[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 1997 Edition]
[From the U.S. Government Publishing Office]
7
Agriculture
[[Page i]]
PARTS 1900 TO 1939
Revised as of January 1, 1997
CONTAINING
A CODIFICATION OF DOCUMENTS
OF GENERAL APPLICABILITY
AND FUTURE EFFECT
AS OF JANUARY 1, 1997
With Ancillaries
Published by
the Office of the Federal Register
National Archives and Records
Administration
as a Special Edition of
the Federal Register
[[Page ii]]
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1997
For sale by U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328
[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 7:
Subtitle B--Regulations of the Department of
Agriculture--Continued:
Chapter XVIII--Rural Housing Service, Rural Business-
Cooperative Service, Rural Utilities Service, and Farm
Service Agency, Department of Agriculture (Continued). 5
Finding Aids:
Table of CFR Titles and Chapters.......................... 349
Alphabetical List of Agencies Appearing in the CFR........ 365
List of CFR Sections Affected............................. 375
[[Page iv]]
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Cite this Code: CFR
To cite the regulations in this volume use title, part
and section number. Thus, 7 CFR 1900.1 refers to title
7, part 1900, section 1.
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[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
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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
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collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
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Office of the Federal Register.
January 1, 1997.
[[Page vii]]
THIS TITLE
Title 7--Agriculture is composed of fifteen volumes. The parts in
these volumes are arranged in the following order: parts 0-26, 27-52,
53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 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, 1997.
The Food and Consumer 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 volume containing parts
1000-1199. Part 900--General Regulations is carried as a note in the
volume containing parts 1000-1199, 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, Elizabeth Thomas was Chief Editor. The Code of
Federal Regulations publication program is under the direction of
Frances D. McDonald, assisted by Alomha S. Morris.
[[Page viii]]
[[Page 1]]
TITLE 7--AGRICULTURE
(This book contains parts 1900 to 1939)
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SUBTITLE B--Regulations of the Department of Agriculture--Continued:Part
chapter xviii--Rural Housing Service, Rural Business-
Cooperative Service, Rural Utilities Service, and Farm
Service Agency, Department of Agriculture (Continued)..... 1900
[[Page 3]]
Subtitle B--Regulations of the Department of Agriculture--Continued
[[Page 5]]
CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS-COOPERATIVE SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT OF AGRICULTURE (Continued)
--------------------------------------------------------------------
Editorial Note: Nomenclature changes to chapter XVIII appear at 59 FR
66443, Dec. 27, 1994, 61 FR 1109, Jan. 16, 1996, and 61 FR 2899, Jan.
30, 1996.
SUBCHAPTER H--PROGRAM REGULATIONS
Part Page
1900 General..................................... 7
1901 Program-related instructions................ 19
1902 Supervised bank accounts.................... 59
1904 Loan and grant programs (individual) [Reserved]
1910 General..................................... 71
1922 Appraisal................................... 85
1924 Construction and repair..................... 88
1925 Taxes....................................... 190
1927 Title clearance and loan closing............ 191
1930 General..................................... 201
1931-1939 [Reserved]
Editorial Note: Chapter XVIII--Rural Housing Service, Rural Business-
Cooperative Service, Rural Utilities Service, and Farm Service Agency,
Department of Agriculture, is continued in the volumes containing 7 CFR
parts 1940 to End.
[[Page 7]]
SUBCHAPTER H--PROGRAM REGULATIONS
PART 1900--GENERAL--Table of Contents
Subpart A--Delegations of Authority
Sec.
1900.1 General.
1900.2 National office staff and state directors.
1900.3 State, district, and county office employees.
1900.4 Ratification.
1900.5 Assignment of cases.
1900.6 Chair, Loan Resolution Task Force.
1900.7 Effect on other regulations.
Subpart B--Adverse Decisions and Administrative Appeals
1900.51 Definitions.
1900.52 General.
1900.53 Applicability.
1900.54 Effect on assistance pending appeal.
1900.55 Adverse action procedures.
1900.56 Non-appealable decisions.
1900.57 [Reserved]
Exhibits to Subpart B
Exhibit A [Reserved]
Exhibit B-1--Letter for Notifying Applicants, Lender, Holders and
Borrowers of Adverse Decisions Where the Decision is
Appealable
Exhibit B-2--Letter for Notifying Applicants, Lenders and Holders and
Borrowers of Unfavorable Decision Reached at the Meeting
Exhibit B-3--Letter for Notifying Applicants, Lender, Holders and
Borrowers of Adverse Decisions Where the Decision Involves an
Appraisal (Not To Be Used in Cases Involving Farmer Program
Primary Loan Servicing Actions)
Exhibit B-4--Letter for Notifying Applicants, Lenders and Holders and
Borrowers of Unfavorable Decision Reached After State Director
Review of an Appraisal (Not To Be Used in Cases Involving
Farmer Program Primary Loan Servicing Actions)
Exhibit C--Letter For Notifying Applicants, Lenders, Holders, And
Borrowers Of Adverse Decisions When Part Or All Of The
Decision Is Not Appealable [Not Used In Connection With
Decisions Related To Nonprogram Applicants, Borrowers, Or
Property]
Exhibit D--Hearings/Review Officer Designations
Subpart C--Applicability of Federal Law
1900.101 General
1900.102 Applicable law.
Subpart D--Processing and Servicing FmHA or Its Successor Agency Under
Public Law 103-354 Assistance to Employees, Relatives, and Associates
1900.151 General.
1900.152 Definitions.
1900.153 Identifying and reporting an employee relationship.
1900.154 Determining the need for special handling.
1900.155 Designating the processing/servicing official.
1900.156 Special handling-processing.
1900.157-1900.200 [Reserved]
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 7 U.S.C. 6991, et. seq.; 42
U.S.C. 1480; Reorganization Plan No. 2 of 1953 (5 U.S.C. App.).
Subpart A--Delegations of Authority
Sec. 1900.1 General.
The authorities contained in this subpart apply to all assets,
functions, and programs now or hereafter administered or serviced by the
Farmers Home Administration or its successor agency under Public Law
103-354, including but not limited to those relating to indebtedness,
security, and other assets obtained or contracted through the Secretary
of Agriculture, Resettlement Administration, Farm Security
Administration, or Emergency Crop and Feed Loan Offices of the Farm
Credit Administration, the Soil Conservation Service in connection with
water conservation and utilization projects; the Puerto Rico Hurricane
Relief Commission and successor agencies in connection with Puerto Rico
Hurricane relief loans to individuals; State Rural Rehabilitation
Corporations, the United States of America or its officials as trustees
of the assets of State Rural Rehabilitation Corporations, Regional
Agricultural Credit Corporations, Defense Relocation Corporations, land
leasing and purchasing associations, corporations, and agencies, and
whether the interest of the
[[Page 8]]
United States in the indebtedness, instrument of debt, security,
security instrument, or other assets is that of obligee, owner, holder,
insurer, assignee, mortgagee, beneficiary, trustee or other interest.
[44 FR 18162, Mar. 27, 1979]
Sec. 1900.2 National office staff and state directors.
The following officials of the Farmers Home Administration or its
successor agency under Public Law 103-354, in accordance with applicable
laws, and the regulations implementing these laws, are severally
authorized, for and on behalf of and in the name of the United States of
America or the Farmers Home Administration or its successor agency under
Public Law 103-354, to do and perform all acts necessary in connection
with making and insuring loans, making grants and advances, servicing
loans and other indebtedness and obtaining, servicing and enforcing
security and other instruments related thereto: The Deputy Administrator
Program Operations, the Assistant Administrators for Farmer Programs,
Housing, and Community and Business Programs, the Assistant
Administrator Accounting and Director Finance Office; each Director and
the Insured Loan Officer, Finance Office; the Directors for the Water
and Waste Disposal Division, the Community Facilities Division, the
Business and Industry Division, the Multi-Family Housing Processing
Division, the Multi-Family Housing Servicing and Property Management
Division, the Single Family Housing Processing Division, the Single
Family Housing Servicing and Property Management Division, the Farm Real
Estate and Production Division, the Emergency Division; and each State
Director within the area of that State Director's jurisdiction; and in
the absence or disability of any such official, the person acting in
that official's position; and the delegates of any such official. The
authority includes, but is not limited to, the authority to:
(a) Effect the assignment of, or the declaration of trust with
respect to, insured security instruments to place them in trust with the
United States of America as trustee for the benefit of any holder of the
promissory note or bond secured by such security instrument.
(b) Acknowledge receipt of notice of sale or assignment of insured
loans and security instruments.
(c) Appoint or request the appointment of substitute trustees in
deeds of trust.
(d) Execute proofs of claim in bankruptcy, death, and other cases.
(e) Consent to sale or assignment of, or sell or assign, direct or
insured loans and security instruments (except that in the case of
Agency asset sales, District Directors and County Supervisors are
delegated the authority to assign security instruments), endorsements,
reinsurance agreements, or other instruments in connection therewith;
and execute agreements to insure and reinsure, and to purchase and
repurchase insured loans and security instruments.
(f) Compromise, adjust, cancel or charge off indebtedness (except
that County Supervisors are delegated authority to approve all
settlements of sections 502 and 504 single family housing debt(s)).
(g) Modify contracts and other instruments and compromise claims
owed to the Farmers Home Administration or its successor agency under
Public Law 103-354 and covered by the Federal Claims Collection Act of
1966 and the joint regulations issued under it by the Attorney General
and the Comptroller General as provided for in applicable program
regulations.
(h) Perform all actions pertaining to the sale (or other disposal)
of real or chattel property or interests therein and to execute and
deliver bills of sale or other instruments to effect such sale (or
disposition), which includes but is not limited to offering property for
sale; advertising; receiving and accepting offers or bids; and closing
sale transactions, including the collection of sale proceeds, and
delivery of quitclaim deeds, easements, and right-of-way conveyances
after those documents have been executed. The authority to execute any
deeds of conveyance of inventory real property, including quitclaim
deeds, easements, rights-of-way, or sale of any use rights is reserved
to the State Director, and this authority may not be redelegated.
[[Page 9]]
(i) Approve and consent to transfers of security property to other
parties with or without assumption of debts; and approve and accept
transfers of security property or interests therein to the United States
of America, and execute release from liability after determination is
made in accordance with applicable program regulations.
(j) Execute and deliver, or approve in writing, suspensions,
releases or terminations of assignments, of income, renewals,
extensions, partial and full releases and satisfactions of security, and
personal or indemnity liability for indebtedness, waivers, subordination
agreements, severance agreements, affidavits, acknowlegements,
certificates of residence, evidence of consent, and other instruments or
documents.
(k) Accelerate and declare entire real estate or chattel
indebtedness due and payable, foreclose or request foreclosure of real
estate security instruments by exercise of power of sale or otherwise,
and bid for and purchase at any foreclosure or other sale or otherwise
acquire real property pledged, mortgaged, conveyed, attached, or levied
upon to collect indetedness, and accept title to any property so
purchased or acquired.
(l) Require and accept further or additional security.
(m) Accelerate and declare entire non-real estate indebtedness due
and payable, and foreclose or request foreclosure of chattel security
instruments by exercise of power of sale or otherwise.
(n) Bid for and purchase at any foreclosure or other sale, or
otherwise acquire personal property pledged, mortgaged, conveyed,
attached, or levied upon to collect indebtedness, and accept title to
any property so purchased or acquired.
(o) Take possession of, maintain, and operate security or acquired
real or personal property or interests therein, sell or otherwise
dispose of such personal property, and execute and deliver contracts,
caretaker's agreements, leases, and other instruments in connection
therewith, as appropriate.
(p) Execute proofs of loss on insurance contracts and endorse
without recourse loss payment drafts and checks.
(q) Issue, publish and serve notices and other instruments.
(r) File or record instruments, whether separate instruments, or by
making marginal entries, or by use of other methods permissible under
State law.
[44 FR 18162, Mar. 27, 1979, as amended at 47 FR 5700, Feb. 8, 1982; 50
FR 23901, June 7, 1985; 52 FR 44375, Nov. 19, 1987; 56 FR 6946, Feb. 21,
1991]
Sec. 1900.3 State, district, and county office employees.
The following officials and employees of the Farmers Home
Administration or its successor agency under Public Law 103-354, in
accordance with applicable laws, and the regulations implementing these
laws, for and on behalf of, and in the name of the United States of
America or the Farmers Home Administration or its successor agency under
Public Law 103-354, are also severally authorized within the area of
their respective jurisdictions to perform the acts specified in
paragraphs (g) through (r) of Sec. 1900.2; and within their loan
approval authority to sell or otherwise dispose of real or chattel
property or interests therein and to execute and deliver bills of sale
or other instruments to effect such sale or disposition: Chief, Farmer
Programs/Specialist; Chief, Rural Housing/Specialist; Chief, Community
Programs/Specialist; Chief, Business and Industry/Specialist; Chief,
Community and Business Programs/Specialist; Chief, Appraisal Staff/
Appraiser; Chief, Underwriting Staff/Underwriter; Chief, Underwriting
and Appraisal Staff; Chief, Servicing and Inventory Staff/Credit
Management Specialist/Realty Specialist; each District Director,
Assistant District Director, Loan Specialist General, County (including
Parish) Supervisor, Emergency Loan Supervisor, Assistant Emergency Loan
Supervisor, or other supervisor or assistant supervisor, and in the
absence or disability of any such official or employee, the person
acting in the position.
[50 FR 23902, June 7, 1985, as amended at 55 FR 43325, Oct. 29, 1990]
[[Page 10]]
Sec. 1900.4 Ratification.
All written instruments affecting title to real or personal
property, including but not limited to deeds, releases, satisfactions,
subordination agreements, severance agreements, consents, waivers,
assignments, declarations of trust, and heretofore executed by officials
or employees of the agencies or other entities referred to in
Sec. 1900.1 to carry out any purpose authorized by law, incident to the
administration of programs under the jurisdiction of said agencies or
other entities, are hereby approved, confirmed, and ratified.
[44 FR 18162, Mar. 27, 1979]
Sec. 1900.5 Assignment of cases.
The State Director may, in writing, assign responsibilities and
functions to a different office or staff position within the FmHA or its
successor agency under Public Law 103-354 State organizational structure
other than that referred to in regulations, provided no benefits,
rights, or opportunities of the public are changed.
[55 FR 43325, Oct. 29, 1990]
Sec. 1900.6 Chair, Loan Resolution Task Force.
The Chair, Loan Resolution Task Force is delegated the following
authorities, to be exercised until September 30, 1996:
(a) The responsibility for, under applicable Farmers Home
Administration or its successor agency under Public Law 103-354
regulations, collecting and settling all delinquent direct Farmer
Program loans as defined in the Consolidated Farm and Rural Development
Act, as amended, that have received all primary servicing rights and
pre-acceleration homestead and preservation loan servicing rights under
7 CFR part 1951, subpart S;
(b) The responsibility for making and directing the making of loan
servicing decisions, under applicable Farmers Home Administration or its
successor agency under Public Law 103-354 regulations, concerning
delinquent direct Farmer Programs loans for which accrued principal and
interest equals or exceeds one million dollars, to extend to borrowers
their remaining primary servicing rights and pre-acceleration homestead
and preservation loan servicing rights under 7 CFR part 1951, subpart S;
(c) Authority for approving the grant of exceptions pursuant to
Secs. 1951.916, 1955.21, 1956.99 and 1965.35 of this chapter, to the
extent necessary to carry out the responsibilities described in
paragraphs (a) and (b) of this section.
[59 FR 43441, Aug. 24, 1994]
Sec. 1900.7 Effect on other regulations.
This subpart does not revoke or modify any other delegation or
redelegation, instruction, procedure, or regulation issued by, or under
authority of, the Administrator of the Farmers Home Administration or
its successor agency under Public Law 103-354.
[44 FR 18162, Mar. 27, 1979. Redesignated at 55 FR 43325, Oct. 29, 1990.
Further redesignated at 59 FR 43441, Aug. 24, 1994]
Subpart B--Adverse Decisions and Administrative Appeals
Source: 60 FR 67318, Dec. 29, 1995, unless otherwise noted.
Sec. 1900.51 Definitions.
Act means the Federal Crop Insurance Reform and Department of
Agriculture Reorganization Act of 1994, Public Law No. 103-354 (7 U.S.C.
6991 et seq.).
Agency means the Rural Utilities Service (RUS), the Rural Housing
Service (RHS), and the Rural Business-Cooperative Development Service
(RBS), or their successor agencies.
Refer to 7 CFR 11.1 for other definitions applicable to appeals of
adverse decisions covered by this subpart.
Sec. 1900.52 General.
This subpart specifies procedures for use by USDA personnel and
program participants to ensure that full and complete consideration is
given to program participants who are affected by an agency adverse
decision.
Sec. 1900.53 Applicability.
(a) Appeals of adverse decisions covered by this subpart will be
governed by 7 CFR part 11.
[[Page 11]]
(b) The provisions of this subpart apply to adverse decisions
concerning direct loans, loan guarantees, and grants under the following
programs: RUS Water and Waste Disposal Facility Loans and Grants
Program; RHS Housing and Community Facilities Loan Programs; RBS Loan,
Grant, and Guarantee Programs and the Intermediary Relending Program;
and determinations of the Rural Housing Trust 1987-1 Master Servicer.
(c) This subpart does not apply to decisions made by parties outside
an agency even when those decisions are used as a basis for decisions
falling within paragraph (b) of this section, for example: decisions by
state governmental construction standards-setting agencies (which may
determine whether RHS will finance certain houses); Davis-Bacon wage
rates; flood plain determinations; archaeological and historical areas
preservation requirements; and designations of areas inhabited by
endangered species.
Sec. 1900.54 Effect on assistance pending appeal.
(a) Assistance will not be discontinued pending the outcome of an
appeal of a complete or partial adverse decision.
(b) Notwithstanding the provisions of paragraph (a) of this section,
administrative offsets initiated under subpart C of part 1951 will not
be stayed pending the outcome of an appeal and any further review of the
decision to initiate the offset.
Sec. 1900.55 Adverse action procedures.
(a) If an applicant, guaranteed lender, a holder, borrower or
grantee is adversely affected by a decision covered by this subpart, the
decision maker will inform the participant of the adverse decision and
whether the adverse decision is appealable. A participant has the right
to request the Director of NAD to review the agency's finding of
nonappealability in accordance with 7 CFR 11.6(a). In cases where the
adverse decision is based on both appealable and nonappealable actions,
the adverse action is not appealable.
(b) A participant affected by an adverse decision of an agency is
entitled under section 275 of the Act to an opportunity for a separate
informal meeting with the agency before commencing an appeal to NAD
under 7 CFR part 11.
(c) Participants also have the right under section 275 of the Act to
seek mediation involving any adverse decision appealable under this
subpart if the mediation program of the State in which the participant's
farming operation giving rise to the decision is located has been
certified by the Secretary for the program involved in the decision. An
agency shall cooperate in such mediation. Any time limitation for appeal
will be stayed pending completion of the mediation process (7 CFR
11.5(c)).
Sec. 1900.56 Non-appealable decisions.
The following are examples of decisions which are not appealable:
(a) Decisions which do not fall within the scope of this subpart as
set out in Sec. 1900.53.
(b) Decisions that do not meet the definition of an ``adverse
decision'' under 7 CFR part 11.
(c) Decisions involving parties who do not meet the definition of
``participant'' under 7 CFR part 11.
(d) Decisions with subject matters not covered by 7 CFR part 11.
(e) Interest rates as set forth in agency procedures, except for
appeals alleging application of an incorrect interest rate.
(f) The State RECD Director's refusal to request an administrative
waiver provided for in agency program regulations.
(g) Denials of assistance due to lack of funds or authority to
guarantee.
[[Page 12]]
Sec. 1900.57 [Reserved]
Exhibits to Subpart B
Exhibit A [Reserved]
Exhibit B-1--Letter for Notifying Applicants, Lender, Holders and
Borrowers of Adverse Decisions Where the Decision is Appealable
UNITED STATES DEPARTMENT OF AGRICULTURE
Farmers Home Administration or its successor agency under Public Law
103-354
(Insert Address)
_______________________________________________________________________
Date
Dear ____________:
After careful consideration, we [were unable to take favorable
action on your application/request for Farmers Home Administration or
its successor agency under Public Law 103-354 services] [are cancelling/
reducing the assistance you are presently receiving]. The specific
reasons for our decision are:
(Insert here the adverse decision and all of the specific reasons for
the adverse action.)
If you have any questions concerning the decision or the facts used
in making our decision and desire further explanation, you may call or
write the County Office (insert phone number) to request a meeting with
(this office) (The County Committee) within 15 calendar days of the date
of this letter. You should present any new information or evidence along
with possible alternatives for our consideration. You may also bring a
representative [or legal counsel] with you. You also have the right to
appeal this decision to a hearing officer in lieu of, or in addition to,
a meeting with [this office] [the County Committee]. See attachment for
your appeal rights. (Attach Form FmHA or its successor agency under
Public Law 103-354 1900-1.) (For guaranteed loans, except loss claims,
the applicant and lender must jointly request a meeting and/or an
appeal.)
If you do not wish a meeting, as outlined above, a request for a
hearing must be sent to the Area Supervisor, National Appeals Staff
(address) ____________, postmarked no later than (month) __________,
(date) __________.
(insert date 30 days from date of letter.)
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, handicap, or age
(provided that the applicant has the capacity to enter into a binding
contract), because all or part of the applicant's income derives 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 the law concerning this
creditor is the Federal Trade Commission, Equal Credit Opportunity,
Washington, DC 20580.
Sincerely,
_______________________________________________________________________
(Decision Maker)
(County Supervisor may sign for County Committee)
_______________________________________________________________________
(Title)
[55 FR 9874, Mar. 16, 1990]
Exhibit B-2--Letter for Notifying Applicants, Lenders and Holders and
Borrowers of Unfavorable Decision Reached at the Meeting
UNITED STATES DEPARTMENT OF AGRICULTURE
Farmers Home Administration or its successor agency under Public Law
103-354
(Insert Address)
_______________________________________________________________________
Date
Dear ____________:
We appreciated the opportunity to review the facts relative to [your
application/request for FmHA or its successor agency under Public Law
103-354 services] [the assistance you are presently receiving]. We
regret that our meeting with you did not result in a satisfactory
conclusion.
(Insert here the adverse decision and all the specific reasons for the
adverse action).
See attachment for your appeal rights. (Attach Form FmHA or its
successor agency under Public Law 103-354 1900-1) (For guaranteed loans,
except loss claims, the applicant and lender must jointly request an
appeal.)
A request for a hearing must be sent to the Area Supervisor,
National Appeals Staff ____________, postmarked no later than (month)
____________, (date) ____________
(insert date 30 days from date of letter.)
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, handicap, or age
(provided that the applicant has the capacity to enter into a binding
contract), because all or part of the applicant's income derives 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 the law concerning this
creditor
[[Page 13]]
is the Federal Trade Commission, Equal Credit Opportunity, Washington,
DC 20580.
Sincerely,
_______________________________________________________________________
(Decision Maker)
(County Supervisor may sign for County Committee)
_______________________________________________________________________
(Title)
[55 FR 9874, Mar. 16, 1990]
Exhibit B-3--Letter for Notifying Applicants, Lender, Holders and
Borrowers of Adverse Decisions Where the Decision Involves an Appraisal
(Not To Be Used in Cases Involving Farmer Program Primary Loan Servicing
Actions)
UNITED STATES DEPARTMENT OF AGRICULTURE
Farmers Home Administration or its successor agency under Public Law
103-354
(Insert Address)
_______________________________________________________________________
Date
Dear____________:
After careful consideration, we [were unable to take favorable
action on your application/request for Farmers Home Administration or
its successor agency under Public Law 103-354 services] [are cancelling/
reducing the assistance you are presently receiving]. The specific
reasons for our decision are:
(Insert here the adverse decision and all of the specific reasons for
the adverse action.)
If you have any questions concerning the decision or the facts used
in making our decision and desire further explanation, you may call or
write the County Office (insert phone number) to request a meeting with
(this office) (The County Committee) within 15 calendar days of the date
of this letter. You should present any new information or evidence along
with possible alternatives for our consideration. You may also bring a
representative or legal counsel with you.
If you do not wish to have a meeting as outlined above, you may
contest the appraisal of the property value. In order to contest the
appraisal you must first request review of the appraisal by the FmHA or
its successor agency under Public Law 103-354 State Director. Your
request for review by the State Director should be made through our
office. You will be advised of the results of the State Director's
review. If after the State Director's review you still disagree with the
appraisal you may request a hearing. When you receive the results of the
State Director's review you will be advised on how to ask for a hearing.
Your request for review of the appraisal must be postmarked no later
than (month)__________, (date)________ (insert date 15 days from date of
letter).
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, handicap, or age
(provided that the applicant has the capacity to enter
[55 FR 9874, Mar. 16, 1990]
Exhibit B-4--Letter for Notifying Applicants, Lenders and Holders and
Borrowers of Unfavorable Decision Reached After State Director Review of
an Appraisal (Not To Be Used in Cases Involving Farmer Program Primary
Loan Servicing Actions)
UNITED STATES DEPARTMENT OF AGRICULTURE
Farmers Home Administration or its successor agency under Public Law
103-354
(Insert Address)
_______________________________________________________________________
Date
Dear ____________:
At your request we have reviewed the appraisal of the property you
wish to purchase. We have determined that the value estimate of the
property is both supportable and defensible (as required by FmHA or its
successor agency under Public Law 103-354 regulations and appraisal
industry standards) and therefore acceptable.
You have the right to appeal this decision. You must show why the
appraisal is in error. You may submit an independent appraisal, at your
expense, from a qualified appraiser who is a designated member of [the
American Institute of Real Estate Appraisers, Society of Real Estate
Appraisers, American Society of Farm Managers and Rural Appraisers,
etc.,] or an equivalent organization requiring appraisal education,
testing and experience. The appraisal must conform to Agency Appraisal
regulations applicable to the loan program.
See attachment for your appeal rights.
A request for a hearing must be sent to the Area Supervisor,
National Appeals Staff (address) ____________, postmarked no later than
(month) ____________, (date) ____________,
(insert date 30 days from date of letter)
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, handicap, or age
(provided that the applicant has the capacity to enter into a binding
contract), because all or part
[[Page 14]]
of the applicant's income derives 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 the law concerning this creditor is the Federal Trade
Commission, Equal Credit Opportunity, Washington, DC 20580.
Sincerely,
_______________________________________________________________________
(State Director)
[55 FR 9875, Mar 16, 1990]
Exhibit C--Letter For Notifying Applicants, Lenders, Holders, And
Borrowers Of Adverse Decisions When Part Or All Of The Decision Is Not
Appealable [Not Used In Connection With Decisions Related To Nonprogram
Applicants, Borrowers, Or Property]
UNITED STATES DEPARTMENT OF AGRICULTURE
Farmers Home Administration or its successor agency under Public Law
103-354
(Insert Address)
_______________________________________________________________________
(Date)
Dear ____________ :
After careful consideration we [were unable to take favorable action
on your application/request for Farmers Home Administration or its
successor agency under Public Law 103-354 services] [are cancelling/
reducing the assistance you are presently receiving].
(Insert and number all of the specific reasons for the adverse action.
Examples of nonappealable reasons are listed in Sec. 1900.55(a)).
If you have any questions about this action, we would like the
opportunity to explain in detail why your request has not been approved,
explain any possible alternative, or provide any other information you
would like. You may bring any additional information you may have and
you may bring a representative or counsel if you wish. Please call
(telephone number) for an appointment.
Applicants and borrowers generally have a right to appeal adverse
decisions, but FmHA or its successor agency under Public Law 103-354
decisions based on certain reasons are not appealable. We have
determined that the reason(s) numbered ________ for the decision in this
case make(s) the decision not appealable under FmHA or its successor
agency under Public Law 103-354 regulations. You may, however, write the
Area Supervisor, National Appeals Staff (insert address) for a review of
the accuracy of our finding that the decision is not appealable,
postmarked no later than (month) ________, (date) ________ (insert date
30 days from date of letter).
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, handicap, or age
(provided that the applicant has the capacity to enter into a binding
contract), because all or part of the applicant's income derives 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 the law concerning this
creditor is the Federal Trade Commission, Equal Credit Opportunity,
Washington, DC 20580.
Sincerely,
_______________________________________________________________________
(Decision Maker)
(County Supervisor may sign for County Committee)
_______________________________________________________________________
(Title)
[55 FR 9875, Mar. 16, 1990, as amended at 58 FR 52646, Oct. 12, 1993]
Editorial Note: At 58 FR 52646, Oct. 12, 1993, the Farmers Home
Administration attempted to amend Exhibit C of subpart B of part 1900 by
removing in the second paragraph the words ``(month) ________,'';
however, because ``(month) ________'' does not exist in the second
paragraph, this amendment could not be incorporated.
Exhibit D--Hearings/Review Officer Designations
Hearing/Review Officer Designations
------------------------------------------------------------------------
Decisionmaker or decision Hearing officer Review officer
------------------------------------------------------------------------
County Supervisor............... National Appeals State Director and/
Staff Hearing or Director,
Officer. National Appeals
Staff.
County Committee................ National Appeals State Director and/
Staff Hearing or Director,
Officer. National Appeals
Staff.
*District Director, *State National Appeals **State Director
Program Chief, *District Staff Hearing and/or Director,
Specialist. Officer. National Appeals
Staff.
*State Director, *Regional As appointed by Director, National
Director. Director, Appeals Staff.
National Appeals
Staff.
Division Director or Assistant As appointed by Director, National
Administrator. Director, Appeals Staff.
National Appeals
Staff.
[[Page 15]]
Assistant Administrator......... As appointed by Director, National
Director, Appeals Staff.
National Appeals
Staff.
Deputy or Associate As appointed by Director, National
Administrator. Director, Appeals Staff.
National Appeals
Staff.
------------------------------------------------------------------------
*Decisionmaker for Rural Development Administration or its successor
agency under Public Law 103-354 (RDA or its successor agency under
Public Law 103-354) cases for Regional Office Operations.
**Review officer will be the Regional Director and/or the Director,
National Appeals Staff for RDA or its successor agency under Public
Law 103-354 cases.
Notes
1. District Director also means Assistant District Director or
District Loan Specialist.
2. County Supervisor also means Assistant County Supervisor with
loan approval authority.
3. The Director of the National Appeals Staff may designate a staff
member to conduct a hearing or review. When the hearing/review is
completed, the designee will send the complete case file, hearing notes,
tape recordings, and a recommended decision to the Director for a final
decision. The Director may, for individual cases, delegate final
decision authority to a designee.
4. For decisions not directly covered above, advice should be sought
from the Director of the National Appeals Staff.
5. An appellant may elect to have an appeal reviewed by the State
Director, or the Director of the National Appeals Staff. The decision of
the State Director will be subject to further review by the Director of
the National Appeals Staff upon request of the appellant.
[58 FR 4065, Jan. 13, 1993]
Subpart C--Applicability of Federal Law
Sec. 1900.101 General.
This subpart provides Agency policy concerning:
(a) The applicability of Federal rather than State Law in the
conduct of Farmers Home Administration or its successor agency under
Public Law 103-354 (FmHA or its successor agency under Public Law 103-
354) operations, and
(b) The liability of an auctioneer for conversion of personal
property mortgaged to FmHA or its successor agency under Public Law 103-
354.
[44 FR 10979, Feb. 26, 1979, as amended at 45 FR 8934, Feb. 11, 1980]
Sec. 1900.102 Applicable law.
Loans made by FmHA or its successor agency under Public Law 103-354
are authorized and executed pursuant to Federal programs adopted by
Congress to achieve national purposes of the U.S. Government.
(a) Instruments evidencing or securing a loan payable to or held by
the Farmers Home Administration or its successor agency under Public Law
103-354, such as promissory notes, bonds, guaranty agreements,
mortgages, deeds of trust, financing statements, security agreements,
and other evidences of debt or security shall be construed and enforced
in accordance with applicable Federal law.
(b) Instruments evidencing a guarantee, conditional commitment to
guarantee, or a grant, such as contracts of guarantee, grant agreements
or other evidences of an obligation to guarantee or make a grant,
executed by the Farmers Home Administration or its successor agency
under Public Law 103-354, shall be construed and enforced in accordance
with applicable Federal law.
(c) In order to implement and facilitate these Federal loan
programs, the application of local procedures, especially for
recordation and notification purposes, may be utilized to the fullest
extent feasible and practicable. However, the use of local procedures
shall not be deemed or construed to be any waiver by FmHA or its
successor agency under Public Law 103-354 of Federal immunity from any
local control, penalty, or liability, or to subject FmHA or its
successor agency under Public Law 103-354 to any State required acts or
actions subsequent to the delivery by FmHA or its successor agency under
[[Page 16]]
Public Law 103-354 officials of the instrument to the appropriate local
or State official.
(d) Any person, corporation, or organization that applies for and
receives any benefit or assistance from FmHA or its successor agency
under Public Law 103-354 that offers any assurance or security upon
which FmHA or its successor agency under Public Law 103-354 relies for
the granting of such benefit or assistance, shall not be entitled to
claim or assert any local immunity, privilege, or exemption to defeat
the obligation such party incurred in obtaining or assuring such Federal
benefit or assistance.
(e) The liability of an auctioneer for conversion of personal
property mortgaged to FmHA or its successor agency under Public Law 103-
354 shall be determined and enforced in acceptance with the applicable
Federal law. ``Auctioneer'' for the purposes of this subpart includes a
commission merchant, market agency, factor or agent. In all cases in
which there has been a disposition without authorization by FmHA or its
successor agency under Public Law 103-354 of personal property mortgaged
to that agency, any auctioneer involved in said disposition shall be
liable to the Government for conversion--notwithstanding any State
statute or decisional rule to the contrary.
[44 FR 10979, Feb. 26, 1979]
Subpart D--Processing and Servicing FmHA or Its Successor Agency Under
Public Law 103-354 Assistance to Employees, Relatives, and Associates
Source: 58 FR 224, Jan. 5, 1993, unless otherwise noted.
Sec. 1900.151 General.
(a) Farmers Home Administration or its successor agency under Public
Law 103-354 (FmHA or its successor agency under Public Law 103-354)
Instruction 2045-BB (available in any FmHA or its successor agency under
Public Law 103-354 office) requires the maintenance of high standards of
honesty, integrity, and impartiality by employees. To reduce the
potential for employee conflict of interest, any processing, approval,
servicing or review activity, including access through automated
information systems, is conducted only by authorized FmHA or its
successor agency under Public Law 103-354 employees who:
(1) Are not themselves the recipient.
(2) Are not members of the family or known close relatives of the
recipient.
(3) Do not have an immediate working relationship with the
recipient, the employee related to the recipient, or the employee who
would normally conduct the activity.
(4) Do not have a business or close personal association with the
recipient.
(b) No provision of this subpart takes precedence over individual
program requirements or restrictions, especially those restrictions
found in FmHA or its successor agency under Public Law 103-354
Instruction 2045-BB (available in any FmHA or its successor agency under
Public Law 103-354 office) relating to eligibility for FmHA or its
successor agency under Public Law 103-354 assistance of FmHA or its
successor agency under Public Law 103-354 employees, members of families
of employees, close relatives, or business or close personal associates
of employees.
(c) The determination of a case's need for special handling under
the provisions of this subpart is not an adverse action and, therefore,
is not subject to appeal.
Sec. 1900.152 Definitions.
Applicant or borrower. All persons or organizations, individually or
collectively, applying for or receiving insured or guaranteed loan or
grant assistance from or through FmHA or its successor agency under
Public Law 103-354. Referred to as recipient.
Assistance. Loans or grants made, insured or guaranteed, or serviced
by FmHA or its successor agency under Public Law 103-354.
Associates. All persons with whom an employee has a business or
close personal association or immediate working relationship.
Business association. Business relationship between those with an
identity of financial interest; including but not limited to a business
partnership,
[[Page 17]]
being an officer, director, trustee, partner or employee of an
organization, or other long-term contractual relationship.
Close personal association. Social relationship between unrelated
residents of the same household.
Close relatives. The spouse, relatives and step-relatives of an
employee or the employee's spouse, including Grandmother, Grandfather,
Mother, Father, Aunt, Uncle, Sister, Brother, Daughter, Son, Niece,
Nephew, Granddaughter, Grandson, and First Cousin.
Conflict of interest. A situation (or the appearance of one) in
which one could reasonably conclude that an FmHA or its successor agency
under Public Law 103-354 employee's private interest conflicts with his
or her Government duties and responsibilities, even though there may not
actually be a conflict.
Employee. All FmHA or its successor agency under Public Law 103-354
personnel, including gratuitous employees and those negotiating for or
having arrangements for prospective employment, except as otherwise
specifically stated. For the purposes of this instruction only, the term
also refers to county or area committee members, elected or appointed,
and to closing agents who, although they are not employees, have a
special relationship to FmHA or its successor agency under Public Law
103-354 and therefore should be subject to these provisions.
Immediate working relationship. A relationship between a subordinate
and a supervisor in a direct line, or between co-workers in the same
office. For the purposes of this subpart, the relationships among a
County Supervisor and members of the local County Committee are
immediate working relationships.
Members of family. Blood and in-law relatives (such as by marriage
or adoption) who are residents of the employee's household.
Recipient. One who has applied for or received FmHA or its successor
agency under Public Law 103-354 financial assistance in the form of a
loan or grant. See definition of applicant or borrower.
Sec. 1900.153 Identifying and reporting an employee relationship.
(a) Responsiblity of applicant. When an application for assistance
is filed, the processing official asks if there is any known
relationship or association with an FmHA or its successor agency under
Public Law 103-354 employee. The applicant is required to disclose the
requested information under subpart A of part 1910 of this chapter and
pertinent program regulations.
(b) Responsibility of FmHA or its successor agency under Public Law
103-354 employee. An FmHA or its successor agency under Public Law 103-
354 employee who knows he or she is related to or associated with an
applicant or recipient, regardless of whether the relationship or
association is known to others, is required to notify the FmHA or its
successor agency under Public Law 103-354 official who is processing or
servicing the assistance, in writing. FmHA or its successor agency under
Public Law 103-354 Guide Letter 1900-D-1 (available in any FmHA or its
successor agency under Public Law 103-354 office) may be used as the
notice. If the appropriate official is not known, the State Director
should be notified. Regardless of whether the relationship or
association is defined in Sec. 1900.152 of this subpart, if the employee
believes there may be a potential conflict of interest, the FmHA or its
successor agency under Public Law 103-354 official who is processing or
servicing the assistance may be notified and special handling requested.
An employee's request that the case receive special handling is usually
honored.
(c) Responsibility of FmHA or its successor agency under Public Law
103-354 official. When any relationship or association is identified,
the FmHA or its successor agency under Public Law 103-354 official
completes and submits FmHA or its successor agency under Public Law 103-
354 Guide Letter 1900-D-2 (available in any FmHA or its successor agency
under Public Law 103-354 office) to the State Director (or
Administrator, under paragraph (e) of this section or Sec. 1900.155(a)
of this subpart). When completed FmHA or its successor agency under
Public Law 103-354 Guide Letter 1900-D-3 (available in any
[[Page 18]]
FmHA or its successor agency under Public Law 103-354 office) is
returned by the State Director, the processing official;
(1) [Reserved]
(2) [Reserved]
(3) notifies the recipient in writing of the change in
responsibility and any other pertinent information,
(4) [Reserved]
(d) Relationship or association established after application for
FmHA or its successor agency under Public Law 103-354 assistance. If a
relationship or association is established after an application has been
filed or assistance has been provided, both recipient and employee are
required to notify the FmHA or its successor agency under Public Law
103-354 official who is processing or servicing the assistance. FmHA or
its successor agency under Public Law 103-354 Guide Letter 1900-D-1
(available in any FmHA or its successor agency under Public Law 103-354
office) may be used for the notice.
(e) Relationship or association with a State Office, Finance Office
or National Office employee. If an identified relationship or
association is with an employee at a State Office (other than a State
Director), Finance Office or National Office, the processing/servicing
official completes and submits FmHA or its successor agency under Public
Law 103-354 Guide Letter 1900-D-2 (available in any FmHA or its
successor agency under Public Law 103-354 office) to the State Director
in the normal manner. The State Director reviews the information,
determines the need for special handling, designates the processing/
servicing official, completes and submits FmHA or its successor agency
under Public Law 103-354 Guide Letter 1900-D-3 (available in any FmHA or
its successor agency under Public Law 103-354 office) to the
Administrator for written concurrence. When the Administrator's
concurrence is received, the State Director returns completed FmHA or
its successor agency under Public Law 103-354 Guide Letter 1900-D-3 to
the original official who completes the action described in paragraph
(c) of this section.
(f) Relationship or association with a State Director. If an
identified relationship or association is with a State Director, the
processing/servicing official completes and submits FmHA or its
successor agency under Public Law 103-354 Guide Letter 1900-D-2
(available in any FmHA or its successor agency under Public Law 103-354
office) to the Administrator. The Administrator reviews, determines the
need for special handling, designates the processing/servicing official,
completes and returns FmHA or its successor agency under Public Law 103-
354 Guide Letter 1900-D-3 (available in any FmHA or its successor agency
under Public Law 103-354 office) to the original official who completes
the action described in paragraph (c) of this section.
(g) Change in relationship or association, status of FmHA or its
successor agency under Public Law 103-354 assistance, or employee's duty
station. If the relationship or association has changed, the application
denied or the assistance otherwise terminated, or the FmHA or its
successor agency under Public Law 103-354 employee's duty station
changed, the designated processing/servicing official completes FmHA or
its successor agency under Public Law 103-354 Guide Letter 1900-D-2
(available in any FmHA or its successor agency under Public Law 103-354
office) with the new information and submits it. The review process
takes place as described in paragraphs (a) through (e) of this section
to determine if processing/servicing activity may return to normal or
requires another change. If the assistance is denied or otherwise
terminated, the designated official notifies the original official.
Sec. 1900.154 Determining the need for special handling.
The State Director (or Administrator, under Sec. 1900.153(e) or
Sec. 1900.155(a) of this subpart):
(a) [Reserved]
(b) determines whether the reported relationship or association is
defined in Sec. 1900.152 of this subpart and would violate the
provisions of Sec. 1900.151(a) of this subpart,
(c) [Reserved]
(d) [Reserved]
(e) [Reserved]
(f) [Reserved]
[[Page 19]]
Sec. 1900.155 Designating the processing/servicing official.
(a) Designating an official with equivalent authority. The State
Director (or Administrator, under Sec. 1900.253(e) of this subpart or
this paragraph) designates a nonrelated or nonassociated FmHA or its
successor agency under Public Law 103-354 official authorized to conduct
the activity under program regulations, established delegation of
authority and approval authority under subpart A of part 1901 of this
chapter, and whose duty station is most convenient to the recipient and
to the security property. A type and/or amount of assistance processed
or serviced by a County Supervisor or at a County Office should be
assigned only to another County Supervisor or County Office. A type and/
or amount of assistance processed or serviced by a District Director or
at a District Office should be assigned only to another District
Director or District Office.
(b) County Committee. For processing or servicing decisions to be
made by a County Committee, if the recipient is a member, a different
County Committee is designated. If the recipient is related to or
associated with the member, notwithstanding the provisions of
Sec. 1900.151(a)(3) of this subpart, the State Director may permit the
decision to be made by the local committee, if the related/associated
member abstains.
(c) [Reserved]
Sec. 1900.156 Special handling--processing.
(a) [Reserved]
(b) Eligibility determination. The designated processing official
reviews the application and develops additional data as necessary. Upon
determination of whether the assistance will be provided, the designated
processing official notifies the applicant of the decision in writing
under program regulations, subpart A of part 1910 of this chapter, and
subpart B of part 1900. If the determination is favorable, unless
otherwise designated, the complete application is returned to the
original processing official for docket preparation. If the
determination is unfavorable, the designated processing official as
decisionmaker participates in the appeal process to its conclusion.
(c) [Reserved]
(d) [Reserved]
(e) [Reserved]
(f) Closing agent. Unless there is a clear or apparent conflict of
interest, closing will be at a location and by a closing agent chosen by
the recipient.
(g) Supervised bank account. Unless there is a clear or apparent
conflict of interest, any supervised bank account (or construction
account) is established at a financial institution chosen by the
recipient under supbart A of part 1902 of this chapter. Countersignature
authority is delegated only to a nonrelated or nonassociated FmHA or its
successor agency under Public Law 103-354 official.
(h) Construction inspection. Construction inspections are delegated
to a nonrelated or nonassociated employee authorized to conduct
inspections, whose duty station is nearest the construction site. The
designated processing/servicing official notifies the builder (or
architect/engineer) in writing of how and from whom to request
inspections.
Secs. 1900.157--1900.200 [Reserved]
PART 1901--PROGRAM-RELATED INSTRUCTIONS--Table of Contents
Subpart A--Loan and Grant Approval Authorities
Sec.
1901.1 Purpose.
1901.2 Policy.
1901.3 Approval documents.
1901.4 Authorities and responsibilities.
1901.5 Other program considerations.
Subparts B-D [Reserved]
Subpart E--Civil Rights Compliance Requirements *C*
1901.201 Purpose.
1901.202 Nondiscrimination in FmHA or its successor agency under Public
Law 103-354 programs.
1901.203 Title VIII of the Civil Rights Act of 1968.
1901.204 Compliance reviews.
1901.205 Nondiscrimination in construction financed with FmHA or its
successor agency under Public Law 103-354 loan or grant.
[[Page 20]]
Exhibits to Subpart E
Exhibit A to Subpart E--Civil Rights Compliance Reviews
Exhibit B to Subpart E--Summary Report of Civil Rights Compliance
Reviews
Exhibit C to Subpart E--FmHA or its successor agency under Public Law
103-354 Financed Contract
Exhibit D to Subpart E--Goals and Timetables for Minorities and Women
Exhibit E to Subpart E--List of Regional Offices, Office of Federal
Contract Compliance Programs (OFCCP), U.S. Department of Labor
(USDL)
Subpart F--Procedures for the Protection of Historical and Archeological
Properties
1901.251 Purpose.
1901.252 Policy.
1901.253 Definitions.
1901.254 Scope.
1901.255 Historical and archeological assessments.
1901.256--1901.258 [Reserved]
1901.259 Actions to be taken when archeological properties are
discovered during construction
1901.260 Coordination with other agencies.
1901.261 [Reserved]
1901.262 State supplement.
Exhibit to Subpart F
Exhibit A to Subpart F--National Park Service, U.S. Department of the
Interior Regional Offices
Subparts G-J [Reserved]
Subpart K--Certificates of Beneficial Ownership and Insured Notes
1901.501 Purpose.
1901.502 Policy.
1901.503 Definitions.
1901.504 Authorities and responsibilities.
1901.505 Certificates of beneficial ownership in FmHA or its successor
agency under Public Law 103-354 loans.
1901.506 Book-entry procedure for FmHA or its successor agency under
Public Law 103-354 securities--issuance and redemption of
certificate by Reserve bank.
1901.507 Certificates of beneficial ownership issued by the FmHA or its
successor agency under Public Law 103-354 Finance Office.
1901.508 Servicing of insured notes outstanding with investors.
1901.509 Loss, theft, destruction, mutilation, or defacement of insured
notes, insurance contracts, and certificates of beneficial
ownership.
Subparts L-M [Reserved]
Subpart N--Indian Outreach Program
1901.651 Purpose.
1901.652 Goals.
1901.653 Field action.
1901.654 FmHA or its successor agency under Public Law 103-354
publications.
1901.655 Reports.
Subpart A--Loan and Grant Approval Authorities
Authority: 42 U.S.C. 1480, 7 U.S.C. 1989, 5 U.S.C. 301, 7 CFR 2.23
and 2.70.
Source: 45 FR 79748, Dec. 2, 1980, unless othewise noted.
Sec. 1901.1 Purpose.
This subpart contains the loan and grant approval authorities by
program of field officials of the Farmers Home Administration or its
successor agency under Public Law 103-354 (FmHA or its successor agency
under Public Law 103-354).
Sec. 1901.2 Policy.
The loan and grant approval authorities will be given to the County
Supervisor and District Director to the maximum extent possible,
consistent with program requirements and available resources. Assistance
to FmHA or its successor agency under Public Law 103-354 employees,
members of their families, close relatives or business or close personal
associates is subject to the provisions of subpart D of part 1900 of
this chapter. Appropriate reviews, concurrence, and authorization, as
required by FmHA or its successor agency under Public Law 103-354
regulations, must be obtained for all loans and/or grants in excess of
the amounts indicated in Exhibits A, B, C, D, E and F.
[51 FR 34928, Sept. 30, 1986, as amended at 58 FR 226, Jan. 5, 1993]
Sec. 1901.3 Approval documents.
(a) Final approval documents for all insured loans and/or grants
will be executed, to the maximum extent possible,
[[Page 21]]
by the County Supervisor or District Director, as appropriate.
(b) State Directors, District Directors, and County Supervisors are
authorized to execute loan guarantee documents in accordance with
approval authorities.
[45 FR 79748, Dec. 2, 1980, as amended at 56 FR 48095, Sept. 24, 1991]
Sec. 1901.4 Authorities and responsibilities.
(a) Authority of supervising officials. Supervising officials have
their own authority and also the authority given to officials under
their supervision.
(b) Authority of acting officials. Acting officials have the
authority and responsibility of their regular and acting positions
unless limited by designation document.
(c) Redelegation of authority by State Directors. Unless restricted
by memorandum from the Administrator, or FmHA or its successor agency
under Public Law 103-354 regulations, State Directors can delegate their
approval authorities to State Office employees within the applicable
loan program by issuing a State Supplement.
(d) Redelegations of authority by District Directors. With the prior
written concurrence from the State Director, District Directors can
delegate their approval authority to Assistant District Directors by
memorandum. Authority will not be redelegated, however, until the
Assistant District Director receives adequate training and has
sufficient expertise.
(e) Restriction of approval authority by Administrator. The
Administrator can make written restrictions or revocations of the
authority given to any loan approval official.
(f) Restrictions of approval authority for other than Farmer
Programs loans by State Directors. A State Director can make written
restrictions or revocations, for not more than 6 months, of the
authority given to an individual.
(g) Restrictions of approval authority for Farmer Programs loans. A
State Director may delegate, revoke, increase, or decrease loan approval
authority of individuals to amounts indicated in Exhibit C and
attachment 1 of Exhibit C of this subpart.
(h) Restrictions on Assistant County Supervisors. (1) Newly
appointed Assistant County Supervisors will not approve loans until they
receive adequate training and written authority from the State Director.
(2) County Supervisors and District Directors must certify that
training requirements have been completed.
(i) Restrictions on Emergency Loan Supervisors and Assistant
Emergency Loan Supervisors. Emergency Loan Supervisors and Assistant
Emergency Loan Supervisors will not approve loans until they receive
adequate training and receive written authority from the State Director.
[45 FR 79748, Dec. 2, 1980, as amended at 56 FR 48095, Sept. 24, 1991]
Sec. 1901.5 Other program considerations.
See Exhibits A, B, C, D, E and F for dollar amounts. See appropriate
program Instructions for other considerations.
[51 FR 34928, Sept. 30, 1986]
Subparts B-D [Reserved]
Subpart E--Civil Rights Compliance Requirements *C*
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 40 U.S.C. 442; 42 U.S.C.
1480, 2942.
Sec. 1901.201 Purpose.
This subpart contains policies and procedures for implementing the
regulations of the Department of Agriculture issued pursuant to Title VI
of the Civil Rights Act of 1964, title VIII of the Civil Rights Act of
1968, Executive Order 11246 and the Equal Credit Opportunity Act of
1974, as they relate to the Farmers Home Administration or its successor
agency under Public Law 103-354 (FmHA or its successor agency under
Public Law 103-354). Nothing herein shall be interpreted to prohibit
preference to American Indians on Indian Reservations.
[41 FR 40112, Sept. 17, 1976]
[[Page 22]]
Sec. 1901.202 Nondiscrimination in FmHA or its successor agency under Public Law 103-354 programs.
(a) Nondiscrimination by recipients of FmHA or its successor agency
under Public Law 103-354 assistance. (1) No recipient of FmHA or its
successor agency under Public Law 103-354 financial assistance will
directly or through contractual or other arrangements subject any person
or cause any person to be subjected to discrimination on the ground of
race, color, or national origin, with respect to any program or
facility. This prohibition applies but is not restricted to unequal
treatment in priority, quality, quantity, methods, or charges for
service, use, occupancy or benefit, participation in the service or
benefit available, or in the use, occupancy or benefit of any structure,
facility, or improvement provided with FmHA or its successor agency
under Public Law 103-354 financial assistance.
(2) Specifically, and without limiting the general applicability of
this subpart, such recipient will not on the grounds of race, color, or
national origin:
(i) Deny any person the use, occupancy, or enjoyment of the whole or
any part of real or personal property or service, financial aid, or
other benefit under any program or facility.
(ii) Provide any person with any service, use, occupancy, or other
benefit different from that provided others by the program or facility.
(iii) Subject any person to segregation or separate treatment in any
matter related to his or her receipt of any service or other benefit.
(iv) Restrict in any way any person's enjoyment of any right,
privilege, or advantage enjoyed by others through the facility or
activity.
(v) Treat any person differently from others in determining whether
he or she satisfies any requirements or conditions for any admission or
membership in the recipient or in any other organization.
(vi) Deny any person an opportunity or restrict opportunity to
participate in a program or facility by:
(A) Refusing or failing to provide notice or services provided
others for the purpose of encouraging participation in the program or
facility; or
(B) Providing any person with such notice or services different from
the notice or services provided others.
(vii) Utilize criteria or methods of administration that have the
effect of subjecting a person to discrimination with respect to any
program or facility or defeating or substantially impairing the
achievement of the objectives of a program or facility.
(viii) Select sites or locate facilities with the purpose or effect
of:
(A) Excluding individuals from, denying them the benefits of, or
subjecting them to discrimination under any programs to which the
regulations in this subpart apply; or
(B) Defeating or substantially impairing the achievement of the
objectives of the regulations in this subpart.
(ix) Continue any previous or existing discriminatory practices, but
will take affirmative action to overcome the effects of such
discrimination.
(x) Deny any person the opportunity to participate as a member of a
planning or advisory body which is an integral part of the program.
(b) Nondiscrimination by FmHA or its successor agency under Public
Law 103-354 employees. (1) No. FmHA or its successor agency under Public
Law 103-354 employee will exclude from participation in, or deny the
benefits of, any program or activity administered by FmHA or its
successor agency under Public Law 103-354, or subject to discrimination
any person in the United States on the ground of race, color, religion,
sex, national origin, or marital status.
(2) No FmHA or its successor agency under Public Law 103-354
employee will:
(i) Be limited in the discharge of his or her responsibilities to
working with applicants solely on the basis of race, color, religion,
sex, national origin, or marital status.
(ii) Obstruct equal access to buildings, facilities, structures, or
lands under the control of FmHA or its successor agency under Public Law
103-354.
(iii) Deny under any program or activity of FmHA or its successor
agency under Public Law 103-354 equal opportunity for employment; for
participation in meetings, demonstrations,
[[Page 23]]
training activities or programs; for receiving awards; for receipt of
information disseminated by publication, news, radio, and other media;
for obtaining contracts, grants, loans or other financial assistance, or
for selection to assist in the administration of programs or activities
of FmHA or its successor agency under Public Law 103-354.
(3) No FmHA or its successor agency under Public Law 103-354
employee will, while conducting official business, participate in or
attend any segregated meetings or meetings held in a segregated facility
from which persons are excluded because of race, color, religion, sex,
national origin, or marital status.
(c) Intimidating or retaliatory acts. No recipient or other person
will intimidate, threaten, coerce, or discriminate against any person
for the purpose of interfering with any right or privilege under this
subpart, or because a person has made a complaint or has testified,
assisted, or participated in any manner in an investigation, proceeding,
or hearing related to a complaint. The identity of complainants will be
kept confidential except to the extent necessary to carry out the
purposes of this subpart.
(d) Nondiscrimination Agreement. The County Supervisor will, at the
time FmHA or its successor agency under Public Law 103-354 assistance is
requested, give all applicants for loans and grants listed in
Sec. 1901.204(a) a copy of Form FmHA or its successor agency under
Public Law 103-354 400-4, ``Nondiscrimination Agreement,'' and inform
the applicant that assistance will be conditioned upon executing this
form and complying with the requirements of this subpart.
(e) Covenants. Each instrument of conveyance for loans subject to
title VI of the Civil Rights Act of 1964, as outlined in Sec. 1901.204,
must 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.''
(f) Posters. The nondiscrimination poster, ``And Justice For All,''
will be displayed at the facilities and/or office of any borrower or
grantee if the facilities have been financed by an FmHA or its successor
agency under Public Law 103-354 loan or grant and are subject to title
VI of the Civil Rights Act of 1964. This poster also will be displayed
in all FmHA or its successor agency under Public Law 103-354 State and
County Offices.
(g) Racial and ethnic data. Recipients should maintain, for review
by FmHA or its successor agency under Public Law 103-354 and other
appropriate agencies, racial and ethnic data showing the extent to which
members of minority groups are beneficiaries of FmHA or its successor
agency under Public Law 103-354-assisted programs. The data should
identify recipients as White, Negro or Black, American Indian, Spanish
Surname, Oriental and Other.
(h) Discrimination complaints. (1) Any person or any specific class
of persons, if they believe they have been subject to discrimination
prohibited by this subpart, may file a written complaint with any FmHA
or its successor agency under Public Law 103-354 office, or, if they
prefer with the Secretary of Agriculture. Persons who complain of
discrimination will be advised of their rights to file complaints. A
complaint must be filed not later than 180 days after the date of the
alleged discrimination, unless the time for filing is extended by the
Secretary of Agriculture.
(2) A complaint filed with the County Supervisor or the State
Director will be referred promptly to the Administrator, Attention:
Equal Opportunity Officer. Attached to the complaint should be a
statement by the County Supervisor or State Director identifying the
recipient and type of assistance provided by FmHA or its successor
agency under Public Law 103-354, indicating whether a nondiscrimination
agreement has been signed, and giving any other available pertinent
information about the complaint.
[41 FR 40112, Sept. 17, 1976]
[[Page 24]]
Sec. 1901.203 Title VIII of the Civil Rights Act of 1968.
FmHA or its successor agency under Public Law 103-354 employees,
FmHA or its successor agency under Public Law 103-354 borrowers,
contractors, packagers, and others who provide housing for sale or rent,
are obligated under the provisions of title VIII of the Civil Rights Act
of 1968 to provide fair housing to all persons regardless of race,
color, religion, sex, or national origin.
(a) Coverage. The prohibitions against discrimination in the sale,
rental, or financing of housing contained in title VIII apply to:
(1) All dwellings financed by loans made by the Federal Government
and, therefore, to all RH borrowers.
(2) Any person in the business of selling or renting dwellings
defined as:
(i) The owner of a dwelling intended for occupancy by five or more
families.
(ii) Any person who has participated as principal in the sale or
rental of three or more dwellings in the past year.
(iii) Any person who has served as sale or rental agent in two or
more transactions in the past year.
(b) Discrimination acts prohibited. Title VIII prohibits FmHA or its
successor agency under Public Law 103-354 employees, multiple housing
borrowers, and those with whom FmHA or its successor agency under Public
Law 103-354 does business (contractors, realtors, packagers) from:
(1) Refusing to sell or rent a particular dwelling because of a
person's race, color, religion, or national origin. The following
actions constitute violations of this provision:
(i) Refusing to package an RH loan application.
(ii) Refusing or failing to show a particular dwelling or home in a
particular subdivision.
(iii) Directing persons only to areas populated by those of similar
race, color, religion, or national origin when housing is available in
other areas.
(iv) Representing unsold dwellings or sites as sold to prospective
buyers.
(2) Requiring applicants for services to meet different terms or
conditions because of their race, color, religion, or national origin;
for example, requiring larger rents or downpayments from minority
applicants.
(3) Including in any advertising either directly or through visual
representation a preference for applicants of a particular race or
ethnic origin.
(i) Words indicative of the race or ethnic background of the
dwelling or landlord such as ``White private home,'' or ``all Black
subdivision,'' may not be used in advertising housing financed or to be
financed by FmHA or its successor agency under Public Law 103-354.
(ii) Selection of advertising media and the areas to be covered by
any advertising must be made to reach potential applicants of all races
or ethnic origins.
(c) FmHA or its successor agency under Public Law 103-354
affirmative action. (1) It is the policy of the Farmers Home
Administration or its successor agency under Public Law 103-354 to
administer its housing program affirmatively so individuals of similar
income levels in the housing market area have housing choices available
to them regardless of their race, color, religion, sex, or national
origin. Each participant in FmHA or its successor agency under Public
Law 103-354 housing program shall pursue affirmative fair housing
marketing policies in soliciting buyers and tenants, in determining
their eligibility and in concluding sales and rental transactions.
(2) Applicability. The affirmative fair housing marketing
requirements shall apply as follows:
(i) Participants in FmHA or its successor agency under Public Law
103-354 housing programs who request approval for subdivision
development involving five or more sites, multi-family projects with
five or more units including self-help technical assistance grantees
assisting five or more families or five or more conditional commitments
for single family dwelling units during a 12-month period must submit an
affirmative marketing plan.
(ii) An Affirmative Fair Housing Marketing Plan is required to be
prepared and submitted to FmHA or its successor agency under Public Law
103-354 by the contractor when:
[[Page 25]]
(A) A real estate broker is offering five or more single-family
dwellings located in the same subdivision for sale under an exclusive
listing contract with FmHA or its successor agency under Public Law 103-
354.
(B) An auctioneer under contract with FmHA or its successor agency
under Public Law 103-354 is offering five or more single-family
dwellings located in the same subdivision for sale by public auction.
(C) A contractor under a contract with FmHA or its successor agency
under Public Law 103-354 is managing a multiple-family housing project
of five or more units or five or more single-family dwellings located in
the same subdivision.
(3) Affirmative fair housing marketing plans will be submitted on
form HUD 935.2(3-76) or the participant must be a signatory to a
voluntary affirmative marketing agreement approved by the Department of
Housing and Urban Development. The plan, if submitted on form HUD
935.2(3-76) shall describe an affirmative program which will meet the
following requirements:
(i) Reaching those prospective buyers or tenants, regardless of sex,
of majority and minority groups in the marketing area who traditionally
would not be expected to apply for such housing without special outreach
efforts because of existing racial or socio-economic patterns.
(ii) Undertaking and/or maintaining a non-discriminatory hiring
policy in recruiting from both majority and minority groups including
both sexes, for staff engaged in the sale or rental of properties.
(iii) Training and instructing employees engaged in the sale or
rental properties in the policy and application of nondiscrimination and
fair housing.
(iv) Displaying in all sales and rental offices the ``Fair Housing''
poster.
(v) Posting in a conspicuous position on each property and FmHA or
its successor agency under Public Law 103-354 construction site a sign
displaying the equal opportunity logo or the following statement:
We are pledged to the letter and spirit of U.S. policy for the
achievement of equal housing opportunity throughout the nation. We
encourage and support an affirmative advertising and marketing program
in which there are no barriers to obtaining housing because of race,
color, religion, sex, or national origin.
(vi) Undertaking efforts to publicize the availability of housing
opportunities to minority persons through the type of media customarily
used by the applicant or participant, including minority publications
and other minority outlets available in the housing market area. As part
of these efforts all advertising must include either the equal housing
opportunity logo or statement. When illustrations or persons are
inclused they shall depict persons of both sexes and of majority and
minority groups.
(4) The affirmative fair housing marketing plans or evidence that
the participant is covered by an approved voluntary affirmative
marketing agreement must be submitted as follows:
(i) For subdivisions with the preliminary submission of plans and
specifications.
(ii) For multi-family projects, including rural rental housing,
labor housing, cooperative housing, technical assistance grants and site
development loans with SF 424.1, ``Application for Federal Assistance
(For Non-construction)'', or SF 424.2, ``Application for Federal
Assistance (For Construction)'', or with the letter of application.
Subsequent loans or grants extended to the participant will necessitate
a new or updated plan.
(iii) For conditional commitments for five or more individual
dwelling units in a 12-month period with the application for the fifth
conditional commitment.
(iv) For real estate brokers listing housing properties on an
exclusive basis, at any time more than 5 properties are listed for sale
by FmHA or its successor agency under Public Law 103-354 in the same
subdivision.
(5) Affirmative fair housing marketing plans will cover the
following time periods:
(i) For subdivision, from time of application until all lots are
sold.
(ii) For multi-family projects from time of application until the
loan is paid in full or for so long as the project is being used for the
same or a similar
[[Page 26]]
purpose for which the funds were extended.
(iii) For conditional commitments involving individual dwelling
units, one year or until all units built through conditional commitments
issued within the one year period have been sold.
(iv) For real estate brokers who list acquired rural housing
properties under an exclusive listing contract, one year or until all
properties covered under the plan have been sold, whichever is later.
(6) Affirmative fair housing marketing plans will be reviewed and
approved by the official authorized to approve the assistance requested.
The County Supervisor will review and submit with comments to the
official authorized to approve the assistance requested, those fair
housing marketing plans where the assistance requested exceeds his
approval authority. Any participant covered by this section must have an
approved affirmative fair housing marketing plan for any assistance
approved 90 or more days after the issuance of these regulations.
(7) Approved affirmative fair housing marketing plans will be made
available by the participant for public inspection at the participant's
place of business and at each sales or rental office. Participants who
fulfill the requirements of this section by filing a Form HUD 9352(3-76)
will maintain records to reflect their efforts in fulfilling the
affirmative fair housing marketing plan. These records will be made
available for review by FmHA or its successor agency under Public Law
103-354 personnel. Affirmative fair housing marketing plans will be
reviewed by FmHA or its successor agency under Public Law 103-354
personnel in accordance with section 2006-M of this chapter.
(8) Applicants failing to comply with these requirements will be
liable to sanctions authorized by regulations, rules or policies
governing the program in which they are participating including but not
limited to denial of further participation in FmHA or its successor
agency under Public Law 103-354 programs and referral to the Department
of Justice for suit by the United States for injunctive or other
appropriate relief.
(d) Discrimination complaints. (1) Complaints against FmHA or its
successor agency under Public Law 103-354 employees or borrowers under
title VIII of the Civil Rights Act of 1968 received by the County Office
will be sent to the State Director. The State Director will forward the
complaints to the Administrator, Attention: Equal Opportunity Officer.
(2) Complaints of discrimination against packagers, contractors or
others with whom FmHA or its successor agency under Public Law 103-354
deals should be filed with the Department of Housing and Urban
Development. However, these complaints may be accepted by FmHA or its
successor agency under Public Law 103-354 employees and routed through
the State Director to the Administrator, Attention: Equal Opportunity
Officer.
(e) Relations to other regulations. Nothing in this section in any
way interferes with the administration of the nondiscrimination
requirements of Title VI of the Civil Rights Act of 1964 or the ``Equal
Opportunity in Housing Certification,'' signed by all packagers.
[41 FR 40112, Sept. 17, 1976, as amended at 42 FR 45894, Sept. 13, 1977;
42 FR 58737, Nov. 11, 1977; 50 FR 23903, June 7, 1985; 53 FR 27825, July
25, 1988; 55 FR 13503, Apr. 11, 1990]
Sec. 1901.204 Compliance reviews.
(a) Recipients subject to reviews. Recipients of the following kinds
of loans and/or grants who received their loans or advances of funds on
or after January 3, 1965, will be reviewed for compliance in accordance
with Title VI of the Civil Rights Act of 1964. Guaranteed loans are not
covered by Title VI and, therefore, are not subject to compliance
reviews.
(1) Farm Ownership loans to install or improve recreational
facilities or other nonfarm enterprises.
(2) Operating loans to install or improve recreational facilities or
other nonfarm enterprises.
(3) Economic Opportunity loans to individuals for nonagricultural
enterprises.
(4) Individual Recreation loans.
(5) Loans for Water and Waste Disposal facilities, including
Resource Conservation and Development loans for this purpose.
[[Page 27]]
(6) Community Facility loans.
(7) Watershed loans and advances.
(8) Recreation Association loans including those made from Resource
Conservation and Development funds.
(9) Economic Opportunity loans to incorporated cooperative
associations (Compliance reviews on unincorporated Economic Opportunity
cooperatives subject to title VI will be conducted only as the need
arises or as directed by either the State Director or the
Administrator).
(10) Grazing Association loans, including Resource Conservation and
Development loans for this purpose.
(11) Loans to Timber Development organizations.
(12) Rural Renewal loans and advances.
(13) Rural Rental Housing (formerly Senior Citizen rental) and Rural
Cooperative Housing loans.
(14) Labor Housing loans and/or grants.
(15) Rural Housing Site loans.
(16) Business and Industrial Insured loans or grants.
(17) Technical Assistance grants.
(18) Development grants for water and waste disposal.
(19) Technical Assistance and Training grants in accordance with
Title XIII of Pub. L. 99-198.
(20) Rural Business Enterprise grants and Television Demonstration
grants.
(21) Section 601 Energy Impacted Area Development Assistance grants.
(22) Nonprofit National Corporations grants.
(23) System for Delivery of Certain Rural Development Programs Panel
Grants.
(24) Emergency Community Water Assistance grants.
(25) Section 306C WWD Loans and Grants in subpart E of part 4284 of
this title.
(26) Housing Application Packaging Grants.
(27) Rural Technology and Cooperative Development Grants in subpart
F of part 4284 of this title.
(b) Duration of obligation for conducting reviews. Compliance
reviews will be conducted on recipients of loans and grants listed in
paragraph (a) of this section:
(1) Until the loan is paid in full or otherwise satisfied; or sold
through the sale of FmHA or its successor agency under Public Law 103-
354's assets; or
(2) Until the last advance of grant funds is made for the grants
listed in paragraph (a) of this section.
(c) Compliance reviews of loans and grants to individuals--(1)
Compliance Review Officer. The County Supervisor will conduct compliance
reviews of loans made to individuals.
(2) Type of review. If the borrower is currently receiving loan
supervision, the County Supervisor may complete the compliance review
based on his knowledge of the borrower's operations from other visits.
Otherwise the County Supervisor must visit the borrower's facilities.
Before completing the compliance review, the County Supervisor should be
aware of:
(i) The borrower's operating regulations, for example, the grounds
for eviction from a Rural Rental Housing Project.
(ii) The borrower's method of advertising the facility to the
public, if there is any advertising, including how well these methods
reach the minority community.
(iii) Any records of request for use of the borrower's facility.
(3) Recording results of review. The County Supervisor's
determination that the borrower is or is not in compliance with title
VI, together with information such as that outlined in paragraph (b)(2)
of this section, will be recorded in the running record. Review of
individual Rural Rental Housing borrowers will be recorded on Form FmHA
or its successor agency under Public Law 103-354 400-8, ``Compliance
Review (Nondiscrimination by Recipients of Financial Assistance Through
FmHA or its successor agency under Public Law 103-354.)''
(4) Reporting results of review. If the borrower is in compliance,
the County Supervisor will report his findings to the State Director.
Exhibit A is a sample report. In the case of Rural Rental Housing
borrowers, a copy of Form FmHA or its successor agency under Public Law
103-354 400-8 will be filed in the borrower's County Office loan docket,
and the original will be sent to the State Director. If the borrower is
[[Page 28]]
not in compliance, the borrower's name, location, type of loan involved,
and the reasons for the finding of noncompliance will be sent to the
State Director.
(5) Forwarding report of noncompliance. The State Director will see
that all compliance review reports are complete. If the recipient was
found in noncompliance, the State Director will immediately send a copy
of the compliance review report to the Administrator, Attention: Equal
Opportunity Officer, with recommended action to take to bring the
recipient into compliance.
(d) Review of loans or grants to organizations (any borrower or
grantee other than an individual)--(1) Designation of compliance review
officer. The State Director, except for Technical Assistance and
Training grants (Pub. L. 99-198) and Nonprofit National Corporations
grants, will designate the Compliance Review Officer for recipient
organization. County Supervisors may be designated only if they have
received approved compliance review training. Otherwise, the Compliance
Review Officer must be a member of the State staff. For Technical
Assistance and Training grants and Nonprofit National Corporations
grants, the Assistant Administrator for Community and Business Programs
will designate the Compliance Review Officer for recipient
organizations.
(2) Type of review. Compliance reviews may be completed in
connection with regular supervision visits to organizations and must
include an inspection of the FmHA or its successor agency under Public
Law 103-354-financed facility. Before determining that the recipient is
or is not complying with the provisions in Form FmHA or its successor
agency under Public Law 103-354 400-4, the Compliance Review Officer
will:
(i) Observe the recipient's records, including records on the
present membership by race, the handling of applications for use of the
facility, the user rates and membership fees or dues, and the facility's
operating regulations.
(ii) Determine if the recipient advertises for members or users. If
so, observe the effectiveness of the recipient's methods of advertising
the availability of the facility to the public, and especially the
effectiveness of this advertising in reaching the minority community.
(iii) Interview organization officials, members, and employees. In
reviews of recipients of Technical Assistance grants, members of the
self-help housing groups should be interviewed to determine the way in
which they were recruited.
(iv) Interview informed local community leaders, including minority
leaders, if any to determine if the facility is operating without
discrimination because of race, color, or national origin.
(3) Recording results of reviews--(i) Association, Watershed,
Resource Conservation and Development, and Rural Renewal loans involving
recreation facilities. Reviews will be recorded on Form FmHA or its
successor agency under Public Law 103-354 400-7, ``Compliance Reviews
for Recreational Loans to Associations (FmHA or its successor agency
under Public Law 103-354 Borrowers).'' If the organization is found in
compliance with title VI, the original of the form will be sent to the
State Director, and a copy will be filed in the borrower's County Office
loan docket. If the organization is found in noncompliance, any
additional information which led to the finding will be sent with the
form.
(ii) Loans and/or grants for Water and Waste Disposal systems,
incorporated Economic Opportunity cooperatives, Grazing associations,
Rural Rental Housing, Labor Housing, and Rural Housing Sites. Reviews
will be completed on Form FmHA or its successor agency under Public Law
103-354 400-8. The original of the form will be sent to the State
Director and a copy filed in the borrower's County Office loan docket.
If the organization is found in noncompliance, any additional
information which led to the finding will be sent with the form.
(iii) Timber Development organizations, Rural Cooperative Housing
loans, and Technical Assistance grants. The information obtained during
the compliance review as well as the Compliance Review Officer's
determination of the borrower's compliance or noncompliance will be
recorded in the running record.
[[Page 29]]
If the organization is found in compliance, a report (see Exhibit A)
will be sent to the State Director. If the organization is not in
compliance, the organization's name, location, type of loan received,
and all information which led to the finding will be sent to the State
Director.
(iv) Technical Assistance and Training grants (Pub. L. 99-198) and
Nonprofit National Corporations grants. The Compliance Review Officer
will record in the running record information obtained during the
compliance review and the determination of recipient's compliance or
noncompliance. A report will be prepared and sent to the Assistant
Administrator, Community and Business Programs, for each recipient.
(4) Mandatory hook-up ordinance. Compliance reviews of public entity
borrowers or grantees for water and waste disposal facilities who are
operating under the provisions of a mandatory hook-up ordinance will
consist of a certification by the borrower or grantee that the ordinance
is still in effect and is being enforced.
(5) Forwarding noncompliance report. The State Director will see
that the reports are complete. If the recipient was found in
noncompliance, the State Director will immediately send a copy of the
report to the Administrator, Attention: Equal Opportunity Officer, with
action proposed to bring the recipient into compliance. For Technical
Assistance and Training grants and Nonprofit National Corporations
grants, the Assistant Administrator, Community and Business Programs,
will send a copy of the report to the Equal Opportunity Officer.
(e) Timing of reviews--(1) Reporting year. The State Director will
schedule Civil Rights compliance reviews from November 1 to October 31
of each year. For example, compliance reviews scheduled during 1976
should be conducted after November 1, 1975, but before October 31, 1976.
(2) Initial reviews--(i) Water and Waste Disposal loan and/or grant.
The initial compliance review will be conducted before loan or grant
closing or before the construction begins, whichever occurs first.
(ii) Technical Assistance grants, Technical Assistance and Training
grants (Pub. L. 99-198) and Nonprofit National Corporations grants. The
initial compliance review will be conducted before the grant is closed.
(iii) Rural Housing Site loan. The initial compliance review will be
conducted at the beginning of the sale of the sites developed with the
FmHA or its successor agency under Public Law 103-354 loan.
(iv) Watershed loans for future water supply. The initial compliance
review will be made when usage of the stored water begins.
(v) All other loans and/or grants. The initial compliance review of
loans and/or grants listed in paragraph (a) of this section will be
conducted within the first reporting year after the loan or grant is
closed or after Form FmHA or its successor agency under Public Law 103-
354 400-4 is signed.
(3) Subsequent reviews. The State Director is responsible for
requiring subsequent compliance reviews at intervals not less than 90
days, or more than 3 years, after the previous compliance review.
(i) For Water and Waste disposal organizations with loans that have
had at least two compliance reviews after loan closing covering a six-
year period, and where no discriminatory practices are indicated, the
frequency of subsequent reviews may be reduced to six years.
(ii) If Water and Waste Disposal organizations have merged to form a
new organization, two reviews will be conducted at 3-year intervals
after the merger and one every 6 years thereafter, provided no
discriminatory practices are noted.
(f) State Office summary reports. The State Director will keep a
list of all compliance reviews conducted during the reporting year so as
to schedule each year's reviews. The State Director will submit a copy
of this list to the Administrator, Attention: Equal Opportunity Office,
no later than July 31 of each year. Recipients found in noncompliance
will also be listed on the summary report. Exhibit B is a sample report.
For Technical Assistance and
[[Page 30]]
Training grants and Nonprofit National Corporations grants, the
Assistant Administrator, Community and Business Programs, will submit a
summary report, using Exhibit B of this subpart as a guide, to the Equal
Opportunity Officer by July 31 of each year.
[41 FR 40112, Sept. 17, 1976, as amended at 52 FR 41949, Nov. 2, 1987;
53 FR 3860, Feb. 10, 1988; 55 FR 5962, Feb. 21, 1990; 57 FR 11559, Apr.
6, 1992; 58 FR 5565, Jan. 22, 1993; 58 FR 58643, Nov. 3, 1993; 59 FR
41389, Aug. 12, 1994; 61 FR 3781, Feb. 2, 1996]
Sec. 1901.205 Nondiscrimination in construction financed with FmHA or its successor agency under Public Law 103-354 loan or grant.
Executive Order 11246 provides for equal employment opportunity
without regard to race, color, religion, sex, or national origin and the
elimination of all facilities segregated on the basis of race, color,
religion, or national origin on construction work financed by FmHA or
its successor agency under Public Law 103-354 involving a construction
contract of more than $10,000.
(a) Compliance. This section applies to Federal or federally
assisted construction contracts or subcontracts in excess of $10,000 for
on-site construction. It also applies to invitations for bids published
for such construction. If construction work of over $10,000 is partially
financed by another Federal Agency, the County Supervisor will try to
reach an agreement as to which agency will administer the
nondiscrimination requirements. If unable to reach an agreement, the
County Supervisor will refer the case to the State Director.
(b) Requirements of applicants, contractors, or subcontractors and
responsible FmHA or its successor agency under Public Law 103-354
officials--(1) Applicant. The applicant will be required to execute Form
FmHA or its successor agency under Public Law 103-354 400-1, ``Equal
Opportunity Agreement,'' at the time the loan is closed or before
construction is started, whichever occurs first. If the applicant is an
incorporated association, a resolution of the governing body will
authorize execution of the form. Municipalities or other public bodies
will have to incorporate references to this form in the loan resolution
before it is adopted. If the applicant wants to publish for bids, the
applicant must obtain Form FmHA or its successor agency under Public Law
103-354 1924-5, ``Invitation for Bid (Construction Contract)'' which is
in compliance with Executive Order 11246, from the local FmHA or its
successor agency under Public Law 103-354 County Supervisor.
(2) Contractor or Subcontractor. (i) The prospective contractor or
subcontractor must submit Form FmHA or its successor agency under Public
Law 103-354 400-6, ``Compliance Statement,'' to the County Supervisor
before contract bid negotiations, and comply with the requirements of
Executive Order 11246, which are included with Form FmHA or its
successor agency under Public Law 103-354 1924-6, ``Construction
Contract,'' during the performance of the contract. The contract will
contain the required ``Standard Federal Equal Employment Opportunity
Construction Contract Specifications'' goals and timetables as set forth
in Exhibit D.
(ii) The contractor or subcontractor will prepare and submit Form
Contract Compliance (CC) 257, ``Monthly Employment Utilization Report''
to the appropriate regional office of the U.S. Department of Labor
(USDL) (see Exhibit E, ``List of Regional Offices'') by the fifth of
each month through completion of the contract.
(3) The County Supervisor or the responsible FmHA or its successor
agency under Public Law 103-354 official will: (i) Deliver to the
contractor the following forms, as appropriate:
(A) Form FmHA or its successor agency under Public Law 103-354 400-
3, ``Notice to Contractors and Applicants,'' with an attached Equal
Employment Opportunity Poster. Posters in Spanish will be provided when
appropriate,
(B) Form FmHA or its successor agency under Public Law 103-354 400-
6, and
(C) Form CC 257.
(ii) Deliver to the applicant Form FmHA or its successor agency
under Public Law 103-354 1924-5 when contractors are to be invited to
submit bids, and Form FmHA or its successor agency under Public Law 103-
354 1924-6 to contract for construction.
[[Page 31]]
(iii) Explain to applicant and contractor the requirements of
Executive Order 11246, when needed. However, inquiries concerning
compliance must be addressed to the appropriate regional office of USDL
(see Exhibit E).
(iv) Submit a report similar in form and content to Exhibit C
(``FmHA or its successor agency under Public Law 103-354 Financed
Contract'') of this Instruction to the appropriate regional office of
USDL (Exhibit E) within 10 calendar days of the date a contract or
subcontract in excess of $10,000 is awarded.
(c) Contractors with 100 or more employees and contract over
$10,000. Contractors with 100 or more employees and contract over
$10,000, will file the following with the Joint Reporting Committee,
1800 G Street NW., Washington, DC 20006:
(1) SF-100 ``Employer Information Report EEO-1,'' within 30 days of
contract award unless the report has been submitted within the past 12
months, and
(2) An annual report by March 31, so long as the contractor holds
any FmHA or its successor agency under Public Law 103-354 financed
contract in excess of $10,000.
(d) Contractor with at least 50 employees and contract of $50,000 or
more. Each contractor or subcontractor with at least 50 employees and
contract of $50,000 or more, must develop a written affirmative action
compliance program for each project. This must be on file in each
contractor's or subcontractor's personnel file within 120 days after the
beginning of the contract. Form AD-425 provides guidelines for
developing compliance programs.
(e) Compliance during construction. The County Supervisor will:
(1) Check to see that:
(i) Required posters are displayed.
(ii) There is no evidence of discrimination in employment.
(2) Record findings on Form FmHA or its successor agency under
Public Law 103-354 1924-12, ``Inspection Report.''
(3) If there is any evidence of noncompliance, the County Supervisor
will report all the facts to the appropriate office of USDL (see Exhibit
E).
(f) Hometown Plans. All construction contracts and subcontracts in
excess of $10,000, financed by FmHA or its successor agency under Public
Law 103-354, in areas which have Hometown Plans regarding affirmative
action and equal employment, are subject to the conditions set forth in
the applicable plan. Each State Director should seek the advice of the
OGC as to compliance with any such plans in the State Director's
jurisdiction.
(g) Discrimination complaints. (1) Complaints alleging
discriminatory acts may be filed directly with the appropriate regional
office of USDL (see Exhibit E) or with the County Supervisor or the
State Director for subsequent forwarding to the above address, by any
employee or applicant for employment with a contractor or subcontractor.
(2) Each complaint must be in writing and signed by the complainant
(The FmHA or its successor agency under Public Law 103-354 official
receiving the complaint will assist complainant when necessary). The
complaint will include:
(i) Name, address, and telephone number of complainant.
(ii) Name and address of the person allegedly discriminating.
(iii) Date and place of the discrimination.
(iv) Description of the discrimination.
(v) Any other information that will assist in investigating and
resolving the complaint.
(3) Complaints must be filed not later than 180 days after the
alleged act unless the State Director extends the time, for good cause
shown by the complainant.
[43 FR 58356, Dec. 14, 1978, as amended at 44 FR 24852, Apr. 27, 1979;
52 FR 8002, Mar. 13, 1987]
Exhibits to Subpart E
Exhibit A--Civil Rights Compliance Reviews
To: State Director, FmHA or its successor agency under Public Law 103-
354.
Civil Rights compliance reviews have been conducted, and each
recipient listed below was found in compliance with title VI of the
Civil Rights Act of 1964. Information which led to this finding and my
determination
[[Page 32]]
that the recipient is in compliance are in the running record of the
recipient's file.
----------------------------------------------------------------------------------------------------------------
Recipient Case No. Type of assistance\1\ Date of review
----------------------------------------------------------------------------------------------------------------
Sam H. Smith......................... 99-05-7031 (rec.)....... OL Jan. 3, 1975.
John A. Jones........................ 99-05-8764.............. RL Feb. 17, 1975.
Medina Housing Association........... 99-05-9176 grant........ TA Mar. 5, 1975.
----------------------------------------------------------------------------------------------------------------
\1\Indicate only the loans or grants received which are subject to compliance reviews.
________________________________________________________________________
County Supervisor
Exhibit B--Summary Report of Civil Rights Compliance Reviews
To: Administrator, FmHA or its successor agency under Public Law 103-
354.
Attention: Director, Equal Opportunity Staff.
I. Civil Rights Compliance Reviews have been conducted, and the
following recipients were found in compliance with title VI of the Civil
Rights Act of 1964.
----------------------------------------------------------------------------------------------------------------
Type of review
Loan type Loan number ------------------------
Pre-award* post-award**
----------------------------------------------------------------------------------------------------------------
1.
2.
3.
----------------------------------------------------------------------------------------------------------------
*A pre-award review is a compliance review conducted prior to loan or grant approval.
**A post-award review is a compliance review conducted after loan closing.
II. The following recipients were found in non-compliance:
----------------------------------------------------------------------------------------------------------------
Type of review
-------------------- Date report of
Name of borrower Loan type Loan number Pre-award post- noncompliance sent
award to nat. ofc.
----------------------------------------------------------------------------------------------------------------
1.
2.
3.
----------------------------------------------------------------------------------------------------------------
_______________________________________________________________________
State Director.
(7 U.S.C. 1989; 42 U.S.C. 1480; 7 CFR 2.23; 7 CFR 2.70)
[47 FR 39127, Sept. 7, 1982]
Exhibit C--FmHA or its successor agency under Public Law 103-354
Financed Contract
To: Area Director, Office of Federal Contract Compliance Program, U.S.
Department of Labor (DOL) (Insert address for your DOL area,
from Exhibit E, FmHA or its successor agency under Public Law
103-354 Instruction 1901-E)
We submit the following information relative to a construction
contract in excess of $10,000:
1. Contractor's name:___________________________________________________
Address:________________________________________________________________
Telephone Number:_______________________________________________________
Employer's Identification Number:_______________________________________
2. Contract for: ____ $__________
Starting Date:__________________________________________________________
Completion Date:________________________________________________________
Contract Number:________________________________________________________
City:___________________________________________________________________
DOL Region:_____________________________________________________________
[52 FR 8002, Mar. 13, 1987]
[[Page 33]]
Exhibit D--Goals and Timetables for Minorities and Women
The preamble to regulations establishing a new part 60-4 to 41 CFR
chapter 60 published at 43 FR 14888-14894, April 7, 1978, states that
OFCCP contemplates proposing standards and goals for minorities within
the very near future. Until that notice has been proposed and final
action taken, construction contractors and subcontractors will continue
to be subject to the goals and timetables for minority utilization on
Federal and federally assisted construction existing now under Executive
order 11246. Such goals are published in appendix B.
Now, therefore, based on the foregoing and 41 CFR part 60-4, each
contracting agency, each applicant, and each contractor shall include
the appropriate goal set forth in appendix A and appendix B in all
invitations for bids or other solicitations for federally involved
construction contracts in excess of $10,000. The goals in appendix A
hereby are established on a nationwide basis as the standards for female
utilization for all trades.
Appendix B established the goals for minority utilization which
shall be applicable for the respective areas set forth in Appendix B.
Appendix A and Appendix B shall be effective with respect to
transactions for which the invitations for bids or other solicitations
or amendments thereto are sent, on or after May 8, 1978.
Weldon J. Rougeau,
Director, OFCCP.
March 28, 1978.
Appendix A
The following goals and timetables for female utilization shall be
included in all Federal and federally assisted construction contracts
and subcontracts in excess of $10,000. The goals are applicable to the
contractor's aggregate on-site construction workforce whether or not
part of that workforce is performing work on a Federal or federally
assisted construction contract or subcontract.
area covered
Goals for Women apply nationwide.
Goals and Timetables
------------------------------------------------------------------------
Goals
Timetable (percent)
------------------------------------------------------------------------
From Apr. 1, 1978 until Mar. 31, 1979........................ 3.1
From Apr. 1, 1979 until Mar. 31, 1980........................ 5.1
From Apr. 1, 1980 until Mar. 31, 1981........................ 6.9
------------------------------------------------------------------------
Appendix B
Until further notice, the following goals and timetables for
minority utilization shall be included in all Federal or federally
assisted construction contracts and subcontracts in excess of $10,000 to
be performed in the respective covered areas. The goals are applicable
to the contractor's aggregate on-site construction workforce whether or
not part of that workforce is performing work on a Federal or federally
assisted construction contract or subcontract.
Region \1\
---------------------------------------------------------------------------
\1\ Region refers to the 10 regions in which the U.S. Department of
Labor has offices. These Regions are headquartered in Boston, New York,
Philadelphia, Atlanta, Chicago, Dallas, Kansas City, Denver, San
Francisco, and Seattle, which are numbered I through X respectively.
---------------------------------------------------------------------------
boston, mass. area
Area covered--Arlington, Boston, Belmont, Brookline, Burlington,
Cambridge, Canton, Chelsea, Dedham, Everett, Malden, Medford, Wakefield,
Westwood, Winthrop, Winchester, Woburn, and the Islands of Boston
Harbor, Mass.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 10.8-10.12
Boilermakers................ 9.6-12.0
Bricklayers................. 8.0-10.0
Carpenters.................. 11.6-14.5
Cement masons............... 25.5-27.5
Electricians................ 6.0-7.0
Elevator constructors....... 9.5-11.4
Glaziers.................... 8.8-11.0
Ironworkers................. 5.9-6.9
Lathers..................... 6.9-8.9
Operating engineers......... 14.1-15.0
Painters.................... 9.1-11.1
Pipefitters................. 11.0-12.1
Plasterers.................. 20.5-22.5
Plumbers.................... 9.8-11.8
Roofers..................... 8.4-10.5
Sheetmetal workers.......... 10.1-12.1
Sprinkler fitters........... 12.3-15.6
All other trades............ 10.3-12.3
------------------------------------------------------------------------
state of rhode island area
Area covered--Statewide.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 5.0
------------------------------------------------------------------------
region ii
buffalo, ny area
Area covered--Erie County and Buffalo, NY.
[[Page 34]]
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice................ All................... 10.6-13.2
------------------------------------------------------------------------
camden, nj area
Area covered--Camden, NJ, area of Camden, Salem, and Gloucester
Counties.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 11.6-14.5
Boilermakers................ 10.8-13.5
Bricklayers................. 17.8-20.0
Carpenters.................. 11.2-13.0
Cement masons............... 12.0-15.0
Electricians................ 14.9-17.8
Elevator constructors....... 10.8-13.5
Glaziers.................... 16.0-20.0
Lathers..................... 10.8-13.5
Operating engineers......... 10.0-12.5
Painters/decorators/ 8.8-12.8
paperhangers.
Plasterers.................. 17.0-19.0
Plumbers/pipefitters/ 8.4-10.5
steamfitters.
Roofers..................... 8.4-10.5
Sheetmetal workers.......... 11.2-14.0
Sprinkler fitters........... 10.8-13.5
Structural metal workers.... 12.9-15.3
Wharf 7 dock builders....... 10.8-13.5
------------------------------------------------------------------------
elmira, ny area
Area covered--Chemung, Steuben, Schuyler, Tioga, and Yates Counties,
NY.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 4.0-5.0
------------------------------------------------------------------------
long island, ny area
Area covered--Nassau and Suffolk Counties, NY.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 6.0-8.0
------------------------------------------------------------------------
westchester, ny area
Area covered--Westchester County, NY.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 11-13
------------------------------------------------------------------------
region iii
state of delaware area
Area covered--State of Delaware.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 11-13
------------------------------------------------------------------------
philadelphia, pa, area
Area covered--Bucks, Chester, Delaware, Montgomery, and Philadelphia
Counties, PA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Ironworkers................. 22-26
Plumbers and pipefitters.... 20-24
Steamfitters................ 20-24
Sheetmetal workers.......... 19-23
Electrical workers.......... 19-23
Elevator construction 19-23
workers.
------------------------------------------------------------------------
pittsburgh, pa, area
Area covered--Allegheny County, PA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 24.3-27.8
Boilermakers................ 33.8-37.7
Bricklayers................. 11.9-13.0
Carpenters.................. 11.8-12.9
Cement masons............... 16.3-18.1
Electricians................ 17.0-20.3
Glaziers.................... 26.9-30.4
Ironworkers................. 25.5-29.9
Lathers..................... 12.7-13.8
Operating engineers......... 44.2-48.3
Painters.................... 16.4-17.9
Plasterers.................. 34.3-38.0
Plumbers.................... 7.8-9.2
Roofers..................... 47.1-50.1
Sheetmetal workers.......... 26.0-26.9
Steamfitters................ 10.1-12.9
Tile setters................ 13.6-16.0
All other................... 27.6-31.5
------------------------------------------------------------------------
washington, dc, area
Area covered--District of Columbia; the Virginia cities of
Alexandria, Fairfax, and
[[Page 35]]
Falls Church; the Virginia counties of Arlington, Fairfax, Loudoun, and
Prince William; and the Maryland counties of Montgomery and Prince
Georges.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Electricians................ 28.0-34.0
Painters and paperhangers... 35.0-42.0
Plumbers, pipefitters and 25.0-30.0
steamfitters.
Iron workers................ 35.0-43.0
Sheetmetal workers.......... 25.0-31.0
Elevator constructors....... 34.0-40.0
Asbestos workers............ 26.0-32.0
Lathers..................... 34.0-40.0
Boilermakers................ 24.0-30.0
Tile and terrazzo workers... 28.0-34.0
Glaziers.................... 28.0-34.0
------------------------------------------------------------------------
Region IV
atlanta, ga, area
Area covered--Atlanta, GA, Standard Metropolitan Statistical Area
which includes Fulton, DeKalb, Cobb, Clayton, and Gwinnett Counties.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 8.6-10.3
Bricklayers................. 16.3-18.2
Carpenters.................. 11.0-12.8
Electricians................ 10.9-12.2
Glaziers.................... 10.2-12.2
Ironworkers................. 14.0-16.0
Metal lathers............... 10.0-12.0
Painters.................... 10.3-12.0
Plumbers.................... 9.4-10.9
Pipefitters................. 9.4-10.9
Plasterers.................. 24.4-25.8
Roofers..................... 18.0-20.0
Sheetmetal workers.......... 9.5-11.3
Sprinkler fitters........... 8.3-9.9
Operating engineers......... 24.0-27.7
Elevator installers......... 9.6-11.5
------------------------------------------------------------------------
birmingham, al, area
Area covered--Jefferson, Shelby, and Walker Counties, AL.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 20-24
------------------------------------------------------------------------
charlotte, nc, area
Area covered--Mecklenburg and Union Counties, NC.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 24-30
------------------------------------------------------------------------
jacksonville, fl, area
Area covered--Drival County, FL.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 20-23
------------------------------------------------------------------------
louisville, ky, area
Area covered--Adair, Barren, Bullitt, Carrol, Edmundson, Grayson,
Green, Hardin, Hart, Henry, Jefferson, Larue, Meade, Nelson, Oldham,
Shelby, Spencer, Taylor, Trimble, Warren, and Washington Counties, KY;
and Clark, Floyd and Harrison Counties, IN.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 12.0-16.0
------------------------------------------------------------------------
miami, fl, area
Area covered--Dade County, FL.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 20.0-40.0
------------------------------------------------------------------------
nashville, tn, area
Area covered--City of Nashville, TN.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 16.0-20.0
------------------------------------------------------------------------
Region V
akron, oh, area
Area covered--Summit, Portage, and Medina Counties, OH.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 10.0-12.5
------------------------------------------------------------------------
[[Page 36]]
canton, oh, area
Area covered--Carroll, Holmes, Stark, Tuscarawas, and Wayne
Counties, OH.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 7.0-8.4
------------------------------------------------------------------------
chicago, il, area
Area covered--Cook, DuPage, Kane, Lake, McHenry, and Will Counties.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 8.6-10.3
Bricklayers................. 16.3-8.2
Carpenters.................. 11.0-12.8
Electricians................ 10.9-12.2
Elevator installers......... 9.6-11.5
Glaziers.................... 10.2-12.2
Ironworkers................. 14.0-16.0
Metal lathers............... 10.0-12.0
Painters.................... 10.3-12.1
Plumbers.................... 9.4-10.9
Pipe fitters................ 9.4-10.9
Plasterers.................. 24.4-25.8
Roofers..................... 18.0-20.0
Sheetmetal workers.......... 9.5-11.3
Sprinkler fitters........... 8.3-9.9
Operating engineers......... (\1\)
------------------------------------------------------------------------
\1\15.7 and above.
cincinnati, oh, area
Area covered.--Ohio counties of Clermont, Hamilton, and Warren and
in the Kentucky counties of Boone, Campbell, and Kenton, and in the
Indiana county of Dearborn.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 9.3-12.2
Boilermakers................ 8.0-8.4
Carpenters.................. 9.0-10.7
Elevator constructors....... 10.2-12.7
Engineers (stationary)...... 26.9-28.4
Floor layers................ 9.0-10.5
Glaziers.................... 9.1-11.1
Lathers..................... 9.3-10.6
Marble, tile and terrazzo 8.3-9.9
workers and helpers.
Millwrights................. 9.1-10.3
Painters.................... 11.0-13.5
Pipefitters................. 10.0-12.0
Plasterers.................. 8.7 to 9.6
Plumbers.................... 10.0-12.7
Sheetmetal workers.......... 10.1-11.3
All other................... 11.0-11.8
------------------------------------------------------------------------
cleveland, oh, area
Area covered--Ashland, Ashtabula, Crawford, Cuyahoga, Erie, Geauga,
Huron, Lake, Lorain, Sandusky, and Seneca Counties, OH.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Art glass workers........... 25.4-28.6
Asbestos workers............ 20.9-23.9
Boilermakers................ 16.3-18.9
Bricklayers................. 28.8-29.5
Carpenters.................. 8.0-8.6
Cement masons............... 41.1-42.2
Electricians................ 15.1-18.1
Elevator constructors....... 28.9-32.5
Glaziers.................... 35.8-40.0
Ironworkers................. 11.4-13.2
Painters.................... 17.7-18.4
Pipefitters................. 15.7-17.9
Plasterers.................. 21.6-23.2
Plumbers.................... 20.8-23.4
Roofers..................... 28.9-31.8
All other................... 17.0-18.8
------------------------------------------------------------------------
dayton, oh, area
Area covered--Greene, Miami, Montgomery, and Preble Counties, OH.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 10.6-11.8
------------------------------------------------------------------------
detroit, mi., area
Area covered--Wayne, Oakland, and Macomb Counties, MI.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Electricians................ 17.0-19.0
Operating engineers......... 16.9-18.0
Lathers..................... 18.6-19.6
Painters.................... 15.0-17.7
Riggers..................... 16.8-17.7
Roofers..................... 15.3-16.6
Tile, terrazzo marble 15.0-17.8
workers.
Tile and marble helpers..... 16.0-18.5
Terrazzo helpers............ 17.8-19.5
All other................... 18.6-20.4
------------------------------------------------------------------------
evansville, in, area
Area covered--Vanderburgh County, IN.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 6.3-7.6
------------------------------------------------------------------------
[[Page 37]]
fort wayne, in, area
Area covered--Adams, Allen, DeKalb, Huntington, LaGrange, Noble,
Steuben, Wells, and Whitley Counties, IN.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Plumbers.................... 5.2-5.5
Steamfitters................ 5.2-5.5
Carpenters.................. 5.7-5.2
Bricklayers................. 9.3-10.4
Electricians................ 5.2-5.9
Sheetmetal workers.......... 4.4-5.2
Ironworkers................. 7.3-8.4
Operating engineers......... 5.2-6.0
Painters.................... 11.0-12.0
All other................... 7.1-8.0
------------------------------------------------------------------------
indianapolis, in, area
Area covered--Marion County, IN.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 32.2-37.7
Bricklayers................. 17.4-19.5
Electricians................ 6.6-7.8
Elevator constructors....... 15.5-18.0
Glaziers.................... 25.2-28.6
Ironworkers................. 11.6-14.0
Lathers..................... 21.1-22.0
Operating engineers......... 7.7-8.8
Painters.................... 22.4-25.0
Plasterers.................. 27.5-30.4
Plumbers.................... 25.5-30.0
Roofers..................... 15.9-18.1
Sheetmetal workers.......... 9.3-10.9
Steamfitters................ 14.9-17.1
All other................... 14.1-16.2
------------------------------------------------------------------------
peoria, il, area
Area covered--Peoria, Fulton, Tazewell, Woodford, Knox, Stark,
Marshall, Hancock, Mason, McLean, McDonough, Henderson, Warren,
Livingston, Bureau, Henry, and Putnam Counties, IL.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 5.0-6.0
------------------------------------------------------------------------
rockford, il, area
Area covered--Boone, Winnebago, Stephenson, De Kalb, Ogle, Lee, and
Jo Daviess Counties; Cherry Grove, Shannon, Rock Creek, Lima, Wysox, and
Elkhorn Townships in Carroll County; Genesee, Jordan, Hopkins, Sterling,
Hume, Montmorency, Tampico, and Hahnaman Townships in Whiteside County,
IL.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 10.0-12.0
------------------------------------------------------------------------
south bend, in, area
Area covered--St. Joseph, County, IN.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 8.0-10.0
------------------------------------------------------------------------
toledo, oh, area
Area covered--Defiance, Fulton, Hancock, Henry, Lusas, Ottawa,
Williams, and Wood Counties, OH.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 10.7-12.3
------------------------------------------------------------------------
youngstown, oh area
Area covered--Columbiana, Mahoning, and Trumbull Counties, OH; and
Lawrence and Mercer Counties, PA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 6.0-7.1
------------------------------------------------------------------------
Region VI
el paso, tx, area
Area covered--El Paso County, TX.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 55.1-66.2
------------------------------------------------------------------------
lawton, ok, area
Area covered--Commanche County, OK.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 15.8-16.8
------------------------------------------------------------------------
little rock, ar, area
Area covered--Pulaski County, AR.
[[Page 38]]
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 25.6-30.6
------------------------------------------------------------------------
new orleans, la.
Area covered--Parishes of Orleans, Jefferson, St. Bernard, St.
Tammany, St. Charles, St. John, Lafourche, Plaquemines, Washington,
Terrebonne, Tangipahoa,/1/ Livingston,\2\ and St. James.\3\
---------------------------------------------------------------------------
\1\ Area covered is east of the Illinois Central RR.
\2\ Area covered is southeast of the line from a point off the
Livingston and Tangipahoa Parish line adjacent from New Orleans and
Baton Rouge.
\3\ Area covered is southeast of a line drawn from the town of
Gramercy to the point of intersection of St. James, Lafourche, and
Assumption Parishes.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 20-23
------------------------------------------------------------------------
tulsa, ok
Area covered--Tulsa, Creek, Mayes, Rogers, Okfuskee, Washington,
Nowata, Craig, Ottawa, Delaware, Okmulgee (northern half), dividing line
Highway 16; Osage (eastern half), dividing line Highway 18; Pawnee
(eastern half), and Payne (eastern half) Counties, OK.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Bricklayers................. 24.0-25.0
Carpenters.................. 17.0-18.0
Cement masons............... 21.5-22.5
Floor covers................ 12.0-14.0
Glaziers, glass workers..... 14.7-17.3
Operating engineers......... 22.0-24.0
Painters.................... 18.0-20.0
Pipefitters................. 10.0-12.0
Plumbers.................... 11.6-13.2
Roofers..................... 12.0-14.0
Sheetmetal workers.......... 8.0-10.0
All other trades............ 12.0-14.4
------------------------------------------------------------------------
Region VII
kansas city (ks) and (mo)
Area covered--Clay, Platte, Jackson, Bates, Carroll, Lafayette, Ray,
Johnson, Henry, and Cass Counties, Mo., and Wyandotte, Johnson, and
Miami Counties, KS.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 10.3-11.7
Boilermakers................ 5.9-6.4
Bricklayers................. 19.4-20.7
Carpenters.................. 5.9-6.9
Carpet, linoleum and 5.5-6.4
resilient floor decorators.
Cement masons............... 25.5-26.5
Elevator constructors....... 9.2-10.7
Electricians................ 8.0-9.4
Glaziers.................... 9.8 to
10.5
Lathers..................... 14.5-15.6
Marble masons, tile layers 7.5-9.0
and terrazzo workers.
Marble and tile helpers..... 4.8-5.6
Operating engineers......... 9.0-10.9
Painters.................... 14.3-15.0
Pipefitters................. 6.9-7.7
Plasterers.................. 19.0-20.4
Plumbers.................... 8.3-9.3
Roofers..................... 14.0-15.0
Sheetmetal workers.......... 7.0-8.0
Teamsters................... 25.0-26.0
All other trades............ 11.4-12.5
------------------------------------------------------------------------
omaha, ne
Area covered--Sharpy and Douglas Counties, NE, Council Bluffs, IA
(city limits only).
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 9.0-10.0
------------------------------------------------------------------------
st. louis, mo
Area covered--City of St. Louis, Mo., and St. Louis, MO.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 5.2-5.7
Boilermakers................ 34.0-37.7
Bricklayers................. 12.6-14.2
Carpenters.................. 8.2-8.9
Cement and concrete 13.3-16.6
finishers.
Electricians................ 13.6-16.1
Elevator constructors....... 8.7-9.3
Glaziers.................... 28.7-34.5
Ironworkers................. 9.0-10.4
Lathers and plasterers...... 24.2-29.7
Operating engineers......... 13.2-15.7
Painters and paperhangers... 25.1-29.3
Plumbers and pipefitters.... 13.2-15.4
Roofers and slaters......... 17.1-19.6
Sheetmetal workers.......... 22.5-27.0
Tilesetters and terrazzo 8.8-10.4
workers.
------------------------------------------------------------------------
topeka, ks
Area covered--Shawnee County, KS.
[[Page 39]]
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 8.8-10.5
------------------------------------------------------------------------
Region VIII
colorado
Area covered--State of Colorado
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 13-14
------------------------------------------------------------------------
Region IX
alameda county, ca, area
Area covered--Alameda County, CA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 28.5-33.0
------------------------------------------------------------------------
arizona
Area covered--State of Arizona.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 25.0-30.0
------------------------------------------------------------------------
contra costa county, ca
Area covered: Contra Costa County, CA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 17.0-19.5
------------------------------------------------------------------------
fresno county, ca
Area covered.--Fresno, Madera, Kings, and Tulare Counties, CA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 20.0-27.0
------------------------------------------------------------------------
las vegas, nv
Area covered.--Area of jurisdiction of the Building & Construction
Trades Council of Clark, Lincoln, Nye and Esmeralda Counties, NV.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 17.7-20.2
Bricklayers................. 18.8-21.3
Carpenters.................. 16.2-17.5
Glaziers, floorcoverers, 16.3-17.7
painters, tapers and
wallcoverers.
Plasterers.................. 24.6-27.2
Plumbers and pipefitters.... 15.2-16.2
Sheet metal workers......... 16.2-17.7
Wood, wire and metal lathers 18.1-19.3
All other trades............ 18.0-19.5
------------------------------------------------------------------------
los angeles county, ca
Area covered.--Area of jurisdiction of the Los Angeles Building &
Construction Trades Council.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 21.7-25.1
------------------------------------------------------------------------
monterey, ca
Area covered.--Monterey County, CA, and within the jurisdiction of
the Monterey County Building & Construction Trades Council, AFL-CIO.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 27.0-29.8
------------------------------------------------------------------------
north bay, ca
Area covered.--Solano, Napa, Lake, Marin, Mendocino, and Sonoma
Counties.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 10.5-12.6
------------------------------------------------------------------------
sacramento, ca
Area covered.--Sacramento, Yolo, Amador, Placer, El Dorado, Nevada,
and Sierra Counties, CA.
[[Page 40]]
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 17.5-20.0
------------------------------------------------------------------------
san diego county, ca
Area covered.--San Diego County, CA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 24.0-30.0
------------------------------------------------------------------------
san francisco city and county, ca
Area covered.--City and County of San Francisco, CA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Electricians................ 17.0
Plumbers, pipefitters and 14.0
steamfitters.
Structural metal workers.... 20.0
Sheet metal workers......... 19.0
Asbestos workers............ 40.0
------------------------------------------------------------------------
san mateo county, ca
Area covered.--San Mateo County, CA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 12.0-14.0
------------------------------------------------------------------------
santa clara county, ca
Area covered.--Santa Clara County, CA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 18.0-21.7
------------------------------------------------------------------------
santa cruz county, ca
Area covered.--Santa Cruz County, CA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 17.0-20.4
------------------------------------------------------------------------
Region X
alaska
Area covered.--State of Alaska.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Asbestos workers............ 26.4-28.0
Carpenters.................. 25.7-28.0
Electricians................ 25.7-28.0
Ironworkers................. 25.7-28.0
Operating engineers......... 26.1-28.0
Painters.................... 25.8-28.0
Pile drivers................ 25.1-28.0
Plumbers and steamfitters... 25.4-28.0
Roofers..................... 27.6-28.0
Sheetmetal workers.......... 25.6-28.0
Teamsters................... 25.6-28.0
All other................... 26.1-28.1
------------------------------------------------------------------------
pasco, wa
Area covered.--The area of jurisdiction of the Southeastern
Washington Building & Construction Trades Council as follows: all of
Benton, Franklin, and Walla Walla Counties, Grant County to Highway 2
and the southwest corner of Adams County, WA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... Boilermakers................ 12.5-15.0
Bricklayers................. 11.0-13.5
Carpenters.................. 9.8-12.3
Cement finishers............ 11.5-14.0
Electricians................ 10.0-12.5
Ironworkers................. 10.0-12.5
Operating engineers......... 10.2-12.7
Painters.................... 10.0-12.5
Plumbers and fitters........ .9-12.4
Sheetmetal workers.......... 10.8-13.3
Laborers.................... 9.5-13.3
All other................... 10.0-12.5
------------------------------------------------------------------------
portland, or
Area covered--Multnomah, Clackamas, and Washington Counties, OR.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 5.5-6.5
------------------------------------------------------------------------
seattle, wa
Area covered--King County, WA.
[[Page 41]]
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 8.8-11.5
------------------------------------------------------------------------
spokane, wa
Area covered--Washington Counties: Spokane, Whitman, Lincoln, Adams,
Stevens, Pend Oreille, Columbia, Garfield, Asotin, Ferry, Okanogan,
Chelan, Douglas and Grant (north of Highway 2), and in connection with
Indian employment, parts of any other counties included in reservations
incorporating portions of the above area; Idaho: Boundary, Bonner,
Kootenai, Shoshone, Benewah, Latah, Clearwater, Nez Perce, Lewis, and
Idaho, and in connection with Indian employment, any other territory
included in reservations, part of which are in the above counties.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... (\1\)
------------------------------------------------------------------------
\1\2.0 and above.
tacoma, wa
Area covered--Pierce, Thurston, Mason, Lewis, Grays Harbor, and
Pacific Counties, WA.
Goals and Timetables
[In percent]
------------------------------------------------------------------------
Timetable Trade Goal
------------------------------------------------------------------------
Until further notice.......... All......................... 12.2-15.0
------------------------------------------------------------------------
[43 FR 58357, Dec. 14, 1978]
Exhibit E--List of Regional Offices, Office of Federal Contract
Compliance Programs (OFCCP), U.S. Department of Labor (USDL)
Region I (ME, NH, VT, MA, RI, CT)
Associate Regional Administrator, USDL/OFCCP, JFK Building, Room
1612-C, Government Center, Boston, MA 12203, (617) 223-4232.
Region II (NY, NJ, PR, VI)
Associate Regional Administrator, USDL/OFCCP, 1515 Broadway, Room
3306, New York, NY 10036, (212) 662-5563.
Region III (PA, MD, DE, VA, WV, DC)
Associate Regional Administrator, USDL/OFCCP, Gateway Building, Room
15434, 3535 Market Street, Philadelphia, PA 19104, (215) 596-1213.
Region IV (NC, SC, KY, TN, MS, AL, GA, FL)
Associate Regional Administrator, USDL/OFCCP, 1371 Peachtree Street,
NE, Room 729, Atlanta, GA 30309, (402) 881-4211).
Region V (OH, IN, MI, IL, WI, MN)
Associate Regional Administrator, USDL/OFCCP, New Federal Building,
16th Floor, 2340 South Dearborn Street, Chicago, IL 60604, (312) 353-
8887.
Region VI (LA, AR, OK, TX, NM)
Associate Regional Administrator, USDL/OFCCP), 555 Griffin Square
Building, Room 506, Dallas, TX 75202, (214) 767-4771.
Region VII (MO, IA, NE, KS)
Associate Regional Administrator, USDL/OFCCP Regional Administrator,
Federal Office Building, Room 2000, 911 Walnut Street, Kansas City, MO
64106, (816) 374-5384.
Region VIII (ND, SD, MT, WY, CO, UT)
Associate Regional Administrator, USDL/OFCCP, 14431 Federal Office
Building, 1961 Stout Street, Denver, CO 80202, (303) 837-5011.
Region IX (CA, NV, AZ, HI, GU)
Associate Regional Administrator, USDL/OFCCP, Federal Office
Building, Room 10341, 450 Golden Gate, San Francisco, CA 94102, (415)
556-3597.
Region X (WA, OR, ID)
Associate Regional Administrator, USDL/OFCCP, Federal Office
Building, 909 First Avenue, Room 4095, Seattle, WA 98174, (206) 442-
4508.
[44 FR 24852, Apr. 27, 1979]
Subpart F--Procedures for the Protection of Historical and Archeological
Properties
Authority: 16 U.S.C. 470; 7 U.S.C. 1989; 42 U.S.C. 1480; 42 U.S.C.
2942; 5 U.S.C. 301; sec. 10, Pub. L. 93-357, 88 Stat. 392; delegation of
authority by Sec. of Agri., 7 CFR 2.23; delegation of authority by the
Asst. Sec. for Rural Development, 7 CFR 2.70; delegations of authority
by Dir., OEO, 29 FR 14764, 33 FR 9850.
Source: 42 FR 62141, Dec. 9, 1977, unless otherwise noted.
Sec. 1901.251 Purpose.
This subpart prescribes Farmers Home Administration or its successor
agency under Public Law 103-354 (FmHA or its successor agency under
Public Law 103-354) policies, procedures, and guidelines for compliance
with section 106 of the National Historic Preservation Act of 1966 (Pub.
L. 89-665), the Reservoir Salvage Act of 1960 (Pub. L. 86-523), as
amended May
[[Page 42]]
24, 1974, by the Archeologic and Historic Preservation Act (Pub. L. 93-
291), and section 1(3) of Executive Order 11593.
Sec. 1901.252 Policy.
(a) The FmHA or its successor agency under Public Law 103-354
recognizes that significant scientific, prehistorical, historical and
archeological (HA) resources are an important part of our National
Heritage.
(b) The FmHA or its successor agency under Public Law 103-354 will
consult with appropriate Federal, State, and local Agencies; other
organizations; the State Historic Preservation Officer (SHPO) and
individuals to assess the impact of any proposed FmHA or its successor
agency under Public Law 103-354 undertaking on properties having
historical or archeological significance in order to avoid or mitigate
any adverse effects on the properties.
(c) The procedures in this subpart have been developed in accordance
with section 1(3) of Executive Order 111593.
Sec. 1901.253 Definitions.
(a) Undertaking means any new or continuing projects or program
activities supported in whole or in part through FmHA or its successor
agency under Public Law 103-354 contracts, grants, subsidies, loans, or
other forms of funding assistance. This does not include any actual
construction by FmHA or its successor agency under Public Law 103-354.
(b) National Historic Preservation Act. The National Register means
the National Register of Historic Places, which is a register of
districts, sites, buildings, structures, and objects, significant in
American history, architecture, archeology, and culture maintained by
the Secretary of the Interior under the authority of section 2(b) of the
Historic Sites Act of 1935 and section 101(a)(1) of the National
Preservation Act. The National Register is published in its entirety in
the Federal Register each year in February. Addenda are published on the
first Tuesday of each month.
(c) National Register Property means a district, site, building,
structure, or object included in the National Register.
(d) Property eligible for inclusion in the National Register means
any district, site, building, structure, or object which the Secretary
of the Interior determines is likely to meet the National Register
criteria.
(e) State Historic Preservation Officer (SHPO) means the official
within each State, designated by the Governor at the request of the
Secretary of the Interior, to administer the National Register and
historic preservation grants program and to coordinate preservation
planning within the State.
(f) Criteria of effect means when any condition of an undertaking
causes or may cause any change, beneficial or adverse, in the
scientific, historical, architectural, archeological, or cultural
character of a National Register property that qualifies the property
under the National Register criteria.
(g) Historical and archeological assessment means a determination by
the FmHA or its successor agency under Public Law 103-354 State Director
using the criteria of effect as a guide, as to whether a proposed
undertaking may have an effect upon any properties located within the
project area which are included or eligible for inclusion in the
National Register.
(h) National Register criteria means the following criteria
established by the Secretary of the Interior for use in evaluating and
determining the eligibility of properties for listing in the National
Register: The quality of significance in American History, Architecture,
Archeology, and the culture is present in districts, sites, buildings,
structures, and objects of State and local importance, that possess
integrity of location, design, setting, materials, workmanship, feeling,
and association; and
(1) That are associated with events that have made a significant
contribution to the broad patterns of our history; or
(2) That are associated with the lives of persons significant in our
past; or
(3) That embody the distinctive characteristics of a type, period,
or method of construction, or that represent the work of a master, or
that possess high artistic values, or that represent a significant and
distinguishable entity
[[Page 43]]
whose components may lack individual distinction; or
(4) That have yielded, or may be likely to yield, information
important in prehistory or history.
(i) FmHA or its successor agency under Public Law 103-354 official
means the FmHA or its successor agency under Public Law 103-354 County
Supervisor, the FmHA or its successor agency under Public Law 103-354
State Director or his designated representative.
(j) Project area means those geographical or legally defined areas
directly under or to be under the applicants control that are affected
by the undertaking such as building sites, easements, rights-of-way,
leasehold interests and those areas which are directly and significantly
impacted by the undertaking.
(k) Advisory council means the Advisory Council on Historic
Preservation, Suite 430, 1522 K Street NW., Washington, DC 20005,
created by title II of Pub. L. 89-665 and charged with the
responsibility of advising the President, Congress, and others on
matters relating to historic preservation.
(l) HA as used in this regulation is an abbreviation of the term
``scientific, prehistorical, historical, and archeological.''
Sec. 1901.254 Scope.
FmHA or its successor agency under Public Law 103-354 will evaluate
all undertakings for possible HA significance. This subpart covers the
following types of undertakings:
(a) Undertakings requiring a historical and archeological
assessment. Although the following undertakings are presumed to involve
nonfederally owned lands, they may have an effect on properties having
HA significance and, therefore, will require a historical and
archeological assessment:
(1) Loans and grants for the development of business and industry
including guaranteed loans.
(2) Loans and grants for multiple family housing projects of 25 or
more dwelling units.
(3) Subdivision plans submitted for approval having 25 or more
building sites.
(4) Loans and grants in rural areas to construct, enlarge, extend,
or otherwise improve:
(i) Community water, sanitary sewage, solid waste disposal, and
storm waste water disposal systems.
(ii) Other essential community facilities such as fire and rescue,
health, safety, public buildings, schools, transportation, traffic, and
law enforcement.
(5) Loans to develop community irrigation, drainage, and other soil
and water conservation and use facilities.
(6) Loans to acquire and develop grazing land for livestock of an
association of members.
(7) Loans in areas designated by the Soil Conservation Service
(SCS), U.S. Department of Agriculture (USDA), to conserve and develop
natural resources and to contribute to economic improvement of the area.
(8) Loans to protect and develop land and water resources in small
watersheds.
(9) Loans to permit Indian tribes to buy land within their
reservations.
(b) Undertakings presumed not to require a historical and
archeological assessment. The following undertakings are generally
presumed to involve nonfederally owned lands and not to have an effect
on properties of historical and archeological value and will therefore
not usually require a historical and archeological assessment. However,
when the State Director or County Supervisor finds or has had
communication or obtains information from a recognized historical and
archeological authority that a specific undertaking may have an effect
on a property included or eligible for inclusion in the National
Register, a historical and archeological assessment will be made.
(1) Loans to farmers and ranchers in rural areas for the purchase,
development, and operation of farms and ranches.
(2) Loans to individual families in rural areas for the purchase,
construction, or improvement of single family residences.
(3) Loans and grants for multiple family housing projects of not
more than 24 family dwelling units.
[[Page 44]]
(4) Subdivision plans submitted for approval having 24 or less
building sites.
(5) Loans to farmers, ranchers, and other rural residents to develop
land, water, and other related resources for increased production of
food and other crops, improved pastures, feed crops, water facilities
for livestock, and improved habitats for fish and wildlife.
(6) Emergency and disaster loans to farmers, ranchers and other
rural residents in declared or designated areas as a result of a major
or national disaster.
Sec. 1901.255 Historical and archeological assessments.
(a) The FmHA or its successor agency under Public Law 103-354
official, normally the FmHA or its successor agency under Public Law
103-354 County Supervisor, who receives a preapplication or application
for loan or grant assistance on an undertaking that may have an effect
on HA properties will, as part of the process, take the following
actions:
(1) Carefully review the State supplements issued by the State
Director pursuant to Sec. 1901.262(a) to determine whether there are any
properties within the project area that appear in the National Register.
(2) Document the following:
(i) A brief narrative report of the findings and conclusions of an
on-site reconnaissance of the project area.
(ii) Any ``in-house'' knowledge of known or suspected HA sites in
the project area.
(3) Submit the information outlined in paragraph (a)(2) of this
section to the FmHA or its successor agency under Public Law 103-354
State Director as part of the preapplication or application.
(b) Upon receipt of the preapplication/application the FmHA or its
successor agency under Public Law 103-354 State Director will, as a
concurrent part of the preapplication/application review, prepare a
historical and archeological assessment of the undertaking. In making
the assessment the State Director will consider information from the
following sources:
(1) State and Regional Clearinghouse comments.
(2) Information submitted by the County Supervisor pursuant to
paragraph (a)(2) of this section.
(3) Factual comments or recommendations of the SHPO or other
responsible Federal, State, or local officials.
(4) Any other reliable information concerning properties in the
project area having HA significance.
(c) Upon completion of the preapplication or application review, the
State Director will take the following actions:
(1) When his assessment indicates that no properties of HA
significance will be effected by the proposed undertaking, he will
proceed with processing of the preapplication or application.
(2) When his assessment indicates that there are properties included
in the National Register that may be effected by the proposed
undertaking, he will in consultation with the SHPO, the applicant and
its representatives, and other appropriate historical and archeological
authorities plan appropriate measures to avoid or mitigate any adverse
effects. He will also notify the Advisory Council and Secretary of the
Interior of the proposed undertaking, and of its possible effect on the
National Register properties and provide them with a copy of the
proposed plan in order to afford them a reasonable opportunity for
comment. Comments that are received with 45 calendar days of
notification in accordance with the requirements for comment as outlined
in section 106 of the National Historic Preservation Act of 1966, will
be considered in further development of the undertaking.
(3) When his assessment indicates that there are properties thay may
be eligible for inclusion in the National Register, based on his
application of the National Register criteria, he will request the
Regional Director of the National Park Service, U.S. Department of the
Interior, Attention: Interagency Archeological Services, in writing, to
cause a survey of the project area to be made to determine the
significance of the properties in accordance with section 3(b) of Pub.
L. 93-291. The State Director's letter to the Regional Director should
request a response within 45 calendar days as to
[[Page 45]]
whether the National Park Service intends to cause a survey to be made,
declines to undertake a survey, or that a survey is not warranted based
on available data. The addresses of the Regional Offices of the National
Park Service are listed in Exhibit A of this Subpart. If no response is
received within the 45-day period, the State Director will proceed as
outlined in paragraph (c)(7) of this section.
(4) The State Director will cooperate fully with the National Park
Service in the conduct of a survey should one be undertaken to assure
that:
(i) The professional archeologist/historian conducting the survey
provides his written opinion as to the eligibility of any identified
properties for inclusion in the National Register.
(ii) When the professional archeologist/historian recommends
recovery, protection, or preservation of identified properties, the
National Park Service is requested to undertake this project.
(5) When the survey made in paragraph (c)(3) of this section does
not identify any historical and archeological properties that may be
eligible for inclusion in the National Register, or the National Park
Service is not going to undertake activity pursuant to paragraph
(c)(4)(ii) of this section, the State Director, after consultation with
the SHPO and the National Park Service, will document the findings and
proceed with processing of the application.
(6) When the survey identifies properties that may be eligible for
inclusion in the National Register, the State Director will request the
SHPO to proceed with the nomination of such properties. The State
Director will then proceed as outlined in paragraph (c)(2) of this
section for any properties accepted for inclusion in the National
Register.
(7) When the National Park Service declines to cause a survey to be
made or determines that one is not warranted, the State Director will
document such facts and proceed with processing of the application.
Secs. 1901.256--1901.258 [Reserved]
Sec. 1901.259 Actions to be taken when archeological properties are discovered during construction.
(a) When properties of significant HA value are discovered during
construction, the State Director will immediately consult with the
applicant, the SHPO and the Regional Director of the National Park
Service to determine whether there is sufficient factual evidence to
warrant a decision to stop construction and undertake detailed survey
and recovery.
(b) When the consultations in paragraph (a) of this section result
in a determination by the National Park Service to request the applicant
to stop construction, such stop action should be taken so that the Park
Service can initiate measures for immediate recovery within 60 days
after notification of a discovery.
(c) When the consultations in paragraph (a) of this section do not
result in a determination by the National Park Service to stop
construction and to undertake a survey and recovery, construction should
be permitted to proceed with caution. In the event that the National
Park Service determines that recovery is necessary, the FmHA or its
successor agency under Public Law 103-354 applicant/borrower and the
Park Service should determine that the consent of all persons,
associations, or public entities having legal interests in the property
involved has been secured. Also, the applicant should be informed that
the Secretary of the Interior is authorized to compensate any person,
association, or public entity damaged as a result of delay in
construction or as a result of the temporary loss of the use of public
or any nonfederally owned land.
(d) No survey or recovery work will be required which in the
determination of the State Director would seriously impede FmHA or its
successor agency under Public Law 103-354 actions in providing
assistance where the State Director determines that immediate action is
required to avoid loss or damage of life or property. Nevertheless,
appropriate measures will be taken to
[[Page 46]]
the extent practical to preserve, protect, or mitigate any damage to
properties having HA significance.
Sec. 1901.260 Coordination with other agencies.
(a) When other Agencies are directly involved in any undertaking
that requires a historical and archeological assessment, the State
Director will contact the Agencies concerned to determine if a joint
assessment will be prepared and whether a single lead Agency will assume
primary responsibility for preparing the assessment.
(b) When a lead Agency is agreed upon other than FmHA or its
successor agency under Public Law 103-354, FmHA or its successor agency
under Public Law 103-354 will provide that Agency with information about
its respective areas of responsibility. Assessments will indicate Agency
participation and concurrence.
(c) When FmHA or its successor agency under Public Law 103-354
program activities are planned that primarily supplement those of the
SCS, USDA, such as watershed projects, resource conservation and
development measures, and irrigation and drainage projects, the SCS will
be designated as the lead Agency.
Sec. 1901.261 [Reserved]
Sec. 1901.262 State supplement.
(a) The State Director shall be responsible for preparing a list of
all properties included in the National Register in his area of
jurisdiction and issuing such list as a part of a State supplement. Such
a list will be updated as needed to reflect changes in the National
Register.
(b) State Directors may also supplement this subpart and its exhibit
as appropriate to meet State and local laws and regulations.
Exhibit to Subpart F
Exhibit A--National Park Service, U.S. Department of the Interior
Regional Offices
Contact should be made to: Chief, Interagency Archeological Services
Division, Office of Archeological and Historic Preservation, National
Park Service.
The three Regional Offices are:
San Francisco Office: Old Post Office Building, Mission and 7th
Streets, Post Office Box 5700, San Francisco, Calif. 94104.
States covered: Arizona, Utah, Idaho, and West, including Hawaii and
Alaska. Attention: Mr. Garland Gordon. Telephone: 415-556-7711.
Denver Office: 1978 South Garrison Street, Denver, Colo. 80225.
States covered: Wisconsin, Iowa, Missouri, Oklahoma, Texas and West
to San Francisco area. Attention: Mr. Jack R. Rudy. Telephone: 303-234-
2560.
Atlanta Office: 730 Peachtree Street, Atlanta, Ga. 30308.
States covered: All others East of Denver area. Attention: Mr.
Wilford Susted. Telephone: 404-526-2611.
Subparts G-J [Reserved]
Subpart K--Certificates of Beneficial Ownership and Insured Notes
Authority: 7 U.S.C. 1989; 42 U.S.C. 1480; 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.
Source: 41 FR 51799, Nov. 24, 1976, unless otherwise noted.
Sec. 1901.501 Purpose.
This subpart prescribes policies and procedures for Farmers Home
Administration or its successor agency under Public Law 103-354 (FmHA or
its successor agency under Public Law 103-354) certificates of
beneficial ownership and insured notes.
Sec. 1901.502 Policy.
It is the current policy to sell all certificates of beneficial
ownership to the Federal Financing Bank for financing activities from
the Agricultural Credit Insurance Fund and the Rural Development
Insurance Fund. Sales from the Rural Housing Insurance Fund will be made
to the Federal Financing Bank to the extent necessary to service
certificates of beneficial ownership held by the Federal Financing Bank.
Sales in excess of those needed for servicing requirements will be made
to the public.
[[Page 47]]
In addition to sales, this subpart provides policy for the servicing of
outstanding certificates of beneficial ownership, insurance contracts,
and insured notes held by investors.
[51 FR 24301, July 3, 1986]
Sec. 1901.503 Definitions.
(a) As used in Secs. 1901.505, 1901.507, 1901.508 and 1901.509 the
following definitions will apply:
(1) Announcement of sale. Any notice of terms and conditions
respecting a sale of certificates.
(2) Certificate. A certificate of beneficial ownership issued by
Farmers Home Administration or its successor agency under Public Law
103-354 (FmHA or its successor agency under Public Law 103-354) under
this subpart.
(3) Director, Finance Office. The Director or the Insured Loan
Officer of the Finance Office of FmHA or its successor agency under
Public Law 103-354.
(4) FmHA or its successor agency under Public Law 103-354. The
United States acting through the Farmers Home Administration or its
successor agency under Public Law 103-354.
(5) Finance Office. The office which maintains the FmHA or its
successor agency under Public Law 103-354 finance records. It is located
at 1520 Market Street, St. Louis, Missouri 63103. (Phone: 314-425-4400)
(6) Fixed period. Any time interval (preceding an option period)
during which the insured holder is not entitled to require FmHA or its
successor agency under Public Law 103-354 to purchase the insured note,
as specified in the insurance agreement.
(7) Insurance agreement. The entire contract evidencing and setting
forth the terms and conditions of FmHA or its successor agency under
Public Law 103-354 insurance of the payment for the insured note. The
insurance agreement with respect to any particular loan may be evidenced
by Form FmHA or its successor agency under Public Law 103-354 440-5,
``Insurance Endorsement (Insured Loan),'' FmHA or its successor agency
under Public Law 103-354 440-30, ``Insurance Endorsement (Insured
Loans),'' or any other form or forms prescribed by the National Office
and executed by an authorized official of FmHA or its successor agency
under Public Law 103-354. It may include such provisions as, for
example, an agreement of FmHA or its successor agency under Public Law
103-354 to purchase or repurchase the loan, or to make supplementary
payments from the insurance fund.
(8) Insurance fund. The Agricultural Credit Insurance Fund
authorized by section 309 of the Consolidated Farm and Rural Development
Act, the Rural Development Insurance Fund authorized by section 309A of
the Consolidated Farm and Rural Development Act, or the Rural Housing
Insurance Fund authorized by section 517 of title V of the Housing Act
of 1949.
(9) Insured holder. The current owner of an insured note other than
FmHA or its successor agency under Public Law 103-354, according to the
records of FmHA or its successor agency under Public Law 103-354 is
insurer of the note.
(10) Insured note. Any promissory note or bond evidencing an insured
loan regardless of whether it is held by FmHA or its successor agency
under Public Law 103-354 in the insurance fund, by a private holder, or
by FmHA or its successor agency under Public Law 103-354 as trustee.
(11) Loan. Loans made and held in the Agricultural Credit Insurance
Fund, Rural Development Insurance Fund, or the Rural Housing Insurance
Fund.
(12) National Office. The Administrator or other authorized officer
of the FmHA or its successor agency under Public Law 103-354 in
Washington, DC.
(13) Option period. Any period during which the insured holder has
the optional right to require the FmHA or its successor agency under
Public Law 103-354 to purchase the insured note, as specified in the
insurance agreement.
(14) Par value. The total amount to which the insured holder is
entitled under the terms of the insurance agreement.
(15) Private buyer. A buyer of an insured note other than FmHA or
its successor agency under Public Law 103-354.
(16) Private holder. An insured holder other than FmHA or its
successor agency under Public Law 103-354.
(17) Repurchase agreement. A provision in the insurance agreement
obligating
[[Page 48]]
FmHA or its successor agency under Public Law 103-354 to buy the insured
note at the option of the holders.
(18) Sale, or seller, and buyer. The transfer of ownership
(including possession or the right of possession), the transferor, and
the transferee respectively.
(19) State Director. The State Director of FmHA or its successor
agency under Public Law 103-354 for the State in which is located the
real estate improved, purchased, or refinanced with the loan evidenced
by the insured note.
(b) As used in Sec. 1901.506 the following definitions will apply:
(1) Reserve bank. The Federal Reserve Bank of New York (and any
other Federal Reserve Bank which agrees to issue securities in book-
entry form) as fiscal agent of the United States acting on behalf of
FmHA or its successor agency under Public Law 103-354 and, when
indicated, acting in its individual capacity.
(2) FmHA or its successor agency under Public Law 103-354 security.
A certificate representing beneficial ownership of notes, bonds,
debentures, or other similar obligations held by FmHA or its successor
agency under Public Law 103-354 under the Consolidated Farm and Rural
Development Act and title V of the Housing Act of 1949, issued in the
form of a definitive FmHA or its successor agency under Public Law 103-
354 security or a book-entry FmHA or its successor agency under Public
Law 103-354 security.
(3) Definitive FmHA or its successor agency under Public Law 103-354
security. An FmHA or its successor agency under Public Law 103-354
security in engraved on printed form.
(4) Book-entry FmHA or its successor agency under Public Law 103-354
security. An FmHA or its successor agency under Public Law 103-354
security in the form of an entry made as prescribed in this subpart on
the records of a Reserve bank.
(5) Pledge. A pledge of, or any other security interest in, FmHA or
its successor agency under Public Law 103-354 securities as collateral
for loans or advances, or to secure deposits of public moneys or the
performance of an obligation.
(6) Date of call. The date fixed in the official notice of call
published in the Federal Register on which FmHA or its successor agency
under Public Law 103-354 will make payment of the security before
maturity in accordance with its terms.
(7) Member bank. Any national bank, state bank, or bank or trust
company which is a member of a Reserve bank.
Sec. 1901.504 Authorities and responsibilities.
The Administrator will approve all methods of FmHA or its successor
agency under Public Law 103-354 financing and major changes in existing
methods. The Director, Finance Office, is responsible for servicing of
all certificates of beneficial ownership and insured notes issued by the
Finance Office, the Federal Reserve Bank of New York for the servicing
of insurance contracts, and the Federal Reserve banks for certificates
of beneficial ownership for which the Reserve banks are FmHA or its
successor agency under Public Law 103-354's fiscal agents.
Sec. 1901.505 Certificates of beneficial ownership in FmHA or its successor agency under Public Law 103-354 loans.
(a) Special trust of loans--(1) Establishment of special trusts.
From time to time FmHA or its successor agency under Public Law 103-354
will place in special trusts unmature loans evidenced by notes or other
instruments. Loans may be placed into or removed from a special trust,
but there will always be maintained in such trusts loans on which the
unpaid amount is at least equal to the face value of the outstanding
unmature certificates evidencing beneficial ownership in such special
trust as provided in paragraph (a)(2) of this section.
(2) Beneficial ownership of special trusts. To permit interested
persons to acquire a beneficial ownership of loans comprising a special
trust established under paragraph (a)(1) of this section, FmHA or its
successor agency under Public Law 103-354 will sell certificates which
will evidence beneficial ownership of an interest in the special trust
to the extent of the face value of such
[[Page 49]]
certificates. FmHA or its successor agency under Public Law 103-354 will
own an interest in special trusts equal to the amount by which the
unpaid principal amount of loans comprising the trusts exceeds the face
value of all outstanding certificates evidencing beneficial ownership in
such trusts.
(b) Sale of certificates. FmHA or its successor agency under Public
Law 103-354 will offer certificates for sale from time to time on such
terms and conditions it may deem appropriate. Sales made by the Finance
Office shall be made by its Director. No sale in excess of $1 million
will be made to any one investor without prior approval of the Associate
Administrator or his designee. The terms and limitations of sales are
subject to change from time to time, and may be obtained from the
Finance Office.
(1) Form of certificates. The certificates may be interest-bearing
or non-interest-bearing. The certificates may be made payable to the
bearer or registered holder thereof, and will be negotiable. The
certificates will be issued in denominations specified in the
invitations for bid or other announcement of sale.
(2) Issue date and maturity date of certificates. The certificates
will be issued on such dates and mature on such dates as specified in
the invitation for bids or other announcement of sale. Such dates will
appear on the face of the certificates.
Sec. 1901.506 Book-entry procedure for FmHA or its successor agency under Public Law 103-354 securities--issuance and redemption of certificate by Reserve
bank.
(a) Authority of Reserve bank. Each Reserve bank is hereby
authorized in accordance with the provisions of this subpart to:
(1) Issue book-entry FmHA or its successor agency under Public Law
103-354 securities by means of entries on its records which shall
include the name of the depositor, the amount, the securities title (or
series) and maturity date.
(2) Effect conversions between book-entry FmHA or its successor
agency under Public Law 103-354 securities and definitive FmHA or its
successor agency under Public Law 103-354 securities.
(3) Otherwise service and maintain book-entry FmHA or its successor
agency under Public Law 103-354 securities.
(4) Issue a confirmation of transaction in the form of a written
advice (serially numbered or otherwise) which specifies the amount and
description of any securities (that is, the securities title (or series)
and the maturity date) sold or transferred and the date of the
transaction.
(b) Scope and effect of book-entry procedure. (1) A Reserve bank as
fiscal agent of the United States acting on behalf of FmHA or its
successor agency under Public Law 103-354 may apply the book-entry
procedure provided for in this subpart to any FmHA or its successor
agency under Public Law 103-354 securities which have been or are
hereafter deposited for any purpose in accounts with it in its
individual capacity under terms and conditions which indicate that the
Reserve bank will continue to maintain such deposit accounts in its
individual capacity, notwithstanding application of the book-entry
procedure to such securities. This paragraph shall be applicable but not
limited to FmHA or its successor agency under Public Law 103-354
securities deposited:
(i) As collateral pledged to a Reserve bank (in its individual
capacity) for advances by it.
(ii) By a member bank for its sole account.
(iii) By a member bank held for the account of its customers.
(iv) In connection with deposits in a member bank of funds of
States, Municipalities, or other political subdivisions.
(v) In connection with the performance of an obligation or duty
under Federal, State, Municipal, or local law, or judgments or decrees
of courts.
(2) The application of the book-entry procedure under paragraph
(b)(1) of this section shall not detract from or adversely affect the
relationships that would otherwise exist between a Reserve bank in its
individual capacity and its depositors concerning any deposit under this
paragraph. Whenever the book-entry procedure is applied to such FmHA or
its successor agency under Public Law 103-354 securities,
[[Page 50]]
the Reserve bank is authorized to take all action necessary in respect
of the book-entry procedure to enable such Reserve bank in its
individual capacity to perform its obligation as depositary with respect
to such FmHA or its successor agency under Public Law 103-354
securities.
(3) A Reserve bank as fiscal agent of the United States acting on
behalf of FmHA or its successor agency under Public Law 103-354 may
apply the book-entry procedure to FmHA or its successor agency under
Public Law 103-354 securities deposited as collateral pledged to the
United States under Treasury Department Circular Nos. 92 and 176, both
as revised and amended, and may apply the book-entry procedure, with the
approval of the Secretary of the Treasury, to any other FmHA or its
successor agency under Public Law 103-354 securities deposited with a
Reserve bank as fiscal agent of the United States.
(4) Any person having an interest in FmHA or its successor agency
under Public Law 103-354 securities which are deposited with a Reserve
bank (in either its individual capacity or as fiscal agent of the United
States) for any purpose shall be deemed to have consented to their
conversion to book-entry FmHA or its successor agency under Public Law
103-354 securities pursuant to the provisions of this subpart and in the
manner and under the procedure prescribed by the Reserve bank.
(5) No deposits shall be accepted under this section on or after the
date of maturity or call of FmHA or its successor agency under Public
Law 103-354 securities.
(c) Transfer or pledge. (1) A transfer or pledge of book-entry FmHA
or its successor agency under Public Law 103-354 securities to a Reserve
bank (in its individual capacity or as fiscal agent of the United
States), or to the United States, or to any transferee or pledgee
eligible to maintain an appropriate book-entry account in its name with
a Reserve bank under this subpart is effected and perfected,
notwithstanding any provision of law to the contrary, by a Reserve bank
making an appropriate entry in its records of the securities transferred
or pledged. The making of such an entry in the records of a Reserve bank
shall:
(i) Have the effect of a delivery in bearer form of definitive FmHA
or its successor agency under Public Law 103-354 securities.
(ii) Have the effect of a taking of delivery by the transferee or
pledgee.
(iii) Constitute the transferee or pledgee a holder.
(iv) If a pledge, effect a perfected security interest therein in
favor of the pledgee. A transfer or pledge of book-entry FmHA or its
successor agency under Public Law 103-354 securities effected under this
paragraph shall have priority over any transfer, pledge, or other
interest, theretofore or thereafter effected or perfected under
paragraph (c)(2) of this section or any other manner.
(2) A transfer or pledge of transferable FmHA or its successor
agency under Public Law 103-354 securities, or any interest therein,
which is maintained by a Reserve bank (in its individual capacity or as
fiscal agent of the United States) in a book-entry account under this
subpart, including securities in book-entry form under
Sec. 1901.506(b)(1)(iii) is effected, and a pledge is perfected by any
means that would be effective under applicable law to effect a transfer
or to effect and perfect a pledge of FmHA or its successor agency under
Public Law 103-354 securities, or any interest therein, if the
securities were maintained by the Reserve bank in bearer definitive
form. For purposes of transfer or pledge hereunder, book-entry FmHA or
its successor agency under Public Law 103-354 securities maintained by a
Reserve bank shall, notwithstanding any provision of law to the
contrary, be deemed to be maintained in bearer definitive form. A
Reserve bank maintaining book-entry FmHA or its successor agency under
Public Law 103-354 securities, either in its individual capacity or as
fiscal agent of the United States, is not a bailee for the purposes of
notification of pledges of these securities under this paragraph, or a
third person in possession for the purposes of acknowledgment of
transfers thereof under this paragraph. Where transferable FmHA or its
successor agency under Public Law 103-354 securities are recorded on
[[Page 51]]
the books of a depositary (a bank, banking institution, financial firm,
or similar party, which regularly accepts in the course of its business
FmHA or its successor agency under Public Law 103-354 securities as a
custodial service for customers, and maintains accounts in the names of
such customers reflecting ownership of or interest in such securities)
for account of the pledgor or transferor thereof and such securities are
on deposit with a Reserve bank in a book-entry account hereunder, such
depositary shall, for purposes of perfecting a pledge of such securities
or effecting delivery of such securities to a purchaser under applicable
provisions of law, be the bailee to which notification of the pledge of
the securities may be given or the third person in possession from which
acknowledgment of the holding of the securities for the purchaser may be
obtained. A Reserve bank will not accept notice or advice of a transfer
or pledge effected or perfected under this paragraph and any such notice
or advice shall have no effect. A Reserve bank may continue to deal with
its depositor in accordance with the provisions of this subpart,
notwithstanding any transfer or pledge effected or perfected under this
paragraph.
(3) No filing or recording with a public recording office or officer
shall be necessary or effective with respect to any transfer or pledge
of book-entry FmHA or its successor agency under Public Law 103-354
securities or any interest therein.
(4) A Reserve bank shall, upon receipt of appropriate instructions,
convert book-entry FmHA or its successor agency under Public Law 103-354
securities into definitive FmHA or its successor agency under Public Law
103-354 securities and deliver them in accordance with such
instructions. No such conversion shall affect existing interest in such
FmHA or its successor agency under Public Law 103-354 securities.
(5) A transfer of book-entry FmHA or its successor agency under
Public Law 103-354 securities within a Federal Reserve Bank shall be
made in accordance with procedures established by the Reserve bank not
inconsistent with this subpart. The transfer of book-entry FmHA or its
successor agency under Public Law 103-354 securities by a Reserve bank
may be made through a telegraphic transfer procedure.
(6) All requests for transfer or withdrawal must be made prior to
the maturity or date of call of the securities.
(d) Withdrawal of FmHA or its successor agency under Public Law 103-
354 securities. (1) A depositor of book-entry FmHA or its successor
agency under Public Law 103-354 securities may withdraw them from a
Reserve bank by requesting delivery of like definitive FmHA or its
successor agency under Public Law 103-354 securities to itself or on its
order to a transferee.
(2) FmHA or its successor agency under Public Law 103-354 securities
which are actually to be delivered upon withdrawal may be issued in
bearer or registered form.
(e) Delivery of FmHA or its successor agency under Public Law 103-
354 securities. A Reserve bank which has received FmHA or its successor
agency under Public Law 103-354 securities and effected pledges, made
entries regarding them, or transferred or delivered them according to
the instructions of its depositor is not liable for conversion or for
participation in breach of fiduciary duty even though the depositor had
no right to dispose of or take other action in respect of the
securities. A Reserve bank shall be fully discharged of its obligations
under this subpart by the delivery of FmHA or its successor agency under
Public Law 103-354 securities in definitive form to its depositor or
upon the order of such depositor. Customers of a member bank or other
depositary (other than a Reserve bank) may obtain FmHA or its successor
agency under Public Law 103-354 securities in definitive form only by
causing the depositor of the Reserve bank to order the withdrawal
thereof from the Reserve bank.
(f) Registered securities. (1) No formal assignment shall be
required for the conversion to book-entry FmHA or its successor agency
under Public Law 103-354 securities of registered FmHA or its successor
agency under Public Law 103-354 securities held by a Reserve bank (in
either its individual capacity or as fiscal agent of the United States)
on the effective date of this subpart for
[[Page 52]]
any purpose specified in Sec. 1901.506(b)(1). Registered FmHA or its
successor agency under Public Law 103-354 securities deposited
thereafter with a Reserve bank for any purpose specified in
Sec. 1901.506(b) shall be assigned for conversion to book-entry FmHA or
its successor agency under Public Law 103-354 securities.
(2) The assignment which shall be executed in accordance with the
provisions of subpart F of 31 CFR part 306, so far as applicable, shall
be to Federal Reserve Bank of ------, as fiscal agent of the United
States acting on behalf of the Farmers Home Administration or its
successor agency under Public Law 103-354, United States Department of
Agriculture, for conversion to book-entry Farmers Home Administration or
its successor agency under Public Law 103-354 securities.
(g) Servicing book-entry FmHA or its successor agency under Public
Law 103-354 securities, payment of interest, payment at maturity or upon
call. Interest becoming due on book-entry FmHA or its successor agency
under Public Law 103-354 securities shall be charged to the general
account of the Treasurer of the United States on the interest due date
and remitted or credited in accordance with the depositor's
instructions. Such securities shall be redeemed and charged to the same
account on the date of maturity or call, and the redemption proceeds,
principal, and interest shall be disposed of in accordance with the
depositor's instructions.
(h) Issuance and redemption. (1) In those instances where the
Reserve bank is acting as fiscal agent of the United States acting on
behalf of FmHA or its successor agency under Public Law 103-354, the
following subparts of Treasury Department Circular No. 300 (31 CFR part
306), so far as applicable, shall apply to such certificates.
(i) Subpart B, Registration.
(ii) Subpart C, Transfers, Exchanges and Reissues.
(iii) Subpart D, Redemption or Payment.
(iv) Subpart E, Interest.
(v) Subpart G, Assignments of Registered Securities--General.
(vi) Subpart F, Assignments by or in Behalf of Individuals.
(vii) Subpart H, Assignments in Behalf of Estates of Deceased
Owners.
(viii) Subpart I, Assignments by or in Behalf of Trustees and
Similar Fiduciaries.
(ix) Subpart J, Assignments in Behalf of Private or Public
Organizations.
(x) Subpart K, Attorneys in Fact.
(xi) Subpart L, Transfer Through Judicial Proceedings.
(xii) Subpart M, Requests for Suspension of Transactions.
(xiii) Subpart N, Relief for Loss, Theft, Destruction, Mutilation,
or Defacement of Securities.
Sec. 1901.507 Certificates of beneficial ownership issued by the FmHA or its successor agency under Public Law 103-354 Finance Office.
(a) Orders and payment. Orders for investment in certificates may be
placed with the Finance Office by mail, telephone, or in person. Payment
for purchase of certificates may be made by a wire transfer to the
Federal Reserve Bank of St. Louis for credit to the Farmers Home
Administration or its successor agency under Public Law 103-354, by a
certified check or bank draft payable to the Farmers Home Administration
or its successor agency under Public Law 103-354. The rate of interest
paid on the certificate will be the rate in effect on the date the
Finance Office receives the payment.
(b) Registration. (1) The registration used must express the actual
ownership of a certificate and may not restrict the authority of the
owner to dispose of it in any manner. FmHA or its successor agency under
Public Law 103-354 reserves the right to treat the registration as
conclusive ownership. Request for registration must be clear, accurate,
and complete, and include the appropriate taxpayer identifying number or
social security number.
(2) The registration of all certificates owned by the same person,
organization, or fiduciary should be uniform with respect to the name of
the owner and, in case of fiduciary, the description of the fiduciary
capacity. Individual owners should be designated by the names by which
they are ordinarily
[[Page 53]]
known or under which they do business, preferably including at least one
full given name. The name of an individual may be preceded by an
applicable title, as, for example ``Mrs.'' ``Mr.'', ``Miss',' ``Ms.'';
``Dr.'', or ``Rev.'', or followed by a designation such as ``M.D.'',
``D.D.'', ``Sr.'', or ``Jr.'', Any other similar suffix should be
included when ordinarily used or when necessary to distinguish the owner
from another member of his family. The address should include, where
appropriate, the name and street, route, or any other location feature,
and zip code.
(3) If an erroneously inscribed certificate is received, it should
not be altered in any respect. FmHA or its successor agency under Public
Law 103-354 should be given full particulars about the error and asked
to furnish instructions.
(c) Transfers and exchanges--closed periods--(1) General. Transfer
of registered certificates should be made by assignment in accordance
with this section. Registered securities are eligible for denominational
exchange. Specific instructions for issuance and delivery of new
certificates signed by the owner or the owner's authorized
representative must accompany the certificates presented. Certificates
presented for transfer must be received by FmHA or its successor agency
under Public Law 103-354 not less than 1 full month before the date on
which they mature. Any certificates so presented which are received too
late to comply with this provision will be accepted for payment only.
(2) Closing of transfer books. The transfer books are closed for 1
full month preceding interest payment dates. If the date set for closing
falls on Saturday, Sunday, or a legal holiday, the books will be closed
as of the close of business on the last business day preceding that
date. The books are reopened on the first business day following the
date on which interest falls due. Registered certificates which have not
matured, or have been submitted for transfer and are received when the
books are closed for that certificate, will be processed on or after the
date such books are reopened. If certificates are received for transfer
when the books are closed for payment of final interest at maturity, the
following action will be taken in the absence of different instructions:
(i) Payment of final interest will be made to the registered owner
of record on the date the books were closed.
(ii) Payment of principal will be made to the assignee under a
proper assignment of the certificate.
(d) Redemption or payment--(1) General. Certificates are payable in
regular course of business at maturity. FmHA or its successor agency
under Public Law 103-354 may provide for the exchange of maturing
certificates. The registered certificates should be presented and
surrendered for redemption at the FmHA or its successor agency under
Public Law 103-354 Finance Office. No assignments or evidence in support
of them will be required by or on behalf of the registered owner or
assignee for redemption for his or its account, or for redemption-
exchange if the new certificates are to be registered in exactly the
same names and forms as in the registrations or assignments of the
certificates surrendered.
(2) Redemption at maturity. Registered certificates presented and
surrendered for redemption at maturity need not be assigned unless the
owner desires that payment be made to some other person. Should the
owner so desire assignments should be made to the ``Farmers Home
Administration or its successor agency under Public Law 103-354 for
redemption for the account of (inserting name and address of person to
whom payment is to be made).'' Specific instructions for the issuance
and delivery of the redemption check signed by the owner or the owner's
authorized representative must accompany the certificates unless
included in the assignment. Payment of the principal and interest will
be made by a check drawn on the Treasurer of the United States to the
order of the person entitled and mailed in accordance with the
instructions received. If instructions are not received concerning
interest, interest will be paid to the registered owner.
(3) Interest. The interest on FmHA or its successor agency under
Public Law 103-354 certificates accrues and is payable annually. A full
interest period does not include the day on which the last preceding
interest became due, but
[[Page 54]]
does include the day on which the next succeeding interest payment is
due. Certificates will cease to bear interest on the date of their
maturity. The interest on registered certificates is payable by checks
drawn on the Treasurer of the United States to the order of the
registered owners, except as otherwise provided in this section. FmHA or
its successor agency under Public Law 103-354 prepares the interest
checks in advance of the interest payment date and ordinarily mails them
in time to reach the addressees on that date. Interest on a registered
certificate which has not matured and which is presented for any
transaction when the books for that certificate are closed will be paid
by check drawn to the order of the registered owner of record. On
receipt of notice of the death or incompetency of an individual named as
registered owner, a change in the name or in the status of a
partnership, corporation, or unincorporated association, the removal,
resignation, succession, or death of a fiduciary or trustee, delivery of
interest checks will be withheld pending receipt and approval of
evidence showing who is entitled to receive the interest checks. If the
inscriptions on certificates do not clearly identify the owners,
delivery of interest checks may be withheld pending reissue of the
certificates in the correct registration, except as provided in this
section. The final installment of interest will be paid by check drawn
to the order of the registered owner of record on presentation and
surrender of the certificate for redemption. To assure timely delivery
of interest checks, owners should promptly notify FmHA or its successor
agency under Public Law 103-354 of any change of address.
(e) Assignments. Assignments of certificates should be executed by
the owner or the owner's authorized representative in the presence of an
officer authorized to certify assignments. Assignments shall be made on
the back of the certificate. Registered certificates may be assigned to
a specified transferee or to FmHA or its successor agency under Public
Law 103-354 for redemption or for exchange for other certificates
offered at maturity. Assignments to ``United States, Farmers Home
Administration or its successor agency under Public Law 103-354,''
``Farmers Home Administration or its successor agency under Public Law
103-354 for Transfer,'' or ``Farmers Home Administration or its
successor agency under Public Law 103-354 for Exchange'' will not be
accepted unless supplemented by specific instructions by or in behalf of
the owner. If an alteration or erasure has been made in an assignment, a
new assignment from the assignor should be obtained. Otherwise, an
affidavit or explanation by the person responsible for the alteration or
erasure should be submitted for consideration.
(f) Death of certificate holder. The Finance Office should be
notified of the death of the registered owner of a certificate. The
following documents should be forwarded with the notice if available.
(1) A certified copy of the death certificate.
(2) A certified copy of the court order appointing the Administrator
or Executor (include the mailing address of the Administrator or
Executor). The Finance Office will notify the person submitting such
notice and/or documentation if any other records or documents are
needed. Legal opinions and advice will be obtained by the Finance Office
as needed from the Regional Attorney. After all legal requirements are
met, the certificate should be reissued in the name of the current
owner.
(g) Replacement. Lost, stolen, destroyed, or mutilated certificates
will be replaced by the Finance Office on the registered owner's
compliance with the requirements of Sec. 1901.509.
Sec. 1901.508 Servicing of insured notes outstanding with investors.
The Director, or the insured loan officer of the Finance Office, is
authorized in connection with the sale of any insured note to execute
required documents on behalf of FmHA or its successor agency under
Public Law 103-354 and to take other appropriate action, including, but
not limited to, acknowledging notice of sale of an insured note, or
requiring an insured holder to sell an insured note to FmHA or its
successor agency under Public Law 103-354 in connection with any
voluntary conveyance or foreclosure, or transfer
[[Page 55]]
related to liquidation of the borrower's account or any other servicing
action so related. Upon recommendation by the State Director that
purchase of an insured note is necessary for any servicing action not
related to liquidation of the borrower's account, authorization may be
given by the National Office to request the Director, Finance Office, to
require a holder to sell an insured note to FmHA or its successor agency
under Public Law 103-354.
(a) Assignments--(1) Effective date of assignment. When an insured
note is sold by a private holder to a private buyer, notice of such sale
executed by the seller must be given to and acknowledged by FmHA or its
successor agency under Public Law 103-354 in order for the sale to be
binding on FmHA or its successor agency under Public Law 103-354, as to
FmHA or its successor agency under Public Law 103-354, the effective
date of the sale will be the acknowledgment date specified in the
acknowledgement of notice executed by FmHA or its successor agency under
Public Law 103-354.
(2) Assignment to FmHA or its successor agency under Public Law 103-
354 at request of FmHA or its successor agency under Public Law 103-354.
At any time FmHA or its successor agency under Public Law 103-354
considers it necessary for proper servicing of the loan, FmHA or its
successor agency under Public Law 103-354 may require, in writing, a
private holder to sell an insured note to FmHA or its successor agency
under Public Law 103-354.
(3) Assignment to FmHA or its successor agency under Public Law 103-
354 at option of holder. A private holder at any time during the option
period may require, in writing, FmHA or its successor agency under
Public Law 103-354 to purchase an insured note.
(4) Price. If FmHA or its successor agency under Public Law 103-354
is the buyer of an insured note, the price will be the par value as of
the effective date of the sale. In other cases, the price will be
determined by an agreement between the parties.
(b) Sale of insured notes by private holders to private buyers. (1)
On receipt of notice from a private holder of intention to assign an
insured note, the Director, Finance Office, will send the holder:
(i) Form FmHA or its successor agency under Public Law 103-354 471-7
``Notice and Acknowledgment of Sale of Insured or Guaranteed Loan.''
(ii) A statement of the unpaid principal. If requested the Director,
Finance Office, will furnish a statement of account instead of or in
addition to a statement of the unpaid principal.
(iii) Appropriate information on how to complete the assignment.
(2) If the Director, Finance Office, is informed that an insured
note has been assigned and FmHA or its successor agency under Public Law
103-354 is requested to recognize the assignment, the Director, Finance
Office, will send the assignor Form FmHA or its successor agency under
Public Law 103-354 471-7, with directions for its execution.
(3) On receipt of Form FmHA or its successor agency under Public Law
103-354 471-7 properly executed by the assignor, the Director, Finance
Office, will complete and execute the acknowledgment section of the
form. The Director, Finance Office, will retain the original of the
form, have two facsimile copies made and send one to the assignor, and
one to the assignee. For any correction or other change to be made in
the record of the name or address of a private holder, or of a
designated agent of a private holder, a request will be made to FmHA or
its successor agency under Public Law 103-354 in writing.
(4) As of the date of the acknowledgment, executed by the Director,
Finance Office, on Form FmHA or its successor agency under Public Law
103-354 471-7 the Director, Finance Office, will transfer the insured
note from the assignor to the assignee as the insured holder on the
records of FmHA or its successor agency under Public Law 103-354. The
name and address of the assignee will be recorded by FmHA or its
successor agency under Public Law 103-354 exactly as they appear on Form
FmHA or its successor agency under Public Law 103-354 471-7.
(5) Payments transmitted by FmHA or its successor agency under
Public Law 103-354 on or after the acknowledgment date shown on Form
FmHA or its successor agency under Public Law
[[Page 56]]
103-354 471-7 will be transmitted to the assignee. The Director, Finance
Office, will give notice to the assignor and the assignee of any
payments transmitted by FmHA or its successor agency under Public Law
103-354 to the assignor before the acknowledgment date and after either
the date of sale, or the date of the statement of account, whichever is
earlier. However, FmHA or its successor agency under Public Law 103-354
will not be liable for any failure to give such notice.
(c) Assignment of insured notes to FmHA or its successor agency
under Public Law 103-354--(1) Assignment at the request of the holder.
For assignment of an insured note to FmHA or its successor agency under
Public Law 103-354 during the option period at the request of the
holder, the following procedure will apply:
(i) The holder will endorse the insured note as follows: ``Pay to
the order of the United States of America. Without recourse.'' The
holder will then deliver the endorsed note, together with the insurance
agreement, to the Director, Finance Office.
(ii) On receipt of the endorsed note with the accompanying insurance
agreement, the Director, Finance Office, will acknowledge receipt of the
note and process payment to the assignor of the par value of the note as
of the date of the Treasury check.
(2) Assignment at the request of FmHA or its successor agency under
Public Law 103-354. The procedure for assigning an insured note at the
request of FmHA or its successor agency under Public Law 103-354 will be
the same as that prescribed in paragraph (c)(1) of this section, except
that the Director, Finance Office, will send a written request to the
holder requiring that the insured note be assigned to FmHA or its
successor agency under Public Law 103-354 and delivered to the Director,
Finance Office, with the accompanying insurance agreement. The Director,
Finance Office, will explain that the assignment is necessary to enable
FmHA or its successor agency under Public Law 103-354 to service the
account properly and will give the holder all necessary information as
to the manner of making the assignment and the amount to be paid by FmHA
or its successor agency under Public Law 103-354.
(d) Replacement of called or fully paid notes. Certain insurance
endorsements contain a clause or rider providing for a replacement note
when the original note is paid in full, or is called by FmHA or its
successor agency under Public Law 103-354. This provision applies to
loans sold for a fixed period of 10 years or longer for loans sold on or
after December 1, 1969, and a fixed period of 15 years or longer for
loans sold before December 1, 1969. If a note is paid in full or called
by the Government and the lender is entitled to a replacement note, the
lender may obtain a certificate of beneficial ownership in lieu of the
replacement note. The certificate will carry the rates and terms
applicable to the replacement note.
(e) Death of a noteholder. The Finance Office should be notified of
the death of a holder of an insured note. The following documents should
be forwarded with the notice if available:
(1) A certified copy of the death certificate.
(2) A certified copy of the court order appointing the Administrator
or Executor (include the mailing address of the Administrator or
Executor). The Finance Office will notify the person submitting the
notice and/or documentation if any other records or documents are
needed, and will provide any additional instructions that are needed.
Legal opinions and advice will be obtained by the Finance Office as
needed from the Regional Attorney.
Sec. 1901.509 Loss, theft, destruction, mutilation, or defacement of insured notes, insurance contracts, and certificates of beneficial ownership.
(a) Block sale insurance contracts. The Associate Administrator is
authorized in connection with block sale insurance contracts to
authorize the FmHA or its successor agency under Public Law 103-354's
fiscal agent to establish requirements for issuance of a replacement
insurance contract when the original issued by the Federal Reserve Bank
of New York (FmHA or its successor agency under Public Law 103-354's
fiscal agent) is lost, stolen, destroyed, mutilated, or defaced. When a
block sale insurance contract is lost,
[[Page 57]]
stolen, or destroyed, a duplicate may be issued to the registered holder
upon receipt of an acceptable certificate of loss and an indemnity bond
without surety. The certificate of loss should include the legal name
and present address of the owner and address when issued, if different
from the present address; the capacity of person certifying, if other
than owner; the identity of the insurance contract, including series
number, contract number, denomination, issue date, and form of
inscription of registry, and the full statement of circumstances of
loss. All available portions of an insurance contract that is mutilated,
defaced, or partially destroyed should be submitted to the Federal
Reserve Bank of New York (FmHA or its successor agency under Public Law
103-354's fiscal agent) for determination as to whether a duplicate
insurance contract can be issued without a certificate of loss and
posting of an indemnity bond. In the event the holder of a block sales
insurance contract obtains possession of the underlying notes, the
requirements of paragraph (b) of this section apply.
(b) Notes and certificates of beneficial ownership sold by County
Office and Finance Office. The Director, or the insured loan officer of
the Finance Office, is authorized on behalf of the Government, in
connection with insured notes or certificates of beneficial ownership
sold through the FmHA or its successor agency under Public Law 103-354
Finance Office to require indemnity bonds from a noteholder when a note
or certificate is lost, stolen, destroyed, mutilated, or defaced while
in the custody of the holder or his designee. When a note or certificate
of beneficial ownership is lost, stolen, or destroyed while in the
custody of the holder or his designee, the following will apply:
(1) A certificate of loss should be filed with FmHA or its successor
agency under Public Law 103-354 Finance Office. The certificate should
include:
(i) Legal name and present address of owner when issued, if
different from present address.
(ii) Capacity of person certifying, if other than the owner.
(iii) Identity of the note or certificate of beneficial ownership,
including the name and FmHA or its successor agency under Public Law
103-354 case number of the maker thereof, issue date, interest rate of
obligation, face amount of note or certificate of beneficial ownership,
and a full description of any assignment, endorsement, or any other
writing.
(iv) A full statement of circumstances of the loss, theft, or
destruction of the note.
(2) An indemnity bond in the amount of the unpaid principal and
interest will be required except in the following instances:
(i) Substantially the entire note or certificate of beneficial
ownership is presented and surrendered by the owner or holder, and the
Director, Finance Office, is satisfied as to the identity of the
instruments and that any missing portions are not sufficient to form the
basis of a valid claim against the United States or the borrower; or
(ii) The owner or holder is the United States, a Federal Reserve
Bank, a Federal Government Corporation, a State or territory, or the
District of Columbia.
(3) An indemnity bond without surety will be provided in the
following cases:
(i) Cases involving registered unassigned obligations held by banks,
trust companies, savings and loan associations, or companies holding
certificates of authority from Secretary of the Treasury as acceptable
sureties on Federal Bonds (companies listed on Treasury Department
Circular 570) where the financial responsibilities of such claimants are
well known or readily ascertainable.
(ii) Cases involving registered unassigned obligations where the
evidence reasonably justifies a conclusion that the obligations were
destroyed and the unpaid principal and interest amount does not exceed
$1,000.
(4) An indemnity posted with a qualified surety is required in all
cases involving registered unassigned obligations other than those cited
in paragraphs (b)(2)(i), (b)(2)(ii), (b)(3)(i) and (b)(3)(ii) of this
section. A qualified surety is a company holding a certificate of
authority from the Secretary of the Treasury as acceptable sureties on
Federal Bonds, and listed in Treasury Department Circular 570.
[[Page 58]]
(5) All indemnity bonds for notes must be payable to both the
borrower and FmHA or its successor agency under Public Law 103-354. All
indemnity bonds for certificates of beneficial ownership must be payable
to FmHA or its successor agency under Public Law 103-354. The bond may
be posted at the time the note or certificate of beneficial ownership
becomes eligible for repurchase by FmHA or its successor agency under
Public Law 103-354. If the holder desires to continue to hold the note
for the life of the note, an indemnity bond will not be required.
(6) An assignment of the note or certificate of beneficial ownership
shall be made to the United States of America, acting through the
Farmers Home Administration or its successor agency under Public Law
103-354, United States Department of Agriculture. An acceptable form of
assignment is available from the Director, Finance Office.
(c) Other cases. Cases involving bearer obligations and other cases
not discussed in this section will be forwarded to the Director, Finance
Office, for requirements.
(d) Replacement of notes. FmHA or its successor agency under Public
Law 103-354 will not attempt to obtain replacement notes from borrowers.
Subparts L-M [Reserved]
Subpart N--Indian Outreach Program
Authority: 7 U.S.C. 1989; 42 U.S.C. 1480; 42 U.S.C. 2942; 5 U.S.C.
301; sec. 10, Pub. L. 93-357, 88 Stat. 392; delegation of authority by
the Sec. of Agri., 7 CFR 2.23, delegation of authority by the Asst. Sec.
for Rural Development, 7 CFR 2.70; delegation of authority by Dir., OEO,
29 FR 14764, 33 FR 9850.
Source: 43 FR 3697, Jan. 27, 1978, unless otherwise noted.
Sec. 1901.651 Purpose.
The purpose of this subpart is to establish procedures and
responsibilities for carrying out the Farmers Home Administration or its
successor agency under Public Law 103-354 (FmHA or its successor agency
under Public Law 103-354) American Indian Outreach Program.
Sec. 1901.652 Goals.
The FmHA or its successor agency under Public Law 103-354 American
Indian Outreach Program is a concerted effort to:
(a) Make all FmHA or its successor agency under Public Law 103-354
programs more accessible and available to Indians living on and off
reservations.
(b) Surface and attempt to correct problems and obstacles that
prevent the participation by eligible Indians and Indian tribes in FmHA
or its successor agency under Public Law 103-354 programs.
(c) Increase the production level of FmHA or its successor agency
under Public Law 103-354 loans and grants going to American Indians both
on and off reservations.
(d) Provide pamphlets, publications and information on FmHA or its
successor agency under Public Law 103-354 programs to individual
Indians, Indian tribes and Tribal leaders, Bureau of Indian Affairs
(BIA) personnel, and other interested groups and individuals.
Sec. 1901.653 Field action.
State Coordinators of Indian activities appointed by State Directors
will:
(a) Maintain close liaison with local FmHA or its successor agency
under Public Law 103-354 supervisors and officials serving Indian
Populations and reservations;
(b) Work closely with local District, State, and National Office
representatives to remove obstacles and solve problems that impede the
use of FmHA or its successor agency under Public Law 103-354 programs on
Indian reservations;
(c) Be familiar with all FmHA or its successor agency under Public
Law 103-354 loan and grant programs available to Indians living on and
off reservations, including the types of security and eligibility
requirements;
(d) Be aware of any unique relationship that may exist between
Indians and the Federal and State governments affecting Indian
participation in the FmHA or its successor agency under Public Law 103-
354 loan and grant programs;
(e) As necessary, attend pertinent meeting of Indian groups,
government agencies, and others concerned with
[[Page 59]]
economic and social development of Indians;
(f) If possible, become personally acquainted with Indian leaders
and non-Indians leaders in Indian affairs in the State;
(g) Arrange for the training of members of Indian tribes,
individuals, and interested groups involved in Indian affairs, in the
packaging and distribution of materials for use in FmHA or its successor
agency under Public Law 103-354 loan and grant programs.
Sec. 1901.654 FmHA or its successor agency under Public Law 103-354 publications.
FmHA or its successor agency under Public Law 103-354 publications,
such as ``Rural Credit for American Indians,'' a handbook of FmHA or its
successor agency under Public Law 103-354 programs, and ``FmHA or its
successor agency under Public Law 103-354 Credit for American Indians,''
or other materials to be developed, will be used as supplementary
training and informational aids for Indian communities, individuals,
governmental agencies, and other groups involved in Indian affairs.
Sec. 1901.655 Reports.
(a) State Directors will keep the National Office advised of any
problems and obstacles in FmHA or its successor agency under Public Law
103-354's procedures relating to Indian laws or customs that cannot be
resolved locally and which prevent American Indians from participating
in the FmHA or its successor agency under Public Law 103-354 programs on
or off the reservations.
(b) Any changes in personnel serving as State Coordinator of Indian
activities will be reported to the National Office.
(c) Each State Director will make a semi-annual memorandum report on
January 1 and July 1 of each year on activities and accomplishments in
his State. The report will specifically reflect what has been done to
carry out the items set forth in Sec. 1901.653. The report will be sent
to the National Office, Attention, Coordinator of Indian Activities.
PART 1902--SUPERVISED BANK ACCOUNTS--Table of Contents
Subpart A--Disbursement of Loan, Grant, and Other Funds
Sec.
1902.1 General.
1902.2 Policies concerning disbursement of funds.
1902.3 Procedures to follow in fund disbursement.
1902.4 Establishing MFH reserve accounts in a supervised bank account.
1902.5 [Reserved]
1902.6 Establishing supervised bank accounts.
1902.7 Pledging collateral for deposit of funds in supervised bank
accounts.
1902.8 Authority to establish supervised bank accounts, deposit loan
checks and other funds, countersign checks, close accounts,
and execute all forms in connection with supervised bank
account transactions.
1902.9 Deposits.
1902.10 Withdrawals.
1902.11 District and county office records.
1902.12--1902.13 [Reserved]
1902.14 Reconciliation of accounts.
1902.15 Closing accounts.
1902.16 Request for withdrawals by State Director.
1902.17--1902.49 [Reserved]
1902.50 OMB control number.
Exhibits to Subpart A
Exhibit A--[Reserved]
Exhibit B--United States Department of Agriculture, Farmers Home
Administration or its successor agency under Public Law 103-
354--Interest-Bearing Deposit Agreement
Subpart B--[Reserved]
Subpart C--Selecting a Financial Institution for the Concentration
Banking System (CBS)
1902.101--1902.103 [Reserved]
1902.104 Establishing or changing a TLA.
1902.105--1902.149 [Reserved]
1902.150 OMB control number.
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480; 7 CFR 2.23
and 2.70.
Subpart A--Disbursement of Loan, Grant, and Other Funds
Source: 46 FR 36106, July 14, 1981, unless otherwise noted.
[[Page 60]]
Sec. 1902.1 General.
This subpart prescribes the policies and procedures of the Farmers
Home Administration or its successor agency under Public Law 103-354
(FmHA or its successor agency under Public Law 103-354) for disbursement
of funds under the Loan Disbursement System (LDS), in establishing and
using supervised bank accounts, and in placing Multi-Family Housing
(MFH) reserve accounts in supervised bank accounts. The LDS system
provides for disbursement of funds on an as needed basis to
substantially reduce interest costs to FmHA or its successor agency
under Public Law 103-354 borrowers, U.S. Treasury, and FmHA or its
successor agency under Public Law 103-354.
(a) Forms FmHA or its successor agency under Public Law 103-354
1940-1, ``Request for Obligation of Funds,'' and FmHA or its successor
agency under Public Law 103-354 1944-51, ``Multiple Family Housing
Obligation--Fund Analysis,'' provide for obligation only, obligation and
check request for the full amount of the loan or grant except for MFH,
and obligation and check request for a partial amount of the loan or
grant. The instructions on when and how to use these forms are contained
in the Forms Manual Insert (FMI) for the forms. Instructions for using
Form FmHA or its successor agency under Public Law 103-354 1944-51 for
obligation and check request via computer terminal may also be found in
the ``Multiple Family Housing User Procedures.'' FmHA or its successor
agency under Public Law 103-354 forms are available in any FmHA or its
successor agency under Public Law 103-354 office.
(b) Forms FmHA or its successor agency under Public Law 103-354 440-
57, ``Acknowledgement of Obligated Funds/Check Request'' and FmHA or its
successor agency under Public Law 103-354 1944-57, ``MFH Acknowledgement
of Obligated Funds/Check Request,'' provide for:
(1) The initial loan check;
(2) All subsequent loan checks;
(3) Making corrections on the data in the loan account as reflected
on the form;
(4) Notifying the Finance Office of the loan closing date and the
loan amortization effective date;
(5) Providing requested information from the Finance Office; and,
(6) For Multiple Family Housing (MFH) loans providing Maximum Debt
Limit and Appraised Value. The instructions on when and how to use these
forms are contained in the FMI for the forms. However, for MFH loans and
grants whenever possible, check obligation requests and loan closings
should be done via the field office computer terminal. Instructions may
be found in the ``Multiple Family Housing User Procedures.''
(c) See FmHA or its successor agency under Public Law 103-354
Instruction 2018-D (available in any FmHA or its successor agency under
Public Law 103-354 office) for procedures to follow if checks are lost
or destroyed.
(d) Borrowers as referred to in this subpart include both loan and
grant recipients. They are referred to as depositors in the deposit
agreements hereinafter described. References herein and in deposit
agreements to ``other lenders'' include lenders and grantors other than
FmHA or its successor agency under Public Law 103-354.
(e) Banks referred to in this subpart are those in which deposits
are insured by the Federal Deposit Insurance Corporation (FDIC).
(f) Savings and Loans referred to in this subpart are those in which
deposits are insured by the Federal Savings and Loan Insurance
Corporation (FSLIC).
(g) Credit Unions referred to in this subpart are those in which
deposits are insured by the National Credit Union Administration (NCUA).
(h) Financial Institutions as referred to in this subpart include
banks, savings and loans, and credit unions which are covered by the
proper insurance coverage cited in paragraphs (e), (f) and (g) of this
section.
(i) Supervised bank accounts referred to in this subpart are bank,
savings and loan, or credit union accounts established through deposit
agreements entered into between the borrower, the United States of
America acting through the FmHA or its successor agency under Public Law
103-354, and the Financial Institution on Form FmHA or its successor
agency under
[[Page 61]]
Public Law 103-354 402-1, ``Deposit Agreement''.
(j) Form FmHA or its successor agency under Public Law 103-354 402-1
provides for the deposit of funds in a supervised bank account to assume
the performance of the borrower's obligation to FmHA or its successor
agency under Public Law 103-354 in connection with a loan and grant.
(k) ``Interest-Bearing Deposit Agreement'' (Exhibit B), provides for
the deposit of loan or grant funds that are not required for immediate
disbursement in specified interest-bearing deposits, and it is executed
in conjunction with Form FmHA or its successor agency under Public Law
103-354 402-1.
[46 FR 36106, July 14, 1981, as amended at 50 FR 8584, Mar. 4, 1985; 53
FR 35670, Sept. 14, 1988; 54 FR 47959, Nov. 20, 1989; 59 FR 3778, Jan.
27, 1994; 59 FR 54788, Nov. 2, 1994]
Sec. 1902.2 Policies concerning disbursement of funds.
(a) The Automated Data Processing System (ADPS) will be utilized
whenever possible in accordance with the specific program procedures,
except where prohibited by State statutes. The capability to request
Treasury checks on an as needed basis reduces the need for supervised
bank accounts. Therefore, supervised bank accounts will be used only in
certain instances. e.g.:
(1) When a construction loan is made and the construction is
substantially completed, but a small amount is being withheld pending
completion of landscaping or some similar item, or a small loan closing.
In this case, the amount of funds not disbursed when the predetermined
amortization effective date occurs may be placed in a supervised bank
account for future disbursement as appropriate.
(2) When a large number of checks will be issued in the construction
of a dwelling or other development, as for example under the ``borrower
method'' of construction or in Operating (OL) loans and Emergency (EM)
loans. In such cases, installment checks will be requested from the
Finance Office as necessary and deposited in a supervised bank account
and disbursed to suppliers, sub-contractors, etc., as necessary. Those
District and County Offices authorized to request checks by the ADPS may
request more than one check at a time. If more than one check is
required, a Form FmHA or its successor agency under Public Law 103-354
440-57 or Form FmHA or its successor agency under Public Law 103-354
1944-57 will be prepared for each check.
(3) Association loan and grant funds made on a multiple advance
basis need not be deposited in a supervised bank account unless required
by State statutes or otherwise determined necessary by the Loan Approval
Official.
(4) Supervised bank accounts will be used only when needed as
defined in paragraph (a)(6) of this section to assure the correct
expenditures of all or a part of loan and grant funds, borrower
contributions, and borrower income. Such accounts will be limited in
amount and duration to the extent feasible through the prudent
disbursement of funds and the prompt termination of the interests of
FmHA or its successor agency under Public Law 103-354 and other lenders
when the accounts are no longer required.
(5) Income from the sale of security or Economic Opportunity (EO)
property or the proceeds from insurance on such property will be
deposited in a supervised bank account under Form FmHA or its successor
agency under Public Law 103-354 402-1 when the District Director or
County Supervisor determines it is needed as defined in paragraph (a)(6)
of this section to assure that the funds will be available for
replacement of the property.
(6) When it is determined by the County Supervisor and requested or
agreed to by the borrower that special supervision is needed in the
management of the borrower's financial affairs, funds may be deposited
in a supervised bank account. This supervisory technique will be used
for a temporary period to help the borrower learn to properly manage
his/her financial affairs. Such a period will not exceed one year unless
extended by the District Director.
(7) In exceptional cases when the unincorporated EO cooperative or
grazing association borrower cannot obtain a position fidelity bond, its
income may be deposited as provided for in Sec. 1902.6 (and
Sec. 1902.2(f) of this subpart if another lender is involved).
[[Page 62]]
(b) For all construction loans and those loans using multiple
advances, only the actual amount to be disbursed at loan closing will be
requested through the State Office terminal. Subsequent checks will be
ordered as needed through the ADPS system.
(c) Program instructions provide information as to the type of note
to be utilized and the method of handling advances and the interest
accrued thereon. For individual loan programs, interest will accrue from
the loan closing date or date of check whichever is later. For
association and organization type loans interest will accrue from the
date the check is delivered to the borrower. For all RRH, RCH, LH or RHS
loans, interest will accrue from the date of the check.
(d) For all loan accounts, when the total amount has not been
advanced at the amortization effective date, as defined in the FMI for
Form FmHA or its successor agency under Public Law 103-354 1940-1, (and
Form FmHA or its successor agency under Public Law 103-354 1944-51, for
multiple family housing), the Finance Office will forward the remaining
balance to the District Director or County Supervisor for appropriate
action, unless the District Director or County Supervisor notifies the
Finance Office of other arrangements.
(e) When a check cannot be negotiated within 20 working days from
the date of the check, the District Director or County Supervisor will
process the check(s) with Form(s) FmHA or its successor agency under
Public Law 103-354 1940-10, ``Cancellation of U.S. Treasury Check and/or
Obligation,'' (or Form FmHA or its successor agency under Public Law
103-354 1944-53, ``Multiple Family Housing Cancellation of U.S. Treasury
Check and/or Obligation,'' for multiple family housing loans) in
accordance with FmHA or its successor agency under Public Law 103-354
Instruction 2018-D (available in any FmHA or its successor agency under
Public Law 103-354 office).
(f) The debt instruments executed at the time of loan closing
constitute an obligation on the part of the Government to disburse all
funds at one time or in multiple advances provided the funds are for
purposes authorized by the Government at the time of loan closing. This
obligatory commitment takes priority over any intervening liens or
advances by other creditors regardless of the provisions of the State
laws involved.
[46 FR 36106, July 14, 1981, as amended at 50 FR 8584, Mar. 4, 1985; 53
FR 35670, Sept. 14, 1988; 54 FR 47959, Nov. 20, 1989; 55 FR 21524, May
25, 1990; 59 FR 54788, Nov. 2, 1994]
Sec. 1902.3 Procedures to follow in fund disbursement.
(a) The District Director or County Supervisor will determine during
loan approval the amount(s) of loan check(s)--full or partial--and
forward such request to be processed through the ADPS system.
(b) When check(s) are delivered to the District or County Office,
the District Director or County Supervisor will make sure that the name
of the borrower and the amount(s) of check(s) coincide with the request
on file. The District Director or County Supervisor should be sure that
the check is properly endorsed to insure payment to the intended
recipient. Examples of such restrictive endorsements are:
(1) ``For Deposit only to Account No. (Number of Construction
Account) of (Name of Borrower) in (Name of Financial Institution).''
(2) ``Pay to the order of (3rd party payee)''--(Contractor,
Developer, Sub-Contractor, Building Supply House, etc.) for the purpose
of ----------.
(c) When necessary and only under the circumstances listed in
Sec. 1902.2 the District Director or County Supervisor will establish,
or cause to be established, a supervised bank account. Funds deposited
in a supervised bank account are to be recorded and accounted for on
Form FmHA or its successor agency under Public Law 103-354 402.2,
``Statement of Deposits and Withdrawals.''
[46 FR 36106, July 14, 1981, as amended at 53 FR 26588, July 14, 1988;
53 FR 35670, Sept. 14, 1988; 54 FR 39727, Sept. 28, 1989]
Sec. 1902.4 Establishing MFH reserve accounts in a supervised bank account.
(a) General requirements. All MFH borrowers required to maintain
reserve accounts must place the reserve accounts
[[Page 63]]
in a supervised bank account(s) which meets the following requirements:
(1) Countersignature requirements. The reserve account must require
that any funds withdrawn be countersigned by an authorized FmHA or its
successor agency under Public Law 103-354 official.
(2) Restrictions on collateral. The financial institution holding
the reserve account must ensure that the funds are not pledged or taken
as security without the Agency's prior consent.
(3) Interest bearing. The reserve account funds are encouraged to be
maintained in an interest-bearing account. The ``Interest-Bearing
Deposit Agreement'' set out in Exhibit B of this subpart is not required
to be used for reserve accounts.
(4) Restricted investments. Reserve funds must be placed in
investments authorized in subpart C of part 1930 of this chapter. The
authorized investments are deemed to be of acceptable risk such that the
potential for any loss is minimal.
(5) Financial institutions. The reserve account must be maintained
in authorized financial institutions set out in subpart C of part 1930
of this chapter (e.g., banks, savings and loan institutions, credit
unions, brokerage firms, mutual funds, etc.). Generally, any financial
institution may be used provided invested or deposited funds are insured
to protect against theft and dishonesty. The reserve account funds need
not be Federally insured. However, if Federally insured, any amount held
above the Federal insurance ceilings established must be backed by a
pledge of collateral from the financial institution, or otherwise
covered by non-federal insurance against theft and dishonesty.
(6) Rules where multiple projects are involved. A reserve account(s)
must be maintained for each borrower. When a borrower owns multiple
projects, reserve accounts may be established for each project. A single
reserve account may also be established by a borrower owning multiple
projects, provided the conditions set out in subpart C of part 1930 of
this chapter are met.
(7) Term. Reserve accounts are expected to be kept for the full term
of the loan.
(b) Deposits and account activity statements.--(1) Deposits.
Generally, the FmHA or its successor agency under Public Law 103-354
will not require the review or approval of deposits or the use of Forms
FmHA or its successor agency under Public Law 103-354 402-1 or FmHA or
its successor agency under Public Law 103-354 402-2.
(2) Account activity statements. Generally, the FmHA or its
successor agency under Public Law 103-354 will not monitor or reconcile
the reserve account activity statements issued periodically by the
financial institutions holding the funds. FmHA or its successor agency
under Public Law 103-354 will monitor reserve account levels through
budget reports, audits, and Agency reserve tracking systems. If disputes
arise or the borrower is in violation of Agency regulations, the Agency
may require account activity statements. When account activity
statements are sought, it will normally be sufficient to obtain the
statement which reflects balances as of the last activity statement
ending period. Form FmHA or its successor agency under Public Law 103-
354 402-2 is not required to be used.
[59 FR 3778, Jan. 27, 1994]
Sec. 1902.5 [Reserved]
Sec. 1902.6 Establishing supervised bank accounts.
(a) Each borrower will be given an opportunity to choose the
financial institution in which the supervised bank account will be
established, provided the bank is a member of the FDIC, the savings and
loan is a member of the FSLIC, and the credit union is a member of the
NCUA.
(b) When accounts are established, it should be determined that:
(1) The financial institution is fully informed concerning the
provisions of the applicable deposit agreement,
(2) Agreements are reached with respect to the services to be
provided by the financial institution including the frequency and method
of transmittal of checking account statements, and
(3) Agreement is reached with the financial institution regarding
the place where the counter-signature will be on checks.
[[Page 64]]
(c) When possible, District Directors or County Supervisors will
make arrangements with financial institutions to waive service charges
in connection with supervised bank accounts. However, there is no
objection to the payment by the borrower of a reasonable charge for such
service.
(d) For each borrower, if the amounts of any loan and grant funds,
plus any borrower contributions and funds from other sources to be
deposited in the supervised bank account will exceed $100,000, the
financial institution will be required to pledge collateral for the
excess over $100,000, before the deposit is made (see Sec. 1902.7).
(e) Only one supervised bank account will be established for any
borrower regardless of the amount or source of funds, except for RRH
loans where separate accounts will be established for each project.
(f) When a supervised bank account is established, an original and
two copies of the applicable Deposit Agreement and the Interest-Bearing
Deposit Agreement (Exhibit B), when applicable, will be executed by the
borrower, the financial institution, and a District or County Office
employee. The original will be retained in the borrower's case file, one
executed copy will be delivered to the financial institution and one
executed copy to the borrower. An extra copy of the Interest-Bearing
Deposit Agreement, when applicable, will be prepared and attached to the
certificate, passbook, or other evidence of deposit representing the
interest-bearing deposit.
(1) If an agreement on the applicable Deposit Agreement has
previously been executed and Form FmHA or its successor agency under
Public Law 103-354 402-6, ``Termination of Interest in Supervised Bank
Account,'' has not been executed with respect to it, a new agreement is
not required when additional funds are to be deposited unless requested
by the financial institution.
(2) When the note and security instrument are signed by two joint
borrowers or by both husband and wife, a joint survivorship supervised
bank account will be established from which either can withdraw funds if
State laws permit such accounts. In such cases both parties will sign
the Deposit Agreement(s).
[46 FR 36106, July 14, 1981, as amended at 53 FR 231, Jan. 6, 1988]
Sec. 1902.7 Pledging collateral for deposit of funds in supervised bank accounts.
(a) Funds in excess of $100,000, per financial institution,
deposited for borrowers in supervised bank accounts, must be secured by
pledging acceptable collateral with the Federal Reserve Bank (FRB) in an
amount not less than the excess.
(b) As soon as it is determined that the loan will be approved and
the applicant has selected or tentatively selected a financial
institution for the supervised bank account, the District Director or
County Supervisor will contact the financial institution to determine:
(1) That the financial institution selected is insured by the FDIC
(banks), FSLIC (savings and loans), or NCUA (credit unions).
(2) Whether the financial institution is willing to pledge
collateral with the FRB under 31 CFR part 202 (Treasury Circular 176) to
the extent necessary to secure the amount of funds being deposited in
excess of $100,000.
(3) If the financial institution is not a member of the Federal
Reserve System, it will be necessary for the financial institution to
pledge the securities with a correspondent bank who is a member of the
System. The correspondent bank should contact the FRB informing them
they are holding securities pledged for the supervised bank account
under 31 CFR part 202 (Treasury Circular 176).
(c) If the financial institution is agreeable to pledging
collateral, the District Director or County Supervisor should complete
FmHA or its successor agency under Public Law 103-354 Form Letter 1901-
A-2 ``Designated Financial Institution--Collateral Pledge'' in an
original and two copies, the original for the National Office, the first
copy for the State Office, and the second copy for the District or
County Office. The FmHA or its successor agency under Public Law 103-354
Form Letter
[[Page 65]]
1902-A-2 should be forwarded to the National Office at least 30 days
before the date of loan closing.
(d) The National Office will arrange for the financial institution
under its designation as a depositary and financial agent of the U.S.
Government to pledge the requested collateral.
(e) If, two days before loan closing, the local FmHA or its
successor agency under Public Law 103-354 office which requested the
collateral has not received notification from National Office that
collateral has been pledged, contact should be made with the financial
institution to ascertain whether they have pledged collateral with their
local FRB under 31 CFR part 202 (Treasury Circular 176). If the
financial institution has pledged collateral, the local FmHA or its
successor agency under Public Law 103-354 office should contact the
National Office, Budget Division, Revolving Fund Analysis Branch who
will follow-up with the local FRB concerning the collateral.
(f) When the amount of deposit in the supervised bank account has
been reduced to a point where the financial institution desires part or
all of the collateral released, it should contact the National Office at
the address noted above. The local FmHA or its successor agency under
Public Law 103-354 office will be contacted for release authorization.
The authorization release will be made through the local FRB, with
notification to the financial institution. The local FmHA or its
successor agency under Public Law 103-354 office may also request
release through the National Office.
[46 FR 36106, July 14, 1981, as amended at 53 FR 231, Jan. 6, 1988; 53
FR 24437, June 29, 1988; 56 FR 50648, Oct. 8, 1991]
Sec. 1902.8 Authority to establish supervised bank accounts, deposit loan checks and other funds, countersign checks, close accounts, and execute all forms in
connection with supervised bank account transactions.
District Directors or County Supervisors are authorized to establish
supervised bank accounts, deposit loan checks and other funds,
countersign checks, close accounts, and execute all forms in connection
with supervised bank account transactions and redelegate this authority
to a person listed in Exhibit B of FmHA or its successor agency under
Public Law 103-354 Instruction 1951-B, under their supervision who are
considered capable of exercising such authority. State Directors will
make written demand upon the bank for withdrawals as outlined in
Sec. 1902.16.
Sec. 1902.9 Deposits.
(a) Deposit by FmHA or its successor agency under Public Law 103-354
personnel. (1) Checks made payable solely to the Federal Government, or
any agency thereof, and a joint check when the Treasurer of the United
States is a joint payee, may not be deposited in a supervised bank
account.
(2) FmHA or its successor agency under Public Law 103-354 personnel
will accept funds for deposit in a borrower's supervised bank account
only in the form of a check or money order endorsed by the borrower
``For Deposit Only,'' or a check drawn to the order of the financial
institution in which the funds are to be deposited, or a loan check
drawn on the U.S. Treasury.
(i) A joint check that is payable to the borrower and FmHA or its
successor agency under Public Law 103-354 will be endorsed by the
District Director or County Supervisor as provided in Sec. 1951.57(e) of
this chapter.
(ii) Ordinarily, when deposits are made from funds which are
received as the result of consent or subordination agreements or
assignments of income, the check should be drawn to the order of the
financial institution in which the supervised bank account is
established or jointly to the order of the borrower and the FmHA or its
successor agency under Public Law 103-354. All such checks should be
delivered or mailed to the District or County Office.
(3) If direct or insured loan funds (other than OL or EM, loan
funds) or borrower contributions are to be deposited in a supervised
bank account, such funds will be deposited on the date of loan closing
after it has been determined that the loan can be closed. However, if it
is impossible to deposit the funds on the day the loan is closed due to
reasons such as distance from the financial institution or banking
hours, the funds will be deposited on the first
[[Page 66]]
banking day following the date of loan closing.
(4) Grant funds will be deposited when such funds are delivered.
(5) When funds from any source are deposited by FmHA or its
successor agency under Public Law 103-354 personnel in a supervised bank
account, a deposit slip will be prepared in an original and two copies
and distribution as follows: Original to the financial institution, one
copy to the borrower, and one copy for the borrower's case folder. The
names of the borrower, the sources of funds, and ``Subject to FmHA or
its successor agency under Public Law 103-354 Countersignature,'' and if
applicable, the account number will be entered on each deposit slip.
(6) A loan or grant check drawn on the U.S. Treasury may be
deposited in a supervised bank account without endorsement by the
borrower when it will facilitate delivery of the check and is acceptable
to the financial institution. The borrower will be notified immediately
of any deposit made and will be furnished a copy of the deposit slip.
When a deposit of this nature is made, the following endorsement will be
used:
For deposit only in the supervised bank account of (name of
borrower) in the (name of financial institution and address when
necessary for identification) pursuant to Deposit Agreement dated ------
----.
(7) Accounts established through the use of Interest-Bearing Deposit
Agreement will be in the name of the depositor and the Government.
(b) Deposits by borrowers. Funds in any form may be deposited in the
supervised bank account by the borrower if authorized by FmHA or its
successor agency under Public Law 103-354 provided the financial
institution has agreed that when a deposit in made to the account by
other than FmHA or its successor agency under Public Law 103-354
personnel, the financial institution will promptly deliver or mail a
copy of the deposit slip to the FmHA or its successor agency under
Public Law 103-354 District or County Office.
(1) A loan or grant check drawn on the U.S. Treasury may be
deposited in a supervised bank account by a borrower, provided the
following endorsement is used and is inserted thereon prior to delivery
to the borrower for signature:
For deposit only in my supervised bank account in the (name of
financial institution and address when necessary for identification)
pursuant to Deposit Agreement dated ----------.
(2) Funds other than loan or grant funds may be deposited by the
borrower in those exceptional instances where an agreement is reached
between the District Director or County Supervisor and the borrower,
whereby the borrower will make deposits of income from any source
directly into the supervised bank account. In such instances the
borrower will be instructed to prepare the deposit slip in the manner
described in Sec. 1902.9 (a)(5).
Sec. 1902.10 Withdrawals.
(a) The District Director or County Supervisor will not countersign
checks on the supervised bank account for the use of funds unless the
funds deposited by the borrower from other sources were cash deposits,
or checks which the District Director or County Supervisor knows to be
good, or until the deposit checks have cleared.
(b) Withdrawals of funds deposited under the applicable deposit
agreement are permitted only by order of the borrower and
countersignature of authorized FmHA or its successor agency under Public
Law 103-354 personnel, or upon written demand on the financial
institution by the State Director.
(c) Upon withdrawal or maturity of interest-bearing accounts
established through the use of an Interest-Bearing Deposit Agreement,
such funds will be credited to the supervised bank account established
through the use of Form FmHA or its successor agency under Public Law
103-354 402-1.
(d) The issuance of checks on the supervised bank account will be
kept to the minimum possible without defeating the purpose of such
accounts. When major items of capital goods are being purchased, or a
limited number of relatively costly items of operating expenses are
being paid, or when debts are being refinanced, the checks will be drawn
to the vendors or creditors. If minor capital items are being purchased
or numerous items of operating and family living expenses are involved
[[Page 67]]
as in connection with a monthly budget, a check may be drawn to the
borrower to provide the funds to meet such costs.
(1) A check will be issued payable to the appropriate payee but will
never be issued to ``cash.'' The purpose of the expenditure will be
clearly shown on Form FmHA or its successor agency under Public Law 103-
354 402-2 and indicated on the fact of the check. When checks are drawn
in favor of the borrower to cover items too numerous to identify, the
expenditure will be identified on the check, as ``miscellaneous.''
(2) Normally, OL and EM loan funds will not be withdrawn from the
supervised bank account until the lien search has been made and a
determination reached that the required security has been obtained. This
applies also to withdrawal of funds in secured individual loan cases.
However, in those instances when the applicant is unable to pay for the
lien search and filing fees from personal funds, a check for this
purpose may be drawn on the supervised bank account to meet these loan
making requirements.
(3) Ordinarily, a check will be countersigned before it is delivered
to the payee. However, in justifiable circumstances such as when
excessive travel on the part of the borrower, District Director of
County Supervisor would be involved, or purchase would be prevented, and
the borrower can be relied upon to select goods and services in
accordance with the plans, a check may be delivered to the payee by the
borrower before being countersigned.
(i) When a check is to be delivered to the payee before being
countersigned, the District Director or County Supervisor must make it
clear to the borrower and to the payee, if possible, that the check will
be countersigned only if the quantity and quality of items purchased are
in accordance with approved plans.
(ii) Checks delivered to the payee before countersignature will bear
the following legend in addition to the legend for countersignature:
``Valid only upon countersignature of Farmers Home Administration or its
successor agency under Public Law 103-354.''
(iii) The check must be presented by the payee or a representative
to the District or County Office of the FmHA or its successor agency
under Public Law 103-354 servicing the account for the required
countersignature.
(iv) Such check must be accompanied by a bill of sale, invoice, or
receipt signed by the borrower identifying the nature and cost of goods
or services purchased or similar information must be indicated on the
check.
(4) For real estate loans or grants, whether the check is delivered
to the payee before or after countersignature, the number, and date of
the check will be inserted on all bills of sale, invoices, receipts, and
itemized statements for materials, equipment, and services.
(5) Bills of sale, and so forth, may be returned to the borrower
with the canceled check for the payment of the bill.
(6) Checks to be drawn on a supervised bank account will bear the
legend:
Countersigned, not as co-maker or endorser.
_______________________________________________________________________
(Title)
_______________________________________________________________________
Farmers Home Administration or its successor agency under Public Law
103-354
[46 FR 36106, July 14, 1981, as amended at 54 FR 47959, Nov. 20, 1989]
Sec. 1902.11 District and county office records.
A record of funds deposited in a supervised bank account will be
maintained on Form FmHA or its successor agency under Public Law 103-354
402-2 in accordance with the FMI. The record of funds provided for
operating purposes by another creditor or grantor will be on a separate
Form FmHA or its successor agency under Public Law 103-354 402-2 so that
they can be clearly identified.
[46 FR 36106, July 14, 1981, as amended at 51 FR 12308, Apr. 10, 1986]
Secs. 1902.12--1902.13 [Reserved]
Sec. 1902.14 Reconciliation of accounts.
(a) A checking account statement will be obtained periodically in
accordance with established practices in the area. If the checking
account statement does not include sufficient information to reconcile
the account (the name of the payee or the check number
[[Page 68]]
and the amount of each check, i.e., a negotiable demand draft drawn on a
financial institution), the original cancelled check or either a
microfilm copy or other reasonable facsimile of the cancelled check must
be provided to the District or County Office with the statement.
Checking account statements will be reconciled promptly with District or
County Office records. The person making the reconciliation will initial
the record and indicate the date of the action.
(b) All checking account statements and, if necessary, original
cancelled checks or either a microfilm copy or other reasonable
fascimile of the cancelled checks will be forwarded immediately to the
borrower when bank statements and District or County Office records are
in agreement. If a transmittal is used, Form FmHA or its successor
agency under Public Law 103-354 140-4, ``Transmittal of Documents,'' is
prescribed for that purpose.
(c) If the Financial Institution did not return the original
cancelled check(s) to the Agency with the statements, and FmHA or its
successor agency under Public Law 103-354 has a need for the original
cancelled check(s) the Financial Institution, upon request by the
Agency, will furnish to the Agency the requested original cancelled
check(s) or a certified microfilmed copy or other reasonable certified
facsimile of the cancelled check(s) and will provide this service to the
Farmers Home Administration or its successor agency under Public Law
103-354 with no fees being assessed the Agency or the Depositor's
account for the service.
[53 FR 35671, Sept. 14, 1988, as amended at 55 FR 21524, May 25, 1990]
Sec. 1902.15 Closing accounts.
When FmHA or its successor agency under Public Law 103-354 loan or
grant funds and those of any other lender or grantor have all been
properly expended or withdrawn, Form FmHA or its successor agency under
Public Law 103-354 402-6 may be used to give FmHA or its successor
agency under Public Law 103-354's consent (and of another lender or
grantor, if involved) to close the supervised bank account in the
following situations:
(a) When FmHA or its successor agency under Public Law 103-354 loan
funds in the supervised bank account of a borrower have been reduced to
$100 or less, and a check for the unexpended balance has been issued to
the borrower to be used for authorized purposes.
(b) For all loans accounts, except loans listed in Sec. 1902.15(c)
of this section, after completion of authorized loan funds expenditures,
and after promptly refunding any remaining unexpended loan funds on the
borrower's loan account with FmHA or its successor agency under Public
Law 103-354 or another lender, as appropriate.
(c) For Community Facility, Water and Waste Disposal, Indian Land
Acquisition, Watershed (WS), Organizational Rural Rental Housing (RRH),
Resource Conservation and Development (RCD), EO loans to a Cooperative
Association, Rural Cooperative Housing (RCH), or Organizational Labor
Housing (LH) loan and grant accounts, when the funds have been expended
in accordance with the requirements of part 1942 subpart A, the
supervised bank account will be closed within 90 days following
completion of development, unless an extension of time is authorized in
writing by the District Director. If the borrower will not agree to
close the account, the District Director or County Supervisor will
request the State Director to make demand upon the financial institution
in accordance with Sec. 1902.16.
(d) Promptly upon death of a borrower, except when the loan is being
continued with a joint debtor, when a borrower is in default and it is
determined that no further assistance will be given, or when a borrower
is no longer classified as ``active.''
(1) Deceased borrowers. (i) Ordinarily, upon notice of the death of
a borrower, the District Director or the County Supervisor will request
the State Director to make demand upon the bank for the balance on
deposit and apply all the balance after payment of any bank charges to
the borrower's FmHA or its successor agency under Public Law 103-354
indebtedness. When the State Director approves continuation with a
survivor, the supervised bank account of deceased borrower may be
continued
[[Page 69]]
with a remaining joint debtor who is liable for the loan and agrees to
use the unexpended funds as planned, provided:
(A) The account is a joint survivorship supervised bank account, or
(B) If not a joint survivorship account, the financial institution
will agree to permit the addition of the surviving joint debtor's name
to the existing signature card and the appropriate Deposit Agreement and
continue to disburse checks out of the existing account upon FmHA or its
successor agency under Public Law 103-354's countersignature and the
joint debtor's signature in place of the deceased borrower, or
(C) The financial institution will permit the State Director to
withdraw the balance from the existing supervised bank account with a
check jointly payable to the FmHA or its successor agency under Public
Law 103-354 and the surviving joint debtor and deposit the money in a
new supervised bank account with a surviving joint debtor, and will
disburse checks from this new account upon the signature of such
survivor and the countersignature of an authorized FmHA or its successor
agency under Public Law 103-354 official.
(ii) The State Director, before applying the balance remaining in
the supervised bank account to the FmHA or its successor agency under
Public Law 103-354 indebtedness, is authorized upon approval by the
Office of the General Counsel (OGC) to refund any unobligated balances
of funds from other lenders to the FmHA or its successor agency under
Public Law 103-354 borrower for specific operating purposes in
accordance with subordination agreements or other arrangements between
the FmHA or its successor agency under Public Law 103-354, the lender
and the borrower.
(iii) The State Director, upon the recommendation of an authorized
representative of the estate of the deceased borrower and the approval
of the OGC, is authorized to approve the use of deposited funds for the
payment of commitments for goods delivered or services performed in
accordance with the deceased borrower's plans approved by FmHA or its
successor agency under Public Law 103-354.
(2) Borrowers in default. Whenever it is impossible or impractical
to obtain a signed check from a borrower whose supervised bank account
is to be closed, the District Director or County Supervisor will request
the State Director to make demand upon the financial institution for the
balance on deposit in the borrower's supervised bank account for
application as appropriate:
(i) To the borrower's FmHA or its successor agency under Public Law
103-354 indebtedness, or
(ii) As refunds of any unobligated advance provided by other lenders
which were deposited in the account, or
(iii) For the return of FmHA or its successor agency under Public
Law 103-354 grant funds to the FmHA or its successor agency under Public
Law 103-354 Finance Office, or
(iv) For the return of grant funds to other grantors.
(3) Inactive borrowers. An inactive borrower is one whose loan has
not been paid in full, but is no longer classified as ``active.''
(4) Paid up borrowers. A paid-up borrower is one who has a balance
remaining in the supervised bank account and has repaid the entire
indebtedness to FmHA or its successor agency under Public Law 103-354
and has properly expended all funds advanced by other lenders. In such
cases the District Director or County Supervisor will (i) notify the
borrower in writing that the interests in the account of FmHA or its
successor agency under Public Law 103-354 have been terminated, and (ii)
inform the borrower of the balance remaining in the supervised bank
account.
[46 FR 36106, July 14, 1981, as amended at 53 FR 231, Jan. 6, 1988; 54
FR 47196, Nov. 13, 1989]
Sec. 1902.16 Request for withdrawals by State Director.
When the State Director is requested to make written demand upon the
financial institution for the balance on deposit in the supervised bank
account, or any part thereof, the request will be accompanied by the
following information.
(a) Name of borrower as it appears on the applicable Deposit
Agreement.
(b) Name and location of financial institution.
[[Page 70]]
(c) Amount to be withdrawn for refund to another lender of any
balance that may remain of funds received by the borrower from such
lender as a loan or grant, or under a subordination agreement or other
arrangement between the FmHA or its successor agency under Public Law
103-354, the other lender, and the borrower.
(d) Amount to be withdrawn, excluding any service charges, for a
refund of FmHA or its successor agency under Public Law 103-354's.
(e) Other pertinent information including reasons for the
withdrawal.
Secs. 1902.17--1902.49 [Reserved]
Sec. 1902.50 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget and
have been assigned OMB control number 0575-0158. Public reporting burden
for this collection of information is estimated to vary from 5 minutes
to 1\1/2\ hours per response, with an average of 0.42 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, 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-
0158), Washington, DC 20503.
[59 FR 3778, Jan. 27, 1994]
Exhibits to Subpart A
Exhibit A--[Reserved]
Exhibit B--United States Department of Agriculture, Farmers Home
Administration or its successor agency under Public Law 103-354--
Interest-Bearing Deposit Agreement
BECAUSE certain funds of __________ referred to as the
``Depositor,'' are now on deposit with the __________, referred to as
the ``Financial Institution,'' under a Deposit Agreement, dated
__________, 19____, providing for supervision by the United States of
America, acting through the Farmers Home Administration or its successor
agency under Public Law 103-354, referred to as the ``Government,''
which Deposit Agreement grants to the Government security and/or other
interest in the funds covered by that Deposit Agreement, and
BECAUSE certain of these funds are not now required for immediate
disbursement and it is the desire of the Depositor to place these funds
in interest-bearing deposits with the Financial Institution:
THEREFORE, the Depositor and the Government authorize and direct the
Financial Institution to place ________ Dollars ($________ ) of the
funds subject to that Deposit Agreement in interest-bearing deposits as
follows:
$ ________ for a period of __________ months at __________ %
interest.
$ ________ for a period of __________ months at __________ %
interest.
$ ________ for a period of __________ months at __________ %
interest.
These interest-bearing deposits and the income earned on them at all
times shall be considered a part of the account covered by said Deposit
Agreement except that the right of the Depositor and the Government to
jointly withdraw all or a portion of the funds in the account covered by
the Deposit Agreement by an order of the Depositor countersigned by a
representative of the Government, and the right of the Government to
make written demand for the balance or any portion of the balance, is
modified by the above time deposit maturity schedule. The evidence of
such time deposits shall be issued in the names of the Depositor and the
Farmers Home Administration or its successor agency under Public Law
103-354.
A copy of this Agreement shall be attached to and become a part of
each certificate, passbook, or other evidence of deposit that may be
issued to represent such interest-bearing deposits.
Executed this ________ day of ________, 19____.
UNITED STATES OF AMERICA
By:_____________________________________________________________________
County Supervisor
Farmers Home Administration or its successor agency under Public Law
103-354
U.S. Department of Agriculture
_______________________________________________________________________
(Depositor)
By:_____________________________________________________________________
Title:__________________________________________________________________
Accepted on the above terms and conditions this ________ day of
________, 19____.
_______________________________________________________________________
(Financial Institution)
[[Page 71]]
_______________________________________________________________________
(Office or Branch)
By:_____________________________________________________________________
Title:__________________________________________________________________
[53 FR 35671, Sept. 14, 1988; 55 FR 21524, May 25, 1990]
Subpart B--[Reserved]
Subpart C--Selecting a Financial Institution for the Concentration
Banking System (CBS)
Secs. 1902.101--1902.103 [Reserved]
Sec. 1902.104 Establishing or changing a TLA.
(a) Establishing a TLA. (1) After an FI has been selected by the
FmHA or its successor agency under Public Law 103-354 field office, the
FmHA or its successor agency under Public Law 103-354 office will
provide the State Office with the name and address of the FI selected.
(2) The FmHA or its successor agency under Public Law 103-354 field
office must have the FI execute a MOU for CBS. Form FmHA or its
successor agency under Public Law 103-354 1902-7, will be completed when
the MOU is executed. The FmHA or its successor agency under Public Law
103-354 field office will complete item 1 and the FI will complete the
rest of the summary. Instructions for completing this form are in the
FMI. The FmHA or its successor agency under Public Law 103-354 field
office will forward three signed copies of the MOU together with the
original and two copies of Form FMHA 1902-7 to the State Office
coordinator. The State Office coordinator will check for the following
common errors before submitting to the: Cash Management Branch, FmHA or
its successor agency under Public Law 103-354 Finance Office, Mail Code
FC-354, 1520 Market Street, St. Louis, MO 63103.
(i) Check to see that the local bank has signed all copies of the
MOU and has affixed its seal next to the signature.
(ii) Check signature blocks to insure that the local FmHA or its
successor agency under Public Law 103-354 office has not signed in any
of the blocks provided for the local bank and Treasury. This agreement
is between the local bank and Treasury and FmHA or its successor agency
under Public Law 103-354 will not be a party to the agreement.
(iii) Do not allow the bank to cross out or change any clauses in
the MOU. Treasury will not accept modified agreements.
(iv) Do not allow the bank to retype the agreement as this would
require a word-for-word verification of the entire document to determine
whether anything had been changed.
(3) The Cash Management Branch will submit the MOU's to Treasury for
signature along with the original and one copy of Form FmHA or its
successor agency under Public Law 103-354 1902-7. Treasury will sign the
copies of the MOU, send one copy to the FI, one to the local FmHA or its
successor agency under Public Law 103-354 office, and keep one copy for
the files. Treasury will notify the Cash Management Branch if a MOU is
rejected.
(4) The local FmHA or its successor agency under Public Law 103-354
office must obtain selected information from the FI for funds transfer
purposes on CBS including information necessary to establish a
compensation account to receive ACH transfers from the concentrator
bank.
[53 FR 26588, July 14, 1988, as amended at 59 FR 54788, Nov. 2, 1994]
Secs. 1902.105--1902.149 [Reserved]
Sec. 1902.150 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 0575-0128.
[53 FR 26588, July 14, 1988]
PART 1904--LOAN AND GRANT PROGRAMS (INDIVIDUAL) [RESERVED]
PART 1910--GENERAL--Table of Contents
Subpart A--Receiving and Processing Applications
Sec.
1910.1 General.
[[Page 72]]
1910.2 Equal Credit Opportunity Act (ECOA) and Regulation B.
1910.3 Receiving applications.
1910.4 Processing applications.
1910.5 Evaluating applications.
1910.6-1910.9 [Reserved]
1910.10 Preference.
1910.11 Special requirements.
1910.12-1910.49 [Reserved]
1910.50 OMB control number.
Exhibits to Subpart A
Exhibit A--[Reserved]
Exhibit B--Letter to Notify Socially Disadvantaged Applicant(s)/
Borrower(s) Regarding the Availability of Direct Farm
Ownership (FO) Loans and the Acquisition/Leasing of FmHA or
Its Successor Agency Under Public Law 103-354 Acquired
Farmland
Exhibit C--Letter to Notify Applicant(s)/Borrower(s) of Their
Responsibilities in Connection With FmHA or its successor
agency under Public Law 103-354 Farmer Program Loans [Note]
Subpart B--Credit Reports (Individual)
1910.51 Purpose.
1910.52 [Reserved]
1910.53 Policy.
1910.54-1910.100 [Reserved]
[[Page 73]]
Subpart C--Commercial Credit Reports
1910.101 Preface.
1910.102-1910.150 [Reserved]
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
Source: 43 FR 56643, Dec. 4, 1978, unless otherwise noted.
Subpart A--Receiving and Processing Applications
Source: 53 FR 35671, Sept. 14, 1988, unless otherwise noted.
Sec. 1910.1 General.
This subpart prescribes the policies and procedures for informing
interested parties of the Farm Credit loan programs available through
the Farm Service Agency (FSA), and how such requests are processed.
Requests for Nonprogram (NP) assistance will be handled in accordance
with subpart J of part 1951 of this chapter. References contained herein
to the housing programs of the Rural Housing Service (RHS), or its
successor agency, are no longer applicable.
(a) The County Supervisor will provide information about FSA and RHS
services to all persons making inquiry about FSA and RHS programs. This
information may be provided by individual interviews, correspondence, or
distribution of pamphlets, leaflets, and appropriate FSA and RHS
regulations. When a presently indebted farmer program borrower, whose
account is delinquent, inquires about an OL loan, the County Supervisor
will inform the borrower of the availability of annual production loans
to delinquent borrowers, as outlined in Sec. 1941.14 of subpart A of
part 1941 of this chapter.
(b) Wherever the term ``applicant'' appears in this subpart, it
shall be construed to mean applicant and/or co-applicant, if any.
(c) FmHA forms are available in any Rural Development (RD) or FSA
office.
(d) The terms ``interest credit'' and ''interest credit
assistance,'' as they relate to Single Family Housing (SFH), are
interchangeable with the term ``payment assistance.'' Payment assistance
is the generic term for the subsidy provided to eligible SFH borrowers
to reduce mortgage payments.
(e) As used in this subpart in relation to Farm Credit Programs
loans, Agency means the Farm Service Agency, its county and State
committees and their personnel, and any successor agency.
[53 FR 35671, Sept. 14, 1988, as amended at 55 FR 21524, May 25, 1990;
55 FR 29560, July 20, 1990; 56 FR 66959, Dec. 27, 1991; 58 FR 44263,
Aug. 20, 1993; 58 FR 52646, Oct. 12, 1993; 60 FR 55122, Oct. 27, 1995;
61 FR 35919, July 9, 1996; 61 FR 59777, Nov. 22, 1996]
Sec. 1910.2 Equal Credit Opportunity Act (ECOA) and Regulation B.
ECOA as amended, prohibits discrimination in credit based on sex,
marital status, race, color, religion, natural origin, age (provided the
applicant has the capacity to contract), because all or part of the
applicant's income is derived from public assistance of any kind, or
because the applicant has, in good faith, exercised any right under the
Consumer Credit Protection Act. These shall hereafter be referred to in
this subpart as ``ECOA prohibited bases.'' It is the policy of the
Farmers Home Administration or its successor agency under Public Law
103-354 that 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, receipt of income from public assistance, or
because the applicant has, in good faith, exercised any right under the
Consumer Credit Protection Act.
Sec. 1910.3 Receiving applications.
Applications for FSA or RHS assistance will ordinarily be filed in
the County Office serving the area in which the farm, dwelling,
business, or other facility for which financing is being requested is or
will be located.
(a) All persons applying for FSA or RHS assistance who are not
indebted to FSA or RHS must file a written application. All persons
wishing to submit an application will be encouraged to do so. No oral or
written statement will be made to applicants or prospective applicants
that would discourage them from applying for assistance, based on any
ECOA ``prohibited bases.''
[[Page 74]]
The filing of written applications will be encouraged even though funds
may not be currently available, since complete applications must be
considered in the date order received, except when program regulations
or Veteran status provides for preference. Applications will normally be
handled as follows:
(1) Form FmHA 410-4, ``Application for Rural Housing Assistance
(NonFarm Tract),'' will be used by applicants for RH loans on nonfarm
tracts who depend primarily on off-farm income.
(2) Form FmHA 410-1, ``Application for FmHA Services,'' will be used
by all other applicants. These include persons applying for RH loans on
farms or nonfarm tracts who derive a major portion of their income from
farming. For EM loans, it is also necessary for the applicant to
complete Form FmHA 1945-22, ``Certification of Disaster Losses.''
(3) SF 424.2, ``Application for Federal Assistance (For
Construction),'' with the requirements outlined in the applicable
program exhibits will be used by all applicants applying for LH loans.
(4) The Right to Financial Privacy Act of 1978, Title XI of Pub. L.
95-630, requires that:
(i) Except as specified in paragraph (a)(4)(ii) of this section,
within 3 days of the receipt of an application for a loan or grant from
an individual or a partnership of five or fewer members, the RD office
will forward Form FmHA 410-7, ``Notification to Applicant on Use of
Financial Information from Financial Institution,'' to those applicants.
(ii) For a labor housing application filed by an individual or a
partnership of five or fewer members, the RD office will comply with
paragraph (a)(4)(i) of this section only if it is determined that
financial information will be requested from any financial institution.
(5) All individual loan applicants will sign Form FmHA or its
successor agency under Public Law 103-354 410-9, ``Statement Required by
the Privacy Act.'' A signed copy will remain with the application. No
application is complete without a signed Form FmHA or its successor
agency under Public Law 103-354 410-9 on file.
(6) Information regarding race, national origin, sex, and marital
status is needed for monitoring purposes for all applications filed for
assistance to finance residential real estate and direct FO loans when
the loan is to be secured by a lien on the property. In those cases,
FmHA or its successor agency under Public Law 103-354 will request the
applicant and/or co-applicant to furnish that information on the
application on a voluntary basis. The application form will indicate
that this information is provided on a voluntary basis.
(7) Applicants are asked to identify any known relationship or
association with an FmHA or its successor agency under Public Law 103-
354 employee when completing the application. When there is a
relationship or association, the processing official must complete the
action required under subpart D of part 1900 of this chapter.
(b) Requests by FmHA or its successor agency under Public Law 103-
354 borrowers for additional assistance will be submitted as prescribed
by each loan/grant program, and the following:
(1) All applicants must provide their taxpayer's identification
number with their applications, except as noted in paragraph (i) of this
section.
(2) RH applicants who have a current Form FmHA or its successor
agency under Public Law 103-354 1944--3, ``Budget and/or Financial
Statement'', or Form FmHA or its successor agency under Public Law 103-
354 410-4, and who are presently indebted to FmHA or its successor
agency under Public Law 103-354, will be required to complete only the
following items of Form FmHA or its successor agency under Public Law
103-354 410-4 (if other information about their current status is not
available for adequate processing of their applications, these
applicants should fully complete Form FmHA or its successor agency under
Public Law 103-354 410-4):
(i) Name.
(ii) Social Security Number.
(iii) Loan purpose.
(iv) Planned income for next 12 months.
(v) Date and signature of the application.
(3) Farmer Program applicants who are presently indebted to FmHA or
its successor agency under Public Law 103-
[[Page 75]]
354 will be required to complete Form FmHA or its successor agency under
Public Law 103-354 410-1. When application is made within 60 days of the
date of Table A, ``Balance sheet,'' on Form FmHA or its successor agency
under Public Law 103-354 431-2, ``Farm and Home Plan,'' and there are no
significant changes that would affect eligibility, reference to Table A
of Form FmHA or its successor agency under Public Law 103-354 431-2 can
be made in Item 17, ``Financial Statement as of Date of Application,''
of Form FmHA or its successor agency under Public Law 103-354 410-1.
(4) Applicants for EM loans with new losses from disaster, as
authorized under EM regulations, must also complete Form FmHA or its
successor agency under Public Law 103-354 1945-22 in addition to the
other required forms.
(c) County Office employees will be responsible for receiving loan
applications and giving a preliminary explanation of services available
through FmHA or its successor agency under Public Law 103-354. An
explanation of the types of assistance available should be given
whenever it is not clear to the applicant what type of loan or grant
will meet the applicant's needs. When a presently indebted farmer
program borrower, whose account is delinquent, applies for OL
assistance, County Office employees will inform the borrower of the
availability of annual production loans to delinquent borrowers, as
outlined in Sec. 1941.14 of subpart A of part 1941 of this chapter. The
employee receiving the application will make sure that it is properly
completed, dated and signed, and will give whatever assistance is
necessary. An applicant may apply for and maintain a loan account using
a birth-given first name and a birth-given surname, or the spouse's
surname, or a combination of surnames. Married persons may apply as
individuals. In the case of a joint application for other than a farmer
program loan, the persons requesting the assistance will designate who
is listed as ``applicant'' and who is listed as ``co-applicant.'' For
farmer program loans, there will be only one applicant. If a husband and
wife insist on applying as co-applicants for a farmer program loan and
the farming operation is a sole proprietorship, they will be considered
a joint operation type entity as set out in FmHA or its successor agency
under Public Law 103-354 loan making regulations and they both will have
to meet the eligibility requirements applicable to the joint operation.
County Office employees must explain to husbands and wives that they
both do not need to apply for farmer program loans unless they desire to
do so or the application is for an entity operation. If they apply
together for a loan, it must be explained that they will be considered
as a joint operation. When the use of veteran's preference is involved,
the identity of the veteran must be properly documented if the name used
in the application differs from that shown on the veteran's evidence of
eligibility.
(d) Information will be obtained about household members or others,
including cosigners, as required by program regulations needed to
determine eligibility for the requested assistance. A cosigner will be
required only when it has been determined that the applicant cannot
possibly meet the repayment or the security requirements for the loan
request. When a co-signer will be required, the applicant will be
requested to identify their choice of co-signer. An applicant will also
be required to provide information concerning a co-signer, spouse or
former spouse, who will not be a co-signer, or who is not a member of
the household, when the applicant is relying on the co-signer, alimony,
child support, separate maintenance from that spouse or former spouse as
a basis for repayment, or receipt of such payments will be considered
for eligibility. In such cases, information regarding the co-signer's,
spouse's or former spouse's financial resources may be requested. Only
information regarding the receipt and dependability of income from
alimony, child support, or separate maintenance, provided by a former
spouse, may be requested, considered, and verified to determine
eligibility and repayment ability.
(e) Signature requirements on the Promissory Note will be as needed
to assure repayment of the indebtedness and as set out in the loan
making regulations. The spouse of an applicant will
[[Page 76]]
not be required to sign the note unless the spouse's signature on the
note is required to create a security interest or the spouse is a co-
applicant. Signature requirements on the Mortgage or Deed of Trust will
be sufficient to obtain the required lien, and to make the property
being offered as security available to satisfy the debt in the event of
default. FmHA or its successor agency under Public Law 103-354 State
supplements will be issued to outline the requirements in accordance
with State real property law. The State Director will obtain the advice
of OGC prior to issuance of the State supplement.
(f) If a spouse's signature would be necessary for FmHA or its
successor agency under Public Law 103-354 to obtain the necessary
security, information regarding an applicant's marital status will be
obtained. Only the terms ``married'' and ``separated'' may be used to
designate marital status. ``Unmarried'' includes single, divorced, or
widowed persons.
(g) FmHA or its successor agency under Public Law 103-354 may not
request information concerning birth control practices, intentions
concerning the bearing or rearing of children, or capability to bear
children. Assumptions or aggregate statistics relating to the likelihood
or probability that any particular group of persons will bear or rear
children will not be used to evaluate creditworthiness, or for any other
purpose; nor will the assumption be made that, for that reason, an
applicant will receive diminished or interrupted income in the future.
(h) If after discussing credit needs, it appears that the applicant
may be able to obtain the necessary credit from some other source, the
County Supervisor should provide information on the availability of such
credit and provide the needed assistance in contacting that credit
source. All applications, including those from applicants assisted in
obtaining credit from other credit sources, will be listed and reported
in accordance with FmHA or its successor agency under Public Law 103-354
Instructions 1905-A and 2006-J which are available in all FmHA or its
successor agency under Public Law 103-354 offices.
(i) For all loans and grants, the applicant must furnish the
applicant's taxpayer's identification number with the application,
except as otherwise indicated in this paragraph. The taxpayer's
identification number for individuals who are not business applicants is
the Social Security Number (SSN). The taxpayer's identification number
will be used as part of the borrower's case number, except as noted in
paragraph (i)(3) of this section.
(1) The SSN preceded by the State and county code numbers will
constitute the borrower's case number to be used on all FmHA or its
successor agency under Public Law 103-354 forms.
(2) In the case of noncitizens who are permanent residents or on
indefinite parole and who do not yet have a taxpayer's identification
number, their applications will be filed; however, they will not be
processed until the SSN is obtained. Disposition of applications not
processed because of lack of the number will be as set forth in FmHA or
its successor agency under Public Law 103-354 Instruction 2033-A,
``Management of County Office Records,'' (available in any FmHA or its
successor agency under Public Law 103-354 office).
(3) The borrower's case number for residents of the Pacific Islands
will be taxpayer's identification number issued by the Pacific Islands
Government.
(j) For all loans and credit sales secured by a first mortgage and
involving the purchase of an existing 1 to 4 family unit, or purchase of
a building site and construction of 1 to 4 family residential units, or
FO loans involving tracts of 25 acres or less, whether made to an
individual, corporation, partnership, joint operation, cooperative,
association, or other entity, the booklet entitled ``Settlement Costs''
will be hand-delivered to the applicant when the completed application
is received, or mailed to the applicant within three (3) business days
after receipt of the application in the County Office.
(1) Form FmHA or its successor agency under Public Law 103-354 440-
58, ``Estimate of Settlement Costs,'' will be completed by the County
Supervisor and delivered to the applicant with the booklet.
[[Page 77]]
(2) A record of the date and method of delivery of the booklet and
Form FmHA or its successor agency under Public Law 103-354 440-58 will
be kept in the running record section of the applicant's/borrower's
County Office case folder.
(k) For loans, assumptions and credit sales to individuals for
household purposes that are subject to the Real Estate Settlement
Procedures Act (RESPA), Form FmHA or its successor agency under Public
Law 103-354 1940-41, ``Truth in Lending Disclosure Statement,'' will be
completed using ``good-faith'' estimates, and will be delivered or
placed in the mail to the applicant within 3 business days of receipt of
the written application in the County Office.
(l) Fees for the total amount charged for individual credit reports
as indicated in Exhibit A of subpart B of part 1910 of this chapter
(available in any FmHA or its successor agency under Public Law 103-354
office) will be collected from the loan applicants before credit reports
are ordered, except in the case of section 504 loan applicants and
section 502 Rural Housing Loan applicants whose requested loan will
likely not exceed $7,500. It is the policy not to order credit reports
for Rural Housing loans of $7,500, or less, 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 Sec. 1910.53(g) of subpart
B of part 1910 of this chapter.
[53 FR 35671, Sept. 14, 1988, as amended at 54 FR 11365, Mar. 20, 1989;
55 FR 21524, May 25, 1990; 56 FR 66959, Dec. 27, 1991; 58 FR 226, Jan.
5, 1993; 58 FR 44263, Aug. 20, 1993; 61 FR 35919, July 9, 1996]
Sec. 1910.4 Processing applications.
When obtaining information concerning applicants and evaluating
their qualifications, FmHA or its successor agency under Public Law 103-
354 personnel will be covered by the provisions of ECOA and the
established policies for the various types of assistance offered by FmHA
or its successor agency under Public Law 103-354. If a farm is situated
in more than one State, County or Parish, the loan will be processed in
the State, County or Parish where the applicant's principal residence on
the farm is located. If the applicant's residence is not located on the
farm or if the applicant is a corporation, cooperative, partnership or
joint operation, the loan will be processed 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 Office. Applications of FmHA or
its successor agency under Public Law 103-354 employees, members of
their families, close relatives, or business or close personal
associates are processed according to subpart D of part 1900 of this
chapter.
(a) Completed RH applications. Completed applications are those as
described in Sec. 1944.27 (copies available in any REDC office), and all
applications for Rural Housing loans will be processed as outlines in
that instruction.
(b) Completed Farm Credit Programs applications and additional FSA
responsibilities. All persons requesting an application will be provided
Exhibit A (available in any office). The County Supervisor will provide
assistance as necessary to help applicants complete their applications.
Complete applications will be processed in the order of date received,
except as outlined in Section 1910.10 of this subpart. If the
application is complete when it is first received, a County Office
official will stamp the filing date on the front of Form FmHA 410-1 and
enter the date in the ``Application Received'' and ``Application
Completed'' fields in the Application Processing Module of the
Management Records Systems (MRS.) On the date all information necessary
to process an application is received, a County Office official will
send the applicant FmHA Guide Letter 1910-A-3 (available in any office)
notifying the applicant that the application is considered complete. The
date entered in the ``Application Completed'' field in the Application
Processing Module of MRS will establish the 30-day and 60-day timeframes
for determining eligibility and loan approval/disapproval, respectively.
The County Supervisor will verify the information furnished by the
applicant, and record and assemble additional information needed to
properly evaluate the applicant's
[[Page 78]]
qualifications and credit needs. Additional information may be obtained
and verified by County Office records, personal contacts, and visits to
the applicant's operation. A complete Farm Credit Programs application
requires fulfillment of both the applicant and FSA responsibilities.
Once this information is received and the application is considered
complete, FSA has additional responsibilities before loan approval is
determined. The various responsibilities are as follows:
Applicant's Responsibilities for a Complete Application
(1) Completed Form FmHA 410-1, ``Application for FmHA Services,''
including a signed Form FmHA 410-9, ``Statement Required by the Privacy
Act.''
(2) If the applicant is a cooperative, corporation, partnership, or
joint operation:
(i) A complete list of members, stockholders, partners or joint
operators showing the address, citizenship, principal occupation, and
the number of shares and percentage of ownership or of stock held in the
cooperative or corporation, by each, or the percentage of interest held
in the partnership or joint operation, by each.
(ii) A current personal financial statement from each of the members
of a cooperative, stockholders of a corporation, partners of a
partnership, or joint operators of a joint operation.
(iii) A current financial statement from the cooperative,
corporation, partnership, or joint operation itself.
(iv) A copy of the cooperative's or corporation's charter, or any
partnership or joint operation agreement, any articles of incorporation
and bylaws, any certificate or evidence of current registration (good
standing), and a resolution(s) adopted by the Board of Directors or
members or stockholders authorizing specified officers of the
cooperative, corporation, partnership, or joint operation to apply for
and obtain the desired loan and execute required debt, security, and
other instruments and agreements.
(3) A brief written description as to the farm training and/or
experience of the applicant and the individual members of an entity
applicant (new applicants only). If a waiver from the training required
in Section 1924.74 of subpart B of part 1924 of this chapter is
requested, provide verification of any courses taken which covered
production and/or financial management concepts, and/or a statement
explaining how the applicant's proven performance based on 5-year
production records demonstrates production ability.
(4) Supporting and documented verification that the applicant (and
all members of an entity applicant) cannot obtain credit elsewhere,
including a guaranteed loan.
(5) Financial records for the past five years. Income tax records
may be provided by the applicant when other financial records are not
available.
(6) Five years of production history immediately preceding the year
of application, unless the applicant has been farming less than 5 years.
(7) A brief written description of the proposed operation and the
proposed size of the operation (required for new applicants and existing
borrowers with significant changes in their operations).
(8) Verification of off-farm employment, if any. This will be used
only when the applicant is relying on off-farm income to pay part of the
applicant's expenses.
(9) Projected production, income and expenses, and loan repayment
plan, which may be submitted on Form FmHA 431-2, ``Farm and Home Plan,''
or other similar plans of operation acceptable to FSA.
(10) Applicable items required in Exhibit M of subpart G of part
1940 of this chapter including SCS Form CPA-026, ``Highly Erodible Land
and Wetland Conservation Determination,'' Form AD-1026, ``Highly
Erodible Land Conservation (HELC) and Wetland Conservation (WC)
Certification,'' and Form FmHA 1940-20, as required by subpart G of part
1940 of this chapter.
(11) A legal description of farm, real estate property and/or (if
applicable) a copy of any lease, contract, option or agreement entered
into by the applicant which may be pertinent to consideration of the
application, or when a
[[Page 79]]
written lease is not obtainable, a statement setting forth the terms and
conditions of the agreement.
(12) Form FmHA 440-32, ``Request for Statement of Debts and
Collateral,'' when applicable.
(13) Forms FmHA 1945-22, ``Certification of Disaster Losses,'' and
FmHA 1940-38, ``Request for Lender's Verification of Loan Application,''
(EM loans only).
FSA's Responsibilities for a Complete Application
(14) Send Form FmHA 410-7, ``Notification to Applicant on Use of
Financial Information from Financial Institution,'' to the applicant
when applicable.
(15) Form FmHA 1945-26, ``Calculation of Actual Losses'' (EM loans
only).
(16) Credit reports as provided in subparts B and C of this part.
(17) Form FmHA 1945-29, ``ASCS Verification of Farm Acreages,
Production and Benefits,'' (EM loans only).
(18) The Current/Past Debt Inquiry and Borrower Cross-Reference
Systems. The Current/Past Debt Inquiry System must be reviewed for each
application and copies of the screens must be attached to the
applicant's file.
(19) For special beginning farmer or rancher operating (OL) loan
assistance, a plan of operation will be developed for each of the first
5 years for which such assistance is requested. A projection of the
financial status of the operation showing financial viability within the
commitment period will also be developed. The 5-year plan and projection
will be developed as described in Sec. 1941.15. This information will be
presented on reports generated on the automated Farm and Home Plan
system, or in other plans or documents consistent and acceptable to the
Agency.
Additional FSA Farm Credit Responsibilities
(20) Form FmHA 1924-1, ``Development Plan,'' if necessary.
(21) Form FmHA 1940-22, ``Environmental Checklist for Categorical
Exclusions,'' or Class I and Class II assessment, whichever is
applicable.
(22) Real estate and chattel appraisal, when applicable.
(23) Completion of the assessment in accordance with Sec. 1924.55.
(c) Notifying applicants that direct loan eligibility is subject to
the unavailability of guaranteed financing. If the assessment, completed
in accordance with Sec. 1924.55 concludes that guaranteed assistance may
be available, with or without interest assistance, a prospectus will be
sent to area lenders in accordance with Sec. 1951.262 (f) as
appropriate. If a lender indicates interest in providing financing with
a Farm Credit Programs loan guarantee, refer to Sec. 1980.113 (c) for
handling as a market placement application. No direct loan to a current
borrower will be approved until the process outlined in this paragraph
has been concluded.
(d) Incomplete Farm Credit Programs applications. (1) When an
incomplete application is received, a County Office official will stamp
the filing date on the front of Form FmHA 410-1, and enter the date in
the ``Application Received'' and ``Incomplete Application'' fields in
the Application Processing Module of MRS.
(2) When an application that was received incomplete is completed,
the date will be entered in the ``Application Completed'' field in the
Application Processing Module of MRS. The County Supervisor will follow
the requirements of paragraph (b) of this section.
(3) Applicants who do not submit necessary information for complete
applications, as described in paragraph (b) of this section, for EM, FO,
OL and SW loans, will be handled as follows:
(i) No later than 10 calendar days after receipt of the application,
the County Supervisor will send the applicant a letter similar to FmHA
Guide Letter 1910-A-1. The letter will:
(A) List the additional information needed.
(B) State that the application cannot be processed until all
required information is received in the FmHA or its successor agency
under Public Law 103-354 County Office.
(C) Set a specific due date for the information. This date will be
20 calendar days after the date of the letter.
[[Page 80]]
(ii) When information is needed from other USDA Agencies, the County
Supervisor will inform those Agencies and the applicant of the
information needed, and note the date of the request in the running
record. For operating loan applications, the County Supervisor will
request that the Agencies return the information to the County Office
within 15 calendar days of the date of receipt of the request.
(iii) If the necessary information has not been received from the
applicant 20 calendar days after the date of the first written
notification of an incomplete application, the County Supervisor will
immediately send the applicant a letter similar to FmHA Guide Letter
1910-A-2.
(A) The letter will again list the additional information needed,
and state that the application cannot be processed until all the
required information is received.
(B) The letter will set a due date of 10 calendar days from the date
of the letter. It will further state that unless the applicant supplies
the required information or contacts the County Office by that date, the
application will be withdrawn without further notice.
(C) This letter will contain the Equal Credit Opportunity Act (ECOA)
statement set forth in Sec. 1910.6 (b)(1) of this subpart.
(D) A copy of this letter must be sent to the District Office at the
same time it is sent to the applicant.
(iv) If the applicant has not contacted the County Office by the due
date set in the second notification letter, the County Supervisor will
then withdraw the application.
(v) All applications withdrawn will be handled in accordance with
Sec. 2033.7 of FmHA Instruction 2033-A.
(e) Notifying applicants (including presently indebted borrowers)
about Limited Resource loans. Immediately after an application for OL,
FO, SW, or EM assistance is received, the County Supervisor will send a
letter similar to Guide Letter 1924-B-1 to the applicant telling the
applicant about Limited Resource loans.
(f) Notifying socially disadvantaged applicants regarding the
availability of Direct Farm Ownership (FO) loans and the acquisition/
leasing of Agency acquired farmland. Immediately after an application
for FO assistance is received, the County Supervisor will send Exhibit B
of this subpart, ``Letter to Notify Socially Disadvantaged Applicants/
Borrowers Regarding the Availability of Acquired Farmland,'' to the
applicants. Exhibit B will also be presented to all socially
disadvantaged individuals at the time they make their initial contact
regarding Agency credit services. Socially disadvantaged applicants are
defined in Section 1943.4 of subpart A of part 1943 of this chapter.
(g) Notifying Borrowers about Farm Credit Programs (FCP) Borrower
Responsibilities. When an application for OL, FO, SW or EM assistance is
approved, the County Supervisor will provide to the borrower Exhibit C
of this subpart, ``Letter to Notify Applicant(s)/Borrower(s) of Their
Responsibilities in Connection with FmHA Farmer Programs Loans.''
(h) Determining eligibility. The Agency will determine eligibility
of all Farm Credit Programs applicants including those who are already
indebted for a Farm Credit Programs loan. The Farm Credit Programs
application does not need to be complete before it is reviewed; however,
all information relative to the eligibility decision must be received.
The Rural Housing Service will determine eligibility for all RH loan
applicants.
(1) The Agency will certify whether or not the applicant meets the
eligibility requirements and whether or not the applicant is a beginning
farmer or rancher, as defined in the applicable Farm Credit Programs
loan making regulation. An eligible Operating Loan (OL) or Farm
Ownership (FO) Loan applicant, who is considered a beginning farmer or
rancher, will have access to targeted funds. An eligible FO applicant
requesting to purchase suitable farmland, who is considered a beginning
farmer or rancher, will be given priority in accordance with
Sec. 1955.107 (f). In addition, it is the responsibility of the Agency
to determine whether or not the FO applicant is an operator of not
larger than a family size farm, as of the time immediately after the
contract of sale or lease is entered into, even though the applicant is
not in
[[Page 81]]
need of Agency credit assistance on eligible rates and terms to purchase
suitable farmland. The loan approval official will determine the
applicant's projected repayment ability, the adequacy of collateral
equity to secure the requested loan, and the feasibility of the proposed
operation.
(2) An outstanding judgment obtained by the United States in a
Federal Court (other than the United States Tax Court), which has been
recorded, shall cause the applicant to be ineligible for any loan or
grant until the judgment is paid in full or otherwise satisfied. Agency
loan or grant funds may not be used to satisfy the judgment.
(i) Timeliness. Processing requirements for each program area are as
follows:
(1) Farm Credit Programs (FCP) applications. Each application must
be approved or disapproved and the applicant notified in writing of the
action taken, not later than 60 days after receipt of a complete
application. The District Director will monitor the processing of all
applications to ensure that each is processed in a timely manner and
receives a final disposition (i.e., approval, rejection, or withdrawal)
within the timeframes outlined in this section.
(i) Receipt by the applicant of a signed copy of Form FmHA 1940-1,
``Request for Obligation of Funds,'' will be considered written notice
of loan approval.
(ii) If a complete application is not approved or disapproved 45
calendar days after all necessary information is received, the following
steps will be taken:
(A) The County Supervisor will make sure that the data in the County
Office MRS data base regarding the application are up-to-date, and that
the reason it remains pending is noted. A selection of reasons is listed
in MRS.
(B) Every week the District Director will generate a report, using
the FOCUS Ad-Hoc Reporting System, based on the weekly upload of
information from each county office MRS data base. The District Director
will note each complete application pending more than 45 calendar days,
and immediately take steps to ensure that final disposition on the
application is taken no later than 60 calendar days after receipt of the
complete application.
(C) The Administrator will utilize MRS data and any other
information available to comply with any statutory reporting
requirements concerning the status of applications.
(2) Single Family Housing (SFH) loans. Written notice of eligibility
or ineligibility will be sent to each applicant not later than 30 days
after receipt of a complete application. If a determination of
eligibility cannot be made within 30 days from the date of receipt of
the complete application, the applicant will be notified in writing of
the circumstances causing the delay and the approximate time needed to
make a decision.
(3) Labor Housing (LH) preapplications. Preapplications must be
determined eligible and feasible and the applicant notified in writing
in accordance with applicable program regulations not later than 45 days
after receipt of a complete preapplication. This eligibility
determination will be made regardless of funding levels.
(4) LH applications. If a determination of eligibility cannot be
made within 30 days from the date of receipt of a complete application,
the applicant will be notified in writing of the circumstances causing
the delay and the approximate time needed to make a decision.
(5) Adverse decisions. If an applicant is given an adverse decision,
the applicant will be given appeal rights as provided in Subpart B of
Part 1900 or 7 CFR part 780, as appropriate. The letter will contain the
ECOA statement set forth in Section 1910.6(b)(1) of this subpart.
(j) [Reserved]
(k) Active applications. An applicant may voluntarily withdraw an
application at any time. Except for incomplete Farm Credit Programs
applications, when an applicant has been determined eligible, but
further processing is delayed due to an apparent lack of interest, the
applicant will be advised by letter that the application will be
considered withdrawn unless the County Office receives a written request
within 30 days that further consideration is desired. The letter to the
[[Page 82]]
borrower will contain the ECOA statement set forth in Sec. 1910.6(b)(1)
of this subpart.
(1) Applications for RH, RHS, and LH loans (posted on Form FmHA
1905-4, ``Application and Processing Card--Individual,'' or inputted in
the Application Processing Module of MRS) received during any fiscal
year will remain active during the remainder of that fiscal year in
which they were received, plus the subsequent fiscal year, unless
withdrawn or disapproved, or unless the loan is closed.
(2) Applications received for FO, SW, OL, EM, and persons applying
for RH loans on farms or nonfarm tracts who derive a major portion of
their income from farming (inputted in the Application Processing Module
of MRS), will remain active for 12 months from the date a complete
application is received, unless withdrawn or disapproved, or unless the
loan is closed.
(3) See paragraph (d) of this section for procedures for incomplete
Farm Credit Programs applications.
(4) All applications which are withdrawn or rejected will be handled
in accordance with Sec. 2033.7 of the Agency Instruction 2033-A. If
notice has been received by the Agency that an adverse action is under
investigation or in litigation, that application and all related
material will be retained until final disposition of the matter.
(5) When an application has been approved and funds are not
available, and the steps outlined in Sec. 1910.6(g) of this subpart have
been taken, the following provisions apply:
(i) The County Supervisor will, during the 11th month following loan
approval, notify the applicant that the application will expire 12
months from the date of loan approval.
(ii) If the applicant wants the application to remain active, the
applicant must provide the County Office with a written request within
30 days, requesting that the application remain active.
(iii) The applications retained at the applicant's request will be
extended for only one additional 12-month period.
(iv) If the applicant fails to respond to the County Supervisor's
written request, the application will be withdrawn.
[53 FR 35671, Sept. 14, 1988, as amended at 55 FR 21525, May 25, 1990;
55 FR 29560, July 20, 1990; 55 FR 46188, Nov. 2, 1990; 56 FR 66959, Dec.
27, 1991; 57 FR 19523, May 7, 1992; 58 FR 226, Jan. 5, 1993; 58 FR
44746, Aug. 25, 1993; 58 FR 48283, Sept. 15, 1993; 58 FR 68719, Dec. 29,
1993; 58 FR 69195, Dec. 30, 1993; 60 FR 55122, Oct. 27, 1995; 61 FR
35920, July 9, 1996]
Sec. 1910.5 Evaluating applications.
The following criteria will be considered in addition to the
eligibility criteria in applicable program regulations.
(a) Age of applicant. When evaluating the application, the age of
the applicant will not be used as a consideration of eligibility
(provided the applicant has reached the legal age of majority in the
State, or has had the minority removed by court action) except when a
specific age is being used to the advantage of the applicant (e.g.
assistance under the 504 grant program).
(b) Credit history. Credit history will be a consideration to the
extent that it is used in evaluating all applicants for similar types
and amounts of credit. For instance, credit requirements for a female
applicant will not differ from those for a male applicant.
(c) Creditworthiness. When considering creditworthiness of an
applicant, the following will not indicate an unacceptable credit
history:
(1) Foreclosures, judgments, delinquent payments of the applicant
which occurred more than 36 months before the application, if no recent
similar situations have occurred, or Agency delinquencies that have been
resolved through loan service programs as defined in Sec. 1951.906 of
part 1951 of subpart S of this chapter.
(2) Isolated incidents of delinquent payments which do not represent
a general pattern of unsatisfactory or slow payment.
(3) ``No history'' of credit transactions by the applicant.
(4) Recent foreclosure, judgment or delinquent payment when the
applicant can satisfactorily demonstrate that:
(i) The circumstances causing any of the above were of a temporary
nature
[[Page 83]]
and were beyond the applicant's control. Example: loss of job; delay or
reduction in government benefits, or other loss of income; increased
living 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.
(5) Non-payment of a debt due to circumstances beyond the
applicant's or borrower's control. However, non-payment of a debt due to
circumstances within an applicant's or borrower's control may be used as
an indication of unacceptable credit history, in accordance with
paragraph (c)(1) of this section. The mere fact that an applicant or
borrower filed bankruptcy will not be used as an indication of
unacceptable credit history. The circumstances causing the nonpayment of
debt, i.e., whether nonpayment was beyond the applicant's or borrower's
control, however, are proper considerations.
(6) Previous FSA or RHS debts settled pursuant to subpart B of part
1956 of this chapter and debts settled pursuant to subpart B of part
1951 of this chapter, except as provided in Sec. 1944.9 of subpart A of
part 1944 of this chapter.
(d) Current/Past FmHA or its successor agency under Public Law 103-
354 Loan History. Current or previous delinquent FmHA or its successor
agency under Public Law 103-354 loans, as determined by reviewing the
Current/Past Debt Inquiry System or the Borrower Cross-Reference Inquiry
System, will be used to help determine the credit history of an
applicant.
(e) Delinquency on a Federal debt. The Department of Housing and
Urban Development Credit Alert Interactive Voice Response System
(CAIVRS) will be used to help determine if an applicant is deliquent on
any Federal debt.
[53 FR 35671, Sept. 14, 1988, as amended at 55 FR 21525, May 25, 1990;
55 FR 46188, Nov. 2, 1990; 56 FR 10147, Mar. 11, 1991; 60 FR 55122, Oct.
27, 1995; 61 FR 1109, Jan. 16, 1996; 61 FR 2899, Jan. 30, 1996; 61 FR
35921, July 9, 1996]
Sec. Sec. 1910.6-1910.9 [Reserved]
Sec. 1910.10 Preference.
(a) Veterans. (1) Veteran's preference will be extended to any
person applying for an RH, FO, SW, or OL loan who has been honorably
discharged, including clemency discharges, or released from the active
forces of the United States Army, Navy, Air Force, Marine Corps, or
Coast Guard, who served on active duty in such forces:
(i) During the period of April 6, 1917, through March 31, 1921;
(ii) During the period of December 7, 1941, through December 31,
1946;
(iii) During the period of June 27, 1950, through January 31, 1955,
or
(iv) For a period of more than 180 days, any part of which occurred
after January 31, 1955, but on or before May 7, 1975.
(2) Veteran's preference will apply when:
(i) There is a shortage of funds.
(ii) Obligating forms are ready to be submitted to the Finance
Office, and
(iii) There is more than one application having the same date.
(3) For Rural Housing applicants, veteran's preference will be
extended to the spouses and children of deceased servicemen who died in
service during one of the periods listed in paragraph (a)(1) of this
section.
(b) Farm Credit Programs (FCP) loans. In addition to the veteran's
preference, the preference set out in Sec. 1943.10 of subpart A of part
1943 of this chapter applies.
[53 FR 35671, Sept. 14, 1988, as amended at 61 FR 35922, July 9, 1996]
Sec. 1910.11 Special requirements.
(a) Servicemen's Readjustment Act of 1944. Section 512(a)(D) of the
Servicemen's Readjustment Act of 1944, as amended, provides that an
applicant for a direct housing loan from the Department of Veterans
Affairs (VA) must be ``unable to obtain a loan for such purposes from
the Secretary of Agriculture under the Consolidated Farm and Rural
Development Act, as amended, or the Housing Act of 1949, as amended.''
Department of Veterans Affairs Loan Guaranty Officers may,
[[Page 84]]
therefore, require VA loan applicants to apply to the agency for loan
assistance.
(b) Veterans determined ineligible by the Agency. If the veteran is
unable to obtain a loan, the County Supervisor will, upon request,
furnish the applicant with a rejection letter to be presented to the
Loan Guaranty Officer. The Loan Guaranty Officer may consult with the
County Supervisor regarding the investigation made by the Agency of the
veteran's application and the specific reasons for rejection.
[61 FR 35922, July 9, 1996]
Secs. 1910.12-1910.49 [Reserved]
Sec. 1910.50 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget and
have been assigned OMB control number 0575-0134. Public reporting burden
for this collection of information is estimated to vary from 20 minutes
to 2 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
collection of this 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 0575-0134), Washington, DC 20503.
[57 FR 19523, May 7, 1992]
Exhibits to Subpart A
Exhibit A--[Reserved]
Exhibit B--Letter to Notify Socially Disadvantaged Applicants/Borrowers
Regarding the Availability of Direct Farm Ownership (FO) Loans and the
Acquisition/Leasing of FmHA or Its Successor Agency Under Public Law
103-354 Acquired Farmland
United States Department of Agriculture
Farmers Home Administration or its successor agency under Public Law
103-354
(Insert address)
Date________
Dear ________:
The Farmers Home Administration or its successor agency under Public
Law 103-354 (FmHA or its successor agency under Public Law 103-354) has
authority under the Consolidated Farm and Rural Development Act to
target direct farm ownership (FO) loan funds to applicants/borrowers of
socially disadvantaged groups. This program provides credit to
applicants/borrowers of socially disadvantaged groups, at regular or
reduced interest rates, to purchase or enlarge farms. In addition, the
program provides that FmHA or its successor agency under Public Law 103-
354 acquired farmland be made available for sale or lease to applicants/
borrowers of socially disadvantaged groups. Socially disadvantaged
borrowers with existing direct FO loans may have their accounts deferred
and/or reamortized at a reduced interest rate.
If you would like additional information regarding the availability
of direct FO loans to, and/or the renting or buying of FmHA or its
successor agency under Public Law 103-354 acquired farmland by, members
of socially disadvantaged groups, you should contact my office.
Sincerely,
County Supervisor.
[57 FR 19523, May 7, 1992]
[[Page 85]]
Exhibit C--Letter to Notify Applicant(s)/Borrower(s) of Their
Responsibilities in Connection with FmHA or its successor agency under
Public Law 103-354 Farmer Program Loans
Note: Exhibit C, referenced in this subpart, is available in any
FmHA or its successor agency under Public Law 103-354 office.
Subpart B--Credit Reports (Individual)
Source: 49 FR 40790, Oct. 18, 1984, unless otherwise noted.
Sec. 1910.51 Purpose.
This subpart prescribes the policies and procedures of the Farmers
Home Administration or its successor agency under Public Law 103-354
(FmHA or its successor agency under Public Law 103-354) for individual
and joint type credit reports. Credit reports will be ordered to
determine the eligibility of applicants requesting Farmers Home
Administration or its successor agency under Public Law 103-354 (FmHA or
its successor agency under Public Law 103-354) loans. A nonrefundable
fee will be charged the applicant.
[55 FR 46188, Nov. 2, 1990]
Sec. 1910.52 [Reserved]
Sec. 1910.53 Policy.
The County Supervisor will be responsible for ordering individual
credit reports. These will be obtained on initial and rescheduled Farmer
Program loans and on all initial Single Family Housing applications,
except for those situations outlined in paragraph (c) of this section,
to help determine the eligibility of the loan applicant, and when it
appears the credit report will not have to be updated before loan
closing.
[55 FR 46188, Nov. 2, 1990]
Secs. 1910.54--1910.100 [Reserved]
Subpart C--Commercial Credit Reports
Source: 52 FR 6498, Mar. 4, 1987, unless otherwise noted.
Sec. 1910.101 Preface.
FmHA or its successor agency under Public Law 103-354 Instruction
1910-C (available in any Farmers Home Administration or its successor
agency under Public Law 103-354 (FmHA or its successor agency under
Public Law 103-354 office) describes the procedure to be used by FMHA in
obtaining commercial credit reports. A nonrefundable fee, set forth in
Sec. 1910.106(d) of this Instruction will be collected from the
applicant, general contractor or dealer contractor who is the subject of
the report.
Secs. 1910.102--1910.150 [Reserved]
PART 1922--APPRAISAL--Table of Contents
Subparts A-D [Reserved]
Subpart E--Appraisal of Farms and Leasehold interests
1922.201 General.
1922.202-1922.208 [Reserved]
1922.209 Easements and appraising property subject to easements.
1922.210-1922.250 [Reserved]
Authority: 7 U.S.C. 1989.
Subparts A-D [Reserved]
Subpart E--Appraisal of Farms and Leasehold Interests
Source: 58 FR 44750, Aug. 25, 1993, unless otherwise noted.
Sec. 1922.201 General.
This subpart prescribes the procedures and guidelines for conducting
appraisals in connection with making and servicing Farmers Home
Administration or its successor agency under Public Law 103-354 (FmHA or
its successor agency under Public Law 103-354) insured loans on farm
tracts. It also includes guidance for market valuations of farm tracts
when leasehold interests, Conservation Reserve Program, easements and
mineral rights are involved. Farm tracts will be appraised for market
value. FmHA or its successor agency under Public Law 103-354
[[Page 86]]
designated appraisers and contract appraisers will comply with the
guidelines and standards as set out in Sections I and II of the Uniform
Standards of Professional Appraisal Practice (USPAP), when completing
farm tract appraisals as prescribed in this subpart. A current copy of
Sections I and II of USPAP promulgated by The Appraisal Foundation is
located in each FmHA or its successor agency under Public Law 103-354
State Office.
Secs. 1922.202-1922.208 [Reserved]
Sec. 1922.209 Easements and appraising property subject to easements.
(a) Easements. Easements represent an interest in real property that
conveys use, but not ownership, of a portion of an owner's property.
Easements frequently permit a specific portion of a property to be used
for access to an adjoining property or as a public right-of-way.
Although surface easements are the most common, subterranean and
overhead easements are used for public utilities, roadways, bridges, air
rights, etc. Basic easement valuation concepts are as follows:
(1) A property that acquires an easement is the beneficiary of
additional rights; one that is subject to an easement is burdened.
Easement rights can be conveyed in perpetuity or for a limited time
period. An easement can be created by a contract between private parties
or it can be arranged by states, municipalities, or public utilities
through the exercise of eminent domain. In any case, a valuation is
needed to estimate the price the easement beneficiary should pay to the
burdened party.
(2) An easement that affords ingress and egress to an otherwise
landlocked parcel may increase its value. The value of an easement is
usually estimated as some part of the amount of value it adds to the
property it benefits; the burdened property's loss in value can also be
used to indicate the value of an easement. The value of an easement
reflects the basic economic concept of contribution.
(3) When an easement is acquired by a public utility company for
overhead power lines, valuation becomes more complicated. In all cases,
however, an easement is a partial interest in the burdened real estate
property.
(4) Preservation easements, such as conservation easements, prohibit
physical changes to the property. Usually, the owner must maintain the
condition of the property at the time the easement is donated or
immediately after a proposed restoration. The economic theory that
underlies the valuation of preservation easements is generally the same
as that which governs eminent domain appraising, although the acquirer
of a preservation easement receives rather than takes rights. Each
easement document contains specific controls and restrictions. An
appraiser must carefully analyze easement restrictions or proposed
restrictions to determine how it affects the property. Damage to the
remaining property is the difference in the value of the remainder as a
part of the whole, or its value before the easement, and the value of
the remaining property after the easement before consideration of
compensation. The amount of compensation is determined by subtracting
the value of the remaining property after the easement, before
compensation, from the value of the remaining property after easement,
after compensation.
(5) Frontage easements (roads or underground water pipes,
electricity, communication lines) can contribute to the value of the
property. Rights considered consist of both subsurface and surface
rights. Fair or just compensation consists of compensation for: The
taking and use of the subsurface; the cost of replenishing any items
destroyed (lawns, bushes, etc.); and any inconvenience or interruption
during installation and later maintenance. Detailed market analysis may
be completed to determine the value of the easement. Usually, 1 percent
of the fair market value is adequate compensation for property taken. It
may be higher when subsurface property has considerable disruption
factors.
(6) Oil, gas, pipeline and powerline easements crossing property can
be determined by two approaches. The appraiser can find comparable sales
of land and narrow strips of land that have been sold or purchased in
the
[[Page 87]]
market and tabulate the prices received and paid, or use the before and
after values as set out in paragraph (b) of this section. Most
landowners realize that a taking agency should pay no more than what it
has paid others to acquire similar easements needed in the same area or
what other landowners have accepted as compensation for the same kind of
rights.
(b) Appraising property subject to easements.
(1) When there is an established traditional market for properties
containing conservation or other easements, value of the property
subject to the easement can be determined through the normal appraisal
process outlined in Sec. 1922.207 of this subpart.
(2) If there is no established traditional market (market value for
the easement) for properties containing conservation or other easements,
value of the property subject to the easement can be determined as
outlined in paragraph (d) of this section. When there is an existing
easement on the subject property, the before valuation will be completed
assuming there is no easement on the property. The after valuation will
be the market value of the property subject to an easement.
(c) Appraising property with no established market for easements. In
most cases, there is no established traditional market for conservation
easements or other easements. These interests must be valued indirectly
through the Before and After method of appraisal. The Before and After
method is used to determine whether, and the degree to which, an
easement changes a property's use and value. The value of property after
the imposition of the easement is subtracted from the value of the
property before the imposition of the easement to estimate the value of
the easement. Each value conclusion is made as of the same date. The
following steps will be used to determine the value of easements to the
subject property being appraised, i.e., if there is no traditional
market for the easement available:
(1) Before valuation.
(i) Apply highest and best use principles.
(A) Determine the property's highest and best use in its current
condition unrestricted by the easement (the ``Before'' value).
Generally, in this step the appraiser considers the suitability of the
property's current use under existing zoning and market conditions and
estimates the reasonable likelihood of a change in use (and the
associated direct and indirect costs and delay), absent the easement, to
realize a more profitable economic use.
(B) Evaluate potential for continuation of existing use and
alternative uses. Under this step the appraiser estimates the property's
potential for continuation of existing use, if its existing use or
realistic alternative uses generate greater value. Alternative uses may
include, if appropriate, either existing improvements or as vacant land
which may include the following: Subdivision, Redevelopment, Renovation,
Flooding, or Timbering.
(C) Estimate remoteness of eventual zoning changes. Under this
analysis, the appraiser must consider future changes in zoning. The
quantification for the supported future probability of a change must be
recognized in the market place and supported by quantification--both
statistical and anecdotal. Hypothetically, value added to land by
possibilities of development is not an appropriate pre-easement
consideration, unless factually supported in the report.
(ii) Apply the three recognized approaches to value. This will be
accomplished as set out in Sec. 1922.207 of this subpart. The appraiser
will apply, as appropriate, the three approaches to the ``Before'' value
to estimate the value of the property without restrictions or not being
encumbered by the easement. Comparable properties used should not be
encumbered by the easement. All factors must be analyzed in view of the
current local market, which if necessary, reflects foreseeable trends
reflected in the market place, such as rezonings, demolition permits,
subdivision approvals, leases, etc. The three approaches should be used
whenever possible to estimate the value of an easement. For each method
not used, the appraiser must explain why the omitted method is not
applicable.
(2) After valuation.
(i) Determining highest and best use by comparing easement covenants
to existing
[[Page 88]]
zoning regulations and other controls. The appraiser must analyze the
easement terms and covenants, individually and collectively, and compare
them to existing zoning regulations and other controls to estimate
whether, and the extent to which, the use restrictions contained in the
easement will affect current and alternate future uses of the property.
Examples of pre-existing controls include local regulations, such as
agricultural or historic district zones; statewide regulations, such as
land-gain taxes to deter land speculation; and Federal limitations, such
as flood plain controls or the necessity to obtain environmental or
historic preservation reviews for federally licensed or assisted
projects encumbered or restricted by the easement.
(ii) Changes in highest and best use. Easement restrictions may be
reflected in the three approaches to value even without a change in
highest and best use. Under the Comparable Sales approach to value, a
well informed purchaser would consider the immediate and long term costs
of complying with the easement and pay less for a restricted property
than for otherwise comparable unrestricted properties. Similarly, the
Cost and Income approaches may indicate immediate and long term value
impairment attributable to the easement. The change in market value
attributable to an easement is frequently greater on properties in those
agricultural, recreational, residential, or commercial areas that are
experiencing a change in highest and best use. Where current use is
commensurate with highest and best use, an easement perpetually limiting
use of the property to current use may have nominal value.
(iii) Apply the three approaches to value. This will be accomplished
as set out in Sec. 1922.207 of this subpart. The appraiser will apply
the Comparable Sales, Cost, and Income approaches as appropriate to
estimate the value of the property as encumbered or restricted by the
easement. Comparable properties used would be subject to the type of
easement appraised. Market abstractions, market analysis as well as
feasibility analysis should be made part of this report. The three
approaches should be used whenever possible to estimate the value for an
easement. For each method not used, the appraiser must explain why the
omitted method is not applicable.
(d) Arriving at the estimated value of the easement. The Recommended
Market Value of the property arrived at from the After valuation is
subtracted from the Before valuation to arrive at the estimated value of
the easement.
(e) Arriving at the Recommended Market Value of the property subject
to an easement. The Recommended Market Value of the property will be the
Recommended Market Value of the property arrived at from the After
valuation approach.
Secs. 1922.210-1922.250 [Reserved]
PART 1924--CONSTRUCTION AND REPAIR--Table of Contents
Subpart A--Planning and Performing Construction and Other Development
Sec.
1924.1 Purpose.
1924.2 [Reserved]
1924.3 Authorities and responsibilities.
1924.4 Definitions.
1924.5 Planning development work.
1924.6 Performing development work.
1924.7 [Reserved]
1924.8 Development work for modular/panelized housing units.
1924.9 Inspection of development work.
1924.10 Making changes in the planned development.
1924.11 District Director's review of incomplete development.
1924.12 Warranty of development work.
1924.13 Supplemental requirements for more complex construction.
1924.14-1924.48 [Reserved]
1924.49 State supplements.
1924.50 OMB control number.
Exhibits to Subpart A
Exhibit A--Estimated Breakdown of Dwelling Costs for Estimating Partial
Payments
Exhibit B--Requirements for Modular/Panelized Housing Units
Exhibit C--Guide for Drawings and Specifications
Exhibit D--Thermal Performance Construction Standards
Exhibit E--Voluntary National Model Building Codes
Exhibit F--Payment Bond
Exhibit G--Performance Bond
Exhibit H--Prohibition of Lead-Based Paints
[[Page 89]]
Exhibit I--Guidelines for Seasonal Farm Labor Housing
Exhibit J--Manufactured Home Sites, Rental Projects and Subdivisions:
Development, Installation and Set-Up
Exhibit K--Classifications for Multi-Family Residential Rehabilitation
Work
Exhibit L--Insured 10-Year Home Warranty Plan Requirements
Subpart B--Management Advice to Individual Borrowers and Applicants
1924.51 General.
1924.52-1924.53 [Reserved]
1924.54 Definitions.
1924.55 Assessment of the agricultural operation.
1924.56 Farm business planning.
1924.57 [Reserved]
1924.58 Recordkeeping.
1924.59 Supervision.
1924.60 Nonfarm enterprises.
1924.61-1924.73 [Reserved]
1924.74 Borrower Training program.
1924.75-1924.99 [Reserved]
1924.100 OMB control number.
Exhibit to Subpart B
Exhibit A--Letter to Borrower Regarding Releases of Farm Income to Pay
Family Living and Farm Operating Expenses
Subpart C--Planning and Performing Site Development Work
1924.101 Purpose.
1924.102 General policy.
1924.103 Scope.
1924.104 Definitions.
1924.105 Planning/performing development.
1924.106 Location.
1924.107 Utilities.
1924.108 Grading and drainage.
1924.109-1924.114 [Reserved]
1924.115 Single Family Housing site evaluation.
1924.116-1924.118 [Reserved]
1924.119 Site Loans.
1924.120-1924.121 [Reserved]
1924.122 Exception authority.
1924.123-1924.149 [Reserved]
1924.150 OMB control number.
Exhibits to Subpart C
Exhibit A--[Reserved]
Exhibit B--Site Development Design Requirements
Exhibit C--Checklist of Visual Exhibits and Documentation for RRH, RCH,
and LH Proposals
Subparts D-E--[Reserved]
Subpart F--Complaints and Compensation for Construction Defects
1924.251 Purpose.
1924.252 Policy.
1924.253 Definitions.
1924.254-1924.257 [Reserved]
1924.258 Notification of borrowers.
1924.259 Handling dwelling construction complaints.
1924.260 Handling manufactured housing (unit) construction complaints.
1924.261 Handling complaints involving dwellings covered by an
independent or insured home warranty plan.
1924.262 Handling complaints involving dwellings constructed by the
self-help method.
1924.263--1924.264 [Reserved]
1924.265 Eligibility for compensation for construction defects.
1924.266 Purposes for which claims may be approved.
1924.267-1924.270 [Reserved]
1924.271 Processing applications.
1924.272 [Reserved]
1924.273 Approval or disapproval.
1924.274 Final inspection.
1924.275 [Reserved]
1924.276 Action against contractor.
1924.277-1924.299 [Reserved]
1924.300 OMB control number.
Authority: 5 U.S.C. 301; 7 U.S.C 1989; 42 U.S.C 1480.
Subpart A--Planning and Performing Construction and Other Development
Source: 52 FR 8002, Mar. 13, 1987, unless otherwise noted.
Sec. 1924.1 Purpose.
This subpart prescribes the basic Farmers Home Administration or its
successor agency under Public Law 103-354 (FmHA or its successor agency
under Public Law 103-354) policies, methods, and responsibilities in the
planning and performing of construction and other development work for
insured Rural Housing (RH), insured Farm Ownership (FO), Soil and Water
(SW), Softwood Timber (ST), single unit Labor Housing (LH), and
Emergency (EM) loans for individuals. It also provides supplemental
requirements for Rural Rental Housing (RRH) loans, Rural Cooperative
Housing (RCH) loans, multi-unit (LH) loans and
[[Page 90]]
grants, and Rural Housing Site (RHS) loans.
[53 FR 35679, Sept. 14, 1988]
Sec. 1924.2 [Reserved]
Sec. 1924.3 Authorities and responsibilities.
The County Supervisor and District Director are authorized to
redelegate, in writing, any authority delegated to them in this subpart
to the Assistant County Supervisor and Assistant District Director,
respectively, when determined to be qualified. FmHA or its successor
agency under Public Law 103-354 Construction Inspectors, District Loan
Assistants, and County Office Assistants are authorized to perform
duties under this subpart as authorized in their job descriptions.
Sec. 1924.4 Definitions.
(a) Construction. Such work as erecting, repairing, remodeling,
relocating, adding to or salvaging any building or structure, and the
installation or repair of, or addition to, heating and electrical
systems, water systems, sewage disposal systems, walks, steps,
driveways, and landscaping.
(b) Contract documents. The borrower-contractor agreement, the
conditions of the contract (general, supplementary, and other), the
drawings, specifications, warranty information, all addenda issued
before executing the contract, all approved modifications thereto, and
any other items stipulated as being included in the contract documents.
(c) Contractor. The individual or organization with whom the
borrower enters into a contract for construction or land development, or
both.
(d) County Supervisor and District Director. In Alaska, for the
purpose of this subpart, ``County Supervisor'' and ``District Director''
also mean ``Assistant Area Loan Specialist'' and ``Area Loan
Specialist,'' respectively. The terms also include other qualified staff
who may be delegated responsibilities under this subpart in accordance
with the provisions of subpart F of part 2006 (available in any FmHA or
its successor agency under Public Law 103-354 office).
(e) Date of commencement of work. The date established in a ``Notice
to Proceed'' or, in the absence of such notice, the date of the contract
or other date as may be established in it or by the parties to it.
(f) Date of substantial completion. The date certified by the
Project Architect/Engineer or County Supervisor when it is possible, in
accordance with any contract documents and applicable State or local
codes and ordinances, and the FmHA or its successor agency under Public
Law 103-354 approved drawings and specifications, to permit safe and
convenient occupancy and/or use of the buildings or other development.
(g) Development. Construction and land development.
(h) Development standards. Any of the following codes and standards:
(1) A standard adopted by FmHA or its successor agency under Public
Law 103-354 for each state in accordance with Sec. 1924.5(d)(1)(i)(E) of
this subpart.
(2) Voluntary national model building codes (model codes).
Comprehensive documents created, referenced or published by nationally
recognized associations of building officials that regulate the
construction, alteration and repair of building, plumbing, mechanical
and electrical systems. These codes are listed in Exhibit E of this
subpart.
(3) Minimum Property Standards (MPS). The Department of Housing and
Urban Development (HUD) Minimum Property Standards for Housing, Handbook
4910.1, 1984 Edition with Changes. (For One and Two Family Dwellings and
Multi-Family Housing).
(i) Identity of interest. Identity of interest will be construed as
existing between the applicant (the party of the first part) and general
contractors, architects, engineers, attorneys, subcontractors, material
suppliers, or equipment lessors (parties of the second part) under any
of the following conditions:
(1) When there is any financial interest of the party of the first
part in the party of the second part. The providing of normal
professional services by architects, engineers, attorneys or accountants
with a client-professional relationship shall not constitute an identity
of interest.
[[Page 91]]
(2) When one or more of the officers, directors, stockholders or
partners of the party of the first part is also an officer, director,
stockholder, or partner of the party of the second part.
(3) When any officer, director, stockholder or partner of the party
of the first part has any financial interest whatsoever in the party of
the second part.
(4) Between the spouse, significant other, relatives, and step-
relatives of the principal owners of the party of the first part and its
management, such as Grandmother, Aunt, Daughter, Granddaughter,
Grandfather, Uncle, Son, Grandson, Mother, Sister, Niece, Cousin,
Father, Brother, Nephew;
(5) When the party of the second part advances any funds to the
party of the first part.
(6) When the party of the second part provides and pays on behalf of
the party of the first part the cost of any legal services,
architectural services or engineering services other than those of a
surveyor, general superintendent, or engineer employed by a general
contractor in connection with obligations under the construction
contract.
(7) When the party of the second part takes stock or any interest in
the party of the first part as part of the consideration to be paid
them.
(8) When there exist or come into being any side deals, agreements,
contracts or undertakings entered into thereby altering, amending, or
cancelling any of the required closing documents except as approved by
FmHA or its successor agency under Public Law 103-354.
(9) An identity of interest will also exist when another party can
significantly influence the management or operating policies of the
transacting parties or if it has an ownership interest in one of the
transacting parties and can significantly influence the other to an
extent that one or more of the transacting parties might be prevented
from fully pursuing its own separate interests.
(j) Land development. Includes items such as terracing, clearing,
leveling, fencing, drainage and irrigation systems, ponds, forestation,
permanent pastures, perennial hay crops, basic soil amendments,
pollution abatement and control measures, and other items of land
improvement which conserve or permanently enhance productivity. Also,
land development for structures includes the applicable items above, and
items such as rough and finish grading, retaining walls, water supply
and waste disposal facilities, streets, curbs and gutters, sidewalks,
entrancewalks, driveways, parking areas, landscaping and other related
structures.
(k) Manufactured housing. Housing, constructed of one or more
factory-built sections, which includes the plumbing, heating and
electrical systems contained therein, which is built to comply with the
Federal Manufactured Home Construction and Safety Standards (FMHCSS),
and which is designed to be used with or without a permanent foundation.
Specific requirements for manufactured homes sites, rental projects and
subdivisions are in Exhibit J of this subpart.
(l) Mechanic's and materialmen's liens. A lien on real property in
favor of persons supplying labor and/or materials for the construction
for the value of labor and/or materials supplied by them. In some
jurisdictions, a mechanic's lien also exists for the value of
professional services.
(m) Modular/panelized housing. Housing, constructed of one or more
factory-built sections, which, when completed, meets or exceeds the
requirements of one or more of the recognized development standards for
site-built housing, and which is designed to be permanently connected to
a site-built foundation.
(n) Project representative. The architect's or owner's
representative at the construction site who assists in the
administration of the construction contract. When required by FmHA or
its successor agency under Public Law 103-354, a full-time project
representative shall be employed.
(o) Technical services. Applicants are responsible for obtaining the
services necessary to plan projects including analysis of project design
requirements, creation and development of the project design,
preparation of drawings, specifications and bidding requirements, and
general administration of the construction contract.
[[Page 92]]
(1) Architectural services. The services of a professionally
qualified person or organization, duly licensed and qualified in
accordance with state law to perform architectural services.
(2) Engineering services. The services of a professionally qualified
person or organization, duly licensed and qualified in accordance with
State law to perform engineering services.
(p) Warranty. A legally enforceable assurance provided by the
builder (warrantor) to the owner and the FmHA or its successor agency
under Public Law 103-354 indicating that the work done and materials
supplied conform to those specified in the contract documents and
applicable regulations. For the period of the warranty, the warrantor
agrees to repair defective workmanship and repair or replace any
defective materials at the expense of the warrantor.
[52 FR 8002, Mar. 13, 1987, as amended at 59 FR 6882, Feb. 14, 1994]
Sec. 1924.5 Planning development work.
(a) Extent of development. For an FO loan, the plans for development
will include the items necessary to put the farm in a livable and
operable condition consistent with the planned farm and home operations.
For other types of loans, the plans will include those items essential
to achieve the objectives of the loan or grant as specified in the
applicable regulation.
(b) Funds for development work. The total cash cost of all planned
development will be shown on Form FmHA or its successor agency under
Public Law 103-354 1924-1, ``Development Plan,'' except Form FmHA or its
successor agency under Public Law 103-354 1924-1 may be omitted when:
(1) All development is to be done by the contract method, (2) adequate
cost estimates are included in the docket, and (3) the work, including
all landscaping, repairs, and site development work, is completely
described on the drawings, in the specifications, or in the contract
documents. Sufficient funds to pay for the total cash cost of all
planned development must be provided at or before loan closing. Funds to
be provided may include loan proceeds, any cash to be furnished by the
borrower, proceeds from cost sharing programs such as Agricultural
Stabilization and Conservation Service (ASCS) and Great Plains programs
or proceeds from the sale of property in accordance with paragraph (g)
of this section.
(c) Scheduling of development work. (1) All construction work
included in the development plan for RH loans will be scheduled for
completion as quickly as practicable and no later than 9 months from the
date of loan closing, except for mutual self-help housing where work may
be scheduled for completion within a period of 15 months.
(2) Development for farm program loans will be scheduled for
completion as quickly as practicable and no later than 15 months from
the date of loan closing unless more time is needed to establish land
developnent practices in the area.
(d) Construction. (1) All new buildings to be constructed and all
alterations and repairs to buildings will be planned to conform with
good construction practices. The FmHA or its successor agency under
Public Law 103-354 Manual of Acceptable Practices (MAP) Vol. 4930.1
(available in any FmHA or its successor agency under Public Law 103-354
office), provides suggestions and illustrative clarifications of design
and construction methods which are generally satisfactory in most areas.
All improvements to the property will conform to applicable laws,
ordinances, codes, and regulations related to the safety and sanitation
of buildings; standards referenced in Appendices C through F of HUD
Handbook 4910.1, Minimum Property Standards for Housing; Thermal
Performance Construction Standards contained in Exhibit D of this
subpart and, when required, to certain other development standards
described below.
(i) The development standard applicable to a proposal will be
selected by the loan applicant or recipient of an RH Conditional
Commitment in accordance with the following. The standard selected must:
(A) Relate to the type(s) of building proposed.
(B) Meet or exceed any applicable local or state laws, ordinances,
codes and regulations.
(C) Include all referenced codes and standards.
[[Page 93]]
(D) Exclude inapplicable administrative requirements.
(E) Be the current edition(s) of either paragraph (d)(1)(i)(E)(1) or
(2) of this section:
(1) The development standard, consisting of building, plumbing,
mechanical and electrical codes, adopted by FmHA or its successor agency
under Public Law 103-354 for use in the state (identified in a State
Supplement to this section) in which the development is proposed, in
accordance with the following:
(i) The adopted development standard shall include any building,
plumbing, mechanical or electrical code adopted by the State, if
determined by the State Director to be based on one of the model codes
listed in Exhibit E to this subpart, or, if not available,
(ii) The adopted development standard shall include any building,
plumbing, mechanical or electrical code adopted by the state, if
determined by the Administrator to be acceptable, or, if not available,
(iii) The adopted development standard shall include the model
building, plumbing, mechanical or electrical code listed in Exhibit E to
this subpart that is determined by the State Director to be most
prevalent and appropriate for the state.
(2) Any of the model building, plumbing, mechanical and electrical
codes listed in Exhibit E to this subpart or the standards defined in
Sec. 1924.4(h)(3) of this subpart.
(ii) Guide 2, ``FmHA or its successor agency under Public Law 103-
354 Design Guide,'' of this subpart (available in any FmHA or its
successor agency under Public Law 103-354 office), includes guidelines
for the evaluation of the design features which are not fully addressed
in the development standards.
(iii) In new housing, all design, materials and construction will
meet or exceed the applicable development standard as provided in
paragraph (d)(1)(i) of this section.
(iv) For multi-family residential rehabilitation, as defined in
Exhibit K of this subpart, all substantial rehabilitation work on
existing buildings will meet or exceed the applicable development
standard. All moderate rehabilitation work should comply with Guide 3,
``Quality and Performance Criteria for Moderate Rehabilitation,'' of
this subpart (available in any FmHA or its successor agency under Public
Law 103-354 office).
(v) The design and construction of housing repairs made with FmHA or
its successor agency under Public Law 103-354 loan or grant funds will,
as near as possible, comply with the applicable development standard.
(vi) Farm LH design and construction will comply with the following:
(A) Family projects, where the length of occupancy will be:
(1) Year-round, will meet or exceed the applicable development
standard.
(2) Less than 12 months, but more than 6 months, will be in
substantial conformance with the applicable development standard and
constructed to facilitate conversion to year-round occupancy standards.
(3) Six months or less, may be less than the applicable development
standard but should be constructed in accordance with Exhibit I of this
subpart.
(B) Dormitory and other nonfamily type projects, where the length of
occupancy will be:
(1) More than 6 months, will be in substantial conformance with the
applicable development standard and will at least meet or exceed the
requirements of the Department of Labor, Bureau of Employment Security
(29 CFR 1910.140).
(2) Six months or less, will comply with
Sec. 1924.5(d)(1)(vi)(A)(3).
(vii) Farm service buildings should be designed and constructed for
adaptation to the local area. In designing and locating farm service
buildings, consideration will be given to practices recommended by
agriculture colleges, the Extension Service (ES), Soil Conservation
Service (SCS) and other reliable sources.
(2) Drawings, specifications, and estimates will fully describe the
work. Technical data, tests, or engineering evaluations may be required
to support the design of the development. The ``Guide for Drawings and
Specifications,'' Exhibit C of this subpart, describes the drawings and
specifications
[[Page 94]]
that are to be included in the application for building construction,
and subpart C of part 1924 of this chapter describes the drawings that
should be included for development of building sites. The specific
development standard being used, if required under paragraph (d)(1) of
this section will be identified on all drawings and specifications.
(3) Materials acceptance shall be the same as described in paragraph
X of Exhibit B to this subpart.
(4) Except as provided in paragraphs (d)(4)(i) through (iii) of this
section, new building construction and additions shall be designed and
constructed in accordance with the earthquake (seismic) requirements of
the applicable Agency's development standard (building code). The
analysis and design of structural systems and components shall be in
accordance with applicable requirements of an acceptable model building
code.
(i) Agricultural buildings that are not intended for human
habitation are exempt from these earthquake (seismic) requirements.
(ii) Single family conventional light wood frame dwellings of two
stories or 35 feet in height maximum shall be designed and constructed
in accordance with the 1992 Council of American Building Officials
(CABO) One and Two Family Dwelling Code or the latest edition.
(iii) Single family housing of masonry design and townhouses of wood
frame construction and additions financed (either directly or through a
guarantee) under title V of the Housing Act of 1949 are recommended to
be designed and constructed in accordance with the earthquake (seismic)
requirements of one of the building codes that provides an equivalent
level of safety to that contained in the latest edition of the National
Earthquake Hazard Reduction Program's (NEHRP) Recommended Provisions for
the Development of Seismic Regulations for New Building (NEHRP
Provisions).
(iv) Acknowledgment of compliance with the applicable seismic safety
requirements for new construction will be contained in the certification
of final plans and specification on the appropriate Agency Form.
(e) Land development. (1) In planning land development,
consideration will be given to practices, including energy conservation
measures, recommended by agricultural colleges, ES, SCS or other
reliable sources. All land and water development will conform to
applicable laws, ordinances, zoning and other applicable regulations
including those related to soil and water conservation and pollution
abatement. The County Supervisor or District Director also will
encourage the applicant to use any cost-sharing and planning assistance
that may be available through agricultural conservation programs.
(2) Site and subdivision planning and development must meet the
requirements of subpart C of part 1924 of this chapter.
(3) Plans and descriptive material will fully describe the work.
(4) The site planning design, development, installation and set-up
of manufactured home sites, rental projects and subdivisions shall meet
the requirements of Exhibit J of this subpart and subpart C of part 1924
of this chapter.
(i) Plans for land leveling, irrigation, or drainage should include
a map of the area to be improved showing the existing conditions with
respect to soil, topography, elevations, depth of topsoil, kind of
subsoil, and natural drainage, together with the proposed land
development.
(ii) When land development consists of, or includes, the
conservation and use of water for irrigation or domestic purposes, the
information submitted to the County Supervisor will include a statement
as to the source of the water supply, right to the use of the water, and
the adequacy and quality of the supply.
(f) Responsibilities for planning development. Planning construction
and land development and obtaining technical services in connection with
drawings, specifications and cost estimates are the sole responsibility
of the applicant, with such assistance from the County Supervisor or
District Director (whichever is the appropriate loan processing and
servicing officer for the type of loan involved), as may be necessary to
[[Page 95]]
be sure that the development is properly planned in order to protect
FmHA or its successor agency under Public Law 103-354's security.
(1) Responsibility of the applicant. (i) The applicant will arrange
for obtaining any required technical services from qualified
technicians, tradespeople, and recognized plan services, and the
applicant will furnish the FmHA or its successor agency under Public Law
103-354 sufficient information to describe fully the planned development
and the manner in which it will be accomplished.
(ii) When items of construction or land development require drawings
and specifications, they will be sufficiently complete to avoid any
misunderstanding as to extent, kind, and quality of work to be
performed. The applicant will provide FmHA or its successor agency under
Public Law 103-354 with one copy of the drawings and specifications.
Approval will be indicated by the applicant and acceptance for the
purposes of the loan indicated by the County Supervisor or District
Director on all sheets of the drawings and at the end of the
specifications, and both instruments will be a part of the loan docket.
After the loan is closed, the borrower will retain a conformed copy of
the approved drawings and specifications, and provide another conformed
copy to the contractor. Items not requiring drawings and specifications
may be described in narrative form.
(iii) FmHA or its successor agency under Public Law 103-354 will
accept final drawings and specifications and any modifications thereof
only after the documents have been certified in writing as being in
conformance with the applicable development standard if required under
paragraph (d)(1) of this section. Certification is required for all
Single Family Housing (SFH) thermal designs (plans, specifications, and
calculations).
(A) Certifications may be accepted from individuals or organizations
who are trained and experienced in the compliance, interpretation or
enforcement of the applicable development standards for drawings and
specifications. Plan certifiers may be any of the following:
(1) Licensed architects,
(2) Professional engineers,
(3) Plan reviewers certified by a national model code organization
listed in Exhibit E to this subpart,
(4) Local building officials authorized to review and approve
building plans and specifications, or
(5) National codes organizations listed in Exhibit E to this
subpart.
(B) The license or authorization of the individual must be current
at the time of the certification statement. A building permit (except as
noted in paragraph (f)(1)(iii)(C)(2) of this section) or professional's
stamp is not an acceptable substitute for the certification statement.
However, a code compliance review conducted by one of the National
recognized code organizations indicating no deficiencies or the noted
deficiencies have been corrected is an acceptable substitute for the
certification statement.
(C) For Single Family Housing (one to four family dwelling units)
FmHA or its successor agency under Public Law 103-354 may also accept
drawings and specifications that have been certified by:
(1) Registered Professional Building Designers certified by the
American Institute of Building Design.
(2) A local community, if that community has adopted, by reference,
one of the model building codes and has trained official(s) who
review(s) plans as well as inspect(s) construction for compliance as a
requisite for issuing a building permit. The building permit, issued by
the community, may serve as evidence of acceptance. The State Director
will determine eligible communities and publish, as a State supplement
to this section, a list of those communities that qualify.
(3) A plan service that provides drawings and specifications that
are certified by individuals or organizations as listed in paragraph
(f)(1)(iii)(A) or (f)(1)(iii)(C)(1) and (2) of this section as meeting
the appropriate state adopted development standard.
(4) Builders/Contractors who provide 10-year warranty plans for the
specific FmHA or its successor agency under Public Law 103-354 finance
dwelling unit that meet the requirements of Exhibit L of this subpart.
[[Page 96]]
(5) Builders/Contractors that are approved by the United States
Department of Housing and Urban Development (HUD) for self-
certification.
(D) The modifications of certified drawings or specifications must
be certified by the same individual or organization that certified the
original drawings and specifications. If such individual or organization
is not available, the entire set of modified drawings and specifications
must be recertified.
(E) The certification of modifications for single family housing
(SFH) construction may be waived if the builder or original author of
the drawings and specifications provides a written statement that the
modifications are not regulated by the applicable development standard.
The County Supervisor may consult with the State Office Architect/
Engineer as to acceptance of the statement and granting a waiver.
(F) All certifications of final drawings, specifications, and
calculations shall be on Form FmHA or its successor agency under Public
Law 103-354 1924-25, ``Plan Certification.''
(2) Responsibility of the County Supervisor or District Director. In
accordance with program regulations for loans and grants they are
required to process, the County Supervisor or District Director, for the
sole benefit of FmHA or its successor agency under Public Law 103-354,
will:
(i) Visit each farm or site on which the development is proposed.
For an FO loan, the County Supervisor and the applicant will determine
the items of development necessary to put the farm in a livable and
operable condition at the outset. Prepare Form FmHA or its successor
agency under Public Law 103-354 1924-1, when applicable in accordance
with the Forms Manual Insert (FMI) for the form, after a complete
understanding has been reached between the applicant and the County
Supervisor regarding the development to be accomplished, including the
dates each item of development will be started and completed.
(ii) Notify the loan or grant applicant in writing immediately if,
after reviewing the preliminary proposal and inspecting the site, the
proposal is not acceptable. If the proposal is acceptable, an
understanding will be reached with the applicant concerning the starting
date for each item of development.
(iii) Discuss with the applicant the FmHA or its successor agency
under Public Law 103-354 requirements with respect to good construction
and land development practices.
(iv) Advise the applicant regarding drawings, specifications, cost
estimates, and other related material which the applicant must submit to
the FmHA or its successor agency under Public Law 103-354 for review
before the loan can be developed. Advise the applicant of the
information necessary in the drawings, how the cost estimates should be
prepared, the number of sets of drawings, specifications, and cost
estimates required, and the necessity for furnishing such information
promptly. Advise the applicant that FmHA or its successor agency under
Public Law 103-354 will provide appropriate specification forms, Form
FmHA or its successor agency under Public Law 103-354 1924-2,
``Description of Materials,'' and Form FmHA or its successor agency
under Public Law 103-354 1924-3, ``Service Building Specifications.''
The applicant may, however, use other properly prepared specifications.
(v) Advise the applicant regarding publications, plans, planning
aids, engineering data, and other technical advice and assistance
available through local, state, and Federal agencies, and private
individuals and organizations.
(vi) Review the information furnished by the applicant to determine
the completeness of the plans, adequacy of the cost estimates,
suitability and soundness of the proposed development.
(vii) When appropriate, offer suggestions as to how drawings and
specifications might be altered to improve the facility and better serve
the needs of the applicant. The County Supervisor or District Director
may assist the applicant in making revisions to the drawings. When
appropriate, the contract documents will be forwarded to the State
architect/engineer for review. For revisions requiring technical
determinations that FmHA or its successor agency under Public Law 103-
354 is not
[[Page 97]]
able to make, the applicant will be requested to obtain additional
technical assistance.
(viii) Provide the applicant with a written list of changes required
in the contract documents. The applicant will submit two complete
revised (as requested) sets of contract documents, for approval. On one
set, the County Supervisor or District Director will indicate acceptance
on each sheet of the drawings, and on the cover of the specifications
and all other contract documents. At least the date and the initials of
the approval official must be shown. On projects where a consulting
architect or engineer has been retained, this acceptance will be
indicated only after the State Director has given written authorization.
The marked set of documents shall be available at the job site at all
times for review by FmHA or its successor agency under Public Law 103-
354. The second set will become part of the loan docket.
(ix) Review the proposed method of doing the work and determine
whether the work can be performed satisfactorily under the proposed
method.
(x) Instruct the applicant not to incur any debts prior to loan
closing for materials or labor or make any expenditures for such
purposes with the expectation of being reimbursed from loan funds.
(xi) Instruct the applicant not to commence any construction nor
cause any supplies or materials to be delivered to the construction site
prior to loan closing.
(xii) Under certain conditions prescribed in Exhibit H of this
subpart, provide the applicant with a copy of the leaflet, ``Warning--
Lead-Based Paint Hazards,'' which is Attachment 1 of Exhibit H
(available in any FmHA or its successor agency under Public Law 103-354
office), and the warning sheet, ``Caution Note on Lead-Based Paint
Hazard,'' which is Attachment 2 of Exhibit H (available in any FmHA or
its successor agency under Public Law 103-354 office).
(g) Surplus structures and use or sale of timber, sand, or stone. In
planning the development, the applicant and the County Supervisor or
District Director should, when practicable, plan to use salvage from old
buildings, timber, sand, gravel, or stone from the property. The
borrower may sell surplus buildings, timber, sand, gravel, or stone that
is not to be used in performing planned development and use net proceeds
to pay costs of performing planned development work. In such a case:
(1) An agreement will be recorded in the narrative of Form FmHA or
its successor agency under Public Law 103-354 1924-1 which as a minimum
will:
(i) Identify the property to be sold, the estimated net proceeds to
be received, and the approximate date by which the property will be
sold.
(ii) Provide that the borrower will deposit the net proceeds in the
supervised bank account and apply any funds remaining after the
development is complete as an extra payment on the loan, or in
accordance with Sec. 1965.13(f) of subpart A of part 1965 of this
chapter for farm program loans.
(2) The agreement will be considered by the Government as modifying
the mortgage contract to the extent of authorizing and requiring the
Government to release the identified property subject to the conditions
stated in the agreement without payment or other consideration at the
time of release, regardless of whether or not the mortgage specifically
refers to Form FmHA or its successor agency under Public Law 103-354
1924-1 or the agreement to release.
(3) If the FmHA or its successor agency under Public Law 103-354
loan will be secured by a junior lien, all prior lienholders must give
written consent to the proposed sale and the use of the net proceeds
before the loan is approved.
(4) Releases requested by the borrower or the buyer will be
processed in accordance with applicable release procedures in subpart A
or subpart C of part 1965 of this chapter, as appropriate.
(h) Review prior to performing development work. For the sole
benefit of FmHA or its successor agency under Public Law 103-354ing
development
[[Page 98]]
work, the County Supervisor or District Director will review planned
development with the borrower. Adequacy of the drawings and
specifications as well as the estimates will be checked to make sure the
work can be completed within the time limits previously agreed upon and
with available funds. Items and quantities of any materials the borrower
has agreed to furnish will be checked and dates by which each item of
development should be started will be checked in order that the work may
be completed on schedule. If any changes in the plans and specifications
are proposed, they should be within the general scope of the work as
originally planned. Changes must be approved and processed in accordance
with Sec. 1924.10 of this subpart. The appropriate procedure for
performing development should be explained to the borrower. Copies of
FmHA or its successor agency under Public Law 103-354 forms that will be
used during the period of construction should be given to the borrower.
The borrower should be advised as to the purpose of each form and at
what period during construction each form will be used.
(i) Time of starting development work. Development work will be
started as soon as feasible after the loan is closed. Except in cases in
which advance commitments are made in accordance with subpart A of part
1944 of this chapter or according to Sec. 1924.13(e)(1)(vi)(A) or
Sec. 1924.13(e)(2)(ix)(A) of this subpart, no commitments with respect
to performing planned development will be made by the County Supervisor,
District Director, or the applicant before the loan is closed. The
applicant will be instructed that before the loan is closed, debts
should not be incurred for labor or materials, or expenditures made for
such purposes, with the expectation of being reimbursed from loan funds
except as provided in subpart A of part 1943 of this chapter and
subparts A and E of part 1944 of this chapter. However, with the prior
approval of the National Office, a State Supplement may be issued
authorizing County Supervisors to permit applicants to commence
welldrilling operations prior to loan closing, provided:
(1) It is necessary in the area to provide the water supply prior to
loan closing,
(2) The applicant agrees in writing to pay with personal funds all
costs incurred if a satisfactory water supply is not obtained,
(3) Any contractors and suppliers understand and agree that loan
funds may not be available to make the payment,
(4) Such action will not result under applicable State law in the
giving of priority to mechanics and materialmen's liens over the later
recorded FmHA or its successor agency under Public Law 103-354 mortgage,
and
(5) FmHA or its successor agency under Public Law 103-354 does not
guarantee that the cost will be paid.
[52 FR 8002, Mar. 13, 1987, as amended at 52 FR 19283, May 22, 1987; 52
FR 48391, Dec. 22, 1987; 52 FR 48799, Dec. 28, 1987; 53 FR 43676, Oct.
28, 1988; 59 FR 43723, Aug. 25, 1994; 61 FR 65156, Dec. 11, 1996]
Effective Date Note: At 61 FR 65156, Dec. 11, 1996, in Sec. 1924.5,
paragraph (d)(4) was added, effective Jan. 10, 1997.
Sec. 1924.6 Performing development work.
All construction work will be performed by one, or a combination, of
the following methods: Contract, borrower, mutual self-help, or owner-
builder. All development work must be performed by a person, firm or
organization qualified to provide the service. Conditional commitment
construction is covered under Subpart A of Part 1944 of this chapter.
(a) Contract method. This method of development will be used for all
major construction except in cases where it is clearly not possible to
obtain a contract at a reasonable or competitive cost. Work under this
method is performed in accordance with a written contract.
(1) Forms used. Form FmHA or its successor agency under Public Law
103-354 1924-6, ``Construction Contract,'' will be used for SFH
construction. Other contract documents for more complex construction,
acceptable to the loan approval official and containing the requirements
of Subpart E of Part 1901 of this chapter, may be used
[[Page 99]]
provided they are customarily used in the area and protect the interest
of the borrower and the Government with respect to compliance with items
such as the drawings, specifications, payments for work, inspections,
completion, nondiscrimination in construction work and acceptance of the
work. If needed, the Office of the General Counsel (OGC) will be
consulted. The United States (including FmHA or its successor agency
under Public Law 103-354) will not become a party to a construction
contract or incur any liability under it.
(2) Contract provisions. Contracts will have a listing of
attachments and the provisions of the contract will include:
(i) The contract sum.
(ii) The dates for starting and completing the work.
(iii) The amount of liquidated damages to be charged.
(iv) The amount, method, and frequency of payment.
(v) Whether or not surety bonds will be provided.
(vi) The requirement that changes or additions must have prior
written approval of FmHA or its successor agency under Public Law 103-
354.
(3) Surety requirements. (i) Unless an exception is granted in
accordance with paragraph (a)(3)(iii) of this section or when interim
financing will be used, surety that guarantees both payment and
performance in the amount of the contract will be furnished when one or
more of the following conditions exist:
(A) The contract exceeds $100,000.
(B) The loan approval official determines that a surety bond appears
advisable to protect the borrower against default of the contractor.
(C) The applicant requests a surety bond.
(D) The contract provides for partial payments in excess of the
amount of 60 percent of the value of the work in place.
(E) The contract provides for partial payments for materials
suitably stored on the site.
(ii) If surety bonds are required the construction contract must
indicate that the contractor will furnish properly executed surety bonds
prior to the start of any work. Exhibits F and G of this subpart as
revised by OGC if necessary to comply with local or state statutory
requirements will be used as the forms of payment bond and performance
bond to be provided. Unless noncorporate surety is provided, the surety
bonds may only be obtained from a corporate bonding company listed on
the current Department of the Treasury Circular 570 (published annually
in the Federal Register), as holding a certificate of authority as an
acceptable surety on Federal bonds and as legally doing business in the
State where the land is located. Noncorporate sureties are not
recommended and the State Director will be responsible for determining
the acceptability of the individual or individuals proposed as sureties
on the bonds. The State Director must determine that an individual or
individuals proposed as sureties must have cash or other liquid assets
easily convertible to cash in an amount at least equal to 25 percent
more than the contract amount in order to be acceptable. The
individual(s) will pledge such liquid assets in an amount equal to the
contract amount. Fees charged for noncorporate sureties may not exceed
fees charged by corporate sureties on bonds of equal amount and, in no
case, may surety be provided by the applicant or any person or
organization with an identity of interest in the applicant's operation.
The United States (including FmHA or its successor agency under Public
Law 103-354) will incur no liability related in any way to a performance
or payment bond provided in connection with a construction contract.
FmHA or its successor agency under Public Law 103-354 will be named as
co-obligee in the performance and payment bonds unless prohibited by
state law.
(iii) When an experienced and reliable contractor cannot obtain
payment and performance bonds meeting the surety requirements of
paragraph (a)(3)(ii) of this section, the State Director may entertain a
request from the applicant for an exception to the surety requirements.
The applicant's request must specifically state why the proposed
contractor is unable to obtain payment and performance bonds meeting the
[[Page 100]]
surety requirements, and why it is financially advantageous for the
applicant to award the contract to the proposed contractor without the
required bonds.
If the applicant's request is reasonable and justified, and if the
proposed contractor is reliable and experienced in the construction of
projects of similar size, design, scope, and complexity, the State
Director may grant an exception to the surety requirements for loans or
grants within the State Director's approval authority and accept one or
a combination of the following:
(A) An unconditional and irrevocable letter of credit issued by a
lending institution which has been reviewed and approved by OGC. In such
cases, the construction contract must indicate that the contractor will
furnish a properly executed letter of credit from a lending institution
acceptable to FmHA or its successor agency under Public Law 103-354
prior to the start of any work. The letter of credit must remain in
effect until the date of final acceptance of work by the owner and FmHA
or its successor agency under Public Law 103-354. In addition, the
letter of credit must stipulate that the lending institution, upon
written notification by FmHA or its successor agency under Public Law
103-354 of the contractor's failure to perform under the terms of the
contract, will advance funds up to the amount of the contract (including
all FmHA or its successor agency under Public Law 103-354 approved
contract change orders) to satisfy all prior debts incurred by the
contractor in performing the contract and all funds necessary to
complete the work. Payments may be made to the contractor in accordance
with paragraph (a)(12)(i)(C) of this section as if full surety bonds
were being provided.
(B) If a letter of credit satisfying the conditions of paragraph
(a)(3)(iii)(A) of this section cannot be obtained, the State Director
may accept a deposit in the amount of the contract, into an interest or
non-interest bearing supervised bank account. In such cases, the
construction contract must indicate that the contractor will furnish the
required deposit prior to the start of any work and that the funds shall
remain on deposit until final acceptance of work by the owner and FmHA
or its successor agency under Public Law 103-354. Payments may be made
to the contractor in accordance with paragraph (a)(12)(i)(C) of this
section as if full surety bonds were being provided.
(C) When the provisions of paragraph (a)(3)(iii)(A) or (B) of this
section can be met except that a surety bond, a letter of credit, and/or
deposits are not obtainable in full amount of the contract, the State
Director may accept an amount less than the full amount of the contract
provided all of the following conditions are met:
(1) The contractor provides a surety bond, a letter of credit, or
deposits in the greatest amount possible, and provides documentation
indicating the reasons why amounts exceeding the proposed amount cannot
be provided.
(2) The applicant agrees to the amount of the surety bond, letter of
credit, or deposits proposed, and the State Director determines that the
applicant has the financial capability to withstand any financial loss
due to default of the contractor.
(3) In the opinion of the State Director, the proposed amount and
the method of payment will provide adequate protection for the borrower
and the Government against default of the contractor.
(4) The contract provides for partial payments not to exceed 90
percent of the value of the work in place for that portion of the total
contract which is guaranteed by an acceptable surety bond, letter of
credit, or deposits, and partial payments not to exceed 60 percent of
the value of the work in place for that portion of the total contract
which is not guaranteed by surety, letter of credit, or deposits.
Example:
Contractor has a surety bond which guarantees payment and
performance in an amount of $150,000 which represents 75 percent of the
total contract amount of $200,000. The contractor's first request for
payment appears thus:
--Value of work in place is $10,000.
--Payment for work guaranteed by surety is 75 percent times $10,000
times 90 percent is $6,750.
--Payment for work not guaranteed by surety is 25 percent times $10,000
times 60 percent is $1,500.
--Authorized payment is $8,250.
[[Page 101]]
(Each partial payment shall reflect values for work guaranteed by
surety, letter of credit, or deposits, and work not so guaranteed).
(iv) In cases where the contractor does not obtain payment and
performance bonds in accordance with the surety requirements of
paragraph (a)(3)(ii) of this section, or where an exception to the
surety requirements is granted by the State Director, the following
steps will be taken to protect the borrower and the government against
latent obligations or defects in connection with the construction:
(A) The contractor will furnish a properly executed corporate latent
defects bond or a maintenance bond in the amount of 10 percent of the
construction contract; or
(B) An unconditional and irrevocable letter of credit in the amount
of 10 percent of the construction contract issued by a lending
institution which has been reviewed and approved by OGC; or
(C) A cash deposit into an interest or non-interest bearing
supervised bank account in the amount of 10 percent of the construction
contract;
(D) The period of protection against latent obligations and/or
defects shall be one year from the date of final acceptance of work by
the owner and FmHA or its successor agency under Public Law 103-354;
(E) Final payment shall not be rendered to the contractor until the
provisions of paragraph (a)(3)(iv)(A), (B) or (C) of this section have
been met;
(F) The contract will contain a clause indicating that the
contractor agrees to provide surety or guarantee acceptable to the owner
and FmHA or its successor agency under Public Law 103-354 against latent
obligations and/or defects in connection with the construction.
(4) Equal opportunity. Section 1901.205 of subpart E of part 1901 of
this chapter applies to all loans or grants involving construction
contracts and subcontracts in excess of $10,000.
(5) Labor standards provisions. The provisions of the Davis-Bacon
and related acts, which are published by the Department of Labor (29 CFR
parts 1, 3 and 5), will apply when the contract involves either LH grant
assistance, or 9 or more units in a project being assisted under the HUD
section 8 housing assistance payment program for new construction.
(6) Historical and archaeological preservation. The provisions of
subpart F of part 1901 of this chapter concerning the protection of
historical and archaeological properties will apply to all construction
financed, in whole or in part, by FmHA or its successor agency under
Public Law 103-354 loans and grants. These provisions have special
applicability to development in areas designated by NRCS as Resource
Conservation and Development (RC&D) areas. (See part 1942, subpart I of
this chapter.)
(7) Air and water acts. Under Executive Order 11738, all loans or
grants involving construction contracts for more than $100,000 must meet
all the requirements of section 114 of the Clean Air Act (42 U.S.C.
7414) and section 308 of the Water Pollution Control Act (33 U.S.C.,
section 1813). The contract should contain provisions obligating the
contractor as a condition for the award of the contract as follows:
(i) To notify the owner of the receipt of any communication from
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.
(ii) 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 as of the date of contract award.
(iii) To include or cause to be included the above criteria and
requirements of paragraphs (a)(7)(i) and (ii) of this section in every
nonexempt subcontract, and that the contractor will take such action as
the Government may direct as a means of enforcing such provisions.
(8) Architectural barriers. In accordance with the Architectural
Barriers Act of 1968 (Pub. L. 90-480), as implemented by the General
Services Administration regulations (41 CFR 101-
[[Page 102]]
19.6) and section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112)
as implemented by 7 CFR, parts 15 and 15b, all facilities financed with
FmHA or its successor agency under Public Law 103-354 loans and grants
and which are accessible to the public or in which people with
disabilities may be employed or reside must be developed in compliance
with this Act. Copies of the Act and Federal accessibility design
standards may be obtained from the Executive Director, Architectural and
Transportation Barriers Compliance Board, Washington, DC 20201.
(9) National Environmental Policy Act. The provisions of subpart G
of part 1940 of this chapter concerning environmental requirements will
apply to all loans and grants including those being assisted under the
HUD section 8 housing assistance payment program for new construction.
(10) Obtaining bids and selecting a contractor. (i) The applicant
may select a contractor and negotiate a contract or contact several
contractors and request each to submit a bid. For complex construction
projects, refer also to Sec. 1924.13(e) of this subpart.
(ii) When a price has already been negotiated by an applicant and a
contractor, the County Supervisor, District Director or other
appropriate FmHA or its successor agency under Public Law 103-354
official will review the proposed contract. If the contractor is
qualified to perform the development and provide a warranty of the work
and the price compares favorably with the cost of similar construction
in the area, further negotiation is unnecessary. If the FmHA or its
successor agency under Public Law 103-354 official determines the price
is too high or otherwise unreasonable, the applicant will be requested
to negotiate further with the contractor. If a reasonable price cannot
be negotiated or if the contractor is not qualified, the applicant will
be requested to obtain competitive bids.
(iii) When an applicant has a proposed development plan and no
contractor in mind, competitive bidding will be encouraged. The
applicant should obtain bids from as many qualified contractors, dealers
or tradespeople as feasible depending on the method and type of
construction.
(iv) If the award of the contract is by competitive bidding, Form
FmHA or its successor agency under Public Law 103-354 1924-5,
``Invitation for Bid (Construction Contract),'' or another similar
invitation bid form containing the requirements of subpart E of part
1901 of this chapter, may be used. All contractors from whom bids are
requested should be informed of all conditions of the contract including
the time and place of opening bids. Conditions shall not be established
which would give preference to a specific bidder or type of bidder. When
applicable, copies of Forms FmHA or its successor agency under Public
Law 103-354 1924-6 and FmHA or its successor agency under Public Law
103-354 400-6, ``Compliance Statement,'' also should be provided to the
prospective bidders.
(11) Awarding the contract. The borrower, with the assistance of the
County Supervisor or District Director, will consider the amount of the
bids or proposals, and all conditions which were listed in the
``Invitation for Bid.'' On the basis of these considerations, the
borrower will select and notify the lowest responsible bidder.
(i) Before work commences, the County Supervisor, District Director
or other FmHA or its successor agency under Public Law 103-354 employee
having knowledge of contracts and construction practices will hold a
preconstruction conference with the borrower(s), contractor and
architect/engineer (if applicable). The purpose of the conference is to
reach a mutual understanding of each party's responsibilities under the
terms and conditions of the contract documents and the loan agreement
during the construction and warranty periods. Form FmHA or its successor
agency under Public Law 103-354 1924-16, ``Record of Preconstruction
Conference,'' may be used as a guide for an agenda.
(ii) A summary of the items covered will be entered in the running
case record.
(iii) The contract will then be prepared, signed and copies
distributed in accordance with the FMI for Form FmHA or its successor
agency under Public Law 103-354 1924-6.
(iv) After a borrower/contractor's contract or subcontract in excess
of
[[Page 103]]
$10,000 is received in the FmHA or its successor agency under Public Law
103-354 County or District Office, the responsible FmHA or its successor
agency under Public Law 103-354 official will send within 10 calendar
days of the date of the contract or subcontract, a report similar in
form and content to Exhibit C of Subpart E of Part 1901 of this chapter
to the Area Director, Office of Federal Contract Compliance Programs,
U.S. Department of Labor, at the applicable address listed in Exhibit E,
Subpart E of Part 1901 of this chapter. The report must contain, at
least, the following information: contractor's name, address and
telephone number; employer's identification number; amount, starting
date and planned completion date of the contract; contract number; and
city and DOL region of the contract site. The information for this
report should be obtained from the contractor when the contract is
awarded.
(12) Payments for work done by the contract method. (i) Payments
will be made in accordance with one of the following methods unless
prohibited by state statute, in which case the State Director shall
issue a State Supplement to this section:
(A) The ``One-Lump-Sum'' payment method will be used when the
payment will be made in one lump-sum for the whole contract.
(B) The ``Partial payments not to exceed 60 percent of the value of
the work in place'' payment method will be used when the contractor does
not provide surety bond, a letter of credit, or deposits.
(C) The ``Partial payments in the amount of 90 percent of the value
of the work in place and of the value of the materials suitably stored
at the site'' payment method will be used when the contractor provides a
surety bond equal to the total contract amount.
(D) The ``Partial payments which reflect the portions of the
contract amount which is guaranteed'' method will be used when the
contractor provides surety bonds, a letter of credit, or deposits less
than the total amount of the contract in accordance with the provisions
of paragraph (a)(3)(iii)(C) of this section.
(ii) When Form FmHA or its successor agency under Public Law 103-354
1924-6 is used, the appropriate payment clause will be checked and the
other payment clauses not used will be effectively crossed out.
(iii) When a contract form other than Form FmHA or its successor
agency under Public Law 103-354 1924-6 is used, the payment clause must
conform with paragraph (a)(12)(i) of this section and the appropriate
clause as set forth in Form FmHA or its successor agency under Public
Law 103-354 1924-6.
(iv) The borrower and FmHA or its successor agency under Public Law
103-354 must take precautionary measures to see that all payments made
to the contractor are properly applied against bills for materials and
labor procured under the contract. Prior to making any partial payment
on any contract where a surety bond is not used, the contractor will be
required to furnish the borrower and the FmHA or its successor agency
under Public Law 103-354 with a statement showing the total amount owed
to date for materials and labor procured under the contract. The
contractor also may be required to submit evidence showing that previous
partial payments were applied properly. When the borrower and the County
Supervisor or District Director have reason to believe that partial
payments may not be applied properly, checks may be made jointly to the
contractor and persons who furnished materials and labor in connection
with the contract.
(v) When partial payments are requested by the contractor and
approved by the owner, the amount of the partial payment will be
determined by one of the following methods:
(A) Based upon the percentage completed as shown on a recently
completed and properly executed Form FmHA or its successor agency under
Public Law 103-354 1924-12, ``Inspection Report.''
(B) When the structure will be covered by an insured 10-year
warranty, the insurer's construction inspector must provide FmHA or its
successor agency under Public Law 103-354 with any available copies of
inspection reports showing percentage of completion immediately after
the inspections
[[Page 104]]
are completed. To make partial payments when copies of inspection
reports are not available, the responsible FmHA or its successor agency
under Public Law 103-354 official will make the inspections or will be
guided by the provisions of Sec. 1924.6(a)(12)(v)(C) of this subpart. If
further assurance is deemed necessary to justify partial payments, the
FmHA or its successor agency under Public Law 103-354 official may make
onsite inspections or require additional information.
(C) Based upon an application for payment containing an estimate of
the value of work in place which has been prepared by the contractor and
accepted by the borrower and FmHA or its successor agency under Public
Law 103-354. When the contract provides for partial payments for
materials satisfactorily stored at the site, the application for payment
may include these items. Prior to receiving the first partial payment,
the contractor should be required to submit a list of major
subcontractors and suppliers and a schedule of prices or values of the
various phases of the work aggregating the total sum of the contract
such as excavation, foundations, framing, roofing, siding, mill work,
painting, plumbing, heating, electric wiring, etc., made out in such
form as agreed upon by the borrower, FmHA or its successor agency under
Public Law 103-354, and the contractor. In applying for payments, the
contractor should submit a statement based upon this schedule. See
Exhibit A of this subpart for guidance in reviewing the contractor's
schedule of prices and estimating the value of the work in place.
(vi) Final payment. (A) When the structure will be covered by an
insured 10-year warranty, the insurer must provide an insured 10-year
warranty policy (or a binder if the policy is not available) before
final payment is made to the builder.
(B) Final payment of the amount due on the contract or disbursal of
the FmHA or its successor agency under Public Law 103-354 loan funds
where an interim loan was used will be made only upon completion of the
entire contract, final inspection by FmHA or its successor agency under
Public Law 103-354, acceptance of the work by FmHA or its successor
agency under Public Law 103-354 and the borrower, issuance of any and
all final permits and approvals for the use and occupancy of the
structure by any applicable state and local governmental authorities,
and compliance by the contractor with all terms and conditions of the
contract. In the event the work of construction is delayed or
interrupted by reason of fire, flood unusually stormy weather, war,
riot, strike, an order, requisition or regulation of any governmental
body (excluding delays related to possible defects in the contractor's
performance and excluding delays caused by the necessity of securing
building permits or any required inspection procedures connected
therewith) or other contingencies reasonably unforeseeable and beyond
the reasonable control of the contractor, then with the written consent
of FmHA or its successor agency under Public Law 103-354, the date of
completion of the work may be extended by the owner by the period of
such delay, provided that the contractor shall give the owner and FmHA
or its successor agency under Public Law 103-354 written notice within
72 hours of the occurrence of the event causing the delay or
interruption.
(C) Prior to making final payment on the contract when a surety bond
is not used or disbursing the FmHA or its successor agency under Public
Law 103-354 loan funds when an interim loan was used, FmHA or its
successor agency under Public Law 103-354 will be provided with a Form
FmHA or its successor agency under Public Law 103-354 1924-9,
``Certificate of Contractor's Release,'' and Form FmHA or its successor
agency under Public Law 103-354 1924-10, ``Release by Claimants.''
executed by all persons who furnished materials or labor in connection
with the contract. The borrower should furnish the contractor with a
copy of the ``Release by Claimants'' form at the beginning of the work
in order that the contractor may obtain these releases as the work
progresses.
(1) If such releases cannot be obtained, the funds may be disbursed
provided all the following can be met:
(i) Release statements to the extent possible are obtained;
[[Page 105]]
(ii) The interests of FmHA or its successor agency under Public Law
103-354 can be adequately protected and its security position is not
impaired; and
(iii) Adequate provisions are made for handling the unpaid account
by withholding or escrowing sufficient funds to pay any such claims or
obtaining a release bond.
(2) The State Director may issue a State Supplement which will:
(i) Not require the use of Form FmHA or its successor agency under
Public Law 103-354 1924-10, if, under existing state statutes, the
furnishing of labor and materials gives no right to a lien against the
property, or
(ii) Provide an alternative method to protect against mechanic's and
materialmen's liens. In this case, the use of Form FmHA or its successor
agency under Public Law 103-354 1924-10 is optional.
(b) Borrower method. The borrower method means performance of work
by or under the direction of the borrower, using one or more of the ways
specified in this paragraph. Development work may be performed by the
borrower method only when it is not practicable to do the work by the
contract method; the borrower possesses or arranges through an approved
self-help plan for the necessary skill and managerial ability to
complete the work satisfactorily; such work not interfere seriously with
the borrower's farming operation or work schedule, and the County Office
caseload will permit a County Supervisor to properly advise the borrower
and inspect the work.
(1) Ways of performing the work. The borrower will:
(i) Purchase the material and equipment and do the work.
(ii) Utilize lump-sum agreements for (A) minor items or minor
portions of items of development, the total cost of which does not
exceed $5,000 per agreement, such as labor, material, or labor and
material for small service buildings, repair jobs, or land development;
or (B) material and equipment which involve a single trade and will be
installed by the seller, such as the purchase and installation of
heating facilities, electric wiring, wells, painting, liming, or
sodding. All agreements will be in writing, however, the County
Supervisor may make an exception to this requirement when the agreement
involves a relatively small amount.
(2) Acceptance and storage of material on site. The County
Supervisor will advise the borrower that the acceptance of material as
delivered to the site and the proper storage of material will be the
borrower's responsibility.
(3) Payment for work done by the borrower method--(i) Payments for
labor. Before the County Supervisor countersigns checks for labor, the
borrower must submit a completed Form FmHA or its successor agency under
Public Law 103-354 1924-11, ``Statement of Labor Performed,'' for each
hired worker performing labor during the pay period. Ordinarily, checks
for labor will be made payable to the workers involved. However, under
justifiable circumstances, when the borrower has paid for labor with
personal funds and has obtained signatures of the workers on Form FmHA
or its successor agency under Public Law 103-354 1924-11 as having
received payment, the County Supervisor may countersign a check made
payable to the borrower for reimbursement of these expenditures. Under
no circumstances will the County Supervisor permit loan funds or funds
withdrawn from the supervised bank account to be used to pay the
borrower for the borrower's own labor or labor performed by any member
of the borrower's household.
(ii) Payment for equipment, materials or lump-sum agreements. (A)
Before countersigning checks for equipment or materials, the County
Supervisor must normally have an invoice from the seller covering the
equipment or materials to be purchased. When an invoice is not available
at the time the check is issued, an itemized statement of the equipment
or materials to be purchased may be substituted until a paid invoice
from the seller is submitted, at which time the prepurchase statement
may be destroyed.
(B) When an invoice is available at the time the check is drawn, the
check will include a reference to the invoice number, the invoice date
if unnumbered and, if necessary, the purpose of the expenditure.
[[Page 106]]
(C) The check number and date of payment will be indicated on the
appropriate Form FmHA or its successor agency under Public Law 103-354
1924-11, invoice, itemized statement of equipment or materials and/or
lump-sum agreement.
(D) Ordinarily, checks for equipment or materials will be made
payable to the seller. Under justifiable circumstances, when the
borrower has paid for equipment or materials with personal funds and
furnished a paid invoice, the County Supervisor may countersign a check
made payable to the borrower for reimbursement of these expenses.
(E) When an invoice includes equipment or materials for more than
one item of development, the appropriate part of the cost to be charged
against each item of development will be indicated on the invoice by the
borrower, with the assistance of the County Supervisor.
(F) Payment made under lump-sum agreements will be made only when
all items of equipment and materials have been furnished, labor has been
performed as agreed upon, and the work has been accepted by the borrower
and FmHA or its successor agency under Public Law 103-354.
(G) Each paid Form FmHA or its successor agency under Public Law
103-354 1924-11, invoice, itemized statement for equipment or material
and/or lump-sum agreement will be given to the borrower in accordance
with the FMI.
(c) Mutual self-help method. The mutual self-help method is
performance of work by a group of families by mutual labor under the
direction of a construction supervisor, as described in subpart A of
part 1944 of this chapter. The ways of doing the work, buying materials,
and contracting for special services are like those used for the
borrower method. Materials can be bought jointly by the group of
families, but payments will be made individually by each family. In the
case of RH loans to families being assisted by Self-Help Technical
Assistance (TA) grants in accordance with subpart I of part 1944 of this
chapter, the County Supervisor may countersign checks for materials and
necessary contract work made payable directly to the TA grantee,
provided the District Director determines that:
(1) The grantee acts in the same capacity as a construction manager
in the group purchase of material and services.
(2) The grantee has an adequate bookkeeping system approved by the
District Director to assure that funds in each RH account are properly
distributed and maintained.
(3) The grantee receives no compensation in the way of profit or
overhead for this service and all discounts and rebates received in
connection with the purchase of materials or services are passed on to
the participating families.
(4) The grantee has a record-keeping system which shows that the
costs of the materials and services were prorated to each borrower's
account in relation to the actual material and service used by each
borrower.
(d) Owner-builder method. This method of construction applies only
to RRH loans made under subpart E of part 1944 of this chapter.
Regulations governing this method are found at Sec. 1924.13(e)(2) of
this subpart.
[52 FR 8002, Mar. 13, 1987, as amended at 55 FR 41833, Oct. 16, 1990; 60
FR 55122, Oct. 27, 1995; 61 FR 56116, Oct. 31, 1996]
Sec. 1924.7 [Reserved]
Sec. 1924.8 Development work for modular/panelized housing units.
(a) Exhibit B of this subpart applies to all loans involving
modular/panelized housing units.
(b) Complete drawings and specifications will be required as
prescribed in Exhibit C of this subpart. Each set of drawings will
contain the design of the foundation system required for the soil and
slope conditions of the particular site on which the modular/panelized
house is to be placed.
(c) The manufacturer will provide a certification (Exhibit B,
Attachment 5 of this subpart), stating that the building has been built
substantially in accordance with the drawings and specifications. The
builder will also provide a certification that the onsite work complies
with drawings, specifications,
[[Page 107]]
and the applicable development standard (Exhibit B, Attachment 5 of this
subpart).
(d) Responsibility for field inspections will be in accordance with
Sec. 1924.9(a) of this subpart. Frequency and timing of inspections will
be in accordance with Sec. 1924.9(b) of this subpart, except that the
Stage 2 inspection should be made during the time and in no case later
than two working days after the crews commence work on the site and the
house is being erected or placed on the foundation, to determine
compliance with the accepted drawings and specifications.
(e) Periodic plant inspections will be performed in accordance with
paragraphs II and III of Exhibit B of this subpart. FmHA or its
successor agency under Public Law 103-354 employees responsible for
inspections in the area in which the manufacturing plant or material
supply yard is located will perform such inspections as deemed necessary
under paragraph III of Exhibit B of this subpart.
(1) Plant inspections will be made if the type construction method
used could restrict adequate inspections on the building site.
(2) Plant inspections will be made as often as necessary; however,
after initial inspection and acceptance of the unit, only when it
appears advisable to ascertain the performance and continuing stability
of accepted materials and construction.
(f) Only one contract will be accepted for the completed house on
the site owned or to be bought by the borrower. The manufacturer of the
house or the manufacturer's agent may be the prime contractor for
delivery and erection of the house on the site or a builder may contract
with the borrower for the complete house in place on the site. Such
contracts should provide that payments will be made only for work in
place on the borrower's site.
(g) Payments for modular/panelized units will be made in accordance
with the terms of the contract and in compliance with Sec. 1924.6(a)(12)
of this subpart.
Sec. 1924.9 Inspection of development work.
The following policies will govern the inspection of all development
work.
(a) Responsibility for inspection. The County Supervisor or District
Director, accompanied by the borrower when practicable, will make final
inspection of all development work and periodic inspections as
appropriate to protect the security interest of the government. In this
respect, inspections other than final inspections, may be conducted by
other qualified persons as authorized in paragraph (b)(3) of this
section, in Sec. 1944.17(a)(2)(iii) of FmHA Instruction 2024-A
(available in any RECD field office), and as authorized under other
agreements executed by, or authorized by, the National Office.
The borrower will be responsible for making inspections necessary to
protect the borrower's interest. RHS or its successor agency under
Public Law 103-354 inspections are not to assure the borrower that the
house is built in accordance with the plans and specifications. The
inspections create or imply no duty or obligation to the particular
borrower. RHS or its successor agency under Public Law 103-354
inspections are for the dual purpose of determining that RHS or its
successor agency under Public Law 103-354 has adequate security for its
loan and is achieving the statutory goal of providing adequate housing.
If difficult technical problems are encountered, the County Supervisor
or District Director should request the assistance of the State Office
or a qualified technician from SCS or the State University Cooperative
Extension Service.
(b) Frequency of inspections. The County Supervisor or District
Director will inspect development work as frequently as necessary to
assure that construction and land development conforms to the drawings
and specifications. The final inspection will be made at the earliest
possible date after completion of the planned development. When several
major items of development are involved, final inspection will be made
upon completion of each item.
(1) For new buildings and additions to existing buildings,
inspections will
[[Page 108]]
be made at the following stages of construction and at such other stages
of construction as determined by the County Supervisor or District
Director except as modified by paragraph (b)(3) of this section.
(i) Stage 1. Customarily, the initial inspection in construction
cases is 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.
However, when it is not practicable to make the initial inspection prior
to or during the placement of concrete, the County Supervisor or
District Director will make the initial inspection as soon as possible
after the placement of concrete and before any backfill is in place.
(ii) Stage 2. The Stage 2 inspection will 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. Customarily, this is prior
to installation of brick veneer or any interior finish which would
include lath, wallboard and finish flooring.
(iii) Stage 3. The final inspection will be made when all on-site
and off-site development has been completed and the structure is ready
for occupancy or its intended use.
(2) For rehabilitation of existing buildings, inspections will be
made in accordance with paragraphs (b)(1)(ii) and (iii) of this section,
and at such other stages of construction to assure that construction is
being performed in a professional manner and in accordance with the FmHA
or its successor agency under Public Law 103-354 approved drawings and
specifications.
(3) For new construction when the structure will be covered by an
insured 10-year warranty plan as described in Exhibit L of this subpart,
only the final inspection is required, except in cases when partial
payments are required when the provisions of Sec. 1924.6(a)(12)(v) of
this subpart will be followed.
(4) Arrangements should be made to have the borrower join the County
Supervisor or the District Director in making periodic inspections as
often as necessary to provide a mutual understanding with regard to the
progress and performance of the work.
(5) The Borrower should make enough periodic visits to the site to
be familiar with the progress and performance of the work, in order to
protect the borrower's interest. If the borrower observes or otherwise
becomes aware of any fault or defect in the work or nonconformance with
the contract documents, the borrower should give prompt written notice
thereof to the contractor with a copy to the County Supervisor or
District Director responsible for servicing the type of loan or grant
involved.
(6) The borrower should, when practicable, join the County
Supervisor or District Director in making all final inspections.
(7) When irrigation equipment and materials are to be purchased and
installed, a performance test under actual operating conditions by the
person or firm making the installation should be required before final
acceptance is made. The test should be conducted in the presence of the
borrower, a qualified technician, and, when practicable, the County
Supervisor or District Director. If the FmHA or its successor agency
under Public Law 103-354 official is not present at the performance
test, he or she should request the technician to furnish a report as to
whether or not the installation meets the requirements of the plans and
specifications.
(8) For irrigation and drainage construction or any dwelling
construction where part or all of the work will be buried or backfilled,
interim inspections should be made at such stages of construction that
compliance with plans and specifications can be determined.
(c) Recording inspections and correction of deficiencies. All
periodic and final inspections made by the County Supervisor or District
Director will be recorded on Form FmHA or its successor agency under
Public Law 103-354 1924-12 in accordance with the FMI. The County
Supervisor or District Director will
[[Page 109]]
be responsible for following up on the correction of deficiencies
reported on Form FmHA or its successor agency under Public Law 103-354
1924-12. When an architect/engineer is providing services on a project,
the District Director should notify the architect/engineer immediately
of any fault or defect observed in the work or of any nonconformance
with the contract document. If the borrower or the contractor refuses to
correct the deficiencies, the District Director will report the facts to
the State Director who will determine the action to be taken. No
inspection will be recorded as a final inspection until all deficiencies
or nonconforming conditions have been corrected.
(d) Acceptance by responsible public authority. When local (city)
county, state, or other public authority) codes and ordinances require
inspections, final acceptance by the local authority having jurisdiction
will be required prior to final inspection or acceptance by FmHA or its
successor agency under Public Law 103-354.
(e) Acceptance by project architect. If architectural services
pursuant to Sec. 1924.13(a) of this subpart have been obtained, final
acceptance by the project architect pursuant to Sec. 1924.13(a)(5)(v) of
this subpart will be required prior to acceptance by FmHA or its
successor agency under Public Law 103-354.
[52 FR 8002, Mar. 13, 1987, as amended at 60 FR 55122, Oct. 27, 1995; 61
FR 2899, Jan. 30, 1996]
Sec. 1924.10 Making changes in the planned development.
The borrower may request changes in the planned development in
accordance with this section.
(a) Authority of the County Supervisor. The County Supervisor is
authorized to approve changes in the planned development involving loans
and grants within the County Supervisor's approval authority provided:
(1) The change is for an authorized purpose and within the scope of
the original proposal.
(2) Sufficient funds are deposited in the borrower's supervised bank
account or with the interim lender, as appropriate, to cover the
contemplated changes when the change involves additional funds to be
furnished by the borrower.
(3) The change will not adversely affect the soundness of the
operation or FmHA or its successor agency under Public Law 103-354's
security. If uncertain as to the probable effect the change would have
on the soundness of the operation or FmHA or its successor agency under
Public Law 103-354 security, the County Supervisor will obtain advice
from the District Director on whether to approve the change.
(4) If a surety bond has been provided on the full amount of the
construction contract, the aggregate amount of all contract change
orders on Form FmHA or its successor agency under Public Law 103-354
1924-7, ``Contract Change Order,'' or other acceptable form will not
exceed 20 percent of the original contract amount. Change orders for
contracts on which a surety bond has been provided which increases the
original contract amount by more than 20 percent may only be approved if
additional surety is provided in the full revised amount of the
contract. For purposes of this paragraph, letters of credit and deposits
are not considered surety.
(5) Change orders for contracts on which letters of credit or
deposits have been provided on the full amount of the contract which
will increase the original contract amount are approved only if
additional letters of credit or deposits are provided in the full
revised amount of the contract.
(6) Modifications have been certified in accordance with
Sec. 1924.5(f)(1)(iii) or certification has been waived in accordance
with Sec. 1924.5(f)(1)(iii)(C) of this subpart.
(b) Authority of the District Director. The District Director is
authorized to approve changes in the development planned with RRH, RCH,
and RHS loans and LH loans and grants within the District Director's
approval authority, provided the conditions in Sec. 1924.10(a) have been
met. For such loans in excess of the District Director's approval
authority, the borrower's request with the District Director's
recommendation will be forwarded to the State Director for
consideration.
[[Page 110]]
(c) Recording changes in the planned development. (1) Changes should
be accomplished only after FmHA or its successor agency under Public Law
103-354 written approval. Changes will not be included in payment
requests until approved by the borrower; the contractor, if applicable;
the architect/engineer, if applicable; and the FmHA or its successor
agency under Public Law 103-354 loan approval official. Examples of
changes requiring documentation are:
(i) Any changes in labor and materials and their respective costs.
(ii) Changes in facility design.
(iii) Any decrease or increase in unit-price on final measurements
that are different from those shown in the bidding schedule.
(iv) Any increase or decrease in the time to complete the project.
(2) All changes shall be recorded in chronological order as follows:
(i) Contract method. Changes shall be numbered in sequence as they
occur using Form FmHA or its successor agency under Public Law 103-354
1924-7 with necessary attachments.
(ii) Borrower method. An increase or decrease in the cash cost,
extension of time, transfer of funds between items, or an addition or
deletion of items of development, will be summarized on the front of
Form FmHA or its successor agency under Public Law 103-354 1924-1 by
striking through the original figures on items and writing in the
changes. Changes made in the ``Development Plan'' in the working
drawings, or in the plans and specifications will be dated and initialed
by all parties.
(iii) Mutual self-help method. [See paragraph (c)(2)(ii) of this
section.]
(iv) Owner-builder method. [See paragraph (c)(2)(i) of this
section.]
(3) All changes in facility design and/or materials must be
certified in accordance with Sec. 1924.5(f)(1)(iii) of this subpart.
Sec. 1924.11 District Director's review of incomplete development.
During monthly District Office work organization meetings and during
regular visits to the County Office, the District Director will review
the progress that is being made in completing development financed with
loans within the District Director's and County Supervisor's
responsibility.
(a) Once each year the District Director will make a comprehensive
review of all development work not completed within the time scheduled.
For incomplete development financed with loan or grant funds within the
responsibility of the District Director, the District Director will take
the necessary actions to assure that the borrower or grantee completes
the planned development. For incomplete development financed with loan
or grant funds within the responsibility of the County Supervisor, the
District Director will give the necessary direction to the County
Supervisor to assure completion of the work. In connection with these
responsibilities, the District Director will consider:
(1) The current farm and home operations with respect to the need
for the development as originally planned.
(2) Revisions to the development plan.
(3) Funds remaining in the supervised bank account.
(4) Need for additional funds.
(5) Personal funds that could be furnished by the borrower.
(6) Estimated completion dates.
(7) The borrower's attitude with respect to completing the
development.
(b) After a complete review of the status of development in both the
District and County Offices has been made, the District Director will
make a written report to the State Director which will include
observations and recommendations regarding incomplete development. The
report may be included in the District Director's regular report, and
will include:
(1) The number of cases in which borrowers have not completed their
development within 9, 15 or 24 months when authorized, and also the
number of cases in which funds have been exhausted and the work is
incomplete.
(2) The number of borrowers who have not completed their development
within 3 years from the loan closing, and indicate the action that was
taken in each such case.
(c) If the borrower has not completed development work within 3
years after the date of loan closing and the District Director has
determined that the
[[Page 111]]
borrower cannot or will not complete the development, the District
Director will so indicate on Form FmHA or its successor agency under
Public Law 103-354 1924-1 and request the State Director to withdraw,
for application on the loan, any unused development funds remaining in
the borrower's supervised bank account, if the borrower will not sign a
check for a refund to the loan account.
Sec. 1924.12 Warranty of development work.
(a) Form FmHA or its successor agency under Public Law 103-354 1924-
19, ``Builder's Warranty,'' or an insured 10-year home warranty as
described in Exhibit L of this subpart, and normal trade warranties on
items of equipment will be issued to the borrower at the completion of
new building construction, dwelling rehabilitation by the contract
method, all cases of newly completed and previously unoccupied dwellings
or construction under conditional commitments issued to builders and
sellers.
(b) If the warranty is not an insured 10-year warranty, a completed
Form FmHA or its successor agency under Public Law 103-354 1924-19, with
warranty protection for 1 year, must be provided by the builder upon
final acceptance of the work by the owner and FmHA or its successor
agency under Public Law 103-354. If an insured 10-year warranty is
provided, the requirements of Exhibit L of this subpart apply, and a
copy of the warranty insurance policy or a binder must have been
received by FmHA or its successor agency under Public Law 103-354 prior
to disbursement of the final payment to the builder.
(c) If, for some reason, the warranty insurance policy cannot be
issued, the contractor will be required to execute Form FmHA or its
successor agency under Public Law 103-354 1924-19 and the case will be
forwarded to the State Director for consideration of debarment under the
provisions of subpart M of part 1940 (available in any FmHA or its
successor agency under Public Law 103-354 office). The County Supervisor
will assist the borrower to the extent necessary under the provisions of
the warranty and subpart F of part 1924 of this chapter.
(d) The County Supervisor will take the following action prior to
the expiration of the first year of the warranty period:
(1) As soon as the warranty has been executed, the follow-up date
for sending Form FmHA or its successor agency under Public Law 103-354
1924-21, ``Notice of Expiration of First Year of Warranty,'' which will
be used for the 1 year warranty or the first year of the insured 10-year
warranty, will be posted to the ``Servicing and Supervision'' section of
the Management System card.
(2) Form FmHA or its successor agency under Public Law 103-354 1924-
21 is provided for use in notifying the borrower of the expiration date
of the first year of the warranty. This letter will be mailed to the
borrower early in the second month preceding the expiration date of the
first year of the warranty period.
(3) If the County Supervisor or District Director does not hear from
the borrower within 30 days, it can reasonably be assumed that no
complaint exists or that any complaint has been satisfied unless
information to the contrary has been received.
(4) If the borrower notifies FmHA or its successor agency under
Public Law 103-354 that any complaint has not been satisfied, an onsite
inspection shall be made as early as possible, but not later than 1
month preceding the expiration date of the first year of the warranty.
The results of the inspection will be recorded on Form FmHA or its
successor agency under Public Law 103-354 1924-12. If the borrower has
complaints, the case should be handled in accordance with the provisions
of subpart F of part 1924 of this chapter, or as otherwise provided in
this subpart.
[52 FR 8002, Mar. 13, 1987, as amended at 54 FR 14334, Apr. 11, 1989]
Sec. 1924.13 Supplemental requirements for more complex construction.
This section includes additional provisions that apply to planning
and conduct of construction work on all multiple family housing projects
and other projects that are more extensive in scope and more complex in
nature than
[[Page 112]]
individual housing units or farm buildings. This section will apply in
addition to all other requirements contained elsewhere in this subpart.
(a) Architectural services. Complete architectural services, as
defined in Sec. 1924.4(o)(1) of this subpart are recommended on all
projects. They are required for projects involving an LH grant and for
all loans for RRH, RCH, and LH projects consisting of more than 4 units
unless prior consent to making an exception to the requirements for
complete architectural services is obtained from the National Office. If
the applicant or contractor is an architect or organization with
architectural capability, the applicant must, nevertheless, hire an
independent qualified architect or architectural firm to inspect the
construction work and perform other needed services during the
construction and warranty phases. See Guide 4, Attachment 1,
``Attachment to AIA Document--Standard Form of Agreement Between Owner
and Architect,'' for further information (available in any FmHA or its
successor agency under Public Law 103-354 office).
(1) Exception. Any request for National Office consent to an
exception being made for complete architectural services should include
the proposed drawings and specifications, method of providing specific
services, the comments and recommendations of the FmHA or its successor
agency under Public Law 103-354 State Architect, and any other pertinent
information. The State Director must determine that any services for
which an exception is requested can be performed by qualified State or
District Office staff members.
(2) Selecting the architect. The applicant is responsible for
selecting the architect. The District Director with the advice of the
State architect/engineer should discuss with the applicant the selection
of the architect for the job as early as possible to assist in the site
selection and participate in early consultations regarding project scope
and design.
(3) Architectural fees. Fees for architectural services shall not
exceed the fee ordinarily charged by the profession for similar work
when FmHA or its successor agency under Public Law 103-354 financing is
not involved. The fee should cover only the architectural services
rendered by the architect. The reduction or elimination of any services
described in paragraph (a)(5) of this section shall be directly
reflected in the fee. Fees for special services rendered by the
architects, such as the packaging of the loan application or additional
nonarchitectural services, will not be authorized to be paid with loan
funds.
(4) Agreement between borrower and architect. The borrower and the
architect will execute a written agreement. The agreement must provide:
(i) The services listed in paragraph (a)(5) of this section.
(ii) The amount of the fee and how it will be determined and paid.
(iii) That the agreement and any amendments to the agreement shall
not be in full force and effect until concurred with in writing by the
State Director or the State Director's delegate, and it will contain the
following provision:
The Farmers Home Administration or its successor agency under Public
Law 103-354, as potential lender or insurer of funds to defray the costs
of this agreement and without liability for any payments thereunder,
hereby concurs in the form, content and the execution of this agreement.
Date____________________________________________________________________
FmHA or its successor agency under Public Law 103-354 Approval Official_
Title___________________________________________________________________
(5) Specific services. Architectural services will include six
consecutive phases as follows:
(i) Schematic design phase. The architect will:
(A) Consult with the applicant to obtain available information
pertinent to the project requirements.
(B) Consult with FmHA or its successor agency under Public Law 103-
354 State architect/engineer about FmHA or its successor agency under
Public Law 103-354 requirements and procedures.
(C) Assist in preparing the project design after analyzing
engineering and survey data on the site selected by applicant.
[[Page 113]]
(D) Prepare schematic design studies consisting of drawings and
other documents illustrating the scale and relationship of project
components for the applicant's approval.
(E) Submit estimates of current development costs based on current
area, volume, or other unit costs.
(F) When the applicant and FmHA or its successor agency under Public
Law 103-354 have accepted the schematic design studies and estimated
development costs, the project architect may be authorized to proceed
with the next phase.
(ii) Design development phase. The architect will:
(A) Prepare the design development exhibits from the accepted
schematic design studies for approval by the applicant. These exhibits
should consist of drawings and other documents to fix and describe the
size and character of the entire project as to structural, mechanical,
and electrical systems, materials, and other essentials as appropriate.
(B) Submit a further statement of probable construction cost.
(C) Obtain applicant and FmHA or its successor agency under Public
Law 103-354 approval of drawings, specifications, and authorization to
proceed with next phase.
(iii) Construction documents phase. The architect will:
(A) Prepare the working drawings and specifications from the
approved design development drawings and set forth in detail the
requirements for the construction of the entire project in accordance
with applicable regulations and codes; for example, necessary bidding
information, assistance in preparing bidding forms, conditions of the
construction contract, and the form of agreement between applicant/owner
and contractor.
(B) Submit a final and more comprehensive statement of probable
development cost. It should show a breakdown of the estimated total
development cost of the project and the various trades in enough detail
for an adequate review.
(C) Obtain the acceptance of the applicant and FmHA or its successor
agency under Public Law 103-354 for contract documents, including
approval of the final drawings and specifications and authorization to
proceed.
(D) Discuss with the applicant various items as they develop.
(iv) Bidding or negotiation phase. The architect will, as
appropriate, for a bidded or negotiated contract:
(A) Assist in review and selection of bidders and submission of
contract documents to selected bidders.
(B) Assist in the interpretation of drawings and specifications, and
other contract documents.
(C) Receive and tabulate all bids.
(D) Review the bids and the negotiated proposals and assist in the
award and preparation of construction contracts.
(v) Construction phase. This phase includes the administration of
the construction contract. It will commence with the award of the
construction contract and end when the borrower makes final payment to
the contractor. The architect will:
(A) Attend the preconstruction conference. Advise and consult with
the borrower (or the borrower's representative) and issue the borrower's
instructions to the contractor.
(B) Prepare change orders.
(C) Keep construction accounts and work as the general administrator
of the project during construction.
(D) Interpret the contract documents and have the authority to
reject all work and materials which do not comply.
(E) Review and approve shop drawings, samples, and other submissions
of the contractor for conformance with the design concept and for
compliance with the contract documents.
(F) Conduct periodic inspections of all phases of construction to
determine compliance with the contract documents and certify as to the
amount is in place and materials suitably stored on site for partial
payment estimates. These inspections will be augmented, when necessary,
by inspections performed by structural, mechanical, and electrical
representatives. Periodic inspections should be made as frequently as is
necessary to verify that the work conforms with the intent of the
contract documents and that a high quality of workmanship is maintained.
The State Director may require a full-time
[[Page 114]]
project representative on projects with a total development cost of
$750,000 or more, when in the opinion of the State Director there is a
need for such representative, and the State Director states the reasons
for such need to the borrower.
(G) Determine, based on the inspections, the dates of substantial
completion and final completion; receive on the borrower's behalf all
written guarantees and related documents assembled by the contractor;
and issue a final certificate for payment.
(vi) Warranty phase. The architect will advise and consult with the
borrower, as the borrower's representative, about items to be corrected
within the warranty period. The architect will accompany the FmHA or its
successor agency under Public Law 103-354 representative during the
inspection required one month prior to expiration of the warranty
period.
(b) Other professional services. The State Director, on the
recommendation of the State architect/engineer, may request that
additional professional services be provided.
(1) Professional services typically include soils engineering,
structural engineering, civil engineering, surveying, land planning, or
professional cost estimation or certification. Fees for these services
may be paid directly by the borrower or by the architect as reimbursable
expenses.
(2) When a project representative is utilized, unless otherwise
agreed, the representative will be provided by the consulting architect/
engineer. Prior to the preconstruction conference, the architect/
engineer will submit a resume of qualifications of the project
representative to the applicant and to FmHA or its successor agency
under Public Law 103-354 for acceptance in writing. If the applicant
provided the project representative, the applicant must submit a resume
of the representative's qualifications to the project architect/engineer
and FmHA or its successor agency under Public Law 103-354 for acceptance
in writing, prior to the preconstruction conference. The project
representative will attend the preconstruction conference where duties
and responsibilities will be fully discussed. The project representative
will work under the general supervision of the architect/engineer. The
project representative will maintain a daily diary in accordance with
the following:
(i) The diary shall be maintained in a hard-bound book.
(ii) The diary shall have all pages numbered and all entries in ink.
(iii) All entries shall be on daily basis, beginning with the date
and weather conditions.
(iv) Daily entries shall include daily work performed, number of men
and equipment used in the performance of the work, and all significant
happenings during the day.
(v) The diary shall be made available to FmHA or its successor
agency under Public Law 103-354 personnel and will be reviewed during
project inspections.
(vi) The project representative's diary will become the property of
the owner after the project is accepted and final payments are made.
(c) Drawings. The type and kinds of drawings should be in accordance
with Exhibit C of this subpart and subpart D of part 1944 of this
chapter.
(1) The drawings must be clear, accurate, with adequate dimensions
and of sufficient scale for estimating purposes.
(2) Construction sections and large-scale details sufficient for
accurate bidding and for the purpose of correlating all parts of the
work should be part of the general drawings. This is particularly
important where the size of a project makes necessary the preparation of
the general drawings at a scale of 1/8 inch equals 1 foot or less.
(3) Mechanical and electrical work should be shown on separate
plans.
(4) Schedules should be provided for doors, windows, finishes,
electrical fixtures, finish hardware, and any other specialty items
necessary to clarify drawings.
(d) Specifications. Trade-type specifications (specifications
divided into sections for various trades) should be used. The
specifications should be complete, clear, and concise, with adequate
description of the various classes of work shown under the proper
sections and headings.
[[Page 115]]
(e) Methods of administering construction. Projects involving a
total development cost of less than $100,000 which do not include an LH
grant may, with the approval of the State Director, follow the contract
procedure in Sec. 1924.6(a) of this subpart without modification.
Construction of all other projects, however, will be administered by the
contract method or owner-builder method as set forth in this section.
(1) Contract method. This method of development will be used for all
complex construction except in cases where owner-builder method is
authorized. Development under this method is done in accordance with
Sec. 1924.6(a) of this subpart except as modified by this paragraph. All
construction work will be completed under one written construction
contract. Guide 1, ``Contract Documents,'' of this subpart (available in
any FmHA or its successor agency under Public Law 103-354 office) is
provided to assist FmHA or its successor agency under Public Law 103-354
personnel and applicants in assembling and reviewing contract documents
for more complex construction such as that administered under this
section.
(i) Competitive bidding methods. (A) All construction contracts must
be awarded on the basis of competitive bidding unless an exception is
granted in accordance with paragraph (e)(1)(vii) of this section thereby
permitting contract negotiation. The applicant's architect should
prepare the bidding documents. Public notice must be given inviting all
interested bidders to submit a bid. Prospective bidders may be contacted
asking for their bids; however, public notice is necessary so that all
local contractors have the opportunity to submit bids.
(B) A bid bond is required from each bidder in the amount of 5
percent of the bid price as assurance that the bidder will, upon
acceptance of the bid, execute the required contract documents within
the time specified.
(C) The construction contract will be awarded based on the contract
cost, and all conditions listed in the ``Invitation to Bid.''
(D) If advertising does not provide a satisfactory bid in the
opinion of the applicant and FmHA or its successor agency under Public
Law 103-354, the applicant shall reject all bids and will then be free
to negotiate with bidders on anyone else to obtain a satisfactory
contract. The following conditions must be met:
(1) The State Director determines that the original competitive bid
process was handled in a satisfactory manner and that there is no
advantage to advertising for competitive bid again.
(2) The requirements of paragraph (e)(1)(vii) of this section are
met.
(E) If there is no agreement by FmHA or its successor agency under
Public Law 103-354 and the applicant as to the construction cost, the
State Director will cease any further action on the preapplication and
inform the applicant of the right to appeal in accordance with subpart B
of part 1900 of this chapter.
(ii) Contract documents. Contract documents will conform with
recognized professional practices as prescribed in this paragraph. Such
contract documents will contain substantially the following:
Item I Invitation for Bids (Form FmHA or its successor agency under
Public Law 103-354 1924-5)
Item II Information for Bidders
Item III Bid
Item IV Bid Bond
Item V Agreement (Construction Contract)
Item VI Compliance Statement (Form FmHA or its successor agency under
Public Law 103-354 400-6)
Item VII General Conditions
Item VIII Supplemental General Conditions
Item IX Payment Bond (Exhibit F of this subpart)
Item X Performance Bond (Exhibit G of this subpart)
Item XI Notice of Award
Item XII Notice of Proceed
Item XIII Drawings and Specifications
Item XIV Addenda
Item XV Contract Change Order (Form FmHA or its successor agency under
Public Law 103-354 1924-7)
Item XVI Labor Standards Provisions [Where applicable]
Item XVII Monthly Employment Utilization Report (Form CC-257)
Item XVIII Partial Payment Estimate (Form FmHA or its successor agency
under Public Law 103-354 1924-18)
Item XIX Builder's Warranty (Form FmHA or its successor agency under
Public Law 103-354 1924-19)
(A) Substitution of term ``architect'' for ``engineer'' may be
necessary on
[[Page 116]]
some of the forms. Other modifications may be necessary in some cases to
conform to the nature and extent of the project. All such contract
documents and related items will be concurred with by the State
Director, with the assistance of OGC prior to the release of invitations
to bid.
(B) Items listed as I through IV and item XI of paragraph (e)(1)(ii)
of this section may be omitted when an exception to the competitive
bidding requirement is granted in accordance with paragraph (e)(1)(vii)
of this section, thereby permitting a negotiated contract.
(C) All negotiated contracts shall include a provision to the effect
that the borrower, USDA, 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 audit, examination, excerpts, and transcriptions.
(D) A provision of liquidated damages will be included in all
contracts. The liquidated damage amount must be reasonable and represent
the best estimate possible of how much interest or other costs will
accrue on the loan, and also represent any loss of rent or other income
which would result from a delay in the completion of the project beyond
the estimated completion date.
(E) All contracts shall include a provision for compliance with the
Copeland ``Anti-Kickback'' Act (18 U.S.C. 874) as supplemented in
Department of Labor regulations (29 CFR part 3). This Act prohibits
anyone from inducing any person in connection with the construction to
give up any part of the compensation to which the person is otherwise
entitled.
(F) All contracts will contain a certification by the applicant
indicating that there is not now nor will there be an identity of
interest between the applicant and any of the following: Contractor,
architect, engineer, attorney, subcontractors, material suppliers,
equipment lessors, or any of their members, directors, officers,
stockholders, partners, or beneficiaries unless specifically identified
to FmHA or its successor agency under Public Law 103-354 in writing
prior to the award of the contract. All contracts must also indicate
that when any identity of interest exists or comes into being, the
contractor agrees to have construction costs as reported to FmHA or its
successor agency under Public Law 103-354 on Form 1924-13, ``Estimate
and Certificate of Actual Cost,'' audited by a Certified Public
Accountant (CPA) or Licensed Public Accountant (LPA) licensed prior to
December 31, 1970, who will provide an opinion as to whether the Form
FmHA or its successor agency under Public Law 103-354 1924-13 presents
fairly the costs of construction in conformity with eligible
construction costs as prescribed in FmHA or its successor agency under
Public Law 103-354 regulations.
(G) All contracts on any form other than Form FmHA or its successor
agency under Public Law 103-354 1924-6, must contain the language of
clause (D) of Form FmHA or its successor agency under Public Law 103-354
1924-6, which is available in all FmHA or its successor agency under
Public Law 103-354 offices. The language of clause (D) of Form FmHA or
its successor agency under Public Law 103-354 1924-6 sets forth the
Notice of Requirement for Affirmative Action to Ensure Equal Employment
Opportunity required by Executive Order 11246, the Equal Opportunity
clause published at 41 CFR 60-1.4 (a) and (b), and the Standard Federal
Equal Employment Opportunity Construction Contract Specifications
required by Executive Order 11246. For contract forms other than Form
FmHA or its successor agency under Public Law 103-354 1924-6, Form AD
767, ``Equal Employment Opportunity Contract Compliance Notices,'' which
can be obtained from the Finance Office, should be attached and made a
part of the contract.
(H) All contracts will contain a provision that they are not in full
force and effect until concurred with by the State Director or the State
Director's delegate, in writing. Therefore, before loan closing or
before the start of construction, whichever occurs first, the State
Director or the State Director's delegate will concur in the contract
[[Page 117]]
form, content, and execution if acceptable, by including the following
paragraph at the end of the contract:
The Farmers Home Administration or its successor agency under Public
Law 103-354, as potential lender or insurer of funds to defray to costs
of this contract, and without liability for any payments thereunder,
hereby concurs in the form, content, and execution of this contract.
Date____________________________________________________________________
_______________________________________________________________________
FmHA or its successor agency under Public Law 103-354 Official
_______________________________________________________________________
Title
(I) The requirements of Sec. 1924.6 (a)(11)(iv) of this subpart
apply to all contracts or subcontracts in excess of $10,000.
(iii) Surety. When multiple advances of loan or grant funds are
utilized, surety that guarantees both payment and performance in the
full amount of the contract will be provided in accordance with
Sec. 1924.6(a)(3)(ii) of this subpart. Exceptions to the surety
requirements shall be governed by the following:
(A) In accordance with the guidance and recommendations of OMB
Circulars A-102 and A-110, exceptions to the surety requirements of
Sec. 1924.6(a)(3)(ii) of this subpart will not be granted for nonprofit
organization or public body applicants.
(B) For loans or grants to applicants other than non-profit
organizations or public bodies that are within the State Director's
approval authority, the State Director may, upon request of the borrower
or grantee, grant exceptions to the surety requirements in accordance
with the provisions of Sec. 1924.6(a)(3)(iii) of this subpart. Before
granting such an exception, however, the State Director should be
provided the following information from the proposed contractor in order
to fully evaluate the experience and capabilities of the contractor:
(1) A resume indicating the contractor's history, ability and
experience.
(2) A current, dated and signed financial statement of the
contractor's operations indicating the payment status of accounts and
any contingent liabilities that may exist. FmHA or its successor agency
under Public Law 103-354 personnel will be responsible for analyzing the
financial statement as to the sufficiency of the contractor's financial
capability to carry out construction. The financial strength must
demonstrate the ability of the contractor to pay all bills prior to
receiving periodic draws of funds from the lender.
(3) A credit report (obtained at no expense to FmHA or its successor
agency under Public Law 103-354) attesting to the contractor's credit
standing.
(4) A listing of trade references that could be contacted to
substantiate the contractor's experience and good standing.
(5) Statements from owners for whom the contractor has done similar
work, indicating the scope of the work and the owner's evaluation of the
contractor's performance.
(C) For loans or grants to applicants other than non-profit
organization or public bodies that are in excess of the State Director's
approval authority, the State Director may request National Office
authorization to grant one of the exceptions to the surety requirements
as indicated in Sec. 1924.6(a)(3)(iii) of this subpart. The following
information must be submitted with the request to the National Office:
(1) An explanation of why interim financing is not available.
(2) An explanation of why the proposed contractor cannot obtain
surety bonds meeting the requirements of Sec. 1924.6(a)(3)(ii) of this
subpart.
(3) The information listed in paragraph (e)(1)(iii)(B) of this
section.
(4) The drawings and specifications for the proposed project,
together with the comments of the State architect/engineer.
(5) The applicant's written request for an exception.
(6) An explanation of why the requirements of
Sec. 1924.6(a)(3)(iii)(A) or (B) of this subpart cannot be met in those
cases where the State Director requests authorization to grant an
exception as indicated in Sec. 1924.6(a)(3)(iii)(C) of this subpart.
When such a request is made, the documentation required of the
contractor under the provision must also be forwarded.
(7) The State Director's recommendation.
[[Page 118]]
(D) Adequate steps will be taken to protect the interests of the
borrower and the government in accordance with the payment provisions of
Sec. 1924.6(a)(12)(i) of this subpart and any alternative as outlined in
Sec. 1924.6(a)(3)(iii)(c) of this subpart.
(iv) Contract cost breakdown. In any case where the loan approval
official feels it appropriate, and prior to the award or approval of any
contract in which there is an identity of interest as defined in
Sec. 1924.4 (i) of this subpart, the contractor and any subcontractor,
material supplier or equipment lessor sharing an identity of interest
must provide the applicant and FmHA or its successor agency under Public
Law 103-354 with a trade-item cost breakdown of the proposed contract
amount for evaluation. The cost of any surety as required by
Sec. 1944.222 (h) and (i) of subpart E of part 1944 of this chapter and
Sec. 1924.6 (a)(3) of this subpart, or cost certification as required by
paragraph (e)(1)(v) of this section, will be included in the proposed
contract amount and shown under General Requirements on Form FmHA or its
successor agency under Public Law 103-354 1924-13, which is available in
all FmHA or its successor agency under Public Law 103-354 offices. FmHA
or its successor agency under Public Law 103-354 personnel will be
responsible for reviewing the estimates on Form FmHA or its successor
agency under Public Law 103-354 1924-13 to determine if the dollar
amounts total correctly, to assure that costs are categorized under
their appropriate columns, and to confirm that the estimated costs for
all line items are reasonable and customary for the State.
(v) Cost certification. Whenever the State Director determines it
appropriate, and in all situations where there is an identity of
interest as defined in Sec. 1924.4 (i) of this subpart, the borrower,
contractor and any subcontractor, material supplier, or equipment lessor
having an identity of interest must each provide certification using
Form FmHA or its successor agency under Public Law 103-354 1924-13 as to
the actual cost of the work performed in connection with the
construction contract. The construction costs, as reported on Form FmHA
or its successor agency under Public Law 103-354 1924-13, must also be
audited, in accordance with Government Auditing Standards, by a CPA, or
LPA licensed on or before December 31, 1970. In addition, certain agreed
upon procedures (available in any FmHA or its successor agency under
Public Law 103-354 office) will be performed in accordance with
Attestation Standards. In some cases, FmHA or its successor agency under
Public Law 103-354 will contract directly with a CPA or LPA for the cost
certification. In that event, documentation necessary to have the costs
of construction certified by an FmHA or its successor agency under
Public Law 103-354 contractor that they were the actual costs of the
work performed, as reported on Form FmHA or its successor agency under
Public Law 103-354 1924-13, will be provided. Funds which were included
in the loan for cost certification and which are ultimately not needed
because FmHA or its successor agency under Public Law 103-354 contracts
for the cost certification will be returned on the loan. FmHA or its
successor agency under Public Law 103-354 personnel will utilize Exhibit
M of this subpart (available in any FmHA or its successor agency under
Public Law 103-354 office) and Form FmHA or its successor agency under
Public Law 103-354 1924-26, ``Cost Certification Worksheet,'' to assist
in the evaluation of the cost certification process.
(A) Prior to the start of construction, the borrower, contractor and
any subcontractor, material supplier, or equipment lessor sharing an
identity of interest must submit, to the CPA or LPA, the accounting
system that the borrower, contractor, subcontractor, material supplier
or equipment lessor and/or the CPA or LPA proposes to set up and use in
maintaining a running record of the actual cost. In order to be
acceptable, the borrower must provide a written assertion that it has an
accounting system that is suitably designed to provide for a trade-item
basis comparison of the actual cost as compared to the estimated cost
submitted on Form FmHA or its successor agency under Public Law 103-354
1924-13. Costs pertaining to a specific line item will be set up in the
accounting system for that particular account. For instance,
[[Page 119]]
only costs of materials, supplies, equipment, and labor associated with
concrete will be shown in the concrete account. The accounting system
must also restrict costs to those pertaining to a specific project so
that costs from multiple projects will not be co-mingled. The
independent CPA or LPA shall report on the borrower's assertion in
accordance with the Standards for Attestation Engagements of the
American Institute of Certified Public Accountants (AICPA). The
borrower's and the CPA or LPA's reports on the accounting system shall
be provided to FmHA or its successor agency under Public Law 103-354 by
the borrower.
(B) Prior to final payment to anyone required to cost certify, a
trade-item breakdown showing the actual cost compared to the estimated
cost must be provided to the owner and FmHA or its successor agency
under Public Law 103-354. Form FmHA or its successor agency under Public
Law 103-354 1924-13 is the form of comparative breakdown that must be
used, and contains the certifications required of the applicant and
contractor prior to final payment. The amounts for builder's general
overhead, builder's profit, and general requirements, respectively,
shall not exceed the amounts represented on the estimate of cost
breakdown provided in accordance with paragraph (e)(1)(iv) of this
section for any contractor, subcontractor, material supplier, or
equipment lessor having or sharing an identity of interest with the
borrower. The amounts for general overhead, builder's profit, and
general requirements must be established prior to FmHA or its successor
agency under Public Law 103-354 approving the construction contract and
will not be changed during the course of construction. This applies to
all contractors, subcontractors, material suppliers, or equipment
lessors having or sharing an identity of interest with the applicant.
Contract change orders will be processed to adjust the contract amount
downward prior to the final payment to the contractor, if necessary, to
assure that the amounts shown in the certificate of actual costs do not
exceed the amounts represented in the contract cost breakdown. Reduction
in the builder's profit, and general overhead if needed, will
counterbalance any increase reflected in the contract costs. Any funds
remaining as a result of hard cost savings will be applied to the
account as an extra payment or used for eligible loan purposes approved
by FmHA or its successor agency under Public Law 103-354 as long as the
improvements are genuinely needed and will enhance marketability of the
project. All increases or decreases of 15 percent or more in line item
costs will require documentation as to the reason for the increases and/
or decreases. The State Director may require documentation for increases
and/or decreases of less than 15 percent, if he/she determines it
necessary. This information will be required with the cost
certification.
(C) The CPA or LPA audit, performed in accordance with Government
Auditing Standards, will include such tests of the accounting records
and such other auditing procedures of the borrower and the contractor
(and any subcontractor, material supplier or equipment lessor sharing an
identity of interest) concerning the work performed, services rendered,
and materials supplied in accordance with the construction contract he/
she considers necessary to express an opinion on the construction costs
as reported on Form FmHA or its successor agency under Public Law 103-
354 1924-13. The CPA or LPA shall also perform the additional agreed
upon procedures specified by FmHA or its successor agency under Public
Law 103-354 (available in any FmHA or its successor agency under Public
Law 103-354 office), performed in accordance with Attestation Standards,
for the applicant and the contractor (and any subcontractor, material
supplier, or equipment lessor sharing an identity of interest)
concerning the work performed, services rendered, and materials supplied
in accordance with the construction contract.
(D) Upon completion of construction and prior to final payment, the
CPA or LPA will provide an opinion concerning whether the construction
costs, as reported on Form FmHA or its successor agency under Public Law
103-354 1924-13, present fairly the costs of construction in conformity
with eligible construction costs as prescribed in
[[Page 120]]
FmHA or its successor agency under Public Law 103-354 regulations.
(E) In some cases, cost certification will be obtained by FmHA or
its successor agency under Public Law 103-354 through direct contract
with the CPA or LPA. The borrower and his/her CPA or LPA will cooperate
fully with the contract CPA or LPA by providing all documentation
necessary to conduct the certification. FmHA or its successor agency
under Public Law 103-354 reserves the right to determine, upon receipt
of the certified Form FmHA or its successor agency under Public Law 103-
354 1924-13 and the auditor's report, whether they are satisfactory to
FmHA or its successor agency under Public Law 103-354. If not
satisfactory to FmHA or its successor agency under Public Law 103-354,
the borrower will be responsible for providing additional information.
(F) There will exist no business relationship between the CPA or LPA
and the borrower except for the performance of the examination of the
cost certification, accounting systems work, and tax preparation. Any
CPA or LPA who acts as the borrower's accountant (performing manual or
automated bookkeeping services or maintains the official accounting
records) will not be the same CPA or LPA who cost certifies the project.
(G) Forms FmHA or its successor agency under Public Law 103-354
1944-30, ``Identity of Interest (IOI) Disclosure Certificate'' and FmHA
or its successor agency under Public Law 103-354 1944-31, ``Identity of
Interest (IOI) Qualification Form,'' provide written notification to the
borrower that willful and intentional falsification of cost
certification documents will result in debarment of all violators in
accordance with the provisions of FmHA or its successor agency under
Public Law 103-354 Instruction 1940-M (available in any FmHA or its
successor agency under Public Law 103-354 office). These forms require
the disclosure of all identities of interest associated with project
construction, certify the entity's ability to provide the contracted
service, and cite the penalties for failure to disclose or falsify such
certification. Each applicant/borrower will be required to complete and
sign the forms (available in any FmHA or its successor agency under
Public Law 103-354 office).
(H) Subcontracting development work.
(1) Contractors will not be allowed to obtain a profit and overhead
unless they are performing actual construction. ``Actual construction''
means ``work'' as defined in American Institute of Architects (AIA)
documents: ``* * * labor, materials, equipment, and services provided by
the contractor to fulfill the contractor's obligations.'' Under this
definition, contractors who choose to subcontract out construction of
the project to another contractor will not obtain a builder's fee
(general overhead and profit) when:
(i) More than 50 percent of the contract sum in the construction
contract is subcontracted to one subcontractor, material supplier, or
equipment lessor, and/or
(ii) Seventy-five percent or more with three or fewer
subcontractors, material suppliers and/or equipment lessors.
(2) Note: If two or more subcontractors have common ownership, they
are considered as one subcontractor.
(3) How to apply rule:
(i) The 50 percent rule will apply when division of the amount of
the largest subcontract by the contract sum of the construction contract
results in more than 50 percent.
(ii) The 75 percent rule will apply when division of the sum of the
amounts of the three largest subcontracts by the contract sum of the
construction contract results in 75 percent or more.
(I) Qualified contracting entities. Contractors, subcontractors,
material suppliers, and any other individual or organization sharing an
identity of interest and providing materials or services for the project
must certify that it is a viable, ongoing trade or business qualified
and properly licensed to undertake the work for which it intends to
contract. Form FmHA or its successor agency under Public Law 103-354
1944-31 will be prepared and executed by the contracting entities. The
form provides notification to the entities of the penalty, under law,
for erroneously certifying to the statements contained
[[Page 121]]
therein. Debarment actions will be instituted against entities who fail
to disclose an identity of interest in accordance with the provisions of
FmHA or its successor agency under Public Law 103-354 Instruction 1940-M
(available in any FmHA or its successor agency under Public Law 103-354
office).
(vi) Method of payments. Partial payments may be requested in
accordance with the terms of the construction contract on Form FmHA or
its successor agency under Public Law 103-354 1924-18, ``Partial Payment
Estimate,'' or other professionally recognized form that contains the
architect's certification, approval of the owner, and conditional
acceptance of FmHA or its successor agency under Public Law 103-354 as
shown in Form FmHA or its successor agency under Public Law 103-354
1924-18.
(A) If interim financing is available at reasonable rates and terms
for the construction period, such financing shall be obtained. Exhibit B
of subpart E of part 1944 of this chapter shall be used to inform the
interim lender that FmHA or its successor agency under Public Law 103-
354 will not close its loan until the project is substantially complete,
ready for occupancy, evidence is furnished indicating that all bills
have been paid or will be paid at loan closing for work completed on the
project, all inspections have been completed and all required approvals
have been obtained from municipal and governmental authorities having
jurisdiction over the project.
Upon presentation of proper partial payment estimates approved by the
applicant and accepted by FmHA or its successor agency under Public Law
103-354, the interim lender may advance construction funds in accordance
with the payment terms of the contract. It is suggested that partial
payments not exceed 90 percent of the value of work in place and
materials suitably stored on site.
(B) When interim financing is not available, payments will be made
in accordance with Sec. 1924.6(a)(12) of this subpart.
(vii) Exception to competitive bidding--(A) For all applicants. An
applicant may negotiate a construction contract provided the State
Director grants an exception and documentation shows that:
(1) The contract price is competitive with other projects similar in
construction and design being built in the area.
(2) The proposed contractor is experienced in construction of
projects of similar size, scope, and complexity, and is recognized as a
reliable builder.
(3) The proposed development work meets all requirements of this
subpart.
(4) If appropriate for nonprofit organizations and public bodies,
the applicant provides a copy of a duly authorized resolution by its
governing body requesting FmHA or its successor agency under Public Law
103-354 to permit awarding the construction contract without formal
bidding.
(5) The applicant is permitted by state law, local law and/or
organizational by-laws to negotiate a construction contract.
(6) The requirements of paragraphs (e)(1)(ii), (iii), (iv) and (v)
of this section are met.
(B) In considering an exception to competitive bidding, the
following additional steps will be taken in all cases.
(1) If, after a full review of the case documents by the appropriate
members of the State Office staff, the State Director determines that
the requirements have been met and the costs are reasonable, an
exception to competitive bidding may be granted. Written documentation
of the State Office review results will be placed in the application
file.
(2) If after the full review by the State Office staff, the State
Director determines that the negotiated contract price is not
competitive with other similar projects in construction and design being
built in the area, the applicant will be requested to competitively bid
the construction of the project in accordance with paragraph (e)(1)(i)
of this section.
(3) If there is no agreement by FmHA or its successor agency under
Public Law 103-354 and the applicant as to the construction cost, the
State Director will cease any further action on the preapplication and
inform the applicant of the right to appeal in accordance with subpart B
of part 1900 of this chapter.
[[Page 122]]
(C) Any requests for exceptions to competitive bidding that are not
covered in this section may be submitted to the National Office for
consideration.
(viii) Exception to contract method--public body. With the approval
of the National Office, the State Director may grant to a public body an
exception to the requirement for using contract method construction
under the following circumstances:
(A) The loan or grant is for repair or rehabilitation of existing
facilities and it is not practicable to perform all work by the contract
method.
(B) The applicant has the managerial ability and qualified employees
necessary to complete the work successfully.
(C) That applicant submits a written request to the District
Director indicating:
(1) The scope of work and construction timetable;
(2) What phases of work can be contracted and what cannot;
(3) Why is it not practicable to contract all phases;
(4) Management ability and employee qualifications for performing
the work;
(5) Proposed method of fund control and frequency of payments;
(6) How changes in scope of work and construction timetable will be
approved; and,
(7) Proposed method of certifying progress and requesting payments.
(D) The request, recommendations of the District Director,
appropriate members of the State Office staff and the State Director and
the application file will be sent to the National Office.
(2) Owner-builder method. This method of development is used only
when requested by profit or limited profit RRH applicants when the
applicant or any of its controlling principals (such as stockholders,
members, partners other than limited partners, directors, or officers),
are general contractors by profession, and will serve as the builder of
the project without a written construction contract. The State Director
may make an exception to the contract method of construction and
authorize proceeding by the owner-builder method of construction in
accordance with the provisions of this section if the amount of the
loan(s) does not exceed the State Director's approval authority. For
projects over the State Director's authority, prior written consent of
the National Office is required. In such cases, the drawings,
specifications, cost estimates, copy of the State Architect/Engineer's
review and detailed information on the applicant's qualifications will
be submitted to the National Office along with the State Director's
recommendations.
(i) The applicant's request to construct a project by the owner-
builder method of construction shall be in the form of a letter giving
specific and detailed information concerning the owner-builder's
proposal, and the qualifications and past experience of the owner-
builder. The following information must be included with the request:
(A) A resume indicating the owner-builder's history, ability, and
experience.
(B) Dated and signed financial statements on the owner-builder's
operation (including balance sheets and statements of income and
expense) from current and prior years indicating the payment status of
the owner-builder's accounts and any contingent liabilities that may
exist. FmHA or its successor agency under Public Law 103-354 personnel
will be responsible for analyzing the financial statement as to the
sufficiency of the owner-builder's financial capability to carry out
construction. The financial strength must demonstrate the ability of the
owner-builder to pay all bills prior to receiving periodic draws of
funds from the lender.
(C) A written, dated, and signed statement agreement to provide any
funds necessary in excess of the applicant's contribution and the loan
amount to complete the project.
(D) A credit report (obtained at no expense to FmHA or its successor
agency under Public Law 103-354) attesting to the owner-builder's credit
standing.
(E) A listing of trade references that could be contacted to
substantiate the owner-builder's experience and good standing.
(F) Statements from other persons for whom the owner-builder has
done similar work, indicating the scope of
[[Page 123]]
the work and that person's evaluation of the owner-builder's
performance.
(G) A current, dated, and signed trade-item cost breakdown of the
estimated total development cost of the project which has been prepared
by the applicant/owner-builder. Form FmHA or its successor agency under
Public Law 103-354 1924-13 will be used for this purpose. If cost
certification services are required by FmHA or its successor agency
under Public Law 103-354, the cost of such services may be included in
the total development cost of the project. Any subcontractor, material
supplier, or equipment lessor sharing an identity of interest with the
applicant/owner-builder as defined in Sec. 1924.4(i) of this subpart
must also provide a trade-item cost breakdown of the proposed amount.
(H) Prior to the start of construction, the owner-builder and any
subcontractor, material supplier, or equipment lessor sharing an
identity of interest must submit, to the CPA or LPA, the accounting
system that the owner-builder, subcontractor, material supplier or
equipment lessor and/or the CPA or LPA proposes to set up and use in
maintaining a running record of the actual cost. In order to be
acceptable, the owner-builder must provide a written assertion that it
has an accounting system that is suitably designed to provide for a
trade-item basis comparison of the actual cost as compared to the
estimated cost submitted on Form FmHA or its successor agency under
Public Law 103-354 1924-13. Costs pertaining to a specific line item
will be set up in the accounting system for that particular account. For
instance, only costs of materials, supplies, equipment, and labor
associated with concrete will be shown in the concrete account. The
accounting system must also restrict costs to those pertaining to a
specific project so that costs from multiple projects will not be co-
mingled. The independent CPA or LPA shall report on the owner-builder's
assertion in accordance with the Standards for Attestation Engagements
of the AICPA. The owner-builder's and the CPA or LPA's reports on the
accounting system shall be provided to FmHA or its successor agency
under Public Law 103-354 by the owner-builder.
(I) A written, dated, and signed statement agreeing to permit U.S.
Department of Agriculture, the Comptroller General of the United States,
or any of their duly authorized representatives, to have access to any
books, documents, papers, and records which are directly pertinent to
the specific Federal program for the purpose of making audit,
examination, excerpts and transcriptions.
(ii) In order to grant an exception to the contract method of
construction and proceed with the owner-builder method of construction,
the State Director must determine that the following conditions exist:
(A) The applicant or at least one of its principals is a fully
qualified and licensed (if necessary under applicable local law) builder
by profession, has adequate experience in constructing the type of units
proposed as well as projects of similar size, scope, and complexity and
will be able to complete the work in accordance with the FmHA or its
successor agency under Public Law 103-354 approved drawings and
specifications.
(B) Based upon the information presented in the applicant's
financial statements, the applicant is presently able and is likely to
continue to be able to provide any funds necessary in excess of the
applicant's contribution and the loan amount to complete the project.
(C) The total development cost of the project does not exceed that
which is typical for similar type projects in the area. The total
development cost recognized by FmHA or its successor agency under Public
Law 103-354 for each individual case will be determined by the MFH
Coordinator with the advice of the State Architect.
(D) The owner-builder has provided sufficient information on all
contracts or subcontracts in excess of $10,000 to permit compliance with
Sec. 1924.6(a)(11)(iv) of this subpart.
(iii) In addition to the requirements for the State Director to
authorize the owner-builder method of construction as indicated in
Sec. 1924.13(e)(2)(i) and (ii)
[[Page 124]]
of this subpart, the following additional steps will be taken by the
State Director.
(A) If, after a full review of the case documents by the appropriate
members of the State Office staff, the State Director determines that
the requirements have been met and the construction cost is reasonable,
an exception to competitive bidding may be granted. Written
documentation of the State Office review results will be placed in the
application file.
(B) If, after the full review by the State Office staff, the State
Director determines that the construction cost is not competitive with
other similar projects in construction and design being built in the
area, the applicant will be requested to competitively bid the
construction of the project in accordance with paragraph (e)(1)(i) of
this section.
(C) If there is no agreement by FmHA or its successor agency under
Public Law 103-354 and the applicant as to construction cost and the
applicant is not agreeable to any of the aforementioned alternatives,
the State Director will cease any further action on the preapplication
and inform the applicant of the right to appeal, in accordance with
subpart B of part 1900 of this chapter.
(iv) The development cost of the project may include a typical
allowance for general overhead, general requirements and a builder's
profit. These amounts may be determined by local investigation and also
from HUD data for the area. The applicant/owner-builder and any
subcontractors, material suppliers and equipment lessors having or
sharing an identity of interest with the applicant/owner-builder may not
be permitted a builder's profit, general overhead, and general
requirements which exceed the amounts represented on their cost
breakdown.
(v) Under no circumstances will loan funds be used to pay the owner/
builder or its stockholders, members, directors or officers, directly or
indirectly, any profits from the construction of the project except a
typical builder's fee for performing the services that would normally be
performed by a general contractor under the contract method of
construction. Discounts and rebates given the owner-builder in advance
must be deducted before the invoices are paid. If discounts or rebates
are given after the invoices are paid, the funds must be returned to the
supervised bank account or applied on the interim construction loan, as
appropriate. Under no circumstances will the dollar amount be placed in
the reserve account.
(vi) The plan and specifications must be specific and complete so
that there is a clear understanding as to how the facility will be
constructed and the materials that will be used.
(vii) When architectural services are required by Sec. 1924.13(a)
during the construction and warranty phases they must be provided by an
architect who has no identity of interest with the applicant/owner-
builder. The services to be rendered during the construction and
warranty phases include, but are not limited to inspections, changes in
the scope of project or work to be done, administration of construction
accounts, rejection of work and materials not conforming to the FmHA or
its successor agency under Public Law 103-354 approved drawings and
specifications, and other appropriate service listed in
Sec. 1924.13(a)(5)(v) and (vi) of this subpart.
(viii) The applicant/owner-builder and any subcontractor, material
supplier, or equipment lessor sharing an identity of interest as defined
in Sec. 1924.4(i) of this subpart must each provide certification as to
the actual cost of the work performed in connection with the
construction of the project on Form FmHA or its successor agency under
Public Law 103-354 1924-13 prior to final payment. The construction
costs, as reported on Form FmHA or its successor agency under Public Law
103-354 1924-13, must be audited by a CPA, or LPA licensed on or before
December 31, 1970, in accordance with Government Auditing Standards, and
certain agreed upon procedures (available in any FmHA or its successor
agency under Public Law 103-354 office) performed in accordance with
Attestation Standards. In some cases, FmHA or its successor agency under
Public Law 103-354 will contract directly with a CPA or LPA for the cost
certification. In that event, documentation
[[Page 125]]
necessary to have the costs of construction certified by an FmHA or its
successor agency under Public Law 103-354 contractor that they were the
actual costs of the work performed, as reported on Form FmHA or its
successor agency under Public Law 103-354 1924-13, will be provided.
Funds which were included in the loan for cost certification and which
are ultimately not needed because FmHA or its successor agency under
Public Law 103-354 contracts for the cost certification will be returned
on the loan.
(A) The CPA or LPA's audit, performed in accordance with Government
Auditing Standards, will include such tests of the accounting records
and such other auditing procedures of the applicant/owner-builder (and
any subcontractor, material supplier, or equipment lessor sharing an
identity of interest) concerning the work performed, services rendered,
and materials supplied in connection with the construction of the
project he/she considers necessary to express an opinion on the
construction costs as reported on Form FmHA or its successor agency
under Public Law 103-354 1924-13. Upon completion of construction and
prior to final payment, the CPA or LPA will provide an opinion as to
whether the construction costs as reported on Form FmHA or its successor
agency under Public Law 103-354 1924-13 present fairly the costs of
construction in conformity with eligible construction costs as
prescribed in FmHA or its successor agency under Public Law 103-354
regulations. FmHA or its successor agency under Public Law 103-354
reserves the right to determine, upon receipt of the certified Form FmHA
or its successor agency under Public Law 103-354 1924-13 and the
auditor's report, whether they are satisfactory to FmHA or its successor
agency under Public Law 103-354. At a minimum, the CPA or LPA shall also
perform any additional agreed upon procedures (available in any FmHA or
its successor agency under Public Law 103-354 office) specified by FmHA
or its successor agency under Public Law 103-354, performed in
accordance with Attestation Standards, of the owner-builder (and any
subcontractor, material supplier, or equipment lessor sharing an
identity of interest) concerning the work performed, services rendered,
and materials supplied in connection with the construction. There will
exist no business relationship between the CPA or LPA and the borrower
except for the performance of the examination of the cost certification,
accounting systems work, and tax preparation. Any CPA or LPA who acts as
the borrower's accountant (performing manual or automated bookkeeping
services or maintains the official accounting records) will not be the
same CPA or LPA who cost certifies the project.
(B) Prior to final payment to anyone required to cost certify, FmHA
or its successor agency under Public Law 103-354 must be provided with a
certification and a trade-item breakdown showing the actual cost
compared to the estimated cost furnished in accordance with paragraph
(e)(2)(i)(G) of this section. Form FmHA or its successor agency under
Public Law 103-354 1924-13 is the form of comparative breakdown that
must be used, and contains the certification required of the applicant/
owner-builder prior to final payment. The amounts for builder's general
overhead, general requirements, and builder's profit shall not exceed
the amounts represented on the estimate of cost breakdown provided in
accordance with paragraph (e)(2)(i)(G) of this section for the owner-
builder or any subcontractor, material supplier, or equipment lessor
having or sharing an identity of interest with the applicant/owner-
builder. Final payment to the owner-builder will be adjusted, if
necessary, to assure that the amounts shown on the certificate of actual
cost do not exceed the amounts represented on the cost breakdown. Any
funds remaining as a result of hard cost savings will be applied to the
account as an extra payment or used for eligible loan purposes approved
by FmHA or its successor agency under Public Law 103-354 as long as the
improvements are genuinely needed and will enhance marketability of the
project. All increases or decreases of 15 percent or more in line item
costs will require documentation as to the reason for the increases or
decreases. The State Director may require documentation for increases or
decreases of less than 15
[[Page 126]]
percent, if he/she determines it necessary. This information will be
required with the cost certification.
(C) Subcontracting development work.
(1) Owner-builders will not be allowed to obtain a profit and
overhead unless they are performing actual construction. ``Actual
construction'' means ``work'' as defined in AIA documents: ``* * *
labor, materials, equipment, and services provided by the contractor to
fulfill the contractor's obligations.'' Under this definition, owner-
builders who choose to subcontract out construction of the project to
another contractor will not obtain a builder's fee (general overhead and
profit) when:
(i) More than 50 percent of the total cost of the building
construction is subcontracted to one subcontractor, material supplier,
or equipment lessor, and/or
(ii) Seventy-five percent or more with three or fewer
subcontractors, material suppliers, and/or equipment lessors.
(2) Note: If two or more subcontractors have common ownership, they
are considered as one subcontractor.
(3) How to apply rule:
(i) The 50 percent rule will apply when division of the amount of
the largest subcontract by the total amount of the building cost results
in more than 50 percent.
(ii) The 75 percent rule will apply when division of the sum of the
amounts of the three largest subcontracts by the total building cost
results in 75 percent or more.
(D) Qualified contracting entities. Contractors, subcontractors,
material suppliers, and any other individual or organization sharing an
identity of interest and providing materials or services for the project
must certify that it is a viable, ongoing trade or business qualified
and properly licensed to undertake the work for which it intends to
contract. Form FmHA or its successor agency under Public Law 103-354
1944-31 will be prepared and executed by the contracting entities. The
form provides notification to the entities of the penalty, under law,
for erroneously certifying to the statements contained therein.
Debarment actions will be instituted against entities who fail to
disclose an identity of interest in accordance with the provisions of
FmHA or its successor agency under Public Law 103-354 Instruction 1940-M
(available in any FmHA or its successor agency under Public Law 103-354
office).
(ix) Requests for payment for work performed by the owner-builder
method, shall be permitted to the FmHA or its successor agency under
Public Law 103-354 District Director for review and approval prior to
each advance of funds in order to insure that funds are used for
authorized purposes. Requests for payment shall be made on Form FmHA or
its successor agency under Public Law 103-354 1924-18 or other
professionally recognized form containing the following certification to
FmHA or its successor agency under Public Law 103-354:
The undersigned certifies that the work has been carefully inspected
and to the best of their knowledge and belief, the quantities shown in
this estimate are correct and the work has been performed in accordance
with the contract documents.
_______________________________________________________________________
(Name of Architect)
By:_____________________________________________________________________
_______________________________________________________________________
(Title (Date)
Approved by Owner's Representative: By:_________________________________
_______________________________________________________________________
(Title)
Accepted by FmHA or its successor agency under Public Law 103-354
Representative: By:_____________________________________________________
_______________________________________________________________________
(Title)
The review and acceptance of partial payment estimates by FmHA or
its successor agency under Public Law 103-354 does not attest to the
correctness of the quantities shown or that the work has been performed
in accordance with the plans and specifications.
(A) If interim financing is available at reasonable rates and terms
for the construction period, such financing shall be obtained. Exhibit B
of subpart E of part 1944 of this chapter shall be used to inform the
interim lender that FmHA or its successor agency under Public Law 103-
354 will not close its loan until the project is complete, ready for
occupancy, evidence is furnished indicating that all bills have been
paid for work completed on the
[[Page 127]]
project, all inspections have been completed and all required approvals
have been obtained from any governmental authorities having jurisdiction
over the project. Upon presentation of proper partial payment estimates
containing an estimate of the value of work in place which has been
prepared and executed by the owner-builder, certified by the applicant's
architect, and accepted by FmHA or its successor agency under Public Law
103-354, the interim lender may advance construction funds in accordance
with the provisions of this section. It is suggested that the partial
payment not exceed 90 percent of the value of work in place and material
suitably stored on site.
(B) If interim financing is not available, partial payments not to
exceed 90 percent of the value of work in place and materials suitably
stored on site may be made to the owner-builder for that portion of the
estimated cost of development guaranteed by a letter of credit or
deposits meeting the requirements of Sec. 1924.6(a)(3)(iii)(A), (B) or
(C) of this subpart. Partial payments may not exceed 60 percent of the
value of work in place in all other cases. The determination of the
value of work in place will be based upon an application for payment
containing an estimate of the value of work in place which has been
prepared and executed by the owner-builder, certified by the borrower's
architect, and accepted by FmHA or its successor agency under Public Law
103-354. Prior to receiving the first partial payment, the owner-builder
must submit a schedule of prices or values of the various trades or
phases of the work aggregating the total development cost of the project
as required in Sec. 1924.13(e)(2)(i)(G) and (H) of this subpart. Each
application for payment must be based upon this schedule, and show the
total amount owed and paid to date for materials and labor procured in
connection with the project. With each application for payment, the
owner-builder must also submit evidence showing how the requested
partial payment is to be applied, evidence showing that previous partial
payments were properly applied, and a signed statement from the
applicant's attorney, title insurance company, or local official in
charge of recording documents certifying that the public records have
been searched and that there are no liens of record. When the District
Director has reason to believe that partial payments may not be applied
properly, checks will be made payable to persons who furnish materials
and labor for eligible purposes in connection with the project.
(x) Under no circumstances shall funds be released for final payment
or to pay any items of the builder's profit until the project is 100
percent complete, ready for occupancy, and the owner-builder has
completed and properly executed Form FmHA or its successor agency under
Public Law 103-354 1924-13 or complied with the cost certification
procedures of Sec. 1924.13(e)(2)(viii) of this subpart.
[52 FR 8002, Mar. 13, 1987; 52 FR 26139, July 13, 1987, as amended at 53
FR 2155, Jan. 26, 1988; 59 FR 6882, Feb. 14, 1994; 61 FR 56116, Oct. 31,
1996]
Secs. 1924.14--1924.48 [Reserved]
Sec. 1924.49 State supplements.
State Supplements or policies will not be issued or adopted to
either supplement or set requirements different from those of this
subpart, unless specifically authorized in this subpart, without prior
written approval of the National Office.
Sec. 1924.50 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget
(OMB) and have been assigned OMB control number 0575-0042. Public
reporting burden for this collection of information is estimated to vary
from 5 minutes to 4 hours per response, with an average of 37 minutes
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 U.S.
Department of Agriculture, Clearance Officer, OIRM, AG Box 7630,
Washington, DC 20250; and to the Office of Management and Budget,
[[Page 128]]
Paperwork Reduction Project (OMB# 0575-0042), Washington, DC 20503.
[59 FR 6885, Feb. 14, 1994]
Exhibits to Subpart A
Exhibit A--Estimated Breakdown of Dwelling Costs for Estimating Partial
Payments
[In percent]
------------------------------------------------------------------------
With With
slab on crawl With
grade space basement
------------------------------------------------------------------------
1. Excavation............................. 3 5 6
2. Footings, foundations columns.......... 8 8 11
3. Floor slab or framing.................. 6 4 4
4. Subflooring............................ 0 1 1
5. Wall framing, sheathing................ 7 7 6
6. Roof and ceiling framing, sheathing.... 6 6 5
7. Roofing................................ 5 5 4
8. Siding, exterior trim, porches......... 7 7 6
9. Windows and exterior doors............. 9 9 8
10. Plumbing--roughed in.................. 3 2 3
11. Sewage disposal....................... 1 1 1
12. Heating--roughed in................... 1 1 1
13. Electrical--roughed in................ 2 2 2
14. Insulation............................ 2 2 2
15. Dry wall or plaster................... 8 8 7
16. Basement or porch floor, steps........ 1 1 6
17. Heating--finished..................... 3 3 3
18. Flooring.............................. 6 6 5
19. Interior carpentry, trim, doors....... 6 6 5
20. Cabinets and counter tops............. 1 1 1
21. Interior painting..................... 4 4 3
22. Exterior painting..................... 1 1 1
23. Plumbing--complete fixtures........... 4 4 3
24. Electrical--complete fixtures......... 1 1 1
25. Finish hardware....................... 1 1 1
26. Gutters and downspouts................ 1 1 1
27. Grading, paving, landscaping.......... 3 3 3
-----------------------------
Total............................... 100 100 100
------------------------------------------------------------------------
Exhibit B--Requirements for Modular Panelized Housing Units
For the benefit of FmHA or its successor agency under Public Law
103-354 this Exhibit prescribes evaluation, acceptance, inspection and
certification procedures formodular/panelized housing units proposed for
use in Farmers Home Administration or its successor agency under Public
Law 103-354 (FmHA or its successor agency under Public Law 103-354)
Rural Housing programs. It applies to proposed development packages
provided either under a contract between an FmHA or its successor agency
under Public Law 103-354 borrower and a single contractor or under a
conditional commitment. This Exhibit also describes the use of
background information available through the Department of Housing and
Urban Development (HUD) for analysis of manufactured products. This
Exhibit also applies to the evaluation of manufactured farm service
buildings in paragraph XI, below. For the purpose of this Exhibit,
County Supervisor and County Office also mean District Director and
District Office, respectively.
I. Applicable Standards and Manuals.
A. The HUD Handbook 4950.1, Technical Suitability of Products
Program Technical and Processing Procedures, must be followed by housing
manufacturers to obtain acceptance of their products. Acceptance
documents issued by HUD include: Structural Engineering Bulletins (SEB)
on a national basis, Area Letters of Acceptance (ALA) which when
accepted by all Area HUD Offices in a HUD region will, in essence,
become Regional Letters of Acceptance (RLA), Truss Connector Bulletins
(TCB): and, Mechanical Engineering Bulletins (MEB). These documents as
well as the Use of Material Bulletins (UM) and Materials Release
Bulletins (MR) are addendums to the HUD Minimum Property Standards
(MPS), Under handbook guidelines, HUD also examines state agency
regulations concerning design, construction and labeling of modular/
panelized housing units and designates those states having procedures
acceptable for use under HUD programs. Modular/panelized housing
produced in these states is called Category III and is considered
technically suitable for use without further structural analysis.
B. All State FmHA or its successor agency under Public Law 103-354
Offices should maintain a close working relationship with each HUD
office in their jurisdiction to assure coordination. Any deviations in
structure, materials or design from HUD acceptance documents must comply
with one of the other applicable development standards.
II. Modular Housing Units that Require Factory Inspections.
Only those types which cannot be completely inspected on site are
required to obtain acceptance from HUD. Those that receive acceptance
will be periodically factory inspected by HUD or HUD's designated
agency, usually about every 6 months.
III. Panelized Housing Units that Do Not Require Factory
Inspections.
A. Housing completely assembled on the building site does not
require HUD acceptance. This includes housing that is manufactured but
is assembled on the site such as: Precut pieces, log wall houses,
trussed roof rafters or floor trusses; open panel walls, and other types
that can be completely inspected on site.
[[Page 129]]
B. Housing that is assembled in local materials dealers' yards for
moving to local sites and to be purchased by an FmHA or its successor
agency under Public Law 103-354 applicant, will be inspected during
construction in the yard by the local FmHA or its successor agency under
Public Law 103-354 County representative.These units must be constructed
according to the applicable development standard and not transported out
of the local FmHA or its successor agency under Public Law 103-354
County Office jurisdiction. The inspection must be recorded on Form FmHA
or its successor agency under Public Law 103-354 1924-12, ``Inspection
Report.''
IV. Manufacturer's Actions Required for Submissions to FmHA or its
successor agency under Public Law 103-354 are listed in Attachment 1 to
this Exhibit B.
V. State FmHA or its successor agency under Public Law 103-354
Office Actions when Manufacturing Facilities are in its Jurisdiction.
The State Office, upon receipt of manufacturer's submission, must:
A. Determine that the unit structural system has been accepted by
HUD as appropriate under HUD Handbook 4950.1 requirements.
B. Review the thermal characteristics and approach of the
calculations to determine actions to be taken in compliance with
paragraph IV C of Exhibit D of this subpart.
C. Review the proposal for compliance with Sec. 1924.5(d)(1) of
this subpart.
D. Determine that the prerequisites for consideration of acceptance
by FmHA or its successor agency under Public Law 103-354 are met. The
prerequisites include all of the following:
1. A current acceptance document from HUD (SEB, RLA, ALA), except
for Category III housing (modular/panelized housing that does not have
to have a Structural Engineering Bulletin as designated by HUD). In
Category III states, the state government requirements for manufactured
housing must be followed.
2. A current HUD Factory Inspection Report, Form No. 2051m, or in
the case of Category III housing, a copy of the inspection report from
the state government or accepted third party performing the factory
inspection. Each report must be made by HUD or a HUD authorized agency,
and must be no older than 6 months.
3. A letter from the manufacturer requesting a review for
acceptance. Enclosed with the letter shall be all the information listed
in Attachment 1 to this Exhibit B.
E. Issue acceptance letters to the manufacturer stating the
conditions of acceptance in the format of Attachment 2 to this Exhibit
B. The letter shall have an attachment listing all models accepted in
the format of Attachment 3 to this Exhibit B. A copy of the acceptance
letter and list of models shall be sent to each County Office in the
state and, when requested by the manufacturer, to each other FmHA or its
successor agency under Public Law 103-354 State Office in which the
product is to be marketed.
F. After initial review of a submission, maintain a master file of
accepted manufacturers and models and review the file twice yearly to
determine the currency of the factory inspection reports and HUD or
state government acceptance documents.
G. Notify manufacturers of overdue factory inspection reports, for
acceptance of documents review and updating, using the format of
Attachment 4 to this Exhibit B. Accompanying the notification will be a
temporary acceptance sheet (Attachment 3 to this Exhibit B) indicating
to the manufacturer that the company models have temporary acceptance
for 60 days. If the manufacturer provides evidence that a review is
being processed by HUD, a maximum of an additional 90 days may be
granted. Otherwise, the acceptance shall terminate on the last extension
date and it will be necessary for the manufacturer to resubmit as if for
initial acceptance.
H. Distribute a list of added models, deleted models, or notice of
deletion of any manufacturer's product to the County Offices and other
State FmHA or its successor agency under Public Law 103-354 Offices as
necessary.
I. Issue an initial supply of Manufacturer's and Builder's
Certification forms (Attachment 5 to this Exhibit B) to each existing
and newly accepted manufacturer. Manufacturers are to duplicate this
form as necessary in their market areas.
J. Resolve any problems with the manufacturer, as reported by the
County Office. Action may include coordination, FmHA or its successor
agency under Public Law 103-354 plant inspections or cancellation of
acceptance letters when problems persist.
VI. County Office Actions:
A. When an application is received involving any of the
manufacturer's products on the accepted list, the County Office FmHA or
its successor agency under Public Law 103-354 authorized personnel will:
1. Review the drawings and description of materials described in
paragraphs A and B of Attachment 1 to this Exhibit B. The floor plans
and elevations must be identifiable with the model listed in the
accepted list issued by the State Office.
2. Require the builder/dealer or manufacturer to provide any
drawings necessary to adapt the house to the site conditions where the
house will be located.
3. Require site plan drawing such as those illustrated in
Attachments 1 and 2 to Exhibit C of this subpart (available in any FmHA
or its successor agency under Public Law 103-354 office).
[[Page 130]]
4. Inspect and identify the model delivered against the
manufacturer's certification and the accepted drawings and description
of materials before the unit has been set on the foundation.
5. Require the builder/dealer to certify that the work for which the
builder/dealer is responsible has been erected in compliance with the
applicable development standard. This certification will be completed on
a copy of Attachment 5 to this Exhibit B, and filed in County Office
case file.
6. Observe any noncompliance with the applicable development
standard or with paragraphs IV and V of this Exhibit B. In this respect:
a. Minor noncompliance will be resolved by the manufacturer through
the builder/dealer. In cases where there is no builder/dealer, the
County Office may resolve such issues with the manufacturer directly.
b. Noncompliance that cannot be resolved at the County Office level
will be reported to the State Office.
7. Inspect manufactured housing according to Sec. 1924.8(d) of this
subpart.
8. Be aware that the accepted list may include many models from
which loan applicants may choose. No changes from accepted model designs
are permitted. The model selected by an applicant should be appropriate
to the needs of that particular family in accordance with subpart A of
part 1944 of this chapter.
VII. Noncompliance Issues.
A. When minor issues are noted, the County Office will attempt to
resolve them as described above. If they cannot be resolved locally,
they will be referred to the State Office. When any issues cannot be
resolved at State Office level, the National Office Program Support
Staff (PSS) will be contacted for guidance.
B. The National Office PSS coordinating with HUD, will take the
appropriate actions to resolve the issues reported.
C. Manufacturers and builder/dealers must be aware that if the FmHA
or its successor agency under Public Law 103-354 inspector finds any of
the following conditions, the inspector may refuse to accept the
construction until corrections have been made:
1. Evidence of noncompliance with any option of the method described
in the HUD--SEB, RLA, or ALA.
2. Faulty shop fabrication, including surface defects.
3. Damage to shop fabricated items or materials due to
transportation, improper storage, handling or assembly operation.
4. Unsatisfactory field or site workmanship.
VIII. Actions by Other State Offices. When a State Office receives a
copy of the accepted list from the State Office in which a manufacturing
plant is located, it will:
A. Maintain a file, by manufacturer, of each accepted list of
models.
B. Provide copies of the accepted list of models to each County
Office in the State.
C. Request a copy of the drawings, description of materials, and
thermal calculations to determine compliance with the thermal
requirements for the county in which the house is to be located
according to Exhibit D of this subpart.
D. Check to see that County Offices within the state will act as
prescribed in paragraph VI of this Exhibit B.
E. When two or more State Offices have different interpretations of
the acceptability of a particular model, there must be an agreement
between the states so that they will have the same requirements. If the
states cannot agree, the National Office PSS will be consulted for
guidance.
IX. Subsequent Review.
FmHA or its successor agency under Public Law 103-354 will make
periodic reviews of houses, both site-built and houses manufactured
offsite, to determine acceptability of the finished product. If, in the
judgment of the FmHA or its successor agency under Public Law 103-354,
the product has failed to perform satisfactorily, acceptance may be
withdrawn. The State Director will notify the manufacturer and/or the
builder/dealer of the reasons for the withdrawal no later than the time
of withdrawal. Negotiations for corrections will be carried out by the
County Office with the assistance of the State Office or National
Office, as necessary.
X. Materials and Products Acceptance--Material Release Bulletins,
Use of Materials Bulletins, Manufacturer's Instructions.
A. The Materials Release (MR) and Use of Materials Bulletins (UM)
provide for the national acceptance of specific nonstandard materials
and products not covered in the current HUD MPS.
B. When contractors or builders intend to use products or materials
not listed as approved in the MPS, the FmHA or its successor agency
under Public Law 103-354 personnel reviewing or concerned with the
approval of construction in which the product is to be used, will
require the contractor or builder to furnish a Materials Release
Bulletin or Use of Materials Bulletin on the materials or products. If
the product has been accepted, the supplier should be able to obtain the
bulletin for the contractor or builder from the manufacturer. These
bulletins describe the products or materials limitations to use, method
of installing or applying, approved type of fasteners, if used, etc. and
will provide the contractor with instructions as to proper installation
or application.
C. When FmHA or its successor agency under Public Law 103-354
personnel are unfamiliar with any materials or products which have been
accepted in the MPS, they will request the contractor or builder to
furnish
[[Page 131]]
the manufacturer's instructions to assure that the materials or products
are properly installed or applied. Any questions on any product that
cannot be resolved in the County Office should be referred to the State
Office. When the question cannot be resolved at the State Office level,
the National Office PSS should be consulted for guidance.
XI. Manufactured Farm Service Buildings.
A. When a loan application is received that involves a manufactured
building or special equipment that cannot be completely inspected on the
site, the local State Land Grant University recommendations should be
requested.
B. When the County Office questions the advisability of making a
loan on a manufactured building, the State Office should also be
consulted.
C. The State Office should review and make recommendations to the
County Office. If doubt still exists, the National Office PSS should be
consulted for guidance.
Attachment 1--Required Information for Acceptance of Modular/Panelized
Housing Units
The manufacturer or sponsor of modular/panelized housing units
wishing to participate in the Farmers Home Administration or its
successor agency under Public Law 103-354 (FmHA or its successor agency
under Public Law 103-354) Rural Housing programs shall submit to the
FmHA or its successor agency under Public Law 103-354 State Director
having jurisdiction over the state in which the proposed housing is to
be manufactured, two complete sets of the information listed below for
evaluation. Submissions not including all the information requested will
be returned.
A. Statements:
1. Name and location of organization, including titles and names of
its principal officers.
2. A brief description of plant facilities.
3. Extent of intended market distribution, including a list of any
other states in which units will be marketed.
4. The method of quality control during site installation.
5. A copy of the applicable current HUD Structural Engineering
Bulletin (SEB), Regional Letter of Acceptance (RLA), or Area Letter of
Acceptance (ALA).
6. A current factory inspection report made within 6 months by HUD
or HUD authorized agency.
7. Name and address of any third party inspection agency.
8. Location of nearest assembled product for inspection.
9. Field manuals for site installation and/or set-up procedures.
10. Specifications or descriptions of materials using either Form
FmHA or its successor agency under Public Law 103-354 1924-2, (HUD-FHA
Form 2005), ``Description of Materials,'' including sizes, species and
grade of all building and finishing materials. All blanks should be
filled and additional sheets may be attached as well as equipment
manufacturer's brochures. Use an asterisk (*) to denote all items of
onsite construction that will be provided by the builder-dealer. The
builder-dealer must complete a form for the builder-dealer's portion of
the work. Use N/A in any blank which is not applicable.
11. Names and addresses of other public and private agencies which
have rendered or been asked to render a technical suitability or
acceptance determination with respect to the products or structural
methods employed.
12. Written certification that construction drawings and
specifications conform with the applicable development standard.
13. Any other pertinent information.
14. An index of all documents submitted.
B. Working Drawings. For emphasis as to the details required for
modular/panelized housing proposals, the following items are listed in
addition to and in more detail than the requirements in Exhibit C of
this subpart. In some cases, the drawing presentation sheets may be
required to be reduced to 200 mm by 266 mm (8 x 10\1/2\ inches) sheet
size:
1. Foundation and/or Basement Plan. This plan shall include
anchorage details, exterior and interior dimensions, typical footings,
wall thickness, pilaster sizes and locations, column or pier sizes and
locations and girders required to support the structures. Show location
of all equipment (furnace, water heater, laundry tubs, sump, etc.) floor
drains, electrical outlets, electrical entrance panels, and all doors
and windows or crawl space vents with all sizes indicated.
2. Floor Plans of all levels. Show square footage of each habitable
room with square footage of each area of natural light and ventilation.
In addition, a design sketch scaled properly to illustrate a typical
furniture arrangement for all habitable levels is required to indicate
intended occupancy functions of the design. A window and door schedule
should also be provided indicating glazed size, sash size, and thermal
conductance of each type.
3. All exterior elevations including opening and sizes; wall finish
materials, flashing, finish grades intended, depth of footings when
known, finish floor, ceiling heights, roof slope, location of
downspouts, gutters, vents for both structural spaces and for equipment.
Indicate construction joint locations and details of connections between
sections, modules or components.
4. Building cross sections showing size and spaces of all framing
members from lowest member (bottom of footing) to highest point of roof
(ridge) plus;
[[Page 132]]
(a) Type of material and method of application of all covering
materials, such as subflooring, combination subflooring and
underlayment, sheathing, interior and exterior finishes;
(b) Complete details including computations of trussed rafter
systems with the architect/engineer's stamp of those responsible for the
design.
(c) Details of insulation and vapor barrier installation and attic
ventilation. If the thermal characteristics to be provided are
determined according to optional method for overall structure
performance allowed in Exhibit D of this subpart, the submission and
complete engineering calculations with all details of construction shall
be sent to Administrator, Attn. PSS, FmHA or its successor agency under
Public Law 103-354 Washington, DC 20250, for analysis as prescribed in
paragraph IV C of Exhibit D of this subpart.
(d) Special details as necessary to show any special features of
construction, including method of fabricating, erection, joining, and
finishing of all elements; and
(e) Details and sections of stairways including all critical
dimensions, such as, riser, run and headroom.
5. Interior elevations of kitchen cabinets and bathroom elevations
with schedule of all shelf, counter-top and drawer footage. Indicate
whether kitchen cabinets are to be custom made for each model or made
for any model by a cabinet manufacturing company.
6. Plumbing schematics, including pipe materials, sizes and plumbing
code compliance.
7. Heating plan, including heat loss of each room, is needed for
heating systems, sizings and capacities, forced air, electric baseboard,
or electric space heaters and, if applicable, heat gain. For forced air
systems, include supply and return duct layout and location of
appropriate diffusers.
8. Electrical plan, including circuit chart or diagram.
9. Any other pertinent facts or drawings that will better explain
why and how certain unusual materials or structural methods are
employed.
Attachment 2
John Dough Manufacturing Company,
3444 Residence Avenue,
Elkton, Indiana 00051.
Dear Sirs: Athough the documents submitted to this office have only
received a cursory review, they appear to be in substantial compliance
to qualify your firm for the type of acceptance indicated on the
attached list.
The acceptance being issued is subject to this letter of conditions,
compliance with HUD Handbook 4950.1 Technical Suitability of Products
Program Technical and Processing Procedures, compliance with Farmer Home
Administration (FmHA or its successor agency under Public Law 103-354)
Thermal Performance Construction Standards, and compliance with the
conditions set forth in the HUD acceptance document, if applicable,
whose number appears on the acceptance.
The manufacturer and the authorized builder-dealer bear the
responsibility of complying with the above, the exhibits submitted and
the applicable development standards.
The manufacturer and/or builder-dealer also shall:
1. Provide positive identification of the modular unit by model,
date of manufacture and factory in which the unit was manufactured.
2. Furnish with each home to be financed by FmHA or its successor
agency under Public Law 103-354 in------(State)------, a written
certificate (Attachment 5 to this Exhibit B) endorsed by the builder-
dealer certifying that all requirements have been satisfied.
3. Furnish the local FmHA or its successor agency under Public Law
103-354 County Supervisor with a complete set of drawings including site
plans, description of materials, structural engineering bulletins when
applicable in the state, and documentation relating to the manufacture,
transportation, erection, and installation for each model of modular/
panelized housing to be financed in the county. Electrical, plumbing and
heating plans must be furnished for each model in addition to the basic
drawings. Floor plans and elevation drawings may vary from those listed
in Attachment 1 of Exhibit B to FmHA or its successor agency under
Public Law 103-354 Instruction 1924-A to reflect each of the
manufacturer's models provided they are in compliance with the
applicable development standard and the FmHA or its successor agency
under Public Law 103-354 Thermal Performance Construction Standards and
provided they have been accepted and listed in this state's approval of
manufactured structures. No field alterations to the accepted models
will be allowed.
4. Furnish, when required by the County Supervisor, foundation
drawings (including special foundation design considerations when the
unit is to be erected in seismic zones 1, 2 or 3) adapting the modular
home to any unusual site conditions needing information additional to
that furnished by the standard drawings.
5. Furnish the County Office with a copy of inspection reports of
the manufacturing facilities immediately after the inspection reports
have been completed.
6. Allow FmHA or its successor agency under Public Law 103-354
personnel to inspect the manufacturing facilities at any time and
furnish all FmHA or its successor agency under Public Law 103-354 State
Offices, where acceptance has been obtained, with a copy of any FmHA or
its successor
[[Page 133]]
agency under Public Law 103-354 inspection reports immediately after the
inspection reports have been completed.
7. In the event there are major changes to the submitted drawings,
obtain approval under the HUD Technical Suitability of Products Program
and submit verification of this approval to the County Office for
listing on the state's accepted list. Any modular home shipped with
major changes incorporated, without such changes on file at the County
Office may be rejected.
(Add state and local requirements appropriate to this letter of
conditions.)
This acceptance may be subject to corrective action when
deficiencies are noted in the product, field inspections, manufacturing
facilities, or when there is noncompliance with the provisions of the
HUD Technical Suitability of Products Program.
The inclusion of these models on the accepted list is based only on
the material and structural aspects of the manufactured units. Final
determination of acceptability rests with FmHA or its successor agency
under Public Law 103-354 personnel. Other factors relating to the
property in its entirety such as appraisal, location, sustained market
acceptance, architectural planning and appeal, thermal qualities,
mechanical and electrical equipment, etc., must be considered in the
final determination.
Your cooperation in this acceptance program is appreciated.
Sincerely,
State Director
Attachment 3
Date ------ File No. ------
Acceptance of Modular/Panelized Housing Units
(Based on HUD Handbook 4950.1)
Manufacturer:
------ Acceptance Document ------
------ Type of Acceptance:
------ ---- Regular
------ ---- Temporary, Expires ------
Plant Locations:________________________________________________________
Date of Latest Plans
Reviewed________________________________________________________________
Date of Latest Factory
Inspection______________________________________________________________
Acceptance Document Review
Date____________________________________________________________________
FmHA or its successor agency under Public Law 103-354 Instruction 1924-
A, Exhibit D
Thermal Performance Construction Standards
State Office Review
(Exh. D, IV, C, 1, a or b)
National Office Review
(Exh. D, IV, C, 2)
Maximum Winter Degree Days for
State ------ Walls R ------
Glazing/Gross Wall Area Ratio ------%
Ceilings R ------
Glazing ------ Pane(s)
Floor R ------
Glazing ------ Pane(s)
Insulated Door ------
Wood and Storm ------
Insulated Door ------
Wood and Storm ------
Models Accepted:
Attachment 4
John Dough Manufacturing Company,
3444 Residence Avenue,
Elktown, Indiana 00051.
Dear Sirs: As set forth in acceptance letters issued by this office,
acceptance of modular/panelized homes in this state is based on HUD's
Technical Suitability of Products Program and the conditions stated in
the acceptance letter. Your file has been reviewed and the following has
been noted.
-------- An inspection report of your manufacturing facilities is
overdue. Inspections are required twice yearly. The last
inspection report on file at this office is dated ------.
-------- Your Structural Engineering Bulletin No. ---- dated ---- has
not been reviewed by HUD. Reviews are generally required every
three years. Temporary acceptance will be considered when you
provide evidence that the review documents have been submitted
to HUD.
[[Page 134]]
-------- The drawings being used for the construction of your homes are
not listed in your Structural Engineering Bulletins. Drawings
used in the field should be those upon which the Structural
Engineering Bulletin was issued.
-------- There have been ---- revisions to the development standards
since ------, the date of the last drawings we have on file
for your homes. It is recommended that you review the
revisions to ascertain whether your drawings need to be
updated.
Please submit a written response and appropriate documents for the
above items within ------ days, or your product will be removed from the
accepted list until your firm can again qualify. If you have any
problems furnishing the above within the time stated, please contact
this office.
We look forward to receiving the materials indicated so that your
firm's listing may be continued.
Sincerely,
State Director
Attachment 5
Certification by Manufacturer
Delivery location of structure
for component___________________________________________________________
_______________________________________________________________________
This is to certify that
Model: ------------,
Serial ------------,
manufactured ------
(date) ------, 19 ------ in
---- (location) ------
and being sold to ------
(name of ------------
builder-dealer or borrower) has been manufactured in accordance with
drawings and specifications on file in the FmHA or its successor agency
under Public Law 103-354 State Office and that the construction complies
with applicable development standards, except as modified by HUD
Acceptance Document (SEB, RLA, ALA,)
NO. ------------,
dated ------------,
and in compliance with the FmHA or its successor agency under Public Law
103-354 Thermal Performance Construction Standards.
_______________________________________________________________________
Date
_______________________________________________________________________
Signature of Authorized Official
_______________________________________________________________________
Title
Certification by Builder-Dealer
------ (Name of
builder-dealer) ------
certifies that the foundation and other on-site work has been
constructed in accordance with the drawings and specifications and the
above structure or component has been erected, installed or applied in
compliance with the applicable development standards.
It is understood that the manufacturer's certification does not
relieve the builder/dealer of responsibility under the terms of the
builder's warranty required by the National Housing Act.
_______________________________________________________________________
Date
_______________________________________________________________________
Signature of Authorized Official
_______________________________________________________________________
Title
Exhibit C--Guide for Drawings and Specifications
This Exhibit applies to all new buildings to be constructed,
including all single family housing and related facilities and, as
applicable, farm housing and farm service buildings.
I. General
The documents recommended in this Exhibit correspond with the list
of Exhibits in Chapter 3 of the Department of Housing and Urban
Development (HUD) ``Architectural Handbook for Building Single-Family
Dwellings'' No. 4145.2. This Exhibit may be used as a public handout and
shall be used as a guide for drawings and specifications to be submitted
in support of any type of application involving construction of major
new buildings or extensive rehabilitation, alterations or additions to
existing buildings. Descriptions of work for minor alterations or
repairs need pertain only to work to be done and may be in narrative
form when acceptable to the County Supervisor. Complete and accurate
drawings and specifications are necessary:
A. To determine the acceptability of the proposed development,
B. To determine compliance with the applicable standards and codes,
C. To prepare a cost estimate, and
D. To provide a basis for inspections and the builder's warranty.
II. Drawings for a Specific Structure
Drawings for individual single dwellings shall provide at least the
following:
A. Plot Plan. Refer to Example Plot Plan No. 1, Attachment 1 to this
Exhibit C (available in any FmHA or its successor agency under Public
Law 103-354 office). Ratio: 1:240 (1"=20') (at scale, 1"=20' or \1/
16\"=1'0" minimum):
1. Lot and block number.
2. Dimensions of plot and north point.
[[Page 135]]
3. Dimensions of front, rear and side yards.
4. Location and dimensions of garage, carport and other accessory
buildings.
5. Location and sizes of walks, driveways and approaches.
6. Location and sizes of steps, terraces, porches, fences and
retaining walls.
7. Location and dimensions of easements and established setback
requirements, if any.
8. Elevations at the following points: (a) first floor of dwelling
and floor of garage, carport and other accessory building; (b) finish
curb or crown of street at points of extension of lot lines; (c) finish
grade elevation at each principal corner of structure; (d) finish grade
at bottom of drainage swales at extension of each side of structure as
feasible.
9. The following additional elevations, as applicable, if the
topography of the site or the design of the structure is such that
special grading, drainage or foundations may be necessary. Examples are
irregular or steeply sloping sites, filled areas on sites, or multi-
level structure designs; (a) finish and existing grade elevations at
each corner of the plot; (b) existing and finish grade at each principal
corner of dwelling; (c) finish grade at both sides of abrupt changes of
grade such as retaining walls, slopes, etc.; (d) other elevations that
may be necessary to show grading and drainage.
10. Indication of type and approximate location of drainage swales.
11. When an individual water supply and/or sewage system is
proposed, drawings, specifications and other items prescribed in
Paragraph V of this Exhibit.
B. Floor Plans.
1. Scale, 1:50 (\1/4\"=1'0").
2. Floor plan of each floor and basement, if any. Show typical
furniture locations to suggest intended use of each habitable space.
3. Plan of all attached terraces and porches, and of garage or
carport.
4. If dwelling is of crawl-space type, a separate foundation plan.
Slab-type foundation may be shown on sections.
5. Direction, size and spacing of all floor and ceiling framing
members, girders, columns or piers.
6. Location of all partitions and indication of door sizes, and
direction of door swing.
7. Location and size of all permanently installed construction and
equipment such as kitchen cabinets, closets, storage shelving, plumbing
fixtures, water heaters, etc. Details of kitchen cabinets may be on
separate drawing.
8. Location and symbols of all electrical equipment, including
switches, outlets, fixtures, etc.
9. Heating system on separate drawing, or when it may be shown
clearly it may be part of the floor or basement plan showing: (a) layout
of system; (b) location and size of ducts, piping, registers, radiators,
etc.; (c) location of heating unit and room thermostat; (d) total
calculated heat loss of dwelling including heat loss through all
vertical surfaces, ceiling and floor. When a duct or piped distribution
system is used, calculated heat loss of each heated space is required.
10. Cooling system, on separate drawings or, as part of heating
plan, floor or basement plan showing: (a) layout of system; (b) location
and size of ducts, registers, compressors, coils, etc.; (c) heat gain
calculations, including estimated heat gain for each space conditioned;
(d) model number and Btu capacity of equipment or units in accordance
with applicable Air Conditioning and Refrigeration Institute (ARI) or
American Society of Refrigerating Engineers (ASRE) Standard; (e) Btu
capacity and total kilowatt (KW) input at stated local design
conditions; (f) if room or zone conditioners are used, provide location,
size and installation details.
C. Exterior Elevations.
1. Scale, 1:50 (\1/4\"=1'0"). Elevations, other than main elevation,
which contain no special details may be drawn at 1:100 (\1/8\"=
1'0").
2. Front, rear and both side elevations, and elevations of any
interior courts.
3. Windows and doors--indicate size unless separately scheduled or
shown on floor plan.
4. Wall finish materials where more than one type is used.
5. Depth of wall footings, foundations, or piers, if stepped or at
more than one level.
6. Finish floor lines.
7. Finish grade lines at buildings.
D. Details and Sections.
1. Section through exterior wall showing all details of construction
from footings to highest point of road. Where more than one type of wall
material is used, show each type. Scale 1:25 (\3/8\"=1'0") minimum.
2. Section through any portion of dwelling where rooms are situated
at various levels or where finished attic is proposed, Scale, 1:50 (\1/
4\"=1'0") minimum.
3. Section through stair wells, landings, and stairs, including
headroom clearances and surrounding framing. Scale, 1:50 (\1/4\"=1'0")
minimum.
4. Details of roof trusses, if proposed, including connections and
stress or test data with seal of architect or engineer responsible.
Scale of connections, 1:25 (\3/8\"=1'0") minimum.
5. Elevation and section through fireplace. Scale, 1:25 (\3/
8\"=1'0") minimum.
6. Elevations and section through kitchen cabinets, indicating
shelving. Scale, 1:50 (\1/4\"=1'0") minimum.
7. Sections and details of all critical construction points,
fastening systems, anchorage methods, special structural items or
special millwork. Scale as necesaary to provide information, 1:25 (\3/
8\"=1'0") minimum.
[[Page 136]]
III. Master Drawings for Group Structures
Drawings for a group of structures (such as for several conditional
commitments) may be submitted in lieu of drawings for each individual
property when a number of applications are simultaneously submitted
involving repetition of the same type structure.
A. Master plot plan shall include the following:
1. Scale which will provide the following information in a clear and
legible manner.
2. North point.
3. Location and width of streets and rights-of-way.
4. Location and dimensions of all easements.
5. Dimensions of each lot.
6. Location of each dwelling on lot with basic dimensions.
7. Dimensions of front, rear and side yards.
8. Location and dimensions of garage, carports and other accessory
buildings.
9. Identification of each lot by number and indication of basic plan
and elevation type.
10. Location of walks, driveways and other permanent improvements.
B. Typical plot plan for each basic type dwelling may be submitted
in lieu of fully detailing each lot on master plot plan, when topography
and lot arrangements present no individual planning or construction
problems.
1. Information not shown on the typical plot plan shall be included
on the master plot plan.
2. Typical plot plans shall not be used for corner lots, lots with
irregular boundaries, lots involving pronounced topographic variations
or other lots where individual detailing is necessary.
3. Location of dwelling on typical lot and full dimensions.
4. Location and dimensions of all typical improvements, such as
garage, carport, accessory buildings, walks, drives, steps, porches,
terraces, trees, shrubs, retaining walls, fences, etc.
C. Grading may be shown on separate grading plan or on the master
plot plan. Scale shall be sufficiently large to provide the following
information in clear and legible manner:
1. Contours of existing grade at intervals of not more than 1.524 m
(5 feet). Intervals less the 1.524 m (5 feet) may be required when
indicated by the character of the topography.
2. Location of house and accessory buildings on each lot.
3. Identification of each lot by number.
4. Elevations in accordance with individual plot plan including
bench mark and datum or, in lieu of finish grade elevations, contours of
proposed finish grading may be submitted. Contour intervals selected
shall be appropriate to the topography of the site.
5. Lot grading shall be shown by indicating protective slopes and
approximate location of drainage swales.
6. Location of drainage outfall, if any drainage is not to a street.
D. Floor plans, elevations, sections and details shall be submitted
for each basic plan. Alternate elevations to basic plan may be shown at
scale, 1:100 (\1/8\''=1'0'').
IV. Specifications
Form FmHA or its successor agency under Public Law 103-354 1924-2,
``Description of Materials,'' or other acceptable and comparable
descriptions of all materials forms shall be submitted with the
drawings. The forms shall be completed in accordance with the
instructions on Form FmHA or its successor agency under Public Law 103-
354 1924-2 to describe the materials to be used in the construction.
A. Form FmHA or its successor agency under Public Law 103-354 1924-2
may be reproduced if size, format and printed text are identical to the
current official form. When it is reproduced, the following deletions
must be made:
1. All lines indicating FmHA or its successor agency under Public
Law 103-354 form numbers or other Government agency initials and/or
numbers, and
2. The United States Government Printing Office (GPO) imprint and
reference number.
B. The material identification shall be in sufficient detail to
fully describe the material, size, grade and when applicable,
manufacturer's model or identification numbers. When necessary,
additional sheets must be attached as well as manufacturer's
specification sheets for equipment and/or special materials, such as
aluminum siding or carpeting.
V. Individual Water Supply and Sewage Disposal Systems
When an individual water and/or sewage disposal system is proposed,
the following additional information must be submitted:
A. Approval and recommendations of other authorities.
1. A written opinion by the health authority having jurisdiction
that the site is suitable and acceptable for the proposed systems(s)
and,
2. If available, a soils report from the local USDA-Soil
Conservation Service and any recommendations they may have.
3. Approval of appropriate environmental control authority.
4. A signature of the health authority on the plot plan indicating
approval of the design of the proposed system.
B. Plot Plan. Refer to Example Plot Plan No. 2, Attachment 2 to this
Exhibit C (available in any FmHA or its successor agency under Public
Law 103-354 office).
[[Page 137]]
1. Location and size of septic tank, distribution box, absorption
field or bed, seepage pits and other essential parts of the sewage
disposal system and distance to all individual wells, open streams or
drainageways.
2. Location of well, service line and other essential parts of the
water supply system and distance to other wells and/or sewage disposal
systems.
3. Exact location of individual systems (water or sewage) on
adjacent properties and description of system, if available.
C. Construction details of all component parts of individual water
supply and sewage disposal systems shall clearly indicate material,
equipment and construction. Extra sheets and drawings should be added as
necessary to fully explain the proposed installation.
Exhibit D--Thermal Performance Construction Standards
I. Purpose
This Exhibit prescribes thermal performance construction standards
to be used in all housing loan and grant programs. These requirements
shall supersede the thermal performance requirements in any of the
development standards in Sec. 1924.4(h) of this subpart.
II. Policy
All loan or grant applications involving new construction (except
for new Single Family Housing (SFH)) and all applications for
conditional commitments (except for new SFH) shall have drawings and
specifications prepared to comply with paragraphs IV A or C and IV D of
this Exhibit. All new SFH construction shall have drawing and
specifications prepared to comply with paragraph IV F of this Exhibit.
All existing dwellings to be acquired with FmHA or its successor agency
under Public Law 103-354 loan funds shall be considered in accordance
with paragraph IV B or C of this Exhibit.
III. Definitions
A. British thermal unit (Btu) means the quantity of heat required to
raise the temperature of one pound (.4535 Kg.) of water by one degree
Fahrenheit (F). For example, one Btu is the amount of heat needed to
raise the temperature of one pound of water from 59 degrees F to 60
degrees F.
B. Glazing is the material set into a sash or door when used as a
natural light source and/or for occupant's views of the outdoors.
C. ``R'' value, thermal resistence, is a unit of measure of the
ability to resist heat flow. The higher the R value, the higher the
insulating ability.
D. ``U'' value is the overall coefficient of heat transmission and
is the combined thermal value of all the materials in a building
section. U is the reciprocal of R. Thus U=1/R or R=1/U or 1/C where C is
the thermal conductance and is the unit of measure of the rate of heat
flow for the actual thickness of a material one square foot in area at a
temperature of one degree Fahrenheit. The lower the U value, the higher
the insulating ability.
E. Winter degree-day is a unit based on temperature difference and
time. For any one day, when the mean temperature is less than 65 degrees
F (18.3 degrees Celsius), there are as many degree-days as the number of
degrees difference between the mean temperature for the day and 65
degrees F. The daily mean temperature is computed as half the total of
the daily maximum and daily minimum temperatures.
F. CABO Model Energy Code, 1992 Edition (MEC-92)--This code sets
forth the minimum energy/thermal requirements for the design of new
buildings and structures or portions thereof and additions to existing
buildings. The MEC is maintained by the Council of American Building
Officials (CABO).
IV. Minimum Requirements
A. All multifamily dwellings to be constructed with FmHA or its
successor agency under Public Law 103-354 loan and/or grant funds and
all repair, remodeling, or renovation work performed on single family
and multifamily dwellings with FmHA or its successor agency under Public
Law 103-354 loan and/or grant funds shall be in conformance with the
following, except as provided in paragraphs IV C 3 and IV D of this
Exhibit:
New Construction--Maximum U Values for Ceiling, Wall And Floor Section of Various Construction
----------------------------------------------------------------------------------------------------------------
Winter degree days \1\ Ceilings \2\ Walls Floors \3\ Glazing \4\ Doors \5\
----------------------------------------------------------------------------------------------------------------
1000 or less....................... 0.05 0.08 0.08 1.13 ...........................
1001 to 2500....................... .04 .07 .07 .69 ...........................
2501 to 4500....................... .03 .05 .05 .69 Storm door if hollow core
door or if over 25% glass.
4501 to 6000....................... .03 .05 .05 .47 Storm Door.
6001 or more....................... .026 .05 .05 .47 Storm Door.
----------------------------------------------------------------------------------------------------------------
Note.--U values are not adjusted for framing. Values calculated for components may be rounded. For example, a
total R Value of 18.88 converts to a U value of .0529 rounded to .05.
[[Page 138]]
\1\ Winter degree-days may be obtained from the ASHRAE Handbook; the ``NAHB Insulation Manual for Homes/
Apartments''; local utilities; and the National Climatic Center, Federal Building, Asheville, NC. Manuals are
available from NAHB RF, Rockville, MD 20850, or NMWIA, 382 Springfield Avenue, Summit, NJ 07901. Other sources
of degree day data may be used if available from a recognized authority.
\2\ Insulation must be continuous (i.e. no gaps) above all ceiling joists. In pitched roof construction,
compression of insulation at the outside building walls is permitted to allow a 1" ventilation space under the
roof sheathing. For any loose fill insulation, a baffle must be provided. Raised trusses are not required.
\3\ For floors of heated spaces over unheated basements, unheated garages or unheated crawl spaces, the U value
of floor section shall not exceed the value shown. A basement, crawl space, or garage shall be considered
unheated unless it is provided with a positive heat supply to maintain a minimum temperature of 50 degrees F.
Positive heat supply is defined by ASHRAE as ``heat supplied to a space by design or by heat losses occurring
from energy-consuming systems or components associated with that space.''
AWhere the walls of an unheated basement or crawl space are insulated in lieu of floor insulation, the total
heat loss attributed to the floor from the heated area shall not exceed the heat loss calculated for floors
with required insulation.
AInsulation may be omitted from floors over heated basement areas or heated crawl spaces if foundation walls
are insulated. The U value of foundation wall sections shall not exceed the value shown. This requirement
shall include all foundation wall area, including header joist (band joist), to a point 50 percent of the
distance from a finish grade to the basement floor level. Equivalent Uo configurations are acceptable.
Maximum U Values of the Foundation Wall Sections of Heated Basement Not
Containing Habitable Living Area or Heated Crawl Space
------------------------------------------------------------------------
Winter degree-days (65 F base) Maximum U value Glazing*
------------------------------------------------------------------------
2500 or less...................... No requirement.......... 1.13
2501 to 4500...................... 0.17.................... 1.13
4501 or more...................... 0.10.................... .69
------------------------------------------------------------------------
*Glazing in heated basement shall be limited to 5 percent of floor area
unless alternative Uo combination is documented.
\4\ Sliding glass doors are considered as glazing. The glazing value is
for glass only. Glazing shall be limited to 15 percent of the gross
area of all exterior walls enclosing heated space, except when
demonstrated that the winter daily solar heat gain exceeds the heat
loss and the glass area is properly screened from summer solar heat
gain.
\5\ 1\3/4\ inch metal-faced door systems with rigid insulation core and
durable weatherstripping providing a ``U'' value equivalent to a wood
door with storm door and an infiltration rate no greater than .50 cfm
per foot of crack length tested according to ASTM E-283 at 1.567 psf
of air pressure, may be substituted for a conventional door and storm
door. All doors shall be weatherstripped. Any glazed areas must be
double-glazed.
Minimum R Values of Perimeter Insulation for Slabs-on-Grade
------------------------------------------------------------------------
Minimum R values*
Winter degree-days (65 F base) ---------------------------------
Heated slab Unheated slab
------------------------------------------------------------------------
500 or less........................... 2.8 ................
1000.................................. 3.5 ................
2000.................................. 4.0 2.5
3000.................................. 4.8 2.8
4000.................................. 5.5 3.5
5000.................................. 6.3 4.2
6000.................................. 7.0 4.8
7000.................................. 7.8 5.5
8000.................................. 8.5 6.2
9000.................................. 9.2 6.8
10000 or greater...................... 10.0 7.5
------------------------------------------------------------------------
*For increments between degree days shown, R values may be interpolated.
B. All existing dwellings to be purchased with RH loan and grant
funds shall be insulated in accordance with the following:
Existing Construction--Maximum U Values for Ceiling, Wall and Floor Section of Various Construction
----------------------------------------------------------------------------------------------------------------
Winter degree days \1\ Ceilings Walls \2\ Floors \3\, \4\ Glazing Doors \5\
----------------------------------------------------------------------------------------------------------------
1000 or less.................... 0.05 ......... 0.08 1.13 .........................
1001 to 2500.................... .04 ......... .07 .69 .........................
2501 to 4500.................... .03 ......... .05 .69 Storm door if hollow core
door or if over 25%
glass.
4501 to 6000.................... .03 ......... .05 .69 Storm Door.
6001 to 7000.................... .026 ......... .05 .69 Storm Door.
7001 or more.................... .026 ......... .05 .69 Storm Door.
----------------------------------------------------------------------------------------------------------------
Note.--U values are not adjusted for framing. Values calculated for components may be rounded. For example, a
wall section with a total R Value of 18.88 converts to a U value of .0529 rounded to .05.
[[Page 139]]
\1\ Winter degree days may be obtained from the ASHRAE Handbook; the ``NAHB Insulation Manual for Homes/
Apartments;'' local utilities; and the National Climatic Center, Federal Building, Asheville, NC. Manuals are
available from NAHB RF, Rockville, MD 20850, or NMWIA, 382 Springfield Avenue, Summit, NJ 07901. Other sources
of degree day data may be used if available from a recognized authority.
\2\ Walls shall be insulated as near to new construction standards as economically feasible. Any exterior wall
framing exposed during repair or rehabilitation work shall have vapor barrier installed and be fully
insulated.
\3\ For floors of heated spaces over unheated basements, unheated garages or unheated crawl spaces the U value
of floor section shall not exceed the value shown.
A basement, crawl space or garage shall be considered unheated unless it is provided with a positive heat supply
to maintain a minimum temperature of 50 degrees F. Positive heat supply is defined by ASHRAE as ``heat
supplied to a space by design or by heat losses occurring from energy-consuming systems or components
associated with that space.''
Where the walls of an unheated basement or crawl space are insulated in lieu of floor insulation, the total heat
loss attributed to the floor from the heated area shall not exceed the heat loss calculated for floors with
required insulation.
Insulation may be omitted from floors over heated basement areas or heated crawl spaces if foundation walls are
insulated. The U value of foundation wall sections shall not exceed the value shown. This requirement shall
include all foundation wall area, including header joist (band joist), to a point 50 percent of the distance
from a finish grade to the basement floor level. Equivalent Uo configurations are acceptable.
Maximum U Values of the Foundation Wall Sections of Heated Basement Not
Containing Habitable Living Area or Heated Crawl Space
------------------------------------------------------------------------
Winter degree days (65 F base) Maximum U value Glazing*
------------------------------------------------------------------------
2500 or less...................... No requirement.......... 1.13
2501 to 4500...................... 0.17.................... 1.13
4501 or more...................... 0.10.................... .69
------------------------------------------------------------------------
* Glazing in heated basement shall be limited to 5 percent of floor area
unless alternative Uo combination is documented.
\4\ Slab edge insulation should be provided wherever practical in areas
of 2500 or more winter degree-days. Rigid insulation placed on the
exterior face of the slab shall be protected by a durable and weather
resistant material.
\5\ Storm doors are not required for double doors, sliding doors or
others where installation would be economically infeasible. 1\3/4\
inch metal-faced door systems with rigid insulation core and durable
weatherstripping providing a ``U'' value equivalent to a wood door
with storm door and an infiltration rate no greater than .50 cfm per
foot of crack length, tested according to ASTM E-283 at 1.567 psf of
air pressure may be substituted for a conventional door and storm
door. All doors shall be weatherstripped.
C. Optional Standards
Housing design not in compliance with the requirements of paragraph
IV A or B of this exhibit may be approved in accordance with the
provisions of this paragraph. Requests for acceptance proposed under
paragraph C 1 of this exhibit, must be approved by the State Director.
Requests for acceptance of site-built housing proposed under paragraph C
2 of this exhibit must be approved by the Administrator. Requests for
acceptance of manufactured housing proposed under paragraph C 2 of this
exhibit may be approved by the State Director. All submissions of
proposed options to the State Director or Administrator shall contain
complete descriptions of materials, engineering data, test data (when U
values claimed are lower than the ASHRAE Handbook of Fundamentals), and
calculations to document the validity of the proposal. All data and
calculations will be based upon the current edition of the ASHRAE
Handbook of Fundamentals or other universally accepted data sources.
1. Overall ``U'' values for enveloped components. The following
requirements shall be used in determining acceptable options to the
requirements of paragraphs IV A and IV B of this Exhibit.
a. Uo (gross wall)--Total exterior wall area (opaque wall and window
and door) shall have a combined thermal transmittance value (Uo value)
not to exceed the values shown in Attachment 1 to this Exhibit D
(available in any FmHA or its successor agency under Public Law 103-354
office). Equation 1 in Attachment 1 shall be used to determine
acceptable combinations to meet the requirements.
b. Uo (gross ceiling)--Total ceiling area (opaque ceiling and
skylights) shall have a combined thermal transmittance value (Uo value)
not to exceed the values shown in Attachment 2 to this Exhibit D
(available in any FmHA or its successor agency under Public Law 103-354
office). Equation 2 in Attachment 2 shall be used to determine
acceptable combinations to meet the requirements.
2. Overall structure performance. The following requirements shall
be used in determining acceptable options to the requirements of
paragraphs IV A and B of this Exhibit.
a. The methodology must be cost effective to the energy user, and
must not adversely affect the structural capacity, durability or safety
aspects of the structure.
b. All data and calculations must show valid performance comparisons
between the proposed option and a structure comparable in size,
configuration, orientation and occupant usage designed in accordance
with paragraphs IV A or B. Structures may be considered for FmHA or its
successor agency under Public Law 103-354 loan consideration which can
be shown by accepted engineering practice to have energy consumption
equal to or less than those which would be attained in a representative
structure utilizing the requirements of paragraphs IV A or B.
3. Special consideration for seasonally occupied farm labor housing.
The following sets forth the minimum acceptable options to the
requirements of paragraphs IV A or B of this
[[Page 140]]
Exhibit for seasonally occupied housing serving as security for farm
labor housing loans and grants.
a. When the period of occupancy does not encounter 500 or more
heating degree-days (HDD) as determined by an average of the previous 10
years based upon local climatological data published by the National
Oceanic and Atmospheric Administration, Environmental Data Service, the
standards of paragraphs IV A or B will not apply.
b. When the period of use exceeds 500 HDD, the 10-year average value
for the period of occupancy shall be used to determine the degree to
which the thermal insulation requirements of paragraphs IV A or B shall
apply.
c. If mechanical cooling is provided and the period of occupancy
encounters more than 700 cooling degree-days (CDD), as determined by an
average of the previous 8 years based upon local climatological data
published by the same source cited in paragraph IV C3a above, the
thermal insulation requirements for 1,000 and less degree-days as stated
in paragraph IV A or B shall apply.
D. Energy efficient construction practices. This section prescribes
those items of design and quality control which are necessary to
guarantee the energy efficiency of homes built according to the
standards of this Exhibit. Also included are recommendations for extra
energy efficiency in dwellings. This section does not apply to new SFH
construction.
1. Infiltration. a. Requirements: All construction shall be
performed in such a manner as to provide a building envelope free of
excessive infiltration.
(i) Caulking and sealants. Exterior joints around windows and door
frames, between wall cavities and window or door frames, between wall
and foundation, between wall and roof, between wall panels, at
penetrations of utility services through walls, floors and roofs, and
all other openings in the exterior envelope shall be caulked, gasketed,
weatherstripped, or otherwise sealed. Caulking shall be silicone rubber
base or butyl rubber base, conforming to Federal Specifications TT-S-
1543 and TT-S-1657 respectively, or materials demonstrating equivalent
performance in resilience and durability.
(ii) Windows shall comply with ANSI 134.1, NWMA 15-2; the air
infiltration rate shall not exceed 0.5 ft 3/min per ft. of sash crack.
(iii) Sliding glass doors shall comply with ANSI 134.2, NWM 15-3;
the air infiltration rate shall not exceed .5 ft 3/min per square ft. of
door area.
(iv) All insulation placed in open cavity walls shall be installed
so that all space behind electrical switches and receptacles, plumbing,
ductwork and other obstructions in the cavity are insulated as
completely as possible. Insulation shall be omitted on the side facing
the conditioned area; however, the vapor barrier in walls must not be
cut or destroyed.
b. Recommendations: (i) Wrap outside corners of wall sheathing with
15 lb. asphalt impregnated building felt before siding application.
(ii) Utilize vestibules for entry doors, especially those facing
into the direction of winter wind.
(iii) Install plumbing, mechanical and electrical components in
interior partitions as much as possible. All water piping should be
insulated from freezing temperatures.
2. Heating and/or Cooling Equipment. a. Requirements: All mechanical
equipment for heating and/or cooling habitable space shall be designed
to provide economy of operations.
(i) All space heating equipment (including fireplaces) requiring
combustion air shall be sealed combustion types, or be located in a
nonconditioned area (such as unheated basements) or adequate combustion
air must be provided from outside the conditioned space.
(ii) All ductwork shall be designed and installed to minimize
leakage. All metal to metal connections shall be mechanically joined and
taped.
b. Recommendations: (i) Whenever possible, locate ductwork inside of
conditioned areas in dropped ceilings, interior partitions or other
similar areas.
(ii) Locate outside cooling units in areas not subject to direct
sunlight or heat buildup.
3. Vapor Barrier. a. Requirements: Adequate vapor barriers must be
provided adjacent to the interior finish material of the wall or other
closed envelope components which do not have ventilation space on the
non-conditioned side of the insulation.
(i) A vapor barrier at the inside of the wall or other closed
envelope component must have a permeability (perm) rating less than that
of any other material in the component and in no case have a perm rating
greater than one. All vapor barriers must be sealed around all openings
in the interior surface. Vapor barriers are not required in ceilings and
floors. Continuous vapor barriers on ceilings, walls, and floors require
adequate moisture vapor control in the conditioned space.
(ii) All vapor producing or exhaust equipment shall be ducted to the
outside and equipped with dampers. This equipment includes rangehoods,
bathroom exhaust fans and clothes dryers. If a dwelling design proposes
the use of windows to satisfy the kitchen and/or bathroom ventilation
requirements of the development standards, the incorporation of
dehumidification equipment should be considered in accordance with
paragraph IV D 3 b. Exhaust of any equipment shall not terminate in an
attic or crawl space.
[[Page 141]]
b. Recommendation: Forced air heating/cooling systems should include
humidification/dehumidification systems where conditions indicate.
E. [Reserved]
F. New SFH construction. New SFH construction shall meet the
requirements of CABO Model Energy Code, 1992 Edition (MEC-92).
V. General Design Recommendations:
A. Orient homes with greatest glass area facing south with adequate
overhangs to control solar gain during non-heating periods. Examples of
proper roof overhangs are given in Attachment 3 to this Exhibit D
(available in any FmHA or its successor agency under Public Law 103-354
office).
B. Arrange plantings with evergreen wind buffers on north side and
deciduous trees on south.
C. Whenever possible, orient entry door away from winter winds.
D. Design house with simple shape to minimize exterior wall area.
E. Minimize glass areas within constraints of required light and
ventilation, applicable safety codes and other appropriate
consideration.
F. Minimize the amount of paved surface adjacent to the structure
where heat gain is not desirable.
VI. State Supplements: State supplements or policies will not be
issued or adopted to either supplement or set requirements different
from those of this Exhibit without the prior written approval of the
National Office.
[52 FR 8002, Mar. 13, 1987, as amended at 54 FR 6874, Feb. 15, 1989; 59
FR 43723, Aug. 25, 1994]
Exhibit E--Voluntary National Model Building Codes
The following documents address the health and safety aspects of
buildings and related structures and are voluntary national model
building codes as defined in Sec. 1924.4(h)(2) of this subpart. Copies
of these documents may be obtained as indicated below:
----------------------------------------------------------------------------------------------------------------
Building code Plumbing code Mechanical code Electrical code
----------------------------------------------------------------------------------------------------------------
BOCA Basic/National Building BOCA Basic/National BOCA Basic/National National Electrical Code
Code \1\. Plumbing Code \1\. Mechanical Code \1\. \5\
Standard Building Code \2\.. Standard Plumbing Code \2\ Standard Mechanical Code ..........................
\2\.
Uniform Building Code \3\... Uniform Plumbing Code \3\. Uniform Mechanical Code ..........................
\3\.
CABO One and Two Family .......................... .......................... ..........................
Dwelling Code \4\.
----------------------------------------------------------------------------------------------------------------
\1\ Building Officials and Code Administrators International, Inc., 4051 West Flossmoor Road, Country Club
Hills, Illinois 60477.
\2\ Southern Building Code Congress International, Inc., 900 Montclair Road, Birmingham, Alabama 35213-1206.
\3\ International Conference of Building Officials, 5360 South Workman Mill Road, Whittier, California 90601.
\4\ Council of American Building Officials, 5203 Leesburg Pike, Falls Church, Virginia 22041.
\5\ National Fire Protection Association, Batterymarch Park, Quincy, Massachusetts 02269.
Exhibit F--Payment Bond
KNOW ALL PERSONS BY
THESE PRESENTS: that
_______________________________________________________________________
(Name of Contractor)
_______________________________________________________________________
(Address of Contractor)
a ----------------,
(Corporation, Partnership or Individual)
hereinafter called
PRINCIPAL and
_______________________________________________________________________
(Name of Surety)
hereinafter called SURETY, are held and firm
bound unto______________________________________________________________
_______________________________________________________________________
(Name of Owner)
_______________________________________________________________________
(Address of Owner)
hereinafter called OWNER and the United States of America acting through
the Farmers Home Administration or its successor agency under Public Law
103-354 hereinafter referred to as GOVERNMENT, and unto all persons,
firms, and corporations who or which may furnish labor, or who furnish
materials to perform as described under the contract and to their
successors and assigns in the total aggregate penal sum of ------, ----
-- Dollars ($------) in lawful money of the United States, for the
payment of which sum well and truly to be made, we bind ourselves, our
heirs, executors, administrators, successors, and assigns, jointly and
severally, firmly by these presents.
THE CONDITION OF THIS OBLIGATION is such that whereas, the PRINCIPAL
entered into a certain contract with the OWNER, dated the ------ day of
------19----, a copy of which is hereto attached and made a part hereof
for the construction of:
_______________________________________________________________________
_______________________________________________________________________
[[Page 142]]
_______________________________________________________________________
NOW, THEREFORE, if the PRINCIPAL shall promptly make payment to all
persons, firms, and corporations furnishing materials for or performing
labor in the prosecution of the WORK provided for in such contract, and
any authorized extension or modification thereof, including all amounts
due for materials, lubricants, oil, gasoline, coal and coke, repairs on
machinery; equipment and tools, consumed or used in connection with the
construction of such WORK, and for all labor cost incurred in such WORK
including that by a SUBCONTRACTOR, and to any mechanic or materialman
lienholder whether it acquires its lien by operation of State or Federal
law; then this obligation shall be void, otherwise to remain in full
force and effect.
PROVIDED, that beneficiaries or claimants hereunder shall be limited
to the SUBCONTRACTORS, and persons, firms, and corporations having a
direct contract with the PRINCIPAL or its SUBCONTRACTORS.
PROVIDED, FURTHER, that the said SURETY for value received hereby
stipulates and agrees that no change, extension of time, alteration or
addition to the terms of the contract or to the WORK to be performed
thereunder or the SPECIFICATIONS accompanying the same shall in any way
affect its obligation on this BOND, and it does hereby waive notice of
any such change, extension of time, alteration or addition to the terms
of this contract or to the WORK or to the SPECIFICATIONS.
PROVIDED, FURTHER, that no suit or action shall be commenced
hereunder by any claimant: (a) Unless claimant, other than one having a
direct contract with the PRINCIPAL (or with the GOVERNMENT in the event
the GOVERNMENT is performing the obligations of the OWNER), shall have
given written notice to any two of the following: The PRINCIPAL, the
OWNER, or the SURETY above named within ninety (90) days after such
claimant did or performed the last of the work or labor, or furnished
the last of the materials for which said claim is made, stating with
substantial accuracy the amount claimed and the name of the party to
whom the materials were furnished, or for whom the work or labor was
done or performed. Such notice shall be served by mailing the same by
register mail or certified mail, postage prepaid, in an envelope
addressed to the PRINCIPAL, OWNER, or SURETY, at any place where an
office is regularly maintained for the transaction of business, or
served in any manner in which legal process may be served in the state
in which the aforesaid project is located, save that such service need
not be made by a public officer. (b) After the expiration of one (1)
year following the date of which PRINCIPAL ceased work on said CONTRACT,
it being understood, however, that if any limitation embodied in the
BOND is prohibited by any law controlling the construction hereof, such
limitation shall be deemed to be amended so as to be equal to the
minimum period of limitation permitted by such law.
PROVIDED, FURTHER, that it is expressly agreed that the BOND shall
be deemed amended automatically and immediately, without formal and
separate amendments hereto, upon amendment to the Contract not
increasing the contract price more than 20 percent, so as to bind the
PRINCIPAL and the SURETY to the full and faithful performance of the
Contract as so amended. The term ``Amendment'', wherever used in this
BOND and whether referring to this BOND, the contract or the loan
Documents shall include any alteration, addition, extension or
modification of any character whatsoever.
PROVIDED, FURTHER, that no final settlement between the OWNER or
GOVERNMENT and the CONTRACTOR shall abridge the right of any benficiary
hereunder, whose claim may be unsatisfied.
IN WITNESS WHEREOF, this instrument is executed in [number]
counterparts, each one of which shall be deemed an original, this the --
-- day of --------.
ATTEST:
_______________________________________________________________________
Principal
_______________________________________________________________________
(Principal) Secretary
(SEAL)
By ----------(s)
_______________________________________________________________________
(Address)
_______________________________________________________________________
Witness as to Principal
_______________________________________________________________________
(Address)
_______________________________________________________________________
Surety
ATTEST:
_______________________________________________________________________
Witness as to Surety
_______________________________________________________________________
(Address)
By______________________________________________________________________
Attorney-in-Fact
_______________________________________________________________________
(Address)
Note.--Date of BOND must not be prior to date of Contract.
If CONTRACTOR is partnership, all partners should execute BOND.
Important: Surety companies executing BONDS must appear 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.
[[Page 143]]
Exhibit G--Performance Bond
KNOW ALL PERSONS BY THESE
PRESENTS: that__________________________________________________________
_______________________________________________________________________
(Name of Contractor)
_______________________________________________________________________
(Address of Contractor)
a_______________________________________________________________________
(Corportion, Partnership, or Individual)
hereinafter called PRINCIPAL, and
_______________________________________________________________________
(Name of Surety)
_______________________________________________________________________
(Address of Surety)
hereinafter called SURETY, are held and firmly bound unto
_______________________________________________________________________
_______________________________________________________________________
(Name of Owner)
_______________________________________________________________________
(Address of Owner)
hereinafter called OWNER, and the United States of America acting
through the Farmers Home Administration or its successor agency under
Public Law 103-354 hereinafter referred to as the GOVERNMENT in the
total aggregate penal sum of
_______________________________________________________________________
Dollars ($------------)
in lawful money of the United States, for the payment of which sum well
and truly to be made, we bind ourselves, our heirs, executors,
administrators, successors, and assigns, jointly and severally, firmly
by these presents.
THE CONDITION OF THIS OBLIGATION is such that whereas, the PRINCIPAL
entered into a certain contract with the OWNER, dated the ------ day of
------ 19 ----, a copy of which is hereto attached and made a part
hereof for the construction of:
_______________________________________________________________________
_______________________________________________________________________
NOW, THEREFORE, if the PRINCIPAL shall well, truly and faithfully
perform its duties, all the undertakings, covenants, terms, conditions,
and agreements of said contract during the original term thereof, and
any extensions thereof which may be granted by the OWNER, or GOVERNMENT,
with or without notice to the SURETY and during the guaranty period and
if the PRINCIPAL shall satisfy all claims and demands incurred under
such contract, and shall fully indemnify and save harmless the OWNER and
GOVERNMENT from all costs and damages which it may suffer by reason of
failure to do so, and shall reimburse and repay the OWNER and GOVERNMENT
all outlay and expense which the OWNER and GOVERNMENT may incur in
making good any default, then this obligation shall be void, otherwise
to remain in full force and effect.
PROVIDED, FURTHER, that the liability of the PRINCIPAL AND SURETY
hereunder to the GOVERNMENT shall be subject to the same limitations and
defenses as may be available to them against a claim hereunder by the
OWNER, provided, however, that the GOVERNMENT may, at its option,
perform any obligations of the OWNER required by the contract.
PROVIDED, FURTHER, that the said SURETY, for value received hereby
stipulates and agrees that no change, extension of time, alteration or
addition to the terms of the contract or to WORK to be performed
thereunder or the SPECIFICATIONS accompanying same shall in any way
affect its obligation on this BOND, and it does hereby waive notice of
any such change, extension of time, alteration or addition to the terms
of the contract or to the WORK or to the SPECIFICATIONS.
PROVIDED, FURTHER, that it is expressly agreed that the BOND shall
be deemed amended automatically and immediately, without formal and
separate amendments hereto, upon amendment to the Contract not
increasing the contract price more than 20 percent, so as to bind the
PRINCIPAL and the SURETY to the full and faithful performance of the
CONTRACT as so amended. The term ``Amendment'', wherever used in this
BOND, and whether referring to this BOND, the Contract or the Loan
Documents shall include any alteration, addition, extension, or
modification of any character whatsoever.
PROVIDED, FURTHER, that no final settlement between the OWNER or
GOVERNMENT and the PRINCIPAL shall abridge the right of the other
beneficiary hereunder, whose claim may be unsatisfied. The OWNER and
GOVERNMENT are the only beneficiaries hereunder.
IN WITNESS WHEREOF, this instrument is executed in [Number]
counterparts, each one of which shall be deemed an original, this the --
---- day of ------.
ATTEST:
_______________________________________________________________________
Principal
_______________________________________________________________________
(Principal) Secretary
(SEAL)
_______________________________________________________________________
Witness as to Principal
_______________________________________________________________________
(Address)
By ----------------(s)
_______________________________________________________________________
(Address)
_______________________________________________________________________
[[Page 144]]
________________________________________________________________________
_______________________________________________________________________
Surety
ATTEST:
_______________________________________________________________________
Witness as to Surety
_______________________________________________________________________
(Address)
By______________________________________________________________________
Attorney-in Fact
_______________________________________________________________________
(Address)
_______________________________________________________________________
_______________________________________________________________________
Exhibit H--Prohibition of Lead-Based Paints
I. Purpose
This Exhibit prescribes the methods to be used to comply with the
requirements of the Lead-Based Paint Poisoning Prevention Act, Public
Law 91-695, as amended, (42 U.S.C. 4801 et seq.) and the amendment to
section 501 (3) of Public Law 91-695 (42 U.S.C. 4841 (3)) as amended by
the National Consumer Health Information and Health Promotion Act of
1976, Public Law 94-317.
II. Policy
The Farmers Home Administration or its successor agency under
Public Law 103-354 (FmHA or its successor agency under Public Law 103-
354) shall not permit the use of lead-based paint on applicable surfaces
of any housing or buildings purchased, repaired, or rehabilitated for
human habitation with financial assistance provided by this agency.
Paints used on applicable surfaces shall not contain more than 0.06
percent lead by weight calculated as lead metal in the total nonvolatile
content of liquid paints or in the dried film of paint already applied.
III. Definitions
A. Housing and buildings mean any house, apartment, or structure
intended for human habitation. This includes any institutional structure
where persons reside, such as an orphanage, boarding school, dormitory,
day care center or extended care facility, college housing, domestic or
migratory labor housing, hospitals, group practice facilities, community
facilities, and business or industrial facilities.
B. Applicable surfaces means all interior surfaces, whether
accessible or not, and those exterior surfaces which are readily
accessible to children under 7 years of age, such as stairs, decks,
porches, railings, windows, and doors.
C. Lead-based paint means any paint containing more than .5 of 1
percentum lead by weight, or with respect to paint manufactured after
June 22, 1977, lead-based paint containing more than six one-hundredths
of 1 percentum lead by weight.
IV. Requirements
A. All new housing and buildings shall comply with paragraph II of
this Exhibit H.
B. For all existing housing and buildings built after 1950, on which
a loan is closed after July 19, 1978, FmHA or its successor agency under
Public Law 103-354 requires that the applicant, borrower or tenant be
notified of the potential hazard of lead-based paints, of the symptoms
and treatment of lead poisoning, and of the importance and availability
of maintenance and removal techniques for eliminating such hazards. This
will be accomplished by providing each applicant, borrower and/or tenant
with a copy of Attachment 1 to this Exhibit H, ``Lead-based Paint
Hazards, Symptoms, Treatment and Techniques for Eliminating Hazards,''
available in any FmHA or its successor agency under Public Law 103-354
County Office. Copies of Attachment 1 may be obtained by the County
Supervisor from the Finance Office, 1520 Market Street, St. Louis, MO
63103.
C. For all existing housing or buildings built before 1950 on which
a loan is closed after July 19, 1978, FmHA or its successor agency under
Public Law 103-354 requires that the applicant, borrower and/or tenant
be notified as in paragraph IV B and a copy of Attachment 2 to this
Exhibit H, ``Caution Note on Lead-Based Paint Hazard,'' available in any
FmHA or its successor agency under Public Law 103-354 County Office,
shall be delivered to the hands of the applicant, borrowers and/or
tenant.
D. For all property transfers and inventory property sales,
Attachments 1 and 2 to this Exhibit H (available in any FmHA or its
successor agency under Public Law 103-354 office) shall be handed to the
purchaser by the FmHA or its successor agency under Public Law 103-354
representative.
E. All inventory housing or buildings built before 1950 to be
repaired, renovated, or rehabilitated shall have tests for lead content,
and where found to be hazardous, shall have any interior lead-based
paint removed entirely. Loose or cracked surfaces shall be cleaned down
to the base surface before repainting with a paint containing not more
than six one-hundredths of 1 percentum lead by weight in the total
nonvolatile content of the paint or the equivalent measure of lead in
the dried film of paint already applied or both. Contracting officers
shall include the following provision prohibiting the use of lead-based
paint in all contracts and subcontracts for construction or
rehabilitation of housing or buildings:
[[Page 145]]
Lead-Based Paint Prohibition
No lead-based paint containing more than .5 of 1 percentum lead by
weight (calculated as lead metal) in the total nonvolatile content of
the paint, or the equivalent measure of lead in the dried film of paint
already applied, or both, or with respect to paint manufactured after
June 22, 1977, no lead-based paint containing more than .06 of 1
percentum lead by weight (calculated as lead metal) in the total
nonvolatile content of the paint, or the equivalent measure of lead in
the dried film of paint already applied, or both, shall be used in the
construction or rehabilitation of residential structures under this
contract or any subsequent subcontractors.
Authority: This amendment is made under provisions of 5 U.S.C. 301,
40 U.S.C. 486 (c).
Done at ------, ---------- this ---- day of ----------, 19--.
--------------------____________________________________________________
FmHA or its successor agency under Public Law 103-354 Representative
V. Summary
Section 401 of the Lead-Based Paint Poisoning Prevention Act as
amended by the National Consumer Health Information and Health Promotion
Act of 1976, Pub. L. 94-317, provides a requirement that each federal
agency issue regulations and to take such other steps necessary to
prohibit the use of lead-based paint on all applicable surfaces in
Federal and Federally-assisted construction or rehabilitation of
residential structures. The Lead-Based Paint Poisoning Prevention Act,
Pub. L. 91-695, January 13, 1971, provides for grants to units of
general local government in any state for the purpose of detecting and
treating incidents of lead-based paint poisoning. Title II of this Act
also provides for grants to the same units to identify those areas of
risk including testing to detect the presence of lead-based paint on
surfaces of residential housing.
Exhibit I--Guidelines for Seasonal Farm Labor Housing
Section 100
General--This Exhibit sets forth the guidelines and minimum
standards for planning and construction of new Labor Housing (LH) that
will be occupied on a seasonal basis. Rehabilitation LH projects will be
in substantial conformance with these guidelines and standards. A
``seasonal basis'' is defined as 6 months or less per year. Seasonal
housing for the farmworker need not be convertible to year-round
occupancy; however, the living units shall be designed for the intended
type of tenant, the time of occupancy, the location, the specific site,
and the planned method of operation. It is important that the design of
the LH site and buildings will help to create a pleasing lifestyle which
will promote human dignity and pride among its tenants.
Section 200
Codes and Regulations--Compliance is required with National, state
and local codes or regulations affecting design, construction,
mechanical, electrical, fire prevention, sanitation, and site
improvement.
Section 300
Planning
300-1 Complete architectural/engineering services in accordance
with this subpart will be required if an LH grant is involved or the LH
loan will involve more than four individual family units, or any number
of group living units, or dormitory units accommodating 20 or more
persons.
300-2 Buildings and site design shall provide for a safe, secure,
economical, healthful, and attractive living facility and environment
suited to the needs of the domestic farm laborer and his/her family.
300-3 At least 5 percent of the individual family units in a
project, or one unit, whichever is greater, and all common use
facilities will be accessible to or adaptable for physically handicapped
persons. This requirement may be modified if a recipient/borrower shows,
through a market survey acceptable to FmHA or its successor agency under
Public Law 103-354, that a different percentage of accessible or
adapatable units is more appropriate for a particular project and its
service area.
Site Design
301-1 General--The site design shall be arranged to utilize and
preserve the favorable features and characteristics of the property and
to avoid or minimize the potential harmful effect of unfavorable
features. Particular attention is directed to Sec. 1944.164(l), (m) and
(n) of subpart D of part 1944 of this chapter with reference to
compliance with subpart G of part 1940 of this chapter. Some of the
features which must be considered are the topography, drainage, access,
building orientation to sun and breezes; and advantageous features, such
as vegetation, trees, good views, etc. or disadvantageous features, such
as offensive odors, noxious plants, noise, dust, health hazards, etc.
301-2 Drainage--Surface and subsurface drainage systems shall be
provided in accordance with the applicable development standard and
subpart C of part 1924 of this chapter.
301-3 Water and Sewage Disposal--Water supply and sewage disposal
installations shall comply with subpart C of part 1924 of this chapter,
the applicable development standard and all governing state and local
[[Page 146]]
department of health requirements. Where environmentally and
economically feasible, the LH facility shall connect to pubic water and
waste disposal systems.
301-4 Electrical--Adequate electrical service shall be provided for
exterior and interior lighting and for the operation of equipment.
301-5 Vehicular Access and Parking.
301-5.1 Safe and convenient all-weather roads shall be provided to
connect the site and its improvements to the off-site public road.
301-5.2 All-weather drives and parking shall be provided for
tenants, and for trucks and buses as needed within the site. Driveways,
parking areas and walkway locations shall be in substantial conformance
with the applicable development standard.
301-6 Walks:
301-6.1 Walks shall be provided for safe convenient access to all
dwellings and for safe pedestrian circulation throughout the development
between locations and facilities where major need for pedstrian access
can be anticipated, such as laundry, parking to dwelling units, common
dining rooms, etc.
301-6.2 Walkways shall be hard surface, such a concrete, asphalt,
or stablized gravel, and shall be adequately drained.
301-7 Building Location:
301-7.1 Side and rear yards and distances between buildings shall
conform to the applicable development standard.
301-8. Garbage and Refuse:
301-8.1 Garbage and refuse containers for individual units are
required and shall be stored on durable functional racks or shall be
located in a central screened area with easily cleaned surfaces. Single
containers for multiple units shall be screened and in locations
designed to accommodate collection vehicle functions.
301-9 Fencing:
301-9.1 Fencing used in the site design for project privacy or
building security shall be harmonious in appearance with other fences
and surrounding facilities which fall within the same view.
301-10 Outdoor living:
301-10.1 All public areas where pedestrian use can be anticipated
after sunset shall be adequately lighted for security purposes, such as
walkways to common use facilities--laundry, dining halls, building
entrances, parking areas, etc.
301-11 Planting and Landscaping:
301-11.1 Planting and lawns or ground covers shall be provided as
required to protect the site from erosion, control dust, for active and
passive recreation areas, and provide a pleasant environment.
Building Design
302-1.1 Living Units Design:
302-1.1 Individual Family Unit--One family or extended family to a
unit which shall contain adequate space for living, dining, kitchen,
bath and bedrooms. Multifamily type units are required whenever possible
for economy of site and building construction.
a. The minimum total net living unit size shall be 400 square feet.
This size assumes occupancy of four persons. Units planned for
additional occupants shall include an additional 60 square feet of
living area per person.
b. A living/dining area shall be provided to accommodate a table and
chairs with adequate dining and circulation space for the intended
number of occupants. The living/dining area should be combined with the
kitchen area.
c. The kitchen shall contain a sink, cooking range and refrigerator.
A minimum free countertop area of six square feet is required. A minimum
of 40 square feet of shelf area is required.
d. Each bathroom shall contain adequate space and circulation for a
bathtub and/or shower, water closet and lavatory. Access to the bathroom
shall not be through another bedroom in dwelling units containing more
than one bedroom.
e. Bedroom areas separate from living areas are required. The design
of the unit shall provide a minimum of 50 square feet of sleeping area
per intended occupant including storage. Housing for families with
children shall have a separate bedroom or sleeping area for the adult
couples. A two foot by two foot shelf with a two foot long clothes
hanging rod is required for each occupant.
302-1.2 Group Living Unit--A living unit designed for the occupancy
of more than one family or for separate occupancy of male and/or female
groups. Common bath spaces shall be contained in the same building.
Group living units for families shall have separate bedrooms for each
adult couple.
a. The design of the unit shall provide for a minimum of 620 square
feet of total net living area for eight persons and an additional 60
square feet for each additional occupant. Additional area shall be
planned for a second bathroom when anticipated occupancy will exceed
eight persons, or if it will be occupied by persons of both sexes.
b. The kitchen shall contain an adequate sink, cooking range,
refrigerator, and space the size of which is commensurate with the needs
of the group living unit. A minimum of free countertop area of eight
square feet is required. A minimum of 50 square feet of shelf area is
required.
c. Refer to paragraph 302-1.1 b for living/dining requirements.
d. Each bathroom shall contain adequate space and circulation for
comfortable access to, and use of, fixtures which will include a bathtub
and/or shower, water closet and lavatory. In no case shall minimum
fixtures be less than that required per paragraph 302-1.3 c below.
[[Page 147]]
e. Refer to paragraph 301-1.1 e for bedroom requirements.
302.1.3 Dormitory Living Unit--A building which provides common
sleeping quarters for persons of the same sex and may or may not contain
kitchen and/or dining facilities in the same building as the sleeping
quarters.
a. The design of areas for sleeping purposes, using single beds,
shall provide for not less than 72 square feet per occupant including
storage.
b. The design of areas for sleeping purposes, using double bunk
beds, shall provide for not less than 40 square feet per occupant.
Triple bunk beds will not be allowed.
c. The design of each dormitory building must include a water closet
and a bathtub or shower for each 12 occupants, and a lavatory for each 8
persons. Urinals may be substituted for men's water closets on the basis
of one urinal for one water closet, up to maximum of one-third of the
required water closets.
d. Adequate kitchen and dining facilities must be provided which may
be in the dormitory building or detached at a distance of not more than
200 feet from the sleeping quarters. In either case, the space must
contain adequate cooking ranges, refrigerators, sinks, countertop, food
storage shelves, tables and chairs, and circulation space. These
facilities will comply with the requirements of the ``Food Service
Sanitation Ordinance and Code,'' part V of the ``Food Service Sanitation
Manual,'' U.S. Public Health Service Publication 934 (1965).
302-2 Other Facilities:
302-2.1 General--Other facilities, authorized by subpart D of part
1944 of this chapter, needed by farm workers may be provided in several
ways: part of a living unit, located in the project, or, with the
exception of laundry facilities, available nearby.
302-2.2 Laundry Facilities--Laundry facilities shall be required
on-site. Drying yards shall be provided if dryer units are not provided.
The design of washing facilities shall plan for a minimum rate of one
washer for each 20 occupants. One drying unit may be provided for every
two washers, if automatic dryers are customarily provided for rental
housing in the community. Laundry facilities shall have adequate space
for loading the units, circulation, and clothes folding.
302-2.3 Office and Maintenance--An office and maintenance space
shall be provided or available, commensurate with the number of living
units served, and shall meet the criteria of the FmHA or its successor
agency under Public Law 103-354 Manual of Acceptable Practices. If
necessary, the maintenance space shall have sufficient area to
accommodate furniture storage.
302-2.4 Child Care Center--Where feasible, a child care center may
be included to provide supervised activity and safety for children while
the parents work. Supervisors and workers for such centers are sometimes
enlisted on a volunteer basis and the cost borne by nonprofit
associations or community organizations. Grants are sometimes available
through Federal or state programs. Consequently, the design of the child
care center should meet the requirements of those sources providing
organizational personnel and/or financing.
302-2.5 Manager's Dwelling--If a manager's dwelling unit is to be
provided as a part of the FmHA or its successor agency under Public Law
103-354 loan or grant, it will meet these guidelines. However, if it is
necessary to provide a year-round caretaker/manager dwelling unit with
FmHA or its successor agency under Public Law 103-354 loan or grant
funds, it will meet the applicable development standard.
302-2.6 Recreation--Outdoor recreation space is required and shall
be commensurate with the needs of the occupants. Active and passive
recreation areas will be provided which may consist of outdoor sitting
areas, playfields, tot lots and play equipment.
General Requirements
303-1 Materials and Construction--All materials and their
installation in a LH facility shall meet the applicable development
standard. Any exceptions to these requirements for materials and their
installation must be obtained with the approval of the FmHA or its
successor agency under Public Law 103-354 National Office. Material
should be selected that is durable and easily cleaned and maintained.
303-2 Fire Protection--Fire protection and egress shall be provided
to comply with the applicable development standard.
303-3 Light, Ventilation, Screening--Natural light and ventilation
requirements as specified in the applicable development standard shall
be followed. Screening of all exterior openings is required.
303-4 Ceiling Heights--Ceiling heights of habitable rooms shall be
a minimum of seven feet six inches clear, and seven feet in halls or
baths in dwelling units. Public rooms shall have a minimum of eight feet
clear ceiling height. Sloping ceilings shall have at least seven feet
six inches for \1/2\ the room with no portion less than five feet in
height.
303-5 Heating and Cooling--Heating and cooling and/or air
circulation equipment shall be installed as needed for the comfort of
the tenants, considering the climate and time of year the facility will
be in operation. Maximum feasible use of passive solar heating and
cooling techniques shall be required. All equipment installed will be in
accordance with the applicable development standard to protect the
health and safety of occupants.
303-6 Plumbing--Plumbing materials and their installation shall
meet the applicable
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development standard. Hot water will be required to all living units,
baths, kitchens and laundry facilities.
303-7 Insulation, Thermal Standards, Winterization--Insulation will
be required where either heating or cooling is provided as per paragraph
303-5 above or when climatic conditions dictate a need for insulation.
Insulation Standards will comply with Exhibit D, paragraph IV C 3, of
this subpart, or the state insulation standards, whichever are the more
stringent.
303-8 Electrical--Electrical design, equipment and installation
shall comply with the requirements of the latest edition of the National
Electrical Code, and the applicable development standard for materials
and their installation. Individual family units may be separately
metered; other types of dwelling units may be separately metered as
required.
303-9 Security and Winterization--Adequate management and physical
measures will be provided as necessary to protect the facility during
off-season periods, including adequate heating and insulation as
required.
[52 FR 8002, Mar. 13, 1987, as amended at 52 FR 19283, May 22, 1987; 58
FR 38922, July 21, 1993]
Exhibit J--Manufactured Home Sites, Rental Projects and Subdivisions:
Development, Installation and Set-Up
Part A--Introduction
Part B--Construction and Land Development
Part C--Drawings, Specifications, Contract Documents and Other
Documentation
Part D--Inspection of Development Work
Part A--Introduction
I. Purpose and Scope. This Exhibit describes and identifies
acceptable site development, installation and set-up practices and
concepts for manufactured homes. It is intended for FmHA or its
successor agency under Public Law 103-354 field personnel, builders,
developers, sponsors, and others participating in FmHA or its successor
agency under Public Law 103-354 housing programs.
This Exhibit applies to all manufactured homes (except those
referenced in Exhibit B of this subpart) on scattered sites or in rental
projects and subdivisions and covers the requirements for design and
construction of manufactured home communities. FmHA or its successor
agency under Public Law 103-354 may approve alternatives or substitutes
if it finds the proposed design satisfactory for the proposed use, and
if the materials, installation, device, arrangement, or method of work
is at least equivalent to that prescribed in this Exhibit considering
quality, strength, effectiveness, durability, safety and protection of
life and health.
FmHA or its successor agency under Public Law 103-354 will require
satisfactory evidence to be submitted to substantiate claims made
regarding the use of any proposed alternative.
II. Background. FmHA or its successor agency under Public Law 103-
354 has authority to make (1) section 502 Rural Housing (RH) loans with
respect to manufactured homes and lots, and (2) section 515 Rural Rental
Housing (RRH) loans with respect to manufactured home rental projects.
The manufactured home must be constructed in conformance with the
Federal Manufactured Home Construction and Safety Standard (FMHCSS) and
be permanently attached to a site-built permanent foundation which meets
or exceeds the Minimum Property Standards (MPS) for One- and Two-Family
Dwellings or Model Building Codes acceptable to FmHA or its successor
agency under Public Law 103-354. The manufactured home must be
permanently attached to that foundation by anchoring devices adequate to
resist all loads identified in the MPS. This includes resistance to
ground movements, seismic shaking, potential shearing, overturning and
uplift loads caused by wind. Note that anchoring straps or cables
affixed to ground anchors other than footings will not meet these
requirements.
Subpart G of part 1940 of this chapter applies on scattered sites,
in subdivisions and rental projects to the development, installation and
set-up of manufactured homes. To determine the level of environmental
analysis required for a particular application, each manufactured home
or lot involved shall be considered as equivalent to one housing unit or
lot as these terms are used in Secs. 1940.310-1940.312 as well as in any
other sections of subpart G of part 1940 of this chapter. The
implementation of FmHA or its successor agency under Public Law 103-354
environmental policies and the consideration of important land use
impacts are of particular relevance in the review of proposed
manufactured home sites and in achieving the two purposes highlighted
below. Because the development, installation and set-up of manufactured
home communities, including scattered sites, rental projects, and
subdivisions, differ in some requirements from conventional site and
subdivision development, two of the purposes of this Exhibit are to:
A. Encourage economical and orderly development of such communities
and nearby areas, and
B. Promote the safety and health of residents of such communities.
Therefore, this Exhibit identifies those required standards and
regulations and suggested guidelines for eliminating and preventing
health and safety hazards and promoting the economical and orderly
development and utilization of land for planning and
[[Page 149]]
development of manufactured home communities. The Exhibit also provides
the requirements for meeting the following:
A. Resistance to Wind. Foundations and anchorages shall be designed
to resist wind forces specified in American National Standards Institute
(ANSI) A-58.1-1982 for the geographic area in which the manufactured
home will be sited;
B. Proper Installation. The manufacturer's installation instructions
provided with each manufactured home shall contain instructions for at
least one site-built foundation with interior and/or perimeter supports.
FmHA or its successor agency under Public Law 103-354 field office
personnel shall review to determine its adequacy as security for an FmHA
or its successor agency under Public Law 103-354 loan only, the
foundation design concept for compliance with this Exhibit, the FmHA or
its successor agency under Public Law 103-354/MPS and any Model Building
Code acceptable to FmHA or its successor agency under Public Law 103-354
in that particular geographic area; and
C. Proper Foundation Design. Manufactured homes shall be installed
on a foundation system which is designed and constructed to sustain,
within allowable stress and settlement limitations, all applicable
loads. Any foundation and anchorage system or method of construction to
be used should be analyzed in accordance with well-established
principles of mechanics and structural engineering.
III. Definitions. For the purpose of this Exhibit the following
definitions apply:
Accessory Building or Structure.
A subordinate building or structure which is an addition to or
supplements the facilities provided by a manufactured home.
Anchoring Systems. An approved system for securing the manufactured
home to the ground or foundation system that will, when properly
designed and installed, resist overturning and lateral movement of the
home from wind forces.
Contiguous. Sharing a boundary, adjoining or adjacent. A lot or
subdivision is considered to be contiguous to other lots or subdivisions
if it is adjoining, touching or adjacent.
Federal manufactured Home Construction and Safety Standards
(FMHCSS). A 1976 federal standard, commonly known as the HUD Standard,
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. ____________ THE 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.
Manufactured Home. A structure which is built to the Federal
Manufactured Home Construction and Safety Standards and FmHA or its
successor agency under Public Law 103-354's 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 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.
Manufactured Home Community. A parcel or contiguous parcels of land
which contains two or more manufactured home sites available to the
general public for occupancy. Sites and units may be for rent, or sites
may be sold for residential occupancy (as in a subdivision).
Manufactured Home Rental Project. A parcel or multiple parcels of
land which have been so designated and improved to contain manufactured
homes with sites available for rent.
Manufactured Home Site. A designated parcel of land in a
manufactured home rental project, subdivision or scattered site designed
for the accommodation of a unit and its accessory structures for the
exclusive use of the occupants.
Manufactured Home Subdivisions. Five or more contiguous (developed
or undeveloped) lots, or building sites that meet the requirements of
subpart C of part 1924 of this chapter.
Permanent Perimeter Enclosure. A permanent perimeter structural
system completely enclosing the space between the floor joist of the
manufactured home and the ground. If separate from the foundation
system, the permanent perimeter enclosure shall be secured to the
perimeter of the manufactured home, properly ventilated and accessible
and constructed of materials that conform to the FmHA or its successor
agency under Public Law 103-354 adopted MPS requirements for
foundations.
Pier Support System. Consists of footings, piers, caps, leveling
spacers, or approved prefabricated load bearing devices.
Related Facilities. Any nonresidential structure or building used
for rental housing related purposes.
[[Page 150]]
Site-Built Permanent Foundation System. A foundation system
(consisting of a combination of footings, piers, caps and shims and
anchoring devices or required structural connections) which is designed
and constructed to support the unit and sustain, within allowable stress
and settlement limitations, all applicable loads specified in ANSI
A58.1-1982. All loads shall be transferred from the manufactured home to
the earth at a depth below the established frost line without exceeding
the safe bearing capacity of the supporting soil.
Set-Up. The work performed and operations involved in the placement
of a manufactured home on a foundation system, to include installation
of accessories or appurtenances and anchoring devices, and when local
regulations permit, connection of utilities, but excluding preparation
of the site.
IV. Compliance with Local Regulations. These requirements do not
replace site development standards established by local law, ordinances,
or regulations. Whenever such local standards contain more stringent
provisions than any of the site development, installation and set-up
minimums of FmHA or its successor agency under Public Law 103-354, the
more stringent standards shall govern.
V. Applicable Standards, Regulations and Manuals.-- A. Manufactured
housing to be financed by FmHA or its successor agency under Public Law
103-354 must comply with the following standards:
1. Federal Manufactured Home Construction and Safety Standards, 24
CFR part 3280, mandated by Congress under title VI of the Federal
Housing and Community Development Act of 1974, except for Sec. 3280.506,
``Heat Loss,'' of subpart F, ``Thermal Protection,'' to part 3280.
2. Foundation requirements of the Minimum Property Standards as
adopted by FmHA or its successor agency under Public Law 103-354 or a
Model Building Code acceptable to FmHA or its successor agency under
Public Law 103-354.
3. [Reserved]
4. Uniform Federal Accessibility Standard (UFAS).
5. ANSI A58.1-1982, Minimum Design Loads for Buildings and Other
Structures.
B. Manufactured housing to be financed by FmHA or its successor
agency under Public Law 103-354 shall comply with all applicable FmHA or
its successor agency under Public Law 103-354 regulations, including but
not limited to the following:
1. Subpart C of part 1924 of this chapter, ``Planning and Performing
Development Work.''
2. Subpart A of part 1924, Exhibit D, ``Thermal Performance
Construction Standards.''
3. Subpart G of part 1940, ``Environmental Program.''
4. Subpart A of part 1944, ``Section 502 Rural Housing Loan
Policies, Procedures, and Authorizations.''
5. Subpart E of part 1944, ``Rural Rental Housing Loan Policies,
Procedures, and Authorizations.''
The requirements of the above references have not been repeated in
this Exhibit. Those requirements contained above are either mandatory or
minimums and every effort should be made by the applicant, builder-
developer or dealer-contractor to utilize higher standards, when
appropriate.
Part B--Construction and Land Development
I. General Acceptability Criteria. The following criteria apply to
development on scattered sites, in subdivisions and in rental project
communities.
A. A manufactured home development including a site, rental project
or subdivision shall be located on property designated for that use,
where designations exist, by the local jurisdiction.
B. Conditions of soil, ground water level, drainage, flooding and
topography shall not create hazards to the property and health or safety
of the residents.
C. The finished grade elevation beneath the manufactured home or the
first flood elevation of the habitable space, whichever is lower, shall
be above the 100-year return frequency flood elevation. This requirement
applies wherever manufactured homes may be installed, not just in
locations designated by the National Flood Insurance Program as areas of
special flood hazards. The use of fill to accomplish this is a last
resort. However, as stated in Sec. 1940.304 of subpart G of part 1940 of
this chapter, it is FmHA or its successor agency under Public Law 103-
354's policy not to approve or fund any proposal in a 100-year
floodplain area unless there is no practicable alternative to such a
floodplain location.
D. Essential service such as employment centers, shopping, schools,
recreation areas, police and fire protection, and garbage and trash
removal shall be convenient to the development and any site, community,
or subdivision must meet the environmental and location requirements
contained in subpart G of part 1940 of this chapter.
E. Manufactured home sites, rental projects and subdivisions shall
not be subject to any adverse influences of adjacent land uses. An
adverse influence is considered as one that is out of the acceptable
level or range of a recognizable standard or where no standard exists is
considered a nuisance irrespective of a site being zoned for
manufactured home use. Health, safety and aesthetic consequences of
location shall be carefully assessed by inspection of the site prior to
selection of development. Undesirable land
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uses sush as deteriorated residential or commercial areas and noxious
industrial properties shall be avoided to ensure compatibility. Other
undesirable elements such as heavily traveled highways, airport runways,
railroad, or fire hazards and other areas subject to recognizably
intolerable noise levels shall be avoided.
F. The requirements for streets shall be those found in subpart C of
part 1924 of this chapter.
G. The site design and development shall be in accordance with sound
engineering and architectural practices and shall provide for all
utilities in a manner which allows adequate, economic, safe, energy
efficient and dependable systems with sufficient easements for their
required installation and maintenance.
H. Utilities for each manufactured home site, rental housing project
or subdivision shall be designed and installed in accordance with
subpart C of part 1924 of this chapter; and the State health authority
having jurisdiction, and all local laws and regulations requiring
approval prior to construction.
I. Exhibit C, section V of this subpart shall be complied with by
the applicant, dealer-contractor or builder-developer for manufactured
home projects with individual water supply and sewage disposal systems.
This Exhibit shall be used by the FmHA or its successor agency under
Public Law 103-354 County Supervisors, District Directors, and State
Directors in reviewing submissions.
J. During the planning, design, and construction of the foundation
system and/or perimeter enclosure, provisions shall be made for the
installation and connection of on-site water, gas, electrical and sewer
systems, which are necessary for the normal operation of the
manufactured home. Water and sewer system hookups shall be adequately
protected from freezing.
II. Development on Scattered Sites and in Subdivisions.--A. General.
Scattered sites and subdivision developments will be planned and
constructed in accordance with specific requirements of this subpart,
subpart C of part 1924, and subpart G of part 1940 of this chapter, and
the applicable FmHA or its successor agency under Public Law 103-354/MPS
or Model Building Codes acceptable to FmHA or its successor agency under
Public Law 103-354. Manufactured homes for development in a manufactured
home community shall:
1. Be erected with or without a basement on a site-built permanent
foundation that meets or exceeds applicable requirements of the FmHA or
its successor agency under Public Law 103-354/MPS for One- and Two-
Family Dwellings or Model Building Codes acceptable to FmHA or its
successor agency under Public Law 103-354;
2. Be permanently attached to that foundation by anchoring devices
adequate to resist all loads identified in the FmHA or its successor
agency under Public Law 103-354 adopted MPS (this includes resistance to
ground movements, seismic shaking, potential shearing, overturning and
uplift loads caused by wind, etc.);
3. Have had the towing hitch or running gear, which includes
tongues, axles, brakes, wheels, lights and other parts of the chassis
that operate only during transportation removed;
4. Have any crawl space beneath the manufactured home properly
ventilated and enclosed by a continuous permanent perimeter enclosure.
If it is not the supporting foundation, designed to resist all forces to
which it may be subject without transmitting to the building
superstructure movements or any effects caused by frost heave, soil
settlement (consolidation), or shrinking or swelling of expansive soils;
and be constructed of materials that conform to FmHA or its successor
agency under Public Law 103-354 adopted MPS requirements for
foundations;
5. Have the manufactured home insulated to meet the energy
conserving requirements contained in Exhibit D of this subpart;
6. Have a manufactured home site, site improvements, and all other
features of the mortgaged property not addressed by the Federal
Manufactured Home Construction and Safety Standards, meet or exceed
applicable requirements of this subpart and subpart C of part 1924 of
this chapter, the FmHA or its successor agency under Public Law 103-354
adopted MPS except paragraph 31-2.2 or a Model Building Code acceptable
to FmHA or its successor agency under Public Law 103-354;
7. Have had the manufactured unit itself braced and stiffened where
necessary before it leaves the factory to eliminate racking and
potential damage during transportation; and
8. Be eligible for financing in accordance with the requirements of
either section 502, or section 515 of FmHA or its successor agency under
Public Law 103-354's Housing Program, for which purpose the beginning of
construction will be the commencement of on-site work even though the
manufactured home itself may have been produced and temporarily stored
prior to the date of application for financing.
B. Site Planning and Development. The site planning and development
of manufactured home scattered sites and subdivisions shall also comply
with the following:
1. Arrangement of Structures and Facilities. The site, including the
manufactured home, accessory structures, and all site improvements shall
be harmoniously and efficiently organized in relation to topography, the
shape of the plot, and the shape, size and position of the unit.
Particular attention shall be paid to use, appearance and livability.
[[Page 152]]
2. Adaptation to Site Assets. The manufactured home shall be fitted
to the terrain with a minimum disturbance of the land. Existing trees,
rock formations, and other natural site features shall be preserved to
the extent practical. Favorable views or outlooks shall be emphasized by
the plan.
3. Site Plan. The site plan shall provide for a desirable
residential environment which is an asset to the community in which it
is located.
4. Lot Size. The size of manufactured home lots (scattered sites and
subdivision) shall be determined by Sec. 1944.11(e) of subpart A of part
1944 and subpart C of part 1924 of this chapter.
C. Foundation Systems, Anchoring and Set-up.
1. The foundation system shall be constructed in accordance with
this subpart and one of the following: (a) The foundation system
included in the manufacturer's installation instructions meeting FmHA or
its successor agency under Public Law 103-354/MPS requirements, (b) the
FmHA or its successor agency under Public Law 103-354/MPS 4900.1, which
specifies performance requirements for foundations in section 600
``General'' and paragraph 601-16 ``Foundations,'' or (c) an FmHA or its
successor agency under Public Law 103-354 recognized model building
code.
2. The manufactured home permanent foundation system shall
constitute a permanent load bearing support system for the manufactured
home. The manufacturer or applicant shall be permitted to design or
specify the installation of a foundation system which meets FmHA or its
successor agency under Public Law 103-354/MPS design requirements for
foundations and the general requirements above.
3. The applicant's responsibility for proper design and installation
of the permanent foundation system, anchoring and set-up shall be in
accordance with Sec. 1924.5(f)(1), of this subpart.
4. The builder/developer of the manufactured home property, for
proposed construction, shall submit with the application for financing
by the applicant or for a conditional commitment design calculations,
details and drawings for the installation, anchorage and construction of
permanent foundation and perimeter enclosure to be used.
III. Rental Housing Project Development.--A. General. Manufactured
housing rental developments shall be planned and constructed in
accordance with requirements of subpart C of part 1924; this subpart;
subpart G of part 1940, the FmHA or its successor agency under Public
Law 103-354/MPS; and the requirements of subpart E of part 1944 of this
chapter.
B. Site Planning and Development. Site planning and development
shall adapt to individual site conditions and the type of market to be
served, reflect advances in site planning and development techniques,
and be adaptable to the trends in design of the manufactured home. Site
planning and development shall utilize existing terrain, trees, shrubs
and rocks formations to the extent practicable. A regimental style site
plan design should be avoided.
C. Foundation Systems, Anchoring and Set-up. Foundation systems,
anchoring and set/ups for manufactured home rental projects (site and
home) developed under FmHA or its successor agency under Public Law 103-
354 section 515 Rural Rental Housing program shall comply with the
requirements of paragraphs II A and II C above.
IV. Accessory Structures and Related Facilities.--A. General.
Accessory structures and related facilities are dependent upon the
manufactured home and its environment.
1. Accessory structures and related facilities shall be planned,
designed and constructed in accordance with the applicable provisions of
this subpart; the FmHA or its successor agency under Public Law 103-354/
MPS; and local criteria of the authority having jurisdiction.
2. Accessory structures and related facilities shall be designed in
a manner that will eliminate and prevent health and safety hazards and
enhance the appearance of the manufactured home and its environment.
3. Accessory structures and related facilities shall not obstruct
required openings for light and ventilation of the manufactured home and
shall not hamper installation and utility connections of the unit.
B. Accessory Structures. 1. Accessory structures shall not include
spaces for pantries, bath, toilet, laundries, closets or utility rooms.
2. Accessory structures shall be carefully designed and constructed
for the convenience and comfort of the manufactured home occupant. These
features significantly affect the visual appearance of the community and
influence livability.
C. Related Facilities (Rental Housing Projects). 1. This includes
those facilities as defined in Secs. 1944.205(i) and 1944.212(f) of
subpart E of part 1944 of this chapter.
1. This includes those facilities as defined in Sec. 1944.212(e) of
subpart E of part 1944 of this chapter.
2. Related facilities built on-site must meet the FmHA or its
successor agency under Public Law 103-354/MPS and subpart A of part 1924
of this chapter or other building codes approved by FmHA or its
successor agency under Public Law 103-354.
3. Workmanship shall be of a quality equal to good standard
practice. Material shall be of such kind and quality as to assure
reasonable durability and economy of maintenance, all commensurate with
the class of building under consideration.
4. All members and parts of the construction shall be properly
designed to carry all
[[Page 153]]
loads imposed without detrimental effect on finish or covering
materials.
5. The structure shall be adequately braced against lateral stresses
and each member shall be correctly fitted and connected.
6. Adequate precautions shall be taken to protect against fire and
accidents.
7. All related facilities which require accessibility to the
handicapped must comply with the Uniform Federal Accessibility Standard
(UFAS).
V. Fire Protection and Safety. A. The design of the site plan for
each manufactured community and scattered site shall meet the fire
protection and safety requirements of the local authority responsible
for providing the necessary fire protection services.
B. All fire detection and alarm systems, and water supply
requirements for fire protection for manufactured communities shall be
in accordance with the local authority responsible for providing the
necessary fire protection services.
C. Any portion of a manufactured home shall not be closer than the
local separation requirements of the development standard for side to
side, end to end, and end to side siting. If the exposed composite wall
and roof of two or more manufactured homes are proposed to be joined
they shall be without openings and constructed of materials which will
provide a minmum one-hour fire rating each, or the manufactured homes
are separated by a one-hour fire rated barrier designed and approved for
such installation and permitted by the authority having jurisdiction.
D. Manufactured homes shall not be positioned vertically (stacked)
with one over the other in whole or in part without the specific
approval of the authority having jurisdiction.
Part C--Drawings, Specifications, Contract Documents and Other
Documentation
I. General. Adequate site development and foundation installation
drawings and specfications shall be provided by the applicant or dealer-
contractor to FmHA or its successor agency under Public Law 103-354 to
fully describe the construction and other development work. These
documents shall be provided according to the requirements of
Sec. 1924.5(f)(1) of this subpart. Contract documents will be prepared
in accordance with Sec. 1924.6 and, in the case of multiple family
housing construction and development, Sec. 1924.13 of this subpart.
A. The documents recommended shall be used as a guide for drawings
and specifications to be submitted in support of all types of loan and/
or grant applications involving manufactured homes. Adequate and
accurate drawings and specifications are necessary to:
1. Determine the acceptability of the physical environment and
improvements,
2. Determine compliance with the applicable standards and codes,
3. Review cost estimates, and
4. Provide a basis for financing, inspections, and the warranty.
B. Detailed floor plans, drawings and specifications are not
required for any manufactured home to be installed on a scattered site,
in a subdivision or rental housing project. However, a schematic floor
plan should be submitted by the applicant when applying for FmHA or its
successor agency under Public Law 103-354 financing. The unit must have
an affixed label as specified in paragraph XIV (c)(3) of Exhibit F of
subpart A of part 1944 indicating that the unit is constructed to the
FmHA or its successor agency under Public Law 103-354 thermal
requirements for the appropriate winter degree days. This will indicate
that the manufacturer certifies that the unit has been properly
inspected and it meets the FmHA or its successor agency under Public Law
103-354 Thermal Performance Construction Standard.
C. For proposed construction, the builder or dealer-contractor shall
submit with the loan or grant application design calculations, details
and drawings for the installation, anchorage and construction of the
permanent foundations and perimeter enclosure to be used. Drawings and
specifications for foundation systems will be reviewed and examined by
either the FmHA or its successor agency under Public Law 103-354 County
Supervisor, District Director, or State Architect/Engineer for
foundation support locations, loads and connection requirements
specified by the manufacturer as a basis for evaluating foundation
compliance with the FmHA or its successor agency under Public Law 103-
354/MPS or Model Building Code, and for determining design suitability
for soil conditions. Drawings and specifications will also be examined
by FmHA or its successor agency under Public Law 103-354 to determine
compliance with all other on-site features not covered by the FMHCSS.
D. Foundation design sections and details of all critical
construction points systems, anchorage methods, and structural items
shall be scaled as necessary to provide all appropriate information 1:30
(3/8''=1'-0'') minimum.
II. Scattered Sites. Drawings for single family manufactured housing
shall be submitted by the applicant in addition to the requirements of
paragraph I above and the requirements of paragraphs II A and D-7 of
Exhibit C of this subpart.
III. Subdivisions. Subpart C of part 1924 of this chapter will be
used in preparing and providing supporting documents.
IV. Rental Housing Projects. Subpart C of part 1924 of this chapter
will be used in preparing and providing supporting documents.
[[Page 154]]
V. Specifications. A. Form FmHA or its successor agency under Public
Law 103-354 424-2, ``Description of Materials,'' or other acceptable and
comparable descriptions of all materials used for site development,
foundation installation and the permanent perimeter enclosure shall be
submitted with the drawings by the applicant.
B. The material identification information shall be in sufficient
detail to fully describe the material, size and grade. Where necessary,
additional sheets shall be attached as well as manufacturer's
specification sheets for equipment and/or special materials.
Part D--Inspection of Development Work
I. General. The following policies will govern the inspection of all
manufactured housing development work. This includes scattered sites,
subdivisions, rental housing projects and all accessory structures and
related facilities unless otherwise indicated.
II. Inspections. A. The responsibility for frequency and propose of
inspections shall be in accordance with Sec. 1924.9(b)(1), (2) and (3)
of this subpart. The inspection requirements of Sec. 1924.13 apply to
the planning and conduct of construction work on all 515 housing
developments that are more extensive in scope and more complex in nature
than those involving an individual manufactured housing unit. The Stage
2 inspection customary for site-built housing when the building is
enclosed is not required for manufactured homes.
The Stage 2 inspection for manufactured homes will be made within
two working days after erection or placement on the foundation to
determine compliance with accepted installation drawings and
specifications for installation and set-up and to verify that the
correct unit is on the site.
Stages 2 and 3 inspections for manufactured homes may be combined
when authorized by the State Director.
B. The borrower will join the County Supervisor or the District
Director in making periodic inspections as often as possible and always
for the final inspection.
C. The borrower should be encouraged to make enough periodic visits
to the site to be familiar with the progress and performance of the work
in order to protect the borrower's interest. If the borrower observes or
otherwise becomes aware of any fault or defect in the work or
nonconformance with the contract documents, the borrower should give
prompt written notice thereof to the dealer-contractor and a copy of the
notice to the appropriate County Supervisor or District Director.
D. During inspection, it will generally be infeasible to determine
whether a manufactured unit erected on a site was properly braced and
stiffened during transportation. Inspectors should examine these units
to determine that there is no obvious damage or loosening of fastenings
that may have occurred during transportation. The dealer-contractor must
warrant these units against such damage, which should protect FmHA or
its successor agency under Public Law 103-354's interest.
III. Warranty Plan Coverage. The warranty requirements for all
development work shall be in accordance with Sec. 1924.9(d) of this
subpart and Exhibit F of subpart A of part 1944 of this chapter.
[51 FR 41603, Nov. 18, 1986, as amended at 52 FR 19283, May 22, 1987; 53
FR 2156, Jan. 26, 1988]
Exhibit K--Classifications for Multi-Family Residential Rehabilitation
Work
I. General
This Exhibit distinguishes between what FmHA or its successor agency
under Public Law 103-354 considers maintenance and repair work, moderate
rehabilitation and substantial rehabilitation. In all cases, the
building or project to be rehabilitated shall be structurally sound. The
applicant shall have a structural analysis of the existing building made
to determine the adequacy of all structural systems for the proposed
rehabilitation.
II. Definitions
Maintenance and Repair--Work involved in the selective replacement
and general maintenance and repair of certain materials, appliances or
components of an existing residential building.
Moderate Rehabilitation--All work directly involved in the
rearrangement of interior space, the replacement of finish materials or
components of the electrical, plumbing, heating or conveyance systems of
an existing multi-family residential building. Work and improvements are
considered to be more than routine maintenance and repair.
Substantial Rehabilitation--All work directly involved in the
rearrangement of interior space that involves alteration of load bearing
partitions and columns; the replacement of the electrical, plumbing,
heating or conveyance systems; and the addition to and/or major
conversion of existing multi-family residential buildings or other
building structures.
Moderate rehabilitation and repair shall not be limited to building
changes for cosmetic or convenience purposes. In all cases moderate
rehabilitation shall involve a minimum of three (3) components of
building rehabilitation listed as moderate. Unless combined with other
improvements in a project that are considered to be moderate or
substantial rehabilitation the items identified as maintenance and
repair are considered to be cosmetic and convenience changes.
[[Page 155]]
When a rehabilitation project consists of both moderate and
substantial rehabilitation components, those substantial rehabilitation
components shall be in accordance with FmHA or its successor agency
under Public Law 103-354's development standards and local codes and
regulation requirements. Where the majority of project components of
building rehabilitation are considered substantial the project shall be
considered in the substantial rehabilitation category.
Those site components of rehabilitation such as landscaping,
grading, drainage, fencing, parking areas, recreation areas, water and
waste disposal systems, etc., whether considered either maintenance and
repair, moderate rehabilitation or substantial rehabilitation shall be
in accordance with FmHA or its successor agency under Public Law 103-
354's development standards for site development work; all local codes
and regulation requirements; and sound engineering and architectural
practices.
Any alteration of a structure listed or eligible for listing on the
National Register of Historic Places may be considered either moderate
or substantial rehabilitation; however, it shall conform first to the
Secretary of the Interior's Standards for Rehabilitation and Guidelines
for Rehabilitating Historic Buildings and then to FmHA or its successor
agency under Public Law 103-354's requirements. In cases where the
Secretary of the Interior's standards cannot be met, rehabilitation will
conform to the agreed upon approaches, treatments and techniques
resulting from the consultation process between FmHA or its successor
agency under Public Law 103-354, the borrower, the State Historic
Preservation Officer and the Advisory Council of Historic Preservation.
III. Components of Multi-Family Building Rehabilitation
The components of multi-family building rehabilitation necessary and
generally considered by FmHA or its successor agency under Public Law
103-354 to be either maintenance and repair, moderate rehabilitation or
substantial rehabilitation include but are not limited to those listed
in the following chart.
Components of Multi-Family Building Rehabilitation
----------------------------------------------------------------------------------------------------------------
Maintenance Moderate Substantial
Components and repair rehabilitation rehabilitation
----------------------------------------------------------------------------------------------------------------
Air conditioning................................................... o .............. ..............
Appliance replacement or repair.................................... o .............. ..............
Cabinet replacement or repair...................................... o .............. ..............
Carpeting.......................................................... o .............. ..............
Caulking........................................................... o .............. ..............
Ceiling framing.................................................... o .............. ..............
Clothes closets or shelving improvements........................... o .............. ..............
Door repair........................................................ o .............. ..............
Drywall repair..................................................... o .............. ..............
Gutters and downspouts............................................. o .............. ..............
Hardware replacement or repair..................................... o .............. ..............
Kitchen cabinet improvement........................................ o .............. ..............
Lighting fixture replacement or repair............................. o .............. ..............
Mail boxes......................................................... o .............. ..............
Painting........................................................... o .............. ..............
Paneling........................................................... o .............. ..............
Partition repair................................................... o .............. ..............
Roof repair........................................................ o .............. ..............
Signage............................................................ o .............. ..............
Stair repair....................................................... o .............. ..............
Tile work.......................................................... o .............. ..............
Wallpapering....................................................... o .............. ..............
Window shades and curtains......................................... o .............. ..............
Door replacement................................................... ........... o ..............
Drywall replacement................................................ ........... o ..............
Elevator components replacement.................................... ........... o ..............
Exterior entrance redesign, relocation............................. ........... o ..............
Finish flooring materials.......................................... ........... o ..............
Flashing........................................................... ........... o ..............
Furnace replacement................................................ ........... o ..............
Gas pipes.......................................................... ........... o ..............
Insulation......................................................... ........... o ..............
Lath and plaster replacement....................................... ........... o ..............
New shingles or roof replacement................................... ........... o ..............
Partition (nonbearing) replacement, or relocation.................. ........... o ..............
Plumbing fixture replacement....................................... ........... o ..............
Pointing........................................................... ........... o ..............
Porch and steps alterator or replacement........................... ........... o ..............
Stair replacement, or relocation................................... ........... o ..............
Storm windows and weatherstripping................................. ........... o ..............
Subfloor material replacement...................................... ........... o ..............
Trim--exterior and interior........................................ ........... o ..............
Window replacement................................................. ........... o ..............
New or alteration to the:
Mechanical system.............................................. ........... .............. o
Soil pipes..................................................... ........... .............. o
Vent pipes..................................................... ........... .............. o
Waste pipes.................................................... ........... .............. o
Alteration or replacement of structural components:
Beams.......................................................... ........... .............. ..............
Chimneys and vents............................................. ........... .............. o
Columns and post............................................... ........... .............. o
Electrical service--replacement or new......................... ........... .............. o
[[Page 156]]
Elevator replacement........................................... ........... .............. o
Exterior walls................................................. ........... .............. o
Floor construction............................................. ........... .............. o
Footing........................................................ ........... .............. o
Foundation wall................................................ ........... .............. o
Foundation waterproofing....................................... ........... .............. o
Interior walls................................................. ........... .............. o
----------------------------------------------------------------------------------------------------------------
Moderate repair and rehabilitation shall not be limited to building
changes for cosmetic purposes. In all cases moderate rehabilitation
shall involve a minimum of three (3) components of building
rehabilitation listed as moderate. Unless combined with other
improvements in a project that are considered to be moderate or
substantial rehabilitation the items identified as maintenance and
repair are considered to be cosmetic and convenience changes.
Exhibit L--Insured 10-Year Home Warranty Plan Requirements
I. Purpose
In recent years, numerous third-party home warranty plans have been
developed offering new homeowners varying degrees of protection against
builder default and/or major structural defects in their homes. This
exhibit establishes the criteria and procedures by which a warranty plan
is found acceptable for new construction of single family homes financed
by Farmers Home Administration or its successor agency under Public Law
103-354 (FmHA or its successor agency under Public Law 103-354). An
acceptable warranty plan will:
A. Assure that FmHA or its successor agency under Public Law 103-354
borrowers receive adequate warranty coverage,
B. In certain circumstances, eliminate the requirement for FmHA or
its successor agency under Public Law 103-354 personnel to make the
first two construction inspections, and
C. Permit a loan up to the market value of the security (less the
unpaid principal balance and past due interest of any other liens
against the security), even though FmHA or its successor agency under
Public Law 103-354 personnel may not have performed period inspections
during construction.
II. Types of Warranty Companies
A. An insured warranty company is underwritten by an insurance
carrier, licensed to operate as an insurer by the states where the
warranty company plans to operate, and has an acceptable rating from a
nationally recognized rating company such as A.M. Best Company.
B. A risk retention group is an insurer which is licensed in one
state and is authorized, under the Products Liability Risk Retention Act
of 1981, to issue its policies in all states. This authority is not
challenged by FmHA or its successor agency under Public Law 103-354;
however, there remains some question as to the legal propriety of a 10-
year insured warranty insurer to be a risk-retention group. If at some
future time any state insurance commission or regulatory agency
challenges the legal authority of such group, FmHA or its successor
agency under Public Law 103-354 will reconsider its acceptance of the
group.
C. Individual state warranty plans, such as that offered by the
State of New Jersey, are backed by the full faith and credit of the
state government.
III. Plan Requirements
To be considered acceptable, a warranty plan must include the
following features:
A. The entire cost (fee, premium, etc.) of the coverage is prepaid
and coverage automatically transfers to subsequent owners without
additional cost.
B. The coverage is not cancellable by the warrantor (builder),
warranty company or insurer.
C. The coverage age includes at least the following:
(1) For one year from the effective date, any defects caused by
faulty workmanship of defective materials.
(2) During the second year after the effective date, the warranty
continues to cover the wiring, piping and duct work of the electrical,
plumbing, heating and cooling systems, plus the items in (3).
(3) During the third through the tenth years, the warranty continues
to cover major structural defects. A major structural defect is actual
damage to the load-bearing portion of the home including damage due to
subsidence, expansion or lateral movement of the soil (excluding
movement caused by flood or earthquake) which affects its load-bearing
function and which vitally effects or is imminently likely to affect use
of the home for residential purposes.
D. A system is provided for complaint (claims) handling which
includes a conciliation and, if necessary to resolve matters in dispute,
arbitration arranged by the American Arbitration Association or similar
organization.
E. A construction inspection plan is required if FmHA or its
successor agency under Public Law 103-354 is to eliminate the first two
FmHA or its successor agency under Public Law 103-354 inspections or
permit a full market value loan when FmHA or
[[Page 157]]
its successor agency under Public Law 103-354 inspections are not
conducted.
IV. Information for Review
A. Companies submitting warranty plans for a determination of
acceptability must support requests with the following information.
(1) Evidence that the insured warranty company has met the
applicable state licensing and/or regulatory requirements in the state
in which the company plans to operate.
(2) Evidence that the insurance carrier underwriting the warranty
plan is licensed to operate as an insurer in the states in which the
company plans to operate and has an acceptable rating from a nationally
recognized company such as A.M. Best Company.
(3) State warrenty plan agencies will provide evidence that the plan
is backed by the full faith and credit of the state.
(4) A full description of the warranty plan including information on
the fees, builder and home registration procedures, required
construction standards, construction inspection procedures, coverage
provided and claims procedures.
(5) A sample copy of the warranty information and/or policy which is
provided to the homeowner.
(6) Suggested means by which FmHA or its successor agency under
Public Law 103-354 field offices can readily assure that the builder is
a member in good standing prior to loan approval and that a warrant will
be issued upon the completion of construction prior to the final release
of funds.
B. Submission and Acceptance:
(1) Insured warranty companies, except those operating as risk
retention groups, and state warranty plan agencies will submit their
requests and supporting information to the FmHA or its successor agency
under Public Law 103-354 State Director in the state in which they plan
to operate. State Directors will determine the acceptability of insured
warranty plans and state warranty plans in their jurisdictions, notify
the company or agency of the decision in writing and notify field
offices by issuance of a State Supplement including the names and
addresses of acceptable warranty companies and any other pertinent
information.
(2) Warranty companies claiming authority as risk retention groups
will submit their requests and supporting information including
certification that it has complied with all requirements of the Products
Liability Risk Retention Act of 1981 (Pub. L. 97-45) and information
indicating the state in which it is licensed, information to the FmHA or
its successor agency under Public Law 103-354 National Office, Single
Family Housing Processing Division. The National Office will determine
the acceptability of the warranty of a risk retention group, notify the
company of the decision in writing and notify field offices by issuance
of an attachment to this Exhibit.
V. Warranty Performance
A. County Supervisors will report inadequate warranty performance
through their District Director to the State Director. State Directors
will review the situation, assist in resolving any problems and, if
necessary, initiate action under subpart F of part 1942 of this chapter.
State Directors will inform, by memorandum, the Director, Single Family
Housing Processing Division, National Office, of any problems with
warranty performance and if any debarment action is initiated.
B. State Directors will annually monitor each warranty company and/
or its insurer to assure continued compliance with state licensing and/
or regulatory requirements.
Attachment 1--Acceptable Warranty Companies
The warranty companies listed below claim authority to act as a risk
retention group under the Products Liability Risk Retention Act of 1981
and as such, to operate in all States to provide 10-year home
warranties. This authority remains subject to future challenges by any
State insurance commissioner or regulatory agency; however, until such
challenge is made, FmHA or its successor agency under Public Law 103-354
accepts their warranty.
------------------------------------------------------------------------
Name and address Area of operation
------------------------------------------------------------------------
Home Owners Warranty Corporation/HOW All States.
Insurance Company, 11 North Glebe Road,
Arlington, Virginia 22201, (703) 516-4100.
Home Buyers Warranty, 89 Liberty Street, All States.
Asheville, North Carolina 22801,
Telephone: (704) 254-4478.
Residential Warranty Corporation, P.O. Box All States.
641, Harrisburg, Pennsylvania 17108-0641,
Telephone: 1-800-247-1812.
Manufactured Housing Warranty Corporation, All States.
P.O. Box 641, Harrisburg, Pennsylvania
17108-0641, Telephone: 1-800-247-1812.
------------------------------------------------------------------------
[52 FR 8002, Mar. 13, 1987, as amended at 56 FR 29167, June 26, 1991]
Subpart B--Management Advice to Individual Borrowers and Applicants
Source: 53 FR 35679, Sept. 14, 1988, unless otherwise noted.
Sec. 1924.51 General.
This subpart contains policies for providing management advice to
all
[[Page 158]]
Farm Credit Programs direct loan applicants and borrowers. Forms and
Farm Assessment and Supervision Reference handbooks are available in any
Agency county office.
[61 FR 35922, July 9, 1996]
Secs. 1924.52--1924.53 [Reserved]
Sec. 1924.54 Definitions.
As used in this subpart, the following definitions apply:
Agency. This term refers to the Farm Service Agency, its county and
State committees and their personnel, and any successor agency.
Commercial classified. The Agency's highest quality Farm Credit
programs accounts. The financial condition of the borrowers is strong
enough to enable them to absorb the normal adversities of agricultural
production and marketing. There is ample security for all loans, there
is sufficient cash flow to meet the expenses of the agricultural
enterprise and the financial needs of the family, and to service debts.
The account is of such quality that commercial lenders would likely view
the loans as a profitable investment.
Farm Assessment and Supervision Reference. This reference provides
guidance to field staff on conducting assessments, year-end analyses,
and general borrower supervision.
Farm business plan. The automated or manual Farm and Home Plan
system which contains a projection that accurately reflects the
borrower's plan of operation for the production or marketing cycle. The
annual plan may cover a period of more or less than 12 months. A normal
year's plan, as defined in this section, will be used when the annual
plan does not reflect typical income, expenses, and debt payments. The
Agency will accept farm business plans other than the Farm and Home Plan
if they provide sufficient information to enable Agency officials to
render a sound credit decision in accordance with Agency regulations.
Farm Credit Programs loan. Includes Farm Ownership (FO), Soil and
Water (SW), Operating (OL), Emergency (EM), Economic Emergency (EE),
Recreation (RL), Special Livestock (SL), Economic Opportunity (EO) and
Softwood Timber (ST) loans. Also included are Rural Housing loans for
farm service buildings (RHF), and Rural Housing (RH) loans where the
borrower is also indebted for an Agency direct farm loan that is not a
collection only or judgment account. Non-Program loans, which are
defined in Sec. 1951.451(a), are excluded.
Financially viable operation. A financially viable operation
projects that it can generate sufficient income to meet annual operating
expenses and debt payments as they become due, meet basic family living
expenses to the extent they are not met by dependable non-farm income,
provide for the replacement of capital items, and provide for long-term
financial progress to enable the operator to obtain commercial credit.
Individual. The term ``individual'' is used throughout this subpart
to refer to the person receiving Agency supervision and management
advice. If an applicant or borrower applies as an individual applicant,
the term ``individual'' means the operator. In the case of an eligible
corporation, cooperative, partnership, or joint operation, the term
``individual'' means the entity members with the primary responsibility
for making management decisions and carrying out the day-to-day physical
tasks.
Normal year plan. A projected farm business plan most
representative, or typical, of an operation's normal income, expenses
(including family living expenses), and capital debt payments.
Prospectus. Consists of a transmittal letter similar to FmHA Guide
Letter 1951-F-3 with a current balance sheet and projected year's budget
attached. The applicant or borrower name and address need not be
withheld from the lender. The prospectus is used to determine lender
interest in financing or refinancing specific direct loan applicants and
borrowers. The prospectus will provide information regarding the
availability of Agency loan guarantee and interest assistance.
Standard classified. These loan accounts are fully acceptable by
Agency standards. Loan risk and potential loan servicing costs are
higher than would be acceptable to other lenders, but all loans are
adequately secured. Repayment ability is adequate, and there is a
[[Page 159]]
high probability that all loans will be repaid as scheduled and in full.
[61 FR 35922, July 9, 1996]
Sec. 1924.55 Assessment of the agricultural operation.
Assessments will be completed for direct Farm Credit Programs loan
applicants. An assessment is a comprehensive evaluation of the
components of an operation, the identification and prioritization of
training and supervisory needs, and the resulting plan of supervision to
assist the borrower in achieving financial viability. The assessment is
the central foundation upon which to build strategies for planning,
credit and management counseling, loan controls, analysis, borrower
training, and all other needed supervision. An assessment will include
thorough inspections of the operation and face-to-face meetings and
discussions with all key individuals. At least semi-annual reviews of
progress will be performed in accordance with paragraph (e) of this
section.
(a) Agency evaluation. The Agency will assess each of the areas
described in paragraph (b) of this section in close cooperation with the
applicant or borrower. As part of that assessment, the Agency will
determine whether the proposed budget is feasible on a direct or
guaranteed loan basis, the type and nature of any material financial or
production management weaknesses in the operation, and the specific
strategy needed, including timeframes, to effect improvements and
control risks. Material weaknesses are those that have a significant
impact on the net income of the operation and need to be corrected to
enable the borrower to progress financially and eventually graduate from
FSA farm credit programs. Examples of material weaknesses include, but
are not limited to: lack of a farm recordkeeping system, obsolete or
inadequate facilities, and use of outdated production practices. In the
case of Youth loans, it is recognized that most of the component areas
will be ``Not Applicable'' since there is no full-scale farming
operation to consider.
(b) The assessment is an evaluation, conducted with an applicant or
borrower, of the following components:
(1) Type of operation.
(2) Goals.
(3) Real estate, including facilities.
(i) Location and size.
(ii) Proposed and existing improvements.
(iii) Presence of environmental hazards.
(iv) Conservation practices and measures.
(v) Adequacy and continued availability of real estate.
(vi) External factors, such as urban encroachment and zoning
changes.
(4) Chattel property used in the operation.
(5) Farm business organization and key personnel.
(6) Historical financial data.
(7) Projected budget.
(8) Planned changes.
(9) Ability to obtain guaranteed credit.
(c) Supervision and training. Appropriate supervisory oversight and
training recommendations will be developed based on the Agency's
evaluation of the strengths and weaknesses of the operation in
accordance with paragraphs (a) and (b) of this section and Sec. 1924.59.
(d) Performing the year-end analysis. A year-end analysis is
required for borrowers (except for Youth loans and loans flagged as
having bankruptcy, foreclosure, or other action pending) the first year
after an initial or subsequent loan, chattel subordination, or
restructuring is received, borrowers who are financially distressed or
delinquent, borrowers who have loans deferred, and borrowers who are
receiving limited resource interest rates. All other borrowers
(including flagged accounts) will receive a year-end analysis at the
discretion and judgment of the Agency. However, at least every two
years, the borrower will provide upon Agency request, a year-end balance
sheet, actual financial performance, and a projected farm budget so that
the borrower can be classified for graduation purposes in accordance
with subpart F of part 1951. The year-end analysis should coincide with
the borrower's farm budget planning period. The borrower will work with
the Agency to:
(1) Complete the year-end analysis, whenever possible, within the
60-day
[[Page 160]]
period after completion of the borrower's business year or farm budget
planning period.
(2) Complete and review the ``actual'' columns on the farm business
plan and Form FmHA 1962-1, ``Agreement for the Use of Proceeds/Release
of Chattel Security,'' if applicable.
(3) Develop a farm business plan for the next production cycle in
accordance with Sec. 1924.56.
(4) Reach agreement on key management issues. Any such agreements
will be documented for the borrower case file and signed by the
borrower.
(e) For all borrowers, the assessment described under this section
will be reviewed on at least a semi-annual basis to monitor progress.
The borrower will consult with the Agency official in person, or if that
is not possible, by telephone, or in writing. A meeting must be
scheduled as soon as practicable to determine corrective options if: the
borrower is, or expects to be, delinquent; the borrower is experiencing
difficulties; or other significant changes have occurred. The year-end
analysis under this section may be treated as one of the required
assessment reviews.
[61 FR 35922, July 9, 1996]
Sec. 1924.56 Farm business planning.
The automated Farm and Home Plan system is the primary tool used by
the Agency to evaluate loan feasibility and prospects for achieving
financial viability. Other manual or automated business planning systems
may be used with the consent of the Agency.
(a) [Reserved]
(b) Documentation and revision of plans. Individuals must submit a
farm business plan to the Agency, upon request, for loan approval and
servicing purposes. An individual may request the assistance of the
Agency official, as needed, in completing the plan. Farm business plans
will be based only on accurate, verifiable information. If the Agency
official and the individual cannot reach agreement, on the farm business
plan, then the Agency will make loan approval and servicing
determinations based on the Agency's separate, revised farm business
plan. The individual will have the right to appeal any resulting adverse
decision.
(1) Historical information will be used as a guide to evaluate the
feasibility of projected farm business plans. Individuals must provide
the Agency with their previous 5-year production history, if available.
Positive and negative trends, mutually agreed upon changes and
improvements, and current input prices, will be taken into consideration
when arriving at reasonable projections.
(i) For individuals with less than a 5-year history, actual
production records from an operation to be taken over by the individual
will be considered, whenever available.
(ii) In the absence of the information listed in paragraph (b)(1)(i)
of this section, other reliable data sources that may be used include:
FSA Farm Programs (formerly Agriculture Stabilization and Conservation
Service) actual yield records and county or State averages.
(iii) This paragraph applies when an accurate projection cannot be
made because the individual's production history in any or all of the
previous 5 years has been substantially affected by a disaster that has
been declared by the President or designated by the Secretary of
Agriculture. This paragraph also applies to those individuals who would
have had a qualifying physical or production loss, as defined in
Sec. 1945.154(a), from such a disaster, but who were not located in a
designated or declared disaster area.
(A) If the individual's disaster years yields are less than the
county average yields, county average yields will be used for those
years. If county average yields are not available, State average yields
will be used.
(B) In calculating a baseline average yield, the individual may
exclude the production year with the lowest actual or county average
yield, providing the individual's yields were affected by disasters
during at least 2 of the 5 years.
(2) Unit prices for agricultural commodities as published in the
State supplement will generally be used. However, regional or county
unit prices may be used when there are transportation costs or other
significant factors that cause a difference in commodity prices within
the State. Individuals who can provide reliable evidence that
[[Page 161]]
they will receive a premium price for a commodity will be allowed to use
the higher price for farm planning. The determination of disaster years
will be based on the 5-year history of disaster declarations or
designations for all counties contained in the State supplement.
(3) When the Agency official and individual revise the farm business
plan, the plan will be signed and initialed by both parties. Form FmHA
1962-1 (available in any Agency office) will be revised whenever
significant changes occur during the year that will affect repayment
ability. It is the individual's responsibility to notify the Agency of
any necessary changes. If the changes would result in a major change in
the operation, a completely new farm business plan must be developed.
The individual and Agency official will initial and date revisions to
the Form FmHA 1962-1.
(4) If the borrower and Agency cannot reach an agreement on
revisions to the farm plan and an adverse decision results, the borrower
may appeal. During an appeal, the Agency will make releases of normal
income security for essential family living and farm operating expenses
in accordance with Sec. 1962.17. If the borrower refuses to execute Form
FmHA 1962-1 as finally determined by the Agency after an appeal, the
account will be serviced under Sec. 1962.18. If the borrower does not
appeal, the planned releases documented on Form FmHA 1962-1 are binding.
[61 FR 35923, July 9, 1996]
Sec. 1924.57 [Reserved]
Sec. 1924.58 Recordkeeping.
(a) All borrowers must have a recordkeeping system, which must be
documented as part of the assessment under Sec. 1924.55.
(b) The selected recordkeeping system must provide information
similar to that contained in Forms FmHA 431-2, FmHA 432-1, ``Farm Family
Record Book,'' and FmHA 432-2, ``Five Year Inventory Record.'' The
recordkeeping system must enable borrowers to make informed management
decisions and allow the Agency to render loan making and servicing
decisions in accordance with Agency program regulations.
(c) Borrowers must maintain accurate records and submit financial
information to the Agency when required. Failure to do so will result in
the borrower's ineligibility for future Agency financing and loan
servicing and may result in acceleration and collection action.
[61 FR 35924, July 9, 1996]
Sec. 1924.59 Supervision.
The Agency's supervision is based on the information and evaluation
resulting from the assessment of the operation. The borrower is required
to:
(a) Cooperate with the Agency and comply with all supervisory
agreements, farm plans, and all other loan-related requirements.
(b) Promptly notify the Agency of any significant change in the
business or family expenses or the development of problem situations.
(c) Maintain and protect the collateral for Agency loans and
promptly report to the Agency any losses or other significant changes in
the collateral.
(d) Complete any training required by Sec. 1924.74.
[61 FR 35924, July 9, 1996]
Sec. 1924.60 Nonfarm enterprises.
A nonfarm enterprise is any business enterprise which supplements
farm income by providing goods or services for which there is a need and
a reasonably reliable market. The same general policies covered in this
subpart for giving management assistance to an applicant or borrower on
farm loans will be followed in dealing with an applicant or borrower on
nonfarm enterprise loans. The appropriate plans and record book will be
used for the nonfarm enterprise. The borrower responsibilities in
Sec. 1924.59 (a) also apply to nonfarm enterprises.
[61 FR 35924, July 9, 1996]
Secs. 1924.61-1924.73 [Reserved]
Sec. 1924.74 Borrower Training program.
(a) Introduction. (1) Supervised credit includes helping borrowers
to develop the skills necessary for successful, efficient production and
financial management of a farm business. An effective, formal training
program provides a
[[Page 162]]
solid foundation on which borrowers can build the skills which will
enable them to become efficient, financially sound producers who can
obtain commercial financing. The goal of this training is for borrowers
to develop and improve the financial and production management skills
necessary to successfully operate a farm, build equity in the farm
business, and become financially successful to graduate from Agency
programs to commercial sources of credit.
(2) The authorities contained in this section require certain Farm
Credit Programs borrowers to obtain training in production and financial
management concepts. Unless waived, this training will be an eligibility
requirement for all Farm Credit Programs direct and guaranteed loans.
The training requirement will also apply to all direct borrowers who
receive Primary Loan Servicing actions approved under subpart S of part
1951 of this chapter, with the exception of net recovery buyout offers.
Borrowers who do not request new loans or servicing actions will be
notified during farm visits and annual analyses of approved courses in
their area. Also, a current list of approved courses will be posted in
the County Office.
(3) The training will be carried out by public and/or private sector
providers of farm management and credit counseling services (including,
but not limited to, community colleges, the Extension Service, State
Departments of Agriculture, farm management firms, lenders, and similar
qualified organizations).
(4) State Directors will enter into agreements with one or more
qualified providers in each State to conduct the training.
(b) Processing--(1) Agency review. The determination of an
applicant/borrower's need for enhanced training in production and
financial management concepts will be made by the Agency. To make this
determination, the Agency will review the case file (in the case of
borrowers) and the complete application package for the assistance
requested. A decision that the applicant/borrower needs such training
cannot be used as a basis for rejecting the request for assistance. In
the case of a cooperative, corporation, partnership, or joint operation,
any individual member, stockholder, partner, or joint operator holding a
majority interest in the entity or who is operating the farm must agree
to complete the training on behalf of the entity. However, if one entity
member is solely responsible for financial or production management,
then only that entity member will be required to complete the training
in that area for the entity or qualify for a partial waiver. If the
financial and production functions of the farming operation are shared,
the knowledge and skills of the individual(s) with the responsibility of
production and/or financial management of the operation will be
considered in the aggregate for granting a waiver or requiring that
training be completed. If a waiver is not granted, these individuals
will be required to complete the training in accordance with their
responsibilities for production and/or financial management. This
training must be completed within 2 years after ``Agreement to Complete
Training,'' is signed if a waiver is not granted. When production
training is required, a borrower must complete course work covering
production management in crop or livestock enterprises which constitute
twenty percent of the projected cash farm income for the coming
production cycle, as determined by the Agency. Borrowers who are adding
a new enterprise must agree to complete any required production training
in that enterprise unless a waiver is granted by the Agency. Borrowers
must also complete financial management training unless a waiver has
been granted by the Agency.
(i) Loan applicants. After the Agency has determined that the
applicant meets all eligibility criteria for the type of assistance
requested, the Agency will consider the applicant's need for enhanced
training in production and financial management concepts. If the Agency
determines the applicant is ineligible for assistance, the training
requirement will not be considered.
[[Page 163]]
(ii) Requests for Primary Loan Servicing. Prior to Agency offer of
any Primary Loan Servicing action, the Agency must determine whether the
borrower must complete a training program or qualifies for a waiver.
This determination should be made after a feasible plan has been
developed using consolidation, rescheduling, reamortization, deferral,
softwood timber, and/or writedown, but prior to Agency actual offer to
restructure the borrower's accounts. This training requirement does not
apply to those borrowers offered net recovery buyout or preservation
loan servicing. If the borrower must complete a training program, fees
will be included in the plan as an operating expense.
(2) Waivers. Applicants for loans and Primary Loan Servicing
programs may request a waiver from the training requirement by
submitting Form FmHA 1924-27, ``Request for Waiver of Borrower Training
Requirements,'' with the application for assistance. The waiver request
must include the required documentation and records as specified in
paragraphs (b)(2)(i) and (b)(2)(ii) of this section. A waiver is not
required for those applicants who have previously received a waiver, or
who have previously satisfied the training requirements. The applicant/
borrower must meet all training requirements for both production and
financial management if no waiver is granted. If the borrower receives a
waiver for production training, the requirements for financial
management training must still be met. Conversely, if the borrower
receives a waiver for financial management training, the requirements
for production training must still be met. In the case of entity
applicants, only those entity members who hold a majority interest in
the operation or who operate the farm must meet the waiver conditions
for the entity to qualify for a waiver. However, if one entity member is
solely responsible for financial or production management, then only
that entity member will be required to complete the training in that
area for the entity or qualify for a partial waiver. If the financial
and production functions of the farming operation are shared, the
knowledge and skills of the individual(s) with the responsibility of
production and/or financial management of the operation will be
considered in the aggregate for granting a waiver or requiring that
training be completed. If a waiver is not granted, these individuals
will be required to complete the training in accordance with their
responsibilities for production and/or financial management. The Agency
may waive the financial and/or production training requirements under
the following conditions:
(i) The applicant has successfully completed an equivalent training
program. To meet this requirement, the applicant must submit evidence of
completion of a production and/or financial management course similar to
a course approved under this section. The submission must include a
description of the content and subjects covered in the course(s)
completed by the applicant or entity members. The submission must also
include evidence of completion, such as a grade report, certificate of
completion, or written certification by the course instructor. The
program must have covered subject areas in paragraph (d)(3)(iii) of this
section. The Agency will review the documentation submitted by the
applicant(s) for assistance to determine whether the training completed
satisfies the training requirements of this section; or
(ii) The applicant has the experience and/or training which
demonstrates the abilities necessary for successful, efficient
production as determined by the Agency based on documentation provided
by the applicant with the request for the waiver. This documentation
must include, at a minimum, the applicant's production records for the
past 5 years and a statement explaining how the records demonstrate
production ability.
(3) Notifying applicants/borrowers of the the Agency's decision
regarding training. The applicant/borrower will be informed of the the
Agency's decision as follows:
(i) Loan applicants receiving a waiver from the training will be
notified in the letter of eligibility, required under Sec. 1910.6 of
subpart A of part 1910 of this chapter. Applicants for Primary Loan
Servicing actions who are receiving a
[[Page 164]]
waiver will be notified through exhibit B or exhibit F to subpart S of
part 1951 of this chapter, as appropriate.
(ii) Loan applicants required to complete the training will be
notified in the letter of eligibility. Applicants for Primary Loan
Servicing actions who are required to complete the training will be
notified through exhibit B or exhibit F to subpart S of part 1951 of
this chapter, as appropriate. The notification will include the name(s)
of the approved vendor(s) in the applicant/borrower's area and the
specific courses required. The notification to the applicant/borrower
will also include a description of the scoring system to be used to
determine if the applicant/borrower has successfully met the training
requirements. In both loan making and servicing cases, the decision to
require certain training is not appealable. However, the decision is
reviewable.
(4) Notification of applicants determined ineligible for assistance.
In the letter informing them of the Agency's decision, applicants
determined ineligible for assistance due to lack of management training
and experience will be notified, for their information, of training
programs approved under this section. If the ineligible applicant
chooses to enroll in a training program, eligibility for future
assistance will not be automatic upon completion of the course.
Applicants who complete an approved course and later apply for a new
loan must still demonstrate that they possess sufficient training and
experience to assure reasonable prospects of success and meet other
eligibility requirements for the assistance requested.
(5) Contacting vendor and payment. Upon receiving the notification
of the training requirement, the borrower is responsible for selecting
and contacting a vendor(s), and making all arrangements to begin the
training. Agency is not a party to fee or other agreements between the
borrower and the vendor. Training fees must be included in the plan of
operation as a farm operating expense. Payment of training fees is an
authorized use of operating loan funds.
(6) Training agreement. Prior to closing the loan or Primary Loan
Servicing action, the applicant/borrower must sign Form FmHA 1924-23.
This agreement will be placed in position 2 of the borrower case file.
(7) Automated tracking system. Field offices will process certain
data to the automated Finance Office records in order to properly track
borrower training-related information. Reference the automated system
user manuals for more specific information on this automated tracking
system.
(8) County Office monitoring. Required training will be included in
Table C of Form FmHA 431-2. Agency personnel will monitor borrower
progress during farm visits and analyses in accordance with this
subpart. The County Supervisor will also contact the borrower to follow
up on unsatisfactory training progress reports. All contacts with the
borrower will be noted in the running case record, together with the
topics discussed and agreements reached.
(c) Vendor's evaluation of borrower progress--(1) All required
training must be completed within 2 years after the borrower signs Form
FmHA 1924-23. The County Supervisor may grant a 1-year written extension
to the agreement in cases where the borrower demonstrates he/she was
unable to complete the training due to circumstances beyond his/her
control, such as poor health or discontinuance of the necessary approved
courses. Refusal to grant a 1-year extension is not an appealable
decision.
(2) The vendor will provide Agency with periodic progress reports.
The frequency of these reports will be determined by the State Director.
These reports are not intended to reflect a grade or score, but to
indicate whether the borrower is attending sessions and honestly
endeavoring to complete the training program. Upon completion of the
training, the vendor will provide the County Office with an evaluation
of the borrower's knowledge of the course material. This evaluation
shall specifically address the borrower's improvement toward meeting the
goals outlined in this section. The instructor will also assign the
borrower a score according to the following criteria:
[[Page 165]]
Score
1. The borrower attended classroom sessions as agreed,
satisfactorily completed all assignments, and demonstrated an
understanding of the course material.
2. The borrower attended classroom sessions as agreed and attempted
to complete all assignments; however, the borrower does not demonstrate
an understanding of the course material.
3. The borrower did not attend classroom sessions as agreed and/or
did not attempt to complete assignments. In general, the borrower did
not make a good faith effort to complete the training.
(i) Borrowers receiving a score of 1 will have met the requirements
of the agreement. The accounts of these borrowers will be serviced in
accordance with existing regulations.
(ii) Borrowers receiving a score of 2 will have met the requirements
of the agreement. However, since these borrowers do not adequately
demonstrate an understanding of the course material, the County
Supervisor will develop a plan outlining the additional supervision the
borrower will require to accomplish the objectives of Agency assistance,
such as recommending further training, more frequent farm visits, or
retaining professional services of an accountant, farm management
consultant, or similar expert based upon the borrower's abilities.
(iii) Borrowers receiving a score of 3 will not have met the
requirements of the agreement for training. Failure to complete the
training as agreed will cause the borrower to be ineligible for future
Agency benefits including future direct and guaranteed loans, Primary
Loan Servicing, Interest Assistance renewals, and restructuring of
guaranteed loans.
(d) Selection and approval of organizations and courses--(1)
Identification of potential vendors. Prior to the initial approval of
vendors and prior to renewal of approved vendor's training agreements,
the State Director or designee shall solicit applications from all
interested organizations, keeping in mind its cultural diversity
responsibilities. The State Director shall contact the Chief Executive
Officer of the State and appropriate officials from the State Department
of Agriculture, the State Extension Service, community colleges, and
other private or nonprofit organizations which may be interested in
conducting this training.
(2) Application. The vendor must submit the following items prior to
consideration for approval:
(i) A sample of the course materials and a description of the
method(s) of training to be used.
(ii) Specific training objectives for each section of the course.
These objectives should relate to the general objectives outlined in
paragraph (d)(3)(i) of this section.
(iii) A detailed course agenda specifying the topics to be covered,
the time to be devoted to each topic, and the number of sessions to be
attended.
(iv) A list of instructors and their qualifications, and the
criteria by which additional instructors will be selected.
(v) The proposed locations where training will take place. These
sites should be within a reasonable commuting distance for borrowers to
be served by the vendor.
(vi) Cost per participant and/or cost per organization, i.e., cost
for husband/wife joint operation; father/son partnership; or multiple
members of a corporation.
(vii) Minimum and/or maximum class size.
(viii) A description of the organization's experience in developing
and administering training to farmers.
(ix) A description of the monitoring and/or quality control methods
the organization intends to use.
(x) A description of the policy on allowing Agency employees to
attend the course for monitoring purposes, i.e., the number of employees
authorized to attend; the cost (if any); and the number of classes each
employee can attend.
(xi) A description of how the needs of borrowers with physical and/
or mental handicaps or learning disabilities will be met.
(xii) A plan of how the needs of borrowers for whom English is not
their primary language will be met.
(3) State Office review and recommendation. Upon receipt of the
application packages from the potential vendors, the State Director will
review the material to assure the vendor's proposal meets the following
minimum criteria
[[Page 166]]
for accomplishment of educational objectives, instructor qualifications,
curriculum content, and vendor qualification:
(i) Educational objectives. Upon completion of the course, the
borrower shall be able to:
(A) Describe the specific goals of the business, describe what
changes are required to attain the business goals, and outline how these
changes will occur using present and projected enterprise budgets.
(B) Maintain and utilize a financial management information system
which includes financial and production records, a household budget, a
statement of financial condition, and an accrual adjusted income
statement. The borrower shall also be able to use this system when
making financial and production decisions.
(C) Understand and utilize an income statement. Specifically, the
borrower must understand the structure and major components of an income
statement and its role in analyzing the performance of a business, be
familiar with the cash and accrual methods of determining net farm
income, and understand the relationship between a balance sheet and an
income statement.
(D) Understand and utilize a balance sheet. Specifically, the
borrower must understand the major components of a balance sheet and its
role in analyzing the business, be familiar with the categories of
assets and liabilities and be able to provide examples of entries under
each, and be familiar with the cost and market methods of valuing assets
and liabilities and the advantages of each method.
(E) Understand and utilize a cash flow budget. Specifically, the
applicant must be able to explain and justify estimates for production
and expenses, and analyze the cash flow to identify potential problems.
(F) Using production records and other production information, be
able to identify problems, evaluate alternatives, and make needed
corrections to current production practices to achieve greater
efficiency and profitability.
(ii) Instructor qualifications. Instructor qualifications will be
reviewed to assure sufficient knowledge of the material and sufficient
experience in adult education. The instructors must have a bachelor's
degree or comparable experience in the subject area they will teach and
a minimum of three years experience in conducting training courses or
teaching. Also, the instructors must successfully complete any
instructor training which may be associated with the Agency approved
course.
(iii) Curriculum. The curriculum shall be reviewed to assure that
the following subject matter is sufficiently addressed. A single vendor
is not required to provide all the courses necessary to cover the entire
curriculum; however, to the extent practicable, all topics must be
available for all Agency districts. The State Director shall identify
the specific crop or livestock enterprises for which training must be
available in a given area or district, and any additional subject matter
to be covered for each.
(A) Business Planning. The course(s) shall cover the general areas
of goal setting, risk management, and planning. Goal setting will
include identification of personal and family goals, business goals, and
short- and long-term goals. Risk management concepts will include the
sources, magnitude and frequency of risk, risk tolerance, risk-taking
ability of the business, and strategies for managing risk such as use of
credit, marketing, production practices, and insurance. Finally, the
course(s) will guide the borrower through the formulation of a long-term
business plan for the farm and presentation of this plan to a lender.
(B) Financial Management Systems. The course(s) shall cover all
aspects of farm accounting, specifically: Instruction in financial
record keeping, preparation of a household budget, development and
analysis of accrual adjusted income statements, balance sheets, and cash
flow budgets. The course(s) shall focus on integrating these elements
into a financial management system which enables the borrower to make
business decisions based on his/her analysis of financial information.
[[Page 167]]
(C) Crop Production. The course(s) shall focus on improving the
profitability of the borrower's crop enterprises. Specifically, the
course shall address keeping and analyzing production records,
identifying problems in current production practices, identifying
sources of production information and assistance, and using production
information to analyze alternatives and identify the most profitable
solution.
(D) Livestock Production. The course(s) shall focus on improving the
profitability of the borrower's livestock enterprises. Specifically, the
course shall address keeping and analyzing production records,
identifying problems in current production practices, identifying
sources of production information and assistance, and using production
information to analyze alternatives and identify the most profitable
solution.
(iv) Vendor. The proposed vendor of the training must have
demonstrated a minimum of three years experience in conducting training
courses or teaching the proposed subject matter.
(4) Approval. After review of the applications, the State Director
shall determine which vendors should be recommended for final approval.
Complete application packages from the selected vendors should be
submitted to the National Office for concurrence prior to final
approval. Applications from accredited colleges (including community
colleges) or universities, however, do not require National Office
concurrence prior to final approval. If all of the instructors have not
been selected at the time of request for approval of the vendor, the
vendor may be approved with the condition that instructors will meet the
criteria set out in paragraph (d)(3)(ii) of this section. After
approval, the State Director and the vendor(s) will sign Form FmHA 1924-
24, ``Agreement to Conduct Production and Financial Management Training
for Farmers Home Administration or its successor agency under Public Law
103-354 Borrowers.'' This agreement will be valid for three years,
unless revoked in writing and giving 30 days notice by the State
Director or the vendor. The State Director may revoke the agreement if
the vendor does not comply with the responsibilities listed in the
agreement. Such revocation is nonappealable. The State Director will
issue a State supplement to this subpart listing the approved vendor(s),
the contact person for the vendor, the terms of the vendor agreements,
and the subject matter in which each vendor is approved to conduct
training.
(5) Renewals. Renewal of agreements to conduct training will not be
automatic. The vendor must request renewal in writing, provide updates
to any changes in curricula, and provide information which indicates the
training provided by the vendor is effective. Such information may
include course evaluations, test scores, or statistics on the
improvement of borrowers who have completed the course. The State
Director must obtain National Office concurrence on any decisions to
deny renewal of a vendor's agreement. A decision to deny renewal of a
vendor's agreement is nonappealable.
(e) Vendor monitoring. An operational file will be maintained in the
State Office for each approved vendor. This file will include the
application, National Office concurrence (if required), the signed Form
FmHA 1924-24, documentation of Agency monitoring of the vendor, and any
further documentation to determine the success of the vendor's program.
To assure the training organization is correctly and effectively
implementing the training as proposed, the State Director or designee
will be responsible for monitoring the vendor. This monitoring shall, as
a minimum, consist of:
(1) Attendance at selected training sessions for each vendor to
verify that the agreed-upon subject matter is being covered in
sufficient detail and to assess the effectiveness of the training
provided by the instructors.
(2) Review of course and instructor evaluations. Course and
instructor evaluations will be completed by the borrowers on Form FmHA
1924-22, ``Borrower Training Course Evaluation.'' This form will be
provided to the borrowers by the instructor as they complete the course.
The evaluations will be forwarded to the State Director
[[Page 168]]
for review. The results will be summarized and made part of the
operational file on each vendor.
(3) Monitoring of borrowers' improvement upon completion of a
course. The State Director will analyze statistics regarding borrower
performance, such as the graduation and delinquency of borrowers who
have completed the required training course.
[58 FR 69195, Dec. 30, 1993, as amended at 61 FR 35924, July 9, 1996]
Secs. 1924.75--1924.99 [Reserved]
Sec. 1924.100 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget
(OMB) and have been assigned OMB control number 0560-0154.
[61 FR 35924, July 9, 1996]
Exhibit to Subpart B
Exhibit A--Letter to Borrower Regarding Releases of Farm Income To Pay
Family Living and Farm Operating Expenses
UNITED STATES DEPARTMENT OF AGRICULTURE
Farmers Home Administration or its successor agency under Public Law
103-354
(Insert Address)
(Date)
Borrower's Name)
(Address)
Dear ______:
Public Law 100-233 requires the Agency to notify you that you are
entitled to have Agency release proceeds from the sale of crops,
livestock, and livestock products planned to be marketed in the regular
course of business including ASCS and CCC payments, so that you can pay
essential family living and farm operating expenses. The releases will
continue until such time as your account should become in default and
Agency has to accelerate your account.
To provide these releases to you, Agency regulations require that
you fill out Form FmHA 1962-1 to explain what items of Agency security
you intend to sell during this crop year. Please see Attachment 1 of
this letter for an explanation of this form. We request that you contact
this office within 10 days of when you receive this letter so that we
can complete this form and you can receive releases on a timely basis.
Sincerely,
_______________________________________________________________________
County Supervisor
Attachment 1 to Exhibit A
Periodically, you will be asked to complete Form FmHA 1962-1,
``Agreement for the Use of Proceeds/Release of Chattel Security,'' which
will document the agreement between you and the Agency as to how
proceeds from the sale of chattel property which serves as security for
your Agency loans will be released. You will also need to list those
buyers to whom you plan to sell your farm products. This plan will give
you and the Agency a clear idea of what income you expect from your
operation and how those proceeds will be used. The plan will set forth
the amount of money required for paying essential family living, farm
operating expenses, and debt service payments. You and the Agency must
agree on how much money will be released from your crop proceeds. Such
releases must be in accordance with Agency regulations.
If the County Supervisor is unable to agree with and approve your
plan for the use of the sales proceeds, you will receive a letter
explaining why the County Supervisor is unable to approve your plan and
how you may appeal the County Supervisor's decision. While an appeal is
pending, Agency will release sales proceeds to be used to pay essential
family living and farm operation expenses.
Once a plan has been agreed on, it is important that you abide by
the plan. The plan can always be revised or changed, as circumstances
require, provided you and Agency can agree to the revisions.
Planned sales can be listed by month, by quarter or by whatever
period suits your operation the best. The form does not have to be
completed to show each individual animal, bushel, bale, etc. The form is
a plan: it contains only projections. We expect your projections to be
realistic and based on your past experience, but we know that you cannot
predict exactly how many bushels per acre you will harvest, exactly how
many animals you will wean, etc. We also realize that you cannot predict
prices to the penny. Sometimes you will have a buyer for your products
who is not listed on the form. All we expect of you is to be as accurate
as you can. Later, if the plan needs to be changed, you and the County
Supervisor can work together to revise it. Many revisions can be agreed
on over the telephone and a trip to the County Office is not always
needed. You are not required to check with Agency before making a sale
just because the price you expected to receive is different from what
you had planned to receive. However, a difference in price might require
your plan to be revised, so Agency wants to be told about the difference
as soon as possible after the sale is
[[Page 169]]
made. you are expected to obtain Agency approval before making a major
change in your operation or before you use sale proceeds in a way
different than you agreed to.
If at all possible, you should let Agency know if you are going to
sell to a buyer who is not listed on the form. The attached chart gives
certain examples when you must get prior consent from the Agency and
when you may advise Agency after the sales of your farm products.
What To Do If You Want To Take Actions That Are Different Than What Is
Listed on Your Form FmHA 1962-1
------------------------------------------------------------------------
Get prior consent Give notice afterwards
------------------------------------------------------------------------
You Must Get Agency PRIOR CONSENT if You You Can Take Action and Then
Want to: Give Agency Notice
AFTERWARDS if You Want to:
1) Sell, exchange, consume, or otherwise 4) Dispose of your property
dispose of property that is not listed on at a time that is different
your Form FmHA 1962-1; than what you listed in the
``MONTH'' section of your
Form FmHA 1962-1;
2) Dispose of chattel security in a way 5) Sell (or exchange) your
not listed in the ``HOW'' section of your property to a person or
Form FmHA 1962-1 (for example, feed corn business that is not listed
to livestock instead of selling it; in the ``POTENTIAL
PURCHASERS'' section of
your Form FmHA 1962-1;
3) Use proceeds in a way not listed in the 6) Sell, exchange, consume,
``USE OF PROCEEDS'' section of your Form or otherwise dispose of a
FmHA 1962-1 (for example, use proceeds to quantity of property that
buy equipment instead of to pay debt). is different than what you
listed in the ``QUANTITY''
section of your Form FmHA
1962-1;
7) Accept a price for your
property that is different
than what you listed in the
``AMOUNT OF PROCEEDS''
section of your Form FmHA
1962-1.
------------------------------------------------------------------------
[53 FR 35679, Sept. 14, 1988, as amended at 56 FR 15821, Apr. 18, 1991;
61 FR 35924, July 9, 1996]
Subpart C--Planning and Performing Site Development Work
Source: 60 FR 24543, May 9, 1995, unless otherwise noted.
Editorial Note: Nomenclature changes appear at 61 FR 2899, Jan. 30,
1996.
Sec. 1924.101 Purpose.
This subpart establishes the basic Rural Housing Service (RHS)
policies for planning and performing site development work. It also
provides the procedures and guidelines for preparing site development
plans consistent with Federal laws, regulations, and Executive Orders.
Sec. 1924.102 General policy.
(a) Rural development. This subpart provides for the development of
building sites and related facilities in rural areas. It is designed to:
(1) Recognize community needs and desires in local planning,
control, and development.
(2) Recognize standards for building-site design which encourage and
lead to the development of economically stable communities, and the
creation of attractive, healthy, and permanent living environments.
(3) Encourage improvements planned for the site to be the most cost-
effective of the practicable alternatives. Encourage utilities and
services utilized to be reliable, efficient, and available at reasonable
costs.
(4) Provide for a planning process that will consider impacts on the
environment and existing development in order to formulate actions that
protect, enhance, and restore environmental quality.
(5) No site will be approved unless it meets the requirements of
this part and all state and local permits and approvals in connection
with the proposed development have been obtained.
(b) Subdivisions. RHS does not review or approve subdivisions. Each
site approved by RHS must meet the requirements of Sec. 1924.115, on a
site by site basis.
(c) Development related costs. (1) Applicant. The applicant is
responsible for all costs incurred before loan or grant closing
associated with planning, technical services, and actual construction.
These costs may be included in the loan or grant as authorized by RHS
regulations.
(2) Developer. The developer is responsible for payment of all costs
associated with development.
Sec. 1924.103 Scope.
This subpart provides supplemental requirements for Rural Rental
Housing (RRH) loans, Rural Cooperative Housing (RCH) loans, Farm Labor
Housing (LH) loans and grants, and Rural Housing Site (RHS) loans. It
also provides a
[[Page 170]]
site development standard, as indicated in exhibit B of FmHA Instruction
1924-C (available in any RHS field office), which supplements this
subpart to provide the minimum for the acceptability of development. All
of this subpart applies to Single Family Housing unless otherwise noted.
All of this subpart also applies to Multiple Family Housing except
Secs. 1924.115 and 1924.120, and any paragraph specifically designated
for Single Family Housing only. In addition, RHS will consult with
appropriate Federal, state, and local agencies, other organizations, and
individuals to implement the provisions of this subpart.
Sec. 1924.104 Definitions.
As used in this subpart:
Applicant. Any person, partnership, limited partnership, trust,
consumer cooperative, corporation, public body, or association that has
filed a preapplication, or in the case of RHS programs that do not
require a preapplication, an official application, with RHS in
anticipation of receiving or utilizing RHS financial assistance.
Community. A community includes cities, towns, boroughs, villages,
and unincorporated places which have the characteristics of incorporated
areas with support services such as shopping, post office, schools,
central sewer and water facilities, police and fire protection,
hospitals, medical and pharmaceutical facilities, etc., and are easily
identifiable as established concentrations of inhabited dwellings and
private and public buildings.
Developer. Any person, partnership, public body, or corporation who
is involved with the development of a site which will be financed by
RHS.
Development. The act of building structures and installing site
improvements on an individual dwelling site, a subdivision, or a
multiple family tract.
Multiple Family Housing. RHS RRH loans, RCH loans, LH loans and
grants, and RHS loans.
Single Family Housing. RHS Rural Housing loans for individuals for
construction of, repair of, or purchase of a dwelling to be occupied by
one household.
Site. A parcel of land proposed as a dwelling site, with or without
development.
Site approval official. The RHS making the determination that a site
meets the requirements in this subpart to be acceptable for site loans.
(See Sec. 1924.120.)
Street surfaces. Streets may be hard or all-weather surfaced.
(1) Hard surface--a street with a portland cement concrete,
asphaltic concrete, or bituminous wearing surface or other hard surfaces
which are acceptable and suitable to the local public body for use with
local climate, soil, gradient, and volume and character of traffic.
(2) All-weather--a street that can be used year-round with a minimum
of maintenance, such as the use of a grader and minor application of
surface material, and is acceptable and suitable to the local public
body for use with local climate, soil, gradient, and volume and
character of traffic.
Subdivision. Five or more contiguous (developed or undeveloped) lots
or building sites. Subdivisions may be new or existing.
Sec. 1924.105 Planning/performing development.
(a) General. Planning is an evaluation of specific development for a
specific site. Planning must take into consideration topography, soils,
climate, adjacent land use, environmental impacts, energy efficiency,
local economy, aesthetic and cultural values, public and private
services, housing and social conditions, and a degree of flexibility to
accommodate changing demands. All planning and performing development
work is the responsibility of the applicant or developer. All
development will be arranged and completed according to applicable
local, state, or Federal regulations including applicable health and
safety standards, environmental requirements, and requirements of this
subpart. When a public authority requires inspections prior to final
acceptance, written assurance by the responsible public authority of
compliance with local, city, county, state or other public codes,
regulations, and ordinances is required prior to final acceptance by
RHS.
[[Page 171]]
(1) [Reserved]
(2) Technical Services. [Reserved]
(i) [Reserved]
(ii) An applicant or developer for a Multiple Family Housing project
or a Single Family Housing site which requires technical services under
Sec. 1924.13(a), must contract for the technical services of an
architect, engineer, land surveyor, landscape architect, or site
planner, as appropriate, to provide complete planning, drawings, and
specifications. Such services may be provided by the applicant's or
developer's ``in house'' staff subject to RHS concurrence. Technical
services must be performed by professionals who are qualified and
authorized to provide such services in the state in which the project
would be developed. All technical services must be provided in
accordance with the requirements of professional registration or
licensing boards. At completion of all construction or completion of a
phase or phases of the total project, the persons providing technical
services under this section must notify the RHS field office in writing
that all work has been completed in substantial conformance with the
approved plans and specifications.
(iii) For developments not specifically required to have technical
services under paragraph (a)(2)(ii) of this section, such services may
be required by the state director when construction of streets or
installation of utilities is involved.
(3) Drawings, specifications, contract documents, and other
documentations. Adequate drawings and specifications must be provided by
the applicant or developer to RHS in sufficient detail to fully and
accurately describe the proposed development. Contract documents must be
prepared in accordance with Sec. 1924.6 or, in the case of more complex
construction, Sec. 1924.13.
(b) Single Family Housing. Proposals for development of individual
dwelling sites must meet the following requirements:
(1) Site development design requirements. Exhibit B (available in
any RHS field office) will be used as a minimum by applicants or
developers in preparing proposals and supporting documents for Single
Family Housing loans, in addition to specific requirements made in this
subpart.
(2) [Reserved]
(c) Multiple Family Housing. Exhibit C (available in any RHS office)
should be used as a guide by the applicant or developer in preparing a
proposal and supporting documents for multiple family housing projects.
Sec. 1924.106 Location.
(a) General. It is RHS's policy to promote compact community
development and not to approve sites located in floodplains, on
wetlands, or on important farmlands, unless there is no practical
alternative. Furthermore, RHS will not finance development on locations
that adversely affect properties which are listed or are eligible for
listing on the National Register of Historic Places, located within the
Coastal Barrier Resource System, or on a barrier island. (Environmental
requirements are found in 7 CFR part 1940, subpart G.) In order to be
eligible for RHS participation:
(1) The site must be located in an eligible area as defined in the
program regulations under which the development is being funded or
approved.
(2) The site must comply with the applicable environmental laws,
regulations, Executive Orders, and subpart G of part 1940.
(b) Single Family Housing. In addition to the general requirements
in paragraph (a) of this section, sites must provide a desirable, safe,
functional, convenient, and attractive living environment for the
residents.
(c) Multiple Family Housing. Multiple family housing projects shall
be located in accordance with the requirements in paragraph (r) of
Sec. 1944.215. Locating sites in less than desirable locations of the
community because they are in close proximity to undesirable influences
such as high activity railroad tracks; adjacent to or behind industrial
sites; bordering sites or structures which are not decent, safe, or
sanitary; or bordering sites which have potential environmental concerns
such as processing plants, etc., is not acceptable. Screening such sites
does not make them acceptable. Sites which are not an integral part of a
residential
[[Page 172]]
community and do not have a reasonable access, either by location or
terrain, to essential community facilities such as water, sewerage,
schools, shopping, employment opportunities, medical facilities, etc.,
are not acceptable.
Sec. 1924.107 Utilities.
All development under this subpart must have adequate, economic,
safe, energy efficient, dependable utilities with sufficient easements
for installation and maintenance.
(a) Water and wastewater disposal systems. (1) Single Family
Housing. If sites are served by central water or sewer systems, the
systems must meet the requirements of paragraphs (a)(2)(i) and (ii) of
this section. If sites have individual water or sewer systems, they must
meet the requirements of the state department of health or other
comparable reviewing and regulatory authority and the minimum
requirements of exhibit B (available in any RHS field office),
paragraphs V and VI. Sites in subdivisions of more than 25 dwelling
units on individual systems, or sites that do not meet the requirements
of exhibit B, paragraphs V and VI, must have state director concurrence.
(2) Multiple Family Housing. Proposals processed under this
paragraph shall be served by centrally owned and operated water and
wastewater disposal systems unless this is determined by RHS to be
economically or environmentally not feasible. All central systems,
whether they are public, community, or private, shall meet the design
requirements of the state department of health or other comparable
reviewing and regulatory authority. The regulatory authority will verify
in writing that the water and wastewater systems are in compliance with
the current provisions of the Safe Drinking Water Act and the Clean
Water Act, respectively.
(i) Sites which are not presently served by a central system, but
are scheduled for tie-in to the central system within 2 years, should
have all lines installed during the initial construction. Such sites
must have an approved interim water supply or wastewater disposal system
installed capable of satisfactory service until the scheduled tie-in
occurs.
(ii) In addition to written assurance of compliance with state and
local requirements, there must be assurance of continuous service at
reasonable rates for central water and wastewater disposal systems.
Public ownership is preferred whenever possible. In cases where interim
facilities are installed pending extension or construction of permanent
public services, the developer must assume responsibility for the
operation and maintenance of the interim facility or establish an entity
for its operation and maintenance which is acceptable to the local
governing body. If a system is not or will not be publicly owned and
operated, it must comply with one of the following:
(A) Be an organization that meets the ownership and operating
requirements for a water or wastewater disposal system that RHS could
finance under 7 CFR part 1942, subpart A or be dedicated to and accepted
by such an organization.
(B) Be an organization or individual that meets other acceptable
methods of ownership and operation as outlined in HUD Handbook 4075.12,
``Ownership and Organization of Central Water and Sewerage Systems.''
RHS should be assured that the organization has the right, in its sole
discretion, to enforce the obligation of the operator of the water and
sewerage systems to provide satisfactory continuous service at
reasonable rates.
(C) Be adequately controlled as to rates and services by a public
body (unit of Government or public services commission).
(iii) Multiple family developments of more than 25 units with
individual system must have national office concurrence.
(A) [Reserved]
(B) Supporting information for the proposed individual water
systems, covering the following points:
(1) In areas where difficulty is anticipated in developing an
acceptable water supply, the availability of a water supply will be
determined before closing the loan.
(2) Documentation must be provided that the quality of the supply
meets
[[Page 173]]
the chemical, physical, and bacteriological standards of the regulatory
authority having jurisdiction. The maximum contaminant levels of U.S.
EPA shall apply. Individual water systems must be tested for quantity
and bacteriological quality. Where problems are anticipated with
chemical quality, chemical tests may be required. Chemical tests would
be limited to analysis for the defects common to the area such as iron
and manganese, hardness, nitrates, pH, turbidity, color, or other
undesirable elements. Polluted or contaminated water supplies are
unacceptable. In all cases, assurance of a potable water supply before
loan closing is required.
(C) Supporting information for individual wastewater disposal
systems with subsurface discharge provided by a soil scientist,
geologist, soils engineer, or other person recognized by the local
regulatory authority. This data must include the following:
(1) Assurance of nonpollution of ground water. The local regulatory
authority having jurisdiction must be consulted to ensure that
installation of individual wastewater systems will not pollute ground
water sources or create other health hazards or otherwise violate State
water quality standards.
(2) Records of percolation tests. Guidance for performing these
tests is included in the EPA design manual, ``Onsite Wastewater
Treatment and Disposal Systems'' and the minimum RHS requirements are in
exhibit B, paragraph VI. (These may be waived by the state director when
the state has established other acceptable means for allowing onsite
disposal.)
(3) Determination of soil types and description. The assistance of
the SCS or other qualified persons should be obtained for soil type
determination and a copy of its recommendations included in the
documentation.
(4) Description of ground water elevations, showing seasonal
variations.
(5) Confirmation of space allowances. An accurate drawing to
indicate that there is adequate space available to satisfactorily locate
the individual water and wastewater disposal systems; likewise,
documented assurance of compliance with all local requirements.
Structures served by wastewater disposal systems with subsurface
discharge require larger sites than those structures served by another
type system.
(6) Description of exploratory pit observations, if available.
(D) Supporting information for individual wastewater disposal
systems with surface discharge covering the following points:
(1) Effluent standards issued by the appropriate regulatory agency
that controls the discharge of the proposed individual systems.
Assurance from this regulatory agency that the effluent standards will
not be exceeded by the individual systems being proposed must be
included.
(2) Program of maintenance, parts, and service available to the
system-owner for upkeep of the system.
(3) A plan for local inspection of the system by a responsible
agency with the authority to ensure compliance with health and safety
standards.
(b) Electric service. The power supplier will be consulted by the
applicant to assure that there is adequate service available to meet the
needs of the proposed site. Underground service is preferred.
(c) Gas service. Gas distribution facilities, if provided, will be
installed according to local requirements where adequate and dependable
gas service is available.
(d) Other utilities. Other utilities, if available, will be
installed according to local requirements.
Sec. 1924.108 Grading and drainage.
(a) General. Soil and geologic conditions must be suitable for the
type of construction proposed. In questionable or unsurveyed areas, the
applicant or developer will provide an engineering report with
supporting data sufficient to identify all pertinent subsurface
conditions which could adversely affect the structure and show proposed
solutions. Grading will promote drainage of surface water away from
buildings and foundations, minimize earth settlement and erosion, and
assure that drainage from adjacent properties onto the development or
from the development to adjacent properties does not
[[Page 174]]
create a health hazard or other undesirable conditions. Grading and
drainage will comply with exhibit B, paragraphs III and IV, of this
subpart.
(b) Cuts and fills. Development requiring extensive earthwork, cuts
and fills of 4 feet or more shall be designed by a professional
engineer. Where topography requires fills or extensive earthwork that
must support structures and building foundations, these must be
controlled fills designed, supervised, and tested by a qualified soils
engineer.
(c) Slope protection. All slopes must be protected from erosion by
planting or other means. Slopes may require temporary cover if exposed
for long periods during construction.
(d) Storm water systems. The design of storm water systems must
consider convenience and property protection both at the individual site
level and the drainage basin level. Storm water systems should be
compatible with the natural features of the site. In areas with
inadequate drainage systems, permanent or temporary storm water storage
shall be an integral part of the overall development plan. Design of
these facilities shall consider safety, appearance, and economical
maintenance operations.
Secs. 1924.109-1924.114 [Reserved]
Sec. 1924.115 Single Family Housing site evaluation.
(a) Site review. The site approval official will evaluate each site
(developed or undeveloped) to determine acceptance for the program.
Information on the site will be provided by the appraiser or site
approval official on a form provided by RHS and available in any RHS
field office.
(b) Site access. Each site must be contiguous to and have direct
access from:
(1) A hard surfaced or all weather road which is developed in full
compliance with public body requirements, is dedicated for public use,
and is being maintained by a public body or a home owners association
that has demonstrated its ability or can clearly demonstrate its ability
to maintain the street; or
(2) An all weather extended driveway which can serve no more than
two sites connecting to a hard surface or all weather street or road
that meets the requirements of paragraph (b)(1); or
(3) A hard surfaced street in a condominium or townhouse complex
which:
(i) Is owned in common by the members or a member association and is
maintained by a member association that has demonstrated its ability or
can clearly demonstrate its ability to maintain the street; and
(ii) Connects to a publicly owned and dedicated street or road.
(c) Exceptions to street requirements. A site not meeting the
conditions in paragraph (b) of this section will be acceptable if:
(1) The applicant is a builder for a conditional commitment (a loan
will not be approved until the site meets the conditions in paragraph
(b) of this section), or the builder posts an irrevocable performance
and payment bond (or similar acceptable assurance) that assures the site
approval official that the site will be developed to meet the conditions
in paragraph (b) of this section; or
(2) The site is recommended by the site approval official and
approved by the state director. A request for state director approval
must justify that it is in the best interest of both the government and
the applicant to approve the site.
(d) Site layout. (1) Sites shall be surveyed and platted. Permanent
markers shall be placed at all corners.
(2) Sites shall meet all requirements of state and local entities
and RHS.
(e) Covenants, conditions and restrictions. Sites in subdivisions
shall be protected by covenants, conditions, and restrictions (CC&Rs) to
preserve the character, value, and amenities of the residential
community and to avoid or mitigate potential environmental impacts
unless, an exception is granted by RHS after considering the suitability
of local ordinances, zoning, and other land use controls.
(1) CC&Rs shall be recorded in the public land records and
specifically referenced in each deed.
(2) The intent of the CC&Rs is to assure the developers that the
purchasers will use the land in conformance with
[[Page 175]]
the planned objectives for the community. In addition, the CC&Rs should
assure the purchasers that the land covered by the CC&Rs will be used as
planned and that other purchasers will use and maintain the land as
planned to prevent changes in the character of the neighborhood that
would adversely impact values or create a nuisance.
Secs. 1924.116-1924.118 [Reserved]
Sec. 1924.119 Site Loans.
Subdivisions approved under subpart G of part 1822 (FmHA Instruction
444.8) or exhibit F of subpart I of part 1944 (available in any RHS
field office), will meet the general requirements of this subpart to
insure lots in the subdivision will meet the requirements of
Sec. 1924.115.
Secs. 1924.120-1924.121 [Reserved]
Sec. 1924.122 Exception authority.
The Administrator of RHS may in individual cases, make an exception
to any requirement or provision of this subpart or address any omission
of this subpart which is not inconsistent with the authorizing statute
or other applicable law if the Administrator determines that application
of the requirement or provision would adversely affect the Government's
interest. The Administrator will exercise this authority upon the
written request of the state director or the appropriate program
assistant administrator. Requests for exceptions must be supported with
documentation to explain the adverse effect on the Government, proposed
alternative courses of action, and show how the adverse effect will be
eliminated or minimized if the exception is granted.
Secs. 1924.123-1924.149 [Reserved]
Sec. 1924.150 OMB Control Number.
The reporting requirements contained in this subpart have been
approved by the Office of Management and Budget (OMB) and have been
assigned OMB control number 0575-0164. Public reporting burden for this
collection of information is estimated to vary from 5 minutes to 10
minutes per response, with an average of .13 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 the Department of
Agriculture, Clearance Officer, OIRM, Ag Box 7630, Washington, DC 20250;
and to the Office of Management and Budget, Paperwork Reduction Project
(OMB #0575-0164), Washington, DC 20503.
Exhibits to Subpart C
Exhibit A [Reserved]
Exhibit B--Site Development Design Requirements
This Exhibit prescribes site development requirements to be used in
developing residential sites in all housing programs. These requirements
cover only those areas which involve health and safety concerns. They
are not intended to cover all aspects of site development. Applicants
and developers are expected to follow local practice, as a minimum, in
all areas of site development not addressed in this Exhibit. When State,
local, or other requirements are applicable in addition to FmHA or its
successor agency under Public Law 103-354's requirements, the most
stringent requirement shall apply.
Proper integration of the natural features of a site with the
manmade improvements is one of the most critical aspects of residential
development. Poor site planning in large scale subdivisions, rental
projects and individual sites, has resulted in a loss of valuable
private and public natural resources and caused economic burdens and
conditions unsuitable for healthy and pleasant living. Proper site
design can preserve desirable natural features of the site, minimize
expenses for streets and utilities, and provide a safe and pleasant
living environment.
Table of Contents
I. Streets
A. Types
1. Collector Streets
2. Local Streets
B. Design Features
1. Emergency Access
2. Cul-de-sacs
3. Intersection Angle
4. Intersection Sight Distance
C. Street Geometry
1. Definitions
2. Design Requirements
D. Construction
[[Page 176]]
II. Walks and Steps
A. Walks
B. Exterior Steps Not Contiguous to Dwelling or Building
1. Flight
2. Risers and Treads
3. Landings
4. Handrails
III. Grading
A. Compaction
B. Gradients
IV. Drainage
A. General
1. Collection and Disposal
2. Concentrated Flow
B. Drainage Design and Flood Hazard Exposure
1. Storm Frequences
2. Street Drainage
3. Foundation Drainage
C. Primary Storm Sewer
1. Pipe Size
2. Minimum Gradient
3. Easements
D. Drainage Swals and Gutters
1. Design
2. Easements
E. Downspouts
1. Outfall
2. Piped Drainage
F. Storm Inlets and Catch Basins
1. Openings
2. Access
G. Drywells
V. Water Supply Systems
A. Individual Water Systems
1. General
2. Well Location
3. Well Construction
4. Pumps and Equipment
5. Storage Tanks
B. Community Water Systems
1. Definition
2. Design
VI. Wastewater Disposal Systems
A. Individual Wastewater Disposal Systems
1. General
2. Percolation Tests
3. Subsurface Absorption Systems
B. Community Wastewater Disposal Systems
1. Definition
2. Design
I. Streets
A. Types--1. Collector streets. Collector streets are feeder streets
which carry traffic from local streets to the major system of arterial
streets and highways. They include the principal entrance streets of
residential developments and streets for circulation within such
developments.
2. Local streets. Local streets are minor streets used primarily for
access to abutting properties. These include drives serving multi-family
housing units.
B. Design Features--1. Emergency Access. Access for fire equipment
and other emergency vehicles shall be within 100 feet of main building
entrances.
2. Cul-de-sacs. Cul-de-sac streets shall have a turn-around with an
outside roadway diameter of at least 80 feet, and a right-of-way
diameter of at least 100 feet.
3. Intersection Angle. Streets shall be laid out to intersect as
nearly as possible at right angles and no street shall intersect any
other street at an angle less than 75 degrees. Curb radii shall be a
minimum of 20 feet for street intersections.
[GRAPHIC] [TIFF OMITTED] TC22SE91.000
4. Intersection Sight Distance. Adequate distances must be
maintained at intersections. Vehicles must be visible when within 75
feet of the centerlines of uncontrolled intersecting streets.
[[Page 177]]
C. Street Geometry--1. Definitions. The definitions in Sections
I.C.1.a and I.C.1.b. apply to the requirements in Section I.C.2.
a. Terrain Classifications.
(1) Ordinary--Slope less than 8%.
(2) Rolling--Slope range of 8% to 15%.
(3) Hilly--Slope greater than 15%.
b. Development Density (Number of Lots). (Land Area minus
Undeveloped Areas greater than Average Lot Size)
(1) Low--Less than 2 lots per acre.
(2) Medium--2 to 6.0 lots per acre.
(3) High-More than six lots per acre.
2. Design Requirements. Collector streets and local streets shall
comply with the requirements in Tables 1 and 2 unless an exception is
granted by the State Director. These requirements may need modification
in localities having winter icing conditions.
Table 1--Pavement Widths (feet)
----------------------------------------------------------------------------------------------------------------
Development density
Street type On-street parallel parking --------------------------------
Low Medium High
----------------------------------------------------------------------------------------------------------------
Collector.................................. Prohibited........................ 26 32 36
Collector.................................. No Restrictions................... 36 36 40
Local...................................... Prohibited........................ 18 18 20
Local...................................... Partial, One Side \1\............. 18 20 26
Local...................................... Partial, One Side \1\............. 22 26 32
Local...................................... Total, One Side \2\............... 22 26 26
Local...................................... Total, Both Sides \2\............. 26 32 36
----------------------------------------------------------------------------------------------------------------
(1) At least one parking space per dwelling is provided off-street.
(2) No parking spaces are provided off-street.
Table 2--Street Design (feet)
------------------------------------------------------------------------
Terrain
--------------------------------
Ordinary Rolling Hilly
------------------------------------------------------------------------
(1) Collector street:
(a) Minimum centerline radius of
curvature........................... 300 225 150
(b) Minimum sight distance........... 250 200 150
(c) Minimum right-of-way width....... 60 60 60
(2) Local Street:
(a) Minimum centerline radius of
curvature........................... 200 150 100
(b) Minimum sight distance........... 200 150 100
(c) Minimum right-of-way width \1\... 50 50 50
------------------------------------------------------------------------
(1) For cul-de-sac streets, the minimum right-of-way width is 40 feet.
D. Construction. Street configuration and wearing surfaces must
provide safe and economical access to all building sites. The design and
construction of the street shall be appropriate for all anticipated
traffic, climatic and soil conditions. Streets shall meet or exceed all
local, county, and State requirements.
II. Walks and Steps
A. Walks. Where walks are provided, they shall be located to assure
a minimum vertical clearance of 7 feet from all permanent or temporary
obstructions. Walks shall have a slip resistant surface.
B. Exterior Steps Not Contiguous to Dwelling or Building--1. Flight.
a. Single steps or flights of steps exceeding a vertical height of 12
feet shall not be accepted.
b. Steps shall be set back from an intersecting walk or drive a
minimum of 1 foot at a retaining wall and 2 feet at slopes.
2. Risers and Treads. a. Risers shall be a maximum of 6 inches, a
minimum of 3 inches and uniform throughout the flight.
b. Treads shall be a minimum of 12 inches and uniform throughout the
flight.
c. Treads shall have a slip resistant surface.
d. Treads shall be pitched appropriately to ensure drainage.
3. Landings. a. Minimum length shall equal 3 feet or walk width
whichever is greater.
b. A change in direction in a flight of stairs shall be accomplished
only at a landing or by a winder which has a tread width at a point 18
inches from the converging end, equal to the full straight stair tread
width.
4. Handrails. Stairways having a flight rise exceeding 30 inches
shall have a 36 inch high handrail located on one side for stairs 5 feet
or less in width and on both sides of stairways over 5 feet wide.
[[Page 178]]
III. Grading
A. Compaction--All fill for street or home construction shall have
compaction of not less than 95 percent maximum density, as determined by
proctor or other accepted testing methods. Maximum thickness of
compaction layers shall be 6 inches except where compaction equipment of
demonstrated capability is used under the direction of a qualified soils
engineer. Earth fill used to support a building foundation shall be a
controlled fill which is designed, supervised, and tested by a qualified
soils engineer in accordance with good practice.
B. Gradients. Grading design shall be arranged to assure safe and
convenient all-weather pedestrian and vehicular access to residential
buildings and to all other necessary site facilities. Site grading shall
be designed to establish building floor elevations and ground surface
grades which allow drainage of surface water away from buildings and
adjacent sites. Grading design shall conform with Tables 3 and 4.
Table 3--Access and Parking Gradients \1\
[In percent]
------------------------------------------------------------------------
Minimum Maximum
-------------------------------------------
Crown or Crown or
Center cross Center cross
line slope line slope
------------------------------------------------------------------------
Streets..................... 0.5 1.0 14.0 5.0
Street Intersections........ 0.5 1.0 \2\5.0 5.0
Driveways (\3\)............. .05 1.0 14.0 5.0
Sidewalks (\4\):
Concrete................ 0.5
Bituminous.............. 1.0
Building Entrances &
Short Walks............ 1.0 12.0 5.0
Main Walks.............. 0.5 10.0 5.0
Adjoining Steps......... 2.0
Landings................ 1.0
Stepped Ramp Treads..... 1.0 2.0 5.0
Parking..................... 0.5 5.0 5.0
------------------------------------------------------------------------
\1\ Approximate Equivalents .5%=\1/16\"ft., 1.0=\1/8\"ft., 2.0%=\1/
4\"ft., 5.0%=\5/8\"ft., 10.0%=1\1/4\"ft., 12.0%=1\1/2\"ft., 21%=2\5/
8\"ft.
\2\ Grades approaching intersections shall not exceed 5 percent for a
distance of not less than 100 feet from the centerline of the
intersection.
\3\ Vertical transitions shall percent contact of car undercarriage of
bumper with driveway surface.
\4\ Five percent maximum for major use by elderly tenants.
Table 4--Slope Gradients \1\
[In percent]
------------------------------------------------------------------------
Minimum Maximum
------------------------------------------------------------------------
Slope Away From Foundations:
Pervious Surfaces............................. \2\ 5.0 \3\ 21.0
Impervious Surfaces........................... \2\1.0 21.0
Pervious Surfaces:
Ground Frost Area............................. 2.0
Non-Ground Frost Areas........................ \4\1.0
Impervious Surfaces............................... 0.5
Slopes to be maintained by Machine................ \3\33.0
------------------------------------------------------------------------
\1\ See Table 3, footnote (1).
\2\ Minimum length of 10 feet or as limited by property lines.
\3\ Minimum length of 4 feet.
\4\ The minimum is 2.0% if the annual precipitation is more than 50
inches.
IV. Drainage
A. General--1. Collection and Disposal. Surface and subsurface
drainage systems shall be provided, as appropriate, for collection and
disposal of storm drainage and subsurface water. These systems shall
provide for the safety and convenience of occupants. They shall protect
dwellings, other improvements and useable lot areas from water damage,
flooding, and erosion.
2. Concentrated Flow. Where storm drainage flow is concentrated,
permanently maintained facilities shall be provided to prevent
significant erosion and other damage or flooding on site or on adjacent
properties.
B. Drainage Design and Flood Hazard Exposure--1. Storm Frequency.
Drainage facilities shall be designed for a 10 year storm frequency of
24-hour duration. Full potential development of all contributing areas
shall be used as a basis for this determination.
2. Street Drainage. Streets shall be useable during runoff
equivalent to a 10-year return
[[Page 179]]
frequency. Where drainage outfall is inadequate to prevent runoff
equivalent to a 10-year return frequency from ponding over 6 inches
deep, streets shall be made passable for local commonly used emergency
vehicles during runoff equivalent to a 25-year return frequency except
where an alternative access street not subject to such ponding is
available.
3. Foundation Drainage. Appropriate crawl space and foundation
drainage shall be provided for the removal of subsurface moisture.
C. Primary Storm Sewer--1. Pipe Size. Pipe size for the primary
storm sewer (any storm sewer or inlet lateral located in a street or
other public right-of-way) shall have an inside diameter based on design
analysis but not less than 15 inches. Where anticipated runoff from the
five-year return frequency rainfall will not fill a 15 inch pipe, a
primary storm sewer system usually is unnecessary.
2. Minimum Gradient. Minimum gradient shall be selected to provide
for self-scouring of the conduit under low-flow conditions and for
removal of sediments foreseeable from the drainage area.
3. Easements. Easements for storm sewers shall be a minimum of 10
feet in width.
D. Drainage Swals and Gutters--1. Design. Paved gutters shall have a
minimum grade of 0.5 percent. Paved gutters and unpaved drainage swales
shall have adequate depth and width to accommodate the maximum
foreseeable runoff without overflow. Swales and gutters shall be seeded,
sodded, sprigged or paved as appropriate to minimize potential erosion.
Side slopes shall be no steeper than 2:1.
2. Easements. Surface channels shall have an easement which is at
least the width of the channel plus 10 feet.
E. Downspouts--1. Outfall. Where downspouts are provided, they shall
either be connected to an available storm sewer, provided with suitable
splash blocks, or empty at acceptable locations onto paved areas so that
water drains away from buildings. Downspouts shall not connect to
sanitary sewers.
2. Piped Drainage. Piped roof drainage from buildings shall be
connected to available storm sewers or empty at locations where no
erosion or other damage will be caused.
F. Storm Inlets and Catch Basins--1. Openings. Where inlets are
accessible to small children, openings shall have one dimension limited
to 6 inch access. Inlet openings in paved areas shall be designed to
avoid entrapment or impedence of bicycles, baby carriages, etc.
2. Access. Access for cleaning shall be provided to all inlet boxes
and catch basins.
G. Drywells--Drywells for the disposal of water from foundation
drains, crawl spaces, and other small quantity sources shall be
permissible where the bottom of drywells project into strata of
undistributed porous soil at a level where the bottom of the drywell
will be above the ground water table at its highest seasonal elevation.
V. Water Supply Systems
A. Individual Water Systems--1. General. a. In this subpart, an
individual water system is a system which serves fewer customers or
connections than the lower threshold for community systems stated in the
Safe Drinking Water Act.
b. The system for an individual household should be capable of
delivering a sustained flow of 5 gpm. A system supplying water to
multiple household shall be designed by a Professional Engineer and have
sufficient capacity to serve estimated demand. A test of at least 4
hours duration shall be conducted to determine the yield and maximum
drawdown for all wells developed as part of an individual water system.
This test may be waived by the State Office based on the hydrologic and
geologic conditions in the area.
c. Water that requires continual or repetitive treatment to be safe
bacterially is not acceptable.
d. After installation, the system should be disinfected in
accordance with the recommendations of the health authority. In the
absence of a health authority, system cleaning and disinfection should
conform with the current EPA Manual of Individual Water Supply Systems.
e. Any method for individual water supply contained herein which is
not permitted by the local health authority having jurisdiction shall
not be used.
2. Well Location--a. A well located within the foundation walls of a
dwelling is not acceptable except in arctic and sub-arctic regions.
b. Water which comes from soil formation which may be polluted or
contaminated or is fissured or creviced or which is less than 20 feet
below the natural ground surface (subject to the requirements of the
local health authority) is not acceptable.
c. Individual water supply systems are not acceptable for individual
lots in areas where chemical soil poisoning is practiced if the
overburden of soil between the ground surface and the water bearing
strata is coarse-grained sand, gravel, or porous rock, or is creviced in
a manner which will permit the recharge water to carry the toxicants
into the zone of saturation.
d. Table 5 shall be used in establishing the minimum acceptable
distances between wells and sources of pollution located on either the
same or adjoining lots. These distances may be increased by either the
health authority having jurisdiction or the FmHA or its successor agency
under Public Law 103-354 State Director.
[[Page 180]]
Table 5--Distance From Source of Pollution
------------------------------------------------------------------------
Minimum
horizontal
Source of pollution distance
(feet)
------------------------------------------------------------------------
Property Line.............................................. 10
Septic Tank................................................ 50
Absorption field........................................... \1\100
Seepage pit................................................ \1\100
Absorption Bed............................................. \1\100
Sewer Lines w/Permanent Watertight Joints.................. 10
Other Sewer Lines.......................................... 50
Chemically Poisoned Soil................................... \1\100
Dry Well................................................... 50
Other...................................................... (\2\)--
------------------------------------------------------------------------
Notes:
\1\ The horizontal distance between the sewage absorption system and the
well, or the chemically poisoned soil and the well, may be reduced to
50 feet only where the ground surface is effectively separated from
the water bearing formation by an extensive, continuous impervious
strata of clay, hard-pan, or rock. The well shall be constructed so as
to prevent the entrance of surface water and contaminants.
\2\ Other sources of pollution could be fuel oil or gasoline storage
tanks, farm yards or chemical storage tanks, etc. The well should be
separated from these sources of pollution a distance recommended by
the local health authority.
3. Well Construction--a. The well shall be constructed to allow the
pump to be easily placed and to function properly.
b. All drilled wells shall be provided with a sound, durable and
watertight casing capable of sustaining the loads imposed. The casing
shall extend from a point several feet below the water level at drawdown
or from an impervious strata above the water level, to 12 inches above
either the ground surface or the pump room floor. The casing shall be
sealed at the upper opening.
c. Bored wells shall be lined with concrete, vitrified clay, or
equivalent materials.
d. The space between the casing or liner and the wall of the well
hole shall be sealed with cement grout.
e. The well casing shall not be used to convey water except under
positive pressure. A separate drop pipe shall be used for suction line.
f. When sand or silt is encountered in the water-bearing formation,
the well shall either be gravel packed, or a removable strainer or
screen shall be installed.
g. The surface of the ground above and around the well shall be
graded to drain surface water away from the well.
h. Openings in the casing, cap, or concrete cover for the entrance
of pipes, pump or manholes, shall be made watertight.
i. If a breather is provided, it shall extend above the highest
level to which surface water may rise. The breather shall be watertight,
and the open end shall be screened and positioned to prevent entry of
dust, insects and foregin objects.
4. Pumps and Equipment--a. Pumps shall be capable of delivering the
volume of water required herein under normal operating pressures within
the living unit. Well pump capacity shall not exceed the output of the
well.
b. Pumps and equipment shall be mounted to be free of objectionable
noises, vibrations, flooding, pollution, and freezing.
c. Suction lines shall terminate below maximum drawdown of the water
level in the well.
d. Horizontal segments of suction line shall be placed below the
frost line in a sealed casing pipe or in at least 4 inches of concrete.
The distance from suction line to sources of pollution shall be not less
than shown in Table 5.
5. Storage Tanks--a. A system for an individual household shall
include a pressure tank having a minimum capacity of 42-gallons.
However, prepressured tanks and other pressurizing devices are
acceptable provided that delivery between pump cycles equals or exceeds
that of a 42 gallon tank. Storage capacity on a system for multiple
households must be sufficient to meet estimated peak demands.
b. Tanks shall be equipped with a clean-out plug at the lowest
point, and if pressurized, a suitable pressure relief valve.
c. When additional storage is necessary because the well yield will
not meet the system peak demands, all nonpressurized intermediate tanks
shall be designed and installed in a manner that will prevent the
pollution or degradation of the water supply.
B. Community Water Systems--1. Definition. In this subpart, a
community water system is a system which meets the definition in the
Safe Drinking Water Act.
2. Design. A community water system shall be designed by a
qualified, professional engineer licensed in the state in which the
water system will be located. Community water systems shall comply with
all Federal and State laws.
VI. Wastewater Disposal Systems
Each dwelling shall be provided with a water-carried system adequate
to dispose of domestic wastes in a manner which will not create a
nuisance, contaminate any existing or prospective water source or water
supply, or in any way endanger the public health.
A. Individual Wastewater Disposal Systems--1. General. a. In this
subpart, an individual wastewater disposal system is a sewage disposal
system which serves only 1 dwelling unit.
b. When service from an acceptable public or community system is not
available or feasible, and ground water and soil conditions are
acceptable, an individual system may be used.
c. Each individual wastewater disposal system shall consist of a
house sewer, a
[[Page 181]]
pretreatment unit (e.g., septic tank, individual package treatment
plant), and acceptable absorption system (subsurface absorption field,
seepage pit(s), or subsurface absorption bed). The system shall be
designed to receive all sanitary sewage (bathrooms, kitchen and laundry)
from the dwelling, but not footing or roof drainage. It shall be
designed so that gases generated anywhere in the system can easily flow
back to the building sewer stack.
2. Percolation Tests--a. Percolation tests are required unless a
waiver is granted by the National Office. Waivers may be granted on a
statewide or local basis in cases where an onsite evaluation of soils
would be performed by a qualified soil technician, soil scientist, or
engineer. Requests for waivers must describe the qualifications of the
person evaluating the soils and discuss the criteria to be used in
designing the absorption system.
b. In uniform soils one percolation test shall be made within each
area proposed for an absorption system. If significant soil variations
are encountered or expected, additional tests shall be made for each
variation.
c. Percolation tests shall be conducted in accordance with good
practice. Guidance for performing these tests is included in the EPA
design manual, ``Onsite Wastewater Treatment and Disposal Systems.''
3. Subsurface Absorption System--a. Where percolation rates, soil
characteristics and site conditions are acceptable, an absorption system
may be installed in an area which is well drained, has an acceptable
slope, and is acceptable for excavation.
b. Soils with percolation rates less than 1 minute per inch may be
used if the soil is replaced with a layer of loamy or fine sand at least
2 feet thick. (Refer to the EPA Design Manual, ``Onsite Wastewater
Treatment and Disposal System''.)
c. Soils with percolation rates greater than 60 minutes per inch are
not acceptable for subsurface wastewater disposal systems.
B. Community Wastewater Disposal Systems--1. Definition. In this
subpart, a community wastewater disposal system is any wastewater
disposal system which serves more than 1 dwelling unit.
2. Design. A community wastewater disposal system shall be designed
by a qualified, professional engineer licensed in the state in which the
system will be located.
[52 FR 19284, May 22, 1987]
Exhibit C--Checklist of Visual Exhibits and Documentation for RRH, RCH,
and LH Proposals
U.S. Department of Agriculture
Farmers Home Administration or its successor agency under Public Law
103-354
This Exhibit lists visual exhibits and documentation necessary for
FmHA or its successor agency under Public Law 103-354 to properly
evaluate proposed development. Intermediate consultation by the
applicant, builder-developer and others hereafter referred to as the
sponsor with the FmHA or its successor agency under Public Law 103-354
District or State Offices should be as frequent as necessary to reduce
chances of misunderstandings and limit the amount of non-productive time
and expense for all parties concerned.
I. Preapplication Submission Documents: The sponsor will submit the
following information to the District Director to determine feasibility
of the project and general conformance with FmHA or its successor agency
under Public Law 103-354 policy:
A. Form 1940-20, ``Request for Environmental Information.'' Portions
of the form must be completed when the submission contains more than 4
dwelling units and the entire form must be completed when the submission
contains more than 25 dwelling units. The form and guidance concerning
assembly of the information is available at any FmHA or its successor
agency under Public Law 103-354 office.
B. Location Map. A general site location map of the area indicating
the adjacent land zoning and uses, the present and future access roads
to the site as well as the proximity to shopping, schools, churches, and
major transportation facilities with note of traffic volumes. If a
satisfactory map of the locality is not available, a clear and
preferably scaled rough sketch map that provides the required
information will be sufficient.
C. Property Survey Map. A current survey map of the project site
showing the boundaries as well as all existing known features
specifically including utilities, easements, access roads, floodplains,
drainageways, rock outcroppings and wooded areas or specimen trees. If a
current survey does not exist, the most accurate document which is
available will be submitted.
D. Soils Map and Report. A complete soils map and report, including
``site specific'' interpretations and recommendations, from the local or
county representative of the
[[Page 182]]
U.S. Department of Agriculture, Soil Conservation Service (SCS) Office
will be included with the location and feasibility submission. A
determination of whether or not any lands described in USDA Regulation
9500-3 are impacted by the proposed development should also be included.
The local SCS office may provide recommendations for the development of
suitable drainage and landscaping plans later in the planning process.
E. Market survey. A market survey will be submitted in accordance
with the requirements of the respective loan program as indicated in
part 1944, subparts D and E of this chapter.
F. Request for Exceptions. Any need for State or National Office
exception(s) should be identified at this stage in the processing.
Appropriate exception(s) should be requested and obtained before
proceeding to the preliminary submission.
G. Other. The applicant will need to submit any additional
information that may be needed as indicated in subpart D or Exhibit A-7
of subpart E of part 1944 of this chapter. This may include but is not
limited to:
1. Schematic design drawings showing the proposed plot plan, typical
unit plans, and elevations. If available, the proposed preliminary
drawings and specifications may be submitted. This would be of
assistance if it is determined that the loan must receive National
Office authorization.
2. Type of construction.
3. The total number of living units and the number of each type of
living unit proposed.
4. Type of utilities such as water, sewer, gas, and electricity and
whether each is public, community, or individually owned.
II. Application Submission Documents: After it is determined by FmHA
or its successor agency under Public Law 103-354 that the project is
feasible and the location conforms with the intent of the funding
program, the sponsor will submit the following information to the
District Director in addition to those materials submitted previously.
A. Property Survey. A survey (where 1 inch represents no more than
100 feet) of the property lot showing the exact boundaries and corners
of the property accompanied by a written description of said boundaries.
Also, locations of predominant features such as utilities, easements,
access points, floodplains, drainageways, rock outcroppings and wooded
areas or specimen trees affecting the proposed development must be
included. This document shall bear the seal of a professional licensed
to provide surveying services in the State in which the project will be
located. This survey could be a part of item D below.
B. Topographic Map. An accurate topographic map showing existing and
proposed contours with a scale compatible with the size of the project.
The site shall be shown at a reasonable scale with 5-foot contour
intervals. Where the site is unusually level or steep, the contour
intervals may be varied accordingly.
C. Preliminary Site Plan. A line drawing, to scale, showing proposed
street locations with profiles and widths, lot layouts, major
drainageways, and other development planned. Preliminary sections and
details shall be provided for the street construction, curbs and
gutters, drainageways, and other physical improvements.
D. Preliminary Dwelling Drawings and Specifications. Drawings of the
dwelling units, preliminary floor plans and specifications, elevations
and sample site plans showing the placement of the individual buildings
should be submitted.
E. Statement of Planning and Zoning Compliance. Local, county and
State approvals as applicable. If change of zoning or variance is
required, the status of the variance or change of zoning shall be
documented.
F. Technical Service Contracts. Executed contracts for the
professional services of an architect, engineer, land surveyor,
landscape architect, site planner and/or soil engineer will be submitted
as appropriate for the planning of the proposed development.
G. Utility Approvals. Statements of approval and feasibility for
utility systems as follows:
1. Verification of adequate capacity and approval to tie-in with
local existing water, wastewater disposal, electric, telephone, and
other utility systems, as appropriate.
2. Tentative approval of local or State health authority for
individual water and/or wastewater disposal systems when it is clear
that central systems are unfeasible at this time. Use
Sec. 1924.108(a)(5) of this subpart when preparing information required.
H. Facility Acceptance. Evidence that the appropriate public body is
willing to accept and maintain streets, common areas, lighting, fire
hydrants, sidewalks, drainageways, and utilities, as appropriate, when
dedicated to said body.
I. Preliminary Specifications. Outline specifications describing all
the proposed materials to be used and how they are to be applied. These
are only the materials used in the land development and construction of
the streets, drainage, and utility work.
J. Incremental Slopes Plan. If areas of common slope are not
identified elsewhere in adequate detail, this information should be
provided in a separate plan.
K. Preliminary Grading Plan. This plan will indicate degree of work
required to provide positive drainage of all building sites and control
measures to be taken to eliminate soil erosion. Dwelling locations may
be shown if they can be predetermined.
L. Other. The applicant will need to submit any additional
information that may be needed as indicated in the respective loan
program regulations as indicated in part
[[Page 183]]
1944, subparts D and E and part 1822, subpart F of this chapter (FmHA or
its successor agency under Public Law 103-354 Instruction 444.7). This
may include but not be limited to:
1. A detailed trade-item cost breakdown of the project for such
items as land and right-of-way, building construction, equipment,
utility connections, architectural/engineering and legal fees, and both
on- and off-site improvements. The cost breakdown also should show
separately the items not included in the loan, such as furnishings and
equipment. This trade-item cost breakdown should be updated just prior
to loan approval.
2. Information on the method of construction, on the proposed
contractor if a construction contract is to be negotiated and on the
architectural, engineering, and legal services to be provided.
3. For all projects containing over four units the applicant will
submit an Affirmative Fair Housing Marketing Plan for approval by FmHA
or its successor agency under Public Law 103-354 in accordance with
Sec. 1901.203 of subpart E to part 1901 of this chapter. The Affirmative
Fair Housing Marketing Plan must be prepared in a complete, meaningful,
responsive and detailed manner.
4. A description and justification of any related facilities
(including but not limited to workshops, community buildings, recreation
center, central cooking and dining facilities, or other similar
facilities to meet essential needs) to be financed wholly or in part
with loan funds.
III. Technical Documents Necessary for the Obligation of Funds. All
decisions regarding the conceptual design of the proposed project should
be made prior to this submission. This effort is mainly to demonstrate
that those agreed upon concepts have been transformed into construction
documents and the necessary approvals have been granted. All items
requiring revision or more detailed information as determined by the
review of the preliminary submission will be resolved before the sponsor
prepares the final submission. All documents shall be executed in a
professional manner and shall carry the appropriate designation
attesting to the professional qualifications of the architect, engineer,
land surveyor or site planner. All documents will be accurately drawn at
an appropriate scale.
[52 FR 19284, May 22, 1987, as amended at 56 FR 2202, Jan. 22, 1991]
Subparts D-E--[Reserved]
Subpart F--Complaints and Compensation for Construction Defects
Source: 56 FR 40241, Aug. 14, 1991, unless otherwise noted.
Sec. 1924.251 Purpose.
This subpart contains policies and procedures for receiving and
resolving complaints concerning the construction of dwellings and
construction, installation and set-up of manufactured homes (herein
called ``units''), financed by the Farmers Home Administration or its
successor agency under Public Law 103-354 (FmHA or its successor agency
under Public Law 103-354), and for compensating borrowers for structural
defects under section 509(c) of the Housing Act of 1949, as amended.
Provisions of this subpart do not apply to dwellings financed with
guaranteed section 502 loans.
Sec. 1924.252 Policy.
FmHA or its successor agency under Public Law 103-354 is responsible
for receiving and resolving all complaints concerning the construction
of dwellings and the construction, installation and set-up of units
financed by FmHA or its successor agency under Public Law 103-354. FmHA
or its successor agency under Public Law 103-354 must determine whether
defects are structural or non-structural. If the defect is structural
and is covered by the builder's/dealer-contractor's (the ``contractor'')
warranty, the contractor is expected to correct the defect. If the
contractor cannot or will not correct the defect, the costs of
correcting the defect may be paid by the Government, or the borrower may
be compensated for correcting the defect, under the provisions of this
subpart. If the defect is non-structural but is covered under the
provisions of the contractor's warranty or independent home warranty,
the contractor is still expected to correct the defect. FmHA or its
successor
[[Page 184]]
agency under Public Law 103-354 will assist the borrower in obtaining
assistance through the independent home warranty company's and/or
manufacturer's complaint resolution process. However, if the contractor
cannot or will not correct a non-structural defect covered under the
provisions of the contractor's warranty, the Government will not pay the
costs for correcting the defect, nor will the borrower be compensated
for doing so.
Sec. 1924.253 Definitions.
As used in this subpart, the following definitions apply:
(a) Newly constructed dwelling. One which:
(1) Is financed with a section 502 insured loan;
(2) Was constructed substantially or wholly under the contract
method, or under a conditional commitment, or, as to only work performed
by a contractor or covered by a manufacturer's warranty, under the
mutual self-help program;
(3) Was not more than one year old and not previously occupied as a
residence at the time financial assistance was granted unless FmHA or
its successor agency under Public Law 103-354 has extended the
conditional commitment issued on a newly constructed dwelling in
accordance with subpart A of part 1944 of this chapter; and
(4) Had the required construction inspections performed by FmHA or
its successor agency under Public Law 103-354, the Department of Housing
and Urban Development (HUD), or the Veterans Administration (VA).
(b) Newly constructed manufactured home (unit). One which:
(1) Is financed with a section 502 insured loan;
(2) Was not more than one year old and not previously occupied as a
residence at the time financial assistance was granted; and
(3) Is built to the Federal Manufactured Home Construction and
Safety Standards (FMHCSS) and is certified by an affixed label as shown
in Exhibit F of subpart A of part 1944 of this chapter.
(c) Non-structural defect. A construction defect which does not
affect the overall useful life, habitability, or structural integrity of
the dwelling or unit. Some non-structural defects may be covered under
the contractor's warranty. Examples of non-structural defects include,
but are not limited to:
(1) Cracks attributed to normal curing or settlement.
(2) Cosmetic defects in cabinets, woodwork, floorcovering,
wallcovering, ornamental trim, etc.
(3) Improper or incomplete seeding or sodding of yard, or failure of
trees, shrubs, grass and other landscaping items to thrive.
(4) Improper grading of yard, unless the grade is causing damage
which may lead to a structural defect.
(d) Structural defect. A defect in the dwelling or unit,
installation or set-up of a unit, or a related facility or a deficiency
in the site or site development which directly and significantly reduces
the useful life, habitability, or integrity of the dwelling or unit. The
defect may be due to faulty material, poor workmanship, or latent causes
that existed when the dwelling or unit was constructed. The term
includes, but is not limited to:
(1) Structural failures which directly and significantly affect the
basic integrity of the dwelling or unit such as in the foundation,
footings, basement walls, slabs, floors, framing, walls, ceiling, or
roof.
(2) Major deficiencies in the utility components of the dwelling or
unit or site such as faulty wiring, or failure of sewage disposal or
water supply systems located on the property securing the loan caused by
faulty materials or improper installation.
(3) Serious defects in or improper installation of heating systems
or central air conditioning.
(4) Defects in or improper installation of safety and security
devices, such as windows, external doors, locks, smoke detectors,
railings, etc., as well as failure to provide or properly install
devices to aid occupancy of dwellings by handicapped individuals, where
required.
(5) Defects in or improper installation of protective materials,
such as insulation, siding, roofing material, exterior paint, etc.
[[Page 185]]
Secs. 1924.254--1924.257 [Reserved]
Sec. 1924.258 Notification of borrowers.
FmHA or its successor agency under Public Law 103-354 will notify by
letter all borrowers who receive Section 502 RH financial assistance for
a newly constructed dwelling or unit of the provisions of this subpart.
Subsequent owners of eligible dwellings will also be notified in
accordance with this section. Borrowers will be notified within 30 days
after the loan is closed, or within 30 days after final inspection,
whichever is later. This notification will contain information
concerning time frames for filing claims under this subpart. FmHA or its
successor agency under Public Law 103-354 will also notify and advise
borrowers of the construction defects procedure at any time construction
defects are apparent within the statutory time frame and favorable
results cannot be obtained from the contractor. This notification will
be documented in the borrower's case file.
Sec. 1924.259 Handling dwelling construction complaints.
This section describes the procedure for handling construction
defect complaints.
(a) Each borrower who complains about construction defects will be
requested to make a written complaint using a format specified by FmHA
or its successor agency under Public Law 103-354 (available in any FmHA
or its successor agency under Public Law 103-354 office). All known
defects will be listed. An oral complaint may be accepted if making a
written complaint will impose a hardship on the borrower. If an oral
complaint is made, FmHA or its successor agency under Public Law 103-354
will notify the contractor on behalf of the borrower.
(b) The borrower will be informed that if, after 30 calendar days,
the defects have not been corrected or other satisfactory arrangements
made by the contractor, the borrower should notify FmHA or its successor
agency under Public Law 103-354 using a format specified by FmHA or its
successor agency under Public Law 103-354 (available in any FmHA or its
successor agency under Public Law 103-354 office).
(c) FmHA or its successor agency under Public Law 103-354 will
advise the contractor in writing of the borrower's complaint, the time
and date of planned inspection by FmHA or its successor agency under
Public Law 103-354 personnel, and request that the contractor accompany
the inspector and borrower on a joint inspection of the property in an
attempt to resolve the complaint.
(d) If, prior to the planned inspection, the contractor informs FmHA
or its successor agency under Public Law 103-354 that the alleged
defect(s) has been or will be corrected within 30 calendar days, FmHA or
its successor agency under Public Law 103-354 will notify the borrower.
(e) If the case is not resolved as outlined in paragraph (d) of this
section, FmHA or its successor agency under Public Law 103-354 will:
(1) [Reserved]
(2) Notify the borrower, contractor and manufacturer, if applicable,
in writing of FmHA or its successor agency under Public Law 103-354's
findings and who has been determined responsible for correcting the
defect(s).
(i) If the defects are determined to be covered under the
contractor's warranty, FmHA or its successor agency under Public Law
103-354 will advise the contractor that the repairs must be completed
within 30 calendar days or other time period agreed to by the borrower,
the contractor, and FmHA or its successor agency under Public Law 103-
354.
(ii) FmHA or its successor agency under Public Law 103-354 will
further advise the contractor and/or manufacturer that if the defect(s)
are not corrected, the Government will consider compensating the
borrower for the costs of correcting the defect(s). In such a case, the
contractor and/or manufacturer may be liable for costs paid by the
Government and may be subject to suspension and/or debarment pursuant to
subpart M of part 1940 of this chapter (available in any FmHA or its
successor agency under Public Law 103-354 office). Even if the
manufacturer is determined to be solely responsible for the defect, the
contractor will still be held liable for correction of the defect.
[[Page 186]]
(3) Should a contractor refuse to correct a defect after being
officially requested in writing to do so, FmHA or its successor agency
under Public Law 103-354 will promptly institute formal suspension and
debarment proceedings against the contractor (as a company and as
individual(s)) in accordance with subpart M of part 1940 of this chapter
(available in any FmHA or its successor agency under Public Law 103-354
office). The contractor's failure to reply to official correspondence or
inability to correct a defect constitutes noncompliance.
(4) If the contractor is willing to correct legitimate defects but
the borrower refuses to permit this, FmHA or its successor agency under
Public Law 103-354 will document the facts in the borrower's case file.
If the borrower chooses to file a claim for compensation for these
defects, the circumstances of the borrower's refusal will be reviewed
and may be sufficient grounds for disapproval of the claim.
(g) [Reserved]
(h) [Reserved]
Sec. 1924.260 Handling manufactured housing (unit) construction complaints.
When a borrower who has purchased a manufactured home (or ``unit'')
complains about construction defects, the borrower will be instructed to
first contact the dealer-contractor from whom the unit was purchased.
FmHA or its successor agency under Public Law 103-354 will assist the
borrower in obtaining assistance through the dealer-contractor's and/or
HUD's complaint resolution process. If the dealer-contractor cannot
resolve the complaint, the borrower should contact the appropriate State
Administrative Agency (SAA) or HUD. If the complaint resolution process
does not result in the correction of the defect, the borrower's
complaint will be handled in accordance with Sec. 1924.259 of this
subpart.
Sec. 1924.261 Handling complaints involving dwellings covered by an independent or insured home warranty plan.
Borrowers with complaints about dwellings covered by an independent
or insured home warranty plan will be instructed to first contact the
warranty company and follow the complaint resolution process for that
company, with the assistance of FmHA or its successor agency under
Public Law 103-354, if needed. If the complaint is not resolved in this
manner, it will be handled under Sec. 1924.259 of this subpart.
Sec. 1924.262 Handling complaints involving dwellings constructed by the self-help method.
When a borrower whose dwelling was constructed by the self-help
method complains about construction defects, FmHA or its successor
agency under Public Law 103-354 will determine whether the defect is the
result of work performed by a contractor or work performed by the
borrower under the guidance of the self-help group. Defects which are
determined to be the responsibility of a contractor will be handled in
accordance with Sec. 1924.259 of this subpart. Defects determined to be
the result of work performed by the borrower are not eligible for
compensation under this subpart.
Secs. 1924.263--1924.264 [Reserved]
Sec. 1924.265 Eligibility for compensation for construction defects.
(a) To be eligible for assistance under this subpart, the following
criteria must be met:
(1) The approval official, in consultation with the State Architect/
Engineer and/or Construction Inspector, must determine that:
(i) The construction is defective in workmanship, material or
equipment, or
(ii) The dwelling or unit has not been built in substantial
compliance with the approved drawings and specifications, or
(iii) The dwelling or unit does not comply with the FmHA or its
successor agency under Public Law 103-354 construction standards in
effect at the time the loan was approved or the conditional commitment
was issued, or
(iv) The property does not meet code requirements.
(2) The claim must be for one or more of the following:
(i) To pay for repairs;
(ii) To compensate the owner for repairs;
[[Page 187]]
(iii) To pay emergency living or other expenses resulting from the
defect; or
(iv) To acquire title to property.
(3) The dwelling or unit must be newly constructed as defined in
Sec. 1924.253 of this subpart and financed with an insured Section 502
RH loan.
(4) The claim seeking compensation from FmHA or its successor agency
under Public Law 103-354 must be filed with FmHA or its successor agency
under Public Law 103-354 within 18 months after the date financial
assistance is granted. Defects for which claims are filed beyond the 18-
month period must have been documented by FmHA or its successor agency
under Public Law 103-354 in the borrower's case file or on the form
designated by FmHA or its successor agency under Public Law 103-354
(available in any FmHA or its successor agency under Public Law 103-354
office), prior to expiration of the 18-month period. For loans made to
construct a new dwelling or erect a new manufactured housing unit,
financial assistance is granted on the date of final construction
inspection and acceptance by the borrower and FmHA or its successor
agency under Public Law 103-354. Claims must be submitted by completing
the designated form (available in any FmHA or its successor agency under
Public Law 103-354 office).
(5) Any obligation of the contractor to correct the defect(s) under
a contractor's warranty must have expired, or the contractor is
responsible for making corrections under the contractor's warranty but
is unable or unwilling to do so.
(b) Subsequent owners of eligible dwellings or units who are also
Section 502 borrowers may be eligible to receive compensation for
construction defects. These owners will be notified in accordance with
Sec. 1924.258 of this subpart. However, the claim for compensation must
be filed in accordance with paragraph (a)(4) of this section within the
18-month period established for the original rural housing (RH)
borrower.
Sec. 1924.266 Purposes for which claims may be approved.
(a) Eligible purposes. A claim may be approved to:
(1) Pay, or reimburse the borrower for costs already paid, to repair
major structural defects which are completed in accordance with plans
and specifications approved by FmHA or its successor agency under Public
Law 103-354. Repairs must be made by a reputable licensed contractor and
a warranty covering the repairs will be issued by the contractor when
the repairs are completed, as prescribed in Subpart A of this part.
Payment will be based on actual cost of the development and the borrower
must provide evidence to reasonably establish the development cost.
Workmanship and materials used in repairs must be consistent with the
level of quality specified in the original dwelling or unit
specifications and/or comparable to the items being replaced. Payment
may be made:
(i) to cover damages which are a direct result of the defect to
permanent enhancements made, such as landscaping, completion of
unfinished living spaces, etc., of the dwelling or unit, installation or
set-up of the unit, or related facilities, and
(ii) for costs approved by FmHA or its successor agency under Public
Law 103-354 for professional reports by engineers, architects or others
needed to determine cause of or means to repair the defect.
(2) Reimburse the borrower for funds expended for emergency repairs.
Emergency repairs are those repairs necessary to preserve the integrity
of the structure, to prevent damage or further damage to personal
property or fixtures in the dwelling or unit and related facilities, or
to prevent or eliminate immediate health hazards. Receipts or other
evidence of borrower's expenditures must be provided.
(3) Acquire title to the property by the Government and, when
appropriate, compensate the claimant for any loss of borrower
contribution at the time the loan was closed. Conveyance of properties
under this section will be handled in accordance with subpart A of part
1955 of this chapter.
[[Page 188]]
(i) Before FmHA or its successor agency under Public Law 103-354
accepts a conveyance, the borrower must attempt to sell the dwelling or
unit in accordance with subpart C of part 1965 of this chapter, if the
dwelling or unit is considered decent, safe and sanitary as prescribed
in subpart C of part 1955 of this chapter. If the property is sold, FmHA
or its successor agency under Public Law 103-354 will:
(A) Pay the borrower's relocation expenses, including temporary
living expenses as prescribed in paragraph (a)(4) of this section, until
another suitable property can be located;
(B) Pay related sales expenses, as prescribed in subpart C of part
1965 of this chapter, if the property is sold for less than the debt
against it;
(C) Release the borrower from personal liability for the remaining
FmHA or its successor agency under Public Law 103-354 debt; and
(D) Process an application for a new RH loan if the borrower so
desires and is still eligible for FmHA or its successor agency under
Public Law 103-354 assistance.
(ii) If the dwelling or unit is not considered decent, safe and
sanitary as prescribed in subpart C of part 1955 of this chapter, FmHA
or its successor agency under Public Law 103-354 should accept a
voluntary conveyance of the property under the provisions of subpart A
of part 1955 of this chapter. Compensation for properties taken into
inventory under this paragraph may not exceed the difference between the
present market value of the security as established by the appraisal
when the loan was made and the amount of the FmHA or its successor
agency under Public Law 103-354 loan and any prior liens.
(iii) A borrower contribution which may be compensated for under
this paragraph may be such things as:
(A) A borrower's land or cash contribution,
(B) Development work done by the borrower under the self-help
program or borrower method of construction, the cost of which was not
included in the loan funds,
(C) Attorney fees, abstract costs or title insurance costs actually
paid by the claimant in connection with closing the loan.
(4) Pay or reimburse the borrower for temporary living expenses,
miscellaneous expenses, storage of household goods and moving expenses
incurred as a result of the defect.
(i) Payment under this paragraph may be made under either of the
following circumstances:
(A) The property is acquired by the Government in accordance with
subpart A of part 1955 of this chapter and FmHA or its successor agency
under Public Law 103-354 determines that the dwelling is not habitable
and the severity of the defect(s) prevents the property from being
repaired and made suitable as a permanent residence for the borrower.
(B) The property is not acquired by the Government but FmHA or its
successor agency under Public Law 103-354 determines that the dwelling
is not habitable or must be vacated in order to repair the defects.
(ii) Claims for compensation under paragraph (a)(4) of this section
are limited as follows:
(A) Compensation may be granted for temporary living expenses for
not more than 45 calendar days per claim unless a longer period is
authorized by FmHA or its successor agency under Public Law 103-354.
Compensation will be paid for actual cost to the claimant not to exceed
the Government per diem rate for the area where the borrower's dwelling
or unit is located. Reimbursement may be claimed for expenses such as
food, lodging, laundering, etc., which would not have been incurred had
the claimant remained in the house.
(B) Compensation may be granted for actual miscellaneous expenses
not to exceed $500 to cover such items as utility connect and disconnect
fees.
(C) Compensation may be granted for moving and storage expenses not
to exceed $5,000 unless authorized by FmHA or its successor agency under
Public Law 103-354 and not to exceed the actual cost of moving the
claimant household with personal belongings a distance of not more than
50 miles
[[Page 189]]
from the original residence. Compensation for storage expenses may not
exceed that amount paid to store household furnishings for 45 days.
(D) A strict accounting of the use of such funds must be maintained
by the borrower and will be verified by FmHA or its successor agency
under Public Law 103-354.
(5) Compensate the claimant for reasonable interest paid on loans
obtained for the sole purpose of correcting structural defects or other
approved purposes under this section.
(b) Ineligible purposes. Compensation will not be granted for:
(1) Completion of a dwelling or unit or installation of materials/
items required under the construction contract and/or specifications.
(2) Defective items which were not completed under the contract
method or under the conditional commitment and supported by a builder's
warranty. Work performed under the borrower method or self-help program
without a warranty by a responsible party is not eligible for
compensation.
(3) Damage caused by defective design, workmanship, or material in
making enhancements to or remodeling the dwelling or unit or related
facilities which were not financed or approved by FmHA or its successor
agency under Public Law 103-354.
(4) The loss of past, present or future wages or salary directly or
indirectly resulting from the defect.
(5) Treatment for physical or psychological damages including
medical and dental claims.
(6) Death benefits or funeral expenses.
(7) Damages encountered as a result of war, civil disorder, flood,
tornado, lightning, earthquake or acts of nature which the structure was
not designed to withstand.
(8) Damages resulting from the homeowner's negligence or failure to
properly maintain the property.
(9) Damage to personal property.
Secs. 1924.267--1924.270 [Reserved]
Sec. 1924.271 Processing applications.
An application for compensation for construction defects shall be
submitted by the claimant to FmHA or its successor agency under Public
Law 103-354 on the designated form (available in any FmHA or its
successor agency under Public Law 103-354 office). The application shall
be completed in its entirety. All structural defects and claims for
which compensation is sought will be listed. Borrowers will be told not
to incur any expenses for repairs or temporary living expenses, except
for emergency situations, until funds have been allocated and the
request has been approved under Sec. 1924.273 of this subpart.
Sec. 1924.272 [Reserved]
Sec. 1924.273 Approval or disapproval.
(a) Claimants will be notified in writing of the decision on the
claim within 60 days of the date the designated form (available in any
FmHA or its successor agency under Public Law 103-354 office) is signed
by the borrower. If the claim or any part of the claim is denied at any
level, the claimant will be informed in writing of the reason(s) for the
denial and advised of appeal rights in accordance with subpart B of part
1900 of this chapter.
(b) [Reserved]
Sec. 1924.274 Final inspection.
Except for emergency repairs, all repair work must be performed in
accordance with subpart A of this part. In all cases, FmHA or its
successor agency under Public Law 103-354 will make a final inspection
of the repair work performed before final payment is made for the work.
Sec. 1924.275 [Reserved]
Sec. 1924.276 Action against contractor.
If FmHA or its successor agency under Public Law 103-354 pays for
correction of construction defects which are the responsibility of the
contractor, debarment proceedings will be initiated against the
contractor in accordance with subpart M of part 1940 of this chapter
(available in any FmHA or its successor agency under Public Law 103-354
office), even if the contractor has gone out of business, declared
bankruptcy, cannot be located, etc. The debarment will be pursued in
both the contractor's company name and
[[Page 190]]
the principal parties as individuals, and any successor entities, if
known. If the manufacturer of the defective product is determined to be
solely responsible, no action will be taken against the contractor. In
such a case, debarment will be initiated against the manufacturer. An
assignment of the borrower's claim against the contractor or other party
will be obtained if it appears to the approval officials, with any
necessary advice from the Office of the General Counsel, that recovery
is reasonably possible.
Secs. 1924.277--1924.299 [Reserved]
Sec. 1924.300 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget
(OMB) and have been assigned OMB control number 0575-0082. Public
reporting burden for this collection of information is estimated to vary
from 15 minutes to 2 hours per response, with an average of .28 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 0575-0082), Washington, DC 20503.
PART 1925--TAXES--Table of Contents
Subpart A--Real Estate Tax Servicing
Sec.
1925.1 General.
1925.2 Definition of tax.
1925.3 Servicing taxes.
1925.4 Servicing delinquent taxes.
1925.5--1925.50 [Reserved]
Authority: 7 U.S.C. 1989; 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR 2.23;
7 CFR 2.70.
Source: 57 FR 36590, Aug. 14, 1992, unless otherwise noted.
Subpart A--Real Estate Tax Servicing
Sec. 1925.1 General.
This Instruction applies to borrowers with a Farm Ownership (FO),
Operating Loan (OL), Soil and Water (SW), Recreation Loan (RL),
Emergency (EM), Economic Opportunity (EO), Rural Rental Housing (RRH),
Rural Cooperative Housing (RCH), Labor Housing (LH), Softwood Timber
(ST), and Non-Program (NP) loans secured by real estate. It also applies
to section 502 and section 504 Rural Housing borrowers (Single Family
Housing (SFH)) who also have a Farmer Program loan. It does not apply to
borrowers who have a SFH loan only; those will be serviced under
Sec. 1965.105 of subpart C of part 1965 of this chapter. Borrowers are
responsible for paying taxes on the real estate security to the proper
taxing authorities before taxes become delinquent. This obligation is
set forth in the security instrument securing the loan.
Sec. 1925.2 Definition of tax.
For the purpose of this instruction, the word ``tax'' means all
taxes, assessments, levies, irrigation and water charges or other
similar obligations which are or will, on nonpayment, become a lien upon
the real estate prior to the mortgage securing the Farmers Home
Administration or its successor agency under Public Law 103-354 (FmHA or
its successor agency under Public Law 103-354) loan.
Sec. 1925.3 Servicing taxes.
(a) The County Supervisor will be responsible for ascertaining that
all mortgaged real estate is listed properly for tax purposes.
(b) The County Supervisor will be responsible for taking all actions
in connection with taxes as may be necessary to protect the Government's
security interests. Any unusual situations that may arise with respect
to tax servicing should be referred to the State Office for
consideration.
(c) The County Supervisor will encourage each borrower to pay taxes
promptly in order to avoid any penalties. Normally, this can be
accomplished through routine servicing of
[[Page 191]]
loans by emphasizing the advantages of setting aside sufficient income
to meet tax obligations when they become due. Taxes will be adequately
budgeted for those borrowers with whom Form FmHA or its successor agency
under Public Law 103-354 431-2, ``Farm and Home Plan,'' is developed.
Each borrower will be encouraged to notify the County Supervisor when he
has paid his taxes. After the delinquent date, it will be necessary for
the County Supervisor to determine the borrowers whose taxes are
delinquent. Forms FmHA or its successor agency under Public Law 103-354
1905-1, ``Management System Card-Individual,'' FmHA or its successor
agency under Public Law 103-354 1905-5, ``Management System Card-
Individual (Rural Housing Only),'' and FmHA or its successor agency
under Public Law 103-354 1905-10, ``Management System Card-
Association,'' will be used in posting servicing action on delinquent
taxes.
Sec. 1925.4 Servicing delinquent taxes.
(a) The County Supervisor will contact each borrower with a
delinquent tax and make every practical effort to have him pay the tax
with his own funds. He will use the Management System Card for follow-up
of delinquent taxes. If the delinquent tax is not paid and the borrower
comes to the office with proceeds for application on the FmHA or its
successor agency under Public Law 103-354 account secured by the real
estate, the County Office personnel will endeavor to get the borrower to
use the proceeds to pay the delinquent tax. If the amount of the
delinquent tax is less than the amount of the proposed payment, the
difference will be applied on the FmHA or its successor agency under
Public Law 103-354 account in accordance with the policy outlined in
FmHA or its successor agency under Public Law 103-354 Instructions 1951-
A and 1951-G.
(b) Prior (usually about 90 days) to the time it is legally possible
for action to be taken that will cause the borrower to lose title or
right of possessions of the security property or the use of essential
water, the County Supervisor will contact the borrower and definitely
determine if he will pay the delinquent tax immediately. If the borrower
is unable or unwilling to pay the delinquent tax with his own funds
after every appropriate effort has been made to have him do so, the
County Supervisor will refer to FmHA or its successor agency under
Public Law 103-354 Instruction 2024-A and utilize the Type 60 Purchase
Order System to pay the amount of the delinquent taxes plus the amount
of any accrued penalty to bring taxes current.
(1) In an exceptional case where reasons for delinquent taxes have
been removed and planned income during the next year covers payment of
current obligations plus delinquent taxes not vouchered, only the
delinquent taxes will be paid that could cause the borrower to lose
title or right of possession of security property.
(2) If the Government is holding a mortgage other than a first
mortgage on the property, do not initiate payment request until the
County Supervisor has determined that (i) the prior lien holder will not
pay the delinquent tax, (ii) the Government's security will be
jeopardized if the delinquent tax is not paid, and (iii) the value of
the security is sufficient to justify the advance.
Secs. 1925.5--1925.50 [Reserved]
PART 1927--TITLE CLEARANCE AND LOAN CLOSING--Table of Contents
Subpart A [Reserved]
Subpart B--Real Estate Title Clearance and Loan Closing
Sec.
1927.51 General.
1927.52 Definitions.
1927.53 Costs of title clearance and closing of transactions.
1927.54 Requirements for closing agents.
1927.55 Title clearance services.
1927.56 Scheduling loan closing.
1927.57 Preparation of closing documents.
1927.58 Closing the transaction.
1927.59 Subsequent loans and transfers with assumptions.
1927.60-1927.99 [Reserved]
1927.100 OMB control number.
Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.
Source: 61 FR 11711, Mar. 22, 1996, unless otherwise noted.
[[Page 192]]
Subpart A [Reserved]
Subpart B--Real Estate Title Clearance and Loan Closing
1927.51 General.
(a) Types of loans covered by this subpart. This subpart sets forth
the authorities, policies, and procedures for real estate title
clearance and closing of loans, assumptions, voluntary conveyances and
credit sales in connection with the following types of Rural Housing
Service (RHS) and Farm Service Agency (FSA) loans: Farm Ownership (FO),
Nonfarm Enterprise (FO-NFE), Emergency (EM), Operating (OL), Rural
Housing (RH), Farm Labor Housing (LH), Rural Rental Housing (RRH), Rural
Cooperative Housing (RCH), Soil and Water (SW), Indian Land acquisition
loans involving nontrust property, and NonProgram (NP) loans. This
subpart does not apply to guaranteed loans.
(b) Programs not covered by this subpart. Title clearance and
closing for all other types of agency loans and assumptions will be
handled as provided in the applicable program instructions or as
provided in special authorizations from the National Office.
(c) [Reserved]
(d) Copies of all agency forms referenced in this regulation and the
agency's internal administrative procedures for title clearance and loan
closing are available upon request from the agency's State Office. Forms
and title clearance and loan closing requirements which are specific for
any individual state must be obtained from the agency State Office for
that state.
1927.52 Definitions.
Agency. The Rural Housing Service (RHS) and Farm Service Agency
(FSA) or their successor agencies.
Approval official. The agency employee who has been delegated the
authority to approve, close, and service the particular kind of loan,
will approve an attorney or title company as closing agent for the
loans. If a loan must be approved at a higher level, the initiating
office may approve the closing agent.
Approved attorney. A duly licensed attorney, approved by the agency,
who provides title opinions directly to the agency and the borrower or
upon whose certification of title an approved title insurance company
issues a policy of title insurance. Approved attorneys also close loans,
assumptions, credit sales, and voluntary conveyances and disburse funds
in connection with agency loans. Approved attorney is further defined in
Sec. 1927.54(c).
Approved title insurance company. A title insurance company,
approved by the agency, (including its local representatives, employees,
agents, and attorneys) that issues a policy of title insurance.
Depending on the local practice, an approved title insurance company may
also close loans, assumptions, credit sales, and voluntary conveyances
and disburse funds in connection with agency loans. If the approved
title insurance company does not close the loan itself, the loan closing
functions may be performed by approved attorneys or closing agents
authorized by the approved title insurance company.
Borrower. The party indebted to the agency after the loan,
assumption, or credit sale is closed.
Certificate of title. A certified statement as to land ownership,
based upon examination of record title.
Closed loan. A loan is considered to be closed when the mortgage is
filed for record and the appropriate lien has been obtained.
Closing agent. The approved attorney or title company selected by
the applicant and approved by the agency to provide closing services for
the proposed loan. Unless a title insurance company also provides loan
closing services, the term ``title company'' does not include ``title
insurance company.''
Closing protection letter. An agreement issued by an approved title
insurance company which is an American Land Title Association (ALTA)
form closing protection letter or which is otherwise acceptable to the
agency and which protects the agency against damage, loss, fraud, theft,
or injury as a result of negligence by the issuing agent, approved
attorney, or title company when title clearance is done by means
[[Page 193]]
of a policy of title insurance. Depending on the area, closing
protection letters may also be known as ``Insured Closing Letters,''
``Indemnification Agreements,'' ``Insured Closing Service Agreements,''
or ``Statements of Settlement Service Responsibilities.''
Cosigner. A party who joins in the execution of a promissory note or
assumption agreement to guarantee repayment of the debt.
Credit sale. A sale in which the agency provides credit to the
purchasers of agency inventory property. Title clearance and closing of
a credit sale are the same as for an initial loan except the property is
conveyed by quitclaim deed.
Deed of trust. See trust deed.
Exceptions. Exceptions include, but are not limited to, recorded
covenants; conditions; restrictions; reservations; liens; encumbrances;
easements; taxes and assessments; rights-of-way; leases; mineral, oil,
gas, and geothermal rights (with or without the right of surface entry);
timber and water rights; judgments; pending court proceedings in Federal
and State courts (including bankruptcy); probate proceedings; and
agreements which limit or affect the title to the property.
Fee simple. An estate in land of which the owner has unqualified
ownership and power of disposition.
FSA. The Farm Service Agency, an agency of the United States
Department of Agriculture ( and any successor agency). FSA is the
successor agency for farm program loans of the former Farmers Home
Administration.
General warranty deed. A deed containing express covenants by the
grantor or seller as to good title and right to possession.
Indemnification agreement. An agreement that protects the agency
against damage, loss, fraud, theft, or injury as a result of useful
conduct or negligence on behalf of the issuing agent, approved attorney,
or title company. This agreement may also be entitled closing protection
letter, insured closing letter, insured closing service agreement,
statement of settlement service responsibilities, or letters which
provide similar protection.
Issuing agent. An individual or entity who is authorized to issue
title insurance for an approved title insurance company.
Land purchase contract (contract for deed). An agreement between the
buyer and seller of land in which the buyer has the right to possession
and use of the land over a period of time (usually in excess of 1 year)
and makes periodic payments of a portion of the purchase price to the
seller. The seller retains legal title to the property until the final
payment is made, at which time the buyer will receive a deed to the land
vesting fee title in the buyer.
Mortgage. Real estate security instrument which pledges land as
security for the performance of an obligation such as repayment of a
loan. For the purpose of this regulation the term ``mortgage'' includes
deed of trust and deed to secure debt. A real estate mortgage or deed of
trust form for the state in which the land to be taken as security is
available in any agency office, and will be used to secure a mortgage to
the agency.
National Office. The National Headquarters Office of FSA or RHS
depending on the loan program involved.
OGC. The Office of the General Counsel, United States Department of
Agriculture.
Program regulations. The agency regulations for the particular loan
program involved (e.g., subpart A of part 1944 of this chapter for
single family housing (SFH) loans).
Quitclaim deed. A transfer of the seller's interest in the title,
without warranties or covenants. This type of deed is used by the agency
to convey title to purchasers of inventory property.
RHS. The Rural Housing Service, an agency of the United States
Department of Agriculture, or its successor agency. RHS is the successor
agency to the Rural Housing and Community Development Service (RHCDS)
which was, in turn, the successor agency to the Farmers Home
Administration.
Seller. Individual or other entity which convey ownership in real
property to an applicant for an agency loan or to the agency itself.
Special warranty deed. A deed containing a covenant whereby the
grantor agrees to protect the grantee against any claims arising during
the grantor's period of ownership.
[[Page 194]]
State Office. For FSA this term refers to the FSA State Office. For
RHS this term refers to the Rural Economic and Community Development
State Director.
Title clearance. Examination of a title and its exceptions to assure
the agency that the loan is legally secured and has the required
priority.
Title company. A company that may abstract title, act as an issuing
agent of title insurance for a title insurance company, act as a loan
closing agent, and perform other duties associated with real estate
title clearance and loan closing.
Title defects. Any exception or legal claim of ownership (through
deed, lien, judgment, or other recorded document), on behalf of a third
party, which would prevent the seller from conveying a marketable title
to the entire property.
Trust deed. A three party security instrument conveying title to
land as security for the performance of an obligation, such as the
repayment of a loan. For the purpose of this regulation a trust deed is
covered by the term ``mortgage.'' A trust deed is the same as a deed of
trust.
Voluntary conveyance. A method of liquidation by which title to
agency security is transferred by a borrower to the agency by deed in
lieu of foreclosure.
Warranty deed. A deed in which the grantor warrants that he or she
has the right to convey the property, the title is free from
encumbrances, and the grantor shall take further action necessary to
perfect or defend the title.
Sec. 1927.53 Costs of title clearance and closing of transactions.
The borrower or the seller, or both, in compliance with the terms of
the sales contract or option will be responsible for payment of all
costs of title clearance and closing of the transaction and will arrange
for payment before the transaction is closed. These costs will include
any costs of abstracts of title, land surveys, attorney's fees, owner's
and lender's policies of title insurance, obtaining curative material,
notary fees, documentary stamps, recording costs, tax monitoring
service, and other expenses necessary to complete the transaction.
Sec. 1927.54 Requirements for closing agents.
(a) Form of title certification. State Offices are directed to
require title insurance for all loan closings unless the agency
determines that the use of title insurance is not available or is
economically not feasible for the type of loan involved or the area of
the state where the loan will be closed. If title insurance is used,
State Offices are authorized to require a closing protection letter
issued by an approved title insurance company to cover the closing
agent, if available. A closing protection letter need not be furnished
when the closing is conducted by the title insurance company.
(b) Approval of closing agent. An attorney or title company may act
as a closing agent and close agency real estate loans, provide necessary
title clearance, and perform such other duties as required in this
subpart. A closing agent will be responsible for closing agency loans
and disbursing both agency loan funds and funds provided by the borrower
in connection with the agency loan so as to obtain title and security
position as required by the agency. The closing agent must be covered by
a fidelity bond which will protect the agency unless a closing
protection letter is provided to the agency. The borrower will select
the approved closing agent. If title clearance is by an attorney's
opinion, the agency will approve the attorney who will perform the
closing in accordance with paragraph (c) of this section. The attorney
will be approved after submitting a certification acceptable to the
agency. If title certification is by means of a policy of title
insurance, the title company which will issue the policy must have been
approved in accordance with paragraph (d) of this section. A closing
agent's delay in providing services without justification in connection
with agency loans may be a basis for not approving the closing agent in
future cases.
(c) Approval of attorneys. Any attorney selected by an applicant,
who will be providing title clearance where the certificate of title
will be an attorney's
[[Page 195]]
opinion, must submit an agency form certifying to professional liability
insurance coverage. If the attorney is also the closing agent, fidelity
coverage for the attorney and any employee having access to the funds
must be provided. The agency will determine the appropriate level of
such insurance. Required insurance will, as a minimum, cover the amount
of the loan to be closed. The agency will approve the form stipulating
the bond coverage. The agency will approve any attorney who is duly
licensed to practice law in the state where the real estate security is
located and who complies with the bonding and insurance requirements in
this section. If the certification of title will be by means of title
insurance, any attorney or closing agent designated as an approved
attorney or closing agent by the approved title insurance company which
will issue the policy of title insurance will be acceptable, and when
covered by a closing protection letter, will not be required to obtain
professional liability insurance or a fidelity bond. Each approved title
insurance company may provide a master list of their approved attorneys
that are covered by its closing protection letters to the State Office
and, in such cases the attorneys are approved for closings for that
title insurance company. Delay in providing closing services without
justification may be a basis for not approving the attorney in future
cases.
(d) Approval of title companies. A title company acting as a closing
agent, or as an issuing agent for a title insurance company, must be
covered by a title insurance company closing protection letter or submit
an agency form certifying to fidelity coverage to cover all employees
having access to the loan funds. The agency will determine the
appropriate level of such coverage and will approve the form stipulating
the bond coverage. Delay in providing closing services without
justification may be a basis for not approving the company in future
cases. Each approved title insurance company may provide a master list
of their approved title companies that are covered by its closing
protection letter to the State Office and, in such cases the title
companies on the list are approved for closings for that title insurance
company.
(e) Approval of title insurance companies. The agency will approve
any title insurance company which issues policies of title insurance in
the State where the security property is located if:
(1) The form of the owner's and lender's policies of title insurance
(including required endorsements) to be used in closing agency loans are
acceptable to the agency, and will contain only standard types of
exceptions and exclusions approved in advance by the agency;
(2) The title insurance company is licensed to do business in the
state (if a license is required); and
(3) The title insurance company is regulated by a State Insurance
Commission, or similar regulator, or if not, the title insurance company
submits copies of audited financial statements, or other approved
financial statements satisfactory to the agency, which show that the
company has the financial ability to cover losses arising out of its
activities as a title insurance company and under any closing protection
letters issued by the title insurance company.
(4) Delay in providing services without justification may be a basis
for not approving the company.
(f) [Reserved]
(g) Conflict of interest. A closing agent who has, or whose spouse,
children, or business associates have, a financial interest in the real
estate which will secure the agency debt shall not be involved in the
title clearance or loan closing process. Financial interest includes
having either an equity, creditor, or debtor interest in any
corporation, trust, or partnership with a financial interest in the real
estate which will secure the agency debt.
(h) Debarment or suspension. No attorney, title company, title
insurance company, or closing agent, currently debarred or suspended
from participating in Federal programs, may participate in any aspect of
the agency loan closing and title clearance process.
(i) Special provisions. Closing agents are responsible for having
current knowledge of the requirements of State law in connection with
loan closing
[[Page 196]]
and title clearance and should advise the agency of any changes in State
law which necessitate changes in the agency's State mortgage forms and
State Supplements.
(j) [Reserved]
Sec. 1927.55 Title clearance services.
(a) Responsibilities of closing agents. Services to be provided to
the agency and the borrower by a closing agent in connection with the
transaction vary depending on whether a title insurance policy or title
opinion is being furnished. The closing agent is expected to perform
these services without unnecessary delay.
(b) [Reserved]
(c) Ordering title services. Application for title examination or
insurance will be made by the borrower to a title company or attorney.
The lender's policy will be for at least the amount of the loan. The
United States of America will be named as the insured lender.
(d) Use of title opinion. If a title opinion will be issued, a title
examination will include searches of all relevant land title and other
records, so as to express an opinion as to the title of the property and
the steps necessary to obtain the appropriate title and security
position to issue a title opinion as required by this subpart. The
closing agent or approved attorney will determine:
(1) The legal description and all owners of the real property;
(2) Whether there are any exceptions affecting the property and
advise the approval official and borrower of the nature and effect of
outstanding interests or exceptions, prior sales of part of the
property, judgments, or interests to assist in determining which
exceptions must be corrected in order for the borrowers to obtain good
and marketable title of record in accordance with prevailing title
examination standards, and for the agency to obtain a valid lien of the
required priority;
(3) Whether there are outstanding Federal, State, or local tax
claims (including taxes which under State law may become a lien superior
to a previously attaching mortgage lien) or homeowner's association
assessment liens;
(4) Whether outstanding judgments of record, bankruptcy, insolvency,
divorce, or probate proceedings involving any part of the property,
whether already owned by the borrower, or to be acquired by assumption
or with loan funds, or involving the borrower or the seller exist;
(5) If a water right is to be included in the security for the loan,
and if so, the full legal description of the water right;
(6) In addition to paragraph(d)(2) of this section, if wetlands
easements or other conservation easements have been placed on the
property;
(7) What measures are required for preparing, obtaining, or
approving curative material, conveyances, and security instruments, and
(8) That sufficient copies of these interests and exceptions are
provided as requested by the approval official.
(e) Use of title insurance. When title insurance is to be obtained,
the approval official will be furnished with a title insurance binder
disclosing any defects in, exceptions to, and encumbrances against, the
title, the conditions to be met to make the title insurable and in the
condition required by the agency, and the curative or other actions to
be taken before closing of the transaction. The binder must include a
commitment to issue a lender policy in an amount at least equal the
amount of the loan, except in instances where there may be an
outstanding owner's policy in favor of the borrower. Not withstanding
the provisions of this section, the instance of an assumption without a
subsequent loan, the existing policy may be continued if the coverage
meets or exceeds the assumption balance and the title company agrees in
writing to extend coverage in full force and effect.
(f) [Reserved]
Sec. 1927.56 Scheduling loan closing.
The agency, in coordination with the closing agent, will arrange a
loan closing and send loan closing instructions, on an agency form to
the closing agent when the agency determines that the exceptions shown
on the preliminary title opinion or title insurance binder will not
adversely affect the suitability, security value, or successful
[[Page 197]]
operation of the property and all other agency conditions to closing
have been satisfied.
Sec. 1927.57 Preparation of closing documents.
(a) Preparation of deeds. The closing agent, unless prohibited by
law, will prepare, complete, or approve documents, including deeds,
necessary for title clearance and closing of the transaction and provide
the agency with the policy of title insurance or title opinion providing
the lien priority required by the agency and subject only to exceptions
approved by the agency. Agency forms will be used when required by this
part.
(1) [Reserved]
(2) [Reserved]
(b) Preparation of mortgages. The closing agent will insure that all
mortgages are properly prepared, completed, executed, and filed for
record. Where applicable, the mortgages should recite that it is a
purchase money mortgage. The following requirements will be observed in
preparing agency morgages:
(1)-(8) [Reserved]
(9) Alteration of mortgage form. An agency mortgage form may be
altered pursuant to a State Supplement having prior approval of the
National Office, or in a special case, to comply with the terms of loan
approval prescribed in accordance with program instructions. No other
alterations in the printed mortgage forms will be made without prior
approval of the National Office. Any changes made by deletion,
substitution, or addition (excluding filling in blanks) will be
initialed in the margin by all persons signing the mortgage.
(10) [Reserved]
(11) Mortgages on leasehold estates. When the agency security
interest is a leasehold estate, unless State law or State Supplement
otherwise provides, the real estate mortgage or deed of trust form,
available in any agency office, will be modified as follows:
(i) In the space provided on the mortgage for the description of the
real property security, the leasehold estate and the land covered by the
lease must be described. The following language must be used unless
modified by a State Supplement:
All of borrower's right, title, and interest in and to a leasehold
estate for an original term of ____ years, commencing on ______, 19
____, created and established by and between ______ as lessor and owner
and ____ as lessee, including any extensions and renewals thereof, a
copy of which lease was recorded or filed in book ____, page ____, as
instrument number ____, in the Office of the (e.g., County Clerk), for
the aforesaid county and State and covering the following real property:
______.
(ii) Immediately preceding the covenant starting with the words
``should default,'' the following covenant will be added:
( ) Borrower covenants and agrees to pay when due all rents and any
and all other charges required by said lease, to comply with all other
requirements of said lease, and not to surrender or relinquish, without
the Government's prior written consent, any of borrower's right, title,
or interest in or to said leasehold estate or under said lease while
this mortgage remains of record.
(12) Mortgages on land purchase contract. When the agency security
interest is on a borrower's interest in a land purchase contract, OGC
will provide language used to modify agency forms.
(13) [Reserved]
(c) [Reserved]
(d) Preparation of protective instruments. The closing agent will
properly prepare, complete, and approve releases and curative documents
necessary for title clearance and closing, in recordable form and record
them if required.
(1) Prior lienholder's agreement. If any liens (other than agency
liens or tax liens to local governmental authorities) or security
agreements (hereafter called ``liens''), with priority over the agency
mortgage will remain against the real property securing the loan, the
lienholders must execute, in recordable form, agreements containing all
of the following provisions unless prior approval for different
provisions has been obtained from the National Office:
(i) The prior lienholder shall agree not to declare the lien in
default or accelerate the indebtedness secured by the prior lien for a
specific period of time after notice to the agency. The agreement must:
(A) Provide that the specified period of time will not commence
until the lienholder gives written notice of the
[[Page 198]]
borrower's default and the prior lienholder's intention to accelerate
the indebtedness to the agency office servicing the loan,
(B) Include the address of the agency servicing office,
(C) Give the agency the option to cure any monetary default by
paying the amount of the borrower's delinquent payments to the prior
lienholder, or pay the obligation in full and have the lien assigned to
the agency, and
(D) Provide that the prior lienholder will not declare the lien in
default for any nonmonetary reason if the agency commences liquidation
proceedings against the property and thereafter acquires the property.
(ii) When the prior lien secures future advances, including the
lienholder's costs for borrower liquidation or bankruptcy, which under
State law have priority over the mortgage being taken (or an agency
mortgage already held), the prior lienholder shall agree not to make
advances for purposes other than taxes, insurance or payments on other
prior liens without written consent of the agency.
(iii) The prior lienholder shall consent to the agency making (or
transferring) the loan and taking (or retaining) the related mortgage if
the prior lien instrument prohibits a loan or mortgage (or transfer)
without the prior lienholder's consent.
(iv) The prior lienholder shall consent to the agency transferring
the property subject to the prior lien after the agency has obtained
title to the property either by foreclosure or voluntary conveyance if
the prior lien instrument prohibits such transfer without the prior
lienholder's consent.
(2) [Reserved]
(3) [Reserved]
(4) Agreement by holder of seller's interest under land purchase
contract. If the buyer's interest in the security property is that of a
buyer under a land purchase contract, it will be necessary for the
seller to execute, in recordable form, an agreement containing all of
the following provisions:
(i) The seller shall agree not to sell or voluntarily transfer the
seller's interest under the land purchase contract without the prior
written consent of the State Office.
(ii) The seller shall agree not to encumber or cause any liens to be
levied against the property.
(iii) The seller shall agree not to commence or take any action to
accelerate, forfeit, or foreclose the buyer's interest in the security
property until a specified period of time after notifying the State
Office of intent to do so. This period of time will be 90 days unless a
State Supplement provides otherwise. The agreement shall give the agency
the option to cure any monetary default by paying the amount of the
buyer's delinquent payments to the seller, or paying the seller in full
and having the contract assigned to the agency.
(iv) The seller shall consent to the agency making the loan and
taking a security interest in the borrower's interest under the land
purchase contract as security for the agency loan.
(v) The seller shall agree not to take any actions to foreclose or
forfeit the interest of the buyer under the land purchase contract
because the agency has acquired the buyer's interest under the land
purchase contract by foreclosure or voluntary conveyance, or because the
agency has subsequently sold or assigned the buyer's interest to a third
party who will assume the buyer's obligations under the land purchase
contract.
(vi) When the agency acquires a buyer's interest under a land
purchase contract by foreclosure or deed in lieu of foreclosure, the
agency will not be deemed to have assumed any of the buyer's obligations
under the contract, provided that the failure of the agency to perform
any such obligations while it holds the buyer's interest is a ground to
commence an action to terminate the land purchase contract.
(5) [Reserved]
(6) [Reserved]
(e) [Reserved]
1927.58 Closing the transaction.
The closing agent will cooperate with the approval official,
borrower, seller, and other necessary parties to arrange the time and
place of closing. The transaction may be closed when the
[[Page 199]]
agency determines that the agency requirements for the loan have been
satisfied and the closing agent or approved attorney can issue or cause
to be issued a policy of title insurance or final title opinion as of
the date of closing showing title vested as required by the agency, the
lien of the agency's mortgage in the priority required by the agency,
and title to the mortgaged property subject only to those exceptions
approved in writing by the agency. The loan will be considered closed
when the mortgage is filed for record and the required lien is obtained.
(a) Disbursement of loan funds. When the closing agent indicates
that the conditions necessary to close the loan have been met, loan
funds will be forwarded to the closing agent. Loan funds will not be
disbursed prior to filing of the mortgage for record; however, when
necessary, loan funds may be placed in escrow before the mortgage is
filed for record and disbursed after it is filed. No development funds
will be kept in escrow by the closing agent after loan closing, unless
approved by the agency. Loan funds for the payment of a lien may be
disbursed only upon the recording of a discharge, satisfaction, or
release of prior lien interests (or assignment where necessary to
protect the interests of the agency).
(b) Title examination and liens or claims against borrowers. If
there are exceptions or recorded items which have arisen since the
preliminary title opinion, the transaction will not be closed until
these entries have been cleared of record or approved by the agency. The
closing agent will advise the approval official of the nature of such
intervening instruments and the effect they may have on obtaining a
valid mortgage of the priority required or the title insurance policy to
be issued.
(c) Taxes and assessments. The closing agent will determine if all
taxes and assessments against the property which are due and payable are
paid at or before the time of loan closing. If the seller and the
borrower have agreed to prorate any taxes or assessments which are not
yet due and payable for the year in which the closing of the transaction
takes place, the seller's proportionate share of the taxes and
assessments will be deducted from the proceeds to be paid to seller at
closing and will be added to the amount required to be paid by borrower
at closing. Appropriate prorations as agreed upon between the borrower
and seller may also be made for taxes paid by the seller which are
applicable to a period after the closing date, and for common area
maintenance fees, prepaid rentals, insurance (unless the borrower is to
obtain a new policy of insurance), and growing crops.
(d) Affidavit regarding work of improvement.
(1) Execution by borrower. If required by State Supplement, the
closing agent will require that an affidavit regarding work of
improvement, provided by the agency, be completed and executed when a
loan is being made to a borrower who already owns the real estate to be
mortgaged. This affidavit will be executed by the borrower at closing.
(2) Execution by seller. If required by State Supplement, the
closing agent will require that an affidavit regarding work of
improvement, provided by the agency, be completed and executed
(including acknowledgment) by the seller when the agency is making a
loan to a borrower to enable the borrower to acquire the property
(including transfers). This affidavit will be executed by the seller at
closing.
(3) Legal insufficiency of affidavit form. If the agency affidavit
regarding work of improvement is not legally sufficient in a particular
State, a State form approved by OGC will be used. A similar form that
may be required by a title insurance company may be substituted for the
agency form.
(4) Recording. The affidavit will not be recorded unless the closing
agent deems it necessary and State law permits.
(5) Delay in closing. The loan will not be closed if, at the loan
closing, the seller (in a sale transaction) or the borrower (in a
nonpurchase money loan situation) indicates that construction, repair,
or remodeling has been commenced or completed on the property, or
related materials or services have been delivered to or performed on the
property within the time limit specified in the affidavit, unless a
State Supplement provides otherwise. The closing agent will notify the
approval
[[Page 200]]
official, who will determine if the work of improvement could result in
a lien prior to the agency lien. The State Office will, with the advice
and concurrence of OGC, provide in a State Supplement the period of time
to be used in completing the affidavit.
(e) [Reserved]
(f) [Reserved]
(g) Return of loan documents to approval official after loan
closing. Within 1 day after loan closing, the closing agent will return
completed and executed copies of the loan closing instructions, the
executed original promissory note, and all other documents required for
loan closing (except the mortgage), to the approval official. If the
recorded mortgage is customarily returned to the borrower or closing
agent after recording, then it must be forwarded to the approval
official immediately.
(h) Final title opinion or title insurance policy. As soon as
possible after the transaction has been closed.
(1) Final title opinion. The attorney will issue a final title
opinion to the agency and the borrower on a form provided by the agency.
Issuance of the final title opinion should not be held up pending the
return of recorded instruments. If it is not possible for the final
title opinion to show the book and page of recording of the agency
security instrument, the words ``and is recorded'' in the final title
opinion form provided by the agency office, may be deleted and the blank
space completed to show the filing office and the filing instrument
number, if available. Attached to the final title opinion will be
required documents then available, including any which the approval
official has furnished to the attorney which were not previously
returned. The attorney will ensure that all recorded instruments are
forwarded or delivered to the proper parties after recording. The
certification of title will be forwarded for a voluntary conveyance.
(2) Title insurance policy. The closing agent will send or deliver
the title insurance policy, with the United States listed as mortgage
holder, to the approval official. The policy will be subject only to
standard exceptions and those outstanding encumbrances, and exceptions,
approved by the approval official. If an owner's policy of title
insurance is requested, the closing agent will send or deliver it to the
borrower. The closing agent will ensure that all recorded instruments
are delivered or sent to the proper parties after recording.
(3) [Reserved]
(i) Other services of the closing agent.
(1) The closing agent will assist the approval official in
preparing, completing, obtaining execution and acknowledgment, and
recording the required documents when necessary. The closing agent will
keep the approval official advised as to the progress of title clearance
and preparation of material for closing the transaction.
(2) The closing agent will provide services for deeds in lieu of
foreclosure as set forth in Sec. 1927.62 of this subpart, and
Sec. 1955.10 of subpart A of part 1955 of this chapter.
Sec. 1927.59 Subsequent loans and transfers with assumptions.
Title services and closing for subsequent loans to an existing
borrower will be done in accordance with previous instructions in this
subpart, except that:
(a) Loans closed using title insurance or title opinions.
(1) Title insurance or title opinions will be obtained unless:
(i) The cost of title services is excessive in relationship to the
size of the loan,
(ii) The agency currently has a first mortgage security interest,
(iii) The applicant has sufficient income to service the additional
loan,
(iv) The borrower is current on the existing agency loan, and
(v) The best mortgage obtainable adequately protects the agency
security interests.
(2) Title insurance or a final title opinion will not be obtained
for a subsequent Section 504 loan where the previous Section 504 loan
was unsecured or secured for less than $7,500 and the outstanding debt
amount plus the new loan is less than $7,500.
(3) Loans closed using a new lender title insurance policy:
(i) Will cover the entire real property which is to secure the loan,
including
[[Page 201]]
the real property already owned and any additional real property being
acquired by the borrower with the loan proceeds.
(ii) Will cover the entire amount of any subsequent loan plus the
amount of any existing loan being refinanced (if the existing loan is
not being refinanced, the new lender policy will insure only the amount
of the subsequent loan).
(b) Title services required in connection with assumptions. These
regulations are contained in part 1965, subparts A, B, and C, of this
chapter as appropriate for the loan type.
Secs. 1927.60-1927.99 [Reserved]
Sec. 1927.100 OMB control number.
The reporting requirements contained in this regulation have been
approved by the Office of Management and Budget and have been assigned
OMB control number 0575-0147. Public reporting burden for this
collection of information is estimated to vary from 5 minutes to 1.5
hours per response, with an average of .38 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, Ag Box 7630, Washington, DC 20250;
and to the Office of Management and Budget, Paperwork Reduction Project
(OMB# 0575-0147), Washington, DC 20503. You are not required to respond
to the collection of information unless it displays a currently valid
OMB control number.
PART 1930--GENERAL--Table of Contents
Subparts A-B--[Reserved]
Subpart C--Management and Supervision of Multiple Family Housing
Borrowers and Grant Recipients
Sec.
1930.101 General.
1930.102 Definitions.
1930.103 Nondiscrimination assurance.
1930.104 Reasonable accommodations.
1930.105 Objective of management and supervision.
1930.106-1930.107 [Reserved]
1930.108 Extent of borrower management.
1930.109 Extent of FmHA or its successor agency under Public Law 103-
354 supervision.
1930.110 Methods of supervision.
1930.111-1930.112 [Reserved]
1930.113 Borrower responsibilities.
1930.114-1930.116 [Reserved]
1930.117 Agency responsibilities
1930.118 [Reserved]
1930.119 Supervisory visits, compliance review, and inspections.
1930.120-1930.121 [Reserved]
1930.122 Borrower accounting methods, management reporting and audits.
1930.123 Annual review.
1930.124 [Reserved]
1930.125 Changing project designation.
1930.126-1930.127 [Reserved]
1930.128 LH grants.
1930.129 RHS loans.
1930.130-1930.133 [Reserved]
1930.134 FmHA or its successor agency under Public Law 103-354 office
records.
1930.135-1930.136 [Reserved]
1930.137 State Supplements, guides, forms and other issuances.
1930.138 Supervisory actions for distressed projects.
1930.139-1930.140 [Reserved]
1930.141 Materials to be provided borrower/applicant.
1930.142 Complaints regarding discrimination in use and occupancy of
MFH.
1930.143 Delegation of responsibility and authority.
1930.144 Exception authority.
1930.145 Appeals.
1930.146-1930.149 [Reserved]
1930.150 OMB control number.
Exhibits to Subpart C
Exhibit A--Steps for Farmers Home Administration or its successor agency
under Public Law 103-354 (FmHA or its successor agency under
Public Law 103-354) Personnel in Conducting Annual Review of
Multiple Housing Operations
Exhibit A-1--Audit Report Review Guide
Exhibit B--Multiple Housing Management Handbook
Exhibit B-1--Management Plan Requirements for Farmers Home
Administration or its successor agency under Public Law 103-
354 Financed Multiple Family Housing (MFH) Projects
Exhibit B-2--Requirements for Management Agreements
[[Page 202]]
Exhibit B-3--Sample Management Agreement for Farmers Home Administration
or its successor agency under Public Law 103-354 Financed
Multiple Family Housing (MFH) Projects
Exhibit B-4--Outline for Prospective Management Agent of a Multiple
Family Rental or Labor Housing Project
Exhibit B-5--Outline for Owner who Proposes Owner-Management of a
Multiple Family Rental or Labor Housing Project
Exhibit B-6 Monthly and Quarterly Project Management Reports
Exhibit B-7--Annual Project Management Reports
Exhibit B-8--Miscellaneous Project Management Reports or Submittals
Exhibit B-9--Notice of Authorization to Withdraw and Use Reserve Funds
Exhibit B-10--Reserve Account Tally
Exhibit B-11--Equal Housing Opportunity Logotype (Required for Project
Sign)
Exhibit B-12--Farmers Home Administration or its successor agency under
Public Law 103-354 Logotype (Optional for Project Sign)
Exhibit B-13--International Symbol of Accessibility (Required for
Handicap Parking Space and along Handicap Accessibility Route)
Exhibit B-14--Sample Waiting List
Exhibit C--Rental and Occupancy Charge and/or Utility Allowance Changes
Exhibit C-1--Notice to Tenants (Members) of Proposed Rent (Occupancy
Charge) and Utility Allowance Change
Exhibit C-2--Notice of Approved Rent (Occupancy Charge) and Utility
Allowance Change
Exhibit D--Energy Audit
Exhibit D-1--Calculation of Financial Impact (Energy Audit)
Exhibit E--Rental Assistance Program
Exhibit F--Farmers Home Administration or its successor agency under
Public Law 103-354 Multiple Family Housing Supervisory Visit--
Pre-Visit Worksheet
Exhibit F-1--Suggested Random Sampling Technique for Tenant Reviews
Exhibit F-2--Suggested Format for a Pre-Visit Tenant Contact Letter
Exhibit G--Farmers Home Administration or its successor agency under
Public Law 103-354 Multiple Family Housing Supervisory Visit--
Summary of Findings
Exhibit G-1--Farmers Home Administration or its successor agency under
Public Law 103-354 Multiple Family Housing Supervisory Visit--
Tenant File Review
Exhibit G-2--Farmers Home Administration or its successor agency under
Public Law 103-354 Multiple Family Housing Supervisory Visit--
Tenant Interview and Unit Review
Exhibit H--Interest Credits on Insured Rural Rental Housing and Rural
Cooperative Housing Loans
Exhibit H-1--Example of Interest Credit Determination for Rural Rental
Housing or Rural Cooperative Housing Projects (Plan II)
Exhibit I--Rural Rental Housing Loans and the Housing and Urban
Development Section 8 Rental Certificate and Rental Voucher
Programs (Existing Units)
Exhibit J--Management of Congregate Housing and Group Homes
Authority: 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR 2.23 and 2.70.
Subparts A-B--[Reserved]
Subpart C--Management and Supervision of Multiple Family Housing
Borrowers and Grant Recipients
Source: 58 FR 40868, July 30, 1993, unless otherwise noted.
Sec. 1930.101 General.
This subpart prescribes the policies, authorizations, and procedures
for management and supervision of all of the following Farmers Home
Administration or its successor agency under Public Law 103-354 (FmHA or
its successor agency under Public Law 103-354) Multiple Family Housing
(MFH) loan and grant recipients:
(a) Farm Labor Housing (LH).
(b) Rural Rental Housing (RRH) including congregate housing.
(c) Rural Cooperative Housing (RCH).
(d) Rural Housing Site Loans (RHS).
(e) Special provisions and exceptions.
(1) Unless otherwise specified in this subpart and except for
Exhibit C of this Subpart, individual type RRH borrowers who were not
required by program regulation to execute a loan agreement are exempted
from the requirements of this subpart as long as the borrower is not in
default of any program requirement, security instrument, payment, or any
other agreement with FmHA or its successor agency under Public Law 103-
354. However, these borrowers must
[[Page 203]]
provide evidence of tenant income eligibility by properly completing
Form FmHA or its successor agency under Public Law 103-354 1944-8,
``Tenant Certification,'' for each tenant as required by the Forms
Manual Insert (FMI), except in LH situations where the tenant is not
paying rent.
(2) The State Director may require any borrower determined to be in
default of any program requirement, security instrument, payment, or
other agreement with FmHA or its successor agency under Public Law 103-
354, or when otherwise failing to meet the program objectives, to comply
with any appropriate section of this subpart to assure that the loan
objectives are met.
(3) For RHS borrowers, the following sections of this subpart do not
apply: Secs. 1930.108, 1930.122, and 1930.141.
Sec. 1930.102 Definitions.
Acceptable tolerance. For the purpose of this subpart, acceptable
tolerance means actual financial activity as expressed in numeric terms
that is operating within plus or minus 5 percent of projected or
forecasted estimates.
Adviser to the board. An individual or organization who will work
with and provide guidance to a cooperative board of directors.
Borrowers. Borrowers means owners who may be individuals,
partnerships, cooperatives, trusts, public agencies, private or public
corporations, and other organizations who have received a loan or grant
from FmHA or its successor agency under Public Law 103-354 for LH, RRH,
RCH, or RHS purposes.
Consumer cooperative. A corporation which is organized under the
cooperative laws of a State or Federally recognized Indian tribe; will
own and operate the housing on a cooperative basis solely for the
benefit of the members; will operate at cost and, for this purpose, any
patronage refunds accruing to members in accordance with Subpart E of
Part 1944 of this chapter will not be considered gains or profits; and
will restrict membership in the housing to eligible persons and, to any
extent the cooperative and FmHA or its successor agency under Public Law
103-354 permit, to others in special circumstances.
FmHA or its successor agency under Public Law 103-354. FmHA or its
successor agency under Public Law 103-354 means the United States of
America acting through the Farmers Home Administration or its successor
agency under Public Law 103-354 or FmHA or its successor agency under
Public Law 103-354's predecessor agencies.
Governing body. Governing body means those elected or appointed
officials of an organization or public agency type borrower responsible
for the operations of the project.
Management. Management is the overall direction given by the
borrower or the borrower's agent to meet the needs of the tenants or
members, maintain the project, and provide sound and economical project
operation.
Member. A person who has executed documents pertaining to a
cooperative housing type of living arrangement and has made a commitment
to upholding the cooperative concept.
Occupancy agreement. A contract setting forth the rights and
obligations of the cooperative member and the cooperative, including the
amount of the monthly occupancy charge and the other terms under which
the member will occupy the housing.
Office of the General Counsel (OGC). OGC means the Regional
Attorney, Associate Regional Attorney, or Assistant Regional Attorney in
the field office of the Office of the General Counsel of the United
States Department of Agriculture (USDA).
Office of Inspector General (OIG). OIG means the Office of Inspector
General of the USDA.
Patronage capital refund. Amounts received by the cooperative in
excess of operating costs and expenses which have been assigned to
members' patronage capital accounts each year of membership in the
cooperative.
Project. A project is the total number of rental housing units that
are operated under one management plan with one loan agreement/
resolution. (The rental units may have been developed originally with
separate initial loans and separate loan agreements/resolutions, now
consolidated into one operational project under Sec. 1965.68 of subpart
B of part 1965 of this chapter.)
[[Page 204]]
Servicing Office. The FmHA or its successor agency under Public Law
103-354 office designated by the State Director to service MFH accounts.
Servicing Official. The individual who by job description or other
qualification is designated by the State Director with delegated
responsibility to service MFH accounts.
State Director. For the purpose of this subpart, State Director also
includes the Rural Housing Chief, Multiple Family Housing Coordinator,
Rural Housing Specialist, and other qualified State staff when delegated
responsibilities under this subpart according to Sec. 1930.143 and the
provisions of FmHA or its successor agency under Public Law 103-354
Instruction 2006-F, (available in any FmHA or its successor agency under
Public Law 103-354 office).
Supervision. Supervision includes the broad scope of FmHA or its
successor agency under Public Law 103-354 guidance available to assist
borrowers to carry out the objectives of the loan and comply with FmHA
or its successor agency under Public Law 103-354 regulations.
Sec. 1930.103 Nondiscrimination assurance.
All management and supervision actions described in this subpart
will be conducted without regard to race, color, religion, sex, familial
status, national origin, age, or handicap. Borrowers, tenants and
cooperative members must possess the legal capacity to enter into a
legal contract. The provisions of subpart E of part 1901 of this chapter
enforcing title VI of the Civil Rights Act of 1964, as amended, along
with other similarly worded statutes will be complied with.
Sec. 1930.104 Reasonable accommodations.
(a) It shall be unlawful for any person to refuse to make reasonable
accommodations in rules, policies, practices, or services when such
accommodations would afford an individual with a handicap equal
opportunity to use or continue to use and enjoy a dwelling unit,
including public and common use areas.
(b) It shall be unlawful for any person to refuse to permit, at the
expense of an individual with a handicap, reasonable modifications of an
existing unit, occupied or to be occupied by an individual with a
handicap, if the proposed modifications may be necessary to afford the
individual with a handicap full enjoyment of the dwelling unit.
Sec. 1930.105 Objective of management and supervision.
(a) The primary objective of management and supervision is to
provide effective supervision to each borrower to accomplish the
objectives of the loan or grant.
(b) To provide effective supervision, FmHA or its successor agency
under Public Law 103-354 will assure that the borrower's management plan
accomplishes the following:
(1) Provide proper and efficient management policies as prescribed
in exhibit B of this subpart.
(2) Comply with loan and grant agreements.
(3) Repay loans on schedule.
(4) Maintain security property.
(5) Protect the interests of FmHA or its successor agency under
Public Law 103-354.
(6) Operate facilities according to State and local laws and
regulations.
(7) Maintain accounts and records.
(8) Submit reports and audits.
(9) Process rent and occupancy charge changes according to exhibit C
of this subpart.
(10) Operate the facilities according to Equal Opportunity
requirements of title VI of the Civil Rights Act of 1964, title VIII of
the Civil Rights Act of 1968 as amended by the Fair Housing Amendments
Act of 1988, section 504 of the Rehabilitation Act of 1973, and the Age
Discrimination Act of 1975.
(11) Maintain facilities and premises that are free of illegal
controlled substances.
(12) Collect and remit any occupancy surcharges as applicable.
Secs. 1930.106-1930.107 [Reserved]
Sec. 1930.108 Extent of borrower management.
According to exhibit B of this subpart, the borrower and/or the
borrower's agent will develop a management plan for each project that
describes the scope of property management needed
[[Page 205]]
to maintain program objectives. When the management is from other than
the borrower, a management agreement will be used to define the
responsibilities of the management agent. Initial, modified and/or
replacement management agreements will be approved by authorized FmHA or
its successor agency under Public Law 103-354 officials. A sample
management agreement is provided in exhibit B-3 of this subpart.
Sec. 1930.109 Extent of FmHA or its successor agency under Public Law 103-354 supervision.
The objective of FmHA or its successor agency under Public Law 103-
354 supervision is to guide and advise borrowers and their designated
representatives in their quest to meet MFH program objectives, goals,
and obligations, not to direct the borrower's activity. Supervision does
not relieve borrowers of their own responsibilities and obligations.
Supervision starts with the first contact by the applicant and continues
as long as any loan balance remains outstanding. In the case of a grant,
supervision continues until the requirements of the grant agreement have
been fulfilled. Supervision of borrowers is a primary responsibility of
the Servicing Official; however, additional supervision and guidance
will be given by the State Director and/or other appropriate members of
the State Office staff. Security servicing actions will be handled
according to subpart B of part 1965 of this chapter.
Sec. 1930.110 Methods of supervision.
Supervisory methods used by FmHA or its successor agency under
Public Law 103-354 employees include organizational and development
planning; property management planning; affirmative marketing;
construction conferences; long-term, annual, and other periodic planning
and evaluation; accounts, budgets, and records inspections and guidance;
project inspections; attendance at membership and governing body
meetings; periodic group meetings with borrowers; analysis of
accounting, budgets, and audit reports; guidance by memorandums; and
similar activities. Supervision of cooperative borrowers will include
coordination with the adviser to the board. Supervision of grant-only
recipients will consist of at least the reviews and inspections outlined
in Sec. 1930.119 of this subpart.
(a) Applicants. Prior to loan or grant closing, supervision will
largely be conducted during conferences and meetings with prospective
borrowers and their various representatives such as applicant's
attorney, architect, property manager, etc. Examples of supervision
include:
(1) Organizational meetings to discuss needs, services available,
owner obligations, and to establish organizational committees.
(2) Preapplication and application conferences.
(3) Preconstruction conferences to reach an understanding regarding
responsibilities and the manner in which development will be performed.
The applicant at this point should be made fully aware of the
responsibilities detailed in Sec. 1930.103 of this subpart.
(4) Preloan and/or grant closing conferences to review requirements
of the loan resolution or agreement, closing requirements, and
management plan and to establish responsibilities for the operation of
the project. The applicant at this point should be made fully aware of
the responsibilities entailed in Sec. 1930.103 of this subpart.
(5) Preoccupancy conferences to review the management plan,
marketing plan, and the general readiness of project facilities,
recordkeeping systems, renting or occupancy procedures, and personnel
assignments to begin project operation. This conference will be
conducted according to Sec. 1944.235 (h) of subpart E of part 1944 of
this chapter.
(b) Borrowers who have yet to demonstrate their ability and
borrowers with problems. When the borrower is establishing its
operations, or when borrowers are delinquent, or have other
difficulties, supervisory guidance will include:
(1) Implementation and/or review for compliance with the management
plan.
(2) Establishment and maintenance of a financial recordkeeping and
reporting system.
[[Page 206]]
(3) Compliance with the requirements of the loan agreement or loan
resolution.
(4) Review of annual audit and budget requirements.
(5) Any other supervision that may be necessary to assure effective
and successful operation of the project.
(6) A requirement that the borrower contract with a management firm
with proven background and/or experience in property management. In the
case of cooperative housing, this stipulation will apply only when it
has been determined that the cooperative is unable to manage itself.
(c) Borrowers who have demonstrated ability. Supervision will
consist of at least an annual review of budgets and other management
reports according to Sec. 1930.122, and a triennial supervisory visit
according to Sec. 1930.119 of this subpart when the borrower is:
(1) Successful in completing a first full fiscal year of operation.
(2) Current with loan payments.
(3) In compliance with other loan or grant requirements.
(4) Maintaining the security in a satisfactory manner.
(5) Otherwise progressing satisfactorily.
Secs. 1930.111-1930.112 [Reserved]
Sec. 1930.113 Borrower responsibilities.
Borrower responsibilities are described in paragraph III of exhibit
B of this subpart.
Secs. 1930.114-1930.116 [Reserved]
Sec. 1930.117 Agency responsibilities.
Effective supervision requires FmHA or its successor agency under
Public Law 103-354 employees to be familiar with the various types of
borrowers and their management plan; to communicate effectively with
borrowers and their management agent, when applicable; and to provide
guidance in the operation and management of MFH projects.
(a) Servicing Official. Servicing Officials are responsible for
effective borrower supervision. Servicing Officials will:
(1) Organize their work and the work of their staffs in order that
time is used effectively in providing borrower supervision and place
emphasis on supervisory visits and review of borrower management
reports.
(2) Emphasize to the borrower and/or the borrower's management agent
that they, not FmHA or its successor agency under Public Law 103-354,
are responsible for managing the project, planning and following budgets
within acceptable tolerance, collecting rents or occupancy charges,
repaying the loan on schedule, budgeting for adequate project operations
and maintenance; and for compliance with any loan or grant agreement or
resolution, State laws, and other FmHA or its successor agency under
Public Law 103-354 requirements.
(3) Monitor all provisions or conditions of the FmHA or its
successor agency under Public Law 103-354 approval documents to ensure
that they are fully complied with throughout the life of the project.
(4) Monitor the borrowers' compliance with FmHA or its successor
agency under Public Law 103-354 regulations concerning real property
tax, insurance, bonding, security, budgeting, and reporting
requirements.
(5) Systematically monitor response to OIG report findings at
specific intervals and/or during routine supervisory visits, compliance
reviews, and physical inspections.
(6) Assure that borrower financing statements are continued and not
allowed to lapse.
(7) Have each borrower designate a representative to serve as its
contact source for Agency communication on project related matters.
(8) Become familiar with the borrower's bylaws or other rules and
regulations when necessary to assure compliance with FmHA or its
successor agency under Public Law 103-354 program civil rights and Fair
Housing Act requirements.
(9) Provide borrower governing bodies with suggestions for
information distribution that may be helpful in keeping the membership
in touch with activities to increase and maintain membership interest.
(10) Provide informed advice and guidance to borrowers as needed.
[[Page 207]]
(11) Identify problem borrower accounts and initiate servicing plans
including workout agreements with the borrower according to Exhibit F of
Subpart B of Part 1965 of this chapter.
(12) Gather, maintain, analyze, and distribute a database of actual
MFH operation and maintenance expense for determination of expense
reasonableness that reflects variables of project operation and
characteristics.
(13) Avoid doing any of the following:
(i) Try to run the borrower's business.
(ii) Take charge of the borrower's meetings.
(iii) Attempt to supervise the borrower only through its attorney,
architect, or management agent.
(iv) Presume that projects without adverse complaints do not require
monitoring and/or supervision by FmHA or its successor agency under
Public Law 103-354.
(b) State Director. State Directors will:
(1) Coordinate and direct supervisory activities related to
borrowers and perform other functions as prescribed by this subpart.
(2) Provide guidance and leadership to assure that the State staff
and Servicing staff thoroughly understand and carry out their
responsibilities.
(3) Develop and conduct training programs necessary to assure that
FmHA or its successor agency under Public Law 103-354 personnel are kept
up-to-date regarding the most effective supervisory methods, that the
proper time is allotted to supervision, and that borrowers receive
adequate supervision and financial counseling.
(4) Establish and maintain a system to monitor followup to findings
in OIG reports, supervisory visits, compliance reviews, physical
inspections, or other factual sources.
(5) Maintain necessary liaison with the OGC.
(6) Maintain necessary liaison with State and local authorities,
agencies, and other organizations. For example, in the case of projects
benefiting the elderly, it is essential that liaison be maintained with
the aging network such as State and Area Agencies on Aging to assure
that available support services are offered to or accessible by the
tenants.
(7) Maintain and update State Office records for effective program
supervision and evaluation.
(8) Assist the Servicing Official in developing a realistic plan to
resolve project operational problems.
(c) State staff. State staff members who are designated by the State
Director as MFH Servicing Officials responsible for supervision of
borrowers covered by this subpart will:
(1) Continuously monitor supervisory and account servicing
activities and borrower status to assure that each project is receiving
timely and effective supervision.
(2) Train staff to effectively perform the required supervisory and
account servicing activities, and to provide informed guidance in sound
operation and management policies. The assistance of the aging network
such as State and Area Agencies on Aging should be sought in connection
with training which pertains to the management of services to the
elderly.
(3) Post review closing of loans and grants to determine that they
have been properly closed.
(4) Visit a sufficient number of projects to assure that proper
supervision and account servicing is being provided.
(5) Assemble, analyze, and distribute a statewide database of actual
MFH operation and maintenance costs for determination of cost
reasonableness that reflects variable characteristics of project
operation.
Sec. 1930.118 [Reserved]
Sec. 1930.119 Supervisory visits, compliance reviews, and inspections.
(a) Purpose. Servicing Officials and other FmHA or its successor
agency under Public Law 103-354 authorized persons will visit the MFH
project site, including the management office, as necessary to
accomplish the objectives of the loan or grant. Following are the major
purposes for which visits may be made:
(1) To assist with satisfactory development of the project.
(2) To evaulate the management program of the project pursuant to
exhibit B of this subpart, such as:
[[Page 208]]
(i) Adherence to the management plan.
(ii) Compliance with the management agreement when applicable.
(iii) To review compliance with the Affirmative Fair Housing
Marketing Plan and/or the Equal Opportunity requirements of title VI of
the Civil Rights Acts of 1964, the Civil Rights Act of 1968 as amended
by the Fair Housing Amendments Act of 1988, section 504 of the
Rehabilitation Act of 1973, and the Age Discrimination Act of 1975.
(3) To review borrower records and verify required compliance and
information, such as:
(i) Tenant or member eligibility.
(ii) Tenant or member income.
(iii) Tenant or member selection criteria.
(iv) Waiting lists.
(v) Rental or occupancy rates are in accordance with an FmHA or its
successor agency under Public Law 103-354 approved budget.
(vi) Other necessary items.
(4) To inspect and ascertain proper maintenance and assure
protection of the security for the FmHA or its successor agency under
Public Law 103-354 loan.
(5) To determine if the project is being operated according to the
approved budget.
(6) To determine that borrower and/or borrower's managment agent is
fully complying with all provisions and conditions of the approval
document regarding site development and use restrictions.
(7) In the case of all LH borrowers, including on-farm LH, to
determine that the housing is serving domestic farm laborers, as defined
by paragraph II of exhibit B of this subpart, and that the LH housing
provided is decent, safe, and sanitary.
(b) Frequency and standards. Visits will be made as follows:
(1) Supervisory visits will be made as needed to assure compliance
with FmHA or its successor agency under Public Law 103-354 policies and
objectives. A Servicing staff person or other FmHA or its successor
agency under Public Law 103-354 authorized person will perform a post
rent-up or occupancy visit before the end of the first 90 days of
operation; and a thorough supervisory visit no later than 12 months
following the post occupancy visit, and at least every 36 months
thereafter at each project.
(i) More frequent visits to delinquent or problem projects,
irrespective of loan type, should be scheduled as needed.
(ii) In the case of borrowers with on-farm LH unit(s) or LH
borrowers providing seasonal farm labor housing, such visits should be
made during the season of occupancy and preferably during an annual farm
visit.
(iii) Planned visits will be included in the monthly work calendar.
(iv) The visit shall be conducted with the borrower and/or the
borrower's designated representative.
(v) Exhibits F, F-1, F-2, G, G-1, and G-2 of this subpart should be
used to assist in the preparation, completion, and followup of visits.
(vi) For small rental projects consisting of only a few units
(usually 1 to 3), the degree of completion of exhibits F, G, G-1 and G-2
may be minimized. Supervisory visits to such projects are required only
once every three years and should concentrate on tenant eligibility,
income and adjustments to income verification, maintenance, insurance
coverage, and status of loan payments.
(2) The Servicing Official or other FmHA or its successor agency
under Public Law 103-354 authorized person will conduct an inspection of
each project at least once every 36 months with the borrower, site
manager, or designated representative present.
(i) This inspection may be made simultaneously with a supervisory
visit scheduled in accordance with this section.
(ii) The results of the inspection will be documented on HUD Form
9822, ``Report of Physical Condition and Estimate of Repair Costs,'' or
a similar form for the same purpose may be used for this inspection.
(iii) Based on the Servicing person's knowledge, without further
research, the estimated repair need and cost columns of the form will be
completed during the inspection visit.
(c) Preparation. The person planning to make the visit and
inspection will
[[Page 209]]
review the most recent quarterly or annual reports, the running records,
correspondence, and other Servicing Office records to be fully aware of
the supervisory needs of the project. This awareness should be developed
into an informal visit plan and include, but not be limited to such
things as; payment status, subsidy status, due dates of taxes and
insurance, adequacy of fidelity coverage, and any known maintenance
problems.
(d) Notice of visit or inspection. The management agent, or when
applicable, the owner should receive a written notice of the scheduled
visit or inspection from the Servicing Office 30 days before the event
to insure that needed records and staff are available (see Guide Letter
1930-2 for borrower notification.)
(e) Conducting visit or inspection. The person making the visit or
inspection should spend sufficient time at the project to accomplish the
visit plan and any additional needs that are observed or brought out by
the tenants, members, or management staff.
(f) Recording, reporting and followup. The preparation notes and
results of each visit should be recorded on exhibits F, G, G-1 and G-2
of this subpart and filed in the borrower's servicing file. A letter
highlighting any needed followup actions and a copy of the completed
supervisory visit checklist will be directed to the management agent
and/or the borrower within 30 days after the visit. Followup will
continue through resolution of any problems. Any major problems with the
project will be reported in writing to the State Director with
recommendations for corrective action. Exhibit A to subpart A of part
1955 of this chapter or Form FmHA or its successor agency under Public
Law 103-354 1955-2, ``Report on Real Estate Problem Case,'' may be used
as appropriate.
(g) Compliance reviews. As authorized State or Servicing staff
member or other FmHA or its successor agency under Public Law 103-354
authorized person will complete the Civil Rights and Fair Housing review
requirements according to subpart E of part 1901 of this chapter. If
initial rent-up or occupancy has not occurred by the time of initial
review, a subsequent review will be due one year following initial
occupancy and then every 36 months thereafter or in accordance with
subpart E of part 1901 of this chapter.
Secs. 1930.120-1930.121 [Reserved]
Sec. 1930.122 Borrower accounting methods, management reporting and audits.
It is the objective of FmHA or its successor agency under Public Law
103-354 that borrowers will maintain accounts and records necessary to
conduct their operation successfully and from which they may accurately
report operational results to FmHA or its successor agency under Public
Law 103-354 for review, and otherwise comply with the terms of their
loan agreements with the Agency. Borrower accounts and records will be
kept or made available in a location within reasonable access for
inspection, review, and copying by representatives of FmHA or its
successor agency under Public Law 103-354 or other agencies of the U.S.
Department of Agriculture authorized by the Department.
(a) Accounting methods and records--(1) Method of accounting and
financial statements. Borrowers may choose a cash or accrual method of
accounting, bookkeeping, and budget preparation as described in their
project management plan, unless otherwise specified in a work-out plan
as part of a servicing action. Balance sheets or statements of financial
condition may be prepared reflecting the same accounting method, except
that the accrual method of reporting financial condition will be used
where the borrower is required to submit an annual audit.
(2) Approval requirement. Before loan closing or start of
construction, whichever is first, each borrower shall incorporate a
description of its method of accounting, bookkeeping, budget
preparation, and reporting of financial condition and, when applicable,
plans for auditing, in the project management plan that must be approved
by FmHA or its successor agency under Public Law 103-354.
(3) Records. Form FmHA or its successor agency under Public Law 103-
354 1930-5, ``Bookkeeping System-Small Borrower,'' may be used by small
organizations as a method of recording and
[[Page 210]]
maintaining accounting transactions. Automated systems may be used if
they meet the conditions of paragraph XVI of exhibit B of this subpart.
(4) Record retention. Each borrower shall retain all financial
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 or its successor agency under
Public Law 103-354, the OIG, the Comptroller General, or to their
representatives.
(b) Management reports and review processes. The objective of
management reports and review processes is to furnish the management and
FmHA or its successor agency under Public Law 103-354 with a means of
evaluating prior decisions and to serve as a basis for planning future
operations and financial conditions. Timely reports and their review
furnish necessary information to make sound management decisions. All
reports will relate only to the FmHA or its successor agency under
Public Law 103-354 financed project and borrower entity. Separate
reports will be prepared and submitted for each project owned by the
same borrower. Forms necessary in making the required reports may be
requested from FmHA or its successor agency under Public Law 103-354.
The various review processes described in this paragraph are illustrated
at Sec. 1930.123 (i) of this chapter.
(1) Annual budget and utility allowance--(i) Objective. It is the
objective of FmHA or its successor agency under Public Law 103-354 that
project budgets and/or utility allowances be prepared, reviewed, and
approved in such manner and timing that the approved budget and/or
utility allowance, including any authorized changes to same, become
effective on the beginning of a fiscal year of project operation.
(ii) Documents.
(A) The annual project budget will be prepared on Form FmHA or its
successor agency under Public Law 103-354 1930-7, ``Multiple Family
Housing Project Budget,'' by the borrower or its agent following the
instructions on the form. It will reflect budget planning for a 12 month
fiscal year. Figures in the ``actual'' column will reflect at least 9
months of actual fiscal year activity and no more than 3 months of
estimated activity for the balance of the same fiscal year based on
recent actual experience.
(B) When tenants pay their own utilities, the housing allowance for
utilities and other public services will be prepared on exhibit A-6 to
subpart E of part 1944 of this chapter. Exhibit A-6 will be prepared by
the borrower or its agent following instructions attached to the exhibit
and will be submitted to FmHA or its successor agency under Public Law
103-354 together with Form FmHA or its successor agency under Public Law
103-354 1930-7 with justification to either retain or change the utility
allowance.
(iii) Supporting data. Any data, justification, or other
documentation required by the instructions for preparation of Form FmHA
or its successor agency under Public Law 103-354 1930-7 and exhibit A-6
to subpart E of part 1944 of this chapter, or otherwise required by the
Servicing Official on an individual case basis, shall be ttached to the
respective document when submitted to the Servicing Office.
(iv) Due date. The borrower can submit the necessary documents as
soon as 9 months of current fiscal year actuals are available, but in
sufficient time to meet the objective stated in (b)(1)(i) of this
section. The Servicing Official needs 15 to 30 days to review project
budgets and utility allowances when no changes of rents, occupancy
charges, or utility allowances are needed. When such changes are needed,
the borrower needs to submit documents to allow sufficient time for
review and proper notice of change to tenants or members.
(v) FmHA or its successor agency under Public Law 103-354 review.
Form FmHA or its successor agency under Public Law 103-354 1930-7 and
Exhibit A-6 to subpart E of part 1944 of this chapter and any attachment
will be reviewed by the Servicing Office as part of the rental or
occupancy charge/utility allowance change review and/or annual review
process.
(2) Rental or occupancy charge budget and/or utility allowance
change--(i) Objective. It is the objective of FmHA or its successor
agency under Public Law
[[Page 211]]
103-354 that changes to project rental or occupancy charges and/or
utility allowances be incorporated into the annual budget review and
planning process in such manner and timing that authorized changes
become effective at the beginning of a fiscal year of project operation.
(ii) Documents. When a rental or occupancy charge and/or utility
allowance change is proposed, the borrower or its agent will prepare and
submit Form FmHA or its successor agency under Public Law 103-354 1930-7
and exhibit A-6 to subpart E of part 1944 of this chapter and any
supporting attachments following the instructions for either document.
(iii) Standards and timing. (A) The policies and procedures
governing rental or occupancy charge and/or utility allowance change are
contained in exhibit C of this subpart, (available in any FmHA or its
successor agency under Public Law 103-354 office or the ``Borrower
Handbook'' made up of selected exhibits of this Subpart and parts of
this chapter).
(B) To meet the projected effective date of change, the necessary
documents need to be received by the Servicing Official at least 75 days
ahead of the effective date of change to allow FmHA or its successor
agency under Public Law 103-354 review to authorize a 60 day notice to
tenants or members of an impending change. The ``actual'' column of Form
FmHA or its successor agency under Public Law 103-354 1930-7 shall
contain actual data for the fiscal year to date plus the projection of
expected data for the remainder of the fiscal year. This projection
should cover a period not exceeding 90 days. The same supporting data
standards of paragraph (b)(1)(iii) of this section will apply.
(C) Should the borrower need to request a rental or occupancy charge
and/or utility allowance change at some time other than described in
paragraph (b)(2)(iii)(B) of this section, e.g., mid-fiscal year, Form
FmHA or its successor agency under Public Law 103-354 1930-7 shall
reflect the project's financial needs for the next 12 months of
operation and the ``actual'' column shall reflect the most recent 12
months of actual data. The previous fiscal year's audit report, or Form
FmHA or its successor agency under Public Law 103-354 1930-8, ``Multiple
Family Housing Borrower Balance Sheet,'' as appropriate, shall be
submitted with the change request if it was not previously submitted to
the Servicing Office.
(iv) FmHA or its successor agency under Public Law 103-354 review.
Exhibit C of this subpart shall govern FmHA or its successor agency
under Public Law 103-354 review of the borrower's request for rental or
occupancy charge and/or utility allowance change.
(3) Quarterly report--(i) Objective. The objective of FmHA or its
successor agency under Public Law 103-354 is for quarterly reports to
provide a monitoring means for borrowers and FmHA or its successor
agency under Public Law 103-354 to mutually check a borrower's progress
in achieving program objectives and when applicable, meeting servicing
goals.
(ii) Document. Form FmHA or its successor agency under Public Law
103-354 1930-7 will be used by borrowers to prepare the quarterly
report.
(iii) Standards. Form FmHA or its successor agency under Public Law
103-354 1930-7 will be completed following the instructions on the form
for preparation of a quarterly report. The quarterly report shall be
required upon commencement of any of the following situations:
(A) Start up of initial occupancy after completion of new
construction or substantial rehabilitation.
(B) Reamortization, transfer of an existing project loan or a 100
percent membership change.
(C) Failure to make a scheduled loan payment, failure to maintain
required transfers to the reserve account, or failure to maintain
reserve accounts at authorized current levels.
(D) Existence of reasons stated in paragraph (b)(3)(iv)(B) of this
section when quarterly reports will suffice in place of monthly reports.
(iv) Frequency and discontinuance--(A) Quarterly reports. Quarterly
reports shall be prepared and submitted for each quarter year at least
through the first year of operation for any situation described in
paragraph (b)(3)(iii) of this section and each quarter year thereafter
for new or existing projects
[[Page 212]]
until discontinuance is authorized by the Servicing Official. The
Official will evaluate the following in reaching a decision to
discontinue:
(1) An adequate accounting system is functioning properly, is kept
current, and the most recent required annual financial reports are
complete and have been submitted to the Servicing Office.
(2) Project loan payments to FmHA or its successor agency under
Public Law 103-354 are on schedule.
(3) The project reserve account is ahead or on schedule, allowing
for authorized expenditures or authorized reduction in funding as set
forth in an approved servicing plan or budget.
(4) The annual review has been completed by the Servicing Office and
the annual audit, or verification of review when appropriate, has been
found acceptable.
(5) The Servicing Official has inspected the project, reviewed
project operations, and found them acceptable. When this and the
preceding determinations are made, a letter of discontinuance of the
quarterly report shall be sent to the borrower or its agent with a copy
sent to the State Director.
(B) Monthly reports. Preparation and submission of the reports
described in this paragraph may be required monthly at the option of the
Servicing Official, rather than quarterly, when warranted in unusual
situations.
(1) This requirement may be invoked when determined essential by the
Servicing Official as part of a servicing plan made in accordance with
exhibit F of subpart B of part 1965 of this chapter (available in any
FmHA or its successor agency under Public Law 103-354 office).
(2) Reasons for invoking the reporting requirement on a monthly
basis may include, but not be limited to, factors such as apparent
violations of policy or reporting practices, audit findings, sudden
increases of vacancy and/or accounts payable or receivables, or other
evidence of weak financial condition.
(v) Due date. Quarterly (or monthly) reports shall be due in the
FmHA or its successor agency under Public Law 103-354 Servicing Office
by the 20th day of the month immediately following the close of the
respective reporting period.
(vi) FmHA or its successor agency under Public Law 103-354 review.
(A) The Servicing Official will review the reports for year-to-date
status of project operations. When reports reveal actual data that
exceeds acceptable tolerance from a forecasted budget SUBTOTAL item, or
vacancies and accounts receivable and/or payable are increasing, the
Servicing Official will initiate verbal and/or written dialogue with the
borrower for further resolution of problems or to otherwise achieve
acceptable progress.
(B) The Servicing Official will complete the FmHA or its successor
agency under Public Law 103-354 review and forward the borrower's report
and any related documentation to the State Director by the 30th day of
the month following close of the reporting period.
(C) If the borrower fails to submit its report by the due date, this
fact will be reported to the State Director by the 30th day of the month
following the close of the reporting period: otherwise, the Servicing
Office will complete its review of a submitted report no later than 10
calendar days following receipt of the borrower's report.
(4) Annual audit reports and verifications of review--(i) Documents
and general standards--(A) Annual audit report. An audit report will be
in the format as prepared by a Certified Public Accountant (CPA) or
Licensed Public Accountant (LPA), provided the LPA was licensed on or
before December 31, 1970.
(1) All audits are to be performed in accordance with generally
accepted government auditing standards, as set forth in ``Government
Auditing Standards'' (1988 Revision), established by the Comptroller
General of the United States, and any subsequent revisions (this
publication is commonly referred to as the ``Yellow Book'' or ``General
Accounting Office Standards''). In addition, the audits are also to be
performed in accordance with applicable portions of various Office of
Management and Budget (OMB) Circulars, Departmental Regulations, parts
3015 and 3016 of chapter XXX of title 7, and the FmHA or its successor
agency under Public Law 103-354 Audit Program as
[[Page 213]]
specified in separate sections of this subpart.
(2) An audit report is required for any project with 25 or more
units unless the State Director or Servicing Official determines that a
project with 24 or fewer units requires an audit for reasons of good
cause. Such reasons include, but are not limited to, situations where
project records are incomplete or inaccurate, or it appears that the
borrower has not adequately accounted for project funds, or where the
borrower's operation consists of multiple projects where each project is
24 or fewer units (with subsidiary reports prepared for each project).
Note: The State Director or Servicing Official may require that the
accounts of RHS borrowers be audited if the loan exceeds the 2-year
repayment term.
(3) The project audit report should cover the borrower entity and
the expense for preparation of the audit report may include the
auditor's preparation of any Internal Revenue Service (IRS) required
borrower entity reports, i.e., Schedule K1 (IRS Form 1065), ``Partner's
Share of Income, Credits, Deductions, etc.''.
(4) The CPA or LPA auditor who prepares the audit report may not be
an individual or organization that is associated with the borrower in
any manner, other than the performance of the audit review and
preparation of the project audit report and required IRS reports, that
creates an identity of interest or possible conflict of interest (as
described in paragraph V B of exhibit B of this subpart). For example,
the CPA or LPA auditor may not be an employee of the borrower or an
employee of any officer of the organization, nor be an employee of any
member, stockholder, partner, principal, or have any ownership or other
interest in the borrower organization.
(5) The State Director or Servicing Official may authorize the
initial audit report to cover a period up to 18 months for new projects
whose first operating year does not exceed 6 months.
(6) The State Director may also make an exception to the CPA or LPA
audit requirement for not more than one successive year in a specific
case providing: The borrower submits a written request; the FmHA or its
successor agency under Public Law 103-354 approved budget for the
project includes a typical and reasonable fee for the audit but the
negotiated cost of an audit would increase the monthly per unit rental
rate by more than $4.00; and the required reports, including a CPA or
LPA prepared audit, were properly submitted for the prior year's project
operations.
(B) Verification of review. Form FmHA or its successor agency under
Public Law 103-354 1930-8 will be prepared by a competent person
qualified by education and/or experience who has no identity of interest
or possible conflict of interest with the borrower or its principals.
However, in the case of a nonprofit institution, the verification of
review may be made by a committee of the membership but may not include
any officer, director or employee of the borrower.
(1) Form FmHA or its successor agency under Public Law 103-354 1930-
8 will be used for the verification of review of project accounts and
the review verifier will also review the actual data on Form FmHA or its
successor agency under Public Law 103-354 1930-7 for projects with 24 or
fewer units unless the requirements of paragraph (b)(4)(i)(A)(1) of this
section are invoked by the State Director or Servicing Official.
(2) The State Director or Servicing Official may authorize the
initial verification of review to cover a period of up to 18 months for
a new project whose first operating year was less than 6 months.
(C) Project operating budget actuals. An annual report of actuals
for the full operating year will be submitted by the borrower, or its
agent, using Form FmHA or its successor agency under Public Law 103-354
1930-7. The report will reflect the actual income and expenses for the
project for the borrower's 12 month operating year. The report will be
submitted with the annual audit report or Form FmHA or its successor
agency under Public Law 103-354 1930-8, as appropriate.
(D) Form FmHA or its successor agency under Public Law 103-354 1930-
10, ``Annual Multiple Family Housing Project Review.'' When the annual
audit report or verification of review is received by the
[[Page 214]]
Servicing Office, parts II C and D of Form FmHA or its successor agency
under Public Law 103-354 1930-10 may be prefilled to the extent possible
to record previous year status as reported in the audit report or
verification of review. The Form FmHA or its successor agency under
Public Law 103-354 1930-10 will be completed later as described in
Sec. 1930.123 (e)(2) and (i) of this subpart.
(E) Fraud, abuse, and illegal acts. If the review verifier becomes
aware of any indication of fraud, abuse or illegal acts in FmHA or its
successor agency under Public Law 103-354 financed projects, prompt
written notice shall be given to the appropriate USDA OIG Regional
Inspector General and the Servicing Official.
(ii) Specific standards--(A) State and local governments and Indian
tribes. These organizations are to be audited in accordance with this
subpart, subpart I of 7 CFR part 3015, and OMB Circular A-128, with
copies of the audit being forwarded by the borrower to the Servicing
Official and the appropriate Federal cognizant agency, if applicable.
For guidance in meeting these requirements, the auditor may refer to the
American Institute of Certified Public Accountants Audit and Accounting
Guide for ``Audits of State and Local Governmental Units.'' The term
``Federal financial assistance'' used herein shall mean Federal loan
and/or grant funds received by the borrower, but not rental subsidies.
(1) Cognizant agency. (i) ``Cognizant agency'' means the Federal
agency assigned by OMB Circular A-128. Within USDA, the USDA OIG shall
fulfill cognizant agency responsibilities.
(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 or its successor agency
under Public Law 103-354 provided the major portion of Federal financial
assistance, the appropriate USDA OIG Regional Inspector General shall be
contacted.
(2) Audit standards. 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) State and local governments and Indian tribes that receive
$100,000 or more a year in Federal financial assistance shall have an
audit made in accordance with OMB Circular A-128.
(ii) State and 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 the FmHA or its successor agency under Public Law 103-
354 Audit Program. This is an option of the State and local government
or Indian tribe. If the election is made to have an audit performed in
accordance with the FmHA or its successor agency under Public Law 103-
354 Audit Program, the audit shall be in accordance with paragraph
(b)(4)(ii)(C) of this section.
(iii) State and local governments and Indian tribes that receive
less than $25,000 a year in Federal financial assistance shall be exempt
from compliance with OMB Circular A-128 and the FmHA or its successor
agency under Public Law 103-354 Audit Program. These State and local
governments and Indian tribes shall be governed by audit standards
prescribed by State and local law or regulation.
(iv) Public hospitals and public colleges and universities may be
excluded from OMB Circular A-128 audit standards. If such entities are
excluded, audits shall be made in accordance with paragraph
(b)(4)(ii)(B) of this section.
(v) Indications of fraud, abuse, and illegal acts shall be processed
in accordance with paragraph (b)(4)(i)(E) of this section.
(B) Nonprofit institutions. These organizations are to be audited in
accordance with this subpart, subpart I of 7 CFR Part 3015, and OMB
Circular A-133, with copies of the audit being forwarded by the borrower
to the Servicing Officer and the appropriate Federal cognizant agency,
if applicable. The term Federal financial assistance used herein shall
mean Federal loan and/or grant funds received by the borrower, but not
rental subsidies.
(1) Cognizant agency. See paragraph (b)(4)(ii)(A)(1) of this
section.
[[Page 215]]
(2) Audit standards. (i) Nonprofit institutions that receive
$100,000 or more a year in Federal financial assistance shall have an
audit made in accordance with the provisions of OMB Circular A-133.
However, nonprofit institutions receiving $100,000 or more but receiving
awards under only one program have the option of having an audit of
their institution prepared in accordance with the provisions of the
Circular or having an audit made of the one program in accordance with
paragraph (b)(4)(ii)(C) of this section. For prior or subsequent years,
when an institution has only loan guarantees or outstanding loans that
were made previously, the institution will be required to conduct audits
for those programs in accordance with paragraph (b)(4)(ii)(C) of this
section.
(ii) Nonprofit institutions that receive at least $25,000 but less
than $100,000 a year in Federal financial assistance shall have an audit
made in accordance with OMB Circular A-133 or in accordance with the
FmHA or its successor agency under Public Law 103-354 Audit Program. If
the election is made to have an audit performed in accordance with the
FmHA or its successor agency under Public Law 103-354 Audit Program, the
audit shall be performed in accordance with paragraph (b)(4)(ii)(C) of
this section.
(iii) Nonprofit institutions receiving less than $25,000 a year in
Federal financial assistance are exempt from Federal audit standards,
but records must be available for review by appropriate officials of
FmHA or its successor agency under Public Law 103-354.
(3) Indications of fraud, abuse and illegal acts shall be processed
in accordance with paragraph (b)(4)(i)(E) of this section.
(C) FmHA or its successor agency under Public Law 103-354 Audit
Program. For-profit organizations and other entities referred to this
paragraph by paragraphs (b)(4)(ii)(A) and/or (B) of this section, audits
will be performed under the guidance of the audit guide entitled ``U.S.
Department of Agriculture, Farmers Home Administration or its successor
agency under Public Law 103-354-Audit Program'' (available in any FmHA
or its successor agency under Public Law 103-354 office).
(iii) Due date. (A) Annual audit reports and verifications of
review, as appropriate, and Form FmHA or its successor agency under
Public Law 103-354 1930-7 with 12 months of project operation actuals
are due in the Servicing Office no later than 90 days following the
close of the project fiscal year.
(B) If the audit or verification of review cannot be submitted by
the due date, and the owner presents a request for extension supported
by evidence that delay is at the request of the auditor, and the request
has a reasonable explanation of why an extension of the due date is
needed, the Servicing Officer may authorize up to a 30-day extension of
the due date.
(C) If an explanation is not forthcoming from the auditor, or the
explanation received is without good reason, or the Servicing Official
otherwise suspects fiscal difficulty, the Servicing Official may request
the borrower to submit to the Servicing Office for review, the project
bank statements for the general operating, reserve, and investment
accounts covering the most recent 60 day period.
(D) If the borrower fails to submit the requested bank statements by
the date stipulated by the Servicing Official, the Servicing Official
will immediately refer the matter to the OIG.
(iv) FmHA or its successor agency under Public Law 103-354 review.
An audit report or verification of review will be reviewed by the
Servicing Official within 60 days following receipt of the audit report
or verification of review. From this annual audit review process, the
Servicing Official will initiate action on findings and concerns needing
immediate attention. Those findings and concerns not needing immediate
action will be considered in the next budget planning and annual review
process at the end of the fiscal year for implementation in the
following fiscal year of project operation.
(5) Miscellaneous management reports. These reports include, but are
not limited to, the following items that provide additional or unique
information that augment or otherwise support other management reports
described in this section:
(i) Documents and formats--(A) Minutes of annual meetings. Written
record
[[Page 216]]
of annual meeting of organizational borrowers who, by their
organizational charter, are required to maintain such written records.
(B) Energy audit. Prepared according to the guidance of exhibit D of
this subpart. Energy audits, including implementation plans for energy
conservation, are prepared and submitted on 5-year cycles.
(C) Miscellaneous items. These include other written or
electronically stored data or information such as financial or income/
expense data, justification statements, or other technical or
informative material that stands alone or supports other managements
reports described in this section, whether volunteered by the borrower
or requested by the Servicing Official.
(ii) Due date. Annual minutes and miscellaneous items are due along
with the report they are attached to as supporting documentation. New
energy audits are due with the next submission of Form FmHA or its
successor agency under Public Law 103-354 1930-7 following expiration of
the old energy audit.
(iii) FmHA or its successor agency under Public Law 103-354 review.
FmHA or its successor agency under Public Law 103-354 review of
miscellaneous management reports will coincide with review of the
management report that each is attached to as documentation.
Sec. 1930.123 Annual review.
(a) Objective. The objective of the annual review is for the FmHA or
its successor agency under Public Law 103-354 Servicing Official to
determine the degree and adequacy of the borrower's achievement of
operational compliance with the applicable FmHA or its successor agency
under Public Law 103-354 loan and/or grant agreements and to provide
followup consultation or supervision to the borrower in meeting program
objectives.
(b) Annual review process. During the annual review process, the
Servicing Official will consider the overall project financial and
operational activity. Project strengths and weaknesses will be
identified, based on review of various documents, and resultant
conclusions will be incorporated into the annual budget planning process
that should happen concurrently with the annual review process.
(c) Documents used in the review. (1) Form FmHA or its successor
agency under Public Law 103-354 1930-7.
(2) Exhibit A-6 of subpart E of part 1944 of this chapter.
(3) Prior fiscal year annual audit report as prepared by a CPA or
LPA, or when applicable, Form FmHA or its successor agency under Public
Law 103-354 1930-8 prepared by a review verifier accompanied by Form
FmHA or its successor agency under Public Law 103-354 1930-7 with actual
income and expense data.
(4) Exhibit A-1 of this subpart prepared in conjunction with the
prior year annual audit report.
(5) Applicable attachments required as part of any of the above
documents (or other information as volunteered by the borrower or
specifically requested by the FmHA or its successor agency under Public
Law 103-354 Servicing Officer for the review at hand).
(6) Minutes of annual meeting for association type borrowers.
(7) Current energy audit with energy conservation implementation
plan (from FmHA or its successor agency under Public Law 103-354
borrower casefile except when new energy audit is due with Form FmHA or
its successor agency under Public Law 103-354 1930-7).
(8) Latest supervisory visit and physical inspection of property
reports (from FmHA or its successor agency under Public Law 103-354
borrower casefile).
(d) Preparation for the annual review. Some documents needed are
available in the borrower's casefile and the balance needed will be
submitted with the annual budget review request. Therefore, annual
review should occur within 30 days of receipt of all necessary
documents. This should result in annual reviews being completed in the
last 2 months of a fiscal year or the first 2 months of the next fiscal
year. When determined necessary, the Servicing Officer should:
(1) Notify the borrower of the required management reports and their
due dates, and provide the borrower with necessary guides and forms for
use in preparing the reports.
[[Page 217]]
(2) With a new nonprofit borrower organization, determine that the
borrower is properly planning for its annual meeting for the correct
date according to its organizational documents. The Servicing Official
should plan to attend the annual meeting unless the borrower has
progressed as described in Sec. 1930.110(c) of this subpart.
(e) Timing, conducting, and completing the review. (1) The annual
review process will be scheduled and performed concurrently with the
budget planning process, normally in the last quarter of a project
fiscal year (see illustration in paragraph (i) of this section). This
process will occur separately from the annual audit review process
(which will occur following close of a project fiscal year).
(2) The Servicing Official will use the applicable resource
documents listed above when performing the review. The Servicing
Official will conduct the annual review following the review and
recording guidance of Form FmHA or its successor agency under Public Law
103-354 1930-10. The Form FmHA or its successor agency under Public Law
103-354 1930-10 will be completed during the prescribed last quarter
review period.
(3) The Servicing Official may invite the borrower or its agent to
participate in any part of the annual review.
(f) Distribution of reviewed documents. (1) A copy of the results of
the annual review on Form FmHA or its successor agency under Public Law
103-354 1930-10 along with recommendations or compliance requirements
will be sent to the borrower and/or its agent and to the State Director
as soon as the review is completed.
(2) The individual items required to perform the annual review will
be distributed according to appropriate FMI's as listed on exhibit B-7
of this subpart.
(g) State Director's review of annual reviews. Upon receipt of the
items identified in this section, the State Director will:
(1) Review all submissions of Form FmHA or its successor agency
under Public Law 103-354 1930-10 that are used by the Servicing Official
to record summary results of an annual project review.
(2) Conduct a more detailed review of only those annual reviews that
warrant further review. The State Director should provide summarized
comment to Servicing Officials after completion of statewide review,
otherwise the State Director will comment on any specific borrower and/
or project annual review selected for further review.
(3) Will review Form 1930-7 and exhibit A-6 of subpart E of part
1944 for approval when the authority to approve budgets as part of the
annual review is not delegated to the FmHA or its successor agency under
Public Law 103-354 Servicing Official.
(4) Be prepared for a sample review of annual reviews by the
National Office upon request during a combined assessment review or
other specific need.
(h) On-farm LH annual review. For individual farm borrowers with on-
farm LH unit(s), the objective of this section will be satisfied by
completing the recordkeeping and reporting requirements of their farm
and home planning with FmHA or its successor agency under Public Law
103-354 as outlined in subpart D of part 1944 of this chapter.
(i) Illustration of MFH budget planning, annual review, and annual
audit review cycles.
----------------------------------------------------------------------------------------------------------------
Last quarter of First quarter of
Items on hand during fiscal year fiscal year next fiscal year Second quarter
----------------------------------------------------------------------------------------------------------------
Management Reports/items in Budget Planning Annual audit FmHA or its File annual audit
borrower casefile. Process--Form preparation by successor agency or Form FmHA or
--Previous fiscal year annual FmHA or its auditor or Form under Public Law its successor
audit or Form FmHA or its successor agency FmHA or its 103-354 review of agency under
successor agency under Public under Public Law successor agency annual audit or Public Law 103-
Law 103-354 1930-8. 103-354 1930-7 & under Public Law Form FmHA or its 354 1930-8 for
util. allowance 103-354 1930-8 by successor agency next budget
Review change or verifier. under Public Law planning & annual
no change of 103-354 1930-8. review process.
rents or 60-day review
occupancy charges period.
and/or utility
allowance.
--Exhibit A-1
[[Page 218]]
--Latest supervisory visit/ FmHA or its Form FmHA or its FmHA or its ..................
inspection. successor agency successor agency successor agency
under Public Law under Public Law under Public Law
103-354 starts 103-354 1930-7 103-354 completes
annual review showing 12 months annual review
process. of project process.
operating actuals
submitted by
borrower.
--Energy audit & implementation --Form FmHA or its .................. .................. ..................
plan. successor agency
under Public Law
103-354 1930-7
--Compliance review............. --Review project .................. FmHA or its ..................
--Management Plan............... financial and successor agency
--Management Agreement.......... management under Public Law
reports. 103-354 may pre-
fill parts II C
and D of Form
FmHA or its
successor agency
under Public Law
103-354 1930-10.
--Forms FmHA or its successor FmHA or its .................. Take immediate ..................
agency under Public Law 103-354 successor agency action on
1944-30, Identity of Interest under Public Law significant items
(IOI) Disclosure Certificate, 103-354 completes found in the
and FmHA or its successor Form FmHA or its Audit Review.
agency under Public Law 103-354 successor agency
1944-31, Identity of Interest under Public Law
(IOI) Qualification Form. 103-354 1930-10.
Other--as applicable.
----------------------------------------------------------------------------------------------------------------
[58 FR 40868, July 30, 1993, as amended at 59 FR 6885, Feb. 14, 1994]
Sec. 1930.124 [Reserved]
Sec. 1930.125 Changing project designation.
Generally, RRH projects designated for families, elderly and persons
with handicaps, including congregate housing, will be used for the
original purpose throughout the life of the FmHA or its successor agency
under Public Law 103-354 loan. However, if it becomes necessary to
change the designation of a project due to housing market changes which
inhibit the borrower's ability to maintain occupancy levels sufficient
to sustain the project, the State Director may change the designation.
Project design must meet the housing requirements of the target group
when changing the designation. The State Director shall consider such
requests on a case-by-case basis when all of the following information
has been provided:
(a) The complete borrower case files have been submitted together
with the Servicing Official's specific recommendations and analysis of
the present and long term situation.
(b) A market needs survey which substantiates the rationale for the
change has been provided by the borrower. (The market survey must
clearly indicate the present long term marketability of the project is
significantly changed from the original market, and include the
appropriate demographic information which reflects the population trends
in the area.)
(c) A summary of all servicing actions taken by FmHA or its
successor agency under Public Law 103-354 to aid the borrower in
maintaining the present designation.
(d) A summary of all actions taken by the borrower to effectively
market the units to potential eligible tenants.
(e) A summary of the impact the change will have on any existing
tenants, rent subsidy needs, and the community as a whole.
[[Page 219]]
(f) A summary of any needed or required physical modifications and
analysis of cost feasibility to complete the modifications.
Secs. 1930.126-1930.127 [Reserved]
Sec. 1930.128 LH grants.
In addition to the supervision provided in connection with LH loans,
recipients of LH grants will receive supervision to assure that the
terms of the grant agreement and other objectives of the LH grant are
carried out. This supervision will be continued to assure that the grant
purposes will be accomplished. Comments on the following points will be
included in appropriate reports, to assure that:
(a) The rents are reasonable.
(b) The project is operated as a community service for the benefit
of the tenants.
(c) Domestic farm laborers are given absolute priority in occupancy.
(This requirement also applies to borrowers who have LH loans only.)
(d) No public or private nonprofit organization borrower may require
that an occupant work for a particular farm or for a particular owner or
interest as a condition of occupancy of the housing.
Sec. 1930.129 RHS loans.
RHS loans will be serviced according to program regulations and the
conditions specified in the borrower's loan resolution. The following
additional supervisory action by the Servicing Official will also apply
to assure that the terms of the loan resolution and loan objectives are
carried out:
(a) Review of the site development account records for compliance
with authorized loan expenditures.
(b) Work with the borrower on the adjustment of sales price, not to
exceed market value, of the developed lots as they are being sold to
assure adequate income to repay the loan, pay taxes, accrued interest,
and any other authorized debt or expenditures.
(c) Determine that lots are sold only to eligible buyers.
(d) Work closely with the borrower to plan for the sale of all lots
prior to the due date of the note.
(e) Should the RHS borrower default in its loan obligations, the
account will be serviced according to Sec. 1965.85 of subpart B of part
1965 of this chapter. The Servicing Official's report to the State
Director should contain the following information:
(1) The status of the account, number of lots unsold, and reasons
for the problem.
(2) Prospects of selling lots to eligible buyers and a target date
as to when this can be accomplished, if feasible.
(3) General comments and recommendations for future servicing of
this account. Where necessary, liquidation may be recommended.
(f) State Directors will take the following actions in connection
with problem RHS accounts:
(1) Provide additional guidance and assistance as necessary.
(2) If a satisfactory proposal for selling the lots can be
developed, the account will be serviced according to program regulations
and the provisions of this subpart and subpart B of part 1965 of this
chapter.
(3) Where no satisfactory proposal for selling the remaining lots
can be developed, the account will be handled according to
Sec. 1965.85(e) of subpart B of part 1965 of this chapter for
liquidation.
Secs. 1930.130-1930.133 [Reserved]
Sec. 1930.134 FmHA or its successor agency under Public Law 103-354 office records.
FmHA or its successor agency under Public Law 103-354 officials will
maintain records in accordance with FmHA or its successor agency under
Public Law 103-354 Instructions 2033-A and G (available in any FmHA or
its successor agency under Public Law 103-354 office).
Secs. 1930.135-1930.136 [Reserved]
Sec. 1930.137 State Supplements, guides, forms, and other issuances.
It is FmHA or its successor agency under Public Law 103-354's
practice to follow the provisions of the Administrative Procedures Act
by inviting public comment before adopting public policy, unless
otherwise directed by statute. However, the State Director
[[Page 220]]
may, in accordance with FmHA or its successor agency under Public Law
103-354 Instruction 2006-B (available in any FmHA or its successor
agency under Public Law 103-354 office), and with prior approval of the
National Office and the assistance of the OGC, develop State
Supplements, guides, or issuances to the extent necessary to enable
borrowers to comply with the policies, procedures, and exhibits of this
subpart and the applicable provisions of State laws. Under no
circumstances will State forms be developed as replacements for the
forms referred to in this subpart.
Sec. 1930.138 Supervisory actions for distressed projects.
MFH projects experiencing high vacancy rates which would lead to
project failure can apply for a special servicing market rate rent
change in accordance with paragraph IX of exhibit C of this subpart.
Secs. 1930.139-1930.140 [Reserved]
Sec. 1930.141 Materials to be provided borrower/applicant.
To enable borrowers and applicants to meet the intent of this
subpart, they will be supplied with one reproducible copy of the
following FmHA or its successor agency under Public Law 103-354 exhibits
and forms and materials as they are issued and/or updated:
(a) Exhibits B and B-1 thru 14 of this subpart, when applicable.
(b) Exhibits C, C-1, and C-2 of this subpart.
(c) Exhibits D and D-1 of this subpart.
(d) Exhibit E of this subpart.
(e) Exhibits H and H-1 of this subpart.
(f) Exhibit I of this subpart.
(g) Exhibit J of this subpart, when applicable.
(h) Subpart L of part 1944 of this chapter.
(i) Booklet entitled ``Audit Program.''
(j) For farm LH borrowers and/or applicants, exhibit B of subpart D
of part 1944 of this chapter in addition to the preceding items of this
section.
(k) The following forms:
(1) Form FmHA or its successor agency under Public Law 103-354 1930-
7 and attached exhibit A-6 of subpart E of part 1944, if applicable.
(2) Form FmHA or its successor agency under Public Law 103-354 1930-
8.
(3) Form FmHA or its successor agency under Public Law 103-354 1944-
7, ``Multiple Family Housing Interest Credit and Rental Assistance
Agreement.''
(4) Form FmHA or its successor agency under Public Law 103-354 1944-
29, ``Project Worksheet for Interest Credit and Rental Assistance.''
(5) Form FmHA or its successor agency under Public Law 103-354 1944-
8.
(6) Form FmHA or its successor agency under Public Law 103-354 1910-
5, ``Request for Verification of Employment.''
Sec. 1930.142 Complaints regarding discrimination in use and occupancy of MFH.
Any tenant or prospective tenant seeking occupancy or use of RRH,
RCH, LH, or related facilities who believes he or she has been
discriminated against because of race, color, religion, sex, national
origin, age, familial status, or handicap 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 Administrator, FmHA or its successor agency
under Public Law 103-354, USDA, Washington, DC 20250. If the complaint
is made to an FmHA or its successor agency under Public Law 103-354
County, Servicing, or State Office, it must be directed to the Director
of Equal Opportunity Staff (EOS), National Office by the FmHA or its
successor agency under Public Law 103-354 employee in charge of that
office. When a complaint is sent to FmHA or its successor agency under
Public Law 103-354-EOS by a FmHA or its successor agency under Public
Law 103-354 Servicing Office, the State Director will be made aware of
the complaint.
(a) Personnel in FmHA or its successor agency under Public Law 103-
354 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:
[[Page 221]]
(1) The name and address of the respondent (complainant).
(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 or its successor agency under Public Law
103-354's housing program failing to comply with the requirements of
Title VIII of the Civil Rights Act of 1968 as amended by the Fair
Housing Amendments Act of 1988, 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.
Victims of alleged discriminatory housing practices may seek reparations
through HUD or by private lawsuit.
Sec. 1930.143 Delegation of responsibility and authority.
(a) The Administrator may on an individual state basis, authorize
the State Director to contract out selective fact gathering, nondecision
making servicing actions in this subpart.
(b) The State Director may delegate in writing any authority
delegated to the State Director in this subpart unless otherwise
restricted, to those State staff members who, in the opinion of the
State Director, have been adequately trained and who demonstrate their
knowledge in understanding and administering the MFH policies and
procedures of FmHA or its successor agency under Public Law 103-354. The
State Director may further delegate such authority in like manner to
Servicing Offices by either of two options:
(1) To individual Servicing Office staff members, including the
Servicing Official.
(2) To the position of Servicing Official, the incumbent of which
may further delegate specified authority to identified Servicing Office
staff members. A copy of such delegation will be filed with the State
Director.
(c) Individual delegation of responsibility and authority may be
limited or expanded in scope, or revoked, as deemed appropriate by the
State Director, or the Servicing Official when applicable, and will be
prepared according to FmHA or its successor agency under Public Law 103-
354 Instruction 2006-F (available in any FmHA or its successor agency
under Public Law 103-354 office).
Sec. 1930.144 Exception authority.
The Administrator may, in individual cases, make an exception to any
requirements of this subpart not required by the authorizing statute if
he/she finds that application of such requirement would adversely affect
the interest of the Government or adversely affect the accomplishment of
the purposes of the MFH program or result in undue hardship by applying
the requirement. The Administrator may exercise the authority at the
request of the State Director or the Assistant Administrator for
Housing. The request must be supported by data that demonstrates the
adverse impact, citing the particular requirement involved and
recommending proper alternative course(s) of action, and outlining how
the adverse impact could be mitigated.
Sec. 1930.145 Appeals.
Only the borrower, or the borrower's representative (as defined in
subpart B of part 1900 of this chapter), can appeal an FmHA or its
successor agency under Public Law 103-354 decision. The borrower's
management agent may not request an appeal unless he/she has been
designated as the borrower's representative. This means he/she must be
authorized in writing by the borrower to act for the borrower in the
administrative appeal, as required by subpart B of part 1900 of this
chapter (this may be addressed in the management agreement). The
borrower's request for review of an alleged adverse decision must be
made to FmHA or its successor agency under Public Law 103-354 in written
form. Appeals and reviews will be handled in accordance with directions
set forth in subpart B of part 1900 of this chapter.
[[Page 222]]
Secs. 1930.146-1930.149 [Reserved]
Sec. 1930.150 OMB control number.
The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget and
have been assigned OMB control number 0575-0033. Public reporting and
recordkeeping burden for this collection of information is estimated to
vary from 5 minutes to 10.25 hours per response, with an average of 0.43
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 the
Department of Agriculture, Clearance Officer, OIRM, room 404-W,
Washington, DC 20250; and to the Office of Management and Budget,
Paperwork Reduction Project (OMB# 0575-0033), Washington, DC 20503.
Exhibits to Subpart C
Exhibit A--Steps for Farmers Home Administration or its successor agency
under Public Law 103-354 (FmHA or its successor agency under Public Law
103-354) Personnel in Conducting Annual Review of Multiple Housing
Operations
I. Examine the Condition of the Borrower/Management Reports to
Determine that:
A. Required accounts are being properly maintained in accordance
with the loan resolution or agreement.
B. Decisions of officials are being entered in the minutes book, if
applicable.
C. Any membership or stock transfers have been approved by FmHA or
its successor agency under Public Law 103-354 and recorded as required.
D. Financial records are maintained by qualified persons.
E. The financial records are being reviewed by a qualified auditor
where an audit is required or by a competent individual or committee
when a verification of review of accounts is required.
II. Study the Financial Progress: Compare current financial
condition and owner's equity with previous years to discover any trends,
for example:
A. Has cash carryover increased or decreased?
B. Are the debts greater or less?
C. Is the owner's equity greater or less?
D. Are accounts receivable greater or less?
E. Are collection provisions being enforced?
F. Are reserve and other required funds or accounts properly
maintained?
III. Study the State of Income and Expenditures for the Past Year:
Compare it with the budget for the past year and the same statement for
previous years.
A. Were rents or occupancy charges, subsidies, and other monies
collected sufficient to produce the required revenues for planned
expenditures?
B. Were actual expenditures significantly different from those
budgeted?
C. Were the expenditures sufficient to adequately maintain the
project?
D. Were expenditures reasonable and typical for similar projects?
E. Were any essential items of maintenance deferred during the past
year?
F. Were payments made on authorized debts in the proper amounts and
on the dates agreed to?
G. If the borrower is operating on a limited profit basis, did net
cash return exceed the amount permitted in the loan agreement or loan
resolution?
H. Did the borrower charge late fees to project accounts other than
the Return on Investment Account?
I. Were an excessive number of overage charges paid by the project?
IV. Study the Budget for the next Year: Compare it with the
statement of income and expenditures for the past year, taking into
consideration any known increase or decrease in operating expenses for
the planned year and the prevailing costs of doing similar business in
the market area.
A. Are proposed expenditures adequate for normal maintenance and
operation of the project?
B. Are proposed fees to be paid to firms closely associated with
the borrower and their management agents typical, reasonable, and earned
for the services to be provided?
C. Does the budget make provision for financing maintenance or
energy conservation measures/practices deferred from the previous year?
D. Does it provide for the required financial reserves?
E. Is planned revenue adequate to cover planned expenditures?
F. Will the budget and planned operating practices correct any
deficiencies in the past year's operations?
V. Study the Audit Report: Compare it with the audit from the
previous year, noting any significant changes affecting the borrower's
operations. Exhibit A-1 of this subpart may be used as a guide.
[[Page 223]]
VI. Review the Energy Audit: Review the most recent energy audit
and the borrower's plan for implementation.
VII. Determine Whether or Not the Borrower Has:
A. Maintained required financial records and accounts, made
required reports, submitted required financial audits or verifications
of review and taken appropriate action to correct previously noted
deficiencies of such records, reports, audits or verifications.
B. Renewed fidelity coverage and insurance policies.
C. For borrowers with governing bodies.
1. Held regular board, committee, and membership meetings.
2. Conducted the affairs along sound business lines.
D. Made a change in any organizational documents without FmHA or
its successor agency under Public Law 103-354 consent.
E. Made a change in the plans for management and operations of the
project without FmHA or its successor agency under Public Law 103-354
consent.
F. Made a change in the membership or interest in ownership without
FmHA or its successor agency under Public Law 103-354 consent.
VIII. Summary: Summarize major observations and decisions reached
as the result of the review and record on Form FmHA or its successor
agency under Public Law 103-354 1930-10, ``Annual Multiple Family
Housing Project Review.''
Exhibit A-1--Audit Report Review Guide
I Purpose. To present a general guide for use of Farmers Home
Administration or its successor agency under Public Law 103-354 (FmHA or
its successor agency under Public Law 103-354) staffs in the review of
independent accountants' audit reports in order to obtain maximum
benefit from these audits. The procedures are designed to provide
uniformity in the audit review, improve loan program servicing, and help
to promote better independent audits.
II General. FmHA or its successor agency under Public Law 103-354
guidelines for independent auditors are detailed in the booklet, ``U.S.
Department of Agriculture, Farmers Home Administration or its successor
agency under Public Law 103-354--Audit Program'' (hereinafter called
Audit Program and available in any FmHA or its successor agency under
Public Law 103-354 office). This Audit Program, along with other
instructions, is designed to protect the security of Government loans.
The review of the financial and financially related information in the
audits must be performed from a technical standpoint in a prompt manner
so that the facts and conclusions are readily available for analysis;
only then can results be used effectively for management purposes and
help to insure improved audit practices.
III Scope. The review should include:
A A determination of the adequacy of the audit in relation to FmHA
or its successor agency under Public Law 103-354 regulations and the
Audit Program.
B Interpretation of information included in the audit.
C Preparing a letter to the borrower on any missing or adverse
audit data.
D Informing appropriate FmHA or its successor agency under Public
Law 103-354 offices of review results and recommendations.
IV Review Procedures to Be Followed.
A General. The individual professional judgment of the reviewer
should be used at all times. Considerations and decisions requiring the
exercise of judgment should be used in the following:
1 Circumstances peculiar to the borrower.
2 Degree of importance attached to each item questioned.
3 Number of exceptions.
4 Whether the exceptions relate to the auditor's work or the
borrower's records and operations.
5 If specific action is to be requested of the borrower.
6 Whether or not the report, as a whole, is acceptable.
B Review and Procedure.
1 Specific.
a Determine if the audit was performed by a Certified Public
Accountant (CPA) or a Licensed Public Accountant (LPA) who was licensed
on or before December 31, 1970.
b Determine if the audit was conducted in accordance with
Government Auditing Standards (1988 Revision), often referred to as
generally accepted government auditing standards (GAGAS).
c Does the audit cover the most recent 12 months since the previous
audit?
d Was the audit received within 90 days after the borrower's year
end, or was an extension of up to an additional 30 days authorized by
the Servicing Official, and if so, was it met?
2 Evaluation checklist for audit reports. The ``Evaluation
Checklist for Audit Reports'' which is attachment 1 of this exhibit is
designed to systematically record and reveal the audit findings.
Information tallied on this form is a good indication of whether or not
additional contact(s) need to be made with the borrower.
3 Previous audits and correspondence. Reference to the prior audit
and any correspondence concerning it can be most helpful in the current
review. Determine whether corrections requested in the previous year
have been made, and whether the borrower has complied with previous
suggestions for improvement in the audit report.
[[Page 224]]
C Preparing the audit review letter. After completion of the
``Evaluation Checklist for Audit Reports'' (attachment 1 of this
exhibit) and applying personal judgment, a decision must be made on
whether or not to prepare an audit review letter similar to that shown
as attachment 2 of this exhibit.
1 If the audit fully complies with the Audit Program and
instructions, a letter is not necessary.
2 If the audit substantially meets the requirements and is lacking
in only a few points, ask the borrower to have the auditor furnish this
additional information.
3 Audits which are unacceptable should be returned to the borrower
for full compliance, indicating the reasons and a timetable for
resubmitting.
Attachment 1--Evaluation Checklist for Audit Reports
_______________________________________________________________________
State
_______________________________________________________________________
County
_______________________________________________________________________
Name of Borrower
_______________________________________________________________________
Address
_______________________________________________________________________
Case No.
_______________________________________________________________________
Name of Auditor
_______________________________________________________________________
Project No.
_______________________________________________________________________
Date of Audit Report
_______________________________________________________________________
Period Covered
------------------------------------------------------------------------
Yes/no
------------------------------------------------------------------------
1. Auditor's Opinion. (section
________ G-1*).
________ (a) Unqualified.
________ (b) Qualified.
(c) No Opinion.
2. Financial Statement.
________ (section J-1*).
________ (a) Balance Sheet.
________ (b) Results of Operations.
(c) Statement of Cashflow
________ (Changes in Financial
Position).
________ (d) Statement of Changes in
Retained Earnings.
(e) Notes to the Financial
Statements.
3. Statement on Auditing
Standards. (section J-2*).
________ Audit Report contains a
statement that the audit was
made in accordance with
Generally Accepted Government
Auditing Standards (GAGAS).
4. Report on Compliance.
(section J-3*).
________ The auditor should prepare a
written report on the tests of
compliance with applicable
laws, regulations, loan
covenants and agreement and
grant agreements. List
significant compliance
findings:
____________________
____________________
____________________
5. Report on Internal Controls.
________ (Section J-4*). The auditor's
report should assess the
borrower's control risk
including discussion on the
scope of the auditor's
assessment, significant
internal controls assessed,
and any material weaknesses of
internal control noted. List
significant internal control
findings:
______________________
______________________
______________________
______________________
6. Reporting Instances of
________ Indication of Illegal Acts.
(Section J-5*). List any
noted:
______________________
______________________
7. Uncorrected Prior Audit
________ Findings. (Section J-6*).
List:
________________________
________________________
8. Was report received within
________ 90 days after the end of the
borrower's operating year or
within a 30 day extension?
9. Was audit performed and
________ signed by a CPA or LPA? If by
an LPA, verify that the LPA
was licensed on or before
December 31, 1970.
------------------------------------------------------------------------
*References to ``Sections'' indicate the appropriate section in the
FmHA or its successor agency under Public Law 103-354 Audit Program
booklet.
Attachment 2--Example Audit Review Letter
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Dear Borrower (or Borrower Representative):
We have reviewed your audit report for the period ____________ to
____________, prepared by ____________________ on ____________. This
review was made in accordance with current Farmers Home Administration
or its successor agency under Public Law 103-354 (FmHA or its successor
agency under Public Law 103-354) regulations and the Audit Program
entitled ``U.S. Department of Agriculture, Farmers Home Administration
or its successor agency under Public Law 103-354-Audit Program.'' Based
on this review, your audit:
1. ( ) Is acceptable. However, the auditor's recommendations
concerning ____________ should be implemented prior to next year's
audit.
2. ( ) Is acceptable but did not include comparative-type financial
statements as indicated in Section J-1 of the Audit Program. Please
inform the auditor to prepare such statements next year.
3. ( ) Is acceptable but was not submitted within 90 days or an
authorized delay of ____________ days after the end of the borrower's
fiscal year. Please insure that next year's audit is forwarded before
____________.
4. ( ) Substantially meets all the requirements. However, the
following items were
[[Page 225]]
omitted as detailed in the Audit Program, Section J, ``Reporting
Standards.'' Please have your auditor comment on the item(s) circled and
forward a copy to us. The circled numbers correspond to the 6 items
listed in Section J of the August Program.
J-1 J-2 J-3 J-4 J-5 J-6
5. ( ) Is returned as unacceptable for the following reason(s).
Please have the auditor prepare your audit in accordance with the Audit
Program.
a. [ ] It was prepared without audit.
b. [ ] The following financial statements were omitted: (Audit
Program, Section J-1)
[ ] Balance Sheet.
[ ] Results of Operations.
[ ] Statement of Cash Flow.
[ ] Statement of Changes in Retained Earnings, or
[ ] Reconciliation of Owner's or Partner's Equity.
[ ] The auditor's opinion of Compliance. (Audit Program, Section
J-3).
[ ] The auditor's opinion of internal control. (Audit Program,
Section J-4).
_______________________________________________________________________
Servicing Official
This letter will be prepared in the Servicing Office. A copy of the
audit and the approval memorandum will be sent to the State Office.
Exhibit B--Multiple Housing Management Handbook
I Purpose: This exhibit prescribes the Farmers Home Administration
or its successor agency under Public Law 103-354 (FmHA or its successor
agency under Public Law 103-354) regulations, policies, and procedures
for management of Rural Rental Housing (RRH), Rural Cooperative Housing
(RCH), and Labor Housing (LH) projects to be used by multiple housing
borrowers (owners) and applicants and their management agents and site
managers. Several exhibits are included to provide guidance. These
regulations are intended to assist borrowers in the successful operation
of FmHA or its successor agency under Public Law 103-354-financed rental
and cooperative projects.
II Definitions:
Adjusted annual income. This is the annual income of the household
members, who live or propose to live in the unit for the next 12 months.
(Households with a member permanently confined to a hospital or nursing
home may choose to either include annual income attributable to such
person, less deductions for which the person would qualify, or exclude
the annual income attributable to such person and not take any
deductions for which the person would qualify.), excluding:
1 $480 for each member of the family residing in the household
(other than the tenant, cotenant, member, or comember or spouse of
either, or foster children) who is under 18 years of age; or who is 18
years of age or older and is disabled, handicapped or a full-time
student. The student must carry a subject load considered full-time by
the educational institution attended. This deduction does not apply to
an unborn child in the household.
2 $400 for any elderly family.
3 In the case of an elderly family, the total of actual medical
and/or handicap assistance expenses paid in excess of 3 percent of
annual family income may be deducted. If an elderly family has both
medical and handicap assistance expense, the 3 percent of annual income
must first be deducted from handicap assistance and any remainder then
deducted from medical expenses.
a Total medical expense includes medical expenses not covered by
insurance that the tenant or member anticipates incurring over the 12
months following the effective date of the certification, using past
experience as a guide.
b Examples of medical expenses are dental expenses, prescription
and nonprescription medicines, medical insurance premiums including
medicare, eyeglasses, hearing aids and batteries, medical related travel
cost, the cost of attendant care including a live-in-resident assistant,
monthly payments required on accumulated major medical bills including
that portion of a household member's nursing home care paid from
household income(s).
Note: Premiums paid for nursing home insurance are not an allowable
deduction unless a household member is housed at a nursing home and that
person's income is included in the household income.)
c Handicap assistance includes reasonable attendant care and
auxiliary apparatus expenses described as follows for each member with
handicaps of the family to the extent needed to enable any family member
(including such member with handicaps) to be employed:
(1) That portion of attendant care attributable to specialized
medical reasons (the portion attributable to companionship is not
counted).
(2) Auxiliary apparatus including but not limited to wheelchairs,
oxygen equipment, reading devices for the visually impaired, and the
cost of equipment added to cars and vans to permit their use by the
handicapped or disabled family member proportionate to the amount of use
by such persons.
4 In the case of any nonelderly family, total handicap assistance
expense in excess of 3 percent of annual family income may be deducted:
a For any handicap assistance expense described in paragraph 3 c of
this definition that is anticipated to occur over the 12 months
following the effective date of the
[[Page 226]]
certification, using past experience as a guide, to the extent needed to
enable any family member (including the handicapped or disabled family
member) to be employed.
b The amount of deduction may not exceed the LESSER of the amount
by which total expenses for handicap assistance exceed 3 percent of
annual family income, or the amount of income received by adult members
from such employment.
5 The amounts paid by the family for the care of minors under 13
years of age may be deducted only to the extent such expenses are not
reimbursed. In the case of families assisted by American Indian housing
authorities, the amount will be the greater of child care expenses; or
excessive travel expenses, not to exceed $25 per family per week.
Deductions for these expenses are permitted only when such care is
necessary to enable a family member to further his or her education or
to be gainfully employed, including the gainful employment of the
disabled or handicapped family member. When the deduction is to enable
gainful employment the amount may not exceed the amount of income
received from such employment. When the deduction is to facilitate
further education, the amount must not exceed a sum reasonably expected
to cover class time and travel time to and from classes. The tenant file
must contain justifying documentation. (Child support payments made on
behalf of a minor child who does not reside in the unit may not be
deducted as a child care expense).
Adjusted monthly income. This is the amount obtained by dividing the
adjusted annual income by 12.
Annual income. Annual income is the anticipated total amount of
income to be received by all members of the household (even if
temporarily absent) to be in residence during 12 months following the
effective date of Form FmHA or its successor agency under Public Law
103-354 1944-8, ``Tenant Certification.''
1 Income Included. The following are included when determining
annual income:
a The gross amount (before any deductions) of wages and salaries,
overtime pay, commissions, fees, tips, and bonuses reasonably expected
to be received by all members of the household.
b The net income reasonably expected to be received from operations
of a business or profession or from rental of real or personal property.
Expenditures for business expansion or amortization of indebtedness are
not considered in the computation of net income. Net losses will be
computed as zero. Deductions from gross business or rental income to
arrive at net income may be made in the same manner as outlined in
Internal Revenue Service (IRS) regulations for the exhaustion, wear and
tear, and obsolescence of depreciable property used in the trade or
business of the adult household members under the straight line method
of depreciation. An itemized schedule must be provided in support of any
deductions from gross income made under the provisions of this section.
The schedule should be consistent with the amount of depreciation
permitted for these items for Federal income tax purposes under the
straight line method of depreciation.
c Interest, dividends, and other received income as defined under
net family assets in this paragraph. On contracts for sale of real
estate, deeds of trust, or mortgages held by the applicant, tenant or
member, only the interest portion of the monthly or annual payments
received by the applicant, tenant or member is included as income.
d The gross amount of periodic payments from Social Security
(including Social Security payment 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.
e Payments received in lieu of earnings, such as unemployment and
disability compensation, worker compensation, and severance pay.
f Periodic and determinable allowances, such as alimony and child
support payments, which the applicant, tenant or member can reasonably
expect to receive.
g Regularly recurring contributions or gifts received from persons
not residing in the dwelling.
h Any amount of education grants or scholarships or Veterans
Administration benefits expected to be received on behalf of tenant,
cotenant, member, or comember, applicant, or other adult that exceeds
attendance expenses for tuition, fees, books, and equipment to include
materials, supplies, transportation, and miscellaneous personal expenses
of the student (i.e., that portion of benefits received for ``room and
board'').
i All regular pay, separation pay, special pay (except hazard duty
pay for persons exposed to hostile fire), and allowances of a member of
the armed forces who is head of the family or spouse, whether or not
that family member lives in the unit.
j Payment received from an adoption incentive program to compensate
support of a minor child legally adopted by the tenant household.
k Public assistance.
(1) A public assistance payment that DOES NOT designate an amount
specifically for rent and utilities shall be counted entirely as income.
(2) A public assistance payment, when administered ``as-paid'' by
the public assistance agency, DOES designate a specific amount for rent
and utilities and may adjust (or ratably reduce) that amount based upon
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what the family is currently paying for those items (only one ratable
reduction will be permitted). The SUM of the ratably reduced amount for
rent and utilities and the amount for subsistence and other needs shall
be counted as income.
(3) Example: The public agency's published schedule shows a monthly
maximum of $180 for rent and utilities for a particular size family. The
public assistance agency has verified that the family will receive $220
monthly for subsistence and other needs. If the agency does not apply a
ratable reduction, $400 per month ($180 + $220) will be included in
annual income. If the agency applies a ratable reduction (e.g., 20
percent) annual income will be computed as shown below:
------------------------------------------------------------------------
Public assistance (P.A.) rent Income
------------------------------------------------------------------------
$180 maximum allowed for housing.......... $220 basic needs
+144 P.A. rent
x .80 P.A. adjustment factor............. $364 mthly income
$144 monthly P.A. rent.................... x 12 months
*$4,368 annual income
------------------------------------------------------------------------
* Shown on line 17 f of Part IV of Form FmHA or its successor agency
under Public Law 103-354 1944-8.
2 Income Exempted. The following are not included in annual income:
a Income of dependent minors (including foster children) under 18
years of age except as specified under 1d of the definition of annual
income in this paragraph. (Tenant, cotenant, member or comember, or
spouse of either may never be considered minors.)
b In the case of contracts for sale of real estate, mortgages or
Deeds of Trust held by the tenant, cotenant, member, or comember, the
principal portion of the payments received by the tenant, cotenant,
member, or comember.
c The value of the allotment provided to an eligible household
under the Food Stamp Act of 1977.
d Payments received for the care of foster children.
e Temporary, nonrecurring, or sporadic income (including gifts).
f Lump-sum additions to family assets such as inheritances; capital
gains; insurance payments included under health, accident, hazard, or
worker compensation policies, and settlements for personal or property
losses.
g Amounts which are granted specifically for, or in reimbursement
of, the cost of medical expenses for any household member. Medical
expenses may include those expenses incurred by disabled or handicapped
residents so that they may maintain independence in living (e.g.,
attendant care).
h 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 attendance costs of tuition, fees, books,
and equipment to include materials, supplies, transportation, and
miscellaneous personal expenses of the student. Any amounts of such
scholarships or veterans payments, which are not used for above purposes
and are available for subsistence and shelter, are considered to be
income of tenant, cotenant, member, comember, or applicant.
i Student loans.
j The special hazard duty pay to a household member serving in the
Armed Forces away from home, who is exposed to hostile fire.
k Payments received pursuant to participation in the following
programs:
(1) Programs under the Domestic Volunteer Service Act of 1973
including, but not limited to, the National Older Americans Volunteer
Programs of the Federal Action Agency for persons age 60 and over
including the:
(i) Retired Senior Volunteer Program.
(ii) Foster Grandparent Program.
(iii) Senior Companion Program.
(iv) Older American Committee Service Program.
(2) National Volunteer Antipoverty Programs such as Volunteers in
Service to America, Peace Corps, Service Learning Program and Special
Volunteer Programs.
(3) Small Business Administration Programs such as the National
Volunteer Program to Assist Small Business and Promote Volunteer Service
to Persons with Business Experience, Service Corps of Retired Executives
and Active Corps of Executives and,
(4) Title V--Community Service Employment for Older Americans which
include:
(i) Senior Community Service Employment Program
(ii) National Caucus Center on Black Aged
(iii) National Urban League
(iv) Association National Pro Personas Mayors
(v) National Council on Aging
(vi) American Association of Retired Persons
(vii) National Council of Senior Citizens
(viii) Green Thumb.
(5) Payments received from a State or local low income energy
assistance program.
l Relocation payments made pursuant to title II of the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of
1970.
m Payments received under the Alaska Native Claims Settlement Act.
n Income derived from certain submarginal land of the United States
that is held in trust for certain Indian tribes.
o Payments or allowances made under the Department of Health and
Human Services Low-Income Home Energy Assistance Program.
p That portion of tenant income paid from the Job Training
Partnership Act,
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whether paid directly or through the employer.
q Income derived from the disposition of funds of the Grand River
Bank of Ottawa Indians.
r The first $2,000 of per capital 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.
s Any funds 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. (Note: The
Department of Housing and Urban Development (HUD) periodically publishes
a notice in the Federal Register identifying the programs and benefits
that qualify for this exemption.)
t Income of a resident assistant, as defined in this paragraph.
u Amounts received under training programs funded by HUD.
v Amounts received by a disabled person (including a sight impaired
person) that are disregarded for a limited time for purposes of
Supplemental Security Income eligibility, and benefits because they are
set aside for use under a Plan to Attain Self-Sufficiency.
w Amounts received by a participant in other public assisted
programs which are specifically for or in reimbursement of out-of-pocket
expenses incurred (special equipment, clothing, transportation, child
care, etc.) and which are made solely to allow participation in a
specific program.
x Gifts, payments, or credits provided by the borrower for the same
purposes as interest credit or rental assistance for the benefit of
residents in accordance with an FmHA or its successor agency under
Public Law 103-354 approved budget when needed to alleviate or avoid
financial distress in a project for a temporary specified time period
identified by FmHA or its successor agency under Public Law 103-354.
y Interest accrual to an annuity that cannot be withdrawn due to
the terms of the annuity or its being under the control of others.
z Payments received after January 1, 1989, from the Agent Orange
Settlement Fund or any other fund established pursuant to the settlement
in the IN RE Agent Orange product liability litigation, M.D.L. No. 381
(E.D.N.Y.)
aa Payments received under the Maine Indian Claims Settlement Act
of 1980 (Public Law (Pub. L.) 96-420, 94 Stat 1785).
bb Earned Income Tax Credit Refund Payments
cc Redress payments received by Japanese American internment camp
survivors.
dd Reparations paid by foreign governments arising out of the
Holocaust.
ee Deferred periodic payments received in a lump sum from SSI and
Social Security.
Borrowers. ``Borrowers'' means owners who may be individuals,
partnerships, cooperatives, trusts, public agencies, private or public
corporations, and other organizations and have received a loan or grant
from FmHA or its successor agency under Public Law 103-354 for LH, RRH,
RCH, or Rural Housing Site (RHS) purposes.
Caretaker. The individual(s) employed by the borrower or the
management agent to handle normal interior and exterior maintenance and
upkeep of the project as specified in the management plan.
Cash value of assets. Current market value less cost to convert
assets to cash.
Chore service worker. An individual who provides intermittent
assistance essential to the well being of household members whose
services are compensated by a Federal, State, or local assistance
program. A chore service worker will not be a resident of the household
living unit.
Congregate Housing. Residential housing for persons or families who
are elderly or have handicaps or disabilities, consisting of private
apartments and central dining facilities in which a number of specific
pre-established services are provided to tenants (short of those
services provided by a health care facility that provides health related
care and services recognized by the medicaid program). Tenants requiring
additional services not provided by the facility will acquire them or
provide for them within their own financial, familial, or social
resources.
Domestic farm laborers. Persons who receive a substantial portion of
their income as laborers on farms in the United States, Puerto Rico, or
the Virgin Islands and either are citizens of the United States, or
reside in the United States, Puerto Rico, or the Virgin Islands after
being legally admitted for permanent residence, and may include the
immediate families of such persons, including retired or disabled
domestic farm laborers as defined in subpart D of part 1944 of this
chapter.
Elderly (senior citizen). A person who is at least 62 years old. The
term elderly (senior citizen) also means individuals with handicaps or
disabilities as separately defined in this paragraph, regardless of age.
Elderly family. A household where the tenant, cotenant, member, or
comember (individual) is at least 62 years old, disabled or handicapped
as defined separately in this paragraph. An elderly family may include a
person(s) younger than 62 years of age who is essential to the care and
well being of the person who is elderly or has handicaps or
disabilities. (To receive an elderly family deduction, the person who is
elderly, or has disabilities or handicaps must be the tenant or cotenant
or member or comember.)
Eligibility income. The calculated adjusted annual income which is
compared to the income limits in exhibit C of subpart A of part
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1944 of this chapter (available in any FmHA or its successor agency
under Public Law 103-354 office).
Familial status. This term means one or more individuals (who have
not attained the age of 18 years) being domiciled with a parent or
another person having legal custody of such individual or individuals;
or the designee of such parent or other person having such custody; with
the written permission of such parent or other person. The protection
against discrimination afforded by familial status shall apply to any
person who is pregnant or is in the process of securing legal custody of
any individual who has not attained the age of 18 years.
Forms Manual Insert (FMI). A type of directive which includes a
sample of the form and complete instructions for its preparation, use,
and distribution.
Group home. Housing that is occupied by individuals who are elderly,
or have handicaps or disabilities sharing living space within a rental
unit in which a group home resident assistant may be required.
Household. One or more persons who maintain or will maintain
residency in one rental or cooperative unit, but not including a
resident assistant or chore service worker.
Individual with disability. A person is considered disabled if the
person meets the criteria or either of the following:
1 The person has an inability to engage in any substantial gainful
activity, but with use of auxiliary apparatus can otherwise participate
in gainful activity, by reason of any medically determinable physical or
mental impairment, where the disability:
a Has lasted or can be expected to last for a continuous period of
not less than 12 months, or which can be expected to result in death,
and
b Substantially impedes the ability to live independently, and
c Is of such a nature that such ability could be improved by more
suitable housing conditions, or
d In the case of a sight impaired person who is at least 55 years
old (within the meaning of sight impairment as determined in section 223
of the Social Security Act), is unable, because of the sight impairment,
to engage in substantial gainful activity in which he/she has previously
engaged with some regularity over a substantial period of time.
e Receipt of veteran's or Social Security Disability payments
benefits for disability, whether service-oriented or otherwise does not
automatically establish disability.
2 The person has a developmental disability; a severe, chronic
disability which;
a Is attributable to a mental or physical impairment or combination
of mental or physical impairment; and
b Was manifested before age 22; and
c Is likely to continue indefinitely; and
d Results in substantial functional limitations in three or more of
the following areas of major life activity:
(1) Self care
(2) Receptive and expressive language
(3) Learning
(4) Mobility
(5) Self-direction
(6) Capacity for independent living
(7) Economic self-sufficiency
e Reflects the person's need for a combination and sequence of
special, interdisciplinary or generic care, or treatment, or for other
services which are of lifelong or extended duration and are individually
planned and coordinated.
Individual with handicap.
1 A person with a physical or mental impairment, that:
a Is expected to be of long-continued and indefinite duration; and
b Substantially impedes the person or is of such a nature that the
person's ability to live independently could be improved by more
suitable housing conditions.
2 The term handicap further means, with respect to a person, a
physical or mental impairment which substantially limits one or more
major life activities; a record of such an impairment; or being regarded
as having such an impairment. THIS TERM DOES NOT INCLUDE CURRENT ILLEGAL
USE OF OR ADDICTION TO A CONTROLLED SUBSTANCE. As used in this
definition:
a Physical or mental impairment includes:
(1) Any physiological disorder or condition, cosmetic disfigurement,
or anatomical loss affecting one or more of the following body systems:
neurological; musculoskeletal; special sense organs; respiratory,
including speech organs; cardiovascular; reproductive; digestive;
genito-urinary; hemic and lymphatic; skin; and endocrine; or
(2) Any mental or psychological disorder, such as mental
retardation, organic brain syndrome, emotional or mental illness, and
specific learning disabilities. The term ``physical or mental
impairment'' includes, but is not limited to, such diseases and
conditions as orthopedic, visual, speech and hearing impairments,
cerebral palsy, autism, epilepsy, muscular dystrophy, multiple
sclerosis, cancer, heart disease, diabetes, human immunodeficiency virus
(HIV) infection, acquired immunodeficiency syndrome (AIDS), mental
retardation, emotional illness, drug addiction (other than addiction
caused by current, illegal use of a controlled substance), and
alcoholism.
b Major life activities means functions such as caring for one's
self, performing major tasks, walking, seeing, hearing, speaking,
breathing, learning, and working.
c Has a record of such an impairment means has a history of, or has
been misclassified as having a mental or physical
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impairment that substantially limits one or more major life activities.
d Is regarded as having an impairment means:
(1) Has a physical or mental impairment that does not substantially
limit one or more major life activities but that is treated by another
person as constituting such a limitation;
(2) Has a physical or mental impairment that substantively limits
one or more major life activities only as a result of the attitudes of
others toward such impairment; or
(3) Has one of the impairments defined in paragraph 2 a (1) and 2 a
(2) of this definition but is treated by another person as having such
an impairment.
LH. Means Farm labor housing loans and/or grants.
Limited equity. The amount of funds which have accumulated in the
cooperative member's patronage capital account and as further described
in Subpart E of Part 1944 of this chapter.
Low-income household. A household having an adjusted annual income
not exceeding the maximum low-income limit stated in Exhibit C of
Subpart A of Part 1944 of this chapter which is periodically updated
(available in any FmHA or its successor agency under Public Law 103-354
Office).
Management agent. The firm or individual engaged by the borrower and
charged with the responsibility to manage the project in accordance with
a written agreement.
Management agreement. The written agreement between the borrower and
management agent setting forth the management agent's responsibilities
and fees for management services.
Management fee. The compensation for providing overall management
services for a Multiple Family Housing (MFH) project as described in the
management plan. The fee is compensation for the time, expertise, and
knowledge required to direct and oversee the present and future
operation of the project. A management fee does not include the
compensation paid to a site manager.
Management plan. The primary management charter constituting a
comprehensive description of the detailed policies and procedures to be
followed in managing a project.
Management reserve. That portion of the cooperative occupancy charge
which is designated for payment of professional management services.
Member/comember. A person(s) who has executed documents pertaining
to a cooperative housing type of living arrangement and has committed
himself/herself to upholding the cooperative concept.
Migrant. A domestic farm laborer who works in any given local area
on a seasonal basis and relocates his or her place of residence as farm
work is obtained in other areas during the year.
Minor. A person who is a Dependent of the tenant, cotenant, member
or comember under 18 years of age. A dependent person age 18 or older
who is a full-time student is treated as a minor.
Moderate-income household. A household having an adjusted annual
income within the maximum moderate-income limit stated in Exhibit C of
Subpart A of Part 1944 of this chapter (available in any FmHA or its
successor agency under Public Law 103-354 Office).
Net family assets.
1 Net family assets include cash on hand and the value of savings,
certificates of deposit, and dollars in checking accounts reported as
``cash on hand.'' It will be such amounts reported on the day of third
party verification. This definition also includes the net cash value of
real property, cash value of whole life insurance policies, IRAs, market
value of bonds and other forms of capital, or personal property held as
investments, irrespective of location, minus debts against them, minus
cost of converting such assets to cash. Examples of conversion costs are
penalties for early withdrawal, broker/legal fees assessed to sell an
asset, and settlement costs for real estate transactions.
2 Net family assets also include the value of equity 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 a foreclosure or bankruptcy sale) in excess of the consideration
received therefrom during the 2 years preceding the effective date of
certification/recertification. In the case of a disposition as part of a
divorce settlement, the disposition shall not be considered to be for
less than fair market value if the household member receives important
consideration not measurable in dollar terms.
3 Income from net family assets which is included in annual income
is determined as follows:
a If net family assets equal $5,000 or less, annual income includes
the actual income derived from the net family assets.
b If net family assets exceed $5,000, annual income includes the
greater of:
(1) Actual income derived from all net family assets, or
(2) A percentage of the cash value of such assets based on the Bank
Passbook annual savings rate.
4 Net family assets exclude:
a Interests in Indian trust land.
b The value of necessary items of personal property such as
furniture and automobile(s), and the debts against them.
c 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.
d The value of a trust fund (i.e., for a minor or a legally
incompetent household
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member) 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.
e A vehicle specially equipped for the handicapped.
f Face value of life insurance policies.
g A cooperative member's patronage capital in the housing
cooperative unit in which the family resides.
h Prepaid funerary arrangements and expenses.
i Retirement funds not accessible for withdrawal by a household
member.
j Assets legally owned but not accessible or that accrue income to
someone else.
k Savings accounts of dependent minors when such accounts are under
the minor's social security number.
New housing. Newly constructed or substantially rehabilitated RRH,
RCH, or LH project financed by FmHA or its successor agency under Public
Law 103-354. For new construction rental assistance (RA) purposes, it
further means before any units are occupied.
Nonprofit corporation. A corporation which is organized and operated
for purposes other than making gains or profits for the corporation or
its members; is legally precluded from distributing to its members any
gains or profits during its existence; and in the event of its
dissolution, is legally bound to transfer its net assets to a nonprofit
corporation of a similar type or to a public corporation which will
operate the housing for the same or similar purposes.
Occupancy charge. The amount of money charged a cooperative member
to cover his/her proportionate share of the cooperative's operating
costs and cash requirements.
Occupany surcharge. A monthly surcharge on units in projects where
the initial loan was made or insured pursuant to a contract entered
into, on or after December 15, 1989. This surcharge will be collected
from tenants by borrowers and transmitted to FmHA or its successor
agency under Public Law 103-354 and set aside to offset any rent
increases which may result when the project becomes eligible for a
guaranteed equity loan, 20 years from the date of the loan in the
project which made the project subject to surcharge.
Operational housing. A completed RRH, RCH, or LH project financed by
FmHA or its successor agency under Public Law 103-354 which has been
opened for occupancy and has at least been partially occupied by tenants
or members.
Overage. The portion of a tenant's or member's net contribution to
shelter cost that exceeds basic rent.
Pet. A commonly accepted domesticated household animal (i.e., dog,
cat, bird, etc.) owned or kept by a tenant or member.
Profit basis. Applies to an individual or organizational applicant
who will operate the housing at rental rates low- and moderate-income
nonelderly or nonhandicapped persons, and/or elderly and persons with
handicaps of any income can afford, where return on initial investment
is not limited to a certain percentage per year.
Project. A project is the total number of rental or cooperative
housing units that are operated under one management plan with one loan
agreement/resolution.
RCH means Rural Cooperative Housing Loans.
Rental agent. The individual responsible for the leasing of the
units. If other than the borrower, this individual may be hired by the
borrower or the management agent as specified in the management plan.
Rental assistance (RA). RA, as used in this exhibit, is the portion
of the approved shelter cost paid by FmHA or its successor agency under
Public Law 103-354 to compensate for the difference between the approved
shelter cost and the monthly tenant contribution as calculated according
to paragraph IV of this exhibit. When the 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 tenant that
difference according to paragraph IX A 2 of exhibit E of this subpart.
RA used in cooperative housing will be calculated in the same manner.
Resident assistant. A person(s) residing in a tenant's housing unit
who is essential to the well-being and care of the person(s) who are
elderly or have handicaps or disabilities residing in the unit, but is
not obligated for the person's financial support and would not be living
in the unit except to provide the needed support services. While the
resident assistant may be a family member, the resident assistant may
not be a dependent of the household for tax purposes and is not subject
to the eligibility requirements of a tenant or member. A resident
assistant is not a chore service worker. A resident assistant may
function in any type of housing affected by this subpart.
RHS means Rural Housing Site loans.
RRH means Rural Rental Housing loans.
Service agreement. A written agreement between the borrower and a
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 a FmHA or its successor agency under Public Law 103-354
financed project. 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.
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Shelter cost. Consists of basic and/or note rate rent plus utility
allowance and occupancy surcharge, when required. Basic and/or note rate
rent must be shown on the project budget for the year and approved
according to paragraph XII of this exhibit. Utility allowances, when
required, must be determined and approved according to Exhibit A-6 of
Subpart E of Part 1944 of this chapter. Any change in rental rates or
utility allowances must be processed according to Exhibit C of this
subpart. The shelter cost in a cooperative housing project will consist
of occupancy charge plus utility allowance.
Site manager. The individual employed by the borrower or the
management agent who lives at or near the project site and is
responsible for the day-to-day operations of the project. A site manager
residing at the project site may also be referred to as a resident
manager. A site manager is not an ``independent contractor.''
Tenant contribution. The portion of the approved shelter cost,
including occupancy surcharge, paid by the tenant household (tenant
rent). For tenants not receiving HUD Section 8, this amount will be
calculated according to Form FmHA or its successor agency under Public
Law 103-354 1944-8. For tenants receiving HUD Section 8, this will be
the amount referred to on HUD Form 50059, ``Certification and
Recertification of Tenant Eligibility,'' (or other HUD approved Form),
as family contribution. The proportion of tenant income and adjusted
income paid as the tenant contribution will vary according to the type
of subsidy provided to the household.
Tenant/cotenant. A person(s) who has signed a lease and is, or will
be, an occupant of a unit in an RRH or LH project.
Utility allowance. A monetary allowance used by a tenant or member
to pay the utility cost portion of their total shelter cost when such
amounts are not otherwise included in project rents or occupancy
charges.
Very low-income household. A household having an adjusted annual
income within the maximum very low-income limit stated in Exhibit C of
Subpart A of Part 1944 of this chapter (available in any FmHA or its
successor agency under Public Law 103-354 office).
III Borrower Responsibilities:
A General. All borrowers are responsible for:
1 Understanding the distinction between FmHA or its successor
agency under Public Law 103-354 supervised credit and the credit
provided by other Federal, State, or conventional loans.
2 Meeting the objectives for which the loan and/or grant was made
and complying with the respective program requirements.
3 Understanding the unique characteristics and function of their
particular type of borrower entity as provided by charter, articles of
incorporation, by-laws, and/or statute.
4 Assuring that a site manager or contact person is in close
proximity to their MFH project.
5 Complying with the provisions of their security instruments and
any directive issued by FmHA or its successor agency under Public Law
103-354.
6 Following the approved management plan and reporting to FmHA or
its successor agency under Public Law 103-354 any changes to the
management plan for prior consent, and when appropriate, reporting and
obtaining FmHA or its successor agency under Public Law 103-354 prior
consent to any change of management agent.
B Borrowers without a loan agreement. Unless otherwise specified,
these borrowers are exempt from the requirements of this subpart, except
for exhibit C of this subpart, as long as the borrower is not in default
of any program requirement, security instrument, payment, or any other
agreement with FmHA or its successor agency under Public Law 103-354.
However, except for LH borrowers not charging for on-farm labor housing,
these borrowers must provide evidence of tenant eligibility.
C Borrowers with a loan and/or grant agreement in a multiple unit
project. These borrowers are responsible for meeting the requirements
and conditions of their agreement/resolution and the requirements of
this subpart.
D Borrowers with governing bodies. The elected or appointed
officials comprising the governing body of the borrower are responsible
for:
1 Maintaining records of all current members and maintaining
membership at the required level.
2 Holding meetings as required by the organizational documents, and
as otherwise necessary, to provide proper control and management of its
operations, and to keep the membership informed.
3 Coordinating and monitoring activities of established cooperative
committees.
E Borrowers with a membership. Members of a membership type
borrower are responsible for full support of the project and operation
by:
1 Promptly paying any dues, fees, and other required charges.
2 Electing responsible officials.
3 Complying with organization rules and regulations.
4 Participating in annual and special meetings.
5 Participating in established cooperative committees to which they
have voluntarily accepted assignment.
6 Carrying out duties and services necessary to maintain the
cooperative property for which they have voluntarily accepted
assignment.
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F Delegation of responsibility and authority. The borrower may
delegate or assign management responsibilities to a property manager
such as a management agent, a site manager, or as appropriate, a
caretaker. Delegations or assignments of duties and responsibility will
be included in written documents such as management agreements and job
descriptions. FmHA or its successor agency under Public Law 103-354 will
hold the borrower ultimately responsible for management of the project.
FmHA or its successor agency under Public Law 103-354 may require a
borrower to change the plan of project management and/or make
appropriate redelegations of project management responsibility to
achieve program objectives.
IV Rent Subsidy Opportunities: The available subsidy programs
should be considered at the time of developing a project proposal and
during project operation as they may be available to meet the tenants'
needs. Congregate type services such as meals, limited homecare,
medical, transportation, and social activities are not included in these
subsidy programs. The subsidy programs are as follows:
A FmHA or its successor agency under Public Law 103-354 Interest
Credit--RRH and RCH Loans. Regulations are contained in Exhibit H to
this subpart and include:
1 Plan I--Only those borrowers who received this type of interest
subsidy prior to October 27, 1980, may continue to utilize this Interest
Credit Plan. Those broadly-based nonprofit corporations and consumer
cooperatives may continue operating under this plan provided:
a Occupancy is limited to very-low or low-income non-elderly; very
low-, low- and moderate-income person(s) who are elderly or have
disabilities or handicaps.
b Budgets and rental rates are based on a 3 percent loan
amortization.
2 Plan II--This interest subsidy is available to broadly-based
nonprofit corporations, consumer cooperatives, State or local public
agencies, or to other organizations and individuals operating on a
limited profit basis.
a Occupancy is limited to very-low, low-and moderate-income persons
except as noted in paragraph VI D 2 i of this exhibit.
b Budgets are prepared showing two rental or occupancy charge
rates, basic and note rate. The minimum (basic) rate for persons not
receiving rental assistance is based on a 1 percent subsidized rate. The
maximum note rate is based on the loan amortized at the interest rate
shown in the promissory note.
c Tenant's or member's contribution for shelter cost, calculated
according to the FMI for Form FmHA or its successor agency under Public
Law 103-354 1944-8, may not exceed the highest of:
(1) Thirty percent of monthly adjusted income, or
(2) Ten percent of gross monthly income, or
(3) If the household is receiving payment 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 costs (see
example in 1k of the definition of annual income in paragraph II of this
exhibit), or
(4) The basic rent or occupancy charge when no RA is available from
FmHA or its successor agency under Public Law 103-354.
d RRH borrowers whose loans were approved on or after August 1,
1968, may convert from Plan I to Plan II. When they are presently a full
profit operation, they may convert to Plan II by executing a new or
amended loan resolution or loan agreement and an interest credit and RA
agreement according to exhibit H of this subpart.
e RRH borrowers with Plan I Section 8 interest credit agreements
may change to Plan II when the 1 percent or 2 percent interest reduction
is insufficient for the HUD contract rent to meet budgeting needs. The
change of interest credit plan will be approved in accordance with
paragraph VII B of Exhibit C of this subpart (available at any FmHA or
its successor agency under Public Law 103-354 office). A new Form FmHA
or its successor agency under Public Law 103-354 1944-7, ``Multiple
Family Housing Interest Credit and Rental Assistance Agreement,'' is
required.
B Rental assistance (RA) program--FmHA or its successor agency
under Public Law 103-354. This is a subsidy program available to RRH,
RCH, and LH borrowers to assist very-low and low-income tenants and
members in paying their shelter cost. RA is not authorized for tenants
or members whose adjusted income is initially above the low-income
level. RA is not available to LH borrowers who are individual
farmowners, partnerships, family corporations, or an association of
farmers. RRH borrowers with loans approved on or after August 1, 1968,
must be operating under, or change to, Interest Credit Plan II to
receive RA. Full profit borrowers may utilize RA by converting to a
limited profit operation. The provisions of the RA program are covered
in detail in Exhibit E of this subpart.
C HUD project based Section 8 and tenant based Section 8 Rental
Certificate or Rental Voucher Program. These subsidy programs are
administered by HUD or others authorized to administer the program such
as State Housing Finance Agencies or the local public housing agency.
Projects operating under the Memorandum of Understanding between FmHA or
its successor agency under Public Law 103-354 and HUD (available at the
FmHA or its successor agency under Public Law 103-354 National Office,
Washington, DC 20250) will also be subject to the requirements of the
Housing Assistance Payments
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Contract executed by the borrower. Projects accepting tenants utilizing
Section 8 rental certificates or rental voucher assistance assigned by a
local public housing agency will also comply with any requirements
imposed by such agency. However, in all cases, tenants receiving section
8 assistance must meet the eligibility requirements specified in
paragraph VI D of this exhibit. Requirements that conflict with FmHA or
its successor agency under Public Law 103-354 requirements should be
referred to the Servicing Official for guidance. (Generally, the most
restrictive HUD or FmHA or its successor agency under Public Law 103-354
requirements or limitations will apply.)
D State provided subsidy. This is a subsidy program provided and
funded by some States and available to RRH borrowers to assist tenants
on approximately the same basis as the FmHA or its successor agency
under Public Law 103-354 RA Program. The assistance is in accordance
with a CONTRACT between the borrower and the State and concurred in by
FmHA or its successor agency under Public Law 103-354.
E Privately provided subsidy. This is a subsidy program whereby the
project owner(s) or others enter into an Agreement with FmHA or its
successor agency under Public Law 103-354 to provide and fund subsidy to
tenants of the project on approximately the same basis as the FmHA or
its successor agency under Public Law 103-354 RA Program. In some
instances, the agreement may include a limit on the number of units and
a Per Unit Ceiling on the amount of assistance. Privately provided
subsidies are typically referred to as private rental assistance.
V Management Operations:
A Management plan.
1 A comprehensive management program is essential to the successful
operation of a project. A written plan is the primary ingredient which
should describe the detailed objectives, policies and procedures in
managing the project. A management plan is required to be submitted to
the Agency for all projects, new and existing, except for those on-farm
LH units where rent is not required. The plan should be developed in
detail commensurate to project size and complexity and should be
reviewed annually and updated at least triennially by the borrower. To
reflect project needs and to meet current program objectives, use of an
addendum is permitted when few changes are made in the update of the
plan. Exhibit B-1 of this subpart outlines the requirements of the plan.
2 In the case of congregate housing/group homes, the management
plan should describe, in addition to the preceding general items, the
specific items in paragraph V B of exhibit J of this subpart.
B Identity of interest disclosure.
1 General principles. FmHA or its successor agency under Public Law
103-354 requires that applicants/borrowers and/or management agents
describe and fully justify any identity of interest, or appearance of
same, that exists or will exist between the borrower, management agent,
suppliers of materials and/or services, or vendors in any combination of
relationship. Identity of interest will be construed as existing between
the applicant/borrower and/or management entity and suppliers of
materials and/or services described under but not limited to any of the
following conditions:
a When there is any financial interest between the applicant/
borrower and/or management entity and the supplying entity.
b When one or more of the officers, directors, stockholders or
partners of the applicant/borrower or management entity is also an
officer, director, stockholder, or partner of the supplying entity.
c When any officer, director, stockholder, or partner of the
applicant/borrower and/or management entity has any financial interest
whatsoever in the supplying entity.
d When the supplying entity advances any funds to the applicant/
borrower and/or management entity.
e When the supplying entity provides and pays on behalf of the
applicant/borrower and/or management entity the cost of any materials
and/or services in connection with obligations under the management
plan/management agreement.
f When the supplying entity takes stock or any interest in the
applicant/borrower and/or management entity as part of the consideration
to be paid them.
g When there exist or come into being any side deals, agreements,
contracts or understandings entered into thereby altering, amending, or
cancelling any of the management plan/management agreement documents,
except as approved by FmHA or its successor agency under Public Law 103-
354.
2 Any individual or organization sharing an identity of interest
for the project must certify by memorandum that it is a viable, ongoing
trade or business qualified and properly licensed to undertake the work
for which it intends to contract.
a FmHA or its successor agency under Public Law 103-354 Forms 1944-
30, ``Identity of Interest (IOI) Disclosure Certificate,'' and FmHA or
its successor agency under Public Law 103-354 1944-31, ``Identity of
Interest (IOI) Qualification Form,'' (available in any FmHA or its
successor agency under Public Law 103-354 Servicing office) will be
completed and submitted as part of the management plan. Management
agents will sign either form as ``applicant.''
b The initial disclosure shall be in effect for a period of 3 years
and renewed every 3 years thereafter, except if there are any changes in
the business practices of the applicant/borrower and/or management
entity
[[Page 235]]
during the interim years that include identity of interest concerns, the
entity must file amended Forms FmHA or its successor agency under Public
Law 103-354 1944-30 and FmHA or its successor agency under Public Law
103-354 1944-31.
c The forms provide notification to the entities of the penalty,
under law, for erroneously certifying to the statements contained
therein.
d Debarment actions will be instituted against entities who fail to
disclose an identity of interest in accordance with the provisions of
subpart M of part 1940 of this chapter (available in any FmHA or its
successor agency under Public Law 103-354 office).
C Management agreement. The management agreement is the primary
document by which the management agent is guided, evaluated, and
compensated. It bears a close relationship to the management plan. A
management agreement is required except in cases where the borrower
(owner) fills the role of manager. Requirements of a management
agreement are listed in exhibit B-2 of this subpart. Exhibit B-3 of this
subpart is a sample management agreement. The two types of agreements
acceptable to FmHA or its successor agency under Public Law 103-354 are
described as follows:
1 The owner hires a professional management agent to oversee and
operate the project. The management agent may provide a site manager for
on-site management and/or caretaker when justified by the size of the
project. A qualifications statement by the management agent is required
by the borrower and FmHA or its successor agency under Public Law 103-
354. Exhibit B-4 of this subpart provides a guideline for preparing the
statement.
2 The owner maintains all or a part of the management role. The
owner may use the services of a site manager in providing onsite
management and/or services of a caretaker when justified by the size of
the project. FmHA or its successor agency under Public Law 103-354
requires a qualifications statement by the owner who proposes to
personally provide the management to determine management capability.
Exhibit B-5 of this subpart provides a guideline for preparing the
statement.
D Responsibility. The management plan and management agreement must
be based on applicable provisions of local, State, and Federal statutes
and the regulatory requirements of the loan used to finance the project,
regardless of the management system used. The owner remains totally
responsible to FmHA or its successor agency under Public Law 103-354 for
the project, regardless of the authority delegated by the owner to the
management agent.
E Compensation for project administration.
1 General principles. Compensation for project administration is
the remuneration for performance of administrative duties and
responsibilities by those selected by the owner and approved by the
Agency as having sufficient background and experience to manage project
operations. The administrative duties and responsibilities must be set
out in the management plan along with the manner in which compensation
will be determined. It is the option of the project owners to determine
whether to use a management agent to carry out project administrative
functions in full or in agent to carry out project administrative
functions in full or in part. Should a management agent be used, it is
the option of the owner to decide which duties the management agent will
perform and which duties will be performed by others. Whenever the owner
chooses to use a management agent, a management agreement must be used.
The management agreement must describe the duties and compensation for
the services provided by the management agent. Any other duties and
compensation for project administration not covered in by the management
agreement, may also be considered as project expenditures. All project
administrative expenditures must be evaluated by the Agency as being
reasonable for the services provided, including the reasonableness of
the expenditures for management agent services.
2 Review of administrative expenses. The Agency is responsible for
determining that project administrative expenses are reasonable for the
services performed in administering project operations in an acceptable
manner. Therefore, the Agency may use data from FmHA or its successor
agency under Public Law 103-354 projects or other sources for use in
making this determination. The Agency may establish guidelines for
administrative expenses for use within a State or area. Administrative
expenses falling within such guidelines for services typically performed
under the guidelines may expect expeditious action on requests for
budget approval. Administrative expenses falling outside of such
guidelines for services typically performed under the guidelines may
also warrant approval when justified. The management agent or owner will
be primarily responsible for providing evidence that such fees are
reasonable for the services performed when the administrative expenses
are falling outside of any established guidelines.
3 Review of management fees. The Agency is responsible for
determining that the fees paid for services performed by management
agents are reasonable. Therefore, the Agency may use data from FmHA or
its successor agency under Public Law 103-354 projects or other sources
for use in determining what fees are reasonable for the services
performed in an acceptable manner by management agents. The Agency may
establish guidelines for management fees for use within a State or area.
Management fees falling
[[Page 236]]
within such guidelines for services typically performed under the
guidelines may expect expeditious action on requests for approval of
management agreements and budgets. Management fees falling outside of
those guidelines may also warrant approval when justified. The
management agent or owner will be primarily responsible for providing
evidence that such fees are reasonable for the services performed when
management fees are falling outside of any established guidelines.
Whenever disputes arise as to whether an administrative expense is
appropriate for listing under the management fee, or as to some other
project expense, the Agency will seek to mutually resolve such concerns.
This will be done by using the approved management agreement or
management plan to determine which services are being performed by the
management agent.
4 Project administrative expenses.
a Acceptable administrative expenses. Those administrative expenses
necessary to successfully carry out project operations may be approved
provided such expenses do not duplicate any such expenses which may be
included in the management fee as specified in the approved management
agreement. The instructions that accompany Form FmHA or its successor
agency under Public Law 103-354 1930-7, ``Multiple Family Housing
Project Budget,'' provide further guidance on acceptable project
administrative expenses. Preparation of an IRS required report for the
project, if required (e.g., Schedule K-1 (IRS Form 1065), ``Partner's
Share of Income, Credits, Deductions, etc.'' is an acceptable project
expense.)
b Unacceptable administrative expenses. Those administrative
expenses not necessary to successfully carry out project operations may
be denied. Preparation of income tax returns for project owners are
unacceptable project expenses.
5 Projects with a management agent. When management agents are
used, the duties and compensation of the management agent must be set
out in a management agreement. All such agreements are subject to Agency
review and concurrence. The amount of compensation for the services
rendered is to be negotiated between the owner and the management agent
but is subject to Agency concurrence with the management agreement and
approval in the project budget.
6 Owner-managed projects. The owner will be authorized to manage
the rental project only when FmHA or its successor agency under Public
Law 103-354 determines in writing that the owner (either as the
individual borrower or as a part of an organizational borrower) has the
necessary management capabilities.
a Projects with owners with identity-of-interest relationships to
the management agent will not be considered as an owner managed project.
A typical management fee may be charged as an expense to the project.
The compensation must be according to the provisions of paragraph V E of
this exhibit and be reasonable, earned, and not exceed the normal cost
of similar services, had such services been provided by an independent
management agent.
b Since cooperatives are to be organized as self-managed entities,
the board of directors is not expected to have management experience. In
lieu of this experience, the adviser to the board will provide
management guidance during the formative years of the cooperative. Under
the adviser's direction, the cooperative will become accustomed to this
role and thus gain the ability to assume management responsibilities.
If, after the required trial period outlined in subpart E of part 1944
of this chapter, the cooperative's board is unable to assume management
responsibilities, professional management will be hired by the
cooperative. We would expect the amount of compensation paid to a
cooperative adviser to be less than that paid to other types of
management agents in order to provide the members with some equity in
the early years. (See subpart E of part 1944 of this chapter).
7 Initial rent-up fees. Payment of fees for a one-time effort to
achieve initial rent-up of a newly constructed rental project is
permitted when it is determined necessary and documented by the FmHA or
its successor agency under Public Law 103-354 loan approval official and
the loan applicant. Rent-up fees should be paid on a per-unit basis only
after each unit has been occupied by the initial tenant. Payment of the
rent-up fee and other project management start-up expenses should
generally be made from the 2 percent initial operation and maintenance
fund. A person or firm, preferably the management agency, may be
compensated at a rate negotiated with the applicant/borrower that
represents reasonable compensation for the incurred marketing cost and
project management start-up expenses.
F Site manager and/or caretaker services. The borrower is
responsible for describing the plan for site management in the
management plan. The plan needs to identify whether the site manager
will occupy one of the project units as a revenue producing unit or as a
rent free unit, or will live away from the project. The on-site services
of a site manager and/or caretaker may be used when justified by the
size, composition, and location of a project, whether the project is
managed by a management agent or by the owner. There should be a written
agreement between the owner or the management agent and the site manager
to define the role and duties and compensation for the site manager and
to provide a basis for evaluating the site manager's performance. FmHA
or its successor agency under Public Law 103-354 may require an on-site
resident manager
[[Page 237]]
and/or caretaker to assure that the loan objectives are met and/or to
protect the tenant's or Government's interests. It is not mandatory that
the site manager and/or caretaker meet tenant occupancy eligibility
requirements. However, if management considers the occupied unit to be a
rental unit, the rent paid will be determined according to the site
manager's/caretaker's income.
1 Calculation of rental rate for site manager or caretaker. The
expense of providing the unit occupied by the site manager or caretaker
will be included in the project budget the same as the expense for other
nonrevenue producing portions of the project such as a laundry or
community room. The rental rate will be determined as follows:
a When used as a revenue producing unit at approved rental rates,
the salary paid to the site manager and/or caretaker will be included in
the project operation and maintenance expenses. The same amount will be
included in the annual income of the site manager and/or caretaker. The
site manager and/or caretaker may be an eligible or ineligible tenant
and their rent contribution will be based on their total income from all
sources as shown on the tenant certification form. Occupancy surcharges
will be applicable in eligible projects.
b When the unit is used as a nonrevenue producing unit, the project
cost of providing the unit will be treated the same as those of other
nonrevenue producing portions of the project. Project rental rates will
be established as if the unit did not exist as living quarters. Debt
payment will be as if the unit were rented at basic rent. A tenant
certification form will not be prepared for this situation. Occupancy
surcharge will not be collected in nonrevenue producing units.
2 Owner occupancy. With the prior approval of the State Director,
owners may occupy a unit in the project when the owner will manage the
project rather than hiring a management agent or a site manager. The
size, composition, and location of the project must justify the services
of a site manager or caretaker, and the State Director must determine
the owner is capable of performing these services. The rental rate will
be included as described in paragraph V F 1 of this exhibit.
G Projects without a site manager and/or caretaker. Projects
without a site manager and/or caretaker must have, at a minimum, a
tenant who will serve as a contact person or have a person who is easily
accessible to the project who is able to represent the project manager
or owner on maintenance and management matters.
H Supplemental services. Supplemental services include laundry,
vending machine, commissary store, pay telephones, or similar tenant
benefit services.
1 Borrower provided supplemental services.
a Income from supplemental services and/or equipment and expense of
acquisition and replacement cost shall be planned and recorded as part
of the annual operating budget.
b Failure to account for all proceeds is a fraudulent act.
2 Consignor provide supplemental services.
a A written contact between the borrower and consignor is required.
The contract terms should follow ``industry'' standards for the type of
service.
b Comparability in all respects to conventional supplemental
services contracts shall govern contract with identity of interest
between the contracting parties.
c The borrower's share of income will be shown as planned and
actual income in the project operating budget.
d Failure by the contractual parties to account for all proceeds is
a fraudulent act.
VI Renting Procedure:
A General. Preparations for initial rent-up, occupancy and
maintenance should begin at least 90 to 120 days ahead of the projected
completion date of the project as described in Sec. 1944.235 of subpart
E of part 1944 of this chapter. This procedure will include a prerent-up
conference between the FmHA or its successor agency under Public Law
103-354 Serving Official, the borrower, and the person(s) responsible
for project management. Decisions to be made concern the advertisement
of available units, affirmative marketing practices, tenant eligibility,
and tenant selection criteria. It is important that this conference
precede active marketing and the receipt of tenant applications.
B Accommodations in communication.
1 The borrower shall take appropriate steps to ensure effective
communication with applicants, tenants, members, and members of the
public with handicaps and disabilities.
a The borrower shall furnish appropriate auxiliary aids
(electronic, mechanical, or personal assistance) where necessary to
afford an individual with handicaps or disabilities an equal opportunity
to participate in and enjoy the benefits of a MFH project receiving FmHA
or its successor agency under Public Law 103-354 financial assistance.
(1) In determining what auxiliary aids are necessary, the borrower
shall give primary consideration to the requests of an individual with
handicaps or disabilities.
(2) The borrower is not required to provide individually prescribed
devices, readers for personal use or study, or other devices of a
personal nature.
b Where a borrower communicates with applicants and tenants or
members by telephone, telecommunication devices for deaf persons (TDD's)
or equally effective communication systems shall be available for use.
2 The borrower shall adopt and implement procedures to ensure that
interested
[[Page 238]]
persons (including persons with impaired vision or hearing) can obtain
information concerning the existence and location of accessible
services, activities, and facilities in the project and community.
3 This paragraph does not require a borrower to take any action
that the borrower can demonstrate would result in a fundamental
alteration in the nature of the project or operation or an undue
financial and administrative burden. If an action would result in such
undue alteration or burden, the borrower shall take any other action
that would otherwise ensure that, to the maximum extent possible,
individuals with handicaps or disabilities receive the benefits and
services of the project.
C Affirmative Fair Housing Marketing Plan. All borrowers with five
or more rental units must meet the requirements of Sec. 1901.203(c) of
subpart E of part 1901 of this chapter by preparing and submitting HUD
Form 935.2, ``Affirmative Fair Housing Marketing (AFHM) Plan.'' Records
must be maintained by the borrower reflecting efforts to fulfill the
plan and will be reviewed by FmHA or its successor agency under Public
Law 103-354 and updated by the borrower during compliance reviews for
title VI of the Civil Rights Act of 1964. The approved plan will be
posted by the borrower for public inspection at the borrower's project
site, rental office, or at any other location where tenant applications
are received for the project. In developing the plan, the following
items should be considered:
1 Direction of marketing activities. The plan should be designed to
attract applications for occupancy from all potentially eligible groups
of people in the housing marketing area regardless of race, color,
religion, sex, age, familial status, national origin, or handicap. The
plan must show which efforts will be made to reach very low-income or
low-income groups who traditionally would least likely be expected to
apply for such housing without special outreach efforts.
2 Marketing program. The applicant or borrower should determine
which methods of marketing such as radio, newspaper, TV, signs, etc.,
are best suited to reach those very low-income or low-income groups who
are least likely to apply for occupancy in the project. Marketing should
not totally rely on ``word of mouth'' advertising. Appropriate social
agencies and networks should be contacted to assist in reaching elderly
(senior citizens), persons with handicaps, etc.
a Advertising.
(1) Frequency. The borrower should advertise availability of housing
units in advance of their availability to allow time to receive and
process applications, determine eligibility, and arrange for move-in of
tenants or members in a smooth flow of project operation. Advertising by
newsprint or electronic media should occur at least annually to promote
project visibility, even if there is an adequate waiting list.
(2) Posters, brochures, etc. Any radio, TV, or newspaper
advertisement, pamphlets, or brochures used must identify the project's
handicap accessibility and contain the appropriate fair housing logotype
or the equal housing opportunity slogan. A copy of this proposed
material is to be submitted along with the HUD Form 935.2 for approval.
The nondiscrimination poster entitled ``And Justice For All,'' the
``Fair Housing'' poster and the tenant grievance and appeals procedure
must be displayed in the rental office. If the rental office is not on
site, the items must be displayed in a common conspicuous place on the
site.
b Signage.
(1) Permanent project sign. A permanent sign identifying the project
is required for all MFH projects approved on or after September 13,
1977. To meet minimum requirements for an existing or new project, the
sign, subject to state or local code:
(i) Must be located at the primary site entrance and be readable and
recognizable from the roadside.
(ii) Must be located near the site manager's (or contact person's)
office when the project has multiple sites. Portable signs will be
placed where vacancies exist at other site locations of a ``scattered''
project.
(iii) May be of any shape.
(iv) For projects of 8 or more units, must have not less than 16
square feet of area. Smaller projects may have smaller signs.
(v) Including its supports, must be made of durable material.
(vi) Must include the project name.
(vii) Must show rental contact information including but not limited
to the project's office location and a telephone number where applicant
inquiries may be made.
(viii) Must show the equal housing opportunity logotype (house
symbol and slogan) as shown in exhibit B-11 of this subpart, OR the
slogan ``Equal Housing Opportunity'' OR the statement ``We are pledge to
the letter and spirit of U.S. policy for the achievement of equal
housing opportunity throughout the nation. We encourage and support an
affirmative advertising and marketing program in which there are no
barriers to obtaining housing because of race, color, religion, sex,
handicap, familial status, or national origin.'' The logotype and/or
slogan must be permanently affixed, clearly visible and should be at
least equal to approximately 3 to 5 percent of the sign area.
(ix) May display the FmHA or its successor agency under Public Law
103-354 logotype as shown in exhibit B-12 of this subpart.
(2) Handicap accessibility signs.
(i) Parking spaces. Accessible parking spaces shall be designated as
reserved for the disabled by a sign showing the international symbol of
accessibility (see exhibit B-13 of
[[Page 239]]
this subpart). The sign should be mounted on a post at a height readily
visible from an occupied vehicle. In snow areas, the sign needs to be
visible above piled snow.
(ii) Handicap accessibility route. When the continuous unobstructed
ingress/egress handicap accessibility route to a primary building
entrance is other than the usual or obvious route, the alternate route
for handicap accessibility shall be clearly marked with handicap symbols
and directional signs to aid a handicapped person's ingress/egress to
the building, through an accessible entrance, and to accessible common
use and public and living areas.
c Community contact. Community leaders and special interest groups
such as community, public interest, religious organizations, and
organizations for the handicapped should be contacted in small
communities without formal communication media aimed at the group or
groups least likely to apply for available housing. Community contacts
should also be used in reaching specific elements of the community such
as the elderly or particular ethnic groups determined least likely to
apply for the available housing.
d Rental staff. All staff persons responsible for renting the units
must have had training provided on Federal, State, and local fair
housing laws and regulations and in the requirements of fair housing
marketing and in those actions necessary to carry out the marketing
plan. Copies of instructions to the staff regarding fair housing must be
attached to the AFHM plan according to the instructions for part 7 of
HUD Form 935.2.
3 Marketing records. The borrower will be required to develop and
maintain a system to provide data to indicate to what extent the
borrower is carrying out the objective of the AFHM plan.
D Tenant eligibility and occupancy guidelines. The rental agent of
the project must be knowledgeable about the FmHA or its successor agency
under Public Law 103-354 tenant eligibility and occupancy requirements
as they relate to a particular project. FmHA or its successor agency
under Public Law 103-354 loans require occupancy of the unit by eligible
tenants. Except for migrant farmworker tenants in LH projects, tenant/
applicants must occupy the housing unit they qualify for as their
permanent residence on the provision they do/will not maintain a
separate subsidized rental unit in a different location.
1 Eligible tenants. The following tenant eligibility criteria will
apply where appropriate, unless otherwise authorized such as in the case
of LH as described in subpart D of part 1944 of this chapter.
a To determine eligibility for occupancy, the applicant's
eligibility income must be as defined in paragraph II and include income
from net family assets as defined in paragraph II of this exhibit.
b The adjusted annual income must meet the definition of very low-,
low- or moderate-income as defined in paragraph II of this exhibit as
required for that specific project for applicant selection, tenant
contribution, and continued occupancy.
c To determine eligibility for continued occupancy, the tenant's
adjusted annual income must be determined at least once every 12 months.
When the tenant's adjusted annual income exceeds the moderate-income
limit established for the area in which the project is located, the
tenant is no longer eligible and will be required to vacate the project
according to the terms of the lease and paragraph VI D 6 of this
exhibit. Continued occupancy by cooperative members will not be affected
by this income criteria. Cooperative members, after initial
certification of income eligibility, may remain members regardless of
income.
d In RRH projects operating on a Plan I basis, tenants will:
(1) Be a very low-, low-, or moderate-income person who is elderly,
or has handicaps, or disabilities, or
(2) Be a very low or low-income nonelderly, nondisabled, or
nonhandicapped person.
e In RRH projects operating on a nonprofit or limited profit Plan
II basis, tenants will be a very low-, low-, or moderate-income person
regardless of age, disability, or handicapping condition.
f In RRH projects operating on a full-profit basis, tenants will:
(1) Be a person of any income who is elderly, or has handicaps, or
disabilities, or
(2) Be a very low-, low-, or moderate-income nonelderly,
nondisabled, or nonhandicapped person.
g In LH projects designed and operated either for year-round or
seasonal occupancy, eligibility is established in subpart D of part 1944
of this chapter.
h Occupancy in RRH project units designated by FmHA or its
successor agency under Public Law 103-354 as:
(1) Family housing may be occupied by any combination of elderly,
disabled, or handicapped, and/or nonelderly, nondisabled, or
nonhandicapped tenants including those tenants with familial status.
Marketing priorities for this category should not exclude one group over
another.
(2) Elderly housing must be occupied by tenants who are elderly,
disabled, and/or handicapped but not at the exclusion of children if
they are members of the ``elderly'' household, nor shall it be
restricted exclusively for use by tenants who are disabled and/or
handicapped.
(3) Housing which consists of specific units in a project designated
as family housing and other units designated as elderly housing units
should be governed by paragraphs VI D 1 h (1) and (2) of this exhibit.
[[Page 240]]
(4) Congregate housing and group homes shall be occupied by persons
described in the definitions for congregate housing and group home,
respectively in paragraph II of this exhibit.
i Tenant of member independence.
(1) RRH, RCH, and LH housing. It shall be a tenant's or member's
responsibility to determine the ability to meet the legitimate and
uniformly applied requirements of tenancy, thus assuming risk and
responsibility of living within and upon the project premises. It shall
be the owner's or representative's responsibility to respond to requests
for what reasonable accommodations the tenant or member may need,
otherwise the owner or its representative MAY NOT under possible penalty
prescribed by Pub. Law No. 100-430, 102 stat. 1619 (1988) codified at 42
U.S.C. 3601 et seq:
(i) Judge whether individuals with handicap or disability are
capable of independent living.
(ii) Require a physical examination as a condition for tenant or
member selection.
(iii) Impose conditional leases requiring individuals with handicaps
or disabilities to participate in supportive services.
(2) Congregate and group home housing and housing with handicap
unit(s). Because the purpose of such housing is to provide specific
supportive services to individuals, it is permissible for the owner or
its representative to inquire only to the extent necessary in the case
of congregate housing whether the project offers the services wanted by
the individual and in the case of group home housing, whether the
individual has a handicap or disability that would qualify the
individual to occupy, or continue to occupy the housing.
(3) Legal capacity. Tenants or members in FmHA or its successor
agency under Public Law 103-354 financed MFH projects must possess the
legal capacity to enter into a lease agreement, except where a legal
guardian (an individual) may sign when the tenant or member is otherwise
eligible and is a tenant residing in a group housing project.
j For LH projects and units in RRH projects specifically designed
and designated for the elderly, disabled, and/or handicapped as defined
by FmHA or its successor agency under Public Law 103-354, occupancy is
limited solely to those meeting the eligibility requirements for the
specific type of project (i.e., domestic farm laborers, elderly,
disabled, and/or handicapped). Eligible occupants in these projects may
also include other persons who are usually household members of the
families of the domestic farm laborer, or persons who are elderly, or
have disabilities, or handicaps. Resident assistants or chore workers
will not be considered members of the tenant's household.
k A student or other seemingly temporary resident of the community
who is otherwise eligible and seeks occupancy in an RRH or RCH project
may be considered an eligible tenant when all of the following
conditions are met:
(1) Is either of legal age in accordance with applicable State law
or is otherwise legally able to enter into a binding contract under
State law.
(2) The person seeking occupancy has established a household
separate and distinct from the person's parents or legal guardians.
(3) The persons seeking occupancy is no longer claimed as a
dependent by the person's parents or legal guardians pursuant to
Internal Revenue Service regulations, and evidence is provided to this
effect.
(4) The person seeking occupancy signs a written statement
indicating whether or not the person's parents, legal guardians, or
others provide any financial assistance and such financial assistance is
considered as part of current annual income and is verified in writing
by the borrower.
l A domestic farm laborer may continue occupancy of an LH project
after retirement (having reached age 55) or after becoming disabled
[(determined to have an impairment which is expected to be of long-
continued and indefinite duration and substantially impedes the person's
ability to earn a livelihood from farm labor (as certified by a licensed
physician)].
m A tenant who does not personally reside in a rental unit for a
period exceeding 60 consecutive days, for reasons other than health or
emergency, is considered ineligible for subsidy and shall be required to
pay note rate rent in Plan II projects or 125 percent of rent in Plan I
projects for the period of absence exceeding 60 consecutive days.
(1) If the tenant continues to be absent from the unit, the
borrower must notify the tenant by certified mail at least 30 days prior
to the end of the leasing period, to occupy the living unit by the end
of the lease period or the borrower will start termination proceedings.
(2) In those cases where the tenant's lease does not contain the
lease clause in paragraph VIII B 4 c of this exhibit, the tenant will be
advised that the lease will not be renewed, unless replaced with a lease
meeting current requirements.
2 Occupancy policy and guidelines.
a Objective. The objective of the occupancy policy and guidelines
in FMHA financed projects is to achieve utilization of subsidized space
without overcrowding or providing more space than is needed by the
number of people in the household.
b Policy.
(1) FmHA or its successor agency under Public Law 103-354 does not
specify the number of persons who may live in MFH housing units of
various sizes.
(2) The borrower must set reasonable occupancy standards which will
assist as many
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people as possible without overcrowding the unit or the project and
which will minimize vacancies.
(3) In setting the occupancy standards, the borrower must comply
with all reasonable State and local health and safety restrictions
regarding the maximum number of occupants permitted to occupy a
dwelling. In the absence of State or local health safety restrictions,
overcrowding shall occur when the TOTAL occupancy level in a housing
unit exceeds 2 people per habitable sleeping room, except that an
additional person(s) may be allowed when a habitable sleeping room
provides at least 50 square feet per person. A habitable sleeping room
shall not include a kitchen, bathroom, hallway, or dining area.
(4) In placing families on waiting lists and in assigning families
to MFH housing, a borrower should allow families to choose whether to
opt for larger or smaller units to permit families to occupy units of
sufficient size, so that persons of opposite sex (other than spouses) or
persons of same sex, persons of different or same generation, and
unrelated or related adults may have separate bedrooms according to the
particular needs of the family.
(5) Borrowers may have different standards for different projects
but such standards must not result in or perpetuate patterns of
occupancy which would be inconsistent with title VI of the Civil Rights
Act of 1964 or the Fair Housing Act.
(6) For the purpose of determining unit size, borrowers need to
include, as members of the household:
(i) All full-time members of the household.
(ii) Dependent minors who are away at school but live with the
family during school recesses.
(iii) Dependent minors who are subject to a joint custody agreement
but live in the unit at least 50 percent of the time.
(iv) An unborn child or a child in the process of being adopted by
or granted custody of an adult.
(v) A foster child residing in the unit, or a household child
temporarily residing elsewhere in foster care.
(vi) A live-in attendant.
(7) Borrowers shall not provide bedroom space for others who are not
members of the household such as adult children on active military duty,
permanently institutionalized family members, or visitors.
c Guidelines. These guidelines are designed to assist the borrower
in implementing the occupancy policy into workable occupancy standards.
The project occupancy standard should be available for review by
applicant, tenant, member, and project representative upon request.
(1) In setting objective occupancy standards, the borrower should
set the standards to permit the tenant to select the unit size they deem
appropriate to their needs insofar as overcrowding by the household does
not happen and underutilization of the unit does not occur. The
occupancy standard selected should attempt to reflect ideal ranges of
occupant density. In developing an ideal occupancy standard, it should
be based so that:
(i) No more than two persons should be required to occupy a bedroom.
(ii) Persons of different generations, persons of the opposite sex
(other than spouses), and unrelated adults should not be required to
share a bedroom.
(iii) Children of the same sex may share a bedroom.
(iv) Children, with the possible exception of infants, should not be
required to share a bedroom with persons of different generations,
including their parents.
(2) These guidelines should result in the following ideal range of
persons per housing unit:
------------------------------------------------------------------------
Occupant density range
No. of bedrooms -------------------------
minimum
------------------------------------------------------------------------
0............................................. 1 1
1............................................. 1 2
2............................................. 2 4
3............................................. 3 6
4............................................. 5 8
5............................................. 7 10
------------------------------------------------------------------------
For example, if the borrower adopts these standards, households with
three people generally should be accomodated in a two bedroom unit and
should not receive apartments with more than three bedrooms. Nor should
such households be required to live in apartments with fewer than two
bedrooms. A household of three persons could be permitted to live in an
apartment with fewer than two bedrooms if the household so chooses,
unless it would constitute overcrowding OR there is a state or local
occupancy law forbidding occupancy of the unit by three or more persons.
(3) If, because of a physical or mental handicap of a household
member or a person associated with that household, a family may need a
unit that is larger than the unit size suggested by the guidelines in
paragraph VI D 2 c (2) of this exhibit, it may be an unlawful failure to
make reasonable accommodation to deny such a family the opportunity to
apply for and obtain such a unit.
d These occupancy guidelines may serve also as general guidelines
for migrant and on-farm LH. Projects developed in compliance with local
and/or state design requirements will determine the appropriate
occupancy standards for migrant LH. In dormitory type LH housing, there
must be at least 400 cubic feet of habitable sleeping area for each
person.
e When there are no units of appropriate size available in the
project:
[[Page 242]]
(1) The tenant may be admitted and/or remain, provided the unit is
not overcrowded or underutilized.
(2) The tenant may receive available rental subsidy if otherwise
qualified by income.
f When an occupied unit becomes overcrowded or underutilized and
there is a waiting list for the size unit occupied:
(1) The tenant must move to another unit in the project of adequate
size and accommodation when it becomes available. If the tenant then
refuses to move to the available unit, or if none is available.
(2) Vacate the project within a reasonable time period established
by the borrower as specified in the lease or by the end of the lease
period, whichever is later.
g To avoid prolonged vacancy and loss of revenue, management may
permit temporary occupancy of specially designed handicapped accessible
units by households not needing such specially designed features, under
the following conditions:
(1) No household needing the specially designed features of a
handicapped accessible unit is available to occupy the unit and
management has made a diligent effort to reach tenants who qualify for
the specially designed unit;
(2) The tenant agrees to transfer to an appropriate unit if and when
it becomes available in the project once an applicant with handicaps
needing the features of a handicapped accessible unit is on the waiting
list and ready to move in;
(3) The responsibility to pay all costs associated with the
subsequent move to the appropriate unit shall be mutually determined
between the owner and the tenant. The owner's share of cost, if any, may
be a project expense; and
(4) The appropriate lease clause in paragraph VIII C of this exhibit
is incorporated in the tenant's lease.
h Borrowers with RRH projects specifically built and designated for
the elderly prior to October 27, 1980, with only a few or no one-bedroom
units, may permit occupancy of two-bedroom units by single eligible
tenants if this provision is included in the project occupancy policy.
The occupancy policy should reflect the needs of the local market area.
This eligibility determination made by management must be included in
the tenant's lease and will entitle such tenant to all benefits without
need for further FmHA or its successor agency under Public Law 103-354
approval.
i When a unit cannot be rented under the provisions in paragraph VI
D 2 g and h of this exhibit, the Servicing Official may authorize an
exception according to paragraph VI D 7 of this exhibit.
j A tenant who was determined eligible and allowed to occupy under
regulations in effect prior to October 1, 1986, who does not meet
eligibility requirements regarding income or occupancy policy as
prescribed in these regulations may be permitted continued occupancy in
the same unit for the duration of their residency. This provision
specifically refers to:
(1) Elderly tenants of any income level who have occupied their
unit, since before October 27, 1980.
(2) Tenants who were determined eligible before October 27, 1980,
but did not meet income and occupancy requirements on that date.
Examples are:
(i) Individual tenants occupying a unit with separate tenant
certifications whose combined income on October 27, 1980, would
disqualify joint tenancy.
(ii) Tenant households whose composition did not meet the occupancy
guidelines in paragraph VI D 2 c (2) of this exhibit.
(3) Tenants who became income ineligible due to changes of income
and shelter cost determination on October 1, 1986. This provision did
not apply to normal increase of household income which may have made
them ineligible before October 1, 1986.
k For each RRH project specifically designated for the elderly, the
borrower or management may not prohibit, prevent, restrict, or
discriminate against any tenant for continued occupancy or applicant for
occupancy who owns or will keep a pet in their apartment unit unless the
approved project pet rules are violated.
l Nothing in this subpart requires that an apartment unit be made
available to any individual whose tenancy would constitute a direct
threat to the health and safety of other individuals or whose tenancy
would result in substantial physical damage to the property of others,
Except, when such threat can be removed by applying a reasonable
accommodation.
3 Reasonable accommodations.
a The Fair Housing Amendment Act of 1988 requires persons to make
reasonable accommodations in rules, policies, practices, or services,
when such accommodations would afford a handicapped or disabled person
equal opportunity to occupy or continue to occupy and enjoy a dwelling
unit, including public and common use areas. For example:
(1) It would be unlawful to refuse a person with a sight impairment
with a service animal to live in a dwelling unit when there is otherwise
a no-pet policy in the apartment complex.
(2) It would be reasonable accommodation to grant a request by an
applicant or tenant with a mobility impairment to be assigned a reserved
parking space as near to that person's dwelling unit as possible, even
though all other designated handicapped parking spaces are already
reserved, having been assigned on a first-come, first served basis.
(3) It would be reasonable accommodation to remove a gas cooking
stove and install a
[[Page 243]]
microwave oven when such accommodations to a tenant or member would
remove a direct threat to the project, the tenant and other tenants.
Other examples are changing water faucets to push or electronic
activated faucets and door knobs to door handles for persons with
infirmed hands.
b The Fair Housing Amendment Act requires owners to permit, at the
expense of a person with handicaps, reasonable modifications of an
existing unit, occupied or to be occupied by a person with handicaps, if
the proposed modifications may be necessary to afford that person full
enjoyment of the dwelling unit.
(1) The borrower may, where it is reasonable to do so, condition
permission for a modification on the applicant or tenant agreeing to
restore the interior of the dwelling unit to the condition that existed
before the modifications, reasonable wear and tear excepted. (Note: It
should not, for example, be necessary to remove blocking previously
installed to support bathtub handrails when restoring to ``original''
condition since the blocking does not affect future use.)
(2) The borrower may not increase the customarily required security
deposit. However, where it is necessary to ensure with reasonable
certainty that funds will be available to pay for the restorations at
the end of tenancy, the borrower may negotiate as part of such a
restoration agreement a provision requiring that a tenant pay into an
interest bearing escrow account, over a reasonable period, an amount of
money not to exceed the cost of restoration. The interest in any such
account shall accrue to the tenant's benefit.
4 Other items the borrower should consider in determining
eligibility of applicants for admission to the project.
a Any criteria or documentation must be applied uniformly for all
applicants for occupancy for the following items:
(1) Verification of income and/or employment according to paragraph
VII of this exhibit. (Mandatory in all cases.)
(2) Credit reports to reflect the applicant's past record of meeting
obligations. (Optional.)
(3) Prior landlord references to determine if the tenant was
responsive to meeting rent payment obligations, care, and maintenance of
the unit. (Optional.)
(4) The applicant's financial capability to meet other basic living
expenses and the rental charge, taking into consideration any subsidy
assistance that could be made available to the tenant. Where RA is not
available, the borrower should inform any very-low or low-income
household that would be required but unable to pay the approved rent,
including utilities, that they may be eligible for a particular form of
rent subsidy described in paragraph IV of this subpart. The borrower
should indicate where information about other subsidies can be obtained.
(Optional.)
(5) Written verification of an unborn child by a doctor or other
qualified third party. (When applicable.)
b A borrower or manager should consider mitigating factors when
tenants or members have had or presently have a period of hardship
beyond their control, when they have had disputes with creditors,
including landlords, or when they were having difficulty paying
overburdened rent levels.
5 Surviving or remaining members of eligible tenant household.
a Surviving members of an elderly, disabled, and/or handicapped
tenant's household may continue occupancy of the unit after the death of
the original tenant, even though they may not meet the definition of an
elderly, disabled or handicapped person stated in paragraph II of this
exhibit, provided:
(1) They are eligible occupants with respect to income and were
either cotenant or member of the household and have legal capacity to
sign and assume the lease,
(2) They occupied the unit with the original tenant at the time that
the original tenant died, and
(3) A surviving nonelderly cotenant or comember shall not qualify
for the elderly family adjustments to income.
b Surviving members of a domestic farm laborer's household may
continue to occupy when they meet the definition of a domestic farm
laborer as defined in paragraph II of this exhibit.
c Remaining household member(s) of a nonelderly, nondisabled and/or
nonhandicapped household, who is included on the current tenant
certification may continue to occupy the rental unit if they otherwise
independently meet tenant eligibility requirements with respect to
income and occupancy standard size and sign a succeeding tenant
certification establishing their own tenancy.
d When tenants no longer meet the requirements of paragraph VI D 5
a, b, or c of this exhibit, the provisions for formerly eligible tenants
in paragraph VI D 6 of this exhibit shall apply.
6 Formerly eligible tenants. Unless authorized by paragraph VI D 2
j of this exhibit, formerly eligible tenants will be required to vacate
their unit within 30 days (7 days for migrant farm labor tenants with
week-to-week lease agreements) or the end of the term of their lease
agreement, whichever is longer. If, however, there is not an eligible
applicant on the waiting list available for occupancy, the formerly
eligible tenant may remain until there is an eligible tenant on the
waiting list available to occupy the unit; at which time, the
requirements for notice to vacate stated in paragraph VI D 6 c of this
exhibit will take effect. If vacating the unit in the time period
described creates an
[[Page 244]]
undue hardship on the family, the Servicing Official may permit
continued occupancy for a reasonable period of time. The following
``formerly eligible'' situations apply to this paragraph:
a Tenants who no longer meet FmHA or its successor agency under
Public Law 103-354 income eligibility requirements. (This includes
tenants receiving RA or Section 8 assistance.)
b Tenants in LH projects who no longer meet the farm labor
occupation requirements, and who are neither retired nor disabled
domestic farm laborers, are considered to be ``formerly eligible
tenants'' as long as a need for housing for domestic farm laborers
exists in the project's farm market area.
c Tenants who no longer meet the occupancy policy for the project.
These tenants must agree in writing to move to a unit of appropriate
size in the project when one becomes available, or when an appropriate
sized unit does not exist in the project, vacate the project at the
termination of their lease. However, the tenant may remain as an
ineligible tenant if the unit is not overcrowded and there are no other
applicants on the waiting list for the size of unit presently occupied.
7 Servicing official authority to permit an RRH or LH borrower to
rent to ineligible tenants.
a The Servicing Official may authorize the borrower in writing,
upon receiving the borrower's written request with the necessary
documentation, to rent vacant units to ineligible persons for temporary
periods to protect the financial interest of the Government. Likewise,
this provision may extend to a cooperative. This authority will be for
the entire project for periods not to exceed one year. Within the period
of the lease, the tenant may not be required to move for initially
documented ineligibility. A copy of the authorization to rent to
ineligibles will be forwarded to the State Office. The following
determinations must be made by the authorizing FmHA or its successor
agency under Public Law 103-354 official.
(1) There are no eligible persons on a waiting list.
(2) The borrower provided evidence that a diligent but unsuccessful
effort to rent any vacant unit(s) to an eligible tenant household has
been made. Such evidence may consist of advertisements in appropriate
publications, posting notices in several public places, and other places
where persons seeking rental housing would likely make contact; holding
open houses, making appropriate contacts with public housing agencies
and authorities (where they exist), State and local agencies and
organizations, Chamber of Commerce, and real estate agencies.
(3) The borrower will continue with aggressive efforts to locate
eligible tenants and submit to the Servicing Office, along with Form
FmHA or its successor agency under Public Law 103-354 1944-29, ``Project
Worksheet for Interest Credit and Rental Assistance,'' a report of
efforts made. The required followup should be posted in the Servicing
Office on Form FmHA or its successor agency under Public Law 103-354
1905-6, ``Management System Card-Multifamily Housing.''
(4) To protect the security interest of the Government, the units
may be rented for no more than a year after which the lease must convert
to a monthly lease. The monthly lease must require that the unit be
vacated when an eligible prospective tenant is available. The ineligible
tenant will then be given 30 days to vacate.
(5) Tenants residing in RRH units who are ineligible, because their
adjusted annual income exceeds the maximum for the RRH project, will be
charged the FmHA or its successor agency under Public Law 103-354
approved note rate rental rate for the size of unit occupied in a Plan
II RRH project. In projects operated under Plan I, ineligible tenants
will be charged rental surcharge of 25 percent of the approved note rate
rental rate.
(6) Tenants permitted to occupy but who are ineligible for reasons
other than income may benefit from RA and/or interest credit.
(7) Tenants residing in off-farm LH units who are ineligible because
their adjusted annual income exceeds the maximum for the area will be
charged the lesser of the LH project's note rate rent or the prevailing
market rent rate for the project as determined by subpart D of part 1944
of this chapter. For on-farm tenants, rent determination may be subject
to local discretion with limitations as set out in subpart D of part
1944 of this chapter. Excess rent shall be remitted to the Agency for
credit to the Rural Housing Insurance Fund.
b Examples of situations where the Servicing Official may authorize
a borrower to rent units to ineligible persons to reduce chronic vacancy
are:
(1) In housing designated as ``family'' housing, permitting persons
or households to occupy who are not eligible because they have an above
normal income.
(2) In housing designated as ``elderly'' housing, permitting persons
or households to occupy that meet the definitional requirements of
qualifying as elderly, but who otherwise have an above moderate income.
This provision will not permit nonelderly persons or households to
occupy housing for the elderly.
c When the Servicing Official determines that a borrower may rent
to an ineligible tenant, the written authorization must contain the
appropriate clauses which must be inserted into the ineligible tenant's
lease. At a minimum it should include:
(1) The reason for ineligibility.
(2) The term of ineligible occupancy.
[[Page 245]]
(3) Any conditions under which the tenant will be required to vacate
the unit including moving to an appropriate size unit when warranted to
comply with the established occupancy standards.
(4) The length of notice the tenant will be given to vacate.
E Applicant inquiries and waiting lists.
1 When a prospective tenant or member inquires (by telephone,
letter, or visit) concerning the availability of a rental or cooperative
unit, the borrower or rental agent will advise the prospective applicant
of their right to file an application.
2 When a prospective tenant or member files a completed application
for occupancy and is determined eligible, the borrower or rental agent
will place the prospect's name chronologically by date and time on the
appropriate written waiting list. Exhibit B-14 of this subpart contains
a sample waiting list. An application is a written document(s)
prescribed by the management providing sufficient information for the
rental agent to complete the steps necessary to determine eligibility.
a Eligibility shall be governed by paragraph VI F of this exhibit.
b The actual determination of eligibility will be conducted
according to the application process described in paragraph VI F of this
exhibit.
c Priority on the waiting list shall be determined according to
paragraph VI E 3 of this exhibit. Eligibility for cooperative membership
will be determined in accordance with subpart E to part 1944 of this
chapter.
3 Separate waiting lists by categories and/or a master waiting list
with income levels identified (very low-, low- and moderate-income), and
categories or priorities indicated will be maintained for rural rental,
cooperative, and year-round occupancy farm labor housing. Each list must
be maintained in chronological order. When there are separate lists,
they must be cross-referenced for prospective tenants who fit more than
one category or priority. Separate lists may be maintained for:
a Income levels (very low-, low-, moderate-income, or ineligible).
b Various size units.
c Units for elderly, disabled, or handicapped persons, families, or
any other combination as planned for the project according to the
borrower's loan agreement or resolution and management plan.
d Persons who require the special design features of the
handicapped accessible units(s) in the project such as persons confined
to a wheelchair or requiring other auxiliary apparatus for mobility and/
or life support. Persons on this list have priority for these units.
e Holders of Letters of Priority Entitlement issued by FmHA or its
successor agency under Public Law 103-354 according to subpart E of part
1965 of this chapter will be given top of the waiting list priority
within an income group for the category of unit size for which the
applicant qualifies. This same priority shall also extend to persons
displaced due to housing rendered uninhabitable or actually seized by
legal action (for other than illegal activities).
f In congregate housing projects, priority can be given to tenants
who qualify for the services provided by the congregate facility insofar
as there is available capacity in the facility to provide the services.
g In LH projects, lists should be maintained in accordance with the
priorities of occupancy established by Sec. 1944.154 of subpart D of
part 1944 of this chapter.
h In only those projects with project based Section 8 units,
priority for such units will go to applicants who, at their time of
housing need, are involuntarily displaced, or living in substandard
housing, or paying more than 50 percent of income for rent.
i Tenant applicants that qualify the borrower for tax credit.
4 For seasonal farm LH a waiting list should be chronologically
compiled by date and time received as in paragraphs VI E 2 and VI E 3 of
this exhibit. These lists should be maintained for the season in which
the project will be operating. Prospective tenants should be advised
that the waiting list will terminate on the closing date of the project
in any given season. Tenant selection shall be governed according to
paragraph VI H 6 of this exhibit.
a Seasonal LH management plans should identify a date when
applications will be accepted for a new operating season and a waiting
list compiled.
b A process should be specified in the plan for advising
prospective tenants of the application process and the dates of project
operation.
5 A waiting list must show the racial identity of the prospective
tenant. Rental housing managers may determine how the identification is
to be made according to the guidance found at exhibit B-14 of this
subpart, which may include the use of a code system.
6 When prospective tenants are first assigned to the waiting list,
they will be notified of the category(s) to be assigned to their
application. Prospective tenants may inquire to determine the place of
their application on the waiting list. However, to protect the privacy
of all prospective tenants, the waiting list should not be shown to any
prospective tenants.
7 Borrowers may establish a procedure for purging the waiting
list(s) periodically of prospective tenants who are no longer interested
in occupancy. The borrower must inform each prospective tenant of this
procedure and any actions they must take to
[[Page 246]]
maintain their priority position on the waiting list. When a name is
removed from the waiting list by the borrower, the prospective tenant
must be informed in writing at their last known address. The letter must
include appeal rights under subpart L of part 1944 of this chapter.
8 Expired waiting lists must be kept on file by the borrower or
management agent until a compliance review has been conducted by FmHA or
its successor agency under Public Law 103-354 in accordance with subpart
E of part 1901 of this chapter.
F Applications, eligibility determination and notification of
eligibility or rejection.
1 Application status for determining eligibility. All persons
desiring to apply for occupancy, whether as the initial applicant
household or as a person(s) later joining an existing tenant household,
will be provided the opportunity to submit a complete application. The
borrower or rental agent will provide prospective tenants or members
with a written list of all information required for a complete
application and offer assistance in completing the application if
needed.
a After the potential tenant or member has submitted all required
forms and information but additional information is required, the
borrower or rental agent must notify the applicant within 10 days of the
items needed to complete a review of eligibility. The application file
will be documented on the action taken.
b When the application is complete, and occupancy by the applicant
is expected within 90 days of completing the application, eligibility
will be determined, including verification of applicant information
performed according to paragraph VII of this exhibit; otherwise,
verification of applicant information will be initially satisfied upon
sufficient review of the information to determine whether the applicant
is clearly eligible or not eligible.
c Applicants determined eligible will be added to the waiting list
according to paragraph VI E 2 of this exhibit, even when an operational
project has few or no vacancies, and there are sufficient active
applications from households determined eligible to fill expected
vacancies.
d Application fees are discouraged, but when used, any fee charged
to a prospective tenant shall be limited to the cost of actual services
incurred for obtaining necessary information associated with completing
a tenant certification.
2 Fair housing restrictions and provisions.
a It shall be unlawful for a person to make an inquiry to determine
whether an applicant for a housing unit, or anyone associated with that
applicant, has a handicap or disability or to make inquiry as to the
nature or severity of a handicap or disability of such a person.
However,
b The following inquiries are not prohibited, provided these
inquiries are made of all applicants, whether or not they have handicaps
or disabilities.
(1) Inquiry into an applicant's ability to meet the requirements of
tenancy (i.e., eligibility, history of meeting financial obligations)
and without being a direct threat to the health and safety of other
individuals or whose tenancy would result in substantial physical damage
to the property of others.
(2) Inquiry to determine whether an applicant is qualified for a
housing unit or adjustment to income available only to persons with
handicaps or disabilities or to a persons with a particular type of
handicap or disability.
(3) Inquiry to determine whether an applicant for a housing unit is
qualified for a priority available to persons with handicaps or
disabilities or to persons with a particular type of handicap.
(4) Inquiring whether an applicant for a dwelling is a current
illegal user of a controlled substance or has a previous conviction of
the same.
(5) Inquiring whether an applicant has been convicted of the illegal
manufacture or distribution of a controlled substance.
(6) Inquiring whether an applicant answering positively to F 2 b (4)
or (5) of this paragraph has successfully completed a controlled
substance abuse recovery program or is presently enrolled in such a
program.
3 Application requirements. At a minimum to be considered complete,
applications must include for each prospective tenant household
sufficient information, such as the following, to complete a tenant
certification form:
a Name and present address.
b Household income information, as defined under annual income,
adjusted annual income, and net family assets in paragraph II of this
exhibit.
c Age and number of household members.
d Indication whether applicant requests either a handicap/
disability adjustment to income or a special handicapped accessible unit
or both.
e Applicant's certification that the unit applied for will be the
applicant household's permanent residence and it does/will not maintain
a separate subsidized rental unit in a different location.
f Signature and date section.
g Race, national origin and sex designation. This designation shall
be placed as the last section of the application form beneath the
signature and date section.
(1) The borrower or management agent will request that each
prospective tenant or member provide this information on a voluntary
basis to enable monitoring or compliance with Federal laws prohibiting
discrimination. When the applicant does not provide this information,
the rental agent or board
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will complete this item based on personal observation or surname.
(2) The following disclosure notice shall appear on the tenant
application form or on an amendment to the application:
``The information regarding race, national origin, and sex
designation solicited on this application is requested in order to
assure the Federal Government, acting through the Farmers Home
Administration or its successor agency under Public Law 103-354, that
Federal Laws prohibiting discrimination against tenant applicants on the
basis of race, color, national origin, religion, sex, familial status,
age, and handicap are complied with. You are not required to furnish
this information, but are encouraged to do so. This information will not
be used in evaluating your application or to discriminate against you in
any way. However, if you choose not to furnish it, the owner is required
to note the race/national origin and sex of individual applicants on the
basis of visual observation or surname.''
h The application form shall contain the fair housing logotype or
slogan and indication of handicap accessibility on the first page of the
form.
i Retired or disabled domestic farm labor applicants must meet the
definition requirements of Sec. 1944.153 of Subpart D of Part 1944 of
this chapter.
4 Notification to applicant. The applicant who has submitted a
completed application will be notified in writing that he or she has
been selected for immediate occupancy, placed on a waiting list, or
rejected.
5 Applicants determined ineligible. After due consideration of
mitigating circumstances, applicants determined ineligible will be
notified in writing of the specific reasons for rejection. The letter
will include the following statement: ``The Fair Housing Act prohibits
discrimination in the sale, rental or financing of housing on the basis
of race, color, religion, sex, handicap, familial status, or national
origin. Federal law also prohibits discrimination on the basis of age.
Complaints of discrimination may be forwarded to the Administrator, FmHA
or its successor agency under Public Law 103-354, USDA Washington, DC
20250.'' This statement can be placed on all materials and
correspondence done by the borrower, owner, or management company.
a The rejection letter must also outline the applicant's rights to
appeal the rejection and be sent or hand-delivered according to subpart
L of part 1944 of this chapter except for those clearly not eligible for
occupancy according to FmHA or its successor agency under Public Law
103-354 regulations.
b When the rejection is based on information from a credit bureau,
the source of the credit bureau report must be revealed to the applicant
in accordance with the Fair Credit Reporting Act.
c Any applicant household may be rejected due to:
(1) A history of unjustified and/or chronic nonpayment of rent and/
or financial obligations.
(2) A history of living or housekeeping habits that would pose a
direct threat to the health and safety of other individuals or whose
tenancy would result in substantial physical damage to the property of
others.
(3) A history of disturbance of neighbors.
(4) A history of violations of the terms of previous rental
agreements, especially those resulting in eviction from housing or
termination from residential programs.
d Rejection of applicants on a arbitrary basis is prohibited.
Examples of such arbitrary rejections includes considering the following
factors in determining a tenant's eligibility:
(1) Race, color, religion, sex, age, familial status, national
origin, handicap (except in those projects or portions of projects
designated for elderly, disabled and/or handicapped, where occupancy by
nonelderly, nondisabled or nonhandicapped can be prohibited).
(2) Receipt of income from public assistance.
(3) Families with children of uncertain parentage.
(4) Participation in tenant organizations.
(5) Tenants or tenant family members with AIDS.
e In the case of LH projects, no organization borrower, other than
an association of farmers of family farm corporation or partnership,
will block lease to, or otherwise require that an occupant work on any
particular farm or for any particular owner or interest as a condition
of occupancy of the housing.
f Rejected applications must be kept on file by the borrower or
management agent for a period of 3 years or until a compliance review
has been conducted by FmHA or its successor agency under Public Law 103-
354 in accordance with subpart E of part 1901 of this chapter.
G Tax credit compliance. The Tax Reform Act of 1986 permits certain
RRH borrowers to receive tax credits for low-income housing projects if
20 percent or more of the units are occupied by very low-income tenants
whose annual gross income is 50 percent or less of the area median gross
income; or 40 percent or more of the units are occupied by tenants whose
annual gross income is 60 percent or less of the area median gross
income.
1 Eligible borrowers with projects qualified to receive tax credits
will follow the tenant selection criteria of paragraph VI H of this
exhibit except that tenant selection may be postponed until applicants
for occupancy are available whose occupancy will allow borrowers to meet
their tax credit requirements.
[[Page 248]]
2 Borrowers using IRS tax credits may neither terminate a tenant's
occupancy nor refuse to renew a tenant's lease except for material
noncompliance or other good cause as described in paragraph XIV of this
exhibit. Tenants whose income increases after initial occupancy and
exceeds IRS tax credit thresholds, but otherwise still meet FmHA or its
successor agency under Public Law 103-354 income eligibility thresholds,
remain qualified to occupy with respect to income eligibility.
H Tenant and member selection.
1 An eligible applicant will be selected from a waiting lists(s)
identifying the category on basis of the applicant's unit size needed,
income level (very low-, low-, moderate-income, or ineligible) or from a
priority waiting list, as described in paragraph VI E of this exhibit,
when the available size unit meets the applicant's need. The eligible
applicant will further be selected on a first-come, first-served basis
from the selected category or priority waiting list in the following
order:
a Very low-income
b Low-income, up to 60 percent of median income, (in ``tax credit''
projects)
c Low-income
d Moderate-income
e Ineligible
2 When RA is available:
a Very low-income applicants eligible for RA have a priority over
all other applicants on each type of waiting list maintained by the
borrower in accordance with paragraph XI of exhibit E to this subpart.
b Low-income applicants may be selected provided no very low-income
applicants remain on the waiting list.
c Moderate-income applicants may not be selected for occupancy when
the number of unassigned RA units equals or exceeds the number of vacant
units. (Borrowers unable to use RA may consider requesting a transfer of
RA authority according to paragraph XV of exhibit E of this subpart).
3 In only those projects when project based section 8 is available,
the following applicants, as described in HUD handbook 4350.3 (available
at any HUD regional or area office), will have priority over other
applicants if at the time of their housing needs, they are:
a involuntarily displaced, or
b living in substandard housing, or
c paying more than 50 percent of income for rent.
4 Selections are to be made from the waiting list or category
maintained for the particular unit size and/or unit type in which a
vacancy exists. If the applicant cannot accept the unit at that time,
the reason for not accepting the living unit will be documented in the
project records and confirmed with the applicant in writing. The
applicant's name will then be removed from the waiting list following
the notice procedure at paragraph VI E 7 of this exhibit unless the
rental agent determines that hardship exists for reasons such as
documented health problems or project rent exceeds 30 percent of
adjusted monthly income without RA in which case the applicant's name
will remain on the list in chronological order. An applicant whose name
has been removed from the waiting list may reapply.
5 When there are no applicant names on the waiting list for the
size and/or type of vacant living unit, a name may be selected from the
waiting list of another size and/or type of living unit according to the
date order of the application on the master waiting list. The selected
tenant will be subject to the provisions for ineligible tenants found in
paragraph VI D 7 of this exhibit and the provisions of paragraph VI D 2
of this exhibit.
6 In LH projects, paragraphs VI H 1 and 2 of this exhibit do not
apply. Eligible LH applicants will be selected according to paragraphs
VI H 4 and 5 of this exhibit and the priority stated in Sec. 1944.154
(a) of subpart D of part 1944 of this chapter irrespective of the
availability of RA. However, when FmHA or its successor agency under
Public Law 103-354 concurs with the LH borrower's determination that
there is a diminished need for housing for domestic farm laborers in
accordance with Sec. 1944.154 (b) of subpart D of part 1944 of this
chapter, all the provisions of this paragraph are applicable to initial
occupancy by applicants eligible only under the RRH program.
I Tenant or member record file. A separate file must be maintained
for each tenant or member. Tenants must be allowed reasonable access to
their own file for review during regular project office hours. This file
will include items such as application, tenant certification with
attached income and adjustment(s), verification forms and calculations,
lease or occupancy agreement and attachments, inspection reports for
moving in and moving out, correspondence and notices to the tenant or
member, and any other necessary information. The income verification,
tenant and member eligibility certification and recertification
information must be retained for at least 3 years while the tenant or
member is living in the unit and for 3 years after the tenant or member
has moved out.
J Marketing incentives: Marketing incentives, as described in the
management plan, may be used anytime as a means of maintaining occupancy
levels and revenue needed to carry out the objectives of the housing and
the projections of the annual project budget.
1 When a need is documented, marketing incentives will be included
in annual project operations as reflected in the project budget, Form
FmHA or its successor agency under
[[Page 249]]
Public Law 103-354 1930-7. The incentives will be governed by the
guidance at paragraph III B 3 c of exhibit F of subpart B of Part 1965
of this chapter (available at any FmHA or its successor agency under
Public Law 103-354 office).
2 FmHA or its successor agency under Public Law 103-354 approval of
marketing incentives.
a When marketing incentives will enhance program objectives during
a ``soft'' market and FmHA or its successor agency under Public Law 103-
354 is otherwise not aware of any loan servicing difficulties of major
concern, cost effective incentives may be approved by the FmHA or its
successor agency under Public Law 103-354 Servicing Official as part of
normal project budget approval.
b When major loan servicing difficulties exist, cost effective
marketing incentives may be approved as part of a servicing plan
according to the provisions of exhibit F of subpart B of part 1965 of
this chapter (available in any FmHA or its successor agency under Public
Law 103-354 office).
VII Certification and Verification of Tenant or Member Income and/or
Employment Information and Corrective Actions.
The borrower/management agent shall obtain tenant or member
authorization to verify income and/or employment information needed to
establish eligibility before pursuing verifications.The Borrower/
management agent shall seek verification of income and/or employment
information disclosed from third party sources without further
involvement of the members of the tenant household. This borrower/
management agent shall seek to verify employment for all FMH program
recipients. The borrower/management agent shall also seek to verify
income for all MFH program recipients, except those residents of LH farm
borrowers who are living in housing provided on a nonrental basis. The
applicable employment and/or income verifications must normally be
verified by the borrower or management agent before the person is
determined eligible. Exceptions may be made for those unusual cases
described herein. Information for the determination of eligibility is
valid for not more than 90 days before the effective date of the tenant
certification. Should verifications reveal discrepancies from the
information provided, the borrower or management agent will seek prompt
resolution using the principles set out in this subpart.
A Verification of income from employment. Verification of income
from employment, authorized by the tenant or member/applicant, must be
obtained from the employer in writing and filed in the ``Tenant or
Member Record File.'' Form FmHA or its successor agency under Public Law
103-354 1910-5, ``Request for Verification of Employment,'' or
comparable form, will be used for this purpose. (A reproducible copy of
Form FmHA or its successor agency under Public Law 103-354 1910-5 is
available in any FmHA or its successor agency under Public Law 103-354
office.)
B Verification of income from other sources. Any income from other
than employment (e.g., social security, Veterans Administration, public
assistance) must be verified in writing by the income source.
Verification of income must be documented and filed in the ``Tenant or
Member Record File.'' When it is not immediately possible to obtain the
written verification from the income source, the income may be
temporarily verified by actually examining the income checks, check
stubs, or other reliable data the person possesses which indicates gross
income.
C Verification of income and/or employment for LH tenants.
1 Verification of income from all sources. Income verification is
required for domestic farm laborers, including migrant farm-workers,
except for those farmworkers where their housing is provided rent free
on a farm as part of their employment compensation for farm labor
performed on the farm where they live and work. All domestic
farmworkers, where income verification is required, must have a
substantial portion of income from farm labor as defined in
Sec. 1944.153 of subpart D of part 1944 of this chapter. When the
tenants do not have easily verifiable income, the borrower may forecast
income expected to be received by the tenant during occupancy for
determining eligibility and subsidy assistance.
2 Farm labor employment verification. Farm labor employment
verification is required for all domestic farm laborers, whether they
are year-round, seasonal, or migrant farmworkers, or farmworkers living
in rent-free housing on the farm where they work. Such employment
verification is in addition to the income verification requirements
described in paragraph VII C 1 of this exhibit.
3 Third party verification.
a Third party verification of income and employment, as applicable,
is required whenever it is possible or available.
b When third party verification of income and employment is not
possible or available, for reasons such as refusal or lack of third
party availability or cooperation, the borrower may ``self-certify'' the
farmworker applicant using any available documents or records the
applicant may have or information the applicant can provide. In the
absence of available income and employment documents, records, or
information, the borrower may forecast income as described in paragraph
VIIC1 of this exhibit.
4 Tenant record file. Verifications of any type must be documented
and filed in the ``Tenant Record File'' or in the borrower loan docket,
as appropriate.
[[Page 250]]
D Sample of tenant or member income and/or employment verification.
1 The Servicing Office staff is required to make a sample of tenant
or member income verifications and adjustments to income; in the case of
LH tenants, employment verifications for use in evaluating the adequacy
of such verifications. This will normally be performed during a
scheduled supervisory visit.
2 The sample will follow the process set out in exhibit F-1 of this
subpart. The sample can be derived from information on the certification
forms that will be submitted to the Servicing Office in accordance with
paragraph VII F of this exhibit and may include verification of
information from third party sources. At least six tenant households
will be sampled (or 100 percent of all tenant households for projects
having six or fewer units) during any sampling.
3 The sample should be representative of very low-, low-, and
moderate-income persons in the project, including those receiving
subsidy assistance, those paying in excess of the level cited in
paragraph IVA2c (1), (2), or (3) of this exhibit for the costs of rent
or occupancy charge and utilities, and those paying the note rate rent.
4 The Servicing Office staff will conduct the sample (and document
the selection method) at any time he/she may be knowledgeable of
discrepancies in income and/or employment verifications.
5 If the sample discloses discrepancies of amounts in excess of $40
monthly or $480 annually, the Servicing Officer will be required to
notify the borrower/management agent to resolve the issues. Should
resolution not be satisfactorily approved, the Servicing Officer will be
required to investigate further and report to the State Director along
with a recommendation for further action. Such further actions may
include those authorized under FmHA or its successor agency under Public
Law 103-354 Instructions 2012-B or 1940-M (available in any FmHA or its
successor agency under Public Law 103-354 office) or subpart N of Part
1951 of this chapter.
E Use of HUD certification form for Section 8 or Section 8 Rental
Certificate or Rental Voucher Recipients. HUD Form 50059, or another HUD
form approved by HUD for this purpose, may be used in lieu of Form FmHA
or its successor agency under Public Law 103-354 1944-8 for the tenants
receiving project based Section 8 or tenant based Rental Certificate or
Rental Voucher assistance. However, the tenant's income cannot exceed
FmHA or its successor agency under Public Law 103-354 limits for the
type of housing project involved if it has been calculated according to
the formula contained in Form FmHA or its successor agency under Public
Law 103-354 1944-8.
F Certifications and corrective actions.
1 To be current, the tenant or member certification Form FmHA or
its successor agency under Public Law 103-354 1944-8 (or for section 8,
the appropriate HUD form) must be submitted in such manner that it is
received in the FmHA or its successor agency under Public Law 103-354
Servicing Office by the close of business (COB) of the due date as
follows:
a New tenant or member move-in certification due date.
(1) Move in on the 2nd through the 23rd. The certification is due
for receipt in the Servicing Office on or before the first of the next
month for all new tenants or members permitted to move in for occupancy
from the 2nd through the 23rd day of a month for overage charges to be
avoided (Example: A change is reported on July 2nd, the effective date
is August 1, and the Servicing Office must receive the certification by
COB on August 1). If the due date falls on a non-working day, overage
will not be charged if the tenant certification is received in the
Servicing Office on the next working day.
(2) Move in from 24th through the 1st of next month. The
certification is due for receipt in the Servicing Office on or before
the tenth of the month in which it is effective in order to avoid
overage charges (Example 1: Move-in is June 24th, effective date is
July 1st and the Servicing Office must receive the certification by COB
July 10th. Example 2: Move-in is July 1st, effective date is July 1st
and the Servicing Office must receive by COB July 10th). If the due date
falls on a nonworking day, overage will not be charged if the tenant
certification is received in the Servicing Office on the next working
day.
b Certification due dates for renewals. Tenant certifications
represent the contractual basis for delivery of benefits to tenants.
Therefore, any certification being renewed must be received by Servicing
Officials on or before the effective date in order to avoid overage
charges. The effective date is the first day of the month following
expiration of the current certification. Certifications expire on the
last day of the month, 12 months from the effective date (Example: The
last certification was effective on July 1 and its ending period date
was 12 months later on June 30, therefore, the renewed certification
effective date is July 1). If the due date falls on a nonworking day,
overage will not be charged if the tenant certification is received in
the Servicing Office on the next working day.
c Tenant reported changes and corrective actions. Changes to
unexpired tenant certifications represent adjustments to the existing
contractual basis for delivery of benefits to tenants. Therefore,
overage may not be invoked as a penalty for any late reporting, since
overage is merely an offset to arrive at the proper subsidy benefits a
tenant is entitled to receive. Tenants are responsible for reporting any
changes in household gross income, adjustments to household income or
[[Page 251]]
changes in household size (as set out in paragraph VIIF3a of this
exhibit) no later than 30 days after the change occurred. Landlords must
recertify tenant households in accordance with the provisions of
paragraph VIIF3b of this exhibit. When recertification is required,
landlords must promptly seek to verify employment and/or income with
third-party sources in accordance with the provisions of paragraphs VII
A, B, C, and F 10 of this exhibit. Once verification is obtained from
third-party sources, landlords are expected to forward such
certifications to the Servicing Office in accordance with the timeframes
set out herein.
(1) Reporting 2nd through 23rd. If the third-party verifications are
received from the 2nd through the 23rd day of the month, the
recertification is due for receipt in the Servicing Office on or before
the first day of the next month. If the due date falls on a nonworking
day, it will be considered on time if received in the Servicing Office
on the next working day.
(2) Reporting 24th through the 1st of the next month. If the third-
party verifications are received from the 24th through the 1st of the
next month, the recertification is due for receipt in the Servicing
Office on or before the COB on the tenth of the month. If the due date
falls on a nonworking day, it will be considered on time if received in
the Servicing Office on the next working day.
(3) Effective date of changed net tenant contribution. The effective
date of a tenant's changed net tenant contribution will be the first day
of the month following third-party verification of changes or the first
day of the following month (generally 30 days later) permitted according
to the tenant notice requirements of State or local law.
(4) Corrective actions on tenant problems.
(i) Should the tenant be found to not comply with the 30-day
reporting requirements, the landlord may initiate actions as set out in
the lease and the Agency may initiate action to ensure appropriate
corrective action is taken.
(ii) If the landlord chooses to pursue termination, the landlord
need not further pursue recovery of any improper benefits from the
tenant but shall instead forward a report on the circumstances to the
Agency for its consideration on whether to initiate an appropriate
servicing action.
(iii) If the landlord chooses to permit the continued occupancy by
the tenant the landlord must take steps to pursue corrective actions,
taking into consideration any rights the tenant may have under the
grievance procedures in subpart L of part 1944 of this chapter.
(iv) In processing corrective actions where existing certifications
have not expired, overage may not be charged for failure to report
changes in a timely manner and the note rate rent will not be charged.
Processing corrective actions will use the corrected accurate
information to establish the proper rent levels, subsidies, and any
overage charges using the same principles as would apply had the change
been promptly processed.
(v) Upon determining any resulting differences, the landlord may
initiate actions to seek recovery from the tenant of any improper
benefits derived from inappropriate rent levels or inappropriate
subsidies. Such recovery efforts will normally not extend over a 3-month
period, but may not ever extend over a 12-month period.
(vi) The Servicing Office may be consulted if guidance is needed on
processing corrective actions when payments are affected.
(vii) When appropriate, the Agency may pursue servicing initiatives
which may include seeking corrective action by the landlord or using the
authorities set out in subpart N of part 1951 of this chapter or FmHA or
its successor agency under Public Law 103-354 Instruction 2012-B
(available in any FmHA or its successor agency under Public Law 103-354
office).
(5) Corrective actions on landlord problems. Should the landlord be
found to not comply with the above reporting dates, the Agency may
initiate action to ensure that the proper rent levels were assessed, the
proper payments were remitted to the Government, and that any
remittances involving any improperly paid Government subsidies are
recovered by the Government. Such initiations may involve seeking
corrected payment remittances, or the use of authorities set out in
subpart N of part 1951 of this chapter as cited in paragraph VII F 1 c
(4) of this exhibit.
d Modifications.
(1) Modifications will likely result from changes to project rents
or utility allowances or when the tenant household moves to a different
unit within the project. In such cases the landlord may revise the
unexpired tenant certification form by notating the changes in rents or
utility allowances and recomputing the net tenant contribution when
necessary.
(2) Unexpired tenant certification forms showing modification(s)
which do not result from changes in income or adjustments to income or
change of household size or composition need not be submitted to the
Agency. Such modifications do not affect the certification effective
dates or expiration dates of the certification form being modified,
therefore, the certification expiration date will remain unchanged (and
overage is not applicable). (Example: Certification with a July, 19xx
effective date is in effect for a 12-month period, and any mid-term
modification will not alter the July 1, 19xx effective date).
(3) Form FmHA or its successor agency under Public Law 103-354 1951-
29, ``Multiple
[[Page 252]]
Family Housing--Changes To Tenant Status,'' or similar reporting format,
will be prepared and submitted to report the modifications, impact on
rental assistance, move-outs, 60-day absences, and expired tenant
certifications.
2 When the Servicing Office does not have a certification in the
office as required in F 1 of this paragraph, the tenant or member is
ineligible for RA and interest credit for that month and overage for the
month will be charged to the project account. This does not apply to
modification of a certification as described in paragraph VII F 1 d of
this exhibit or in a situation as described at paragraph XIV A 5 b
(2)(vi) of this exhibit.
a If a formal eviction process has started, the provisions of
paragraph VII F 6 d of this exhibit will be followed.
b If the late certification was due to noncooperation by the tenant
or member (noncooperation does not include situations beyond the control
of the tenant member, such as delays by third-party sources in
completing income or employment verifications), overage must be paid and
is a project expense; however, the borrower or management agent may
attempt to recover the charge by billing the person note rate rent
(overage) for the month. If the error was due to the borrower's or
management's action, the cost of overage will be a project expense and
it will not be charged to the person.
c Overage charges due to negligent management may not be considered
cause for a rent increase. The costs should be deducted from return on
owner investment or from management agent fees and may be cause for
requiring different management.
3 Reporting changes.
a Tenant reporting. Tenants must report changes in household income
(gross income) or adjustments to household income. In addition, any
change in household size must be promptly reported to the landlord.
Changes to household income may result from changes in hours worked,
salary rates, social security, pensions, public assistance payments, the
sale of assets, interest income, the amount of net family assets
exceeding $5,000, imputed income, or other sources of income. Changes in
adjustments to income may result from changes in household members other
than the tenant or cotenant (e.g., changes in the number of minors,
disabled, handicapped or full-time students 18 or older), changes in the
tenant or cotenant (e.g., changes in the elderly, disabled, or
handicapped status), changes in medical care expenses, and changes in
child care expenses.
b Landlord reporting. Landlords must recertify tenant households
whenever permanent changes to gross household income or permanent
adjustments to household income result in an increase of $40 or more per
month or $480 or more per year. Landlords must recertify tenant
households whenever changes to permanent household income or permanent
adjustments to household income result in a decrease of $20 or more per
month or $240 or more per year. If the permanent gross income of a
tenant household does not exceed $20 a month or $240 annually, and the
tenant requests certification, the borrower will process the
recertification. In addition, landlords must recertify changes in
household size or composition.
4 The current certification form will be revised by correcting
entries and being initialed by the tenant or member and the owner's
representative when there are project changes such as:
a Changed rental or occupancy rates and/or utility allowances.
b Tenant or member relocation within the project.
c Addition or removal of household RA.
5 Form FmHA or its successor agency under Public Law 103-354 1944-8
must be processed as follows:
a Borrowers or their representatives may sign Form FmHA or its
successor agency under Public Law 103-354 1944-8 up to 60 days prior to
the effective date.
b Borrowers or their representatives should submit Form FmHA or its
successor agency under Public Law 103-354 1944-8 to the FmHA or its
successor agency under Public Law 103-354 Servicing Office during the 30
day period preceding the effective date. Borrowers should not delay
submitting certifications until Form FmHA or its successor agency under
Public Law 103-354 1944-29 is submitted. Borrowers should avoid
submitting certifications just before or on the first day of a month to
reduce impact on first of month account servicing at the Servicing
Office, and to minimize late delivery and the charge of overage.
c The FmHA or its successor agency under Public Law 103-354
Servicing Office date stamps each Form FmHA or its successor agency
under Public Law 103-354 1944-8 when received, reviews each form
submitted and determines that the information is complete, and correctly
computed based on the information provided on the form (see Guide Letter
1930-1 for use in noting exceptions).
d The FmHA or its successor agency under Public Law 103-354
approved tenant certifications and recertifications have an effective
period of 12 months. The effective period begins on the effective date
which is always the first day of a month.
6 Each tenant or member must be recertified within 12 months of the
previous certification. Tenants receiving Section 8 assistance will be
certified according to HUD regulations.
a It is the tenant's or member's responsibility to provide income
information and sign the certification form as a condition for continued
occupancy. Failure to do so will cause a charge for overage/surcharge
during
[[Page 253]]
those months such information was not provided, and it may result in
termination of occupancy.
b The borrower's responsibility is to:
(1) Notify the tenant or member that a current certification and
income verification is required before the due date and explain the
procedure necessary to accomplish recertification. Normally, this
initial written notice will be sent 75 to 90 days prior to the
expiration date of the current certification; then
(2) Obtain verification of income from tenant or member records and/
or directly from tenant or member employers and process the appropriate
tenant recertification; and
(3) Submit the signed recertification to be received by the
Servicing Office by the due date stipulated in paragraph VII F 1.
(c) The borrower must provide a second written notice to the tenant
or member 30 days prior to the due date if they have not responded. The
second notice must advise the tenant or member that without a current
certification, the person will be required to pay note rate rent or
occupancy charge (i.e., the person pays overage) as well as maximum
occupancy surcharge, and that termination proceedings may be started as
of the due date since an annual recertification is required for
continued occupancy. [Note: In any event, the borrower is required to
pay the overage amount to FmHA or its successor agency under Public Law
103-354 according to Sec. 1951.506(a)(5)(iii) of subpart K to part 1951
of this chapter.] If the tenant or member has RA, the person must be
advised that without a current certification, the person's RA will be
canceled and possibly may not be immediately available for reinstatement
should a proper certification be provided at a later date.
d When a notice of termination has been served on a tenant or
member for failure to recertify, the borrower must provide a copy of the
termination notice to the Servicing Office prepared according to
paragraph XIVB of this exhibit. If the Servicing Official does not
receive a new certification on such person(s), the Servicing Official
will annotate the project master list with an E beside the ``Expiration
Date of Tenant Certification'' on Form FmHA or its successor agency
under Public Law 103-354 1944-29 for the appropriate tenant(s) or
member(s). The Servicing Official will continue to authorize interest
credit and waiver of overages and occupancy surcharges while the
termination is being actively pursued until resolution of the
termination. The payment of RA will be suspended during the termination
process. Upon conclusion of the termination process the RA will either
be reinstated or given to another tenant or member.
7 The borrower must submit Form FmHA or its successor agency under
Public Law 103-354 1944-29 to the Servicing Office with each payment,
report of overage, or request for RA as required in paragraph XIIIC2f(1)
of this exhibit. The calculations on Part II of the form must be for
tenants or members in residence on the first day of the month preceding
the payment due date. All calculations will be made as if the tenant or
member was in residence for the full month. Adjustments Will Not Be Made
to the Borrower's Subsidy, RA Request, Payment, or Overage Charges for
Persons Moving in or Out After the First of the Month. (See Guide Letter
1930-1 for any necessary Servicing Official's response after review of
Form FmHA or its successor agency under Public Law 103-354 1944-29.)
8 Paragraph VIII B 4 b of this exhibit is a required lease or
occupancy agreement provision requiring tenants or members to notify the
management of any change in gross household income or adjustments to
income, or size or composition of household. Upon receipt of such
notice, the borrower must promptly obtain a new certification form and
income verification and submit it to the Servicing Office when there is
a permanent change in size or composition of the household, or a
permanent increase of $40 or more per month ($480 per year) or a
permanent decrease of $20 or more per month ($240 per year) in gross
household income or adjustment to income.
9 When a borrower/agent believes that an applicant/tenant or member
certification or income verification is inaccurate, they may provide the
information including the tenant's or member's social security number to
the Servicing Office requesting a further verification through the
appropriate State employment agency. The Servicing Office will forward
the request to the State Director for submission to the State Agency
that keeps records on the incomes of wage earners. The State Director
will develop a method of obtaining the information from the State
Agency. Any reasonable cost for information provided by a State shall be
a project expense.
10 Landlords may use the following emergency certification/
recertification procedure in the unusual cases described herein, but
must otherwise meet the FmHA or its successor agency under Public Law
103-354 submission requirements stated in paragraph VII F 1 of this
exhibit:
a When a tenant or member applicant needs to initially occupy
before income verification is complete, or when a borrower has been
unable to initiate recertification on time, an ``estimated''
verification may be performed and the certification and the lease or
occupancy agreement completed and marked ``subject to verification of
income.'' Temporary verification may also be obtained through contacts
with individuals who may be knowledgeable of the person's income. When
no other verifiable source is available,
[[Page 254]]
a written, dated, and signed statement, certifying that the disclosed
annual gross income of the household is accurate to the best knowledge
of the tenant or member, may be accepted. After normal verification is
completed, any needed adjustment in tenant or member contribution can be
made and recorded on the certification and when appropriate, the lease
or occupancy agreement.
b When a tenant or member decides to continue occupancy after
giving indication of vacating the project and insufficient time remains
to complete the verification of income or when an employer fails to
return a verification of income on time, the procedure of F 10 a of this
paragraph may be followed.
c When a delay is caused by circumstances beyond the control of the
tenant or landlord, such as when delays are encountered in receiving
verification of income, employment, etc., from third party sources, the
procedure of F 10 a of this paragraph may be followed.
G Mid-month tenant or member certification. The certification
effective date for a tenant or member starting occupancy on a day other
than the first day of the month shall be the first day of the following
month. Certification shall be completed according to paragraph VII F of
this exhibit.
H Resolution of suspected inaccurate information. Should forms,
interviews, unit inspections, complaints, or other information bring
into question the accuracy or reasonableness of information relied upon
to qualify the residents for occupancy or benefits, it should be further
explored and resolved by the owner and/or management agent. Should the
matter remain unsolved, the borrower or management agent may forward a
report to the Agency along with a recommendation for further action. The
Agency may evaluate such material to determine whether further action is
warranted. Such actions may include those authorized under FmHA or its
successor agency under Public Law 103-354 Instructions 2012-B, 1940-M,
or subpart N of part 1951 of this chapter (available in any FmHA or its
successor agency under Public Law 103-354 office).
VIII Lease Agreements, Occupancy Agreements, Rules, and Other
Tenant Information: A lease agreement is a written contract between a
tenant and landlord assuring the tenant quiet, peaceful enjoyment and
exclusive possession of a specific dwelling unit in return for payment
of rent and reasonable use and protection of the property. The contract
between a cooperative member and the cooperative is called an occupancy
agreement. Should the provisions of any lease or occupancy agreement be
in violation of any State or local law, it may be modified to the extent
needed to comply with the law; however, the change should be as
consistent as possible with the provisions set out herein.
A Form of lease or occupancy agreement. Each State Director is
encouraged to prepare a sample lease form complying with individual
State laws and FmHA or its successor agency under Public Law 103-354
requirements. Occupancy agreements for cooperatives are to be prepared
in accordance with applicable State laws and subpart E of part 1944 of
this chapter. The State Director may incorporate clauses which meet a
specific need in compliance with State law. Any sample lease must be
reviewed and approved by the OGC before being provided to borrowers as a
guide for preparing an acceptable project lease.
1 All leases will be in writing. Initial leases for units for which
tenants are eligible must cover a period of 1 year. If the tenant is not
subject to termination of occupancy according to paragraph XIV A of this
exhibit, a renewal lease, or an addendum of lease extension, shall cover
a period of 1 year. Leases for LH may be for shorter periods where
occupancy is typically seasonal. Leases for all tenants signed after
notification of intent to prepay, but prior to prepayment, may be for a
term which ends on the date of prepayment. Leases for tenants who
entered a project with a Letter of Priority Entitlement and who are
temporarily occupying a unit for which they are not occupancy eligible,
will have the clause in paragraph VIII C 1 of this exhibit inserted to
deal with their obligation to move when an eligible unit becomes
available.
2 Leases and occupancy agreements must contain an appropriate
escalation clause permitting changes in basic and/or note rate rents or
occupancy charges prior to the expiration of the document. Such changes
would normally be necessary due to changing utility and other operating
costs. Any changes must be approved by FmHA or its successor agency
under Public Law 103-354 according to exhibit C of this subpart. Leases
must specify that no increases in tenant contribution to rent will take
place due to prepayment of the FmHA or its successor agency under Public
Law 103-354 loan during the term of the lease. Leases must also state
that should any Federal subsidies paid to the borrower on behalf of
tenants be suspended or canceled, due to a monetary or nonmonetary
default by the borrower, the monetary payment made by the tenant to the
borrower (or, when applicable, the monetary payment received by the
tenant from the borrower) shall not change over that which would have
been required had the subsidy remained in place.
3 Projects in which occupant surcharge collection is required must
contain an appropriate lease clause permitting increases in the
surcharge assessed. This clause should contain at least the following:
a That occupancy surcharges are mandated by law, therefore, they
must be paid by
[[Page 255]]
the tenant in addition to regular rent. If they are not paid, these
unpaid surcharges constitute good cause for possible termination of
occupancy.
b That the current occupancy surcharge unit rate is $____ per unit
and will increase annually on the surcharge anniversary date by $2 per
month for each unit, not to exceed a total of $40 per month per unit.
c That the portion of the unit surcharge assessment which the
tenant pays will be based upon the tenant household income and will not
cause the tenant's contribution for rent and occupancy charge plus
utility allowance to exceed 30 percent of adjusted income.
d That tenant households may experience increases or decreases in
the amount of occupancy surcharge they pay prior to the expiration of
the lease.
4 Pursuant to the Fair Housing Amendments Act of 1988, no provision
may be incorporated into a lease that would prohibit:
a Occupancy by families with children under 18 years of age. As
applied to housing designated as elderly, those residing with the
elderly household who are under 18 years of age may not be excluded
under the terms of the lease.
b Occupancy by a person with a handicap who is willing and able to
make reasonable modifications to an apartment unit, at the tenant's
expense, to afford such person full enjoyment of the apartment. The
owner may include in the lease, where reasonable, permission to occupy
the apartment on the condition the tenant agrees to restore the interior
of the apartment to the condition that existed before any modifications,
reasonable wear and tear excepted.
5 In areas where there is a concentration of non-English speaking
individuals in the project or in the community, leases or occupancy
agreements and the established rules and regulations for the project
written in both plain English and the appropriate non-English language
must be available to the tenants or members. The tenant or member should
have the opportunity to examine and execute either form of lease or
occupancy agreement.
6 The form of lease or occupancy agreement to be used by the
borrower and any modifications of the same must be approved by the FmHA
or its successor agency under Public Law 103-354 Servicing Official.
When submitting a lease or occupancy agreement form for FmHA or its
successor agency under Public Law 103-354 approval, it must be
accompanied by a letter from a practicing attorney licensed in the State
regarding its legal sufficiency and compliance with State law and FmHA
or its successor agency under Public Law 103-354 regulations.
7 A copy of a properly completed and approved exhibit A-6 of
subpart E of part 1944 (when the tenant or member will pay utilities)
and a copy of the established rules and regulations for the project will
be provided to the tenant or member as attachments to the lease or
occupancy agreement.
8 A copy of a properly completed and signed Form FmHA or its
successor agency under Public Law 103-354 1944-8 or HUD Form 50059 or
other HUD approved form for those tenants receiving HUD section 8 tenant
subsidy will be used to calculate each tenant's contribution and will be
provided to the tenant as an attachment to the lease.
B Required lease or occupancy agreement clauses. The following
clauses will be required in leases used in connection with FmHA or its
successor agency under Public Law 103-354-financed housing projects.
Only clauses in paragraphs 1, 4 b, 4 d, 4 e, 5, and 7 of this exhibit
are applicable to cooperative occupancy agreements.
1 All lease and occupancy agreements must include a statement
indicating that the project is financed by FmHA or its successor agency
under Public Law 103-354 and is subject to nondiscrimination provisions
of title VI of the Civil Rights Act of 1964, title VIII of the Fair
Housing Act, section 504 of the Rehabilitation Act of 1973, and the Age
Discrimination Act of 1975; and that all complaints are to be directed
to the Administrator, FmHA or its successor agency under Public Law 103-
354, USDA, Washington, DC 20250. However, complaints of Fair Housing
violations may be sent directly to the Secretary of Housing and Urban
Development, Washington, DC 20410.
2 All lease agreements must specify that should the unit become
overcrowded or underutilized or should the tenant no longer meet the
eligibility requirements of the project during the term of the lease
agreement, he/she will be required to vacate the unit at the end of the
lease term unless eligibility can be established following specified
steps, such as moving to an appropriate size unit, or an exception is
granted by management.
3 All lease agreements must contain a provision that a tenant
household's tenancy still exists during the time that the tenant
household's personal possessions remain in the apartment unit after the
tenant household has personally ceased occupancy with the intent to
vacate and leave the project, until such time the personal possessions
have been removed voluntarily or by legal means, subject to the
provision of State or local law in such matters.
4 All leases used in FmHA or its successor agency under Public Law
103-354-financed RRH projects must include the following clauses except
for persons who are elderly, disabled, or handicapped living in a full
profit plan project unless otherwise noted. (Occupancy agreements must
include the clauses contained in paragraphs VII B 4 b, d, and e of this
exhibit.)
[[Page 256]]
a ``I understand that I will no longer be eligible for occupancy
in this project if my income exceeds the maximum allowable adjusted
income as defined periodically by the Farmers Home Administration or its
successor agency under Public Law 103-354 for the (State/Territory).''
b ``I agree I must immediately notify the [landlord or
cooperative] when there is a change in my gross income or adjustment to
income, or when there is a change in the number of persons living in the
household. I understand my rent or benefits may be affected as a result
of this information. I also understand that failure to report such
changes may result in my losing benefits to which I may be entitled or
may result in the [landlord or cooperative] taking corrective action if
benefits were mistakenly received. I understand the corrective action
the [landlord or cooperative] may take includes the initiation of a
demand for repayment of any benefits or rental subsidies improperly
received, initiation of a notice to cancel any rental assistance or
section 8 assistance being received for the balance of my certification
period, initiation of a notice to increase my monthly rent to $____ per
month (note rate rent for Plan II projects or 125 percent of rent in
Plan I projects), or initiation or a notice of termination. I understand
that one or more of these remedies may be initiated at the option of the
[landlord or cooperative].''
c ``I understand that I must promptly notify the lessor of any
extended absences and that if I do not personally reside in the unit for
a period exceeding 60 consecutive days, for reasons other than health or
emergency, my net monthly tenant contribution shall be raised to $____
per month (note rate rent for Plan II projects or 125 percent of rent in
Plan I projects) for the period of my absence exceeding 60 consecutive
days. I also understand that should any rental assistance be suspended
or reassigned to other eligible tenants, I am not assured that it will
still be available to me upon my return. I also understand that if my
absence continues, that as landlord, you may take the appropriate steps
to terminate my tenancy.''
d ``I understand that should I receive occupancy benefits to which
I am not entitled due to my/our failure to provide information or due to
incorrect information provided by me or on my behalf by others, or for
any other household member, I may be required to make restitution and I
agree to repay any amount of benefits to which I was not entitled.''
e ``I understand that income certification is a requirement of
occupancy and I agree to promptly provide any certifications and income
verifications required by the owner or cooperative board to permit
determination of eligibility and, when applicable, the monthly tenant or
member contribution to be charged.''
5 Leases and occupancy agreements used by borrowers participating
in the FmHA or its successor agency under Public Law 103-354 RA program
will contain the following clauses. (These clauses can be made an
addendum to the lease and they must be signed by the lessor and lessee):
``I understand and agree that as long as I receive rental
assistance, my gross monthly contribution (as determined on the latest
Form FmHA or its successor agency under Public Law 103-354 1944-8, which
must be attached to this lease) for rent or occupancy charge and
utilities will be $____. If I pay any or all utilities directly (not
including telephone or cable TV), a utility allowance of $____ will be
deducted from my gross monthly contribution and my resulting net monthly
contribution will be $____. If my net monthly contribution would be less
than zero, the lessor will pay me $____.
I also understand and agree that my monthly contribution under this
lease or occupancy agreement may be raised or lowered, based on changes
in the household income or adjustments to income, failure to submit
information necessary to certify income, changes in the number and age
of persons living in the household, and on the escalation clause in this
contract. Should I no longer receive rental assistance as a result of
these changes, or the rental assistance agreement executed by the [owner
or cooperative] and FmHA or its successor agency under Public Law 103-
354 expires, I understand and agree that my monthly contribution may be
adjusted to no less than $____ (basic) nor more than $____ (note rate)
during the remaining term of this [lease or occupancy agreement], except
that based on the escalation clause in this contract these rates may be
changed by a Farmers Home Administration or its successor agency under
Public Law 103-354 approved rent or occupancy charge change.''
[Note No. 1: Eligible borrowers with LH loans and grants, Plan I direct
RRH or insured RRH loans approved before August 1, 1968, may omit the
words ``no less than $____ (Basic) nor more than'' from the last
sentence of the above statement.]
``I understand that every effort will be made to provide rental
assistance so long as I remain eligible and the rental assistance
agreement between the [owner or cooperative] and FmHA or its successor
agency under Public Law 103-354 remains in effect.
[[Page 257]]
However, should this assistance be terminated I may arrange to terminate
this contract, giving proper notice as set forth elsewhere in this
[lease or occupancy agreement].''
[Note No. 2: The following additional clause is needed by those
borrowers with Plan I direct or insured RRH loans approved before August
1, 1968.]
``I further agree that should I be permitted to occupy when my
income exceeds maximum limits, I shall pay a 25 percent rental rate
surcharge in addition to my rental rate of $____.''
6 For leases with tenants occupying units in which borrowers are
operating under Plan I either with or without interest credit approved
on or after August 1, 1968:
``I understand and agree that my rent rate of $____ (includes)
(excludes) my cost of utilities. I further understand and agree that
should I be permitted to occupy when my income exceeds maximum limits, I
shall pay a 25 percent rental rate surcharge in addition to my rental
rate.''
7 For leases or occupancy agreements in projects which borrowers
are operating under Plan II Interest Credit Only:
``I understand and agree that my gross monthly contribution as
determined on the latest Form FmHA or its successor agency under Public
Law 103-354 1944-8, which must be attached to this contract, for [rent
or occupancy charge] and utilities will be $____.
If I pay any or all utilities directly (not including telephone or
cable TV), a utility allowance of $____ will be deducted from my gross
monthly [rent or occupancy charge] except that I will pay not less than
the basic rent nor more than the note rate [rent or occupancy charge]
stated below. My net monthly [rent or occupancy charge] will be $____. I
understand that should I receive rental subsidy benefits (interest
credit) to which I am not entitled, I may be required to make
restitution and I agree to pay any amount of benefit to which I was not
entitled. I also understand and agree that my monthly tenant [rent or
occupancy charge] under this [lease or occupancy agreement] may be
raised or lowered based on changes in the household income, failure to
submit information necessary to certify income, changes in the number
and age of persons living in the household, and on the escalation clause
in this contract. My [rent or occupancy charge] will not, however, be
less than $____ (basic) nor more than $____ (note rate) during the term
of this contract, except that based on the escalation clause in this
[lease or occupancy agreement], these rental rates or occupancy charges
may be changed by a Farmers Home Administration or its successor agency
under Public Law 103-354 approved [rent or occupancy charge] change.''
8 Leases used by borrowers with LH loans and/or grants will use the
following additional clauses:
a ``I understand that the project is operated and maintained for
the purpose of providing housing for domestic farm laborers and their
immediate families. I do hereby certify that a substantial portion of my
immediate family income is and will be derived from farm labor. I
further understand that domestic farm labor means persons who receive a
substantial portion of their income as laborers on farms in the United
States and either are citizens of the United States, or reside in the
United States, Puerto Rico, or the Virgin Islands, after being legally
admitted for permanent residence therein, and may include the immediate
families of such persons. Laborers on farms may include laborers engaged
in handling agricultural commodities while in the unprocessed stage. It
also includes labor for the production of aquatic organisms under a
controlled or selected environment.''
b ``I agree that if my household income ceases to be substantially
from farm labor for reasons other than disability or retirement, I will
vacate my dwelling after proper notification by the owner.''
9 All leases, including all renewal leases, shall contain the
following clause:
``It is understood that the use, attempted use, or possession,
manufacture, sale, or distribution of an illegal controlled substance
(as defined by local, State, or federal law) while in or on any part of
this apartment complex or cooperative is an illegal act. It is further
understood that such action is a material lease violation. Such
violations (hereafter called a ``drug violation'') may be evidenced upon
the admission to or conviction of a drug violation.
The landlord may require any lessee or other adult member of the
tenant household occupying the unit (or other adult or nonadult person
outside the tenant household who is using the unit) who commits a drug
violation to vacate the leased unit permanently, within timeframes set
by the landlord, and not thereafter enter upon the landlord's premises
or the lessee unit without the landlord's prior consent as a condition
for continued occupancy by members of the tenant household. The landlord
may deny consent for entry unless the person agrees to not commit a drug
violation in the future and is either actively participating in a
counseling or recovery program, complying with court orders related to a
drug violation, or completed a counseling or recovery program.
The landlord may require any lessee to show evidence that any
nonadult member of the tenant household occupying the unit, who
committed a drug violation, agrees to not commit a drug violation in the
future,
[[Page 258]]
and to show evidence that the person is either actively seeking or
receiving assistance through a counseling or recovery program, complying
with court orders related to a drug violation, completed a counseling or
recovery program within timeframes specified by the landlord as a
condition for continued occupancy in the unit. Should a further drug
violation be committed by any nonadult person occupying the unit the
landlord may require the person to be severed from tenancy as a
condition for continued occupancy by the lessee.
If a person vacating the unit, as a result of the above policies, is
one of the lessees, the person shall be severed from the tenancy and the
lease shall continue among any other remaining lessees and the landlord.
The landlord may also, at the option of the landlord, permit another
adult member of the household to be a lessee.
Should any of the above provisions governing a drug violation be
found to violate any of the laws of the land the remaining enforceable
provisions shall remain in effect. The provisions set out above do not
supplant any rights of tenants afforded by law.
C Special lease clause.
1 Handicapped accessible units occupied by those not needing
specially designed features. A clause should be used in addition to the
required clauses in the special situation where management temporarily
assigns a nonhandicapped households to occupy a handicapped accessible
unit specially designed for handicapped households under the conditions
of paragraph VI D 2 g of this exhibit. Any agreements between the
landlord and the tenant concerning who bears the costs of moving to
another suitably sized vacant unit should be documented.
``I/we acknowledge that I/we am/are occupying a designated
handicapped accessible unit. I/we acknowledge that priority for such
units is given to those needing special physical design features. I/we
acknowledge that I/we am/are permitted to occupy the unit until
management issues a notice that a priority applicant is on the waiting
list and that I/we must move to another suitably sized vacant unit in
the project. Upon receiving this notice, I/we agree to move at [my/our
own] [shared (as agreed)] [project] expense within 30 calendar days to
the suitably sized vacant unit within the project, if one is available.
I/we further understand my/our rental rate will change, when
appropriate, to the rental rate for the unit I/we move to and this lease
will be modified accordingly.''
2 Prepayment subject to restrictive-use covenants. Upon FmHA or its
successor agency under Public Law 103-354 approval and acceptance of a
prepayment, subject to restrictive-use covenants, the landlord will
ensure all existing tenant leases and renewals of such leases are
amended to include the following provisions:
``As a condition of the Government's approval of a request to accept
early payment on notes owed, the tenant household is protected, to the
extent herein disclosed, against involuntary displacement (except for
good cause) and against having the tenant household contribution level
(rent) materially increased until [insert a date 20 years from the date
of the last FmHA or its successor agency under Public Law 103-354 loan
or servicing action making the loan subject to prepayment restrictions,
or insert ``the tenant household decides to move'' depending on the
restrictive-use provision accepted by the owner (see Sec. 1965.215(e)(5)
of subpart E of part 1965 of this chapter)]. Specifically, the tenant
household contribution level (rent) must be consistent with those
necessary to maintain the project for low- and moderate-income tenants.
Those tenant households whose tenant household contribution level (rent)
did not exceed 30 percent of their monthly adjusted income at the time
the prepayment was accepted, may have their tenant household
contribution level (rent) raised to the lesser of 30 percent of their
monthly adjusted income or 10 percent of their gross monthly income per
year. Those tenant households whose tenant household contribution level
(rent) exceeded 30 percent of their monthly adjusted income at the time
the prepayment was accepted, may have their tenant household
contribution level (rent) raised to the lesser of the latest U.S.
Consumer Price Index or 10 percent per year.''
D Other lease provisions. All leases or occupancy agreements must
contain provisions covering:
1 Names of the parties to the contract and all individuals to
reside in the unit and the identification of the unit.
2 The amount and due date of monthly contributions, including
occupancy surcharge levied, if any.
3 Any penalty for late payment of monthly contributions according
to paragraph IX B of this exhibit.
4 The utilities and quantities thereof and the services and
equipment to be furnished to the tenant or member by the management or
cooperative and the tenant's or member's responsibility to pay utility
charges promptly when due.
5 The process by which contribution and eligibility for occupancy
shall be determined and redetermined including:
a The frequency of such contribution and eligibility
determinations.
b The information which the tenant or member shall supply to permit
such determinations: Usually, income verification; names and ages of
household members; in congregate facilities, only that essential
information about the person's request for provided service(s) to
determine whether the project provides the services requested by
[[Page 259]]
the applicant/tenant and/or to determine how to best serve the
applicant's/tenant's/member's request with reasonable accommodation,
referral services, etc. In the case of a group home, the information may
also include an assessment by a professional medical examiner or
practitioner, social service caseworker, representative of an advocacy
group, member of the clergy, etc., that the tenant/applicant provides to
support the application or recertification for housing and services.
c The standards by which rents or occupancy charge, eligibility,
and appropriate dwelling unit size shall be determined.
d Tenant's household agreement to move to a unit of appropriate
size if the household size changes.
e The circumstances under which a tenant or member may request a
redetermination of tenant contribution.
f The effect of misrepresentation by the tenant or member of the
facts upon which contributions or eligibility determinations are based.
g The time at which shelter cost change, contribution changes, or
notice of ineligibility shall become effective.
6 The limitation upon the tenant or member of the right to the use
and occupancy of the dwellings. Limitations may not be discriminatory in
nature.
7 The responsibilities of the tenant or member in the maintenance
of the dwelling and the obligation for intentional or negligent failure
to do so.
8 Agreement of management or cooperative to accept a tenant or
member contribution without regard to any other charges owed by tenant
or member to management or cooperative and to seek separate legal remedy
for the collection of any other charges which may accrue to management
from tenant(s) or member(s).
9 The responsibility of management to maintain the buildings and
any common areas in a decent, safe, and sanitary condition in accordance
with local housing codes and FmHA or its successor agency under Public
Law 103-354 regulations, and its liabilities for failure to do so.
10 The responsibility of management or cooperative to provide the
tenant or member with a written statement of the condition of the
dwelling unit (when the tenant or member initially enters into occupancy
and when vacating the dwelling unit), and the conditions under which the
tenant or member may participate in the inspection of the premises which
is the basis for such statement.
11 The circumstances under which management or the cooperative may
enter the premises during the tenant's or member's possession thereof,
including a periodic inspection of the dwelling unit as a part of a
preventive maintenance program.
12 Responsibility of tenant or member to advise management or the
cooperative of any planned absence for an extended period, usually 2
weeks or more.
13 Agreement that tenant or member may not let or sublet all or any
part of the premises without the consent of management or cooperative
and FmHA or its successor agency under Public Law 103-354.
14 Understanding that should the RRH project be sold to a buyer
approved by FmHA or its successor agency under Public Law 103-354, the
lease will be transferred to the new owner.
15 The formalities that shall be observed by management or the
cooperative and the tenant or member in giving notice one to the other
as may be called for under the terms of the lease or occupancy
agreement.
16 The circumstances under which management or the cooperative may
terminate the lease or occupancy agreement, all limited to good cause,
and the length of notice required for the tenant or member to exercise
the right to terminate.
17 The procedure for handling tenant's or member's abandoned
property as provided by State law.
18 Disposition of lease or occupancy agreement if building becomes
uninhabitable because of fire or other disaster. Right of owner or
cooperative to repair or rehabilitate the building within a certain
period or terminate the lease or occupancy agreement.
19 The agreement that any tenant or member grievance or appeal from
management's or cooperative's decision shall be resolved in accordance
with procedures consistent with FmHA or its successor agency under
Public Law 103-354 regulations covering such procedures which are posted
in the rental office or at the cooperative.
20 That the lease may be terminated by the tenant, with 30 days
notice, prior to expiration of its term for ``good cause'' such as
moving to another location for employment, loss of job, severe illness,
death of spouse, or other reasons customary or mandatory in the
community, or after notification by RRH borrower of intent to prepay.
The prior notice on which a cooperative member may cancel an occupancy
agreement for ``good cause'' shall be 4 months.
21 The usual signature clause attesting that the lease or occupancy
agreement has been executed by the parties.
E Prohibited lease or occupancy agreement clauses. Clauses in the
classifications listed below shall not be included in any lease or
occupancy agreement.
1 Confession of judgment. Prior consent by tenant or member to any
lawsuit the landlord or board may bring against the tenant or member in
connection with the lease or occupancy agreement and to a judgment in
favor of the landlord or board.
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2 Distraint for rental or occupancy charge or other charges.
Authorization to the landlord or cooperative board to take property of
the tenant or member and hold it as a pledge until the tenant or member
performs any obligation which the landlord has determined the tenant or
member has failed to perform.
3 Exculpatory clause. Agreement by tenant or member not to hold the
landlord or landlord's agents or cooperative board liable for any acts
or omissions whether intentional or negligent on the part of the
landlord or the landlord's authorized representative or agents or the
cooperative board.
4 Waiver of legal notice by tenant or member prior to actions for
eviction or money judgments. Agreement by tenant or member that the
landlord or board may institute suit without any notice to the tenant or
member that the suit had been filed.
5 Waiver of legal proceedings. Authorization to the landlord or
board to evict the tenant or member or hold or sell the tenant's or
member's possessions whenever the landlord or board determines that a
breach or default has occurred.
6 Waiver of jury trail. Authorization to the landlord's or board's
lawyer to appear in court for the tenant or member and to waive the
tenant's or member's right to trail by jury.
7 Waiver of right to appeal judicial error in legal proceedings.
Authorization to the landlord's or board's lawyer to waive the tenant's
or member's right to appeal on the ground of judicial error in any suit
or the tenant's or member's right to file a suit in equity to prevent
the execution of a judgment.
8 Tenant or member chargeable with costs or legal actions
regardless of outcome. Agreement by the tenant or member to pay
attorney's fees or other legal costs whenever the landlord or board
decides to take action against the tenant or member even though the
court finds in favor of the tenant or member. (Omission of this clause
does not mean that the tenant or member, as a party to a lawsuit, may
not be obligated to pay attorney's fees or other costs if the tenant or
member loses the suit.)
F Modification of lease or occupancy agreement and notification to
tenants or members. The landlord or board may modify the terms and
conditions of the lease or occupancy agreement with FmHA or its
successor agency under Public Law 103-354 prior consent, effective at
the end of the initial term or a successive term, by serving an
appropriate notice on the tenant or members, together with the tender of
a revised lease or occupancy agreement or an addendum revising the
existing lease or occupancy agreement. This notice and tender shall be
delivered to the tenant or member either by first-class mail, properly
stamped and addressed or hand-delivered to the premises to an adult
member of the household. The date on which the notice shall be deemed to
be received by the tenant or member shall be the date on which the
first-class letter is mailed or the date on which the copy of the notice
is delivered to the premises. The notice must be received at least 30
days prior to the last date on which the tenant or member has the right
to terminate the occupancy without executing the revised lease or
occupancy agreement. The notice must advise the tenants or members that
they may appeal modifications to the lease or occupancy agreement in
accordance with subpart L of part 1944 of this chapter if the
modification will result in a denial, substantial reduction, or
termination of benefits being received. The same notification will be
applicable to any changes in the rules and regulations for the project.
G Occupancy rules and informative material. Occupancy rules
establish the basis for the management-tenant or member relationship.
Occupancy rules and regulations must be provided and explained by the
project management to enable the tenant or member to understand the
purposes, objectives, and standards of the project. The rules will be
approved by the FmHA or its successor agency under Public Law 103-354
State Director or designee, generally together with the project
management plan, management agreement, and lease or occupancy agreement
form.
1 All rules for occupancy and rent or occupancy charge structures
will be in writing posted conspicuously in the borrower's and/or
manager's offices and provided to each tenant or member with the lease
or occupancy agreement.
2 Proposed changes of any rules for occupancy must be made
available to each tenant or member at least 30 days in advance of
implementation, and tenants or members must be advised that they may
appeal changes in accordance with FmHA or its successor agency under
Public Law 103-354 tenant grievance and appeals procedure subpart L of
part 1944 of this chapter.
3 Landlords or cooperatives may not place unreasonable restrictions
on residents desiring to use federally financed community rooms for
their enjoyment. No rule may infringe on the rights of the rental
tenants to organize an association of tenants. Such associations may be
organized to bargain with management, as well as to act socially and/or
provide for the welfare of its members. The project management person or
organization should be available and willing to work with a tenant
organization. Examples of unreasonable restrictions include rules
requiring management representatives to be present in order to use
community rooms, rules barring tenant or cooperative organizational
meetings from using the rooms, or rules requiring management
representatives to be present at any resident organizational meeting
held in community rooms.
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4 Rules may be promulgated that prohibit activities which are
detrimental to management, tenants and members. Such activities include
threats to the health or safety of other tenants or members or the
employees of the borrower, interference with the quiet enjoyment of the
premises by other tenants or members, or damage to the physical
structure of the project.
5 The borrower may choose to provide rules for nonelderly projects
that either permit or exclude pets except that no rules may be
promulgated that would prohibit the occupancy of a household member who
requires the services of a service animal to achieve the normal function
of that household member.
6 For each RRH project or portion of a project specifically
designated for the elderly, the borrower must have established project
rules permitting elderly, handicapped, or disabled tenants to keep
commonly accepted household pets. These pet rules are to be governed by
the following guidelines:
a Pet rules must not:
(1) Prohibit, prevent, restrict, or discriminate against any tenant
who owns or keeps a pet in their apartment unit, with respect to
continued occupancy in the project unless the approved project pet rules
are violated.
(2) Prohibit, prevent, restrict, or discriminate against any
applicant who owns a pet with respect to obtaining occupancy in the
project.
(3) Charge an extra monthly rental charge for pets.
b Borrowers with operational projects must consult with the tenants
of the project when revising pet rules and retain documentation on how
the consultation process was conducted.
c. Borrowers with new projects will establish pet rules prior to
occupancy, but may revise those rules based on tenant comments and
suggestions received after rent-up begins.
d Pet rules will be approved by FmHA or its successor agency under
Public Law 103-354 as part of, or an amendment to, the project lease.
FmHA or its successor agency under Public Law 103-354 approval will be
granted when the rules meet the provisions and intent of this
subparagraph.
e Pet rules will be reasonable and will be written to consider at
the least the following factors:
(1) Density of project units.
(2) Pet size.
(3) Type of pet.
(4) Potential financial obligations of tenants who own or keep pets.
(5) Standards of pet care.
(6) Pet exercise areas.
(7) State and local animal laws or ordinances.
(8) Liability insurance.
f Pet rules must allow the borrower or project manager
authorization to remove from the project any pet whose conduct or
condition is duly determined to constitute a nuisance or threat to the
health or safety of other tenants or members in the project or persons
in the surrounding community.
7 Initial rules will be attached to the lease or occupancy
agreement. Approval by FmHA or its successor agency under Public Law
103-354 for changers and additions may be requested as needed.
8 The following items illustrate areas that are among those which
should be addressed in rules or informative materials developed by
management and provided to all tenants or members prior to move-in:
a Explanation of rights and responsibilities under the lease or
occupancy agreement. Where a non-English language is common to a project
area, a lease or occupancy agreement written in that language should
also be provided.
b Rent payment or occupancy charge policies and procedures should
be fully explained.
c Policy on periodic inspection of units.
d Responding to tenant or member complaints.
e Maintenance request procedure.
f Project services and facilities available to tenants or members.
g Office location, hours, and emergency telephone numbers.
h Map showing location of community facilities including schools,
health care, libraries, parks, etc.
i Restrictions on storage and prohibition against abandoning
vehicles in the project area.
j A rental project newsletter or other printed material distributed
to potential tenants or the public. If a newsletter or other printed
material is desired, it must contain an appropriate nondiscrimination
statement, or fair housing slogan or logotype.
k Community and public transportation schedules.
9 Tenant or member may be permitted to have a guest(s) visit their
household. However, the landlord reserves the right to request a
recorded declaration of domicile or proof of domicile if it is suspected
that the guest is an unauthorized household occupant. Such suspicion may
arise whenever an adult person(s) is making reoccurring visits or one
continuous visit of 14 days and/or nights in a 45-day period without
prior notification of the management. Should the tenant or person in
question not provide the requested information needed to confirm other
domicile, or should the facts be sufficient to evidence domicile in the
project, then the landlord may consider such person(s) a member of the
tenant household and may enforce
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any lease covenants shown to be broken and/or require recertification.
10 No provisions may be incorporated into occupancy rules that
would discriminate against or otherwise deny equal opportunity to any
person (whether the tenant or a person associated with the tenant) in
the terms, conditions, or privileges of rental of a dwelling unit, or in
the provision for services or facilities in connection wherewith,
because of race, color, religion, sex, familial status, National origin,
or handicap.
11 The borrower must establish and enforce rules to ensure there
are reasonable accommodations to persons who are handicapped or
disabled.
H Security deposits.
1 Security deposits are encouraged and they should be used when it
is reasonable and customary for the area for assurance of rental payment
or charges for damages. The amount of security deposits must be
reflected in the borrower's management plan and may not be changed
without the written consent of the FmHA or its successor agency under
Public Law 103-354 Servicing Official. When security deposits are used,
they should not exceed an amount equal to the net tenant contribution
for one month or basic rent, whichever is greater. Families receiving a
HUD rental subsidy will pay security deposits according to HUD
requirements. In an elderly project, the amount of additional security
deposit for pets must be reasonable and not designed to prohibit or
discourage tenancy but in no case should it exceed the basic rent of the
project. Where a service animal is necessary for the normal function of
a household member, an additional security deposit for the animal may
not be charged. A membership fee, equal to one month's occupancy charge,
will be required from members of a cooperative.
2 Security deposits for persons eligible for RA or Section 8
assistance shall be administered in a manner to prevent hardship on the
household. If such tenants or members cannot pay the full amount
initially, they may be given terms that may ordinarily:
a For RRH projects, not exceed a downpayment of 30 percent of
adjusted monthly income plus $15 per month or that amount needed monthly
to complete the security deposit within 3 months, whichever is greater
(landlords may provide payment over longer terms if desired). For RCH
projects, not exceed an initial payment of $25 plus the amount needed
monthly to complete the membership fee within 3 months (longer terms may
be permitted if desired by the project). Should installments not be met,
the total security deposit charge may become due and payable in full.
b For low-income farmworkers in an LH project, not exceed $25
downpayment and $15 per month until an equivalent of one month's project
rent is reached. In the case of migrants who will occupy the units for a
short period of time, exception to this policy by FmHA or its successor
agency under Public Law 103-354 may be made upon written request from
the borrower when it is shown that such deposits need to be raised to
protect the interest of the government and it will not create a hardship
on the tenants.
3 Security deposits or membership fees shall be handled in
accordance with any State or local laws governing security deposits.
Both security deposits and membership fees shall be deposited in a
separate account when required by State or local law, and such funds
must be held in a Federally insured institution, and shall be handled in
accordance with any State or local laws governing such deposits. Funds
in the security deposit account shall only be used for authorized
purposes as intended and represented by the project management in the
management plan, and until so used, shall be held by the borrower in
trust for the respective tenants. Funds in the membership fee account
shall only be used for authorized purposes, until so used, shall be held
by the borrower in trust for the respective members.
4 Borrowers may assess fair and reasonable charges to the security
deposit or membership fee for damage and loss caused or allowed by the
tenant or member. An itemized accounting for such charges must be
presented to the tenant or member after the move-out inspection provided
for in paragraph X E 2 of this exhibit, unless the tenant or member has
abandoned the property and his/her whereabouts are unknown and cannot be
ascertained after reasonable inquiry.
5 The owner may not increase, for persons with handicaps, any
customarily required security or membership fee deposit for restoration
made to earlier modifications that permitted the handicapped person's
full enjoyment of the dwelling unit. However, where it is necessary in
order to ensure with reasonable certainty that funds will be available
to pay for the restoration(s) at the end of the occupancy, the borrower
may negotiate as part of such a restoration agreement, a provision
requiring that the tenant or member pay into an interest bearing escrow
account, over a reasonable period, a reasonable amount of money not to
exceed the cost of the restoration(s). The interest in any such account
shall accrue to the benefit of the tenant or member.
I Leases for Section 8 and Section 8 Rental Certificate or Rental
Voucher tenants/members. Guidance on leases for such tenants/members is
set out herein; however, the use of any addendum necessary to meet the
requirements of FmHA or its successor agency under Public Law 103-354,
HUD, or other provider of subsidy or assistance as needed to comply
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with the requirements of any such other program, may be used as needed.
Whenever conflicts or disputes arise, the servicing office may forward a
request for guidance to the State Director, along with any
recommendation. The State Director may take those actions necessary to
resolve the issue with the advice and consent of the Office of the
General Counsel.
1 Borrowers/Management agents are encouraged to use HUD approved
lease agreements. Evidence of HUD's approval should be contained in the
borrower casefile.
2 The HUD approved lease must include modifications of addenda that
meet the conditions or requirements of paragraphs VIII A, B1, B2, and B3
of this subpart.
3 An FmHA or its successor agency under Public Law 103-354-approved
lease may also be used when acceptable by HUD and the local housing
authority when this option proves more practical.
IX Rent or Occupancy Charge Collection and Account Servicing: Rents
or occupancy charges should be due on the first day of each month of the
lease period. The time and place of on-site collection and/or the
correct address for payment by mail should be well publicized and
consideration should be given to an after-hours depository if needed.
A Receipts. A form of serially-numbered receipts should be selected
for use and the collection agent held accountable for every receipt.
Optional collection services may be considered when they are available.
B Delinquencies. A system to identify and detect unpaid rents or
occupancy charges within the project should be instituted in the
management plan and made known to tenants in their lease. The borrower
may adopt the late rental payment penalty and grace period prescribed by
State law; otherwise, they may not exceed a grace period of 10 days from
the rental or occupancy charge due date and not have the late payment
penalty exceed the highest of:
1 An amount up to $10 after the grace period, or
2 An amount equal to 5 percent of the tenant's gross tenant
contribution (GTC) (found at line 30 of Form 1944-8) after the grace
period,
3 Any late payment policy established should address unusual
situations such as tenants receiving income from Social Security,
pension and retirement type funds that tenants receive routinely in the
few days following the first day of a month. A 5-day grace period
following the usual receipt date of such payment could be permitted.
4 The plan should also address any provisions for waivers of late
payment penalty, if appropriate
C Recapture of improperly advanced RA and interest credit.
Recapture of improperly advanced RA and interest credit will be
processed in accordance with subpart N of part 1951 of this chapter.
D Project late fees on Predetermined Amortization Schedule System
(PASS) accounts.
1 Project late fees are charged on PASS account loan payments not
received by FmHA or its successor agency under Public Law 103-354 by
close of business of the 10th day of the month as further described in
Sec. 1951.510(c)(2) of subpart K of part 1951 of this chapter.
2 A borrower may request in writing a waiver of a late fee
according to Sec. 1951.510(c)(2) of subpart K of part 1951 of this
chapter. Borrowers may appeal a denial of a request for a late fee
waiver under the Agency's uniform appeal procedures set out in subpart B
of part 1900 of this chapter.
3 Late fee waivers are determined to be a benefit to the borrower
entity and must be reported to IRS by the FmHA or its successor agency
under Public Law 103-354 Finance Office.
4 If the cause of the late fee is an FmHA or its successor agency
under Public Law 103-354 accounting system error, the FmHA or its
successor agency under Public Law 103-354 may suspend sending monthly
billings to the borrower until the error is corrected. If delinquency
persists after correcting the error, late fees will be charged. Late
fees charged as a result of FmHA or its successor agency under Public
Law 103-354 error will be administratively corrected and not reported to
IRS by the FmHA or its successor agency under Public Law 103-354 Finance
Office.
5 Except for cooperatives, project late fees are not a project
expense. Borrowers shall record a line item entry on Form FmHA or its
successor agency under Public Law 103-354 1930-7 showing late fees,
offset by an equal transfer-in of the borrower's own funds or a
reduction of the borrower's return to owner.
X Maintenance: Maintenance is the process by which a project is
kept up in all respects and includes land, buildings, and equipment.
Maintenance responsibilities will be included in the management plan.
Proper maintenance will help to keep a good image for the project, help
to minimize vacancies, and help to preserve the project. Plans and
policies for inspections, effective maintenance and repair are to be
established at the outset and modified periodically as needed. The
following types of maintenance are necessary:
A Routine maintenance. Routine maintenance and repairs will be
those cost items and services included in the annual budgets to be paid
out of the operations and maintenance expense account. It includes
regular maintenance tasks of the project that can be prescheduled or
planned for, based on equipment availability and property
characteristics tasks performed on a regular basis to
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maintain the appearance of the project and to prevent an accumulation of
debris and subsequent deterioration.
B Responsive maintenance. This includes all maintenance tasks
performed in response to either requests for service from tenants or
members or unplanned breakdowns. An essential part of any maintenance
system is to plan for requests coming from the dwelling units and for
emergencies occurring in the systems serving the apartments. The project
manager or the cooperative's board of directors should develop a plan to
focus on: who receives the requests, how they are handled, how specific
employees or members are assigned to the tasks, and what kind of records
are kept. The capacity of the project manager or board to respond to
requests and emergencies is one of the true tests of a successful
maintenance program.
C Preventive maintenance. This is similar to inspection type
maintenance. Regular checking and servicing of equipment and systems is
done as required by service information. Preventive maintenance of
mechanical systems, building exteriors, elevators, and heating and
cooling systems in projects require specially trained personnel. The
project manager should establish biweekly or monthly schedules in which
the routine oiling, adjusting, replacing of filters, and the like is
done based on manufacturer's manuals and specifications.
D Long-term maintenance and replacement (curable depreciation).
These are major expense items which normally do not occur on an annual
basis and cannot be afforded from an annual budget income. These
expenses include items such as repaving the parking lot or repainting an
entire building or project; replacement of furnishings and equipment,
including such items as stoves, refrigerators, carpets, water heaters,
furnaces, etc., whenever such replacements are beyond the capacity of
the project to pay out of the normal operating budget. The borrower may
request permission to use reserve funds to pay for these expenses when
they occur. However, use of funds out of the reserve account must be
preapproved by FmHA or its successor agency under Public Law 103-354.
E Inspection maintenance. These are maintenance inspections
performed periodically to discover problems before crisis situations
develop. The following inspections of each apartment should be made at
appropriate times:
1 Move-in inspection. Before move-in occurs, the management and the
applicant accepted for occupancy should together inspect the unit to be
occupied and agree upon any needed repairs. A written inspection report
shall be prepared and a copy retained in the tenant's or member's file.
Any of the identified deficiencies not corrected prior to occupancy
should be noted on the lease or occupancy agreement or inspection move-
in report and signed by the tenant or member and borrower's or
cooperative's representative.
2 Move-out inspection. An inspection should be scheduled with the
tenant or member when the management becomes aware that the tenant or
member is moving out or has vacated the unit. Whenever possible, the
inspection should be performed after the furniture has been moved out
and before any portion of the security deposit or membership fee is
returned to the tenant or member. Any repairs or costs to be charged to
the tenant or member will be according to the terms of the lease or
occupancy agreement, local law, and regulations governing security
deposits or membership fees in paragraph VIII H of this exhibit.
3 Periodic inspection. An inspection of this type should be made at
least annually. The borrower should make provisions in the lease or
occupancy agreement for periodic inspection of the units as a part of a
preventive maintenance program.
XI Rent or Occupancy Charge and/or Utility Allowance Changes: It
may be necessary as operating costs and/or revenues fluctuate to
consider a change of rental or occupancy charge rates and/or utility
allowance to keep the project viable. Before any change of rates or
utility allowances may occur, prior written consent of FmHA or its
successor agency under Public Law 103-354 is required. The procedure to
request and implement a rental or occupancy charge and/or utility
allowance change is specifically covered in exhibit C of this subpart.
XII Borrower Project Budgets:
A Budget development and preparation. Borrowers are responsible for
developing project budgets using past actual experiences in developing
realistic forecasts of projected project operations. The budgets must
reflect realistic income sources, uses and amounts of funds, and allow
realistic vacancy and contingency factors. Generated funds must be
sufficient to pay the forecasted operating costs and authorized
expenditures of the project including reserves and return on investment,
leaving adequate cash on hand as a normal course of business. When the
income from typical project operations (operational income) is not
sufficient to meet the normal project cash requirements, the borrower is
responsible for reducing expenditures, seeking FmHA or its successor
agency under Public Law 103-354 consent for authorized withdrawals from
the reserve account, and/or providing other funds (nonoperational funds)
to meet project budget requirements.
1 Budgets will be prepared according to the instructions contained
in Form FmHA or its successor agency under Public Law 103-354 1930-7.
2 Borrowers are required to develop a project budget annually.
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3 Budgets will cover a 12-month period selected by the borrower
that is to be the project fiscal year of operation.
4 Separate budgets will be developed for each project when the
borrower owns more than one MFH project.
5 The priority order of planned and actual budget expenditures will
be:
a Critical operating and maintenance expenses.
b FmHA or its successor agency under Public Law 103-354 debt
service.
c Reserve account requirements.
d Other authorized expenditures.
e Return on owner's investment.
6 Project funds may not be used for borrower organizational
expenses, except in the case of a cooperative or a nonprofit
organization.
7 When tenants pay their own utilities, an updated or current
exhibit A-6 to subpart E of part 1944 of this chapter is to accompany
each budget submitted to FmHA or its successor agency under Public Law
103-354 for approval with justification to either retain or change the
utility allowance(s).
8 When planned expenses appear to be excessive (such as when
expenses at any subtotal level on the budget exceed 5 percent of that
shown for typical costs for the area) for the area based on current cost
data, the FmHA or its successor agency under Public Law 103-354 budget
approval official may require justification prior to any approval
action. Such justifications may include evidence that the cost is in
line with what others charge for the same or similar services (i.e.,
cost estimates from others, summaries of rental housing revenues and
expenditures from Agency or third-party sources, etc.). Such evidence
may also be verified by the Agency at its option. When differences
cannot be mutually resolved, the request for budget approval may be
denied and the borrower or the borrower's designated representative will
be advised of any applicable appeal rights in accordance with subpart B
of part 1900 of this chapter. Any unapproved expenditure actually paid
which is clearly in excess of a fair and equitable amount may be
required to be repaid to the project from any authorized return on
owner's investment or from nonproject sources, such that tenant rents
will not be increased.
B Return on investments authorized by borrower's RRH loan
agreement/resolution.
1 Limited profit borrowers may take the return authorized for the
project's current budget year without further FmHA or its successor
agency under Public Law 103-354 approval under the following conditions.
(Note: This does not require delaying taking a return on owner's
investment pending submission, review and/or action on any required
audit by Agency officials):
a Payment may be only once a year based on the project's financial
condition as of the end of the project fiscal year. Borrowers are
encouraged to draw the return on investment in the days or weeks
immediately following the close of the fiscal year. The return on
owner's investment must be taken within 9 months of the last day earned,
except when the circumstances described in paragraph XII B 2 a of this
exhibit are applicable.
b Payment must have been approved as part of the borrower's annual
budget on Form FmHA or its successor agency under Public Law 103-354
1930-7.
c The project must produce income at approved monthly rental rates
during that year, which is used to pay for the project expenses in
accordance with the approved budget and, when appropriate, an approved
servicing plan.
d The balance in the reserve account must be on schedule less any
authorized withdrawals not requiring immediate redeposit. The amount of
reduction of the annual reserve requirement approved as part of a
servicing plan will be considered like an authorized withdrawal not
requiring redeposit.
e Payment of the return may not produce a negative ending year
unrestricted cash balance on Form FmHA or its successor agency under
Public Law 103-354 1930-7.
2 If income is not adequate in any given fiscal year to cover
payment of the return to owner, FmHA or its successor agency under
Public Law 103-354 may authorize a well-documented request that the
return be paid, provided:
a The return can be paid from excess funds available at the end of
the following fiscal year of operation, as long as it does not result in
a rent increase and the reserve account is current less authorized
withdrawals. (Noncash losses of the borrower entity do not qualify to be
recouped in following years.) This option is authorized only for the
year immediately following the year in which the return was not paid.
The prior year's return on owner's investment may be taken first, and
any residual left to apply to the current year's return on owner's
investment at the borrower's option.
b Release of reserve funds at the end of the current budget year
with Servicing Official approval, if the principles set out in
paragraphs XII B 1 b, c, and d of this exhibit are met, and further
provided that:
(1) The reserve account will not be reduced below the amount
required to be accumulated by that time considering any previously
authorized withdrawals or adjustments; and,
(2) During the next 12 months, the amount in the reserve account
will not likely fall below that required to be accumulated by the end of
such 12-month period.
(3) This option is authorized only for the year immediately
following the year in which the return was not paid. This does not
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apply to the return on investment waived while a special market rent
budget is in effect.
3 Borrowers operating under a servicing (workout) plan and/or using
special servicing market rate rents that call for less than full debt
service payment to FmHA or its successor agency under Public Law 103-354
shall forego and cannot recoup the annual return to owner for the budget
year that such plans or rents are in place.
4 When the provisions of paragraph XII B 1, 2 of this exhibit are
not met only because the payment was not earlier approved on Form FmHA
or its successor agency under Public Law 103-354 1930-7, and the
conditions are such that approval can now be made, an adjusted form may
be submitted to seek approval of the return on owner's investment.
5 Should the return to owner be suspected or discovered as being
improperly taken, the Agency may initiate appropriate servicing actions,
including using the authorities set out in subpart N of part 1951 of
this chapter and/or FmHA or its successor agency under Public Law 103-
354 Instructions 2012-B and/or 1940-M (available at any FmHA or its
successor agency under Public Law 103-354 office).
C Advancement (loan) of funds to a RRH project by the owner, member
of the organization, or agent of the owner.
1 Prior written approval by the Servicing Office is required. Such
advances may be authorized when justified by unusual short-term
conditions. When conditions are not short-term in nature, a servicing
plan may be developed and advances may be approved in accordance with
the provisions set out in subpart B of part 1965 of this chapter.
Justification will be based on the following:
a A review of the documented circumstances and the project
operating budget before any funds are advanced (loaned). The financial
position of the project must not be jeopardized.
b Funds are not immediately available from any of the following
sources:
(1) Reserve funds
(2) Initial operating capital
(3) An imminent rent increase
2 The funds will be applied to ordinary project operating and
maintenance expenses.
3 Interest may be charged or paid on the loan from project income;
however, interest must be reasonable. The proposal may be denied if FmHA
or its successor agency under Public Law 103-354 financing can be
provided to resolve the problem in a more cost effective manner.
4 No lien in connection with the loan will be filed against the
property securing the FmHA or its successor agency under Public Law 103-
354 loan or against project income. The advance may show as an unsecured
project liability on financial statements prepared for year-end reports
until such time as it is authorized to be repaid.
5 The payback of the advance (loan) may be permitted by the
Servicing Official provided the terms and conditions were mutually
agreed to by the borrower and FmHA or its successor agency under Public
Law 103-354 at the time of the advance and the financial position of the
project will not be jeopardized. Payback should only be permitted on the
advance when the FmHA or its successor agency under Public Law 103-354
debt is current and the reserve requirements are being maintained at the
authorized levels.
D Special budget planning.
1 Budgets must be prepared according to the special servicing
guidelines of subpart B of part 1965 of this chapter when a project is
experiencing abnormal vacancy or is otherwise detrimentally impacted by
economic reversal in the community.
2 The borrower is responsible for obtaining FmHA or its successor
agency under Public Law 103-354 approval of budget revisions that
reflect significant change to approved operating cost levels that occur
during the budget year. Minor revisions to an approved FmHA or its
successor agency under Public Law 103-354 budget to reflect changes of 5
percent or less in any subtotal area of the budget need not be subject
to FmHA or its successor agency under Public Law 103-354 approval unless
specifically required as an approval condition. Other minor revisions of
a few line items may be entered on the current approved budget as
``pencil'' changes and initialed by the borrower and approved by FmHA or
its successor agency under Public Law 103-354. Major changes involving
many budget line items will warrant a new budget being prepared and
approved by FmHA or its successor agency under Public Law 103-354.
3 When revisions to approved budgets are required, the Agency
action should normally be obtained within 30 days. Should action be
delayed, the borrower or management should notify the Agency of any
changes which they deem as being essential and in the project's best
interest provided such changes do not involve the use of reserve funds,
a rent change, or added secured debt, and proceed to meet the needs of
the project. In such cases, the borrower may request, and the Agency may
grant, postapproval of the actions when shown to be in the best interest
of the project.
XIII Accounting and Reporting Requirements and Financial Management
Analysis:
A General. FmHA or its successor agency under Public Law 103-354
anticipates that RRH, RCH, and LH borrowers will account for all project
income and expenses through a bookkeeping or accounting system as a
normal business practice appropriately reflecting the complexity of
project operations. The degree of sophistication will also reflect such
factors as the type of borrower; the size, location, and type of project
and the
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type of financial management information needed to provide adequate
guidance and supervision to assure program objectives are being met.
1 Separate accountability. Separate accountability of funds is
required and may be accomplished by bookkeeping entry for each required
account for each project owned by the same borrower. The policies set
out herein are aimed at facilitating efficient accounting of services by
one borrower. Commingling of the funds of two or more different
borrowers is prohibited to guard against the failure of one borrower
threatening the financial resources of other borrowers (i.e., ensuring
that a bankruptcy does not result in freezing bank accounts of several
borrowers due to the failure of one borrower to fulfill its
responsibilities).
a Multiple projects owned by one borrower.
(1) The principle of separate accountability permits a borrower's
approved accounting system to combine project funds in one or more bank
accounts for two or more projects owned by the same borrower. The
principle is met as long as the accounting system segregates and tracks
each project's funds separately. This means for example, that a Housing
Authority, or any other borrower owning two or more projects, can
maintain one bank account for:
(i) All project accounts, or
(ii) The same type of account, such as general operating account or
tax and insurance account, for two or more projects.
(2) When the borrower seeks approval of its accounting and funds
tracking system according to Sec. 1930.122(a)(2) of this subpart, it
must demonstrate to FmHA or its successor agency under Public Law 103-
354 that the funds tracking system will segregate and maintain separate
recordkeeping accountability for separate projects. Such demonstration
must include a certification issued by a Certified Public Accountant
(CPA) stating the system will function to meet this principle of
separate accountability.
b Multiple projects owned by multiple borrowers. When a management
agent is handling funds for multiple borrowers, the principles of
separate accountability within a bank account does not extend across
multiple borrowers, thus a separate general operating bank account is
required for each separate borrower.
c Central funds collection and disbursement system. When a
management agent is handling multiple bank accounts for multiple
borrowers, a central funds collection and disbursement accounting system
may be maintained. This would permit systems under which a management
agent could track funds going into and out of the bank accounts of more
than one borrower. This practice would facilitate the hiring and paying
of firms providing services to multiple borrowers. A central funds
collection and disbursement accounting system would permit billings to
be prorated between projects and permit funds to be withdrawn from many
bank accounts to facilitate payment by one check to a firm providing
services to multiple borrowers.
d Prorating. The accounting system and/or management plan must
document how funds are prorated for revenue and expenses which are not
clearly identifiable as being associated with a particular project
(e.g., how interest earned on a general operating account or reserve
account serving two or more projects owned by a single borrower will be
prorated between projects, etc.) Where this documentation is not present
for some unusual reason, and the Agency and the borrower become involved
in a dispute over this issue which cannot be mutually resolved, the
Agency will consider proration by the number of units in the respective
projects to be an appropriate guide for prorating the funds involved.
e Tenant security deposit concerns. When tenant security deposits
are being accounted for, the provisions of state and local laws must be
met. This may dictate that such accounts be held in a separate bank
account or otherwise separately identified and may require such funds be
held in trust for the tenant. The manner in which tenant security
deposits must be kept must also be documented in the accounting system
and/or management plan. Where this documentation is not provided for
some unusual reason, resolution of any disputes must be done according
to State and local law.
2 Borrowers with loan agreements or resolutions. Borrowers with
loan agreements or resolutions are subject to the following conditions:
a All RRH, RCH, and LH projects with loan agreements or resolutions
approved on or after October 27, 1980, are required to comply with the
provisions of paragraph XIII of this exhibit.
b All RRH, RCH, and LH projects with loan agreements or resolutions
approved prior to October 27, 1980, will be guided by the recordkeeping
and reporting requirements of their respective loan agreement or
resolution.
(1) They are encouraged, however, to adopt the provisions of this
paragraph by amending their existing loan agreement or resolution.
(2) The State Director may require adoption of these provisions when
deemed necessary as a loan servicing action.
c Any amendment to an existing loan agreement, or resolution,
requires concurrence of all parties and written consent of the Servicing
Office staff who may, when deemed necessary, obtain advice from the
State Director or the OGC prior to enactment of the amendment.
3 Individual LH Borrowers. Individual farm borrowers with nonrental
LH units will be
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considered in general compliance with this paragraph by virtue of
completing the recordkeeping and reporting requirements of their farm
and home planning with FmHA or its successor agency under Public Law
103-354 as outlined in subpart D of part 1944 of this chapter.
4 Borrowers without loan agreements or resolutions. Borrowers
without loan agreements or resolutions are required to maintain
information in sufficient detail to provide the necessary assurance that
program objectives are being met. As necessary to protect the integrity
of the program, the State Director may require the borrower to establish
a system capable of accounting for project operations and reporting.
B Accounting System. A bookkeeping and accounting system provides
the financial information needed to effectively plan, control, and
evaluate project activity, whether required by FmHA or its successor
agency under Public Law 103-354 or not. The type of system should be
determined prior to loan closing, but may be revised with FmHA or its
successor agency under Public Law 103-354 approval to meet program
objectives. The Agency may also prescribe the system to be used. Form
FmHA or its successor agency under Public Law 103-354 1930-5,
``Bookkeeping System--Small Borrower,'' can be adapted to the
bookkeeping needs of small MFH borrowers. Bookkeeping for MFH operations
may be maintained using a cash or accrual method of accounting.
1 Type of borrower accounts. As used in this paragraph, the term
account is used interchangeably to mean either a ledger (or bookkeeping
account) or an actual banking account, or an actual securities account
provided any securities account meets the conditions set out herein.
Depending upon the complexity of the accounting system being used, these
accounts may be further subdivided into subsidiary ledgers or accounts
to assist the borrower in providing the information needed for project
financial analysis or reporting requirements. Regardless of the number
or types of accounts established, or whether a bookkeeping and
accounting system is required, the borrower must meet the following:
a All project funds shall be held only in domestic bank accounts
insured by an agency of the Federal Government, or backed by collateral
provided by the bank, or held in securities meeting the conditions set
out herein.
b All funds in any account shall be used only for authorized
purposes as described in their loan agreement or resolution and this
Exhibit.
c All funds received and held in any account, except the tenant
security deposit, membership fee, and management reserve (patronage
capital), shall be held in trust by the borrower for the loan obligation
until used and serve as security for the FmHA or its successor agency
under Public Law 103-354 loan or grant.
d All project funds will be accounted for by adequate and clear
accounting methods or practices that otherwise maintain proprietary
identity of said funds for each borrower.
e Each borrower will maintain at least one demand deposit or
checking account. However, it is not necessary for each bookkeeping
account within one project to be maintained as a checking account.
f In no case shall project fund accounts be pledged as collateral
for non-FmHA or its successor agency under Public Law 103-354 debts.
2 Accounts. All RRH, RCH, and LH borrowers will maintain, as a
minimum, the accounts required by their loan agreement or resolution.
The following accounts are standard for all RRH and RCH loans approved
after October 27, 1980, and for those who have amended their previous
loan agreements or resolutions to adopt these accounts, or those
required by a servicing plan. The following listing of accounts also
identifies the order of funding of each of the listed accounts through
available project revenues each month:
a General operating account. This account records all project
income and disbursements exclusive of tenant security deposits. Excess
project cash held in this account may be combined with other project
funds described in this paragraph in temporary (immediate call) interest
bearing accounts when separate bookkeeping records are maintained for
the individual project accounts. This account may be further subdivided
as folllows:
(1) Initial operating capital.
(i) The initial operating capital must be in the form of cash as set
forth in Sec. 1944.211(a)(6) of subpart E of part 1944 of this chapter.
(ii) The borrower will have deposited the required initial operating
cash into the general operating account by the time of the FmHA or its
successor agency under Public Law 103-354 loan closing or when interim
financing funds are obtained, whichever occurs first. These funds will
blend with other revenue that accrues to the account to cover budgeted
expenditures including payment of return to owner.
(iii) After 2, but before 5 full (12 month) borrower fiscal years of
project operation, the borrower may request (in writing) the State
Director's authorization to make a one-time withdrawal of the initial
operating capital, or a part of it. The one-time withdrawal can never
exceed the initial operating capital as described in the loan agreement
or loan resolution. The withdrawal can be approved provided that:
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(A) The project has achieved at least a 95 percent occupancy level
at time of the withdrawal request or achieved a 95 percent occupancy
level for a 12-month period preceding the request and show strong
prospects of retaining at least a 95 percent occupancy level in the
immediate future.
(B) The withdrawal will not affect the financial integrity of the
project. After withdrawal, 10 percent of projected project expenses
should remain in the general operating account in excess of current
liabilities then outstanding. The reserve account must be on schedule
less authorized withdrawals. The borrower must demonstrate that all
prudent maintenance is being planned and performed, and payment of
necessary project expenses are not being deferred.
(C) The State Director determines that the withdrawal will not
necessitate a rent increase during the year of withdrawal or during the
next year of operation, except that rent increases needed because of
normal increases of operation and maintenance expenses unrelated to the
withdrawal may be approved; and
(D) The State Director has reviewed and approved any required
borrower reports before the initial operating capital is withdrawn.
Promptness is expected but actual withdrawal of funds could occur in the
sixth year.
(2) Deposits. All income and revenue from the housing project shall,
upon receipt, be immediately deposited in the general operating account.
This will include rent or occupancy charge receipts, housing subsidy
payments (including HUD section 8 and FmHA or its successor agency under
Public Law 103-354 RA payments), occupancy surcharge monies, laundry
revenue, or any other project income including interest earned on
project accounts. The borrower may also deposit other funds at any time
which are to be used for purposes authorized by this section, including
transfers from the reserve account.
(3) Disbursements. The borrower shall pay or fund the actual,
reasonable, and necessary monthly project expenses out of the general
operating account. Current expenses may include the initial purchase and
installation of furnishings and equipment with any other funds deposited
in the general operating account which are not proceeds of the loan or
income or revenue from the project. (However, nonprofit borrowers are
permitted to use loan funds specified for initial operating capital
purposes as authorized in subparts D and E of part 1944 of this
chapter.) Other authorized disbursements are FmHA or its successor
agency under Public Law 103-354 approved installments of debt service
including occupancy surcharge; real estate tax and insurance escrow as
provided in paragraph XIII B 2 b of this exhibit; reserve, and return on
investment as provided in paragraph XIII B 2 c of this exhibit. In RRH
accounts, any balance remaining in a general operating account, except
as authorized, above, may be retained in this account or transferred to
the reserve account. In RCH accounts, any balance in excess of three
months of average operating expenses remaining in a general operating
account will be transferred into the cooperative's patronage capital
account at the end of the fiscal year.
(4) Unauthorized disbursements. Except for cooperatives, late fees
charged the borrower according to subpart K of part 1951 of this
chapter, may not be paid from project income. When late fees are
deducted by FmHA or its successor agency under Public Law 103-354 from
payments made from project income, the project general operating account
must be reimbursed from nonproject income of the owner or management
agent or deducted from the owner's return on investment.
b Real estate tax and insurance escrow account. According to the
borrower's management plan, project funds for periodic payment(s) of
real estate taxes and real property insurance may be deposited in a real
estate tax and insurance escrow account or held in the general operating
account as cash on hand. The escrow account may be an interest bearing
account. Deposits to the account should be in monthly increments of one-
twelfth of the annual anticipated real estate tax and insurance
payments. Any interest earned shall accrue to the project as project
operational cash income.
c. Reserve account. The reserve account is a required account
subject to the requirements set out in this paragraph. The borrower will
initiate monthly deposits in this project account, preferably an
interest bearing account, starting the same month the first loan payment
is due FmHA or its successor agency under Public Law 103-354. As
projects age, the required reserve account level may be adjusted to meet
anticipated ``life-cycle'' needs, including equipment and facility
replacement costs, by amending the loan agreement/resolution. All RRH,
RCH, and LH borrowers operating projects (i.e., all LH borrowers
exclusive of those on-farm type LH borrowers) are required to establish
a reserve account. Effective as of July 26, 1994, reserve funds will be
required to be placed in a supervised account. The provisions of subpart
A of part 1902 of this chapter apply. Reserve funds on deposit just
prior to this date in instruments which are subject to monetary
penalties for early withdrawal may be temporarily held for the time
needed to avoid such penalties.
(1) Monthly installments. Immediately after paying each installment
for the orderly retirement of the FmHA or its successor agency under
Public Law 103-354 loan, as provided in the borrower's promissory note,
required reserve installments shall be transferred to the Reserve
Account at least at the monthly
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rate stipulated by the borrower's loan agreement or resolution starting
with the date the first payment is due to the Agency. Monthly transfers
will continue until the account reaches the total amount specified in
the loan agreement or resolution. Monthly transfers shall be resumed the
month following withdrawals that decrease the reserve account balance
below its required level until it is restored to the specified total
minimum sum.
(2) Reserve account principles. Reserve account funds are governed
by the following principles:
(i) Primary use. The reserve account is primarily used to meet the
major capital expense needs of a project. It is expected that the
reserve account should rarely have to be used to meet any noncapital
expense need of a project; however, the Servicing Official may approve
such uses when warranted in unusual circumstances (e.g., a cash income
shortfall, using the notice of approval at exhibit B-9 of this subpart).
(ii) Investment vehicles and institutions. Reserve account funds not
immediately needed to pay for expenses for authorized purposes may be
held as set out herein. Reserve account funds may be held in the form of
a checking, savings, negotiable order of withdrawal, or similar account
at a Federally insured domestic institution such as a bank, savings and
loan, or credit union. Reserve account funds may be held in the form of
readily marketable obligations of the United States Treasury Department
(e.g., U.S. Treasury bonds, U.S. Savings bonds, zero coupon bonds, etc.)
at a Federally insured domestic institution or at an insured domestic
institution authorized to sell securities. Reserve account funds may
also be held in the form of an account (the account may be a tax exempt
account or a taxable account) established at an insured domestic
institution authorized to sell securities (the institution may or may
not charge brokerage fees), provided the accounts so established meet
the remaining conditions set out herein and are not used in a
speculative manner.
(iii) Limitations on investments in securities. Any securities must
be backed by the United States (U.S.) Government or an Agency of the
U.S. Government, or be triple A (AAA) rated Government National Mortgage
Association collateralized tax-emempt bonds or be AAA rated prerefunded
bonds. Prerefunded bonds are bonds that originally may have been issued
as general obligation or revenue bonds but are now secured, until the
call date or maturity, by an ``escrow fund'' consisting entirely of
direct U.S. Government obligations that are sufficient for paying the
bondholders.
(iv) Reporting actual costs of securities. In order to assure that
required amounts have been paid into the reserve account, the actual
costs of securities (which in many cases may not be the face value) must
be shown on the project books. In addition, details of these
transactions should be disclosed in footnotes to financial information
provided to the Agency.
(v) Security sales. When the Agency approves withdrawals from the
reserve account and the funds are invested in securities, borrowers
must, to the extent that securities are available, assure that
securities are sold in an amount which results in proceeds sufficient to
cover the disbursement.
(vi) Forecasting security sales. Since the sale or redemption of any
securities may result in cash proceeds of less than the amount invested,
borrowers should take steps to minimize the risk of loss from converting
securities to cash. Needed reserve account withdrawals should be
forecasted well in advance to permit Agency approval of anticipated
needs such that security sales can be arranged to be sold in favorable
market conditions. When sales of securities take place the proceeds will
normally be held in a reserve fund at a domestic bank, savings and loan,
credit union, or similar institution insured by an Agency of the Federal
Government until such time as withdrawals are actually needed for the
purposes authorized. Should unusual circumstances require the sale of
securities in unfavorable market conditions the borrower will not be
required to reimburse the project for any losses incurred.
(vii) Knowledge required of securities investors. Those investing in
securities must be knowledgeable of common industry practices prior to
investing in securities. Knowledge of the various fees that may be
associated with the purchase and sale of securities and the maintenance
of security accounts must be considered when making security investments
(e.g., front end loads or fees, back end loads or fees, maintenance
fees, etc.). Such fees may be paid by the general operating account or
by the reserve account. However, the Agency must give its prior consent
before reserve account funds may be used.
(viii) Financial advisor limitations. Project proceeds may not be
permitted to be used to pay for the services of a financial advisor to
assist in the selecting of securities for investments, since the
securities permitted are relatively limited and must meet the
requirements set out herein. However, normal brokerage fees may be paid
to secure and sell securities. It is recognized that financial advice
may also be provided as part of the normal brokerage fee service package
to consummate the purchase and sale of securities. Separate financial
advisor services fees, apart from normal brokerage fees, are prohibited,
however.
(3) Reserve account tracking. Any deposit and withdrawal from the
reserve account should be recorded on a withdrawal format
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for tracking and reconciliation of the account similar to that found in
exhibit B-10 of this exhibit.
(4) Excess reserve. Any amount in the reserve account which exceeds
the total sum specified in the loan agreement or resolution may be
transferred to the general operating account for the authorized purposes
only when it is agreed between the borrower and FmHA or its successor
agency under Public Law 103-354 to be in excess of the requirement and
there is a specific need for the excess funds. However, the FmHA or its
successor agency under Public Law 103-354 Servicing Official may direct
the excess sum to be retained in the reserve account or applied as an
extra payment on the loan.
(5) Reserve account use. Funds in the reserve account may be used
for purposes in accordance with this paragraph. The borrower will
request withdrawal of reserve funds in a written or confirmed manner
before they are needed. Annual budgets are to include realistic routine
income and expense levels to avoid the need to use the reserve for
routine expenses (operating shortfalls), not caused by emergencies or
very unusual servicing situations; but when needed, use of reserve funds
may be permitted with Agency approval. The Servicing Official will take
prompt action on a request for reserve withdrawal (normally within 5
working days of the request) and provide written authorization to the
borrower for any authorized withdrawal of funds by the use of a letter
in the form of Exhibit B-9 of this subpart (or other similar letter
containing at least the information shown on Exhibit B-9 of this
subpart) before the borrower actually withdraws any funds. Any
conditions for approval (e.g., a copy of paid invoices, inspections,
etc.) will be indicated in the letter. Although the prior consent of the
Government is required for the use of reserve funds, the Servicing
Official may post approve the use of reserve funds if they were used for
authorized purposes and their expenditure would have been approved had a
request for approval been submitted prior to the withdrawal. The
borrower must provide documented evidence showing the actual amount and
use of funds before the post-approval action. Authorized purposes are:
(i) To meet payments due on the loan obligations in the event the
amount for debt service is not sufficient for that purpose.
(ii) To pay cost of repairs or replacements to the housing,
furnishings or equipment or shortfalls of current expenses. Withdrawal
for planned authorized purposes should be approved in advance during the
annual budget approval process.
(iii) To make improvements to the housing project without creating
new living units or to retrofit units to make them accessible to the
physically handicapped.
(iv) For other purposes desired by the borrower, which in the
judgement of the Government will promote the loan purposes, strengthen
the security, or facilitate, improve, or maintain the project and the
orderly collection of the loan without jeopardizing the loan or
impairing the adequacy of the security. Reserve funds may also be used
to facilitate payment of fees associated with the buying or selling of
securities or maintaining a securities account.
(v) To pay a return on investment at the end of the borrower's
project operating year, provided that after such disbursements the
amount in the reserve account will not be less than that required by the
loan agreement or resolution to be accumulated by that time (taking into
consideration the provisions of any approved servicing plan which may be
authorizing a temporary adjustment to these provisions), minus any
authorized withdrawals, and provided that the amount in the reserve
account will likely not fall below that required to be accumulated
during the next 12 months.
(A) In the case of borrowers operating on a limited profit basis, to
pay a return on the borrower's initial investment as identified in the
loan agreement or resolution.
(B) In the case of borrowers operating on a full profit basis, to
pay an annual return as specified in the borrower's loan agreement or
resolution.
(6) Exhibit B-10 of this subpart may be used by the borrower and
FmHA or its successor agency under Public Law 103-354 to record deposits
and withdrawals in the reserve account and to perform reconciliation of
the account to determine the current account balance.
d Management reserve account (patronage capital account). Any funds
in excess of three months of average operating expenses remaining in the
general operating account of an RCH project at the end of the fiscal
year will be transferred and maintained in a lump sum in an interest
bearing patronage capital account and will be handled according to any
state laws governing patronage capital. That amount will then be equally
assigned, by bookkeeping entry only, to each member. The patronage
capital funds will be held by the cooperative in trust for the
respective member until that member terminates membership in the
cooperative, provided the member has paid all charges and costs due the
cooperative. The patronage capital funds will not be used for any other
purpose.
e Security deposit or membership fee account (when applicable).
Upon receipt, all security deposit or membership fee funds collected
shall be recorded in a bookkeeping account that is kept separate from
the project bookkeeping accounts. These funds shall be deposited in a
separate bank account that is kept separate from any project funds and
will be handled according to any state or
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local laws governing security deposits. Funds in the security or
membership fee deposit account shall be used only for authorized
purposes as intended and represented by the project management plan.
They shall be held by the borrower or borrower's management agent in
trust for the respective tenants or members until so used. Any amount of
the security deposit account which is retained by the borrower as a
result of lease or occupancy agreement violations shall be transferred
to the general operating account and treated as income of the housing.
(1) The owner will follow all State and local requirements governing
the handling and disposition of security or membership fee deposits.
(2) In no case will interest earned on security or membership fee
deposits accrue to project management or the owner of a rental project.
Any interest earned but not returned to the tenants, or in the case of a
cooperative, interest earned on membership fees but not returned to
members will, accrue to the project's general operating account for
disposition as outlined in the management plan.
C Borrower reporting requirements. It is the objective of FmHA or
its successor agency under Public Law 103-354 that borrowers will
maintain accounts and records necessary to conduct their operation
successfully and from which they may accurately report operational
results to FmHA or its successor agency under Public Law 103-354 for
review, and otherwise comply with the terms of their loan agreements
with the Agency. Certain reports are necessary to verify compliance with
FmHA or its successor agency under Public Law 103-354 requirements and
to aid the borrower in carrying out the objectives of the loan. Some
reports must be submitted with the FmHA or its successor agency under
Public Law 103-354 payments and others submitted to FmHA or its
successor agency under Public Law 103-354 either monthly, quarterly, or
annually. Exhibits B-6, B-7, and B-8 of this subpart are to be used as a
guide for determining when reports are due and the number of copies
required. Borrower accounts and records will be kept or made available
in a location within reasonable access for inspection, review and
copying by representatives of FmHA or its successor agency under Public
Law 103-354 or other agencies of the U.S. Department of Agriculture
authorized by the Department.
1 Accounting methods and records.
a Method of accounting and financial statements. Borrowers may
choose a cash or accrual method of accounting, bookkeeping and budget
preparation as described in their project management plan. Balance
sheets or statements of financial condition may be prepared reflecting
the same accounting method, except that the accrual method of reporting
financial condition will be used where the borrower is required to
submit an annual audit.
b Approval requirement. Before loan closing or start of
construction, whichever is first, each borrower shall incorporate a
description of its method of accounting, bookkeeping, budget
preparation, and reporting of financial condition and, when applicable,
plans for auditing in the project management plan that must be approved
by FmHA or its successor agency under Public Law 103-354.
c Records. Form FmHA or its successor agency under Public Law 103-
354 1930-5 may be used by small organizations as a method of recording
and maintaining accounting transactions. Automated systems may be used
if they meet the conditions of paragraph XVI of this exhibit.
d Record retention. Each borrower shall retain all financial
records, books, and supporting material for at least 3 years after the
issuance of the audit reports and financial statements. Upon request,
this material will be made available to FmHA or its successor agency
under Public Law 103-354, the Office of Inspector General (OIG), the
Comptroller General, or to their representatives.
2 Management reports and review processes. The objective of
management reports and review processes is to furnish the management and
FmHA or its successor agency under Public Law 103-354 with a means of
evaluating prior decisions and to serve as a basis for planning future
operations and financial conditions. Timely reports and their review
furnish necessary information to make sound management decisions. All
reports will relate only to the FmHA or its successor agency under
Public Law 103-354 financed project and borrower entity. Separate
reports will be prepared and submitted for each project owned by the
same borrower. Forms necessary in making the required reports may be
requested from FmHA or its successor agency under Public Law 103-354.
The various review processes described in this paragraph are illustrated
at paragraph XIII C 3 of this exhibit.
a Annual budget and utility allowance.
(1) Objective. It is the objective of FmHA or its successor agency
under Public Law 103-354 that project budgets and/or utility allowances
be prepared, reviewed, and approved in such manner and timing that the
approved budget and/or utility allowance, including any authorized
changes to same, become effective on the beginning of a fiscal year of
project operation.
(2) Documents.
(i) The annual project budget will be prepared on Form FmHA or its
successor agency under Public Law 103-354 1930-7 by the borrower or its
agent following the instructions on the form. It will reflect budget
planning for a 12 month fiscal year. Figures in the ``actual'' column
will reflect at least 9
[[Page 273]]
months of actual fiscal year activity and no more than 3 months of
estimated activity for the balance of the same fiscal year based on
recent actual experience.
(ii) The housing allowance for utilities and other public services
will be prepared on exhibit A-6 of subpart E of part 1944 of this
chapter. The exhibit A-6 will be prepared by the borrower or its agent
following instructions attached to exhibit A-6 of subpart E of part 1944
of this chapter.
(3) Supporting data. Any data, justification or other documentation
required by the instructions for preparation of Form FmHA or its
successor agency under Public Law 103-354 1930-7 and exhibit A-6 of
subpart E of part 1944 of this chapter, or otherwise required by the
Servicing Official on an individual case basis, shall be attached to the
respective document when submitted to the Servicing Office.
(4) Due date. The borrower can submit the necessary documents as
soon as 9 months of current fiscal year actuals are available, but in
sufficient time to meet the objective stated at C 2 a (1) of this
paragraph. The Servicing Official needs 15 to 30 days to review project
budgets and utility allowances when no changes of rents, occupancy
charges, or utility allowances are needed. When such changes are needed,
the borrower needs to submit documents to allow sufficient time for
review and proper notice of change to tenants or members.
(5) FmHA or its successor agency under Public Law 103-354 review.
Form FmHA or its successor agency under Public Law 103-354 1930-7 and
exhibit A-6 of subpart E of part 1944 of this chapter and any attachment
will be reviewed by the Servicing Office as part of the rental or
occupancy charge/utility allowance change review and/or annual review
process.
b Rental or occupancy charge budget and/or utility allowance
change.
(1) Objective. It is the objective of FmHA or its successor agency
under Public Law 103-354 that changes to project rental or occupancy
charges and/or utility allowances be incorporated into the annual budget
review and planning process in such manner and timing that authorized
changes become effective at the beginning of a fiscal year of project
operation.
(2) Documents. When a rental or occupancy charge and/or utility
allowance change is proposed, the borrower or its agent will prepare and
submit Form FmHA or its successor agency under Public Law 103-354 1930-7
and exhibit A-6 of subpart E of part 1944 of this chapter and any
supporting attachments following the instructions for either document.
(3) Standards and timing.
(i) The policies and procedures governing rental or occupancy charge
and/or utility allowance change are contained in exhibit C of this
subpart, (available in the ``Borrower Handbook'' or any FmHA or its
successor agency under Public Law 103-354 office).
(ii) To meet the projected effective date of change, the necessary
documents need to be received by the Servicing Official at least 75 days
ahead to allow FmHA or its successor agency under Public Law 103-354
review and allow for a 60-day notice to tenants or members of an
impending change. The ``actual'' column of Form FmHA or its successor
agency under Public Law 103-354 1930-7 shall contain actual data for the
fiscal year to date plus the projection of expected data for the
remainder of the fiscal year. This projection should cover a period not
exceeding 90 days. The same supporting data standards of paragraph XIII
C 2 a (3) of this exhibit will apply.
(iii) Should the borrower need to request a rental or occupancy
charge and/or utility allowance change at some time other than described
at paragraph XIII C 2 b(3)(ii) of this exhibit (e.g., mid-fiscal year),
the Form FmHA or its successor agency under Public Law 103-354 1930-7
shall reflect the project's financial needs for the next 12 months of
operation and the ``actual'' column shall reflect the most recent 12
months of actual data. The previous fiscal year's audit report, or Form
FmHA or its successor agency under Public Law 103-354 1930-8, as
appropriate, shall be submitted with the change request if it was not
previously submitted to the Servicing Office.
(4) FmHA or its successor agency under Public Law 103-354 review.
Exhibit C of this subpart shall govern FmHA or its successor agency
under Public Law 103-354 review of the borrower's request for rental or
occupancy charge and/or utility allowance change.
c Quarterly report.
(1) Objective. The objective of FmHA or its successor agency under
Public Law 103-354 is for quarterly reports to provide a monitoring
means for borrowers and FmHA or its successor agency under Public Law
103-354 to mutually check a borrower's progress in achieving program
objectives and when applicable, meeting servicing goals. The Servicing
Official may require monthly reports rather than quarterly reports when
warranted in unusual situations.
(2) Document. Form FmHA or its successor agency under Public Law
103-354 1930-7 will be used by borrowers to prepare the quarterly
report.
(3) Standards.
(i) For quarterly reports, Form FmHA or its successor agency under
Public Law 103-354 1930-7 will be completed following the instructions
on the form for preparation of a quarterly report. The quarterly report
shall be required upon commencement of any of the following situations:
(A) Start-up of initial occupancy after completion of new
construction or substantial rehabilitation.
[[Page 274]]
(B) Reamortization, transfer of an existing project loan or a 100-
percent membership change.
(C) Failure to make a scheduled loan payment, failure to maintain
required transfers to the reserve account, or failure to maintain
reserve accounts at authorized current levels.
(ii) For monthly reports, Form FmHA or its successor agency under
Public Law 103-354 1930-7 will be completed following the instructions
on the form for preparing a monthly report. The monthly report may be
invoked:
(A) When determined essential by the Servicing Official as part of a
servicing plan made in accordance with exhibit F of subpart B of part
1965 of this chapter (available in any FmHA or its successor agency
under Public Law 103-354 office).
(B) When there are factors such as apparent violations of policy or
reporting practices, audit findings, sudden increases of vacancy and/or
accounts payable or receivables, or other evidence of weak financial
condition.
(4) Frequency and discontinuance of quarterly and monthly reports.
(i) Reports shall be prepared and submitted at least through the
first year of operation for any situation described in paragraph XIII C
2 c (3) of this exhibit and each quarter or month thereafter for new or
existing projects until discontinuance is authorized by the Servicing
Official. The Servicing Official will evaluate the following in reaching
a decision to discontinue:
(A) The project has been operated and maintained in a satisfactory
manner during the most recent 6 months of the required reporting period.
(B) An adequate accounting system is functioning properly, is kept
current, and the most recent required annual financial reports are
complete and have been submitted to the Servicing Office.
(C) Project loan payments to FmHA or its successor agency under
Public Law 103-354 are on schedule.
(D) The project reserve account is ahead or on schedule, allowing
for authorized expenditures or authorized reduction in funding as set
forth in an approved servicing plan or budget.
(E) The annual review has been completed by the Servicing Office and
the annual audit, or verification of review when appropriate, has been
found acceptable.
(F) The Servicing Official has inspected the project, reviewed
project operations, and found them acceptable. If a determination is
made to discontinue, a letter shall be sent to the borrower or its agent
with a copy sent to the State Director.
(ii) The reporting and audit requirements of paragraphs XIII C 2
c(4)(i)(B) and (E) do not apply when the most recent 6 continuous months
of successful operation occur before the first audit and/or annual
review is due.
(5) Due date. Quarterly (or monthly) reports shall be due in the
FmHA or its successor agency under Public Law 103-354 Servicing Office
by the 20th day of the month immediately following the close of the
respective reporting period.
(6) FmHA or its successor agency under Public Law 103-354 review.
(i) The Servicing Official will review the reports for year-to-date
status of project operations. When reports reveal actual data that
exceeds acceptable tolerance from a forecasted budget Subtotal item, or
vacancies and accounts receivable and/or payable are increasing, the
Servicing Official will initiate verbal and/or written dialogue with the
borrower for further resolution of problems or to otherwise achieve
acceptable progress.
(ii) The Servicing Official will complete the FmHA or its successor
agency under Public Law 103-354 review and forward the borrower's report
and any related documentation to the State Director by the 30th day of
the month following close of the reporting period.
(iii) If the borrower fails to submit its report by the due date,
this fact will be reported to the State Director by the 30th day of the
month following the close of the reporting period; otherwise, the
Servicing Office will complete its review of a submitted report no later
than 10 calendar days following receipt of the borrower's report.
d Annual audit reports and verifications of review.
(1) Documents and general standards.
(i) Annual audit report. An audit report will be in the format as
prepared by a CPA or Licensed Public Accountant (LPA), provided the LPA
was licensed on or before December 31, 1970.
(A) All audits are to be performed in accordance with generally
accepted government auditing standards or GAGAS, as set forth in
``Government Auditing Standards'' (1988 Revision), established by the
Comptroller General of the United States, and any subsequent revisions
(this publication is commonly referred to as the ``Yellow Book'' or
``Government Accounting Office Standards''). In addition, the audits are
also to be performed in accordance with applicable portions of various
Office of Management and Budget (OMB) Circulars, Departmental
Regulations, parts 3015 and 3016 of chapter XXX of title 7, and the FmHA
or its successor agency under Public Law 103-354 Audit Program as
specified in separate sections of this subpart.
(B) An audit report is required for any project with 25 or more
units unless the State Director or Servicing Official determines that a
project with 24 or fewer units requires an audit for reasons of good
cause.
[[Page 275]]
Such reasons include, but are not limited to, situations where project
records are incomplete or inaccurate, or it appears that the borrower
has not adequately accounted for project funds, or where the borrower's
operation consists of multiple projects where each is 24 or fewer units
(with subsidy reports prepared for each project). (Note: The State
Director or Servicing Official may require that the accounts of RHS
borrowers be audited if the loan exceeds the 2-year repayment term.)
(C) The project audit report should cover the borrower entity and
the expense for preparation of the audit report may include the
auditor's preparation of any IRS required borrower entity reports (i.e.,
Schedule K-1 (IRS Form 1065), ``Partner's Share of Income, Credits,
Deductions, etc.'').
(D) The CPA or LPA auditor who prepares the audit report may not be
an individual or organization that is associated with the borrower in
any manner, other than the performance of the audit review and
preparation of the project audit report and required IRS reports, that
creates an identity of interest or possible conflict of interest (as
described in paragraph V B of this exhibit. For example, the CPA or LPA
auditor may not be an employee of the borrower or an employee of any
officer of the organization, nor be an employee of any member,
stockholder, partner, principal, or have any ownership or other interest
in the borrower organization.
(E) The State Director or Servicing Official may authorize the
initial audit report to cover a period up to 18 months for new projects
whose first operating year does not exceed 6 months.
(F) The State Director may also make an exception to the CPA or LPA
audit requirement for not more than one successive year in a specific
case providing: the borrower submits a written request; the FmHA or its
successor agency under Public Law 103-354 approved budget for the
project includes a typical and reasonable fee for the audit but the
negotiated cost of an audit would increase the monthly per unit rental
rate by more than $4.00; and the required reports, including a CPA or
LPA prepared audit, were properly submitted for the prior year's project
operations.
(ii) Verification of review. Form FmHA or its successor agency under
Public Law 103-354 1930-8 will be prepared by a competent person
qualified by education and/or experience who has no identity of interest
or possible conflict of interest with the borrower or its principals.
However, in the case of a nonprofit institution, the verification of
review may be made by a committee of the membership but may not include
any officer, director, or employee of the borrower.
(A) Form FmHA or its successor agency under Public Law 103-354 1930-
8 will be used for the verification of review of project accounts and
the review verifier will also review the actual data on Form FmHA or its
successor agency under Public Law 103-354 1930-7 for projects with 24 or
fewer units unless the requirements of paragraph XIII C 2 d(1)(i)(A) of
this exhibit are invoked by the State Director or Servicing Official.
(B) The State Director or Servicing Official may authorize the
initial verification of review to cover a period up to 18 months for a
new project whose first operating year was less than 6 months.
(iii) Project operating budget actuals. An annual report of actuals
for the full operating year will be submitted by the borrower, or its
agent, using Form FmHA or its successor agency under Public Law 103-354
1930-7. The report will reflect the actual income and expenses for the
project for the borrower's 12-month operating year. The report will be
submitted with the annual audit report or Form FmHA or its successor
agency under Public Law 103-354 1930-8, as appropriate.
(iv) Form FmHA or its successor agency under Public Law 103-354
1930-10, ``Annual Multiple Family Housing Project Review.'' When the
annual audit report or verification of review is received, Parts II C
and D of Form FmHA or its successor agency under Public Law 103-354
1930-10 may be prefilled to the extent possible to record previous year
status as reported in the audit report or verification of review. The
Form FmHA or its successor agency under Public Law 103-354 1930-10 will
be completed later as described in Sec. 1930.123(e)(2) and (i) of this
subpart.
(v) Fraud, abuse, and illegal acts. If the review verifier becomes
aware of any indication of fraud, abuse, or illegal acts in FmHA or its
successor agency under Public Law 103-354 financed projects, prompt
written notice shall be given to the appropriate Servicing Official.
(2) Specific standards.
(i) State and local governments and Indian tribes. These
organizations are to be audited in accordance with this subpart, 7 CFR
part 3015, and OMB Circular A-128, with copies of the audit being
forwarded by the borrower to the Servicing Official and the appropriate
Federal cognizant agency, if applicable. For guidance in meeting these
requirements, the auditor may refer to the American Institute of
Certified Public Accountants Audit and Accounting Guide for ``Audits of
State and Local Governmental Units.'' The term Federal financial
assistance used herein shall mean Federal loan and/or grant funds
received by the borrower, but not rental subsidies.
(A) Cognizant agency. (1) ``Cognizant agency'' means the Federal
agency assigned by OMB Circular A-128. Within the U.S. Department of
Agriculture (USDA), the USDA OIG shall fulfill cognizant agency
responsibilities.
[[Page 276]]
(2) 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 or its successor agency
under Public Law 103-354 provided the major portion of Federal financial
assistance, the appropriate USDA OIG Regional Inspector General shall be
contacted.
(B) Audit standards. 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.
(1) State and local governments and Indian tribes that receive
$100,000 or more a year in Federal financial assistance shall have an
audit made in accordance with OMB Circular A-128.
(2) State and 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 the FmHA or its successor agency under Public Law 103-
354 Audit Program. This is an option of the State and local government
or Indian tribe. If the election is made to have an audit performed in
accordance with the FmHA or its successor agency under Public Law 103-
354 Audit Program, the audit shall be in accordance with paragraph XIII
C 2 d(2)(iii) of this exhibit.
(3) State and local governments and Indian tribes that receive less
than $25,000 a year in Federal financial assistance shall be exempt from
compliance with OMB Circular A-128 and the FmHA or its successor agency
under Public Law 103-354 Audit Program. These State and local
governments and Indian tribes shall be governed by audit standards
prescribed by State and local law or regulation.
(4) Public hospitals and public colleges and universities may be
excluded from OMB Circular A-128 audit standards. If such entities are
excluded, audits shall be made in accordance with paragraph XIII C 2
d(2)(ii) of this exhibit.
(5) Indications of fraud, abuse, and illegal acts shall be referred
to FmHA or its successor agency under Public Law 103-354 for processing
in accordance with paragraph XIII C 2 d(1)(v) of this exhibit.
(ii) Nonprofit institutions. These organizations are to be audited
in accordance with this subpart, 7 CFR part 3015, and OMB Circular A-
133, with copies of the audit being forwarded by the borrower to the
Servicing Office and the appropriate Federal cognizant agency, if
applicable. The term Federal financial assistance used herein shall mean
Federal loan and/or grant funds received by the borrower, but not rental
subsidies.
(A) Cognizant agency. See paragraph XIII C 2 d(2)(i)(A) of this
exhibit.
(B) Audit standards.
(1) Nonprofit institutions that receive $100,000 or more a year in
Federal financial assistance shall have an audit made in accordance with
the provisions of OMB Circular A-133. However, nonprofit institutions
receiving $100,000 or more but receiving awards under only one program
have the option of having an audit of their institution prepared in
accordance with the provisions of the OMB Circular A-133 or having an
audit made of the one program in accordance with paragraph XIII C 2
d(2)(iii) of this exhibit. For prior or subsequent years, when an
institution has only loan guarantees or outstanding loans that were made
previously, the institution will be required to conduct audits for those
programs in accordance with paragraph XIII C 2 d(2)(iii) of this
exhibit.
(2) Nonprofit institutions that receive at lease $25,000 but less
than $100,000 a year in Federal financial assistance shall have an audit
made in accordance with OMB Circular A-133 or in accordance with the
FmHA or its successor agency under Public Law 103-354 Audit Program. If
the election is made to have an audit performed in accordance with the
FmHA or its successor agency under Public Law 103-354 Audit Program, the
audit shall be performed in accordance with paragraph XIII C 2 d(2)(iii)
of this exhibit.
(3) Nonprofit institutions receiving less than $25,000 a year in
Federal financial assistance are exempt from Federal audit standards,
but records must be available for review by appropriate officials of
FmHA or its successor agency under Public Law 103-354.
(C) Fraud, waste, and abuse. Indications of fraud, abuse, and
illegal acts shall be processed in accordance with paragraph XIII C 2
d(1)(v) of this exhibit.
(iii) FmHA or its successor agency under Public Law 103-354 Audit
Program. For-profit organizations and other entities referred to this
paragraph by paragraphs XIII C 2 d(2)(i) and/or (ii) of this exhibit,
audits will be performed under the guidance of the audit guide entitled
``U.S. Department of Agriculture, Farmers Home Administration or its
successor agency under Public Law 103-354-Audit Program'' (available in
any FmHA or its successor agency under Public Law 103-354 office).
(3) Due date. (i) Annual audit reports and verifications of review,
as appropriate, and Form FmHA or its successor agency under Public Law
103-354 1930-7 with 12 months of project operation actuals are due in
the Servicing Office no later than 90 days following the close of the
project fiscal year.
(ii) If the audit or verification of review and Form FmHA or its
successor agency under Public Law 103-354 1930-7 with 12 months of
project operation actuals cannot
[[Page 277]]
be submitted by the due date, and the owner presents a request for
extension supported by evidence that delay is at the request of the
auditor, and the request has a reasonable explanation of why an
extension of the due date is needed, the Servicing Official may
authorize up to a 30-day extension of the due date.
(iii) If an explanation is not forthcoming from the auditor, or the
explanation received is without good reason, or the Servicing Official
otherwise suspects fiscal difficulty, the Servicing Official may request
the borrower to submit to the Servicing Office for review, the project
bank statements for the general operating, reserve, and investment
accounts covering the most recent 60-day period.
(iv) If the borrower fails to submit the requested bank statements
by the date stipulated by the Servicing Official, the Servicing Official
will immediately refer the matter to the OIG.
(4) FmHA or its successor agency under Public Law 103-354 review. An
audit report or verification of review and Form FmHA or its successor
agency under Public Law 103-354 1930-7 with 12 months of project
operation actuals will be reviewed by the Servicing Official within 60
days following receipt of the audit report or verification of review.
From this annual audit review process, the Servicing Official will
initiate action on findings and concerns needing immediate attention.
Those findings and concerns not needing immediate action will be
considered in the next budget planning and annual review process at the
end of the fiscal year for implementation in the following fiscal year
of project operation.
e Miscellaneous management reports. These reports include, but are
not limited to, the following items that provide additional or unique
information that augment or otherwise support other management reports
described in this section:
(1) Documents and formats. (i) Minutes of annual meetings. Written
record of annual meeting of organizational borrowers who, by their
organizational charter, are required to maintain such written records.
(ii) Energy audit. Prepared according to the guidance of exhibit D
of this subpart. Energy audits, including implementation plans for
energy conservation, are prepared and submitted on multi-year cycles.
(iii) Miscellaneous items. These include other written or
electronically stored data or information such as financial or income/
expense data, justification statements, or other technical or
informative material that stands alone or supports other managements
reports described in this section, whether volunteered by the borrower
or requested by the Servicing Official.
(2) Due date. Annual minutes and miscellaneous items are due along
with the report they are attached to as supporting documentation. New
energy audits are due with the next submission of Form FmHA or its
successor agency under Public Law 103-354 1930-7 following expiration of
the old energy audit.
(3) FmHA or its successor agency under Public Law 103-354 review.
FmHA or its successor agency under Public Law 103-354 review of
miscellaneous management reports will coincide with review of the
management report that each is attached to as documentation.
f Project worksheets.
(1) Submit Form FmHA or its successor agency under Public Law 103-
354 1944-29, with the payment to the Servicing Office. This form must be
submitted each month to report overage, occupancy surcharge, and/or
request RA, even if a loan payment is not submitted. This form reflects
occupancy in the project as of the first day of the month preceding the
payment due date. The form will be retained indefinitely.
(2) For LH projects, Form FmHA or its successor agency under Public
Law 103-354 1944-29 will be submitted monthly for the LH tenants who
receive RA. Otherwise, the Form FmHA or its successor agency under
Public Law 103-354 1944-29 covering all LH tenants will be submitted to
FmHA or its successor agency under Public Law 103-354 at least once
annually with the annual reports. The form will be retained
indefinitely.
(3) Illustration of MFH budget planning, annual review, and annual
audit review cycles.
----------------------------------------------------------------------------------------------------------------
Last quarter of First quarter of
Items on hand during fiscal year fiscal year next FY Second quarter
----------------------------------------------------------------------------------------------------------------
Management Reports/items in Budget Planning Annual audit FmHA or its File annual audit
borrower casefile. Process Form FmHA preparation by successor agency or Form FmHA or
--Previous fiscal year annual or its successor auditor or Form under Public Law its successor
audit or Form FmHA or its agency under FmHA or its 103-354 review of agency under
successor agency under Public Public Law 103- successor agency annual audit or Public Law 103-
Law 103-354 1930-8.. 354 1930-7 & under Public Law Form FmHA or its 354 1930-8 for
util. allowance 103-354 1930-8 by successor agency next budget
Review change or verifier. under Public Law planning & annual
no change of 103-354 1930-8 60- review process.
rents or day review period.
occupancy charges
and/or utility
allowance.
[[Page 278]]
--Exhibit A-1
--Latest supervisory visit/ FmHA or its Form FmHA or its FmHA or its
inspection. successor agency successor agency successor agency
under Public Law under Public Law under Public Law
103-354 starts 103-354 1930-7 103-354 completes
annual review showing 12 months annual review
process. of project process.
operating actuals
submitted by
borrower.
--Energy audit & implementation --Form FmHA or its .................. FmHA or its
plan. successor agency successor agency
--Compliance review............. under Public Law under Public Law
--Management plan............... 103-354 1930-7. 103-354 may
--Management agreement.......... --Review project prefill Parts II
financial and C and D of Form
management FmHA or its
reports.. successor agency
under Public Law
103-354 1930-10.
--Identity of Interest (IOI) FmHA or its .................. Take immediate
Disclosure Certificate, Form successor agency action on
FmHA or its successor agency under Public Law significant items
under Public Law 103-354 1944-- 103-354 completes found in the
30 and Identity of Interest Form FmHA or its Audit Review.
(IOI) Qualification Form, Form successor agency
FmHA or its successor agency under Public Law
under Public Law 103-354 1944-- 103-354 1930-10.
31.
Other--as applicable
----------------------------------------------------------------------------------------------------------------
D Financial and management analysis. Financial and management
analysis provides information on the status of the project's operation.
Regular analysis by the borrower and/or FmHA or its successor agency
under Public Law 103-354 can help identify strengths, weaknesses, and
reasonableness of income and expenses so that appropriate corrective
actions can be taken. Some methods of analysis FmHA or its successor
agency under Public Law 103-354 encourages are:
1 Budget analysis: Using quarterly (or monthly if deemed necessary)
and annual reports, the borrower or project manager compares actual
income and expenses with the budgeted amounts. Any differences between
the budget and actual figures indicate areas of the project operation
where the manager may need to focus added attention and/or take
corrective action.
2 Ratio analysis: Ratios are an effective tool for financial
analysis. They prescribe various measures of actual operating
performance. FmHA or its successor agency under Public Law 103-354 and
borrowers should develop a data base of recorded ratios for comparative
analysis. Some useful ratios are:
[[Page 279]]
[GRAPHIC] [TIFF OMITTED] TC05SE91.001
XIV Termination and Eviction: Borrowers and project managers should
actively develop ways and means to avoid forced termination of leases or
occupancy agreements and the eviction of tenants or members by
considering the following:
A Entitlement to continued occupancy.
1 General. The borrower or project manager may terminate or refuse
to renew any occupancy only for material noncompliance with the lease or
occupancy agreement or other good cause such as:
a Noneligibility for tenancy.
b Action or conduct of the tenant or member which disrupts the
livability of the project by being a direct threat to the health or
safety of any person, or the right of any tenant or member of the quiet
enjoyment of the premises and related project facilities, or that
results in substantial physical damage causing an adverse financial
effect on the project, or the property of others, Except when such
threat can be removed by applying a reasonable accommodation.
c Expiration of the lease or occupancy agreement period is not
sufficient grounds for eviction of a tenant or member.
2 Material noncompliance. Material noncompliance with the lease or
occupancy agreement includes:
a One or more substantial violations of the lease or occupancy
agreement; or
b Nonpayment or repeated late payment of rent or occupancy charge
or any other financial obligation due under the lease or occupancy
agreement (including any portion thereof) beyond any grace period
constitutes a substantial violation; or
c Admission to or conviction for use, attempted use, possession,
manufacture, selling, or distribution of an illegal controlled substance
that:
(1) is conducted in or on the premises by the tenant or someone
under the tenant's control.
[[Page 280]]
(2) is allowed to happen by a household member or guest because the
tenant has not taken reasonable steps to prevent or control such illegal
activity; or because the tenant has not taken steps to remove the
household member or guest who is conducting the illegal activity.
(3) It is not the intent that this provision of material lease
violation apply to innocent members of the tenant's household who are
not engaged in the illegal activity, nor are responsible for control of
another household member or guest. It is the intent that such innocent
persons can remain in the dwelling unit if an otherwise eligible
household remains or can be formed.
3 Other good cause.
a Repeated minor violations of the lease or occupancy agreement
which disrupt the livability and harmony of the project by adversely
affecting the health or safety of any person, or the right of any tenant
or member to the quiet enjoyment of the leased premises and the related
project, or that have an adverse financial effect on the project.
b The borrower or project manager must base their decision on
current objective data, not on supposition that the tenant may or could
pose a harm or threat to other persons or property.
c Conduct cannot be considered as other good cause unless the
borrower or project manager has given the tenant or member prior notice
that the conduct will constitute a basis for termination of occupancy.
4 Rent overburden.
a Any tenant household (except those receiving Section 8 benefits)
paying more than the contribution levels cited in paragraphs IV A 2 c
(1), (2), or (3) of this exhibit toward rent, including utilities, is
considered to be experiencing rent overburden that may jeopardize a
tenant's ability to maintain occupancy.
b Whenever a tenant is experiencing rent overburden, borrowers are
encouraged to utilize any available and compatible governmental or
private rental subsidies including FmHA or its successor agency under
Public Law 103-354 RA and/or interest credit; or to inform tenants where
they may apply for Section 8 housing assistance to minimize termination
of tenancy.
c With reference to FmHA or its successor agency under Public Law
103-354 RA or interest credit, no further action by the borrower is
necessary if the borrower has already requested RA in conjunction with a
previous rental or occupancy charge change request.
d For purpose of this provision, the term ``rent overburden'' also
refers to occupancy charges paid by cooperative members.
5 Tenant or member benefits during termination through eviction.
a Continued occupancy. Tenant or member households may continue
occupancy through the specified termination date, or if judicial action
is initiated to evict, to the specified date in a court order for
eviction. In addition, this policy applies when a tenant or member has
filed a discrimination complaint and a final decision on the complaint's
resolution is awaited from the Department's Office of Advocacy and
Enterprise or the Department of Housing and Urban Development.
b Rental subsidy. During termination, RA payments and/or interest
credit and occupancy surcharge will be administered following this
outline according to type of situation:
(1) Failure to recertify.
(i) If failure to recertify is the fault of the tenant or member:
(A) The borrower will charge the tenant or member note rate rent or
occupancy charge, and occupancy surcharge during the period of occupancy
with an expired certification and will remit collected overage and
occupancy surcharge to the Servicing Office.
(B) If the tenant or member does not pay rent or occupancy charge
and occupancy surcharge during this period, the project will not be
required to pay overage or to pay the occupancy surcharge.
(ii) The borrower will send a copy of the termination notice to the
Servicing Official, together with a copy of the ``90 day'' and ``30
day'' letters sent to the tenant.
(iii) The Servicing Official will suspend payment of any RA until
the recertification process is completed; otherwise until the tenant or
member moves out or is evicted by court order, whichever occurs first.
(iv) The Servicing Official will annotate the next processed project
master list with an ``E'' for expiration in column 5 of Part II of Form
FmHA or its successor agency under Public Law 103-354 1944-29 for the
appropriate tenant(s) or member(s).
(v) If failure to recertify is the fault of the borrower or
management, through no fault of the tenant or member:
(A) The Servicing Official will advise the borrower or management to
rescind the notice of termination.
(B) Overage will be paid from project funds or by the management
agent, depending on the provisions of the management plan and management
agreement.
(C) Until a new tenant certification is effective, the tenant shall
continue to pay the rent or occupancy charge established by the expired
tenant certification, as well as the occupancy surcharge.
(vi) If the termination process is nullified, either by completing
the recertification process, by judicial action or the resolution of a
discrimination complaint, the Servicing Official will restore RA and
request RA payment retroactive to the date it was withheld, based on the
newly verified tenant certification. If the termination process ends
with
[[Page 281]]
voluntary tenant/member move-out or court ordered eviction, whichever
occurs first, the RA will be assigned to the next tenant or member that
is RA eligible at the time of the move-out or eviction.
(2) Lease violation.
(i) The borrower will send a copy of the termination notice to the
Servicing Official.
(ii) The Servicing Official will annotate the next processed project
master list with a ``T'' for termination in column 5 of Part II of Form
FmHA or its successor agency under Public Law 103-354 1944-29 for the
appropriate tenant(s) or member(s).
(iii) The Servicing Official will continue to authorize RA for the
tenant or member.
(iv) The borrower will continue to charge and collect the rental or
occupancy charge rate established by the tenant's or member's current
tenant certification, as well as the occupancy surcharge.
(v) If the termination process is nullified, either by resolution of
the lease violation or by court action, normal tenant/member status
resumes. If the termination ends with tenant/member move-out or court
ordered eviction, whichever occurs first, the RA will be assigned to the
next tenant or member that is RA eligible at the time of the move-out or
eviction.
(vi) If the tenant certification expires while a notice of
termination for lease violation or good cause is in effect (i.e.,
litigation is pending):
(A) The borrower will continue to assess the rent or occupancy
charge and occupancy surcharge to the tenant/member at the rates
established by the expired tenant certification, through such time the
court has rendered a decision, or the tenant/member has moved out,
whichever occurs first. (Note: the tenant/member must pay the rent or
occupancy charge and occupancy surcharge into an escrow account pending
the outcome of litigation.)
(B) The project will not be required to pay overage or the occupancy
surcharge.
(C) Should the court deny the termination and order reinstatement of
occupancy, the borrower shall promptly complete the recertification
process as of the current time to become effective as soon as possible,
collect the due rent or occupancy charge and reimbursement for occupancy
surcharge, and request RA retroactive to the date it was suspended.
B Notice of lease or occupancy agreement violation. A notice of
lease or occupancy agreement violation is prepared and issued by the
borrower or authorized representative. Any such notice must be based on
material violation of the lease or occupancy agreement terms or for
other documented good cause as determined by the borrower or the project
manager.
1 The notice of lease or occupancy agreement violation will be
handled according to the terms of the lease or occupancy agreement.
Tenants or members will be given prior notice of lease or occupancy
agreement violation according to State or local law. The notice must:
a Refer to relevant provisions in the lease or occupancy agreement.
b State the violations with enough information describing the
nature and frequency of the problem to enable the tenant or member to
understand and correct the problem. In those cases where the lease or
occupancy agreement violation is due to the tenant's failure to pay rent
or the member's failure to pay occupancy charge, a notice stating the
dollar amount of the balance due on the rent or occupancy charge account
and the date of such computation shall satisfy this requirement.
c State that the tenant or member will be expected to correct the
lease or occupancy agreement violation by a specified date.
d State that the tenant or member may informally meet with the
borrower or borrower representative to attempt to resolve the stated
violation before the date of corrective action specified in the notice.
e Advise the tenant or member that if he or she has not corrected
the stated violation by the date specified, the borrower may seek to
terminate the lease or occupancy agreement by bringing forth a judicial
action, at which time the tenant or member may present a defense.
2 The notice shall be accomplished by: sending a letter by first
class mail to the tenant or member at his or her address at the project;
or by serving a copy of the notice on any adult person answering the
door at the dwelling unit, or if no adult responds, by placing the
notice under or through the door, if possible, or by affixing the notice
to the door. Service shall not be deemed effective until either method
of notice as described herein has been accomplished. The date on which
the notice shall be deemed to be received by the tenant or member shall
be the date on which the required first class letter is mailed, or the
date on which the notice provided for in this paragraph is properly
given, whichever method of service is used.
C Notice of termination.
1 Upon failure by the tenant or member to meet the condition(s) or
correct the violation(s) stated in the notice of lease or occupancy
agreement violation by the date specified, the tenant or member will be
notified that the occupancy is terminated and that eviction is being
sought through the appropriate judicial process according to State or
local law.
2 The notice of termination is prepared and issued by the borrower
or its authorized representative in accordance with the prior notice
requirements and provisions of State or local law.
[[Page 282]]
3 If State or local law is silent or otherwise not explicit, the
notice must state the reason and basis for the termination of occupancy
(i.e., material or other good cause violation, or both).
4 The notice of termination must include the location and regular
office hours during which the tenant or member (or counsel) may view its
file and copy any information it contains to aid in the tenant's
member's defense.
5 The notice will be accomplished in the same manner described at
paragraph XIV B 2 of this exhibit.
6 A copy of the notice of termination will simultaneously be
forwarded to the Servicing Office.
7 In those states where the notice of lease or occupancy agreement
violation automatically becomes the notice of termination after a
prescribed period of time, the requirements of the notice of termination
have been met.
D Servicing Official review.
1 Upon receipt of a copy of notice of termination, the Servicing
Official shall promptly review the notice for technical compliance with
paragraph XIV C of this exhibit and any applicable State Supplements.
The Servicing Official will not review the notice for the merits of the
action, nor express any opinion on the merits of the action (this
responsibility resides with the State or local court).
2 No further action is required if the notice of termination meets
technical requirements of preparation.
3 If the notice of termination fails to meet the technical
requirements of preparation, the Servicing Official will:
a Inform the borrower how the notice of termination failed to meet
the technical requirements of preparation,
b Inform the borrower to cease the action,
c Inform the borrower that it may reissue a new revised notice of
termination if the borrower believes the conditions still warrant such
action, and
d Send to the tenant a copy of the Servicing Official's letter that
was sent to the borrower.
E Notice of eviction. A notice of eviction is prepared and issued
by a court of law, not the borrower or its authorized representative.
Eviction will be carried out as specified by the terms of the eviction
notice and court order.
XV SECURITY SERVICING: Security servicing, as referenced in this
exhibit, concerns the borrower's general responsibilities in relation to
the loan agreement or resolution, note, mortgage, and other loan
documents. It does not deal with security items between the borrower and
the tenants or members. FmHA or its successor agency under Public Law
103-354 will look to the borrower to fulfill its obligation according to
the requirements of the loan agreement or resolution, note, mortgage,
and other legal or closing documents. Some items of special emphasis
are:
A Fidelity coverage. It is the borrower's overall responsibility as
described in the management plan to see that fidelity coverage is in
place on any personnel entrusted with the receipt, custody, and
disbursement of any project monies, securities, or readily saleable
property other than money or securities. The borrower should have
fidelity coverage in force as soon as there are assets within the
organization and it must be obtained before any loan funds or interim
financing funds are made available to the borrower. Coverage must be
from a company licensed to provide coverage in the state where the
project is located. Fidelity coverage obtained should utilize standard
industry forms copyrighted by an organization such as the American
Association of Insurance Services, or AAIS; Insurance Services Office,
Inc., or ISO; or the Surety Association of America, or SSA. Use of the
following guidelines will meet the administrative intent of FmHA or its
successor agency under Public Law 103-354:
1 Fidelity coverage policies must declare in the insuring
agreement(s) that the insurance company will provide protection to the
insured against the loss of project money, securities, and property
other than money and securities, through any criminal or dishonest act
or acts committed by any ``employee,'' whether acting alone or in
collusion with others, not to exceed the amount of indemnity stated in
the declaration of coverage. The FmHA or its successor agency under
Public Law 103-354 minimally requires any insuring policy to include an
insuring agreement that covers employee dishonesty.
2 The types of coverage policies acceptable to FmHA or its
successor agency under Public Law 103-354 are:
a Blanket crime policy. This type of policy usually provides the
broader fidelity coverage and economy of cost options. Premiums are
subject to discount based on the level of internal control exercised by
the insured operation. This type of policy can provide the following
insuring agreements:
(1) Employee dishonesty--Form A, Blanket. (Required)
(2) Loss inside the premises--Money and Securities Broad Form.
(Recommended)
(3) Loss outside the premises--Money and Securities Broad Form.
(Recommended)
(4) Depositor's forgery or alteration. (Recommended)
b Fidelity bond. Fidelity bonds limit coverage only to employee
dishonesty. Fidelity bonds are generally used when one or two employees
are covered. Premiums are based on established rate charges that are
usually greater than for blanket crime policies.
[[Page 283]]
(1) Schedule and position bonds. A schedule bond covers a named
employee and is acquired with each change of employment. A position bond
covers a named position of responsibility and permits continuous
coverage even though the person holding that position changes. Of the
two, a position bond is preferred by FmHA or its successor agency under
Public Law 103-354.
(2) Blanket bonds. Blanket bonds cover all employees in either of
two forms:
(i) Commercial blanket bond (Form A). This bond limits coverage to
each loss, irrespective of how many persons are involved. This form of
bond is available on a ``standard'' basis.
(ii) Blanket position bond (Form B). This bond limits coverage to
each employee, hence it can provide greater protection if there is
collusion of two or more persons. This is a nonstandard form of bond
available from some insurance companies who use their own individualized
forms.
3 The FmHA or its successor agency under Public Law 103-354
requires only an endorsement listing all FmHA or its successor agency
under Public Law 103-354 financed properties and their locations covered
under the policy or bond. The policy or bond may also include properties
or operations other than FmHA or its successor agency under Public Law
103-354 financed properties on separate endorsement listings.
4 Individual or organizational borrowers will have fidelity
coverage when they have employees with access to project assets as cited
in paragraph XV A of this exhibit; otherwise, a management company with
exclusive access to the borrower's assets will have the fidelity
coverage.
5 Borrowers who use a management agent with exclusive access to
project assets as cited above will require the Agent to have fidelity
coverage on all principals and employees with access to the project
assets. Should active management revert to the borrower, the borrower
will obtain fidelity coverage as specified in XV A 1 of this paragraph
as a first course of business.
6 Fidelity coverage is not required when a loan is made to an
individual (a natural person) or a General Partnership and that person
or general partner will be responsible for a project's financial
activities. (An individual person cannot bond or obtain coverage against
its own actions.)
7 In the case of a land trust where the beneficiary is responsible
for management, the beneficiary will be treated as an individual.
8 A limited partnership will not be required to have fidelity
coverage on its general partners UNLESS one or more of its general
partners perform financial acts coming within the scope of the usual
duties of an ``employee.''
9 The minimum amount of fidelity coverage will be the amount
calculated by multiplying an exposure index by a coverage factor. When
the calculated amount is less than $10,000, minimum coverage of $10,000
must be provided. This calculation is made as follows:
a Determine exposure index: Exposure index=25 percent of the SUM of
annual cash receipts (rents, cash subsidy, interest, etc.) and cash
(cash carryover, reserves, CD's, tax and insurance escrows, etc.). Round
to next higher $1,000.
b Determine coverage: Coverage=exposure index X coverage factor
taken from the coverage chart. Round to next higher $1000.
c Coverage chart:
------------------------------------------------------------------------
Coverage
Exposure index factor
------------------------------------------------------------------------
$100,000 or less............................................. .30
$100,000 to $200,000......................................... .28
$200,000 to $300,000......................................... .26
$300,000 to $400,000......................................... .24
$400,000 to $500,000......................................... .22
$500,000 to $600,000......................................... .20
$600,000 to $700,000......................................... .18
$700,000 to $800,000......................................... .16
$800,000 to $900,000......................................... .14
$900,000 to $1,000,000....................................... .12
$1,000,000 or more........................................... .10
------------------------------------------------------------------------
d Example: $245,000 exposure index X .26=$63,700 Minimum coverage
(rounded)=$64,000
10 A deductible is designed to allow flexibility in balancing what
the project can prudently pay from its own assets, at a time of loss,
against the economy of annual premiums in its annual budget. The
following deductible levels will meet FmHA or its successor agency under
Public Law 103-354 requirements:
------------------------------------------------------------------------
Deductible
Fidelity coverage level
------------------------------------------------------------------------
Under 50,000................................................ $1,000
In the area of $100,000..................................... 2,500
In the area of $250,000..................................... 5,000
In the area of $500,000..................................... 10,000
In the area of $1,000,000................................... 15,000
------------------------------------------------------------------------
11 When discussing fidelity coverage with its insurance agent, the
borrower and/or management agent should inquire how it can improve its
internal controls to reduce exposure to risk. Adoption of improvement
measures may result in lower premiums.
12 The premium for a borrower's fidelity coverage on project site
employees is a project expense.
13 The premium of a management agent's fidelity coverage for the
agent's principals and employees will be the management agent's business
expense (i.e., it is included within the management fee). When a project
[[Page 284]]
site employee is covered under the ``umbrella'' of the agent's fidelity
coverage, the pro rata portion of the premium covering the employee may
be considered a project expense.
14 Fidelity coverage should be reviewed during annual review and
adjusted when necessary.
B Insurance. The minimum amounts and types of insurance required
of the borrower will be determined by FmHA or its successor agency under
Public Law 103-354 in accordance with subparts A and B of part 1806 of
this chapter (FmHA or its successor agency under Public Law 103-354
Instructions 426.1 and 426.2) except as otherwise described in this
paragraph. All references to County Supervisor shall be construed to
mean Servicing Official when applied to the multiple housing program.
The borrower or its agent shall obtain:
1 Adequate fire, extended coverage, and earthquake insurance as
needed will be required on all buildings included as security for the
loan or grant (see Guide Letter 1930-4 for requesting renewals). The
amount of coverage will be not less than the ``Total Estimated
Reproduction Cost New of Improvements,'' on page 5 of Form FmHA or its
successor agency under Public Law 103-354 1922-7, ``Appraisal Report for
Multi-Unit Housing.'' The following additional provisions will apply:
a An initial insurance policy with evidence of first year paid
premium will be delivered to the FmHA or its successor agency under
Public Law 103-354 Servicing Official at the time of loan closing or
transfer of loan, providing at least 1 year of coverage.
b Form FmHA or its successor agency under Public Law 103-354 426-
2, ``Property Insurance Mortgage Clause,'' or the provisions thereof
printed in the policy or in a blanket letter from an insurance company,
must be part of the policy; namely to provide FmHA or its successor
agency under Public Law 103-354, as mortgagee, with at least 10 days
advance notice of cancellation.
c Evidence of paid premium in subsequent years will not be
required.
d Any change of insurance provider or level of coverage or term,
will be provided to the Servicing Official by use of Part VII ``Notice
of Change to Borrower/Project Status,'' of Form FmHA or its successor
agency under Public Law 103-354 1930-7.
2 Suitable Worker's Compensation Insurance on all its employees.
Worker's Compensation Insurance for employees of a management agent
shall be paid out of the agent's management fee. When a project site
employee is covered under the ``umbrella'' of the agent's insurance, the
portion of premium attributable to a project site employee may be a
project expense.
3 Adequate liability insurance.
4 Flood insurance when the project is located in a designated
flood hazard area.
5 A blanket insurance policy may be accepted from a borrower when
blanket coverage is more cost effective for each FmHA or its successor
agency under Public Law 103-354 financed project on a prorata basis, and
an endorsement is attached to the policy listing FmHA or its successor
agency under Public Law 103-354 financed projects, locations, and
coverage limits separate from any other properties covered by the
policy.
C Real estate and personal property taxes. All borrowers will be
required to pay their taxes before they become delinquent and provide
FmHA or its successor agency under Public Law 103-354 with proof of
payment (see Guide Letter 1930-7 to remind borrowers to pay taxes). An
exception to the above may be made if the borrower has formally
contested the amount of the property assessment and had escrowed the
amount of taxes in question in a manner acceptable to the Servicing
Official.
XVI Automation of FmHA or its successor agency under Public Law
103-354 Forms and Formats: The various forms and formats approved or
prescribed for use by borrowers and their agents throughout this subpart
may be prepared on automated systems when the following criteria is
complied with:
A FmHA or its successor agency under Public Law 103-354 forms
approved for official use by OMB.
1 The identical wording and nomenclature of an official form must
be included in the automated version of the form, including the OMB
approval number.
2 The function (i.e., logic or mathematical calculation) of an
official form must be the same in an automated version of the form.
3 The name or logo of the source of an automated form must be
visibly annotated on each output of the automated form.
4 Nominal spacing adjustment of the content of an official form on
the automated format is permitted to accommodate limitations of
automation software and hardware.
5 Output size must be 8\1/2\ inches x 11 inches.
6 Output on colored paper is permissible but not required by FmHA
or its successor agency under Public Law 103-354.
B Unofficial FmHA or its successor agency under Public Law 103-354
formats. Items such as management plans, management agreements, waiting
lists, and FmHA or its successor agency under Public Law 103-354 guide
letters should be automated to the extent possible. Content and
completion of the format must be developed according to FmHA
[[Page 285]]
or its successor agency under Public Law 103-354 guidelines for the
item.
[58 FR 40868, July 30, 1993, as amended at 59 FR 3779, Jan. 27, 1994; 59
FR 6886, Feb. 14, 1994]
Exhibit B-1--Management Plan Requirements for Farmers Home
Administration or its successor agency under Public Law 103-354 Financed
Multiple Family Housing (MFH) Projects
The objective of a management plan is to describe the property
owner's expectations and standards for performance, timing, and results
of management of all aspects of the various components of property
operation, maintenance, and compliance with applicable laws and
regulations. This exhibit is intended to guide the owner in identifying
the various components of property management in an organized manner.
The listing of discussion items under each component is intended as
further guidance. Items should be added if needed; likewise, those items
listed and not applicable to a given property situation need not be
addressed.
FmHA or its successor agency under Public Law 103-354 requires
management of FmHA or its successor agency under Public Law 103-354
financed MFH projects to be in compliance with applicable Federal,
State, and local laws and this regulation. Exhibit B-4 of this subpart
will be used by a prospective management agent to provide a resume of
management background and/or experience. Exhibit B-5 of this subpart
will be used by an owner who proposes to provide direct project
management. In rural cooperative housing (RCH), a cooperative's board of
directors will manage the business of the cooperative with the
assistance of the adviser to the board. If the board is unable, in the
adviser's opinion, to manage the cooperative after an adequate period of
training, then FmHA or its successor agency under Public Law 103-354
will make the determination of whether the cooperative will hire
professional management.
FmHA or its successor agency under Public Law 103-354 will review
the management plan to evaluate the borrower's standards for project
management. The management plan and any subsequent revisions must be
signed by the borrower, and then approved and signed by the authorized
FmHA or its successor agency under Public Law 103-354 official. No loan
will be closed or construction started, or loan transfer completed,
without a properly approved and signed management plan. Management plans
should be reviewed annually and updated at least triannually by the
borrower. Any updated or modified management plan will need to be
reviewed and approved by the Servicing Official at the time of annual
review. When only a few changes are needed, use of an addendum to the
plan is acceptable to FmHA or its successor agency under Public Law 103-
354.
A management plan will reflect understanding of FmHA or its
successor agency under Public Law 103-354 program requirements for the
project and address each of the following areas:
1 The role and responsibility of the owner and the relationship and
delegations of authority to the management agent. A management agreement
must be provided where a management agent is to be used. If there is no
management agent, the management plan should supply the equivalent
information concerning the management staff assigned to day-to-day
operation of the project even when the owner provides direct management.
a Describe and fully justify any identity of interest as described
in paragraph V B of Exhibit B of this subpart.
b Identify the supervisory relationships, and to whom the incumbent
of the position responsible for the day-to-day operation of the project
is accountable.
c Describe the conditions when the management agent must consult
the owner before taking any action.
d Identify the person or position in the owner's organization that
is the key contact for the management agency. Describe the type of
decisions to be made by this contact person.
e Describe the fundamental responsibilities and duties of the owner
and the managing agent. Identify any areas of overlap and describe how
the overlap will be handled.
f Describe any pro rata divisions of singularly incurred operating
expense that is common to the management agent and the owner (project)
(i.e., fidelity coverage that may be divided between both).
2 Personnel policy and staffing arrangements.
a Describe hiring practices of management and their conformance
with equal employment opportunity requirements.
b Include a staffing plan for the project.
c Describe the lines of authority, responsibility, and
accountability (internal controls) within the management entity.
d Describe the standards and plans for training and familiarizing
employees with their job related responsibilities and applicable FmHA or
its successor agency under Public Law 103-354 program requirements.
Describe how such training will generally be achieved.
3 Plans and procedures for marketing units, achieving and
maintaining full occupancy, and meeting HUD Form 935.2, ``Affirmative
Fair Housing Marketing Plan,'' requirements.
a Describe how affirmative marketing practices will be used.
Describe the outreach and marketing efforts that will be used to
[[Page 286]]
reach those low-income and minority persons who are least likely to
apply for such housing without special outreach efforts.
b Describe the methods that will be used to achieve and maintain
the highest possible level of occupancy. When applicable, indicate any
additional compensation or incentives that may be allowed management
agents for early initial rent-up. (If this area is not covered in the
management plan, it will usually not be allowed by FmHA or its successor
agency under Public Law 103-354 at a later date.)
c Describe how the units will be advertised. Indicate minimum
levels planned regardless of occupancy levels.
d Describe the appropriate communication system, auxiliary aids, or
other assistance that will be used to ensure effective communication
with applicants, tenants or members, and members of the public that have
sight or hearing impairments.
e Describe the kinds of reasonable accommodation the project can
readily provide such as changing water faucets, kitchen equipment, door
knobs, assigning handicap parking spaces, etc.
f Describe the process management will follow in reviewing and
determining whether structural modification of an apartment unit is
practical and feasible to reasonably accommodate a tenant or household
member who has a handicap or disability.
g Indicate whether the FmHA or its successor agency under Public
Law 103-354 sample waiting list (exhibit B-14 of this subpart) or some
other waiting list will be used. If another waiting list is used,
indicate how its use will otherwise comply with FmHA or its successor
agency under Public Law 103-354 guidelines.
h Attach copies of sample forms that will be used to record unit
condition, and indicate who will receive copies of the inspection forms.
i Describe any orientation services to be provided tenants or
members to acquaint them with the project and care of the units.
Indicate what printed project information will be given to applicants.
j Identify the person or staff position responsible for determining
tenant or member eligibility and their location on the waiting list.
k In projects receiving tax credits, describe how special waiting
lists will be established and when eligible tenants with incomes higher
than tax credit limits will be considered for occupancy.
4 Procedures for determining eligibility and for certifying and
recertifying incomes.
a Describe how applications and other records relevant to this
function will be kept. If application fees are used, describe them.
b Describe the level of knowledge, skill, and ability that
management official(s) will be expected to possess before assuming
rental related duties such as application processing, eligibility
determination, selection, unit assignment, certification,
recertification, rent or occupancy charge and occupancy surcharge
collection, and recordkeeping. This discussion should mention training
and testing to be provided or obtained to achieve and maintain the level
expected.
c Identify whether project funds or the management agent will pay
overage when overage is due through no fault of the tenant or member.
5 Leasing and occupancy policies.
a Describe the occupancy standards for the project. (This could be
shown as an annex to the management plan.)
b Describe the project admissions and leasing/occupancy policies
and procedures, and criteria for selecting tenants/members for
occupancy. (This could be shown as an annex to the management plan.)
c Describe the level of knowledge, skill, and ability that
management official(s) will be expected to understand and apply
regarding project lease provisions and prohibitions, occupancy
standards, and admissions policies.
d Describe special procedures that will be used where the marketing
area includes non-English speaking or reading persons to assure that
such persons will understand leases or occupancy agreements and
established rules.
6 Rent and occupancy charge and occupancy surcharge collection
policies and procedures.
a Describe the project rent/occupancy charge and occupancy
surcharge collection policy and procedure, covering such matters as
where the collection point is, which staff position handles the
collection, provisions for collection after normal office hours,
recording, and safeguarding of collections.
b Describe the project security deposit/membership fee policy and
procedure covering matters similar to the preceding item. Include
discussion on handling of any interest earned on such deposits.
7 Procedures for requesting and implementing a rent or occupancy
charge change.
a Describe the process to be followed for preparation and request
of a change of rents/occupancy charges and/or utility allowances, and to
notify tenants of such change, to meet FmHA or its successor agency
under Public Law 103-354 requirements.
b Identify which staff position or person will process change
requests.
c Describe when such change requests will normally be made in terms
of economic need and timing within a fiscal year of operation.
8 Plans and procedures for carrying out an effective maintenance,
repair, and replacement program.
a Describe the project objective and general plan for preventive
maintenance.
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b Describe where the project's as-built plans and specifications
will be located and identify the staff position responsible for updating
it as modifications occur.
c Describe the general maintenance procedures and schedules or
cycles to: (this list could be attached as an addendum)
(1) Check and service appliances and mechanical equipment.
(2) Perform safety checks of smoke/fire alarms, fire extinguishers,
outside lighting, and ice removal, etc.
(3) Inspect and perform maintenance and redecoration incident to
tenant/member move-out and move-in.
(4) Perform major interior and exterior painting and redecorating.
(5) Perform major repairs and grounds maintenance.
(6) Remove garbage and trash.
(7) Perform common areas cleanup (parking lot, entryways, hallways,
community room, etc.)
d Describe the project policy and procedure for tenants/members to
prepare and submit maintenance requests.
e Describe the general timing for handling purchase orders and
payments.
f Describe the project policy for budgeting for and/or requesting
use of reserve funds for funding major maintenance or replacement items.
g In migrant or seasonally occupied labor housing (LH), describe
the above items in terms of season opening and closing dates.
9 Plans and procedures for providing supplemental services.
a Describe the types of supplemental services such as laundry and
vending machines that will be provided to benefit occupants.
b Explain whether this equipment will be owned and operated by the
owner or a consignee (vendor).
c Describe the safekeeping and recording practices (internal
control) of any cash collections from use of the equipment.
d Describe who will be responsible for maintaining the equipment
and stocking any vending machines.
e When a consignee will operate the equipment, describe the general
terms of the consignment contract.
10 Plans for accounting, recordkeeping, and meeting FmHA or its
successor agency under Public Law 103-354 reporting requirements.
a Briefly describe the type of project accounting methods (i.e.,
cash or accrual) and records that will be used, how will they be
maintained, and which staff position will prepare and maintain them.
b Describe how interest earned on project reserve funds will be
prorated and accounted ``separately'' if such funds are deposited
jointly with funds of another project owned by the same borrower.
c Describe whether the project bookkeeping chart of accounts and
bank accounts is compatible with Form FmHA or its successor agency under
Public Law 103-354 1930-7, ``Multiple Family Housing Project Budget,''
requirements, and if not, what adjustments will be made when reporting
actuals on the form.
d Identify which staff member or position will be responsible for
the preparation and submission of the quarterly and annual reports
required by FmHA or its successor agency under Public Law 103-354.
e Provide assurance or explanation that the person or firm who will
perform and prepare the annual audit, or verification of review, is not
associated with the project, other than to perform the audit or review.
f Discuss the proposed tenant or member record maintenance system
including retention of records and identify which person/position will
handle and maintain the records.
g Identify where records subject to FmHA or its successor agency
under Public Law 103-354 review will be kept and which person/position
FmHA or its successor agency under Public Law 103-354 will contract to
review the records.
11 Energy conservation measures and practices.
a Describe the plan to inform and encourage tenants/members in use
of energy conservation practices they can use in their unit to save
utility expense (and thus minimize utility allowances and conserve
rental assistance).
b Describe the plan to utilize energy conservation practices in the
common areas of the project (to conserve operating expense and help
minimize rent/occupancy charge levels).
c Describe the project objective in implementing energy
conservation measures, if any, as they are identified in an energy
audit.
12 Plans for tenant participation in rural rental housing (RRH)
project operations and tenant's relationship with management.
a Decribe any plans for a tenant organization and how management
and staff will work with the organization.
b Describe where the Tenant Grievance and Appeals Procedure
(subpart L of part 1944 of this chapter) will be posted in the project
and otherwise made available to tenants. Identify which person or staff
position will be responsible for responses to and consideration of a
tenant/member grievance.
13 Plans for member participation in RCH project operations.
a Decribe who will explain to the members the types of committees
the cooperative will be using.
b Describe what the cooperative will do to attract member
participation on committees.
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c Describe how the board members will participate with the
committee.
d Describe where the cooperative will post, and otherwise make
available to members, the Tenant Grievance and Appeals Procedure
(subpart L of part 1944 of this chapter). Identify which person or staff
position will be responsible for response to and consideration of a
member grievance.
14 Plan for carrying out management training programs.
a Describe the standards of training and proficiency that
management or board members will be expected to attain and maintain to
perform their duties and responsibilities in carrying out project
objectives, including compliance with applicable Federal, State, and
local laws.
b Describe the plan to conduct internal training and to otherwise
use external training sources to maintain levels of attained
proficiency.
c For RCH, describe the actions the board will take if a board
member(s) does not participate in training.
d For RCH, describe the role the board will assume in making sure
the RCH membership as a whole understands its role and functions in the
cooperative.
15 Termination of leases or occupancy agreements and eviction.
a Identify which person or staff position is responsible for
knowing and administering State and local laws and FmHA or its successor
agency under Public Law 103-354's requirements regarding termination of
leases or occupancy agreement and evictions.
b Identify which person or staff position is responsible for
knowing and administering State and local laws and FmHA or its successor
agency under Public Law 103-354's requirements regarding the
notification that must be given to a tenant or member when termination
of lease or occupancy agreement is proposed and subsequent eviction
procedures through the State or local judicial process.
16 Security servicing.
a Identify which person or staff position is responsible for
knowing and complying with FmHA or its successor agency under Public Law
103-354 requirements for fidelity coverage and acquiring such coverage.
b Identify which person or staff position is responsible for
knowing and complying with FmHA or its successor agency under Public Law
103-354's insurance coverage requirements and acquiring such coverage.
17 Management agreement. Attach a copy of the management agreement,
when applicable. (If an initial loan, attach a copy of the proposed
management agreement, when applicable.) See Exhibit B-2 of this subpart
for requirements for management agreements.
18 RCH board of director/adviser relationship. Discuss the
relationship of the adviser and its effect on decisions made by the
board.
19 Management compensation.
a If management is provided directly by the owner, describe the
amount of management fee, how it will be determined, and how it will be
paid.
b In the case of a cooperative, describe the amount of compensation
to be paid to the adviser by the board.
20 On-site management.
a Describe who (owner, site manager, caretaker, board) will perform
on-site management duties and responsibilities.
b Describe the duties and responsibilities of the on-site
management staff.
c Identify whether the site manager will live in the project in a
rent-free unit or pay rent, or live off-site.
d Describe established office hours and indicate where they will be
posted.
21 Validity of the management plan. The plan must provide space at
the end for the following:
a Date, title, and signature of borrower or borrower's authorized
representative.
b Date, title, and signature of the FmHA or its successor agency
under Public Law 103-354 official approving the plan.
Exhibit B-2--Requirements for Management Agreements
A completed and executed management agreement must be reviewed and
approved by the Farmers Home Administration or its successor agency
under Public Law 103-354 (FmHA or its successor agency under Public Law
103-354) whenever a management agent is to be used. A management
agreement must be submitted to FmHA or its successor agency under Public
Law 103-354 for review as part of a project loan docket, whenever there
is a change of management agents or ownership, or when a major revision
of an existing agreement is necessary or required.
1 A written management agreement is required for any project when
the owner retains a management agent. A management agreement is not
required when the project is managed by the owner as described in
paragraph V E 6 of Exhibit B of this subpart. However, a written
management plan is required for all projects new and existing, except
for on-farm labor housing units where rent is not required. Although the
adviser to a cooperative board of directors is not the same type of
agent as those who are now managing rental projects, a written agreement
between the board and the adviser is required which sets forth their
relationship and what the adviser is expected to do for the cooperative.
Exhibits F, F-1, and G of subpart E of part 1944 of this chapter outline
the functions and responsibilities of an adviser. The agreement may
follow the content of Exhibit B-3 of this subpart.
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2 The management agreement must address how FmHA or its successor
agency under Public Law 103-354 requirements will be met. The owner may
delegate to the agent any management duties which are not required to be
performed by the owner. The owner may delegate selected ownership
responsibilities, such as requests for review and/or appeal of adverse
decisions by third parties that affect the owner. However, the owner
remains totally responsible to FmHA or its successor agency under Public
Law 103-354 for all aspects of management.
3 The management plan is the primary management charter,
constituting a comprehensive description of the policies and procedures
to be followed in managing the project. The management agreement
describes how the objectives and policies in the management plan will be
carried out. The agreement should be clear and concise, should not
merely repeat the management plan, but indicate how the management agent
will implement the plan.
4 The management agreement shall describe the management agent's
organization and staffing structure, management controls, and any
management company identity of interest relationship(s) such as the
borrower, vendors, and suppliers of materials, labor, and services. When
such relationships exist, the management agent shall prepare and sign
the forms described in paragraph V B 2 a of Exhibit B of this subpart as
``applicant''.
5 The management agreement sets forth the standards and
expectations negotiated between the borrower and the management agent.
The agreement should follow the guidelines of Exhibit B-3 of this
subpart. Each management agreement should be tailored to the specific
conditions and staffing arrangements of the particular project. The
site, design, size of the project, and fiscal constraints; market
conditions; social factors; local law; and business practices are among
the elements which may require variations to Exhibit B-3 of this
subpart.
Exhibit B-3--Sample Management Agreement for Farmers Home Administration
or its successor agency under Public Law 103-354 (FmHA or its successor
agency under Public Law 103-354) Financed Multiple Family Housing (MFH)
Projects
This Agreement is made this ____ day of ____, 19____, between
________ (the ``Owner''), and ________ (the ``Agent'') under the terms
and conditions set forth herein.
I General.
A Appointment and acceptance. The Owner appoints the Agent as
exclusive agent for the management of the property described in
paragraph I B of this agreement, and the Agent accepts the appointment,
subject to the terms and conditions set forth in this agreement.
B Project description. The property to be managed by the Agent
under this agreement (the ``Project'') is a housing development
consisting of the land, buildings, and other improvements which make up
Project No. ____. The Project is further described as follows:
Name____________________________________________________________________
Location
City:___________________________________________________________________
County:_________________________________________________________________
State:__________________________________________________________________
No. of dwelling units___________________________________________________
Type of units___________________________________________________________
(Family, Elderly, (Mixed, Congregate)
C Definitions. As used in this agreement:
1 ``FmHA or its successor agency under Public Law 103-354'' means
the Farmers Home Administration or its successor agency under Public Law
103-354, including any successor agencies.
2 ``Principal Parties'' means the Owner and the Agent.
3 ``Agent,'' as used throughout this agreement, means the person or
business entity, including employees at the Agent's office and project
site, engaged in the task of providing management of a FmHA or its
successor agency under Public Law 103-354 financed MFH project in
contractual arrangement with the Owner.
D Identity of interest. The Agent discloses to the Owner and FmHA
or its successor agency under Public Law 103-354 any and all identities
of interest that exist or will exist between the Agent and the Owner,
suppliers of material and/or services, or vendors in any combination of
relationship. Forms FmHA or its successor agency under Public Law 103-
354 1944-30, ``Identity of Interest (IOI) Disclosure Certificate,'' and
FmHA or its successor agency under Public Law 103-354 1944-31,
``Identity of Interest (IOI) Qualification Form,'' completed by the
Agent as ``applicant,'' are attached and made part of this agreement.
E FmHA or its successor agency under Public Law 103-354
requirements. In performing its duties under this management agreement,
the Agent will comply with all relevant requirements of FmHA or its
successor agency under Public Law 103-354. FmHA or its successor agency
under Public Law 103-354 requirements include preparation of forms and
reports in the format of prescribed FmHA or its successor agency under
Public Law 103-354 forms and exhibits.
F Basic information. As soon as possible, the Owner will furnish
the Agent with a complete set of ``as built'' plans and specifications
and copies of all guarantees and
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warranties relevant to construction, fixtures, and equipment. With the
aid of this information and inspection by competent personnel, the
Agency will become thoroughly familiar with the character, location,
construction, layout, plan, and operation of the project, and especially
with the physical plant.
G Compliance with governmental orders. The Agent will take such
action as it may deem necessary to comply promptly with any and all
governmental orders or other requirements affecting the project, whether
imposed by Federal, State, county or municipal authority, subject,
however, to the limitation stated in paragraph IV D of this exhibit with
respect to litigation and repairs. Nevertheless, the Agent shall take no
action so long as the Owner is contesting, or has affirmed its intention
to contest, any such order or requirement. The Agent will notify the
Owner in writing of all notices of such orders or other requirements,
within 72 hours from the time of their receipt.
H Nondiscrimination. In the performance of its obligations under
this agreement, the Agent will comply with the provisions of any
Federal, State or local Fair Housing law prohibiting discrimination in
housing on the grounds of race, color, religion, sex, familial status,
national origin, or handicap. Other nondiscrimination provisions include
title VI of the Civil Rights Act of 1964 (Pub. L. 88-352, 78 Stat. 241),
Section 504 of the Rehabilitation Act of 1973, and the Age
Discrimination Act of 1975, as they relate to the FmHA or its successor
agency under Public Law 103-354 multi-housing program.
I Fidelity coverage. The Agent agrees to furnish, at its own
expense, fidelity coverage to the Owner, with copy to the FmHA or its
successor agency under Public Law 103-354 Servicing Office on the
employees of the Agent who are entrusted with the receipt, custody, and
disbursement of any project monies, securities, or readily saleable
property other than money or securities. The minimum coverage of $____
will be provided according to the coverage chart found in paragraph XV
of Exhibit B of this subpart. The Agent will obtain coverage from a
company licensed to provide coverage in the project locality. Coverage
will be in force to coincide with the assumption of fiscal
responsibility by the Agent until that responsibility is relinquished.
Endorsement listing FmHA or its successor agency under Public Law 103-
354 projects separate from other projects or operations will be obtained
and made part of the coverage policy or bond. The other terms and
conditions of the coverage, and the surety thereon, will be subject to
the requirements and approval of the owner.
J Bids, discounts, rebates, etc. With prior approval of the owner,
the Agent will obtain contracts, materials, supplies, utilities, and
services on the most advantageous terms to the project, and is
authorized to solicit bids, either formal or informal, for those items
which can be obtained from more than one source. The Agent will secure
and credit to the Owner all discounts, rebates, or commissions
obtainable with respect to purchases, service contracts, and all other
transactions on the Owner's behalf.
II Management plan.
A Description. Attached is a copy of the management plan for the
project, which provides a comprehensive description of the policies and
procedures to be followed in the management of the project.
B Relationship with management plan. The Agent shall conduct its
management activities in accordance with the policies and procedures set
forth in the management plan. In addition, the Agent will also carry out
the tasks and responsibilities set forth in paragraph IV of this
agreement.
C Division of duties and common expense. An identification of
duties and supervisory relationship for project site staff and Agent's
office staff are described in the management plan as is the pro rata
division of singularly incurred operating expense common to the Agent
and the Owner.
III Budget.
A Preparation. The Agent shall prepare an original project budget
for submission to the owner and FmHA or its successor agency under
Public Law 103-354 for approval. For each subsequent fiscal year the
Agent shall prepare a new budget.
B Budget categories. The budget shall be prepared using the format
and categories of FmHA or its successor agency under Public Law 103-354
Form 1930-7, ``Multiple Family Housing Project Budget.''
IV Agent's authorizations. The Owner authorizes the Agent to:
A Operate the project according to the Owner's management plan and
in compliance with the Owner's loan agreement (or resolution) with FmHA
or its successor agency under Public Law 103-354, and applicable FmHA or
its successor agency under Public Law 103-354 regulations an guidelines.
B Operate and maintain the project within reasonable tolerance (as
defined by FmHA or its successor agency under Public Law 103-354) of the
expense category subtotals in the project budget.
C Purchase all material, equipment, tools, appliances, supplies and
services necessary for proper maintenance and repair of the project as
stipulated by the Owner in the management plan, project budget, and/or
other form of written documentation.
D Notwithstanding any of the foregoing provisions or any similar
provisions that follow, the prior written approval of the Owner will be
required for any expenditure which
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exceeds $____ in any one instance for litigation involving the project,
or labor, materials, or otherwise in connection with the maintenance and
repair of the project. This limitations is not applicable for recurring
expenses within the limits of the operating budget or emergency repairs
involving manifest danger to persons or property, or that are required
to avoid suspension of any necessary service to the project. In the
latter event, the Agent will inform the Owner of the facts as promptly
as possible.
E Represent the Owner in specific matter related to management of
the project. (Items such as representing the Owner's interest at appeal
hearings may be specified here or may be indicated that such
authorizations will be provided in writing as an addendum when
appropriate.)
V Agent's obligations.
A Management input during and after FmHA or its successor agency
under Public Law 103-354 processing. The Agent will advise and assist
the Owner with respect to management planning and input during FmHA or
its successor agency under Public Law 103-354 loan processing and
subsequent review. The Agent's specific tasks will be:
1 Participation in any conference with FmHA or its successor agency
under Public Law 103-354 officials involving project management.
2 Preparation and submission of Form FmHA or its successor agency
under Public Law 103-354 1930-7 as a quarterly report throughout the
period from initial occupancy after FmHA or its successor agency under
Public Law 103-354 loan closing until such time as no longer required by
FmHA or its successor agency under Public Law 103-354. If the management
is authorized to sign the reports for the owner, a copy of the signed
report as submitted to FmHA or its successor agency under Public Law
103-354 will be provided to the Owner.
3 Participation in the on-site final inspection of the project,
required by FmHA or its successor agency under Public Law 103-354 prior
to initial occupancy.
4 Continuing review of the management plan, for the purpose of
keeping the Owner advised of necessary or desirable changes.
B Liaison with architect and general contractor. At the direction
of the owner during the planning and construction phases, the Agent will
maintain direct liaison with the architect and general contractor, in
order to:
1 Coordinate management concerns with the design and construction
of the project,
2 To facilitate completion of any corrective work, and
3 To facilitate the Agent's responsibilities for arranging
utilities and services pursuant to paragraph V J of this agreement. The
Agent will keep the Owner advised of all significant matters of this
nature.
C Marketing. The Agent will market the rental units according to
the management plan, observe all requirements of the Affirmative Fair
Housing Marketing Plan, and maintain records of the marketing activity
for compliance review purposes.
D Rentals. The Agent will offer for rent and will endeavor to rent
the dwelling units in the project. The following provisions will apply:
1 The Agent will make preparations for initial rent-up, as
described in the management plan.
2 The Agent will follow the tenant selection policy described in
the management plan.
3 The Agent will show the premises and available units to all
prospective tenants without regard to race, color, national origin, sex,
religion, familial status, handicap or age; and will provide for
reasonable accommodation to individuals with handicaps.
4 The Agent will take and process all applications received for
rentals. If an application is rejected, the Agent will inform the
applicant in writing of the reason for rejection. The rejected
application, with the reason for rejection noted thereon, will be kept
on file until a compliance review has been conducted. If the rejection
is because of information obtained from a credit bureau, the source of
the report must be revealed to the applicant according to the Fair
Credit Reporting Act. A current list of qualified applicants will be
maintained.
5 The Agent will prepare all dwelling leases, parking permits, and
will execute the same in its name, identified thereon as Agent for the
Owner. The terms of all leases will comply with the relevant provisions
of FmHA or its successor agency under Public Law 103-354 regulations and
State and local law. Dwelling leases will be in a form approved by the
Owner and FmHA or its successor agency under Public Law 103-354.
6 The Owner will furnish the Agent with rental and income report
forms required by FmHA or its successor agency under Public Law 103-354,
showing rents as appropriate for dwelling units, other charges for
facilities and services, and income data relevant to determinations of
tenant eligibility and tenant rents. In no event will the rents and
other charges be exceeded.
7 The Agent will counsel all prospective tenants regarding
eligibility and will prepare and verify eligibility certifications and
recertifications in accordance with FmHA or its successor agency under
Public Law 103-354 requirements.
E Reports. The Agent will furnish information (including occupancy
reports) as may be requested by the Owner, FmHA or its successor agency
under Public Law 103-354, and/or the Office of Inspector General from
time
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to time with respect to the project's financial, physical, or
operational condition. The Agent will also prepare and submit:
Form FmHA or its successor agency under Public Law 103-354 1944-8:
``Tenant Certification''
Form FmHA or its successor agency under Public Law 103-354 1944-29:
``Project Worksheet for Interest Credit and Rental Assistance''
Form FmHA or its successor agency under Public Law 103-354 1930-7:
``Multiple Family Housing Project Budget''
The Agent will assist the owner in initiating or completing all
additional reporting forms and data prescribed by FmHA or its successor
agency under Public Law 103-354 affecting the operation and maintenance
of the project.
F Collection of rents, security deposits and other receipts. The
Agent will endeavor to collect when due all rents, charges, and other
amounts receivable on the Owner's account in connection with the
management and operation of the project. Such receipts will be deposited
immediately in the project's general operating account with ______ (name
of bank or such other financial institution designated by the owner),
whose deposits are insured by an agency of the Federal Government. The
Agent will collect, deposit, and disburse security deposits, if
required, in compliance with any State or local laws governing tenant
security deposits. Security deposits will be deposited by the Agent in a
separate account, at a Federally insured institution. This Account will
be carried in the owner's name and designated of record ``Name of
Project) Security Deposit as Account.''
G Accounting system. The Agent must develop a systematic method to
record the business transactions of the project that appropriately
reflects the complexity of project operations and the owner's
requirements. The Agent may be required to implement and use a
bookkeeping and accounting system acceptable to FmHA or its successor
agency under Public Law 103-354. The accounts described in paragraph VI
of this agreement, as a minimum, will be established and regularly
maintained by the Agent.
H Enforcement of leases. The Agent will endeavor to ensure full
compliance by each tenant with the terms of the lease. Voluntary
compliance will be emphasized. The Agent, using the services of local
social service agencies when available, will counsel tenants and make
referrals to community agencies in cases of financial hardship or other
circumstances deemed appropriate by the Agent. Involuntary termination
of tenancies should be avoided to the maximum extent consistent with
sound management of the project. Nevertheless, and subject to the
relevant procedures prescribed in the management plan, the Agent may
initiate action to terminate any tenancy when, in the Agent's judgment,
there is material noncompliance with the lease or other good cause as
prescribed by FmHA or its successor agency under Public Law 103-354
regulations for such termination. The tenant must be properly notified
of his/her right to appeal the proposed action according to FmHA or its
successor agency under Public Law 103-354 regulations. Attorney's fees,
and other necessary costs incurred in connection with such actions will
be paid out of the general operating account as project expenses within
the itemized limit of the project budget.
I Maintenance and repair. The Agent will endeavor to maintain and
repair the project in accordance with the management plan and local
codes, and keep it in a condition acceptable to the Owner and FmHA or
its successor agency under Public Law 103-354 at all times. This will
include, but is not limited to, cleaning, painting, decorating,
plumbing, carpentry, grounds care, energy conservation measures and
practices, and such other maintenance and repair work as may be
necessary, subject to any limitations imposed by the Owner in addition
to those contained therein.
Incidental thereto, the following provisions will apply:
1 Special attention will be given to preventive maintenance, and to
the greatest extent feasible, the services of regular maintenance
employees will be used.
2 The Agent will contract with qualified independent contractors
acceptable to the Owner for the maintenance and repair of air
conditioning, heating systems, and elevators, and for extraordinary
repairs beyond the capability of regular maintenance employees. Any
identity of interest will be identified in accordance with paragraph V B
of Exhibit B of this subpart.
3 The Agent will systematically receive and promptly investigate
all service requests from tenants, take such action as may be justified,
and keep records of the same. Emergency requests will be received and
serviced on a 24 hour basis. Serious complaints will be reported to the
Owner after investigation.
4 The Agent will advise the Owner of any cost-effective and
adaptable energy conservation measures or practices that should be used
in the project. The Agent will encourage their use and will assist the
Owner during any installation of these measures or institution of
practices.
J Utilities and services. In accordance with the Owner's management
plan, the Agent will make arrangements for water, electricity, gas, fuel
oil, sewage and trash disposal, vermin extermination, decorating,
laundry facilities, and telephone service.
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K Insurance. The Owner will inform the agent of insurance to be
carried with respect to the project and its operations, and the Agent
will cause such insurance to be placed and kept in effect at all times.
The Agent will pay premiums out of the general operating account, and
premiums will be treated as operating expenses. All insurance will be
placed with companies, on conditions, in amounts, and with beneficial
interests appearing thereon as shall be acceptable to the Owner and the
FmHA or its successor agency under Public Law 103-354 provided that the
same will include public liability coverage, with the Agent designated
as one of the insured, in amounts acceptable to the Agent as well as the
Owner and FmHA or its successor agency under Public Law 103-354. The
Agent will investigate and furnish the Owner with full reports on all
accidents, claims, and potential claims for damage relating to the
project, and will cooperate with the owner's insurers in connection
therewith.
L Taxes, fees and assessments. The Agent shall provide for the
payment from project funds all taxes, assessments, and government fees
for the owner promptly when due and payable. The Agent shall also
evaluate local property taxes to determine if they bear a fair
relationship to the project value and if they do not, at the direction
of the Owner, appeal such taxes on behalf of the Owner or assist the
Owner in the appeal, whichever is required by local jurisdiction or is
appropriate.
M Employees and/or services. The Agent will employ persons and/or
services, (or will manage persons and/or services employed by the Owner)
to perform duties and responsibilities at the project site as described
in the management plan. Compensation of such persons and/or services
will be paid as a direct expense to the project as specified in the
management plan and this agreement. The Agent will employ sufficient
resources (staff and/or services) within the Agent's operation to
fulfill Agent's obligation to the Owner under the terms of this
agreement.
VI Project accounts. The Agent will maintain and safeguard the
Owner's project financial accounts and tenant security deposit accounts
according to the current requirements set forth in paragraph XIII B 2 of
Exhibit B of subpart C of part 1930 of this chapter, which is part of
the ``Multiple Housing Management Handbook.''
VII Agent's compensation, tenure, and identification.
A Agent's compensation. The Agent will be compensated for its
services for providing management described under this agreement, and
the Owner's management plan, by monthly fees, to be paid from the
general operating account and treated as a project operation and
maintenance expense. Such fees will be payable on the first day of each
month for the preceding month. Each monthly fee will be in an amount
computed as follows:
(The following are acceptable methods in no order of preference. Any
other method of compensation will be fully described and inserted in
this section.) The costs incurred by the Agent for performing the
specified services listed in this agreement shall be allocated to the
owner and Agent as outlined in the agreement, management plan, and
approved project budget.
1. $____ occupied unit on the first of a month.
2. % of cash rent collected. (Plan I and full profit)
3. % of basic rents collected. (Plan II)
Maximum annual compensation under this agreement and the approved
project budget shall be $____ year.
B Term of agreement. This agreement shall be in effect for a period
of not more than 3 years, beginning on the ____ day of ____, 19____,
subject, however, to the following conditions:
1 This agreement will not be binding upon the Principal Parties
until approved by FmHA or its successor agency under Public Law 103-354.
2 This agreement may be terminated by mutual consent of the
principal parties as of the end of any calendar month, provided that at
least 30 days advance written notice thereof with reasons given is
submitted to FmHA or its successor agency under Public Law 103-354.
3 In the event that a petition in bankruptcy is filed by or against
either of the Principal Parties, or in the event that either makes an
assignment for the benefit of creditors or takes advantage of any
insolvency act, the other party may terminate this agreement without
notice to the other, provided that prompt written notice with reasons
given for such termination is submitted FmHA or its successor agency
under Public Law 103-354.
4 It is expressly understood and agreed by and between the
Principal Parties that the State Director may terminate this agreement
with cause upon the issuance of a 30-day written notice of cancellation
to each of the Principal Parties. It is further understood and agreed
that no liability will attach to either of the Principal Parties in the
event of such termination.
5 Upon termination of this agreement, the Agent will submit to the
Owner all project books and records and any financial statements
required by the FmHA or its successor agency under Public Law 103-354.
After the Principal Parties have accounted to each other with respect to
all matters outstanding as of the date of termination, the Owner will
furnish the Agent security, in form and Principal amount satisfactory to
[[Page 294]]
the Agent, against any obligations or liabilities which the Agency may
properly have incurred on behalf of the Owner hereunder.
C Agent's indemnification. Notwithstanding any provision of this
agreement or any obligation of Agent hereunder, it is understood and
agreed: that Owner has assumed and will maintain its responsibility and
obligation throughout the term of this agreement for the finances and
the financial stability of the project; and that Agent shall have no
obligation, responsibility, or liability to fund authorized project
costs, expenses, or accounts other than those funds generated by the
project itself or provided to the project or to Agent by Owner. In
accordance with the foregoing, Owner agrees that Agent shall have the
right at all times to secure payment of its compensation, as provided
for under paragraph VII A of this agreement, from the operating and
maintenance account, immediately when such compensation is due and
without regard to other project obligations or expenses provided the
Agent has satisfactorily discharged all duties and responsibilities
under this agreement. Moreover, Owner hereby indemnifies Agent and
agrees to hold it harmless with respect to project costs, expenses,
accounts, liabilities, and obligations during the term of this agreement
and further agrees to guarantee to Agent the payment of its compensation
under paragraph VII A of this agreement during the term of this
agreement to the extent that the project's operating and maintenance
account is insufficiently funded for this purpose. Failure of Owner at
any time to abide by and to fulfill the foregoing shall be a breach of
this agreement entitling Agent to obtain from Owner, upon demand, full
payment of all compensation owned to Agent through the date of such
breach and entitling Agent, at its option, to terminate this agreement
forthwith.
VIII Interpretative provisions.
A This agreement constitutes the entire agreement between the Owner
and the Agent with respect to the management and operation of the
project. No change will be valid unless made by supplemental written
agreement approved by FmHA or its successor agency under Public Law 103-
354.
B This agreement has been executed in several counterparts, each of
which shall constitute a complete original agreement, which may be
introduced in evidence or used for any other purpose without production
of any of the other counterparts.
C This agreement is NOT in full force and effect unless and until
concurred with by FmHA or its successor agency under Public Law 103-354.
D At all times, this agreement will be subject and subordinate to
all rights of the FmHA or its successor agency under Public Law 103-354,
and will work to the benefit of and constitute a binding obligation upon
the Principal parties and their respective successors and assigns. To
the extent that this agreement confers rights upon the consenting
parties, it will be deemed to work to their benefit, but without
liability to either, in the same manner and work with the same effect as
though the consenting parties were primary parties to the agreement.
The Principal Parties [by their duly authorized officers] have
executed this agreement on the date first above written.
Owner: ________________________________________________________________
By: ___________________________________________________________________
Title: ________________________________________________________________
Agent: ________________________________________________________________
By: ___________________________________________________________________
Title: ________________________________________________________________
As lender or insurer of funds to defray certain costs of the project
and without liability for any payments hereunder, the Farmers Home
Administration or its successor agency under Public Law 103-354 hereby
concurs with this agreement.
Farmers Home Administration or its successor agency under Public Law
103-354
By: ___________________________________________________________________
Title: ________________________________________________________________
Date: _________________________________________________________________
Attachments: Management plan, Loan resolution or agreement, Identity
of Interest Disclosure Certificate, Identity of Interest Qualification
Form.
[58 FR 40868, July 30, 1993, as amended at 59 FR 6886, Feb. 14, 1994]
Exhibit B-4--Outline for Prospective Management Agent of a Multiple
Family Rental or Labor Housing Project
Farmers Home Administration or its successor agency under Public Law
103-354 (FmHA or its successor agency under Public Law 103-354) expects
that Multiple Family Housing (MFH) property and program financed by the
Agency will be managed to comply with authorizing statutes and
regulatory requirements in meeting the objective of providing decent,
safe, and sanitary housing for eligible tenants and members.
The following outline is intended to be a guide that borrowers can
use in evaluating the level and quality of services that a prospective
management agent plans to provide in the management of a multiple
housing project. The borrower is encouraged to add those items it deems
appropriate and to delete any that do not apply.
1. Provide your name, address, name of project, location of
project, and the name of the owner.
2. Provide information about projects previously or presently
managed by the management entity and its employees, including
information relative to default history,
[[Page 295]]
mortgage relief history, and foreclosure history along with an
explanation of the circumstances that led to such actions.
3. Describe your firm including number of main office staff
employed in the following capacities: supervisory, clerical,
maintenance, and social services.
4. Explain where project records will be kept.
5. Describe your plan for project on-site staff including their
duties and work frequency.
6. Give the distance in miles from your home office and the nearest
branch office, if applicable, to the project.
7. Describe the accounting system, rent-up procedure, rent
collection policy, and preventive maintenance program including energy
conservation you intend to use in the proposed project.
8. Describe any and all identities of interest as described in
paragraph V B of Exhibit B of this subpart.
9. Describe the frequency and type of direct supervision to be
given the site manager.
10. Give a description of your financial condition, stability, and
financial resources.
11. Describe your plan to implement applicable FmHA or its
successor agency under Public Law 103-354 accounting requirements for
the project. If you have managed this type of project before, cite those
projects as an indication of your knowledge of such requirements. If you
have not managed such projects, indicate your understanding of what
needs to be done to fulfill such requirements.
12. Please also describe.
a. Your plans for handling tenant grievances and appeals, providing
tenant counseling, and using outside social service agencies.
b. The extent of your knowledge of FmHA or its successor agency
under Public Law 103-354 requirements for tenant eligibility, tenant
certifications and recertifications.
c. Your plans to train your personnel in the management of FmHA or
its successor agency under Public Law 103-354 MFH, including training on
the nondiscrimination and fair housing (reasonable accomodation)
provisions of the civil rights laws.
13. Describe the internal controls you will use to safeguard
project monies, securities, and readily saleable property other than
money and securities.
14. Provide evidence of fidelity coverage capacity.
15. Include where appropriate the following statement: ``I hereby
certify that there is no close association between the management agent
and the owner of the above described project in such manner that creates
a possible conflict of interest.'' If such an association exists (e.g.,
the management agent is a member, stockholder, partner, principal, etc.,
of the borrower organization, familial relationship) explain the
relationship in detail (this may be combined with item 8 of this
exhibit).
Exhibit B-5--Outline for Owner Who Proposes Owner-Management of a
Multiple Family Rental or Labor Housing Project
Farmers Home Administration or its successor agency under Public Law
103-354 (FmHA or its successor agency under Public Law 103-354) expects
that Multiple Family Housing (MFH) property and program financed by the
Agency will be managed to comply with authorizing statutes and
regulatory requirements in meeting the objective of providing decent,
safe, and sanitary housing for eligible tenants and members.
The following outline is intended to be a guide that the borrower
can use in describing the level and quality of services that the
borrower plans to provide in the management of an MFH project. The
borrower is encouraged to add those items it deems appropriate and to
delete any that do not apply. Response to the outline will be used by
FmHA or its successor agency under Public Law 103-354 to evaluate the
level and quality of project management planned by the borrower when the
borrower plans to provide the project management.
1. Provide name of owner, address, and the name and location of
project. State the number or rental units in the proposal.
2. Provide information about your previous projects, regardless of
the source of financing, including mortgage relief and foreclosure
history along with an explanation of the circumstances that led to such
actions.
3. List names and addresses of management agents who manage your
previously or presently owned projects, if any.
4. Describe your understanding of the responsibilities connected
with owning and managing an MFH project under FmHA or its successor
agency under Public Law 103-354.
5. Outline your experience and capabilities in providing housing
for low- and moderate-income tenants.
6. Describe your intended tenure of ownership and the extent of
personal involvement in operating and managing this project.
7. Describe any identities of interest as described in paragraph V
B of Exhibit B of this subpart.
8. Describe your intentions and capacity to meet negative cash flow
situations.
9. Describe your plans for the management and maintenance of the
proposed project. If you intend to manage the project, describe your own
management capacity by answering applicable portions of Exhibit B-4 of
this subpart.
[[Page 296]]
10. Describe the internal controls you will use to safeguard
project monies, securities, and readily saleable property other than
money and securities.
Exhibit B-6--Monthly and Quarterly Project Management Reports
--------------------------------------------------------------------------------------------------------------------------------------------------------
Report or item
Report of item required Due date Prepared by applicable to Distribution References and notes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Project worksheet for interest Monthly payment date.. All borrowers (Agent). Each project......... Copy kept by Instructions for
credit and rental assistance (Form borrower; original preparation are in
FmHA or its successor agency under goes to the FmHA or the FMI for Form
Public Law 103-354 1944-29). its successor agency FmHA or its
under Public Law 103- successor agency
354 Servicing Office under Public Law 103-
with payments. 354 1944-29.
Quarterly Report (Form FmHA or its Due in FmHA or its All borrowers (Agent). Each project until Copy kept by Reports will continue
successor agency under Public Law successor agency discontinued. borrower. Original until written notice
103-354 1930-7, Multiple Family under Public Law 103- and one copy goes to for discontinuance
Housing Project Budget). 354 Servicing Office FmHA or its is received from
by the 20th of month successor agency FmHA or its
following each under Public Law 103- successor agency
reporting period; 354 Servicing under Public Law 103-
forward to State Office; Servicing 354 Servicing
Office by the 30th. Office to forward Official.
original to State Instructions for
Office. * State preparation are in
Office makes copy the FMI for Form
and signed original FmHA or its
returned to successor agency
Servicing Office. under Public Law 103-
354 1930-7.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Signed copy goes to State Office when Servicing Office staff have received delegated approval authority.
Exhibit B-7--Annual Project Management Reports
--------------------------------------------------------------------------------------------------------------------------------------------------------
Report or item
Report of item required Due date Prepared by applicable to Distribution References and notes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiple Family Housing Project In last quarter of Borrower (Agent)...... All projects......... Copy kept by Instructions for
Budget Form FmHA or its successor fiscal year in borrower. Original preparation are in
agency under Public Law 103-354 sufficient time for and one copy to FmHA the FMI for Form
1930-7. FmHA or its successor or its successor FmHA or its
agency under Public agency under Public successor agency
Law 103-354 approval Law 103-354 under Public Law 103-
before start of next Servicing Office; 354 1930-7.
fiscal year. original with
comments to State
Office by Servicing
Office. *State
Office makes copy
(with State Office
comments) and
returns original to
Servicing Office.
[[Page 297]]
Housing allowance for Utilities & Must be submitted with Borrower (Agent)...... Plan II and rental Copy kept by Instructions for
Other Public Services (Exhibit A-6 Form FmHA or its assistance projects borrower. Original preparation are in
to Subpart E of Part 1944 of this successor agency where tenant pays and one copy to FmHA Subpart E of Part
chapter). under Public Law 103- any utilities. or its successor 1944 of this
354 1930-7. agency under Public chapter.
Law 103-354
Servicing Office
with backup data;
Servicing Office
returns original to
borrower after State
Office approval.*.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: All Preceding Items Will Be Submitted Separate From Audit/Verification of Review
--------------------------------------------------------------------------------------------------------------------------------------------------------
Audit Report....................... Within 90 days Borrower's CPA or LPA Projects with 25 or Copy kept by Will be submitted
following close of in accordance with more units in one or borrower. Original separately from
borrower's fiscal booklet ``U.S. more projects, or as and one copy to FmHA other borrower
year. Department of required by FmHA or or its successor management reports.
Agriculture, Farmers its successor agency agency under Public
Home Administration under Public Law 103- Law 103-354
or its successor 354 State Director. Servicing Office;
agency under Public one copy to State
Law 103-354 Audit Office.
Program''.
Multiple Family Housing Borrower Within 90 days Borrower (Agent)...... All projects......... Copy kept by Instruction for
Balance Sheet (Form FmHA or its following close of borrower. Original preparation in the
successor agency under Public Law borrower's fiscal and one copy to FmHA Forms Manual Insert
103-354 1930-8). year. or its successor for Form FmHA or its
agency under Public successor agency
Law 103-354 under Public Law 103-
Servicing Office. 354 1930-8.
Servicing Office
sends original to
State Office. *State
Office makes copy
and returns signed
original to
Servicing Office.
Verification of Review (in lieu of Within 90 days Qualified individual, Projects with 24 or Copy kept by Instruction for
audit report) according to this following close of independent of the fewer units. borrower. Original preparation in the
Subpart (Form FmHA or its borrower's fiscal borrower. to FmHA or its FMI for Form FmHA or
successor agency under Public Law year. successor agency its successor agency
103-354 1930-8). under Public Law 103- under Public Law 103-
354 Servicing 354 1930-8.
Office; Servicing Submitted separate
Office makes one from annual review
copy for State items.
Office.
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Signed copy goes to State Office when Servicing Office staff have received delegated approval authority.
[[Page 298]]
Exhibit B-8--Miscellaneous Project Management Reports or Submittals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Report or item
Report of item required Due date Prepared by applicable to Distribution References and notes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minutes of Annual Meeting (when Submit with next Form Borrower.............. All organizational Two copies to FmHA or
applicable). FmHA or its successor borrowers with its successor agency
agency under Public governing bodies, under Public Law 103-
Law 103-354 1930-7, and all corporations. 354 Servicing
``Multiple Family Office; one to be
Housing Project sent by Servicing
Budget''. Office to State
Office.
Energy Audit....................... Submit with next Form Energy Auditor........ All projects......... One copy to Servicing Exhibit D of this
FmHA or its successor Office. subpart.
agency under Public
Law 103-354 1930-7.
Request for Rental Assistance (Form When rental assistance Borrower (Agent)...... Multiple Family Original and copy to Refer to Exhibit E of
FmHA or its successor agency under is requested. Housing borrowers Servicing Office; this subpart for
Public Law 103-354 1944-25). and applicants with submit to State material to be
tenants paying rent Office for approval included with
in excess of 30% of after Servicing request.
their adjusted Office review. Instructions for
income. preparation are in
Forms Manual Insert
for Form FmHA or its
successor agency
under Public Law 103-
354 1944-25.
Compliance reviews (review Nov. 1st to Oct. 31st FmHA or its successor All Multiple Family Copy to State Office; Refer to 1901.204(e)
conducted within the 1st reporting of each year. agency under Public Housing borrowers. original retained in of Subpart E of Part
year after the project opens for Law 103-354 Servicing Servicing Office. 1901 of this
operation). Official. chapter.
(a) Initial reviews (Form FmHA or The Oct. 31st
its successor agency under Public following loan
Law 103-354 400-8, ``Compliance closing.
Review'' (Non-discrimination
Recipients of Financial Assistance
through FmHA or its successor
agency under Public Law 103-354)*.
(b) Subsequent reviews (Form FmHA Minimum of every 3
or its successor agency under years.
Public Law 103-354 400-8).
Management Plan.................... Start of operations; Borrower.............. All borrowers except Original to borrower; Reviewed annually
update every third those with nonrent copy to Servicing during annual
year of operation. LH projects. Office. review.
[[Page 299]]
Management Agreement (Exhibit B-3 Start of management by Borrower and All borrowers not Copies with FmHA or Reviewed at least
of this subpart). management agent. management agent. providing their own its successor agency annually during
management. under Public Law 103- annual review.
354 concurrence to
Borrower, management
agent and FmHA or
its successor agency
under Public Law 103-
354.
Forms FmHA or its successor agency Start of operations or Borrower, management All borrowers........ Original to Servicing Reviewed at least
under Public Law 103-354 1944-30, whenever there is a agent, individuals, Office; copies to annually during
``Identity of Interest (IOI) change in identity of vendors or borrower and any annual review.
Disclosure Certificate,'' and FmHA interest relationship. organizations sharing other individual or
or its successor agency under identity of interest organization sharing
Public Law 103-354 1944-31, with the project. identity of interest
``Identity of Interest (IOI) with the project.
Qualification Form''.
--------------------------------------------------------------------------------------------------------------------------------------------------------
*If initial rent-up has not occurred by initial review, a subsequent review will be due within 1 year following initial occupancy and then every 3
years.
[58 FR 40868, July 30, 1993, as amended at 59 FR 6886, Feb. 14, 1994]
Exhibit B-9--Notice of Authorization to Withdraw and Use Reserve Funds
To: Borrower Name, Borrower Address
Subject: Authorization to Withdraw and Use Reserve Account Funds
Project Name & Number
This letter authorizes the withdrawal of $______ from the subject
reserve account to be used for ______ (describe uses)
.______________________________________________________________________
The (This) amount of $______ is a capital replacement/
improvement expenditure and repayment by increasing the reserve payment
level is not required; however, the period of deposits are extended
until the required deposit level is achieved.
The (This) amount of $______ is an annual operating and
maintenance expense and must be restored in the reserve account plus any
required annual reserve payment before any return on investment can be
authorized subsequent to this date. (During the second to fifth year of
project operation, add this sentence if the initial operating capital
has not yet been withdrawn, ``This amount will be deducted from the
initial operating capital to be withdrawn if said capital is being
withdrawn during the current budget year, and this amount has not been
restored to the reserve account.'')
The (This) amount of $______ is an annual recurring type of
expense and must be restored in the reserve account according to the
terms and conditions contained in your special servicing work-out plan
with Farmers Home Administration or its successor agency under Public
Law 103-354.
(Add any additional discussion required.)
The correct level of funding of the project reserve account after
this disbursement is (amount) as of (date).
/s/
Servicing Official
Select appropriate paragraph(s).
Exhibit B-10--Reserve Account Tally
Starting Date: (1)
Amount Shown on Loan Agreement/Resolution: $(2)
Contribution: $(3)/Month x 12 = $(4) Annually
[[Page 300]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Planned deposits Planned use of reserve Actual deposits End of
------------------------------------------------------------------------------------------------------------------------- fiscal
Withdrawal Interest earned/used year
Fiscal Beginning Req. Planned ------------------------------------- -------------------------------------------- Comments
year of fiscal annual ending Transfer Ending
year deposit balance Date Purpose Amount to reserve Earned on Transfer Left in reserve
authorized reserve to GOA reserve balance
--------------------------------------------------------------------------------------------------------------------------------------------------------
(5)....... (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reserve Account Tally Instructions
1. Enter month and year that cash flow started from rental income.
2. Enter the ultimate reserve amount to be achieved as shown on the
loan agreement/resolution (as modified and increased, if applicable).
3. Enter monthly reserve deposit installment.
4. Enter yearly reserve deposit installment.
5. Enter borrower fiscal year for which records apply.
6. Enter fiscal year beginning balance carried forward from
preceding fiscal year.
7. Enter the required annual deposit. If borrower is authorized by
an approved budget to contribute less than the amount required by the
loan agreement, enter the reduced amount. For amounts ``restored'' to
reserve after a previous withdrawal, enter restored amount in this
column on a separate line and describe in comment column.
8. Enter the required balance at the end of the borrower fiscal
year.
9. Enter the date of authorization for withdrawal from reserve.
10. Enter the purpose (capital or annual recurring expense); and
describe in comment column any agreement (see Exhibit B-9 of this
subpart) to restore the withdrawal.
11. Enter amount of authorized withdrawal.
12. Enter the actual amount paid into the reserve account.
13. Enter amount of interest earned on reserve deposit during fiscal
year.
14. Enter portion of earned interest transferred to project general
operating account.
15. Enter balance of earned interest left (accrued) in the reserve
account. (Note: At borrower's choice, this amount may be used to help
meet or increase the annual reserve deposit.)
16. Enter the reserve balance at the end of the fiscal year.
Balance at end of last fiscal year.
Less authorized withdrawal.
Plus transfer to reserve.
Plus accrued interest.
Note: Reconciliation of the current account balance may be
accomplished by entering the following calculations of the tally sheet.
(1) Calculate: Gross Potential Reserve (GPR); No. of Deposit
Installments since start date X $ amount of installments = GPR. Then
separately,
(2) Add: regular and extra deposits = $ Additions.
(3) Subtract: FmHA or its successor agency under Public Law 103-354
authorized withdrawals = $ Subtractions.
(4) Result: current balance = $ balance.
(5) Compare GPR to current balance.
17. Enter appropriate notes (e.g., withdrawal uses, explain
discrepancies with other documents).
[[Page 301]]
EXHIBIT B-11--EQUAL HOUSING OPPORTUNITY LOGOTYPE (REQUIRED FOR PROJECT
SIGN)
[GRAPHIC] [TIFF OMITTED] TC05SE91.001
[[Page 302]]
EXHIBIT B-12--FARMERS HOME ADMINISTRATION OR ITS SUCCESSOR AGENCY UNDER
PUBLIC LAW 103-354 LOGOTYPE (OPTIONAL FOR PROJECT SIGN)
[GRAPHIC] [TIFF OMITTED] TC05SE91.002
[[Page 303]]
EXHIBIT B-13--INTERNATIONAL SYMBOL OF ACCESSIBILITY (REQUIRED FOR
HANDICAP PARKING SPACE AND ALONG HANDICAP ACCESSIBILITY ROUTE)
[GRAPHIC] [TIFF OMITTED] TC05SE91.003
[[Page 304]]
Exhibit B-14--Sample Waiting List
(1) Project Name.
(2) Location.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Applicant information Selection criteria
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Income level Unit size Dates
App. Date/ Name/ Phone Race Displ. --------------------------------------------------------- RA contacted Lease Removal
No. time address No. code HH size prior elig. for date date Comments
yes/no VL L M I 1 br 2 br 3 br 4 br yes/no occupancy
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(3).... (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Waiting List Instructions
This sample waiting list may be used as a model in developing a
project waiting list. It combines income level and unit size groupings
on one page. Separate pages for different income levels or unit sizes
are an option.
Waiting lists need to be updated periodically by carrying forward
active applications and removing applications that have become tenants
or members or have been withdrawn. This should be done with sufficient
frequency so that a substantial number of lines on the waiting list are
filled with active applications. Retired waiting lists must be kept
through the next compliance review performed by Farmers Home
Administration or its successor agency under Public Law 103-354 (FmHA or
its successor agency under Public Law 103-354).
Description of Input:
1. Project name--Self-explanatory.
2. Location--Project location name.
3. Application No.--This is the sequential number of the order by
which the completed application was received. This may be a continual
sequence from a given start date or it may be the sequential number in a
particular year. Example: 93-3 denotes the third application received in
1993.
4. Date/time--The date and time a completed application is received.
5. Name/address--Name of applicant and current street and/or mailing
address.
6. Phone number--Applicant's current phone number or a contact
person's phone number.
7. Race code--Local management should use a code known to itself of
the code provided in Form FmHA or its successor agency under Public Law
103-354 1944-8, ``Tenant Certification.'' Use letters or numbers or a
combination of both. Do not state or abbreviate racial or ethnic
descriptions.
8. Household size--The total number of people who will actually
occupy a unit.
9. Blank column--For optional use; for labor housing purposes.
10. Displaced priority--If applicant possesses a letter of priority
entitlement (LOPE) issued by FmHA or its successor agency under Public
Law 103-354 or from other assisted housing enter yes/LOPE. If applicant
is displaced due to a natural disaster or catastrophe, housing rendered
uninhabitable, or seized by legal action (other than for illegal
activity) enter yes/other. Enter no if applicant is not a displacee.
Note: Section 8 applicants who at time of housing need are
involuntarily displaced, living in substandard housing, or paying more
than 50 percent of family income for rent have priority over other
Section 8 applicants.
11. Income level--Enter a checkmark under the income level
determined by income verification.
12. Unit size--Enter a checkmark under each unit size the applicant
is qualified to occupy or deems appropriate to its need. Circle the
checkmark denoting the size requested. Legend: VL--Very low-income, L--
Low-income, M--Moderate-income, I--Ineligible.
13. Rental assistance eligibility--Indicate whether or not the
income level qualifies the applicant to receive rental assistance (RA).
(If RA is being used in the project).
14. Blank column--For optional use. It could denote Sec. 8 handicap
status, elderly family status, LH status, or tax credit eligibility
status.
15. Dates contacted for occupancy--Enter the dates management
contacted or attempted to contact the applicant to offer an apartment
for occupancy. Note the method of contact and the results.
16. Lease date--Fill in date of Lease to denote that applicant has
changed to tenant status.
17. Removal date--Enter date of removal from the waiting list, when
applicable.
18. Comments--Self-explanatory.
[[Page 305]]
Exhibit C--Rental and Occupancy Charge and/or Utility Allowance Changes
I. Objectives
This exhibit prescribes the method of processing changes in the
monthly rental or occupancy charge rates for tenants or members in
Farmers Home Administration or its successor agency under Public Law
103-354 (FmHA or its successor agency under Public Law 103-354) Rural
Rental Housing (RRH), Rural Cooperative Housing (RCH), and Labor Housing
(LH) projects. This exhibit covers all RRH, RCH, and LH loans (except
``nonrental'' LH loans), including those approved before the date of
this subpart.
II. Definitions
A. Approval official. State Director or designated State and
Servicing Office staff with delegated authority according to
Sec. 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.
C. Rental or occupancy charge rate (rental or occupancy charge). The
term rental rate means RRH or LH project rent rates that include
utilities; or net project rent rates plus an allowance for utilities,
either of which should be equal in value. In RCH projects, the term
occupancy charge means the charge for occupancy including utilities; or
the net charge for occupancy exclusive of an allowance for utilities
according to the operating plan of the cooperative.
III. Initial Understanding With Borrower
A. All RRH, RCH, and LH applicants will be informed at the
application stage of the agency's rental or occupancy charge change
procedure. All borrowers will be advised that any proposed rent or
occupancy charge changes must comply with this exhibit. Utility
allowance changes will comply with this exhibit and exhibit A-6 of
Subpart E of Part 1944 of this chapter. This exhibit will also apply to
rental changes resulting from the Department of Housing and Urban
Development's (HUD) Automatic Annual Adjustment Factors for units
receiving section 8 assistance. Request for a rental or occupancy charge
change will be based on a realistic projected budget for the interim
year or the ensuing full year.
B. Rental or occupancy charge change policies.
1. Rental or occupancy charge rates in projects financed in whole or
in part by an RRH, RCH, or LH loan may not be raised without FmHA or its
successor agency under Public Law 103-354 written consent according to
requirements in loan agreements, loan resolutions, and other instruments
executed in connection with RRH, RCH, and LH loans.
2. Changes requiring only prior FmHA or its successor agency under
Public Law 103-354 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 the tenant's or member's total shelter cost.
3. 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.
4. Change requests normally should be made 60 to 90 days prior to
the end of the borrower's fiscal year.
5. It is anticipated that rental or occupancy charge changes would
not be necessary more frequently than once a year.
6. Changes in rental or occupancy charge rates will apply to all
units in the project.
7. Projects with operating budgets that consistently generate a
surplus of unrestricted cash greater than 10 percent of project yearly
expense (exclusive of any qualifying refund of 2 percent initial
operating capital contribution) should reduce their rental or occupancy
charge rates.
8. Current tenant or member certifications on Form FmHA or its
successor agency under Public Law 103-354 1944-8, ``Tenant
Certification,'' or other form approved by FmHA or its successor agency
under Public Law 103-354 must be on file in the Servicing Office.
C. All borrowers are encouraged to participate in the FmHA or its
successor agency under Public Law 103-354 rental assistance (RA)
program. However, unless the Administrator notifies State and Servicing
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 automatically treated as having applied for
rental assistance, since section 530 of title V of the Housing Act of
1949, as amended, requires such consideration.
D. Borrowers must accept RA when it is available and it appears that
a rental or occupancy charge change will cause any very low or low-
income tenant to pay in excess of 30 percent of adjusted monthly income
for shelter costs. If FmHA or its successor agency under Public Law 103-
354 does not have RA appropriation 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 or its successor agency under Public Law 103-354 from
processing a rental or occupancy charge change request. The borrower
will retain the option of submitting an RA request at any time that it
appears that any very
[[Page 306]]
low- or low-income tenant cannot pay in excess of 30 percent of adjusted
monthly income in shelter costs, even without a rent change action. In
such cases, the borrower must apply for RA on Form FmHA or its successor
agency under Public Law 103-354 1944-25, ``Request for Rental
Assistance,'' unless such form is already on file at the FmHA or its
successor agency under Public Law 103-354 Servicing Office.
E. Even though RA is not available, borrowers are encouraged to
convert to Interest Credit Plan II to give tenants and members the most
favorable rental rates possible.
IV. Borrower's Responsibility in Processing Rental or Occupancy Charge
Change Requests Which Change Housing Costs to Tenants or Members
A. When an RRH, RCH, or LH borrower determines that a project rental
or occupancy charge change is needed, the borrower must meet or consult
with the Servicing Office staff, unless such requirement is waived by
the Servicing Office, to review the following information before the
``Notice to Tenants (members) of Proposed Rent (Occupancy Charge) and
Utility Allowance Change,'' Exhibit C-1 of this subpart, is posted and
delivered to the tenants or members:
1. Facts demonstrating the need and justification for a rental or
occupancy charge change in accordance with paragraph III A of this
exhibit.
2. A new operating budget for the borrower fiscal year showing:
a. Currently approved budget at old rents or occupancy charges.
b. Actual income and expenses to date.
c. Proposed budget at proposed new basic rents or occupancy charges.
d. Proposed budget at proposed new note rate rents or occupancy
charges (when applicable).
3. An application for RA is considered to have been automatically
filed with the Agency. However, the borrower may submit an application
for RA at any time on Form FmHA or its successor agency under Public Law
103-354 1944-25, if the borrower's project is an eligible project and
the proposed change will cause any very low- and low-income tenants or
members to pay in excess of 30 percent of adjusted monthly income for
shelter costs.
4. A new energy audit, if one is due, or a listing of deferred
improvements identified in a previous energy audit that were performed
within the past 5-year period according to the requirements of Exhibit D
of this subpart.
5. Information on actual utility costs for representative units in
the project and, whenever any utility allowance was approved over 12
months ago, an updated Exhibit A-6 of Subpart E of Part 1944 of this
chapter when tenants or members pay their own utilities.
6. Any other information the borrower believes necessary to justify
the proposed shelter cost change.
B. Required actions and timeframes for shelter cost changes.
Requests for shelter cost changes (i.e. changes to the rent and/or
utility allowance) may be submitted at any time, however, the Agency
encourages such requests to be submitted within the last quarter of the
calendar year in conjunction with the annual budget review.
1. Agency action.
a. The Agency must act on any shelter cost change request and take
one of the following actions within 25 days of its receipt:
(1) Review the request package and if it is incomplete, return it to
the borrower/manager, advising what additional information is needed, or
(2) Request a meeting with the borrower/manager and state the
proposed meeting date. The request should inform the borrower/manager of
the purpose of the meeting. When a meeting is held, the Servicing
Official will either:
(i) Approve posting of the proposed rental or occupancy charge
change and advise the borrower in writing to post the notice, or
(ii) If the proposed change as submitted is not acceptable, the
Servicing Official and the borrower/manager will arrive at a mutually
acceptable change, and the Servicing Official will authorize in writing,
posting of the agreed to revised figure, OR
(iii) Reject posting of the proposed change, advise the borrower in
writing to not post the notice and advise the borrower of their appeal
or review rights in accordance with subpart B of part 1900 of this
chapter.
(3) If the borrower/manager does not attend the proposed meeting or
other mutually agreed date, the change request will be considered
withdrawn and returned to the borrower/manager, or
(4) The Servicing Official may waive the meeting requirement and
authorize the posting subject to any minor changes or other requirements
listed, if any, or
(5) Allowing posting of the request by not taking action on the
request (de facto posting approval).
b. Once a rental or occupancy charge change has been permitted to be
posted, the only decision that can be made is to ``approve'' or
``reject,'' which would be based on material concerns in comments of the
tenants or members. When the request is rejected, the borrower will be
advised of any appeal or review rights in accordance with subpart B of
part 1900 of this chapter.
2. Borrower action. When approval to post notice is given by FmHA or
its successor agency under Public Law 103-354, the borrower is required
to:
a. Notify tenants or members.
[[Page 307]]
(1) Tenants or members must be notified in writing at least 60 days
before the anticipated effective date of change using Exhibit C-1 of
this subpart. The written notice may be delivered by mail or by other
means. In addition, the borrower must post at least one notice in a
visible place at the project site.
(2) Tenant or member comment period. Tenants or members will be
informed of their right to submit comments to the Servicing Office
during the 20-day period following the date of the notice. Tenants or
members will also be informed of their rights to inspect and copy
records on file with the Agency, which are related to the request,
throughout the 20-day period.
b. Notify the Agency. The Agency must be given a copy of the written
and dated notification which was mailed or delivered to the tenants or
members.
3. Implementation timeframes. Shelter cost changes cannot be
implemented until such time as the tenants or members are informed of
the changed rates. When increases are involved, tenants or members must
be informed at least 30 days in advance of their effectiveness or such
longer time as State law may prescribe. Tenants or members receiving
notice of a shelter cost increase via the use of Exhibit C-1 of this
subpart will already have been ``informed at least 30 days in advance''
and need not receive a second notice provided the final approval action
(i.e., See Exhibit C-2 of this subpart) does not change the shelter cost
rate established in Exhibit C-1.
V. Determination by FmHA or its successor agency under Public Law 103-
354
A. Actions by servicing official. The Servicing Official will not
consider a rental or occupancy charge change application complete and
acceptable until the borrower has complied 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 Agency will:
1. Review all the material submitted.
2. Review a copy of the borrower's latest Form FmHA or its successor
agency under Public Law 103-354 1944-29, ``Project Worksheet for
Interest Credit and Rental Assistance.''
3. Determine if RA is available for an eligible project on behalf of
the low-income tenants or members. If RA is available, and it is
apparent from record sources that at least one tenant is eligible for
RA, the Servicing Office staff must require the borrower to apply for RA
if an application for RA using Form FmHA or its successor agency under
Public Law 103-354 1944.25 is not already on file at the Servicing
Office.
4. When the change is requested for energy saving improvements
identified in an energy audit, the Servicing Official shall determine
the cost effectiveness and financial impact of the proposed improvements
from information contained in the energy audit. The Servicing Official's
determination will be made according to paragraph VI of Exhibit D of
this subpart.
5. When State Office approval is required, the Servicing 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 rent 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,
and
d. A short narrative describing the general tone and material
content of tenant or member comments and concerns.
6. When a member of the Servicing Office staff is the approval
official, the documentation required by paragraph V A 5 of this exhibit,
will be attached to the rent change request.
7. When the borrower has requested RA, complete Form FmHA or its
successor agency under Public Law 103-354 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 and act on
the request within 25 days. The borrower will be notified by the
Approval Official of the determination within 45 days from the date the
``Notice to Tenants (Members) of Proposed Rent (Occupancy Charge) and
Utility Allowance Change'' (Exhibit C-1 of this Subpart) is posted,
otherwise the request will be considered approved.
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
(Exhibit C-2 of this subpart) will be prepared using the required and/or
optional paragraphs as applicable. The reasons for the approved rent
change should be concise. The notice letter will be mailed or hand
delivered to each tenant or member and posted in a conspicuous
places(s).
b. When the borrower's project is operated on a profit basis and the
purpose of the rental change is for: justified operating and maintenance
expense; funding the reserve account; other project expenses; and
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 Servicing Official determines an
application for a proposed rental or occupancy charge change is
[[Page 308]]
not justified on the basis of the information submitted, the Servicing
Official will notify the borrower in writing of the reason(s) why the
change is not approved. The borrower will be advised of their appeal
rights in accordance with subpart B of part 1900 of this chapter. Rental
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 rental or occupancy charge structure to meet operation and
maintenance expenses which are appropriate and reasonable in amount,
meet the FmHA or its successor agency under Public Law 103-354 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 rental 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 rental change will result in rental
rates in excess of what eligible tenants can afford).e State Director is
able to provide RA to the project and the borrower's project is operated
on a nonprofit basis, or a limited profit basis (as defined in
Sec. 1944.205 of subpart E of part 1944 of this chapter); but the
borrower has not applied for RA within the most recent period of 180
days prior to the rental change request or otherwise already has an
application for RA on file at the Servicing Office on Form FmHA or its
successor agency under Public Law 103-354 1944-25.
VI. Unauthorized Rental or Occupancy Charge Changes
When a borrower implements a change that does not meet the
requirements of this exhibit, the borrower will be notified in writing
that: the change has not been authorized; and the rates must be rolled
back to the last FmHA or its successor agency under Public Law 103-354
authorized level. Tenants or members affected by the unauthorized change
will be given a rebate or credit for the unauthorized amounts
retroactive to the date of the unauthorized change. Those borrowers that
fail to comply the provisions of this paragraph will be handled
according to Sec. 1965.85(d) of subpart B of part 1965 of this chapter
or paragraph X of this exhibit.
VII. Annual Adjustment Factors for Section 8 Units
A. HUD allowance of change.
1. If the Servicing Official disapproves a rental rate change, or
approves a lesser amount than permitted by HUD, as a result of HUD's
annual adjustment factors for units receiving Section 8 assistance, the
Servicing Official must require the borrower to deposit any excess
funds, the difference between the FmHA or its successor agency under
Public Law 103-354 approved note rate rent and the higher HUD authorized
rental rate, into the reserve account.
2. If this results in an accumulation of funds in the reserve
account behind the sum shown in the loan agreement or loan resolution,
the interest credit reduction on a Section 8/515 project should be
adjusted or canceled through field office terminals.
3. This adjustment or cancellation can be done without borrower
consent for projects with interest credit agreements dated on or after
October 27, 1980. For projects with interest credit agreements dated
before October 27, 1980, this cancellation or reduction of interest
credit may occur only with the borrower's written consent.
4. When interest credit cannot be canceled or reduced, the Agency
will collect overage. Overage, for each tenant, in this instance is the
difference between the FmHA or its successor agency under Public Law
103-354 interest credit reduced rate rent and the lesser of the FmHA or
its successor agency under Public Law 103-354 note rate rent or the HUD
contract rent. The total overage collected should not exceed an amount
equal to the interest credit authorized by the interest credit agreement
for the period of time covered by the loan payment installment.
5. Even though interest credit is canceled or nullified by
collecting overage, the borrower will still be required to operate on a
limited profit basis.
B. HUD disallowance of change. If HUD will not allow an annual
adjustment of rents, and the project operating budget justifies need for
rent(s) greater than HUD's contract rent(s), the State Director only may
authorize conversion from a plan of 1 or 2 percent interest reduction
(Interest Credit Plan II) to a plan of debt amortization at 1 percent
interest plus overage up to the HUD contract rent(s) level by meeting
the requirements of paragraph IV A2e of Exhibit B of this subpart.
C. Reviewing budgets where HUD subsidies are involved. FmHA or its
successor agency under Public Law 103-354 has the responsibility to
review and approve project budgets based on need to meet the cash flow
and expense requirements without regard to HUD's automatic annual
adjustment. Since HUD and FmHA or its successor agency under
[[Page 309]]
Public Law 103-354 approved rent rates frequently differ, it may be
necessary to have a 3 column budget in projects with Section 8 Housing
Assistance Program (HAP) agreements. (Refer to the examples shown in
paragraph VIID of this exhibit).
1. When HUD contract rent and the 1 or 2 percent reduced rate are
the same. In a project where 100 percent of the units receive Section 8
(100 percent Section 8 projects), and the HUD contract rent rate and the
1 or 2 percent reduced rate are the same, only the HUD contract rent
rate column on the budget is needed.
2. When HUD contract rent falls between the 1 or 2 percent reduced
rate and the FmHA or its successor agency under Public Law 103-354 note
rate. In a 100 percent Section 8 project where the HUD contract rental
rate falls between the 1 or 2 percent reduced rate rent and the note
rate rent, a 3 column budget showing the 1 or 2 percent reduced rate
rent, the HUD contract rental rate, and FmHA or its successor agency
under Public Law 103-354 note rate rent is needed.
3. When HUD contract rate exceeds the FmHA or its successor agency
under Public Law 103-354 note rate. In a 100 percent Section 8 project
without interest credit and where the HUD contract rental rate exceeds
the note rate rent, the budget should show 2 columns reflecting each
rent rate. The difference between the two rent rates is considered
excess funds and is to be deposited in the reserve account.
4. When part of units are covered by Section 8 HAP contract. In a
project where only part of the units are under a Section 8 HAP contract,
a 3 column budget of basic rental rate, HUD contact rental rate, and
note rate rent is needed. The HUD contract rental rate may fall between
the basic and note rate, or it may be higher than the note rate rent.
D. Overage payments and excess income from an interest credit
agreement:
1. Overage is the amount by which total rental payments paid or to
be paid by the tenants or members exceed the total basic monthly rental
rate. In 100 percent Section 8/515 projects, and Plan II projects, where
the HUD contract rental rate exceeds the approved 1 or 2 percent (or
greater percentage in the case of Plan II) reduced rental rate, the FmHA
or its successor agency under Public Law 103-354 approved rate is the
required ``basic'' monthly rental rate. Whenever FmHA or its successor
agency under Public Law 103-354 approves a note rate rent change for a
lesser amount than the change permitted by HUD, the FmHA or its
successor agency under Public Law 103-354 Servicing Official must
require the borrower to deposit any excess funds into the reserve
account.
2. Any Section 8 subsidy funds paid by HUD are paid on behalf of the
tenant or member, and therefore, any Section 8 payments are not
considered as excess funds until after any benefits provided by the
interest credit agreement are recovered. Therefore, the following
applies:
a. Projects on an Interest Credit plan coded 7 or 8 on Form FmHA or
its successor agency under Public Law 103-354 1944-7. See figure 1 of
paragraph VIID 2 a (3) of this exhibit.
(1) When HUD rate is equal to or less than FmHA or its successor
agency under Public Law 103-354 note rate. In 100 percent Section 8/515
projects when the HUD contract rental rate is more than the 1 or 2
percent reduced rate and is either equal to or less than the FmHA or its
successor agency under Public Law 103-354 note rate rent, overage will
be paid to FmHA or its successor agency under Public Law 103-354 in an
amount equal to the difference between the HUD contract rental rate and
the 1 or 2 percent reduced rate.
(2) When HUD rate is greater than FmHA or its successor agency under
Public Law 103-354 note rate. In 100 percent Section 8/515 projects when
the HUD contract rental rate is greater than the FmHA or its successor
agency under Public Law 103-354 note rate rent, overage will be paid to
FmHA or its successor agency under Public Law 103-354 as in D 1 of this
paragraph, and the amount equal to the difference between the HUD
contract rental rate and the FmHA or its successor agency under Public
Law 103-354 note rate rent will be deposited in the reserve account as
excess income. In 100 percent Section 8/515 projects, when the HUD
contract rental rate exceeds the note rate rent the borrower/manager
needs to use FmHA or its successor agency under Public Law 103-354 Form
1944-29, part I, items 23 through 29, to document the required deposit
in the reserve account.
(3) Figure 1. Projects with 100 percent of units assisted by HUD
Section 8.
[[Page 310]]
Example 1
[GRAPHIC] [TIFF OMITTED] TC05SE91.004
Note: If the HUD contract rent and FmHA or its successor agency
under Public Law 103-354 1 or 2 percent reduced rent are the same, then
the first budget column would not apply.
Example 2
[GRAPHIC] [TIFF OMITTED] TC05SE91.005
b Projects on Interest Credit Plan II and receiving Section 8
Assistance. See figure 2 of paragraph VII D 2 b (3) of this exhibit.
(1) Calculating overage. In Section 8/515 projects the overage will
be the difference between basic rental rate and the note rate rent
including the income from HUD. The overage will be reported as type 3.
(2) Depositing excess income in the reserve account. In the cases
where the HUD contract rental rate exceeds the note rate rent, the
difference is excess income and will be deposited in the reserve
account. The borrower/manager should use FmHA or its successor agency
under Public Law 103-354 Form 1944-29, part I, item 23 through 29, to
document the required deposit in the reserve account.
(3) Figure 2. Projects with some HUD Section 8/515 units.
[[Page 311]]
Example 1:
[GRAPHIC] [TIFF OMITTED] TC05SE91.006
Example 2:
[GRAPHIC] [TIFF OMITTED] TC05SE91.007
VIII Rental or Occupancy Charge Control Preemption Policy. In order
to carry out the provisions of this subpart and to protect a housing
source in rural areas for very low-, low- and moderate income families;
the financial obligation of borrowers; and the financial interest of the
government in such housing, the entire field of rental or occupancy
charge control that may be exercised by any local rental control board
or other authority pursuant to State and local law, as it affects
housing covered by this subpart, is hereby preempted.
IX Special Servicing Market Rate Rent (SMR) Change: When a Plan II
or Plan II RA RRH project is experiencing serve 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 as part of a workout
plan according to the provisions of Exhibit F of subpart B of part 1965
of this chapter. An SMR addresses
[[Page 312]]
the situation where some existing and prospective tenants are not
willing to pay 30 percent of adjusted income or note rate 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 or its successor agency under Public Law 103-354 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 I of Exhibit A-8 of subpart E of part
1944 of this chapter.
A Eligibility for SMR. Based on borrower documentation and FmHA or
its successor agency under Public Law 103-354 servicing records, the
Servicing Official will prepare a written recommendation for borrower
eligibility for an SMR.
1 Based on borrower documentation and Servicing Office
verification:
a Over the most recent 6-month period, the monthly vacancy rate has
averaged at least 15 percent or the project shows financial losses
considering the following:
(1) Each month was at least 12 percent vacant, and
(2) When RA is not available, units subsidized by funds of the
project/owner will be considered vacant for SMR calculations, or
(3) The project submits financial records that show a 15 percent
loss of rents available below basic rent not including project provided
subsidies, and provided
(4) The loss of rents available is not a result of management's
failure to effectively market the units.
b Comparable market rental rates in the community are lower than
the previously approved FmHA or its successor agency under Public Law
103-354 note rate rents. Exhibit A-2 of 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:
(1) Significant outreach efforts in the community, including (but
not limited to) contacts listed in the Affirmative Fair Housing
Marketing Plan.
(2) The borrower had obtained approval from FmHA or its successor
agency under Public Law 103-354 for a servicing workout plan, exclusive
of SMR features, at least 3 months earlier.
d The borrower complies with FmHA or its successor agency under
Public Law 103-354 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 or its
successor agency under Public Law 103-354 1930-7, ``Multiple Family
Housing Project Budget,'' with only minimally sufficient operation and
maintenance expenses. The project budget should continue to fund other
cash expenditures such as FmHA or its successor agency under Public Law
103-354 payments and the reserve account, except for the return on
initial investment which the borrower has agreed to forego according to
paragraph IX A 1 e of this exhibit.
2 Based on Servicing Office servicing actions and documentation:
a The project has been operational for at least 24 months. The
National Office may make exceptions to this requirement on a case-by-
case basis for extreme hardship.
b No more than 10 percent of budgeted expenses are reflected in
unrestricted cash on hand, and reserve account balances do not exceed
the required accumulation-to-date minus authorized withdrawals.
c The Servicing Official 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 Servicing Official has reviewed and approved a project budget
with only minimally sufficient operation and maintenance expenses and
other expenses as specified in paragraph IX A 1 f of this exhibit.
e The Servicing Official 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 in paragraph IX A of this exhibit are met.
2 While a request for an SMR is pending or an SMR is in effect,
requests to develop new FmHA or its successor agency under Public Law
103-354 units in the area will be handled in accordance with
Sec. 1944.213(f) of subpart E of part 1944 of this chapter.
C Implementing an SMR.
1 After the use of an SMR has been approved by the State Director,
the Servicing Official will establish an SMR for the project with the
borrower.
a The SMR will be obtained by adjusting the ``FmHA or its successor
agency under Public Law 103-354 Debt Payment'' item in the ``Proposed
Budget'' column of Form FmHA or its successor agency under Public Law
103-354 1930-7, to reflect a payment to FmHA or its successor agency
under Public Law 103-354 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
[[Page 313]]
SMR rental rates comparable with community rental rates. This rate will
remain constant except as provided in paragraph 4 D of this exhibit.
2 The initial change to SMR rents or a decrease in SMR rents will
be accomplished in accordance with the following:
a The borrower will submit to the Servicing Official, the items
listed in paragraph IV A 1, 2, 4, 5, and 6 of this exhibit.
b The Servicing Official 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.
c In addition to any State requirements, the borrower notifies each
tenant or member of the new rates and/or utility allowance and:
(1) Include 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.
(2) Mail a copy of the notice to the tenant or member at least 30
days prior to the effective date of the change.
(3) Offer the tenants or members an opportunity to meet with
management to discuss the change and review any material contributing to
the change.
(4) Inform the tenants or members of their right to request a review
of the rate change approval decision within 45 days of the date of the
notice by writing to the next higher FmHA or its successor agency under
Public Law 103-354 approval official. Until the request is resolved, the
tenants or members are required to pay the changed amount of rent as
indicated in the notice of approval.
3 When an SMR is implemented in a Plan II section 8/515 Project,
use lines 23 through 29 of Form FmHA or its successor agency under
Public Law 103-354 1944-29 to report any additional payments to the
reserve account required when HUD contract rents exceed SMR rental
rates.
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.
a If the local market conditions that caused the need for the SMR
have not been resolved and corrected, document same and update the
monitoring timeframes and proceed no further. However,
b If the local market conditions have changed and change in the SMR
is warranted, the requirements listed in paragraphs IX D 2, 3, and 4 of
this exhibit apply.
2 An SMR must have the SMR rate rent increased by a minimum of 10
percent per year (or a higher amount if mutually agreed to by the
borrower and FmHA or its successor agency under Public Law 103-354) 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
paragraphs IX A 1 c (1) and (2), d, e, or f of this exhibit.
3 An SMR is completely terminated when the note rate rent is
regained.
4 An increase in an SMR will be accomplished in accordance with
paragraph IV of this exhibit.
E Disapproval of SMR. When the approval official determines a
request for an SMR 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 SMR is not approved. The borrower will be advised
of their appeal rights in accordance with Subpart B of Part 1900 of this
chapter.
X 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.
[58 FR 40868, July 30, 1993, as amended at 58 FR 44263, Aug. 20, 1993]
Exhibit C-1--Notice to Tenants (Members) of Proposed Rent (Occupancy
Charge) and Utility Allowance Change
_______________________________________________________________________
Date Posted
You as a tenant (member) are hereby notified that, subject to
Farmers Home Administration or its successor agency under Public Law
103-354 (FmHA or its successor agency under Public Law 103-354)
approval, rents (occupancy charge) and utility allowances will be
changed effective __________. (at least 60 days from this posting or
other timeframe if required by State law)
____________________ (Project Owner Name) has filed with FmHA or its
successor agency under Public Law 103-354, United States Department of
Agriculture, a request for approval of a change in the monthly rent
(occupancy charge) rates and/or utility allowances of the (Name of
apartment complex) for the following reasons:
1.
2.
3.
4.
Planned rent (occupancy charge) changes are as follows:
Present rent (occupancy charge) Proposed rent (occupancy charge)
Unit size Amount changed
Basic Note rate Basic Note rate
[[Page 314]]
Planned utility allowance changes are as follows:
Present utility Proposed utility
Unit size allowance allowance Amount changed
(Use where applicable such as when only basic or note rate rents
and/or utility allowances are changing and the tenant is receiving
rental assistance: Since you receive subsidy, your contribution for rent
(occupancy charge) and utilities will not be changed so long as your
income and household composition remain unchanged).
All materials justifying the proposed changes have been reviewed by
FmHA or its successor agency under Public Law 103-354 and will be made
available to you and other tenants (members) to inspect and copy at
________________ during the hour of ____________.
You may submit comments or objections in writing to the FmHA or its
successor agency under Public Law 103-354 Servicing Official 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 or its successor agency under Public Law 103-354
Servicing Official. Your comments or objections must be filed prior to
____________ with the FmHA or its successor agency under Public Law 103-
354 Servicing Official, ________________, at the Servicing Office
located at ________________,
These comments will be reviewed by the FmHA or its successor agency
under Public Law 103-354 Servicing Official and forwarded to the FmHA or
its successor agency under Public Law 103-354 approval official who will
decide if the change(s) should be approved.
Each tenant (member) will be notified in writing of the FmHA or its
successor agency under Public Law 103-354 decision to approve or deny
the change. The approved rents and utility allowances 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
rents (occupancy charges) and utility allowances will be effective at
the next rent (occupancy charge) due date following the additional
notice and the FmHA or its successor agency under Public Law 103-354
approval.
By______________________________________________________________________
Borrower/Borrower's Representative
Exhibit C-2--Notice of Approved Rent (Occupancy Charge) and Utility
Allowance Change
Dear
You are hereby notified that the Farmers Home Administration or its
successor agency under Public Law 103-354 (FmHA or its successor agency
under Public Law 103-354) has reviewed the request for a change in
shelter costs for the ________ project(s), and considered all
justifications provided by project management [and comments provided by
tenants]. The FmHA or its successor agency under Public Law 103-354 has
approved the following rent (occupancy charge) and/or utility allowance
rates listed below. The changes for all units will become effective on
________, 19____. (Insert effective date shown in exhibit C-1 of this
subpart or later effective date in accordance with last paragraph of
Exhibit C-1 of this subpart.) The change is needed for the following
reasons:
(Insert Reasons for Approval)
The approved changes are as follows:
Present rent (occupancy charge) Approved rent (occupancy charge)
Unit size
Basic Note rate Basic Note rate
The approved utility allowance changes are as follows:
Present utility Proposed utility Approved utility
Unit size allowance allowance allowance
Should you have any questions or concerns, you may contact FmHA or
its successor agency under Public Law 103-354. The FmHA or its successor
agency under Public Law 103-354 Servicing Office address is:
(Use the following required and/or optional paragraphs where
applicable.)
*You must notify the tenants (members) of FmHA or its successor
agency under Public Law 103-354's approval of the rent (occupancy
charge) and utility allowance changes by posting this letter in the same
manner as the ``Notice to Tenants (Members) or Proposed Rent (Occupancy
Charge) and Utility Allowance Change (Exhibit C-1 of this subpart).''
This notification must be posted in a conspicuous place and cannot be
substituted for the usual written notice to each individual tenant
(member).
*This 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
[[Page 315]]
(occupancy charge) and utilities will continue to be based on the higher
of 30 percent 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.
**Your application for RA units on behalf of eligible tenants
(members) has been received (or is on hand). Since RA units are not
available, the approved rate and/or allowance change is subject to your
acceptance of the RA units should they become available.
**This rate and utility allowance change is conditioned on the
requirement that you carry out energy conservation measures and
operating practices as determined necessary by the project energy audit.
You will be allowed ____________ days for completion of the work. FmHA
or its successor agency under Public Law 103-354 assistance may be
available to finance any needed improvements.
**You may file an appeal regarding the rate and utility allowance
change as approved within 45 days of the date of this notice. See
attached Form FmHA or its successor agency under Public Law 103-354
1900-1, ``Request for Appeal of Adverse Action,'' for your appeal
rights. A request for a hearing must be sent to the Area Supervisor,
National Appeals Staff, (T3address), postmarked no later than (30 days
from date of this letter).
*You must inform the tenants (members) of their right to request an
explanation of the rate and utility allowance change approval decision
within 45 days of the date of this notice by writing to (insert the name
and address of next higher FmHA or its successor agency under Public Law
103-354 approval official). All 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 or its successor
agency under Public Law 103-354 approved rent changes may give the owner
a 30-day 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 changed rent.
Sincerely,
_______________________________________________________________________
FmHA or its successor agency under Public Law 103-354 Approving Official
*Required
**Optional, as applicable
Exhibit D--Energy Audit
I Objective: It is the objective of the Farmers Home Administration
or its successor agency under Public Law 103-354 (FmHA or its successor
agency under Public Law 103-354) that Multiple Family Housing (MFH)
financed by the Agency incorporates energy conservation measures and
operating practices in keeping with the National Energy Strategy for a
more efficient, less vulnerable, and environmentally sustainable energy
future. Monitoring of this objective will be accomplished by energy
audit.
II Purpose and Intended Outcome:
A The purpose of this exhibit is to define the FmHA or its
successor agency under Public Law 103-354 requirements for energy
audits. While energy audits will review the functioning of energy
conservation measures initially incorporated in the housing, or
previously retrofitted, and identify need for any further measures, the
main thrust of energy audits will be to evaluate and/or recommend
operating practices used in individual dwelling units and the common
areas of a project.
B The intended outcome is to reduce tenant or member utility
expenses; reduce project operating and maintenance expense; reduce usage
of subsidy; improve the marketability of units and value of the
property; conserve national energy resources within cost effectiveness;
and increase the comfort and enjoyment level of tenants or members.
III Borrower Responsibility:
A Initial audit. An initial energy audit is required for each
project during the third year of operation following completion of
construction for ``early'' detection and correction of any deficiencies
in energy conservation measures and/or operating practices.
B Subsequent audit. A subsequent energy audit is required at least
within 5 years of the initial audit and at 5-year intervals thereafter,
to identify if energy conservation improvements are needed.
C Submission of audit. The borrower shall submit a copy of the
initial or subsequent energy audit along with the next submission of
Form FmHA or its successor agency under Public Law 103-354 1930-7,
``Multiple Family Housing Project Budget.'' The borrower's plan for
implementing the recommended improvements shall be included in the
project budget. The submitted copy of the energy audit will be retained
in the file by the Servicing Office for review during subsequent annual
reviews. If any of the improvements are deferred due to cost
ineffectiveness, the borrower shall, each year thereafter, include
[[Page 316]]
with the annual project budget, an updated cost feasibility analysis of
the deferred improvements, along with the borrower's recommendation for
implementing the improvements.
D Cost of audit. An energy audit is beneficial to the operation of
an MFH project. The cost of the audit is an operational 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.
IV Performance of Energy Audit:
A An energy audit shall be an in-depth, on-site inspection of the
building shell and of the space heating, space cooling, ventilation, and
water heating equipment for the building. It shall be conducted by a
qualified energy auditor.
B Persons shall be considered qualified to perform an energy audit
if they:
1 Are authorized under a State Plan approved by the Department of
Energy (DOE) in accordance with the requirements in 10 CFR Part 456,
2 Are authorized under a Federal Standby Plan promulgated by DOE in
accordance with the requirements in 10 CFR part 456, or,
3 Can otherwise demonstrate that they possess the technical skills
and knowledge necessary to perform energy audits.
C When persons meeting the qualifications in paragraph IV B of this
exhibit are not available, the FmHA or its successor agency under Public
Law 103-354 State Director, with prior National Office approval, may
institute a plan and method to accomplish the requirements of this
exhibit using Agency staff and resources, provided it is cost and time
effective to perform such task.
D The energy auditor shall inspect the building to determine which
energy saving measures and operating practices should be improved. The
energy auditor is expected to summarize the results of this inspection
and projected cost savings in priority order and include them in a
written report.
1 The report shall address the condition or application of the
following energy saving measures:
a Caulking and weatherstripping;
b Central high efficiency air conditioners;
c Ceiling, wall, and floor insulation;
d Crawlspace or foundation wall insulation;
e Duct or pipe insulation;
f Water heater insulation;
g Storm or thermal windows and doors;
h Heat-reflective window and door material;
i Crawlspace and/or attic ventilation;
j Energy management devices;
k Clock thermostats;
l Furnace efficiency modifications; and
m Vent dampers for water heaters, furnaces, and boilers.
2 The report may address the following energy saving measures if
significant benefits can be shown in the opinion of the energy auditor:
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 The auditor shall inspect the building and report any improvement
of energy conserving operating practices that can lead to immediate
energy savings. These practices include, but are not limited to, the
following:
a Furnace efficiency maintenance and adjustments (air filters
should be changed frequently);
b Water flow reduction on showers and faucets;
c Sealing leaks and check insulation of pipes and ducts;
d Raising thermostat settings in summer and lowering them in
winter;
e Cleaning baseboard convectors and refrigerator coils;
f Nightime temperature setback;
g Reducing energy use when apartment is unoccupied;
h Plugging leaks in attics, basements, and fireplaces;
i Efficient use of shading; and
j Reduce water heater temperature setting (should not exceed 120
degrees Fahrenheit).
4 The report shall include a list of any recommended energy saving
measures and/or operating practices. The following information shall be
provided as applicable:
a Description;
b Estimated useful life;
c Estimated annual energy cost savings in the first year;
d Cost; and
e Estimate of any incremental annual operation and maintenance
costs.
5 The report shall include a summary of the energy auditor's
qualifications.
V Funding: Improvements may be funded from annual project income,
project reserve, a subsequent loan, borrower's funds, or any other FmHA
or its successor agency under Public Law 103-354 authorized funding
which will keep the improvement cost effective. Plans for funding the
improvements should be included in the borrower's recommendation for
implementation.
VI Servicing Official Responsibility:
A The Servicing Official shall determine the cost effectiveness and
financial impact of the proposed improvements from information contained
in the energy audit.
1 Cost effectiveness. Cost effectiveness shall be determined by
comparing the value-in-use of the facility with and without the
[[Page 317]]
proposed energy saving improvement. Exhibit D of FmHA or its successor
agency under Public Law 103-354 Instruction 1922-B, (available in any
FmHA or its successor agency under Public Law 103-354 office), 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 5-year period are found
to be cost effective and have a positive financial impact, the Servicing
Official 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 Servicing Official 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 or its successor
agency under Public Law 103-354 investment only, the improvement is cost
effective. A positive first year financial impact is not 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 Servicing Official shall recommend deferral of
implementation of the improvements. Any deferred improvements must be
analyzed during each subsequent year's annual analysis.
C A copy of the decision regarding the energy audit will be
included in the annual reports forwarded to the State Director.
VII State Director Responsibility: The State Director shall review
the Servicing Official's recommendations and the decision regarding
implementation of the proposed improvements and/or practices as a part
of the annual report review.
VIII Development: 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 Sec. 1924.6
(b)(3)(i) of subpart A of part 1924 of this chapter will not apply to
improvements made by the owner-builder method.
IX Rent or Occupancy Charge Change: Any rental or occupancy charge
change necessitated by the improvements must be processed as set forth
in Exhibit C of this subpart.
Exhibit D-1--Calculation of Financial Impact (Energy Audit)
A. First Year Annual Savings (from audit). $__________
B. Annual Cost of Amortized Loan (from $__________
calculation in part D below).
C. Difference (A-B) (if zero or greater, $__________
energy saving measure has a positive
financial impact).
D. Calculation of Annual Cost of Amortized
Loan for Energy Saving Measure:
1. Appraisal of Energy Saving Measure $__________
(for calculation of appraised value, of
FmHA or its successor agency under
Public Law 103-354 Instruction 1922-B
see Exhibit D available in any FmHA or
its successor agency under Public Law
103-354 office).
2. Amortization Factor (for calculation x __________
of Amortization Factor, use interest
rate of Rural Rental Housing and Rural
Cooperative Housing from FmHA or its
successor agency under Public Law 103-
354 Instruction 440.1, Exhibit B
(available in any FmHA or its successor
agency under Public Law 103-354
office); the Useful Life or weighted
average of Full Life for more than one
energy saving measure from the energy
audit; and the Amortization Factor from
FmHA or its successor agency under
Public Law 103-354 Instruction 440.1,
(available in any FmHA or its successor
agency under Public Law 103-354 Office).
3. Annual Cost (Appraisal x $__________
Amortization Factor enter answer in
part B above).
[[Page 318]]
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 the Farmers Home Administration or its successor
agency under Public Law 103-354 (FmHA or its successor agency under
Public Law 103-354). For the purposes 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
nonprofit organization, nonprofit organization of farmworkers, or a
State or local public agency. RA will supplement the benefits available
to tenants under the interest credit program outlined in Exhibit H to
this subpart.
II Definitions.
A Eligible tenants. Any very low-income, or low-income household
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 of subpart A of part 1944 of this chapter (available in any
FmHA or its successor agency under Public Law 103-354 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;
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 or its successor agency under Public Law
103-354 according to paragraph VI D 2 of Exhibit B of this subpart.
4 The household must have an unexpired and signed Form FmHA or its
successor agency under Public Law 103-354 1944-8, ``Tenant
Certification,'' on file with the borrower.
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;
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 limited profit basis as defined in Sec. 1944.205 of subpart
E to part 1944 of this chapter;
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 and FmHA
or its successor agency under Public Law 103-354 RA in the same project.
In such cases, Form FmHA or its successor agency under Public Law 103-
354 1944-7, ``Multiple Family Housing Interest Credit and Rental
Assistance Agreement,'' for the project will reflect coding for ``Plan
II RA.''
3 Borrowers will provide RA to only those eligible tenants
occupying LH, RCH, or RRH rental housing units financed by FmHA or its
successor agency under Public Law 103-354.
C Operational project. A completed RRH, RCH, or LH project financed
by FmHA or its successor agency under Public Law 103-354 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 or its successor agency under
Public Law 103-354. For new construction RA purposes, if 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 or its successor agency under
Public Law 103-354 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 RA agreement. The term refers to Form FmHA or its successor
agency under Public Law 103-354 1944-27, or its predecessor. Form FmHA
or its successor agency under Public Law 103-354 444-27 and Form FmHA or
its successor agency under Public Law 103-354 444-27A.
G RA obligation. The obligation consisting of the number of RA
units and associated
[[Page 319]]
dollar amounts of rental assistance specified in a particular RA
agreement.
H RA obligation number. The identification number associated with a
particular RA obligation.
I Replacement units. RA units which replace RA units in RA
agreements expiring because obligated funds have been fully disbursed.
J Servicing units. RA units which increase the number of RA units
resulting in initial or additional RA agreements.
K Shelter cost. The approved shelter cost consists of basic or note
rate rent plus utility allowance and occupancy surcharge, when required.
Basic and/or note rate rent must be shown on the project budget for the
year and approved according to Sec. 1930.122 of (b)(1) of this subpart.
Utility allowances, when required, are determined and approved according
to Exhibit A-6 of subpart E of part 1944 of this chapter. Any change in
rental rates or utility allowances must be processed according to
Exhibit C of this subpart.
L Utility allowances. The allowance approved by FmHA or its
successor agency under Public Law 103-354 according to Exhibit A-6 of
subpart E of part 1944 of this chapter to cover the cost of utilities
which are payable directly by the households.
III Utilization of RA. 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.
IV Priority of RA applications.
A State of 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.
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.
Priority in allocating RA units will be as follows:
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 Servicing 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 having highest need located in areas identified as having
the greatest need for low-income housing, and selected for funding in
accordance with Sec. 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 Form FmHA or its
successor agency under Public Law 103-354 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
or its successor agency under Public Law 103-354 for consideration.
V Processing of RA applications. 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 should
be encouraged to have on file a Form FmHA or its successor agency under
Public Law 103-354 1944-25 with the Servicing Official to avoid delays
in processing future servicing requests. Once a Form FmHA or its
successor agency under Public Law 103-354 1944-25 is on file at the FmHA
or its successor agency under Public Law 103-354 Servicing Office,
subsequent submittals of the form will not be necessary to support
subsequent approvals of RA by FmHA or its successor agency under Public
Law 103-354. A separate Form FmHA or its successor agency under Public
Law 103-354 1944-25 will be submitted for each project. The borrower
should include the following with each request.
[[Page 320]]
a Form FmHA or its successor agency under Public Law 103-354 1944-
29, ``Project Worksheet for Interest Credit and Rental Assistance,''
with all columns completed for each tenant in the project. (All Forms
FmHA or its successor agency under Public Law 103-354 1944-8 must be
current.)
b Approved or proposed budget for the year on Form FmHA or its
successor agency under Public Law 103-354 1930-7, ``Multiple Family
Housing Project Budget,'' with Exhibit A-6 of 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. The request should contain all the material
requested in paragraph V A 1 of this exhibit and should be submitted no
later than 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 or its successor agency under Public Law 103-
354 1944-51, ``Multiple Family Housing Obligation-Fund Analysis,'' is
received obligating the replacement units. Form FmHA or its successor
agency under Public Law 103-354 1944-51 requesting the additional units
must be coded sequentially as required in paragraph V C 5 of this
exhibit.
3 The Servicing Official will review the budget, Exhibit A-6 of
Subpart E of Part 1994 of this chapter, Form FmHA or its successor
agency under Public Law 103-354 1944-29, and Form FmHA or its successor
agency under Public Law 103-354 1944-25 submitted by the borrower to
assure that the items are complete and accurate. The Servicing Official
will complete Form FmHA or its successor agency under Public Law 103-354
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 or its
successor agency under Public Law 103-354 1944-25 to the Servicing
Official 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 RA. 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 or its successor
agency under Public Law 103-354 1944-51 for obligation, or Form FmHA or
its successor agency under Public Law 103-354 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 or
its successor agency under Public Law 103-354 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 RA 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 or its successor
agency under Public Law 103-354 1944-51 or Form FmHA or its successor
agency under Public Law 103-354 1944-55 to the Servicing Official. The
Servicing Official will complete Form FmHA or its successor agency under
Public Law 103-354 1944-27, and attach the appropriate copies of Form
FmHA or its successor agency under Public Law 103-354 1944-51 or Form
FmHA or its successor agency under Public Law 103-354 1944-55 according
to the FMI.
a Initial RA agreements. The Servicing Official will prepare the
original and two copies of Form FmHA or its successor agency under
Public Law 103-354 1944-27. When the project does not have a Form FmHA
or its successor agency under Public Law 103-354 1944-7 in effect, the
Servicing Official will prepare an original and three copies. The
Servicing Official and the borrower will then execute the originals and
all copies of Form FmHA or its successor agency under Public Law 103-354
1944-27 and Form FmHA or its successor agency under Public Law 103-354
1944-7. The forms will be distributed according to their FMIs.
b Replacement or modified RA agreements. When a Form FmHA or its
successor agency under Public Law 103-354 444-27 initiated prior to May
1, 1985, is replaced or modified, a new Form FmHA or its successor
agency under Public Law 103-354 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 noted, assembled and distributed by the Servicing Official
according to the FMI.
3 Modification of an existing RA agreement. After any request for a
change in the amount of RA has been obligated, a copy of Form FmHA or
its successor agency under Public Law 103-354 1944-51 or Form FmHA or
its successor agency under Public Law 103-354 1944-55 will be attached
to Form FmHA or its successor agency under Public Law 103-354 1944-27
and distributed according to the FMI. A
[[Page 321]]
new FmHA or its successor agency under Public Law 103-354 1944-7 is not
required.
4 Denial of RA Request.
a If RA funds are available but cannot be provided due to a
determination of ineligibility, the State Director will inform the
borrower, in writing, of the reasons. The borrower will be given appeal
rights in accordance with subpart B of part 1900 of this chapter in such
cases. When RA funds are not available from the State's allocation or
the National Office Reserve the decision will be considered
nonappealable, however, the decision is still reviewable, under subpart
B of part 1900 of this chapter.
b Should RA not be available for lack of appropriation to replace
an expiring RA obligation, the State Director will advise the borrower
to notify tenants of the increase to their contribution to rent
following the notification requirements of Exhibit C of this subpart.
Tenants who cannot afford the increased rent shall be given the
opportunity to quit the lease and vacate the project without penalty.
5 RA obligation numbers.
a Each RA obligation will be assigned a six digit RA obligation
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--Numbers in sequential order for each fiscal
year starting with 01 (i.e. 93-01, 93-02, 94-01, 94-02).
(3) Third two digits--All obligations will be coded 00.
b RA obligation 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-Automated Multi-housing
Accounting System conversion loan number to which the RA obligation was
processed.
(3) Third two digits--Indicate the number of modifications plus 1.
(Form FmHA or its successor agency under Public Law 103-354 1944-27 with
two modifications on September 30, 1984, will be designated ``03.'')
c The Finance Office will track RA obligations and undisbursed
balances by number.
VI Terms of the RA Agreement.
A Effective date. Each Form FmHA or its successor agency under
Public Law 103-354 1944-27 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-year RA agreement. Twenty-year agreements were authorized
during the initial years of the RA program through FY 1982. Twenty-year
agreements were restricted to new projects or modifications of existing
20-year agreements. The agreement is effective for 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 Form FmHA or its successor agency under Public
Law 103-354 1944-27 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 5-year period.
2 Five-year RA agreement. Five-year agreements may be used for
operational projects, or for new projects when 20-year units are not
available. The agreement shall be effective for 5 years from the
effective date of the agreement. This 5-year agreement may be modified
or terminated in accordance with the terms stated on Form FmHA or its
successor agency under Public Law 103-354 1944-27.
The agreement will expire when the funds obligated for the RA units
described in section 1 of Form FmHA or its successor agency under Public
Law 103-354 1944-27 are fully disbursed. This can be any time before or
after the end of the 5-year period.
3 Modification of RA agreements. Forms FmHA or its successor agency
under Public Law 103-354 1944-27 may be modified:
a To add or subtract RA units assigned to the project through
obligation, through transfer from another RA obligation, or as an
incentive to avert prepayment.
b To reinstate a suspended RA obligation(s) to a new borrower in
the same project after a voluntary conveyance or a foreclosure and a
credit sale within the Multiple Family Housing (MFH) program; or
c To transfer a suspended RA obligation(s) 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 RA agreements.
a Any existing RA obligation 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 or its successor
agency under Public Law 103-354 444-27A, ``Amendment to Rental
Assistance Agreement.'' The amended agreement will expire when the
obligated funds are fully disbursed.
b Any existing RA agreement on earlier Form FmHA or its successor
agency under Public Law 103-354 444-27 or Exhibit D-2 (of
[[Page 322]]
now obsolete FmHA or its successor agency under Public Law 103-354
Instruction 444.5) containing an occupancy standard may be amended by
mutual consent of the borrower and FmHA or its successor agency under
Public Law 103-354 when a new occupancy policy for the project is
approved according to paragraph VI D 2 of Exhibit B of this subpart. To
amend the form:
(1) Delete section 5 of the original and the borrower's copy and
have the deletion dated and initialed by the appropriate FmHA or its
successor agency under Public Law 103-354 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 or its successor agency under Public
Law 103-354 official and the person(s) authorized to sign for the
borrower. ``Amended (date) ______ by authority of paragraphs VI B 4 of
Exhibit E and VI D 2 a of Exhibit B of subpart C of part 1930, chapter
XVIII, title 7, Code of Federal Regulations.''
5 Replacement RA obligations. Replacement RA obligation(s) for
either 5-year or 20-year obligations will be for a 5-year period. All
requirements in paragraphs VI B 2 and 3 of this exhibit apply. Expiring
RA obligations and replacement RA obligations may run concurrently for a
period of 30-50 days so any undisbursed obligation balance on the
expiring RA agreement can be liquidated.
VII Recordkeeping Responsibilities.
A The Finance Office (FO) will track the use of RA obligation and
ensure that RA obligation is not disbursed or credited to a borrower's
account in excess of the RA obligation. Quarterly and annually, the FO
will provide the Servicing Official 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.
B The Servicing Official will notify the borrower to apply for
replacement RA obligation 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.
VIII Responsibilities of Borrower in Administering the RA Program.
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 or its successor agency under
Public Law 103-354 1944-8 for each tenant as required in paragraph VII F
of Exhibit B of this subpart.
C The incomes reported by the tenants must be verified by the
borrower in accordance with paragraph VII of Exhibit B of this subpart.
D Borrowers utilizing RA must comply with Sec. 1930.122(b)(1) of
this subpart. RA will not be approved for a project until the operating
budget has been approved by the FmHA or its successor agency under
Public Law 103-354 State Office or the Servicing Official. Servicing
Officials, 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 or
its successor agency under Public Law 103-354 approved lease with the
assisted household. All leases must comply with the provisions of
paragraph VIII of Exhibit B of this subpart.
F The borrower will be responsible to FmHA or its successor agency
under Public Law 103-354 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 FmHA or its successor agency
under Public Law 103-354 Instruction 2012-B (available in any FmHA or
its successor agency under Public Law 103-354 office).
IX Handling Utility Allowances.
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 paragraphs II A 2
a, b, or c of this exhibit.
2 When utilities are paid by the household receiving RA and the
portion of income cited in paragraphs II A 2 a, 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 paragraphs A 2 a, 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
[[Page 323]]
by the use of Exhibit A-6 of 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. 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.
X Method of Payment of RA to Borrower
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 or its successor agency under Public Law 103-354 1944-29
and the remaining balance must be submitted to the Servicing Office by
check. If the RA due the borrower exceeds the balance of scheduled loan
payments, delinquent payments and other charges, no additional payment
is due from the borrower and an RA check for the excess will be issued
by the FO.
b Each month the borrower must forward to the Servicing Official a
Form FmHA or its successor agency under Public Law 103-354 1944-29. Any
new Forms FmHA or its successor agency under Public Law 103-354 1944-8
must be submitted to the Servicing Office as required in Exhibit B of
this subpart. Both forms must be prepared for each project according to
the instruction attached to the respective forms.
2 Servicing Official responsibilities.
a When new Forms FmHA or its successor agency under Public Law 103-
354 1944-8 are received, the Servicing Official will immediately date
stamp each form with the receival date, review each Form FmHA or its
successor agency under Public Law 103-354 1944-8 and verify that the
information contained on the form is complete and correctly computed
based on information contained in the form.
b When a Form FmHA or its successor agency under Public Law 103-354
1944-29 is received, the Servicing Official will:
(1) Date stamp each form FmHA or its successor agency under Public
Law 103-354 1944-29, and review the form and assure that entries are
supported by the current form FmHA or its successor agency under Public
Law 103-354 1944-8.
(2) Enter the payment data via field office terminals as required in
Exhibit A to subpart K of part 1951 of this chapter (available in any
FmHA or its successor agency under Public Law 103-354 office).
c The Servicing Official should verify the accuracy of the
borrower's servicing address shown on the FO record. When the address
shown is incorrect, corrections must be made on AMAS screen M5A ``Record
Borrower/Project Data'' via a field computer terminal.
B When a project account is delinquent, the Servicing Official may
agree to release a portion of the monthly RA for project operation
according to provisions authorized in a servicing plan developed in
accordance with Exhibit F of subpart B of part 1965 of this chapter
(available in any FmHA or its successor agency under Public Law 103-354
Office).
C An RA payment request must be based on actual occupancy as of the
first day of the month.
XI Assigning RA to tenants
A New project. Applications for occupancy should be accepted during
the construction phase of the project, after the preconstruction
conference has been held, 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 eligible tenants as defined in paragraph II A of this
exhibit who qualify for RA, even if there are applications on other
lists that applied earlier. 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 remaining units
equal to the number of units that will not be subsidized with RA can be
rented simultaneously to other applicants.
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
request a transfer of unused RA units in accordance with paragraph XV B
5 of this exhibit. However, applicants not eligible for RA cannot be
selected to occupy units initially reserved to be used with RA until the
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 RRH and RCH projects. To determine priority for
assigning an available RA unit in an operational project, the latest
Form FmHA or its successor agency under Public Law 103-354 1944-29 for
the project must be updated as of the date the unit is available,
assuring that columns 3 through 9 of part II are current and accurate.
1 First priority for assigning RA must always be given to eligible
very low-income households in the following order:
[[Page 324]]
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 the project waiting list
according to the order provided in paragraph VI H of Exhibit B of 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 in the project paying the higher
percentage of adjusted annual income for approved shelter cost.
b Eligible low-income applicants from the project waiting list.
Low-income applicants will be selected according to paragraph VI H 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 to occupancy ineligible
tenants as described in paragraph VI D 7 b of Exhibit B of this subpart
living in the project.
4 Eligible tenants receiving the benefits of RA may continue
receiving such benefits as long as they remain eligible for RA, as the
RA calculation formula shows a moderate income tenant that was initially
eligible for RA as a very low- and/or low-income tenant who still needs
RA and there is an RA agreement in effect.
C Limits on low-income RRH and RCH applicants who 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 when 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 of this exhibit respectively, only when there are no more
very low-income applicants or tenants available in the market area. The
borrower must have documentation in its file and available to FmHA or
its successor agency under Public Law 103-354 for its review to show the
efforts made, and the facts used to determine that there are currently
no more very low-income applicants in the market area.
D Operational LH projects: Tenants who meet the definitional
requirements of domestic farm laborers found at Sec. 1944.153 of subpart
D of part 1944 of this chapter shall be assigned RA in the following
priority order within the subcategories of priority occupancy
established by that subpart:
1 Very low-income.
2 Low-income.
E Assigning RA 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 prorate 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 or its
successor agency under Public Law 103-354 1944-29 for that month will be
made. The borrower will begin to receive reimbursement of RA for the
tenant as of the first day of the next month.
4 No adjustment will be made on Form FmHA or its successor agency
under Public Law 103-354 1944-29 to request additional RA payment or to
refund any excess RA payment or overage for the previous month when RA
is reassigned other than the first of the month.
XII RA assigned to wrong household: 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 canceled and reassigned.
Incidents involving incorrect reporting are addressed in subpart N of
part 1951 of this chapter.
A Before the borrower notifies the tenant, the borrower or
management agent shall review the case with the Servicing Official. If
the Servicing Official 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 canceled 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
[[Page 325]]
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 RA. The RA unit will be reassigned to the next
eligible household, based on Form FmHA or its successor agency under
Public Law 103-354 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.
XIII RA payment cancellation: When an RA check must be canceled,
the following procedure will be followed:
A Return of the original RA U.S. Treasury Check: The Servicing
Office will prepare Form FmHA or its successor agency under Public Law
103-354 1944-53, ``Multiply Family Housing Cancellation of U.S. Treasury
Check and/or Obligation'' as specified in the FMI and mail it to the MFH
unit in the FO.
B Return of all or a portion of the monthly RA payment or refund of
RA previously advanced: A check from the borrower made payable to FmHA
or its successor agency under Public Law 103-354 will be submitted to
the MFH unit in the FO on Form FmHA or its successor agency under Public
Law 103-354 1944-53, completed according to the FMI.
XIV Terminating existing RA agreements obligated in prior and/or
current FYs.
A When a project's obligated funds are fully disbursed under any
given RA obligation number, RA will be automatically terminated by the
FO and no further RA requests will process against the RA obligation
number. The Servicing Official must monitor these balances through field
office terminals and AMAS Report No. 513-C. The Servicing Office will
modify Form FmHA or its successor agency under Public Law 103-354 1944-
27 according to the FMI to indicate that a termination has occurred. The
Servicing Official will notify the borrower in writing that the
obligation under the RA obligation number has expired and the RA
obligation number must be stricken from the agreement.
1 For all RA obligations before FY 1985. RA is considered fully
disbursed by the FO 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 FO when all RA funds obligated in a particular FY are
disbursed. This includes RA transferred from a different MFH project.
3 When a Form FmHA or its successor agency under Public Law 103-354
1944-27 consists of several different obligations (Form FmHA or its
successor agency under Public Law 103-354 1944-51, part III, or Form
FmHA or its successor agency under Public Law 103-354 1944-55)
identified by different RA obligation numbers, and the obligations will
not be fully disbursed at the same time, only those RA obligation
numbers with fully disbursed obligation will be terminated.
B Prior to full disbursement of obligated funds:
1 Prior FY obligations. Prior FY obligations will not be
terminated. They will be suspended by the State Director using
procedures in paragraph XV of this exhibit.
2 Current FY obligations. The State Director is authorized to
terminate RA obligation 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.
XV Suspending or transferring existing RA.
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 paragraphs XV B 2, 3, and 4 of this exhibit. The State Director will
maintain records and control of the suspended RA.
b The State Director or Servicing Office will notify the borrower
in writing, stating the reason(s) the RA is suspended.
c The Servicing Office will put a suspend code on the account. This
is done on the M5A ``Record Borrower/Project Data'' screen in AMAS using
Suspend Code 7. After suspension, only RA payments described in
paragraph XV B 4 of this exhibit will be processed by the Servicing
Office.
d The State Director may approve reinstatement of the RA to the
same borrower in the same project. After approval, the Servicing Office
will remove the suspend code from the project using the M5A screen.
e 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 field office terminals.
2 Transfer.
a Only the State Director may approve an 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 AMAS will determine the per unit value of the RA obligation being
transferred by dividing the undisbursed balance of the RA obligation on
the date the transfer is processed by the number of RA units in the
agreement. The number of units being transferred times the per unit
value equals the total amount
[[Page 326]]
transferred. After the transfer processes the State Director should
enter the dollar amount of the transfer in the Remarks area of Form FmHA
or its successor agency under Public Law 103-354 1944-55.
d RA units identified by different RA obligation numbers may be
transferred. New RA obligation numbers should be assigned according to
the FMI for Form FmHA or its successor agency under Public Law 103-354
1944-55.
e All or any portion of the units in an RA Agreement with an
undisbursed balance may be transferred by the State Director.
f When the State Director approves an RA transfer, Form FmHA or its
successor agency under Public Law 103-354 1944-55 completed according to
the FMI, will be used to notify the FO except as noted in paragraph XV B
1 of this exhibit.
g Form FmHA or its successor agency under Public Law 103-354 1944-
27, with Form FmHA or its successor agency under Public Law 103-354
1944-55 attached, will be completed according to the FMI for each
transferee. The transferee may use the transferred units effective the
first day of the month in which the transfer is approved.
h The transferor's Form FmHA or its successor agency under Public
Law 103-354 1944-27 will be modified by attaching a copy of Form FmHA or
its successor agency under Public Law 103-354 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 project transfer. When a project is
transferred to an eligible borrower, the transferee may assume the
transferor's liquidated RA obligation(s). Form FmHA or its successor
agency under Public Law 103-354 1944-55 will be forwarded to the FO
attached to Form FmHA or its successor agency under Public Law 103-354
1965-10, ``Information on Assumption of Multiple Family Housing Loans,''
as required in Sec. 1965.65(c)(11) of Subpart B of Part 1965 of this
chapter.
2 Suspension and transfer after a voluntary conveyance or
foreclosure sale. When a project with RA is voluntarily conveyed to the
Government or acquired by foreclosure sale, the RA obligation will be
automatically suspended under the borrower's name when the FO processes
Form FmHA or its successor agency under Public Law 103-354 1965-19,
``Multiple Family Housing Advice of Mortgaged Real Estate Acquired.''
These units will be held in suspense until the final disposition of the
acquired property has been determined. During the inventory period
tenants will pay 30 percent of their income for rent. Tenants entitled
to reimbursement for utilities will be paid from project income.
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 or its successor agency
under Public Law 103-354 financed project in accordance with paragraph
XV B 3 b of this exhibit, 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
or its successor agency under Public Law 103-354 project due to
prepayment or liquidation, the RA the tenant was receiving will be
transferred, or suspended and transferred, to any other FmHA or its
successor agency under Public Law 103-354 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 a FmHA or its
successor agency under Public Law 103-354 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 ineligiible unit may not differ from the 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 or its
successor agency under Public Law 103-354 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 Sec. 1965.85 of
subpart B of part 1965 of this chapter and the account has been
accelerated:
(1) The RA will be suspended to the extent that no payments will be
credited to the project's account. Interest credit will be credited to
the project's account until the appeal period for the acceleration has
expired. After the expiration of the appeal period, if it is determined
that foreclosure will
[[Page 327]]
proceed, the interest credit will be cancelled as of the last day of the
month in which the appeal period expired. RA will be automatically
suspended by the interest credit cancellation.
(2) That portion of the monthly RA not needed to pay the project
monthly installment and other charges as specified in paragraph VIII of
Exhibit A to subpart K of part 1951 of this chapter (available in any
FmHA or its successor agency under Public Law 103-354 office) may be
processed and returned to the project operating account to maintain
project operation.
(3) RA agreements expiring during the acceleration and appeal
process may be renewed in order to continue payment of RA as described
in paragraph X V B 4 a (2) of this exhibit.
b After final disposition of the acceleration, expiration of the
appeal and redemption period of the defaulting borrower the RA will be:
(1) Transferred with a credit sale. If the project is sold through a
credit sale to an eligible borrower within the program, the suspended RA
should be transferred from the previous borrower's case number and
project number to the new case number and project number. Form FmHA or
its successor agency under Public Law 103-354 1944-55 will be attached
to Form FmHA or its successor agency under Public Law 103-354 1965-20
``Multiple Family Housing Advice of Mortgaged Real Estate Sold,'' when
it is sent to the FO, or
(2) Transferred to a different project when the defaulting project
is sold outside the program. When the suspended RA is not needed for the
project after the credit sale or other disposition of the acquired
property, the State Director should transfer the RA to a different
project or projects as provided in paragraph XV A 2 of this exhibit, or
(3) Reinstated to the same project when the defaults are corrected
and the State Director reinstates the borrower's account.
c 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 describes the efforts made to market the subsidized
units and further demonstrates that:
(1) The market survey indicated there should be a significant need
for rental housing by households in the market area that would have
required RA for occupancy, but all or a substantial portion of the RA
units available remain unused after a 2-year period since initial
availability. The borrower must:
(i) Document the efforts made to market the project to RA eligible
applicants;
(ii) Demonstrate that 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) Certify that project management has not used a policy of
discouraging RA eligible households from applying for or obtaining
tenancy in the project.
(2) Rent increases anticipated for the following 2 years will not
prompt a request for RA according to the provision of Exhibit C of this
subpart.
b The Servicing Official 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 RA 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 without the
borrower's request. If the remaining unit(s) remains unused after an
additional 12-month period, the State Director may authorize its
transfer to another project. This would apply only if the current
agreement is on form FmHA or its successor agency under Public Law 103-
354 1944-27 and when:
(1) The borrower has made the efforts described in paragraphs XV B
5a (1)(i), (ii), and (iii) of this exhibit to market the project to
tenants needing RA, or if the borrower's failure to use RA has resulted
in an acceleration of the loan account.
(2) The Servicing Official has reviewed the project occupancy list,
waiting list, past RA usage, and any other data available and verified
that there is no apparent RA needs in the project.
(3) The State Director has notified the borrower at least 30 days in
advance of FmHA or its successor agency under Public Law 103-354'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 the 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 unclosable 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
[[Page 328]]
under the conditions of Sec. 1944.235 (b) of subpart E of part 1944 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 FY must be
canceled and will be lost unless the conditions of Sec. 1944.235 (b) of
subpart E of part 1944 of this chapter exist.
XVI Rights for appeal if RA is not granted or is cancelled by FmHA
or its successor agency under Public Law 103-354.
A Borrowers who have requested RA in writing and are denied such
assistance due to a determination of ineligibility by FmHA or its
successor agency under Public Law 103-354, or when RA is cancelled, will
be notified in writing of the specific reasons why they have been denied
RA and will be notified of their appeal rights in accordance with
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.
XVII Forms and exhibits. Exhibit A-6 to subpart E of part 1944 of
this chapter and Form FmHA or its successor agency under Public Law 103-
354 1944-7 are to be used in determining the amount of RA to be
provided.
Exhibit F--Farmers Home Administration or its successor agency under
Public Law 103-354 Multiple Family Housing Supervisory Visit--Pre-Visit
Worksheet
Purpose and Use of This Document
Use this document to help organize information and plan for a
supervisory visit, compliance review, and physical inspection. It should
be completed far enough in advance so that all relevant concerns and
issues surrounding project operations are known and considered prior to
the site visit.
Appropriate Servicing Office staff should examine the project
casefile, consult with coworkers, and review any outstanding issues
raised by FmHA or its successor agency under Public Law 103-354's most
recent annual review of project operational and financial status. Other
relevant issues may be obtained from a variety of sources such as
ongoing tenant certification or payment processing concerns, Automated
Multi-housing Accounting System (AMAS) status, correspondence from
tenants or project management, or other issues contained in the running
record.
Use your available tracking systems, AMAS, FOCUS, or Multi-housing
Tenant File System (MTFS) to gather statistical information relevant to
this document and the visit, to help define current project status and
to determine if that status falls within acceptable FmHA or its
successor agency under Public Law 103-354 norms for occupancy or
financial operations.
Thoroughly review the management plan and management agreement to
assure that the management practices at the project are in accordance
with FmHA or its successor agency under Public Law 103-354 procedure and
with the way project management has agreed to operate.
You should use the random sampling technique contained in Exhibit F-
1 of this subpart to establish a sample of tenants for conducting tenant
file reviews, interviews and apartment unit reviews, or wage matching.
You may use an alternative sampling technique; however, you must fully
explain any alternative sampling techniques on this document. Also, you
may supplement your random sample with additional tenants that appear to
represent unique occupancy or verification situations.
You may contact tenants to advise them of your visit and provide
them the opportunity to express their view of project operations.
Exhibit F-2 of this subpart may be used for this purpose.
FmHA or its successor agency under Public Law 103-354 MFH Supervisory
Visit--Pre-Visit Worksheet
Project name:
_______________________________________________________________________
Borrower name:
_______________________________________________________________________
Borrower ID and project number:
_______________________________________________________________________
Project location:
_______________________________________________________________________
Project management:
_______________________________________________________________________
FmHA or its successor agency under Public Law 103-354 visit to be
completed by:
_______________________________________________________________________
General information.
Visit Date: ( - - ) Bor/Mgt notified of visit: ( - - ) __________
Tax Credit Eligible: (y)(n) Number of Sec. 8 Units: __________
Project Type: (RRH)(RCH)(LH) Number of RA Units: __________
Latest tenant termination notice attached: (y)(n)(na) __________
Project's latest tenant grievance attached: (y)(n)(na) __________
Current tenant information for supervisory visit.
[Latest MTFS project worksheet attached. As of: ( - - )] __________
Total Units: ____________
Vacant Units: ____________
Overburdened Tenants: ____________
Tenants Receiving RA: ____________
[[Page 329]]
Unused RA Units: ____________
Expired Certifications: ____________
Current tenant information for compliance review.
[Latest MTFS documentation attached. As of: ( - - )] ____________
Tenants by race national origin code.
White, Non-Hispanic: ____________
Black, Non-Hispanic: ____________
Asian, Pacific Island: ____________
American Indian, Alaska Native: ____________
Hispanic: ____________
Tenants by Sex.
Male, single member household: ____________
Female, single member household: ____________
Family (nonsingle member) household: ____________
Tenants by handicapped/disability status.
Designated handicapped household member: ____________
Designated disabled household member: ____________
Number of designated handicapped units: ____________
Number of designated handicapped units occupied by a handicapped or
disabled household member: ____________
Review of Current Documentation
------------------------------------------------------------------------
Outstanding concerns: (Check if
Date of most recent action or yes, and explain briefly in
approval: (Enter date) Comments below)
------------------------------------------------------------------------
1. (____ ____ ____) Supervisory Visit ______________
2. (____ ____ ____) Physical ______________
Inspection of Property.
3. (____ ____ ____) Compliance Review ______________
4. (____ ____ ____) Management Plan.. ______________
5. (____ ____ ____) Management ______________
Agreement.
6. (____ ____ ____) Affirmative Fair ______________
Housing Marketing Plan.
7. (____ ____ ____) Lease............ ______________
8. (____ ____ ____) Occupancy Rules.. ______________
9. (____ ____ ____) Rent Change...... ______________
10. (____ ____ ____) Energy Audit and ______________
Implementation Plan.
------------------------------------------------------------------------
Comments:
Other operational or financial concerns:
Additional documentation for the upcoming visit:
Most recently completed Exhibit A-2 of this subpart attached:
(y)(n)(na)
Most recently approved Form FmHA or its successor agency under Public
Law 103-354 1930-7 Multiple Family Housing Project Budget attached:
(y)(n)
Tenants selected for tenant file review:
Name and unit number
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Tenants selected for interview and apartment unit review (if other
than above):
Name and unit number
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Tenants selected for wage match (if other than above):
Name and unit number
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Tenant data review actions:
Reviewed tenant records & selected tenant sample: ( - - )
Tenant list sent to State Office for wage match: ( - - )
Final Report to file, borrower, HUD etc.: ( - - )
Exhibit F-1 (of this subpart) process used to select tenant sample:
(y)(n)
Explanation of other sampling process attached: (y)(n)(na)
Exhibit F-1--Suggested Random Sampling Technique for Tenant Reviews
Enter information to be used in the sampling calculation.
[[Page 330]]
A. ______ Total number of revenue producing units.
B. ______ Percentage of units to be reviewed (based on Servicing Office
preference for sample size, expressed as a decimal, for example .10 for
10 percent or .50 for 50 percent).
Note: At least six tenant households will be sampled or 100 percent
of all households for projects having six or fewer units.
Determine the sample size.
C. ______ (A times B)
Determine the sampling ``interval.''
D. ______ (A divided by C)
Determine the ``starting point'' of the sample.
E. ______ (the last digit of the current calendar year)
Sampling process.
Using the most current project worksheet, start selecting tenants
with the tenant at the ``starting point'' (E) and select every tenant on
the worksheet at the ``interval'' (D). To assure that you have a full
sample (C), you may need to ``wrap around'' the project worksheet.
For example:
A 24-unit project is to be visited. Based on the June 1, 199X,
project worksheet, a 25 percent sampling will be used.
A. Total number of units is 24
B. Percentage to be reviewed is ``.25''
C. Sample size is 6
D. Interval is 4
E. Starting point is X year digit
Starting with the second tenant on the project worksheet, every
fourth occupied unit will be selected for the sample.
Exhibit F-2--Suggested Format for a Pre-Visit Tenant Contact Letter
Date
Name
Address
Dear Tenant:
The Farmers Home Administration or its successor agency under Public
Law 103-354 (FmHA or its successor agency under Public Law 103-354) of
the United States Department of Agriculture (USDA) financed the
apartment project where you now live. At least once every three years,
FmHA or its successor agency under Public Law 103-354 makes a site
inspection and management review. The purpose of the visit is to help
assure that this FmHA or its successor agency under Public Law 103-354
financed project is being operated in accordance with Federal laws and
regulations.
Our next visit is scheduled for __________ at approximately
__________. We would appreciate knowing any questions, comments, or
concerns that you would like to share with us regarding your occupancy.
We may be able to talk to you directly during the visit, or you may want
to contact us before the visit at:
(Insert Servicing Office Address)
Some of the issues FmHA or its successor agency under Public Law
103-354 reviews during the visit are to determine: if fair and equal
access is provided to apartments in your project; if outstanding
maintenance, repair, or security concerns exist; how income is verified
or certified; and if occupancy charges are at FmHA or its successor
agency under Public Law 103-354 approved levels.
Your response to this letter is completely voluntary. We appreciate
your assistance.
Sincerely,
Servicing Official
Exhibit G--Farmers Home Administration or its successor agency under
Public Law 103-354--Multiple Family Housing Supervisory Visit--Summary
of Findings
Project name:
_______________________________________________________________________
Borrower name:
_______________________________________________________________________
Borrower ID and project number:
_______________________________________________________________________
Date of visit:
_______________________________________________________________________
Persons interviewed:
_______________________________________________________________________
FmHA or its successor agency under Public Law 103-354 visit completed
by:
_______________________________________________________________________
Purpose and use of This Document
This document summarizes the findings obtained during the subject
supervisory visit. Information is collected directly by the FmFA
reviewer on this form or summarized from information obtained from any
of the following sources:
1. Pre-visit worksheet (Exhibit F of this subpart)
2. A concurrent compliance review
3. A concurrent project physical inspection
4. Tenant file reviews
5. Tenant interviews & unit reviews
6. Tenant wage matching findings
7. FmHA or its successor agency under Public Law 103-354 docket
information
8. Any other relevant document or worksheet
FmHA or its successor agency under Public Law 103-354 will review
the project file and any other project management documentation prior to
the visit to identify areas of concern.
The FmHA or its successor agency under Public Law 103-354 reviewer
may prepare
[[Page 331]]
questions in advance to draw responses from project management or
tenants that will enable FmHA or its successor agency under Public Law
103-354 to answer the question on the supervisory visit forms. The
questions should be prepared to allow the respondent to describe how
tasks or functions are performed (i.e., who, what, when, where, or why),
rather than ``do you do this.''
The findings are listed to highlight areas of project management and
operation activities as they relate to the project management plan as
described in Exhibit B-1 of this subpart.
Concerns resulting from this supervisory visit may be used as a
basis for requiring improved borrower/project management performance.
Status/Analysis (Indicate Yes, No, or Not Applicable)
1. Identity of interest (IOI) and relationship of borrower,
management agent and suppliers.
____ Borrower and management agent IOI properly disclosed.
____ Borrower & material/services suppliers IOI properly disclosed.
____ Management Agent & material/services suppliers IOI properly
disclosed.
____ Are IOI provided management, material and services comparable in
cost, quality or scope to ``arms-length'' transactions?
Comments:
2. Personnel policy and staffing.
____ Personnel policy and staffing per management plan.
Comments:
3. Marketing and Occupancy.
Signs and posters compliance.
____ Project sign.
____ Equal Housing LOGO on sign.
____ Handicapped LOGO at handicapped parking space.
____ Sign indicates where to apply for housing.
____ Equal Housing Opportunity posters visible.
____ ``. . .and Justice for All'' posters visible.
Affirmative marketing.
____ Affirmative Fair Housing Marketing Plan (AFHMP) available for
review.
____ AFHMP signed and dated by authorized FmHA or its successor agency
under Public Law 103-354 official.
____ Advertising documented (Attach copies).
____ Race/Ethnic composition of the project reflects market area.
Applications Management/Occupancy Policy
____Applications accepted at project.
____Applications accepted from anyone.
____Proper documentation of applicant contacts.
____Proper written documentation of withdrawn/rejected applicants.
____Applicants on waiting list. Number: ________.
____Applicants with a Letter of Priority. Number: ________.
____Tenant file review indicates proper application maintenance.
____Waiting list meets 1930-C requirements.
____Most recent tenant selection met 1930-C requirements.
____Correct priorities for selection followed.
____Marketing and occupancy policy per management plan.
____Occupancy ineligible tenants properly admitted.
____Occupancy ineligibles are placed on a unit transfer list.
____Occupancy ineligibles have appropriate lease clauses.
Achieving full occupancy.
____Tenant vacancy percentage is within an acceptable range.
____Tenant turnover rate is within an acceptable range.
____Tax credit eligibility is not affecting project viability.
____Marketing incentives are used to attract tenants.
Comments:
4. Determining eligibility and adjusted income.
____Income included or excluded correctly.
____Frequency and timing of verification is correct.
____Manager believes tenant provided data is accurate & complete.
____Form FmHA or its successor agency under Public Law 103-354 1944-29,
updated before rental assistance (RA) is assigned.
____All qualified households listed on the updated Form FmHA or its
successor agency under Public Law 103-354 1944-29.
____RA assignment policy meets 1930-C, Exhibit E requirements.
____Most recent tenant RA assignment met 1930-C, requirements.
____Tenant file review indicates income/status correctly verified.
____Tenant file review indicates income/information correct on Form FmHA
or its successor agency under Public Law 103-354 1944-8, ``Tenant
Certification.''.
____Tenant file review indicates proper recertification notice.
____Determining eligibility & adjusted income per management plan.
____Site manager's income verified by third party when appropriate.
Comments:
5. Leasing and occupancy policies.
____Tenants placed in units according to occupancy standards.
____Tenant lease prepared by project site manager.
[[Page 332]]
____Tenant file review indicates rent is properly determined.
____Tenant file review indicates correct lease maintenance.
____Tenant file review indicates FmHA or its successor agency under
Public Law 103-354 approved lease used.
____Tenant file review indicates FmHA or its successor agency under
Public Law 103-354 approved occupancy rules.
____Leasing and occupancy policies per management plan.
Comments:
6. Rents, occupancy charges, and occupancy surcharges.
____Utilities paid by tenants correspond to FmHA or its successor agency
under Public Law 103-354 approved levels.
____Tenants do not pay additional utility fees or charges.
____Actual costs for tenant utilities verified annually.
____Tenant rent payments accepted and tracked on site.
____Rent payments on site are adequately protected.
____Tenants receive appropriate evidence of cash payment.
____Rent and occupancy charge policy per management plan.
____Tenant security deposit processing per management plan.
____Application fees per 1930-C and management plan.
Comments:
7. Rent changes.
____Rents and utility allowances charged are FmHA or its successor
agency under Public Law 103-354 approved.
____Most recent rent change per 1930-C and management plan.
____Most recent utility allowance per 1944-E and management plan.
Comments:
8. Maintenance, Repair, and Replacement.
____ Maintenance per management plan.
____ Routine repair and replacement per management plan.
____ Routine unit inspection per management plan.
____ Services (i.e., exterminating) provided per management plan.
____ Security services provided per management plan.
____ Followup needed on exterior items inspected.
____ Followup needed on energy efficiency items inspected.
____ Followup needed on interior items inspected.
____ Followup needed on miscellaneous items inspected.
____ Followup needed on individual units inspected.
____ Capital improvements needed, planned and reserve account use plan
updated.
Comments:
9. Supplemental Services.
____ Laundry and vending machines operated per management plan.
____ Laundry and vending proceeds handled per management plan.
Comments:
10. Accounting, Recordkeeping, and FmHA or its successor agency
under Public Law 103-354 Reporting.
Project Records
____ Project O&M expenses appear per approved Form FmHA or its successor
agency under Public Law 103-354 1930-7.
____ Project capital expenses appear per approved Form FmHA or its
successor agency under Public Law 103-354 1930-7.
____ Project revenue appears per approved Form FmHA or its successor
agency under Public Law 103-354 1930-7.
____ Project account information reviewed, balances obtained:
Reserve account: ________
General operating account: ________
Tax and insurance escrow: ________
Tenant security deposit account: ________
____ Accounts are kept per 1930-C and management agreement.
____ Funds are protected by a Federal agency or bank collateral.
____ Bookkeeping location per management plan.
____ Project financial information maintained per management plan.
____ Project is operated as part of a ``consolidated'' project.
____ If operations are consolidated, arrangement per 1930-C.
____ Internal control conducted per management plan.
____ Do multiple accounts by borrower or management entity in one bank
exceed collateral limits.
Tenant Records
____ Current tenant files retained for 3 years.
____ Former tenant and rejected applicant files retained 3 years.
____ Privacy of tenant files adequately protected.
____ Tenant files maintained per management plan.
Comments:
11. Energy conservation measures and practices.
____ Implemented feasible measures identified by energy audit.
____ Physical inspection recommends further energy conservation.
____ Physical inspection recommends more tenant education efforts.
[[Page 333]]
Comments:
12. Tenant participation and relationship with management.
____ Tenant appeals since last visit. Number ________.
____ Tenants are being informed of their appeal rights.
____ ``FmHA or its successor agency under Public Law 103-354 Instruction
1944-L'' posted for review by tenants.
____ Standing hearing panel for the project.
____ Records maintained of settlements and hearings.
____ Project management is responsive to tenant grievances.
Comments:
13. Management training programs.
____ Site manager training per management plan.
____ Site manager has received FmHA or its successor agency under Public
Law 103-354 requirements training.
Date of last FmHA or its successor agency under Public Law 103-354
requirements training: (____-____-____)
____ Site manager ``certified'' from an FmHA or its successor agency
under Public Law 103-354 recognized source.
____ Equal Opportunity training per AFHMP.
Comments:
14. Termination of leases and eviction.
____ The latest tenant termination was properly conducted.
____ The latest eviction was properly conducted.
____ Is termination and eviction per 1930-C and management plan.
Comments:
15. Management agreement plan and project operations.
____ Project uses the management plan as a working document.
____ The management plan accurately describes project operations.
____ The management agreement accurately describes project operations.
____ Indication of an unreported change to insurance coverage.
____ Indication of an unreported change to fidelity coverage.
____ Indication of unreported change to management.
____ Indication of unreported change to borrower entity.
Comments:
16. Management compensation.
____ Management fee paid per management agreement.
Comments:
17. On-site management.
____ Site manager compensation per management plan and agreement.
____ Site manager's unit operated per management plan.
Date current site manager hired: (____-____-____)
Comments:
FmHA or its successor agency under Public Law 103-354 MFH Supervisory
Visit--Conclusions and Recommendations
Listed below are the major findings of the supervisory visit,
compliance review, and physical inspection of the project, and any
followup actions required by the Servicing Office.
FmHA or its successor agency under Public Law 103-354 MFH Supervisory
Visit--Rating
Above Average ____ Satisfactory____ Below Average____
Unsatisfactory____
Next follow-up needed (Letter, telephone, etc.)_________________________
Next scheduled review___________________________________________________
FmHA or its successor agency under Public Law 103-354 MFH Supervisory
Visit--Additional Rural Cooperative Housing Questions
____ The cooperative treasurer has received relevant training.
____ The board of directors considers and acts on new member
applications.
____ Applicants are screened for suitability before being placed on the
waiting list.
____ There are signed ``What is Cooperative Housing?'' forms indicating
the member recognizes and accepts the responsibilities associated with
cooperative living.
____ Cooperative members perform maintenance functions.
____ Maintenance functions are contracted out. Explain:
____ The borrower cooperative is working with FmHA or its successor
agency under Public Law 103-354.
____ The board of directors holds monthly meetings.
____ There is an agreement with the adviser.
____ The adviser to the board attends each meeting.
____ It appears that the board has control over the cooperative's
operations.
____ The cooperative has active committees. What are the committees and
how many members on each?
________________________ ________
________________________ ________
________________________ ________
________________________ ________
________________________ ________
________________________ ________
How often do the committees meet? ________
[[Page 334]]
____ A board member attends committee meetings.
____ Management agreements and contracts are being followed.
Comments:
FmHA or its successor agency under Public Law 103-354 MFH Supervisory
Visit--Additional Labor Housing Questions
____ In the case of on-farm LH, the housing is serving eligible farm
laborers employed by this LH borrower.
____ Borrower is ( ) charging, or ( ) not charging rent in accordance
with their FmHA or its successor agency under Public Law 103-354
approved budget.
____ Properly verifying farm labor employment.
____ Properly determining ``substantial'' portion of income from farm
labor.
Comments:
FmHA or its successor agency under Public Law 103-354 MFH Supervisory
Visit--Additional Congregate Housing or Group Home Questions
____ Project provides a basic services package to tenants.
____ Project provides optional services package to tenants.
____ Meals provided per service agreement.
____ Transportation provided per service agreement.
____ Housekeeping provided per service agreement.
____ Personal service provided per service agreement.
____ Recreational/social services provided per service agreement.
Comments:
Exhibit G-1--Farmers Home Administration or its successor agency under
Public Law 103-354 Multiple Family Housing Supervisory Visit--Tenant
File Review
Project Name:
_______________________________________________________________________
Borrower Name:
_______________________________________________________________________
Borrower ID and Project Number:
_______________________________________________________________________
Date of Visit:
_______________________________________________________________________
Management Representative Present:
_______________________________________________________________________
FmHA or its successor agency under Public Law 103-354 Review Completed
by:
_______________________________________________________________________
----------------------------------------------------------------------------------------------------------------
Tenant 1 Tenant 2 Tenant 3
----------------------------------------------------------------------------------------------------------------
Apartment number..................... __________ __________ __________
Tenant name.......................... __________ __________ __________
Application:
Signed and dated................. (y)(n)(na) (y)(n)(na) (y)(n)(na)
EO Statement..................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
1930-C requirements met.......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Credit report/references......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Verifications/Documentation:
Handicap/disability.............. (y)(n)(na) (y)(n)(na) (y)(n)(na)
Signed asset statement........... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Assets documented................ (y)(n)(na) (y)(n)(na) (y)(n)(na)
Income........................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Medical expenses................. (y)(n)(na) (y)(n)(na) (y)(n)(na)
Child care expenses.............. (y)(n)(na) (y)(n)(na) (y)(n)(na)
FmHA or its successor agency (y)(n)(na) (y)(n)(na) (y)(n)(na)
under Public Law 103-354 ``wage
match'' used.
Correct Value on Certification:
Assets........................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Income........................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Medical.......................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Child care....................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Remaining calculations........... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Occupancy standards met.......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Lease:
FmHA or its successor agency (y)(n)(na) (y)(n)(na) (y)(n)(na)
under Public Law 103-354
approved.
Correct rent/provisions.......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Re-Certification Notice:
Used 75-90 day notice............ (y)(n)(na) (y)(n)(na) (y)(n)(na)
Used 30 day notice............... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Other Documentation:
Annual inspection................ (y)(n)(na) (y)(n)(na) (y)(n)(na)
Move-in inspection............... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Record of contacts............... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Unit repairs & maintenance....... (y)(n)(na) (y)(n)(na) (y)(n)(na)
3 years of tenant files.......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Follow-up Required................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
----------------------------------------------------------------------------------------------------------------
[[Page 335]]
Comments:
Exhibit G-2--Farmers Home Administration or Its Successor Agency Under
Public Law 103-354 Multiple Family Housing Supervisory Visit--Tenant
Interview and Unit Review
Project Name:
Borrower Name:
Borrower ID and Project Number:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Date of Visit:
Management Representative Present:
_______________________________________________________________________
_______________________________________________________________________
FmHA or its successor agency under Public Law 103-354 Review Completed
by:
_______________________________________________________________________
----------------------------------------------------------------------------------------------------------------
Tenant 1 Tenant 2 Tenant 3
----------------------------------------------------------------------------------------------------------------
Apartment number..................... __________ __________ __________
Tenant name.......................... __________ __________ __________
NTC from MTFS........................ __________ __________ __________
From Tenant Interview:
Number of bedrooms............... __________ __________ __________
Number of individuals............ __________ __________ __________
Date of occupancy................ ( - - ) ( - - ) ( - - )
Rent paid........................ __________ __________ __________
Utilities paid (average)......... __________ __________ __________
Knows verification rules......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Knows grievance procedures....... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Maintenance is acceptable........ (y)(n)(na) (y)(n)(na) (y)(n)(na)
Repairs are acceptable........... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Other comments................... __________ __________ __________
From FmHA or its successor agency
under Public Law 103-354 Apartment
Review--Maintenance Needed:
Energy Efficiency Items Inspected:
Insulation....................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Caulking & weatherstrip.......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Storm doors & windows............ (y)(n)(na) (y)(n)(na) (y)(n)(na)
Water saver devices.............. (y)(n)(na) (y)(n)(na) (y)(n)(na)
____________________............. (y)(n)(na) (y)(n)(na) (y)(n)(na)
Interior Items Inspected:
Floors, carpets, tiles........... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Stairs, walks, common areas...... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Cabinets, doors.................. (y)(n)(na) (y)(n)(na) (y)(n)(na)
Painting......................... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Curtains & shades................ (y)(n)(na) (y)(n)(na) (y)(n)(na)
Refrigerators & ranges........... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Garbage disp. & exhaust.......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Compactor & incinerator.......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Electrical fxtrs & system........ (y)(n)(na) (y)(n)(na) (y)(n)(na)
Plumbing fxtrs & systems......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Heating & air condition.......... (y)(n)(na) (y)(n)(na) (y)(n)(na)
Hot water, boiler room........... (y)(n)(na) (y)(n)(na) (y)(n)(na)
____________________............. (y)(n)(na) (y)(n)(na) (y)(n)(na)
----------------------------------------------------------------------------------------------------------------
Comments:
Exhibit H--Interest Credits on Insured Rural Rental Housing and Rural
Cooperative Housing 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 or its successor agency under Public Law 103-354 (FmHA or
its successor agency under Public Law 103-354) may give a borrower
toward making its payments on an insured
RRH or RCH loan.
B Interest credit and rental assistance (RA) agreement is an
agreement between FmHA or its successor agency under Public Law 103-354
and the borrower providing for interest credits and/or RA for RRH or RCH
loans. This agreement will be on Form FmHA or its successor agency under
Public Law 103-354 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
[[Page 336]]
a 30-year or longer period at 1 percent per annum and covering budgeted
project expenses. Basic rent also means basic occupancy charge.
E Note rate rental is a unit rental charge determined on the basis
of operating the project with payments of principal and interest which
the borrower is obligated to pay under the terms of the promissory note
and meet budgeted project expenses. Note rate rental also means note
rate occupancy charge in an RCH housing 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 Eligibilty: Borrowers may receive interest credit provided the
loan was made on or after August 1, 1986, to a nonprofit corporation,
consumer cooperative, State or local public agency, or to any individual
or organization operating on a limited profit basis; is repaid over a
period of 30 years or more; and 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 is no longer available.
All borrowers already operating on Plan I may continue operating under
it according to the applicable requirements of this exhibit and of this
subpart. A subsequent loan on a Plan I project approved after August 1,
1968, will require the project to convert to Plan II.
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.
C Units must be ready for occupancy (decent, safe, and sanitary) to
qualify for interest credit.
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 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.
d Determine adjusted personal income of each tenant or member and
have each tenant or member complete Form FmHA or its successor agency
under Public Law 103-354 1944-8, ``Tenant Certification.'' Determine the
monthly rent or occupancy charge to be paid by each tenant or member
household.
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 one budget form that reflects two rent levels; the first
level on the basis of a 1 percent interest rate loan to determine basic
rental; the second level on the basis of a loan at the interest rate
shown in the promissory note to determine note rate rental.
b Determine both basic rental and note rate rental for the
different units based on the two budgets. (See Exhibit H-1 of this
subpart).
c Determine adjusted personal income of each tenant or member and
have each tenant or member complete Form FmHA or its successor agency
under Public Law 103-354 1944-8. 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. The amount of
the project payment will be entered on Form FmHA or its successor agency
under Public Law 103-354 1944-29, ``Project Worksheet for Interest
Credit and Rental Assistance.''
V Determining the Amount of Payment:
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.
C For the project. The payment amount for all loans on the project
will be added together to determine the project payment. The amount due
FmHA or its successor agency under Public Law 103-354 will also include
all overage, surcharges, late fees, audit receivables, and cost item
charges.
VI Special Conditions:
[[Page 337]]
A Leases or occupancy agreements. Borrowers participating in the
interest credit program must have an FmHA or its successor agency under
Public Law 103-354 approved lease or occupancy agreement with the
assisted household. Leases and occupancy agreements must comply with the
requirements of paragraph VIII of Exhibit B of 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 $100 per month, this
ineligible tenant would pay $125 per month. The 25 percent surcharge, or
$25 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 note rate rental.
C Vacancies.
1 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 as if the amortization effective date (AED)
and subsidy levels had been established. A prerent-up or preoccupancy
conference is required before marketing and rent-up begins. All income
generated must be deposited in the general operating account and used
for management and operation of the units except for member's patronage
capital contributions.
2 Multi-Family Housing units rendered unusable due to fire, natural
cause, or other damage requiring less than 180 days to repair or replace
shall be assumed to be rented or occupied at the monthly basic rate
rental or occupancy charge rate. If the units are not repaired or
replaced within the 180 day period, they shall thereafter be assumed to
be unmarketable and the units will be carried at the monthly note rate
rental or occupancy charge rate (i.e., full overage for such units will
be paid by the borrower until the units are again ready for occupancy).
The Form FmHA or its successor agency under Public Law 103-354 1944-7
will be cancelled, effective the first day of the month following the
180-day period.
3 The State Director may make an exception to the 180-day period if
all of the following conditions are met:
a The repairs have not been started or completed due to
circumstances beyond the borrower's control; and
b The borrower must be able to show that they have acted in good
faith and they face serious financial difficulties in maintaining the
project for existing tenants and they are unable to meet the payments on
the indebtedness without the subsidy.
4 Any borrower directly or indirectly affected by action under this
subpart will be granted the appropriate appeal rights according to
Subpart B of Part 1900 of this chapter.
5 RRH or RCH units vacant for lack of tenant or member applications
on the waiting list or for repair not associated with paragraph VI C 2
of this exhibit shall be assumed to be charged at the basic rent.
D Interest credit for tenants in projects under the Department of
Housing and Urban Development (HUD) Housing Assistance Payment Program
or FmHA or its successor agency under Public Law 103-354 rental
assistance. When any rental units in an RRH project are leased under the
new construction Section 8 program, Form HUD 50059, ``Certification and
Recertification of Tenant Eligibility,'' or other acceptable HUD Form
will be completed. When any rental units in an RRH project are leased
under the FmHA or its successor agency under Public Law 103-354 RA
program, Form FmHA or its successor agency under Public Law 103-354
1944-8 will be completed.
E Special cases. Situations not covered by this exhibit or Exhibit
E to this subpart will be handled individually with instructions from
the National Office.
F Understanding eligibility. The borrower should understand the
eligibility requirements for occupancy of the housing. Instructions for
tenant or member eligibility are in paragraph VI D of Exhibit B of this
subpart.
VII Execution of Agreements:
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
Servicing Official determines that the project is ready for full
operation, the borrower and the Servicing Official should execute Form
FmHA or its successor agency under Public Law 103-354 1944-7. A separate
Form FmHA or its successor agency under Public Law 103-354 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 Form Manual
Insert (FMI) for Form FmHA or its successor agency under Public Law 103-
354 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 Form FmHA or its successor agency under Public Law 103-354 1944-7.
[[Page 338]]
C Borrowers who are not receiving interest credit. If an eligible
borrower did not execute a Form FmHA or its successor agency under
Public Law 103-354 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 or
its successor agency under Public Law 103-354 1944-7 and this exhibit.
When Form FmHA or its successor agency under Public Law 103-354 1944-7
is executed, it will be effective for the first of the month in which
the Form FmHA or its successor agency under Public Law 103-354 1944-7 is
executed.
D Borrowers who have had interest credit terminated.
1 If an interest credit agreement on Form FmHA or its successor
agency under Public Law 103-354 1944-7 has been terminated because the
benefits were not needed and circumstances change to where an interest
credit is again needed, a new Form FmHA or its successor agency under
Public Law 103-354 1944-7 may be executed.
2 If an interest credit agreement on Form FmHA or its successor
agency under Public Law 103-354 1944-7 has been terminated because of
the borrower's failure to comply with requirements and the appropriate
corrective actions have been accomplished, a new Form FmHA or its
successor agency under Public Law 103-354 1944-7 may be executed.
VIII Tenant or Member Certification: Tenant or member certification
and recertification for interest credit borrowers will be performed in
accordance with paragraph VII of Exhibit B to this subpart.
IX Project Payments: With each payment made, the borrower will
complete Form FmHA or its successor agency under Public Law 103-354
1944-29. The FmHA or its successor agency under Public Law 103-354
representative handling the transmittal to the Finance Office will
transmit the payments according to subpart B of part 1951 of this
chapter and Exhibit A of subpart K of part 1951 of this chapter
(available in any FmHA or its successor agency under Public Law 103-354
office).
A Plan I.
1 The borrower will make monthly payments in an amount necessary to
repay the project loans as if the loans 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 or its successor agency under Public Law 103-354
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 shown and will be charged to 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
project notes were written at a 1 percent interest rate plus any overage
due and payable whether or not collected from the tenant or member.
X Servicing: Handling of interest credits when servicing a
project's accounts according to Sec. 1965.85 of subpart B of part 1965
of this chapter will be handled according to the applicable parts of
subpart A of part 1955 of this chapter. Any unusual cases that cannot be
serviced in accordance with these sections should be submitted to the
National Office with the State Director's recommendations.
Exhibit H-1--Example of Interest Credit Determination for Rural Rental
Housing or Rural Cooperative Housing Projects (Plan II)
$260,000 loan--approved during 1987 fiscal year project contains
four 1-bedroom units (600 sq. ft. each) and four 2-bedroom units (700
sq. ft. each) total floor area = 5200 sq. ft.
------------------------------------------------------------------------
Budget for note rate rent**-a Budget for basic rent**
------------------------------------------------------------------------
Operating, maintenance, vacancy and Operating, maintenance, vacancy and
contingency allowance, reserve and contingency allowance, reserve and
return to investor, if applicable: return to investor, if applicable:
$10,560 $10,560
Loan repayment at 9\1/2\% interest: Loan repayment at 1% interest:
$260M x $95.88 b $24,929 $260M x $25.44 b $6,615
Total annual cost $35,489 Total annual cost $17,175
$35,489 12 = $2958* cost/ $17,175 12= $1432* cost/
month month
One bedroom rent: 600/5200 = .1154 One bedroom rent: 600/5200 = .1154
x 2958 = 341.35 x 1432 = 165.25
Two bedroom rent: 700/5200 = .1346 Two bedroom rent: 700/5200 = .1346
x 2958 = 398.15 x 1432 = 192.75
(341.35 x 4) + (398.15 x 4) = (165.25 x 4) + (192.75 x 4) =
$2,958 monthly income $1432 monthly income
$35,489 12 = $2958* cost/ $17,175 12 = $1432* cost/
mo. mo.
------------------------------------------------------------------------
a One budget form reflecting two rent levels must be prepared; one level
for the note rate rent and another level for the basic rent. (The
expense items in the budgets shown in this illustration are only for
illustration purposes and are not itemized.)
b Annual amount using monthly amortization factor for 50 years. If the
regular installment on the note was amortized using a factor for less
than 50 years, substitute the appropriate factor for a corresponding
number of years.
* Rounded to the nearest dollar.
** In cooperatives, the term ``rent'' shall mean ``occupancy charge.''
[[Page 339]]
Exhibit I--Rural Rental Housing Loans and the Housing and Urban
Development Section 8 Rental Certificate and Rental Voucher Programs
(Existing Units)
I General. This exhibit contains the policies and procedures that
will be followed by the Farmers Home Administration or its successor
agency under Public Law 103-354 (FmHA or its successor agency under
Public Law 103-354) to permit the utilization of existing Section 515
Rural Rental Housing (RRH) units and the Department of Housing and Urban
Development (HUD) tenant-based Section 8 Rental Certificate and Rental
Voucher Programs.
II Applicability. This exhibit is not applicable to units in
Section 515/8 projects which use the project-based Section 8 new
construction and substantial rehabilitation programs. Otherwise, FmHA or
its successor agency under Public Law 103-354 RRH borrowers are
authorized to utilize the procedure outlined in this exhibit and the HUD
Section 8 Rental Certificate Program or the Rental Voucher Program for
existing housing as outlined in HUD's regulations 24 CFR part 882 and 24
CFR part 887 (as amended) respectively. To promote the use of these
programs with existing projects, the following action should be taken:
A Servicing Officials should inform RRH borrowers operating in the
area of their jurisdiction 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
and utilities. 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. Those
tenants paying 50 percent or more of their adjusted income for housing
have preference over those paying less. In the Rental Certificate
Program, families generally pay 30 percent of their monthly adjusted
income toward the rent and the total rent to the owner must be below a
maximum amount. Section 8 Rental Certificate and Rental Voucher
assistance is administered by local Public Housing Agencies (PHA)
authorized by HUD to administer the program in the area. This Section 8
assistance can be used in the unit of the family's choice anywhere in
the State where the issuing PHA is located, and in certain areas in
adjacent States. Families must apply to the PHA and come to the top of
its waiting list through normal PHA selection preferences.
C The HUD Rental Voucher Program uses a ``shopper's incentive.'' If
a unit rents for less than the payment standard established by the local
PHA, the eligible family benefits by paying less than 30 percent of its
monthly adjusted income toward rent and utilities, subject to a minimum
rent calculation by the PHA. If a unit rents for more than the payment
standard for the area (not the actual rent), the housing assistance
payment is not increased, nor is the family told it must find another
unit, as in the Rental Certificate Program. Instead, the family pays the
entire difference between the rent and the rental voucher payment
standard. The family may rent the unit if it is willing to pay more than
30 percent of its income toward rent. There is no maximum rent as in the
Rental Certificate Program.
D In Rural Cooperative Housing (RCH), cooperatives are considered
rental housing in the Section 8 Rental Certificate and Rental Voucher
programs. Wherever the word tenant appears in this exhibit, it shall
also mean member; rent shall also mean occupancy charge; and lease shall
also mean occupancy agreement.
III FmHA or its successor agency under Public Law 103-354 Policies
Concerning Rental Rates and Payments.
A Under the Section 8 Rental Certificate and Rental Voucher
Programs, the PHA will pay a portion of the tenant's rent including
utility allowance as described in paragraphs II B or C of this exhibit,
whichever is appropriate. The contract rent to be established under
either HUD 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 note rate 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 note rate 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:
a For Rental Certificate participants 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 For Rental Voucher participants, the rent to owner must be the
lesser of the note rate rent for the unit as approved by FmHA or its
successor agency under Public Law 103-354 OR the payment standard
approved by the PHA (but not less than basic rent approved by FmHA or
its successor agency under Public Law 103-354).
(1) When basic rent is less than the PHA approved payment standard,
the borrower will collect and remit the difference between the basic
rent and payment standard to FmHA or its successor agency under Public
[[Page 340]]
Law 103-354 as overage to avoid double subsidy on behalf of the tenant.
(2) Should the PHA inadvertently pay the owner (borrower) more than
the amount specified in the housing assistance contract between the PHA
and the owner, the owner shall return the overpayment to the PHA as an
excess payment
B The method of calculation and transmittal of the scheduled
payment to the Finance Office will be in accordance with paragraph IX of
Exhibit H of this subpart.
IV Responsibilities.
A Family. A household family must apply to the PHA and be issued a
Certificate of Family Participation or a Rental Voucher to obtain the
appropriate housing assistance. Households receiving housing assistance
under either program will be responsible for fulfilling all of their
obligations under the Certificate of Family Participation or Rental
Voucher issued to them by the PHA and under the lease with the owner.
However, a lease violation is not necessarily a reason for terminating
Section 8 assistance.
B Owner (FmHA or its successor agency under Public Law 103-354
borrower). Upon being presented a Certificate of Family Participation or
a Rental Voucher by a family, an owner wishing to participate in the
program shall sign a Request for Lease Approval (Form HUD 52517-A) which
is then submitted to the PHA. After PHA approval the owner will execute
a Housing Assistance Contract (Form HUD 52535-A) with the PHA and a
lease with the tenant. Owners shall be responsible (and subject to
review or audit by the PHA or HUD) for performing all of their
obligations under the contract and lease.
C FmHA or its successor agency under Public Law 103-354.
1 FmHA or its successor agency under Public Law 103-354, 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 paragraph XIII C of Exhibit B of this subpart.
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 or its successor agency under Public Law 103-354 will not be
responsible for the requirements and conditions of the contract entered
into between the PHA and 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.
V Special Conditions.
A Eligibility of family.
1 The PHA will determine a household's eligibility before the
Certificate of Family Participation or Rental Voucher is issued. To be
eligible for either form of housing assistance, the household's income
as determined by HUD generally may not exceed the very low-income limit,
based on 50 percent of the median income for the area. The household's
eligibility for housing assistance payments under the Rental Voucher
program continues until the amount payable by the family equals or
exceeds the payment standard or when the amount payable by the family
equals or exceeds the rent to owner plus any applicable utility
allowances. However, when these conditions are exceeded, the family may
still be able to occupy a rental unit under the FmHA or its successor
agency under Public Law 103-354 interest credit program if 30 percent of
the family's adjusted gross income is greater than the lowest
established rental rate for the unit. In both the Rental Certificate and
Rental Voucher Programs, the housing assistance contract terminates when
1 year has elapsed since the last Housing Assistance Payment (HAP) to
the owner.
2 Form FmHA or its successor agency under Public Law 103-354 1944-
8, ``Tenant Certification,'' will not be required for tenants who have
obtained a Certificate of Family Participation or a Rental Voucher from
the PHA. A copy of the Certificate of Family Participation or the Rental
Voucher, however, needs to be provided to the FmHA or its successor
agency under Public Law 103-354 Servicing Official.
3 At admission, the tenant's adjusted household income must not
exceed the maximum income limitations (initially in the case of RCH) as
authorized by FmHA or its successor agency under Public Law 103-354 for
the project.
B Security deposits. According to HUD regulations, the owner may
require a household to pay a security deposit. For certificate
participants the maximum amount will be the greater of the amount of one
month's total tenant payment or $50. For voucher participants, the
security deposit may not exceed the lesser of the limit established by
the PHA or one month's rent to the owner. Under HUD regulations, if a
certificate household vacates a unit and the security deposit is
insufficient, the owner may claim reimbursement from the PHA in an
amount not to exceed two month's contract rent. For voucher
participants, the owner may claim up to one month's rent to owner for
amounts owed under the lease. Neither program allows claims for
reimbursement of unpaid rent for the period after the family moves from
the unit.
C Payment for vacated units.
1 Rental Certificate Program. If a certificate family vacates the
unit in violation of the
[[Page 341]]
provisions of the lease, the owner may receive the full housing
assistance payment 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.
2 Rental Voucher Program. If the voucher family moves from the
unit, the owner shall promptly notify the PHA. The PHA shall make no
additional housing assistance payment to the owner for any month after
the month in which the family moves out. However, the owner may retain
the housing assistance payment for the month in which the family moves.
D Recertification for families with either a Section 8 Rental
Certificate or Rental Voucher.
1 The PHA, not the FmHA or its successor agency under Public Law
103-354 borrower, must reexamine the income and family composition of
all Rental Certificate and Rental Voucher families at least annually,
and adjust the housing assistance payment made on behalf of the family
to reflect any changes in the family's monthly adjusted income, size, or
composition. Once a HAP contract expires, recertification responsibility
reverts to the borrower and FmHA or its successor agency under Public
Law 103-354 forms and income verification and certification requirements
apply.
2 All changes in family composition must be reported to the PHA.
3 A family may request a redetermination of the housing assistance
payment at any time, based on a change in the family's income, adjusted
income, size, or composition.
4 Whether reporting of increases of family income between annual
recertifications is required is determined by the PHA. The PHA policy
must be stated in its administrative plan.
E Rent changes.
1 When project rents in all units change.
a Rental Certificate Program. Rents for tenants receiving rental
certificate assistance under HUD Form 52535-A (Section 8 Existing
Housing Assistance Payments Contract for Subsidized Units) may change
after the beginning (day 1) of the HAP contract term for the initial
leasing of the unit with Section 8 assistance. The amount of the
contract rent adjusts automatically when the subsidized rent is changed.
However, the adjustments are subject to rent reasonableness limitations
which are determined by the PHA. Adjustments may not result in material
differences between the rents charged for assisted and comparable
unassisted units as determined by the PHA.
b Rental Voucher Program. Rents for tenants receiving rental
voucher assistance may not change until the end of the initial 12 months
of the individual lease, even though all unit rents may have been
changed in the meantime. The lease may provide that the owner may
increase the tenant's rent any time AFTER the first anniversary of the
lease, but the Owner must give the tenant and the PHA 60 days prior
written notice of any increase before it takes place.
2 When tenant household income, size, and composition change. The
following items apply to both the Section 8 Rental Certificate and
Rental Voucher Program.
a The PHA must examine the income and family composition of all
rental certificate and rental voucher families at least annually and
adjust the housing assistance payment made on behalf of the family to
reflect any changes in the family's income, size, or composition.
b All changes in family composition must be reported to the PHA.
c A family may request a redetermination of the housing assistance
payment at any time, based on a change in the family's income, size, or
composition.
d Whether reporting of increases of family income between annual
recertifications is required is determined by the PHA. The PHA policy
must be stated in its administrative plan.
(1) Should household income INCREASE to where HUD assistance becomes
zero, the HAP contract between borrower/owner and the PHA remains in
effect for 12 more months. When 12 months of ``zero'' assistance occurs,
the HAP contract automatically terminates. However, if during that year
the family's income decreases to the level where subsidy is needed
again, the PHA will resume subsidy payments under the HAP contract after
notification by the family of the change.
(2) In both the Rental Certificate and Rental Voucher programs, the
tenant's lease term runs concurrently with the Housing Assistance
Contract until the tenant or owner terminates the lease or the PHA
terminates the contract. In a situation where a tenant's income
increases to where the tenant does not receive a subsidy for 12 months,
the owner can offer the tenant a new lease for execution. If the tenant
fails to execute the new lease after a reasonable time, the owner may
terminate the tenant's occupancy.
F Changes in household size and composition.
1. An increase in household size that results in the occupied unit
not meeting the PHA occupancy standards or housing quality standards
(namely, overcrowding) requires the PHA to issue the household a new
rental certificate or rental voucher for a larger unit. The PHA must
provide assistance to the family in locating another unit. The PHA may
not terminate the current contract unless the family has rejected with
good cause the offer of a new unit.
2. If the OWNER fails to maintain the dwelling unit at acceptable
housing quality
[[Page 342]]
standards, the PHA may, after unsuccessful efforts to correct the
problem, terminate or abate the housing assistance payments, even though
the household continues to occupy the unit.
3. A decrease in household size will not necessarily require the
household to move. In the Rental Voucher Program, the household may rent
a unit with greater number of bedrooms than indicated on the housing
voucher and still receive housing assistance. In the Rental Certificate
Program, the family may continue to receive assistance in the unit if
the gross rent (contract rent plus utility allowance) is within the fair
market rent for the smaller size unit appropriate for the size and
composition of the family.
G Limitation of owner's participation in the two programs. HUD's
regulations provide that assistance under Section 8 Certificates will
not exceed 40 percent of the total number of units in the project;
however, this limitation may be exceeded on a case-by-case basis for the
purpose of relieving hardship of a particular household or households
with the approval of the HUD field office. There is no corresponding
limit under the HUD Rental Voucher program. The HUD limits shall not
affect the number of rental assistance units the project receives
through FmHA or its successor agency under Public Law 103-354.
H Special problems. Any problems on utilizing either the HUD
Section 8 Certificate or the Rental Voucher program for existing RRH
projects not covered by this exhibit should be referred to the National
Office by the State Director.
Exhibit J--Management of Congregate Housing and Group Homes
I Purpose: This exhibit prescribes additional requirements for the
management of congregate housing and group homes. It applies in addition
to other requirements in this subpart.
II Objective: The objective in the management of congregate and
group home housing is to provide shelter and predetermined services as
separate components, based on a market study identification of need,
that are affordable to the housing's tenant base. It is further the
objective to permit resident tenants to cover their individual medical
and discretionary needs, and/or service needs or preferences not
provided or arranged by the housing provider, within their own
financial, familial and social resources.
III Definitions:
Congregate housing. Residential housing for persons or families who
are elderly, or have handicaps, or disabilities, consisting of private
apartments and central dining facilities in which a number of
preestablished services are provided to tenants (short of those services
provided by a health care facility that provides health related care and
services recognized by the medicaid program). Tenants requiring
additional services not provided by the facility will acquire them or
provide for them within their own financial, familial, or social
resources.
Group home. Housing that is occupied by individuals who are elderly
or have handicaps or disabilities, sharing living space within a rental
unit in which a group home resident assistant may be required.
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 contract. A written contract between the borrower and the
tenant listing the package of services selected by the tenant that will
be provided or arranged by the borrower, the fee or fees to be charged,
and applicable conditions and agreements pertaining thereto.
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.
Tenant base. The demographic and economic profile of eligible people
in a housing market area who would benefit, whether by need or
preference, from the housing and supportive services provided by a
congregate housing or group home facility located in the market area.
IV Rent Subsidy Opportunities: 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.
V Management Operations: 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
how services will be provided.
A Borrower's experience. Borrowers and management agents must
outline their experience and plans for providing congregate and group
home services when completing the management outline 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 Management plan. In addition to the general requirements for a
management plan described at paragraph V A of Exhibit B of
[[Page 343]]
this subpart, the management plan should describe the plan for
management of features unique and essential to congregate/group home
housing. This portion of an overall management plan may either be
incorporated within the framework of the management plan or as an
addendum to the plan. The following areas should be described:
1 Tenant mix. For congregate housing, describe the mix of tenants
who will have a greater number of services and tenants who will have a
lesser number of services that the project is designed to accommodate.
For group home housing, describe the ``group(s)'' of tenants the group
home is intending to serve such as elderly tenants, developmentally
disabled, or mentally impaired persons.
2 Marketing plan. Describe the strategies, ways and means that
marketing and advertising will be focused to attract and retain tenants
from the market area (tenant base) that would benefit by the congregate/
group home housing project.
3 Service package. Describe the basic and any alternative
``package'' of service(s), or combination of service packages, that a
tenant may acquire at the project. Describe any deviations to a service
package that can be accommodated on an individual tenant basis by the
project in a reasonable and practical manner.
4 Referral service. Describe the plan for identifying other
services available to tenants and for establishing liaison between the
project and the other services. Describe the plan to make the
information of such services available and known to tenants. Describe
what arrangements the project can provide as part of a service package
to help tenants use referral services.
5 Tenant consultation. Describe how the project management staff
will use tenant consultation to assist tenants with information,
modification of service package, referral to medical, clinical, family
or other services, and identifying what, if any, reasonable
accommodations or assistance are needed and whether they are feasible
and practical to provide.
6 Emergency evacuation plan. Describe what the project will do to
inform and train tenants on safe evacuation of an apartment and
building. Describe which community/public services will be informed
about and incorporated into the project evacuation plan.
C Service plan. Congregate housing/group home borrowers must
submit a service plan as defined in paragraph III of this exhibit. See
Exhibit E of subpart E of part 1944 of this chapter 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.
D 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 1 year.
E Service contract. Borrowers must submit a sample of the service
contract for Agency review for compliance with Fair Housing Act
requirements/restrictions and Agency requirements in or referenced by
this subpart. The service contract may not be a requirement for
occupancy in the congregate housing project and it must be made separate
and apart from the occupancy lease agreement.
VI Renting Procedure: In addition to meeting the conditions of
paragraph VI of Exhibit B of this subpart, borrowers must meet the
following conditions.
A Eligible tenants. Tenants must meet the general provisions of
paragraph VI D of Exhibit B of this subpart and be eligible to occupy
congregate or group home housing as defined in paragraph III of this
exhibit. Borrowers must be careful to follow the condition described in
paragraph VI D 1 i of Exhibit B of this subpart when inquiring about the
applicant's or tenant's request for congregate/group home housing and
the service it provides.
B Tenant selection. Borrowers must meet the provisions of paragraph
VI H of Exhibit B of this subpart. Borrowers should be further guided by
the following in selecting tenants for congregate housing and group
homes:
1 Congregate housing.
a Tenant mix. It is the primary intent of a congregate housing
project to provide or arrange for service packages made up of various
component services to serve the needs of tenants needing such services.
If it is not feasible to provide service packages to all tenants, the
borrower may serve tenants needing services and tenants not needing
services. The number of tenants that can be served with service
package(s) will be described in the project management plan. Project
management should be consulted when establishing the tenant mix. The
plan should establish a percentage of tenants who will use a service
package with a greater number of component services as differentiated
from tenants whose service package
[[Page 344]]
will contain fewer services. As existing tenants age and new tenants
move in, the percentage may fluctuate. Farmers Home Association must
concur with the proposed plan.
b Selecting services needed or wanted by tenants in congregate
housing.
(1) It is the borrower's responsibility to inform applicants or
tenants about the supportive services provided at or by the congregate
project. Such services or service packages need to be identified on the
project's application form as part of an application package.
(2) It is the applicant's or tenant's responsibility to identify and
request the services or service package provided by the project which
that person desires or needs.
(3) The borrower may have the applicant/tenant provide only such
essential information about the person's desire for provided service(s)
to determine whether the project provides the services desired by the
applicant/tenant and/or to determine how to best serve the applicant's/
tenant's request for services with reasonable accommodation, referral
services, etc. The essential information may include an explanation by
the applicant/tenant. In the case of a group home, it may also include
an assessment by a professional medical examiner or practitioner, social
service caseworker, representative of an advocacy group, member of the
clergy, etc. that the tenant/applicant provides to support the
application for housing and services.
c Waiting lists. To sustain the number of tenants requesting
services, management may maintain waiting lists for tenants requesting
large component service packages, small component service packages, and
those wanting a service package at a later time. Management may choose
tenants from the lists in such manner to maintain the feasibility in
providing services, however, priority in tenant selection should go to
an applicant requesting a service package over one requesting a service
package at some later date. The other provisions contained in paragraph
VI H 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 people, or mentally impaired
tenants. This limitation will be outlined in the borrower's management
plan. The following will apply to group homes.
a Applicants for group home housing must demonstrate their need for
such housing.
b 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.
c 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.
VII Verification and Certification of Tenant Income, and/or
Employment and Review of Support Services: The provisions of paragraph
VII of Exhibit B of this subpart apply. In addition to recertifying
income, management should consult with each tenant to explain the
available support services and determine if the tenant desires any
available services not presently used and/or if any other practical and
feasible accommodations can be provided to the tenant.
VIII Lease Agreements: In addition to the conditions contained in
paragraph VIII of Exhibit B of this subpart, the following should be
addressed:
A Tenants who request services in congregate housing. If a tenant
requests services, the lease must contain the following clauses:
1 ``I understand that use of the service package I have selected is
not mandatory, and if I later choose to modify or not renew my service
contract, such action on my part will not cause default under the terms
of this lease agreement. I further understand and agree that I may not
use any aspect of dissatisfaction with my service contract as grounds to
withhold rents due under the terms of this lease agreement.''
2 ``The lessor warrants that the following basic services will be
made available to all tenants for a fee separate and apart from any rent
described in the terms of this lease. The basic services are:
____________________.
If these services cannot later be provided, such failure or
inability to provide the services will not constitute a breach of this
lease agreement and the lessor will hold the tenant harmless should the
tenant elect to terminate this lease on the grounds that provision of
these services was cause for the tenant to apply for and accept
occupancy in this congregate housing project.''
[[Page 345]]
B Services provided to people other than tenants of FmHA or its
successor agency under Public Law 103-354 financed congregate housing.
If the meal facility serves people other than the tenants of the
project, the borrower must obtain a lease from the service 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 conditions 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.
2 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 or its successor agency under Public Law
103-354, U.S. Department of Agriculture, or the State Director's
delegated representative.''
IX Rent Collection: The provisions of paragraph IX of Exhibit B of
this subpart will apply for 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.
X Borrower Project Budgets: Borrowers must separate the revenue and
expenses of project operations from the service component. Form FmHA or
its successor agency under Public Law 103-354 1930-7, ``Multiple Family
Housing Project Budget,'' must reflect project operations only. Also, if
project employees provide any part of the services, the project
operation budget and the services budget must reflect the proration of
employee compensation between the respective budgets as further
described in Exhibit E of subpart E of part 1944 of this chapter.
XI Accounting and Reporting Requirements and Financial Management
Analysis: 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 may not
be used to supplement the cost of services, nor may service component
funds be used to supplement the project operation and maintenance.
Detailed financial reports on the service component will not be required
unless specifically requested by FmHA or its successor agency under
Public Law 103-354, and then only to the extent necessary for FmHA or
its successor agency under Public Law 103-354 and the borrower to
discuss the affordability (and competitiveness) of the service component
by the tenant base in keeping with the objective stated in paragraph II
of this exhibit. The project audit, or verification of accounts on Form
FmHA or its successor agency under Public Law 103-354 1930-8, ``Multiple
Family Housing Balance Sheet,'' together with an accompanying Form 1930-
7 showing actuals, must allocate revenue and expense between project
operations and the service component.
XII Termination of Tenancy and Eviction. In keeping with the spirit
and provisions of the Fair Housing Amendments Act of 1988, a tenant
living in congregate or group home housing project may remain as long as
they are eligible to occupy and the tenant expresses or otherwise
maintains they can care for themself with or without services provided
by the project, or by familial or social services from outside the
project. Tenants are otherwise bound by the terms of their lease and
their occupancy may be terminated only according to the provisions
contained in paragraph XIV of Exhibit B of this subpart.
PARTS 1931--1939 [RESERVED]
[[Page 347]]
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.
[[Page 349]]
Table of CFR Titles and Chapters
(Revised as of January 1, 1997)
Title 1--General Provisions
I Administrative Committee of the Federal Register
(Parts 1--49)
II Office of the Federal Register (Parts 50--299)
IV Miscellaneous Agencies (Parts 400--500)
Title 2--[Reserved]
Title 3--The President
I Executive Office of the President (Parts 100--199)
Title 4--Accounts
I General Accounting Office (Parts 1--99)
II Federal Claims Collection Standards (General
Accounting Office--Department of Justice) (Parts
100--299)
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 Counsel (Parts 1800--1899)
IX Appalachian Regional Commission (Parts 1900--1999)
XI Armed Forces Retirement Home (Part 2100)
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)
XXI Department of the Treasury (Parts 3100--3199)
XXII Federal Deposit Insurance Corporation (Part 3202)
XXIII Department of Energy (Part 3301)
[[Page 350]]
XXIV Federal Energy Regulatory Commission (Part 3401)
XXVI Department of Defense (Part 3601)
XXVIII Department of Justice (Part 3801)
XXIX Federal Communications Commission (Parts 3900--3999)
XXX Farm Credit System Insurance Corporation (Parts 4000--
4099)
XXXI Farm Credit Administration (Parts 4100--4199)
XXXIII Overseas Private Investment Corporation (Part 4301)
XXXV Office of Personnel Management (Part 4501)
XL Interstate Commerce Commission (Part 5001)
XLI Commodity Futures Trading Commission (Part 5101)
XLII Department of Labor (Part 5201)
XLIII National Science Foundation (Part 5301)
XLV Department of Health and Human Services (Part 5501)
XLVI Postal Rate Commission (Part 5601)
XLVII Federal Trade Commission (Part 5701)
XLVIII Nuclear Regulatory Commission (Part 5801)
L Department of Transportation (Part 6001)
LII Export-Import Bank of the United States (Part 6201)
LIII Department of Education (Parts 6300--6399)
LIV Environmental Protection Agency (Part 6401)
LVII General Services Administration (Part 6701)
LVIII Board of Governors of the Federal Reserve System (Part
6801)
LIX National Aeronautics and Space Administration (Part
6901)
LX United States Postal Service (Part 7001)
LXII Equal Employment Opportunity Commission (Part 7201)
LXIII Inter-American Foundation (Part 7301)
LXV Department of Housing and Urban Development (Part
7501)
LXVI National Archives and Records Administration (Part
7601)
LXIX Tennessee Valley Authority (Part 7901)
LXXI Consumer Product Safety Commission (Part 8101)
LXXIV Federal Mine Safety and Health Review Commission (Part
8401)
LXXVI Federal Retirement Thrift Investment Board (Part 8601)
LXXVII Office of Management and Budget (Part 8701)
Title 6--[Reserved]
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 Consumer Service, Department of Agriculture
(Parts 210--299)
III Animal and Plant Health Inspection Service, Department
of Agriculture (Parts 300--399)
[[Page 351]]
IV Federal Crop Insurance Corporation, Department of
Agriculture (Parts 400--499)
V Agricultural Research Service, Department of
Agriculture (Parts 500--599)
VI Natural Resources Conservation Service, Department of
Agriculture (Parts 600--699)
VII Farm Service Agency, Department of Agriculture (Parts
700--799)
VIII Grain Inspection, Packers and Stockyards
Administration (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 Utilities Service, Department of Agriculture
(Parts 1700--1799)
XVIII Rural Housing Service, Rural Business-Cooperative
Service, Rural Utilities Service, and Farm Service
Agency, Department of Agriculture (Parts 1800--
2099)
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 [Reserved]
XXXIII Office of Transportation, Department of Agriculture
(Parts 3300--3399)
XXXIV Cooperative State Research, Education, and Extension
Service, Department of Agriculture (Parts 3400--
3499)
XXXV Rural Housing Service, Department of Agriculture
(Parts 3500--3599)
XXXVI National Agricultural Statistics Service, Department
of Agriculture (Parts 3600--3699)
[[Page 352]]
XXXVII Economic Research Service, Department of Agriculture
(Parts 3700--3799)
XXXVIII World Agricultural Outlook Board, Department of
Agriculture (Parts 3800--3899)
XLI [Reserved]
XLII Rural Business-Cooperative Service and Rural Utilities
Service, Department of Agriculture (Parts 4200--
4299)
Title 8--Aliens and Nationality
I Immigration and Naturalization Service, Department of
Justice (Parts 1--499)
Title 9--Animals and Animal Products
I Animal and Plant Health Inspection Service, Department
of Agriculture (Parts 1--199)
II Grain Inspection, Packers and Stockyards
Administration (Packers and Stockyards Programs),
Department of Agriculture (Parts 200--299)
III Food Safety and Inspection Service, Meat and Poultry
Inspection, Department of Agriculture (Parts 300--
599)
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)
XI United States Enrichment Corporation (Parts 1100--
1199)
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)
Title 11--Federal Elections
I Federal Election Commission (Parts 1--9099)
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)
[[Page 353]]
IX Federal Housing Finance Board (Parts 900--999)
XI Federal Financial Institutions Examination Council
(Parts 1100--1199)
XIV Farm Credit System Insurance Corporation (Parts 1400--
1499)
XV Thrift Depositor Protection Oversight Board (Parts
1500--1599)
XVII Office of Federal Housing Enterprise Oversight,
Department of Housing and Urban Development (Parts
1700-1799)
XVIII Community Development Financial Institutions Fund,
Department of the Treasury (Parts 1800--1899)
Title 13--Business Credit and Assistance
I Small Business Administration (Parts 1--199)
III Economic Development Administration, Department of
Commerce (Parts 300--399)
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 Commercial Space Transportation, Federal Aviation
Administration, Department of Transportation
(Parts 400--499)
V National Aeronautics and Space Administration (Parts
1200--1299)
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, Department of Commerce
(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)
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
[[Page 354]]
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)
Title 16--Commercial Practices
I Federal Trade Commission (Parts 0--999)
II Consumer Product Safety Commission (Parts 1000--1799)
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)
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)
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)
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 (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)
[[Page 355]]
IX Office of the Assistant Secretary for Veterans'
Employment and Training, Department of Labor
(Parts 1000--1099)
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)
III Office of National Drug Control Policy (Parts 1400--
1499)
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)
XVII United States Institute of Peace (Parts 1700--1799)
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)
[[Page 356]]
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) [Reserved]
VII Office of the Secretary, Department of Housing and
Urban Development (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)
XII Office of Inspector General, Department of Housing and
Urban Development (Parts 2000--2099)
XX Office of Assistant Secretary for Housing--Federal
Housing Commissioner, Department of Housing and
Urban Development (Parts 3200--3899)
XXV Neighborhood Reinvestment Corporation (Parts 4100--
4199)
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, Department of the
Interior (Parts 500--599)
IV Office of Navajo and Hopi Indian Relocation (Parts
700--799)
V Bureau of Indian Affairs, Department of the Interior,
and Indian Health Service, Department of Health
and Human Services (Part 900)
VI Office of the Assistant Secretary-Indian Affairs,
Department of the Interior (Part 1001)
[[Page 357]]
Title 26--Internal Revenue
I Internal Revenue Service, Department of the Treasury
(Parts 1--799)
Title 27--Alcohol, Tobacco Products and Firearms
I Bureau of Alcohol, Tobacco and Firearms, Department of
the Treasury (Parts 1--299)
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)
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 Office of Labor-Management 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)
XXVII Federal Mine Safety and Health Review Commission
(Parts 2700--2799)
XL Pension Benefit Guaranty Corporation (Parts 4000--
4999)
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)
[[Page 358]]
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)
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)
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, National
Archives and Records Administration (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)
XXIX Presidential Commission on the Assignment of Women in
the Armed Forces (Part 2900)
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)
[[Page 359]]
IV Saint Lawrence Seaway Development Corporation,
Department of Transportation (Parts 400--499)
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)
XI National Institute for Literacy (Parts 1100-1199)
Subtitle C--Regulations Relating to Education
XII National Council on Disability (Parts 1200--1299)
Title 35--Panama Canal
I Panama Canal Regulations (Parts 1--299)
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)
XIV Assassination Records Review Board (Parts 1400-1499)
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)
[[Page 360]]
IV Assistant Secretary for Technology Policy, Department
of Commerce (Parts 400--499)
V Under Secretary for Technology, Department of Commerce
(Parts 500--599)
Title 38--Pensions, Bonuses, and Veterans' Relief
I Department of Veterans Affairs (Parts 0--99)
Title 39--Postal Service
I United States Postal Service (Parts 1--999)
III Postal Rate Commission (Parts 3000--3099)
Title 40--Protection of Environment
I Environmental Protection Agency (Parts 1--799)
V Council on Environmental Quality (Parts 1500--1599)
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 People Who Are Blind or
Severely Disabled (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)
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) [Reserved]
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)
[[Page 361]]
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)
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)
III Utah Reclamation Mitigation and Conservation
Commission (Parts 10000--10005)
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)
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),
Administration for Children and Families,
Department of Health and Human Services (Parts
200--299)
III Office of Child Support Enforcement (Child Support
Enforcement Program), Administration for Children
and Families, Department of Health and Human
Services (Parts 300--399)
IV Office of Refugee Resettlement, Administration for
Children and Families 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, Administration for
Children and Families, 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)
[[Page 362]]
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)
XXI Commission on Fine Arts (Parts 2100--2199)
XXII Christopher Columbus Quincentenary Jubilee Commission
(Parts 2200--2299)
XXIII Arctic Research Commission (Part 2301)
XXIV James Madison Memorial Fellowship Foundation (Parts
2400--2499)
XXV Corporation for National and Community Service (Parts
2500--2599)
Title 46--Shipping
I Coast Guard, Department of Transportation (Parts 1--
199)
II Maritime Administration, Department of Transportation
(Parts 200--399)
IV Federal Maritime Commission (Parts 500--599)
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)
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)
[[Page 363]]
19 United States Information Agency (Parts 1900--1999)
20 Nuclear Regulatory Commission (Parts 2000--2099)
21 Office of Personnel Management, Federal Employees
Group Life Insurance Federal Acquisition
Regulation (Parts 2100--2199)
23 Social Security Administration (Parts 2300--2399)
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)
54 Defense Logistics Agency, Department of Defense (Part
5452)
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)
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 Federal Transit Administration, Department of
Transportation (Parts 600--699)
VII National Railroad Passenger Corporation (AMTRAK)
(Parts 700--799)
VIII National Transportation Safety Board (Parts 800--999)
[[Page 364]]
X Surface Transportation Board, Department of
Transportation (Parts 1000--1399)
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 Fishing and Related Activities (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)
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
Alphabetical List of Agencies Appearing in the CFR
[[Page 365]]