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Do the provisions of 2 CFR § 200.316 apply in the case of real property purchased with a federal award, regardless of whether the city or a third party purchases the property?

Yes, a municipality that receives funding pursuant to the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”), must, along with any subrecipients of those funds, follow the provisions of Title 2, Code of Federal Regulations, Section 200.316 (“2 CFR § 200.316”), regardless of whether the municipality or a subrecipient uses those funds to purchase real property.

The U.S. Department of the Treasury’s (“Treasury”) Final Rule states:

the Uniform Guidance at 2 C.F.R. 200 applies to capital expenditures unless stated otherwise. Importantly, this includes 2 C.F.R. 200 Subpart D on post-federal award requirements, including property standards pertaining to insurance coverage, real property, and equipment; procurement standards; sub-recipient monitoring and management; and record retention and access.[1]  

Treasury also makes clear that the municipality is responsible for monitoring its subrecipients’ use of CSLFRF funds[2]  and must provide quarterly and annual reports to Treasury.[3]

According to 2 CFR § 200.316:

Real property, equipment, and intangible property, that are acquired or improved with a Federal award must be held in trust by the non-Federal entity as trustee for the beneficiaries of the project or program under which the property was acquired or improved. The Federal awarding agency may require the non-Federal entity to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with a Federal award and that use and disposition conditions apply to the property.[4], [5]

Moreover, according to 2 CFR § 200.311:

Except as otherwise provided by Federal statutes or by the Federal awarding agency, real property will be used for the originally authorized purpose as long as needed for that purpose, during which time the non-Federal entity must not dispose of or encumber its title or other interests and when real property is no longer needed for the originally authorized purpose, the non-Federal entity must obtain disposition instructions from the Federal awarding agency or pass-through entity.[6]

Last Updated: April 25, 2022

[1] Treas. Reg. 31 CFR Part 35 at 207, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[2] Department of the Treasury, CSLFRF Compliance and Reporting Guidance, at 5, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[3] Id., at 7

[5] Because proceeds from the sale of real property do not qualify as “program income,” see Code of Federal Regulations: 2 CFR § 200.307, available at: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-D/section-200.307, 2 CFR § 200.316 applies unless a federal statute, regulation or the terms and conditions of the federal award state otherwise. See Department of the Treasury, CSLFRF Compliance and Reporting Guidance, at 4, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.