[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR1003.600]

[Page 781-782]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 1003--COMMUNITY DEVELOPMENT BLOCK GRANTS FOR INDIAN TRIBES AND ALASKA NATIVE VILLAGES--Table of Contents
 
                  Subpart G--Other Program Requirements
 
Sec. 1003.600  Constitutional prohibition.


    In accordance with First Amendment Church/State Principles, as a 
general rule, ICDBG assistance may not be used for religious activities 
or provided to primarily religious entities for any activities, 
including secular activities. The following restrictions and limitations 
therefore apply to the use of ICDBG funds.
    (a) ICDBG funds may not be used for the acquisition of property or 
the construction or rehabilitation (including historic preservation and 
removal of architectural barriers) of structures to be used for 
religious purposes or which will otherwise promote religious interests. 
This limitation includes the acquisition of property for ownership by 
primarily religious entities and the construction or rehabilitation 
(including historic preservation and removal of architectural barriers) 
of structures owned by such entities (except as permitted under 
paragraph (b) of this section with respect to rehabilitation and under 
paragraph (d) of this section with respect to repairs undertaken in 
connection with public services) regardless of the use to be made of the 
property or structure. Property owned by primarily religious entities 
may be acquired with ICDBG funds at no more than fair market value for a 
non-religious use.
    (b) ICDBG funds may be used to rehabilitate buildings owned by 
primarily religious entities to be used for a wholly secular purpose 
under the following conditions:
    (1) The building (or portion thereof) that is to be improved with 
the ICDBG assistance has been leased to an existing or newly established 
wholly secular entity (which may be an entity established by the 
religious entity);
    (2) The ICDBG assistance is provided to the lessee (and not the 
lessor) to make the improvements;
    (3) The leased premises will be used exclusively for secular 
purposes available to persons regardless of religion;
    (4) The lease payments do not exceed the fair market rent of the 
premises as they were before the improvements are made;
    (5) The portion of the cost of any improvements that also serve a 
non-leased part of the building will be allocated to and paid for by the 
lessor;
    (6) The lessor enters into a binding agreement that unless the 
lessee, or a qualified successor lessee, retains the use of the leased 
premises for a wholly secular purpose for at least the useful life of 
the improvements, the lessor will pay to the lessee an amount equal to 
the residual value of the improvements;
    (7) The lessee must remit the amount received from the lessor under 
paragraph (b)(6) of this section to the grantee or subrecipient from 
which the ICDBG funds were derived.
    (8) The lessee can also enter into a management contract authorizing 
the lessor religious entity to use the building for its intended secular 
purpose, e.g., homeless shelter, provision of public services. In such 
case, the religious entity must agree in the management contract to 
carry out the secular purpose in a manner free from religious influences 
in accordance with the principles set forth in paragraph (c) of this 
section.
    (c) As a general rule, ICDBG funds may be used for eligible public 
services to be provided through a primarily religious entity, where the 
religious entity enters into an agreement with the grantee or 
subrecipient from which the

[[Page 782]]

ICDBG funds are derived that, in connection with the provision of such 
services:
    (1) It will not discriminate against any employee or applicant for 
employment on the basis of religion and will not limit employment or 
give preference in employment to persons on the basis of religion;
    (2) It will not discriminate against any person applying for such 
public services on the basis of religion and will not limit such 
services or give preference to persons on the basis of religion;
    (3) It will provide no religious instruction or counseling, conduct 
no religious worship or services, engage in no religious proselytizing, 
and exert no other religious influence in the provision of such public 
services;
    (d) Where the public services provided under paragraph (c) of this 
section are carried out on property owned by the primarily religious 
entity, ICDBG funds may also be used for minor repairs to such property 
which are directly related to carrying out the public services where the 
cost constitutes in dollar terms only an incidental portion of the ICDBG 
expenditure for the public services.