are used to pay for activities allowable under the grant. Questions on
what constitutes an allowable match and what are the allowable construction costs that can be
charged to the grant and/or counted as allowable match have arisen from the YouthBuild system.
This guidance is designed to provide clarification on two separate but connected issues. First,
this guidance identifies which construction costs are allowable costs under the YouthBuild
program. Second, this guidance identifies which costs are allowable match costs for the
YouthBuild program. Note that the allowable construction costs under the grant also will qualify
as allowable match costs.

4. Allowable Construction Costs for YouthBuild Activities.

Construction costs are generally not allowable costs to ETA funded grants because these types of
costs are defined as capital expenditures as they contribute to the increased value or useful life of
a capital asset. However, because the YouthBuild program is designed to provide training to
eligible participants in the construction or rehabilitation of affordable housing for homeless
individuals and low-income families, the costs of construction related materials and supplies
necessary to fulfill the goals of approved YouthBuild projects are allowable. Therefore, the
purchase of construction supplies and materials used as part of the direct training for YouthBuild
participants that are directly related to the construction or rehabilitation of residential,
community, or other public facilities are allowable costs.

Examples of allowable construction costs are the tools used to construct or rehabilitate
residential, community, or other public facilities, such as hammers, safety gear, protective
clothing; the machinery used to construct or rehabilitate property, loaders, lift trucks, tractors,
mixers, operators; and the materials needed to construct or rehabilitate property such as lumber,
dry wall and like items.

Additionally, there are other costs that contribute to the development and structuring of the
YouthBuild project, such as acquiring the location for the training activity to take place and
procuring the goods or services required to secure the location, land, and property that will be
used for the training activity. Some of the costs associated with securing the location, land, and
property are allowable costs to the grant while others are not. For example, a portion of the
purchase costs when the property used for training purposes are allowable; whereas the fees
including acquisition fees, inspection, title, and broker fees, are not. When making the
distinction, grantees need to consider whether the activity and associated costs are directly
related to participant training. If the incurred costs are not directly related to participant training,
then they are not allowable costs to the grant.

Unallowable construction costs are those costs of non-training services and deliverables that are
not directly related to participant training. For example, property enhancements such as
landscaping are not allowable costs to the grant unless performed by participants as part of a
training activity. Similarly, the costs associated with plumbing and electrical work are
unallowable unless participant training is taking place on those specific activities. Another
example would be termite inspection services. Although termite inspection services may be a

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non-construction cost that is incurred when constructing or rehabilitating a house for sale, it is
not directly related to participant training and is an unallowable cost of the YouthBuild grant
program.

Attachment 1 identifies a list of selected items of costs that are allowable, unallowable, or
allowable with conditions as they relate to the YouthBuild program construction activities.
Please note that the conditions under which some costs are allowable may include getting Grant
Officer approval prior to incurring the costs.

5. Allowable Matching Funds under the YouthBuild Program.

Under the Uniform Administrative Requirements, 29 CFR 95.23 and 97.24, matching
requirements may be met by costs incurred by the direct grant recipient, subrecipient and/or cost
type contractor that could have been paid with grant funds, but were instead paid with non-grant
resources. Federal funds may not be used to meet a match requirement unless specifically
authorized by the statute. A number of questions have been raised as to whether or not certain
costs not chargeable to the grant but incurred as a result of activities used for training
participants could be used to fulfill the 25 percent match requirement.

Costs that are not allowable to be charged to the grant cannot be used to fulfill a match
requirement. For example, grant funds cannot be used to purchase land although, as described in
Section 4 above, a portion of grant funds may be used to purchase a home to be constructed or
renovated through training. Therefore, under the requirement that only allowable costs may be
used as matching funds, if the cost of the land which the home resides on is paid for with
leveraged resources, these costs cannot be used to qualify towards meeting the match
requirement. Other examples of such related costs that may be essential to the acquisition of
property used for training purposes but that are not chargeable to the grant and therefore, cannot
be used as match are appraisal fees, inspection fees, and other acquisition fees.

Examples of allowable YouthBuild costs are the cost of actual construction supplies and
materials used in the approved training activities. The YouthBuild program is designed to
provide training to eligible participants in the construction or rehabilitation of affordable housing
for homeless individuals and low-income families. The costs of such materials for approved
YouthBuild projects are allowable and therefore, may be used in fulfilling the match requirement
if paid for with non Federal funds.

General examples of allowable match for the YouthBuild program are salaries of construction
site managers paid with non grant funds; construction tools, materials, equipment and supplies
purchased with non-grant funds used by participants for training activities; supportive services
paid with non-grant funds to enable participation in the program; and other allowable activities
that contribute to the direct training of eligible participants enrolled in the YouthBuild program.
As discussed above, to be allowable as part of match, a cost must be an allowable charge for
Federal grant funds. If the cost is not allowable to be paid with grant funds, it is also not
acceptable in fulfilling the 25 percent match requirement.

Matching funds must be expended during the grant period of performance and must be reported
quarterly, when the costs are incurred, on the ETA 9130 financial form.



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6. Action Requested. All ETA YouthBuild grantees should distribute this information to all
appropriate staff.

7. Inquiries. Questions regarding this guidance should be directed to the appropriate ETA
regional office.

8. Attachments. YouthBuild Selected Items of Costs




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Attachment 1 (official PDF): https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2010/TEGL05-10a1.pdf

Attachment 1


                     YouthBuild Selected Items of Cost

                                                               A= Allowable
                                                               U=Unallowable
                          Item                                 AC=Allowable
                                                               with conditions*


Pre-Purchase Phase
Brokerage Fees                                                 U
Home Appraisal                                                 U
Home Inspection                                                U
Termite Inspection                                             U
Title Fee                                                      U
Pre-Construction/Construction/Rehab Phase
Architectural fees                                             AC
Building Permits                                               U
Construction company services (provide the heavy equipment     A
(crawler loaders, bobcats, dozers, mixers, operators, etc.
Equipment Rental costs                                         AC
Property Insurance (Not home owners Insurance)                 AC
Construction/Rehab Training Phase
Appliances                                                     U
Brick/Cement                                                   A
Doors                                                          A
Door locks                                                     AC
Dry wall                                                       A
Electrical supplies (fuse box, wiring, outlets/covers, etc)    A
Flooring materials                                             AC
Furnace                                                        A
Heat pump                                                      AC
Hot water tanks                                                A
Insulation materials                                           A
Kitchen and bath cabinets                                      AC
Landscaping                                                    AC
Lighting fixtures                                              AC
Lumber                                                         A
Nails                                                          A
Paint                                                          AC
Plumbing supplies (tubs, sinks, commodes, faucets, etc)        AC
Plumbing Pipes                                                 A
Roofing materials                                              A
Tools (hammers, screw drivers, etc)                            A
Windows                                                        A
Property Disposition Phase
House Advertising costs                                        AC
Legal fees associated with acquisition and disposition         U
Real Estate fees                                               U


    The selected items of costs specifically listed above are strictly for the
    purpose of implementing an authorized YouthBuild program.
    *Some costs may be allowable provided they are part of the YouthBuild
    training activities, while other costs may be allowable with Grant Officer
    approval.