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CHAPTER 11: SPECIAL PROPERTY TYPES

[7 CFR 3560.69 and 7 CFR 3560.70]

11.1 INTRODUCTION 

Congregate housing, group homes, manufactured homes, and cooperative housing are 

special property types that are eligible for Section 515 loans. Such loans are processed and 

underwritten through the application process at the state-level Loan Processing Office. Initial 

applications that the Loan Originator believes should move on to the final application stage are 

sent to the National Office for review. If the National Office concurs, the loan applicant is 

invited to submit a final application. Processing of the loan application is then resumed by the 

Loan Originator; the final application will only be sent back to the National Office for review if

the National Office imposes certain restrictions on the loan processing. 

Most of the loan processing requirements for special property types are the same as for 

other Multi-Family Housing loans. However, there are some differences in requirements and 

procedures that affect the processing and underwriting of loan applications to finance these 

properties. This chapter covers those differences for each of these special property types. 

Loans on the special property types described in this chapter are subject to the same

environmental requirements as standard Section 515 Multi-Family Housing projects. The loan 

docket submitted for National Office review must include the completed environmental review. 

For additional guidance on environmental reviews, see Chapter 3 and RD Instruction 1940-G. 

SECTION 1: CONGREGATE HOUSING [7 CFR 3560.69]

11.2 OVERVIEW 

Congregate housing is residential housing for elderly households or persons with 

disabilities, consisting of private apartments, central dining facilities, and a number of 

preestablished services, such as meals and housekeeping. Nursing services cannot be provided 

to tenants. 

Because of the special services provided to elderly households and person with 

disabilities, the Agency has established the following additional requirements and standards for 

these projects that do not apply to other Multi-Family Housing projects: 

• Additional design requirements for congregate housing to accommodate the elderly 

and persons with disabilities; 

• In the underwriting that the Loan Originator must conduct, an additional element of 

analysis of the need and demand for the services that are to be provided to the tenants; 

and 

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• Documentation by the loan applicant of experience in congregate housing or similar 

type facilities (such as assisted living). If this is not possible, the Agency requires 

them to hire someone with experience. 

Congregate housing projects compete for funding and are processed and underwritten in 

each State together with other Section 515 proposals and loan applications. However, due to the 

specialized nature of such housing, States will solicit the advice and input of the National Office 

as soon as they receive the initial application for a congregate housing project. 

The remainder of this section describes the requirements that apply to congregate housing 

and the procedures that Loan Processing Staff must follow in processing and approving a 

congregate housing loan application. 

11.3 RESTRICTIONS ON USE OF LOAN FUNDS 

Congregate housing must comply with the eligible and prohibited loan expenses 

identified in Attachments 4-B and 4-C. Specific costs that are prohibited in congregate projects 

are: 

• Specialized equipment for training and therapy; 

• Items that do not become affixed to the real estate security; and 

• Operating capital for a central dining facility. 

11.4 USE OF OPERATING CAPITAL 

Borrowers may use the initial operating capital to purchase necessary items that do not 

become affixed to the real estate security, such as special portable equipment, furnishings, 

kitchen bars, dinnerware, eating utensils, movable tables and chairs, etc. 

11.5 ELIGIBILITY REQUIREMENTS 

Congregate projects must meet the eligibility requirements of 7 CFR 3560.55, as 

described in Chapter 5. Congregate housing facilities cannot be licensed healthcare facilities. 

There are several additional requirements which also must be met. 

A. Eligible Loan Applicants 

Loan applicants for congregate housing must: 

• Meet the requirements of 7 CFR 3560.55; 

• Review Attachment 11-A prior to submitting an initial application and document 

that they have met the provisions of the attachment; and 

• Have experience in managing congregate housing or show evidence of acquiring 

experienced management. Operation of congregate housing requires special 

management expertise and skills beyond those needed to manage a typical Multi11-2
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Family Housing project. The success or failure of a project will depend upon 

management’s marketing skills and ability to deliver services effectively. Counseling 

tenants and tenant selection also add a unique dimension to management

responsibilities. 

B. Eligible Tenants 

Eligible tenants for congregate housing must meet program income requirements, be 

at least 62 years old or disabled, and be a U.S. citizen or qualified alien. 

C. Eligible Projects 

Eligible projects are those that are located in designated places, which meet the basic 

Rural Rental Housing project requirements of 7 CFR part 3560, subpart B, and the 

supplemental requirements of 7 CFR 3565.69 for congregate housing. Congregate 

housing must also meet all applicable Federal, State, and local laws, statutes, codes, 

and/or ordinances pertaining to this type of housing and the services provided. 

11.6 APPLICATION REQUIREMENTS 

The package of services that must be offered to the tenants in a congregate housing 

project is what distinguishes congregate projects from elderly projects. Consequently, the main 

difference in application requirements is the additional information that the loan applicant must 

provide to describe the planned services. 

As part of the initial loan application, the applicant must submit a separate service plan 

and budget detailing the costs for operation and maintenance of the services and describing 

delivery of services. This plan must include a letter of commitment from each service provider 

detailing its ability and willingness to provide services. Alternative service providers must be 

identified in the event a service provider is unable to provide the services in the future. 

Paragraph 11.8 provides detailed guidance on support services. 

11.7 DESIGN REQUIREMENTS 

Congregate housing must be planned and developed in accordance with RD Instruction 

1924-A and RD Instruction 1924-C. The Loan Originator must require any applicant with no 

prior experience to obtain assistance from organizations or individuals who have experience in 

planning and designing congregate housing or similar assisted care housing. Exhibit 11-1 details 

the additional design criteria that congregate housing must meet. 

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Exhibit 11-1 

Additional Design Requirements for Congregate Housing Projects

• Location. Congregate housing must be located as close to services and shopping as 

possible, considering the availability of suitable residential sites. The time it takes to reach 

services is important, especially when considering potential medical emergencies. 

• Design must accommodate support services. Facilities needed to accommodate support 

services must be fully explained and justified by the market feasibility documentation 

(MFD) and must be designed in accordance with acceptable practices. Specific design 

guidelines are provided in RD Instruction 1924-A, Guide 2, Chapter 1. These facilities 

may be larger than necessary to meet the tenants’ requirements if they are needed in the 

community and other sources of funds are available to pay a pro rata share of the cost. 

• Accommodations. The design must accommodate the needs of the individuals that the 

housing is designed to serve. The walkways and corridors between living units and the 

support service facilities must be safe, comfortable, and minimal in length; include 

handrails; and comply with Uniform Federal Accessibility Standards (UFAS). In addition 

to UFAS, accommodations must comply with Fair Housing Act Accessibility Guidelines 

(FHA/AG), the Americans with Disabilities Act Accessibility Guidelines (ADA/AG), and 

any State or local requirements. 

• Separate service and delivery areas. Areas used by the tenants must be separated as 

much as possible from areas needed for delivery of food and supplies and other building 

services. Interior spaces and finish materials must be residential in character and designed 

to help prevent tenants from becoming disoriented within the building(s). 

• Emergency lighting. Emergency lighting must be provided in every public space, 

corridor, stairway, elevator, and other means of egress. 

• Accessibility. The entrances to all living units must be on a route accessible to people with 

disabilities. Living units accessible only via exterior steps or interior stairs are not 

acceptable. 

• Living unit specifications. The size of rooms and spaces in the living units must be 

comparable to units provided in other housing for the elderly. Kitchen facilities must be 

provided in all living units and include, at a minimum, a cooktop, oven, sink, refrigerator, 

and food preparation surface. 

• Emergency call systems. The bathroom and one bedroom in each living unit, and any

public toilet rooms, must be furnished with an emergency call system that is appropriate for 

the size and staffing of the housing facility. 

11.8 TENANT SUPPORT SERVICES 

Tenant support services must be offered to assist tenants in living independently. Such 

services must be reasonably priced to ensure affordability and continued use by very low- and 

low-income tenants. Loan applicants must meet the requirements of Attachment 11-B in 

planning services. 

Services may not be of a nature that would be provided by a nursing home or special care 

facility. Tenants requiring additional health or medical services beyond the scope of congregate 

services must acquire them or provide for them within their own financial, familial, or social

resources. 

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A. Services Plan 

The loan applicant must submit a services plan with the initial application. The Loan 

Originator must review the services plan and confirm that the minimum services detailed 

in Paragraph 11.8 B below are to be provided and that the plan specifies the following: 

• The services to be provided. 

• The frequency of services to be provided. 

• The entity or organization providing the services, including a letter of commitment 

from each service provider detailing its ability and willingness to provide services. 

The Loan Originator must confirm that this letter identifies the type, scope, cost, term

and any licensing requirements of services that will be provided to the project. If a 

local agency on aging will provide a service, the commitment can be contingent on 

the local agency maintaining its level of funding. 

• Alternative service providers, in the event the original provider is unable to furnish 

services in the future. Alternative sources must be documented even if the applicant 

plans to use onsite personnel for services. The availability of services from

alternative sources enhances a proposal’s feasibility since long-term services are 

crucial to the success of congregate housing. 

• The procedures for advising tenants of the availability of services. 

• The staff necessary to provide the services. 

B. Minimum Services

Loan applicants may offer a wide variety of services; however, the services detailed 

below must be offered as a minimum. 

1. Meals 

Since some tenants will depend on the meal service for sustenance, at least one 

cooked meal a day, seven days a week must be provided by the primary meal provider or 

an alternate source. The following conditions apply to meals: 

• To ensure that the meals are wholesome and meet the needs of individual tenants, a 

professionally trained dietitian or nutritionist must be involved in planning the menus. 

• The feasibility of sustained meal service may depend on the number of people who 

elect to use it. Congregate housing borrowers should actively solicit tenant 

participation in the meal service if the economic feasibility of the service depends on 

user charges. 

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• If the entity that operates the 

service is eligible to accept food 

stamps under the regulations of 

the Food and Nutrition Service 

(FNS), USDA, the entity must be 

authorized by FNS to accept food 

stamps from tenants for the 

purchase of meals. 

Required Services

• Meals: One cooked meal, seven days a week.

• Transportation: On a fixed schedule based 

on tenant needs. 

• Housekeeping: To tenants who request 

assistance in keeping their units clean. 

• Personal services: Upon request, services 

such as assistance with personal hygiene,

nutrition counseling, and general health 

screening. 

• Recreational/social activities: To the extent 

possible, any and all of the following services 

should be provided: hobby and craft classes, 

special dinners, a library or book exchange

area, games and videos, and wellness and 

exercise classes. 

• Access to medical services: Medical services 

must be available within reasonable proximity

and transportation must be provided to tenants 

who require it. 

2. Transportation 

Transportation must be provided 

to the project on a fixed schedule 

based on tenant needs. Public and 

private transportation sources may be 

used by loan applicants to develop a 

dependable and economical method 

for providing this service. If these 

sources cannot provide adequate 

transportation, the applicant must 

develop a project-sponsored 

transportation system. 

3. Housekeeping 

Housekeeping services must be provided to tenants who request assistance in keeping 

their units clean. Light housekeeping tasks, such as dusting, vacuuming, floor washing, 

bathroom cleaning, and laundry for bedding generally should be provided on a weekly 

basis. Heavier tasks, such as oven, window, and drapery cleaning, should be provided 

periodically. 

4. Personal Services 

Limited nonmedical personal services must be made available to tenants who request 

them. Personal services can include beautician services, nutrition counseling, and general 

health screening. They do not include recurring medical assistance, such as dispensing 

medication or medical supervision. Space may be included in the project for a small 

beauty shop and health screening area. Applicants may want to consider contracting for 

personal services to assure their continued and dependable availability to tenants. 

5. Recreational/Social Activities 

Loan applicants are encouraged to offer tenants recreational and social activities, such 

as hobby and craft classes, special dinners, a library or book exchange area, games and 

videos, and wellness and exercise classes. 

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6. Access to Medical Services 

Tenants must have access to healthcare providers. Healthcare services must be 

available within a reasonable traveling distance for tenants, and transportation must be 

provided for tenants who require it to access medical services.

C. Project Services Coordinator 

Loan applicants are encouraged to include as part of their services package a Project 

Services Coordinator to coordinate the services provided in the project. A Project 

Services Coordinator is a social service staff person hired by project owners or their 

management company. The Coordinator is responsible for linking the elderly, especially 

those who are frail, and residents with disabilities to the supportive services they need to 

continue living independently. Such a Coordinator can do much to assist the well-being 

of the tenants and is an allowable project expense in congregate housing. 

D. Service Agreements 

As a part of the final application, the applicant must provide a service agreement for 

each service to be provided, detailing the information contained in the letter of 

commitment provided with the services plan at initial application. Initial service 

agreements must be effective for at least 1 year after the project becomes operational. 

Subsequent agreements must be effective for at least 1 year. 

11.9 NONTENANT SERVICES 

Nonresidents may be served by project services, such as the meal facility. If a service 

provider uses the facility to serve meals to nonresidents, the service provider must sign a lease 

with the borrower and provide payment sufficient to cover the annual operating expenses, debt 

service, and reserve account payments attributable to the portion of space that is being used for 

nontenants. In most cases, this will be a negligible amount that the meal provider can afford to 

pay. In addition, if this occurs, the kitchen must be metered separately so that the costs of 

running the kitchen can be identified. 

11.10 PROCESSING APPLICATIONS 

A. Agency Action 

Congregate housing proposals compete for funding with proposals for other rental 

projects through the Notice of Funding Availability (NOFA) process and are generally 

processed in the same manner as all other Multi-Family Housing loans. However, the 

State loan processing office must send to the National Office for review and concurrence 

all initial congregate housing applications that the loan processing office feels should 

move on to the final application stage. Once the National Office concurs, processing is 

completed at the State loan processing level, unless the National Office imposes some 

restrictions that are to be reviewed again before final loan approval. 

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The Loan Originator will include the following information with any loan that is sent

to the National Office for review: 

• A summary description of the loan request; 

• A copy of the loan docket (initial application information); and 

• The State Director’s comments and recommendations. 

B. Requirements of the Applicant 

1. Initial Application Package 

When a project proposal for congregate housing ranks high enough to be invited to 

submit an initial application package, the initial application package sent by the Loan 

Originator to the loan applicant will contain all items identified in Exhibits 4-6 and 4-7 of 

Chapter 4, plus the following information:

• Attachments 11-A and 11-B give the loan applicant a clear understanding of the 

management and support service requirements for congregate housing; and 

• Notification to the loan applicant about the requirement to submit the following with 

the initial application:

◊ Congregate services charges; and 

◊ A congregate services plan. 

2. Final Application 

The loan applicant must be informed that the following information will be required 

as part of the final application: 

• Service agreements; and 

• Schedule of charges for nonshelter services. 

11.11 PRELIMINARY MEETING 

In addition to all items identified in Chapter 5 as necessary to cover at the preliminary 

meeting, the Loan Originator must discuss with and encourage the loan applicant for congregate 

housing financing to take the following steps: 

• Carefully read Attachments 11-A and 11-B so as to fully understand the 

requirements of the congregate housing commitment; 

• Hire an architect experienced in the design of elderly housing with supportive 

services; and 

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• Include input during the design phase from project management with housing 

experience to prevent long-term effects of poorly conceived design on project 

operations. 

11.12 UNDERWRITING CONSIDERATIONS 

The Loan Originator must underwrite the congregate housing loan using the basic 

procedures described in Chapters 4 and 5. Because of the special nature of congregate housing, 

the Loan Originator’s underwriting considerations must also evaluate the market for this special 

type of housing, the adequacy and availability of the support services offered to the tenants, and 

the quality of the project’s management. 

A. Market Feasibility Documentation 

The Loan Originator must make sure that the MFD for a congregate housing project 

indicates clearly that a market exists for the type of services that are to be offered by the 

project and that the services being offered are those that are in most demand in the market 

area. 

MFD must address the market demand for meal plans. A congregate housing 

project’s meal plan subscription must be well planned so that dining facilities do not go 

unused, adversely affecting the project’s financial viability. 

For additional market feasibility documentation requirements, see Section 3 of this 

chapter. 

B. Tenant Services 

The services that are offered to the tenants of a congregate housing project are a 

critical and integral part of the project. It is the services that distinguish congregate 

housing from other elderly projects. Consequently, the Loan Originator must ascertain 

that the services meet the minimum Agency requirements and are: 

• Needed and desired in the market; 

• Affordable to the tenants; and 

• Available for the foreseeable future. 

In reviewing the budget for the services plan, the Loan Originator must look at the 

costs and make sure that they are not excessive. If the service costs are not affordable to 

the tenants or in excess of what is comparable in the market, they must be reduced. The 

loan applicant should be contacted to discuss other options, such as community services 

or volunteers. If no other options are available and costs cannot be reduced, the project 

must be rejected as infeasible. 

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C. Management 

The Loan Originator must review the management profile and certification to make 

sure that the proposed management company has experience in special senior housing, 

such as congregate housing. If the proposed company does not, the Loan Originator must 

require that the loan applicant obtain additional management expertise, which may be in 

the form of a consultant, to advise in the management of the congregate housing. 

11.13 DESIGN CONSIDERATIONS 

The Loan Originator must review project plans to make sure that the design criteria 

identified in Paragraph 11.7 have been met. The layout of the structure should be amenable to 

the tenants. For example, the common dining facility is easily accessible by a covered walkway. 

In addition, the design elements should have a positive effect on project management and 

ongoing operations. For example, service areas are well out of the way of public areas where 

tenants might gather. Projects proposed by applicants who have engaged the services of an 

architect experienced in similar type project design will generally meet these design standards. 

The Loan Originator must also send the plans to the State Architect, who will review them to 

determine whether they meet program requirements. 

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SECTION 2: GROUP HOMES [7 CFR 3560.69]

11.14 OVERVIEW 

Group homes provide shared living space within a rental project for individuals who are 

capable of caring for themselves in the basic functions of everyday living, but who otherwise 

need the direction or assistance of a trained resident assistant. Group homes may be designed for 

individuals who are elderly or have disabilities, and may limit occupancy to certain groups of 

people. Although a resident assistant may provide limited medical services, such as assistance to 

tenants with medication, group homes are not intended as healthcare facilities. 

This section discusses the procedures and requirements of loan origination that are 

different for group homes from those of other Multi-Family Housing loans. 

11.15 PROJECT ELIGIBILITY 

A. Tenancy 

A group home may limit occupancy to a specific group of tenants. For example, a 

group home may limit occupancy to eligible elderly tenants, developmentally disabled 

people, or mentally impaired tenants. 

Prospective tenants must be evaluated to determine if they meet the essential 

eligibility requirements to reside in a group home. Loan applicants are guided in this by 

Attachment 11-A. 

A legal guardian (an individual) may execute a lease agreement on behalf of a tenant 

in a group home when that tenant does not possess the legal capacity to enter into a legal 

contract with the project owner. 

B. Applicable Laws

Group homes must meet all applicable Federal, State, and local laws, statutes, codes 

and/or ordinances pertaining to these types of housing and the services provided. 

C. Association with Another Organization 

A group home may be associated with another organization, such as a workshop for 

the developmentally disabled. However, the group home must be a separate entity and 

able to function without being dependent on another organization. 

11.16 SUPPORT SERVICES 

Loan applicants must show in the initial application that adequate support services that 

are needed by tenants will be available on a continual, long-range basis. Support services can be 

provided by the project or by a State or local public agency. A nonprofit organization with an 

established ongoing service program also may be deemed capable of providing support services. 

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Loan applicants for a group home project must provide a service plan that describes how 

affordable services will be made available to potential residents to assist them in living 

independently. The plan must address the long-term availability of this assistance from specific 

service providers and must address how the following services will be provided or made 

available: 

• Access to a common kitchen in which to prepare meals; 

• Access to transportation;

• Nearby recreational and social activities that may be coordinated by the resident 

assistant, if applicable; and 

• Access to medical services as necessary. 

A narrative statement from any local, State, or Federal Government agencies that are 

expected to provide support for the current and long-range service needs for the tenants of the 

facilities is also required.

11.17 DESIGN REQUIREMENTS 

A group home is generally designed as a single household dwelling; however, it can also 

be a small, multi-unit structure. Specific design criteria that must be met are provided in 

RD Instruction 1924-A, Guide 2, Chapter 1. In addition to these requirements, group homes must 

meet the following criteria: 

• Interior spaces and finish materials must be residential in character. 

• Appropriate common areas and facilities must be included to encourage participation 

by the tenants under the direction of a staff person in sharing the meal preparation, 

housekeeping, and social and recreational activities within the home. 

• Facilities and services to address potential decreases in tenants’ physical and mental 

capabilities must be considered in the design. 

• Emergency lighting must be provided in every corridor, stairway and other means of 

egress. 

• Entrances to all living units must be on a route accessible to persons with disabilities. 

• Group homes must meet UFAS, FHA/AG, ADA/AG, and any State or local 

requirements. 

11.18 RENTS AND RENTAL ASSISTANCE 

Instructions on how to determine the per unit rental rates for group homes are stipulated 

in Attachment 11-A. 

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A unit in a group home consists of a space occupied by a specific tenant household, 

which may be an apartment unit, a bedroom, or a part of a bedroom. The provisions of 

7 CFR 3560.69(g) allows Agency rental assistance to be made available to group home tenants 

sharing units. However, in a shared bedroom situation, rental assistance may be made available 

to each tenant only so long as the total rent for the unit does not exceed what other rents are in 

the area for conventional and comparable shared bedrooms. 

11.19 APPLICATION REQUIREMENTS AND PROCESSING 

Applicants for a loan to complete a group home must submit the same documentation that 

is required for Multi-Family Housing projects as specified in Chapters 4 and 5, as well as a 

service plan as described in Paragraph 11.16 and a narrative statement from any local, State, or 

Federal Government agency that is expected to provide support for the current and long-range 

service needs of the tenants. 

Group home loan applications are processed through the initial application stage by the 

Loan Originator. If the loan application is not eligible or feasible, the application will be rejected 

in accordance with the procedures outlined in Chapter 4. 

Any initial application that the Loan Originator feels should move on to the final 

application stage must be submitted with the State Director’s recommendation to the National 

Office for review and concurrence. Once the National Office concurs, loan applicants are 

advised that their loan request has been selected for further processing, and processing of the 

loan application is completed at the State level. If the loan amount exceeds the State Director’s 

approval authority, National Office concurrence of the final application is required before loan 

approval. 

11.20 UNDERWRITING CONSIDERATIONS 

Loans for group homes must be underwritten as are any other loans and in accordance 

with the standards established by Chapters 4 and 5. 

As with congregate housing, the Loan Originator must review all loan documents, giving 

special attention to whether the loan applicant has a market for the types of tenants and services 

that will be provided. See Section 3 of this chapter on MFD requirements. 

Specifically, the Loan Originator must determine that: 

• The loan applicant has submitted all required information at each stage of the 

origination process, including that which is required of all Multi-Family Housing loan 

requests and the additional requirements described in Paragraph 11.19—the services 

plan and narrative statement from a Government services provider. 

• If the group home is affiliated with another organization, the group home can function

independently of the organization. 

• A market exists for the type of services offered. 

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• If occupancy is restricted to a certain group of tenants, the data show that there is a 

need and demand by the target households for housing with the proposed services. 

• Management is experienced in group homes or will hire experienced assistance. 

• The design of the group home meets the criteria identified in Paragraph 11.17. 

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SECTION 3: MARKET FEASIBILITY CONSIDERATIONS FOR 

CONGREGATE HOUSING AND GROUP HOMES 

11.21 ADDITIONAL MARKET FEASIBILITY DOCUMENTATION REQUIREMENTS 

[7 CFR 3560.69(f)]

MFD for congregate housing and group homes must address the need for services that are 

to be offered to a specific group of tenants. In addition to the MFD outlined in Chapter 4, the 

following requirements must be met:

• The loan applicant’s MFD must address the need for housing with services and 

specifically, the need for the services that are proposed to be offered. Local agencies 

on aging and other groups familiar with the elderly can be a valuable source of

information on the needs and wants of elderly people in the market area. Loan 

applicants can conduct a mail survey to age- and income-qualified elderly people if 

information is not available from other sources. 

• An expanded market area may be considered only when the additional communities 

are part of the trade area and are so rural that they cannot support development of a 

congregate or group home facility. The facility itself must be located in a designated

place. If an expanded market area is proposed, the MFD must establish conclusively 

that the community will be able to draw enough tenants from the market area to 

ensure feasibility of the project. The MFD must clearly identify the expanded area 

and contain separate information on the additional communities. If used, mail-out 

surveys must clearly address the probability of respondents relocating to the proposed 

site. 

• MFD should include income information from the local Social Security Office since 

many elderly people are dependent on social security and/or supplemental security 

income. This information will assist in determining if proposed tenants would have 

sufficient income to afford the services provided by the project. 

• MFD must contain demographic information particular to those over the ages of 62, 

70, and 85. 

• MFD must discuss the availability of alternative service providers. 

• Continued use of meal service is important to the congregate services budget. 

Therefore, MFD must address the market demand for meal services. 

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SECTION 4: MANUFACTURED HOUSING [7 CFR 3560.70]

11.22 OVERVIEW 

The Agency has authority to make loans for Multi-Family Housing projects that consist 

of manufactured housing units. Manufactured housing is designed and constructed for 

permanent occupancy by a single family and contains permanent cooking, eating, sleeping, and 

sanitary facilities within the structure. It is transportable in one or more sections, and when 

erected on site is 400 or more square feet. 

Manufactured housing loans compete for funding with other Multi-Family Housing 

projects and are underwritten at the State level. Final approval of such loans must come from the 

National Office. 

Processing and underwriting considerations are generally the same for manufactured 

housing projects as they are for other Multi-Family Housing projects. However, because the 

housing is constructed offsite, there are some additional design and warranty requirements 

placed on the loan applicant that the Loan Originator must make sure are met. 

11.23 ELIGIBILITY REQUIREMENTS 

A. Applicant Eligibility 

In addition to meeting the eligibility criteria of 7 CFR 3560.55, and described in 

Chapter 4, the loan applicant must be the first owner purchasing the manufactured homes 

for purposes other than resale. 

B. Project Eligibility 

In addition to meeting all construction, design, and warranty requirements specified 

in Paragraphs 11.24 and 11.25, a manufactured home project must meet the following 

requirements: 

• Each manufactured home unit must not have been previously occupied as a residence 

or for any other purpose and be less than 1 year old from date of manufacture. 

• The manufactured housing must include two or more housing units. 

• A project is not eligible if the purpose of the loan is for refinancing, except as it 

relates to taking out a construction loan. 

• A loan may be made to rehabilitate manufactured home units of an existing project 

only if the units to be rehabilitated are currently financed by the Agency under the 

Multi-Family Housing program. Rehabilitation of manufactured home units must 

only be undertaken by individuals who have experience with rehabilitating 

manufactured housing since the structural integrity of the unit may be undermined by 

an inexperienced individual. 

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• A housing proposal may include the purchase of the real property of existing 

manufactured housing that will be redeveloped with the placement of new 

manufactured homes. 

11.24 DESIGN REQUIREMENTS 

Manufactured housing projects, including related facilities constructed or erected on the 

security property, must conform to the development, installation, and setup requirements of RD 

Instruction 1924-A, Exhibit J. 

The manufactured home, when placed on the site, will have floor space area of not less

than 400 square feet, and a width of 12 feet or more for single wide and 20 feet or more for a 

double wide unit. The unit must: 

• Be placed on a site-built permanent foundation that meets or exceeds applicable 

requirements of the Agency-adopted standards, that are identified in RD Instruction 

1924-A, Exhibit J, or other building codes approved by the Agency; 

• Be permanently attached to the foundation by anchoring devices adequate to resist all 

loads identified in RD Instruction 1924-A, or other building codes adopted by the 

Agency; 

• Be constructed in compliance with Agency thermal performance construction 

standards specified in RD Instruction 1924-A, Exhibit D, Paragraph (IV)(G); and 

• Be constructed in compliance with applicable standards and manuals adopted by the 

Agency as evidenced in RD Instruction 1924-A, Exhibit J. All units must conform to 

the HUD “Manufactured Home Construction and Safety Standards,” and be identified 

by an affixed certification label according to Exhibit J of RD Instruction 1924-A. 

Manufactured home projects must be designed to provide for a desirable residential 

environment. Innovative and imaginative design is encouraged. Highly stylized patterns and 

monotony must be avoided. All property improvements will relate to the individual 

characteristics of the land. The project, including structures, streets, and all site improvements, 

should be harmoniously, efficiently, and conveniently arranged in relation to the topography and 

the shape of the property. 

Manufactured home projects designed for families must consider adequate recreational 

space to accommodate children. In addition, the units themselves should be able to handle 

normal wear and tear of family living. 

11.25 SPECIAL WARRANTY REQUIREMENTS 

The seller of the manufactured homes must deliver to the borrower the manufacturer’s 

warranty. The warranty must identify the units by serial number. 

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The general contractor or dealer-contractor, as applicable, must provide a warranty in 

accordance with RD Instruction 1924-A. To be acceptable, the warranty must contain provisions

establishing that: 

• The manufactured home, foundation, positioning, anchoring to permanent 

foundations, and all contracted improvements are constructed in substantial 

conformity with applicable approved plans and specifications; 

• The manufactured home sustained no hidden damage during transportation and, for 

double-wide units, that the sections were properly joined and sealed; and 

• The manufacturer’s warranty is in addition to, and not in derogation of, all other 

warranties, rights, and remedies that the borrower may have. 

11.26 RATES AND TERMS 

The amortization period and term of each loan will not exceed the lesser of the economic 

life of the security, taking into account probable depreciation, or 30 years. The loan appraisal 

will provide an economic life estimate. 

11.27 LOAN PROCESSING AND UNDERWRITING 

Loans for manufactured housing are processed and underwritten in accordance with the 

guidance established in Chapters 4 and 5. In addition, the Loan Originator must do the 

following: 

• Establish that the project meets the additional eligibility requirements of Paragraph 

11.23. The Loan Originator can verify the age of the manufactured home unit by 

looking at purchase agreements or bills of sale. 

• Work with the State Architect to make sure that project plans meet the construction 

and design requirements established in Paragraph 11.24. 

• Verify that the required warranties identified in Paragraph 11.25 are available at the 

final application stage. 

If the project cannot meet these or any other program requirements, the loan application 

must not be approved. 

11.28 LOAN CLOSING 

Loans for manufactured housing projects are closed in accordance with the guidance 

provided by Chapter 8. In addition, the following requirements must be met at loan closing: 

• A mortgage or deed of trust must be taken on the entire property purchased or 

improved with the loan; 

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• The encumbered property must be covered under a standard real estate title insurance 

policy or attorney’s title opinion that identifies the project (including the 

manufactured homes) as real property and insures or indemnifies against any loss if

the manufactured home is determined not to be part of the real property; and 

• The property must be taxed as real estate by the jurisdiction where the project is 

located, if such taxation is permitted under applicable law when the loan is closed. 

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SECTION 5: RURAL COOPERATIVE HOUSING 

11.29 OVERVIEW 

Rural cooperative housing is multi-family housing owned, operated, and managed by a 

consumer cooperative. The consumer cooperative consists of eligible members who operate the 

housing at actual costs. Any income received by the consumer cooperative in excess of 

operating costs and expenses are assigned to members’ patronage capital accounts. 

Cooperative members do not earn equity in their homes; however, they are entitled to the 

funds that accumulate in their patronage capital accounts, which is referred to as limited equity. 

Paragraph 11.33 E provides additional details on patronage capital accounts. 

Cooperative housing projects do not compete for funding with other Multi-Family 

Housing projects. Rather, they receive funds held at the National Office. Underwriting of 

cooperative housing is a joint effort between the State Office and the National Office. The State 

Office reviews the loan application through the initial application stage, and if the project 

appears eligible and feasible, the State Office submits the case file to the National Office. If the 

National Office concurs, the applicant is invited to submit a final application. The National 

Office makes the final decision to approve or reject the loan. 

This section discusses the requirements regarding the development and operation of 

cooperative housing that are addressed during the loan origination process. The loan origination 

procedures are much the same as for those of other Multi-Family Housing projects, although 

there are some differences due to the nature of cooperative housing. 

11.30 ELIGIBILITY AND ORGANIZATIONAL REQUIREMENTS 

The consumer cooperative is the loan applicant. The consumer cooperative includes a 

Board of Directors elected from its members. All members, including the Board of Directors, 

must meet the organizational and eligibility requirements outlined in Exhibit 11-2. 

The eligibility and tenancy rules for cooperative housing projects are different than those 

for other Agency-financed, multi-family housing but are similar to those for the Guaranteed 

Rural Rental Housing Program. Any person who is admitted to rural cooperative housing as an 

eligible member may not subsequently be deprived of membership or tenancy if the person no 

longer meets the original program income eligibility requirements. 

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Exhibit 11-2 

Eligibility and Organizational Requirements

Consumer Cooperative 

(Loan Applicant) Members of the Cooperative Board of Directors 

• Must be organized under the 

cooperative laws of a State or 

a federally recognized Indian 

tribe. 

• Must consist of members from

whom are elected a Board of 

Directors. 

• Must own and operate the 

housing on a cooperative basis 

solely for the benefit of the 

members. 

• Must operate at cost. 

• Must restrict membership in 

the housing to eligible persons 

and, to any extent the 

cooperative and the Agency

permit, to others in special 

circumstances, such as when 

prolonged vacancies occur. 

• Must have no less than five 

directors, or whatever is 

allowable under State law. 

• Must reside in the cooperative 

housing.

• Must have very low, low, or 

moderate incomes, except that 

any member who is admitted 

as an eligible member of the 

cooperative may not 

subsequently be deprived of

membership or tenancy by

reason of no longer meeting 

the income eligibility 

requirements. 

• Must deposit a membership

fee. This fee will be retained 

by the cooperative for as long 

as the person remains a 

member. The fee will be 

refunded to the person when 

membership is terminated.

• Must execute documents 

committing themselves to 

uphold the cooperative 

concept. 

• The composition of the Board 

of Directors will be drawn 

from the cooperative 

membership, initially by 

appointment and later by

election from the general 

membership. 

• The Board must be composed 

of at least five members. 

• A membership list showing the 

names and addresses of each

member must be maintained 

by the secretary of the 

cooperative. 

• The Board of Directors, with

assistance from the adviser to 

the Board, will devise the rules 

and regulations under which 

the cooperative will operate. 

Additionally, the Board will be 

responsible for managing the 

cooperative. 

11.31 MARKET FEASIBILITY 

Market feasibility is evidenced by the names and addresses of prospective members who 

have definitely affirmed their intention of becoming cooperative members in the proposed 

project. In the event some persons cannot be accepted for membership for financial or other 

reasons, the cooperative should obtain more names than the number of proposed units to assure 

adequate feasibility coverage. Attachment 11-D may be used for this purpose. A professional 

market study is not required. 

11.32 APPLICATION REQUIREMENTS 

Loan applicants for cooperative housing projects must submit the following items in 

addition to those required for other Multi-Family Housing projects as described in Chapters 4 

and 5: 

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• At the initial application stage: 

◊ The names and addresses of persons who have expressed an interest in becoming 

members of the cooperative. Signature and date evidencing this interest from

each person will be obtained to fully document the need for the cooperative 

housing. 

◊ A budget that provides for accumulating a management reserve at a rate 

commensurate with normal management fees appropriate to the area. The reserve 

should be shown under the management column. 

◊ Certification of interest from prospective members, including a statement that the 

prospective member understands the cooperative type of organization and the 

time and effort each member must spend in its operation and maintenance. 

◊ A statement from each prospective member of monthly income and expenses 

showing the repayment of debts and whether those payments are current. The 

statement must indicate that the person will have the financial ability to meet the 

monthly occupancy rate requirement, while still meeting other monetary 

obligations. Form RD 3560-38, Application for Cooperative Housing 

Membership, will be used for this purpose. 

• At the final application stage: 

◊ An Affirmative Fair Housing Marketing Plan (AFHMP) for all cooperative 

projects containing over four units. 

◊ A management statement that should the cooperative be unable, after a 12-month

period, to show the ability to manage itself without professional assistance, 

professional management services will be obtained, and the amount to be 

accumulated in the management reserve account will be used to pay for this 

service. 

◊ An executed copy of a limited equity agreement which substantially conforms to 

Attachment 11-E. 

◊ A completed subscription agreement which substantially conforms to 

Attachment 11-I. 

11.33 MANAGEMENT REQUIREMENTS 

When underwriting loan applications for cooperative housing, Loan Originators must 

give consideration to the special management requirements of a cooperative housing structure. 

The Board of Directors of the cooperative has ultimate responsibility for management of the 

housing. 

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A. Cooperative Board of Directors 

The Board will be composed of members of the cooperative with the same interests 

and concerns as the general membership. The Board will be responsible for establishing 

the policies and procedures that will govern the operation of the cooperative and 

enforcing those policies and procedures. For instance, instituting increases in the 

member occupancy rates, or terminating a member’s right to cooperative ownership 

because of serious repeated violations of cooperative rules and regulations will be the 

types of actions which are taken by the Board. The members of the Board will also be 

affected by these decisions since they must adhere to the same rules and regulations as 

the rest of the cooperative community. 

The Board of Directors must provide to all prospective members a description of the 

cooperative and its financial obligations, and a description of limited equity and what it 

means to the cooperative members. Attachment 11-E will be used for this purpose. 

B. Adviser to the Board 

A resident of the community who is not a member of the cooperative will serve as an 

adviser to the Board during the period of formation and until the Board of Directors has 

effectively demonstrated its ability to manage the cooperative. At that time, the adviser 

will maintain close contact with the cooperative and provide advice and assistance as 

needed. The adviser may also be an organization; however, one specific individual will 

have sole contact with the Board to eliminate confusion and to prevent one person from 

countermanding another’s instructions. The adviser will closely monitor the cooperative 

for at least 2 years after it becomes its own manager. This time may vary, depending on 

the circumstances. 

The adviser must be very carefully selected to ensure that adequate guidance is given 

to the Board. The adviser must meet specific criteria to ensure that the Board receives 

sound advice and direction. Attachments 11-F, 11-G, and 11-H, must be used in 

evaluating potential advisers. While it may not be possible to find one individual or 

individuals who can meet all the requirements outlined, the criteria should be used to

select the best candidate. The Agency will provide counsel to the cooperative during the 

interview period and must approve the selection of the adviser. 

The adviser may require compensation for services rendered; however, the amount 

paid should not severely limit the amount of patronage capital accruing to the members. 

Compensation paid to the adviser will be shared by members through the deduction of 

equal amounts from their management reserve payments. 

C. Committees 

The success of cooperative housing projects will depend on how well the members 

are able to manage the cooperative themselves with assistance from the adviser to the 

Board. The cooperative must first develop and designate the areas of responsibilities to 

be delegated to committees, a list of the committees, and the functions of the committees. 

A copy of this information will be provided to each prospective member. 

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It will be necessary for the proposed Board of Directors to become familiar with how 

a cooperative is supposed to work before it is able to successfully assume the 

responsibilities of running the cooperative. This can best be achieved by participating in 

programs designed for the express purpose of educating potential Board members. The 

prospective Board members will be expected to take part in such a training program. 

Participation on committees by members will be on a voluntary basis. However, if it 

appears a committee does not have sufficient numbers for it to adequately operate, then 

additional members will be expected to volunteer their time and talents. Thus, 

participation on committees is voluntary up to a point. If a member has experience in a 

particular area, that member should be encouraged to join the committee that will benefit 

from their experience. The cooperative will need a total commitment from the 

membership to assure success of self-management. Examples of the types of committees 

which may be considered are: 

• Maintenance; 

• Groundskeeping; 

• Communications; 

• Budget and finance; 

• Rules; 

• Recreation; and 

• Home service. 

If the cooperative is not successful in managing itself, the cooperative must hire 

professional management. 

D. Acceptable Forms of Management 

There are three forms of acceptable management options for cooperative housing: 

self-management, partial self-management, and contract management. 

1. Self-Management 

The primary management objective for many housing cooperatives is to self-manage. 

To achieve this goal, education and training efforts should be an ongoing part of their 

early years of the project operation. Accordingly, modest education costs will be 

permitted in the budget as a subheading under management expenses. Education must be 

relevant to cooperatives and conducted by a professional person with experience in 

cooperatives. In the beginning, it may be necessary to obtain some outside services, such 

as a bookkeeper. If so, then partial self-management can be used initially. It will be 

necessary for a qualified nonmember (individual or organization) to advise the board 

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during the formative years of the cooperative. Attachments 11-F and 11-H will be used 

as a guide for determining the qualifications of the adviser. 

2. Partial Self-Management 

Certain management and supervisory services may be contracted from a technical 

service organization, housing authority, or management firm. If this additional assistance 

does not enable the cooperative to manage itself, then the ultimate solution will have to 

be contract management. 

3. Contract Management 

Professional services may be contracted for the day-to-day supervision of cooperative 

operations. The Board of Directors could develop the policies that would then be 

administered by the management agent. The Agency will assist the adviser to the Board 

in determining if and when professional management will be hired in lieu of selfmanagement. In the event the adviser and the Agency are unable to reach an agreement 

regarding the hiring of professional management, the ultimate decision will rest with the 

Agency. 

E. Management Reserves and Patronage Accounts 

1. Paying for Management 

A set rate for professional management will be assessed each month as part of the 

occupancy rate and will be maintained in a separate reserve account. If the cooperative is 

successful at managing its own affairs during the year, the amount accumulated in the 

reserve will at the end of the year be transferred to the patronage account and credited

equally to each member’s account. This same procedure will be followed each year, 

allowing a buildup of patronage capital. For budgeting purposes, contributions to the 

management reserve account will be tracked separately for each member. This will 

facilitate distribution of patronage capital should a member leave before the end of the 

year. 

If professional management is hired by the cooperative to correct deficiencies that 

have arisen from poor self-management, the deposits to the management account will 

then be used to pay for professional management, and the amount being accrued to the 

members’ patronage capital account will be suspended. If the amount being accumulated 

for management is not sufficient to cover the cost of contract management, occupancy 

charges will be increased to cover the expense of management. When the cooperative 

begins to again manage itself, the assessment for the management reserve will resume as 

previously stated. 

Agency rental assistance proceeds are not to be used to make the member’s 

contribution to the management reserve account. Therefore, the member must make this 

payment from the member’s own resources. If it becomes necessary to hire full-time 

professional management, then the management fee will be considered part of the shelter 

cost and thus eligible for Agency rental assistance. 

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2. Patronage Capital Accounts 

Any income remaining at the end of the year, including unused management reserves 

will be assigned as patronage capital. The cooperative must keep records to track each 

member’s contribution to the management reserve account so that the cooperative will 

know how much patronage capital the member is entitled to should membership be 

terminated prior to the end of the fiscal year. Assignment from the patronage capital 

account and from the management reserve must be accomplished in accordance with the 

Internal Revenue Service ruling concerning patronage distribution. Inflation equity that 

accrues on cooperative property is not considered part of the members’ limited equity and 

will not be taken from the project when a member vacates the project. 

F. Occupancy Agreement 

All members of the cooperative must sign an occupancy agreement, which is a 

contract setting forth the rights and obligations of the cooperative member and the 

cooperative, including the amount of the monthly occupancy charge and the other terms 

under which the member will occupy the housing. An example of such an agreement is 

provided in Attachment 11-C. 

11.34 COOPERATIVE MEMBERSHIP FEE 

Cooperatives require a membership fee. The membership fee is established by the Board 

of Directors and must be equal to 1 month’s occupancy charge. Once the fee has been

established, that amount is uniformly applied to all members. Members unable to pay a 

membership fee in full should be permitted to make monthly payments without interest, until the 

membership fee is paid; however, a down payment of at least $25 should be required at 

occupancy. The period of payment on the membership fee should not exceed 12 months.

11.35 LOAN PROCESSING 

Applications for cooperative housing will be solicited through a NOFA, but considered 

for funding from an administrative reserve. 

Applications for cooperative housing loans will be processed in the order in which a 

complete project proposal is received. When a request for a cooperative housing loan is 

received, the State Director will contact the National Office to determine if sufficient funds are 

available to make the loan. If so, and if the project proposal appears preliminarily eligible and 

feasible, the Loan Originator will invite the applicant to submit an initial application in

accordance with Chapter 5 and including the additional information outlined in Paragraph 11.32. 

If funds are not available in the current funding cycle, the initial application will be considered 

for funding in the next funding cycle. 

The Loan Originator will review all initial applications for cooperative housing loans for 

eligibility and feasibility. In cases where the proposal is not eligible or feasible, the proposal will 

be rejected and appeal rights provided in accordance with RD Instruction 1900-B. Proposals that 

appear eligible and feasible will be forwarded to the National Office for review and 

authorization. 

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If authorized by the National Office, the State Director will notify the applicant that the 

application appears eligible and feasible. The Loan Originator will then invite the applicant to 

submit a final application. Loan Originators will use the procedures presented in Chapter 5 to 

process final applications and obtain loan approval. 

11.36 LOAN CLOSING AND POST-CLOSING ACTIVITIES 

Loan Originators will follow the procedures described in Chapters 8 and 9 to close the 

loan, monitor construction, and oversee initial project occupancy. 

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Attachment 11-A 

Page 1 of 6 

ATTACHMENT 11-A 

MANAGEMENT OF CONGREGATE HOUSING AND GROUP HOMES 

I. PURPOSE: This exhibit prescribes additional requirements for the management of congregate 

housing and group homes. It applies in addition to other requirements in 7 CFR Part 3560. 

II. OBJECTIVE: The objective in the management of congregate and group home housing is to 

provide shelter and predetermined services as separate components, based on a market study 

identification of need, that are affordable to the housing's tenant base. It is further the objective to 

permit resident tenants to cover their individual medical and discretionary needs, and/or service 

needs or preferences not provided or arranged by the housing provider, within their own 

financial, familial and social resources. 

III. DEFINITIONS:

Congregate housing. Residential housing for persons or families who are elderly, or have 

handicaps, or disabilities, consisting of private apartments and central dining facilities in which a 

number of preestablished services are provided to tenants (short of those services provided by a 

health care facility that provides health related care and services recognized by the Medicaid 

program). Tenants requiring additional services not provided by the facility will acquire them or 

provide for them within their own financial, familial, or social resources. 

Group home. Housing that is occupied by individuals who are elderly or have 

handicaps/disabilities, sharing living space within a rental unit in which a group home resident 

assistant may be required. 

Service agreement. A written agreement between the borrower and the congregate or group 

home service provider detailing the specific service to be provided, the cost of the service, and 

the length of time the service will be provided. 

Service contract. A written contract between the borrower and the tenant listing the package 

of services selected by the tenant that will be provided or arranged by the borrower, the fee or 

fees to be charged, and applicable conditions and agreements pertaining thereto. 

Service plan. A written plan describing how services will be provided to congregate housing 

or group home projects. At a minimum, the plan must specify the services to be provided, the 

frequency of the services, who will provide the services, how tenants will be advised of the 

availability of services, and the staff needed to provide the services. 

Tenant base. The demographic and economic profile of eligible people in a housing market 

area who would benefit, whether by need or preference, from the housing and supportive 

services provided by a congregate housing or group home facility located in the market area. 

IV. RENT SUBSIDY OPPORTUNITIES: Subsidy discussed in that paragraph cannot be used to 

pay for services in congregate housing or group homes. 

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Attachment 11-A 

Page 2 of 6 

V. MANAGEMENT OPERATIONS: Borrowers must comply with 7 CFR Part 3560 in 

managing congregate housing and group homes. In addition, borrowers must submit a service 

plan that explains how services will be provided. 

 A. Borrower's experience. Borrowers and management agents must outline their experience 

and plans for providing congregate and group home services when completing the management 

plan in 7 CFR 3560.102(e)(2). Borrowers who are not experienced with congregate 

housing/group homes must obtain assistance from organizations or individuals experienced with 

congregate issues in developing management and servicing plans. The service provider's

experience and ability to furnish the services must be documented. 

 B. Management plan. In addition to the general requirements for a management plan 

described in 7 CFR 3560.102, the management plan should describe the plan for management of 

features unique and essential to congregate/group home housing. This portion of an overall 

management plan may either be incorporated within the framework of the management plan or 

as an addendum to the plan. The following areas should be described: 

 1. Tenant mix. For congregate housing, describe the mix of tenants who will have a 

greater number of services and tenants who will have a lesser number of services that the project 

is designed to accommodate. For group home housing, describe the "group(s)" of tenants the 

group home is intending to serve such as elderly tenants, developmentally disabled, or mentally 

impaired persons. 

2. Marketing plan. Describe the strategies, ways and means that marketing and 

advertising will be focused to attract and retain tenants from the market area (tenant base) that 

would benefit by the congregate/group home housing project. 

3. Service package. Describe the basic and any alternative "package" of service(s), or 

combination of service packages, that a tenant may acquire at the project. Describe any 

deviations to a service package that can be accommodated on an individual tenant basis by the 

project in a reasonable and practical manner. 

4. Referral service. Describe the plan for identifying other services available to tenants 

and for establishing liaison between the project and the other services. Describe the plan to make 

the information of such services available and known to tenants. Describe what arrangements the 

project can provide as part of a service package to help tenants use referral services. 

5. Tenant consultation. Describe how the project management staff will use tenant

consultation to assist tenants with information, modification of service package, referral to 

medical, clinical, family or other services, and identifying what, if any, reasonable 

accommodations or assistance are needed and whether they are feasible and practical to provide. 

6. Emergency evacuation plan. Describe what the project will do to inform and train 

tenants on safe evacuation of an apartment and building. Describe which community/public 

services will be informed about and incorporated into the project evacuation plan. 

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Attachment 11-A 

Page 3 of 6 

 C. Service plan. Congregate housing/group home borrowers must submit a service plan as 

defined in paragraph III of this attachment and in 7 CFR 3560.11. The service plan will be an 

addendum to the management plan when appropriate, or subject to the signature and 

authorization requirements of the management plan when the service provider is not the 

borrower or management agent. 

 D. Service agreements. Borrowers must submit a service agreement for each service they do 

not provide directly. The agreement must stipulate the specific service to be provided, the cost of 

the service and the length of time the service will be provided. The service agreement will be an 

addendum to the management agreement when appropriate or subject to the signature and 

authorization requirements of the management agreement when the service provider is not the 

borrower or management agent. Initial service agreements must be effective for at least 1 year 

after the project becomes operational. Subsequent agreements must be effective for at least 1 

year. 

 E. Service contract. Borrowers must submit a sample of the service contract for Agency 

review for compliance with Fair Housing Act requirements/restrictions and Agency 

requirements. The service contract may not be a requirement for occupancy in the congregate 

housing project and it must be made separate and apart from the occupancy lease agreement. 

VI. RENTING PROCEDURE: In addition to meeting the conditions of 7 CFR 3560.104, 

borrowers must meet the following conditions. 

 A. Eligible tenants. Tenants must meet the general provisions of 7 CFR 3560.152 and be 

eligible to occupy congregate or group home housing as defined in paragraph III of this 

attachment. Borrowers must be careful to follow the conditions described in 7 CFR 3560.104 

when inquiring about the applicant's or tenant's request for congregate/group home housing and 

the services it provides. 

 B. Tenant selection. Borrowers must meet the provisions of 7 CFR 3560.154. Borrowers 

should be further guided by the following in selecting tenants for congregate housing and group 

homes: 

1. Congregate housing.

 a. Tenant mix. It is the primary intent of a congregate housing project to provide or 

arrange for service packages made up of various component services to serve the needs of 

tenants needing such services. If it is not feasible to provide service packages to all tenants, the 

borrower may serve tenants needing services and tenants not needing services. The number of 

tenants that can be served with service package(s) will be described in the project management 

plan. Project management should be consulted when establishing the tenant mix. The plan should 

establish a percentage of tenants who will use a service package with a greater number of

component services as differentiated from tenants whose service package will contain fewer 

services. As existing tenants age and new tenants move in, the percentage may fluctuate. Rural 

Development must concur with the proposed plan. 

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Attachment 11-A 

Page 4 of 6 

 b. Selecting services needed or wanted by tenants in congregate housing.

(1) It is the borrower's responsibility to inform applicants or tenants about the 

supportive services provided at or by the congregate project. Such services or service packages 

need to be identified on the project's application form as part of an application package. 

(2) It is the applicant's or tenant's responsibility to identify and request the 

services or service package provided by the project which that person desires or needs. 

(3) The borrower may have the applicant/tenant provide only such essential 

information about the person's desire for provided service(s) to determine whether the project 

provides the services desired by the applicant/tenant and/or to determine how to best serve the 

applicant's/tenant's request for services with reasonable accommodation, referral services, etc. 

The essential information may include an explanation by the applicant/tenant. In the case of a 

group home, it may also include an assessment by a professional medical examiner or 

practitioner, social service caseworker, representative of an advocacy group, member of the 

clergy, etc. that the tenant/applicant provides to support the application for housing and services. 

 c. Waiting lists. To sustain the number of tenants requesting services, management 

may maintain waiting lists for tenants requesting large component service packages, small 

component service packages, and those wanting a service package at a later time. Management 

may choose tenants from the lists in such manner to maintain the feasibility in providing 

services, however, priority in tenant selection should go to an applicant requesting a service 

package over one requesting a service package at some later date. The other provisions 

contained in 7 CFR 3560.154(f) concerning waiting lists are applicable. 

 2. Group home. A group home may limit occupancy to a specific group of tenants. For 

example, a group home may limit occupancy to eligible elderly tenants, developmentally 

disabled people, or mentally impaired tenants. This limitation will be outlined in the borrower's 

management plan. The following will apply to group homes: 

a. Applicants for group home housing must demonstrate their need for such housing. 

b. Tenants of group homes cannot be required to be a part of an ongoing training or 

rehabilitation program sponsored by the applicant or other organization. 

c. Tenants should be selected from the local area before considering other areas. 

 C. Determining per unit rental rates for group living arrangements. A "unit" in a group home

consists of the space occupied by a specific tenant household. It may be a traditional apartment 

unit, a bedroom, or a portion of a bedroom. Rents are determined as follows: 

1. When all units are of equal size, divide operational costs equally. 

2. When all units are not of equal size, determine the size of each unit and divide 

operational costs accordingly. 

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Attachment 11-A 

Page 5 of 6 

a. The size of traditional units is their square footage. 

b. The size of nontraditional units is the bedroom or portion of bedroom occupied by 

the household and portion of the common area to be used by all potential units in nontraditional 

units. 

3. A unit occupied by a resident assistant is not considered a revenue producing unit and 

would be excluded from the rent determination. 

VII. VERIFICATION AND CERTIFICATION OF TENANT INCOME, AND/OR 

EMPLOYMENT AND REVIEW OF SUPPORT SERVICES: The provisions of 7 CFR 

3560.152(a) apply. In addition to recertifying income, management should consult with each 

tenant to explain the available support services and determine if the tenant desires any available 

services not presently used and/or if any other practical and feasible accommodations can be 

provided to the tenant. 

VIII. LEASE AGREEMENTS: In addition to the conditions contained in 7 CFR 3560.156, the 

following should be addressed: 

 A. Tenants who request services in congregate housing. If a tenant requests services, the 

lease must contain the following clauses: 

1. “I understand that use of the service package I have selected is not mandatory, and if I 

later choose to modify or not renew my service contract, such action on my part will not cause 

default under the terms of this lease agreement. I further understand and agree that I may not use 

any aspect of dissatisfaction with my service contract as grounds to withhold rents due under the 

terms of this lease agreement.” 

2. “The lessor warrants that the following basic services will be made available to all 

tenants for a fee separate and apart from any rent described in the terms of this lease. The basic 

services are: ______________________________________________________________ 

__________________________________________________________________. If these 

services cannot later be provided, such failure or inability to provide the services will not 

constitute a breach of this lease agreement and the lessor will hold the tenant harmless should the 

tenant elect to terminate this lease on the grounds that provision of these services was cause for 

the tenant to apply for and accept occupancy in this congregate housing project.”

 B. Services provided to people other than tenants of Rural Development financed congregate 

housing. If the meal facility serves people other than the tenants of the project, the borrower must 

obtain a lease from the service provider and require payment sufficient to cover the annual 

operating expenses, debt services and reserve account attributable to the portion of increased 

space that is in excess of the needs of the tenants in the project. Tenants of the congregate 

housing must have priority in receiving the services. When the facilities are provided with loan 

funds, the following conditions must be met: 

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1. The services to be provided and the fees to be charged (if any) must be fully 

documented in the service plan, if provided by the applicant, or in the service plan and lease 

agreement if the services will be provided by others. 

2. Any lease agreement must be approved by the State Director or the loan approving 

official and contain the following statement: “This agreement will not be effective until approved 

by the State Director of the Rural Development, U.S. Department of Agriculture, or the State 

Director's delegated representative.” 

IX. RENT COLLECTION: The provisions of 7 CFR 3560.209 will apply for services as well as 

rent. Tenants must pay charges for the services as documented in their lease. The payment for 

rent or services may be made separately or combined; however, payments for rent and services 

must be accounted for separately. 

X. BORROWER PROJECT BUDGETS: Borrowers must separate the revenue and expenses of 

project operations from the service component. Form RD 3560-7, Multiple Family Housing 

Project Budget/Utility Allowance, must reflect project operations only. Also, if project 

employees provide any part of the services, the project operation budget and the services budget 

must reflect the proration of employee compensation between the respective budgets as further 

described in 7 CFR 3560.102(i). 

XI. ACCOUNTING AND REPORTING REQUIREMENTS AND FINANCIAL 

MANAGEMENT ANALYSIS: Borrowers must maintain separate financial records for the 

operation and maintenance of the project and the service component. Funds allocated to the 

operation and maintenance of the project may not be used to supplement the cost of services, nor 

may service component funds be used to supplement the project operation and maintenance. 

Detailed financial reports on the service component will not be required unless specifically 

requested by Rural Development, and then only to the extent necessary for Rural Development 

and the borrower to discuss the affordability (and competitiveness) of the service component by 

the tenant base in keeping with the objective stated in paragraph II of this attachment. The 

project audit, or verification of accounts on Form RD 3560-10, Borrower Balance Sheet, 

together with an accompanying Form RD 3560-7 showing actuals, must allocate revenue and 

expense between project operations and the service component. 

XII. TERMINATION OF TENANCY AND EVICTION. In keeping with the spirit and 

provisions of the Fair Housing Amendments Act of 1988, a tenant living in congregate or group 

home housing project may remain as long as they are eligible to occupy and the tenant expresses 

or otherwise maintains they can care for themselves with or without services provided by the 

project, or by familial or social services from outside the project. Tenants are otherwise bound by 

the terms of their lease and their occupancy may be terminated only according to the provisions 

contained in 7 CFR 3560.158 and 3560.159.

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ATTACHMENT 11-B 

SUPPORT SERVICES FOR 

CONGREGATE HOUSING AND GROUP HOMES

I. PURPOSE: This attachment prescribes support services for congregate housing and group 

homes. 

II. GENERAL: The success of congregate housing and group homes will depend on the 

quality and affordability of the service component. Congregate housing applicants should 

explore the feasibility of providing services individually to ensure affordability by very lowincome tenants. 

III. EXISTING COMMUNITY SERVICES AND REQUIREMENTS: Applicants should 

check local service agencies to determine what services are already available in the community. 

Services can often be provided more inexpensively through local service agencies or other 

groups which assist in providing services. In many communities there are established volunteer 

groups that may be willing to provide volunteer assistance to congregate housing tenants. 

Volunteer groups with a history of assisting elderly people may be able to supplement the 

delivery of services and help keep the costs affordable. Applicants should explore the 

availability of volunteers from the Retired Senior Volunteer Program (RSVP), local church 

groups and other community organizations. If volunteer groups are used, an alternative method 

of service delivery must be addressed in case the availability of volunteers ceases in the future. 

Applicants must also verify State and local licensing and certification requirements and include 

relevant information in the loan request. 

IV. SERVICE AGREEMENTS: Applicant must submit a service agreement(s) for services 

that will be provided by employees of the project. If services will be provided by employees of

the project, the applicant must submit a separate budget for services and describe how tenants 

will be billed for services. Employees of congregate housing facilities who perform tasks for the 

management of the building and spend an appreciable amount of time in providing services to 

tenants should have their salaries prorated between the project's operation and maintenance 

budget and the services budget. 

V. SERVICES FOR CONGREGATE HOUSING: The following services must be made 

available to tenants of congregate housing projects: 

A. Meals. At least one nutritious meal a day 7 days a week, must be provided in 

accordance with 7 CFR 3560.69(c)(1). The following information concerning the meal 

service must be included with the loan request: 

1. Who will provide the meals (i.e., meals offered by a local agency with tenant 

contribution; supplied or conducted for by owner with charge to tenant)?

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2. If the service will be provided by employees of the project, a proposed breakdown 

of costs for the meal service. The breakdown should include the cost of food, 

personnel and utilities needed to prepare and serve the meals. Information 

concerning the proposed staffing should be included. 

3. The cost to the tenant. Will tenants pay by the meal or be charged a rate for a 

specified time? 

4. A statement concerning the frequency of meals, including the number of meals to 

be served per week. 

5. Information concerning how when and where the meals will be served (i.e., waiter 

style, buffet, tray service). 

6. Any licensing requirement necessary for the service. 

B. Transportation. Adequate transportation must be provided to shopping, medical and 

other services to meet the needs of the tenants. Applicants are encouraged to locate 

congregate housing facilities so that tenants can use public services. In many cases, 

service is available and the applicant can arrange for the project to be included in the 

schedule established by the provider. The following information concerning the 

transportation service must be included with the loan request: 

1. Who will provide the service (i.e., transportation provided by a local agency with 

tenant contribution; vehicle leased or purchased by applicant with charge to tenant)?

2. If the service will be provided by employees of the project, a proposed breakdown 

of costs for the transportation service. The applicant should address the following 

costs: vehicle purchase or lease payment; personnel to operate the vehicle; fuel; 

maintenance; and insurance. 

3. The cost to the tenant. Will tenants pay for each trip or will they be charged a 

monthly rate?

4. A typical proposed schedule. 

C. Housekeeping. Housekeeping services must be offered to assist congregate tenants 

with household tasks. The applicant must address the following concerning the 

housekeeping service: 

1. Who will provide the service (i.e., housekeeping offered by a local agency with 

tenant contribution; supplied or contracted for by applicant with charge to tenant)?

2. If the service is provided by employees of the project, a proposed cost breakdown 

for the service which includes the cost of labor and supplies. 

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3. The type of tasks that will be offered (i.e., light housekeeping, laundry, 

shampooing carpeting). What is the planned frequency of the tasks?

4. The cost to the tenant. 

D. Personal services. Personal services include such items as assistance with personal 

hygiene, nutrition counseling and general health screening (blood pressure checks, etc.). 

The following information concerning the personal services must be submitted with the 

loan request: 

1. Who will provide the service (i.e., personal services offered by a local agency 

with tenant contribution; volunteer health services; contracted for by applicant with 

charge to tenant)?

2. If the service is provided by employees of the project, a proposed cost breakdown 

for the service which includes the cost of labor and supplies. 

3. The type of tasks that will be provided. 

4. The cost to the tenant. 

5. Any licensing requirement necessary for the services. 

E. Recreational/social. Recreational and social activities must be offered to tenants to 

encourage interest in a variety of areas. The following areas could be considered: hobby 

and craft classes; dinners for holidays, birthdays, etc.; educational lectures; wellness and 

exercise programs; and a library. The applicant should encourage recreational/social 

activities which cause interaction between tenants, the project and the community. The 

following information concerning the recreational/social service must be included with the 

loan request: 

1. Who will provide the service (i.e., recreational/social activities offered by a local 

agency with tenant contribution; supplied or contracted for by applicant with charge

to the tenant)?

2. If the service is provided by employees of the project, a proposed cost breakdown 

which includes the cost of labor and supplies. 

3. The types and frequency of recreational/social activities that will be offered. 

4. The cost to the tenant. 

VI. SERVICES FOR GROUP HOMES: The following services must be made available to 

tenants of a group home: 

A. Meals. At least three nutritious meals a day, 7 days a week, must be provided if 

tenants are not capable of preparing their meals. If meals are provided, the budget may 

include only the cost of food if tenants assist a staff person in preparing meals. Tenants in 

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some group homes may be able to prepare meals on their own with supervision from

project personnel. In these cases, applicants must ensure that the tenants will be preparing 

nutritious meals. 

B. Transportation. Applicants must submit information on the transportation service as 

detailed in paragraph V B of this attachment. 

C. Housekeeping. Applicants must provide a narrative explaining how housekeeping 

will be accomplished. In many cases, group home tenants assist with housekeeping chores 

with little expense being borne by the project. Applicants should detail expenses that will 

be part of the service budget. 

D. Personal services. A higher percentage of tenants in a group home may require 

personal services. Applicants must detail the services to be offered and the cost to tenants. 

E. Recreational/social. In most cases, there will be little expense for recreational/social 

opportunities in a group home. Applicants should explain what will be offered to the 

tenants and the projected cost to tenants. 

VII ADDITIONAL ITEMS NECESSARY FOR CONGREGATE HOUSING/GROUP 

HOMES THAT CANNOT BE FINANCED WITH RURAL DEVELOPMENT LOAN FUNDS: 

Congregate housing/group home projects require additional items that will not become affixed to 

the real estate. These items can include special portable equipment, furnishings, kitchen bars, 

dining ware, eating utensils, movable tables and chairs, steamtables, etc. In accordance with 

7 CFR 3560.69(d), loan funds cannot be used to finance these items. As a part of the loan 

request, applicants must include a proposed list of additional items that will be needed by the 

project and state how these items will be paid for. 

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ATTACHMENT 11-C 

OCCUPANCY AGREEMENT 

THIS AGREEMENT, dated ______________________, by and between 

_______________________________________(hereinafter referred to as the "Cooperative"), at 

_____________________ ____________________________ and 

_________________________ (hereinafter referred to as "Member"). 

 WITNESSETH: WHEREAS: 

The purpose of the Cooperative is to acquire, own, and operate a cooperative housing 

project and its members shall have the right to occupy its dwelling units under the terms and 

conditions set forth in this agreement: 

Member is the owner and holder of a certificate of membership of the Cooperative and 

intends to occupy a dwelling unit in the project as permanent residence; and 

Member has certified to the accuracy of the statements in Member's application and agrees 

and understands that household income and other eligibility requirements are substantial and 

material requirements of his initial and continuing occupancy. 

TO HAVE AND TO HOLD dwelling unit Number ___________________ on the terms 

and conditions set forth in this agreement, in the corporate charter, bylaws, and any other rules 

and regulations of the Cooperative. The term of this agreement shall be for a three-year period 

ending on ___________________, 20 __, 1/ renewable for successive three-year periods under 

the conditions provided for in this agreement. 

ARTICLE 1. OCCUPANCY CHARGES. 

Section 1.01. Commencing at the time indicated in ARTICLE 2, the Member agrees to 

pay to the Cooperative a monthly sum referred to as the "Occupancy Charge." This amount will 

be equal to one-twelfth of the Member's proportionate share of the total amount required by the 

Cooperative, as estimated by its board of directors, to meet its annual expenses and the 

requirements of the Rural Development loan. These include but are not limited to, the following 

items: 

1/ The termination date to be inserted should be three years from the date of the occupancy 

agreement. (These terms may be for periods longer than 3 years if mutually agreeable to the 

member and to the cooperative.) 

(a) Project operating expenses and cost of services furnished. 

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(b) Necessary management reserve and administrative costs. 

(c) Taxes and assessments levied against the project or the Cooperative which it is 

required to pay. 

(d) Fire and extended coverage insurance on the project and any other insurance which the 

Cooperative may require. 

(e) The cost of furnishing any water, electricity, heat gas, garbage and trash collection, 

and other utilities, if furnished by the Cooperative. 

(f) Payments to other reserves set up by the board of directors. 

(g) Estimated costs of repairs, maintenance, and replacements of project property to be 

made by the Cooperative. 

(h) The amount of principal, interest, and any other required payments on any 

indebtedness of the Cooperative, including any loan made or insured by Rural 

Development, United States Department of Agriculture. 

(i) Any other expenses of the Cooperative approved by the board of directors and by 

Rural Development, while mortgagee, including operating deficiencies, if any, for prior 

periods. 

Section 1.02. The board of directors shall determine the amount of the occupancy charges 

annually, but may do so at more frequent intervals should circumstances so require. No Member 

shall be charged with more than the appropriate share determined by the board of directors. That 

amount of the occupancy charge required for payment on the principal of mortgage of the 

Cooperative or any other capital expenditures shall be credited upon the books of the 

Cooperative as a capital contribution by the Members. Until further notice from the Cooperative, 

the monthly charge for the above-mentioned dwelling unit shall be $_________. 

ARTICLE 2. WHEN PAYMENT OF OCCUPANCY CHARGES TO COMMENCE. 

Section 2.01. After thirty days' notice by the Cooperative that the dwelling unit is 

available for occupancy, or upon acceptance of occupancy, whichever is earlier, Member shall 

make a payment for occupancy charge covering the unexpired balance of the month. Thereafter, 

Member shall pay occupancy charge in advance on the first day of each month. Dates of 

payments may be changed by mutual agreement of the Cooperative and Rural Development. 

Section 2.02. The Member agrees to furnish to the Cooperative, each year, a certificate of 

income on which the Member's occupancy charge will be determined. 

ARTICLE 3. PATRONAGE REFUNDS. 

Section 3.01. The Board shall, on the books of the Cooperative, assign to Member in 

accordance with the Internal Revenue Service ruling concerning patronage capital, a 

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proportionate share of money collected in excess of the amount needed for Cooperative 

expenses, including reserves designated as management reserve, and Members will be notified of

the amount assigned each year. 

ARTICLE 4. MEMBER'S OPTION TO RENEW. 

Section 4.01. It is agreed that the term of occupancy shall be renewed for further periods 

of three years from the expiration of the initial term (or for a longer term as mutually agreed to 

by the member and the cooperative). Such renewals shall be based upon the same agreements as 

contained in this agreement unless: (1) notice of Member's decision not to renew is given to the 

Cooperative in writing at least 4 months prior to expiration of the current terms, and (2) Member, 

before expiration of said term, shall (a) endorse membership certificate for transfer to 

Cooperative and deposits same with the Cooperative, (b) meet all obligations and pay all 

amounts due under this agreement before said expiration, and (c) vacate and leave the premises 

in good state of repair. Upon compliance with foregoing provisions (1) and (2), Member shall 

have no further liability under this agreement. If extenuating circumstances warrant, the 

Member's four-month notification of intention to vacate may be modified appropriately. The 

Member will be entitled to the patronage capital which has accrued and been assigned during the 

term of this agreement provided that provisions (1) and (2) have been met. 

ARTICLE 5. PREMISES TO BE USED FOR RESIDENTIAL PURPOSES ONLY.

Section 5.01. Member shall occupy the dwelling unit covered by this agreement as a 

private dwelling unit for the Member and/or immediate household and for no other purpose. The 

Member shall have use of all common community property and facilities of the project so long as 

Member continues to own a membership certificate of the Cooperative, occupies the assigned 

dwelling unit, and abides by the terms of this agreement. Any sublessee of the Member, if 

approved pursuant to Article 7 hereof, may enjoy the rights to which Member is entitled under 

this Article 5, except that the sublessee will have no voting rights in the affairs of the 

Cooperative. 

Section 5.02. Member shall not permit or suffer anything to be done or be kept upon said 

premises which will increase the rate of insurance on the building, or on its contents. Member 

will not obstruct or interfere with the rights of other occupants, or annoy them by unreasonable 

noises or otherwise permit any nuisance on the premises, or allow any illegal act to be 

committed. Member shall comply with all the requirements of the Board of Health and of all 

other governmental authorities with respect to the said premises. If, by reason of the occupancy 

or use of these premises by Member, the rate of insurance on the building is increased, Member 

shall become personally liable for the additional insurance premiums. 

ARTICLE 6. MEMBER'S RIGHT TO PEACEABLE POSSESSION. 

Section 6.01. In return for Member's continued fulfillment of the terms and conditions of 

this agreement, the Cooperative agrees that the Member may at all times while this agreement 

remains in effect, have and enjoy for the Member's sole use and benefit the dwelling unit and 

community facilities hereinabove described. 

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ARTICLE 7. NO SUBLETTING WITHOUT CONSENT OF CORPORATION. 

Section 7.01. This agreement shall not be assigned nor Member's dwelling unit sublet 

without the written consent of the Cooperative and Rural Development, while mortgagee. Under 

this agreement the Member shall be liable for the conduct of the sublessee. Any unauthorized 

subleasing shall, at the option of the Cooperative and of Rural Development, while mortgagee, 

result in termination and forfeiture of Member's rights under this occupancy agreement. 

ARTICLE 8. TRANSFERS. 

Section 8.01. Neither this agreement nor Member's right of occupancy shall be 

transferable or assignable except as provided in the bylaws of the Cooperative for the transfer of 

membership. 

ARTICLE 9. MANAGEMENT, TAXES AND INSURANCE. 

Section 9.01. The Cooperative shall provide necessary management, operation, and 

administration of the project; pay or provide for the payment of all taxes or assessments levied 

against the project; procure and pay or provide for the payment of fire insurance and extended 

coverage, and other insurance as the Cooperative may deem advisable on property in the project. 

The Cooperative will not, however, provide insurance on Member's personal property. 

ARTICLE 10. UTILITIES. 

Section 10.01. The Cooperative shall arrange for utilities (water, electricity, heat, and gas) 

for common areas of the structure(s) in amounts which it deems reasonable and in conformance 

with 7 CFR 3560.303(b). (Strike out any of the foregoing items in this Article which are not 

applicable.) Each unit will be separately metered and Member shall pay directly to the supplier 

for the utilities billed to Member. 

ARTICLE 11. REPAIRS. 

Section 11.01. By Member. Member agrees to repair and maintain Member's dwelling 

unit at own expense as follows: 

(a) Any repairs or maintenance necessitated by Member's own negligence or misuse; 

(b) Any redecoration of own dwelling unit authorized, done or contracted for by Member; 

(c) Any repairs, maintenance, or replacements required on the following items: (Insert the 

items desired, subject to Rural Development approval.) 

Section 11.02. By Cooperative. The Cooperative shall provide and pay for all necessary 

repairs, maintenance, and replacements except as specified in Section 11.01. Member agrees to 

the right of the officers of the Cooperative to authorize entrance to Member's dwelling unit in 

order to complete necessary repairs, maintenance, and replacements and to authorize entrance for 

such purposes by employees of any contractor, utility company, municipal agency, or others at 

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any reasonable hour of the day and upon reasonable notice. In the event of emergency, the unit 

may be entered at any time. Notification of entry will be left for the member by the person 

performing the maintenance or repair. 

Section 11.03. Right of Cooperative to Make Repairs at Member's Expense. In case 

Member shall fail to effect and pay for the repairs, maintenance, or replacements specified in 

Section 11.01, in a manner satisfactory to the Cooperative, the board may do so and add the cost 

of repairs to Member's next month's occupancy charge payment. 

ARTICLE 12. ALTERATIONS AND ADDITIONS. 

Section 12.01. The Member shall not, without the written consent of the Cooperative 

make any structural alterations in the premises or in the water, gas or steampipes, electrical 

conduits, plumbing or other fixtures connected therewith, or remove any additions, 

improvements, or fixtures from the premises. 

Section 12.02. If Member for any reason ceases to be an occupant of the premises, 

Member shall surrender to the Cooperative possession thereof, including any alterations, 

additions, fixtures, and improvements. 

Section 12.03. Member shall not, without the prior written consent of the Cooperative 

install or use in dwelling unit any air conditioning equipment, electric heater, or power tools. 

Member agrees that the Cooperative or Rural Development, while mortgagee, may require the 

prompt removal of any such equipment at any time, and that failure to remove such equipment 

upon request shall constitute a default within the meaning of Article 13 of this agreement. 

ARTICLE 13. DEFINITION OF DEFAULT BY MEMBER AND EFFECT THEREOF. 

Section 13.01. If, at any time after the happening of any event specified in clauses (a) 

through (k) below, the Cooperative gives to Member a 30-day notice of expiration, this 

agreement and all Member's rights under this agreement will expire on the date specified in such 

notice. In the meantime the default may be cured in a manner deemed satisfactory by the 

Cooperative. After 10 days following such expiration of Member's rights, the Cooperative may 

reenter the dwelling unit and remove all persons and personal property therefrom, by any means 

available to it by law, and may repossess the dwelling unit in its former state as if this agreement 

had not been made. 

(a) If, during the term of this agreement, Member ceases to be the owner and legal holder 

of a membership of the Cooperative. 

(b) If Member attempts to transfer or assign this agreement in a manner inconsistent with 

the provisions of the bylaws. 

(c) If, during continuance of this agreement, Member is declared bankrupt under the laws 

of the United States so as to be released from any debt or obligation to the Cooperative or 

to interfere with his full exercise of his rights as Member and occupant. 

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(d) If, during continuance of this agreement, a receiver of Member's property is appointed 

under the laws of the United States or of any State. 

(e) If, during continuance of this agreement, Member shall make a general assignment for 

the benefit of creditors. 

(f) If, during continuance of this agreement, any of the membership rights in the 

Cooperative owned by Member are duly levied upon and sold under the process of any 

court. 

(g) If Member fails to effect and/or pay for repairs and maintenance as provided for in 

Article 11. 

(h) If Member fails to pay any sum due pursuant to Article 1. 

(i) If default occurs with respect to any obligation of Member under this agreement. 

(j) If, during the term of this agreement, Member fails to comply promptly with all 

requests by the Cooperative for information and certifications concerning the total current 

income of Member and Member's household or any other eligibility requirements for 

membership or occupancy. 

(k) If, during the term of this agreement, limitations for continued occupancy are 

established from time to time by the Rural Development and are exceeded. 

Section 13.02. Member hereby expressly waives any and all right to reenter the dwelling 

if the eviction is by judgment of any court or judge. The words "enter," "reenter," or "reentry" as 

used in this agreement are not restricted to their technical legal meaning. In the event of a breach 

by Member of the terms of this agreement, the Cooperative shall have the right of injunction and 

the right to invoke any remedy allowed at law or in equity, as if reentry, summary proceedings, 

and other remedies were not provided for. 

Section 13.03. Failure by the Cooperative to avail itself of any remedy given under this 

agreement shall not waive or destroy any right of the Cooperative to avail itself of remedies for 

any similar or other breach or default by Member. 

Section 13.04. Notice by the Cooperative under any of the conditions described in Article 

13 shall be in writing. The cooperative shall not evict any member except by judicial action 

pursuant to State or local law and in accordance with the requirements of 

7 CFR 3560.158 or 3560.159. 

ARTICLE 14. MEMBER TO COMPLY WITH ALL CORPORATE REGULATIONS 

Section 14.01. Member agrees to preserve and promote the cooperative ownership 

principles on which the Cooperative has been founded and to abide by the charter, bylaws, rules 

and regulations of the Cooperative, and amendments. The Member agrees to make diligent 

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effort in performing duties and accepting responsibilities either through volunteering or by 

assignment from the board of directors. By acts of cooperation with other members, Member 

will strive to bring about and maintain a high standard in home and community conditions. The 

Cooperative agrees to deliver to Member its rules and regulations and/or to distribute them in 

such other manner as to constitute adequate notice. 

ARTICLE 15. EFFECT OF FIRE LOSS ON INTERESTS OF MEMBER 

Section 15.01. In the event of loss or damage by fire or other casualty to Member's

dwelling unit without fault or negligence of Member, the Cooperative shall determine (1) 

whether Rural Development to restore the damaged premises and, if not, to restore (2) the 

amount to be paid to Member to redeem membership and for reimbursement for any loss 

sustained by the Member. 

Section 15.02. If, under such circumstances, the Cooperative decides to restore the 

premises, occupancy charges shall stop wholly or partially, as determined by the Cooperative, 

until the premises have been restored. If, on the other hand, the cooperative decides not to 

restore the premises, the occupancy charges shall cease from the date of such loss or damage. 

ARTICLE 16. INSPECTION OF DWELLING UNIT 

Section 16.01. Member agrees that the representatives of any mortgagee holding a 

mortgage on the property of the Cooperative, the officers of the Cooperative, or authorized 

representative of the Cooperative shall have the right to enter the dwelling unit of Member and 

make inspections and, with the approval of the Cooperative, the employees of any contractor, 

utility company, municipal agency, or others shall have the right to enter the dwelling unit of 

Member and make inspections at any reasonable hour of the day, upon reasonable notice, and at 

any time in the event of emergency. 

ARTICLE 17. SUBORDINATION CLAUSE 

Section 17.01. The Cooperative housing project of which Member's dwelling unit is a part 

is planned to be constructed by the Cooperative with the assistance of a loan to the Cooperative 

made or insured by the Rural Development. Therefore, this agreement and all rights, privileges, 

and benefits hereunder shall be at all times subject and subordinate to a first mortgage lien or any 

documents executed by the Cooperative to secure its obligations to Rural Development and to 

any extensions and removals and to any security instrument which may be made in replacement 

thereof or at any time hereafter be placed on the property of the corporation. Member hereby 

agrees to execute, at the Cooperative's request and expense, any instrument which the 

Cooperative or any lender or mortgagee may deem necessary or desirable to subordinate this 

Agreement to any such security instrument. Member hereby appoints the Cooperative and each 

and every officer thereof, and any future officer, as irrevocable attorney-in-fact during the term

of the agreement to execute any such instrument on behalf of Member. 

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ARTICLE 18. LATE CHARGES AND OTHER COSTS IN CASE OF DEFAULT 

Section 18.01. In addition to all other sums due or to become due under this agreement, 

Member shall pay to the Cooperative a late charge, not to exceed $10.00, at any time payment of 

occupancy charges, or part thereof, is more than 10 days late. This late fee may be waived, 

depending on the circumstances and at the discretion of the board. 

Section 18.02. If, because of default by Member under any obligation in this agreement, 

the Cooperative obtains the services of an attorney, Member shall pay to the Cooperative all 

costs and fees involved, including reasonable attorney's fees and the costs of any resulting law 

suit, if such an action becomes necessary. 

ARTICLE 19. NOTICES 

Section 19.01. Whenever any bylaw of Cooperative, any law, or this agreement requires 

notice to be given to either party, any notice or demand by the Cooperative to Member shall be 

considered to have been duly given if the same is delivered to Member at Member's unit or to 

Member's last known address. Any notice or demand by Member to the Cooperative shall be 

considered to have been duly given if delivered to an officer of the Cooperative. Such notice 

may also be given by depositing same in the United States mails addressed to Member as shown 

on the books of the Cooperative, or to the president of the cooperative, as the case may be, and 

the time of mailing shall be the time of giving such notice. 

ARTICLE 20. ORAL REPRESENTATION NOT BINDING 

Section 20.01. No representation other than those contained in this Agreement and in the 

charter and the bylaws of the Cooperative shall be binding upon the Cooperative. 

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be signed and 

sealed the day and year first above written. 

 _________________________ 

 Cooperative 

 By:__________________________(SEAL) 

 

 __________________________ 

 Member 

TO BE DULY ACKNOWLEDGED

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Attachment 11-D 

Page 1 of 2 

ATTACHMENT 11-D 

COOPERATIVE HOUSING SURVEY 

BEFORE ATTEMPTING TO ANSWER THESE QUESTIONS, PLEASE READ THE 

GUIDELINES FOR UNDERSTANDING THE PRINCIPLES OF COOPERATIVE HOUSING. 

NOW TAKE TIME TO ANSWER THE FOLLOWING QUESTIONS AS HONESTLY AS 

YOU CAN. 

(Circle yes or no) 

1. Are you willing to share the responsibilities required of a cooperative member? 

yes no 

2. If asked, will you serve on the board of directors or on a committee? 

yes no 

3. Are you willing to help in maintaining the cooperative property? 

yes no 

4. Do you now have a better idea of what cooperative housing really is? 

yes no 

5. Do you want to ask more about the cooperative before deciding whether to join? 

yes no 

6. If the answer to question 5 is "yes," will you come to an information meeting to be held in 

town? 

yes no 

7. Have you answered the questions truthfully? Did you answer “no” to any of questions 1, 2, or 

3? If so, this type of housing is not for you. If you are interested, please go on to complete the 

second portion of this survey. 

1. How many persons in your household?

adults children 

______ ______ 

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Attachment 11-D 

Page 2 of 2 

2. Approximate annual income from all sources: $__________ 

3. Are you or members of the household handicapped or impaired and in need of specifically 

designed housing arrangements?

 yes no 

4. An informal meeting is scheduled for ______a.m./p.m., on _____________, 20____, for the 

purpose of discussing a proposed ____-unit cooperative planned for this community. 

At that time, a representative of the cooperative will be on hand to answer other questions you 

may have. So that we may know how many persons to expect at the meeting, we ask that you 

give us your name, address, and phone number. 

NAME _______________________ 

ADDRESS _______________________ 

 _______________________ 

PHONE _______________________ 

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Attachment 11-E 

Page 1 of 2 

ATTACHMENT 11-E 

LIMITED EQUITY AGREEMENT 

This Agreement, dated ______________________________, by and between 

_____________________________________________(hereinafter referred to as the 

"Cooperative"), a corporation having its principal office and place of business at 

______________________________________________________________________________

_______________and Rural Housing Service, United States Department of Agriculture 

(hereinafter referred to as RHS). 

WITNESSETH WHEREAS 

The purpose of the cooperative is to own and operate cooperative housing on behalf of its 

members, and the cooperative has applied to RHS for mortgage financing as authorized under 

Section 515 of the Housing Act of 1949, as amended. 

The purpose of RHS is to provide long term housing financing for very-low, low-, and 

moderate-income persons and households, although initially eligible cooperative members may 

remain in occupancy after exceeding the income limit established for moderate income. 

The additional purpose of RHS is to maintain the availability of units financed by RHS for 

very-low, low-, and moderate-income persons for as long as possible up to the 30-year maximum 

life of the loan. 

As a means for implementing and carrying out these purposes, the cooperative pledges to 

RHS that: 

(a) Equity accumulated by the cooperative, other than through the appreciation in value of 

real estate, furnishings, and equipment of the cooperative, will be assigned on the 

cooperative's books equally to members at the end of its fiscal year and in accordance with 

the Internal Revenue Service ruling concerning patronage capital. 

(b) The members will be notified, in writing, of the amount assigned to his or her 

patronage account each year after the assignment has been made. 

(c) The officers, board of directors, and members of the cooperative may not act to 

dissolve the cooperative for the purpose of distributing equity, or for other reasons, except 

as necessary due to default or other circumstances beyond the cooperative's control, and 

(d) Should it become necessary to dissolve the cooperative, all property and assets of the 

cooperative will be transferred to another nonprofit or such other municipal organization 

and be maintained for the same purposes for which it was started. 

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Attachment 11-E 

Page 2 of 2 

(e) Only membership fees and money accrued in the members' patronage capital accounts 

will be distributed to the members and represents the entire equity payment to which the 

members are entitled. The cooperative reserves the right to withdraw from the equity 

payment or membership fee any amount due the cooperative through member's

delinquency in payment of occupancy charge or through damage to the premises. 

In witness thereof, the parties hereto have caused this agreement to be signed and sealed 

the day and year first above written. 

 ____________________________________ 

 (Cooperative) 

_______________ BY: _______________________________ (Seal) 

(Witness) (Member) 

This agreement will be filed with the member’s record. 

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Attachment 11-F 

Page 1 of 2 

ATTACHMENT 11-F 

QUALIFICATIONS FOR AN ADVISER TO THE BOARD 

In the Board's analysis of the talents and abilities of a person to handle the job of adviser, the 

first attribute most desirable is the capacity to be a friend. The definitions of a friend include (1) 

a person whom one knows, likes, and trusts; (2) one with whom one is allied in a struggle or 

cause; (3) one who supports, sympathizes with, or patronizes a group, cause, or movement. 

The adviser must care about the person he or she is trying to help. That means having patience 

and understanding during the trial and error period of a new cooperative's operation and also 

when it becomes necessary to explain complicated regulations or legal documents more than just

once to those who have had less educational opportunities than the adviser. 

The adviser must teach a totally new housing concept to persons who have only had experience 

with a rental environment. This means that the adviser must be able to talk to each and every 

person who is interested in the cooperative housing and explain just what the person is facing. 

The adviser must also be able to listen to those who rely on someone's "being there" to hear their 

problems and ideas. The adviser must be someone who is able to work with low-income persons 

and one who both understands their particular circumstances and strives to improve their wellbeing. The adviser, in this regard, must be able to learn as well as to teach. 

The adviser must be dedicated to those persons with whom he or she is associated as well as to 

have the capacity to work with city officials, Government officials, politicians, and other 

professionals to achieve the goal of housing the local citizens. 

EDUCATIONAL BACKGROUND 

a. Experience in working with - low-income people and with the problems inherent within 

this group. 

b. Administrative background for - 

1. setting up system for management, including detailed financial, personal, and 

activity records; 

2. setting up system for maintenance for buildings, grounds, and equipment. 

c. Training to - 

1. accept the major responsibility of teaching and have the experience to carry this 

out. 

2. make certain that members are learning while doing, whatever the activity. 

3. know how to use group dynamics. 

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Attachment 11-F 

Page 2 of 2 

4. be ready to assist individual members resolve problems. 

5. recognize a need for social casework when required, then be able to give or 

obtain that assistance. (Individual problems quickly affect cooperatives.) 

6. have knowledge of and make effective use of resources. 

7. handle the business of a cooperative while teaching members how to manage it 

themselves. 

8. understand complexity of management and maintenance. 

9. be able to understand, interpret, and teach the contents of documents from

funding agencies. 

Ideally, a background in social work would be the most logical experience, but others can be 

considered. 

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Attachment 11-G 

Page 1 of 2 

ATTACHMENT 11-G 

RELATIONSHIP OF ADVISER TO MEMBERS 

I. The adviser must be able to teach the members and the members must be willing to learn 

management and maintenance of total Cooperative while they gradually assume more and more 

responsibilities, until the cooperative is completely self-managed. 

II. In order to be effective, the adviser should have the ability to teach to members: 

a. The complete procedures and techniques of management and maintenance. 

b. A cooperative approach to everything involved while member lives in a cooperative. 

c. An ability to deal with persons in authority. 

d. Resources and how to use them. 

e. Board procedures and specific duties. 

f. Functions and responsibilities of Committees. 

g. Regulatory documents and their importance. 

h. Attitudes and procedures that will help member to: 

1. learn while doing. 

2. make payments on time. 

3. develop a willingness to do his or her fair share of the work and the decisionmaking. 

4. cultivate a concern for his or her neighbor. 

5. consider the good of the group, ahead of self-interest. 

6. use his or her vote and know it counts: within the cooperative for directors and 

officers of the board; outside for local, state, and national Government. 

7. cooperate with board and committees. 

III. The adviser must be able to help the people understand that there are rules which must be 

followed. The adviser must make certain that the members realize that, by signing their 

occupancy agreement, they are agreeing to live up to all aspects of that agreement. In so doing, 

they are agreeing to abide by all of the funding agency's regulations pertaining to the 

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Attachment 11-G 

Page 2 of 2 

cooperative. These regulatory documents must be taught over and over and consulted by the 

members in all major decisions. The adviser would also be expected to: 

a. work with families or individuals with specific problems. 

b. consider each activity as an opportunity for the members to learn - learning while 

doing must be the members' primary goal. 

c. become involved in the early planning stage of the cooperative. 

d. involve members in decision-making during the planning stage, including the selection 

of living unit. 

e. feel a part of the group of members and break down regulations and instructions into 

language understood by them. 

f. give members the freedom and encouragement to express ideas and to carry out ideas 

accepted by the majority unless they are contrary to Government regulations. 

g. interpret Government regulations and guidelines, being able to apply and teach them. 

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Attachment 11-H 

Page 1 of 1 

ATTACHMENT 11-H 

ADVISER RESPONSIBILITIES 

Responsibilities of the adviser to the board will include - 

a. serving as backup manager while teaching self-management and maintenance to the 

members. 

b. assisting in organizing the board of directors and standing committees and meeting 

regularly with them. 

c. assisting in continual evaluation and monitoring of operations. 

d. developing an educational plan and being responsible for its implementation. 

e. assisting in setting up systems and procedures for1. management, including detailed financial, personal, and activity records; 

2. maintenance of buildings, grounds, and equipment. 

f. assisting with financial questions that are not of sufficient complexity to require

referral to an outside auditor. 

g. advising in evaluation of new applicants for membership. 

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HB-1-3560

ATTACHMENT 11-I 

SUBSCRIPTION AGREEMENT 

Dwelling Unit NO.___________ 

Date _______________________ 

1. Subscription Amount: 

(a) I/We ________________________, a legal resident(s) of

__________________________, hereinafter called “Subscriber,” hereby subscribe for 

membership in _____________________________, a cooperative housing corporation 

hereinafter called the “Cooperative,” and hereby subscribe to a Membership Certificate in 

said Cooperative having a par value of $__________. 

(b) Subscriber hereby agrees to pay for the Membership Certificate, also referred to as 

Membership Fee, as follows: 

(1) $_________ upon signing this agreement. 

(2) $_________ in monthly payments of $________ payable over _____ 

consecutive months (not to exceed 12 months). 

2. Ratification of Other Provisions. Subscriber has read and agrees to be bound by all 

provisions of the articles of incorporation, bylaws, and occupancy agreement, copies of which 

are attached hereto and receipt of which is hereby acknowledged, and agrees to be bound by 

requirements of the Rural Development as long as it remains mortgagee. 

3. Priority of Mortgage Lien. This agreement and all rights hereunder are and at all times shall 

be subject and subordinate to the lien of the mortgage and accompanying documents to be 

executed by the Cooperative to Rural Development and to any and all modifications, extensions, 

and renewals thereof; and to any mortgage or deed of trust which may at any time hereafter be 

placed on the property of the Cooperative or any part thereof.

4. Occupancy Agreement. Subscriber, if approved for membership, will be entitled to 

occupancy of the above numbered dwelling unit under provisions of the above-mentioned 

occupancy agreement. Estimated initial charge per month for said unit will be established prior 

to signing the occupancy agreement. Future charges will be based on family income, as 

provided for in the occupancy agreement. I/We agree to execute the occupancy agreement on 

demand and to comply with all the terms thereof.

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Attachment 11-C

Page 3 of 8 

5. Cancellation Rights. 

(a) The Cooperative reserves the right at any time before it has notified the Subscriber of 

his/her acceptability for membership, for reasons deemed sufficient by the Cooperative, 

and approved by Rural Development, to return the amount paid by the Subscriber under 

this agreement. In the event the Subscriber shall have died prior to becoming a member, 

the Cooperative reserves the right to return the amount paid by the Subscriber under this 

agreement to Subscriber's estate or legal representative, and thereupon all rights of the 

Subscriber shall cease and terminate without further liability on the part of the 

Cooperative. 

(b) It is understood that the Subscriber's credit is subject to approval by Rural 

Development, and that said Subscriber's total household income must not exceed any 

limitations for initial occupancy established by Rural Development. In the event Rural 

Development determines that the Subscriber does not meet Rural Development credit, 

income limitation, or other eligibility requirements for participation in this project, the 

Cooperative shall return to Subscriber the sums paid hereunder. In the event Rural 

Development determines that the necessary loan to finance the Cooperative housing 

project cannot be made or insured by Rural Development, or the Cooperative withdraws 

its application for such loan, the Cooperative shall return to Subscriber all sums paid by 

Subscriber hereunder. Upon either determination by Rural Development and the return of 

the sums to Subscriber as provided in this paragraph, this agreement shall become null and 

void and all rights and liabilities hereunderof the parties shall cease and terminate. 

(c) If the Subscriber within five (5) days after the execution of this subscription 

agreement, notifies the Cooperative in writing that he wishes to withdraw from the 

agreement, the amounts paid by the Subscriber under this agreement will be returned to the 

Subscriber and thereupon all rights and liabilities of the Subscriber hereunder shall cease 

and terminate. If, at the end of the five-day period, the Subscriber has not exercised this 

right to withdraw, the right will be terminated. If Rural Development determines that 

membership has not been achieved to the extent required by Rural Development, the 

Subscriber will again have the right to withdraw within a five-day period. 

(d) If the Subscriber defaults in any obligation under this agreement, and such default 

continues for fifteen (15) days after notice sent by registered mail by the Cooperative to 

the Subscriber at the address given below, then at the option of the Cooperative, the 

Subscriber shall lose any and all rights under this agreement. Any amount paid toward 

this subscription price at the option of the Cooperative may be retained by the Cooperative 

as liquidated damages or be returned, less the Subscriber's proportionate share of expenses 

incurred by the Cooperative as determined solely by the Cooperative. The Cooperative 

may, at its option, release the obligations of the Subscriber under this agreement in the 

event the Subscriber secures an assignee of this agreement who assumes the obligations 

herein contained and is satisfactory to the Cooperative and Rural Development while 

mortgagee. This agreement is not otherwise assignable. 

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Attachment 11-G 

Page 4 of 2 

6. Oral Representation Not to be Relied Upon. This agreement will supersede any prior 

understandings and agreements and constitutes the entire agreement between the Subscriber and 

the Cooperative, and no oral representation or statements shall be considered a part hereof. 

WITNESS: ______________________ 

 Subscriber 

 

_____________________ ______________________ 

 Subscriber 

 ______________________ 

 Address 

 

 ______________________ 

 

 ______________________ 

 Telephone 

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