[Code of Federal Regulations]
[Title 24, Volume 3]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR570.301]

[Page 62-63]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER V--OFFICE OF ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND 
        DEVELOPMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 570_COMMUNITY DEVELOPMENT BLOCK GRANTS--Table of Contents
 
                      Subpart D_Entitlement Grants
 
Sec. 570.301  Activity locations and float-funding.

    The consolidated plan, action plan, and amendment submission 
requirements referred to in this section are those in 24 CFR part 91.
    (a) For activities for which the grantee has not yet decided on a 
specific location, such as when the grantee is allocating an amount of 
funds to be used for making loans or grants to businesses or for 
residential rehabilitation, the description in the action plan or any 
amendment shall identify who may apply for the assistance, the process 
by which the grantee expects to select who will receive the assistance 
(including selection criteria), and how much and under what terms the 
assistance will be provided, or in the case of a planned public facility 
or improvement, how it expects to determine its location.
    (b) Float-funded activities and guarantees. A recipient may use 
undisbursed funds in the line of credit and its CDBG program account 
that are budgeted in statements or action plans for one or more other 
activities that do not need the funds immediately, subject to the 
limitations described below. Such funds shall be referred to as the 
``float'' for purposes of this section and the action plan. Each 
activity carried out using the float must meet all of the same 
requirements that apply to CDBG-assisted activities generally, and must 
be expected to produce program income in an amount at least equal to the 
amount of the float so used. Whenever the recipient proposes to fund an 
activity with the float, it must include the activity in its action plan 
or amend the action plan for the current program year. For purposes of 
this section, an activity that uses such funds will be called a ``float-
funded activity.''
    (1) Each float-funded activity must be individually listed and 
described as such in the action plan.
    (2)(i) The expected time period between obligation of assistance for 
a float-funded activity and receipt of program income in an amount at 
least equal to the full amount drawn from the float to fund the activity 
may not exceed 2.5 years. An activity from which program income 
sufficient to recover the full amount of the float assistance is 
expected to be generated more than 2.5 years after obligation may not be 
funded from the float, but may be included in an action plan if it is 
funded from CDBG funds other than the float (e.g., grant funds or 
proceeds from an approved Section 108 loan guarantee).
    (ii) Any extension of the repayment period for a float-funded 
activity shall be considered to be a new float-funded activity for these 
purposes and may be implemented by the grantee only if the extension is 
made subject to the same limitations and requirements as apply to a new 
float-funded activity.
    (3) Unlike other projected program income, the full amount of income 
expected to be generated by a float-funded activity must be shown as a 
source of program income in the action plan containing the activity, 
whether or not some or all of the income is expected to be received in a 
future program year (in accordance with 24 CFR 91.220(g)(1)(ii)(D)).
    (4) The recipient must also clearly declare in the action plan that 
identifies the float-funded activity the recipient's commitment to 
undertake one of the following options:
    (i) Amend or delete activities in an amount equal to any default or 
failure to produce sufficient income in a timely manner. If the 
recipient makes this choice, it must include a description of the 
process it will use to select the activities to be amended or deleted 
and how it will involve citizens in that

[[Page 63]]

process; and it must amend the applicable statement(s) or action plan(s) 
showing those amendments or deletions promptly upon determining that the 
float-funded activity will not generate sufficient or timely program 
income;
    (ii) Obtain an irrevocable line of credit from a commercial lender 
for the full amount of the float-funded activity and describe the lender 
and terms of such line of credit in the action plan that identifies the 
float-funded activity. To qualify for this purpose, such line of credit 
must be unconditionally available to the recipient in the amount of any 
shortfall within 30 days of the date that the float-funded activity 
fails to generate the projected amount of program income on schedule;
    (iii) Transfer general local government funds in the full amount of 
any default or shortfall to the CDBG line of credit within 30 days of 
the float-funded activity's failure to generate the projected amount of 
the program income on schedule; or
    (iv) A method approved in writing by HUD for securing timely return 
of the amount of the float funding. Such method must ensure that funds 
are available to meet any default or shortfall within 30 days of the 
float-funded activity's failure to generate the projected amount of the 
program income on schedule.
    (5) When preparing an action plan for a year in which program income 
is expected to be received from a float-funded activity, and such 
program income has been shown in a prior statement or action plan, the 
current action plan shall identify the expected income and explain that 
the planned use of the income has already been described in prior 
statements or action plans, and shall identify the statements or action 
plans in which such descriptions may be found.

[60 FR 56913, Nov. 9, 1995]