[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: 24CFR570.504]

[Page 134-135]
 
                 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. 570.504  Program income.

    (a) Recording program income. The receipt and expenditure of program 
income as defined in Sec. 570.500(a) shall be recorded as part of the 
financial transactions of the grant program.
    (b) Disposition of program income received by recipients. (1) 
Program income received before grant closeout may be retained by the 
recipient if the income is treated as additional CDBG funds subject to 
all applicable requirements governing the use of CDBG funds.
    (2) If the recipient chooses to retain program income, that program 
income shall be disposed of as follows:
    (i) Program income in the form of repayments to, or interest earned 
on, a revolving fund as defined in Sec. 570.500(b) shall be 
substantially disbursed from the fund before additional cash withdrawals 
are made from the U.S. Treasury for the same activity. (This rule does 
not prevent a lump sum disbursement to finance the rehabilitation of 
privately owned properties as provided for in Sec. 570.513.)
    (ii) Substantially all other program income shall be disbursed for 
eligible activities before additional cash withdrawals are made from the 
U.S. Treasury.
    (iii) At the end of each program year, the aggregate amount of 
program income cash balances and any investment thereof (except those 
needed for immediate cash needs, cash balances of a revolving loan fund, 
cash balances from a lump-sum drawdown, or cash or investments held for 
section 108 loan guarantee security needs) that, as of the last day of 
the program year, exceeds one-twelfth of the most recent grant made 
pursuant to Sec. 570.304 shall be remitted to HUD as soon as 
practicable thereafter, to be placed in the recipient's line of credit. 
This provision applies to program income cash balances and investments 
thereof held by the grantee and its subrecipients. (This provision shall 
be applied for the first time at the end of the program year for which 
Federal Fiscal Year 1996 funds are provided.)
    (3) Program income on hand at the time of closeout shall continue to 
be subject to the eligibility requirements in subpart C and all other 
applicable provisions of this part until it is expended.
    (4) Unless otherwise provided in any grant closeout agreement, and 
subject to the requirements of paragraph (b)(5) of this section, income 
received after closeout shall not be governed by the provisions of this 
part, except that, if at the time of closeout the recipient has another 
ongoing CDBG grant received directly from HUD, funds received after 
closeout shall be treated as program income of the ongoing grant 
program.

[[Page 135]]

    (5) If the recipient does not have another ongoing grant received 
directly from HUD at the time of closeout, income received after 
closeout from the disposition of real property or from loans outstanding 
at the time of closeout shall not be governed by the provisions of this 
part, except that such income shall be used for activities that meet one 
of the national objectives in Sec. 570.901 and the eligibility 
requirements described in section 105 of the Act.
    (c) Disposition of program income received by subrecipients. The 
written agreement between the recipient and the subrecipient, as 
required by Sec. 570.503, shall specify whether program income received 
is to be returned to the recipient or retained by the subrecipient. 
Where program income is to be retained by the subrecipient, the 
agreement shall specify the activities that will be undertaken with the 
program income and that all provisions of the written agreement shall 
apply to the specified activities. When the subrecipient retains program 
income, transfers of grant funds by the recipient to the subrecipient 
shall be adjusted according to the principles described in paragraphs 
(b)(2) (i) and (ii) of this section. Any program income on hand when the 
agreement expires, or received after the agreement's expiration, shall 
be paid to the recipient as required by Sec. 570.503(b)(8).
    (d) Disposition of certain program income received by urban 
counties. Program income derived from urban county program activities 
undertaken by or within the jurisdiction of a unit of general local 
government which thereafter terminates its participation in the urban 
county shall continue to be program income of the urban county. The 
urban county may transfer the program income to the unit of general 
local government, upon its termination of urban county participation, 
provided that the unit of general local government has become an 
entitlement grantee and agrees to use the program income in its own CDBG 
entitlement program.

[53 FR 8058, Mar. 11, 1988, as amended at 60 FR 56915, Nov. 9, 1995]