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�������������������������� BEFORE THE DEPARTMENT OF COMMERCE

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In the matter of the adoption of New Rule I pertaining to the administration of the 2008-2009 Federal Community Development Block Grant (CDBG) Program

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NOTICE OF ADOPTION

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TO:�All Concerned Persons

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1.�On November 21, 2007, the Department of Commerce published MAR Notice No. 8-94-61 pertaining to the public hearing on the proposed adoption of the above-stated rule at page 1850 of the 2007 Montana Administrative Register, Issue Number 22.

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2.�The department has adopted New Rule I (8.94.3724) as proposed.

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3.�The department has thoroughly considered the comments received.�A summary of the comments received and the department's responses to each follows.�Public comments received at the Treasure State Endowment Program (TSEP) Administrative Rules Hearing, December 12, 2007, directed by the commenter to both TSEP and CDBG are also included.

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COMMENT #1:�Two comments were received that objected to the proposed change in scoring levels for TSEP priority #3, which is the same as CDBG Ranking Criterion #3, "Project Concept and Technical Design".�One commenter stated that preliminary engineering reports are the perfect tie breaker as compared to issues such as public support.�The other commenter noted that the scoring weight of technical aspects of the project is being reduced with the proposed quartile scoring system, yet this part of the project application represents over 75% of the cost of preparing the application.

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RESPONSE #1:�The department decided to use four levels versus five levels to score CDBG Ranking Criterion #3, because of the difficulty in distinguishing between a good preliminary engineering report and an excellent one.�This particular issue has been a major point of contention for many years with applicants, engineers, and legislators.�The proposed change will allow the department to clearly distinguish between preliminary engineering reports that are adequately prepared and those that have potentially serious issues that have not been adequately addressed.�The department does not plan to modify the proposed change.

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COMMENT #2:�Two comments were received regarding a comment attached to one of the examples of projects used in the application guidelines for scoring of TSEP Statutory Priority #1, which is the same as CDBG Ranking Criterion #2, "Need for Project" - specifically certain types of wastewater projects. �The comment states:�"The opportunities for contact with people must be documented with photos, maps, or other supporting evidence in order to demonstrate the level of public use of the area."�One commenter stated that the proposal suggesting that public contact with wastewater discharges be documented may be difficult to do.�It would not be practical, for example, to wait by a stream so that people floating by can be photographed.�The other commenter stated that it is difficult, if not impossible, to document a situation where someone has come in contact with wastewater.�Furthermore, the requirement that wastewater projects must meet this higher level of documentation is inherently unfair.�Does the program require photos and maps of people drinking water with elevated levels of contaminants?�Any increased level of documentation should apply to all potential projects uniformly.

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RESPONSE #2:�The department is simply requesting that applicants provide as much documentation as they can, in the form of photographs primarily, so that the engineers reviewing the technical information can gain a better understanding of the area and the problem.�The review engineers will probably not have the opportunity to visit the site in person and need as much insight into the nature of the area from the application in order to determine if the area is likely to be visited by the public or used for recreational purposes.�For example, an aerial photo of the area obtained from the Internet accompanied by a few photos from different angles is all that is being requested.�The department will more clearly state in the application guidelines what is being requested from applicants based on the example provided in the previous sentence.�In regard to the last comment, all projects are held to a similar level of documentation.�Data regarding contaminants in drinking water, modeling of fire flow, and photographs of decayed pipe are just a few examples of documentation that may be appropriate for other types of projects. �The department does not plan to modify the proposed change.

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COMMENT #3:�One comment was received at the TSEP hearing regarding the scoring level definitions and examples that were added to both the TSEP and CDBG application guidelines.�The commenter stated that the department should maintain some subjectivity in the process that would allow reviewers to recognize health and safety impacts.�He stated that not every problem "fits into a box."

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RESPONSE #3:�The examples of the different kinds of projects that fit into each scoring level under CDBG Ranking Criterion #2, "Need for Project", are simply illustrations for the benefit of the reader, and are not intended to cover every possible scenario or unique situation.�The definition of the scoring levels is the principal guide for the ranking team when scoring projects.�New and additional examples are added over time as differing circumstances arise in the application ranking process, in order to assist in scoring projects.�The department does not plan to modify the proposed change.

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COMMENT #4:�One comment was received requesting that group homes for special populations be eligible within either the public facility or housing categories.

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RESPONSE #4:�Last year in response to comments, projects designed to provide temporary, short-term, or transitional housing facilities were transferred from the Housing and Neighborhood Renewal category to the Public Facilities category.�The department does not plan to modify this previous change. �It is the intent of the department that all housing proposals providing permanent, long-term housing be directed to the Housing and Neighborhood Renewal category; all other forms of housing, including facilities designed for special populations or a short-term use, are intended to be reviewed under the Public Facilities category.

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/s/�KELLY A. CASILLAS������������ ��������� /s/�ANTHONY J. PREITE�����������

KELLY A. CASILLAS���������������������������� ANTHONY J. PREITE

Rule Reviewer�������������������������������������� Director

����������������������������������������������������������� Department of Commerce

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Certified to the Secretary of State April 14, 2008.