RD Instruction 1942-C

Page 1

(Revision 2)

PART 1942 - ASSOCIATION

Subpart C - Fire and Rescue and other Small Community Facilities
Projects

## Table of Contents

[Sec]{.underline}. [Page]{.underline}

1942.101 General. 1

1942.102 Nondiscrimination. 1

1942.103 Definitions. 1

> Agency. 1
>
> Approval official. 1

Construction. 2

Owner. 2

> Processing office 2
>
> Regional Attorney or OGC 2
>
> Small Community Facilities projects. 2

1942.104 Application processing. 2

\(a\) General. 1

\(b\) Unfavorable decision. 2

1942.105 Environmental review. 3

1942.106 Intergovernmental review. 3

1942.107 Priorities. 3

1942.108 Application docket preparation and review. 4

\(a\) Guides. 4

\(b\) Project summary. 4

\(c\) Budgets. 4

\(d\) Letter of conditions. 4

\(e\) Organizational review. 4A

\(f\) National Office review. 4A

\(g\) State Office review. 4A

\(h\) Loan approval and fund obligation. 5

1942.109 - 1942.110 \[Reserved\]

1942.111 Applicant eligibility. 5

\(a\) General. 5

\(b\) Credit elsewhere determinations. 5

\(c\) Public use. 5

(11-4-87) PN 68

RD Instruction 1942-C

Table of Contents

Page 2

(Revision 2)

[Sec]{.underline}. [Page]{.underline}

1942.112 Eligible loan purposes. 5

1942.113 Rates and terms. 7

1942.114 Security. 8

1942.115 Reasonable project costs. 9

1942.116 Economic feasibility requirements. 9

1942.117 General requirements. 9

\(a\) Reserve requirements. 9

\(b\) Membership authorization. 9

\(c\) Insurance and bonding. 9

\(d\) Acquisition of land and rights. 9

\(e\) Lease agreements. 10

\(f\) Notes and bonds. 10

\(g\) Public information. 10

\(h\) Joint funding. 10

1942.118 Other Federal, State, and local requirements. 10

1942.119 Professional services and borrower contracts. 10

1942.120 - 1942.121 \[Reserved\]

1942.122 Actions prior to loan closing and start of construction. 10

\(a\) Excess Rural Development loan funds. 10

\(b\) Loan resolutions. 10

\(c\) Interim financing. 11

\(d\) Applicant contribution. 11

\(e\) Evidence of and disbursement of other funds. 11

\(f\) Assurance agreement. 11

1942.123 Loan closing. 11

\(a\) Ordering loan checks. 11

\(b\) Public bodies and Indian tribes. 11

\(c\) Organizations other than public bodies and

Indian tribes. 11

\(d\) Authority to execute, file, and record legal

instruments. 12

\(e\) Mortgages. 12

\(f\) Notes and bonds. 12

\(g\) Disposition of title evidence. 12

\(h\) Multiple advances. 12

\(i\) Bond registration record. 13

\(j\) Loan disbursements. 13

\(k\) Safeguarding bond shipments. 13

\(l\) Review of loan closing. 13

\(m\) Loan cancellation. 14

RD Instruction 1942-C

Table of Contents

Page 3

[Sec]{.underline}. [Page]{.underline}

1942.124 - 1942.125 \[Reserved)

1942.126 Planning, bidding, contracting, constructing, procuring. 14

\(a\) General. 14

\(b\) Technical services. 14

\(c\) Design policies. 15

\(d\) Construction contracts. 15

\(e\) Performing construction. 16

\(f\) Owner\'s contractual responsibility. 16

\(g\) Owner\'s procurement regulations. 16

\(h\) Procurement methods. 16

\(i\) Contracting methods. 17

\(j\) Contracts awarded prior to preapplications. 17

\(k\) Construction contract provisions. 17

\(l\) Construction contract administration. 17

1942.127 Project monitoring and fund delivery. 20

\(a\) Coordination of funding sources. 20

\(b\) Multiple advances. 20

\(c\) Use and accountability of funds. 20

\(d\) Development inspections. 20

\(e\) Payment for project costs. 20

\(f\) Use of remaining funds. 21

1942.128 Borrower accounting methods, management reports

and audits. 21

1942.129 Borrower supervision and servicing. 21

1942.130 - 1942.131 \[Reserved\]

1942.132 Subsequent loans. 22

1942.133 Delegation and redelegation of authority. 22

1942.114 State supplements and guides. 22

\(a\) State supplements. 22

\(b\) State guides. 22

1942.135 - 1942.149 \[Reserved\]

1942.150 OMB control number. 22

(11-4-87) PN 68

RD Instruction 1942-C

PART 1942 - ASSOCIATIONS

Subpart C - Fire and Rescue and other Small Community Facilities
Projects

§ 1942.101 [General]{.underline}.

This subpart provides the policies and procedures for making and
processing insured Community Facilities (CF) loans for facilities that
will primarily provide fire or rescue services and other small essential
community facility projects and applies to fire and rescue and other
Community Facilities loans for projects costing \$300,000 and under. Any
processing or servicing activity conducted pursuant to this subpart
involving authorized assistance to Rural Development employees, members
of their families, known close relatives, or business or close personal
associates, is subject to the provisions of subpart D of part 1900 of
this chapter. Applicants for this assistance are required to identify
any known relationship or association with a Rural Development employee.
Community Facilities loans for other types of facilities and those
costing in excess of \$300,000 are defined in subpart A of this part.
(Revised 02-09-04, SPECIAL PN.)

§ 1942.102 [Nondiscrimination]{.underline}.

\(a\) Federal statutes provide for extending Rural Development financial
programs without regard to race, color, religion, sex, national origin,
marital status, age, or physical/mental handicap. The participants must
possess the capacity to enter into legal contracts under State and local
statutes.

\(b\) Indian tribes on Federal and State reservations and other
Federally recognized Indian tribes are eligible to apply for, and are
encouraged to participate in, this program. Such tribes might not be
subject to State and local laws or jurisdiction. However, any
requirements of this subpart that affect applicant eligibility, the
adequacy of Rural Development\'s security or the adequacy of service to
users of the facility, and all other requirements of this subpart must
be met.

§ 1942.103 [Definitions]{.underline}. (Revised 02-09-04, SPECIAL PN.)

For the purpose of this subpart:

[Agency]{.underline}. The Rural Housing Service (RHS), an agency of the
U.S. Department of Agriculture.

[Approval official]{.underline}. An official who has been delegated loan
or grant approval authorities within applicable programs, subject to
certain dollar limitations.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DISTRIBUTION: WSDC Loan and Grant Making

Association

## 1

## (Revision 4)

(11-4-87) PN 68

RD Instruction 1942-C

§1942.103 (con.)

[Construction]{.underline}. The act of building or putting together a
facility that is a part of, or physically attached to, real estate. This
does not include procurement of major equipment although the equipment
may be custom built to meet the owner\'s requirements.

[Owner]{.underline}. An applicant or borrower.

[Processing office]{.underline}. The office designated by the State
program official to accept and process applications for Community
Facilities projects.

[Regional Attorney or OGC]{.underline}. The head of a Regional Office of
the General Counsel (OGC).

[Small Community Facilities projects]{.underline}. Community Facilities
loans costing \$300,000 and under.

§ 1942.104 [Application processing]{.underline}.

\(a\) [General]{.underline}. Prospective applicants should request
assistance by filing SF 424.2, \"Application for Federal Assistance (For
Construction),\" with the Local or Area Rural Development Office. When
practical, approval officials should meet with prospective applicants
before an application is filed to discuss eligibility and Rural
Development requirements and processing procedures. Throughout loan
processing, Rural Development should confer with applicant officials as
needed to ensure that applicant officials understand the current status
of the processing of their application, what steps and determinations
are necessary, and what is required from them. Rural Development should
assist the applicant as needed and generally try to develop and maintain
a cooperative working relationship with the applicant.\
Revised 02-09-04, SPECIAL PN.)

\(b\) [Unfavorable decision]{.underline}. If, at any time prior to loan
approval, it is decided that favorable action will not be taken on an
application, the approval official will notify the applicant, in
writing, of the reasons why the request was not favorably considered.
The notification to the applicant will state that a review of this
decision by Rural Development may be requested by the applicant in
accordance with Subpart B of Part 1900 of this chapter. The following
statement will also be made on all notifications of adverse action:
(Renumbered 02-09-04, SPECIAL PN.)

## 2

## (Revision 4) 

§1942.104 (Con.) RD Instruction 1942-C

\"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, age (provided that the
applicant has the capacity to enter into a binding contract); because
all or part of the applicant\'s income is derived 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 this law is the Federal Trade
Commission, Equal Credit Opportunity, Washington, D.C. 20580.\"

## 2A

## (Revision 1)

(11-4-87) PN 68

RD Instruction 1942-C

§ 1942.105 [Environmental Review]{.underline}.

The Agency must conduct and document an environmental review for each
proposed project in accordance with Subpart G of Part 1940 of this
chapter. The review should be completed as soon as possible after
receipt of an application. The loan approving official must determine an
adequate environmental review has been completed before requesting an
obligation of funds.

§ 1942.106 [Intergovernmental review]{.underline}.

\(a\) Loans under this subpart are subject to intergovernmental review
in accordance with Subpart J of Part 1940 of this chapter.\
(Revised 02-14-96, PN 257.)

\(b\) State intergovernmental review agencies that have selected
Community Facility loans as a program they want to review may not be
interested in reviewing proposed loans for fire and rescue facilities.
In such cases, the State Director should obtain a letter from the State
single point of contact exempting fire and rescue loans from
intergovernmental consultation review. A copy of the letter should be
placed in the case file for each fire and rescue facility application in
lieu of completing the intergovernmental review process.\
(Revised 02-14-96, PN 257.)

\(c\) When an application is filed and adverse comments are not
expected, the District Director should proceed with application
processing pending intergovernmental review. The loan should not be
obligated until any required review process has been completed.

\(d\) Funds allocated for use under this Subpart are also for the use of
eligible Indian tribes within the State, regardless of whether State
development strategies include Indian reservations. Eligible Indian
tribes must have equal opportunity to participate in the program as
compared with other residents of the State.

§ 1942.107 [Priorities]{.underline}.

\(a\) Eligible applications must be selected for processing in
accordance with § 1942.17(c) of Subpart A of Part 1942 of this chapter.

\(b\) The District Director must score each eligible application in
accordance with § 1942.17(c)(2)(iii) of Subpart A of Part 1942 of this
chapter. The District Director must then notify the State Director of

## 3

## (Revision 3)

(11-4-87) PN 68

RD Instruction 1942-C

§ 1942.107(b) (Con.)

the score, proposed loan amount, and other pertinent data. The State
Director should determine as soon as possible if the project has
sufficient priority for further processing and notify the District
Director. Normally, this consultation should be handled by telephone and
documented in the running record.

\(c\) Applicants who appear eligible but do not have the priority
necessary for further consideration at this time should be notified that
funds are not available, requested to advise whether they wish to have
their application maintained for future consideration, and given the
following notice:

\"You are advised against incurring obligations which would limit the
range of alternatives to be considered, or which cannot be fulfilled
without Agency funds until the funds are actually made available.
Therefore, you should refrain from such actions as initiating
engineering and legal work, taking actions which would have an adverse
effect on the environment, taking options on land rights, developing
detailed plans and specifications, or inviting construction bids until
notified by the Agency to proceed.\"

§ 1942.108 [Application docket preparation and review]{.underline}.

\(a\) [Guides]{.underline}. The application docket should be developed
in accordance with § 1942.2 (c) of subpart A of part 1942 of this
chapter.

\(b\) [Project summary]{.underline}. The Rural Development Manager
should complete the automated Community Facilities Project Summary.
Comments by the State architect/engineer and program chief may be
omitted unless the Rural Development Manager or State Director requests
their review. (Revised 03-19-03, PN 357.)

\(c\) [Budgets]{.underline}. All applicants must complete Form RD 442-7,
\"Operating Budget,\" except as provided in this paragraph. Applicants
with annual incomes not exceeding \$100,000 may, with concurrence of the
Rural Development Manager, use Form RD 1942-52, \"Cash Flow
Projection,\" instead of Form RD 442-7. Projections should be provided
for the current year and each year thereafter until the facility has
been in operation for a full year and a full annual installment has been
paid on the loan.

\(d\) [Letter of Conditions]{.underline}. The Rural Development Manager
should prepare and issue a Letter of Conditions in accordance with §
1942.5(a)(l) and (c) of subpart A of part 1942 of this chapter.

## 

## 

## 4

## (Revision 3) 

RD Instruction 1942-C

§ 1942.108 (Con.)

\(e\) [Organizational review]{.underline}. As early in the application
process as practical, the approval official should obtain copies of
organization documents from each applicant and forward them through the
State Office to the Regional Attorney for review and comments. The
Regional Attorney\'s comments should be received and considered before
obligation of funds.

\(f\) [National Office review]{.underline}. Applications that require
National Office review will be submitted in accordance with § 1942.5(b)
of subpart A of part 1942 of this chapter.

\(g\) [State Office review]{.underline}. The State Office must monitor
fire and rescue and other small essential community facility project
loanmaking and servicing and provide guidance, assistance, and training
as necessary to ensure the activities are accomplished in an orderly
manner consistent with the Agency's regulations. The processing office
should request advice and assistance from the State Office as needed.
The State Director may require all or part of a specific application
docket be

## 4A

## (Revision 1)

(11-4-87) PN 68

RD Instruction 1942-C

§ 1942.108(g) (Con.)

submitted to the State Office for review at any time. The State Director
may determine that one or more of the processing office staffs do not
have adequate training and expertise to routinely complete application
dockets without State Office review. In such cases, the State Director
should establish guidelines by memorandum or by State supplement to this
subpart for the necessary State Office reviews. (Revised 02-09-04,
SPECIAL PN.)

\(h\) [Loan approval and fund obligation]{.underline}. Loans must be
approved and obligated in accordance with § 1942.5(d) of subpart A of
part 1942 and Subpart A of Part 1901 of this chapter.

§§ 1942.109 - 1942.110 \[Reserved\]

§ 1942.111 [Applicant eligibility]{.underline}.

\(a\) [General]{.underline}. Loans under this subpart are subject to the
provisions of § 1942.17(b) of Subpart A of Part 1942 of this chapter.

\(b\) [Credit elsewhere determinations]{.underline}. The approval
official must determine whether financing from commercial sources at
reasonable rates and terms is available. If credit elsewhere is
indicated, the approval official should inform the applicant and
recommend the applicant apply to commercial sources for financing. To
provide a basis for referral of only those applicants who may be able to
finance projects through commercial sources, approval officials should
maintain liaison with representatives of lenders in the area. The State
Director should keep approval officials informed regarding lenders
outside the area who might make loans in the area. Approval officials
should maintain criteria for determining applications that should be
referred to commercial lenders and maintain a list of lender
representatives interested in receiving such referrals. (Revised
02-04-09, SPECIAL PN.)

\(c\) [Public use]{.underline}. Loans under this subpart are subject to
the provisions of § 1942.17(e) of Subpart A of Part 1942 of this
chapter.

§ 1942.112 [Eligible loan purposes]{.underline}.

\(a\) Funds may be used:

\(1\) To construct, enlarge, extend, or otherwise improve essential
community facilities primarily providing fire or rescue services
primarily to rural residents and rural businesses. Rural business would
include facilities such as educational and other publicly owned
facilities. \"Otherwise improve\" includes, but is not limited to the
following: (Revised 05-19-92, SPECIAL PN.)

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## (Revision 2)

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RD Instruction 1942-C

§ 1942.112(a)(1) (Con.)

\(i\) The purchase of major equipment, such as fire trucks and
ambulances, which will, in themselves, provide an essential service to
rural residents.

\(ii\) The purchase of existing facilities when it is necessary either
to improve or to prevent a loss of service.

\(iii\) The construction or development of an essential community
facility requisite to the beneficial and orderly development of a
community operated on a nonprofit basis in accordance with § 1942.17(d)
of this subpart. This subpart includes those projects meeting the
definition of a small community facility project. (Added 02-09-04,
SPECIAL PN.)

\(2\) To pay the following expenses, but only when such expenses are a
necessary part of a loan to finance facilities authorized in paragraph
(a)(1) of this section:

\(i\) 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.

\(ii\) Interest on loans until the facility is self-supporting but not
for more than 3 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 2 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.

\(iii\) 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.

\(iv\) Purchasing or renting equipment necessary to install, maintain,
extend, protect, operate, or utilize facilities.

\(v\) Initial operating expenses for a period ordinarily not exceeding 1
year when the borrower is unable to pay such expenses.

6

(Revision 2)

RD Instruction 1942-C

§ 1942.112 (a)(2) (con.)

\(vi\) Refinancing debts incurred by, or on behalf of, a community when
all of the following conditions exist:

\(A\) the debts being refinanced are a secondary part of the total loan;

\(B\) the debts are incurred for the facility or service being financed
or any part thereof; and

\(C\) 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.

## 6A

## (Added 02-09-04, SPECIAL PN.) 

§1942.112 (a) (Con.) RD Instruction 1942-C

\(3\) To pay obligations for construction or procurement incurred before
loan approval. Construction work or procurement actions 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 or procurement before loan
approval, applicants may request Rural Development approval to pay such
obligations. Such requests may be approved if Rural Development
determines that:

\(i\) Compelling reasons exist for incurring obligations before loan
approval; and

\(ii\) The obligations will be incurred for authorized loan purposes;
and

\(iii\) Contract documents have been approved by Rural Development; and

\(iv\) All environmental requirements applicable to Rural Development
and the applicant have been met; and

\(v\) 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 or procurement is started without Rural Development
approval, post approval in accordance with this section may be
considered.

\(b\) Funds may not be used to finance:

\(1\) Facilities which are not modest in size, design, and cost.

\(2\) Loan finder\'s fees.

\(3\) Projects located within the Coastal Barriers Resource system that
do not qualify for an exception as defined in Section 6 of the Coastal
Barriers Resource Act, Public Law 97-348.

§1942.113 [Rates and terms]{.underline}.

Rates and terms for loans under this subpart are as set out in Section
1942.17 (f) of Subpart A of Part 1942 of this chapter.

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RD Instruction 1942-C

§1942.114 [Security]{.underline}.

Specific requirements for security for each loan will be included in the
letter of conditions. Loans must be secured by the best security
position practicable, in a manner which will adequately protect the
interest of Rural Development during the repayment period of the loan,
and in accordance with the following:

\(a\) Security must include one of the following:

\(1\) A pledge of revenue and a lien on all real estate and major
equipment purchased or developed with the Rural Development loan; or

\(2\) General obligation bonds or bonds pledging ocher taxes.

\(b\) Additional security may be required as determined necessary by the
loan approval official. In determining the need for additional security
the loan approval official should carefully consider:

\(1\) The estimated market value of real estate and equipment security.

\(2\) The adequacy and dependability of the applicant\'s revenues, based
on the applicant\'s financial records, the project financial feasibility
report, and the project budgets.

\(3\) The degree of community commitment to the project, as evidenced by
items such as active broad based membership, aggressive leadership,
broad based fund drives, or contributions by local public bodies.

\(c\) Additional security may include, but is not limited to, the
following:

\(1\) Liens on additional real estate or equipment.

\(2\) A pledge of revenues from additional sources.

\(3\) An assignment of assured income in accordance with section
1942.17(g)(3)(iii)(A)(l) of Subpart A of Part 1942 of this chapter.

\(d\) Review and approval or concurrence in the State Office is required
if the security will not include a pledge of taxes and the applicant
cannot provide evidence of the financially successful operation of a
similar facility for the 5 years immediately prior to loan application.

\(e\) Review and concurrence in the National Office is required if the
security will not include a pledge of taxes, the applicant cannot
provide evidence of the financially successful operation of a similar
facility for the 5 years immediately prior to loan application, and the
amount of the loan will exceed \$250,000.

\(f\) Loans under this subpart are subject to the provisions of section
1942.17(g)(l) of Subpart A of Part 1942 of this chapter, regarding
security for projects utilizing joint financing.

## 8 

RD Instruction 1942-C

§1942.115 [Reasonable project costs]{.underline}.

Applicants are responsible for determining that prices paid for property
rights, construction, equipment, and other project development are
reasonable and fair. Rural Development may require an appraisal by an
independent appraiser or Rural Development employee.

§1942.116 [Economic feasibility requirements]{.underline}.

All projects financed under this section must be based on taxes,
assessments, revenues, fees, or other satisfactory sources of revenues
in an amount sufficient to provide for facility operation and
maintenance, a reasonable reserve, and debt payment. An overall review
of the applicant\'s financial status, including a review of all assets
and liabilities, will be a part of the docket review process by the
Rural Development staff and approval official. All applicants will be
expected to provide a financial feasibility report. These financial
feasibility reports will normally be:

\(a\) Included ss part of the preliminary engineer/architectural report
using Guide 6 to Subpart A of Part 1942 of this chapter (available in
any Rural Development Office), or

\(b\) Prepared by the applicant using Form RD 1942-54, \"Applicant\'s
Feasibility Report.\"

§1942.117 [General requirements]{.underline}.

\(a\) [Reserve requirements]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (i) of Subpart A of Part
1942 of this chapter.

\(b\) [Membership authorization]{.underline}. The membership of
organizations other than public bodies must authorize the project and
its financing except the District Director may, with the concurrence of
the State Director (with advice of OGC as needed), accept the loan
resolution without such membership authorization when State statutes and
the organization charter and bylaws do not require such authorization.

\(c\) [Insurance and bonding]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (j)(3) of subpart A of Part
1942 of this chapter.

\(d\) [Acquisition of land and rights]{.underline}. Loans under this
subpart are subject to the provisions of Section 1942.17 (j)(4) of
Subpart A of Part 1942 of this chapter.

\(e\) [Lease agreements]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (j)(5) of Subpart A of Part
1942 of this chapter.

## 9

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RD Instruction 1942-C

§1942.117 (Con.)

\(f\) [Notes and bonds]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (j)(6) and Section 1942.19
of Subpart A of Part 1942 of this chapter.

\(g\) [Public information]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (j)(9) of Subpart A of Part
1942 of this chapter.

\(h\) [Joint funding]{.underline}. Loans under this subpart are subject
to the provisions of Section 1942.2 (e) and Section 1942.17 (j)(11) of
Subpart A of Part 1942 of this chapter.

§1942.118 [Other Federal, State, and local requirements]{.underline}.

\(a\) Loans under this subpart are subject to the provisions of Section
1942.17 (k) of Subpart A of Part 1942 of this chapter.

\(b\) An initial compliance review should be completed under Subpart E
of Part 1901 of this chapter.

§1942.119 [Professional services and borrower contracts]{.underline}.

\(a\) Loans under this subpart are subject to the provisions of Section
1942.17 (1) of Subpart A of Part 1942 of this chapter.

\(b\) The District Director will, with assistance as necessary by the
State Director and OGC, concur in agreements between borrowers and third
parties such as contracts for professional and technical services. The
State Director may require State Office review of such documents in
accordance with Section 1942.108 (g) of this subpart. State Directors
are expected to work closely with representatives of engineering and
architectural societies, bar associations, commercial lenders,
accountant associations, and others in developing standard forms of
agreements, where needed, and other matters to expedite application
processing, minimize referrals to OGC, and resolve problems which may
arise. Standard forms should be reviewed by and approved by OGC.

§§1942.120 - 1942.121 \[Reserved\]

§1942.122 [Actions prior to loan closing and start of
construction]{.underline}.

\(a\) [Excess Rural Development loan funds]{.underline}. Loans under
this subpart are subject to the provisions of Section 1942.17 (n)(l) of
Subpart A of Part 1942 of this chapter.

\(b\) [Loan resolutions]{.underline}. Loans under this subpart are
subject to the Provisions of Section 1942.17 (n)(2) of Subpart A of Part
1942 of this chapter.

## 10 

§1942.122 (Con.) RD Instruction 1942-C

\(c\) [Interim financing]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (n)(3) of subpart A of Part
1942 of this chapter.

\(d\) [Applicant contribution]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (n)(5) of Subpart A of Part
1942 of this chapter.

\(e\) [Evidence of and disbursement of other funds]{.underline}. Loans
under this subpart are subject to the provisions of Section 1942.17
(n)(6) of Subpart A of Part 1942 of this chapter.

\(f\) [Assurance agreement]{.underline}. All applicants must execute
Form RD 400-4, \"Assurance Agreement,\" at or before loan closing.

§1942.123 [Loan closing]{.underline}.

\(a\) [Ordering loan checks]{.underline}.

Checks will not be ordered until:

\(1\) Form RD 440-57, \"Acknowledgement of Obligated Funds/Check
Request,\" has been received from the Finance Office.

\(2\) The applicant has complied with approval conditions and any
closing instructions, except for those actions which are to be completed
on the date of loan closing or subsequent thereto.

\(3\) The applicant is ready to start construction or funds ere needed
to pay interim financing obligations.

\(b\) [Public bodies and Indian tribes]{.underline}.

\(1\) After loan approval the completed docket will be reviewed by the
State Director. The information required by OGC will be transmitted to
OGC with a request for closing instructions. Upon receipt of the closing
instructions from OGC, the State Director will forward them along with
any appropriate instructions to the District Director. Upon receipt of
closing instructions, the District Director will discuss with the
applicant and its architect or engineer, attorney, and other appropriate
representatives, the requirements contained therein and any actions
necessary to proceed with closing.

\(2\) Loans will be closed in accordance with the closing instructions
issued by OGC and Section 1942.19 of Subpart A of Part 1942 of this
chapter.

\(c\) [Organizations other than public bodies and Indian
tribes]{.underline}. District Directors are authorized to close loans to
organizations other than public bodies and Indian tribes without closing
instructions from OGC. State Directors, in consultation with OGC, should
develop

## 11

(11-4-87) PN 68

RD Instruction 1942-C

§1942.123 (c) (Con.)

standard closing procedures and forms as needed. Assistance with loan
closing and a certification regarding the validity of the note and
mortgage or other debt instruments should be provided by the
applicant\'s attorney. Appropriate title opinion or title insurance is
required as provided in Section 1942.17 (j)(4)(i)(B) of Subpart A of
Part 1942 of this chapter.

\(d\) [Authority to execute, file, and record legal
instruments]{.underline}. District Office employees are authorized to
execute and file or record any legal instruments necessary to obtain or
preserve security for loans. This includes, as appropriate, mortgages
and other lien instruments, as well as affidavits, acknowledgments, and
other certificates.

\(e\) Mortgages. Unless otherwise required by State law or unless an
exception is approved by the State Director with advice of the OGC, only
one mortgage will be taken even though the indebtedness is to be
evidenced by more than one instrument. The real estate or chattel
mortgages or security instruments will be delivered to the recording
office for recordation or filing, as appropriate. A copy of such
instruments will be delivered to the borrower. The original instrument,
if returnable after recording or filing, will be retained in the
borrower\'s case folder.

\(f\) [Notes and bonds]{.underline}. When the debt instrument is a note
or single instrument bond fully registered as to Principal and interest
a conformed copy will be sent to the Finance Office immediately after
loan closing and the original instrument will be stored in the District
Office. When other types of bonds are used, the original bond(s) will be
forwarded to the Finance Office immediately after loan closing.

\(g\) [Disposition of title evidence]{.underline}. All title evidence
other than the opinion of title and mortgage title insurance policy,
will be returned to the borrower when the loan has been closed.

\(h\) [Multiple advances]{.underline}. When temporary paper, such as
bond anticipation notes or interim receipts, is used to conform with the
multiple advance requirement, the original temporary paper will be
forwarded to the Finance Office after each advance is made to the
borrower. The borrower\'s case number will be entered in the upper
right-hand corner of such paper by the District Office. The permanent
debt instrument(s) should be forwarded to the Finance Office as soon as
possible after the last advance is made, except that for notes and
single instrument bonds fully registered as to principal and interest
the original will be retained in the District Office and a copy will be
forwarded to the Finance Office. The following actions will be taken
prior to issuance of the permanent instruments:

\(1\) The Finance Office will be notified of the anticipated date for
the retirement of the interim instruments and the issuance of permanent
instruments of debt.

## 12 

## RD Instruction 1942-C

§ 1942.123(h) (Con.)

\(2\) The Office of the Deputy Chief Financial Officer will prepare a
statement of account including accrued interest through the proposed
date of retirement and also show the daily interest accrual. The
statement of account and the interim financing instruments will be
forwarded to the Rural Development Manager. (Revised 05-18-05,\
PN 386.)

\(3\) The Rural Development Manager will collect interest through the
actual date of the retirement and obtain the permanent instrument(s) of
debt in exchange for the interim financing instruments. The permanent
instruments and the cash collection will be forwarded to the Office of
the Deputy Chief Financial Officer immediately, except that for notes
and single instrument bonds fully registered as to principal and
interest the original will be retained in the Area Office and a copy
will be forwarded to the Office of the Deputy Chief Financial Officer.
In developing the permanent instruments, the sequence of preference set
out § 1942.19(e) of Subpart A of Part 1942 of this chapter will be
followed. (Revised 05-18-05,\
PN 386.)

\(i\) [Bond registration record]{.underline}. Form RD 442-28, \"Bond
Registration Book,\" may be used as a guide to assist borrowers in the
preparation of a bond registration book in those cases where a
registration book is required and a book is not provided in connection
with the printing of the bonds.

\(j\) [Loan disbursements]{.underline}. Whenever a loan disbursement is
received, lost, or destroyed, the Rural Development Manager will take
the appropriate actions outlined in RD Instruction 2018-D.\
(Revised 05-18-05, PN 386.)

\(k\) [Safeguarding bond shipments]{.underline}. Rural Development
personnel will follow the procedures for safeguarding mailings and
deliveries of bonds and coupons outlined in RD Instruction 2018-E
(available in any Rural Development office), whenever they mail or
deliver these items.

\(l\) [Review of loan closing]{.underline}. When the loan has been
closed, the Rural Development Manager will submit the completed loan
closing documents and a statement showing what was done in closing the
loan to the State Director. The State Director will review the documents
and the Rural Development Manager\'s statement to determine whether the
transaction was closed properly. For loans to public bodies or Indian
tribes the

## 13

## (Revision 2)

(11-4-87) PN 68

RD Instruction 1942-C

§ 1942.123(1) (Con.)

State Director will forward all documents, along with a statement that
all administrative requirements have been met, to the Regional Attorney.
The Regional Attorney will review the submitted material to determine
whether all legal requirements have been met. The Regional Attorney
should review Rural Development standard forms only for proper
execution, unless the State Director brings attention to specific
questions. Facility development should not be held up pending receipt of
the Regional Attorney opinion. When the review of the State Director has
been completed, and for public bodies and Indian tribes the Regional
Attorney\'s opinion has been received, the State Director must advise
the Rural Development Manager of any deficiencies that must be corrected
and return all material that was submitted for review. (Revised
05-18-05, PN 386.)

\(m\) [Loan cancellation]{.underline}. Loans under this subpart are
subject to the provisions of § 1942.12 of Subpart A of Part 1942 of this
chapter.

§§ 1942.124 - 1942.125 \[Reserved\]

§ 1942.126 [Planning, bidding, contracting, constructing,
procuring]{.underline}.

\(a\) [General]{.underline}. This section provides procedures and
requirements for planning, bidding, contracting, constructing and
procuring facilities financed under this subpart. These procedures do
not relieve the owner of contractual obligations that arise from
procurement of services.

\(b\) [Technical services]{.underline}. Owners are responsible for
providing the engineering or architectural services necessary for
planning, designing, bidding, contracting, inspecting and constructing
their facilities. Services may be provided by the owner\'s \"in-house\"
engineer or architect or through contract, subject to Rural Development
concurrence. Architects and engineers must be licensed in the State
where the facility is to be located.

\(1\) [Preliminary reports]{.underline}. A preliminary architectural or
engineering report conforming with customary professional standards is
required for all construction, except that Rural Development may waive
the requirement for a preliminary architectural/ engineering report or
accept a brief report if the cost of the construction does not exceed
\$100,000. Guide 6 to Subpart A of Part 1942 of this chapter (available
in any Rural Development office) may be used.

## 14

## (Revision 2) 

RD Instruction 1942-C

§1942.126 (b) (Con.)

\(2\) [Final reports]{.underline}. Detailed final plans and
specifications are required for all construction and must receive Rural
Development concurrence. When negotiated procurement is used for
construction costing not more than \$100,000 the final plans and
specifications may be provided by the contractor who submits the
successful proposal. The plans and specifications must be prepared by or
under the supervision of an architect or engineer who is licensed in the
State where the facility is to be located and should include all
materials and work to be provided under the contract. Some work and
material may be omitted from the contract provided the owner furnishes
detailed cost estimates for whatever is needed to fully complete the
facility and will complete the facility in accordance with paragraph (e)
of this section and the small purchase procedures set out in §1942.18
(k)(l) of subpart A of Part 1942 of this chapter. In such cases, Rural
Development may determine that it is not necessary to require the
applicant to hire a consulting architect/engineer; however, if a second
contract that does not qualify for small purchase procedures is needed
to complete the facility, the owner must provide for an

## 14A

## (Added 11-02-94, PN 236)

(11-4-87) PN 68

§1942.126 (b) (2) (Con.) RD Instruction 1942-C

architect/engineer to design the entire facility. When the contractor
provides the plans and specifications, the contract will be considered a
design/build procurement method under section 1942.18(1) of subpart A of
Part 1942 of this chapter.

\(3\) [Major equipment]{.underline}. An architect/engineer is not
required for major equipment if Rural Development determines the owner
has the ability to develop an adequate request for proposal and evaluate
the proposals received or can obtain adequate assistance from other
sources, such as State or Federal agencies or trade associations.

\(c\) [Design policies]{.underline}. Facilities financed by Rural
Development must be designed and constructed in accordance with sound
engineering and architectural practices, and must meet the requirements
of Federal, State and local agencies. All facilities intended for or
accessible to the public or in which physically handicapped persons may
be employed or reside must be developed in compliance with the
Architectural Barriers Act of 1968 (P.L. 90-480) as implemented by the
General Services Administration regulations 41 CFR 101-19.6 and Section
504 of the Rehabilitation Act of 1973 (P.L. 93-112) as implemented by 7
CFR, Parts 15 and 15b.

\(d\) [Construction contracts]{.underline}. Contract documents must be
sufficiently descriptive and legally binding to accomplish the work as
economically and expeditiously as possible.

\(1\) [Standard construction contract documents]{.underline}. When
standard construction contract documents available from Rural
Development are used, or when the amount of the contract does not exceed
\$100,000, it will normally not be necessary for the Regional Attorney
to perform a detailed legal review. If construction contract documents
used are not in the format of guide forms approved by Rural Development,
and the contract amount exceeds \$100,000, the Regional Attorney must
review the documents before their use.

\(2\) [Contract review and approval]{.underline}. The owner\'s attorney
will review executed contract documents, including performance and
payment bonds, and certify that they are adequate, legal and binding,
and that the persons executing the documents have been authorized to do
so. The contract documents, bid bonds, and bid tabulation sheets will be
forwarded to Rural Development for approval prior to awarding. All
contracts will contain a provision that they are not in full force and
effect until they have been approved by Rural Development. The Rural
Development District Director is responsible for approving construction
contracts with advice and guidance of the State Director and Regional
Attorney when necessary.

## 15

(11-4-87) PN 68

RD Instruction 1942-C

§1942.126 (d) (Con.)

\(3\) [Separate contracts]{.underline}. Arrangements which split
responsibility of contractors (separate contracts for labor and
material, extensive subcontracting and multiplicity of small contracts
on the same job) should be avoided whenever it is practical to do so.
Contracts may be awarded to suppliers or manufacturers for furnishing
and installing certain items which have been designed by the
manufacturer and delivered to the job site in a finished or semifinished
state such as prefabricated buildings. Contracts may also be awarded for
material delivered to the job site and installed by a patented process
or method.

\(e\) [Performing construction]{.underline}. Owners are encouraged to
accomplish construction through contracts with recognized contractors.
Owners may accomplish construction by using their own personnel and
equipment provided the owners possess the necessary skills, abilities
and resources to perform the work and provided a licensed engineer or
architect prepares design drawings and specifications and inspection is
provided in accordance with paragraph (1) (3) of this section.

\(f\) [Owner\'s contractual responsibility]{.underline}. Loans under
this subpart are subject to the provisions of Section 1942.18 (i) of
Subpart A of Part 1942 of this chapter.

\(g\) [Owner\'s procurement regulations]{.underline}. Loans under this
subpart are subject to the provisions of Section 1942.18 (j) of Subpart
A of Part 1942 of this chapter.

\(h\) [Procurement methods]{.underline}. Unless the Rural Development
National Office gives prior written approval of another method,
procurement must be made by one of the following methods:

\(1\) Small purchase procedures as provided in Section 1942.18 (k)(l) of
Subpart A of Part 1942 of this chapter.

\(2\) Competitive sealed bids as provided in Section 1942.18 (k)(2) of
Subpart A of Part 1942 of this chapter. Competitive sealed bids is the
preferred procurement method for construction projects, except for
buildings costing \$100,000 or less when the owner desires to use a
\"preengineered\" or \"packaged\" building.

\(3\) Competitive negotiation as provided in Section 1942.18 (k)(3) of
Subpart A of Part 1942 of this chapter. Competitive negotiation is the
preferred procurement method for buildings not exceeding \$100,000 in
cost when the owner desires to use a \"pre-engineered\" or \"packaged\"
building and for major equipment.

\(4\) Noncompetitive negotiation as provided in Section 1942.18 (k)(4)
of Subpart A of Part 1942 of this chapter.

## 16 

§1942.126 (Con.) RD Instruction 1942-C

\(i\) [Contracting methods]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.18 (1) of Subpart A of Part
1942 of this chapter.

\(j\) [Contracts awarded prior to preapplications]{.underline}. Loans
under this subpart are subject to the provisions of Section 1942.18 (m)
of Subpart A of Part 1942 of this chapter.

\(k\) [Construction Contract provisions]{.underline}. Construction
contracts for loans under this subpart are subject to the provisions of
Section 1942.18 (n) of Subpart A of Part 1942 of this chapter.
Construction contracts for loans under this subpart are also subject to
the provisions of Section 1901.205 of Subpart A of Part 1901 of this
chapter, regarding nondiscrimination in construction, except that guides
18 and 17 or 19 to Subpart A of Part 1942 of this chapter will normally
be used instead of Form RD 1924-5, \"Invitation for Bid (Construction
Contract),\" and Form RD 1924-6, \"Construction Contract.\" When Guide
18 is used with a design/build type contract, section 4, \"Conflict of
Interest,\" may need revision.

\(l\) [Construction contract administration]{.underline}. Owners shall
be responsible for maintaining a contract administration system to
monitor the contractors\' performance and compliance with the terms,
conditions, and specifications of the contracts.

\(1\) [Preconstruction conference]{.underline}. Prior to beginning
construction the owner will schedule a preconstruction conference where
Rural Development will review the planned development with the owner,
its architect or engineer, project inspector, attorney, contractor(s),
and other interested parties. The conference will thoroughly cover
applicable items included in Form RD 1924-16, \"Record of
Preconstruction Conference,\" and the discussions and agreements will be
documented. Form RD 1924-16 may be used for this purpose.

\(2\) [Monitoring reports]{.underline}. Each owner will be required to
monitor and provide reports to Rural Development on actual performance
during construction for each project financed, or to be financed, in
whole or in part with Rural Development funds. The reports are to
include:

\(i\) A comparison of actual accomplishments with the construction
schedule established for the period. The partial payment estimate may be
used for this purpose.

\(ii\) A narrative statement giving full explanation of the following:

\(A\) Reasons why established goals were not met.

\(B\) Analysis and explanation of cost overruns or high unit costs and
how payment is to be made for the same.

## 17

(11-4-87) PN 68

RD Instruction 1942-C

§1942.126 (1) (2) (Con.)

\(iii\) If events occur between reports which have a significant impact
upon the project, the owner will notify Rural Development as soon as any
of the following conditions are known:

\(A\) Problems, delays, or adverse conditions which will materially
affect the ability to attain program objectives or prevent the meeting
of project work units by established time periods. This disclosure shall
be accompanied by a statement of the action taken, or contemplated, and
any Federal assistance needed to resolve the situation.

\(B\) Favorable developments or events which enable meeting time
schedules and goals sooner than anticipated or producing more work units
than originally projected or which will result in cost underruns or
lower unit costs than originally planned and which may result in less
Rural Development assistance.

\(3\) [Inspection]{.underline}. The borrower must provide for inspection
of all construction. When the borrower enters into an agreement for
technical services with an engineer/architect, the agreement should
provide for general engineering/architectural inspection of the
construction work. When no such agreement exists, or Rural Development
or the borrower determines the inspection services of the
engineer/architect may not be sufficient, the owner must provide a
project inspector. Prior to the preconstruction conference, the borrower
must submit a resume of qualifications of the project inspector to Rural
Development for acceptance in writing. The project inspector will be
responsible for making inspections necessary to protect the borrower\'s
interest and for providing written inspection reports to the borrower
with copies to the Rural Development District Director. Guide 11 of
Subpart A of Part 1942 of this chapter (available in any Rural
Development office) may be used as a guide format for inspection
reports. For new buildings, additions to existing buildings, and
rehabilitation of existing buildings, the project inspector should make
inspections at the following stages of construction and at other stages
of construction as determined by the District Director and the borrower.
Inspections by Rural Development are solely for its benefit as lender.

\(i\) An initial inspection should be 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. If the building design does not include
concrete footings the initial inspection should be made just after or
during the placement of poles or other foundation materials.

## 18 

§1942.126 (1) (3) (Con.) RD Instruction 1942 -C

\(ii\) An inspection should 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.

\(iii\) A final inspection should be made when all development of the
structure has been completed and the structure is ready for its intended
use.

\(4\) [Prefinal inspections]{.underline}. A prefinal inspection will be
made by the owner, project inspector, owner\'s architect or engineer,
representatives of other agencies involved, and the District Director.
The inspection results will be recorded on Form RD 1924-12, \"Inspection
Report,\" and a copy provided to all interested parties, including the
Rural Development State Director.

\(5\) [Final inspection]{.underline}. A final inspection will be made by
Rural Development before final payment is made.

\(6\) [Changes in development plans]{.underline}.

\(i\) Changes in development plans may be approved by Rural Development
when requested by owners, provided:

\(A\) Funds are available to cover any additional costs; and

\(B\) The change is for an authorized loan purpose; and

\(C\) It will not adversely affect the soundness of the facility
operation or Rural Development\'s security; and

\(D\) The change is within the scope of the contract; and

\(E\) Any applicable requirements of Subpart G of Part 1940 of this
chapter have been met.

\(ii\) Changes will be recorded on Form RD 1924-7, \"Contract Change
Order,\" or other similar forms may be used with the prior approval of
the District Director. Regardless of the form, change orders must be
approved by the Rural Development District Director.

\(iii\) Changes should be accomplished only after Rural Development
approval on all changes which affect the work and shall be authorized
only by means of contract change order. The change order will include
items such as:

## 19

(11-4-87) PN 68

RD Instruction 1942-C

§1942.126 (1) (6) (iii) (Con.)

\(A\) Any changes in labor and material and their respective cost.

\(B\) Changes in facility design.

\(C\) Any decrease or increase in quantities based on final measurements
that are different from those shown in the bidding schedule.

\(D\) Any increase or decrease in the time to complete the project.

\(iv\) All changes shall be recorded on chronologically numbered
contract change orders as they occur. Change orders will not be included
in payment estimates until approved by all parties.

§1942.127 [Project monitoring and fund delivery]{.underline}.

\(a\) [Coordination of funding sources]{.underline}. When a project is
jointly financed, the District Director will reach any needed agreement
or understanding with the representatives of the other source of funds
on distribution of responsibilities for handling various aspects of the
project. These responsibilities will include supervision of
construction, inspections and determination of compliance with
appropriate regulations concerning equal employment opportunities, wage
rates, nondiscrimination in making services or benefits available, and
environmental compliance. If any problems develop which cannot be
resolved locally, complete information should be sent to the State
Office for advice.

\(b\) [Multiple advances]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (p)(2) of Subpart A of Part
1942 of this chapter.

\(c\) [Use and accountability of funds]{.underline}. Loans under this
subpart are subject to the provisions of Section 1942.17 (p)(3) of
Subpart A of Part 1942 of this chapter.

\(d\) [Development inspections]{.underline}. Loans under this subpart
are subject to the provisions of Section 1942.17 (p)(4) of Subpart A of
Part 1942 of this chapter.

\(e\) [Payment for project costs]{.underline}. Each payment for project
costs must be approved by the borrower\'s governing body.

## 20 

§1942.127 (e) (Con.) RD Instruction 1942-C

\(1\) [Construction]{.underline}. Payment for construction must be for
amounts shown on payment estimate forms. Form RD 1924-18, \"Partial
Payment Estimate,\" may be used for this purpose or other similar forms
may be used with the prior approval of the District Director. However,
the District Director cannot require more reporting burden than is
required by Form RD 1924-18. Advances for contract retainage will not be
made until such retainage is due and payable under the terms of the
contract. The review and acceptance of project cost, including
construction partial payment estimates, by Rural Development does not
attest to the correctness of the amounts, the quantities shown, or that
the work has been performed under the terms of agreements or contracts.

\(2\) [Major equipment]{.underline}. Payment for major equipment should
generally coincide with delivery of the usable equipment, along with any
necessary title or certifications, to the borrower. Borrowers may not
use Rural Development loan funds to make deposits on equipment not ready
for delivery. If a borrower purchases a truck chassis from one supplier
and another supplier will complete the development of a fire or rescue
vehicle, Rural Development may release funds to pay for the chassis when
title to the chassis is transferred to the borrower.

\(f\) [Use of remaining funds]{.underline}. Loans under this subpart are
subject to the provisions of Section 1942.17 (p)(6) of Subpart A of Part
1942 of this chapter.

§1942.128 [Borrower accounting methods, management reports and
audits]{.underline}.

\(a\) Loans under this subpart are subject to the provisions of Section
1942.17 (q) of Subpart A of Part 1942 of this chapter except as provided
in this section.

\(b\) Borrowers with annual incomes not exceeding \$100,000 may, with
concurrence of the District Director, use Form RD 1942-53, \"Cash Flow
Report,\" instead of page one of schedule one and schedule two of Form
RD 442-2, \"Statement of Budget, Income, and Equity.\" When used for
budgeting, the cash flaw statement should be projected for the upcoming
fiscal year. When used for quarterly or annual reports, the cash flow
report should include current year projections and actual data for the
prior year, the quarter just ended, and the current year to date.

§1942.129 [Borrower supervision and servicing]{.underline}.

Loans under this subpart are subject to the provisions of Section
1942.17 (r) of Subpart A of Part 1942 and Subpart E of Part 1951 of this
chapter.

§§1942.130 - 1942.131 \[Reserved\]

## 21

(11-4-87) PN 68

RD Instruction 1942-C

§1942.132 [Subsequent loans]{.underline}.

Subsequent loans will be processed under this subpart.

§1942.133 [Delegation and redelegation of authority]{.underline}.

Loan approval authority is in Subpart A of Part 1901 of this chapter.
State Directors may delegate approval authority to District Directors to
approve fire and rescue loans regardless of whether authority to approve
other community facility loans is delegated. Except for loan approval
authority, District Directors may redelegate their duties to qualified
staff members.

§1942.134 [State supplements and guides]{.underline}.

State Directors will obtain National Office clearance for all State
supplements and guides under RD Instruction 2006-B, (available in any
Rural Development Office).

\(a\) [State supplements]{.underline}. State Directors may supplement
this subpart to meet State and local laws and regulations and to provide
for orderly application processing and efficient service to applicants.
State supplements shall not contain any requirements pertaining to bids,
contract awards, and materials more restrictive than those in this
subpart.

\(b\) [State guide]{.underline}. State Directors may develop guides for
use by applicants if the guides to this subpart and Subpart A of Part
1942 of this chapter are not adequate. State Directors may prepare
guides for items needed for the application; items necessary for the
docket; and items required prior to loan closing or construction starts.

§§1942.135 - 1942.149 \[Reserved\]

§1942.150 [OMB control number]{.underline}.

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 0575-0120.

## oOo

## 22