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B-170971 1 (1976-01-22)

handle is hein.gao/gaobaddsk0001 and id is 1 raw text is: DECISIONl FILE: B-170971 THE COMPTROLLER GENERAL / OF THE UNITED STATES \S, WASHINGTON, D.C. 2054B DATE: JAN 2 2 197 I 6 MATTER OF: New Community Deyelopment Revolving Fund DIGEST: Revolving fund established by Urban Growth and New Community Development Act of 1970 may not be used by Department of Housing and Urban Development (HUD) to make payments to developer, as program expenditures, to enable him to repair, maintain and operate develop- ment project except subsequent to bona fide determination by HUD to acquire subject property, or to make payments to senior mortgagees or other priority lienholders for this purpose since such actions appear wholly beyond scope of Federal assistance contemplated by Act. This decision to the Secretary, Department of Housing and Urban Development (HUD), is in response to a request from the General Counsel of HUD regarding use of the revolving fund established by section 717 of the Urban Growth and New Community Development Act of 1970 (title VII of the Housing cad Urban Dcvclopment Act of 1970), Pub. L. No. 91-609 (December 31, 1970), 84 Stat. 1770, 1791, 42 U.S.C. 5 4518 (1970). The specific question raised by HUD is: Whether, prior to the acquisition of the Security by the Secretary, she may use funds from the revolving fund to: A. repair, maintain and operate the security and B. make payment of amounts payable by the developer to senior mortgagees, obligees under contracts for real property, optionors under real property options, mechanics', tax and other lienors whose liens may have priority over the Government's lien. For reasons discussed below, we do not believe the fund is available for either of these purposes except to the limited extent indicated. The General Counsel of HUD points out that there may at times be sound reasons for the Government to make repair, maintenance and operation payments to or on behalf of a new community developer prior to acquisi- tion of the property. The following paragraphs are extracted from the General Counsel's letter: / r L

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