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2 <br /> constitute a violation of this Agreement and may result in the withholding of future <br /> payments. The Contractor hereby agrees to have an annual agency audit conducted in <br /> accordance with current City policy concerning Contractor audits and, as applicable, OMB <br /> Circulars A-128 or A-133. <br /> C. Reporting and Payment Procedures <br /> 1. Program Income: The Contractor shall report quarterly all program income as defined at <br /> 24 CFR 570.500(a) generated by activities carried out with CDBG funds made available <br /> under this Agreement. The use of program income by the Contractor shall comply with <br /> the requirements set forth at 24 CFR 570.504. By way of further limitations, the <br /> Contractor may use such income during the contract period for activities permitted under <br /> this Agreement and shall reduce requests for additional funds by the amount of any such <br /> program income balances on hand. All unused program income shall be returned to the <br /> City at the end of the contract period. Any interest earned on cash advances from the <br /> U.S. Treasury is not program income and shall be remitted promptly to the City. <br /> 2. Indirect Costs: If indirect costs are charged, the Contractor will develop an indirect cost <br /> allocation plan for determining the appropriate Contractor's share of administrative costs <br /> and shall submit such plan to the City for approval, in a form specified by the City. <br /> 3. Payment Procedures: The City will pay to the Contractor funds available under this <br /> Agreement based upon information submitted by the Contractor and consistent with any <br /> approved budget and City policy concerning payments. With the exception of certain <br /> advances, payments will be made for eligible expenses actually incurred by the <br /> Contractor, and not to exceed actual cash requirements. Payments will be adjusted by <br /> the City in accordance with advance fund and program income balances available in <br /> Contractor accounts. In addition, the City reserves the right to liquidate funds available <br /> under this Agreement for costs incurred by the City on behalf of the Contractor. <br /> 4. Progress Reports: The Contractor shall submit regular Progress Reports to the City in <br /> the form, content, and frequency as required by the City. <br /> D. Procurement <br /> 1. Compliance: The Contractor shall comply with current City policy concerning the <br /> purchase of equipment and shall maintain inventory records of all non-expendable <br /> personal property as defined by such policy as may be procured with funds provided <br /> herein. All program assets (unexpended program income, property, equipment, etc.). <br /> shall revert to the City upon termination of this Agreement. <br /> B-6 1 5 <br />