Use of New Community Development Revolving Fund

The agency requested guidance regarding the use of the revolving fund established by the Urban Growth and New Community Development Act of 1970. This fund may not be used by the agency to make payments to the developer as "program expenditures" to enable him to repair, maintain, and operate a development project except subsequent to a bona fide determination by the Department of Housing and Urban Development to acquire the subject property or to make payments to senior mortgagees or other priority lienholders for this purpose. Such actions appear wholly beyond the scope of federal assistance contemplated by the act.