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Mr. Timothy K. Scherkenbach March 20, 1990 Page Five 2. Appraisal Engineering and Legal Costs From our study of the Federal regulations, it is unclear whether a budget period extension is necessary to consider appraisal, engineering, and legal costs associated with the land acquisition as eligible costs. From the preceding paragraphs, it is clear that in acquiring land the City must and did follow the exact procedures prescribed in State and Federal Law. Since the costs for the land were obligated on April 13, 1987, then all costs associated with complying with the laws necessary to acquire the land were also obligated on April 13, 1987. Although the regulations are not clear whether a budget period extension is necessary to consider these costs eligible, it is clear that a budget period extension is necessary to complete the work. 40 CFR defines Project Period as the length of time EPA specifies in the assistance agreement for the completion of all project work (emphasis added). Since land acquisition is one of the tasks identified in the assistance agreement, it is part of the project work. In Special Condition No. 2 of the City's EPA Grant Agreement, dated September 2, 1983, the City agreed to manage the project in accordance with 40 CFR 35.2212, "Project Initiation and Completion" consistent with its project schedule .... and if any such dates in said project schedule will not be met, the grantee also acknowledges and agrees to notify (emphasis added) the project officer, include in the notification (emphasis added) an explanation/justification of the cause for delay and proposed revised dates, and obtain written approval of same, all prior to the expiration of any such date. In December, 1988, the Site D property owner filed a "Notice of Issue and Certificate of Readiness for Trail". At this time, just one month prior to the expiration of the project period, the City is officially informed that the owner intends to appeal. The City then followed the notification process as described in the following paragraph. C. Discussion of how the City followed the budget period extension notice process for a budget period extension. Once the City was served notice of appeal in December, 1988, the City realized that. because of the appeal, it could not complete all the project work (i.e., land acquisition) prior to the January, 1989 completion date. The City, through its City Engineer, initiated the procedure outlined in Special Condition No. 2 of the City's EPA Assistance Agreement. In summary, that procedure is: