(a) A grantee proposing to acquire or
undertake a major renovation of a facility must submit a detailed estimate of
the costs of the proposed activity and compare the costs of the proposed
activity as provided under paragraph (c) of this section and provide any
additional information requested by the responsible HHS official.
(b) All costs of acquisition, renovation and ownership must be
identified, including, but not limited to, professional fees, purchase of the
facility to be renovated, renovation costs, moving expenses, additional
transportation costs, maintenance, taxes, insurance, and easements, rights of
way or land rentals. An independent appraisal of the current value of the
facility proposed to be purchased, or which the grantee will continue to
purchase with Head Start funds or to receive major renovation, made by a
professional appraiser, must be included.
(c)(1) Grantees
proposing to purchase a facility, without requesting funds for major
renovations to the facility, must compare costs of the proposed facility to
the cost of the facility currently used by the grantee, unless the grantee has
no current facility, will lose the use of its current facility, intends to
continue to use its current facility after it purchases the new facility, or
has shown to the satisfaction of the responsible HHS official that its
existing facility is inadequate. Where the grantee's current facility is not
used as the alternate facility, the grantee must use for comparison a facility
(or facilities) available for lease in the grantee's service area and suitable
for use as a Head Start facility or which can be made suitable through
incidental alteration or renovations, the cost of which shall be included in
the cost comparison. In the case of an application for approval of the use of
Head Start funds to continue purchase of a facility, the cost of the present
facility must be compared to the cost of the facility used by the grantee
before purchase of its current facility. If the facility used by the grantee
before the purchase of its present facility was deemed inadequate by the
responsible HHS official, or the grantee had no previous facility, the
alternative facility shall be an available, appropriate facility (or
facilities) of comparable size that was available for rent in the grantee's
service are at the time of its purchase of the current facility. Grantees
which have established under Sec. 1309.10(f) that there is a lack of
alternative facilities that will prevent or would have prevented operation of
the program are not required to provide a cost comparison under this
paragraph.
(2) Grantees
proposing to construct a facility must compare the costs of constructing the
proposed facility to the costs of purchasing a suitable alternate facility
or owning, purchasing or leasing an alternative facility which can be made
suitable for use through incidental alterations and renovations or major
renovations. The alternative facility is one now owned by the grantee or
available for lease or purchase in the grantee's service area. If no such
facility is available, this statement must explain how this fact was
determined and the claim must be supported, whenever possible, by a written
statement from a licensed real estate professional in the grantee's service
area.
(3) A grantee proposing to undertake a major
renovation of a facility must compare the cost of the proposed renovation
(including the cost of purchasing the facility to be renovated, if the
grantee is proposing to purchase the facility) to the costs of constructing
a facility of comparable size. In place of the cost comparison required in
the preceding sentence, a grantee proposing to make major renovations to a leased
facility must show that the monthly or annual occupancy costs for the term
of the lease, including the cost of the major renovations, is less than, or
comparable to, the costs of purchasing or leasing any other facility in the
grantee's service area which can be made suitable through major renovations,
if such a facility is available.
(d) The grantee
must separately delineate the following expenses in the
application:
(1) One-time costs, including but not
limited to, costs of purchasing the facility to be renovated, the down
payment, professional fees, moving expenses, the cost of site preparation;
and (2) Ongoing
costs, including, but not limited to, mortgage payments, insurance premiums,
maintenance costs, and property taxes. If the grantee is exempt from the
payment of property taxes, this fact must be stated.
(e) The period of comparison for purchase, construction or major
renovation of a facility is twenty years, except that for the purchase of a
modular unit the period of comparison is ten years and the period of
comparison for major renovation of a leased facility is the period of the
lease remaining after the renovations are completed. For approvals of the use
of Head Start funds to continue purchase of the facility the period of
comparison begins on the date the purchase began.
(f) If the facility
is to be used for other purposes in addition to the operation of the Head
Start program, the cost of use of that part of the facility used for such
other purposes must be allocated in accordance with applicable Office of
Management and Budget cost principles.