Rd instruction 1942-a table of Contents

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(Revision 2)

§1942.17 (d)(1)(i)(B) (Con.) RD Instruction 1942-A

(4) Hydroelectric generating facilities and related connecting systems and appurtenances, when not eligible for Rural Electrification Administration (REA) financing;


(Added 05-19-92, SPECIAL PN)

(2-6-85) PN 956

§1942.17 (d) (1) (i) (B) (Con.) RD Instruction 1942-A

(5) Supplemental and supporting structures for other rural electrification or telephone systems (including facilities such as headquarters and office buildings, storage facilities, and maintenance shops) when not eligible for Rural Electrification Administration financing:

(6) Natural gas distribution systems; and
(7) Industrial park sites, but only to the extent of land acquisition and necessary site preparation, including access ways and utility extensions to and throughout the site. Funds may not be used in connection with industrial parks to finance on-site utility systems, or business and industrial buildings.
(C) "Otherwise improve" includes but is not limited to the following:
(1) The purchase of major equipment, such as solid waste collection trucks, and X-ray machines, which will in themselves provide an essential service to rural residents; (Revised 11-4-87, PN 68.)
(2) The purchase of existing facilities when it is necessary either to improve or to prevent a loss of service;
(3) Payment of tap fees and other utility connection charges as provided in utility purchase contracts prepared under section 1942.18(f) of this subpart.
(ii) To construct or relocate public buildings, roads, bridges, fences, or utilities, and to make other public improvements necessary to the successful operation or protection of facilities authorized in paragraph (d)(l)(i) of this section.
(iii) To relocate private buildings, roads, bridges, fences, or utilities, and other private improvements necessary to the successful operation or protection of facilities authorized in paragraph (d)(l)(i) of this section.
(iv) To pay the following expenses, but only when such expenses are a necessary part of a loan to finance facilities authorized in paragraphs (d)(l)(i), (d)(l)(ii), and (d)(l) (iii) of this section:


(Revision 1)

(2-6-85) PN 956

RD Instruction 1942-A

§1942.17 (d) (1) (iv) (Con.)

(A) Reasonable fees and costs such as legal, engineering, architectural, fiscal advisory, recording, environmental impact analyses, archaeological surveys and possible salvage or other mitigation measures, planning, establishing or acquiring rights.

(B) Interest on loans until the facility is self-supporting, but not for more than three years unless a longer period is approved by the National Office; interest on loans secured by general obligation bonds until tax revenues are available for payment, but not for more than two years unless a longer period is approved by the National Office; and interest on interim financing, including interest charges on interim financing from sources other than Rural Development.
(C) Costs of acquiring interest in land; rights, such as water rights, leases, permits, rights-of-way; and other evidence of land or water control necessary for development of the facility.
(D) Purchasing or renting equipment necessary to install, maintain, extend, protect, operate, or utilize facilities.
(E) Initial operating expenses for a period ordinarily not exceeding one year when the borrower is unable to pay such expenses.
(F) Refinancing debts incurred by, or on behalf of, a community when all of the following conditions exist:
(1) The debts being refinanced are a secondary part of the total loan;
(2) The debts are incurred for the facility or service being financed or any part thereof;
(3) Arrangements cannot be made with the creditors to extend or modify the terms of the debts so that a sound basis will exist for making a loan.
(G) Prepay costs for which Rural Development grant funds were obligated provided there is:


(Revision 1)

§1942.17 (d)(1)(iv)(G) (Con.) RD Instruction 1942-A

(1) No conflict with the loan resolution, State statutes, or any other loan requirements; and

(2) Full documentation showing that:
(i) Loan funds will only be utilized on a temporary basis; and
(ii) All Rural Development loan funds are restored at a later date for purpose(s) for which they were obligated.
(v) To pay obligations for construction incurred before loan approval. Construction work should not be started and obligations for such work or materials should not be incurred before the loan is approved. However, if there are compelling reasons for proceeding with construction before loan approval, applicants may request Rural Development approval to pay such obligations. Such requests may be approved if Rural Development determines that:
(A) Compelling reasons exist for incurring obligations before loan approval; and
(B) The obligations will be incurred for authorized loan purposes; and
(C) Contract documents have been approved by Rural Development; and
(D) All environmental requirements applicable to Rural Development and the applicant have been met; and
(E) The applicant has the legal authority to incur the obligations at the time proposed, and payment of the debts will remove any basis for any mechanic, material or other liens that may attach to the security property. Rural Development may authorize payment of such obligations at the time of loan closing. Rural Development's authorization to pay such obligations, however, is on the condition that it is not committed to make the loan; it assumes no responsibility for any obligations incurred by the applicant; and the applicant must subsequently meet all loan approval requirements. The applicant's request and Rural Development authorization for paying such obligations shall be in writing. If construction is started without Rural Development approval, post approval in accordance with this section may be considered.
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