CDBG Entitlement FAQ

Are code violation fines collected considered CDBG program income?

Date Published: April 2019

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No because these funds do not meet the definition of program income as defined at 24 CFR 570.500(a). Rather, the fines should be treated as applicable credits or general revenue. Applicable credits are receipts or reductions of expenditure type transactions that offset or reduce expense items allocable to Federal awards. Applicable credits shall be credited to the Federal award (in this case, CDBG funds) either as a cost reduction or cash refund, as appropriate. There are two instances that must be met for code enforcement fines to be considered applicable credits:

  1. The cost of the inspections for code violations and enforcement of codes, which may include the inspectors' salaries, must have been wholly or partially paid for with CDBG funds, and

  2. The intended purpose of the code enforcement fine, as reflected in local law, handbook, manual, etc., is to recover the costs incurred for the code enforcement activities without regard to the source of funds for payment of the code enforcement activity.

To be considered general revenue,

  1. The purpose of the fine cannot be to recover the cost of the code inspections and enforcement;

  2. The costs of carrying out the code inspections and enforcement were not paid with CDBG funds; or

  3. The amount of the fine exceeds the costs paid with CDBG funds.

Tags: CDBG Entitlement Program Code Enforcement