g Program Income: Basics and Closeout Requirements February 10, - - PowerPoint PPT Presentation

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g Program Income: Basics and Closeout Requirements February 10, - - PowerPoint PPT Presentation

Sep 01, 2023 347 likes •609 views

U.S. Department of Housing and Urban Development g Program Income: Basics and Closeout Requirements February 10, 2015 Community Planning and Development Moderators and Host Moderator Paul Patterson, Dept. of Housing and Urban

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U.S. Department of Housing and Urban Development

Program Income:

Basics and Closeout Requirements February 10, 2015

Community Planning and Development

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Moderators and Host

  • Moderator

– Paul Patterson, Dept. of Housing and Urban Development – Njeri Santana, Dept. of Housing and Urban Development – Hunter Kurtz, Dept. of Housing and Urban Development – Larry Reyes, Dept. of Housing and Urban Development

  • Host

– Jennifer Alpha, TDA – George Martin, TDA

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U.S. Department of Housing and Urban Development • Community Planning and Development

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U.S. Department of Housing and Urban Development • Community Planning and Development

  • Program Income Resources
  • Basic Requirements

– Regulations – Waiver for NSP 2 Grantees

  • Closeout Reminders
  • Uses of Post-closeout Program Income
  • Exceptions
  • Using PI for Revolving Loan Funds

Today’s Topics

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Program Income Resources

  • NSP combined program notice dated 10/19/10
  • Policy Alert on Program Income dated 7/13/11
  • Policy Alert on RLF dated 8/20/12
  • Closeout & Recapture notice dated 11/27/12
  • Waiver for NSP 2 Grantees dated 1/28/15
  • CDBG regulations at 24 CFR 570.500(a) &

570.504

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U.S. Department of Housing and Urban Development • Community Planning and Development

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More Program Income Resources

  • Search NSP Webinars (onecpd.info)

– Program Income, Activity Delivery, and General Administration (7/1/10) – Greatest Hits of Program Income (8/23/11) – DRGR Updates NSP Webinar (12/6/11) – Effective Use of NSP2 PI (9/18/12) – Program Income & NSP Administration Strategies Post Closeout (11/5/13)

  • FAQs (search onecpd.info for program income)

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Program Income Basics

Program Income = Gross income received by a grantee or subrecipient from the use of program funds Examples:

  • Proceeds from sale/lease of property acquired,

rehabbed, or redeveloped with NSP funds

  • Proceeds from the sale of equipment purchased

with NSP funds

  • Gross rental income from property acquired,

rehabbed, or redeveloped with NSP funds

  • Principal and interest on NSP loans

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Program Income Basics (cont.)

Program Income is NOT:

  • Income earned and retained by a developer
  • Review developer agreement to ensure that

nonprofit developer: – Was not designated a subrecipient – Is not required to return income to the grantee/subrecipient

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Program Income Basics (cont.)

  • NSP1 and NSP3:

Program income must be spent before Line of Credit Funds for NSP1 and NSP3 grants

  • New waiver allows NSP2 grantees to spend

program income in advance of Line of Credit funds

– Assists grantees in meeting September 30, 2015 spending deadline – Applies ONLY to 42 NSP2 grantees – DRGR instructions available

www.hudexchange.info/resources/documents/DRGR-Guidance-NSP2- Grantees-Receiving-Waiver-Program-Income-Expenditures.pdf

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Closeout Reminders Regarding Program Income

  • Grantee retains any Program Income on hand at

closeout and generated following closeout

  • If 25% Set-Aside Requirement is not met for Program

Income at the time of closeout, then grantee has three (3) years to meet the requirement

  • Program Income is earned in perpetuity- Income that

comes back after closeout is still PI. Note: Exception for grantees with NO open CDGB grant.

  • Program Income will be reported annually.

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Uses of Post-Closeout PI

Generally, for NSP admin & eligible activities:

  • NSP eligible use
  • Eligible activity (not limited to target areas)
  • National objective
  • 25% Set-aside Requirement

Exceptions:

  • Special requirements depending on grantee

type and program

  • Grantee PI below annual thresholds

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Post Closeout Requirements by Grantee Type

Category 1: – NSP1 and NSP3 state and entitlement grantees – NSP2 state and entitlement grantees who are members of an NSP2 Consortium subject to a consortium funding agreement – NSP3 Non-entitlement with OPEN CDBG grants

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Post Closeout Requirements by Grantee Type (cont.)

Category 1 PI Rules:

  • Income generated for the duration of the NSP

program is must be used for NSP-eligible activities that meet a national objective.

  • If PI does not exceed $25,000 per year-

use funds for administration or include in a CDBG activity.

  • If the program income generated exceeds

$250,000 per year – 25% Set-aside Requirement applies.

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Post Closeout Requirements by Grantee Type (cont.)

Category 2: – NSP3 Non-entitlement Grantees with NO CDBG grant open at closeout – NSP2 Consortium Non-Profit Lead Agencies

  • r Members and NSP2 Non-Profit Direct

Grantees

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Post Closeout Requirements by Grantee Type (cont.)

Category 2 PI Rules:

  • Income received prior to closeout must meet all

NSP requirements.

  • Income received during the first five years

following closeout: – must be used for NSP- eligible activities that meet a national objective. – Other cross-cutting federal requirements do not apply, including environmental and Davis- Bacon, for example.

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Post Closeout Requirements by Grantee Type (cont.)

Category 2 PI Rules (cont.):

  • Income received five years or more from the

date of the closeout agreement will be considered “miscellaneous revenue.”

  • Funds are not subject to ongoing NSP or CDBG

program requirements, but HUD encourages nonprofit grantees to use the funds in the same manner. Figure 6 of the Closeout Guide summarizes all PI requirements.

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U.S. Department of Housing and Urban Development • Community Planning and Development

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  • Program Income policies will be set by State to

show how State will allocate future PI

  • Program Income is aggregated at State level

(even if retained by subrecipients) and follows $25,000 rule

  • States must report and are responsible for

Program Income

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U.S. Department of Housing and Urban Development • Community Planning and Development

Post-Closeout Requirements- State Grantee Considerations

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Post Closeout Provisions

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Revolving Loan Funds

Basics:

  • Tool for managing the flow of Program Income
  • May be operated by grantee or subrecipients
  • Funded with Program Income
  • Funds tracked separately from LOC and other

PI.

  • Funds disbursed, replenished, and again

disbursed in perpetuity

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Revolving Loan Funds (cont.)

Uses: Each RLF must be for an NSP-eligible, income-generating activity meeting an NSP national objective. Examples:

  • Loans to purchase and redevelop foreclosed

homes and residential properties (including first and second mortgages)

  • Funding a loan loss reserve
  • Shared-equity loans for low- and moderate

income homebuyers

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Revolving Loan Funds (cont.)

Key Requirements:

  • Plan Amendment – RLF must be for a specific

activity

  • Capitalize RLF from PI*
  • Separate Accounts for each RLF
  • Funds held in interest bearing account
  • Comply with NSP1, NSP2, or NSP3

requirements, as applicable

  • Repayment to the RLF is treated as PI

(*Exception under the limited CDBG rules related to lump sum draw downs for rehabilitation only activities, as provided for in 24 CFR 570.513.)

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Revolving Loan Funds (cont.)

Considerations:

  • Select activities that are appropriate for the size

and scope of the program to ensure that funds will revolve

  • Consider administrative maintenance
  • Policies and procedures and a monitoring plan

are recommended

  • Establishing a revolving fund does not constitute

meeting a national objective and is not inherently an eligible activity

  • Consult DRGR resources for set up

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Questions?

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Q and A Instructions

To Ask Question By Phone:

– Press *1 on your telephone keypad and you will be

added to the queue.

– If your question is answered before your turn in the

queue, press *2 to be removed from the queue. To Ask Written Questions:

– Use the “Q&A” tool in Webex – On the lower right hand

side of your screen

– Please ask your question to all panelists

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U.S. Department of Housing and Urban Development • Community Planning and Development

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Resource Links

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U.S. Department of Housing and Urban Development • Community Planning and Development

Resource Link Search the Resource Library https://www.hudexchange.info/search/ Search the DRGR FAQs https://www.hudexchange.info/resource/134/drgr- knowledgebase-faqs/ View All Training Materials https://www.hudexchange.info/drgr/guides/ Submit a Question via Ask A Question https://www.hudexchange.info/get-assistance/ Request Technical Assistance https://www.hudexchange.info/technical-assistance/

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  • Answer a few short questions
  • Link:

https://www.surveymonkey.com/r/2LPG692

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