(a) If any part of the estimated project costs consists of the value of donated land, labor, materials, or equipment, or of the value of a property interest in land acquired at a cost that (as represented by the sponsor) is not the actual cost or the amount of an award in eminent domain proceedings, the sponsor must so state in the application, indicating the nature of the donation or other transaction and the value it places on it.

(b) If, after the grant agreement is executed and before the final payment of the allowable project costs is made under § 151.63, it appears that the sponsor inadvertently or unknowingly failed to comply with paragraph (a) of this section as to any item, the Administrator—

(1) Makes or obtains an appraisal of the item, and if the appraised value is less than the value placed on the item in the project application, notifies the sponsor that it may, within a stated time, ask in writing for reconsideration of the appraisal and submit statements of pertinent facts and opinion; and

(2) Adjusts the U.S. share of the project costs to reflect any decrease in value of the item below that stated in the project application.