(Added 09-06-95, PN 250)
(2-6-85) PN 956
Table of Contents (Con.) RD Instruction 1942-A
(n) Actions prior to loan closing and start of
(1) Excess Rural Development loan and grant funds. 59
(2) Loan resolutions. 60
(3) Interim financing. 62
(4) Obtaining closing instructions. 63
(5) Applicant contribution. 63
(6) Evidence of and disbursement of other funds. 63
(o) Loan closing. 64
(1) Closing instructions. 64
(2) Obtaining insurance and fidelity bonds. 64
(3) Distribution of recorded documents. 64
(4) Review of loan closing. 64
(p) Project monitoring and fund delivery during
(1) Coordination of funding sources. 64
(2) Multiple advances. 64
(3) Use and accountability of funds. 65
(4) Development inspections. 66
(5) Payment for construction. 67
(6) Use of remaining funds. 67
(q) Borrower accounting methods, management reporting
and audits. 68
(1) Accounting methods and records. 68
(2) Management reports. 68
(3) Substitute for management reports. 69
(4) Audits. 70
(5) Borrowers exempt from audits. 71
(r) Rural Development actions for borrower supervision and
(1) Management assistance and management reports. 71
(2) Audits and financial statements. 73
(3) Security inspections. 73
(4) Civil rights compliance reviews. 74
(5) Other loan servicing actions. 74
(2-6-85) PN 956
RD Instruction 1942-A
§1942.17 Community Facilities.
(a) General. This section includes information and procedures specifically designed for use by applicants, including their professional consultants and/or agents who provide such assistance and services as architectural, engineering, financial, legal, or other services related to application processing and facility planning and development. This section is made available as needed for such use. It includes Rural Development policies and requirements pertaining to loans for community facilities. It provides applicants with guidance for use in proceeding with their application. Rural Development shall cooperate fully with appropriate State agencies to give maximum support of the State's strategies for development of rural areas. (Revised 05-19-92, SPECIAL PN.)
(b) Eligibility. Financial assistance to areas or communities adjacent to, or closely associated with, nonrural areas is limited by §1942.17 (c) of this subpart. (Revised 05-19-92, SPECIAL PN.)
(i) A public body, such as a municipality, county, district, authority, or other political subdivision of a state.
(A) Loans for water or waste disposal facilities will not be made to a city or town with a population in excess of 10,000 inhabitants, according to the latest decennial Census of the United States.
(B) Loans for essential community facilities will not be made to a city or town with a population in excess of 20,000 inhabitants, according to the latest decennial Census of the United States.
(ii) An organization operated on a not-for-profit basis, such as an association, cooperative, or private corporation. Applicants organized under the general profit corporation laws may be eligible if they actually will be operated on a not-for-profit basis under their charter, bylaws, mortgage, or supplemental agreement provisions as may be required as a condition of loan approval. Essential community facility applicants other than utility-type must have significant ties with the local rural community. Such ties are necessary to ensure to the greatest extent possible that a facility under private control will carry out a public purpose and continue to primarily serve rural areas. Ties may be evidenced by items such as:
(2-6-85) PN 956
RD Instruction 1942-A
§1942.17 (b)(1)(ii) (Con.)
(A) Association with or controlled by a local public body or bodies, or broadly based ownership and controlled by members of the community.
(B) Substantial public funding through taxes, revenue bonds, or other local Government sources, and/or substantial voluntary community funding, such as would be obtained through a community-wide funding campaign.
(iii) Indian tribes on Federal and State reservations and other Federally recognized Indian tribes.
(i) Facilities must be located in rural areas, except for utility-type services such as water, sewer, natural gas, or hydroelectric, serving both rural and non-rural areas. In such cases, Rural Development funds may be used to finance only that portion serving rural areas, regardless of facility location.
(ii) Essential community facilities must primarily serve rural areas.
(iii) For water or waste disposal facilities, the terms "rural" and "rural area" will not include any area in any city or town with a population in excess of 10,000 inhabitants, according to the latest decennial Census of the United States.
(iv) For essential community facilities, the terms "rural" and "rural area" will not include any area in any city or town with a population in excess of 20,000 inhabitants, according to the latest decennial Census of the United States.
(3) Credit elsewhere. Applicants must certify in writing and Rural Development shall determine and document that the applicant is unable to finance the proposed project from their own resources or through commercial credit at reasonable rates and terms.
RD Instruction 1942-A
§1942.17 (b) (Con.)
(4) Legal authority and responsibility. Each applicant must have or will obtain the legal authority necessary for constructing operating and maintaining the proposed facility or service and for obtaining giving security for and repaying the proposed loan. The applicant shall be responsible for operating maintaining and managing the facility and providing for its continued availability and use at reasonable rates and terms. This responsibility shall be exercised by the applicant even though the facility may be operated maintained or managed by a third party under contract management agreement or written lease. Leases may be used when this is the only feasible way to provide the service and is the customary practice. Management agreements should provide for at least those items listed in Guide 24 of this subpart (available in any Agency office). Such contracts management agreements or leases must not contain options or other provisions for transfer of ownership.
(5) Refinancing debt. The Government shall require an agreement that if at any time it shall appear to the Government that the borrower is able to refinance the amount of the indebtedness then outstanding in whole or in part by obtaining a loan for such purposes from responsible cooperative or private credit sources at reasonable rates and terms for loans for similar purposes and periods of time the borrower will upon request of the Government apply for and accept such loan in sufficient amount to repay the Government and will take all such actions as may be required in connection with such loan.
(6) Expanded eligibility for timber dependent communities in Pacific Northwest. In the Pacific Northwest defined as an area containing national forest covered by the Federal document entitled Forest Plan for a Sustainable Economy and a Sustainable Environment, dated July 1 1993; the population limits contained §1942.17(b) are expanded to include communities with not more than 25,000 inhabitants until September 30, 1998 if: (Added 09-06-95, PN 250.)
(i) Part or all of the community lies within 100 miles of the boundary of a national forest covered by the Federal document entitled Forest Plan for a Sustainable Economy and a Sustainable Environment, dated July 1, 1993; and
(ii) The community is located in a county in which at least 15 percent of the total primary and secondary labor and proprietor income is derived from forestry, wood products, or forest related industries such as recreation and tourism.