07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. B-10
07 CFR 1930.150 -- Exhibit B-10 -- Objective Guides to Assist
Management in Determining the Ability of Tenants to Sustain Relative
Independence
In providing housing for senior citizens and handicapped persons,
especially when that housing is provided in the form of congregate
housing or housing involving group living arrangements, there is a
critical dimension of occupancy that must be considered by the project
management when selecting, placing, certifying and recertifying tenants.
This dimension concerns the ability of tenants with functional
impairments to sustain relative independence given the supportive
services provided in the project.
No matter how well meaning management might be in trying to provide
housing for those tenants that have become ill or acutely impaired,
rural rental housing apartment projects are designed for occupancy by
tenants who are capable of caring for themselves. In a similar sense,
congregate housing is designed for occupancy by those who are fully
capable of living totally independent lives as well as for those who are
able to sustain relative independence when given the non-shelter
supportive services provided in the project. When management provides
additional types of non-shelter support services to counteract the
progressive functional impairments that prohibit tenants from being able
to function on a semi-independent basis, it only makes those tenants
more dependent on project management. Over time, this increased
dependency has the effect of creating an ''institution,'' and it runs
contrary to the congregate housing objective of enabling tenants that
are functionally impaired (but not ill) to sustain relatively
independent lives.
Physicians, or state or local agencies responsible for providing
non-shelter supportive services to the tenants, can assist project
managers by providing certificates or statements concerning the degree
of a tenant's functional impairment. This information can be used by
project management to assess the tenant's ability to remain independent
with assistance from the services provided in the project.
Exhibit B-10A ''Type of Living Environment Needed in Relation to
Nature and Degree of Disability,'' is a guide which can be used by
management to assess a person's capacity for personal care and
independent or semi-independent living.
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. B-10A
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. C
07 CFR 1930.150 -- Exhibit C -- Rent and Occupancy Charge Changes
This Exhibit prescribes the method of processing changes in the
monthly rental or occupancy charge rates for tenants or members in
Farmers Home Administration (FmHA) Rural Rental Housing (RRH), Rural
Cooperative Housing (RCH), and Labor Housing (LH) projects. This
Exhibit covers all RRH, RCH, and LH loans, including those approved
before the date of this subpart.
A. Approving official. State Director or designated State and
District Office staff with delegated authority according to 1930.143 of
this subpart.
B. Utility. Sewer, water, trash collection, electricity, natural gas,
and any other fuel used specifically for cooking, heating, and/or
cooling.
A. All RRH, RCH, and LH applicants will be informed at the
application stage of the agency's rent or occupancy charge change
procedure. All borrowers will be advised that all proposed changes must
comply with this Exhibit. This Exhibit will also apply to rent changes
resulting from Housing and Urban Development's (HUD) Automatic Annual
Adjustment Factors for units receiving Section 8 assistance. Requests
for a change will be based on a realistic projected budget for the
interim year or the ensuing full year.
B. Rental rates or occupancy charges in projects financed in whole or
in part by an RRH, RCH, or LH loan may not be raised without FmHA
written consent according to requirements in loan agreements, loan
resolutions, and other instruments executed in connection with RRH, RCH,
and LH loans. Changes requiring only prior FmHA review are those which
are beyond the borrowers' control to cover changes in taxes or
utilities, and changes which do not result in an increase in total
shelter cost. Borrowers are encouraged to have the effective date of
needed changes coincide with the start of their fiscal year or with the
start of the season in the case of LH projects occupied on a seasonal
basis. Change requests normally should be made at least 60 days prior
to the end of the borrower's fiscal year. It is anticipated that rent
or occupancy charge changes would not be necessary more than once a
year.
C. All borrowers are encouraged to participate in the FmHA Rental
Assistance (RA) Program. However, unless the Administrator notifies
State and District Offices otherwise, all borrowers with projects
meeting the eligibility requirements of Paragraph II B of Exhibit E of
this subpart, except full profit borrowers, will be required according
to Section 530 of Title V of the Housing Act of 1949, as amended, to
apply for and accept RA when it appears that a rent or occupancy charge
change will cause more than 20 percent of the low-income tenants to pay
in excess of 30 percent of adjusted monthly income for shelter costs.
If FmHA does not have RA available for this purpose, the borrower is
encouraged to use other sources of governmental subsidies. The
availability or unavailability of governmental subsidies will not
preclude FmHA from processing a rent or occupancy charge change request.
D. Even though RA is not available, borrowers are encouraged to
convert to Interest Credit Plan II to give tenants and members the most
favorable rates possible.
A. When an RRH, RCH, or LH borrower determines that a change is
needed for reasons other than those specified in paragraph VI, the
borrower must meet with the District Director to review the following
information before the ''Notice of Proposed Rent or Occupancy Charge
Change'' is posted and delivered to the tenants or members. In lieu of
meeting with the borrower, the District Director may allow the
information to be submitted to the District Director for prior review
before being posted. The borrower may proceed to post the notice 15
days after the submission or upon receipt of the District Office's
response whichever is earlier.
1. Facts demonstrating the need and justification for a rent or
occupancy charge change in accordance with paragraph III A of this
Exhibit.
2. A new operating budget for borrower fiscal year showing:
a. Currently approved budget at old rents or occupancy charge.
b. Actual income and expenses to date.
c. Proposed budget at proposed new basic rents or occupancy charge.
d. Proposed budget at proposed new market rents or occupancy charge
(when applicable).
3. An application for RA on Form FmHA 1944-25, ''Request For Rental
Assistance,'' if the borrower's project is an eligible project and the
proposed change will cause 20 percent of the very low- and low-income
tenants or members to pay in excess of 30 percent of adjusted monthly
income for shelter costs. If the low-income tenants or members are
receiving some other form of rent subsidy, such as HUD's existing
section 8, an exception may be made to this requirement.
4. A new energy audit or a listing of deferred improvements
identified in a previous energy audit that was performed within the past
five-year period according to the requirements of Exhibit D of this
subpart or regulations then extant.
5. Any other formation the borrower believes necessary to justify the
proposed change.
B. Current tenant or member certifications on Form FmHA 1944-8,
''Tenant Certification,'' or other form approved by FmHA must be on file
in the District Office.
C. After the borrower and District Director have reviewed the rent or
occupancy charge change application, the borrower will notify all
affected persons of any proposed change using the format of Exhibit C-1
of this Exhibit. The ''Notice to Tenants or Members of Proposed Rent or
Occupancy Charge Change'' will advise tenants or members that during a
20-day comment period identified in the posted Notice, they have an
opportunity to inspect, copy, and make written comments or objections to
all materials which will be made available to them justifying the
proposed increase. Tenants or members will be advised that they may
also review any subsequent material submitted by the borrower to FmHA to
support the change. If subsequent material is submitted, the borrower
will be required to post a new Notice. The Notice will advise the
tenants or members that all written comments or objections should be
submitted directly to the FmHA District Director by the end of the
20-day comment period. Tenants or members must be notified by the
following methods.
1. The owner or management agent must mail or hand deliver copies of
the Notice to all affected persons and the District Director at least 60
days prior to the anticipated effective date of the change. By the end
of the 20-day period, the borrower may submit to the District Director
any other information to be considered.
2. The management must also post prominently in common areas around
the project (laundry rooms, parking areas, recreation rooms, etc.)
copies of the Notice. In addition to plain English, all Notices will be
published in the other primary languages of the tenants or members.
D. Notification to the tenant or member of proposed rent or occupancy
charge change will not be required when a change in the utility
allowance only is proposed on Exhibit A-6 of subpart E of part 1944 of
this chapter, and the utilities are paid directly by the tenants or
members. This does not preclude posting of the FmHA Letter of Approval
as provided for in paragraph V B 1 of this Exhibit.
A. Actions by district director. The District Director will not
consider a rent or occupancy charge change application complete with all
terms listed in paragraph IV of this Exhibit. When the application and
all attachments for the proposed change have been received (including
the tenant or member comments when notification is required), the
District Director will:
1. Review all the material submitted.
2. Provide a copy of the borrower's latest Form FmHA 1944-29,
''Project Worksheet for Interest Credit and Rental Assistance.''
3. Determine if RA is available for eligible project on behalf of the
low-income tenants or members.
4. When the change is requested for energy savings improvements
identified in an Energy Audit, the District Director shall determine the
cost effectiveness and financial impact of the proposed improvements
from information contained in the energy audit. The District Director's
determination will be made according to paragraph VI of Exhibit D of
this subpart.
5. When State Office approval is required, the District Office will
submit to the State Director (see Guide Letter 1930-3 for outlining the
change request package being submitted):
a. Appropriate recommendations on the request,
b. An indication of the number of tenants or members who will need RA
as a result of the changes,
c. All the material received from the borrower, including tenant or
member comments or objections, at the end of the 20-day comment period,
d. A short narrative describing the general tone of tenant or member
comments and concerns.
6. When a member of the District Office staff is the approval
official, the documentation required by V A 5 above, will be attached to
the change request.
7. When the borrower has requested RA, complete Form FmHA 1944-25 and
forward it to the State Director.
B. Actions by the approval official. When the application,
attachments, and comments are received, the approval official will
review the material to determine if the change is justified. The
borrower will be notified by the approval official of the determination
within 45 days from the date the ''Notice to Tenants or Members of
Proposed Rent or Occupancy Charge Change'' is posted.
1. Approval actions. a. When a change is approved, the approval
official will notify the borrower by using Exhibit C-2 of this subpart.
The Notice letter will be prepared using the required and/or optional
paragraphs as applicable. The reasons for the approved change should be
concise. The Notice letter will be mailed or hand delivered to each
tenant or member and posted in a conspicuous place(s).
b. When the borrower's project is operated on a profit basis and the
purpose of the rent change is for: Justified operating and maintenance
expense; funding the reserve account; other project expenses;
providing or maintaining a profit, the change may be allowed as long as
eligible tenants can afford the new rental rate.
2. Disapproval actions. When the approval official determines an
application for a proposed rent or occupancy charge change is not
justified on the basis of the information submitted, the approval
official will notify the borrower in writing of the reason(s) why the
change is not approved. The borrower will be advised of the right to
file an appeal regarding the change disapproval according to 1900.56 of
subpart B of part 1900 of this chapter. Rent or occupancy charge
changes may not be approved when any of the following circumstances
exist:
a. The borrower is able but unwilling: To comply with applicable
tenant eligibility requirements; the audit and reporting requirements
of this subpart; or, the conditions set forth in the borrower's loan
agreement or resolution, interest credit and/or rental assistance
agreement, promissory note, or mortgage.
b. The budget for the project reflects sufficient income at the
present rent or occupancy charge structure to meet operation and
maintenance expenses which are appropriate and reasonable in amount,
meet the FmHA debt service requirements, meet the required reserve
account deposit, and provide a return to the borrower, when appropriate.
c. The borrower's project is operated on a profit basis and the
proposed rent change is for purposes other than meeting operation and
maintenance expenses and debt service, i.e., the purpose is to allow
excessive profits and the proposed rent change will result in rental
rates in excess of what eligible tenants can afford.
d. The State Director is able to provide RA to the project and the
borrower's project is operated on either a nonprofit basis or limited
profit basis as defined in 1944.205 of subpart E of part 1944; but the
borrower has not applied for RA within the most recent period of 180
days prior to the change request.
A. Rent or occupancy charge changes caused by increases in operating
costs for taxes and utilities, which are beyond the borrower's control,
may be implemented with only prior FmHA review. The changes may not be
greater than the amount necessary to cover the specific tax or utility
increases.
1. Prior to notifying tenants or members, the borrower must meet or
consult with the District Director to review:
a. A new operating budget for borrower fiscal year showing:
(1) Currently approved budget.
(2) Actual income and expenses to date.
(3) Budget at new basic rates.
(4) Budget at new market rates.
b. A copy of the notification to the borrower from the taxing body or
vendor showing that taxes or utilities are being increased. The amount
of the change or the basis on which the increased cost can be computed
must be shown in the notice.
c. Detailed calculations showing how the increased operating cost was
determined.
d. An updated Exhibit A-6 to subpart E of part 1944, when the tenants
or members pay their own utilities and the rent or occupancy charge
change involves increased utility costs.
e. A new energy audit or a listing of deferred improvements
identified in a previous energy audit that was performed within the past
five-year period according to the requirements of Exhibit D of this
subpart or regulations then extant.
2. The District Director shall review the budget and supporting
documentation and, when found to be acceptable, notify the borrower in
writing that the budget is approved. A copy of the approved budget will
be forwarded to the State Director.
3. In addition to notifying each tenant or member of the new rents or
occupancy charges required by State law, the borrower will:
a. Include in the notice an explanation of the increased costs which
necessitated the change.
b. Mail a copy of the notice to the tenant or member at least 30 days
prior to the effective date of the change.
c. Offer the tenants or members an opportunity to meet with
management, discuss the change and review all material necessitating the
change.
d. Inform the tenants or members of their right to request a review
of the change approval decision within 45 days of the date of the notice
by writing to the next higher FmHA approval official. Until the request
is resolved, the tenants or members are required to pay the changed
amount indicated in the Notice of Approval.
B. Rent or occupancy charge changes decreasing or not increasing
total shelter cost (rent or occupancy charge plus utilities) may be
implemented with only prior FmHA review provided:
1. Prior to notifying tenants or members, the borrower must meet with
the District Director to review:
a. A new borrower fiscal year operating budget showing:
(1) Currently approved budget.
(2) Actual income and expenses to date.
(3) Budget at new basic rates.
(4) Budget at new market rates.
b. Any material contributing to the change and justification for the
change.
c. An updated Exhibit A-6 to subpart E of part 1944 when the change
involved the utility allowance.
2. The District Director shall review the budget and supporting
documentation, and when found to be acceptable, notify the borrower in
writing that the budget is approved. A copy of the approved budget will
be forwarded to the State Director.
3. In addition to any State requirements, the borrower notifies each
tenant or member of the new rates and/or utility allowance as required
by State law, and:
a. Included in the Notice an explanation of the changes and events
which necessitated the change. Also, the explanation must specify any
adverse and/or positive effect the change may have on the tenants or
members.
b. Mail a copy of the Notice to the tenant or member at least 30 days
prior to the effective date of the change.
c. Offer the tenants or members an opportunity to meet with
management to discuss the change and review any material contributing to
the change.
d. Inform the tenants or members of their right to request a review
of the change approval decision according to paragraph VI A 3 d of this
Exhibit.
C. When the budget and supporting documentation for any changes
authorized by this paragraph are not acceptable to the District
Director, and the District Director and the borrower cannot jointly
agree on a budget based on acceptable rents or occupancy charges, the
borrower will be notified in writing to reduce or rescind the proposed
change. The borrower will be given appeal rights as specified in
Subpart B of Part 1900 of this chapter.
When a borrower implements a change that does not meet the
requirements of this Exhibit, the borrower will be notified in writing
that: (1) The change has not been authorized, and (2) the rates must be
rolled back to the last FmHA authorized level. Tenants or members
affected by the unauthorized change will be given a rebate or credit for
the unauthorized amount retroactive to the date of the unauthorized
change. Those borrowers that fail to comply with the provisions of this
paragraph will be handled according to 1965.85(d) of subpart B of part
1965 of this chapter.
If the approval official disapproved a rental rate change requested
as a result of HUD's annual adjustment factors for units receiving
Section 8 assistance, or approves a rent change for a lesser amount than
the change permitted by HUD, the approval official must require the
borrower to deposit any excess funds into the Reserve Account. If this
results in an accumulation of funds in the Reserve Account beyond the
sum shown in the Loan Agreement or Loan Resolution, the interest
reduction on a Section 8/515 project should be adjusted or canceled by
memorandum to the Finance Office. The borrower will still be required
to operate on a limited profit basis.
In order to carry out the provisions of this subpart and to protect
(1) A housing source in rural areas for very low, low and moderate
income families, (2) the financial obligation of borrowers and (3) the
financial interest of the Government in such housing, the entire field
of rent or occupancy charge control that may be exercised by any local
rent control board or other authority pursuant to State and local law,
as it affects housing covered by this subpart, is hereby preempted.
When a Plan II or Plan II RA RRH project is experiencing severe
vacancies due to poor local market conditions, an SMR change may be
implemented to attract and keep tenants who could pay more than basic
rent. An SMR addresses the situation where some existing and
prospective tenants are not willing to pay 30 percent of adjusted income
or market rent because the rental rates would exceed those of other
rental properties in the community. This action may only be taken after
supervisory efforts by FmHA and management efforts by the borrower have
not produced an acceptable level of occupancy. For the purposes of this
paragraph, market area and community are used as defined in paragraph 2
of Exhibit A-7 of subpart E of part 1944 of this chapter.
A. Eligibility for SMR. Based on borrower documentation and FmHA
servicing records, the District Director will prepare a written
recommendation for borrower eligibility for an SMR.
1. Based on borrower documentation and District Office verification:
a. The vacancy rate was at least 15 percent for each month for the
most recent 6 month period.
b. Comparable market rents in the community are lower than the
previously approved FmHA market rents. Exhibit A-2 to subpart E of part
1944 of this chapter can be used to document comparable market rents.
c. The borrower has aggressively marketed the project including the
following actions:
(i) Significant outreach efforts in the community, including (but not
limited to) contacts listed in the Affirmative Fair Housing Marketing
Plan (AFHMP).
(ii) The borrower has obtained approval from FmHA at least 3 months
earlier to rent to ineligible tenants in accordance with paragraph VI B
6 of Exhibit B of this subpart.
d. The borrower complies with FmHA regulations and encourages
occupancy through good maintenance and positive relations with tenants.
e. The borrower has provided a signed statement agreeing to forego,
without provision to recoup, the return on initial investment while
operating with an SMR.
f. The borrower has submitted a project budget on Form FmHA 1930-7,
''Statement of Budget and Cash Flow,'' with only minimally sufficient
operation and maintenance expenses. The project budget should continue
to fund other cash expenditures such as FmHA payments and the reserve
account, except for the return on initial investment which the borrower
has agreed to forego according to paragraph X A 1 e of this exhibit.
2. Based on District Office servicing actions and documentation:
a. The project has been operational for at least 24 months, except
that projects obligated prior to October 1, 1986, must have been
operational for at least 6 months. The National Office may make
exceptions to these requirements on a case-by-case basis for extreme
hardship.
b. No more than 10 percent of budgeted operation and maintenance
expenses are reflected in unrestricted cash, or 25 percent, if any funds
remain from the 2 percent initial operating capital, and reserve account
balances do not exceed required levels minus authorized withdrawals.
c. The District Director has reviewed and discussed with the borrower
the feasibility of using borrower contributed funds, including advances,
in accordance with paragraph XII C of Exhibit B of this subpart.
d. The District Director has reviewed and approved a project budget
with only minimally sufficient operation and maintenance expenses and
other expenses as specified in paragraph X A 1 f of this exhibit.
e. The District Director has reviewed any market studies or surveys
received from MFH loan applicants for the market area and considered any
information that may conflict with the request for an SMR.
B. Approval of SMR. 1. The State Director may approve the use of an
SMR when the conditions listed above in paragraph X A of this Exhibit
are met.
2. While an SMR is in effect, no initial RRH loan may be obligated
for the same market area if existing units can be used to serve the
unmet need.
C. Implementing an SMR. 1. After the use of an SMR has been approved
by the State Director, the District Director will establish an SMR for
the project with the borrower.
a. The SMR will be obtained by adjusting Item 3, ''FmHA Payment
(Principal and Interest) Including Overage,'' on column 4 of Form FmHA
1930-7, to reflect a payment to FmHA amortized at an interest rate which
is less than the full note rate on the borrower's promissory note. The
interest rate chosen may never be less than 2 percent.
b. The interest rate of the SMR budget will be set at a level that
will make project market rents comparable with community rental rates.
This rate will remain constant except as provided in paragraph D of this
Exhibit.
2. The initial change to SMR rents or a decrease in SMR rents will be
accomplished in accordance with paragraph VI B of this exhibit.
D. Changing an SMR. 1. An SMR may be increased or decreased whenever
the local market conditions warrant, but must be reviewed at least
annually.
2. An SMR must be increased by a minimum of 10 percent per year (or a
higher amount if mutually agreed to by the borrower and FmHA) when the:
a. Vacancy rate drops to 10 percent or below for 6 consecutive
months, or
b. The borrower does not continue to satisfy the conditions of
paragraph X A 1 c (i) and (ii), d, e, or f of this Exhibit.
3. An SMR is completely terminated when the market rent is again
based on the note interest rate.
4. An increase in an SMR will be accomplished in accordance with
paragraph IV of this exhibit.
XI. Special Problem Cases. Problem cases which cannot be handled
under this subpart should be submitted to the National Office for review
with the State Director's recommended plan of action.
(56 FR 2225, Jan. 22, 1991)
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. C-1
07 CFR 1930.150 -- Exhibit C-1 -- Notice to Tenants (Members) of
Proposed Rent (Occupancy Charge) Change
--
Date Posted
You as a tenant (member) are hereby notified that, subject to Farmers
Home Administration approval, rents (occupancy charge) will be changed
effective ------ (at least 60 days from posting).
------ has filed with the Farmers Home Administration (FmHA),
United States Department of Agriculture, a request for approval of a
change in the monthly rate of the ------ project for the following
reasons:
1.
2.
3.
4.
Planned changes are as follows:
(Use where applicable:
Since you receive rent subsidy, your rent (occupancy charge) will not
be changed so long as your income and household composition remain
unchanged.)
All materials justifying the proposed change have been reviewed by
FmHA and will be made available to you and other tenants (members) to
inspect and copy at ------ during the hours of ------ .
You may submit comments or objections in writing to the FmHA District
Director during the 20 day period immediately following the posting of
this notice. Comments or objections should include reasons or
information you feel should be considered by the FmHA approval official.
Your comments or objections must be filed prior to ------ with the FmHA
District Director, ------ , at the District Office located at ------ .
These comments will be reviewed by the FmHA District Director and
forwarded to the FmHA approval official who will decide if the change
should be approved.
Each tenant (member) will be notified in writing of the FmHA decision
to approve, reduce, or deny the change. The approved rates will then be
effective upon the effective date given above. If the approved change
cannot be made effective by such date, an additional notice will be
posted and the tenants (members) will be notified in writing that new
rates will be effective at the next rent (occupancy charge) due date
following the additional notice and the FmHA approval.
By ------
(56 FR 2228, Jan. 22, 1991)
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. C-2
07 CFR 1930.150 -- Exhibit C-2 -- Notice of Approved Rent (Occupancy
Charge) Change
Dear
You are hereby notified that the Farmers Home Administration (FmHA)
has approved a rent (occupany charge) change for the XXXXXX project(s).
The changes for all units will become effective on XXXXXX, 19. XXXXXX
(Insert effective date shown in Exhibit C-1 or later effective date in
accordance with last paragraph of Exhibit c-1.)
(Insert Reasons for Approval)
The approved changes are as follows:
(Use the following required and/or optional paragraphs where
applicable)
*You must notify the tenants (members) of FmHA's approval of the
changes by posting this letter in the same manner as the ''NOTICE TO
TENANTS (MEMBERS) OF PROPOSED RENT (OCCUPANCY CHARGE) CHANGE.'' This
notification must be posted in a conspicuous place and cannot be
substituted for the usual written notice to each individual tenant
(member).
**This change approval does not authorize you to violate the terms of
any lease (occupancy agreement) you currently have with your tenants
(members).
**For those tenants (members) receiving rental assistance (RA), their
costs for rent (occupancy charge) and utilities will continue to be
based on the higher of 30% of their adjusted monthly income or 10
percent of gross monthly income or if the household is receiving
payments for public assistance from a public agency, the portion of such
payments which is specifically designated by that agency to meet the
household's shelter cost. If tenants are receiving Housing and Urban
Development (HUD) Section 8 subsidy assistance, their costs for rent and
utilities will be determined by the current HUD formula.
**Since RA units are not available, the approved change is subject to
your acceptance of the units should they become available. Your
application for RA units on behalf of eligible tenants (members) has
been received.
**This change is conditioned on the requirement that you carry out
energy conservation measures as determined necessary by the project
energy audit. You will be allowed XXX days for completion of the work.
FmHA assistance may be available to finance any needed improvements.
**You may file an appeal regarding the change as approved within 45
days of the date of this notice. An appeal by you must be in writing to
the appropriate hearing officer as specified in subpart B of part 1900
of this chapter.
*You must inform the tenants (members) of their right to request a
review of the rent (occupancy charge) change approval decision within 45
days of the date of this notice by writing to (insert name and address
of next higher FmHA approval official). Until the request is resolved,
the tenants (members) are required to pay the changed amount of rent
(occupancy charge) as indicated in the Notice of Approval.
*Any tenant who does not wish to pay the FmHA approved rent changes
may give the owner 30-days notice that they will vacate. The tenant
will suffer no penalty as a result of this decision to vacate, and will
not be required to pay the changed rent. However, if the tenant later
decides to remain in the unit, the tenant will be required to pay the
changed rent from the effective date of the change rent.
Sincerely,
------------
FmHA Approving Official
*Required
**Optional, as applicable
(56 FR 2229, Jan. 22, 1991)
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. D
07 CFR 1930.150 -- Exhibit D -- Energy Audit
The basic objective of this Exhibit is to define the Farmers Home
Administration (FmHA) requirement in Multiple Family projects for an
energy audit and what is included in an energy audit.
II. Purpose: An energy audit and implementation of the recommended
improvements contained therein should: Increase the comfort and
enjoyment of the project by the tenants or members; improve the value
of the borrower's property; reduce project operating costs; reduce
tenant or member and/or borrower utility costs; reduce subsidy costs;
and conserve energy.
A. Initial Audit. An energy audit is required for each project. The
cost of the audit is an operating expense. The cost should be
consistent with the size of the project and comparable to the cost of
other audits in the area. The cost may be paid from annual revenue or
from the reserve account depending on the amount. Those projects built
under the FmHA thermal performance standards effective July 1, 1978,
will not require an initial audit until five (5) years following
completion of construciton.
B. Subsequent Audit. A subsequent energy audit is required five
years following the initial audit and every five years thereafter, to
identify if further improvements are feasible.
C. Submission of Audit. The borrower shall submit a copy of the
initial or subsequent energy audit with the annual project report due 45
days following the end of the borrower's fiscal year. The borrower's
plan for implementing the recommended improvements shall be included
with the report. If any of the improvements are deferred due to cost
ineffectiveness, the borrower shall, each year thereafter, include with
the annual project report, an updated cost feasibility analysis of the
deferred improvements, along with the borrower's recommendation for
implementing the improvements.
A. For any type of energy audit to be considered acceptable, it
should contain the following information for each energy saving measure
recommended:
1. A description of the energy saving measure(s).
2. Its estimated useful life.
3. Its estimated annual energy cost savings in the first year.
4. The cost of the energy saving measure.
5. An estimate of any incremental annual operation and maintenance
costs.
B. The borrower/management agent energy audit is based upon
information collected by the borrower or management agent concerning the
housing project and forwarded to a utility company or a home heating
supplier that participates with a State Energy Conservation program for
analysis.
C. The ''Program Audit'' is an in-depth, on-site inspection of a
building, which is performed by a trained energy auditor. This type of
audit is also governed by the regulations of the Department of Energy
(DOE) found in 10 CFR part 456 (RCS). The auditor inspects the building
to determine the installation applicability of energy conservation
improvements.
1. These improvements should be included in the inspection as a
minimum:
a. Caulking and weatherstripping;
b. Replacement central high efficiency air conditioners;
c. Ceiling, wall, and floor insulation;
d. Duct or pipe insulation;
e. Water heater insulation;
f. Storm or thermal windows and doors;
g. Heat-reflective and heat-absorbing window and door material;
h. Load management devices;
i. Clock thermostats; and
j. Furnace efficiency modifications
2. Consideration of these improvements is encouraged, but not
required:
a. Solar domestic hot water systems;
b. Active solar space heating system;
c. Combined active solar space heater and solar domestic hot water
systems; and
d. Passive solar space heating and cooling systems.
3. During the ''Program Audit'' inspection, the auditor also examines
the building to determine the possible application of energy conserving
practice which can lead to immediate energy savings. These practices
include but are not limited to the following:
a. Furnace efficiency maintenance and adjustments;
b. Water flow reduction on showers and faucets;
c. Sealing leaks in pipes and ducts;
d. Raising thermostat settings in summer and lowering of them in
winter;
e. Nighttime temperature setback;
f. Reducing energy use when apartment is unoccupied;
g. Plugging leaks in attics, basements, and fireplaces; and
h. Efficient use of shading
4. Upon completion of the program audit, the auditor calculates the
estimated energy savings and installation costs for applicable measures
and presents the results in writing to the borrower.
D. Any other energy audit which substantially complies with
paragraphs IV A, B or C of this Exhibit. This may be applicable in some
States where State energy plans are not yet in place. In such cases the
State Director may accept such other Audits. Some private energy
suppliers, Regional Utility Commissions (RUC), Public Utility Districts
(PUD), Rural Electrification Administration (REA) offices, State
extension offices, property management firms, and the DOE have developed
energy audit checklists and forms. These sources of information may be
utilized.
Improvements may be funded from annual project income, project
reserve, a subsequent loan, borrower's funds, or any other FmHA
authorized funding, which will keep the improvement cost effective.
Plans for funding the improvements should be included in the borrower's
recommendation for implementation.
A. The District Director shall determined the cost effectiveness and
financial impact of the proposed improvements from information contained
in the energy audit.
1. Cost effectiveness. Cost effectiveness shall be determine by
comparing the value-in-use of the facility with and without the proposed
energy saving improvement. Exhibit D of subpart B of part 1922, which
is available in any FmHA office, ''Guide for Appraisal of Energy Saving
Measures'' describes the ''value-in-use'' approach that may be used to
appraise cost effectiveness.
2. Financial Impact. Financial impact shall be determined by
comparing the estimated net energy and operation and maintenance costs
savings in the first year to the annual cost of amortizing a loan to
install the proposed energy saving improvement. A positive financial
impact occurs when the first year annual savings equals or exceeds the
annual cost of amortizing any loan(s) for the proposed energy savings
improvement. Exhibit D-1 of this subpart may be used to organize the
calculation of the financial impact.
3. When the identified and/or deferred improvements determined by an
energy audit obtained within the immediate past five year period are
found to be cost effective and have a positive financial impact, the
District Director shall recommend or require that any rent or occupancy
charge increase approval requested by the borrower be conditioned upon
installation of such energy saving improvement(s).
4. The District Director may recommend a rent or occupancy charge
increase for energy saving improvements which are not ''cost effective''
whenever the borrower contributes sufficient funds to reduce the cost of
the improvement so that, on the basis of the FmHA investment only, the
improvement is cost effective. A positive first year financial impact
is required. Any contribution made by the borrower to reduce the cost
of the improvement to the cost effective limits will not be an eligible
contribution for computing return on investments. The project reserve
may not be utilized for such contribution.
B. When the improvements are not cost effective or do not have a
positive financial impact, and the borrower does not elect to reduce the
cost of the energy saving measures as described in Paragraph VI A 4 of
this Exhibit, the District Director shall recommend deferral of
implementation of the improvements. Any deferred improvements must be
analyzed during each subsequent year's annual analysis.
C. A story of the decision regarding the energy audit will be
included in the annual reports forwarded to the State Director.
The State Director shall review the District Director's
recommendations and the decision regarding implementation of the
proposed improvements as a part of the annual report review.
All development will be performed in accordance with the requirements
of subpart E of part 1944 of this chapter and subpart A of part 1924 of
this chapter, except that 1924.6(b)(3)(i) of subpart A of part 1924
will not apply to improvements made by the owner-builder method.
Any rent or occupancy charge change necessitated by the improvements
must be processed as set forth in Exhibit C of this subpart.
(48 FR 56139, Dec. 19, 1983, as amended at 51 FR 27664, Aug. 1, 1986;
55 FR 35895, Sept. 4, 1990; 56 FR 2229, Jan. 22, 1991)
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. D-1
07 CFR 1930.150 -- Exhibit D-1 -- Calculation of Financial Impact
(Energy Audit)
(48 FR 56139, Dec. 19, 1983, as amended at 55 FR 35895, Sept. 4,
1990)
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. E
07 CFR 1930.150 -- Exhibit E -- Rental Assistance Program
I. General. The objective of the rental assistance (RA) program is to
reduce rents paid by low-income households. This Exhibit sets forth the
policies and procedures and delegates authority under which RA will be
extended to eligible tenants occupying eligible Rural Rental Housing
(RRH) and eligible members occupying Rural Cooperative Housing (RCH)
projects financed by FmHA. For the purpose of this Exhibit, the term
''tenant'' also means ''member''. This exhibit also applies to Farm
Labor Housing (LH) projects when the borrower is a broadly-based
non-profit organization, non-profit organization of farmworkers, or a
State of local public Agency. RA will supplement the benefits available
to tenants under the interest credit program outlined in Exhibit H to
this subpart.
A. Eligible Tenants. Any very low-income, or low-income household,
elderly, disabled or handicapped person, meeting the following
requirements:
1. The household adjusted annual income must not exceed the very low-
or low-income limit established for the area as indicated in Exhibit C
to subpart A of part 1944 of this chapter (available in any FmHA
Office.)
2. The household must be unable to pay the approved rental rate plus
utility allowance and occupancy surcharge within a portion of their
income not exceeding the highest of:
(a) 30 percent of their adjusted monthly income; or
(b) 10 percent of gross monthly income, or
(c) If the household is receiving payments for public assistance from
a public agency, the portion of such payments which is specifically
designated by that agency to meet the household's shelter cost.
3. The household must meet the occupancy policy established for the
project and approved by FmHA according to paragraph VI.B.2. of Exhibit B
of this subpart.
B. Eligible Project. 1. All projects must operate under Interest
Credit Plan II RA to be eligible to receive RA, except LH loans, direct
RRH, and insured RRH loans approved prior to August 1, 1968, which must
operate under Plan RA. To be eligible for RA the project must have a:
a. RRH insured or direct loan made to a broadly-based nonprofit
organization, or State or local agency, including Senior Citizen Housing
(SCH), or
b. RRH insured loan to an individual or organization who has or will
execute a Loan Resolution or Loan Agreement agreeing to operate the
housing on a lmited profit basis as defined in 1944.205 of subpart E to
part 1944 of this chapter, or
c. RCH insured or direct loan, or
d. LH loan, or an LH loan and grant combination, made to a
broadly-based nonprofit organization or nonprofit organization of
farmworkers or a State or local public Agency.
2. Borrowers may utilize the Department of Housing and Urban
Development (HUD) Section 8 Housing Assistance Payments Program for
existing housing and FmHA RA for other eligible households in the same
project.
3. Projects with all or a part of the rental units under contract
with HUD developed under the Section 8 program for new construction or
rehabilitation, by either the dual or single track processing procedures
will not be considered an eligible project for RA.
4. Borrowers may provide RA to only those eligible tenants occupying
rental housing units financed by FmHA, LH, RCH, or RRH funds.
C. Operational Project. A completed RRH, RCH, or LH project financed
by FmHA which has been opened for occupancy and has at least been
partially occupied by tenants.
D. New Projects. Newly constructed or substantially rehabilitated
RRH, RCH, or LH project financed by FmHA. For new construction RA
purposes, it further means before any units are occupied.
E. Rental Assistance. RA, as used in this Exhibit, is the portion of
the approved shelter cost paid by FmHA to compensate for the difference
between the approved shelter cost and the monthly tenant contribution as
calculated according to paragraph IV.A.2.C. of Exhibit B to this
subpart. When the household's monthly gross tenant contribution is less
than the approved utility allowance which is billed directly to and paid
by the tenant, the owner will pay the household that difference
according to paragraph IX.A.2. of this Exhibit.
F. Shelter cost. The approved shelter cost consists of basic or
market rent plus utility allowance, and occupancy surcharge when
required. Basic and/or market rent must be shown on the project budget
for the year and approved according to 1930.124 of this subpart.
Utility allowances, when required, are determined and approved according
to Exhibit A-6 to subpart E of part 1944 of this chapter. Any change in
rental rates or utility allowances must be processed according to
Exhibit C to this subpart.
G. Utility allowances. The allowance approved by FmHA according to
Exhibit A-6 to subpart E of part 1944 of this chapter, to cover the cost
of utilities which are payable directly by the household.
H. Replacement Units. RA units which replace RA units in RA
agreements expiring because obligated funds have been fully disbursed.
All borrowers with eligible projects as defined in paragraph II. B.
of this Exhibit are encouraged to utilize the RA program and receive RA
payments on behalf of eligible tenants. Generally, the borrower, or the
borrower's approved management agent, will initiate the processing of a
RA application.
A. State Allocations. The National Office may establish a State
quota on the number of RA units that may be approved and obligated in
any fiscal year. The State Director will limit the approval of RA to no
more than the number of units allocated to the State. Unless otherwise
stated by the National Office, the State allocation will indicate the
number of RA units for operational projects and the number of RA units
to be used for new construction. Priority in allocating RA units will
be as follows:
B. Allocation to Projects Within a State. The State Director will
distribute any RA units allocated to the State according to any specific
guidance established by the National Office. When no specific guidance
is established by the National Office the State Director will approve
requests for RA to projects according to the provisions of this Exhibit.
1. Replacement Units: The State Director will distribute or reserve
RA units and give priority to projects needing replacement units before
any initial or additional units are allocated to other new or
operational projects. The State Director should ascertain how many RA
units are expected to expire in each District Office during the current
fiscal year and the first quarter of the following fiscal year.
2. New Housing: Any RA units allocated to the State for new
construction will be distributed on a priority basis in the following
order:
a. Applications for RRH and RCH loans where the market survey
information indicates that a large percentage of the prospective tenants
needed RA. When the number of RA units available is inadequate to cover
all such applications, the units will be distributed giving priority to
those projects located in areas identified as having the greatest
housing needs and selected for funding in accordance with 1944.231 of
subpart E of part 1944 of this chapter.
b. For LH projects, RA units will be allocated by the National Office
from the National Office reserve on a case-by-case basis at the time the
projects are considered for funding at the National Office level.
3. Operational Housing: When the National Office provides an
allocation for servicing RA units, the State Director will distribute
them to operational RRH, RCH, and LH projects based on Forms FmHA
1944-25, ''Request for Rental Assistance'' that have been submitted by
eligible borrowers. Priority will be given to projects based on this
exhibit and administrative directives issued by the National Office
under the annual RA allocations or other authorizations or guidelines
established through the budget process. The National Office will notify
the State Director each year of any specific date by which all requests
for RA must be submitted to FmHA for consideration.
All requests for RA will be processed according to this paragraph and
may be approved by the State Director.
A. Operational Projects. 1. A borrower with an eligible project in
which there are tenants paying in excess of 30 percent of their adjusted
income for rent is encouraged to file Form FmHA 1944-25 with the
District Director. A separate Form FmHA 1944-25 will be submitted for
each project. The borrower should include the following with each
request.
a. Form FmHA 1944-29, ''Project Worksheet for Interest Credit and
Rental Assistance,'' with all columns completed for each tenant in the
project. (All Forms FmHA 1944-8, ''Tenant Certification'' must be
current.)
b. Approved or proposed budget for the year on Form FmHA 1930-7,
''Statement of Budget and Cash Flow,'' with Exhibit A-6 to subpart E of
part 1944 of this chapter attached, when applicable.
2. Prior to the full disbursement of obligated funds on any
agreement, a borrower or approved management agent may submit a request
for replacement RA units. This request should contain all the material
requested in paragraph V A 1 of this Exhibit and should be submitted no
later than three (3) months prior to the expected full disbursement of
obligated funds, to allow time for processing the request. The number
of replacement units may not exceed the number of units that are
expiring. Once replacement units have been requested, additional units
may not be requested until Form FmHA 1944-51, ''Multiple Family Housing
Obligation Fund Analysis,'' is received obligating the replacement
units. Form FmHA 1944-51 requesting the additional units must be coded
sequentially as required in paragraph V C 5.
3. The District Director will review the budget, Exhibit A-5, Form
FmHA 1944-29, and Form FmHA 1944-25 submitted by the borrower to assure
that the items are complete and accurate. The District Director will
complete Form FmHA 1944-25 and submit all data provided by the borrower
to the State Director with appropriate comments and recommendations.
B. Projects To Be Funded. 1. Applicants requesting funding for new
projects who are planning to utilize the RA program, should submit a
completed Form FmHA 1944-25 to the County Supervisor or District
Director, as appropriate, when submitting a preapplication or
application for funding.
2. The number of units of RA requested should be based on the market
data for the area, the proposed rental rates as reflected in a budget
for the project, and the income levels of the prospective tenants.
C. State Director Action on Requests for Rental Assistance. Only the
State Director or delegated members of the State Office staff may
approve or disapprove RA requests.
1. Approval Actions. When the State Director determines that RA can
be obligated or transferred, part III of Form FmHA 1944-51 for
obligation, or Form FmHA 1944-55, ''Multiple Family Housing Transfer of
Rental Assistance,'' for transfers, will be prepared and distributed
according to the Forms Manual Insert (FMI). Form FmHA 1944-27, ''Rental
Assistance Agreement,'' will not be executed or amended until the
obligation or transfer is verified by the Finance Office. The State
Office will verify the obligation or transfer via the computer terminal,
on the day following the request.
2. Completing Agreements. When the State Director verifies that RA
units have been obligated or transferred by the Finance Office, the
State Director will forward a copy of either Form FmHA 1944-51 or Form
FmHA 1944-55 to the District Director. The District Director will
complete Form FmHA 1944-27, and attach the appropriate copies of Form
FmHA 1944-51 on Form FmHA 1944-55 according to the FMI.
a. Initial Agreements. The District Director will prepare an
original and two copies of Form FmHA 1944-27. When the project does not
have a Form FmHA 1944-7, ''Multiple Family Housing Interest Credit and
Rental Assistance Agreement,'' in effect, the District Director will
prepare an original and three copies. The District Director and the
borrower will then execute the originals and all copies of Form FmHA
1944-27 and Form FmHA 1944-7. The forms will be distributed according
to their FMIs.
b. Replacement or Modified Agreements. When an RA agreement
initiated prior to May 1, 1985, is replaced or modified, a new Form FmHA
1944-27 will be prepared and distributed according to the FMI. For
every replacement or modification on or after May 1, 1985, the original
and all copies of the affected RA agreement will be notated, assembled
and distributed by the District Director according to the FMI.
3. Modification of an Existing Agreement. After any request for a
change in the amount of RA has been obligated by the Finance Office, a
copy of Form FmHA 1944-51 or Form FmHA 1944-55 will be attached to Form
FmHA 1944-27 distributed according to the FMI. A new Form FmHA 1944-7
is not required.
4. Denial of Rental Assistance Request. If RA cannot be provided,
the State Director will inform the borrower, in writing, of the reasons.
The borrower will be given appeal rights according to subpart B of part
1900 of this chapter in all cases except when RA is not available from
the State's allocation or the National Reserve.
5. Rental Assistance Agreement Numbers. a. Each RA agreement will be
assigned a six digit Rental Assistance Agreement Number by the Approving
Official as follows:
(1) First two digits -- Fiscal Year (FY in which the funds were
obligated, i.e., 85, 86, etc.)
(2) Second two digits -- Initial obligation for the project will be
coded 01. Renewal obligations will be coded sequentially starting with
02.
(3) Third two digits -- Initial obligation will be coded 01. Each
modification where units are added to the agreement by obligation will
be coded sequentially starting with 02.
b. RA Agreements with units obligated before FY 1985 will be coded as
follows:
(1) First two digits -- FY initial obligation was made on the
project, i.e., 78, 79, 80, etc.
(2) Second two digits -- Relate to the pre-AMAS conversion loan
number to which the RA obligation was processed.
(3) Third two digits -- Indicate the number of modifications plus 1.
(RA Agreement with two modifications on September 30, 1984, will be
designated ''03.'')
c. The Finance Office will track RA agreements by number and notify
the District Office on Form FmHA 1951-53, ''Multiple Family Housing
Transaction Record.''
A. Effective Date. Each ''Rental Assistance Agreement'' will be
effective the first day of the month in which it is executed. If
assistance is granted to a project under an appeal according to
paragraph XVI of this Exhibit, the effective date will be retroactive to
the first day of the month in which the assistance was denied, provided
the borrower agrees to make any appropriate refunds to tenants who would
have been entitled to RA during the retroactive period.
B. Term -- 1. Twenty (20) Year Agreement. Twenty (20) year
agreements when authorized are restricted to new projects or
modifications of existing twenty (20) year agreements. The agreement
shall be effective for twenty (20) years from the effective date of the
agreement. This agreement may be modified or terminated in accordance
with the terms of the RA agreement. The agreement will expire when the
funds obligated for the RA units described in Section 1 of the agreement
are fully disbursed. This can be any time before or after the end of
the 20-year term. Upon expiration of the agreement, a replacement
agreement may be executed. If a replacement agreement is considered, it
will be for a five (5) year period.
2. Five (5) Year Agreement. Five (5) year agreements may be used for
operational projects, or for new projects when twenty (20) year units
are not available. The agreement shall be effective for five (5) years
from the effective date of the agreement. This five (5) year agreement
may be modified or terminated in accordance with the terms of the RA
agreement. The agreement will expire when the funds obligated for the
RA units described in Section 1 of the agreement are fully disbursed.
This can be any time before or after the end of the five (5) year
period.
3. Modification of Agreements. RA agreements may be modified:
a. To add or subtract RA units assigned to the project through
obligation or through transfer from another RA agreement;
b. To reinstate a suspended RA agreement to a new borrower in the
same project after a voluntary conveyance or a foreclosure and a credit
sale within the Multiple Family housing program; or
c. To transfer a suspended RA agreement to a new borrower and a
different project after liquidation of the project assets or after the
loan is paid in full.
4. Amendment of Agreements. a. Any existing RA agreement executed
prior to February 15, 1983, which will have a remaining obligation
balance at the end of the 5-year or 20-year expiration date stated in
Section 9, ''Term of the Agreement,'' may be modified by the use of Form
FmHA 444-27A, ''Amendment to Rental Assistance Agreement.'' The amended
agreement will expire when the obligated funds are fully disbursed.
b. Any existing RA agreement containing an occupancy standard may be
amended by mutual consent of the borrower and FmHA when a new occupancy
policy for the project is approved according to paragraph VI B 2 of
Exhibit B of this subpart. To amend the agreement:
(1) Delete Section 5 of the original agreement and the borrower's
copy and have the deletion dated and initialed by the appropriate FmHA
official and the person(s) authorized to sign for the borrower.
(2) Type the following statement on the reverse of the original
agreement and the borrower's copy and have the statement dated and
initialed by the appropriate FmHA official and the person(s) authorized
to sign for the borrower.
''Amended XXXXXX (date) by authority of paragraphs VI B 4 of Exhibit
E and VI B 2 a of Exhibit B to subpart C of part 1930, chapter XVIII,
title 7, Code of Federal Regulations.''
5. Replacement Agreements. Replacement RA agreements for either
5-year or 20-year agreements will be for a five (5) year period. All
requirements in paragraphs VI B 2 and 3 of this exhibit apply. Expiring
RA agreements and replacement RA agreements may run concurrently for one
month so any undisbursed obligation balance on the expiring RA agreement
can be liquidated.
A. The State Director will maintain Form FmHA 444-28, ''Record of
Rental Assistance Agreements.'' Any changes which are made in the number
of rental units assisted will be recorded on Form FmHA 444-28.
B. The Finance Office (FO) will track the use of RA and ensure that
RA is not disbursed or credited to a borrower's account in excess of the
RA obligation. Quarterly and annually, the FO will provide the District
Director with an RA payment and obligation status report for each
project. The annual version of this report will be filed in Position 2
of the project case file and maintained indefinitely.
C. The District Director will notify the borrower to apply for
replacement RA units when the RA Undisbursed Balance reaches a level
sufficient to cover approximately 6 months of RA requests. This figure
will be based on the project's average monthly request for RA.
The borrower and management agent for each project receiving RA
should fully understand the responsibilities and requirements of
carrying out the program. The following guidelines will be followed:
A. RA payments will not be made directly to eligible tenants
receiving RA except as specified in paragraph IX A of this Exhibit. The
borrower will maintain an accurate accounting of each tenant's utility
allowance and payments made to tenants. All other RA payments will be
recorded as a credit to the tenant's monthly rental payment.
B. The borrower must submit Form FmHA 1944-8 for each tenant as
required in paragraph VII F of Exhibit B of this subpart (Management
Handbook).
C. The incomes reported by the tenants must be verified by the
borrower in accordance with paragraph VII of Exhibit B of this subpart
(Management Handbook).
D. Borrowers utilizing RA must comply with 1930.124 of this subpart.
RA will not be approved for a project until the operating budget has
been approved by the FmHA State Office or the District Director.
District Directors, with assistance from the State Office, must closely
supervise and assist borrowers in complying with all accounting and
management requirements.
E. A borrower participating in the RA program must have an FmHA
approved lease with the assisted household. All leases must comply with
the provisions of paragraph VIII of Exhibit B of this subpart
(Management Handbook).
F. The borrower will be responsible to FmHA for any errors made in
the administration of the RA program which are made by the borrower or
the borrower's authorized management agent. Errors in computation or
other unauthorized use of RA will require, at a minimum, the repayment
of any incorrectly advanced RA funds. If the error or unauthorized use
of RA appears to be deliberate or intentional, the State Director will
refer the case to the Office of Inspector General according to subpart B
of part 2012 (available in any FmHA Office).
A. Payment of Utilities. 1. When the tenant is billed directly for
utilities, rent paid by the tenant receiving RA will be the difference
between the established utility allowance and the portion of income
cited in paragraph II A 2 (a) or (b) or (c) of this Exhibit.
2. When utilities are paid by the household receiving RA and the
portion of income cited in paragraph II A 2 or (b) or (c) of this
Exhibit is less than the allowance for utilities, the borrower will pay
the household the difference between the utility allowance and one of
those limits of the household's adjusted monthly income.
3. In a project where the owner pays all utilities, the tenant rent
will be the portion of income cited in paragraph II A 2 (a) or (b) or
(c) of this Exhibit up to the approved rent for the rental unit being
occupied.
B Determining the allowance. The utility allowance will be
determined and recorded by the use of Exhibit A-6 to subpart E of part
1944 of this chapter.
C. Changes in Allowances. The utility allowance should be reviewed
annually and adjusted if there are substantial changes in utility and
public service rates. Normally, allowances will be adjusted on an
annual basis if necessary when the owner submits a new budget for
approval. Changes in utility allowance which will result in changed
rent paid by tenants will be processed according to Exhibit C of this
subpart.
A. Regular monthly RA payments.
1. Borrower Responsibilities. a. Any RA due the borrower will be
deducted from the balance of scheduled loan payments, any delinquent
payments, and other charges due on Form FmHA 1944-29, and the remaining
balance must be submitted to the District Office. If the RA due the
borrower exceeds the balance of scheduled loan payments, delinquent
payments and other charges, an RA check for the excess will be issued by
the Finance Office.
b. Each month the borrower must forward to the District Director a
separate Form FmHA 1944-29 and any new Form FmHA 1944-8, for each
project according to the instruction attached to the form.
2. District Director Responsibilities. a. When a Form FmHA 1944-29
and new Form FmHA 1944-8 are received, the District Director will:
(1) Review Form FmHA 1944-8 and verify that the information contained
on the form is complete and correctly computed based on information
contained in the form.
(2) Review Form FmHA 1944-29 and ensure that entries are supported by
the current Form FmHA 1944-8.
(3) Enter the payment data via field office terminals as required in
Exhibit A to subpart K of part 1951 (available in any FmHA office).
b. The District Director should verify the accuracy of the borrower's
servicing address shown on the Finance Office (FO) record. When the
address shown is incorrect, corrections must be made on Automated
Multi-Housing Accounting System (AMAS) Screen M5A ''Record
Borrower/Project Data'' via a field computer terminal.
B. When a project loan account is delinquent, the District Director
should counsel with the borrower and develop a servicing plan in
accordance with 1965.85 (b) of subpart B of part 1965 of this chapter.
This plan should incorporate detailed provisions for continuing
operation of the project and paying the account current.
1. As part of the servicing plan, the District Director may agree to
releasing a portion of the monthly RA for project operations.
2. The RA Check may be released to the borrower according to the
servicing plan.
C. An RA payment request must be based on actual occupancy as of the
first day of the month.
A. New Project. Applications for occupancy should be accepted during
the construction phase of the project and placed on a waiting list.
During initial rent-up period the following priorities will apply:
1. Until all the RA units have been assigned, a number of apartment
units in the project equal to the number of RA units will be initially
reserved for applicant households who qualify for RA as defined in
paragraph II A of this Exhibit. Applications qualifying for RA will be
considered according to the priority established by paragraph XI B of
this Exhibit, by-passing those applicants on the waiting list whose
income is above the low-income limits for the area. The balance of the
apartment units will be rented simultaneously to other applicants on a
first-come-first-served basis.
2. If a substantial number of apartment units reserved to be used
with RA units remain vacant after initial rent-up and the borrower could
rent those units to applicants not eligible for RA, the borrower may
consider requesting a transfer of unused RA units in accordance with
paragraph XV B 5 of this Exhibit. Applicants not eligible for RA cannot
be selected to occupy units initially reserved to be used with RA until
unused RA units are transferred.
3. If there are still vacant units, those applicants by-passed
because they did not qualify for RA will be considered for occupancy on
a first-come first-served basis.
B. Operational Project. To determine priority for assigning an
available RA unit in an operational project, the latest Form FmHA
1944-29 must be updated as of the date the unit is available, assuring
that columns 3 through 9 are current and accurate.
1. First priority for assigning RA must always be given to eligible
very low-income households in the following order:
a. Eligible very low-income tenants paying the highest percentage of
adjusted annual income for approved shelter costs.
b. Eligible very low-income applicants from waiting list. Very
low-income applicants will be selected from the waiting list on a first
come, first served basis as provided in paragraph VI F of Exhibit B to
this subpart. No eligible tenant household in the project may be
required to move from the project to allow an applicant on the waiting
list who is eligible for RA, to move in.
2. Second priority for assigning RA will be given to eligible
households with low-income in the following order.
a. Eligible low-income tenants paying the highest percentage of
adjusted annual income for approved shelter cost.
b. Eligible low-income applicants from waiting list. Low-income
applicants will be selected on a first come, first served basis
according to paragraph VI F of Exhibit B of this subpart, provided the
borrower has satisfied the requirements of paragraph XI C of this
Exhibit.
3. Third priority for RA will be given, with State Director approval,
to occupancy ineligible tenants living in the project. The occupancy
requirements of paragraph VI B 2 of Exhibit B of this subject must be
met.
4. When the project has vacancies and RA is not available, an
applicant who is eligible for RA may elect to accept occupancy without
the benefit of RA. After occupancy, the household will be considered
for RA according to paragraph XI B of this Exhibit. If the applicant
elects not to accept occupancy because RA is not available, their
application will retain its priority date on the waiting list if the
rental agent determines that a hardship to the applicant will exist
according to paragraph VI F 3 of Exhibit B of this subpart.
5. Eligible tenants receiving the benefits of RA may continue
receiving such benefits as long as they remain eligible for RA or the RA
calculation formula shows a moderate income tenant that was initially
eligible for RA as a low-income tenant still needs RA and there is a RA
agreement in effect.
C. Limits on Low-Income Applicants Which May Receive Occupancy and
RA. 1. When no more very low-income applicants are on the waiting list
and RA is available, eligible low-income applicants may obtain occupancy
and receive RA provided that:
a. For projects available for initial occupancy prior to November 30,
1983, no more than 25 percent of the vacant units receiving RA may
become occupied by low-income tenants other than very low-income
tenants.
b. For projects available for initial occupancy on or after November
30, 1983, no more than 5 percent of the vacant units receiving RA may
become occupied by low-income tenants other than very low-income
tenants.
2. The borrower may rent units and provide RA to other than very
low-income applicants/tenants in excess of the percentage in paragraph
XI C 1 a and b above, respectively, when no more very low-income
applicants/tenants are in the market area. The borrower must have in
its file and available to FmHA or its representative documentation that
shows the efforts made, and the facts used to determine that there are
no more very low-income applicants in the market value.
D. Assigning Rental Assistance Other Than the First of the Month. 1.
When a tenant receiving RA vacates before the end of the month, the RA
unit should be immediately reassigned to another tenant or an applicant
using the priorities given in paragraph XI B of this Exhibit.
2. When RA is assigned to an applicant and the applicant initially
enters the project on a day other than the first of the month, the
applicant's tenant contribution for housing costs will be prorated for
the remaining portion of the month the same as if the tenant was
receiving RA. (Example: Basic rent of $200 and the tenants monthly
contribution with RA would be $120, the prorata amount for 1/2 month
would be $60.)
3. When RA is assigned to a tenant other than the first of the month,
no adjustment to their tenant contribution on Form FmHA 1944-29 for that
month will be made. The tenant will begin to receive the benefits of RA
as of the first day of the next month.
4. No adjustment will be made on Form FmHA 1944-29 to request
additional RA payment or to refund any excess RA payment or overage when
RA is reassigned other than the first of the month.
When the tenant has correctly reported income and household size, but
RA was assigned to a household in error, that tenant's RA benefit should
be cancelled and reassigned. Incidents involving incorrect reporting
are addressed in 7 CFR part 1951 subpart N (FmHA Instruction 1951-N,
available in any FmHA Office.)
A. Before the borrower notifies the tenant, the borrower or
management agent shall review the case with the District Director. If
the District Director verifies that an error has been made based on
information available at the time the unit was assigned, the tenant will
be given 30 days written notice that the unit was assigned in error and
that the RA benefit will be cancelled effective on the next monthly
rental payment due date after the end of the 30 day notice period. The
tenant will also be notified in writing that:
1. The tenant has the right to cancel the lease based on the error
made by the borrower and the loss of benefit to the tenant.
2. The RA granted in error will not be recaptured from the tenant.
3. The tenant may meet with management to discuss the cancellation
and the facts on which the decision was based. If the facts are
accurate and the tenant cannot produce further evidence proving
eligibility for RA, there will be no appeal from the decision. If the
tenant feels there is justification for further review the borrower must
give the tenant appeal rights under Subpart L of part 1944 of this
chapter.
B. Reassigning rental assistance. 1. The RA unit will be reassigned
to the household which was erroneously denied the RA unit. The
assignment will be based on the Form FmHA 1944-29 from which the
original priority was established, when the unit was erroneously
assigned. The RA will not be retroactive unless the reassignment was
based on an appeal by the tenant. Retroactive RA may not exceed the
project's remaining RA obligation balance.
2. If the originally denied household now has RA, or is no longer a
resident, the RA will be assigned based on a current Form FmHA 1944-29
and the priorities in paragraph XI of this Exhibit.
When a RA check must be cancelled, the following procedure will be
followed:
A. Return of the original rental assistance Treasury Check: The
District Office will prepare Form FmHA 1944-53, as specified in the FMI
and mail it to the MFH unit in the Finance Office.
B. Return of all or a portion of the monthly rental assistance
payment or refund of rental assistance previously advanced: A check
from the borrower made payable to Farmers Home Administration (FmHA)
will be submitted to the MFH Unit in the Finance Office on Form FmHA
1944-53, completed according to the FMI.
A. When a project's obligated funds are fully disbursed under any
given RA agreement number, RA will be automatically terminated by the
Finance Office and no further RA requests will process against that RA
agreement number. The District Office will notate Form FmHA 1944-27
according to the FMI to indicate that a termination has occurred. The
District Director will notify the borrower in writing that the
obligation under the RA agreement number has expired and the RA
agreement number must be stricken from the agreement.
l. For all RA obligations before FY 1985. RA is considered fully
disbursed by the Finance Office when all RA funds obligated before FY
1985 are disbursed.
2. For all RA obligations after FY 1984. RA is considered fully
disbursed by the Finance Office when all RA funds obligated in a
particular FY are disbursed. This includes RA transferred from a
different MFH project.
3. When an RA agreement (Form FmHA 1944-27) consists of several
different obligations (Form FmHA 1944-51, Part III, or Form FmHA
1944-55) identified by different RA agreement numbers, and the
obligations will not be fully disbursed at the same time, only those RA
agreement numbers with fully disbursed obligation will be terminated.
B. Prior to Full Disbursement of Obligated Funds:
1. Prior Fiscal Year Obligations. Prior fiscal year (FY) obligations
will not be terminated. They will be suspended by the State Director
using procedures in paragraph XV of this Exhibit.
2. Current Fiscal Year Obligations. The State Director is authorized
to terminate RA agreements prior to the disbursement of obligated funds
if the funds were obligated during the current FY. The undisbursed
funds for the RA obligation will be returned to the current FY
obligation authority.
A. RA may be suspended or transferred according to the requirements
for each situation described in paragraph XV B of this Exhibit and the
following:
1. Suspension. a. The State Director may approve a suspension of a
project's RA agreement and obligation as a result of the servicing
actions described in paragraph XV B 2, 3, and 4 of this Exhibit. The
State Director will maintain. records and control of the suspended RA.
b. The District Director will notify the borrower in writing.
c. With a suspend code on the project record, entered by the State
Director through the AMAS M5A screen, the Finance Office will suspend
all RA payments to the affected project.
d. The State Director may reinstate the RA to the same borrower in
the same project, by removing the suspend code from the M5A screen
through a field office terminal.
2. Transfer. a. Only the State Director may approve a RA transfer.
b. RA may be transferred to any borrower with an RA eligible project
according to the priorities established by this Exhibit or the National
Office.
c. The amount of RA which may be transferred must be:
(1) A specific unit and dollar amount. The dollar value of each RA
unit to be transferred will be determined by dividing the transferring
project's total remaining RA obligation(s) balance in the transferring
RA agreement by the total number of obligated RA units in the RA
agreement.
(2) A unit and dollar value equal to or less than those shown on the
current RA agreement for the transferring project for example, a portion
of an RA agreement unit and remaining obligation dollar value may be
transferred.
d. RA units identified by different RA agreement numbers must be
transferred with separate RA agreement numbers on Form FmHA 1944-55.
e. When the State Director approves an RA transfer, Form FmHA 1944-55
completed according to the FMI, will be used to notify the Finance
Office except as noted in paragraph XV B l of this Exhibit.
f. Form FmHA 1944-27, with Form FmHA 1944-55, attached will be
completed according to the FMI for each transferee. The transferors RA
agreement will be modified by attaching a copy of Form FmHA 1944-55
according to the FMI to indicate that a portion of the agreement has
been transferred. When all the RA units on a RA agreement have been
transferred, the transferor's present agreement will be so documented.
B. RA may be suspended and/or transferred in the following situations
according to the following directions:
1. RA transfer accompanying a loan transfer. When a loan is
transferred to an eligible borrower, the transferee may assume the
transferor's RA agreement. The RA will be transferred using Form FmHA
1944-55 which will be forwarded to the Finance Office with Form FmHA
1965-9, ''Multiple Family Housing Assumption Agreement'' as required in
1965.65 (c)(11) of Subpart B of Part 1965 of this chapter.
2. Suspension and transfer after a voluntary conveyance. When a
project with RA is voluntarily conveyed to the Government, the RA will
be suspended rather than cancelled. When Form FmHA 1965-19, ''Multiple
Family Housing Advice of Mortgaged Real Estate Acquired,'' is sent to
the Finance Office. Form FmHA 1944-55 must be attached indicating the
Code 4 status of the suspended RA units according to the FMI. If the
project is sold through a credit sale within the program, the suspended
RA may be transferred to the project's new borrower, or a different
project if it is not needed.
3. Suspension and transfer after a liquidation or prepayment. a.
When a project with RA is liquidated through sale outside of the program
or the loan is paid in full, the RA will be suspended and, subsequently,
transferred to a different FmHA financed project in accordance with
paragraph b below, if applicable, or if not, to another project at the
State Director's discretion.
b. When a tenant receiving RA is, or will be, displaced from an FmHA
project due to prepayment or liquidation, the RA the tenant was
receiving will be transferred, or suspended and transferred, to any
other FmHA project, regardless of location, to which the displaced
tenant moves. That tenant will be given first priority for a unit of
RA, regardless of other priorities for the RA, if all the following
conditions are met:
(1) The borrower is eligible to receive and administer RA.
(2) The tenant is eligible to occupy the project and to receive RA.
(3) The tenant had taken all the following steps to insure
eligibility to receive priority for the unit of RA:
(i) Had been placed on at least one waiting list for an FmHA project
with a Letter of Priority Entitlement.
(ii) Moved to the project as soon as the name was reached on a
waiting list, even if it meant temporarily occupying an ineligible unit.
The ineligible unit may not differ from one for which the tenant is
eligible by more than one bedroom.
(iii) Moved to an eligible unit as soon as one was available.
(4) The RA has not previously been transferred for the tenant's
current displacement.
c. Procedures for transferring RA and modifying RA agreements
outlined in paragraphs V C and XV A 2 of this exhibit will be followed,
but the receiving project borrower need not submit Form FmHA 1944-25 if
the RA was received as a result of the occupancy of a displaced tenant.
4. Suspension and transfer or reinstatement due to a servicing
action. a. When servicing a project's account according to 1965.85 of
subpart B of part 1965 of this chapter and the account is accelerated,
the RA will be suspended and either:
(1) Transferred with the project to a new borrower when all appeals
and redemption periods of the defaulting borrower have expired and a
credit sale is to be completed, or
(2) Transferred to a different project if the defaulting project is
subsequently sold outside the program, or
(3) Reinstated to the same project when the defaults are corrected
and the State Director reinstates the borrower's account.
b. The borrower will be apprised of the appeal rights available under
Subpart B of Part 1900 of this chapter upon notification of the pending
suspension. The suspension will not be effective until these appeal
rights have been exhausted.
5. Transfer of unused RA. When RA is unused after initial rent-up
and not needed because of a lack of eligible potential tenants in the
area, all or a portion of it may be transferred when the State Director
determines that the following conditions have been met:
a. The borrower demonstrates that: (1) The original market survey
completed according to Exhibit A-7 of subpart E of part 1944 of this
chapter clearly indicates no significant need for rental housing by
households in the market area that would require RA for occupancy, and
that there are no eligible tenants in the project not receiving RA or
there are no eligible applicants on the waiting list who could use RA
when obtaining occupancy. The State Director may require a new market
survey for the project to make this determination if the original market
survey does not adequately address potential very low-income tenants in
the area, or does not reflect current market conditions.
(2) When the market survey indicates that there is a significant need
for rental housing by households in the market srea that would have
required RA for occupancy, but all or a substantial portion of the RA
units available remain unused after a two-year period since initial
availability, the borrower must demonstrate that:
(i) A good faith effort was made to market the project to RA eligible
applicants;
(ii) The waiting list does not contain RA eligible applicants and the
project is not occupied by RA eligible tenants who do not receive RA;
and
(iii) Project management has not used a policy of discouraging RA
eligible households from applying for or obtaining tenancy in the
project.
(3) Rent increases anticipated for the following two years will not
prompt a request for RA according to the provision of Exhibit C of this
subpart.
b. The District Director recommends the RA transfer after reviewing
documentation submitted by the borrower and finding that the applicable
conditions of paragraph XV B 5 of this Exhibit have been met.
c. If, after the end of the initial year of a Rental Assistance
Agreement, the borrower has not used a portion of the RA units for any
ensuing consecutive 12-month period, the State Director may transfer the
number of unused units, minus at least one to another project. This
would apply only if the current agreement is on Form FmHA 1944-27 and
when:
(1) The borrower has made the efforts described in paragraphs 5a (2)
(i), (ii) and (iii) to market the project to tenants needing RA.
(2) The District Director has reviewed the project occupancy list,
waiting list, and any other data available and verified that there is no
apparent RA needed in the project.
(3) The State Director has notified the borrower at least 30 days in
advance of FmHA's intent to transfer the RA units and has given the
borrower appropriate appeal rights in accordance with Subpart B of Part
1900 of this chapter.
(4) If the borrower appeals this decision, the appeal is resolved in
accordance with subpart B of part 1900 of this chapter, before any
transfer action is taken.
(5) The transfer will be completed in accordance with paragraph XV A
2 of this Exhibit.
6. Transfer due to an uncloseable loan. When RA will be unused
because the loan to which it was obligated will not be closed, or the RA
agreement is not signed, the RA obligation may not be transferred except
as provided under the conditions of 1944.235 (b) of this chapter.
However, if this situation occurs during the same FY of obligation, the
obligation should be cancelled and reobligated immediately using current
authorities. Obligations from prior fiscal year must be cancelled and
will be lost unless the conditions of 1944.235 (b) of Subpart E of Part
1944 of this chapter exist.
A. Borrowers who have requested RA in writing and are denied such
assistance (whether in whole or in part) by FmHA, or when RA is
cancelled, will be notified in writing of the specific reasons why they
have been denied RA as specified in subpart B of part 1900 of this
chapter.
B. If at any time a borrower or a household is granted RA under an
appeal, the borrower or household will receive the next available RA
unit.
C. Borrower denial of RA to tenants will be handled according to
subpart L of part 1944 of this chapter.
Exhibit A-6 to subpart E of part 1944 of this chapter and Form FmHA
1944-7 are to be used in determining the amount of RA to be provided.
(51 FR 27664, Aug. 1, 1986, as amended at 52 FR 20698, June 3, 1987;
52 FR 24287, June 30, 1987; 53 FR 2156, Jan. 26, 1988; 54 FR 3772,
Jan. 26, 1989; 54 FR 9197, Mar. 6, 1989; 55 FR 25075, June 20, 1990;
56 FR 2229, Jan. 22, 1991; 56 FR 66960, Dec. 27, 1991)
Effective Date Note: At 56 FR 66960, Dec. 27, 1991, Exhibit B to
subpart C of part 1930 was amended in paragraph II.F. in the first
sentence by adding the words ''and occupancy surcharge'' between the
words ''allowance'' and ''when'', effective January 27, 1992.
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. F
07 CFR 1930.150 -- Exhibit F -- Visit Checklist for Multiple Family
Housing Projects
A. TENANT OR MEMBER AND APPLICATION RECORDS: (refer to FmHA
Instruction 1930-C)
1. Tenant or Member records:
Comments:
2. Rental Assistance (RA) Assignment:
Comments:
3. Rental Assistance (RA) Assignment:
Comments:
4. Tenant or Member Selection:
Comments:
5. Tenant or Member Grievance and Appeals Procedure:
Comments:
B. PHYSICIAL INSPECTION
1. Tenant or Member Information:
Comments:
2. Posters and Signs Etc.
Comments:
3. Project Maintenance.
Comments:
C. BORROWER RECORDS
1. Management.
Comments:
2. Bookkeeping System:
Comments:
(56 FR 2230, Jan. 22, 1991)
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. G
07 CFR 1930.150 -- Exhibit G -- Supervisory Visit Report Form --
Multiple Family Housing Projects
Date:
Profit ( ) Limited Profit ( ) Nonprofit ( ) Cooperative ( )
Individual ( )
Partnership ( ) Corporation ( ) Other
( ) Owner/manager ( ) Resident Manager
( ) Management Firm ( ) Plan I ( ) Plan I S8
( ) Plan II ( ) Plan II RA ( ) RA ( )
1. Account status: Current ( )
Delinquent ( ). If delinquent, amount and reason XXXXXXXX
3. Real Estate Taxes: Current ( ) Delinquent ( ) Amount XXXXXX
5. Subsidy:
RA ( ) No. of Units ( )
Section 8 ( ) No. of Units ( )
Number of additional units needed ( )
6. Rents or Occupancy Charge and Units:
7. Development status: Completed ( ) Partial ( ) Rehab ( ) Describe
XXXXXXXX
8. Visits and Reviews:
Date last site inspectionXXXXX
Date last compliance review XXXXX
9. Affirmative Fair Housing Marketing Plan
Date approved XXXX Yes XX No XX
10. Tenant or Member and Application Records:
Date Lease or Occupancy Agreement Approved XXXXX
Comments/problems -- tenant or member records, waiting list, RA
priority list, tenant or member selection and tenant or member grievance
and appeal procedures, etc.
11. Tenant or Member Information and Physical Inspection:
Comment/Problem -- posters, energy conservation, maintenance, etc.
12. Borrower Records:
Comments/Problems -- management, accounts, financial management,
reports, rent or occupancy charge increase, etc.
13. Servicing Actions:
What actions in progress (transfers, reamortization, rent or
occupancy charge increase, RA request, subsequent loans, etc.
XXXXXXXXXX
Have there been Finance Office or District Office errors in applying
payments, etc? XXXXX
Are they being corrected and how? XXXXXXXXXX
Has borrower corrected previous problems when requested to by FmHA?
XXXXX
14. What are the problems that need to be corrected and what specific
follow-up action will be planned? (Show planned follow-up and scheduled
dates) Continue on another sheet, if necessary.
(56 FR 2231, Jan. 22, 1991)
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. H
07 CFR 1930.150 -- Exhibit H -- Interest Credits on Insured RRH and RCH
Loans
I. Purpose: This Exhibit outlines the policies and conditions under
which interest credits will be made on insured rural rental housing
(RRH) and rural cooperative housing (RCH) loans.
II. Definitions: As used in this Exhibit:
A. Interest Credit is the amount of assistance the Farmers Home
Administration (FmHA) may give a borrower toward making its payments on
an insured RRH or RCH loan.
B. Interest Credit and Rental Assistance Agreement is an agreement
between FmHA and the borrower providing for interest credits and/or
rental assistance for RRH or RCH loans. This agreement will be on Form
FmHA 1944-7, ''Multiple Family Housing Interest Credit and Rental
Assistance Agreement.''
C. Project is the total number of rental or cooperative housing units
that are operated under one management plan with one loan
agreement/resolution.
D. Basic Rent is determined on the basis of operating the project
with payments of principal and interest on a loan to be repaid over a
30-year period at 1 percent per annum. Basic rent also means basic
occupancy charge.
E. Market Rental is a unit rental charge determined on the basis of
operating the project with the payments of principal and interest which
the borrower is obligated to pay under the terms of the promissory note.
Market rental also means market occupancy charge in an RCH project.
F. Overage is the amount by which total rental or occupancy charge
payments paid or to be paid by the tenants or members of a project
exceed the total basic monthly charge.
G. Surcharge is 25 percent of the established rent in a Plan I
project which is added to the rent of an ineligible tenant or member.
III. Eligibility: Borrowers may receive interest credits provided
the loan (1) was made on or after August 1, 1968, to a nonprofit
corporation, consumer cooperative, State or local public agency, or to
any individual or organization operating on a limited profit basis; (2)
is repaid over a period of 30 years or more; and (3) meets the other
requirements of this exhibit subject to the following limitations:
A. Plan I will be only to broadly based nonprofit corporations and
consumer cooperatives. Except for subsequent loans to projects approved
before August 1, 1968, Plan I interest credit will no longer be
available for new loans after October 27, 1980. All borrowers operating
on Plan I as of October 27, 1980, may continue operating under it
according to the applicable requirements of this exhibit and of this
subpart.
B. Plan II will be available to broadly-based nonprofit corporations,
cooperatives, State or local public agencies, or to profit organizations
and individuals operating on a limited profit basis.
IV. Options of Borrowers: An eligible borrower operating under Plan
I or Plan II, as described below, will determine interest credits on its
loan in the respective manner indicated:
A. Plan I.
1. Borrowers operating under this plan must agree to limit occupancy
of the housing to very low- or low-income nonelderly and very low-, low-
and moderate-income elderly, disabled or handicapped persons.
2. A borrower under Plan I generally must:
a. Determine that there is a firm market and continuing demand for
rental housing by persons within the applicable income limits.
b. Prepare a budget on the basis of a 3 percent loan.
c. Determine rentals to be charged.
B. Plan II.
1. Borrowers operating under this plan must agree to limit occupancy
of the housing to households, including elderly, disabled and
handicapped persons of very low, low and moderate incomes. Under Plan
II, interest credits are based on the cost of operating the project and
the size and income of the household.
2. A borrower under Plan II generally must:
a. Prepare two budgets, one on the basis of a 1 percent interest rate
loan to determine basic rental, and a second budget on the basis of a
loan at the interest rate shown in the promissory note to determine
market rental.
b. Determine both basic rental and market rental for the different
units based on the two budgets. (See Exhibit H-1.)
c. Determine adjusted personal income of each tenant or member and
have each tenant or member complete Form FmHA 1944-8, ''Tenant
Certification.'' Determine the monthly rent or occupancy charge to be
paid by each tenant or member household.
d. Determine the required monthly payment on the loan at 1 percent
interest plus overage for the month for the total units developed with
any one loan. The amount of payment will be computed separately for
each loan using Form FmHA 1944-29, ''Project Worksheet for Interest
Credit and Rental Assistance.''
A. For Plan I. The amount of payment will be determined by using the
amortization factor for a payment at a 3 percent interest rate (use the
same number of years that was used for computing the regular installment
on the note) plus all surcharges.
B. For Plan II. The amount of payment will be determined by using
the amortization factor for a payment at a 1 percent interest rate (use
the same number of years that was used for computing the regular
installment on the note) plus all overage.
A. Leases or Occupancy Agreements. Borrowers participating in the
interest credit program must have an FmHA approved lease or occupancy
agreement with the assisted household. Leases and occupancy agreements
must comply with the requirements of paragraph VIII of Exhibit B to this
subpart.
B. Rental Surcharges to Ineligible Tenants. If a unit is rented in
accordance with the provisions of paragraph VI A of this exhibit to a
tenant who is ineligible because the income exceeds the maximum income
limits, the ineligible tenant will:
1. Under Plan I, be charged a 25 percent rental surcharge. To
illustrate, if the unit normally rents for $60 per month, this
ineligible tenant would pay $75 per month. The 25 percent surcharge, or
$15 in this illustration, would be paid on the account and would be
included with, but in addition to, the regular payment on the loan.
2. Under Plan II, be charged the market rental.
C. Vacancies. When all construction is not completed but some units
are ready for occupancy and the contractor consents in writing to permit
occupancy, the State Director may authorize the occupancy of those
completed units to eligible tenants or members at the rent or occupancy
charge they would be paying should the FmHA loan be closed. A
prerent-up or preoccupancy conference is required. All income generated
must be deposited in the General Operating Account and used for
management and operation of the units except for members' patronage
capital contributions.
D. Interest Credit for Projects Under the Department of Housing and
Urban Development (HUD) Housing Assistance Payment Program or FmHA
Rental Assistance. When rental units in an RRH project are leased under
the Section 8 program, Form HUD 50059, ''Certification and
Recertification of Tenant Eligibility,'' will be completed for new
construction. Borrowers with projects authorized to utilize rental
assistance will complete Form FmHA 1944-7 in accordance with Exhibit E
to Subpart C of Part 1930.
E. Special Cases. Situations not covered by this Exhibit or Exhibit
E to this subpart, will be handled on an individual basis with
instructions from the National Office.
F. Understanding Eligibility. The borrower should understand the
eligibility requirements for occupancy of the housing. Instructions for
tenant and member eligibility are in paragraph VI B of Exhibit B to this
Subpart.
A. Interest Credit and Rental Assistance Agreement.
1. Multiple Advance Loans. Interest credit may become effective the
first day of the month following substantial completion of construction
when the project is ready for full operation, which is the AED. When
the District Director determines that the project is ready for full
operation, the borrower and the District Director should execute Form
FmHA 1944-7. A separate Form FmHA 1944-7 will be executed for each loan
on the project.
2. Interim Financing and Servicing. Effective dates for interim
financed loans and servicing action will be according to the FMI for
Form FmHA 1944-7.
B. Change in Interest Credit Plan. A borrower under Plan I may
change, if it can meet the requirements of the other plan, by executing
a new Interest Credit and Rental Assistance Agreement.
C. Borrowers Who Are Not Receiving Interest Credit. If an eligible
borrower did not execute a Form FmHA 1944-7 according to paragraph VII A
of this Exhibit, interest credit may be instituted at any time during
the life of the loan provided the borrower agrees to the requirements of
Form FmHA 1944-7 and this Exhibit. When Form FmHA 1944-7 is executed,
it will be effective for the next monthly payment due.
Tenant or member certification and recertification for interest
credit borrowers will be performed in accordance with paragraph VII of
Exhibit B to this subpart.
With each payment made, the borrower will complete Form FmHA 1944-29.
The FmHA representative will process the payment as required in
subparts B and K of part 1951 of this chapter.
A. Plan I.
1. The borrower will make monthly payments in an amount necessary to
repay the loan as if the loan carried a 3 percent interest rate. When a
rental surcharge is collected as described in paragraph VI B of this
exhibit, the surcharge will be included and will be credited as interest
to the account as a regular payment. The special handling of payments
involving rental surcharges is explained in paragraph IX A 2 of this
exhibit.
2. When a payment is made for any month that involves a rental
surcharge, Form FmHA 1944-29 will be completed with the amount of the
surcharge being inserted in the spaces provided. This form will be
completed and the amount reported as a charge on the project account
regardless of whether the surcharge is actually collected by the
borrower.
B. Plan II. The borrower will make monthly payments as though the
note was written at a 1 percent interest note plus any overage due and
payable whether or not collected from the tenant or member.
Any unusual case that cannot be serviced in accordance with this
Exhibit should be submitted to the National Office with the State
Director's recommendations.
(53 FR 2157, Jan. 26, 1988, as amended at 56 FR 2232, Jan. 22, 1991;
56 FR 28038, June 19, 1991)
07 CFR 1930.150 -- Pt. 1930, Subpt. C, Exh. H-1
07 CFR 1930.150 -- Exhibit H-1 -- Example of Interest Credit
Determination for RRH or RCH Projects (Plan II)
(56 FR 2232, Jan. 22, 1991)
07 CFR 1930.150 -- -- Pt. 1930, Subpt. C, Exh. I
07 CFR 1930.150 -- -- Exhibit I -- RRH Loans and the HUD Section 8
Housing Assistance Payments Program (Existing Units)
This exhibit contains the policies and procedures that will be
followed by the Farmers Home Administration (FmHA) to permit the
utilization of existing Section 515 rural rental housing (RRH) units for
leasing under the Department of Housing and Urban Development (HUD)
Section 8 Housing Assistance Payments Program.
All FmHA RRH borrowers are authorized to utilize the procedure
outlined in this Exhibit and the HUD Section 8 Housing Assistance
Payments Program for existing housing as outlined in HUD's regulations
24 CFR Part 882 (as amended). To promote the use of the Section 8
Housing Assistance Payments Program with existing projects, the
following action should be taken:
A. District Directors should inform all RRH borrowers operating in
the area of their jurisidiction of the contents of this Exhibit.
B. The HUD Section 8 program could benefit any eligible tenant in an
RRH project who is paying more than 30 percent of its income for rent.
Therefore, RRH borrowers should advise tenants who are paying more than
30 percent of their adjusted income for housing of the possibility of
obtaining Section 8 housing assistance payments. Section 8 assistance
for existing housing is administered by local housing agencies
authorized by HUD to administer the program in the area. In areas where
no housing agency has been established to administer the program,
interested citizens and the local government may wish to establish such
an agency.
A. Under the Section 8 Housing Assistance Payments Program, HUD will
pay that portion of the tenant's rent including utility allowance in
excess of 30 percent of the household's income. The contract rent to be
established under the HUD Section 8 program will be as follows: (1) For
borrowers with a 3 percent direct RRH loan and borrowers operating in
accordance with interest credit Plan I, the contract rent will be the
market rental rate for the units as determined by the current approved
annual budget using a 3 percent amortization factor for principal and
interest payments; (2) for borrowers operating without interest credit,
the contract rent will be the market rental rate for the unit as
determined by the current approved annual budget using the amortization
factor for the note rate of interest for principal and interest
payments; (3) for borrowers operating in accordance with interest
credit Plan II, the contract rent will be the basic rental rate as
determined by the current approved annual budget using a 1 percent
interest amortization factor for principal and interest payments.
B. This method of calculation and transmittal of the scheduled
payment to the Finance Office will be in accordance with Exhibit H of
this subpart.
A. Household. A household must obtain a Certificate of Family
Participation to obtain Section 8 assistance. A household receiving
housing assistance under the Section 8 program will be responsible for
fulfilling all of its obligations under the Certificate of Family
Participation issued to it by the Public Housing Agency (PHA) and under
the lease with the owner.
B. Owner (FmHA Borrower). The owner, upon being presented a
Certificate of Family Participation, shall contact and enter into a
Housing Assistance Payments Contract with the PHA and a lease with the
tenant. Owners shall be responsbile (and subject to review or audit by
the PHA or HUD) for performing all of their obligations under the
contract and lease.
C. FmHA.
1. FmHA, in accordance with existing regulations, will be responsible
for normal loan servicing and supervision, including but not limited to:
a. Obtaining and reviewing all reports from the borrower in
accordance with Subpart G of Part 1802 of this chapter (FmHA Instruction
430.2).
b. Review and approval of budgets and rental rates.
c. Collection of required payments and review of the borrower's
establishment and maintenance of required accounts.
2. FmHA will not be responsible for the requirements and conditions
of the contract entered into between the PHA and the owner but will
cooperate with HUD and the PHA to the extent possible to assure that the
borrower carries out all obligations under the contract.
A. Eligibility.
1. The PHA will determine a household's eligibility before the
Certificate of Family Participation is issued. To be eligible for
Section 8 assistance, the household's income as determined by HUD may
not exceed 80 percent of the median income for the area. The
household's eligibility for housing assistance payments under the
Section 8 program will continue until the amount payable by the
household equals or is greater than the gross rental rate. However,
when 30 percent of the household's income equals or is greater than the
gross rental rate charged for the unit, the household may still be able
to occupy a rental unit under FmHA interest credit program if 30 percent
of the family's income is greater than the lowest established rental
rate for the unit.
2. Form FmHA 1944-8, ''Tenant Certification,'' will not be required
for tenants who have obtained a Certificate of Household Participation
from the PHA. A copy of the Certificate of Household Participation
will, however, be provided to the FmHA District Director.
3. The tenant's adjusted household income must not exceed the maximum
income limitations as authorized by FmHA for the project.
B. Security deposits. According to HUD regulations, the owner may
require a household to pay a security deposit. The maximum amount will
be the greater of the amount of rent payable by the household towards
one month's total tenant payment or $50. Under HUD regulations, if a
household vacates a unit and the security deposit is insufficient, the
owner may claim reimbursement from the PHA in an amount not to exceed
one month's contract rent.
C. Payment for vacated units. According to HUD regulations, if a
household vacates the unit in violation of the provisions of the lease,
the owner may receive the full housing assistance payments for the month
in which the family vacates and then in the amount of 80 percent of the
contract rent for a vacancy period not exceeding an additional month or
the expiration or other termination of the lease, whichever comes first.
D. Limitation of owner's participation in the program. HUD's
regulations provide that assistance under Section 8 will not exceed 40
percent of the total number of units in the project; however, this
limitation may be exceeded for the purpose of relieving hardship of a
particular household or households with the approval of the HUD field
office.
E. Special problems. Any problems on utilizing the HUD Section 8
program for existing RRH projects not covered by this Exhibit should be
referred to the National Office by the State Director.
(53 FR 2156, Jan. 26, 1988)
07 CFR 1930.150 -- -- Pt. 1930, Subpt. C, Exh. J
07 CFR 1930.150 -- -- Exhibit J of Subpart C -- Management of
Congregate Housing and Group Homes
This exhibit prescribes additional requirements for the management of
congregate housing and group homes. It applies in addition to other
requirements in this subpart.
Congregate housing. Residential housing consisting of private
apartments and central dining facilities in which services are provided
to tenants to enable them to remain independent. Tenants must not
require the supervision or additional services provided by an
intermediate health care facility.
Group home. Housing that is occupied by elderly, handicapped or
disabled tenants sharing living space within a rental unit in which a
resident assistant may be required. A group home is generally designed
as a single household dwelling but can also be a multi-unit structure.
Service agreement. A written agreement between the borrower and the
congregate or group home service provider detailing the specific service
to be provided, the cost of the service and the length of time the
service will be provided.
Service plan. A written plan describing how services will be
provided to congregate housing or group home projects. At a minimum,
the plan must specify the services to be provided, the frequency of the
services, who will provide the services, how tenants will be advised of
the availability of services, and the staff needed to provide the
services.
Congregate housing and group homes are subject to the provisions of
paragraph IV of exhibit B of this subpart. Subsidy discussed in that
paragraph cannot be used to pay for services in congregate housing or
group homes.
Borrowers must comply with paragraph V of exhibit B of this subpart
in managing congregate housing and group homes. In addition, borrowers
must submit a service plan that explains services will be provided.
A. Borrowers experience. Borrowers and management agents must
outline their experience and plans for providing congregate and group
home services when completing the management questionnaire in either
exhibit B-4 or B-5 of this subpart. Borrowers who are not experienced
with congregate housing/group homes must obtain assistance from
organizations or individuals experienced with congregate issues in
developing management and servicing plans. The service provider's
experience and ability to furnish the services must be documented.
B. Service plans. Congregate housing/group home borrowers must
submit a service plan as defined in paragraph II of this exhibit. See
exhibit E of subpart E of part 1944 for guidance on the issues that
should be included in the plan. The service plan will be an addendum to
the management plan when appropriate, or subject to the signature and
authorization requirements of the management plan when the service
provider is not the borrower or management agent.
C. Service agreements. Borrowers must submit a service agreement for
each service they do not provide directly. The agreement must stipulate
the specific service to be provided, the cost of the service and the
length of time the service will be provided. The service agreement will
be an addendum to the management agreement when appropriate, or subject
to the signature and authorization requirements of the management
agreement when the service provider is not the borrower or management
agent. Initial service agreements must be effective for at least 1 year
after the project becomes operational. Subsequent agreements must be
effective for at least one year.
In addition to meeting the conditions of paragraph VI of exhibit B of
this subpart, borrowers must meet the following conditions.
A. Eligible tenants. 1. Tenants must meet the general provisions of
paragraph VI B of exhibit B of this subpart and be eligible to occupy
elderly housing as defined in paragraph VI B 1 i of exhibit B of this
subpart. Borrowers must be careful to ensure that all tenants,
especially those who need the services to remain independent, can live
independently in the project with the scope of services offered.
2. Tenants who need the services to remain independent may have a
physical limitation that would make them ineligible tenants in a typical
elderly RRH project. Tenants who need services to remain independent
may meet the tenant eligibility requirements contained in paragraph VI B
1 i of exhibit B of this subpart by taking the services provided by the
project.
B. Tenant selection. Borrowers must meet the provisions of paragraph
VI F of exhibit B of this subpart. In congregate housing and group
homes, a further critical dimension is added for the selection and
placement of tenants. This involves determining the ability of a tenant
to sustain independence with the support services provided. Borrowers
should be further guided by the following in selecting tenants for
congregate housing and group homes:
1. Congregate housing -- a. Tenant mix. Most tenants living in
congregate housing will be people who can live independently and will be
able to extend their independence by using services available from the
project.
Some tenants may need services to enable them to remain independent.
Borrowers must establish a written plan for ensuring an appropriate mix
of tenants. If feasible, project management should be consulted when
establishing the tenant mix. The plan should establish a maximum
percentage of tenants who need services to remain independent. As
existing tenants age, the percentage may increase. FmHA must concur
with the proposed plan.
b. Determining ability to be independent. (1) An evaluation of the
ability of tenants to sustain independence with the support services
provided by the project must be made. This evaluation must be made by a
qualified professional assessment committee, which includes project
management, a professional medical member, and others deemed appropriate
by project management (i.e., social service caseworkers, representatives
of elderly advocacy groups, clergymen, etc.). The assessments should be
presented to project management for concurrence. A tenant's likelihood
of sustaining independence as a result of living in congregate housing
should be verified by one of the following methods:
(i) Certification by a physician or an agency responsible for support
services as to a person's ability to remain independent with assistance
from services.
(ii) By the use of any objective guide, such as exhibits J-1 and J-2
of this subpart.
(2) When a determination is made concerning a tenant's need for
services, he/she will be notified and placed on an appropriate waiting
list and the tenant file and/or lease will be documented accordingly.
c. Waiting lists. To sustain a balanced mix of tenants, management
may maintain a separate waiting list for fully independent tenants and
tenants who need services to remain independent. Management may choose
tenants in order to assure a balanced project in accordance with
paragraph V B 1(a) of this exhibit. Selection of new tenants should be
based on the predetermined tenant mix ratio. If necessary to maintain a
balanced project, fully independent tenants may be chosen over tenants
who need services or vice versa. The other provisions contained in
paragraph VI F of exhibit B of this subpart concerning waiting lists are
applicable.
2. Group home. A group home may limit occupancy to a specific group
of tenants. For example, a group home may limit occupancy to eligible
elderly tenants, developmentally disabled, or mentally impaired tenants.
This limitation will be outlined in the borrower's management plan.
The following will apply to group homes:
a. Tenants of group homes cannot be required to be a part of an
ongoing training or rehabilitation program sponsored by the applicant or
other organization.
b. Tenants should be selected from the local area before considering
other areas.
c. Determining per unit rental rates for group living arrangements.
A ''unit'' in a group home consists of the space occupied by a specific
tenant household. It may be a traditional apartment unit, a bedroom or
a portion of a bedroom. Rents are determined as follows:
1. When all units are of equal size, divide operational costs
equally.
2. When all units are not of equal size, determine the size of each
unit and divide operational costs accordingly.
a. The size of traditional units is their square footage.
b. The size of nontraditional units is the bedroom or portion of
bedroom occupied by the household and portion of the common area to be
used by all potential units in nontraditional units.
3. A unit occupied by a resident assistant is not considered a
revenue producing unit and would be excluded from the rent
determination.
The provisions of paragraph VII of exhibit B of this subpart apply.
In addition to recertifying income, management must reassess the ability
of each tenant to remain independent with the services provided by the
project. Informal reassessment should be an ongoing process; however,
a formal reassessment that uses the same criteria as the initial
assessment must be done when a recertification of tenant income is
prepared.
In addition to the conditions contained in paragraph VIII of exhibit
B of this subpart, the following should be addressed:
A. Tenants who need services to remain independent. If a tenant
needs services to remain independent, the lease must contain the
following clause:
''I agree that I need the following services in order for me to live
independently in this congregate housing/group home project. (List
necessary services.) I understand that I must pay a monthly charge of
$XX for the services and that this payment will be in addition to my
monthly rent payment.''
B. Inability to remain independent. The following clause should be
included in all leases for all congregate housing/group home tenants:
''I understand that management will periodically reassess my ability
to live independently, applying the same criteria that was used to
determine my initial eligibility for residency. If management
determines that I can no longer live independently without services, I
understand that choosing not to use them could render me an ineligible
tenant in the project. If management determines that I have become
physically or mentally unable to live independently in the project even
with the services provided, I will voluntarily move from this congregate
housing/group home project.''
c. Services provided to other than tenants of FmHA financed
congregate housing. If the meal facility serves others than the tenants
of the project, the applicant must obtain a lease from the services
provider and require payment sufficient to cover the annual operating
expenses, debt services and reserve account attributable to the portion
of increased space that is in excess of the needs of the tenants in the
project. Tenants of the congregate housing must have priority in
receiving the services. When the facilities are provided with loan
funds, the following condition must be met:
1. The services to be provided and the fees to be charged (if any)
must be fully documented in the service plan, if provided by the
applicant, or in the service plan and lease agreement if the services
will be provided by others. Any lease agreement must be approved by the
State Director or the loan approving official and contain the following
statement:
''This agreement will not be effective until approved by the State
Director of the Farmers Home Administration, U.S. Department of
Agriculture, or the State Director's delegated representative.''
The provisions of paragraph IX of exhibit B of this subpart will
apply for the services as well as rent. Tenants must pay charges for
the services as documented in their lease. The payment for rent or
services may be made separately or combined; however, payments for rent
and services must be accounted for separately.
Borrowers must separate the revenue and expenses of project
operations from the service component. Forms FmHA 1930-6, ''Monthly
Report,'' 1930-7, ''Statement of Budget and Cash Flow,'' and 1930-8,
''Year End Report and Analysis for Fiscal Year Ending XX,'' must reflect
project operations only.
Borrowers must maintain separate financial records for the operation
and maintenance of the project and the service component. Funds
allocated to the operation and maintenance of the project cannot be used
to supplement the cost of services. Detailed financial reports on the
service component will not be required unless specifically requested by
FmHA, but the project audit or verification of accounts must allocate
revenue and expense between project operations and the service
component.
To ensure that congregate housing remains residential and
noninstitutional in nature, borrowers must explain clearly to applicants
that:
A. When tenants can no longer remain independent without using the
services, they may meet the tenant eligibility requirements contained in
paragraph VI B 1 i of exhibit B of this subpart by taking the services
provided by the project.
B. As a condition of occupancy, tenants must agree to vacate the
project when they can no longer remain independent even though they are
assisted with services.
(55 FR 26641, June 29, 1990)
07 CFR 1930.150 -- -- PARTS 1931 -- 1939 (RESERVED)
07 CFR 1930.150 -- -- FINDING AIDS
A list of CFR titles, subtitles, chapters, subchapters and parts and
an alphabetical list of agencies publishing in the CFR are included in
the CFR Index and Finding Aids volume to the Code of Federal Regulations
which is published separately and revised annually.
Table of CFR Titles and Chapters
Alphabetical List of Agencies Appearing in the CFR
List of CFR Sections Affected
Chap.
07 CFR 1930.150 -- -- Table of CFR Titles and Chapters
07 CFR 1930.150 -- -- Title 1 -- General Provisions
I Administrative Committee of the Federal Register (Parts 1 -- 49)
II Office of the Federal Register (Parts 50 -- 299)
III Administrative Conference of the United States (Parts 300 -- 399)
IV Miscellaneous Agencies (Parts 400 -- 500)
07 CFR 1930.150 -- -- Title 2 -- (Reserved)
07 CFR 1930.150 -- -- Title 3 -- The President
I Executive Office of the President (Parts 100 -- 199)
07 CFR 1930.150 -- -- Title 4 -- Accounts
I General Accounting Office (Parts 1 -- 99)
II Federal Claims Collection Standards (General Accounting Office --
Department of Justice) (Parts 100 -- 299)
III General Accounting Office (CASB) (Parts 300 -- 499)
07 CFR 1930.150 -- -- Title 5 -- Administrative Personnel
I Office of Personnel Management (Parts 1 -- 1199)
II Merit Systems Protection Board (Parts 1200 -- 1299)
III Office of Management and Budget (Parts 1300 -- 1399)
IV Advisory Committee on Federal Pay (Parts 1400 -- 1499)
V The International Organizations Employees Loyalty Board (Parts 1500
-- 1599)
VI Federal Retirement Thrift Investment Board (Parts 1600 -- 1699)
VII Advisory Commission on Intergovernmental Relations (Parts 1700 --
1799)
VIII Office of Special Council (Parts 1800 -- 1899)
IX Appalachian Regional Commission (Parts 1900 -- 1999)
XI United States Soldiers' and Airmen's Home (Parts 2100 -- 2199)
XIV Federal Labor Relations Authority, General Counsel of the Federal
Labor Relations Authority and Federal Service Impasses Panel (Parts 2400
-- 2499)
XV Office of Administration, Executive Office of the President (Parts
2500 -- 2599)
XVI Office of Government Ethics (Parts 2600 -- 2699)
07 CFR 1930.150 -- -- Title 6 -- (Reserved)
07 CFR 1930.150 -- -- Title 7 -- Agriculture
Subtitle A -- Office of the Secretary of Agriculture (Parts 0 -- 26)
Subtitle B -- Regulations of the Department of Agriculture
I Agricultural Marketing Service (Standards, Inspections, Marketing
Practices), Department of Agriculture (Parts 27 -- 209)
II Food and Nutrition Service, Department of Agriculture (Parts 210
-- 299)
III Animal and Plant Health Inspection Service, Department of
Agriculture (Parts 300 -- 399)
IV Federal Crop Insurance Corporation, Department of Agriculture
(Parts 400 -- 499)
V Agricultural Research Service, Department of Agriculture (Parts 500
-- 599)
VI Soil Conservation Service, Department of Agriculture (Parts 600 --
699)
VII Agricultural Stabilization and Conservation Service (Agricultural
Adjustment), Department of Agriculture (Parts 700 -- 799)
VIII Federal Grain Inspection Service, Department of Agriculture
(Parts 800 -- 899)
IX Agricultural Marketing Service (Marketing Agreements and Orders;
Fruits, Vegetables, Nuts), Department of Agriculture (Parts 900 -- 999)
X Agricultural Marketing Service (Marketing Agreements and Orders;
Milk), Department of Agriculture (Parts 1000 -- 1199)
XI Agricultural Marketing Service (Marketing Agreements and Orders;
Miscellaneous Commodities), Department of Agriculture (Parts 1200 --
1299)
XIV Commodity Credit Corporation, Department of Agriculture (Parts
1400 -- 1499)
XV Foreign Agricultural Service, Department of Agriculture (Parts
1500 -- 1599)
XVI Rural Telephone Bank, Department of Agriculture (Parts 1600 --
1699)
XVII Rural Electrification Administration, Department of Agriculture
(Parts 1700 -- 1799)
XVIII Farmers Home Administration, Department of Agriculture (Parts
1800 -- 2099)
XXI Foreign Economic Development Service, Department of Agriculture
(Parts 2100 -- 2199)
XXII Office of International Cooperation and Development, Department
of Agriculture (Parts 2200 -- 2299)
XXV Office of the General Sales Manager, Department of Agriculture
(Parts 2500 -- 2599)
XXVI Office of Inspector General, Department of Agriculture (Parts
2600 -- 2699)
XXVII Office of Information Resources Management, Department of
Agriculture (Parts 2700 -- 2799)
XXVIII Office of Operations, Department of Agriculture (Parts 2800 --
2899)
XXIX Office of Energy, Department of Agriculture (Parts 2900 -- 2999)
XXX Office of Finance and Management, Department of Agriculture
(Parts 3000 -- 3099)
XXXI Office of Environmental Quality, Department of Agriculture
(Parts 3100 -- 3199)
XXXII Office of Grants and Program Systems, Department of Agriculture
(Parts 3200 -- 3299)
XXXIII Office of Transportation, Department of Agriculture (Parts
3300 -- 3399)
XXXIV Cooperative State Research Service, Department of Agriculture
(Parts 3400 -- 3499)
XXXVI National Agricultural Statistics Service, Department of
Agriculture (Parts 3600 -- 3699)
XXXVII Economic Research Service, Department of Agriculture (Parts
3700 -- 3799)
XXXVIII World Agricultural Outlook Board, Department of Agriculture
(Parts 3800 -- 3899)
XXXIX Economic Analysis Staff, Department of Agriculture (Parts 3900
-- 3999)
XL Economics Management Staff, Department of Agriculture (Parts 4000
-- 4099)
XLI National Agricultural Library, Department of Agriculture (Part
4100)
07 CFR 1930.150 -- -- Title 8 -- Aliens and Nationality
I Immigration and Naturalization Service, Department of Justice
(Parts 1 -- 499)
07 CFR 1930.150 -- -- Title 9 -- Animals and Animal Products
I Animal and Plant Health Inspection Service, Department of
Agriculture (Parts 1 -- 199)
II Packers and Stockyards Administration, Department of Agriculture
(Parts 200 -- 299)
III Food Safety and Inspection Service, Meat and Poultry Inspection,
Department of Agriculture (Parts 300 -- 399)
07 CFR 1930.150 -- -- Title 10 -- Energy
I Nuclear Regulatory Commission (Parts 0 -- 199)
II Department of Energy (Parts 200 -- 699)
III Department of Energy (Parts 700 -- 999)
X Department of Energy (General Provisions) (Parts 1000 -- 1099)
XV Office of the Federal Inspector for the Alaska Natural Gas
Transportation System (Parts 1500 -- 1599)
XVII Defense Nuclear Facilities Safety Board (Parts 1700 -- 1799)
07 CFR 1930.150 -- -- Title 11 -- Federal Elections
I Federal Election Commission (Parts 1 -- 9099)
07 CFR 1930.150 -- -- Title 12 -- Banks and Banking
I Comptroller of the Currency, Department of the Treasury (Parts 1 --
199)
II Federal Reserve System (Parts 200 -- 299)
III Federal Deposit Insurance Corporation (Parts 300 -- 399)
IV Export-Import Bank of the United States (Parts 400 -- 499)
V Office of Thrift Supervision, Department of The Treasury (Parts 500
-- 599)
VI Farm Credit Administration (Parts 600 -- 699)
VII National Credit Union Administration (Parts 700 -- 799)
VIII Federal Financing Bank (Parts 800 -- 899)
IX Federal Housing Finance Board (Parts 900 -- 999)
XI Federal Financial Institutions Examination Council (Parts 1100 --
1199)
XIII Farm Credit System Assistance Board (Parts 1300 -- 1399)
XIV Farm Credit System Insurance Corporation (Parts 1400 -- 1499)
XV Oversight Board (Parts 1500 -- 1599)
XVI Resolution Trust Corporation (Parts 1600 -- 1699)
07 CFR 1930.150 -- -- Title 13 -- Business Credit and Assistance
I Small Business Administration (Parts 1 -- 199)
III Economic Development Administration, Department of Commerce
(Parts 300 -- 399)
07 CFR 1930.150 -- -- Title 14 -- Aeronautics and Space
I Federal Aviation Administration, Department of Transportation
(Parts 1 -- 199)
II Office of the Secretary, Department of Transportation (Aviation
Proceedings) (Parts 200 -- 399)
III Office of Commercial Space Transportation, Department of
Transportation (Parts 400 -- 499)
V National Aeronautics and Space Administration (Parts 1200 -- 1299)
07 CFR 1930.150 -- -- Title 15 -- Commerce and Foreign Trade
Subtitle A -- Office of the Secretary of Commerce (Parts 0 -- 29)
Subtitle B -- Regulations Relating to Commerce and Foreign Trade
I Bureau of the Census, Department of Commerce (Parts 30 -- 199)
II National Institute of Standards and Technology, Department of
Commerce (Parts 200 -- 299)
III International Trade Administration, Department of Commerce (Parts
300 -- 399)
IV Foreign-Trade Zones Board (Parts 400 -- 499)
VII Bureau of Export Administration, Department of Commerce (Parts
700 -- 799)
VIII Bureau of Economic Analysis, Department of Commerce (Parts 800
-- 899)
IX National Oceanic and Atmospheric Administration, Department of
Commerce (Parts 900 -- 999)
XI Technology Administration, Department of Commerce (Parts 1100 --
1199)
XII United States Travel and Tourism Administration, Department of
Commerce (Parts 1200 -- 1299)
XIII East-West Foreign Trade Board (Parts 1300 -- 1399)
XIV Minority Business Development Agency (Parts 1400 -- 1499)
Subtitle C -- Regulations Relating to Foreign Trade Agreements
XX Office of the United States Trade Representative (Parts 2000 --
2099)
Subtitle D -- Regulations Relating to Telecommunications and
Information
XXIII National Telecommunications and Information Administration,
Department of Commerce (Parts 2300 -- 2399)
07 CFR 1930.150 -- -- Title 16 -- Commercial Practices
I Federal Trade Commission (Parts 0 -- 999)
II Consumer Product Safety Commission (Parts 1000 -- 1799)
07 CFR 1930.150 -- -- Title 17 -- Commodity and Securities Exchanges
I Commodity Futures Trading Commission (Parts 1 -- 199)
II Securities and Exchange Commission (Parts 200 -- 399)
IV Department of the Treasury (Parts 400 -- 499)
07 CFR 1930.150 -- -- Title 18 -- Conservation of Power and Water
Resources
I Federal Energy Regulatory Commission, Department of Energy (Parts 1
-- 399)
III Delaware River Basin Commission (Parts 400 -- 499)
VI Water Resources Council (Parts 700 -- 799)
VIII Susquehanna River Basin Commission (Parts 800 -- 899)
XIII Tennessee Valley Authority (Parts 1300 -- 1399)
07 CFR 1930.150 -- -- Title 19 -- Customs Duties
I United States Customs Service, Department of the Treasury (Parts 1
-- 199)
II United States International Trade Commission (Parts 200 -- 299)
III International Trade Administration, Department of Commerce (Parts
300 -- 399)
07 CFR 1930.150 -- -- Title 20 -- Employees' Benefits
I Office of Workers' Compensation Programs, Department of Labor
(Parts 1 -- 199)
II Railroad Retirement Board (Parts 200 -- 399)
III Social Security Administration, Department of Health and Human
Services (Parts 400 -- 499)
IV Employees' Compensation Appeals Board, Department of Labor (Parts
500 -- 599)
V Employment and Training Administration, Department of Labor (Parts
600 -- 699)
VI Employment Standards Administration, Department of Labor (Parts
700 -- 799)
VII Benefits Review Board, Department of Labor (Parts 800 -- 899)
VIII Joint Board for the Enrollment of Actuaries (Parts 900 -- 999)
IX Office of the Assistant Secretary for Veterans' Employment and
Training, Department of Labor (Parts 1000 -- 1099)
07 CFR 1930.150 -- -- Title 21 -- Food and Drugs
I Food and Drug Administration, Department of Health and Human
Services (Parts 1 -- 1299)
II Drug Enforcement Administration, Department of Justice (Parts 1300
-- 1399)
07 CFR 1930.150 -- -- Title 22 -- Foreign Relations
I Department of State (Parts 1 -- 199)
II Agency for International Development, International Development
Cooperation Agency (Parts 200 -- 299)
III Peace Corps (Parts 300 -- 399)
IV International Joint Commission, United States and Canada (Parts
400 -- 499)
V United States Information Agency (Parts 500 -- 599)
VI United States Arms Control and Disarmament Agency (Parts 600 --
699)
VII Overseas Private Investment Corporation, International
Development Cooperation Agency (Parts 700 -- 799)
IX Foreign Service Grievance Board Regulations (Parts 900 -- 999)
X Inter-American Foundation (Parts 1000 -- 1099)
XI International Boundary and Water Commission, United States and
Mexico, United States Section (Parts 1100 -- 1199)
XII United States International Development Cooperation Agency (Parts
1200 -- 1299)
XIII Board for International Broadcasting (Parts 1300 -- 1399)
XIV Foreign Service Labor Relations Board; Federal Labor Relations
Authority; General Counsel of the Federal Labor Relations Authority;
and the Foreign Service Impasse Disputes Panel (Parts 1400 -- 1499)
XV African Development Foundation (Parts 1500 -- 1599)
XVI Japan-United States Friendship Commission (Parts 1600 -- 1699)
07 CFR 1930.150 -- -- Title 23 -- Highways
I Federal Highway Administration, Department of Transportation (Parts
1 -- 999)
II National Highway Traffic Safety Administration and Federal Highway
Administration, Department of Transportation (Parts 1200 -- 1299)
III National Highway Traffic Safety Administration, Department of
Transportation (Parts 1300 -- 1399)
07 CFR 1930.150 -- -- Title 24 -- Housing and Urban Development
Subtitle A -- Office of the Secretary, Department of Housing and
Urban Development (Parts 0 -- 99)
Subtitle B -- Regulations Relating to Housing and Urban Development
I Office of Assistant Secretary for Equal Opportunity, Department of
Housing and Urban Development (Parts 100 -- 199)
II Office of Assistant Secretary for Housing-Federal Housing
Commissioner, Department of Housing and Urban Development (Parts 200 --
299)
III Government National Mortgage Association, Department of Housing
and Urban Development (Parts 300 -- 399)
V Office of Assistant Secretary for Community Planning and
Development, Department of Housing and Urban Development (Parts 500 --
599)
VI Office of Assistant Secretary for Community Planning and
Development, Department of Housing and Urban Development (Parts 600 --
699)
VII Office of the Secretary, Department of Housing and Urban
Development (Section 8 Housing Assistance Programs and Public and Indian
Housing Programs) (Parts 700 -- 799)
VIII Office of the Assistant Secretary for Housing -- Federal Housing
Commissioner, Department of Housing and Urban Development (Section 8
Housing Assistance Programs and Section 202 Direct Loan Program) (Parts
800 -- 899)
IX Office of Assistant Secretary for Public and Indian Housing,
Department of Housing and Urban Development (Parts 900 -- 999)
X Office of Assistant Secretary for Housing -- Federal Housing
Commissioner, Department of Housing and Urban Development (Interstate
Land Sales Registration Program) (Parts 1700 -- 1799)
XI Solar Energy and Energy Conservation Bank, Department of Housing
and Urban Development (Parts 1800 -- 1899)
XII Office of Inspector General, Department of Housing and Urban
Development (Parts 2000 -- 2099)
XV Mortgage Insurance and Loan Programs under the Emergency
Homeowners' Relief Act, Department of Housing and Urban Development
(Parts 2700 -- 2799)
XX Office of Assistant Secretary for Housing -- Federal Housing
Commissioner, Department of Housing and Urban Development (Parts 3200 --
3699)
XXV Neighborhood Reinvestment Corporation (Parts 4100 -- 4199)
07 CFR 1930.150 -- -- Title 25 -- Indians
I Bureau of Indian Affairs, Department of the Interior (Parts 1 --
299)
II Indian Arts and Crafts Board, Department of the Interior (Parts
300 -- 399)
III National Indian Gaming Commission (Parts 500 -- 599)
IV Office of Navajo and Hopi Indian Relocation (Parts 700 -- 799)
07 CFR 1930.150 -- -- Title 26 -- Internal Revenue
I Internal Revenue Service, Department of the Treasury (Parts 1 --
799)
07 CFR 1930.150 -- -- Title 27 -- Alcohol, Tobacco Products and
Firearms
I Bureau of Alcohol, Tobacco and Firearms, Department of the Treasury
(Parts 1 -- 299)
07 CFR 1930.150 -- -- Title 28 -- Judicial Administration
I Department of Justice (Parts 0 -- 199)
III Federal Prison Industries, Inc., Department of Justice (Parts 300
-- 399)
V Bureau of Prisons, Department of Justice (Parts 500 -- 599)
VI Offices of Independent Counsel, Department of Justice (Parts 600
-- 699)
VII Office of Independent Counsel (Parts 700 -- 799)
07 CFR 1930.150 -- -- Title 29 -- Labor
Subtitle A -- Office of the Secretary of Labor (Parts 0 -- 99)
Subtitle B -- Regulations Relating to Labor
I National Labor Relations Board (Parts 100 -- 199)
II Bureau of Labor-Management Relations and Cooperative Programs,
Department of Labor (Parts 200 -- 299)
III National Railroad Adjustment Board (Parts 300 -- 399)
IV Office of Labor-Management Standards, Department of Labor (Parts
400 -- 499)
V Wage and Hour Division, Department of Labor (Parts 500 -- 899)
IX Construction Industry Collective Bargaining Commission (Parts 900
-- 999)
X National Mediation Board (Parts 1200-1299)
XII Federal Mediation and Conciliation Service (Parts 1400-1499)
XIV Equal Employment Opportunity Commission (Parts 1600-1699)
XVII Occupational Safety and Health Administration, Department of
Labor (Parts 1900 -- 1999)
XX Occupational Safety and Health Review Commission (Parts 2200 --
2499)
XXV Pension and Welfare Benefits Administration, Department of Labor
(Parts 2500 -- 2599)
XXVI Pension Benefit Guaranty Corporation (Parts 2600 -- 2699)
XXVII Federal Mine Safety and Health Review Commission (Parts 2700 --
2799)
07 CFR 1930.150 -- -- Title 30 -- Mineral Resources
I Mine Safety and Health Administration, Department of Labor (Parts 1
-- 199)
II Minerals Management Service, Department of the Interior (Parts 200
-- 299)
III Board of Surface Mining and Reclamation Appeals, Department of
the Interior (Parts 300 -- 399)
IV Geological Survey, Department of the Interior (Parts 400 -- 499)
VI Bureau of Mines, Department of the Interior (Parts 600 -- 699)
VII Office of Surface Mining Reclamation and Enforcement, Department
of the Interior (Parts 700 -- 999)
07 CFR 1930.150 -- -- Title 31 -- Money and Finance: Treasury
Subtitle A -- Office of the Secretary of the Treasury (Parts 0 -- 50)
Subtitle B -- Regulations Relating to Money and Finance
I Monetary Offices, Department of the Treasury (Parts 51 -- 199)
II Fiscal Service, Department of the Treasury (Parts 200 -- 399)
IV Secret Service, Department of the Treasury (Parts 400 -- 499)
V Office of Foreign Assets Control, Department of the Treasury (Parts
500 -- 599)
VI Bureau of Engraving and Printing, Department of the Treasury
(Parts 600 -- 699)
VII Federal Law Enforcement Training Center, Department of the
Treasury (Parts 700 -- 799)
VIII Office of International Investment, Department of the Treasury
(Parts 800 -- 899)
07 CFR 1930.150 -- -- Title 32 -- National Defense
Subtitle A -- Department of Defense
I Office of the Secretary of Defense (Parts 1 -- 399)
V Department of the Army (Parts 400 -- 699)
VI Department of the Navy (Parts 700 -- 799)
VII Department of the Air Force (Parts 800 -- 1099)
Subtitle B -- Other Regulations Relating to National Defense
XII Defense Logistics Agency (Parts 1200-1299)
XVI Selective Service System (Parts 1600-1699)
XIX Central Intelligence Agency (Parts 1900 -- 1999)
XX Information Security Oversight Office (Parts 2000 -- 2099)
XXI National Security Council (Parts 2100 -- 2199)
XXIV Office of Science and Technology Policy (Parts 2400 -- 2499)
XXVII Office for Micronesian Status Negotiations (Parts 2700 -- 2799)
XXVIII Office of the Vice President of the United States (Parts 2800
-- 2899)
07 CFR 1930.150 -- -- Title 33 -- Navigation and Navigable Waters
I Coast Guard, Department of Transportation (Parts 1 -- 199)
II Corps of Engineers, Department of the Army (Parts 200 -- 399)
IV Saint Lawrence Seaway Development Corporation, Department of
Transportation (Parts 400 -- 499)
07 CFR 1930.150 -- -- Title 34 -- Education
Subtitle A -- Office of the Secretary, Department of Education (Parts
1 -- 99)
Subtitle B -- Regulations of the Offices of the Department of
Education
I Office for Civil Rights, Department of Education (Parts 100 -- 199)
II Office of Elementary and Secondary Education, Department of
Education (Parts 200 -- 299)
III Office of Special Education and Rehabilitative Services,
Department of Education (Parts 300 -- 399)
IV Office of Vocational and Adult Education, Department of Education
(Parts 400 -- 499)
V Office of Bilingual Education and Minority Languages Affairs,
Department of Education (Parts 500 -- 599)
VI Office of Postsecondary Education, Department of Education (Parts
600 -- 699)
VII Office of Educational Research and Improvement, Department of
Education (Parts 700 -- 799)
07 CFR 1930.150 -- -- Title 35 -- Panama Canal
I Panama Canal Regulations (Parts 1 -- 299)
07 CFR 1930.150 -- -- Title 36 -- Parks, Forests, and Public Property
I National Park Service, Department of the Interior (Parts 1 -- 199)
II Forest Service, Department of Agriculture (Parts 200 -- 299)
III Corps of Engineers, Department of the Army (Parts 300 -- 399)
IV American Battle Monuments Commission (Parts 400 -- 499)
V Smithsonian Institution (Parts 500 -- 599)
VII Library of Congress (Parts 700 -- 799)
VIII Advisory Council on Historic Preservation (Parts 800 -- 899)
IX Pennsylvania Avenue Development Corporation (Parts 900-999)
XI Architectural and Transportation Barriers Compliance Board (Parts
1100 -- 1199)
XII National Archives and Records Administration (Parts 1200 -- 1299)
07 CFR 1930.150 -- -- Title 37 -- Patents, Trademarks, and Copyrights
I Patent and Trademark Office, Department of Commerce (Parts 1 --
199)
II Copyright Office, Library of Congress (Parts 200 -- 299)
III Copyright Royalty Tribunal (Parts 300 -- 399)
IV Assistant Secretary for Technology Policy, Department of Commerce
(Parts 400-499)
V Under Secretary for Technology, Department of Commerce (Parts 500
-- 599)
07 CFR 1930.150 -- -- Title 38 -- Pensions, Bonuses, and Veterans'
Relief
I Department of Veterans Affairs (Parts 0 -- 99)
07 CFR 1930.150 -- -- Title 39 -- Postal Service
I United States Postal Service (Parts 1-999)
III Postal Rate Commission (Parts 3000 -- 3099)
07 CFR 1930.150 -- -- Title 40 -- Protection of Environment
I Environmental Protection Agency (Parts 1 -- 799)
V Council on Environmental Quality (Parts 1500-1599)
07 CFR 1930.150 -- -- Title 41 -- Public Contracts and Property
Management
Subtitle B -- Other Provisions Relating to Public Contracts
50 Public Contracts, Department of Labor (Parts 50-1 -- 50-999)
51 Committee for Purchase from the Blind and Other Severely
Handicapped (Parts 51-1 -- 51-99)
60 Office of Federal Contract Compliance Programs, Equal Employment
Opportunity, Department of Labor (Parts 60-1 -- 60-999)
61 Office of the Assistant Secretary for Veterans Employment and
Training, Department of Labor (Parts 61-1 -- 61-999)
Subtitle C -- Federal Property Management Regulations System
101 Federal Property Management Regulations (Parts 101-1 -- 101-99)
105 General Services Administration (Parts 105-1 -- 105-999)
109 Department of Energy Property Management Regulations (Parts 109-1
-- 109-99)
114 Department of the Interior (Parts 114-1 -- 114-99)
115 Environmental Protection Agency (Parts 115-1 -- 115-99)
128 Department of Justice (Parts 128-1 -- 128-99)
132 Department of the Air Force (Parts 132-1 -- 132-99)
Subtitle D -- Other Provisions Relating to Property Management
(Reserved)
Subtitle E -- Federal Information Resources Management Regulations
System
201 Federal Information Resources Management Regulation (Parts 201-1
-- 201-99)
Subtitle F -- Federal Travel Regulation System
301 Travel Allowances (Parts 301-1 -- 301-99)
302 Relocation Allowances (Parts 302-1 -- 302-99)
303 Payment of Expenses Connected with the Death of Certain Employees
(Parts 303-1 -- 303-2)
304 Payment from a non-Federal source for travel expenses (Parts
304-1 -- 304-99)
07 CFR 1930.150 -- -- Title 42 -- Public Health
I Public Health Service, Department of Health and Human Services
(Parts 1 -- 199)
IV Health Care Financing Administration, Department of Health and
Human Services (Parts 400 -- 499)
V Office of Inspector General-Health Care, Department of Health and
Human Services (Parts 1000 -- 1999)
07 CFR 1930.150 -- -- Title 43 -- Public Lands: Interior
Subtitle A -- Office of the Secretary of the Interior (Parts 1 --
199)
Subtitle B -- Regulations Relating to Public Lands
I Bureau of Reclamation, Department of the Interior (Parts 200 --
499)
II Bureau of Land Management, Department of the Interior (Parts 1000
-- 9999)
07 CFR 1930.150 -- -- Title 44 -- Emergency Management and Assistance
I Federal Emergency Management Agency (Parts 0 -- 399)
IV Department of Commerce and Department of Transportation (Parts 400
-- 499)
07 CFR 1930.150 -- -- Title 45 -- Public Welfare
Subtitle A -- Department of Health and Human Services, General
Administration (Parts 1 -- 199)
Subtitle B -- Regulations Relating to Public Welfare
II Office of Family Assistance (Assistance Programs), Family Support
Administration, Department of Health and Human Services (Parts 200 --
299)
III Office of Child Support Enforcement (Child Support Enforcement
Program), Family Support Administration, Department of Health and Human
Services (Parts 300 -- 399)
IV Office of Refugee Resettlement, Family Support Administration,
Department of Health and Human Services (Parts 400 -- 499)
V Foreign Claims Settlement Commission of the United States,
Department of Justice (Parts 500 -- 599)
VI National Science Foundation (Parts 600 -- 699)
VII Commission on Civil Rights (Parts 700 -- 799)
VIII Office of Personnel Management (Parts 800 -- 899)
X Office of Community Services, Family Support Administration,
Department of Health and Human Services (Parts 1000 -- 1099)
XI National Foundation on the Arts and the Humanities (Parts 1100 --
1199)
XII ACTION (Parts 1200 -- 1299)
XIII Office of Human Development Services, Department of Health and
Human Services (Parts 1300 -- 1399)
XVI Legal Services Corporation (Parts 1600 -- 1699)
XVII National Commission on Libraries and Information Science (Parts
1700 -- 1799)
XVIII Harry S. Truman Scholarship Foundation (Parts 1800 -- 1899)
XX Commission on the Bicentennial of the United States Constitution
(Parts 2000 -- 2099)
XXI Commission on Fine Arts (Parts 2100 -- 2199)
XXII Christopher Columbus Quincentenary Jubilee Commission (2200 --
2299)
07 CFR 1930.150 -- -- Title 46 -- Shipping
I Coast Guard, Department of Transportation (Parts 1 -- 199)
II Maritime Administration, Department of Transportation (Parts 200
-- 399)
III Coast Guard (Great Lakes Pilotage), Department of Transportation
(Parts 400 -- 499)
IV Federal Maritime Commission (Parts 500 -- 599)
07 CFR 1930.150 -- -- Title 47 -- Telecommunication
I Federal Communications Commission (Parts 0 -- 199)
II Office of Science and Technology Policy and National Security
Council (Parts 200 -- 299)
III National Telecommunications and Information Administration,
Department of Commerce (Parts 300 -- 399)
07 CFR 1930.150 -- -- Title 48 -- Federal Acquisition Regulations
System
1 Federal Acquisition Regulation (Parts 1 -- 99)
2 Department of Defense (Parts 200 -- 299)
3 Department of Health and Human Services (Parts 300 -- 399)
4 Department of Agriculture (Parts 400 -- 499)
5 General Services Administration (Parts 500 -- 599)
6 Department of State (Parts 600 -- 699)
7 Agency for International Development (Parts 700 -- 799)
8 Department of Veterans Affairs (Parts 800 -- 899)
9 Department of Energy (Parts 900 -- 999)
10 Department of the Treasury (Parts 1000 -- 1099)
12 Department of Transportation (Parts 1200 -- 1299)
13 Department of Commerce (Parts 1300 -- 1399)
14 Department of the Interior (Parts 1400 -- 1499)
15 Environmental Protection Agency (Parts 1500 -- 1599)
16 Office of Personnel Management Federal Employees Health Benefits
Acquisition Regulation (Parts 1600 -- 1699)
17 Office of Personnel Management (Parts 1700 -- 1799)
18 National Aeronautics and Space Administration (Parts 1800 -- 1899)
19 United States Information Agency (Parts 1900 -- 1999)
22 Small Business Administration (Parts 2200 -- 2299)
24 Department of Housing and Urban Development (Parts 2400 -- 2499)
25 National Science Foundation (Parts 2500 -- 2599)
28 Department of Justice (Parts 2800 -- 2899)
29 Department of Labor (Parts 2900 -- 2999)
34 Department of Education Acquisition Regulation (Parts 3400 --
3499)
35 Panama Canal Commission (Parts 3500 -- 3599)
44 Federal Emergency Management Agency (Parts 4400 -- 4499)
51 Department of the Army Acquisition Regulations (Parts 5100 --
5199)
52 Department of the Navy Acquisition Regulations (Parts 5200 --
5299)
53 Department of the Air Force Federal Acquisition Regulation
Supplement (Parts 5300 -- 5399)
57 African Development Foundation (Parts 5700 -- 5799)
61 General Services Administration Board of Contract Appeals (Parts
6100 -- 6199)
63 Department of Transportation Board of Contract Appeals (Parts 6300
-- 6399)
99 Cost Accounting Standards Board, Office of Federal Procurement
Policy, Office of Management and Budget (Parts 9900-9999)
07 CFR 1930.150 -- -- Title 49 -- Transportation
Subtitle A -- Office of the Secretary of Transportation (Parts 1 --
99)
Subtitle B -- Other Regulations Relating to Transportation
I Research and Special Programs Administration, Department of
Transportation (Parts 100 -- 199)
II Federal Railroad Administration, Department of Transportation
(Parts 200 -- 299)
III Federal Highway Administration, Department of Transportation
(Parts 300 -- 399)
IV Coast Guard, Department of Transportation (Parts 400 -- 499)
V National Highway Traffic Safety Administration, Department of
Transportation (Parts 500 -- 599)
VI Urban Mass Transportation Administration, Department of
Transportation (Parts 600 -- 699)
VII National Railroad Passenger Corporation (AMTRAK) (Parts 700 --
799)
VIII National Transportation Safety Board (Parts 800 -- 899)
X Interstate Commerce Commission (Parts 1000 -- 1399)
07 CFR 1930.150 -- -- Title 50 -- Wildlife and Fisheries
I United States Fish and Wildlife Service, Department of the Interior
(Parts 1 -- 199)
II National Marine Fisheries Service, National Oceanic and
Atmospheric Administration, Department of Commerce (Parts 200 -- 299)
III International Regulatory Agencies (Fishing and Whaling) (Parts
300 -- 399)
IV Joint Regulations (United States Fish and Wildlife Service,
Department of the Interior and National Marine Fisheries Service,
National Oceanic and Atmospheric Administration, Department of
Commerce); Endangered Species Committee Regulations (Parts 400 -- 499)
V Marine Mammal Commission (Parts 500 -- 599)
VI Fishery Conservation and Management, National Oceanic and
Atmospheric Administration, Department of Commerce (Parts 600 -- 699)
07 CFR 1930.150 -- -- CFR Index and Finding Aids Subject/Agency
Index List of Agency Prepared Indexes Parallel Tables of Statutory
Authorities and Rules Acts Requiring Publication in the Federal Register
List of CFR Titles, Chapters, Subchapters, and Parts
07 CFR 1930.150 -- -- Alphabetical List of Agencies Appearing in the
CFR
CFR Title, Subtitle or
Agency
Chapter
ACTION 45, XII
Administrative Committee of the Federal Register 1, I
Administrative Conference of the United States 1, III
Advisory Commission on Intergovernmental Relations 5, VII
Advisory Committee on Federal Pay 5, IV
Advisory Council on Historic Preservation 36, VIII
African Development Foundation 22, XV; 48, 57
Agency for International Development 22, II; 48, 7
Agricultural Marketing Service 7, I, IX, X, XI
Agricultural Research Service 7, V
Agricultural Stabilization and Conservation Service 7, VII
Agriculture Department
Agricultural Marketing Service 7, I, IX, X, XI
Agricultural Research Service 7, V
Agricultural Stabilization and Conservation Service 7, VII
Animal and Plant Health Inspection Service 7, III; 9, I
Commodity Credit Corporation 7, XIV
Cooperative State Research Service 7, XXXIV
Economic Analysis Staff 7, XXXIX
Economic Research Service 7, XXXVII
Economics Management Staff 7, XL
Energy, Office of 7, XXIX
Environmental Quality, Office of 7, XXXI
Farmers Home Administration 7, XVIII
Federal Acquisition Regulation 48, 4
Federal Crop Insurance Corporation 7, IV
Federal Grain Inspection Service 7, VIII
Finance and Management, Office of 7, XXX
Food and Nutrition Service 7, II
Food Safety and Inspection Service 9, III
Foreign Agricultural Service 7, XV
Foreign Economic Development Service 7, XXI
Forest Service 36, II
General Sales Manager, Office of 7, XXV
Grants and Program Systems, Office of 7, XXXII
Information Resources Management, Office of 7, XXVII
Inspector General, Office of 7, XXVI
International Cooperation and Development Office 7, XXII
National Agricultural Library 7, XLI
National Agricultural Statistics Service 7, XXXVI
Operations Office 7, XXVIII
Packers and Stockyards Administration 9, II
Rural Electrification Administration 7, XVII
Rural Telephone Bank 7, XVI
Secretary of Agriculture, Office of 7, Subtitle A
Soil Conservation Service 7, VI
Transportation, Office of 7, XXXIII
World Agriculture Outlook Board 7, XXXVIII
Air Force Department 32, VII; 41, Subtitle C, Ch. 132
Federal Acquisition Regulation Supplement 48, 53
Alaska Natural Gas Transportation System, Office of the Federal
Inspector 10, XV
Alcohol, Tobacco and Firearms, Bureau of 27, I
AMTRAK 49, VII
American Battle Monuments Commission 36, IV
Animal and Plant Health Inspection Service 7, III; 9, I
Appalachian Regional Commission 5, IX
Architectural and Transportation Barriers Compliance Board 36, XI
Arms Control and Disarmament Agency, U.S. 22, VI
Army Department 32, V
Engineers, Corps of 33, II; 36, III
Federal Acquisition Regulation 48, 51
Assistant Secretary for Technology Policy, Department of Commerce 37,
IV
Benefits Review Board 20, VII
Bicentennial of the United States Constitution, Commission on the 45,
XX
Bilingual Education and Minority Languages Affairs, Office of 34, V
Blind and Other Severely Handicapped, Committee for Purchase from 41,
51
Board for International Broadcasting 22, XIII
Budget, Office of Management and 5, III
Census Bureau 15, I
Central Intelligence Agency 32, XIX
Child Support Enforcement, Office of 45, III
Christopher Columbus Quincentenary Jubilee Commission 45, XXII
Civil Rights Commission 45, VII
Civil Rights, Office for (Education Department) 34, I
Claims Collection Standards, Federal 4, II
Coast Guard 33, I; 46, I, III; 49, IV
Commerce Department 44, IV
Census Bureau 15, I
Assistant Secretary for Technology Policy 37, IV
Economic Affairs, Under Secretary 37, V
Economic Analysis, Bureau of 15, VIII
Economic Development Administration 13, III
Endangered Species Committee 50, IV
Export Administration Bureau 15, VII
Federal Acquisition Regulation 48, 13
Fishery Conservation and Management 50, VI
International Trade Administration 15, III; 19, III
National Institute of Standards and Technology 15, II
National Marine Fisheries Service 50, II, IV
National Oceanic and Atmospheric Administration 15, IX; 50, II, III,
IV, VI
National Telecommunications and Information Administration 15, XXIII;
47, III
Patent and Trademark Office 37, I
Productivity, Technology and Innovation, Assistant Secretary for 37,
IV
Secretary of Commerce, Office of 15, Subtitle A
Technology Administration 15, XI
Under Secretary for Technology 37, V
United States Travel and Tourism Administration 15, XII
Commercial Space Transportation, Office of, Department of
Transportation 14, III
Commission on the Bicentennial of the United States Constitution 45,
XX
Committee for Purchase from the Blind and Other Severely Handicapped
41, 51
Commodity Credit Corporation 7, XIV
Commodity Futures Trading Commission 17, I
Community Planning and Development, Office of Assistant Secretary for
24, V, VI
Community Services, Office of 45, X
Comptroller of the Currency 12, I
Construction Industry Collective Bargaining Commission 29, IX
Consumer Product Safety Commission 16, II
Cooperative State Research Service 7, XXXIV
Copyright Office 37, II
Copyright Royalty Tribunal 37, III
Cost Accounting Standards Board, Office of Federal Procurement Policy
48, 99
Council on Environmental Quality 40, V
Customs Service, United States 19, I
Defense Department 32, Subtitle A
Air Force Department 32, VII; 41, Subtitle C, Ch. 132
Army Department 32, V; 33, II; 36, III, 48, 51
Engineers, Corps of 33, II; 36, III
Federal Acquisition Regulation 48, 2
Navy Department 32, VI; 48, 52
Secretary of Defense, Office of 32, I
Defense Logistics Agency 32, XII
Defense Nuclear Facilities Safety Board 10, XVII
Delaware River Basin Commission 18, III
Drug Enforcement Administration 21, II
East-West Foreign Trade Board 15, XIII
Economic Affairs, Under Secretary (Commerce) 37, V
Economic Analysis, Bureau of 15, VIII
Economic Analysis Staff, Department of Agriculture 7, XXXIX
Economic Development Administration 13, III
Economics Management Staff 7, XL
Economic Research Service 7, XXXVII
Education, Department of
Bilingual Education and Minority Languages Affairs, Office of 34, V
Civil Rights, Office for 34, I
Educational Research and Improvement, Office of 34, VII
Elementary and Secondary Education, Office of 34, II
Federal Acquisition Regulation 48, 34
Postsecondary Education, Office of 34, VI
Secretary of Education, Office of 34, Subtitle A
Special Education and Rehabilitative Services, Office of 34, III
Vocational and Adult Education, Office of 34, IV
Educational Research and Improvement, Office of 34, VII
Elementary and Secondary Education, Office of 34, II
Employees' Compensation Appeals Board 20, IV
Employees Loyalty Board, International Organizations 5, V
Employment and Training Administration 20, V
Employment Standards Administration 20, VI
Endangered Species Committee 50, IV
Energy, Department of 10, II, III, X; 41, 109
Federal Acquisition Regulation 48, 9
Federal Energy Regulatory Commission 18, I
Energy, Office of, Department of Agriculture 7, XXIX
Engineers, Corps of 33, II; 36, III
Engraving and Printing, Bureau of 31, VI
Environmental Protection Agency 40, I; 41, 115; 48, 15
Environmental Quality, Office of (Agriculture Department) 7, XXXI
Equal Employment Opportunity Commission 29, XIV
Equal Opportunity, Office of Assistant Secretary for 24, I
Executive Office of the President 3, I
Administration, Office of 5, XV
Export Administration Bureau 15, VII
Export-Import Bank of the United States 12, IV
Family Assistance, Office of 45, II
Family Support Administration 45, II, III, IV, X
Farm Credit Administration 12, VI
Farm Credit System Assistance Board 12, XIII
Farm Credit System Insurance Corporation 12, XIV
Farmers Home Administration 7, XVIII
Federal Acquisition Regulation 48, 1
Federal Aviation Administration 14, I
Federal Claims Collection Standards 4, II
Federal Communications Commission 47, I
Federal Contract Compliance Programs, Office of 41, 60
Federal Crop Insurance Corporation 7, IV
Federal Deposit Insurance Corporation 12, III
Federal Election Commission 11, I
Federal Emergency Management Agency 44, I; 48, 44
Federal Energy Regulatory Commission 18, I
Federal Financial Institutions Examination Council 12, XI
Federal Financing Bank 12, VIII
Federal Grain Inspection Service 7, VIII
Federal Highway Administration 23, I, II; 49, III
Federal Home Loan Mortgage Corporation 1, IV
Federal Housing Finance Board 12, IX
Federal Information Resources Management Regulations 41, Subtitle E,
Ch. 201
Federal Inspector for the Alaska Natural Gas Transportation System,
Office of 10, XV
Federal Labor Relations Authority, and General Counsel of the Federal
Labor Relations Authority 5, XIV; 22, XIV
Federal Law Enforcement Training Center 31, VII
Federal Maritime Commission 46, IV
Federal Mediation and Conciliation Service 29, XII
Federal Mine Safety and Health Review Commission 29, XXVII
Federal Pay, Advisory Committee on 5, IV
Federal Prison Industries, Inc. 28, III
Federal Procurement Policy Office 48, 99
Federal Property Management Regulations 41, 101
Federal Property Management Regulations System 41, Subtitle C
Federal Railroad Administration 49, II
Federal Register, Administrative Committee of 1, I
Federal Register, Office of 1, II
Federal Reserve System 12, II
Federal Retirement Thrift Investment Board 5, VI
Federal Service Impasses Panel 5, XIV
Federal Trade Commission 16, I
Federal Travel Regulation System 41, Subtitle F
Finance and Management, Department of Agriculture 7, XXX
Fine Arts Commission 45, XXI
Fiscal Service 31, II
Fish and Wildlife Service, United States 50, I, IV
Fishery Conservation and Management 50, VI
Fishing and Whaling, International Regulatory Agencies 50, III
Food and Drug Administration 21, I
Food and Nutrition Service 7, II
Food Safety and Inspection Service 9, III
Foreign Agricultural Service 7, XV
Foreign Assets Control, Office of 31, V
Foreign Claims Settlement Commission of United States 45, V
Foreign Economic Development Service 7, XXI
Foreign Service Grievance Board 22, IX
Foreign Service Impasse Disputes Panel 22, XIV
Foreign Service Labor Relations Board 22, XIV
Foreign-Trade Zones Board 15, IV
Forest Service 36, II
General Accounting Office 4, I, II, III
General Sales Manager, Office of 7, XXV
General Services Administration
Contract Appeals Board 48, 61
Federal Acquisition Regulation 48, 5
Federal Information Resources Management Regulations 41, Subtitle E,
Ch. 201
Federal Property Management Regulations System 41, 101, 105
Federal Travel Regulation System 41, Subtitle F
Payment of Expenses Connected With the Death of Certain Employees 41,
303
Reduction in Meeting and Training Allowance Payments 41, 304
Relocation Allowances 41, 302
Travel Allowances 41, 301
Geological Survey 30, IV
Government Ethics, Office of 5, XVI
Government National Mortgage Association 24, III
Grants and Program Systems, Office of 7, XXXII
Great Lakes Pilotage 46, III
Harry S. Truman Scholarship Foundation 45, XVIII
Health and Human Services, Department of 45, Subtitle A
Child Support Enforcement, Office of 45, III
Community Services, Office of 45, X
Family Assistance, Office of 45, II
Family Support Administration 45, II, III, IV, X
Federal Acquisition Regulation 48, 3
Food and Drug Administration 21, I
Health Care Financing Administration 42, IV
Human Development Services Office 45, XIII
Inspector General, Office of 42, V
Public Health Service 42, I
Refugee Resettlement, Office of 45, IV
Social Security Administration 20, III; 45, IV
Health Care Financing Administration 42, IV
Housing and Urban Development, Department of
Community Planning and Development, Office of Assistant Secretary for
24, V, VI
Equal Opportunity, Office of Assistant Secretary for 24, I
Federal Acquisition Regulation 48, 24
Government National Mortgage Association 24, III
Housing -- Federal Housing Commissioner, Office of Assistant
Secretary for 24, II, VIII, X, XX
Inspector General, Office of 24, XII
Mortgage Insurance and Loan Programs Under Emergency Homeowners'
Relief Act 24, XV
Public and Indian Housing, Office of Assistant Secretary for 24, IX
Secretary, Office of 24, Subtitle B, VII
Solar Energy and Energy Conservation Bank 24, XI
Housing -- Federal Housing Commissioner, Office of Assistant
Secretary for 24, II, VIII, X, XX
Human Development Services Office 45, XIII
Immigration and Naturalization Service 8, I
Indian Affairs, Bureau of 25, I
Indian Arts and Crafts Board 25, II
Information Agency, United States 22, V; 48, 19
Information Resources Management, Office of, Agriculture Department
7, XXVII
Information Security Oversight Office 32, XX
Inspector General, Office of, Agriculture Department 7, XXVI
Inspector General, Office of, Health and Human Services Department
42, V
Inspector General, Office of, Housing and Urban Development
Department 24, XII
Inter-American Foundation 22, X
Intergovernmental Relations, Advisory Commission on 5, VII
Interior Department
Endangered Species Committee 50, IV
Federal Acquisition Regulation 48, 14
Federal Property Management Regulations System 41, 114
Fish and Wildlife Service, United States 50, I, IV
Geological Survey 30, IV
Indian Affairs, Bureau of 25, I
Indian Arts and Crafts Board 25, II
Land Management Bureau 43, II
Minerals Management Service 30, II
Mines, Bureau of 30, VI
National Park Service 36, I
Reclamation Bureau 43, I
Secretary of the Interior, Office of 43, Subtitle A
Surface Mining and Reclamation Appeals, Board of 30, III
Surface Mining Reclamation and Enforcement, Office of 30, VII
United States Fish and Wildlife Service 50, I, IV
Internal Revenue Service 26, I
International Boundary and Water Commission, United States and Mexico
22, XI
International Cooperation and Development Office, Department of
Agriculture 7, XXII
International Development, Agency for 22, II
International Development Cooperation Agency 22, XII
International Development, Agency for 22, II
Overseas Private Investment Corporation 22, VII
International Joint Commission, United States and Canada 22, IV
International Organizations Employees Loyalty Board 5, V
International Regulatory Agencies (Fishing and Whaling) 50, III
International Trade Administration 15, III; 19, III
International Trade Commission, United States 19, II
Interstate Commerce Commission 49, X
Japan-United States Friendship Commission 22, XVI
Joint Board for the Enrollment of Actuaries 20, VIII
Justice Department 28, I; 41, 128
Drug Enforcement Administration 21, II
Federal Acquisition Regulation 48, 28
Federal Claims Collection Standards 4, II
Federal Prison Industries, Inc. 28, III
Foreign Claims Settlement Commission of the United States 45, V
Immigration and Naturalization Service 8, I
Offices of Independent Counsel 28, VI
Prisons, Bureau of 28, V
Labor Department
Benefits Review Board 20, VII
Employees' Compensation Appeals Board 20, IV
Employment and Training Administration 20, V
Employment Standards Administration 20, VI
Federal Acquisition Regulation 48, 29
Federal Contract Compliance Programs, Office of 41, 60
Federal Procurement Regulations System 41, 50
Labor-Management Relations and Cooperative Programs, Bureau of 29, II
Labor-Management Standards, Office of 29, IV
Mine Safety and Health Administration 30, I
Occupational Safety and Health Administration 29, XVII
Pension and Welfare Benefits Administration 29, XXV
Public Contracts 41, 50
Secretary of Labor, Office of 29, Subtitle A
Veterans' Employment and Training, Office of the Assistant Secretary
for 41, 61; 20, IX
Wage and Hour Division 29, V
Workers' Compensation Programs, Office of 20, I
Labor-Management Relations and Cooperative Programs, Bureau of 29, II
Labor-Management Standards, Office of 29, IV
Land Management, Bureau of 43, II
Legal Services Corporation 45, XVI
Library of Congress 36, VII
Copyright Office 37, II
Management and Budget, Office of 5, III; 48, 99
Marine Mammal Commission 50, V
Maritime Administration 46, II
Merit Systems Protection Board 5, II
Micronesian Status Negotiations, Office for 32, XXVII
Mine Safety and Health Administration 30, I
Minerals Management Service 30, II
Mines, Bureau of 30, VI
Minority Business Development Agency 15, XIV
Miscellaneous Agencies 1, IV
Monetary Offices 31, I
Mortgage Insurance and Loan Programs Under the Emergency Homeowners'
Relief Act, Department of Housing and Urban Development 24, XV
National Aeronautics and Space Administration 14, V; 48, 18
National Agricultural Library 7, XLI
National Agricultural Statistics Service 7, XXXVI
National Archives and Records Administration 36, XII
National Bureau of Standards 15, II
National Capital Planning Commission 1, IV
National Commission for Employment Policy 1, IV
National Commission on Libraries and Information Science 45, XVII
National Credit Union Administration 12, VII
National Foundation on the Arts and the Humanities 45, XI
National Highway Traffic Safety Administration 23, II, III; 49, V
National Indian Gaming Commission 25, III
National Institute of Standards and Technology 15, II
National Labor Relations Board 29, I
National Marine Fisheries Service 50, II, IV
National Mediation Board 29, X
National Oceanic and Atmospheric Administration 15, IX; 50, II, III,
IV, VI
National Park Service 36, I
National Railroad Adjustment Board 29, III
National Railroad Passenger Corporation (AMTRAK) 49, VII
National Science Foundation 45, VI; 48, 25
National Security Council 32, XXI
National Security Council and Office of Science and Technology Policy
47, II
National Telecommunications and Information Administration 15, XXIII;
47, III
National Transportation Safety Board 49, VIII
Office of Navajo and Hopi Indian Relocation 25, IV
Navy Department 32, VI; 48, 52
Neighborhood Reinvestment Corporation 24, XXV
Nuclear Regulatory Commission 10, I
Occupational Safety and Health Administration 29, XVII
Occupational Safety and Health Review Commission 29, XX
Office of Independent Counsel 28, VII
Offices of Independent Counsel, Department of Justice 28, VI
Operations Office, Department of Agriculture 7, XXVIII
Overseas Private Investment Corporation 22, VII
Oversight Board 12, XV
Packers and Stockyards Administration 9, II
Panama Canal Commission 48, 35
Panama Canal Regulations 35, I
Patent and Trademark Office 37, I
Payment of Expenses Connected With the Death of Certain Employees 41,
303
Peace Corps 22, III
Pennsylvania Avenue Development Corporation 36, IX
Pension and Welfare Benefits Administration, Department of Labor 29,
XXV
Pension Benefit Guaranty Corporation 29, XXVI
Personnel Management, Office of 5, I; 45, VIII; 48, 17
Federal Employees Health Benefits Acquisition Regulation 48, 16
Postal Rate Commission 39, III
Postal Service, United States 39, I
Postsecondary Education, Office of 34, VI
President's Commission on White House Fellowships 1, IV
Presidential Documents 3
Prisons, Bureau of 28, V
Productivity, Technology and Innovation, Assistant Secretary
(Commerce) 37, IV
Property Management Regulations System, Federal 41, Subtitle C
Public Contracts, Department of Labor 41, 50
Public Health Service 42, I
Railroad Retirement Board 20, II
Reclamation Bureau 43, I
Reduction in Meeting and Training Allowance Payments 41, 304
Refugee Resettlement, Office of 45, IV
Regional Action Planning Commissions 13, V
Relocation Allowances 41, 302
Research and Special Programs Administration 49, I
Resolution Trust Corporation 12, XVI
Rural Electrification Administration 7, XVII
Rural Telephone Bank 7, XVI
Saint Lawrence Seaway Development Corporation 33, IV
Science and Technology Policy, Office of 32, XXIV
Science and Technology Policy, Office of, and National Security
Council 47, II
Secret Service 31, IV
Securities and Exchange Commission 17, II
Selective Service System 32, XVI
Small Business Administration 13, I; 48, 22
Smithsonian Institution 36, V
Social Security Administration 20, III; 45, IV
Soil Conservation Service 7, VI
Solar Energy and Energy Conservation Bank, Department of Housing and
Urban Development 24, XI
Soldiers' and Airmen's Home, United States 5, XI
Special Counsel, Office of 5, VIII
Special Education and Rehabilitative Services, Office of 34, III
State Department 22, I
Federal Acquisition Regulation 48, 6
Surface Mining and Reclamation Appeals, Board of 30, III
Susquehanna River Basin Commission 18, VIII
Technology Administration 15, XI
Tennessee Valley Authority 18, XIII
Thrift Supervision Office, Department of the Treasury 12, V
Trade Representative, United States, Office of 15, XX
Transportation, Department of 44, IV
Coast Guard 33, I; 46, I, III; 49, IV
Commercial Space Transportation, Office of 14, III
Contract Appeals Board 48, 63
Federal Acquisition Regulation 48, 12
Federal Aviation Administration 14, I
Federal Highway Administration 23, I, II; 49, III
Federal Railroad Administration 49, II
Maritime Administration 46, II
National Highway Traffic Safety Administration 23, II, III; 49, V
Research and Special Programs Administration 49, I
Saint Lawrence Seaway Development Corporation 33, IV
Secretary of Transportation, Office of 14, II; 49, Subtitle A
Urban Mass Transportation Administration 49, VI
Transportation, Office of, Department of Agriculture 7, XXXIII
Travel Allowance 41, 301
Travel and Tourism Administration, United States 15, XII
Treasury Department 17, IV
Alcohol, Tobacco and Firearms, Bureau of 27, I
Comptroller of the Currency 12, I
Customs Service, United States 19, I
Engraving and Printing, Bureau of 31, VI
Federal Acquisition Regulation 48, 10
Federal Law Enforcement Training Center 31, VII
Fiscal Service 31, II
Foreign Assets Control, Office of 31, V
Internal Revenue Service 26, I
Monetary Offices 31, I
Secret Service 31, IV
Secretary of the Treasury, Office of 31, Subtitle A
Thrift Supervision Office 12, V
United States Customs Service 19, I
Truman, Harry S. Scholarship Foundation 45, XVIII
Under Secretary for Technology, Department of Commerce 37, V
United States and Canada, International Joint Commission 22, IV
United States Arms Control and Disarmament Agency 22, VI
United States Customs Service 19, I
United States Fish and Wildlife Service 50, I, IV
United States Information Agency 22, V; 48, 19
United States International Development Cooperation Agency 22, XII
United States International Trade Commission 19, II
United States Postal Service 39, I
United States Soldiers' and Airmen's Home 5, XI
United States Trade Representative, Office of 15, XX
United States Travel and Tourism Adminstration 15, XII
Urban Mass Transportation Administration 49, VI
Veterans Affairs Department 38, I; 48, 8
Veterans' Employment and Training, Office of the Assistant Secretary
for 41, 61; 20, IX
Vice President of the United States, Office of 32, XXVIII
Vocational and Adult Education, Office of 34, IV
Wage and Hour Division 29, V
Water Resources Council 18, VI
Workers' Compensation Programs, Office of 20, I
World Agriculture Outlook Board 7, XXXVIII
07 CFR 1930.150 -- -- 7 CFR (1-1-92 Edition)
07 CFR 1930.150 -- -- List of CFR Sections Affected
07 CFR 1930.150 -- -- List of CFR Sections Affected
All changes in this volume of the Code of Federal Regulations which
were made by documents published in the Federal Register since January
1, 1986, are enumerated in the following list. Entries indicate the
nature of the changes effected. Pages numbers refer to Federal Register
pages. The user should consult the entries for chapters and parts as
well as sections for revisions.
For the period before January 1, 1986, see the ''List of CFR Sections
Affected, 1949-1963, 1964-1972, and 1973-1985'' published in seven
separate volumes.
07 CFR 1930.150 -- -- 1986
7 CFR
51 FR
Page
Chapter XVIII
1900 Authority citation revised 4135
1900.51 Revised; interim 6707
Confirmed 29905
(b) revised; eff. 1-20-87 45432
1900.52 (a) revised; interim 6708
Confirmed 29905
1900.53 (a)(15) revised 4135
(a)(5) revised; interim 6708
Confirmed 29905
(a)(17) added 40785
1900.55 (c), (d), and (e) revised; (f) added; interim 6708
Confirmed 29905
(d) revised; interim 13441
1900.56 (a), (b) introductory text, and (e) revised; interim 6708
Confirmed 29905
(a) revised; interim 13441
1900.57 (j) redesignated as (k); new (j) added; (i) amended 29449
1900.59 (c) added; interim 6709
Confirmed 29905
1900.51 -- 1900.60 (Subpart B) Exhibit D corrected 2345
Exhibit B-6 revised; Exhibit B-7 added; interim 6709
Confirmed 29905
Exhibit B-3 revised; interim 13442
1901 Authority citation revised 24301
Authority citation revised; interim 34928
1901.2 Revised; interim 34928
1901.5 Revised; interim 34928
1901.502 Revised 24301
1902 Authority citation revised 12308
1902.11 Amended 12308
1903 Authority citation revised 4135, 13442
1903.1 Revised; interim 13442
1903.2 (b) revised 4135
(b) revised; eff. 1-20-87 45432
1910.1 Introductory text revised; interim 13442
1910.3 (e) and (j) introductory text revised; interim 13442
1910.4 Revised; interim 13442
1910.5 (c)(1) revised; (c)(5) added; interim 13443
1910.6 Introductory text and (b)(3) added; (c) through (e)
redesignated as (d) through (f); new (c) added; new (d) revised;
interim 13443
1910.7 (a) amended; interim 13444
1910.52 (b) revised; interim 13444
1910.61 (b) (2) and (3) revised; (c)(2), (d)(2) introductory text,
(i), and (iii) amended 25029
1924 Authority citation revised 3569,
4135, 13444, 41603
1924.1 -- 1924.13 (Subpart A) Exhibit B amended; Exhibit J added
41603
1924.5 (g)(4) revised 4135
(e)(4) added 41603
1924.6 (b)(3)(ii)(G) amended 12308
1924.8 (a) amended 41603
1924.13 (a) introductory text amended 3569
1924.51 Revised 4135
Revised; interim 13444
1924.57 (b)(1) introductory text, (iv), (2), and (3), (c)(4) and (5),
and (d)(2) revised; (b)(1)(viii) and (c)(6) added; interim 13444
1924.51 -- 1924.100 (Subpart B) Exhibit A amended; interim 13445
1924.71 Revised 3326
1924.72 Introductory text revised 4135
(b) and (c) revised; interim 6709
Confirmed 29905
1927 Authority citation revised 4136
1927.7 (c)(3) revised 4136
1930.101 (d)(1) amended 27643
1930.102 (h) amended 27643
1930.109 Amended 27643
1930.110 Introductory text, (a) (4) and (5) amended 27643
1930.117 (b) (3), (5), and (6) and (c) introductory text amended
27643
1930.119 (a) introductory text, (b) (1) and (2) amended; (d) and (e)
redesignated as (e) and (f); (c) revised; new (d) added; new (f)
amended 27643
1930.124 Introductory text, (a)(3), (b) introductory text, (c)
introductory text and (1), (d)(1)(iii), and (f)(1) amended 27644
(b) amended 27669
1930.125 Added 27644
1930.134 (a) and (b) amended 12308
1930.141 (i)(6) amended 27644
1930.143 Existing text designated as (b); (a) added 27644
1930.101 -- 1930.150 (Subpart C) Exhibits B and E amendment confirmed
6393
Exhibit A amended; Exhibit A-1 nomenclature change; Exhibit B
revised 27644
Exhibits B-1, B-3, and B-9 amended; Exhibit C revised 27662
Exhibits C-2 and E revised; Exhibit D amended 27664
Exhibit A-1 amended; Exhibit B-7 nomenclature change 27669
1930.176 (f)(2) amended 12308
07 CFR 1930.150 -- -- 1987
7 CFR
52 FR
Page
Chapter XVIII
1900.2 (e) revised 44375
1900.51 (b) removed; (c) through (j) redesignated as (b) through (i)
46348
1900.52 (d) revised 26133
1900.57 (i) revised 45806
1900.51 -- 1900.60 (Subpart B) Exhibit D revised 45807
1901 Authority citation revised 8002
1901.204 (a) (19) through (21) and (d)(3)(iv) added; (b)(2), (d) (1)
and (5), (e)(2)(ii) and (f) revised 41949
1901.205 (b)(1), (2)(i), (3)(ii) and (iv), and (e)(2) amended 8002
1901.201 -- 1901.205 (Subpart E) Exhibit C revised 8002
1910 Authority citation revised 15491
1910.3 (i) introductory text revised; (i)(4) added 15491
1910.52 (a) revised 41699
1910.53 (d) revised 41699
1910.54 (f) through (j) redesignated as (g) through (k); new (f)
added 41699
1910.55 (a) revised 41699
1910.59 Revised 41699
1910.60 (a) revised 25586
(c) revised 41699
1910.61 (b) (1) through (3) and (d) (4) and (5) revised 25586
1910.101 (Subpart C) Added 6498
1922.104 (a)(12) amended 11982
Policy guidelines 23543
1924 Authority citation revised 8002
1924.1 -- 1924.50 (Subpart A) Text revised 8002
1924.5 (d)(2) and (e) (2) and (4) amended 19283
Transition period 30658
(d)(2) corrected 48391
(d)(1) introductory text and (3) corrected 48799
Transition period extended to 9-30-88 49349
1924.13 (e)(1)(v)(C) and (2)(viii)(B) correctly removed;
(e)(1)(v)(D) and (2)(viii)(C) correctly redesignated as (e)(1)(v)(C) and
(2)(viii)(B); (e)(1)(ii)(F), (v) introductory text and (B) and
(e)(2)(viii) introductory text and (A) correctly revised 26139
1924.1 -- 1924.50 (Subpart A) Exhibits A through I, K and L revised
8021
Exhibits I and J amended 19283
1924.51 Revised 26133
1924.57 (b)(2) and (d)(2) revised 32120
1924.60 (d)(7) added 26133
1924.101 -- 1924.150 (Subpart C) Added 19284
1924.253 (a)(3) amended; (c) revised 8034
1930.110 (c) introductory text amended 20697
1930.119 (b) amended 20697
1930.124 (a)(3) (ii) and (v) amended 20697
1930.138 Added 36913
1930.101 -- 1930.150 (Subpart C) Exhibit B amended 8034, 20697
Exhibits C, C-2, and E amended 20698
Exhibits B and E amended 24287
Exhibit C amended 36913
1933 Authority citation revised 19301
1933.409 (f) revised 8034
1933.412 Revised 19301
07 CFR 1930.150 -- -- 1988
7 CFR
53 FR
Page
Chapter XVIII
1900.51 -- 1900.100 (Subpart B) Revised 26407
1900.55 (c) through (f) redesignated as (d) through (g); (f) and (g)
amended; new (c) added 7332
1901.203 (c)(4)(iv) and (5)(iv) revised 27825
1901.204 (b)(3) removed; (b) (1) and (2) and (e)(3)(i) revised 3860
1902 Authority citation revised 26588
1902.1 -- 1902.16 (Subpart A) Authority citation removed 35670
1902.1 (a), (i), (j) and (k) revised; interim 35670
1902.2 (b) revised 26588
(a) introductory text, (2), (4), (5), and (6), (b), (e) and (f)
introductory text revised; interim 35670
1902.3 (b) removed; (c) and (d) redesignated as (b) and (c); (a)
revised 26588
(b)(1) revised; interim 35670
1902.6 (d) revised 231
1902.7 (a), (c) and (f) revised; (e) amended 231
(f) corrected 24437
1902.14 Revised; interim 35671
1902.15 Introductory text, (b) and (c) revised 231
1902.1 -- 1902.16 (Subpart A) Exhibit A removed 232
Exhibit B revised; Exhibits C and D removed; interim 35671
1902.104 -- 1902.150 (Subpart C) Added 26588
1903.9 (a) amended 17688
1910 Authority citation revised 35671
1910.1 -- 1910.50 (Subpart A) Revised; interim 35671
1910.3 (b)(2) amended 17688
1910.7 (a) amended 17688
1910.51 -- 1910.64 (Subpart B) Table of contents amended; Note to
Exhibits revised; interim 35679
1910.52 (b) revised; interim 35679
1924 Authority citation revised 43676
1924.1 Revised; interim 35679
1924.5 (f)(1)(iii) (A) through (E) revised; (f)(1)(iii)(F) added
43676
1924.13 (e)(1)(iv) and (vi)(A) and (2)(ix)(A) revised 2155
1924.1 -- 1924.13 (Subpart A) Exhibit J amended 2156
1924.51 -- 1924.100 (Subpart B) Revised; interim 35679
1924.57 (c)(5)(ii) revised 8739
1927.7 (c)(3) revised 13100
1930.102 (h) revised 2156
1930.141 (e) revised 2156
1930.101 -- 1930.150 (Subpart C) Exhibits B, B-8, C, and E amended;
Exhibits H, H-1, and I added 2156
1933.404 (a)(4)(iii) revised 2159
1933.416 (b) revised 2159
07 CFR 1930.150 -- -- 1989
7 CFR
54 FR
Page
Chapter XVIII
1900.51 (b) revised; interim 47957
1902 Authority citation revised 47196
1902.1 (i) revised; (k) removed; (l) redesignated as (k); new (k)
amended 47959
1902.2 (f) removed; (g) redesignated as (f) 47959
1902.3 (a) revised 39727
1902.10 (c) amended 47959
1902.15 (c) amended 47196
1910 Authority citation revised 11365, 18098
1910.1 (a) revised 11365
1910.3 (c) amended 11365
1910.6 (d) amended 11366
1910.7 (b) amended 11366
1910.8 (e) added 29330
1910.52 (a) revised 18098
1910.53 (g) revised 14632
(d) and (e) revised 18098
1910.54 (b) revised 18098
1910.59 Revised 18098
1910.61 (a)(2)(ii) revised 18098
1922 Authority citation revised 8523
1922.101 -- 1922.111 (Subpart C) Revised 8523
1924.12 (c) amended 14334
1924.1 -- 1924.50 (Subpart A) Exhibit D amended 6874
1924.201 -- 1924.220 (Subpart E) Removed 14334
1924.256 (g)(3)(ii) and (i) amended 14334
1924.263 Amended 14334
1930.124 (c) introductory text revised; (c) (1) through (5)
redesignated as (c)(3) (i) through (v); new (c) (1), (2), and (3)
heading and introductory text added; (c)(3)(ii) amended 43416
1930.101 -- 1930.150 (Subpart C) Exhibits B, B-1, and E amended 3772
Exhibit E amended 9197
Exhibit B amended 14335, 43417
Exhibit B-3 amended 14336
Exhibit C amended 39335
07 CFR 1930.150 -- -- 1990
7 CFR
55 FR
Page
Chapter XVIII
1900 Authority citation revised 11005
1900.3 Amended 43325
1900.5 Redesignated as 1900.6; new 1900.5 added 43325
1900.6 Redesignated from 1900.5 43325
1900.51 (b), (c), and (e) revised 9871
(b) amended; (f) added 11005
1900.52 (b) through (j) redesignated as (c) through (k); (a), new
(c), new (g), and new (h) revised; new (b) added; 9872
1900.53 (a)(4), (b), and (c)(1) revised 9872
1900.55 (a) introductory text revised; (a)(15) and (16) added; (b)
revised 9872
1900.56 (a)(5) revised 9873
1900.57 (i) revised; (j) amended 1577
(a), (e), (g), (j), and (l) revised; (m) added 9873
1900.58 (d) revised 9874
1900.61 Added 1577
1900.1 -- 1900.100 (Subpart B) Exhibit A removed; Exhibits B-1, B-2,
B-3 and C revised 9874
Exhibit B-4 added 9875
1901.203 (c)(4)(ii) nomenclature change 13503
1901.204 (a)(22) added; (d)(1), (3)(iv), (5), (e)(2)(ii), and (f)
revised 5962
1901.355 (a)(1) nomenclature change 13503
1902 Authority citation revised 21524
1902.1 Regulation at 53 FR 35670 confirmed 21524
1902.2 Regulation at 53 FR 35670 confirmed; (a) amended 21524
1902.3 Regulation at 53 FR 35670 confirmed 21524
1902.14 Regulation at 53 FR 35671 confirmed; (a) revised 21524
1902.1 -- 1902.16 Subpart A and Exhibits A, B, C, and D Regulation at
53 FR 35671 confirmed 21524
1910 Authority citation revised 25819
1910.1 -- 1910.50 (Subpart A) Regulation at 53 FR 35671 confirmed
21524
1910.1 Introductory text revised 21524
(d) added; interim 29560
1910.3 (b)(2) amended; (b)(3), (j)(2) and (k) amended 21524
1910.4 (b)(16) removed; (b)(13) through (15) redesignated as (b)(14)
through (16); new (b)(13) and (22) added; (a)(6)(ii), (b) introductory
text, (6), new (15), (e), and (i) revised 21525
(a)(10) and (b)(23) added 46188
(i) revised; interim 29560
1910.5 (c)(1) and (6) revised 21525
(d) added 46188
1910.6 (a), (b)(2), (e), (f) introductory text and (1) revised 21525
1910.8 Introductory text amended 21526
1910.1 -- 1910.50 (Subpart A) Exhibits A and (B) amended 21526
1910.51 Revised 25819
Revised 46188
1910.52 -- 1910.55 Removed 25819
1910.59 -- 1910.64 Removed 25819
1910.53 Added 46188
1922.104 (a)(12) amended 35895
1924.6 (c) introductory text amended 41833
1924.60 (c)(4) revised 37455
1930.103 Revised 6242
1930.105 (b)(10) revised and (b)(11) added 6242
(b)(12) added; interim 25074
1930.134 Revised 26641
1930.141 (a) and (d) revised; (f) through (i) redesignated as (g)
through (j); new (f) added 26641
1930.142 Revised 6242
1930.101 -- 1930.150 (Subpart C) Exhibit B amended 6242, 26641
Exhibit B amended; interim 25074
Exhibit B-1 and E amended; interim 25075
Exhibit B-3 amended 6244
Exhibits D and D-1 amended 35895
Exhibit J added 26641
1933 Removed 41833
07 CFR 1930.150 -- -- 1991
7 CFR
56 FR
Page
Chapter XVIII
1900 Authority citation revised 6946
1900.2 (f) revised 6946
1901 Authority citation revised 48095
1901.3 (b) revised 48095
1901.4 (f) revised; (g) and (h) redesignated as (h) and (i); new
(g) added 48095
1902 Authority citation revised 50648
1902.7 (a), (b)(2), (3), (d), (e) and (f) revised 50648
1903.2 (b) amended 10147
1910.1 (d) removed; eff. 1-27-92 66959
1910.3 (a)(3), (4) and (5) redesignated as (a)(4), (5) and (6); new
(a)(3) added; new (a)(4)(i) and (ii) amended; eff. 1-27-92 66959
1910.4 (a)(9), (b)(14) and (i) amended; eff. 1-27-92 66959
1910.5 (c)(6) amended 10147
1922.101 Revised 8107
1922.102 Removed 8107
1922.104 Removed 8107
1922.105 Removed 8107
1922.107 Removed 8107
1922.108 Removed 8107
1922.109 Removed 8107
1922.110 Removed 8107
1922.111 Removed 8107
1924 Authority citation revised; subpart authority citations removed
40241
1924.1 -- 1924.50 (Subpart A) Exhibit L amended 29167
1924.57 (b) introductory text, (1) introductory text, (d)(1) and (2)
revised; (d)(4) added 15820
(d)(3) amended 15821
1924.51 -- 1924.100 (Subpart B) Exhibit A amended 15821
1924.101 -- 1924.150 (Subpart C) Exhibit C amended 2202
1924.251 -- 1924.300 (Subpart F) Revised 40241
1927 Removed 943
Added; eff. 1-30-92 67472
1930 Authority citation revised 2202, 28037
1930.101 (c) and (d) redesignated as (d) and (e); (b) revised; new
(c) added 2202
1930.102 Revised 2202
1930.103 Revised 2203
1930.105 (b)(9) revised 2203
1930.110 Introductory text, (a)(5), and (b)(6) revised 2203
1930.117 (a)(2) revised 2203
1930.119 (a)(3)(i), (ii), (iii), (v), (b)(1), (d), and (f) revised
2203
1930.124 (b)(3) revised 2204
1930.125 Introductory text revised 2204
1930.141 (j)(1) revised 2204
1930.142 Introductory text revised 2204
1930.144 Revised 2204
1930.101 -- 1930.150 (Subpart C) Exhibit A amended 2204
Exhibit B revised 2204
Exhibit B amended 28471, 47375
Exhibit B amended; eff. 1-27-92 66959
Exhibit B-1 revised 2223
Exhibit B-2 amended 2225
Exhibit B-4 and B-5 heading revised 2225
Exhibit B-7 amended 2225
Exhibit C revised 2225
Exhibit C-1 revised 2228
Exhibit C-2 revised 2229
Exhibit C-2 amended 47375
Exhibit D amended 2229
Exhibit E amended 2229,
28038, 66960
Exhibit F revised 2230
Exhibit G revised 2231
Exhibit H amended 2232, 28038
Exhibit H-1 revised 2232
7
Agriculture
PARTS 1900 TO 1939
Revised as of January 1, 1992
CONTAINING
A CODIFICATION OF DOCUMENTS
OF GENERAL APPLICABILITY
AND FUTURE EFFECT
AS OF JANUARY 1, 1992
With Ancillaries
Published by
the Office of the Federal Register
National Archives and Records
Administration
as a Special Edition of
the Federal Register
Washington, DC 20402-9328
07 CFR 1930.150 -- -- Table of Contents
Page
Explanation
Title 7:
Subtitle B -- Regulations of the Department of Agriculture --
Continued:
Chapter XVIII -- Farmers Home Administration, Department of
Agriculture (Continued)
Finding Aids:
Table of CFR Titles and Chapters
Alphabetical List of Agencies Appearing in the CFR
List of CFR Sections Affected
07 CFR 1930.150 -- -- Explanation
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16 as of January 1
Title 17 through Title 27 as of April 1
Title 28 through Title 41 as of July 1
Title 42 through Title 50 as of October 1
The appropriate revision date is printed on the cover of each volume.
LEGAL STATUS
The contents of the Federal Register are required to be judicially
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
issues of the Federal Register. These two publications must be used
together to determine the latest version of any given rule.
To determine whether a Code volume has been amended since its
revision date (in this case, January 1, 1992), consult the ''List of CFR
Sections Affected (LSA),'' which is issued monthly, and the ''Cumulative
List of Parts Affected,'' which appears in the Reader Aids section of
the daily Federal Register. These two lists will identify the Federal
Register page number of the latest amendment of any given rule.
EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
Register since the last revision of that volume of the Code. Source
citations for the regulations are referred to by volume number and page
number of the Federal Register and date of publication. Publication
dates and effective dates are usually not the same and care must be
exercised by the user in determining the actual effective date. In
instances where the effective date is beyond the cut-off date for the
Code a note has been inserted to reflect the future effective date. In
those instances where a regulation published in the Federal Register
states a date certain for expiration, an appropriate note will be
inserted following the text.
OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires Federal
agencies to display an OMB control number with their information
collection request. Many agencies have begun publishing numerous OMB
control numbers as amendments to existing regulations in the CFR. These
OMB numbers are placed as close as possible to the applicable
recordkeeping or reporting requirements.
OBSOLETE PROVISIONS
Provisions that become obsolete before the revision date stated on
the cover of each volume are not carried. Code users may find the text
of provisions in effect on a given date in the past by using the
appropriate numerical list of sections affected. For the period before
January 1, 1986, consult either the List of CFR Sections Affected,
1949-1963, 1964-1972, or 1973-1985, published in seven separate volumes.
For the period beginning January 1, 1986, a ''List of CFR Sections
Affected'' is published at the end of each CFR volume.
CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Statutory
Authorities and Agency Rules (Table I), and Acts Requiring Publication
in the Federal Register (Table II). A list of CFR titles, chapters, and
parts and an alphabetical list of agencies publishing in the CFR are
also included in this volume.
An index to the text of ''Title 3 -- The President'' is carried
within that volume.
The Federal Register Index is issued monthly in cumulative form.
This index is based on a consolidation of the ''Contents'' entries in
the daily Federal Register.
A List of CFR Sections Affected (LSA) is published monthly, keyed to
the revision dates of the 50 CFR titles.
REPUBLICATION OF MATERIAL
There are no restrictions on the republication of material appearing
in the Code of Federal Regulations.
INQUIRIES AND SALES
For a summary, legal interpretation, or other explanation of any
regulation in this volume, contact the issuing agency. Inquiries
concerning editing procedures and reference assistance with respect to
the Code of Federal Regulations may be addressed to the Director, Office
of the Federal Register, National Archives and Records Administration,
Washington, DC 20408 (telephone 202-523-3517). All mail order sales are
handled exclusively by the Superintendent of Documents, Attn: New
Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. Charge orders may
be telephoned to the Government Printing Office order desk at
202-783-3238.
Martha L. Girard,
Director,
Office of the Federal Register.
January 1, 1992.
07 CFR 1930.150 -- -- THIS TITLE
Title 7 -- Agriculture is composed of nineteen volumes. The parts in
these volumes are arranged in the following order: parts 0-26, 27-45,
46-51, part 52, 53-209, 210-299, 300-399, 400-699, 700-899, 900-999,
1000-1059, 1060-1119, 1120-1199, 1200-1499, 1500-1899, 1900-1939,
1940-1949, 1950-1999, and part 2000 to end. The contents of these
volumes represent all current regulations codified under this title of
the CFR as of January 1, 1992.
An index of the alphabetical list of U.S. standards for grades of
processed fruits, vegetables and certain other products appears in the
Finding Aids section of the volume containing part 52.
The Food and Nutrition Service current regulations in the volume
containing parts 210-299, include the Child Nutrition Programs and the
Food Stamp Program. The regulations of the Federal Crop Insurance
Corporation are found in the volume containing parts 400-699.
All marketing agreements and orders for fruits, vegetables and nuts
appear in the one volume containing parts 900-999. All marketing
agreements and orders for milk appear in the three volumes containing
parts 1000-1199. Part 900 -- General Regulations is carried as a note
in each of the three volumes containing parts 1000-1199, and part 1000
-- General Provisions of Federal Milk Marketing Orders is carried as a
note in each of the two volumes containing parts 1060-1199, as a
convenience to the user.
Redesignation tables appear in the Finding Aids section of the
volumes containing parts 210 -- 299 and parts 1500 -- 1899.
For this volume, Ms. S. Meyer was Chief Editor. The Code of Federal
Regulations publication program is under the direction of Richard L.
Claypoole, assisted by Alomha S. Morris.
07 CFR 0.0 7 CFR Ch. XVIII (1-1-92 Edition)
07 CFR 0.0 Farmers Home Administration, USDA
07 CFR 0.0 Title 7 -- Agriculture
07 CFR 0.0 (This book contains parts 1940 to 1949)
SUBTITLE B -- Regulations of the Department of Agriculture
(Continued)
Part
chapter xviii -- Farmers Home Administration, Department of
Agriculture (Continued) 1940
07 CFR 0.0 Subtitle B -- Regulations of the Department of Agriculture (Continued)
07 CFR 0.0 7 CFR Ch. XVIII (1-1-92 Edition)
07 CFR 0.0 Farmers Home Administration, USDA
07 CFR 0.0 CHAPTER XVIII -- FARMERS HOME
07 CFR 0.0 ADMINISTRATION, DEPARTMENT
07 CFR 0.0 OF AGRICULTURE -- (Continued)
07 CFR 0.0 SUBCHAPTER H -- PROGRAM REGULATIONS -- Continued
Part
Page
1940 General
1941 Operating loans
1942 Associations
1943 Farm ownership, soil and water and recreation
1944 Housing
1945 Emergency
1946 Mediation
1948 Rural development
1949 (Reserved)
07 CFR 0.0 7 CFR Ch. XVIII (1-1-92 Edition)
07 CFR 0.0 Farmers Home Administration, USDA
07 CFR 0.0 SUBCHAPTER H -- PROGRAM REGULATIONS -- CONTINUED
07 CFR 0.0 Pt. 1940
07 CFR 0.0 PART 1940 -- GENERAL
07 CFR 0.0 Subparts A -- F (Reserved)
07 CFR 0.0 Subpart G -- Environmental Program
Sec.
1940.301 Purpose.
1940.302 Definitions.
1940.303 General policy.
1940.304 Special policy.
1940.305 Policy implementation.
1940.306 Environmental responsibilities within the National Office.
1940.307 Environmental responsibilities within the State Office.
1940.308 Environmental responsibilities at the District and County
Office levels.
1940.309 Responsibilities of the prospective applicant.
1940.310 Categorical exclusions from National Environmental Policy
Act (NEPA) reviews.
1940.311 Environmental assessments for Class I actions.
1940.312 Environmental assessments for Class II actions.
1940.313 Actions that normally require the preparation of an
Environmental Impact Statement (EIS).
1940.314 Criteria for determining a significant enviromental impact.
1940.315 Timing of the environmental review process.
1940.316 Responsible officials for the environmental review process.
1940.317 Methods for ensuring proper implementation of categorical
exclusions.
1940.318 Completing environmental assessments for Class II actions.
1940.319 Completing environmental assessments for Class I actions.
1940.320 Preparing EISs.
1940.321 Use of completed EIS.
1940.322 Record of decision.
1940.323 Preparing supplements to EISs.
1940.324 Adoption of EIS or environmental assessment prepared by
another Federal Agency.
1940.325 FmHA as a cooperating Agency.
1940.326 FmHA as a lead Agency.
1940.327 Tiering.
1940.328 State Environmental Policy Acts.
1940.329 Commenting on other agencies' EISs.
1940.330 Monitoring.
1940.331 Public involvement.
1940.332 Emergencies.
1940.333 Applicability to planning assistance.
1940.334 Direct participation of State agencies in the preparation of
FmHA EISs.
1940.335 Environmental review of FmHA proposals for legislation.
1940.336 Contracting for professional services.
1940.337 -- 1940.349 (Reserved)
1940.350 Office of Management and Budget (OMB) control number.
Exhibits to Subpart G
Exhibit A -- Departmental Regulation
Exhibit B -- Development and Implementation of Natural Resource
Management Guide
Exhibit C -- Implementation Procedures for the Farmland Protection
Policy Act; Executive Order 11988, Floodplain Management; Executive
Order 11990, Protection of Wetlands; and Departmental Regulation
9500-3, Land Use Policy
Exhibit D -- Implementation Procedures for the Endangered Species Act
Exhibit E -- Implementation Procedures for the Wild and Scenic Rivers
Act
Exhibit F -- Implementation Procedures for the Coastal Barrier
Resources Act
Exhibit G -- (Reserved)
Exhibit H -- Enviromental Assessment for Class II Actions
Exhibit I -- Finding of No Significant Environmental Impact
Exhibit J -- Locations and Telephone Number of Federal Emergency
Management Administration's Regional Offices
Exhibit K -- Locations and Telephone Numbers of U.S. Fish and
Wildlife Service's Wetland Coordinators
Exhibit L -- Exceptions to Restrictions of Coastal Barrier Resources
Act
Exhibit M -- Implementation Procedures for the Conservation of
Wetlands and Highly Erodible Land Affecting Farmer Program Loans and
Loans to Indian Tribes and Tribal Corporations
07 CFR 0.0 Subpart H -- (Reserved)
07 CFR 0.0 Subpart I -- Truth in Lending -- Real Estate Settlement
Procedures
1940.401 Truth in lending.
1940.402 -- 1940.405 (Reserved)
1940.406 Real estate settlement procedures.
07 CFR 0.0 Subparts J -- K (Reserved)
07 CFR 0.0 Subpart L -- Methodology and formulas for allocation of
Loan and Grant Program Funds
1940.551 Purpose and general policy.
1940.552 Definitions.
1940.553 -- 1940.554 (Reserved)
1940.555 Insured Farm Operating loan funds.
1940.556 Guaranteed Farm Operating loan funds.
1940.557 Insured Farm Ownership loan funds.
1940.558 Guaranteed Farm Ownership loan funds.
1940.559 Farmer Programs and Indian Land Acquisition appropriations
not allocated by State.
1940.560 -- 1940.562 (Reserved)
1940.563 Section 502 Non-subsidized guarnateed Rural Housing (RH)
loans.
1940.564 Section 502 Subsidized guaranteed Rural Housing loans.
1940.565 Section 502 Subsidized Rural Housing loans.
1940.566 Section 504 Housing Repair loans.
1940.567 Section 504 Housing Repair grants.
1940.568 Single Family Housing programs appropriations not allocated
by State.
1940.569 -- 1940.574 (Reserved)
1940.575 Section 515 Rural Rental Housing (RRH) loans.
1940.576 Rental Assistance (RA) for new construction.
1940.577 Rental Assistance (RA) for existing projects.
1940.578 Housing Preservation Grant (HPG) program.
1940.579 Multiple-Family Housing appropriations not allocated by
State.
1940.580 -- 1940.584 (Reserved)
1940.585 Community Facility loans.
1940.586 Water and Waste Disposal loans.
1940.587 Water and Waste Disposal grants.
1940.588 Business and Industrial guaranteed loans.
1940.589 Community and Business programs appropriations not allocated
by State.
1940.590 Community and business programs appropriations not allocated
by State.
1940.591 Community Program Guaranteed loans.
1940.592 -- 1940.600 (Reserved)
Exhibit B -- Section 515 Nonprofit Set Aside (NPSA)
Exhibit C -- Housing in Underserved Areas
07 CFR 0.0 Subparts M -- R (Reserved)
07 CFR 0.0 Subpart S -- Accountability Requirements of Persons Paid to
Influence the Making of an FmHA Housing Loan and/or Grant
1940.901 Purpose.
1940.902 Objective.
1940.903 Definitions.
1940.904 -- 1940.905 (Reserved)
1940.906 Interrelationship of this subpart and Pub. L. 101-121.
1940.907 Who must comply with this subpart.
1940.908 Prohibited practices.
1940.909 -- 1940.910 (Reserved)
1940.911 Reporting and registration requirements.
1940.912 Exceptions.
1940.913 Applicability of this Subpart to FmHA housing applicants.
1940.914 -- 1940.915 (Reserved)
1940.916 Remedies and penalties.
1940.917 Nonexclusiveness of remedies.
1940.918 -- 1940.949 (Reserved)
1940.950 Office of Management and Budget (OMB) reporting and
recordkeeping requirements.
Authority: 7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR
2.23; 7 CFR 2.70.
07 CFR 0.0 Subparts A -- F (Reserved)
07 CFR 0.0 Subpart G -- Environmental Program
Source: 53 FR 36240, Sept. 19, 1988 , unless otherwise noted.
07 CFR 1940.301 Purpose.
(a) This subpart contains the major environmental policies of the
Farmers Home Administration (FmHA). It also provides the procedures and
guidelines for preparing the environmental impact analyses required for
a series of Federal laws, regulations, and Executive orders within one
environmental document. The timing and use of this environmental
document within the FmHA decision-making process is also outlined.
(b) This subpart is intended to be consistent with the Council on
Environmental Ouality's (CEQ) Regulations for Implementing the
Procedural Provisions of the National Environmental Policy Act (NEPA),
40 CFR Parts 1500-1508. CEQ's regulations will not be repeated in this
subpart except when essential for clarification of important procedural
or substantive points. Otherwise, citations to applicable sections of
the regulations will be provided. The CEQ regulations will be available
at all FmHA offices.
(c) This subpart is designed to integrate the requirements of NEPA
with other planning and environmental review procedures required by law,
or by Agency practice, so that all such procedures run concurrently
rather than consecutively. The environmental document, which results
from the implementation of this subpart, provides on a project basis a
single reference point for the Agency's compliance and/or implementation
of the following requirements and policies:
(1) The National Environmental Policy Act, 42 U.S.C. 4321;
(2) Safe Drinking Water Act -- Section 1424(e), 42 U.S.C. 300h;
(3) Endangered Species Act, 16 U.S.C. 1531;
(4) Wild and Scenic Rivers Act, 16 U.S.C. 1271;
(5) The National Historic Preservation Act, 16 U.S.C. 470 (See
Subpart F of Part 1901 of this chapter for more specific implementation
procedures);
(6) Archaeological and Historic Preservation Act, 16 U.S.C. 469 (See
Subpart F of Part 1901 of this chapter for more specific implementation
procedures);
(7) Coastal Zone Management Act -- Section 307(c) (1) and (2), 16
U.S.C. 1456;
(8) Farmland Protection Policy Act, Subtitle I, Pub. L. 97-98;
(9) Coastal Barrier Resources Act, Pub. L. 97-348;
(10) Executive Order 11593, Protection and Enhancement of the
Cultural Environment (See Subpart F of Part 1901 of this chapter for
more specific implementation procedures);
(11) Executive Order 11514, Protection and Enhancement of
Environmental Quality;
(12) Executive Order 11988, Floodplain Management;
(13) Executive Order 11990, Protection of Wetlands;
(14) Title 7, Parts 1b and 1c, Code of Federal Regulations,
Department of Agriculture's National Environmental Policy Act; Final
Policies and Procedures;
(15) Title 7, Part 3100, Code of Federal Regulations, Department of
Agriculture's Enhancement, Protection, and Management of the Cultural
Environment (See Subpart F of Part 1901 of this chapter for more
specific implementation procedures);
(16) Title 7, Part 658, Code of Federal Regulations, Department of
Agriculture, Soil Conservation Service, Farmland Protection Policy;
(17) Title 87, Part 12, Code of Federal Regulations, Highly Erodible
Land and Wetland Conservation;
(18) Departmental Regulation 9500-3, Land Use Policy (See Exhibit A
of this subpart);
(19) Departmental Regulation 9500-4, Fish and Wildlife Policy.
(d) The primary objectives of this subpart are for the Agency to make
better decisions by taking into account potential environmental impacts
of proposed projects and by working with FmHA applicants, other Federal
agencies, Indian tribes, State and local governments, and interested
citizens and organizations in order to formulate actions that advance
the program goals in a manner that will protect, enhance, and restore
environmental quality. To accomplish these objectives, the
identification of potentially significant impacts on the human
environment is mandated to occur early in the Agency's planning and
decisionmaking processes. Important decision points are identified.
The completion of the environmental review process is coordinated with
these decision points, and this review must be completed prior to the
Agency's first major decision on whether or not to participate in the
proposal. This early availability of the results of the environmental
review process is intended to ensure that Agency decisions are based on
an understanding of their environmental consequence, as well as the
consequences of alternative courses of action.
(e) Reducing delays, duplication of effort, and superfluous analyses
are provided for in this subpart. FmHA environmental documents are to
be supported by accurate analyses and will concentrate on the issues
that are timely and relevant to the action in question, rather than
amassing needless detail. Such documents and their preparation and
review will be coordinated with other Federal or State agencies jointly
participating in proposed actions or related actions, in order to avoid
duplication of effort, and to achieve a coordinated and timely response.
(f) Public involvement is desirable, and to facilitate public
involvement, environmental documents will be available to interested
citizens as early in the decisionmaking process as possible and before
decisions are made. Provisions are included for citizens or interested
parties to express their views and any concerns.
(g) The FmHA officials responsible for the environmental review
process are identified.
(h) The FmHA actions covered by this subpart include:
(1) Financial assistance to include grants, loans, and guarantees,
(2) Subdivision approvals,
(3) The management, leasing and sale of inventory property, and
(4) Other major federal actions such as proposals for legislation and
the issuance of regulations.
07 CFR 1940.302 Definitions.
Following is a list of definitions that apply to the implementation
of this subpart. Please note that 1940.301(b) of this subpart refers
to the Council on Environmental Quality's Regulations for Implementing
the Procedural Provisions of the National Environmental Policy Act, 40
CFR Parts 1500-1508. Consequently, the definitions contained in Part
1508 of the Council's regulations apply to this subpart, as well as
those listed below.
(a) Emergency circumstance. One involving an immediate or imminent
danger to public health or safety.
(b) Environmental review documents. The documents required by this
subpart for the purpose of documenting FmHA's compliance with the
environmental laws and regulations applicable to the FmHA actions
covered in this subpart. These documents include:
(1) Form FmHA 1940-22, ''Environmental Checklist for Categorical
Exclusions,''
(2) Form FmHA 1940-21, ''Environmental Assessment of Class I
Action,''
(3) Environmental Assessment for Class II Actions (Exhibit H of this
subpart), and
(4) Environmental Impact Statements (EIS).
(c) Flood or flooding. A general and temporary condition of partial
or complete inundation of land areas, from the overflow of inland and/or
tidal waters, and/or the rapid accumulation or runoff of surface waters
from any source. Two important classifications of floods are as
follows.
(1) A one-percent chance flood or based flood -- A flood of a
magnitude that occurs once every 100 years on the average. Within any
one-year period there is one chance in 100 of the occurrence of such a
flood. Most importantly, however, the cumulative risk of flooding
increases with time. Statistically, there is about one chance in five
that a flood of this magnitude will occur within a 20-year period, the
length of time commonly defined as the useful life of a facility. Over
a 30-year period, the life of a typical mortgage, the probability of
such a flood occurring increases to greater than one chance in four.
(2) A 0.2-percent chance flood -- A flood of a magnitude that occurs
once every 500 years on the average. (Within any one-year period there
is one chance in 500 of the occurrence of such a flood.) As with the
one-percent chance flood, the cumulative risk of this flood occurring
also increases with time.
(d) Floodplains. Lowland and relatively flat areas adjoining inland
and coastal waters, including flood-prone areas of offshore islands. At
a minimum, floodplains consist of those areas subject to a one percent
or greater chance of flooding in any given year. The term floodplain
will be taken to mean the base floodplain, unless the action involves a
critical action, in which case the critical action floodplain is the
minimum floodplain of concern.
(1) Base floodplain (or 100-year floodplain) -- The area subject to
inundation from a flood of a magnitude that occurs once every 100 years
on the average (the flood having a one-percent chance of being equalled
or exceeded in any given year).
(2) Critical action floodplain (or 500-year floodplain) -- The area
subject to inundation from a flood of a magnitude that occurs once every
500 years on the average (the flood having 0.2-percent chance of being
equalled or exceeded in any given year).
(e) Indirect impacts. Those reasonably foreseeable environmental
impacts that result from the additional public facility, residential,
commercial, or industrial development or growth that a federally
financed project may cause, induce or accommodate. Consequently,
indirect impacts often occur later in time than the construction of the
Federal project and can be removed in distance from the construction
site. For example, a water transmission line may be designed to serve
additional residential development. The environmental impacts of that
residential development represent an indirect impact of the federally
funded water line. Those indirect impacts which deserve the greatest
consideration include changes in the patterns of land use, population
density or growth rate, and the corresponding changes to air and water
quality and other natural systems.
(f) Mitigation measure. A measure(s) included in a project or
application for the purpose of avoiding, minimizing, reducing or
rectifying identified, adverse environmental impacts. Examples of such
measures include:
(1) The deletion, relocation, redesign or other modifications of the
project's elements;
(2) The dedication to open space of environmentally sensitive areas
of the project site, which would otherwise be adversely affected by the
action or its indirect impacts;
(3) Soil erosion and sedimentation plans to control runoff during
land-disturbing activities;
(4) The establishment of vegetative buffer zones between project
sites and adjacent land uses;
(5) Protective measures recommended by environmental and conservation
agencies having jurisdiction or special expertise regarding the
project's impacts;
(6) Storm water management plans to control potential downstream
flooding effects that would result from a project;
(7) Zoning; and
(8) Reuse of existing facilities as opposed to new construction.
(g) No-action alternative. The alternative of not approving an
application for financial assistance, a subdivision feasibility
analysis, or an Agency proposal.
(h) Practicable alternative. An alternative that is capable of
attainment within the confines of relevant constraints. The test of
practicability, therefore, depends upon the particulars of the situation
under consideration and those constraints imposed by environmental,
economic, legal, social and technological parameters. This test,
however, is not limited by the temporary unavailability of sufficient
financial resources to implement an alternative. That is, alternatives
cannot be rejected solely on the basis of moderately increased costs.
The range of alternatives that must be analyzed to determine if a
practicable alternative exists includes the following three categories
of alternatives:
(1) Alternative project sites or designs,
(2) Alternative projects with similar benefits as the proposed
actions, and
(3) The no-action alternative.
(i) Preparer of Environmental Review Documents. The FmHA official
who is responsible for reviewing the potential environmental impacts of
the proposed action and for completing the appropriate environmental
review document. Under the circumstances indicated, the following
Agency positions and divisions will act as the preparer of the
environmental review documents covered by this subpart.
(1) County Office. When the approval official for the action under
review is located at the County Office level, that official will
prepare, as required, Environmental Checklist for Categorical Exclusions
and Class I and Class II assessments.
(2) District Office. When the approval official for the action under
review is located at the District Office level, that official will
prepare, as required, Environmental Checklist for Categorical Exclusions
and Class I and Class II assessments or may delegate this responsibility
to either:
(i) The District Office staff member having primary responsibility
for assembling the associated pre-application, application or other case
materials, analyzing the materials and developing recommendations for
the approval official, or
(ii) A County Office staff member having the same responsibilities as
the District Office member, if the action is initiated at the County
Office level.
(3) State Program Chief. For actions approved within the State
Office, the Chief will prepare, as required, Environmental Checklist for
Categorical Exclusions and Class I and II assessments or may delegate
this responsibility to either:
(i) The appropriate State Office Loan Specialist, if not the State
Environmental Coordinator (SEC),
(ii) An architect or engineer on the Chief's staff who is not the
SEC, or
(iii) A District or County Office staff member located within the
office in which the action is initiated and having the responsibilities
outlined in paragraph (i)(2)(i) of this section.
(4) State Environmental Coordinator. EIS's for actions within the
approval authority of County Supervisors, District Directors, and State
Office officials.
(5) Assistant Administrators for Programs. Checklists, assessments,
and EIS's for all actions initiated within their program office.
(6) Program Support Staff. Checklists, assessments, and EIS's that
the Deputy Administrator for Program Operations requests be done.
(j) Water resource project. Includes any type of construction which
would result in either impacts on water quality and the beneficial uses
that water quality criteria are designed to protect or any change in the
free-flowing characteristics of a particular river or stream to include
physical, chemical, and biological characteristics of the waterway.
This definition encompasses construction projects within and along the
banks of rivers or streams, as well as projects involving withdrawals
from, and discharges into such rivers or streams. Projects which
require Corps of Engineers dredge and fill permits are also water
resource projects.
07 CFR 1940.303 General policy.
(a) FmHA will consider environmental quality as equal with economic,
social, and other relevant factors in program development and
decision-making processes.
(b) In assessing the potential environmental impacts of its actions,
FmHA will consult early with appropriate Federal, State, and local
agencies and other organizations to provide decision-makers with both
the technical and human aspects of environmental planning.
(c) When adverse environmental impacts are identified, either direct
or indirect, an examination will be made of alternative courses of
action, including their potential environmental impacts. The objective
of the environmental review will be to develop a feasible alternative
with the least adverse environmental impact. The alternative of not
proceeding with the proposal will also be considered particularly with
respect to the need for the proposal.
(d) If no feasible alternative exists, including the no-action
alternative, measures to mitigate the identified adverse environmental
impacts will be included in the proposal.
(e) The performance of environmental reviews and the consideration of
alternatives will be initiated as early as possible in the FmHA
application review process so that the Agency will be in the most
flexible and objective position to deal with these considerations.
07 CFR 1940.304 Special policy.
(a) Land use. (1) FmHA recognizes that its specific mission of
assisting rural areas, composed of farms and rural towns, goes
hand-in-hand with protecting the environmental resources upon which
these systems are dependent. Basic resources necessary to both farm and
rural settlements include important farmlands and forestlands, prime
rangelands, wetlands, and floodplains. The definitions of these areas
are contained in the Appendix to Departmental Regulation 9500-3, Land
Use Policy, which is included as Exhibit A of this subpart. For
assistance in locating and defining floodplains and wetlands, the
locations and telephone numbers of the Federal Emergency Management
Administration's regional offices have been included as Exhibit J of
this subpart, and similar information for the U.S. Fish and Wildlife
Service's Wetland Coordinators has been included as Exhibit K of this
subpart. Given the importance of these resources, as emphasized in the
Departmental Regulation, Executive Order 11988, ''Floodplain
Management,'' and Executive Order 11990, ''Protection of Wetlands,'' it
is FmHA's policy not to approve or fund any proposals that, as a result
of their identifiable impacts, direct or indirect, would lead to or
accommodate either the conversion of these land uses or encroachment
upon them. The only exception to this policy is if the approving
official determines that
(i) There is no practicable alternative to the proposed action,
(ii) The proposal conforms to the planning criteria identified in
paragraph (a)(2) of this section, and
(iii) The proposal includes all practicable measures for reducing the
adverse impacts and the amount of conversion/encroachment.
(A) For Farmer Program loans and guarantees, and loans to Indian
Tribes and Tribal Corporations, Exhibit M of this subpart imposes
additional and more restrictive requirements regarding wetland and
highly erodible land conservation.
(B) Unless otherwise exempted by the provisions of Exhibit M, the
proceeds of any Farmer Program loan or loan to an Indian Tribe or Tribal
Corporation made or guaranteed by FmHA cannot be used
(1) For a purpose that will contribute to excessive erosion of highly
erodible land (as defined in Exhibit M), or
(2) For a purpose that will contribute to conversion of wetlands (as
defined in Exhibit M) to produce an agricultural commodity.
(2) It is also recognized that unless carefully reviewed, some
proposals designed to serve the needs of rural communities can adversely
affect the existing economic base and settlement patterns of the
community, as well as create development pressures on land and
environmental resources essential to farm economies. An example of such
a proposal might be the extension of utilities and other types of
infrastructure beyond a community's existing settlement pattern and into
important farmlands for the purpose of commercial or residential
expansion, even though there is available space within the existing
settlement pattern for such expansion. Not only may the loss of
important farmlands unnecessarily result, but the community may be faced
with the economic costs of providing public services to outlying areas,
as well as the deterioration of its central business or commercial area;
the latter may not be able to compete with the newer, outlying
commercial establishments. These results are undesirable, and to avoid
their occurrence, projects designed to meet rural community needs (i.e.,
residential, industrial, commercial, and public facilities) will not be
approved unless the following conditions are met.
(i) The project is planned and sited in a manner consistent with the
policies of this section, the Farmland Protection Policy Act, and
Departmental Regulation 9500-3 (Exhibit A of this subpart).
(ii) The project is not inconsistent with an existing comprehensive
and enforceable plan that guides growth and reflects a realistic
strategy for protecting natural resources, and the project is
compatible, to the extent practicable, with State, unit of local
government, and private programs and policies to protect farmland. (If
no such plan or policies exist, there is no FmHA requirement that they
either be prepared and adopted, as further specified in paragraph (a)(3)
of this section.)
(iii) The project will encourage long-term, economically viable
public investment by fostering or promoting development patterns that
ensure compact community development, that is, development that is
limited to serving existing settlement patterns or is located in
existing settlement patterns, e.g., the rehabilitation and renovation of
existing structures, systems and neighborhoods; infilling of
development; the provision of a range of moderate-to-high residential
densities appropriate to local and regional needs. When these
development patterns or types are not practicable, the development must
be contiguous with the existing settlement pattern and provide for a
range of moderate-to-high residential densities appropriate to local and
regional needs. It is recognized that some FmHA Community Programs
projects are designed to serve rural residents, such as rural water and
waste disposal systems and, therefore, cannot be limited in service area
to these areas contiguous with existing settlement patterns. These
types of projects will be designed to primarily serve existing
structures and rural residents in noncontiguous areas. Any additional
capacity within the system will be limited to meet reasonable growth
needs, and, to the extent practicable, be designed to meet such needs
within existing settlements and areas contiguous to them.
(3) The conditions specified in paragraph (a)(2) of this section
should not be construed as advocating excessive densities, congestion,
or loss of open space amenities within rural communities. Desirable
living conditions can be obtained under these objectives, along with
economic and social benefits for the community and the surrounding farm
operations. Additionally, these conditions should not be construed as
requiring localities to develop plans which contain the conditions. In
any instance in which these planning conditions or criteria do not exist
within the project area, project reviews will not be postponed until the
criteria are adopted. Rather, projects will be reviewed and funding
decisions made in light of a project's consistency with the contents of
this subpart (excluding paragraph (a)(2)(ii) of this section, which
would not be applicable).
(b) Endangered species. FmHA will not authorize, fund, or carry out
any proposal or project that is likely to
(1) Jeopardize the continued existence of any plant or wildlife
species listed by the Secretary of the Interior or Commerce as
endangered or threatened; or
(2) Destroy or adversely modify the habitats of listed species when
such habitats have been determined critical to the species' existence by
the Secretary of the Interior or Commerce, unless FmHA has been granted
an exemption for such proposal by the Endangered Species Committee
pursuant to paragraph (h) of section 7 of the Endangered Species Act.
(c) Wild and scenic rivers. FmHA will not provide financial
assistance or plan approval for any water resource project that would
have a direct and adverse effect on the values for which a river has
been either included in the National Wild and Scenic Rivers System or is
designated for potential addition. Additionally, FmHA will not approve
or assist developments (commercial, industrial, residential, farming or
community facilities) located below or above a wild, scenic or
recreational river area, or on any stream tributary thereto which will
invade the area or unreasonably diminish the scenic, recreational, and
fish and wildlife values present in the area.
(d) Historic and cultural properties. As part of the environmental
review process, FmHA will identify any properties that are listed in, or
may be eligible for, listing in the National Register of Historic Places
and are located within the project's area of potential environmental
impacts. Consultations will be undertaken with State Historic
Preservation Officers and the Advisory Council on Historic Preservation,
through the implementation of Subpart F of Part 1901 of this chapter, in
order to determine the most appropriate course of action for protecting
such identified properties or mitigating potential adverse impacts to
them.
(e) Coastal barriers. Under the requirements of the Coastal Barrier
Resources Act, FmHA will not provide financial assistance for any
activity to be located within the Coastal Barrier Resources System
unless
(1) Such activity meets the criteria for an exception, as defined in
section 6 of the Act, and
(2) Consultation regarding the activity has been completed with the
Secretary of the Interior.
(f) Water and energy conservation. FmHA will encourage the
conservation of water and energy in the development of its programs and
policies and will encourage applicants to incorporate all economically
feasible water and energy-saving features and designs within their
proposals.
(g) Intergovernmental initiatives on important land resources. On a
broader scale, FmHA will advocate, in cooperation with other USDA
agencies (through the USDA State-level committee system), the retention
of important farmlands and forestlands, prime rangeland, wetlands and
floodplains whenever proposed conversions to other uses
(1) Are caused or encouraged by actions or programs of a Federal
Agency, or
(2) Require licensing or approval by a Federal Agency, unless other
needs clearly override the benefits derived from retention of such
lands.
(h) Water quality. FmHA will not provide financial assistance to any
activity that would either impair a State water quality standard,
including designated and/or existing beneficial uses that water quality
criteria are designed to protect, or that would not meet antidegradation
requirements.
07 CFR 1940.305 Policy implementation.
(a) Environmental impact analysis. The implementation of the
environmental impact analysis requirements described in this subpart
serves as the primary mechanism for FmHA as follows:
(1) Incorporating environmental quality considerations into FmHA
program and decision-making processes,
(2) Obtaining the views of the public and government agencies on
potential environmental impacts associated with FmHA projects, and
(3) Using all practicable means to avoid or to minimize any possible
adverse environmental effects of FmHA actions.
(b) Natural resource management. The State Director will develop a
natural resource management guide. This guide will serve as an
essential mechanism for implementing 1940.304 of this subpart; and,
therefore, the guide must be consistent with and reflect the objectives
and policies contained in 1940.304 of this subpart. At the same time,
however, it must be tailored to take into account important State,
regional, and local natural resource management objectives. The guide
will be issued as a State Supplement for prior approval. The basic
content, purposes, and uses of the guide are enumerated in Exhibit B of
this subpart and can be summarized as follows:
(1) The guide will serve as a mechanism for assembling an inventory
of the locations within the State of those natural resources, land uses,
and environmental factors that have been specified by Federal, State and
local authorities as deserving some degree of protection or special
consideration;
(2) The guide will summarize the various standards or types of
Federal, State, or local protection that apply to the natural resources,
land uses, and environmental factors listed in the inventory; and
(3) Applications for individual projects must be reviewed for
consistency with the guide.
(c) Intergovernmental initiatives. When commenting on proposed
Federal actions subject to environmental impact statements, FmHA
commentors will focus on the consistency of these actions with the
appropriate State natural resource management guide. A similar focus or
element will be addressed in FmHA's review of the Environmental
Protection Agency's 201 Wastewater Management Plans.
(d) Farmland Protection Policy Act and Departmental Regulation
9500-3, Land Use Policy. The natural resource management guide serves
as a tool for implementing the requirements of the Act and the
Departmental Regulation at the broad level of implementing the Agency's
programs at the State level. These requirements must also be followed
in the review of applications for financial assistance or subdivision
approval, as well as the disposal of real property. FmHA's
implementation procedures for the project review process are contained
in Exhibit C of this subpart.
(e) Endangered Species. FmHA will implement the consultation
procedures required under section 7 of the Endangered Species Act as
specified in 50 CFR Part 402. It is important to note that these
consultation procedures apply to the disposal of real property and all
FmHA applications for financial assistance and subdivision approval,
including those applicants which are exempt from environmental
assessments. FmHA's implementation procedures are contained in Exhibit
D of this subpart.
(f) Wild and scenic rivers. Each application for financial
assistance or subdivision approval and the proposed disposal of real
property will be reviewed to determine if it will affect a river or
portion of it, which is either included in the National Wild and Scenic
Rivers System, designated for potential addition to the system, or
identified in the Nationwide Inventory prepared by the National Park
Service (NPS) in the Department of the Interior (DOI). FmHA's
procedures for completing this review are contained in Exhibit E of this
subpart.
(g) Historic and cultural properties. (1) As part of the
environmental review process, FmHA will identify any properties that are
listed in or may be eligible for listing in the National Register of
Historic Places, and located within the area of potential environmental
impact. Identification will consist of consulting the published lists
of the National Register and formally contacting and seeking the
comments of the appropriate State Historic Preservation Officer (SHPO).
Since it is not always possible from the consultation with the SHPO to
determine whether historic and cultural properties are present within
the project's area of environmental impact, it may be necessary for FmHA
to consult public records and other individuals and organizations, such
as university archaeologists, local historical societies, etc. These
latter discussions should take place before initiating a detailed site
survey since they may provide reliable information that obviates the
need for a survey. However, whenever insufficient information exists to
document the presence or absence of potentially eligible National
Register properties and where the potential for previously unidentified
properties is recognized by FmHA, the SHPO, or other interested parties,
FmHA will conduct the necessary investigations to determine if such
properties are present within the area of potential environmental
impact. FmHA will involve the SHPO in the planning and formulation of
any historic, cultural, architectural or archaeological testing, studies
or surveys conducted to investigate the presence of such properties and
will utilize persons with appropriate knowledge and experience.
(2) If the information obtained, as a result of the consultation and
investigations conducted by FmHA, indicates the presence of an historic
or cultural property within the area of potential environmental impact
that, in the opinion of the SHPO and FmHA, appear to meet the National
Register Criteria (36 CFR 60.4), the property will be considered
eligible for the National Register of Historic Places. If the SHPO and
FmHA do not agree on the property's eligibility for the National
Register or if the Secretary of the Interior or the Advisory Council on
Historic Preservation so requests, FmHA will request a determination of
eligibility from the Keeper of the National Register in accordance with
36 CFR Part 63. Consultations will be initiated with the SHPO and the
Advisory Council on Historic Preservation in accordance with 36 CFR Part
800, through the implementation of Subpart F of Part 1901 of this
chapter, to determine the most appropriate course of action to protect
all National Register and eligible properties within the area of
potential environmental impact.
(3) Further instructions detailing the procedures to be followed in
considering and protecting historic and cultural properties and the
responsible Agency officials are contained in Subpart F of Part 1901 of
this chapter. These procedures will be followed whenever a proposal,
considered by FmHA, has the potential to affect National Register or
eligible properties.
(h) Coastal barriers. In those States having coastal barriers within
the Coastal Barrier Resources System, each application for financial
assistance or subdivision approval, as well as the proposed disposal of
real property, will be reviewed to determine if it would be located
within the system, and, if so, whether the action must be denied on this
basis or meets the Act's criteria for an exception. To accomplish the
review, all affected State, District and County Offices will maintain a
current set of maps, as issued by DOI, which depict those coastal
barriers within their jurisdiction that have been included in the
system. FmHA's implementation procedures for accomplishing this review
requirement and for consulting as necessary with DOI are contained in
Exhibit F of this subpart. The exceptions to the restrictions of the
Coastal Barrier Resources Act are contained in Exhibit L of this
subpart.
(i) Water and energy conservation. Water and energy conservation
measures will be considered at both the program and project level in a
manner consistent with program regulations.
(j) Noise abatement. For purposes of assessing noise impacts and for
determining the acceptability of housing sites in terms of their
exposure to noise, FmHA has adopted and follows the standards and
procedures developed by the U.S. Department of Housing and Urban
Development (HUD) and contained in 24 CFR Part 51 of Subpart B entitled,
''Noise Abatement and Control.''
(k) Water quality. Each application for financial assistance or
subdivision approval and the proposed disposal of real property will be
reviewed to determine if it would impair a State water quality standard
or meet antidegradation requirements. When necessary, the proposed
activity will be modified to protect water quality standards, including
designated and/or existing beneficial uses that water quality criteria
are designed to protect, and meet antidegradation requirements.
07 CFR 1940.306 Environmental responsibilities within the National
Office.
(a) Administrator. The Administrator of FmHA has the direct
responsibility for Agency compliance with all environmental laws,
Executive orders, and regulations that apply to FmHA's program and
administrative actions. As such, the Administrator ensures that this
responsibility is adequately delegated to Agency staff and remains
informed on the general status of Agency compliance, as well as the need
for any necessary improvements. The Administrator is also responsible
for ensuring that the Agency's manpower and financial needs for
accomplishing adequate compliance with this subpart are reflected and
documented in budget requests for departmental consideration.
(b) Deputy Administrator Program Operations. (1) The Deputy
Administrator for Program Operations has the delegated overall Agency
responsibility for developing and implementing environmental policies
and compliance procedures, monitoring their effectiveness, and advising
the Administrator on the status of compliance, to include
recommendations for any necessary changes in this subpart. The
incumbent is also responsible for developing and documenting, as part of
the Agency's budget formulation process, the manpower and financial
needs necessary to implement this subpart.
(2) The specific responsibilities of the Deputy Administrator --
Program Operations are as follows:
(i) Provide for the Agency an interdisciplinary approach to
environmental impact analysis and problem resolution, as required by the
CEQ regulations;
(ii) Provide the leadership and technical expertise for the
implementation of the Agency's environmental policies with special
emphasis being placed on those policies relating to natural resource
management, energy conservation, and orderly community development;
(iii) Coordinate the implementation of this subpart with affected
program offices;
(iv) Provide policy direction and advice on the implementation of
this subpart to Agency staff, particularly to SECs and technical support
personnel within State Offices;
(v) Consult and coordinate, as needed or upon request, with the
Department's interagency committees dealing with environmental, land
use, and historic preservation matters;
(vi) Monitor the Agency's record in complying with this subpart;
(vii) Provide training programs and materials for the Agency staff
assigned the functions identified in this subpart;
(viii) Review, as necessary, applications for funding assistance,
proposed policies and regulations, and recommend their approval,
disapproval, or modification after analyzing and considering their
anticipated adverse environmental impacts, their benefits, and their
consistency with the requirements of this subpart;
(ix) Develop and direct Agency procedures for complying with
environmental legislation, Executive orders, and regulations, including,
but not limited to, those listed in 1940.301(c) of this subpart;
(x) Maintain a position identified as the Senior Environmental
Specialist (hereafter called the Environmental Specialist), who will
serve as the responsible Agency official under the National
Environmental Policy Act and the National Historic Preservation Act,
maintain liaison on environmental matters with interested public groups
and Federal agencies, and serve as the focal point for developing and
coordinating the Agency's procedures for the requirements listed in
1940.301(c) of this subpart; and
(xi) Review and evaluate legislative and administrative proposals in
terms of their environmental impact.
(c) Assistant Administrators for Programs. The Assistant
Administrators for Programs will:
(1) Ensure, as necessary, that environmental assessments and EISs for
proposed program regulations are prepared by their staff;
(2) Ensure that all proposed actions that fall under the requirements
of this subpart, and that are submitted to the National Office for
approval or concurrence, contain adequate analyses and documentation of
their potential environmental impacts (Transfer of program funds from
National Office to State Office control to enable the State Office to
approve an application is not considered to be National Office approval
of or concurrence in an application);
(3) Consider and include, in the development of program regulations,
feasible policies and mechanisms that promote program goals in a manner
that either enhances environmental quality or reduces unnecessary
adverse environmental impacts; and
(4) Designate one or more staff members to serve as a program
environmental coordinator, having generally the same duties and
responsibilities within the program office as the SEC has within the
State Office (See 1940.307(b) of this subpart).
07 CFR 1940.307 Environmental responsibilities within the State Office.
(a) State Director. The State Director will:
(1) Serve as the responsible FmHA official at the State Office level
for ensuring compliance with the requirements of this subpart; and
(2) Appoint one individual to serve as the SEC. Thereafter, the SEC
will report directly to the State Director on the environmental matters
contained in this subpart.
(b) State Environmental Coordinator (SEC). The SEC will:
(1) Act as advisor to the State Director on environmental matters and
coordinate the requirements of this subpart;
(2) Review those Agency actions which are not categorically excluded
from this subpart (see 1940.311 and 1940.312 of this subpart) and
which require the approval and/or clearance of the State Office and
recommend to the approving official either project approval,
disapproval, or modification after analyzing and considering the --
(i) Anticipated adverse environmental impacts,
(ii) The anticipated benefits, and
(iii) The action's consistency with this subpart's requirements;
(3) Represent the State Director at conferences and meetings dealing
with environmental matters of a State Office nature;
(4) Maintain liaison on State Office environmental matters with
interested public groups and local, State, and other Federal agencies;
(5) Serve as the State Director's alternate on State-level USDA
committees dealing with environmental, land use and historic
preservation matters;
(6) Solicit, whenever necessary, the expert advice and assistance of
other professional staff members within the State Office in order to
adequately implement this subpart;
(7) Provide technical assistance as needed on a project-by-project
basis to State, District, and County Office staffs;
(8) Develop controls for avoiding or mitigating adverse environmental
impacts and monitor their implementation;
(9) Provide assistance in resolving post-approval environmental
matters at the State Office level;
(10) Maintain records for those actions required by this subpart;
(11) Coordinate for the State Director the development of the State
Office natural resource management guide;
(12) Provide direction and training to State, District, and County
Office staffs on the requirements of this subpart; and
(13) Coordinate for the State Director the monitoring of the State
Office's compliance with this subpart and keep the State Director
advised of the results of the monitoring process.
(c) Program Chiefs. State Office Program Chiefs will:
(1) Be responsible for the adequacy of the environmental impact
reviews required by this subpart for all program actions to be approved
at the State Office level or concurred in at that level;
(2) Coordinate the above reviews as early as possible with the SEC,
so that the latter can assist in addressing the resolution of any
unresolved or difficult environmental issues in a timely manner; and
(3) Incorporate into projects and actions measures to avoid or reduce
potential adverse environmental impacts identified in environmental
reviews.
07 CFR 1940.308 Environmental responsibilities at the District and
County Office levels.
(a) The District Director will be responsible for carrying out the
actions required by this subpart to be completed at the District Office
level.
(b) The County Supervisor will be responsible for carrying out the
actions required by this subpart to be completed at the County Office
level.
(c) In discussing FmHA assistance programs with potential applicants,
District Directors and County Supervisors will inform them of the
Agency's environmental requirements, as well as the environmental
information needs and responsibilities that FmHA applicants are expected
to address. (See 1940.309 of this subpart.)
07 CFR 1940.309 Responsibilities of the prospective applicant.
(a) FmHA expects applicants and transferees (and in the case of the
loan guarantee programs, borrowers and transferees) to consider the
potential environmental impacts of their requests at the earliest
planning stages and to develop proposals that minimize the potential to
adversely impact the environment. Prospective applicants should contact
County Supervisors or District Directors, as appropriate, to determine
FmHA's environmental requirements as soon as possible after they decide
to pursue FmHA financial assistance.
(b) As specified in paragraph (c) of this section, applicants for
FmHA assistance will be required to provide information necessary to
FmHA to evaluate their proposal's potential environmental impacts and
alternatives to them. For example, the applicant will be required to
provide a complete description of the project elements and the proposed
site(s) to include location maps, topographic maps, and photographs when
needed. The applicant will also be required to provide data on any
expected gaseous, liquid and solid wastes to be produced, including
hazardous wastes as defined by the Resource Conservation and Recovery
Act or State law, and all permits and/or correspondence issued by the
appropriate local, State, and Federal agencies which regulate treatment
and disposal practices.
(c) Form FmHA 1940-20, ''Request for Environmental Information,''
will be used for obtaining environmental information from applicants
whose proposals require an environmental assessment under the
requirements of this subpart. These same applicants must notify the
appropriate State Historic Preservation Officer of the filing of the
application and provide a detailed project description as specified in
Item 2 of Form FmHA 1940-20 and the FMI. If the applicant's proposal
meets the definition of a Class II action as defined in 1940.312 of
this subpart, all of Form FmHA 1940-20 must be completed. If the
applicant's proposal meets the definition of a Class I action as defined
in 1940.311 of this subpart, the entire form need not be completed, but
just the face of the form and categories (1), (2), (13), (15), (16), and
(17) of Item 1b of the FMI. As an exception to the foregoing statement,
an applicant for an action that is normally categorically excluded but
requires a Class I assessment for any of the reasons stated in
1940.317(e) of this subpart is not required to complete Form FmHA
1940-20. Additionally, for Class I actions within the Farm Programs, a
site visit by the FmHA official completing the environmental assessment
obviates the need for the applicant to complete any of the form, and the
adoption by FmHA of a Soil Conservation Service (SCS) environmental
assessment or evaluation for the action obviates the need to complete
the form for either a Class I or Class II action.
(d) Applicants will ensure that all required materials are current,
sufficiently detailed and complete, and are submitted directly to the
FmHA office processing the application. Incomplete materials or delayed
submittals may seriously jeopardize consideration or postponement of a
proposed action by FmHA.
(e) During the period of application review and processing,
applicants will not take any actions with respect to their proposed
undertakings which are the subject of the application and which would
have an adverse impact on the environment or limit the range of
alternatives. This requirement does not preclude development by
applicants of preliminary plans or designs or performance of other work
necessary to support an application for Federal, State, or local permits
or assistance. However, the development of detailed plans and
specifications is discouraged when the costs involved inhibit the
realistic consideration of alternative proposals.
(f) Applicants are required to provide public notification and to
fully cooperate in holding public information meetings as described in
1940.318(e), 1940.320 (c) and (g), and 1940.331 (b) and (c) of this
subpart.
(g) Any applicant that is directly and adversely affected by an
administrative decision made by FmHA under this subpart may appeal that
decision under the provisions of Subpart B of Part 1900 of this chapter.
07 CFR 1940.310 Categorical exclusions from National Environmental
Policy Act (NEPA) reviews.
(a) General guidelines. The following actions have been determined
not to have a significant impact on the quality of the human
environment, either individually or cumulatively. They will not be
subject to environmental assessments or impact statements. It must be
emphasized that even though these actions are excluded from further
environmental reviews under NEPA, they are not excluded from either the
policy considerations contained in 1940.303 through 1940.305 of this
subpart or from compliance with other applicable local, State, or
Federal environmental laws. Also, the actions preceded by an asterisk
(*) are not excluded from further review depending upon whether in some
cases they would be located within, or in other cases, potentially
affect:
(1) A floodplain,
(2) A wetland,
(3) Important farmlands, or prime forestlands or rangelands,
(4) A listed species or critical habitat for an endangered species,
(5) A property that is listed on or may be eligible for listing on
the National Register of Historic Places,
(6) An area within an approved State coastal zone management program,
(7) A coastal barrier or a portion of a barrier within the Coastal
Barrier Resources System,
(8) A river or portion of a river included in, or designated for,
potential addition to the Wild and Scenic Rivers System,
(9) A sole source aquifer recharge area, or
(10) A State water quality standard (including designated and/or
existing beneficial uses and antidegradation requirements).
(i) Whether location within one of the preceding resource areas is
sufficient to require a further review or a potential impact to one of
them must also be identified to require a review is determined by FmHA's
completion of Form FmHA 1940-22 in accordance with the FMI and 1940.317
of this subpart.
(ii) When the categorical exclusion classification is lost, as
specified in 1940.317 of this subpart, the action must be reviewed
under the requirements of paragraph (g) of that section. This
requirement serves to implement 1508.4 of the CEQ regulations which
requires Federal agencies to detect extraordinary circumstances in which
a normally excluded action may have a significant environmental effect.
(iii) Further guidance on the use of these exclusions is contained in
1940.317 of this subpart.
(b) Housing assistance. *(1) The provision of financial assistance
for the purchase of a single family dwelling or a multi-family project
serving no more than four families, i.e. units;
(2) The approval of an individual building lot that is located on a
scattered site and either not part of a subdivision or within a
subdivision not requiring FmHA's approval;
*(3) Rehabilitation, replacement, or renovation of any existing
housing units, with no expansion in the number of units;
(4) Self-Help Technical Assistance Grants;
*(5) The approval of a subdivision that consists of four or fewer
lots and is not part of, or associated with, building lots or
subdivisions;
(6) Technical Supervisory Assistance Loans and Grants;
(7) Weatherization of any existing housing unit(s), unless the
property is listed in the National Register of Historic Places or may be
eligible for listing, or is located either within the Coastal Barrier
Resources System or in a listed or potentially eligible historic
district, in which case the application will require a Class I
assessment as specified in 1940.317(g) of this subpart;
(8) The financing of housing construction or the approval of lots in
a previously approved FmHA subdivision provided that
(i) The action is consistent with all previously adopted stipulations
for the multi-family housing project or subdivision, and
(ii) The FmHA environmental impact review that was previously
completed for the original application is still current with respect to
applicable environmental requirements and conditions present at the
site, and it assessed the lots or expansion for which approval is being
requested;
(9) The purchase of any existing, non-FmHA owned housing unit(s),
unless the property is listed in the National Register of Historic
Places or may be eligible for listing, or is located either within a
100-year floodplain, the Coastal Barrier Resources System, or in a
listed or potentially eligible historic district, in which case the
application will require a Class I assessment as specified in
1940.317(g) of this subpart; and
(10) Appraisals of nonfarm tracts and small farms for rural housing
loans.
(c) Community and business programs and nonprofit national
corporations loan and grant program. *(1) Financial assistance directed
to existing businesses, facilities, and/or structures that does not
involve new construction or large increases in employment; does not
involve a facility that presently or previously produced or stored
hazardous waste or disposed of hazardous waste on the facility's
property; and does not result in the increased production of gaseous,
liquid, or solid wastes, or a change in the type or content of such
wastes as long as waste production, handling, treatment and disposal
practices presently comply with applicable Federal, State and local
regulations and there is no history of violations. If any of these
waste production, handling, treatment, disposal or compliance criteria
cannot be met, a Class I assessment must be initiated to include a
narrative discussion of the types and quantities of wastes produced and
the adequacy of the treatment, storage, and disposal practices, if the
involved wastes meet the criteria for a Class I assessment contained in
1940.311(b)(3)(iii) of this subpart. If not, a Class II assessment must
be completed.
*(2) Projects that solely involve the acquisition, construction,
reconstruction, renovation, or installation of facilities, structures or
businesses, for replacement or restoration purposes, with minimal change
in use, size, capacity, purpose or location from the original facility
(e.g., replacement in-kind of utilities such as water or sewer lines and
appurtenances, reconstruction of curbs and sidewalks, street repaving,
and building modifications, renovations, and improvements);
(3) Project management actions relating to invitation for bids,
contract award, and the actual physical commencement of construction
activities;
(4) Financial assistance for a technical assistance grant under the
nonprofit national corporation loan and grant program;
(5) Projects that solely involve the purchase and installation of
office equipment, public safety equipment, or motor vehicles; and
(6) Amendments to approved projects meeting the criteria of paragraph
(e)(2) of this section.
(d) Farm programs. (1) Financial assistance for the purchase of an
existing farm, or an enlargement to one, provided no shifts in land use
are proposed beyond the limits stated in paragraphs (d) (10) and (11) of
this section;
(2) Financial assistance for the purchase of livestock and essential
farm equipment, including crop storing and drying equipment, provided
such equipment is not to be used to accommodate shifts in land use
beyond the limits stated in paragraphs (d) (10) and (11) of this
section;
(3) Financial assistance for:
(i) The payment of annual operating expenses, which does not cover
activities specifically addressed in this section or 1940.311 or
1940.312 of this subpart;
(ii) Family living expenses, and
(iii) Refinancing debts;
*(4) Financial assistance for the construction of essential farm
dwellings and service buildings of modest design and cost, as well as
repairs and improvements to them;
(5) Financial assistance for onsite water supply facilities to serve
a farm dwelling, farm buildings, and livestock needs;
(6) Financial assistance for the installation or enlargement of
irrigation facilities, including storage reservoirs, diversion dams,
wells, pumping plants, canals, pipelines, and sprinklers designed to
irrigate less than 80 acres, provided that neither a State water quality
standard, a property listed or potentially eligible for listing on the
National Register of Historic Places, a river or portion of a river
included in, or designated for, potential addition to the Wild and
Scenic Rivers System, nor a wetland is affected. If a wetland is
affected, the application will fall under Class II as defined in
1940.312 of this subpart. Potential effects to a water quality
standard, an historic property or the Wild and Scenic Rivers System
require that a review be initiated under a Class I assessment as
specified in 1940.317(g) of this subpart.
(7) Financial assistance that solely involves the replacement or
restoration of irrigation facilities, to include those facilities
described in paragraph (d)(6) of this section, with minimal change in
use, size, capacity, or location from the original facility(s) provided
that neither a State water quality standard, a property listed or
potentially eligible for listing on the National Register of Historic
Places, a river or portion of a river included in or designated for
potential addition to the Wild and Scenic Rivers System, nor a wetland
is affected. If a wetland is affected, the application will fall under
Class II as defined in 1940.312 of this subpart. Potential effects to
a water quality standard, an historic property, or the Wild and Scenic
Rivers System require that a Class I assessment be completed as
specified in 1940.317(g) of this subpart. Also, to qualify for this
exclusion, the facilities to be replaced or restored must have been used
for similar irrigation purposes at least two out of the last three
consecutive growing seasons. Otherwise, the action will be viewed as an
installation of irrigation facilities.
(8) Financial assistance for the development of farm ponds or lakes
of no more than 5 acres in size, provided that, neither a State water
quality standard, a property listed or potentially eligible for listing
on the National Register of Historic Places, a river or portion of a
river included in or designated for potential addition to the Wild and
Scenic Rivers System, nor a wetland is affected. If a wetland is
affected, the application will fall under Class II as defined in
1940.312 of this subpart. Potential effects to a water quality
standard, an historic property, or the Wild and Scenic Rivers System
require that a review be initiated under a Class I assessment as
specified in 1940.317(g) of this subpart;
*(9) Financial assistance for the conversion of:
(i) Land in agricultural production to pastures or forests, or
(ii) Pastures to forests;
*(10) Financial assistance for land-clearing operations of no more
than 15 acres, provided no wetlands are affected, and financial
assistance for any amount of land involved in tree harvesting conducted
on a sustained yield basis and according to a Federal, State or other
governmental unit approved forestry management and marketing plan; and
(11) Financial assistance for the conversion of no more than 160
acres of pasture to agricultural production, provided that in a
conversion to agricultural production no State water quality standard or
wetlands are affected. If a wetland is affected, the application will
fall under Class II as defined in 1940.312 of this subpart. If a water
quality standard would be impaired or antidegradation requirement not
met, a Class I assessment is required as specified in 1940.317(g) of
this subpart.
(e) General exclusions. (1) The award of financial assistance for
planning purposes, management and feasibility studies, or environmental
impact analyses;
(2) For actions other than those covered by Exhibit M of this
subpart, loan-closing and servicing activities, transfers, assumptions,
subordinations, construction management activities and amendments and
revisions to approved projects, including the provision of additional
financial assistance that do not alter the purpose, operation, location,
or design of the project as originally approved;
(3) The issuance of regulations and instructions, as well as
amendments to them, describing administrative and financial procedures
for processing, approving, and implementing the Agency's financial
assistance programs;
(4) Procurement activities for goods and services, routine facility
operations, personnel actions, and other such management activities
related to the operation of the Agency;
(5) Reduction in force or employee transfers resulting from workload
adjustments, reduced personnel or funding levels, skill imbalances, or
other similar circumstances; and
*(6) The lease or disposal of real property by FmHA whenever the
transaction is either not controversial for environmental reasons or
will not result in a change in use of the real property within the
reasonably foreseeable future.
07 CFR 1940.311 Environmental assessments for Class I actions.
The Agency's proposals and projects that are not identified in
1940.310 of this subpart as categorical exclusions require the
preparation of an environmental assessment in order to determine if the
proposal will have a significant impact on the environment. For
purposes of implementing NEPA, the actions listed in this section are
presumed to be major Federal actions. If an action has a potential to
create a significant environmental impact, an EIS must be prepared. (In
situations when there is clearly a potential for a significant impact,
the EIS may be initiated directly without the preparation of an
assessment.) It is recognized that many of the applications funded
annually by FmHA involve small-scale projects having limited
environmental impacts. However, because on occasion they have the
potential to create a significant impact, each must be assessed to
determine the degree of impact. The scope and level of detail of an
assessment for a small-scale action, though, need only be sufficient to
determine whether the potential impacts are substantial and further
analysis is necessary. Therefore, for the purpose of implementing NEPA,
FmHA has classified its smaller scale approval actions as Class I
actions. The format which will be used for accomplishing the
environmental assessment of a Class I action is provided in Form FmHA
1940-21. An important aspect of this classification method is that it
allows FmHA's environmental review staff to concentrate most of its time
and efforts on those actions having the potential for more serious or
complex environmental impacts. Additional guidance on the application
of NEPA to Class I actions is provided in 1940.319 of this subpart.
(a) Housing assistance. If either of the following actions is an
expansion of a previously approved FmHA housing project, see
1940.310(b)(8) of this subpart to determine if it meets the requirements
for a categorical exclusion. In the case of an expansion for which an
environmental assessment was not done for the original FmHA project, the
size of the proposal for assessment purposes is determined by adding the
number of units in the original project(s) to those presently being
requested.
(1) Financial assistance for a multi-family housing project,
including labor housing which comprises at least 5 units, but no more
than 25 units; and
(2) Financial assistance for or the approval of a subdivision, as
well as the expansion of an existing one which involves at least 5 lots
but no more than 25 lots; and
(3) Financial assistance for a housing preservation grant.
(b) Community and business programs and nonprofit national
corporations loan and grant program. Class I assessments will be
prepared for the following categories:
(1) Financial assistance for water and waste disposal facilities and
natural gas facilities that meet all of the following criteria:
(i) There will not be a substantial increase in the volume of
discharge or the loading of pollutants from any existing or expanded
sewage treatment facilities, or a substantial increase in an existing
withdrawal from surface or ground waters. A substantial increase may be
evidenced by an increase in hydraulic capacity or the need to obtain a
new or amended discharge or withdrawal permit.
(ii) There will not be either a new discharge to surface or ground
waters or a new withdrawal from surface or ground waters such that the
design capacity of the discharge or withdrawal facility exceeds 50,000
gallons per day and provided that the potential water quality impacts
are documented in a manner required for a Class II assessment and
attached as an exhibit to the Class I assessment.
(iii) From the boundaries listed below, there is no extension,
enlargement or construction of interceptors, collection, transmission or
distribution lines beyond a one-mile limit estimated from the closest
point of the boundary most applicable to the proposed service area:
(A) The boundary formed by the corporate limits of the community
being served.
(B) If there are developed areas immediately contiguous to the
corporate limits of a community, the boundary formed by the limits of
these developed areas.
(C) If an unincorporated area is to be served, the boundary formed by
the limits of the developed areas.
(iv) The proposal is designed for predominantly residential use with
other new or expanded users being small-scale commercial enterprises
having limited secondary impacts.
(v) For a proposed expansion of sewage treatment or water supply
facilities, such expansions would serve a population that is no more
than 20 percent greater than the existing population.
(vi) The proposal is not controversial for environmental reasons, nor
have relevant questions been raised regarding its environmental impact
which cannot be addressed in a Class I assessment.
(2) Financial assistance for group homes, detention facilities,
nursing homes, or hospitals, providing a net increase in beds of not
more than 25 percent or 25 beds, whichever is greater; and
(3) Financial assistance for the construction or expansion of
facilities, such as fire stations, real stores, libraries outpatient
medical facilities, service industries, additions to manufacturing
plants, office buildings, and wholesale industries, that:
(i) Are confined to single, small sites; and
(ii) Are not a source of substantial traffic generation; and
(iii) Do not produce either substantial amounts of liquid or solid
wastes or any of the following type(s) of wastes:
(A) Gaseous, liquid, or solid waste that is hazardous toxic,
radioactive, or odorous;
(B) Either a liquid waste, whether or not disposed of on-site, that
cannot be accepted by a publicly owned treatment works without first
receiving petreatment, or a liquid waste discharge that is a point
source subject to a Federal, or State discharge permit; or
(C) Gaseous waste or air pollutant that will be emitted either from a
new source at a rate greater than one hundred tons per year or from an
expanded source at a rate greater than twenty-five tons per year.
(4) Financial assistance for a livestock-holding facility or feed-lot
meeting the criteria of 1940.311(c)(8) of this subpart.
(c) Farm Programs. In completing environmental assessments for the
following Class I actions and the Class II actions listed in
1940.312(d), special attention will be given to avoiding a duplication
of effort with other Department agencies, particularly SCS. For
applications in which the applicant is receiving assistance from other
agencies, technical assistance from SCS, for example, FmHA will request
from that agency a copy of any applicable environmental review conducted
by it and will adopt that review if the requirements of 1940.324 of
this subpart are met. FmHA will work closely with the other Federal
Agencies to supplement previous or ongoing reviews whenever they cannot
be readily adopted.
(1) Financial assistance for the installation or enlargement of
irrigation facilities including storage reservoirs, diversion dams,
wells, pumping plants, canals, pipelines, and sprinklers designed to
irrigate at least 80 acres, but no more than 160 acres and provided that
no wetlands are affected, in which case the application will fall under
Class II as defined in 1940.312 of this subpart:
(2) Financial assistance for the development of farm ponds or lakes
of more than 5 acres in size, but no more than 10 acres, provided that
no wetlands are affected. If wetlands are affected, the application
will fall under Class II as defined in 1940.312 of this subpart;
(3) Financial assistance for land-clearing operations encompassing
over 15 acres, but no more than 35 acres, provided that no wetlands are
affected. If wetlands are affected, the application will fall under
Class II as defined in 1940.312 of this subpart;
(4) Financial assistance for the construction of energy producing
facilities designed for on-farm needs such as methane digestors and fuel
alcohol production facilities;
(5) Financial assistance for the conversion of more than 160 acres of
pasture to agricultural production, but no more than 320 acres, provided
that in a conversion to agricultural production no wetlands are
affected, in which case the application will fall under Class II as
defined in 1940.312 of this subpart;
(6) Financial assistance to grazing associations;
(7) Financial assistance for the use of a farm or portion of a farm
for recreational purposes or nonfarm enterprises utilizing no more than
10 acres, provided that no wetlands are affected. If wetlands are
affected, the application will fall under Class II as defined in
1940.312 of this subpart; and
(8) Financial assistance for a livestock-holding facility or feedlot
having a capacity of at least one-half of those listed in
1940.312(c)(9) of this subpart. (If the facility is located near a
populated area or could potentially violate a State water quality
standard, it will be treated as a Class II action as required by
1940.312(c)(10) of this subpart.)
(d) General. (1) Any Federal action which is defined in 1940.310 of
this subpart as a categorical exclusion, but which is controversial for
environmental reasons, or which is the subject of an environmental
complaint raised by a government agency, interested group, or citizen;
(2) Loan-closing and servicing activities, transfers, assumptions,
subordinations, construction management activities, and amendments and
revisions to all approved actions listed either in this section or
equivalent in size or type to such actions and that alter the purpose,
operation, location or design of the project as originally approved;
(3) The lease or disposal of real property by FmHA which meets either
the following criteria:
(i) The lease or disposal may result in a change in use of the real
property in the reasonably foreseeable future, and such change is
equivalent in magnitude or type to either the Class I actions defined in
this section or the categorical exclusions defined in 1940.310 of this
subpart; or
(ii) The lease or disposal is controversial for environmental
reasons, and the real property is equivalent in size or type to either
the Class I actions defined in this section or the categorical
exclusions defined in 1940.310 of this subpart.
07 CFR 1940.312 Environmental assessments for Class II actions.
Class II actions are basically those which exceed the thresholds
established for Class I actions and, consequently, have the potential
for resulting in more varied and substantial environmental impacts. A
more detailed environmental assessment is, therefore, required for Class
II actions in order to determine if the action requires an EIS. The
format that will be used for completing this assessment is included as
Exhibit H of this subpart. Further guidance on Class II actions is
contained in 1940.318 of this subpart. Class II actions are presumed
to be major Federal actions and are defined as follows:
(a) Housing assistance. If either of the following actions is an
expansion of a previously approved FmHA housing project, see
1940.310(b)(8) of this subpart to determine if it meets the requirements
for a categorical exclusion, otherwise it is a Class II action.
(1) Financial assistance for a multi-family housing project,
including labor housing, which comprises more than 25 units; and
(2) Financial assistance for, or the approval of, a subdivision as
well as the expansion of an existing one, which involves more than 25
lots.
(b) Community and business programs and nonprofit national
corporations loan and grant program. (1) Class II actions are those
which either do not meet the criteria for a categorical exclusion as
stated in 1940.311 of this subpart, or involve a livestock-holding
facility or feedlot meeting the criteria for a Class II action as
defined in paragraphs (c) (9) and (10) of this section; and
(2) Non-technical assistance grant or loan guarantee under nonprofit
national corporation loan and grant program.
(c) Farm programs. In completing environmental assessments for the
following actions, FmHA will first determine if the applicant has sought
technical assistance from the Soil Conservation Service (SCS). If not,
the applicant will be requested to do so. Subsequently, an approved
loan will be structured so as to be consistent with any conservation
plan developed with the application by SCS. However, the FmHA approving
official need not include an element of the conservation plan within the
loan agreement if that official determines that the element is both
nonessential to the accomplishment of the plan's objectives and so
costly as to prevent the borrower from being able to repay the loan.
The SCS environmental review will be adopted by FmHA if the requirements
of 1940.324 of this subpart are met.
(1) Financial assistance for the installation or enlargement of
irrigation facilities including storage reservoirs, diversion dams,
wells, pumping plants, canals, pipelines, and sprinklers either designed
to irrigate more than 160 acres or that would serve any amount of
acreage and affects a wetland;
(2) Financial assistance for the development of farm ponds or lakes
either larger than 10 acres in size or for any smaller size that would
affect a wetland;
(3) Financial assistance for land-clearing operations either
encompassing more than 35 acres or affecting a wetland, if less than 35
acres is involved;
(4) Financial assistance for the construction or enlargement of
aquaculture facilities;
(5) Financial assistance for the conversion of more than 320 acres of
pasture to agricultural production or for any smaller conversion of
pasture to agricultural production that affects a wetland;
(6) Financial assistance to an individual farmer or an association of
farmers for water control facilities such as dikes, detention
reservoirs, stream channels, and ditches;
(7) Financial assistance for the use of a farm or portion of a farm
for recreational purposes or nonfarm enterprises either utilizing more
than 10 acres or affecting a wetland, if less than 10 acres is involved.
(8) Financial assistance for alteration of a wetland;
(9) Financial assistance for a livestock-holding facility or feedlot
located in a sparsely populated farming area having a capacity as large
or larger than one of the following capacities; 1,000 slaughter steers
and heifers; 700 mature dairy cattle (whether milkers or dry cows);
2,500 swine; 10,000 sheep; 55,000 turkeys; 100,000 laying hens or
broilers when facility has unlimited continuous flow watering systems;
30,00 laying hens or broilers when facility has liquid manure handling
system; 500 horses; and 1,000 animal units from a combination of
slaughter steers and heifers, mature dairy cattle, swine, and sheep;
(The term ''animal unit'' means a unit of measurement for any animal
feeding operation calculated by adding the following numbers: the
number of slaughter and feeder cattle multiplied by 1.0, plus the number
of mature dairy cattle multiplied by 1.4, plus the number of swine
weighing over 25 kilograms (approximately 55 pounds) multiplied by 0.4,
plus the number of sheep multiplied by 0.1, plus the number of horses
multiplied by 2.0) and
(10) Financial assistance for a livestock-holding facility or feedlot
which either could potentially violate a State water quality standard or
is located near a town or collection of rural homes which could be
impacted by the facility, particularly with respect to noise, odor,
visual, or transportation impacts and having a capacity of at least
one-half of those listed in paragraph (c)(9) of this section.
(d) General. (1) Any action which meets the numerical criteria or
other restriction for a Class I action contained in 1940.311 of this
subpart, but is controversial for environmental reasons. If the action
is the subject of isolated environmental complaints or any questions or
concerns that focus on a single impact, air quality, for example, the
analysis of such a complaint or questions can be handled under the
assessment format for a Class I action, Form FmHA 1940-21, as explained
in 1940.319 of this subpart. When several potential impacts are
questioned, however, the assessment format (Exhibit H of this subpart)
for a Class II action must be used to address these questions;
(2) Loan-closing and servicing activities, transfers, assumptions,
subordinations, construction management activities and amendments and
revisions to all approved actions listed either in this section or
equivalent in size or type to such actions and that alter the purpose,
operation, location, or design of the project as originally approved;
(3) The approval of plans and State Investment Strategies for Energy
Impacted Areas, designated under section 601 Energy Impacted Area
Development Assistance Program, as well as the applications for
financial assistance (excluding the award of planning funds) for Energy
Impact Areas;
(4) Proposals for legislation as defined in CEQ's regulations,
1508.17;
(5) The issuance of regulations and instructions, as well as
amendments to these, that described either the entities, proposals and
activities eligible for FmHA financial assistance, or the manner in
which such proposals and activities must be located, constructed, or
implemented; and
(6) The lease or disposal of any real property by FmHA which either
does not meet the criteria for a categorical exclusion as stated in
1940.310(e)(6) of this subpart or a Class I action as stated in
1940.311(d)(3) of this subpart.
07 CFR 1940.313 Actions that normally require the preparation of an
Environmental Impact Statement (EIS).
The environmental assessment process will be used, as defined in this
subpart, to identify on a case-by-case basis those actions for which the
preparation of an EIS is necessary. Given the variability of the types
and locations of actions taken by FmHA, no groups or set of actions can
be identified which in almost every case would require the preparation
of an EIS.
07 CFR 1940.314 Criteria for determining a significant environmental
impact.
(a) EISs will be done for those Class I and Class II actions that are
determined to have a significant impact on the quality of the human
environment. The criteria for determining significant impacts are
contained in 1508.27 of the CEQ regulations.
(b) In utilizing the criteria for a significant impact, the
cumulative impacts of other FmHA actions planned or recently approved in
the proposal's area of environmental impact, other related or similarly
located Federal actions, and non-federal related actions must be given
consideration. This is particularly relevant for frequently recurring
FmHA actions that on an individual basis may have relatively few
environmental impacts but create a potential for significantly impacts
on a cumulative basis. Housing assistance is one such example.
Consequently, in reviewing proposals for subdivisions and multi-family
housing sites, consideration must be given to the cumulative impacts of
other federally assisted housing in the area, including FmHA's. The
boundaries of the area to be considered should be based upon such
factors as common utility or public service districts, common
watersheds, and common commuting patterns to central employment or
commercial areas. Additionally, the criteria for significant impacts
utilized by the other involved housing agency(s), (VA and HUD, for
example) must be reviewed when there is a potential for cumulative
impacts. FmHA will consult with HUD for determining a significant
impact whenever the total of HUD and FmHA housing units being planned
within a common area of environmental impact exceeds the HUD thresholds
listed in its NEPA regulations. (See 24 CFR Part 50.)
(c) Because the environmental values and functions of floodplains and
wetlands are of critical importance to man, and because these areas are
often extremely sensitive to man-induced disturbances, actions which
affect wetlands and floodplains will be considered to have a significant
environmental impact whenever one or more of the following criteria are
met:
(1) The public health and safety are identifiably affected, that is,
whenever the proposed action may affect any standards promulgated under
the Safe Drinking Water Act (42 U.S.C. 300f et seq.), the Clean Water
Act (33 U.S.C. 1251 et seq.) or similar State authorities.
(2) The preservation of natural systems is identifiably affected,
that is, whenever the proposed action or related activities may
potentially create or induce changes in the existing habitat that may
affect species diversity and stability (both flora and fauna and over
the short and long term) or affect ecosystem productivity over the long
term.
(3) The proposal, if located or carried out within a floodplain,
poses a greater than normal risk for flood-caused loss of life or
property. Examples of such actions include facilities which produce,
use, or store highly volatile, toxic, or water-reactive materials or
facilities which contain occupants who may not be sufficiently mobile to
avoid the loss of life or injury during flood and storm events (i.e.,
hospitals, nursing homes, schools).
07 CFR 1940.315 Timing of the environmental review process.
(a) The FmHA office to which a potential applicant would go to seek
program information and request application materials will notify the
applicant of the major environmental requirements applicable to the type
of assistance being sought. Emphasis should be placed on describing
FmHA's natural resource management policies, the nature and purpose of
the environmental impact assessment process, and the permissible actions
of the applicant during this process.
(b) When a preapplication is either filed by the applicant or
required by FmHA for a project not categorically excluded, the
prospective applicant will be requested to complete Form FmHA 1940-20 at
the time of the issuance of Form AD-622, ''Notice of Preapplication
Review Action,'' or other notice inviting an application. Form AD-622
will clearly inform the applicant that during the period of application
review, the applicant is to take no actions or incur any obligations
which would either limit the range of alternatives to be considered or
which would have an adverse effect on the environment, and that
satisfactory completion of the environmental review process must occur
prior to the issuance of the letter of conditions for Community Programs
and prior to loan approval for all other programs where a preapplication
is used. FmHA must make its environmental reviews simultaneously with
other loan processing actions so that they are an integral part of the
loan process. Whenever the potential for a major adverse environmental
impact is recognized, such as issues pertaining to floodplains,
wetlands, endangered species, or the need for an EIS, priority
consideration will be given to resolving this issue by appropriate FmHA
staff. Loan processing need not cease during this resolution period,
but loan processing actions will not be taken that might limit
alternatives to be considered or whose outcome may be affected by the
environmental review. The environmental impact review (whether a
categorical exclusion, environmental assessment or EIS) must be
completed prior to the issuance of the letter of conditions for
Community Programs, prior to issuance of a conditional commitment for
the Business and Industry and Farmer Program Guaranteed Loan Programs,
and either prior to loan approval or obligation of funds, whichever
occurs first, for all other programs where a preapplication is used. As
an exception, however, whenever an application must be submitted to the
National Office for concurrence or approval, the environmental review
must be completed prior to and included in the submission to the
National Office. The environmental impact review is not completed by
FmHA until all applicable public notices and associated review periods
have been completed and FmHA has taken any necessary action(s) to
address comments received. The exception to the provisions of this
paragraph is contained in 1940.332 of this subpart.
(c) When a preapplication is not filed, the prospective applicant
will be required to complete Form FmHA 1940-20 at the earliest possible
time after FmHA is contacted for assistance but no later than when the
application is filed with the appropriate FmHA office. (For the
exception to this statement as regards Farm Programs' Class I actions,
see 1940.309(c) of this subpart.) FmHA will not consider the
application to be complete, until FmHA staff have completed the
environmental impact review, whether an assessment or EIS.
(d) For those applications that meet the requirements of a
categorical exclusion, Form FmHA 1940-22 will be completed by FmHA as
early as possible after receipt of the application. The application
will not be considered complete until either the checklist is
successfully completed or the need for any further environmental review
is identified and completed.
07 CFR 1940.316 Responsible officials for the environmental review
process.
(a) Approving official. With the exception of paragraph (b)(2) of
this section, the FmHA official responsible for executing the
environmental impact determination and environmental findings for a
Class I or Class II action will be the official having approval
authority for the action as specified in Subpart A of Part 1901 of this
chapter (available in any FmHA office).
(b) State Office level. (1) When the approval official is at the
State Office level, the responsible Program Chief will have the
responsibility for preparing the appropriate environmental review
document. Whenever the Chief delegates this responsibility in
accordance with 1940.302(i) of this subpart, the Chief is responsible
for reviewing the environmental document to ensure that it is adequate,
that any deficiencies are corrected, and that it is signed by the
preparer. When the document is satisfactory to the Chief, the Chief
will sign it as the concurring official. When no delegation occurs, the
Chief will sign as the preparer. If the environmental review document
is either a Class I or Class II assessment, it must be provided to the
SEC for review prior to being submitted to the approval official for
final determinations. The SEC will review the assessment and provide
recommendations to the approval official.
(2) Whenever the preparer and the SEC do not concur on either the
adequacy of the assessment or the recommendations reached, the State
Director, whether or not the approving official, will make the final
decision on the matter or matters in disagreement. The State Director
will also make the final decision whenever a State Office approving
official disagrees with the joint recommendations of the preparer and
the SEC. In either case, should the State Director desire, the matter
will be forwarded to the National Office for resolution. The Program
Support Staff will coordinate its resolution with the appropriate
Assistant Administrator. Failure of these parties to resolve the matter
will require a final decision by the Administrator. The State Director
should also request the assistance of the National Office on actions
that are too difficult to analyze at the State Office level.
(c) District or County Office level. The approval official for the
action under review will be responsible for preparing the appropriate
environmental review document and completing the environmental findings
and impact determinations for Class I and Class II assessments, except
in the circumstances outlined in paragraph (d) of this section.
Whenever the approval official delegates the preparation of the
environmental review in accordance with 1940.302(i) of this subpart,
the approval official must, after exercising the same responsibilities
assigned to the Program Chief as indicated in paragraph (b)(1) of this
section, sign the environmental review document as the concurring
official. Both District Directors and County Supervisors will contact,
as needed, the SEC for technical assistance in preparing specific
environmental review documents.
(d) Multi-level review. When the approval official is at the County
Office or District Office level but the action must be forwarded to the
State Office for concurrence, the responsible Program Chief will perform
the responsibilities of the concurring official with respect to the
environmental review document and the SEC will review it, if a Class I
or Class II assessment, in a similar manner as indicated in paragraph
(b) of this section. Responsibilities similar to those of the Program
Chief will exist for the District Director when the County Supervisor
forwards an action to the District Office for concurrence.
(e) Reservation of authority. The Administrator reserves the right
to request a State Director to forward to the National Office for review
and approval any action which is highly controversial for environmental
reasons, involves the potential for unique or extremely complex
environmental impacts or is of national, regional, or great local
significance. State Directors have a similar right with respect to
District and County Offices.
07 CFR 1940.317 Methods for ensuring proper implementation of
categorical exclusions.
(a) The use of categorical exclusions exempts properly defined
actions or proposals from the review requirements of NEPA. It does not
exempt proposals from the requirements of other environmental laws,
regulations or Executive orders. Each proposal must be reviewed to
determine the applicability of other environmental requirements.
Extraordinary circumstances may cause an application to lose its
categorical exclusion and require a Class I environmental assessment, as
further specified in paragraph (e) of this section. Section 1508.4 of
CEQ's regulations state that ''any procedures under this section will
provide for extraordinary circumstances in which a normally excluded
action may have a significant environmental effect.'' For example, an
application for approval of a subdivision of four lots is normally
excluded from a NEPA review (see 1940.310(b)(5) of this subpart) but is
not exempt from the requirements of Executive Order 11990, ''Protection
of Wetlands.'' In the processing of this application, FmHA must
determine if a wetland is to be impacted. Assuming that the development
of the proposed subdivision site necessitates the filling of 2 acres of
wetland, such a potential wetland impact, under the requirements of
1940.310(a) of this subpart, represents an extraordinary circumstance
that causes the application to lose its categorical exclusion. An
environmental assessment for a Class I action must then be initiated.
This assessment serves the purposes of providing for the extraordinary
circumstance by analyzing the degree of potential impact and the need
for further study as well as completing and documenting FmHA's
compliance with the Executive order. In this particular example, unless
an alternative site could not be readily located and the approving
official wanted to further pursue consideration of the application, the
environmental assessment would determine that there was a significant
impact and an EIS would be required. (See 1940.314 of this subpart.)
(b) The approving official for an action will be responsible for
ensuring that no action which requires an environmental assessment is
processed as a categorical exclusion. In order to fulfill this
responsibility, Form FmHA 1940-22 will be completed for those actions
that would normally be categorically excluded and as further defined in
paragraph (c) of this section. When Form FmHA 1940-22 must be prepared
and the approving official delegates its preparation in accordance with
1940.302(i) of this subpart, the approving official must sign the form
as the concurring official. If that approving official must, prior to
approval, forward the action to a District or State Office for review, a
second concurrence must be executed by the Program Chief or District
Director, as determined by the level of review being conducted. The
checklist is filed with the application and serves as FmHA's
documentation of compliance with the environmental laws, regulations and
Executive Orders listed on the checklist. Whenever the preparer is
within the State Office or is in the National Office, the FmHA office
where the processing of the application was initiated is responsible for
providing sufficient site and project information in order to complete
the checklist.
(c) Form FmHA 1940-22 need not be completed for all categorical
exclusions as defined in 1940.310 of this subpart but only for those
listed below. This list identifies the exclusions by their subject
heading and paragraph number within 1940.310 of this subpart.
Additionally, for the housing assistance exclusion identified in
1940.310(b)(8), for farm programs exclusions listed in 1940.310(d)(2)
and (3), and for community and business programs exclusions processed
under 1940.310(e)(2) of this subpart, a notation must be made in the
docket materials or running record for the action by the processing
official that the specific criteria of the applicable exclusion have
been met for the action under review.
(1) Housing assistance -- (b), (1), (2), (3), (5), (7), and (9);
(2) Community and Business Programs -- (c) (1) and (2);
(3) Farm Programs -- (d) (1) through (11);
(4) General exclusions -- (e)(2), if action covered by Exhibit M of
the subpart, and (6).
(d) In applying the definition of a categorical exclusion to a
project activity, the preparer must consider the following two elements
in addition to the specific project elements for which approval is
requested.
(1) If the application represents one of several phases of a larger
proposal, the application will undergo the environmental review required
for the elements or the size of the total proposal. For example, if
approval of a four-lot subdivision is requested and the application
evidences or the reviewer knows that additional phases are planned and
will culminate in a 16-lot subdivision, the categorical exclusion does
not apply and an environmental assessment for a Class I action must be
initiated and must address the impact of developing 16 lots. Should the
applicant subsequently apply for approval of any of these additional
phases, no further environmental assessment will be required as long as
the original assessment still accurately reflects the environmental
conditions found at the project site and the surrounding areas.
(2) If the application represents one segment of a larger project
being funded by private parties or other government agencies, the size
and elements of the entire project are used in determining the proper
level of environmental assessment to be conducted by FmHA. If an
environmental assessment is required, it will address the environmental
impacts of the entire project.
(e) Under any one of the following circumstances, an action that is
normally categorically excluded loses its classification as an exclusion
and must be reviewed in the manner described in paragraph (g) of this
section. The following listing corresponds to the list of land uses and
environmental resources contained in part 2 of Form FmHA 1940-22.
(1) Wetlands -- the proposed action:
(i) Would be located adjacent to a wetland or a wetland is within the
project site, and
(ii) The action would affect the values and functions of the wetland
by such means as converting, filling, draining, or directly discharging
into it;
(2) Floodplains -- the proposed action:
(i) Includes or involves an existing structure(s) located within a
100-year floodplain (500-year floodplain if critical action), or
(ii) Would be located within a 100-year floodplain (500-year
floodplain if critical action) and would affect the values and functions
of the floodplain by such means as converting, dredging, or filling or
clearing the natural vegetation;
(3) Wilderness (designated or proposed) -- the proposed action:
(i) Would be located in a wilderness area, or
(ii) Would affect a wilderness area such as by being visible from the
wilderness area;
(4) Wild or Scenic River (proposed or designated or identified in the
Department of the Interior's nationwide Inventory) -- the proposed
action:
(i) Would be located within one-quarter mile of the banks of the
river,
(ii) Involves withdrawing water from the river or discharging water
to the river via a point source, or
(iii) Would be visible from the river;
(5) Historical and Archeological Sites (listed on the National
Register of Historic Places or which may be eligible for listing) -- the
proposed action:
(i) Contains a historical or archeological site within the
construction site, or
(ii) Would affect a historical or archeological site;
(6) Critical Habitat or Endangered/Threatened Species (listed or
proposed) -- the proposed action:
(i) Contain a critical habitat within the project site,
(ii) Is adjacent to a critical habitat, or
(iii) Would affect a critical habitat or endangered/threatened
species;
(7) Coastal Barrier Included in Coastal Barrier Resources System --
the proposed action would be located within the Coastal Barrier
Resources System;
(8) Natural Landmark (listed on National Registry of Natural
Landmarks) -- the proposed action either:
(i) Contains a natural landmark within the project site, or
(ii) Would affect a natural landmark;
(9) Important Farmlands -- the proposed action would convert
important farmland to a nonagricultural use(s) except when the
conversion would result from the construction of on-farm structures
necessary for farm operations;
(10) Prime Forest Lands -- the proposed action would convert prime
forest land to another use(s), except when the conversion would result
from the construction of on-farm structures necessary for farm
operations;
(11) Prime Rangelands -- the proposed action would convert prime
rangeland to another use(s) except when the conversion would result from
the construction of on-farm structures necessary for farm operations;
(12) Approved Coastal Zone Management Area -- the proposed action
would be located within such area and no agreement exists with the
responsible State agency obviating the need for a consistency
determination for the type of action under consideration;
(13) Sole Source Aquifer Recharge Area -- the proposed action would
be located within such area and no agreement exists with the
Environmental Protection Agency (EPA) obviating the need for EPA's
review of the type of action under consideration; and
(14) State Water Quality Standard -- the proposed action would impair
a water quality standard, including designated and/or existing
beneficial uses, or would not meet applicable antidegradation
requirements for point or nonpoint sources.
(f) From the above paragraph (e), it should be noted that the
location within the project site of any of the land uses and
environmental resources identified in paragraphs (e) (1), (2), (9),
(10), (11), (12), and (13) of this section is not sufficient for an
action to lose its categorical exclusion. Rather, the land use or
resource must be affected in the case of paragraphs (e) (1), (2), (9),
(10), and (11) of this section. For paragraphs (e) (12), (13) and (14)
of this section, further review and consultation can be avoided by
written agreement with the responsible agency detailing the types of
actions not requiring interagency review.
(g) Whenever a categorical exclusion loses its status as an exclusion
for any of the reasons stated in paragraph (e) of this section, the
environmental impacts of the action must be reviewed through the
preparation of a Class I assessment, Form FmHA 1940-21. Not all of the
procedural requirements for a Class I assessment apply in this limited
case, however. The following exemptions exists:
(1) No public notice provisions of this subpart apply.
(2) The applicant does not complete Form FmHA 1940-20.
(3) The action does not require a Class II assessment should more
than one important land resources be affected.
07 CFR 1940.318 Completing environmental assessments for Class II
actions.
(a) The first step for the preparer (as defined in 1940.302(i) and
1940.316 of this subpart) is to examine Form FmHA 1940-20 submitted by
the applicant to determine if it is complete, consistent, fully
responsive to the items, signed, and dated. If not, it will be returned
to the applicant with a request for necessary clarifications or
additional data.
(b) Once adequate data has been obtained, the assessment will be
initiated in the format and manner described in Exhibit H of this
subpart. In completing the assessment, appropriate experts from State
and Federal agencies, universities, local and private groups will be
contacted as necessary for their views. In so doing, the preparer
should communicate with these agencies or parties in the most
appropriate and expeditious manner possible, depending upon the
seriousness of the potential impacts and the need for formal
documentation. Appropriate experts must be contacted whenever required
by a specific provision of this subpart or whenever the preparer does
not have sufficient data or expertise available within FmHA to
adequately assess the degree of a potential impact or the need for
avoidance or mitigation. Comments from an expert must be obtained in
writing whenever required by a specific provision of this subpart or the
potential environmental impact is either controversial, complex, major,
or apparently major. When correspondence is exchanged, it will be
appended to the assessment. Oral discussions should be documented in
the manner indicated in Exhibit H of this subpart. On the other hand,
there is no need for the preparer to seek expert views outside of the
Agency when there is no specific requirement to do so and the preparer
has sufficient expertise available within FmHA to assess the degree of
the potential impact and the need for avoidance or mitigation.
(c) At the earliest possible stage in the assessment process, the
preparer will identify the Federal, State, and local parties which are
carrying out related activities, either planned or under way.
Discussions with the applicant and FmHA staff familiar with the project
area should assist in this identification effort. If there is a
potential for cumulative impacts, the preparer will consult with the
involved agencies to determine the nature, timing and results of their
environmental analysis. These consultations will be documented in the
assessment and considered or adopted when making the environmental
impact determination. (See 1940.324 of this subpart concerning
adoption of assessments.) If it is determined that the cumulative
impacts are significant, the preparer will further contact the involved
Federal agencies and attempt to determine the lead Federal Agency as
discussed in 1940.320(b) and 1940.326 of this subpart.
(d) Consultations similar to those discussed in paragraph (c) of this
section will also be undertaken with those Federal and State agencies
which are directly involved in the FmHA action, either through the
provision of financial assistance or the review and approval of a
necessary plan or permit. For example, a construction permit from the
U.S. Army Corps of Engineers may be required for a project. In such an
instance, the environmental assessment cannot be completed until the
preparer has either reviewed the other Agency's completed environmental
analysis or consulted with the other Agency and is reasonably sure of
the scope, content, and expected environmental impact determination of
the forthcoming analysis and has so documented for the FmHA assessment
this understanding. If the other Agency believes that the project will
have a significant impact, a joint or lead impact statement will be
prepared. If the other Agency does not believe a significant impact
will occur, the preparer will consider this finding and its supporting
analysis in completing the FmHA environmental impact determination.
Guidance in adopting an environmental assessment prepared by another
Federal Agency is provided in 1940.324 of this subpart.
(e) For actions having a variety of complex or interrelated impacts
that are difficult for the preparer to assess, consideration should be
given to holding a public meeting in the manner described in
1940.331(c) of this subpart. Such meetings should not be assumed as
being limited to projects for which EISs are being prepared. Such a
meeting can serve a useful purpose in better defining and identifying
complex impacts, as well as locating expertise with respect to them.
The results of a public meeting and the follow-up from it can also serve
as a valuable tool in reaching an early understanding on the potential
need for an EIS. When identified impacts are difficult to quantify
(such as odor and visual and community impacts) or controversial, a
public information meeting should be held near the project site and the
local area's concern about it. Whenever held, it should be announced
and organized in the manner described in 1940.331(c). However, a
transcript of the meeting need not be prepared, but the preparer will
make detailed notes for incorporation in the assessment. (See
1940.331(c) of this subpart.)
(f) Throughout this assessment process, the preparer will keep in
mind the criteria for determining a significant environmental impact.
If at any time in this process it is determined that a significant
impact would result, the preparer will so notify the approving official.
Those actions specified in 1940.320 of this subpart will then be
initiated, unless the approving official disagrees with the preparer's
recommended determination, in which case further review of the
determination may be required as explained in 1940.316 (b), (d) and (e)
of this subpart. As soon as possible after the need for an EIS is
determined, the applicant will also be advised of this in writing, as
well as reinformed of the limitations on its actions during the period
that the EIS is being completed. (See 1940.309(e) of this subpart.)
The applicant's failure to comply with these limitations will be
considered as grounds for postponement of further consideration of the
application until such problem is alleviated.
(g) Similarly, throughout the assessment process, consideration will
be given to incorporating mechanisms into the proposed action for
reducing, mitigating, or avoiding adverse impacts. Examples of such
mechanisms which are commonly referred to as mitigation measures include
the deletion, relocation, redesign or other modifications of the project
elements; the dedication of environmentally sensitive areas which would
otherwise be adversely affected by the action or its indirect impacts;
soil erosion and sedimentation plans to control runoff during
land-disturbing activities; the establishment of vegetative buffer
zones between project sites and adjacent land uses; protective measures
recommended by environmental and conservation agencies, including but
not limited to interstate, international, Federal, State, area-wide, and
local agencies having jurisdiction or special expertise regarding the
action's impacts; and zoning. Mitigation measures must be tailored to
fit the specific needs of the action, and they must also be practical
and enforceable. Mitigation measures which will be taken must be
documented in the assessment (Item XIX of Exhibit H of this subpart),
and include an analysis of their environmental impacts and potential
effectiveness and placed in the offer of financial assistance as special
conditions or in the implementation requirements when the action does
not involve financial assistance. These measures will be consistent
with the basic goal of the proposed action and developed in consultation
with the appropriate program office.
(h) As part of the assessment process, the preparer will initiate the
consultation and compliance requirements for the environmental laws,
regulations, and Executive orders specified in the assessment format.
The assessment cannot be completed until compliance with these laws and
regulations is appropriately documented. The project's failure to meet
the requirements specified in Item 10b of Form FmHA 1940-21 for a Class
I action and Item XXIb of Exhibit H of this subpart for a Class II
action will result in postponement of further consideration of the
application until such problem is alleviated.
(i) When the preparer has completed the assessment, the related
materials and correspondence utilized will be attached. The preparer
will then either recommend to the approving official that the action has
the potential for significantly affecting the quality of the human
environment or will recommend that the action does not have this
potential and, therefore, the preparation of an EIS is not necessary.
(Item 10a of Form FmHA 1940-21 for Class I action and item XXIa of
Exhibit H of this subpart for a Class II action.) The recommended
environmental findings will also be completed. (Item 10b of Form FmHA
1940-21 for a Class I action and Item XXIb of Exhibit H of this subpart
for a Class II action.) In those instances specified in 1940.316, the
assessment will then be forwarded to the concurring official and, as
required, to the SEC for review. The concurring official will
coordinate, as necessary, with the preparer any questions, concerns or
clarifications and complete and document the review prior to the
assessment being submitted to the approving official or the SEC. The
SEC will coordinate with the concurring official in a similar fashion
whenever the latter's review is required.
(j) The approving official will review the environmental file and
recommendations. The official will then execute the environmental
impact determination and findings. If the conclusions reached are that
there is no significant impact and there is compliance with the listed
requirements, the format contained in Exhibit I of this subpart will be
used. If a significant impact is determined, the steps specified in
1940.320 of this subpart will be initiated for the preparation of the
EIS. If a determination is made that the proposed action does not
comply with the environmental requirements that are explained in this
subpart and listed in Item 10b of Form FmHA 1940-21 for a Class I action
or Item XXIb of Exhibit H of this subpart for a Class II action and
there are no feasible alternatives (practicable alternatives when
required by specific provisions of this subpart), modifications, or
mitigation measures which could comply, the action will be denied or
disapproved. If the approving official's determination or findings
differ from the recommendations of the preparer, concurring official or
the SEC, this difference will be addressed in the manner specified in
1940.316 of this subpart.
(k) When there is no need for further review as discussed in
paragraph (j) of this section and findings of compliance and a
determination of no significant impact are reached, the assessment
process is conditionally concluded. To conclude the assessment, the
applicant will then be requested to provide public notification of these
results as indicated in 1940.331(b)(3) of this subpart. The approving
official will not approve the pending application for at least 15 days
from the date the notification is last published. If comments are
received as a result of the notification, they will be included in the
environmental assessment and considered. Any necessary changes
resulting from this consideration will be made in the assessment, impact
determinations, and findings. If the changes require further
implementation steps, such as the preparation of an EIS, they will be
undertaken. If there are no changes in the findings and determination
steps, such as the preparation of an EIS, they will be undertaken. If
there are no changes in the findings and determinations, the approving
official may continue to process the application. The environmental
documents, i.e., the assessment, related correspondence, Form FmHA
1940-20, and the finding of no significant impact will be included with
the approval documents which are assembled for review and clearance
within the approving office.
(l) Whenever changes are made to an action or comments or new or
changed information relating to the action's potential environmental
effects is received after the assessment is completed but prior to the
action's approval, such change, comment, or information will be
evaluated by the approving official to determine the impact on the
completed assessment. Whenever the contents or findings of that
assessment are affected, the assessment process for that action will be
revised and any other related requirement of this subpart met. Changes
to an action in terms of its location(s), design, purpose, or operation
will normally require, at a minimum, modification of the original
assessment to reflect such change(s) and the associated environmental
impacts.
(m) When comments are received after the action has been approved,
the approving official will consider the environmental importance of the
comments and the necessity and ability to amend both the action, with
respect to the issue raised and the action's stage of implementation.
The National Office may be consulted to assist in determining whether
there are any remaining environmental requirements which need to be met
under the specific circumstances. A similar procedure will be followed
when new or changed information is received after project approval.
Amendments and revisions to actions will be handled as specified in
1940.310 through 1940.313 of this subpart.
07 CFR 1940.319 Completing environmental assessments for Class I
actions.
(a) As stated in this subpart, a main purpose of Form FmHA 1940-21,
is to provide a mechanism for reviewing actions with normally minimal
impacts and for documenting a finding of no significant impact, as well
as compliance determinations for other applicable environmental laws,
regulations and policies. The second major purpose is to serve as a
screening tool for identifying those Class I actions which have more
than minimal impacts and which, therefore, require a more detailed
environmental review.
(b) The approach to reviewing a Class I action under the assessment
format of Form FmHA 1940-21 is exactly the same as for a Class II
action. The preparer (as defined in 1940.302(i) and 1940.316 of this
subpart) must become familiar with the elements of the action, the
nature of the environment to be affected, the relationship to any other
Federal actions or related nonfederal actions, and the applicable
environmental laws and regulations.
(c) The data submission requirements placed on the applicant for a
Class I action are not as extensive as for a Class II action. The
requirements are limited to completing the face of Form FmHA 1940-20, as
well as categories (1), (2), (13), (15), (16), and (17) of Item 1b of
the FMI, whenver a previously completed environmental analysis covering
these categories is not available. Should it later be determined that
the magnitude of the Class I action's impact warrants a more detailed
assessment, the applicant will be required to submit the remaining items
of the data request. Additionally, the circumstances under which FmHA
does not require the submission of Form FmHA 1940-20 by an applicant
whose proposed action requires a Class I assessment are specified in
1940.317(f) of this subpart.
(d) The preparer must ensure that the data received from the
applicant is complete, consistent, signed and dated before initiating
the assessment. If it is not, the applicant will be required to make
the necessary changes and clarifications. The reviewer must also ensure
that the application properly meets the definition of a Class I action.
Phased or segmented projects, as discussed in 1940.317(d) of this
subpart, will be identified and the elements and the size of the entire
project used to classify the action.
(e) An important element of this assessment is to determine if the
action affects an environmental resource which is the subject of a
special Federal consultation or coordination requirement. Such
resources are listed in the assessment format, Form FmHA 1940-21, and
include wetlands, floodplains, and historic properties, for example. If
one of the listed resources is to be affected, the preparer must
demonstrate the required compliance by accomplishing the review and
coordination requirements for that resource. Documentation of the steps
taken and coordination achieved will be attached. However, if more than
one listed resource is to be affected, this will be viewed as the action
having more than minimal impacts and the environmental assessment format
for a Class II action will be initiated except if the action under
review is an application for a Housing Preservation Grant.
(f) Similarly in completing item 3, General Impacts of Form FmHA
1940-21, the assessment format for a Class II action must be initiated
if more than one category of impacts cannot be checked as minimal. If
there is a single category which needs analysis, this can be
accomplished by attaching an appropriate exhibit addressing the
questions and issues for that impact, as specified in the environmental
assessment format for a Class II action. See 1940.311(b)(1) of this
subpart for when an attached discussion of water quality impacts is
mandatory.
(g) The comments of State, regional, and local agencies obtained
through applicable permit reviews or the implementation of Executive
Order 12372, Intergovernmental Review of Federal Programs, will be
incorported into the assessment, if this review applies to the action.
The receipt of negative comments of an environmental nature will warrant
the initiation of a more detailed assessment under the format for a
Class II action (Exhibit H of this subpart). Also, the issue of
controversy must be addressed, and if the action is controversial for
environmental reasons, the environmental assessment format for a Class
II action (Exhibit H of this subpart) will be completed. However, if
the action is the subject of isolated environmental complaints or any
questions or concerns that focus on a single impact, air quality, for
example, the analysis of such complaints or questions can be handled
under the assessment format for a Class I action. This analysis will
then be provided by the approving official to the party or parties which
raised the matter with FmHA. When several potential impacts are
questioned, however, the more detailed assessment format will be
accomplished to address these questions.
(h) The potential cumulative impacts of this action, particularly as
it relates to other FmHA actions recently approved in the area or
planned, will be analyzed. If the cumulative impact is not minimal and,
for example, cumulatively exceeds the criteria and threshholds discussed
in paragraphs (e), (f) and (g) of this section, the environmental
assessment format for a Class II action will be completed. The actions
of other Federal agencies and related nonfederal actions must also be
assessed on this basis. When there is a Federal action involved, the
environmental review conducted by that Agency will be requested and, if
it sufficiently addresses the cumulative impact, can be utilized by the
preparer as the FmHA assessment, assuming the impacts are not
significant. (See 1940.324 of this subpart.) If the other Agency is
doing or planning an EIS, the preparer will inform that Agency of our
action and request to be a cooperating agency.
(i) The preparer will have the responsibility of initiating the
assessment format for a Class II action (Exhibit H of this subpart)
whenever the need is identified. This should be done as early as
possible in the review process. The preparer should not complete the
assessment for a Class I action when it is obvious that the assessment
format for a Class II action will be needed. The preparer will simply
start the more detailed assessment and inform the applicant of the
additional data requirements.
(j) Exhibit I will be completed by the approval official in the same
instances for a Class I assessment as for a Class II assessment.
However, public notification of FmHA's finding of no significant
environmental impact will not be required for a Class I assessment.
Also, special provisions for completing a Class I assessment for an
action that is normally categorically excluded but loses its
classification as an exclusion are contained in 1940.317(g) of this
subpart. With the exception of the two preceding sentences, all other
procedural requirements of the assessment process, such as the timing of
the assessment and the limitations on the applicant's actions, apply to
a Class I assessment.
07 CFR 1940.320 Preparing EISs.
(a) Responsibility. Whenever the District Director or County
Supervisor determines there is a need to prepare an EIS, the State
Director will be notified. The EIS will be prepared at the State Office
and the State Director will assume the responsibility for preparing it.
The State will in turn notify the Administrator of these EISs, as well
as those needed EISs identified by a State Office review. EISs will be
prepared according to this section. The State Director will be
responsible for actions initiated within the State. However, in so
doing, the State Director will consult with the National Office to
determine that the document meets the requirements of NEPA. State
Directors will be responsible for issuing such EISs. However, unless
delegated authority by the Administrator, based upon a demonstrated
capability and experience in preparing EISs, the State Director will not
issue the EIS until reviewed and approved by the Administrator.
(b) Organizing the EIS process. Prior to initiating the scoping
process outlined below, the preparer of the EIS will take several
organizational steps to ensure that the EIS is properly coordinated and
completed as efficiently as possible. To accomplish this, the
below-listed parties need to be identified in advance; the list should
be expanded as familiarity with the project increases. Those parties
falling within the first four groups should be formally requested to
serve as cooperating agencies. If any of these agencies appear to be a
more appropriate lead agency than FmHA (using the criteria contained in
section 1501.5(c) of the CEQ regulations), consultations should be
initiated with that agency to determine the lead agency. If
difficulties arise in completing this determination, the National Office
will be consulted for assistance. All of the parties identified below
will be sent a copy of the notice of intent to prepare the EIS and an
invitation to the scoping meeting, as discussed in paragraph (c) of this
section.
(1) All Federal and State agencies that are being requested to
provide financial assistance for the project or related projects;
(2) All Federal agencies that must provide a permit for the project
should it be approved;
(3) All Federal agencies that have a specific environmental expertise
in major environmental issues identified to date;
(4) The Agency responsible for the implementation of the State's
environmental impact analysis requirement, if one has been enacted or
promulgated by the State;
(5) All Federal, State, and local agencies that will be requested to
comment on the draft EIS;
(6) All individuals and organizations that have expressed an interest
in the project; and
(7) National, regional, or local environmental organizations whose
particular area of interest corresponds to the major impacts identified
to date.
(c) Scoping process. As soon as possible after a decision has been
made to prepare an EIS, the following process will be initiated by the
preparer for identifying the major issues to be addressed in the EIS and
for developing a coordinated government approach to the preparation and
review of the EIS.
(1) The first step in this process will be the publication of a
notice of intent to prepare the EIS. The notice will indicate that an
EIS will be prepared and will briefly describe the proposed action and
possible alternatives; state the name, address, and phone number of the
preparer, indicating that this person can answer questions about the
proposed action and the EIS; list any cooperating agencies, and include
the date and time of the scoping meeting. If the latter information is
not known at the time the notice of intent is prepared, it will be
incorporated into a special notice, when available, and published and
distributed in the same manner as the notice of intent. It will be the
responsibility of the preparer of the EIS to inform the National Office
of the need to publish a notice of intent which will coordinate the
publication of the notice in the Federal Register. For requirements
relating to the timing the publication of the notice of intent within
the project area, as well as the applicant's responsibilities for the
notice, see 1940.331(b) of this subpart.
(2) A scoping meeting will be held. To the extent possible, the
scoping meeting should be integrated with any other early planning
meetings of the Agency or other involved agencies. The scoping meeting
will be chaired by the preparer of the EIS and will be organized to
accomplish the following major purposes (as well as other purposes
listed in 1501.7 of the CEQ regulations).
(i) Invite the participation of affected Federal, State, and local
agencies, any affected Indian Tribe, the proponent of the action, and
any interested parties including those who may disagree with the action
for environmental reasons;
(ii) Determine the scope and the significant issues to be analyzed in
depth in the EIS;
(iii) Identify and eliminate, from detailed study, the issues which
are not significant or which have been covered by prior environmental
review, narrowing the discussion of these issues in the statement to a
brief presentation of why they will not have a significant effect on the
human environment or providing a reference to their coverage elsewhere;
(iv) Allocate assignments for preparation of the EIS among the lead
and cooperating agencies, with the lead Agency retaining responsibility
for the statement;
(v) Indicate any public environmental assessments and other EISs
which are being or will be prepared that are related to, but are not
part of, the scope of the impact statement under consideration;
(vi) Identify other environmental review and consultation
requirements so the lead and cooperating agencies may prepare other
required analyses and studies concurrently with, and integrated with,
the environmental impact statement; and
(vii) Indicate the relationship between the timing of the preparation
of environmental analyses and the Agency's tentative planning and
decisionmaking schedule;
(3) Minutes of the scoping meeting, including the major points
discussed and decisions made, will be prepared and retained by the
preparer of the EIS as part of the environmental file. The preparer
will offer, during the scoping meeting, to send copies of the minutes to
any interested party upon written request.
(d) Interdisciplinary approach. The EIS will be prepared using an
interdisciplinary approach that will ensure the integrated use of the
natural and social sciences and the environmental design arts. The
disciplines of the preparers will be appropriate to address the
potential environmental impact associated with the project. This can be
accomplished both in the information collection stage and the analysis
stage by communication and coordination with environmental experts at
local, State and Federal agencies (particularly cooperating agencies)
and universities near the project site. When needed information or
expertise is not readily available, these needs should be met through
procurement contracts with qualified consulting firms. Consulting firms
can be utilized to prepare the entire EIS or portions of it as specified
in 1940.336 of this subpart.
(e) Content and format of EIS. The EIS will be prepared in the
format and manner described in Part 1502 of the CEQ regulations. There
is a great deal of specific guidance in that Part which will not be
repeated here.
(f) Circulation of the EIS. FmHA will circulate for review and
comment the draft and final EIS as broadly as possible. Therefore, it
will be necessary for the preparer to have sufficient copies printed or
reproduced for this purpose. In identifying the parties to receive a
draft EIS, the same process should be utilized as is employed for
inviting participants to the scoping meeting. (See paragraph (b) of
this section.) Special emphasis should be given to transmitting the
draft to those agencies with jurisdiction or expertise on the proposed
action's major impacts, as well as those parties who have expressed an
interest in the action. The final EIS will be provided to all parties
that commented on the draft EIS.
(g) Filing of the EIS. The Deputy Administrator for Program
Operations or any State Director that has been delegated the authority
to prepare an EIS must file the EIS with EPA in accordance with 1506.9
of the CEQ regulations. The official filing date for an EIS is the day
that it is received by EPA's Office of Federal Activities. Filing of
the EIS cannot occur until copies of the EIS have been transmitted to
commenting agencies and made available to the public. Transmittal of
the EIS must, therefore, occur either prior to its being filed with EPA
(received by EPA) or no later than close of business of the same day
that it is filed.
(h) Public information meetings. A public information meeting, as
specified in 1940.331(c)(1) of this subpart, will be held near the
project site to discuss and receive comments on the draft EIS.
(i) Response to comments. The preparer of the EIS will respond to
comments on the draft EIS as required by 1503.4 of the CEQ regulations.
The major and most frequently raised issues during the public
information meeting will also be identified and addressed.
(j) Timing of review. The preparer of the EIS will be responsible
for ensuring that the timing requirements for FmHA actions and the
review periods for draft and final EISs are fully met ( 1506.10 of CEQ
regulations). Prescribed review periods are calculated from the date
that EPA's Office of Federal activities publishes in the Federal
Register a notice of availability for the EIS. Any request to reduce a
prescribed review period will be made to EPA in accordance with
1506.10(d) of the CEQ regulations.
07 CFR 1940.321 Use of completed EIS.
(a) The final EIS will be a major factor in the Agency's final
decision. Agency staff making recommendations on the action and the
approving official will be familiar with the contents of the EIS and its
conclusions and will consider these in formulating their respective
positions with respect to the action. The final EIS and all comments
received on the draft will accompany the proposal through the FmHA final
clearance process. The alternatives considered by the approving
official will be those addressed in the final EIS.
(b) As part of this review process, the preparer of the EIS will
complete the recommendations listed in Item XXIb and c of Exhibit H of
this subpart and provide them to the approving official prior to a final
decision.
07 CFR 1940.322 Record of decision.
Upon completion of the EIS and its review within FmHA and before any
action is taken on the decision reached on the proposal, the approving
official will prepare, in consultation with the preparer of the EIS, a
concise record of the decision which will be available for public
review. The record will:
(a) State the decision reached;
(b) Certify that the timing requirements for the EIS process have
been fully met;
(c) Identify all alternatives considered in reaching the decision
specifying the alternative or alternatives that were considered to be
environmentally preferable and discuss the relevant factors
(environmental, economic, technical, statuatory mission and, if
applicable, national policy) that were considered in the decision;
(d) State whether all practicable means to avoid or minimize
environmental harm from the alternative selected have been adopted, and
if not, why not; and
(e) If any mitigation measures have been adopted, specify the
monitoring and enforcement program that will be utilized.
07 CFR 1940.323 Preparing supplements to EIS's.
(a) Either the State Office or the National Office, as appropriate,
will prepare supplements to either draft or final EIS's if:
(1) A substantial change or changes occur in the proposed action and
such changes are relevant to the environmental impacts previously
presented; and
(2) Significant new circumstances or information arise which are
relevant to environmental concerns and bear on the proposed action or
its impacts.
(b) If the preparer of the draft or final EIS determines that the
changes or new circumstances referenced in paragraph (a) of this section
do not require the preparation of a supplemental EIS, the preparer will
complete an environmental assessment for a Class II action which will
document the reasons for this determination.
(c) The preparer will be responsible for advising the approving
official of the need for a supplement. The latter will make the
Agency's formal determination in a manner consistent with 1940.316 of
this subpart.
(d) All of the requirements of this subpart that apply to the
completion of an initial EIS apply to the completion of a supplement
with the exception of the scoping process, which is optional.
Additionally, if the approving official believes that there is a need
for expedited or special procedures in the completion of a supplement,
the approval of CEQ must first be obtained by the Administrator for any
alternative procedures. The final supplement will be included in the
project file or docket and used in the Agency's decisionmaking process
in the same manner as a final EIS. (See 1940.321 of this subpart and
in particular subparagraphs (f), (g), and (j) of that section as well as
1502.9(c)(4) of the CEQ regulations for associated circulation, filing,
and timing requirements.)
07 CFR 1940.324 Adoption of EIS or environmental assessment prepared by
other Federal Agency.
(a) FmHA may adopt an EIS or portion thereof prepared by another
Federal Agency after completion if:
(1) An independent review of the document is conducted by the
preparer of the FmHA environmental review and it is concluded that the
document meets the requirements of this subpart; and
(2) If the actions covered in the EIS are substantially the same as
those proposed by FmHA and the environmental conditions in the project
area have not substantially changed since its publication, FmHA will
recirculate the EIS as a ''final'' and so notify the public as specified
in 1940.331(b) of this subpart. The final EIS will contain an
appropriate explanation of the FmHA involvement and will be sent to all
parties who would typically receive a draft EIS published by FmHA. If
there are differences between the actions or the environmental
conditions as discussed in the original EIS, that EIS will be updated to
cover these differences and recirculated as a draft EIS with the public
so notified. From that point, it will be reviewed and processed in the
same manner as any other FmHA EIS. For circulation, filing, and timing
requirements, see paragraphs (f), (g), and (j) of 1940.320 of this
subpart as well as 1506.3(c), 1506.9, and 1506.10 of the CEQ
regulations.
(b) If the adopted EIS is not final within the agency that prepared
it, or if the action it assesses is the subject of a referral under Part
1504 of the CEQ regulations, or if the statement's adequacy is the
subject of a judicial action which is not final, FmHA must so specify
and provide an explanation in the recirculated EIS.
(c) After recirculation (whether as a draft or final), the EIS will
be reviewed and processed in the same manner as any other FmHA EIS.
(d) FmHA may also adopt all or part of environmental assessments or
environmental reviews prepared by other Federal agencies. In this case,
only paragraph (a)(1) of this section applies. If the requirements of
that paragraph can be met except for the fact that the Federal agency
whose assessment is to be adopted has no preliminary public notice
requirements similar to FmHA's (See 1940.331(b)(4) of this subpart),
the assessment can be adopted without FmHA publishing a preliminary
public notice. Additionally, when all of another Federal agency's
assessment is adopted, without supplementation, for a Class II action
and a finding of no significant environmental impact (Exhibit I of this
subpart) is reached by the proper FmHA official, no public notification
of FmHA's finding of no significant environmental impact is required if:
(1) The other Federal agency or its designee published a similar
finding in a newspaper of general circulation in the vicinity of the
proposed action;
(2) The other Federal agency's or its designee's public notice
clearly described the action subject to the FmHA environmental review;
and
(3) The other Federal agency's or its designee's public notice was
published less than eighteen months from the date FmHA adopted the
assessment.
07 CFR 1940.325 FmHA as a cooperating Agency.
(a) FmHA will serve as a cooperating Agency when requested to do so
by the lead Agency for an action in which FmHA is directly involved or
for an action which is directly related to a proposed FmHA action. An
example of the latter would be a request from EPA to participate in an
EIS covering its sewage treatment plans for a community, as well as the
community's water system plans pending before FmHA. A memorandum of
understanding or other written correspondence will be developed with the
lead agency in order to define FmHA's role as the cooperating agency.
The State Director will coordinate FmHA's participation as a cooperating
Agency for an action at the State Office level. The Administrator will
have the same responsibility at the National Office level.
(b) When requested to be a cooperating Agency on a basis other than
that discussed above, the State Director will consider the expertise
which FmHA could add to the particular EIS process in question and
existing workload commitments. If a decision is made on either of these
two bases not to participate as a cooperating Agency, a copy of the
letter signed by the State Director or Administrator and so informing
the lead Agency will be sent to CEQ.
(c) As a cooperating Agency, FmHA will participate in the development
and implementation of the scoping process. If requested by the lead
Agency, provide the lead Agency with staff support and descriptive
materials with respect to the analyses of the FmHA portion of the
action(s) to be covered, review and comment on all preliminary draft
materials prior to their circulation for public review and comment, and
attend and participate in public meetings called by the lead Agency
concerning the EIS.
(d) The State Director will request the lead Agency to fully identify
the Agency's involvement in all public documents and notifications.
(e) FmHA will use the EIS as its own as long as FmHA's comments and
concerns are adequately addressed by the lead Agency and the final EIS
is considered to meet the requirements of this subpart. It will be the
responsibility of the preparer of the FmHA environmental review document
to formally advise the approving official on these two points. The
failure of the lead Agency's EIS to meet either of these stipulations
will require FmHA to follow the steps outlined in 1940.324 of this
subpart prior to the approving official's decision on the FmHA action.
07 CFR 1940.326 FmHA as a lead Agency.
(a) When other Federal agencies are involved in an FmHA action or
related actions that require the preparation of an EIS, the preparer
will consult with these agencies to determine a lead Agency for
preparing the EIS. The criteria for making this determination will be
those contained in 1505.5 of the CEQ regulations. If there is a
failure to reach a determination within a reasonably short time after
consultation is initiated, the National Office will be contacted. The
assistance of CEQ will then be requested by the Administrator in order
to conclude the determination of a lead Agency.
(b) When acting as lead Agency, the FmHA preparer will request other
Federal and State agencies to serve as cooperating agencies on the basis
of the guidance provided in 1940.320(b) of this subpart. A memorandum
of understanding or other written correspondence should be developed
with a cooperating agency in order to define that agency's role in the
preparation of the EIS.
07 CFR 1940.327 Tiering.
To the extent possible, FmHA may consider the concept of tiering in
the preparation of environmental assessments and EISs. Tiering refers
to the coverage of general matters in broader environmental impact
statements, such as one done for a national program or regulation, with
subsequent narrower statements or environmental analyses incorporating
by reference the broader matters and concentrating on the issues
specific to the action under consideration. Tiering can be used when
the sequence of analysis is from the program level to site-specific
actions taken under that program or from an initial EIS to a supplement
which discusses the issues requiring supplementation.
07 CFR 1940.328 State Environmental Policy Acts.
(a) Numerous States have enacted environmental policy acts or
regulations similar to NEPA, hereafter referred to as State NEPA's. It
is important that FmHA staff have an understanding of which States have
such requirements and how they apply to applicant's proposals. It will
be the responsibility of each State Director to determine the applicable
State requirements and to establish a working relationship with the
State personnel responsible for their implementation.
(b) In processing projects located within States having State NEPA's,
the preparer of the FmHA assessment will determine as early as possible
in the assessment process whether the project falls under the
requirements of the State NEPA. If it does, one of the following cases
will exist and the appropriate actions specified will be taken.
(1) The applicant has complied with the State's NEPA, and it was
determined under the State's requirements that the proposed project
would not result in sufficient potential impacts to warrant the
preparation of an impact statement or other detailed environmental
report required by the State NEPA. This finding or conclusion by the
State will be considered in the FmHA's review, and any supporting
information used by the State will be requested. However, the State's
finding can never be the total basis for FmHA's environmental impact
determination. An independent and thorough review in accordance with
the requirements of this subpart must be conducted by the preparer.
(2) The applicant has complied with the State NEPA, and it was
determined under its implementing guidelines that a significant impact
will result. This fact will be given great weight in the Agency's
environmental determination. However, the State's definition of
significant environmental impact may encompass a much lower threshold of
impacts compared to FmHA's. In such a case, if the preparer does not
believe that a significant impact will result under Agency guidelines
for determining significant impacts, the environmental assessment will
be prepared and include a detailed discussion with supporting
information as to why the environmental reviewer's recommendation
differs from that of the State's. However, the assessment cannot be
completed until the State's impact statement requirements have been
fulfilled by the applicant and the resulting impact statement has been
reviewed by the preparer. An environmental impact determination will
then be executed based upon the assessment and the statement.
(c) It should be emphasized that at no time does the completion of an
impact statement under the requirements of a State NEPA obviate the
requirement for FmHA to prepare an impact statement. Consequently, as
soon as it is clear to the preparer that the Agency will have to prepare
a statement, every attempt should be made to accomplish the statement
simultaneously with the State's. Coordination with State personnel is
necessary so that data and expertise can be shared. In this manner,
duplication of effort and the review periods for the separate statements
can be minimized. This process clearly requires a close working
relationship with the appropriate State personnel.
07 CFR 1940.329 Commenting on other Agencies' EIS's.
(a) State Directors are authorized to comment directly on EIS's
prepared by other Federal agencies. In so doing, comments should be as
specific as possible. Any recommendations for the development of
additional information or analyses should indicate why there is a need
for the material.
(b) Comments should concentrate on those matters of primary
importance to FmHA and on areas of Agency expertise, such as rural
planning and development. Any potential conflicts with FmHA programs,
plans, or actions should be clearly identified. Special attention
should be given to the relationship of the alternatives under study to
the State Office's natural resource management guide and the objectives
of the Department's land use regulation (Exhibit A of this subpart).
Copies of comments addressing land use questions will be provided to the
appropriate chairman of the USDA State-level committee dealing with land
use matters.
(c) Whenever a State Director has serious concerns over the
acceptability of the anticipated environmental impacts, the State
Director will notify the Administrator.
07 CFR 1940.330 Monitoring.
(a) FmHA staff who normally have responsibility for the postapproval
inspection and monitoring of approved projects will ensure that those
measures which were identified in the preapproval stage and required to
be undertaken in order to reduce adverse environmental impacts are
effectively implemented.
(b) This staff, as identified in paragraph (a) of this section, will
review the action's approval documents and consult with the preparer of
the action's environmental review document prior to making site visits
or requesting project status reports in order to determine if there are
environmental requirements to be monitored.
(c) The preparer will directly monitor actions containing difficult
or complex environmental special conditions.
(d) Before certifying that conditions contained within offers of
financial assistance have been fully met, the responsible monitoring
staff will obtain the position of the preparer for those conditions
developed as a result of the environmental review.
(e) Whenever noncompliance with an environmental special condition is
detected by FmHA staff, the preparer and the SEC will be immediately
informed. The approving official will then take appropriate steps, in
consultation with the responsible program office, the SEC and preparer,
to bring the action into compliance.
07 CFR 1940.331 Public involvement.
(a) Objective. The basic objective of FmHA's public involvement
process is threefold. It is to ensure that interested citizens can
readily obtain knowledge of the environmental review status of FmHA's
funding applications, have the opportunity to input into this review
process before decisions are made, and have access to the environmental
documents supporting FmHA decisions.
(b) Public notice requirements. (1) For projects that undergo the
preparation of an environmental impact statement, the first element of
formal public participation in the EIS process involves the publication
of the notice of intent to prepare an EIS. The content of the notice of
intent and its publication by FmHA in the Federal Register are explained
in 1940.320 of this subpart. With respect to notification within the
project area, the applicant will be requested to publish a copy of the
notice of intent and the date of the scoping meeting in the newspaper of
general circulation in the vicinity of the proposed action and in any
local or community-oriented newspapers within the proposed action's area
of environmental impact. The notice will be published in easily
readable type in the nonlegal section of the newspaper(s). It will also
be bilingual if the affected area is largely non-English speaking or
bilingual. Individual copies of the notice will be sent by the
applicant to the appropriate regional EPA office, any State and regional
review agencies established under Executive Order 12372; the State
Historic Preservation Officer; local radio stations and other news
media; any State or Federal agencies planning to provide financial
assistance to this or related actions or required to review permit
applications for this action, any potentially affected Indian Tribe;
any individuals, groups, local, State, and Federal agencies known to be
interested in the project; affected property owners; and to any other
parties that FmHA has identified to be so notified. It will also be
posted at a readable location on the project site. The applicant will
provide FmHA with a copy of the notice as it appeared in the
newspaper(s), the date(s) published, and a list of all parties receiving
an individual notice. Publication and individual transmittal of the
notice for the scoping meeting will be accomplished at least 14 days
prior to the date of the meeting.
(2) Coincident with the distribution of either a draft or final EIS,
a notice of the statement's availability will be published within the
project area in the same manner as a notice of intent to prepare an EIS.
FmHA will request EPA to publish in the Federal Register a notice of
the statement's availability in accordance with EPA's requirements and
pursuant to 1506.10 of the CEQ regulations.
(3) For Class II actions that are determined not to have a
significant environmental impact, the Agency will require the applicant
to publish a notification of this determination. This notice will be
published in the same manner as a notice of intent to prepare an EIS but
will appear for at least 3 consecutive days if published in a daily
newspaper or otherwise in two consecutive publications. Individual
copies will be sent to the same parties that are required to be sent a
notice of intent, as specified in paragraph (b)(1) of this section, with
the exception of local radio stations and other news media. Also, there
is no requirement to post this notice on the project site. The
applicant will provide FmHA with a copy of this notice, the dates the
notice was published, and a list of all parties receiving an individual
notice. This notification procedure does not apply to actions reviewed
solely on the basis of a Class I assessment.
(4) The public notice procedures for actions that will affect
floodplains, wetlands, important farmlands, prime rangelands or prime
forest lands are contained in Exhibit C of this subpart. These
procedures apply to actions that require either an EIS, Class II
assessment or Class I assessment. However, whenever an action normally
classified as a categorical exclusion requires a Class I assessment
because of the potential impact to one of these important land
resources, no public notice procedures apply in the course of completing
the Class I assessment. When applicable to an action, as specified in
Exhibit C of this subpart, these public notice procedures can apply at
two distinct stages. The first stage, a preliminary notice, applies to
any of the five important land resources. The second stage, a final
notice, is followed by a fifteen-day public review period and applies
only to actions that will impact floodplains or wetlands. For Class II
actions, this final notice procedure must be combined with any
applicable finding of no significant environmental impact, which is
described in paragraph (b)(3) of this section. Individual copies of the
preliminary and final notices will be sent to the same parties that are
required to be sent a notice of finding of no significant impact, as
specified in paragraph (b)(3) of this section, with the following
exception. Whenever property owners affected by proposed mitigation
measures, such as proposed hook-up restrictions on portions of water or
sewer lines that will traverse floodplains, are advised of these
proposed measures in a preliminary notice, these property owners need
not be sent copies of the final notice as long as the mitigation
measures in the final notice are unchanged from the preliminary notice
and no property owners raised objections or concerns over the mitigation
measures.
(5) The public notice requirements associated with holding a public
information meeting are specified in paragraph (c) of this section.
(c) Public information meetings. (1) Public information meetings
will be held for an action undergoing an EIS as specified in 1940.320
of this subpart. As part of the EIS process, a public information
meeting will be held near the project site to discuss and receive
comments on the draft EIS. It will be scheduled no sooner than 15 days
after the release of the draft EIS. It will be announced in the same
manner as the scoping meeting, and the list of parties receiving an
individual notification will also be developed in the same manner. The
meeting will be chaired by the State Director or a designee and will be
fully recorded so that a transcript can be produced. The applicant will
be requested to assist in obtaining a facility for holding the meeting.
To the extent possible, this meeting will be combined with public
meetings required by other involved agencies.
(2) Whenever a public information meeting is held as part of the
completion of an environmental assessment, it will be scheduled,
announced, and held in generally the same manner as a public information
meeting for an EIS. However, a minimum of 7 days advance notice of the
meeting is sufficient, and a transcript of the meeting will not be
required. Rather a summary of the meeting to include the major issues
raised will be prepared by the FmHA official who chaired the meeting.
(d) Distribution of environmental documents. FmHA officials will
promptly provide to interested parties, upon request, copies of
environmental documents, including environmental assessments, draft and
final environmental impact statements, and records of decision.
Interested parties can request these materials from the appropriate
State Director or approval official for project activities and from the
Administrator on other activities subject to environmental review.
07 CFR 1940.332 Emergencies.
(a) Action Requiring EIS. When an emergency circumstance makes it
necessary to take an action with significant environmental impact
without observing the provisions of this subpart or the CEQ regulations,
the Administrator will consult with CEQ about alternative arrangements
before the proposed action is taken. It must be recognized that CEQ's
regulations limit such arrangements to actions necessary to control the
immediate impacts of the emergency. Other actions remain subject to
NEPA review. For purposes of this subpart, an emergency circumstance is
defined as one involving an immediate or imminent danger to public
health or safety.
(b) Action Not Requiring EIS. When an emergency circumstance makes
it necessary to take an action with apparent non-significant
environmental impact without observing the provisions of this subpart or
the CEQ regulations, the Administrator will be so notified. The
Administrator reserves the authority to waive or amend all procedural
aspects of this subpart relating to the preparation of environmental
assessments including but not limited to the applicant's submission of
Form FmHA 1940-20, public notice requirements and/or their associated
comment periods, the timing of the assessment process, and the content
of environmental review documents. Alternative arrangements will be
established on a case by case basis taking into account the nature of
the emergency and the time reasonably available to respond to it. These
alternative arrangements will, to the extent possible, attempt to
achieve the substantive requirements of this subpart such as avoiding
impacts to important land resources, when practicable, and minimizing
potential adverse environmental impacts. In all cases, the
environmental findings and determinations required for Class I and Class
II assessments must be executed by the appropriate FmHA officials prior
to approval of the action and be based upon the best information
available under the circumstances and the prescribed alternative
arrangements. (Refer to paragraph (a) of this section should the
approval official for the action determine that an EIS is necessary.)
Additionally, all applicable consultation and coordination procedures
required by law or regulation will be initiated with the appropriate
Federal or State agency(s). Such procedures will be accomplished in the
most expeditious manner possible and modified to the extent necessary
and mutually agreeable between FmHA and the affected agency(s). The
provisions of this paragraph are limited to the same emergency
circumstances and scope of action as specified in paragraph (a) of this
section.
07 CFR 1940.333 Applicability to planning assistance.
The award of FmHA funds for the purpose of providing technical
assistance or planning assistance will not be subject to any
environmental review. However, applicants will be expected to consider
in the development of their plans and to generally document within their
plans:
(a) The existing environmental quality and the important
environmental factors within the planning area, and
(b) The potential environmental impacts on the planning area of the
plan as well as the alternative planning strategies that were reviewed.
07 CFR 1940.334 Direct participation of State Agencies in the
preparation of FmHA EISs.
FmHA may be assisted by a State Agency in the preparation of an EIS
subject to the conditions indicated below. At no time, however, is FmHA
relieved of its responsibilities for the scope, objectivity, and content
of the entire statement of any other responsibility under NEPA.
(a) The FmHA applicant for financial assistance is a State Agency
having statewide jurisdiction and responsibility for the proposed
action;
(b) FmHA furnishes guidance to the State Agency as to the scope and
content of the impact statement and participates in the preparation;
(c) FmHA independently evaluates the statement and rectifies any
major deficiencies prior to its circulation by the Agency as an EIS;
(d) FmHA provides, early in the planning stages of the project,
notification to and solicits the views of any land management entity
(State or Federal Agency responsible for the management or control of
public lands) concerning any portion of the project and its alternatives
which may have significant impacts upon such land management entities;
and
(e) If there is any disagreement on the impacts addressed by the
review process outlined in paragraph (d) of this section, FmHA prepares
a written assessment of these impacts and the views of the land
management entities for incorporation into the draft impact statement.
07 CFR 1940.335 Environmental review of FmHA proposals for legislation.
(a) As stated in 1940.312(d)(4) of this subpart, all FmHA proposals
for legislation will receive an environmental assessment. The
definition of such a proposal is contained in 1508.17 of the CEQ
regulations.
(b) The environmental assessment and, when necessary, the EIS will be
prepared by the responsible Agency staff that is developing the
legislation.
(c) If an EIS is required, it will be prepared according to the
requirements of 1506.8 of the CEQ Regulations.
07 CFR 1940.336 Contracting for professional services.
(a) Assistance from outside experts and professionals can be secured
for the purpose of completing EIS, assessments, or portions of them.
Such assistance will be secured according to the Federal and Agriculture
Procurement Regulations contained in Chapters 1 and 4 of Title 48 of the
Code of Federal Regulations.
(b) The contractor will be selected by FmHA in consultation with any
cooperating agencies. In order to avoid any conflict of interest,
contractors competing for the work will be required to execute a
disclosure statement specifying that they have no financial or other
interest in the outcome of the project.
(c) The Administrator will provide the State Director with a proposed
scope of work for use in securing such professional services.
(d) Applicants will not be required to pay the costs of these
professional services.
1940.337 -- 1940.349 (Reserved)
07 CFR 1940.350 Office of Management and Budget (OMB) control number.
The collection of information requirements in this regulation has
been approved by the Office of Management and Budget and has been
assigned OMB control number 0575-0094.
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. A
07 CFR 1940.350 Exhibits to Subpart G
07 CFR 1940.350 Exhibit A -- Departmental Regulation
Number: 9500-3.
Subject: Land Use Policy.
Date: March 22, 1983.
OPI: Land Use Staff, Soil Conservation Service.
1. Purpose
2. Cancellation
3. Policy
4. Abbreviations
5. Definitions
6. Responsibilities
7. Appendix A
The Nation's farmlands, forest lands, rangelands, flood plains, and
wetlands are unique natural resources providing food, fiber, wood, and
water necessary for the continued welfare of the people of the United
States and protection from floods. Each year, large amounts of these
lands are converted to other uses. Continued conversion of the Nation's
farmlands, forest lands, and rangelands may impair the ability of the
United States to produce sufficient food, fiber, and wood to meet
domestic needs and the demands of export markets. Continued conversion
of the Nation's wetlands may reduce the availability of adequate
supplies of suitable-quality water, indigenous wildlife species, and the
productive capacity of the Nation's fisheries. Continued encroachments
on flood plains decrease the natural flood-control capacity of these
land areas, create needs for expensive manmade flood-control measures
and disaster-relief activities, and endanger both lives and property.
Land use allocation decisions are matters of concern to USDA.
Decisions concerning land use arise from needs to accommodate needed
growth and development; prevent unwarranted and costly sprawl; avoid
unwarranted conversion of farm, range, and forest lands and wetlands
from existing uses and unwarranted encroachment on flood plains;
maintain and enhance agricultural and forest production capabilities;
maintain wildlife, fish, and seafood habitat; provide or improve
community services and facilities; assure appropriate environmental
quality; and assure adequate supplies of suitable-quality water. These
needs are highly interdependent and often compete with each other for
the limited supply of available land and water.
It is Departmental policy to promote land use objectives responsive
to current and long-term economic, social, and environmental needs.
This policy recognizes the rights and responsibilities of State and
local governments for regulating the uses of land under their
jurisdiction. It also reflects the Department's responsibility to (a)
assure that the United States retains a farm, range, and forest land
base sufficient to produce adequate supplies, at reasonable production
costs of high-quality food, fiber, wood, and other agricultural products
that may be needed; (b) assist individual landholders and State and
local governments in defining and meeting needs for growth and
development in such ways that the most productive farm, range, and
forest lands are protected from unwarranted conversion to other uses;
and (c) assure appropriate levels of environmental quality.
In accordance with the authority contained in 7 U.S.C. 1010 and 7
U.S.C. 2204 and consistent with 7 CFR 2.19(f) and provisions of the
Farmland Protection Policy Act, Subtitle I, Title XV, Pub. L. 97-98,
the Department sets forth this statement of policy on land use.
This regulation supersedes Secretary's Memorandum 9500-2 dated March
10, 1982.
Federal agencies, in implementing programs, make decisions that
affect current and potential uses of land. The Department will:
a. Promote and support planning procedures that allow landholders,
interest groups, and State and local governments to have input at all
appropriate stages of the decisionmaking process for public projects,
programs, or activities; that recognize the rights and responsibilities
of landholders in making private land use decisions; and that recognize
the responsibility of governments in influencing how land may be used to
meet public needs.
b. Assure that programs of the agencies within the Department
discourage the unwarranted conversion to other uses of prime and unique
farmlands, farmlands of statewide or local importance, and prime
rangelands, as defined in appendix A; the unwarranted alteration of
wetlands or flood plains; or the unwarranted expansion of the
peripheral boundaries of existing settlements.
c. Manage both its land use-related programs and USDA-administered
land in such manner as to (1) demonstrate leadership in meeting short-
and long-term needs for growth and development, while assuring adequate
supplies of needed food, fiber, and forest products; (2) assure
appropriate levels of environmental quality and adequate supplies of
water; and (3) discourage unwarranted expansion of peripheral
boundaries of existing settlements. Whenever practicable, management of
USDA-administered lands shall be coordinated with the management of
adjacent private and other public lands.
d. Conduct multidisciplinary land use research and education programs
responsive to identified State, local, and national needs and, when
requested, assist State and local governments, citizens groups, and
individual landholders in determining a alternative land use values,
thereby enabling local officials to make judicious choices to meet
growth and development needs and to protect the community's farm- and
forest-related economic base.
e. Assist landowners and State and Federal agencies in the
reclamation of abandoned surface-mined lands. This reclamation will
help eliminate safety, health, and environmental problems.
f. Assist in planning for the extraction of coal and other
nonrenewable resources in such manner as to facilitate restoration.
This restoration would reestablish or enhance food, fiber, or forest
productivity or contribute to other beneficial uses of the land as
mining is completed in defined areas as sites.
g. Advocate among Federal agencies:
(1) The retention of important farmlands, rangelands, forest lands,
and wetlands, whenever proposed conversions to other uses (a) are caused
or encouraged by actions or programs of a Federal agency or (b) require
licensing or approval by a Federal agency, unless other needs clearly
override the benefits derived from retention of such lands; and
(2) Actions that reduce the risk of flood loss and soil erosion;
that minimize impacts of floods on human safety, health, and welfare;
that preserve natural flood-control and other beneficial functions and
values of wetlands and flood plains; and that reduce future need for
expensive manmade flood-control systems, disaster-relief assistance, or
Federal rehabilitation assistance in the event of flooding.
USDA -- U.S. Department of Agriculture.
NRE -- Natural Resources and Environment Committee.
Complete definitions for the terms ''farmlands,'' ''forest lands,''
''rangelands,'' ''wetlands,'' and ''flood plains'' are found in appendix
A.
a. The Office of the Secretary is responsible for (1) encouraging,
assisting, and coordinating efforts of other Federal departments and
agencies to implement policies and procedures supportive of the
objectives of this regulation; (2) resolving issues and acting on
recommendations raised to the Secretary's Policy and Coordination
Council by the Departmental committees; and (3) raising unresolved
issues and recommending actions to the appropriate Cabinet Council.
b. The NRE Committee, created under the Secretary's memorandum dated
July 22, 1981, will provide departmentwide leadership for the
implementation of this policy statement. In implementing this policy,
the NRE Committee will:
(1) Recommend Departmental guidelines to the Secretary and schedule
reviews of each agency's procedures for implementation;
(2) Monitor implementation of this policy;
(3) Encourage, support, and provide guidance to State- and
local-level USDA committees in implementing this policy;
(4) Coordinate the work of USDA agencies in carrying out the
provisions of this regulation; and
(5) Advise the Secretary annually as to progress and problems
encountered.
c. Each USDA agency will review and make the necessary administrative
changes in existing and proposed rules, regulations, guides, practices,
or policies and propose needed legislative changes to bring agency
programs into compliance with the provisions of this regulation.
d. Each USDA agency having programs that will be affected by this
regulation shall develop implementing procedures, consistent with the
guidelines provided by the NRE Committee, and shall provide to all
offices of the agency copies of this policy statement, Departmental
guidelines, and agency procedures to implement this policy.
e. USDA agencies will encourage State and local governments and
individual landholders to retain important farmlands, rangelands, forest
lands, and wetlands and to avoid encroachments on flood plains when
practicable alternatives exist to meet developmental needs. Appropriate
agencies will assist State and local governments, citizens groups, and
individual landholders in identifying options and determining
alternative land use values as the basis for making judicious choices in
meeting growth and development needs.
f. USDA agencies will encourage other Federal, State, and local
government agencies to exchange information on plans or projects that
may impact on important farmlands, rangelands, forest lands, wetlalds,
or flood plains and to involve appropriate USDA agencies early in the
planning process. USDA agencies will participate in a timely manner at
appropriate stages in the planning process on Federal or federally
assisted projects or activities when requested. Where opportunity for
such participation is not forthcoming, the Department may intercede,
consistent with policy contained in this regulation, at appropriate
stages in the decisionmaking process through review and comments on
plans, as provided for in authorized administrative review procedures
for such projects, activities, or actions.
g. When land held either in public or private ownership will be
directly affected by USDA actions, the implementing agency will notify
the affected landholders at the earliest time practicable of the
proposed action and provide such landholders an opportunity to review
the elements of the action and to comment on the action's feasibility
and alternatives to it.
h. Agencies of USDA will assure that their actions, investments, and
programs on non-Federal lands will conform, to the extent practicable,
with the uses permitted under land use regulations adopted by State or
local governments.
i. When land use regulations or decisions are inconsistent with USDA
policies and procedures for the protection of important farmlands,
rangelands, forest lands, wetlands, or flood plains, USDA agencies shall
not assist in actions that would convert these lands to other uses or
encroach upon flood plains, unless (1) there is a demonstrated,
significant need for the project, program, or facility, and (2) there
are no practicable alternative actions or sites that would avoid the
conversion of these lands or, if conversion is unavoidable, reduce the
number of acres to be converted or encroached upon directly and
indirectly.
The following definitions apply to this Departmental Regulation.
(1) General Criteria. Prime farmland is land that has the best
combination of physical and chemical characteristics for producing food,
feed, forage, fiber, and oilseed crops and is also available for these
uses (the land could be cropland, pastureland, rangeland, forest land,
or other land, but not urban built-up land or water). It has the soil
quality, growing season, and moisture supply needed to produce,
economically, sustained high yields of crops when treated and managed,
including water management, according to acceptable farming methods. In
general, prime farmlands have an adequate and dependable water supply
from precipitation or irrigation, a favorable temperature and growing
season, acceptable acidity or alkalinity, acceptable salt and sodium
content, and few or no rocks. They are permeable to water and air.
Prime farmlands are not excessively erodible or saturated with water for
a long period of time, and they either do not flood frequently or are
protected from flooding. Examples of soils that qualify as prime
farmland are Palouse silt loam, 0- to 7-percent slopes; Brookston silty
clay loam, drained; and Tama silty clay loam, 0- to 5-percent slopes.
(2) Specific Criteria. Prime farmlands must meet all the following
criteria. Terms used in this section are defined in these USDA
publications: ''Soil Taxonomy, Agriculture Handbook 436,'' ''Soil
Survey Manual, Agriculture Handbook 18,'' ''Rainfall-Erosion Losses from
Cropland, Agriculture Handbook 282,'' ''Wind Erosion Forces in the
United States and Their Use in Predicting Soil Loss, Agriculture
Handbook 346,'' and ''Saline and Alkali Soils, Agriculture Handbook
60.''
(a) The soils have:
1. Aquic, udic, ustic, or xeric moisture regimes and sufficient
available water capacity within a depth of 40 inches, or in the root
zone (root zone is the part of the soil that is penetrated by plant
roots) if the root zone is less than 40 inches deep, to produce the
commonly grown cultivated crops (cultivated crops include but are not
limited to grain, forage, fiber, oilseed, sugar beets, sugarcane,
vegetables, tobacco, orchard, vineyard, and bush fruit crops) adapted to
the region in 7 or more years out of 10; or
2. Xeric or ustic moisture regimes in which the available water
capacity is limited, but the area has a developed irrigation water
supply that is dependable (a dependable water supply is one in which
enough water is available for irrigation in 8 out of 10 years for the
crops commonly grown) and of adequate quality; or
3. Acidic or torric moisture regimes, and the area has a developed
irrigation water supply that is dependable and of adequate quality; and
(b) The soils have a temperature regime that is frigid, mesic,
thermic, or hyperthermic (pergelic and cryic regimes are excluded).
These are soils that, at a depth of 20 inches, have a mean annual
temperature higher than 32 degrees Fahrenheit. In addition, the mean
summer temperature at this depth in soils with an 0 horizon is higher
than 47 degrees Fahrenheit; in soils that have no 0 horizon, the mean
summer temperature is higher than 59 degrees Fahrenheit; and
(c) The soils have a pH between 4.5 and 8.4 in all horizons within a
depth of 40 inches or in the root zone if the root zone is less than 40
inches deep; and
(d) The soils either have no water table or have a water table that
is maintained at a sufficient depth during the cropping season to allow
cultivated crops common to the area to be grown; and
(e) The soils can be managed so that in all horizons within a depth
of 40 inches or in the root zone if the root zone is less than 40 inches
deep, during part of each year the conductivity of the saturation
extract is less than 4 mmhoc/cm and the exchangeable sodium percentage
is less than 15; and
(f) The soils are not flooded frequently during the growing season
(less often than once in 2 years); and
(g) The product of K (erodibility factor) times the percent slope is
less than 2.0, and the product of I (soils erodibility) times C
(climatic factor) does not exceed 60; and
(h) The soils have a permeability rate of at least 0.06 inch per hour
in the upper 20 inches, and the mean annual soil temperature at a depth
of 20 inches is less than 59 degrees Fahrenheit or higher; and
(i) Less that 10 percent of the surface layer (upper 6 inches) in
these soils consists of rock fragments coarser than 3 inches.
(1) General Criteria. Unique farmland is land other than prime
farmland that is used for the production of specific high-value food and
fiber crops. It has the special combination of soil quality, location,
growing season, and moisture supply needed to produce, economically,
sustained high-quality and/or high yields of a specific crop when
treated and managed according to acceptable farming methods. Examples
of such crops are citrus, tree nuts, olives, cranberries, fruit, and
vegetables.
(2) Specific Characteristics. Unique farmland is used for a specific
high-value food or fiber crop. It has a moisture supply that is
adequate for the specific crop; the supply is from stored moisture,
precipitation, or a developed irrigation system. It combines favorable
factors of soil quality, growing season, temperature, humidity, air
drainage, elevation, aspect, or other conditions, such as nearness to
market, that favor the growth of a specific food or fiber crop.
This is land, in addition to prime and unique farmlands, that is of
statewide importance for the production of food, feed, fiber, forage,
and oilseed crops. Criteria for defining and delineating this land are
to be determined by the appropriate State agency or agencies.
Generally, additional farmlands of statewide importance include those
that are nearly prime farmland and that economically produce high yields
of crops when treated and managed according to acceptable farming
methods. Some may produce as high a yield as prime farmlands if
conditions are favorable. In some States, additional farmlands of
statewide importance may include tracts of land that have been
designated for agriculture by State law.
In some local areas, there is concern for certain additional
farmlands for the production of food, feed, fiber, forage, and oilseed
crops, even though these lands are not identified as having national or
statewide importance. Where appropriate, these lands are to be
identified by the local agency or agencies concerned.
Because of the multiple use of forested lands, several categories,
e.g., timber, wildlife, and recreation, may be developed. For purposes
of this regulation only, the following timberland definitions will
apply.
Prime timberland is land that has soil capable of growing wood at the
rate of 85 cubic feet or more/acre/year (at culmination of mean annual
increment) in natural stands and is not in urban or built-up land uses
or water. Generally speaking, this is land currently in forest, but
does not exclude qualifying lands that could realistically be returned
to forest. Delineation of these lands will be in accordance with
national criteria.
Unique timberlands are lands that do not qualify as prime timberland
on the basis of producing less than 85 cubic feet/acre/year, but are
growing sustained yields of specific high-value species or species
capable of producing specialized wood produsts under a silvicultural
system that maintains soil productivity and protects water quality.
Delineation of these lands will be in accordance with national criteria.
This is land, in addition to prime and unique timberlands, that is of
statewide importance for the growing of wood. Criteria for defining and
delineating these lands are to be determined by State forestry planning
committees or appropriate State organizations.
In some local areas, there is concern for certain additional forest
lands for the growing of wood, even though these lands are not
identified as having national or statewide importance. Where
appropriate, these lands are to be identified by a local agency or
agencies concerned.
Wetlands are those areas that are inundated by surface or ground
water with a frequency sufficient to support and, under normal
circumstances, do or would support a prevalence of vegetative or aquatic
life that requires saturated or seasonally saturated soil conditions for
growth and reproduction. Wetlands generally include swamps, marshes,
bogs, and similar areas, such as sloughs, potholes, wet meadows, river
overflows, mudflats, and natural ponds.
The term ''flood plain'' means the lowland and relatively flat areas
adjoining inland and coastal waters, including floodprone areas of
offshore islands, including, at a minimum, those that are subject to a
1-percent or greater chance of flooding in any given year.
Prime rangeland is rangeland which, because of its soil, climate,
topography, vegetation, and location, has the highest quality or value
for grazing animals. The (potential) natural vegetation is palatable,
nutritious, and available to the kinds of herbivores common to the area.
17 CFR 657.5.
1See footnote 1 on previous page.
2Prime Forest Land Definition and Criteria, U.S. Forest Service, May
26, 1977.
3Definitions contained in Executive Orders 11988 and 11990.
4USDA proposed definition for intradepartmental use only.
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. B
07 CFR 1940.350 Exhibit B -- Development and Implementation of Natural
Resource Management Guide
1. The State Director shall complete the natural resource management
guide within 12 months from the effective date of this subpart and issue
the guide as a State supplement after prior approval by the
Administrator. A summary of the basic content, purposes, and uses of
the guide is contained in 1940.305 of this subpart. The guide shall be
prepared in draft form and be provided for review and comment to USDA
agencies, appropriate Federal and State agencies, State and regional
review agencies assigned the consulation requirements of Executive Order
12372, as well as interested localities, groups, and citizens. Also at
least one public information meeting shall be held on the draft which
shall be followed by a 30-day period for the submission of public
comments. Public notification of this meeting shall be made in the same
manner as the notification process for a scoping meeting. (See
1940.320(c) of this subpart). Additionally, the public shall be
informed that copies of the draft guide will be made available from the
State Office upon request. After completion of this public review, the
draft will be revised as necessary in light of the comments received and
provided as a final draft State Supplement to the Administrator for
review and approval. Any concerns and comments of the Administrator
will be addressed by the State Director and the guide completed. Upon
the Administrator's approval and the fulfillment of the requirements of
paragraph 4. of this exhibit, the natural resource management guide
shall then become part of any program investment strategies developed by
the State Director for the purpose of addressing the rural needs of the
State. Although a 12-month period has been established for the
completion of a natural resource management guide, this deadline is not
to be construed as curtailing or postponing the implementation of
existing environmental laws, regulations, Executive orders or the
Departmental Regulation 9500-3, Land Use Policy, with respect to
individual project reviews, nor giving anyone any rights or claims with
respect to the completion or content of the guide.
2. The natural resource management guide needs to be developed in
full recognition of its role as an internal Agency planning tool and
with sensitivity to the Agency's mission.
3. After the Administrator approves the natural resource management
guide, it will become effective 4 months from that date. This interim
period shall be used to inform local, State, and Federal agencies,
localities, organizations, and interested citizens of the content of the
guide. In this manner, those parties intending to seek FmHA assistance
or to coordinate FmHA assistance programs with their own programs will
be able to gain for their planning needs an understanding of our guide.
4. Completed natural resource management guides shall be reviewed
every 2 years and updated by the State Director to reflect newly
identified geographical areas of concern or policy revisions at the
lational, State, regional or local level. They will also be revised, as
necessary, through appropriate guidance from the Administrator.
Revisions shall be transmitted to the Administrator for postapproval and
shall be considered approved if either no comments are raised by the
Administrator within 30 days of receipt of the State Director's
transmittal letter or the administrator specifically approves them
before the 30 days expire. Public review of a revision will not be
required. However, if in the opinion of the State Director the proposed
revision will substantially change the previously adopted natural
resource management guide, a public review shall be conducted of the
revision in the same manner as that described in paragraph 1 of this
exhibit for the development of the original guide. Such review shall
occur prior to the transmittal of the revision to the Administrator. If
the State Director believes that at the expiration of any 2-year review
period there is need to update the guide, a statement to this effect
shall be filed with the Administrator.
5. The foundation for the natural resource management guide is the
identification of the types of land uses or environmental factors
deserving attention and their geographical location within the State.
An inventory or listing shall be developed, therefore, of the important
land uses within the State. This inventory will be accomplished by
assembling existing data and information compiled by those Federal,
State, and local agencies that have jurisdiction or expertise regarding
the land uses or environmental factors. At a minimum, the inventory
shall consist of available documents, listings, maps, or graphic
materials describing the location of the following:
a. National Register of Historic Places to include monthly
supplements as designated by the Department of the Interior (DOI), and
the State Historic Preservation Plans. This list is issued as a State
supplement to Subpart F or Part 1901 of this Chapter;
b. Rivers designated as part of the Wild and Scenic Rivers System and
rivers under study for inclusion in the system, as published by DOI;
c. Important farmlands;
d. Prime rangelands.
e. Prime forestlands;
f. Wetland inventory;
g. Floodplain inventory as issued by the Federal Emergency Management
Administration;
h. Endangered Species and Critical Habitats as listed or proposed for
listing by the Department of Commerce (DOC) and DOI;
i. Sole source aquifer recharge areas as designated by the
Environmental Protection Agency (EPA);
j. Air Quality Control Regions as designated by EPA;
k. National Registry of Natural Landmarks at published by DOI;
l. Coastal Barrier Resources System;
m. State inventories or planning documents identifying important land
uses, particularly those not covered by the above items, such as
wildlife refuges, important habitats, and areas of high water quality,
or scenic or recreational value;
n. Agricultural districts or other similar zoning classifications for
agricultural land protection; and
o. Coastal Zone Management Areas.
6. The Administrator shall be responsible for assisting State
Directors in obtaining listings and inventories of resources protected
by Federal statutes and regulations. The State Director has the
responsibility for assembling documents on important environmental
resources or areas identified in State and substate laws, regulations,
plans, and policies.
7. Development of the inventory by the State Director will require
consultation and assistance from a variety of agencies and experts.
This consultation should begin with Department agencies and be
accomplished through appropriate, State-level USDA committees. The
objective should be to determine the land classification data that has
been compiled and that which is in the process of being compiled either
by USDA agencies or their counterparts at the state level. The
Memorandum of Understanding executed in May 1979 between the Soil
Conservation Service (SCS) and FmHA should be utilized as the basis for
seeking SCS's assistance in this data collection effort. (See FmHA
Instruction 2000-D, Exhibit A, which is available in any FmHA Office.)
Direct contacts should then be made with State agencies, in particular
with the appropriate office of State planning, to determine the
availability of State inventories and State land use policies and
priorities. Similar discussions should be held with substate regional
planning agencies and clearinghouses with assistance being provided in
this effort by District Directors. County Supervisors shall contact
local officials and shall be responsible for being familiar with and for
assembling similar inventories, land use policies, or protective
requirements developed by the local government agencies within the
supervisor's territorial jurisdiction.
8. Another important element of the natural resource management guide
shall be the examination of any major environmental impacts on the State
or a substate area resulting from the cumulative effects of
FmHA-assisted project over the last several years. In this examination,
particular emphasis should be given to the cumulative impacts of water
resource projects such as irrigation systems. This should be done in
consultation with experts within the appropriate State agencies and the
U.S. Geological Survey. The housing programs should also be given a
particular emphasis with respect to their cumulative impacts. More
detailed guidance on the accomplishment of this cumulative impact
section of the natural resource management guide, as well as the overall
content of the guide, shall be provided by the Administrator. In
preparing the State's natural resource management guide and in
assembling inventories of critical resources, Agency staff should not
lose sight of the basic purposes of this effort. The development of
lengthy and complex guides and the amassing of huge inventories is not
our goal. In the end, the material must be useable and serve as a tool
for better decisionmaking. The basic purposes of this guide and
inventory, then, are to provide a basis for developing comprehensive,
statewide, rural development investment strategies that (i) do not
conflict with Federal, State, and local mandates to preserve and protect
important land and environmental resources, (ii) that do not create
short- or long-term development pressures which would lead to the
unnecessary conversion of these resources, and (iii) which effectively
support and enhance Federal, State, and local plans to preserve these
resources.
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. C
07 CFR 1940.350 Exhibit C -- Implementation Procedures for the Farmland
Protection Policy Act; Executive Order 11988, Floodplain Management;
Executive Order 11990, Protection of Wetlands; and Departmental
Regulation 9500-3, Land Use Policy
1. Background. The Subtitle I of the Agriculture and Food Act of
1981, Pub. L. 97-98, created the Farmland Protection Policy Act. The
Act requires the consideration of alternatives when an applicant's
proposal would result in the conversion of important farmland to
nonagricultural uses. The Act also requires that Federal programs, to
the extent practicable, be compatible with State, local government, and
private programs and policies to protect farmland. The Soil
Conservation Service (SCS), as required by the Act, has promulgated
implementation procedures for the Act at 7 CFR Part 658 which are
hereafter referred to as the SCS rule. This rule applies to all federal
agencies. The Departmental Regulation 9500-3, Land Use Policy (the
Departmental Regulation), also requires the consideration of
alternatives but is much broader than the Act in that it addresses the
conversion of land resources other than farmland. The Departmental
Regulation is included as Exhibit A to this subpart and affects only
USDA agencies. For additional requirements that apply to some Farmer
Program loans and guarantees and loans to an Indian Tribe or Tribal
Corporation and that cover the conservation of wetlands and highly
erodible land, see Exhibit M of this subpart.
2. Implementation. Each proposed lease or disposal of real property
by FmHA and application for financial assistance or subdivision approval
will be reviewed to determine if it would result in the conversion of a
land resource addressed in the Act, Executive Orders, or Departmental
Regulation and as further specified below. Those actions that are
determined to result in the lease, disposal or financing of an existing
farm, residential, commercial or industrial property with no reasonably
foreseeable change in land use and those actions that solely involve the
renovation of existing structures or facilities would require no further
review. /1/ Since these actions have no potential to convert land uses,
this finding would simply be made by the preparer in completing the
environmental assessment for the action. Also, actions that convert
important farmland through the construction of on-farm structures
necessary for farm operations are exempt from the farmland protection
provisions of this Exhibit. For other actions, the following
implementation steps must be taken:
a. Determine whether important land resources are involved. The Act
comes into play whenever there is a potential to affect important
farmland. The Departmental Regulation covers important farmland as well
as the following land resources: prime forest land, prime rangeland,
wetlands and floodplains. Hereafter, these land resources are referred
to collectively as important land resources. Definitions for these land
resources are contained in the Appendix to the Departmental Regulation.
The SCS rule also defines important farmland for purposes of the Act.
Since the SCS's definition of prime farmland differs from the
Departmental Regulation's definition, both definitions must be used and
if either or both apply, the provisions of this Exhibit must be
implemented. It is important to note the definition of important
farmland in both the SCS rule and the Departmental Regulation because it
includes not only prime and unique farmland but additional farmland that
has been designated by a unit of State or local government to be of
statewide or local importance and such designation has been concurred in
by the Secretary acting through SCS. In completing the environmental
assessment or Form FmHA 1940-22, ''Environmental Checklist For
Categorical Exclusions,'' the preparer must determine if the project is
either located in or will affect one or more of the land resources
covered by the SCS rule or the Departmental Regulation. Methods for
determining the location of important land resources on a
project-by-project basis are discussed immediately below. As reflected
several times in this discussion, SCS personnel can be of great
assistance in making agricultural land and natural resource evaluation,
particularly when there is no readily available documentation of
important land resources within the project's area of environmental
impact. It should be remembered that FmHA and SCS have executed a
Memorandum of Understanding in order to facilitate site review
assistance. (See FmHA Instruction 2000-D, Exhibit A, available in any
FmHA office.)
(1) Important Farmland, Prime Forest Land, Prime Rangeland -- The
preparer of the environmental review document will review available SCS
important farmland maps to determine if the general area within which
the project is located contains important farmland. Because of the
large scale of the important farmland maps, the maps should be used for
general review purposes only and not to determine if sites of 40 acres
or less contain important farmland. If the general area contains
important farmland or if no important farmland map exists for the
project area, the preparer of the environmental review will request
SCS's opinion on the presence of important farmland by completing Form
AD-1006, ''Farmland Conversion Impact Rating,'' according to its
instructions, and transmitting it to the SCS local field office having
jurisdiction over the project area. This request will also indicate
that SCS's opinion is needed regarding the application to the project
site of both definitions of prime farmland, the one contained within its
rule and the one contained within the Departmental Regulation. SCS's
opinion is controlling with respect to the former definition and
advisory with respect to the latter. No request need be sent to SCS for
an action meeting one of the exemptions contained in item number 2 of
this exhibit.
(2) Floodplain -- Review the most current Flood Insurance Rate Map or
Flood Insurance Study issued for the project area by the Federal
Emergency Management Administration (FEMA). Information on the most
current map available or how to obtain a map free of charge is available
by calling FEMA's toll free number 800-638-6620. When more specific
information is needed on the location of a floodplain, for example, the
project site may be near the boundary of a floodplain; or for
assistance in analyzing floodplain impacts, it is often helpful to
contact FEMA's regional office staff. Exhibit J of this subpart
contains a listing of these regional offices and the appropriate
telephone numbers.
If a FEMA floodplain map has not been prepared for a project area,
detailed assistance is normally available from the following agencies:
The U.S. Fish and Wildlife Service (FWS), SCS, Corps of Engineers, U.S.
Geological Survey (USGS), or appropriate regional or State agencies
established for flood prevention purposes.
(3) Wetlands -- FWS is presently preparing wetland maps for the
nation. Each FWS regional office has a staff member called a Wetland
Coordinator. These individuals can provide updated information
concerning the status of wetland mapping by FWS and information on State
and local wetland surveys. Exhibit K of this subpart contains a listing
of Wetland Coordinators arranged by FWS regional office and geographical
area of jurisdiction. If the proposed project area has not been
inventoried, information can be obtained by using topographic and soils
maps or aerial photographs. State-specific lists of wetland soils and
wetland vegetation are also available from the FWS Regional Wetland
coordinators. A site visit can disclose evidence of vegetation
typically associated with wetland areas. Also, the assistance of FWS
field staff in reviewing the site can often be the most effective means.
Because of the unique wetland definition used in Exhibit M of this
subpart, SCS wetland determinations are required for implementing the
wetland conservation requirements of that Exhibit.
(1) Scope -- Although information on the location and the
classification of important land resources should be gathered from
appropriate expert sources, as well as their views on possible ways to
avoid or reduce the adverse effects of a proposed conversion, it must be
remembered that it is FmHA's responsibility to weigh and judge the
feasibility of alternatives and to determine whether any proposed land
use change is in accordance with the implementation requirements of the
Act and the Departmental Regulation. Consequently, after reviewing as
necessary, the project site, applicable land classification data, or the
results of consultations with appropriate expert agenices, the FmHA
preparer must determine, as the second implementation step, whether the
applicant's proposal:
(a) Is compatible with State, unit or local government, and private
programs and policies to protect farmland; and
(b) Either will have no effect on important land resources; or
(c) If there will be a direct or indirect conversion of such a
resource, (i) whether practicable alternatives exist to avoid the
conversion; and
(d) If there are no alternatives, whether there are practicable
measures to reduce the amount of the conversion.
(2) Determination of No Effect -- If the preparer determines that
there is no potential for conversion and that the proposal is
compatible, this determination must be so documented in the
environmental assessment for a Class II action or the appropriate
compliance blocks checked in the Class I assessment or Checklist for
Categorical Exclusions based on whichever document is applicable to the
action being reviewed.
(3) Determination of Effect or Incompatibility -- Whenever the
preparer determines that an applicant's proposal may result in the
direct or indirect conversion of an important land resource or may be
incompatible with State, unit of local government, or private programs
and policies to protect farmland, the following further steps must be
taken.
(a) Search for Practicable Alternatives /2/ -- In consultation with
the applicant and the interested public, the preparer will carefully
analyze the availability of practicable alternatives that avoid the
conversion or incompatibility Possible alternatives include:
(i) The selection of an alternative site;
(ii) The selection of an alternative means to meet the applicant's
objectives; or
(iii) The denial of the application, i.e., the no-action alternative.
When the resource that may be converted is important farmland, the
preparer will follow the Land Evaluation and Site Assessment (LESA)
point system contained within the SCS rule in order to evaluate the
feasibility of alternatives. When the proposed site receives a total
score of less than 160 points, no additional sites need to be evaluated.
Rather than use the SCS LESA point system, the State Director has the
authority to use State or local LESA systems that have been approved by
the governing body of such jurisdiction and the SCS state
conservationist. After this authority is exercised, it must be used for
all applicable FmHA actions within the jurisdiction of that approved
LESA system.
(b) Inform the Public -- The Department Regulation requires us in
section 6, Responsibilities, to notify the affected landholders at the
earliest time practicable of the proposed action and to provide them an
opportunity to review the elements of the action and to comment on the
action's feasibility and alternatives to it. This notification
requirement only applies to Class I and Class II actions and not to
categorical exclusions that lose their status as an exclusion for any of
the reasons stated in 1940.317(e) of this subpart. The notification
will be published and documented in the manner specified in 1940.331 of
this subpart and will contain the following information:
(i) A brief description of the application or proposal and its
location;
(ii) The type(s) and amount of important land resources to be
affected;
(iii) A statement that the application or proposal is available for
review at an FmHA field office (specify the one having jurisdiction over
the project area); and
(iv) A statement that any person interested in commenting on the
application or proposal's feasibility and alternatives to it may do so
by providing such comments to FmHA within 30 days following the date of
publication. (Specify the FmHA office processing the application or
proposal for receipt of comments.)
Further consideration of the application or proposal must be delayed
until expiration of the public comment period. Consequently,
publication of the notice as early as possible in the review process is
both in the public's and the applicant's interest. Any comments
received must be considered and addressed in the subsequent Agency
analysis of alternatives and mitigation measures. It should be
understood that scheduling a public information meeting is not required
but may be helpful based on the number of comments received and types of
issues raised.
(c) Determine Whether Practicable Alternative Exists -- (i)
Alternative exists -- If the preparer concludes that a practicable
alternative exists, the preparer will complete step 2b(3)(e)(ii) of this
exhibit and transmit the assessment for the approving official's review
in the manner specified in 1940.316 of this subpart. If the findings
of this review are similar to the preparer's recommendation, FmHA will
inform the applicant of such findings and processing of the application
will be discontinued. Should the applicant still desire to pursue the
proposal, the applicant is certainly free to do so but not with the
further assistance of FmHA. Should the applicant be interested in
amending the application to reflect the results of the alternative
analysis, the preparer will work closely with the applicant to this end.
Upon receipt of the amended application, the preparer must reinstitute
this implementation process at that point which avoids the duplication
of analysis and data collection undertaken in the original review
process.
If the results of the approving official(s) review differs from the
preparer's recommendations, the former will ensure that the findings are
appropriately documented in step 2b(3)(e)(ii) of this exhibit and any
remaining consideration given to mitigation measures, step 2b(3)(d) of
this exhibit.
(ii) No Practicable Alternative Exists -- On the other hand, if the
preparer concludes that there is no practicable alternative to the
conversion, the preparer must then continue with step 2b(3)(d) of this
exhibit, immediately below.
(d) Search for Mitigation Measures -- Once the preparer determines
that there is no practicable alternative to avoiding the conversion or
incompatibility, including the no-action alternative, all practicable
measures for reducing the direct and indirect amount of the conversion
must be included in the application. Some examples of mitigation
measures would include reducing the size of the project which thereby
reduces the amount of the important land resource to be converted. This
is a particularly effective mitigation measure when the resource is
present in a small area, as is often the case with wetlands or
floodplains. A corresponding method of mitigation would be to maintain
the project size or number of units but decrease the amount of land
affected by increasing the density of use. Finally, mitigation can go
as far as the selection of an alternative site. For example, in a
housing market area composed almost entirely of important farmland, any
new proposed subdivision site would result in conversion. However, a
proposed site within or contiguous to an existing community has much
less conversion potential, especially indirect potential, than a site a
mile or two from the community. The LESA system can also be used to
identify mitigation measures when the conversion of important farmland
cannot be avoided.
(e) Document Findings -- Upon completion of the above steps, a
written summary of the steps taken and the reasons for the
recommendations reached shall be included in the environmental
assessment along with either one of the following recommendations as
applicable. The following example assumes that important farmland is
the affected resource and that the inappropriate phrase within the
brackets would be deleted.
(i) The application would result in the direct or indirect conversion
of important farmland and (is/is not) compatible with State, unit of
local government, or private programs and policies to protect farmland.
It is recommended that FmHA determine, based upon the attached analysis,
that there is no practicable alternative to this and that the
application contains all practicable measures for reducing the amount of
conversion (or limiting the extent of any identified incompatibility.)
(ii) The application would result in direct or indirect conversion of
important farmland and (is/is not) incompatible with State, unit of
local government, or private programs and policies to protect farmland.
It is recommended that FmHA determine, based upon the attached analysis,
that there is a practicable alternative to this action, and the
processing of this application be discontinued.
(f) Implement findings -- The completed environmental assessment and
the Agency's determination of compliance with the Act, the Departmental
Regulation and Executive orders will be processed and made according to
1940.316 of this subpart. Whenever this determination is as stated in
step 2b(3)(e)(i) above, the action will be so structured as to ensure
that any recommended mitigation measures are accomplished. See
1940.318(g) of this subpart. Whenever the determination is as stated in
step 2b(3)(e)(ii) above, the applicant shall be so informed and
processing of the application discontinued. Any further FmHA
involvement will be as specified in Item 2b(3)(c)(i) of this exhibit.
3. Special Procedures and Considerations When a Floodplain or Wetland
Is The Affected Resource Under Executive Order 11988 and 11990. a.
Scope. (1) Geographical Area -- The geographical area that must be
considered when a floodplain is affected varies with the type of action
under consideration. Normally the implementation procedures beginning
in Item 2a of this Exhibit are required when the action will impact,
directly or indirectly, the 100-year floodplain. However, when the
action is determined by the preparer to be a critical action, the
minimum floodplain of concern is the 500-year floodplain. A critical
action is an action which, if located or carried out within a
floodplain, poses a greater than normal risk for flood-caused loss of
life or property. Critical actions include but are not limited to
actions which create or extend the useful life of the following
facilities:
(a) Those facilities which produce, use, or store highly volatile,
flammable, explosive, toxic or water-reactive materials;
(b) Schools, hospitals, and nursing homes which are likely to contain
occupants who may not be sufficiently mobile to avoid the loss of life
or injury during flood and storm events;
(c) Emergency operation centers or data storage centers which contain
records or services that any become lost or inoperative during flood and
storm events; and
(d) Multi-family housing facilities designed primarily (over 50
percent) for handicapped individuals.
(2) Threshold of Impact -- The Executive ordres differ from the Act
and the Departmental Regulation in that the Executive orders'
requirements apply not only to the conversion of floodplains or wetlands
but to any impacts upon them. Impacts are defined as changes in the
natural values and functions of a wetland or floodplain. Therefore,
there would be an impact to a floodplain whenever either (a) the action
or its related activities would be located within a floodplain, or (b)
the action through its indirect impacts has the potential to result in
development within a floodplain. The only exception to this statement
is when the preparer determines that the locational impact is minor to
the extent that the floodplain's or wetland's natural values and
functions are not affected.
b. Treatment of Existing Structures. (1) Non-FmHA-Owned Properties
-- The Executive orders can apply to actions that are already located in
floodplains or wetlands; that is, where the conversion has already
occurred. The implementation procedures beginning in item 2a of this
exhibit must be accomplished for any action located in a floodplain or
wetland and involving either (a) the purchase of an existing structure
or facility or (b) the rehabilitation, renovation, or adaptive reuse of
an existing structure or facility when the work to be done amounts to a
substantial improvement. A substantial improvement means any repair,
reconstruction, or improvement of a structure the cost of which equals
or exceeds 50 percent of the market value of the structure either (a)
before the improvement or repair is started, or (b) if the structure has
been damaged, and is being restored, before the damage occurred. The
term does not include (a) any project for improvement of a structure to
comply with existing State or local health sanitary or safety code
specifications which are solely necessary to assure safe living
conditions or (b) any alteration of a structure listed on the National
Register of Historic Places or a State Inventory of Historic Places.
(2) FmHA-Owned Real Property -- The requirement in paragraph 3 b (1)
immediately above also applies to any substantial improvements made to
FmHA-owned real property with the exception of the public notice
requirements of this exhibit. Irrespective of any improvements,
whenever FmHA real property located in a floodplain or wetland is
proposed for lease or sale, the official responsible for the conveyance
must determine if the property can be safely used. If not, the property
should not be sold or leased. Otherwise, the conveyance must specify
those uses that are restricted under identified Federal, State, and
local floodplains or wetlands regulations as well as other appropriate
restrictions, as determined by the FmHA official responsible for the
conveyance, to the uses of the property by the leasee or purchaser and
any successors, except where prohibited by law. Appropriate
restrictions will be developed in consultation with the U.S. Fish and
Wildlife Service (FWS) as specified in the Memorandum of Understanding
with FWS contained in Subpart LL of Part 2000 of this chapter.
Applicable restrictions will be incorporated into quitclaim deeds with
the consent and approval of the Regional Attorney, Office of the General
Counsel. Upon application by the owner of any property so affected and
upon determination by the appropriate FmHA official that the condition
for which a deed restriction was imposed no longer exists, the
restriction clause may be released. A listing of any restrictions shall
be included in any notices announcing the proposed sale or lease of the
property. At the time of first inquiry, prospective purchasers must be
informed of the property's location in a floodplain or wetland and the
use restrictions that will apply. A written notification to this effect
must be provided to the prospective purchaser who must acknowledge the
receipt of the notice. See Item 3 d of this exhibit and Subpart C of
Part 1955 of this Chapter for guidance on the proper formats to be used
with respect to notices and deed restrictions. The steps and analysis
conducted to comply with the requirements of this paragraph must be
documented in the environmental review document for the proposed lease
or sale.
c. Mitigation measures. (1) Alternative Sites -- As with the Act and
the Departmental Regulation, the main focus of the review process must
be to locate an alternative that avoids the impact to a floodplain or
wetland. When this is not practicable, mitigation measures must be
developed to reduce the impact which in the case of a floodplain or
wetland can include finding another site, i.e., a safer site. The
latter would be a site at a higher elevation within the floodplain
and/or exposed to lower velocity floodflows.
(2) Nonstructural Mitigation Measures -- Mitigation measures under
the Executive orders are intended to serve the following three purposes:
reduce the risks to human safety, reduce the possible damage to
structures, and reduce the disruption to the natural values and
functions of floodplains and wetlands. More traditional structural
measures, such as filling in the floodplain, cannot accomplish these
three purposes and, in fact, conflict with the third purpose.
Nonstructural flood protection methods, consequently, must be given
priority consideration. These methods are intended to preserve,
restore, or imitate natural hydrologic conditions and, thereby,
eliminate or reduce the need for structural alteration of water bodies
or their associated floodplains and wetlands. Such methods may be
either physical or managerial in character. Nonstructural flood
protection methods are measures which:
(a) Control the uses and occupancy of floodplains and wetlands, e.g.,
floodplain zoning and subdivision regulations;
(b) Preserve floodplain and wetland values and functions through
public ownership; e.g., fee title, easements and development rights;
(c) Delay or reduce the amount of runoff from paved surfaces and
roofed structures discharged into a floodway, e.g., construction of
detention basins and use of flow restricting barriers on roofs;
(d) Maintain natural rates of infiltration in developed or developing
areas, e.g., construction of seepage or recharge basins and minimization
of paved areas;
(e) Protect streambanks and shorelines with vegetative and other
natural cover, e.g., use of aquatic and water-loving woody plants;
(f) Restore and preserve floodplain and wetland values and functions
and protect life and property through regulation, e.g., flood-proofing
building codes which require all structures and installations to be
elevated on stilts above the level of the base flood; and
(g) Control soil erosion and sedimentation, e.g., construction of
sediment basins, stabilization of exposed soils with sod and
minimization of exposed soil.
(3) Avoid Filling in Floodplains -- As indicated above, the Executive
orders place a major emphasis on not filling in floodplains in order to
protect their natural values and functions. Executive Order 11988
states ''agencies shall, wherever practicable, elevate structures above
the base flood level rather than filling in the land.''
(d) Additional Notification Requirement. (1) Final Notice -- Where
it is not possible to avoid an impact to a floodplain or wetland and
after all practicable mitigation measures have been identified and
agreed to by the prospective applicant, a final notice of the proposed
action must be published. This notice will either be part of the notice
required for the completion of a Class II assessment or a separate
notice if a Class I assessment or an EIS has been completed for the
action. The notice will be published and distributed in the manner
specified in 1940.331 of this subpart and contain the following
information.
(a) A description of the proposd action, its location, and the
surrounding area;
(b) A description of the floodplain or wetland impacts and the
mechanisms to be used to mitigate them;
(c) A statement of why the proposed action must be located in a
floodplain or a wetland;
(d) A description of all significant facts considered in making this
determination;
(e) A statement indicating whether the actions conform to applicable
State or local floodplain protection standards; and
(f) A statement listing other involved agencies and individuals.
(2) Private Party Notification -- For all actions to be located in
floodplains or wetlands in which a private party is participating as an
applicant, purchaser, or financier, it shall be the responsibility of
the approving official to inform in writing all such parties of the
hazards associated with such locations.
4. The Relationship of the Executive Orders to the National Flood
Insurance Program. The National Flood Insurance Program establishes the
floodplain management criteria for participating communities as well as
the performance standards for building in floodplains so that the
structure is protected against flood risks. As such, flood insurance
should be viewed only as a financial mitigation measure that must be
utilized only after FmHA determines that there is no practicable
alternative for avoiding construction in the floodplain and that all
practicable mitigation measures have been included in the proposal.
That is, for a proposal to be located in the floodplain, it is not
sufficient simply to require insurance. The Agency's flood insurance
requirements are explained in Subpart B of Part 1806 of this chapter
(FmHA Instruction 426.2). It should be understood that an applicant
proposing to build in the floodplain is not even eligible for FmHA
financial assistance unless the project area is participating in the
National Flood Insurance Program.
(53 FR 36262, Sept. 19, 1988)
/1/ See special procedures in item 3 of this Exhibit if the existing
structure or real property is located in a floodplain or wetland.
/2/ When the action involves the disposal of real property determined
not suitable for disposition to persons eligible for FmHA's financial
assistance programs, the consideration of alternatives is limited to
those that would result in the best price.
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. D
07 CFR 1940.350 Exhibit D -- Implementation Procedures for the
Endangered Species Act
1. FmHA shall implement the consultation procedures required under
Section 7 of the Endangered Species Act as specified in 50 CFR 402. It
is important to note that these consultation procedures apply to the
disposal of real property by FmHA and to all FmHA applications for
financial assistance and subdivision approval, including those
applications which are exempt from environmental assessments. (See
1940.310.) Unless repeated in this paragraph, the definitions for the
terms utilized are found in 50 CFR 402.02.
2. State Directors shall ensure that State, District, and County
Offices maintain current publications of listed and proposed species as
well as critical habitats found in their respective jurisdictions.
3. When an application to FmHA involves financial assistance or
permit approval from another Federal agency(s), the FmHA reviewer shall
work with the other Agency to determine a lead Agency for the
consultation process. When FmHA is not the lead Agency, the reviewer
shall ensure that the lead Agency informs the approporiate Area Manager,
U.S. Fish and Wildlife Service (FWS), or Regional Director, National
Marine Fisheries Service (NMFS), of FmHA's involvement.
4. Each disposal action, application for financial assistance or
subdivision approval shall be reviewed by the FmHA official responsible
for completing environmental assessments in order to determine if the
proposal either may affect a listed species or critical habitat or is
likely to jeopardize the continued existence of a proposed species or
result in the destruction or adverse modification of a proposed critical
habitat.
a. For applications subject to environmental assessments, this review
shall be accomplished as part of the assessment.
b. For those applications that are excluded from an environmental
assessment, this review shall be documented as part of Form FmHA
1940-22, ''Environmental Checklist For Categorical Exclusions,'' and
shall be accomplished as early as possible after receipt of the
application and prior to approval of the application.
c. For applications subject to an environmental impact statement,
FmHA shall request from the Area Manager, FWS, and the Regional
Director, NMFS, a list of the proposed and listed species that may be in
the area of the proposal. Within 30 days, the FWS and NMFS will respond
to FmHA with this list. FmHA shall then conduct, as part of the process
of preparing the draft environmental impact statement, a biological
assessment of these species to determine which species are in the area
of the proposal and how they may be affected. This biological
assessment should be completed within 180 days or a time mutually agreed
upon between FmHA and FWS or NMFS. Upon completion of the biological
assessment, if FmHA determines either that the proposal may affect a
listed species or critical habitat or is likely to jeopardize the
continued existence of proposed species or result in the destruction or
adverse modification of proposed critical habitat, the formal
consultation procedures shall be initiated as specified in paragraph 7b
below. To the extent practical, these procedures shall be concluded and
their results reflected in the draft EIS. For all draft EISs in which
FmHA determines there will be no effect upon a listed or proposed
species or critical habitat and FWS or NMFS indicated the presence of
such species upon the initial inquiry, a copy of the draft shall be
provided to that agency for review and comment.
5. As indicated in paragraph 4 above, the focus of this review
process is to determine if the proposal will affect a listed species or
critical habitat or is likely to jeopardize the continued existence of a
proposed species or result in the destruction or adverse modification of
a proposed critical habitat. Because this impact terminology is
specific to the Act, it is important to understand its meaning.
a. To jeopardize the continued existence of a species means to engage
in a project which reasonably would be expected to reduce the
reproduction, numbers, or distribution of a listed species to such an
extent as to appreciably reduce the likelihood of the survival and
recovery of that species in the wild. The level of reduction necessary
to constitute jeopardy would be expected to vary among listed species.
b. The destruction or adverse modification of a critical habitat
means a direct or indirect alteration of critical habitat which
appreciably diminishes the value of that habitat for survival and
recovery of a listed species. Such alterations include but are not
limited to those diminishing the following requirements for:
(i) Space for individual and population growth and for normal
behavior;
(ii) Food, water, air, light, minerals, or other nutritional or
physiological requirements;
(iii) Cover or shelter;
(iv) Sites for breeding, reproduction, or rearing of offspring; and
(v) Habitats that are protected from disturbances or are
representative of the geographical distribution of listed species.
6. It is also important to note that the consultation procedures
differ when the subject of the consultation is a listed species or
critical habitat as opposed to a proposed species or critical habitat.
The latter are defined as those that the Secretary of Interior or
Commerce are considering for listing and have so proposed through
notification in the Federal Register. When listed species or critical
habitats are invloved, FmHA shall initiate formal consultation
procedures whenever it determines that a proposed project may affect
them, either beneficially or adversely. For proposed species or
critical habitats, FmHA shall first determine if the proposed project is
likely to jeopardize the continued existence of proposed species or
result in the destruction or adverse modification of proposed critical
habitat. Whenever this determination is made, FmHA shall confer with
the appropriate agency identified in paragraph 7 of this exhibit and, in
so doing, shall focus on (i) determining the status of the listing
process, and (ii) attempting to cooperatively develop alternatives or
measures for inclusion in the project that avoid or mitigate the
identified adverse impacts. The results of this process shall be
documented in the environmental review being done for the proposed
project and, if this review is an environmental assessment, shall be an
important factor in determining the need for an environmental impact
statement. No action shall be taken by the approving official on the
application unitl the requirement to confer on proposed species or
critical habitat has been completed. Paragraphs 7 through 9 of this
exhibit outline the formal consultation procedure for listed species or
critical habitats.
7. In initiating the review process for a project, the list of
species and critical habitats, including proposed, shall be examined to
determine the potential for impacts. Projects planned within
established communities are less likely to affect listed or proposed
species or their critical habitat. Projects to be located in remote
areas, heavily forested areas and/or previously undisturbed areas are
more likely to affect these species. For projects located in such
areas, the reviewer shall, at a minimum, discuss the project's potential
impact on listed or proposed species with officials of the appropriate
State wildlife protection agency or the Area Manager, FWS, or the
Regional Director, NMFS, as appropriate. The latter organization
generally has responsibility for marine species. The specific list of
species under NMFS's jurisdiction can be found at 50 CFR 222.23(a) and
227.4. Such discussions shall be considered as informal consultations
and are not a substitute for the required consultation process outlined
below.
a. Whenever the reviewer, after reviewing the list and contacting
appropriate experts, formally determines that the proposal will have no
effect on a listed or proposed species or its critical habitat, these
review procedures are completed, unless new information comes to light
as discussed in paragraph 9 of this exhibit, or consultation is
requested by the appropriate Area Manager, FWS, or Regional Director,
NMFS.
b. If the reviewer determines there may be an effect on a listed
species or a critical habitat or is unable to make a clear
determination, the reviewer shall so inform the SEC (assuming the
reviewer is not the SEC). The latter shall either (i) convey a written
request for consultation, along with available information to the
appropriate Area Manager, FWS or Regional Director, NMFS, for the
Federal region where the proposal will be carried out, or (ii) request
Program Support Staff (PSS) to perform such consultation. FmHA shall
initiate this formal consultation process and not the applicant. See
paragraph 4.c. of this exhibit for initiating consultation where an
environmental impact statement is being done for the application. Until
the consultation process is completed, as outlined in 50 CFR 402.04,
FmHA shall not approve the application. Should the need for
consultation be identified after application approval, FmHA shall
refrain from making any irreversible or irretrievable commitment of
resources which would foreclose the consideration of modifications or
alternatives to the identified activity or program.
8. Several possible responses may result from initiation of the
formal consultation process with each requiring further specific
actions.
a. Whenever the Area Manager, FWS, or Regional Director, NMFS,
informs FmHA that insufficient information exists to conclude the
consultation process, the SEC with assistance as feasible from the FWS
or NMFS and State sources of expertise shall then obtain additional
information and conduct, as needed, biological surveys or studies to
determine how the proposal may affect listed species or their critical
habitat. The cost and performance of such studies shall be handled in
the same manner as in the preparation of an Environmental Impact
Statement. (See 1940.336 of this Subpart.)
b. Whenever the Area Manager, FWS, or Regional Director, NMFS,
responds that the proposal will either promote the conservation of a
listed species or is not likely to jeopardize the continued existence of
a listed or proposed species or result in the destruction or adverse
modification of its critical habitat, the FmHA reviewer shall formally
make a similar determination, attaching the response as documentation.
This concludes the formal consultation process unless new information
comes to light as discussed in paragraph 9 of this exhibit.
c. Whenever the results of the consultation process include
recommendations by the Area Manager, FWS, or Regional Director, NMFS,
for modifications to the project which would enhance the conservation
and protection of a listed species or its critical habitat, the State
Director shall review these recommendations and require that they be
incorporated into the project as either design changes or special
conditions to the offer of assistance. If the State Director does not
believe the recommendations can be so adopted, the Administrator shall
be requested to review the recommendations and to assist in the further
resolution of the matter.
d. Whenever the appropriate Area Manager, FWS, or Regional Director,
NMFS, determines that the proposal is likely to jeopardize the continued
existence of a listed species or result in the destruction or adverse
modification of its critical habitat, the FmHA applicant shall be so
informed and the project denied on this basis. However, if the State
Director believes that funding or approval of the application is (i) of
national, regional, or great local significance, and (ii) that there are
no reasonable and prudent alternatives to avoiding the listed species
impact, the State Director can request the Administrator, through PSS,
to review the proposal and the results of the consultation process.
Based upon this review, the Administrator shall either inform the State
Director that a request for an exemption from section 7 of the
Endangered Species Act is not warranted and the application shall be
denied or, if the Administrator believes it is warranted, shall request
an exemption from the Endangered Species Committee established by
section 7(e) of the Act. No action shall be taken by the State Director
on the application until the Administrator informs the State Director of
the results of the exemption request.
9. Once completed, the consultation process shall be reinitiated by
FmHA or upon request of the appropriate Area Manager, FWS, or Regional
Director, NMFS, if:
a. New information or modification of the proposal reveals impacts
that may affect listed or proposed species or their habitats; or
b. A new species is listed that may be affected by the proposal.
10. In completing the above compliance procedures, particularly when
consulting with the referenced agencies, formally or informally, the
preparer of the environmental review document will request information
on whether any Category I or Category II species may be present within
the project area. These are candidate species; they are presently
under consideration for listing under section 4 of the Endangered
Species Act. Category I species are those for which FWS currently has
substantial date on hand to support the biological appropriateness of
proposing to list the species as endangered or threatened. Currently
data are being gathered concerning essential habitat needs and, for some
species, data concerning the precise boundaries of critical habitat
designations. Development and publication of proposed rules on such
species is anticipated. Category II comprises species for which
information now in the possession of the FWS indicates that proposing to
list the species as endangered or threatened is possibly appropriate but
for which conclusive data on biological vulnerability and threat(s) are
not currently available to presently support proposed rules. Whenever a
Category I or II species may be affected, the preparer of the
environmental review document will determine if the proposed project is
likely to jeopardize the continued existence of the species. Whenever
this determination is made, the same compliance procedures specified in
paragraph 6 of this exhibit for a proposed species will be followed.
The purpose of the requirements of this paragraph is to comply with the
National Environmental Policy Act as well as Departmental Regulation
9500-4, Fish and Wildlife Policy, which specifies that USDA agencies
will avoid actions which may cause a species to become threatened or
endangered.
(49 FR 3727, Jan. 30, 1984, as amended at 53 FR 36266, Sept. 19,
1988)
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. E
07 CFR 1940.350 Exhibit E -- Implementation Procedures for the Wild and
Scenic Rivers Act
1. Each application for financial assistance or subdivision approval
as well as the proposed disposal of real property by FmHA shall be
reviewed to determine if it will affect a river or portion of it which
is either included in the National Wild and Scenic Rivers System,
designated for potential addition to the system, or identified in the
Nationwide Inventory prepared by the National Park Service (NPS) in the
Department of the Interior. The Nationwide Inventory identifies those
river segments that, after preliminary review, appear to qualify for
inclusion in the system. (For purposes of this subpart, river segments
in the Nationwide Inventory shall be treated the same as segments within
the system with the exception of paragraph 8.) For applications subject
to environmental assessments, the review shall be accomplished as part
of the assessment. For applications that are excluded from an
environmental assessment, this review shall be documented as part of
Form FmHA 1940-22, ''Environmental Checklist For Categorical
Exclusions,'' within the reviewing office and shall be accomplished as
early as possible after receipt of the application and prior to approval
of the application. The FmHA official responsible for completing the
environmental assessment shall accomplish this review. (See 1940.316
of this subpart.)
2. In order to effectively implement this review, State Directors
shall ensure that State, District and County Offices maintain current
listings of rivers within their respective States that are included in
or designated for potential addition to the system as well as those
identified in the Nationwide Inventory prepared by NPS.
3. For applications for water resources projects, as defined in
1940.302(i) of this Subpart, the purpose of this review shall be to
determine whether the proposal would have a direct and adverse effect on
the values which served as the basis for the river's inclusion in the
system or designation for potential addition. For other applications,
the purpose of the review shall be to determine if the proposal would
invade the river area or unreasonably diminish the scenic, recreational,
and fish and wildlife values present in the area. To make these
determinations, the reviewer shall consult with the appropriate regional
office of NPS if the proposal (i) would be located within one-quarter
mile of the banks of the river, (ii) involves withdrawing water from the
river or discharging water to the river via a point source, or (iii)
would be visible from the river. The appropriate regional office of the
Forest Service (FS) shall be contacted under similar circumstances when
the effected river is on FS lands. Consultation shall be initiated by a
written request for comments on the potential impacts accompanied by a
description of the project and its location. The reviewer shall consult
in other instances when the likelihood of an impact on a river in the
system is identified as part of the environmental review. When the
reviewer determines there is no potential impact on such a river, the
documentation of this determination concludes the review process, unless
reinitiation is required under paragraph 10 of this exhibit. In all
other cases, the review is completed as specified below in paragraphs 4
through 9 of this exhibit.
4. If the review is at the County or District Office level, the
reviewer can request the State Director (see 1940.307 of this subpart)
to perform the above consultation. The State Director can in turn make
a similar request of the National Office. If not requested to perform
the consultation for applications approvable at the County and District
Office levels, the SEC shall be informed whenever NPS or FS advises that
there is a potential for an adverse impact on a river within the system
or that protective measures need to be included or designed into the
proposal. In all cases, consultation shall be initiated by FmHA and not
the applicant. Until consultation is complete, FmHA shall not approve
the application. Should the need for consultation be identified after
application approval, FmHA shall, if still within its power at the time
of identification, refrain from making any irreversible or irretrievable
commitments of resources which would foreclose the consideration of
modifications or alternatives to the project.
5. If NPS or FS advises there is no potential for an adverse effect
as described in paragraph 3 of this exhibit, this review process is
concluded, unless the need to reinitiate arises. (See paragraph 10 of
this exhibit.)
6. Whenever the results of the consultation process include
recommendations by NPS or FS to modify the proposal in order to avoid an
adverse effect, as described in paragraph 3 above, the State Director
shall review these recommendations and require that they be incorporated
into the project as either design changes or special conditions to the
offer of assistance. If the State Director does not believe that the
Regional Director's recommendations can be so adopted, the Administrator
shall be requested to review the recommendations and to assist in the
further resolution of the matter.
7. If NPS or FS advises that the proposal will have an unavoidable
adverse effect, as described in paragraph 3 of this exhibit, on a river
segment which is either included in the National Wild and Scenic Rivers
System or designated for potential addition to the system, the FmHA
applicant will be informed by the reviewing office and the application
denied on this basis. However, if the State Director disagrees with
this determination, the State Director can request the Administrator to
review the proposal and attempt to further resolve the matter. The
specific reasons for disagreement along with supporting documentation
must be included in such a request. Based upon a review of this
request, the Administrator shall either inform the State Director that
no further consultation is warranted and the application shall be denied
or shall request the headquarters staff of NPS or FS to further review
the matter. No action shall be taken by the State Director on the
application until the Administrator informs the State Director of the
results of this further review and consultation.
8. If NPS or FS advises that the proposal will have an adverse
effect, as described in paragraph 3 of this exhibit, on a river segment
identified in the Nationwide Inventory, the reviewer shall further
consult with NPS or FS in order to formulate adequate measures or
modification to avoid or mitigate the potential adverse effect. The
purposes of such measures or modifications is to ensure that the
proposal does not effectively foreclose the designation of a wild,
scenic, or recreational river segment. Once concurrence is reached and
documented with NPS or FS regarding modifications, the State Director
shall require that they be incorporated into the proposal as either
design changes or special conditions to the offer of assistance. If the
State Director is not able to reach an agrement with NPS or FS on
appropriate modifications, the Administrator shall be requested to
assist in the further resolution of the matter.
9. If an application involves financial assistance or permit approval
from another Federal Agency, the FmHA reviewer shall work with the other
agency(s) to determine a lead Agency for the consultation process. When
FmHA is not the lead Agency, the reviewer shall ensure that the lead
Agency informs NPS or FS of FmHA's involvement.
10. Once completed, the consultation process shall be reinitiated by
FmHA if new information or modification of the proposal reveals impacts
to a river within the System or Nationwide Inventory.
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. F
07 CFR 1940.350 Exhibit F -- Implementation Procedures for the Coastal
Barrier Resources Act
1. The Act applies to barrier islands that Congress has designated
for inclusion in the Coastal Barrier Resources System. Since coastal
barriers are only found in East and Gulf Coast States, no other State
Offices fall under the requirements of the Act and, therefore, need be
concerned with these implementation procedures.
2. On coastal barriers that are included in the system, the Act
prohibits any new expenditures or new financial assistance by the
Federal Government. There are some limited exceptions that are
contained in Section 6 of the Act and listed in Exhibit L of this
subpart. Consequently, all of the following actions must be reviewed by
the environmental reviewer to determine if they would be located within
the System: any application for financial assistance, any proposed
direct expenditure of FmHA funds for construction or maintenance
purposes, any request for subdivision approval, and any proposed
disposal of real property that includes any form of financial assistance
or subsidy to the purchaser. The boundaries of the system can be
determined by reviewing a series of maps passed with the legislation and
distributed by the Department of the Interior. Each State Director is
responsible for ensuring that those field offices having components of
the system within their jurisdictions are aware of the system's
boundaries therein.
3. Exhibit L lists the six categories of exceptions, that is, those
actions that may be taken within the system. No exception may be
implemented, however, without first consulting with the Secretary of the
Interior. It should also be noted that the sixth category is more
limited than the first five. Besides meeting the consultation
requirement for this sixth category, the sponsoring Agency must also
determine whether the proposed exception is consistent with the purposes
of the Act.
4. For those actions that are reviewed and determined not to be
within the System, the environmental reviewer must document this result
by checking the appropriate compliance blocks on either Form FmHA
1940-22, ''Environmental Checklist for Categorical Exclusions,'' or Form
FmHA 1940-21, ''Environmental Assessment for Class I actions,'' or by so
stating this result in the environmental assessment for Class II Actions
(Exhibit H), depending upon whichever format is applicable to the action
under review.
5. For those actions that would be located within the system, one of
the following two steps must be taken:
a. If the environmental reviewer concludes that the action does not
meet the criteria for an exception, as listed in Exhibit L, the reviewer
shall so inform the approving official and a final determination made in
the manner indicated in 1940.316 of this Subpart. If this
determination is consistent with the environmental reviewer's
conclusion, the action must be denied by the approving official and the
affected applicant or party informed of the reason for denial. If it is
determined that the action may qualify for an exception, the steps
identified in Item b immediately below must be implemented prior to a
decision on this question.
b. If the environmental reviewer concludes that the proposed action
may meet the exception criteria, the approving official must be so
informed. Whenever the approving official agrees or makes a similar
determination as a result of the review conducted in Item a immediately
above, consultation shall be initiated with the Secretary of the
Interior by either the State Director or the Administrator for a
National Office activity. FmHA shall request the Secretary's views as
to whether the exception criteria are met and shall provide the
Secretary with the following information:
(1) A detailed description of the action and its location;
(2) A description of the affected environment within the System and
the impacts of the proposed action;
(3) The applicable exception criteria and FmHA's reasons for
believing they apply to this action; and
(4) If a Section 6(a)(6) exception is claimed, FmHA's reasons for
believing the action to be consistent with the purposes of the Act.
Should the Secretary concur in the exception criteria being met, that
portion of the environmental assessment relating to compliance with the
Act shall be completed and the corresponding documentation attached.
Should the Secretary not concur, a final decision on the approval or
denial of the action must be made by the Administrator.
07 CFR 1940.350 Exhibit G -- (Reserved)
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. H
07 CFR 1940.350 Exhibit H -- Environmental Assessment for Class II
Actions
In completing this assessment, it is important to understand the
comprehensive nature of the impacts which must be analyzed.
Consideration must be given to all potential impacts associated with the
construction of the project, its operation and maintenance, the
operation of all identified primary beneficiaries, and the attainment of
the project's major objectives, whether they be an increased housing
stock, community improvement, economic development, or greater
agricultural productivity. This last category, the attainment of the
project's major objectives, often induces or supports changes in
population densities, land uses, community services, transportation
systems and resource consumption. The scope of the assessment is
broadened even further when there are related activities involved. The
impacts of these activities must also be assessed.
The preparer will consult as indicated in 1940.318(b) of this
subpart with appropriate experts from Federal, State, and local
agencies, universities, and other organizations or groups whose views
could be helpful in the assessment of potential impacts. In so doing,
each discussion which is utilized in reaching a conclusion with respect
to the degree of an impact will be summarized in the assessment as
accurately as possible and include the name, title, phone number, and
organization of the individual contacted, plus the date of contact.
Related correspondence should be attached to the assessment.
The FmHA environmental assessment shall be prepared in the following
format. It shall address the listed items and questions and contain as
attachments the indicated descriptive materials, as well as the
environmental information submitted by the applicant, Form FmHA 1940-20,
''Request for Environmental Information.''
The assessment has been designed to cover the wide variety of
projects and environments with which the Agency deals. Consequently,
not every issue or potential impact raised in the assessment may be
relevant to each project. The purpose of the format is to give the
preparer an understanding of a standard range of impacts, environmental
factors, and issues which may be encountered. In preparing an
assessment, each topic heading identified by a Roman numeral and each
environmental factor listed under topic heading IV, such as air quality,
for example, must be addressed.
The amount of analysis and material that must be provided will depend
upon the type and size of the project, the environment in which it is
located, and the range and complexity of the potential impacts. The
amount of analysis and detail provided, therefore, must be commensurate
with the magnitude of the expected impact. The analysis of each
environmental factor (i.e., water quality) must be taken to the point
that a conclusion can be reached and supported concerning the degree of
the expected impact with respect to that factor.
For example, a small community center may not require detailed
information on air emissions or solid waste management, but an
industrial facility would. Similarly, an irrigation project for a
farming operation would concentrate on such factors as water quality and
fish and wildlife, rather than land use changes. The extension of a
water or sewer system or the approval of a subdivision, on the other
hand, would have to give close attention to all factors, with potential
land use changes being a particularly important one.
Identify the name, project number, location, and specific elements of
the project along with their sizes, and, when applicable, their design
capacities. Indicate the purpose of the project, FmHA's position
regarding the need for it, and the extent or area of land to be
considered as the project site.
Identify any existing businesses or major developments that will
benefit from the project and those which will expand or locate in the
area because of the project. Specify by name, product, service, and
operations involved.
Identify any related activities which are defined as interdependent
parts of a FmHA action. Such undertakings are considered interdependent
parts whenever they either make possible or support the FmHA action or
are themselves induced or supported by the FmHA action or another
related activity. These activities may have been completed in the very
recent past and are now operational, or they may reasonably be expected
to be accomplished in the near future. Related activities may or may
not be federally permitted or assisted. When they are, identify the
involved Federal Agency(s).
In completing the remainder of the assessment, it must be remembered
that the impacts to be addressed are those which stem from the project,
the primary beneficiaries, and the related activities.
Describe the project site and its present use. Describe the
surrounding land uses; indicate the directions and distances involved.
The extent of the surrounding land to be considered depends on the
extent of the impacts of the project, its related activities, and the
primary beneficiaries. Unique or sensitive areas must be pointed out.
These include residential, schools, hospitals, recreational, historical
sites, beaches, lakes, rivers, parks, floodplains, wetlands, dunes,
estuaries, barrier islands, natural landmarks, unstable soils, steep
slopes, aquifer recharge areas, important farmlands and forestlands,
prime rangelands, endangered species habitats or other delicate or rare
ecosystems.
Attach adequate location maps of the project area, as well as (1) a
U.S. Geological Survey ''15 minute'' (''7 1/2 minute,'' if available,)
topographic map which clearly delineates the area and the location of
the project elements, (2) the Department of Housing and Urban
Development's floodplain map(s) for the project area, (3) site photos,
(4), if completed, a standard soil survey for the project, and (5), if
available, an aerial photograph of the site. When necessary for
descriptive purposes or environmental analysis, include land use maps or
other graphic information. All graphic materials shall be of high
quality resolution.
1. Air Quality. Discuss, in terms of the amounts and types of
emissions to be produced, all aspects of the project including
beneficiaries' operations and known indirect effects (such as increased
motor vehicle traffic) which will affect air quality. Indicate the
existing air quality in the area. Indicate if topographical or
meteorological conditions hinder or affect the dispersal of air
emissions. Evaluate the impact on air quality given the types and
amounts of projected emissions, the existing air quality, and
topographical and meterological conditions. Discuss the project's
consistency with the State's air quality implementation plan for the
area, the classification of the air quality control region within which
the project is located, and the status of compliance with air quality
standards within that region. Cite any contacts with appropriate
experts and agencies which must issue necessary permits.
2. Water Quality. Discuss, in terms of amounts and types of
effluents, all aspects of the project including primary beneficiaries'
operations and known indirect effects which will affect water quality.
Indicate the existing water quality of surface and/or underground water
to be affected. Evalute the impacts of the project on this existing
water quality. Indicate if an aquifer recharge area is to be adversely
affected. If the project lies within or will affect a sole source
aquifer recharge area as designated by EPA, contact the appropriate EPA
regional office to determine if its review is necessary. If it is,
attach the results of its review.
Indicate the source and available supply of raw water and the extent
to which the additional demand will affect the raw water supply.
Describe the wastewater treatment system(s) to be used and indicate
their capacity and their adequacy in terms of the degree of treatment
provided. Discuss the characteristics and uses of the receiving waters
for any sources of discharge. If the treatment systems are or will be
inadequate or overloaded, describe the steps being taken for necessary
improvements and their completion dates. Compare such dates to the
completion date of the FmHA project. Analyze the impacts on the
receiving water during any estimated period of inadequate treatment.
Discuss the project's consistency with the water quality planning for
the area, such as EPA's Section 208 area-wide waste treatment management
plan. Discuss the project's consistency with applicable State water
quality standards to include a discussion of whether or not the project
would either impair any such standard or fail to meet antidegradation
requirements for point or nonpoint sources. Describe how surface runoff
is to be handled and the effect of erosion on streams.
Evaluate the extent to which the project may create shortages for or
otherwise adversely affect the withdrawal capabilities of other present
users of the raw water supply, particularly in terms of possible human
health, safety, or welfare problems.
For projects utilizing a groundwater supply, evaluate the potential
for the project to exceed the safe pumping rate for the aquifer to the
extent that it would (1) adversely affect the pumping capability of
present users, (2) increase the likelihood of brackish or saltwater
intrusion, thereby decreasing water quality, or (3) substantially
increase surface subsidence risks.
For projects utilizing a surface water supply, evaluate the potential
for the project to (1) reduce flows below the minimum required for the
protection of fish and wildlife or (2) reduce water quality standards
below those established for the stream classification at the point of
withdrawal or the adjacent downstream section.
Cite contacts with appropriate experts and agencies that must issue
necessary permits.
3. Solid Waste Management. Indicate all aspects of the project
including primary beneficiaries' operations, and known indirect effects
which will necessitate the disposal of solid wastes. Indicate the kinds
and expected quantities of solid wastes involved and the disposal
techniques to be used. Evaluate the adequacy of these techniques
especially in relationship to air and water quality. Indicate if
recycling or resource recovery programs are or will be used. Cite any
contacts with appropriate experts and agencies that must issue necessary
permits.
4. Land Use. Given the description of land uses as previously
indicated, evaluate (a) the effect of changing the land use of the
project site and (b) how this change in land use will affect the
surrounding land uses and those within the project's area of
environmental impact. Particularly address the potential impacts to
those unique or sensitive areas discussed under Section III, Description
of Project Area, which are not covered by the specific analyses required
in Sections V-XI. Describe the existing land use plan and zoning
restrictions for the project area. Evaluate the consistency of the
project and its impacts on these plans. For all actions subject to the
requirements of Exhibit M of this subpart indicate (a) whether or not
highly erodible land, wetland or converted wetland is present, (b) if
any exemption(s) applies to the requirements of Exhibit M, (c) the
status of the applicant's eligibility for an FmHA loan under Exhibit M
and (d) any steps the applicant must take prior to loan approval to
retain or retain its eligibility. Attach a completed copy of Form
SCS-CPA-26, ''Highly Erodible Land and Wetland Conservation
Determination,'' for the action.
5. Transportation. Describe available facilities such as highways and
rail. Discuss whether the project will result in an increase in motor
vehicle traffic and the existing roads' ability to safely accommodate
this increase. Indicate if additional traffic control devices are to be
installed. Describe new traffic patterns which will arise because of
the project. Discuss how these new traffic patterns will affect the
land uses described above, especially residential, hospitals, schools,
and recreational. Describe the consistency of the project's
transportation impacts with the transportation plans for the area and
any air quality control plans. Cite any contact with appropriate
experts.
6. Natural Environment. -- Indicate all aspects of the project
including construction, beneficiaries' operations, and known indirect
effects which will affect the natural environment including wildlife,
their habitats, and unique natural features. Cite contacts with
appropriate experts. If an area listed on the National Registry of
Natural Landmarks may be affected, consult with the Department of
Interior and document these consultations and any agreements reached
regarding avoidance or mitigation of potential adverse impacts.
7. Human Population. Indicate the number of people to be relocated
and arrangements being made for this relocation. Discuss how impacts
resulting from the project such as changes in land use, transportation
changes, air emissions, noise, odor, etc. will affect nearby residents
and users of the project area and surrounding areas. Discuss whether
the proposal will accommodate any population increases and, if so,
describe the potential impacts of these increases on the area's public
and community services such as schools, health care, social services,
and fire protection. Cite contacts with appropriate experts.
8. Construction. Indicate the potential effects of construction of
the project on air quality, water quality, noise levels, solid waste
disposal, soil erosion and siltation. Describe the measures that will
be employed to limit adverse effects. Give particular consideration to
erosion, stream siltation, and clearing operations.
9. Energy Impacts. Indicate the project's and its primary
beneficiaries' effects on the area's existing energy supplies. This
discussion should address not only the direct energy utilization, but
any major indirect utilization resulting from the siting of the project.
Describe the availability of these supplies to the project site.
Discuss whether the project will utilize a large share of the remaining
capacity of an energy supply or will create a shortage of such supply.
Discuss any steps to be taken to conserve energy.
10. Discuss any of the following areas which may be relevant: noise,
vibrations, safety, seismic conditions, fire-prone locations, radiation,
and aesthetic considerations. Cite any disucssion with appropriate
experts.
Indicate if the project is within or will impact a coastal area
defined as such by the State's approved Coastal Zone Management Program.
If so, consult with the State agency responsible for the Program to
determine the project's consistency with it. The results of this
coordination shall be included in the assessment and considered in
completing the environmental impact determination and environmental
findings (Item XXI below).
In this Section, the environmental reviewer shall detail the steps
taken to comply with the above regulations as specified in Subpart F of
Part 1901 of this Chapter. First, indicate that the National Register
of Historic Places, including its monthly supplements, has been reviewed
and whether there are any listed properties located within the area to
be affected by the project. Second, indicate the steps taken such as
historical/archeological surveys to determine if there are any
properties eligible for listing located within the affected area.
Summarize the results of the consultation with the State Historic
Preservation Officer (SHPO) and attach appropriate documentation of the
SHPO's views. Discuss the views of any other experts contacted. Based
upon the above review process and the views of the SHPO, state whether
or not an eligible or listed property will be affected.
If there will be an effect, discuss all of the steps and protective
measures taken to complete the advisory Council's regulations. Describe
the affected property and the nature of the effect. Attach to the
assessment the results of the coordination process with the Advisory
Council on Historic Preservation.
Indicate whether the project will affect a river or portion of it
which is either included in the National Wild and Scenic Rivers System
or designated for potential addition to the system. This analysis shall
be conducted through discussions with the appropriate regional office of
the National Park Service or the Forest Service when its lands are
involved, as well as the appropriate State agencies having
implementation authorities. See Exhibit E for specific implementation
instructions for this Act. A summary of discussions held or any
required formal coordination shall be included in the assessment and
considered in completing the environmental impact determination and
environmental findings (Item XXI below).
Indicate whether the project will either (1) affect a listed
endangered or threatened species or critical habitat or (2) adversely
affect a proposed critical habitat for an endangered or threatened
species or jeopardize the continued existence of a proposed endangered
or threatened species. This analysis will be conducted in consultation
with the Fish and Wildlife Service and the National Marine Fisheries
Service, when appropriate. Any formal or informal consultations
conducted with these agencies as well as any State wildlife protection
agency will also address impacts to Category I and Category II species.
See Exhibit D of this subpart for specific implementation instructions.
The results of any required coordination shall be included in the
assessment along with any completed biological opinion and mitigation
measures to be required for the project. These factors shall be
considered in completing the environmental impact determination.
Indicate whether the project will either directly or indirectly
convert an important land resource(s) identified in the Act or
Departmental Regulation, other than floodplains or wetlands which should
be addressed below in Item X of this exhibit. If a conversion may
result, determine if there is a practicable alternative to avoiding it.
If there is no such alternative, determine whether all practicable
mitigation measures are included in the project. Document as an
attachment these determinations and the steps taken to inform the
public, locate alternatives, and mitigate potential adverse impacts.
See Exhibit C of this subpart for specific implementation guidance.
Indicate whether the project is either located within a 100-year
floodplain (500-year floodplain for a critical action) or a wetland or
will impact a floodplain or wetland. If so, determine if there is a
practicable alternative project or location. If there is no such
alternative, determine whether all practicable mitigation measures are
included in the project and document as an attachment these
determinations and the steps taken to inform the public, locate
alternatives, and mitigate potential adverse impacts. See the U.S.
Water Resources Council's Floodplain Management Guidelines for more
specific guidance as well as Exhibit C of this Subpart.
Indicate whether the project is located within the Coastal Barrier
Resources System. If so, indicate whether or not the project meets an
exception criteria under the Act and the results of any consultation
with the Secretary of the Interior regarding its qualification as an
exception. See Exhibit F of this subpart for specific implementation
instructions as well as Exhibit L for a listing of the exception
criteria. (Those States not having any components of the system within
their jurisdiction need not reference this item in their assessments.)
Indicate if the proposed project is subject to a State environmental
policy act or similar regulation. Summarize the results of compliance
with these requirements and attach available documentation. (See
1940.328 of this Subpart for further guidance.)
Attach the comments of State, regional, or local agencies (if this
review process is required for the project) and respond to all comments
that deal with the subject matters discussed in this assessment format
or are otherwise of an environmental nature.
Indicate if another Federal Agency is participating in the project
either through the provision of additional funds, a companion project,
or a permit review authority. Summarize the results of the involved
Agency's environmental impact analysis and attach available
documentation. (See 1940.318(d) of this Subpart for further guidance.)
Discuss any negative comments or public views raised about the
project and the consideration given to these comments. Indicate whether
a public hearing or public information meeting has been held either by
the applicant or FmHA to include a summary of the results and any
objections raised. Indicate any other examples of the community's
awareness of the project, such as newspaper articles or public
notifications.
Summarize the cumulative impacts of this project and the related
activities. Give particular attention to land use changes and air and
water quality impacts. Summarize the results of the environmental
impact analysis done for any of these related activities and/or your
discussion with the sponsoring agencies. Attach available documentation
of the analysis.
Summarize the potential adverse impacts of the proposal as pointed
out in the above analysis.
Discuss the feasibility of alternatives to the project and their
environmental impacts. These alternatives should include (a)
alternative locations, (b) alternative designs, (c) alternative projects
having similar benefits, and (d) no project. If alternatives have been
fully discussed above in any of Items VI through X, simply reference
that discussion.
Describe any measures which will be taken or required by FmHA to
avoid or mitigate the identified adverse impacts. Analyze the
environmental impacts and potential effectiveness of the mitigation
measures. Such measures shall be included as special requirements or
provisions to the offer of financial assistance or other appropriate
approval document, if this action does not involve financial assistance.
Discuss the project's consistencies and inconsistencies with the
Agency's environmental policies and the State Office's Natural Resource
Management Guide. See 1940.304 and 1940.305 for a discussion of these
policies and Exhibit B for a discussion of the guide.
The following recommendations shall be completed:
a. Based on an examination and review of the foregoing information
and such supplemental information attached hereto, I recommend that the
approving official determine that this project will have ( ) a
significant effect on the quality of the human environment and an
Environmental Impact Statement must be prepared; will not have ( ) a
significant effect on the quality of the human environment.
b. I recommend that the approving official make the following
compliance determinations for the below-listed environmental
requirements.
c. I have reviewed and considered the types and degrees of adverse
environmental impacts identified by this assessment. I have also
analyzed the proposal for its consistency with FmHA environmental
policies, particularly those related to important farmland protection,
and have considered the potential benefits of the proposal. Based upon
a consideration and balancing of these factors, I recommend from an
environmental standpoint that the project
------ be approved. ------ not be approved because of the
attached reasons.
Signature of preparer*
Date
Title
State Environmental Coordinator's Review (When required by 1940.316
of this Subpart)
I have reviewed this environmental assessment and supporting
documentation. Following are my positions regarding its adequacy and
the recommendations reached by the preparer. For any matter in which I
do not concur, my reasons are attached as exhibit ---- .
Signature of State Environmental Coordinator
Date
(49 FR 3727, Jan. 30, 1984, as amended at 53 FR 36266, Sept. 19,
1988)
*Complete only if coastal or Great Lakes State.
*See 1940.316 of this subpart for listing of officials responsible
for preparing assessment.
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. I
07 CFR 1940.350 Exhibit I
SUBJECT: Finding of No Significant Environmental Impact and
Necessary Environmental Findings for (insert name, location, and any
identification number of project).
TO: Project File.
The attached environmental assessment has been completed for the
subject proposal by the FmHA environmental reviewer. After reviewing
the assessment and the supporting materials attached to it, I find that
the subject proposal will not significantly affect the quality of the
human environment. Therefore, the preparation of an environmental
impact statement is not necessary.
I also find that the assessment properly documents the proposal's
status of compliance with the environmental laws and requirements listed
therein.
Insert signature and title of approving official as specified in
1940.316 of this subpart. XXXX(Date).
(49 FR 3727, Jan. 30, 1984, as amended at 53 FR 36266, Sept. 19,
1988)
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. J
07 CFR 1940.350 Exhibit J
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. K
07 CFR 1940.350 Exhibit K -- Locations and Telephone Numbers of U.S.
Fish and Wildlife Service's Wetland Coordinators
The U.S. Fish and Wildlife Service (FWS) is presently preparing the
National Wetlands Inventory. Each regional office of the FWS has named
a staff member as a Wetland Coordinator. These individuals can provide
updated information concerning existing State and local wetland surveys
and Federal inventories. Listed below are the FWS regional offices and
their areas of responsibility.
Portland, OR -- FTS 429-6154; Commercial (503) 231-6154.
Areas Covered: California, Hawaii, Idaho, Nevada, Oregon,
Washington, U.S. Pacific Trust, Territories and Possessions.
Albuquerque, NM -- FTS 474-3152; Commercial (505) 766-2914.
Areas Covered: Arizona, New Mexico, Oklahoma, Texas.
Twin Cities, MN -- FTS 725-3593; Commercial (612) 725-3593.
Areas Covered: Illinois, Indiana, Michigan, Minnesota, Ohio,
Wisconsin.
Atlanta, GA -- FTS 242-6343; Commercial (404) 221-6343.
Areas Covered: Alabama, Arkansas, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Carolina, Panama Canal Zone, Puerto Rico,
South Carolina, Tennessee, Virgin Islands.
Newton Corner, MA -- FTS 829-9379; Commercial (617) 965-5100, Ext.
379.
Areas Covered: Connecticut, Delaware, District of Columbia, Maine,
Maryland, Massachusetts, New Hampshire, New Jersey, New York,
Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia.
Denver, CO -- FTS 234-5586; Commercial (303) 234-5586.
Areas Covered: Colorado, Iowa, Kansas, Missouri, Montana, Nebraska,
North Dakota, South Dakota, Utah, Wyoming.
Anchorage, AK -- Commercial (907) 263-3403.
St. Petersburg, FL -- FTS 826-3624; Commercial (813) 893-3624.
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. L
07 CFR 1940.350 Exhibit L -- Exceptions to Restrictions of Coastal
Barrier Resources Act
(a) Notwithstanding section 5, the appropriate Federal officer, after
consultation with the Secretary, may make Federal expenditures or
financial assistance available within the Coastal Barrier Resources
System for --
(1) Any use or facility necessary for the exploration, extraction, or
transportation of energy resources which can be carried out only on, in,
or adjacent to coastal water areas because the use or facility requires
access to the coastal water body;
(2) The maintenance of existing channel improvements and related
structures, such as jetties, and including the disposal of dredge
materials related to such improvements;
(3) The maintenance, replacement, reconstruction, or repair, but not
the expansion, of publicly owned or publicly operated roads, structures,
or facilities that are essential links in a larger network or system;
(4) Military activities essential to national security;
(5) The construction, operation, maintenance, and rehabilitation of
Coast Guard facilities and access thereto; and
(6) Any of the following actions or projects, but only if the making
available of expenditures or assistance therefor is consistent with the
purposes of this Act:
(A) Projects for the study, management, protection and enhancement of
fish and wildlife resources and habitats, including, but not limited to,
acquisition of fish and wildlife habitats and related lands,
stabilization projects for fish and wildlife habitats, and recreational
projects.
(B) The establishment, operation, and maintenance of air and water
navigation aids and devices, and for access thereto.
(C) Projects under the Land and Water Conservation Fund Act of 1965
(16 U.S.C. 4601-4 through 11) and the Coastal Zone Management Act of
1972 (16 U.S.C. 1452 et seq.).
(D) Scientific research, including but not limited to aeronautical,
atmospheric, space, geologic, marine, fish and wildlife and other
research, development and applications.
(E) Assistance for emergency actions essential to the saving of lives
and the protection of property and the public health and safety, if such
actions are performed pursuant to sections 305 and 306 of the Disaster
Relief Act of 1974 (42 U.S.C. 5145 and 5146) and section 1362 of the
National Flood Insurance Act of 1968 (42 U.S.C. 4103) and are limited to
actions that are necessary to alleviate the emergency.
(F) The maintenance, replacement, reconstruction, or repair, but not
the expansion, of publicly owned or publicly operated roads, structures,
or facilities.
(G) Nonstructural projects for shoreline stabilization that are
designed to mimic, enhance, or restore natural stabilization systems.
(b) For purposes of subsection (a)(2), a channel improvement or a
related structure shall be treated as an existing improvement or an
existing related structure only if all, or a portion, of the moneys for
such improvement or structure was appropriated before the date of the
enactment of this Act.
*Quoted from section 6 of the Act, Pub. L. 97-348.
07 CFR 1940.350 Pt. 1940, Subpt. G, Exh. M
07 CFR 1940.350 Exhibit M -- Implementation Procedures for the
Conservation of Wetlands and Highly Erodible Land Affecting Farmer
Program Loans and Loans to Indian Tribes and Tribal Corporations
1. Background. This exhibit implements the requirements of Subtitle
B, Highly Erodible Land Conservation, and Subtitle C, Wetland
Conservation, of Title XII of the Food Security Act of 1985, Pub. L.
99-198. The purposes of these Subtitles are to: Reduce soil loss due to
wind and water erosion; protect the Nation's long term capability to
produce food and fiber; reduce sedimentation; improve water quality;
assist in preserving the Nation's wetlands; create better habitat for
fish and wildlife through improved food and cover; and curb production
of surplus commodities by removing certain incentives for persons to
produce agricultural commodities on highly erodible land or converted
wetland.
2. Applicability. The provisions of this exhibit apply to insured and
guaranteed Farmer Program loans and loans to Indian Tribes and Tribal
Corporations, subordinations, transfers and assumptions of such loans
and leases and credit sales of inventory property. For the purpose of
this exhibit, ''Farmer Program loans'' means Farm Operating Loans, Farm
Ownership Loans, Emergency Loans, and Soil and Water Loans. As used in
this exhibit, the word loan is meant to include guarantee as well.
Applicant means an applicant for either an insured or guaranteed loan
and borrower means a recipient of either an insured or guaranteed loan.
3. FmHA prohibited activities. Unless otherwise exempted by the
provisions of this exhibit, the proceeds of any Farmer Program loan or
loan to an Indian Tribe or Tribal Corporation made or guaranteed by FmHA
will not be used either (a) for a purpose that will contribute to
excessive erosion of highly erodible land, or (b) for a purpose that
will contribute to conversion of wetlands to produce an agricultural
commodity. (See 12.2(a)(1) of Subpart A of Part 12 of Subtitle A of
Title 7, which is Attachment 1 of this exhibit and is available in any
FmHA office, for the definition of an agricultural commodity.)
Consequently, any applicant proposing to use loan proceeds for an
activity contributing to either such purpose, will not be eligible for
the requested loan. Any borrower that uses loan proceeds in a manner
that contributes to either such purpose will be in default on the loan.
a. U.S. Department of Agriculture (USDA) definitions. In
implementing this exhibit, FmHA will use the USDA's definitions of the
terms found at 12.2 of Subpart A of Part 12 of Subtitle A of Title 7
(Attachment 1 of this exhibit which is available in any FmHA office).
b. Highly erodible land conservation. FmHA will conclude that
excessive erosion of highly erodible land results or would result
whenever (1) a field on which highly erodible land is predominant, as
determined by the Soil Conservation Service (SCS), is or would be used
to produce an agricultural commodity without conformance to a
conservation system approved either by SCS or the appropriate
conservation district, as evidenced by a statement from SCS, and (2)
such field is not exempt from the provisions of this exhibit.
c. Wetland conservation. FmHA will conclude that a conversion of
wetlands to produce an agricultural commodity has occurred or will occur
whenever, as determined by SCS, (1) a wetland has or will be drained,
dredged, filled, leveled, or otherwise manipulated (including any
activity that results in impairing or reducing the flow, circulation, or
reach of water) that makes possible the production of an agricultural
commodity without further application of the manipulations described
herein if (a) such production would not have been possible but for such
action and (b) before such action such land was wetland and was neither
highly erodible land nor highly erodible cropland; and (2) neither the
affected wetland nor the activity affecting the wetland is exempt from
the provisions of this exhibit.
d. Use of loan proceeds. To use loan proceeds for a purpose that
contributes to either the excessive erosion of highly erodible land or
the conversion of wetlands to produce an agricultural commodity means
that loan proceeds will or have been used in a way that contributes to
either excessive erosion of highly erodible land or the conversion of
wetlands to produce an agricultural commodity by paying the costs of any
of the following:
(1) The purchase of the affected land;
(2) Necessary planning, feasibility, or design studies;
(3) Obtaining any necessary permits;
(4) The purchase, contract, lease or renting of any equipment or
materials necessary to carry out the land modification or conversion to
include all associated operational costs such as fuel and equipment
maintenance costs;
(5) Any labor costs;
(6) The planting, cultivating, harvesting, or marketing of any
agricultural commodity produced on nonexempt highly erodible land to
include any associated operational or material costs such as fuel, seed,
fertilizer, and pesticide costs;
(7) Within the crop year in which the wetland conversion was
completed plus the next ten crop years thereafter, the planting,
cultivating, harvesting, or marketing of any agricultural commodity
produced on the affected land to include any associated operational or
materials costs such as fuel, seed, fertilizer and pesticide costs; or
(8) For the same time period as in subparagraph 3d(7) above, any
costs associated with using for on-farm purposes an agricultural
commodity grown on the affected land.
(9) Additionally, if loan proceeds will be or have been substituted
to pay other costs at anytime during the life of the loan so that
non-loan funds can be used to pay any of the above costs, it is deemed
that loan proceeds will be or have been used for a purpose that
contributes to the prohibited activities described in this paragraph.
4. Prohibited activities under other USDA financial assistance
programs. Unless otherwise exempted, a person becomes ineligible for a
variety of USDA financial assistance programs if that person produces in
any crop year an agricultural commodity on either a field on which
highly erodible land is predominant or a converted wetland. This
ineligibility extends to any commodity produced during the crop year
that the prohibited action occurs. The programs for which the person
would be ineligible include price support payments, farm storage
facility loans, disaster payments, crop insurance, payments made for the
storage of an agricultural commodity, and payments received under a
Conservation Reserve Program Contract. Farmer Program applicants and
borrowers and applicants for, and borrowers of, loans to Indian Tribes
and Tribal Corporations, therefore, can be affected not only by the FmHA
prohibited activities but also by the broad USDA sweep of the Subtitles
B and C restrictions. Should such an applicant rely or plan to rely on
any of these other USDA financial assistance programs as a source of
funds to repay its FmHA loan(s) and then fail to meet the other
program(s)' eligibility criteria related to wetland or highly erodible
land conservation, repayment ability to FmHA or the lender of and FmHA
guaranteed loan may be jeopardized. Consequently, those applicants who
are applying for a loan and those borrowers who receive a loan after the
effective date of Subtitles B and C, as designated in Part 12 of
Subtitle A of Title 7, and who include in their projected sources of
repayment, potential funds from any USDA program subject to some form of
Subtitle B or C restrictions will have to demonstrate as part of their
applications, and for borrowers, as part of their farm plan of
operation, their ability to meet the other program(s)' eligibility
criteria. Failure to meet the criteria will require the applicant or
borrower either to document an alternative, equivalent source of
revenues or, if possible, agree to undertake any steps necessary to gain
eligibility for the other program(s). See paragraph 6 of this exhibit
for a discussion of such steps.
5. Applicant's responsibilities.
a. Required information. Every applicant for a Farmer Program loan
or a loan to an Indian Tribe or Tribal Corporation will be required to
provide the following information and, as applicable, certification as
part of the application for financial assistance. An application will
not be considered to be complete until this information and
certification are provided to FmHA. Once an applicant has provided FmHA
with information from SCS on the presence of any highly erodible land,
wetland, or converted wetland this information need not be provided
again for a subsequent loan unless there is either a change in the
property upon which FmHA loan proceeds will be applied or a change in
the previous information, such as a change in the status of an
exemption. There is a continuing responsibility on FmHA borrowers using
other USDA financial assistance programs for repayment purposes to
provide the County Supervisor with an executed copy of any similar
certification required by the other USDA agency at the time of each
required certification.
(1) A statement from the SCS indicating whether or not the
applicant's farm property or properties contain either highly erodible
land, wetland, or converted wetland and, if so, whether or not the
applicant qualifies for a particular exemption to the provisions of this
exhibit and as further detailed in paragraph 11 below. The property or
properties will be listed and described in accordance with the
Agriculture Stabilization and Conservation Service's (ASCS) farm records
system. SCS's execution of Form SCS-CPA-26, ''Highly Erodible Land and
Wetland Conservation Determination,'' is necessary to meet this
information requirement.
(2) If either highly erodible land, wetland, or converted wetland is
present, the applicant's properly executed original or carbon copy of
Form AD-1026, ''Highly Erodible Land and Wetland Conservation
Certification.''
b. Required actions. If at any time during the application review
process any of the information or basis for an applicant's certification
changes, the applicant (or the lender in the case of a guaranteed loan)
must immediately notify FmHA. If an applicant intends to produce an
agricultural commodity on a nonexempt field on which highly erodible
land is predominant, the applicant must develop a conservation system
approved by SCS or the appropriate conservation district, demonstrate
that it is or will be in compliance with the system at the time the
field is to be used, and provide SCS's concurrence with this position.
6. FmHA's application review. The FmHA County Supervisor will review
the information provided by the applicant from SCS regarding the
presence of any highly erodible land, wetland, or converted wetland and
any possible exemptions and take the actions warranted by the presence
of one or more of the circumstances described below. In carrying out
these actions, FmHA will consider the technical decisions rendered by
the SCS and the ASCS, as assigned to these agencies by Subparts A, B,
and C of Part 12 of Subtitle A of Title 7 and further explained in this
exhibit, to be final and controlling in the remaining FmHA
decisionmaking process for this exhibit. It must also be understood
that the definition of a wetland used by SCS in implementing this
exhibit applies only to this exhibit and not to other wetland protection
provisions of Subpart G of Part 1940.
a. No highly erodible land, wetland, or converted wetland present.
The requested loan can be approved under the provisions of this exhibit
and, except for documenting this result in accordance with paragraph 8
of this exhibit, no further action is required.
b. Converted wetland present. The County Supervisor will consult
with the applicant (and lender, in the case of a guaranteed loan) and
the appropriate local office of the ASCS in order to determine if the
converted wetland qualifies for the exemption specified in subparagraph
c (1) of paragraph 11 of this exhibit. If so, no further action is
necessary with respect to the converted wetland except for documenting
the result. If the converted wetland does not qualify for an exemption,
the County Supervisor will complete one or both of the following steps
as the identified circumstances dictate.
(1) Step one. Review both the date that the wetland was converted
and the proposed use of loan proceeds in order to determine if loan
proceeds will be used for a prohibited activity as defined in
subparagraph d of paragraph 3 of this exhibit. If not, the County
Supervisor will so document this as specified in paragraph 8 of this
exhibit; complete step two immediately below; and, if an insured loan
will be approved, notify the applicant in writing, coincident with the
transmittal of Form FmHA 1940-1, ''Request For Obligation of Funds,''
and by using Form Letter 1940-G-1, ''Notification of The Requirements of
Exhibit M of FmHA Instruction 1940-G,'' that the loan approval
instruments will contain compliance requirements affecting the
applicant's converted wetland. If loan proceeds will be used for a
prohibited activity, the applicant (and lender, in the case of a
guaranteed loan) will be advised of the applicant's ineligibility for
the FmHA loan being requested. The applicant (and lender, in the case
of a guaranteed loan) will be advised of any modifications to the
application that could cure the ineligibility. Not growing an
agricultural commodity on the converted wetland would cure the
ineligibility, but the substitution of non-FmHA funds to grow an
agricultural commodity on the converted wetland would not.
(2) Step two. The County Supervisor will review the applicant's
sources of loan repayment to determine if they include funds from a USDA
financial assistance program(s) subject to wetland conservation
restrictions. If so, the County Supervisor will implement the actions
in subparagraph e of this paragraph.
c. Highly erodible land or wetland present. The County Supervisor
will discuss with the applicant (and lender, in the case of a guaranteed
loan) and review the intended uses of the FmHA loan proceeds as
evidenced in any relevant application materials.
(1) Proceeds to be used for prohibited activity. If proceeds would
be used for a prohibited activity, the applicant (and lender, in the
case of a guaranteed loan) will be advised of its ineligibility for the
FmHA loan. The applicant (and lender, in the case of a guaranteed loan)
will be informed of any modifications to its application that could cure
the ineligibility, including financially feasible eligible loan purposes
that could be helpful in implementing a conservation plan or installing
a conservation system, should either be an appropriate cure.
Substitution of non-FmHA monies to accomplish the prohibited activity
would not cure the ineligibility, but actual elimination of the activity
from the applicant's farm plan of operation would.
(2) Proceeds not to be used for a prohibited activity. If loan
proceeds are not planned to be used for a prohibited activity, the
County Supervisor will perform the following tasks:
(a) Document the above determination in the applicant's file as
specified in paragraph 8 of this exhibit.
(b) If an insured loan will be approved and the requirements of
subparagraph c (2)(c) of this paragraph do not apply, notify the
applicant in writing, coincident with the transmittal of Form FmHA
1940-1, ''Request For Obligation of Funds,'' and by using Form Letter
1940-G-1, ''Notification of The Requirements of Exhibit M of FmHA
Instruction 1940-G,'' that the loan approval instruments will contain
compliance requirements affecting the applicant's highly erodible land
and/or wetland.
(c) Review the term of the proposed loan and take the following
actions, as applicable.
(i) Loan term exceeds January 1, 1990, but not January 1, 1995. If
the term of the proposed loan expires within this period and the
applicant intends to produce an agricultural commodity on highly
erodible land that is exempt from the restrictions of this exhibit until
either 1990 or two years after the SCS has completed a soil survey for
the borrower's land, whichever is later, the County Supervisor will
determine if it is financially feasible for the applicant, prior to loss
of the exemption, to actively apply a conservation plan approved by SCS
or the appropriate conservation district. See 12.23 of Subpart A of
Part 12 of Subtitle A of Title 7, which is Attachment 1 of this exhibit
and is available in any FmHA office, for a definition of actively
applying a conservation plan. Prior to loan approval, the applicant,
the lender, (if a guaranteed loan is involved), FmHA and SCS will
resolve any doubts as to what extent production would be able to
continue under application of a conservation plan and as to the
financial implications on loan repayment ability from both the potential
costs of actively applying the conservation plan and the potential loss
of revenues from any reduced acreage production base. The loan approval
official will determine the financial implications of actively applying
a conservation plan to the applicant's highly erodible land by
developing a projected farm plan of operation or other farm financial
projections that reflect adequate repayment on the full scheduled
installments for all debt obligations at the time the conservation plan
is being actively applied. If in making this determination, loan
repayment ability cannot be demonstrated, FmHA will deny the loan
application. If loan repayament ability can be demonstrated and an
insured loan will be approved, the applicant will be advised in writing,
coincident with the transmittal of Form FmHA 1940-1, ''Request For
Obligation of Funds,'' and using Form Letter 1940-G-1, ''Notification of
The Requirements of Exhibit M of FmHA Instruction 1940-G,'' that the
loan approval instruments will contain compliance requirements affecting
the applicant's highly erodible land. The applicant will also be
advised that a statement from the SCS issued prior to either January 1,
1990, or two years after the SCS has completed a soil survey of the
applicant's land (whichever is later) and stating that the applicant is
actively applying an approved conservation plan will be considered
adequate demonstration of compliance on the highly erodible land
affected by the 1990 deadline.
(ii) Loan term exceeds January 1, 1995. If the term of the proposed
loan would exceed this date and the borrower intends to produce an
agricultural commodity on highly erodible land that is exempt from the
restrictions of the exhibit up until that date (see subparagraph b (4)
of paragraph 11 of this exhibit) the County Supervisor will determine if
it is financially feasible for the applicant, after January 1, 1985, to
produce an agricultural commodity on the highly erodible land in
compliance with a conservation system approved by SCS or the appropriate
conservation district. Prior to loan approval, the applicant, the
lender (if a guaranteed loan is involved), FmHA and SCS will resolve any
doubts as to what extent production would be able to continue under a
conservation system and as to the financial implications on loan
repayment ability from both the potential costs of the conservation
system and the potential loss of revenues from any reduced acreage
production base. The loan approval official will determine the
financial implications of compliance with a conservation system using
the financial projection method(s) indicated in subparagraph c (2)(c)(i)
of this paragraph. If loan repayment ability cannot be demonstrated,
the application will be denied. If loan repayment ability can be
demonstrated and an insured loan will be approved, the applicant will be
advised in writing, coincident with the transmittal of Form 1940-1,
''Request for Obligation of Funds,'' and using Form Letter 1940-G-1,
''Notification of The Requirements of Exhibit M of FmHA Instruction
1940-G,'' that the loan approval instruments will contain compliance
requirements affecting the applicant's highly erodible land. The
applicant will also be advised that a statement from SCS issued prior to
January 1, 1995, and stating that the applicant is in compliance with an
approved conservation system will be considered adequate demonstration
of compliance.
(d) Implement the actions in subparagraph e of this paragraph if the
applicant plans to repay a portion of the loan with funds from a USDA
financial assistance program subject to wetland or highly erodible land
conservation restrictions.
d. Highly erodible land present that was or is planted in alfalfa.
If the applicant plans to cultivate highly erodible land for the purpose
of producing an agricultural commodity and that highly erodible land
during each of the 1981 to 1985 crop years was planted in alfalfa in a
crop rotation determined by SCS to be adequate for the protection of
highly erodible land, the applicant is exempt until June 1, 1988, from
the requirement to fully implement an approved conservation system on
the highly erodible land. The County Supervisor, following procedures
similar to those indicated in subparagraph c (2)(c)(i) of this
paragraph, will determine if it is financially feasible for the
applicant to apply a conservation system to the highly erodible land
prior to the loss of the exemption on June 1, 1988. If loan repayment
ability cannot be demonstrated, the application will be denied. If loan
repayment ability can be demonstrated and an insured loan will be
approved, the applicant will be advised in writing that the loan
approval instruments will contain compliance requirements affecting the
applicant's highly erodible land. The applicant will also be advised
that a statement from SCS issued prior to June 1, 1988 and stating that
the applicant is in compliance with an approved conservation system will
be considered adequate demonstration of compliance with this
requirement.
e. Highly erodible land, wetland, or converted wetland present and
applicant intends to use the USDA financial assistance program(s),
including crop insurance, to repay FmHA loan. The County Supervisor
will consult with the applicant (and lender, in the case of a guaranteed
loan) and the other USDA agency(s) to determine if the applicant is
eligible for the latter's financial assistance. If not eligible, the
applicant will have to demonstrate that an alternative source(s) of
repayment will be available in order for further processing of the
application to proceed.
7. Required provisions in loan approval documents.
a. Insured loans.
(1) Promissory Notes. For all loans to which this exhibit applies,
all promissory notes must contain the provision indicated below: (Form
FmHA 1940-17, ''Promissory Note,'' has been revised so that the language
will no longer be inserted as an addendum, but the following provision
must be inserted as an addendum to Form FmHA 440-22, ''Promissory Note
(Association or Organization),'' if the loan is being made to an Indian
Tribe or a Tribal Corporation.)
Addendum to promissory note dated XXXXXXXX in the amount of $XXXXXX
at an annual interest rate of XX percent. This agreement supplements
and attaches to the above note.
Borrower recognizes that the loan described in this note will be in
default should any loan proceeds be used for a purpose that will
contribute to excessive erosion of highly erodible land or to the
conversion of wetlands to produce an agricultural commodity, as further
explained in 7 CFR Part 1940, Subpart G, Exhibit M. If (1) the term of
the loan exceeds January 1, 1990, but not January 1, 1995, and (2)
Borrower intends to produce an agricultural commodity on highly erodible
land that is exempt from the restrictions of Exhibit M until either
January 1, 1990 or two years after the U.S. Soil Conservation Service
(SCS) has completed a soil survey for the Borrower's land, whichever is
later, the Borrower further agrees that, prior to the loss of the
exemption from the highly erodible land conservation restrictions found
in 7 CFR Part 12, Borrower must demonstrate that Borrower is actively
applying on that land which has been determined to be highly erodible a
conservation plan approved by the SCS or the appropriate conservation
district in accordance with SCS's requirements. Furthermore, if the
term of the loan exceeds January 1, 1995, Borrower further agrees that
Borrower must demonstrate prior to January 1, 1995, that any production
after that date of an agricultural commodity on highly erodible land
will be done in compliance with a conservation system approved by SCS or
the appropriate conservation district in accordance with SCS's
requirements.
--
(Name of Borrower)
--
(Signature of Executive Official)
--
(Signature of Attesting Official)
(2) Mortgages, deeds of trust and security agreements. State
Directors will consult with the Office of General Counsel and ensure
that for all loans to which this exhibit applies a covenant is included
in all mortgages, deeds of trust, and security agreements which reads as
indicated below. Form FmHA 440-15, ''Security Agreement (Insured Loans
to Individuals),'' and Form FmHA 440-4, ''Security Agreement (Chattels
and Crops),'' have been revised accordingly. Equivalent forms required
in State supplements must be similarly revised.
''Borrower further agrees that the loan(s) secured by this instrument
will be in default should any loan proceeds be used for a purpose that
will contribute to excessive erosion of highly erodible land or to the
conversion of wetlands to produce an agricultural commodity, as further
explained in 7 CFR Part 1940, Subpart G, Exhibit M.''
''Default shall also exist if any loan proceeds are used for a
purpose that will contribute to excessive erosion of highly erodible
land or to the conversion of wetlands to produce an agricultural
commodity, as further explained in 7 CFR Part 1940, Subpart G, Exhibit
M.''
b. Guaranteed loans.
(1) Form FmHA 449-14, ''Conditional Commitment for Guarantee,'' and
Form FmHA 1980-15, ''Conditional Commitment for Contract of Guarantee
(Line of Credit).'' These forms must contain a condition that includes
the following provisions:
(a) Informs the lender that FmHA's commitment is conditioned upon
loan proceeds not being used for a purpose that will contribute to
excessive erosion of highly erodible land or to the conversion of
wetlands to produce an agricultural commodity, as explained in this
exhibit;
(b) Informs the lender of the lender's monitoring responsibilities
under paragraph 10 of this exhibit; and;
(c) Requires the lender, for all borrowers having highly erodible
land, wetland, or converted on their farm properties, to include
provisions in its loan instruments similar to those contained in
subparagraphs a (1) and (2) of this paragraph.
(2) Lender's loan and security instruments. These instruments must
be modified as specified in subparagraph b(1)(c) of this paragraph.
8. Required FmHA documentation. The actions taken and determinations
made by FmHA to comply with the provisions of this exhibit will be
documented as part of the environmental review of the application. All
actions subject to this exhibit will undergo at a minimum the completion
of Form FmHA 1940-22, ''Environmental Checklist for Categorical
Exclusions.'' On the reverse of this form, the preparer will document as
applicable (a) whether or not highly erodible land, wetland, or
converted wetland is present, (b) if any exemption(s) applies, (c) the
status of the applicant's eligibility for an FmHA loan under this
exhibit, and (d) any steps the applicant must take prior to loan
approval to retain or regain its eligibility. If the application under
review meets the definition of a Class I action as defined in 1940.311
of this subpart, the above documentation will be included as an exhibit
to Form FmHA 1940-21, ''Environmental Assessment for Class I Action.''
If the application meets the definition of a Class II action as defined
in 1940.312 of this subpart, the required documentation will be
included within the Class II assessment under the discussion of land use
impacts. See paragraph IV.4. of Exhibit H of this subpart. Once an
applicant's farm property has undergone an environmental review covering
the provisions of this exhibit, the County Supervisor reviewing a
subsequent loan request need not require the applicant to obtain further
site information from SCS as long as there is no change in the farm
property to be affected or any applicable exemptions.
9. Borrowers' responsibilities. In addition to complying with any
loan requirements resulting from FmHA's implementation of this exhibit,
a borrower must within ten days of receipt inform, in writing, the
lender of a guaranteed loan and the County Supervisor for an insured
loan of any ineligibility determinations received from other USDA
agencies for violations of wetland or highly erodible land conservation
restrictions. A borrower also has the responsibility to consult with
the lender or County Supervisor, as applicable, if at any time the
borrower is uncertain as to the borrower's duties and responsibility
under the loan provisions.
10. FmHA and lender monitoring. As an element of insured loan
servicing, to include development of a farm plan of operation for an
upcoming crop year, scheduled farm visits, or other contracts with
borrowers, FmHA staff will review and analyze the borrower's compliance
with the provisions of this exhibit and any related loan requirements.
If at anytime FmHA becomes aware of the borrower's violation of these
provisions or related loan requirements, the borrower will be informed
that the affected loan(s) is in default. In addition to directly
monitoring borrowers, the County Supervisor will receive and review the
monitoring results of other USDA agencies having restrictions on wetland
and highly erodible land conservation. Whenever these results indicate
that a borrower may have violated the loan conditions, the County
Supervisor will further analyze the matter and respond, as indicated in
this paragraph, should a violation be determined. Lenders of FmHA
guaranteed loans must also monitor compliance as part of their servicing
responsibilities.
11. Exemptions and determining their applicability. Following is a
list of exemptions from the provisions of this exhibit as well a
description of how FmHA will apply the exemptions to a proposed loan or
activity under a loan. This list is intended to provide guidance on
implementing the exemptions contained in Subparts A, B, and C of Part 12
of Subtitle A of Title 7 (Attachment 1 of this exhibit which is
available in any FmHA office) and does not modify or limit any of those
exemptions.
a. Exemption from wetland and highly erodible land conservation. Any
loan which was closed prior to December 23, 1985, or any loan for which
either Form FmHA 1940-1, ''Request for Obligation of Funds,'' Form FmHA
449-14, ''Conditional Commitment for Guarantee,'' or Form FmHA 1980-15,
''Conditional Commitment for Contract of Guarantee (Line of Credit),''
was executed prior to December 23, 1985, is exempt from the provisions
of this exhibit.
b. Exemptions from highly erodible land conservation. The following
exemptions exist from the restrictions on highly erodible land
conservation. Whenever the County Supervisor is required to consult
with another USDA agency in applying these exemptions, the County
Supervisor's review of a properly completed Form SCS-CPA-26 will be
considered adequate consultation if the needed information is presented
on the form and no questions are raised by the FmHA review.
(1) Any land upon which an agricultural commodity was planted before
December 23, 1985, is exempt for that particular planting. The County
Supervisor will consult with the appropriate local ASCS office in
applying this exemption and the ASCS determination is controlling for
purposes of this exhibit.
(2) Any land planted with an agricultural commodity during a crop
year beginning before December 23, 1985, is exempt for that particular
planting. FmHA will consult with the ASCS State Executive Director and
the latter's position will be controlling in determining the date that
the crop year began.
(3) Any land that during any one of the crop years of 1981 through
1985 was either (a) cultivated to produce an agricultural commodity, or
(b) set aside, diverted or otherwise not cropped under a program
administered by USDA to reduce production of an agricultural commodity,
is exempt until the later of January 1, 1990, or the date that is two
years after the date that the SCS has completed a soil survey of the
land. To apply this exemption, the County Supervisor will consult with
ASCS to determine from the latter's records whether or not the land was
cultivated or set aside during the required period. The ASCS
determination will be controlling. However, the date of completion for
any SCS soil survey will be determined by SCS and used by the County
Supervisor.
(4) Beginning on January 1, 1990, or two years after SCS has
completed a soil survey for the land, whichever is later, and extending
to January 1, 1995, any land that qualified for the exemption in
subparagraph b (3) of this paragraph is further exempt if a person is
actively applying to it a conservation plan that is based on the local
SCS technical guide and properly approved by the appropriate SCS
conservation district or the SCS. To apply this exemption as well as
the exemptions specified in subparagraphs b (5), (6), (7), and (8) of
this paragraph, the County Supervisor will consult with the appropriate
local SCS office and the SCS position will be controlling.
(5) Highly erodible land within a conservation district and under a
conservation system that has been approved by a conservation district
after the district has determined that the conservation system is in
conformity with technical standards set forth in the SCS technical guide
for such district is exempt.
(6) Highly erodible land not within a conservation district but under
a conservation system determined by SCS to be adequate for the
production of a specific agricultural commodity or commodities on any
highly erodible land is exempt for the production of that commodity or
commodities.
(7) Highly erodible land that is planted in reliance on a SCS
determination that such land was not highly erodible is exempt. The
exemption is lost, however, for any agricultural commodity planted after
SCS determines that such land is highly erodible land.
(8) Highly erodible land planted or to be planted in an agricultural
commodity that was planted in alfalfa during each of the 1981 and 1985
crop years in a crop rotation determined by SCS to be adequate for the
protection of highly erodible land is exempt until June 1, 1988, from
the requirement that the highly erodible land be planted in compliance
with an approved conservation system.
c. Exemptions from wetland conservation. The following exemptions
exist from the restrictions on wetland conservation. Whenever the
County Supervisor is required to consult with another USDA agency in
applying these exemptions, the County Supervisor's review of a properly
completed Form SCS-CPA-26 will be considered adequate consultation if
the needed information is presented on the form and no questions are
raised by the FmHA review.
(1) A converted wetland is exempt if the conversion of such wetland
was completed or commenced before December 23, 1985. The County
Supervisor will consult with ASCS whose determination as to when
conversion of a wetland commenced will be final for FmHA purposes.
Additionally, the County Supervisor will request evidence of ASCS's
consultation with the U.S. Fish and Wildlife Service on each commenced
determination reached for an FmHA applicant or borrower. SCS will
determine if a wetland is a converted wetland using the criteria
contained in 12.32 of Subpart C of Part 12 of Subtitle A of Title 7
(Attachment 1 of this exhibit which is available in any FmHA office).
Under these criteria, however, a converted wetland determined to be
exempt may not always remain exempt. The criteria include the provision
that if crop production is abandoned on a converted wetland and the land
again meets the wetland criteria, that land has reverted to a wetland
and is no longer exempt. For purposes of FmHA inventory farm
properties, crop production will be considered to have been abandoned on
a converted wetland either at the earlier of the time the former owner
so abandoned crop production or at the time FmHA caused crop production
to be abandoned after the property came into FmHA's inventory. While in
its inventory FmHA will not lease the converted wetland for the purpose
of producing an agricultural commodity. Whether or not the wetland
criteria are met on the abandoned land will be determined by SCS
immediately before FmHA's lease or sale of the property.
(2) The following are not considered to be a wetland under the
provisions of this exhibit: (a) An artificial lake, pond, or wetland
created by excavating or diking non-wetland to collect and retain water
for purposes such as water for livestock, fish production, irrigation
(including subsurface irrigation), a settling basin, colling, rice
production, or flood control; (b) a wet area created by a water
delivery system, irrigation, irrigation system, or application of water
for irrigation and (c) lands in Alaska identified by SCS as having a
predominance of permafrost soils. The County Supervisor will consult
with SCS regarding the application of this exemption as well as the
remaining exemptions in this paragraph and the SCS position will be
controlling.
(3) A wetland is exempt if the production of an agricultural
commodity is possible (a) as a result of a natural condition, such as
drought, and (b) without action by the producer that destroys a natural
wetland characteristic. This exemption is lost whenever condition (a)
or (b) no longer exists.
(4) Production of an agricultural commodity on a converted wetland is
exempt is SCS determines that the effect of such action, individually
and in connection with all other similar actions authorized in the area
by USDA agencies, on the hydrological and biological aspect of wetland
is minimal.
12. Appeals. Any applicant or borrower that is directly and adversely
affected by an administrative decision made by FmHA under this exhibit
may appeal that decision under the provisions of Subpart B of Part 1900
of this chapter (see especially 1900.55).
13. Working with other USDA agencies.
a. Coordination. FmHA State Directors will consult with SCS State
Conservationists and ASCS State Executive Directors to assess and
coordinate loan processing workloads in order to minimize delays in
responding to FmHA requests for site information or for the application
of the exemptions contained in paragraph 11 of this exhibit. State
Directors will ensure that FmHA field staff understand and can use the
ASCS farm records system and will request ASCS training as needed.
Also, management systems for sharing the information discussed in
subparagraph b of this paragraph will be established.
b. Information exchange. FmHA State Directors will develop with ASCS
State Executive Directors a system for FmHA to routinely receive
notification whenever a violation has occurred under ASCS's wetland and
highly erodible land conservation restrictions. FmHA State Directors
will in turn provide to any interested USDA agency the following
information.
(1) Upon request, copies of site information or exemption decision
made by SCS for FmHA application reviews;
(2) Upon request, copies of exemption decisions made by FmHA; and
(3) Notice of any violations of the provisions of this exhibit
identified by FmHA as a result of the monitoring activities identified
in paragraph 10 of this exhibit.
14. Relationship of the requirements of this exhibit to the wetland
protection requirements of Exhibit C of this subpart. The provisions of
this exhibit determine (a) whether or not an applicant for a Farmer
Program insured or guaranteed loan or a loan to an Indian Tribe or
Tribal Corporation is eligible to be considered for such a loan, and (b)
whether or not a recipient of such a loan is properly using the loan
proceeds with respect to the requirements of this exhibit. On the other
hand, the requirements in Exhibit C of this subpart regarding wetland
protection cover all FmHA loan and grant programs and address not
questions of eligibility but the potential environmental impacts of a
proposed action on a wetland and alternatives to the action.
Consequently, those applications covered by this exhibit and which may
be approved under this exhibit must also meet the requirements of
Exhibit C of this subpart. For example, an application covered by this
exhibit (M) that proposed to convert a wetland into a tree farm would be
exempt from this exhibit (M) because trees are not an agricultural
commodity, i.e., there is no conversion in order to produce an
agricultural commodity. However, before FmHA could make the loan, the
requirements of Exhibit C of this subpart would have to be met to
include an FmHA finding that no practicable alternative exists to the
conversion of the wetland. In summary, any proposed wetland conversion
that is not prohibited by this exhibit (M) must next meet the
requirements of Exhibit C of this subpart before FmHA approval of the
requested financial assistance could be provided.
(53 FR 7333, Mar. 8, 1988, as amended at 53 FR 14778, April 26, 1988)
07 CFR 1940.350 Subpart H -- (Reserved)
07 CFR 1940.350 Subpart I -- Truth in Lending -- Real Estate Settlement
Procedures
Source: 48 FR 4, Jan. 3, 1983, unless otherwise noted.
07 CFR 1940.401 Truth in Lending.
(a) General. This section provides instructions for compliance with
the Truth in Lending Act, as implemented by Regulation Z of the Federal
Reserve System, to assure that individual Rural Housing (RH) applicants
are informed of:
(1) The cost and terms of credit, and
(2) Their right to cancel certain credit transactions resulting in a
lien or mortgage on their home.
(b) Scope. This section applies to all individuals who apply for
loans, assumptions, or credit sales (hereafter described as
transactions) for household purposes.
(1) Special rules for the right to cancel transactions not for
purchase, acquisition or initial construction of a home broaden the
scope of this section to include individuals who have an ownership
interest in, and reside in as a principal dwelling, property which will
be security for a mortgage, even though they may not execute the
promissory note or assumption agreement. Such persons have the right to
receive credit disclosures and the notice of the right to cancel and may
cancel the transaction.
(2) This section does not apply to:
(i) Applicants who are corporations, associations, cooperatives,
public bodies, partnerships, or other organizations;
(ii) Individual applicants for multiple family housing transactions
(rural rental or labor housing), unless for a two-family dwelling in
which the applicants will reside, and other business and commercial type
loans; or
(iii) Applicants involved in credit transactions primarily for
agricultural purposes.
(c) Disclosure of the cost and terms of credit -- (1) Form and
content. Form FmHA 1940-41, ''Truth in Lending Disclosure Statement,''
will be used to provide the following required disclosures:
(i) Annual percentage rate;
(ii) Finance charge;
(iii) Amount financed;
(iv) Total of payments;
(v) Total sale price (required for credit sales only);
(vi) Payment schedule;
(vii) A separate itemization of the amount financed, if the applicant
requests it. Normally this required disclosure will have been met in
transactions subject to the Real Estate Settlement Procedures Act
(RESPA) by providing the applicant with Form FmHA 440-58, ''Estimate of
Settlement Costs'';
(viii) The lender's identity;
(ix) Prepayment or late payment penalties;
(x) Security interest;
(xi) Insurance requirements;
(xii) Assumption policy; and
(xiii) Referral to other loan documents.
(2) Timing, use of estimates and required redisclosure. (i) In
transactions for the purchase or construction of a home subject to
RESPA, Form FmHA 1940-41, completed using ''good faith'' estimates based
on the best information available, will be delivered or placed in the
mail to the applicant no later than three (3) business days after
receipt of a written application in the County Office.
(ii) In transactions not subject to RESPA, such as RH Section 502
transactions for repairs or refinancing or RH Section 504 transactions,
Form FmHA 1940-41, completed using the actual terms of the transaction,
will be delivered to each applicant (and in transactions which are
subject to cancellation, each non-applicant with the right to cancel) at
the time of loan approval.
(iii) In the event of a change in rates and terms between the time of
initial disclosure and closing, whereby the annual percentage rate
varies by more than one-eighth of one percent, redisclosure must be
made. This may be done by entering the changes on all copies of the
initial Form FmHA 1940-41, or by preparing a new Form FmHA 1940-41.
When required, redisclosure may be made at the time the transaction is
approved or at the time of the change, but the form must be delivered to
the applicant before the signing of the promissory note or assumption
agreement.
(3) Special instructions for assumption, reamortization, refinancing
and multiple transactions. (i) Assumptions, within the scope of
paragraph (b) of this section, at new rates and terms or of existing
obligations which were for purchase, acquisition or initial construction
of a residence, require new credit disclosure before the assumption
occurs. Since assumptions are not subject to RESPA, early disclosure is
not required.
(ii) Reamortization, as described in 1944.37(g) of Subpart A of Part
1944 and 1951.314 of Subpart G of Part 1951 of this chapter, when the
borrower is in default or delinquent, does not require new credit
disclosure. In all other cases reamortization requires new credit
disclosure.
(iii) Refinancing of debts in accordance with 1944.22 of Subpart A
of Part 1944 of this chapter, though not subject to RESPA or early
disclosure, does require credit disclosure at the time the transaction
is approved.
(iv) Multiple transactions.
(A) When a subsequent loan is financed along with another transaction
and both transactions require credit disclosure, a separate Form FmHA
1940-41 will be prepared for each transaction.
(B) Transactions with multiple advances will be treated as one
transaction for the purpose of credit disclosure, in accordance with the
Forms Manual Insert (FMI) for Form FmHA 1940-41.
(d) Notice of the right to cancel. The right to cancel applies only
to transactions within the scope of paragraph (b) of this section, which
are not for purchase, acquisition or initial construction of and which
result in a mortgage on an individual's principal residence, such as RH
Section 502 transactions for refinancing, repairs or rehabilitation or
RH Section 504 transactions.
(1) Form and Content. Form FmHA 1940-43, ''Notice of Right to
Cancel'', will be used to notify individuals of their right to cancel
those transactions, within the scope of paragraphs (b) and (d) of this
section, which result in a mortgage on their principal residence except
when the transaction is for its purchase or initial construction. This
notice will identify the transaction and disclose the following:
(i) The acquisition of a security interest in the individual's
principal residence.
(ii) The individual's right to cancel the transaction.
(iii) How to exercise the right to cancel the transaction, with a
form for that purpose.
(iv) The effects of cancellation.
(v) The date the cancellation period expires.
(2) Timing. (i) Two copies of Form FmHA 1940-43, and one copy of
Form FmHA 1940-41, in accordance with the FMI's, will be given to each
individual entitled to cancel, not later than loan closing.
(ii) Any entitled individual may cancel the transaction until
midnight of the third business day following whichever of the following
events occurs last:
(A) The date the transaction is closed.
(B) The date Truth in Lending credit disclosures were made.
(C) The date notice of the right to cancel was received.
(3) Disbursement of funds. In a transaction subject to cancellation
funds will not be disbursed, other than to a designated attorney or
title insurance company preparatory to closing, until:
(i) Forms FmHA 1940-43 have been given to the appropriate
individuals,
(ii) The three-day cancellation period has expired, and
(iii) The loan approval official is reasonably assured that the
transaction has not been cancelled. This assurance may be obtained by:
(A) Waiting a reasonable period of time after the expiration of the
cancellation period to allow for the delivery of a mailed notice, or
(B) Obtaining a written statement from each individual entitled to
cancel that the right has not been exercised.
(iv) This delay in disbursing funds may be waived in cases of a
bonafide personal financial emergency, which must be met within the
cancellation period, when the individual submits a signed and dated
statement describing the nature of the emergency and waiving the right
to cancel. Such a statement must be signed by all individuals entitled
to cancel.
(4) Effects of cancellation. (i) When an individual cancels a
transaction, the mortgage securing the transaction becomes void and the
borrower will not be liable for any amount, including any finance
charge.
(ii) Within twenty (20) calendar days after receipt of a notice of
cancellation the loan approval official will:
(A) Notify all interested parties of the cancellation;
(B) Return, and/or request the return of any money or property given
to anyone in connection with the transaction; and
(C) Take the necessary action to terminate the mortgage.
(iii) Once evidence has been presented to the borrower that the
mortgage has been terminated, the borrower must return any funds
advanced by FmHA to the FmHA County Office or surrender any property at
his/her residence within twenty (20) calendar days.
(e) Advertisements. An ''advertisement'' is defined as a commercial
message in any medium that promotes, directly or indirectly, a credit
transaction. Advertisements for credit sales of Government inventory
property, within the scope of pararaph (b) of this section, are subject
to the following requirements.
(1) If an advertisement states specific credit terms, it shall state
only those terms that actually are or will be arranged or offered.
(2) If an advertisement states a rate of finance charge, it shall
state the rate as an ''annual percentage rate,'' using that term.
(3) Terms requiring additional disclosures.
(i) If any of the following terms is set forth in an advertisement:
(A) The amount or percentage of any down payment,
(B) The number of payments or period of repayment,
(C) The amount of any payment, or
(D) The amount of any finance charge,
(ii) The advertisement must also state:
(A) The amount or percentage of down payment,
(B) The terms of repayment, and
(C) The ''annual percentage rate,'' using that term.
1940.402 -- 1940.405 (Reserved)
07 CFR 1940.406 Real estate settlement procedures.
(a) General. This section provides the instructions for compliance
with the Real Estate Settlement Procedures Act (RESPA), as amended, and
Regulation X of the Department of Housing and Urban Development.
(b) Scope. (1) This section applies to loans and credit sales,
including Section 502 Rural Housing, 1-4 family Rural Rental Housing,
1-4 family Labor Housing, and Farm Ownership involving tracts of less
than 25 acres, whether made to an individual, corporation, partnership,
association or other entity, which meet the following requirements:
(i) The proceeds of the loan or the credit extended are used in whole
or in part to finance the purchase and transfer of title of the property
to be mortgaged by the borrower, and
(ii) The loan or credit sale is secured by a first lien covering real
estate on which is located a structure designed principally for the
occupancy of from 1-4 families, or on which a structure designed
principally for the occupancy of from 1-4 families is to be constructed
using proceeds of the loan.
(2) Exempt transactions include:
(i) Loans for repairs, improvements, or refinancing if the proceeds
are not used to finance the purchase of the property.
(ii) Loans to finance the construction of a 1-4 family structure if
the tract of land is already owned by the applicant/borrower.
(iii) Assumptions or transfers.
(c) Action required. (1) The information booklet entitled
''Settlement Costs'' will either be given to the applicant at the time
the completed application is received, or mailed to the applicant no
later than three (3) business days after receipt of the application in
the County Office.
(i) Form FmHA 440-58, ''Estimate of Settlement Costs,'' is to be used
to provide a ''good faith'' statement of estimated closing costs. Form
FmHA 440-58 will be completed by the County Supervisor and mailed or
delivered to the applicant with the Settlement Costs booklet. Costs
will vary between geographic areas; therefore, information supplied on
this form must be based upon (A) the County Supervisor's best estimate
of charges the borrower will pay for each service in connection with the
transaction, or (B) a range of charges at which such service is
available to the borrower from all providers in the area.
(ii) Form FmHA 440-58 does not replace Truth in Lending forms.
Appropriate forms listed in 1940.401 will be used for Truth in Lending
purposes.
(2) Form FmHA 1940-59, ''Settlement Statement,'' will be completed as
indicated in the form and FMI by the designated attorney or title
company for all transactions described in paragraph (b) of this section.
The purpose of this form is to provide a uniform settlement statement
prescribed by RESPA.
(i) During the business day immediately preceding the date of
settlement, the closing agent, if requested by the applicant, must
permit the applicant to inspect the settlement statement, completed for
those items which are then known to the closing agent.
(ii) A copy will be given to both the borrower and seller at the time
of closing or settlement or will be mailed as soon as practicable if the
borrower or seller are not present at closing.
07 CFR 1940.406 Subpart L -- Methodology and Formulas for Allocation of
Loan and Grant Program Funds
Source: 50 FR 24180, June 10, 1985, unless otherwise noted.
07 CFR 1940.551 Purpose and general policy.
(a) The purpose of this subpart is to set forth the methodology and
formulas by which the Administrator of the Farmers Home Administration
(FmHA) allocates program funds to the States. (The term ''State'' means
any of the States of the United States, the Commonwealth of Puerto Rico,
any territory or possession of the United States, or the Western Pacific
Areas.)
(b) The formulas in this subpart are used to allocate program loan
and grant funds to State Offices so that the overall mission of the
Agency can be carried out. Considerations used when developing the
formulas include enabling legislation, congressional direction, and
administration policies. Allocation formulas ensure that program
resources are available on an equal basis to all eligible individuals
and organizations.
(c) The actual amounts of funds, as computed by the methodology and
formulas contained herein, allocated to a State for a funding period are
distributed to each State Office by an exhibit to this subpart. The
exhibit is available for review in any FmHA State Office. The exhibit
also contains clarifications of allocation policies and provides further
guidance to the State Directors on any suballocation within the State.
FmHA will publish a Notice of Availability of Rural Housing funds in the
Federal Register each year.
(49 FR 3727, Jan. 30, 1984, as amended at 53 FR 26229, July 12, 1988;
55 FR 29560, July 20, 1990; 56 FR 66960, Dec. 27, 1991)
Effective Date Note: At 56 FR 66960, Dec. 27, 1991, 1940.551(c)
was amended by revising the last sentence of paragraph (c), effective
January 27, 1992. For the convenience of the user, the superseded text
follows:
1940.551 Purpose and general policy.
(c) * * *That portion of the exhibit which deals with the Rural
Housing Programs will be published in the Federal Register.
07 CFR 1940.552 Definitions.
(a) Amount available for allocation. Funds appropriated or otherwise
made availiable to the Agency for use in authorized programs. On
occasion, the allocation of funds to States may not be practical for a
particular program due to funding or administrative constraints. In
these cases, funds will be controlled by the National Office.
(b) Basic formula criteria, data source and weight. Basic formulas
are used to calculate a basic state factor as a part of the methodology
for allocating funds to the States. The formulas take a number of
criteria that reflect the funding needs for a particular program and
through a normalization and weighting process for each of the criteria
calculate the basic State Factor (SF). The data sources used for each
criteria is believed to be the most current and reliable information
that adequately quantifies the criterion. The weight, expressed as a
percentage, gives a relative value to the importance of each of the
criteria.
(c) Basic formula allocation. The result of multiplying the amount
available for allocation less the total of any amounts held in reserve
or distributed by base or administrative allocation times the basic
State factor for each State. The basic formula allocation (BFA) for an
individual State is equal to:
BFA=(Amount available for allocation^NO reserve^Total base and
administrative allocations) SF.
(d) Transition formula. A formula based on a proportional amount of
previous year allocation used to maintain program continuity by
preventing large fluctuations in individual State allocations. The
transition formula limits allocation shifts to any particular State in
the event of changes from year to year of the basic formula, the basic
criteria, or the weights given the criteria. The transition formula
first checks whether the current year's basic formula allocation is
within the transition range (+ or ^ percentage points of the
proportional amount of the previous year's BFA).
If the current year's State BFA is not within this transition range,
the State formula allocation is changed to the amount of the transition
range limit closest to the BFA amount. After having performed this
transition adjustment for each State, the sum of the funds allocated to
all States will differ from the amount of funds available for BFA. This
difference, whether a positive or negative amount, is distributed to all
States receiving a formula allocation by multiplying the difference by
the SF. The end result is the transition formula allocation. The
transition range will not exceed 40% ( 20%), but when a smaller range is
used it will be stated in the individual program section.
(e) Base allocation. An amount that may be allocated to each State
dependent upon the particular program to provide the opportunity for
funding at least one typical loan or grant in each FmHA State, District,
or County Office. The amount of the base allocation may be determined
by criteria other than that used in the basic formula allocation such as
agency historic data.
(f) Administrative allocations. Allocations made by the
Administrator in cases where basic formula criteria information is not
available. This form of allocation may be used when the Administrator
determines the program objectives cannot be adequately met with a
formula allocation.
(g) Reserve. An amount retained under the National Office control
for each loan and grant program to provide flexibility in meeting
situations of unexpected or justifiable need occurring during the fiscal
year. The Administrator may make distributions from this reserve to any
State when it determined necessary to meet a program need or agency
objective. The Administrator may retain additional amounts to fund
authorized demonstration programs. When such demonstration programs
exist, the information is outlined in Exhibit A of this subpart
(available in any FmFA State Office).
(h) Pooling of funds. A technique used to ensure that available
funds are used in an effective, timely and efficient manner. At the
time of pooling those funds within a State's allocation for the fiscal
year or portion of the fiscal year, depending on the type of pooling,
that have not been obligatedf by the State are placed in the National
Office reserve. The Administrator will establish the pooling dates for
each affected program.
(1) Mid-year: This pooling addresses the need to partially
redistribute funds based on use/demand. Mid-year pooling occurs near
the midpoint of the fiscal year.
(2) Year-end: This pooling is used to ensure maximum use of program
funds on a national basis. Year-end pooling usually occurs near the
first of August.
(3) Emergency: The Administrator may pool funds at any time that it
is determined the conditions upon which the initial allocation was based
have changed to such a degree that it is necessary to pool funds in
order to efficiently carry out the Agency mission.
(i) Availability of the allocation. Program funds are made available
to the Agency on a quarterly basis. In the high demand programs, it is
necessary that specific instructions by given to the State Offices
regarding the amount which is available for obligation during each
quarter.
(j) Suballocation by the State Director. Dependent upon the
individual program for which funds are being allocated, the State
Director may be directed or given the option of suballocating the State
allocation to District or County Offices. When suballocating the State
Director may retain a portion of the funds in a State Office reserve to
provide flexibility in situations of unexpected or justified need. When
performing a suballocation the State Director will use the same formula,
criteria and weights as used by the National Office.
(k) Other documentation. Additional instructions given to field
offices regarding allocations.
(49 FR 3727, Jan. 30, 1984, as amended at 53 FR 26229, July 12, 1988)
1940.553 -- 1940.554 (Reserved)
07 CFR 1940.555 Insured Farm Operating loan funds.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria, data source and weight are:
(1) A=Farm operators with sales of $2,500 to $39,999 and less than
200 days work off farm. Source: U.S. Census of Agriculture. 15%
(2) B=Farm operators with sales of $40,000 or more and less than 200
days work off farm. Source: U.S. Census of Agriculture. 35%
(3) C=Tenant farm operators. Source: U.S. Census of Agriculture.
20%
(4) D=Three year average net farm income. Source: USDA Economic
Research Service. 15% This criterion is the inverse of the division of
the State mean net farm income by the National mean net farm income.
This inverse is used because the need for assistance is inversely
proportional to the level of net income. Limits of .5 and 1.5 are
placed in this result to limit the influence on the allocation.
(5) E=Value of farm nonreal estate assets. Source: USDA Economic
Research Service. 15%
The basic allocation formula is a two-step process. In step one,
each criterion is converted to that State's percentage of a National
total, multiplied by the weighting factor and summed to arrive at a
State Factor: Aa+Bb+Cc+Dd+Ee=STATE FACTOR where A, B, C, D, and E
represent selected Criteria expressed as a State Percentage of the U.S.
total and a, b, c, d, and e represent the Weight expressed as a
percentage, given to the selected criterion. The weight assigned each
criterion is constant for all States. The State Factor represents the
percentage of the total allocation by basic formulas that a State is to
receive and is the sum of the weighted criteria percentage for each
State. The basic formula allocation is the final step.
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. Not used.
(e) Base allocation. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions participating in the formula allocation process do not
receive administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Subobligation by the State Director. See 1940.552(j) of this
subpart. Suballocations by the State Director are optional.
(k) Other documentation. See 1940.552(k) of this subpart.
07 CFR 1940.556 Guaranteed Farm Operating loan funds.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria, data source and weight are:
(1) A=Farm operators with sales of $2,500 to $39,999 and less than
200 days work off farm. Source: U.S. Census of Agriculture. 15%
(2) B=Farm operators with sales of $40,000 or more and less than 200
days work off farm. Source: U.S. Census of Agriculture. 35%
(3) C=Tenant farm operators. Source: U.S. Census of Agriculture.
20%
(4) D=Three year average net farm income. Source: USDA Economic
Research Service. 15%. This criterion is the inverse of the division of
the State mean net farm income by the National mean net farm income.
This inverse is used because the need for assistance is inversely
proportional to the level of net income. Limits of .5 and 1.5 are
placed in this result to limit the influence on the allocation.
(5) E=Value of farm nonreal estate assets. Source: USDA Economic
Research Service. 15%
The basic allocation formula is a two-step process. In step one,
each criterion is converted to the State's percentage of a National
total, multiplied by the weighting factor and summed to arrive at a
State Factor: Aa+Bb+Cc+Dd+Ee=State Factor Where A, B, C, D, and E
represent selected Criteria expressed as a State Percentage of the U.S.
total and a, b, c, d, and e represent Weight expressed as a percentage,
given to the selected criterion. The weight assigned each criterion is
constant for all States. The State Factor represents the percentage of
the total allocation by basic formulas that a State is to receive and is
the sum of the weighted criteria percentage for each State. The basic
formula allocation is the final step.
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. Not used.
(e) Base allocation. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions participating in the formula allocation process do not
receive administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. Suballocations by the State Director are optional.
(k) Other Documentation. See 1940.552(k) of this subpart.
07 CFR 1940.557 Insured Farm Ownership loan funds.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria, data source and weight are:
(1) A=Farm operators with sales of $2,500 to $39,999 and less than
200 days work off farm. Source: U.S. Census of Agriculture. 15%
(2) B=Farm operators with sales of $40,000 or more and less than 200
days work off farm. Source: U.S. Census of Agriculture. 35%
(3) C=Tenant farm operations. Source: U.S. Census of Agriculture.
25%
(4) D=Three-year average net farm income. Source: USDA Economic
Research Service. 15%. This criterion is the inverse of the division of
the State mean net farm income by the National mean net farm income.
This inverse is used because the need for assistance is inversely
proportional to the level of net income. Limits of .5 and 1.5 are
placed in this result to limit the influence of the allocation.
(5) E=Value of farm real estate assets. Source: USDA Economic
Research Service. 10%. The basic allocation formula is a two-step
process. In step one, each criterion is converted to that State's
percentage of a National total, multiplied by the weighting factor and
summed to arrive at a State Factor: Aa+Bb+Cc+Dd+Ee=State Factor where
A, B, C, D, and E represent selected Criteria expressed as a State
Percentage of the U.S. total and a, b, c, d, and e represent Weight
expressed as a percentage, given to the selected criterion. The weight
assigned each criterion is constant for all States. The State Factor
represents the percentage of the total allocation by basic formulas that
a State is to receive and is the sum of the weighted criteria percentage
for each State. The basic formula allocation is the final step.
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. The
transition range is plus or minus 15%.
(e) Base allocation. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions participating in the formula allocation process do not
receive administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.522(h) of this subpart.
(i) Availability of the allocation. A portion of the allocation will
be targeted to the State's rural socially disadvantaged population. The
amount of the targeted funds for each state is equal to the State's
rural socially disadvantaged population divided by the State's total
rural population multiplied by the State's total fiscal year Insured
Farm Ownership allocation. Source of data is U.S. Census 1980.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. Suballocations by the State Director are optional.
(k) Other documentation. See 1940.552(k) of this subpart.
(49 FR 3727, Jan. 30, 1984, as amended at 53 FR 26229, July 12, 1988)
07 CFR 1940.558 Guaranteed Farm Ownership loan funds.
(a) Amount available for allocation. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria, data source and weight are:
(1) A=Farm operators with sales of $2,500 to $39,999 and less than
200 days work off farm. Source: U.S. Census of Agriculture. 15%
(2) B=Farm operators with sales of $40,000 or more and less than 200
days work off farm. Source: U.S. Census of Agriculture. 35%
(3) C=Tenant farm operations. Source: U.S. Census of Agriculture.
25%
(4) D=Three year average net farm income. Source: USDA Economic
Research Service. 15%. This criterion is the inverse of the division of
the State mean net farm income by the National mean net farm income.
This inverse is used because the need for assistance is inversely
proportional to the level of net income. Limits of .5 and 1.5 are
placed in this result to limit the influence on the allocation.
(5) E=Value of farm real estate assets. Source: USDA Economic
Research Service. 10%
The basic allocation formula is a two-step process. In step one,
each criterion is converted to that State's percentage of a National
total, multiplied by the weighting factor and summed to arrive at a
State Factor: Aa+Bb+Cc+Dd+Ee=State Factor where A, B, C, D, and E
represent selected Criteria expressed as a State Percentage of the U.S.
total and a, b, c, d, and e represent the Weight expressed as a
percentage, given to the selected criterion. The weight assigned each
criterion is constant for all States. The State Factor represents the
percentage of the total allocation by basic formulas that a State is to
receive and is the sum of the weighted criteria percentage for each
State. The basic formula allocation is the final step.
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. Not used.
(e) Base allocation. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administrative allocations: See Section 1940.552(f) of this
subpart. Jurisdictions participating in the formula allocation process
do not have administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. Suballocations by the State Director are optional.
(k) Other documentation. See 1940.552(k) of this subpart.
07 CFR 1940.559 Farmer Programs and Indian Land Acquisition
appropriations not allocated by State.
(a) Emergency Disaster. State allocations are not made since it is
impossible to predict occurrences. Obligating documents may be
submitted to the Finance Office as loans are approved in designated
areas. This type loan is available only in areas designated as disaster
areas. Designations may be by a single county, multiple of counties or
areas, depending upon scope and severity.
(b) Soil and Water. Funds are not allocated to States. Program size
does not permit equitable distribution. Obligation of funds are on a
first-come, first-served basis, subject to availability.
(49 FR 3727, Jan. 30, 1984, as amended at 53 FR 26229, July 12, 1988)
1940.560 -- 1940.562 (Reserved)
07 CFR 1940.563 Section 502 non-subsidized guaranteed Rural Housing
(RH) loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552
(b) of this subpart. The criteria used in the basic formula are:
(1) State's percentage of the National number of rural occupied
substandard units,
(2) State's percentage of the National rural population in places of
less than 2,500 population,
(3) State's percentage of the national number of rural households
between 80 and 100 percent of the area median income, and
(4) State's percentage of the national number of rural renter
households paying more than 35 percent of income for rent.
Data source for each of these criteria is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
basic State factor (SF) as follows:
SF = (criterion 1 weight of 30%) + (criterion 2 weight of 10%) +
(criterion 3 weight of 30%) + (criterion 4 weight of 30%)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range used for Section 502 guaranteed RH loans is plus or
minus 15.
(e) Base allocation. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions receiving formula allocations do not receive
administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(1) Mid-year: If used in a particular fiscal year, available funds
unobligated as of the pooling date are pooled and redistributed based on
the formula used to allocate funds initially.
(2) Year-end: Pooled funds are placed in a National Office reserve
and are available as determined administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. Annually, the Administrator will advise State Director's
whether or not suballocation within the State Office jurisdiction will
be required for the guaranteed Housing program.
(k) Other documentation. Not applicable.
(56 FR 10509, Mar. 13, 1991)
07 CFR 1940.564 Section 502 subsidized guaranteed Rural Housing loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria used in the basic formula are:
(1) State's percentage of the National number of rural occupied
substandard units,
(2) State's percentage of the National rural population in places of
less than 2,500 population,
(3) State's percentage of the national number of rural households
below 80 percent of the area median income, and
(4) State's percentage of the national number of rural renter
households paying more than 35 percent of income for rent.
Data source for each of these criteria is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
basic State factor (SF) as follows:
SF = (criterion 1 weight of 30% + (criterion 2 weight of 10% +
(criterion 3 weight of 30% + (criterion 4 weight of 30%)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range used for section 502 guaranteed RH loans is plus or
minus 15.
(e) Base allocation. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administration allocations. See 1940.552(f) of this subpart.
Jurisdictions receiving formula allocations do not receive
administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(1) Mid-year: If used in a particular fiscal year, available funds
unobligated as of the pooling date are pooled and redistributed based on
the formula used to allocate funds initially.
(2) Year-end: Pooled funds are placed in a National Office reserve
and are available as determined administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. Annually, the Administrator will advise State Director's
whether or not suballocation within the State Office jurisdiction will
be required for the guaranteed Housing program.
(k) Other documentation. Not applicable.
(56 FR 10509, Mar. 13, 1991)
07 CFR 1940.565 Section 502 subsidized Rural Housing loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria used in the basic formula are:
(1) State's percentage of the National number of rural occupied
substandard units,
(2) State's percentage of the National rural population,
(3) State's percentage of the National rural population in places of
less than 2,500 population,
(4) State's percentage of the National number of rural households
between 50 and 80 percent of the area median income, and
(5) State's percentage of the National number of rural households
below 50 percent of the area median income.
Data source for each of these criteria is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
basic State factor (SF)
SF=
(criterion 1 x weight of 25%)+ (criterion 2 x weight of 10%)+
(criterion 3 x weight of 15%)+ (criterion 4 x weight of 30%)+
(criterion 5 x weight of 20%)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range used for Section 502 subsidized RH loans is plus or
minus 15.
(e) Base allocation. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions receiving formula allocations do not receive
administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(1) Mid-year: If used in a particular fiscal year, available funds
unobligated as of the pooling date are pooled and redistributed based on
the formula used to allocate funds initially.
(2) Year-end: Pooled funds are placed in a National Office reserve
and are available as determined administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. The State Director will suballocate funds to the District
Offices and may, at his/her option, suballocate to the County Offices.
The State Director will use the same basic formula criteria, data source
and weight for suballocating funds within the State as used by the
National Office in allocating to the States as described in 1940.565
(b) and (c) of this section. The suballocations to District or County
Offices will not be reduced or restricted unless written approval is
received from the National Office in response to a written request from
the State Director. The State Director's request must include the
reasons for the requested action (e.g., high housing inventory and/or
high housing delinquency).
(k) Other documentation. The percentage distribution of funds to the
States by income levels is based on prevailing legislation.
07 CFR 1940.566 Section 504 Housing Repair loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See
1940.552(b). The criteria used in the basic formula are:
(1) State's percentage of the National number of rural occupied
substandard units, and
(2) State's percentage of the National number of rural households
below 50 percent of area median income.
Data source for each of these criteria is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
basic State factor (SF).
SF=
(criterion No. 1 weight of 50%)+ (criterion No. 2 weight of
50%)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range used for section 504 Housing Repair Loans is plus or
minus 15.
(e) Base allocation. Not used.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions receiving formula allocations do not receive
administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(1) Mid-year: If used in a particular fiscal year, available funds
unobligated as of the pooling date are pooled and redistributed based on
the formula used to allocate funds initially.
(2) Year-end: Pooled funds are placed in a National Office reserve
and are available as determined administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. At the option of the State Director, section 504 loan funds
may be suballocated to the District Offices. When performing a
suballocation, the State Director will use the same basic formula
criteria, data source and weight for suballocating funds within the
State as used by the National Office in allocating to the States as
described in 1940.566 (b) and (c) of this section.
(k) Other documentation. Not applicable.
07 CFR 1940.567 Section 504 Housing Repair grants.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria used in the basic formula are:
(1) State's percentage of the National number of rural occupied
substandard units,
(2) State's percentage of the National rural population 62 years and
older, and
(3) State's percentage of the National number of rural households
below 50 percent of area median income.
Data source for each of these criteria is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
basic State factor (SF).
SF=
(criterion No. 1 weight of 33 1/3%)+ (criterion No. 2 weight
of 33 1/3%)+ (criterion No. 3 weight of 33 1/3%)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range used for section 504 Housing Repair grants is plus or
minus 15.
(e) Base allocation. Not used.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions receiving formula allocations do not receive
administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(1) Mid-year: If used in a particular fiscal year, available funds
unobligated as of the pooling date are pooled and redistributed based on
the formula used to allocate funds initially.
(2) Year-end: Pooled funds are placed in a National Office reserve
and are available as determined administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. At the option of the State Director, section 504 grant funds
may be suballocated to the District Offices. When performing a
suballocation, the State Director will use the same basic formula
criteria, data source and weight for suballocating funds within the
State as used by the National Office in allocating to the States as
described in 1940.567 (b) and (c) of this section.
(k) Other documentation. Not applicable.
07 CFR 1940.568 Single Family Housing programs appropriations not
allocated by State.
The following program funds are kept in a National Office reserve and
are available as determined administratively:
(a) Section 523 Self-Help Technical Assistance Grants.
(b) Section 523 Land Development Fund.
(c) Section 524 Rural Housing Site Loans.
(d) Section 509 Compensation for Construction Defects.
(e) Section 502 Nonsubsidized Funds.
1940.569 -- 1940.574 (Reserved)
07 CFR 1940.575 Section 515 Rural Rental Housing (RRH) loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart.
The criteria used in the basic formula area:
(1) State's percentage of National rural population,
(2) State's percentage of National number of rural occupied
substandard units, and
(3) State's percentage of National rural families with incomes below
the poverty level.
Data source for each of these criterion is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight assigned and summed to arrive at a
State factor (SF).
SF = (criterion No. 1 weight of 33 1/3%) + (criterion No. 2
weight of 33 1/3%) + (criterion No. 3 weight of 33 1/3%)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.522(d) of this subpart.
(e) Base allocation. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions receiving formula allocations do not receive
administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart.
(k) Other documentation. Not applicable.
(53 FR 26229, July 12, 1988)
07 CFR 1940.576 Rental Assistance (RA) for new construction.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.575(b)
of this subpart.
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart.
(e) Base allocation. See 1940.552(e) of this subpart.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions receiving formula allocations do not receive
administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart.
(k) Other documentation. Not applicable.
(53 FR 26229, July 12, 1988)
07 CFR 1940.577 Rental Assistance (RA) for existing projects.
(a) Amount available for allocations. See 1940.552(a) of this
subpart. RA appropriated for existing projects will first be used to
replace contracts expiring each fiscal year and for the first few months
of the following fiscal year. This is done to assure continued RA
funding. RA units not needed for replacement purposes will be used for
existing multiple family housing projects experiencing servicing
problems.
(b) Basic formula criteria, data source and weight. No formula or
weighted criteria is used to allocate replacement RA. The basic
allocation for replacement RA will be made based on the following:
(1) Criteria. This allocation is based on the estimated need to
replace RA contracts expiring from the depletion of funds.
(2) Date source. The most accurate and current information available
from FmHA computerized data sources.
(c) Basic formula allocation. While no formula will be used, the
basic allocation will be made to each State according to the need
determined using the basic criteria.
(d) Transition formula. Not applicable.
(e) Base allocation. Not applicable.
(f) Administrative allocation. Not applicable.
(g) Reserve. See 1940.552(g) of this subpart. The National Office
maintains a reserve adequate to compensate for the differences between
actual and projected replacement activity. Units will be
administratively distributed for existing housing to either satisfy
previously unidentified replacement needs or address servicing
situations. Units will be distributed to any State when the
Administrator determines that additional allocations are necessary and
appropriate.
(h) Pooling of funds. See 1940.552(h) of this subpart. Units will
be pooled at the Administrator's discretion.
(i) Obligation of the allocation. See 1940.552(i) of this subpart.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart.
(k) Other documentation. Not applicable.
(49 FR 3727, Jan. 30, 1984, as amended at 53 FR 26229, July 12, 1988)
07 CFR 1940.578 Housing Preservation Grant (HPG) program.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.575(b)
of this subpart.
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart.
(e) Base allocation. See 1940.552(e) of this subpart.
(f) Administrative allocations. See 1940.552(f) of this subpart.
(g) Reserve. See 1940.552(g) of this subpart.
(h) Pooling of funds. See 1940.552(h) of this subpart. Funds may
be pooled after all HPG applications have been received and HPG fund
demand by State has been determined. Pooled funds will be combined with
the National Office reserve to fund eligible projects. Remaining HPG
funds will be available for distribution for use under the Section 504
program.
(i) Availability of the allocation. See 1940.552(i) of this
subpart.
(j) Suballocation by the State Director. Not applicable.
(k) Other documentation. Funds for the HPG program will be available
for a limited period each fiscal year. Due to the requirements by law
to allocate funds on a formula basis to all States and to have a
competitive selection process for HPG project selection, FmHA will
announce opening and closing dates for receipt of HPG applications.
After the closing date, FmHA will review and evaluate the proposals,
adjust State allocations as necessary to comply with the law and program
demand, and redistribute remaining unused HPG resources for use under
Section 504 (as required by statute).
(53 FR 26229, July 12, 1988)
07 CFR 1940.579 Multiple-Family Housing appropriations not allocated by
State.
(a) Section 514 Farm Labor Housing loans. Funds are not allocated to
States because of the small program size. Projects are funded on a
first-come, first-served basis.
(b) Section 516 Farm Labor Housing Grants. Funds are not allocated
to States because of the small program size. State Directors must
obtain authorization from the National Office before permitting
development of a full applications. Projects are funded on a
first-come, first-served basis.
1940.580 -- 1940.584 (Reserved)
07 CFR 1940.585 Community Facility loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria used in the basic formula are:
(1) State's percentage of National rural population -- 50 percent.
(2) State's percentage of National rural population with incomes
below the poverty level -- 50 percent.
Data source for each of these criterion is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
State factor (SF).
SF=
(criterion No. 1 50 percent)+ (criterion No. 2 50 percent)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
States receiving administrative allocations do not receive formula
allocations.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range for the transition formula equals 30 percent ( 15%).
(e) Base allocation. See 1940.552(e) of this subpart. States
receiving administrative allocations do not receive base allocations.
(f) Administrative allocation. See 1940.552(f) of this subpart.
States participating in the formula base allocation procedures do not
receive administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart. States may request
funds by forwarding a completed copy of Guide 26 of Subpart A of Part
1942 of this chapter (available in any FmHA office), to the National
Office. Generally, a request for additional funds will not be honored
unless the State has insufficient funds to obligate the loan requested.
(h) Pooling of funds. See 1940.552(h) of this subpart. Funds are
generally pooled at mid-year and year-end. Pooled funds will be placed
in the National Office reserve and will be made available
administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart. The allocation of funds is made available for States to
obligate on an annual basis although the Office of Management and Budget
apportions it to the Agency on a quarterly basis.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. State Director has the option to suballocate to District
Offices.
(k) Other documentation. Not applicable.
07 CFR 1940.586 Water and Waste Disposal loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria used in the basic formula are:
(1) State's percentage of National rural population -- 50 percent.
(2) State's percentage of National rural population with incomes
below the poverty level -- 50 percent.
Data source for each of these criterion is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
State factor (SF).
SF=
(criterion No. 1 x .5) + (criterion No. 2 x .5)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
States receiving administrative allocations do not receive formula
allocations.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range for the transition formula equals 30 percent ( 15%).
(e) Base allocation. See 1940.552(e) of this subpart. States
receiving administrative allocations do not receive base allocations.
(f) Administrative allocation. See 1940.552(f) of this subpart.
States participating in the formula and base allocation procedures do
not receive administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart. Any State may
request reserve funds by forwarding a completed copy of Guide 26 of
Subpart A of Part 1942 of this Chapter (available in any office), to the
National Office. Generally, a request for additional funds will not be
honored unless the State has insufficient funds to obligate the loan
requested.
(h) Pooling of funds. See 1940.552(h) of this subpart. Funds are
generally pooled at mid-year and year-end. Pooled funds will be placed
in the National Office reserve and will be made available
administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart. The allocation of funds is made available for States to
obligate on an annual basis although the Office of Management and Budget
apportions it to the Agency on a quarterly basis.
(j) Suballocation by the State Director. See 1940.552 (j) of this
subpart. The State Director has the option to suballocate funds to
District Offices.
(k) Other documentation. Not applicable.
07 CFR 1940.587 Water and Waste Disposal grants.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria used in the basic formula are:
(1) State's percentage of National rural population -- 50 percent.
(2) State's percentage of National rural population with incomes
below the poverty level -- 50 percent
Data source for each of these criterion is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
State factor (SF).
SF=
(criterion No. 1 x .5) + (criterion No. 2 x .5)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
States receiving administrative allocations do not receive formula
allocations.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range for the transition formula equals 30 percent. ( 15%).
(e) Base allocation. See 1940.552(e) of this subpart. States
receiving administrative allocations do not receive base allocations.
(f) Administrative allocation. See 1940.552(f) of this subpart.
States participating in the formula and base allocation procedures do
not receive administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart. Any State may
request reserve funds by forwarding a completed copy of Guide 26 of
Subpart A of Part 1942 of this Chapter (available in any office), to the
National Office. Generally, a request for additional funds will not be
honored unless the State has insufficient funds to obligate the grant
requested.
(h) Pooling of funds. See 1940.552(h) of this subpart. Funds are
generally pooled at mid-year and year-end. Pooled funds will be placed
in the National Office reserve and will be made available
administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart. The allocation of funds is made available for States to
obligate on an annual basis although the Office of Management and Budget
apportions it to the Agency on a quarterly basis.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. The State Director has the option to suballocate funds to
District Offices.
(k) Other documentation. Not applicable.
07 CFR 1940.588 Business and Industrial guaranteed loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source and weight. See 1940.552(b)
of this subpart. The criteria used in the basic formula are:
Data source for each of these criterion is based on the latest census
data available. Each criterion is assigned a specific weight. The
percentage representing each criterion is multiplied by the weight
factor and summed to arrive at a State factor (SF).
SF=
(Criterion No. 1 x weight No. 1)+ (Criterion No. 2 x weight No.
2)+ (Criterion No. 3 x weight No. 3)
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. See 1940.552(d) of this subpart. The
percentage range for the transition formula equals 30% ( 15%).
(e) Base allocations. See 1940.552(e) of this subpart.
Jurisdictions receiving administrative allocations do not receive base
allocations.
(f) Administrative allocations. See 1940.552(f) of this subpart.
Jurisdictions receiving formula allocations do not receive initial
administrative allocations.
(g) Reserve. See 1940.552(g) of this subpart. A National reserve
of approximately 10 percent of the program amount has been established
for the B&I program. States may request reserve funds from the B&I
reserve when all of the State's allocation has been obligated or will be
obligated to the project for which the request is made.
(h) Pooling of funds. See 1940.552(h) of this subpart. Funds are
generally pooled at mid-year and year end. Pooled funds will be placed
in a reserve and made available on a priority basis to all States.
(i) Availability of the allocation. See 1940.552(i) of this
subpart. There is a 6-day waiting period from the time project funds
are reserved to the time they are obligated.
(j) Suballocation by the State Director. Not applicable.
(k) Other documentation. Not applicable.
07 CFR 1940.589 Industrial Development Grants.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source, and weight. See
1940.552(b) of this subpart. The criteria used in the basic formula
are:
(1) State's percentage of National Nonmetro population -- 50 percent.
(2) State's inverse percentage of nonmetro per capita income -- 50
percent.
Data source for each of these criterion is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multipled by the weight factor and summed to arrive at a
State factor (SF).
(c) Basic formula allocation. See 1940.552(c) of this subpart.
(d) Transition formula. Not used.
(e) Base allocation. See 1940.552(e) of this subpart.
(f) Administrative allocation. Not used.
(g) Reserve. See 1940.552(g) of this subpart. States may request
funds by written request to the Director, Community Facilities Loan
Division. Generally, a request for additional funds will not be honored
unless the State has insufficient funds to obligate from the State's
allocation.
(h) Pooling of funds. See 1940.552(h) of this subpart. Funds are
generally pooled at mid-year and year-end. Pooled funds will be placed
in the National Office reserve and will be made available
administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart. The allocation of funds is made available for States to
obligate on an annual basis although the Office of Management and Budget
apportions funds to the Agency on a quarterly basis.
(j) Suballocation by the State Director. See 1940.552(j) of this
subpart. State Director has the option to suballocate to District
Offices.
(k) Other documentation. Not applicable.
(53 FR 26230, July 12, 1988)
07 CFR 1940.590 Community and Business programs appropriations not
allocated by State.
(a) Watershed Protection Loans, Resource Conservation and Development
Loans, and Flood Protection Loans. State allocations will not be made
for these type loans. Instead, obligating documents may be submitted to
the Finance Office when a loan is approved. Only States that are
authorized to process Pub. L. 534 loans may submit obligating documents
to the Finance Office for that type loan. Resource Conservation and
Development (RC&D) Loan funds will be used in preference to Community
Facility loan funds in designated RC&D areas for loan purposes included
in Subpart A of Part 1942 of this chapter.
(b) Indian Land Acquisition. Control of funds will be retained in
the National Office and allocated on an individual case basis. Requests
for funds will be made to the Director, Community Facilities Division,
when it is determined the loan can be approved.
(c) Nonprofit National Corporation Guaranteed Loans and Grants.
Control of funds will be retained in the National Office. These funds
are not available for obligation by States.
(d) Intermediary Relending Program. Control of funds will be
retained in the National Office. These funds are not available for
obligation by States.
(e) Technical Assistance and Training Grants. Control of funds will
be retained in the National Office. These funds are not available for
obligation by States.
(f) Emergency Community Water Assistance Grants. Control of funds
will be retained in the National Office and allocated on an project case
basis. Requests for funds will be made to the Director, Water and Waste
Disposal Division.
(53 FR 26230, July 12, 1988, as amended at 55 FR 12811, April 6,
1990)
07 CFR 1940.591 Community Program Guaranteed loans.
(a) Amount available for allocations. See 1940.552(a) of this
subpart.
(b) Basic formula criteria, data source, and weight. See
1940.552(b) of this subpart. The criteria used in the basic formula
are:
(1) State's percentage of National rural population -- 50 percent.
(2) State's percentage of National rural population with incomes
below the poverty level -- 50 percent.
Data source for each of these criterion is based on the latest census
data available. Each criterion is assigned a specific weight according
to its relevance in determining need. The percentage representing each
criterion is multiplied by the weight factor and summed to arrive at a
State factor (SF).
(c) Basic formula allocation. See 1940.552(c) of this subpart.
States receiving administrative allocations do not receive formula
allocations.
(d) Transition formula. The transition formula for Community Program
Guaranteed loans is not used.
(e) Base allocation. See 1940.552(e) of this subpart. States
receiving administrative allocations do not receive base allocations.
(f) Administrative allocation. See 1940.552(f) of this subpart.
States participating in the formula base allocation procedures do not
receive administrative allocations.
(g) Reserve. See 1940.522(g) of this subpart. States may request
funds by forwarding a request following the format found in Guide 26 of
subpart A of part 1942 of this chapter (available in any FmHA office),
to the National Office. Generally, a request for additional funds will
not be honored unless the State has insufficient funds from the State's
allocation to obligate the loan requested.
(h) Pooling of funds. See 1940.522(h) of this subpart. Funds are
generally pooled at mid-year and year-end. Pooled funds will be placed
in the National Office reserve and will be made available
administratively.
(i) Availability of the allocation. See 1940.552(i) of this
subpart. The allocation of funds is made available for States to
obligate on an annual basis although the Office of Management and Budget
apportions it to the Agency on a quarterly basis.
(j) Suballocation by State Director. See 1940.552(j) of this
subpart. State Director has the option to suballocate to District
Offices.
(k) Other documentation. Not applicable.
(55 FR 11134, Mar. 27, 1990)
1940.592 -- 1940.600 (Reserved)
07 CFR 1940.591 Pt. 1940, Subpt. L, Exh. B
07 CFR 1940.591 Exhibits to Subpart L
07 CFR 1940.591 Exhibit B -- Section 515 Nonprofit Set Aside (NPSA)
I. Objective: To provide eligible nonprofit entities with a
reasonable opportunity to utilize Section 515 funds.
II. Background: The Cranston-Gonzalez National Affordable Housing
Act of 1990, requires that FmHA set aside 7 percent of FY 91 and 9
percent of FY 92 funds for use by certain nonprofit entities.
III. Eligible nonprofit entities. Notwithstanding the definition of
''Nonprofit'' in subpart E of part 1944 of this chapter, to receive
funds from this set aside, the applicant must be a nonprofit entity
which meets the following conditions:
A. Is a private nonprofit organization, consumer cooperative or
Indian Tribe;
B. Whose principle purposes include the planning, development and
management of low-income housing;
C. Is exempt from federal income taxes under section 501(c)(3) or
501(c)(4) of the Internal Revenue Code;
D. Is not wholly or partially owned or controlled with/by a ''for
profit'' entity;
E. Is not a public body, housing authority, limited partnership,
limited partnership with a nonprofit general partner; and
F. Is not co-venturing with a ''for profit'' entity eligible for
section 515 assistance.
IV. Amount of set aside. Seven percent in FY 91 and nine percent in
FY 92 of each States section 515 allocation has been set aside for
nonprofit applicants defined in paragraph III. Rental Assistance (RA)
has also been set aside in the National Office reserve for use with set
aside funds.
V. Location of set aside. All set aside funds and RA have been
reserved in the National Office as follows:
A. Small State Allocation Set Aside (SSASA): In all States where 7
percent of the State's FY 91 allocation is less than $750,000, 7 percent
of the State's allocation has been reserved and combined to form the
SSASA. In FY 92, the percentage is increased from 7 percent to 9
percent.
B. Large State Allocation Set Aside (LSASA): In all States where 7
percent of the State's allocation is more than $750,000, 7 percent of
the State's allocation has been reserved and combined to form the LSASA.
In FY 92, the percentage is increased from 7 percent to 9 percent.
C. Nonprofit RA Set Aside: 700 units of RA in FY 91 and 900 units in
FY 92 have been reserved in the National Office for use with SSASA and
LSASA funds.
VI. Access to funds and RA: RA is available and may be requested, as
needed, with eligible loan requests. Funds and RA should be requested
on Attachment 1 of this exhibit (available in any FmHA State Office.)
Funds are available as follows:
A. SSASA: The following conditions apply:
1. The SSASA is available to any SSASA state on a first-come
first-served basis until COB June 14, 1991.
2. On June 17, 1991, all unused SSASA funds will be pooled and made
available to any SSASA state on a first-come first-served basis until
COB July 12, 1991.
3. Unused funds, as of COB July 12, 1991, will be returned to States
which did not utilize the full amount of set aside funds they
contributed. The amount of funds returned to a State will be
proportionate to the amount it contributed. States may utilize those
funds for Section 515 proposals ready for obligation without regard to
applicant entity.
B. LSASA: The following conditions apply:
1. States may request LSASA funds, up to the amount the State
contributed to the LSASA until COB July 12, 1991.
2. Unused funds will be returned to each State as of COB July 12,
1991. States may utilize those funds for section 515 proposals ready
for obligation without regard to applicant entity.
VII. Priority/Processing of Preapplications:
Preapplications/applications for assistance from eligible nonprofits
must continue to meet all loan making requirements of subpart E of part
1944 of this chapter. The State Director may issue AD-622s requesting a
formal application to the highest ranking preapplication(s) from
nonprofit entities defined in paragraph III of this exhibit. In LSASA
states, AD-622s may not exceed 150 percent of the amount the State
contributed to the LSASA. In SSASA states, AD-622s may not exceed the
greater of $750,000 or 150 percent of the amount the state contributed
to the SSASA.
VIII. Exception Authority. The Administrator, or his/her designee,
may, in individual cases, make an exception to any requirements of this
exhibit which are not inconsistent with the authorizing statute, if
he/she finds that application of such requirement would adversely affect
the interest of the Government or adversely affect the intent of the
authorizing statute and/or RRH program or result in an undue hardship by
applying the requirement. The Administrator, or his/her designee, may
exercise this authority upon the request of the State Director,
Assistant Administrator for Housing, or Director of the Multi-Family
Housing Processing Division. The request must be supported by
information that demonstrates the adverse impact or effect on the
program. The Administrator, or his/her designee, also reserves the
right to change pooling dates, establish/change minimum and maximum fund
usage from the reserve, or restrict participation in the set aside.
(55 FR 52835, Dec. 24, 1990, as amended at 56 FR 6961, Feb. 21, 1991)
07 CFR 1940.591 Exhibit C -- Housing in Underserved Areas
A. To improve the quality of affordable housing by targeting funds
under Rural Housing Targeting Set Aside (RHTSA) to designated areas that
have extremely high concentrations of poverty and substandard housing
and have severe, unmet rural housing needs.
B. To provide for the eligibility of certain colonias for rural
housing funds.
The Cranston-Gonzalez National Affordable Housing Act of 1990 (herein
referred to as the ''Act'') requires that FmHA set aside 3.5 percent of
FY 91 and 5 percent of FY 92 section 502, 504, 514, 515 and 524 funds
for assistance in targeted underserved areas. An appropriate amount of
section 521 new construction rental assistance (RA) is set aside for use
with section 514 and 515 loan programs. Under the Act, certain colonias
are now eligible for FmHA housing assistance.
A. Colonia is defined as any identifiable community that:
1. Is in the State of Arizona, California, New Mexico or Texas;
2. Is in the area of the United States within 150 miles of the border
between the United States and Mexico, except that the term does not
include any standard metropolitan statistical area that has a population
exceeding 1,000,000;
3. Is designated by the State or county in which it is located as a
colonia;
4. Is determined to be a colonia on the basis of objective criteria,
including lack of potable water supply, lack of adequate sewage systems,
and lack of decent, safe, and sanitary housing; and
5. Was in existence and generally recognized as a colonia before
November 28, 1990.
B. Requests for housing assistance in colonias have priority as
follows:
1. When the State did not obligate its allocation in one or more of
its housing programs during the previous two FYs, priority will be given
to requests for assistance, in the affected program(s), from regularly
allocated funds, until an amount equal to 5 percent of the current FY
program(s) allocation is obligated in colonias. This priority takes
precedence over other processing priority methods.
2. When the State did obligate its allocation in one or more of its
housing programs during the previous two FYs, priority will be given to
requests for assistance, in the affected program(s), from RHTSA funds,
until an amount equal to 5 percent of the current FY program(s)
allocation is obligated in colonias. This priority takes precedence
over other processing priority methods.
C. Colonias may access pooled RHTSA funds as provided in paragraph IV
G of this exhibit.
A. Amount of Set Aside. Set asides for RHTSA from the FY 91
allocations are as follows:
B. Selection of Targeted Counties -- 1. Eligibility: eligible
counties met the following criteria: (1) 20 percent or more of the
county population is at or below poverty level, (2) 10 percent or more
of the occupied housing units are substandard and (3) the average funds
received on a per capita basis in the county during the previous 5 FYs
was more than 40 percent below the State per capita average during the
same period. Data from the most recent available Census was used for
all three criteria, with criteria (2) and (3) based on the FmHA rural
area definition. This resulted in 166 eligible counties.
2. Selection: The Act requires that 100 of the most underserved
counties be initially targeted for RHTSA funds. In establishing the 100
counties, those with 28 percent or more of its population at or below
poverty level and 13 percent or more of its occupied housing units
substandard, have preference. Fifty-nine (59) of the 166 eligible
counties qualified for preference and inclusion in the 100-county group.
To complete the 100-county group, each of the remaining 107 counties
was ranked, based upon a total of its substandard housing and poverty
level percentages. The 41 highest-ranking counties were then selected
for inclusion in the 100-county list. An updated list of counties will
be developed for FY 92 using the same criteria.
C. State RHTSA Levels. Sections 514 and 524 funds are available on a
first-come, first-served basis. Sections 502 and 515 funds are
available up to the amounts shown on Attachment 1 of this exhibit. In
order to ensure that a meaningful amount of assistance is available to
each state, minimum funding levels were established, based on the number
of eligible RHTSA counties in the state. In the 502 program, each state
received at least enough funds to obligate 5 section 502 initial loans
in each targeted county, using nationwide average of $48,000 per initial
loan. In section 515, each state received at least enough funds
($438,000) to obligate one 12-unit project for each group of 1 to 3
RHTSA counties in the state. A nationwide average unit cost of $36,500
was used. FmHA utilized the section 502 and 515 formula elements and
weights contained in this subpart and applied them to the specific
states and counties participating in RHTSA. Each state's funding level
was the greater of the formula allocation or the established minimum.
In the 504 loan and grant programs, each state's RHTSA amount is based
on its number of eligible counties with each county receiving an equal
share of the total funds available.
D. Use of Funds. To maximize the assistance to targeted counties,
allocated program funds should be used in addition to RHTSA funds, where
possible. The State Director has the discretion to determine the most
effective delivery of RHTSA funds among the targeted counties within
his/her jurisdiction. The 100 counties listed in Attachment 2 of this
exhibit are eligible for RHTSA funding consideration immediately.
Colonias are also eligible for RHTSA funds as described in paragraph III
of this exhibit.
E. National Office RHTSA Reserves. A limited National Office reserve
is available April 1, 1991 (and 1992) on an individual case basis when
the State is unable to fund the request from their regular or RHTSA
allocation.
F. Requests for Funds and Rental Assistance (RA). All RHTSA funds
are reserved in the National Office and requests for these funds and RA
units must be submitted by the State Director using the applicable
format shown on Attachments 4 or 5 of this exhibit (available in any
FmHA State Office). The State Director is responsible for notifying the
Director of Single Family Housing Processing Division (SFHPD) or
Multi-Family Housing Processing Division (MFHPD) of any RHTSA funds and
RA units authorized but not obligated by RHTSA pooling date.
G. Pooling. Unused RHTSA funds and RA will be pooled close of
business (COB) July 1, 1991, and will be available on a first-come,
first-served basis to all eligible colonias and all counties listed on
Attachments 2 and 3 of this Exhibit. Pooled RHTSA funds will remain
available until the year-end pooling data tentatively scheduled for COB
August 16, 1991.
H. Outreach. Outreach efforts publicizing the availability of loan
and grant funds for the eligible RHTSA counties will be aggressively
carried out. Each affected State Director will develop an outreach plan
which includes such techniques as news releases, community meetings,
coordination with other Federal, State and local government
organizations, to promote full utilization of these targeted funds by
all qualified applicants regardless of race, color and sex. In addition
to the above outreach efforts, States with eligible colonias should
establish liaison with community groups in order to leverage support and
assistance provided to residents of colonias.
J. Requests for Assistance. Requests for assistance in targeted
counties must meet all loan making requirements of the applicable
program Instructions, except as modified for colonias in paragraph III
of this exhibit. For section 515, States may issue Form AD-622s,
''Notice of Preapplication Review Action,'' up to 150 percent of the
amount shown in Attachment 1 of this Exhibit.
The Administrator, or his/her designee, may, in individual cases,
make an exception to any requirements of this exhibit which are not
inconsistent with the authorizing statute, if he/she finds that
application of such requirement would adversely affect the interest of
the Government or adversely affect the intent of the authorizing statute
and/or housing programs or result in an undue hardship by applying the
requirement. The Administrator, or his/her designee, may exercise this
authority upon the request of the State Director, Assistant
Administrator for Housing, Director of the Single Family Housing
Processing Division or Director of the Multi-Family Housing Processing
Division. The request must be supported by information that
demonstrates the adverse impact or effect on the program. The
Administrator, or his/her designee, also reserves the right to change
the pooling date, establish/change minimum and maximum fund usage from
set asides and/or the reserve, or restrict participation in set asides
and/or reserves.
07 CFR 1940.591 66 Counties Eligible for RHTSA Pooled Funds only
(56 FR 6792, Feb. 20, 1991)
07 CFR 1940.591 Subparts M -- R (Reserved)
07 CFR 1940.591 Subpart S -- Accountability Requirements of Persons
Paid to Influence the Making of an FmHA Housing Loan and/or Grant
Source: 55 FR 25075, July 20, 1990, unless otherwise noted.
07 CFR 1940.901 Purpose.
This subpart implements section 401(a) of the Housing and Urban
Development Reform Act of 1989 (''HUD Reform Act''), Public Law (P.L.)
101-235, approved December 15, 1989, which adds section 536(d) to the
Housing Act of 1949. Section 401(a) imposes registration and reporting
requirements on any person engaged for pay or for any consideration for
the purpose of attempting to influence the making of a Farmers Home
Administration (FmHA) housing loan and/or grant, and limits fees a
person may charge for this service. Section 401(a) and this subpart do
not apply to other FmHA loan and/or grant programs.
07 CFR 1940.902 Objective.
To ensure compliance with the HUD Reform Act and ensure that persons
influencing the making of an FmHA housing loan and/or grant register and
report their activities to FmHA, and do not seek fees contingent upon
obtaining assistance.
07 CFR 1940.903 Definitions.
As used in this subpart only.
Communication. Includes written, oral, electronic or any other means
of communication.
Department. United States Department of Agriculture .
Engaged. Retained pursuant to an agreement for ''pay or for other
consideration.'' The term includes the employment relationship between a
person and its officers or employees.
FmHA. Farmers Home Administration.
FmHA housing loan and/or grant. Any loan: insured; direct or
guaranteed, made pursuant to the Housing Act of 1949, as amended. The
term includes rental assistance (RA) and interest credits. The term
does not include contracts, such as procurement contracts, which are
subject to the Federal Acquisition Regulation (FAR).
Indian tribe and tribal organization. Those defined in Section 4 of
the Indian Self-Determination and Education Assistance Act (25 U.S.C.
450b). Alaskan Natives are included under the definitions of Indian
tribes in that Act.
Influence or attempt to influence. Includes (but is not limited to)
any effort to effect any aspect, including (but not limited to) the
outcome, of the making of an FmHA housing loan and/or grant. Influence
may be actual or constructive.
Officer or employee.
(a) In the case of an individual employed by the Department, the term
includes:
(1) An individual who is appointed to a position in the Department
under title 5, United States Code, including a position under a
temporary appointment;
(2) A special government employee, as defined in section 202, title
18, United States Code; and
(3) An individual who is a member or a Federal Advisory Committee, as
defined by the Federal Advisory Committee Act, title 5, United States
Code.
(b) In the case of an individual employed by a person, the term
includes an individual who is in any way retained, designated,
appointed, employed, or receiving compensation of any kind from the
person to perform duties of any kind and on any basis, including
full-time, part-time, or temporary basis.
Pay or other consideration. Includes (but is not limited to) a
payment, distribution, loan, advance, deposit, gift of money, or the
provision of anything else of value. The term includes pay or other
consideration made by, or on behalf of, a person. Pay or other
consideration is considered to have been made when the person makes it
available to another person without restriction. Receipt of the pay or
other consideration is not necessary -- only that same has been offered.
Ownership by an individual of a single family home financed under the
section 502 program does not constitute pay or other consideration.
Person. An individual (including, but not limited to, a consultant,
lobbyist, or lawyer), corporation, association, authority, firm,
partnership society, State, local government, or any other organization
or group of people. This term excludes an Indian tribe, tribal
organization, or any other Indian organization.
Professional services. Includes (but is not limited to) legal,
technical and other advice/services needed to support the
preapplication/application for an FmHA housing loan and/or grant.
1940.904 -- 1940.905 (Reserved)
07 CFR 1940.906 Interrelationship of this subpart and Pub. L.
101-121.
Section 319 of Public Law 101-121 contains a general prohibition on
the use of federally appropriated funds for influencing the award of
Federal contracts, loans, grants, cooperative agreements and certain
post award actions. It also requires disclosure of certain information
on payments from non-appropriated funds that are used to influence the
aforementioned Federal actions as well as the insurance and guarantee of
loans. Section 319 of Public Law 101-121 applies to all Federal
agencies (and all FmHA programs) and was implemented by a
government-wide common rule published on February 26, 1990 at 55 FR
6736. Section 319 of Public Law 101-121 and this subpart contain
similar but overlapping requirements. Compliance with one Public Law
does not preclude compliance with the other Public Law. Persons
influencing the making of an FmHA housing loan and/or grant should be
familiar with both Public Laws and ensure compliance with either, or
both, as applicable.
07 CFR 1940.907 Who must comply with this subpart.
This subpart applies to any person who is engaged for pay or for any
consideration to influence, or that should reasonably have the effect of
influencing, the making of an FmHA housing loan and/or grant through
direct communication with any officer or employee of the Department.
The influencing (or attempt to influence) must be related to a specific
request for an FmHA housing loan and/or grant although an
application/preapplication need not be on file with FmHA. Influencing
(or attempting to influence) policy issues, not related to a specific
request for an FmHA housing loan and/or grant, is not subject to this
subpart. See exhibit A of this subpart (available in any FmHA office)
for specific examples of covered actions. Although FmHA applicants do
not have any direct responsibilities under this subpart, they should
carefully review 1940.913 and 1940.916 of this subpart.
07 CFR 1940.908 Prohibited practices.
Any person meeting the provisions of 1940.907 of this subpart, shall
not seek or receive any fee that is:
(a) Based upon the amount of the FmHA loan and/or grant or the number
of units being developed, or
(b) Contingent upon approval of an FmHA housing loan and/or grant by
FmHA, except that professional services related to a project may be
donated in whole or in part to a community housing development
organization in the event the FmHA housing loan and/or grant is not
made. For the purposes of this paragraph, ''donated * * * in part''
means that at least 33 1/3 percent of the total value of the
professional services must be donated to the community housing
development organization before the exception is permitted.
1940.909 -- 1940.910 (Reserved)
07 CFR 1940.911 Reporting and registration requirements.
Any person meeting the provisions of 1940.907 of this subpart, must:
(a) Register. Prior to any influencing activities, Form FmHA
1940-39, ''Declaration of Registrant,'' must be submitted to FmHA.
(b) Report quarterly. Each person registering under paragraph (a) of
this section must, between the first and tenth day of each calendar
quarter, so long as the person's activities continue, submit Form FmHA
1940-40, ''Quarterly Declaration of Registrant,'' to FmHA. Calendar
quarters are January 1, April 1, July 1, and October 1.
(c) Submit registration/reporting forms. Forms FmHA 1940-39 and FmHA
1940-40, must be submitted to: Farmers Home Administration, USDA, ATTN:
1940-S Coordinator, 14th Street and Independence Avenue, SW.,
Washington, DC 20250. Persons registering/reporting to FmHA may also be
requested by FmHA field offices to supply documentation that they have
complied with this Subpart. If requested, the registrant will provide
documentation to an FmHA field office to verify that applicable forms
have been submitted to the FmHA National Office in Washington, DC.
(d) Keep records. Persons required to register/report under this
subpart will maintain records and documentation to support information
contained in Forms FmHA 1940-39 and FmHA 1940-40.
07 CFR 1940.912 Exceptions.
The following exceptions apply to the registration and reporting
requirements contained in 1940.911 of this subpart:
(a) Compliance with FmHA requirements. Where the conditions,
requirements, or procedures are imposed, or are reasonably believed by
the person to be imposed by law, regulation or written directive (such
as an FmHA Administrative Notice (AN), unnumbered letter, Exhibit,
application document, etc.), registration or reporting is not required.
This includes a request for information by FmHA to support the making of
an FmHA housing loan and/or grant not specifically addressed in the
applicable program making regulation.
(b) Litigation. Litigation against the Department of FmHA is exempt
from registration or reporting requirements. In addition, litigation
taken by the Department or FmHA, including (but not limited to) civil
actions, criminal proceedings, or administrative proceedings pusurant to
statute or regulation is exempt.
(c) Appeals. Appellants and their representatives who have filed an
appeal pursuant to Subpart B of Part 1900 of this chapter are exempt
from registration or reporting requirements.
07 CFR 1940.913 Applicability of this subpart to FmHA housing
applicants.
This subpart describes the reporting/registration requirements of
persons who are engaged for pay or for any consideration for attempting
to influence the making of an FmHA housing loan and/or grant. It also
establishes limits on fees a person that influences may receive.
Although no such requirements are placed upon the applicant for the FmHA
housing loan and/or grant, the failure of the person paid to influence a
request for assistance could adversely affect an application. This
could include the termination of processing an application, recapturing
any funds advanced, etc. It is therefore incumbent upon housing
applicants to ensure that any person they engage to influence their
application complies with this subpart. Applicants should review
1940.916 of this subpart for specific administrative remedies and civil
penalties which may be imposed upon the influencer and/or applicant.
1940.914 -- 1940.915 (Reserved)
07 CFR 1940.916 Remedies and penalties.
(a) Administrative remedies. If the Administrator receives or
obtains information providing a reasonable basis to believe that a
violation of this subpart has occurred, the Administrator shall:
(1) If the request for assistance has not been approved, determine
whether to return the complete request for assistance to the applicant,
or take other appropriate actions; or
(2) If the request for assistance has been approved, determine
whether to:
(i) Void or rescind approval, subject to review and determination on
the record after the opportunity for a hearing;
(ii) Impose sanctions against the violator, including debarment,
subject to review and determination on the record after the opportunity
for a hearing;
(iii) Stop disbursement of any remaining loan and/or grant funds;
(iv) Recapture any funds that have been advanced;
(v) Permit the applicant to continue with the processing of the FmHA
housing loan and/or grant;
(vi) Take any other actions the Administrator deems appropriate.
(3) The Administrator shall publish in the Federal Register each
action and determination under this paragraph.
(b) Civil penalties. Any person who violates this subpart shall be
subject to the imposition of a civil penalty in a civil action brought
by the United States in an appropriate district court of the United
States. A civil penalty may not exceed:
(1) $100,000 in the case of an individual; or
(2) $1,000,000 in the case of other than an individual.
(c) Disposition of civil penalties. Notwithstanding any other
provision of the law, all civil monetary penalties collected under this
subpart shall be deposited in the Rural Housing Insurance Fund.
(d) Appeals. Administrative remedies sought and/or taken pursuant to
this subpart against the applicant for the FmHA housing loan and/or
grant are subject to subpart B of part 1900 of this chapter.
Administrative remedies and civil penalties sought and/or taken against
the person paid to influence FmHA pursuant to this subpart are not
subject to subpart B of part 1900 of this chapter.
07 CFR 1940.917 Nonexclusiveness of remedies.
This subpart shall not be construed to limit the applicability of any
other requirements, sanctions, penalties, or remedies established in any
other law. Other requirements, sanctions, penalties, or remedies
required by FmHA regulations and/or statutes or laws shall apply
independently and in addition to the remedies set forth in this subpart.
1940.918 -- 1940.949 (Reserved)
07 CFR 1940.950 Office of Management and Budget (OMB) reporting and
recordkeeping requirements.
The reporting and recordkeeping requirements contained in this
regulation have been approved by OMB and have been assigned OMB control
number 0575-0139. Public reporting burden for this collection of
information is estimated to vary from five minutes to two hours per
response, with an average of 1.67 hours per response including time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the collection
of information. Send comments regarding this burden estimate or any
other aspect of this collection of information, including suggestions
for reducing this burden to: Department of Agriculture, Clearance
Officer, OIRM, Room 404-W, Washington, DC 20250; and to the Office of
Management and Budget, Paperwork Reduction Project (OMB 0575-0139),
Washington, DC 20503.
07 CFR 1940.950 PART 1941 -- OPERATING LOANS
07 CFR 1940.950 Subpart A -- Operating Loan Policies, Procedures, and
Authorizations
Sec.
1941.1 Introduction.
1941.2 Objectives.
1941.3 Management assistance.
1941.4 Definitions.
1941.5 (Reserved)
1941.6 Credit elsewhere.
1941.7 -- 1941.9 (Reserved)
1941.10 Veterans' preference.
1941.11 Applications.
1941.12 Eligibility requirements.
1941.13 Rural youth.
1941.14 Annual production loans to delinquent borrowers.
1941.15 (Reserved)
1941.16 Loan purpose.
1941.17 Loan limitations.
1941.18 Rates and terms.
1941.19 Security.
1941.20 -- 1941.22 (Reserved)
1941.23 General provisions.
1941.24 (Reserved)
1941.25 Appraisals.
1941.26 -- 1941.28 (Reserved)
1941.29 Relationship between FmHA loans, insured and guaranteed.
1941.30 Committee certification.
1941.31 (Reserved)
1941.32 Loan docket processing.
1941.33 Loan approval or disapproval.
1941.34 (Reserved)
1941.35 Actions after loan approval.
1941.36 -- 1941.37 (Reserved)
1941.38 Loan closing.
1941.39 -- 1941.41 (Reserved)
1941.42 Loan servicing.
1941.43 -- 1941.49 (Reserved)
1941.50 State Supplements.
Exhibit A -- Processing Guide -- Insured Operating Loans
Exhibit B -- (Reserved)
Exhibit C -- Controlled Substance
07 CFR 1940.950 Subpart B -- Closing Loans Secured by Chattels
1941.51 Purpose.
1941.52 -- 1941.53 (Reserved)
1941.54 Promissory note.
1941.55 -- 1941.56 (Reserved)
1941.57 Security instruments.
1941.58 -- 1941.59 (Reserved)
1941.60 Purchase money security interest.
1941.61 -- 1941.62 (Reserved)
1941.63 Lien search.
1941.64 -- 1941.66 (Reserved)
1941.67 Additional requirements for perfecting security interests.
1941.68 -- 1941.70 (Reserved)
1941.71 Fees.
1941.72 -- 1941.74 (Reserved)
1941.75 Retention and use of security agreements.
1941.76 -- 1941.78 (Reserved)
1941.79 Future advance and after-acquired property clauses.
1941.80 -- 1941.83 (Reserved)
1941.84 Title clearance and closing requirements.
1941.85 -- 1941.87 (Reserved)
1941.88 Insurance.
1941.89 -- 1941.91 (Reserved)
1941.92 Check delivery.
1941.93 (Reserved)
1941.94 Supervised bank accounts.
1941.95 (Reserved)
1941.96 Changes in use of loan funds.
Authority: 7 U.S.C. 1989; 5 U.S.C. 301; 7 CFR 2.23 and 2.70.
Source: 43 FR 55883, Nov. 29, 1978, unless otherwise noted.
07 CFR 1940.950 Subpart A -- Operating Loan Policies, Procedures, and
Authorizations
Source: 53 FR 35684, Sept. 14, 1988, unless otherwise notes.
07 CFR 1941.1 Introduction.
This subpart contains regulations for making initial and subsequent
insured Operating (OL) and Youth (OL-Y) loans. OL loans may be made to
eligible farmers and ranchers and farm cooperatives, private domestic
corporation, partnerships, and joint operations that will manage and
operate not larger than family farms. Youth loans may be made to rural
youth to conduct modest projects in connection with their participation
in 4-H, Future Farmers of America, and similar organizations. It is the
policy of Farmers Home Administration (FmHA) to make loans to any
qualified applicant without regard to race, color, religion, sex,
national origin, marital status, age or physical/mental handicap
provided the applicant can execute a legal contract. See Exhibit A of
Subpart A of Part 1943 of this chapter for making OL loans to entrymen
on unpatented public lands. FmHA forms are available in any FmHA
office.
07 CFR 1941.2 Objectives.
The basic objective of the OL loans program is to provide credit and
management assistance to farmers and ranchers to become operators of
family-sized farms or continue such operations when credit is not
available elsewhere. FmHA assistance enables family-farm operators to
use their land, labor and other resources and to improve their living
and financial conditions so that they can obtain credit elsewhere. The
objective of the OL loan program for rural youth is to provide credit
for rural youths to establish and operate income-producing projects of
modest size in connection with their participation in 4-H clubs, Future
Farmers of America, and similar organizations.
07 CFR 1941.3 Management assistance.
As provided in Subpart B of Part 1924 of this chapter, management
assistance will be provided to all borrowers to the extent necessary to
achieve the objectives of the loan.
07 CFR 1941.4 Definitions.
As used in this subpart, the following definitions apply:
Approval official. A field official who has been delegated loan and
grant approval authorities within applicable loan programs, subject to
the dollar limitation contained in Tables available in any FmHA office.
Z
Borrower. When a loan is made to an individual, the individual is the
borrower. When a loan is made to an entity, the corporation,
cooperative, partnership or joint operation is the borrower.
Cooperative. An entity which has farming as its purpose and whose
members have agreed to share the profits of the farming enterprise. The
entity must be recognized as a farm cooperative by the laws of the
State(s) in which the entity will operate a farm.
Corporation. For the purpose of this regulation, a private domestic
corporation created and organized under the laws of the State(s) in
which the entity will operate a farm.
Family farm. A farm which:
(a) Produces agricultural commodities for sale in sufficient
quantities so that it is recognized in the community as a farm rather
than a rural residence.
(b) Provides enough agricultural income by itself, including rented
land, or together with any other dependable income, to enable the
borrower to:
(1) Pay necessary family and operating expenses;
(2) Maintain essential chattel and real property; and
(3) Pay debts.
(c) Is managed by:
(1) The borrower when a loan is made to an individual.
(2) The members, stockholders, partners, or joint operators
responsible for operating the farm when a loan is made to a cooperative,
corporation, partnership, or joint operation.
(d) Has a substantial amount of the labor requirements for the farm
and nonfarm enterprise provided by:
(1) The borrower and family members for a loan made to an individual.
(2) The members, stockholders, partners, or joint operators
responsible for operating the farm, along with the families of these
individuals, for a loan made to a cooperative, corporation, partnership,
or joint operation.
(e) May use a reasonable amount of full-tme hired labor and seasonal
labor during peakload periods.
Farm. A tract or tracts of land, improvements, and other
appurtenances considered to be farm property which is used or will be
used in the production of crops or livestock, including the production
of fish under controlled conditions, for sale in sufficient quantities
so that the property is recognized as a farm rather than a rural
residence. The term ''farm'' also includes any such land and
improvements and facilities used in a nonfarm enterprise. It may also
include a residence which, although physically separate from the farm
acreage, is ordinarily treated as part of the farm in the local
community.
Feasible plan. A feasible plan is a plan based upon the
applicant/borrower's records that show the farming operation's actual
production and expenses. These records will be used along with
realistic anticipated prices, including farm program payments when
available, to determine that the income from the farm operation, along
with any other reliable off farm income, will provide the income
necessary for an applicant/borrower to at least be able to:
(a) Pay all operating expenses and all taxes which are due during the
projected farm budget period;
(b) Meet necessary payments on all debts, except as provided in
1941.14 of this subpart, for annual production loans or subordinations
made to delinquent borrowers; and
(c) Provide living expenses for the family members of an individual
borrower or a wage for the farm operator in the case of a cooperative,
corporation, partnership, or joint operation borrower which is in
accordance with the essential family needs. Family members include the
individual borrower of farm operator in the case of an entity, and the
immediate members of the family who reside in the same household.
Fish. Any aquatic gilled animal commonly known as ''fish,'' as well
as mollusks or crustaceans (or other invertebrates) produced under
controlled conditions (that is, feeding, tending, harvesting, and such
other activities as are necessary to properly raise and market the
products) in ponds, lakes, streams, or similar holding areas.
Joint operation. Individuals who have agreed to operate a farm or
farms together as a business unit. The real and personal property is
owned separately or jointly by the individuals. A husband and wife who
want to apply for a loan together will be considered a joint operation.
Limited resources applicant. An applicant who is a farmer or rancher
and is an operator of a small or family farm (a small farm is a marginal
family farm), including a new operator, with a low income who
demonstrates a need to maximize farm or ranch income. A limited
resource applicant must meet the eligibility requirements for a farm
ownership or operating loan but, due to low income, cannot pay the
regular interest rate on such loans. Due to the complex nature of the
problems facing this applicant, special help will be needed and more
supervisory assistance will be required to assure reasonable prospects
for success. The applicant may face such problems as underdeveloped
managerial ability, limited eduction, low-producing farm due to lack of
development or improved production practices and other related factors.
The applicant will not have nor expect to obtain, without the special
help and a low-interest loan, the income needed to have a reasonable
standard of living when compared to other residents of the community.
Majority interest. Any individual or combination of individuals
owning more than a 50 percent interest in a cooperative, corporation,
joint operation, or partnership.
Nonfarm enterprise. Any nonfarm business enterprise, including
recreation, which is closely associated with the farm operation and
located on or adjacent to the farm and provides income to supplement
farm income. The business must provide goods or services for which
there is a need and a reasonably reliable market. This may include, but
is not limited to, such enterprises as raising earthworms, exotic birds,
tropical fish, dogs, and horses for nonfarm purposes, welding shops,
road stands, boarding horses and riding stables.
Partnership. An entity consisting of individuals who have agreed to
operate a farm. This entity must be recognized as a partnership by the
laws of the State(s) in which the partnership will operate a farm and
must be authorized to own both real and personal property and to incur
debt in its own name.
Recreation enterprise. An outdoor enterprise which generates income
and supplements or supplants farm or ranch income.
Related by blood or marriage. As used in this subpart, individuals
who are connected to one another as husband, wife, parent, child,
brother, or sister.
Rural youth. A person who has reached the age of 10 but has not
reached the age of 21 and does not reside in any city or town with a
population of more than 10,000 inhabitants.
Rural youth projects. Modest projects initiated, developed, and
carried out by rural youths participating in 4-H or Future Farmers of
America, or similar organizations. Projects must produce enough income
to meet expenses and debt repayment.
Security. Property of any kind subject to a real or personal property
lien. Any references to collateral or security property shall be
considered a reference to the term ''security.''
State or United States. The United States itself, any of the fifty
States, the Commonwealth of Puerto Rico, the Virgin Islands of the
United States, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
1941.5 (Reserved)
07 CFR 1941.6 Credit elsewhere.
The applicant shall certify in writing on the appropriate forms, and
the County Supervisor shall verify and document, that adequate credit is
not available, with or without a guarantee or subordination, to finance
the applicant's actual needs at reasonable rates and terms, taking into
consideration prevailing private and cooperative rates and terms in the
community in or near where the applicant resides for loans for similar
purposes and periods of time.
(a) If the County Supervisor receives letters or other written
evidence from a lender(s) indicating that the applicant is unable to
obtain satisfactory credit, this will be included in the loan docket.
(b) If the applicant cannot qualify for the needed credit from the
lender(s) contacted, but one or more of them has indicated they would
provide credit with an FmHA guarantee, or the County Supervisor
determines that the applicant can obtain a guaranteed loan, the
applicant will be advised to file an application with that lender(s) so
that a guaranteed OL request can be processed by the lender(s) for
consideration by FmHA.
(c) Property and interest in property owned and income received by an
individual applicant; a cooperative and its members, as individuals; a
corporation and its stockholders, as individuals; a partnership and its
partners, as individuals; and a joint operation and its joint operator
as individuals will be considered and used by an applicant in obtaining
credit from other sources.
(d) Applicants and borrowers will be encouraged to supplement
operating loans with credit from other credit sources to the extent
economically feasible and in accordance with sound financial management
practices.
1941.7 -- 1941.10 (Reserved)
07 CFR 1941.11 Applications.
Applications will be received and processed as provided in Subpart A
of Part 1910 of this chapter, with consideration given to the
requirements in Exhibit M of Subpart G of Part 1940 of this chapter.
07 CFR 1941.12 Eligibility requirements.
In accordance with the Food Security Act of 1985 (Pub. L. 99-198),
after December 23, 1985, if an individual or any member, stockholder,
partner, or joint operator of an entity is convicted under Federal or
State law of planting, cultivating, growing, producing, harvesting, or
storing a controlled substance (see 21 CFR Part 1308, which is Exhibit C
of this subpart and is available in any FmHA office, for the definition
of ''controlled substance'') prior to loan approval in any crop year,
the individual or entity shall be ineligible for a loan for the crop
year in which the individual or member, stockholder, partner, or joint
operator of the entity was convicted and the four succeeding crop years.
Applicants will attest on Form FmHA 410-1, ''Application for FmHA
Services,'' that as individuals or that its members, if an entity, have
not been convicted of such crime after December 23, 1985. A decision to
reject an application for this reason is not appealable. In addition,
the following requirements must be met:
(a) An individual must:
(1) Be a citizen of the United States (see 1941.4 of this subpart
for the definition of ''United States'') or an alien lawfully admitted
to the United States for permanent residence under the Immigration and
Nationality Act. Aliens must provide Forms I-151 or I-551, ''Alien
Registration Receipt Card.'' Indefinite parolees are not eligible. If
the authenticity of the information shown on the alien's identification
document is questioned, the County Supervisor may request the
Immigration and Naturalization Service (INS) to verify the information
appearing on the alien's identification card by completing INS Form
G-641, ''Application for Verification of Information from Immigration
and Naturalization Records,'' obtainable from the nearest INS District.
(See Exhibit B of Subpart A of Part 1944 of this chapter.) Mail the
completed form to INS. The payment of a service fee by FmHA to INS is
waived by inserting in the upper right hand corner of INS Form G-641,
the following: ''INTERAGENCY LAW ENFORCEMENT REQUEST''.
(2) Possess the legal capacity to incur the obligations of the loan.
(3) Except for youth loans, have sufficient applicable educational
and/or on the job training or farming experience in managing and
operating a farm or ranch (1 year's complete production and marketing
cycle within the last 5 years) which indicates the managerial ability
necessary to assure reasonable prospects of success in the proposed plan
of operation.
(4) Have the character (emphasizing credit history, past record of
debt repayment and reliability) and industry to carry out the proposed
operation. Past record of debt repayment will not be cause for a
determination that the applicant/borrower is not eligible if an honest
attempt has been made to meet the payment(s).
(5) Honestly endeavor to carry out the applicant's/borrower's
undertakings and obligations. This would include, but is not limited
to, providing current, complete and truthful information when applying
for assistance and making every reasonable effort to meet the conditions
and terms of the proposed loan.
(6) Be unable to obtain sufficient credit elsewhere to finance actual
needs at reasonable rates and terms, taking into consideration
prevailing private and cooperative rates and terms in the community in
or near which the applicant resides for loans for similar purposes and
periods of time.
(7) Except for youth loans, be the owner-operator or tenant-operator
of not larger than a family farm after the loan is closed. In the case
of a limited resource applicant see 1941.4 of this subpart.
(b) A cooperative, corporation, partnership, or joint operation must:
(1) Be unable to obtain sufficient credit elsewhere to finance actual
needs at reasonable rates and terms, taking into account prevailing
private and cooperative rates and terms in or near the community for
loans for similar purposes and periods of time. This applies to the
entity and all of its members, stockholders, partners, or joint
operators, as individuals.
(2) Be controlled by farmers or ranchers engaged primarily and
directly in farming or ranching in the United States, after the loan is
made.
(3) Be the owner-operator or tenant-operator of not larger than a
family farm after the loan is closed.
(4) Consist of members, stockholders, partners or joint operators who
are individuals and not cooperative(s), corporation(s), partnership(s),
or joint operation(s).
(5) If the members, stockholders, partners, or joint operators
holding a majority interest are related by blood or marriage, they must
meet the following requirements:
(i) They must be citizens of the United States (see 1941.4 of this
subpart for the definition of ''United States'') or aliens lawfully
admitted to the United States for permanent residence under the
Immigration and Nationality Act. Aliens must provide Forms I-151 or
I-551, ''Alien Registration Receipt Card.'' Indefinite parolees are not
eligible. If the authenticity of the information shown on the alien's
identification document is questioned, the County Supervisor may request
the Immigration and Naturalization Service (INS) to verify the
information appearing on the alien's identification card by completing
INS Form G-641, ''Application for Verification of Information from
Immigration and Naturalization Records,'' obtainable from the nearest
INS District. (See Exhibit B of Subpart A of Part 1944 of this
chapter.) Mail the completed form to INS. The payment of a service fee
by FmHA to INS is waived by inserting in the upper right hand corner of
the INS Form G-641, the following: ''INTERAGENCY LAW ENFORCEMENT
REQUEST''.
(ii) They must have sufficient applicable educational and/or on the
job training or farming experience in managing and operating a farm or
ranch (1 year's complete production and marketing cycle within the last
5 years) which indicates the managerial ability necessary to assure
reasonable prospects of success in the proposed plan of operation.
(iii) They and the entity itself must have the character (emphasizing
credit history, past record of debt repayment and reliability) and
industry to carry out the proposed operation. Past record of debt
repayment will not be cause for a determination that the
applicant/borrower is not eligible if an honest attempt has been made to
meet the payment(s).
(iv) They and the entity itself will honestly endeavor to carry out
the applicant's/borrower's undertakings and obligations. This would
include, but is not limited to, providing current, complete and truthful
information when applying for assistance and making every reasonable
effort to meet the conditions and terms of the proposed loan.
(v) At least one member, stockholder, partner, or joint operator must
operate the family farm.
(vi) The entity must operate the farm and be authorized to do so in
the State(s) in which the farm is located.
(6) If the members, stockholders, partners, or joint operators
holding a majority interest are not related by blood or marriage:
(i) The requirements of paragraphs (b)(5) (i) through (iv) and (vi)
of this section must be met.
(ii) They and the entity itself must operate the family farm.
(7) If applying as a limited resource applicant, as defined in
1941.4 of this subpart:
(i) The requirements of paragraphs (b)(5) (i) through (iv) and (vi)
of this section must be met by the entity and all its members,
stockholders, partners, or joint operators.
(ii) The entity and all the members, stockholders, partners, or joint
operators must own or operate a small or family farm and at least one
member, stockholder, partner, or joint operator must operate the farm.
(8) If each member's, partner's, stockholder's, or joint operator's
ownership interest does not exceed the family farm definition limits,
their collective interests can exceed the family farm definition limits
only if:
(i) all of the members of the entity are related by blood or
marriage,
(ii) all of the members are or will be operators of the entity, and
(iii) the majority interest holders of the entity meet the
requirements of paragraphs (b)(5) (i) through (iv) and (vi) of this
section.
(53 FR 35684, Sept. 14, 1988, as amended at 55 FR 21527, May 25,
1990; 56 FR 3971, Feb. 1, 1991)
07 CFR 1941.13 Rural youth.
If otherwise eligible, a rural youth who applies for an OL loan must
be recommended by a project advisor such as a 4-H club advisor,
vocational teacher, home economics teacher, county extension agent, or
other organizational sponsor or advisor. In addition, a youth who has
not reached the age of majority under State law must obtain a written
recommendation from a parent or guardian. All recommendations will be
filed with the application in the borrower's case file.
07 CFR 1941.14 Annual production loans to delinquent borrowers.
Delinquent borrowers who otherwise meet the eligibility criteria in
1941.12 of this subpart, and whose accounts have not been accelerated by
FmHA, and who cannot be assisted after considering consolidation,
rescheduling and/or reamortizing at regular interest rates and
consolidation, rescheduling and/or reamortizing at limited resource
rates and deferral of principal and interest payments, including
distressed Farmer Program loans for softwood timber production in
applicable areas, all in accordance with Subpart S of Part 1951 of this
chapter, will automatically be considered for annual production loans
under this section or subordinations under Subpart A of Part 1962 and
Subpart A of Part 1965 of this chapter, when the conditions in paragraph
(a) of this section are met.
(a) Such delinquent borrowers must apply for assistance and must meet
all of the following conditions before their loan is approved:
(1) The borrower has acted in good faith by demonstrating sincerity
and honesty in meeting all agreements and promises made with and to the
FmHA.
(2) The borrower has been unable to pay accounts as scheduled. The
following are examples, but eligibility is not limited to these
examples:
(i) Reduction in essential income from a non-farm job, e.g.,
unemployment or under employment of the borrower-operator or spouse,
caused by circumstances beyond the borrower's control; or
(ii) Reduction in income caused by illness, injury or death of an
individual borrower; or, in the case of an entity borrower, the
stockholder, member, joint operator or partner who operates the farm;
or
(iii) Reduction in income caused by natural disaster(s), an outbreak
of uncontrollable disease, and/or uncontrollable insect damage, which
caused severe loss of agricultural production that reduced the repayment
ability of the borrower to the degree that scheduled payments could not
be met.
(3) The borrower has applied the improvements and key management
practices spelled out in Item D of Form FmHA 431-2, ''Farm and Home
Plan,'' or in any other acceptable farm plan of operation.
(4) The borrower has properly maintained chattel and real estate
security, and properly accounted for the sale of security, including
crops, livestock and livestock production.
(5) A farm plan of operation projecting realistic production,
commodity prices, family living expenses, and operating expenses, is
developed; the proposed cash flow projection shows that all operating
expenses, reasonable family living expenses, and principal and accruing
interest on all production loans and supplied credit for the production
and marketing cycle can be repaid from the planned income. Borrowers
will not be required to show that they can pay any principal or interest
on other debts outstanding.
(6) Nondisturbance agreements will be obtained from other creditors,
as necessary.
(7) If FmHA has completed the process of considering the borrower for
debt restructuring, pursuant to Subpart S of Part 1951 of this chapter,
and the borrower has received the benefits of conservation easement or
debt write-down, bringing the account current, the borrower may be
considered for an annual production loan or subordination in the future,
if the account again becomes delinquent due to circumstances beyond the
borrower's control. Those borrowers for whom FmHA has completed the
process of consideration for debt restructuring (including any
administrative appeal and further review), who are determined not
eligible for conservation easement or debt write-down benefits, and
whose accounts have been accelerated, will not be eligible for
assistance under this section. If FmHA has not completed the process
(including any administrative appeal and further review) of considering
the borrower for debt restructuring, the borrower may be considered for
assistance under this section.
(8) The Food, Agriculture, Conservation, and Trade Act of 1990 (Pub.
L. 101-624), dated November 28, 1990, requires FmHA to revise its
notices on loan service programs for delinquent borrowers to include
additional servicing options and extend various timeframes. Therefore,
all delinquent borrowers who cannot be considered for all servicing
options until FmHA implements these provisions of the Act, will be
considered for an annual production loan or a subordination under this
section.
(b) Loan funds will be used to pay essential annual operating and
family living expenses only, as defined in 1962.17 (b)(2)(ii)(A) of
subpart A of part 1962 of this chapter.
(c) If the borrower is eligible for assistance under this section,
follow the procedures in 1941.33(b) of this subpart.
(d) If the borrower is not eligible for assistance under this
section, the County Supervisor will so inform the borrower in accordance
with 1941.33(c) of this subpart.
(e) Form FmHA 1941-1, ''Criteria for Continuing Assistance to
Delinquent Borrowers,'' is used to document the basis for continued
assistance. The County Supervisor will date and sign the form and place
it in position number three of the case file. At loan closing, or at
the time of approval of a subordination, the County Supervisor will
advise borrowers, by FmHA Form Letter 1941-A-1, ''Advice to Borrower of
Financial Condition,'' of their serious financial condition; the
importance of carrying out the plan, as developed, for the production
and marketing cycle being financed; and that FmHA is continuing to
provide assistance for their operations only on a year-to-year basis.
Borrowers will be further advised that their farming operations will be
evaluated at the end of the production season and a decision will be
made, at that time, whether FmHA will consider assistance for another
year to continue their operations. The County Supervisor will answer
any question(s) a borrower has concerning the letter and explain its
purpose. FmHA Form Letter 1941-A-1 will be signed and dated by the
County Supervisor and the borrower(s) at loan closing or at the time of
approval of a subordination. A copy will be given to the borrower, and
the original will be retained in the case file to acknowledge the
borrower's receipt of the letter.
(53 FR 35684, Sept. 14, 1988, as amended at 54 FR 11366, Mar. 20,
1989; 55 FR 21527, May 25, 1990; 56 FR 6796, Feb. 20, 1991)
1941.15 (Reserved)
07 CFR 1941.16 Loan purposes.
Except for entity borrowers, 10 percent or $5,000, whichever is less,
of any OL loan will be placed in a non-supervised bank account of the
borrower's choosing at loan closing. These funds will be used at the
borrower's discretion for family living needs or other purposes agreed
upon in the farm plan(s) of operation. Loans may be made for farm,
forestry, recreation, and nonfarm enterprises or modest rural youth
projects for the following purposes, when such purposes are essential to
the operation:
(a) Purchase of farm machinery and equipment, livestock, poultry, fur
bearing and other farm animals, fish, poultry, bees, tools, and
inventories, or to purchase an individual's undivided interest in such
items.
(b) Payment of annual operating expenses.
(c) Payment of family living expenses.
(d) Refinancing debts incurred for any authorized operating loan
purpose other than FmHA debts.
(e) Purchase of membership and stock in a farm purchasing, marketing,
or service-type cooperative association, including a grazing
association.
(f) Purchase and repair of essential home equipment.
(g) Purchase of a milk base or milk quota with or without cows.
(h) Not more than $15,000 in a fiscal year for real estate
improvements or repairs. The following determinations must be made
before an OL loan is made for real estate improvements:
(1) OL loans will not be needed year after year for this purpose.
(2) The applicant owns the farm or has tenure arrangements, including
a compensation agreement, sufficient to obtain a reasonable return on
the investment.
(i) Payments to a creditor. In any one year, OL funds used to make
these payments cannot exceed 20 percent of the appraised market value of
the essential farm and nonfarm equipment and livestock under a prior
lien to that creditor, or 20 percent of the amount owed to such
creditor, whichever is less.
(j) Purchase of a franchise, contract, or privilege when necessary to
the operation of the planned enterprise.
(k) Partial payment for the purchase and construction of crop storage
and drying facilities when the Commodity Credit Corporation, through the
Agricultural Stabilization and Conservation Service (ASCS), is providing
a part of the credit under the Commodity Credit Corporation Farm Storage
and Drying Equipment Loan Program.
(l) Payment of costs for training farmer program borrowers,
particularly limited resource borrowers, in recordkeeping for farming
and ranching operations. The loan approval official must determine that
the training will meet the objectives of the loan program, assist the
borrower in his/her recordkeeping and management responsibilities, and
that costs are reasonable.
(m) To plant softwood timber on marginal land which was previously
used to produce an agricuultural commodity or as pasture.
07 CFR 1941.17 Loan limitations.
An OL loan will not be approved:
(a) If the total outstanding insured OL principal balance, including
the new loan, owed by the applicant will exceed $200,000 at loan
closing.
(b) If the total outstanding youth loan principal balance will exceed
$5,000 at loan closing.
(c) For the purchase of real estate, making principal payments on
real estate, or refinancing of any debts incurred for the purchase of
real estate.
(d) For any purpose that will contribute to excessive erosion of
highly erodible land or to convert wetlands to produce an agricultural
commodity as further explained in Exhibit M of Subpart G of Part 1940 of
this chapter. Refer to Subpart LL of Part 2000 of this chapter,
''Memorandum of Understanding Between FmHA and the U.S. Fish and
Wildlife Service,'' for assistance in implementation.
07 CFR 1941.18 Rates and terms.
(a) Rates. Upon request of the applicant, the interest rate charged
by FmHA will be the lower of the interest rates in effect at the time of
loan approval or loan closing. If an applicant does not indicate a
choice, the loan will be closed at the interest rate in effect at the
time of loan approval. Interest rates are specified in Exhibit B of
FmHA Instruction 440.1 (available in any FmHA office) for the type of
assistance involved. A lower rate may be established for a limited
resource applicant subject to the following:
(1) An applicant will receive the lower rate provided:
(i) The applicant meets the conditions of the definition for a
limited resource applicant set forth in 1941.4 of this subpart.
(ii) The Farm and Home Plan and/or Nonagricultural Enterprise
Analysis, when appropriate, indicates that installments at the higher
rate, along with other debts, cannot be paid during the period of the
plan.
(2) A borrower with Limited Resource interest rates will be reviewed
each year at the time the analysis is conducted (see 1924.60 of Subpart
B of Part 1924 of this chapter) and at any time a servicing action such
as consolidation, rescheduling or deferral is taken to determine what
interest rate should be charged. The rate may be increased in
increments of whole numbers until it reaches the current regular
interest rate for the loan at the time of the rate increase. (See
1951.25 of Subpart A of Part 1951 of this chapter.)
(b) Terms. (1) The final maturity date for each loan cannot exceed 7
years from the date of the promissory note. The first installment must
be scheduled for payment within 18 months of loan closing.
(2) Loan funds used to pay annual operating expenses or bills
incurred for such purposes for the crop year being financed will
normally be scheduled for payment within 12 months, but no later than 18
months, from the date the loan is closed when marketing plans extend
beyond 12 months. When an OL loan for annual production is scheduled
for repayment in one installment, the installment must fall due no later
than 18 months from the date of loan closing. Individual marketing
circumstance may warrant repayment schedules which are longer than 18
months. Such factors as establishing a new enterprise, developing a
farm, purchasing feed while feed crops are being established, marketing
plans, or during recovery from a disaster or economic reverses, can be
considered as reasons for a longer repayment period on loans for annual
operating purposes. When longer than normal repayment terms are used
for annual operating purposes, crops and/or livestock produced for sale
will not be considered sufficient security. The County Supervisor may
use Form FmHA 440-9, ''Supplementary Payment Agreement,'' for borrowers
who receive substantial income from which payment is to be made before
their installment due date.
(3) Advances for purposes other than annual operating expenses will
be rescheduled for payment over the minimum period necessary considering
the applicant's ability to pay and the useful life of the security, but
not in excess of 7 years.
(4) When conditions warrant, installment scheduled in accordance with
paragraph (b)(2) of this section may include equal, unequal, or balloon
installments. In each case warranting balloon installments, there must
be adequate collateral for the loan at the time the balloon payment is
due. Circumstances which warrant balloon installments are factors such
as establishing a new enterprise, developing a farm, purchasing feed
while crops are being established or during recovery from a disaster, or
economic reverses. In no case will annual crops be used as the sole
collateral securing a balloon installment. A loan with a balloon
installment must be adequately secured by hard security, which may
include foundation stock, farm equipment and/or real estate. The amount
of the balloon installment should not exceed that which the borrower
could reasonably expect to pay during a maximum additional 7-year
period.
(53 FR 35684, Sept. 14, 1988, as amended at 55 FR 21527, May 25,
1990)
07 CFR 1941.19 Security.
Security must be adequate to assure repayment of the loan. The loan
must be secured by a first lien on all property or products acquired,
produced, or refinanced with loan funds and by any additional security
needed. Such additional security may consist of the best lien
obtainable on chattels, real estate or other property. In unusual
cases, the loan approval official may require a cosigner as defined in
1910.3(d) of Subpart A of Part 1910 of this chapter or a pledge of
security from someone other than the borrower(s). Generally, a pledge
of security is preferable to a cosigner. Loans may be subordinated to
another lender in accordance with 1962.30 of Subpart A of Part 1962 of
this chapter when the subordination will help the borrower to accomplish
the objectives of the loan.
(a) Exceptions. (1) A lien will not be taken on property that cannot
be made subject to a valid lien.
(2) A lien will not be taken on subsistence livestock, household
goods, and small tools and small equipment, such as hand tools, power
lawn mowers, and other items of like type not needed for security
purposes.
(3) When title to a livestock or crop enterprise is held by a
contractor under a written contract or the enterprise is to be managed
by the applicant under a share lease or share agreement, an assignment
of all or part of the applicant's share of the income will be taken. A
form approved by OGC will be used to obtain the assignment.
(4) A lien will not be taken on timber or the marginal land for a
loan for planting softwood timber trees on marginal land in conjunction
with a softwood timber (ST) loan.
(b) Real estate. The loan approval official may require a lien on
all or part of the applicant's real estate as security. When the amount
of the loan exceeds the equity in chattel security by more than $10,000,
the best lien obtainable will be taken on real estate having sufficient
collateral equity to fully secure the loan(s) being made. Different
lien positions on real estate are considered separate and identifiable
collateral. Real estate security may be taken for a portion of a loan
when a separate advance and promissory note evidences such portion.
Form FmHA 1927-1 (State), ''Real Estate Mortgage for XXX,'' will be used
to obtain such a lien, unless a State supplement requires a different
form.
(c) Assignment on income in Uniform Commercial Code (UCC) States.
The County Supervisor will determine whether or not such an assignment
will be taken. In UCC States, an assignment of livestock or crop income
constitutes a security agreement on income. The share lease, share
agreement, or contract will be described specifically as ''Contract
Rights'' or ''Contract Rights in Livestock or Crops,'' (or as
''Accounts'' or ''Accounts in Livestock or Crops,'' if required by a
State supplement), and so forth, in paragraph 1(b) of the financing
statement.
(d) Insurance. See 1941.88 of Subpart B of this part for insurance
requirements.
(e) Special security requirements. When OL loans are made to
eligible entities that consist of members, stockholders, partners or
joint operators who are presently indebted for an OL loan(s) as
individual(s), or when OL loans are made to eligible individuals who are
members, stockholders, partners, or joint operators of an entity which
is presently indebted for an OL loan(s), security must consist of:
(1) Chattel and/or real estate security that is separate and
identifiable from the security pledged to FmHA for any other farmer
programs insured or guaranteed loan(s).
(2) Different lien positions on real estate are considered separate
and identifiable collateral.
(3) The outstanding amount of loans made may not exceed the value of
the collateral used.
(f) Income from products and program payments. Assignments, consents
and security interests relating to income from products and program
payments will be used when necessary to protect FmHA's interest as
follows:
(1) Form FmHA 441-8, ''Assignment of Proceeds from the Sale of
Agricultural Products,'' for products or income in which FmHA does not
have a security interest under UCC. Other forms approved by OGC may be
used when this form is not adequate.
(2) Form FmHA 441-8, ''Consent to Payment of Proceeds from Sale of
Farm Products,'' for products or income, except dairy products in which
FmHA has a security interest under UCC.
(3) Form FmHA 441-25, ''Assignment of Proceeds from the Sale of Dairy
Products and Release of Security Interest,'' for dairy products in which
FmHA has a security interest under UCC.
(4) Forms provided by ASCS will be used for assignment of incentive
and other agricultural program payments.
(5) A security interest on income from products and ASCS incentive
and other agricultural program payments.
(g) Fixtures. A security interest may be taken in fixtures. An item
is generally considered a fixture if it is attached to a building or
other structure or to land in such a way that it cannot be removed
without defacing or dismantling the structure, or substantially damaging
the item itself. When determined necessary by OGC, a State supplement
will be issued to further explain the taking of a security interest in
fixtures.
(1) A security interest taken in goods before they become fixtures
has priority over real estate interest holders.
(2) A security interest taken in goods after they become fixtures is
valid against all persons subsequently acquiring an interest in the real
estate. However, it is not valid against persons who had an interest in
the real estate when the goods became fixtures, unless they execute Form
FmHA 440-26, ''Consent and Subordination Agreement''.
(h) Milkbase and grazing permits. The advice of OGC will be obtained
as to how to perfect a security interest when these items are financed
or taken as security.
(i) Stock in cooperative associations. Loans only for the
acquisition of memberships or the purchase of stock in cooperative
associations may be made on the basis of the borrower's promissory note
without taking security except as follows:
(1) An assignment, pledge, or other security interest in stock or
other evidence of membership will be obtained, provided the security
interest has value to FmHA. A security interest also may be taken in
dividends to be paid on stock, memberships, or patronage, or in
undivided profits and other retainages. The security interest will be
in the form of an assignment, pledge, or other instrument and will be
taken on forms and in the manner approved by the OGC. Stock
certificates and similar collateral will be kept in the County Office.
A notation will be made on Form FmHA 1905-1, ''Management System Card --
Individual,'' showing that such security has been retained.
(2) In individual cases, loan approval officials may require a lien
on crops or chattels as security for a loan made for the acquisition of
a membership or stock if they determine that such action is necessary to
protect the FmHA interest.
(53 FR 35684, Sept. 14, 1988, as amended at 54 FR 47959, Nov. 20,
1989; 56 FR 67480, Dec. 31, 1991)
Effective Date Note: At 56 FR 67480, Dec. 31, 1991, 1941.19 was
amended by changing the reference at paragraph (b) from ''Form FmHA
427-1'' to ''Form FmHA 1927-1'', effective January 30, 1992.
1941.20 -- 1941.22 (Reserved)
07 CFR 1941.23 General provisions.
(a) Compliance requirements. The following will apply as
appropriate:
(1) Environmental assessments and statements. Subpart G of Part 1940
of this chapter should be referred to for these requirements. The State
Environmental Coordinator should be consulted for assistance in
preparing any required statements.
(2) Equal opportunity and nondiscrimination requirements. In
accordance with Title V of Pub. Law 93-495, the Equal Credit
Opportunity Act, FmHA will not discriminate against any applicant on the
basis of race, color, religion, sex, national origin, marital status,
age or physical/mental handicap provided the applicant can execute a
legal contract, with respect to any aspect of a credit transaction.
(3) National Historic Preservation Act of 1966. If a loan will
affect any district, site, building, structure, or object that has been
included in the National Register of Historic Places as maintained by
the Department of Interior in accordance with the National Historic
Preservation Act of 1966, or if the undertaking may affect properties
having scientific, prehistorical, historical, or archaeological
significance, the provisions of Subpart F of Part 1901 of this chapter
will apply.
(b) Other considerations. (1) FmHA employees will not guarantee
repayment of advances from other credit sources, either personally or on
behalf of applicants, borrowers, or FmHA.
(2) An applicant will be advised that compliance with all applicable
special laws and regulations is required.
(3) An applicant receiving a loan for a nonfarm enterprise will be
advised of the possibilities of incurring liability and encouraged to
obtain public liability and property damage insurance.
(4) An applicant must have acceptable tenure arrangements. Unless
the loan approval official determines otherwise, each applicant will
obtain a satisfactory written lease. A copy of the lease will be filed
in the County Office case file.
1941.24 (Reserved)
07 CFR 1941.25 Appraisals.
(a) Real estate appraisals will be completed by an FmHA employee or a
contractor authorized to make farm appraisals. Chattel and real estate
appraisals will be made on Form FmHA 440-21, ''Appraisal of Chattel
Property,'' FmHA 422-1, ''Appraisal Report (FARM TRACT),'' and FmHA
1922-11, ''Appraisal for Mineral Rights,'' respectively, to determine
market value and borrower equity in the following instances:
(1) A chattel appraisal is required when an initial loan is made and
chattels are required for security, and when refinancing chattel debt.
(2) A real estate appraisal is required when real estate is needed as
additional security or for refinancing.
(b) Appraiser qualifications. The contractor, when he/she is not the
appraiser, is responsible for substantiating the appraiser's
qualifications. The contractor will obtain FmHA's concurrence that the
appraiser has the necessary qualifications and experience before the
contractor will utilize the appraiser in any appraisal work. The
contractor/appraiser completing the report must meet at least one of the
following qualifications:
(1) Certification by a National or State appraisal society.
(2) If the contractor is not a certified appraiser and a certified
appraiser is not available, the contractor may qualify or may use other
qualified appraisers, if the contractor can establish that he/she or
that the appraiser meet the criteria for a certification in a National
or State appraisal society.
(3) The appraiser has recent, relevant, documented appraisal
experience or training, or other factors clearly establish the
appraiser's qualifications.
1941.26 -- 1941.28 (Reserved)
07 CFR 1941.29 Relationship between FmHA loans, insured and guaranteed.
(a) An eligible emergency loan (EM) applicant's total credit needs
will be satisfied under the EM loan authorities, to the extent possible,
before OL loan assistance is considered.
(b) An insured OL loan may be made to a guaranteed loan borrower
provided:
(1) The outstanding insured and guaranteed OL principal balance owed
by the loan applicant does not exceed $400,000 at loan closing.
(2) The outstanding combined insured and guaranteed OL principal
balance owed by the loan applicant, or owed by anyone who will sign the
note as co-signer evidencing personal liability, will not exceed the
authorized guaranteed OL loan limit providing the portion representing
the insured OL indebtedness does not exceed the insured loan limit. The
deciding factors are the type of entity and the personal liability of
the entity members. Individuals, who are members or stockholders of a
cooperative or corporation that is indebted for a $200,000 insured and
$200,000 guaranteed OL loan, can each borrow a $200,000 insured and
$200,000 guaranteed OL loan, or any combination of insured or guaranteed
OL loan funds that does not cause them to exceed the individual insured
or guaranteed OL loan limits, provided they conduct separate farming
operations as individuals and they have not signed as individuals giving
personal liability for the entity OL debt. Likewise, such entities
whose members or stockholders are individually indebted for the maximum
insured or guaranteed OL loan limit, may borrow the maximum insured or
guaranteed OL loan limits, providing none of the members or stockholders
are required to pledge personal liability for the entity debt. Partners
or joint operators of a partnership or joint operation, which is
indebted for a $200,000 insured and a $200,000 guaranteed OL loan,
cannot borrow additional OL funds as individuals in a separate operation
because they are each personally liable for the total entity debt.
Likewise, such entities, consisting of individuals who are indebted for
the maximum insured or guaranteed OL loan limits, are not eligible for
OL loan assistance.
(3) Chattel and/or real estate security must be separate and
identifiable from the security pledge to FmHA for a guaranteed loan.
Different lien positions on real estate are considered separate and
identifiable security.
(c) An insured OL loan will be made to refinance a guaranteed OL loan
when the following conditions are met:
(1) The circumstances resulting in the need to refinance were beyond
the borrower's control.
(2) Refinancing is in the best interest of the Government and the
borrower.
(3) The guaranteed OL loan must be completely paid off at the time
the insured OL loan is closed.
(d) New applicants and borrowers indebted to FmHA and/or an FmHA
guaranteed lender(s) for an EE loan may be considered for an OL loan(s)
provided their total outstanding principal indebtedness to FmHA and/or
the FmHA guaranteed lender(s) for the EE loan and any FO, SW, RL, and/or
OL loans will not exceed $650,000.
(53 FR 36240, Sept. 19, 1988, as amended at 55 FR 21527, May 25,
1990)
07 CFR 1941.30 Committee certification.
The County Committee will certify an applicant's eligibility on Form
FmHA 440-2, ''County Committee Certification or Recommendation,'' before
each loan is approved. In some instances the committee may want to
interview the applicant or see the farm before making any
recommendations.
07 CFR 1941.31 (Reserved)
07 CFR 1941.32 Loan docket processing.
See Exhibit A of this subpart for the loan docket processing guide.
07 CFR 1941.33 Loan approval or disapproval.
(a) Loan approval authority. Initial and subsequent loans may be
approved as authorized by Subpart A of Part 1901 of this chapter,
provided the total insured operating loan principal balance at loan
closing does not exceed $200,000.
(b) Loan approval action. (1) The loan approval official must
approve or disapprove applications within the deadlines set out in
1910.4 of Subpart A of Part 1910 of this chapter. The loan approval
official is responsible for reviewing the docket to determine whether
the proposed loan complies with established policies and all pertinent
regulations. When reviewing the docket and before approving the loan,
the loan approval official will determine that:
(i) The County Committee has certified the applicant eligible,
(ii) The Committee certification has been properly completed and
signed by at least two members of the Committee,
(iii) Funds are requested for authorized purposes,
(iv) The proposed loan is based on a feasible plan, or meets the
requirements set forth in 1941.14(a)(5) of this chapter for annual
production loans to delinquent borrowers. Planning forms other than
Form FmHA 431-2 may be used when they provide all the necessary
information.
(v) The security is adequate,
(vi) Necessary supervision is planned, and
(vii) All other pertinent requirements have been met or will be met.
(2) When approving the loan, the approval official will:
(i) Indicate on all copies of Form FmHA 1940-1, ''Request for
Obligation of Funds,'' any conditions required by FmHA regulations that
must be met for loan closing;
(ii) Specify any special security requirements;
(iii) Indicate special conditions or agreements needed with prior
lienholders when appropriate;
(iv) Indicate that approval is subject to satisfactory title evidence
when required, if such evidence has not been obtained; and
(v) Send a signed copy of Form FmHA 1940-1 to the borrower on the
date of loan approval.
(c) Loan disapproval. The loan approval official must approve or
disapprove applications within 60 days after receiving a complete
application, as set out in 1910.4 of Subpart A of Part 1910 of this
chapter. The following actions will be taken when a loan is
disapproved:
(1) The reasons for disapproval will be indicated on Form FmHA 1940-1
by the loan approval official. The reasons may be in a letter or the
running record if this from has not been completed. Suggestions of how
to remedy the disapprovals should be included.
(2) The County Supervisor will notify the applicant in writing of the
action taken, and include any suggestions that could result in favorable
action. When denial of an OL loan to a delinquent farmer program
borrower is involved, the County Supervisor must clearly explain why the
borrower is not eligible for the OL loan and why the borrower is not
eligible for an annual production loan as outlined in 1941.14 of this
chapter. The applicant will be notified, in writing, of the opportunity
to appeal (see Subpart B of Part 1900 of this chapter).
(3) Items furnished by the applicant during docket processing will be
returned.
(4) The County Supervisor will notify any other interested parties of
the disapproval.
(53 FR 35664, Sept. 14, 1988, as amended at 54 FR 11366, Mar. 20,
1989)
1941.34 (Reserved)
07 CFR 1941.35 Actions after loan approval.
(a) Requesting check. If the County Supervisor is reasonably certain
that the loan can be closed within 20 working days from the date of the
check, loan funds may be requested at the time of loan approval through
the State Office terminal system. If funds are not requested when the
loan is approved, advances in the amount needed will be requested
through the County Office computer terminal system. Each advance will
be limited to an amount which can be used promptly, usually within 60
days from the date of the check. Loan funds must be provided to the
applicant(s) within 15 days after loan approval, unless the applicant(s)
agrees to a longer period. If no funds are available within 15 days of
loan approval, funds will be provided to the applicant as soon as
possible and within 15 days after funds become available, unless the
applicant(s) agrees to a longer period. If a longer period is agreed
upon by the applicant(s), the same will be documented in the case file
by the County Supervisor.
(b) Cancellation of loan check and/or obligation. If, for any
reason, a loan check or obligation will be canceled, the County
Supervisor will notify the State Office and the Finance Office of loan
cancellation by using Form 1940-10, ''Cancellation of U.S. Treasury
Check and/or Obligation.'' If a check received in the County Office is
to be canceled, the check will be returned as prescribed in FmHA
Instruction 102.1 (available in any FmHA office). c) Cancellation of
advances. When an advance is to be cancelled the County Supervisor must
take the following actions:
(c) Cancellation of advances. When an advance is to be cancelled the
County Supervisor must take the following actions:
(1) Complete and distribute Form FmHA 1940-10.
(2) When necessary, prepare and excute a subsitute promissory note
reflecting the revised total of the loan and the revised repayment
schedule. When it is not necessary to obtain a substitute promissory
note, the County Supervisor will show on Form FmHA 440-57 the revised
amount of the loan and the revised repayment schedule.
(d) Increase or decrease in loan amount. If it becomes necessary to
increase or decrease the amount of the loan prior to closing, the County
Supervisor will request that all distributed docket forms be returned to
the County Office for reprocessing unless the change is minor and
replacement forms can be promptly completed and submitted.
(53 FR 35684, Sept. 14, 1988, as amended at 54 FR 39727, Sept. 28,
1989)
1941.36 -- 1941.37 (Reserved)
07 CFR 1941.38 Loan closing.
Operating loans will be closed in accordance with Subpart B of Part
1941 of this chapter.
07 CFR 1941.39 -- 1941.41 (Reserved)
07 CFR 1941.42 Loan servicing.
Loans will be serviced in accordance with Subpart A of Part 1962 of
this chapter and/or Subpart S of Part 1951 of this chapter.
07 CFR 1941.43 -- 1941.49 (Reserved)
07 CFR 1941.50 State supplements.
State supplements will be issued as necessary to implement this
subpart.
07 CFR 1941.50 Pt. 1941, Subpt. A, Exh. A
07 CFR 1941.50 Exhibits to Subpart A
07 CFR 1941.50 Exhibit A -- Processing Guide -- Insured Operating Loans
This Exhibit outlines the basic steps involved in processing a loan
application and identifies the FmHA forms which should be considered for
use at each step.
Consult the appropriate Forms Manual Insert (FMI) for instructions
for completion, distribution, and procedural references for each form.
Review applicant's proposed plan of operation in view of authorized
loan purposes and limitations on loans.
Begin running case record.
Provide applicant with FmHA forms to be completed and returned which
are needed to determine eligibility. Be sure applicant understands the
purposes of the forms and knows who must complete them.
Advise applicant of other information that must be given to FmHA.
When appropriate, have applicant contact other creditors as possible
credit sources for financing, or participating in the financing, of the
proposed operation.
The following FmHA forms will be made available to the applicant or
will be used by the County Supervisor. Forms designated with an ''x''
are always required and those designated with an ''*'' are to be used
when appropriate.
Notify applicant of planned visit and its purpose.
Evaluate the resources available to the applicant and determine
whether or not they adequately fulfill the requirements of the proposed
plan of operation.
Obtain information needed to complete required appraisals (chattel
and real estate).
Hold landlord-tenant meeting, if necessary, to reach an agreement on
the terms of the lease, resolve any problems, etc.; record in running
case record.
Determine security requirements and record in running case record.
The following FmHA forms will be used as appropriate:
Obtain all needed application forms, and other information from the
applicant; assist the applicant in completing these forms and in
obtaining needed information, as necessary.
Request copy of deed or other evidence of title, when needed.
Schedule meeting with county committee, review application and
determine eligibility.
Inform applicant of the results of committee action.
The following FmHA forms will be used as appropriate in accomplishing
the above actions:
Obtain all information from the applicant, prior lienholder(s),
landlord(s), etc., needed for the loan docket to be prepared.
Check to make sure all security requirements have been met or will be
met by loan closing.
Prepare a loan narrative, for running record.
The following FmHA forms will be completed and utilized as necessary
in preparing the loan docket for approval:
File financing statement or chattel mortgage, and obtain a lien
search.
Request preliminary title opinion when appropriate.
Record loan closing conditions in the running record.
Execute and distribute all forms necessary for loan approval.
Request needed legal services.
Arrange for loan closing by county office, escrow agent, designated
attorney, or other authorized loan closing agent; furnish loan closing
agent with appropriate instructions, forms, and other needed information
for loan closing.
The following FmHA forms will be used by the County Office in
addition to those forms listed under docket preparation which must be
executed by the borrower or other party:
(7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; sec. 10, Pub. L.
93-357, 88 Stat. 392; 7 CFR 2.23; 7 CFR 2.70)
(43 FR 55883, Nov. 29, 1978, as amended at 45 FR 16166, Mar. 13,
1980; 47 FR 21236, May 18, 1982; 48 FR 6, Jan. 3, 1983; 49 FR 3759,
Jan. 30, 1984; 50 FR 16055, Apr. 24, 1985; 50 FR 27415, July 3, 1985;
50 FR 32844, Aug. 15, 1985; 54 FR 28019, July 5, 1989; 54 FR 29330,
July 12, 1989; 54 FR 47959, Nov. 20, 1989; 55 FR 21527, May 25, 1990;
56 FR 67480, Dec. 31, 1991)
Effective Date Note: At 56 FR 67480, Dec. 31, 1991, exhibit A of
subpart A was amended by changing ''427-8'' to read ''1927-8'',
''427-9'' to read ''1927-9'', and by removing the line beginning with
''427-5'', effective January 30, 1992.
07 CFR 1941.50 Exhibit B -- (Reserved)
07 CFR 1941.50 Exhibit C -- Controlled Substance
(Note. -- Exhibit C referenced in this subpart is available in any
FmHA office.)
(53 FR 35684, Sept. 14, 1988)
07 CFR 1941.50 Subpart B -- Closing Loans Secured by Chattels
07 CFR 1941.51 Purpose.
This subpart prescribes Farmers Home Administration (FmHA) policies,
procedures, and authorizations for closing insured loans secured by
chattels. These loans are considered closed on the date the promissory
note is executed.
1941.52 -- 1941.53 (Reserved)
07 CFR 1941.54 Promissory Note.
(a) Executing the note. Form FmHA 1940-17, ''Promissory Note,'' will
be executed and dated following receipt of the loan check in the county
office and prior to the first withdrawal of loan funds from the
supervised bank account or delivery of the loan check to the borrower.
(b) Signatures -- (1) Individuals. Only the applicant is required to
sign the promissory note. Any other signatures needed to assure the
required security will be obtained as provided in State supplements. A
cosigner will be required only when it has been determined that the
applicant cannot possibly meet the repayment requirements for the loan
request. Persons who are minors (except a youth obtaining a youth
loan), mental incompetents, or noncitizens will not execute a promissory
note. Except when a person has pledged only property as security for a
loan, the purpose and effect of signing a promissory note or other
evidence of indebtedness for a loan made or insured by FmHA is to incur
individual personal liability regardless of any State law to the
contrary. A youth executing a promissory note shall incur full personal
liability for the indebtedness evidenced by such note.
(2) Cooperatives or corporations. The appropriate officer will
execute the note on behalf of the cooperative or corporation. Any other
signatures needed to assure the required security will be obtained as
provided in State supplements.
(3) Partnerships or joint operations. The note will be executed by
the partner or joint operator authorized to sign for the entity, and all
partners in the partnership or joint operators in the joint operation,
as cosigners.
(43 FR 55883, Nov. 29, 1978, as amended at 51 FR 13448, Apr. 21,
1986; 53 FR 35691, Sept. 14, 1988)
1941.55 -- 1941.56 (Reserved)
07 CFR 1941.57 Security instruments.
Security instruments referred to in this Subpart are financing
statements, security agreements, chattel mortgages, and similar lien
instruments. To obtain a security interest in chattels and crops in
States which have adopted the Uniform Commercial Code (UCC), both a
financing statement and a security agreement are required, although only
the financing statement must be filed or recorded in public records.
See paragraph (g) of this section for filing or recording instructions.
In Louisiana a Chattel Mortgage and Crop Pledge or Crop Pledge, as
appropriate, is required to obtain a security interest in chattels and
crops.
(a) Executing security instruments by borrowers. State supplements
will be issued, as necessary, to carry out the provisions of this
paragraph. In order to close the loan and obtain the desired lien(s),
security instruments will be executed by:
(1) Appropriate cooperative or corporation officials, on behalf of a
cooperative or corporation. Any other signatures needed to assure the
required security will be obtained as provided in State supplements. A
cosigner will be required only when it has been determined that the
applicant cannot possible meet the security requirements for the loan
request.
(2) Appropriate partners or joint operators on behalf of a
partnership or joint operation; and the instruments will also be
executed by all partners, or all joint operators, who will sign as
individuals.
(b) Undivided interests. An applicant obtaining a loan to finance an
undivided interest in security or to refinance debts on an undivided
interest in such property will secure the loan with a lien on the
undivided interest in the property. All individuals having an undivided
interest in the security will execute Form FmHA 441-12, ''Agreement for
Disposition of Jointly-Owned Property'', unless a written agreement to
the same affect as this form has already been signed.
(c) Security instrument forms. (1) Form FmHA 440-25, ''Financing
Statement,'' or Form FmHA 440A-25, ''Financing Statement
(Carbon-Interleaved)''; and Form FmHA 440-4, ''Security Agreement
(Chattels and Crops),'' will be used to obtain security interests in
chattel property in States which have adopted the Uniform Commercial
Code (UCC), unless a State supplement requires the use of other forms.
(2) Form FmHA 440-4 LA, ''Chattel Mortgage and Crop Pledge
(Louisiana),'' or Form FmHA 440-4A LA, ''Crop Pledge (Louisiana),'' will
be used in the State of Louisiana.
(3) Other forms will be used as provided in State supplements in
Puerto Rico, Guam, American Samoa and the Northern Mariana Islands.
(d) Taking security instruments -- (1) Financing statement. A
financing statement is effective for 5 years from the date of filing and
as long thereafter as it is continued by filing a continuation
statement.
(i) Initial loan. A financing statement will be required for every
initial loan except when a filed financing statement covering the
applicants property is still effective, covers all types of chattel
property that will serve as security for the initial loan, and describes
the land on which crops and fixtures are or will be located.
(ii) Subsequent loan. A financing statement will not be required
unless the filed financing statement is not effective, does not cover
all types of chattel property that will serve as security for the
subsequent loan, or does not describe the land on which crops or
fixtures are or will be located. If the loan debt is being secured for
the first time, however, the procedure for securing initial loans stated
in paragraph (d)(1)(i) of this section will be followed.
(2) Security Agreements -- (i) Initial loan. When an intitial loan
is made to an applicant, including to a paid-in-full borrower, a new
security agreement will be required in all cases. The security
agreement will be executed not later than the first withdrawal of loan
funds from the supervised bank account or delivery of the loan check to
the borrower.
(ii) Subsequent loan. An additional security agreement will be
required if property which is to serve as security for the debt is not
described either specifically or in the printed form of the previous
security agreement, or if an additional agreement it is needed to obtain
or maintain a security interest in crops.
(A) An additional security agreement may also be executed to reflect
significant changes in security.
(B) An additional security agreement is not necessary if the existing
security agreement covers all types of chattels that will serve as
security for the subsequent loan, describes the land on which the crops
or fixtures are or will be located, and was executed within 1 year
before the crops which are offered as security became growing crops.
When determined necessary by OGC, a State supplement will be issued
to further explain when a security agreement covering crops will be
required.
(e) Describing collateral in security instruments. (1) Financing
statements describe certain types of collateral. If items of collateral
not covered in the printed form of the financing statement are to serve
as security, they should be described by type or specifically
identified.
(2) Generally, animals, birds, fish, etc., should be described by
groups in the security agreement. The serial or other identification
numbers of major items of equipment should be listed in the security
agreement. If a security interest is to be taken in property such as
inventory, supplies, recreation or other nonfarm equipment, or fixtures
which cannot be readily described under the column headings of items 2
or 3 of Form FmHA 440-4, an appropriate description of such property
will be inserted in item 2 or 3 below the other property, without regard
to the column headings.
(3) The advice of the Office of the General Counsel (OGC) will be
obtained as to how to describe in financing statements and security
agreements items such as grazing permits, milk bases, and membership or
stock in cooperative associations. The property to be described in
security instruments should be reconciled with any existing security
instruments and with Form FmHA 462-1, ''Record of the Disposition of
Security Property.''
(4) After the initial security agreement is executed, and after the
borrower obtains all the property which FmHA wants specifically
described, by item, in the security agreement, a new security agreement
will be executed.
(f) Executing security instruments by County Office employees. The
County Supervisor and any County Office employee authorized by the
County Supervisor may execute on behalf of the Government any legal
instruments necessary to obtain or preserve security for loans. This
includes financing statements, security agreements, chattel mortgages
and similar lien instruments, as well as severance agreements, consent
and subordination agreements, affidavits and acknowledgments.
(g) Filing or recording security instruments. (1) Ordinarily, in
States which have adopted the UCC, financing statements may be delivered
by hand or mailed to the filing officers for filing or recording when
the loan is approved. However, when this is not practical, the
financing statement may be filed at a later date, but not later than the
first withdrawal of loan funds from the supervised bank account or
delivery of the loan check to the borrower. If crops or other property
of the borrower are located or will be located in a State other than
that of the borrower's residence, the County Office servicing the loan
will contact the County Office in the other State for information as to
the security instruments to be used and the place(s) of filing or
recording in the other State. The financing statement will be filed or
recorded as required by State supplements.
(2) Security agreements will not be filed or recorded unless required
by State supplements. Form FmHA 440-4 LA or Form FmHA 440-4A LA will be
filed or recorded in Louisiana as provided by State supplements.
(43 FR 55883, Nov. 29, 1978, as amended at 50 FR 27415, July 3, 1985;
51 FR 13448, Apr. 21, 1986; 53 FR 35691, Sept. 14, 1988)
1941.58 -- 1941.59 (Reserved)
07 CFR 1941.60 Purchase money security interest.
A purchase money security interest will take priority over an earlier
perfected security interest if a security agreement is taken and a
financing statement is filed before the purchaser receives possession of
the property or within 10 days thereafter, subject to the following
limitations:
(a) Motor vehicles. For motor vehicles required to be licensed, any
action necessary to obtain perfection in the particular State, such as
having the security interest noted on the certificate of title, must be
taken before the purchaser receives possession or within 10 days. In
some States, it is not necessary to file a financing statement to
perfect a security interest in such motor vehicles; however, FmHA will
always require both a security agreement and a financing statement. A
State supplement will be issued, if necessary to set out the procedure
for obtaining a lien on a motor vehicle, motorboat, or any special type
of security.
(b) Farm equipment. A purchase money security interest in farm
equipment costing $2,500 or less (other than fixtures or motor vehicles
required to be licensed), will take priority over an earlier perfected
security interest if a security agreement is obtained, even though a
financing statement is not executed or filed. FmHA, however, will
always file a financing statement. State supplements will be issued, as
necessary, to further explain the requirements for complying with this
section.
(c) Inventory. A purchase money security interest in inventory will
take priority over an earlier perfected security interest, provided:
(1) A security agreement is taken and a financing statement is filed
not later than the time the purchaser receives possession of the
property, and
(2) Before the purchaser takes possession of the property, written
notice is given to the party holding the earlier perfected interest that
the purchase money creditor has acquired or expects to acquire a
purchase money security interest in the inventory, which must by
described by item or type. When determined necessary by OGC, a State
supplement will be issued to further explain the requirements for
perfecting a purchase money security interest in inventory.
(d) Fixtures. A security interest taken in goods before they become
fixtures has priority over a security interest in the real estate to
which they are attached. A security interest taken in goods after they
become fixtures is valid against all persons later acquiring an interest
in the real estate. It is not valid against persons who had an interest
in the real estate when the goods become fixtures, unless they execute a
consent disclaimer or Form FmHA 440-26, ''Consent and Subordination
Agreement''.
(e) Crops. A security interest taken in crops not more than 3 months
before the crops are planted or otherwise become growing crops, has
priority over an earlier perfected security interest, if the obligation
underlying the earlier interest was due more than 6 months before the
crops became growing crops.
(43 FR 55883, Nov. 29, 1978, as amended at 54 FR 47959, Nov. 20,
1989)
1941.61 -- 1941.62 (Reserved)
07 CFR 1941.63 Lien search.
(a) Required lien searches. (1) A lien search will be obtained at a
time that assures that the security instruments give the Government the
required security, usually at the time the financing statement (mortgage
or crop pledge in Louisiana) is filed or recorded. Lien searches may be
obtained after the financing statement is filed, but never after the
delivery of the loan check or the first withdrawal of loan funds from
the supervised bank account. Form FmHA 440-13, ''Report of Lien
Search,'' or other lien search forms will be used.
(2) Under the UCC, lien searches are necessary in making subsequent
loans if an additional financing statement is required; i.e., when
crops or fixtures to be taken as security are or will be located on land
not described in the existing financing statement, or when property not
covered by the financing statement is to be taken as security for the
loan.
(3) Lien searches also may be obtained in connection with processing
applications when the County Supervisor determines such searches are
necessary on an individual case basis.
(4) Although a lien search is not always required for youths who are
minors (as defined in State supplements), the County Supervisor may
determine that a search is necessary to assure the Government obtains
the required security interest.
(b) Responsibility for obtaining lien searches. (1) Applicants
should obtain and pay for lien searches. FmHA County Office employees
may make lien searches (at no cost to the applicant) in exceptional
cases, such as when no other person is available to provide such a
service, or when experience has shown that using the service available
would lead to an undue delay in closing the loan and the delay would
cause undue hardship to the borrower.
(2) The State Director will issue a State supplement setting forth
the requirements for lien searches, including the records to be searched
and the periods to be covered.
(3) The applicant should be informed of County Clerks, local
attorneys or other persons who will conduct lien searches at a
reasonable cost. The applicant will select the lien searcher. The cost
of a lien search can be paid from the proceeds of loan checks.
1941.64 -- 1941.66 (Reserved)
07 CFR 1941.67 Additional requirements for perfecting security
interests.
If necessary because of provisions in State statutes, leases, land
purchase contracts, or real estate mortgages commonly in use, State
Directors will issue State supplements which tell how to obtain a
subordination agreement, certification of obligation to landlord,
disclaimer, and consent and subordination agreement to perfect security
interest.
(a) Form FmHA 441-5, ''Subordination Agreement.'' This form will be
used if a subordination agreement is required by FmHA on crops,
livestock, farm equipment, or other chattels. If Form FmHA 441-5 is not
legally sufficient, a form recommended by OGC will be used. The time to
be covered by the subordination agreement generally will be equal to the
repayment period of the loan or for the unexpired period of the lease if
the borrower is a tenant, but as a minimum will be for the year for
which the loan is made.
(b) Form FmHA 441-17, ''Certification of Obligation To Landlord.''
This form may be used instead of obtaining a subordination agreement if:
(1) It appears that the applicant is not financially obligated to the
landlord except for rent for the lease year and will not incur other
obligations to the landlord during that year, and
(2) A State supplement authorizing the use of Form FmHA 441-17 in
such cases has been issued.
(c) Form FmHA 440-26, ''Consent and Subordination Agreement.'' Unless
otherwise provided by a State supplement, this form rather than a
severance agreement will be used in UCC States when a security interest
is taken in property after it has become a fixture.
(1) If a debt on an item which has already become a fixture is being
refinanced, consent and subordination agreements will be signed before
releasing loan funds to the creditor. In all other cases in which a
security interest is being taken on an item that already has become a
fixture, consent and subordination agreements will be signed no later
than the time of loan closing.
(2) Consent and subordination agreements will be taken only in those
cases in which the fixture is placed on the real estate before the
financing statement and security agreement covering the fixture have
been executed, or before the financing statement is filed, or before the
request for obligation of funds is signed by the loan approving
official.
(43 FR 55883, Nov. 29, 1978, as amended at 54 FR 47959, Nov. 20,
1989)
1941.68 -- 1941.70 (Reserved)
07 CFR 1941.71 Fees.
The borrower will pay all fees for filing or recording financing
statements, mortgages, or other legal instruments and will pay all
notary and lien search fees incident to loan transactions. Payment will
be made from personal funds or from the proceeds of the loan. Whenever
FmHA employees accept cash to pay for filing or recording fees or for
the cost of making a lien search, Form FmHA 440-12, ''Acknowledgment of
Payment for Recording, Lien Search, and Releasing Fees,'' will be
executed. FmHA employees will make it clear to the borrower that any
fee so accepted is not received by the Government as a payment on the
borrower's debt, but is accepted only for paying the recording, filing,
or lien search fees on behalf of the borrower.
1941.72 -- 1941.74 (Reserved)
07 CFR 1941.75 Retention and use of security agreements.
Original executed security agreements will not be altered or
destroyed, and will remain in the case file when new security agreements
are taken. Changes in security property will be noted only on the work
copy. When an additional security agreement covering all collateral for
the debt is taken, the work copy of the previous security agreement may
be destroyed.
1941.76 -- 1941.78 (Reserved)
07 CFR 1941.79 Future advance and after-acquired property clauses.
The future advance and after-acquired property clauses of security
agreements will be considered valid in all respects in UCC States unless
otherwise provided in a State supplement.
(a) Future advance clause. A properly prepared, executed, and filed
or recorded FmHA financing statement and a properly prepared and
executed FmHA security agreement give FmHA a security interest in the
property described. This security interest covers future loans,
advances, and expenditures, as well as any other FmHA debts evidenced by
notes and any advances or expenditures for debts evidenced by such
notes. However, when a borrower's indebtedness is paid in full, a new
security agreement must be taken in all cases to secure an initial loan
made following the payment in full.
(b) After-acquired property clause. After a security interest is
acquired in certain property, any property (except fixtures) acquired
which is of the same type as that described in the financing statement
and security agreement will also serve as security for the debt. The
after-acquired property clause in the security agreement will encumber
crops grown on the land described in the security agreement and
financing statement, provided the crops are planted or otherwise become
growing crops within 1 year of the execution date of the security
agreement, or within such other period as provided in a State
supplement. FmHA after-acquired security interests take priority over
other security interests perfected after the FmHA financing statement is
filed, except as stated in 1941.60.
(c) State supplements. A State supplement concerning future advance
and after-acquired property clauses will set forth requirements for
filing or recording security instruments in that State. This will
assist County Supervisors in other States who request such information
in accordance with 1941.57(g). A State supplement will also be issued
when OGC determines that it is needed to reflect any amendments made to
a State's UCC.
1941.80 -- 1941.83 (Reserved)
07 CFR 1941.84 Title clearance and closing requirements.
(a) For loans over $10,000 (or EM loans over $25,000), title
clearance is required when real estate is taken as security.
(b) For loans of $10,000 or less (or EM loans of $25,000 or less),
and loans for which real estate is taken as security, a certification of
ownership and verification of equity in real estate is required.
Certification of ownership may be in the form of a notarized affidavit
which is signed by applicant, names the record owner of the real estate
in question and lists the balances due on all known debts against the
real estate. Whenever the County Supervisor is uncertain of the record
owner or debts against the estate security, a title search will be
required.
(c) When real estate is taken as security, title clearance and loan
closing requirements will be carried out in accordance with subpart B of
part 1927 of this chapter.
(d) If any prior liens against the real estate offered as security
contain provisions (such as future advance clauses not limited to a
specific amount) that could jeopardize either the security position of
the Government or the applicant's ability to meet the obligations of the
prior liens and FmHA loan, the prior lienholders involved must agree in
writing, before the loan is closed, to modify, waive, or subordinate
such objectionable provisions.
(e) If a lien is to be taken on real estate which is already subject
to a lien, and if State law allows a prior lienholder to foreclose on a
loan (under power of sale or otherwise) without notifying a junior
lienholder of the foreclosure proceedings, the prior lienholders must
agree, in writing, to give FmHA advance notice of all foreclosure
proceedings and of any assignment of the mortgage.
(f) Each real estate lien will be taken on Form FmHA 1927-1 (state),
''Real Estate Mortgage for XXXX,'' unless a State supplement requires
the use of another Form.
(g) If the real estate offered as security is held under a purchase
contract, the following conditions must exist:
(1) The applicant must be able to provide a mortgageable interest in
the real estate.
(2) The applicant and the purchase contract holder must agree, in
writing, that any insurance proceeds received to compensate for real
estate losses will be used only to replace or repair the damaged real
estate. If necessary, the applicant will negotiate with the purchase
contract holder to arrive at a new contract without any provisions
objectionable to either FmHA or the lender.
(3) If a satisfactory contract of sale cannot be negotiated or if the
purchase contract holder refuses to agree to apply the insurance
proceeds toward the repair or replacement of the real estate and wants
to retain some of the proceeds as an extra payment on the balance owned,
the applicant will make every effort to refinance the existing purchase
contract.
(4) The purchase contract must not be subject to summary cancellation
on default and must not contain any other provisions which might
jeopardize either the Government's security position or the borrower's
ability to repay the loan.
(5) The contract holder must agree, in writing, to give the
Government notice of any breach by the purchaser, and must also agree to
give the Government the option to rectify the conditions which amount to
a breach within 30 days. The 30 days begin to run on the day the
Government receives the written notice of the breach.
(51 FR 13448, Apr. 21, 1986, as amended at 56 FR 67480, Dec. 31,
1991)
Effective Date Note: At 67480, Dec. 31, 1991, 1941.84 was amended
by revising paragraphs (c) and (f), effective January 30, 1992. For the
convenience of the user, the superseded text follows:
1941.84 Title clearance and closing requirements.
(c) When real estate is taken as security, title clearance and loan
closing requirements will be carried out in accordance with Part 1807 of
this chapter (FmHA Instruction 427.1).
(f) Each real estate lien will be taken on Form FmHA 427-1 (State),
''Real Estate Mortgage for XXX,'' unless a State supplement requires the
use of another form.
1941.85 -- 1941.87 (Reserved)
07 CFR 1941.88 Insurance.
Insurance for property, public liability, and crops should be
obtained before loan or at the time of closing.
(a) Crops. Crop insurance is a good management tool. Loan approval
officials will, therefore, during the loan making process, encourage all
borrowers who grow crops to obtain and maintain Federal Crop Insurance
Corporation (FCIC) crop insurance or multi-peril crop insurance, if it
is available.
(1) When OL loan funds are to be used as the primary source of
financing for the ensuing year's crop production expenses, and such
crop(s) will serve as security for the loan, and crop insurance is
purchased by the borrower, FmHA requires and ''Assignment of Indemnity''
on the borrower's crop insurance policy(ies).
(2) When FmHA is not the primary lender for annual crop production
expenses, but has or will have a security interest in the crop(s), and
the applicant has purchased or will purchase crop insurance, an
''Assignment of Indemnity'' is taken by FmHA, if the primary lender
chooses not to do so.
(3) When the payment of crop insurance premiums is not required until
after harvest, the premiums may be paid by releasing insured crop(s)
sale proceeds, but not withstanding the limits in 1962.17 and
1962.29(b) of Subpart A of Part 1962 of this chapter. If the borrower's
crop losses are sufficient to warrant an indemnity payment, the premium
due will be deducted by the insurance carrier from such payment.
(b) Chattels. Borrowers will be encouraged to carry insurance on
chattel property that serves as security for a loan and on other chattel
and real property, in order to protect themselves against losses
resulting from accidents, theft and other hazards existing in the area.
It is especially desirable that insurance be obtained by applicants who
receive large loans and have considerable chattel property including
feed, supplies and other inventory centrally stored over an extended
period of time.
(c) Real estate. If essential insurable buildings are located on the
property, or improvements are to be made to existing buildings, the
applicant, when required, will provide adequate property insurance
coverage at the time of the loan closing or as of the date materials are
delivered to the property, whichever is appropriate. Real property
insurance will not be required when a real estate appraisal report shows
that both the present market value of the land (after deducting the
value of buildings) and the owner's equity in the land exceed the amount
of the debt, including the debt for the loan being made. However, the
applicant will be encouraged to carry insurance. If insurance claims
for loss or damage to buildings to be replaced or repaired with loan
funds are outstanding at the time the loan is approved, the applicant
will be required to agree in writing that when settlement of these is
made, the proceeds will be used to replace or repair buildings, applied
to debts secured by prior liens, or applied to the OL loan being made.
(d) Public liability and property damage. Borrowers, including
youths, receiving loans for farm, recreational, or nonfarm enterprises
should be advised of the possibilities of incurring liability and
encouraged to obtain public liability and property damage insurance,
including insurance on a customer's property in the custody of the
borrower.
(e) Mortgage clause. When insurance is required on property serving
as security, Form FmHA 426-2, ''Property Insurance Mortgage Clause
(Without Contribution),'' or a standard mortgage clause in general use
in the area will be attached to or printed in the policy and will show
the United States of America (Farmers Home Administration) as mortgagee
or secured party.
(43 FR 55883, Nov. 29, 1978, as amended at 47 FR 33486, Aug. 3, 1982;
53 FR 35691, Sept. 14, 1988)
1941.89 -- 1941.91 (Reserved)
07 CFR 1941.92 Check delivery.
The County Supervisor will receive and deliver loan checks. On
receipt of a loan check, and after arrangements have been completed for
loan closing, the applicant will be promptly notified on Form FmHA
440-8, ''Notice of Check Delivery.'' Loan funds will be disbursed in
accordance with Part 1803 of this chapter (FmHA Instruction 402.1).
1941.93 (Reserved)
07 CFR 1941.94 Supervised bank accounts.
If a supervised bank account is required, loan funds will be
deposited following loan closing. Supervised bank accounts will be
established in accordance with Subpart A of Part 1902 of this chapter.
(53 FR 35692, Sept. 14, 1988)
1941.95 (Reserved)
07 CFR 1941.96 Changes in use of loan funds.
(a) Approval of changes. County Supervisors, or their delegates, are
authorized to approve changes in the purposes for which loan funds are
to be used provided:
(1) The change is consistent with authorities, policies and
limitations for making loans, and
(2) The change will not adversely affect either the workings of an
on-going operation or the Government's interest.
(b) Recording changes. When changes are made in the use of loan
funds, the installments on Form FmHA 1940-17, ''Promissory Note,'' will
not be revised. When funds loaned for the purchase of capital goods are
to be used for annual recurring production expenses, the funds will be
repaid in accordance with the terms for such uses in Subpart A of this
part. Appropriate changes with respect to the repayments will be made
in Table K of Form FmHA 431-2, ''Farm and Home Plan,'' also on Form FmHA
1962-1, ''Agreement for the Use of Proceeds/Release of Chattel
Security,'' and initialed by the borrower. Appropriate notations will
be made in the ''Supervisory and Servicing Actions'' section of the
Management System Card.
(43 FR 55883, Nov. 29, 1978, as amended at 45 FR 16166, Mar. 13,
1980; 53 FR 35692, Sept. 14, 1988; 54 FR 47959, Nov. 20, 1989)
07 CFR 1941.96 Pt. 1942
07 CFR 1941.96 PART 1942 -- ASSOCIATIONS
07 CFR 1941.96 Subpart A -- Community Facility Loans
Sec.
1942.1 General.
1942.2 Processing applications.
1942.3 Preparation of appraisal reports.
1942.4 Borrower contracts.
1942.5 Application review and approval.
1942.6 Preparation for loan closing.
1942.7 Loan closing.
1942.8 Actions subsequent to loan closing.
1942.9 Planning, bidding, contracting, and constructing.
1942.10 -- 1942.11 (Reserved)
1942.12 Loan cancellation.
1942.13 Loan servicing.
1942.14 Subsequent loans.
1942.15 Delegation and redelegation of authority.
1942.16 State supplements and guides.
1942.17 Community facilities.
1942.18 Community Facilities -- Planning, Bidding, Contracting,
Constructing.
1942.19 Information pertaining to preparation of notes or bonds and
bond transcript documents for public body applicants.
1942.20 Community Facility Guides.
1942.21 -- 1942.49 (Reserved)
1942.50 OMB control number.
07 CFR 1941.96 Subpart B -- (Reserved)
07 CFR 1941.96 Subpart C -- Fire and Rescue Loans
1942.101 General.
1942.102 Nondiscrimination.
1942.103 Definitions.
1942.104 Application processing.
1942.105 Environmental review.
1942.106 Intergovernmental review.
1942.107 Priorities.
1942.108 Application docket preparation and review.
1942.109 -- 1942.110 (Reserved)
1942.111 Applicant eligibility.
1942.112 Eligible loan purposes.
1942.113 Rates and terms.
1942.114 Security.
1942.115 Reasonable project costs.
1942.116 Economic feasibility requirements.
1942.117 General requirements.
1942.118 Other Federal, State, and local requirements.
1942.119 Professional services and borrower contracts.
1942.120 -- 1942.121 (Reserved)
1942.122 Actions prior to loan closing and start of construction.
1942.123 Loan closing.
1942.124 -- 1942.125 (Reserved)
1942.126 Planning, bidding, contracting, constructing, procuring.
1942.127 Project monitoring and fund delivery.
1942.128 Borrower accounting methods, management reports and audits.
1942.129 Borrower supervision and servicing.
1942.130 -- 1942.131 (Reserved)
1942.132 Subsequent loans.
1942.133 Delegation and redelegation of authority.
1942.134 State supplements and guides.
1942.135 -- 1942.149 (Reserved)
1942.150 OMB control number.
07 CFR 1941.96 Subparts D -- F -- (Reserved)
07 CFR 1941.96 Subpart G -- Industrial Development Grants
1942.301 Purpose.
1942.302 Policy.
1942.303 Authorities, delegation, and redel-egation.
1942.304 Definitions.
1942.305 Eligibility and priority.
1942.306 Purposes of grants.
1942.307 Limitations on use of grant funds.
1942.308 Regional Commission grants.
1942.309 (Reserved)
1942.310 Other considerations.
1942.311 Application processing.
1942.312 (Reserved)
1942.313 Plan to provide financial assistance to third parties.
1942.314 Grants to provide financial assistance to third parties and
Technical Assistance programs.
1942.315 Docket preparation and Letter of Conditions.
1942.316 Grant approval, fund obligation, approval announcement, and
cancellation.
1942.317 -- 1942.320 (Reserved)
1942.321 Subsequent grants.
1942.322 -- 1942.347 (Reserved)
1942.348 Exception authority.
1942.349 Forms, guides, and attachments.
1942.350 OMB control number.
Guide 1 -- Project Management Agreement Between the ----------
Regional Commission and the Farmers Home Administration, Department of
Agriculture
Guide 2 -- Resolution
07 CFR 1941.96 Subpart H -- Development Grants for Com- munity Domestic
Water and Waste Disposal Systems
1942.351 General.
1942.352 (Reserved)
1942.353 Processing applications and docket preparation.
1942.354 (Reserved)
1942.355 Applicant eligibility and priority.
1942.356 -- 1942.357 (Reserved)
1942.358 Use of grant funds.
1942.359 (Reserved)
1942.360 Grant limitations.
1942.361 -- 1942.362 (Reserved)
1942.363 Determining the need for development grants.
1942.364 -- 1942.365 (Reserved)
1942.366 Application review, approval and obligation of funds.
1942.367 (Reserved)
1942.368 Borrower contracts.
1942.369 Preparation for grant closing.
1942.370 -- 1942.371 (Reserved)
1942.372 Grant closing and delivery of funds.
1942.373 Planning and performing development.
1942.374 (Reserved)
1942.375 Actions subsequent to grant closing.
1942.376 Grant servicing.
1942.377 Grant cancellation.
1942.378 (Reserved)
1942.379 Subsequent grants.
1942.380 Regional commission grants.
1942.381 Audits.
1942.382 Management assistance.
1942.383 State Supplements and guides.
1942.384 Delegation of authority.
1942.385 Special conditions under Public Law (PL) 98-8 (Emergency
Jobs Bill)
1942.386 -- 1942.400 (Reserved)
Exhibit A -- Memorandum of Agreement Between the Federal Cochairman
of the Appalachian Regional Commission and the Adminstrator of the
Farmers Home Adminstration
Exhibit B -- Project Management Agreement
Exhibit C -- Association Water or Sewer System Grant Agreement
Exhibit D -- Regulations for Grant Approvals Utilizing Funds Made
Available Under Pub. L. 98-8
07 CFR 1941.96 Subpart I -- Resource Conservation and Development (RCD)
Loans and Watershed (WS) Loans and Watershed Advances
1942.401 Purpose.
1942.402 Policy.
1942.403 Authorities, responsibilities, and delegation of authority.
1942.404 Definitions.
1942.405 Eligibility.
1942.406 Loan purposes.
1942.407 Loan and advance limitations and obligations incurred before
loan closing.
1942.408 Rates and terms -- WS loans and WS advances and RCD loans.
1942.409 Security, feasibility, evidence of debt, title insurance,
and other requirements.
1942.410 (Reserved)
1942.411 Other considerations.
1942.412 Preapplication and application processing.
1942.413 Reserved.
1942.414 Planning, options, and appraisals.
1942.415 Planning and performing development.
1942.416 County committee review.
1942.417 Docket preparation and processing.
1942.418 Feasibility.
1942.419 Approval, closing and cancellation.
1942.420 Disbursement of WS and RCD loan funds and WS advance funds.
1942.421 Borrower accounting methods, management, reporting, and
audits.
1942.422 Subsequent loans.
1942.423 Servicing.
1942.424 State instructions.
Exhibit A -- Memorandum of Understanding Between the Soil
Conservation Service and the Farmers Home Administration Relating to the
Making of WS Loans and WS Advances Under the Watershed Protection and
Flood Prevention Act
Exhibit B -- Memorandum of Understanding Between the Soil
Conservation Service and the Farmers Home Administration Relating to
Loans Made with RCD Under the Provisions of Section 102 of the Food and
Agriculture Act of 1962
07 CFR 1941.96 Subpart J -- Technical Assistance and Training Grants
1942.451 General.
1942.452 (Reserved)
1942.453 Objectives.
1942.454 Definitions.
1942.455 Source of funds.
1942.456 (Reserved)
1942.457 Eligibility.
1942.458 Purpose.
1942.459 (Reserved)
1942.460 Limitations.
1942.461 Equal opportunity requirements.
1942.462 Environmental requirements.
1942.463 Preapplications.
1942.464 Priority.
1942.465 (Reserved)
1942.466 Application processing.
1942.467 (Reserved)
1942.468 Grant approval and obligation of funds.
1942.469 Fidelity bond.
1942.470 -- 1942.471 (Reserved)
1942.472 Fund disbursement.
1942.473 Grant cancellation or major changes.
1942.474 Reporting.
1942.475 Audit.
1942.476 Grant agreement.
1942.477 Grant servicing.
1942.478 Delegation of authority.
1942.479 -- 1942.499 (Reserved)
1942.500 OMB control number.
Exhibit A -- Grant Agreement -- Technical Assistance and Training
07 CFR 1941.96 Subpart K -- Emergency Community Water Assistance Grants
Sec.
1942.501 General.
1942.502 (Reserved)
1942.503 Objective.
1942.504 Definitions.
1942.505 (Reserved)
1942.506 Eligibility.
1942.507 Project priority.
1942.508 (Reserved)
1942.509 Uses.
1942.510 Restrictions.
1942.511 Maximum grants.
1942.512 (Reserved)
1942.513 Set-aside.
1942.514 Other considerations.
1942.515 -- 1942.520 (Reserved)
1942.521 Application processing.
1942.522 Planning development and procurement.
1942.523 Grant closing and disbursement of funds.
1942.524 -- 1942.530 (Reserved)
1942.531 Performing development.
1942.532 Grant cancellation.
1942.533 (Reserved)
1942.534 Grant servicing.
1942.535 Subsequent grants.
1942.536 (Reserved)
1942.537 Forms, guides, and attachments.
1942.538 -- 1942.549 (Reserved)
1942.550 OMB control number.
Authority: 7 U.S.C. 1989; 16 U.S.C. 1005; 5 U.S.C. 301; 7 CFR
2.23; 7 CFR 2.70.
07 CFR 1941.96 Subpart A -- Community Facility Loans
Source: 50 FR 7296, Feb. 22, 1985, unless otherwise noted.
07 CFR 1942.1 General.
(a) This subpart outlines the policies and procedures for making and
processing insured loans for community facilities except fire and rescue
facilities. This subpart applies to community facility loans for fire
and rescue facilities only as specifically provided for in Subpart C of
this Part 1942. The Farmers Home Administration (FmHA) shall cooperate
fully with State and local agencies in making loans to assure maximum
support to the State strategy for rural development. FmHA State
Directors and their staffs shall maintain coordination and liaison with
State agency and substate planning districts. Funds allocated for use
under this subpart are also for the use of Indian tribes within the
State, regardless of whether State development strategies include Indian
reservations within the State's boundaries. Indians residing on such
reservations must have equal opportunity to participate in the benefits
of these programs as compared with other residents of the State.
Federal statutes provide for extending FmHA financial programs without
regard to race, color, religion, sex, national origin, marital status,
age, or physical/mental handicap. The participants must possess the
capacity to enter into legal contracts under State and local statutes.
(b) Indian tribes on Federal and State reservations and other
Federally recognized Indian tribes are eligible to apply for and are
encouraged to participate in this program. Such tribes might not be
subject to State and local laws or jurisdiction. However, any
requirements of this subpart that affect applicant eligibility, the
adequacy of FmHA's security or the adequacy of service to users of the
facility and all other requirements of this subpart must be met.
(c) Loans sold without insurance by FmHA to the private sector will
be serviced in the private sector and will not be serviced under this
subpart. The provisions of this subpart are not applicable to such
loans. Future changes to this subpart will not be made applicable to
such loans.
(d) The County Office will normally be the entry point for
preapplications and serve as a local contact point. However,
applications will be filed with the District Office and loans will be
processed to the maximum extent possible by the District Office staff.
The applicant's governing body should designate one person to coordinate
the activities of its engineer, architect, attorney, and any other
professional employees and to act as contact person during loan
processing. FmHA personnel should make every effort to involve the
applicant's contact person when meeting with the applicant's
professional consultants and/or agents. The State Office staff will
monitor Community Programs loan making and servicing, and will provide
assistance to District Office personnel to the extent necessary to
assure that the activities are being accomplished in an orderly manner
consistent with FmHA regulations. The District Director will supply
information on Community Program loan activity within the County Office
service area to the County Supervisor at key points throughout the loan
making process. As a minimum, the District Director should provide
appropriate copies or notice to the County Office when the following
actions occur:
(1) Form AD-622, ''Notice of Preapplication Review Action,'' is
issued.
(2) Project summary is completed.
(3) Letter of Conditions is issued.
(4) Applicant declines to execute Form FmHA 1942-46, ''Letter of
Intent To Meet Conditions.''
(5) Applicant is notified of loan or grant approval.
(6) A loan is properly closed.
(7) A construction contract is awarded.
(8) A final inspection is completed.
(50 FR 7296, Feb. 22, 1985, as amended at 52 FR 38908, Oct. 20, 1987;
52 FR 43725, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987; 53 FR 6785,
Mar. 3, 1988; 54 FR 47196, Nov. 13, 1989)
07 CFR 1942.2 Processing applications.
(a) Preapplications. (1) The County Office may handle initial
inquiries and provide basic information about the program. They are to
provide the preapplication, SF 424.2, ''Application for Federal
Assistance (For Construction).'' The County Supervisor will assist
applicants as needed in completing SF 424.2, and in filing written
notice of intent and request for priority recommendation with the
appropriate clearinghouse (except Federally recognized Indian tribes
which will be dealt with in accordance with 1901.352 (b) of Subpart H
of Part 1901 of this Chapter). The County Supervisor will inform the
applicant that it may be necessary to apply for credit from commercial
sources. It will be explained that if credit for the project is
available from commercial sources at reasonable rates and terms the
applicant is not eligible for FmHA financing. Preapplications filed in
the County Office will be forwarded immediately to the District Office.
The applicant will be informed that further processing will be handled
by the District Office. An information folder will be established and
maintained by the County Office once a preapplication is received. In
the event the preapplication is filed in the District Office, the
District Director may assist the applicant in completing the
preapplication requirements. The District Director will meet with the
applicant, whenever appropriate, to discuss FmHA preapplication
processing. The appropriate information to set up the County Office
information file will be sent to the County Supervisor by the District
Director. Guidance and assistance will be provided by the State
Director, as needed, for orderly application processing. The District
Director will determine that the preapplication is properly completed
and fully review it. The District Director will then forward to the
State Director:
(i) Eligibility determination and recommendations.
(ii) One copy of SF 424.2.
(iii) State intergovernmental review comments and recommendations
(clearinghouse comments).
(iv) Priority recommendations.
(v) Supporting documentation necessary to make an eligibility
determination such as financial statements, audits, or copies of
organizational documents or existing debt instruments. The District
Director will advise applicants on what documents are necessary.
Applicants should not be required to expend significant amounts of money
or time developing supporting documentation at the preapplication stage.
(2) The State Director will review each SF 424.2 along with other
information that is deemed necessary to determine whether financing from
commercial sources at reasonable rates and terms is available. If
credit elsewhere is indicated, the State Director will instruct the
District Director to so inform the applicant and recommend the applicant
apply to commercial sources for financing. Projects may be funded
jointly with other lenders provided the requirements of 1942.17 (g) of
this subpart are met. Joint financing occurs when two or more lenders
make separate loans to supply the funds required by one applicant for a
project.
(i) In order to provide a basis for referral of preapplications of
only those applicants who may be able to finance projects through
commercial sources, State Directors should maintain liaison with
representatives of banks, investment bankers, financial advisors, and
other lender representatives in the State. State Directors with their
assistance, should maintain criteria for determining preapplications
which should be referred to commercial lenders. A list of lender
representatives interested in receiving such referrals should be
maintained.
(ii) The State Director shall maintain a working relationship with
the State A-95 or other appropriate State agency and give full
consideration to their comments when selecting preapplications to be
processed.
(iii) The State Director will review the District Director's
eligibility determination and recommendations in sufficient time for the
District Director's use in preparing and issuing Form AD-622.
(iv) Form AD-622 will be prepared by the District Director within
forty-five (45) calendar days from receipt of the preapplication by
FmHA, stating the results of the review action. The original will be
signed and delivered to the applicant with a copy to the State Director.
(3) For preapplications eligible for FmHA funding which have the
necessary priority to compete with similar preapplications, FmHA will
issue Form AD-622 inviting an application containing the following
statement:
You are advised against taking any actions or incurring any
obligations which would either limit the range of alternatives to be
considered, or which would have an adverse effect on the environment.
Satisfactory completion of the environmental review process must occur
prior to the issuance of the letter of conditions.
(4) The following statement must be added to Form AD-622 when
notifying preapplicants who are eligible, but do not have the priority
necessary for further consideration at this time:
You are advised against incurring obligations which would limit the
range of alternatives to be considered, or which cannot be fulfilled
without FmHA funds until the funds are actually made available.
Therefore, you should refrain from such actions as initiating
engineering and legal work, taking actions which would have an adverse
effect on the environment, taking options on land rights, developing
detailed plans and specifications, or inviting construction bids until
notified by Farmers Home Administration (FmHA) to proceed.
(b) Environmental review. Environmental requirements will be
documented in accordance with Subpart G of Part 1940 of this chapter and
submitted to the State Director. Starting with the earliest discussions
with prospective applicants or review of preapplications and continuing
throughout application processing, environmental issues must be
considered. This should provide flexibility to consider alternatives to
the project and develop methods to mitigate identified adverse
environmental impacts. Documentation of the appropriate environmental
review should be completed as soon as possible; however, the State
Director will ensure that the appropriate environmental review is
completed prior to issuing the letter of conditions.
(c) Applications. The District Director should assist the applicant
in application assembly and processing.
(1) State Directors should have applications in process representing
approximately 150 percent of the current State allocation.
(2) The application docket will include SF 424.2, and related forms,
materials, and information. The application will be assembled in
accordance with Guide 15 of this subpart or State guides developed under
1942.16 of this subpart.
(3) When an applicant is notified to proceed with an application, the
District Director should arrange for a conference with the applicant to
provide copies of appropriate appendices and forms; furnish guidance
necessary for orderly application processing; and to initiate a
processing checklist for establishing a time schedule for completing
items using Form FmHA 1942-39, ''Processing Check List (Other Than
Public Bodies),'' or Form FmHA 1942-40, ''Processing Check List (Public
Bodies),'' or other checklist adopted for use in the State. The
District Director will confirm decisions made at this conference by
letter to the applicant and by a copy of the processing checklist. The
original and a copy of the processing checklist will be retained in the
District Office and a copy will be forwarded to the State Office. The
original and copy of the checklist retained in the District Office will
be kept current as application processing actions are taken. The copy
will be sent to the State Office to use in updating its copy of this
form. The State Office will then return the District Office's copy. As
the application is being processed, and the need develops for additional
conferences, the District Director will arrange with the applicant for
such conference to extend and update the processing checklist.
(d) Review of decision. If at any time prior to loan approval it is
decided that favorable action will not be taken on a preapplication or
application, the District Director will notify the applicant in writing
of the reasons why the request was not favorably considered. The
notification to the applicant will state that a review of this decision
by FmHA may be requested by the applicant under Subpart B of Part 1900
of this chapter. The following statement will also be made on all
notifications of adverse action.
The Federal Equal Credit Opportunity Act prohibits creditors from
discriminating against credit applicants on the basis of race, color,
religion, national origin, sex, marital status, age (provided that the
applicant has the capacity to enter into a binding contract); because
all or part of the applicant's income is derived from any public
assistance program; or because the applicant has in good faith
exercised any right under the Consumer Credit Protection Act. The
Federal agency that administers compliance with this law is the Federal
Trade Commission, Equal Credit Opportunity, Washington, DC 20580.
(e) Joint funding. FmHA may finance projects jointly with funds from
other sources, such as, commercial/private lenders, Federal agencies,
State and local Governments, etc. Other departments, agencies, and
executive establishments of the Federal Government may participate and
provide financial and technical assistance jointly with FmHA to any
applicant to whom FmHA is providing assistance. The amount of
participation by the other department, agency, or executive
establishment shall only be limited by its authorities except that any
limitation on joint participation itself is superseded by Section 125 of
Pub. L. 95-334 (Section 347, Consolidated Farm and Rural Development
Act, as amended).
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6786, Mar. 3, 1988;
54 FR 47197, Nov. 13, 1989; 55 FR 13503 and 15304, Apr. 11, 1990)
07 CFR 1942.3 Preparation of appraisal reports.
When the loan approval official requires an appraisal, Form FmHA
422-10, ''Appraisal Report -- Water and Waste Disposal Systems,'' may be
used with appropriate supplements. Form FmHA 442-10 may be modified as
appropriate or other appropriate format may be used for facilities other
than water and waste disposal. Appraisal reports prepared for use in
connection with the purchase of existing essential community facilities
or when required by 1942.17 (g)(2)(iii)(B)(2), (g)(3)(iii)(B)(2), and
(j)(4) of this subpart, may be prepared by the FmHA engineer/architect
or, if desired by the State Director, some other qualified appraiser.
The loan approval official may require an applicant to provide an
appraisal prepared by an independent qualified appraiser; however, the
loan approval official must determine that the appraised value shown in
such reports reflects the present market value.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6786, Mar. 3, 1988)
07 CFR 1942.4 Borrower contracts.
The State Director will, with assistance as necessary by the Office
of the General Counsel (OGC), concur in agreements between borrowers and
third parties such as contracts for professional and technical services
and contracts for the purchase of water or treatment of waste. State
Directors are expected to work closely with representatives of
engineering and architectural societies, bar associations, commercial
lenders, accountant associations, and others in developing standard
forms of agreements, where needed, and other such matters in order to
expedite application processing, minimize referrals to OGC, and resolve
problems which may arise.
07 CFR 1942.5 Application review and approval.
(a) Procedures for review. Ordinarily FmHA staff review will proceed
as applications are being developed. An overall review of the
applicant's financial status, including a review of all assets and
liabilities, will be a part of the docket review process by the staff
and approval officials. The engineering/architect reports and
associated data are to be reviewed by the FmHA staff engineer or
architect, as appropriate, as soon as available but prior to the
District Director's completion of the project summary. During the
review the District Director in all cases will make certain that no low
income or minority community within the service area has been omitted or
discouraged -- rom participating in the proposed project. The District
Director will also determine how the service area was defined to assure
that gerrymandering of specific communities or areas has not occurred.
The findings should be documented in the running record. Prior to
presenting the assembled application to the approval official, the
assembled application ordinarily will be processed in the following
sequence:
(1) The District Director will complete the project summary including
written analysis and recommendations using either Form FmHA 1942-45,
''Project Summary -- Water and Waste Disposal and Other Utility-Type
Projects,'' for utility type projects or Form FmHA 1942-43, ''Project
Summary -- Community Facilities (Other than utility-type projects),''
for all other types of projects. The District Director will prepare a
draft letter of conditions listing all the requirements which the
applicant must agree to meet within a specific time.
(i) Requirements listed in letters of conditions will include the
following unless inappropriate due to the particular type of funding or
entity involved: Maximum amount of loan and/or grant which may be
considered, scheduling of payments, term of loan and any deferment of
principal which may be allowed, reserve requirements, compliance with
section 504 of the Rehabilitation Act of 1973, number of users (members)
and verification required, contributions rates and charges, interim
financing, disbursement of funds, security requirements, graduation
requirements, debt collection policies execution of Form FmHA 1910-11,
''Application Certification, Federal Collection Policies for Consumer or
Commercial Debts,'' organization, business operations, insurance and
bonding (including applicant/borrower and contractor), construction
contract documents and bidding, accounts, records, and audit reports
required (including requirements of OMB Circulars A-128 and A-110),
adoption of Form FmHA 1942-47, ''Loan Resolution (Public Resolution),''
for public bodies or Form FmHA 1942-9, ''Loan Resolution (Security
Agreement),'' for other than public bodies, closing instructions, and
other requirements.
(ii) Each letter of conditions will contain the following paragraphs:
This letter establishes conditions which must be understood and
agreed to by you before further consideration may be given to the
application. Any changes in the project cost, source of funds, scope of
services, or any other significant changes in the project or applicant
must be reported to and approved by FmHA by written amendment to this
letter. Any changes not approved by FmHA shall be cause for
discontinuing processing of the application.
This letter is not to be considered as loan approval or as
representation to the availability of funds. The docket may be
completed on the basis of a loan not to exceed $ ------ .
If FmHA makes the loan, you may make a written request that the
interest rate be the lower of the rate in effect at the time of loan
approval or the time of loan closing. If you do not request the lower
of the two interest rates, the interest rate charged will be the rate in
effect at the time of loan approval. The loan will be considered
approved on the date a signed copy of Form FmHA 1940-1, ''Request for
Obligation of Funds,'' is mailed to you. If you want the lower of the
two rates, your written request should be submitted to FmHA as soon as
practical. In order to avoid possible delays in loan closing such a
request should ordinarily be submitted at least 30 calendar days before
loan closing.
Please complete and return the attached Form FmHA 1942-46, ''Letter
of Intent to Meet Conditions,'' if you desire that further consideration
be given your application.
(iii) District Directors may add the following:
If the conditions set forth in this letter are not met within ------
days from the date hereof, FmHA reserves the right to discontinue the
processing of the application.
(2) The FmHA staff engineer or architect, as appropriate, will
include a written analysis and recommendations on Form FmHA 1942-43 or
Form FmHA 1942-45.
(3) The Chief, Community Programs or Community and Business Programs
will review the assembled application and include on Form FmHA 1942-43
or Form FmHA 1942-45 written analysis and recommendations, including the
availability of other credit and other eligibility determinations. The
draft letter of conditions will be reviewed and any necessary
modifications made.
(b) Project requiring National Office review. Prior National Office
review is required for certain proposals (See Subpart A of Part 1901 of
this chapter).
(1) The District Director should assemble applications for the
National Office review in the following order from top to bottom and
forward them to the State Director for review and recommedation prior to
submission to the National Office:
(i) Transmittal memorandum including:
(A) Recommendation.
(B) Date of expected obligation.
(C) Any unusual circumstances.
(ii) Copies of the following:
(A) Proposed letter of conditions.
(B) Applicable State Intergovernmental review comments (FmHA
Instruction 1940-J, available in any FmHA office).
(C) Forms FmHA 1942-45 or FmHA 1942-43 (including the required copy
of Forms FmHA 1942-7, ''Operating Budget,'' and FmHA 1942-14,
''Association Project Fund Analysis'').
(D) Form FmHA 1942-51, ''Water and Waste Disposal Grant
Determination,'' if applicable.
(E) Preliminary architectural or engineering report.
(F) Form FmHA 442-3, ''Balance Sheet,'' or a financial statement or
audit that includes a balance sheet.
(G) For other essential community facility loan applicants whose
proposals do not meet the assured income or tax based security
requirements of 1942.17 (g)(2)(iii) and (g)(3)(iii) of this subpart,
financial information for the last five years of operation will be
submitted if available. The type of financial information to be
submitted should be determined based on what is available and the
following order of preference:
(1) Complete audits;
(2) Unaudited financial statements including balance sheets and
statements of income and expenses;
(3) Lists of income and expenses.
(H) For other essential community facility loans secured under
paragraph (b)(1)(ii)(G) of this section, submit a detailed explanation
of the proposed security; evidence that the application cannot be
processed and the loan secured under paragraph (b)(1)(ii)(G) of this
section; evidence supporting the efforts by the applicant in persuading
appropriate public bodies to provide the proposed facility and services
and the results, and comments of the Regional Attorney concurring in the
applicants' legal authority to give the proposed security.
(I) Financial Feasibility Report when required by 1942.17 (h)(1).
(J) Proposed lease agreements, management agreements, or other
agreements when facility management will be provided by other than the
applicant.
(K) Other forms and documents on which there are specific questions.
(L) Environmental impact analysis and documentation.
(2) For applications to be reviewed in the State or field, at least
those items in paragraph (b)(1)(ii) of this section, should be
available.
(c) For all applications. All letters of conditions will be
addressed to the applicant, signed by the District Director or other
FmHA representative designated by State Director, and delivered to the
applicant. Upon signing the letter of conditions, the District Director
will send two copies of the letter of conditions and two copies of Forms
FmHA 1942-43 or FmHA 1942-45 to the State Director. The State Director
will immediately send one copy of Forms FmHA 1942-43 or FmHA 1942-45
(including the required copy of Forms FmHA 1942-7 and FmHA 1942-14) and
a copy of the letter of conditions to the National Office, Attention:
Water and Waste Disposal Division or Community Facilities Division, as
appropriate. The District Director, with assistance as needed from the
State Office, will discuss the requirements of the letter of conditions
with the applicant's representatives and afford them an opportunity to
execute Form FmHA 1942-46.
(1) The letter of conditions should not ordinarily be issued unless
the State Director expects to have adequate funds in the State
allocation to fund the project within the next 12 months based on
historic allocations or other reliable projections.
(2) If the applicant declines to execute Form FmHA 1942-46, the
District Director will immediately notify the State Director and provide
complete information as to the reasons for such declination.
(3) If the applicant executes Form FmHA 1942-46, the District
Director will forward two copies of the completed Form FmHA 1942-14;
and the completed and executed original, a signed copy and an unsigned
copy of Form FmHA 1940-1 to the State Director.
(d) Loan approval and obligating funds. Loans will be approved under
this subpart and Subpart A of Part 1901 of this chapter (available in
any FmHA office). The loan will be considered approved on the date the
signed copy of Form FmHA 1940-1 is mailed to the applicant. The State
Director or designee may request an obligation of funds when available
within their State allocation and according to the following:
(1) Form FmHA 1940-1, authorizing funds to be reserved, may be
executed by the loan approval official providing the applicant has the
legal authority to contract for a loan and to enter into required
agreements and has signed Form FmHA 1940-1.
(2) If approval was concurred in by the National Office, a copy of
the concurring memorandum will be attached to the original of Form FmHA
1940-1.
(3) The State Director or designee will request an obligation of loan
and/or grant funds via the FmHA Field Office terminal system after
signing Form FmHA 1940-1. The requesting official will furnish security
identification as necessary. The requesting official will record the
date, time of request, and their initials on the original Form FmHA
1940-1.
(4) The obligation date and date the applicant is notified of loan
and/or grant approval is six working days from the date funds are
reserved unless an exception is granted by the National Office.
(5) Immediately after verifying that funds have been reserved,
utilizing the FmHA Field Office terminal system status inquiry function,
the State Director or designee will notify by telephone, the Legislative
Affairs and Public Information Staff in the National Office as required
by FmHA Instruction 2015-C, ''Announcement of Approval of Loans, Grants,
or Guaranteed Loans for Rural Project,'' (available in any FmHA State
Office).
(6) Loan approval and applicant notification will be accomplished by
the State Director or designee by mailing to the applicant on the
obligation date a copy of Form FmHA 1940-1 which has been previously
signed by the applicant and loan approval official. The date the
applicant is notified is also the date the interest rate at loan
approval is established. The State Director or designee will record the
date of applicant notification and the interest rate in effect at that
time on the original of Form FmHA 1940-1 and include it as a permanent
part of the District Office project file with a copy placed in the State
Office file.
(7) If a transfer of obligation of funds is necessary, complete Form
FmHA 450-10, ''Advice of Borrower's Change of Address, Name, Case
Number, or Loan Number,'' and process via the FmHA Field Office terminal
system. An obligation of funds established for an applicant may be
transferred to a different (substituted) applicant provided:
(i) The substituted applicant is eligible to receive the assistance
approved for the original applicant; and
(ii) The substituted applicant bears a close and genuine relationship
to the original applicant (such as two organizations that are controlled
by the same individuals); and
(iii) The need for and scope of the project and the purpose(s) for
which FmHA funds will be used remain substantially unchanged.
(50 FR 7296, Feb. 22, 1985, as amended at 50 FR 33332, Aug. 19, 1985;
50 FR 43378, Oct. 25, 1985; 53 FR 6787, Mar. 3, 1988; 54 FR
47196-47197, Nov. 13, 1989)
07 CFR 1942.6 Preparation for loan closing.
(a) Obtaining closing instructions. Completed dockets will be
reviewed by the State Director. The information required by OGC will be
transmitted to OGC with a request for closing instructions. Upon
receipt of the closing instructions from OGC, the State Director will
forward them along with any appropriate instructions to the District
Director. Upon receipt of closing instructions, the District Director
will discuss with the applicant and its architect or engineer, attorney,
and other appropriate representatives, the requirements contained
therein and any actions necessary to proceed with closing.
(b) Verification of users and other funds. (1) In connection with a
loan for a utility type roject to be secured by a pledge of user fees or
revenues, the District Director will authenticate the number of users
prior to loan closing or the commencement of construction, whichever
occurs first. Such individual will review each signed user agreement
and check evidence of cash contributions. If during the review any
indication is received that all signed users may not connect to the
system, there will be such additional investigation made as deemed
necessary to determine the number of users who will connect to the
system. The District Director will record the determination in a
memorandum to the State Director.
(2) In all cases the availability and amounts of other funds to be
used in the project will be verified by FmHA.
(c) Initial compliance review. An initial compliance review should
be completed under Subpart E of Part 1901 of this chapter.
(d) Ordering loan checks. Checks will not be ordered until:
(1) The applicant has complied with approval conditions and closing
instructions, except for those actions which are to be completed on the
date of loan closing or subsequent thereto; and
(2) The applicant is ready to start construction or funds are needed
to pay interim financing obligations.
(e) Multiple advances of FmHA funds. When FmHA provides loan funds
during the construction period using interim (temporary) instruments
described in 1942.19(g) of this subpart, the following action will be
taken prior to the issuance of the permanent instruments:
(1) The Finance Office will be notified of the anticipated date for
retirement of the interim instruments and issuance of permanent
instruments of debt.
(2) The Finance Office will prepare a statement of account including
accrued interest through the proposed date of retirement and also show
the daily interest accrual. The statement of account and the interim
financing instruments will be forwarded to the District Director.
(3) The District Director will collect interest through the actual
date of the retirement and obtain the permanent instrument(s) of debt in
exchange for the interim financing instruments. The permanent
instruments and the cash collection will be forwarded to the Finance
Office immediately, except that for promissory notes and single
instrument bonds fully registered as to principal and interest, the
original will be retained in the District Office and a copy will be
forwarded to the Finance Office. In developing the permanent
instruments, the sequence of preference set out in 1942.19(e) of this
subpart will be followed.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988;
53 FR 26589, July 14, 1988)
07 CFR 1942.7 Loan closing.
Loans will be closed in accordance with the closing instructions
issued by the OGC and 1942.17(o) of this subpart and as soon as
possible after receiving the check.
(a) Authority to execute, file, and record legal instruments.
District Office employees are authorized to execute and file or record
any legal instruments necessary to obtain or preserve security for
loans. This includes, as appropriate, mortgages and other lien
instruments, as well as affidavits, acknowledgments, and other
certificates.
(b) Preparation of mortgages. Unless otherwise required by State law
or unless an exception is approved by the State Director with advice of
the OGC, only one mortgage will be taken even though the indebtedness is
to be evidenced by more than one instrument.
(c) Source of funds for insured loans. All loans will be made from
the Rural Development Insurance Fund (RDIF).
(d) Unused funds. Obligated funds planned for project development
which remain after all authorized costs have been provided for will be
disposed of in accordance with 1942.17(p)(6) of this subpart. See
Subpart B of Part 1951 of this chapter as to the method of returning
loan and grant funds.
(e) Loan checks. Whenever a loan check is received, lost, or
destroyed, the District Director will take appropriate actions outlined
in FmHA Instruction 102.1 (available in any FmHA office). Checks which
cannot be delivered within a reasonable amount of time (no more than 20
calendar days) will be handled in accordance with FmHA Instruction
102.1.
(f) Supervised bank accounts. Supervised bank accounts will be
handled under Subpart A of Part 1902 of this chapter.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988)
07 CFR 1942.8 Actions subsequent to loan closing.
(a) Mortgages. Real estate or chattel mortages or security
instruments will be delivered to the recording office for recordation or
filing, as appropriate. A copy of such instruments will be delivered to
the borrower. The original instrument, if returnable after recording or
filing, will be retained in the borrower's case folder.
(b) Notes and bonds. When the debt instrument is a promissory note
or single instrument bond fully registered as to principal and interest,
a conformed copy will be sent to the Finance Office immediately after
loan closing and the original instrument will be stored in the District
Office. When other types of bonds are used, the original bond(s) will
be forwarded to the Finance Office immediately after loan closing.
(c) Multiple advances -- bond(s). When temporary paper, such as bond
anticipation notes or interim receipts, is used to conform with the
multiple advance requirement, the original temporary paper will be
forwarded to the Finance Office after each advance is made to the
borrower. The borrower's case number will be entered in the upper
righthand corner of such paper by the District Office. The permanent
debt instrument(s) should be forwarded to the Finance Office as soon as
possible after the last advance is made except that for promissory notes
and single instrument bonds fully registered as to principal and
interest, the original will be retained in the District Office and a
copy will be forwarded to the Finance Office.
(d) Bond registration record. Form FmHA 442-28, ''Bond Registration
Book,'' may be used as a guide to assist borrowers in the preparation of
a bond registration book in those cases where a registration book is
required and a book is not provided in connection with the printing of
the bonds.
(e) Disposition of title evidence. All title evidence other than the
opinion of title, mortgage title insurance policy, and water stock
certificates will be returned to the borrower when the loan has been
closed.
(f) Material for State Office. When the loan has been closed, the
District Director will submit to the State Director:
(1) The complete docket; and
(2) A statement covering information other than the completion of
legal documents showing what was done in carrying out loan closing
instructions.
(g) State Office review of loan closing. The State Director will
review the District Director's statement concerning loan closing, the
security instruments, and other documents used in closing to determine
whether the transaction was closed properly. All material submitted by
the District Director, including the executed contract documents (if
required by OGC) with the certification of the borrower's attorney,
along with a statement by the State Director that all administrative
requirements have been met, will be referred to OGC for post-closing
review. OGC will review the submitted material to determine whether all
legal requirements have been met. OGC's review of FmHA's standard forms
will be only for proper execution thereof, unless the State Director
brings specific questions or deviations to the attention of OGC. It is
not expected that facility development including construction will be
held up pending receipt of the opinion from OGC. When the opinion from
OGC is received, the State Director will advise the District Director of
any deficiencies that must be corrected and return all material that was
submitted for review.
(h) Safeguarding bond shipments. FmHA personnel will follow the
procedures for safeguarding mailings and deliveries of bonds and coupons
outlined in FmHA Instruction 2018-E (available in any FmHA office),
whenever they mail or deliver these items.
(i) Water stock certificates. Water stock certificates will be filed
in the loan docket in the District Office.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988)
07 CFR 1942.9 Planning, bidding, contracting, and constructing. (See
1942.17(p) and 1942.18)
(a) Review of construction plans and specifications. All plans and
specifications will be submitted as soon as available to the State
Office for review and comments.
(b) Contract approval. The State Director or designee is responsible
for approving all construction contracts using legal advice and guidance
of OGC as necessary. The use of a contracting method under 1942.18(l)
of this subpart exceeding $100,000 must be concurred in by the National
Office. Procurement under 1942.18(l) of this subpart will not be
considered when an FmHA grant is involved. When an applicant requests
such concurrence, the State Director will submit the following to the
National Office:
(1) State Director's and FmHA engineer/architect's comments and
recommendations, and when noncompetitive negotiation is proposed, submit
an evaluation of previous work of the proposed construction firm.
(2) Regional attorney's opinion and comments regarding the legal
adequacy of the proposed procurement method and proposed contract
documents.
(3) Copy of owner's written request and description of the
procurement method proposed.
(4) Copy of the proposed contract.
(c) Bid irregularities. Any irregularities in the bids received or
other matters pertaining to the contract award having legal implications
will be cleared with OGC before the State Director consents to the
contract award.
(d) Noncompliance. State Directors, upon receipt of information
indicating borrowers or their officers, employees, or agents are not
performing in compliance with 1942.18(j)(1) of this subpart, may
request the Regional Office of the Inspector General (OIG) to
investigate the matter and provide a report. The State Director is
responsible for resolving the issue.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988)
1942.10 -- 1942.11 (Reserved)
07 CFR 1942.12 Loan cancellation.
Loans which have been approved and obligations which have been
established may be canceled before closing as follows:
(a) Form FmHA 1940-10, ''Cancellation of U.S. Treasury Check and/or
Obligation.'' The District Director or State Director may prepare and
execute Form FmHA 1940-10 in accordance with the Forms Manual Insert
(FMI). If the check has been received or is subsequently received in
the District Office, the District Director will return it as prescribed
in FmHA Instruction 102.1 (available in any FmHA office).
(b) Notice of cancellation. If the docket has been forwarded to OGC,
that office will be notified of the cancellation by a copy of Form FmHA
1940-10. Any application for title insurance, if ordered, will be
canceled. The borrower's attorney and engineer/architect, if any,
should be notified of the cancellation. The District Director may
provide the borrower's attorney and engineer/architect with a copy of
the notification to the applicant. The State Director will notify the
Director of Legislative Affairs and Public Information by telephone or
electronic mail and give the reasons for such cancellation.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 26589, July 14, 1988;
54 FR 39727, Sept. 28, 1989)
07 CFR 1942.13 Loan servicing.
Loans will be serviced under Subpart E of Part 1951 of this chapter.
07 CFR 1942.14 Subsequent loans.
Subsequent loans will be processed under this subpart.
07 CFR 1942.15 Delegation and redelegation of authority.
The State Director is responsible for implementing the authorities in
this subpart and for issuing State supplements redelegating authorities.
Loan and grant approval authority is in Subpart A of Part 1901 of this
chapter. Except for loan and grant approval authority, District
Directors may redelegate their duties to qualified staff members.
07 CFR 1942.16 State supplements and guides.
State Directors will obtain National Office clearance for all State
supplements and guides under FmHA Instruction 2006-B (available in any
FmHA office).
(a) State supplements. State Directors may supplement this subpart
to meet State and local laws and regulations and to provide for orderly
application processing and efficient service to applicants. State
supplements shall not contain any requirements pertaining to bids,
contract awards, and materials more restrictive than those in 1942.18
of this subpart.
(b) State guides. State Directors may develop guides for use by
applicants if the guides to this subpart are not adequate. State
Directors may prepare guides for items needed for the application;
items necessary for the docket; and items required prior to loan
closing or start of construction.
07 CFR 1942.17 Community facilities.
(a) General. This section includes information and procedures
specifically designed for use by applicants including their professional
consultants and/or agents who provide such assistance and services as
architectural, engineering, financial, legal or other services related
to application processing and facility planning and development. This
section is made available as needed for such use. It includes FmHA
policies and requirements pertaining to loans for community facilities.
It provides applicants with guidance for use in proceeding with their
application. FmHA shall cooperate fully with appropriate State agencies
to give maximum support of the State's strategies for development of
rural areas. State and substate A-95 agencies may recommend priorities
for applications. FmHA will fully consider all A-95 agency review
comments and priority recommendations in selecting applications for
funding.
(b) Applicant eligibility. Facilities financed by FmHA must
primarily serve rural residents. For water or waste disposal facilities
the terms ''rural'' and ''rural area'' will not include any area in any
city or town with a population in excess of 10,000 inhabitants according
to the latest decennial census of the United States. For essential
community facilities the term ''rural'' and ''rural area'' will not
include any area in any city or town with a population in excess of
20,000 inhabitants according to the latest decennial census of the
United States. Facilities must be located in rural areas except for
utility-type services, such as water, sewer, natural gas, or
hydroelectric, serving both rural and non-rural areas. In such cases,
FmHA funds may be used to finance only that portion serving rural users,
regardless of facility location. Loans for water or waste disposal
facilities will not be made to any city or town with a population in
excess of 10,000. Loans for essential community facilities will not be
made to any city or town with a population in excess of 20,000.
Assistance to areas or communities adjacent to, or closely associated
with, non-rural areas is limited by 1942.17(c) of this subpart.
(1) Type of applicants -- (i) Public bodies such as municipalities,
counties, districts, authorities, or other political subdivisions of a
State.
(ii) Organizations operated on a not-for-profit basis such as
associations, cooperatives, and private corporations. Applicants
organized under the general profit corporation laws may be eligible if
they actually will be operated on a not-for-profit basis under their
charter, bylaws, mortgage, or supplemental agreement provisions as may
be required as a condition of loan approval.
(A) Essential community facility applicants other than utility-type
must have significant ties with the local rural community. Such ties
are necessary to ensure to the greatest extent possible that a facility
under private control will carry out a public purpose and continue to
primarily serve the local residents. Ties may be evidenced by items
such as:
(1) Association with or controlled by a local public body or bodies,
or broadly based ownership and controlled by members of the community;
(2) Substantial public funding through taxes, revenue bonds, or other
local Government sources, and/or, substantial voluntary community
funding such as would be obtained through a community-wide funding
campaign.
(iii) Indian tribes on Federal and State reservations and other
Federally recognized Indian tribes.
(2) Credit elsewhere. Applicants must certify in writing and FmHA
shall determine and document that the applicant is unable to finance the
proposed project from their own resources or through commercial credit
at reasonable rates and terms.
(3) Legal authority and responsibility. Each applicant must have or
will obtain the legal authority necessary for constructing, operating,
and maintaining the proposed facility or service and for obtaining,
giving security for, and repaying the proposed loan. The applicant
shall be responsible for operating, maintaining, and managing the
facility, and providing for its continued availability and use at
reasonable rates and terms. This responsibility shall be exercised by
the applicant even though the facility may be operated, maintained, or
managed by a third party under contract, management agreement, or
written lease. Leases may be used when this is the only feasible way to
provide the service and is the customary practice. Management
agreements should provide for at least those items listed in Guide 24 of
this subpart (available in any FmHA office). Such contracts, management
agreements, or leases must not contain options or other provisions for
transfer of ownership.
(4) Refinancing FmHA debt. FmHA shall require an agreement that if
at any time it shall appear to the Government that the borrower is able
to refinance the amount of the indebtedness then outstanding, in whole
or in part, by obtaining a loan for such purposes from responsible
cooperative or private credit sources, at reasonable rates and terms for
loans for similar purposes and periods of time, the borrower will, upon
request of the Government, apply for and accept such loan in sufficient
amount to repay the Government and will take all such actions as may be
required in connection with such loan.
(c) Priorities -- (1) Truly rural areas. FmHA program assistance
will be directed toward truly rural areas and rural communities.
Normally, priority will not be given to preapplications for projects
that will serve other than truly rural areas. Truly rural areas are
areas other than densely settled areas or communities adjacent to, or
closely associated with, a city or town with a population exceeding
10,000 residents for water or waste disposal assistance, or 20,000
residents for essential community facility assistance. When determining
whether a rural area or rural community is adjacent to, or closely
associated with, a city or town with a population exceeding 10,000
residents for water and waste disposal, or 20,000 residents for
essential community facility assistance, minor open spaces such as those
created by physical or legal barriers, commercial or industrial
development, parks, areas reserved for convenience or appearance, or
narrow strips of cultivated land, will be disregarded. An area or
community shall be considered adjacent to or closely related with a
nonrural area when it constitutes for general, social, and economic
purposes a single community having a contiguous boundary.
(2) Project selection process. The following paragraphs indicate
items and conditions which must be considered in selecting
preapplications for further development. When ranking eligible
preapplications for consideration for limited funds, FmHA officials must
consider the priority items met by each preapplication and the degree to
which those priorities are met, and apply good judgement.
(i) Preapplications. The preapplication and supporting information
submitted with it will be used to determine the proposed project's
priority for available funds.
(ii) State Office review. All preapplications will be reviewed and
scored and Form AD-622, ''Notice of Preapplication Review Action,''
issued within the time limits in 1942.2(a)(2)(iv) of this subpart.
When considering authorizing the development of an application for
funding, the State Director should consider the remaining funds in the
State allocation, and the anticipated allocation of funds for the next
fiscal year as well as the amount of time necessary to complete that
application. Applicants whose preapplications are found to be
ineligible will be so advised. These applicants will be given adverse
notice through Form AD-622 and advised of their appeal rights under
Subpart B of Part 1900 of this chapter. Those applicants with eligible
lower scoring preapplications which obviously cannot be funded within an
eighteen month period of time, and are not within 150 percent of the
State's allocation, should be notified that funds are not available;
and requested to advise whether they wish to have their preapplication
maintained in an active file for future consideration. The State
Director may request an additional allocation of funds from the National
Office for such preapplications. Such requests will be considered along
with all others on hand.
(iii) Selection priorities. The priorities described below will be
used by the State Director to rate preapplications. The priorities
should be applied to water and waste disposal or community facilities
preapplications as directed. The format found in Part I of Guide 26 of
this subpart should be followed in scoring each preapplication. A copy
of the score sheet should be placed in the case file for future
reference.
(A) Population priorities. The following priorities apply to both
Water and Waste Disposal and Community Facilities preapplications.
Points will be distributed as indicated.
(1) The proposed project is located in a rural community having a
population not in excess of 2,500 -- 25 points.
(2) The proposed project is located in a rural community having a
population not in excess of 5,500 -- 20 points. (Points under this
priority should not be assigned to a preapplication if points were
assigned under paragraph (c)(2)(iii) (A)(1) of this section.)
(B) Health priorities. Points will be distributed as indicated.
(1) Water and Waste Disposal preapplications only. The proposed
project is:
(i) Needed to alleviate the sudden unexpected diminution or
deterioration of a water supply, or to meet health or sanitary standards
which pertain to a community's water supply -- 25 points.
(ii) Required to correct an inadequate waste disposal system due to
unexpected occurrences, or to meet health or sanitary standards which
pertain to a community's waste disposal system -- 25 points.
(2) Community Facility preapplication only. The proposed project is
required either to correct a health or sanitary problem, or to meet a
health or sanitary standard -- 25 points.
(C) Income priorities. The following priorities apply to both Water
and Waste Disposal and Community Facilities preapplications. Points
will be distributed as indicated. The median income of the population
to be served by the proposed facility is:
(1) Less than the poverty line for a family of four, as defined in
Section 673(2) of the Community Services Block Grant Act (42 U.S.C.
9902(2)), or less than 80 percent of the statewide nonmetropolitan
median household income. -- 25 points.
(2) Equal to or more than the poverty line and between 80% and 100%,
inclusive, of the State's nonmetropolitan median household income. -- 20
points.
(D) Other factors. Points will be distributed as indicated.
(1) Water and Waste Disposal preapplications only. The proposed
project will: merge ownership, management, and operation of smaller
facilities providing for more efficient management and economical
service; and/or enlarge, extend, or otherwise modify existing
facilities to provide service to additional rural residents -- 10
points.
(2) Community Facilities preapplications only. The purpose of the
proposed project is to construct, enlarge, extend or otherwise improve
the following types of facilities. (Select only the factor most
applicable to the proposed project.)
(i) Public safety -- 10 points. (Examples include police services
and fire, rescue and ambulance services as authorized by Subpart C of
this Part 1942.
(ii) Health care -- 5 points. (Examples include clinics, nursing
homes, convalescent facilities, and hospital projects designed to make
the facility conform with life/safety codes, medicare and medicaid
requirements, and minor expansions needed to meet the immediate
requirements of the community. Points under this authority should not be
awarded to a preapplication if points were awarded under
1942.17(c)(2)(iii)(B)(2) of this subpart.)
(3) Water and Waste Disposal and Community Facilities
preapplications.
(i) Applicant is a public body or Indian tribe -- 5 points.
(ii) Project is located in a ''truly rural area'' as described in
1942.17(c)(1) of this subpart -- 10 points.
(iii) Amount of joint financing committed to the project is:
(a) 20% or more private, local or state funds except federal funds
channeled through a state agency -- 10 points.
(b) 5%-19% private, local or state funds except federal funds
channeled through a state agency -- 5 points.
(E) In certain cases the State Director may assign up to 15 points to
a preapplication, in addition to those that may be scored under
paragraphs (c)(2)(iii) (A) through (D), of this section. These points
are primarily intended to address an unforeseen exigency or emergency,
such as the loss of a community facility due to accident or natural
disaster or the loss of joint financing if FmHA funds are not committed
in a timely fashion. However, the points may also be awarded to
projects in order to improve compatibility/coordination between FmHA's
and other agencies' selection systems and to assist those projects that
are the most cost effective. A written justification must be prepared
and placed in the project file each time the State Director assigns
these points.
(iv) Results of State Office review. After completing the review,
the State Director will normally select the eligible preapplications
with the highest scores for further processing. In cases where
preliminary cost estimates indicate that an eligible, high scoring
preapplication is unfeasible or would require an amount of funding from
FmHA that exceeds either 25 percent of a State's current annual
allocation or an amount greater than that remaining in the State's
allocation, the State Director may instead select the next lower scoring
preapplication(s) for futher processing provided the high scoring
applicant is notified of this action and given an opportunity to revise
the proposal and resubmit it. If it is found that there is no effective
way to reduce costs, the State Director, after consultation with
applicant, may submit a request for an additional allocation of funds
for the proposed project to the National Office. The request should be
submitted during the fiscal year in which obligation is anticipated.
Such request will be considered along with all others on hand. A
written justification must be prepared and placed in the project file
when an eligible preapplication with a higher rating is not selected for
further processing. The State Director will notify the District
Director of the results of the review action. The State Director will
return the preapplication information with an authorization for the
District Director to prepare and issue Form AD-622 in accordance with
1942.2(a)(2)(iv) of this subpart. Priority will be given to those
preapplications and applications for funding which meet criteria in
1942.17(c)(2)(iii)(A) (1) or (2); and the criteria in 1942.17(c)
(2)(iii)(B)(1) (i) or (ii) or (B)(2) of this subpart.
(v) Application development. Applications should be developed
expeditiously following good management practices. Applications that
are not developed in a reasonable period of time taking into account the
size and complexity of the proposed project may be removed from the
State's active file. Applicants will be consulted prior to taking such
action.
(vi) Project obligations. To ensure efficient use of resources,
obligations should occur in a timely fashion throughout the fiscal year.
Projects may be obligated as their applications are completed and
approved.
(vii) Requests for additional funding. All requests for additional
allocations of funds submitted to the National Office must follow the
formats found in Parts I and II of Guide 26. In selecting projects for
funding at the National Office level, additional points may be scored
based on the priority assigned to the project by the State Office.
These points will be scored in the manner shown below. Only the three
highest priority projects can score points. In addition, the
Administrator may assign up to 15 additional points to account for items
such as geographic distribution of funds and emergency conditions caused
by economic problems or natural disasters.
(viii) Cost overruns. A preapplication may receive consideration for
funding before others at the State Office level or at the National
Office level, if funds are not available in the State Office, when it is
a subsequent request for a previously approved project which has
encountered cost overruns due to high bids or unexpected construction
problems that cannot be reduced by negotiations, redesign, use of bid
alternatives, rebidding or other means.
(d) Eligible loan purposes. (1) Funds may be used:
(i) To construct, enlarge, extend, or otherwise improve water or
waste disposal, and other essential community facilities providing
essential service primarily to rural residents.
(A) ''Water or waste disposal facilities'' include water, sanitary
sewerage, solid waste disposal, and storm waste-water facilities.
(B) ''Essential community facilities'' are those public improvements
requisite to the beneficial and orderly development of a community
operated on a nonprofit basis including but not limited to:
(1) Health services;
(2) Community, social, or cultural services;
(3) Transportation facilities, such as streets, roads, and bridges;
(4) Hydroelectric generating facilities and related connecting
systems and appurtenances, when not eligible for Rural Electrification
Administration (REA) financing;
(5) Supplemental and supporting structures for other rural
electrification or telephone systems (including facilities such as
headquarters and office buildings, storage facilities, and maintenance
shops) when not eligible for Rural Electrification Administration
financing;
(6) Natural gas distribution systems; and
(7) Industrial park sites, but only to the extent of land acquisition
and necessary site preparation, including access ways and utility
extensions to and throughout the site. Funds may not be used in
connection with industrial parks to finance on-site utility systems, or
business and industrial buildings.
(C) ''Otherwise improve'' includes but is not limited to the
following:
(1) The purchase of major equipment, such as solid waste collection
trucks and X-ray machines, which will in themselves provide an essential
service to rural residents;
(2) The purchase of existing facilities when it is necessary either
to improve or to prevent loss of service;
(3) Payment of tap fees and other utility connection charges as
provided in utility purchase contracts prepared under 1942.18(f) of
this subpart.
(ii) To construct or relocate public buildings, roads, bridges,
fences, or utilities, and to make other public improvements necessary to
the successful operation or protection of facilities authorized in
paragraph (d)(1)(i) of this section.
(iii) To relocate private buildings, roads, bridges, fences, or
utilities, and other private improvements necessary to the successful
operation or protection of facilities authorized in paragraph (d)(1)(i)
of this section.
(iv) To pay the following expenses, but only when such expenses are a
necessary part of a loan to finance facilities authorized in paragraphs
(d)(1)(i), (d)(1)(ii) and (d)(1)(iii) of this section.
(A) Reasonable fees and costs such as legal, engineering,
architectural, fiscal advisory, recording, environmental impact
analyses, archeological surveys and possible salvage or other mitigation
measures, planning, establishing or acquiring rights.
(B) Interest on loans until the facility is self-supporting, but not
for more than three years unless a longer period is approved by the
National Office; interest on loans secured by general obligation bonds
until tax revenues are available for payment, but not for more than two
years unless a longer period is approved by the National Office; and
interest on interim financing, including interest charges on interim
financing from sources other than FmHA.
(C) Costs of acquiring interest in land; rights, such as water
rights, leases, permits, rights-of-way; and other evidence of land or
water control necessary for development of the facility.
(D) Purchasing or renting equipment necessary to install, maintain,
extend, protect, operate, or utilize facilities.
(E) Initial operating expenses for a period ordinarily not exceeding
one year when the borrower is unable to pay such expenses.
(F) Refinancing debts incurred by, or on behalf of, a community when
all of the following conditions exist:
(1) The debts being refinanced are a secondary part of the total
loan;
(2) The debts are incurred for the facility or service being financed
or any part thereof;
(3) Arrangements cannot be made with the creditors to extend or
modify the terms of the debts so that a sound basis will exist for
making a loan.
(G) Prepay costs for which FmHA grant funds were obligated provided
there is:
(1) No conflict with the loan resolution, State statutes, or any
other loan requirements; and
(2) Full documentation showing that:
(i) Loan funds will only be utilized on a temporary basis; and
(ii) All FmHA loan funds are restored at a later date for purpose(s)
for which they were obligated.
(v) To pay obligations for construction incurred before loan
approval. Construction work should not be started and obligations for
such work or materials should not be incurred before the loan is
approved. However, if there are compelling reasons for proceeding with
construction before loan approval, applicants may request FmHA approval
to pay such obligations. Such requests may be approved if FmHA
determines that:
(A) Compelling reasons exist for incurring obligations before loan
approval; and
(B) The obligations will be incurred for authorized loan purposes;
and
(C) Contract documents have been approved by FmHA; and
(D) All environmental requirements applicable to FmHA and the
applicant have been met; and
(E) The applicant has the legal authority to incur the obligations at
the time proposed, and payment of the debts will remove any basis for
any mechanic, material, or other liens that may attach to the security
property. FmHA may authorize payment of such obligations at the time of
loan closing. FmHA's authorization to pay such obligations, however, is
on the condition that it is not committed to make the loan; it assumes
no responsibility for any obligations incurred by the applicant; and
the applicant must subsequently meet all loan approval requirements.
The applicant's request and FmHA authorization for paying such
obligations shall be in writing. If construction is started without
FmHA approval, post approval in accordance with this section may be
considered.
(2) Funds may not be used to finance:
(i) On-site utility systems or business and industrial buildings in
connection with industrial parks.
(ii) Facilities to be used primarily for recreation purposes.
(iii) Community antenna television services or facilities.
(iv) Electric generation or transmission facilities or telephone
systems, except as provided in paragraph (d)(1)(i)(B)(4), or
(d)(1)(i)(B)(5) of this section; or extensions to serve a particular
essential community facility as provided in paragraph (d)(1)(ii) or
(d)(1)(iii) of this section.
(v) Facilities which are not modest in size, design, and cost.
(vi) Loan or grant finder's fees.
(vii) Projects located within the Coastal Barriers Resource System
that do not qualify for an exception as defined in Section 6 of the
Coastal Barriers Resource Act, Pub. L. 97-348.
(viii) New combined sanitary and storm water sewer facilities.
(e) Facilities for public use. All facilities financed under the
provisions of this subpart shall be for public use and primarily serve
rural residents.
(1) Utility-type service facilities will be installed so as to serve
any user within the service area who desires service and can be feasibly
and legally served. Applicants and borrowers must obtain written
concurrence of the FmHA prior to refusing service to such user. Upon
failure to provide service which is reasonable and legal, such user
shall have direct right of action against the applicant/borrower. A
notice of the availability of this service should be given by the
applicant/borrower to all persons living within the area who can
feasibly and legally be served by the phase of the project being
financed.
(i) If a mandatory hookup ordinance will be adopted, the required
bond ordinance or resolution advertisement will be considered adequate
notification.
(ii) When any portion of the income will be derived from user fees
and a mandatory hookup ordinance will not be adopted, each potent user
will be afforded an opportunity to request service by signing a Users
Agreement.
Those declining service will be afforded an opportunity to sign a
statement to such effect. FmHA has guides available for these purposes
in all FmHA offices.
(2) In no case will boundaries for the proposed service area be
chosen in such a way that any user or area will be excluded because of
race, color, religion, sex, marital status, age, handicap, or national
origin.
(3) This does not preclude:
(i) Financing or constructing projects in phases when it is not
practical to finance or construct the entire project at one time; and
(ii) Financing or constructing facilities where it is not
economically feasible to serve the entire area provided economic
feasibility is determined on the basis of the entire system and not by
considering the cost of separate extensions to or parts thereof; the
applicant publicly announces a plan for extending service to areas not
initially receiving service from the system; and those families living
in the areas not to be initially served receive written notice from the
applicant that service will not be provided until such time as it is
economically feasible to do so.
(iii) Extending services to industrial areas when service is made
available to users located along the extensions.
(4) The State Director will determine that, when feasibly and legally
possible, inequities within the proposed project's service area for the
same type service proposed (i.e., water or waste disposal) will be
remedied by the owner on or before completion of the project that
includes FmHA funding. Inequities are defined as flagrant variations in
availability, adequacy or quality of service. User rate schedules for
portions of existing systems that were developed under different
financing, rates, terms or conditions, as determined by the State
Director, do not necessarily constitute inequities.
(5) Before a loan is made to an applicant other than a public body,
for other than utility type projects, the articles of incorporation or
loan agreement will include a condition similar to the following:
In the event of dissolution of this corporation, or in the event it
shall cease to carry out the objectives and purposes herein set forth,
all business, property, and assets of the corporation shall go and be
distributed to one or more nonprofit corporations or public bodies as
may be selected by the board of directors of this corporation and
approved by at least 75 percent of the users or members to be used for,
and devoted to, the purpose of a community facility project or other
purpose to serve the public welfare of the community. In no event shall
any of the assets or property, in the event of dissolution thereof, go
or be distributed to members, directors, stockholders, or others having
financial or managerial interest in the corporation either for the
reimbursement of any sum subscribed, donated or contributed by such
members or for any other purposes, provided that nothing herein shall
prohibit the corporation from paying its just debts.
(f) Rates and terms -- (1) General. Each loan will bear interest at
the rate prescribed in FmHA Instruction 440.1, Exhibit B (available in
any FmHA office). The interest rates will be set by FmHA at least for
each quarter of the fiscal year. All rates will be adjusted to the
nearest one-eighth of one per centum. For each loan, the basis for
determining what interest rate is appropriate will be completely
documented on Form FmHA 1942-43 or Form FmHA 1942-45. The applicant may
submit a written request prior to loan closing that the interest rate
charged on the loan be the lower of the rate in effect at the time of
loan approval or the rate in effect at the time of loan closing. If the
interest rate is to be that in effect at loan closing, the interest rate
charged on a loan involving multiple advances of FmHA funds, using
temporary debt instruments, shall be that in effect on the date when the
first temporary debt instrument is issued. If no written request is
received from the applicant prior to loan closing, the interest rate
charged on the loan will be the rate in effect at the time of loan
approval.
(2) Poverty line rate. The poverty line interest rate will not
exceed five per centum per annum. It will apply to loans for which the
loan approval official determines both the following condition exist:
(i) The primary purpose of the loan is to upgrade existing facilities
or construct new facilities required to meet applicable health or
sanitary standards. Documentation will be obtained from the appropriate
regulatory agency with jurisdiction to establish the standard, to verify
that a bonafide standard exists, what that standard is, and that the
proposed improvements are needed and required to meet the standard; and
(ii) The median household income of the service area is below the
poverty line for a family of four, as defined in section 673(2) of the
Community Services Block Grant Act (42 U.S.C. 9902(2)), or below 80
percent of the Statewide nonmetropolitan median household income.
(3) Intermediate rate. The intermediate interest rate will be set at
the poverty line rate plus one-half of the difference between the
poverty line rate and the market rate, not to exceed 7 percent per
annum. It will apply to loans that do not meet the requirements for the
poverty line rate and for which the median household income of the
service area is below the poverty line or not more than 100 percent of
the nonmetropolitan median household income of the State.
(4) Market rate. The market interest rate will be set using as
guidance the average of the Bond Buyer Index for the four weeks prior to
the first Friday of the last month before the beginning of the quarter.
The market rate will apply to all loans that do not qualify for a
different rate under paragraph (f)(2) or (f)(3) of this section. It may
be adjusted as provided in paragraph (f)(5) of this section.
(5) Prime farmland. For essential community facilities loans, the
rate indicated by paragraphs (f)(2), (f)(3) or (f)(4) of this section
will be increased by two per centum per annum if the project being
financed will involve the use of, or construction on, prime or unique
farmland in accordance with FmHA Instruction 440.1, Exhibits B and J
(available in any FmHA office).
(6) Income determination. The income data used to determine median
household income should be that which most accurately reflects the
income of the service area. The service area is that area reasonably
expected to be served by the facility being financed by FmHA. The
median household income of the service area and the nonmetropolitan
median household income of the State will be determined from income data
from the most recent decennial census of the U.S. If there is reason to
believe that the census data is not an accurate representation of the
median household income within the area to be served, the reasons will
be documented and the applicant may furnish, or FmHA may obtain,
additional information regarding such median household income.
Information will consist of reliable data from local, regional, State or
Federal sources or from a survey conducted by a reliable impartial
source. The nonmetropolitan median household income of the State may
only be updated on a national basis by the FmHA National Office. This
will be done only when median household income data for the same year
for all Bureau of the Census areas is available from the Bureau of the
Census or other reliable sources. Bureau of the Census areas would
include areas such as: Counties, County Subdivisions, Cities, Towns,
Townships, Boroughs, and other places.
(7) Repayment terms. The loan repayment period shall not exceed the
useful life of the facility, State statute or 40 years from the date of
the note(s) or bond(s), whichever is less. Where FmHA grant funds are
used in connection with an FmHA loan, the loan will be for the maximum
term permitted by this subpart, State statute, or the useful life of the
facility, whichever is less, unless there is an exceptional case where
circumstances justify making an FmHA loan for less than the maximum term
permitted. In such cases, the reasons must be fully documented. In all
cases, including those in which the FmHA is jointly financing with
another lender, the FmHA payments of principal and interest should
approximate amortized installments.
(i) Principal payments may be deferred in whole or in part for a
period not to exceed 36 months following the date the first interest
installment is due. If for any reason it appears necessary to permit a
longer period of deferment, the State Director may authorize such
deferment with the prior approval of the National Office. Deferments of
principal will not be used to:
(A) Postpone the levying of taxes or assessments.
(B) Delay collection of the full rates which the borrower has agreed
to charge users for its services as soon as major benefits or the
improvements are available to those users.
(C) Create reserves for normal operation and maintenance.
(D) Make any capital improvements except those approved by FmHA
determined to be essential to the repayment of the loan or to the
obtaining of adequate security thereof.
(E) Accelerate the payment of other debts.
(ii) Payment date. Loan payments will be scheduled to coincide with
income availability and be in accordance with State law. If consistent
with the foregoing, monthly payments will be required and will be
enumerated in the bond, other evidence of indebtedness, or other
supplemental agreement. However, if State law only permits principal
plus interest (P&I) type bonds, annual or semiannual payments will be
used. Insofar as practical monthly payments will be scheduled one full
month following the date of loan closing; or semiannual or annual
payments will be scheduled six or twelve full months, respectively,
following the date of loan closing or any deferment period. Due dates
falling on the 29th, 30th or 31st day of the month will be avoided.
(g) Security. Loans will be secured by the best security position
practicable in a manner which will adequately protect the interest of
FmHA during the repayment period of the loan. Specific requirements for
security for each loan will be included in a letter of conditions.
(1) Joint financing security. For projects utilizing joint
financing, when adequate security of more than one type is available,
the other lender may take one type of security with FmHA taking another
type. For projects utilizing joint financing with the same security to
be shared by FmHA and another lender, FmHA will obtain at least a parity
position with the other lender. A parity position is to ensure that
with joint security, in the event of default, each lender will be
affected on a proportionate basis. A parity position will conform with
the following unless an exception is granted by the National Office:
(i) Terms. It is not necessary for loans to have the same repayment
terms to meet the parity requirements. Loans made by other lenders
involved in joint financing with FmHA for facilities should be scheduled
for repayment on terms similar to those customarily used in the State
for financing such facilities.
(ii) Use of trustee or other similar paying agent. The use of a
trustee or other similar paying agent by the other lender in a joint
financing arrangement is acceptable to FmHA. A trustee or other similar
paying agent will not normally be used for the FmHA portion of the
funding unless required to comply with State law. The responsibilities
and authorities of any trustee or other similar paying agent on projects
that include FmHA funds must be clearly specified by written agreement
and approved by the FmHA State Director and Regional Attorney. FmHA
must be able to deal directly with the borrower to enforce the
provisions of loan and grant agreements and perform necessary servicing
actions.
(iii) Regular payments. In the event adequate funds are not
available to meet regular installments on parity loans, the funds
available will be apportioned to the lenders based on the respective
current installments of principal and interest due.
(iv) Disposition of Property. Funds obtained from the sale or
liquidation of secured property or fixed assets will be apportioned to
the lenders on the basis of the pro rata amount loaned, but not to
exceed their respective outstanding balances; provided, however, funds
obtained from such sale or liquidation for a project that included FmHA
grant funds will be apportioned as may be required by the grant
agreement.
(v) Protective advances. Protective advances are payments made by a
lender for items such as insurance or taxes, to protect the financial
interest of the lender, and charged to the borrower's loan account. To
the extent consistent with State law and customary lending practices in
the area, repayment of protective advances made by either lender, for
the mutual protection of both lenders, should receive first priority in
apportionment of funds between the lenders. To ensure agreement between
lenders, efforts should be made to obtain the concurrence of both
lenders before one lender makes a protective advance.
(2) Public bodies. Loans to such borrowers will be evidenced by
notes, bonds, warrants, or other contractual obligations as may be
authorized by relevant State statutes and by borrower's documents,
resolutions, and ordinances.
(i) Utility-type facilities such as water and sewer systems, natural
gas distribution systems, electric systems, etc., will be secured by:
(A) The full faith and credit of the borrower when the debt is
evidenced by general obligation bonds; and/or
(B) Pledges of taxes or assessments; and/or
(C) Pledges of facility revenue and, when it is the customary
financial practice in the State, liens will be taken on the interest of
the applicant in all land, easements, rights-of-way, water rights, water
purchase contracts, water sales contracts, sewage treatment contracts,
and similar property rights, including leasehold interest, used or to be
used in connection with the facility whether owned at the time the loan
is approved or acquired with loan funds; and/or
(D) In those cases involving water and waste disposal projects where
there is a substantial number of other than full-time residents and
facility costs result in a higher than reasonable rate for such
full-time residents, the loan will be secured by the full faith and
credit of the borrower or by an assignment or pledge of taxes, or
assessments for public bodies or other organizations having the
authority to issue or pledge such taxes, or assessments.
(ii) Solid waste projects will be secured by bonds pledging solid
waste disposal revenue, only when the revenue pledged includes that from
the solid waste project plus revenue from other facilities of the
applicant with tie-in enforcement rights, or by the taxing power of
participating local governments.
(iii) Other essential community facilities other than utility type,
such as those for public health and safety, social, and cultural needs
and the like will meet the following security requirements:
(A) Such loans will be secured by one or a combination of the
following and in the following order of preference:
(1) General obligation bonds.
(2) Assessments.
(3) Bonds which pledge other taxes.
(4) Bonds pledging revenues of the facility being financed when such
bonds provide for the mandatory levy and collection of taxes in the
event revenues later become insufficient to properly operate and
maintain the facility and to retire the loan.
(5) Assignment of assured income which will be available for the life
of the loan, from such sources as insurance premium rebates, income from
endowments, irrevocable trusts, or commitments from industries, public
bodies, or other reliable sources.
(6) Liens on real and chattel property when legally permissible and
an assignment of the borrowers income from applicants who have been in
existence and are able to present evidence of a financially successful
operation of a similar facility for a period of time sufficient to
indicate project success. National Office concurrence is required when
the applicant has been in existence for less than five years or has not
operated on a financially successful basis for five years immediately
prior to loan application.
(7) Liens on real and chattel property when legally permissible and
an assignment of income from an organization receiving Health and Human
Services (HHS) operating grants under the ''Memorandum of Understanding
Between Health Resources and Services Administration, U.S. Department of
Health and Human Services and Farmers Home Administration, U.S.
Department of Agriculture'' (see FmHA Instruction 2000-T, available in
any FmHA office.)
(8) Liens on real and chattel property when legally permissible and
an assignment of income from an organization proposing a facility whose
users receive reliable income from programs such as social security,
supplemental security income (SSI), retirement plans, long-term
insurance annuities, medicare or medicaid. Examples are homes for the
handicapped or institutions whose clientele receive State or local
government assistance.
(9) When the applicant cannot meet the criteria in paragraph
(g)(2)(iii)(A) (1) through (8) of this section, such proposals may be
considered when all the following are met:
(i) The applicant is a new organization or one that has not operated
the type of facility being proposed.
(ii) There is a demonstration of exceptional community support such
as substantial financial contributions, and aggressive leadership in the
formation of the organization and proposed project which indicates a
commitment of the entire community.
(iii) The State Director has determined that adequate and dependable
revenues will be available to meet all operation expenses, debt
repayment, and the required reserve.
(iv) Prior National Office review and concurrence is obtained.
(B) Real estate and chattel property taken as security in accordance
with paragraphs (g)(2)(iii)(A) (6) through (9) of this section:
(1) Ordinarily will include the property that is used in connection
with the facility being financed; and
(2) Will have an as-developed present market value determined by a
qualified appraiser equal to or exceeding the amount of the loan to be
obtained plus any other indebtedness against the proposed security; and
(3) May have one of the lien requirements deleted when the loan
approval official determines that the loan will be adequately secured
with a lien on either the real estate or chattel property.
(C) When security is not available in accordance with paragraphs
(g)(2)(iii)(A) (1) through (5) of this section and State law precludes
securing the loan with liens on real or chattel property, the loan will
be secured in the best manner consistent with State law and customary
security taken by private lenders in the State, such as revenue bonds,
and any other security the loan approval official determines necessary
for a sound loan. Such loans will otherwise meet the requirements of
(g)(2)(iii)(A) (6) through (9) of this section as appropriate.
(3) Other-than-public bodies. Loans to other-than-public body
applicants will be secured as follows:
(i) Utility-type facilities eligible for FmHA assistance under
paragraph (d) of this section such as water and sewer systems, natural
gas distribution systems, electric systems, etc., will be secured as
follows:
(A) Assignments of borrower income will be taken and perfected by
filing, if legally permissable; and
(B) A lien will be taken on the interest of the applicant in all
land, easements, rights-of-way, water rights, water purchase contracts,
water sales contracts, sewage treatment contracts and similar property
rights, including leasehold interest, used, or to be used in connection
with the facility whether owned at the time the loan is approved or
acquired with loan funds. In unusual circumstances where it is not
feasible to obtain a lien on such land (such as land rights obtained
from Federal or local government agencies, and from railroads) and the
loan approval official determines that the interest of FmHA otherwise is
secured adequately, the lien requirement may be omitted as to such land
rights.
(C) When the loan is approved or the acquisition of real property is
subject to an outstanding lien indebtedness, the next highest priority
lien obtainable will be taken if the loan approval official determines
that the loan is adequately secured.
(D) Other security. Promissory notes from individuals, stock or
membership subscription agreements, individuals member's liability
agreements, or other evidences of debt, as well as mortgages or other
security instruments encumbering the private property of members of the
association may be pledged or assigned to FmHA as additional security in
any case in which the interest of FmHA will not be otherwise adequately
protected.
(E) In those cases where there is a substantial number of other than
full time residents and facility costs result in a higher than
reasonable rate for such full time residents, the loan will be secured
by an assignment or pledge of general obligation bonds, taxes or
assessments from public bodies or other organizations having authority
to issue bonds backed by taxes or assessments.
(ii) Solid waste projects will be secured by a pledge of solid waste
disposal revenue, only when the revenue pledged includes that from the
solid waste project plus revenue from other facilities of the applicant
with tie-in enforcement rights, or by the taxing power of participating
local governments.
(iii) Essential community facilities other than utility type such as
those for public health and safety, social, and cultural needs and the
like will meet the following security requirements:
(A) Such loans will be secured by one or a combination of the
following and in the following order of preference:
(1) An assignment of assured income that will be available for the
life of the loan, from sources such as insurance premium rebates, income
from endowments, irrevocable trusts, or commitments from industries,
public bodies, or other reliable sources.
(2) Liens on real and chattel property with an assignment of income
from applicants who have been in existence and are able to present
evidence of a financially successful operation of a similar facility for
a period of time sufficient to indicate project success. National
Office concurrence is required when the applicant has been in existence
for less than five years or has not operated on a financially successful
basis for at least the five years immediately prior to loan application.
(3) Liens on real and chattel property and an assignment of income
from an organization receiving HHS operating grants under the
''Memorandum of Understanding Between Health Resources and Services
Administration, U.S. Department of Health and Human Services and Farmers
Home Administration, U.S. Department of Agriculture'' (see FmHA
Instruction 2000-T, available in any FmHA office).
(4) Liens on real and chattel property when legally permissible and
an assignment of income from an organization proposing a facility whose
users receive reliable income from programs such as social security,
supplemental security income (SSI), retirement plans, long-term
insurance annuities, medicare or medicaid. Examples are homes for the
handicapped or institutions whose clientele receive State or local
government assistance.
(5) When the applicant cannot meet the criteria in paragraphs
(g)(3)(iii)(A) (1) through (4) of this section, such proposals may be
considered when all the following are met:
(i) The applicant is a new organization or one that has not operated
the type of facility being proposed.
(ii) There is a demonstration of exceptional community support such
as substantial financial contributions, and aggressive leadership in the
formation of the organization and proposed project which indicates a
commitment of the entire community.
(iii) The State Director has determined that adequate and dependable
revenues will be available to meet all operation expenses, debt
repayment, and the required reserve.
(iv) Prior National Office review and concurrence is obtained.
(6) Additional security may be taken as determined necessary by the
loan approval official.
(B) Real estate and chattel property taken as security:
(1) Ordinarily will include the property that is used in connection
with the facility being financed; and
(2) Will have an as-developed present market value determined by a
qualified appraiser equal to or exceeding the amount of the loan to be
obtained plus any other indebtedness against the proposed security; and
(3) May have one of the lien requirements deleted when the loan
approval official determines that the loan will be adequately secured
with a lien on either the real estate or the chattel property.
(h) Economic feasibility requirements. All projects financed under
the provisions of this section must be based on taxes, assessments,
revenues, fees, or other satisfactory sources of revenues in an amount
sufficient to provide for facility operation and maintenance, a
reasonable reserve, and debt payment. An overall review of the
applicant's financial status, including a review of all assets and
liabilities, will be a part of the docket review process by the FmHA
staff and approval official.
(1) Financial feasibility reports. All applicants will be expected
to provide a financial feasibility report prepared by a qualified firm
or individual. These financial feasibility reports will normally be:
(i) Included as part of the preliminary engineer/architectural report
using Guides 6 through 10 as applicable; or
(ii) Prepared by a qualified firm or individual not having a direct
interest in the management or construction of the facility using Guide 5
when:
(A) The project will significantly affect the applicant's financial
operations and is not a utility-type facility but is dependent on
revenues from the facility to repay the loan; or
(B) It is specifically requested by FmHA.
(2) Applicants for loans for utility-type facilities dependent on
users fees for debt payment shall base their income and expense forecast
on realistic user estimates in accordance with the following:
(i) In estimating the number of users and establishing rates or fees
on which the loan will be based for new systems and for extensions or
improvements to existing systems, consideration should be given to the
following:
(A) An estimated number of maximum initial users should not be used
when setting user fees and rates since it may be several years before
all residents in the community will need the services provided by the
system. In establishing rates a realistic number of initial users
should be employed.
(B) User agreements from individual vacant property owners will not
be considered when determining project feasibility unless:
(1) The owner has plans to develop the property in a reasonable
period of time and become a user of the facility; and
(2) The owner agrees in writing to make a monthly payment at least
equal to the proportionate share of debt service attributable to the
vacant property until the property is developed and the facility is
utilized on a regular basis. A bond or escrowed security deposit must
be provided to guarantee this monthly payment and to guarantee an amount
at least equal to the owner's proportionate share of construction costs.
If a bond is provided, it must be executed by a surety company that
appears on the Treasury Department's most current list (Circular 570, as
amended) and be authorized to transact business in the State where the
project is located. The guarantee shall be payable jointly to the
borrower and the Farmers Home Administration; and
(3) Such guarantee will mature not later than 4 years from the date
of execution and will be finally due and payable upon default of a
monthly payment or at maturity, unless the property covered by the
guarantee has been developed and the facility is being utilized on a
regular basis.
(C) Income from other vacant property owners will be considered only
as extra income.
(ii) Realistic user estimates will be established as follows:
(A) Meaningful potential user cash contributions. Potential user
cash contributions are required except:
(1) For users presently receiving service, or
(2) Where FmHA determines that the potential users as a whole in the
applicant's service area cannot make cash contributions, or
(3) Where State statutes or local ordinances require mandatory use of
the system and the applicant or legal entity having such authority
agrees in writing to enforce such statutes, or ordinances.
(B) The amount of cash contributions required in paragraph
(h)(2)(ii)(A) of this section will be set by the applicant and concurred
in by FmHA. Contribtions should be an amount high enough to indicate
sincere interest on the part of the potential user, but not so high as
to preclude service to low income families. Contributions ordinarily
should be an amount approximating one year's minimum user fee, and shall
be paid in full before loan closing or commencement of construction,
whichever occurs first. Once economic feasibility is ascertained based
on a demonstration of meaningful potential user cash contributions, the
contribution, membership fee or other fees that may be imposed are not a
requirement of FmHA under this section. However, borrowers do have an
additional responsibility relating to generating sufficient revenues as
set forth in paragraph (n)(2)(iii) of this section.
(C) Enforceable user agreement. Except for users presently receiving
service, an enforceable user agreement with a penalty clause is required
unless State statutes or local ordinances require mandatory use of the
system and the applicant or legal entity having such authority agrees in
writing to enforce such statutes or ordinances.
(iii) In those cases where all or part of the borrower's debt payment
revenues will come from user fees, applicants must provide a positive
program to encourage connection by all users as soon as service is
available. The program will be available for review and approval by
FmHA before loan closing or commencement of construction, whichever
occurs first. Such a program shall include:
(A) An aggressive information program to be carried out during the
construction period. The borrower should send written notification to
all signed users at least three weeks in advance of the date service
will be available, stating the date users will be expected to have their
connections completed, and the date user charges will begin.
(B) Positive steps to assure that installation services will be
available. These may be provided by the contractor installing the
system, local plumbing companies, or local contractors.
(C) Aggressive action to see that all signed users can finance their
connections. This might require collection of sufficient user
contributions to finance connections. Extreme cases might necessitate
additional loan funds for this purpose; however, loan funds should be
used only when absolutely necessary and when approved by FmHA prior to
loan closing.
(3) Utility-type facilities for new developing communities or areas.
Developers are normally expected to provide utility-type facilities in
new or developing areas and such facilities shall be installed in
compliance with appropriate State statutes and regulations. FmHA
financing will be considered to an eligible applicant in such cases when
failure to complete development would result in an adverse economic
condition for the rural area (not the community being developed); the
proposal is necessary to the success of an area development plan; and
loan repayment can be assured by:
(i) The applicant already having sufficient assured revenues to repay
the loan; or
(ii) Developers providing a bond or escrowed security deposit as a
guarantee sufficient to meet expenses attributable to the area in
question until a sufficient number of the building sites are occupied
and connected to the facility to provide enough revenues to meet
operating, maintenance, debt service, and reserve requirements. Such
guarantees from developers will meet the requirements in paragraph
(h)(2)(i)(B) of this section; or
(iii) Developers paying cash for the increased capital cost and any
increased operating expenses until the developing area will support the
increased costs; or
(iv) The full faith and credit of a public body where the debt is
evidenced by general obligation bonds; or
(v) The loan is to a public body evidenced by a pledge of tax
assessments; or
(vi) The user charges can become a tax lien upon the property being
served and income from such lien can be collected in sufficient time to
be used for its intended purposes.
(i) Reserve requirements. Provision for the accumulation of
necessary reserves over a reasonable period of time will be included in
the loan documents and in assessments, tax levies, or rates charged for
services. In those cases where statutes providing for extinguishing
assessment liens of public bodies when properties subject to such liens
are sold for delinquent State or local taxes, special reserves will be
established and maintained for the protection of the borrower's
assessment lien.
(1) General obligation or special assessment bonds. Ordinarily, the
requirements for reserves will be considered to have been met if general
obligation or other bonds which pledge the full faith and credit of the
political subdivision are used, or special assessment bonds are used,
and if such bonds provide for the annual collection of sufficient taxes
or assessments to cover debt service, operation and maintenance, and a
reasonable amount for emergencies and to offset the possible nonpayment
of taxes or assessments by a percentage of the property owners, or a
statutory method is provided to prevent the incurrence of a deficiency.
(2) Other than general obligation or special assessment bonds. Each
borrower will be required to establish and maintain reserves sufficient
to assure that loan installments will be paid on time, for emergency
maintenance, for extensions to facilities, and for replacement of
short-lived assets which have a useful life significantly less than the
repayment period of the loan. It is expected that borrowers issuing
bonds or other evidences of debt pledging facility revenues as security
will ordinarily plan their reserve to provide for a total reserve in an
amount at least equal to one average loan installment. It is also
expected the ordinarily such reserve will be accumulated at the rate of
at least one-tenth of the total each year until the desired level is
reached.
(j) General requirements -- (1) Membership authorization. For
organizations other than public bodies, the membership will authorize
the project and its financing except that the State Director may, with
the concurrence of OGC, accept the loan resolution without such
membership authorization when State statutes and the organization's
charter and bylaws do not require such authorization; and
(i) The organization is well established and is operating with a
sound financial base; or
(ii) For utility-type projects the members of the organization have
all signed an enforceable user agreement with a penalty clause and have
made the required meaningful user cash contribution, except for members
presently receiving service or when State statutes or local ordinances
require mandatory use of the facility.
(2) Planning, bidding, contracting, constructing. (See 1942.18).
(3) Insurance and fidelity bonds. The purpose of FmHA's insurance
and fidelity bond requirements is to protect the government's financial
interest based on the facility financed. The requirements below apply
to all types of coverage determined necessary. The National Office may
grant exceptions to normal requirements when appropriate justification
is provided establishing that it is in the best interest of the
applicant/borrower and will not adversely affect the government's
interest.
(i) General. (A) Applicants must provide evidence of adequate
insurance and fidelity bond coverage by loan closing or start of
construction, whichever occurs first. Adequate coverage in accordance
with this section must then be maintained for the life of the loan. It
is the responsibility of the applicant/borrower and not that of FmHA to
assure that adequate insurance and fidelity bond coverage is maintained.
(B) Insurance and fidelity bond requirements by FmHA shall normally
not exceed those proposed by the applicant/borrower if the FmHA loan
approval or servicing official determines that proposed coverage is
adequate to protect the government's financial interest.
Applicants/borrowers are encouraged to have their attorney, consulting
engineer/architect, and/or insurance provider(s) review proposed types
and amounts of coverage, including any deductible provisions. If the
FmHA official and the applicant/borrower cannot agree on the
acceptability of coverage proposed, a decision will be made by the State
Director.
(C) The use of deductibles, i.e., an initial amount of each claim to
be paid by the applicant/borrower, may be allowed by FmHA providing the
applicant/borrower has financial resources which would likely be
adequate to cover potential claims requiring payment of the deductible.
(D) Borrowers must provide evidence to FmHA that adequate insurance
and fidelity bond coverage is being maintained. This may consist of a
listing of policies and coverage amounts in yearend reports submitted
with management reports required under 1942.17(q)(2) or other
documentation. The borrower is responsible for updating and/or renewing
policies or coverage which expire between submissions to FmHA. Any
monitoring of insurance and fidelity bond coverage by FmHA is solely for
the benefit of FmHA, and does not relieve the applicant/borrower of its
obligation under the loan resolution to maintain such coverage.
(ii) Fidelity bond. Applicants/borrowers will provide fidelity bond
coverage for all persons who have access to funds. Coverage may be
provided either for all individual positions or persons, or through
''blanket'' coverage providing protection for all appropriate employees
and/or officials. An exception may be granted by the State Director
when funds relating to the facility financed are handled by another
entity and it is determined that the entity has adequate coverage or the
government's interest would otherwise be adequately protected.
(A) The amount of coverage required by FmHA will normally approximate
the total annual debt service requirements for the FmHA loans.
(B) Form FmHA 440-24, ''Position Fidelity Schedule Bond'' may be
used. Similar forms may be used if determined acceptable to FmHA.
Other types of coverage may be considered acceptable if it is determined
by FmHA that they fulfill essentially the same purpose as a fidelity
bond.
(iii) Insurance. The following types of coverage must be maintained
in connection with the project if appropriate for the type of project
and entity involved:
(A) Property insurance. Fire and extended coverage will normally be
maintained on all structures except as noted in paragraphs
(j)(3)(iii)(A) (1) and (2) below. Ordinarily, FmHA should be listed as
mortgagee on the policy when FmHA has a lien on the property. Normally,
major items of equipment or machinery located in the insured structures
must also be covered. Exceptions:
(1) Reservoirs, standpipes, elevated tanks, and other structures
built entirely of noncombustible materials if such structures are not
normally insured.
(2) Subsurface lift stations except for the value of electrical and
pumping equipment therein.
(B) Liability and property damage insurance, including vehicular
coverage.
(C) Malpractice insurance. The need and requirements for malpractice
insurance will be carefully and thoroughly considered in connection with
each health care facility financed.
(D) Flood insurance. Facilities located in special flood- and
mudslide-prone areas must comply with the eligibility and insurance
requirements of Subpart B of Part 1806 of this chapter (FmHA Instruction
426.2).
(E) Worker's compensation. The borrower will carry worker's
compensation insurance for employees in accordance with State laws.
(4) Acquisition of land, easements, water rights, and existing
facilities. Applicants are responsible for acquisition of all property
rights necessary for the project and will determine that prices paid are
reasonable and fair. FmHA may require an appraisal by an independent
appraiser or FmHA employee.
(i) Title for land, rights-of-way, easements, or existing facilities.
The applicant must certify and provide a legal opinion relative to the
title to rights-of-way and easements. Form FmHA 442-21, ''Rights-of-Way
Certificate,'' and Form FmHA 442-22, ''Opinion of Counsel Relative to
Rights-of-Way,'' may be used.
(A) Rights-of-way and easements. Applicants are responsible for and
will obtain valid, continuous and adequate rights-of-way and easements
needed for the construction, operation, and maintenance of the facility.
Form FmHA 442-20, ''Right-of-Way Easement,'' may be used. When a site
is for major structures for utility-type facilities such as a reservoir
or pumping station and the applicant is able to obtain only a
right-of-way or easement on such a site rather than a fee simple title,
the applicant will furnish a title report thereon by the applicant's
attorney showing ownership of the land and all mortgages or other lien
defects, restrictions, or encumbrances, if any. It is the
responsibility of the applicant to obtain and record such releases,
consents or subordinations to such property rights from holders of
outstanding liens or other instruments as may be necessary for the
construction, operation, and maintenance of the facility and give FmHA
the required security.
(B) Title for land or existing facilities. Title to land essential
to the successful operation of facilities or title to facilities being
purchased, must not contain any restrictions that will adversely affect
the suitability, successful operation, security value, or
transferability of the facility. Title opinions must be provided by the
applicant's attorney. The opinions must be in sufficient detail to
assess marketability of the property. Form FmHA 1927-9, ''Preliminary
Title Opinion,'' and Form FmHA 1927-10, ''Final Title Opinion,'' may be
used to provide the required title opinions. If other forms are used
they must be reviewed and approved by FmHA and OGC.
(1) In lieu of receiving title opinions from the applicant's
attorney, the applicant may use a title insurance company. If a title
insurance company is used, the company must provide FmHA a title
insurance binder, disclosing all title defects or restrictions, and
include a commitment to issue a title insurance policy. The policy
should be in an amount at least equal to the market value of the
property as improved. The title insurance binder and commitment should
be provided to FmHA prior to requesting closing instructions. FmHA will
be provided a title insurance policy which will insure FmHA's interest
in the property without any title defects or restrictions which have not
been waived by FmHA.
(2) The loan approval official may waive title defects or
restrictions, such as utility easements, that do not adversely affect
the suitability, successful operation, security value, or
transferability of the facility. If the District Director is the loan
approval official and is unable to waive the defect or restriction, the
title opinion or title insurance binder will be forwarded to the State
Director. If the State Director, with the advice of the OGC, determines
that the defect or restriction cannot be waived, the defect or
restriction must be removed.
(ii) Water rights. When legally permissible, an assignment will be
taken on water rights owned or to be acquired by the applicant. The
following will be furnished as applicable:
(A) A statement by the applicant's attorney regarding the nature of
the water rights owned or to be acquired by the applicant (such as
conveyance of title, appropriation and decree, application and permit,
public notice and appropriation and use).
(B) A copy of a contract with another company or municipality to
supply water; or stock certificates in another company which represents
the right to receive water.
(iii) Land purchase contract: (A) A land purchase contract (known in
some areas as a contract for deed) is an agreement between two or more
parties which obligates the purchaser to pay the purchase price, gives
the purchaser the rights of immediate possession, control, and
beneficial use of the property, and entitles the purchaser to a deed
upon paying all or a specified part of the purchase price.
(B) Applicants may obtain land through land purchase contracts when
all of the following conditions are met:
(1) The applicant has exhausted all reasonable means of obtaining
outright fee simple title to the necessary land.
(2) The applicant cannot obtain the land through condemnation.
(3) There are not other suitable sites available.
(4) National Office concurrence is obtained in accordance with
paragraph (j)(4)(iii)(D)(2) of this section.
(C) The land purchase contract must provide for the transfer of
ownership by the seller without any restrictions, liens or other title
defects. The contract must not contain provisions for future advances
(except for taxes, insurance, or other costs needed to protect the
security), summary cancellations, summary forfeiture, or other clauses
that may jeopardize the Government's interest or the purchaser's ability
to pay the FmHA loan. The contract must provide that if the purchaser
fails to make payment that FmHA will be given at least 90 days written
notice with an option to cure the default before the contract can be
cancelled, terminated or foreclosed. Then FmHA must have the option of
making the payment and charging it to the purchaser's account, making
the payment and taking over the ownership of the purchase contract, or
taking any other action necessary to protect the Government's interest.
(D) Prior to loan closing or the beginning of construction, whichever
occurs first, the following actions must be taken in the order listed
below:
(1) The land purchase contract and any appropriate title opinions
must be reviewed by the Regional Attorney to determine if they are
legally sufficient to protect the interest of the Government.
(2) The land purchase contract, the Regional Attorney's comments, and
the State Director's recommendations must be submitted to the National
Office for concurrence.
(3) The land purchase contract must be recorded.
(5) Lease agreements. Where the right of use or control of real
property not owned by the applicant/borrower is essential to the
successful operation of the facility during the life of the loan, such
right will be evidenced by written agreements or contracts between the
owner(s) of the property and the applicant/borrower. Lease agreements
shall not contain provisions for restricted use of the site of facility,
forfeiture or summary cancellation clauses and shall provide for the
right to transfer and lease without restriction. Lease agreements will
ordinarily be written for a term at least equal to the term of the loan.
Such lease contracts or agreements will be approved by the FmHA loan
approval official with the advice and counsel of the Regional Attorney,
OGC, as to the legal sufficiency of such documents. A copy of the lease
contract or agreement will be included in the loan docket.
(6) Notes and bonds. Notes and bonds will be completed on the date
of loan closing except for the entry of subsequent multiple advances
where applicable. The amount of each note will be in multiples of not
less than $100. The amount of each bond will ordinarily be in multiples
of not less than $1,000.
(i) Form FmHA 440-22, ''Promissory Note (Association or
Organization),'' will ordinarily be used for loans to nonpublic bodies.
(ii) 1942.19 contains instructions for preparation of notes and
bonds evidencing indebtedness of public bodies.
(7) Environmental requirements. Environmental requirements will be
documented by FmHA in accordance with Subpart G Part 1940 of this
chapter. The applicant will provide any information required.
(8) Health care facilities. The applicant will be responsible for
obtaining the following documents:
(i) A statement from the responsible State agency certifying that the
proposed health care facility is not inconsistent with the State Medical
Facilities Plan.
(ii) A statement from the responsible State agency or regional office
of the Department of Health and Services certifying that the proposed
facility meets the standards in 1942.18(d)(4).
(9) Public information. Applicants should inform the general public
regarding the development of any proposed project. Any applicant not
required to obtain authorization by vote of its membership or by public
referendum, to incur the obligations of the proposed loan or grant, will
hold at least one public information meeting. The public meeting must
be held after the preapplication is filed and not later than loan
approval. The meeting must give the citizenry an opportunity to become
acquainted with the proposed project and to comment on such items as
economic and environmental impacts, service area, alternatives to the
project, or any other issue identified by FmHA. The applicant will be
required, at least 10 days prior to the meeting, to publish a notice of
the meeting in a newspaper of general circulation in the service area,
to post a public notice at the applicant's principal office, and to
notify FmHA. The applicant will provide FmHA a copy of the published
notice and minutes of the public meeting. A public meeting is not
normally required for subsequent loans which are needed to complete the
financing of the project.
(10) Service through individual installation. Community owned water
or waste disposal systems may provide service through individual
installations or small clusters of users within the applicant's service
area. When individual installations or small clusters are proposed, the
loan approval official should consider items such as: quantity and
quality of the individual installations that may be developed; cost
effectiveness of the individual facility compared with the initial and
long term user cost on a central system; health and pollution problems
attributable to individual facilities; operational or management
problems peculiar to individual installations; and permit and
regulatory agency requirements.
(i) Applicants providing service through individual facilities must
meet the eligibility requirements in 1942.17(b).
(ii) FmHA must approve the form of agreement between the owner and
individual users for the installation, operation and payment for
individual facilities.
(iii) If taxes or assessments are not pledged as security, owners
providing service through individual facilities must obtain security as
necessary to assure collection of any sum the individual user is
obligated to pay the owner.
(iv) Notes representing indebtedness owed the owner by a user for an
individual facility will be scheduled for payment over a period not to
exceed the useful life of the individual facility or the loan, whichever
is shorter. The interest rate will not exceed the interest rate charged
the owner on the FmHA indebtedness.
(v) Owners providing service through individual or cluster facilities
must obtain:
(A) Easements for the installation and ingress to and egress from the
facility; and
(B) An adequate method for denying service in the event of nonpayment
of user fees.
(11) Funds from other sources. FmHA loan funds may be used along
with or in connection with funds provided by the applicant or from other
sources. Since ''matching funds'' is not a requirement for FmHA loans,
shared revenues may be used with FmHA funds for project construction.
(k) Other Federal, State, and local requirements. Each application
shall contain the comments, necessary certifications and recommendations
of appropriate regulatory or other agency or institution having
expertise in the planning, operation, and management of similar
facilities. Proposals for facilities financed in whole or in part with
FmHA funds will be coordinated with appropriate Federal, State, and
local agencies in accordance with the following:
(1) Compliance with special laws and regulations. Except as provided
in paragraph (k)(2) of this section applicants will be required to
comply with Federal, State, and local laws and any regulatory commission
rules and regulations pertaining to:
(i) Organization of the applicant and its authority to construct,
operate, and maintain the proposed facilities;
(ii) Borrowing money, giving security therefore, and raising revenues
for the repayment thereof;
(iii) Land use zoning; and
(iv) Health and sanitation standards and design and installation
standards unless an exception is granted by FmHA.
(2) Compliance exceptions. If there are conflicts between this
subpart and state or local laws or regulatory commission regulations,
the provisions of this subpart will control.
(3) State Pollution Control or Environmental Protection Agency
Standards. Water and waste disposal facilities will be designed,
installed, and operated in such a manner that they will not result in
the pollution of water in the State in excess of established standards
and that any effluent will conform with appropriate State and Federal
Water Pollution Control Standards. A certification from the appropriate
State and Federal agencies for water pollution control standards will be
obtained showing that established standards are met.
(4) Consistency with other development plans. FmHA financed
facilities will not be inconsistent with any development plans of State,
multijurisdictional areas, counties, or municipalities in which the
proposed project is located.
(5) State agency regulating water rights. Each FmHA financed
facility will be in compliance with appropriate State agency regulations
which have control of the appropriation, diversion, storage and use of
water and disposal of excess water. All of the rights of any
landowners, appropriators, or users of water from any source will be
fully honored in all respects as they may be affected by facilities to
be installed.
(6) Civil Rights Act of 1964. All borrowers are subject to, and
facilities must be operated in accordance with, Title VI of the Civil
Rights Act of 1964 and Subpart E of Part 1901 of this chapter,
particularly as it relates to conducting and reporting of compliance
reviews. Instruments of conveyance for loans and/or grants subject to
the Act must contain the covenant required by 1901.202(e) of Subpart E
of Part 1901 of this chapter.
(7) Title IX of the Education Amendments of 1972. No person in the
United States shall, on the basis of sex, be excluded from participation
in, be denied the benefits of, or be subjected to discrimination under
any education program or education activity receiving FmHA financial
assistance except as otherwise provided for in the Education Amendments
of Title IX. The FmHA State Director will provide guidance and
technical assistance to carry out the intent of this paragraph.
(8) Section 504 of the Rehabilitation Act of 1973. Under section 504
of the Rehabilitation Act of 1973, as amended (29 U.S.C. 794), no
handicapped individual in the United States shall, solely by reason of
their handicap, be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any program or
activity receiving FmHA financial assistance.
(9) Age Discrimination Act of 1975. This Act provides that no person
in the United States shall on the basis of age, be excluded from
participation in, be denied the benefits of, or be subjected to
discrimination under any program or activity receiving Federal financial
assistance. This Act also applies to programs or activities funded
under the State and Local Fiscal Assistance Act of 1972 (31 U.S.C. 1221
et. seq.). This Act does not apply to: (i) age distinctions contained
in Federal, State or local statutes or ordinances adopted by an elected,
general purpose legislative body which provide benefits or assistance
based on age; (ii) establish criteria for participation in age-related
terms; (iii) describe intended beneficiaries or target groups in
age-related terms; and, (iv) any employment practice of any employer,
employment agency, labor organization, or any labor-management joint
apprenticeship training program except for any program or activity
receiving Federal financial assistance for public service employment
under the Comprehensive Employment and Training Act of 1974 (CETA) (29
U.S.C. 801 et. seq.).
(l) Professional services and contracts related to the facility --
(1) Professional services. Applicants will be responsible for providing
the services necessary to plan projects including design of facilities,
preparation of cost and income estimates, development of proposals for
organization and financing, and overall operation and maintenance of the
facility. Professional services of the following may be necessary:
Engineer, architect, attorney, bond counsel, accountant, auditor,
appraiser, and financial advisory or fiscal agent (if desired by
applicant). Contracts or other forms of agreement between the applicant
and its professional and technical representatives are required and are
subject to FmHA concurrence. Form FmHA 1942-19, ''Agreement for
Engineering Services,'' may be used when appropriate. Guide 20,
''Agreement for Engineering Services (FmHA/EPA -- Jointly Funded
Projects)'' may be used on projects jointly funded by FmHA and EPA.
Guide 14 may be used in the preparation of the legal services agreement.
(2) Bond counsel. Unless otherwise provided by 1942.19(b), public
bodies are required to obtain the service of recognized bond counsel in
the preparation of evidence of indebtedness.
(3) Contracts for other services. Contracts or other forms of
agreements for other services including management, operation, and
maintenance will be developed by the applicant and presented to FmHA for
review and approval. Management agreements should provide at least
those items in Guide 24.
(4) Fees. Fees provided for in contracts or agreements shall be
reasonable. They shall be considered to be reasonable if not in excess
of those ordinarily charged by the profession for similar work when FmHA
financing is not involved.
(m) Applying for FmHA loans -- (1) Preapplication. Applicants
desiring loans will file SF 424.2 and comments from the appropriate A-95
clearinghouse agency normally with the appropriate FmHA County Office.
The County Supervisor will immediately forward all documents to the
District Office. The District Director has prime responsibility for all
community program loan making and servicing activities within the
District.
(2) Preapplication review. Upon receipt of the preapplication, FmHA
will tentatively determine eligibility including the likelihood of
credit elsewhere at reasonable rates and terms and availability of FmHA
loan funds. The determination as to availability of other credit will
be made after considering present rates and terms available for similar
proposals (not necessarily based upon rates and terms available from
FmHA); the repayment potential of the applicant; long-term cost to the
applicant; and average user or other charges. In those cases where
FmHA determines that loans at reasonable rates and terms should be
available from commercial sources, FmHA will notify the applicant so
that it may apply for such financial assistance. Such applicants may be
reconsidered for FmHA loans upon their presenting satisfactory evidence
of inability to obtain commercial financing at reasonable rates and
terms.
(3) Incurring obligations. Applicants should not proceed with
planning nor obligate themselves for expenditures until authorized by
FmHA.
(4) Results of preapplication review. After FmHA has reviewed the
preapplication material and any additional material that may be
requested, Form AD-622 will be sent to the applicant. Ordinarily the
review will not exceed 45 days.
(5) Application conference. Before starting to assemble the
application and after the applicant selects its professional and
technical representatives, it should arrange with FmHA for an
application conference to provide a basis for orderly application
assembly. FmHA will provide applicants with a list of documents
necessary to complete the application. Guide 15 may be used for this
purpose. Applications will be filed with the District Office.
(6) Application completion and assembling. This is the
responsibility of the applicant with guidance from FmHA. The applicant
may utilize their professional and technical representatives or other
competent sources.
(7) Review of decision. If an application is rejected, the applicant
may request a review of this decision under Subpart B of Part 1900 of
this chapter.
(n) Actions prior to loan closing and start of construction -- (1)
Excess FmHA loan and grant funds. If there is a significant reduction
in project cost, the applicant's funding needs will be reassessed before
loan closing or the start of construction, whichever occurs first. In
such cases applicable FmHA forms, the letter of conditions, and other
items will be revised. Decreases in FmHA funds will be based on revised
project costs and current number of users, however, other factors
including FmHA regulations used at the time of loan/grant approval will
remain the same. Obligated loan or grant funds not needed to complete
the proposed project will be deobligated.
(2) Loan resolutions. Loan resolutions will be adopted by both
public and other-than-public bodies using Form FmHA 1942-47, ''Loan
Resolution (Public Bodies),'' or Form FmHA 1942-9, ''Loan Resolution
(Security Agreement).'' These resolutions supplement other provisions in
this subpart. The applicant will agree:
(i) To indemnify the Government for any payments made or losses
suffered by the Government on behalf of the association. Such
indemnification shall be payable from the same source of funds pledged
to pay the bonds or any other legally permissible source.
(ii) To comply with applicable local, State and Federal laws,
regulations, and ordinances.
(iii) To provide for the receipt of adequate revenues to meet the
requirements of debt service, operation and maintenance, establishment
of adequate reserves, and to continually operate and maintain the
facility in good condition. Except for utility-type facilities, free
service use may be permitted. If free services are extended no
distinctions will be made in the extension of those services because of
race, color, religion, sex, national origin, marital status, or physical
or mental handicap.
(iv) To acquire and maintain such insurance coverage including
fidelity bonds, as may be required by the Government.
(v) To establish and maintain such books and records relating to the
operation of the facility and its financial affairs and to provide for
required audit thereof in such a manner as may be required by the
Government and to provide the Government without its request, a copy of
each such audit and to make and forward to the Government such
additional information and reports as it may, from time to time,
require.
(vi) To provide the Government at all reasonable times, access to all
books and records relating to the facility and access to the property of
the system so that the Government may ascertain that the association is
complying with the provisions hereof and of the instruments incident to
the making or insuring of the loan.
(vii) To provide adequate service to all persons within the service
area who can feasibly and legally be served and to obtain FmHA's
concurrence prior to refusing new or adequate services to such persons.
Upon failure of the applicant to provide services which are feasible and
legal, such person shall have a direct right of action against the
applicant organization.
(viii) To have prepared on its behalf and to adopt an ordinance or
resolution for the issuance of its bonds or notes or other debt
instruments or other such items and in such forms as are required by
State statutes and as are agreeable and acceptable to the Government.
(ix) To refinance the unpaid balance, in whole or in part, of its
debt upon the request of the Government if at any time it should appear
to the Government that the association is able to refinance its bonds by
obtaining a loan for such purposes from responsible cooperative or
private sources at reasonable rates and terms.
(x) To provide for, execute, and comply with Form FmHA 400-4,
''Assurance Agreement,'' and Form FmHA 400-1, ''Equal Opportunity
Agreement,'' including an ''Equal Opportunity Clause,'' which is to be
incorporated in or attached as a rider to each construction contract and
subcontract in excess of $10,000.
(xi) To place the proceeds of the loan on deposit in a manner
approved by the Government. Funds may be deposited in institutions
insured by the State or Federal Government as invested in readily
marketable securities backed by the full faith and credit of the United
States. Any income from these accounts will be considered as revenues
of the system.
(xii) Not to sell, transfer, lease, or otherwise encumber the
facility or any portion thereof or interest therein, and not to permit
others to do so, without the prior written consent of the Government.
(xiii) Not to borrow any money from any source, enter into any
contract or agreement, or incur any other liabilities in connection with
making enlargements, improvements or extensions to, or for any other
purpose in connection with the facility (exclusive of normal
maintenance) without the prior written consent of the Government if such
undertaking would involve the source of funds pledged to repay the debt
to FmHA.
(xiv) That upon default in the payments of any principal and accrued
interest on the bonds or in the performance of any covenant or agreement
contained herein or in the instruments incident to making or insuring
the loan, the Government, at its option, may:
(A) Declare the entire principal amount then outstanding and accrued
interest, due and payable;
(B) For the account of the association (payable from the source of
funds pledged to pay the bonds or notes or any other legally
permissiable source), incur and pay reasonable expenses for repair,
maintenance and operation of the facility and such other reasonable
expenses as may be necessary to cure the cause of default; and/or
(C) Take possession of the facility, repair, maintain and operate, or
otherwise dispose of the facility. Default under the provisions of the
resolution or any instrument incident to the making or insuring of the
loan may be construed by the Government to constitute default under any
other instrument held by the Government and executed or assumed by the
association and default under any such instrument may be construed by
the Government to constitute default hereunder.
(3) Interim financing. In all loans exceeding $50,000, where funds
can be borrowed at reasonable interest rates on an interim basis from
commercial sources for the construction period, such interim financing
will be obtained so as to preclude the necessity for multiple advances
of FmHA funds. Guide 1 or Guide 1a, as appropriate, may be used to
inform the private lender of FmHA's commitment. When interim commercial
financing is used, the application will be processed, including
obtaining construction bids, to the stage where the FmHA loan would
normally be closed, that is immediately prior to the start of
construction. The FmHA loan should be closed as soon as possible after
the disbursal of all interim funds. Interim financing may be for a
fixed term provided the fixed term does not extend beyond the time
projected for completion of construction. For this purpose, a fixed
term is when the interim lender cannot be repaid prior to the end of the
stipulated term of the interim instruments. When an FmHA Water and
Waste Disposal grant is included, any interim financing involving a
fixed term must be for the total FmHA loan amount. Multiple advances
may be used in conjunction with interim commercial financing when the
applicant is unable to obtain sufficient funds through interim
commercial financing in an amount equal to the loan. The FmHA loan
proceeds (including advances) will be used to retire the interim
commercial indebtedness. Before the FmHA loan is closed, the applicant
will be required to provide FmHA with statements from the contractor,
engineer, architect, and attorney that they have been paid to date in
accordance with their contracts or other agreements and, in the case of
the contractor, that any suppliers and subcontractors have been paid.
If such statements cannot be obtained, the loan may be closed provided:
(i) Statements to the extent possible are obtained;
(ii) The interest of FmHA can be adequately protected and its
security position is not impaired; and
(iii) Adequate provisions are made for handling the unpaid accounts
by withholding or escrowing sufficient funds to pay such claims.
(4) Obtaining closing instructions. After loan approval, the
completed docket will be reviewed by the State Director. The
information required by OGC will be transmitted to OGC with request for
closing instructions. Upon receipt of the closing instructions from
OGC, the State Director will forward them along with any appropriate
instructions to the District Director. Upon receipt of closing
instructions, the District Director will discuss with the applicant and
its architect or engineer, attorney, and other appropriate
representatives, the requirements contained therein and any actions
necessary to proceed with closing.
(5) Applicant contribution. An applicant contributing funds toward
the project cost shall deposit these funds in its construction account
on or before loan closing or start of construction, whichever occurs
first. Project costs paid prior to the required deposit time with
applicant funds shall be appropriately accounted for.
(6) Evidence of and disbursement of other funds. Applicants
expecting funds from other sources for use in completing projects being
partially financed with FmHA funds will present evidence of the
commitment of these funds from such other sources. This evidence will
be available before loan closing, or the start of construction,
whichever occurs first. Ordinarily, the funds provided by the applicant
or from other sources will be disbursed prior to the use of FmHA loan
funds. If this is not possible, funds will be disbursed on a pro rata
basis. FmHA funds will not be used to pre-finance funds committed to
the project from other sources.
(o) Loan closing -- (1) Closing instructions. Loans will be closed
in accordance with the closing instructions issued by OGC.
(2) Obtaining insurance and fidelity bonds. Required property
insurance policies, liability insurance policies, and fidelity bonds
will be obtained by the time of loan closing or start of construction,
whichever occurs first.
(3) Distribution of recorded documents. The originals of the
recorded deeds, easements, permits, certificates of water rights,
leases, or other contracts and similar documents which are not to be
held by FmHA will be returned to the borrower. The original mortgage(s)
and water stock certificates, if any, if not required by the recorder's
office will be retained by FmHA.
(4) Review of loan closing. In order to determine that the loan has
been properly closed the loan docket will be reviewed by the State
Director and OGC.
(p) Project monitoring and fund delivery during construction -- (1)
Coordination of funding sources. When a project is jointly financed,
the State Director will reach any needed agreement or understanding with
the representatives of the other source of funds on distribution of
responsibilities for handling various aspects of the project. These
responsibilities will include supervision of construction, inspections
and determinations of compliance with appropriate regulations concerning
equal employment opportunities, wage rates, nondiscrimination in making
services or benefits available, and environmental compliance. If any
problems develop which cannot be resolved locally, complete information
should be sent to the National Office for advice.
(2) Multiple advances. In the event interim commercial financing is
not legally permissible or not available, multiple advances of FmHA loan
funds are required. An exception to this requirement may be granted by
the National Office when a single advance is necessitated by State law
or public exigency. Multiple advances will be used only for loans in
excess of $50,000. Advances will be made only as needed to cover
disbursements required by the borrower over a 30-day period. Advances
should not exceed 24 in number nor extend longer than two years beyond
loan closing. Normally, the retained percentage withheld from the
contractor to assure construction completion will be included in the
last advance.
(i) 1942.19 contains instructions for making multiple advances to
public bodies.
(ii) Advances will be requested by the borrower in writing. The
request should be in sufficient amounts to pay cost of construction,
rights-of-way and land, legal, engineering, interest, and other expenses
as needed. The applicant may use Form FmHA 440-11, ''Estimate of Funds
Needed for 30 Day Period Commencing XXX,'' to show the amount of funds
needed during the 30-day period.
(iii) FmHA loan funds obligated for a specific purpose, such as the
paying of interest, but not needed at the time of loan closing will
remain in the Finance Office until needed unless State statutes require
all funds to be delivered to the borrower at the time of closing. Loan
funds may be advanced to prepay costs under paragraph (d)(1)(iv)(G) of
this section. If all funds must be delivered to the borrower at the
time of closing to comply with State statutes, funds not needed at loan
closing will be handled as follows:
(A) Deposited in an appropriate borrower account, such as the debt
service account, or
(B) Deposited in a supervised bank account under paragraph (p)(3)(i)
of this section.
(3) Use and accountability of funds -- (i) Supervised bank account.
FmHA loan funds and any funds furnished by the applicant/borrower to
supplement the loan including contributions to purchase major items of
equipment, machinery, and furnishings may be deposited in a supervised
bank account if determined necessary as provided in Subpart A of Part
1902 of this chapter. When FmHA has a Memorandum of Understanding with
another agency that provides for the use of supervised bank accounts, or
when FmHA is the primary source of funds for a project and has
determined that the use of a supervised bank account is necessary,
project funds from other sources may also be deposited in the supervised
bank account. FmHA shall not be accountable to the source of the other
funds nor shall FmHA undertake responsibility to administer the funding
program of the other entity. Supervised bank accounts should not be
used for funds advanced by an interim lender.
(ii) Other than supervised bank account. If a supervised bank
account is not used, arrangements will be agreed upon for the prior
concurrence by FmHA of the bills or vouchers upon which warrants will be
drawn, so that the payments from loan funds can be controlled and FmHA
records kept current. If a supervised bank account is not used, use
Form FmHA 402-2, ''Statement of Deposits and Withdrawals,'' or similar
form to monitor funds. Periodic reviews of nonsupervised accounts shall
be made by FmHA at the times and in the manner as FmHA prescribes in the
conditions of loan approval. State laws regulating the depositories to
be used shall be complied with.
(iii) Use of minority owned banks. Applicants are encouraged to use
minority banks (a bank which is owned at least 50 percent by minority
group members) for the deposit and disbursement of funds. A list of
minority owned banks can be obtained from the Office of Minority
Business Enterprise, Department of Commerce, Washington, D.C. 20230 and
is also available in all FmHA offices.
(4) Development inspections. The District Director will be
responsible for monitoring the construction of all projects being
financed, wholly or in part, with FmHA funds. Technical assistance will
be provided by the State Director's staff. Project monitoring will
include construction inspections and a review of each project inspection
report, each change order and each partial payment estimate and other
invoices such as payment for engineering/architectural and legal fees
and other materials determined necessary to effectively monitor each
project. These activities will not be performed on behalf of the
applicant/borrower, but are solely for the benefit of FmHA and in no way
are intended to relieve the applicant/borrower of corresponding
obligations to conduct similar monitoring and inspection activities.
Project monitoring will include periodic inspections to review partial
payment estimates prior to their approval and to review project
development in accordance with plans and specifications. Each
inspection will be recorded using Form FmHA 1924-12, ''Inspection
Report.'' The original Form FmHA 1924-12 will be filed in the project
case folder and a copy furnished to the State Director. The State
Director will review inspection reports and will determine that the
project is being effectively monitored. The District Director is
authorized to review and accept partial payment estimates prepared by
the contractor and approved by the borrower, provided the consulting
engineer or architect, if one is being utilized for the project, has
approved the estimate and certified that all material purchased or work
performed is in accordance with the plans and specifications, or if a
consulting engineer or architect is not being utilized, the District
Director has determined that the funds requested are for authorized
purposes. If there is any indication that construction is not being
completed in accordance with the plans and specifications or that any
other problems exist, the District Director should notify the State
Director immediately and withhold all payments on the contract.
(5) Payment for construction. Each payment for project costs must be
approved by the borrower's governing body. Payment for construction
must be for amounts shown on payment estimate forms. Form FmHA 1924-18,
''Partial Payment Estimate,'' may be used for this purpose or other
similar forms may be used with the prior approval of the State Director
or designee. However, the State Director or designee cannot require a
greater reporting burden than is required by Form FmHA 1924-18.
Advances for contract retainage will not be made until such retainage is
due and payable under the terms of the contract. The review and
acceptance of project costs, including construction partial payment
estimates by FmHA, does not attest to the correctness of the amounts,
the quantities shown, or that the work has been performed under the
terms of agreements or contracts.
(6) Use of remaining funds. Funds remaining after all costs incident
to the basic project have been paid or provided for will not include
applicant contributions. Applicant contributions will be considered as
funds initially expended for the project. Funds remaining, with
exception of applicant contributions, may be considered in direct
proportion to the amount obtained from each source. Remaining funds
will be handled as follows:
(i) FmHA loan and/or grant funds. Remaining funds may be used for
purposes authorized by paragraph (d) of this section and 1942.358 of
Subpart H of Part 1942 of this chapter, provided the use will not result
in major changes to the facility design or project and that the purpose
of the loan and/or grant remains the same.
(A) On projects that only involve an FmHA loan and no FmHA grant,
funds that are not needed will be applied as an extra payment on the
FmHA indebtedness unless other disposition is required by the bond
ordinance, resolution, or State statute.
(B) On projects that involve an FmHA grant, all remaining FmHA funds
will be considered to be grant funds up to the full amount of the grant.
Grant funds not expended under paragraph (p)(6)(i) of this section will
be deobligated.
(ii) Funds from other sources. Funds remaining from other sources
will be handled according to rules, regulations and/or the agreement
governing their participation in the project.
(q) Borrower accounting methods, management reporting and audits --
(1) Accounting methods and records -- (i) Method of accounting and
financial statements. Financial statements must be prepared on the
accrual basis of accounting unless State statutes or regulatory agencies
provide otherwise, or an exception is made by FmHA. This requirement is
for accrual basis financial statements and not for accrual basis
accounting systems. Organizations may keep their books on an accounting
basis other than accrual and then make adjustments so that the financial
statements are presented on the accrual basis.
(ii) Approval requirement. Before loan closing or start of
construction, whichever is first, each borrower shall provide to, and
obtain approval from the FmHA loan approval official for its accounting
and financial reporting system, including the agreement with its
auditor, if an auditor is required.
(iii) Records. Form FmHA 1930-5, ''Bookkeeping System -- Small
Borrower,'' may be used by small organizations as a method of recording
and maintaining accounting transactions.
(iv) Record retention. Each borrower shall retain all records,
books, and supporting material for 3 years after the issuance of the
audit reports and financial statements. Upon request, this material
will be made available to FmHA, the Comptroller General, or to their
representatives.
(2) Management reports. These reports will furnish the management
with a means of evaluating prior decisions and serve as a basis for
planning future operations and financial conditions. In those cases
where revenues from multiple sources are pledged as security for an FmHA
loan, two reports will be required; one for the project being financed
by FmHA and one combining the entire operation of the borrower. In
those cases where FmHA loans are secured by general obligation bonds or
assessments and the borrower combines revenues from all sources, one
management report combining all such revenues will suffice. The
following management data will be submitted by the borrower to the FmHA
District Director.
(i) Financial information. (A) Form FmHA 442-2, ''Statement of
Budget, Income and Equity,'' which includes Schedule 1, ''Statement of
Budget, Income and Equity'' and Schedule 2, ''Projected Cash Flow.''
(B) Prior to the beginning of each fiscal year, two copies, with data
entered in column three only of Schedule 1, page one, ''Annual Budget''
and all of Schedule 2, will be submitted to the District Director.
Twenty (20) days after the end of each of the first three quarters of
each year, two copies with all information furnished on Schedule 1 will
be submitted. For the fourth quarter of each year, submit together with
the year-end financial requirements of paragraphs (q) (4) and (5) of
this section. More frequent submissions may be required by FmHA when
necessary. The submission dates to the District Director will be 90
days following year-end for audited statements and 60 days following
year-end for unaudited statements. The fourth quarter submission may
serve the dual purpose of management report and year-end financial
requirement for Statement of Income.
(ii) Additional information. (A) A list of the names and addresses
of all members of the governing body as appropriate, also indicating the
officers and their terms of office, will be included with the other
information required at the end of the year.
(B) Borrowers delinquent on payment to FmHA or experiencing financial
problems, will develop a positive action plan to resolve financial
problems. The plan will be reviewed with FmHA and updated at least
quarterly. Guide 22 may be used for developing a positive action plan.
(3) Substitute for management reports. When FmHA loans are secured
by the general obligation of the public body or tax assessments which
total 100 percent of the debt service requirements, the State Director
may authorize an annual audit to substitute for other management reports
if the audit is received within 90 days following the period covered by
the audit.
(4) Audits. All audits are to be performed in accordance with
generally accepted government auditing standards (GAGAS), using the
publication, ''Standards for Audit of Governmental Organizations,
Programs, Activities and Functions,'' developed by the Comptroller
General of the United States in 1981, and any subsequent revisions. In
addition, the audits are also to be performed in accordance with various
Office of Management and Budget (OMB) Circulars and FmHA requirements as
specified in the separate sections of this subpart.
(i) Audits based upon Federal financial assistance received. The
following requirements shall apply to audits of the years in which funds
are received by the borrower.
(A) Local governments and Indian tribes. These organizations are to
be audited in accordance with this subpart and OMB Circular A-128, with
copies of the audits being forwarded by the borrower to the FmHA
District Director and the appropriate Federal cognizant agency. The
Circular is available in any FmHA office. For years in which an audit
is not required by OMB Circular A-128, see paragraph (q)(4)(ii) of this
section.
(1) Cognizant agency. (i) ''Cognizant agency'' means the Federal
agency assigned by OMB to carry out the responsibilities described in
OMB Circular A-128. Within the Department of Agriculture (USDA), OIG is
designated as the cognizant agency.
(ii) Cognizant agency assignments. Smaller borrowers not assigned a
cognizant agency by OMB should contact the Federal agency that provided
the most funds. When USDA is designated as the cognizant agency or when
it has been determined by the borrower that FmHA provided the major
portion of Federal financial assistance, the appropriate USDA OIG
Regional Inspector General shall be contacted. FmHA and the borrower
shall coordinate all proposed audit plans with appropriate USDA OIG. A
list of OIG contact persons is attached to FmHA Instruction 1942-A as
Exhibit B (available in any FmHA office).
(2) Audit requirements. It is not intended that audits required by
this subpart be separate and apart from audits performed in accordance
with State and local laws. To the extent feasible, the audit work
should be done in conjunction with those audits.
(i) Local governments and Indian tribes that receive $100,000 or more
a year in Federal financial assistance shall have an audit for that year
in accordance with OMB Circular A-128.
(ii) Local governments and Indian tribes that receive between $25,000
and $100,000 a year in Federal financial assistance shall have an audit
made in accordance with OMB Circular A-128 or in accordance with FmHA
audit requirements. This is an option of the local government or Indian
tribe. If the election is made to have an audit performed in accordance
with FmHA requirements, the audit shall be in accordance with paragraph
(q)(4)(i)(B) of this section.
(iii) Local governments and Indian tribes that receive less than
$25,000 a year in Federal financial assistance shall be exempt from both
OMB Circular A-128 audits and FmHA audit requirements. However, audits
performed shall be governed by the requirements prescribed by State or
local law or regulation.
(iv) Public hospitals and public colleges and universities may be
excluded from OMB Circular A-128 audit requirements. However, in this
case audits shall be made in accordance with paragraph (q)(4)(i)(B) of
this section.
(3) Fraud, abuse, and illegal acts. If the auditor becomes aware of
any indication of fraud, abuse, or illegal acts in FmHA financed
projects, prompt written notice shall be given to the appropriate USDA
OIG Regional Inspector General and the District Director.
(B) Nonprofit organizations and others. These organizations are to
be audited in accordance with FmHA requirements and OMB Circular A-110,
''Uniform Requirements for Grants to Universities, Hospitals, and Other
Nonprofit Organizations.'' These requirements also apply to public
hospitals and public colleges and universities if they are excluded from
the audits of paragraph (q)(4)(i)(A) of this section.
(1) Audits shall be annual unless otherwise prohibited and supplied
to the FmHA District Director as soon as possible but in no case later
than ninety (90) days following the period covered by the audit.
(2) Audit requirements. (i) Borrowers which receive $25,000 or more
a year in Federal financial assistance shall have an audit. Also, refer
to paragraph (q)(4)(ii) of this section for additional audit
requirements.
(ii) Borrowers which receive less than $25,000 a year in Federal
financial assistance shall be exempt from audits except for the audits
based upon annual gross income which may apply in paragraph (q)(4)(ii)
of this section.
(iii) Indications of fraud, abuse and illegal acts shall be processed
in accordance with paragraph (q)(4)(i)(A)(3) of this section.
(ii) Audits based upon annual gross income. The following annual
gross income audit reguirements shall apply to all borrowers (local
government, Indian tribes, and nonprofit organizations) for all years
except the ones in which there is an audit requirement based upon the
amount of Federal assistance received as required by paragraphs
(q)(4)(i)(A) and (q)(4)(i)(B) of this section. Audits shall be on an
annual basis unless otherwise prohibited and shall be supplied to FmHA
as soon as possible but in no case later than 90 days following the
period covered by the audit.
(A) Gross annual income of $100,000 or more. (1) Local governments
and Indian tribes shall have audits made in accordance with State or
local law or regulation or regulatory agency requirements. If no such
requirements exist, audits shall be made in accordance with OMB Circular
A-110 and paragraphs (q)(4)(i)(B)(1) and (2)(iii) of this section.
(2) All other organizations shall have audits in accordance with OMB
Circular A-110 and paragraph (q)(4)(i)(B)(1) and (2)(iii) of this
section.
(B) Gross annual income of less than $100,000. For borrowers that
have a gross annual income of less than $100,000, the requirements for
audits shall be at the discretion of the State Director. However, when
audits are required, they shall be in accordance with paragraph
(q)(4)(ii)(A) of this section.
(5) Borrowers exempt from audits. All borrowers who are exempt from
audits, will, within 60 days following the end of each fiscal year,
furnish the FmHA with annual financial statements, consisting of a
verification of the organization's balance sheet and statement of income
and expense by an appropriate official of the organization. Forms FmHA
442-2 and 442-3 may be used. For borrowers using Form FmHA 442-2, the
dual purpose of fourth quarter management reports, when required, and
annual statements of income will be met with this one submission.
(r) FmHA actions for borrower supervision and servicing -- (1)
Management assistance and management reports. Management assistance
will be based on such factors as observation of borrower operations and
review of the periodic financial reports. The amount and type of
assistance provided will be that needed to assure borrower success and
compliance with its agreements with FmHA.
(i) The District Director is responsible for obtaining all management
report data from the borrower, promptly reviewing it and making any
necessary recommendations to the borrower within 40 calendar days.
However, after receiving management reports for borrowers whose FmHA
indebtedness exceeds $1,000,000 and for delinquent and problem case
borrowers, the District Director will forward them with comments to the
State Director for review.
(ii) District Director reviews of borrower operations. (A) A review
of the borrower's total operational and management practices, including
records and accounts to be maintained, will be made between the
beginning of the ninth and the end of the eleventh full month of the
first year of operation. A report will be made to the State Director by
sending a copy of Form FmHA 442-4, ''District Director Report.'' Earlier
reviews will be made when needed to resolve operational and management
problems that may arise.
(B) Subsequent reviews will be made for all delinquent and other
borrowers having financial problems and reported to the State Director
by a copy of Form FmHA 442-4. These borrowers will adopt a positive
action plan (see Guide 22). The plan will be reviewed quarterly by the
District Director until the delinquency is eliminated or other servicing
actions are recommended.
(C) The District Director may, after the end of the borrower's third
fiscal year of operation, exempt it from submitting management reports
provided it:
(1) Is current on its loan payments.
(2) Is meeting the conditions of its agreements with FmHA.
(3) Has demonstrated its ability to successfully operate and manage
the organization and has not obtained subsequent loans in the last 3
years which have significantly altered the scope of the project.
(4) Has the State Director's written concurrence for all borrowers
whose FmHA indebtedness exceeds $1,000,000.
(D) Borrowers qualifying for this exemption will still be required to
submit a copy of their audits or annual financial statements.
(E) Ordinarily and exception will not be made to the requirement for
the borrower to submit a copy of its annual budget.
(F) The District Director or State Director may reinstate the
requirements for submission of periodic management reports for those
borrowers who became delinquent or otherwise are not carrying out their
agreements with FmHA or require more frequent submission of management
reports. This requirement will be reinstated for borrowers receiving a
subsequent loan which will significantly alter the scope of the project.
(G) The District Director may accept management reports which are not
prepared on page 1 of Form FmHA 442-2 Schedule 1 but contain like
information. However, page 2 of this form must be used by all borrowers
required to furnish management reports.
(iii) The State Director is responsible for:
(A) The review of the District Director's submission for all
borrowers whose indebtedness exceeds $1,000,000. The State Director
will forward comments to the District Director in order that a response,
if necessary, can be sent to the borrower within 40 calendar days after
the borrower's submission of its management reports.
(B) The review of all delinquent and problem case borrower management
reports. Ordinarily, review findings and instructions regarding further
management assistance will be determined, and provided to the District
Office within 20 calendar days of submission for delinquent and problem
borrowers.
(C) Forwarding to the National Office copies of review findings,
instructions for further assistance, and positive action plans on
delinquent borrowers and borrowers experiencing financial problems, at
same time the findings and instructions are provided to the District
Office.
(2) Audits and financial statements -- (i) The District Director is
responsible for obtaining all audit reports and financial statements
from the borrower. Those received from borrowers whose FmHA
indebtedness exceeds $1,000,000 and from delinquent and problem case
borrowers will be promptly reviewed and forwarded to the State Director
with appropriate comments.
(ii) The District Director is responsible for the review of audits
and financial statements and for recommendations and instructions for
borrower assistance. For borrowers required to have audits, in
accordance with paragraph (q)(4)(i)(A) of this section, the District
Director is also responsible for any necessary follow up required
because of audit resolution items received from the cognizant agencies.
(iii) The State Director is responsible for the review of audits of
borrowers whose indebtedness exceeds $1,000,000 and delinquent and
problem case borrowers. The State Director may recommend to the
District Director any necessary actions to be taken.
(3) Security inspections. A representative of the borrower will
ordinarily accompany the District Director during each inspection.
(i) Post construction inspection. The District Director will inspect
each facility between the beginning of the ninth and the end of the
eleventh full month of the first year of operation. This will normally
coincide with the District Director's review of the borrower's total
operational and management practices described in paragraph
(r)(1)(ii)(A) of this section. The results of this inspection will be
reported to the State Director on Form FmHA 1924-12. Earlier
inspections will be made when operational or other problems indicate a
need. The State Director will provide guidance to the District Director
to assure that action will be taken to correct project deficiencies.
(ii) Subsequent inspections. The District Director will make
subsequent inspections of borrower security property and facilities
during each third year after the post construction inspection. The
results of this inspection will be reported to the State Director on
Form FmHA 1924-12.
(iii) Special inspections. The District Director may request, or the
State Director may determine, the need for a member of the State staff
to make certain security inspections. In such cases, the State Director
will detail a staff member to make such inspections.
(iv) Follow-up inspections. If any inspection discloses deficiencies
or exceptions, or otherwise indicates a need for subsequent inspections
prior to the third year, the State Director will prescribe the type and
frequency of follow-up inspections. These inspections will be made
until all deficiencies and exceptions have been corrected.
(4) Civil rights compliance reviews will be performed under Subpart E
of Part 1901 of this chapter for the life of the loan.
(5) Other loan servicing actions will be in accordance with Subparts
E and O of Part 1951 of this chapter.
(s) Loans under Pub. L. 98-8 (Emergency Jobs Bill). Each FmHA
project that is funded utilizing FmHA loan funds authorized by the Pub.
L. 98-8 (Emergency Jobs Bill), will also comply with 1942.385 (b) and
(c) of Subpart H of Part 1942 of this chapter.
(50 FR 7296, Feb. 22, 1985, as amended at 50 FR 12768, Apr. 1, 1985;
50 FR 12990 and 13005, Apr. 2, 1985; 50 FR 43379, Oct. 25, 1985; 51 FR
10186, Mar. 25, 1986; 52 FR 8035, Mar. 13, 1987; 52 FR 41949, Nov. 2,
1987; 52 FR 43725, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987; 53 FR
6787, Mar. 3, 1988; 54 FR 18882, May 3, 1989; 55 FR 13503, Apr. 11,
1990; 56 FR 29168, June 26, 1991; 56 FR 67480, Dec. 31, 1991)
Effective Date Note: At 56 FR 67480, Dec. 31, 1991, 1942.17 was
amended by changing the references in paragraph (j)(4)(i)(B) from ''Form
FmHA 427-9'' to ''Form FmHA 1927-9'' and ''Form FmHA 427-10'' to ''Form
FmHA 1927-10'', effective January 30, 1992.
07 CFR 1942.18 Community Facilities -- Planning, Bidding, Contracting,
Constructing.
(a) General. This section is specifically designed for use by owners
including the professional or technical consultants and/or agents who
provide assistance and services such as architectural, engineering,
inspection, financial, legal or other services related to planning,
bidding, contracting, and constructing community facilities. These
procedures do not relieve the owner of the contractual obligations that
arise from the procurement of these services. For this section, an
owner is defined as an applicant, borrower, or grantee.
(b) Technical services. Owners are responsible for providing the
engineering or architectural services necessary for planning, designing,
bidding, contracting, inspecting, and constructing their facilities.
Services may be provided by the owner's ''in house'' engineer or
architect or through contract, subject to FmHA concurrence. Architects
and engineers must be licensed in the State where the facility is to be
constucted.
(c) Preliminary reports. Preliminary architectural and engineering
reports must conform with customary professional standards. Preliminary
report guidelines for water, sanitary sewer, solid waste, storm sewer,
and other essential community facilities are available from FmHA.
(d) Design policies. Facilities financed by FmHA will be designed
and constructed in accordance with sound engineering and architectural
practices, and must meet the requirements of Federal, State and local
agencies.
(1) Natural resources. Facility planning should be responsive to the
owner's needs and should consider the long-term economic, social and
environmental needs as set forth in this section. FmHA's environmental
considerations are under Subpart G of Part 1940 of this chapter.
(i) Floodplains and wetlands. Facilities must avoid, to the extent
possible, the long- and short-term adverse impacts associated with the
occupancy and modification of floodplains and wetlands, and avoid direct
or indirect support of floodplain and wetland development whenever there
is a practicable alternative. This subject is more fully discussed in
Executive Order 11988, Executive Order 11990, and Water Resources
Council's Floodplain Management Guidelines (43 FR 6030) which is
available in all FmHA offices. Facilities located in special flood and
mudslide prone areas must comply with FmHA's eligibility and insurance
requirements in Subpart B of Part 1806 of this chapter (FmHA Instruction
426.2).
(ii) Coastal Zone Management. Facilities shall be designed and
constructed in a manner consistent with approved State management
programs, under the Coastal Zone Management Act of 1972 (Pub. L. 92-583
Section 307 (c)(1) and (2)) as supplemented by the Department of
Commerce regulations 15 CFR Part 930.
(iii) Wild and Scenic Rivers. Facilities shall be designed and
constructed in order that designated wild and scenic rivers be preserved
in free-flowing condition and that they and their immediate environments
be protected for the benefit and enjoyment of present and future
generations under the Wild and Scenic Rivers Act of 1978 (Pub. L.
95-625).
(iv) Endangered species. Facilities shall be designed and
constructed in a manner to conserve, to the extent practicable, the
various endangered and threatened species of fish or wildlife and
plants, and will not jeopardize their continued existence and will not
result in destruction or modification of the habitat of species in the
Endangered Species Act of 1973 (Pub. L. 93-205).
(2) Historic preservation. Facilities should be designed and
constructed in a manner which will contribute to the preservation and
enhancement of sites, structures, and objects of historical,
architectural, and archaeological significance. All facilities must
comply with the National Historic Preservation Act of 1966 (16 U.S.C
470) as supplemented by 36 CFR Part 800 and Executive Order 11593,
''Protection and Enhancement of the Cultural Environment.'' Subpart F of
Part 1901 of this chapter sets forth procedures for the protection of
Historic and Archaeological Properties.
(3) Architectural barriers. All facilities intended for or
accessible to the public or in which physically handicapped persons may
be employed or reside must be developed in compliance with the
Architectural Barriers Act of 1968 (Pub. L. 90-480) as implemented by
the General Services Administration regulations 41 CFR 101-19.6 and
Section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112) as
implemented by 7 CFR Parts 15 and 15b.
(4) Health Care Facilities. The proposed facility must meet the
minimum standards for design and construction contained in the American
Institute of Architects Press Publication No. ISBN 0-913962-96-1,
''Guidelines for Construction and Equipment of Hospital and Medical
Facilities,'' 1987 Edition. The facility must also meet the life/safety
aspects of the 1985 edition of the National Fire Protection Association
(NFPA) 101 Life Safety Code, or any subsequent code that may be
designated by the Secretary of HHS. All publications referenced in this
section are available in all FmHA State Offices. Under
1942.17(j)(8)(ii) of this subpart, a statement by the responsible
regulatory agency that the facility meets the above standards will be
required. Any exceptions must have prior National Office concurrence.
(5) Energy conservation. Facility design should consider cost
effective energy saving measures or devices.
(6) Lead base paints. Lead base paints shall not be used in
facilities designed for human habitation. Owners must comply with the
Lead Base Paints Poisoning and Prevention Act of 1971 (42 U.S.C. 4801)
and the National Consumer Health Information and Health Promotion Act of
1976 (Pub. L. 94-317) with reference to paint specifications used
according to Exhibit H of Subpart A of Part 1924 of this chapter.
(7) Fire protection. Water facilities must have sufficient capacity
to provide reasonable fire protection to the extent practicable.
(8) Growth capacity. Facilities must have sufficient capacity to
provide for reasonable growth to the extent practicable.
(9) Water conservation. Owners are encouraged, when economically
feasible, to incorporate water conservation practices into a facility's
design. For existing water systems, evidence must be provided showing
that the distribution system water losses do not exceed reasonable
levels.
(10) Water quality. All water facilities must meet the requirements
of the Safe Drinking Water Act (Pub. L. 93-523) and provide water of a
quality that meets the current Interim Primary Drinking Water
Regulations (40 CFR part 141).
(11) Combined sewers. New combined sanitary and storm water sewer
facilities will not be financed by FmHA. Extensions to existing
combined systems can only be financed when separate systems are
impractical.
(12) Compliance. All facilities must meet the requirements of
Federal, State, and local agencies having the appropriate jurisdiction.
(13) Dam safety. Projects involving any artificial barrier which
impounds or diverts water, or the rehabilitation or improvement of such
a barrier, should comply with the provisions for dam safety as discussed
in the Federal Guidelines for Dam Safety (Government Printing Office
stock No. 041-001-00187-5) as prepared by the Federal Coordinating
Council for Science, Engineering and Technology.
(14) Pipe. All pipe used shall meet current American Society for
Testing Materials (ASTM) or American Water Works Association (AWWA)
standards.
(15) Water system testing. For new water systems or extensions to
existing water systems, leakage shall not exceed 10 gallons per inch of
pipe diameter per mile of pipe per 24 hours when tested at 1 1/2 times
the working pressure or rated pressure of the pipe, whichever is
greater.
(16) Metering devices. Water facilities financed by FmHA will have
metering devices for each connection. An exception to this requirement
may be granted by the FmHA State Director when the owner demonstrates
that installation of metering devices would be a significant economic
detriment and that environmental consideration would not be adversely
affected by not installing such devices.
(e) Construction contracts. Contract documents must be sufficiently
descriptive and legally binding in order to accomplish the work as
economically and expeditiously as possible.
(1) Standard construction contract documents are available from FmHA.
When FmHA's standard construction contract documents are used, it will
normally not be necessary for the Office of the General Counsel (OGC) to
perform a detailed legal review. If the construction contract documents
utilized are not in the format of guide forms previously approved by
FmHA, OGC's review of the construction contract documents will be
obtained prior to their use.
(2) Contract review and approval. The owner's attorney will review
the executed contract documents, including performance and payment
bonds, and will certify that they are adequate, and that the persons
executing these documents have been properly authorized to do so. The
contract documents, bids bonds, and bid tabulation sheets will be
forwarded to FmHA for approval prior to awarding. All contracts will
contain a provision that they are not in full force and effect until
they have been approved by FmHA. The FmHA State Director or designee is
responsible for approving construction contracts with the legal advice
and guidance of the OGC when necessary.
(3) Separate contracts. Arrangements which split responsibility of
contractors (separate contracts for labor and material, extensive
subcontracting and multiplicity of small contracts on the same job),
should be avoided whenever it is practical to do so. Contracts may be
awarded to suppliers or manufacturers for furnishing and installing
certain items which have been designed by the manufacturer and delivered
to the job site in a finished or semifinished state such as
perfabricated buildings and lift stations. Contracts may also be
awarded for material delivered to the job site and installed by a
patented process or method.
(f) Utility purchase contracts. Applicants proposing to purchase
water or other utility service from private or public sources shall have
written contracts for supply or service which are reviewed and approved
by the FmHA State Director or designee. To the extent practical, FmHA
review and approval of such contracts should take place prior to their
execution by the owner. Form FmHA 442-30, ''Water Purchase Contract,''
may be used when appropriate. If the FmHA loan will be repaid from
system revenues, the contract will be pledged to FmHA as part of the
security for the loan. Such contracts will:
(1) Include a commitment by the supplier to furnish, at a specified
point, an adequate quantity of water or other service and provide that,
in case of shortages, all of the supplier's users will proportionately
share shortages. If it is impossible to obtain a firm commitment for
either an adequate quantity or sharing shortages proportionately, a
contract may be executed and approved provided adequate evidence is
furnished to enable FmHA to make a determination that the supplier has
adequate supply and/or treatment facilities to furnish its other users
and the applicant for the foreseeable future; and
(i) The supplier is subject to regulations of the Federal Energy
Regulatory Commission or other Federal or State agency whose
jurisdiction can be expected to prevent unwarranted curtailment of
supply; or
(ii) A suitable alternative supply could be arranged within the
repayment ability of the borrower if it should become necessary; or
(iii) Prior approval is obtained from the National Office. The
following information should be submitted to the National Office:
(A) Transmittal memorandum including:
(1) Alternative supplies considered; and
(2) Recommendations and comments; and
(3) Any other necessary supporting information.
(B) Copies of the following:
(1) Proposed letter of conditions; and
(2) Form FmHA 442-7, ''Operating Budget''; and
(3) Form FmHA 442-3, ''Balance Sheet''; and
(4) Preliminary Engineering Report; and
(5) Proposed Contract.
(C) Owner and FmHA engineer's comments and recommendations.
(D) Documentation and statement from the supplier that it has an
adequate supply and treatment facilities available to meet the needs of
its users and the owner for the foreseeable future.
(2) Set out the ownership and maintenance responsibilities of the
respective parties including the master meter if a meter is installed at
the point of delivery.
(3) Specify the initial rates and provide some kind of escalator
clause which will permit rates for the association to be raised or
lowered proportionately as certain specified rates for the supplier's
regular customers are raised or lowered. Provisions may be made for
altering rates in accordance with the decisions of the appropriate State
agency which may have regulatory authority.
(4) Run for a period of time which is at least equal to the repayment
period of the loan. State Directors may approve contracts for shorter
periods of time if the supplier cannot legally contract for such period,
or if the owner and supplier find it impossible or impractical to
negotiate a contract for the maximum period permissible under State law,
provided:
(i) The supplier is subject to regulations of the Federal Energy
Regulatory Commission or other Federal or State agency whose
jurisdiction can be expected to prevent unwarranted curtailment of
supply; or
(ii) The contract contains adequate provisions for renewal; or
(iii) A determination is made that in the event the contract is
terminated, there are or will be other adequate sources available to the
owner that can feasibly be developed or purchased.
(5) Set out in detail the amount of connection or demand charges, if
any, to be made by the supplier as a condition to making the service
available to the owner. However, the payment of such charges from loan
funds shall not be approved unless FmHA determines that it is more
feasible and economical for the owner to pay such a connection charge
than it is for the owner to provide the necessary supply by other means.
(6) Provide for a pledge of the contract to FmHA as part of the
security for the loan.
(7) Not contain provisions for:
(i) Construction of facilities which will be owned by the supplier.
This does not preclude the use of money paid as a connection charge for
construction to be done by the supplier.
(ii) Options for the future sale or transfer. This does not preclude
an agreement recognizing that the supplier and owner may at some future
date agree to a sale of all or a portion of the facility.
(g) Sewage treatment and bulk water sales contracts. Owners entering
into agreements with private or public parties to treat sewage or supply
bulk water shall have written contracts for such service and all such
contracts shall be subject to FmHA concurrence. Paragraph (f) of this
section should be used as a guide to prepare such contracts.
(h) Performing construction. Owners are encouraged to accomplish
construction through contracts with recognized contractors. Owners may
accomplish construction by using their own personnel and equipment
provided the owners possess the necessary skills, abilities and
resources to perform the work and provided a licensed engineer or
architect prepares design drawings and specifications and inspects
construction and furnishes inspection reports as required by paragraph
(o) of this section. For other than utility-type facilities, inspection
services may be provided by individuals as approved by the FmHA State
Director. In either case, the requirements of paragraph (j) of this
section apply. Payments for construction will be handled under
1942.17(p)(5) of this part.
(i) Owner's contractual responsibility. This subpart does not
relieve the owner of any contractual responsibilities under its
contract. The owner is responsible for the settlement of all
contractural and administrative issues arising out of procurements
entered into in support of a loan or grant. These include, but are not
limited to: source evaluation, protests, disputes, and claims. Matters
concerning violation of laws are to be referred to the local, State, or
Federal authority as may have jurisdiction.
(j) Owner's procurement regulations. Owner's procurement regulations
must comply with the following standards:
(1) Code of conduct. Owners shall maintain a written code or
standards of conduct which shall govern the performance of their
officers, employees or agents engaged in the award and administration of
contracts supported by FmHA funds. No employee, officer or agent of the
owner shall participate in the selection, award, or administration of a
contract supported by FmHA funds if a conflict of interest, real or
apparent, would be involved. Examples of such conflicts would arise
when: the employee, officer or agent; any member of their immediate
family; their partner; or an organization which employs, or is about
to employ, any of the above; has a financial or other interest in the
firm selected for the award.
(i) The owner's officers, employees or agents shall neither solicit
nor accept gratuities, favors or anything of monetary value from
contractors, potential contractors, or parties of subagreements.
(ii) To the extent permitted by State or local law or regulations,
the owner's standards of conduct shall provide for penalties, sanctions,
or other disciplinary actions for violations of such standards by the
owner's officers, employees, agents, or by contractors or their agents.
(2) Maximum open and free competition. All procurement transactions,
regardless of whether by sealed bids or by negotiation and without
regard to dollar value, shall be conducted in a manner that provides
maximum open and free competition. Procurement procedures shall not
restrict or eliminate competition. Examples of what are considered to
be restrictive of competition include, but are not limited to: Placing
unreasonable requirements on firms in order for them to qualify to do
business; noncompetitive practices between firms; organizational
conflicts of interest; and unnecessary experience and bonding
requirements. In specifying material(s), the owner and its consultant
will consider all materials normally suitable for the project
commensurate with sound engineering practices and project requirements.
For a water or waste disposal facility, FmHA shall consider fully any
recommendation made by the loan applicant or borrower concerning the
technical design and choice of materials to be used for such a facility.
If FmHA determines that a design or material, other than those that
were recommended should be considered by including them in the
procurement process as an acceptable design or material in the water or
waste disposal facility, FmHA shall provide such applicant or borrower
with a comprehensive justification for such a determination. The
justification will be documented in writing.
(3) Owner's review. Proposed procurement actions shall be reviewed
by the owner's officials to avoid the purchase of unnecessary or
duplicate items. Consideration should be given to consolidation or
separation of procurement items to obtain a more economical purchase.
Where appropriate, an analysis shall be made of lease versus purchase
alternatives, and any other appropriate analysis to determine which
approach would be the most economical. To foster greater economy and
efficiency, owners are encouraged to enter into State and local
intergovernmental agreements for procurement or use of common goods and
services.
(4) Solicitation of offers, whether by competitive sealed bids or
competitive negotiation, shall:
(i) Incorporate a clear and accurate description of the technical
requirements for the material, product, or service to be procured. The
description shall not, in competitive procurements, contain features
which unduly restrict competition. The description may include a
statement of the qualitative nature of the material, product or service
to be procured, and when necessary shall set forth those minimum
essential characteristics and standards to which it must conform if it
is to satisfy its intended use. Detailed product specifications should
be avoided if at all possible. When it is impractical or uneconomical
to make a clear and accurate description of the technical requirements,
a ''brand name or equal'' description may be used to define the
performance or other salient requirements of a procurement. The
specific features of the named brands which must be met by offerors
shall be clearly stated.
(ii) Clearly specify all requirements which offerors must fulfill and
all other factors to be used in evaluating bids or proposals.
(5) Small, minority, and women's businesses and labor surplus area
firms. (i) affirmative steps should be taken to assure that small and
minority businesses are utilized when possible as sources of supplies,
equipment, construction and services. Affirmative steps shall include
the following:
(A) Include qualified small and minority businesses on solicitation
lists.
(B) Assure that small and minority businesses are solicited whenever
they are potential sources.
(C) When economically feasible, divide total requirements into
smaller tasks or quantities so as to permit maximum small and minority
business participation.
(D) Where the requirement permits, establish delivery schedules which
will encourage participation by small and minority businesses.
(E) Use the services and assistance of the Small Business
Administration and the Office of Minority Business Enterprise of the
Department of Commerce.
(F) If any subcontracts are to be let, require the prime contractor
to take the affirmative steps in paragraphs (j)(5)(i) (A) through (E) of
this section.
(ii) Owners shall take similar appropriate affirmative action in
support of women's businesses.
(iii) Owners are encouraged to procure goods and services from labor
surplus areas.
(iv) Owners shall submit a written statement or other evidence to
FmHA of the steps taken to comply with paragraphs (j)(5)(i) (A) through
(F), (j)(5)(ii), and (j)(5)(iii) of this section.
(6) Contract pricing. Cost plus a percentage of cost method of
contracting shall not be used.
(7) Unacceptable bidders. The following will not be allowed to bid
on, or negotiate for, a contract or subcontract related to the
construction of the project:
(i) An engineer or architect as an individual or firm who has
prepared plans and specifications or who will be responsible for
monitoring the construction;
(ii) Any firm or corporation in which the owner's architect or
engineer is an officer, employee, or holds or controls a substantial
interest;
(iii) The governing body's officers, employees, or agents;
(iv) Any member of the immediate family or partners in paragraphs
(j)(7)(i), (j)(7)(ii), or (j)(7)(iii) of this section; or
(v) An organization which employs, or is about to employ, any person
in paragraph (j)(7)(i), (j)(7)(ii), (j)(7)(iii) or (j)(7)(iv) of this
section.
(8) Contract award. Contracts shall be made only with responsible
parties possessing the potential ability to perform successfully under
the terms and conditions of a proposed procurement. Consideration shall
include but not be limited to matters such as integrity, record of past
performance, financial and technical resources, and accessibility to
other necessary resources. Contracts shall not be made with parties who
are suspended or debarred.
(k) Procurement methods. Procurement shall be made by one of the
following methods: small purchase procedures; competitive sealed bids
(formal advertising); competitive negotiation; or noncompetitive
negotiation. Competitive sealed bids (formal advertising) is the
preferred procurement method for construction contracts.
(1) Small purchase procedures. Small purchase procedures are those
relatively simple and informal procurement methods that are sound and
appropriate for a procurement of services, supplies or other property,
costing in the aggregate not more than $10,000. If small purchase
procedures are used for a procurement, written price or rate quotations
shall be obtained from an adequate number of qualified sources.
(2) Competitive sealed bids. In competitive sealed bids (formal
advertising), sealed bids are publicly solicited and a firm-fixed-price
contract (lump sum or unit price) is awarded to the responsible bidder
whose bid, conforming with all the material terms and conditions of the
invitation for bids, is lowest, price and other factors considered.
When using this method the following shall apply:
(i) At a sufficient time prior to the date set for opening of bids,
bids shall be solicited from an adequate number of qualified sources.
In addition, the invitation shall be publicly advertised.
(ii) The invitation for bids, including specifications and perinent
attachments, shall clearly define the items or services needed in order
for the bidders to properly respond to the invitation under paragraph
(j)(4) of this section.
(iii) All bids shall be opened publicly at the time and place stated
in the invitation for bids.
(iv) A firm-fixed-price contract award shall be made by written
notice to that responsible bidder whose bid, conforming to the
invitation for bids, is lowest. When specified in the bidding
documents, factors such as discounts and transportation costs shall be
considered in determining which bid is lowest.
(v) Any or all bids may be rejected by the owner when it is in their
best interest.
(3) Competitive negotiation. In competitive negotiations, proposals
are requested from a number of sources and the Request for Proposal is
publicized. Negotiations are normally conducted with more than one of
the sources submitting offers. Competitive negotiation may be used if
conditions are not appropriate for the use of formal advertising and
where discussions and bargaining with a view to reaching agreement on
the technical quality, price, other terms of the proposed contract and
specifications may be necessary. If competitive negotiation is used for
a procurement, the following requirements shall apply:
(i) Proposals shall be solicited from an adequate number of qualified
sources to permit reasonable competition consistent with the nature and
requirements of the procurement. The Request for Proposal shall be
publicized and reasonable requests by other sources to compete shall be
honored to the maximum extent practicable.
(ii) The Request for Proposal shall identify all significant
evaluation factors, including price or cost where required, and their
relative importance.
(iii) The owner shall provide mechanisms for technical evaluation of
the proposals received, determination of responsible offerors for the
purpose of written or oral discussions, and selection for contract
award.
(iv) Award may be made to the responsible offeror whose proposal will
be most advantageous to the owner, price and other factors considered.
Unsuccessful offerors should be promptly notified.
(v) Owners may utilize competitive negotiation procedures for
procurement of architectural/engineering and other professional
services, whereby competitors' qualifications are evaluated and the most
qualified competitor is selected, subject to negotiations of fair and
reasonable compensation.
(4) Noncompetitive negotiation. Noncompetitive negotiation is
procurement through solicitation of a proposal from only one source, or
after solicitation of a number of sources competition is determined
inadequate. Noncompetitive negotiation may be used when the award of a
contract is not feasible under small purchase, competitive sealed bids
(formal advertising) or competitive negotiation procedures.
Circumstances under which a contract may be awarded by noncompetitive
negotiations are limited to the following:
(i) The item is available only from a single source; or
(ii) There exists a public exigency or emergency and the urgency for
the requirement will not permit a delay incident to competitive
solicitation; or
(iii) After solicitation of a number of sources, competition is
determined inadequate; or
(iv) No acceptable bids have been received after formal advertising;
or
(v) The procurement of architectural/engineering and other
professional services.
(vi) The aggregate amount does not exceed $50,000.
(5) Additional procurement methods. Additional innovative
procurement methods may be used by the owner with prior written approval
of the FmHA National Office.
(l) Contracting methods. The services of the consulting engineer or
architect and the general construction contractor shall normally be
procured from unrelated sources in accordance with paragraph (j)(7) of
this section. Procurement methods which combine or rearrange design,
inspection or construction services (such as design/build or
construction management) may be used with FmHA written approval. If the
contract amount exceeds $100,000, National Office prior concurrence must
be obtained under 1942.9(b) of this subpart. This method cannot be
used when an FmHA grant is involved. The owner should request FmHA
approval by providing at least the following information to FmHA:
(1) The owner's written request to use an unconventional contracting
method with a description of the proposed method.
(2) A proposed scope of work describing in clear, concise terms the
technical requirements for the contract. It should include items such
as:
(i) A nontechnical statement summarizing the work to be performed by
the contractor and the results expected.
(ii) The sequence in which the work is to be performed and a proposed
construction schedule.
(3) A proposed firm-fixed-price contract for the entire project which
provides that the contractor shall be responsible for:
(i) Any extra cost which may result from errors or omissions in the
services provided under the contract.
(ii) Compliance with all Federal, State, and local requirements
effective on the contract execution date.
(4) Where noncompetitive negotiation is proposed, an evaluation of
the contractor's performance on previous similar projects in which the
contractor acted in a similar capacity.
(5) A detailed listing and cost estimate of equipment and supplies
not included in the construction contract but which are necessary to
properly operate the facility.
(6) Evidence that a qualified construction inspector who is
independent of the contractor has or will be hired.
(7) Preliminary plans and outline specifications. However, final
plans and specifications must be completed and reviewed by FmHA prior to
the start of construction.
(8) The owner's attorney's opinion and comments regarding the legal
adequacy of the proposed contract documents and evidence that the owner
has the legal authority to enter into and fulfill the contract.
(m) Contracts awarded prior to preapplications. Owners awarding
construction or other procurement contracts prior to filing a
pre-application with FmHA must comply with the following:
(1) Evidence. Provide conclusive evidence that the contract was
entered into without intent to circumvent the requirements of FmHA
regulations. The evidence will consist of at least the following:
(i) The lapse of a reasonable period of time between the date of
contract award and the date of filing the preapplication which clearly
indicates an irreconcilable failure of previous financial arrangements;
or
(ii) A written statement explaining initial plans for financing the
project and reasons for failure to obtain the planned credit.
(2) Modifications. Modify the outstanding contract to conform with
the provisions of this subpart. Where this is not possible,
modifications will be made to the extent practicable and, as a minimum,
the contract must comply with all State and local laws and regulations
as well as statutory requirements and executive orders related to the
FmHA financing. When all construction is complete and it is
impracticable to modify the contracts, the owner must provide the
certification required by paragraph (m)(4) of this section.
(3) Consultant's certification. Provide a certification by an
engineer or architect that any construction performed complies fully
with the plans and specifications.
(4) Owner's certification. Provide a certification by the owner that
the contractor has complied with all statutory and executive
requirements related to FmHA financing for construction already
performed even though the requirements may not have been included in the
contract documents.
(n) Contract provisions. In addition to provisions defining a sound
and complete contract, any recipient of FmHA funds shall include the
following contract provisions or conditions in all contracts:
(1) Remedies. Contracts other than small purchases shall contain
provisions or conditions which will allow for administrative,
contractual, or legal remedies in instances where contractors violate or
breach contract terms, and provide for such sanctions and penalties as
may be appropriate. A realistic liquidated damage provision should also
be included.
(2) Termination. All contracts exceeding $10,000, shall contain
provisions for termination by the owner including the manner by which it
will be affected and the basis for settlement. In addition, such
contracts shall describe conditions under which the contract may be
terminated for default as well as conditions when the contract may be
terminated because of circumstances beyond the control of the
contractor.
(3) Surety. In all contracts for construction or facility
improvements awarded exceeding $100,000, the owner shall require bonds,
a bank letter of credit or cash deposit in escrow assuring performance
and payment, each in the amount of 100 percent of the contract cost.
The surety will normally be in the form of performance bonds and payment
bonds; however, when other methods of surety may be necessary, bid
documents must contain provisions for such alternative types of surety.
The use of surety other than performance bonds and payment bonds
requires concurrence by the National Office after submission of a
justification by the State Director together with the proposed form of
escrow agreement or letter of credit. For contracts of lesser amounts,
the owner may require surety. When a surety is not provided,
contractors will furnish evidence of payment in full for all materials,
labor, and any other items procured under the contract. Form FmHA
1924-10, ''Release by Claimants,'' and Form FmHA 1924-9, ''Certificate
of Contractor's Release,'' may be obtained at the local FmHA office and
used for this purpose. The United States, acting through the Farmers
Home Administration, will be named as co-obligee on all surety unless
prohibited by State law. Companies providing performance bonds and
payment bonds must hold a certificate of authority as an acceptable
surety on Federal bonds as listed in Treasury Circular 570 as amended
and be legally doing business in the State where the facility is
located.
(4) Equal Employment Opportunity. All contracts awarded in excess of
$10,000 by owners shall contain a provision requiring compliance with
Executive Order 11246, entitled, ''Equal Employment Opportunity,'' as
amended by Executive Order 11375, and as supplemented by Department of
Labor regulations 41 CFR Part 60.
(5) Anti-kickback. All contracts for construction shall include a
provision for compliance with the Copeland ''Anti-Kickback'' Act (18
U.S.C. 874). This Act provides that each contractor shall be prohibited
from inducing, by any means, any person employed in the construction,
completion, or repair of public work, to give up any part of the
compensation to which they are otherwise entitled. The owner shall
report all suspected or reported violations to FmHA.
(6) Records. All negotiated contracts (except those of $2,500 or
less) awarded by owners shall include a provision to the effect that the
owner, FmHA, the Comptroller General of the United States, or any of
their duly authorized representatives, shall have access to any books,
documents, papers, and records of the contractor which are directly
pertinent to a specific Federal loan program for the purpose of making
audits, examinations, excerpts, and transcriptions. Owners shall
require contractors to maintain all required records for three years
after owners make final payments and all other pending matters are
closed.
(7) State Energy Conservation Plan. Contracts shall recognize
mandatory standards and policies relating to energy efficiency which are
contained in the State energy conservation plan issued in compliance
with the Energy Policy and Conservation Act (Pub. L. 94-163).
(8) Change orders. The construction contract shall require that all
contract change orders be approved in writing by FmHA.
(9) FmHA concurrence. All contracts must contain a provision that
they shall not be effective unless and until the FmHA State Director or
designee concurs in writing.
(10) Retainage. All construction contracts shall contain adequate
provisions for retainage. No payments will be made that would deplete
the retainage nor place in escrow any funds that are required for
retainage nor invest the retainage for the benefit of the contractor.
The retainage shall not be less than an amount equal to 10 percent of an
approved partial payment estimate until 50 percent of the work has been
completed. If the job is proceeding satisfactory at 50 percent
completion, further partial payments may be made in full, however,
previously retained amounts shall not be paid until construction is
substantially complete. Additional amounts may be retained if the job
is not proceeding satisfactorily, but in no event shall the total
retainage be more than 10 percent of the value of the work completed.
(11) Other compliance requirements. Contracts in excess of $100,000
shall contain a provision which requires compliance with all applicable
standards, orders, or requirements issued under Section 306 of the Clean
Air Act (42 U.S.C. 1857(h)), Section 508 of the Clean Water Act (33
U.S.C. 1368), Executive Order 11738, and Environmental Protection Agency
(EPA) regulations 40 CFR Part 15, which prohibit the use under
non-exempt Federal contracts, grants or loans of facilities included on
the EPA List of Violating Facilities. The provision shall require
reporting of violations to FmHA and to the U.S. Environmental Protection
Agency, Assistant Administrator for Enforcement. Solicitations and
contract provisions shall include the requirements of 40 CFR Part
15.4(c) as set forth in Guide 18 of this subpart which is available in
all FmHA offices.
(o) Contract administration. Owners shall be responsible for
maintaining a contract administration system to monitor the contractors'
performance and compliance with the terms, conditions, and
specifications of the contracts.
(1) Preconstruction conference. Prior to beginning construction, the
owner will schedule a preconstruction conference where FmHA will review
the planned development with the owner, its architect or engineer,
resident inspector, attorney, contractor(s), and other interested
parties. The conference will thoroughly cover applicable items included
in Form FmHA 1924-16, ''Record of Preconstruction Conference,'' and the
discussion and agreements will be documented. Form FmHA 1924-16 may be
used for this purpose.
(2) Monitoring reports. Each owner will be required to monitor and
provide reports to FmHA on actual performance during construction for
each project financed, or to be financed, in whole or in part with FmHA
funds to include:
(i) A comparison of actual accomplishments with the construction
schedule established for the period. The partial payment estimate may
be used for this purpose.
(ii) A narrative statement giving full explanation of the following:
(A) Reasons why established goals were not met.
(B) Analysis and explanation of cost overruns or high unit costs and
how payment is to be made for the same.
(iii) If events occur between reports which have a significant impact
upon the project, the owner will notify FmHA as soon as any of the
following conditions are met:
(A) Problems, delays, or adverse conditions which will materially
affect the ability to attain program objectives or prevent the meeting
of project work units by established time periods. This disclosure
shall be accompanied by a statement of the action taken, or
contemplated, and any Federal assistance needed to resolve the
situation.
(B) Favorable developments or events which enable meeting time
schedules and goals sooner than anticipated or producing more work units
than originally projected or which will result in cost underruns or
lower unit costs than originally planned and which may result in less
FmHA assistance.
(3) Inspection. Full-time resident inspection is required for all
construction unless a written exception is made by FmHA upon written
request of the owner. Unless otherwise agreed, the resident inspector
will be provided by the consulting architect/engineer. Prior to the
preconstruction conference, the architect/engineer will submit a resume
of qualifications of the resident inspector to the owner and to FmHA for
acceptance in writing. If the owner provides the resident inspector, it
must submit a resume of the inspector's qualifications to the project
architect/engineer and FmHA for acceptance in writing prior to the
preconstruction conference. The resident inspector will work under the
general supervision of the project architect/engineer. A guide format
for preparing daily inspection reports (Guide 11 of this subpart) and
Form FmHA 1924-18, ''Partial Payment Estimate,'' are available on
request from FmHA.
(4) Inspector's daily diary. The resident inspector will maintain a
record of the daily construction progress in the form of a daily diary
and daily inspection reports as follows:
(i) A complete set of all daily construction records will be
maintained and the original set furnished to the owner upon completion
of construction.
(ii) All entries shall be legible and shall be made in ink.
(iii) Daily entries shall include but not be limited to the date,
weather conditions, number and classification of personnel working on
the site, equipment being used to perform the work, persons visiting the
site, accounts of substantive discussions, instructions given to the
contractors, directions received, all significant or unusual happenings
involving the work, any delays, and daily work accomplished.
(iv) The daily entries shall be made available to FmHA personnel and
will be reviewed during project inspections.
(5) Prefinal inspections. A prefinal inspection will be made by the
owner, resident inspector, project architect or engineer,
representatives of other agencies involved, the District Director and a
FmHA State Office staff representative, preferably the State Staff
architect or engineer. Prefinal inspections may be made without FmHA
State Office staff participation if the State Director or a designee
determines that the facility does not utilize complicated construction
techniques, materials or equipment for facilities such as small fire
stations, storage buildings or minor utility extensions, and that an
experienced District Office staff representative will be present. The
inspection results will be recorded on Form FmHA 1924-12, ''Inspection
Report,'' and a copy provided to all appropriate parties.
(6) Final inspection. A final inspection will be made by FmHA before
final payment is made.
(7) Change is development plans.
(i) Changes in development plans may be approved by FmHA when
requested by owners, provided:
(A) Funds are available to cover any additional costs; and
(B) The change is for an authorized loan purpose; and
(C) It will not adversely affect the soundness of the facility
operation or FmHA's security; and
(D) The change is within the scope of the contract.
(ii) Changes will be recorded on Form FmHA 1924-7, ''Contract Change
Order,'' or, other similar forms may be used with the prior approval of
the State Director or designee. Regardless of the form, change orders
must be approved by the FmHA State Director or a designated
representative.
(iii) Changes should be accomplished only after FmHA approval on all
changes which affect the work and shall be authorized only by means of
contract change order. The change order will include items such as:
(A) Any changes in labor and material and their respective cost.
(B) Changes in facility design.
(C) Any decrease or increase in quantities based on final
measurements that are different from those shown in the bidding
schedule.
(D) Any increase or decrease in the time to complete the project.
(iv) All changes shall be recorded on chronologically numbered
contract change orders as they occur. Change orders will not be
included in payment estimates until approved by all parties.
(50 FR 7296, Feb. 22, 1985, as amended at 52 FR 8035, Mar. 13, 1987;
53 FR 6791, Mar. 3, 1988; 54 FR 14334, Apr. 11, 1989; 54 FR 18883, May
3, 1989)
07 CFR 1942.19 Information pertaining to preparation of notes or bonds
and bond transcript documents for public body applicants.
(a) General. This section includes information for use by public
body applicants in the preparation and issuance of evidence of debt
(bonds, notes, or debt instruments, herein referred to as bonds). This
section is made available to applicants as appropriate for application
processing and loan docket preparation.
(b) Policies related to use of bond counsel. Preparation of the
bonds and the bond transcript documents will be the responsibility of
the applicant. Public body applicants will obtain the services and
opinion of recognized bond counsel with respect to the validity of a
bond issue, except as provided in (b) (1) through (3) below. The
applicant normally will be represented by a local attorney who will
obtain the assistance of a recognized bond counsel firm which has
experience in municipal financing with such investors as investment
dealers, banks, and insurance companies.
(1) Issues of $250,000 or less. At the option of the applicant for
issues of $250,000 or less, bond counsel may be used for the issuance of
a final opinion only and not for the preparation of the bond transcript
and other documents when the applicant, FmHA, and bond counsel have
agreed in advance as to the method of preparation of the bond transcript
documents. Under such circumstances the applicant will be responsible
for the preparation of the bond transcript documents.
(2) Issues of $50,000 or less. At the option of the applicant and
with the prior approval of the FmHA State Director, the applicant need
not use bond counsel if:
(i) The amount of the issue does not exceed $50,000 and the applicant
recognizes and accepts the fact that processing the application may
require additional legal and administrative time.
(ii) There is a significant cost saving to the applicant particularly
with reference to total legal fees after determining what bond counsel
would charge as compared with what the local attorney will charge
without bond counsel.
(iii) The local attorney is able and experienced in handling this
type of legal work.
(iv) The applicant understands that, if it is required by FmHA to
refinance its loan pursuant to the statutory refinancing requirements,
it will probably have to obtain at its expense a bond counsel's opinion
at that time.
(v) All bonds will be prepared in accordance with this regulation and
will conform as nearly as possible to the preferred methods of
preparation stated in paragraph (e) of this section but still be
consistent with State law.
(vi) Many matters necessary to comply with FmHA requirements such as
land rights, easements, and organizational documents will be handled by
the applicant's local attorney. Specific closing instructions will be
issued by the Office of the General Counsel of the U.S. Department of
Agriculture for the guidance of FmHA.
(3) For loans of less than $500,000. The applicant shall not be
required to use bond counsel in a straight mortgage-note situation where
competitive bidding is not required for the sale of the debt instrument,
unless a complicated financial situation exists with the applicant. In
addition, if there is a known backlog in a particular OGC regional
office the applicant will be advised of such backlog and it will be
suggested to the applicant that the appointment of bond counsel may be
more expeditious. However, it will be the decision of the applicant
whether or not to appoint bond counsel. The applicant must comply with
(b)(2) (iii) through (vi) of this section.
(c) Bond transcript documents. Any questions with respect to FmHA
requirements should be discusesd with the FmHA representatives. The
bond counsel (or local counsel where no bond counsel is involved) is
required to furnish at least two complete sets of the following to the
applicant, who will furnish one complete set to FmHA:
(1) Copies of all organizational documents.
(2) Copies of general incumbency certificate.
(3) Certified copies of minutes or excerpts therefrom of all meetings
of the applicant's governing body at which action was taken in
connection with the authorization and issuance of the bonds.
(4) Certified copies of documents evidencing that the applicant has
complied fully with all statutory requirements incident to calling and
holding of a favorable bond election, if such an election is necessary
in connection with bond issuance.
(5) Certified copies of the resolution or ordinances or other
documents, such as the bond authorizing resolutions or ordinance and any
resolution establishing rates and regulating the use of the improvement,
if such documents are not included in the minutes furnished.
(6) Copies of official Notice of Sale and affidavit of publication of
Notice of Sale where a public sale is required by State statute.
(7) Specimen bond, with any attached coupons.
(8) Attorney's no-litigation certificate.
(9) Certified copies of resolutions or other documents pertaining to
the bond award.
(10) Any additional or supporting documents required by bond counsel.
(11) For loans involving multiple advances of FmHA loan funds a
preliminary approving opinion of bond counsel (or local counsel if no
bond counsel is involved) if a final unqualified opinion cannot be
obtained until all funds are advanced. The preliminary opinion for the
entire issue shall be delivered on or before the first advance of loan
funds and state that the applicant has the legal authority to issue the
bonds, construct, operate and maintain the facility, and repay the loan
subject only to changes during the advance of funds such as litigation
resulting from the failure to advance loan funds, and receipt of closing
certrificates.
(12) Preliminary approving opinion, if any, and final unqualified
approving opinion of recognized bond counsel (or local counsel if no
bond counsel is involved) including opinion regarding interest on bonds
being exempt from Federal and any State income taxes. On approval of
the Administrator, a final opinion may be qualified to the extent that
litigation is pending relating to Indian claims that may affect title to
land or validity of the obligation. It is permissible for such opinions
to contain language referring to the last sentence of Section 306(a)(1)
or to Section 309A(h) of the Consolidated Farm and Rural Development Act
(7 U.S.C. 1926(a)(1) or 1929a(h)), and providing that if the bonds
evidencing the indebtedness in question are required by the Federal
Government and sold on an insured basis from the Agriculture Credit
Insurance Fund, or the Rural Development Insurance Fund, the interest on
such bonds will be included in gross income for the purpose of the
Federal income tax statutes.
(d) Interim financing from commercial sources during construction
period for loans of $50,000 or more. In all cases where it is possible
for funds to be borrowed at current market interest rates on an interim
basis from commercial sources, such interim financing will be obtained
so as to preclude the necessity for multiple advances of FmHA funds.
(e) Permanent instruments for FmHA loans to repay interim commercial
financing. FmHA loans will be evidenced by the following types of
instruments chosen in accordance with the following order of preference:
(1) First preference -- Form FmHA 440-22, ''Promissory Note
(Association or Organization)''. If legally permissible use Form FmHA
440-22 for insured loans.
(2) Second preference -- single instruments with amortized
installments. If Form FmHA 440.22 is not legally permissible, use a
single instrument providing for amortized installments. Show the full
amount of the loan on the face of the document and provide for entering
the date and amount of each FmHA advance on the reverse thereof or on an
attachment to the instrument. Form FmHA 440-22 should be followed to
the extent possible. When principal payment is deferred, no attempt
should be made to compute in dollar terms the amount of interest due on
these installment dates. Rather the instrument should provide that
''interest only'' is due on these dates. The appropriate amortized
installment computed as follows will be shown due on the installment
date thereafter.
(i) Annual payments -- Subtract the due date of the last annual
interest only installment from the due date of the final installment to
determine the number of annual payments applicable. When there are no
interest only installments, the number of annual payments will equal the
number of years over which the loan is amortized. Then multiply the
amount of the note by the applicable amortization factor shown in FmHA
Amortization Tables and round to the next higher dollar. Example of
Computation of Annual Payment:
Date of Loan Closing: 7-5-1976
Amount of Loan: $100,000.00
Interest Rate: 5%
Amortization Period: 40 years
Interest Only Installments: 7-5-1977 and 7-5-1978
First Regular Installment: 7-5-1979
Final Installment: 7-5-2016
Computation:
2016^1978=38 annual payments $100,000.00 .05929=$5,929.00 annual
payment due
(ii) Semiannual payments -- Multiply by two the number of years
between the due date of the last annual interest only installment and
the due date of the final installment to determine the correct number of
semiannual periods applicable. When there are no interest only
installments, multiply by two the number of years over which the loan is
amortized. Then multiply the amount of the note by the applicable
amortization factor shown in FmHA Amortization Tables and round to the
next higher dollar. Example of Computation of Semiannual Payment:
Date of Loan Closing: 7-5-1976
Amount of Loan: $100,000.00
Interest Rate: 5%
Amortization Period: 40 years
Interest Only Installments: 7-5-1977 and 7-5-1978
First Regular Installment: 7-5-1979
Final Installment: 7-5-2016
Computation:
2016^1978=38 2=76 semiannual periods $100,000.00 .02952=$2,952.00
semiannual payment due
(iii) Monthly payments -- Multiply by twelve the number of years
between the due date of the last annual interest only installment and
the final installment to determine the number of monthly payments
applicable. When there are no interest only installments, multiply by
twelve the number of years over which the loan is amortized. Then
multiply the amount of the note by the applicable amortization factor
shown in FmHA Amortization Tables and round to the next higher dollar.
Example of Computation of Monthly Payment:
Date of Loan Closing: 7-5-1976
Amount of Loan: $100,000.00
Interest Rate: 5%
Amortization Period: 40 years
Interest Only Installments: 7-5-1977 and 7-5-1978
First Regular Installment: 7-5-1979
Final Installment: 7-5-2016
Computation:
2016^1978=38 12=456 monthly payments $100,000.00 .00491=$491.00
monthly payment due
(3) Third preference -- single instrument with installments of
principal plus interest. If a single instrument with amortized
installments is not legally permissible, use a single instrument
providing for installments of principal plus interest accrued on the
unmatured principal balance. The principal should be in an amount best
adapted to making principal retirement and interest payments which
closely approximate equal installments of combined interest and
principal as required by the first two preferences.
(i) The repayment terms concerning interest only installments
described in paragraph (e)(2) of this section, ''Second perference''
applies.
(ii) The instrument shall contain in substance the following
provisions:
(A) A statement of principal maturities and due dates.
(B) Payments made on indebtedness evidenced by this instrument shall
be applied to the interest due through the next installment due date and
the balance to principal in accordance with the terms of the bond.
Payments on delinquent accounts will be applied in the following
sequence:
(1) Billed delinquent interest,
(2) Past due interest installments,
(3) Past due principal installments,
(4) Interest installment due, and
(5) Principal installment due.
Extra payments and payments made from security depleting sources
shall be applied to the principal last to come due or as specified in
the bond instrument.
(4) Fourth preference -- serial bonds with installments of principal
plus interest. If instruments described under the first, second, and
third preferences are not legally permissible, use serial bonds with a
bond or bonds delivered in the amount of each advance. Bonds will be
delivered in the order of their numbers. Such bonds will conform with
the minimum requirements of paragraph (h) of this section. Rules for
application of payments on serial bonds will be the same as those for
principal installment single bonds as set out in the preceding paragraph
(e)(3) of this section.
(f) Multiple advances of FmHA funds using permanent instruments.
Where interim financing from commercial sources is not available, FmHA
loan proceeds will be disbursed on an ''as needed by borrower'' basis in
amounts not to exceed the amount needed during 30-day periods.
(g) Multiple advances of FmHA funds using temporary debt instrument.
When none of the instruments described in paragraph (e) of this section
are legally permissible or practical, a bond anticipation note or
similar temporary debt instrument may be used. The debt instrument will
provide for multiple advance of FmHA loan funds and will be for the full
amount of the FmHA loan. The instrument will be prepared by bond
counsel (or local counsel if bond counsel is not involved) and approved
by the State Director and OGC. At the same time FmHA delivers the last
advance, the borrower will deliver the permanent bond instrument and the
canceled temporary instrument will be returned to the borrower. The
approved debt instrument will show at least the following:
(1) The date from which each advance will bear interest.
(2) The interest rate.
(3) A payment schedule providing for interest on outstanding
principal at least annually.
(4) A maturity date which shall be no earlier than the anticipated
issuance date of the permanent instrument(s).
(h) Minimum bond specifications. The provisions of this paragraph
are minimum specifications only, and must be followed to the extent
legally permissible.
(1) Type and denominations. Bond resolutions or ordinances will
provide that the instrument(s) be either a bond representing the total
amount of the indebtedness or serial bonds in denominations customarily
accepted in municipal financing (ordinarily in multiples of not less
than $1000). Single bonds may provide for repayment of principal plus
interest or amortized installments; amortized installments are
preferable from the standpoint of FmHA. Coupon bonds will not be used
unless required by State statute.
(i) To compute the value of each coupon when the bond denomination is
consistent:
(A) Multiply the amount of the loan or advance by the interest rate
and divide the product by 365 days.
(B) Multiply the daily accrual factor determined in (A) by the number
of days from the date of advance or last installment date to the next
installment date.
(C) Divide the interest computed in (B) by the number of bonds
securing the advance; this is the individual coupon amount.
(ii) to compute the value of each coupon when the bond denomination
varies:
(A) Multiply the denomination of the bond by the interest rate and
divide the product by 365 days.
(B) Multiply the daily accrual factor determined in (A) by the number
of days from the date of advance or last installment date to the next
installment due date; this is the individual coupon amount.
(2) Bond registration. Bonds will contain provisions permitting
registration as to both principal and interest. Bonds purchased by FmHA
will be registered in the name of ''United States of America, Farmers
Home Administration,'' and will remain so registered at all times while
the bonds are held or insured by the United States. The address of FmHA
for registration purposes will be that of the appropriate FmHA State
Office.
(3) Size and quality. Size of bonds and coupons should conform to
standard practice. Paper must be of sufficient quality to prevent
deterioration through ordinary handling over the life of the loan.
(4) Date of bond. Bonds will preferably be dated as of the day of
delivery, however, may be dated another date at the option of the
borrower and subject to approval by FmHA. If the date of delivery is
other than the date of the bond, the date of delivery will be stated in
the bond. In all cases, interest will accrue from the date of delivery
of the funds.
(5) Payment date. Loan payments will be scheduled to coincide with
income availability and be in accordance with State law. If consistent
with the foregoing, monthly payments will be required and will be
enumerated in the bond, other evidence of indebtedness, or other
supplemental agreement. However, if State law only permits principal
plus interest (P&I) type bonds, annual or semiannual P&I bonds will be
used. Insofar as practical monthly payments will be scheduled one full
month following the date of loan closing; or semiannual or annual
payments will be scheduled six or twelve full months, respectively,
following the date of loan closing or any deferment period. Due dates
falling on the 29th, 30th or 31st day of the month will be avoided.
(6) Place of payment. Payments on bonds purchased by FmHA should be
submitted to the FmHA District Office by the borrower. The District
Office will then remit the payments to the Finance Office or deposit
them in a Treasury General Account in accordance with Subpart B of Part
1951 of this chapter.
(7) Redemptions. Bonds should contain customary redemption
provisions, subject, however, to unlimited right of redemption without
premium of any bonds held by FmHA except to the extent limited by the
provisions under the ''Third Preference'' and ''Fourth Preference'' in
paragraph (e) of this section.
(8) Additional revenue bonds. Parity bonds may be issued to complete
the project. Otherwise, parity bonds may not be issued unless the net
revenues (that is, unless otherwise defined by the State statute, gross
revenues less essential operation and maintenance expense) for the
fiscal year preceding the year in which such parity bonds are to be
issued, were 120 percent of the average annual debt service requirements
on all bonds then outstanding and those to be issued; provided, that
this limitation may be waived or modified by the written consent of
bondholders representing 75 percent of the then outstanding principal
indebtedness. Junior and subordinate bonds may be issued in accordance
with the loan agreement.
(9) Scheduling of FmHA payments when joint financing is involved. In
all cases in which FmHA is participating with another lender in the
joint financing of the project to supply funds required by one
applicant, the FmHA payments of principal and interest should
approximate amortized installments.
(10) Precautions. The following types of provisions in debt
instruments should be avoided.
(i) Provisions for the holder to manually post each payment to the
instrument.
(ii) Provisions for returning the permanent or temporary debt
instrument to the borrower in order that it, rather than FmHA, may post
the date and amount of each advance or repayment on the instrument.
(iii) Defeasance provisions in loan or bond resolutions. When a bond
issue is defeased, a new issue is sold which supersedes the contractual
provisions of the prior issue, including the refinancing requirement and
any lien on revenues. Since defeasance in effect precludes FmHA from
requiring graduation before the final maturity date, it represents a
violation of the statutory refinancing requirement, therefore it is
disallowed.
(iv) Provisions that amend convenants contained in Forms FmHA
1942-47, ''Loan Resolution (Public Bodies),'' or FmHA 1942-9, ''Loan
Resolution Security Agreement.''
(11) Multiple Loan Instruments. The following will be adhered to
when preparing debt instruments:
(i) When more than one loan type is used in financing a project, each
type of loan will be evidenced by a separate debt instrument or series
of debt instruments.
(ii) Loan funds obligated in different fiscal years and those
obligated with different interest rates or terms in the same fiscal year
will be evidenced by separate debt instruments.
(iii) Loan funds obligated for the same loan type in the same fiscal
year at the same interest rate and term may be combined in the same debt
instrument; provided the borrower has been notified on Form FmHA
1940-1, ''Request for Obligation of Funds'', of the action.
(i) Bidding by FmHA. Bonds offered for public sale shall be offered
in accordance with State law, in such a manner to encourage public
bidding. FmHA will not submit a bid at the advertised sale unless
required by State law, nor will reference to FmHA's rates and terms be
included. If no acceptable bid is received, FmHA will negotiate the
purchase of the bonds.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6791, Mar. 3, 1988;
54 FR 18883, May 3, 1989; 56 FR 29168, June 26, 1991)
07 CFR 1942.20 Community Facility Guides.
(a) The following documents are attached and made part of this
subpart and may be used by FmHA officials in administering this program.
(1) Guide 1 and 1a -- Guide Letter for Use in Informing Private
Lender of FmHA's Commitment.
(2) Guide 2 -- Water Users Agreement.
(3) Guide 3 -- Service Declination Statement.
(4) Guide 4 -- Bylaws.
(5) Guide 5 -- Financial Feasibility Report.
(6) Guide 6 -- Preliminary Architectural Feasibility Report.
(7) Guide 7 -- Preliminary Engineering Report Water Facility.
(8) Guide 8 -- Preliminary Engineering Report Sewerage Systems.
(9) Guide 9 -- Preliminary Engineering Report Solid Waste Disposal
Systems.
(10) Guide 10 -- Preliminary Engineering Report Storm Waste-Water
Disposal.
(11) Guide 11 -- Daily Inspection Report.
(12) Guide 12 -- Memorandum of Understanding Between the Economic
Development Administration -- Department of Commerce and the Farmers
Home Administration -- Department of Agriculture Pertaining to EDA
Public Works Projects Assisted by an FmHA Loan.
(13) Guide 13 -- Memorandum of Understanding Between the Economic
Development Administration -- Department of Commerce and the Farmers
Home Administration -- Department of Agriculture Regarding Supplementary
Grant Assistance for the Construction of Public Works and Development
Facilities.
(14) Guide 14 -- Legal Services Agreement.
(15) Guide 15 -- Community Facility Borrower's Application.
(16) Guide 16 -- Community Facility Loan Docket.
(17) Guide 17 -- Construction Contract Documents -- Short Form.
(18) Guide 18 -- FmHA Supplemental General Conditions.
(19) Guide 19 -- Construction Contract Documents.
(20) Guide 20 -- Agreement for Engineering Services (FmHA/EPA Jointly
Funded Projects).
(21) Guide 21 -- Review of Audit Reports.
(22) Guide 22 -- Delinquent Accounts Positive Action Plan.
(23) Guide 23 -- Agreement for Joint Use of Electric System Poles.
(24) Guide 24 -- Minimum Suggested Contents of Management Agreements.
(25) Guide 25 -- Joint Policy Statement Between EPA and FmHA.
(26) Guide 26 -- Community Programs Project Selection Criteria.
(27) Exhibit A -- Circular No. A-128.
(28) Exhibit B -- Department of Agriculture Regional Inspector
General (OIG).
(b) These guides and exhibits are for use by FmHA officials,
applicants and applicant's officials and/or agents on certain matters
related to the planning, development, and operation of essential
community facilities which involve the use of loans and/or grants from
FmHA. This includes activities related to applying for and obtaining
such financial assistance. These guides and exhibits are not published
in the Federal Register, however, they are available in any FmHA office.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 6787, Mar. 3, 1988)
1942.21 -- 1942.49 (Reserved)
07 CFR 1942.50 OMB control number.
The collection of information requirements in this regulation has
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0015.
07 CFR 1942.50 Subpart B -- (Reserved)
07 CFR 1942.50 Subpart C -- Fire and Rescue Loans
Source: 52 FR 43726, Nov. 16, 1987, unless otherwise noted.
07 CFR 1942.101 General.
This subpart provides the policies and procedures for making and
processing insured community facility loans for facilities that will
primarily provide fire or rescue services. Community facility loans for
other types of facilities are covered in Subpart A of this Part 1942.
07 CFR 1942.102 Nondiscrimination.
(a) Federal statutes provide for extending Farmers Home
Administration (FmHA) financial programs without regard to race, color,
religion, sex, national origin, marital status, age, or physical/mental
handicap. The participants must possess the capacity to enter into
legal contracts under State and local statutes.
(b) Indian tribes on Federal and State reservations and other
Federally recognized Indian tribes are eligible to apply for and are
encouraged to participate in this program. Such tribes might not be
subject to State and local laws or jurisdiction. However, any
requirements of this subpart that affect applicant eligibility, the
adequacy of FmHA's security or the adequacy of service to users of the
facility and all other requirements of this subpart must be met.
07 CFR 1942.103 Definitions.
For the purpose of this subpart:
(a) Construction means the act of building or putting together a
facility that is a part of or physically attached to real estate. This
does not include procurement of major equipment even though the
equipment may be custom built to meet the owner's requirements.
(b) Owner means an applicant or borrower.
(c) Regional Attorney or OGC means the head of a Regional Office of
General Counsel (OGC).
07 CFR 1942.104 Application processing.
(a) General. Prospective applicants should request assistance by
filing SF 424.2, ''Application for Federal Assistance (For
Construction),'' with the County or District FmHA Office. When
practical, District Directors should meet with prospective applicants
before an application is filed to discuss eligibility and FmHA
requirements and processing procedures. Throughout loan processing FmHA
should confer with applicant officials as needed to ensure that
applicant officials understand the current status of the processing of
their application, what steps and determinations are necessary and what
is required from them. FmHA should assist the applicant as needed and
generally try to develop and maintain a cooperative working relationship
with the applicant.
(b) County Office. The County Office may handle initial inquiries
and provide basic information about the program, application forms, and
assistance in completing applications. Applications filed in the County
Office should be forwarded immediately to the District Office. The
applicant should be informed that further processing will be handled by
the District Office. When an application is received, the County Office
must establish and maintain an information folder.
(c) District Office. If the application is filed in the District
Office, the District Director must send a copy to the County Supervisor
to set up the information file. The District Director must supply
information on fire and rescue loan activity within the County Office
service area to the County Supervisor at key points throughout the loan
making process. As a minimum, the District Director should provide
appropriate copies or notice to the County Office when the following
actions occur:
(1) Project summary is completed.
(2) Letter of conditions is issued.
(3) Applicant declines to execute Form FmHA 1942-46, ''Letter of
Intent to Meet Conditions.''
(4) Applicant is notified of loan approval.
(5) A loan is properly closed.
(6) A construction contract is awarded.
(7) A final inspection is completed.
(d) Unfavorable decision. If at any time prior to loan approval it
is decided that favorable action will not be taken on an application,
the District Director will notify the applicant in writing of the
reasons why the request was not favorably considered. The notification
to the applicant will state that a review of this decision by FmHA may
be requested by the applicant in accordance with Subpart B of Part 1900
of this chapter. The following statement will also be made on all
notifications of adverse action.
The Federal Equal Credit Opportunity Act prohibits creditors from
discriminating against credit applicants on the basis of race, color,
religion, national origin, sex, marital status, age (provided that the
applicant has the capacity to enter into a binding contract); because
all or part of the applicant's income is derived from any public
assistance program; or because the applicant has in good faith
exercised any right under the Consumer Credit Protection Act. The
Federal agency that administers compliance with this law is the Federal
Trade Commission, Equal Credit Opportunity, Washington, DC 20580.
(52 FR 43726, Nov. 16, 1987, as amended at 54 FR 47197, Nov. 13,
1989; 55 FR 13504, Apr. 11, 1990)
07 CFR 1942.105 Environmental review.
FmHA must conduct and document an environmental review for each
proposed project in accordance with Subpart G of Part 1940 of this
chapter. The review should be completed as soon as possible after
receipt of an application. The loan approving official must determine
an adequate environmental review has been completed before requesting an
obligation of funds.
07 CFR 1942.106 Intergovernmental review.
(a) Loans under this subpart are subject to intergovernmental review
in accordance with Subpart H of Part 1901 and Subpart J of Part 1940 of
this chapter.
(b) State intergovernmental review agencies that have selected
community facility loans as a program they want to review may not be
interested in reviewing proposed loans for fire and rescue facilities.
In such cases, the State Director should obtain a letter from the State
single point of contact exempting fire and rescue loans from A-95 and
intergovernmental consultation review. A copy of the letter should be
placed in the case file for each fire and rescue facility application in
lieu of completing the intergovernmental review process.
(c) When an application is filed and adverse comments are not
expected, the District Director should proceed with application
processing pending intergovernmental review. The loan should not be
obligated until any required review process has been completed.
(d) Funds allocated for use under this subpart are also for the use
of eligible Indian tribes within the State, regardless of whether State
development strategies include Indian reservations. Eligible Indian
tribes must have equal opportunity to participate in the program as
compared with other residents of the State.
07 CFR 1942.107 Priorities.
(a) Eligible applications must be selected for processing in
accordance with 1942.17(c) of Subpart A of this Part 1942.
(b) The District Director must score each eligible application in
accordance with 1942.17(c)(2)(iii) of Subpart A of this Part 1942. The
District Director must then notify the State Director of the score,
proposed loan amount, and other pertinent data. The State Director
should determine as soon as possible if the project has sufficient
priority for further processing and notify the District Director.
Normally, this consultation should be handled by telephone and
documented in the running record.
(c) Applicants who appear eligible but do not have the priority
necessary for further consideration at this time should be notified that
funds are not available, requested to advise whether they wish to have
their application maintained for future consideration and given the
following notice:
You are advised against incurring obligations which would limit the
range of alternatives to be considered, or which cannot be fulfilled
without FmHA funds until the funds are actually made available.
Therefore, you should refrain from such actions as initiating
engineering and legal work, taking actions which would have an adverse
effect on the environment, taking options on land rights, developing
detailed plans and specifications, or inviting construction bids until
notified by Farmers Home Administration (FmHA) to proceed.
07 CFR 1942.108 Application docket preparation and review.
(a) Guides. Application dockets should be developed in accordance
with 1942.2(c) of Subpart A of this Part 1942.
(b) Project summary. The District Director should complete the
project summary using Form FmHA 1942-43, ''Project Summary-Community
Facilities (Other Than Utility-Type Projects).'' Comments by the State
Architect/Engineer and program chief may be omitted unless the District
Director or State Director requests their review. Form FmHA 1942-14,
''Association Project Fund Analysis,'' and a budget or cash flow
projection should be completed and attached.
(c) Budgets. All applicants must complete Form FmHA 442-7,
''Operating Budget,'' except as provided in this paragraph. Applicants
with annual incomes not exceeding $100,000 may, with concurrence of the
District Director, use Form FmHA 1942-52, ''Cash Flow Projection,''
instead of Form FmHA 442-7. Projections should be provided for the
current year and each year thereafter until the facility is expected to
have been in operation for a full year and a full annual installment
paid on the loan.
(d) Letter of conditions. The District Director should prepare and
issue a letter of conditions in accordance with 1942.5 (a)(1) and (c)
of Subpart A of this Part 1942.
(e) Organizational review. As early in the application process as
practical the District Director should obtain copies of organization
documents from each applicant and forward them through the State Office
to the Regional Attorney for review and comments. The Regional
Attorney's comments should be received and considered before obligation
of funds.
(f) National Office review. Applications that require National
Office review will be submitted in accordance with 1942.5(b) of Subpart
A of this Part 1942.
(g) State Office review. The State Office must monitor fire and
rescue loan making and servicing and provide guidance, assistance, and
training as necessary to ensure the activities are accomplished in an
orderly manner consistent with FmHA regulations. The District Director
should request advice and assistance from the State Office as needed.
The State Director may require all or part of a specific application
docket to be submitted to the State Office for review at any time. The
State Director may determine one or more District Office staffs do not
have adequate training and expertise to routinely complete application
dockets without State Office review. In such cases, the State Director
should establish guidelines by memorandum or by State supplement to this
subpart for the necessary State Office reviews.
(h) Loan approval and fund obligation. Loans must be approved and
obligated in accordance with 1942.5(d) of Subpart A of this Part 1942
and Subpart A of Part 1901 of this chapter.
(52 FR 43726, Nov. 16, 1987, as amended at 54 FR 47197, Nov. 13,
1989)
1942.109 -- 1942.110 (Reserved)
07 CFR 1942.111 Applicant eligibility.
(a) General. Loans under this subpart are subject to the provisions
of 1942.17(b) of Subpart A of this Part 1942.
(b) Credit elsewhere determinations. The District Director must
determine whether financing from commercial sources at reasonable rates
and terms is available. If credit elsewhere is indicated, the District
Director should inform the applicant and recommend the applicant apply
to commercial sources for financing. To provide a basis for referral of
only those applicants who may be able to finance projects through
commercial sources District Directors should maintain liaison with
representatives of lenders in the district. The State Director should
keep District Directors informed regarding lenders outside the district
that might make loans in the district. District Directors should
maintain criteria for determining applications that should be referred
to commercial lenders and maintain a list of lender representatives
interested in receiving such referrals.
(c) Public use. Loans under this subpart are subject to the
provisions of 1942.17(e) of Subpart A of this Part 1942.
07 CFR 1942.112 Eligible loan purposes.
(a) Funds may be used:
(1) To construct, enlarge, extend or otherwise improve essential
community facilities primarily providing fire or rescue services
primarily to rural residents. ''Otherwise improve'' includes but is not
limited to the following:
(i) The purchase of major equipment, such as fire trucks and
ambulances, which will, in themselves, provide an essential service to
rural residents.
(ii) The purchase of existing facilities when it is necessary either
to improve or to prevent a loss of service.
(2) To pay the following expenses, but only when such expenses are a
necessary part of a loan to finance facilities authorized in paragraph
(a)(1) of this section:
(i) Reasonable fees and costs such as legal, engineering,
architectural, fiscal advisory, recording, environmental impact
analyses, archaeological surveys and possible salvage or other
mitigation measures, planning, establishing or acquiring rights.
(ii) Interest on loans until the facility is self-supporting but not
for more than 3 years unless a longer period is approved by the National
Office; interest on loans secured by general obligation bonds until tax
revenues are available for payment, but not for more than 2 years unless
a longer period is approved by the National Office; and interest on
interim financing, including interest charges on interim financing from
sources other than FmHA.
(iii) Costs of acquiring interest in land, rights such as water
rights, leases, permits, rights-of-way, and other evidence of land or
water control necessary for development of the facility.
(iv) Purchasing or renting equipment necessary to install, maintain,
extend, protect, operate, or utilize facilities.
(v) Initial operating expenses for a period ordinarily not exceeding
1 year when the borrower is unable to pay such expenses.
(vi) Refinancing debts incurred by, or on behalf of, a community when
all of the following conditions exist:
(A) The debts being refinanced are a secondary part of the total
loan;
(B) The debts are incurred for the facility or service being financed
or any part thereof; and
(C) Arrangements cannot be made with the creditors to extend or
modify the terms of the debts so that a sound basis will exist for
making a loan.
(3) To pay obligations for construction or procurement incurred
before loan approval. Construction work or procurement actions should
not be started and obligations for such work or materials should not be
incurred before the loan is approved. However, if there are compelling
reasons for proceeding with construction or procurement before loan
approval, applicants may request FmHA approval to pay such obligations.
Such requests may be approved if FmHA determines that:
(i) Compelling reasons exist for incurring obligations before loan
approval; and
(ii) The obligations will be incurred for authorized loan purposes;
and
(iii) Contract documents have been approved by FmHA; and
(iv) All environmental requirements applicable to FmHA and the
applicant have been met; and
(v) The applicant has the legal authority to incur the obligations at
the time proposed, and payment of the debts will remove any basis for
any mechanic, material or other liens that may attach to the security
property. FmHA may authorize payment of such obligations at the time of
loan closing. FmHA's authorization to pay such obligations, however, is
on the condition that it is not committed to make the loan; it assumes
no responsibility for any obligations incurred by the applicant; and
the applicant must subsequently meet all loan approval requirements.
The applicant's request and FmHA authorization for paying such
obligations shall be in writing. If construction or procurement is
started without FmHA approval, post approval in accordance with this
section may be considered.
(b) Funds may not be used to finance:
(1) Facilities which are not modest in size, design, and cost.
(2) Loan finder's fees.
(3) Projects located within the Coastal Barriers Resource system that
do not qualify for an exception as defined in section 6 of the Coastal
Barriers Resource Act, Pub. L. 97-348.
07 CFR 1942.113 Rates and terms.
Rates and terms for loans under this subpart are as set out in
1942.17(f) of Subpart A of this Part 1942.
07 CFR 1942.114 Security.
Specific requirements for security for each loan will be included in
the letter of conditions. Loans must be secured by the best security
position practicable, in a manner which will adequately protect the
interest of FmHA during the repayment period of the loan, and in
accordance with the following;
(a) Security must include one of the following:
(1) A pledge of revenue and a lien on all real estate and major
equipment purchased or developed with the FmHA loan; or
(2) General obligation bonds or bonds pledging other taxes.
(b) Additional security may be required as determined necessary by
the loan approval official. In determining the need for additional
security the loan approval official should carefully consider:
(1) The estimated market value of real estate and equipment security.
(2) The adequacy and dependability of the applicant's revenues, based
on the applicant's financial records, the project financial feasibility
report, and the project budgets.
(3) The degree of community commitment to the project, as evidenced
by items such as active broad based membership, aggressive leadership,
broad based fund drives, or contributions by local public bodies.
(c) Additional security may include, but is not limited to, the
following:
(1) Liens on additional real estate or equipment.
(2) A pledge of revenues from additional sources.
(3) An assignment of assured income in accordance with
1942.17(g)(3)(iii)(A)(1) of Subpart A of this Part 1942.
(d) Review and approval or concurrence in the State Office is
required if the security will not include a pledge of taxes and the
applicant cannot provide evidence of the financially successful
operation of a similar facility for the 5 years immediately prior to
loan application.
(e) Review and concurrence in the National Office is required if the
security will not include a pledge of taxes, the applicant cannot
provide evidence of the financially successful operation of a similar
facility for the 5 years immediately prior to loan application, and the
amount of the loan will exceed $250,000.
(f) Loans under this subpart are subject to the provisions of
1942.17(g)(1) of Subpart A of this Part 1942, regarding security for
projects utilizing joint financing.
(52 FR 43726, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987)
07 CFR 1942.115 Reasonable project costs.
Applicants are responsible for determining that prices paid for
property rights, construction, equipment, and other project development
are reasonable and fair. FmHA may require an appraisal by an
independent appraiser or FmHA employee.
07 CFR 1942.116 Economic feasibility requirements.
All projects financed under this section must be based on taxes,
assessments, revenues, fees, or other satisfactory sources of revenues
in an amount sufficient to provide for facility operation and
maintenance, a reasonable reserve, and debt payment. An overall review
of the applicant's financial status, including a review of all assets
and liabilities, will be a part of the docket review process by the FmHA
staff and approval official. All applicants will be expected to provide
a financial feasibility report. These financial feasibility reports
will normally be:
(a) Included as part of the preliminary engineer/architectural report
using Guide 6 to Subpart A of this Part 1942 (available in any FmHA
Office), or
(b) Prepared by the applicant using Form FmHA 1942-54, ''Applicant's
Feasibility Report.''
07 CFR 1942.117 General requirements.
(a) Reserve requirements. Loans under this subpart are subject to
the provisions of 1942.17 (i) of Subpart A of this Part 1942.
(b) Membership authorization. The membership of organizations other
than public bodies must authorize the project and its financing except
the District Director may, with the concurrence of the State Director
(with advice of OGC as needed), accept the loan resolution without such
membership authorization when State statutes and the organization
charter and bylaws do not require such authorization.
(c) Insurance and bonding. Loans under this subpart are subject to
the provisions of 1942.17(j)(3) of Subpart A of this Part 1942.
(d) Acquisition of land and rights. Loans under this subpart are
subject to the provisions of 1942.17(j)(4) of Subpart A of this Part
1942.
(e) Lease agreements. Loans under this subpart are subject to the
provisions of 1942.17(j)(5) of Subpart A of this Part 1942.
(f) Notes and bonds. Loans under this subpart are subject to the
provisions of 1942.17(j)(6) and 1942.19 of Subpart A of this Part
1942.
(g) Public Information. Loans under this subpart are subject to the
provisions of 1942.17 (j)(9) of Subpart A of this Part 1942.
(h) Joint funding. Loans under this subpart are subject to the
provisions of 1942.2 (e) and 1942.17 (j)(11) of Subpart A of this Part
1942.
07 CFR 1942.118 Other Federal, State, and local requirements.
(a) Loans under this subpart are subject to the provisions of
1942.17 (k) of Subpart A of this Part 1942.
(b) An initial compliance review should be completed under Subpart E
of Part 1901 of this chapter.
07 CFR 1942.119 Professional services and borrower contracts.
(a) Loans under this subpart are subject to the provisions of
1942.17 (l) of Subpart A of this Part 1942.
(b) The District Director will, with assistance as necessary by the
State Director and OGC, concur in agreements between borrowers and third
parties such as contracts for professional and technical services. The
State Director may require State Office review of such documents in
accordance with 1942.108 (g) of this subpart. State Directors are
expected to work closely with representatives of engineering and
architectural societies, bar associations, commercial lenders,
accountant associations, and others in developing standard forms of
agreements, where needed, and other matters to expedite application
processing, minimize referrals to OGC, and resolve problems which may
arise. Standard forms should be reviewed by and approved by OGC.
1942.120 -- 1942.121 (Reserved)
07 CFR 1942.122 Actions prior to loan closing and start of
construction.
(a) Excess FmHA loan funds. Loans under this subpart are subject to
the provisions of 1942.17 (n)(1) of Subpart A of this Part 1942.
(b) Loan resolutions. Loans under this subpart are subject to the
provisions of 1942.17 (n)(2) of Subpart A of this Part 1942.
(c) Interim financing. Loans under this subpart are subject to the
provisions of 1942.17 (n)(3) of Subpart A of this Part 1942.
(d) Applicant contribution. Loans under this subpart are subject to
the provisions of 1942.17 (n)(5) of Subpart A of this Part 1942 this
chapter.
(e) Evidence of and disbursement of other funds. Loans under this
subpart are subject to the provisions of 1942.17 (n)(6) of Subpart A of
this Part 1942.
(f) Assurance agreement. All applicants must execute Form FmHA
400-4, ''Assurance Agreement,'' at or before loan closing.
07 CFR 1942.123 Loan closing.
(a) Ordering loan checks. Checks will not be ordered until:
(1) Form FmHA 440-57, ''Acknowledgement of Obligated Funds/Check
Request,'' has been received from the Finance Office.
(2) The applicant has complied with approval conditions and any
closing instructions, except for those actions which are to be completed
on the date of loan closing or subsequent thereto.
(3) The applicant is ready to start construction or funds are needed
to pay interim financing obligations.
(b) Public bodies and Indian tribes. (1) After loan approval the
completed docket will be reviewed by the State Director. The
information required by OGC will be transmitted to OGC with a request
for closing instructions. Upon receipt of the closing instructions from
OGC, the State Director will forward them along with any appropriate
instructions to the District Director. Upon receipt of closing
instructions, the District Director will discuss with the applicant and
its architect or engineer, attorney, and other appropriate
representatives, the requirements contained therein and any actions
necessary to proceed with closing.
(2) Loans will be closed in accordance with the closing instructions
issued by OGC and 1942.19 of Subpart A of this Part 1942.
(c) Organizations other than public bodies and Indian tribes.
District Directors are authorized to close loans to organizations other
than public bodies and Indian tribes without closing instructions from
OGC. State Directors, in consultation with OGC, should develop standard
closing procedures and forms as needed. Assistance with loan closing
and a certification regarding the validity of the note and mortgage or
other debt instruments should be provided by the applicant's attorney.
Appropriate title opinion or title insurance is required as provided in
1942.17 (j)(4)(i)(B) of Subpart A of this Part 1942.
(d) Authority to execute, file, and record legal instruments.
District Office employees are authorized to execute and file or record
any legal instruments necessary to obtain or preserve security for
loans. This includes, as appropriate, mortgages and other lien
instruments, as well as affidavits, acknowledgements, and other
certificates.
(e) Mortgages. Unless otherwise required by State law or unless an
exception is approved by the State Director with advice of the OGC, only
one mortgage will be taken even though the indebtedness is to be
evidenced by more than one instrument. The real estate or chattel
mortgages or security instruments will be delivered to the recording
office for recordation or filing, as appropriate. A copy of such
instruments will be delivered to the borrower. The original instrument,
if returnable after recording or filing, will be retained in the
borrower's case folder.
(f) Notes and bonds. When the debt instrument is a note or single
instrument bond fully registered as to principal and interest a
conformed copy will be sent to the Finance Office immediately after loan
closing and the original instrument will be stored in the District
Office. When other types of bonds are used, the original bond(s) will
be forwarded to the Finance Office immediately after loan closing.
(g) Disposition of title evidence. All title evidence other than the
opinion of title and mortgage title insurance policy, will be returned
to the borrower when the loan has been closed.
(h) Multiple advances. When temporary paper, such as bond
anticipation notes or interim receipts, is used to conform with the
multiple advance requirement, the original temporary paper will be
forwarded to the Finance Office after each advance is made to the
borrower. The borrower's case number will be entered in the upper
right-hand corner of such paper by the Distict Office. The permanent
debt instrument(s) should be forwarded to the Finance Office as soon as
possible after the last advance is made, except that for notes and
single instrument bonds fully registered as to principal and interest
the original will be retained in the District Office and a copy will be
forwarded to the Finance Office. The following actions will be taken
prior to issuance of the permanent instruments:
(1) The Finance Office will be notified of the anticipated date for
the retirement of the interim instruments and the issuance of permanent
instruments of debt.
(2) The Finance Office will prepare a statement of account including
accrued interest through the proposed date of retirement and also show
the daily interest accrual. The statement of account and the interim
financing instruments will be forwarded to the District Director.
(3) The District Director will collect interest through the actual
date of the retirement and obtain the permanent instrument(s) of debt in
exchange for the interim financing instruments. The permanent
instruments and the cash collection will be forwarded to the Finance
Office immediately, except that for notes and single instrument bonds
fully registered as to principal and interest the original will be
retained in the District Office and a copy will be forwarded to the
Finance Office. In developing the permanent instruments, the sequence
of preference set out 1942.19(e) of Subpart A of this Part 1942 will be
followed.
(i) Bond registration record. Form FmHA 442-28, ''Bond Registration
Book,'' may be used as a guide to assist borrowers in the preparation of
a bond registration book in those cases where a registration book is
required and a book is not provided in connection with the printing of
the bonds.
(j) Loan checks. Whenever a loan check is received, lost, or
destroyed, the District Director will take the appropriate actions
outlined in FmHA Instruction 102.1 (available in any FmHA office).
Checks which cannot be delivered within a reasonable amount of time (no
more than 20 calendar days) will be handled in accordance with FmHA
Instruction 102.1 (available in any FmHA office.)
(k) Safeguarding bond shipments. FmHA personnel will follow the
procedures for safeguarding mailings and deliveries of bonds and coupons
outlined in FmHA Instruction 2018-E (available in any FmHA office),
whenever they mail or deliver these items.
(l) Review of loan closing. When the loan has been closed, the
District Director will submit the completed loan closing documents and a
statement showing what was done in closing the loan to the State
Director. The State Director will review the documents and the District
Director's statement to determine whether the transaction was closed
properly. For loans to public bodies or Indian tribes the State
Director will forward all documents, along with a statement that all
administrative requirements have been met, to the Regional Attorney.
The Regional Attorney will review the submitted material to determine
whether all legal requirements have been met. The Regional Attorney
should review FmHA standard forms only for proper execution, unless the
State Director brings attention to specific questions. Facility
development should not be held up pending receipt of the Regional
Attorney opinion. When the review of the State Director has been
completed, and for public bodies and Indian tribes the Regional
Attorney's opinion has been received, the State Director must advise the
District Director of any deficiencies that must be corrected and return
all material that was submitted for review.
(m) Loan cancellation. Loans under this subpart are subject to the
provisions of 1942.12 of Subpart A of this Part 1942.
1942.124 -- 1942.125 (Reserved)
07 CFR 1942.126 Planning, bidding, contracting, constructing,
procuring.
(a) General. This section provides procedures and requirements for
planning, bidding, contracting, constructing and procuring facilities
financed under this subpart. These procedures do not relieve the owner
of contractual obligations that arise from procurement of services.
(b) Technical services. Owners are responsbile for providing the
engineering or architectural services necessary for planning, designing,
bidding, contracting, inspecting and constructing their facilities.
Services may be provided by the owner's ''in-house'' engineer or
architect or through contract, subject to FmHA concurrence. Architects
and engineers must be licensed in the State where the facility is to be
located.
(1) Preliminary reports. A preliminary architectural or engineering
report conforming with customary professional standards is required for
all construction, except that FmHA may waive the requirement for a
preliminary architectural/engineering report or accept a brief report if
the cost of the construction does not exceed $100,000. Guide 6 to
Subpart A of this Part 1942 (available in any FmHA office) may be used.
(2) Final reports. Detailed final plans and specifications are
required for all construction and must receive FmHA concurrence. When
negotiated procurement is used for construction costing not more than
$100,000 the final plans and specifications may be provided by the
contractor who submits the successful proposal. The plans and
specifications must be prepared by or under the supervision of an
architect or engineer who is licensed in the State where the facility is
to be located and should include all materials and work to be provided
under the contract. Some work and material may be omitted from the
contract provided the owner furnishes detailed cost estimates for
whatever is needed to fully complete the facility and will complete the
facility in accordance with paragraph (e) of this section and the small
purchase procedures set out in 1942.18(k)(1) of Subpart A of this Part
1942. In such cases, FmHA may determine that it is not necessary to
require the applicant to hire a consulting architect/engineer; however,
if a second contract that does not qualify for small purchase procedures
is needed to complete the facility, the owner must provide for an
architect/engineer to design the entire facility. When the contractor
provides the plans and specifications, the contract will be considered a
design/build procurement method under 1942.18(1) of Subpart A of this
Part 1942.
(3) Major equipment. An architect/engineer is not required for major
equipment if FmHA determines the owner has the ability to develop an
adequate request for proposal and evaluate the proposals received or can
obtain adequate assistance from other sources, such as State or Federal
agencies or trade associations.
(c) Design policies. Facilities financed by FmHA must be designed
and constructed in accordance with sound engineering and architectural
practices, and must meet the requirements of Federal, State and local
agencies. All facilities intended for or accessible to the public or in
which physically handicapped persons may be employed or reside must be
developed in compliance with the Architectural Barriers Act of 1968
(Pub. L. 90-480) as implemented by the General Services Administration
regulations 41 CFR 101-19.6 and section 504 of the Rehabilitation Act of
1973 (Pub. L. 93-112) as implemented by 7 CFR Parts 15 and 15b.
(d) Construction contracts. Contract documents must be sufficiently
descriptive and legally binding to accomplish the work as economically
and expeditiously as possible.
(1) Standard construction contract documents. When standard
construction contract documents available from FmHA are used, or when
the amount of the contract does not exceed $100,000, it will normally
not be necessary for the Regional Attorney to perform a detailed legal
review. If construction contract documents used are not in the format
of guide forms approved by FmHA, and the contract amount exceeds
$100,000, the Regonal Attorney must review the documents before their
use.
(2) Contract review and approval. The owner's attorney will review
executed contract documents, including performance and payment bonds,
and certify that they are adequate, legal and binding, and that the
persons executing the documents have been authorized to do so. The
contract documents, bid bonds, and bid tabulation sheets will be
forwarded to FmHA for approval prior to awarding. All contracts will
contain a provision that they are not in full force and effect until
they have been approved by FmHA. The FmHA District Director is
responsible for approving construction contracts with advice and
guidance of the State Director and Regional Attorney when necessary.
(3) Separate contracts. Arrangements which split responsibility of
contractors (separate contracts for labor and material, extensive
subcontracting and multiplicity of small contracts on the same job)
should be avoided whenever it is practical to do so. Contracts may be
awarded to suppliers or manufacturers for furnishing and installing
certain items which have been designed by the manufacturer and delivered
to the job site in a finished or semifinished state such as
prefabricated buildings. Contracts may also be awarded for material
delivered to the job site and installed by a patented process or method.
(e) Performing construction. Owners are encouraged to accomplish
construction through contracts with recognized contractors. Owners may
accomplish construction by using their own personnel and equipment
provided the owners possess the necessary skills, abilities and
resources to perform the work and provided a licensed engineer or
architect prepares design drawings and specifications and inspection is
provided in accordance with paragraph (l)(3) of this section.
(f) Owner's contractual responsibility. Loans under this subpart are
subject to the provisions of 1942.18(i) of Subpart A of this Part 1942.
(g) Owner's Procurement regulations. Loans under this subpart are
subject to the provisions of 1942.18(j) of Subpart A of this Part 1942.
(h) Procurement methods. Unless the FmHA National Office gives prior
written approval of another method, procurement must be made by one of
the following methods:
(1) Small purchase procedures as provided in 1942.18(k)(1) of
Subpart A of this Part 1942.
(2) Competitive sealed bids as provided in 1942.18(k)(2) of Subpart
A of this Part 1942. Competitive sealed bids is the preferred
procurement method of construction projects, except for buildings
costing $100,000 or less when the owner desires to use a
''preengineered'' or ''packaged'' building.
(3) Competitive negotiation as provided in 1942.18(k)(3) of Subpart
A of this Part 1942. Competitive negotiation is the preferred
procurement method of buildings not exceeding $100,000 in cost when the
owner desires to use a ''pre-engineered'' or ''packaged'' building and
for major equipment.
(4) Noncompetitive negotiation as provided in 1942.18(k)(4) of
Subpart A of this Part 1942.
(i) Contracting methods. Loans under this subpart are subject to the
provisions of 1942.18(1) of Subpart A of this Part 1942.
(j) Contracts awarded prior to preapplications. Loans under this
subpart are subject to the provisions of 1942.18(m) of Subpart A of
this Part 1942.
(k) Construction Contract provisions. Construction contracts for
loans under this subpart are subject to the provisions of 1942.18(n) of
Subpart A of this Part 1942. Construction contracts for loans under
this subpart are also subject to the provisions of 1901.205 of Subpart
E of Part 1901 of this chapter, regarding nondiscrimination in
construction, except that guides 18 and 17 or 19 to Subpart A of this
Part 1942 of this chapter will normally be used instead of Form FmHA
1924-5, ''Invitation for Bid (Construction Contract),'' and Form FmHA
1924-6, ''Construction Contract.'' When Guide 18 is used with a
design/build type contract, section 4, ''Conflict of Interest,'' may
need revision.
(l) Construction contract administration. Owners shall be
responsible for maintaining a contract administration system to monitor
the contractors' performance and compliance with the terms, conditions,
and specifications of the contracts.
(1) Preconstruction conference. Prior to beginning construction the
owner will schedule a preconstruction conference where FmHA will review
the planned development with the owner, its architect or engineer,
project inspector, attorney, contractor(s), and other interested
parties. The conference will thoroughly cover applicable items included
in Form FmHA 1924-16, ''Record of Preconstruction Conference,'' and the
discussions and agreements will be documented. Form FmHA 1924-16 may be
used for this purpose.
(2) Monitoring reports. Each owner will be required to monitor and
provide reports to FmHA on actual performance during construction for
each project financed, or to be financed, in whole or in part with FmHA
funds. The reports are to include:
(i) A comparison of actual accomplishments with the construction
schedule established for the period. The partial payment estimate may
be used for this purpose.
(ii) A narrative statement giving full explanation of the following:
(A) Reasons why established goals were not met.
(B) Analysis and explanation of cost overruns or high unit costs and
how payment is to be made for the same.
(iii) If events occur between reports which have a significant impact
upon the project, the owner will notify FmHA as soon as any of the
following conditions are known:
(A) Problems, delays, or adverse conditions which will materially
affect the ability to attain program objectives or prevent the meeting
of project work units by established time periods. This disclosure
shall be accompanied by a statement of the action taken, or
contemplated, and any Federal assistance needed to resolve the
situation.
(B) Favorable developments or events which enable meeting time
schedules and goals sooner than anticipated or producing more work units
than originally projected or which will result in cost underruns or
lower unit costs than originally planned and which may result in less
FmHA assistance.
(3) Inspection. The borrower must provide for inspection of all
construction. When the borrower enters into an agreement for technical
services with an engineer/architect, the agreement should provide for
general engineering/architectural inspection of the construction work.
When no such agreement exists, or FmHA or the borrower determines the
inspection services of the engineer/architect may not be sufficient, the
owner must provide a project inspector. Prior to the preconstruction
conference, the borrower must submit a re1sume1 of qualifications of the
project inspector to FmHA for acceptance in writing. The project
inspector will be responsible for making inspections necessary to
protect the borrower's interest and for providing written inspection
reports to the borrower with copies to the FmHA District Director.
Guide 11 of Subpart A of this Part 1942 (available in any FmHA office)
may be used as a guide format for inspection reports. For new
buildings, additions to existing buildings, and rehabilitation of
existing buildings, the project inspector should make inspections at the
following stages of construction and at other stages of construction as
determined by the District Director and the borrower. Inspections by
FmHA are solely for its benefit as lender.
(i) An initial inspection should be made just prior to or during the
placement of concrete footings or monolithic footings and floor slabs.
At this point, foundation excavations are complete, forms or trenches
and steel are ready for concrete placement and the subsurface
installation is roughed in. If the building design does not include
concrete footings the initial inspection should be made just after or
during the placement of poles or other foundation materials.
(ii) An inspection should be made when the building is enclosed,
structural members are still exposed, roughing in for heating, plumbing
and electrical work is in place and visible, and wall insulation and
vapor barriers are installed.
(iii) A final inspection should be made when all development of the
structure has been completed and the structrure is ready for its
intended use.
(4) Prefinal inspections. A prefinal inspection will be made by the
owner, project inspector, owner's architect or engineer, representatives
of other agencies involved, and the District Director. The inspection
results will be recorded on Form FmHA 1924-12, ''Inspection Report,''
and a copy provided to all interested parties, including the FmHA State
Director.
(5) Final inspection. A final inspection will be made by FmHA before
final payment is made.
(6) Changes in development plans. (i) Changes in development plans
may be approved by FmHA when requested by owners, provided:
(A) Funds are available to cover any additional costs; and
(B) The change is for an authorized loan purpose; and
(C) It will not adversely affect the soundness of the facility
operation or FmHA's security; and
(D) The change is within the scope of the contract; and
(E) Any applicable requirements of Subpart G of Part 1940 of this
chapter have been met.
(ii) Changes will be recorded on Form FmHA 1924-7, ''Contract Change
Order,'' or other similar forms may be used with the prior approval of
the District Director. Regardless of the form, change orders must be
approved by the FmHA District Director.
(iii) Changes should be accomplished only after FmHA approval on all
changes which affect the work and shall be authorized only by means of
contract change order. The change order will include items such as:
(A) Any changes in labor and material and their respective cost.
(B) Changes in facility design.
(C) Any decrease or increase in quantities based on final
measurements that are different from those shown in the bidding
schedule.
(D) Any increase or decrease in the time to complete the project.
(iv) All changes shall be recorded on chronologically numbered
contract change orders as they occur. Change orders will not be
included in payment estimates until approved by all parties.
(52 FR 43726, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987)
07 CFR 1942.127 Project monitoring and fund delivery.
(a) Coordination of funding sources. When a project is jointly
financed, the District Director will reach any needed agreement or
understanding with the representatives of the other source of funds on
distribution of responsibilities for handling various aspects of the
project. These responsibilities will include supervision of
construction, inspections and determination of compliance with
appropriate regulations concerning equal employment opportunities, wage
rates, nondiscrimination in making services or benefits available, and
environmental compliance. If any problems develop which cannot be
resolved locally, complete information should be sent to the State
Office for advice.
(b) Multiple advances. Loans under this subpart are subject to the
provisions of 1942.17 (p)(2) of Subpart A of this Part 1942.
(c) Use and accountability of funds. Loans under this subpart are
subject to the provisions of 1942.17 (p)(3) of Subpart A of this Part
1942.
(d) Development inspections. Loans under this subpart are subject to
the provisions of 1942.17(p)(4) of Subpart A of this Part 1942.
(e) Payment for project costs. Each payment for project costs must
be approved by the borrower's governing body.
(1) Construction. Payment for construction must be for amounts shown
on payment estimate forms. Form FmHA 1924-18, ''Partial Payment
Estimate,'' may be used for ths purpose or other similar forms may be
used with the prior approval of the District Director. However, the
District Director cannot require more reporting burden than is required
by Form FmHA 1924-18. Advances for contract retainage will not be made
until such retainage is due and payable under the terms of the contract.
The review and acceptance of project cost, including construction
partial payment estimates, by FmHA does not attest to the correctness of
the amounts, the quantities shown, or that the work has been performed
under the terms of agreements or contracts.
(2) Major equipment. Payment for major equipment should generally
coincide with delivery of the usable equipment, along with any necessary
title or certifications, to the borrower. Borrowers may not use FmHA
loan funds to make deposits on equipment not ready for delivery. If a
borrower purchases a truck chassis from one supplier and another
supplier will complete the development of a fire or rescue vehicle, FmHA
may release funds to pay for the chassis when title to the chassis is
transferred to the borrower.
(f) Use of remaining funds. Loans under this subpart are subject to
the provisions of 1942.17 (p)(6) of Subpart A of this Part 1942.
(52 FR 43726, Nov. 16, 1987; 52 FR 47097, Dec. 11, 1987)
07 CFR 1942.128 Borrower accounting methods, management reports and
audits.
(a) Loans under this subpart are subject to the provisions of
1942.17(q) of Subpart A of this Part 1942 except as provided in this
section.
(b) Borrowers with annual incomes not exceeding $100,000 may, with
concurrence of the District Director, use Form FmHA 1942-53, ''Cash Flow
Report,'' instead of page one of schedule one and schedule two of Form
FmHA 442-2, ''Statement of Budget, Income, and Equity.'' When used for
budgeting, the cash statement should be projected for the upcoming
fiscal year. When used for quarterly or annual reports, the cash flow
report should include current year projections and actual data for the
prior year, the quarter just ended, and the current year to date.
07 CFR 1942.129 Borrower supervision and servicing.
Loans under this subpart are subject to the provisions of 1942.17(r)
of Subpart A of this Part 1942 and Subpart E of Part 1951 of this
chapter.
1942.130 -- 1942.131 (Reserved)
07 CFR 1942.132 Subsequent loans.
Subsequent loans will be processed under this subpart.
07 CFR 1942.133 Delegation and redelegation of authority.
Loan approval authority is in Subpart A of Part 1901 of this chapter.
State Directors may delegate approval authority to District Directors
to approve fire and rescue loans regardless of whether authority to
approve other community facility loans is delegated. Except for loan
approval authority, District Directors may redelegate their duties to
qualified staff members.
07 CFR 1942.134 State supplements and guides.
State Directors will obtain National Office clearance for all State
supplements and guides under FmHA Instruction 2006-B, (available in any
FmHA Office).
(a) State supplements. State Directors may supplement this subpart
to meet State and local laws and regulations and to provide for orderly
application processing and efficient service to applicants. State
supplements shall not contain any requirements pertaining to bids,
contract awards, and materials more restrictive than those in this
subpart.
(b) State guides. State Directors may develop guides for use by
applicants if the guides to this subpart and Subpart A of Part 1942 this
are not adequate. State Directors may prepare guides for items needed
for the application; items necessary for the docket; and items
required prior to loan closing or construction starts.
1942.135 -- 1942.149 (Reserved)
07 CFR 1942.150 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and have been
assigned OMB control number 0575-0120.
07 CFR 1942.150 Subparts D -- F -- (Reserved)
07 CFR 1942.150 Subpart G -- Industrial Development Grants
Authority: 7 U.S.C. 1989; delegation of authority by the Secretary
of Agriculture, 7 CFR 2.23; delegation of authority by the Assistant
Secretary for Rural Development, 7 CFR 2.70; 5 U.S.C. 301.
Source: 45 FR 73637, Nov. 6, 1980, unless otherwise noted.
07 CFR 1942.301 Purpose.
This subpart outlines Farmers Home Administration (FmHA) policies and
authorizations and sets forth procedures for making grants to finance
and facilitate development of private business enterprises.
(53 FR 30247, Aug. 11, 1988)
07 CFR 1942.302 Policy.
(a) The grant program will be used to support the development of
small and emerging private business enterprises in rural areas.
(b) FmHA officials will maintain liaison with officials of other
federal, state, regional and local development agencies to coordinate
related programs to achieve rural development objectives.
(c) FmHA officials shall cooperate with appropriate State agencies in
making grants that support State strategies for rural area development.
(d) Funds allocated for use in accordance with this Subpart are also
to be considered for use of Indian tribes within the State regardless of
whether State development strategies include Indian reservations within
the State's boundaries. Indians residing on such reservations must have
equal opportunity along with other rural residents to participate in the
benefits of these programs. This includes equal application of outreach
activities of FmHA County and District Offices.
(53 FR 30247, Aug. 11, 1988)
07 CFR 1942.303 Authorities, delegation, and redelegation.
The State Director is responsible for implementing the authorities
contained in this subpart and to issue State supplements redelegating
these authorities to appropriate FmHA employees. Grant approval
authorities are contained in Subpart A of Part 1901 of this chapter.
07 CFR 1942.304 Definitions.
(a) Industrial Development (ID) grants. Grants made to finance and
facilitate development of small and emerging private business
enterprises in rural areas. Grants are made from FmHA funds under
authority of the Consolidated Farm and Rural Development Act, as
amended, section 310B (7 U.S.C. 1932).
(b) Regional Commission grants -- Grants made from funds made
available to FmHA by the Appalachian Regional Commission (ARC) or other
Federal Regional Commissions designated under Title V of the Public
Works and Economic Development Act of 1965.
(c) Rural and Rural Area -- Includes all territory of a State, the
Commonwealth of Puerto Rico, the Virgin Islands of the United States,
Guam, American Samoa, or the Commonwealth of the Mariana Islands, that
is not within the outer boundary of any city having a population of
fifty thousand or more and its immediately adjacent urbanized and
urbanizing areas with a population density of more than one hundred
persons per square mile, as determined by the Secretary of Agriculture
according to the latest decennial census of the United States.
(d) Urbanized Area -- An area immediately adjacent to a city having a
population of 50,000 or more which, for general social and economic
purposes, constitutes a single community and has a boundary contiguous
with that of the city. Such community may be incorporated or
unincorporated and extends from the contiguous boundary(ies) to
recognizable open country, less densely settled areas, or natural
boundaries such as forests or water. Minor open spaces such as
airports, industrial sites, recreational facilities, or public parks
shall be disregarded. Outer boundaries of an incorporated community
extend at least to its legal boundaries. Cities which may have a
contiguous border with another city but are located across a river from
such city and are recognized as a separate community and are not
otherwise considered a part of an urbanized or urbanizing area, as
defined in this section, are not in a nonrural area.
(e) Urbanizing Area -- A community which is not now, or within the
foreseeable future not likely to be, clearly separate from and
independent of a city of 50,000 or more population and its immediately
adjacent urbanized areas. A community is considered ''separate from''
when it is separated from the city and its immediately adjacent
urbanized area by open country, less densely settled areas, or natural
barriers such as forests or water. Minor open spaces such as airports,
industrial sites, recreational facilities, or public parks shall be
disregarded. A community is considered ''independent of'' when its
social and economic structure (e.g., government; educational, health,
and recreational facilities; and business, industry, tax base, and
employment opportunities) is not primarily dependent on the city and its
immediately adjacent urbanized area.
(f) Technical Assistance. A function performed for the benefit of a
grantee project and is a problem solving activity such as market
research, product and/or service improvement, feasibility study, etc.
(g) Project. The result of the use of program funds, i.e., a
facility, whether constructed by the applicant or a third party from a
loan or grant made with grant funds; technical assistance; startup
operating costs or working capital. A party from a loan or grant made
with grant funds; technical assistance; startup operating costs or
working capital. A revolving fund established in whole or in part with
grant funds will also be considered a project for the purpose of
Intergovernmental and Environmental Review under 1942.310 paragraphs
(b) and (c), as well as the specific uses of the revolving funds.
(h) Small and emerging private business enterprise. Generally any
private business which will employ 50 or less new employees and has less
than $1.0 million in projected gross revenues and has or will utilize
technological innovation and commercialization of (i) new products that
can be used in rural areas and (ii) new processes that can be used in
such production.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 30247, Aug. 11, 1988)
07 CFR 1942.305 Eligibility and priority.
(a) Eligibility. (1) ID grants may be made to public bodies and
private nonprofit corporations serving rural areas. Public bodies
include states, counties, cities, townships, and incorporated towns and
villages, boroughs, authorities, districts, and Indian tribes on Federal
and State reservations and other Federally recognized Indian Tribal
groups in rural areas. The State Director will proceed as follows in
rural area determinations: When the FmHA State Director determines an
area to be urbanized or urbanizing, the State Director must then
determine the population density per square mile. If the area appears
to be eligible, the State Director will request the National Office to
provide the correct density figure. All such density determinations
will be made on the basis of minor civil division or census county
division as used by the Bureau of the Census. In making the density
calculations, large nonresidential tracts devoted to urban land uses
such as railroad yards, airports, industrial sites, parks, golf courses,
and cemeteries of land set aside for such purposes will be excluded.
(2) Regional Commission Grant applicants must meet eligibility
requirements of the Regional Commission and also of FmHA, in accordance
with paragraph (a)(1) of this section, for FmHA to administer the
Regional Commission Grant under this subpart.
(b) Project selection process. The following paragraphs indicate
items and conditions which must be considered in selecting applications
for further development. When ranking eligible applications for
consideration for limited funds, FmHA officials must consider the
priority items met be each application and the degree to which those
priorities are met, and apply good judgment.
(1) Applications. The application and supporting information
submitted with it will be considered in determining the proposed
project's priority for available funds.
(2) State Office review. All applications will be reviewed and
scored for funding priority. Eligible applicants that cannot be funded
should be advised by the State Director that funds are not available,
and requested to advise whether they wish to have their application
maintained in an active file for future consideration.
(3) Selection priorities. The priorities described below will be
used by the State Director to rate applications. Points will be
distributed as indicated in paragraphs (b)(3) (i) through (iv) of this
section. A copy of the score sheet should be placed in the case file
for future reference.
(i) Population. Proposed project(s) will primarily be located in a
community of under 25,000 population -- 10 points.
(ii) Economic conditions.
(A) Proposed project(s) will primarily be located in areas where the
unemployment rate (1) exceeds the State rate by 25% or more -- 20
points, (2) exceeds the State rate by less than 25% -- 10 points, (3) is
equal to or less than the State rate -- 0 points.
(B) Proposed project(s) will primarily be located in areas where
Median Household Income (MHI) as prescribed by section 673(2) of the
Community Services Block Grant Act (42 U.S.C. 9902(2)) for a family of 4
for the State is: (1) Less than poverty line -- 25 points, (2) more
than poverty line but less than 85% of State MHI -- 15 points, (3)
between 85% and 100% of State MHI -- 10 points, (4) equal or greater
than State MHI -- 0 points.
(iii) Experience. Applicant has successful experience in
administering a rural economic development program -- 15 points.
(iv) Other.
(A) Applicant has industry or business committed to locate in the
sites -- 25 points.
(B) Grant request contains evidence of substantial commitment of
funds from nonfederal sources for proposed projects -- 25 points.
(C) For grants to establish a revolving fund, points will be
distributed if the grant request contains proposed third party
loan/grant recipients -- 25 points.
(v) Discretionary. In certain cases the Administrator may assign up
to 50 points in addition to those that may be assigned in paragraphs
(b)(3)(i) through (iv) of this section. Use of these points must
include a written justification from the State Director which will be
based on factors such as geographic distribution of funds, criteria
which will result in substantial employment improvement, mitigation of
economic distress of a community through the creation or salvation of
jobs or emergency situations.
(50 FR 7296, Feb. 22, 1988, as amended at 53 FR 30247, Aug. 11, 1988;
55 FR 134, Jan. 3, 1990)
07 CFR 1942.306 Purposes of grants.
(a) Grant funds may be used to finance and develop small and emerging
private business enterprises in rural areas including, but not limited
to, the following:
(1) Acquisition and development of land, easements and rights-of-way.
(2) Construction, conversion, enlargement, repairs or modernization
of buildings, plants, machinery, equipment, access streets and roads,
parking areas, utilities, and pollution control and abatement
facilities.
(3) Startup operating cost and working capital.
(4) Technical assistance for proposed grantee projects.
(5) Reasonable fees and charges for professional services necessary
for the planning and development of the project including packaging.
Services must be provided by individuals licensed in accordance with
appropriate State accreditation associations.
(6) Refinancing of debts exclusive of interest incurred by or on
behalf of an association before an application for a grant when all of
the following exist:
(i) The debts were incurred for the facility or part thereof or
service to be installed or improved with the grant, and
(ii) Arrangements cannot be made with the creditors to extend or
modify the terms of the existing debt.
(7) Providing financial assistance to third parties through a loan or
a pass through grant.
(b) Grants may be made only when there is a reasonable prospect that
they will result in development of small and emerging private business
enterprises.
(c) FmHA grant funds may be used jointly with funds furnished by the
grantee or from other sources including FmHA loan funds. Pursuant to
Pub. L. 95-334, other departments, agencies, and executive
establishments of the Federal Government may participate and provide
financial and technical assistance jointly with FmHA. The amount of
participation by the other department, agency, or executive
establishment shall only be limited by its authorities other than
authorities which impose restrictions on joint financing.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 30248, Aug. 11, 1988;
55 FR 135, Jan. 3, 1990)
07 CFR 1942.307 Limitations on use of grant funds.
(a) Funds will not be used:
(1) To produce agriculture products through growing, cultivation and
harvesting either directly or through horizontally integrated livestock
operations except for commercial nurseries, timber operations or limited
agricultural production related to technical assistance projects.
(2) To finance comprehensive areawide type planning. This does not
preclude the use of grant funds for planning for a given project.
(3) For loans by grantees when the rates, terms and charges for those
loans are not reasonable or would be for purposes not eligible under
1942.306 of this subpart.
(b) Funds will not be used for any project which will require more
than $500,000 in FmHA grant funds available under this subpart.
(c) At least 51 percent of the outstanding interest in the project
has membership or is owned by those who are either citizens of the
United States or reside in the United States after being legally
admitted for permanent residence.
(53 FR 30248, Aug. 11, 1988, as amended at 55 FR 135, Jan. 3, 1990)
07 CFR 1942.308 Regional Commission grants.
(a) Grants are sometimes made by Federal Regional Commissions for
projects eligible for FmHA assistance. FmHA has agreed to administer
such funds in accordance with FmHA regulations and the requirements of
the commission.
(b) The transfer of funds from a Regional Commission to FmHA will be
based on specific applications determined to be eligible for an
authorized purpose in accordance with the requirements of FmHA and the
Regional Commission.
(c) ARC is authorized under the Appalachian Regional Development Act
of 1965, as amended, to serve the Appalachian region. ARC grants are
handled in accordance with the FmHA-ARC Agreement (Exhibit A Subpart H
of this part) which applies to all ARC grants administered by FmHA.
Therefore, a separate Project Management Agreement between FmHA and ARC
is not needed for each ARC grant.
(d) Other Federal Regional Commissions are those authorized under
Title V of the Public Works and Economic Development Act of 1965.
Grants by these commissions are handled in accordance with a separate
Project Management Agreement between the respective Regional Commission
and FmHA for each Commission grant administered by FmHA (Guide 1 of this
subpart). The agreement should be prepared by the FmHA State Director
and the appropriate Commission official when the State Director receives
a notice from the Commission of the amount of the grant to be made.
1942.309 (Reserved)
07 CFR 1942.310 Other considerations.
(a) Civil rights compliance requirements. All grants made under this
Subpart are subject to Title VI of the Civil Rights Act of 1964 as
outlined in Subpart E of Part 1901 of this chapter. All construction
contracts of $10,000 or more must be in compliance with the requirements
of Subpart E of Part 1901 of this chapter. When FmHA is administering a
Federal Regional Commission grant and no FmHA ID grant funds are
involved, the Federal Regional Commission may make its own determination
of compliance with the Civil Rights Act of 1964. In these instances,
FmHA will not conduct a review for compliance with the Act unless
specifically requested to do so by the Commission.
(b) Environmental requirements -- (1) General applicability. Unless
specifically modified by this section, the requirements of Subpart G of
Part 1940 of this Chapter apply to this Subpart. FmHA will give
particular emphasis to ensuring compliance with the environmental
policies contained in 1940.303 and 1940.304 in Subpart G of Part 1940
of this Chapter. Although the purpose of the grant program established
by this Subpart is to improve business, industry and employment in rural
areas, this purpose is to be achieved, to the extent practicable,
without adversely affecting important environmental resources of rural
areas such as important farmlands and forest lands, prime rangelands,
wetlands and floodplains. Prospective recipients of grants, therefore,
must consider the potential environmental impacts of their applications
at the earliest planning stages and develop plans, grants and projects
that minimize the potential to adversely impact the environment.
(2) Technical assistance. The application for a technical assistance
project is generally excluded from FmHA's environmental review process
by 1940.310(e)(1) of Subpart G of Part 1940 of this Chapter. However,
as further specified in 1940.330 of Subpart G of Part 1940 of this
Chapter, the grantee for a technical assistance grant, in the process of
providing technical assistance, must consider the potential
environmental impacts of the recommendations provided to the recipient
of the technical assistance.
(3) Applications for Direct Construction Project. The application by
a potential grantee who intends to directly use grant funds for a
nontechnical assistance project, such as a construction project, shall
be reviewed and processed under the applicable requirements of Subpart G
of Part 1940 of this Chapter.
(4) Applications for Grants to Provide Financial Assistance to Third
Party Recipients. As part of the preapplication, the applicant must
provide a complete Form FmHA 1940-20, ''Request for Environmental
Information,'' for each project specifically identified in its plan to
provide financial assistance to third parties who will undertake
eligible projects with such assistance. FmHA will review the
preapplication, supporting materials and any required Forms FmHA 1940-20
and initiate a Class II assessment for the preapplication. This
assessment will focus on the potential cumulative impacts of the
projects as well as any environmental concerns or problems that are
associated with individual projects and that can be identified at this
time from the information submitted. Because FmHA's approval of this
type of grant application does not constitute FmHA's commitment to the
use of grant funds for any identified third party projects (see
1942.316 of this Subpart), no public notification requirements for a
Class II assessment will apply to the preapplication. After the grant
is approved, each third party project to be assisted under the grant
will undergo the applicable environmental review and public notification
requirements in Subpart G of Part 1940 of this Chapter, prior to FmHA
providing its consent to the grantee to assist the third party project.
(5) Combined Applications. Whenever an applicant files a
preapplication that includes a direct construction project and a plan to
provide financial assistance to third parties who will undertake
eligible projects, the following environmental requirements will apply.
(i) The proposed direct construction project(s) will be reviewed
under the requirements of paragraph (b)(3) of this section prior to
authorization of the application.
(ii) The plan to provide financial assistance to thrid parties will
be reviewed and processed under the requirements of paragraph (b)(4) of
this section. Additionally, the Class II assessment required for the
plan shall address and analyze the cumulative impacts of all proposed
projects, direct or third party, identified within the preapplication.
(c) Excess capacity or transfer of employment. (1) If the proposed
ID grant is for more than $1,000,000 and will increase direct employment
by more than 50 employees, the applicant will be requested to provide a
written indication to FmHA which will enable FmHA to determine that the
proposal will not result in a project which is calculated to or likely
to result in:
(i) The transfer of any employment or business activity from one area
to another (this limitation shall not prohibit assistance for the
expansion of an existing business entity through the establishment of a
new branch, affiliate, or subsidiary of such entity if the expansion
will not result in an increase in the unemployment in the area of
original location or in any other area where such entity conducts
business operations unless there is reason to believe that such
expansion is being established with the intention of closing down the
operations of the existing business entity in the area of its original
location or in any other area where it conducts such operations), or
(ii) An increase in the production of goods, materials, or
commodities or the availability of services or facilities in the area,
when there is not sufficient demand for such goods, materials,
commodities, services, or facilities, to employ the efficient capacity
of existing competitive commercial or industrial enterprises, unless
such financial or other assistance will not have an adverse effect upon
existing competitive enterprises in the area. The applicant's written
indication will consist of a resolution from the applicant and Form FmHA
449-22, ''Certificate of Non-Relocation and Market and Capacity
Information Report,'' from each existing and future occupant of the
site. The applicant may use Guide 2 of this subpart as an example in
preparing the resolution. Future occupants of the site must be
certified by Department of Labor (DOL) as outlined in paragraph (c)(3)
of this section for a period of 3 years after the initial certification
by DOL.
(2) The State Director will check each document for completeness and
accuracy and, submit nine copies of each to the National Office for
forwarding to DOL. The submittal to the National Office should be
accompanied by a cover memorandum giving the amount and purpose of the
grant. Information should not be submitted directly to DOL from the
applicant or the State Office.
(3) Grants shall not be made if the Secretary of Labor certifies
within 30 days after the matter has been submitted by the Secretary of
Agriculture that the provisions of 1942.310(c)(1) of this subpart have
not been complied with. Information for obtaining this certification
will be submitted in writing by the applicant to FmHA. The information
will be submitted to DOL by the FmHA National Office. Grant approval
may be given and funds may be obligated subject to the DOL certification
being received provided FmHA has made its own separate determinations of
(c)(1)(i) and (ii) of this section when the project is in excess of $1
million and affects over 50 employees.
(4) When a grant is being administered for a Federal Regional
Commission and no FmHA ID grant funds are being used, the requirements
for DOL determinations may be waived upon written request from the
Commission. If the Commission so desires, the request will be included
in the letter from the Commission to FmHA that gives notice of transfer
of funds and conditions under which the funds are to be made available
to the grantee. In such cases the letter of conditions from FmHA to the
grantee will not include the requirement for DOL determinations.
(d) Management assistance. Grant recipients will be supervised as
necessary to assure that projects are completed in accordance with
approved plans and specifications and that funds are expended for
approved purposes. Grants made under this subpart will be administered
under and are subject to 7 CFR part 3015, 7 CFR part 3016, and 7 CFR
part 3017, as appropriate, and established FmHA guidelines.
(e) National Historic Preservation Act of 1966. All projects will be
in compliance with the National Historic Preservation Act of 1966 in
accordance with Subpart F of Part 1901 of this chapter.
(f) Uniform Relocation and Real Property Acquisition Policies Act.
All projects must comply with the requirements set forth in Title 7,
Subtitle A, Part 21 of the Code of Federal Regulation.
(g) Floodplains and wetlands. All projects must comply with
Executive Order 11988 ''Floodplain Management'' and Executive Order
119900 ''Protection of Wetlands.''
(h) Flood or mudslide hazard area precautions. If the grantee
financed project is in a flood or mudslide area, then flood or mudslide
insurance must be provided.
(i) Termination of Federal requirements. Once the grantee has
provided assistance to projects from a revolving fund, in an amount
equal to the grant provided by FmHA, the requirements imposed on the
grantee shall not be applicable to any new projects thereafter financed
from the revolving fund. Such new projects shall not be considered as
being derived from Federal funds.
(7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; sec. 10, Pub. L.
93-357, 88 Stat. 392; 7 CFR 2.23; 7 CFR 2.70)
(45 FR 73637, Nov. 6, 1980, as amended at 47 FR 54423, Dec. 3, 1982;
49 FR 3760, Jan. 30, 1984; 53 FR 30248, Aug. 11, 1988; 55 FR 135, Jan.
3, 1990)
07 CFR 1942.311 Application processing.
(a) Preapplications and applications. (1) The application review and
approval procedures outlined in 1942.2 of subpart A of part 1942 of
this chapter will be followed as appropriate. The State Director should
assist the applicant in application assembly and processing. The
applicant shall use SF 624, ''Application for Federal Assistance,'' (for
construction or nonconstruction programs as applicable) when requesting
financial assistance under this program.
(2) Each application for assistance will be carefully reviewed in
accordance with the priorities established in 1942.305(b)(3) of this
Subpart. A priority rating will be assigned to each application.
Applications selected for funding will be based on the priority rating
assigned each application and the total funds available. All
applications submitted for funding should contain sufficient information
to permit FmHA to complete a thorough priority rating.
(b) Review of decision. When the District Director is informed that
favorable action will not be taken on a preapplication or application,
the applicant will be notified in writing of the reasons why the request
was not favorably considered. The notification to the applicant will
state that a review of this decision by FmHA may be requested by the
applicant in accordance with Subpart B of Part 1900 of this chapter.
(45 FR 73637, Nov. 6, 1980, as amended at 50 FR 33332, Aug. 19, 1985;
53 FR 30249, Aug. 11, 1988; 55 FR 135, Jan. 3, 1990)
1942.312 (Reserved)
07 CFR 1942.313 Plan to provide financial assistance to third parties.
(a) For applications involving establishment of a revolving fund to
provide financial assistance to third parties the applicant shall
develop a plan which outlines the purpose and administration of the
fund. The plan will include:
(1) Planned projects to be financed.
(2) Sources of all non ID funds.
(3) Amount of technical assistance (if any).
(4) Purpose of the loans/grants.
(5) Number of jobs to be created/saved with each project.
(6) Project priority and length of time involved in completion of
each project.
(7) Other information required by the State Office.
(b) Each third party project receiving funds will be reviewed for
eligibility. When the applicant does not have a list of projects to be
completed, the applicant should advise the FmHA at the time a
preapplication is submitted.
(55 FR 135, Jan. 3, 1990)
07 CFR 1942.314 Grants to provide financial assistance to third parties
and Technical Assistance programs.
For applications involving a purpose other than a construction
project to be owned by the applicant, the applicant shall develop a
Scope of Work. The Scope of Work will be used to measure the
performance of the grantee. As a minimum, the Scope of Work should
contain the following:
(a) The specific purposes for which grant funds will be utilized,
i.e., Technical Assistance, Revolving Fund, etc.
(b) Timeframes or dates by which action surrounding the use of funds
will be accomplished.
(c) Who will be carrying out the purpose for which the grant is made
(key personnel should be identified).
(d) How the grant purposes will be accomplished.
(e) Documentation regarding the availability and amount of other
funds to be used in conjunction with the funds from the ID program.
(f) For grants involving a revolving fund the scope of work should
include those items listed in paragraphs (a) through (e) of this section
as well as the following:
(1) Information which will establish/identify the need for the
revolving loan fund.
(2) Financial statements which will demonstrate the financial ability
of the applicant to administer the revolving loan fund. As a minimum
the financial statements will include:
(i) Balance sheet
(ii) Income statement
(3) Detail on the applicants experience in operating a revolving loan
fund.
(55 FR 135, Jan. 3, 1990)
07 CFR 1942.315 Docket preparation and Letter of Conditions.
(a) The applicable provisions of 1942.5 of Subpart A of Part 1942 of
this chapter relating to preparation of loan dockets will be followed in
preparing grant dockets.
(b) The State Director or the State Director's designated
representative will prepare a Letter of Conditions outlining the
conditions under which the grant will be made. It will include those
matters necessary to assure that the proposed development is completed
in accordance with approved plans and specifications, that grant funds
are expended for authorized purposes, and that the terms of the Scope of
Work and requirements as prescribed in Parts 3015 and 3016 of 7 CFR are
complied with. The Letter of Conditions will be addressed to the
applicant, signed by the State Director or other designated FmHA
representative, and mailed or handed to appropriate applicant officials.
Each Letter of Conditions will contain the following paragraphs.
''This letter established conditions which must be understood and
agreed to by you before further consideration may be given to the
application.''
''This letter is not to be considered as grant approval nor as a
representation as to the availability of funds. The docket may be
completed on the basis of a grant not to exceed $XXXXX.''
''Please complete and return the attached Form FmHA 442-46,'Letter of
Intent to Meet Conditions,' if you desire further consideration be given
your application.''
Other items in the Letter of Conditions should include those relative
to: Maximum amount of grant, contributions, interim financing, final
plans and specifications, construction contract documents and bidding,
required project audit, evidence of compliance with all applicable
Federal, State, and local requirements, closing instructions, DOL
certifications, compliance with any required environmental mitigation
measures, and other requirements including those of Regional Commissions
when a grant is being made by a Regional Commission.
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 30249, Aug. 11, 1988)
07 CFR 1942.316 Grant approval, fund obligation and third party
financial assistance.
(a) Grant approval. FmHA State Directors are authorized to approve
grants made in accordance with this Subpart and Subpart A of Part 1901
of this chapter.
(b) Fund obligation and approval announcement. Funds will be
obligated and approval announcement made in accordance with the
provisions of 1942.5(d) of Subpart A of Part 1942 of this chapter.
(c) Third party financial assistance. Approval of a grant to an
applicant who will use grant funds to provide financial assistance to a
third party does not constitute approval of the projects financed by the
grantee. The review, approval and disbursement of funds for specific
projects financed by grantees will be completed in accordance with
applicable sections of this subpart.
(45 FR 73637, Nov. 6, 1980, as amended at 47 FR 36413, Aug. 20, 1982;
53 FR 30250, Aug. 11, 1988)
1942.317 -- 1942.320 (Reserved)
07 CFR 1942.321 Subsequent grants.
Subsequent grants will be processed in accordance with this subpart.
1942.322 -- 1942.347 (Reserved)
07 CFR 1942.348 Exception authority.
The Administrator may, in individual cases, make an exception to any
requirement or provision of this subpart which is not inconsistent with
the authorizing statute, an applicable law or decision of the
Comptroller General, if the Administrator determines that application of
the requirement or provision would adversely affect the Government's
interest and show how the adverse impact will be eliminated or minimized
if the exception is made.
(55 FR 135, Jan. 3, 1990)
07 CFR 1942.349 Forms, guides, and attachments.
Exhibit A of Subpart H of Part of 1942 of this Chapter, Guides 1 and
2 of this Subpart, Attachment 1 and Forms referenced (all available in
any FmHA office) are for use in administering ID Grants.
(53 FR 30250, Aug. 11, 1988)
07 CFR 1942.350 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget (OMB) and have been
assigned OMB control number 0575-0132. Public reporting burden for this
collection of information is estimated to vary from one-half to 40 hours
per response, with an average of 1.8 hours per response including time
for reviewing instructions, searching existing data sources, gathering
and maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding this burden estimate
or any other aspect of this collection of information, including
suggestions for reducing this burden, to Department of Agriculture
Clearance Officer, Office of Information Resources Management, Room
404-W, Washington, DC 20250; and to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Washington, DC
20503.
(55 FR 135, Jan. 3, 1990)
07 CFR 1942.350 Pt. 1942, Subpt. G, Guide 1
07 CFR 1942.350 Guides to Subpart G
07 CFR 1942.350 Guide 1 -- Project Management Agreement Between the
---------- Regional Commission and the Farmers Home Administration,
Department of Agriculture Pertaining to
(Grantee)
County,
Page No. ----
I. Introduction
A. The -------- Regional Commission is providing a (basic or
supplemental) grant for (purpose) -------- to (grantee) -------- , and
the U.S. Department of Agriculture, Farmers Home Administration (FmHA)
has approved and will administer that grant. The FmHA has determined
that funds (can or cannot) be made available under its funding program
for this fiscal year for the project. The project does meet all the
requisites for assistance under section 310(B) of the Consolidated Farm
and Rural Development Act, as amended (7 USC 1926). In order to
accomplish these purposes, the -------- Regional Commission's Federal
Cochairman and the FmHA State Director hereby enter into this Memorandum
of Understanding which is in accordance with the 31 USC 686.
B. This agreement is intended to cover the application phase,
construction phase, and final audit.
II. General
A. Project Cost
The project costs for the purposes of this agreement shall include
the costs of construction, technical services, legal services, land
acquisition, permits and rights-of-way, interest during construction and
contingencies.
B. Grant
The -------- Regional Commission shall make a (basic or supplemental)
grant of $ -------- up to but not exceeding ---- % of the total cost of
the project. These funds will be transferred to the Treasury Account of
the Farmers Home Administration by Standard Form 1151, ''Nonexpenditure
Transfer Authorization.''
C. The undersigned FmHA State Director on behalf of FmHA, in
concurring to this Project Management Agreement, hereby assures the
Federal Cochairman that:
1. The estimated cost of the project is reasonable and the (basic or
supplemental) grant, with the funds to be supplied by the applicant,
are, in its judgment, sufficient to complete the project.
2. The funds to be supplied by the applicant are available or FmHA is
reasonably satisfied that the applicant has the capability of supplying
such funds.
3. FmHA is reasonably satisfied that the facility will be properly
and efficiently administered, operated, and maintained and that the
applicant will provide sufficient funds to assure the successful and
continuing operation of the facility.
D. The (grantee) -------- is subject to Executive Order 11246 and
will be required to evidence compliance by execution of the following:
1. Equal Opportunity Agreement -- Form FmHA 400-1
2. Nondiscrimination Agreement -- Form FmHA 400-4
E. The (grantee) -------- shall execute assurances of nonrelocation.
(If applicable.)
III. Construction Management
A. The forms and format for the documents shall conform to the
requirements in Subpart A of Part 1942 of this chapter. Generally, the
following items shall be included:
1. Contract Documents
2. Specifications
3. Plans
B. FmHA will approve the plans and specifications.
C. FmHA will obtain a certification of adequacy from the Federal
Environmental Protection Agency (include only when applicable).
D. FmHA will obtain a non-pollution certificate from the (state)
-------- (agency) -------- (include only when applicable).
E. FmHA will make monthly inspections.
F. Contract change orders will not become effective until approved by
FmHA.
G. Final inspection will be conducted by FmHA.
IV. Financial Management
A. Financial management of the project shall be according to Subpart
A of Part 1942 of this chapter.
B. FmHA will provide the -------- Regional Commission with a copy of
the audit report.
C. If actual costs fall below the costs on which the grant was
calculated, the Federal and non-Federal shares will be reduced
proportionately.
D. FmHA will conform to the financial reporting requirements for
transferred funds as required by the attached copy of ''Reporting of
Funds Transfer by Participating Agencies.''
V. Compensation
Services rendered by FmHA for the processing and administration of
Commission grants in cases where neither FmHA loan nor grant funds are
involved shall be on a reimbursable basis. Reimbursement will be based
on five percent of the amount of the grant up to $50,000 and an
additional one percent of any amount over the first $50,000 of the
Commission grant. The full amount of the reimbursement will be
transferred to FmHA at the time the grant funds are transferred to FmHA.
VI. No provision in this agreement shall abrogate the legal
requirements of administrative responsibilities as set forth in the
Consolidated Farm and Rural Development Act or section 509 of the Public
Works and Economic Development Act of 1965, as amended.
For the -------- Regional Commission
(name)
Federal Cochairman
---------- , 197 --
For the Farmers Home Administration, USDA
(name)
State Director
---------- , 197 --
07 CFR 1942.350 Pt. 1942, Subpt. G, Guide 2
07 CFR 1942.350 Guide 2 -- Resolution
Whereas the ---------- (hereinafter called public body) desires to
obtain financial assistance from the Farmers Home Administration, United
States Department of Agriculture, pursuant to section 310 B of the
Consolidated Farm and Rural Development Act, for the purpose of
providing ---------- (describe briefly the nature of the project)
---------- (herein referred to as the facility) and as a condition to
and in consideration of receiving financial assistance from the Farmers
Home Administration this resolution is being adopted.
Therefore, in consideration of the premises the public body agrees as
follows:
1. No private business enterprises shall be allowed to use or occupy
the facility if such use or occupancy would be calculated to, or is
likely to, result in the transfer from one area to another of any
employment or business activity provided by operations of the private
business enterprises. This limitation shall not be construed to
prohibit use and enjoyment of the facility by such private business
entity through the establishment of a new branch, affiliate, or
subsidiary if the establishment of such branch, affiliate, or subsidiary
will not result in the increase in unemployment in the area of original
location (or in any other area where such entity conducts business
operations), unless there is reason to believe that such branch,
affiliate, or subsidiary is being established with the intention of
closing down the operations of the existing business entity in the area
of its original location (or in any other area where it conducts such
operation).
2. No private business enterprises shall be allowed to use or occupy
the facilities if such use or occupancy would be calculated to, or is
likely to, result in an increase in the production of goods, materials,
or commodities, or the availability of services or facilities in the
area, where there is not sufficient demand for such goods, materials,
commodities, services or facilities to employ the sufficient capacity of
existing competitive commercial or industrial enterprises, unless such
financial or other assistance will not have an adverse affect upon
existing competitive enterprises in the area.
3. Prior to allowing the use or occupancy of the facilities by any
private business enterprise, the public body shall clear such use or
occupancy with the Manpower Administration, Department of Labor,
Washington, DC, by submitting information required by the Department of
Labor for certification under the Act. This information shall be
submitted to Farmers Home Administration for transmittal to the
Department of Labor. The public body agrees to make no final commitment
with any private business enterprise regarding such use or occupancy if
the Department of Labor issues a negative certification under the Act.
The public body shall obtain prior clearance in this matter for a period
of three years after the date of an affirmative certification by the
Department of Labor on the application for financial assistance now
pending before the Farmers Home Administration.
This resolution shall be in force and effect immediately.
The voting was yeas ---- , nays ------ , absent ------ .
(Name of public body)
by (Name and Title)
I the undersigned as (Secretary) (Town Clerk) of the -------- do
hereby certify that the foregoing resolution was duly adopted at a
meeting of -------- duly called and held on the ------ day of ------ 19
-- , and that such resolution has not been rescinded or amended in any
way. Dated this ------ day of ---- , 19 -- .
(Seal)
07 CFR 1942.350 Subpart H -- Development Grants for Community Domestic
Water and Waste Disposal Systems
Source: 50 FR 12768, Apr. 1, 1985, unless otherwise noted.
07 CFR 1942.351 General.
(a) This Subpart outlines the policies and authorizations and sets
forth the procedures for making and processing grants to assist in
financing the development cost of domestic water and waste disposal
systems to rural communities and other associations of farmers,
ranchers, rural residents, and other rural users. Farmers Home
Administration (FmHA) will maintain continuous liaison and coordination
with State and substate planning district officials. FmHA shall
cooperate fully with appropriate State agencies in making grants in a
manner which will assure maximum support of the State's strategies for
development of rural areas. State and substate A-95 agencies may
recommend priorities for applications. FmHA will give due consideration
to all A-95 agency review comments and priority recommendations in
selecting applications for funding.
(b) Indian tribes on Federal and State reservations and other
Federally recognized Indian tribes are eligible to apply for and are
encouraged to participate in this program. Such tribes might not be
subject to State and local laws or jurisdiction. However, any
requirements of this Subpart that affect applicant eligibility, the
adequacy of FmHA's security or the adequacy of service to users of the
facility and all other requirements of this Subpart must be met. FmHA
State Directors are reminded that funds allocated for use as prescribed
in this Subpart are to be considered for use by Indian tribes within the
State regardless of whether State development strategies include Indian
reservations within the State's boundaries. It is essential that
Indians residing on such reservations have equal opportunity to
participate in the benefits of these programs on as equal a basis as
other residents of the State. This is intended to include an equal
application of the outreach activities of FmHA County and District
Offices.
(c) It is the policy that the County Office will normally be the
entry point for preapplications and serve as the local contact point.
However, applications will be filed and grants will be processed to the
maximum extent possible by the District Office staff. The State Office
staff will monitor grant making and servicing and will provide
assistance to District Office personnel to the extent necessary to
assure that the activities are being accomplished in an orderly manner
consistent with FmHA regulations. The District Director will supply
information on grant activity within the County Office service area to
the County Supervisor at key points throughout the grant making process.
(d) Federal statutes provide for extending FmHA financial programs
without regard to race, color, religion, sex, national origin, marital
status, age, or physical/mental handicap (provided the participant
possesses the capacity to enter into legal contracts).
1942.352 (Reserved)
07 CFR 1942.353 Processing applications and docket preparation.
(a) Preapplications and applications for water and waste disposal
development grants will be processed in accordance with 1942.2 of
Subpart A of Part 1942 of this chapter.
(b) Grant dockets will be prepared in accordance with this subpart
and applicable portions of Subpart A of Part 1942 of this chapter.
1942.354 (Reserved)
07 CFR 1942.355 Applicant eligibility and priority.
(a) Eligibility. Applicant eligibility shall be determined in
accordance with 1942.17 (b) of Subpart A of Part 1942 of this chapter.
Also, grants shall not be made in connection with any project unless the
project:
(1) Will serve a rural area which, if such project is carried out, is
not likely to decline in population below that for which the project was
designed.
(2) Is designed and constructed so that adequate capacity will or can
be made available to serve the present population of the area to the
extent feasible and to serve the reasonably foreseeable growth needs of
the area to the extent practicable. Also, water systems must have
sufficient capacity to provide for reasonable fire protection to the
extent practicable.
(3) Is necessary for orderly community development consistent with a
comprehensive community water, waste disposal, or other development plan
of the rural area and not inconsistent with any planned development
provided in any State, multijurisdictional, county, or municipal plan
approved by competent authority for the area in which the rural
community is located.
(b) Applicant priorities. Priority for grant funds will be given to
applicants and projects in accordance with 1942.17(c) of Subpart A of
Part 1942 of this chapter.
1942.356 -- 1942.357 (Reserved)
07 CFR 1942.358 Use of grant funds.
Funds may be used only for the following purposes:
(a) To construct, enlarge, extend, or otherwise improve community
water, sanitary sewage, solid waste disposal, and storm wastewater
disposal facilities.
(b) To construct or relocate public buildings, roads, bridges,
fences, utilities, and to make such other public improvements necessary
to the successful operation or protection of facilities authorized in
paragraph (a) of this section.
(c) To relocate private buildings, roads, bridges, fences, utilities,
and to make such other private improvements necessary to the successful
operation or protection of facilities authorized in paragraph (a) of
this section.
(d) To use FmHA grant funds for the following when a necessary part
of the project relates to those facilities in paragraphs (a), (b) and
(c) of this section.
(1) Reasonable fees and costs such as legal, engineering,
architectural, fiscal advisory, recording, environmental impact
analyses, archeological surveys and possible salvage or other mitigation
measures, planning, establishing or acquiring rights.
(2) Costs of acquired interest in land, rights such as water rights,
leases, permits, rights-of-way, and other evidence of land or water
control which are necessary for development of the facility.
(3) Purchase or rent equipment necessary to install, maintain,
extend, protect, operate or utilize facilities. (Subject to limitations
contained in 1942.360(a) of this subpart).
(4) Payment of tap fees and other utility connection charges as
provided in utility purchase contracts prepared in accordance with
1942.18(f) of Subpart A of Part 1942 of this chapter.
(e) To use FmHA grant funds on projects where other types of
financial assistance are available on all or part of the projects,
provided the other assistance is on reasonable rates and terms. In such
cases the maximum percentages allowed under other agencies' authorities
will apply to their participation in the project. However, the FmHA
grant may not exceed applicable percentages in 1942.360(b) of this
subpart of the eligible project development cost. The need for FmHA
grant funds must meet the requirements of 1942.363 of this subpart
after considering all project financing.
(f) To restore FmHA loan funds used in accordance with
1942.17(d)(1)(iv)(G) of Subpart A of Part 1942 of this chapter.
(50 FR 12768, Apr. 1, 1985, as amended at 52 FR 41949, Nov. 2, 1987)
1942.359 (Reserved)
07 CFR 1942.360 Grant limitations.
(a) Grant funds may not be used to:
(1) Finance facilities which are not modest in size, design, and
cost.
(2) Pay loan or grant finder's fees.
(3) Pay for the construction of any new combined storm and sanitary
sewer facilities.
(4) Pay any annually recurring costs including purchases or rentals
that are generally considered to be operation and maintenance expenses.
(5) Construct or repair electric generating plants, electric
transmission lines, or gas distribution lines to provide services for
commercial sale.
(6) Purchase fire trucks, hoses, and other fire fighting equipment or
construct housing for such shipment.
(7) Pay rental for the use of equipment or machinery owned by the
association.
(8) Pay for salesrooms or other purposes not directly related to
operation and maintenance of the facility being installed or improved.
(9) Purchase existing systems.
(10) Refinance existing indebtedness.
(11) Pay interest.
(12) Pay any portion of the cost of a facility which is not located
in a rural area.
(13) Pay any costs of a project when the median household income of
the service area is above the poverty line and more than 100 percent of
the nonmetropolitan median household income of the State. The poverty
line will be that income for a family of four as defined in section
673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)).
(b) An FmHA development grant may not be made in excess of the
following percentages (whichever is higher) of the eligible project
development costs. Facilities previously installed will not be
considered in determining the development costs.
(1) Seventy-five percent (75%) when the median household income of
the service area is below the poverty line or below 80 percent
(whichever is higher) of the Statewide nonmetropolitan median household
income.
(2) Fifty-five percent (55%) when the median household income of the
service area exceeds the seventy-five percent requirements described in
paragraph (b)(1) of this section but is not more than 100 percent of the
Statewide nonmetropolitan median household income.
(50 FR 12768, Apr. 1, 1985, as amended at 50 FR 13005, Apr. 2, 1985;
52 FR 41949, Nov. 2, 1987)
1942.361 -- 1942.362 (Reserved)
07 CFR 1942.363 Determining the need for development grants.
(a) FmHA District Directors are responsible for determining
applicant's eligibility for grants and the amount of such grants. The
amount of grant assistance shall be based on the FmHA interest rate in
effect at the time of grant approval. If an FmHA loan is associated
with the grant and the loan is closed at a lower rate, no change will be
made in the amount of grant assistance. Form FmHA 1942-51, ''Water and
Waste Disposal Grant Determination,'' will be used to determine the
amount of FmHA grant assistance for which the applicant qualifies. A
separate form will be used to record the determination of FmHA grant
assistance for each water, sewer collection and treatment, solid waste,
and storm drainage project.
(b) Grants will be used for water and waste disposal projects serving
the most financially needy communities to reduce user costs to a
reasonable level for farmers, ranchers, and rural residents.
(1) Other Users. Other rural water and waste disposal users whose
total water needs are met or, if there is no meter, could be met by a
single residential size water meter also may be considered eligible.
For example, a user on a waste system may be considered for a grant when
the total water needs of the waste user are met or could be met by such
residential-size meter.
(2) Reasonable Rate. Reasonable user rate is defined as that which
is not less than existing prevailing rates in communities having similar
economic conditions being served by an established system constructed at
similar costs per user. Similar user costs shall include charges,
taxes, and assessments attributable to the system.
(3) User rate. The initial user rate after the grant is made should
produce enough revenue to provide for all costs of the facility. The
planned revenue should be sufficient to provide for all debt service,
reserve, operation and maintenance and if appropriate, additional
revenue for facility replacement of short lived assets without building
a substantial surplus. Ordinarily, the total reserve will be equal to
one average annual loan installment which will accumulate at the rate of
one-tenth of the total each year.
(c) Grants will be determined in accordance with the following and
will not result in a user rate below that deemed to be reasonable.
(1) Grants may not exceed the percentages in 1942.360(b) of this
subpart of the eligible project development costs listed in 1942.358 of
this subpart.
(2) Applicants will be considered for grant assistance when the debt
service portion of the average annual user cost, for users in the
applicant's service area, exceeds the following percentages of median
household income:
(i) .5 percent when the median household income of the service area
is below the poverty line or below 80 percent (whichever is higher) of
the Statewide nonmetropolitan median household income.
(ii) 1.0 percent when the median household income of the service area
exceeds the .5 percent requirement but is not more than 100 percent of
the Statewide nonmetropolitan median household income.
(3) In the exceptional cases where FmHA determines that a reasonable
user rate has not been achieved due to unusually high operation and
maintenance costs, construction or water acquisition costs, or other
unusual factors, FmHA may proceed with a grant in an amount necessary to
reduce the rate to a reasonable level as defined in paragraph (b)(2) of
this section.
(4) If, after applying the formula described in paragraphs (c)(2)(i)
or (c)(2)(ii) of this section, FmHA determines that a reasonable average
annual cost to the applicant for delivery of service to residential type
users has not been achieved, FmHA may proceed with a grant in an amount
necessary to reduce such cost to not below a reasonable user rate as
defined in paragraph (b)(2) of this section. Reasonable average annual
cost to the applicant is defined as that which is not less than existing
prevailing costs in communities, being served by an established system,
having similar economic conditions. This option is only available to an
applicant:
(i) Where the annual cost to the applicant for delivery of service to
residential type users is subsidized by either the state, commonwealth,
or territory, and
(ii) Where uniform user charges are imposed for similar classes of
service throughout the service area.
(5) When the applicant will be furnishing bulk service to rural
residents served by another system (entity), a grant to such applicant
may also be considered for an amount to reduce the user costs on a basis
comparable to that provided in this section for users of such other
system. An agreement between the applicant and the other system will be
obtained that clearly shows that the benefit of the grant will accrue
only to the users intended to be benefited by the grant. For purposes
of grant determination, all other systems which will receive bulk
service may either:
(i) Be considered as part of the total by averaging the median
household incomes of the systems involved and averaging the debt service
portion for the particular service of the other systems. Where this
method is used, a uniform user rate schedule must be established for
similar classes of users. For example, all systems involved would have
the same user rate schedule for residential users, or
(ii) Consider the median household income and the debt service
portion for the particular service for each entity separately.
(d) The income data used to determine median household income should
be that which most accurately reflects the income of the service area.
The service area is that area reasonably expected to be served by the
facility being financed by FmHA. The median household income of the
service area, communities described in paragraph (b)(2) of this section,
communities used in Part II C of Form FmHA 1942-51, and the
nonmetropolitan median household income for the State will be determined
from income data from the most recent decennial census of the U.S. If
there is reason to believe that the census data is not an accurate
representation of the median household income within the area to be
served, the reasons will be documented on Form FmHA 1942-51 and the
applicant may furnish, or FmHA may obtain, additional information
regarding such median household income. Information will consist of
reliable data from local, regional, State or Federal sources or from a
survey conducted by a reliable impartial source. The nonmetropolitan
median household income of the State may only be updated on a national
basis by the FmHA National Office. This will be done only when median
household income data for the same year for all Bureau of the Census
areas is available from the Bureau of the Census or other reliable
sources. Bureau of the Census areas would include areas such as:
Counties, County Subdivisions, Cities, Towns, Townships, Boroughs, and
other places.
(e) Financial information contained in preliminary engineering
reports will be prepared without taking an FmHA grant into
consideration.
(50 FR 12768, Apr. 1, 1985, as amended at 50 FR 13005, Apr. 2, 1985;
50 FR 43379, Oct. 25, 1985; 52 FR 41950, Nov. 2, 1987)
1942.364 -- 1942.365 (Reserved)
07 CFR 1942.366 Application review, approval and obligation of funds.
(a) When a grant only (no FmHA loan) is being made, only those
applicable provisions of review and approval procedures outlined in
1942.5 of Subpart A of Part 1942 of this chapter will apply which are
necessary to assure that:
(1) The proposed development is completed in accordance with approved
plans and specifications.
(2) Grant funds are expended for authorized purposes.
(3) The applicant can comply with the terms of the grant agreement.
(b) When the grant approval official requires an appraisal, Form FmHA
442-10, ''Appraisal Report -- Water and Waste Disposal Systems,'' with
appropriate supplements, may be used. Appraisal reports may be prepared
by the FmHA engineer or, if desired by the grant approval official,
another qualified appraiser.
(c) When an FmHA loan and grant are being processed simultaneously,
the application review and approval procedures outlined in 1942.5 of
Subpart A of Part 1942 of this chapter will be followed.
(d) Grants will be approved in accordance with this subpart and
Exhibit B of FmHA Instruction 1901-A which is available in any FmHA
office.
(e) All grants that require National Office review will be submitted
in accordance with 1942.5(b)(1) of Subpart A of Part 1942 of this
chapter.
(f) Each letter of conditions involving a grant will contain the
following:
(1) Insertions which read:
(i) ''Attached is a copy of Form FmHA 1942-31, ''Association Water or
Sewer System Grant Agreement,'' for your review. You will be required
to execute a completed form at the time of grant closing.''
(ii) ''The applicant contribution shall be considered as the first
funds expended except (insert appropriate exceptions if funds from other
sources make an exception necessary). After providing for all
authorized costs, any remaining FmHA project funds will be considered to
be FmHA grant funds and refunded to FmHA. If the amount of unused FmHA
project funds exceeds the FmHA grant, that part would be FmHA loan
funds.
(2) All items contained in 1942.5(a)(1) of Subpart A of Part 1942 of
this chapter applicable to the grant funding.
(3) Other relative requirements.
(g) State Directors may obligate funds including Regional Commission
grant funds when they are available, in accordance with 1942.5(d) of
Subpart A of Part 1942 of this chapter.
(h) A copy of Form FmHA 1942-51, along with the letter of conditions
and Form FmHA 1942-45, ''Project Summary -- Water and Waste Disposal and
Other Utility-Type Projects,'' (including the required copy of Forms
FmHA 442-14, ''Association Project Fund Analysis,'' and FmHA 442-7,
''Operating Budget'') will be submitted to the National Office,
Attention: Water and Waste Disposal Division, by the State Director not
later than the time the letter of conditions is issued.
1942.367 (Reserved)
07 CFR 1942.368 Borrower contracts.
The requirements of 1942.4, 1942.17(1), and 1942.18 of Subpart A of
Part 1942 of this chapter will be followed when concurring in agreements
between grantees and third parties.
07 CFR 1942.369 Preparation for grant closing.
(a) Section 1942.6 of Subpart A of Part 1942 of this chapter will be
followed when preparing for grant closing.
(b) The requirements of 1942.17(n)(1) of Subpart A of Part 1942 of
this chapter will be followed for water and waste disposal development
grants.
1942.370 -- 1942.371 (Reserved)
07 CFR 1942.372 Grant closing and delivery of funds.
(a) Grants will be closed in accordance with instructions received
from the Office of the General Counsel (OGC). FmHA policy is not to
disburse grant funds from the Treasury until they are actually needed by
the applicant. Borrower funds will be disbursed before the disbursal of
any FmHA grant funds.
(1) FmHA loan funds will be disbursed before the disbursal of any
FmHA grant funds except when:
(i) Interim financing of the total estimated amount of funds needed
during construction is arranged.
(ii) All interim funds have been disbursed, and
(iii) FmHA grant funds are needed before the FmHA loan can be closed.
(2) If grant funds are available from other agencies and are
transferred to the Finance Office for disbursement by FmHA, these grant
funds shall be disbursed in accordance with the agreement governing such
agencies participation in the project.
(3) Any grant funds remaining will be handled in accordance with
1942.17(p)(6) of Subpart A of Part 1942 of this chapter.
(b) FmHA grant funds will be disbursed by using multiple advances in
accordance with 1942.17(p)(2) of Subpart A of Part 1942 of this
chapter.
(c) Payment for construction will be made in accordance with
1942.17(p)(5) Subpart A of Part 1942 of this chapter.
(d) Form FmHA 1942-31 will be completed and executed in accordance
with the requirements of grant approval and closing instructions. Both
District Directors and State Directors are authorized to sign the grant
agreement on behalf of FmHA. For grants that supplement FmHA loan
funds, the grant should be closed simultaneously with the closing of the
loan. However, when grant funds will be disbursed before loan closing
as provided for in paragraph (a)(1) of this section, the grant will be
closed not later than the delivery date of the first advance of grant
funds. The grant will be considered closed when Form FmHA 1942-31 has
been properly executed. Incorporated as a part of this subpart is Form
FmHA 1942-31 which appears as Exhibit C in the Federal Register.
07 CFR 1942.373 Planning and performing development.
Planning and performing development will be handled in accordance
with 1942.9 and 1942.18 of Subpart A of Part 1942 of this chapter.
1942.374 (Reserved)
07 CFR 1942.375 Actions subsequent to grant closing.
Section 1942.8 of Subpart A of Part 1942 of this chapter will be
followed for water and waste disposal development grants.
07 CFR 1942.376 Grant servicing.
Grants will be serviced in accordance with 1951.215 of Subpart E and
Subpart O of Part 1951 of this chapter.
(50 FR 12990, Apr. 2, 1985)
07 CFR 1942.377 Grant cancellation.
The District Director or State Director may prepare and execute Form
FmHA 1940-10, ''Cancellation of U.S. Treasury Check and/or Obligation,''
in accordance with the Forms Manual Insert. If the docket has been
forwarded to OGC, that office will be notified of the cancellation by a
copy of Form FmHA 1940-10. The borrower's attorney and engineer if any,
should be notified of the cancellation. The borrower's attorney and
engineer may be provided a copy of the notification to the applicant.
1942.378 (Reserved)
07 CFR 1942.379 Subsequent grants.
Subsequent grants will be processed in accordance with this subpart.
07 CFR 1942.380 Regional commission grants.
Grants are sometimes made by regional commissions for projects
eligible for FmHA assistance. FmHA has agreed to administer such funds
in a manner similar to FmHA assistance.
(a) When FmHA has funds in the project, no charge will be made for
administering commission funds.
(b) When FmHA has neither loan nor grant funds in the project, an
administrative charge will be made pursuant to the Economy Act of 1932
(31 U.S.C. 686). A fee of five percent (5%) of the first $50,000 of a
regional commission grant and one percent (1%) of any amount over
$50,000 will be paid FmHA by the commission.
(1) Appalachian Regional Commission. Exhibit A of this subpart will
be followed in determining the responsibilities of FmHA. The Federal
Cochairman and the State Director will provide each other with the
necessary notification and certification.
(2) Other regional commissions. Title V of the Public Works and
Economic Development Act of 1965 authorizes other commissions similar to
the Appalachian Regional Commission. Exhibit B of this subpart will be
used to develop a separate project management agreement between FmHA and
the commission for each project. The agreement should be prepared by
the FmHA State Director as soon as notification is received that a
commission grant will be made and the amount is confirmed.
(c) Regional commission grants should be obligated as soon as
possible in accordance with 1942.5(d) of Subpart A of Part 1942 of this
chapter, except that the announcement procedure referred to in
1942.5(d)(6) is not applicable. Regional commission grants will be
obtained from the Finance Office in the same manner as FmHA funds are
obtained.
07 CFR 1942.381 Audits.
Audits will be handled in accordance with 1942.17(q)(4) of Subpart A
of Part 1942 of this chapter.
(52 FR 41950, Nov. 2, 1987)
07 CFR 1942.382 Management assistance.
Grant recipients will be supervised to the extent necessary to assure
that facilities are constructed in accordance with approved plans and
specifications and to assure that funds are expended for approved
purposes.
07 CFR 1942.383 State Supplements and guides.
This Subpart may be supplemented by State Supplements and guides in
accordance with 1942.16 of Subpart A of Part 1942 of this chapter.
07 CFR 1942.384 Delegation of authority.
The State Director is responsible for the overall implementation of
the authorities contained in this Subpart and may redelegate any such
authority to appropriate FmHA employees.
07 CFR 1942.385 Special conditions under Public Law (PL) 98-8
(Emergency Jobs Bill).
Each project to be funded utilizing grant funds authorized by Public
Law 98-8 (Emergency Jobs Bill) will be processed in accordance with
Exhibit D of this subpart. In Exhibit D of this Subpart, all references
to other FmHA regulations and forms will be construed to mean the most
current version of those regulations and forms, and the following:
(a) Grant funds shall be made available for projects and activities
in civil jurisdictions with high unemployment, or in labor surplus
areas, or in political units or in pockets of poverty that are currently
or should meet the criteria to be eligible under the Urban Development
Grant Action (UDAG) program administered by the Department of Housing
and Urban Development.
(b) Each letter of conditions that is issued utilizing FmHA loan
and/or grant funds authorized by P.L. 98-8 will contain the following:
(1) Standard paragraphs in accordance with 1942.5 (a)(1)(ii) of
Subpart A of Part 1942 of this chapter, and
(2) ''The (i.e. town, district, authority) shall to the extent
practicable utilize FmHA funds in manner which maximizes immediate
creation of new employment opportunities to individuals 1983. Such a
condition will be made part of any construction contract awarded in
support of FmHA funds.''
(c) The following should be added to the Supplemental General
Conditions of construction contracts involving Pub. L. 98-8 funds:
To the extent practicable, the contractor shall hire needed new
employees in a manner which maximizes immediate creation of new
employment opportunities to individuals who were unemployed at least 15
of the 26 weeks prior to March 24, 1983.
1942.386 -- 1942.400 (Reserved)
07 CFR 1942.385 Pt. 1942, Subpt. H, Exh. A
07 CFR 1942.385 Exhibits to Subpart H
07 CFR 1942.385 Exhibit A -- Memorandum of Agreement Between the
Federal Cochairman of the Appalachian Regional Commission and the
Administrator of the Farmers Home Administration
1.1 The Appalachian Regional Development Act of 1965 (hereinafter
also styled the Appalachian Act or ARDA) authorizes a special program to
assist the Appalachian Region to meet its special problems and to
promote its economic development. Section 214 of the Appalachian Act
authorizes, among other assistance, grants for all or any part of the
basic Federal contribution to projects under certain Federal
grant-in-aid programs upon certain conditions and, in addition,
authorizes supplemental grants to basic grants under such Federal
grant-in-aid programs; provided that in no case shall the total Federal
grant be for more than 80 percent of the project cost.
1.2 Section 306(a) of the Consolidated Farm and Rural Development Act
(CFRDA) (7 U.S.C. 1926) authorizes Farmers Home Administration to make
grants for up to 75 percent of the cost of water and waste facility
projects. Section 310B of the CFRDA (7 U.S.C. 1932) authorizes Farmers
Home Administration to make grants (not to exceed $50 million annually)
to public bodies for measures designed to facilitate development of
private business enterprises including the development, construction or
acquisition of land, buildings, plants, equipment, access streets and
roads, parking areas, utility extensions, necessary water supply and
waste disposal facilities, refinancing, services and fees.
1.3 The purpose of this agreement, between the Federal Cochairman of
the Appalachian Regional Commission (ARC) and the Administrator of the
Farmers Home Administration (FmHA), is to establish procedures, terms
and conditions to facilitate cooperation between the Commission and
FmHA. Under these procedures, terms, and conditions ARC will approve
grant assistance pursuant to the general provisions and procedures in
Sections 214, 223 and 303 of the Appalachian Regional Development Act
and will transfer funds therefor to FmHA and FmHA will award,
administer, monitor and report upon such grants.
1.4 This agreement is made in furtherance of the responsibilities of
the ARC Federal Cochairman under Section 104 of the ARDA and authorized
under Section 106(7) of the ARDA which authorizes the ARC to enter into
and perform such cooperative agreements, as may be necessary to carry
out its functions.
General Provisions for Transfer of Funds for Use for Projects
Approved Under the Appalachian Regional Development Act, Reporting
Requirements and Administrative Expenses
2.1 The Federal Cochairman, subject to such conditions and
limitations as he or she may prescribe, will from time to time transfer
on SF 1151, NonExpenditure Transfer Authorizations, funds to FmHA for
the award of grants under Section 214 of the Act approved by the
Appalachian Regional Commission pursuant to the provisions and
procedures of Section 223, through the framework authority of the CFRDA.
The Federal Cochairman will likewise transfer funds for the reasonable
administrative expenses of FmHA incident to special basic grants
approved under this Act (see Part IV). The Federal Cochairman may
withdraw the unobligated balances of any funds transferred to FmHA
pursuant to this agreement, or may direct a transfer of any such
balances, in whole or in part, from one program account to another.
2.2 It is understood that, notwithstanding the provisions of any
other laws, Appalachian assistance may be provided up to the levels of
Federal participation authorized in ARDA Section 214, as set forth in
this section. ARDA Section 214 provides authority for grants of Federal
financial assistance under the Appalachian Act to supplement grant
assistance under other Federal grant-in-aid programs including the
CFRDA. This assistance can be of two types:
(1) To supplement such Federal grants by providing Appalachian Act
funds to add on to such other Federal grant thereby increasing the
Federal contribution above the percentage of Federal share authorized
for such grant under such basic program; or
(2) Where sufficient funds are not available under a qualifying
Federal grant program, to provide Appalachian Act funds to be used for
all or part of the basic (or ''first dollar'') grants of Federal
financial assistance under such program.
In either case the total Federal contribution for projects assisted
under Section 214 is limited to 80 percent of total project costs.
2.3 The Commission will inform FmHA in writing of each project to be
assisted; the amount approved for each, the costs and funding plan on
which it premised its approval; and any specific terms, conditions, and
limitations thereon not otherwise provided for in this agreement.
2.4 For each project involving transferred funds, FmHA will
incorporate, in the grant agreement or other appropriate implementing
document, appropriate provisions as necessary to carry out this
agreement, to insure compliance with applicable Federal laws and
Commission regulations, and to effectuate grant terms and conditions
approved by ARC. (See paragraph 3.6(5), Part III of this agreement.)
FmHA will also incorporate in each grant agreement or other implementing
document, a copy of the applicable Commission approval of Appalachian
Act funding and any special conditions thereof and transmit same to the
grantee.
2.5 FmHA will furnish to the Commission (a) a copy of all executed
grant agreements (or other implementing documents) and amendments
thereto, for each project involving transferred funds; (b) copies of
such information, data documents, or other materials pertaining to
projects as the Commission may require; (c) information on any unusual
problems (including degree of enforcement of the Davis-Bacon Act)
encountered and any ameliorative action taken; (d) a final report on
the costs of each program or project, in sufficient detail to permit a
reasonable review of the expenditures and which includes final total
eligible project costs, total ineligible project costs, and the amounts
of FmHA, ARC and non-Federal funds indicating source, i.e., State or
local, used to meet such project costs, as well as FmHA certification
that the reported costs are final and in accord with agency program and
accounting records; and (e) progress reports, including the following:
(1) Monthly Report. SF 133 ''Report on Budget Execution'' (OMB
Circular A-34).
(2) Quarterly Report on the status of the funds transferred to FmHA
by ARC, providing for each project the following information:
Both FmHA and ARC project identification number
Location of project
Amount of ARC funds approved by ARC for the project
Cumulative obligations
Unobligated balance
Unliquidated obligation
Accrual expenditures
Disbursements
This report shall also provide totals of the above information items
so as to show current fiscal year data consistent with amounts reported
on SF-133 by FmHA. The information in the report shall be provided in
the form and content specified in Attachment A to this Memorandum of
Agreement.
(3) Annual Reports
(i) Copy of SF-220, ''Statement of Financial Conditions,'' as
required by Treasury Circular No. 966, due by October 31, for the year
ending September 30.
(ii) Treasury TFS Form 2108, ''Statement of Unexpended Balances of
Appropriations and Funds,'' as required by Circular No. 965, due by
October 31 for the year ending September 30.
(iii) Copy of ''Report on Federal Grants-in-Aid to States,'' as
required by Chapter 7000 of Treasury Fiscal Requirements Manual, due by
November 15 for the year ending September 30. (Treasury Circular 1014)
2.6 The Commission may revoke or revise its approval of any program
or project if the work intended to be undertaken is not started or
placed under contract within 18 months after the date of the grant
agreement or contract by FmHA.
2.7 Payments by FmHA involving transferred funds will be made in
accordance with this agreement and any specific terms, conditions and
limitations prescribed by the Appalachian Regional Commission.
2.8 Subject to paragraphs 2.9 and 2.10, each disbursement of funds
for a project receiving assistance from more than one Federal source
will be deemed to be a proportionate disbursement from each source.
2.9 (1)(a) Section 224(c) of the Appalachian Act provides that
''Funds may be provided for programs and projects in a State under this
Act only if the Commission determines that the level of Federal and
State financial assistance under Acts other than this Act or the same
type of programs or projects in that portion of the State within the
region, will not be diminished in order to substitute funds authorized
by this Act.'' (b) Further, Section 224(a)(3) requires that the ARC
consider the financial resources available to the State or political
subdivisions or instrumentalities thereof which seek to undertake the
project (i.e., the relative ability to pay).
(2) Therefore, whenever there is, or it appears that there will be,
any change in project funding cost or the project funding plan
including, but not limited to, underrun cases, FmHA will inform the
Commission promptly of any such change or projected change. Also
because of these same provisions, whenever there is such a change, the
Commission may, as a result, approve an appropriate increase or decrease
in the amount of transferred funds available for such project.
Generally, unless the Commission specifically provides otherwise, the
provisions in 2.10 shall apply to the cases specified therein.
2.10 If the actual eligible project costs are less than the estimated
costs on which the Commission based its approval of a supplemental or
special basic grant (or if the non-214 basic Federal grant(s) or the
non-Federal funds are increased for a project without any change in
eligible project costs), the amount of Section 214 funds available for
the project shall be reduced to the difference between the actual
eligible costs and the sum of (i) the non-214 basic grant(s) and (ii)
the non-Federal funds shown in the approved Section 214 application
unless, because of changed circumstances, the Commission directs
otherwise.
Provisions Relating to Procedure for Review and Processing of Grant
Applications and Construction Management
3.1 Applications for grant assistance under Section 214 of the
Appalachian Regional Development Act (ARDA) will be submitted through
the appropriate State Member to the Appalachian Regional Commission
(ARC) and to the appropriate state office of the Farmers Home
Administration (FmHA).
Where ARDA funds will be requested under the framework of the CFRDA,
ARC and FmHA will receive applications for such grant assistance. Such
applications will be made on the FmHA forms appropriate to such project
and on ARC Form 1. Such applications shall include, but not be limited
to:
(1) Description and purpose of the project;
(2) The amount of the basic grant (and the amount of the supplemental
grant, where applicable) being requested;
(3) The total project cost;
(4) The amount and source of the non-Federal share, including the
method of obtaining such funds; and
(5) Whether an application for the proposed project has been filed
with any Federal grant-in-aid agency, the date of filing, the
identification of the agency and the current status of the application.
Such applications will be processed in general accord with the
applicable procedural regulations of FmHA and ARC, unless otherwise
provided in accordance with Section 223 of the ARDA.
3.2 If a project proposed to the Commission appears to qualify for
funding under the ARDA and CDRDA, the Commission will request in writing
that FmHA provide the following:
(A) For all Grants:
A certification that the level of FmHA financial assistance which
would otherwise be available for projects in that portion of the State
within the Appalachian Region will not be diminished in order to
substitute ARC funds; and
(B) For Supplemental Grants -- in addition to the requirement above:
A Notification that FmHA will approve a CFRDA grant and certification
of the amount of FmHA assistance to be provided and the portion of
eligible project costs which that assistance will meet; and
(C) For Special Basic Grants -- in addition to the requirement of (A)
above:
(1) A certification that the project is not incompatible with the
statutory provisions and objectives of the (CFRDA);
(2) A certification that there are no FmHA funds available for the
projects within the current fiscal year allocations and priorities; and
(3) Advice as to when FmHA grant funds are likely to or will become
available for such project under its funding program.
(D) Should FmHA fail to give the certification in (C)(1) above, FmHA
shall state specifically the reasons therefor.
3.3 The FmHA State office and the Commission will arrange to keep
each other informed of the progress of their respective processing, will
exchange appropriate information, and will advise each other of any
apparent, significant problems which may cause delay in processing or
which may preclude, delay or affect approval.
3.4 In accordance with Section 223 of the ARDA, the ARC will review
the project application to determine that the project:
(1) Meets the applicable criteria under Section 224 of the ARDA;
(2) Meets the requirements of the development planning process under
Section 225 of the ARDA;
(3) Will contribute to the development of the Region; and
(4) Is well designed to meet the goals and objectives established by
the Commission for the development of the Region.
3.5 After consideration of the reviews conducted by FmHA and ARC, the
ARC Federal Cochairman will approve grants under Section 214 and advise
FmHA in writing as provided in paragraph 2.3 of Part II. Announcement
of approval will be made by ARC at the time of this determination by the
ARC Federal Cochairman.
3.6 The Administrator of the FmHA or his delegate shall make grant
awards after ARC approval under paragraph 3.5 of this Part, and accept
responsibility for:
(1) The payment of grant funds;
(2) The full and accurate reporting of grant expenditures by
grantees;
(3) Provision of complete and accurate fiscal reports to the ARC.
This shall be accomplished in accordance with grant terms and conditions
jointly determined by FmHA and ARC;
(4) General grant administration; and
(5) The ensurance of compliance with all applicable laws, including,
but not limited to, Title VI of the Civil Rights Act of 1964, including
regulations in 15 CFR, Subtitle A, Part 8; the National Environmental
Protection Act; section 112 of the Public Works and Economic
Development Act of 1971 (42 U.S.C. 3123), the Davis-Bacon Act (40 U.S.C.
27a et seq.); Parts II, III, IV of Executive Order 11246, regulations
of the Department of Labor (41 CFR, Chapter 60); sections 224(b),
302(e) and 402 of the Appalachian Act; and ARC Code Section 200C-1
regarding employment of local labor, and any other applicable Federal
laws and regulations. Copies of sections 224(b), 302 and 402 of the
ARDA and of ARC Code Section 200C-1 are included as Attachment A to this
agreement.
3.7 FmHA shall take all practical steps to insure that ARC's grants
(in the combined amount of the basic and supplementary grants, where
applicable) are obligated within the fiscal year in which they are
approved.
3.8 FmHA will administer the projects, after the grants are made, in
general accordance with its procedural regulations unless otherwise
provided in accordance with Section 223 of the ARDA.
3.9 (A) The forms and format for the documents shall conform to the
requirements in FmHA regulations. Generally, the following items shall
be included:
(1) Contract documents
(2) Specifications
(3) Plans
(B) FmHA will approve the plans and specifications.
(C) FmHA will obtain a nonpollution certificate from the appropriate
State agency for 306(a) type of assistance.
(D) FmHA will make periodic inspections.
(E) Contract change orders will not become effective until approved
by FmHA.
(F) Final inspection will be conducted by FmHA.
(A) It is agreed that in cases where there are no FmHA funds
involved, the total costs of services to be performed on each project by
FmHA will be five percent of the ARC grant up to $50,000 and an
additional one percent of any amount over the first $50,000 of the
Commission grant.
(B) All funds for grant and administrative costs will be provided to
FmHA by SF 1151.
(C) FmHA shall report administrative expenses in the manner similar
to that use in Attachment B.
Dated: March 8, 1979.
Appalachian Regional Commission.
Robert W. Scott,
Federal Cochairman.
Dated: February 15, 1979.
Farmers Home Administration.
Gordon Cavanaugh,
Administrator.
224. Program development criteria.
(b) No financial assistance shall be authorized under this Act to be
used (1) to assist establishements relocating from one area to another;
(2) to finance the cost of industrial plants, commercial facilities,
machinery, working capital, or other industrial facilities or to enable
plant subcontractors to undertake work theretofore performed in another
area by other subcontractors or contractors; (3) to finance the cost of
facilities for the generation, transmission, or distribution of electric
energy; or (4) to finance the cost of facilities for the production,
transmission, or distribution of gas (natural, manufactured, or mixed).
(c) Funds may be provided for programs and projects in a State under
this Act only if the Commission determines that the level of Federal and
State financial assistance under Acts other than this Act for the same
type of programs or projects in that portion of the State within the
region, will not be diminished in order to substitute funds authorized
by this Act.
302. Grants for administrative expenses of local development
districts and for research and demonstration projects.
(a) The President is authorized --
(1) To make grants to the Commission for administrative expenses,
including the development of areawide plans or action programs and
technical assistance activities, of local development districts, but (A)
the amount of any such grant shall not exceed 75 per centum of such
expenses, (B) no grants for administrative expenses shall be made for a
State agency certified as a local development district for a period of
excess of three years beginning on the date the initial grant is made
for such development district, and (C) the local development district
contributions for administrative expenses may be in cash or in kind,
fairly evaluated, including but not limited to space, equipment, and
services;
(2) To make grants to the Commission for assistance to States for a
period not in excess of two years to strengthen the State development
planning process for the region and the coordination of State planning
under this Act, the Public Works and Economic Development Act of 1965,
as amended, and other Federal and State programs; and
(3) To make grants to the Commission for investigation, research,
studies, evaluations, and assessments of needs, potentials, or
attainments of the people of the region, technical assistance, training
programs, demonstrations, and the construction of necessary facilities
incident to such activities, which will further the purposes of this
Act. Grant funds may be provided entirely from appropriations to carry
out this section or in combination with funds available under other
Federal or Federal grant-in-aid programs or from any other source.
Notwithstanding any provision of law limiting the Federal share in any
such other program, funds appropriated to carry out this section may be
used to increase such Federal share, as the Commission determines
appropriate.
(b)(1) Notwithstanding the provisions of section 224(b) (2), (3), or
(4), the Commission may provide assistance under this section for
demonstrations of enterprise development, including site acquisition or
development where necessary for the feasibility of the project, in
connection with the development of the region's energy resources and the
development and stimulation of indigenous arts and crafts of the region.
No more than $3,000,000 shall be obligated for such energy resource
related demonstrations in any fiscal year, and no more than $2,500,000
shall be obligated for such indigenous arts and crafts demonstrations.
(2) In carrying out the purposes of this Act, including section 2(b),
and in implementing this section, the Federal Energy Administration, the
Energy Research and Development Administration, the Environmental
Protection Agency, and other Federal agencies shall cooperate with the
Commission and shall provide such assistance as the Federal Cochairman
may request.
(3) The Commission shall conduct a study and report on the status of
Appalachian migrants in the destinations to which they have migrated,
current migration patterns and implications, and the impact which the
Commission program has had, and the potential for such impact, on
out-migration and the welfare of Appalachian migrants. The Commission
is authorized to conduct pilot projects and demonstrations within the
region in connection with such study.
(4) The Commission shall conduct a study of physical hazards which
are constraints on land use in the Appalachian region (with emphasis on
mudslides, landslides, sink holes, and subsidence) and the risks
associated with such hazards. To the extent practicable, such study
shall identify high-risk hazard areas throughout the Appalachian region.
The Commission shall submit its report on such study together with
recommendations for means to remove or avoid such constraints on land
use, to the Congress not later than twenty-four months after the
enactment of this paragraph.
(c)(1) The Commission shall, as required by the President, maintain
accurate and complete records of transactions and activities financed
with Federal funds and report thereon to the President. The records of
the Commission shall be available for audit with respect to such grants
by the President and the Comptroller General or their duly authorized
representatives.
(2) Recipients of Federal assistance under the provisions of this
section shall, as required by the Commission, maintain accurate and
complete records of transactions and activities financed with Federal
funds and report thereon to the Commission. Such records shall be
available for audit by the President, the Comptroller General, and the
Commission or their duly authorized representatives.
(d) Not to exceed $11,000,000 of the funds authorized in section 401
of this Act for the two-fiscal-year period ending June 30, 1960, shall
be available to carry out this section. Not to exceed $3,000,000 of
such authorization shall be available for the purposes of subsection
(b).
(e) No part of any appropriated funds may be expended pursuant to
authorization given by this Act involving any scientific or
technological research or development activity unless such expenditure
is conditioned upon provisions effective to insure that all information,
copyrights, uses, processes, patents, and other developments resulting
from that activity will be made freely available to the general public.
Nothing contained in this subsection shall deprive the owner of any
background patent relating to any such activity, without his consent, of
any right which that owner may have under that patent. Whenever any
information, copyright, use, process, patent or development resulting
from any such research or development activity conducted in whole or in
part with appropriated funds expended under authorization of this Act is
withheld or disposed of by any person, organization, or agency in
contravention of the provisions of this subsection, the Attorney General
shall institute, upon his own motion or upon request made by any person
having knowledge of pertinent facts, an action for the enforcement of
the provisions of this subsection in the district court of the United
States for any judicial district in which any defendant resides, is
found, or has a place of business. Such court shall have jurisdiction
to hear and determine such action, and to enter therein such orders and
decrees as it shall determine to be required to carry into effect fully
the provisions of this subsection. Process of the district court for
any judicial district in any action instituted under this subsection may
be served in any other judicial district of the United States by the
United States marshal thereof. Whenever it appears to the court in
which any such action is pending that other parties should be brought
before the court in such action, the court may cause such other parties
to be summoned from any judicial district of the United States.
402. Applicable labor standards.
All laborers and mechanics employed by contractors or subcontractors
in the construction, alteration, or repair, including painting and
decorating, of projects, buildings, and works which are financially
assisted through the Federal funds authorized under this Act, shall be
paid wages at rates not less than those prevailing on similar
construction in the locality as determined by the Secretary of Labor in
accordance with the Davis-Bacon Act, as amended. The Secretary of Labor
shall have with respect to such labor standards, the authority and
functions set forth in Reorganization Plan Numbered 14 of 1950, and
section 2 of the Act of June 13, 1934, as amended.
Section 200C-1 Recommended Policy on Use of Local Labor.
Section 200C-1.1 Federal Agencies. The Commission recommends that
heads of Federal Departments and Agencies administering programs of
construction with the aid of funds authorized by or in connection with
the Appalachian Regional Development Act of 1965 adopt regulations to
assure the use of local labor, to the maximum extent practicable, in the
implementation of such programs. (Res. 31)
Section 200C-1.2 Contractors. The Commission recommends that --
(1) Every contractor or subcontractor undertaking to do work on any
project assisted under the Act which is or reasonably may be done as
onsite work, in carrying out such contract work shall give preference to
qualified persons who regularly reside in the labor area as designated
by the United States Department of Labor wherein such project is
situated, or the subregion, or the Appalachian counties of the State
wherein such project is situated, except:
(a) To the extent that qualified persons regularly residing in the
area are not available;
(b) For the reasonable needs of any such contractor or subcontractor,
to employ supervisory or specially experienced individuals necessary to
assure an efficient execution of the contract; or
(c) For the obligation of any such contractor or subcontractor to
offer employment to present or former employees as the result of a
lawful collective bargaining contract, Provided that in no event shall
the number of non-resident persons employed under this subparagraph (c)
exceed 20 percent of the total number of employees employed by such
contractor and his subcontractors on such projects.
Every such contractor and subcontractor shall furnish the appropriate
United States Employment Service offices with a list of all positions
for which it may from time to time require laborers, mechanics and other
employees; and
(3) Every such contractor and subcontractor shall be required to
furnish periodic reports to the contracting agency on the extent to
which local labor has been used in carrying out such contract work.
(Res. 31)
07 CFR 1942.385 Attachment B -- U.S. Department of Agriculture;
Farmers Home Administration -- Finance Office
DEVELOPMENT PROGRAM, EXECUTIVE (TRANSFER TO
AGRICULTURE)
07 CFR 1942.385 Pt. 1942, Subpt. H, Exh. B
07 CFR 1942.385 Exhibit B -- Project Management Agreement
Project No.
Project Management Agreement Between the ---------- Regional
Commission and the Farmers Home Administration, Department of
Agriculture Pertaining to ---------------- .
(grantee) ---------- County, ---------- .
A. The ------------ Regional Commission is providing a basic grant
for ------------ (purpose) to ------------ (grantee), and the U.S.
Department of Agriculture, Farmers Home Administration (FmHA) has
approved and will administer that grant. The FmHA has determined that
funds cannot be made available under its funding program for this fiscal
year for the project although it meets all the requisites for assistance
under Section 306(a) of the Consolidated Farm and Rural Development Act,
as amended (7 U.S.C. 1926). In order to accomplish these purposes, the
------------ Regional Commission's Federal Cochairman and the FmHA State
Director hereby enter into this Memorandum of Understanding which is in
accordance with 31 U.S.C. 686.
B. This agreement is intended to cover the application phase,
construction phase, and final audit.
A. Project Cost. The project costs for the purposes of this
agreement shall include the costs of construction, technical services,
legal services, land acquisition, permits and rights-of-way, interest
during construction, and contingencies.
B. Grant. The ------------ Regional Commission shall make a basic
grant of $ -------- up to but not exceeding ---- % of the total cost of
the project. These funds will be transferred to the Treasury Account of
the Farmers Home Administration by Standard Form 1151, ''Nonexpenditure
Transfer Authorization.''
C. The undersigned FmHA State Director on behalf of FmHA, in
concurring with this Project Management Agreement, hereby assures the
Federal Cochairman that: 1. The estimated cost of the project is
reasonable and the basic grant, with the funds to be supplied by the
applicant, is, in FmHA's judgment, sufficient to complete the project.
2. The funds to be supplied by the applicant are available or FmHA is
reasonably satisfied that the applicant has the capability of supplying
such funds.
3. FmHA is reasonably satisfied that the facility will be properly
and efficiently administered, operated, and maintained and that the
applicant will provide sufficient funds to assure the successful and
continuing operation of the facility.
D. The ------------ (grantee) is subject to Executive Order 11246 and
will be required to evidence compliance by execution of the following:
1. Form FmHA 400-1, ''Equal Opportunity Agreement.''
2. Form FmHA 400-4, ''Nondiscrimination Agreement.''
E. The ------------ (grantee) shall execute assurances of
nonrelocation.
A. The forms and format for the documents shall conform to the
requirements in FmHA Instruction 1942-A. Generally, the following items
shall be included.
1. Contract Documents
2. Specifications
3. Plans
B. FmHA will approve the plans and specifications.
C. FmHA will obtain a certification of adequacy from the Federal
Environmental Protection Agency.
D. FmHA will obtain a non-pollution certificate from the ------------
(state) ------------ (agency).
E. FmHA will make monthly inspections.
F. Contract change orders will not become effective until approved by
FmHA.
G. Final inspection will be conducted by FmHA.
A. Financial Management of the project shall be according to FmHA
Instruction 1942-A.
B. FmHA will provide the ------------ Regional Commission with a copy
of the audit report.
C. If actual costs fall below the costs on which the grant was
calculated, the Federal and non-Federal shares will be reduced
proportionately.
D. FmHA will conform to the financial reporting requirements for
transferred funds as required by the attached copy of ''Reporting of
Funds Transfer by Participating Agencies.''
Services rendered by FmHA for the processing and administration of
Commission grants in cases where neither FmHA loan nor grant funds are
involved shall be on a reimburseable basis. Reimbursement will be based
on five percent (5%) of the amount of the grant up to $50,000 and an
additional one percent (1%) of any amount over the first $50,000 of the
Commission grant. The full amount of the reimbursement will be
transferred to FmHA at the time the grant funds are transferred to FmHA.
VI No provisions in this agreement shall abrogate the legal
reguirements of administrative responsibilities as set forth in the
Consolidated Farm and Rural Development Act or Section 509 of the Public
Works and Economic Development Act of 1965, as amended.
For the ------------ Regional Commission.
----------------
(name) Federal Cochairman -------- , 19 -- .
For the Farmers Home Administration, USDA
----------------
(name) State Director -------- ,19 -- .
07 CFR 1942.385 Pt. 1942, Subpt. H, Exh. C
07 CFR 1942.385 Exhibit C -- Association Water or Sewer System Grant
Agreement
United States Department of Agriculture
Farmers Home Administration
This Agreement dated ------------ , 19 -- , between
a public corporation organized and operating under
(Authorizing Statute)
herein called ''Grantee,'' and the United States of America acting
through the Farmers Home Administration, Department of Agriculture,
herein called ''Grantor,'' WITNESSETH:
WHEREAS
Grantee has determined to undertake a project of acquisition,
construction, enlargement, or capital improvement of a (water) (sewer)
system to serve the area under its jurisdiction at an estimated cost of
$ ---------- and has duly authorized the undertaking of such project.
Grantee is able to finance not more than $ ---------- of the
development costs through revenues, charges, taxes or assessments, or
funds otherwise available to Grantee resulting in a reasonable user
charge.
Said sum of $ ---------- has been committed to and by Grantee for
such project development costs.
Grantor has agreed to grant the Grantee a sum not to exceed $
---------- or ---------- percent of said development costs, whichever is
the lesser, subject to the terms and conditions established by the
Grantor. Provided, however, that the proportionate share of any grant
funds actually advanced and not needed for grant purposes shall be
returned immediately to the Grantor. The Grantor may terminate the
grant in whole, or in part, at any time before the date of completion,
whenever it is determined that the Grantee has failed to comply with the
Conditions of the grant.
NOW, THEREFORE, In consideration of said grant by Grantor to Grantee,
to be made pursuant to Section 306(a) of The Consolidated Farm and Rural
Development Act for the purpose only of defraying a part not to exceed
------ percent of the development costs, as defined by applicable
Farmers Home Administration instructions.
A. Cause said project to be constructed within the total sums
available to it, including said grant, in accordance with the project
plans and specifications and any modifications thereof prepared by
Grantee and approved by Grantor.
B. Permit periodic inspection of the construction by a representative
of Grantor during construction.
C. Manage, operate and maintain the system, including this project if
less than the whole of said system, continuously in an efficient and
economical manner.
D. Make the services of said system available within its capacity to
all persons in Grantee's service area without discrimination as to race,
color, religion, sex, national origin, age, marital status, or physical
or mental handicap (possess capacity to enter into legal contract for
services) at reasonable charges, including assessments, taxes, or fees
in accordance with a schedule of such charges, whether for one or more
classes of service, adopted by resolution date ------------ , 19 -- , as
may be modified from time to time by Grantee. The initial rate schedule
must be approved by Grantor. Thereafter, Grantee may make such
modifications to the rate system as long as the rate schedule remains
reasonable and nondiscriminatory.
E. Adjust its operating costs and service charges from time to time
to provide for adequate operation and maintenance, emergency repair
reserves, obsolescence reserves, debt service and debt service reserves.
F. Expand its system from time to time to meet reasonably anticipated
growth or service requirements in the area within its jurisdiction.
G. Provide Grantor with such periodic reports as it may require and
permit periodic inspection of its operations by a representative of the
Grantor.
H. To execute Form FmHA 400-1, ''Equal Opportunity Agreement,'' and
to execute Form FmHA 400-4, ''Nondiscrimination Agreement,'' and to
execute any other agreements required by Grantor which Grantee is
legally authorized to execute. If any such form has been executed by
Grantee as a result of a loan being made to Grantee by Grantor
contemporaneously with the making of this grant, another form of the
same type need not be executed in connection with this grant.
I. Upon any default under its representations or agreements set forth
in this instrument, Grantee, at the option and demand of Grantor, will
repay to Grantor forthwith the original principal amount of the grant
stated hereinabove with the interest at the rate of 5 percentum per
annum from the date of the default. Default by the Grantee will
constitute termination of the grant thereby causing cancellation of
Federal assistance under the grant. The provisions of this Grant
Agreement may be enforced by Grantor, at its option and without regard
to prior waivers by it previous defaults of Grantee, by judicial
proceedings to require specific performance of the terms of this Grant
Agreement or by such other proceedings in law or equity, in either
Federal or State courts, as may be deemed necessary by Grantor to assure
compliance with the provisions of this Grant Agreement and the laws and
regulations under which this grant is made.
J. Return immediately to Grantor, as required by the regulations of
Grantor, any grant funds actually advanced and not needed by Grantee for
approved purposes.
K. Use the real property including land, land improvements,
structures, and appurtenances thereto, for authorized purposes of the
grant as long as needed.
1. Title to real property shall vest in the recipient subject to the
condition that the Grantee shall use the real property for the
authorized purpose of the original grant as long as needed.
2. The Grantee shall obtain approval by the Grantor agency for the
use of the real property in other projects when the Grantee determines
that the property is no longer needed for the original grant purposes.
Use in other projects shall be limited to those under other Federal
grant progrms or programs that have purposes consistent with those
authorized for support by the Grantor.
3. When the real property is no longer needed as provided in 1 and 2
above, the Grantee shall request disposition instructions from the
Grantor agency or its successor Federal agency. The Grantor agency
shall observe the following rules in the disposition instructions:
(a) The Grantee may be permitted to retain title after it compensates
the Federal Government in an amount computed by applying the Federal
percentage of participation in the cost of the original project to the
fair market value of the property.
(b) The Grantee may be directed to sell the property under guidelines
provided by the Grantor agency and pay the Federal Government an amount
computed by applying the Federal percentage of participation in the cost
of the original project to the proceeds from sale (after deducting
actual and reasonable selling and fix-up expenses, if any, from the
sales proceeds). When the Grantee is authorized or required to sell the
property, proper sales procedures shall be established that provide for
competition to the extent practicable and result in the highest possible
return.
(c) The Grantee may be directed to tansfer title to the property to
the Federal Government provided that in such cases the Grantee shall be
entitled to compensation computed by applying the Grantee's percentage
of participation in the cost of the program or project to the current
fair market value of the property.
This Grant Agreement covers the following described real property
(use continuation sheets as necessary).
L. Abide by the following conditions pertaining to nonexpendable
personal property which is furnished by the Grantor or acquired wholly
or in part with grant funds. Nonexpendable personal property means
tangible personal property having a useful life of more than one year
and an acquisition cost of $300 or more per unit. A Grantee may use its
own definition of nonexpendable personal property provided that such
definition would at least include all tangible personal property as
defined above.
1. Use of nonexpendable property.
(a) The Grantee shall use the property in the project for which it
was acquired as long as needed. When no longer needed for the original
project, the Grantee shall use the property in connection with its other
Federally sponsored activities, if any, in the following order of
priority:
(1) Activities sponsored by the FmHA.
(2) Activities sponsored by other Federal agencies.
(b) During the time that nonexpendable personal property is held for
use on the project for which it was acquired, the Grantee shall make it
available for use on other projects if such other use will not interfere
with the work on the project for which the property was originally
acquired. First preference for such other use shall be given to FmHA
sponsored projects. Second preference will be given to other Federally
sponsored projects.
2. Disposition of nonexpendable property. When the Grantee no longer
needs the property as provided in paragraph (a) above, the property may
be used for other activities in accordance with the following standards:
(a) Nonexpendable property with a unit acquisition cost of less than
$1,000. The Grantee may use the property for other activities without
reimbursement to the Federal Government or sell the property and retain
the proceeds.
(b) Nonexpendable personal property with a unit acquisition cost of
$1,000 or more. The Grantee may retain the property for other uses
provided that compensation is made to the original Grantor agency or its
successor. The amount of compensation shall be computed by applying the
percentage of Federal participation in the cost of the original project
or program to the current fair market value of the property. If the
Grantee has no need for the property and the property has further use
value, the Grantee shall request disposition instructions from the
original Grantor agency.
The Grantor agency shall determine whether the property can be used
to meet the agency's requirements. If no requirement exists within that
agency, the availability of the property shall be reported, in
accordance with the guidelines of the Federal Property Management
Regulations (FPMR), to the General Services Administration by the
Grantor agency to determine whether a requirement for the property
exists in other Federal agencies. The Grantor agency shall issue
instructions to the Grantee no later than 120 days after the Grantee
requests and the following procedures shall govern:
(1) If so instructed or if disposition instructions are not issued
within 120 calendar days after the Grantee's request, the Grantee shall
sell the property and reimburse the Grantor agency an amount computed by
applying to the sales proceeds the percentage of Federal participation
in the cost of the original project or program. However, the Grantee
shall be permitted to deduct and retain from the Federal share $100 or
ten percent of the proceeds, whichever is greater, for the Grantee's
selling and handling expenses.
(2) If the Grantee is instructed to ship the property elsewhere the
Grantee shall be reimbursed by the benefitting Federal agency with an
amount which is computed by applying the percentage of the Grantee
participation in the cost of the original grant project or program to
the current fair market value of the property, plus any reasonable
shipping or interim storage costs incurred.
(3) If the Grantee is instructed to otherwise dispose of the
property, the Grantee shall be reimbursed by the Grantor agency for such
costs incurred in its disposition.
3. The Grantee's property management standards for nonexpendable
personal property shall also include:
(a) Property records which accurately provide for: a description of
the property; manufacturer's serial number or other identification
number; acquisition date and cost; source of the property; percentage
(at the end of budget year) of Federal participation in the cost of the
project for which the property was acquired; location, use and
condition of the property and the date the information was reported;
and ultimate disposition data including sales price or the method used
to determine current fair market value if the Grantee reimburses the
Grantor for its share.
(b) A physical inventory of property shall be taken and the results
reconciled with the property records at least once every two years to
verify the existence, current utilization, and continued need for the
property.
(c) A control system shall be in effect to insure adequate safeguards
to prevent loss, damage, or theft of the property. Any loss, damage, or
theft of nonexpendable property shall be investigated and fully
documented.
(d) Adequate maintenance procedures shall be implemented to keep the
property in good condition.
(e) Proper sales procedures shall be established for unneeded
property which would provide for competition to the extent practicable
and result in the highest possible return.
This Grant Agreement covers the following described nonexpendable
property (use continuation sheets as necessary).
M. Provide Financial Management Systems which will include:
1. Accurate, current, and complete disclosure of the financial
results of each grant. Financial reporting will be on an accrual basis.
2. Records which identify adequately the source and application of
funds for grant-supported activities. Those records shall contain
information pertaining to grant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays, and income.
3. Effective control over and accountability for all funds, property
and other assets. Grantees shall adequately safeguard all such assets
and shall assure that they are used solely for authorized purposes.
4. Accounting records supported by source documentation.
N. Retain financial records, supporting documents, statistical
records, and all other records pertinent to the grant for a period of at
least three years after grant closing except that the records shall be
retained beyond the three-year period if audit findings have not been
resolved. Microfilm copies may be substituted in lieu of original
records. The Grantor and the Comptroller General of the United States,
or any of their duly authorized representatives, shall have access to
any books, documents, papers, and records of the Grantee's government
which are pertinent to the specific grant program for the purpose of
making audits, examinations, excerpts and transcripts.
O. Provide information as requested by the Grantor to determine the
need for and complete any necessary Environmental Impact Statements.
P. Provide an audit report prepared in sufficient detail to allow the
Grantor to determine that funds have been used in compliance with the
proposal, any applicable laws and regulations and this Agreement.
Q. Agree to account for and to return to Grantor interest earned on
grant funds pending their disbursement for program purposes when the
Grantee is a unit of local government. States and agencies or
instrumentalities of states shall not be held accountable for interest
earned on grant funds pending their disbursement.
R. Not encumber, transfer or dispose of the property or any part
thereof, furnished by the Grantor or acquired wholly or in part with
Grantor funds without the written consent of the Grantor except as
provided in item K above.
S. To include in all contracts for construction or repair a provision
for compliance with the Copeland ''Anti-Kick Back'' Act (18 U.S.C. 874)
as supplemented in Department of Labor regulations (29 CFR, Part 3).
The Grantee shall report all suspected or reported violations to the
Grantor.
T. In construction contracts in excess of $2,000 and in other
contracts in excess of $2,500 which involve the employment of mechanics
or laborers, to include a provision for compliance with Sections 103 and
107 of the Contract Work Hours and Safety Standards Act (40 U.S.C.
327-330) as supplemented by Department of Labor regulations (29 CFR,
Part 5).
U. To include in all contracts in excess of $100,000 a provision that
the contractor agrees to comply with all the requirements of Section 114
of the Clean Air Act (42 U.S.C. 1875C-9) and Section 308 of the Water
Pollution Control Act (33 U.S.C. 1318) relating to inspection,
monitoring, entry, reports, and information, as well as all other
requirements specified in Section 114 of the Clean Air Act and Section
308 of the Water Pollution Control Act and all regulations and
guidelines issued thereunder after the award of the contract. Such
regulations and guidelines can be found in 40 CFR 15.4 and 40 FR 17126
dated April 16, 1975. In so doing the Contractor further agrees:
1. As a condition for the award of contract, to notify the Owner of
the receipt of any communication from the Environmental Protection
Agency (EPA) indicating that a facility to be utilized in the
performance of the contract is under consideration to be listed on the
EPA list of Violating Facilities. Prompt notification is required prior
to contract award.
2. To certify that any facility to be utilized in the performance of
any nonexempt contractor subcontract is not listed on the EPA list of
Violating Facilities pursuant to 40 CFR 15.20 as of the date of contract
award.
3. To include or cause to be included the above criteria and the
requirements in every nonexempt subcontract and that the Contractor will
take such action as the Government may direct as a means of enforcing
such provisions.
As used in these paragraphs the term ''facility'' means any building,
plan, installation, structure, mine, vessel or other floating craft,
location, or site of operations, owned, leased, or supervised by a
Grantee, cooperator, contractor, or subcontractor, to be utilized in the
performance of a grant, agreement, contract, subgrant, or subcontract.
Where a location or site of operation contains or includes more than one
building, plant, installation, or structure, the entire location shall
be deemed to be a facility except where the Director, Office of Federal
Activities, Environmental Protection Agency, determines that independent
facilities are co-located in one geographical area.
A. Will make available to Grantee for the purpose of this Agreement
not to exceed $ ------------ which it will advance to Grantee to meet
not to exceed ---- percent of the development costs of the project in
accordance with the actual needs of Grantee as determined by Grantor.
B. Will assist Grantee, within available appropriations, with such
technical assistance as Grantor deems appropriate in planning the
project and coordinating the plan with local official comprehensive
plans for sewer and water and with any State or area plans for the area
in which the project is located.
C. At its sole discretion and at any time may give any consent,
deferment, subordination, release, satisfaction, or termination of any
or all of Grantee's grant obligations, with or without valuable
consideration, upon such terms and conditions as Grantor may determine
to be (1) advisable to further the purpose of the grant or to protect
Grantor's financial interest therein and (2) consistent with both the
statutory purposes of the grant and the limitations of the statutory
authority under which it is made.
This Agreement may be terminated for cause in the event of default on
the part of the Grantee as provided in paragraph I above or for
convenience of the Grantor and Grantee prior to the date of completion
of the grant purpose. Termination for convenience will occur when both
the Grantee and Grantor agree that the continuation of the project will
not produce beneficial results commensurate with the further expenditure
of funds.
In witness whereof Grantee on the date first above written has caused
these presence to be executed by its duly authorized
------------------------ and attested and its corporated seal affixed by
its duly authorized
------------------------------------------
------------------------------------------
Attest:
------------------------------------------
By ------------------------------------
By ------------------------------------
(Title) ------------------------------------
(Title) ------------------------------------
UNITED STATES OF AMERICA
FARMERS HOME ADMINISTRATION
By ------------------------------------
(Title) ------------------------------------
07 CFR 1942.385 Pt. 1942, Subpt. H, Exh. D
07 CFR 1942.385 Exhibit D -- Regulations for Grant Approvals Utilizing
Funds Made Available Under Pub. L. 98-8
(a) This Exhibit outlines the policies and authorizations and sets
forth the procedures for making and processing grants to assist in
financing the development cost of domestic water and waste disposal
systems to rural communities and other associations of farmers,
ranchers, rural residents, and other rural users. Farmers Home
Administration (FmHA) will maintain continuous liaison and coordination
with State and substate planning district officials. FmHA shall
cooperate fully with appropriate State agencies in making grants in a
manner which will assure maximum support of the State's strategies for
development of rural areas. State and substate A-95 agencies may
recommend priorities for applications. FmHA will give due consideration
to all A-95 agency review comments and priority recommendations in
selecting applications for funding. FmHA State Directors are reminded
that funds allocated for use as prescribed in this subpart are to be
considered for use by Indian tribes within the State regardless of
whether State development strategies include Indian reservations within
the State's boundaries. It is essential that Indians residing on such
reservations have equal opportunity to participate in the benefits of
these programs on as equal a basis as other residents of the State.
This is intended to include an equal application of the outreach
activities of FmHA County and District Offices.
(b) It is the policy that the County Office will normally be the
entry point for preapplications and serve as the local contact point.
However, applications will be filed and grants will be processed to the
maximum extent possible by the District Office staff. The State Office
staff will monitor grant making and servicing and will provide
assistance to District Office personnel to the extent necessary to
assure that the activities are being accomplished in an orderly manner
consistent with FmHA regulations. The District Director will supply
information on grant activity within the County Office service area to
the County Supervisor at key points throughout the grant making process.
(c) It is the policy of FmHA to extend its financial program without
regard to race, color, religion, sex, national origin, marital status,
age, or physical/mental handicap (possess capacity to enter into legal
contract.)
(a) Preapplications and applications for water and waste disposal
development grants will be processed in accordance with 1942.2 of
Subpart A of Part 1942 of this chapter.
(b) Grant dockets will be prepared in accordance with this Subpart
and applicable portions of 1942.17, 1942.18 and 1942.19 of Subpart A
of Part 1942 of this chapter.
(a) Eligibility. Applicant eligibility shall be determined in
accordance with 1942.17(b) of Subpart A of Part 1942. Also grants
shall not be made in connection with any project unless the project:
(1) Will serve a rural area which, if such project is carried out, is
not likely to decline in population below that for which the project was
designed.
(2) Is designed and constructed so that adequate capacity will or can
be made available to serve the present population of the area to the
extent feasible and to serve the reasonably foreseeable growth needs of
the area. Also, water systems must have sufficient capacity to provide
for reasonable fire protection.
(3) Is necessary for orderly community development consistent with a
comprehensive community water, waste disposal, or other development plan
of the rural area in which the project is located.
(b) Applicant priorities. Preference for grant funds will be given
to applicants and projects in accordance with 1942.17(c) (1) and (2) of
Subpart A of Part 1942 of this chapter.
Funds may be used only for the following purposes:
(a) Domestic and water waste facilities -- install and improve
community domestic water and waste disposal facilities including:
(1) Facilities for the development, storage, treatment, purification
and distribution of water.
(2) Sanitary sewer facilities including collection lines, treatment
plants, outfall lines, disposal fields, and stabilization ponds.
(3) Storm sewers for the collection and disposal of surface drainage.
(4) Solid waste disposal projects including facilities for the
collection, treatment, or disposal of human, animal, agricultural and
other wastes. Items such as garbage trucks and equipment, sanitary
landfills, and incinerators are included.
(b) Purchase or rent equipment necessary to extend, protect, develop
or utilize facilities. Such purchases or rentals must be necessary to
provide efficient service, to enable the facility to remain in
operation, and to fulfill the purposes and intent of the loan and/or
grant. However, funds may not be used to pay any annually recurring
costs, including purchases or rentals, that are normally considered to
be operation and maintenance expenses.
(c) Acquire land and rights. Acquiring land, interest in land, and
rights such as water rights, leases, permits, right-of-way, and other
evidence of land or water control which are necessary for development of
the facility.
(d) Buildings, fences, secondary facilities, and relocation.
(1) Construct buildings of modest design, size, and cost, and fences
essential to the successful operation or protection of authorized
facilities and to provide storage for tools and supplies needed to
operate the facility.
(2) Construct secondary facilities such as gas or electric service
lines to convey fuel or energy for, or utilities for, primary
facilities.
(3) Construct or relocate roads, bridges, utilities, fences, and
other public improvements or relocate roads, bridges, utilities, fences,
and other private improvements.
(e) Services and fees. Pay costs incidental to establishment of such
facilities or for services necessary to accomplish any of the above
purposes, including, but not limited to:
(1) Paying fees or other legal expenses of establishing water rights
through appropriation, agreement, permit, or court decree.
(2) Paying for other services necessary in planning and completing
the facilities to be financed.
(3) Acquiring a water supply by purchasing of water stock or
membership in a water users association.
(f) FmHA grant funds may be used on projects where other types of
financial assistance are available on all or part of the project,
provided the other assistance is on reasonable rates and terms. In such
cases the maximum percentages allowed under other agencies' authorities
will apply to their participation in the project. However, the FmHA
grant may not exceed seventy-five percent (75%) of the eligible project
development cost. The need for FmHA grant funds must meet the
requirement of paragraph VI of this Exhibit after considering all
project financing.
(a) Grant funds may not be used to:
(1) Pay for the construction of any new combined storm and sanitary
sewer facilities.
(2) Pay any annually recurring costs that are generally considered to
be operation and maintenance expenses.
(3) Construct or repair electric generating plants, electric
transmission lines, or gas distribution lines to provide services for
commercial sale.
(4) Purchase fire trucks, hoses, and other firefighting equipment or
construct housing for such equipment.
(5) Pay rental for the use of equipment or machinery owned by the
association.
(6) Pay for salesrooms or other purposes not directly related to
operation and maintenance of the facility being installed or improved.
(7) Purchase existing systems.
(8) Refinance existing indebtedness.
(9) Pay any portion of the cost of a facility when the annual reserve
based on a typical year exceeds one-tenth of the average annual debt
service requirement unless State regulatory agencies require a larger
reserve, or when it is anticipated that facility replacement costs on a
relatively short-term basis will require a higher reserve.
(10) Pay interest.
(11) Pay any portion of the cost of a facility which is not located
in a rural area.
(b) An FmHA development grant may not be made in excess of
seventy-five percent (75%) of the eligible project development costs.
Facilities previously installed will not be considered in determining
the development costs.
(a) FmHA District Directors are responsible for determining applicant
eligibility for grants and the amount of such grants. Form FmHA
1942-51, ''Water and Waste Disposal Development Grant Summary,'' will be
used to determine the amount of FmHA grant assistance for which the
applicant qualifies. A separate form will be used to record the
determination of FmHA grant assistance for each water, sewer collection
and treatment, solid waste, and storm drainage project. A copy of each
such form along with the letter of conditions and Form FmHA 1942-45,
''Project Summary -- Water and Waste Disposal and Other Utility-Type
Projects,'' will be submitted to the National Office, Attention: Water
and Waste Disposal Loan Division by the State Director not later than
the time of issuance of the letter of conditions.
(b) Grants will be used for water and waste disposal projects serving
the most financially needy communities to reduce user costs to a
reasonable level for farmers, ranchers, and rural residents. Other
rural users whose needs are met or, if there is no meter, could be met
by a single residential-size water meter may also be considered
eligible. For example, a user on a waste system may be considered for a
grant when the water needs of the waste user are met or could be met by
such residential-size meter. This method of computing grants will be
used for all water and waste disposal projects. Reasonable user rate is
defined as that which is not less than existing prevailing rates in
communities being served by an established system constructed at similar
cost per user and having similar economic conditions. User costs shall
include charges, taxes, and assessments attributable to the project. An
exception to the reasonable user rate may be granted by the FmHA
National Office in justifiable cases for areas of extremely low income
when it is necessary to meet the needs of a particular community. Such
an exception will only be considered when comparable systems are not
available or the user rates from the comparable systems appear to be too
high for the average user of the applicant, and the median income in the
applicant service area is less than $4,000. When it is determined that
such an exception should be considered, the FmHA State Director will
submit information to the National Office concerning health conditions
of the area, median income of the service area, and user rates and
median incomes of other like or most similar communities in the region,
employment conditions, and any other information to justify the
recommendation for the exception.
(1) Grants may not exceed seventy-five percent (75%) of the eligible
project development costs listed in paragraph IV of this Exhibit.
(2) Ordinarily, an applicant will be considered for grant assistance
only when the debt service portion of the average annual user cost for
either water or waste service, for only those users in the applicant
service area, exceeds the following percentages of median incomes:
(i) .75 percent when the median income is under $6,000.
(ii) 1.00 percent when the median income is $6,000 to $10,000.
(iii) 1.25 percent when the median income is over $10,000.
Median income will be determined in accordance with paragraph
VI(b)(6). Except as provided for in paragraphs VI(b) and (b)(4), the
grant will be limited to an amount necessary to reduce the debt service
portion of the user cost to the applicable percent level listed above.
If the median income is not available, the average income may be used.
This procedure shall not be used to result in a rate below that deemed
to be reasonable as defined in paragraph VI(b). However, an exception
to the reasonable user rate may be authorized by the FmHA National
Office in accordance with paragraph VI(b).
(3) When the applicant will be furnishing bulk service to rural
residents served by another system, a grant to such applicant may also
be considered for an amount to reduce the user costs on a similar basis
as provided in this paragraph for users of such other system. An
agreement between the applicant and the other system (entity) will be
obtained that clearly shows that the benefit of the grant will accrue
only to the users intended to be benefited by the grant. For purposes
of grant determination, all other systems which will receive bulk
service may either:
(i) Be considered as part of the total by averaging the median
incomes of the systems involved and averaging the debt service portion
for the particular service of the other systems; or
(ii) Consider the median income and the debt service portion for the
particular service for each entity separately.
(4) If, after applying the formula described in paragraph (VI)(b)(2),
FmHA determines that a reasonable user cost has not been achieved due to
unusually high operation and maintenance costs, construction or water
acquisition costs, or other factors, FmHA may proceed with a grant in an
amount necessary to reduce the user cost to not below a reasonable level
as defined in paragraph VI(b). However, an exception to the reasonable
user rate may be authorized by the FmHA National Office in accordance
with paragraph VI(b).
(5) If, after applying the formula described in paragraph (VI)(b)(2),
FmHA determines that a reasonable average annual cost to the applicant
for delivery of service to residential type users has not been achieved,
FmHA may proceed with a grant in an amount necessary to reduce such cost
to not below a reasonable user rate as defined in paragraph (VI)(b)
provided this option is only available to an applicant that imposes
uniform user charges for similar classes of service throughout their
service area. Reasonable average annual cost to the applicant is
defined as that which is not less then existing prevailing costs in
communities, being served by an established system, having similar
economic conditions.
(6) The median income in the applicant community or those reference
communities used in comparing the proposed system with similar systems
will be determined by the FmHA District Director as follows:
(i) The median income will be determined from the U.S. Department of
Commerce, Bureau of Census, Publication PC (1)-C series or from reliably
extracted unpublished Bureau of Census data for individual enumeration
Districts; or
(ii) For those projects where the FmHA District Director has reason
to elieve that the census data is not an accurate representation of the
median income within the area to be served, the District Director may
determine the median income taking into consideration the following:
(A) Data from responsible public or private sources.
(B) The District Director's knowledge of the community based on
availability FmHA data gained through individual loans.
(C) The results of a survey conducted by the applicant.
(D) By using a combination of the above.
(7) Preliminary engineering reports and suggested operating budgets
included herein will be prepared without taking a grant into
consideration.
(a) When an FmHA loan and grant are being processed simultaneously,
the application review and approval procedures outlined in 1942.5 of
Subpart A of Part 1942 will be followed. Grants will be approved in
accordance with this Exhibit and FmHA Instruction 1901-A which is
available in any FmHA Office. When a grant only (no FmHA loan) is being
made, only those provisions will apply which are necessary to assure:
(1) That the proposed development is completed in accordance with
approved plans and specifications.
(2) That grant funds are expended for authorized purposes.
(3) That the terms of the grant agreement are complied with.
(b) Each letter of conditions involving a grant will contain the
following:
(1) An item which reads:
''You shall execute the attached Form FmHA 1942-31, 'Association
Water or Sewer System Grant Agreement.'''
(2) All items contained in 1942.5(a)(1) of Subpart A of Part 1942 of
this chapter applicable to the grant funding.
(3) Other relative requirements.
When the grant approval official requires an appraisal, Form FmHA
442-10, ''Appraisal Report -- Water and Waste Disposal System,'' with
appropriate supplements may be used. Appraisal reports will be prepared
by the FmHA engineer or, if desired by the grant approval official,
another qualified appraiser.
The requirements of 1942.17 (1) and (3) of Subpart A of Part 1942 of
this chapter will be followed when concurring in agreements between
grantees and third parties.
(a) FmHA State Directors are authorized to approve grants being made
in accordance with this Exhibit and Exhibit B of FmHA Instruction 1901-A
which is available in any FmHA Office.
(b) State Directors may obligate funds including Regional Commission
grant funds when they are available, in accordance with 1942.5(d) of
Subpart A of Part 1942 of this chapter.
Section 1942.6 of Subpart A of Part 1942 of this chapter will be
followed when preparing for grant closing.
(a) Grants will be closed in accordance with instructions received
from the Office of the General Counsel (OGC). FmHA policy is not to
disburse grant funds from the Treasury until they are actually needed by
the applicant. Borrower funds will be disbursed before the disbursal of
any FmHA grant funds.
(1) FmHA loan funds will be disbursed before the disbursal of any
FmHA grant funds except when:
(i) Interim financing of the total FmHA loan amount is arranged,
(ii) All interim funds have been disbursed, and
(iii) FmHA grant funds are needed before the FmHA loan can be closed.
(2) The FmHA loan should be closed as soon as possible after the
disbursal of all interim funds; however, the loan should be closed no
later than construction completion. If grant funds are available from
other agencies and are transferred to the Finance Office for
disbursement by FmHA, these grant funds shall be disbursed in accordance
with the agreement governing such agencies' participation in the grant.
Any grant funds remaining will be handled in accordance with
1942.17(p)(6) of Appendix A of Subpart A of Part 1942.
(b) FmHA grant funds will be disbursed by using multiple advances in
accordance with 1942.17(p)(2) of Subpart A of Part 1942.
(c) Form FmHA 1942-31 will be completed and executed in accordance
with the requirements of approval and closing instructions. Both
District Directors and State Directors are authorized to sign the grant
agreement on behalf of FmHA. For grants that supplement FmHA loan
funds, the grant should be closed simultaneously with the closing of the
loan. However, when grant funds will be disbursed before loan closing
as provided for in paragraph XII(a)(1) the grant will be closed not
later than the delivery date of the first advance of grant funds. The
grant will be considered closed when Form FmHA 1942-31 has been properly
executed. Incorporated as a part of this regulation is Form FmHA
1942-31 which appears as Exhibit C to Subpart H of Part 1942 in the
Federal Register.
Planning and performing development will be handled in accordance
with 1942.9 and 1942.18 of Subpart A of Part 1942 of this chapter.
Section 1942.8 of Subpart A of Part 1942 of this chapter will be
followed for water and waste disposal development grants.
Grants will be serviced in accordance with Subpart E of Part 1951 of
this Chapter.
The District Director or State Director may prepare and execute Form
FmHA 1940-10, ''Cancellation of U.S. Treasury Check and/or Obligation,''
in accordance with the Forms Manual Insert. If the docket has been
forwarded to OGC, that office will be notified of the cancellation by a
copy of Form FmHA 1940-10. The borrower's attorney and engineer, if
any, should be notified of the cancellation. The borrower's attorney
and engineer may be provided with a copy of the notification to the
applicant.
Subsequent grants will be processed in accordance with this Exhibit.
Grants are sometimes made by regional commissions for projects
eligible for FmHA assistance. FmHA has agreed to administer such funds
in a manner similar to FmHA assistance.
(a) When FmHA has funds in the project, no charge will be made for
administering commission funds.
(b) When FmHA has neither loan nor grant funds in the project, an
administrative charge will be made pursuant to the Economy Act of 1932
(31 U.S.C. 686). A fee of five percent (5 percent) of the first $50,000
of a regional commission grant and one percent (1 percent) of any amount
over $50,000 will be paid FmHA by the commission.
(1) Appalachian Regional Commission. Exhibit A of Subpart of H of
Part 1942 will be followed in determining the responsibilities of FmHA.
The Federal Cochairman and the State Director will provide each other
with the necessary notification and certification.
(2) Other regional commissions. Title V of the Pubic Works and
Economic Development Act of 1965 authorizes other commissions similar to
the Appalachian Regional Commission. Exhibit B of Subpart H of Part
1942 of this chapter will be used to develop a project management
agreement between FmHA and the commission separately for each project.
The agreement should be prepared by the FmHA State Director as soon as
notification is received that a commission grant will be made and the
amount is confirmed.
(c) Regional commission grants should be obligated as soon as
possible in accordance with 1942.5(d) of Subpart A of Part 1942 of this
chapter, except that the announcement procedure refered to in
1942.5(d)(6) is not applicable. Regional commission grants will be
obtained from the Finance Office in the same manner as FmHA funds are
obtained.
Grant recipients will be supervised to the extent necessary to assure
that facilities are constructed in accordance with approved plans and
specifications and to assure that funds are expended for approved
purposes.
This Exhibit may be supplemented by State Supplements and guides in
accordance with 1942.16 of Subpart A of 1942 of this chapter.
The State Director is responsible for implementing the authorities
contained in this Exhibit and may redelegate such authority to
appropriate FmHA employees.
((7 U.S.C. 1989) Title I of Pub. L. 98-8; 7 CFR 2.23, 2.70)
(48 FR 20218, May 5, 1983, as amended at 50 FR 7327, Feb. 22, 1985)
07 CFR 1942.385 Subpart I -- Resource Conservation and Development
(RCD) Loans and Watershed (WS) Loans and Watershed Advances
Source: 43 FR 28442, June 30, 1978, unless otherwise noted.
07 CFR 1942.401 Purpose.
This subpart prescribes Farmers Home Administration (FmHA) policies
and procedures for making:
(a) Watershed (WS) loans and watershed (WS) advances for works of
improvement in a watershed project, and
(b) Resource conservation and development (RCD) loans for measures or
projects needed to implement the RCD area plan to achieve objectives in
an RCD area.
07 CFR 1942.402 Policy.
(a) FmHA will make WS and RCD loans available to sponsoring local
public bodies, agencies, and nonprofit organizations to assist them in
obtaining the local cost of WS works of improvement and RCD measures.
FmHA will assist the local sponsors and the Soil Conservation Service
(SCS) in making loans from SCS construction funds as WS advances when
needed for the development of future water supplies or for site
preservation.
(b) FmHA will coordinate application processing with the SCS and
other appropriate State and Federal agencies.
(43 FR 28442, June 30, 1978, as amended at 48 FR 29120, June 24,
1983)
07 CFR 1942.403 Authorities, responsibilities and delegation of
authority.
(a) SCS provides technical and financial assistance to sponsoring
local organizations for developing WS and RCD area plans and for
individual RCD measures or projects and watershed works of improvement.
The watershed work plan for developing, operating, and maintaining
watershed works of improvement must be agreed upon by sponsoring local
organizations and SCS. When approved, it is the basis for extending
technical and cost-sharing assistance from watershed funds. The RCD
area plan is prepared for the development of the RCD area by sponsoring
local organizations with assistance from SCS and other agencies,
endorsed by the Governor or by the agency designated by the Governor,
and accepted by the Secretary of Agriculture or his delegate. It
includes objectives, planned courses of action, and RCD measures or
projects to be developed. It is amended as necessary to include
continuing activities and needs in the RCD area.
(b) FmHA receives and processes applications for WS loans and SCS WS
advances and RCD loans and makes and services such loans and advances.
WS loans are made by FmHA from either Pub. L. 534 (78th Cong.) funds
authorized in the Flood Control Act of 1944 or Pub. L. 566 (83d Cong.)
funds authorized in the Watershed Protection and Flood Prevention Act of
1954 to cover a part or all of the local cost for a watershed work of
improvement.
(c) WS loans and WS advances may be made to project sponsors in
watershed project areas for which:
(1) A watershed work plan has been approved administratively or by
resolutions adopted by the Committee on Agriculture and Forestry of the
Senate and by the Committee on Agriculture of the House of
Representatives, and
(2) Federal assistance has been authorized for the installation of
works of improvement by the Administrator of SCS.
(d) RCD loans may be made in areas authorized for RCD program
assistance by the Secretary of Agriculture and for which an RCD plan
design or area plan has been accepted by the State SCS conservationist.
(e) Delegation of authority. The State director is authorized to
approve WS and RCD loans subject to limitations in FmHA instruction
1901-A and conditions of this subpart. The State director is authorized
to redelegate authority in accordance with this subpart to the chief,
community programs; or other members of the State office staff.
(f) SCS is responsible for providing technical and financial
assistance to sponsoring local organizations for planning and developing
WS and RCD areas. This includes development of WS and RCD plans and WS
works of improvement and RCD measures or projects.
(g) FmHA is responsible for making and servicing WS loans and
advances and RCD loans.
(h) The SCS -- FmHA agreements in exhibits A and B to this subpart
include further responsibilities and functions of SCS and FmHA in WS and
RCD areas.
07 CFR 1942.404 Definitions.
(a) Watershed (WS) project. An authorized area in which watershed
assistance from SCS and other U.S. Department of Agriculture (USDA)
agencies including WS loans and advances may be provided. Watershed
assistance is provided in two types of watershed projects identified by
the public law under which they are authorized.
(1) Pub. L. 534 Watershed. One of the eleven watersheds authorized
by Congress in the Flood Control Act of 1944, Pub. L. 78-534 as
amended.
(2) Pub. L. 566 Watershed. A small watershed of not more than
250,000 acres authorized in accordance with the Watershed Protection and
Flood Prevention Act, August 4, 1954, Pub. L. 83-566 as amended.
(b) Resource conservation and development (RCD) area. An area in
which RCD program assistance from SCS and other USDA agencies has been
authorized. It usually includes all or part of more than one county and
may be coterminous with substate planning and development areas. RCD
loans are authorized under section 32 of title III of the Bankhead-Jones
Farm Tenant Act (7 U.S.C. 1011).
(c) Watershed plan. A plan agreed upon by sponsoring local
organizations and the SCS for developing, operating, and maintaining
watershed works of improvement.
(d) R.C. & D. measure plan. A plan document for a land area,
directly controled or under the jurisdiction of the sponsoring public
bodies or public nonprofit organization. It involves one of the measure
purposes eligible for R.C. & D. cost-sharing assistance. The document
sets forth what will be done, how, when, and by whom, and involves R.C.
& D. technical and/or financial assistance.
(e) RCD area plan. A plan prepared by sponsoring local organizations
with assistance from SCS and other agencies for the development of the
RCD area which has been endorsed by the Governor or his designated
agency and accepted by the Secretary of Agriculture or his delegate. It
includes objectives, planned courses of action, and RCD measures to be
developed. It is amended as necessary to include continuing activities
and needs in the RCD area.
(f) Watershed works of improvement. Structural, nonstructural, and
land treatment measures included in a watershed plan which are to be
installed in a watershed project.
(g) RCD measure or project. An activity or development indicated in
the RCD area plan as being needed to achieve RCD area goals and
objectives.
(h) Cost sharing. The WS and RCD legislative authorities provide for
sharing certain costs of installing WS works of improvement or RCD
measures by the Federal Government and by sponsoring local
organizations. Federal cost sharing from WS and RCD funds is provided
by SCS for certain WS works of improvement and RCD measures.
Information on amounts, purposes, and procedures for cost sharing is
available from the SCS.
(i) Local cost. The part of the cost of a WS work of improvement or
a RCD measure or project that is to be paid by a sponsoring local
organization.
(j) Public agency or public body. A State agency or department or
instrumentality, county, municipality or other political subdivision or
instrumentality of a State or agencies or districts created by or
pursuant to State law for making improvement of a public nature or
providing public services such as soil and water conservation districts,
irrigation districts, drainage districts, flood prevention and control
districts, school districts, other special purpose districts, municipal
corporations, or similar governmental units.
(k) Nonprofit corporation. Mutual and other irrigation, water users,
water supply, drainage, or waste disposal companies or associations,
ditch companies, grazing, recreation and forestry associations, and
similar associations and organizations generally designated as private
corporations operating on a nonprofit basis. They may be organized and
chartered under special law, general nonprofit corporation law, or
general profit corporation law, if operated on a nonprofit basis under
adequate charter, bylaw, mortgage, or supplementary agreement provisions
which will assure continued operation in that manner.
(l) Sponsoring local organization. A local public agency or body or
a local nonprofit corporation having authority under State law to plan,
develop, maintain, and operate WS works of improvement or RCD measures
or projects included in a WS or RCD area plan. The name of the
sponsoring local organization must be included in the plan and
sponsorship must be evidenced by execution of the plan.
(m) Watershed loan. A loan made by FmHA from watershed funds to a
sponsoring local organization to develop a WS work of improvement.
(n) RCD loan. A loan made by FmHA from RCD funds to a local
sponsoring organization to develop a RCD measure or project. RCD loans
are made from RCD funds to enable sponsoring local organizations to
provide a part or all of the local share of cost for the RCD measure.
(o) Watershed advance. A loan made from SCS watershed construction
funds to develop a future water supply or for the preservation of a site
for a work of improvement authorized in a watershed plan.
(p) Future water supply. Water storage capacity in a reservoir with
related facilities for release or withdrawal of water to meet future
needs for municipal or industrial use.
(q) Preservation of sites. Acquisition to assure their availability
for planned developments. Land, easements, or rights-of-way essential
to preserve sites for watershed works of improvement or RCD measures.
07 CFR 1942.405 Eligibility.
To be eligible for a WS loan, WS advance, or an RCD loan, the
sponsoring local organization must meet the following requirements as
applicable. Questions on eligibility will be referred to the regional
attorney, OGC for legal advice prior to development of a loan docket.
(a) Be named in the WS or RCD plan as a sponsor of the development to
be financed.
(b) Be legally organized and established in the WS or RCD area with
legal authority, responsibility and capability to develop and operate
the facility for which assistance is requested.
(c) Have authority under and comply with Federal, State and local
laws on such matters as:
(1) Organizing, installing, operating, and maintaining proposed WS
work of improvement or RCD measures or projects.
(2) Borrowing money, giving security, levying taxes, making
assessments or raising revenues for operation and maintenance of the
facility and repayment of loans.
(3) Land use zoning.
(4) Acquiring necessary property, lands, and rights.
(5) Obtaining approval of construction plans and specifications by
appropriate Federal, State, and local agencies and construction
facilities.
(6) Health and sanitation standards, water pollution control, and
environmental regulations.
(7) Design and installation standards.
(8) Public service commission or similar State public body rules and
regulations.
(d) Be financially sound and capable of providing service essential
to the rural development needs of the area.
(e) If it is a nonprofit corporation:
(1) Membership should be broadly based and representative of the area
benefiting from the facility. Membership on the governing board of the
corporation will be limited to those living in the area to be benefited
unless for justifiable reasons the State director gives prior approval
for other than local residents to serve on the board of directors.
(2) The corporation must propose a facility which will primarily
serve or generate other substantial, tangible benefits for farmers and
other residents of the area. In the case of a recreational development
at least two-thirds of the membeship must be farmers and others residing
in the area.
(3) Nonprofit corporations will not be formed to serve an area which
could be served by a public agency which has adequate authority to
provide the needed service unless prior approval of the national office
is obtained.
07 CFR 1942.406 Loan purposes.
(a) WS and RCD loans. WS and RCD loans may be used for:
(1) Water development, storage, treatment and conveyance to farms for
irrigation and other farm use, including farmstead, livestock, orchard,
and crop spraying.
(2) Drainage systems and facilities in farm areas to sustain
agricultural production or protect farmers and rural residents from
water damage.
(3) Agricultural water management practices for annual streamflow
stabilization, recharging ground water reservoirs, and conserving water
supplies by management and control of vegetation along waterways and in
drainage basins.
(4) Soil conservation and water control facilities such as dikes,
terraces, detention reservoirs, stream channels, ditches, and other
special land treatment and stabilization measures needed to protect
farms and rural residents from water damage, provided such facilities
cannot be installed or imporved under, or will not conflict with, other
public programs such as those administered by the Corps of Engineers.
(5) Special treatment measures or equipment primarily, though not
exclusively, for flood prevention such as:
(i) Facilities and equipment for fire prevention and control.
(ii) Tree planting and establishment of other vegetative cover for
stabilizing critical runoff and sediment-producing areas.
(iii) Structural and vegetative measures to stabilize stream channels
and gullies.
(iv) Basic farm conservation practices to control runoff, erosion,
and sedimentation.
(6) Installing, repairing, and improving water storage facilities,
including outlets for immediate and future domestic, municipal and
industrial water supply and water quality management, and conveying
water to treatment facilities or distribution systems. When payment of
loans for such facilities are primarily dependent upon revenues from use
of water stored the loan approval official must determine the adequacy
of facility for use of the water before a loan is closed.
(7) Public water based recreation and fish and wildlife developer
loans will only be made to public bodies for the local share of cost for
such developments for which SCS is providing technical or financial
assistance from WS or RCD funds. Loans will not be made for
developments larger or more elaborate than that which is included in the
WS or RCD plan. Loans may include funds for:
(i) Construction of necessary water resource improvements such as
storage capacity in multipurpose and single purpose reservoirs, water
level control structures in reservoirs and streams, and stream channel
improvements necessary for the development of the facilities. This may
include practices for improvement of fish and wildlife habitat and
environment and related areas and facilities for proper protection and
management of the development.
(ii) Essential developments, improvements, equipment and facilities
for access, public health and safety, and efficient operation management
and maintenance; such as energy utilities, water supply and waste
disposal systems, maintenance buildings, fences, cattle guards, roads
and trails, parking, picnicking, camping, beaches, playgrounds, and
related shelters and equipment.
(iii) Special areas and structures such as forest and other
vegetative cover, marshes, pits, shelters and fish ladders to provide
protected natural spawning, breeding, nesting, and feeding for fish and
wildlife.
(8) Soil and water management for agriculture related pollutant
control. Measures to reduce agriculture-related pollutants that
adversely affect the community and the general public. Measures may
include, but are not limited to, holding ponds, debris basins,
diversions, terraces, and community distribution systems.
(9) Acquiring fee simple title to lands or perpetual easements, or
rights-of-way for sites for works of improvement or project measures and
related costs for removal, relocation, or replacement of existing
improvements including relocation payments for displaced persons,
business enterprises and facilities, and other related purposes. Funds
for land acquisition will be limited to costs necessary for WS works of
improvement or RCD measures. Final construction plans will indicate
minimum essential lands and rights-of-ways to be acquired. In some
cases, sponsoring local organizations may need to acquire lands in
excess of actual needs when it is expedient for planned development. If
the State director determines that the acquisition of excess land is
necessary or expedient for the orderly development of a WS works of
improvement, or RCD measure, he may authorize the action subject to the
following conditions:
(i) The applicant must agree to sell excess land as soon as
practicable and apply the proceeds, together with any income from excess
land, on the debt to FmHA.
(ii) The applicant must furnish legal evidence of authority to
acquire additional land and dispose of it as agreed.
(iii) Evidence must be provided to jusify acquisition of additional
land.
(iv) Easements for land or water resource protection structures must
be perpetual and must not include clauses that terminate the easement
with the dissolution or abandonment of the applicant organization. Loan
funds will not be used for an easement that deviates in any way from
that provided in the standard SCS form unless modifications of it are
approved by both SCS and FmHA.
(10) Acquisition of water supply or water right by purchase or by
appropriation under local, State, and Federal laws. The loan may
include funds for the purchase of land on which the water supply or
water right is presently being used when:
(i) The water supply or water right cannot be purchased without the
land, and
(ii) The value of the land is not the major portion of the cost, and
(iii) Any excess land thus acquired will be sold as soon as possible
and the proceeds applied on the loan.
(11) Purchase of equipment and machinery necessary for development
and operation of planned WS works of improvement or RCD measures or
projects including:
(i) Special-purpose equipment. Purchase or rent special-purpose
equipment to install or maintain any community facility in the above
categories or to establish on farms soil and water conservation measures
such as terraces, ponds, land leveling for irrigation or drainage,
subsoiling, seeding, tree planting, and removal of brush, scattered
trees, and stumps, provided:
(A) Such equipment is not otherwise available when needed.
(B) There is sufficient need and local demand to justify ownership or
rental.
(C) Rates to be charged include, among other things, an allowance for
depreciation, obsolescense, and replacement based upon the
recommendations of the equipment manufacturer or the experience of
contractors engaged in providing services for similar types of work.
(ii) Forestry equipment and services. Purchase or rent basic
special-purpose equipment, facilities, certain land or land rights, and
supplies needed for furnishing services for the establishment,
improvement, protection, and harvesting of timber (not processing)
suitable for lumber, pulp, poles or posts; providing that the forest
program and forest practices benefiting from such services are in
accordance with approved conservation practices for the development,
use, and control of water resources on farms and in forests.
Special-purpose equipment may include such items as tractors, bull
dozers, plows, planters, trucks, loaders, fire-fighting equipment, and
sprayers. Facilities may include such items as ponds and reservoirs,
pipelines, buildings for storage of equipment and supplies, nurseries,
access roads, fire lanes, and lookout towers. Supplies may include such
things as seed, seedlings, fertilizers, fencing, and pesticides. Land
or land-rights acquisition will be limited to that necessary for sites
for facilities listed above which are directly related to the forestry
program. Loans for these purposes may be made only when the equipment,
supplies, and facilities to be provided:
(A) Are not readily available when needed.
(B) Will be justified by local need and demand.
(C) Will be available to users at rates sufficient to cover loan
amortization, obsolescence, replacement, operation, and cost of
supplies.
(D) Will more efficiently serve the group through cooperative effort.
(12) Refinancing debt obligations of the sponsoring local
organization that were incurred before application for a WS or RCD loan
when that is not the primary purpose of the loan and:
(i) The debt being refinanced was for works of improvement or
measures for which loan funds could be used and,
(ii) The debt is a valid obligation of the sponsor and
(iii) Creditors will not modify payment terms on existing debts, and
the organization cannot pay existing debts and a loan from FmHA over the
same period of time.
(13) Long-term debts will not be refinanced unless necessary to
provide a sound basis for the loan or WS advance and concurrence is
obtained from the national office.
(14) If repayment is based on revenues, payment of interest
installments from loan funds (but not WS advances) until the facility is
generating enough revenue to make accrued interest payments. Loan funds
for interest payments will not exceed the estimated amount that will
accrue to the end of the third full calendar year after loan closing
without prior approval from the National Office.
(15) Relocation payment to displaced persons, business, and farm
operations and for relocation assistance advisory services in accordance
with the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970, (Pub. L. 91-646, 84 Stat. 1894), the regulations
issued by the Secretary of Agriculture under the act (7 CFR Part 21) and
the Memorandum of Understanding between SCS and FmHA.
(16) Services of engineers, architects, attorneys, auditors,
construction foremen, managers, clerks, and others for organizing,
planning, surveying, supervising, analyzing, developing, operating,
managing, and accounting for activities related to loan processing and
closing and development for which the loan is made.
(17) Buildings, fences, roads, utilities, facilities, and relocation.
(i) To construct buildings of modest design essential for the
operation and maintenance of the works of improvement or measure.
(ii) To provide support facilities and utilities such as gas,
electricity, water, sewer, and waste disposal.
(iii) To build or relocate roads, bridges, utilities, fences, and
other improvements when necessary to acquire rights-of-way or to
construct or operate the facility.
(18) Services and fees. To pay costs for services for any purposes
listed under this section such as:
(i) Fees or other legal expenses for establishing a water right
through appropriation, agreement, permit, or court decree.
(ii) Purchase of water stock or membership in an incorporated water
users' association to acquire a water supply.
(iii) Costs of labor, technical or professional services, and fees to
be incurred in obtaining the loan and in planning and completing the
facilities or services to be financed with loan funds.
(iv) Services such as those listed in paragraph (a) (16) of this
section.
(b) RCD loans. Purposes for which RCD loans may be made in addition
to those included in paragraph (a) of this section are:
(1) Solid waste management. Lands, equipment and facilities to
collect, transport, and dispose of solid waste in sanitary landfills for
which SCS is providing technical assistance.
(2) Shifts-in-land use. Lands for uses such as grazing, forestry,
wildlife, natural areas and parks, greenbelts, and other open spaces.
(3) Purchase existing facilities. Purchase existing facilities for
shift-in-land use, soil and water development, conservation, control and
use when it is determined that purchase is necessary to provide
efficient service through a facility owned and operated by a public
agency (or a nonprofit corporation in a rural area), or the owner is
either unwilling or unable to make improvements, enlargement, or
extensions needed to provide significant additional or improved service
for present users or for a new group of users at reasonable rates.
(c) SCS watershed advances.
(1) SCS watershed advances are loans that may be made from SCS
construction funds for the following purposes included in a watershed
work plan agreement:
(i) To pay construction costs including cost of engineering and
related services for increasing reservoir capacity (including intake and
outlet structures) for a future water supply for municipal, domestic,
industrial, or agricultural uses.
(ii) To preserve sites for authorized watershed works of improvement
by acquiring land, easements, and rights-of-way or other property
rights.
07 CFR 1942.407 Loan and advance limitations and obligations incurred
before loan closing.
(a) WS and RCD loan limitations.
(1) Loans will not be used for:
(i) Land treatment measures on individual farms except as provided in
1942.406(a)(5)(iv).
(ii) Buildings and facilities to be used for lodging, dining or
entertainment purposes.
(iii) Building industrial parks or constructing facilities in them,
or establishing private industrial or commercial enterprises, or
purchasing land to be used primarily for industrial purposes.
(iv) Paying costs allocated to structural measures for flood
prevention.
(v) Facilities for the production and harvesting of fish and wildlife
such as hatcheries, rearing ponds, and related facilities other than
those under natural conditions.
(vi) Facilities primary for treatment and distribution of water or
for sewerage, collection and treatment for domestic or industrial use or
for municipal or community systems.
(vii) Electric generating, transmission, and distribution facilities,
except when provided as part of the minimum basic facilities for
recreation and fish and wildlife developments authorized in
1942.406(a)(7).
(viii) Storm and sanitary sewers and solid waste disposal facilities
other than authorized in 1942.406(b)(1).
(ix) Payment for a tract of land, easements, or rights-of-way on
which SCS will share the cost if the amount to be paid with loan funds
exceeds the difference between the SCS share and the value on which the
SCS share is based.
(x) Purchasing tracts of land primarily for later resale to private
developers or individuals for agricultural or nonagricultural use.
(xi) (Reserved)
(xii) Buildings for residential, commercial, or industrial use.
(xiii) Developments on private property primarily for the benefit of
the individual property owner.
(xiv) Payment of that part of the cost of facilities, improvements,
and practices that could be earned by participation in agricultural
conservation programs unless such cost cannot be covered by purchase
orders or assignments to material suppliers or contractors. If a loan
is made for such purposes for which practice or cost share payments
exceed $500, FmHA will obtain an assignment on such payments to be paid
on the loan.
(xv) Primarily for water and sewage treatment plants and distribution
systems.
(xvi) Drainage facilities primarily for the benefit of other than
rural areas.
(xvii) Any single RCD measure that requires a loan of more than
$500,000.
(xviii) The total amount of principal outstanding for all WS loans
made for one or more watershed works of improvement in a single
watershed project, whether made to one or more sponsoring organizations,
will not exceed $10,000,000.
(b) Watershed advance limitations -- (1) A WS advance for future
water supply will not be used for acquiring property rights including
lands, easements, and rights-of-way; water rights; administration of
contracts; storage capacity for immediate municipal use; pipelines
from the reservoir to place of use; or for other uses such as
irrigation, fish and wildlife, and recreation.
(2) A WS advance for increasing reservoir capacity for future water
supply will not exceed 30 percent of the total installation cost of the
structure.
(3) A WS advance for site preservation will not exceed that
determined necessary by SCS except to purchase land in excess of actual
needs in accordance with the provisions of 1942.406(a)(7).
(4) Before a project agreement is entered into, there must be
satisfactory evidence that the borrower will develop the site to be
acquired or will use the future water supply and that revenue will be
sufficient to meet all scheduled installments.
(c) Obligations incurred before loan closing -- (1) WS loans, WS
advances, and RCD loans may be used for payment of obligations incurred
before loan closing when the State director determines that:
(i) The obligations incurred are necessary for planned developments,
(ii) The obligations are incurred for authorized loan purposes, and
(iii) Contracts and construction plans meet FmHA and SCS standards,
and
(iv) The applicant has legal authority to incur the obligations at
the time proposed and
(v) The State director authorizes such action in a letter to the
applicant.
(2) The State director's letter will specifically state that the
permission is granted on the condition that FmHA is not committed to
make a loan and assumes no responsibility for any obligation incurred by
the applicant because of the permission granted and that the loan will
be closed subject to compliance with agency regulations including
closing instructions of the regional attorney office of the general
counsel.
07 CFR 1942.408 Rates and terms -- WS loans and WS advances and RCD
loans.
(a) Interest rates. The interest rate for WS loans, WS advances and
RCD loans is the average rate as determined by the Secretary of the
Treasury, payable by the U.S. Treasury on its marketable public
obligations outstanding at the beginning of the fiscal year in which an
obligating agreement is executed, which are neither due nor callable for
redemption for 15 years from the date of issue.
(1) The interest rate determined at the beginning of each fiscal
year, will be charged for loans or advances obligated in that fiscal
year.
(2) For loans, unless otherwise required by State law, interest will
accure from date of check delivery where Form FmHA 440-22, ''Promissory
Note (Association Organization),'' is used. Where bonds are used
interest will accure from the applicable dates recorded on the bonds.
Where multiple loan disbursements are used interest will accrue from
date of check.
(3) Interest on an advance for future water supply will begin as
required by State law, when water is first used from the future water
storage capacity installed with advance, or ten years from the scheduled
date of the completion of the facility, whichever date is the earlier.
(4) Interest on an advance for preservation of sites will begin on
the date the advance is closed.
(b) Length of repayment period. The repayment period on loans may
not exceed the shortest of the following periods:
(1) The statutory limitation on the sponsoring local organization's
borrowing authority.
(2) Fifty (50) years for WS loans and WS advances and 30 years for
RCD loans from the date when the principal benefits from the WS works of
improvement or RCD measure being financed first become available.
(3) The useful life of the WS works of improvement or RCD measure
being financed with loan or advance funds.
(c) Deferred or partial payments. Deferred or partial payments may
be authorized when:
(1) Payments need to be delayed until the receipt of income from
taxes or other revenues is enough to meet a regular installment but not
exceed:
(i) The completion date of the facility or
(ii) The date when benefits from the facility begins but
(iii) In no case for more than 5 years for other than future water
supply.
(2) Payments will depend on the increased returns expected from
planned improvements, or from the installation on individual farms of
land development or other soil and water improvements essential for
obtaining benefits from the improvement to be installed with loan funds.
(3) They will not be used to permit the accelerated payment of other
debts, to make capital improvements, or to create operating reserves.
(4) Where prohibited by State Statutes; interest payments will not
be deferred even though payments on principal may be deferred.
(5) Loans or advances for future water supply will be repaid within
the life of the reservoir structure but in no event later than 50 years
for WS and 30 years for RCD after the reservoir structure is built.
Payments on the principal amount may be deferred one year after the
water is first used from the storage capacity installed with the advance
or for 10 years from the scheduled completion date of the structures,
whichever occurs first.
(i) Interest will begin for a future water supply as required by
State law, or when water is first used from the future storage capacity
or 10 years from the scheduled date of completion of the facility,
whichever occurs first.
(ii) If State law requires that interest be charged and repaid before
water is first used or earlier than 10 years from completion date of the
structure, interest payments will be scheduled to comply with State law
even though payments of principal may be deferred.
(iii) The borrower should be encouraged to begin repayments as soon
as practicable after the reservoir is built even though this liberal
deferment policy exists.
(iv) WS advances for preservation of sites must be fully repaid
before beginning construction of the works of improvement for which such
sites were acquired.
(A) Unless a WS advance is to be repaid with a WS loan, installments
will be scheduled at the earliest possible date following the date of
closing the advance. The date and amount of each such installment will
be fixed to coincide with the receipt of income from taxes or other
revenues.
(B) Payments for both principal and interest on a WS advance for
preservation of sites may be scheduled for payment in one installment to
be paid on the date of the closing of a WS loan which includes funds for
the repayment of the WS advance.
(C) Interest on a WS advance for preservation of sites will begin on
the date the WS advance is closed.
(d) Payment amortization and application. (1) A borrower may make
prepayments on WS loans, WS advances, or RCD loans in any amount at any
time.
(2) Payments will be applied first to interest accrued to the date of
the receipt of payment, and second to the principal balance. If the
regular payments plus any prepayments exceed the cumulative amount due,
the excess payments will be applied on the next installment first to
interest, then principal. Loan refunds and proceeds from the sale of
security property, however, will be applied on the final unpaid
installment.
(3) Payments will be scheduled annually beginning 1 year following
the date of loan closing or 1 year following the end of any approved
deferment period, unless another annual due date is required by State
statute or upon prior written authorization from the national office.
In those cases where loans are being made under statutes requiring a
repayment date other than this, the State director will send a copy of
the regional attorney's opinion that such is required, to the finance
office.
(4) When a single obligation instrument is used, amortized
installments will be required. When this cannot be done because of
State law, serial bonds or a single bond having installments of
principal plus interest, stated separately, will be used. In cases
where the payment of interest has been deferred, all collections will be
applied to interest until such interest has been paid. Also, when a
full installment is not paid when due, the payment made will be applied
first to accrued interest.
(5) In cases where the indebtedness will be represented by serial
bonds or a single bond having installments of principal plus interest,
stated separately, annual payments of principal and interest will be
scheduled to permit them to be paid in amounts approximately equal to
the amounts that would be required for annual amortized installments.
(6) If the borrower will be retiring other debts represented by bonds
or notes, the payment on such bonds may be considered in developing the
payment schedule for the FmHA loan. In some cases, it may be desirable
to reduce the amount of payments to FmHA in the early years of the loan
in order to preclude the necessity for refinancing the outstanding debt.
When such payment schedules are proposed, national office authorization
will be obtained prior to loan approval.
(7) Payment date. Insofar as loan payments are consistent with
income availability, applicable State statutes, and commercial customs
in the preparation of bonds or other evidence of indebtedness, they
should be scheduled on a monthly basis either in the bond or other
evidence of indebtedness or through the use of a supplemental agreement.
Such requirements will be accomplished not later then the time of loan
closing. When monthly payments are required, such payments will be
scheduled beginning 1 full month following the date of loan closing or
the end of any approved deferment period. Subsequent monthly payments
will be scheduled each full month thereafter. In those cases where
evidence of indebtedness calls for annual or semiannual payments, they
will be scheduled beginning 6 or 12 full months, respectively following
the date of loan closing or the end of any approved deferment period.
Subsequent payments will be scheduled each 6th or 12th full month
respectively, thereafter. When the evidence of indebtedness is dated
the 29th, 30th, or 31st day of a month, the payment date will be
scheduled the 28th day of the month.
07 CFR 1942.409 Security, feasibility, evidence of debt, title,
insurance and other requirements.
(a) Security -- WS loans, WS advances and RCD loans will be secured
in accordance with applicable provision of 1942.17(g).
(b) Feasibility. All projects financed under the provisions of this
subpart must be based on taxes, assessments, revenues, fees, or other
satisfactory sources in an amount that will provide for facility
operation and maintenance, a reasonable reserve, and payment of the
debt. The State director may obtain needed assistance in determining
economic feasibility from officials of SCS and other appropriate USDA
agencies. See 1942.17(h) for applicable economic feasibility
requirements and feasibility reports.
(c) Notes, bonds, and bond transcript documents. See 1942.19 for
applicable requirements and provisions.
(d) Insurance. See 1942.17(j)(3) for requirements.
(e) National flood insurance -- The requirements of the National
Flood Insurance Act of 1968 as amended by the Flood Disaster Protection
Act of 1973 will be complied with in accordance with the applicable
provisions of FmHA Instruction 1901-L. Also see 1942.18(d)(1)(i).
(f) Borrower contracts and bonds. See 1942.18 (e), (i) and (n)(3)
of Subpart A of Part 1942 for applicable provisions.
(g) Title requirements. (1) Title evidence for land, easements, and
rights-of-way to be acquired with proceeds of loans or advances will be
furnished by the sponsoring local organization in accordance with SCS
policies and procedures.
(2) FmHA will specify and approve the form and content of instruments
for conveying title to or interest in real estate on which a lien will
be taken to secure a WS loan, WS advance, or RCD loan. These should be
consistent with the applicable provisions of 1942.17(g). The State
director will make his decision after consultation with the regional
attorney and the State conservationist. He will notify SCS in writing
of his decision. Thereafter, title clearance will be completed under
SCS regulations except that a marketable title must be obtained on any
tract of land, a part of which will be sold as excess land in accordance
with 1942.406(a)(9). In addition to the title evidence required by
SCS, applicants will furnish an opinion of legal counsel on all land and
interest in land acquired with loan or advance funds.
(h) Purchasing lands, rights and facilities. The amounts paid for
lands, rights, and facilities with loan funds will be not more than that
determined to be reasonable and fair by the loan approval official based
upon an appraisal of the current market value made by an FmHA employee
or an independent appraiser authorized by the FmHA loan approval
official.
(i) Water rights. Applicants will be required to comply with
applicable State and local laws and regulations governing appropriating,
diverting, storing and using water, changing the place and manner of use
of water, and in disposing of water. All of the rights of any
landowner, appropriator, or user of water from any source will be fully
honored in all respects as they may be affected by facilities installed
with WS loans and advances and RCD loans. If, under the provisions of
State law, notice of the proposed diversion or storage of water by the
applicant may be filed, the applicant will be required to file such a
notice. An applicant must furnish evidence to provide reasonable
assurance that its water rights will be or have been properly
established, will not interfere with prior vested rights, will likely
not be contested or enjoined by other water users or riparian owners,
and will be within the provisions of any applicable interstate compact.
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979;
50 FR 7327, Feb. 22, 1985)
1942.410 (Reserved)
07 CFR 1942.411 Other considerations.
(a) Technical assistance. When pipelines from reservoirs to
treatment plants are included in watershed work plans, SCS will not
furnish engineering services for their design or installation. When
such pipelines are to be financed by WS or RCD loans, FmHA will
supervise the activities of the private engineers retained for the
purpose. Such FmHA supervision will include, among other things,
approval of private engineer's contracts, approval of plans and
specifications, authorization of contract awards, spot checks of
engineering inspection, and final inspection and acceptance.
(b) Professional services. Applicants will be responsible for
providing the services necessary to plan projects including design of
facilities, preparation of cost and income estimates, development of
proposals for organization and financing, and overall operation and
maintenance of the facility. Necessary professional services may
include such as that of an engineer, architect, attorney, bond counsel,
accountant, auditor, and financial advisor or fiscal agent. Form FmHA
442-19, ''Agreement for Engineering Services,'' may be used when
appropriate. Part 1942, Subpart A, Guide 14 (available in any FmHA
office) and may be used as a guide to prepare the agreement for legal
services.
(c) Other services. Contracts for other services such as management,
operation, and maintenance will be developed by the applicant and
presented to the FmHA official developing the docket for review and
approval.
(d) Fees for services. Fees provided for in contracts, agreements,
or services will not be more than those ordinarily charged by the
profession for similar work when FmHA financing is not involved.
(e) State pollution control or Environmental Protection Agency
standards. Facilities will be designed, installed, and operated to
prevent pollution of water in excess of established standards. Effluent
disposal will conform with appropriate State and Federal water pollution
control standards.
(f) Water pollution. When repayment of a WS loan, WS advance, or RCD
loan will be dependent upon income from the use or sale of water, FmHA
approval will be contingent upon a determination that the proposed use
of water will not be impaired by pollution. For example, full use of
stored water for recreation or municipal supply might not be permitted
by a State health department because the water is being polluted from an
upstream or other source.
(g) Environmental requirements. Actions will be taken to comply with
the National Environmental Policy Act in accordance with Subpart G of
Part 1940 of this chapter. When environmental assessments and
environmental impact statements have been prepared on WS plans or RCD
area plans by SCS, a separate environmental impact statement or
assessment on WS works of improvement or RCD measures for which a WS
loan, WS advance, or RCD loan is requested will not be necessary unless
the SCS environmental review fails to meet the requirements of Subpart G
of Part 1940 of this chapter. The FmHA State Director should document
the action taken by SCS in compliance with the requirements of the
National Environmental Policy Act and fomally adopt the impact statement
or assessment, if satisfactory. If a determination is made that a
further analysis of the environmental impact is needed, the FmHA State
Director will make necessary arrangements with the State SCS
Conservationist for such action to be taken before a loan is made.
(h) National Historic Preservation Act. All projects will comply
with the provisions of the National Historic Preservation Act of 1966 in
accordance with FmHA instruction 1901-F.
(i) Civil Rights Act of 1964. Recipients of WS loans, WS advances,
or RCD loans are subject to title VI of the Civil Rights Act of 1964
which prohibits discrimination because of race, color, or national
origin. Borrowers must agree not to discriminate in their operations by
signing form FmHA 400-4, ''Nondiscrimination Agreement,'' before loan
closing. This requirement should be discussed with the applicant as
early in the negotiations as possible. Necessary actions will be taken
in accordance with FmHA instruction 1901-E.
(j) Appraisals. When required by the State director, appraisals will
be made by an FmHA official designated by him. Form FmHA 442-10,
''Appraisal Report -- Water and Waste Disposal Systems,'' with
appropriate supplements, may be modified as needed for use with the type
of facilities being appraised.
(k) Architectural Barriers Act of 1968. All facilities financed with
FmHA loans and grants which are accessible to the public or in which
physically handicapped persons may be employed or reside must be
developed in compliance with this act in accordance with this act.
(7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; sec. 10, Pub. L.
93-357, 88 Stat. 392; 7 CFR 2.23; 7 CFR 2.70)
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979;
49 FR 3760, Jan. 30, 1984)
07 CFR 1942.412 Preapplication and application processing.
(a) WS and RCD Loans -- (1) Preapplications. (i) The County
Supervisor or other person designated by the State Director may assist
the applicant in completing SF 424.1, ''Application for Federal
Assistance (For Non-construction),'' and will forward one copy of SF
424.1 to the State Director.
(ii) The State director will review form SF 424.1 along with other
necessary information and will coordinate selection of preapplications
to be processed with SCS. He will consult with the SCS State
conservationist concerning the status of the WS plan or RCD measure
plan, the estimated time schedule for construction and cost of the
proposed works to be installed with the loan, cost sharing funds to be
made available to the applicant, and other pertinent information.
(iii) Form AD-622, ''Notice of Preapplication Review Action,'' will
be prepared and signed by the State director within forty-five (45) days
from receipt of the preapplication in FmHA stating the results of the
review action. An original and one copy of form AD-622 will be sent to
the county supervisor who will deliver the original to the applicant.
(2) Applications -- (i) The application includes applicable forms and
information indicated in Part 1942, Subpart A, Guide 15 (available in
any FmHA office). When the State director determines that an
application will be further processed and form AD-622 is delivered, he
will designate the district director, a community program specialist
(field), or a member of the community program staff to assist the county
supervisor and the applicant with assembling and processing the
application.
(ii) The county supervisor should arrange needed conferences with the
applicant and its legal and engineering consultants, and when necessary,
arrange for review of other FmHA officials, and provide guides, forms,
instructions, and other assistance with assembling and processing the
application. A processing checklist and time schedule will be
established by using form FmHA 1942-40, ''Processing Check List (Public
Bodies),'' or form FmHA 1942-39, ''Processing Check List (Other than
Public Bodies).'' The county supervisor will send a letter and a copy of
the processing checklist to the applicant to confirm instructions and
decisions conference. The original and a copy of the processing
checklist will be kept in the county office, and will be posted current
as application processing actions are taken. The copy will be
circulated from the county office to the district director to the State
office for use in updating copies of the forms retained, after which it
will be returned from the State office to the county office.
(3) Dockets. WS loan, WS advance, and RCD loan dockets will be
developed and assembled in accordance with applicable provisions of Part
1942, Subpart A, Guide 16 (available in any FmHA office).
(b) Watershed advances. Applications for WS advances will be
developed and processed with SCS assistance as necessary.
(1) The State director will arrange with the SCS State
conservationist to be advised when a local sponsoring organization
applies to SCS for a WS advance.
(2) The FmHA State director will request the SCS State
conservationist to provide information justifying the WS advance along
with a written recommendation that it be made. This will include:
(i) Economic feasibility of the proposed WS advance.
(ii) Evidence of the legal authority of the sponsoring local
organization to incur the obligation and make required payments.
(iii) Any limitations on the issuance of additional bonds or notes
which may be imposed by the provisions of bond ordinances or on
resolutions which authorize the issuance of any outstanding obligation
of the sponsoring local organization.
(iv) The amount of WS advance funds to be provided, purpose for which
funds will be used, and date funds will be needed.
(3) When the above information has been made available to the FmHA
State director, he will send written recommendations concerning further
action on the WS advance request to the SCS State conservationist
including actions to be taken in the preparation of the WS advance
docket as required by Part 1942, Subpart A, Guide 16 (available in any
FmHA office).
(c) Combination WS Loans and WS Advances. If an applicant requests
both a WS loan and WS advance, the application for the WS loan should
indicate the amount of the WS advance needed and whether a request for
it has been made to SCS. The FmHA State director and the SCS State
conservationist will coordinate applicable processing actions of such
applications. When the FmHA State director determines that favorable
consideration will be given to an application for a loan or advance, he
will provide instructions to the county supervisor for completing and
processing the appropriate docket. Any questions concerning eligibility
or other legal matters should be cleared with the regional attorney.
(d) Review of Decision. When it is determined that the
preapplication or application cannot be given favorable consideration,
the State director will return it to the county supervisor along with
written reasons. When the county supervisor receives this information,
he will notify the applicant in writing of the reasons why the request
was not favorably considered. The notification to the applicant will
state that the FmHA Administrator may be requested to review the
decision. This action will be taken in accordance with Part 1942,
Subpart A, 1942.2 (c).
(1) Upon receipt of the State office copy of a review request from
the applicant, the State director will furnish a report on the matter to
the Administrator.
(2) The Administrator will notify the applicant and the State
director in writing of his decision and the reasons therefore.
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979;
48 FR 29120, June 24, 1983; 54 FR 47197, Nov. 13, 1989; 55 FR 13503,
Apr. 11, 1990)
Editorial Note: Nomenclature changes to 1942.412 appear at 55 FR
13503, Apr. 11, 1990
1942.413 (Reserved)
07 CFR 1942.414 Planning, options, and appraisals.
(a) WS and RCD area plans are developed by sponsoring local agencies
and organizations with technical assistance from SCS and other Federal
and State agencies. These plans include WS works of improvement and RCD
measures to be developed or constructed for which SCS construction funds
may be made available on a cost share basis along with funds provided by
the sponsoring local organization, a portion or all of which may be
obtained by a WS loan and/or WS advance, or a RCD loan.
(b) Current information on the availability of cost share funds and
purposes for which they may be used is provided by SCS. The amount of
SCS cost share funds and the amount of funds to be provided by the
sponsoring local organizations will be indicated in each plan. The
estimated amount of WS loan, WS advance, or RCD loan anticipated by the
sponsoring local organization should also be included.
(c) Plans for the development or construction of individual WS works
of improvement and RCD measures will normally be developed with SCS
technical assistance. In every case they will be approved by both the
SCS State conservationist and the FmHA State director or their
designated agent when a WS loan, WS advance, or RCD loan is made.
(d) Options and appraisals related to the purchase of real estate for
which a WS loan, WS advance, or RCD loan is made must be developed in
accordance with SCS and FmHA requirements and approved by FmHA. The
determination of present market value will be made in accordance with
Part 1942, Subpart A, 1942.3.
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979)
07 CFR 1942.415 Planning and performing development.
(a) Planning and performing development will be handled in accordance
with 1942.9 and 1942.18 and regulations of SCS for developments with
SCS financial assistance.
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979)
07 CFR 1942.416 County committee review.
(a) Comments and recommendations in narrative form will be obtained
prior to approval of a WS loan, WS advance, or RCD loan from:
(1) The county committee for the county in which the WS works of
improvements or RCD measure is or will be located and also in which the
applicant is located if in different counties, and
(2) The county committee in other counties in the WS or RCD area if
the State director determines that such is desirable.
(b) The comments and recommendations should indicate the community
need for and interest in the proposed WS works of improvement or RCD
measure, any local issues, or other information which the committee
feels should be considered by the approval official.
(c) The written statement of the county committee will be signed by
at least two members of each committee involved and will be included in
the loan docket.
07 CFR 1942.417 Docket preparation and processing.
(a) Loan dockets. Dockets for WS loans, WS advances, and RCD loans
will be prepared in accordance with the applicable provisions of FmHA
regulations including Part 1942, Subpart A, 1942.3, and 1942.5, and
Guides 15 and 16 (available in any FmHA office), and the following:
(1) Time for preparation of docket. Docket preparation may begin as
soon as a preliminary draft of the watershed plan or RCD area plan,
together with an estimate of costs and benefits, have been prepared with
the assistance of SCS and approved by the sponsoring local organization
applicant. However, the applicant must understand that approval of the
WS loan, WS advance, or RCD loan will not be determined until the work
plan has been authorized for assistance by SCS. To the extent
practicable, docket preparation may be completed by that time to
facilitate the availability of funds when needed.
(2) Instructions for preparation of docket. When the State director
has determined that plans and other requirements are completed to the
extent that preparation of the loan docket may begin, he will send the
county supervisor a memorandum giving complete instructions for docket
preparation, with a list of documents to be included in the docket.
(3) Objectives of the docket. The docket should include information
for use in determining that:
(i) The sponsoring local organization:
(A) Has legal authority to construct and operate the proposed
facility, borrow money, give security, incur debt, and generate revenue
needed for operation, maintenance, reserves, debt payment, and other
cash requirements.
(B) Is a sponsor or cosponsor of the WS plan or RCD work plan and is
otherwise eligible for assistance.
(ii) Funds will be used for authorized purposes.
(iii) The source of income to be pledged for debt payment and the
security proposed is adequate.
(iv) Actions required for loan closing are administratively
satisfactory, legally sufficient and properly documented in accordance
with Agency regulations.
(4) Assembly of the docket. The docket will be assembled in
accordance with paragraph (2) of this section, applicable provisions of
Part 1942, Subpart A, Guides 15 and 16 (available in any FmHA office)
and will include the following:
(i) A copy of the WS works of improvement agreement or RCD measure
agreement.
(ii) A copy of the operation and maintenance agreement between SCS
and the WS or RCD sponsoring local organization for the WS works of
improvement or the RCD measure.
(iii) A statement from the SCS State conservationist concurring in
the feasibility of the WS work of improvement or RCD measure and that
SCS is providing financial and/or technical assistance in accordance
with applicable WS or RCD authorities.
(5) Narrative by county supervisor. This should be included in or
attached to the project summary. It should relate project costs to
benefits of the WS or RCD loan or WS advance. Minimum and average
individual charges, tax levies or assessments should be given where
applicable. Where taxes or assessments on land will be levied, acres
should be indicated and average cost per acre should be given. Analyses
of income from recreational facilities should be based on the best
information available from local, State, and Federal agencies concerned
with such recreation facilities. Determination of water rates,
schedules, and estimated consumption of water should be made by the same
methods as for loans for domestic water and irrigation.
(6) Estimates of right-of-way Costs. The docket should include, as
part of the project summary, current estimated costs of easements,
rights-of-way, and other land rights which must be acquired. The amount
estimated for such purposes in the WS or RCD plan should reflect current
conditions.
(b) Loan processing by State Office -- (1) Review of the docket. The
county supervisor and the district director will check the docket for
accuracy and completeness and forward it to the State office with their
recommendations. The State director will review the docket to determine
that:
(i) All documents are accurate and complete.
(ii) The proposed loan complies with WS and RCD program policies and
procedures of both FmHA and SCS.
(iii) Security is adequate and the repayment plan is sound.
(iv) Funds requested are for authorized purposes.
(v) Actions are in compliance with requirements of applicable Federal
and State laws.
(2) Letter of conditions. When the State director determines that
the docket is complete and the proposed activity is feasible, he will
prepare a proposed letter of conditions including the requirements
1942.5(a)(1) under which the application may be further processed. The
letter will be delivered to and discussed with the applicant upon
acceptance of the conditions the applicant will indicate instructions to
meet the conditions by a letter of interest and the application will be
further processed.
(3) Legal Review. The complete docket and proposed letter of
conditions will be forwarded to the regional attorney, OGC for review
and preparation of closing instructions. If it is not possible to issue
closing instructions at that time, the regional attorney, will issue a
preliminary legal opinion commenting upon the applicants legal
existence, authority to incur debt and give security for the WS loan, WS
advance, or RCD loan requested and actions to be taken before closing
instructions may be issued.
(4) Authorization for Approval. When the FmHA State director
receives closing instructions or a preliminary legal opinion for a WS
loan, WS advance, or RCD loan that is not within his approval authority
he will send this information along with the docket, the proposed letter
of conditions, and a memorandum recommending approval to the national
office. A copy of his memorandum will be sent to the county supervisor
and to the district director. If the proposed action is within the
State director's approval authority he need not submit the material
listed above to the national office unless he wants review and comments
before approval.
(c) WS Advance Processing -- (1) When the FmHA State director has
concurred with the SCS State conservationist in the inclusion of a WS
advance in a watershed plan, preparation of the advance docket can be
initiated and will be processed in the same manner as for a WS loan.
Where both a WS loan and WS advance are planned only one docket will be
prepared to include both the WS loan and WS advance.
(2) If the advance appears to be sound and proper, the FmHA State
director will send a proposed memorandum of concurrence to the SCS State
conservationist. The memorandum will state that FmHA concurs in the
execution of a work of improvement agreement for which SCS will obligate
advance funds and that FmHA will accept the proposed obligations of the
applicant to repay the advance subject to conditions specified in or
attached to the memorandum. These conditions will include all
appropriate requirements in accordance with 1942.417(b)(2) of this
instruction and will specify compliance with closing instructions issued
by the regional attorney. It will also indicate that preparation of the
WS advance docket will be in accordance with 1942.417(a) of this
instruction.
(3) The FmHA State Director and the SCS State conservationist will
sign the memorandum of concurrence to SCS when:
(i) It has been determined that funds for the advance will be
obligated by SCS, and
(ii) The WS advance docket, has been approved, and
(iii) Closing instructions have been issued by the regional attorney,
and
(iv) The FmHA State Director and SCS State conservationist have
determined that the applicant can comply with all requirements of the
letter of conditions and closing instructions.
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979)
07 CFR 1942.418 Feasibility.
(a) Before WS loan, WS advance, or RCD loan is approved, a
determination of feasibility will be made by the FmHA State Director
based upon a review of plans developed in cooperation with SCS
personnel. The feasibility determination must have the concurrence of
the SCS State conservationist before a WS loan, WS advance, or RCD loan
is approved.
(b) A written assessment of the project's feasibility will be made by
the county supervisor, architect/engineer, district director, and
program chief in their recommendations or comments on the project
summery. These should reflect concurrence of the respective SCS
personnel in counterpart positions with whom they cooperate in
administering these programs.
07 CFR 1942.419 Approval, closing, and cancellation.
(a) Approval and closing actions will be taken in accordance with the
applicable provisions of Part 1901, Subpart A, and 1942.5, 1942.6,
1942.7, 1942.8, and 1942.17 and the following:
(1) The WS or RCD plan has been approved for operations by SCS and
the applicant is an official sponsoring or cosponsoring local
organization for the plan as evidenced by being included in the list of
sponsoring or cosponsoring local organizations in the plan.
(2) Closing instructions or a preliminary legal opinion has been
prepared by the regional attorney.
(3) The governing body of the applicant's sponsoring local
organization has formally passed and approved the loan resolution.
(4) The FmHA State director and SCS State conservationist have
determined that all planned actions can be carried out as proposed in
the project plan and the docket.
(5) The SCS State conservationist and FmHA State director have
mutually agreed on the priority to be given the WS loan or WS advance,
or RCD loan. In making this determination, consideration will be given
to the relative priority of the WS works of improvement or RCD measures
to all other such work in the State and the anticipated availability of
Federal and local funds to assure continuity of action and work until
the project is completed. When funds are to be provided by SCS for a WS
or RCD loan or a WS advance such funds must be obligated by SCS before
closing.
(6) Public bodies will be required to use bond counsel in accordance
with 1942.19.
(b) When favorable action is not taken on a WS loan, WS advance, or
RCD loan, the FmHA State director will notify the SCS State
conservationist and the applicant in writing and, if possible, arrange
for a meeting of FmHA and SCS representatives with the applicant to
explain the action. WS loans, WS advances, or RCD loans may be canceled
before closing in accordance with 1942.12.
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979)
07 CFR 1942.420 Disbursement of WS and RCD loan funds and WS advance
funds.
(a) WS and RCD loan funds will be disbursed by the county supervisor
in accordance with the applicable provisions of 1942.17(p) and Exhibit
A, paragraph (5). Funds will be made available to the borrower as
needed for payment of development or other costs for which the loan is
made. The county supervisor must determine that the payment is for an
authorized purpose and is for benefits accrued to the borrower. This
will require evidence from SCS in accordance with the applicable
provisions of Exhibit A, ''Memorandum of Understanding Between FmHA and
SCS.''
(b) WS advance funds may be disbursed in the same manner as WS loan
funds if such funds are transferred to FmHA by SCS for disbursement or
they may be disbursed by SCS.
(1) When WS advance funds are disbursed by SCS, payments from advance
of funds will be reported to the FmHA State director each month to be
reported to the finance office and charged to the borrower's account.
This action will be taken in accordance with the applicable provisions
of Exhibit A or Exhibit B and agreement between the SCS State
conservationist and FmHA State director as follows:
(i) When a future water supply is being developed with SCS, WS
advance funds, the SCS State conservationist will send the FmHA State
director a monthly report of funds disbursed. This will include three
(3) copies of Form SCS-AS-49a and 49b, ''Contract Payment Estimate and
Construction Progess Report,'' along with a transmittal memorandum
showing the sequential number (first, second, third, etc.) of the
payment, the amount and date of payment, the check number by which the
payment was made and the cumulative amount of advance funds disbursed to
date. When the works of improvement, for which WS advance funds are
used is completed the final report will, in addition to the above, show
the date that construction was completed and the total amount of WS
advance funds used.
(ii) WS advances for construction costs will be set out each month on
form SCS 49a. The FmHA State director should make arrangements with the
SCS State conservationist to be supplied each month with a copy of form
SCS 49a when advance funds are included together with an official
statement from the SCS State administrative officer giving the date of
the check and the exact amount of each advance of funds made under the
advance provisions of the project agreement or of any engineering
services agreement or other supplementary agreement which further
implements the proposal for the advance in the project agreement. The
original will be sent immediately to the finance office and a copy
provided for the FmHA county office file.
(iii) When WS advance funds are used to acquire property for site
preservation the same reporting procedure as for a future water supply
will be used except that form SCS-AS-49a and 49b if used, should be
adopted to indicate fund use. As payments are made on land on which a
mortgage or other security instrument is required, such instruments will
be executed in accordance with instructions from the regional attorney,
OGC.
(iv) The FmHA State director maintain send the bond or note
evidencing WS advance indebtedness of the borrower to the along with
reports of payments from advance funds disbursed by SCS. A copy of the
bond or note and copy of each report of payment will be sent to the FmHA
county office.
(c) Actions subsequent to closing of loans or advances. Actions will
be taken in accordance with 1942.8.
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979)
07 CFR 1942.421 Borrower accounting methods, management, reporting, and
audits.
These activities will be handled in accordance with the provisions of
1942.17(q).
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979)
07 CFR 1942.422 Subsequent loans.
Subsequent loans will be processed in accordance with this
instruction.
07 CFR 1942.423 Servicing.
Servicing will be handled in accordance with the provisions of
Subpart E of Part 1951 and Subpart A of Part 1955.
(43 FR 28442, June 30, 1978, as amended at 47 FR 52119, Nov. 19,
1982)
07 CFR 1942.424 State supplements.
(a) State supplements will be issued as needed in accordance with
applicable provisions of FmHA instructions including Part 1942, Subpart
A, 1942.16.
(43 FR 28442, June 30, 1978, as amended at 44 FR 6353, Feb. 1, 1979)
07 CFR 1942.424 Pt. 1942, Subpt. I, Exh. A
07 CFR 1942.424 Exhibits to Subpart I
07 CFR 1942.424 Exhibit A -- Memorandum of Understanding Between the
Soil Conservation Service and the Farmers Home Administration Relating
to the Making of WS Loans and WS Advances Under the Watershed Protection
and Flood Prevention Act
(1) Purpose: This memorandum is to coordinate general agency
responsibilities and functions of the Farmers Home Administration (FmHA)
and the Soil Conservation Service (SCS) in connection with loans and
advances made to sponsoring local organizations under the provisions of
the Watershed Protection and Flood Prevention Act (68 Stat. 666), as
amended.
(2) General agency responsibilities: The general assignments to the
SCS and the FmHA for the administration of the Watershed Protection and
Flood Prevention Act are contained in the Secretary's policy statement
dated October 19, 1962. Each agency will establish policy and
procedures and take such other action as required to carry out its
responsibility.
(i) The FmHA is responsible for making and servicing WS loans or
advancements under section 8 and obligations for repayment of WS
advances made by the SCS under section 4 of the act.
(ii) The SCS is responsible for administration of all authority under
the act, except making and servicing WS loans made under section 8, and
for servicing obligations for repayment of WS advances made by the SCS
under section 4 of the act.
(iii) The SCS and the FmHA will cooperate in developing and carrying
out their respective policies, procedures, and requirements, as they
relate to WS loans and WS advances made under the act.
(3) Receipt and processing of applications for loans and advances:
(i) A works of improvement must be included in an approved watershed
plan before a loan or advance for it is made under the act. During the
development of a watershed plan, the State conservationist of SCS will
afford the State director of FmHA an opportunity to gain an
understanding of watershed problems and needs, and the proposed plans
for works of improvement. When a sponsoring local organization
indicates a desire for a WS loan or WS advance the SCS State
conservationist will consult with the FmHA State director on matters
such as organizational arrangements, specific local or State
requirements and other problems related to the plans for financing,
installing, operating, and maintaining the planned works of improvement
being considered.
(ii) The SCS State conservationist will furnish the FmHA State
director a copy of each watershed plan. The Administrator of SCS will
furnish the Administrator of FmHA a copy of each approved WS plan.
(iii) A watershed plan and the related executed watershed plan
agreement will not obligate the FmHA to make a WS loan or obligate the
SCS to make a WS advance to sponsoring local organizations.
(4) Coordination of assistance for design, construction, and
maintenance. The following principles are to be used as a guide for the
design, construction, operation, and maintenance of works of improvement
when a WS loan or WS advance is involved:
(i) The SCS will furnish or assume the cost of engineering services
required to plan and install the portion of the works of improvement
allocated to flood prevention, agricultural phases of the conservation,
development, utilization, and disposal of water, fish and wildlife, and
recreational development, and not more than 50 percent of the costs of
engineering services for minimum basic facilities. Sponsoring local
organizations are expected to furnish and assume the cost of other
engineering services required. The SCS will give such engineering
advice and guidance to the sponsoring local organization as required to
insure that plans, specifications and cost estimates furnished by them
meet the design and construction standards and criteria established for
the project and that the works are properly coordinated with any other
works to be installed under the watershed plan. The SCS State
conservationist will consult with and keep the FmHA State director
informed during the development of construction plans and the
construction of works of improvement. This will include an engineering
review and a statement by the SCS of the adequacy and appropriateness of
cost estimates, designs, plans, and specifications prepared by private
engineers.
(ii) Engineering plans, including specifications, drawings and cost
estimates for works of improvement involving WS loans or advances will
be approved by the SCS State conservationist and the FmHA State
director.
(iii) The SCS State conservationist will consult with the FmHA State
director as to terms and conditions to be included in invitations for
bids and contracts for construction or purchase of supplies and
materials in connection with works of improvement to be installed with
loans or advances. The SCS will provide technical assistance and advice
needed by the sponsoring local organizations for the preparation of
these documents and in analyzing bids and selecting the lowest
responsible bidder. The contracts shall be acceptable to the FmHA State
director and the SCS State conservationist before execution by the
sponsoring local organization receiving a loan or advance.
(iv) The sponsoring local organization will not be permitted to
accept a bid which would require additional loan funds or make changes
in plans or specifications in order to obtain a bid within the estimated
cost without the concurrence of the FmHA State director. Should the
sponsoring local organization desire to reject bids or to not call for
bids and undertake construction of works of improvement by force
account, the concurrence of the FmHA State director shall be obtained.
(v) The SCS will provide technical assistance including periodic
inspections during construction as necessary to protect the Government's
interest and to assure that the works of improvement are being
constructed in accordance with approved drawings and specifications.
The SCS may approve minor changes during construction in the contract
terms and conditions and the drawings and specifications which do not
appreciably affect the design, cost or function of a structure without
concurrence of the FmHA. Major changes or changes which affect the
over-all cost of the works of improvement will require the prior
concurrence of the FmHA State director.
(vi) The SCS and FmHA will make annual joint inspections, for a
period of 3 years after completion thereof or more frequently if
necessary, to see that works of improvement are being operated and
maintained according to agreements. The sponsoring local organization
will be required to make annual inspections throughout the life of the
structure and report their findings to the SCS and FmHA offices. When
SCS or FmHA determines that there are serious deficiencies in operation
and maintenance, the FmHA State director will collaborate with the SCS
State conservationist in arranging with the local sponsoring
organization for the correction of such deficiencies. The FmHA or SCS
may make other inspections as necessary to service the loan or advance
account of the borrowing sponsoring local organization.
(vii) Responsibility rests with the local sponsoring organization to
acquire any land, easements, or rights-of-ways that will be needed for
works of improvement. If a lien is to be taken on works of improvement
and the land, easements, or rights-of-way, the FmHA will, after
consultation with the SCS, approve the easements, deeds, and permits
before they are executed. The FmHA will provide instructions to the
local sponsoring organization pertaining to acknowledgment, title
searchers and examinations, obtaining consent of holders of liens
outstanding against the land, and recording easements and deeds. The
SCS will check land description in all land rights instruments to the
extent necessary to determine that the areas required for construction,
operation and maintenance of works of improvement are included, except
that the SCS will make no property line surveys.
(viii) When loan payments will depend upon a right to use a specific
quantity of water, the local sponsoring organization will furnish to
FmHA satisfactory evidence of such rights, and any required additional
information concerning the water supply. This evidence will include
such documents and materials as affidavits, permits, title certificates,
court decrees, stream gage records, rainfall records, well logs, records
of pumping tests and water analysis. The SCS will examine information
that is furnished together with other available information and give
FmHA a written opinion of the adequacy of supply, including quality, to
meet the requirements of the plan.
(5) Disbursement of funds. Proceeds of WS loans will be deposited
in, and withdrawn from, bank accounts in the manner required by FmHA
regulations. Checks on these bank accounts for payments to contractors
and supplies of materials will be based upon Form SCS 49a, ''Contract
Payment Estimate and Construction Progress Report.'' Form SCS 49a,
prepared by the local sponsoring organization for this purpose, will be
approved by the SCS. In giving his approval to Form SCS 49a, the SCS
representative shall be certain that the items covered are for the
purposes and in the amounts authorized in the project agreement.
(i) Advances for future water supply shall be made as provided in the
project agreement. The maximum amount of such advance shall be shown in
the project agreement.
(ii) Advances for site preservation will be handled in accordance
with procedures mutually agreeable to the SCS and the FmHA, which will
be developed on a case-by-case basis.
(6) Starting construction: The local sponsoring organization will
not be authorized to start construction on works of improvement to be
financed in whole or in part, with a WS loan or a WS advance until:
(i) The SCS has entered into a project agreement for construction of
works of improvement.
(ii) The State conservationist has notified the State director that
the local organization has complied with all SCS requirements for
receiving Pub. L. 566 construction assistance and the State
conservationist has furnished the State director with a schedule
indicating the approximate times that construction work will begin on
works of improvement to be installed with such funds.
(iii) The State director has notified the State conservationist and
the borrower that the loan or advances has been properly closed.
(iv) Any contract entered into by the local organization for
materials, labor, or the construction of works of improvement to be
financed with loan funds has been found acceptable by the FmHA.
(v) The State director has notified the State conservationist that
any advance for the preservation of sites has been repaid.
(vi) All engineering drawings and specifications for works of
improvement to be financed in part by WS loans or advances have been
approved by the FmHA and the SCS.
(7) FmHA contracts with local organizations: Ordinarily, a WS loan
or advance will be made to the local organization having primary
interest in, and direct responsibility for, the operation and
maintenance or works of improvement to be installed with loan or advance
funds rather than to an organization that would have to contract with
another organization for the operation and maintenance of works of
improvement and the collection of revenues for repaying the loan or
advance. When it is proposed to make a WS loan to an organization that
would have to contract with another organization, the organization and
the contractural arrangements will be mutually acceptable to the FmHA
and the SCS. This determination will be made before the approval of the
project agreement for construction of the works of improvement.
(8) Informational activities: The SCS will be responsible for the
preparation, release, or other handling of the overall informational and
educational material regarding the watershed protection program,
including bulletins, press releases and other public announcements. The
SCS will obtain the recommendations of the FmHA prior to releasing
pamphlets and similar informational material which makes reference to
loans. The FmHA may prepare and release informational material on the
handling of loan applications. Such material will be reviewed with the
SCS if it alludes to overall costs or benefits or to technical aspects
for which SCS has responsibility. When desirable or necessary in
particular watershed areas for SCS to arrange for community meetings to
discuss and explain the program to interested local people, the FmHA
will be invited to participate in such meetings if a loan or advance may
be needed by a local organization to carry out planned works of
improvement.
Dated: May 26, 1978.
Victor H. Barry, Jr.,
Acting Administrator,
Soil Conservation Service.
Dated: May 31, 1978.
Gordon Cavanaugh,
Administrator,
Farmers Home Administration.
07 CFR 1942.424 Pt. 1942, Subpt. I, Exh. B
07 CFR 1942.424 Exhibit B -- Memorandum of Understanding Between the
Soil Conservation Service and the Farmers Home Administration Relating
to Loans Made with RCD Under the Provisions of Section 102 of the Food
and Agriculture Act of 1962
(1) Purpose: The purpose of this memorandum of understanding is to
outline the responsibilities and functions of the Soil Conservation
Service (SCS) and the Farmers Home Administration (FmHA) in regard to
loans made by FmHA to local sponsors for the installation of RC&D
measures within authorized resource conservation and development RC&D
areas.
(2) Agency responsibilities: Secretary of Agriculture memorandum No.
1515 designates the Soil Conservation Service as the Departmental
agency responsible for administration of the activities under section
102, Pub. L. 87-703, relating to resource conservation and development
program. The Secretary also directed the Farmers Home Administration to
assist such projects within its departmentally assigned functions which
includes making and servicing RCD loans.
FmHA will establish policies and procedures for making and servicing
RCD loans and will cooperate with RCD sponsors, SCS, and other Federal
and State agencies in carrying out their responsibilities in support of
the RCD program.
(3) Assisting local sponsors:
(i) When it is known that an eligible sponsoring local organization
desires information about an RCD loan, the RC&D Coordinator of SCS will
notify the FmHA County supervisor. They will consult with the
sponsorsing local organization on organizational arrangements, plans for
financing, and operation and maintenance of the RCD measure for which a
loan is needed.
(ii) When the RCD measure Plan has been approved by the SCS State
conservationist, the FmHA representative will assist the interested
sponsoring local organization with the preparation of the application
for an RCD loan.
(iii) The application will be reviewed with the RCD area sponsors to
see if the application and the RCD measure for which it is requested
meet the RCD area plan objectives.
(iv) An approved RCD area plan and the related approved RCD measure
plan will not obligate the FmHA to make an RCD loan.
(v) The SCS will furnish technical assistance to RCD sponsoring local
organizations receiving a loan in accordance with SCS policies and
procedures. The SCS and FmHA representatives will work together during
the development of plans for RCD measures including estimates of funds
needed and sources of funds for the establishment of RCD measures to
assure that RCD loan funds may be used in accordance with FmHA policies
to serve the needs of the RCD sponsoring local organization and also in
a manner to protect the Government's interest.
(4) Requirements to be met when financial assistance is provided by
SCS and an RCD loan is made by FmHA:
(i) The SCS will confer with FmHA as to terms and conditions to be
included in invitations to bid and contracts for construction or
purchase of supplies and materials issued in connection with RCD
measures to be installed with RCD loan funds. The contracts must be
acceptable to FmHA before execution by the sponsoring local
organization.
(ii) The SCS may approve minor changes during construction which do
not appreciably affect design, cost, or function of a structure.
However major changes must have the concurrence of FmHA.
(iii) The SCS and FmHA will agree to make joint periodic inspections
annually, or more frequently if necessary, to see that works of
improvement are being operated and maintained according to the RCD
measure operation and maintenance agreements. The SCS State
conservationist and FmHA State director will collaborate in arranging
for correction of deficiencies. The FmHA will make other inspections as
necessary to determine compliance with FmHA loan regulations and
maintenance of the security property or other security interest of the
Government.
(iv) When a RCD measure sponsoring local organization proposes to
contract with another organization for construction, operation and
maintenance, the organization and contractural arrangements must be
approved by FmHA and SCS. This determination will be made prior to
approval of the project agreement.
(v) The local organization will not be authorized to start
construction on works of improvement to be financed, in whole or in
part, with a RCD loan until:
(A) The SCS State conservationist has notified the FmHA State
director that the sponsoring local organization has met all requirements
for receiving RCD assistance from SCS and has furnished the State
director with a schedule for beginning and completing the construction
of works of improvement to be installed with RCD loan funds.
(B) The SCS has entered into a project agreement for construction of
works of improvement, setting forth the mutual understanding,
responsibilities, working relations and cost-sharing arrangements of the
sponsoring and contracting local organizations and the SCS.
(C) The FmHA State director has notified the SCS State
conservationist and the borrower in writing that the RCD loan has been
closed properly and that RCD loan funds are available and the conditions
under which they will be released.
(D) Any contract entered into by the local organization for
materials, labor, or the construction of works of improvement to be
financed with RCD loan funds has been found acceptable by both FmHA and
SCS and has been approved in writing by both.
(E) All engineering plans, specifications, and drawings for works of
improvement to be installed with loan funds have been approved by both
FmHA and the SCS.
(5) Performing development where financial assistance (cost-sharing)
is not provided by SCS: The FmHA will be responsible for construction
of project measures for these loans in accordance with FmHA policies and
procedures.
(6) Information activities: The SCS will be responsible for
preparation, release, and handling of all informational and educational
material regarding RCD plans, measures and projects, including
bulletins, press releases, and other public announcements. The SCS
will, however, secure the recommendations of the FmHA prior to releasing
pamphlets and other informational material which makes reference to RCD
loans. The FmHA will, in cooperation with SCS, prepare and release
informational material on receiving and processing RCD loans
applications.
07 CFR 1942.424 Subpart J -- Technical Assistance and Training Grants
Source: 52 FR 41950, Nov. 2, 1987, unless otherwise noted.
07 CFR 1942.451 General.
This subpart sets forth the policies and procedures for making
Technical Assistance grants. Grants for technical assistance and
training for water and waste disposal facilities are authorized under
section 306(a)(16)(A) of the Consolidated Farm and Rural Development
Act, (CONACT), (7 U.S.C. 1926(a)), as amended. Grants for solid waste
management are authorized under section 310B of the CONACT, (7 U.S.C.
1932), as amended.
(56 FR 51536, July 11, 1991)
1942.452 (Reserved)
07 CFR 1942.453 Objectives.
(a) The objectives of the Technical Assistance and Training Grant
Program are to:
(1) Identify and evaluate solutions to water and waste disposal
problems in rural areas.
(2) Assist applicants in preparing applications for water and waste
disposal grants made in accordance with Subpart H of Part 1942 of this
chapter.
(3) Improve operation and maintenance of existing water and waste
disposal facilities in rural areas.
(b) The objectives of the Solid Waste Management Grant Program are
to:
(1) Reduce or eliminate pollution of water resources.
(2) Improve planning and management of solid waste sites.
(52 FR 41950, Nov. 2, 1987, as amended at 56 FR 51536, July 11, 1991)
07 CFR 1942.454 Definitions.
Association. An entity, including a small city or town, that is
eligible for Farmers Home Administration (FmHA) water and waste disposal
financial assistance in accordance with 1942.17(b) of Subpart A and
1942.355(a) of Subpart H of Part 1942 of this chapter.
Grantee. An entity with whom FmHA has entered into a grant agreement
under this program to provide technical assistance and/or training to
associations as defined in this section.
Low Income. Median household income below the poverty line for a
family of four as defined in section 673(2) of the Community Services
Block Grant Act (42 U.S.C. 9902(2)), or below 80 percent of the
Statewide nonmetropolitan median household income.
Rural area. For water and waste disposal facilities the terms
''rural'' or ''rural area'' will not include any area in a city or town
with a population in excess of 10,000 inhabitants according to the
latest decennial census of the United States.
State. Any of the fifty States, the Commonwealth of Puerto Rico, the
Western Pacific Territories, Marshall Islands, Federated States of
Micronesia, Republic of Palau, and the U.S. Virgin Islands.
(52 FR 41950, Nov. 2, 1987, as amended at 56 FR 31536, July 11, 1991)
07 CFR 1942.455 Source of funds.
Technical Assistance and Training grants awarded will be made from
not less than one (1) percent or, at the discretion of the FmHA
Administrator, not more than two (2) percent of any appropriations for
grants under section 306(a)(2) of the CONACT, (7 U.S.C. 1926(a)).
Technical Assistance and Training grant funds not obligated by September
1 of each fiscal year will be used for water and waste disposal grants
made in accordance with subpart H of this part 1942. This section does
not apply to Solid Waste Management grants.
(56 FR 31536, July 11, 1991)
1942.456 (Reserved)
07 CFR 1942.457 Eligibility.
Organizations eligible for grants are private nonprofit organizations
that have been granted tax exempt status by the Internal Revenue Service
of the United States. Applicants must have the proven ability,
background, experience, legal authority and actual capacity to provide
technical assistance and/or training to associations as provided in
1942.453 of this subpart.
07 CFR 1942.458 Purpose.
(a) Technical Assistance and/or Training Grants may be used to:
(1) Identify and evaluate solutions to water problems of associations
in rural areas relating to:
(i) Source.
(ii) Storage.
(iii) Treatment.
(iv) Distribution.
(2) Identify and evaluate solutions to waste problems of associations
in rural areas relating to:
(i) Collection.
(ii) Treatment.
(iii) Disposal.
(3) Assist associations that have filed a preapplication with FmHA in
the preparation of water and/or waste disposal loan and/or grant
applications.
(4) Provide training to association personnel that will improve the
management, operation and maintenance of water and waste disposal
facilities.
(5) To pay the expenses associated with providing the technical
assistance and/or training authorized in paragraphs (a) (1) through (4)
of this section.
(b) Solid Waste Management grants may be used to:
(1) Evaluate current landfill conditions to determine threats to
water resources.
(2) Provide technical assistance and/or training to enhance operator
skills in the maintenance and operation of active landfills.
(3) Provide technical assistance and/or training to help communities
reduce the solid waste stream.
(4) Provide technical assistance and/or training for operators of
landfills which are closed or will be closed in the near future with the
development/implementation of closure plans, future land use plans,
safety and maintenance planning, and closure scheduling within permit
requirements.
(52 FR 41950, Nov. 2, 1987, as amended at 56 FR 31536, July 11, 1991)
1942.459 (Reserved)
07 CFR 1942.460 Limitations.
Grant funds may not be used to:
(a) Recruit applications for FmHA's water and waste disposal loan
and/or grant program or any loan and/or grant program.
(b) Duplicate current services, replacement or substitution of
support previously provided such as those performed by an association's
consultant in developing a project.
(c) Fund political activities.
(d) Pay for capital assets, the purchase of real estate or vehicles,
improve and renovate office space, or repair and maintain
privately-owned property.
(e) Pay for construction or operation and maintenance costs.
(f) Pay costs incurred prior to the effective date of grants made
under this subpart.
07 CFR 1942.461 Equal opportunity requirements.
The policies and regulations contained in Subpart E of Part 1901 of
this chapter apply to grants made under this subpart.
07 CFR 1942.462 Environmental requirements.
The policies and regulations contained in Subpart G of Part 1940 of
this chapter apply to grants made for the purposes in 1942.458 of this
subpart.
07 CFR 1942.463 Preapplications.
(a) Applicants will file an original and one copy of SF 424.1,
''Application for Federal Assistance (For Non-construction),'' with the
appropriate FmHA office between October 1 and December 31 each fiscal
year. Preapplications for Solid Waste Management grants for the first
year will be accepted for 30 days after the effective date of the
Federal Register. This form is available in all FmHA offices.
Applicants proposing to provide technical assistance and/or training in
only one State will apply through the appropriate FmHA State Office.
The FmHA State Office will review and forward preapplications, with
their recommendations, within seven working days to the National Office,
Attention: Water and Waste Disposal Division. Applicants providing
technical assistance and/or training in more than one State will forward
the preapplication to the Administrator, Farmers Home Administration,
Washington, DC 20250. Preapplications for Solid Waste Management grants
that cannot be funded in the fiscal year received will not be retained
for consideration for funding in the following fiscal year and will be
handled as outlined in 1942.463(g).
(b) All preapplications shall be accompanied by:
(1) Evidence of applicant's legal existence and authority, in the
form of certified copies of articles of incorporation and bylaws and a
certified list of directors and officers with their respective terms.
(2) Evidence tax exempt status from the Internal Revenue Service.
(3) Brief written narrative which includes items such as:
(i) The proposed service(s) to be provided, including the benefits of
the technical assistance and/or training.
(ii) Area to be served.
(iii) Name of association(s) or type of association(s) that will be
served.
(iv) Median household income of the population to be served by each
association(s).
(v) Grantee's experience, including experience of key staff members
and person(s) providing the technical assistance and/or training.
(vi) The number of months duration of the project or service and the
estimated time it will take from grant approval to beginning of service.
(vii) Method used to select the association(s) that will receive the
service.
(viii) Brief description of how the service will be provided. Such
as through currently employed personnel or some other method.
(ix) Method to be used for delivery of the service, including
personnel to be utilized and tasks to be contracted, if any.
(4) Latest financial information to show the organization's financial
capacity to carry out the proposed work. As a minimum, the information
should include a balance sheet and an income statement. A current audit
report is preferred.
(5) Estimated breakdown of costs including that to be funded by
grantee as well as other sources.
(6) Budget and accounting system in place or proposed.
(7) Evaluation method to determine if objective(s) of the proposed
activity is being accomplished.
(c) Upon receipt of a preapplication, the FmHA National Office will:
(1) Review and evaluate the preapplication and accompanying
documents; and
(2) Request from the Office of General Counsel (OGC), a legal
determination of applicant's legal existence and authority to provide
technical assistance and/or training. The legal opinion will be
obtained from the Regional Attorney serving the area where the
applicant's headquarters is located; and
(3) Normally, respond to the applicant within 45 days after December
31 of each year using Form AD-622, ''Notice of Preapplication Review
Action'' indicating the action taken on the preapplication.
(d) Applicants whose preapplications are found to be ineligible will
be given notice by use of Form AD-622 and advised of their appeal rights
under Subpart B of Part 1900 of this chapter.
(e) Applicants who are eligible, but do not have the priority
necessary for further consideration will be notified with Form FmHA
AD-622 which includes the following statements:
''Your proposal cannot be funded within the available funds.''
''You are advised against incurring obligations which cannot be
fulfilled without FmHA funds.''
(f) Applicants that are eligible for funding within the available
funds will be provided forms and instructions for filing a complete
application. Applicants should be advised against incurring obligations
which cannot be fulfilled without FmHA funds.
(g) Applicants who have filed preapplications for solid waste
management grant funds that cannot be funded within the available funds
will be notified, using AD-622, that their preapplication will not be
retained. They will also be notified that they may file a new
preapplication when funds again become available using the following
statement:
''If the Farmers Home Administration receives funding for the program
in FY XX, you may file a new preapplication on or after October 1,
19XX.''
(50 FR 7296, Feb. 22, 1985, as amended at 53 FR 3861, Feb. 10, 1988;
55 FR 13503, Apr. 11, 1990; 56 FR 31536, July 11, 1991)
07 CFR 1942.464 Priority.
(a) The preapplication and supporting information will be used to
determine the applicant's priority for available funds for the Technical
Assistance and Training Grant program. The following specific criteria
will be considered in the competitive selection of Technical Assistance
and Training Grant recipients:
(1) Applicant's demonstrated capability and past performance in
providing technical assistance and/or training to rural associations.
(2) The extent to which the population of the associations served
have low income.
(3) Applicant's financial and if applicable, in-kind resources that
will maximize use of technical assistance and/or training funds for
direct staffing of activities that are delivered to the associations.
(4) The extent to which the project will be cost effective, including
but not limited to; the ratio of proposed personnel to the cost of the
project, the cost per associations served by the project, and the
expected benefits from the project.
(5) How well the proposal coincides with the objectives of FmHA's
Water and Waste Disposal program authorized in Subparts A and H of Part
1942 of this chapter.
(6) Applicants proposing to serve multi-state, regional, or
nationwide areas.
(7) Applicants whose time frame for completion of the technical
assistance and/or training grant project is twelve months or less.
(b) Preapplications received for the Solid Waste Management Grant
program that will provide for regional technical assistance will be
given priority within the available funds.
(52 FR 41950, Nov. 2, 1987, as amended at 56 FR 31537, July 11, 1991)
1942.465 (Reserved)
07 CFR 1942.466 Application processing.
(a) Upon notification on Form AD-622 that the applicant is eligible
for funding, the following will be submitted to the FmHA National Office
by the applicant.
(1) SF 424.1, ''Application for Federal Assistance (For
Non-construction.)''
(2) Proposed scope of work detailing the training and/or technical
assistance to be accomplished and time frames for completion of each
task.
(3) Proposed budget.
(4) Other requested information needed by FmHA to make a grant award
determination.
(b) The following forms and documents will be part of the grant
docket:
(1) Form FmHA 400-1, ''Equal Opportunity Agreement.''
(2) Form FmHA 400-4, ''Assurance Agreement.''
(3) Grant Agreement signed by the applicant.
(4) Scope of work prepared by the applicant.
(5) Form FmHA 1940-1, ''Request for Obligation of Funds.''
(c) If the applicant fails to submit the application and related
material by the date shown on Form AD-622 (normally 30 days from the
date of Form AD-622), FmHA may discontinue consideration of the
application.
(52 FR 41950, Nov. 2, 1987, as amended at 55 FR 13504, Apr. 11, 1990)
1942.467 (Reserved)
07 CFR 1942.468 Grant approval and obligation of funds.
(a) FmHA National Office will review the application and other
documents to determine whether the proposal complies with these
regulations.
(b) All grants made under these regulations will be approved and
obligated by the FmHA Administrator, or designee.
(c) The obligation of funds will be handled in accordance with
1942.5(d) of Subpart A of Part 1942 of this chapter.
(d) An executed copy of the Grant Agreement and scope of work will be
sent to the applicant on the obligation date, along with a copy of Form
FmHA 1940-1. FmHA will retain the executed original of the Grant
Agreement. The grant will be considered closed on the obligation date.
(e) If the grant is not approved, the applicant will be notified in
writing of the reason(s) for rejection. The notification to the
applicant will state that a review of this decision by FmHA may be
requested by the applicant under Subpart B of Part 1900 of this chapter.
07 CFR 1942.469 Fidelity bond.
Prior to the advancing of funds, the grantee will provide fidelity
bond coverage for the positions of persons entrusted with the receipt
and disbursement of its funds and the custody of valuable property. The
amount of the bond will be at least equal to the maximum amount of
monies that the grantee will have on hand at any one time for technical
assistance and/or training provided in accordance with the Grant
Agreement. Unless prohibited by State law, the United States, acting
through the Farmers Home Administration, will be named as co-obligee in
the bond. The bond must be obtained from a company listed in Department
of Treasury Circular 570, as amended. Form FmHA 440-24, ''Position
Fidelity Schedule Bond,'' may be used. A certified power-of-attorney
with effective date will be attached to the bond.
1942.470 -- 1942.471 (Reserved)
07 CFR 1942.472 Fund disbursement.
Grantees will be reimbursed as follows:
(a) Standard Form (SF) 270, ''Request for Advance or Reimbursement?''
will be completed by the applicant and submitted to FmHA National Office
not more frequently than monthly.
(b) Upon receipt of a properly completed SF-270, the funds will be
requested through the field office terminal system. Ordinarily, payment
will be made within 30 days after receipt of a proper request for
reimbursement.
(c) Grantees are encouraged to use minority banks (a bank which is
owned by at least 50 percent minority group members) for the deposit and
disbursement of funds. A list of minority owned banks can be obtained
from the Office of Minority Business Enterprise, Department of Commerce,
Washington, DC 20230.
07 CFR 1942.473 Grant cancellation or major changes.
If it is determined that a project will not be funded or if major
changes in the scope of the project are made after release of the
approval announcement, the Administrator will notify the Director of
Legislative Affairs and Public Information Staff (LAPIS) giving the
reasons for such action. In the case of a grant cancellation, Form FmHA
1940-10, ''Cancellation of U.S. Treasury Check and/or Obligation,'' will
not be submitted to the Finance Office until five working days after
notifying the Director of LAPIS and grant obligation cancellations will
not be submitted to the National Office until 5 work days after
notifying the Director of LAPIS.
07 CFR 1942.474 Reporting.
Standard Form (SF) 269, ''Financial Status Report,'' SF 272,
''Federal Cash Transactions Report,'' and a project performance activity
report will be required of all Grantees on a quarterly basis. A final
project performance report will be required with the last SF-269. The
final report may serve as the last quarterly report. Grantees shall
constantly monitor performance to ensure that time schedules are being
met, projected work by time periods is being accomplished, and other
performance objectives are being achieved. All multi-state, regional,
and nationwide Grantees are to submit an original of each report to the
FmHA National Office. Grantees serving only one State are to submit an
original of each report to the FmHA State Director. The FmHA State
Director will review and forward to the FmHA National Office the report
with comments. The project performance reports shall include, but not
be limited to, the following:
(a) A comparison of actual accomplishments to the objectives
established for that period;
(b) Reasons why established objectives were not met;
(c) Problems, delays, or adverse conditions which will affect
attainment of overall project objectives, prevent meeting time schedules
or objectives, or preclude the attainment of particular project work
elements during established time periods. This disclosure shall be
accompanied by a statement of the action taken or planned to resolve the
situation; and
(d) Objectives and timetable established for the next reporting
period.
07 CFR 1942.475 Audit.
The Grantee will provide an audit report prepared in accordance with
OMB Circular A-110, Attachment F (available at any FmHA state or
district office), within 90 days after project completion.
07 CFR 1942.476 Grant agreement.
Exhibit A of this subpart is a Grant Agreement which sets forth the
procedures for making and servicing grants made under this subpart.
07 CFR 1942.477 Grant servicing.
Grants will be serviced in accordance with the grant agreement and
Subpart E of Part 1951 of this chapter. Subpart B of Part 1900 of this
chapter will be followed when grants are terminated for cause.
07 CFR 1942.478 Delegation of authority.
The authority under this subpart is redelegated to the Assistant
Administrator, Community and Business Programs, except for the
discretionary authority contained in 1942.455 of this subpart. The
Assistant Administrator Community and Business Programs may redelegate
the authority in this section.
1942.479 -- 1942.499 (Reserved)
07 CFR 1942.500 OMB control number.
The collection of information requirements in this regulation have
been approved by the Office of Management and Budget and assigned OMB
control number 0575-0123.
07 CFR 1942.500 Pt. 1942, Subpt. J, Exh. A
07 CFR 1942.500 Exhibit to Subpart J
07 CFR 1942.500 Exhibit A -- Grant Agreement Technical Assistance and Training
07 CFR 1942.500 Pt. 1942, Subpt. J, Exh. A
This agreement is between
--
(name),
--
(address), (Grantee) and the United States of America acting through
the Farmers Home Administration (Grantor or FmHA). Grantee has
determined to undertake certain Technical Assistance and/or Training at
an estimated cost of $XXXX and has duly authorized such activity.
Grantee shall finance $XXXX of the costs through cash and in-kind
contributions. The Grantor agrees to grant to Grantee a sum not to
exceed $XXXX subject to the terms and conditions established by the
Grantor; provided, however, that the proportionate share of any grant
funds actually advanced and not needed for grant purposes shall be
returned immediately to the Grantor. The Grantor may terminate the
grant in whole, or in part, at any time before the date of completion,
whenever it is determined that the Grantee has failed to comply with the
conditions of the grant. In consideration of said grant by Grantor to
Grantee, to be made pursuant to Section 306(a)(16)(A) of the
Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)) for the
purpose of defraying technical assistance and/or training costs as
permitted by applicable Farmers Home Administration regulations:
1. This agreement shall be effective when executed by both parties.
2. The scope of work described by the applicant in Exhibit 1 shall be
completed within XXXX days from the date of this agreement.
3. Use of grant funds for travel which is determined as being
necessary to the program for which the grant is established may be
subject to the travel policies of the Grantee institution if they are
uniformly applied regardless of the source of funds in determining the
amounts and types of reimbursable travel expenses of Grantee staff and
consultants. Where the Grantee institution does not have such specific
policies uniformly applied, the Federal Travel Regulations shall apply
in determining the amount charged to the grant.
The information collected through the grant agreement is required to
obtain a Technical Assistance and/or Training grant and is used to
determine that the grant funds are used for authorized program purposes.
Grantee may purchase furniture and office equipment only if
specifically approved in the scope of work. Approval will be given only
when Grantee demonstrates that purchase is necessary. Commercial
purchase under these circumstances will be approved only after
consideration of Federal supply sources.
(a) Expenses and Purchases Excluded:
(i) In no event shall the Grantee expend or request reimbursement
from Federal-share funds for obligations entered into or for costs
incurred or accrued prior to the effective date of this grant.
(ii) Funds budgeted under this grant may not be used for
entertainment expenses or to fund political activities.
(iii) Funds budgeted under this grant may not be used to pay for
capital assets, the purchase of real estate or vehicles, improve or
renovate office space, or repair and maintain privately-owned property.
(iv) Recruit applications for FmHA's water and waste disposal loan
and/or grant program.
(v) Duplicate current services, replacement, or substitution of
support previously provided.
(b) Grant funds shall not be used to replace any financial support
previously provided for or assured from any other source. The Grantee
agrees that the general level of expenditure by the Grantee for the
benefit of program area and/or program covered by this agreement shall
be maintained and not reduced as a result of the Federal share funds
received under this grant.
4. Grant funds will be disbursed by FmHA on a reimbursement basis not
to exceed one advance every 30 days. The financial management system of
the recipient organization shall provide for effective control over and
accountability for all funds, property and other assets.
(a) As needed, but not more frequently than once every 30 days, an
original and one copy of Standard Form (SF) 270, ''Request for Advance
or Reimbursement'' may be submitted to FmHA.
(b) Grantee shall provide satisfactory evidence to FmHA that all
officers of Grantee organization authorized to receive and/or disburse
Federal funds are covered by such bonding and/or insurance requirements
as are normally required by the Grantee.
(c) Where the Grantee shall have claimed credit for
contributions-in-kind to the total cost of allowable expenses, the
evaluation of such contributions-in-kind shall be subject to
reevaluation by the Grantor at any time, and any deficiency so
determined by the Grantor shall be compensated by supplemental
contributions by the Grantee as a condition for further disbursements by
the Grantor. Specific procedures for establishing the value of in-kind
contributions from third parties established in OMB Circular A-110 will
govern such an evaluation. Principles for determining cost are set
forth in OMB Circular A-122 and will be used in cost evaluation.
(d) If for any reason grant funds are invested, income earned on such
investments shall be identified as interest income on grant funds and
forwarded to the Finance Office, FmHA, St. Louis, Missouri.
5. The Grantee will submit Performance and Financial reports as
indicated below:
(a) Quarterly, an original and one copy of SF 269, ''Financial Status
Report,'' SF 272, ''Federal Cash Transactions Report,'' (due 15 working
days after end of quarter) and a Project Performance report according to
the schedule below:
(b) Final, an original and 1 copy of SF 269, and a Project
Performance report according to the schedule below:
Note: Final reports may serve as the last quarterly reports.
(c) The original and 1 copy of reports and forms are to be submitted
to the Administrator, Farmers Home Administration, Washington, DC 20250.
6. The budget covered by this agreement is:
(a) Federal Contribution
$
Grantee Contribution
-- Cash -- in-kind
Total $
(b) Budget.
(c) In accordance with OMB Circular A-122, compensation for employees
will be considered reasonable to the extent that such compensation is
consistent with that paid for similar work in order activities of the
State or local government.
(d) In accordance with OMB Circular A-110, Attachment J, transfers
among direct cost budget categories of more than 5 percent of the total
budget must have prior written approval by the Administrator, Farmers
Home Administration.
7. Grantee responsibility.
(a) The scope of work is described in the attached Exhibit 1. The
Grantee accepts responsibility for providing technical assistance and/or
establishing and implementing a training program as set forth in scope
of work. The Grantee shall:
(i) Identify and evaluate solutions to water and waste disposal
problems in rural areas.
(ii) Provide technical assistance and/or training to improve
operation and maintenance of water and waste disposal facilities in
rural areas.
(iii) Assist rural communities that have decided to submit an
application for the FmHA Water and Waste Disposal grant program in
preparing such application.
(iv) Provide continuing information to FmHA on the status of Grantee
programs, projects, related activities, and problems.
(b) The Grantee shall inform the Grantor as soon as the following
types of conditions become known:
(i) Problems, delays, or adverse conditions which materially affect
the ability to attain program objectives, prevent the meeting of time
schedules or goals, or preclude the attainment of project work units by
established time periods. This disclosure shall be accompanied by a
statement of the action taken or contemplated, and any Grantor
assistance needed to resolve the situation.
(ii) Favorable developments or events which enable meeting time
schedules and goals sooner than anticipated or producing more work units
than originally projected.
1. To comply with property management standards established by
Attachment N of OMB Circular A-110 for expendable and nonexpendable
personal property. ''Personal property'' means property of any kind
except real property. It may be tangible -- having physical existence
-- or intangible -- having no physical existence, such as patents,
inventions, and copyrights. ''Nonexpendable personal property'' means
tangible personal property having a useful life of more than one year
and an acquisition cost of $300 or more per unit. A Grantee may use its
own definition of nonexpendable personal property provided that such
definition would at least include all tangible personal property as
defined above. ''Expendable personal property'' refers to all tangible
personal property other than nonexpendable property. When nonexpendable
tangible property is acquired by a Grantee with project funds, title
shall not be taken by the Federal Government but shall be vested in the
Grantee subject to the following conditions:
(a) Right to transfer title. For items of nonexpendable personal
property having a unit acquisition cost of $1,000 or more, FmHA may
reserve the right to transfer the title to the Federal Government or to
a third party named by the Federal Government when such third party is
otherwise eligible under existing statutes. Such reservation shall be
subject to the following standards:
(i) The property shall be appropriately identified in the grant or
otherwise made known to the Grantee in writing.
(ii) FmHA shall issue disposition instructions within 120 calendar
days after the end of the Federal support of the project for which it
was acquired. If FmHA fails to issue disposition instructions within
the 120 calendar day period, the Grantee shall apply the standards of
Part B 1. (b) and (c) of this exhibit.
(iii) When FmHA exercises its right to take title, the personal
property shall be subject to the provisions for federally owned
nonexpendable property discussed in Part B 1. (b) and (c) of this
exhibit.
(iv) When title is transferred either to the Federal Government or to
a third party and the Grantee is instructed to ship the property
elsewhere, the Grantee shall be reimbursed by the benefiting Federal
agency with an amount which is computed by applying the percentage of
the Grantee participation in the cost of the original grant project or
program to the current fair market value of the property, plus any
reasonable shipping or interim storage costs incurred.
(b) Use of other tangible nonexpendable property for which the
Grantee has title.
(i) The Grantee shall use the property in the project or program for
which it was acquired as long as needed, whether or not the project or
program continues to be supported by Federal funds. When it is no
longer needed for the original project or program, the Grantee shall use
the property in connection with its other Federally sponsored
activities, in the following order of priority:
(1) Activities sponsored by FmHA.
(2) Activities sponsored by other Federal agencies.
(ii) Shared use. During the time that nonexpendable personal
property is held for use on the project or program for which it was
acquired, the Grantee shall make it available for use on other projects
or programs if such other use will not interfere with the work on the
project or program for which the property was originally acquired.
First preference for such other use shall be given to projects or
programs sponsored by FmHA; second, preference shall be given to
projects or programs sponsored by other Federal agencies. If the
property is owned by the Federal Government, use on other activities not
sponsored by the Federal Government shall be permissible if authorized
by FmHA. User charges should be considered if appropriate.
(c) Disposition of other nonexpendable property. When the Grantee no
longer needs the property as provided in Part B 1. (b) of this exhibit,
the property may be used for other activities in accordance with the
following standards:
(i) Nonexpendable property with a unit acquisition cost of less than
$1,000. The Grantee may use the property for other activities without
reimbursement to the Federal Government or sell the property and retain
the proceeds.
(ii) Nonexpendable personal property with a unit acquisition cost of
$1,000 or more. The Grantee may retain the property for other use
provided that compensation is made to FmHA or its successor. The
amounts of compensation shall be computed by applying the percentage of
Federal participation in the cost of the original project or program to
current fair market value of the property. If the Grantee has no need
for the property and the property has further use value, the Grantee
shall request disposition instructions from the original Grantor agency.
(iii) FmHA shall determine whether the property can be used to meet
the agency's requirements. If no need exists within FmHA, the General
Services Administration's Federal Property Management Regulations (FPMR)
will be used by FmHA to determine whether a need for the property exists
in other Federal agencies. FmHA shall issue instructions to the Grantee
no later than 120 days after the Grantee request and the following
procedures shall govern:
(1) If so instructed or if disposition instructions are not issued
within 120 calendar days after the Grantee's request, the Grantee shall
sell the property and reimburse FmHA an amount computed by applying to
the original project or program. However, the Grantee shall be
permitted to deduct and retain from the Federal share $100 or ten
percent of the proceeds, whichever is greater, for the Grantee's selling
and handling expenses.
(2) If the Grantee is instructed to dispose of the property other
than as described in Part B 1. (b) and (c) of this exhibit, the Grantee
shall be reimbursed by FmHA for such costs incurred in its disposition.
(3) Property management standards for nonexpendable property. The
Grantee's property management standards for nonexpendable personal
property shall include the following procedural requirements:
(a) Property records shall be maintained accurately and shall
include:
(i) A description of the property.
(ii) Manufacturer's serial number, model number, Federal stock
number, national stock number, or other identification number.
(iii) Sources of the property including grant or other agreement
number.
(iv) Whether title vests in the Grantee or the Federal Government.
(v) Acquisition date (or date received, if the property was furnished
by the Federal Government) and cost.
(vi) Percentage (at the end of the budget year) of Federal
participation in the cost of the project or program for which the
property was acquired. (Not applicable to property furnished by the
Federal Government.)
(vii) Location, use and condition of the property and the date the
information was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, including date of disposal and sales
price or the method used to determine current fair market value where a
Grantee compensates the Federal agency for its share.
(b) Property owned by the Federal Government must be marked to
indicate Federal ownership.
(c) A physical inventory of property shall be taken and the results
reconciled with the property records at least once every two years. Any
differences between quantities determined by the physical inspection and
those shown in the accounting records shall be investigated to determine
the causes of the difference. The Grantee shall, in connection with the
inventory, verify the existence, current utilization, and continued need
for the property.
(d) A control system shall be in effect to ensure adequate safeguards
to prevent loss, damage, or theft of the property. Any loss; damage,
or the theft of nonexpendable property shall be investigated and fully
documented; if the property was owned by the Federal Government, the
Grantee shall promptly notify FmHA.
(e) Adequate maintenance procedures shall be implemented to keep the
property in good condition.
(f) Where the Grantee is authorized or required to sell the property,
proper sales procedures shall be established which would provide for
competition to the extent practicable and result in the highest possible
return.
(g) Expendable personal property shall vest in the Grantee upon
acquisition. If there is a residual inventory of such property
exceeding $1,000 in total aggregate fair market value, upon termination
or completion of the grant and if the property is not needed for any
other federally sponsored project or program, the Grantee shall retain
the property for use on nonfederally sponsored activities, or sell it,
but must in either case compensate the Federal Government for its share.
The amount of compensation shall be computed in the same manner as
nonexpendable personal property.
2. To provide Financial Management Systems which will include:
(a) Accurate, current, and complete disclosure of the financial
results of each grant. Financial reporting will be on an accrual basis.
(b) Records which identify adequately the source and application of
funds for grant-supported activities. Those records shall contain
information pertaining to grant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays, and income.
(c) Effective control over and accountability for all funds, property
and other assets. Grantees shall adequately safeguard all such assets
and shall assure that they are used soley for authorized purposes.
(d) Accounting records supported by source documentation.
3. To retain financial records, supporting documents, statistical
records, and all other records pertinent to the grant for a period of at
least three years after grant closing except that the records shall be
retained beyond the three-year period if audit findings have not been
resolved. The Grantor and the Comptroller General of the United States,
or any of their duly authorized representatives, shall have access to
any books, documents, papers, and records of the Grantee which are
pertinent to the specific grant program for the purpose of making audit,
examination, excerpts, and transcripts.
4. Provide an audit report prepared in accordance with OMB Circular
A-110, Attachment F, within 90 days after project completion.
5. To account for and to return to Grantor interest earned on grant
funds pending their disbursement for program purposes. See Part A4.
(d) of this exhibit.
6. Not to encumber, transfer, or dispose of the property or any part
thereof, furnished by the Grantor or acquired wholly or in part with
Grantor funds without the written consent of the Grantor except as
provided in Part B1 of this exhibit.
7. To provide Grantor with such periodic reports as it may require of
Grantee operations by designated representative of the Grantor.
8. To execute Form FmHA 400-1, ''Equal Opportunity Agreement,'' Form
FmHA 400-4, ''Assurance Agreement,'' and to execute any other agreements
required by Grantor to implement the civil rights requirements.
9. That, upon any default under its representations or agreements set
forth in this instrument, Grantee, at the option and demand of Grantor,
will to the extent legally permissible, repay to the Grantor forthwith
the original principal amount of the grant stated herein above, with
interest accruing thereon from the date of default at the market rate
for water and waste disposal loan assistance in effect on the date
hereof or at the time the default occurred. Default by the Grantee will
constitute termination of the grant thereby causing cancellation of
Federal assistance under the grant. The provisions of this Grant
Agreement may be enforced by the Grantor, at its option and without
regard to: (a) prior waivers by it of previous defaults of Grantee, (b)
by judicial proceedings to require specific performance of the terms of
this Grant Agreement, (c) by such other proceedings in law or equity, in
either Federal or State courts, as may be deemed necessary by Grantor to
assure compliance with the provisions of this Grant Agreement and, (d)
the laws and regulations under which this grant is made.
10. That no member of Congress shall be permitted any share or part
of this grant or any benefit that may arise therefrom; but this
provision shall not be construed to bar as a contractor under the Grant
a private nonprofit organization whose membership might include a member
of Congress.
11. That all nonconfidential information resulting from its
activities shall be made available to the general public on an equal
basis.
12. That the purpose and scope of work for which this grant is made
shall not duplicate programs for which monies have been received, are
committed, or are applied for from other sources, public and private.
13. That the Grantee shall relinquish any and all copyrights and/or
privileges to the materials developed under this grant, such material
being the sole property of the Federal Government. In the event
anything developed under this grant is published in whole or in part,
the material shall contain notice and be identified by language to the
following effect: ''The material is the result of tax-supported
research and as such is not copyrightable. It may be freely reprinted
with the customary crediting of the source.''
14. That the Grantee shall abide by the policies promulgated in OMB
Circular A-110, Attachment O, which provides standards for use by
Grantees in establishing procedures for the procurement of supplies,
equipment, and other services with Federal grant funds.
15. To the following termination provisions:
(a) Termination for cause. The Grantor agency may terminate any
grant in whole, or in part, at any time before the date of completion,
wherever it is determined that the Grantee has failed to comply with the
conditions of the grant. The Grantor agency shall promptly notify the
Grantee in writing of the determination and the reasons for the
termination, together with the effective date. Grants can be terminated
for cause such as: failure to use funds for authorized purposes, poor
progress, untimely reports, no progress, and failure to properly account
for expenditures or property.
(b) Termination for convenience. The Grantor agency or Grantee may
terminate grants in whole, or in part, when both parties agree that the
continuation of the project would not produce beneficial results
commensurate with the further expenditure of funds. The two parties
shall agree upon the termination conditions, including the effective
date and, in the case of partial terminations, the portion to be
terminated. The Grantee shall not incur new obligations for the
terminated portion after the effective date, and shall cancel as many
outstanding obligations as possible. The Grantor agency shall allow
full credit to the Grantee for the Federal share of the noncancelable
obligations, properly incurred by the Grantee prior to termination.
Disposition of expendable and nonexpendable personal property will be in
accordance with the standards of Part B 1. of this exhibit.
16. As a condition of this grant or Cooperative Agreement, the
recipient assures and certifies that it is in compliance with and will
comply in the course of the Agreement with all applicable laws,
regulations, Executive Orders and other generally applicable
requirements, including those set out in 7 CFR 3015.205 b, which hereby
are incorporated in this Agreement by reference, and such statutory
provisions as are specifically set forth herein.
1. That it will assist Grantee, within available appropriations, with
such technical assistance as Grantor deems appropriate in planning the
project.
2. That at its sole discretion, Grantor may at any time give any
consent, deferment, subordination, release, satisfaction, or termination
of any or all of Grantee's grant obligations, with or without valuable
consideration, upon such terms and conditions as Grantor may determine
to be (a) advisable to further the purposes of the grant or to protect
Grantor's financial interest therein, and (b) consistent with both the
statutory purposes of the grant and the limitations of the statutory
authority which it is made.
This agreement is subject to current Grantor regulations and any
future regulations not inconsistent with the express terms hereof.
Grantee on XXXX 19XX, has caused this agreement to be executed by its
duly authorized XXXX and attested and its corporate seal affixed by its
duly authorized XXXX.
Attest:
Grantee
--
By
(Title)
Grantor
United States of America
Farmers Home Administration
By
--
(Title)
07 CFR 1942.500 Subpart K -- Emergency Community Water Assistance
Grants
Source: 55 FR 12812, April 6, 1990, unless otherwise noted.
07 CFR 1942.501 General.
(a) This subpart outlines Farmers Home Administration (FmHA) policies
and procedures for making Emergency Community Water Assistance Grants
authorized under sections 306A and 306B of the Consolidated Farm and
Rural Development Act, (7 U.S.C. 1926(a)), as amended.
(b) FmHA officials will maintain liaison with officials of other
Federal, State, regional and local development agencies to coordinate
related programs to achieve rural development objectives.
(c) FmHA officials shall cooperate with appropriate State agencies in
making grants that support State strategies for rural area development.
(d) Funds allocated for use in accordance with this subpart are also
to be considered for use by Indian tribes within the State regardless of
whether State development strategies include Indian reservations within
the State's boundaries. Indians residing on such reservations must have
an equal opportunity along with other rural residents to participate in
the benefits of this program. This includes equal application of
outreach activities of FmHA County and District Offices.
(e) Federal statutes provide for extending FmHA financial programs
without regard to race, color, religion, sex, national origin, marital
status, age, or physical/mental handicap (provided the participant
possesses the capacity to enter into legal contracts).
(55 FR 12812, April 6, 1990, as amended at 56 FR 58178, Nov. 18,
1991)
1942.502 (Reserved)
07 CFR 1942.503 Objective.
The objective of the Emergency Community Water Assistance Grant
Program is to assist the residents of rural areas that have experienced
a significant decline in quantity or quality of water to obtain adequate
quantities of water that meet the standards set by the Safe Drinking
Water Act (42 U.S.C. 300f et seq.) (SDWA).
07 CFR 1942.504 Definitions.
Emergency -- Occurrence of an incident such as, but not limited to, a
drought, earthquake, flood, disease outbreak, or chemical spill.
Rural areas -- Located in any of the fifty States, the Commonwealth
of Puerto Rico, the Western Pacific Territories, Marshall Islands,
Federated States of Micronesia, Republic of Palau, and the U.S. Virgin
Islands.
(1) Section 306A -- Includes any area in any city or town with a
population not in excess of 15,000 inhabitants according to the most
recent decennial census of the United States.
(2) Section 306B -- Includes any area in any city or town with a
population not in excess of 5,000 inhabitants according to the most
recent decennial census of the United States.
Section 306A -- Grants authorized by the ''Disaster Assistance Act of
1989'' (Public Law 101-82)
Section 306B -- Grants authorized by the ''Food, Agriculture,
Conservation, and Trade Act of 1990'' (Public Law 101-624).
Significant decline in quantity -- A significant decline in the
quantity is caused by a disruption of the potable water supply by an
emergency. The disruption in quantity of water prevents the present
source or delivery system from supplying the present potable water of
rural residents. This would not include a decline in excess water
capacity.
Significant decline in quality -- A significant decline in quality of
potable water is where the present community source or delivery system
does not meet, as a result of an emergency, the current SDWA
requirements. For a private source or delivery system a significant
decline in quality is where the water is no longer potable as a result
of an emergency.
(56 FR 58178, Nov. 18, 1991)
1942.505 (Reserved)
07 CFR 1942.506 Eligibility.
(a) Grants may be made to public bodies and private nonprofit
corporations serving rural areas. Public bodies include counties,
cities, townships, incorporated towns and villages, boroughs,
authorities, districts, and other political subdivisions of a State.
Public bodies also includes Indian tribes on Federal and State
reservations and other federally recognized Indian Tribal groups in
rural areas.
(b) In the case of grants made to alleviate a significant decline in
quantity or quality of water available from the water supplies of rural
residents, the applicant must demonstrate that the decline occurred
within two years of the date the application was filed with FmHA. This
would not apply to grants made for repairs, partial replacement, or
significant maintenance on an established water system.
07 CFR 1942.507 Project priority.
The following paragraphs indicate items and conditions which must be
considered in selecting applications for further development. When
ranking eligible applications for consideration for limited funds, FmHA
officials must consider the priority items met by each application and
the degree to which those priorities are met.
(a) Applications. The application and supporting information
submitted with it will be used to determine the proposed project's
priority for available funds.
(b) State Office review. All applications will be reviewed and
scored for funding priority using Exhibit A of this subpart (available
in any FmHA office). The State Director will request funds from the
National Office, Attention: Director, Water and Waste Disposal Division
(WWD), using Exhibits A and B of this subpart (available in any FmHA
office). If an application cannot be funded, the State Director will be
notified. Eligible applicants that cannot be funded should be advised
by the District Director that funds are not available.
(c) National Office review. Each year all funding requests will be
reviewed by the National Office starting November 1 and will continue as
long as funds are available except for the first year in which funds are
made available for this grant program. A review of funding requests the
first year will start 30 days after funds are made available. Projects
selected for funding will be considered based on the priority criteria
and available funds. Projects must compete on a national basis for
available funds, and the National Office will allocate funds to FmHA
State offices on a project by project basis.
(d) Selection priorities. The priorities described below will be
used by the State Director to rate applications and by the Director of
WWD to select projects for funding. Points will be distributed as
indicated in paragraphs (d)(1) through (5) of this section and will be
considered in selecting projects for funding. A copy of Exhibits A and
B (available in any FmHA office) used to rate applications, should be
placed in the case file for future reference.
(1) Population. The proposed project will serve an area with a rural
population:
(i) Section 306A.
(A) Not in excess of 5,000 -- 30 points.
(B) More than 5,000 and not in excess of 10,000 -- 15 points.
(C) More than 10,000 and not in excess of 15,000 -- 0 points.
(ii) Section 306B.
(A) Not in excess of 1,500 -- 30 points.
(B) More than 1,500 and not in excess of 3,000 -- 20 points.
(C) More than 3,000 and not in excess of 5,000 -- 15 points.
(2) Income: The median household income of population to be served
by the proposed project is:
(i) Not in excess of 70% of the statewide nonmetropolitan median
household income -- 30 points.
(ii) More than 70% and not in excess of 80% of the statewide
nonmetropolitan median household income -- 20 points.
(iii) More than 80% and not in excess of 90% of the statewide
nonmetropolitan median household income -- 10 points.
(iv) Over 90% of the statewide nonmetropolitan median household
income -- 0 points.
(3) Significant decline. Points will only be assigned for one of the
following paragraphs when the primary purpose of the proposed project is
to correct a significant decline in the:
(i) Quantity of water available from private individually owned wells
or other individual sources of water -- 30 points, or
(ii) Quantity of water available from an established system's source
of water -- 20 points, or
(iii) Quality of water available from private individually owned
wells or other individual sources of water -- 30 points. or
(iv) Quality of water available from an established system's source
of water -- 20 points.
(4) Acute shortage. Grants made in accordance with 1942.511(b) of
this subpart to assist an established water system remedy an acute
shortage of quality water or correct a significant decline in the
quantity or quality of water that is available -- 10 points.
(5) Discretionary. In certain cases the FmHA Administrator may
assign up to 30 points for items such as geographic distribution of
funds, rural residents hauling water, severe contamination levels, etc.
(55 FR 12812, Apr. 6, 1990; 55 FR 25773, June 22, 1990, as amended
at 56 FR 58178, Nov. 18, 1991)
1942.508 (Reserved)
07 CFR 1942.509 Uses.
Grant funds may be used for the following purposes:
(a) Waterline extensions from existing systems.
(b) Construction of new waterlines.
(c) Repairs to an existing system.
(d) Significant maintenance to an existing system.
(e) Construction of new wells, reservoirs, transmission lines,
treatment plants, and other sources of water.
(f) Equipment replacement.
(g) Connection and/or tap fees.
(h) Pay costs that were incurred within six months of the date an
application was filed with FmHA to correct an emergency situation that
would have been eligible for funding under this subpart.
(i) Any other appropriate purpose such as legal fees, engineering
fees, recording costs, environmental impact analyses, archaeological
surveys, possible salvage or other mitigation measures, planning,
establishing or acquiring rights associated with developing sources of,
treating, storing, or distributing water.
(j) Assist rural water systems to comply with the requirements of the
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.) (FWPCA) or
the SDWA when such failure to comply is directly related to a recent
decline in quality of potable water. This would not apply to changes in
the requirements of FWPCA or SDWA.
07 CFR 1942.510 Restrictions.
(a) Grant funds may not be used to:
(1) Section 306A -- Assist any city or town with a population in
excess of 15,000 inhabitants according to the most recent decennial
census of the United States.
(2) Section 306B -- Assist any city or town with a population in
excess of 5,000 inhabitants according to the most recent decennial
census of the United States.
(3) Assist a rural area that has a median household income in excess
of the statewide nonmetropolitan median household income according to
the most recent decennial census of the United States.
(4) Finance facilities which are not modest in size, design, cost,
and are not directly related to correcting the potable water quantity or
quality problem.
(5) Pay loan or grant finder's fees.
(6) Pay any annual recurring costs that are considered to be
operational expenses.
(7) Pay rental for the use of equipment or machinery owned by the
rural community.
(8) Purchase existing systems.
(9) Refinance existing indebtness, except for short-term debt
incurred in accordance with 1942.509 (h) of this subpart.
(10) Make reimbursement for projects developed with other grant
funds.
(11) Finance facilities that are not for public use.
(b) Nothing in paragraphs (a)(1) or (a)(2) of this section shall
preclude rural areas from submitting joint proposals for assistance
under this subpart. Each entity applying for financial assistance under
this subpart to fund their share of a joint project will be considered
individually.
(55 FR 12812, April 6, 1990, as amended at 56 FR 58178, Nov. 18,
1991)
07 CFR 1942.511 Maximum grants.
(a) Grants made to alleviate a significant decline in quantity or
quality of water available from the water supplies in rural areas that
occurred within two years of filing an application with FmHA cannot
exceed $500,000.
(b) Grants made for repairs, partial replacement, or significant
maintenance on an established system to remedy an acute shortage or
significant decline in the quality or quantity of potable water cannot
exceed $75,000.
(c) Grants under this subpart, subject to paragraphs (a) and (b) of
this section, shall be made for 100 percent of eligible project costs.
(55 FR 12812, April 6, 1990, as amended at 56 FR 58178, Nov. 18,
1991)
1942.512 (Reserved)
07 CFR 1942.513 Set-aside.
At least 70 percent of all grants made under these grant programs
shall be for projects funded in accordance with 1942.511(a) of this
subpart.
(a) Section 306A -- At least 50 percent of the funds appropriated for
this grant program shall be allocated to rural areas with populations
not in excess of 5,000 inhabitants according to the most recent
decennial census of the United States.
(b) Section 306B -- At least 75 percent of the funds appropriated for
this grant program shall be allocated to rural areas with populations
not in excess of 3,000 inhabitants according to the most recent
decennial census of the United States.
(56 FR 58178, Nov. 18, 1991)
07 CFR 1942.514 Other considerations.
(a) Civil rights compliance requirements. All grants made under this
subpart are subject to title VI of the Civil Rights Act of 1964 as
outlined in subpart E of part 1901 of this chapter.
(b) Environmental requirements. The requirements of subpart G of
part 1940 of this chapter apply to grants made under this subpart.
(c) Uniform Relocation and Real Property Acquisition Policies Act.
All projects must comply with the requirements set forth in title 7,
subtitle A, part 21 of the Code of Federal Regulations.
(d) Flood and mudslide hazard area precautions. If the project is
located in a flood or mudslide area, then flood or mudslide insurance
must be provided as required in subpart A of part 1806 of this chapter
(FmHA Instruction 426.2).
(e) Governmentwide debarment and suspension (nonprocurement) and
requirements for drug-free work place. All projects must comply with
the requirements set forth in the U.S. Department of Agriculture
regulations 7 CFR part 3017 and FmHA Instruction 1940-M (available in
any FmHA office).
(f) Intergovernmental review. All projects funded under this subpart
are subject to Executive Order 12372 which requires intergovernmental
consultation with State and local officials. These requirements are set
forth in U.S. Department of Agriculture regulations 7 CFR part 3015,
subpart V and FmHA Instruction 1940-J (available in any FmHA office).
1942.515 -- 1942.250 (Reserved)
07 CFR 1942.521 Application processing.
(a) To the extent possible, an application under this subpart will be
approved or disapproved within 60 days of the date that a complete
application and all related material is submitted to FmHA.
(b) The material submitted with the application should include the
Preliminary Engineer Report, population and median household income of
the area to be served, description of project, and nature of emergency
that caused the problem(s) being addressed by the project. The
documentation must clearly show that the applicant has had a significant
decline in the quantity and/or quality of potable water or an acute
shortage of potable water and the proposed project will eliminate the
problem. For projects to be funded in accordance with 1942.511(a) of
this subpart, evidence must be furnished that a significant decline in
quantity or quality occurred within two years of filing the application
with FmHA.
(c) The District Director should assist the applicant in application
assembly and processing.
(d) Appropriate application review and approval procedures outlined
in 1942.2 of subpart A of part 1942 of this chapter will be followed.
The preapplication stage is eliminated in processing an application
under this subpart.
(e) Each application for assistance will be carefully reviewed in
accordance with the priorities established in 1942.507 of this subpart.
A priority rating will be assigned to each application by the State
Director.
(f) When the National Office has allocated funds to the State for a
project, applicable provisions outlined in 1942.5 of subpart A and
1942.366 of subpart H of part 1942 of this chapter will be followed in
preparation of the grant docket. This would include development of an
operating budget showing that the applicant can meet all its obligations
and provide the intended services.
(g) When favorable action will not be taken on an application, the
applicant will be notified in writing by the District Director of the
reasons why the request was not favorably considered. Notification to
the applicant will state that a review of this decision by FmHA may be
requested by the applicant in accordance with subpart B of part 1900 of
this chapter.
(h) FmHA State Directors are authorized to approve grants made in
accordance with this subpart A of part 1901 of this chapter.
(i) Funds will be obligated and approval announcement made in
accordance with the provisions of 1942.5(d) and subpart A of part 1942
of this chapter.
(55 FR 12812, Apr. 6, 1990; 55 FR 25773, June 22, 1990)
07 CFR 1942.522 Planning development and procurement.
Planning development and procurement for grants made under this
subpart will be in accordance with 1942.9 and 1942.18 of subpart A of
part 1942 of this chapter. A certification should be obtained from the
State agency or the Environmental Protection Agency if the State does
not have primacy, stating that the proposed improvements will be in
compliance with requirements of the SDWA.
07 CFR 1942.523 Grant closing and disbursement of funds.
(a) Grants will be closed in accordance with instructions received
from the Office of the General Counsel (OGC).
(b) Form FmHA 1942-31, ''Association Water or Sewer System Grant
Agreement,'' will be executed by all applicants. District Directors and
State Directors are authorized to execute the agreement on behalf of
FmHA.
(c) The grant will be considered closed on the date Form FmHA 1942-31
is signed by FmHA. The Finance Office will be notified of the grant
closing date. FmHA will retain the original of the Grant Agreement.
(d) FmHA's policy is not to disburse grant funds from the Treasury
until they are actually needed by the applicant. Grant funds will be
disbursed by using multiple advances in accordance with 1942.17(p)(2)
of subpart A of part 1942 of this chapter.
1942.524 -- 1942.530 (Reserved)
07 CFR 1942.531 Performing development.
(a) Applicable provisions of 1942.17(p) and 1942.18(o) of subpart A
of part 1942 of this chapter will be followed in performing development
for grants made under this subpart.
(b) After filing an application in accordance with 1942.521 of this
subpart and when immediate action is necessary, the State Director may
concur in an applicant's request to proceed with construction before
funds are obligated provided the requirements of subpart G of part 1940
of this chapter are complied with. The applicant must be advised in
writing that:
(1) Any authorization to proceed or any concurrence in bid awards,
contract concurrence, or other project development activity, is not a
commitment by FmHA to provide grant funds under this subpart.
(2) FmHA is not liable for any debt incurred by the applicant in the
event that funds are not provided under this subpart.
07 CFR 1942.532 Grant cancellation.
The District Director or State Director may prepare and execute Form
FmHA 1940-10, ''Cancellation of U.S. Treasury Check and/or Obligation,''
in accordance with the Forms Manual Insert. If the docket has been
forwarded to OGC, that office should receive a copy of Form FmHA
1940-10. The applicant's attorney and engineer may be provided a copy
of Form FmHA 1940-10. A copy should also be sent to the National
Office, Attention: Water and Waste Disposal Division.
1942.533 (Reserved)
07 CFR 1942.534 Grant servicing.
(a) Grants will be serviced in accordance with 1951.215 of subpart E
of part 1951 of this chapter and subpart O of part 1951 of this chapter.
(b) The grantee will provide an audit report in accordance with
1942.17(q) of subpart A of part 1942 of this chapter.
07 CFR 1942.535 Subsequent grants.
Subsequent grants will be processed in accordance with the
requirements set forth in this subpart. The initial and subsequent
grants made to complete a previously approved project must comply with
the maximum grant requirements set forth in 1942.511 of this subpart.
1942.536 (Reserved)
07 CFR 1942.537 Forms, Guides, and Attachments.
Exhibit C of subpart H of part 1942 of this chapter, Exhibits A and B
of this subpart, and Forms referenced (all available in any FmHA office)
are for use in administering grants made under this subpart.
1942.538 -- 1942.549 (Reserved)
07 CFR 1942.550 OMB control number.
The reporting and recordkeeping requirements contained in this
instruction has been approved by the Office of Management and Budget and
assigned OMB control number 0575-0074. Public reporting burden for this
collection of information is estimated to average two hours per
response, including the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments
regarding this burden estimate or any other aspect of this collection of
information, including suggestions for reducing this burden, to
Department of Agriculture, Clearance Officer, OIRM, Room 404-W,
Washington, DC 20250; and to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Washington, DC 20503.
07 CFR 1942.550 Exhibit A -- Emergency Community Water Assistance Grant Program Project Selection Criteria
07 CFR 1942.550 Exhibit B -- Transmittal Memorandum
Note: The exhibits are not published in the Code of Federal
Regulations. They are available in any FmHA office.
07 CFR 1942.550 Pt. 1943
07 CFR 1942.550 PART 1943 -- FARM OWNERSHIP, SOIL AND WATER AND RECREATION
07 CFR 1942.550 Subpart A -- Insured Farm Ownership Loan Policies,
Procedures, and Authorizations
Sec.
1943.1 Introduction
1943.2 Objectives.
1943.3 Management assistance.
1943.4 Definitions.
1943.5 (Reserved)
1943.6 Credit elsewhere.
1943.7 -- 1943.9 (Reserved)
1943.10 Preference.
1943.11 Receiving and processing applications.
1943.12 Farm ownership loan eligibility requirements.
1943.13 -- 1943.15 (Reserved)
1943.16 Loan purposes.
1943.17 Loan limitations.
1943.18 Rates and terms.
1943.19 Security.
1943.20 -- 1943.22 (Reserved)
1943.23 General provisions.
1943.24 Special requirements.
1943.25 Options, planning and appraisals.
1943.26 Planning and performing farm development.
1943.27 Relationship with other lenders.
1943.28 FmHA loans simultaneous with other lenders.
1943.29 Relationship with other FmHA loans, insured and guaranteed.
1943.30 County Committee certification.
1943.31 (Reserved)
1943.32 Loan docket processing and forms.
1943.33 Loan approval or disapproval.
1943.34 Requesting title service and accepting option.
1943.35 Action after loan approval.
1943.36 -- 1943.37 (Reserved)
1943.38 Loan closing actions.
1943.39 -- 1943.41 (Reserved)
1943.42 Servicing.
1943.43 Subsequent FO loans.
1943.44 Subordinations.
1943.45 -- 1943.49 (Reserved)
1943.50 State supplements.
Exhibit A -- Farmers Home Administration Loans to Entrymen on
Unpatented Public Lands
Exhibit B -- Target Participation for Farmers Home Adminstration
(FmHA) Direct Farm Ownership (FO) Loan and Acquired Property Outreach
Program for Members of Socially Disadvantaged Groups
07 CFR 1942.550 Subpart B -- Insured Soil and Water Loan Policies,
Procedures, and Authorizations
1943.51 Introduction.
1943.52 Objectives.
1943.53 Management assistance.
1943.54 Definitions.
1943.55 (Reserved)
1943.56 Credit elsewhere.
1943.57 -- 1943.59 (Reserved)
1943.60 Preference.
1943.61 Receiving and processing applications.
1943.62 Soil and water loan eligibility requirements.
1943.63 -- 1943.65 (Reserved)
1943.66 Loan purposes.
1943.67 Loan limitations.
1943.68 Rates and terms.
1943.69 Security.
1943.70 -- 1943.72 (Reserved)
1943.73 General provisions.
1943.74 Special requirements.
1943.75 Options, planning and appraisals.
1943.76 Planning and performing development.
1943.77 Relationship with other lenders.
1943.78 (Reserved)
1943.79 Relationship with other FmHA loans, insured and guaranteed.
1943.80 County Committee certification.
1943.81 (Reserved)
1943.82 Loan docket processing.
1943.83 Loan approval or disapproval.
1943.84 Requesting title service.
1943.85 Action after loan approval.
1943.86 -- 1943.87 (Reserved)
1943.88 Loan closing actions.
1943.89 -- 1943.91 (Reserved)
1943.92 Servicing.
1943.93 Subsequent SW loans.
1943.94 Subordinations.
1943.95 -- 1943.99 (Reserved)
1943.100 State supplements.
Exhibit A -- Memorandum of Understanding Between the Bureau of
Reclamation, Department of the Interior and the Farmers Home
Administration, Department of Agriculture
07 CFR 1942.550 Subpart C -- (Reserved)
Authority: 7 U.S.C. 1989; 5 U.S.C. 301; 7 CFR 2.23 and 2.70.
Source: 43 FR 55895, Nov. 29, 1978, unless otherwise noted.
07 CFR 1942.550 Subpart A -- Insured Farm Ownership Loan Policies,
Procedures and Authorizations
Source: 53 FR 35692, Sept. 15, 1988, unless otherwise noted.
07 CFR 1943.1 Introduction.
This subpart contains regulations for making initial and subsequent
insured Farm Ownership (FO) loans. FO loans may be made to eligible
farmers and ranchers, farm cooperatives, private domestic corporations,
partnerships, and joint operations that will manage and operate not
larger than family farms. It is the policy of Farmers Home
Administration (FmHA) to make loans to any qualified applicant without
regard to race, color, religion, sex, national origin, marital status,
age or physical/mental handicap provided the applicant can execute a
legal contract. See Exhibit A of this subpart for making FP loans to
entrymen on unpatented public lands.
07 CFR 1943.2 Objectives.
The basic objective of the FO loan program is to provide credit and
management assistance to eligible farmers and ranchers to become
owners-operators of family-sized farms or to continue such operations
when credit is not available elsewhere. FmHA assistance enables
family-farm operators to use their land, labor and other resources, and
to improve their living and financial conditions so that they can obtain
credit elsewhere.
07 CFR 1943.3 Management assistance.
Supervision will be provided borrowers to the extent necessary to
achieve the objectives of the loan and to protect the interests of the
Government in accordance with subpart B of part 1924 of this chapter.
Such assistance consists of farm, home and nonfarm planning,
recordkeeping; analyzing the farm and any nonfarm business; and giving
management advice.
07 CFR 1943.4 Definitions.
As used in this subpart, the following definitions apply:
Approval official. A field official who has been delegated loan and
grant approval authorities within applicable loan programs, subject to
the dollar limitations contained in tables available in any FmHA office.
Borrower. When a loan is made to an individual, the individual is the
borrower. When a loan is made to an entity, the cooperative,
corporation, partnership or joint operation is the borrower.
Cooperative. An entity which has farming as its purpose and whose
members have agreed to share the profits of the farming enterprise. The
entity must be recognized as a farm cooperative by the laws of State(s)
in which the entity will operate a farm.
Corporation. For the purposes of this regulation, a private domestic
corporation created and organized under the laws of the State(s) in
which the entity will operate a farm.
Family farm. A farm which:
(a) Will produce agricultural commodities for sale in sufficient
quantities so that it is recognized in the community as a farm rather
than a rural residence.
(b) Will provide enough agricultural income by itself, including
rented land, or together with any other dependable income, to enable the
borrower to:
(1) Pay necessary family and operating expenses;
(2) Maintain essential chattel and real property; and
(3) Pay debts.
(c) Is managed by:
(1) The borrower, when a loan is made to an individual.
(2) The members, stockholders, partners, or joint operators
responsible for operating the farm when a loan is made to a cooperative,
corporation, partnership, or joint operation.
(d) Has a substantial amount of the labor requirements for the farm
and nonfarm enterprise provided by:
(1) The borrower and any family member for a loan made to an
individual.
(2) The members, stockholders, partners, or joint operators
responsible for operating the farm, along with the families of these
individuals, for a loan made to a cooperative, corporation, partnership,
or joint operation.
(e) May require a reasonable amount of full-time hired labor and
seasonal labor during peakload periods.
Farm. A tract or tracts of land, improvements and other appurtenances
considered to be farm property which is used or will be used in the
production of crops or livestock, including the production of fish under
controlled conditions, for sale in sufficient quantities so that the
property is recognized as a farm rather than a rural residence. The
term ''farm'' also includes any such land and improvements and
facilities used in a nonfarm enterprise. It may also include a
residence which, although physically separate from the farm acreage, is
ordinarily treated as a part of the farm in the local community.
Feasible plan. A feasible plan is a plan based upon the
applicant/borrower's records that show the farming operation's actual
production and expoenses. These records will be used along with
realistic anticipated prices, including farm program payments when
available, to determine that the income from the farming operation,
along with any other reliable off farm income, will provide the income
necessary for an applicant/borrower to at least be able to:
(a) Pay all operating expenses and all taxes which are due during the
projected farm budget period.
(b) Meet necessary payments of all debts, except as provided in
1941.14 of subpart A of part 1941 of this chapter, for annual production
loans or subordinations made to delinquent borrowers.
(c) Provide living expenses for the family members of an individual
borrower or a wage for the farm operator in the case of a cooperative,
corporation, partnership or joint operation borrower which is in
accordance with the essential family needs. Family members include the
individual borrower or farm operator in the case of an entity, and the
immediate members of the family which resides in the same household.
Fish farming. The production of fish, mollusks or crustaceans (or
other invertebrates) under controlled conditions in ponds, lakes,
streams, or similar holding areas. This involves feeding, tending,
harvesting and other activities as are necessary to properly raise and
market the products.
Joint operation. Individuals that have agreed to operate a farm or
farms together as a business unit. The real and personal property is
owned separately or jointly by the individuals. A husband and wife who
want to apply for a loan together will be considered a joint operation.
Limited resource applicant. An applicant who is a farmer or rancher
and is an owner or operator of a small or family farm (a small farm is a
marginal family farm), including a new owner or operator, with a low
income who demonstrates a need to maximize farm or ranch income. A
limited resource applicant must meet the eligibility requirements for a
farm ownership or operating loan, but due to low income, cannot pay the
regular interest rate on such loans. Due to the complex nature of the
problems facing this applicant, special help will be needed and more
supervisory assistance will be required to assure reasonable prospects
for success. The applicant may face such problems as underdeveloped
managerial ability, limited education, low-producing farm due to lack of
development or improved production practices and other related factors.
The applicant will not have nor expect to obtain, without the special
help and low-interest loan, the income needed to have a reasonable
standard of living when compared to other residents of the community.
Majority interest. Any individual or a combination of individuals
owning more than a 50 percent interest in a cooperative, corporation,
joint operation or partnership.
Market value. The amount which a willing buyer would pay a willing
but not forced seller in a completely voluntary sale.
Mortgage. Any form of security interest or lien upon any rights or
interest in real property of any kind. In Louisiana and Puerto Rico the
term ''mortgage'' also refers to any security interest in chattel
property.
Nonfarm enterprise. Any nonfarm business enterprise, including
recreation, which is closely associated with the farm operations and
located on or adjacent to the farm and provides income to supplement
farm income. The business must provide goods or services for which
there is a need and a reasonably reliable market. This may include, but
is not limited to, such enterprises as raising earthworms, exotic birds,
tropical fish, dogs and horses for nonfarm purposes, welding shops,
roadside stands, boarding horses and riding stables.
Partnership. An entity consisting of individuals who have agreed to
operate a farm. The entity must be recognized as a partnership by the
laws of the State(s) in which the entity will operate a farm and the
entity must be authorized to own both real and personal property and to
incur debts in its own name.
Related by blood or marriage. As used in this subpart, individuals
who are connected to one another as husband, wife, parent, child,
brother or sister.
Security. Property of any kind subject to a real or personal property
lien. Any reference to collateral or security property shall be
considered a reference to the term security.
Socially disadvantaged applicant. An applicant/borrower who, because
of their identity as a member of a group, has been subjected to racial
or ethnic prejudice or cultural bias without regard to their individual
qualities.
State or United States. The United States itself, each of the
several States, the Commonwealth of Puerto Rico, the Virgin Islands of
the United States, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
Undivided right. An undivided right of title, or a title to an
undivided portion of an estate, that is owned by one of two or more
tenants in common or joint tenants before division.
1943.5 (Reserved)
07 CFR 1943.6 Credit elsewhere.
The applicant shall certify in writing on the appropriate forms, and
the County Supervisor shall verify and document, that adequate credit
elsewhere is not available, with or without a guarantee or a
subordination, to finance the applicant's actual needs at reasonable
rates and terms, taking into consideration prevailing private and
cooperative rates and terms in the community in or near where the
applicant resides for loans for similar purposes and periods of time.
(a) If the County Supervisor receives letters or other written
evidence from a lender(s) indicating that the applicant is unable to
obtain satisfactory credit, these will be included in the loan docket.
(b) If the applicant cannot qualify for the needed credit from the
lenders contacted, but one or more of them has indicated they would
provide credit with an FmHA guarantee or the County Supervisor
determines that the applicant can obtain a guaranteed loan, the
applicant will be advised to file an application with that lender(s) so
that a guaranteed FO loan request can be processed by the lender for
consideration by FmHA.
(c) Property and interests in property owned and income received by
an individual applicant; a cooperative and its members, as individuals;
a corporation and its stockholders, as individuals; a partnership and
its partners, as individuals; and a joint operation and its joint
operators, as individuals; will be considered and used by an applicant
in obtaining credit from other sources.
(d) Applicants and borrowers will be encouraged to supplement farm
ownership loans with credit from other credit sources to the extent
economically feasible and in accordance with sound financial management
practices.
07 CFR 1943.7 For the State of Hawaii -- FO loans on leasehold interest
on real property.
The term owner-operator as used in this subpart shall include in the
State of Hawaii the lessee-operator of real property in any case in
which the County Supervisor determines that such real property cannot be
acquired in fee simple by the lessee-operator. The leasehold must
provide adequate security for the loan. A leasehold is the right to use
property for a specific period of time under conditions provided in a
lease agreement. The determination of value will be made by an
appraisal of the present market value of the leasehold by an FmHA
employee designated to appraise farm real estate. The terms and
conditions of the lease must be such as to allow the lessee-operator to
have a reasonable probability of accomplishing the objectives and
repayment of the loan. The FmHA Hawaii State Office will issue an
amendment to its State supplement for this subpart providing the
necessary requirements (including forms) for obtaining the required
security. The amendment to the State supplement and forms, and any
revisions to them, but have prior National Office approval before being
issued.
1943.8 -- 1943.9 (Reserved)
07 CFR 1943.10 Preference.
(a) In addition to the preference established in subpart A of part
1910 of this chapter, an application for a loan for land purchase from
an applicant who (1) has a dependent family, or (2) is an owner of
livestock and farm implements necessary to successfully carry on farming
operations, or (3) is able to make down payments will be given
preference over one from an applicant who does not meet any of these
criteria.
(b) The portion of a State's farm ownership (FO) loan fund allocation
designated for applicants who are members of socially disadvantaged
groups will be used exclusively to assist them in purchasing farmland.
However, this requirement does not preclude the use of the State's
regular allocation of FO funds for loans for other authorized FO loan
purposes to applicants who are members of socially disadvantaged groups.
(See exhibit B of this subpart, ''Target Participation Rates for
Farmers Home Administration (FmHA) Direct Farm Ownership (FO) Loans and
Acquired Property Outreach Program for Members of Socially Disadvantaged
Groups''.)
(53 FR 35692, Sept. 15, 1988, as amended by 55 FR 21527, May 25,
1990)
07 CFR 1943.11 Receiving and processing applications.
Applications for FO loans will be received and processed as provided
in subpart A of part 1910 of this chapter, with consideration given to
the requirements in Exhibit M of subpart G of part 1940 of this chapter.
Socially disadvantaged individuals will be provided the technical
assistance necessary when applying for FO loans or other assistance to
acquire inventory farmland. Such assistance shall include, but not be
limited to, completion of application and farm and home planning.
(55 FR 21528, May 25, 1990)
07 CFR 1943.12 Farm ownership loan eligibility requirements.
In accordance with the Food Security Act of 1985 (Pub. L. 99-198),
after December 23, 1985, if an individual or any member, stockholder,
partner, or joint operator of an entity is convicted under Federal or
State law of planting, cultivating, growing, producing, harvesting or
storing a controlled substance (see 21 CFR part 1308, which is Exhibit C
to subpart A of part 1941 of this chapter and is available in any FmHA
office, for the definition of ''controlled substance'') prior to loan
approval in any crop year, the individual or entity shall be ineligible
for a loan for the crop year in which the individual or member,
stockholder, partner or joint operator of the entity was convicted and
the four succeeding crop years. Applicants will attest on Form FmHA
410-1, ''Applications for FmHA Services,'' that as individuals or that
its members, if an entity, have not been convicted of such crime after
December 23, 1985. In addition, the following requirements must be met:
(a) An individual must:
(1) Be a citizen of the United States (see 1943.4 of this subpart
for the definition of ''United States'') or an alien lawfully admitted
to the United States for permanent residence under the Immigration and
Nationality Act. Aliens must provide forms I-151 or I-551, ''Alien
Registration Receipt Card.'' Indefinite parolees are not eligible. If
the authenticity of the information shown on the alien's identification
document is questioned, the County Supervisor may request the
Immigration and Naturalization Service (INS) to verify the information
appearing on the alien's identification card by completing INS Form
G-641, ''Application for Verification of Information from Immgiration
and Naturalization Records'' obtainable from the nearest INS District.
(See Exhibit B of subpart A of part 1944 of this chapter.) Mail the
completed form to INS. The payment of a service fee by FmHA to INS is
waived by inserting in the upper right hand corner of INS Form G-641,
the following: ''INTERAGENCY LAW ENFORCEMENT REQUEST.''
(2) Possess the legal capacity to incur the obligations of the loan.
(3) Have sufficient applicable educational and/or on the job training
or farming experience in managing and operating a farm or ranch (1
year's complete production and marketing cycle within the last 5 years)
which indicates the managerial ability necessary to assure reasonable
prospects of success in the proposed plan of operation.
(4) Have the character (emphasizing credit history, past record of
debt repayment, and reliability) and industry to carry out the proposed
operation. Past record of debt repayment will not be cause for a
determination that the applicant/borrower is not eligible if an honest
attempt has been made to make the payment(s).
(5) Honestly endeavor to carry out the applicant's/borrower's
obligations. This would include, but is not limited to, providing
current, complete and truthful information when applying for assistance
and making every reasonable effort to meet the conditions and terms of
the proposed loan.
(6) Be unable to obtain sufficient credit elsewhere to finance actual
needs at reasonable rate and terms, taking into consideration prevailing
private and cooperative rates and terms in the community in or near
which the applicant resides for loans for similar purposes and periods
of time.
(7) Be the owner-operator of not larger than a family farm after the
loan is closed (in the case of a limited resource applicant see 1943.4
of this subpart).
(b) A cooperative, corporation, partnership, or joint operation must:
(1) Be unable to obtain sufficient credit elsewhere to finance actual
needs at reasonable rates and terms, taking into account prevailing
private and cooperative rates and terms in or near the community for
loans for similar purposes and periods of time. This applies to the
entity and all of its members, stockholders, partners, or joint
operators as individuals.
(2) Be controlled by farmers or ranchers engaged primarily and
directly in farming or ranching in the United States, after the loan is
made.
(3) Be the owner-operator of not larger than a family farm after the
loan is closed (except for limited resource applicants and as provided
for in paragraph (b)(7) of this section) and consist of members,
stockholders, partners, or joint operators who are individuals and not
cooperative(s), corporations(s), partnership(s) or joint operation(s).
(4) If the members, stockholders, partners, or joint operators
holding a majority interest are related by blood or marriage, they must
meet the following requirements:
(i) They must be citizens of the United States (see 1943.4 of this
subpart for the definition of ''United States'') or aliens lawfully
admitted to the United States for permanent residence under the
Immigration and Nationality Act. Aliens must provide Forms I-151 or
I-551, ''Alien Registration Receipt Card.'' Indefinite parolees are not
eligible. If the authenticity of the information shown on the alien's
identification document is questioned, the County Supervisor may request
the Immigration and Naturalization Service (INS) to verify the
information appearing on the alien's identification card by completing
INS Form G-641 ''Application for Verification of Information from
Immigration and Naturalization Records,'' obtainable from the nearest
INS District. (See Exhibit B of subpart A of part 1944 of this
chapter.) Mail the completed form to INS. The payment of a service fee
by FmHA to INS is waived by inserting in the upper right hand corner of
INS Form G-641, the following: ''INTERAGENCY LAW ENFORCEMENT REQUEST.''
(ii) They must have sufficient applicable educational and/or on the
job training or farming experience in managing and operating a farm or
ranch (1 year's complete production and marketing cycle within the last
5 years) which indicates the managerial ability necessary to assure
reasonable prospects of success in the proposed plan of operation.
(iii) Have the character (emphasizing credit history, past record of
debt repayment and reliability) and industry to carry out the proposed
operation. This requirement must be met by the individual members,
stockholders, partners or joint operators. Past record of debt
repayment will not be cause for a determination that the
applicant/borrower is not eligible if an honest attempt has been made to
make the payment(s).
(iv) They and the entity itself must honestly endeavor to carry out
the applicant's/borrower's undertakings and obligations. This would
include, but is not limited to, providing current, complete and truthful
information when applying for assistance and making every reasonable
effort to meet the conditions and terms of the proposed loan.
(v) At least one member, stockholder, partner, or joint operator must
operate the family farm.
(vi) The entity must own and operate the farm and be authorized to do
so in the State(s) in which the farm is located.
(5) If the members, stockholders, partners, or joint operators
holding a majority interest are not related by blood or marriage:
(i) The requirements of paragraphs (b)(4)(i) through (iv) and (vi) of
this section must be met.
(ii) They and the entity itself must own and operate the family farm.
(6) If applying as a limited resource applicant, as defined in
1943.4 of this subpart:
(i) The requirements of paragraphs (b)(4)(i) through (iv) and (vi) of
this section must be met by the entity and all its members,
stockholders, partners, or joint operators.
(ii) The entity and all the members, stockholders, partners or joint
operators must own or operate a small or family farm; and at least one
member, stockholder, partner, or joint operator must operate the farm.
(7) If each member's, partner's, stockholder's or joint operator's
ownership interest does not exceed the family farm definition limits,
their collective interests can exceed the family farm definition limits
only if: (i) All of the members of the entity are related by blood or
marriage, (ii) all of the members are or will operators of the entity,
and (iii) the majority interest holders of the entity meet the
requirements of paragraphs (b)(4) (i) through (iv) and (vi) of this
section.
(53 FR 35692, Sept. 15, 1988, as amended at 55 FR 21528, May 25,
1990; 56 FR 3972, Feb. 1, 1991)
07 CFR 1943.13 Outreach program for applicants/borrowers who are
members of socially disadvantaged groups.
The purpose of this section is to establish procedures and
responsibilities for carrying out the Farmers Home Administration (FmHA)
Farm Ownership (FO) Direct Loan and Acquired Property Outreach Program
to Applicants/ Borrowers who are members of socially disadvantaged
groups.
(a) Policy. The FmHA FO Loan and Acquired Property Outreach Program
is a concerted effort to:
(1) Make direct FO loan funds and the acquisition of inventory
farmland more available to members of socially disadvantaged groups.
(2) Surface and correct problems and obstacles that prevent the
participation of members of socially disadvantaged groups in the FO loan
and credit sale programs.
(3) Increase the number of direct FO loans and credit sales made to
members of socially disadvantaged groups in targeted and nontargeted
areas.
(4) Target direct FO loan funds and acquired properties, as outlined
in Exhibit B of this subpart, to ensure participation of members of
socially disadvantaged groups in these programs.
(5) Provide pamphlets, publications and general information on the
direct FO loan and credit sale programs to members of socially
disadvantaged groups.
(6) Provide assistance to members of socially disadvantaged groups to
assure that the application process is expedient and complete.
Assistance will be provided to borrowers of socially disadvantaged
groups through special farm initiatives to assure that sound operating
procedures are implemented to enhance the borrower's chances for
successfully achieving the objectives of the direct FO loan program.
(b) Field action. The State Director shall designate the Farmer
Programs Chief to coordinate the Farmers Home Administration (FmHA) Farm
Ownership (FO) Loan and Acquired Property Outreach Program to members of
socially disadvantaged groups. The State's Civil Rights Coordinator
will act as a resource person for this program. The Farmer Programs
Chief will:
(1) Maintain close liaison with local, State and national
organizations serving social disadvantaged groups to ascertain the
reasons for the lack of participation of members of socially
disadvantaged groups in FmHA direct FO loan and acquired farmland
programs.
(2) Work closely with County Supervisors, District Directors, and
National Office officials to remove obstacles and solve problems
relating to the making of direct FO loans and credit sales to members of
socially disadvantaged groups.
(3) Attend meetings of local, State, and Federal Governments and
private organizations concerned with the economic and social development
of members of socially disadvantaged groups.
(4) Train members of socially disadvantaged groups, interested
individuals and groups involved with socially disadvantaged activities,
in the packaging of applications and distribution of materials for use
in the direct FO loan and credit sale programs.
(5) Provide pamphlets and publications on the direct FO loan and
credit sale program.
(6) Initiate special media outreach activities to inform members of
socially disadvantaged groups of the availability of targeted and
non-targeted direct FO loan funds and acquired farmland.
(i) Information must be provided to community and farm oriented
organizations, agriculture colleges, other USDA agencies and community
leaders who are active in the farming area.
(ii) Newspaper articles, radio announcements and public television
broadcasts will be used to publicize the FmHA Farm Ownership (FO) Direct
Loan and Acquired Property Outreach Program to members of socially
disadvantaged groups. State Directors and required to publicize the
program at least twice annually in a newspaper most used by members of
socially disadvantaged groups. This effort will be monitored by the
National Office through Coordinated Assessment Reviews (CARs) and
special planned visits to selected States.
(c) Reports. (1) State Directors will keep the Assistant
Administrator, Farmer Programs, advised of any problems encountered in
carrying out the FmHA Farm Ownership (FO) Direct Loan and Acquired
Property Outreach Program to Members of Socially Disadvantaged Groups
which prevent their participation in this program.
(2) Each State Director will make a semi-annual memorandum report to
the Assistant Administrator, Farmer Programs, on May 1 and September 30
of each fiscal year on the Farm Ownership (FO) Direct Loan and Acquired
Property Outreach Program to members of Socially Disadvantaged Groups.
The report will summarize accomplishments on the items set forth in
1943.13(b) of this subpart. The following should also be included in
the report:
(i) The State and County of each direct FO loan and credit sale made
to applicant/borrowers who are members of socially disadvantaged groups.
(ii) Number of applications for direct initial and subsequent FO
loans and credit sales received during the period.
(iii) Number of direct initial and subsequent FO loans and credit
sales approved during the period.
(iv) Number of applications on hand for direct initial and subsequent
FO loans and credit sales at the end of the reporting periods.
(v) Number of announcements placed in local newspapers, on radio and
public television.
(vi) Amount of each initial and subsequent direct FO loans and credit
sales approved during the reporting periods.
(vii) Total dollar value of direct initial and subsequent FO loans
and credit sales approved during the reporting periods.
1943.14 -- 1943.15 (Reserved)
07 CFR 1943.16 Loan purposes.
Loans that are consistent with all Federal, State and local
environmental quality standards may be made to:
(a) Purchase or enlarge a farm, including any land for recreation or
other nonfarm enterprise. This may include:
(1) Purchasing easements and rights-of-way needed to operate the farm
or nonfarm enterprise.
(2) An applicant's portion of the cost of land which is being
subdivided.
(3) Making a downpayment on the purchase of land under the following
conditions:
(i) A deed is obtained by the borrower and the unpaid balance on the
loan is secured by a note and mortgage or an acceptable land purchase
contract or similar instrument.
(ii) The applicant can meet the loan terms under normal farm
production and management conditions.
(iii) The conditions and the requirements of any prior mortgage or
contract meet the FO security requirements for taking a junior lien.
(iv) A purchase contract is signed which obligates the purchaser to
pay the purchase price, gives the purchaser the rights of present
possession, control, and beneficial use of the property, and entitles
the purchaser to a deed upon paying all of a specific part of the
purchase price.
(b) Construct, buy, or improve buildings and facilities needed on or
in close proximity to, the applicant's farm, including:
(1) The construction of an essential farm dwelling and service
buildings of modest design and cost, including facilities and structures
for nonfarm enterprise uses or fish farming such as docks, fish
hatcheries, shooting blinds, refreshment or marketing stands, processing
or assembly plants for nonfarm enterprises, sales buildings, repair
shops, lodging facilities, trailer parks, picnic areas, target ranges,
tennis courts, shuffleboard courts, golf driving ranges, campsites, and
modest rental housing. For dwelling improvement or construction,
consideration may be given to additional space required for facilities
used for food preparation and storage, vehicle storage, or laundry and
office space, the size and cost of which will not exceed that owned by
typical family farmers in the area.
(2) The improvement, alteration, repair, replacement, relocation, or
purchase and transfer of such essential dwellings and service buildings,
facilities, structures and fixtures that become part of the real estate
or customarily pass with the farm when it is sold. This includes
pollution control and energy saving devices.
(3) Construction costs for methane and gas facilities and essential
equipment.
(c) Provide land and water development, pollution control and energy
saving measures, acquire water supplies and rights, and promote the use
and conservation essential to the operation of the farm and any nonfarm
enterprise facilities. This includes providing fencing, drainage and
irrigation facilities, basic applications of lime and fertilizer, and
facilities for land clearing. This also includes establishing approved
forestry practices, fish ponds, trails and lakes; improving orchards;
and establishing and improving permanent hay or pasture. Sources of
water, powerlines, gas lines, and other facilities necessary for the
successful operation of the farm may be located outside the land owned,
provided that appropriate rights or easements are obtained to ensure
that the rights will pass with the farm when it is sold. The funds for
land and water development may include the costs of machinery and
equipment needed to do the development only when the total cost of the
development and machinery or equipment would not exceed the cost of
hiring someone to do the development work. Also, loan funds may be used
to pay that part of the cost of facilities, improvements and
''practices'' which will be paid for in connection with participation in
such programs as the Agricultural Conservation or Great Plains programs
only when such costs cannot be covered by purchase orders or assignments
to material suppliers or contractors. If loan funds are advanced and
the portion of the payment for which the funds are advanced is likely to
exceed $1,000, the applicant will assign the payment to FmHA.
(1) Funds may be used to pay for development costs on land owned with
defective title (see 1943.19(b) of this subpart) or on land in which
the applicant owns an undivided interest, provided:
(i) The amount of loan funds used on such land is limited to $25,000.
(ii) There is adequate security for the loan; and
(iii) The tract with defective title or undivided interest is not to
be included in the appraisal report.
(2) Funds may be used to pay for development costs on land leased by
the applicant provided:
(i) The terms of the lease are such that there is reasonable
assurance the applicant will have use of the improvement over its useful
life;
(ii) A written lease provides for payment to the tenant or assignee
of any unexhausted value of the improvement if the lease is terminated;
(iii) There is adequate security for the loan; and
(iv) The amount of the loan funds used for improvements on leased
land will not exceed $10,000.
(d) Refinance debts subject to the following:
(1) The applicant's present creditors will not furnish credit at
rates and terms the applicant can meet.
(2) The County Supervisor, by contacting the appropriate lender,
verifies and documents either in the running record or by letter from
the lender, the need to refinance or guarantee any secured debts and
major unsecured debts. The unpaid balance on the debts to be refinanced
will also be verified.
(3) FmHA debts, including FmHA guaranteed loans, will not be
refinanced unless such refinancing is necessary to enable borrowers to
continue farming. The State Director's consent is required before FO
funds can be used to refinance other FmHA debts.
(e) Pay reasonable expenses incidental to obtaining, planning,
closing and making the loan, such as fees for legal, architectural and
other technical services, and first year insurance premiums, which are
required to be paid by the borrower and which cannot be paid from other
funds. Loan funds also may be used to pay the borrower's share of
Social Security taxes for labor hired by the borrower in connection with
land and building development.
(f) Finance a nonfarm enterprise when it will provide another source
of necessary income even though the owned or purchased acreage for such
enterprise is not physically located on the farmland. A major portion
of the goss total income must be farm income. The nonfarm enterprise
income will be supplemental income.
07 CFR 1943.17 Loan limitations.
(a) An FO loan will not be approved if:
(1) The total outstanding insured FO, Soil and Water (SW) or
Recreation (RL) loan principal balance including the new loan owed by
the applicant will exceed the lesser of $200,000 or the market value of
the farm or other security.
(2) The noncontiguous character of a farm containing two or more
tracts is such that an efficient farming operation and nonfarm
enterprise cannot be conducted due to the distance between tracts or due
to inadequate rights-of-way or public roads between tracts.
(3) The limitation found in 1943.29 (b) of this subpart is exceeded.
(b) Loans my not be made for any purpose that will contribute to
excessive erosion of highly erodible land or to the conversion of
wetlands to produce an agricultural commodity, as further explained in
Exhibit M to subpart G of part 1940 of this chapter. Refer to subpart
LL of part 2000 of this chapter, ''Memorandum of Understanding Between
FmHA and U.S. Fish and Wildlife Service,'' for assistance in
implementation.
07 CFR 1943.18 Rates and terms.
(a) Terms of loans. Each loan will be scheduled for repayment over a
period not to exceed 40 years from the date of the note or such shorter
period as may be necessary to assure the loan will be adequately
secured, taking into account the probable depreciation of the security.
The loan approval official will also consider the repayment ability of
the applicant, as reflected in the completed Form FmHA 431-2, ''Farm and
Home Plan,'' or other similar plan of operation acceptable to FmHA, when
setting the term. In any case, there must be an interest payment
scheduled at least annually in accordance with the FMI for Form FmHA
1940-17, ''Promissory Note.'' Loans may have reduced annual installments
scheduled, of at least partial interest, for the first five years.
(b) Interest rate. Upon request of the applicant, the interest rate
charged by FmHA will be the lower of the interest rates in effect at the
time of loan approval or loan closing. If the applicant does not
indicate a choice, the loan will be closed at the interest rate in
effect at the time of loan approval. Interest rates are specified in
Exhibit B of FmHA Instruction 440.1 (available in any FmHA office) for
the type assistance involved. A lower rate is established in this
Exhibit for a limited resource applicant subject to the following:
(1) The applicant meets the conditions of the definition for a
limited resource applicant set forth in 1943.4(i) of this subpart.
(2) The Farm and Home Plan and Business Analysis -- Nonagricultural
Enterprise form, when appropriate, indicate that installments at the
higher rate, along with other debts, cannot be paid during the period of
the plan.
(3) A borrower with limited resource interest rates will be reviewed
each year at the time the analysis is conducted (see 1924.6 of subpart
B of part 1924 of this chapter) and at any time a servicing action such
as reamortization or deferral is taken to determine what interest rate
should be charged. The rate may be increased in increments of whole
numbers until it reaches the current regular interest rate for the loan
at the time of the rate increase. (See 1951.25 subpart A of part 1951
of this chapter.)
07 CFR 1943.19 Security.
(a) General. Each FO loan will be secured by real estate or by real
estate and a combination of chattels and/or other security.
(b) Real estate security. (1) A mortgage will be taken on the entire
farm owned or to be owned by applicant, including land in which the
applicant owns an undivided interest, except a portion of the farm will
be excluded when:
(i) The applicant's title to that part of the farm is defective, and
cannot be cured at a reasonable cost provided:
(A) The Office of the General Counsel (OGC) determines the
applicant's interest is of such nature that it is not mortgageable; and
(B) To include the land would complicate loan servicing or
liquidation; and
(C) Any land on which title is defective will not be included in the
appraisal of the farm whether or not it is described on the mortgage.
(D) State law prohibits taking a lien on homestead property, except
for the purchase money of that property and financing improvements and
the State Director has issued a State supplement exempting taking a lien
on homestead property where purchase money or improvements are not
involved.
(ii) The present lienholder on that part of the farm will not permit
a junior lien or State law will not recognize or permit lien provided:
(A) The part excluded from the security is not included in the
appraisal report, and
(B) OGC advice is obtained before excluding any real estate from the
security or the conditions under which real estate can be excluded are
outlined by a State supplement.
(iii) Soundness of the loan will not be affected if there is
defective title or part of the farm is not included as security for the
loan.
(2) When the farm alone will not provide enough security, other real
estate owned by the applicant may also be taken as security.
(3) Loans may be secured by a junior lien or real estate provided:
(i) Prior lien instruments do not contain provisions for future
advances (except for taxes, insurance, other costs needed to protect the
security, or reasonable foreclosure costs), cancellation, summary
forfeiture, or other clauses that may jeopardize the Government's
interest or the applicant's ability to pay the FO loan unless any such
undesirable provisions are limited, modified, waived or subordinated
insofar as the Government is concerned.
(ii) Agreements are obtained from prior lienholders to give notice of
foreclosure to FmHA whenever State law or other arrangements do not
require such a notice. Any agreements needed will be obtained as
provided in subpart B of part 1927 of this chapter.
(4) The approved closing agent or the OGC will furnish advice on
obtaining security when a life estate is involved.
(5) Any loan of $10,000 or less may be secured by the best lien
obtainable without title clearance or legal service as required in
subpart B of part 1927 of this chapter provided the County Supervisor
believes from a search of the County records that the applicant can give
a mortgage on the farm. This exception to title clearance will not
apply when:
(i) The loan is made simultaneously with that of another lender.
(ii) Land is to be purchased.
(iii) This provision conflicts with program regulations of any other
FmHA loan being made simultaneously with the FO loan.
(6) The Departments of Agriculture and Interior have agreed that FmHA
loans may be made to Indians and secured by real estate when title is
held in trust or restricted status. When security is taken on real
estate held in trust or restricted status:
(i) The applicant will request the Bureau of Indian Affairs (BIA) to
furnish Title Status Reports to the County Supervisor.
(ii) BIA approval will be obtained on the mortgage after it has been
signed by the applicant and any other party whose signature is required.
(c) Chattel security. Loans may be secured by chattels subject to
the following conditions:
(1) There is not enough real estate security for the loan and the
best lien obtainable on the farm has been taken.
(2) Taking a lien on chattels will not prevent the borrower from
obtaining operating credit from other sources or the FmHA.
(3) Junior liens on chattels may be taken when there is enough equity
in the property. However, when practical, a first lien on selected
chattel items should be obtained.
(4) A first lien will be taken on equipment or fixtures bought with
loan funds whenever such property cannot be included in the real estate
lien and this additional security is needed to secure the loan.
(5) Chattel security liens will be obtained and kept effective as
notice to third parties as provided in subpart A of part 1941 and
subpart A of part 1962 of this chapter.
(d) Other security. (1) Items such as land, buildings, fixtures,
fences, water, water stock and facilities, other improvements,
easements, rights-of-way, and other appurtenances that are considered
part of the farm and usually pass with the farm in a change of ownership
may be taken as additional security when needed. If any of these do not
pass with a change of ownership, the County Supervisor will obtain
advice from the designated attorney, title insurance company or OGC to
properly identify such items and include them in an appropriate security
instrument or assignment.
(2) Other property that cannot be converted to cash without
jeopardizing the borrower's farm operation may be taken as additional
security when needed. Examples of such security may include cash value
of insurance policies, stock, memberships or stock in associations, or
water stocks. Any property taken as additional security must have
security value and be transferable. Advice will be obtained from the
designated attorney, title insurance company or the OGC on obtaining
this security or assignment.
(e) State supplements. Each State will supplement this section to
provide instructions on forms and other requirements to be met in order
to obtain the required security. In each State where loans will be made
to Indians holding title to land in trust or restricted status, FmHA and
BIA will decide on a way to exchange necessary information, and the
procedure to be followed will be set out in a State supplement.
(f) Security -- nonfarm enterprise. When an FO loan is made just to
finance a nonfarm enterprise, even though a majority of the products are
used on the farm such as alcohol or methane gas, a lien will be taken on
the nonfarm enterprise facility and sufficient other property to
adequately secure the loan. In these situations a lien need not be
taken on the entire farm when it is not needed to secure the loan. When
the security is so located that a legal right-of-way to the property is
not available, an easement or agreement will be obtained providing for
right of ingress and egress.
(g) Special security requirements. When FO loans are made to
eligible entities that consist of members, stockholders, partners or
joint operators who are presently indebted for an FO loan(s) as
individual(s) or when FO loans are made to eligible individuals who are
members, stockholders, partners or joint operators of an entity which is
presently indebted for an FO loan(s), security must consist of:
(1) Chattel and/or real estate security that is separate and
identifiable from the security pledged to FmHA for any other farmer
program insured or guaranteed loans.
(2) Different lien positions on real estate are considered separate
and identifiable collateral.
(3) The outstanding amount of loans made may not exceed the value of
the collateral used.
(h) Same security. Except as provided in paragraph (g) of this
section, when an FO loan (insured or guaranteed) is made to a borrower
who has other FmHA loans, the same real estate collateral may secure
more than one loan so long as the outstanding loan amount does not
exceed the total value of the security.
(53 FR 35692, Sept. 15, 1988, as amended at 56 FR 67481, Dec. 31,
1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.19 was
amended by revising the second sentence of paragraph (b)(3)(ii), (b)(4),
and the first sentence of the introductory text of paragraph (b)(5),
effective January 30, 1992. For the convenience of the user, the
superseded text follows:
1943.19 Security.
(b) * * *
(3) * * *
(ii)* * * Any agreements needed will be obtained as provided in Part
1807 of this chapter (FmHA Instruction 427.2), except as modified by the
''Memorandum of Understanding-FHA-FCA,'' Exhibit B of this subpart.
(4) The designated attorney, title insurance company, or the OGC will
furnish on obtaining security when a life estate is involved.
(5) Any loan of $10,000 or less may be secured by the best lien
obtainable without title clearance or legal service as required in part
1807 of this chapter (FmHA Instruction 427.1) provided the County
Supervisor believes from a search of the County records that the
applicant can give a mortgage on the farm. * * *
1943.20 -- 1943.22 (Reserved)
07 CFR 1943.23 General provisions.
(a) Flood or mudslide hazard areas. Flood or mudslide hazards will
be evaluated whenever the farm to be financed is located in special
flood or mudslide prone areas as designated by the Federal Emergency
Management Agency (FEMA). Subpart B of part 1806 of this chapter (FmHA
Instruction 426.2) as well as subpart G of part 1940 of this chapter
will be complied with when loan funds are used to construct or improve
buildings located in such areas. This will not prevent making loans on
farms if the farmstead is located in a flood or mudslide prone area and
funds are not included for building improvements. However, buildings
will need to meet the standards set out in 1943.24 of this subpart.
The flood or mudslide hazard will be recognized in the appraisal report.
When land development or improvements such as dikes, terraces, fences,
and intake structures are planned to be located in special flood or
mudslide prone areas, loan funds may be used subject to the following:
(1) The Corps of Engineers or the Soil Conservation Service (SCS)
will be consulted concerning:
(i) Likelihood of flooding.
(ii) Probability of flood damage.
(iii) Recommendation on special design and specifications needed to
minimize flood and mudslide hazards.
(2) FmHA representatives will evaluate the proposal and record the
decision in the loan docket in accordance with subpart G of part 1940 of
this chapter.
(b) Civil rights. The provisions of subpart E of part 1901 of this
chapter will be complied with on all loans made which involve:
(1) Funds used to finance nonfarm enterprises and recreation
enterprises. Applicants will sign Form FmHA 400-4, ''Nondiscrimination
Agreement,'' in these cases.
(2) Any development financed by FmHA that will be performed by a
contract or subcontract of more than $10,000.
(c) Protection of historical and archaeological properties. If there
is any evidence to indicate the property to be financed has historical
or archaeological value, the provisions of subpart F of part 1901 of
this chapter apply.
(d) Environmental requirements. See subpart G of part 1940 of this
chapter for applicable environmental requirements including subpart LL
of part 2000 of this chapter for assistance in implementation.
(e) Real Estate Settlement Procedures Act. The provisions of the
Real Estate Settlement Procedures Act outlined in 1940.406 of Subpart I
of Part 1940 apply when FO funds are used involving tracts of less than
25 acres, if:
(1) Any part of the loan is used to purchase all or part of the land
to be mortgaged, and
(2) The loan is secured by a first lien on the property where a
dwelling is located.
(f) Equal Credit Opportunity Act. In accordance with Title V of Pub.
L. 93-495, the Equal Credit Opportunity Act, the FmHA will not
discriminate against any applicant on the basis of sex or marital status
with respect to any aspect of a credit transaction.
(g) Compliance with special laws and regulations. (1) Applicants
will be required to comply with applicable Federal, State and local laws
and regulations governing building construction, diverting,
appropriating, and using water, including use for domestic or nonfarm
enterprise purposes; installing facilities for draining land; and
making changes in the use of the land affected by zoning regulations.
(2) State Directors and Farmer Programs Staff members will consult
with SCS, U.S. Geological Survey, State Geologist or Engineer, or any
board having official functions relating to water use or farm drainage
requirements and restrictions for water and drainage development. State
supplements will be issued to provide guidelines which:
(i) State all requirements to be met, including the acquisition of
water rights.
(ii) Define areas where development of ground water for irrigation is
not recommended.
(iii) Define areas where land drainage is restricted.
(3) Applicants will comply with all local laws and regulations, and
obtain any special licenses or permits needed for nonfarm, recreation,
specialized or fish farming enterprises.
(4) Applicants requesting loans for the production of alcohol fuel
should be advised to consult with the nearest Bureau of Alcohol, Tobacco
and Firearms (ATF) regional regulatory administrator concerning the
specific requirements applicable to their operations. Before a loan is
closed, applicants must provide evidence that they have received an ATF
operating permit.
07 CFR 1943.24 Special requirements.
(a) Determining whether a farm will permit a feasible plan. The
County Supervisor is responsible for making a preliminary determination
as to whether a loan should be made on the farm. This determination
will be based on a personal inspection of the farm and an evaluation of
such factors as productivity of the land; location, conditions, and
adequacy of the buildings; approximate value of the farm, roads,
schools, markets, or other community facilities; tax rates; and
adequacy of the water supply. A decision also will be made on the
suitability of the farm for a nonfarm enterprise facility or specialized
farm operation, and development needed to make it acceptable for the
planned operation of the farm.
(b) Dwellings and other essential buildings. (1) Buildings adequate
for the planned operation of the farm, including any nonfarm enterprise,
must be available for the applicant's use after the loan is made. The
necessary buildings will be located on the applicant's farm. Exceptions
of this requirement are when:
(i) The applicant already owns an adequate, decent, safe, and
sanitary dwelling, suitable for the family's needs, and located close
enough to the farm so the farm may be operated successfully, it will not
be necessary to provide a dwelling on the farm. A real estate lien will
be taken on such a dwelling.
(ii) The applicant has a long-term lease on acceptable rented
buildings that are adjacent to or near the farm, or the applicant
occupies suitable buildings which the applicant will eventually inherit
or be permitted to purchase from a relative.
(iii) The farm does not have an adequate dwelling and the applicant
owns a suitable mobile home which will be used as the applicant's home,
the applicant will not be required to build a dwelling. A mobile home
will not be considered to add value to the farm but FO funds may be used
to finance anchoring the home.
(iv) A nonfarm enterprise facility does not have to be physically
located on the farm.
(2) When loan funds are needed for a dwelling and an applicant is
eligible for a Rural Housing (RH) loan, it will be processed
simultaneously with the FO loan. However, in such cases if a small
amount is needed for dwelling improvements, FO funds may be used.
Dwellings financed with RH funds will meet the requirements for such
loans as provided in Subpart A of Part 1944 of this chapter.
(c) Land and facility development. Development needed to make the
farm and any nonfarm enterprise ready for a successful operation will be
planned during loan processing. The plans should provide for completing
the development at the earliest practicable date. Recommendations of
representatives of the Forest Service, Soil Conservation Service, State
Agricultural Extension Service, and State Planning and Development
Agency or local planning groups should be included in the development
plan and the Farm and Home Plan. In planning such development with the
applicant, the County Supervisor will encourage the applicant to use any
cost-sharing assistance that may be available through any source such as
the Agricultural Stabilization and Conservation Service (ASCS) programs.
(d) Insurance. (1) Insurance will be obtained on buildings and other
property as provided in Subpart A of Part 1806 of this chapter (FmHA
Instruction 426.1).
(2) See 1943.23(a) of this subpart for information about mudslide
and flood insurance.
(3) Applicants receiving loans for nonfarm enterprises will be
advised of the possibility of incurring liability and will be encouraged
to obtain public liability and property damage insurance.
(4) Personal property insurance will be obtained to insure against
chattel security losses caused by hazards customarily insured against in
the area if the loss of such security would jeopardize the interests of
the Government.
(e) Income from other than owned acreage. When loan soundness
depends on income from other sources in addition to income from owned
land, it will be necessary to determine that:
(1) There is reasonable assurance that any rented land which the
applicant depends on will be available; and/or
(2) Any off-farm employment the applicant depends on is likely to
continue.
(f) Income from nonfarm enterprises. Nonfarm enterprises will be
analyzed to determine soundness.
(1) Form FmHA 431-4, ''Business Analysis -- Nonagricultural
Enterprise,'' will be used to document nonfarm enterprises unless the
applicant uses another suitable form.
(2) The net cash income from the nonfarm enterprise will be entered
as nonfarm income in the Farm and Home Plan.
(g) Other real estate and assets. Other assets not used directly in
the farming operation will be handled as follows:
(1) FO loans may be made when essential real estate is owned, either
in whole or as an undivided interest, that will not be part of the farm
provided:
(i) The real estate or interests therein furnish employment or income
which is essential to the applicant's success.
(ii) Sale of the property will not eliminate the need for FmHA
credit.
(iii) Retention of the real estate will not cause the operation to be
larger than a family farm.
(2) An applicant will dispose of nonessential real estate or an
undivided interest in real estate no later than loan closing. If this
is not feasible, the applicant must agree by signing Form FmHA 443-17,
''Agreement to Sell Nonessential Real Estate,'' to dispose of the
property as soon after closing as possible. Under no circumstances may
the property be held for more than three years after closing.
(3) The applicant must agree to use the proceeds from the sale of
other real estate to:
(i) Pay costs and taxes connected with the sale;
(ii) Reduce the FmHA debt or any prior lien;
(iii) Make essential capital purchases; or
(iv) Pay essential farm and home expense.
(4) Real estate or an interest in real estate which is non essential
to the operation and is retained after loan closing, will not be
included in:
(i) The appraisal report.
(ii) The security instrument for the loan.
(iii) The total against the security.
(h) Life estates. When life estates are involved, loans may be made:
(1) To both the life estate holder and the remainderman, provided:
(i) Both have a legal right to occupy and operate the farm;
(ii) Both are eligible for the loan; and
(iii) Both parties sign the note and mortgage.
(2) To the remainderman only, provided;
(i) The remainderman has a legal right to occupy and operate the
farm; and
(ii) The lien instrument is signed by the remainderman, life estate
holder, and any other party having any interest in the security.
(3) To the life estate holder only, provided:
(i) There is no legal restriction placed on a life estate holder who
occupies and operates a farm; and
(ii) The lien instrument is signed by the life estate holder,
remainderman, and any other party having any interest in the security.
(i) Farm or residence situated in different counties. If a farm is
situated in more than one State, county or parish, the loan will be
processed and serviced in the State, county or parish in which the
borrower's residence on the farm is located. However, if the borrower's
residence is not situated on the farm, the FO loan will be serviced by
the County Office serving the county in which the farm or a major
portion of the farm is located unless otherwise approved by the State
Director.
(j) Subdivision of large tracts of farmland, other than FmHA
inventory farms, into family farm units. County Supervisors should
investigate any large tract that is offered for sale to determine the
feasibility of making FO loans to enable several applicants to acquire
the tract. In considering the feasibility of a tract for subdivision
into family farms, the following are some of the factors that must be
considered:
(1) Productivity of the land and its suitability for operation as a
family farm;
(2) Cost of the land and improvements;
(3) Accessibility to roads, markets, schools, right-of-way,
easements, and other services.
(4) Disposition or omisson of any part of the tract that is not
suitable; and
(5) The number of eligible applicants in the area.
(k) Liens junior to the FmHA lien. A loan will not be approved if a
lien junior to the FmHA lien is likely to be taken simultaneously with
or immediately subsequent to the loan closing to secure any debt the
borrower may have at the time of loan closing or any debt that may be
incurred in connection with the FO loan, such as for a portion of the
purchase price of the farm or money borrowed from others for payments on
debts abainst the farm, unless the total debt against the security would
be within its market value.
(l) Graduation of FO borrowers. If, at any time, it appears that the
borrower may be able to obtain a refinancing loan from a cooperative or
private credit source at reasonable rates and terms, comparable to those
for loans for similar purposes and periods of time prevailing in the
area, the borrower will, upon request, apply for and accept such
financing. A borrower paying a rate of interest less than the market
rate wil be expected to pay the current rate when able to do so.
07 CFR 1943.25 Options, planning and appraisals.
(a) Optioning land. an applicant is responsible for obtaining
options on real property bought. Form FmHA 440-34, ''Option to Purchase
Real Property,'' should be used if possible. Other forms may be used if
acceptable to all parties concerned and to FmHA. When an FmHA form is
not used, a provision should be included which makes the option
contingent upon the FmHA making a loan to the buyer.
(1) The County Supervisor should advise the applicant to have an
understanding with the seller on such items as:
(i) Land description and number of acres;
(ii) Buildings and fixtures included in the transaction. The
applicant should determine the condition of property attached to the
land and the working condition of any fixtures with movable parts;
(iii) Minerals and the effect any mineral reservation has on the land
value and operating it as a farm;
(iv) Access to the land or any part of it;
(v) The party responsible for taxes and insurance; and
(vi) The party who will receive the income from the land during the
crop year of the transaction.
(2) The aplicant shoud decide if the applicant wants the option
recorded and is responsible for paying any recording fees.
(b) Planning. Farm and Home Plans and nonagricultural enterprise
plans, when appropriate, will be completed as provided in Subpart B of
Part 1924 of this chapter.
(c) Appraisals. (1) Real estate appraisals will be completed by an
FmHA employee or contractor authorized to make farm appraisals when real
estate is taken as security. The contractor, when he/she is not the
appraiser, is responsible for substantiating the appraiser's
qualifications. The contractor will obtain FmHA's concurrence that the
appraiser has the necessary qualifications and experience before the
contractor will utilize the appraiser in any appraisal work. The
contractor/appraiser completing the report must meet at least one of the
following qualifications:
(i) Certification by a National or State appraisal society.
(ii) If the contractor is not a certified appraiser and a certified
appraiser is not available, the contractor may qualify or may use other
qualified appraisers, if the contractor can establish that he/she or
that the appraiser meets the criteria for certification in a National or
State appraisal society.
(iii) The appraiser has recent, relevant, documented appraisal
experience or training, or other factors clearly establishing the
appraiser's qualifications.
(2) Real estate appraisals will be completed as provided in Subpart A
of Part 1809 of this chapter (FmHA Instruction 422.1). The rights to
mining products, gravel, oil, gas, coal or other minerals will be
considered a portion of the security for Farmer Program loans and will
be specifically included as part of the appraised value of the real
estate securing the loans.
(3) The value of stock required to be purchased by Federal Land Bank
(FLB) borrowers may be added to the recommended market value of the real
estate, provided:
(i) An assignment is obtained on the stock, or
(ii) An agreement is obtained which provides that:
(A) The value of the stock at the time the FLB loan is satisfied will
be applied on the FLB loan, or
(B) The stock refund check is made payable to the borrower and FmHA,
or
(C) The stock refund check is made payable to the borrower and mailed
to the County Supervisor.
(iii) The total of the stock value and the recommended market value
of real estate is indicated in the comments section of the appraisal
report.
(4) In the case of nonreal estate security the following items apply:
(i) Form FmHA 440-21, ''Appraisal of Chattel Property,'' will be
used.
(ii) The property which will serve as security will be described in
sufficient detail so it can be identified.
(iii) Its current market value, or if appropriate, the current cash
value will be determined.
(53 FR 35692, Sept. 15, 1988, as amended at 54 FR 47959, Nov. 20,
1989)
07 CFR 1943.26 Planning and performing farm development.
The development work will be planned and completed in accordance with
Subpart A of Part 1924 of this chapter. The provisions of Subpart E of
Part 1901 of this chapter will be met in connection with FO loans
involving recreational enterprises and the construction of buildings.
07 CFR 1943.27 Relationship with other lenders.
An applicant will be requested to obtain credit from another source
when information indicates such credit is available. When another
lender will not make a loan for the total needs of the applicant but is
willing to participate with an FO loan, consideration will be given to a
participation loan. FmHA employees may not guarantee, personally or for
FmHA, repayment of advances made from other credit sources. However,
lenders may be assured that lien priorities will be recognized.
07 CFR 1943.28 FmHA loans simultaneous with other lenders.
(a) Subpart R of Part 2000 of this chapter, ''Memorandum of
Understanding FHA-FCA,'' (available in any FmHA office) will serve as a
guide in processing FO loans to be made simultaneously with loans by FLB
to a common applicant. State Directors may work out agreements for
simultaneous loans with long-term lenders other than FLBs for eligible
loan purposes. Such an agreement should prohibit future advances by the
first mortgage holder except for taxes, property insurance, reasonable
maintenance expenditures, and reasonable foreclosure costs, but should
not prohibit subsequent FmHA loans. It should also cover items such as
appraisal methods, title clearances, loan closing, the disbursement of
funds and, when appropriate, advance notice of foreclosure. It may also
cover other items considered necessary or advisable for a sound FmHA
junior lien loan.
(b) The County Supervisor and the other lender's representative
should maintain a close working relationship in processing loans to a
mutual applicant or borrower. When an FO loan is made at the same time
as a loan from another lender, that lender's lien will have priority
over the FmHA lien unless otherwise agreed upon. The lender's lien
priority can cover the following in addition to principal and interest:
advances for payment of taxes, property insurance, reasonable
maintenance to protect the security, and reasonable foreclosure costs
including attorney's fees.
07 CFR 1943.29 Relationship with other FmHA loans, insured and
guaranteed.
(a) Insured FO loans may be made simultaneously with other FmHA
loans, and to borrowers presently indebted to FmHA, when the loan limits
will not be exceeded and all requirements of the loans involved will be
met.
(b) An insured FO loan may be made to a borrower with an outstanding
guaranteed FO, SW, or RL loan when:
(1) The total insured and guaranteed FO, SW and RL principal balance,
including the new loan, owed by the loan applicant does not exceed
$300,000 at loan closing.
(2) The outstanding combined insured and guaranteed FO principal
balance owed by the loan applicant, or owed by anyone who will sign the
note as cosigner evidencing personal liability, will not exceed the
authorized guaranteed FO loan limit providing the portion representing
the insured FO indebtedness does not exceed the insured FO loan limit.
The deciding factors are the type of entity and the personal liability
of the entity members. Individuals, who are members or stockholders of
a cooperative or coproration that is indebted for a $200,000 insured and
$100,000 guaranteed FO loan, can each borrow a $200,000 insured and
$100,000 guaranteed FO loan, or any combination of insured or guaranteed
FO loan funds that does not cause them to exceed the individual insured
or guaranteed FO loan limits, provided they conduct separate farming
operations as individuals and they have not signed for personal
liability for the entity FO debt. Likewise, such entities, whose
members or stockholders are individually indebted for the maximum
insured or guaranteed FO loan limits, may borrow the maximum insured or
guaranteed FO loans providing none of the members or stockholders are
required to pledge personal liability for the entity debt. Partners or
joint operators of a partnership or joint operation, which are indebted
for a $200,000 insured and a $100,000 guaranteed FO loan, cannot borrow
additional FO funds as individuals in a separate operation, because they
are each personally liable for the total entity debt. Likewise, such
entities consisting of individuals who are indebted for the maximum
insured or guaranteed FO loan limits, are not eligible for FO loan
assistance.
(3) Different lien positions on real estate are considered separate
and identifiable collateral.
(4) All other requirements of the loan are met.
(c) New applicants and borrowers indebted to FmHA and/or and FmHA
guaranteed lender(s) for an EE loan may be considered for an FO loan(s)
provided their total outstanding principal indebtness to FmHA and/or the
FmHA guaranteed lender(s) for the EE and any SW, RL OL and FO loans will
not exceed $650,000.
(d) A borrower may use the same collateral to secure two or more
loans, insured or guaranteed, under this subpart except that the
outstanding amount of such loans may not exceed the total value of the
collateral so used.
(53 FR 35692, Sept. 15, 1988, as amended at 55 FR 21528, May 25,
1990)
07 CFR 1943.30 County Committee certification.
The County Committee will certify that an applicant is eligible on
Form FmHA 440-2, ''County Committee Certification or Recommendation,''
before a loan is approved. In some instances the Committee may want to
interview the applicant or see the farm before making any
recommendations.
1943.31 (Reserved)
07 CFR 1943.32 Loan docket processing and forms.
(a) Forms. FmHA forms are available in any FmHA office. The
following table is a guide on the forms needed and distribution:
(b) Other docket items. The running record and correspondence
pretaining to the loan application and docket will be included. Other
items may include supplementary information to Farm and Home Plans,
nonfarm enterprises, and copies of mortgages, contracts, and deeds.
(c) Verification of veterans' preference. If the applicant has
checked the veteran block, the County Supervisor or other County Office
employee will review the applicant's evidence of discharge or release to
determine whether the applicant is entitled to veteran's preference.
(d) Information on other credit. The docket will include, by entries
in the running record or by letters, information on the need to
refinance secured and major unsecured debts. Also, information will be
included which shows other credit is not available in the amount needed
or is not available under repayment terms which the applicant can meet.
(53 FR 35692, Sept. 15, 1988, as amended at 54 FR 28019, July 5,
1989; 54 FR 29331, July 12, 1989; 54 FR 47959, Nov. 20, 1989; 55 FR
21528, May 25, 1990; 56 FR 67481, Dec. 31, 1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.19 was
amended by changing the reference in the column titled ''FmHA Form No''
from ''427-8'' to read ''1927-8'', effective January 30, 1992.
07 CFR 1943.33 Loan approval or disapproval.
(a) Loan approval authority. Initial and subsequent loans may be
approved as authorized by Subpart A of Part 1901 of this chapter
provided:
(1) The total debt including the loan(s) being made (unpaid principal
and past due interest) against the security will not exceed the market
value of the security.
(2) No significant changes have been made in the development plan
considered by the appraiser when real estate will be taken as security.
(b) Loan approval action. (1) The loan approval official must
approve or disapprove applications within the deadlines set out in
1910.4 of Subpart A of Part 1910 of this chapter. The loan approval
official is responsible for reviewing the docket to determine whether
the proposed loan complies with established policies and all pertinent
regulations. When reviewing the docket, the loan approval official will
determine that:
(i) The County Committee has certified the applicant eligible.
(ii) The Committee certification has been properly completed and
signed by at least two members of the Committee.
(iii) Funds are requested for authorized purposes.
(iv) The proposed loan is based on a feasible plan. Planning forms
other the Form FmHA 431-2 may be used when they provide the necessary
information.
(v) The security is adequate.
(vi) Necessary supervision is planned, and
(vii) All other pertinent requirements have been met or will be met.
(2) When approving the loan, the approval official will:
(i) Indicate on all copies of Form FmHA 1940-1, ''Request for
Obligation of Funds,'' any conditions required by FmHA regulations that
must be met for loan closing;
(ii) Specify any special security requirements;
(iii) Indicate special conditions or agreements needed with prior
lienholders when appropriate;
(iv) Indicate that satisfactory title evidence has been obtained;
(v) Indicate any other special requirements; and
(vi) Sign the original and one copy of Form FmHA 1940-1 and insert
the title of the approving official.
(c) Loan disapproval. The loan approval official must approve or
disapprove applications within 60 days after receiving a complete
application, as set out in 1910.4 of Subpart A of Part 1910 of this
chapter. The following action will be taken when a loan is disapproved:
(1) The reasons for disapproval will be indicated on Form FmHA 1940-1
by the loan approval official or the reasons will be in a letter or the
running record if this form has not been completed. Suggestions of how
to remedy the disapproval should be included.
(2) The County Supervisor will notify the applicant in writing of the
action taken and include any suggestions that could result in favorable
action. The applicant will be advised of the opportunity to appeal.
(See Subpart B of Part 1900 of this chapter.)
(3) Item furnished by the applicant during docket processing will be
returned.
07 CFR 1943.34 Requesting title service and accepting option.
(a) The County Supervisor will request the applicant to obtain title
clearance as provided in subpart B of part 1927 of this chapter, when
required, if this has not been done.
When the loan is approved, the following action will be taken:
(b) The applicant will sign Form FmHA 440-35, ''Acceptance of
Option,'' and send the original to the seller if land is being acquired.
A copy will be kept in the case folder.
(c) The applicant will arrange with the seller to take possession
when land is being acquired.
(53 FR 35692, Sept. 15, 1988, as amended at 54 FR 47959, Nov. 20,
1989; 56 FR 67481, Dec. 31, 1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.34 was
amended by revising paragraph (a), effective January 30, 1992. For the
convenience of the user, the superseded text follows:
1943.34 Requesting title service and accepting option.
(a) The County Supervisor will request the applicant to obtain title
clearance as provided in Part 1807 of this chapter (FmHA Instruction
427.1) when required, if this has not been done.
07 CFR 1943.35 Action after loan approval.
(a) Requesting check. If the County Supervisor is reasonably certain
that the loan can be closed within 20 working days from the date of the
check, loan funds may be requested at the time of loan approval through
the field office terminal system. If funds are not requested when the
loan is approved, advances in the amount needed will be requested
through the field office terminal system. Loan funds must be provided
to the applicant(s) within 15 days after loan approval, unless the
applicant(s) agrees to a longer period. If no funds are available
within 15 days of loan approval, funds will be provided to the applicant
as soon as possible and within 15 days after funds become available,
unless the applicant agrees to a longer period. If a longer period is
agree upon by the applicant(s), the same will be documented in the case
file by the County Supervisor.
(1) When all loan funds can be disbursed at, or within 30 days after,
loan closing of if the amount of funds that cannot be disbursed does not
exceed $5,000, the total amount of the loan will be requested in a
single advance.
(2) When loans funds cannot be disbursed as outlined in paragraph
(a)(1) of this section, the amount needed to meet the immediate needs of
the borrower will be requested through the field office terminal system.
The amount of each advance should meet the needs of borrowers as much
as possible, so that the amount in the supervised bank account will be
kept at a minimum. The Finance Office will continue to supply Form FmHA
440-57 until the entire loan has been disbursed. The County Supervisor
should tell the borrower to notify the County Office of amounts needed
on a timely basis to avoid delays in receiving loan checks.
(b) Handling loan checks. (1) When the loan check or the borrower's
personal funds are to be deposited in the designated loan closing
agent's escrow account, this will be done no later than the date of loan
closing. If loan funds or the borrower's personal funds are to be
deposited in a supervised bank account, this will be done in accordance
with Subpart A of Part 1902 of this chapter as soon as possible, but in
no case later than the first banking day following the date of loan
closing.
(2) If a loan check is received and the loan cannot be closed within
20 working days from the date of the check, the County Supervisor will
take appropriate action in accordance with FmHA Instruction 102.1, a
copy of which may be obtained from any FmHA office. The applicant must
agree to a delayed loan closing and the same will be documented in the
case file by the County Supervisor.
(3) When a check is returned and the loan will be closed at a
subsequent date, another check will be requested in accordance with FmHA
Instruction 102.1, a copy of which may be obtained as stated in
paragraph (b)(2) of this section.
(c) Cancellation of loan. If, for any reason a loan check or
obligation will be cancelled:
(1) The County Supervisor will notify the State Office of loan
cancellation by using Form FmHA 1940-10, ''Cancellation of U.S.
Treasury Check and/or Obligation.'' The County Office will send a copy
of Form FmHA 1940-10 to the designated attorney, Regional Attorney, or
the title insurance company representative providing loan closing
instructions to indicate that the loan has been canceled. If a check
received in the County Office is to be canceled, the check will be
returned as prescribed in FmHA Instruction 102.1 (available in any FmHA
office).
(2) Interested parties will be notified of the cancellation as
provided in subpart B of part 1927 of this chapter.
(d) Cancellation of advances. When an advance is to be cancelled,
the County Supervisor must take the following actions;
(1) Complete and distribute Form FmHA 1940-10 in accordance with the
FMI.
(2) When necessary, prepare and execute a substitute promissory note
reflecting the revised total of the loan and the revised repayment
schedule. When it is not possible to obtain a substitute promissory
note, the County Supervisor will show on Form FmHA 440-57 the revised
amount of the loan and the revised repayment schedule.
(e) Increase or decrease in amount of loan. If it becomes necessary
to increase or decrease the amount of the loan prior to loan closing,
the County Supervisor will request that all distributed docket forms be
returned to the County Office and reprocessed unless the change is minor
and replacement forms can readily be completed and submitted. In the
latter case, a memorandum will be attached to the revised forms and sent
to the State Office.
(53 FR 35692, Sept. 15, 1988, as amended at 54 FR 39727, Sept. 28,
1989; 56 FR 67481, Dec. 31, 1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.35 was
amended by revising paragraph (c)(2), effective January 30, 1992. For
the convenience of the user, the superseded text follows:
1943.35 Action after loan approval.
(c) * * *
(2) Interested parties will be notified of the cancellation as
provided in Part 1807 of this chapter (FmHA Instruction 427.1).
1943.36 -- 1943.37 (Revised)
07 CFR 1943.38 Loan closing actions.
When a loan closing date has been agreed upon, the County Supervisor
will notify the borrower and the seller, if any, of the loan closing
date. The following appropriate actions will be taken in connection
with, and after, loan closing.
(a) Real estate mortgage loans. When a loan is to be secured by a
real estate mortgage, it will be closed in accordance with the
applicable provisions of subpart B of part 1927 of this chapter except
as modified for loans of $10,000 or less in 1943.19(b)(4).
(b) Loans involving chattel or other nonreal estate security. All
chattel security instruments will be signed and filed as prescribed in
Subpart B of Part 1941 of this chapter for operating loans. The
following forms will be used for chattel security:
(1) Form FmHA 440-15, ''Security Agreement (Insured Loans to
Individuals).''
(2) Form FmHA 440-25, ''Financing Statement'' or, when authorized,
Form FmHA 440-A25, ''Financing Statement.''
(3) State forms may be used if national forms are not legally
acceptable. Such forms will require OGC and National Office clearance.
(c) Applicant's financial condition. The County Supervisor will
review with the applicant the financial statement which was prepared at
the time the docket was developed. If there have been significant
changes in the applicant's financial condition, the financial statement
will be revised and initialed by the applicant and the County
Supervisor. When an applicant's financial condition has changed to the
extent that it appears that the loan would be unsound or improper, the
loan will not be closed. If a revised loan docket is needed to meet
loan requirments or determine loan soundness, it will be developed and
submitted to the appropriate loan approval official.
(d) Loan approval conditions. The County Supervisor will inform the
applicant of any loan approval conditions that need to be met. These
conditions will usually be included in the notice informing the
applicant of the loan closing date. The loan will not be closed if the
applicant is unable to meet loan approval conditions.
(e) Change in the use of funds planned for refinancing. (1) County
Supervisors are authorized to:
(i) Transfer funds planned to be used for refinancing specific debts
to other debts when there is a need to do so, and
(ii) Transfer funds planned to be used for other purposes to pay
small deficiencies in estimates for refinancing debts, providing there
are sufficient remaining funds to complete any land purchase and planned
development.
(2) A revised docket will be developed when:
(i) The total amount of debts to be refinanced has increased in such
an amount that planned loan purposes cannot be carried out, and
(ii) The applicant is unable to make up any deficiencies from other
resources.
(f) Assignment of income from real estate to be mortgaged. Income to
be received by the borrower from royalties, leases, or other existing
agreements under which the value of the real estate security will be
reduced will be assigned and disposed of in accordance with Subpart A of
Part 1965 of this chapter, including provisions for written consent of
any prior lienholder. When the County Supervisor deems it advisable,
assignments also may be taken on all or a portion of income to be
derived from nondepleting sources such as income from bonus payments or
annual delay rentals. Such income will be assigned and disposed of in
accordance with Subpart A of Part 1965 of this chapter.
(1) For assignment of income, Form FmHA 443-16, ''Assignment of
Income from Real Estate Security,'' will be used, except if it is
legally inadequate in a State it may be adapted to that State with the
approval of the OGC or an authorized State Form may be used instead.
(2) The County Supervisor, upon the advice of the designated
attorney, escrow agent, title insurance company, or the OGC, as
appropriate, may require acknowledgment and recordation of the
assignment. Any cost incident thereto will be paid by the borrower.
(3) At the time Form FmHA 443-16 is executed, appropriate notations
will be made on Form FmHA 1905-1, ''Management System Card --
Individual,'' to insure that the proceeds, or the specified portions of
the proceeds assigned to FmHA from the transactions, are remitted at the
proper time.
(g) Preparation of the note. Form FmHA 1940-17, ''Promissory Note,''
will be used and completed in accordance with the FMI.
(1) Separate notes will be prepared for any other FmHA loan made
simultaneously with the FO loan. The notes will be completed as
provided in the appropriate loan regulation and FMI.
(2) All FmHA notes to be secured by real estate can be described in
the same mortgage.
(3) The promissory note will be signed as follows:
(i) Individuals. Only the applicant(s) will sign the note as a
borrower. If the co-signer is needed (see 1910.3(e) of Subpart A of
Part 1910 of this chapter), the co-signer will also sign the note. Any
other signatures needed to assure the required security will be obtained
as provided in State supplements. Persons who are minors or mental
incompetents will not execute a promissory note. Except when a person
has pledged only property as security for a loan, the purpose and effect
of signing a promissory note or other evidence of indebtedness for a
loan made or insured by FmHA is to incur individual personal liability
regardless of any State law to the contrary.
(ii) Cooperatives or corporations. The appropriate officers will
execute the note on behalf of the cooperative or corporation. Any other
individuals' signatures needed to assure the required security will be
obtained as provided in State supplements, and they will be personally
liable for the debt.
(iii) Partnerships or joint operations. The note will be executed by
the partner or joint operator authorized to sign for the entity, and all
partners in the partnership or joint operators in the joint operation,
as co-signers.
(h) Supplementary payment agreement. Form FmHA 440-9,
''Supplementary Payment Agreement,'' should be used for each applicant
who regularly (such as weekly, monthly, or quarterly) receives
substantial income from an off-farm source, a nonfarm enterprise, or
from farming.
(i) Obtaining insurance. The applicant will be informed of the
insurance requirements set forth in 1943.24(d) of this subpart.
(j) Effective time of loan closing. An FO loan is considered closed
when the mortgage is filed for record.
(k) Distribution of documents after loan closing. The County
Supervisor should review the forms and closing actions. Corrective
action should be taken when necessary.
(1) Real estate mortgage.
(i) When the original recorded instrument is returned to County
Office:
(A) File the original in the County Office file, and
(B) Give a copy to the borrower.
(ii) When the original is retained by recorder:
(A) File a conformed copy in County Office file, and
(B) Give a conformed copy to the borrower.
(iii) The County Supervisor will provide copies that may be needed in
some cases for interested third parties.
(2) Deeds.
(i) Give the original to borrower, and
(ii) Retain one copy to file.
(3) Title insurance policies.
(i) File the mortgage title policy in the County Office file, and
(ii) Give the Owner's title policy, if one is obtained, to the
borrower.
(4) Water stock certificates or similar collateral will be retained
in the County Office file.
(5) Abstracts of title.
(i) Return to the borrower, except that when they were obtained from
a third party with understanding they will be returned, the abstracts
will be sent to the third party. A memorandum receipt will be obtained
when abstracts are delivered to the third party.
(ii) Form FmHA 140-4, ''Transmittal of Documents'' will be used and a
receipted copy kept in the County Office. The FMI should be followed
for preparing this form.
(53 FR 35692, Sept. 15, 1988, as amended at 55 FR 21529, May 25,
1990; 56 FR 67481, Dec. 31, 1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.38 was
amended by revising paragraph (a) and by changing the reference in
paragraph (f)(3) from ''Form FmHA 405-1'' to read ''Form FmHA 1905-1''
effective January 30, 1992. For the convenience of the user, the
superseded text follows:
1943.38 Loan closing actions.
(a) Real estate mortgate loans. When a loan is to be secured by a
real estate mortgage, it will be closed in accordance with the
applicable provisions of Part 1807 of this chapter (FmHA Instruction
427.1), except as modified for loans of $10,000 or less in 1943.19
(b)(4) of this subpart.
1943.39 -- 1943.41 (Reserved)
07 CFR 1943.42 Servicing.
FO loans will be serviced in accordance with Subpart A of Part 1965
of this chapter and/or Subpart S of Part 1951 of this chapter. Chattel
security for FO loans will be serviced in accordance with Subpart A of
Part 1962 of this chapter and/or Subpart S of Part 1951 of this chapter.
07 CFR 1943.43 Subsequent FO loans.
A subsequent FO loan is a loan made to a borrower who is currently in
debt for an FO loan.
(a) A subsequent loan may be made for the same purpose and under the
same conditions as an initial loan.
(b) The subsequent loan will be processed in the same manner as an
initial loan.
(c) A new real estate mortgage will not be necessary provided:
(1) All the land which will serve as security for the loan is
described on the present real estate mortgage and
(2) The real estate mortgage has a future advance clause and a State
supplement provides authority for using such a clause and
(3) The required lien priority is obtained with the existing mortgage
and future advance clause.
07 CFR 1943.44 Subordinations.
Subordinations in favor of other lenders will be processed in
accordance with Subpart A of Part 1965 of this chapter.
1943.45 -- 1943.49 (Reserved)
07 CFR 1943.50 State supplements.
State supplements will be issued as necessary to implement this
subpart.
07 CFR 1943.50 Pt. 1943, Subpt. A, Exh. A
07 CFR 1943.50 Exhibits to Subpart A
07 CFR 1943.50 Exhibit A -- Farmers Home Administration Loans to
Entrymen on Unpatented Public Lands
I. GENERAL: This Exhibit provides additional policies and procedures
applicable to (1) insured Farmers Home Administration (FmHA) loans to
homestead and desertland entrymen which are to be secured by real
estate, and (2) taking of real estate mortgages on entries to secure
Farm Ownership, Soil and Water, Individual Recreation, Operating,
Emergency, Single Family Housing, and Farm Labor Housing loans in
connection with loan making and servicing.
A. Authority. The authorizations contained in this Exhibit clarify
security and servicing for loans to entrymen and are based on Public Law
361. Attachment 1 is a Memorandum of Understanding between the
Department of the Interior and the Department of Agriculture and
outlines the general procedures to be followed when loans are made to
entrymen. Reference to Guaranteed Loans in the Memorandum of
Understanding is not applicable.
B. Cooperation Between the Department of Agriculture and the
Department of the Interior. The extension of financial assistance and
taking of real estate mortgages authorized in paragraph I A will be
facilitated through the cooperation of the FmHA, the Bureau of Land
Management (BLM), and the Bureau of Reclamation (BR), as provided in the
Memorandum of Understanding.
C. Special Policies Applicable to Dwellings, Land Improvement and
Ownership. An FmHA loan will not be made to an applicant who lacks the
capital or who cannot obtain credit to provide (1) any required
habitable dwellings within the statutory period specified in pargraph I
D for the establishment of residence, and (2) land development
sufficient for success but in no case less than that necessary to meet
the entry requirements. The Notice of Allowance of Entry is adequate to
meet the ownership requirement until the patent is issued.
D. Patent Requirements. All entrymen will be expected to keep in
contact with appropriate officials of the BLM, and BR and comply with
pertinent laws and regulations of these Agencies relating to the
issuance of patents for homestead or desertland entries. When
applicable, reclamation proof must be filed by the borrower at the
earliest possible date. Likewise, FmHA personnel concerned with making
and securing FmHA loans to entrymen should acquaint themselves with BLM
and BR representatives and keep informed of their regulations relating
to the issuance of patents for homestead or desertland entries,
including but not limited to the following:
1. RESIDENCE AND DEVELOPMENT REQUIREMENTS. A homestead entryman must
established residence upon the tract entered within 6 months after date
of the entry unless an extension of time is allowed and must maintain a
residence there for 3 years. The entryman should notify the authorized
officer of the BLM upon establishing residence. When an FmHA loan is
made for any purpose, the requirements of the applicable FmHA
regulations must be met. Likewise any residence or development
requirements of BLM or BR will be met.
2. FINAL PROOF. Specific requirements for final proof for homestead
entrymen is found in 43 CFR 2515.7 and final proof for desertland
entrymen is found in 43 CFR 2521.6.
a. Homestead Entryman: Final proof must be filed within 5 years from
the date of allowance of entry. A patent will not be issued until the
entryman has submitted final proof. Final proof must show that (1) a
habitable dwelling is on the land at the time proof is submitted, (2)
residence requirements have been met, (3) the improvements are of such
character as to show good faith, and (4) the entryman is a citizen of
the United States. When the entryman is ready to submit final proof the
entryman should notify the BR and request instructions regarding the
procedure to be followed.
b. Desertland Entryman: Final proof must be made within 4 years from
the date of entry. General requirements of the BLM that must be met
include: (1) Filing a map at the initiation of the entry showing the
method of irrigation and the proposed source of water supply, (2) an
annual expenditure for 3 years of not less than $1 for each acre in the
necessary development of the land, (3) filing a map at the end of the
third year showing the character and extent of improvements, and (4)
yearly proof of expenditures containing statements of two or more
credible witnesses who have knowledge that the expenditures were made.
The County Supervisor should consult the BLM official for any
additional requirements of the entryman such as preparing a notice of
intention to make final proof, publication of final proof and submission
of final proof.
3. RECLAMATION PROOF. Reclamation proof for homestead entryman may
be submitted with, or at any time after, the submission of homestead
proof. In additon to the final homestead proof mentioned in paragraph I
D 2, the filing of reclamation proof is required as a condition for
obtaining a patent to any entry within a reclamation project.
Reclamation proof must show reclamation and cultivation of at least
one-half of the irrigable area in the entry for 2 years immediately
preceding the date of submission of proof and the payment of all
reclamation charges due at that time. Reclamation proof, in proper
form, must be submitted to the official in charge of the project
accompanied by the payment of final homestead commissions.
II. LOAN PROCESSING: When making an FmHA loan to be secured by the
entryman's land, existing FmHA policies, procedures, and loan
authorities applicable to the particular type of loan will be met,
except as follows:
A. Applications. 1 APPLICATIONS FROM ENTRYMEN NOT IN A FEDERAL
RECLAMATION PROJECT. An application for an FmHA loan from an entryman
with respect to public land not within a Federal reclamation project
will be considered only after the entryman has selected a farm and
received the Notice of Allowance of Entry from BLM. The original or a
copy of the document showing allowance of entry must be attached to Form
FmHA 410-1, ''Application for FmHA Services.''
2. APPLICATIONS FROM ENTRYMEN IN A FEDERAL RECLAMATION PROJECT. An
application for an FmHA loan from an entryman with respect to public
land within a Federal reclamation project will not be considered until
after the entryman has received a Certificate of Eligibility from BR and
has selected a farm. If at the time of making application the entryman
has received the Notice of Allowance of Entry from BLM, he will attach
the original or a copy of such document to Form FmHA 410-1. If the
entryman has not received the Notice of Allowance of Entry, a copy of
the Certificate of Eligibility must be attached to the FmHA application.
However, the docket will not be approved until the original or a copy
of the document showing Notice of Allowance of Entry has been received
from the applicant and placed in the loan docket.
3. SUPPLEMENTAL INFORMATION ON APPLICANT. At the time of making
application for an FmHA loan to be secured by real estate, the entryman
may be requested to authorize the FmHA to obtain from BLM or BR any
available information concerning the entryman's application for
homestead, desertland, or reclamation entry for use by the FmHA in
determining the entryman's eligibility for the loan as provided in the
Memorandum of Understanding.
B. Special Items in Development of Loan Dockets for Loans to be
Secured by the Entryman's Land. Loan dockets for loans to entrymen will
be prepared and distributed in accordance with the applicable FmHA
regulations, except as modified by this paragraph.
1. DEVELOPMENT PLAN. An extra copy of Form FmHA 1924-1, ''Farm
Development Plan'' will be prepared and sent to BLM in each case. When
the entryman's farm is located in a Federal reclamation project, any
development items listed on Form FmHA 1924-1 must be consistent with the
overall plans for development of the reclamation project. Consequently,
when Form FmHA 1924-1 provides for the leveling of land or the
installation of farm distribution and surface drainage systems another
extra copy will be prepared and sent to the Reclamation Project Officer
as soon as the County Supervisor determines that there is a reasonable
likelihood that the loan will be made. If Form FmHA 1924-1 conflicts
with the overall BR plans for the development of the Federal reclamation
project, officials of the BR will so advise the County Supervisor. The
processing of the loan will not be delayed while awaiting such advice
from BR but the FmHA loan will not be closed until Form FmHA 1924-1 is
revised to make it consistent with the BR plans. The County Supervisor
will advise the Project Officer or Authorized Officer in writing
whenever changes are made in the plans approved by the FmHA.
C. Title Clearance. 1 The entryman applicant will be required to
furnish and pay for a certified statement prepared by a qualified title
examiner or abstractor or as otherwise required by a State supplement
which will include finding with respect to any outstanding land leveling
contracts and any other claims of any kind on record against the entry.
This certified statement will be included in the loan docket. Where
there is an outstanding land leveling contract, the applicant's copy of
such contract also will be included in the loan docket and returned to
the borrower when the loan is closed.
2. The State Director, upon advice from the Office of the General
Counsel, will inform the County Supervisor regarding the acceptable form
of certified statement required in paragraph II C 1.
D. Loan Closing. Except as provided by this Exhibit, FmHA loans will
be closed in accordance with the applicable FmHA regulation.
1. REAL ESTATE MORTGAGE FORMS. Whenever the entry is located within
a Federal reclamation project two extra copies of Form FmHA 1927-1,
''Real Estate Mortgage,'' will be prepared. If the entry is not within
a Federal reclamation project, one extra copy of the real estate
mortgage will be prepared. After the loan has been closed, a conformed
copy of the real estate mortgage will be sent to BLM and, if the entry
is located in a Federal reclamation project, a conformed copy of the
mortgage also will be sent to the BR. The entryman's serial number
which appears on the original document showing Notice of Allowance of
Entry will be typed on the original, and the conformed copies of the
Mortgage for BLM and BR will indicate the date and place of recordation
and the book and page numbers.
2. COUNTY OFFICE RECORD OF ALLOWANCE OF ENTRY. When the loan is
closed a copy will be made of the original document showing Notice of
Allowance of Entry for the borrower's county office case folder, unless
a copy was funished. The County Supervisor will sign the following
certification which will be typed on this copy:
''I hereby certify that this is an exact copy of the Notice of
Allowance of Entry issued by the BLM to -------------------- (Entryman's
Name) residing at -------------------- (Entryman's Address)
''
County Supervisor
When the original document showing allowance of entry is furnished,
it will be returned to the borrower.
3. ENTRIES REQUIRED ON MANAGEMENT SYSTEM CARDS. Upon closing the
loan, the County Supervisor will enter a notation on the borrower's
Management System Card (Form FmHA 405-1) as to the date when the
borrower must submit final proof to the BLM in fulfillment of the
requirements to obtain a patent. If residence has not been established,
a notation also will be made on the Management System Card of the date
such residence must be commenced. It will be the responsibility of the
County Supervisor to follow through to see that the borrower completes
these actions.
III. MORTGAGE ON REAL ESTATE FOR ADDITIONAL SECURITY. When it is
deemed advisable to take a mortgage on the homestead or desertland entry
as additional security or to otherwise protect the interests of the
FmHA, a real estate mortgage will be taken on such entry. The mortgage
will be taken as authorized in Subpart A of Part 1965 of this chapter
(FmHA Instruction 465.1). In such a case, a copy of the real estate
mortgage will be sent to BLM and, if the farm is located in a Federal
reclamation project, a copy of the mortgage also will be sent to the BR.
IV. DEFAULT AND DISPOSAL OF UNITS: The County Supervisor will
coordinate with the local BLM and BR representatives and keep the State
Director currently advised on any cases in default or where default is
anticipated. The State Director will be guided by Attachment I and
advice of the Office of the General Counsel in fulfilling FmHA's
responsibilities for disposal of any units on which a patent has not
been issued. Units on which a patent has been issued will be serviced
by applicable FmHA procedures.
A. Purpose. The purpose of this memorandum is to outline the general
procedure to be followed by the Farmers Home Administration (FHA), the
Bureau of Land Management (BLM), and the Bureau of Reclamation (BR),
when FHA extends financial assistance to entrymen on unpatented public
lands, including public land in reclamation projects.
B. Definitions. Unless otherwise indicated in this memorandum:
(1) The term ''unit'' will be used to describe an adequate family
farm, less than adequate family farm, a portion of a farm or any other
tract of land.
(2) The term ''FHA'' also includes its insured lenders and guaranteed
lenders.
(3) The term ''outstanding balance'' includes (a) the unpaid
indebtedness under the FHA mortgage, (b) any unpaid costs owed to BR for
construction by it of a special distribution system to serve a unit
where such costs have been allocated to the unit as a separate item, and
(c) any portion of an SW association loan made by FHA for construction
of a domestic water system to serve the unit and secured by a lien on
the unit. It does not include any portion of an SW association loan
made by the FHA for construction of a domestic water system to serve the
unit and not secured by a lien on the unit, nor project construction
costs charged to the unit.
(4) Pub. L. 361, 81st Congress (7 U.S.C. 1006a and 1006b), is
referred to as ''Pub. L. 361.'' It applies to Farm Ownership (FO),
Operating (OL), Soil and Water Conservation (SW) loans made to
individuals and Recreation (RL) loans to individuals under the
Consolidated Farm and Rural Development Act of 1972 (7 U.S.C. 1921) and
prior laws. It does not apply to Emergency (EM) loans made under that
act or prior laws, nor to Housing (RH) loans made under Title V of the
Housing Act of 1949 (42 U.S.C. 1471), or to any other loans made or
administered by FHA.
(5) Pub. L. 419 (86 Stat. 675) amended Pub. L. 361 to add
desertland entrymen as eligible for the same loans as indicated in (4)
above.
(6) The term ''Project Officer'' refers to the BR Officer who may
properly hold the requisite responsibility for the project or area in
question.
(7) The term ''authorized officer'' refers to the BLM Officer to whom
has been delegated the required responsibility for the area in question.
(8) The term ''County Supervisor'' means County Supervisor for FHA.
(9) The term ''State Director'' means State Director for FHA.
A. FHA regulations will govern making and servicing FHA loans,
including the taking of mortgages as additional security for existing
FHA loans.
B. In connection with applications for FHA loans or credit sales to
eligible applicants, the Project Officer of BR or the authorized officer
of BLM, upon written request of the County Supervisor, will furnish the
following:
1. Written consent to make the applicant an FHA loan or to secure an
existing FHA loan.
2. Any information which BR or BLM has concerning the applicant,
provided, in the case of BR information, the request has the following
authorizations attached to it:
Date ------------ , 19 --
I hereby authorize the Bureau of Reclamation to make available to the
Farmers Home Administration any information the Bureau may have
concerning my transactions with it. This information may be used by the
Farmers Home Administration in determining my eligibility and
qualifications for a loan, and is to be treated as confidential.
(Type name of applicant below signature)
signed
(applicant)
signed
(spouse)
3. A statement of account, showing the applicant's outstanding
balance if there is a debt owed to BR (principal balance, accrued unpaid
interest, and daily interest accrual rate, any other charges and any
unpaid special distribution system costs, and the amount, delinquent).
4. A report on any development and residence requirements which have
not been completed and on eligibility of the unit for water, including
full information on the status of any excess land.
5. Advice as to whether the applicant is in default because of
failure to pay water charges, or because of breach of any other
agreements with the Bureau of Reclamation.
C. A homestead or desertland entryman on public land not in a
reclamation project may apply to the County Supervisor for an FHA loan
when his entry has been allowed. The original or a copy of the Notice
of Allowance of Entry from BLM must be attached to the application for a
loan from FHA. Upon request of the County Supervisor, the authorized
officer of the BLM, to the extent applicable will furnish any
information that office has with respect to the applicant entryman.
An applicant for a homestead on a reclamation project likewise may
apply to the County Supervisor for an FHA loan when he has received from
the BR a Certificate of Eligibility and has selected a unit. A copy of
the Certificate of Eligibility must be attached to the application for a
loan from the FHA unless the unit has been entered, in which case the
Notice of Allowance of Entry will be attached to the application for a
loan. Each application for such a loan filed by an entryman will be
processed in substantially the same manner as other application of a
similar character, including the preparation of the loan docket,
certifications by the FHA County Committee, and approval by the duly
authorized loan approving official. If any conflict exists between the
development plans of FHA and BR or BLM, the difference must be
reconciled prior to loan closing. A copy of the Notice of Allowance of
the Entry will be required in the loan docket before a loan is closed.
D. Upon closing of a loan to an entryman, when real estate security
is taken, the County Supervisor will send copies of the real estate
mortgage to the authorized officer of BLM, and to BR if appropriate.
The County Supervisor will indicate on the mortgage the date such
instrument was filed for record and the entryman's homestead or
desertland entry serial number. Copies of these instruments will serve
as notification to BLM or BR that a loan has been made by FHA and may be
used in connection with the servicing of such loans as indicated herein.
A. If the entryman-borrower repays his indebtedness in full to FHA
before a patent is issued to him by BLM, the County Supervisor will
promptly notify the BLM authorized officer of the release of the
mortgage lien.
B. When final homestead or desertland entry proof or homestead proof
and reclamation proof submitted by an entryman-borrower is accepted by
the BLM and a patent is issued before BLM is notified of the full
repayment of the indebtedness to FHA, the patent issued will make
reference to the FHA mortgage as follows:
''This patent is issued subject to the rights of the United States
under a certain mortgage or deed of trust executed by ------ and
-------------- under date of ---------------- , 19 ---- , recorded in
Book ------ , Page ---------- of the records of the Recorder of Deeds
for ---------- .''
In such cases, if the patent is issued to a person other than the
mortgager or the purchaser at foreclosure of the mortgage, there shall
also be inserted after the recital of recordation of the mortgage the
following words: ''Which the patentee assumes and agrees to pay.''
C. Upon issuance of the patent to the entryman-borrower, the
authorized officer of BLM will notify the State Director that the patent
has been issued and mailed to the entryman-borrower. Upon such
notification, the County Supervisor will advise the entryman-borrower to
record the patent promptly in the real estate records in the county in
which his unit is located, and will check the records to determine that
the recordation has been accomplished. The issuance of the patent will
terminate any further relationship between BLM and FHA insofar as the
entryman-borrower is concerned.
D. In the event that an entryman-borrower has not submitted Final
Proof within the statutory period from the date of allowance of his
entry, BLM will send to the County Supervisor a copy of the Notice of
Expiration of the statutory period of entry when it is mailed to the
entryman-borrower. The copy of the notice will be used by the County
Supervisor in urging the entryman-borrower to submit final proof with
appropriate explanation of his failure to do so before the expiration of
the statutory period.
When an entryman-borrower is in default in the terms of his mortgage
to FHA, in complying with requirements to obtain a patent, or in meeting
the requirements to make reclamation proof, the following procedures
will apply:
A. Default on Mortgage. BLM will issue a decision canceling any
entry upon which there is an FHA mortgage when so requested in writing
by the State Director. FHA may request a cancellation whenever any
default occurs in the terms, conditions, covenants, and obligations
contained in the mortgage. Included among the terms, conditions,
covenants, and obligations in the mortgage taken by FHA will be the
provision that the entryman-borrower must comply with the legal and
administrative regulations for the issuance of a patent and, if the
entry is located in a reclamation project, with the legal and
administrative regulations for making reclamation proof.
1. The State Director will furnish the authorized officer of BLM with
an explanation of the need for cancellation. When the entry is located
in a reclamation project, the State Director also will notify the BR
Regional Director and furnish him with an explanation of the need for
cancellation.
2. The BR Regional Director may request the State Director to
reconsider the necessity for cancellation of the entry when (a) BR can
furnish information which may not have been considered by FHA, (b) there
is an outstanding contract between BR and the entryman borrower for the
repayment of charges for land leveling, or (c) the entryman-borrower has
not made reclamation proof. If such a request is made, a copy will be
furnished to the BLM which shall suspend action on the FHA request until
further notified by the FHA. Ordinarily, BR will not request a
reconsideration of the necessity for cancellation unless there appears
to be a reasonable basis upon which a solution can be worked out so that
the entryman-borrower may retain possession of his unit.
3. If BR does not ask the State Director to reconsider his request to
cancel within 30 days, BLM will issue a decision cancelling the entry.
4. If BR asks for a reconsideration of the request to cancel, it will
furnish the State Director immediately new information which it believes
should be considered by FHA in reaching a decision. When FHA has
reached a final decision, it will notify the BLM and the BR of the
decision reached. Within 30 days after receiving notice of the final
decision of the State Director that the entry should be canceled, BLM
will notify the entryman-borrower of the cancellation of his entry in
accordance with the usual procedure. A copy of the notice of the
cancellation will be mailed to the State Director at the same time.
B. Default in Meeting Entry Requirements. If BLM proposes to take
any action toward cancellation of an entryman-borrower's entry, it will
notify the State Director and the BR Regional Director if the unit is
located in a reclamation project, in writing at least 30 days before any
action is commenced. The notification will be accompanied by an
explanation as to why cancellation will be made. Within the 30-day
period either or both FHA and BR may present any new information for the
consideration of the BLM in reaching a decision to, or not to, cancel
the entry. When BLM has reached a final decision, it will inform the
State Director and the BR Regional Director.
C. Default in Meeting Reclamation Requirements. In the event BR
intends to recommend cancellation of an entryman-borrower's entry, the
Superintendent of the Reclamation Project will notify the State Director
in writing at least 30 days before such recommendation is to be
submitted to BLM for cancellation. The notification will be accompanied
by an explanation as to why cancellation of entry is to be requested.
FHA may request a reconsideration of BR's intended recommendation to
cancel within the 30-day period and will furnish any new information
which it believes should be considered by BR when reaching a final
decision. When BR has reached a final decision, it will notify the
State Director.
After cancellation or relinquishment of an entry upon land on which
FHA holds a mortgage, such land shall be opened to re-entry only to
persons eligible for an original entry, and eligible for an FHA loan
unless the FHA Loan is paid in full. Any unit disposed of hereunder
shall be subject to the outstanding balance owed to FHA and BR, or to
that portion of the outstanding balance as agreed upon by the FHA and BR
or BLM, as appropriate, if the entryman is eligible for an FHA loan.
A. One Year Limit. Under Pub. L. 361, BLM or BR can permit a new
entry only during one year after cancellation or relinquishment of the
old entry where the FHA mortgage is subject to Pub. L. 361 (FO, OL, and
SW). In other cases such as RH and EM, the one-year limitation does not
apply, but BLM or BR will nevertheless arrange for a new entry within
the one-year period if it is practicable to do so.
B. Custody and Expenses. While BLM or BR has disposal authority it
will assume custodial responsibility for the unit, but the County
Supervisor and the Project Officer will determine the actions necessary
to protect the interests of both FHA and BLM or BR. Any expenses
incurred for protection of FHA's interest will be paid by FHA and added
to the mortgage debt.
C. Disposal of Units -- 1. Within a Reclamation Project. As soon as
possible, after cancellation or relinquishment, FHA will make an
appraisal to determine the value of the property and will report its
findings to BR on appropriate FHA appraisal forms. The State Director
and the BR Regional Director after receipt of the report by BR will
jointly participate in determining the amount of indebtedness owed to
the United States which shall be required in accordance with the
existing law to be paid and the terms under which repayment will be
made.
a. BR will, thereafter, for that particular unit, proceed to inform
the public of the availability of the unit in accordance with its
established procedures. However, before BR issues a Certificate of
Eligibility to any applicant for re-entry it will submit to the County
Supervisor (a) a list of the names of the applicants who can qualify for
a Certificate of Eligibility and the order in which such applicants
shall be considered, and (b) the information submitted by each of the
qualified applicants in support of his application for the entry.
b. The County Supervisor and the County Committee will examine the
list and the information to determine which of the applicants are
eligible for an FHA loan. The list of any documentary information
furnished will be returned to BR with a written statement setting forth
the names in the list which are eligible for FHA assistance. Upon
receiving such information from FHA, BR will proceed to select, in
accordance with established procedures, from among the applicants
determined to be eligible for a Certificate of Eligibility and an FHA
loan, one applicant but not to exceed two alternate applicants, to whom
the unit may be awarded upon qualifying to assume the indebtedness.
c. BR will issue a Certificate of Eligibility to the selected
applicant. The Certificate of Eligibility will be sent to the FHA
County Supervisor who will instruct the applicant to file his
Certificate of Eligibility and application for entry with BLM which will
issue a Notice of Allowance of Entry if the applicant is qualified to
make entry. The applicant will be allowed to occupy the unit when he
has received the Notice of Allowance of Entry and has completed
arrangements to assume the required amount of indebtedness owed to FHA
or to refinance such indebtedness. FHA will send a copy of the
assumption agreement or note and mortgage, if any, executed by the new
occupant to BR and BLM.
d. FHA may permit an eligible person to whom the unit is awarded to
assume that part of the indebtedness determined to be within the value
of the property.
2. Units Not Within a Reclamation Project. As soon as possible,
after cancellation or relinquishment, FHA will make an appraisal to
determine the value of the property and to determine the amount of
indebtedness owed on FHA loans that is to be paid by the new entryman.
The FHA will report the amount of the FHA debt to be assumed to the BLM.
a. The BLM will, thereafter, for that particular entry, proceed to
inform the public of the availability of the land in accordance with its
established procedures. BLM will, following the opening of the land to
application, submit to the County Supervisor (a) a list of the names of
the applicants who can qualify for the allowance and the order in which
such applicants shall be considered, and (b) the information submitted
by each of the applicants in support of his application.
b. Thereafter the FHA will select from the list the first applicant
for the entry who can qualify for an FHA loan.
c. FHA will then notify BLM of the applicant selected. The
authorized Officer will, as soon as possible after notification, issue
the Notice of Allowance. The Allowance of Entry or an attachment
thereto will show that entry is conditioned upon payment or assumption
of the FHA debt. A copy of appropriate notice will be mailed to the
State Director.
d. Upon receipt of the Notice of Allowance of Entry by the applicant,
FHA will instruct him to occupy the unit and will complete arrangements
for him to assume or refinance the indebtedness or the part thereof
determined to be within the value of the property. FHA will send a copy
of the assumption agreement or note and the mortgage, if any, executed
by the new occupant to BLM.
e. FHA may permit an eligible person to whom the unit is awarded to
assume that part of the indebtedness determined to be within the value
of the property.
D. Disposal of Units By Farmers Home Administration. 1. If no entry
is allowed within one year after cancellation or relinquishment of a
prior entry on which FHA holds a mortgage and the property was security
for an FHA loan subject to Pub. L. 361 even though it also was security
for a loan not subject to that law, FHA will dispose of the unit in
accordance with the FHA regulations. If the unit is located on a
reclamation project, such disposition shall be subject, however, to
outstanding reclamation charges on the land due the United States.
2. If the property cannot be sold immediately, the FHA will arrange
for a lease or caretaker agreement as necessary to protect the
Government's interests.
3. When FHA prepares to sell a unit, it will also advise BLM or BR,
as appropriate, of the name of the purchaser and will request issuance
of a patent to the purchaser. If the unit is in a reclamation project.
BR will furnish, as soon as possible to FHA, information concerning any
outstanding reclamation charges on the land due the United States.
4. The sale may be for cash or on credit. In the event the sale is
on credit, FHA will furnish a copy of the mortgage to BLM or BR, as
appropriate, which shall make reference, in any patent issued
thereafter, to the outstanding mortgage of FHA.
This memorandum of understanding supersedes the earlier memorandum of
understanding signed on February 17, 1950, and March 25, 1950,
respectively, by the Secretaries of Agriculture and Interior.
Approved:
Jack O. Horton,
Assistant Secretary of the
Interior.
Date: October 22, 1974.
Approved:
William Erwin,
Assistant Secretary of
Agriculture.
Date: December 16, 1974.
(43 FR 55895, Nov. 29, 1978, as amended at 51 FR 4136, Feb. 3, 1986;
52 FR 8035, Mar. 13, 1987; 56 FR 67481, Dec. 31, 1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, exhibit A of
subpart A of part 1943 was amended by changing the reference in the
first sentence of paragraph II D 1 from ''Form FmHA 427-1'' to read
''Form FmHA 1927-1'', effective January 30, 1992.
07 CFR 1943.50 Pt. 1943, Subpt. A, Exh. B
07 CFR 1943.50 Exhibit B -- Target Participation Rates for Farmers Home
Administration (FmHA) Direct Farm Ownership (FO) Loan and Acquired
Property Outreach Program for Members of Socially Disadvantaged Groups.
I. GENERAL: Provisions of the Agricultural Credit Act of 1987
require Farmers Home Administration (FmHA) to establish target
participation rates for providing direct Farm Ownership (FO) loan funds
and acquired farmland assistance to members of socially disadvantaged
groups. These rates are established to ensure that members of socially
disadvantaged groups are provided access to direct FO loan funds and
acquired farmland. The target participation rate established for each
State, and each County within the State, is based on the proportion of
minority rural population to the total rural population in the State,
and for each County within the State.
II. IMPLEMENTATION RESPONSIBILITIES: States will meet their target
participation rates in use of direct FO loan funds and the sale of
inventory property.
A. The target participation rate, as provided in this Exhibit, will
be applied to direct Farm Ownership loan funds and inventory property in
the following manner:
1. The targeted portion of a State's Fiscal Year direct farm
ownership allocation, as outlined in Exhibit A of Subpart L of Part 1940
of this chapter, will be used exclusively to enable members of socially
disadvantaged groups to purchase suitable farmland. Additional funds
will be available from the National Office Reserve to enable States to
obligate loans for socially disadvantaged applicants should their
targeted allocation be insufficient. This requirement does not prohibit
States from using their allocation of regular direct FO funds for making
loans to members of socially disadvantaged groups.
2. Inventory property. States will ensure that members of socially
disadvantaged groups have an opportunity to purchase, as a minimum, the
number of inventory farms available October 1 of each year x a State's
target participation rate. Sales of suitable inventory farmland will be
handled in accordance with the applicable provisions of Subpart C of
Part 1955 of this chapter. Leasing of inventory property will be
handled in accordance with the applicable provisions of Subpart B of
Part 1955 of this chapter.
III. OTHER INFORMATION: The National Office will provide each State
Director with a list of the target participation rates for each county
by October 1 of each year. State Directors shall make available to each
County and District Office the county(ies) target participation rates.
State Directors will make every effort to provide the greater amount of
direct FO loan funds and inventory farmland to counties having the
larger socially disadvantaged population.
(53 FR 35692, Sept. 15, 1988)
07 CFR 1943.50 Subpart B -- Insured Soil and Water Loan Policies,
Procedures, and Authorizations
Source: 53 FR 35706, Sept. 15, 1988, unless otherwise noted.
07 CFR 1943.51 Introduction.
This subpart contains regulations for making initial and subsequent
insured Soil and Water (SW) loans. It is the policy of Farmers Home
Administration (FmHA) to make loans to any qualified applicant without
regard to race, color, religion, sex, national origin, marital status,
age or physicial/mental handicap provided the applicant can execute a
legal contract. See Exhibit A of Subpart A of this Part for making SW
loans to entrymen on unpatented public lands. See Subpart R of Part
2000 of this chapter (available in any FmHA office) for the Memorandum
of Understanding between the Farm Credit Administration (FCA) and the
FmHA.
07 CFR 1943.52 Objectives.
The basic objective of the SW loan program is to provide credit and
management assistance to eligible farmers and ranchers when credit is
not available elsewhere. FmHA assistance enables farm and ranch
operators to use their land resources to improve their financial
conditions so that they can obtain credit elsewhere.
07 CFR 1943.53 Management assistance.
Supervision will be provided borrowers to the extent necessary to
achieve loan objectives and protect the Government's interest, in
accordance with Subpart B of Part 1924 of this chapter.
07 CFR 1943.54 Definitions.
Approval official. A field official who has been delegated loan and
grant approval authorities within applicable loan programs, subject to
the dollar limitations contained in tables available in any FmHA office.
Borrower. When a loan is made to an individual, the individual is the
borrower. When a loan is made to an entity, the corporation
cooperative, partnership or joint operation is the borrower.
Cooperative. An entity which has farming as its purpose and whose
members have agreed to share the profits of the farming enterprise. The
entity must be recognized as a farm cooperative by the laws of the
State(s) in which the entity will operate a farm.
Corporation. For the purposes of this regulation, a private domestic
corporation created and organized under the laws of the State(s) in
which the entity will operate a farm.
Farm. A tract or tracts of land, improvements, and other
appurtenances considered to be farm property which is used or will be
used in the production of crops or livestock, including the production
of fish under controlled conditions, for sale in sufficient quantitites
so that the property is recognized as a farm rather than a rural
residence. The term ''farm'' also includes any such land and
improvements and facilities used in a nonfarm enterprise. It may also
include a residence which, although physicially separate from the farm
acreage, is ordinarily treated as a part of the farm in the local
community.
Feasible plan. A feasible plan is a plan based upon the
applicant/borrower's records that show the farming operation's actual
production and expenses. These records will be used along with
realistic anticipated prices, including farm program payments when
available, to determine that the income from the farming operation,
along with any other reliable off-farm income, will provide the income
necessary for the applicant/borrower to at least be able to:
(a) Pay all operating expenses and all taxes which are due during the
projected farm budget period.
(b) Meet necessary payments on all debts, except as provided in
1941.14 of Subpart A of Part 1941 of this chapter, for annual production
loans or subordinations made to delinquent borrowers.
(c) Provide living expenses for the family members of an individual
borrower or a wage for the farm operator in the case of a cooperative,
corporation, partnership or joint operation borrower which is in
accordance with essential family needs. Family members include the
individual borrower or farm operator in the case of an entity, and the
immediate members of the family which resides in the same household.
Fish farming. The production of fish, mollusks, or crustaceans (or
other invertebrates) under controlled conditions in ponds, lakes,
streams, or similar holding areas. This involves feeding, tending,
harvesting and other activities as are necessary to properly raise and
market the products.
Indefinite parole. To verify that applicants other than citizens are
legally admitted to the U.S. on the indefinite parole, such applicants
must provide their Form I-94, ''Immigration on Indefinite Parole'' card.
Joint operation. Individuals that have agreed to operate a farm or
farms together as a business unit. The real and personal property is
owned separately or jointly by the individuals. A husband and wife who
want to apply for a loan together will be considered a joint operation.
Leasehold. A right to use farm property for a specific period of time
under conditions provided for in a lease agreement.
Majority interest. Any individual or a combination of individuals
owning more than a 50 percent interest in a cooperative, corporation,
partnership or joint operation.
Mortgage. Any form of security interest or lien upon any rights or
interest in real property of any kind. In Louisiana and Puerto Rico the
term ''mortgage'' also refers to any security interest in chattel
property.
Partnership. An entity consisting of individuals who have agreed to
operate a farm. The entity must be recognized as a partnership by the
laws of the State(s) in which the entity will operate a farm and must be
authorized to own both real and personal property and to incur debts in
its own name.
Security. Property of any kind subject to a real or personal property
lien. Any reference to collateral or security property shall be
considered a reference to the term security.
State or United States. The United States itself, each of the
several States, the Commonwealth of Puerto Rico, the Virgin Islands of
the United States, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
1943.55 (Reserved)
07 CFR 1943.56 Credit elsewhere.
The applicant shall certify in writing on the appropriate forms, and
the County Supervisor shall verify and document, that adequate credit
elsewhere is not available, with or without a guarantee or
subordination, to finance the applicant's actual needs at reasonable
rates and terms, taking into consideration prevailing private and
cooperative rates and terms in the community in or near where the
applicant resides for loans for similar purposes and periods of time.
(a) If the County Supervisor receives letters or other written
evidence from a lender(s) indicating the applicant is unable to obtain
satisfactory credit, these will be included in the loan docket.
(b) If the applicant cannot qualify for the needed credit from the
lenders contacted, but one or more of them has indicated they would
provide credit with an FmHA guarantee, or the County Supervisor
determines that the applicant can obtain a guaranteed loan, the
applicant will be advised to file an application with that lender(s) so
that a guaranteed SW loan request can be processed by the lender for
consideration by FmHA.
(c) Property and interest in property owned and income received by an
individual applicant; and cooperative and its members, as individuals;
a corporation and its stockholders, as individuals; a partnership and
it partners, as individuals; and a joint operation and its joint
operators, as individuals; will be considered and used by an applicant
in obtaining credit from other sources.
1943.57 -- 1943.60 (Reserved)
07 CFR 1943.61 Receiving and processing applications.
Applications will be received and processed as provided in Subpart A
of Part 1910 of this chapter, with consideration given to the
requirements in Exhibit M of Subpart G of Part 1940 of this chapter.
07 CFR 1943.62 Soil and Water loan eligibility requirements.
In accordance with the Food Security Act of 1985 (Pub. L. 99-198),
after December 23, 1985, if an individual or any member, stockholder,
partner, or joint operator of an entity is convicted under Federal or
State law of planting, cultivating, growing, producing, harvesting, or
storing a controlled substance (see 21 CFR part 1308, which is Exhibit C
of subpart A of part 1941 of this chapter and is available in any FmHA
office, for the definition of ''controlled substance'') prior to loan
approval in any crop year, the individual or entity shall be ineligible
for a loan for the crop year in which the individual or member,
stockholder, partner, or joint operator of the entity was convicted and
the four succeeding crop years. Applicants will attest on Form FmHA
410-1, ''Application for FmHA Services,'' that as individuals or that
its members, if an entity, have not been convicted of such crime after
December 23, 1985. In addition, the following requirements must be met:
(a) An individual must:
(1) Be a citizen of the United States (see 1943.54 of this subpart
for the definition of ''United States'') or an alien lawfully admitted
to the United States for permanent residence under the Immigration and
Nationality Act. Aliens must provide Forms I-151 or I-551, ''Alien
Registration Receipt Card.'' Indefinite parolees are not eligible. If
the authenticity of the information shown on the alien's identification
document is questioned, the County Supervisor may request the
Immigration and Naturalization Service (INS) to verify the information
appearing on the alien's identification card by completing INS Form
G-641, ''Application for Verification of Information from Immigration
and Naturalization Records,'' obtainable from the nearest INS District.
(See Exhibit B of Subpart A of Part 1944 of this chapter.) Mail the
completed form to INS. The payment of a service fee by FmHA to INS is
waived by inserting in the upper right hand corner of INS Form G-641,
the following: ''INTERAGENCY LAW ENFORCEMENT REQUEST.''
(2) Possess the legal capacity to incur the obligations of the loan.
(3) Have the character (emphasizing credit history, past record of
debt repayment and reliability), and industry necessary to carry out the
proposed operation. Past record of debt repayment will not be cause for
a determination that the applicant/borrower is not eligible if an honest
attempt has been made to make the payments.
(4) Honestly endeavor to carry out the applicant's/borrower's
undertakings and obligations. This would include, but is not limited
to, providing current, complete and truthful information when applying
for assistance and making every reasonable effort to meet the conditions
and terms of the proposed loan.
(5) Be unable to obtain sufficient credit elsewhere to finance actual
needs at reasonable rates and terms, taking into consideration
prevailing private and cooperative rates and terms in the community in
or near which the applicant resides for loans for similar proposes and
periods of time.
(6) Be the owner or operator of a farm after the loan is closed.
(7) If a tenant, has a satisfactory written lease for a sufficient
period of time and under terms that will enable the operator to obtain
reasonable returns on the improvements to be made with the SW loan. In
addition, the lease or separate agreement should provide for
compensating the tenant for any unexhausted value of the improvements
upon termination of the lease.
(b) A cooperative, corporation, partnership or joint operation must:
(1) Have the character (emphasizing credit history, past record of
debt repayment and reliability), and industry necessary to carry out the
proposed operation. This requirement also must be met by the individual
members, stockholders, partners or joint operators, Past record of debt
repayment will not be cause for a determination that the
applicant/borrower is not eligible if an honest attempt has been made to
make the payments.
(2) Honestly try to carry out the applicant's/borrower's undertakings
and obligations. This would include, but is not limited to, providing
current, complete and truthful information when applying for assistance,
and making every reasonable effort to carry out the conditions and terms
of the proposed loan. This requirement also must be met by the
individual members, stockholders, partners, or joint operators.
(3) Consist of members, stockholders, partners, or joint operators
holding a majority interest who are citizens of the United States (see
143.54 of this subpart for the definition of ''United States''), or
aliens lawfully admitted to the United States for permanent residence
under the Immigration and Nationality Act. Aliens must provide Forms
I-151 or I-551, ''Alien Registration Receipt Card.'' Indefinite parolees
are not eligible. If the authenticity of the information shown on the
alien's identification document is questioned, the County Supervisor may
request the Immigration and Naturalization Service (INS) to verify the
information appearing on the alien's identification card by completing
INS Form G-641, ''Application for Verification of Information from
Immigration and Naturalization Records,'' obtainable from the nearest
INS District. (See Exhibit B of Subpart A of Part 1944 of this
chapter.) Mail the completed form to INS. The payment of a service fee
by FmHA to INS is waived by inserting in the upper right hand corner of
INS Form G-641, the following: ''INTERAGENCY LAW ENFORCEMENT REQUEST.''
(4) Be authorized to own and/or operate a farm in the State(s) in
which the farm is located.
(5) Be unable to obtain sufficient credit elsewhere, either as an
entity or as individual members, stockholders, partners, or joint
operators, to finance actual needs at reasonable rates and terms taking
into account prevailing private and cooperative rates and terms in or
near the community for loans for similar proposes and periods of time.
(6) Be controlled by individuals engaged primarily and directly in
farming or ranching in the United States after the loan is made.
(7) Be the owner or operator of the farm after the loan is made.
(8) If a tenant, has a satisfactory written lease for a sufficient
period of time, and under terms that will enable the applicant to obtain
reasonable returns on the improvements made with the loan. In addition,
the lease or separate agreement should provide for compensating the
tenant for any unexhausted value of the improvements upon termination of
the lease.
(9) Consist of members, stockholders, partners, or joint operators,
who are individuals and not corporation(s), partnership(s),
cooperative(s) or joint operation(s).
(53 FR 35706, Sept. 15, 1988, as amended at 56 FR 3972, Feb. 1, 1991)
1943.63 -- 1943.65 (Reserved)
07 CFR 1943.66 Loan purposes.
Loans that are consistent with all Federal, State and local
environmental quality standards may be made to:
(a) Pay costs for construction, materials, supplies, equipment, and
services related to land and water development, use, conservation; and
energy saving measures related to soil and water conservation, such as:
(1) Terraces, dikes, reservoirs, ponds, tanks, cisterns, liquid and
solid waste disposal facilities, wells, pipelines, pumping and
irrigation equipment, ditches and canals for drainage, waterways, and
erosion control structures.
(2) Drainage of land which is part of an operating farm unit.
(3) Land clearing.
(4) Sodding, subsoiling, land leveling, liming and fencing.
(5) Fertilizer and seed used in connection with a soil conservation
practice or to establish or improve permanent vegetation.
(6) Forestation for sustained yield and tree planting for erosion
control or shelter belt purposes.
(7) Gasoline, oil, and equipment rental or hire connected with
establishing or completing the development.
(8) Reasonable expenses incidental to obtaining, planning, closing
and making the loan, such as fees for legal, engineering or other
technical services and first year insurance premiums which are required
to be paid by the borrower and which cannot be paid from other funds.
Loan funds may also be used to pay the borrower's share of Social
Security taxes for labor hired by the borrower in connection with making
any planned improvements.
(9) Purchase or repair of special-purpose equipment, such as
terracing, land leveling and ditching equipment, provided:
(i) Such equipment is needed and will facilitate the completion of
maintenance of the planned improvement, and
(ii) The cost of the equipment plus the other costs related to
improvement will not be more than if performed by a contractor or by
another method.
(10) Pay the cost of construction of alcohol and methane gas
facilities along with essential equipment.
(b) Pay the costs of meeting Federal, State or local requirements for
agricultural, animal, or poultry waste pollution abatement and control
facilities, including construction, modification, or relocation of the
farm or farm structures, if necessary, to comply with such pollution
abatement requirements.
(c) Acquire a source of water to be used on land the applicant owns,
will acquire, or operates including:
(1) The purchase of water stock or membership in an incorporated
water users association.
(2) The acquisition of a water right through appropriation,
agreement, permit, or decree.
(3) The acquisition of water supply or right, and the land on which
it is presently being used, when the water supply or right cannot be
purchased without the land, provided:
(i) The value of the land without the water supply or right is only
an incidental part of the title price, and
(ii) The water supply will be transferred to, and used more
effectively on, other land owned or operated by the applicant.
(d) Refinance debts subject to the following:
(1) The debts were incurred for authorized SW loan purposes.
(2) All development or repair work conforms to FmHA standards or
those standards will be met with the SW loan.
(3) The applicant's present creditors will not furnish credit at
rates and terms the applicant can meet.
(4) The County Supervisor, by contacting the appropriate lender,
verifies and documents, either in the running record or by letter from
the lender, the need to refinance any secured debts and major unsecured
debts. The unpaid balance on the debts to be refinanced will be
verified.
(e) Purchase land or an interest therein for sites or rights-of-way
and easements upon which a water or drainage facility will be located.
(f) Pay that part of the cost of facilities, improvements, and
''practices'' which will be paid for in connection with participation in
programs administered by agencies such as the Agricultural Stabilization
and Conservation Service or the Soil Conservation Service only when such
costs cannot be covered by purchase orders or assignments to material
suppliers or contractors. If loan funds are advanced and the portion of
the payment for which the funds were advanced is likely to exceed
$1,000, the applicant will assign the payment to the Farmers Home
Administration (FmHA).
(g) Provide water supply facilities for dwellings and farm buildings,
including such facilities as wells, pumps, farmstead distribution
systems, and home plumbing.
(h) Pay costs of land and water development, use, and conservation
essential to the applicant's farm, subject to the following:
(1) Such a loan may be made on land with defective title owned by the
applicant (see 1943.69 (b)) or on land in which the applicant owns an
undivided interest providing:
(i) The amount of funds used on such land is limited to $25,000,
(ii) There is adequate security for the loan, and
(iii) The tract is not included in the appraisal report.
(2) Such a loan may be made on land leased by the applicant
providing:
(i) The terms of the lease are such that there is reasonable
assurance the applicant will have use of the improvement over its useful
life,
(ii) A written lease provides for payment to the tenant or assignee
any unexhausted value of the improvement if the lease is terminated, and
(iii) There is adequate security for the loan.
07 CFR 1943.67 Loan limitations.
An SW loan will not be approved if:
(a) The noncontiguous character of a farm containing two or more
tracts is such that an efficient farming operation and nonfarm
enterprise cannot be conducted due to the distance between tracts or due
to inadequate rights-of-way or public records between tracts.
(b) The limitation found in 1943.79 (c) of this subpart is exceeded.
(c) The loan is made for any purpose that will contribute to
excessive erosion of highly erodible land or to the conversion of
wetlands to produce an agricultural commodity, as further explained in
Exhibit M of Subpart G of Part 1940 of this chapter. Refer to FmHA
Instruction 2000-LL of this chapter, ''Memorandum of Understanding
Between FmHA and U.S. Fish and Wildlife Service,'' for assistance in
implementation.
07 CFR 1943.68 Rates and terms.
(a) Terms of loan. Each loan will be scheduled for repayment over a
period not to exceed 40 years from the date of the note or such shorter
period as may be necessary to assure the loan will be adequately
secured, taking into account the probable depreciation of the security.
The loan approval official will also consider the repayment ability of
the applicant, as reflected in the completed Form FmHA 431-2, ''Farm and
Home Plan,'' or other similar plan of operation acceptable to FmHA when
setting the terms. In any case, there must be an interest payment
scheduled at least annually in accordance with the FMI for FmHA 1940-17,
''Promissory Note.'' Loans may have reduced annual installments
scheduled, of least partial interest, for the first five years.
(b) Reamortization. When the loan approval official determines that
reamortization will assist in the orderly collection of any SW loan, the
loan approval official may take such action under Subpart S of Part 1951
of this chapter.
(c) Interest rate. Upon request of the applicant, the interest rate
charged by FmHA will be the lower of the interest rates in effect at the
time of loan approval or loan closing. If an applicant does not
indicate a choice, the loan will be closed at the interest rate in
effect at the time of loan approval. Interest rates are specified in
Exhibit B of FmHA Instruction 440.1 (available in any FmHA office) for
the type assistance involved.
07 CFR 1943.69 Security
(a) General. Each SW loan will be secured by real estate, chattels,
other security, leaseholds, or a combination of these.
(b) Real estate security. (1) A mortgage will be taken on the entire
farm to be improved which is owned by the applicant, including land in
which the applicant owns an undivided interest, except a portion of the
farm will be excluded when:
(i) The applicant's title to that part of the farm is defective, and
cannot be cured at a reasonable cost, provided:
(A) The Office of the General Counsel (OGC) determines that the
applicant's interest is of such nature that it is not mortgageable; and
(B) To include the land would complicate loan servicing or
liquidation; and
(C) Any land on which title is defective will not be included in the
appraisal of the farm whether or not it is described on the mortgage.
(D) State law prohibits taking a lien on homestead property, except
for the purchase money of that property and financing improvements and
the State Director has issued a State supplement exempting taking a lien
on homestead property where purchase money or improvements are not
involved.
(ii) The present lienholder on that part of the farm will not permit
a junior lien or State law will not recognize or permit a lien provided:
(A) The part excluded from the security is not included in the
appraisal report; and
(B) OGC advice is obtained before excluding any real estate from the
security or the conditions under which real estate can be excluded are
outlined by a State supplement.
(iii) Soundness of the loan will not be affected if there is
defective title or part of the farm is not included as security.
(iv) An SW loan is made just to finance construction of an alcohol or
methane gas facility, a lien will be taken on the facility and
sufficient other property to adequately secure the loan, even though a
majority of the products are used on the farm. In these situations, a
lien need not be taken on the entire farm when it is not needed to
secure the loan. When the security is so located that legal
right-of-way to the property is not available, an easement or agreement
will be obtained providing for right of ingress and egress.
(2) When the farm alone will not provide enough security, other real
estate owned by the applicant may also be taken as security.
(3) Loans may be secured by a junior lien on real estate provided:
(i) Prior lien instruments do not contain provisions for future
advances (except for taxes, insurance, other costs needed to protect the
security, or reasonable foreclosure costs), cancellation, summary
forfeiture, or other clauses that may jeopardize the Government's
interest or the applicant's ability to pay the SW loan unless any such
undesirable provisions are limited, modified, waived or subordinated
insofar as the Government is concerned.
(ii) Agreements are obtained from prior lienholders to give notice of
foreclosure to FmHA whenever State law or other arrangements do not
require such a notice. Any agreements needed will be obtained as
provided in subpart B of part 1927 of this chapter.
(4) The approved closing agent or OGC will furnish advice on
obtaining security when a life estate is involved.
(5) Any loan of $10,000 or less may be secured by the best lien
obtainable without title clearance or legal services as required in
subpart B of part 1927 of this chapter, provided the County Supervisor
believes from a search of the county records that the applicant can give
mortgage on the farm. This exception to title clearance will not apply
when:
(i) The loan is made simultaneously with that of another lender.
(ii) This provision conflicts with program regulations of any other
FmHA loan being made simultaneously with the SW loan.
(6) The Departments of Agriculture and Interior have agreed that FmHA
loans may be made to Indians and secured by real estate when title is
held in trust or restricted status. When security is taken on real
estate held in trust or restricted status:
(i) The applicant will request the Bureau of Indian Affairs (BIA) to
furnish Title Status Reports to the County Supervisor.
(ii) BIA approval will be obtained on the mortgage after it has been
signed by the applicant and any other party whose signature is required.
(c) Chattel security. Loans may be secured by chattels subject to
the following conditions:
(1) Real estate security is inadequate to secure the loan or is not
available at all.
(2) Taking a lien on chattels will not prevent the borrower from
obtaining operating credit from other sources or the FmHA.
(3) Junior liens on chattels may be taken when there is enough equity
in the property. However, when practical, a first lien on selected
chattel items should be obtained.
(4) A first lien will be taken on equipment or fixtures bought with
loan funds whenever such property cannot be included in the real estate
lien and this additional security is needed to secure the loan.
(5) When a loan is made only for the purchase of shares of water
stock, such stock will be pledged or assigned as security for the loan.
No other security need by required if the stock represents the right to
receive water and is transferrable separately from the land, provided:
(i) There is a market for the stock.
(ii) The purchase price is no greater than the price at which stock
in the water company is normally sold.
(6) If secured by chattels only, the loan cannot be over $100,000 and
must be scheduled for repayment within 20 years or the useful life of
the security, whichever is less.
(7) Chattel security will be obtained and kept effective as notice to
third parties as provided in Subpart A of Part 1962 and Subpart B of
Part 1941 of this chapter.
(d) Other security. (1) Items such as land, buildings, fixtures,
fences, water, water stock and facilities, other improvements,
easements, rights of way, and other appurtenances that are considered
part of the farm and usually pass with the farm in a change of ownership
may be taken as additional security when needed. If any of these do not
pass with a change of ownership, the County Supervisor will obtain
advice from the designated attorney, title insurance company or OGC to
properly identify such items and include them in an appropriate security
instrument or assignment.
(2) Other property that cannot be converted to cash without
jeopardizing the borrower's farm operation may be taken as additional
security when needed. Examples of such security may include cash value
of insurance policies, stock, memberships or stock in associations or
water stocks. Any property taken as additional security must have
security value and be transferable. Advice will be obtained from the
designated attorney, title insurance company or the OGC on obtaining
this security or assignment.
(e) Loans secured by leaseholds. A loan may be secured by a mortgage
on the leasehold if it has negotiable value and is able to be mortgaged,
subject to the following:
(1) The unexpired term of the lease should extend beyond the
repayment period of the loan for a period sufficient to ensure the
objectives of the loan will be achieved. If the loan repayment period
is equal to or greater than the period covered by the lease, the
borrower must provide other security to secure the loan or the lessor
must agree in writing to compensate the borrower for any unexhausted
value of the improvements when the lease expires or is terminated.
(2) The lessor must have good and marketable title to the real
estate, which may be subject to a prior lien, or the lessor must have
signed a contract to purchase the real estate. The contract to sell and
the lien instruments must not contain covenants, such as short
redemption periods or rights to cancel, which may jeopardize the
Government's security. Any provisions which may jeopardize the
Government's security must be limited, modified, waived or subordinated
in favor of the Government.
(3) With respect to achieving the purpose of the loan, obtaining
adequate security and being able to service the loan and enforce its
rights, the Government, as holder of a mortgage upon a lease or
leasehold interest, must be in a position substantially as good as if it
held a second mortgage on the real estate. Besides the lessor's consent
to the SW mortgage on the leasehold interest, FmHA should consider
whether or not:
(i) There is reasonable security of tenure. The borrower's interest
should not be subject to summary forfeiture or cancellation.
(ii) The right to foreclose the SW mortgage and sell without
restrictions would adversely affect the salability or market value of
the security.
(iii) FmHA has a right to bid at a foreclosure sale or to accept
voluntary conveyance in lieu of foreclosure.
(iv) FmHA has the right, after acquiring the leasehold through
foreclosure or voluntary conveyance in lieu of foreclosure, or in event
of abandonment by the borrower, to occupy the property or sublet it, and
to sell it for cash or credit. In case of a credit sale, the FmHA
should take a vendor's mortgage with rights similar to those under the
original SW mortgage.
(v) The borrower has the right, in the event of default or inability
to continue with the lease and the SW loan, to transfer the leasehold,
subject to the SW mortgage, to an eligible transferees who will assume
the SW debt.
(vi) Advance notice will be given to FmHA of the lessor's intention
to cancel, terminate or foreclose upon the lease. Such advance notice
should be long enough to permit FmHA to ascertain the amount of
delinquencies, the total amount of the lessor's and any other prior
interest, the market value of the leasehold interest and, if ligation is
involved, to refer the case with a report of the facts to the United
States Attorney for appropriate action.
(vii) There are express provisions covering the question of FmHA's
obligation to pay unpaid rental or other charges accrued at the time it
acquires possession of the property or title to the leasehold, and those
which become due during FmHA's occupancy or ownership, pending further
servicing or liquidation.
(viii) There are any necessary provisions to assure fair compensation
to the lessee for any part of the premises taken by condemnation.
(ix) Any other provisions are necessary to obtain an interest which
can be mortgaged.
(4) A State supplement will be issued in any State in which real
estate or chattel liens may be taken on leasehold interests in farmland
and recorded so as to protect the mortgagee.
(5) The following language or similar language which, in the opinion
of OGC or the designated attorney, is legally adequate, will be inserted
on the lien instrument:
''All Borrower's right, title, and interest in and to the leasehold
estate for a term of XX years beginning on XX, 19X, created and
established by a certain Lease dated XXXXX, 19X, executed by XXXXXX as
lessor(s), recorded on XX, 19X, in Book XX, page XX of the XX Records of
said County and State, and any renewals and extensions thereof, and all
Borrower's right, title, and interest in and to said Lease, covering the
following real estate:'' (To be inserted just before the legal
description.)
This additional covenant will be inserted in the mortgage:
Borrower will pay when due all rents and any and all other charges
required by said Lease, will comply with all other requirements of said
Lease, and will not surrender or relinquish without the Government's
written consent, any of the Borrower's right, title or interest in or to
said leasehold estate or under said Lease while this instrument remains
in effect.
(f) State supplements. Each State will supplement this section to
provide instructions on forms to be completed and other requirements to
be met in order to obtain the required security. In each State where
loans will be made to Indians holding title to land in trust or
restricted status, FmHA and BIA will decide on a way to exchange
necessary information, and the procedure to be followed will be set out
in a State supplement.
(g) Special security requirements. When SW loans are made to
eligible entities that consist of members, stockholders, partners or
joint operators who are presently indebted for an SW loan(s) as
individual(s) or when SW loans are made to eligible individuals, who are
members, stockholders, partners or joint operators of an entity which is
presently indebted for an SW loan(s), security must consist of:
(1) Chattel and/or real estate security that is separate and
identifiable from the security pledged to FmHA for any other farmer
program insured or guaranteed loans.
(2) Different lien positions on real estate are considered separate
and identifiable collateral.
(3) The outstanding amount of loans made may not exceed the value of
the collateral used.
(h) Same security. Except as provided in paragraph (g) of this
section, when an SW loan (insured or guaranteed) is made to a borrower
who has other FmHA loans, the same real estate collateral may secure
more than one loan so long as the outstanding loan amount does not
exceed the total value of the security.
(53 FR 35706, Sept. 15, 1988, as amended at 56 FR 67481, Dec. 31,
1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.69 was
amended by revising the second sentence of paragraph (b)(3)(ii), (b)(4),
and the first sentence of the introductory text of (b)(5), effective
January 30, 1992. For the convenience of the user, the superseded text
follows:
1943.69 Security.
(b) * * *
(3) * * *
(ii) * * * Any agreements needed will be obtained as provided in Part
1807 of this chapter (FmHA Instruction 427.1).
(4) The designated attorney, title insurance company, or OGC will
furnish advice on obtaining security when a life estate is involved.
(5) Any loan of $10,000 or less may be secured by the best lien
obtainable without title clearance or legal services as required in Part
1807 of this chapter (FmHA Instruction 427.1), provided the County
Supervisor believes from a search of the county records that the
applicant can give mortgage on the farm.
1943.70 -- 1943.72 (Reserved)
07 CFR 1943.73 General provisions.
(a) Flood and mudslide hazard areas. Flood and mudslide hazards will
be evaluated whenever the farm to be financed is located in special
flood or mudslide prone areas as designated by the Federal Emergency
Management Administration (FEMA). Subpart B of Part 1806 of this
chapter (FmHA instruction 426.2) as well as Subpart G of Part 1940 of
this chapter will be complied with when loan funds are used to
construct, modify, or relocate buildings in such areas. This will not
prevent making loans on farms when the farmstead is located in a flood
or mudslide prone area and if funds are not included in the loan for
building improvements. However, the hazard will need to be noted in the
appraisal report. When land development or improvements such as dikes,
terraces, fences, and intake structures planned to be located in special
flood or mudslide prone areas, loan funds may be used subject to the
following:
(1) The Corps of Engineers or the Soil Conservation Service (SCS)
will be consulted concerning:
(i) Likelihood of flooding.
(ii) Probability of flood damage.
(iii) Recommendations on special design and specifications needed to
minimize flood and mudslide hazards.
(2) FmHA representatives will evaluate the proposal and record the
decision in the loan docket in accordance with Subpart G of Part 1940 of
this chapter.
(b) Civil rights. The provisions of Subpart E of Part 1901 of this
chapter will be complied with on all loans made which involve any
development financed by FmHA that will be performed by a contract or
subcontract of more than $10,000.
(c) Protection of historical and archaeological properties. If there
is any evidence to indicate the property to be financed has historical
or archaeological value, the provisions of Subpart F of Part 1901 of
this chapter apply.
(d) Environmental requirements. See Subpart G of Part 1940 of this
chapter for applicable environmental requirements. Refer to Subpart LL
of Part 2000 of this chapter (available in any FmHA office) for
assistance in implementation.
(e) Equal Credit Opportunity Act. In accordance with Title V of Pub.
L 93-495, the Equal Credit Opportunity Act, the FmHA will not
discriminate against any applicant on the basis of sex or marital
status, with respect to any aspect of a credit transaction.
(f) Compliance with Special Laws and Regulations. (1) Applicants
will be required to comply with applicable Federal, State and local laws
and regulations governing construction; diverting, appropriating, and
using water including use for domestic purposes; installing facilities
for draining land; and making changes in the use of land affected by
zoning regulations.
(2) State Directors and Farmer Programs Staff members will consult
with SCS, U.S. Geological Survey, State Geologist or Engineer, or any
board having official functions relating to water use or farm drainage
requirements and restrictions for water and drainage development. State
supplements will be issued to provide guidelines which:
(i) State all requirements to be met, including the acquisition of
water rights.
(ii) Define areas where development of ground water for irrigation is
not recommended.
(iii) Define areas where land drainage is restricted.
(3) Applicants will comply with all local laws and regulations, and
will obtain any special licenses or permits needed for nonfarm,
recreation, specialized or fish farming enterprises.
(4) Applicants requesting loans for the production of alcohol fuel
should be advised to consult with the nearest Bureau of Alcohol, Tobacco
and Firearms (ATF) regional regulatory administrator concerning the
specific requirements applicable to their operations. Before a loan is
closed, applicants must also provide evidence that they have received an
ATF operating permit.
07 CFR 1943.74 Special requirements.
(a) Land development. When possible, recommendations for land
development will be obtained from the Forest Service, State Agricultural
Extension Service, and the Soil Conservation Service and included in the
development plan, and in the farm and home plans. In planning such
development with the applicant, the County Supervisor will encourage the
applicant to use any cost-sharing assistance that may be available
through any source such as the Agricultural Stabilization and
Conservation Service (ASCS) program.
(b) Technical assistance. Applicants are responsible for obtaining
all the technical assistance required in connection with an SW loan,
such as that needed to plan, construct, or establish the improvement or
facility to be financed.
(c) Loans for irrigation purposes. Evidence or documentation of the
following should be obtained when loan funds are to be used for
irrigation purposes:
(1) The land to be irrigated is suitable for irrigation.
(2) The applicant has a right to use water for irrigation.
(3) The water is suitable to use for irrigation and is available in
sufficient quantities to irrigate a specified amount of land.
(4) If irrigation specialists have prepared any feasibility studies,
copies of these studies have been submitted to FmHA.
(d) Insurance. (1) Insurance will be obtained on buildings and other
property as provided in Subpart A of Part 1806 of this Chapter (FmHA)
Instruction 426.1) when the loan is secured by real estate.
(2) See 1943.73 (a) of this subpart for information about mudslide
and flood insurance.
(3) Chattel security should be insured against hazards customarily
insured against in the area if the loss of such security would
jeopardize the interests of the Government.
(e) Life estates. When life estates are involved, loans may be made:
(1) To both the life estate holder and the remainderman, provided:
(i) Both have a legal right to occupy and operate the farm; and
(ii) Both are eligible for the loan; and
(iii) Both parties sign the note and mortgage
(2) To the remainderman only, provided:
(i) The remainderman has a legal right to occupy and operate the
farm; and
(ii) The lien instrument is signed by the remainderman, life estate
holder, and any other party having any interest in the security.
(3) To the life estate holder only, provided:
(i) There is no legal restriction placed on a life estate holder who
occupies and operates a farm; and
(ii) The lien instrument is signed by the life estate holder,
remainderman, and any other party having any interest in the security.
(f) Liens junior to the FmHA lien. A loan will not be approved if a
lien junior to the FmHA lien is likely to be taken simultaneously with
or immediately subsequent to the loan closing to secure any debt the
borrower may have at the time of loan closing or any debt that may be
incurred in connection with the SW loan, unless the total debt against
the security would be within its market value.
(g) Graduation of SW borrowers. If, at any time, it appears that the
borrower may be able to obtain a refinancing loan from a cooperative or
private credit source at reasonable rates and terms, comparable to those
for loans for similar purposes and periods of time prevailing in the
area the borrower will, upon request, apply for and accept such
financing.
07 CFR 1943.75 Options, planning, and appraisals.
(a) Options. An applicant is responsible for obtaining options on
real property. Form FmHA 440-34, ''Option to Purchase Real Property,''
may be used. Other forms may be used if acceptable to all parties
concerned and to FmHA. When an FmHA form is not used, a provision
should be included which makes the option contingent upon FmHA making a
loan to the buyer.
(b) Planning. Farm and Home Plans and nonagricultural enterprise
plans, when appropriate, will be completed as provided in Subpart B of
Part 1924 of this chapter.
(c) Appraisals. (1) Real estate appraisals will be completed by an
FmHA employee or contractor authorized to make farm appraisals when real
estate is taken as security. The contractor, when he/she is not the
appraiser, is responsible for substantiating the appraiser's
qualifications. The contractor will obtain FmHA's concurrence that the
appraiser has the necessary qualifications and experience before the
contractor will utilize the appraiser in any appraisal work. The
contractor/appraiser completing the report must meet at least one of the
following qualifications:
(i) Certification by a national or State appraisal society.
(ii) If the contractor is not a certified appraiser and a certified
appraiser is not available, the contractor may qualify or may use other
qualified appraisers, if the contractor can establish that he/she or
that the appraiser meets the criteria for a certification in a national
or State appraisal society.
(iii) The appraiser has recent, relevant, documented appraisal
experience or training, or other factors clearly establish the
appraiser's qualifications.
(2) Real estate appraisals will be completed as provided in Subpart A
of Part 1809 of this chapter (FmHA Instruction 422.1). The rights to
mining products, gravel, oil, gas, coal or other minerals will be
considered a portion of the security for farmer program loans and will
be specifically included as a part of the appraised value of the real
estate securing the loans.
(3) The value of stock required to be purchased by Federal land Bank
(FLB) borrowers may be added to the recommended market value of the
security, provided:
(i) An assignment is obtained on the stock, or
(ii) An assignment is obtained which provided that:
(A) The value of the stock at the time the FLB loan is satisfied will
be applied on the FLB loan, or
(B) The stock refund check is made payable to the borrower and FmHA,
or
(C) The stock refund check is made payable to the borrower and mailed
to the County Supervisor.
(iii) The total of the stock value and the recommended market value
of real estate is indicated in the comments section of the appraisal
report.
(4) In the case of nonreal estate security, the following items
apply:
(i) Form FmHA 440-21, ''Appraisal of Chattel Property,'' will be
used.
(ii) The property which will serve as security will be described in
sufficient detail so it can be identified.
(iii) Its current market value or, if appropriate, the current cash
value will be determined.
07 CFR 1943.76 Planning and performing development.
The development work will be planned and completed in accordance with
Part 1924, Subpart A of this chapter.
07 CFR 1943.77 Relationship with other lenders.
(a) An applicant will be requested to obtain credit from another
source when information indicates such credit is available. When
another lender will not make a loan for the total needs of the applicant
but is willing to participate with an SW loan, consideration will be
given to a participation loan. FmHA employees may not guarantee,
personally or for FmHA, repayment of advances made from other credit
sources. However, lenders may be assured that lien priorities will be
recognized.
(b) The County Supervisor and the other lender's representative
should maintain a close working relationship in processing loans to a
mutual applicant or borrower. When an SW loan is made at the same time
as a loan from another lender, that lender's lien will have priority
over the FmHA lien unless otherwise agreed upon. The lender's lien
priority can cover the following in addition to principal and interest:
Advances for payment of taxes, property insurance, reasonable
maintenance to protect the security, and reasonable foreclosure costs
including attorney's fees.
1943.78 (Reserved)
07 CFR 1943.79 Relationship with other FmHA loans, insured and
guaranteed.
(a) Insured SW loans may be made simultaneously with other FmHA loans
or to borrowers presently in debt on FmHA loans, only if the loan limits
involved will not be exceeded and all requirements of the loans involved
will be met.
(b) New applicants and borrowers indebted to FmHA and/or an FmHA
guaranteed lender(s) for an EE loan may be considered for an SW loan(s)
provided their total outstanding principal indebtedness to FmHA and/or
the FmHA guaranteed lender(s) for the EE and any FO, RL, OL and SW loans
will not exceed $650,000.
(c) An insured SW loan may be made to a borrower with an outstanding
guaranteed FO, SW of RL loan when:
(1) The total insured and guaranteed FO, SW and RL principal balance,
including the new loan, owed by the loan applicant does not exceed
$300,000 at loan closing.
(2) Different lien positions on real estate are considered separate
and identifiable collateral.
(3) All other requirements of the loan are met.
(d) A borrower may use the same collateral to secure two or more
loans made, insured or gauranteed under this subpart except that the
outstanding amount of such loans may not exceed the total value of the
collateral so used.
07 CFR 1943.80 County Committee certification.
The County Committee will certify that an applicant is eligible on
Form FmHA 440-2, ''County Committee Certification or Recommendation,''
before a loan is approved. In some instances the Committee may want to
interview the applicant or see the farm before making any
recommendations.
1943.81 (Reserved)
07 CFR 1943.82 Loan docket processing.
(a) Forms. FmHA forms are available in any FmHA Office. The
following table is a guide to the forms needed and shows how they are
distributed.
(b) Other docket items. The running record and correspondence
pertaining to the loan application and docket will be included. Other
items may include supplementary information to farm and home plans;
nonfarm enterprises; and copies of mortgages, contracts, and deeds.
(c) Verification of veteran's preference. If the applicant has
checked the veteran block, the County Supervisor, or other County Office
employee will review the applicant's evidence of discharge or release to
determine whether the applicant is entitled to veteran's preference.
(d) Information on other credit. The docket will include, by entries
in the running record or by letters, information on the need to
refinance secured and major unsecured debts. Also, information will be
included which shows other credit is not available in the amount needed
or is not available under repayment terms which the applicant can meet.
(53 FR 35706, Sept. 15, 1988, as amended at 54 FR 28019, July 5,
1989; 54 FR 29331, July 12, 1989, 54 FR 47959, Nov. 20, 1989; 55 FR
21530, May 25, 1990)
07 CFR 1943.83 Loan approval or disapproval.
(a) Loan approval authority. Initial and subsequent loans may be
approved as authorized by Subpart A of Part 1901 of this chapter,
provided:
(1) Section 1943.67 of this subpart, containing loan limitations, is
not violated.
(2) No significant changes have been made in the development plan
considered by the appraiser when real estate will be taken as security.
(b) Loan approval action. (1) The loan approval official must
approve or disapprove applications within the deadlines set out in
1910.4 of Subpart A of Part 1910 of this chapter. The loan approval
official is responsible for reviewing the docket to determine whether
the proposed loan complies with established policies and all pertinent
regulations. When reviewing the docket, the loan approval official will
determine that:
(i) The County Committee has certified the applicant eligible;
(ii) The County Committee certification has been properly completed
and signed by a least two members of the Committee;
(iii) Funds are requested for authorized purposes;
(iv) The proposed loan is based upon a feasible plan. Planning forms
other than Form FmHA 432-2, ''Farm and Home Plan'' may be used when they
provide the necessary information.
(v) The security is adequate;
(vi) Necessary supervision is planned; and
(vii) All other pertinent requirements have been met or will be met.
(2) When approving the loan, the approval official will:
(i) Indicate on all copies of Form FmHA 1940-1, ''Request for
Obligation of Funds,'' any conditions not required by FmHA regulations
that must be met for loan closing;
(ii) Specify any special security requirements; and
(iii) Indicate special conditions or agreements needed with prior
lienholders, when appropriate; or
(iv) Indicate that satisfactory title evidence has been obtained;
(v) Indicate any other special requirements; and
(vi) Sign the original and one copy of Form FmHA 1940-1 and insert
the title of the approval official.
(c) Loan disapproval. The loan approval official must approve or
disapprove applications within the deadlines set out in 1910.4 of
Subpart A of Part 1910 of this chapter. The following action will be
taken when a loan is disapproved:
(1) The reason(s) for disapproval will be indicated on Form FmHA
1940-1 by the loan approval official. The reason(s) may be in a letter
or the running record if this form has not been completed. Suggestions
which could remedy the reasons for disapproval should be included.
(2) The County Supervisor will notify the applicant in writing of the
action taken and include any suggestions that could result in favorable
action. The applicant will be advised of the opportunity to appeal (see
Subpart B of Part 1900 of this chapter).
(3) Items furnished by the applicant during docket processing will be
returned.
(53 FR 35706, Sept. 15, 1988, as amended at 55 FR 21530, May 25,
1990)
07 CFR 1943.84 Requesting title service.
When the loan is approved and real estate will serve as security, the
County Supervisor will request the applicant to obtain title clearance
as provided in subpart B of part 1927 of this chapter, when required if
this has not been done. If an option is involved, the applicant will
sign and send to the seller Form FmHA 440-35, ''Acceptance of Option,''
or other suitable forms.
53 FR 35706, Sept. 15, 1988, as amended at 56 FR 67481, Dec. 31,
1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.84 was
amended by revising the first sentence, effective January 30, 1992. For
the convenience of the user, the superseded text follows:
1943.84 Requesting title service.
When the loan is approved and real estate will serve as security, the
County Supervisor will request the applicant to obtain title clearance
as provided in Part 1807 of this chapter (FmHA Instruction 427.1), when
required, if this has not been done. * * *
07 CFR 1943.85 Action after loan approval.
(a) Requesting check. If the County Supervisor is reasonably certain
that the loan can be closed within 20 working days from the date of the
check, loan funds may be requested at the time of loan approval through
the field office terminal system. If funds are not requested when the
loan is approved, advances in the amount needed will be requested
through the field office terminal system. Loan funds must be provided
to the applicant(s) within 15 days after loan approval, unless the
applicant(s) agrees to a longer period. If no funds are available
within 15 days of loan approval, funds will be provided to the applicant
as soon as possible and within 15 days after funds become available,
unless the applicant agrees to a longer period. If a longer period is
agreed upon by the applicant(s), the same will be documented in the case
file by the County Supervisor.
(1) When all loan funds can be disbursed at, or within 30 days after
loan closing or if the amount of funds that cannot be disbursed does not
exceed $5,000, the total amount of the loan will be requested in a
single advance.
(2) When loan funds cannot be disbursed as outlined in paragraph
(a)(1) of this section, the amount needed to meet the immediate needs of
the borrower will be requested through the field office terminal system.
The amount of each advance should meet the needs of the borrower as
much as is possible, so the amount in the supervised bank account will
be kept to a minimum. The Finance Office will continue to supply Form
FmHA 440-57 until the entire loan has been disbursed. The County
Supervisor should tell the borrower to notify the County Office of
amounts needed on a timely basis to avoid delays in receiving loan
checks.
(b) Handling loan checks. (1) When the loan check or the borrower's
personal funds are to be deposited in the designated loan closing
agent's escrow account, this will be done no later than the date of loan
closing. If loan funds or the borrower's personal funds are to be
deposited in a supervised bank account, this will be done in accordance
with Subpart A of Part 1902 of this chapter as soon as possible, but in
no case later than the first banking day following the date of loan
closing.
(2) If a loan check is received and the loan cannot be closed within
20 working days from the date of the check, the County Supervisor will
take appropriate action in accordance with FmHA Instruction 102.1,
(available in any FmHA office). The applicant must agree to a delayed
loan closing and the same will be documented in the case file by the
County Supervisor.
(3) When a check is returned and the loan will be closed at a
subsequent date, another check will be requested in accordance with FmHA
Instruction 102.1, a copy of which may be obtained as stated in
paragraph (b)(2) of this section.
(c) Cancellation of loan. If, for any reason a loan check or
obligation will be cancelled, the County Supervisor will take the
following actions:
(1) The County Supervisor will notify the State Office of loan
cancellation by using Form FmHA 1940-10, ''Cancellation of U.S.
Treasury Check and/or Obligation.'' The County Office will send a copy
of Form FmHA 1940-10 to the designated attorney, Regional Attorney, or
the title insurance company representative providing loan closing
instructions to indicate the loan has been canceled. If a check
received in the County Office is to be canceled, the check will be
returned as prescribed in FmHA Instruction 102.1 (available in any FmHA
office).
(2) Interested parties will be notified of the cancellation as
provided in subpart B of part 1927 of this chapter.
(d) Cancellation of advances. When an advance is to be cancelled the
County Supervisor must take the following actions:
(1) Complete and distribute Form FmHA 194-10 in accordance with the
FMI.
(2) When necessary, prepare and execute a substitute promissory note
reflecting the revised total of the loan and the revised repayment
schedule. When it is not possible to obtain a substitute promissory
note, the County Supervisor will show on Form FmHA 440-57 the revised
amount of the loan and the revised repayment schedule.
(e) Increase or decrease in amount of loan. If it becomes necessary
to increase or decrease the amount of the loan prior to loan closing,
the County Supervisor will request that all distributed docket forms be
returned to the County Office and reprocessed unless the change is minor
and replacement forms can readily be completed and submitted. In the
latter case, a memorandum explaining the change will be attached to the
revised forms and sent to the Finance Office.
(53 FR 35706, Sept. 15, 1988, as amended at 54 FR 39727, Sept. 28,
1989; 56 FR 67481, Dec. 31, 1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.85 was
amended by revising paragraph (c)(2), effective January 30, 1992. For
the convenience of the user, the superseded text follows:
1943.85 Action after loan approval.
(c) * * *
(2) Interested parties will be notified of the cancellation as
provided in Part 1807 of this chapter (FmHA Instruction 427.1)
1943.86 -- 1943.87 (Reserved)
07 CFR 1943.88 Loan closing actions.
When a loan closing date has been agreed upon, the County Supervisor
will notify the borrower of the loan closing date. The following
appropriate actions will be taken in connection with, and after loan
closing:
(a) Real estate mortgage loans. When a loan is to be secured by a
real estate mortgage, it will be closed in accordance with the
applicable provisions of subpart B of part 1927 of this chapter except
as modified for loans of $10,000 or less in paragraph 1943.69(b)(5).
(b) Loans involving chattel or other nonreal estate security. All
chattel security instruments will be signed and filed as prescribed in
Subpart B of Part 1941 of this chapter for Operating loans. The
following forms will be used for chattel security:
(1) Form FmHA 440-15, ''Security Agreement (Insured Loans to
Individuals).''
(2) Form FmHA 440-25, ''Financing Statement,'' or, when authorized,
Form FmHA 440-A25, ''Financing Statement.''
(3) State forms may be used if National forms are not legally
acceptable. Such forms will require OGC and National Office clearance.
(c) Applicant's financial condition. The County Supervisor will
review with applicant the financial statement which was prepared at the
time the docket was developed. If there have been significant changes
in the applicant's financial condition, the financial statement will be
revised and initialed by the applicant and the County Supervisor. When
an applicant's financial condition has changed to the extent that it
appears the loan would be unsound or improper, the loan will not be
closed. If a revised loan docket is needed to meet loan requirements or
determine loan soundness, it will be developed and submitted to the
appropriate loan approval official.
(d) Loan approval conditions. The County Supervisor will inform the
applicant of any loan approval conditions that need to be met. These
conditions will usually be included in the notice informing the
applicant of the loan closing date. The loan will not be closed if the
applicant is unable to meet loan approval conditions.
(e) Change in the use of funds planned for refinancing. (1) County
Supervisors are authorized to:
(i) Transfer funds planned to be used for refinancing specific debts
to other debts when there is a need to do so; and
(ii) Transfer funds planned to be used for other purposes to pay
small deficiencies in estimates for refinancing debts, providing there
are sufficient remaining funds to complete any land purchase and planned
development.
(2) A revised docket will be developed when:
(i) The total amount of debts to be refinanced has increased in such
an amount that planned loan purposes cannot be carried out; and
(ii) The applicant is unable to make up any deficiencies from other
resources.
(f) Assignment of income from real estate to be mortgaged. Income to
be received by the borrower from royalties, leases, or other existing
agreements under which the value of the real estate security will be
reduced will be assigned and disposed of in accordance with Subpart A of
Part 1965 of this chapter, including provisions for written consent of
any prior lienholder. When the County Supervisor deems it advisable,
assignments also may be taken on all or a portion of income to be
derived from nondepleting sources such as income from bonus payments or
annual delay rentals. Such income will be assigned and disposed of in
accordance with Subpart A of Part 1965 of this chapter.
(1) For assignment of income, Form FmHA 443-16, ''Assignment of
Income from Real Estate Security,'' will be used, except, if it is
legally inadequate in a State, it may be adapted to that State with the
approval of the OGC or an authorized State form may be used instead.
(2) The County Supervisor, upon the advice of the designated
attorney, escrow agent, title insurance company, or the OGC, as
appropriate, may require acknowledgment and recordation of the
assignment. Any cost incident thereto will be paid by the borrower.
(3) At the time Form FmHA 443-16 is executed, appropriate notations
will be made on Form FmHA 1905-1, ''Management System Card --
Individual,'' to insure the proceeds, or the specified portion of the
proceeds assigned to FmHA from the transactions are remitted at the
proper time.
(g) Preparation of the note. Form FmHA 1940-17, ''Promissory Note,''
will be used and completed in accordance with the FMI.
(1) Separate notes will be prepared for any other FmHA Loan made
simultaneously with the SW loan. The notes will be completed as
provided in the appropriate loan regulation and FMI.
(2) All FmHA notes to be secured by real estate can be described in
the same mortgage.
(3) The promissory note will be signed as follows:
(i) Individuals. Only the applicant(s) will sign the note as a
borrower. If a co-signer is needed (see 1910.3(e) of Subpart A of Part
1910 of this chapter), the co-signer will also sign the note. Any other
signatures needed to assure the required security will be obtained as
provided in State supplements. Persons who are minors or mental
incompetents will not execute a promissory note. Except when a person
has pledged only property as security for a loan, the purpose and effect
of signing a promissory note or other evidence of indebtedness for a
loan made or insured by FmHA is to incur individual personal liability
regardless of any State law to the contrary.
(ii) Cooperatives or corporations. The appropriate authorized
officers will execute the note on behalf of the cooperative or
corporation. Any other signatures needed to assure the required
security will be obtained as provided in State supplements.
(iii) Partnerships or joint operations. The note will be executed by
the partner or joint operator authorized to sign for the entity, and all
partners in a partnership or joint operators in the joint operation, as
co-signers.
(h) Supplementary payment agreement. Form FmHA 440-9,
''Supplementary Payment Agreement,'' should be used for each applicant
who regularly (such as weekly, monthly, or quarterly) receives
substantial income from an off-farm source, a nonfarm enterprise, or
from farming.
(i) Obtaining insurance. The applicant will be informed of the
insurance requirements set forth in 1943.74(d) of this subpart.
(j) Effective time of loan closing. An SW loan is considered closed
when the mortgage is filed for record.
(k) Distribution of documents after loan closing. The County
Supervisor should review the forms and closing actions. Corrective
action should be taken when necessary.
(1) Real estate mortgages:
(i) When the original recorded instrument is returned to the County
Office:
(A) File the original in the County Office file, and
(B) Give a copy to the borrower.
(ii) When the original is retained by recorder:
(A) File a conformed copy in County Office file, and
(B) Give a conformed copy to the borrower.
(iii) The County Supervisor will provide copies that may be needed in
some cases for interested third parties.
(2) Deeds:
(i) Give the original to the borrower, and
(ii) Retain one copy to file.
(3) Title insurance policies:
(i) File the Mortgagee title policy in the County Office file, and
(ii) Give the owner's title policy, if one is obtained, to the
borrower.
(4) Water stock certificates or similar collateral will be retained
in the County Office file.
(5) Abstracts of title:
(i) Return to the borrower, except when they were obtained from a
third party with the understanding they would be returned, the abstracts
will be sent to the third party. A memorandum receipt will be obtained
when abstracts are delivered to the third party.
(ii) Form FmHA 140-4, ''Transmittal of Documents,'' will be used and
a receipted copy kept in the County Office. The FMI should be followed
for preparing this form.
(53 FR 35706, Sept. 15, 1988, as amended at 56 FR 67481, Dec. 31,
1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1943.88 was
amended by revising paragraph (a), effective January 30, 1992. For the
convenience of the user, the superseded text follows:
1943.88 Loan closing actions.
(a) Real estate mortgage loans. When a loan is to be secured by a
real estate mortgage, it will be closed in accordance with the
applicable provisions of Part 1807 of this chapter (FmHA Instruction
427.1) except as modified for loans of $10,000 or less in paragraph
1943.69(b)(5) of this subpart.
1943.89 -- 1943.91 (Reserved)
07 CFR 1943.92 Servicing.
SW loans will be serviced in accordance with Subpart A of Part 1965
of this chapter. Chattel security for SW loans will be serviced in
accordance with Subpart A of Part 1962 of this chapter. Bureau of
Reclamation (BR) loans made during the period August 19, 1977, through
September 30, 1977, will be serviced in the same manner as Soil and
Water loans. See Exhibit A of this subpart, ''Memorandum of
Understanding Between the Bureau of Reclamation, Department of the
Interior, and the Farmers Home Administration, Department of
Agriculture,'' for additional information on these loans.
07 CFR 1943.93 Subsequent SW loans.
A subsequent SW loan is a loan made to a borrower who is currently in
debt for an SW loan.
(a) Subsequent loan may be made for the same purposes and under the
same conditions as an initial loan.
(b) The subsequent loan will be processed in the same manner as an
initial loan.
(c) A new real estate mortgage will not be necessary provided:
(1) All the land which will serve as security for the loan is
described on the present real estate mortgage; or
(2) The real estate mortgage has a future advance clause and a State
supplement provides authority for using such a clause; or
(3) The required lien priority is obtained with the existing mortgage
and future advance clause.
07 CFR 1943.94 Subordinations.
Subordinations in favor of other lenders will be processed in
accordance with Subpart A of Part 1965 of this chapter.
1943.95 -- 1943.99 (Reserved)
07 CFR 1943.100 State supplements.
State supplements will be issued as necessary to implement this
subpart.
07 CFR 1943.100 Pt. 1943, Subpt. B, Exh. A
07 CFR 1943.100 Exhibit to Subpart B
07 CFR 1943.100 Exhibit A -- Memorandum of Understanding Between the
Bureau of Reclamation, Department of the Interior and the Farmers Home
Administration, Department of Agriculture
Whereas, under section 8 of the 1977 Drought Emergency Act (P.L.
95-18), hereafter referred to as ''the Act,'' the Bureau of Reclamation
(BR) is authorized to make loans to irrigators for the purpose of
undertaking construction, management, conservation activities, or the
acquisition and transportation of water, which can be expected to have
an effect in mitigating losses and damages resulting from the 1976-1977
drought period;
Whereas, the Farmers Home Administration (FmHA) has an existing soil
and water program (SW) authorized by section 304 of the Consolidated
Farm and Rural Development Act for loans to individuals that accomplish
purposes similar to those in the Act;
Whereas, it is more efficient and in the best interests of the United
States, and in accordance with section 6 of the Act, for BR to procure
the services of FmHA pursuant to the terms of the Economy Act of 1932
(31 U.S.C. 686) to make and service loans to individual irrigators as
authorized by the Act.
Now therefore the parties agree:
1. For purposes of this Memorandum the term ''irrigators'' shall mean
any person or legal entity who holds a valid existing water right for
irrigation purposes within the Federal reclamation projects. Federal
reclamation projects means any project constructed or funded under
Federal reclamation law and specifically including projects having
approved loans under the Small Reclamation Projects Act of 1956, as
amended.
2. FmHA shall make and service loans to individual irrigators as
authorized by the Act pursuant to its SW program and applicable FmHA
regulations except as modified hereby.
3. The loans shall be only for the purposes relating specifically to
irrigation and set forth in FmHA Instruction 443.2, IVA1, A8, B1, B2,
and C. The loans shall be interest free. Loans for water acquisition
and transportation shall be repaid over a period not to exceed 5 years.
Other loans shall be repaid over a period not to exceed 5 years except
such loans which generate benefits which are usable beyond 1977 shall be
repaid within a period which shall be the shorter of the estimated
useful life of the facilities or the reasonable payment capacity of the
irrigator but in no event to exceed 40 years. All loans shall be
obligated not later than September 30, 1977, and any construction
related to any loan must be completed by November 30, 1977.
4. Services rendered by FmHA pursuant to this Memorandum of
Understanding shall be on a nonreimbursable basis to the irrigator. For
services rendered, BR shall pay to FmHA a charge of 5 percent of
principal of each loan. BR directs that FmHA disburse such service
charge to itself directly upon the closing of each loan.
5. Three million dollars shall be transferred to FmHA by Standard
Form 1151, which amount shall be available for construction, management,
and conservation activities. An additional sum of $5 million may be
made available upon request of FmHA for the acquisition and
transportation of water.
6. Monthly Report: FmHA shall submit a Standard Form 133, ''Report
on Budget Execution'', in accordance with OMB Circular A-34, to the
Bureau of Reclamation, Washington, D.C. 20240, attention code 370.
7. Accomplishment: FmHA shall submit to the Bureau of Reclamation,
Washington, D.C. 20240, attention code 400, a complete report on
expenditures and accomplishments under this Memorandum on January 16,
1978.
Date of June 29, 1977.
Bureau of Reclamation, Department of the Interior,
R. Keith Higginson,
Commissioner.
Dated: July 15, 1977.
Farmers Home Administration, Department of Agriculture,
Marty Holleran,
for Gordon Cavanaugh,
Administrator.
WHEREAS, the Bureau of Reclamation (BR) and the Farmers Home
Administration (FmHA) consummated a Memorandum of Understanding on July
15, 1977, whereby BR would procure the services of FmHA pursuant to the
terms of the Economy Act of 1932 (31 U.S.C. 686) to make and service
loans to individual irrigators as authorized by section 8 of the 1977
Drought Emergency Act (Pub. L. 95-18); and
WHEREAS, item 3 of that Memorandum of Understanding provides in part
that all loans shall be obligated not later than September 30, 1977, and
any construction related to any loan must be completed by November 30,
1977; and
WHEREAS, Pub. L. 95-107, enacted on August 17, 1977, amends Pub. L.
95-18 to accomplish, among other things, an extension of the time for
completing construction activities under the authorities of Pub. L.
95-18 from November 30, 1977, to January 31, 1978.
NOW THEREFORE the parties agree that the date November 30, 1977, in
the last sentence of item 3 of the Memorandum of Understanding executed
by BR on June 29, 1977, and FmHA on July 15 1977, be revised to January
31, 1978, so that the sentence will read, ''All loans shall be obligated
not later than September 30, 1977, and any construction related to any
loan must be completed by January 31, 1978.''
Date of September 6, 1977.
Bureau of Reclamation, Department of the Interior,
R. Keith Higginson,
Commissioner.
Farmers Home Administration, Department of Agriculture,
Gordon Cavanaugh,
Administator.
September 7, 1977.
07 CFR 1943.100 Pt. 1944
07 CFR 1943.100 PART 1944 -- HOUSING
07 CFR 1943.100 Subpart A -- Section 502 Rural Housing Loan Policies,
Procedures, and Authorizations
Sec.
1944.1 General.
1944.2 Definitions.
1944.3 Loan purposes.
1944.4 Loan restrictions.
1944.5 Annual income.
1944.6 Adjusted annual income.
1944.7 (Reserved)
1944.8 Income eligibility requirements.
1944.9 Other eligibility requirements.
1944.10 Rural area designation.
1944.11 Site requirements.
1944.12 -- 1944.14 (Reserved)
1944.15 Ownership requirements.
1944.16 Dwelling requirements.
1944.17 Maximum loan amounts.
1944.18 Security requirements.
1944.19 -- 1944.21 (Reserved)
1944.22 Refinancing debts.
1944.23 Loans to Farm Ownership (FO), Individual Soil and Water (SW),
and Recreation (RL) borrowers.
1944.24 Technical services.
1944.25 Rates, terms, and source of funds.
1944.26 Application processing.
1944.27 -- 1944.29 (Reserved)
1944.30 Preparation of loan docket.
1944.31 Loan approval.
1944.32 Actions subsequent to loan approval.
1944.33 Loan closing.
1944.34 Interest credit.
1944.35 Deferred mortgage payments.
1944.36 (Reserved)
1944.37 Subsequent Section 502 loans.
1944.38 Mutual self-help housing loans.
1944.39 RH loans to FmHA employees and loan closing officials.
1944.40 Rural Housing Disaster (RHD) loans.
1944.41 -- 1944.43 (Reserved)
1944.44 Borrower graduation.
1944.45 Conditional commitments.
1944.46 Construction financing for builders by private credit
sources.
1944.47 Exception authority.
1944.48 -- 1944.50 (Reserved)
Exhibit A -- Information Required to Package Applications for Section
502 Rural Housing Loans
Exhibit B -- Addresses for Authentication of Alien Registration Cards
Exhibit C -- (Reserved)
Exhibit D -- Rural Housing Applicant Interview
Exhibit E -- (Reserved)
Exhibit F -- Supplemental Requirements for Making Section 502 RH
Loans for Manufactured Homes
07 CFR 1943.100 Subparts B -- C -- (Reserved)
07 CFR 1943.100 Subpart D -- Farm Labor Housing Loan and Grant
Policies, Procedures and Authorizations
1944.151 Purpose.
1944.152 Objective.
1944.153 Definitions.
1944.154 Priorities for tenants' occupancy.
1944.155 Responsibility for LH processing and servicing.
1944.156 (Reserved)
1944.157 Eligibility requirements.
1944.158 Loan and grant purposes.
1944.159 Rates and terms.
1944.160 -- 1944.162 (Reserved)
1944.163 Conditions under which an LH grant may be made.
1944.164 Limitations and conditions.
1944.165 -- 1944.167 (Reserved)
1944.168 Security requirements.
1944.169 Technical, legal, and other services.
1944.170 Processing preapplications.
1944.171 Preparation of completed loan and/or grant docket.
1944.172 (Reserved)
1944.173 Loan and grant approval -- delegation of authority.
1944.174 Distribution of loan and/or grant approval documents.
1944.175 Actions subsequent to loan and/or grant approval.
1944.176 Loan and/or grant closing.
1944.177 Coding loans and grants as to initial or subsequent.
1944.178 Complaints regarding discrimination in use and occupancy of
Labor housing.
1944.179 -- 1944.180 (Reserved)
1944.181 Loan servicing.
1944.182 Rental assistance.
1944.183 Exception authority.
1944.184 -- 1944.200 (Reserved)
Exhibit A -- Labor Housing Loan and Grant Application Handbook
Exhibit A-1 -- Information to be Submitted by Organizations and
Associations of Farmers for Labor Housing Loan or Grant
Exhibit A-2 -- Information to be Submitted by Individuals, Farmowners
and Family Farm Corporations or Partnerships for Labor Housing Loans
Exhibit A-3 -- Labor Housing Construction Guidelines
Exhibit A-4 -- Survey of Existing Labor Housing
Exhibit A-5 -- Statement of Budget and Cash Flow
Exhibit B -- Management Plans
Exhibit C -- Loan Resolution
Exhibit D -- Loan Agreement
Exhibit E -- Loan and Grant Resolution
Exhibit F -- Labor Housing Grant Agreement
Exhibit G -- Legal Service Agreement
Exhibit H -- Information Pertaining to Preparation of Notes or Bonds
and Bond Transcript Documents for Public Body Applicants
Exhibit I -- Guide Letter for Use in Informing Interim Lender of
FmHA's Commitment
07 CFR 1943.100 Subpart E -- Rural Rental and Rural Cooperative Housing
Loan Policies, Procedures, and Authorizations
1944.201 General.
1944.202 Objective.
1944.203 -- 1944.204 (Reserved)
1944.205 Definitions.
1944.206 -- 1944.210 (Reserved)
1944.211 Eligibility requirements.
1944.212 Loan purposes.
1944.213 Limitations.
1944.214 Rates and terms.
1944.215 Special conditions.
1944.216 -- 1944.220 (Reserved)
1944.221 Security.
1944.222 Technical, legal and other services.
1944.223 Supplemental requirements for manufactured home project
development.
1944.224 Supplemental requirements for congregate housing and group
homes.
1944.225 -- 1944.230 (Reserved)
1944.231 Processing preapplications.
1944.232 Rental assistance (RA) from sources other than FmHA.
1944.233 -- 1944.234 (Reserved)
1944.235 Actions subsequent to loan approval.
1944.236 Loan closing.
1944.237 Subsequent loans.
1944.238 Prohibition against prepayment.
1944.239 Complaints regarding discrimination in use and occupancy of
RRH and RCH.
1944.240 Exception authority.
1944.241 -- 1944.245 (Reserved)
1944.246 Loan approval.
1944.247 -- 1944.249 (Reserved)
1944.250 OMB control number.
Exhibit A -- How to Bring Rental and Cooperative Housing to Your Town
Exhibit A-1 -- Legal Services Agreement (For Cooperative or Other
Nonprofit Organizations)
Exhibit A-2 -- Survey of Existing Rental Housing
Exhibit A-3 -- Rental Housing Survey
Exhibit A-4 -- Cooperative Housing Survey
Exhibit A-5 -- Housing Survey Summary
Exhibit A-6 -- Housing Allowances for Utilities and Other Public
Services
Exhibit A-7 -- Information to be Submitted with Preapplication for a
Rural Rental Housing (RRH) or a Rural Cooperative Housing (RCH) Loan
Exhibit A-8 -- Outline of Professional Market Study
Exhibit A-9 -- Information to be Submitted with Application for a
Rural Rental Housing (RRH) Loan
Exhibit A-10 -- Administrative Process for Combining Farmers Home
Administration (FmHA) Assistance with Low-Income Housing Tax Credits
Exhibit B -- Guide Letter for use in Informing Interim Lender of
FmHA's Commitment
Exhibit C -- Articles of Incorportion for Rental or Cooperative
Organizations (Not for Profit)
Exhibit D -- Bylaws (Except Cooperative)
Exhibit D-1 -- Bylaws (Cooperative)
Exhibit E -- Support Services for Congregate Housing and Group Homes
Exhibit F -- Qualifications of an Advisor to the Board
Exhibit F-1 -- Relationship of Advisor to Members
Exhibit G -- Advisor Responsibilities
Exhibit H -- Limited Equity Agreement
Exhibit I -- Subscription Agreement
Exhibit J -- Occupancy Agreement
07 CFR 1943.100 Subparts F-H -- (Reserved)
07 CFR 1943.100 Subpart I -- Self-Help Technical Assistance Grants
1944.401 Objective.
1944.402 Grant purposes.
1944.403 Definitions.
1944.404 Eligibility.
1944.405 Authorized use of grant funds.
1944.406 Prohibited use of grant funds.
1944.407 Limitations.
1944.408 Accountability.
1944.409 Executive Order 12372.
1944.410 Processing preapplications, applications, and completing
grant dockets.
1944.411 Conditions for approving a grant.
1944.412 Docket preparation.
1944.413 Grant approval.
1944.414 (Reserved)
1944.415 Grant approval and other approving authorities.
1944.416 Grant closing.
1944.417 Servicing actions after grant closing.
1944.418 (Reserved)
1944.419 Final grantee evaluation.
1944.420 Extension or revision of the grant agreement.
1944.421 Refunding of an existing grantee.
1944.422 Audit and other report requirements.
1944.423 Loan packaging and 502 RH application submittal.
1944.424 Dwelling construction and standards.
1944.425 Handling and accounting for borrower loan funds.
1944.426 Grand closeout.
1944.427 Grantee self-evaluation.
1944.428 -- 1944.449 (Reserved)
1944.450 OMB Control Number.
Exhibit A -- Self-Help Technical Assistance Grant Agreement
Exhibit B -- Evaluation Report of Self-Help Technical Assistance (TA)
Grants
Exhibit B-1 -- Instructions for Preparation of Evaluation Report of
Self-Help Technical Assistance Grants
Exhibit B-2 -- Breakdown of Construction Development for Determining
Percentage Construction Completed
Exhibit B-3 -- Pre-construction and Construction Phase Breakdown
Exhibit C -- Amendment to Self-Help Technical Assistance Grant
Agreement
Exhibit D -- Self-Help Technical Assistance Grant Predevelopment
Agreement
Exhibit E -- Guidance for Recipients of Self-HelpTechnical Assistance
Grants (Section 523 of Housing Act of 1949)
Exhibit F -- Site Option Loan to Technical Assistance Grantees
07 CFR 1943.100 Subpart J -- Section 504 Rural Housing Loans and Grants
1944.451 General.
1944.452 Equal credit opportunity.
1944.453 Definitions.
1944.454 -- 1944.455 (Reserved)
1944.456 Loan and grant purposes.
1944.457 Loan and grant restrictions.
1944.458 Eligibility requirements.
1944.459 -- 1944.460 (Reserved)
1944.461 Security and other requirements.
1944.462 Rates and terms.
1944.463 Technical services.
1944.464 Insurance requirements.
1944.465 Taxes and assessments.
1944.466 Accountability.
1944.467 Processing applications.
1944.468 Loan or grant approval.
1944.469 Loan closing or grant settlement.
1944.470 -- 1944.471 (Reserved)
1944.472 Subsequent section 504 loans and/or grants.
1944.473 Unauthorized loans and/or grants.
1944.474 Exception authority.
1944.475 -- 1944.499 (Reserved)
1944.500 OMB control number.
Exhibit A -- Section 504 Repayment Agreement
Exhibit B -- Cost Estimate or Bid
Exhibit C -- Guidance on Packaging Applications for Section 504 Rural
Housing Assistance
07 CFR 1943.100 Subpart K -- Technical and Supervisory Assistance
Grants
1944.501 General.
1944.502 Policy.
1944.503 Objectives.
1944.504 -- 1944.505 (Reserved)
1944.506 Definitions.
1944.507 -- 1944.509 (Reserved)
1944.510 Applicant eligibility.
1944.511 (Reserved)
1944.512 Authorized representative of the applicant.
1944.513 (Reserved)
1944.514 Comprehensive TSA grant projects.
1944.515 (Reserved)
1944.516 Grant purposes.
1944.517 (Reserved)
1944.518 Term of grant.
1944.519 (Reserved)
1944.520 Ineligible activities.
1944.521 (Reserved)
1944.522 Equal opportunity requirements.
1944.523 Other administrative requirements.
1944.524 (Reserved)
1944.525 Targeting of TSA funds to States.
1944.526 Preapplication procedure.
1944.527 (Reserved)
1944.528 Preapplication submission deadline.
1944.529 Project selection.
1944.530 (Reserved)
1944.531 Application submission.
1944.532 (Reserved)
1944.533 Grant approval and announcement.
1944.534 (Reserved)
1944.535 Cancellation of an approved grant.
1944.536 Grant closing.
1944.537 (Reserved)
1944.538 Extending and revising grant agreements.
1944.539 (Reserved)
1944.540 Requesting TSA checks.
1944.541 Reporting requirements.
1944.542 (Reserved)
1944.543 Grant monitoring.
1944.544 (Reserved)
1944.545 Additional grants.
1944.546 (Reserved)
1944.547 Management assistance.
1944.548 Counseling consent by FmHA single family housing borrowers.
1944.549 Grant evaluation, closeout, suspension and termination.
1944.550 (Reserved)
Exhibit A -- Grant Agreement -- Technical and Supervisory Assistance
Exhibit B -- Administrative Instructions for State Offices Regarding
Their Responsibilities in the Administration of the Technical and
Supervisory Assistance Grant Program
Exhibit C -- Instructions for District Offices Regarding Their
Responsibilities in the Administration of the Technical and Supervisory
Assistance Grant Program
Exhibit D -- Amendment to Technical and Supervisory Assistance Grant
Agreement
Exhibit E -- Guide Letter to Delinquent FmHA Single Family Housing
Loan Borrowers
07 CFR 1943.100 Subpart L -- Farmers Home Administration Tenant
Grievance and Appeals Procedure
1944.551 Purpose.
1944.552 Definitions.
1944.553 Exceptions.
1944.554 Reasons for grievance and appeal.
1944.555 Settlement of grievances and appeals.
1944.556 Procedure for obtaining a hearing.
1944.557 Procedures governing the hearing.
1944.558 Decision of the hearing officer or hearing panel.
1944.559 Responsibilities of the FmHA District Director.
1944.560 -- 1944.599 (Reserved)
1944.600 OMB control number.
Exhibit A -- Summary of Meeting
07 CFR 1943.100 Subpart N -- Housing Preservation Grants
1944.651 General.
1944.652 Policy.
1944.653 Objective.
1944.654-1944.655 (Reserved)
1944.656 Definitions.
1944.657 (Reserved)
1944.658 Applicant eligibility.
1944.659 (Reserved)
1944.660 Authorized representative of the HPG applicant and FmHA
point of contact.
1944.661 Homeowner eligibility for HPG assistance.
1944.662 Accountability.
1944.663 (Reserved)
1944.664 Housing preservation assistance.
1944.665 Supervision and inspection of rehabilitation and repair
work.
1944.666 Administrative activities and policies.
1944.667 (Reserved)
1944.668 Term of grant.
1944.669 (Reserved)
1944.670 Project income.
1944.671 Equal opportunity requirements.
1944.672 Environmental and administrative requirements.
1944.673 Historic preservation requirements and procedures.
1944.674 Public participation and consultation with State and local
governments.
1944.675 Allocation of HPG funds to States and unused HPG funds.
1944.676 Preapplication procedures.
1944.677 (Reserved)
1944.678 Preapplication submission deadline.
1944.679 Project selection criteria.
1944.680 Limitation on grantee selection.
1944.681 Application submission.
1944.682 Grant approval and requesting HPG funds.
1944.683 Reporting requirements.
1944.684 Extending grant agreements and modifying statements of
activities.
1944.685 (Reserved)
1944.686 Additional grants.
1944.687 (Reserved)
1944.688 Grant evaluation, closeout, suspension and termination.
1944.689 (Reserved)
1944.690 Exception authority.
1944.691 -- 1944.699 (Reserved)
1944.700 OMB control number.
Exhibit A -- Housing Preservation Grant Agreement
Exhibit B -- Amendment to Housing Preservation Grant Agreement
Exhibit C -- (Reserved)
Exhibit D -- Project Selection Criteria-Outline Rating Form
Exhibit E -- Guide for Quarterly Performance Report
Authority: 42 U.S.C. 1480, 5 U.S.C. 301, 7 CFR 2.23, 7 CFR 2.70.
07 CFR 1943.100 Subpart A -- Section 502 Rural Housing Loan Policies,
Procedures, and Authorizations
Source: 48 FR 200, Jan. 4, 1983, unless otherwise noted.
07 CFR 1944.1 General.
This subpart sets forth the policies and procedures and delegates
authority for making section 502 Rural Housing (RH) loans to individuals
under Title V of the Housing Act of 1949, as amended. The objective of
section 502 loans is to provide eligible persons who will live in rural
areas an opportunity to obtain adequate but modest, decent, safe, and
sanitary dwellings and related facilities. The requirements of Subpart
E of Part 1901 will be applied as appropriate. Loans and services
provided under this subpart shall not be denied to any person or
applicant based on race, sex, national origin, color, religion, marital
status, age, physical or mental handicap (applicant must possess the
capacity to enter into a legal contract for services), receipt of income
from public assistance, or because the applicant has, in good faith,
exercised any right under the Consumer Protection Act.
07 CFR 1944.2 Definitions.
The following definitions apply to this subpart:
(a) Cosigner. A party who joins in the execution of a promissory
note to guarantee its repayment by the borrower. The cosigner becomes
jointly and severally liable to comply with the terms of the note in the
event of the borrower's default.
(b) County Supervisor. Includes Assistant County Supervisor for all
duties and responsibilities which are included in the employee's job
description and for authorizations which have been delegated in writing
in accordance with FmHA Instruction 2006-F (available in any FmHA
office). For the areas of Alaska and Western Pacific Territories it
also includes the Area Supervisor.
(c) Disabled person. A person who is unable to engage in any
substantially gainful activity by reason of any medically determinable
physical or mental impairment expected to result in death or which has
lasted or is expected to last for a continuous period of not less than
12 months. In the case of an individual who has attained the age of 55
and is blind, disability is defined as inability by reason of such
blindness to engage in substantially gainful activity requiring skills
or abilities comparable to those of any gainful activity in which the
individual has previously engaged with some regularity over a
substantial period of time. Form FmHA 1944-4, ''Certification of
Disability or Handicap,'' will be used to verify disability in cases
where State Review Board or Social Security records are not available.
Receipt of veteran's benefits for disability, whether service-oriented
or otherwise, does not automatically establish disability. A disabled
person also includes a person with a developmental disability. A
developmental disability means a severe, chronic disability of a person
which:
(1) Is attributable to a mental or physical impairment or combination
of mental and physical impairments;
(2) Is manifested before the person attains age 22;
(3) Is likely to continue indefinitely;
(4) Results in substantial functional limitations in 3 or more of the
following areas of major life activity:
(i) Self-care,
(ii) Receptive and expressive language,
(iii) Learning,
(iv) Mobility,
(v) Self-direction,
(vi) Capacity for independent living,
(vii) Economic self-sufficiency; and
(5) Reflects the person's need for a combination and sequence of
special care, treatment, or other services which are of lifelong or
extended duration and are individually planned and coordinated.
(d) Elderly family. An elderly family consists of one of the
following:
(1) A person who is the head, spouse or sole member of a family and
who is 62 years of age or older, or who is handicapped or disabled and
is the applicant/borrower or the co-applicant/co-borrower; or
(2) Two or more unrelated elderly (age 62 or older), disabled or
handicapped persons who are living together, at least one of whom is the
applicant/borrower or co-applicant/co-borrower; or
(3) In the case of a family where the borrower/co-borrower, or
spouse, was at least 62 years old, handicapped, or disabled, the
surviving household member(s) shall continue to be classified as an
''elderly family'' for the purpose of determining adjusted income even
though the surviving member or members may not meet the definition of
elderly family on their own, provided:
(i) They occupied the dwelling with the deceased family member at the
time of his or her death; and
(ii) If one of the surviving family members is the spouse of the
deceased family member the surviving family shall be classified as an
elderly family only until the remarriage of the surviving spouse; and
(iii) At the time of the death of the deceased family member the
dwelling was financed under Title V of the Housing Act of 1949.
(e) Existing dwellings. A dwelling which is:
(1) More than 1 year old; or
(2) Previously occupied as a residence.
(f) Extended family. A double family unit comprised of adult
relatives who live together with the other members of the household, for
reasons of physical dependency, economics, and/or social custom, who,
under other circumstances, could maintain separate households. A
typical example is: parents living with their adult children.
(g) Farm. Includes the total acreage of one or more tracts of land
which:
(1) Is owned by the applicant,
(2) Is operated as a single unit,
(3) Is in agricultural production, and
(4) Annually will produce agricultural commodities for sale and home
use with a gross value of at least $400 based on 1944 prices. To aid in
estimating the gross annual value of agricultural commodities produced
on a particular farm, a State Supplement will be issued listing the 1944
prices for the principal farm commodities in the State.
(h) Full-time student. A person who is carrying a subject load that
is considered full-time for day students (excluding correspondence
courses) under the standards and practices of the educational
institution attended. An educational institution includes a vocational
school with a diploma or certificate program, as well as an institution
offering a college degree.
(i) Handicapped person. A person having a physical or mental
impairment which:
(1) Is expected to be of long or indefinite duration;
(2) Substantially impedes his or her ability to live independently;
and
(3) Is of such a nature that the person's ability to live
independently could be improved by more suitable housing conditions.
Form FmHA 1944-4 will be used to verify handicap in cases where State
Review Board or Social Security records are not available.
(j) Household or family. The applicant, co-applicant, and all other
persons who will make the applicant's dwelling their primary residence
for all or part of the next 12 months. Children who are members of the
family, but have been removed and placed in foster care, will be counted
as residents of the household. Foster care children placed in the
borrower's home and live-in aides will not be counted as members of the
household.
(k) Income -- (1) Very low income. An adjusted annual income that
does not exceed the very low-income limit according to size of household
as established by the Department of Housing and Urban Development (HUD)
for the county or Metropolitan Statistical Area (MSA) where the property
is or will be located. Maximum very low-income limits are set forth in
Exhibit C of this subpart (available in any FmHA office).
(2) Low income. An adjusted annual income that does not exceed the
''lower'' income limit according to size of household as established by
HUD for the county or MSA where the property is or will be located.
Maximum lower-income limits are set forth in Exhibit C of this subpart
(available in any FmHA office).
(3) Moderate income. An adjusted annual income that does not exceed
the maximum limit for moderate-income households as provided in Exhibit
C of this subpart (available in any FmHA office).
(4) Above-moderate income. An adjusted annual income that exceeds
the maximum limit for moderate-income households as provided in Exhibit
C of this subpart (available in any FmHA office).
(l) Metropolitan Statistical Area. MSAs are defined according to a
set of detailed standards prepared by the Federal Committee on MSAs. An
area qualifies as an MSA if it contains a city of at least 50,000
population or an urbanized area of at least 50,000 with a total
metropolitan population of at least 100,000. MSAs are defined in terms
of entire counties, except in the six New England states where they are
defined in terms of cities and towns. An MSA may also include
additional counties having strong economic and social ties of the
central county. The term Standard Metropolitan Statistical Area (SMSA)
was in use prior to the June 30, 1983, effective date of the MSA
terminology.
(m) Minor. Persons under 18 years of age. Neither the head of
household nor spouse may be counted as a minor. Foster children are not
counted as minors for determining annual or adjusted annual income.
(n) Net family assets. Include:
(1) The value of equity in real property, savings, demand deposits,
and the market value of stocks, bonds, and other forms of capital
investments, but exclude:
(i) Interests in Indian trust land,
(ii) The value of dwelling and a minimum adequate dwelling site,
(iii) Cash on hand which will be used to reduce the amount of the
loan,
(iv) The value of necessary items of personal property such as
furniture and automobile(s) and the debts against them,
(v) The assets that are a part of the business, trade, or farming
operation in the case of any member of the household who is actively
engaged in such operation, and
(vi) The value of a trust fund that has been established and the
trust is not revocable by, or under the control of, any member of the
household, so long as the fund continues to be held in trust.
(2) The value of any business or household assets disposed of by a
member of the household for less than fair market value (including
disposition in trust, but not in foreclosure or bankruptcy sale) during
the two years preceding the date of application, in excess of the
consideration received therefor. In the case of a disposition as part
of a separation or divorce settlement, the disposition shall not be
considered to be for less than fair market value if the household member
receives important consideration not measureable in dollar terms.
(o) Nonfarm tract. A parcel of land that is not a farm and is
located in a rural area, or a building site that is part of a farm, and
which secures an RH loan in accordance with 1944.18(b)(10) of this
subpart.
(p) Place. An area containing a concentration of inhabitants within
a determinable unincorporated area.
(q) Rehabilitation. Major repairs and improvements to existing
dwellings such as the installation or completion of bathroom facilities,
installation of major items of equipment, additions, or structural
changes.
(r) Senior citizen. A ''senior citizen'' is a person who is 62 years
of age or older.
(s) Town. A ''town'' means a municipality similar to a city but not
a New England-type town which resembles a township or county in most
States.
(t) Urban area. Either a town, village, city, place, or any
associated combination thereof which, with the immediately adjacent
densely settled areas, has a population in excess of the limits
prescribed in 1944.10(a)(2) (i) and (ii) of this subpart.
(50 FR 39961, Oct. 1, 1985 and 51 FR 6393, Feb. 24, 1986, as amended
at 52 FR 11982, Apr. 14, 1987; 56 FR 28310, June 20, 1991)
07 CFR 1944.3 Loan purposes.
(a) A loan may be made to an eligible applicant for the following
purposes:
(1) To buy, build, rehabilitate, improve or relocate a dwelling and
provide related facilities for use by the applicant as a permanent
residence.
(2) To buy, build, rehabilitate, improve or relocate a dwelling, and
provide related facilities for a farm owner to provide housing to be
occupied by the farm manager, tenants, sharecroppers or farm laborers.
(3) To refinance secured debts or unsecured debts as provided in
1944.22, except for manufactured homes.
(b) A loan made under paragraph (a) (1) or (2) of this section may be
used to:
(1) Purchase, in fee title, a minimum adequate site, as outlined in
1944.11(c) on which the improvements are or will be located, if the
applicant does not own an adequate site.
(2) Pay reasonable acquisition cost for a leasehold interest in a
minimum adequate site at the time of making the initial RH loan.
(3) Provide an adequate and safe water supply and/or an adequate
sewage disposal facility.
(4) Provide site preparation, including grading, foundation
plantings, seeding or sodding of lawns, trees, walks, yard fences and
driveways to building sites.
(5) Purchase and install essential equipment in the dwelling
including items such as a range, refrigerator, clothes washer or clothes
dryer, if these items are normally sold with dwellings in the area and
if purchase of these items is not the primary purpose of the loan.
(6) Provide special design features or equipment when necessary
because of physical handicap or disability of the applicant or a member
of the household.
(7) Purchase and install approved energy saving measures and approved
furnaces and space heaters which use a type of fuel that is commonly
used, and is economical and dependably available.
(8) Provide storm cellars, and similar protective structures.
(9) Pay incidental expenses such as fees for tax monitoring service,
legal, title clearance, loan closing, architectural, surveying,
environmental and other technical services and incidental expenses
authorized in Exhibit F of this subpart.
(10) Pay reasonable connection fees for utilities such as water,
sewer, electricity or gas, which are required to be paid by the borrower
and which cannot be paid from other funds.
(11) Pay the borrower's share of Social Security taxes for labor
hired by the borrower in connection with making the planned
improvements.
(12) Pay real estate taxes which are due and payable on the building
and/or site at the time of closing on an initial loan, if this amount is
not a substantial part of the loan.
(13) Establish escrow accounts for the payment of real estate taxes
or property insurance premiums in those States where the use of escrow
accounts is authorized by the National Office.
(14) Provide living area for all members of the applicant's
household, including ''extended family,'' as provided in 1944.16(a)(6).
(48 FR 200, Jan. 4, 1983, as amended at 49 FR 40793, Oct. 18, 1984;
51 FR 41607, Nov. 18, 1986; 53 FR 36267, Sept. 19, 1988)
07 CFR 1944.4 Loan restrictions.
(a) A loan will not be made to an applicant who, within the previous
2 years, had a section 502 RH loan but disposed of the property through
sale or transfer unless:
(1) The dwelling sold or transferred was inadequate to meet the
applicant's housing needs; or
(2) The applicant was compelled to relocate due to change of
employment or health reasons and the property the applicant proposes to
buy is in a different trade/market/employment area; or
(3) The housing need is due to a legal separation or divorce.
(b) Loan funds may not be used to:
(1) Buy or improve income-producing land, or buildings to be used for
income-producing purposes or buildings not essential for RH purposes.
(2) Pay fees, charges or commissions such as finders' fees, fees for
packaging the application or placement fees for the referral of
prospective applicants to FmHA.
(c) A loan will not be made to an applicant whose previous FmHA debts
have been settled pursuant to Subpart B of Part 1956 of this chapter or
by release from personal liability under Subpart A of Part 1955 of this
chapter as reflected by the County Office records, or where settlement
under such regulation is contemplated, unless failure to pay the
indebtedness was the result of circumstances beyond the applicant's
control, or the conditions which necessitated the debt settlement or
release, or than weather hazards, disasters, or price fluctuations, have
been removed or will be removed by making the loan. Before approving
the property or causing such an applicant to incur any expense in
connection with the loan the County Supervisor will complete Form FmHA
431-2, ''Farm and Home Plan,'' or Form FmHA ''1944 -- 3, Budget and/or
Financial Statement,'' and send it with the application, any available
case folders, and recommendations to the State Office for a
determination as to whether to proceed with the development of the loan
docket.
(d) A loan will not be made to an applicant who has demonstrated his
or her inability to carry out the required obligations of the loan, as
evidenced by recent failure to maintain rental property or a former home
and premises in a habitable and responsible manner, has performed
unauthorized conversion or alterations of the structure, or created
public nuisances in or around a former residence, unless the reasons
have been removed and are not likely to recur. Evidence of such
inability must be specifically addressed in the letter of rejection and
documented in the case file running record, and may never be due to
presumed inability based on age, sex, marital status, or any other
prohibited basis under the Equal Credit Opportunity Act (ECOA).
(e) Loans will not be made to a homestead entryman or desert entryman
to improve the entry prior to receipt of patent.
(48 FR 200, Jan. 4, 1983, as amended at 51 FR 45432, Dec. 18, 1986;
53 FR 17688, May 18, 1988; 56 FR 10147, Mar. 11, 1991)
07 CFR 1944.5 Annual income.
Income will be determined as follows and thoroughly documented in the
case file running record:
(a) Current verified income either part-time or full-time received by
the applicant and all adult members of the household including the
spouse is derived by multiplying:
(1) An hourly wage by 2080 hours (for part-time employment use
anticipated annual hours); or
(2) A weekly wage by 52 weeks; or
(3) A biweekly wage by 26 weeks; or
(4) A monthly wage by 12 months.
(b) If the spouse or any other adult member of the household is not
presently employed but there is a recent history of such employment,
that person's income will be considered unless the applicant/borrower
and the person(s) involved sign a statement that the person(s) is not
presently employed and does not intend to resume employment in the
foreseeable future, or if interest credit is involved, during the term
of the Interest Credit Agreement. The statement will be filed in the
applicant/borrower's case file.
(c) Income from such sources as seasonal type work of less than 12
months duration, commissions, overtime, bonuses, and unemployment
compensation will be computed as the estimated annual amount of such
income for the ensuing 12 months. Historical data based on the past 12
months may be used if a determination of expected income cannot
logically be made.
(d) The following are included in annual income:
(1) The gross amount, before any payroll deductions, of wages and
salaries overtime pay, commissions, fees, tips, bonuses, and other
compensation for personal services of all adult members of the
household.
(2) The net income from operation of a farm, business or profession.
Consider the following:
(i) Expenditures for business or farm expansion and payments of
principal on capital indebtedness shall not be used as deductions in
determining income. A deduction is allowed in the manner prescribed by
Internal Revenue Service (IRS) regulations only for interest paid in
amortizing capital indebtedness.
(ii) Farm and nonfarm business losses are considered ''0'' in
determining annual income.
(iii) A deduction based on straight line depreciation is allowed in
the manner prescribed by IRS regulations for the exhaustion, wear and
tear, and obsolescene of depreciable property used in the operation of a
trade, farm or business by a member of the household. The deduction
must be based on an itemized schedule showing the amount of straight
line depreciation actually claimed for Federal income tax purposes.
(iv) Any withdrawal of cash or assets from the operation of a farm,
business or profession will be included in income, except to the extent
the withdrawal is reimbursement of cash or assets invested in the
operation by a member of the household.
(3) Interest, dividends, and other net income of any kind from real
or personal property, including:
(i) The share received by adult members of the household from income
distributed from a trust fund.
(ii) Any withdrawal of cash or assets from an investment except to
the extent the withdrawal is reimbursement of cash or assets invested by
a member of the household.
(iii) Where the household has net family assets, as defined in
1944.2(n) of this subpart, in excess of $5,000, the greater of the
actual income derived from all net family assets or a percentage of the
value of such assets based on the current passbook savings rate, as
determined by the County Supervisor.
(4) The full amount of periodic payments received from social
security (including social security received by adults on behalf of
minors or by minors intended for their own support), annuities,
insurance policies, retirement funds, pensions, disability or death
benefits, and other similar types of periodic receipts.
(5) Payments in lieu of earnings, such as unemployment and disability
compensation, worker's compensation and severance pay.
(6) Public assistance except as indicated in paragraph (e)(2) of this
section.
(7) Periodic and determinable allowances, such as alimony and child
support payments, and regularly recurring cash contributions or gifts
received from persons not residing in the dwelling.
(8) Any earned income tax credit to the extent it exceeds income tax
liability.
(9) Any amount of educational grants or scholarships or Veteran's
Administration benefits available for subsistence after deducting
expenses for tuition, fees, books and equipment.
(10) All regular pay, special pay (except for persons exposed to
hostile fire), and allowances of a member of the armed forces who is the
applicant/borrower or spouse, whether or not that family member lives in
the unit.
(11) The income of an applicant's spouse, unless the spouse has been
living apart from the applicant for at least 6 months (for reasons other
than military or work assignment), or court proceedings for divorce or
legal separation have been commenced.
(e) The following are not included in annual income but will be
considered in determining repayment ability:
(1) Income from employment of minors (including foster children)
under 18 years of age. The applicant and spouse may never be considered
minors.
(2) The value of the allotment provided to an eligible household
under the Food Stamp Act of 1977.
(3) Payments received for the care of foster children.
(4) Casual, sporadic or irregular cash gifts.
(5) Lump-sum additions to family assets such as inheritances, capital
gains, insurance payments included under health, accident, hazard, or
worker's compensation policies, and settlements for personal or property
losses (except as provided in paragraph (d)(5) of this section).
(6) Amounts which are granted specifically for, or in reimbursement
of, the cost of medical expenses.
(7) Amounts of education scholarships paid directly to the student or
to the educational institution, and amounts paid by the Government to a
veteran for use in meeting the costs of tuition, fees, books and
equipment. Any amounts of such scholarships or veteran's payments,
which are not used for above purposes and are available for subsistence,
are considered to be income. Student loans are not considered income.
(8) The hazardous duty pay to a service person applicant/borrower or
spouse away from home and exposed to hostile fire.
(9) Payments to volunteers under the Domestic Volunteer Service Act
of 1973, including but not limited to:
(i) National Volunteer Antipoverty Programs which include VISTA,
Peace Corps, Service Learning Program and Special Volunteer Programs.
(ii) National Older American Volunteer Programs for persons age 60
and over which include Retired Senior Volunteer Programs, Foster
Grandparent Program, Older American Community Services Program, and
National Volunteer Programs to Assist Small Business and Promote
Volunteer Service by Persons with Business Experience, Service Corps of
Retired Executives (SCORE) and Active Corps of Executives (ACE).
(10) Relocation payments made pursuant to Title II of the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of
1970.
(11) Payments received under the Alaska Native Claims Settlement Act.
(12) Income derived from certain submarginal land of the United
States that is held in trust for certain Indian tribes.
(13) Payments or allowances made under the Department of Health and
Human Services Low-Income Home Energy Assistance Program.
(14) Payments received from the Job Training Partnership Act.
(15) Income derived from the disposition of funds of the Grand River
Bank of Ottawa Indians.
(16) The first $2,000 of per capita shares received from judgment
funds awarded by the Indian Claims Commission or the Court of Claims, or
from funds held in trust for an Indian tribe by the Secretary of
Interior.
(17) Any funds, other than those listed in paragraph (e) of this
section, which a Federal statute specifies must not be used as the basis
for denying or reducing Federal financial assistance or benefits to
which the recipient would otherwise be entitled.
(50 FR 39962, Oct. 1, 1985 and 51 FR 6393, Feb. 24, 1986)
07 CFR 1944.6 Adjusted annual income.
Adjusted annual income is annual income as determined in 1944.5 of
this subpart less the following:
(a) A deduction of $480 for each resident of the household, as
defined by 1944.2 of this subpart, other than the applicant, spouse, or
co-applicant, who is:
(1) Under 18 years of age; or
(2) Eighteen years of age or older and is disabled or handicapped as
defined in 1944.2 (c) and (i) of this subpart; or
(3) A full-time student aged 18 or older.
(b) A deduction of $400 for any elderly family as defined in
1944.2(d) of this subpart.
(c) A deduction for the care of minors 12 years of age or under to
the extent necessary to enable a member of the applicant/borrower's
family to be gainfully employed or to further his or her education. The
deduction will be based only on monies reasonably anticipated to be paid
for care services and, if caused by employment, must not exceed the
amount of income received from such employment. Payments for these
services may not be made to persons whom the applicant/borrower is
entitled to claim as dependents for income tax purposes. Full
justification for such deduction must be recorded in detail in the loan
docket.
(d) A deduction of the amount by which the aggregate of the following
expenses of the household exceeds 3 percent of gross annual income:
(1) Medical expenses for any elderly family as defined in 1944.2(d)
of this subpart. This includes medical expenses the applicant/borrower
anticipates incurring over the ensuing 12 months and which are not
covered by insurance. Examples of medical expenses are dental expenses,
prescription medicines, medical insurance premiums, eyeglasses, hearing
aids and batteries, the cost of home nursing care, monthly payments on
accumulated major medical bills, and cost of full-time nursing or
institutional care which cannot be provided in the home for a member of
the household; and
(2) Reasonable attendant care and auxiliary apparatus expenses for
each handicapped/disabled member of any household to the extent
necessary to enable any member of such household (including such
handicapped/disabled member) to be employed.
(50 FR 39963, Oct. 1, 1985 and 51 FR 6393, Feb. 24, 1986, as amended
at 56 FR 28310, June 20, 1991)
1944.7 (Reserved)
07 CFR 1944.8 Income eligibility requirements.
(a) An applicant is eligible for a Section 502 loan only if the
following requirements are met:
(1) The adjusted annual income as defined in 1944.6 of this subpart
at the time of loan approval does not exceed the applicable income limit
in Exhibit C of this subpart (available in any FmHA office).
(2) Repayment ability as provided in 1944.26(f), is demonstrated in
the following manner:
(i) The applicant has adequate and dependably available income. The
determination of income dependability will include consideration of the
applicant's past history of annual income and/or the history of the
typical annual income of others in the area with similar types of
employment. Such income should be sufficient to meet living expenses,
pay taxes, insurance and maintenance costs, and to make required
payments on all obligations including the Section 502 loan; or
(ii) The applicant obtains a cosigner with dependably available
income which will be sufficient to repay the loan. The cosigner must be
an individual but may not be a member of the applicant's household.
(b) Applicants applying who do not meet the requirements of paragraph
(a)(2) of this section will be considered ineligible unless another
adult(s) in the household has adequate income and wishes to join in the
application as a co-applicant. The combined incomes then may be
considered in determining repayment ability.
(48 FR 200, Jan. 4, 1983, as amended at 50 FR 39963, Oct. 1, 1985;
51 FR 6393, Feb. 24, 1986)
07 CFR 1944.9 Other eligibility requirements.
In addition to the income eligibility requirements of 1944.8, the
applicant must:
(a) Qualify as one of the following:
(1) A person who does not own a dwelling, or owns a dwelling which is
not structurally sound, functionally adequate, or large enough to
accommodate the needs of the applicant, or
(2) A farmowner without decent, safe and sanitary housing for the
farmowner's own use or for the use of farm tenants, sharecroppers, farm
laborers, or farm manager.
(b) Be without sufficient resources to provide the necessary housing
or related facilities, and be unable to secure the necessary credit from
other sources upon terms and conditions which the applicant could
reasonably be expected to fulfill. If the applicant has only an
undivided interest in the land to be improved, those co-owners whose
execution of the mortgage is required under 1944.18(b)(8) must also be
unable to provide the improvement with their own resources or obtain the
necessary credit elsewhere either individually or jointly with the
applicant.
(c) Be a natural person (individual) who resides as a citizen in any
of the 50 States, the commonwealth of Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, the Commonwealth of the Northern
Marianas, or the Trust Territory of the Western Pacific Islands, or a
noncitizen who resides in one of the foregoing areas after being legally
admitted for permanent residence or on indefinite parole. Permanent
residents will verify their status by presentation of Form I-151 or Form
I-551, ''Alien Registration Receipt Card,'' or any later revision of the
form. Those on indefinite parole must present Form I-94,
''Arrival/Departure Card,'' or any later revision of the form. If the
authenticity of the information shown on the aliens's identification
document is questioned, the County Supervisor may request the
Immigration and Naturalization Service (INS) to verify the information
appearing on the alien's identification card by completing INS Form
G-641, ''Application for Verification of Information from Immigration
and Naturalization Records'' (obtainable from the nearest INS District.
See Exhibit B of this subpart), and mailing the form to INS. The
payment of a service fee by FmHA to INS is waived by inserting in the
upper right hand corner of INS Form G-641, the following: ''INTERAGENCY
LAW ENFORCEMENT REQUEST''.
(d) Possess legal capacity to incur the loan obligation, and have
reached the legal age of majority in the State, or have had the
disability of minority removed by court action.
(e) have the potential ability to personally occupy the home on a
permanent basis, if the loan is to provide housing for the applicant's
own use. To illustrate, because of the probability of their being
transferred or moving after graduation, military personnel on active
duty and full-time students will not be granted loans unless:
(1) The applicant, if military personnel, will be discharged at an
early date (usually within 1 year). The family must continue to occupy
the home in case the borrower is transferred to another duty station
before discharge, and
(2) The applicant intends to make the home a permanent residence and
there are reasonable prospects that employment will be available in the
area after graduation or discharge, and
(3) An adult member of the household will be available to make
inspections if the home is being constructed and to sign checks for work
performed.
(f) Have a credit history which indicates a demonstrated ability and
willingness to meet obligations as they become due.
(1) Any or all of the following are indicators of an unacceptable
credit history unless FmHA determines that the cause was beyond the
applicant's control, and satisfies the criteria in paragraph (f)(3) of
this section:
(i) Incidents of more than one secured or unsecured debt payment
being more than 30 days late if the incidents have occurred within the
last 12 months. This includes more than one late payment on a single
account.
(ii) Loss of security due to a foreclosure if the foreclosure has
been completed within the last 36 months.
(iii) Outstanding tax liens or delinquent Government debts with no
satisfactory arrangements for payments.
(iv) A court-created or affirmed obligation (judgment), caused by
nonpayment, that is currently outstanding or has been outstanding within
the last 12 months.
(v) Two or more rent payments paid 30 days or more past due, that
have occurred within the last three years.
(vi) Accounts which have been converted to collections within the
last 12 months (utility bills, hospital bills, etc.)
(vii) Collection accounts outstanding, or which have been outstanding
within the last 12 months, with no satisfactory arrangements for
payments, no matter what their age, as long as they are currently due
and payable.
(viii) Non-FmHA debts written off within the last 36 months.
(2) The following will not indicate an unacceptable credit history:
(i) ''No history'' of credit transactions by the applicant.
(ii) A bankruptcy in which the debtor was discharged more than 36
months before the date of application.
(iii) A satisfied judgment, or foreclosure with no loss of security,
which was completed more than 12 months before the date of application.
(3) When an applicant has an unacceptable credit history, an
exception may be considered by the loan approval official, when the
applicant provides documentation that:
(i) The circumstances were of a temporary nature, were beyond the
applicant's control, and have been removed. Examples: Loss of job;
delay or reduction in benefits, or other loss of income; increased
expenses due to illness, death, etc.
(ii) The adverse action or delinquency was the result of a refusal to
make full payment because of defective goods or services or as a result
of some other justifiable dispute relating to the goods or services
purchased or contracted for.
(4) It is the responsibility of the applicant to work directly with
the credit bureau to correct any erroneous credit bureau records. A
corrected report, showing that the error has been removed, must be
presented to FmHA before the application is determined eligible.
(48 FR 200, Jan. 4, 1983, as amended at 48 FR 54809, Dec. 7, 1983;
56 FR 30312, July 2, 1991)
07 CFR 1944.10 Rural area designation.
(a) For the purpose of this subpart, a rural area is:
(1) Open country which is not part of or associated with an urban
area.
(2) Any town, village, city or place, including the immediately
adjacent densely settled area, which is not part of or associated with
an urban area and which:
(i) Has a population not in excess of 10,000 if it is rural in
character, or
(ii) Has a population in excess of 10,000 but not in excess of
20,000, and
(A) Is not contained within an MSA, and
(B) Has a serious lack of mortgage credit for low- and
moderate-income households as determined by the Secretary of Agriculture
and the Secretary of Housing and Urban Development.
(3) An area classified as a rural area prior to October 1, 1990, with
a population exceeding 10,000, but not in excess of 25,000, which is
rural in character, and has a serious lack of mortgage credit for lower
and moderate-income families. This is effective through receipt of the
decennial census data in the year 2000.
(b) A determination that open country, or any town, village, city, or
place is not part of or associated with an urban area must include a
finding that any densely populated section of the area in question is
separated from the densely populated section of any adjacent urban area
by open spaces. Open spaces include undeveloped, agricultural, or
sparsely settled areas. Other spaces such as physical barriers (e.g.,
rivers, canals), public parks, commercial and industrial developments,
small areas reserved for recreational purposes, recognized open spaces
for which the existence of plans for development in the near future (3
to 5 years) is known, and similar nonresidential areas, are not
considered open spaces for the purpose of this program.
(c) Two or more towns, villages, cities, and places may have
contiguous boundaries, and each will be considered separately if they
are not otherwise associated with each other, and their densely
populated areas are not contiguous, as determined after consideration of
paragraphs (a) and (b) of this section.
(d) Population count in any area will be taken from the decennial
U.S. Census of Population, national population updates published by the
Bureau of the Census, any special population census conducted by the
Bureau of the Census, and the following:
(1) Significant new development on the periphery of ineligible areas
which require change in boundaries.
(2) Redesignation of corporate limits by local authorities which
affect the eligibility status of an area.
(e) In determining population count for area eligibility,
consideration must also be given to developed areas in counties or
states which are contiguous to and, therefore, a part of developed areas
in other counties or states. This determination must be made in
agreement between the State Directors concerned.
(f) In order to ensure that the rural housing program is limited to
eligible rural areas, the County Supervisor, in consultation with the
District Director, will conduct a review of all areas under his/her
jurisdiction every 5 years. The first 5-year revision must have been
completed by FY-86. More frequent reviews may be conducted as needed.
The following criteria will apply:
(1) The review will be based on the considerations set forth in
paragraphs (a) through (e) of this section and may be facilitated by the
use of recent maps and aerial photographs. A report on the review with
recommendations will be signed by the County Supervisor and the District
Director and submitted to the State Director on or before February 28 of
the review year.
(2) Based on the recommended changes provided by the County
Supervisor and the District Director, the State Director will:
(i) Make the public aware that a study will be conducted for those
areas that may change from rural to nonrural. The State Director
should, where the State Director determines it practicable, publish in
local newspapers, pre-notices of the review actions for the information
of interested parties, at least 180 days prior to final determination.
It can be anticipated that the study may take 6 months before a decision
will be made.
(ii) If the study shows that an area is not rural, limit the rural
housing program in that area after the date of the decision, to the loan
purposes prescribed in paragraph (i) of this section.
(iii) Request authorization from the National Office (Attention:
Chief Homeownership Branch, SFH/PD) for changes, if the study shows new
areas exceeding 10,000 but not exceeding 20,000 (as defined in paragraph
(a)(2)(ii) of this section) that will be identified as eligible rural
areas.
(iv) Upon completion of the study, and prior to September 30 of the
review year, update, establish, and issue by State Supplement, lists and
maps of all ineligible areas under his/her jurisdiction.
(g) In addition to the review of eligible areas prescribed by this
section, the State Director is responsible for the implementation of
changes in all areas under his/her jurisdiction resulting from the
decennial Census of Population (including biannual updates, if
available). The State Director will take immediate action on these
changes after receipt of the information from the Bureau of the Census
through FmHA. These changes and other immediate changes for cause
directed by the Administrator must be implemented without delay, since
advance notice to the public in such situations is impracticable.
(h) The State Office will provide current County maps to be displayed
in the County Supervisor's office and prepare and distribute to the
county offices an adequate number of copies of maps and lists of
ineligible areas, to be displayed in the County Office and to be used as
handouts, as requested, to inform the public of those areas not served
by the Agency. These may be sections of maps showing only the
ineligible area and the immediate eligible area surrounding the outside
of the ineligible area boundary. Maps for counties without ineligible
areas will be labeled ''NO INELIGIBLE AREAS'' at the bottom center of
the map.
(i) If an area designation is changed from rural to nonrural, loans
may be made only in the following instances:
(1) Applications received by FmHA prior to the change of designation
may be processed.
(2) New conditional commitments may be issued and existing
conditional commitments will be honored only in conjunction with the
approval of RH loan applications which were received prior to the date
the area was designated non-rural.
(3) Credit sales and transfers with assumptions may be processed in
such areas as authorized in 1955.103(q) of Subpart C of Part 1955 or
1965.126 of Subpart C of Part 1965 of this chapter, respectively.
(4) Subsequent loans may be made on property in an area where the
designation was changed from rural to nonrural after the initial loan
was made:
(i) To make necessary repairs.
(ii) To pay equity in connection with an assumption and transfer of
an RH loan.
(48 FR 200, Jan. 4, 1983, as amended at 50 FR 39639, Sept. 30, 1985;
51 FR 44898, Dec. 15, 1986; 56 FR 30494, July 3, 1991)
07 CFR 1944.11 Site requirements.
(a) The property on which the loan is made must be located on a farm,
or in a designated rural area as defined in 1944.10 of this subpart or
in an area the designation of which has been changed as provided in
1944.10(i) of this subpart and must also meet the requirements of
Subpart G of Part 1940 of this chapter. A nonfarm tract to be purchased
or improved with loan funds must not include or be closely associated
with farm service buildings.
(b) The property must be contiguous to and have direct access from a
street, road, or driveway that meets the applicable requirements of
1924.115 (New or less than partially completed subdivisions), 1924.116
(Existing subdivisions partially or more completed), and 1924.117
(Scattered Site) of Subpart C of Part 1924 of this chapter. For
properties having access from a driveway, the maintenance cost for the
driveway must be considered when determining the applicant's repayment
ability.
(c) A nonfarm tract on which a loan is to be made may not be larger
than a minimum adequate site, which is the smallest area sufficient for
the dwelling, an adequate water and/or waste disposal system, other
related facilities, and a yard. Minimum adequate sites are:
(1) Scattered sites of 1 acre of less.
(2) House sites of 1 acre or less within a subdivision environment
without central water and sewer facilities.
(3) House lots will not exceed one-fourth acre within a subdivision
environment having central water and sewer, except that some variation
in individual lot size may be permitted to accommodate cul-de-sacs,
cluster housing concepts, or other subdivision designs which maximize
good land usage.
(d) Sites which exceed the size limits set forth in paragraph (c) of
this section may be authorized by the District Director when:
(1) The County Supervisor determines that minimum adequate sites are
not available in the area, that the value of the total site is
comparable to the value of a minimum adequate site in the area, and that
the extra land does not qualify as a minimum adequate site.
(2) Zoning ordinances which require lots in excess of the limits set
forth in paragraph (c) of this section were established because the
additional land is needed to protect the water supply and/or provide an
adequate waste disposal system, or the zoning complies with either an
established State or National environmental plan or a State law, or
(3) The scattered site or subdivision was approved before the
effective date of this amendment.
(e) Loans made to buy, build, or repair dwellings located in an area
having special flood or mudslide hazards are subject to the requirements
of Subpart B of Part 1806 of this chapter (FmHA Instruction 426.2) and
Subpart G of Part 1940 of this chapter. The latter also contains
applicable requirements regarding (1) Locating non-farm single family
housing sites in or adjacent to established settlement patterns, (2)
Avoiding impacts to important land resources when practicable
alternatives exist, and (3) Completing environmental review documents
for actions taken under this subpart.
(48 FR 200, Jan. 4, 1983, as amended at 51 FR 44899, Dec. 15, 1986;
52 FR 11982, Apr. 14, 1987; 52 FR 19301, May 22, 1987; 53 FR 36267,
Sept. 19, 1988)
1944.12 -- 1944.14 (Reserved)
07 CFR 1944.15 Ownership requirements.
(a) After the loan is closed, the borrower must have an interest in
the property to be purchased, improved, or refinanced, which qualifies
as one of the following:
(1) Full marketable title.
(2) The purchaser's interest under a land purchase contract which
obligates payment of the purchase price, gives the rights of present
possession, control and beneficial use of the property, and entitles the
purchaser to a deed upon paying all or a specific part of the purchase
price.
(3) An undivided fee interest if the co-owners meet the security
requirements imposed by 1944.18(b)(8).
(4) A life estate interest with rights of present possession, control
and beneficial use of the property if the remaindermen meet the security
requirements imposed by 1944.18(b)(9).
(5) Leasehold interest if all of the following conditions are met:
(i) The applicant is unable to obtain fee title to the property and
the rent charged for the lease does not exceed the rate being paid for
similar leases.
(ii) The lessor owns the fee simple title.
(iii) Neither the leasehold nor the fee simple title is subject to a
prior lien, unless the County Supervisor submits complete information to
the State Director for review and authorization prior to approval of the
loan. The amount of the RH loan plus any prior liens may not exceed the
recommended market value of the leasehold.
(iv) The written lease contains the following provisions:
(A) The lessor's consent to the RH mortgage.
(B) Reasonable security of tenure. The borrower's interest must not
be subject to summary forfeiture or cancellation.
(C) The right of FmHA to foreclose the RH mortgage and sell without
restrictions that would adversely affect the market value of the
security.
(D) The right of FmHA to bid at foreclosure sale or to accept
voluntary conveyance of the security in lieu of foreclosure.
(E) The right of FmHA, after acquiring the leasehold through
foreclosure or voluntary conveyance in lieu of foreclosure, or in event
of abandonment by the borrower, to occupy the property or sublet it, and
to sell for cash or credit. In case of a credit sale, FmHA will take a
mortgage with rights similar to those under the original RH mortgage.
(F) The right of the borrower, in the event of default or inability
to continue with the lease and the RH loan, to transfer the leasehold,
subject to the RH mortgage, to an eligible transferee with assumption of
the RH debt.
(G) Advance notice of at least 90 days to FmHA of lessor's intention
to cancel or terminate the lease. Such advance notice will be long
enough to permit FmHA to ascertain the amount of delinquencies, the
total amount of the lessor's and any other prior interests, and the
market value of the leasehold interest and, if litigation is involved,
to refer the case with a report of the facts to the United States
Attorney for appropriate action.
(H) Express provisions covering the question of liability of FmHA for
unpaid rentals or other charges accrued at the time it acquires
possession of the property or title to the leasehold, and those which
become due during FmHA's possession or ownership, pending further
servicing or liquidation.
(I) Any necessary provisions to assure fair compensation to the
lessee for any part of the premises taken by condemnation.
(v) The lease has an unexpired term, from the date of loan approval,
of at least 50 years (a lease for 25 years with an option to the lessee
to renew for an additional 25 years would be considered a 50 year lease)
except where:
(A) A lease is granted for the purpose of permitting a person to
obtain an RH loan and the time required to process and approve the loan
results in the unexpired term of the lease being not less than 49 years,
or
(B) A lease is in existence at least 1 year prior to the date of the
loan approval, and the unexpired term of the lease is at least 50
percent longer than the repayment period of the loan. In no case may
the unexpired term of the lease be less than 15 years.
(6) Possessory rights on an Indian reservation or State-owned land if
the security requirements imposed by 1944.18(b)(2) are met.
(7) The interest of an Indian in land held in severalty under trust
patents or deeds containing restrictions against alienation if the
security requirements imposed by 1944.18(b)(3) are met.
(b) If an applicant's title to any part of the property does not
qualify as an ownership interest under paragraph (a) of this section and
is therefore defective, an RH loan may nevertheless be made if:
(1) The defect cannot be cured at a reasonable cost, and
(2) No improvements to be constructed or repaired with loan funds
will be located on the parcel to which title is defective, and
(3) No security value will be accorded to the parcel to which title
is defective.
07 CFR 1944.16 Dwelling requirements.
(a) Modest house. Applicants will be counseled that dwellings
financed must provide decent, safe and sanitary housing, be modest in
size, design, and cost, and not exceed the housing needs of the
applicant. Housing needs will be determined by the County Supervisor,
based on the number and composition of the household, along with
consideration of special needs, such as facilities for the elderly,
disabled, or handicapped.
(b) Characteristics of new dwellings. The construction or purchase
of a new house shall not exceed what is typical for the current needs of
low and moderate income persons in the area or the following, whichever
is smaller:
(c) Living area. Living area or gross floor area is the square
footage measured from the outside walls of the dwelling. Living area
will be determined as follows:
(1) Ranch on slab, crawl space, or basement. First floor excluding
garage carport, without deduction for any of the contained space.
(2) Split foyer, bi-level, raised ranch, etc. All space, without
deduction for any of the contained space within that area, except for a
basement garage and that portion of the lower level designed and used
for utility and storage. Split foyer, bi-level, or raised ranch designs
may be used only when:
(i) Site configuration lends itself to that design (sloped site),
(ii) The storage, utility, in the lower level will be below ground,
(iii) All rooms, including those in the lower level designed as
living area, will be needed by the applicant in accordance with
paragraph (b) of this section, and will be finished at the time of loan
closing.
(3) Cape Cod. All of the first floor, and all of the second floor
area measured to the outside of the stud knee wall, excluding
below-ground basements. All rooms designed for living will be needed by
the applicant in accordance with paragraph (b) of this section, and
finished at the time of loan closing.
(4) Two-story townhouses -- zero lot-line. The area, center to
center of party walls, and outside of all exterior walls of all floors,
excluding below ground basements.
(d) Dwelling designs and materials. FmHA officials shall not require
the use of any building designs and/or building materials which exceed
the applicable development standards for new houses or new construction,
or the fair quality for site-built and modular houses and average
quality for manufactured houses as described in Marshall and Swift
Residential Cost handbook, or other similar cost guide. However, such
designs and/or materials may be permitted when the costs are comparable
to or less than the cost of fair quality material.
(e) Prohibited features. The following design features will not be
permitted when financing construction of a dwelling or purchase of a new
dwelling:
(1) Garages or carports if not customary in the area;
(2) Garages or carports exceeding 320 square feet;
(3) Nonliving areas such as balconies, decks, and patios;
(4) Dwelling designs which are incompatible with existing site
conditions; i.e., raised ranch or split foyer on flat sites, or
basements in wet areas;
(5) Den/recreation room;
(6) Central air conditioning systems separate and apart from heat
pumps unless authorized by the State Director. Authorization must be
based on known operating costs which compare favorably to heat pumps;
(7) Fireplaces.
(f) Prohibited amenities. (1) Bay or bow windows;
(2) Components of the house, such as kitchen cabinets, bathroom
fixtures, light fixtures, etc., which exceed ''fair-quality'' as
described in Marshall and Swift Residential Cost Handbook or some other
similar cost guide, unless the cost of the selected component is
comparable to or less than one of ''fair quality'';
(3) Fences, except:
(i) When needed to provide protection from a potentially dangerous
situation; or
(ii) When customary in the area on zero lot lines, townhouse
properties, or on house lots of 6,000 sq. ft. or less, to afford
privacy;
(4) Decorative iron work which is not needed as a safety measure;
(5) Dishwashers, garbage disposers, or other luxury kitchen
appliances;
(6) Sliding glass or atrium doors unless:
(i) The State Director determines that these types of doors are
customary in other modest homes in the area;
(ii) They will not increase the cost of the house;
(7) Vaulted ceilings unless they will not increase the cost of the
house;
(8) Skylights and cathedral ceilings.
(g) Permitted features. (1) Special design features necessary to
accommodate the needs of elderly, disabled, or handicapped persons may
be included.
(2) Energy saving measures which exceed FmHA requirements and cost
more than 1 percent of the market value of the property, and cost
effective solar energy systems may be used only after approval by the
State Architect/Engineer and authorization by the State Director.
Complex systems, such as active solar space heating or cooling,
geothermal, hydropower, wind and photovoltaic, that could be considered
unconventional, must be submitted to the National Office for concurrence
prior to authorization by the State Director.
(3) Solid fuel burning devices may be authorized only if the loan
approval official determines and documents that a dependable and
economical fuel supply is available. All solid fuel burning devices
must comply with Exhibit D, paragraph IV D 2 of Part 1924, Subpart A.
To assure compliance and to remove uncertainties regarding safety and
efficiency, solid fuel burning devices are authorized only after
approval by a local fire official, State Architect/Engineer and
subsequent authorization by the State Director.
(4) A dwelling for extended families as defined in 1944.2(f) of this
subpart may include bedroom area with an exterior entrance and an
additional bathroom. This area should be designed in a manner that will
not adversely affect the home's potential for resale.
(h) Existing dwellings. Applicants should be counseled regarding the
type of housing necessary to meet their current needs. Consideration
should be given to the purchase of an existing adequate but modest
dwelling. In most cases, the cost of an existing dwelling, including
necessary repair and renovation, is less than the cost of new
construction; however, the cost advantage should not be offset by the
cost of utilities and maintenance. Loans will not be made on an
existing manufactured home unless it is already financed with a Section
502 rural housing loan, or is being sold from FmHA inventory. Existing
dwellings must:
(1) Be structurally sound, functionally adequate, be in good repair
or placed in good repair with loan funds, and meet the general
requirements in Guide 2, Subpart A, Part 1924 of this chapter.
(2) Be consistent with program objectives to provide only housing
that is modest in size, design, and cost.
(3) Meet the thermal standards required in Exhibit D, paragraph IV B,
Subpart A, Part 1924 of this chapter.
(4) Be inspected and certified for adequacy of electrical, plumbing,
heat, water, sewage disposal systems, and termite infestation. The
responsibility for these inspections and certifications will be
identified in the sales agreement, or in case of FmHA inventory, will be
provided by FmHA.
(5) Contain no more than 1,300 sq. ft. of living area for households
of 2 or more persons, measured in accordance with paragraph (c) of this
section, or not more than 1,008 sq. ft. of living area for 1 member
households, unless:
(i) A larger house is necessary to meet the needs of the family in
accordance with paragraph (b) of this section; or,
(ii) The house is being transferred by assumption of a 502 loan, or a
credit sale is being made, and the County Supervisor determines, in
either case, that the house is typical of modest homes in the area. In
all cases, every effort will be made to provide housing which does not
exceed the needs of the applicant/borrower; or
(iii) The District Director determines and documents in the case file
that the house is modest in size, design and cost for the area in which
it is located, and exempts it from the limitations established in this
paragraph on the square feet of living area.
(i) Design features/amenities in existing dwellings. Existing
dwellings with design features which add significantly to the value of
the dwelling (such as those listed in paragraph (e) of this section)
will not be financed unless the cost of the dwelling is no more than the
cost of a new dwelling, and the dwelling with such a feature is
determined by the County Supervisor to be modest. Amenities such as
those outlined in paragraph (f) of this section may be included in
existing dwellings unless the County Supervisor determines that a
combination of those amenities causes the dwelling to be above modest.
(j) Repairs. Any dwelling repaired with RH funds must be
structurally sound, functionally adequate, and be placed in good repair
with loan funds. If the loan is not more than $7,500 and is scheduled
for repayment in not more than 15 years from the date of the note, the
dwelling may lack some equipment or features such as a complete bath,
kitchen cabinets, closet, or completely finished interior in some rooms.
Such dwellings must meet the housing needs of the applicant and provide
decent, safe, and sanitary living conditions when the improvements
financed with the loan are completed. Manufactured homes will not be
repaired unless authorized in 1944.40 of Exhibit F, paragraph IV (d) of
this subpart.
(k) Improvements. Improvements financed with loan funds must be on
land, which after loan closing, is part of a tract owned by the borrower
in accordance with 1944.15(a) of this subpart, or on an easement
appurtenant to such a tract.
(l) Manufactured homes. Exhibit F of this subpart contains
supplemental information concerning building requirements for
manufactured homes.
(52 FR 11982, Apr. 14, 1987, as amended at 52 FR 45808, Dec. 2, 1987;
53 FR 13244, Apr. 22, 1988)
07 CFR 1944.17 Maximum loan amounts.
(a) An RH loan to buy or build a dwelling may be made up to the
market value of the security less the unpaid principal balance and
past-due interest of any other liens against the security property for:
(1) An existing dwelling which is more than a year old or previously
occupied as a residence, except as provided in Exhibit F of this
subpart.
(2) A new dwelling when any of the following conditions exist:
(i) A conditional commitment was issued in accordance with 1944.45.
(ii) The RH loan will be closed prior to the start of construction.
(iii) Construction is financed in accordance with 1944.46.
(iv) The required construction inspections were made by the Federal
Housing Administration (FHA) or Veterans Administration (VA). A
complete set of plans and specifications will be submitted together with
copies of inspection reports or certification by FHA or VA indicating
the dwelling was built in accordance with approved plans and
specifications. The builder will also furnish a certification of
compliance with FmHA thermal standards for new construction as required
by Exhibit D of Subpart A of Part 1924 of this Chapter.
(v) The dwelling is covered by an approved insured 10-year warranty
plan. The builder will provide complete plans and specifications
together with a certification that construction was completed in
compliance with the plans and specifications, MPS and FmHA thermal
standards for new construction. The cost of the insured warranty will
be included in the sale price of the dwelling, if it is to be charged to
the borrower. Prior to loan approval the builder must provide evidence
that he/she is an approved builder in good standing under a 10-year
insured warranty plan.
(vi) The manufactured home and site meet the requirements in Exhibit
F of this subpart and Exhibit J of Subpart A of Part 1924 of this
chapter.
(b) A loan will be limited to 90 percent of the market value of the
security for any dwelling that does not meet the requirements of
paragraph (a) of this section.
(c) A loan on a dwelling meeting the requirements of paragraph (a) of
this section which causes the total secured indebtedness to exceed the
appraised value of the property securing the loan may be made when the
amount exceeding the appraised value is all or part of a lien held by a
public body, hospital or welfare institution for advances made for
medical bills, welfare payments, or state motor vehicle judgments
provided:
(1) The borrower is unable to settle or compromise such lien
sufficiently to avoid exceeding the market value, and
(2) The lien securing the excess amount will at all times be inferior
to the FmHA mortgage securing the initial loan and any subsequent loan
or advances determined by the FmHA to be reasonably necessary to carry
out the purpose of the initial loan or to protect the Government's
financial interest, and
(3) The existence of the excess lien will not jeopardize the security
or servicing so as to preclude the making of a sound RH loan, and
(4) The borrower has the ability to meet any payments on the excess
debt as they become due or are likely to become due.
(d) When a subsequent loan for closing costs only is made
simultaneously with a credit sale (as provided in 1955.117(f) of
subpart C of part 1955 of this chapter) or a transfer, the total
indebtedness may exceed the sale price or market value of the security
property, whichever is less, by no more than one percent.
(e) When FmHA is refinancing the loan of an existing FmHA borrower in
accordance with 1951.315 of Subpart G of Part 1951 of this chapter, the
debt may exceed the market value of the security property to the extent
necessary to refinance the borrower's outstanding indebtedness plus
closing costs required in connection with the refinancing.
(f) When a subsequent loan is needed for repairs essential to protect
the Government's security interest, the total FmHA indebtedness may
exceed the market value of the security by no more than the amount of
the subsequent loan plus a reasonable amount for closing costs.
(48 FR 200, Jan. 4, 1983, as amended at 50 FR 23903, June 7, 1985;
51 FR 41607, Nov. 18, 1986; 52 FR 246, Jan. 5, 1987; 54 FR 20521, May
12, 1989; 55 FR 3942, Feb. 6, 1990)
07 CFR 1944.18 Security requirements.
(a) Adequate security. To protect the interests of FmHA all loans
must be adequately secured. Except as provided in paragraph (b) of this
section, a loan is adequately secured only when all of the following
requirements are met:
(1) FmHA obtains at closing a mortgage on all ownership interests in
the entire tract.
(2) No liens prior to the FmHA mortgage exist at the time of closing,
and no junior liens are likely to be taken immediately subsequent to or
at the time of closing.
(3) The provisions of subpart B of part 1927 of this chapter
regarding title clearance and the use of legal services are complied
with.
(b) Exceptions. Exceptions to the usual security requirements will
be made only as follows:
(1) Note only. A loan of $2,500 or less scheduled for repayment is
not more than 10 years from the date of the note, and that is not
subject to recapture of subsidy in accordance with Subpart I of Part
1951 of this Chapter, may be secured by the borrower's promissory note
alone when the County Supervisor determines that:
(i) The applicant has a credit history which indicates an ability and
willingness to pay debts when they are due;
(ii) The applicant will have sufficient income to readily meet all
obligations; and
(iii) The applicant's equity in the real estate as improved equals or
exceeds the amount of the proposed loan.
(2) Mortagage insurance. When the applicant is the holder of
possessory rights on an Indian reservation or State-owned land, adequate
security in the form of mortgage insurance guaranteeing payment from a
State agency or Indian tribe will be acceptable. Separate State
Supplements covering loan approval, title clearance, closing,
appropriate loan documents and a Memorandum of Understanding with the
State or Indian tribe insuring agency should be developed and used with
the approval of the State Director and the concurrence of the Office of
General Counsel (OGC). Approval of such supplements by the National
Office is required prior to participation in any such program.
(3) Indian land. Indian land in trust or restricted status acquired
with an RH loan will remain in trust or restricted status. In these
cases mortgages must be approved by the Secretary of the Interior. When
a lien is to be taken on trust or restricted property, the local Bureau
of Indian Affairs (BIA) representative will be requested to furnish
advice and information with respect to the property and each applicant.
The FmHA State Director should arrange with the BIA Area Director or
other appropriate local BIA official as to how the information will be
requested and furnished. A State Supplement will be issued to prescribe
the actions to be taken by FmHA personnel to implement the making of
loans under such conditions.
(4) Best mortgage obtainable. Loans of $7,500 or less scheduled for
repayment in not more than 15 years from the date of the note must be
secured by a mortgage, except as provided in paragraph (b)(1) of this
section, but title clearance and the use of legal services in accordance
with subpart B of part 1927 of this chapter are not required. The best
mortgage obtainable without use of these procedures will be sufficient
unless the loan approval official determines that the procedures in
subpart B of part 1927 of this chapter are necessary to assure repayment
or accomplish the objective of the loan. Evidence of ownership must
comply with 1944.24 (d)(2).
(5) Leasehold. When the applicant owns only a leasehold interest,
FmHA may not require a mortgage on the lessor's interest but will treat
the lessee's interest like any other type of ownership interest in
determing whether a mortgage on the leasehold is required. The lease
must meet the requirements of 1944.15(a)(5) (iv) and (v). In any State
in which applicants are likely to own a leasehold interest, the State
Director will issue a State Supplement outlining the technical
requirements for making such loans.
(6) Security by junior lien. FmHA may take a junior mortgage as
security for an RH loan if the tract which will secure the FmHA mortgage
provides adequate security for the entire prior lien debt and the RH
loan, and
(i) The prior mortgage does not contain provisions that may
jeopardize FmHA's security position or the borrower's ability to repay
the loan, such as provisions for future advances, forfeiture,
cancellation, foreclosure without adequate notice to junior lienholders,
the charge of a flat fee of more than 5 percent attorney's cost in case
of foreclosure; or
(ii) Such provisions are satisfactorily limited, modified, or waived.
(7) Liens junior to FmHA lien. Liens junior to the FmHA lien will be
allowed at closing or immediately subsequent to closing only when:
(i) The junior lien will not interfere with the purposes or repayment
of the RH loan, and
(ii) The total amount of the RH loan, the junior lien, and any prior
liens will not exceed the market value of the security except as
provided in 1944.17(c).
(8) Undivided interest. When the applicant owns an undivided
interest in the property, the co-owners' interests need not be included
in the mortgage in the following cases:
(i) When one or more of the co-owners are not legally competent, or
cannot be located, or the ownership rights are divided among such a
large number of co-owners that it is not practical for all their
interests to be mortgaged, the mortgaging of interests not exceeding 50
percent may be excluded from the security requirements upon prior
approval by the State Director. The State Director should review the
County Supervisor's recommendation accompanied by a full statement of
ownership and conditions which justify the exclusion. All legally
competent co-owners using or occupying the property will be required to
sign the mortgage. Co-owners will be required to sign the note when
necessary for a sound loan or to obtain the required security. The loan
may not exceed the percentage of the market value of the property
represented by the interests of the owners who sign the mortgage. In
determining such value, consideration will be given to any adverse
effect which might result from sale of the mortgaged interests
separately from the nonmortgaged interests.
(ii) When an applicant owns an undivided interest in part of a farm
and seeks a loan to build or improve facilities on another part in which
the applicant owns the entire interest, or the applicant owns only an
undivided interest in a building site which will be a part of the farm,
the interest of the applicant's co-owners may be excluded from the
security requirements upon approval by the State Director if:
(A) The loan will be adequately secured by the applicant's equity in
the wholly owned tract,
(B) The market value of the jointly owned tract is at least equal to
the debts against it, and
(C) The applicant's participation in the joint ownership of part of
the farm and its operations has been and is likely to continue to be
successful.
(9) Life estate. When the applicant owns a life estate interest in
the property, the remaindermen's interests need not be included in the
mortgage if one or more of the remaindermen are not legally competent or
cannot be located or if the remainder rights are divided among such a
large number of remaindermen that it is not practicable to obtain the
signatures of all the remaindermen. In that case, the mortgaging of
remainder interests, not exceeding 50 percent of the total remainder
interest may be excluded from the security requirements upon prior
approval by the State Director. The State Director should review the
County Supervisor's and District Director's recommendations accompanied
by a memorandum stating complete ownership information and circumstances
which justify the exclusion. In such cases, the loan may not exceed the
percentage of market value of the property represented by the interests
of those remaindermen who sign the mortgage, determined with due regard
to all adverse factors involved. Remaindermen will be required to sign
the note when necessary for a sound loan or to obtain the required
security.
(10) Farm dwelling. When the applicant is the owner of a farm, a
mortgage may be taken only on the dwelling and dwelling site provided
the following conditions can be met:
(i) The tract to be mortgaged must not include or be close to farm
service buildings, must be in a good residential location, be otherwise
suitable as a residential type of nonfarm tract, provide adequate
security for the loan, be contiguous to and have direct access to a
public road, or
(ii) The tract to be mortgaged must contain at least enough land to
clearly provide adequate security for the loan and to make the tract
readily saleable in the area.
(11) Land purchase contract. When the ownership interest is by
virtue of a land purchase contract, a prior lienholder's agreement must
be obtained as required by subpart B of part 1927 of this chapter.
(c) Additional security. When necessary to supplement the
applicant's equity in the farm or nonfarm tract on which the dwelling is
located, or to facilitate servicing the loan, FmHA may also take a
mortgage on other real estate owned by the applicant.
(d) Assignment of income from real estate to be mortgaged. Income to
be received by the borrower from royalties, leases, or other existing
agreements under which the value of the real estate security will be
depreciated will be assigned and disposed of in accordance with
applicable portions of Subpart C of Part 1965 of this chapter and the
provisions for written consent of any prior lienholder. In small
nonfarm tract cases, the State Director may authorize withholding
transmittal of assignments to lessees for execution until production
begins. The State Director may, in individual cases, waive the
requirement of taking an assignment if repayment of the loan is
reasonably assured from other sources.
(48 FR 200, Jan. 4, 1983, as amended at 50 FR 39639, Sept. 30, 1985;
56 FR 67481, Dec. 31, 1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1944.18 was
amended by revising paragraphs (a)(3), (b)(4), and (b)(11), effective
January 30, 1992. For the convenience of the user, the superseded text
follows:
1944.18 Security requirements.
(a) * * *
(3) The provisions of Part 1807 of this Chapter (FmHA Instruction
427.1) regarding title clearance and the use of legal services are
complied with.
(b) * * *
(4) Best mortgage obtainable. Loans of $7,500 or less scheduled for
repayment in not more than 15 years from the date of the note must be
secured by a mortgage, except as provided in paragraph (b)(1) of this
section, but title clearance and the use of legal services in accordance
with Part 1807 of this Chapter (FmHA Instruction 427.1) are not
required. The best mortgage obtainable without use of these procedures
will be sufficient unless the loan approval official determines that the
procedures in Part 1807 of this Chapter (FmHA Instruction 427.1) are
necessary to assure repayment or accomplish the objective of the loan.
Evidence of ownership must comply with 1944.24(d)(2).
(11) Land purchase contract. When the ownership interest is by
virtue of a land purchase contract a prior lienholder's agreement must
be obtained as required by Part 1807 of this Chapter (FMHA Instruction
427.1, paragraph II F 5.)
1944.19 -- 1944.21 (Reserved)
07 CFR 1944.22 Refinancing debts.
(a) Refinancing of FmHA debts, except as authorized under 1951.315
of Subpart G of Part 1951 of this chapter, or debts on a building site
without a dwelling or debts on a manufactured home is not authorized.
(b) Loan funds may be used for refinancing non-FmHA debts on a
dwelling only if the debt was incurred by the applicant prior to the
date the application was filed and the following conditions can be met:
(1) The debt was incurred for purposes for which a Section 502 RH
loan could be made or is a protective advance by the mortgagee for items
covered by the mortgage to be refinanced, such as accrued interest,
insurance premium or real estate tax advances or preliminary foreclosure
costs.
(2) The debt must be a lien against the property which will be
security for the RH loan. The promissory note and security instrument
for the debt must represent rates and terms that were typical and
customary for long-term residential financing in the area at the time
the debt was incurred.
(3) A loan to refinance a qualified secured debt may also include
short-term or unsecured debts, if necessary to establish a sound
repayment ability, if such short-term or unsecured debts were incurred
for authorized Section 502 loan purposes and are not a significant
portion of the loan.
(4) Payments on the debt are so seriously delinquent, for reasons
beyond the control of the applicant, that the applicant is likely to
lose the dwelling at an early date if the debt is not refinanced. Such
delinquency must be due to loss of employment or income, illness, or
such other similar events or unforeseen circumstances.
(5) A statement will be obtained for each debt to be refinanced
showing the purpose for which the debt was incurred, the date on which
it was incurred, the final due date, interest rate, amount and frequency
of installments, amount of delinquency, unpaid principal and accrued
interest.
(c) If a loan of $5,000 or more is necessary for repairs to correct
major deficiencies to make the dwelling decent, safe and sanitary, an
existing lien which meets the requirements of paragraphs (b) (1), (2)
and (3) of this section may be refinanced regardless of delinquency, if
necessary for the applicant to have repayment ability for the existing
loan and the requested loan for repairs.
(d) Debts or costs incurred after the date of application may be
refinanced if the costs were incurred for:
(1) Fees for legal, architectural and other technical services, or
(2) Materials, construction or site acquisition.
(e) The County Supervisor may authorize the use of RH funds to pay
costs provided for in paragraphs (d) (1) and (2) of this section only
when all of the following conditions exist and have been documented in
the borrower case file:
(1) The costs were incurred after the applicant filed a written
application for a loan but before the loan was closed. In the case of a
subsequent loan to complete improvements previously planned, the costs
must have been incurred after the initial loan was closed.
(2) The applicant is unable to pay such costs from personal resources
or to obtain credit from other sources and failure to authorize the use
of RH funds to pay such costs would jeopardize the applicant's
capability of repaying the loan.
(3) The construction or repair work conforms to that shown on the
building plans and specifications or Form FmHA 1924-1, ''Development
Plan,'' when applicable, and the costs were incurred for authorized
section 502 loan purposes.
(48 FR 200, Jan. 4, 1983, as amended at 52 FR 6132, Mar. 2, 1987; 52
FR 8035, Mar. 13, 1987)
07 CFR 1944.23 Loans to Farm Ownership (FO), Individual Soil and Water
(SW), and Recreation (RL) borrowers.
A Section 502 loan may be made to an FO, SW, or RL borrower or
simultaneously with an FO loan and a loan from another lender if all
conditions of this subpart are met. In these cases, the borrower's
current FO, SW, or RL loan may be reamortized in accordance with Subpart
S of Part 1951 of this chapter.
(53 FR 35716, Sept. 14, 1988)
07 CFR 1944.24 Technical services.
(a) Planning and performing construction work. Any construction work
will be planned and completed in accordance with Subpart A of Part 1924
of this chapter or a lesser standard as may be prescribed by FmHA for
demonstration type loans.
(b) Planning and performing site development work. Any site
development will be planned and completed in accordance with Subpart C
of Part 1924 of this chapter, except as provided for manufactured homes
in Exhibit J of Subpart A of Part 1924 of this chapter. Subdivisions
will be accepted by FmHA without further processing when the developer
provides written evidence of current subdivision acceptance by HUD or
VA. The developer must also provide proof of compliance with exception
conditions established by HUD or VA. Such evidence will be reviewed and
approved by the State Director.
(c) Appraisal. The value of property securing RH loans will be
determined as follows:
(1) When a mortgage will be taken on a nonfarm tract or small farm,
or on a leasehold interest in a nonfarm tract or small farm, to secure a
total indebtedness of more than $7,500, an appraisal of the security
property will be made in accordance with Subpart C of Part 1922 of this
chapter. A small farm for the purpose of this subpart is a farm as
defined in 1944.2(g) of this subpart which has value primarily as a
residence rather than for the production of agricultural commodities,
and repayment of the RH loan is not dependent on farm income.
(2) When a mortgage will be taken on a farm tract or leasehold
interest in a farm tract to secure a total indebtedness of more than
$7,500, an appraisal of the security property will be made in accordance
with Subpart A of Part 1809, of this chapter (FmHA Instruction 422.1).
(3) When the total indebtedness will be not more than $7,500, an
appraisal of the real estate or leasehold interest is not required,
unless the County Supervisor or loan approval official is uncertain as
to the adequacy of the security. When an appraisal is not completed the
County Supervisor will document in the case file the estimated market
value of the property.
(4) When a loan is being made to an FmHA real estate borrower and the
FmHA appraisal report in the borrower's case folder indicates the value
of the security property is adequate to secure the total real estate
indebtedness, including the planned loan, an appraisal is not required.
(5) Real estate mortgaged as additional security will be appraised
when it represents a substantial portion of the security for the loan or
when requested by the loan approving official.
(d) Title clearance and legal services. (1) When real estate will be
taken as security except on a best mortgage obtainable basis (including
a mortgage on a leasehold), title clearance and legal services for
making and closing the loan will be provided in accordance with subpart
B of part 1927 of this chapter. Title clearance and legal services will
not be requested until the loan is approved.
(2) When real estate will not be mortgaged or when the best real
estate mortgage obtainable is taken as security without title clearance
or use of legal services, each applicant will be required to submit
evidence of ownership of the farm or nonfarm tract. This may be the
original or a certified or photostatic copy of the deed, purchase
contract, or other instrument evidencing ownership. When the County
Supervisor is uncertain as to whether or not the applicant is a
qualified owner, such action will be taken as the County Supervisor
considers necessary, such as requiring the applicant to furnish
additional information or obtaining the advice of the OGC regarding the
evidence of ownership submitted and any further information or action
that may be needed. Proof of ownership need not be as much as that
required by subpart B of part 1927 of this chapter. For example, it may
include such evidence as the levy and payment, in the applicant's name,
of taxes on the real estate and affidavits by others in the community to
the effect that the applicant has occupied the property as the apparent
owner for a given length of time and is believed and generally reputed
to be the owner. No loan will be made if the County Supervisor has
actual knowledge that the applicant does not have a valid title to the
property.
(48 FR 200, Jan. 4, 1983, as amended at 48 FR 7159, Feb. 18, 1983;
50 FR 39964, Oct. 1, 1985; 51 FR 6393, Feb. 24, 1986; 51 FR 41607,
Nov. 18, 1986; 52 FR 19301, May 22, 1987; 56 FR 67481, Dec. 31, 1991)
Effective Date Note: At 56 FR 67481, Dec. 31, 1991, 1944.18 was
amended by revising the first sentence of paragraph (d)(1) and the
fourth sentence of paragraph (d)(2), effective January 30, 1992. For
the convenience of the user, the superseded text follows:
1944.24 Technical services.
(d)(1) When real estate will be taken as security except on a best
mortgage obtainable basis (including a mortgage on a leasehold), title
clearance and legal services for making and closing the loan will be
provided in accordance with Part 1807 of this chapter (FmHA Instruction
427.1). * * *
(2) * * * Proof of ownership need not be as much as that required by
Part 1807 of this chapter (FmHA Instruction 427.1). * * *
07 CFR 1944.25 Rates, terms, and source of funds.
(a) Source of funds. All loans financed under this program will be
funded from the Rural Housing Insurance Fund (RHIF).
(b) Interest rate. Upon request of the applicant, the interest rate
charged by FmHA will be the lower of the rates in effect at the time of
loan approval or loan closing. If the applicant does not indicate a
choice, the loan will be closed at the interest rate in effect at the
time of loan approval. Interest rates are specified in Exhibit B of
FmHA Instruction 440.1 (available in any FmHA office) for the type
assistance involved.
(c) Amortization. Loans will be scheduled for repayment over a
period that will not exceed the expected useful life of the property as
a dwelling to assure the loans are adequately secured. Only one of the
amortization periods listed in this paragraph may be used for a
borrower. Each loan will be scheduled for repayment from the date of
the promissory note, for a period not to exceed one of the following:
(1) 33 years for initial and subsequent loans, except as otherwise
indicated in this section.
(2) 38 years for initial loans (subsequent loans may be made for a
period not to exceed the remaining years of the initial loan) to
applicants whose adjusted annual incomes do not exceed 60 percent of the
median income for the area, if necessary to show repayment ability (as
reflected by comparing the annual installment for repayment at 1 percent
interest with the resulting repayment ability figure of a completed Form
FmHA 431-3, ''Household Financial Statement and Budget''). Adjusted
income limits for eligibility for the 38-year term appear in Exhibit C
of FmHA Instruction 1944-A (available in any FmHA office).
(3) 30 years for manufactured homes.
(4) 25 years for Repair and Rehabilitation loans as set forth in
1944.34(f)(6)(iii) of this subpart.
(5) 10 years for loans not exceeding $2,500 which are not secured by
a real estate mortgage.
(d) Interest credit. Borrowers may be eligible for an interest
credit subsidy which can reduce the borrower's effective interest rate
to as low as 1 percent. The policies and procedures for granting and
servicing interest credit on RH loans are set forth in 1944.34.
(48 FR 200, Jan. 4, 1983, as amended at 51 FR 6733, Feb. 26, 1986;
51 FR 44899, Dec. 15, 1986)
07 CFR 1944.26 Application processing.
(a) Application forms. (1) Applications for section 502 RH loans
will be made on Form FmHA 410-4, ''Application for Rural Housing
Assistance (Nonfarm Tract),'' or Form FmHA 410-1, ''Application for FmHA
Services,'' which are available at local County Offices, and processed
in accordance with Subpart A of Part 1910 of this chapter.
(2) Form FmHA 1944-3, ''Budget and/or Financial Statement,'' will be
completed prior to loan approved for each low- or very low-income
applicant for a Section 502 loan, transfer with assumption, or credit
sale. The form will be used to determine repayment ability. When
preparing Form FmHA 1944-3, the following will be considered.
(i) Non-cash items (e.g., food stamps, scholarships, free clothing,
or transportation which help reduce the applicant's budgeted expenses)
will be properly documented, and budgeted expenses will be reduced
accordingly.
(ii) Dependably available income from all sources not used to
determine adjusted annual income, such as earning from employment of
minors, foster care payments, and similar income items, will be
considered to the extent it is used to offset budgeted expenses even
though such income will not be included in ''annual income.''
(3) An applicant who completes Form FmHA 410-1 will also complete
Form FmHA 431-2 as prescribed in Subpart B of Part 1924 of this chapter.
In preparing Form 431-2, the provisions of paragraphs (a)(2) (i) and
(ii) of this section will apply to allow consideration of all income and
non-cash items. When a loan is to be made to a non-operator farmowner,
the columns in Table B and C pertaining to the operator's share will be
changed to the owner's share. If an application is being considered
early in the crop year for a borrower who has a current Form FmHA 431-2,
such form will be revised to show changes in the financial statement and
significant changes in the planned operation. However, if the crop year
is well advanced or completed, a farm and home plan will be developed
for the ensuing year. The applicant will also complete Form FmHA 431-1,
''Long-Time Farm and Home Plan,'' when needed.
(4) When available funds are not adequate to complete the processing
of all applications as they are received, a preliminary determination of
eligibility will be made based on information provided by the applicant.
To avoid duplication of work, a credit report or Verification of
Employment will not be ordered for those who appear eligible until it is
known that funds will be available for the processing of the loan and it
appears that such information will not have to be updated before loan
closing. Applicants who appear eligible at time of application will be
advised within 30 days of the filing of the application of the estimated
waiting period and that a final determination of eligibility will be
made when loan funds are available for the processing of their
applications. Applicants found not eligible will be advised of the
appeal procedure in accordance with Subpart B of Part 1900 of this
chapter. Applicants on the waiting list will be notified when funds are
available and will be advised of information necessary to determine
final eligibility for loan approval.
(5) Form 1910-5, ''Request for Verification of Employment,'' will be
used to verify employment or income of the loan applicant. The form
will be mailed or hand-carried to the employer only by the FmHA
authorized representative (e.g., FmHA employee, contractor for interest
credit renewals, or contractor for account servicing actions),
authorized packagers for rural housing applications, or in the case of
interest credit renewals, by the borrower. When FmHA mails the form
directly to the employer, the Agency will provide self-addressed
''Business Reply Mail'' envelope(s) for the employer to return the
completed form to FmHA. In all other cases, the sender will provide the
employer with stamped envelopes for returning the completed form. The
envelopes provided to the employer will be pre-addressed with the County
Office address except in the case of contractors for interest credit
renewals or contractors for other servicing actions where their return
addresses will be shown. Other income information that cannot be
obtained by the use of this form, may be obtained by mail from the other
sources of income.
(6) The County Supervisor must review with each loan applicant, and
the applicant must sign Form FmHA 1910-11, ''Applicant Certification,
Federal Collection Policies for Consumer or Commercial Debts''.
(b) Processing priorities. Applications for section 502 RH loans
will be processed in accordance with 1910.4(b) of Subpart A of Part
1910 of this chapter with the following exceptions:
(1) All applications, including those on hand prior to the revision
date of this paragraph, will be separated into two major groups: (i)
Low income, moderate income and other, and (ii) Very low income, based
on data contained in the application form. The county office will enter
the names of the applicants in date order of the receipt of the
applications, on two Forms FmHA 1905-4, ''Application and Processing
Card -- Individual,'' with the proper designation of ''Low and moderate
income and other'' or ''Very low income'' in the upper right hand
corners of the cards.
(2) Applications in the above income groups, including those
applications on hand prior to revision date of this paragraph, will be
assigned to an appropriate category (except as otherwise noted in this
subparagraph), and the category numeral entered on the left side of the
Forms FmHA 1905-4, to establish a processing priority system as follows:
(i) The State Director will maintain an adequate reserve to fund
applications for the following types of loans (applications for such
loans will not be categorized, will be processed as soon as they are
received in the county office and the approved loans submitted through
the State Office for funding):
(A) Credit sales of inventory property with or without subsequent
loans.
(B) Transfers by assumption with or without subsequent loans.
(C) Subsequent loans for essential improvements and repairs.
(ii) Category I. Applicants for refinancing of debts in accordance
with 1944.22(b) and applicant hardship cases as determined by the State
Director. These also will be processed as soon as the application is
received.
(iii) Category II. Applicants for mutual self-help housing loans in
FmHA approved self-help projects.
(iv) Category III. Applicants living in deficient housing for a
period of more than 6 months prior to the date of application. Base
this determination on information obtained from the applicant and
document it on the application. If the County Supervisor believes there
is reason to question the accuracy of the information provided, an
on-site inspection may be made. Deficient housing is defined as
follows:
(A) Lack of complete plumbing: no bathtub or shower, wash basin,
flush toilet or hot running water for the exclusive use of the occupant,
or
(B) The persons per room ratio is greater than one. The number of
rooms in a dwelling includes bedrooms, a living room, a dining room, a
kitchen, and other rooms designed as living area.
(v) Category IV. All other section 502 RH applications.
(c) Selection for processing. Quarterly, or as necessary, the County
Supervisor will select a sufficient number of applicants from categories
II, III, and IV, in that order, to assure an adequate number of loans
which can be processed and approved during the period. In selecting
applications for processing, the requirement of serving very low-income
families and persons in accordance with the Agency's funding directives
(available in any FmHA office) will be complied with. Processing will
be handled in accordance with the following:
(1) Selected applicants will be notified that they have not more than
30 days in which to submit the necessary material (including the amount
the applicant must pay to FmHA for each credit report needed to complete
the credit investigation) to continue the processing to the loan. It is
the policy not to order a credit report for RH loan applicants whose
requested loan will likely not exceed $7,500 , but if the County
Supervisor determines that a credit report is necessary, it will be
ordered at no cost to the loan applicant as provided for in 1910.53 (g)
of Subpart B of Part 1910 of this chapter. When credit reports will be
ordered, the notification must also indicate that the credit report fee
paid by the applicant is nonrefundable after credit reports have been
ordered. The amount charged the applicant for each credit report is as
prescribed in Exhibit A (available in any FmHA office) of Subpart B of
Part 1910 of this chapter.
(2) The County Supervisor will post and update after each selection
period on the county office bulletin board in a conspicuous place a list
of the names of those applicants who have been selected and notified of
the processing of their applications.
(3) After applicants are notified, the loans will be approved in the
order in which required material is submitted to the county office.
(4) Those applicants supplying all necessary items but for whom loans
cannot be funded in the current quarter will be held over for priority
funding from the subsequent quarter's funds, according to the date of
submission of complete material, prior to the selection of any other
applicants.
(5) Applicants who respond affirmatively to the notice of selection
for processing but fail to furnish within 30 days all material necessary
to approve a loan will be by-passed for the current quarter but will be
reselected for the ensuing quarter. If all required material for loan
approval is not received within 30 days after the second selection
notification, the applicants will be notified that after an additional
15 days their application will be withdrawn.
(d) Applicant interview. A personal interview will be conducted by
FmHA employees with all applicants before approval of the requested
loan. During the interview, the applicant will verify information,
including any submitted by a packager or others, concerning the
applicant's employment and income. The applicant will also verify
information concerning persons who will occupy the dwelling and on whose
income eligibility for the loan and any interest credit is based. The
County Supervisor will inform the applicant, and reach an understanding
with the applicant, as to the FmHA loan making and servicing
authorities, and the responsibilities of the applicant or borrower. The
discussion will include an explanation of all options of assistance
which may be available to the applicant or borrower. A documentation of
the items discussed will be placed in each applicant case file and will
be dated and signed by both the applicant and County Supervisor. A copy
will be provided to the applicant or borrower at the time of the
personal interview. Exhibit D of this Subpart sets forth items which
must be included and may be used as a guide in preparing the required
documentation for this purpose. No housing loan will be approved
without such evidence that a personal interview has been completed.
(e) Credit counseling. During the time of the applicant's initial
interview and application processing, consultation will be provided as
necessary to assist the applicant in preparing and understanding a
meaningful budget, Form FmHA 431-2, or Form FmHA 1944-3, which will
reasonably reflect the applicant's repayment ability. County
Supervisors will work closely with applicants to better understand all
sources of income and cash substitutes. Credit and financial counseling
will also be provided, as needed, to suggest financial management
methods by which the applicant's success as a homeowner may most likely
be achieved. When the County Supervisor determines that the applicant
does not have sufficient income to repay the requested loan, other
alternatives will be considered such as reducing amenities in the
dwelling, selecting a less expensive dwelling or site, obtaining a
cosigner, reduction of present debt load or, when appropriate, building
the dwelling by the self-help method.
(f) Determining eligibility. (1) The County Committee will determine
eligibility of RH applicants who are also applying for or are indebted
for a Farmer Program loan. The County Supervisor will determine
eligibility for all other RH applicants.
(2) Repayment ability as outlined in 1944.8(a)(2), will be evaluated
on the circumstances surrounding the individual case including possible
eligibility for interest credits as provided in 1944.34 of this
subpart. Form FmHA 1944-3 will be completed by the applicant and the
County Supervisor as set forth in paragraph (a)(2) of this section.
Under no condition(s) will arbitrary guidelines or ''rules of thumb'' be
used. If the applicant(s) can verify payment of a comparable or greater
amount for housing costs (rent, utilities, and insurance, etc., as
compared to real estate taxes, property insurance, utilities,
maintenance, and scheduled FmHA payments for the previous 12 months),
the applicant will be presumed to have repayment ability for the
requested loan unless:
(i) Current annual income is less than past income,
(ii) Planned expenses are proportionally greater than current
expenses, when compared to income, or
(iii) The applicant has increased debts, or failed to pay existing
debts in order to maintain the present standard of living.
(3) Credit history will be considered to the extent that it is used
in evaluating all applicants for similar types and amounts of credit in
accordance with the ECOA. For instance, credit requirements for a
female applicant will not differ from those of a male applicant.
(4) The age of the applicant will not be used as a consideration of
eligibility, except as provided in 1944.9(d).
(5) The County Supervisor must determine whether the applicant could
obtain housing credit elsewhere as follows:
(i) In any case in which a County Supervisor determines there is no
possibility of the applicant's obtaining adequate housing credit
elsewhere and, therefore, does not require the applicant to provide
evidence that an effort has been made to obtain such credit, the County
Supervisor will record that conclusion and the basis for it in the loan
docket.
(ii) In any case where there may be a possibility that credit could
be obtained from another source, the County Supervisor will require the
applicant to make a diligent effort to obtain other credit.
(A) Applicants will be expected to apply for credit from lenders
engaged in extending long-term housing credit in the area.
(B) Applicants should be advised to request lenders to indicate the
amount, interest rate, and terms of housing credit they would be willing
to extend to the applicant.
(C) When appropriate, the County Supervisor should verify evidence
presented by an applicant that adequate credit is not available
elsewhere.
(D) Letters from the lenders and any other evidence indicating that
the applicant is unable to obtain credit elsewhere will be included in
the loan docket.
(E) In no case will a loan be made to an applicant who is able to
obtain the credit needed from another source at terms that can
reasonably be expected to be within the applicant's repayment ability.
(g) Veterans preference. Veterans preference will apply when:
(1) There is a shortage of funds.
(2) Obligating forms are ready to be submitted to the Finance Office,
and
(3) There is more than one application in the same category having
the same date.
(h) Optioning of real estate. The County Supervisor should advise
the applicant about the size, design, quality, cost and location of the
dwellings and dwelling sites suitable for the RH program. If possible
this should be done before the applicant selects a property to be
purchased. Form FmHA 440-34, ''Option to Purchase Real Property,''
should be used; however, other option forms may be used if their
provisions are acceptable.
(i) Application assistance. Builders, brokers, contractors, and
others including organizations such as those providing self-help
assistance, who can provide complete information on the applicant and
the house that is to be purchased, may assist in the assembly and
processing of loan applications. Form FmHA 1944-12, ''Rural Housing
Loan Application Package,'' will be used for this purpose. Builders or
sellers who received conditional commitments may also assist applicants
in applying for an RH loan to buy a house for which a conditional
commitment was issued in accordance with 1944.45. The County Supervisor
will meet with such interested parties to explain:
(1) The eligibility requirements of RH loans,
(2) The size, design, cost and location of homes that can be
financed,
(3) The requirements of Subpart E of Part 1901 of this chapter.
(4) How applications will be handled, and
(5) The type of information that must be submitted. The information
to be submitted is listed in Exhibit A of this subpart which may be used
as a guide.
(j) Appeal. If the decision on the applicant's request for
assistance is unfavorable and was based on appealable determinations,
the applicant will be notified of appeal rights as required by
1910.6(b) of Subpart A of Part 1910 and Subpart B of Part 1900 of this
chapter.
(k) Accountability. Applicants should be made aware of the
accountability requirements of persons paid to influence the making of
an FmHA housing loan and/or grant as described in subpart S of part 1940
of this chapter.
(48 FR 200, Jan. 4, 1983, as amended at 49 FR 40793, Oct. 18, 1984;
50 FR 39964, Oct. 1, 1985; 51 FR 6393, Feb. 24, 1986; 51 FR 13453,
Apr. 21, 1986; 51 FR 27157, July 30, 1986; 52 FR 11984, Apr. 14,
1987; 53 FR 17688, May 18, 1988; 54 FR 29331, July 12, 1989; 55 FR
25077, June 20, 1990)
1944.27 -- 1944.29 (Reserved)
07 CFR 1944.30 Preparation of loan docket.
(a) Forms and documents will be fastened in the designated filing
positions of the case folder as prescribed in Exhibit A of FmHA
Instruction 2033-A (available in any FmHA office). Appropriate loan
docket forms will be prepared in accordance with the Forms Manual Insert
(FMI) for distribution as follows:
(b) All other documents necessary for approval of the particular loan
will be included in the loan docket. This will include the following or
others as appropriate:
(1) A copy of Exhibit D, ''Rural Housing Applicant Interview,'' or a
similar document executed by the applicant.
(2) Credit report(s) on the applicant(s).
(3) Evidence of ownership such as a certified copy of the applicant's
deed, lease, purchase contract, or other evidence specified in
1944.24(d), or a statement by the County Supervisor that such documents
have been reviewed.
(4) Estimates of the value of any security for which a formal
appraisal report is not required.
(5) Agreements from prior lienholders, if any, when necessary to
comply with 1944.18(b)(6) and subpart B of part 1927 of this chapter.
(6) When the loan is to be secured by a junior real estate mortgage,
the docket must include a copy of each prior mortgage and, if available,
a copy of each secured note or other obligation, furnished by the
applicant at the applicant's own expense. The docket must include a
current statement signed by the mortgagee showing the amount of unpaid
principal secured by the mortgage; the amount of any accrued interest;
the amount of any delinquency, with interest and principal shown
separately; and, if a copy of the note is not furnished, its maturity
date, payment schedule, interest rate, and a summary of any other
provisions of the note.
(7) When the applicant obtains a cosigner, the docket must include
that cosigner's current financial statement, income statement, and
employment or business history. This will be supplemented by a
statement from the County Supervisor as to the cosigner's financial
condition and reputation for paying debts, and any other information,
such as a credit report, that will be of assistance to the loan approval
official.
(8) When the loan is for a manufactured home, the supplemental
information needed is listed in Exhibit F, paragraph XVIII of this
subpart.
(48 FR 200, Jan. 4, 1983, as amended at 48 FR 52566, Nov. 21, 1983;
50 FR 16056, Apr. 24, 1985; 51 FR 41607, Nov. 18, 1986; 52 FR 8036,
Mar. 13, 1987; 53 FR 10241, Mar. 30, 1988; 53 FR 17688, May 18, 1988;
53 FR 36267, Sept. 19, 1988; 54 FR 8523, Mar. 1, 1989; 54 FR 29332,
July 12, 1989; 56 FR 67482, Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.30 was
amended by changing ''FmHA 427-8'' to read ''FmHA 1927-8'' in the column
titled ''Form No.'' in paragraph (a) and by revising the line beginning
with the words ''FmHA 427-9'' and paragraph (b)(5), effective January
30, 1992. For the convenience of the user, the superseded text follows:
1944.30 Preparation of loan docket.
(a) * * *
(b) * * *
(5) Agreements from prior lienholders, if any, when necessary to
comply with 1944.18(b)(6) and 1807.2(f) of this chapter (paragraph II
F of FmHA Instruction 427.1).
07 CFR 1944.31 Loan approval.
(a) The State Director, District and Assistant District Directors,
County and Assistant County Supervisors are authorized to approve or
disapprove loans in accordance with Subpart A of Part 1901 of this
chapter.
(b) The loan approval official is responsible for reviewing the
docket to determine that the proposed loan complies with established
policies and all pertinent regulations and that funds are available for
the loan.
(c) Prior to loan approval a new verification of employment will be
required if more than 90 days have elapsed since the date of the last
verification of employment, or if evidence is brought to the attention
of the loan approval official that indicates the applicant's financial
status has changed. Any applicable environmental review document
required by Subpart G of Part 1940 of this chapter will be completed.
If an environmental review is not required, for example, because the
proposed building site is within a subdivision for which FmHA has
previously completed an environmental assessment, a notation must be
made in the running record of the loan docket by the processing official
briefly stating the reason why no environmental review is required by
Subpart G of Part 1940.
(d) When a loan is approved, the loan approval official will:
(1) Indicate on all copies of Form FmHA 1940-1 any condition that
must be met before the loan is closed. Also, the loan approval official
will specify all security requirements that the applicant will need to
meet, such as a first real estate lien or a junior lien subject to
certain prior liens. If title evidence is required in accordance with
subpart B of part 1927 of this chapter or in accordance with any special
requirements for the loan but is not included in the docket, the loan
may be approved subject to the applicant's furnishing the required title
evidence. When the applicant furnishes required title evidence, the
County Supervisor will proceed with processing the loan. In those cases
in which the title evidence does not comply with the conditions
specified by the approval official, the docket will be reconsidered by
the loan approval official.
(2) Sign the approval certification on the original and one copy of
Form FmHA 1940-1 and insert title in the space provided. The remaining
copies will be conformed.
(3) If a loan is not approved after the docket has been developed,
the reason for such action with date and initial of the approval
official will be shown on the original Form FmHA 1940-1 and the County
Supervisor will notify the applicant in accordance with 1910.6(b) of
this chapter.
(48 FR 200, Jan. 4, 1983, as amended at 53 FR 10241, Mar. 30, 1988;
53 FR 36267, Sept. 19, 1988; 56 FR 67482, Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.31 was
amended by revising the phrase ''part 1807 of this chapter (FmHA
Instruction 427.1)'' to read ''subpart B of part 1927 of this chapter'',
effective January 30, 1992.
07 CFR 1944.32 Actions subsequent to loan approval.
(a) Requesting a loan check. (1) A loan check may be requested when
all approval conditions can be met and necessary curative actions have
been taken to provide a satisfactory title to real estate security. All
check requests will be requested through the field office terminal
system.
(2) A loan check may be requested at the time of loan approval by
entering the amount of the check requested on Form FmHA 1940-1 when one
of the following conditions exist:
(i) The loan will be secured by a promissory note only, or
(ii) Real estate security will be taken and the County Supervisor is
reasonably certain that satisfactory title evidence can be obtained and
the loan can be closed within 20 working days from the date of the
check.
(3) When not more than $4,000 of the loan funds will remain
unexpended for more than 15 days after loan closing, the total amount of
the loan will be requested in a single advance.
(4) If loan funds cannot be expended within 15 days, the County
Supervisor will enter in the appropriate ''block'' of Form FmHA 1940-1
the amount of loan funds to be disbursed at loan closing. Additional
loan funds will be requested when, and in amounts, needed by submitting
a completed copy of Form FmHA 440-57 to the Finance Office, or by
telephone request if the additional funds cannot be received by the date
needed using mail service. The County Supervisor should work with
borrowers, developers, and others to be sure that funds will be
available when needed and to reduce the multiple advances to a
reasonable number. Any loan funds not requested by the ''amortization
effective date'' for the loan, will be disbursed by the Finance Office
to the County Office by check dated on the amoritization effective date.
The check will be deposited in the borrower's supervised bank account
if it cannot be endorsed directly to a payee within 20 working days from
the date of the check.
(b) Handling loan checks. (1) When the loan check or borrower's
personal funds are to be deposited in the designated loan closing
agent's escrow account, this will be done no later than the date of loan
closing. If loan funds or borrower's personal funds are to be deposited
in a supervised bank account, this will be done in accordance with
1902.6 of this chapter no later than the first banking day following the
date of loan closing.
(2) If a loan check is received and the loan cannot be closed within
20 working days from the date of the check, the County Supervisor will
take appropriate action in accordance with FmHA Instruction 102.1
(available in any FmHA office).
(c) Cancellation of loan. Loans may be cancelled before loan closing
by the use of Form FmHA 1940-10, ''Cancellation of U.S. Treasury Check
and/or Obligation,'' prepared in accordance with the FMI for the form.
Checks received in the County Office will be returned as prescribed in
FmHA Instruction 102.1 (available in any FmHA office). Interested
parties will be notified of the cancellation as provided in subpart B of
part 1927 of this chapter. If the cancellation is not a voluntary
action by the applicant, the applicant will be notified in accordance
with 1910.6(b) of subpart A of part 1910 of this chapter.
(d) Increase or decrease in amount of loan. If it becomes necessary
that the amount of the loan be increased or decreased prior to loan
closing, the County Supervisor will request that all distributed docket
forms be returned to the County Office. The loan docket will be revised
and reprocessed in accordance with the FMI for Form FmHA 1940-1.
(e) Property insurance. Buildings on the property which is to be
taken as security for the loan will be insured in accordance with
Subparts A and B of Part 1806 of this chapter (FmHA Instructions 426.1
and 426.2) when appropriate.
(48 FR 200, Jan. 4, 1983, as amended at 53 FR 26590, July 14, 1988;
54 FR 39727, Sept. 28, 1989; 56 FR 67482, Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.31 was
amended by revising the phrase ''part 1807 of this chapter (FmHA
Instruction 427.1)'' to read ''subpart B of part 1927 of this chapter'',
effective January 30, 1992.
07 CFR 1944.33 Loan closing.
(a) Loans approved with interest credit. If the loan will be closed
and Form FmHA 1944-6 or 1944-A6, ''Interest Credit Agreement (Section
502 RH Loans,)'' will be executed more than 90 days after the last
''Verification of Employment,'' or if there is evidence to indicate the
applicant's financial status has changed significantly, a current
''Verification of Employment'' will be obtained and the amount of
interest credit will be determined on the basis of the applicant's new
circumstances. If the adjusted income exceeds the low-income limit set
forth in Exhibit C of this subpart (available in any FmHA office), the
loan will not be closed unless authorized by the State Director. Such
authorization may be granted if there is documented evidence to clearly
indicate other credit is not available. Interest credit will not be
granted in any case in which the adjusted income exceeds the
moderate-income limit set forth in Exhibit C.
(b) Loans approved without interest credit. Further review of the
applicant's financial status is not required at the time of closing
unless the loan is closed more than 90 days after the date of loan
approval, or there is evidence to indicate the financial status has
changed significantly. If the adjusted income exceeds the limit for
moderate income set forth in Exhibit C of this subpart (available in any
FmHA office), the case will be referred to the State Director. The
State Director may authorize closing of the loan if there is documented
evidence to clearly indicate other credit is not available.
(c) Promissory note. Form FmHA 440-16, ''Promissory Note,'' will be
prepared and signed in accordance with subpart B of part 1927 of this
chapter, and the FMI for the Form.
(1) The payment alternatives of the note will be completed in
accordance with the FMI for the form. Payments of principal and
interest will be deferred during the period the dwelling is not expected
to be suitable for occupancy as a residence because of construction or
repairs to be made. In such cases if the loan is closed before any
funds are advanced by the Finance Office or loan funds are distributed
by multiple advance, accrued interest is added to principal and repaid
in regular amortized installments (payment alternative I) after the
deferment period.
(2) The payment provision of the note will be completed in accordance
with the FMI for the form and the following:
(i) The monthly payment provision will be used for all borrowers who
regularly receive monthly income and who can repay the loan in 12 equal
monthly payments.
(ii) The annual payment provision will be used only for borrowers who
do not regularly receive monthly income throughout the year. If
installments are not to be deferred, the following provisions apply:
(A) The amount of the first installment will be determined by the
County Supervisor after considering the immediate debt paying ability of
the borrower. The amount of the first installment may be less, but not
more, than a regular annual installment.
(B) The amount of the first installment may not be less than the
amount equal to interest on the loan from the date of loan closing to
the next January 1.
(C) Form FmHA 440-9 should be used to supplement this payment
provision to facilitate servicing of loans for borrowers who pay more
than one time a year.
(d) Real estate mortgage. Form FmHA 1927-1, ''Real Estate Mortgage
for (state),'' will be used for loans to be secured by a real estate
mortgage. Any changes made in the text by deletion, substitution, or
addition (excluding filling in blanks) will be initialed in the margin
by all persons signing the mortgage. Additions will be made on the
mortgage in the following cases:
(1) For a loan secured by a mortgage on a leasehold, the following
language, or similar language which in the opinion of OGC is legally
adequate, will be inserted in the mortgage just before the legal
description of the real estate:
''All Borrower's right, title, and interest in and to the leasehold
estate for a term of ---- years beginning on ---- , 19 -- , created,
executed and established by certain Lease dated ---- , 19 -- , by
-------- as lessor(s), and recorded at Book ---- , Page -- of the ----
Records of said County and State, and any renewals and extensions
thereof, and all Borrower's right, title, and interest in and to said
Lease, covering the following real estate:''
(2) For a loan secured by a mortgage on a leasehold an additional
covenant will be inserted in the mortgage to read as follows:
''Borrower will pay when due all rents and any and all other charges
required by said Lease, will comply with all other requirements of said
Lease, and will not surrender or relinquish, without the Government's
written consent, any of Borrower's right, title or interest in or to
said leasehold estate or under said Lease while this instrument remains
in effect.''
(3) For all initial and subsequent Section 502 RH loans, until the
mortgage forms are revised, the following additional covenant will be
inserted above the signature line on the mortgage and be initialed at
loan closing by all parties signing the mortgage.
''This instrument also secures the recapture of any interest credit
or subsidy which may be granted to the borrower(s) by the Government
pursuant to 42 U.S.C. 1490a.''
(e) Collection of first installment. If the annual payment provision
of the note is used and payments are not deferred, the first installment
of a loan closed during December will be collected at the time of loan
closing.
(f) Direct payments. Direct payment coupons will be provided to all
new borrowers. The coupons will be delivered to the borrower and
payments made directly to the address shown on the payment coupon.
Direct payments with coupons received in the County Office will be
mailed directly to the address shown on the coupon. Payments with
coupons should be placed in the return envelope. The field office
should then place all return envelopes for a day's business in a larger
envelope and forward to the retail lockbox. Payments without coupons,
cash payments, refunds, and extra payments will be handled in accordance
with subparts B and G of part 1951 of this chapter.
(g) Owner's policy of title insurance. If an owner's policy of title
insurance is obtained, it will be delivered to the borrower as soon as
it is received from the title insurance company.
(h) Real estate mortgage after filing. When the real estate mortgage
is returned by the filing official or loan closing official, the
original will be filed in the borrower's case folder. If the original
is retained by the filing official in the official records, a copy
conformed to show the recording data including the date and place of
recording and the book and page number will be filed in the borrower's
case folder. A copy of the mortgage will be delivered to the borrower.
(i) Effective date of loan closing. A loan secured by a real estate
mortgage is closed when the mortgage is filed for record. In other
cases a loan is closed when the borrower executes the note and any other
required instruments.
(j) Water stock certificate or other such collateral. When water
stock certificates or other such collateral are part of the security,
they will be retained in the County Office. A notation will be made on
Form FmHA 1905-1, ''Management System Card-Individual,'' or Form FmHA
1905-5, ''Management System Card-Individual (RH Only),'' as appropriate,
showing that such security has been retained.
(k) Account record and case folder. The account record and case
folder will be established in accordance with FmHA Instructions 2033-A
and 1905-A (available at any FmHA office).
(48 FR 200, Jan. 4, 1983, as amended at 50 FR 39964, Oct. 1, 1985;
51 FR 6393, Feb. 24, 1986; 52 FR 29175, Aug. 6, 1987; 53 FR 26590,
July 14, 1988; 53 FR 44177, Nov. 2, 1988; 54 FR 39727, Sept. 28, 1989;
56 FR 6946, Feb. 21, 1991; 56 FR 67482, Dec.31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.33 was
amended by revising the introductory text of paragraph (c) and the first
sentence of paragraph (d), effective January 30, 1992. For the
convenience of the user, the superseded text follows:
1944.33 Loan closing.
(c) Promissory Note. Form FmHA 1940-16 ''Promissory Note,'' will be
prepared and signed in accordance with Part 1807 of this Chapter (FmHA
Instructions 427.1), and the FMI for the form.
(d) Real estate mortgage. Form FmHA 427-1, ''Real Estate Mortgage
for (State),'' will be used for loans to be secured by a real estate
mortgage. * * *
07 CFR 1944.34 Interest credit.
(a) General. It is the policy of FmHA to grant interest credit on
loans to low-income borrowers to assist them in obtaining and retaining
decent, safe, and sanitary dwellings and related facilities.
(b) Definitions -- (1) Annual payment borrowers. Borrowers who
signed promissory notes providing for annual payments, including
borrowers converted to monthly payments through the use of Form FmHA
1951-34, ''Direct Payment Plan Change.''
(2) Monthly payment borrowers. Borrowers who signed promissory notes
providing for monthly payments.
(3) Review period. The review period for an annual payment borrower
will be the months of October and November. The review period for a
monthly payment borrower will be the second and third months prior to
the anniversary date of the borrower's current Interest Credit
Agreement.
(4) Real estate taxes. Real estate taxes for interest credit
purposes means the amount of real estate taxes and assessments that will
actually be due and payable on the dwelling and the dwelling site during
the interest credit period, reduced by the amount of any tax exemption
available to the borrower, regardless of whether such exemption is
actually claimed. Tax exemptions may include such things as homestead
exemptions, special exemptions for low-income families, senior citizens,
veterans and others.
(c) Approval authority. Those FmHA officials who are authorized to
approve Section 502 loans are also authorized to approve the Interest
Credit Agreement.
(d) Amount of interest credit. (1) Loans other than FmHA loans
qualified to be considered in the interest credit calculation include
only those advanced for authorized Section 502 RH purposes and which are
a lien against the FmHA security by virtue of a prior mortgage. Except
as provided in paragraph (d)(2) of this section, the amount of interest
credit granted will be the lesser of:
(i) The difference between 20 percent of the borrower's adjusted
annual income and the sum of the annual installments due at the note
interest rate on qualified loans plus the cost of real estate taxes and
insurance, or
(ii) The difference between the annual installment due on the FmHA
promissory notes eligible for interest credit and the amount the
borrower would pay if the loan(s) were amortized at an interest rate of
1 percent.
(2) For repair and rehabilitation loans which meet the requirements
of paragraph (f)(6) of this section, interest credit will be granted in
an amount to achieve the following effective interest rates:
(i) For borrowers whose adjusted annual income is not more than
$5,000, interest credit will be calculated to reduce the effective
interest rate to 1 percent.
(ii) For borrowers whose adjusted annual income is more than $5,000,
but not more than $7,000, interest credit will be calculated to reduce
the effective interest rate to 2 percent.
(iii) For borrowers whose adjusted annual income is more than $7,000
but not more than $10,000, interest credit will be calculated to reduce
the effective interest rate to 3 percent.
(3) Borrowers qualifying for interest credit assistance under both
paragraphs (d) (1) and (2) of this section will be granted only the one
type of interest credit assistance that is most beneficial to them.
Interest credit on initial and subsequent loans will always be the same
type. There is no provision for switching from one type of interest
credit to the other.
(e) Recapture. At the applicant interview, the County Supervisor
will advise all Section 502 RH applicants that interest credit is
subject to recapture. Applicants who receive interest credit will be
required to sign a ''Subsidy Repayment Agreement'' (Subpart I of Part
1951 of this chapter, Exhibit A) at the time the initial interest credit
agreement is signed.
(f) Eligibility. To be eligible for interest credit, a borrower must
qualify for a section 502 loan, must personally occupy the dwelling, and
must meet the following additional requirements:
(1) Initial loans including credit sales. Interest credit my be
granted at loan closing if:
(i) The borrower's adjusted annual income at time of loan approval
did not exceed the applicable low-income limit in Exhibit C of this
subpart (available in any FmHA office).
(ii) The borrower's net family assets as defined in 1944.2(n) of
this subpart do not exceed $7,500 (maximum net family assets of $10,000
will be allowed for an elderly family as defined in 1944.2(d) of this
subpart) unless an exception is authorized. For the purpose of
determining whether an exception is justified, consideration will be
given to the nature of the assets, particularly whether they are assets
upon which a borrower is currently dependent for a livelihood or which
could be used to reduce or eliminate the need for interest credit. The
District Director may authorize exceptions of the net family assets
limitation up to $20,000. Cases recommended by the State Director for
which the net family assets exceed $20,000 will be submitted to the
National Office for authorization to grant interest credit.
(iii) The term of the loan is for 33 years (30 years for a
manufactured home loan), unless authorized otherwise by the State
Director based on complete documentation of the justifiable reasons on
an individual case basis. Interest credit will not be granted on loans
with a term of less than 25 years, except as provided in paragraphs (f)
(4) and (6) of this section.
(iv) The loan was approved on or after August 1, 1968.
(v) The amount of interest credit will be $5 or more per month or $60
or more annually.
(2) Subsequent loans. Interest credit may be granted on subsequent
loans which meet the requirements of paragraph (f)(1) of this section.
If interest credit is presently being granted on the initial loan and
the borrower's adjusted income does not exceed the moderate-income limit
set forth in Exhibit C of this subpart (available in any FmHA office),
it may also be granted on the subsequent loan if the term of the
subsequent loan is 25 years or more.
(3) Transfers. Interest credit may be granted to a borrower assuming
an RH loan provided the assuming party(ies) qualifies according to
paragraph (f)(1) of this section.
(4) Reamortization. Interest credit may be granted on loans made as
low- and moderate-income loans after reamortization under the following
conditions:
(i) If the loan was eligible for interest credit prior to
reamortization, interest credit may continue to be granted even though
the term of the reamortization period is less than 25 years; or
(ii) If the loan was not eligible for interest credit prior to
reamortization, the reamortized term of the loan must be 25 or more
years and all other conditions of paragraph (f)(1) of this section must
be met.
(5) Existing loans. Interest credit may be granted at any time after
loan closing if:
(i) The requirements of paragraphs (f)(1) (ii), (iii), (iv), and (v)
of this section are met.
(ii) The loan was approved as a ''low or moderate'' Section 502 loan
on or after August 1, 1968.
(iii) The borrower's adjusted annual income does not exceed the
low-income limit in Exhibit C of this subpart (available in any FmHA
office).
(iv) The borrower requests interest credit, or the County Supervisor
determines that interest credit is needed to enable the borrower to
repay the loan. In the case of married borrowers, when one spouse has
left the dwelling due to marital discord, interest credit based on the
remaining spouse's income may be extended to the remaining spouse if:
(A) The remaining spouse is occupying the dwelling, owns a legal
interest in the property, and is liable for the debt;
(B) The FmHA loan account is put in the remaining spouse's name;
(C) Legal papers have been filed with the appropriate court to
commence divorce or legal separation proceedings, or one spouse has not
been living in the dwelling for at least six months. Interest credit
will not be granted if separation is due only to work assignment or
military order; and
(D) The remaining spouse is informed and agrees that should the
spouse begin to live in the dwelling, that spouse's income will then be
counted toward annual income and interest credit may be reduced or
cancelled.
(6) Repair and rehabilitation loans. Interest credit may be granted
on section 502 RH loans made to repair or rehabilitate a dwelling
already owned by the applicant provided the following conditions are
met:
(i) The initial interest credit will be granted at the time of loan
closing and the loan will be secured by a real estate mortgage;
(ii) The dwelling is, or will be, occupied by an eligible borrower
after the loan is made;
(iii) The amount of the loan will not exceed $10,000, or be amortized
for not more than 25 years;
(iv) The applicant's adjusted annual income does not exceed $10,000;
(v) The repairs will be made to bring a substandard dwelling up to
the standards outlined in 1944.16 (c); and
(vi) The net worth requirements in paragraph (f)(1)(ii) of this
section are met.
(g) Processing interest credit. (1) General. The amount of interest
credit for which a borrower may be eligible will be determined by use of
Form FmHA 1944-6 or Form FmHA 1944-A6 as outlined in paragraph (d) of
this section.
(i) Determination of income. The County Supervisor is responsbile
for determining the borrower's annual and adjusted annual income as
defined in 1944.2, paragraphs (b) and (c) respectively, of this
subpart. A borrower interview will be conducted in all cases for
granting initial interest credit. Form FmHA 1910-5 will be used to
verify the earnings from employment of all persons whose income is
included in ''Annual Income.''
(ii) Effective period. Interest Credit Agreements on loans made to
monthly payment borrowers will be for a 12-month period with the
agreement extendable for an additional 12 months if the borrower's
circumstances do not change. For annual payment borrowers the agreement
will be in effect until the first December 31 after the effective date
with the agreement renewable until the second December 31 after the
effective date if the borrower's circumstances do not change. The
effective date will be as indicated on the FMI for Form FmHA 1944-6.
(iii) Partial year interest credit. For an annual payment borrower
with an initial installment less than a regular installment, and who
will receive less than a full year of interest credit assistance, the
interest credit granted will be a pro rata portion calculated on the
number of months left in the current calendar year, including the month
in which the loan is closed.
(iv) Advances from the RHIF. The repayment schedule for advances
made from the Rural Housing Insurance Fund will be computed at the
interest rate shown on the promissory note. However, interest will
accrue and payments will be applied on the amount advanced at the
reduced interest rate in effect at the time of payment.
(v) Preparation of the transaction record. For borrowers receiving
interest credit, the following changes will be shown on Form FmHA
451-26, ''Transaction Record,'' when prepared by the Finance Office:
(A) Interest rate field. The interest rate field of the form will
continue to show the interest rate on the note. The Finance Office will
compute the effective interest rate charged the borrower based on the
amount of interest credit granted. The computed rate, rounded to the
nearest 1/8 of a percent, will be shown as a footnote on the form as
''Interest Rate reduced to %.'' Subsequent transactions will be applied
to the loan by the Finance Office at the reduced interest rate until
such time as renewal, change, or cancellation occurs.
(B) Daily interest accrual field. The daily interest accrual will be
shown at the reduced interest rate and the interest will accrue at the
same interest rate until such time as the interest credit is renewed,
changed, or cancelled.
(C) Application of credit field. The initial transaction record form
will not have an entry in the ''Application of Credit'' field. The
Interest Credit Transaction Code for this method of processing interest
credit will be 4 Z.
(D) Payment status field. The payment status field will not reflect
the dollar amount of the interest credit granted. No entry will be made
for monthly payment borrowers.
(E) Minimum amount due be date shown field. For annual payment
borrowers, the amount of the installment, reduced by the amount of
interest credit granted, will be shown. For monthly payment borrowers
the word ''monthly'' will be entered in the space provided.
(2) Initial and subsequent loans. (i) County Office action. The
County Supervisor will:
(A) Determine the borrower's adjusted annual income and document the
calculations in the case file running record.
(B) Enter of Form FmHA 1940-1 the adjusted annual income, the
estimated real estate taxes that will become due and payable during the
first and second years of the agreement, and the amount of the annual
property insurance premium for the dwelling.
(C) For initial loans approved with interest credit and closed under
the multiple advance feature of the loan disbursement system outlined in
Subpart A of Part 1902 of this chapter, further review of the borrower's
financial status is not required unless the Interest Credit Agreement
will be approved more than 90 days after the last ''Verification of
Employment,'' or there is evidence which indicates the borrower's
financial status has changed significantly. If prior to approval of the
Interest Credit Agreement the County Supervisor finds that the adjusted
income has increased, interest credit will be granted on the basis of
the borrower's new circumstances.
(D) Complete and submit a corrected Interest Credit Agreement to the
Finance Office when the loan is closed, or at the amortization effective
date, if the borrower's circumstances have changed so that the amount of
interest credit would be increased or decreased by at least $5 monthly
or $60 annually.
(ii) Finance Office actions. The Finance Office will:
(A) Enter the information concerning adjusted annual income, the
estimated real estate taxes, and the insurance premium on Form FmHA
440-57.
(B) Calculate the amount of interest credit to be granted to the
borrower. The amount of interest credit will be determined from the
information initially shown on Form FmHA 1940-1.
(C) Prepare and mail Form FmHA 1944-A6 to the County Office when the
final loan check is issued. Upon receipt, the form will be competed and
a copy returned to the Finance Office only when indicated on the form.
(D) Prepare and issue payment cards to the County Office.
(3) Reamortization, credit sales and transfers. Interest credit to a
borrower whose loan is being reamortized, or a borrower who assumes an
RH loan or purchases property from inventory will be calculated by the
County Office on Form FmHA 1944-6. A copy of Form FmHA 1944-6 will be
forwarded to the Finance Office along with the copy of the
Reamortization Agreement, Advice of Mortgaged Real Estate Sold, or
Assumption Agreement. The Finance Office will issue payment cards to
the County Office.
(4) Existing loans. Interest credit granted in accordance with
paragraph (f)(5) of this section can be processed at any time in the
same manner as interest credit on initial loans, except that the County
Office will complete Form FmHA 1944-6 and calculate the amount of
interest credit assistance the borrower will receive. A copy of Form
FmHA 1944-6 will be used to send interest credit information to the
Finance Office. The daily interest accrual will be reduced as of the
effective date entered on the form or as of the date the last cash
credit was made to the account, whichever is later.
(h) Interest credit modification. (1) Before expiration. When
approving a change in interest credit assistance before the expiration
of a current Interest Credit Agreement in Accordance with paragraph
(i)(3) of this section, the County Supervisor will again interview the
borrower, determine the follower's adjusted annual income and document
the findings in the case file running record. A Form FmHA 1944-6 will
be completed in accordance with the FMI and a copy of the form will be
forwarded to the Finance Office. The Finance Office will adjust the
daily interest accrual as of the date entered on the form or as of the
date of the last cash credit made to the account, whichever is later.
(2) Correction of interest credit agreement. When an error by an
FmHA employee results in too little interest credit being granted, a
corrected agreement will be prepared effective the date of the error, if
the error results in the granting of $5 or more per month, or $60 or
more per year less interest credit than the borrower was eligible to
receive. In such cases, a Form FmHA 1944-6 showing the proper amount of
interest credit which the borrower is entitled to receive, together with
written authorization from the State Director to reapply any affected
payments, will be submitted to the Finance Office to replace the
incorrect agreement. The effective date of the corrected agreement will
be the same as the agreement in error. The notation ''Corrected in
accordance with 1944.34'' will be entered on the face of the form. The
Finance Office will cancel the incorrect Interest Credit Agreement as of
its effective date. Payments made under the previous agreement will be
reapplied at the adjusted interest rate of the new Interest Credit
Agreement.
(3) Interest credit renewal. Pursuant to delegations of procurement
authority included in FmHA Instruction 2024-A (available in any FmHA
Office), State Directors are authorized to enter into contracts for the
processing of interest credit renewals. Contractor will not be given
the authority to approve or disapprove Interest Credit Agreements.
(i) Initiation of renewal action. At the beginning of the annual
review period, the Finance Office will mail to the County Office a list
of borrowers whose Interest Credit Agreements are to be reviewed,
together with a package to be mailed by the County Supervisor to each
borrower or to be picked up at the County Office by the contractor for
interest credit renewals. The package will contain Form FmHA 1944-A6 (3
parts with carbon interleaved). If the renewal Form 1944-A6 is for the
first year review period following the effective date of the agreement,
it will contain the following legend:
''Subsidy for (ensuing year) of $XXXXXX. Is this correct? ( )''
The County Supervisor or the contractor will complete Form FmHA
1944-1, ''Interest Credit Agreement Renewal,'' according to the FMI for
the form and insert it in the package together with two Forms FmHA
1910-5. Two envelopes which have been preaddressed with the County
Office address or the address of the contractor, if applicable, will be
inserted in the package to be used by the employer(s) to mail the
Verification of Employment form(s) to the County Office or to the
contractor. Postage for these envelopes will be provided as set forth
in 1944.26 (a)(5) of this subpart.
(ii) Borrower responsibility. Upon receipt of the package, the
borrower will give one copy of the Verification of Employment form to
the employer or employers of each member of the household who has income
to be considered. A stamped envelope will be provided each employer to
facilitate the mailing of the Verification of Employment form directly
to the County Office or to the contractor, if applicable. The borrower
will also complete part II of the Interest Credit Agreement from
(leaving carbon intact), sign the original form and bring the original
and all copies to the County Office or to the office of the contractor.
(iii) County Office actions. The County Supervisor, or designee,
will:
(A) Maintain the list of borrowers as a record of Interest Credit
Agreements processed and sent to the Finance Office.
(B) Conduct an interview with the borrower to review the information
on Forms FmHA 1944-A6 and 1910-5 for completeness and accuracy. The
interview should, whenever possible, be a face-to-face contact.
(C) Determine the adjusted annual income and document the
calculations in the case file running record.
(D) For the first year review period following the effective date of
the agreement, place an ''X'' in the box of the Finance Office legend on
the renewal Form FmHA 1944-A6 if there is no change in the amount of
interest credit. This will extend the agreement for one year. If there
is a change, complete the Interest Credit Agreement and send a copy of
the agreement to the Finance Office. For the second review period
following the effective date of the agreement, an Interest Credit
Agreement will be completed and a copy of the agreement sent to the
Finance Office. If an annual note installment borrower is not eligible
for interest credit, enter ''O'' in the blocks which indicate the amount
of interest credit and send a copy of the agreement to the Finance
Office. For monthly note installment borrowers not eligible for
interest credit a copy of the agreement need not be sent to the Finance
Office.
(E) If the Form FmHA 1944-A6 is multilated or unusable, transfer all
information preprinted on the form to a new Form FmHA 1944-6 to be
signed by the borrower and submit the completed form to the Finance
Office.
(F) Retain the original of the Interest Credit Agreement and return
the other copy to the borrower.
(G) Notify by letter borrowers not eligible for continued interest
credit and those whose interest credit has been reduced of the amount of
their revised payments. The letter must notify the borrower of the
right to appeal as outlined in 1944.34(1). A new Form FmHA 440-9 will
be obtained when needed.
(iv) Finance Office actions. The Finance Office will:
(A) Upon receipt of Form FmHA 1944-A6 fron the County Office, send
the County Office a new set of payment cards.
(B) Before the end of the review period, send the County Office a
list of annual installment borrowers for whom a renewal Interest Credit
Agreement has not been received. The County Office staff will place a
chechmark in the appropriate column of the list to indicate those
borrowers who are no longer eligible for interest credit or whose
agreements will not be renewed. The original of the completed list will
be retained in the County Office and a copy returned to the Finance
Office.
(v) Processing interest credit renewals not received during the
review period. The County Supervisor may approve interest credit
renewals not completed during the review period. They will be handled
as follows:
(A) The amount of interest credit assistance granted will be based on
the borrower's current annual income. The effective date of the
Interest Credit Agreement will be as indicated on the FMI for Form FmHA
1944-6.
(B) Payments made by the borrower after the expiration date of the
previous Interest Credit Agreement will be applied at the note interest
rate until the Finance Office receives a new Form FmHA 1944-6.
(C) Upon receipt of Form FmHA 1944-6, the Finance Office will reduce
the daily interest accrual in accordance with the following conditions
and limitations:
(1) If failure to renew was due to error or oversight by FmHA, the
State Director will authorize the Finance Office to reduce the interest
accrual as of the effective date entered on the form and reverse and
reapply payments processed after the effective date. Such authorization
must be in writing.
(2) In all other cases the Finance Office will reduce the daily
interest accrual as of the effective date entered on the form or as of
the date of the last cash credit made to the account, whichever is
later.
(i) Eligibility review. The eligibility of those borrowers currently
receiving interest credit will be reviewed as follows:
(1) Annual review. The eligibility of borrowers will be reviewed
annually during the review period.
(i) If the borrower's net worth increases above the applicable
eligibility limit, interest credit may nevertheless be renewed unless
the increase is sufficient to enable the borrower to graduate to another
source of credit.
(ii) Interest credit will not be renewed if the amount of interest
credit for which the borrower qualifies is less than $5 monthly or $60
annually.
(A) The amount of interest credit for which the borrower qualifies is
less than $5 monthly or $60 annually, or
(B) The borrower's adjusted annual income exceeds the moderate-income
limit set forth in Exhibit C of this subpart (available in any FmHA
office).
(iii) Interest credit will not be renewed if the borrower has
enlarged or improved the dwelling or added related facilities so that
the housing exceeds modest standards for size, design, and cost for
previously occupied homes as compared to other housing in the locality
for low- and moderate-income families.
(2) Renewals not completed during the review period. When the
borrower's renewal Interest Credit Agreement is not completed during the
review period, it will be processed in accordance with
1944.34(h)(3)(v).
(3) Change in borrower's circumstances. The County Supervisor is not
responsible for monitoring whether a borrower's income, family size,
real estate taxes, or insurance costs have changed after an Interest
Credit Agreement is approved. If, however, it becomes known that the
borrower's circumstances have changed significantly, the County
Supervisor will take action in accordance with the following:
(i) Increased adjusted income. If the County Supervisor determines
that the borrower's adjusted income has increased to the level where the
interest credit is less than $5 monthly or $60 annually, the interest
credit will be canceled effective the date the County Supervisor becomes
aware of the situation. The borrower will be notified in accordance
with paragraph (l) of this section.
(ii) Decreased adjusted income. Changes in interest credit will not
be made unless the borrower's income is reduced by at least 30 percent.
The 30-percent reduction will be from the income on which the current
interest credit agreement is based. If the change is determined within
3 months prior to the anniversary date of the agreement currently in
effect, the change will be effective on the anniversary date.
(j) Unauthorized interest credit. When it is determined that a
borrower has received interest credit to which he/she was not entitled
(unauthorized interest credits), the case will be serviced according to
Subpart M of Part 1951 of this chapter.
(k) Cancellation of interest credit agreements. (1) Reasons for
cancellation. An existing Interest Credit Agreement will be cancelled
whenever:
(i) The borrower has never occupied the dwelling and FmHA will not
continue with the loan.
(ii) The borrower ceases to occupy the dwelling.
(iii) The borrower sells or conveys the title to the property.
(iv) The borrower has received improper interest credit as outlined
in 1944.34(j) and a corrected Interest Credit Agreement will not be
submitted.
(v) The borrower has an increase in income as outlined in
1944.34(i)(3)(i) and is no longer eligible for interest credit.
(vi) The borrower has enlarged or improved the dwelling or added
related facilities so that the housing exceeds modest standards for
size, design and cost for previously occupied homes compared to other
housing in the locality for low- and moderate-income families.
(vii) The security property is acquired by FmHA.
(2) Effective date of cancellation. The effective date of
cancellation for paragraph (k)(1)(i) of this section will be date of
loan closing. The effective date of cancellation for paragraphs (k)(1)
(ii), (iii) and (iv) of this section will be the date on which the
earliest action occurs which causes the cancellation. If the date
cannot be determined, the date on which the County Supervisor became
aware of the situation will be used. The effective date of cancellation
for paragraph (k)(1) (v) and (vi) of this section will be the date on
which the County Supervisor became aware of the situation. The
effective date of cancellation for paragraph (k)(1)(vii) of this section
will be the date the property is acquired by FmHA (the same date
reported on Form FmHA 465-6, ''Advice of Mortgaged Real Estate
Acquired.'') When an account has been accelerated and none of the
conditions outlined in paragraph (k)(1) of this section exist, the
Interest Credit Agreement will remain in effect until the final
foreclosure action is completed. However, if the existing agreement
expires before the foreclosure action is completed, an interest credit
renewal agreement will not be prepared. If foreclosure action is
dismissed, withdrawn or terminates without sale of the property or
payment of the loan in full, a renewal agreement will be prepared with
an effective date as of the expiration of the previous agreement. After
the determination of the effective date of cancellation, Form FmHA
1944-15, ''Interest Credit Agreement Cancellation,'' will be completed
in accordance with the FMI. The FmHA field office will process the
interest credit agreement cancellation via the FmHA field office
terminal system.
(l) Applicant or borrower notice of right to appeal. All applicants
or borrowers who request and are denied interest credit or whose
interest credits are reduced, cancelled, or not renewed, will be
notified of their appeal rights as required by 1900.56 of Subpart B of
Part 1900 of this chapter except when:
(1) Interest credit is denied because of confirmed income that is
above FmHA published limits, or
(2) Interest credit is reduced because of confirmed income increases.
(m) Submission to National Office. The State Director may submit to
the National Office for determination by the Administrator or a delegate
any proposed transaction in which the conditions prescribed in the
foregoing paragraphs of this section cannot be met, and it is determined
that interest credit is necessary to avoid extreme hardship to the
family or prevent foreclosure action. This paragraph is primarily
intended to be used for those cases in which the granting of interest
credit is necessary for the borrower to retain a dwelling for the
borrower's own use, and there are no other means to do so. The State
Director will submit to the National Office the County Office files
together with full facts, justification, and recommendation.
(48 FR 200, Jan. 4, 1983)
Editorial Note: For Federal Register citations affecting 1944.34,
see the List of CFR Sections Affected in the Finding Aids section of
this volume.
07 CFR 1944.35 Deferred mortgage payments.
(a) General. It is the policy of FmHA to defer up to 25 percent of
the payment, calculated at 1 percent interest rate, due on loans to
qualified borrowers, to assist them in obtaining decent, safe, and
sanitary dwellings and related facilities. Only principal and interest
can be deferred. When FmHA contracts out servicing, all actions
assigned to the County Supervisor may be performed by the contractor,
except approval or cancellation of deferrals.
(b) Approval authority. FmHA officials authorized to approve section
502 loans are also authorized to approve the deferral.
(c) Eligibility. In order to qualify for deferred mortgage payments
under this section, the following conditions must exist:
(1) The borrower's adjusted family income, at the time of initial
loan approval, does not exceed the applicable very low-income limits in
exhibit C of this subpart.
(2) The term of the loan is 38 years, or 30 years for manufactured
housing units,
(3) The borrower's payment at 1 percent interest, plus real estate
taxes and insurance, exceeds 20 percent of the adjusted family income by
more than $5 per month, and
(4) Deferral under this section is granted at the time of initial
loan closing, and for renewal
(5) Annually, the borrower received deferment assistance and it is
within 15 years of the effective date of the initial interest credit
agreement.
(d) Amount and terms of deferral. (1) No more than 25 percent of the
amount of the payment due at 1 percent interest shall be deferred.
(2) The deferral amount is determined as follows:
(i) The borrower will be granted the maximum interest credit
allowable under 1944.34 of this subpart.
(ii) That portion of the principal and interest payment, amortized at
1 percent, plus real estate taxes and homeowner's insurance premiums (or
escrow amounts for taxes and homeowner's insurance premiums due during
the current year, where applicable), in excess of 20 percent of the
borrower's adjusted family income may be deferred, up to 25 percent of
the monthly payment calculated at 1 percent interest rate.
(iii) Only regularly scheduled principal and interest payments, and
real estate taxes and insurance bills due for the current year will be
included when calculating the amount of payment to be deferred.
Protective advances, additional payment agreements, and other payment
agreements will not be considered.
(3) Deferrals will be effective for a 12 month period. The effective
date shall coincide with the anniversary date of an interest credit
agreement processed. Deferred payments may be continued for up to 15
years after the effective date of the initial interest credit agreement.
(4) Interest deferred will not accrue interest. Any principal
deferred will accrue interest at a 1 percent rate. Interest payments
deferred under this section cannot be converted to principal through
reamortization or other servicing action.
(e) Review process. The borrower's income will be reviewed annually
to determine if the borrower is eligible for continued payment deferral
and interest credit benefits. The review for both benefits shall be
performed at the same time. Deferrals will be effective for a 12 month
period.
(1) Annual review. The annual review will be scheduled to take place
during the interest credit review period as defined in 1944.34 of this
subpart.
(2) Reviews outside of the regular review period. It is not the
responsibility of the FmHA to monitor changes in the borrower's income.
If a borrower whose payments are being deferred experiences a change in
income that qualifies under 1944.34(i)(3) of this subpart for a change
in interest credit, the amount of deferral may also be changed.
(3) Responsibilities of the borrower. The borrower is responsible
for providing FmHA with the following before a deferral can be approved:
(i) Income verification, considered satisfactory by FmHA,
(ii) The information needed to complete the deferral section of Form
FmHA 1944-6 and signing the form, and
(iii) An interview to review the deferral information, either in
person or by telephone.
(4) Responsibilities of the FmHA. (i) The Finance Office will
indicate on the interest credit renewal report sent to the County
Office, which borrowers currently have payment deferrals which must be
reviewed and that have one year of eligibility remaining.
(ii) If a borrower fails to respond to the interest credit or
deferral renewal letter, a second notice will be sent by certified mail,
return receipt requested. The returned receipt will be kept in the
casefile.
(iii) An FmHA employee or contractor will determine the borrower's
payment and document the calculations on a form designated by FmHA.
(iv) Accept the borrower's reported real estate tax and property
insurance expenses, unless uncharacteristic for the area, or the payment
is being escrowed. Payment deferrals will not be delayed solely because
of the borrower's failure to provide paid receipts for these expenses.
(f) Cancellation of deferral. Deferrals may be canceled for any of
the conditions outlined in 1944.34(k) of this subpart. The same
effective dates of cancellations will be used and appeal rights will be
granted in accordance with paragraph (h) of this section. Deferred
payments may be continued for up to 15 years after the effective date of
the initial interest credit agreement. After this time period, the
borrower is no longer eligible for deferred payments.
(g) Notification of deferral requirements. (1) The applicant will be
notified, through the mortgage subsidy paragraph of Form FmHA 1944-6,
that the mortgage payment deferral is subject to repayment and/or
recapture.
(2) For all loans receiving payment deferral, until the mortgage
forms are revised, the following additional covenant will be inserted
above the signature line on the mortgage and be initialed at loan
closing by all parties signing the mortgage:
This instrument also secures the recapture of any deferred principal
and interest which may be granted to the borrower(s) pursuant to 502(g)
of the Housing Act of 1949, as amended.
(h) Appeal/review rights. Because the deferral regulations are based
on the objective application of formulas, deferral calculations are not
appealable, however, a review may be requested. Borrowers who request
and are denied mortgage payment deferral, or whose deferral amount has
been reduced, cancelled, or not renewed based on contested income
calculations, will be notified of their appeal rights as required by
Subpart B of Part 1900 of this chapter. If a decision is not
appealable, such as decisions based on verified income or clear and
objective statutory or regulatory requirements, the applicant or
borrower will receive review rights in accordance with subpart B of part
1900 of this chapter.
(56 FR 41765, Aug. 23, 1991)
1944.36 (Reserved)
07 CFR 1944.37 Subsequent Section 502 loans.
Subsequent Section 502 loans may be made to present borrowers for the
same purposes and under the same conditions and limitations as initial
loans, except as provided in this section.
(a) The subsequent loan will be processed in the same manner as
initial loans, except that a new appraisal report will be required in
accordance with 1944.24 only when real estate will be taken as security
and at least one of the following conditions exists:
(1) The property was not appraised in connection with the initial
loan.
(2) The latest appraisal report of the real estate is over two years
old.
(3) The physical characteristics of the property have changed
significantly.
(4) The County Supervisor or loan approval official is uncertain of
the adequacy of the security and requests a new appraisal report.
(5) The subsequent loan is in connection with a transfer of an
existing loan subject to subsidy recapture in accordance with Subpart I
of Part 1951 of this chapter.
(b) A subsequent RH loan may be made on a note-only basis, provided
the amount of the subsequent loan plus the unpaid principal balance of
any prior note-only RH loan or loans does not exceed $2,500. Applicants
for such loans must meet the requirements of 1944.18(b)(1).
(c) When a real estate mortgage is required in connection with a
subsequent RH loan, outstanding RH notes will not be described in the
mortgage unless required in accordance with subpart B of part 1927 of
this chapter.
(d) The subsequent loan will bear interest at a rate determined in
accordance with Exhibit B of FmHA Instruction 440.1 (available in any
FmHA office).
(e) When necessary to settle a divorce action, a subsequent loan may
be made to permit the remaining borrower, if eligible, to purchase the
equity of the departing spouse.
(f) When an area designation has been changed from rural to
non-rural, subsequent RH loans may be made only in accordance with the
provisions of 1944.10(g)(4).
(g) The loan approval official may authorize reamortization of a
prior RH loan at the time a subsequent loan is made in those cases in
which it is determined that the borrower cannot reasonably be expected
to meet installments due unless the account is reamortized. It will be
processed in accordance with 1951.314 of this chapter.
(48 FR 200, Jan. 4, 1983, as amended at 56 FR 67482, Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.37 was
amended by revising paragraph (c), effective January 30, 1992. For the
convenience of the user, the superseded text follows:
1944.37 Subsequent Section 502 loans.
(c) When a real estate mortgage is required in connection with a
subsequent RH loan, any outstanding RH notes will be described in the
mortgage unless an exception can be made in accordance with Exhibit A,
paragraph II F, of FmHA Instruction 427.1 (available in any FmHA
office).
07 CFR 1944.38 Mutual self-help housing loans.
Low income applicants may build their homes by participating in a
mutual self-help housing project. The County Supervisor will not
approve RH loans or proceed in the development of a self-help project
without prior authorization of the State Director. If an organization
applies for a Technical Assistance (TA) grant, the District Director
will submit Form SF 424.1, ''Application for Federal Assistance (For
Non-construction)'', and all related information concerning the
technical assistance grant to the State Director. If it is determined
that the technical assistance grant has been approved for funding, the
State Director may issue written authorization for the County Supervisor
to approve Mutual Self-Help Housing Loans. The county Supervisor, in
counseling with families participating in self-help housing projects,
will determine the anticipated time required for construction.
(48 FR 200, Jan. 4, 1983, as amended at 56 FR 67482, Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.38 was
amended by changing the reference in the third sentence from ''Form AD
625, 'Application for Federal Assistance (Short Form),''' to read ''Form
SF 424.1, 'Application for Federal Assistance (For Non-construction),'''
and by removing the fifth and sixth sentences, effective January 30,
1992. For the convenience of the user, the superseded text follows:
1944.38 Mutual self-help housing loans.
* * * Exhibit E, ''Mutual Self-Help Housing Guidelines,'' will be
used as a guide for developing self-help projects and counseling with
participating families. Exhibit E-1, ''Membership Agreement,'' and
Exhibit E-2, ''Promissory Note,'' will be used as explained in Exhibit
E. * * *
07 CFR 1944.39 RH loans to FmHA employees and loan closing officials.
FmHA employees, County Committee members, and loan-closing officials,
or their spouses may receive a Section 502 RH loan subject to the
provisions of this subpart and the following conditions:
(a) The application will be submitted to the County Office in the
usual manner. Written evidence indicating the applicant's inability to
obtain the needed credit will be included. The County Office will
obtain the verification of employment and credit report and submit the
application and related information to the District Director for review.
The District Director will forward the applicant's docket, along with
written recommendation concerning the applicant's eligibility, to the
State Director for eligibility determination.
(b) The State Director will determine the eligibility of the
applicant. If eligible, the applicant will be notified and the docket
will be returned to the District Director for processing. If the
applicant is determined ineligible, the State Director will notify the
applicant in writing and will provide the applicant all information
required by 1910.6(b) of Subpart A of Part 1910 of this chapter.
(c) The application will be retained in the County Office and will be
processed in the same order as other applications. The District
Director will be notified when the application is in order for
processing and will be responsible for the complete loan processing.
(d) If the loan applicant works outside the county in which the
application is filed, the District Director may permit authorized County
Office staff to perform the appraisal function. In all other cases the
District Director will appraise the property or have it appraised by a
qualified FmHA appraiser from outside the County Office area in which
the loan is to be made. The completed loan docket together with the
District Director's written recommendation will be submitted to the
State Director for consideration of approval.
(e) If the applicant is an employee in the District Office, the State
Director will designate another District Director to process the
application.
(f) The State Director must, before approving the loan, determine
that the applicant has not been and will not be given any advantage
because of the FmHA relationship and the making of a loan will not
result in a conflict of interest under FmHA Instruction 2045-BB
(available in any FmHA office). The dwelling may not exceed the needs
of the applicant or be excessive in size, design, or cost when compared
to other FmHA financed dwellings in the area.
(g) If the loan is approved, the borrower's case file will not be
maintained or serviced in the office where the borrower is or will be
employed. If the property is in the area serviced by the office of
employment the State Director will designate another District or County
Office to service the loan.
(h) If the loan involves any type of construction, the inspections
for FmHA will be made by the District Director or another member of the
District Director's staff as designated by the District Director. Under
no circumstances will the employee receiving the loan make the
inspections for FmHA.
(i) Loans, credit sales, or assumption agreements will not be
approved under this authority for any of the following purposes:
(1) Purchase of inventory property.
(2) Purchase of a dwelling from an RH borrower.
(3) Purchase of FmHA security property being sold at foreclosure
sale.
07 CFR 1944.40 Rural housing disaster (RHD) loans.
RHD loans may be made to repair (except no RHD loan may be made on a
manufactured home unless the unit is already financed with a section 502
rural housing loan) or replace dwellings which were damaged or destroyed
by a natural disaster such as earthquake, flood, forest fire, severe
windstorm or lightning.
(a) Eligibility requirements. (1) The applicant must meet the
requirements of 1944.8 and 1944.9.
(2) Nonfarm applicants must have occupied the dwelling as their
permanent residence.
(3) The loss by a nonfarm applicant was not the result of a major
disaster designated by the President as eligible for individual
assistance or a natural disaster designated by the Administrator of the
Small Business Administration.
(4) The loss by a farmer was not the result of a major disaster
designated by the President as eligible for individual assistance or a
natural disaster designated by the Secretary of Agriculture.
(5) The loan application must be filed within 12 months after the
date the loss occurred.
(6) The applicant must use available assets, including insurance loss
payments, and other assistance, to the extent available, to repair or
replace the damaged or destroyed buildings.
(b) Repair or replacement of buildings. Repair or replacement of any
damaged or destroyed building must be consistent with the basic Section
502 loan policies and Subpart G of Part 1940 of this chapter. Changes
may be made in the building, but in any case the repaired or replaced
building should not be significantly larger or more costly than the
original building except as necessary to provide which is adequate but
modest. Any new dwelling constructed must meet the limitations
established by 1944.16 of this subpart.
(c) Interest rate and source of funds. (1) RHD loans will be made at
an interest rate of 5 percent. Interest credit will not be granted for
RHD loans.
(2) Insured loan funds will be used for RHD loans.
(d) Approval authorization. The State Director, County and Assistant
County Supervisors are authorized to approve RHD loans in accordance
with Subpart A of Part 1901 of this chapter for Section 502 RH loans.
(e) Deferred payments. The initial payments of principal and
interest, or principal only, may be deferred so as not to become due
until as late as the third January 1 for annual payment notes, or the
third anniversary date of the note for monthly payment notes, subject to
all of the following conditions:
(1) The applicant, as a result of the loss suffered from the
disaster, has had a substantial loss of income; or debts, including the
proposed RHD loan, have increased substantially as a result of the
disaster.
(2) The income loss or increase in debts must be sufficiently great
so that the applicant will not likely be able to pay in full the
installments that ordinarily would be due during the proposed deferment
period and also meet other obligations.
(3) The applicant's other debts must be adjusted by reduction,
reamortization, extension, or other means to the extent possible by
negotiation with other creditors.
(4) The applicant's income will be sufficient after the deferment
period to enable the applicant to meet the payments on the RHD loan and
all other obligations.
(f) Form FmHA 1940-1. The appropriate assistance code number will be
entered in the space provided to indicate the nature of the loss.
(48 FR 200, Jan. 4, 1983, as amended at 51 FR 41607, Nov. 18, 1986;
53 FR 36267, Sept. 19, 1988)
1944.41 -- 1944.43 (Reserved)
07 CFR 1944.44 Borrower graduation.
County supervisors must stay currently informed about credit from
other sources including availability of funds, interest rates, terms and
debt/value ratios required. Borrowers will be asked to refinance RH
loans when FmHA determines that credit likely will be available at rates
and terms prevailing in the area and on terms which the borrower can
reasonably be expected to meet. Borrowers will be required to apply for
a refinancing loan from one or more locally active lenders when asked
and, if approved by a lender, accept such credit to pay the FmHA loan in
full. Graduation reviews will be conducted in accordance with Subpart F
of Part 1951 of this chapter.
(48 FR 200, Jan. 4, 1983, as amended at 48 FR 40203, Sept. 6, 1983)
07 CFR 1944.45 Conditional commitments.
(a) General. A conditional commitment is assurance from FmHA to a
qualified builder, dealer-contractor or seller that a dwelling to be
built, rehabilitated, or developed as a manufactured home package and
offered for sale will be acceptable for purchase by qualified RH loan
applicants if built in accordance with FmHA approved plans and
specifications and priced at not more than a specified maximum amount.
The conditional commitment does not reserve funds for a loan nor does it
assure that the area the dwelling is in will remain rural or that an
eligible loan applicant will be available to buy the dwelling.
(b) Eligibility. To be eligible for conditional commitments, the
builder, dealer-contractor, or seller must:
(1) Be the owner as defined in 1944.15, before construction is
started, of the site on which the dwelling is located or to be built,
except as indicated in Subpart G of Part 1822 of this chapter (paragraph
VII L of FmHA Instruction 444.8).
(2) Have the experience and ability to complete the type of proposed
work in a competent and workmanlike manner.
(3) Be financially responsible and have the ability to finance or
obtain financing for the proposed housing or rehabilitation.
(4) Comply with the requirements of Subpart E of Part 1901 of this
chapter and all applicable laws relating to equal opportunity.
(5) Plan to build or rehabilitate dwellings which will qualify for
purchase by RH applicants and which will be in compliance with all
applicable laws, ordinances, and codes.
(6) Have the legal capacity to enter into the required agreements and
the actual capacity to carry them out.
(c) Limitations. (1) Conditional commitments will be issued only in
cases where the commitment applicant's selling price does not exceed the
commitment price, which will never be more than the appraised value
minus customary closing costs.
(2) Conditional commitments will be issued by FmHA only for new homes
to be constructed, new manufactured homes, or existing homes (other than
manufactured) to be rehabilitated.
(3) Conditional commitments will not be issued after construction has
started.
(4) Number of conditional commitments.
(i) The total number of conditional commitments issued in any
locality will not exceed the number of homes for which there is an
immediate and ready market in that locality.
(ii) The number of houses on which conditional commitments will be
outstanding to a commitment applicant at any time will not exceed 15 in
any one county unless authorized by the State Director after the State
Director:
(A) Determines that a larger number of commitments must be made to
meet the immediate housing needs in the area;
(B) Determines that authorizing more than 15 commitments to one
commitment applicant will not reduce the participation of small volume
builders in the Rural Housing program; and
(C) Provides guidelines to the County Supervisor to assure that all
builders active in the area have equal opportunity to obtain more than
15 conditional commitments.
(iii) The total number of conditional commitments outstanding in the
area served by a County Office will not exceed the number on which the
County Supervisor can reasonably expect to be able to approve RH loans
within 3 months after the houses covered by the commitments are
completed, considering the availability of loan funds and the number of
applications in the County Office.
(5) The period of the conditional commitment will be for 12 months
from the date of issue. The commitment may be extended for an
additional 6 months if justified because of (1) unexpected delays in
construction caused by such factors as bad weather or materials
shortages, or (2) marketing difficulties.
(6) When five or more conditional commitments have been issued to one
recipient during a 12 month period, an affirmative marketing plan will
be required in accordance with 1901.203 (c) of Subpart E of Part 1901
of this chapter.
(d) Conditional commitments involving packaging of applications. A
conditional commitment may be made to a builder or dealer-contractor who
packages a Rural Housing application for an applicant to buy the
property. In cases when the dwelling is presold and is to be
constructed for sale only to a specific applicant and the information on
the house and the loan applicant is submitted at the same time, all of
the following conditions must be met to avoid misunderstanding of FmHA's
obligation to either the RH applicant or the conditional commitment
applicant:
(1) The conditional commitment will not be approved until the RH loan
has been approved.
(2) Construction will not begin until the County Office has received
notice from the Finance Office that funds are obligated for the RH loan.
(3) The RH loan will be closed only after the dwelling is constructed
or the rehabilitation completed and final inspection has been made.
(e) Fees. Each commitment applicant will pay an application fee at
the time an application is submitted for a conditional commitment. The
fee for each dwelling will be:
(1) For proposed construction of new dwellings -- $65.
(2) For existing dwellings to be rehabilitated -- $50.
(f) Processing applications. (1) Applications for conditional
commitments will be submitted on Form FmHA 1944-36, ''Application for
Conditional Commitment.'' Attachments as outlined on the form will be
included for each individual dwelling for which a conditional commitment
is requested.
(2) Transmittal of fees. The County Supervisor will transmit
application fees on Form FmHA 451-2, ''Schedule of Remittances.'' The
payment will be handled with all other payments for the day in
accordance with Subpart B of Part 1951 of this chapter and the FMI for
Form FmHA 451-2.
(3) Evaluation of applications. The County Supervisor will take the
following actions in the order specified:
(i) Determine whether the commitment applicant meets the requirements
of paragraphs (b) and (c) of this section.
(ii) Determine whether the dwelling and site meet the requirements of
this subpart and Subpart A of Part 1924 of this chapter and will comply
with all local codes and ordinances. The use of construction contracts
with conditional commitments is optional. The property must also meet
the requirements of Subpart C of Part 1924 of this chapter and Subpart G
of Part 1940 of this chapter.
(iii) If the commitment applicant and the dwelling and site have
qualified, an appraisal will be made in accordance with Subpart C of
Part 1922 of this chapter.
(4) Failure of applicant or dwelling to qualify. In case any
commitment applicant or dwelling does not qualify for a conditional
commitment, the documents attached to the application will be returned
to the commitment applicant with a letter explaining why the application
was not approved. If the application is denied for failure to meet the
requirements of paragraph (b) (2) or (3) of this section, notice of
appeal rights will be given as required by 1900.56 of Subpart B of Part
1900 of this chapter.
(i) The application fee will be refunded if for any reason
preliminary inspection of the property or investigation of the
commitment applicant indicates that a conditional commitment cannot be
issued. For example, the property might be located in a nonrural area
or the dwellings may not be of a type that the FmHA can appropriately
finance. If a refund is required, a memorandum should be sent to the
Finance Office indicating the commitment applicant's name together with
the date and amount of fees paid. The memorandum should also indicate
the number of commitments being denied and amount of fees to be
refunded.
(ii) Application fees will not be refunded for any property on which
the appraisal has been made.
(5) Conditional commitment approval. The State Director, District
Director, County and Assistant County Supervisors are authorized to
approve conditional commitments provided the commitment price does not
exceed the loan approval authority for section 502 RH loans as outlined
in Subpart A of Part 1901 of this chapter. If the conditional
commitment is granted, the loan approval official will complete and sign
Form FmHA 1944-11, ''Conditional Commitment.'' When a qualified
applicant applies for a loan to buy a dwelling on which a conditional
commitment has been issued, the application file will be transferred to
the conditional commitment folder.
(g) Inspections. Inspections of work to be done will be performed in
accordance with Subpart A of Part 1924 of this chapter. Failure to
correct any deficiencies or to complete the work in accordance with
plans and specifications approved by FmHA will be a basis for cancelling
the conditional commitment.
(h) Changes in plans, specifications, and/or commitment price. The
County Supervisor is authorized to approve changes in plans and
specifications that are consistent with the applicable development
standards and Exhibits D and J (for manufactured homes) of Subpart A of
Part 1924 of this chapter. If the changes are requested after an option
has been executed by a rural housing applicant, the change will be
approved only after the applicant and the commitment holder submit a
written request for approval. If a change will reduce or increase the
appraised value of the property, the County Supervisor will revise the
commitment price and inform the commitment holder. Also, in cases when
the holder of a commitment reports to the County Supervisor that costs
associated with the construction or repair of a dwelling have increased,
the approval official may increase the commitment price provided the
property has not been optioned by an RH applicant, and the County
Supervisor determines that the increase is clearly justified, the
circumstances causing the price increase were beyond the commitment
holder's control, and the value of the property is adequate to permit
the increased commitment price. A revised appraisal report will be
prepared. The conditional commitment will be revised, initialed, and
dated by the person authorizing the change.
(i) Cancellation of outstanding conditional commitments. (1)
Conditional commitments may be cancelled when construction of the
dwelling is not begun within 60 days after the commitment is issued.
(2) Conditional commitments will be cancelled when construction is
not in accordance with all FmHA requirements, approved plans,
specifications, or the applicable development standards, and the builder
refuses to make corrections necessary for compliance.
(j) Folder maintenance. Documents prescribed in this subpart will be
filed in accordance with FmHA Instruction 2033-A (available in any FmHA
office).
(k) Builder's warranty. The builder, dealer-contractor or seller, as
appropriate, will execute Form FmHA 1924-19, ''Builder's Warranty,''
(manufactured home warranty will be in accordance with Exhibit F,
paragraph XIII of this subpart) or provide a 10-year isured warranty
when construction is completed or the loan to buy the dwelling is
closed.
(48 FR 200, Jan. 4, 1983, as amended at 48 FR 7159, Feb. 18, 1983;
51 FR 41607, 41608, Nov. 18, 1986; 51 FR 44899, Dec. 15, 1986; 52 FR
8036, Mar. 13, 1987; 52 FR 19301, May 22, 1987; 53 FR 36267, Sept. 19,
1988)
07 CFR 1944.46 Construction financing for builders by private credit
sources.
(a) The purpose of this section is to provde a method by which a
builder may be able to obtain construction credit from commercial
sources of credit. It may eliminate the need to use a supervised bank
account and also eliminate the need for the borrower to make payments on
the loan during construction.
(b) This method may be used under the following conditions:
(1) A conditional commitment has been or will be issued, an RH loan
approved, and funds obligated for the applicant in accordance with
1944.45, or
(2) The applicant owns a building site and will contract the
construction or improvement of the building or buildings. In such a
case:
(i) The applicant will retain ownership of the site and not convey
title to the builder, and
(ii) The lender providing the construction financing will not take a
mortgage on the site owned by the applicant or otherwise require the
applicant to secure the construction loan.
(c) This method may not be used if the RH loan is made in
participation with an FO or an individual SW loan.
(d) Loan docket forms will be prepared in accordance with 1944.30 of
this subpart. Applicants who own the building site will be required to
obtain and submit to the County Supervisor preliminary title evidence in
accordance with subpart B of part 1927 of this chapter. Satisfactory
title or leasehold interest in the property must be confirmed before
execution of Form FmHA 1924-6, ''Construction Contract,'' and Form FmHA
444-16, ''Notice of Loan Approval.''
(e) When Form FmHA 440-57 is received from the Finance Office, the
County Supervisor will complete and sign an original and one copy of
Form FmHA 444-16. The original of Form FmHA 444-16 will be given to the
builder and a copy will be retained in the loan docket.
(f) The builder may present Form FmHA 444-16, Form FmHA 1944-11,
''Conditional Commitment,'' Form FmHA 440-34, or Form FmHA 1924-6, as
appropriate, to a commercial lender to obtain construction financing.
The County Supervisor will make no commitments to the lender except as
indicated on the above forms.
(g) The required inspections will be made by FmHA or a firm or
company that will provide a 10-year insured warranty. In all cases the
final inspection will be made by FmHA. Copies of Form FmHA 1924-12,
''Inspection Report,'' will be provided to the builder and, if
requested, to the commercial lender.
(h) The lender is responsible for determining the amount that will be
advanced to the builder under the construction financing arrangement,
and for determining any measures necessary to protect its interest.
(i) When construction is completed, the loan will be closed in
accordance with subpart B of part 1927 of this chapter, usually within
10 days after satisfactory completion of construction.
(48 FR 200, Jan. 4, 1983, as amended at 52 FR 8036, Mar. 13, 1987;
56 FR 67482, Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.46 was
amended by revising the second sentence of paragraph (d) and paragraph
(i), effective January 30, 1992. For the convenience of the user, the
superseded text follows:
1944.46 Construction financing for builders by private credit
sources.
(d) * * *Applicants who own the building site will be required to
obtain and submit to the County Supervisor preliminary title evidence in
accordance with Part 1807 of this chapter (FmHA Instruction 427.1). * *
*
(i) When construction is completed, the loan will be closed in
accordance with Subpart A of Part 1807 of this chapter (FmHA Instruction
427.1), usually within 10 days after satisfactory completion of
construction.
07 CFR 1944.47 Exception authority.
The Administrator may, in individual cases, make an exception to any
requirement or provision of this subpart which is not inconsistent with
the authorizing statute or other applicable law if the Administrator
determines that the Government's interest would be adversely affected or
the immediate health and/or safety of applicants/borrowers or the
community are endangered if there is no adverse effect on the
Government's interest. The Administrator will exercise this authority
only at the request of the State Director and recommendation of the
Assistant Administrator, Housing. Requests for exceptions must be in
writing by the State Director and supported with documentation to
explain the adverse effect on the Government's interest, and/or impact
on the applicant, borrower, or community, proposed alternative courses
of action, and show how the adverse effect will be eliminated or
minimized if the exception is granted.
(51 FR 11299, Apr. 2, 1986, and 52 FR 9649, Mar. 26, 1987)
1944.48 -- 1944.50 (Reserved)
07 CFR 1944.47 Pt. 1944, Subpt. A, Exh. A
07 CFR 1944.47 Exhibits to Subpart A
07 CFR 1944.47 Exhibit A -- Information Required To Package
Applications for Section 502 Rural Housing Loans
I General Information: Persons or organizations that want to assist
applicants in submitting applications to the Farmers Home Administration
FmHA) should first meet with the County Supervisor. If these discussions
indicate that the person or organization is capable of satisfactorily
delivering complete information about applicants and houses that are
likely to qualify for Rural Housing (RH) loans, the County Supervisor
will review in detail the information that is needed and the processing
steps required in completing an RH loan. The County Supervisor will
provide assistance and guidance to all packagers in obtaining the
required information. The following FmHA forms and this exhibit may be
provided to prospective packagers as needed:
A Form FmHA 1944-12, ''Rural Housing Loan Application Package.''
B Form FmHA 410-4, ''Application for Rural Housing Assistance (Non
Farm Tract).''
C Form FmHA 410-1, ''Application for FmHA Services.''
D Form FmHA 1910-5, ''Request for Verification of Employment.''
E Form FmHA 1924-2, ''Description of Materials.''
F Form FmHA 440-34, ''Option to Purchase Real Property.''
II Information Packager or Applicant Must Provide. -- A Information
to be submitted for all applicants.
1 The applicant should complete the appropriate application form
(Form FmHA 410-1 or 410-4).
a All information must be complete and accurate.
b If the applicant has business income, the current operating
statement must be attached.
c The applicant must date and sign the application form.
2 Form FmHA 410-5 is used to check employment and income of
applicants. The form should be mailed to the employer to be completed
and returned directly to the County Office. FmHA will not provide
franked envelopes to a packager for this purpose.
3 In cases where it appears that the applicant has sufficient income
or assets to qualify for housing credit from another source, a diligent
effort must be made to obtain such credit from at least two lenders who
customarily make long-term housing loans in the area. If such lenders
are unable to provide the credit needed, their written response stating
why they cannot assist the applicant should be included in the loan
package.
4 The information specified in paragraphs II B or II C of this
Exhibit, whichever is applicable, will be submitted. In case FmHA has
issued a conditional commitment on the property, information on the
house will be on file in the County Office and need not be resubmitted.
5 If a house to be purchased is under construction, the loan will not
be closed until construction is completed. In such a case the
information in paragraph II C of this Exhibit will be submitted.
B Information needed for loans to purchase new homes or to build or
rehabilitate homes. The information requested on the front page of Form
FmHA 1944-36 will be submitted along with the completed form. This
applies regardless of whether a conditional commitment is being
requested in connection with the package. Additional information
required for manufactured homes is listed in Exhibit F, paragraph XVIII
of this subpart.
C Information to be submitted for loans to buy existing homes. 1
Form FmHA 1944-12 ''Rural Housing Loan Application Package.''
2 A signed or certified copy of an option on the property. The
option must provide that any payments made by the applicant will be
refunded if the loan cannot be made. Form FmHA 440-34, may be used for
this purpose.
3 A termite certification whenever required.
4 In case major improvements are involved, submit three sets of
complete drawings and specifications of the work that must be done, and
a contractor's bid or a reliable cost estimate.
5 If the house qualifies as an existing home, is less than a year
old, and an individual water or sewage system is involved, include a
certification by the builder that the house and any water and waste
disposal system have been or will be built or installed in accordance
with the local building codes and plans and specifications. Such plans
and specifications will also be submitted. Evidence of approval by
health authorities having jurisdiction in the area also will be
included. If the house is a year or more old, the County Supervisor
will determine that the water and/or sewage system is functionally
adequate and that the house meets FmHA requirements.
6 Direction map to the property.
7 Plot plan drawn to scale showing house location and related
facilities.
III Review and Acceptance of Completed Package: During the initial
discussions with packagers, the packager should understand the necessity
for, and agree that, the loan packages will be assembled in the order
shown on Form FmHA 1944-12 before they are delivered to the County
Office. Form FmHA 1944-12 must be signed by the packager and be
included with the materials submitted; otherwise, the packaged
application will not be accepted. The County Supervisor will review
each loan package when it is received and request any additional
information needed. An affirmative fair housing plan will be submitted
in accordance with 1901.203 (c) of Subpart E of Part 1901 of this
chapter. The County Supervisor will determine eligibility according to
Subpart A of Part 1910 of this chapter but will not proceed with the
processing of the loan until the applicant has been interviewed. A
personal interview will be conducted by an FmHA employee with all
applicants before approval of the requested loan in accordance with
1944.26(d).
A If the applicant appears to be qualified and all needed material is
available, the County Supervisor will process the application in
accordance with the regulations.
B If a loan can be approved, the County Supervisor will notify the
applicant including any requirements that must be met prior to closing
the loan. If for any reason a loan cannot be made, the County
Supervisor will notify the applicant and the packager. If the loan is
denied because the applicant is determined ineligible the applicant will
be notified in accordance with 1910.6 of this chapter.
IV Packagers' Responsibilities: Packagers should fully understand
their responsibilities in helping applicants to assemble their RH loan
applications and that no fees may be charged for providing this service.
Packagers must also comply with the requirements of Subpart E, Part
1901 of this chapter, ''Civil Rights Compliance Requirements'', and the
Equal Credit Opportunity Act as provided in 1910.2 of this chapter.
V District Directors' Review of Loans Originated by Application
Packagers: District Directors are responsible for reviewing the file of
a representative number of borrowers whose RH applications were
submitted to the County Office by a packager. At least 5 percent of the
cases packaged by each packager working in the county will be reviewed.
The folders reviewed will be randomly selected and reviewed at scheduled
office visits throughout the year in accordance with 2006.604(c) and
2006.605(a)(1) of FmHA Instruction 2006-M (available in any FmHA
office). The review will be made to determine whether: The applicant's
income was properly verified; any credit report received was mailed
from the Credit Reporting firm directly to the County Supervisor; the
County Supervisor interviewed and counseled with the applicant prior to
loan approval; the applicant was eligible for the RH assistance
granted; and the loan was in accordance with FmHA procedures. Any
incidence of unethical activity by a packager or the approval of
improper loans by a County Supervisor will be reported promptly to the
State Director for appropriate handling.
(46 FR 61991, Dec. 21, 1981, as amended at 48 FR 222, Jan. 4, 1983;
48 FR 52566, Nov. 21, 1983; 50 FR 16056, Apr. 24, 1985; 51 FR 41608,
Nov. 18, 1986; 52 FR 8036, Mar. 13, 1987)
07 CFR 1944.47 Pt. 1944, Subpt. A, Exh. B
07 CFR 1944.47 Exhibit B -- Addresses for Authentication of Alien
Registration Cards
This Exhibit lists the addresses of the Immigration and
Naturalization Service district offices. To comply with 1944.9(c) of
this subpart, County Supervisors will request verification of the
validity of alien registration cards from the nearest office.
A list of these offices follows:
Albany, New York 12207, Post Office and Courthouse, Room 220, 445
Broadway
Anchorage, Alaska 99513, Room D-229, 701 C Street
Atlanta, Georgia 30303, Room 1408, Federal Office Building, 75 Spring
Street, SW
Baltimore, Maryland 21201, E.A. Garmatz Federal Building, 100 S.
Hanover St.
Boston, Massachusetts 02203, John Fitzgerald Kennedy Federal
Building, Government Center
Buffalo, New York 14202, 68 Court Street
Chicago, Illinois 60604, Dirksen Federal Office Building, 219 South
Dearborn Street
Cincinnati, Ohio 45201, U.S. Post Office and Courthouse, 5th and
Walnut Streets, Post Office Box 537
Cleveland, Ohio 44199, Room 1917, Federal Building, 1240 East 9th
Street
Dallas, Texas 75202, Room 6A21, Federal Building, 1100 Commerce
Street
Denver, Colorado 80202, 17027 Federal Office Building
Detroit, Michigan 48207, Federal Building, 333 Mount Elliott Street
El Paso, Texas 79984, 343 U.S. Courthouse, Post Office Box 9398
Hammond, Indiana 46320, 102 Federal Building, 507 State Street
Harlingen, Texas 78550, 2102 Teege Avenue
Hartford, Connecticut 06105, 900 Asylum Avenue
Helena, Montana 59601, Room 512, 301 South Park
Honolulu, Hawaii 96809, 595 Ala Moana Boulevard, Post Office Box 461
Houston, Texas 77004, 2627 Caroline Street
Kansas City, Missouri 64106, Suite 1100, 324 E Eleventh Street
Los Angeles, California 90012, 300 North Los Angeles Street
Los Fresnos, Texas 78566, Route 3, Box 341
Memphis, Tennessee 38104, 814 Federal Building, 167 North Main Street
Miami, Florida 33130, 155 South Miami Avenue
Milwaukee, Wisconsin 53202, Room 186 Federal Building, 517 East
Wisconsin Avenue
Newark, New Jersey 07102, Federal Building, 970 Broad Street
New Orleans, Louisiana 70113, Room T-8005, Postal Services Building,
701 Loyola Avenue
New York, New York 10007, 26 Federal Plaza
Norfolk, Virginia 23502, Room 207, Bank of Virginia Building, 870
North Military Highway
Omaha, Nebraska 68102, Room 1008, Federal Office Building, 106 South
15th Street
Philadelphia, Pennsylvania 19106, Room 1321 U.S. Courthouse,
Independence Mall West, 601 Market Street
Phoenix, Arizona 85025, Federal Building, 230 North First Avenue
Pittsburgh, Pennsylvania 15222, 2130 Federal Building, 1000 Liberty
Avenue
Port Isabel, Texas 78566, Rural Route 3
Portland, Maine 04112, 76 Pearl Street
Portland, Oregon 97209, Federal Office Building, 511 N.W. Broadway
Providence, Rhode Island 02903, Federal Building, U.S. Post Office,
Exchange Terrace
Reno, Nevada 89502, Suite 150, 350 South Center Street
Saint Albans, Vermont 05478, Federal Building, Post Office Box 328
Saint Louis, Missouri 63101, Room 423, U.S. Courthouse and
Customhouse, 1114 Market Street
Saint Paul, Minnesota 55111, 927 New Post Office Building, 180 East
Kellog Blvd.
Salt Lake City, Utah 84138, Room 4103, New Federal Building, 125
South State Street
San Antonio, Texas 78206, Suite A301, U.S. Federal Building, 727 East
Durango
San Diego, California 92188, 880 Front Street
San Francisco, California 94111, Appraisers Building, 630 Sansome
Street
San Juan, Puerto Rico 00936, U.S. Immigration and Naturalization
Service, GPO Box 5068
Seattle, Washington 98134, 815 Airport Way, South
Spokane, Washington 99201, 691 U.S. Courthouse Building
Washington, D.C. 20538, E Street NW.
(46 FR 61991, Dec. 21, 1981, as amended at 48 FR 222, Jan. 4, 1983;
48 FR 52566, Nov. 21, 1983)
07 CFR 1944.47 Exhibit C -- (Reserved)
07 CFR 1944.47 Pt. 1944, Subpt. A, Exh. D
07 CFR 1944.47 Exhibit D -- Rural Housing Applicant Interview
The following items will be reviewed in detail during a personal
interview between the rural housing loan applicant and County Supervisor
to assure an understanding of Farmers Home Administration loan making
and loan servicing authorities, and the responsibilities of the
applicant/borrower. No loan will be closed without signed evidence that
this interview has been held.
1. Equal Credit Opportunity: FmHA assistance and services shall not
be denied to any person or applicant as a result of race, sex, national
origin, color, religion, marital status, age, physical or mental
handicap (applicant must possess the capacity to enter into a legal
contract for services), receipt of income from public assistance, or
because the applicant has, in good faith, exercised any right under the
Consumer Credit Protection Act.
2. Income: Eligibility is limited to those applicants with low or
moderate income who are creditworthy and have repayment ability for the
loan requested. The current income received by the applicant and all
other adults who live or propose to live in the dwelling during the next
12 months must be included.
3. Adjusted Income: Qualification for low or moderate income is
based on adjusted income. This is the total annual income less $480 for
each minor person who is a member of the immediate household and lives
in the home. A deduction of $480 is also allowed for persons other than
the applicant or co-applicant who are 18 years of age or older and are
handicapped or disabled as defined in the regulations, or who are
full-time students. Also, a $400 deduction is allowed for an elderly
family as defined in the regulations. Other deductions are contained in
the regulations.
4. Eligibility: An initial determination of applicant eligibility is
not an assurance that a loan will be approved. Loan approval will
depend on an inspection and appraisal of the dwelling the applicant
wishes to purchase and the applicant's repayment ability for the amount
of loan needed to purchase the dwelling.
5. Counseling: Credit counseling is available at the local County
Office for any applicant or borrower who needs or desires such
assistance. This will include assistance in budgeting and the use and
management of household income.
6. Energy Conservation: The local county office will provide
suggested ways homeowners may conserve on the use of energy in the home.
They can also provide local sources of information such as utility
companies and county extension offices, which may suggest methods of
conservation.
7. Cosigner: An applicant who does not have repayment ability may
furnish a cosigner who will guarantee repayment of the loan. Such
cosigner must be approved by Farmers Home Administration.
8. Legal Fees: The applicant must pay necessary legal fees for title
examination and loan closing. Escrow Agents or Designated Attorneys
will be employed for this service. In some cases the fees may be
included in the loan.
9. Interest Credit: Interest credit is available to qualified
applicants whereby the interest rate on the loan may be reduced to a
minimum of 1 percent. The amount of interest credit granted depends on
the borrower's income which will be reviewed at least every year.
10. Improper Interest Credit: Interest Credit or other subsidy
assistance granted improperly either as a result of false information or
through error, will be repaid by the borrower.
11. Recapture of Interest Credit: Interest credit received by a
borrower will be subject to repayment to the Government when the
mortgage is released, when the loan is assumed by another person(s),
when the property is sold, or when the property is no longer occupied by
the borrower.
12. Monthly Payments: Regular payments must be made on or before the
due date. Normally, payments will be applied first to unpaid interest
and the balance to principal. If a noninterest accruing administrative
cost, such as a charge for an uncollectible check, has been charged to
the borrower's account, payments will be applied to the outstanding
administrative cost first. (The amounts of any such administrative
charges are available from any FmHA office.) If for any reason a payment
cannot be made on time, the borrower should immediately contact the
local County Office.
13. Insurance: Every borrower will be required to obtain property
insurance in a minimum amount specified by FmHA. The cost must be paid
by the borrower and is not included in the regular monthly payment.
14. Taxes: All real estate taxes must be paid by the borrower
directly to the local taxing office. They are not included in the
regular monthly payment. Nonpayment of taxes can result in public sale
of the property by the local tax authority or foreclosure by the Farmers
Home Administration.
15. Graduation: FmHA does not replace conventional credit. FmHA
credit is available to eligible rural residents only until such time as
conventional credit is available to finance the borrower's needs. When,
in FmHA's opinion, the borrower may obtain credit at rates and terms
then prevailing in the area and on terms the borrower can reasonably be
expected to meet, the borrower will be required to apply for and, if
approved by the lender, accept a loan sufficient to pay the balance of
the FmHA debt in full.
16. Inspection of Property: The borrower will be responsible for
making inspections necessary to protect the borrower's interest. The
FmHA inspections create or imply no duty or obligation to the particular
borrower but are, rather, for the dual purpose of determining that FmHA
has adequate security for its loan and to enable FmHA to determine that
the agency is working toward achieving the statutory goal of providing
adequate housing.
17. Compensation for Construction Defects: For newly built dwellings
the government may in some cases pay for major defects in dwelling
construction which are not repaired by the builder. To be eligible, a
claim must be filed at the FmHA County Office within 18 months after
financial assistance is granted.
18. Moratorium: Borrowers may apply for a postponement of payments
if due to circumstances beyond their control they are unable to continue
making scheduled payments on the loan without unduly impairing their
standard of living. Some of these circumstances are: Loss of job or
sudden reduction of income from other sources; a loss of income or a
substantial increase in expenses due to injury, illness, or death in the
family.
19. Occupancy: Borrowers must personally occupy the dwelling as one
of the eligibility requirements for interest credit or moratorium.
20. Home improvements or additions: If a borrower's home is enlarged
or improved so that it exceeds modest standards for size, design and
cost, the borrower may no longer be eligible to receive interest credit
and the home may then become ineligible for transfer by assumption in
the FmHA loan program.
21. Appeal: Applicants or borrowers may appeal any FmHA program
administrative action by which they are directly or adversely affected.
This includes having a request for FmHA assistance denied or having FmHA
assistance reduced, cancelled, or not renewed. The County Supervisor
will provide information on appeal procedures.
The above items were discussed on ---------- and we acknowledge
receipt of a copy of the discussion outline.
--
County Supervisor.
--
Applicant.
--
Co-Applicant.
Original to Borrower case file.
Copy to Borrower.
(46 FR 61991, Dec. 21, 1981, as amended at 48 FR 223, Jan. 4, 1983;
50 FR 39965, Oct. 1, 1985; 51 FR 6393, Feb. 24, 1986; 52 FR 9113, Mar.
23, 1987; 54 FR 46844, Nov. 8, 1989)
07 CFR 1944.47 Exhibit E -- (Reserved)
07 CFR 1944.47 Pt. 1944, Subpt. A, Exh. F
07 CFR 1944.47 Exhibit F -- Supplemental Requirements for Making
Section 502 RH Loans for Manufactured Homes
Paragraph
I. What are the general conditions for financing a manufactured home?
II. What are the definitions of terms used in this Exhibit?
III. What are the applicant eligibility requirements?
IV. For what purposes may Section 502 RH loan funds be used?
V. For what purposes may Section 502 RH funds not be used?
VI. What are the building and siting requirements?
VII. How will a manufactured home be appraised?
VIII. What are the loan limitations?
IX. How does a dealer-contractor qualify to participate in the
program?
X. What are the County Supervisor's, District Director's and State
Director's responsibilities in evaluating a dealer-contractor?
XI. What are the contract requirements?
XII. What are the lien release requirements?
XIII. What are the warranty requirements?
XIV. What are the requirements for inspections and design reviews?
XV. What are the rates and terms of the loan?
XVI. Can a borrower be granted interest credit with a Section 502 RH
loan on a manufactured home?
XVII. May a dealer-contractor obtain conditional commitments for
manufactured homes?
XVIII. What information must an RH applicant submit with a request
for financing a manufactured home?
XIX. What are the other considerations?
a. This Exhibit provides for the financing of a manufactured home
(herein called unit) with a Section 502 Rural Housing loan.
Manufactured structures (as described in Exhibit B to Subpart A of Part
1924), generally referred to as modular homes that are constructed to
the FmHA adopted MPS or FmHA recognized building codes, are not affected
by this Exhibit. All parts of Part 1944, Subpart A of this chapter
apply unless modified by this Exhibit.
b. FmHA may finance a manufactured home if both the unit and its site
are covered by the mortgage or Deed of Trust. The encumbered property
must be covered under a standard real estate title insurance policy or
attorney's title opinion that identifies the site and unit as real
property and insures or indemnifies against any loss if the manufactured
home is determined not to be part of the real property. The unit and
site must be taxed as real estate by the jurisdiction where located, if
such taxation is permitted under applicable law, when the loan is
closed. FmHA may not finance a lot for a unit already owned by the
applicant. It is a violation of this regulation to finance furniture or
to refinance any existing debts owed by the applicant/borrower.
As used in this Exhibit the term --
a. ''Manufactured Home'' (Unit) means a structure which is built to
the Federal Manufactured Home Construction and Safety Standards and FmHA
Thermal requirements. It is transportable in one or more sections,
which in the traveling mode is ten body feet or more in width, and when
erected on site is four hundred or more square feet, and which is built
on a permanent chassis and designed to be used as a dwelling with or
without a permanent foundation when connected to the required utilities.
It is designed and constructed for permanent occupancy by a single
family and contains permanent eating, cooking, sleeping and sanitary
facilities. The plumbing, heating, and electrical systems are contained
in the structure. For the purpose of the FmHA Section 502 manufactured
home program permanent foundations are required.
b. ''Furniture'' means movable articles of personal property such as
drapes, beds, bedding, chairs, sofas, divans, lamps, tables,
televisions, radios, or stereo sets, and other similar items of personal
property, but furniture does not include wall-to-wall carpeting,
refrigerators, ovens, ranges, washing machines, clothes dryers, heating
or cooling equipment or other similar items.
c. ''Single Wide'' means a dwelling unit that is 12 or more feet in
width and contains 400 or more square feet. It is a totally
self-contained dwelling unit as transported from the factory on a single
permanent chassis.
d. ''Double Wide'' means two or more sections transported from the
factory on a permanent chassis intended to be joined together
horizontally when located on the site, but capable of independent
movement. The sections when joined together must be 20 or more feet in
width.
e. ''Eligible Options'' mean items that could be financed under the
Section 502 Program but are not included in the base price for the
manufactured home unit. Examples are appliances, wiring for dryer,
plumbing for washer, standard bathroom and kitchen fixtures, etc.
f. ''Federal Manufactured Home Construction and Safety Standards''
(FMHCSS) mean a 1976 Federal Standard commonly known as the HUD
standards for the construction, design and performance of a manufactured
home which meets the needs of the public including the need for quality,
durability and safety. Units conforming to the FMHCSS are certified by
an affixed label that reads as follows:
AS EVIDENCED BY THIS LABEL NO. XXXXXXTHE MANUFACTURER CERTIFIES TO
THE BEST OF THE MANUFACTURER'S KNOWLEDGE AND BELIEF THAT THIS
MANUFACTURED HOME HAS BEEN INSPECTED IN ACCORDANCE WITH THE REQUIREMENTS
OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT AND IS CONSTRUCTED IN
CONFORMANCE WITH THE FEDERAL MANUFACTURED HOME CONSTRUCTION AND SAFETY
STANDARDS IN EFFECT ON THE DATE OF MANUFACTURE. SEE DATA PLATE.
g. ''Dealer-Contractor'' is a person, firm, partnership or
corporation in the business of selling and servicing manufactured homes
and developing sites for manufactured homes. A person, firm,
partnership or corporation not capable of providing the complete service
is not eligible to be a ''dealer-contractor.''
h. ''New Unit'' means a unit not previously occupied as a residence
and less than 1 year old.
i. ''Existing Unit'' is a unit previously occupied as a residence or
more than 1 year old.
j. ''Design Approval Primary Inspection Agency'' (DAPIA) is a state
or private organization which has been approved by the Secretary of HUD
to evaluate (i.e. approve or disapprove) manufactured home designs and
quality control programs.
An applicant meeting the eligibility requirements of 1944.8 and
1944.9 of this subpart is eligible for a loan on a manufactured home.
FmHA may finance the following when a real estate mortgage covers
both the unit and the lot:
a. A new unit for a site owned by the applicant which meets the
requirements and limitations of 1944.11 of this subpart or a leasehold
meeting the provisions of 1944.15(a)(5) of this subpart.
b. A new unit and a site which meets the requirements of 1944.11 of
this subpart.
c. Site development work. The types of site development required and
permitted are in paragraph VI of this Exhibit and Part 1924, Subpart A
of this chapter.
d. Subsequent loans for equity or repair with a transfer, credit
sale, or a subsequent loan for repair of a unit if the unit is currently
financed with a section 502 Rural Housing loan.
e. Transportation and set-up costs if a new unit is financed.
FmHA may not use loan funds to finance:
a. An existing unit and site unless it is already financed with a
Section 502 Rural Housing loan or is being sold from FmHA inventory.
b. The purchase of a site without also financing the unit.
c. Existing debts owed by the applicant/borrower.
d. A unit without an affixed certified label indicating the
construction of the unit is in accordance with the FMHCSS.
e. Alteration or remodeling of the unit when the initial loan is
made.
f. Furniture as defined in this Exhibit.
g. Any unit not constructed to the FmHA thermal standards as
identified by an affixed label for the winter degree day zone where the
unit will be located.
h. A unit that at the time of loan approval would result in more than
one person per room. The number of rooms include bedrooms, living room,
dining room, kitchen, den or family room.
i. Repairs unless authorized in paragraph (IV)(d) of this Exhibit.
The unit must be modest in design, size and cost as defined in
1944.16(a) of this subpart. The floor area must be 400 square feet or
more, and the width 12 feet or more for a single wide unit and 20 feet
or more for a double wide unit. Construction of the unit must conform
with the FMHCSS as evidenced by an affixed certification label. The
unit must be constructed to the FmHA thermal requirements of Exhibit D
of Subpart A of Part 1924 of this chapter and identified by an affixed
label as required in paragraph XIV c 3 of this Exhibit. Site
development and set-up must conform to Exhibit J of Subpart A of Part
1924 of this chapter.
a. The appraiser will use normal single family residential appraisal
techniques when appraising a manufactured home and the site. Since
other manufactured homes and sites provide the most similar comparables,
every effort must be made to obtain such comparables even if their
distance from the subject is greater than normally desirable. If other
units are not available within a reasonable distance, the appraiser may
use other than manufactured homes after adjusting for location,
construction material, size, quality, etc.
b. The appraiser will use Marshall and Swift cost data for
manufactured housing to determine the cost approach. An alternate cost
method may be substituted for Marshall and Swift with prior
authorization from the National Office.
A loan for a new unit, new unit and site or an existing site and unit
may not exceed the final reconciliation/estimated value of the developed
security as determined by a real estate appraisal.
A dealer-contractor may apply to participate by submitting Form FmHA
1944-5, ''Dealer-Contractor Application,'' and a current financial
statement prepared by a public accountant and certified by the dealer to
the FmHA County Supervisor. A person, firm, partnership or corporation
unable to provide a full service of sales, service, erection and site
development is not eligible to participate as a dealer-contractor. To
qualify to participate a dealer-contractor must be:
a. Financially responsible,
b. Qualified to perform satisfactorily the set-up of the homes and
site development work,
c. Equipped to extend proper services to the customer, and
d. Willing to provide a warranty as required in paragraph XIII of
this Exhibit.
a. The County Supervisor will:
1. Maintain an operational file for each dealer-contractor who
submits Form FmHA 1944-5, ''Dealer-Contractor Application,'' and a
certified financial statement.
2. Obtain a commercial credit report on the firm and consumer credit
reports on each of the principals.
3. Make direct checks on trade and bank references and check with the
local Better Business Bureau.
4. Inspect the dealer's place of business to determine the permanency
of same and the adequacy of available equipment.
5. Obtain copies of brochures, descriptive literature, guarantees,
sales contracts, and price lists.
6. Determine that the dealer-contractor has the necessary equipment
and experience to perform or subcontract all site development work. If
the firm uses subcontractors, obtain the names of the subcontractors and
their qualifications. A field inspection of recently developed sites
and set-ups would be desirable in determining whether the
dealer-contractor has the necessary experience.
7. Carefully analyze the above information to determine if the
dealer-contractor is able to provide the full service of sales, service,
erection and warranty of manufactured homes and developing sites for
them. Submit, through the District Director, to the State Director a
recommendation with supporting documentation as to whether or not the
dealer-contractor is acceptable.
8. Maintain a complaint file on each dealer-contractor to establish a
basis for limiting future business with that dealer-contractor, if
necessary. In cases of serious or continuous noncompliance, refer to
Subpart M of Part 1940 (available in any FmHA office) for possible
debarment action.
b. The District Director will review the County Supervisor's
recommendations and forward them, with any additional comments, to the
State Director for review.
c. The State Director will make the decision on dealer-contractor's
acceptability and, if acceptable, issue a letter of acceptance. The
State Director will also issue a list of acceptable dealer-contractors
in the state as a supplement to this Exhibit. If the State Director
determines the dealer-contractor not acceptable, appeal rights will be
granted as if the decision were covered by Subpart B of Part 1900 of
this chapter. Any dealer-contractor held not to be acceptable may
reapply for acceptance at any time the dealer-contractor has reason to
believe the conditions leading to the determination have been removed.
The dealer-contractor must sign Form FmHA 424-6, ''Construction
Contract,'' which will cover both the unit and site development work.
The ''borrower method'' of development or use of multi-contracts is
prohibited. A dealer-contractor may use subcontractors if the
dealer-contractor is solely responsible for all work under the contract.
Payment for all work will be in accordance with Form FmHA 424-6 and
Subpart A of Part 1924 of this chapter, except no payment will be made
for materials or property stored on site (e.g. payment for a unit will
be made only after it is permanently attached to the foundation).
All persons furnishing materials or labor in connection with the
contract must sign Form FmHA 424-10, ''Release by Claimants,'' except
the manufacturer of the unit. The manufacturer of the unit must furnish
an executed manufacturer's certificate of origin that the unit is free
and clear of all legal encumbrances. The use of Form FmHA 424-10 is
optional in a State if the State Director has issued a State supplement
not requiring its use. However, in all states the certificate of origin
is required.
A dealer-contractor must provide a warranty in accordance with the
provisions of 1924.12 of Subpart A of Part 1924. The warranty must
identify the unit(s) by serial number(s). The dealer-contractor must
certify that the manufactured home property substantially complies with
the plans and specifications and the manufactured home sustained no
hidden damage during transportation and, if manufactured in separate
sections, that the sections were properly joined and sealed according to
the manufacturer's specifications. The dealer-contractor will also
furnish the applicant with a copy of all manufacturer's warranties.
a. The County Supervisor will inspect and review for purposes of
determining that the government's security is adequate and that the
general goals of the program are being complied with but not for the
protection of the specific borrower:
1. That the unit has a properly affixed certification label
indicating the construction of the unit is in accordance with the
FMHCSS.
2. That the unit is modest in size, design and cost in accordance
with 1944.16 of this subpart and other housing financed for similar
applicants in the area.
3. That the thermal design certification has been provided as
required in paragraphs XIV(c)(2)(i) or XIV(c)(2)(ii).
4. That the unit contains the manufacturer's thermal certification as
required in paragraph XIV(c)(3) of this Exhibit, and that the certified
winter degree days are correct for the location of the unit.
5. To determine compliance with Exhibit J of Subpart A of Part 1924
of this chapter for all onsite development and features not covered by
the FMHCSS.
6. To determine foundation support locations, loads and connection
requirements specified by the manufacturer as a basis for evaluating
foundation compliance with Exhibit J of Subpart A of Part 1924 of this
chapter and for determining design suitability for the soil conditions.
7. To determine compliance with site development requirements
including required siting approval by State and local authorities, when
those entities regulate manufactured home siting.
8. To determine that the site is in compliance with Subpart G of Part
1940 of this chapter.
b. Designs must be reviewed and construction must be inspected in
accordance with the procedures established by the Secretary of HUD in 24
CFR Part 3282.
c. Units must be designed and constructed in accordance with Exhibit
D to Subpart A of Part 1924, ''Thermal Performance Construction
Standards.''
1. The manufacturer must assign a unique designation to the design
for each unit proposed for FmHA financing. This designation may not be
repeated for any design package with a lower thermal resistance.
2. The unit must be designed to conform with either the prescriptive
standards in paragraph IV A of Exhibit D to Subpart A of Part 1924, or
the optional standards in paragraph IV C of Exhibit D to Subpart A of
Part 1924.
(i) If a manufacturer proposes that a design conform with paragraph
IV A of Exhibit D to Subpart A of Part 1924, then a DAPIA, qualified
registered engineer or qualified registered architect must evaluate the
thermal design of the unit and determine the maximum number of winter
degree days in which the unit may be located based on paragraph IV A of
Exhibit D to Subpart A of Part 1924. This determination must be
certified in writing by the DAPIA, qualified registered engineer or
qualified registered architect before FmHA will accept the unit for
financing. This certification shall include the date, the name of the
manufacturer, the model number, the design package number, and the
maximum number of winter degree days in which the unit may be located.
The manufacturer must submit a copy of this certification, prior to loan
approval, to the FmHA loan approval official. This certification shall
be filed in the loan docket.
(ii) If a manufacturer proposes that a design conform with paragraph
IV C of Exhibit D to Subpart A of Part 1924, then the manufacturer shall
submit to the FmHA State Office all drawings, sketches, material
descriptions, thermal calculations, and any other information needed to
substantiate design conformance. This shall be submitted to the State
Office for the State in which the manufacturing plant is located. The
State Office architect or engineer will review this submittal. Approval
authority of designs shall be in accordance with paragraph IV C of
Exhibit D to Subpart A of Part 1924. The State Office shall notify
County and District Offices of models with approved thermal designs and
other State Offices will be notified, if requested by the manufacturer.
A State Office notification shall be accepted by other State Offices.
Notifications shall include the manufacturer's name, model number,
design package number, and the maximum number of winter degree days in
which the unit may be located. A copy of this notification shall be
filed in the loan docket.
3. The manufacturer must provide the following certification on a
sticker approximately 4 inches by 6 inches affixed in a permanent manner
near the HUD data plate: ''This unit is constructed in accordance with
design package XXXXXX which conforms with the Farmers Home
Administration thermal standards for XXXXXX winter degree days. The
thermal design of this unit was reviewed by XXXXXX. This unit was
constructed by XXXXXX.'' The manufacturer will insert into the first
blank space the designation for the design package, into the second
blank space the maximum number of winter degree days identified in
paragraph XIV(c)(2), into the third blank space the name of the DAPIA,
registered engineer or registered architect which reviewed the thermal
design in paragraph XIV(c)(2)(i) (or insert ''FmHA'' if reviewed in
accordance with paragraph XIV(c)(2)(ii)), and into the fourth blank
space the name of the manufacturer.
The interest rates are the same as for other real estate loans made
with Section 502 rural housing loan funds. The term of the loan may be
up to 30 years for both single-wide and double-wide units.
A borrower may receive interest credit under the conditions of
1944.34 of this subpart.
A dealer-contractor may obtain conditional commitments under 1944.45
of this subpart.
In addition to the information required in Subpart A of Part 1944 of
this chapter, an applicant must submit the following:
a. A plot plan and site development plan under Subpart A of Part 1924
of this chapter.
b. An itemized cost breakdown of the total package including the base
unit, eligible options, site development, installation, set-up, lot
costs and any credit for wheels and axles.
c. A statement signed by the dealer-contractor that any cash payment
or rebate as a result of the purchase of the manufactured home will be
deducted from the price of the unit and not paid to the applicant.
d. A statement signed by the dealer-contractor that this is the full
price of the unit and all development, and if furniture is being
purchased by the applicant, that a lien will not be filed against the
FmHA security property.
a. Development under the mutual self-help and borrower construction
methods is not permitted for manufactured homes.
b. Debarment procedures apply to dealer-contractors who are removed
from the list of approved dealer-contractors.
(51 FR 41608, Nov. 18, 1986; 52 FR 36565, Sept. 30, 1987, as amended
at 54 FR 14334, Apr. 11, 1989)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, subpart A of
part 1944 was amended by removing exhibit E, effective January 30, 1992.
For the convenience of the user, the supereseded text follows:
07 CFR 1944.47 Pt. 1944, Subpt. A, Exh. E, Note
07 CFR 1944.47 Exhibit E -- Mutual Self-Help Housing Guidelines
Introduction.
Leadship and Supervision.
Basic Requirements.
Organization and Agreements.
Preconstruction Meetings.
Construction.
How to give low-income rural people an opportunity to have a decent
home of their own is a major challenge in rural America. To help such
persons have an adequate home at a cost they can afford, the Farmers
Home Administration (FmHA) makes Rural Housing (RH) loans to individual
persons to enable them to participate in a mutual self-help housing
project. This program is specifically designed to help those who do not
have enough income to build modest homes by customary methods, to work
together to build modest homes of their own.
Participating applicants who are approved by FmHA may obtain rural
housing loans to buy materials, to pay for any skilled labor and
contract costs required for work on their own homes and if necessary buy
a building site. Basic construction labor will be performed by families
mutually helping each other, after forming an unincorporated or
incorporated association for this purpose.
This exchange of labor, without a cash cost to the families, is the
key to the mutual self-help housing program. In this way the houses can
be built for considerably less cash cost than by customary methods.
There also may be savings in the cost of materials purchased. All
members of the group may buy their materials from suppliers who offer
the most favorable prices. Material suppliers may offer discounts to
those participating in mutual self-help housing if they know they will
have a large volume of sales to members of the group.
Families have been able to build modest homes suited to their needs
at savings of several thousand dollars. This substitution of labor
equity for cash can reduce the cost of homes enough to bring the price
of a modest home within reach of low-income rural families.
Persons interested in working with other families on an organized
basis to build their own homes should contact the FmHA County Supervisor
serving the area in which the housing will be located.
The County Supervisor will obtain the prior approval of the State
Director for committing the FmHA to participate in each mutual self-help
project.
FmHA will provide the overall leadership and supervision and
determine the eligibility of the participating applicants to receive
Rural Housing loans. A special construction supervisor may, with prior
authorization of the National Office, be hired by the State Director to
help the applicants with their home building. In some cases
construction supervision assistance may be offered by another agency or
organization. FmHA will consider such offers under the following
conditions:
1. The agency or organization must have the legal, financial and
actual capacity and resources to provide the construction supervision
assistance under the direction of the FmHA County Supervisor.
2. The respective responsibilities of all parties should be clearly
defined and stated in a written agreement to be signed by the
participating agencies.
3. The proposal must be compatible with the FmHA borrower method of
operation, more specifically:
a. FmHA will make Rural Housing loans to applicants based on the need
and qualifications of each.
b. FmHA will determine the eligiblilty of each applicant, approve the
house plans, inspect the construction, and disburse loan funds as needed
on an individual-case basis. Loan funds will not be pooled.
c. No advance commitments of loan funds will be made for any project.
A commitment of funds will be made for each loan when it is approved
subject to the conditions stated in each loan approval.
d. No loan funds may be used to pay for construction supervision or
to pay borrowers for working on their homes or on the homes of others
who are participating.
e. The construction will involve as much on-site work as practicable,
to obtain maximum savings to those participating.
f. Basic plans and construction methods should be standardized to the
extent practicable.
Rural housing loans will be made by FmHA to those who participate in
a self-help housing group and who:
1. Do not have sufficient income to build a modest home by customary
methods.
2. Are creditworthy by FmHA standards and can comply with all other
eligibility requirements for rural housing loans.
3. Desire to build a home of their own that is simple in design,
structurally sound, and low in cost.
The following basic conditions are essential to the success of a
self-help housing venture:
1. A sincere spirit of cooperation on the part of all participants.
2. Competent leadership and technical supervision.
3. A complete understanding by each person of the responsibilities
involved.
4. Adequate time available to participants to do the work.
5. Sufficient skills among the members of the group to do at least
the basic construction work.
6. All the building sites must be close enough together to permit
convenient exchange of work.
7. Ordinarily from 6 to 10 families can work together satisfactorily.
An understanding should be reached on important items such as when
the individuals in the group will be available to work, the amount of
work to be performed, the number to be involved in the various work
groups and the amount of time each will spend working on the homes. The
group will develop a written agreement drawn so as to be binding upon
all members signing it. Attached as Exhibit E-1 is a suggested form of
such an agreement called a Membership Agreement. All participating
members will sign the Membership Agreement and each applicant will be
given a copy. Any such document used will be given prior review and
approval by the FmHA to be sure that it is legally adequate and does not
conflict with applicable State laws or FmHA regulations. This should be
done with the assistance of the Office of the General Counsel.
Each applicant will execute a promissory note for an amount equal to
the value of the services they agree to perform for the association to
build the houses. See Exhibit E-2. Such a note should not be secured
by a lien against the property.
The successful conduct of a mutual self-help housing program requires
a series of meetings with those participating. These meetings should be
held to discuss fully all of the planning, construction, and maintenance
of a home, the responsibilities of home ownership, and the requirements
for an FmHA rural housing loan. These meetings also will familiarize
the applicants with the self-help approach, develop mutual confidences
among participants and develop the interest of community leaders in the
project. During the group meetings the FmHA County Supervisor and those
who will be responsible for the supervision of the construction should
be able to learn about the capabilities of the individuals and determine
the extent to which construction can be carried out under the self-help
method.
The actual number of meetings held will depend on the rate at which
the group progresses toward reaching a full understanding of the
responsibilities involved. Experience indicates that from 8 to 10
meetings usually will be adequate. Local people should be used, where
practical, to discuss appropriate subjects in the meetings. This will
help in making the local community aware of the self-help program, and
also help obtain local acceptance and support for the project. The
following is a recommended sequence of meetings and a suggested list of
subjects to be discussed:
The first meeting should be explanatory in nature. The FmHA County
Supervisor should discuss the basic principles involved in mutual
self-help housing, together with a brief explanation of the purposes and
limitations of and the requirements for rural housing loans. The County
Supervisor should also discuss obligations of home ownership such as
loan payments, taxes, insurance and maintenance. At the first meeting,
time should be allowed for the individuals to become acquainted with one
another. In closing the first meeting, the group should be informed of
the duties and responsibilities of the officers and committees needed to
carry out a mutual self-help program. The members of the group should
be considering a name for the organization and the persons best suited
for the various positions in order that the officers and committees can
be selected at the next meeting.
At the second meeting an association should be formed and the
officers and committees selected. They might include the following:
1. President.
2. Vice President.
3. Secretary-Treasurer.
4. Labor Manager.
5. Purchasing Committee.
6. Program Committee.
Additional meetings are essential, but the order in which the
subjects are presented or the number of subjects included in any meeting
may vary. The following topics are suggested for a series of meetings:
1. Site Planning and Building Codes. An architect, FmHA engineer, or
a good builder who also does home designing could be invited to discuss
factors in selecting house size. The local building inspector could be
asked to speak on building and health code requirements.
2. Home Planning. An architect or home economist may be invited to
discuss home kitchen layouts, traffic patterns, window placement,
economical construction, and other considerations in the selection of a
good house plan.
3. Plans and Specifications. The group will probably have questions
and need individual help in making decisions concerning plans and
specifications for their homes. The County Supervisor and the
construction supervisor should help each applicant develop suitable
specifications.
4. Cost of Materials. The purchasing committee will obtain and
review prices of materials and contract work. At one of the last
meetings to be held before the construction starts, the purchasing
committee should report on its recommendations for buying materials and
awarding contracts.
5. Taxes. A discussion of the method of tax appraising could be given
by the local tax assessor. Based on plans and locations a rough
estimate should be made of expected taxes.
6. Insurance. A local insurance agent may be asked to speak on
insurance for fire and extended coverage, household policies, and other
coverages of interest to the group such as liability insurance. The
FmHA County Supervisor should discuss fire, windstorm and other hazard
insurance requirements of RH loans.
7. Mortgage Requirements. The FmHA County Supervisor might discuss
the FmHA mortgage and related requirements. A local attorney might be
asked to discuss other legal aspects of the program.
8. Maintenance Costs. The County Supervisor, the construction
supervisor or a local real estate agent might discuss the importance of
proper maintenance for a home. They should emphasize how money spent
for maintenance improves appearance, helps maintain value and saves
money in the long run.
9. Money Management. The FmHA County Supervisor should impress upon
the group the necessity of following the basic principles of money
management such as keeping records, following a budget, and not
overspending on non-essentials.
10. Labor Sharing Arrangement. The group should discuss and reach
decisions as to how the members will share the labor, how records will
be kept of time worked, how to make sure that labor will be exchanged on
a basis that is fair to all members and how to evidence and record these
decisions.
11. Use of Tools. One or more of the meetings should include
demonstrations and training by the construction supervisor of the safe
and proper use of tools. Special attention should be given to the use
of basic tools such as level, square, rule, saw, and any power tools
that might be used in the construction.
12. Construction and Work Procedures. The authority and duties of
the construction supervisor will be discussed in detail. The procedures
for actual construction will be discussed including labor sharing, work
programs, order of development, function of committees, time reporting
for work completed and future hours available.
13. Ground Breaking Plans. The final preconstruction meeting should
be more of a social get-together than a business meeting. This is also
the logical time to plan a ground breaking ceremony for the day the
loans are closed.
The basic work is performed, largely on a labor exchange basis, by
the participating families under the guidance of the construction
supervisor.
The group may, depending on the skills of the individuals, plan to do
all the work or plan to contract for work which they cannot do readily,
such as installation of wiring, plumbing and kitchen cabinets and
equipment, excavating for basements and dry-wall finishing. Highly
skilled or specialized jobs will be contracted when such services are
not available in the group.
There may be an inclination on the part of some participants to want
to concentrate on their own homes, particularly after the framing is in
place. Therefore, a prior understanding should be reached regarding the
specific responsibilities of each family. Rather than completing or
nearly completing each house one at a time, work should start on all
houses and each stage of construction be finished on all before starting
the next stage of construction on any house, to the extent consistent
with good construction practices.
To effect savings, materials for all the houses may be purchased from
the one or several suppliers who offer the lowest prices. Also, all
contracts for members of the group may be awarded to the same
contractors. To illustrate, the plumbing contractor offering the lowest
price ordinarily should perform the plumbing for all of the dwellings.
Each borrower will pay the material supplier for materials used, and
the contractor for work done, on its own home. All deliveries of
materials will be itemized separately for each home. The Association as
a whole, after considering the suggestions of the purchasing committee
will recommend the suppliers from whom materials will be purchased and
the contractors to whom the contracts will be awarded.
The construction supervisor with the advice of the president of the
association should divide the group into work teams. Work teams should
be organized on the basis of skills, compatability, and availability.
For example, one team could lay out and pour footings and another team
could lay bricks. The third team could begin framing as soon as the
foundation is ready.
A firm understanding will be reached that no changes in construction
from the approved plans and specifications may be made without
furnishing the County Supervisor with full cost figures and obtaining
approval in advance. If any change results in a need for additional
funds, they must be furnished by the borrower before approval. All
homes should be finished at or about the same time and none should be
occupied prior to completion of them all.
The Association should have brief meetings, at least once a week, to:
1. Report on performance and hours of work performed.
2. Settle any disagreements.
3. Plan work schedule and purchases for the coming week.
(46 FR 61991, Dec. 21, 1981. Redesignated and amended at 48 FR 223,
Jan. 4, 1983)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, subpart A of
part 1944 was amended by removing exhibit E-1, effective January 30,
1992. For the convenience of the user, the superseded text follows:
07 CFR 1944.47 Pt. 1944, Subpt. A, Exh. E-1, Note
07 CFR 1944.47 Exhibit E-1 -- Membership Agreement
---------- Association
We understand that by signing this agreement we will become members
in the ---------- Association when we receive adequate credit to finance
the home we intend to build. We have read the agreement or have had it
read to us and agree to comply with all its provisions. Each applicant
has been given a copy to keep.
The purpose of this Association is to provide a way whereby each
member can help itself and every other member to build its own home.
Membership will be limited to those persons who:
1. Do not have an adequate home;
2. Are willing to work with the other members of the Association in
building their homes;
3. Have a commitment to obtain financing for the cash cost of their
home; and
4. Sign the Membership Agreement.
Applicants and co-applicants may both sign the Membership Agreement.
As used in this agreement the term ''Applicant'' means either applicant
or co-applicant when both sign the agreement, or the person signing when
only one signs.
Each member will have one vote in the election of officers and all
other matters involving a decision by the membership.
The officers of the Association will be a President, Vice-President
and a Secretary-Treasurer. Each will be elected, at a meeting, by a
majority vote of all the members and will continue to hold office unless
the officer resigns, dies, is incapacitated, or is removed by vote of
two-thirds of all the members at a called meeting for the purpose of
considering such removal. The duties of the officers will be as
follows:
The President will:
1. Call membership meetings and officers' meetings;
2. Preside over all meetings;
3. Work closely with the construction supervisor; and
4. See that committees and members carry out their responsibilities
in connection with mutual self-help project.
The Vice-President will:
1. Act for the President in the President's absence, and
2. Be chairman of the Program Committee.
The Secretary-Treasurer will:
1. Keep the minutes of each meeting.
2. Handle correspondence of the Association.
3. Collect and handle through a checking account in the Association's
name, funds the organization may need. These may include items such as
stationery, stamps and record book.
4. Maintain other records of the Association at the direction of the
President.
The officers by majority vote will appoint the following from the
membership:
1. A Labor Manager who will keep records of the hours worked by each
member and notify the construction supervisor as to the availability of
members for work on the housing.
2. A Purchasing Committee of three members of the Association that
will obtain and review prices and cost estimates for the houses to be
built and recommend contractors and suppliers to be used by the members.
3. Two of the three members of the Program Committee. The third
member will be the Vice-President, who will be chairperson. This
committee will help plan meetings and assist in obtaining outside
speakers.
Meetings of officers and meetings of members will be held as often as
necessary to successfully complete the mutual self-help housing.
Meetings may be called by the President when considered advisable and
will be called by the President at the written request of not less than
------ members, or at the request of the Farmers Home Administration
County Supervisor or other authorized Farmers Home Administration
employee. Each officer or member will be notified at least three days
before the meeting as to the time, date and place of each meeting by
mail, telephone or by announcement at the preceding meeting.
Each member agrees to furnish 700 hours of labor for the construction
of houses of the other members of this Association in return for 700
hours of labor from other members in the actual construction of its
house. We understand that if more than 700 hours labor is required from
each member to complete all houses, each member will furnish its share
of additional labor needed. In case less than 700 hours labor is
required from each to complete all the houses, each family's obligation
under this agreement will be satisfied when it has contributed the
number of hours labor actually required.
The number of hours worked by each member or by any other person for
any applicant credit will be verified by the Labor Manager. Each member
will sign a promissory note to the Association in the amount of $ ------
. It is understood the amount of $ ------ for each approved hour of
labor performed will be credited on the note and that the note will be
satisfied when the number of hours required of each member has been
worked. However, if any member because of death, illness, or injury is
unable to make its full labor contribution personally or from other
sources as required, that member will be excused to that extent from
performing its labor agreement, and all the other members will assist
such a member in completing its house and will contribute the additional
amount of labor for all the houses which otherwise the stricken member
would have furnished.
We agree to exchange labor on the following basis:
1. Equal time will be allowed for labor performed by members in the
actual construction of the homes regardless of the type of work
involved.
2. Rates for time allowances for labor performed by persons other
than members, will be determined by the Officers with the approval of
the Labor Manager and the construction supervisor.
3. A member may not work alone on the member's own house unless the
job can be done alone and the consent of the construction supervisor has
been obtained.
4. The hours worked will be reported by each worker to the
construction supervisor each day. The construction supervisor will
promptly turn in a work sheet for each worker to the Labor Manager, who
will credit the hours worked to that member's account. In case of a
dispute as to the number of hours to be credited, the question will be
resolved by a majority vote of the officers of the Association.
We agree that:
The Association, by majority vote, will determine and recommend the
best way to buy materials and recommend contractors for any skilled
work. Each member shall make its own decision in selecting the type of
building materials and in selecting a contractor from those recommended
by the Association. Each member shall pay the cost of materials and the
contractor in connection with its own home.
2. The Association will collect cost of operation of the Association
from members, not to exceed $ ------ from each member.
The Association will collect, by any means available, payment for
failing to provide the amount of labor agreed.
4. The Association will act for the group in other matters related to
the project when authorized by a majority of the members.
5. Property insurance will be obtained by the members as required by
the Farmers Home Administration. Members also will obtain workmen's
compensation insurance as required by State law or public liability
insurance against claims of others when required by the Farmers Home
Administration.
After a determination is made by the officers that the last house is
completed and that there are no obligations of or to the Association,
upon majority vote of the members and with the consent of the Farmers
Home Administration the Association shall terminate.
Amendments to this agreement may be made by a majority vote of the
members, at a meeting called for the announced purpose of considering
amendments, to take effect upon approval by the Farmers Home
Administration County Supervisor; but no amendments may decrease the
rights or increase the liability of any member without such member's
consent.
Date ---------- Signed Applicant ---------- Date ---------- Signed
Co-applicant ----------
Date ---------- Signed Applicant ---------- Date ---------- Signed
Co-applicant ----------
Date ---------- Signed Applicant ---------- Date ---------- Signed
Co-applicant ----------
Date ---------- Signed Applicant ---------- Date ---------- Signed
Co-applicant ----------
(46 FR 61991, Dec. 21, 1981. Redesignated at 48 FR 223, Jan. 4, 1983)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991,subpart A of
part 1944 was amended by removing exhibit E-2, effective January 30,
1992. For the convenience of the user, the superseded text follows:
07 CFR 1944.47 Pt. 1944, Subpt. A, Exh. E-2, Note
07 CFR 1944.47 Exhibit E-2 -- Promissory Note
Date ----------
Eighteen months after date for value received, we promise to pay to
the ---------- Association or order the sum of ---------- ($ ). We have
agreed to furnish said Association 700 hours of our own labor or the
labor of other persons as approved by the officers and Labor Manager of
the Association and the construction supervisor in accordance with the
Membership Agreement of the Association. Credits will be made on this
note at the rate of $ ------ for each hour worked by either of the
undersigned, and at a rate determined in accordance with the Membership
Agreement for each hour worked by any other person for the account of
the undersigned, in the next eighteen months. This note will be
satisfied when the undersigned have furnished the actually required
number of hours labor. All time worked must be approved by the Labor
Manager of the Association. This note is subject to all provisions of
the Membership Agreement.
Applicant
Witness
Co-applicant
Address
(46 FR 61991, Dec. 21, 1981. Redesignated at 48 FR 223, Jan. 4, 1983)
07 CFR 1944.47 Subparts B-C -- (Reserved)
07 CFR 1944.47 Subpart D -- Farm Labor Housing Loan and Grant Policies,
Procedures and Authorizations
Source: 45 FR 47655, July 16, 1980, unless otherwise noted.
07 CFR 1944.151 Purpose.
This subpart sets forth the polices and procedures and delegates
authority for making initial and subsequent insures loans under section
514 and grants under section 516 of the Housing Act of 1949, to provide
housing and related facilities for domestic farm labor.
07 CFR 1944.152 Objective.
The basic objective of the Farmers Home Administration (FmHA) in
making domestic Farm Labor Housing (LH) loans is to provide decent,
safe, and sanitary housing for domestic farm labor to be located in
areas where a need for farm labor exists and in making LH grants where
there is a pressing need for such facilities in the area for farm
laborers and there is a reasonable doubt that the housing can be
provided without the grant assistance.
(56 FR 28472, June 21, 1991)
07 CFR 1944.153 Definitions.
Applicant. The applicant for or the recipient of an LH loan or grant.
Association of farmers. Two or more farmers acting as a single legal
entity. Association members may include the individual members of
farming partnerships or corporations.
Board and directors. Includes the governing body and members of the
governing body of an organization.
Construct or repair. To construct new structures or facilities, or
to acquire, relocate, or repair or improve existing structures or
facilities.
Development cost. Includes the cost of constructing, purchasing,
improving, altering, or repairing new or existing housing and related
facilities, buying household furnishings, and purchasing or improving
the necessary land. It includes necessary architectural, engineering,
legal fees and charges, and other appropriate technical and professional
fees and charges. It does not include fees, charges, or commissions
such as payments to brokers, negotiators, or other persons for the
referral of prospective applicants or solicitations of loans. For all
types of LH applicants, other than the individual farmowners, family
farm corporation and partnerships, and associations of farmers, the
development cost may include initial operating expenses of up to 2
percent of the permitted costs.
Domestic farm laborer. A person who receives a ''substantial portion
of his or her income'' performing farm labor employment (not
self-employed) in the United States, Puerto Rico, or the Virgin Islands
and either is a citizen of the United States or resides in the United
States, Puerto Rico, or the Virgin Islands after being legally admitted
for permanent residence. This definition may include the immediate
family members residing with such a person. (See the definition for
Self-employed in this section and/or exhibit L of this subpart which is
available in any FmHA office.)
Familial status. (See subpart E of part 1944 of this chapter or
subpart C of part 1930 of this chapter.)
Family farm corporation or partnership. A private corporation or
partnership in which at least 90 percent of the stock or interest is
owned and controlled by members of the same family. These family
members must be related by blood or law. If more than three separate
households are supported by the farming operation, the family farm
corporation or partnership must be:
(1) Legally organized and authorized to own and operate a farm
business within the State,
(2) Legally able to carry out the purposes of the loan, and
(3) Prohibited from the sale or transfer of 90 percent of the stock
or interest to other than family members by either the articles of
incorporation, bylaws or by agreement between the stockholders or
partners and the corporation or partnership.
Farm labor. For purposes of this subpart, farm labor includes
services in connection with cultivating the soil, raising or harvesting
any agriculture or aquaculture commodity; or in catching, netting,
handling, planting, drying, packing, grading, storing, or preserving in
its unmanufactured state any agriculture or aquaculture commodity; or
delivering to storage, market, or a carrier for transportation to market
or to processing any agricultural or aquacultural commodity.
Farm Labor Contractor. Any person -- other than an agriculture
employer, an agricultural association, or an employee of an agriculture
employer or agriculture association -- who, for any money or other
valuable consideration paid or promised to be paid, recruits, solicits,
hires, employs, furnishes, or transports any year round or migrant farm
laborer.
Farm owner. A natural person or persons who are the ''owners'' of a
''farm'' as these two terms are further defined in subpart A of part
1944 of this chapter.
Farmer. A person who is actually involved in day to day on-site
operations of a farm and who devotes a substantial amount of time to
personal participation in the conduct of the operation of a ''farm''.
Handicap. (See subpart C of part 1930 of this chapter.)
Home base. A home base State is a State which the farm laborer
claims as his/her domicile.
Household furnishings. Such basic durable items as stoves,
refrigerators, drapes, drapery rods, tables, chairs, dressers, and beds.
Items such as bedding, linens, dishes, silverware, and cooking utensils
are not included in this definition.
Housing. New or existing structures which are or will be suitable for
decent, safe and sanitary dwelling use by domestic farm labor.
''Housing'' may include household furnishings and related facilities
where appropriate.
Individual. A natural person. It may include the spouse.
LH fund(s). May include either loan or grant monies or both in this
subpart.
Local broad-based nonprofit organization. An organization, public or
private, that operates in one employment area and which:
(1) Is incorporated with the State, Puerto Rico, or Virgin Islands,
or a federally recognized Indian Tribe;
(2) Is organized and operated on a nonprofit basis;
(3) Is legally precluded from distributing any profits or dividends
to its members or any private individual during its corporate lifetime;
(4) Is not grower oriented (majority of board must be nonfarmers);
(5) Pledges to administer the housing as a community service in the
interest of the whole community, regardless of race, color, national
origin, sex, religion, age, handicap, and marital or familial status;
(6) Has at least 25 members for projects with a total development
cost of up to $100,000 and additional members for projects costing more
than $100,000; and
(7) Has a membership reflecting a variety of interests of the area
where the housing will be located.
Members and membership. Includes stockholders and stock when
appropriate.
Migrant agricultural laborers. Agricultural laborers and family
dependents who establish a temporary residence while performing
agriculture work at one or more locations away from the place he/she
calls home or home base. (This does not include day-haul agricultural
workers whose travels are limited to work areas within one day of their
work locations.)
Mortgage. May include any appropriate form of security instrument.
Nonprofit organization of farmworkers. A nonprofit organization
which is incorporated with the State, Puerto Rico, or the Virgin
Islands, which has local representation in the membership, and whose
membership is composed of at least 51 percent farmworkers.
Organization. A broad-based nonprofit organization, a nonprofit
organization of farmworkers, federally recognized Indian Tribe, or an
agency or Political subdivision of State or local government.
Promissory note. May include a bond or other evidence of
indebtedness.
Regional or statewide broad-based nonprofit organization. Any
organization that operates or plans to operate in more than one
employment area, that provides or is planning to provide labor housing
to those areas and that meets the following criteria in addition to
those in paragraphs (1) through (6) under the definition for ''local
broad-based nonprofit organization:''
(1) The membership of the organization must be broadly representative
of the region or state by having representation from either the counties
or employment areas in which it provides or is planning to provide labor
housing; and
(2) The membership must include at least eight (8) members from the
employment area to be served by the project who represent a variety of
interests of the employment area. If the project is located in a
community or dependent upon a community for essential services, at least
four of the eight members must be residents of that community.
Related facilities. Includes community rooms or buildings,
cafeterias, dining halls, infirmaries, child care facilities, assembly
halls, and other essential service facilities such as central heating,
sewerage, lighting systems, clothes washing facilities, trash disposal
and safe domestic water supply. All related facilities must be
reasonably necessary for proper use of the housing as dwellings for
domestic farm labor occupants.
Retired or disabled domestic farm laborer. A ''retired domestic farm
laborer'' is a person who is at least 55 years of age and who has spent
the last 5 years prior to retirement as a domestic farm laborer or spent
the majority of the last 10 years prior to retirement as a domestic farm
laborer (self-certification and employer affidavits may be used as a
last resort). A ''disabled domestic farm laborer'' is a person who is
determined to have an impairment which is expected to be of
long-continued, indefinite duration, and substantially impedes the
person's ability to earn a livelihood from farm labor (as certified by a
licensed physician) and who is a domestic farm laborer prior to
disability.
Seasonal housing. Described in exhibit I of subpart A of part 1924
of this chapter.
Self-employed. The determination of self-employed farm laborers is in
accordance with the Common Law test used by the Internal Revenue Service
to determine an employer-employee relationship. The Common Law Rules
Factors are included in exhibit L of this subpart and are available for
review in any FmHA Office. Exhibit L of this subpart is provided for
situations when it is not clear an employer-employee relationship exists
for eligible farm labor. The eligibility determination and use of the
Common Law Rules Factors may be referred to the District or State
Director for resolution.
Subsequent LH loan or grant. A loan or grant to an applicant or
borrower to complete the units planned with the initial loan or grant.
Substantial portion of income. That portion of income received which
has been derived from farm labor performed by a farm laborer as defined
of this section.
(1) To determine if income is considered substantial, the measure to
be used will be:
(i) Actual dollars earned from farm labor by domestic farm laborers
other than migrant laborers must equal at least 65 percent of the annual
income limits indicated for the Standard Federal regions, as shown in
exhibit J of this subpart (which is available in any FmHA office). For
migrant laborers living in seasonal housing the actual dollars earned
from farm labor by a domestic farm laborer must equal at least 50
percent of annual limits as shown in Exhibit J of this subpart.
(ii) An alternate measure for determining substantial portion of
income when actual earnings are not available may be the duration of
time a farm laborer worked on a farm as a domestic farm worker during
the preceding 12 months. In order to be considered as substantial the
farm laborer must have worked at least 110 whole days in farm work. For
purposes of this section one whole day is the equivalent of, at least 7
hours. When using a period of more than one year, a yearly average
amounting to at least 110 days per year must be computed.
(2) When a natural disaster has occurred, such as a drought, flood,
freeze, etc., figures for the last full year of work will be used to
determine, substantial portion of income under paragraph (1) of this
definition.
(3) The tenant who qualifies as a domestic farm laborer in order to
reside or continue to reside in the project must not have household
income which exceeds the moderate income limit as shown in exhibit C of
subpart A of part 1944 of this chapter (which is available in any FmHA
office), for the appropriate household size and appropriate geographical
area.
(i) Income for purposes of this section is defined in exhibit B
(II)(C) of subpart C of part 1930 of this chapter and also includes the
full amount of periodic payments received from Social Security
(including Social Security payments received by adults on behalf of
minors or by minors intended for their own support), annuities,
insurance policies, retirement funds, pensions, disability or death
benefits (except lump sum settlements) and other similar types of
periodic receipts, as well as any payments that will begin during the
next 12 months, such as payments in lieu of earnings, such as
unemployment and disability compensation, worker compensation and
severance pay.
(ii) Exempted income is income of dependents, unmarried minors, under
18 years of age except as specified in paragraph (3)(i) of this
definition. (Tenants or co-tenants or spouses of either are not
considered as minors for purposes of this section.)
Variety of interests. To meet the representation of a variety of
interests in a broad-based nonprofit organization, members should be
actively affiliated with or participating in civic, business,
agricultural, or service organizations in their community; members'
previous and current occupations may be considered in this
determination. Individual members may represent multiple interests as
well.
(56 FR 28472, June 21, 1991
07 CFR 1944.154 Priorities for tenants' occupancy.
(a) Tenant occupancy in labor housing is prioritized in the following
order:
(1) First priority is to be given to eligible farm laborer households
based upon percent of total earnings from farm labor in the following
ranked categories: 71 to 100 percent; 51 to 70 percent; 26 to 50
percent; and less than 25 percent.
(i) For LH units without Rental Assistance, occupancy priority within
each ranking category is according to the household's income, very-low,
low-, then moderate.
(ii) For LH units with Rental Assistance, tenant occupancy priority
is given to all eligible very-low income farm worker households by
ranked category, then to low income farm worker households by ranked
category. Moderate income may be served when there are no very-low or
low-income eligible farm workers on the waiting lists, again by ranked
category.
(2) Second priority is given to retired or disabled farm laborer
households who were in the local farm market area at the time of
retirement or becoming disabled. Occupancy priority will be by
paragraph (a)(1) (i) or (ii) of this section without the farm income
ranking category.
(3) Third priority is to be given to other retired or disabled farm
laborer households. Occupancy priority will be by paragraph (a)(1) (i)
or (ii) of this section without the farm income ranking category.
(b) When there is a diminished need for housing by persons or
families in the above categories, such units may be made available to
persons or families eligible for occupancy under the section 515, Rural
Rental Housing program. Section 515 tenants may occupy the labor
housing until such time the units are again needed by persons or
families eligible under paragraph (a) of this section. As the basis for
FmHA's approval or disapproval of a borrower's determination of
diminished need, the borrower must submit to FmHA a current analysis of
need and demand, identical to the market survey required of applicants
in exhibit A-I of this subpart. The borrower's determination and the
State Director's recommendation should be forwarded to the National
Office for concurrence.
(c) For additional guidance on occupancy and rental assistance, refer
to FmHA Instruction 1930-C, exhibit B VI of this subpart, Renting
Procedures, and exhibit E of this subpart, Rental Assistance Program.
The Agency is required by statute to provide affordable housing to
eligible farm workers and their families as a first program priority and
to provide Rental Assistance as a second program priority. If it
appears there is conflict in FmHA Instructions concerning the housing of
an eligible Domestic or Migrant Farm Worker, document the problem and
consult the District Director. If necessary, the problem may be
referred to the State Office and/or the National Office for resolution.
(56 FR 28473, June 21, 1991)
07 CFR 1944.155 Responsibility for LH processing and servicing.
All LH loan and/or LH grant application processing and servicing is
the responsibility of the FmHA District Director. However, the State
Director may authorize the District Director to delegate processing and
servicing functions on a case by case basis to the appropriate County
Supervisor. Such delegation is limited to LH loans to farmowners and
family farm corporations or partnerships when (1) such an entity has
another existing FmHA loan(s), (2) the LH loan is considered part of the
applicant's farming operation, and (3) the delegation is considered by
the State Director to be in the best interest of the borrower and FmHA.
(45 FR 47655, July 16, 1980. Redesignated at 56 FR 28473, June 21,
1991)
1944.156 (Reserved)
07 CFR 1944.157 Eligibility requirements.
(a) Eligibility of applicant for an LH loan. To be eligible for an
LH loan the applicant must:
(1) Be a farmowner, family farm partnership, family farm corporation,
or an association of farmers whose farming operations demonstrate a need
for farm labor housing, or an organization, as these terms are defined
in 1944.153, which will own the housing and operate it on a nonprofit
basis.
(2) Except for State and local public agencies, or a political
subdivision thereof, be unable to provide the necessary housing from
their own resources and be unable to obtain the necessary credit from
any other source upon terms and conditions they could reasonably be
expected to fulfill. If an association of farmers or family farm
corporation or partnership, the individual members, individually and
jointly, must be unable to provide the necessary housing by utilizing
their own resources and be unable, by pledging their personal liability,
to obtain other credit that would enable them to provide housing for
farm workers at rental rates they can afford to pay. The individual
resources of family farm corporation or partnership members with less
than a ten percent corporate or partnership interest need not be
considered.
The State Director may make an exception to the requirement that an
individual farmowner, family farm corporation, family farm partnership
or an association be unable to obtain the necessary credit elsewhere
when all of the following conditions exist:
(i) There is a need in the area for housing for domestic farmworkers
who are migrants and that applicant will provide such housing;
(ii) There are no qualified State or political subdivisions or public
or private nonprofit organizations currently available or likely to
become available within a reasonable period of time that are willing and
able to provide the housing; and
(iii) The interest rate for such loans is in accordance with Subpart
A of Part 1810 of this chapter (FmHA Instruction 440.1).
(3) Have sufficient initial operating capital to pay costs such as
property and liability insurance premiums, fidelity bond premiums if
required, utility hookup deposits, maintenance equipment, moveable
furnishings and equipment, printing lease forms, and other initial
expenses. LH loans made to nonprofit organizations and to State or
local public agencies or political subdivisions thereof may include up
to 2 percent of the development cost for initial operating expenses.
(4) After the loan is made, have income sufficient to pay operating
expenses, make necessary capital replacements, make the payments on the
loan and other authorized debts, and accumulate reasonable reserves as
required.
(5) Possess the legal and actual capacity, character, ability, and
experience to carry out the undertakings and obligations required for
the loan, including the obligation to maintain and operate the housing
and related facilities for the purpose for which the loan is made.
Organizations operating in more than one local area will be required to
indicate their ability to provide local management and supervision of
the day-to-day operation of the housing project.
(6) Intend to use the housing for labor to be used in the farming
operations of the applicant or farming operations of its members if an
individual farmowner, family farm corporation or partnership, or an
association of farmers.
(7) Own the housing and related land or become the owner when the
loan is closed. An owner may include, in addition to the owner of full
marketable title, a lessee of a tract of land owned by a State,
political subdivision, public body or public agency, or Indian tribal
lands which are not available for purchase. It may also include a lease
of land when the State Director determines that long-term leasing of
sites by nonpublic bodies is a well established practice and such
leaseholds are fully marketable in the area, provided:
(i) The applicant is unable to obtain fee title to the property.
(ii) A recorded mortgage constituting a valid and enforceable lien on
the applicant's leasehold will be given as security.
(iii) The amount of the labor housing (LH) loan against the property
will not exceed the maximum security value or Maximum Debt Limit (MDL)
determined in accordance with Subpart A of Part 1809 (FmHA Instruction
422.1), or Subparts B and C of Part 1922 of this chapter, as
appropriate.
(iv) The unexpired term of the lease on the date of loan approval is
at least 25 percent longer than the repayment period of the loan and
rental charged for the lease should not exceed the rate charged for
similar leases in the area.
(v) The borrower's interest may not be subject to summary foreclosure
or cancellation.
(vi) The lease must:
(A) Not restrict the right to foreclose the LH mortgage or to
transfer the lease.
(B) Permit FmHA to bid at foreclosure sale or to accept voluntary
conveyance of the security in lieu of foreclosure.
(C) Permit FmHA after acquiring the leasehold through foreclosure, or
voluntary conveyance in lieu of foreclosure, or in event of abandonment
by the borrower, to occupy the property, or to sublet the property and
to sell the leasehold for cash or credit.
(D) Permit the borrower, in the event of default or inability to
continue with the lease and the LH loan, to transfer the leasehold,
subject to the LH mortgage, to a transferee with assumption of the LH
debt and grant obligation.
(vii) The advice of the Office of the General Counsel (OGC) will be
obtained as to legal sufficiency of the lease. When the State Director
is uncertain as to whether a loan can be made on a leasehold, the
request should be submitted to the National Office for evaluation and
instructions.
(8) If it is a private broad-based nonprofit organization or a
nonprofit organization of farmworkers, meet the following additional
requirements:
(i) In the event of its dissolution, be legally bound to transfer its
net assets to a nonprofit organization of a similar type or a public
body for use for domestic farm labor housing or other public purposes if
the need for farm labor housing no longer exists.
(ii) Responsibility for management of the housing must be vested in
the applicant's board of directors.
(A) A broad-based nonprofit organization must be governed by a board
of directors of not less than five members who are experienced in such
fields as real estate management, finance, or related businesses and who
will not be users of the farm workers housed in the project.
(B) A nonprofit organization of farmworkers must have representation
on the board from the area where the housing is located. Directors may
be elected who are not members of the organization but are experienced
in such fields as real estate management, finance, or related businesses
provided member directors represent a majority of the board.
(iii) Be prohibited from requiring or preventing employment on any
particular farm or farms as a condition of occupancy.
(iv) Except for an organization of farmworkers, be certified as
exempt from Federal income taxation.
(9) Be an individual farmowner who is a citizen of the United States,
the Commonwealth of Puerto Rico, the Virgin Islands, the territories and
possessions of the United States, or the trust territory of the Pacific
Islands or residents in one of the foregoing areas after being legally
admitted for permanent residence or an indefinite parole. If the
applicant is an organization, other than a State or political
subdivision, the majority of the members and controlling interests must
be individuals who meet the citizenship requirements for individual
farmowners as stated above.
(b) Eligibility of applicant for an LH grant. To be eligible for an
LH grant the applicant must meet the applicable requirements in
1944.157 (a) and:
(1) Be an organization, as defined in 1944.153 with an assured life
over a period of years sufficient to carry out the purpose of providing
low-rent housing for domestic farm labor. This should not be less than
the anticipated useful life of the project as suitable housing for
domestic farm labor, assuming proper maintenance and repair of the
property. Ordinarily, this should not be less than 50 years.
(2) When the grant is closed, be the owner (as defined in this
subpart) of the housing and related facilities, including the site.
(3) Be unable to provide the necessary housing from its own
resources, including any power to levy taxes, assessments, or charges,
and be unable to obtain the necessary credit through an LH loan or from
other sources upon terms and conditions the applicant could reasonably
be expected to fulfill.
(4) Possess the legal and actual capacity, ability, and experience to
incur and carry out the undertakings and obligations required, including
the obligations to maintain and operate the housing and related
facilities for the purpose for which the grant is made.
(5) Legally obligate itself not to divert income from the housing to
any other business, enterprise, or purpose.
(c) Authorized representative of applicant. FmHA will deal only with
the applicant or its bona fide representative and technical advisers.
The authorized representative of the applicant must be a person who has
no pecuniary interest in the award of the architectural or construction
contracts, management contracts, the purchase of equipment, or the
purchase of land for the housing site.
(45 FR 47655, July 16, 1980, as amended at 48 FR 7159, Feb. 18, 1983;
48 FR 44762, Sept. 30, 1983; 50 FR 8590, Mar. 4, 1985; 56 FR 28474,
June 21, 1991)
07 CFR 1944.158 Loan and grant purposes.
LH loans and grants may be made to qualified applicants to:
(a) Build, buy, improve or repair housing as defined in 1944.153(b).
(b) Purchase and improve the necessary land on which the housing will
be located.
(1) The cost of land purchased with loan or grant funds may not
exceed its present market value in its present condition. Present
market value will be determined by a current appraisal in accordance
with Subpart B of Part 1922 of this chapter.
(2) Loan or grants funds will not be used to buy land from a member
of an applicant-organization, or from another organization in which any
member of the applicant-organization has an interest, without prior
approval of the State Director. In granting this approval the State
Director should be sure that the purchase price does not exceed the
present market value.
(3) Loan or grant funds may not be used to acquire land in excess of
that needed for the housing, including related facilities, except when
the applicant cannot acquire only the needed land at a fair price, can
justify the acquisition, agrees to sell the excess land as soon as
practicable and apply proceeds on the loan, and has legal authority to
acquire and administer the land.
(c) Develop and install water supply, sewage disposal, streets, storm
water retention facilities or areas, and heat and light systems
necessary in connection with the housing. If the facilities are located
offsite, the following requirements must be met:
(1) The applicant will hold the title to the facility or have a
legally assured adequate right to use of the facility for at least the
life of the loan or grant and such title or right can be transferred to
any subsequent owner of the site.
(2) The facilities are provided for the exclusive use of the LH
project or funds are limited to the prorated part of the total cost of
the facility according to the use and benefit to the project. The
applicant will agree in writing to the application of extra payments on
the LH loan of any subsequent collection by the applicant from other
users or beneficiaries of the facility.
(3) Adequate security can be obtained with or without a mortgage
based on the offsite facilities.
(d) Construct other related facilities in connection with the housing
such as:
(1) Maintenance workshop and storage facilities.
(2) Recreation center including lounge if the project is large enough
to justify such a facility.
(3) Central cooking and dining facilities when the project is large
enough to justify such services.
(4) Small infirmary for emergency care only when justified.
(5) Laundry room and equipment, including clotheslines, if not
provided in the individual units.
(6) Appropriate outdoor recreational facilities and other facilities
to meet essential needs.
(7) Child day care facilities when needed and feasible.
(8) Trash retention areas if necessary.
(9) Outdoor lighting in pedestrian areas where use is anticipated
after sunset.
(e) Construct office and living quarters for the resident manager and
other operating personnel if needed and advantageous to the project and
the Government.
(f) Purchase and install ranges, refrigerators, drapes, drapery rods,
clothes washers, and clothes dryers. If individual washer and dryer
hookups are provided, clothes washers and clothes dryers may be
installed in individual rental units only if the inclusion of such items
in individual units is needed and is customary in the area for the type
of housing involved and is consistent with the requirement that the
construction be undertaken in an economical manner and not constitute
elaborate or extravagant items. Otherwise, the clothes washers and
clothes dryers must be installed in a central laundry room. The number
of washers and dryers must be adequate to serve the tenant needs.
Whenever practical, this equipment should be attached to the real
property in a manner to prevent easy removal.
(g) Purchase and install essential equipment which upon installation
becomes a part of the real estate.
(h) Provide landscaping, foundation planting, seeding or sodding of
lawns, and necessary facilities related to buildings such as walks,
yards, fences, parking areas, and driveways.
(i) Pay related costs such as fees and charges for legal,
architectural, engineering, and other appropriate technical and required
services. Ordinarily, FmHA will furnish the needed guidance for the
development of an LH loan docket and project. However, the State
Director may authorize the use of loan funds to enable a nonprofit
corporation to pay a qualified consulting organization or foundation,
operating on a nonprofit basis, charges for necessary services, provided
the State Director determines that:
(1) Either (i) the applicant, with available FmHA assistance, cannot
meet all requirements for a sound loan or grant without the services, or
(ii) the services would permit significant financial savings to the
Government, either directly or by lightening the workload involved in
processing applications, and
(2) The charges are reasonable in amount, considering (i) the amount
and the purpose of the loan or grant, (ii) the payment ability of the
borrower, and (iii) the cost of similar services in the same or similar
rural areas.
(j) Pay interest which will accrue during the estimated construction
period if interim financing is used (or if loan will be closed using
multiple advances on daily interest accrual (DIAS) with annual
installment and deferred principal). In the case of multiple advances
when the loan is closed on a predetermined amortization schedule system
(PASS) or on DIAS with monthly installments, loan funds will not be used
for construction interest. Accrued interest during the construction
period will be capitalized when construction is substantially complete
and the project is ready for full operation.
(k) Pay normal charges necessary to obtain interim financing.
(l) Pay initial operating expenses up to 2 percent of the development
cost for any type applicant except an individual farmowner, family farm
corporation or partnership, or an association of farmers.
(m) Pay for related costs incurred in compliance with the Uniform
Relocation Assistance and Real Property Acquisition Act of 1970 and in
accordance with 1944.164(q) of this subpart.
(45 FR 47655, July 16, 1980, as amended at 50 FR 8590, Mar. 4, 1985)
07 CFR 1944.159 Rates and terms.
(a) Amortization period. Each loan will be scheduled for payment in
installments within a period, not to exceed 33 years, as may be
necessary to assure that the loan will be adequately secured, taking
into account the probable depreciation of the security.
(b) Interest rate. Upon request of the applicant, the interest rate
charged by FmHA will be the lower of the interest rates in effect at the
time of loan approval or loan closing. If an applicant does not
indicate a choice, the loan will be closed at the interest rate in
effect at the time of loan approval. Interest rates are specified in
Exhibit B of FmHA Instruction 440.1 (available in any FmHA office).
(c) Amortization schedule. LH loans, including subsequent loans
closed after May 1, 1985, must be on PASS if the project has year-round
occupancy and monthly income. LH loans requiring annual installments
due to seasonal income may be closed on the daily interest accrual
system (DIAS) with monthly or annual payments. All loans on any project
receiving a subsequent loan on or after May 1, 1985, must be converted
to PASS if the subsequent loan is on PASS. Accounting and processing
payments for PASS loans will be handled under Subpart K of Part 1951 of
this chapter.
(45 FR 47655, July 16, 1980, as amended at 50 FR 8591, Mar. 4, 1985;
51 FR 6734, Feb. 26, 1986)
1944.160 -- 1944.162 (Reserved)
07 CFR 1944.163 Conditions under which an LH grant may be made.
A grant may be made to an eligible applicant only when all of the
following requirements can be met:
(a) The applicant will contribute at least one-tenth of the total
development cost, obtained from its own resources, including any power
to levy taxes, assessments, or charges, with funds from other sources,
or with an LH loan. The applicant's contribution must be available at
the time of grant closing. If an LH loan is needed, the applicant will
file an application for a combination loan and grant at the same time.
(b) The housing and related facilities will fulfill a pressing need
in the area in which the housing is or will be located and there is
reasonable doubt that such housing can be provided without the grant.
(1) The applicant will furnish FmHA factual evidence of fulfilling a
pressing need. This need will be documented in accordance with Exhibits
A-1 or A-2 of this subpart, as applicable, and using Exhibit A-4 as a
guideline if appropriate.
(2) When appropriate, the District Director may check with sources
such as the State Department of Labor, Bureau of Employment Security,
and other reliable sources to verify the information submitted.
(3) If, after evaluating the information furnished by the applicant
and additional information that may be provided, the District Director
determines that the housing will fulfill a pressing need and that a
reasonable doubt exists that the housing can be provided without the
grant, the District Director will prepare a narrative statement to
support these conclusions.
(c) The housing will be constructed in accordance with Exhibit A-3 of
this subpart.
(d) The housing will be constructed in an economical manner and will
not be of elaborate or extravagant design or material.
(e) The housing must be durable and suitable for year round use
unless the need for such housing is seasonal and year-round occupancy is
not practical and will not be needed. Construction of seasonal farm
labor housing will be permitted upon a finding of persistent need for
migrant farmworker housing in the area and such housing will be used
solely by migrant farmworkers while they are away from their residence.
Seasonal farm labor housing that will be occupied for six months or less
per year by migrant farmworkers while they are away from their
residence, will be constructed in accordance with Exhibit I to Subpart A
of Part 1924. Farm labor housing that is to be occupied less than
year-round but more than six months shall be in substantial conformance
with and be easily convertible to the applicable development standards
as required by 1924.5(d)(1) of Subpart A of Part 1924 of this chapter.
Such projects that are to be occupied less than year-round but more than
six months may be approved after review of the savings in construction
costs, the plan for conversion to full compliance with development
standards and the long term need for such housing.
(f) Housing will be constructed and designed with the consideration
given to selecting the most economic, energy efficient heating (and
cooling, if applicable) systems including, but not limited to,
insulation in excess of the requirements of Exhibit D of Subpart A of
Part 1924 of this chapter (FmHA Instruction 1924-A, Exhibit D);
active/passive solar design; building orientation; and sun control
measures.
(45 FR 47655, July 16, 1980, as amended at 47 FR 28086, June 29,
1982; 52 FR 8036, Mar. 13, 1987)
07 CFR 1944.164 Limitations and conditions.
(a) Limitations on use of loan and grant funds. Among the purposes
for which loan and grant funds will not be used are the following:
(1) Providing housing for the members of the immediate family of the
applicant when the applicant is an individual farmowner, family farm
corporation, or partnership, or an association of farmers. (Immediate
family in this instance includes mother, father, brothers, sisters, sons
and daughters of applicant(s) and spouse.)
(2) Housing, related facilities, or household furnishings which are
elaborate or extravagant in design or material.
(3) Refinancing debts of the applicant.
(4) Moveable-type furnishings or equipment except household
furnishings as defined in 1944.153(c).
(5) Payment of any fees, charges, or commissions to any broker,
negotiator, or other person for the referral of a prospective applicant
or solicitation of the loan.
(6) Payment of any fee, salary, commission, profit, or compensation
to an applicant, or any officer, director, trustee, stockholder, member,
or agent of the applicant, except as provided in 1944.158(i).
(b) Priority in use of grant funds and maximum amount of grant. (1)
Priority in use of grant funds. Projects will be authorized for funding
by the National and State Offices based on priority to:
(i) Locations where a long range and pressing need exists for farm
labor housing because of labor intensive agricultural crop production
and a lack of suitable housing.
(ii) Projects where occupants will derive the highest portion of
their income from on-farm agricultural work.
(2) Maximum amount of grant. The amount of any grant may not exceed
the lessor of:
(i) Ninety percent of the total development cost, or
(ii) That portion of the total cash development cost which exceeds
the sum of any amount the applicant can provide from its own resources
plus the amount of a loan which the applicant will probably be able to
repay, with interest, from income from rentals within the financial
reach of low-income farmworker families. The availability of rental
assistance and Department of Housing and Urban development (HUD) section
8 subsidies will be considered in determining the rentals that farm
workers will pay.
(c) Advance of grant funds. The times for requesting Treasury Checks
representing LH grant funds and depositing such checks in the
applicant's supervised bank account will be determined in accordance
with 1944.175. When other funds to help finance the labor housing are
being supplied by the applicant from its own resources or from a loan,
such other funds will be used before a grant check is requested from the
Treasury or deposited in or disbursed from the supervised bank account,
as appropriate to comply with 1944.175.
(d) Obligations incurred before loan or grant closing. When the
applicant files an application for a loan or grant, the District
Director will advise the applicant that construction must not be started
and obligations for work materials or land must not be incurred or made
before the loan or grant is closed, and that it is the policy of FmHA
not to permit loan or grant funds to be used to pay such obligations or
reimburse the applicant for such payments. If, nevertheless, the
applicant incurs expenses or makes payments for such purposes before the
loan or grant is closed, the State Director may authorize the use of
loan or grant funds to pay such expenses or reimburse the applicant only
when the State Director finds that all the following conditions exist:
(1) The expenses were incurred: (i) After the applicant filed a
written application for a loan with FmHA; or (ii) before the date of
application as part of a predevelopment loan specifically intended as
interim financing from a public agency or nonprofit organization and
prior concurrence of the National Office is obtained; or (iii) before
the date of application as part of a development loan made to a State or
local public agency specifically intended as temporary financing and
prior concurrence of the National Office is obtained.
(2) The applicant is unable to pay such expenses from its own
resources or from credit from other sources, and failure to authorize
the use of loan or grant funds to pay such expenses or reimburse the
applicant would impair the applicant's financial position.
(3) The expenses were incurred or payments were made for authorized
loan and grant purposes.
(4) Contracts, materials, construction and any land purchase meet
FmHA standards.
(5) Payment of the expenses will remove any liens which have attached
and any basis for liens that may attach to the property on account of
such expenses.
(e) Grant resolution. A resolution will be adopted by the
applicant's Board of Directors and a certified copy included in the
grant docket before a grant is approved.
(1) For a grant accompanied by an LH loan, the form of resolution
attached as Exhibit E to this subpart will be used with any necessary
changes required or approved by OGC. For a grant not accompanied by an
LH loan, the form of resolution will be provided or approved by the
National Office, following Exhibit E as closely feasible.
(2) The form of resolution to be adopted by the applicant will
contain policy and procedural requirements which should be read and be
fully understood by the applicant's Board of Directors and officers.
Included in the resolution will be provisions authorizing FmHA to
prescribe requirements regarding the operation of the housing and
related facilities and other provisions including the following:
(i) The rentals charged domestic farm labor will not exceed such
amounts as are approved by FmHA after considering the income of the
occupants and the necessary costs of operation, debt service, and
adequate maintenance of the housing.
(ii) The housing will be maintained at all times in a safe and
sanitary condition in accordance with standards prescribed by State and
local law, and as required by FmHA.
(iii) In granting occupancy of the housing an absolute priority will
be given at all times to domestic farm labor.
(3) The resolution will also authorize the appropriate officers of
the applicant to execute a ''Labor Housing Grant Agreement,'' in the
format of Exhibit F of this subpart. If changes are required in Exhibit
F they must be approved by OGC.
(f) Conditional obligations to repay grants. The obligations
incurred by the applicant as a condition of the grant will be in
accordance with Exhibit F of this subpart.
(g) Loan resolution or loan agreement. (1) An organization will have
its Board of Directors adopt a loan resolution and furnish a certified
copy for the loan docket before loan approval. The resolution will be
substantially in the format of Exhibit C of this subpart. Any necessary
changes must be approved by OGC.
(2) All other loan applicants will execute a loan agreement in
substantially the same format as Exhibit D of this subpart. Any
necessary changes must be approved by OGC. The State Director may waive
the use of the loan agreement when:
(i) The applicant receives no rental income from its tenants, and
(ii) The applicant is an individual or family farm corporation or
partnership. The applicant must agree, and so indicate, that the
operation and maintenance of the LH unit(s) are part of the farm
operation, and should use Form FmHA 431-2, ''Farm and Home Plan,'' for
this purpose, which is available in any FmHA office.
(h) Restrictions on conditions of occupancy. No organizational
borrower, other than an association of farmers or family farm
corporation or partnership will be permitted to require that an occupant
work on any particular farm or for any particular owner or interest as a
condition of occupancy of the housing. Tenant selection should be in
accordance with Exhibit B of subpart C of part 1930 of this chapter. No
borrower will discriminate, or permit discrimination by any agent,
lessee, or other operator in the use or occupancy of the housing or
related facilities because or race, color, religion sex, age, handicap,
marital or familial status or National origin. Each borrower will
comply with subpart E of part 1901 of this Chapter and prepare and
submit HUD Form 935.2, ''Affirmative Fair Housing Marketing Plan,''
which is available in any FmHA Office.
(i) Supervisory assistance. Supervision will be provided borrowers
to the extent necessary to achieve the objectives of the loan and to
protect the interests of the Government. The provision of Subpart C of
Part 1930 of this chapter (FmHA Instruction 1930-C) will be followed.
(j) Location of housing. (1) Multifamily type housing designed for
year-round occupancy will meet the location requirements as explained in
Exhibit A-3 of this subpart.
(2) Single family type housing designed for year-round occupancy, as
explained in Exhibit A-3 of this subpart, will be located:
(i) On plotted lots within a subdivision which complies with all
local requirements and is developed in accordance with Subpart C of Part
1924 of this chapter; or
(ii) On scattered sites located to meet the location requirements of
Subpart C of Part 1924 of this chapter and Part 1944 Subpart A.
(3) Housing designed for seasonal occupancy, whether single family or
multifamily type housing may be located on the farm as long as it is not
located near farm service buildings and will be situated to allow for
possible conversion to full-year occupancy should the need for migrant
farmworkers in the area change.
(k) International review. Intergovernmental consultation should be
carried out in accordance with 7 CFR Part 3015 Subpart V,
''Intergovernmental Review of Department of Agriculture Programs and
Activities'' for 25 units or more. See FmHA Instruction 1940-J,
available in any FmHA office.
(l) Guidelines for preparing environmental assessments and
environmental impact statements. All projects shall comply with Subpart
G of Part 1940 of this chapter.
(m) Guidelines for projects affecting floodplains. The provisions of
the National Flood Insurance Act of 1968 as amended by the Flood
Disaster Protection Act of 1973 apply to FmHA authorities permitting
financing of LH now located in or to be located in special flood or
mudslide prone areas as designated by the Federal Emergency Management
Agency. Subpart B of Part 1806 of this chapter (FmHA Instruction 426.2)
applies. It should be emphasized, however, that FmHA's response to
floodplain development is not limited to the Flood Insurance Program.
Pursuant to Executive Order 11988, ''Floodplain Management,'' FmHA shall
not fund any housing projects which impact a floodplain unless there is
no practicable alternative siting of the project. Applicants,
therefore, should concentrate in the early planning stages of this
proposal to locating sites which do not impact floodplains. See Subpart
G of Part 1940 of this chapter for applicable environmental
requirements.
(n) LH loans to Indians secured by trust or restricted land. Loans
to individuals will be secured by a mortgage on the leasehold interest
held by the applicant. The leasehold interest must meet the conditions
of 1944.18(b)(5) of Part 1944 Subpart A. Loans to tribes or tribal
corporations will be secured in accordance with 1823.409 and
1823.414(a) of Subpart N of Part 1823 of this chapter (FmHA Instruction
442.11, paragraphs IX and XIV A).
(o) Refinancing LH loans. Each borrower must agree to refinance the
unpaid balance of the LH loan at the request of FmHA whenever it appears
to FmHA that the borrower is unable to obtain a loan from responsible
cooperative or private credit sources at rates and terms which FmHA
considers reasonable, and still rent the units to eligible occupants at
rental rates within their payment ability. The refinancing of an LH
loan must comply with the restrictions indicated in 1944.176(c)(2) of
this subpart. For all loans closed prior to December 21, 1979, the
State Director shall comply and the borrower agrees to, the restrictive
provisions of 1944.200 of this subpart as a condition for the State
Director's approval or acceptance of prepayment of the FmHA loan.
(p) Prepayment of LH loan. The acceptance of a farm labor housing
loan will make the borrower subject to the restrictive-use provisions
contained in 1944.176(c)(2) of this subpart.
(q) Uniform Relocation Assistance and Real Property Acquisition Act
of 1970. Compliance with the requirements of this Act applies to public
bodies and agencies which have the power of eminent domain and/or
condemnation. It will be the responsibility of the applicant to provide
assistance required for relocation of displaced persons from the site on
which a LH project will be located. FmHA loan funds may be increased to
cover costs incurred in the relocation of displaced persons from the
site over and above the appraised value of the property. Until national
FmHA instructions are published the Department regulations found at Part
21 of this chapter should be followed and the National Office should be
consulted for guidance in developing an LH loan for a project affected
by this Act. However, the following should be considered:
(1) Generally, sites which will involve relocation of displaced
persons should not be considered if alternative sites are available.
(2) For the purpose of determining the appraisal value of the site to
be acquired in respect to LH projects which involve relocation of
displaced persons, the designated FmHA multiple family housing appraiser
or such other agency designated appraiser shall be used.
(45 FR 47655, July 16, 1980, as amended at 46 FR 61990, Dec. 21,
1981; 48 FR 29121, June 24, 1983; 49 FR 3762, Jan. 30, 1984; 52 FR
19301, May 22, 1987; 52 FR 24288, June 30, 1987; 55 FR 6244, Feb. 22,
1990)
1944.165 -- 1944.167 (Reserved)
07 CFR 1944.168 Security requirements.
(a) General. Each loan will be secured to adequately protect the
financial interest of the Government in the loan during its repayment
period. The amount of the loan may not exceed the value of the security
for the loan as determined by an appraisal, less the unpaid principal
balance, plus past due interest of any prior liens that will or will
likely exist against the security after the loan is closed. If the
State Director determines it necessary or advisable to encumber
household furnishings purchased with loan funds, the State Director
will, with the advice of OGC, issue appropriate instructions setting
forth the manner in which household furnishings will be secured.
(b) Loan to an organization or an association of farmers. (1) A loan
to an organization or association of farmers which can give a real
estate mortgage will be secured by a mortgage on good and marketable
title to the real estate including the housing, the related facilities,
and the site, subject to any exceptions that may be waived as provided
in subpart B of part 1927 of this chapter.
(2) If a first mortgage cannot be obtained, a junior mortgage may be
taken provided:
(i) The prior mortgage as affected by the State law does not contain
such provisions for future advances, payment schedules, forfeiture or
cancellation, foreclosure without adequate notice to junior lienholders,
or other matters which may jeopardize FmHA's security position or the
borrower's ability to pay the loan; or
(ii) Such provisions are satisfactorily limited, modified waived, or
subordinated.
(3) If it is impossible for an applicant which is a public or
quasi-public organization to give a real estate mortgage, the security
to be taken will be determined by the National Office upon the
recommendation of the State Director. The State Director should consult
OGC as to whether the proposed security is legally permissible
(4) In individual cases, additional security may be advisable to
ensure that the loan objectives will be carried out. For example, to
provide for more effective management and operation, one or more of the
following types of security may be required.
(i) A mortgage on other real estate owned by the applicant.
(ii) A pledge, assignment, mortgage, or other security interest in
income from the housing.
(iii) A cosigner on the promissory note, letter of credit,
endorsements, assessments, user agreements, personal liability
agreements, or membership subscription agreements.
(5) As a general policy, personal liability will be required of the
members of an association of farmers.
(c) Loan to an individual farmowner or family farm corporation or
partnership. For every loan to an individual farm owner or family farm
corporation or partnership, a real estate mortgage will be taken on the
farm, whenever practicable, in accordance with subpart B of part 1927 of
this chapter. However, if requested by the applicant, a mortgage may be
taken on the units and at least enough land to clearly provide adequate
security for the loan as determined by an appraisal. In such cases, the
loan must meet the following conditions:
(1) If the tract to be mortgaged is covered by a prior lien which
also applies to other land, the tract to be given as security must
either:
(i) Be released from the prior lien or subordinated to permit a first
lien for the LH loan, or
(ii) Provide adequate security for the entire prior lien debt and the
LH loan and comply with 1944.18(b)(6) of Part 1944 Subpart A.
(2) Personal liability will be required of all stockholders or
partners.
(45 FR 47655, July 16, 1980, as amended at 46 FR 61990, Dec. 21,
1981; 56 FR 67482, Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.168 was
amended by revising paragraph (b)(1) and the first sentence of the
introductory text of paragraph (c), effective January 30, 1992. For the
convenience of the user, the superseded text follows:
1944.168 Security requirements.
(b) * * *
(1) A loan to an organization or an association of farmers which can
give a real estate mortgage will be secured by a mortgage on good and
marketable title to the real estate including the housing, the related
facilities, and the site, subject to any exceptions that may be waived
as provided in 1807.2 (d) of Part 1807 of this chapter (paragraph II D
of FmHA Instruction 427.1).
(c) Loan to an individual farmowner or family farm corporation or
partnership. For every loan to an individual farmowner or family farm
corporation or partnership, a real estate mortgage will be taken on the
farm, whenever practicable, in accordance with Part 1807 of this chapter
(FmHA Instruction 427.1). * * *
07 CFR 1944.169 Technical, legal, and other services.
(a) Appraisals. (1) When real estate is taken as security, the
property will be appraised by an FmHA employee authorized to make real
estate appraisals. Form FmHA 426-1, ''Valuation of Buildings,'' will be
completed to show the depreciated replacement value of all the buildings
existing or to be constructed on the property to be taken as security.
When the security being offered is:
(i) A farm, an appraisal will be made in accordance with Subpart A of
Part 1809 of this chapter (FmHA Instruction 422.1).
(ii) Other than a farm, and the units are individual detached
dwellings, an appraisal will be made in accordance with FmHA Instruction
422.3 which is available in Subpart C of Part 1922 of this chapter.
(iii) Other than a farm, and involves multifamily or dormitory-type
housing, an appraisal will be made in accordance with Subpart B of Part
1922 of this chapter.
(2) If the loan includes funds for purchasing household furnishings
or equipment which will not become part of the real estate, a narrative
type appraisal, identifying the items, will be prepared by the employee
preparing the real estate appraisal. The value placed on such
furnishings will be based on comparable selling prices in the area.
(b) Architectural and engineering services. Housing and related
facilities will be planned and designed to meet the needs of the type of
occupants who will likely occupy it. A written contract for
architectural or engineering services will be required as outlined in
Subpart A of Part 1924 of this chapter.
(c) Construction and development policies. (1) Planning and
construction. Housing and related facilities will be planned in
accordance with Subpart A of Part 1924 of this chapter and Exhibit A-3
of this subpart. Construction and development will be performed in
accordance with Subpart A of Part 1924 of this chapter.
(2) Davis-Bacon Act. Construction financed with the assistance of an
LH grant will be subject to Subpart D of Part 1901 of this chapter
regarding the Davis-Bacon Act and related requirements.
(3) Compliance with local codes and regulations. Planning
construction, and operation of housing finance with the LH loan or grant
will conform with all applicable Federal, State, and local laws,
ordinances, codes, and regulations governing such matters as zoning,
construction, heating, plumbing, electrical installation, fire
prevention, health and safety, and sanitation. If there are no local or
State codes and regulations governing these matters, the State Director
will issue appropriate guidelines to insure that the facilities meet all
FmHA requirements.
(4) Land use objectives. Location of projects shall, to the extent
practicable, result in the preservation of Important Farmlands and
Forestlands, Prime Rangeland and Wetlands. State Directors will assure
that FmHA actions, investments, and programs on non-Federal lands are
consistent with State and local land use plans and programs to the
extent practicable. In carrying this out, State Directors will:
(i) Attempt to integrate departmental and State and local land use
policies and programs.
(ii) Identify and minimize to the extent practicable adverse
environmental, economic, and social effects of FmHA projects and
programs.
(iii) Provide landholders and other concerned people information
about the alternatives to, and the associated environmental, social, and
economic implications of proposed actions.
(iv) Refrain from enabling others to irreversibly convert these lands
or encroaching or enabling other encroachments on flood plains unless
there are no practicable alternatives.
(v) In unusual circumstances when the State Director is unable to
make a determination regarding land classification, the State Director
will request assistance from the Administrator of the Soil Conservation
Service in Washington, D.C.
(d) Optioning of land. If a loan or grant includes funds to purchase
real estate, an acceptable option to purchase or purchase agreement will
be included in the application. After the loan is approved, the
District Director will have Form FmHA 440-35, ''Acceptance of Option,''
or other appropriate form of acceptance, completed, signed, and mailed
to the seller.
(e) Insurance. The State Director will determine the minimum amounts
and types of insurance the applicant will carry.
(1) Fire and extended coverage will be required on all buildings
included in the security for the loan in accordance with Subpart A of
Part 1806 of this chapter (FmHA Instruction 426.1).
(2) Suitable Workman's Compensation Insurance will be carried by the
applicant for all its employees.
(3) The applicant will be advised of the possibility of incurring
liability and encouraged, or may be required when appropriate, to obtain
liability insurance.
(f) Title clearance and legal services. When the applicant is an
organization, or has special title or loan closing problems, title
clearance and legal services will be obtained in accordance with
instructions from the OGC. In other cases, the provisions of subpart B
of part 1927 of this chapter regarding title clearance and legal
services apply.
(g) Use of and accountability for loan and grant funds. Loan and
grant funds and any funds furnished by the borrower for authorized
purposes will be deposited and handled in accordance with Subpart A of
Part 1902 of this chapter.
(1) Funds furnished by the borrower for the purchase of special
equipment and furnishings to be used in connection with the project, for
which loan or grant funds could not be used, should not be deposited in
the supervised bank account with loan or grant funds.
(2) For all organizations collateral will be pledged by the financial
institution for any loan or grant funds or borrower contribution in
accordance with 1902.7 of this chapter.
(3) Funds may be disbursed from the supervised bank account only for
authorized loan or grant purposes.
(h) Bond counsel. All public bodies offering bonds as security for
the LH loan are required to obtain the services of recognized bond
counsel in the preparation of evidence of indebtedness in accordance
with 1942.19 of Subpart A of Part 1942 of this chapter except as
provided in paragraph 1 of Exhibit H of this subpart.
(i) Bonding. (1) The provisions of Subpart A of Part 1924 of this
chapter pertaining to surety bonds are applicable to LH loans and
grants.
(2) If the applicant is an organization, it will provide fidelity
bond coverage for the official(s) entrusted with the receipt, custody,
and disbursement of its funds and the custody of any other negotiable or
readily saleable personal property. The amount of the bond will be at
least equal to the maximum amount of money that the applicant will have
on hand at any one time exclusive of loan or grant funds deposited in a
supervised bank account. The United States will be named co-obligee in
the bond if not prohibited by State law. Form FmHA 440-24, ''Position
Fidelity Schedule Bond,'' may be used if permitted by State law.
(j) Contracts for legal services. On projects requiring extensive
legal services, the applicant will be required to have a written
contract for these services. All such contracts will be subject to
review and approval by FmHA and, therefore, should be submitted to FmHA
before execution by the applicant. Contracts will provide for the types
of service to be performed and the amount of the fees to be paid, either
in lump-sum on the completion of all services or in installments as
services are performed. ''Legal Service Agreement,'' Exhibit G of this
subpart, may be used.
(45 FR 47655, July 16, 1980, as amended at 46 FR 36112, July 14,
1981; 48 FR 7159, Feb. 18, 1983; 56 FR 67482, Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.169 was
amended by changing the phrase ''Part 1807 of this chapter (FmHA
Instruction 427.1)'' to read ''subpart B of part 1927 of this chapter,''
effective January 30, 1992.
07 CFR 1944.170 Processing preapplications.
(a) Preapplication. SF 424.2, ''Application for Federal Assistance
(For Construction),'' with the additional information outlined in
Exhibit A-1 or A-2 of this subpart, as applicable, will be submitted to
the District Director. This information is used to determine the
applicant's eligibility and eliminate any proposals which have little or
no chance for funding. The applicant should be instructed not to
prepare an application until notified to proceed. General guidance to
applicants is provided in the Labor Housing Loan and Grant Application
Handbook, Exhibit A.
(b) Actions by District Director. The preapplication, with
attachments, will be reviewed by the District Director. The District
Director will inspect the site and consider its desirability if it
appears that the applicant is eligible.
(1) If the preapplication proposes an LH loan of a type and amount
within the approval authority of the District Director according to
Subpart A of Part 1901 of this chapter, the District Director should
determine the applicant's eligibility and execute Form AD-622, ''Notice
of Preapplication Review Action.''
(2) If the preapplication proposes an LH loan and/or grant which
requires State Office approval, the preapplication, including the
comments and recommendations of the District Director and any additional
material considered necessary, will be forwarded to the State Director.
(c) Actions by State Director. (1) If the applicant is an
organization adopting without change the ''Articles and Bylaws''
prescribed by State supplements, the preapplication need not be
submitted to OGC.
(2) In all other cases involving loans or grants to organizations,
the docket, with any questions or comments of the State Director, will
be submitted to OGC for a preliminary opinion as to whether the
applicant and the proposed loan meet or can meet the requirements of
State law and this subpart.
(3) An original and one copy of the appropriate environmental review
document required by Subpart G of Part 1940 of this chapter must be
completed prior to submitting the docket to the National Office for
review.
(4) In cases not receiving a National Office review, the following
statement is to be added to the Form AD-622: ''You are advised against
taking any actions or incurring any obligations which would either limit
the range of alternatives to be considered, or which would have an
adverse effect on the environment. Satisfactory completion of the
environmental review process in accordance with Subpart G of Part 1940
of this chapter must occur prior to loan approval. The issuance of this
review action does not constitute site approval.''
(5) Determining amount of grant.
(i) General. The State Director will determine the amount the
applicant can obtain from other sources, including an LH loan, and the
amount of the grant to be made, within the limits set forth in
1944.164(b)(2). The State Director will make this determination after
thoroughly analyzing the information in the docket and receiving
authorization from the National Office.
(ii) Method of determining amount of grant.
(A) The State Director will examine the income of the project based
on the estimated rental charges and operating costs of the housing when
in full operation to determine the soundness of the operations. When
there is any doubt as to the probable soundness due to unrealistic
planning of income or operating expenses, or for other reasons, the
housing project and its operation will be discussed with the applicant
to determine changes which can be made to correct the deficiencies.
(B) When a sound plan of operation has been agreed upon, the State
Director will determine the amount of funds that can be expected to be
available from other sources, including an LH loan. The State Director
will also determine the amount of income available for loan repayments
after allowing for reasonable and necessary maintenance costs, payments
on debts of the applicant, and the orderly accumulation of an adequate
reserve.
(C) The amount of the grants will be the difference between the
amount of funds to be provided in accordance with paragraph
(c)(3)(ii)(B) of this section, plus any funds available from the
applicant's own resources and the total development cost of the project.
In no case, however, may the amount of the grant exceed 90 percent of
the total development cost.
(6) When the State Director considers it necessary, any
preapplication may be sent to the National Office for evaluation and
instructions.
(7) The State Director will determine the priority of the
preapplication when grant funds are applied for in accordance with
1944.164(b)(1) of this subpart. If in accordance with those priorities,
and after completing review of the preapplication material and
determining the amount of grant, the State Director will notify the
District Director of the State Director's determination and authorize
the District Director to prepare and execute Form AD-622. The District
Director will forward the original to the applicant, a copy to the State
Director, and a copy to the case file.
(d) Accountability. Applicants should be made aware of the
accountability requirements of persons paid to influence the making of
an FmHA housing loan and/or grant as described in subpart S of part 1940
of this chapter.
(48 FR 200, Jan. 4, 1983, as amended at 53 FR 36267, Sept. 19, 1988;
55 FR 13503, Apr. 11, 1990; 55 FR 25077, June 20, 1990)
07 CFR 1944.171 Preparation of completed loan and/or grant docket.
(a) Information needed. If the applicant has been requested to file
an application, SF 424.2 (for application submission), and the
additional information as outlined in Exhibit A-1 or A-2, as applicable,
will be submitted to the District Director.
(b) District Director's responsibility. As the information for the
loan docket is being developed, the District Director will work closely
with the applicant. The District Director will review and verify the
information furnished for correctness, adequacy, and completeness. The
District Director will determine that the market survey is adequate and
that the market survey report is accurate. The District Director will
evaluate the manner in which the applicant plans to conduct its business
and financial affairs and comment on the adequacy of the management.
(c) County Committee certification. County Committees will not be
used to review LH loan and/or grant applications.
(d) Assembly, review, and distribution of complete loan and/or grant
docket items. When all items required for the complete loan and/or
grant docket have been furnished, they will be examined thoroughly by
the FmHA official who will approve the loan and/or grant to make sure
they are properly and accurately prepared and are complete in all
aspects, including dates and signatures. The loan and/or grant docket
items will be assembled in the following order for distribution after
approval:
(e) Submission of docket to State Office. (1) The loan and/or grant
docket needing State Office approval, including comments and
recommendations by the District Director, will be submitted to the State
Office. The State Director will prepare and include in the docket a
memorandum to the District Director which will either require additional
information if the material submitted is inadequate or will set forth
the conditions of loan approval. The proposed conditions of loan
approval must indicate if construction will be financed by multiple
advances or interim financing if the loan will be closed on DIAS or
PASS, and when the payment will be made, if an annual payment is
indicated due to seasonal income.
(i) Loans for multiple advance construction on PASS or DIAS monthly
installments will include the cost of construction less the cost of
interest during construction. To determine the recommended loan amount
the District Director should determine the authorized loan amount
including construction interest, then subtract the estimated
construction interest from the loan amount. Interest during
construction will be capitalized as authorized in 1944.158 (j) of this
subpart.
(ii) Loans for interim financed construction may include the cost of
interest during construction as authorized in 1944.158 (j) of this
subpart.
(iii) Loans for multiple advance construction on DIAS, with annual
installment and deferred principal payments, may include the cost of
interest during construction as authorized in 1944.158 (j).
(2) The advice of the Office of the General Counsel (OGC) should be
obtained for all loans and/or grants to organizations and associations
of farmers and their comments included in the memorandum to the State
Director. If the State Director determines that the loan and/or grant
should be approved, the State Director will approve the loan and/or
grant and sign the memorandum to the District Director as required by
paragraph (e)(1) of this section.
(f) Submission of docket to National Office. The final loan and/or
grant docket need not be submitted to the National Office unless
required by an authorizing memorandum resulting from compliance with
1944.170.
(g) Announcement. When it is determined that a loan and/or grant can
be approved, project information will be prepared in accordance with
FmHA Instruction 2015-C which is available in the FmHA State and
National Offices.
(h) Establishing borrower/project data. Prior to loan approval, the
State Director, District Director or a designee will input into the
accounting system through field office terminals, the information
contained in Form FmHA 1944-50.
(45 FR 47655, July 16, 1980, as amended at 47 FR 36414, Aug. 20,
1982; 49 FR 3762, Jan. 30, 1984; 50 FR 8591, Mar. 4, 1985; 54 FR
29332, July 12, 1989; 55 FR 13503, Apr. 11, 1990)
1944.172 (Reserved)
07 CFR 1944.173 Loan and grant approval -- delegation of authority.
The State Director and District Director are authorized to approve
loans and/or grants in accordance with this subpart and Subpart A of
Part 1901 of this chapter. The State Director may delegate loan or
grant approval in writing to State Office employees other than District
Directors. No LH grant may be approved by the State Director without
the prior consent of the National Office.
(a) Action before loan or grant approval. The loan or grant approval
official is responsible for reviewing the docket to determine that the
proposed loan and/or grant complies with all pertinent regulations,
instructions, and directives. In making this review, the approval
official will determine that:
(1) The applicant is eligible.
(2) The funds are requested for authorized purposes.
(3) The proposed loan or grant is sound.
(4) The security is adequate for the loan.
(5) All preapproval requirements have been met.
(6) Compliance with Title VI of the Civil Rights Act will be met.
(7) All other requirements will be met.
(b) Approval of loan or grant. When a loan or grant is approved:
(1) The approving official will prepare and sign Form FmHA 1944-51 in
an original and one copy. The State Director, District Director or a
designee will record the obligation of loan and/or grant funds for the
project through a field office terminal in accordance with the FMI for
Form FmHA 1944-51 and the MFH User Procedure.
(2) The individual obligating the loan or grant will record the date
and time of the obligation and sign Form FmHA 1944-51 in accordance with
the FMI.
(3) The obligation date of loan and/or grant funds will be confirmed
through use of field terminals the following work day.
(4) The Finance Office will mail the State Office Form FmHA 1944-57,
''MFH Acknowledgement of Obligated Funds/Check Request,'' confirming the
reservation of funds with the obligation date inserted as required by
the FMI for Form FmHA 1944-57. Form FmHA 1944-57 will be prepared and
distributed in accordance with the FMI.
(5) Form FmHA 1944-51 will not be mailed to the Finance Office unless
there is an excessive time period in which the terminals are not
operable. Immediately after confirming the reservation of funds for
not-for-profit organizations and public bodies, through use of the
terminal operating station, the State Director will call the Information
Division in the National Office as required by Subpart C of Part 2015 of
this chapter. Notice of approval to the applicant will be accomplished
by mailing the applicant's signed copy of Form FmHA 1944-51 on the
obligation date. The State Director, District Director or a designee
will record the actual date of applicant notification on the original of
Form FmHA 1944-51 and include the original of the form as a permanent
part of the District Office project file with a copy in the State Office
file.
(6) Determine the maximum rental rates to be charged domestic farm
labor for occupancy of the housing, and advise the applicant, in
writing, of these maximum rates. In determining the maximum rental
rates due consideration must be given to the income and earning capacity
of the prospective occupants of the housing and the cost of operating
and maintaining such housing. As a general guide, the rental charges
should not exceed 25 percent of the occupant families' estimated
adjusted annual income.
(c) Disapproval of or adverse action on a loan or grant. When a loan
and/or grant is disapproved or if adverse action is taken, the reasons
for such action will be shown on the original Form FmHA 1944-51. Form
FmHA 1944-51 will be initialed and dated. The District Director will
notify the applicant in writing of the disapproval of or adverse action
on the loan or grant and the reasons therefore and advise them of their
right to appeal in accordance with Subpart B of Part 1900 of this
chapter. The disapproved docket will then be handled in accordance with
Form FmHA Instruction 2033-A which is available in any FmHA office. Any
appeals as a result of disapproval or adverse action will be handled in
accordance with Subpart B of Part 1900 of this chapter.
(45 FR 47655, July 16, 1980, as amended at 50 FR 8591, Mar. 4, 1985)
07 CFR 1944.174 Distribution of loan and/or grant approval documents.
For a loan to an organization, or in special cases, the approved loan
or grant docket, including any title evidence, will be sent to OGC by
the State Office for preparation of closing instructions and any special
legal documents required for closing. The original executed, witnessed
loan and grant resolution, or a certified copy of the required loan and
grant resolution must be supplied by the applicant in time to be
included in the loan or grant docket. If applicable, the docket will
also include the proposed grant agreement for OGC review. No docket
will be considered which fails to include such a required resolution or
proposed agreement. OGC will route the docket, including closing
instructions and any such legal documents, to the District Office
through the State Office for review and for inclusion of any further
instructions needed in closing the loan.
(45 FR 47655, July 16, 1980, as amended at 47 FR 54423, Dec. 3, 1982)
07 CFR 1944.175 Actions subsequent to loan and/or grant approval.
(a) Interim financing from commercial sources. Interim financing may
be used when a loan or combination loan and grant exceeds $50,000
provided funds can be borrowed at reasonable interest rates from
commercial sources for the construction period. When interim commercial
financing is used:
(1) The docket will be processed to the stage where the FmHA loan or
combination loan and grant would normally be closed. FmHA loan or
combination loan and grant funds will be obligated before the applicant
proceeds with the final arrangements for interim commercial financing.
(2) The State Director or District Director may deliver a copy of
Form FmHA 1944-57 as evidence of FmHA commitment, if necessary, or a
letter stating that funds in specified amounts have been obligated and
will be available to retire the interim financing if the applicant
complies with the approval conditions. See Exhibit I of this subpart
for a sample letter that may be used.
(3) FmHA will undertake similar functions as if FmHA funds had been
advanced from the standpoint of approving construction contracts and the
monitoring of construction.
(4) The supervised bank account will normally not be used for funds
obtained through interim commercial financing. However, the District
Director will approve Form FmHA 1924-18, ''Partial Payment Estimate,''
to insure that funds are used for authorized purposes.
(5) When the interim financing funds have been expended, the FmHA
loan or combination loan and grant will be closed and permanent
instruments will be issued to evidence the FmHA indebtedness. The FmHA
loan or combination loan and grant proceeds will be used to retire the
interim commercial indebtedness.
(6) Before the FmHA loan or combination loan and grant is closed, the
applicant will be required to provide the district Director with
statements from the contractor(s), engineer, and attorney that they have
been paid in full in accordance with their contracts or other agreements
and that there are no unpaid obligations outstanding in connection with
the construction of the project. See in addition 1924.6 of Subpart A
of Part 1924.
(b) Multiple advances of LH loan and/or grant funds. In the event
FmHA provides grant only assistance, or if interim commercial financing
is not available for a loan or combination loan and grant in excess of
$50,000, multiple advances will be used subject to the following:
(1) When relatively large amounts of funds are to be expended for
purchases of real estate or for other reasons at the time of closing,
separate checks for such purposes may be ordered and endorsed by the
borrower to the seller or other appropriate party. This will preclude
the necessity for depositing such funds in the supervised bank account
and reduce the amount of required collateral.
(2) Except as indicated in paragraph (b)(1) of this section, advances
will be made only as needed to cover disbursements required by the
borrower for a 30-day period. Normally, the advances should not exceed
24 in number or extend longer than 2 years beyond loan closing. The
retained percentage withheld from the contract or to assure that
construction will be completed in accordance with the contract documents
will ordinarily be included in the last advance. Advances will be
requested in sufficient amounts to insure that ample funds will be on
hand to pay costs of construction, land purchase, legal, engineering, or
architectural costs, interest when authorized, and other expenses, as
needed. The borrower will prepare Form FmHA 440-11, ''Estimate of Funds
Needed for 30-day Period Commencing ------ ,'' modified as needed, to
show the amount of funds required during the 30-day period. This form
will be approved by the District Director. After the District Director
determines that the estimates prepared by the borrower are adequate, the
District Director will indicate the amount on Form FmHA 1944-57 in
accordance with the FMI and request the amount through field office
terminals in accordance with MFH User Procedures. As an example, for a
loan and/or grant of $100,000, the advances may be made as follows:
Assuming that the loan and/or grant will be closed on July 1, the
borrower will complete Form FmHA 440-11 in sufficient time so that the
the funds will be available on, the day of loan closing. The estimates
should be broken down for the first advance in a manner similar to the
following:
An advance in the amount of $40,000 would then be available on July
1, the date of loan closing. The second advance will also be based on
the borrower's estimate prepared on Form FmHA 440-11, and will be
prepared in sufficient time so that the estimate of funds might be
broken down as follows:
The amount will be indicated on Form FmHA 1944-57 and requested
through field office terminals. The same procedure will be followed for
each advance until the project is completed.
(3) Any deviation from the multiple advance procedure must have the
prior approval of the National Office.
(c) Requesting a check. When loan approval conditions can be met,
including any real estate lien required, and a date for loan closing has
been agreed upon, the District Director will determine the amount of
funds needed in accordance with either paragraphs (a) or (b) of this
section. The District Director's delegate will then order the loan
and/or grant check through the field office terminal so that it will be
available on or just before the date set for loan closing.
(d) Increase or decrease in the amount of the loan. If it becomes
necessary for the amount of the loan and/or grant to be increased or
decreased before loan closing, the loan approval official or District
Director will request that all distributed docket forms be returned to
the District Office. The loan docket will be revised accordingly and
reprocessed.
(e) Cancellation of loan. Loans and/or grants may be canceled after
approval and before loan closing as follows:
(1) The District Director will prepare Form FmHA 1944-53, ''Multiple
Family Housing Cancellation of U.S. Treasury Check and/or Obligation,''
in accordance with the Forms Manual Insert (FMI) as prescribed in FmHA
Instruction 1951-B (available in any FmHA office).
(2) If the loan or grant check is received in the District Office,
the District Director will return the check as prescribed in FmHA
Instruction 102.1 (available in any FmHA office).
(3) All interested parties will be notified of cancellation as
provided in subpart B of part 1927 of this chapter.
(f) Handling the loan or grant check. The loan or grant check will
be handled in accordance with paragraph IV of FmHA Instruction 102.1
which is available in any FmHA office and Subpart A of Part 1902 of this
chapter.
(g) Property insurance. Buildings will be insured in accordance with
Subpart A of Part 1806 of this chapter (FmHA Instruction 426.1).
(45 FR 47655, July 16, 1980, as amended at 47 FR 36414, Aug. 20,
1982; 50 FR 8592, Mar. 4, 1985; 52 FR 8036, Mar. 13, 1987; 53 FR
26590, July 14, 1988; 54 FR 39728, Sept. 28, 1989; 56 FR 67482, Dec.
31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.175 was
amended by revising paragraph (e)(3), effective January 30, 1992. For
the convenience of the user, the superseded text follows:
1944.175 Actions subsequent to loan and/or grant approval.
(e) * * *
(3) All interested parties will be notified of the cancellation as
provided in Part 1807 of this chapter (FmHA Instruction 427.1).
07 CFR 1944.176 Loan and/or grant closing.
(a) Applicable instructions. LH loans and/or grants will be closed
in accordance with applicable provisions of subpart B of part 1927 of
this chapter and State supplements. Loan dockets for an organization
and loan dockets for an individual in special cases will be sent to OGC
for additional closing instructions. A family farm corporation or
partnership or an association of farmers applicant may use its attorney
to close the loan in accordance with applicable loan closing
instructions provided the attorney is not a member, officer, director,
trustee, stockholder, or partner of the applicant entity. Nonprofit
organizations may use an attorney who is a member of their organization.
The cost incurred by the organization for legal services must be
reasonable and competitive for the area.
(b) LH grant agreement. An LH grant agreement, prepared and
authorized as provided in 1944.164(e), will be dated and executed by
the applicant on the date of grant closing. The executed agreement will
be filed with the mortgage or other security instrument in the County
Office case file.
(c) Mortgage. Unless the OGC determines the Form to be
inappropriate, real estate mortgage Form FmHA 1927-1 (state), ''Real
Estate Mortgage for XXX,'' will be used. For loans and/or grants to
organizations, Form FmHA 1927-1 will be modified as prescribed by or
with the advice of the OGC with respect to the name, address, and other
identification of the borrower, style of execution, acknowledgement, and
any other provisions.
(1) The mortgage or other instrument will contain the following
covenant:
''The property described herein was obtained or improved through
Federal financial assistance. This property is subject to the
provisions of Title VI of the Civil Rights Act of 1964 and the
regulations issued pursuant thereto for so long as the property
continues to be used for the same or similar purpose for which financial
assistance was extended or for so long as the purchaser owns it,
whichever is longer.''
(2) For all LH loans approved on or after December 21, 1979, the
following language shall be included in the mortgage:
''The borrower and any successors in interest agree to use the
housing for the purpose of housing people eligible for occupancy as
provided in section 514 of Title V of the Housing Act of 1949 and FmHA
regulations then extant during this 20 year period beginning ------ (the
date the last loan on the project is closed). No person occupying the
housing shall be required to vacate prior to the close of such 20 year
period because of early repayment. The borrower will be released during
such period from these obligations only when the Government determines
that there is no longer a need for such housing or that Federal or other
financial assistance provided to the residents of such housing will no
longer be provided. A tenant may seek enforcement of this provision as
well as the government''.
(3) Borrowers whose loans were approved prior to December 21, 1979,
and closed on or after that date with the restrictive-use clause in the
Mortgage, Loan Resolution, or Agreement should be notified that they
have the option of having these instruments modified if they desire to
do so. Any cost associated with the modification must, however, be
borne by the borrowers. Any action in this regard should be approved by
the Office of the General Counsel.
(4) When a loan resolution or loan agreement is used, an additional
paragraph will be included in the mortgage to read as follows:
''This instrument also secures the obligations and covenants of
Borrower set forth in Borrower's Loan Resolution (Loan Agreement) of
(Date), which is hereby incorporated herein by reference.''
(5) When a loan resolution or loan agreement is not used, the
following will be included in the mortgage:
(i) ''Occupancy of the housing will be limited to domestic
farmworkers or migrants as defined in this subpart unless the Government
gives prior written approval for other occupancy, except that in no case
will a member of the borrower's immediate family occupy the housing.''
(ii) ''The housing will be operated on a nonprofit basis. The
borrower will provide any financial information requested concerning
income and expenses connected with the housing.''
(6) When the borrower is an organization the mortgage will include
the following provision:
''Borrower will not require any occupant of the housing or related
facilities, as a condition of occupancy, to work or be employed on any
particular farm or other place, or work for or be employed by any
particular person, firm, or interest.''
(7) For a grant made at the same time as an LH loan, the mortgage
securing the loan will contain a provision making it also secure the
applicant's obligations under the LH grant agreement. For a grant not
made at the same time as an LH loan, the type of security instrument
will be determined by the National Office based upon the State
Director's recommendation and the advice of OGC.
(d) Promissory note. (1) Form FmHA 1944-52, ''Multiple Family
Housing Promissory Note,'' will be used for all LH loans except those
secured by bonds. Payments on LH loans will be scheduled on a monthly
or annual basis in accordance with the expected schedule of income from
the project. If periodic payments are desired on an annual note they
may be scheduled on Form FmHA 440-9.
(2) The note will be dated the date of loan closing as authorized in
subpart B of part 1927 of this chapter.
(3) In the case of multiple advances on PASS or DIAS monthly
installments, payments will be deferred for the period of construction
and any remaining period until the project is operational. When
construction is substantially complete and/or the project is ready for
full operation or interest plus principal reaches the ''Maximum Debt
Limit (MDL) at Amortization Effective Date (AED),'' the accrued interest
on advances will be capitalized establishing a new loan amount. The MDL
at AED will be established according to 1944.157(a)(7)(iii) of this
subpart. The borrower's payment of principal and interest will be
established according to the FMI, for Form FmHA 1944-52, ''Multiple
Family Housing Promissory Note.'' At loan closing the Finance Office
will be notified of the projected AED and the MDL at AED on Form FmHA
1944-57. When the MDL at AED is reached or the loan is fully advanced,
Finance Office will:
(i) Capitalize the construction interest. When there is a remaining
obligation balance, the remaining obligation will be cancelled by the
Finance Office.
(ii) Notify the District Office of the new loan amount and the
borrower's scheduled loan payment.
(iii) Prepare and forward to the District Office Form FmHA 1944-7,
''Multiple Family Housing Interest Credit and Rental Assistance
Agreement'' if RA has been obligated for the project.
(iv) The District Office will complete Forms FmHA 1944-52 and FmHA
1944-7 according to the FMI's.
(4) Deferred principal payments may be permitted up to 2 years when
determined to be necessary and advisable. Accrued interest must be paid
annually when the loan is closed on DIAS; however, smaller than regular
payments of principal or no payments of principal may be provided for
the first and second installments after loan closing.
(5) The promissory note(s) will be signed in accordance with subpart
B of part 1927 of this chapter and any supplemental instructions from
OGC.
(6) After loan closing the original note and copies will be
distributed according to the FMI. The loan closing information will be
transmitted via the field office terminals when the loan is closed with
a promissory note.
(7) For a loan to a public body, the forms of obligation will be
determined in accordance with Exhibit H to this of subpart.
(e) Recorded mortgage. When the real estate mortgage is returned by
the recording official, the District Director will retain the original
in the borrower's case folder. If the original is retained by the
recording official for the county records, a conformed copy including
the recording data showing the date and place of recordation and book
and page number will be prepared and filed in the borrower's case
folder. A copy of the mortgage, conformed as to all matters except the
recording date, will be delivered to the borrower.
(f) Date of closing -- establishment of account. (1) An LH loan
and/or grant is considered closed when the security instrument is filed
of record or, if no security instrument is filed of record, when the
loan or grant funds are deposited in the supervised bank account or
otherwise made available to the borrower after the borrower executes and
delivers the note and any other required instruments.
(2) After the loan and/or grant is closed, the account and case
folder will be established in accordance with applicable FmHA
regulations (FmHA Instruction 1905-A which is available in any FmHA
office and FmHA Instruction 2033-A which is available in the FmHA State
and National Offices.)
(45 FR 47655, July 16, 1980 as amended at 50 FR 8592, Mar. 4, 1985;
51 FR 12308, Apr. 10, 1986; 52 FR 24288, June 30, 1987; 56 FR 67482,
Dec. 31, 1991)
Effective Date Note: At 56 FR 67482, Dec. 31, 1991, 1944.176 was
amended by revising the first sentence of paragraph (a), the
introductory text of paragraph (c), and paragraphs (d)(2) and (d)(5),
effective January 30, 1992. For the convenience of the user, the
superseded text follows:
1944.176 Loan and/or grant closing.
(a) Applicable instructions. LH loans and/or grants will be closed
in accordance with applicable provisions of Part 1807 of this chapter
(FmHA Instruction 427.1) and State supplements. * * *
(c) Mortgage. Unless the OGC determines the form to be
inappropriate, real estate mortgage Form FmHA 427-1 (State), ''Real
Estate Mortgage for ------ ,'' will be used. For loans and/or grants to
organizations, Form FmHA 427-1 will be modified as prescribed by or with
the advice of the OGC with respect to the name, address, and other
identification of the borrower, style of execution, acknowledgment, and
any other provisions.
(d) * * *
(2) The note will be dated the date of loan closing as authorized in
1807.2(f)(8) of Part 1807 of this chapter (paragraph II F 8 of FmHA
Instruction 427.1).
(5) The promissory note(s) will be signed in accordance with Part
1807 of this chapter (FmHA Instruction 427.1) and any supplemental
instructions from OGC.
07 CFR 1944.177 Coding loans and grants as to initial or subsequent.
A borrower may obtain financing for more than one project. Each
project will be coded as an initial loan or grant when the total number
of units are built or purchased at one place at one time. A subsequent
loan or grant will be so coded when an additional loan or grant is
necessary to complete the units planned with the initial loan or grant.
As an example, the borrower may obtain initial loans or grant for more
than one project in the same district, in different counties under the
same District Office jurisdiction, or in more than one District Office
jurisdiction. Codes to be used will be in accordance with the FMI for
Forms FmHA 1944-51 and FmHA 1944-57.
(45 FR 47655, July 16, 1980 as amended at 50 FR 8593, Mar. 4, 1985)
07 CFR 1944.178 Complaints regarding discrimination in use and
occupancy of Labor housing.
Any tenant or prospective tenant seeking occupancy or use of LH or
related facilities who believes he/she has been discriminated against
because of age, race, color, religion, sex, marital or familial status,
handicap or National origin may file a complaint in person with, or by
mail to the Office of Fair Housing and Equal Opportunity, Department of
Housing and Urban Development (HUD), Washington, DC, 20410, or any HUD
Office, or to the Secretary of Agriculture, Washington, DC. If the
complaint is made to an FmHA county, district or State office, it must
be directed to the Director of Equal Opportunity Staff, National Office,
by the FmHA employee in charge of that office. When a complaint is sent
to FmHA-EOS by a county or district office, the State Director will be
made aware of the complaint.
(a) Personnel in FmHA field offices will provide assistance to the
aggrieved party when filling out required forms and filing a complaint.
(b) Each complaint must contain the following information:
(1) The name and address of the respondent.
(2) The name and address of the aggrieved person.
(3) A description and the address of the dwelling which is involved,
if appropriate.
(4) A concise statement of the facts, including pertinent dates,
constituting the alleged discriminatory housing practice.
(c) Participants in FmHA's housing program failing to comply with the
requirements of title VIII, as amended of the Civil Rights Act of 1968,
and the respective Affirmative Fair Housing Marketing Plan will make
themselves liable to sanction authorized by law, regulations,
agreements, rules and/or policies governing the program pursuant to
which the application was made. All complaints will be handled in
accordance with prescribed procedure.
(55 FR 6244, Feb. 22, 1990)
1944.179 -- 1944.180 (Reserved)
07 CFR 1944.181 Loan servicing.
LH loans and grants will be serviced in accordance with Subpart B of
Part 1924 of this chapter and Subpart C of Part 1930 of this chapter
(FmHA Instruction 1930-C). Requests for rent increases will be
processed in accordance with Exhibit F of Subpart C of Part 1930 of this
chapter (FmHA Instruction 1930-C, Exhibit C).
(45 FR 47655, July 16, 1980, as amended at 45 FR 70738, Oct. 27,
1980)
07 CFR 1944.182 Rental assistance.
Rental assistance may be provided to eligible tenants in LH projects
in accordance with Exhibit E of Subpart C of Part 1930 of this chapter.
Income will be verified for LH tenants requesting rental assistance from
all easily identifiable sources by using Form FmHA 1910-5, ''Request for
Verification of Employment.'' Income or portions of income from sources
that are not known or not easily contacted will be verified from the
best information obtainable. This may include copies of payroll
records, tenant's own records, contacts with individuals who may be
knowledgeable of the tenant's income, or, if no other verifiable data is
available, a notarized affidavit from the tenant attesting to his/her
previous year's income. The borrower and tenant will execute Form FmHA
1944-8, ''Tenant Certification.'' The borrower will be expected to
certify only that the income is correctly stated based on the best
information available. The borrower will be expected to have the
tenants that occupy the project year round and do not have easily
verifiable income report monthly income to enable accurate income
certification at the end of one year of occupancy.
(45 FR 47655, July 16, 1980, as amended at 45 FR 70777, Oct. 27,
1980; 48 FR 6697, Feb. 15, 1983; 50 FR 16056, Apr. 24, 1985; 51 FR
27670, Aug. 1, 1986)
07 CFR 1944.183 Exception authority.
The Administrator of the Farmers Home Administration may, in
individual cases, make an exception to any requirements of this subpart
not required by the authorizing statute if the Administrator finds that
application of such requirement would adversely affect the interest of
the Government, the immediate health or safety of the tenants or the
community. The Administrator will exercise the authority only at the
request of the State Director. The State Director will submit the
request supported by data: demonstrating the adverse impact;
identifying the particular requirement involved; showing proper
alternative courses of action; and, identifying how the adverse impact
will be eliminated.
1944.184 -- 1944.200 (Reserved)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. A
07 CFR 1944.183 Exhibits to Subpart D
07 CFR 1944.183 Exhibit A -- Labor Housing Loan and Grant Application
Handbook
Development of a proposal for a Labor Housing (LH) loan and grant can
be an expensive proposition and the Farmers Home Administration (FmHA),
therefore, encourages applicants to develop applications in two phases
which are termed preapplication phase and application phase. In
development of the items required for the preapplication phase,
applicants should understand that the Government is in no way obligated
to commit loan or grant funds to the proposed project and therefore,
they should not, at this stage, incur expenses for the optioning of
land, architectural services, engineering services, or other purposes
unless they will be able to use their own funds to pay these expenses.
In addition, before the development of a preapplication, applicants
should meet with the local FmHA District Director to gain a basic
understanding of the eligibility and other requirements of the LH loan
and grant program.
Applicants should also be aware that rental assistance (RA) subsidies
are available to eligible projects to reduce rents for very low- and
low-income farmworkers. RA may be used in conjunction with LH grants to
develop feasible LH projects to meet local farmworker housing needs.
When at all possible, applicants should consider the use of RA in lieu
of a full 90% grant for LH projects with year-round occupancy.
(45 FR 47655, July 16, 1980, as amended at 51 FR 27670, Aug. 1, 1986)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. A-1
07 CFR 1944.183 Exhibit A-1 -- Information to be Submitted by
Organizations and Associations of Farmers for Labor Housing Loan or
Grant
I. Information to be submitted with SF 424.2 (for preapplication
submission).
1. Financial Statement -- A current, dated, and signed financial
statement showing assets and liabilities with information on the
repayment schedule and status of all debts. If the applicant is an
association of farmers, a current financial statement will also be
required from each member who holds an interest in the association in
excess of 10 percent. The applicant, must have or be able to obtain
initial operating capital of at least 2 percent of the total development
cost of the project. A statement should, therefore, be included
explaining how such funds will be provided. Loan or grant funds may be
used to provide the required initial operating capital for nonprofit and
State or local public agencies.
2. All applicants, except State and local public agencies, must
provide evidence that they are unable to obtain credit from other
sources. Letters from credit institutions who normally provide real
estate loans in the area should be obtained and these letters should
indicate the rates and terms upon which a loan might be provided.
3. If a Labor Housing (LH) grant is requested, the applicant should
provide a statement on their projected use of Rental Assistance (RA) and
their need for a LH grant. This statement should include preliminary
estimates of the rents required with and without a grant and the
relative need for a grant if RA is provided to supplement market rents
for eligible farmworkers. (LH grants and RA are not available to
associations of farmers.)
4. A statement of the applicant's experience in operating LH or other
rental housing. If the applicant's experience is limited, additional
information should be provided to indicate how the applicant plans to
compensate for this limited experience. (i.e., obtaining assistance and
advice of a management firm, non-profit group, public agency, or other
organization which is experienced in rental management and will be
available on a continuous basis).
5. A brief statement explaining the applicant's proposed method of
operation and management. This does not have to be a full-fledged
management plan, as outlined by Exhibit B of this subpart; however, it
should generally explain how the applicant proposes to operate the
facility. (i.e., on-site manager, contracting for management services,
etc.).
6. Applicants must provide a copy of or an accurate citation to the
special provisions of State law under which the applicant is or is to be
organized, a copy of the applicant's charter, Articles of Incorporation,
bylaws, and other basic authorizing documents; names, occupations, and
addresses of the applicant's members, directors, and officers; and, if
a member or subsidiary of another organization, its name, address, and
principal business.
A preliminary survey should be conducted to identify the supply and
demand for LH in the area. This survey should address or include the
following items:
1. The annual income level of farmworker families in the area and the
probable income of those farmworkers who are most apt to occupy the
proposed unit.
2. A realistic estimate of the number of farmworkers who are
home-based in the area and the number of farmworkers who normally
migrate into the area. Information on migratory workers should indicate
the average number of months the migrants reside in the area and an
indication of what type of family groups are represented by the migrants
(i.e., single individuals as opposed to families). Much of this
information may be available from the local office of the Rural Manpower
Services section of the Department of Employment Services.
3. General information concerning the type of labor intensive crops
grown in the area and prospects for continued demand for farm laborers
(i.e., prospects for mechanization etc.). Information may be available
from the local U.S. Department of Agriculture (USDA) Cooperative
Extension Service office or from the Agricultural Stabilization and
Conservation Service.
4. The overall occupancy rate for comparable rental units in the area
and rents charged and customary rental practices for these units (i.e.,
will they rent to large families, do they require annual leases, etc.).
This information may be available from census data, local planning
organizations, or local housing authorities.
5. The number, condition, adequacy, ownership and rental rates for
units currently used or available to farmworkers. This information may
be available from local farmworker advocacy groups, Rural Manpower
Services, or social service agencies.
6. A general description of the units proposed, including number,
type, and size and an estimate of the total development cost and amount
of contribution by the applicant. This should also include an estimated
projection of the rental rates to be charged.
Note: The market survey is one of the most important determinates of
the overall feasibility of the proposed project. Therefore, the
applicant may wish to do a more detailed study of the market in
accordance with item II J below. Endorsement of the proposal by
community leaders will not be required.
C. Environmental Information.
When a preapplication is to be submitted to the National Office for
review, the applicant will complete Form FmHA 1940-20, ''Request for
Environmental Information,'' as required by Subpart G of Part 1940 of
this Chapter. The applicant shall provide all information requested;
the District Office will provide any assistance necessary in completing
this form.
Each applicant will prepare and submit HUD 935.2, ''Affirmative Fair
Housing Marketing Plan,'' where they propose developing five (5) or more
units. The plan will reflect that occupancy is not limited to their
employees and they will not discriminate on the basis of race, color,
sex, age, handicap, marital or familial status or National origin in
regard to the occupancy or use of these units.
The following items should be provided only if they are readily
available:
1. A map of the proposed site showing the location of the site and
supporting information on the neighborhood and available facilities,
such as distance to shopping, churches, schools, available
transportation, drainage, sanitation facilities, water supply, and
access to other services such as doctors, dentists, and hospitals.
2. Any available sketches or schematics of the proposed housing
including plot plans, building layouts, and construction types.
The information required by the preapplication will be carefully
reviewed for eligibility and feasibility by appropriate Farmers Home
Administration (FmHA) officials. As soon as a decision is reached, the
applicant will be advised of the availability of funds for the project,
via Form AD-622, ''Notice of Preapplication Review Action.''
II. Information to be submitted with SF 424.2 (for application
submission) .
A. After the applicant has received the signed SF 424.2 authorizing
the applicant to proceed to develop a final application, the applicant
and the applicant's architect should meet with the FmHA
architect/engineer and other officials responsible for loan processing.
During this preprocessing meeting, FmHA will discuss the services which
the applicant's architect will be expected to provide and will also
explain the items needed to complete the final application such as Form
FmHA 1940-20, ''Request for Environmental Information,'' if not
previously submitted in the preapplication stage.
If after the preprocessing meeting the applicant believes that the
Labor Housing (LH) project can be developed within the guidelines
required by FmHA, the following information should be submitted with SF
424.2:
B. If applicable, evidence of compliance with 7 CFR Part 3015 Subpart
V, ''Intergovernmental Review of Department of Agriculture Programs and
Activities.'' See FmHA Instruction 1940-J, available in any FmHA office.
C. Proposed contracts for architectural, engineering, and legal
services as applicable. FmHA approval of these contracts should be
obtained before execution of the contract.
D. A plot plan and detailed preliminary drawings and specifications
prepared in accordance with Subpart A of Part 1804 of this chapter (FmHA
Instruction 1924-A). Exhibit A-3 provides FmHA's general philosophy and
standards concerning the construction of LH facilities.
E. A detailed cost breakdown of the project for items such as land
purchase, right-of-ways, building construction, equipment, utility
connections, on-site improvements, architectural and/or engineering
services, and legal services. The cost breakdown should itemize labor
and material unit costs. If an LH grant is proposed, construction will
be subject to the provisions of the Davis-Bacon Act. LH grant
applicants should, therefore, obtain a copy of Subpart D of Part 1901 of
this chapter which explains the Davis-Bacon requirements.
F. Satisfactory evidence of review and approval of the proposed
housing, including compliance with zoning requirements by State and
local officials, as required by applicable State or local laws,
ordinances, or regulations.
G. If not already provided in the preapplication submittal, a map of
the proposed site showing the location of the site in relation to
available facilities such as schools, shopping, churches, hospitals,
etc. In addition, supporting information should be provided indicating
that essential utilities such as sewer, water, electricity, etc., will
be available to the project. (See Exhibit A-3 for FmHA's general
requirements for location of LH facilities).
H. A description of and justification for any related facilities such
as community or multi-purpose type buildings, cafeterias, dining halls,
infirmaries, child care facilities, etc. To be included for funding by
FmHA, the facilities should not be of extravagant design and their size
must be commensurate with the needs of the farmworkers who will occupy
the housing facility. Any long-term agreements which are contemplated
with other agencies for services such as manpower training, migrant
health services, child care, and education programs should be explained
and included as justification for the related facilities.
I. A detailed market analysis addressing in detail the preapplication
information required under item I B above, ''Need and Demand,'' should
be conducted in accordance with the following:
1. The market area (i.e., the area from which tenants can reasonably
be drawn for the project) should be clearly identified.
2. Adequate existing units which are currently available or which
could become available should be surveyed and information obtained and
recorded in a format similar to Exhibit A-4.
3. Individual farmworkers and farmworker groups should be contacted
and their ideas obtained concerning the type of housing which would gain
the greatest acceptance. (This information may not seem important at
the outset of the loan if there is a pressing need for LH, however, to
assure a long-term demand for the project, consideration should be given
to the views of the prospective tenants).
4. The above items should then be correlated to arrive at a realistic
estimate of the total need for units, type of units, estimated
occupancy, maximum rental rates which can be charged for the units, and
the type of amenities or related facilities which should be provided.
J. Proposed, detailed operating budgets for: (1) The first year of
operation, and (2) a typical year's operation. The overall percentage
of occupancy should be based upon the data collected in the market
analysis. Operating costs should be realistic and should reflect
somewhat higher than normal maintenance costs and an allowance for the
establishment of a reserve as required by the loan agreement. The
budget should be prepared in a format similar to Exhibit A-5.
K. A management plan which includes the applicable items of Exhibit
B.
L. When the loan is to be secured by a junior real estate lien,
certain agreements will be required from prior lien holders. The local
or State FmHA Official will provide the applicable agreements.
M. An option to purchase or other evidence of ability to purchase or
evidence of ownership for the proposed site.
When the final application is assembled it should be submitted to the
local FmHA District Office for review and submission to the State
Office. As soon as a final decision to approve the loan is reached, the
applicant will be notified and advised to proceed with the preparation
of final plans and specifications, contract documents, and other items
needed to close the loan. The applicant should not proceed with bid
advertisement or contract awards until advised to proceed by FmHA.
(45 FR 47655, July 16, 1980, as amended at 48 FR 29121, June 24,
1983; 49 FR 3762, Jan. 30, 1984; 53 FR 36268, Sept. 19, 1988; 55 FR
6245, Feb. 22, 1990; 55 FR 13503 and 13504, Apr. 11, 1990)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. A-2
07 CFR 1944.183 Exhibit A-2 -- Information to be Submitted by
Individuals, Farmowners and Family Farm Corporations or Partnerships for
Labor Housing Loans
I. Information to be submitted by Individuals, Farmowners and Family
Farm Corporation or Partnerships for Labor Housing Loans.
A. Financial Statement. Show assets and liabilities of the
applicant, each individual farmer, and each farming partnership or
corporation of which the individuals are members. Each statement must
be signed and dated. Financial statements of family farm corporation or
partnership members with less than a ten percent corporate or
partnership interest need not be submitted to FmHA.
B. Other Credit. All applicants must provide evidence that they are
unable to obtain credit from other sources. Applicants should attach
letters showing what rates, terms and conditions are available for the
project from private credit sources. In seeking other credit, the
assets and personal liability of each of the members must be offered if
the applicant is a family farm corporation or partnership.
C. Experience. Describe the experience of each member in owning or
operating labor or rental housing. If limited, describe other business
experience.
D. Operation. Describe the proposed operation of the housing and its
relationship to the farm operation. Include the proposed method of
tenant selection, unit maintenances, determining rental charges (if
any), payment of utilities, etc.
E. Need. Describe the farming operations in which the laborers to be
housed in the units will be used. Include acreages of each crop or
details of other operations. Discuss present laborers and their living
arrangements and the number and condition of labor housing now provided.
F. Continuing Need. Discuss any possible changes in mechanization or
shifts to other farm products that might decrease the need for labor
housing in the future.
G. Proposed Security. If a mortgage is not being given on the entire
farm, explain why not and describe the sites proposed as security.
Attach a map showing the site locations, shopping areas, schools,
doctors, hospitals, nearest public water and sewer system, and school
bus stop.
H. Proposed Project. Describe the housing proposed to be bought or
built (specify which) and the estimated cost. If building sites are to
be purchased, show the cost of each. Attach any options available.
List any other expenses expected. Show the total cost, the loan
requested, and the applicant contribution.
I. Environmental Information. The District Office will advise the
application of the applicability of FmHA's environmental requirements
under Subpart G of Part 1940 of this Chapter which are primarily based
on the size of the proposed project. If the preapplication must go to
the National Office for approval, the applicant will complete Form FmHA
1940-20, ''Request for Environmental Information.'' The District Office
will provide assistance and guidance to the applicant in completing this
form.
J. Each applicant will prepare and submit HUD 935.2, ''Affirmative
Fair Housing Marketing Plan'', where they propose developing five (5) or
more units. The plan will reflect that occupancy is limited to their
employees and that they will not discriminate on the basis of race,
color, sex, age, handicap, marital or familial status or National
origin.
II. Information to be submitted with SF 424.2 (for application
submission).
A. Supplemental. Any information requested to clarify or augment
information supplied earlier with the preapplication.
B. Site. Options to purchase or a copy of deeds and mortgages on
sites already owned.
C. Surveys. When needed to identify the site, a current survey
showing boundaries, geographical features, access to public roads, and
public utility location.
D. Plans, Specifications, and Proposed Contracts. Attach one copy of
each complete set of building plans and specifications and a bid or
contract for construction. A complete site plan is also required.
E. Environmental Information. If not submitted with the
preapplication, the applicant will complete Form FmHA 1940-20, ''Request
for Environmental Information.''
(45 FR 47655, July 16, 1980, as amended at 49 FR 3762, Jan. 30, 1984;
53 FR 36268, Sept. 19, 1988; 55 FR 6245, Feb. 22, 1990; 55 FR 13503
and 13504, Apr. 11, 1990)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. A-3
07 CFR 1944.183 Exhibit A-3 -- Labor Housing Construction Guidelines
I. Introduction: This Exhibit provides the Farmers Home
Administration's (FmHA's) general guidelines and policies concerning the
planning, location, and construction of housing for farmworkers. The
type of housing should be in accordance with the needs of the
prospective tenants. Multi-family type units are encouraged whenever
possible; however, when planning units for farmworker families, lower
density building design and layout is normally desirable. Housing
should be designed in such a manner that it will be decent, safe,
sanitary, and modest in size and cost. Actual plans, specifications,
and contract documents should be prepared in accordance with Subpart A
of Part 1924.
a. Single-family type housing is defined as an individual or a group
of individual single family detached dwelling units. These type units
should meet the following standards:
1. All sites shall be planned and constructed in accordance with
Subpart C of Part 1924 of this chapter.
2. All planning and construction other than seasonal farm labor
housing and housing to be occupied more than six months but less than
year-round shall be in conformance with the applicable development
standard as required by 1924.5(d)(1) of Subpart A of Part 1924 of this
chpater and applicable state and local codes.
b. Multi-family type housing is defined as a project or a number of
projects encompassing a building or buildings containing more than one
dwelling unit and may include mixtures of detached and multi-unit
structures in a project. These type units should meet the following
standards:
1. All housing designed for year-round occupancy will be planned in
compliance with the applicable development standard and will be
compatible with conventional rental type housing.
2. Housing for seasonal occupancy (less than six months) shall be
designed and constructed in accordance with Exhibit I to Subpart A of
Part 1924 of this Chapter.
3. Housing to be occupied more than six months but less than
year-round shall be designed and constructed in substantial conformance
with and be easily converted to the applicable development standard
requirements for year-round housing.
4. All planning and construction should be in conformance with
applicable State and local codes.
(44 FR 59212, Oct. 15, 1979, as amended at 45 FR 39794, June 12,
1980; 47 FR 28086, June 29, 1982; 52 FR 8036, Mar. 13, 1987; 52 FR
19302, May 22, 1987)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. A-4
Insert illustrations 0103
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. A-5
Insert illustrations 0104
Insert illustrations 0105
(44 FR 59214, Oct. 15, 1979, as amended at 48 FR 56174, Dec. 19,
1983)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. B
07 CFR 1944.183 Exhibit B -- Management Plans
The management of a rental project, regardless of the type of
tenants, is one of the most, if not the most, important determinants of
the success or failure of a proposed project.
The management plan, therefore, as the primary management charter
should constitute a comprehensive description of the detailed policies
and procedures to be followed in managing the project and should as a
minimum address the following items:
1. Staffing. The number, qualifications required, and duties of all
personnel who will be hired to operate the project. Equal employment
opportunity should be provided and special consideration should be given
to hiring Spanish-speaking persons if warranted by the expected
occupancy. Roles and responsibility's of owner and of manager should be
specified.
2. Marketing. The marketing efforts or techniques which will be used
to obtain initial rent up and occupancy of future vacancies (i.e.
advertisement, contacts with social service agencies, local farmers,
etc.). Definite dates for opening and closing of the project will be
spelled out for projects constructed for seasonal purposes.
3. Tenant selection. Domestic farm workers must be given absolute
priority in renting available units. Other selection criteria should be
specifically outlined in the management plan. Arbitrary restrictions as
to family size, age of children, or other similar items are prohibited,
however, the size of unit assigned to a family should be commensurate
with its needs. Rejected tenant applications should be maintained for a
minimum of 1 year and applicants must be advised in writing of the
reasons for rejection.
4. Ineligible tenants. Units can be rented to other than farm
workers when they are not needed by farm workers (i.e., during the off
season), however, the leases must be on a short-term basis, normally not
exceeding 30 days, and ineligible tenants must be advised that they will
have to vacate the units if an eligible farm worker becomes available.
To avoid future problems, occupancy by ineligibles should be avoided if
at all possible. Written permission to rent to ineligibles must be
obtained from the District Director before allowing the ineligible
tenant to occupy LH projects.
5. Lease or occupancy agreement. A copy of any proposed lease or
occupancy agreement should be submitted with the plan. The lease or
occupancy agreement should clearly outline the responsibilities of the
tenant and landlord.
6. Counseling services. Pre- and post-occupancy counseling services,
which will be provided to tenants by borrowers to acquaint them with the
project or otherwise assist them should be thoroughly explained.
7. Collection of rent. The system which will be used in the
collection of rent must be outlined including proper provisions for the
internal control and security of cash collections, followup on overdue
accounts, persons responsible for collections, recordkeeping, and
conditions for the return of security deposits, if required.
8. Evictions. The plan should spell out the specific reasons which
warrant eviction and the steps which will be taken to resolve problems
before eviction, including provisions for appeal. Voluntary compliance
with the lease or occupancy agreement should be emphasized and every
effort should be made to utilize the benefits available through local
social service agencies and other community organizations.
9. Maintenance and repairs. A schedule for preventive maintenance
and the procedure for handling service requests from individual tenants,
including procedures for the handling of emergency repairs on a 24 hour
basis, should be outlined. Management plans for projects constructed
for seasonal occupancy will include provisions for off-season
maintenance and security.
10. Records and reports. The type of recordkeeping system which will
be established and the person or persons who will be responsible for
keeping records and submitting required reports to FmHA. Subpart C of
1930 of this chapter (FmHA Instruction 1930 -- C) outlines the reports
required and the formats for these reports. This Instruction is
available from the local District Office.
11. Fidelity bonds. Bonding should be provided for all persons
entrusted with the receipt, custody, and disbursement of funds and
custody of other negotiable or readily salable personal property. The
amount of the bond should be at least equal to the maximum amount of
money or property which the individual will have control of at any one
time.
12. Tenant councils. Tenant councils should be encouraged and should
be given an input into proposed changes in lease agreements, staff
selection, eviction, and in some cases tenant selection and other
management decisions which have a bearing on the tenant's overall
situation. Provisions should also be outlined for the democratic
election of tenant councils.
13. Rent increases. Requested or proposed rent increases should be
handled in accordance with Exhibit F of Subpart C of Part 1930 of this
chapter. (FmHA Instruction 1930 -- C, Exhibit C).
14. Non-discrimination. The plan should address the policy of
non-discrimination in tenant selection and employee hiring in accordance
with Form FmHA 400-4, ''Non-Discrimination Agreement,'' and the
affirmative action planned in the recruitment of employees and tenants.
15. Other items. Any other items which have a bearing on the
operation and management of the project.
16. The management plan must be signed and dated by the borrower or
the borrower's authorized representative.
(44 FR 59199, Oct. 15, 1979, as amended at 45 FR 70738, Oct. 27,
1980; 47 FR 28086, June 29, 1982)
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. C
07 CFR 1944.183 Exhibit C -- Loan Resolution
LOAN RESOLUTION OF ------------------ -- , 19 --
PROVIDING FOR BORROWING $
---------- TO FINANCE
NG AND RELATED FACILITIES FOR DOMESTIC
FARM LABOR, THE COLLECTION, HANDLING, AND DISPOSITION
OF INCOME, THE ISSUANCE OF INSTALLMENT PROMISSORY NOTE
AND REAL ESTATE SECURITY INSTRUMENT, AND RELATED
MATTERS
Whereas
(herein referred to as ''Corporation'') is a nonprofit corporation
duly organized and operating under (authorizing State statute)
-------------------- ;
The Board of Directors of the Corporation (herein referred to as the
''board'') has decided to provide certain housing and related facilities
for domestic farm labor;
The board has determined that the Corporation is unable to provide
such housing and facilities with its own resources or to obtain from
other sources for such purpose sufficient credit upon terms and
conditions which the Corporation could reasonably be expected to
fulfill;
Be it resolved:
1. Application for Loan. The Corporation shall apply for and obtain
a domestic farm labor housing loan (herein called ''the loan'') of $
---- through the facilities of the United States of America acting
through the Farmers Home Administration, United States Department of
Agriculture (herein called ''the Government'') pursuant to title V of
the Housing Act of 1949. The loan shall be used solely for the specific
eligible purposes for which it is approved by the Government, in order
to provide housing and related facilities for domestic farm labor. Such
housing and facilities and the land constituting the site are herein
called ''the housing.''
2. Execution of Loan Instruments. To evidence the loan the
Corporation shall issue a promissory note (herein referred to as ''the
note''), signed by its President and attested by its Secretary, with its
corporate seal affixed thereto, for the amount of the loan, payable in
installments over a period of ---------- years, bearing interest at the
rate of 1 percent per annum, and containing other terms and conditions
prescribed by the Government. To secure the note or any indemnity or
other agreement required by the Government, the President and Secretary
are hereby authorized to execute a real estate security instrument
giving a lien upon the housing and upon such other real property of the
Corporation as the Government shall require, including an assignment or
security interest in the rents and profits as collateral security to be
enforceable in the event of any default by the Corporation, and
containing other terms and conditions prescribed by the Government. The
President and Secretary are further authorized to execute any other
security instruments and other instruments and documents required by the
Government in connection with the making or insuring of the loan. The
indebtedness and other obligations of the Corporation under the note,
the related security instruments, and any related agreements are herein
called the ''loan obligations.''
3. Equal Opportunity and Nondiscrimination Provisions. The borrower
will comply with (a) any undertakings and agreements required by the
Government pursuant to Executive Order 11063 regarding nondiscrimination
in the use and occupancy of housing; (b) Farmers Home Administration
Form FmHA 400-1 entitled ''Equal Opportunity Agreement,'' including an
''Equal Opportunity Clause,'' to be incorporated in or attached as a
rider to each construction contract the amount of which exceeds $10,000
and any part of which is paid for with funds from the loan, (c) Farmers
Home Administration Form FmHA 400-4, entitled ''Nondiscrimination
Agreement (Under Title VI, Civil Rights Act of 1964),'' a copy of which
is attached hereto and made a part hereof, and any other undertakings
and agreements required by the Government pursuant to lawful authority.
4. Supervised Bank Account. The proceeds of the note and the amount
of $ ---------- to be contributed by the Corporation from its own funds
and used for eligible loan purposes shall be deposited in a ''supervised
bank account'' as required by the Government. 1 Amounts in the
supervised bank account exceeding $100,000 shall be secured by the
financial institution in advance in accordance with the U.S. Treasury
Department Circular No. 176. As provided by the terms of the agreement
creating the supervised bank account, all funds therein shall, until
duly expended, collaterally secure the loan obligations. Withdrawals
from the supervised bank account by the Corporation shall be made only
on checks signed by the ---------- of the Corporation and countersigned
by the County Supervisor of the Farmers Home Administration, and only
for the specific loan purposes approved in writing by the Government.
The Corporation's share of any liquidated damages or other monies paid
by defaulting contractors or their sureties shall be deposited in the
supervised bank account to assure completion of the project. When all
approved items eligible for payment with loan funds are paid in full,
any balance remaining in the supervised bank account shall be applied on
the note as an ''extra payment'' as defined in the regulations of the
Farmers Home Administration, and the supervised bank account shall be
closed.
5. Accounts for Housing Operations and Loan Servicing. The
Corporation shall establish on its books the following accounts, which
shall be maintained so long as the loan obligations remain unsatisfied:
A General Fund Account, an Operation and Maintenance Account, a Debt
Service Account, and a Reserve Account. Funds in said accounts shall be
deposited in a bank or banks insured by the Federal Deposit Insurance
Corporation, except for any portion invested in readily marketable
obligations of the United States as authorized by Section 9. The
Treasurer of the Corporation shall execute a fidelity bond, with a
surety company approved by the Government, in an amount not less than
the estimated maximum amount of such funds to be held in said accounts
at any one time. The United States of America shall be named as
co-obligee, and the amount of the bond shall not be reduced without the
prior written consent of the Government. The Corporation in its
discretion may at any time establish and utilize additional accounts to
handle any funds not covered by the provisions of this resolution.
6. General Fund Account. By the time the loan is closed the
Corporation shall from its own funds deposit in the General Fund Account
the amount of $ ---------- . All income and revenue from the housing
shall upon receipt be immediately deposited in the General Fund Account.
The Corporation may also in its discretion at any time deposit therein
other funds, not otherwise provided for by this resolution, to be used
for any of the purposes authorized in section 7, 8, or 9. Funds in the
General Fund Account shall be used only as authorized in said sections
and, until so used, shall be held by the Corporation in trust for the
Government as security for the loan obligations.
7. Operation and Maintenance Account. Not later than the 15th of
each month, out of the General Fund Account shall be transferred to the
Operation and Maintenance Account, sufficient amounts to enable the
Corporation to pay from the Operation and Maintenance Account the
actual, reasonable, and necessary current expenses, for the current
month and the ensuing month, of operating and maintaining the housing
not otherwise provided for. Current expenses may include, in addition
to expenses occurring or becoming due monthly, monthly accumulations of
proportionate amounts for the payment of items which may become due
either annually or at irregular intervals, such as taxes and insurance,
normal repair and replacement of furnishings and equipment reasonably
necessary for operation of the housing. Current expenses may also
include initial purchase and installation of such furnishings and
equipment with any funds deposited in and transferred from the General
Fund Account which are not proceeds of the loan or income or revenue
from the housing.
8. Debt Service Account. Each month, immediately after the transfer
to the Operation and Maintenance Account provided for in section 7, or
after it is determined that no such transfer is called for, any balance
remaining in the General Fund Account, or so much thereof as may be
necessary, shall be transferred to the Debt Service Account until the
amount in the Debt Service Account equals the amount of the next
installment due on the loan. Funds in the Debt Service Account shall be
used only for payments on the loan obligations and, until so used, shall
be held by the Corporation in trust for the Government as security
therefor.
9. Reserve Account. (a) Immediately after each transfer to the Debt
Service Account as provided in section 8, any balance in the General
Fund Account shall be transferred to the Reserve Account. Funds in the
Reserve Account may be used only as authorized in this resolution and
until so used shall be held by the Corporation in trust as security for
the loan obligations. Transfers at a rate not less than $ ------------
2 annually shall be made to the Reserve Account until the amount in the
Reserve Account reaches the sum of $ ---------- 3 and shall be resumed
at any time when necessary, because of disbursements from the Reserve
Account, to restore it to said sum. Of such sum, at least 50 percent
shall be maintained on a cash basis, referred to herein as the ''cash
reserve.'' After the cash reserve reaches the required 50 percent of
said sum, all or any portion of the balance of said sum may, at the
option of the Corporation, consist of an amount, referred to herein as
the ''prepayment reserve,'' by which the Corporation is ''ahead of
schedule'' as defined in the regulations of the Farmers Home
Administration. Funds in the cash reserve shall be deposited in a
separate bank account or accounts insured by the Federal Deposit
Insurance Corporation or invested in readily marketable obligations of
the United States, the earnings on which shall accrue to the Reserve
Account.
(b) With the prior consent of the Government, funds in the Reserve
Account may be used by the Corporation --
(1) To meet payments due on the loan obligations in the event the
amount in the Debt Service Account is not sufficient for the purpose.
(2) To pay costs of repairs or replacements to the housing caused by
catastrophe or long-range depreciation which are not current expenses
under section 7.
(3) To make improvements or extensions to the housing.
(4) For other purposes desired by the Corporation which in the
judgment of the Government likely will promote the loan purposes without
jeapordizing collectibility of the loan or impairing the adequacy of the
security, or will strengthen the security, or will facilitate, improve,
or maintain the orderly collectibility of the loan.
(c) Any amount in the Reserve Account which exceeds the aggregate sum
specified in subsection (a), and is not agreed between the Corporation
and the Government to be used for purposes authorized in subsection 9(b)
shall be applied promptly on the loan obligations.
10. Regulatory Covenants. So long as the loan obligations remain
unsatisfied, the Corporation shall --
(a) Impose and collect such fees, assessments, rents, and charges
that the income of the Corporation will be sufficient at all times for
operation and maintenance of the housing, payments on the loan
obligations, and maintenance of the accounts herein provided for.
(b) Maintain complete books and records relating to the Corporation's
financial affairs, cause such books and records to be audited at the end
of each fiscal year, promptly furnish the Government without request a
copy of each audit report, and permit the Government to inspect such
books and records at all reasonable times.
(c) If required or permitted by the Government, revise the accounts
herein provided for, or establish new accounts, to cover handling and
disposition of income from and payment of expenses attributable to the
housing or to any other property securing the loan obligations, and
submit to the Government regular and special reports concerning the
housing or the Corporation's financial affairs.
(d) Unless the Government gives prior consent --
(1) Not use or permit use of the housing for any purpose other than
as housing and related facilities for domestic farm labor.
(2) Not enter into any contract or agreement for improvements or
extensions to the housing or other property securing the loan
obligations.
(3) Not cause or permit voluntary dissolution of the Corporation, nor
merge or consolidate with any other organization, nor cause or permit
any transfer or encumberance of title to the housing or any part thereof
or interest therein, by sale, mortgage, lease, or otherwise, nor engage
in any other new business, enterprise, or venture than operation of the
housing.
(4) Not cause or permit the issuance or transfer of any stock, borrow
any money, nor incur any liability aside from current expenses as
defined in section 7.
(e) Submit the following to the Government for prior review and
approval not less than ---- days before the effective dates, unless
approval is waived by the Government:
(1) Annual budgets and operating plans.
(2) Statements of management policy and practice, including
eligibility criteria and implementing rules for occupancy of the
housing.
(3) Proposed rents and charges and other terms of rental agreements.
(4) Rates of compensation to officers and employees of the
Corporation payable from or chargeable to any account provided for in
this resolution.
(f) If required by the Government, modify and adjust any matters
covered by clause (e) of this section.
(g) Comply with all its agreements and obligations in or under the
note, security instrument, and any related agreement executed by the
Corporation in connection with the loan.
(h) Not alter, amend, or repeal without the Government's consent this
resolution or the bylaws or articles of incorporation of the
Corporation, which shall constitute parts of the total contract between
the Corporation and the Government relating to the loan obligations.
(i) Do other things as may be required by the Government in
connection with the operation of the housing, or with any of the
Corporation's operations or affairs which may affect the housing, the
loan obligations, or the security.
11. Refinancing of Loan. If at any time it appears to the Government
that the Corporation is able to obtain a loan upon reasonable terms and
conditions to refinance the loan obligations then outstanding, upon
request from the Government the Corporation will apply for, take all
necessary actions to obtain, and accept such refinancing loan and will
use the proceeds for said purpose.
12. General Provisions.
(a) It is expressly understood and agreed that any loan made will be
administered subject to the limitations of the authorizing act of
Congress and related regulations, and that any rights granted to the
Government herein or elsewhere may be exercised by it in its sole
discretion to carry out the purposes of the loan, enforce such
limitations, and protect the Government's financial interest in the loan
and the security.
(b) The provisions of this resolution are representations to the
Government to induce the Government to make a loan to the Corporation as
aforesaid. If the Corporation should fail to comply with or perform any
provision of this resolution or any requirement made by the Government
pursuant to this resolution, such failure shall constitute default as
fully as default in payment of amounts due on the loan obligations. In
the event of such failure, the Government at its option may declare the
entire amount of the loan obligations immediately due and payable, and,
if such entire amount is not paid forthwith, may take possession of and
operate the housing and proceed to foreclose its security and enforce
all other available remedies.
(c) Upon request by the Government the Corporation will permit
representatives of the Government to inspect and make copies of any of
the records of the Corporation pertaining to this loan. Such inspection
and copying may be made during regular office hours of the Corporation,
or any other time the Corporation and the Government finds convenient.
(d) Any provisions of this resolution may be waived by the Government
in its sole discretion, or changed by agreement between the Government
and the Corporation, after this resolution becomes contractually
binding, to any extent such provisions could legally have been foregone,
or agreed to in amended form, by the Government initially.
(e) Any notice, consent, approval, waiver, or agreement must be in
writing.
(f) This resolution may be cited in the security instrument and any
other instruments or agreements as the ''Loan Resolution of (date of
this resolution) -------------------- 19 ---- .''
The undersigned, -------------------- , the Secretary of the
Corporation identified in the foregoing Loan Resolution, hereby
certifies that the foregoing is a true copy of a resolution duly adopted
by the board of directors on -------------------- 19 ---- , which has
not been altered, amended, or repealed.
--------------------
(Date)
--------------------
(Secretary)
(44 FR 59199, Oct. 15, 1979, as amended at 46 FR 36112, July 14,
1981)
1Only loan funds, and borrower's funds to be used for an eligible
loan purpose, may be deposited in the supervised bank account.
2In most cases this figure should be one-tenth of the aggregate sum
specified later in the sentence and indicated by footnote 3.
3The amount to be inserted will usually be about 10 percent of the
value of the buildings and related facilities financed wholly or
partially with the loan.
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. D
07 CFR 1944.183 Exhibit D -- Loan Agreement
1. Parties and Terms Defined. This agreement dated ------------ of
the Undersigned ---------------------------------------- , herein called
''Borrower'' whether one or more, whose post office address is
---------------------------------------- , with the United States of
America acting through the Farmers Home Administration, United States
Department of Agriculture, herein called ''the Government,'' is made in
consideration of a loan, herein called ''the loan,'' to Borrower in the
amount of $ ------------ made or insured, or to be made or insured by
the Government pursuant to title V of the Housing Act of 1949 to provide
housing and related facilities for domestic farm laborers. Such housing
and related facilities, together with the site, may be referred to
herein as ''the housing.'' The indebtedness and other obligations of
Borrower under the note evidencing the loan, the related security
instrument, and any related agreement are herein called the ''loan
obligations.''
2. Equal Opportunity and Nondiscrimination Provisions. The borrower
will comply with (a) any undertakings and agreements required by the
Government pursuant to Executive Order 11063 regarding nondiscrimination
in the use and occupancy of housing, (b) Farmers Home Administration
Form FmHA 400-1 entitled ''Equal Opportunity Agreement,'' including an
''Equal Opportunity Clause'' to be incorporated in or attached as a
rider to each construction contract the amount of which exceeds $10,000
and any part of which is paid for with funds from the loan, (c) Farmers
Home Administration Form FmHA 400-4, entitled ''Nondiscrimination
Agreement (Under Title VI, Civil Rights Act of 1964),'' a copy of which
is attached hereto and made a part hereof, and any other undertakings
and agreements required by the Government pursuant to lawful authority.
3. Supervised Bank Account. The proceeds of the note and the amount
of $ ------------ to be contributed by the borrower from its own funds
and used for eligible loan purposes shall be deposited in a ''supervised
bank account'' as required by the Government. 1 Amounts in the
supervised bank account exceeding $100,000 shall be secured by the
financial institution in advance in accordance with U.S. Treasury
Department Circular No. 176. As provided therein shall, until duly
expended, collaterally secure the loan obligations. Withdrawals from
the supervised bank account by the borrower shall be made only on checks
signed by the ---------------- of the borrower and countersigned by a
representative of the Farmers Home Administration, and only for the
specific loan purposes approved in writing by the Government. The
borrower's share of any liquidated damages or other monies paid by
defaulting contractors or their sureties shall be deposited in the
supervised bank account to assure completion of the project. When all
approved items eligible for payment with loan funds are paid in full,
any balance remaining in the supervised bank account shall be applied on
the note as an ''extra payment'' as defined in the regulations of the
Farmers Home Administration, and the supervised bank account shall be
closed.
4. Accounts for Housing Operations and Loan Servicing. Borrower
shall establish on his books the following accounts, which shall be
maintained so long as the loan obligations remain unsatisfied: A
General Fund Account, an operation and Maintenance Account, a Debt
Service Account, and a Reserve Account. Funds in said accounts shall be
deposited in a bank or banks insured by the Federal Deposit Insurance
Corporation, except for any portion invested in readily marketable
obligations of the United States as authorized by section 8(a).
5. General Fund Account. By the time the loan is closed Borrower
shall from his own funds deposit in the General Fund Account the amount
of $ ---------------- . All income and revenue from the housing shall
upon receipt be immediately deposited in the General Fund Account.
Borrower may also in his discretion at any time deposit therein other
funds, not otherwise provided for by this agreement, to be used for any
of the purposes authorized in sections 6, 7, or 8. Funds in the General
Fund Account shall be used only as authorized in said sections and,
until so used, shall be held by Borrower in trust for the Government as
security for the loan obligations.
6. Operation and Maintenance Account. Not later than the 15th of
each month out of the General Fund Account shall be transferred to the
Operation and Maintenance Account sufficient amounts to enable Borrower
to pay from the Operation and Maintenance Account the actual,
reasonable, and necessary current expenses, for the current month and
the ensuing month, of operating and maintaining the housing not
otherwise provided for. Current expenses may include, in addition to
expenses occurring or becoming due monthly, monthly accumulations of
proportionate amounts for the payment of items which may become due
either annually or at irregular intervals, such as taxes, insurance, and
normal repair and replacement of furnishings and equipment reasonably
necessary for operation of the housing. Current expenses may also
include initial purchase and installation of such furnishings and
equipment with any funds deposited in and transferred from the General
Fund Account which are not proceeds of the loan or income or revenue
from the housing.
7. Debt Service Account. Each month, immediately after the transfer
to the Operation and Maintenance Account provided for in section 6, or
after it is determined that no such transfer is called for, any balance
remaining in the General Fund Account, or so much thereof as may be
necessary, shall be transferred to the Debt Service Account until the
amount in the Debt Service Account equals the amount of the next
installment due on the loan. Funds in the Debt Service Account shall be
used only for payments on the loan obligations and, until so used, shall
be held by Borrower in trust for the Government as security therefor.
8. Reserve Account.
(a) Immediately after each transfer to the Debt Service Account as
provided in section 7, any balance in the General Fund Account shall be
transferred to the Reserve Account. Funds in the Reserve Account may be
used only as authorized in this agreement and until so used shall be
held by the Borrower in trust as security for the loan obligations.
Transfers at a rate not less than $ ---------------- 1 annually shall be
made to the Reserve Account until the amount in the Reserve Account
reaches the sum of $ ------------ 2 and shall be resumed at any time
when necessary, because of disbursements from the Reserve Account, to
restore it to said sum. Of such sum, at least 50 percent shall be
maintained on a cash basis, referred to herein as the ''cash reserve.''
After the cash reserve reaches the required 50 percent of said sum, all
or any portion of the balance of said sum may, at the option of
Borrower, consist of an amount, referred to as the ''prepayment
reserve,'' by which Borrower is ''ahead of schedule'' as defined in the
regulations of the Farmers Home Administration. Funds in the cash
reserve shall be deposited in a separate bank account or accounts
insured by the Federal Deposit Insurance Corporation or invested in
readily marketable obligations of the United States, the earnings on
which shall accrue to the Reserve Account.
(b) With the prior consent of the Government, funds in the Reserve
Account may be used by Borrower --
(1) To meet payments due on the loan obligations in the event the
amount in the Debt Service Account is not sufficient for the purpose.
(2) To pay costs of repairs or replacements to the housing caused by
catastrophe or long-range depreciation which are not current expenses
under section 6.
(3) To make improvements or extensions to the housing.
(4) For other purposes desired by Borrower which in the judgment of
the Government likely will promote the loan purposes without
jeopardizing collectibility of the loan or impairing the adequacy of the
security, or will strengthen the security, or will facilitate, improve,
or maintain the orderly collectibility of the loan.
(5) For any purpose desired by Borrower, provided Borrower determines
that after such disbursement (a) the amount in the Reserve Account will
be not less than that required by subsection 8(a) to be accumulated by
that time, and (b) during the next 12 months the amount in the Reserve
Account will likely not fall below that required to be accumulated by
the end of such period.
(c) Any amount in the Reserve Account which exceeds the aggregate sum
specified in subsection 8(a) and is not agreed between the borrower and
the Government to be used for purposes authorized in subsection 8(a)
shall be applied promptly on the loan obligations.
9. Regulatory Covenants. So long as the loan obligations remain
unsatisfied, Borrower shall --
(a) Impose and collect such fees, assessments, rents, and charges
that his income will be sufficient at all times for operation and
maintenance of the housing, payments on the loan obligations, and
maintenance of the accounts herein provided for.
(b) Maintain complete books and records relating to his financial
affairs, cause such books and records to be audited at the end of each
fiscal year, promptly furnish the Government without request a copy of
each audit report, and permit the Government to inspect such books and
records at all reasonable times.
(c) If required by the Government, revise the accounts herein
provided for, or establish new accounts, to cover handling and
disposition of income from and payment of expenses attributable to the
housing or to any other property securing the loan obligations, and
submit regular and special reports concerning the housing or Borrower's
financial affairs.
(d) Unless the Government gives prior consent --
(1) Not use the housing for any purpose other than as labor housing
and related facilities for domestic farm laborers.
(2) Not enter into any contract or agreement for improvements or
extensions to the housing or other property securing the loan
obligations.
(3) Not cause or permit the transfer or encumbrance of title to the
housing or any part thereof or interest therein, by sale, mortgage,
lease, or otherwise.
(e) Submit the following to the Government for prior review and
approval not less than -------- days before the effective dates.
(1) Annual budgets and operating plans, including proposed rents and
charges and other terms of rental agreements for occupancy and
compensation to employees chargeable as operating expenses of the
housing.
(2) Statements of management policy and practice, including
eligibility criteria and implementing rules for occupancy of the
housing.
(f) If required by the Government, modify and adjust any matters
covered by clause (e) of this section.
(g) Do other things as may be required by the Government in
connection with the operation of the housing or with any of Borrower's
operations or affairs which may affect the housing, the loan
obligations, or the security.
10. Refinancing of Loan. If at any time it appears to the Government
that Borrower is able to obtain a loan upon reasonable terms and
conditions to refinance the loan obligations then outstanding, upon
request from the Government, Borrower will apply for, take all necessary
actions to obtain, and accept such refinancing loan and will use the
proceeds for said purpose.
11. General Provisions.
(a) It is understood and agreed by Borrower that any loan made or
insured will be administered subject to the limitations of the
authorizing act of Congress and related regulations, and that any rights
granted to the Government herein or elsewhere may be exercised by it in
its sole discretion to carry out the purposes of the loan, enforce such
limitations, and protect the Government's financial interest in the loan
and the security.
(b) Borrower shall also comply with all covenants and agreements set
forth in the note, security instrument, and any related agreements
executed by Borrower in connection with the loan.
(c) The provisions of this agreement are representations to the
Government to induce the Government to make or insure a loan to Borrower
as aforesaid. If Borrower should fail to comply with or perform any
provision of this agreement or any requirement made by the Government
pursuant hereto, such failure shall constitute default as fully as
default in payment of amounts due on the loan. In the event of such
failure, the Government at its option may declare the entire amount of
the loan obligations immediately due and payable and, if such entire
amount is not paid forthwith, may take possession of and operate the
housing and proceed to foreclose its security and enforce all other
available remedies.
(d) Upon request by the Government the Borrower will permit
representatives of the Government to inspect and make copies of any of
the records of the Borrower pertaining to this loan. Such inspection
and copying may be made during regular office hours of the Borrower, or
any other time the Borrower and the Government finds convenient.
(e) Any provisions of this agreement may be waived by the Government,
or changed by agreement between the Government and Borrower to any
extent such provisions could legally have been foregone, or agreed to in
any amended form, by the Government initially. Any notice, consent,
approval, waiver, or agreement must be in writing.
(f) This agreement may be cited in the security instrument and other
instruments or agreements as the ''Loan Agreement of (date of this
agreement) ---------------- 19 ------ .''
Witness
Borrower
Witness
Borrower
(44 FR 59199, Oct. 15, 1979, as amended at 46 FR 36112, July 14,
1981)
1In most cases this figure should be one-tenth of the aggregate sum
specified later in the sentence as indicated by footnote 2.
2The amount to be inserted will usually be about 10 percent of the
value of the buildings and related facilities financed wholly or
partially with the loan.
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. E
07 CFR 1944.183 Exhibit E -- Loan and Grant Resolution
Loan and Grant Resolution of ---------- , 19 ---- Resolution of the
Board of Directors of -------------------- providing for obtaining
financial assistance in the amount $ ------------ to aid in financing
federally defined low-rent housing and related facilities for low-income
domestic farm labor, and related matters. Whereas
-------------------------------------------- (herein referred to as the
''Corporation'') is organized and operating under and the board of
(authorizing State statute) ----------------------------------------
directors of the Corporation has determined that --
(a) The Corporation should provide low-rent housing and related
facilities for low-income domestic farm labor, as defined in title V of
the Housing Act of 1949.
(b) The estimated total cash development cost of such housing and
facilities amounts to $ ------------ .
(c) For such purpose the Corporation is able to furnish from its own
resources $ ------------ .
(d) The Corporation will need financial assistance in the amount of $
------------ which the Corporation is unable to obtain from other
sources for such purpose upon terms and conditions which the Corporation
could reasonably be expected to fulfill.
(e) Of such amount of needed financial assistance the Corporation
will be able to repay, with interest at 1% per annum, the amount of $
------------ over a repayment period of -------- years, if the balance
of $ ------------ is made available to the Corporation as a grant.
(f) The housing and related facilities will fulfill a pressing need
in the area in which they are or will be located.
(g) The housing and facilities cannot be provided without the aid of
a grant in the amount stated above:
Therefore Be It Resolved:
1. Application for Loan and Grant. The Corporation shall apply to
the United States of America, acting through the Farmers Home
Administration, United States Department of Agriculture (herein called
''the Government'') for a loan of $ ------------ and a grant of $
------------ , pursuant to Title V of the Housing Act of 1949. Such
loan may be insured by the Government. The loan and the grant shall be
used only for the specific eligible purposes approved by the Government,
in order to provide low-rent housing and related facilities for
low-income domestic farm labor. Such housing and facilities and the
land constituting the site may be referred to herein as the ''housing.''
2. Execution of Loan and Grant Instruments. To evidence the loan the
Corporation shall issue a promissory note (herein referred to as ''the
Note''), signed by its President and attested by its Secretary, with its
corporate seal affixed thereto, for the amount of the loan, payable in
installments over a period of -------- years, bearing interest at a rate
not to exceed ---- percent per annum, and containing other terms and
conditions prescribed by the Government. To evidence the obligations of
the grant, the Corporation shall execute an instrument in the form
attached hereto entitled ''Labor Housing Grant Agreement'' and referred
to herein as the ''Grant Agreement,'' evidencing terms and conditions
upon which the grant is made by the Government and the obligations of
the Corporation with respect thereto. To secure the note and/or all
other obligations and agreements of the Corporation with respect to the
loan and the grant, as required by the Government, the President and the
Secretary are hereby authorized to execute a security instrument giving
a lien upon or security interest in the housing and such other property
as the Government shall require, including an assignment of or security
interest in the rents and profits as collateral security to be
enforceable in the event of any default by the Corporation. The
President and the Secretary are further authorized to execute any other
security and other instruments, agreements, and documents required by
the Government for the loan or grant. The indebtedness and other
obligations of the Corporation under the note, Grant Agreement, this
resolution, the security instrument, and any other instruments and
agreements related to the loan or grant are herein called the ''loan and
grant obligations.''
3. Equal Employment Opportunity under Construction Contracts and
Nondiscrimination in the Use of Occupancy and Housing and in Any Other
Benefits of the Loan or Grant. The President and the Secretary are
hereby authorized and directed to execute on behalf of the Corporation
(a) any undertakings and agreements required by the Government regarding
nondiscrimination in the use and occupancy of housing, (b) Farmers Home
Administration Form FmHA 400-1, ''Equal Opportunity Agreement,''
involving an Equal Opportunity Clause to be incorporated in or attached
as a rider to each construction contract which exceeds $10,000 in amount
and is paid for in whole or in part with loan or grant funds, and (c)
Farmers Home Administration Form FmHA 400-4, ''Nondiscrimination
Agreement (Under Title VI, Civil Rights Act of 1964),'' a copy of which
is attached hereto and made a part hereof.
4. Supervised Bank Account. The proceeds of the loan and grant and
the amount of $ ------------ to be contributed by the Corporation from
its own funds and used for approved eligible purposes shall be deposited
in a ''supervised bank account'' as required by the Government. 1
Amounts in the supervised bank account exceeding $100,000 shall be
secured by the financial institution in advance in accordance with U.S.
Treasury Department Circular No. 176. As provided by the terms of the
agreement creating the supervised bank account, all funds therein shall,
until duly expended, collaterally secure the loan and grant obligations.
Withdrawals from the supervised bank account by the Corporation shall
be made only on checks signed by the -------------------- of the
Corporation and countersigned by the County Supervisor or other
authorized official of the Farmers Home Administration, and only for the
specific eligible purposes approved in writing by the Government. The
Corporation's share of any liquidated damages or other monies paid by
defaulting contractors of their sureties shall be deposited in the
supervised bank account to assure completion of the project. When all
approved items eligible for payment with loan or grant funds are paid in
full, any balance remaining in the supervised bank account shall be
treated as a refund of loan and grant funds in the same ratio as that
between the amounts of the loan and grant, and the supervised bank
account shall be closed.
5. Accounts for Housing Operations and Loan Servicing. The
Corporation shall establish on its books the following accounts, which
shall be maintained so long as the loan or grant obligations continue:
A General Fund Account, an Operation and Maintenance Account, a Debt
Service Account, and a Reserve Account. Funds in said accounts shall be
deposited in a bank or banks insured by the Federal Deposit Insurance
Corporation, except for any portion invested in readily marketable
obligations of the United States as authorized by section 9. The
Treasurer of the Corporation shall execute a fidelity bond, with a
surety company approved by the Government, in an amount not less than
the estimated maximum amount of such funds to be held in said accounts
at any one time. The United States of America shall be named as
co-obligee, and the amount of the bond shall not be reduced without the
prior written consent of the Government. The Corporation in its
discretion may at any time establish and utilize additional accounts to
handle any funds not covered by the provisions of this resolution.
6. General Fund Account. By the time the loan and grant are closed
the Corporation shall from its own funds deposit in the General Fund
Account the amount of $ ------------ . All income and revenue from the
housing shall upon receipt be immediately deposited in the General Fund
Account. The Corporation may also in its discretion at any time deposit
therein other funds, not otherwise provided for by this resolution, to
be used for any of the purposes authorized in sections 7, 8, or 9.
Funds in the General Fund Account shall be used only as authorized in
said sections and, until so used, shall be held by the Corporation in
trust for the Government as security for the loan and grant obligations.
7. Operation and Maintenance Account. Not later than the 15th of
each month, out of the General Fund Account shall be transferred to the
Operation and Maintenance Account, sufficient amounts to enable the
Corporation to pay from the Operation and Maintenance Account the
actual, reasonable, and necessary current expenses, for the current
month and the ensuing month, of operating and maintaining the housing
not otherwise provided for. Current expenses may include, in addition
to expenses occurring or becoming due monthly, monthly accumulations of
proportionate amounts for the payment of items which may become due
either annually or at irregular intervals, such as taxes and insurance
and normal repair and replacement of furnishings and equipment
reasonably necessary for operation of the housing. Current expenses may
also include initial purchase and installation of such furnishings and
equipment with any funds deposited in and transferred from the General
Fund Account which are not proceeds of the loan and, unless the
Government gives prior written consent, are not income or revenue from
the housing.
8. Debt Service Account. Each month, immediately after the transfer
to the Operation and Maintenance Account provided for in section 7, or
after it is determined that no such transfer is called for, any balance
remaining in the General Fund Account, or so much thereof as may be
necessary, shall be transferred to the Debt Service Account until the
amount in the Debt Service Account equals the amount of the next
installment due on the loan. Funds in the Debt Service Account shall be
used only for payments on the loan obligations while they continue and,
until so used, shall be held by the Corporation in trust for the
Government as security for the loan and grant obligations.
9. Reserve Account. (a) Immediately after each transfer to the Debt
Service Account as provided in section 8, any balance in the General
Fund Account shall be transferred to the Reserve Account. Funds in the
Reserve Account may be used only as authorized in this resolution and
until so used shall be held by the Corporation in trust as security for
the loan and grant obligations. Transfers at a rate not less than $
------------ 2 annually shall be made to the Reserve Account until the
amount in the Reserve Account reaches the sum of $ ------------ 3 and
shall be resumed at any time when necessary, because of disbursements
from the Reserve Account, to restore it to said sum. Of such sum, at
least 50 percent shall be maintained on a cash basis, referred to herein
as the ''cash reserve.'' After the cash reserve reaches the required 50
percent of said sum, all or any portion of the balance of said sum may,
at the option of the Corporation, consist of an amount, referred to
herein as the ''prepayment reserve,'' by which the Corporation is
''ahead of schedule'' as defined in the regulations of the Farmers Home
Administration. Funds in the cash reserve shall be deposited in a
separate bank account or accounts insured by the Federal Deposit
Insurance Corporation or invested in readily marketable obligations of
the United States, the earnings on which shall accrue to the Reserve
Account.
(b) With the prior consent of the Government, funds in the Reserve
Account may be used by the Corporation --
(1) To meet payments due on the loan obligations in the event the
amount in the Debt Service Account is not sufficient for the purpose.
(2) To pay costs of repairs or replacements to the housing caused by
catastrophe or long-range depreciation which are not current expenses
under section 7.
(3) To make improvements or extensions to the housing.
(4) For other purposes desired by the Corporation which in the
judgment of the Government likely will promote the loan or grant
purposes without jeopardizing collectibility of the loan or impairing
the adequacy of the security, or will strengthen the security, or will
facilitate, improve, or maintain the orderly collectibility of the loan.
(c) Any amount in the Reserve Account which exceeds the sum specified
in sub-section (a), and is not agreed between the Corporation and the
Government to be used for purposes authorized in subsection (b) shall be
applied promptly on the loan obligations.
10. Regulatory Covenants. So long as the loan or grant obligations
continue, the Corporation shall --
(a) Impose and collect such fees, assessments rents, and charges that
the income of the Corporation will be sufficient at all times for
operation and maintenance of the housing payments on the loan
obligations, and maintenance of the accounts herein provided for.
(b) Maintain complete books and records relating to the Corporation's
financial affairs, cause such books and records to be audited at the end
of each fiscal year, promptly furnish the Government without request a
copy of each audit report, and permit the Government to inspect such
books and records at all reasonable times.
(c) If required or permitted by the Government, revise the accounts
herein provided for, or establish new accounts to cover handling and
disposition of income from the payment of exenses attributable to the
housing or to any other property securing the loan or grant obligations,
and submit to the Government regular and special reports concerning the
housing or the Corporation's financial affairs, including any
information required by the Government regarding income of the occupants
of the housing.
(d) Unless the Government gives prior consent --
(1) Not use or permit use of the housing for any purpose other than
as low-rent housing and related facilities for low-income domestic farm
labor, as those terms are defined by the Government.
(2) Not enter into any contract or agreement for improvements or
extensions to the housing or other property securing the loan or grant
obligations.
(3) Not cause or permit voluntary dissolution of the Corporation, nor
merge or consolidate with any other organization, nor transfer or
encumber title to the housing or any part thereof or interest therein,
by sale, mortgage, lease, or other conveyance or encumbrance, nor engage
in any other new business, enterprise, or venture than operation of the
housing.
(4) Not borrow any money, nor incur any liability aside from current
expenses as defined in Section 7.
(e) Submit the following to the Government for prior review not less
then ------------ days before the effective dates:
(1) Annual budgets and operating plans.
(2) Statements of management policy and practice including
eligibility criteria and implementing rules for occupancy of the
housing.
(3) Proposed rents and charges and other terms of rental agreements
for occupancy of the housing.
(4) Rates of compensation to officers and employees of the
Corporation payable from or chargeable to any account provided for in
this resolution.
(f) If required by the Government, modify and adjust any matters
covered by clause (e) of this section.
(g) Comply with all its agreements and obligations in or under this
resolution, the note, Grant Agreement, security instrument, and any
related agreement executed by the Corporation in connection with the
loan or grant.
(h) Not alter, amend, or repeal without the Government's consent this
resolution or the bylaws or articles of incorporation of the
Corporation, which shall constitute parts of the total contract between
the Corporation and the Government relating to the loan and grant
obligations.
(i) Do other things as may be required by the Government in
connection with the operation of the housing, or with any of the
Corporation's operations or affairs which may affect the housing, the
loan or grant obligations, or the security.
11 Refinancing of Loan. If at any time it appears to the Government
that the Corporation is able to obtain a loan upon reasonable terms and
conditions to refinance the loan obligations then outstanding, upon
request from the Government, the Corporation will apply for, take all
necessary actions to obtain, and accept such refinancing loan and will
use the proceeds for said purpose.
12 General Provisions. (a) It is understood and agreed by the
Corporation that any loan or grant will be administered subject to the
limitations of the authorizing act of Congress and related regulations,
and that any rights granted to the Government herein or elsewhere may be
exercised by it in its sole discretion to carry out the purposes of the
loan and grant, enforce such limitations, and protect the Government's
financial interest in the loan and grant and the security.
(b) The provisions of this resolution are representations of the
Corporation to induce the Government to make or insure a loan or make a
grant to the Corporation as aforesaid. If the Corporation should fail
to comply with or perform any of its loan or grant obligations, such
failure shall constitute default as fully as default in payment of
amounts due on the loan obligations. In the event of default, the
Government at its option may declare the entire amount of the loan and
grant obligations immediately due and payable and, if such entire amount
is not paid forthwith, may take possession of and operate the housing
and proceed to foreclose its security and enforce all other available
remedies.
(c) Upon request by the Government the corporation will permit
representatives of the Government to inspect and make copies of any of
the records of the corporation pertaining to the financial assistance.
Such inspection and copying may be made during regular office hours of
the corporation, or any other time the corporation and the Government
finds convenient.
(d) Any provisions of this resolution may be waived by the Government
in its sole discretion, or changed by agreement between the Government
and the Corporation, after this resolution becomes contractually
binding, to any extent such provisions could legally have been foregone,
or agreed to in amended form, by the Government initially.
(e) Any notice, consent, approval, waiver, or agreement must be in
writing.
(f) This resolution may be cited in the security instrument and
elsewhere as the ''Loan and Grant Resolution of (date of this
resolution) -------------------- 19 ---- .''
The undersigned, -------------------- , the Secretary of the
corporation identified in the foregoing resolution, hereby certifies
that the foregoing is a true copy of a resolution duly adopted by the
board of directors on -------------------- 19 ---- , which has not been
altered, amended, or repealed.
Date
Secretary
(SEAL)
(44 FR 59199, Oct. 15, 1979, as amended at 46 FR 36112, July 14,
1981)
1Only loan or grant funds, and borrower's funds to be used for an
eligible loan or grant purpose, may be deposited in the supervised bank
account.
2In most cases this figure should be one-tenth of the aggregate sum
specified later in the sentence as the total amount of the Reserve
Account.
3The amount to be inserted will usually be about 10 percent of the
value of the buildings and related facilities financed wholly or
partially with the loan and grant.
07 CFR 1944.183 Pt. 1944, Subpt. D, Exh. F
07 CFR 1944.183 Exhibit F -- Labor Housing Grant Agreement
THIS AGREEMENT dated -------------------- , 19 ---- ,
between --
which is organized and operating under
---------------------- (Authorizing statute)
herein called ''Grantee,'' and the United States of America acting
through the Farmers Home Administration, Department of Agriculture,
herein called ''Grantor,'' WITNESSETH:
Whereas Grantee has determined to undertake a project of acquisition,
construction, enlargement and/or capital improvement of a Labor Housing
Project to serve domestic farm laborers at an estimated cost of $
------------ and has duly authorized the undertaking of such project.
Grantee is able to finance not more than $ ------------ of the
development costs through revenues, charges, taxes or assessments, or
funds otherwise available to Grantee resulting in a reasonable rental
rate.
Said sum of $ ------------ has been committed to and by Grantee for
such project development costs.
Grantor has agreed to grant the Grantee a sum not to exceed $
------------ subject to the terms and conditions established by the
Grantor. Provided, however, that the proportionate share of any grant
funds actually advanced and not needed for grant purposes shall be
returned immediately to the Grantor. The Grantor may terminate the
grant in whole, or in part, at any time before the date of completion,
whenever it is determined that the Grantee has failed to comply with the
conditions of the grant.
Now therefore, in consideration of said grant by Grantor to Grantee,
to be made pursuant to Section 516 of the Housing Act of 1949 for the
purpose only of defraying a part not to exceed ---- percent of the
development costs, as defined by applicable Farmers Home Administration
instructions.
Grantee agrees that Grantee will:
A. Cause said project to be constructed within the total sums
available to it, including said grant, in accordance with the project
plans and specifications and any modifications thereof prepared by
Grantee and approved by Grantor.
B. Permit periodic inspection of the construction by a representative
of Grantor during construction.
C. Manage, operate and maintain the project, including these units if
less than the whole of said project, continuously in an efficient and
economic manner.
D. Make services of said project available within its capacity to all
domestic farm laborers in borrowers/grantees service area without
discrimination because of race, color, religion, sex, age, handicap,
marital or familial status, or National origin at reasonable rental
rates, whether for one or more types of units, adopted by resolution
dated XX 19 XX, as may be revised from time to time by Grantee. The
initial rental rates must be approved by the Grantor. Thereafter,
Grantee may not make changes to the rental rate structure without prior
authorization from the Grantor.
E. Adjusts its operating costs and service charges from time to time
to provide for adequate operation and maintenance, emergency repair
reserves, obsolescence reserves, debt service and debt service reserves.
F. Provide Grantor with such periodic reports as it may require and
permit periodic inspection of its operations by a representative of the
Grantor.
G. To execute Form FmHA 400-1, ''Equal Opportunity Agreement,'' and
to execute Form 400-4, ''Assurance Agreement,'' and to execute any other
agreements required by Grantor which Grantee is legally authorized to
execute. If any such form has been executed by Grantee as a result of a
loan being made to Grantee by Grantor contemporaneously with the making
of this grant, another form of the same type need not be executed in
connection with this grant.
H. Upon any default under its representations or agreements set forth
in this instrument, Grantee, at the option and demand of Grantor, will
repay to Grantor forthwith the original principal amount of the grant
stated hereinabove, with interest at the rate of 5 percentum per annum
from the date of the default. Default by the Grantee will constitute
termination of the grant thereby causing cancellation of Federal
assistance under the grant. The Provisions of this Grant agreement may
be enforced by Grantor, at its option and without regard to prior
waivers by it of previous defaults of Grantee, by judicial proceedings
to require specific performance of the terms of this Grantee Agreements
or by such other proceedings in law or equity, in either Federal or
State courts, as may be deemed necessary by Grantor to assure compliance
with the provisions of this Grant Agreement and the laws and regulations
under which this grant is made.
I. Return immediately to Grantor, as required by the regulations of
Grantor, any grant funds actually advanced and not needed by Grantee for
approved purposes.
J. Use the real property including land, land improvements,
structures, and appurtenances thereto, for authorized purposes of the
grant as long as needed.
1. Title to real property shall vest in the recipient subject to the
condition that the Grantee shall use the real property for the
authorized purpose of the original grant as long as needed.
2. The Grantee shall obtain approval by the Grantor agency for the
use of the real property in other projects when the Grantee determines
that the property is no longer needed for the original grant purposes.
Use in other projects shall be limited to those under other Federal
grant programs or programs that have purposes consistent with those
authorized for support by the Grantor.
3. When the real property is no longer needed as provided in 1 and 2
above, the Grantee shall request disposition instructions from the
Grantor agency or its sucessor Federal agency. The Grantor agency shall
observe the following rules in the disposition instructions.
(a) The Grantee may be permitted to retain title after it compensates
the Federal Government in an amount computed by applying the Federal
percentage of participation in the cost of the original project to the
fair market value of the property.
(b) The Grantee may be directed to sell the property under guidelines
provided by the Grantor agency and pay the Federal Government an amount
computed by applying the Federal percentage of participation in the cost
of the original project to the proceeds from sale (after deducting
actual and reasonable selling and fix-up expenses, if any, from the
sales proceeds). When the Grantee is authorized or required to sell the
property, proper sales procedures shall be established that provide for
competition to the extent practicable and result in the highest possible
return.
(c) The Grantee may be directed to transfer title to the property to
the Federal Government provided that in such cases the Grantee shall be
entitled to compensation computed by applying the Grantee's percentage
of participation in the cost of the program or project to the current
fair market value of the property.
This Grant Agreement covers the following described real property
(use continuation sheets as necessary).
K. Abide by the following conditions pertaining to nonexpendable
personal property which is furnished by the Grantor or acquired wholly
or in part with grant funds. Nonexpendable personal property means
tangible personal property having a useful life of more than one year
and an acquisition cost of $300 or more per unit. A Grantee may use its
own definition of nonexpendable personal property provided that such
definition would at least include all tangible personal property as
defined above.
1. Use of nonexpendable property.
(a) The Grantee shall use the property in the project for which it
was acquired as long as needed. When no longer needed for the original
project, the Grantee shall use the property in connection with its other
Federally sponsored activities, if any, in the following order of
priority:
(1) Activities sponsored by the FmHA.
(2) Activities sponsored by other Federal agencies.
(b) During the time that nonexpendable personal property is held for
use on the project for which it was acquired, the Grantee shall make it
available for use on other projects if such other use will not interfere
with the work on the project for which the property was originally
acquired. First preference for such other use shall be given to FmHA
sponsored projects. Second preference will be given to other Federally
sponsored projects.
2. Disposition of nonexpendable property. When the Grantee no longer
needs the property as provided in paragraph (a) above, the property may
be used for other activities in accordance with the following standards:
(a) Nonexpendable property with a unit acquisition cost of less than
$1000. The Grantee may use the property for other activities without
reimbursement to the Federal Government or sell the property and retain
the proceeds.
(b) Nonexpendable personal property with a unit acquisition cost of
$1000 or more. The Grantee may retain the property for other uses
provided that compensation is made to the original Grantor agency or its
successor. The amount of compensation shall be computed by applying the
percentage of Federal participation in the cost of the original project
or program to the current fair market value of the property. If the
Grantee has no need for the property and the property has further use
value, the Grantee shall request disposition instructions from the
original Grantor agency.
The Grantor agency shall determine whether the property can be used
to meet the agency's requirements. If no requirement exists within the
agency, the availability of the property shall be reported, in
accordance with the guidelines of the Federal Property Management
Regulations (FPMR), to the General Services Administration by the
Grantor agency to determine whether a requirement for the property
exists in other Federal agencies. The Grantor agency shall issue
instructions to the Grantee no later than 120 days after the Grantee
request and the following procedures shall govern:
(1) If so instructed or if disposition instructions are not issued
within 120 calendar days after the Grantee's request, the Grantee shall
sell the property and reimburse the Grantor agency an amount computed by
applying to the sales proceeds the percentage of Federal participation
in the cost of the original project or program. However, the Grantee
shall be permitted to deduct and retain from the Federal share $100 or
ten percent of the proceeds, whichever is greater, for the Grantee's
selling and handling expenses.
(2) If the Grantee is instructed to ship the property elsewhere the
Grantee shall be reimbursed by the benefitting Federal agency with an
amount which is computed by applying the percentage of the Grantee
participation in the cost of the original grant project or program to
the current fair market value of the property, plus any reasonable
shipping or interim storage costs incurred.
(3) If the Grantee is instructed to otherwise dispose of the
property, the Grantee shall be reimbursed by the Grantor agency for such
costs incurred in its disposition.
3. The Grantee's property management standards for nonexpendable
personal property shall also include:
(a) Property records which accurately provide for: a description of
the property; manufacturer's serial number or other identification
number; acquisition date and cost; source of the property; percentage
(at the end of budget year) of Federal participation in the cost of the
project for which the property was acquired; location, use and
condition of the property and the date the information was reported;
and ultimate disposition data including sales price or the method used
to determine current fair market value if the Grantee reimburses the
Grantor for its share.
(b) A physical inventory of property shall be taken and the results
reconciled with the property records at least once every two years to
verify the existence, current utilization, and continued need for the
property.
(c) A control system shall be in effect to insure adequate safeguards
to prevent loss, damage, or theft of the property. Any loss, damage, or
theft of nonexpendable property shall be investigated and fully
documented.
(d) Adequate maintenance procedures shall be implemented to keep the
property in good condition.
(e) Proper sales procedures shall be established for unneeded
property which would provide for competition to the extent practicable
and result in the highest possible return.
This Grant Agreement covers the following described nonexpendable
property (use continuation sheets as necessary).
L. Provide Financial Management Systems which will include:
1. Accurate, current, and complete disclosure of the financial
results of each grant. Financial reporting will be on an accrual basis.
2. Records which identify adequately the source and application of
funds for grant-supported activities. Those records shall contain
information pertaining to grant awards and authorizations, obligations,
unobligated balances, assets, liabilities, outlays, and income.
3. Effective control over and accountability for all funds, property
and other assets. Grantees shall adequately safeguard all such assets
and shall assure that they are used solely for authorized purposes.
4. Accounting records supported by source documentation.
M. Retain financial records, supporting documents, statistical
records, and all other records pertinent to the grant for a period of at
least three years after grant closing except that the records shall be
retained beyond the three-year period if audit findings have not been
resolved. Microfilm copies may be substituted in lieu of original
records. The Grantor and the Comptroller General of the United States,
or any of their duly authorized representatives, shall have access to
any books, documents, papers, and records of the Grantee's government
which are pertinent to the specific grant program for the purpose of
making audits, examinations, excerpts and transcripts.
N. Provide information as requested by the Grantor to determine the
need for and complete any necessary Environmental Impact Statements.
O. Provide an audit report prepared in sufficient detail to allow the
Grantor to determine that funds have been used in compliance with the
proposal, any applicable laws and regulations and this Agreement.
P. Agree to account for and to return to Grantor interest earned on
grant funds pending their disbursement for program purposes when the
Grantee is a unit of local government. States and agencies or
instrumentalities of states shall not be held accountable for interest
earned on grant funds pending their disbursement.
Q. Not encumber, transfer or dispose of the property or any part
thereof, furnished by the Grantor or acquired wholly or in part with
Grantor funds without the written consent of the Grantor except as
provided in item J above.
R. To include in all contracts for construction or repair a provision
for compliance with the Copeland ''Anti-Kick Back'' Act (18 U.S.C. 874)
as supplemented in Department of Labor regulations (29 CFR, Part 3).
The Grantee shall report all suspected or reported violations to the
Grantor.
S. Pay all laborers and mechanics employed by contractors and
subcontractors wages at rates not less than those prevailing on similar
construction in the locality as determined by the Secretary of Labor in
accordance with the Davis-Bacon Act, as amended (40 U.S.C.
276a-276a-5).
T. In construction contracts in excess of $2,000 and in other
contracts in excess of $2,500 which involve the employment of mechanics
or laborers, to include a provision for compliance with Sections 103 and
107 of the Contract Work Hours and Safety Standards Act (40 U.S.C.
327-330) as supplemented by Department of Labor regulations (29 CFR,
Part 5).
U. To include in all contracts in excess of $100,000 a provision that
the contractor agrees to comply with all the requirements of Section 114
of the Clean Air Act (42 U.S.C. 1875C-9) and Section 308 of the Water
Pollution Control Act specified in Section 114 of the Clean Air Act and
Section 308 of the Water Pollution Control Act and all regulations and
guidelines issued thereunder after the award of the contract. Such
regulations and guidelines can be found in 40 CFR 15.4 and 40 FR 17126
dated April 16, 1975. In so doing the Contractor further agrees:
1. As condition for the award of contract to notify the Owner of the
receipt of any communication from the Environmental Protection Agency
(EPA) indicating that a facility to be utilized in the performance of
the contract is under consideration to be listed on the EPA list of
Violating Facilities. Prompt notification is required prior to contract
award.
2. To certify that any facility to be utilized in the performance of
any nonexempt contractor subcontract is not listed on the EPA list of
Violating Facilities. Prompt notification is required prior to contract
award.
3. To include or cause to be included the above criteria and the
requirements in every nonexempt subcontract and that the Contractor will
take such action as the Government may direct as a means of enforcing
such provisions.
As used in these paragraphs the term ''facility'' means any building,
plan, installation, structure, mine, vessel or other floating craft,
location, or site of operations, owned, leased, or supervised by a
Grantee, cooperator, contractor, or subcontractor, to be utilized in the
performance of a grant, agreement, contract, subgrant, or subcontract.
Where a location or site of operation contains or includes more than one
building, plant, installation, or structure, the entire location shall
be deemed to be a facility except where the Director, Office of Federal
Activities, Environmental Protection Agency, determines that independent
facilities are co-located in one geographical area.
Grantor agrees that it: A. Will make available to Grantee for the
purpose of this Agreement not to exceed $ ------------ which it will
advance to Grantee to meet not to exceed ---- percent of the development
costs of the project in accordance with the actual needs of Grantee as
determined by Grantor.
B. Will assist Grantee, within available appropriations, with such
technical assistance as Grantor deems appropriate in planning the
project and coordinating the plan with local official comprehensive
plans and with any State or area plans for the area in which the project
is located.
C. At its sole discretion and at any time may give any consent,
deferment, subordination, release, satisfaction, or termination of any
or all of Grantee's grant obligations, with or without available
consideration, upon such terms and conditions as Grantor may determine
to be (1) advisable to further the purpose of the grant or to protect
Grantor's financial interest therein and (2) consistent with both the
statutory purposes of the grant and the limitations of the statutory
authority under which it is made.
This agreement may be terminated for cause in the event of default on
the part of the Grantee as provided in paragraph I above or for
convenience of the Grantor and Grantee prior to the date of completion
of the grant purpose. Termination for convenience will occur when both
the Grantee and Grantor agree that the continuation of the project will
not produce beneficial results commensurate with the further expenditure
of funds.
In witness whereof Grantee on the date first above written has caused
these presence to be executed by its duly authorized
and attested and its corporated seal affixed by its duly authorized
ATTEST:
By
By
United States of America, Farmers Home Administration
By
(44 FR 59199, Oct. 15, 1979, as amended at 55 FR 6245, Feb. 22, 1990)