1. CDBG PROGRAM INCOME
NCDA Winter Legislative, Policy and Professional Development Meeting
Holiday Inn Capitol Hill
Washington, DC
February 16, 2017

2. What is Program Income
What is PI? Money that comes back to grantee or subrecipient that is generated by a CDBG activity, such as:
Proceeds from sale or lease of real property acquired and/or improved with CDBG
Gross income from use/rental of real or personal property acquired, constructed, improved (less costs incidental to generation of income) with CDBG 42

3. What is Program Income (cont'd)
Payments of principal & interest on loans made with CDBG
Proceeds from the sale of loans or obligations secured by loans made with CDBG
Interest earned on program income pending its disposition
Funds collected through special assessments on properties not owned/occupied by LMI persons

4. REVOLVING FUND
A separate fund/account for specific activities that generate repayments for reuse with similar activities (hence revolving funds)
Must be in an interest bearing account
Interest earned on fund remitted to HUD
Interest paid by borrowers & loan repayments are program income

5. Report Program Income Creating Receipts Funding with Program Income
Identify IDIS activity ID that generated the program income
Create receipt when program income is received
Funding with Program Income
PI now appears as available on drawdown
No longer need to manually fund PI
System will auto adjust funding based on draw
Drawing Program Income
Same process as EN

6. Program Income Key Points
Different Types of Cash Receipts
Program Income
Loan payments
Sale of property
Revolving Loan
Earmarked for specific type of activity
Homeowner rehab revolving loans
Economic Development revolving loans
Repayments/Credits
Not program income!
Will use Drawdown Revision to reflect repayment

7. Program Income Key Points
Use Program Income First!
Receipt all income on hand before creating drawdown
Net program income out of draw requests to Treasury
If the subrecipient is allowed to keep PI per CDBG agreement:
Fund to specific activity
Enter receipt in IDIS on a regular basis

8. Planning and Admin (PA) cap & program income

9. Planning & Admin Obligation Cap (1st Test)
Program year obligation test - Obligations for planning and administration may not exceed the amount of:
20% of annual entitlement grant and the program income received during current Program Year
Regulatory citation: 24 CFR (g)(2) 46 35 46

10. CALCULATING OBLIGATION CAP

11. DETERMINING COMPLIANCE WITH THE ADMIN OBLIGATION CAP46 35 46

12. IDIS REPORTS CAN BE USED TO CHECK ADMIN OBLIGATIONS/DISBURSEMENTS
IDIS PR26 Report – CDBG Financial Summary Report
IDIS PR03 Report – CDBG Activity Summary Report 53

13. USE IDIS PR26 REPORT TO DETERMINE COMPLIANCE WITH THE ADMIN OBLIGATION CAP46 35 46

14. Admin & Planning Program Year Expenditure Cap (2nd Test)
Limit planning & administration expenditures to no more than 20 percent of each grant (excluding program income) – Origin year grant expenditure test
Cap is imposed through annual appropriations legislation, not the CDBG statute (HCDA)
The compliance will be determined at the end of the grant
This test is included at 24 CFR (g)(1)
A New IDIS report has been developed to check compliance

15. Obligation Test Vs. Expenditure Test
Obligation (Existing) Test
Expenditure Test
Obligations
Expenditures
Compliance is determined at the end the each program year
Compliance is determined at the end of grant (apply to 2015 or later grants)
Amount = 20% (Grant amount +Program Income)
20% of Grant

16. How Program Income impacts CDBG timeliness For entitlements

17. (CDBG Regulation - 24 CFR 570.902)
What is Timeliness?
“Timeliness” refers to the statutory requirement that HUD annually determines whether each CDBG grantee is carrying out its program in a timely manner.
The grantee must have a balance no greater 1.5 times its annual grant remaining in the line-of-credit, 60 days prior to the end of the program year.
(CDBG Regulation - 24 CFR )

18. Unadjusted vs. Adjusted Timeliness Ratios
Two Timeliness Tests - 24 CFR (a) (1) and (2)
PR56 Current CDBG Timeliness Report
Unadjusted Ratio – only the grant balance in LOCCS
Adjusted Ratio – includes grant balances and program income, including the balance in revolving loan funds.
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19. PR56: CDBG TIMELINESS REPORT

20. More Grantees Untimely Due to Program Income
In the past, HQ has generally identified grantees as untimely based on the unexpended grant funds in the grantee’s LOC, even if the adjusted (grant balance plus PI) exceeded the 1.5 ratio. With the increasing number of CDBG grantees with larger program income balances, this is now a concern.

21. Program Income from Revolving Loan Funds
Loan repayments to RLF’s are considered program income which is counted toward the timeliness ratio of 1.5.
In order to ensure PI from RLF’s is not making a CDBG grantee untimely, it is crucial that the funds are “active” or revolving.
If RLF has a high balance, grantee may move funds out to use for other CDBG projects.
120

22. Program Income from Neighborhood Stabilization Program (NSP)
Revision of requirements in the NSP Closeout Notice
Allows NSP program income received by a CDBG grantee or subrecipient to be transferred by the recipient from the NSP1, NSP2 and NSP3 programs to the CDBG Program.
All transferred NSP program income will be subject to the CDBG PI regulations.
Grantees transferring large NSP program income balances (relative to their CDBG allocation should develop a plan on how they intend to spend this PI.
Federal Register/Vol 81, No. 114,June 14, 2016
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23. Resources for Understanding Program Income
Video –On Program Income
HUD Exchange – Timeliness FAQ’s