(a) The allocation of interest earned on development fund investments or State Housing Fund investments is based on the presumption that such investments represent, firstly, the investment of unexpended funds for the offsite clearance program; secondly, the investment of unexpended funds for the rehabilitation program; thirdly, the investment of funds for the relocation of buildings program; and, lastly, the investment of unexpended funds other than funds for the specified related programs. If the investments were made from the proceeds of temporary loan notes, the investments and the allocation of the interest thereon are related to the unexpended balances, at the end of a quarter, of the amounts requisitioned for the respective related programs on the most recent approved certificate of purposes. If the investments were made from bond issue proceeds, the investments and the allocation of the interest earned thereon, are related to the unexpended balances, at the end of a given quarter, of the amounts budgeted for the respective programs on the bond sale budget.

(b) To illustrate the operation of the allocation of the interest earned credit, as stated above, assume that the unexpended balance for the respective programs, at the end of a quarter, are as follows:

If the development fund investments were $150,000, the interest earned during the quarter on $100,000 would be credited to offsite clearance, on $35,000 to rehabilitation, on $10,000 to relocation of buildings, and the interest on the residual amount of $5,000 would remain as a credit to project development cost (account 1420.2) or project income (account 3610). If the development fund investments were $125,000, the interest earned during the quarter on $100,000 would be credited to offsite clearance and that on $25,000 to rehabilitation, with no credit to relocation of buildings or project development cost (account 1420.2) or project income (account 3610). If the development fund investments were $15,000, the entire credit for the interest earned during the quarter would be to offsite clearance.

(c) The interest earned on development fund investments or State Housing Fund investments shall be credited, in the first instance, to account 1420.2 Interest Income, or account 3610, Interest Earned, whichever is applicable, and then distributed by journal voucher, as credits to the related programs on the basis of the allocation described above. The cutoff point for the allocation of interest earned to the offsite clearance program shall be the date of substantial completion of the project proper, or the date of liquidation of the offsite clearance program, whichever is earlier. The cutoff point for the allocation of interest earned to the rehabilitation or relocation of buildings programs shall be the dates of liquidation of the respective programs. Where State Housing Fund investments and development fund investments both represent bond issue proceeds, the interest earned on the State Housing Fund investments should be allocated first in accordance with the bond sale budget amounts unexpended to date. If the bond sale budget amounts for the related programs are in excess of the State Housing Fund investments, allocable thereto, then the interest earned on the development fund investments is allocated to the extent necessary to make up the deficiency.