RD Instruction 1944-I

Table of Contents

Page 1

Part 1944 - HOUSING

Subpart I - Self-Help Technical Assistance Grants

## [Table of Contents]{.underline}

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

1944.40l Objective. 1

1944.402 Grant purposes. 1

1944.403 Definitions. 2

\(a\) Agreement. 2

\(b\) Agreement period (or grant period). 2

\(c\) Date of completion. 2

\(d\) Direct costs. 2

\(e\) Disallowed costs. 2

\(f\) Equivalent units. 2

\(g\) Equivalent value of a modest house. 2

\(h\) Indirect costs. 2

\(i\) Mutual self-help. 3

\(j\) Organization. 3

\(k\) Participating family. 3

\(l\) Self-help. 3

\(m\) Sponsor. 3

\(n\) Technical assistance. 4

\(o\) Termination of a grant. 4

1944.404 Eligibility. 4

1944.405 Authorized use of grant funds. 5

1944.406 Prohibited use of grant funds. 7

1944.407 Limitations. 7

1944.408 \[Reserved\] 8

1944.409 Executive Order 12372. 8

1944.410 Processing preapplications, applications, and

completing grant dockets. 8

\(a\) Form SF-424, \"Application for Federal Assistance.\" 8

\(b\) Preapplication review. 10

\(c\) Form AD-622, \"Notice of Preapplication Review

Action.\" 11

\(d\) Self-help technical assistance grant predevelopment

agreement. 12

\(e\) Form SF-424, \"Application for Federal Assistance.\" 12

1944.411 Conditions for approving a grant. 13

1944.412 Docket preparation. 14

(07-31-96) PN 264

RD Instruction 1944-I

Table of Contents (Con.)

Page 2

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

1944.413 Grant approval. 15

\(a\) Approval of grant. 15

\(b\) Cancellation of an approved grant. 15

\(c\) Disapproval of grant. 16

1944.414 \[Reserved\] 16

1944.415 Grant approval and other approving authorities. 16

1944.416 Grant closing. 17

1944.417 Servicing actions after grant closing. 17

1944.418 \[Reserved\] 19

1944.419 Final grantee evaluation. 20

1944.420 Extension or revision of the grant agreement. 21

1944.421 Refunding of an existing grantee. 21

1944.422 Audit and other report requirements. 21

\(a\) Nonprofit organizations and others. 22

\(b\) State and local governments and Indian tribes. 22

1944.423 Loan packaging and 502 RH application submittal. 23

1944.424 Dwelling construction and standards. 23

1944.425 Handling and accounting for borrower loan funds. 24

1944.426 Grant closeout. 24

\(a\) Grant purposes completed. 24

\(b\) Grant purposes not completed. 25

\(c\) Grant suspension. 25

\(d\) Grant termination. 26

1944.427 Grantee self-evaluation. 26

1944.428 - 1944.449 \[Reserved\] 27

1944.450 OMB Control Number. 27

Exhibit A Self-Help Technical Assistance Grant Agreement.

Exhibit B Evaluation Report of Self-Help Technical Assistance (TA)

Grants.

Exhibit B-1 Instructions for Preparation of Evaluation Report of

Self-Help Technical Assistance Grants.

Exhibit B-2 Breakdown of Construction Development for Determining

Percentage Construction Completed.

Exhibit B-3 Pre-Construction and Construction Phase Breakdown.

Exhibit C Amendment to Self-Help Technical Assistance Grant Agreement

Exhibit D Self-Help Technical Assistance Grant Predevelopment

Agreement.

Exhibit E Guidance for Recipients of Self-Help Technical Assistance

Grants.

Exhibit F Site Option Loan to Technical Assistance Grantees.

## 

## oOo 

RD Instruction 1944-I

PART 1944 - HOUSING

Subpart I - Self-Help Technical Assistance Grants

§ 1944.401 [Objective]{.underline}.

This subpart sets forth the policies and procedures and delegates
authority for providing Technical Assistance (TA) funds to eligible
applicants to finance programs of technical and supervisory assistance
for self-help housing, as authorized under Section 523 of the Housing
Act of 1949. 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. This financial assistance may pay part or all of
the cost of developing, administering, or coordinating programs of
technical and supervisory assistance to aid needy very low- and
low-income families in carrying out self-help housing efforts in rural
areas. Very low-income families must receive a priority for recruitment
and participation and may not comprise less than the percentage stated
in Subpart L of Part 1940 of this chapter of those assisted in any
grant. The primary purpose is to fund organizations that are willing to
locate and work with families that otherwise do not qualify as
homeowners. Generally, these are families below 50 percent of median
incomes, living in substandard housing, and/or lacking the skills to be
good homeowners. Grantees will comply with the nondiscrimination
regulation Subpart E of Part 1901 of this chapter which states that no
person in the United States shall, on the grounds of race, color,
national origin, sex, religion, marital status, mental or physical
handicap, or age, be excluded from participating in, be denied the
benefits of, or be subject to discrimination in connection with the use
of grant funds and all provisions of the Fair Housing Act of 1988.
(Revised 02-04-93, SPECIAL PN.)

§ 1944.402 [Grant purposes]{.underline}.

Rural Development may contract or make a grant to an organization to:

\(a\) Give technical and supervisory assistance to eligible very low-
and low-income families as defined in Appendix 9 of HB-1-3550 (available
in any Rural Development Office), in carrying out self-help housing
efforts. (Revised 01-23-03, SPECIAL PN.)

\(b\) Assist other organizations to provide technical and supervisory
assistance to eligible families.

\(c\) Develop a final application, recruit families and related
activities necessary to participate under paragraph (a) of this section.

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

Distribution: WSDC Loan and Grant Making

Housing

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## (Revision 2)

(11-15-90) SPECIAL PN

RD Instruction 1944-I

§ 1944.403 [Definitions]{.underline}.

\(a\) [Agreement]{.underline}. The Self-Help Technical Assistance
Agreement, which is a document signed by Rural Development and the
grantee, sets forth the terms and conditions under which TA funds will
be made available. (Exhibit A of this subpart).

\(b\) [Agreement period (or grant period)]{.underline}. The period of
time for which an agreement is in force. Generally, the period will not
exceed 24 months.

\(c\) [Date of completion]{.underline}. The date when all work under a
grant is completed or the date in the TA grant agreement, or any
supplement or amendment to it, when Federal assistance ends.

\(d\) [Direct costs]{.underline}. Those costs that are specifically
identified with a particular project or activity. Grantees receiving
funds from a single grant source would consider all costs as direct
costs.

\(e\) [Disallowed costs]{.underline}. Those charges to a grant which
Rural Development determines cannot be authorized.

\(f\) [Equivalent units]{.underline}. Equivalent units represent the
\"theoretical number of units\" arrived at by adding the equivalent
percentage of completion figure for each family in the self-help program
(pre-construction and actual construction) together at any given date
during program operations. The sum of the percentage of completion
figures for all participant families represent the total number of
\"theoretical units\" completed at any point in time. Equivalent units
are useful in measuring progress during the period of the grant and are
not a measurement of actual accomplishments. The number of equivalent
units for any group can never exceed the number of planned or completed
houses for that group.

\(g\) [Equivalent value of a modest house]{.underline}. The equivalent
value of a modest house is the typical cost of a recent contractor-built
Rural Development financed home in the area plus the actual or projected
costs of an acceptable site and site development. If Rural Development
has not financed a contractor-built house during the last twelve months,
the value will be established by use of the Marshall and Swift cost
handbook or a similar type of handbook. Equivalent value of a modest
house is established by Rural Development.

\(h\) [Indirect costs]{.underline}. Those costs that are incurred for
common or joint objectives and therefore, cannot be readily and
specifically identified with a particular project or activity, e.g.
self-help.

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## (Revision 2) 

§1944.403 (Con.) RD Instruction 1944-I

\(i\) [Mutual self-help]{.underline}. The construction method by which
participating families organized in groups generally of 4 to 10 families
utilize their own labor to reduce the total construction cost of their
homes. Participating families complete construction work on their homes
by an exchange of labor with one another. The mutual self-help method
must be used for new construction.

\(j\) [Organization]{.underline}.

\(1\) A State, political subdivision, or public nonprofit corporation
(including Indian tribes or Tribal corporations); or

\(2\) A private nonprofit corporation that is owned and controlled by
private persons or interests and is organized and operated for purposes
other than making gains or profits for the corporation and is legally
precluded from distributing any gains or profits to its members.

\(k\) [Participating family]{.underline}. Individuals and/or their
families who agree to build homes by the mutual self-help method and
rehabilitate homes by the self-help method. Participants are families
with very low- or low-incomes who have the ability to furnish their
share of the required labor input regardless of the handicap, age, race,
color, national origin, religion, family status, or sex of the head of
household. The participating family must be approved for a Section 502
RH loan or similar loans from other Federal, state, and private lenders
that uses income guidelines substantially similar to the Department of
Housing and Urban Development before the start of construction, have
sufficient time available to assist in building their own homes, and
show a desire to work with other families. Each family in the group must
contribute labor on each other\'s homes to accomplish the 65 percent of
the total 100 percent of tasks listed in Exhibit B-2 of this subpart. A
participating family may use a substitute to perform the labor with
prior approval of the Grantee and the Rural Development State Director.
A substitute is only permitted when the participating family is
incapacitated.

\(l\) [Self-help]{.underline}. The construction method by which an
individual family utilizes their labor to reduce the construction cost
of their home without an exchange of labor between participating
families. Unless otherwise authorized by the District Director, this
method is only funded for repair and rehabilitation type construction.

\(m\) [Sponsor]{.underline}. An existing entity that is willing and able
to assist an applicant, with or without charge, in applying for a grant
and in carrying out responsibilities under the agreement. Examples of
sponsors are local rural electric cooperatives, institutions of higher
education, community action agencies and other self-help grantees. Also,
when available, regional technical and management assistance contractors
may qualify to serve as a sponsor at no charge.

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(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.403 (Con.)

\(n\) [Technical assistance]{.underline}. The organizing and supervising
of groups of families in the construction of their own homes including:

\(1\) Recruiting families who are interested in sharing labor in the
construction of each other\'s homes and assisting such families in
obtaining housing loans.

\(2\) Conducting meetings of the families to explain the self-help
program and subjects related to home ownership, such as loan payments,
taxes, insurance, maintenance, and upkeep of the property.

\(3\) Helping families in planning and developing activities that lead
to the acquisition and development of suitable building sites.

\(4\) Assisting families in selecting or developing house plans for
homes which will meet their needs and which they can afford.

\(5\) Assisting families in obtaining cost estimates for construction
materials and any contracting that may be required.

\(6\) Providing assistance in the preparation of loan applications.

\(7\) Providing construction supervision and training for families while
they construct their homes.

\(8\) Providing financial supervision to individual families with
Section 502 Rural Housing (RH) loans which will minimize the time and
effort required by Rural Development in processing borrower expenditures
for materials and contract services.

\(9\) Assisting families in solving other housing problems.

\(o\) [Termination of a grant]{.underline}. The cancellation of Federal
assistance, in whole or in part, at any time before the date of
completion.

§1944.404 [Eligibility]{.underline}.

To receive a grant, the applicant must:

\(a\) Be an organization as defined in §1944.403(j) of this subpart.

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§1944.404 (Con.) RD Instruction 1944-I

\(b\) Have the financial, legal, administrative, and actual capacity to
assume and carry out the responsibilities imposed by the Agreement. To
meet the requirement of actual capacity it must either:

\(1\) Have necessary background and experience with proven ability to
perform responsibly in the field of mutual self-help or other business
management or administrative ventures which indicate an ability to
perform responsibly in the field of mutual self-help; or

\(2\) Be sponsored by an organization with background experience, and
ability, which agrees in writing to help the applicant to carry out its
responsibilities.

\(c\) Legally obligate itself to administer TA funds, provide adequate
accounting of the expenditure of such funds, and comply with the
Agreement and Rural Development regulations.

\(d\) If the organization is a private nonprofit corporation, be a
corporation that:

\(1\) Is organized under State and local laws.

\(2\) Is qualified under Section 501(c)(3) of the Internal Revenue Code
of 1986.

\(3\) Has as one of its purposes the production of affordable housing.

\(4\) Has a Board of Directors which consist of not less than five.

§1944.405 Authorized use of grant funds.

\(a\) Payment of salaries of personnel as authorized in the Agreement.

\(b\) Payment of necessary and reasonable office expenses such as office
rental, office utilities, and office equipment rental. The purchase of
office equipment is permissible when the grantee determines it to be
more economical than renting. As a general rule, these types of expenses
would be classified as indirect costs in multiple funded organizations.

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(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.405 (Con.)

\(c\) Purchase of office supplies such as paper, pens, pencils, and
trade magazines.

\(d\) Payment of necessary employee benefit costs including but not
limited to items such as Worker\'s Compensation, employer\'s share of
social security, health benefits, and a reasonable tax deferred pension
plan for permanent employees.

\(e\) Purchase, lease, or maintenance of power or specialty tools such
as a power saw, electric drill, saber saw, ladders, and scaffolds, which
are needed by the participating families. The participating families,
however, are expected to provide their own hand tools such as hammers
and handsaws.

\(f\) Payment of liability insurance and special purpose audit costs
associated with self-help activities. These would be considered direct
costs, even though the grantee\'s general liability insurance cost and
the cost of audits for the organization are generally indirect costs.

\(g\) Payment of reasonable fees for training of grantee personnel
including board members. This may include the cost of travel and per
diem to attend in or out-of-state training as authorized by the board of
directors and, when necessary, for the employee to do the current job.
These costs are generally direct costs.

\(h\) Payment of services rendered by a sponsor or other organization
after the grant is closed and when it is determined the sponsor can
provide the necessary services which will result in an overall reduction
in the cost of assistance. Typically, this will be limited to new
grantees and an existing grantee for the period of time that its size or
activity does not justify a full staff. A full staff is a full or
part-time director, project worker, secretary-bookkeeper, and a
construction supervisor. This type of cost is generally direct.

\(i\) Payment of certain consulting and legal costs required in the
administration of the grant if such service is not available without
cost. This does not include legal expenses for claims against the
Federal Government. (Legal costs that may be incurred by the
organization for the benefit of the participating families may be paid
with prior approval of the State Director).

\(j\) Payments of the cost of an accountant to set up an accounting
system and perform audits that may be required. Generally, these costs
are indirect.

\(k\) Payments of reasonable expenses of board members for attending
regular or special board meetings. These costs are indirect.

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RD Instruction 1944-I

§1944.406 [Prohibited use of grant funds]{.underline}.

\(a\) Hiring personnel specifically for the purpose of performing any of
the construction work for participating families in the self-help
projects.

\(b\) Buying real estate or building materials or other property of any
kind for participating families.

\(c\) Paying any debts, expenses, or costs which should be the
responsibility of the participating families in the self-help projects.

\(d\) Paying for training of an employee as authorized by\
Attachment B of OMB Circular A-122.

\(e\) Paying costs other than approved indirect (including salaries)
that are not directly related to helping very low- and low-income
families obtain housing consistent with the objectives of this program.

§1944.407 [Limitations]{.underline}.

The amount of the TA grant depends on the experience and capability of
the applicant and must be justified based on the number of families to
be assisted. As a guide, the maximum grant amounts for any grant period
will be limited to:

\(a\) An average TA cost equivalent per unit of no more than 15 percent
of the cost of equivalent value of modest homes built in the area. (Upon
request, the County Supervisor will provide the grantee the average cost
of modest homes for the area); or\
(Revised 04-24-91, PN 163.)

\(b\) An average TA cost per equivalent unit that does not exceed the
difference between the equivalent value of modest homes in the area and
the average mortgage of the participating families minus \$1,000; or

\(c\) A TA per equivalent unit cost that does not exceed an amount
established by the State Director. The State Director may authorize a
greater TA cost than paragraph (a) or (b) of this section when needed to
accomplish a particular objective, such as requiring the grantee to
serve very low-income families, remote areas, or similar situations; or

\(d\) A negotiated amount for repair and rehabilitation type proposals.
At a minimum, applicants applying for repair and rehabilitation grants
must include information on the proximity of the houses in a project,
the typical needed repairs, and the cost savings between self-help and
contractor rehabilitation and repair.

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## (Revision 3)

(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.408 \[Reserved\] (Revised 07-31-96, PN 264.)

§1944.409 [Executive Order 12372]{.underline}.

The self-help program is subject to the provision of Executive Order
12372 which requires intergovernmental consultation with State and local
officials. Under Subpart J of Part 1940 (available in any Agency
office), new applicants for the self-help program must submit their
Statement of Activities to the State single point of contact prior to
submitting their preapplication to the Agency. The name of the point of
contact is available from the State Office.

§1944.410 [Processing preapplications, applications, and completing
grant dockets]{.underline}.

\(a\) [Form SF-424, \"Application for Federal Assistance]{.underline}.\"
Form SF-424 in an original and one copy must be submitted by the
applicant to the District Director. It will be used to establish
communication between the applicant and RHS, determine the applicant\'s
eligibility, determine how well the project can compete with similar
applications from other organizations and eliminate any proposals which
have little or no chance for Federal funding before applicants incur
significant expenditures for preparing an application. In addition, the
following information will be attached to and become a part of the
preapplication:

\(1\) Complete information about the applicant\'s previous experience
and capacity to carry out the objective of the agreement.

\(2\) If the applicant organization is already formed, a copy of or an
accurate reference to the specific provisions of State law under which
the applicant is organized; a certified copy of the applicant\'s
Articles of Incorporation and Bylaws or other evidence of corporate
existence; certificate of incorporation for other than public bodies;
evidence of good standing from the State when the corporation has been
in existence 1 year or more; the names and addresses of the applicant\'s
members, directors, and officers; and, if another organization is a
member of the applicant-organization, its name, address, and principal
business. If the applicant is not already formed, attach copies of the
proposed organizational documents demonstrating compliance with
§1944.404(d) of this subpart.

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## (Revision 3) 

§1944.410(a) (Con.) RD Instruction 1944-I

\(3\) A current (no more than 12 months old) dated and signed financial
statement showing the amounts and specific nature of assets and
liabilities together with information on the repayment schedule and
status of any debt owed by the applicant. If the applicant is being
sponsored by another organization, the same type of financial statement
also must be provided by the applicant\'s sponsor.

\(4\) A narrative statement which includes information about the amount
of the grant funds being requested, area(s) to be served, need for
self-help housing in the area(s), the number of self-help units proposed
to be built, rehabilitated or repaired during the agreement period,
housing conditions of low-income families in the area and reasons why
families need self-help assistance. Evidence should be provided that the
communities support the activity and that there are low-income families
willing to contribute their labor in order to obtain adequate housing.
Evidence of community support may be letters of support from local
officials, individuals and community organizations. The pre-application
may contain information such as census materials, local planning
studies, surveys, or other readily available information which indicates
a need in the area for housing of the type and cost to be provided by
the proposed self-help TA program.

\(5\) A plan of how the organization proposes to reach very low-income
families living in houses that are deteriorated, dilapidated,
overcrowded, and/or lack plumbing facilities.

\(6\) A proposed budget which will be prepared on SF-424A, \"Budget
Information (Non-Construction Programs)\" will be completed to address
applicable assurances as outlined in ½3015.205 of 7 CFR Part 3015. State
and local Government will include an assurance that the grantee shall
comply with all applicable Federal statutes and regulations in effect
with respect to the periods for which it receives grant funding. The
State and local governments shall also comply with 7 CFR Part 3016.

\(7\) A preliminary survey as to the availability of lots and projected
cost of the sites.

\(8\) A list of other activities the applicant is engaged in and expects
to continue, and a statement as to other sources of funding and whether
it will have sufficient funds to assure continued operation of the other
activities for at least the period of the agreement. If multi-funded,
its cost allocation plan or indirect cost rate must be part of the
pre-application.

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RD Instruction 1944-I

§1944.410(a) (Con.)

\(9\) Whether assistance under paragraph (d) of this section is
requested and a brief narrative identifying the need, amount of funds
needed, and projected time period.

\(10\) If a project is planned for five or more housing lots or units,
an Affirmative Fair Marketing Plan is required. The plan will be in
effect until the completion of the project.

\(b\) [Preapplication review]{.underline}.

\(1\) The District Director, within 30 days of receipt of the
preapplication, Form SF-424, and all other required information and
material will complete a thorough review for completeness, accuracy, and
conformance to program policy and regulations. Incomplete
preapplications will be returned to the applicant for completion. The
applicant should be given the name of the regional technical assistance
contractor. The County Supervisor in the prospective county will be
contacted as to the need for the program in the proposed area and if the
necessary resources are available to the grantee. This will include a
discussion of the number of 502 and 504 units that will need to be
committed to the grantee and the potential work impact on the office
during the grant period. If it is determined that the County Office
lacks the resources (either personnel or funds) to process all loan
requests in a timely manner, the District Director must communicate this
need to the State Director along with a recommended solution. (Lack of
resources at the county level are not grounds to deny a request). After
the District Director has determined that the preapplication is complete
and accurate, the District Director will assemble the material in an
applicant case file and forward it to the State Director. The case file,
as a minimum, must contain the following:

\(i\) Form SF-424,

\(ii\) Original and one copy of Form RD 1940-20, \"Request for
Environmental Information,\"

\(iii\) Eligibility recommendations, and

\(iv\) HUD Form 935.2 \"Affirmative Fair Housing Marketing Plan\", if
applicable.

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##  

§1944.410(b) (Con.) RD Instruction 1944-I

\(2\) The State Director may, if needed, submit the organizational
documents with any comments or questions to the Office of General
Counsel (OGC) for a preliminary opinion as to whether the applicant is
or will be a legal organization of the type required by these
regulations and for advice on any other aspects of the preapplication.

\(3\) The State Director, if unable to determine eligibility or
qualifications with the advice of the OGC, may submit the preapplication
to the National Office for review. The preapplication will contain all
memoranda from OGC giving the results of its review. The State Director
will identify in the transmittal memorandum to the National Office the
specific problem and will recommend possible solutions and any
information about the applicant which would be helpful to the National
Office in reaching a decision.

\(4\) After an eligibility determination has been made, which should be
completed within 30 days unless OGC is involved, the State Director
will:

(i)If the applicant is eligible, contact the National Office as to the
availability of funds or submit the proposal to the National Office for
authorization if the requested amount exceeds the State Director\'s
approval authority. If funds are available, the final review officer,
either the State Director or the Assistant Administrator, Housing will
issue a letter of conditions that the applicant must meet and direct the
District Director to issue Form AD-622, \"Notice of Preapplication
Review Action.\"

\(ii\) If the applicant is determined not eligible, the State Director
will direct the District Director to issue Form AD-622.

\(c\) [Form AD-622, \"Notice of Preapplication Review
Action]{.underline}.\"

\(1\) If the applicant is eligible and after the State Director has
returned the preapplication information and the executed original Form
RD 1940-20 to the District Office, the District Director will, within 10
days, prepare and issue Form AD-622. The original Form AD-622 will be
signed and delivered to the applicant along with the letter of
conditions, a copy to

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(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.410(c)(1) (Con.)

the applicant\'s case file, a copy to the County Supervisor, and a copy
to the State Director.

\(2\) If the applicant is not eligible and after the State Director has
returned the preapplication information, the District Director will
within 5 days notify the applicant on Form AD-622. The notification will
inform the applicant that an appeal of the decision may be made to the
National Appeals Staff under Subpart B of Part 1900 of this chapter.

\(3\) If the applicant is eligible and no grant or loan funds are
available, the State Director will return the preapplication information
to the District Director who will, within 10 days, notify the applicant
on Form AD-622. The notification will explain the facts concerning the
lack of funding and that Rural Development will notify them when funding
will be available. This is not an appealable decision.

\(d\) [Self-help technical assistance grant predevelopment
agreement]{.underline}. If the grantee requested predevelopment
assistance and the State Director determines that the applicant lacks
the financial resources to meet the conditions of grant approval, a
grant of up to \$10,000 and for up to six months will be made in order
for the applicant to provide what is required by paragraph (e) of this
section. Exhibit D of this subpart will be used for this purpose.
Existing grantees proposing to operate in an area different from the
area that they are currently funded to operate are eligible for this
grant. However, this grant is available only once for a defined area.
This grant is available only after the letter of conditions has been
issued. Denial of this assistance is an appealable decision under
Subpart B of Part 1900 of this chapter.

\(e\) [Form SF-424, \"Application for Federal Assistance]{.underline}.\"
The applicant will submit Form SF-424 in an original and one copy to the
District Director. The application should provide a detailed proposal of
its goals including:

\(1\) Names, addresses, number in household, and total annual household
income of families who have been contacted by the applicant and are
interested in participating in a self-help housing project. Community
organizations including minority organizations may be used as a source
of names of people interested in self-help housing.

\(2\) Proof that the first group of prospective participating\
self-help families have qualified for financial assistance.

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RD Instruction 1944-I

§1944.410(e) (Con.)

\(3\) Evidence that lots are optioned by the prospective participating
self-help families for the first group. Evidence that lots are available
for the remaining groups.

\(4\) Detailed cost estimates of houses to be built by the mutual
self-help method. Plans and specifications should be submitted with the
cost estimates.

\(5\) Proposed staffing need, including qualifications, experience,
proposed hiring schedule, and availability of any prospective employees.

\(6\) Name, address, and official position of the applicant\'s
representative or representatives authorized to act for the applicant
and work with Rural Development.

\(7\) Budget information including a detailed budget for the Agreement
period based upon the needs outlined in the proposal.\
SF 424A will be completed to furnish the budget information.

\(8\) Indirect or direct cost policy and proposed indirect cost rate
developed in accordance with 7 CFR Part 3015 and Part 3016.

\(9\) Personnel procedures and practices that will be established or are
in existence. Forms to be used should be submitted with the application.

\(10\) A proposed monthly activities schedule showing the proposed dates
for starting and completing the recruitment, loan processing and
construction phases for each group of participant families.

§1944.411 [Conditions for approving a grant]{.underline}.

A grant may be approved for an eligible applicant when the conditions in
the letter of conditions are met and the following conditions are
present:

\(a\) The applicant has or can hire, or contract directly or indirectly
with, qualified people to carry out its responsibilities in
administering the grant.

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## (Revision 1)

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RD Instruction 1944-I

§1944.411 (Con.)

\(b\) The applicant has met all of the conditions listed in §1944.410(e)
of this subpart.

\(c\) The grantee furnishes a signed statement that it complies with the
requirements of the Departmental Regulations found in 7 CFR Part 3015
and Part 3016.

\(d\) A resolution has been adopted by the board of directors which
authorizes the appropriate officer to execute Exhibit A of this subpart
and Form RD 400-4, \"Assurance Agreement.\" (Revised 04-24-91, PN 163.)

\(e\) The grantee has fidelity bonding as covered in 7 CFR Part 3015 if
a nonprofit organization or, if a State or local government, to the
extent required in 7 CFR Part 3016.

\(f\) The grantee has agreed by completing SF-424B, \"Assurances-Non
Construction Programs,\" that it will establish a recordkeeping system
that is certifiable by a certified public accountant that it adequately
meets the Agreement. (Revised 04-24-91, PN 163.)

\(g\) The grantee has established an interest bearing checking account
on which at least two bonded officials will sign all checks issued and
understands that interest earned in excess of \$250.00 annually must be
submitted to Rural Development quarterly. (The use of minority
depository institutions is encouraged.)

\(h\) The grantee has developed an agreement to be executed by the
grantee and the self-help participants which clearly sets forth what is
expected of each and has incorporated Exhibit B-2 of this subpart which
clearly shows what work is expected of the participating family.

§1944.412 [Docket preparation]{.underline}.

When the application and all items required for the complete docket have
been received, the District Director will thoroughly examine it to
insure the application has been properly and accurately prepared and
that it includes the required dates and signatures. The docket items
will be assembled and distributed by the District Director in the
following order:

Number

Form Name of Form Total No. Signed by for Agree- Copy for

[Number or Document of Copies Applicant ment docket
Applicant]{.underline}

SF-424 Application for 3 1 1-0&1C 1-C

Federal Assistance

## 14

## (Revision 1) 

§1944.412 (Con.) RD Instruction 1944-I

AD-622 Notice of Pre-

application Review

Action 2 - 1-C 1-0

RD Request for Obligation

1940-1 of Funds 4 2 3-0&2C 1-C

RD Assurance

400-4 Agreement 2 1 1-0 1-C

HUD Form 935.2,

Affirmative Fair 3 1 1-0&1C 1-C

Housing Marketing

Plan

Certified Copy

Authorizing

Resolution 1 1 1-0 -

Self-Help Technical

Assistance Grant

Agreement (Exhibit A) 2 1 1-0 1-C

Any Personnel Forms

to be used 2 1-0 1-C

O=Original

C=Copy

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

§1944.413 [Grant approval]{.underline}.

\(a\) [Approval of grant]{.underline}. Within 30 days of the grantee
meeting the conditions of §1944.411 of this subpart or, if applicable,
signing Exhibit D, the approving official will:

\(1\) Execute and distribute Form RD 1940-1 in accordance with the Forms
Manual Insert (FMI).

\(2\) After the Finance Office acknowledges that funds are obligated,
request an initial advance of funds on Form RD 440-57, \"Acknowledgment
of Obligated Funds/Check Request,\" in accordance with the FMI. The
amount of this request should cover the applicant\'s needs for the
remainder of the month in which the grant is closed plus the next month.
Subsequent advances will cover only a one-month period.

\(b\) [Cancellation of an approved grant]{.underline}. An approved grant
may be canceled before closing if the applicant is no longer eligible,
the

## 15

## 

(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.413(b) (Con.)

proposal is no longer feasible, or the applicant requests cancellation.
Cancellation will be accomplished as follows:

\(1\) The District Director will prepare Form RD 1940-10, \"Cancellation
of U.S. Treasury Check and/or Obligation,\" according to the FMI and
send it to the State Director with the reasons for cancellation. If the
State Director approves the request, Form RD 1940-10 will be returned to
the District Office for processing in accordance with the FMI.

\(2\) The District Director will notify the applicant of the
cancellation and the right to appeal under Subpart B of Part 1900 of
this chapter. If the applicant requested the cancellation, no appeal
rights are provided, but the applicant will still be notified of the
cancellation.

\(c\) [Disapproval of grant]{.underline}. If a grant is disapproved
after the docket has been developed, the approving official will state
the reason on the original Form RD 1940-1, or in a memorandum to the
District Director. The District Director will notify the applicant in
writing of the disapproval and the reason for disapproval. Also, the
notification will inform the applicant of its appeal rights under
Subpart B of Part 1900 of this chapter.

§1944.414 \[Reserved\]

§1944.415 [Grant approval and other approving authorities]{.underline}.

\(a\) The State Director is authorized to approve or disapprove TA
grants under this subpart. For a grant in excess of \$300,000, or in the
case of a grant amendment when the amount of the grant plus any
unexpended funds from a previous grant will exceed \$400,000, prior
written consent of the National Office is required. In such cases, the
docket, along with the State Director\'s recommendations, must be
submitted to the National Office for review.

\(b\) The State Director may approve a grant not to exceed \$10,000 to
an eligible organization under §1944.410(d) of this subpart. The grant
must be limited to 6 months and funds must be used for the development
of the final application, family recruitment, and related activities as
explained in §1944.410(e) of this subpart. The amount of this grant will
not be included in figuring TA cost per units.

## 16

##  

RD Instruction 1944-I

§1944.415 (Con.)

\(c\) The authority to contract for services is limited to the
Administrator of Rural Development.

\(d\) Monthly expenditures of the grantee will normally be approved by
the District Director unless:

\(1\) The grantee operates in only one county, in which case the
authority may be delegated to the County Supervisor.

\(2\) The grantee operates in more than one Rural Development District,
in which case the State Director will designate the approving official.

\(3\) The grantee operates in more than one State Director\'s
jurisdiction, in which case the Administrator will designate the
approving official.

\(4\) The expenditure is under contract authority, in which case the
Contracting Official Representative will approve the monthly
expenditure.

§1944.416 [Grant closing]{.underline}.

The grant is closed on the date the Agreement is executed as defined in
§1944.403(a) by the applicant and the Government. Funds may not be
advanced prior to the signing of the Agreement. The District Director or
Assistant District Director are authorized to execute the Agreement for
Rural Development. Person(s) authorized by resolution may sign for the
applicant.

§1944.417 [Servicing actions after grant closing]{.underline}.

Rural Development has a responsibility to help the grantee be successful
and help the grantee avoid cases of fraud and abuse. Servicing actions
also include correlating activities between the grantee and Rural
Development to the benefit of the participating families. The amount of
servicing actions needed will vary in accordance with the experience of
the grantee, but as a minimum the following actions are required:

\(a\) Monthly, the grantee will provide the District Director with a
request for additional funds on Form SF-270, \"Request for Advance or
Reimbursement.\" This request need only show the amount of funds used
during the previous month, amount of unspent funds, projected need for
the next 30 days, and written justification if the request exceeds the
projected need for the next 30 days. This request must be in the
District Director\'s office fifteen days prior to the beginning of the
month. Upon receipt of the grantee\'s request, the District Director
will:

## 17

## (Revision 1)

(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.417(a) (Con.)

\(1\) If the request appears to be in order, process Form RD 440-57 so
that delivery of the check will be possible on the first of the next
month.

\(2\) If the request does not appear to be in order, immediately contact
the grantee to resolve the problem. After the contact:

\(i\) if the explanation is acceptable, process Form RD 440-57 so
delivery may be possible by the first of the next month, or

\(ii\) if the explanation is not acceptable, immediately notify the
grantee and request the amount of funds that appear reasonable for the
next 30 days on Form RD 440-57, so that delivery may be possible by the
first of the next month. Unapproved funds that are later approved will
be added to the next month\'s request.

\(b\) Quarterly, the grantee will submit Exhibit B of this subpart in an
original and three copies to the County Supervisor on or before January
15, April 15, July 15, and October 15 which will verify its progress
toward meeting the objectives stated in the Agreement and the
application. The County Supervisor will immediately complete the County
Office review part and forward the report to the District Office. After
Exhibit B is received in the District Office, a meeting should be
scheduled between the grantee, District Director, and the County
Supervisor since this is an opportune time for both the grantee and
Rural Development to review progress to date and make necessary
adjustments for the future. This meeting is required if the grantee was
previously identified as a problem grantee or will be identified as a
problem grantee at this time. Regardless of whether a meeting will be
held, the following will be done:

(Revised 04-24-91, PN 163.)

\(1\) Exhibit B and other information will be evaluated to determine
progress made to date. The District Director will comment on Exhibit B
as to whether the grantee is ahead or behind schedule in each of the
following areas:

\(i\) [Assisting the projected number of families]{.underline}.

\(ii\) [Serving very low-income applicants]{.underline}. Is the grantee
reaching a minimum of very low-income families as required in Exhibit A,
Attachment 2 to Subpart L of Part 1940 of this chapter (available in any
Rural Development office).

## 18

## (Revision 1) 

§1944.417 (b) (1) (Con.) RD Instruction 1944-I

\(iii\) [Equivalent units (EUs)]{.underline}. Is the number of EUs
completed representative of lapse in time of the grant? For example, if
25 percent of the grant period has elapsed, are 25 percent of the number
of EUs completed?

\(iv\) [Labor contributions by the family]{.underline}. Are the families
working together and are they completing the labor tasks as established
on Exhibit B-2?

\(2\) The District Director will submit Exhibit B to the State Director
who will evaluate the quarterly report along with the District
Director\'s comments. If the State Director determines the grantee is
progressing satisfactorily, the State Director will sign and forward
Exhibit B to the National Office. However, if the State Director
determines the grantee is not performing as expected, the State Director
will notify the grantee that it has been classified a \"High Risk\"
grantee. The notice will specify the deficiencies and inform the grantee
of proposed remedies for noncompliance.

The notice will advise the grantee that Rural Development is available
to assist and provide the name and address of an organization that is
under contract with Rural Development to assist them. The State Director
will forward a copy of Exhibit B, District Directors comments, and the
reasons for classifying them as \"High Risk\" to the National Office,
Single Family Housing, Special Programs Branch. When the period of time
provided for corrective action has expired, an assessment will be made
of the progress by the grantee toward correcting the situation. If the
State Director determines:

\(i\) The situation has been corrected or reasonable progress has been
made toward correcting the situation, the \"High Risk\" status will be
lifted and the grantee so notified.

\(ii\) The situation has not been corrected but it is correctable if
additional time is granted, an extension will be issued.

\(iii\) The situation has not been corrected and it is unlikely to be
corrected if given additional time, the grant will be terminated under
§1944.426(b)(1) of this subpart.

§1944.418 \[Reserved\]

## 19

## 

(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.419 [Final grantee evaluation]{.underline}.

Near the end of the grant period but prior to the last month, an
evaluation of the grantee will be conducted by Rural Development. The
State Director may use Rural Development employees or an organization
under contract to Rural Development to provide the evaluation. The
evaluation is to determine how successful the grantee was in meeting
goals and objectives as defined in the agreement, application, this
regulation, and any amendments.

\(a\) This is a quantitative evaluation of the grantee to determine if
it met its goals in:

\(1\) Assisting the projected number of families in obtaining adequate
housing.

\(2\) Meeting the goal of assisting very low-income families.

\(3\) Meeting the family labor requirement in §1944.411(h) and Exhibit
B-2 of this subpart.

\(4\) Keeping costs within the guides set in §1944.407.

\(5\) Meeting other objectives in the Agreement.

\(b\) The evaluation is a narrative addressed to the State Director with
a copy to the National Office, Single Family Housing Processing
Division. It will be in 3 parts, namely; findings, recommendations, and
an overall rating. The rating will be either unacceptable, acceptable,
or outstanding, as follows:

\(1\) Outstanding if the grantee met or exceeded all of the goals in
paragraph (a) of this section.

\(2\) Acceptable if the grantee met or exceeded all of the goals as
defined in paragraph (a) except two.

\(3\) Unacceptable if the grantee failed to obtain an acceptable rating.

\(c\) After the State Director has reviewed the evaluation, a copy will
be mailed to the grantee. The grantee may request a review of the
evaluation with the District Director. This review is for clarification
of the material and to dispute the findings if they are known to be
wrong. The rating is not open for discussion except to the extent it can
be proven that the findings do not support the rating. If this is the
case, the District Director will file an amendment to the State
Director.

## 20

##  

RD Instruction 1944-I

§1944.420 [Extension or revision of the grant agreement]{.underline}.

The State Director may authorize the District Director to execute on
behalf of the Government, Exhibit C of this subpart, at any time during
the grant period provided:

\(a\) The extension period is for no more than one year from the final
date of the existing Agreement.

\(b\) The need for the extension is clearly justified,

\(c\) If additional funds are needed, a revised budget is submitted with
complete justification, and

\(d\) The grantee is within the guidelines in §1944.407 of this subpart
or the State Director determines that the best interest of the
Government will be served by the extension.

§1944.421 [Refunding of an existing grantee]{.underline}.

Grantees wishing to continue with self-help efforts after the end of the
current grant plus any extensions should file Form SF-424, in accordance
with §1944.410(e). It is recommended that it be filed at least 6 months
before the end of the current grant period. Funds from the existing
grant may be used to meet the conditions of a new grant to serve the
same or redefined geographic area. If the grantee is targeting a
different geographic area, a new preapplication must be submitted in
accordance with §1944.410 and the grantee may apply for a predevelopment
grant in accordance with §1944.410(d). In addition to meeting the
conditions of an applicant as defined in §1944.411 of this subpart, the
grantee must also have received or will receive an acceptable rating on
its current grant unless an exception is granted by the State Director.
The State Director may grant an exception to the rating if it is
determined that the reasons causing the previous unacceptable rating
have been removed or will be removed with the approval of this grant.

§1944.422 [Audit and other report requirements]{.underline}.

The grantee must submit an audit to the appropriate Rural Development
District Office annually (or biennially if a State or local government
with authority to do a less frequent audit requests it) and within 90
days of the end of the grantee\'s fiscal year, grant period, or
termination of the grant. The audit, conducted by the grantee\'s
auditors, is to be performed in accordance with Generally Accepted
Government Auditing Standards (GAGAS), using the publication \"Standards
for Audit of Governmental Organizations, Programs, Activities and
Functions\" developed by the Comptroller General of the United States in
1981, and any subsequent revisions. In addition, the audits are also to
be performed in accordance with 7 CFR Parts 3015 and 3016 and Rural
Development requirements as specified in this subpart. Audits of
borrower loan funds will

## 21

## (Revision 1)

(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.422 (Con.)

be required. The number of borrower accounts audited will be determined
by the auditor. In incidences where it is difficult to determine the
appropriate number of accounts to be audited, auditors should be
authorized by the State Director to audit the lesser of 10 loans or 10
percent of total loans.

(Revised 04-24-91, PN 163.)

\(a\) [Nonprofit organizations and others]{.underline}. If determined
necessary, these organizations are to be audited in accordance with
Rural Development requirements OMB Circular A-110, A-133, and 7 CFR Part
3015. These requirements also apply to public hospitals, public
colleges, and universities if they are excluded from the audit
requirements of paragraph (b) of this section.

\(1\) An audit conducted by the grantee\'s auditor shall be supplied to
the Rural Development District Director as soon as possible but in no
case later than ninety (90) days following the period covered by the
grant agreement.

\(2\) Auditors shall promptly notify United States Department of
Agriculture\'s Office of the Inspector General Regional Inspector
General and the Rural Development District Office, in writing, of any
indication of fraud, abuse, or illegal acts in grantees use of grant
funds or in the handling of borrowers accounts.

\(3\) Nonprofit organizations that receive less than \$25,000 a year in
Federal financial assistance need not be audited.

\(b\) [State and local governments and Indian tribes]{.underline}. These
organizations are to be audited in accordance with this subpart and 7
CFR Part 3016. The grantee will forward completed audits to the
appropriate Federal cognizant agency and a copy to the Rural Development
District Director. \"Cognizant agency\" means the federal agency
assigned by OMB Circular A-128. Within USDA, the OIG shall fulfill
cognizant agency responsibilities. Smaller grantees not assigned a
cognizant agency by OMB should contact the Federal agency that provided
the most funds. When USDA is designated as the cognizant agency or when
it has been determined by the borrower that Rural Development provided
the major portion of Federal financial assistance, the State Director
will contact the appropriate USDA OIG Regional Inspector General. Rural
Development and the borrower shall coordinate all proposed audit plans
with the appropriate USDA OIG.

## 22

## (Revision 1) 

RD Instruction 1944-I

§ 1944.422(b) (Con.)

\(1\) State and local governments and Indian tribes that receive
\$25,000 or more a year in Federal financial assistance shall have an
audit made in accordance with 7 CFR Part 3016.

\(2\) State and local and Indian tribes that receive less than \$25,000
a year in Federal financial assistance shall be exempt from 7 CFR Part
3016.

\(3\) Public hospitals and public colleges and universities may be
excluded by the State Director from OMB Circular A-128 audit
requirements. If such entities are excluded, audits shall be made in
accordance with paragraph (a) of this section.

§ 1944.423 [Loan packaging and 502 RH application
submittal]{.underline}.

A grantee is required to assist 502 RH applicants in submitting their
application for an RH loan. Loan packaging will be performed in
accordance with 7 CFR part 3550; therefore, it is important that the
grantee be trained at an early date in the packaging of RH loans.
Typically, this training should take place before the first applications
are submitted to the County Office and before the grant is closed. A
grantee should become very knowledgeable of Rural Development\'s
eligibility requirements but must understand that only Rural Development
can approve or deny an applicant assistance. Grantee must work
cooperatively with Rural Development in the 502 loan approval process
and must work within the regulations for the 502 program and recognize
Rural Development\'s ultimate decision making authority to approve or
deny loans. However, the grantee may ask for clarification that may be
helpful in working with future applicants. Grant funds may not be used
to pay any expense in connection with an appeal that the applicant may
file or pursue.

§ 1944.424 [Dwelling construction and standards]{.underline}.

All construction will be performed in accordance with Subpart A of Part
1924 of this chapter. The planned work must meet the building
requirements of 7 CFR part 3550 and meet the Development Standards as
defined in subpart A of part 1924 of this chapter and in any local
codes. Sites and site developments must conform to the requirements of
subpart C of part 1924 of this chapter.

## 23

## (Revision 2)

(11-15-90) SPECIAL PN

RD Instruction 1944-I

§ 1944.425 [Handling and accounting for borrower loan
funds]{.underline}.

Grantees will be required to administer borrower loan funds during the
construction phases. The extent of their involvement will depend on the
experience of the grantee and the amount of authority delegated to them
by the District Director in accordance with § 1924.6(c) of Subpart A of
Part 1924 of this chapter. Training should include Rural Development\'s
non-discrimination policies in receiving applications.

§ 1944.426 [Grant closeout]{.underline}.

\(a\) [Grant purposes completed]{.underline}. Promptly after the date of
completion, grant closeout actions will be taken to allow the orderly
discontinuance of grantee activity.

\(1\) The grantee will immediately refund to Rural Development any
balance of grant funds advanced that are not committed for the payment
of authorized expenses. The unused grant funds will be remitted on Form
RD 451-2, "Schedule of Remittances" in accordance with the forms manual
insert. (Revised 10-28-03, SPECIAL PN.)

\(2\) The grantee will furnish Form SF-269A, \"Financial Status Report
(short form)\" to Rural Development within 90 days after the date of
completion of the grant. All other financial, performance, and other
reports required as a condition of the grant also will be completed.

\(3\) After the grant closeout, Rural Development retains the right to
recover any disallowed costs which are discovered as a result of the
final audit. 7 CFR part 3550 will be used by Rural Development to
recover any unauthorized expenditures. (Revised 01-23-03, SPECIAL PN.)

\(4\) The grantee will provide Rural Development an audit conforming to
those requirements established in this part, including audits of
self-help borrower accounts.

\(5\) Upon request from the recipient, any allowable reimbursable cost
not covered by previous payments shall be promptly paid by Rural
Development.

## 24

(Revision 2)

§1944.426 (Con.) RD Instruction 1944-I

\(b\) [Grant purposes not completed]{.underline}.

\(1\) [Notification of termination]{.underline}. The State Director will
promptly notify the grantee and the National Office in writing of the
termination action including the specific reasons for the decision and
the effective date of the termination. The notification to the grantee
will specify that if the grantee believes the reason for the proposed
termination can be resolved, the grantee should, within 15 calendar days
of the date of this notification, contact the State Director in writing
requesting a meeting for further consideration. The meeting will be an
informal proceeding at which the grantee will be given the opportunity
to provide whatever additional information it believes should be
considered in reaching a decision concerning the case. The grantee may
have an attorney or any other person present at the meeting if desired.
Within 7 calendar days of the meeting, the State Director will determine
what action to take.

\(i\) If the State Director determines that termination is not
necessary, the grantee will be informed by letter along with the
District Director.

\(ii\) If the State Director determines that termination of the grant is
appropriate, he/she will promptly inform the grantee by the use of
Exhibit B-3 of Subpart B of Part 1900 of this chapter.

\(2\) [National Office review]{.underline}.

\(i\) Upon receipt of a request from a grantee that the decision of the
State Director be reconsidered, the National Office will make a
preliminary decision concerning the continued funding of the grantee
during the appeal period. Written notification of the decision will be
given to the State Director and grantee.

\(ii\) The National Office will then obtain a comprehensive report on
the matter from the State Office. This information will be considered
together with any additional information that may be provided by the
grantee.

\(c\) [Grant Suspension]{.underline}. When the grantee has failed to
comply with the terms of the agreement, the District Director will
promptly report the facts to the State Director. The State Director will
consider termination or suspension of the grant usually only after a
Grantee has been classified as \"high risk\" in accordance with
§1944.417(b)(2)

## 25

## 

(11-15-90) SPECIAL PN

RD Instruction 1944-I

§1944.426(c) (Con.)

of this subpart. When the State Director determines that the grantee has
a reasonable potential to correct deficiencies the grant may be
suspended. The State Director will request written authorization from
the National Office to suspend a grantee. The suspension will adhere to
7 CFR Parts 3015 and 3016. The grantee will be notified of the grant
suspension in writing by the State Director. The State Director will
also promptly inform the grantee of its rights to appeal the decision by
use of Exhibit B-3 of Subpart B of Part 1900 of this chapter.

\(d\) [Grant Termination]{.underline}. The State Director may terminate
the grant agreement whenever Rural Development determines that the
grantee has failed to comply with terms of the Agreement. The reasons
for termination may include, but are not limited to, such problems as
listed in paragraph (e)(3)(i) of Exhibit A of this subpart. The State
Director may also withhold further disbursement of grant funds and
prohibit the grantee from incurring additional obligations of grant
funds with written approval of the National Office. Rural Development
will allow all necessary and proper costs which grantee could not
reasonably avoid.

\(i\) [Termination for cause]{.underline}. The grant agreement may be
terminated in whole, or in part, at any time before date of completion,
whenever Rural Development determines that the grantee has failed to
comply with terms of the Agreement. The State Director will notify the
grantee in writing giving the reasons for the action and inform the
grantee of its rights of appeal by use of Exhibit B-3 of Subpart B of
Part 1900 of this chapter.

\(ii\) [Termination for convenience]{.underline}. Rural Development or
the grantee may terminate the grant in whole, or in part, when both
parties agree that the continuation of the grant would not produce
beneficial results. The two parties will agree in writing to the
termination conditions including the effective date. No notice of rights
of appeal will be issued by Rural Development.

§1944.427 [Grantee self-evaluation]{.underline}.

Annually or more often, the board of directors will evaluate their own
self-help program. Exhibit E of this subpart is provided for that
purpose. It is also recommended that they review their personnel policy,
any audits that may have been conducted and other reports to determine
if they need to make adjustments in order to prevent fraud and abuse,
and meet the goals in the current grant agreement.

## 26

##  

RD Instruction 1944-I

§§1944.428 - 1944.449 \[Reserved\]

§1944.450 [OMB Control Number]{.underline}

The reporting and recordkeeping requirements contained in this
regulation have been approved by the Office of Management and Budget and
have been assigned OMB control number 0575-0043. Public reporting burden
for this collection of information is estimated to vary from 10 minutes
to 18 hours per response, with an average of 1.17 hours per response
including time for reviewing instructions, searching existing data
sources, gathering and maintaining the data needed, and completing and
reviewing the collection of information. Send comments regarding this
burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to Department of
Agriculture, Clearance Officer, OIRM, Room 404-W, Washington, D.C.
20250; and to the Office Management and Budget, Paperwork Reduction
Project (OMB# 0575-0043), Washington, D.C. 20503.

Attachments: Exhibits A, B, B-1, B-2, B-3, C, D, E, and F

## oOo

## 27

## 

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit A

## SELF-HELP TECHNICAL ASSISTANCE GRANT AGREEMENT

## 

THIS GRANT AGREEMENT dated \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, 19\_\_\_,
is between \_\_\_\_\_\_\_\_\_

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

a nonprofit corporation (\"Grantee\"), organized and operating under
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(authorizing State statute)

and the United States of America acting through Rural Development,
Department of Agriculture.

In consideration of financial assistance in the amount of
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(called \"Grant Funds\") to be made available by Rural Development to
Grantee under Section 523 (b) (1)(A) of the Housing Act of 1949 to be
used in (specify area to be served)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
for the purpose of providing a program of technical and supervisory
assistance which will aid low-income families in carrying out mutual
self-help housing efforts. Grantee will provide such a program in
accordance with the terms of this Agreement and Rural Development
regulations.

Definitions:

\"Date of Completion\" means the date when all work under a grant is
completed or the date in the TA Grant Agreement, or any supplement or
amendment thereto, on which Federal assistance ends.

\"Disallowed costs\" are those charges to a grant which the Rural
Development determines cannot be authorized.

\"Grant Closeout\" is the process by which the grant operation is
concluded at the expiration of the grant period or following a decision
to terminate the grant.

\"Termination\" of a grant means the cancellation of Federal assistance,
in whole or in part, under a grant at any time prior to the date of
completion.

Terms of agreement:

\(a\) This Agreement shall terminate \_\_\_\_\_\_\_\_\_\_\_\_\_\_ years
from this date unless extended or sooner terminated under paragraphs (e)
and (f) of this Agreement.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit A

Page 2

\(b\) Grantee shall carry out the self-help housing activity described
in the application docket which is attached to and made a part of this
Agreement. Grantee will be bound by the conditions set forth in the
docket, 7 CFR Part 1944, Subpart I, and the further conditions set forth
in this Agreement. If any of the conditions in the docket are
inconsistent with those in the Agreement or Subpart I of Part 1944, the
latter will govern. A waiver of any condition must be in writing and
must be signed by an authorized representative of Rural Development.

\(c\) Grantee shall use grant funds only for the purposes and activities
specified in Rural Development regulations and in the application docket
approved by Rural Development including the approved budget. Any uses
not provided for in the approved budget must be approved in writing by
Rural Development in advance.

\(d\) If Grantee is a private nonprofit corporation, expenses charged
for travel or per diem will not exceed the rates paid Rural Development
employees for similar expenses. If Grantee is a public body, the rates
will be those that are allowable under the customary practice in the
government of which Grantee is a part; if none are customary, the Rural
Development rates will be the maximum allowed.

\(e\) Grant closeout and termination procedures will be as follows:

\(1\) Promptly after the date of completion or a decision to terminate a
grant, grant closeout actions are to be taken to allow the orderly
discontinuation of Grantee activity.

\(i\) Grantee shall immediately refund to Rural Development any
uncommitted balance of grant funds.

\(ii\) Grantee will furnish to Rural Development within 90 days after
the date of completion of the grant a \"Financial Status Report\", Form
SF-269A. All financial, performance, and other reports required as a
condition of the grant will also be completed.

\(iii\) Grantee shall account for any property acquired with technical
assistance (TA) grant funds, or otherwise received from Rural
Development.

\(iv\) After the grant closeout, Rural Development retains the right to
recover any disallowed costs which may be discovered as a result of any
audit.

RD Instruction 1944-I

Exhibit A

Paragraph (e) Con.

Page 3

\(2\) When there is reasonable evidence that Grantee has failed to
comply with the terms of this Agreement, the State Director may
determine Grantee as \"high risk\". A \"high risk\" Grantee will be
supervised to the extent necessary to protect the Government\'s interest
and to help Grantee overcome the deficiencies.

\(3\) Grant termination will be based on the following:

\(i\) [Termination for cause]{.underline}. This grant may be terminated
in whole, or in part, 90 days after a Grantee has been classified as
\"high risk\" if the State Director determines that Grantee has failed
to correct previous deficiencies and is unlikely to correct such items
if additional time is allowed. The reasons for termination may include,
but are not limited to, such problems as:

\(A\) Actual TA costs significantly exceeding the amount stipulated in
the proposal.

\(B\) The number of homes being built is significantly less than
proposed construction or is not on schedule.

\(C\) The cost of housing not being appropriate for the self-help
program.

\(D\) Failure of Grantee to only use grant funds for authorized
purposes.

\(E\) Failure of Grantee to submit adequate and timely reports of its
operation.

\(F\) Failure of Grantee to require families to work together in groups
by the mutual self-help method in the case of new construction.

\(G\) Serious or repetitive violation of any of the provisions of any
laws administered by Rural Development or any regulation issued under
those laws.

\(H\) Violation of any nondiscrimination or equal opportunity
requirement administered by Rural Development in connection with any
Rural Development programs.

\(I\) Failure to establish an accounting system acceptable to Rural
Development.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit A

Page 4

\(J\) Failure to serve very low-income families.

\(K\) Failure to recruit families from substandard housing.

\(ii\) [Termination for convenience]{.underline}. Rural Development or
Grantee may terminate the grant in whole, or in part, when both parties
agree that the continuation of the project would not produce beneficial
results commensurate with the further expenditure of funds. The two
parties shall agree upon the termination conditions, including the
effective date and, in case of partial termination, the portion to be
terminated.

\(4\) To terminate a grant for cause, Rural Development shall promptly
notify Grantee in writing of the determination and the reasons for and
the effective date of the whole or partial termination. Grantee will be
advised of its appeal rights under 7 CFR Part 1900, Subpart B.

\(f\) An extension of this grant agreement may be approved by Rural
Development provided in its opinion, the extension is justified and
there is a likelihood that the grantee can accomplish the goals set out
and approved in the application docket during the period of the
extension.

\(g\) Grant funds may not be used to pay obligations incurred before the
date of this Agreement. Grantee will not obligate grant funds after the
grant termination or completion date.

\(h\) As requested and in the manner specified by Rural Development, the
grantee must make quarterly reports, Exhibit C of this subpart (on 1/15,
4/15, 7/15 and 10/15 of each year), and a financial status report at the
end of the grant period, and permit on-site inspections of program
progress by Rural Development representatives. Rural Development may
require progress reports more frequently if it deems necessary. Grantee
must also comply with the audit requirements found in ½1944.422 of
Subpart I of 7 CFR Part 1944, if applicable. Grantee will maintain
records and accounts, including property, personnel and financial
records, to assure a proper accounting of all grant funds. These records
will be made available to Rural Development for auditing purposes and
will be retained by grantee for three years after the termination or
completion of this grant.

\(i\) Acquisition and disposal of personal, equipment and supplies
should comply with Subpart R of 7 CFR Part 3015 and Subpart C of 7 CFR
Part 3016.

RD Instruction 1944-I

Exhibit A

Page 5

\(j\) Results of the program assisted by grant funds may be published by
Grantee without prior review by Rural Development, provided that such
publications acknowledge the support provided by funds pursuant to the
provisions of Title V of the Housing Act of 1949, 42 U.S.C. 1471, [et
seq]{.underline}., and that five copies of each such publication are
furnished to the local representative of Rural Development.

\(k\) Grantee certifies that no person or organization has been employed
or retained to solicit or secure this grant for a commission,
percentage, brokerage, or contingent fee.

\(l\) Grantee shall comply with all civil rights laws and the Rural
Development regulations implementing these laws.

\(m\) In all hiring or employment made possible by or resulting from
this grant, Grantee: (1) will not discriminate against any employee or
applicant for employment because of race, religion, color, sex, marital
status, national origin, age, or mental or physical handicap, and (2)
will take affirmative action to insure that applicants are employed, and
that employees are treated during employment without regard to their
race, religion, color, sex, marital status, national origin, or mental
or physical handicap. This requirement shall apply to, but not be
limited to, the following: Employment, upgrading, demotion, or transfer;
recruitment or recruitment advertising; layoff or termination; rates of
pay or other forms of compensation; and selection for training,
including apprenticeship. In the event Grantee signs a contract which
would be covered by any Executive Order, law, or regulation prohibiting
discrimination, Grantee shall include in the contract the \"Equal
Employment Clause\" as specified by Rural Development.

\(n\) It is understood and agreed by Grantee that any assistance granted
under this Agreement will be administered subject to the limitations of
Title V of the Housing Act of 1949 as amended, 42 USC 1471 [et
seq]{.underline}., and related regulations, and that rights granted to
Rural Development in this Agreement or elsewhere may be exercised by it
in its sole discretion to carry out the purposes of the assistance, and
protect Rural Development\'s financial interest.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit A

Page 6

\(o\) Grantee will maintain a code or standards of conduct which will
govern the performance of its officers, employees, or agents. Grantee\'s
officers, employees, or agents will neither solicit nor accept
gratuities, favors, or anything of monetary value from suppliers,
contractors, or others doing business with the grantee. To the extent
permissible by State or local law, rules, or regulations such standards
will provide for penalties, sanctions, or other disciplinary actions to
be taken for violations of such standards.

\(p\) Grantee shall not hire or permit to be hired any person in a staff
position or as a participant if that person or a member of that
person\'s immediate household is employed in an administrative capacity
by the organization, unless waived by the State Director. (For the
purpose of this section, the term \"household\" means all persons
sharing the same dwelling, whether related or not).

\(q\) Grantee\'s board members or employees shall not directly or
indirectly participate, for financial gain, in any transactions
involving the organization or the participating families. This includes
activities such as selling real estate, building material, supplies, and
services.

\(r\) Grantee will retain all financial records, supporting documents,
statistical records, and other records pertinent to this agreement for 3
years, and affirms that it is fully aware of the provisions of the
Administrative Remedies for False Claims and Statements Act, 31 USC
3801, [et seq]{.underline}.

By\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
By\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature) (Signature)

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

(Title) (Title)

GRANTEE FARMERS HOME ADMINISTRATION

RD Instruction 1944-I

Exhibit B

## [Evaluation Report of Self-Help Technical Assistance (TA) Grants]{.underline}

## 

Evaluation for Quarter Ending:
\_\_\_\_\_\_[(1)]{.underline}\_\_\_\_\_\_\_, 19\_\_\_\_\_\_

1\. a. Name of Grantee:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_[(2)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

b\. Address:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_[(3)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

c\. Area the grant serves:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_[(4)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

2\. Date of
Agreement:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_[(5)]{.underline}\_\_\_\_\_\_\_\_Time
Extended\_\_\_[(6)]{.underline}\_\_\_

3\. a. Equivalent unit increase during quarter:
\_\_\_\_\_\_[(7)]{.underline}\_\_\_\_\_

First Month

\_\_\_\_\_\_[(8)]{.underline}\_\_\_\_\_

Second Month

\_\_\_\_\_\_[(9)]{.underline}\_\_\_\_\_

Third Month

b\. Cumulative total number of Equivalent Units
\_\_\_\_\_\_[(10)]{.underline}\_\_\_\_\_

since beginning of grant: Total to Date

4\. a. Method of Construction:

Stick built \_\_\_\_\_\_\_\_%, Panelized \_\_\_\_\_\_\_\_%, Combined
\_\_\_\_\_\_\_%

b\. Number of bedrooms per house built this grant period:

\_\_\_\_\_\_\_\_\_\_2BR, \_\_\_\_\_\_\_\_\_\_\_3BR,
\_\_\_\_\_\_\_\_\_\_\_

c\. Household size this Quarter:

1 person \_\_\_\_\_\_\_\_\_, 2 persons \_\_\_\_\_\_\_\_\_, 3 persons
\_\_\_\_\_\_\_\_\_\_\_

4 persons \_\_\_\_\_\_\_\_\_, 5 persons \_\_\_\_\_\_\_\_\_

d\. Number of houses under construction this grant period, but started

during previous grant period: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

5\. a. Number of houses proposed under this grant:
\_\_\_\_\_\_\_[(11)]{.underline}\_\_\_\_\_\_

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit B

Page 2

b\. Number of houses completed under this grant:
\_\_\_\_\_\_\_[(12)]{.underline}\_\_\_\_\_\_

c\. Number of houses currently under construction:
\_\_\_\_\_\_\_[(13)]{.underline}\_\_\_\_\_\_

d\. Number of families in pre construction:
\_\_\_\_\_\_\_[(14)]{.underline}\_\_\_\_\_\_

e\. Number of Construction Supervisors:
\_\_\_\_\_\_\_[(15)]{.underline}\_\_\_\_\_\_

f\. Number of TA employees: \_\_\_\_\_\_\_[(16)]{.underline}\_\_\_\_\_\_

6\. a. Average time needed to construct a single house:
\_\_\_\_\_\_[(17)]{.underline}\_\_\_\_\_\_

b\. Number of months between submission of self-

help borrower\'s docket and approval/rejection:
\_\_\_\_\_\_[(18)]{.underline}\_\_\_\_\_

c\. Number and percentage of loan docket rejections

during reporting period: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_[(19)]{.underline}\_\_\_\_\_\_

7\. a. Did any of the following adversely affect the Grantee\'s ability

to accomplish program objectives?

YES NO

TA Staff Turnover \_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_

Rural Development Staff Turnover \_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_

Bad Weather \_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_

Loan Processing Delays \_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_

Site Acquisition and Development \_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_

Unavailable Loan/Grant Funds \_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_

Lack of Participants \_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_

Communication between Rural Development/Grantee \_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_

8\. Attach information concerning number of families contacted, number
who

have indicated a willingness to be a participating family, number of

mutual self-help groups organized, progress on any construction

started, and any problems relating to the operation of this grant.

RD Instruction 1944-I

Exhibit B

Page 3

I certify that the statements made above are true to the best of my

knowledge and belief.

\_\_\_\_\_\_\_\_[(20)]{.underline}\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_[(21)]{.underline}\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_[(22)]{.underline}\_\_\_\_\_\_\_

(Date) (Title) (Signature)

GRANTEE

## [COUNTY OFFICE REVIEW]{.underline}

## 

I have reviewed the above information which I have found to be
substantially correct. Must be completed by County Office.

Comment: Must be completed (23)

Average appraisal value of units financed this

Quarter: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Average amount loan per unit financed this Quarter:
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_[(24)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_[(25)]{.underline}\_\_\_\_\_\_\_\_

(Date) County Supervisor

## [DISTRICT OFFICE REVIEW]{.underline}

## 

Comment: Must be completed (26)

\_\_\_\_\_\_\_[(27)]{.underline}\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_[(28)]{.underline}\_\_\_\_\_\_\_\_\_\_\_

Date District Director

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit B

Page 4

## [STATE OFFICE REVIEW]{.underline}

## 

Comments: Must be completed (29)

\_\_\_\_\_\_\_\_[(30)]{.underline}\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_[(31)]{.underline}\_\_\_\_\_\_\_\_\_\_\_\_

Date State Office Representative

## oOo

RD Instruction 1944-I

Exhibit B-1

Page 1

## Instructions for Preparation of

## Evaluation Report of Self-Help Technical Assistance Grants

## 

Exhibit B will be used by all Technical Assistance (TA) Grantees
obtaining self-help TA grants. This attachment provides the grantee and
Rural Development a uniform method of reporting the performance progress
of self-help projects. The TA Grantee will prepare an original and 4
copies of the attachment. The TA Grantee will sign the original and 3
copies and forward it to the local Rural Development County Office. The
TA Grantee will keep the unsigned copy for its records.

The evaluation report will be completed in accordance with the
following:

1\. Enter the date the quarter ends either March 31, June 30, September
30, or December 31 and the year.

2\. Enter the full name of the TA Grantee organization.

3\. Enter the complete mailing address of the TA Grantee organization.

4\. Enter the area served by the grant.

5\. Enter the date of the initial self-help TA grant agreement.

6\. Enter the time of any extension self-help TA grant agreement(s).

7\. Insert the number of equalivent units (EU) completed the
first/second/third month of the quarter using steps 1, 2, and\
3 of Exhibit B-3.

8\. Insert the number of EU\'s completed the second month of the

quarter by using steps 1, 2, and 3 of Exhibit B-3.

9\. Insert the number of EU\'s completed the third month of the quarter
by using steps 1, 2, and 3 of Exhibit B-3.

10\. Add items (7), (8), and (9) to the total from the previous

quarterly report to obtain the cumulative total number of EU\'s.

This total is the cumulative total number of EU\'s for the project.

11\. Enter the number of houses planned in the TA Grantee proposal(s).

12\. Enter the number of houses completed and occupied since the
beginning of the grant.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit B-1

Page 2

13\. Enter the number of houses that are under construction at the end
of this quarter.

14\. Enter the number of families in the pre-construction phase.

15\. Enter the total number of construction supervisor(s) paid with TA
grant funds.

> 16\. Enter the number of employees paid with TA grant funds including\
> those listed in item 15.

17\. Insert the average elapsed time needed per house from excavation\
to final inspection by Rural Development to complete construction of\
a house. If no self-help homes have been completed by this grantee,\
use other projects or your best estimate as a guide.

18\. Enter the number of months it takes on average to approve or reject
a borrower\'s docket once it\'s submitted.

19\. Enter number and percent of dockets submitted and rejected this
quarter.

20\. Enter date of Exhibit submittal.

21\. Insert title of the Grantee or authorized representative.

22\. Signature of Grantee or authorized representative.

23\. County Supervisor must answer questions concerning market value and
loan amount and also should insert comments concerning progress of
construction, success of the project and any problems\
that the organization may have.

24\. Insert date of County Supervisor\'s review.

25\. Signature of County Supervisor.

26\. District Director representative should insert his/her comments

concerning items listed in §1944.417(b)(1) of 1944-I.

27\. Insert date of District Director review.

28\. Signature of District Director or representative.

29\. Insert State Office comments.

30\. Insert date of State Office review.

31\. Signature of State Office representative.

RD Instruction 1944-I

Exhibit B-2

## BREAKDOWN OF CONSTRUCTION DEVELOPMENT FOR

## DETERMINING PERCENTAGE CONSTRUCTION COMPLETED

With With With

Slab on Crawl Basement

Grade % Space % %

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

1\. Excavation 3 5 6

The removal of earth to allow the construction of a foundation or
basement.

2\. Footing, Foundations, columns 8 8 11

Footing: Construction of the spreading course or courses at the base or
bottom of a foundation wall, pier, or column.

Foundation: Construction of the supporting portion of a structure below
the first floor construction, or below grade, including footing.

3\. Floor slab or framing 6 4 4

The floor slab consist of concrete, usually reinforced, poured over
gravel and a vapor barrier with perimeter insulation to prevent heat
loss.

4\. Subflooring 0 1 1

The installation of materials used for flooring that is laid directly on
the joist and serving the purpose of a floor during construction prior
installation of the finish floor.

5\. Wall framing sheathing 7 7 6

The construction process of putting together and erecting the skeleton
parts of a building\'s walls (the rough lumber work) and, for the
exterior walls, covering with sheathing (plywood, waferboard, oriented
strand board or lumber) and insulating board to close up the side walls
prior to the installation of finish materials on the surface.

6\. Roof and ceiling framing, sheathing 6 6 5

The process, or method, of putting the parts of a roof, such as truss,
rafters, ridge and plates in position. Ceiling joist support the
overhead interior lining of a room. Roof sheathing is any sheet
material, such as plywood or particleboard, connected to the roof
rafters or truss to act as a base for sheathing felt, shingles or other
roof covers.

7\. Roofing 5 5 4

The installation of a material that acts as a roof covering, making it
impervious to the weather, such as shingles over sheathing felt, tile,
or slate.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit B-2

Page 2

8\. Siding, exterior trim, porches 7 7 6

The installation of lumber, panel products or other materials intended
for use as the exterior wall covering including all trim.

9\. Windows and exterior doors 9 9 8

The installation of all exterior windows and doors. This includes
securely fastening windows and doors plumb and level, square and true
and adjusting sash, screens and hardware for smooth and proper
operation.

10\. Plumbing - roughed in 3 2 3

Subject to local codes and regulations the installation of all parts of
the plumbing system which must be completed prior to the installation of
plumbing fixtures or appliances. This includes drain, waste, and vent
piping, water supply, and the necessary built- in fixture supports.

11\. Sewage disposal 1 1 1

Subject to local codes and regulations the construction and installation
of a wastewater disposal system consisting of a house sewer, a
pretreatment unit (e.g., septic tank, individual package treatment
plant), an acceptable absorption system (subsurface absorption field,
seepage pit, or subsurface absorption bed). The system shall be designed
to receive all sanitary sewage (bathroom, kitchen and laundry) from the
dwelling, but not footing or roof drainage. It shall be designed so that
gases generated anywhere in the system can easily flow back to the
building sewer stack.

12\. Heating - roughed in 1 1 1

Subject to local codes and regulations the installation of ducts and/or
piping and the necessary supports to minimize the cutting of walls and
joist. This rough in is done before finish wall and floor installed.

13\. Electrical - roughed in 2 2 2

Subject to local codes and regulations the installation of conduit or
cable and the location of switch, light, and outlet boxes with wires
ready to connect. This roughing-in work is done before the dry wall
finish is applied, and before the insulation is placed in the walls and
ceiling.

14\. Insulation 2 2 2

The installation of any material used in walls, floors, and ceilings to
prevent heat transmission as required by RD Instruction 1924-A, Exhibit
D of 7 CFR of Part 1924, Subpart A.

RD Instruction 1944-I

Exhibit B-2

Page 3

15\. Dry wall 8 8 7

Dry walling is covering the interior walls using sheets of gypsum board
and taped joints.

16\. Basement or porch floor, steps 1 1 6

The construction of basement or porch floors and steps whether wood or
concrete.

17\. Heating - finished 3 3 3

Subject to local codes and regulations the installation of registers,
grilles and thermostats.

18\. Flooring covering 6 6 5

The installation of the \"finish flooring\" (the material used as the
final wearing surface that is applied to a floor). Floor covering
include numerous flooring materials such as wood materials, vinyl,
linoleum, cork, plastic, carpet and other materials in tile or sheet
form.

19\. Interior carpentry, trim, doors 6 6 5

Installing visible interior finish work (molding and/or trim), including
covering joints around window and door openings. The installation of an
interior door including frames and trim.

20\. Cabinets and counter tops 1 1 1

Securing cabinets and counter tops (usually requiring only fastening to
the wall or floor) that are plumb and level, square and true.

21\. Interior painting 4 4 3

Cleaning and preparation of all interior surfaces and applying paint in
strict accordance with the paint manufacturer\'s instructions.

22\. Exterior painting 1 1 1

Cleaning and preparation of all exterior surfaces and applying paint in
strict accordance with the paint manufacturer\'s instructions.

23\. Plumbing - complete fixtures 4 4 3

Subject to local codes and regulations the installation of a receptor or
device which requires both a water supply connection and a discharge to
the drainage system, such as water closets, lavatories, bathtubs or
sinks. Also, the installation of an energized household appliance with
plumbing connections, such as a clothes washer, water heater, dishwasher
or garbage grinder.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit B-2

Page 4

24\. Electrical - complete fixtures 1 1 1

Subject to local codes and regulations the installation of the fixtures,
the switches, and switch plates. This is usually done after the dry wall
finish is applied.

25\. Finish hardware 1 1 1

The installation of all the visible, functional hardware in a house that
has a finish appearance, including such features as hinges, locks,
catches, pulls, knobs, and clothes hooks.

26\. Gutters and downspouts 1 1 1

The installation of a shallow channel of wood, metal, or PVC (gutters)
positioned just below and following along the eaves of the house for the
purpose of collecting and diverting water from a roof to a vertical pipe
(downspouts) used to carry rainwater from the roof to the ground by way
of a splash block or into a drainage system.

27\. Grading, paving, landscaping 3 3 3

Landscaping includes final grading, planting of shrubs and trees, and
seeding or sodding of lawn areas. Final grading includes the best
available routing of runoff water to assure that house and adjacent
homes will not be endagered by the path of water runoff. The minimum
slope should be 6\" in 10\' or 5% from the foundation of the home.

Paving includes both driveways and walks.

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

100% 100% 100%

RD Instruction 1944-I

Exhibit B-3

## Pre-Construction and Construction Phase Breakdown

## 

I. [General]{.underline}. This Exhibit will be used by Farmers Home
Administration (Rural Development) and the Grantee in determining
Grantee performance as required in §1944.417(b) of this subpart.

II\. [Determining technical assistance (TA) cost per unit]{.underline}.

A. Equivalent units are used to measure progress at any time during the
period of the grant. It is necessary because self-help grantees have
several groups of families in various stages of progress during the
period of the grant. The following formula has been developed to provide
a more accurate method of determining progress.

## [FORMULA]{.underline}

## 

[PHASE BREAKDOWN]{.underline} [VALUE OF EACH PHASE]{.underline}
[CUMULATIVE]{.underline}

(%) (%)

[Pre-Construction]{.underline}

Phase I 10 10

Phase II 10 10

[Construction]{.underline}

Phase III 80 21-100

B. Using the [Description of Phase Breakdown]{.underline} as a guide,
the project staff selects the total percentage pertinent to the stage
the self-help group is in and multiplies that percentage by the number
of families (units) in the group. The result is the [equivalent number
of units completed]{.underline}. No credit may be given for Phase I, if
the application is rejected. When this computation has been completed
for each group that falls within Phases I - III, the total number of
equivalent units is divided into the total grant funds
[expended]{.underline} to that date. The result is the TA cost per unit
at that stage of the program\'s progress.

C. The definition of pre-construction and construction phases described
are follows:

[PRE-CONSTRUCTION]{.underline}

[Phase I]{.underline}: Hold community meetings; conduct interviews;
obtain house plans; prepare cost estimates; begin search for land;
submit family applications to the lender; lender runs credit check;
applications. Lender either approves or rejects.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit B-3

Page 2

[Phase II]{.underline}: Organize an association of Section 502 Rural
Housing eligible families; association conducts weekly meetings at which
required lender forms are discussed and completed; house plans and land
sites are selected; outside speakers explain and discuss taxes,
insurance, how to keep a checking account how interest is computed, home
maintenance, decorating, and landscaping; etc.; completed loan dockets
for each family are submitted to the lender. Family loan dockets are
reviewed and recommendations made as to the loan amounts requested; the
lender reviews family loan dockets; preliminary title search of each
proposed building site is begun; requests loan check from Finance
Office; when check arrives, final title search is made, loan closed,
checking accounts opened, and construction begun.

[Construction]{.underline}: The grantee will utilize Exhibit B-2 which
outlines 27 construction tasks to determine the percentage of completed
construction activities.

D. The computation of equivalent units and TA costs will be computed as
follows:

Exhibit C will be used for recording the following information and
construction in this example which starts January 1.

## [Step 1]{.underline}

## 

Both the grantee and Rural Development review the Rural Development loan
application records to determine the percentage of completion for each
family in the pre-construction phase of the program. These are Phases
I - III. Total these percentages to find the number of \"equivalent
units\" (EUs) completed at that date during pre-construction. For
example, if there are eight families in Group #2 and all have completed
the 20 percent phase of preconstruction, then there would be 1.6 EUs in
the pre-construction phase of the program as of that date. Each phase
must be completed before it is considered in the calculation.

## [Step 2]{.underline}

## 

Refer to the records of construction progress for families in the
construction Phase III. As of that date, the director totals the
percentage of completion figures for each family as followings:

Askew: .45

Whited: .40

Martinez: .40

Gonzalez: .38

RD Instruction 1944-I

Exhibit B-3

Page 3

Sherry: .34

Duran: .33

Johnson: .13

Harvey: [.31]{.underline}

2.92 EUs

Total production in the construction phase is therefore 2.92 EUs as of
that date.

## [Step 3]{.underline}

## 

Add the pre-construction and construction subtotals together:

Pre-construction 1.60

Construction [2.92]{.underline}

Total EUs 4.52

This provides the total EUs of production during the first three months
of operation. Steps 1, 2, and 3 will be used to complete items 7, 8 and
9 of Exhibit B of this subpart.

III\. [Preparation]{.underline}:

Compile Exhibit B of this subpart in an original and four copies. The
exhibit will be signed by the TA Grantee. Submit the original and three
copies of the exhibit quarterly to Rural Development County Office on or
before January 15, April 15, July 15, and October 15, of each year for
the quarters ending March 31, June 30, September 30, and December 31 of
each year. The District Director will keep the original and forward two
copies to the State Office. The State Office will forward one copy to
the National Office. The State Office will prepare information
concerning TA grants closed within 30 days of the end of a quarter on
the next quarterly report.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit C

## Amendment

## to

## Self-Help Technical Assistance Grant Agreement

## 

This Agreement
dated,\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_19\_\_\_\_\_\_\_between\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

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

a nonprofit corporation (\"Grantee\"), organized and operating under
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
and the United States of America

(authorizing State Statute)

acting through the Rural Development, Department of Agriculture (\"Rural
Development\"), amends the \"Self-Help Technical Assistance Grant
Agreement\" between the parties dated \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
19\_\_\_\_\_\_\_\_\_, (\"Agreement\").

The Agreement is amended by providing additional financial assistance in
the amount of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_to be made available by
Rural Development to Grantee pursuant to Section 523 of Title V of the
Housing Act of 1949 for the purpose of assisting in providing a program
of technical and supervisory assistance which will aid low-income
families in carrying out mutual self-help housing efforts; or

The Agreement is amended by changing the completion date specified in
convenant 1 from \_\_\_\_\_\_\_\_\_\_\_\_\_to \_\_\_\_\_\_\_\_\_\_\_ and
by making the following attachments to this amendment: (List and
identify proposal and any other documents pertinent to the grant.)

Agreed to this\_\_\_\_\_\_\_\_\_\_\_\_day of
\_\_\_\_\_\_\_\_\_\_\_19\_\_\_\_\_\_\_\_.

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

(Name of Grantee)

By\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature)

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

(Title)

UNITED STATES OF AMERICA

By\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature)

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

(Title)

RURAL DEVELOPMENT

## oOo

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit D

## SELF-HELP TECHNICAL ASSISTANCE GRANT PREDEVELOPMENT AGREEMENT

THIS GRANT PREDEVELOPMENT AGREEMENT dated,
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

19 \_\_\_, is between
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
a nonprofit corporation (\"Grantee\"), organized and operating under
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
(authorizing State statute)

and the United States of America acting through the Rural Developemnt,
Department of Agriculture.

In consideration of financial assistance in the amount of
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(\"Grant Funds\") to be made available by Rural Development to Grantee
under Section 523 (b)(1)(A) of the Housing Act of 1949 to be used in
(specify area to be served)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
for the purpose of developing a program of technical and supervisory
assistance which will aid low-income families in carrying out mutual
self-help housing efforts, Grantee will provide such a program in
accordance with the terms of this Agreement and Rural Development
regulations.

Grant funds will be used for authorized purposes as contained in
§1944.410(d) of 7 CFR Part 1944, Subpart I, as necessary, to develop a
complete program for a self-help TA grant. This will include
recruitment, screening, loan packaging and related activities for
prospective self-help participants.

Agreed to this \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
day of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

19 \_\_\_\_\_.

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

(Name of Grantee)

By\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature)

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

(Title)

UNITED STATES OF AMERICA

By\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature)

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

(Title)

RURAL DEVELOPMENT

## oOo

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit E

## GUIDANCE

## FOR RECIPIENTS OF

## SELF-HELP TECHNICAL ASSISTANCE GRANTS

## (SECTION 523 OF HOUSING ACT OF 1949)

7 CFR Part 1944, Subpart I provides the specific details of this grant
program. The following is a list of some functions of the grant
recipients taken from this subpart. With the list are questions we
request to be answered by the recipients to reduce the potential for
fraud, waste, unauthorized use or mismanagement of these grant funds. We
suggest the Board of Directors answer these questions every six months
by conducting [their own review]{.underline}. Paid staff should not be
permitted to complete this evaluation.

A. [Family Labor Contribution]{.underline}

1\. Does your organization maintain a list of each Yes No

family and a running total of hours worked (when

and on what activity)?

2\. Are there records of discussions with participating Yes No

families counseling them when the family contribution

is falling behind?

3\. Are there obstacles which prevent the family from Yes No

performing the required tasks?

B. [Use of Grant Funds]{.underline}

1\. Were grant funds used to pay salaries or other Yes No

expenses of personnel not directly associated with

this grant?

2\. Were grant funds used to pay for construction Yes No

work for participating families?

3\. Were all purchases or rentals (item and cost) Yes No

of office equipment authorized?

4\. Are all office expenses authorized by 7 CFR Part 1944, Yes No

Subpart I?

5\. Was a record of long distance telephone calls Yes No

maintained and was that log and telephone checked?

6\. Was all travel and mileage incurred for official Yes No

business and properly authorized in advance?

7\. Were mileage and per diem rates within authorized Yes No

levels?

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit E

Page 2

8\. Were participating families charged for use of Yes No

tools?

9\. Were grant funds expended to train grant personnel? Yes No

10\. Was training appropriate for the individual trainee? Yes No

11\. Were any technical or consultant services obtained Yes No

for participating families?

12\. Were the provided technical or consultant services Yes No

appropriate in type and cost?

C. [Financial Responsibilities]{.underline}

1\. Does each invoice paid by the grant recipient match Yes No

the purchase order?

2\. Does each invoice paid by the borrower and Rural Yes No\
Development match the purchase order?

3\. Were purchases made from the appropriate vendors? Yes No

4\. Are the invoices and itemized statements totaled Yes No

for materials purchased for individual families?

5\. Is there a record of deposits and withdrawals to Yes No

account for all loan funds?

6\. Are checks from grant funds signed by the Board Yes No

Treasurer and Executive Director?

7\. Are grant funds deposited in an interest bearing Yes No

account?

8\. Are checks from loan funds prepared by the grant Yes No

recipient for the borrower\'s and lender\'s signature?

9\. Are checks from loan funds accompanied by accurate Yes No

invoices?

10\. Are any borrower loan funds including interest, Yes No

deposited in grantee accounts?

11\. Are checks from loan funds submitted to Rural DevelopmentYes No

more often than once every 30 days?

12\. Is the reconciliation of bank statements for both Yes No

grant and loan funds completed on a monthly basis?

RD Instruction 1944-I

Exhibit E

Page 3

13\. If the person who issues the checks also reconciles Yes No

them, does the Executive Director review this activity?

14\. Are materials purchased in bulk approved by the Yes No

Executive Director?

15\. Was the amount of materials determined by both the Yes No

Executive Director and construction staff?

16\. Were any participating families consulted about the Yes No

purchase of materials?

17\. Were savings accomplished by the bulk purchase method? Yes No

18\. Did the Executive Director review the purchase Yes No

order and the ultimate use of the materials?

19\. Are materials covered by insurance when stored by Yes No

grantee?

D. [Reporting]{.underline}

1\. Are \"Requests for Advance or Reimbursement\" made Yes No

once monthly to the Rural Development District Office?

2\. Has the grant recipient engaged a certified public Yes No

Accountant (CPA) or CPA firm to review their

operations on a regular basis: (Annually is preferable

but every two years and at the end or the grant period

are requirements)?

3\. Are the quarterly evaluation reports submitted on Yes No

time to the County Supervisor?

What, if any, problems exist that need to be corrected for effective
management of the grant project?

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

Date President, Board of Directors

(Period covered by report\_\_\_\_\_\_\_\_\_\_\_\_\_\_)

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit E

Page 4

## ANSWER KEY

## 

The following answers should help your organization in assessing its
vulnerablility to fraud, waste, and abuse. You should take actions to
correct practices that now generate an answer different from the key.

[Question]{.underline} [Answer]{.underline}

A. 1 yes

A. 2 yes

A. 3 yes

B. 1 no

B. 2 no

B. 3 yes

B. 4 yes

B. 5 yes

B. 6 yes

B. 7 yes

B. 8 no

B. 9 yes

B. 10 yes

B. 11 yes

B. 12 yes

C. 1 yes

C. 2 yes

C. 3 yes

C. 4 yes

C. 5 yes

C. 6 yes

C. 7 no

C. 8 yes

C. 9 yes

C. 10 no

C. 11 no

C. 12 yes

C. 13 yes

C. 14 yes

C. 15 yes

C. 16 yes

C. 17 yes

C. 18 yes

C. 19 yes

D. 1 yes

D. 2 yes

D. 3 yes

RD Instruction 1944-I

Exhibit F

Page 1

## Site Option Loan to Technical Assistance

## Grantees

## 

I. [Objectives]{.underline}. The objective of a Site Option (SO) loan
under Section 523(b)(1)(B) of Title V of the Housing Act of 1949 is to
enable technical assistance (TA) grantees to establish revolving fund
accounts to obtain options on land needed to make sites available to
families that will build their own homes by the self-help method. An SO
loan will be considered only when sites cannot be made available by
other means including a regular Rural Housing Site (RHS) loan.

II\. [Eligibility requirements]{.underline}. To be eligible for an SO
loan, the applicant must be a TA grantee that is currently operating in
a satisfactory manner under a TA grant agreement. If the SO loan
applicant has applied for TA funds but is not already a TA grantee and
it appears that the TA grant will be made, the SO loan may be approved
but not closed until the TA grant is closed.

III\. [Loan purposes]{.underline}. Loans may be made only as necessary
to enable eligible applicants to establish revolving accounts with which
to obtain options on land that will be needed as building sites by
self-help families participating in the TA self-help housing program.
Loans will not be made to pay the full purchase price of land but only
for the minimum amounts necessary to obtain an option from the seller.
The option should be for as long as necessary but in no case should the
option be for less than 90 days.

IV\. [Limitations]{.underline}.

\(A\) If the amount of an SO loan will exceed \$10,000, the prior
consent of the National Office shall be obtained before approval.

\(B\) The amount of the SO loan should not exceed 15 percent of the
purchase price of the land expected to be under option at any one time,
unless a higher percent is authorized by the State Director when other
land is not available or the particular area requires more down payment
than elsewhere or similar circumstances exist.

\(C\) Form RD 440-34, \"Option to Purchase Real Property,\" will be used
without modification in all cases for obtaining options under this
subpart.

\(D\) The limitations of §1822.266(b)(1) and (2) of Subpart F of Part
1822 of this chapter (RD Instruction 444.8, paragraphs VI B(1) and (2))
concerning land purchase will apply to options purchased under this
subpart.

V. [Rates and terms]{.underline}.

\(A\) [Interest]{.underline}. Loans will be made at an interest rate of
3 percent.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit F

Page 2

\(B\) [Repayment period]{.underline}. Each SO loan will be repaid in one
installment which will include the entire principal balance and accrued
interest. The maximum repayment period for each SO loan will be the
applicant\'s remaining TA grant funding period.

\(1\) A shorter repayment period will be established if SO funds will
not be needed for the entire TA grant funding period.

\(2\) If a regular RHS loan is to be processed, the SO loan should be
scheduled for repayment when RHS loan funds will be available to
purchase the land and repay the amount of SO funds advanced on the
option, unless SO loan funds will still be needed to purchase other
options. Under no circumstances, however, will the repayment period
exceed the applicant\'s remaining TA grant funding period.

VI\. [Processing application]{.underline}.

\(A\) [Form of application]{.underline}: The application for assistance
will be in the form of a letter to the Rural Development County
Supervisor having jurisdiction over the area of the proposed site to be
optioned. The letter will be signed by the applicant or its authorized
representative and contain, as a minimum, the following information:

\(1\) A copy of the proposed option that shows a legal description of
the land, option price, purchase price, and terms of the option. If more
than one site is to be purchased, a schedule of the proposed options
should be included.

\(2\) Information to verify that a regular RHS loan cannot be processed
in time to secure the option.

\(3\) Proposed method repayment of the SO loan.

\(4\) Resolution from the applicant\'s governing body authorizing the
application for an SO loan from Rural Development.

\(B\) [Responsibility of the County Supervisor]{.underline}. Upon
receipt of an SO loan application, the County Supervisor will:

\(1\) Determine whether the applicant is eligible. If the applicant is
not eligible, or the loan cannot be made for other reasons, the
application may be rejected by the County Supervisor with the
concurrence of the District Director. The reasons for the rejection
should be clearly stated and provided, in writing to the applicant. The
applicant will have the right to have the decision reviewed following
the procedure established in

RD Instruction 1944-I

Exhibit F

Page 3

(Revision 1)

Subpart B of Part 1900 of this chapter.

\(2\) Review and verify the accuracy of the information provided.

\(3\) Make an inspection and a memorandum appraisal of each proposed
site \"as is.\" The appraisal will include a narrative statement as to
whether the site has been recently sold, verify that the seller is the
owner of the property, and indicate whether the purchase price is
acceptable based on the selling price of similar properties in the area.

\(4\) Indicate whether or not it appears that, considering the location
and cost of development, adequate building sites can be provided at
reasonable costs.

\(5\) If the option is for a tract of land on which 5 or more sites are
proposed, the County Supervisor will forward to the District Director
with recommendations as defined in § 1924.119 of Subpart C of Part 1924
of this chapter.

\(6\) If approval is recommended, prepare and have the applicant execute
Form RD 1940-1, \"Request for Obligation of Funds,\" for the amount
needed. Copies of the form will be distributed as provided in the Forms
Manual Insert (FMI).

\(7\) Forward the SO loan application and the applicant\'s TA
application or TA docket to the State Director. The submission will
include the appraisal report and the County Supervisor\'s comments and
recommendations.

VII\. [Loan approval authority and State Office actions]{.underline}.
The State Director is authorized to approve SO loans developed in
accordance with this Exhibit. The approval or disapproval of the loan
will be handled in the same manner as provided in § 1822.272 of Subpart
F of Part 1822 of this chapter (RD Instruction 444.8, paragraph XII). SO
loans will be established in Automated Multiple Housing Accounting
System (AMAS) using Form RD 3560-51, \"Multiple Family Housing
Obligation Fund Analysis\". The Issue loan/Grant checks transaction will
be used to request a check for SO loans. (Revised 02-24-05, SPECIAL PN.)

VIII\. [Loan closing]{.underline}.

\(A\) [General]{.underline}. Loan closing instructions will be provided
by the Office of the General Counsel (OGC) to assure that the Promissory
Note is properly completed and executed. The County Supervisor may then
close the loan.

(11-15-90) SPECIAL PN

RD Instruction 1944-I

Exhibit F

Page 4

(Revision 1)

\(B\) [Security for the loan]{.underline}. The loan will be secured by a
Promissory Note properly executed by the grantee using Form RD 1940-16,
\"Promissory Note.\" A lien on the optioned real estate will not be
taken.

\(1\) The \"kind of loan\" block on the note will read \"SO loan.\"

\(2\) The note will be modified to show that the only installment on the
loan will be the final installment.

\(C\) [Loan is closed]{.underline}. The loan will be considered closed
when the note is executed and the loan check delivered to the grantee.

IX\. [Establishment of SO loan revolving account]{.underline}.

\(A\) Supervised bank accounts will not be used for SO loans.

\(B\) Grantee will deposit SO loan funds in a depository institution of
its choice. The use of minority institutions is encouraged. Such funds
will remain separate from any other account of the grantee and shall be
established as an SO revolving account.

\(C\) Checks drawn on the revolving account will be for the sole purpose
of purchasing land options and must be signed by at least two authorized
officials of the grantee who have been properly bonded in accordance
with § 1944.411(e) and (g) of this subpart.

\(D\) Grantees will not expend funds for any options until the site and
the option form have been reviewed and approved by the County
Supervisor.

\(1\) SO funds will not be left unused in the revolving account in
excess of 60 days.

\(2\) If the funds are not used for the intended purpose within the 60
days specified above, the unused portion will be refunded on the
account.

\(E\) When funds become available for repayment of the SO loan, such
funds will be deposited in the revolving account for the purchase of
additional site options if needed. If such funds are not needed to
purchase more options, they will be applied on the SO loan.

X. [Source of funds]{.underline}.

SO loans will be funded from the self-help housing land development
fund.