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B-246502 1 (1992-05-11)

handle is hein.gao/gaobadoef0001 and id is 1 raw text is: 150 .> ;-wptroUer Genemrl .* .o theUnlted .9 s Decision Matter of: ;, rile: 1 yl t ~' Interest Earned on Unauthorized Federal Grant Funds Loans of B-246502 May 11, 1992 Interest earned by grantees on unauthorized loans of grant funds belongs to the United States and must be deposited in the Treasury as miscellaneous receipts. 4pt~1 A A q * 9, * Pt.; 9.. 1~~ * DECISION This responds to a request from the Inspector General of the United States Department of Housing ard Urban Development (HUD) concerning the disposition of interest earned on unauthorized loans made by grantees of federal grant funds. The Inspector General identified two cases where recipients of grants under the Community Development Block Grant (CDBG) Entitlement Program obtained grant funds from the United States Treasury and made loans of the funds tor purposes that were subsequently determied to be ineligible under the CDBG program. The amount of the principal of these loans will be returned by the grantees, but HUD's Inspector * General has asked our advice on the disposition of the interest the grantees earned on these loans. We conclude that interest earned on loans which are deemed ineligible under the federal grant program belongs to the United States and must be deposited in the Treas.V y as miscellaneous .receipts. See 31 U.S.C. § 3302(b) Created by the Hou sig and Community Development Act of 1974 (Pub. L. No. 93-383,8 8 Stat. 633) and administered by HUD, the CDBG program is a major source of federal financial aid to cities and counties. The broad purpose of the CDBG program is to improve the quality of urban life, Particularly for persons of modest financial means, through better housing and q panding economic opportunities. 42 U.S.C. § 5301(c )'. Cities and counties may use their r'DBC funds for a wide variety of authorized purposes, including making loans for certain,comt3nity projects. See, e.g., 42 U.S.C. §5 5305 (a) (4)R17) . -See also B-239974uly 10, 1991. The general rule is that interest earned by a grantee on funds advanced by the United States belongs to the United States rather than to the grantee and must be paid to the QYWYS't PUBLISHED DECISION S, a' INA N60P ! DataG k *' ~4t3r. P'.. a.

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