The local jurisdiction in which the proposed project is situated shall make or agree to make a local contribution which materially reduces the development costs or operating costs, or otherwise significantly supports the project. In evaluating the local contribution for the project, the Department shall take into consideration the significance of the local contribution in relation to the: Local jurisdiction's ability to contribute; and Needs of the project. A local contribution may be a contribution which: Reduces development costs, such as: The donation or leasing of a site, Capital funds for acquisitions, construction, rehabilitation, or development costs, and Locally installed infrastructure which reduces off-site costs attributable to the project; Reduces operating costs, such as: Real estate tax deferral, abatement, or payment instead of taxes, Operating subsidies for the project, or Long-term agreements for a local government to provide services at no cost to a project such as trash collection, road maintenance, or grounds care; Otherwise supports a project such as: Allocation of rent subsidies, Guarantees of deficits or completion of construction, Long-term provision of needed social services for special use projects, or Sponsorship or solicitation of local or community services, materials, or funds which benefit the project and make a material impact on the feasibility of a project and which may, in some cases, be acceptable local contributions. Local Contributions. Local jurisdictions whose taxes are below tax capacity and which do not have access to discretionary federal funds are expected to contribute directly of their own assets. The Department's preferred local contributions are: Donation of, or long-term leasing of, land and buildings; Contribution of capital funds from local appropriations or discretionary federal funds; Locally installed infrastructure and site improvements; or Real estate tax deferral, abatement, or payment instead of taxes. Less Preferred Type of Contribution. If a political subdivision can demonstrate that it is taxing at capacity, does not have discretionary surplus funds, and does not have discretionary federal resources to allocate to specific projects, it may provide a less preferred type of contribution such as: Sponsorship or solicitation of local services, materials, or funds for the benefit of the project; Guarantee of construction; Assistance with or packaging of a successful project-specific award of federal funds; and Long-term provision of local services such as trash collection, road or grounds maintenance, or necessary social services. Other Local Resources and Assets. Local resources and assets are preferred sources for contributions when the local jurisdiction has total discretion in allocating the resources. Federal funds such as Housing Development Action Grants and Urban Development Action Grants, or federal subsidies such as §8 Moderate Rehabilitation, which are awarded at the federal level for a specific project, may not be eligible to be used as a local contribution unless the local jurisdiction qualifies to make a less preferred type of contribution under §D of this regulation, and is instrumental in the application for and administration of the federal resources. Local contributions which are made in conjunction with grants from the Department's Small Cities Community Development Block Grant Program may be counted toward or may satisfy the local contribution requirement if the grant is used for the project. Other State funds may not be permitted as a local contribution even if the local government has discretion in allocating the funds.