RD Instruction 1924-A
§1924.13 (e)(1)(viii)(C) (Con.)
(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
(05-12-87) SPECIAL PN
RD Instruction 1924-A
§1924.13 (e)(2)(i)(B) (Con.)
liabilities that may exist. Rural Development 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. (Revised 03-16-94, SPECIAL PN.)
(C) A written, dated, and signed statement agreeing 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 Rural Development) 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 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 RD 1924-13 will be used for this purpose. If cost certification services are required by Rural Development, 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 §1924.4 (i) of this subpart must also provide a trade-item cost breakdown of the proposed amount. (Revised 03-16-94, SPECIAL PN.)
(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
RD Instruction 1924-A
§1924.13 (e)(2)(i)(H) (Con.)
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 RD 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 Rural Development by the owner-builder. (Revised 03-16-94, SPECIAL PN.)
(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 Rural Development 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.