[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: 24CFR570.500]

[Page 130-131]
 
                 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 J_Grant Administration
 
Sec. 570.500  Definitions.

    Source: 53 FR 8058, Mar. 11, 1988, unless otherwise noted.


    For the purposes of this subpart, the following terms shall apply:
    (a) Program income means gross income received by the recipient or a 
subrecipient directly generated from the use of CDBG funds, except as 
provided in paragraph (a)(4) of this section.
    (1) Program income includes, but is not limited to, the following:
    (i) Proceeds from the disposition by sale or long-term lease of real 
property purchased or improved with CDBG funds;
    (ii) Proceeds from the disposition of equipment purchased with CDBG 
funds;
    (iii) Gross income from the use or rental of real or personal 
property acquired by the recipient or by a subrecipient with CDBG funds, 
less costs incidental to generation of the income;
    (iv) Gross income from the use or rental of real property, owned by 
the recipient or by a subrecipient, that was constructed or improved 
with CDBG funds, less costs incidental to generation of the income;
    (v) Payments of principal and interest on loans made using CDBG 
funds, except as provided in paragraph (a)(3) of this section;
    (vi) Proceeds from the sale of loans made with CDBG funds;
    (vii) Proceeds from sale of obligations secured by loans made with 
CDBG funds;
    (viii) [Reserved]
    (ix) Interest earned on program income pending its disposition; and
    (x) Funds collected through special assessments made against 
properties owned and occupied by households not of low and moderate 
income, where the assessments are used to recover all or part of the 
CDBG portion of a public improvement.
    (2) Program income does not include income earned (except for 
interest described in Sec. 570.513) on grant advances from the U.S. 
Treasury. The following items of income earned on grant advances must be 
remitted to HUD for transmittal to the U.S. Treasury, and will not be 
reallocated under section 106(c) or (d) of the Act:
    (i) Interest earned from the investment of the initial proceeds of a 
grant advance by the U.S. Treasury;
    (ii) Interest earned on loans or other forms of assistance provided 
with CDBG funds that are used for activities determined by HUD either to 
be ineligible or to fail to meet a national objective in accordance with 
the requirements of subpart C of this part, or that fail substantially 
to meet any other requirement of this part; and
    (iii) Interest earned on the investment of amounts reimbursed to the 
CDBG program account prior to the use of the reimbursed funds for 
eligible purposes.
    (3) The calculation of the amount of program income for the 
recipient's CDBG program as a whole (i.e., comprising activities carried 
out by a grantee and its subrecipients) shall exclude payments made by 
subrecipients of principal and/or interest on CDBG-funded loans received 
from grantees if such payments are made using program income received by 
the subrecipient. (By making such payments, the subrecipient shall be 
deemed to have transferred program income to the grantee.) The amount of 
program income derived from this calculation shall be used for reporting 
purposes, for purposes of applying the requirement under Sec. 
570.504(b)(2)(iii), and in determining limitations on planning and 
administration and public services activities to be paid for with CDBG 
funds.
    (4) Program income does not include:
    (i) Any income received in a single program year by the recipient 
and all its subrecipients if the total amount of

[[Page 131]]

such income does not exceed $25,000; and
    (ii) Amounts generated by activities that are financed by a loan 
guaranteed under section 108 of the Act and meet one or more of the 
public benefit criteria specified at Sec. 570.209(b)(2)(v) or are 
carried out in conjunction with a grant under section 108(q) in an area 
determined by HUD to meet the eligibility requirements for designation 
as an Urban Empowerment Zone pursuant to 24 CFR part 597, subpart B. 
Such exclusion shall not apply if CDBG funds are used to repay the 
guaranteed loan. When such a guaranteed loan is partially repaid with 
CDBG funds, the amount generated shall be prorated to reflect the 
percentage of CDBG funds used. Amounts generated by activities financed 
with loans guaranteed under section 108 which are not defined as program 
income shall be treated as miscellaneous revenue and shall not be 
subject to any of the requirements of this part, except that the use of 
such funds shall be limited to activities that are located in a 
revitalization strategy area and implement a HUD approved area 
revitalization strategy pursuant to Sec. 91.215(e) of this title. 
However, such treatment shall not affect the right of the Secretary to 
require the section 108 borrower to pledge such amounts as security for 
the guaranteed loan. The determination whether such amounts shall 
constitute program income shall be governed by the provisions of the 
contract required at Sec. 570.705(b)(1).
    (5) Examples of other receipts that are not considered program 
income are proceeds from fund raising activities carried out by 
subrecipients receiving CDBG assistance (the costs of fundraising are 
generally unallowable under the applicable OMB circulars referenced in 
24 CFR 84.27), funds collected through special assessments used to 
recover the non-CDBG portion of a public improvement, and proceeds from 
the disposition of real property acquired or improved with CDBG funds 
when the disposition occurs after the applicable time period specified 
in Sec. 570.503(b)(8) for subrecipient-controlled property, or in Sec. 
570.505 for recipient-controlled property.
    (b) Revolving fund means a separate fund (with a set of accounts 
that are independent of other program accounts) established for the 
purpose of carrying out specific activities which, in turn, generate 
payments to the fund for use in carrying out the same activities. Each 
revolving loan fund's cash balance must be held in an interest-bearing 
account, and any interest paid on CDBG funds held in this account shall 
be considered interest earned on grant advances and must be remitted to 
HUD for transmittal to the U.S. Treasury no less frequently than 
annually. (Interest paid by borrowers on eligible loans made from the 
revolving loan fund shall be program income and treated accordingly.)
    (c) Subrecipient means a public or private nonprofit agency, 
authority, or organization, or a for-profit entity authorized under 
Sec. 570.201(o), receiving CDBG funds from the recipient or another 
subrecipient to undertake activities eligible for such assistance under 
subpart C of this part. The term excludes an entity receiving CDBG funds 
from the recipient under the authority of Sec. 570.204, unless the 
grantee explicitly designates it as a subrecipient. The term includes a 
public agency designated by a unit of general local government to 
receive a loan guarantee under subpart M of this part, but does not 
include contractors providing supplies, equipment, construction, or 
services subject to the procurement requirements in 24 CFR 85.36 or 
84.40, as applicable.

[53 FR 8058, Mar. 11, 1988, as amended at 57 FR 27120, June 17, 1992; 60 
FR 1952, Jan. 5, 1995; 60 FR 17445, Apr. 6, 1995; 60 FR 56914, Nov. 9, 
1995]