Rd instruction 1942-a table of Contents




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57

(Revision 5)


(02-06-85) PN 956

RD Instruction 1942-A

§ 1942.17 (Con.)
(l) Professional services and contracts related to the facility.
(1) Professional services. Applicants will be responsible for providing the services necessary to plan projects including design of facilities, preparation of cost and income estimates, development of proposals for organization and financing, and overall operation and maintenance of the facility. Professional services of the following may be necessary: engineer, architect, attorney, bond counsel, accountant, auditor, appraiser, and financial advisory or fiscal agent (if desired by applicant). Contracts or other forms of agreement between the applicant and its professional and technical representatives are required and are subject to agency concurrence. Form RD 1942-19, "Agreement for Engineering Services," may be used when appropriate. Guide 20, "Agreement for Engineering Services (Agency/EPA - Jointly Funded Projects)," may be used on projects jointly funded by the Agency and EPA. Guide 14 may be used in the preparation of the legal services agreement. Guide 27, Attachment 1 to AIA Document B141, 1997 Edition, "Standard Form of Agreement Between owner and Architect," may be used when appropriate. (Revised 08-26-98, PN 296.)
(2) Bond counsel. Unless otherwise provided by § 1942.19(b), public bodies are required to obtain the services of recognized bond counsel in the preparation of evidence of indebtedness.
(3) Contracts for other services. Contracts or other forms of agreements for other services including management, operation, and maintenance will be developed by the applicant and presented to agency for review and approval. Management agreements should provide at least those items in Guide 24.
(4) Fees. Fees provided for in contracts or agreements shall be reasonable. They shall be considered to be reasonable if not in excess of those ordinarily charged by the professional for similar work when agency financing is not involved. An Engineer Fee Analysis described in the attached Automation Supplement may be used as an aid in reviewing the engineer fees described herein.
(m) Applying for Agency loans.
(1) Preapplication. Applicants desiring loans will file SF 424.2 and comments from the appropriate A-95 clearinghouse agency normally with the appropriate agency County Office. The County Supervisor will immediately forward all documents to the District Office. The District Director has prime responsibility for all community program loan making and servicing activities within the District.
(Revised 04-11-90, SPECIAL PN.)


58

(Revision 5)


RD Instruction 1942-A

§ 1942.17(m) (Con.)

(2) Preapplication review. Upon receipt of the preapplication, the agency will tentatively determine eligibility including the likelihood of credit elsewhere at reasonable rates and terms and availability of agency loan funds. The determination as to the availability of

58A

(Added 08-26-98, PN 296)

(02-06-85) PN 956

§1942.17 (m)(2) (Con.) RD Instruction 1942-A
other credit will be made after considering present rates and terms available for similar proposals (not necessarily based upon rates and terms available from Rural Development); the repayment potential of the applicant; long-term cost to the applicant; and average user or other charges. In those cases where Rural Development determines that loans at reasonable rates and terms should be available from commercial sources, Rural Development will notify the applicant so that it may apply for such financial assistance. Such applicants may be reconsidered for Rural Development loans upon their presenting satisfactory evidence of inability to obtain commercial financing at reasonable rates and terms.

(3) Incurring obligations. Applicants should not proceed with planning nor obligate themselves for expenditures until authorized by Rural Development.

(4) Results of preapplication review. After Rural Development has reviewed the preapplication material and any additional material that may be requested, Form AD-622 will be sent to the applicant. Ordinarily the review will not exceed 45 days.

(5) Application conference. Before starting to assemble the application and after the applicant selects its professional and technical representatives, it should arrange with Rural Development for an application conference to provide a basis for orderly application assembly. Rural Development will provide applicants with a list of documents necessary to complete the application. Guide 15 may be used for this purpose. Applications will be filed with the District Office.

(6) Application completion and assembling. This is the responsibility of the applicant with guidance from Rural Development. The applicant may utilize their professional and technical representatives or other competent sources.

(7) Review of decision. If an application is rejected, the applicant may request a review of this decision under Subpart B of Part 1900 of this chapter.


(n) Actions prior to loan closing and start of construction.

(1) Excess Rural Development loan and grant funds. If there is a significant reduction in project cost, the applicant's funding needs will be reassessed before loan closing or the start of construction, whichever occurs first. In such cases applicable Rural Development forms, the letter of conditions, and other items will be revised. Decreases in Rural Development funds will be based on revised project costs and current number of users, however, other factors including Rural Development regulations used at the time of loan/grant approval will remain the same. Obligated loan or grant funds not needed to complete the proposed project will be deobligated.

59

(Revision 1)


(2-6-85, PN 956)

RD Instruction 1942-A

§1942.17 (n) (Con.)

(2) Loan resolutions. Loan resolutions will be adopted by both public and other-than-public bodies using Form RD 1942-47, "Loan Resolution (Public Bodies)," or Form RD 1942-9, "Loan Resolution (Security Agreement)." These resolutions supplement other provisions in this subpart. The applicant will agree:


(i) To indemnify the Government for any payments made or losses suffered by the Government on behalf of the association. Such indemnification shall be payable from the same source of funds pledged to pay the bonds or any other legally permissible source.
(ii) To comply with applicable local, State and Federal laws, regulations, and ordinances.
(iii) To provide for the receipt of adequate revenues to meet the requirements of debt service, operation and maintenance, establishment of adequate reserves, and to continually operate and maintain the facility in good condition. Except for utility-type facilities, free service use may be permitted. If free services are extended, no distinctions will be made in the extension of those services because of race, color, religion, sex, national origin, marital status, or physical or mental handicap.
(iv) To acquire and maintain such insurance coverage including fidelity bonds, as may be required by the Government.
(v) To establish and maintain such books and records relating to the operation of the facility and its financial affairs and to provide for required audit thereof in such a manner as may be required by the Government and to provide the Government without its request, a copy of each such audit and to make and forward to the Government such additional information and reports as it may, from time to time, require.
(vi) To provide the Government at all reasonable times, access to all books and records relating to the facility and access to the property of the system so that the Government may ascertain

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