rhs, rbs, rus, fsa, usda pt. 1944, subpt. e, exh. a · rhs, rbs, rus, fsa, usda pt. 1944, subpt. e,...

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RHS, RBS, RUS, FSA, USDA Pt. 1944, Subpt. E, Exh. A

in accordance with subpart A of part2033 of this chapter. If disapproval isnot at the applicant’s request or bymutual agreement, the applicant willbe notified that it may request a fur-ther review of the decision in accord-ance with subpart B of part 1900 of thischapter.

(3) OGC closing instructions. For aloan to an organization, or an indi-vidual in special cases, the approveddocket, including any title evidence,will be sent through the State Office toOGC for preparation of closing instruc-tions and any special legal documentsrequired for closing. A certified copy ofa loan resolution or the original exe-cuted witnessed loan agreement mustbe supplied by the applicant in time tobe included in the docket. No docketwill be considered which does not in-clude the required resolution or agree-ment. The OGC will route the docket,including closing instructions and anylegal documents, to the servicing officethrough the State Office.

[55 FR 29562, July 20, 1990, as amended at 59FR 6896–6897, Feb. 14, 1994]

§§ 1944.247–1944.249 [Reserved]

§ 1944.250 OMB control number.

The reporting and recordkeeping re-quirements contained in this regula-tion have been approved by the Officeof Management and Budget and havebeen assigned OMB control number0575–0047. Public reporting burden forthis collection of information is esti-mated to vary from 15 minutes to 40hours per response, with an average of6.4 hours per response including timefor reviewing instructions, searchingexisting data sources, gathering andmaintaining the data needed, and com-pleting and reviewing the collection ofinformation. Send comments regardingthis burden estimate or any other as-pect of this collection of information,including suggestions for reducing thisburden, to the Department of Agri-culture, Clearance Officer, OIRM, room404–W, Washington, DC 20250; and tothe Office of Management and Budget,Paperwork Reduction Project (OMB#0575–0047), Washington, DC 20503.

[56 FR 2241, Jan. 22, 1991, as amended at 58FR 44273, Aug. 20, 1993]

EXHIBIT A TO SUBPART E—HOW TOBRING RENTAL AND COOPERATIVEHOUSING TO YOUR TOWN

I. IntroductionII. Applying for a LoanIII. Review of the PreapplicationIV. Developing the Loan DocketV. Review of the Complete DocketVI. ConstructionVII. Open HouseVIII. Exhibits

A–1 Legal Service AgreementA–2 Survey of Existing Rental HousingA–3 Rental Housing SurveyA–4 Cooperative Housing SurveyA–5 Housing Survey SummaryA–6 Housing Allowances for Utilities and

Other Public ServicesA–7 Information to be Submitted with

Preapplication for a Rural Rental Hous-ing (RRH) and a Rural Cooperative Hous-ing (RCH) Loan

A–8 Outline of Professional Market StudyA–9 Administrative Process for Combining

FmHA or its successor agency underPublic Law 103–354 Assistance with Low-Income Housing Tax Credits

A–10 Information to be Submitted with Ap-plication for a Rural Rental Housing(RRH) and a Rural Cooperative Housing(RCH) Loan.

I. INTRODUCTION

A. Most areas in rural America need moreadequate rental housing. Some people withmodest incomes live in impoverished housingthat is cold in the winter and hot in the sum-mer because adequate housing at a reason-able rent is not available. Other householdsthat prefer to rent have the choice of eithercommuting many miles to work or living inthe substandard rental housing that is avail-able in small rural communities. To help re-duce this rental housing shortage, the Farm-ers Home Administration (FmHA) or its suc-cessor agency under Public Law 103–354 fi-nances rental housing in rural communities.

B. To augment the choice of living accom-modations available to modest income per-sons, FmHA or its successor agency underPublic Law 103–354 also provides financingfor cooperative-type housing units. Althoughthis kind of housing units is appropriateonly to a particular group of persons, it alsoserves to help reduce the existing housingshortage in rural communities. Nonprofit or-ganizations, other types of organizations andindividuals may qualify for these housingloans. Information about the loans is avail-able at the local FmHA or its successoragency under Public Law 103–354 office.

C. This handbook will assist interested per-sons and groups in applying for a rural rent-al or cooperative housing loan. It also briefly

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7 CFR Ch. XVIII (1–1–02 Edition)Pt. 1944, Subpt. E, Exh. A

explains requirements regarding the con-struction and operation of the housing.

D. The basic guidelines in this handbookapply to all applicants; however, some proce-dural requirements will vary depending onthe size of the project being proposed and thetype of applicant/borrower. However, in noinstance will different policies, practices orprocedures be utilized in the evaluation or indetermination of the creditworthiness of anyorganization or person(s) in connection withthe provision of any RRH or RCH loan orother financial assistance for a project orother financial assistance which is securedby residential real estate because of race,color, religion, sex, handicap, marital or fa-milial status, age, or National origin.

E. The objective of the FmHA or its suc-cessor agency under Public Law 103–354 hous-ing loan program is to provide credit forhousing that serves the needs of eligible verylow-, low-, and moderate-income permanentresidents.

F. Successful housing depends on the exist-ence of the following three important condi-tions:

1. There must be a need for the housing tobe built.

2. The housing must fit the needs of pro-spective tenants or cooperative membersfrom the standpoint of location, design andcost.

3. The applicant for a loan must provideadequate information to FmHA or its suc-cessor agency under Public Law 103–354 toshow that these basic conditions can be met.

II. APPLYING FOR A LOAN

A. An individual, organization, or grouporganizing to provide housing may contactany Rural Development office processingSection 515 loan requests to obtain informa-tion and necessary forms. The Section 515program is administered by Rural Develop-ment’s Rural Housing Service (RHS).

B. Each funding cycle, RHS will publish inthe FEDERAL REGISTER a notice of the avail-ability of funds (NOFA) for Section 515 loansand a list of designated places (communities)for which loan requests may be submitted.The list of designated places is also availablefrom any Rural Development office proc-essing Section 515 loan requests. Designatedplaces are rural places identified by RHS ashaving the greatest potential need for Sec-tion 515 housing. Except in unusual cir-cumstances, places are designated for a pe-riod of three years or until a loan has beenselected for funding, whichever occurs first.

C. Applicants must submit a loan requestby the deadline announced in the FEDERALREGISTER, and available in any Rural Devel-opment office, to be considered in the fund-ing cycle. Section III of this exhibit providesinformation on the loan review and selectionprocess. In addition, applicants are advised

to read this subpart, which provides detailedinformation on the Section 515 program.

D. The loan request consists of SF–424.2,‘‘Application for Federal Assistance (ForConstruction),’’ the supporting material orinformation listed in exhibit A–7 of this sub-part, and any additional information re-quired in NOFA. This information will en-able the Agency to determine:

1. The eligibility of the applicant;2. The feasibility (economic, environ-

mental, and architectural) of the proposedhousing;

3. That prospective cooperative membershave read and understand their responsibil-ities as outlined in ‘‘What is CooperativeHousing?’’ (available in any Rural Develop-ment office) before agreeing to a cooperativehousing project;

4. Whether the proposed housing can appro-priately be financed by RHS; and

5. Its Civil Rights impact.E. This information usually can be fur-

nished by the applicant without hiring ex-tensive professional services. However, feesfor professional packaging services renderedto a nonprofit organization can be made apart of loan development costs.

III. REVIEW OF THE LOAN REQUEST

A. Loan requests received by the deadlineannounced in the NOFA will be reviewed,scored, and ranked based on the loan selec-tion criteria announced in the NOFA. Re-quests that rank sufficiently high will be re-viewed for eligibility and feasibility.

B. Upon completion of the loan reviewprocess, applicants will be advised of RHS’decision. Applicants whose loan requests areselected for further processing will be noti-fied of the additional steps that need to betaken. Loan requests not selected for furtherprocessing in the current funding cycle willbe returned to the applicant.

IV. DEVELOPING THE LOAN DOCKET

A. When a loan request is selected for fur-ther processing, the servicing official will re-view the items required in exhibit A–9. Theamount of information required will varybased on the complexity and size of the pro-posed project. The servicing official will alsoprovide forms and guides to assist the appli-cant in recording required information.Some of the guides are included as exhibitsin this handbook. The applicant is respon-sible for providing the information required.The servicing official will assemble this in-formation and complete the docket.

B. The following information will be help-ful in developing a loan docket. The first twoitems are applicable only to nonprofit orga-nizations. The other items apply to any ap-plicant. In addition, the requirements of ex-hibit A–7 of this subpart must be met when


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developing a loan request and the require-ments of exhibit A–9 must be met for loan re-quests selected for further processing.

1. Getting organized if applicant is a non-profit organization and has not adopted articlesof incorporation and bylaws. a. Steering com-mittee or sponsor. The group may choose asteering committee or, in the case of a coop-erative, a sponsor to act for it. An attorneywill usually be required to advise the organi-zation on incorporation and assist in devel-oping the loan application. The steeringcommittee, or sponsor, should select an at-torney who is interested in the proposedhousing and will render the necessary serv-ices promptly for a reasonable fee.

b. Articles of incorporation and bylaws.FmHA or its successor agency under PublicLaw 103–354 has developed model articles ofincorporation and bylaws for nonprofit orga-nizations. The steering committee, or spon-sor, should arrange for the servicing officialto meet with the attorney. The servicing of-ficial will give the attorney copies of theFmHA or its successor agency under PublicLaw 103–354 model articles of incorporationand bylaws and explain FmHA or its suc-cessor agency under Public Law 103–354 re-quirements. Separate bylaws have been de-veloped for cooperatives and for rental hous-ing organizations.

c. Attorney’s fees. Reasonable attorney’sfees may be included in the FmHA or its suc-cessor agency under Public Law 103–354 loan.A written agreement between the applicantand attorney is required. See exhibit A–1 fora sample copy of an agreement.

d. Board of directors. The steering com-mittee, or sponsor, usually selects theincorporators for the corporation. The boardof directors is responsible for conducting thecorporation’s business, including obtainingthe loan and providing overall managementafter the housing is completed.

2. Obtaining broadly based membership forrental housing. a. A nonprofit corporation ap-plying for a loan must have and maintain abroadly based local membership, includingleaders in the community, representing a va-riety of interests in the community. Themembers may be individuals or organiza-tions but each member is limited to onevote.

b. The purpose of the broadly based mem-bership requirement is to obtain communitysupport, provide enough members to be ableto rotate officers and members of the boardof directors, protect the Government’s finan-cial interest as mortgagee and provide assur-ance that the housing will be a success andthe purpose of the loan carried out.

c. In RRH loans made to nonprofit organi-zations and public bodies, there is no profitincentive. The term of the loan may be for aslong as 30 years, with an amortization periodnot to exceed 50 years. Therefore, factorssuch as the prospect for continuous com-

petent management and supervision, mainte-nance and adequate community support forthe housing project over the expected life ofthe loan are important.

d. A membership list showing the namesand addresses of each member should bemaintained by the secretary of the organiza-tion.

(1) Number of members required. The organi-zation should have at least 25 members. Thenumber of members may be decreased forprojects with less than 25 units.

(2) Contributions by members. Nonprofit cor-porations may require a membership fee orask prospective members for a contribution.This is the method often used by nonprofitcorporation applicants to raise initial oper-ating capital. However, no such fee or con-tribution can entitle a member or prospec-tive member to a preference in occupancy ofthe housing.

3. Cooperative membership. a. Only thosepersons who will reside in the cooperativehousing will be members of the cooperative.The composition of the board of directorswill be drawn from that membership, ini-tially by appointment and later by electionfrom the general membership. The boardshould be composed of at least 5 members.

b. The board of directors, with assistancefrom the adviser to the board (discussed in alater section), will devise the rules and regu-lations under which the cooperative will op-erate. Additionally, the board will be respon-sible for management of the cooperative.

c. A membership list showing the namesand addresses of each member will be main-tained by the secretary of the cooperative.

d. Cooperative membership will require thedeposit of a membership fee by each memberas outlined in § 1944.215(g) of this subpart.The fee will be retained by the cooperativefor as long as the person remains a memberof the cooperative. The fee will be refundedto the person when membership is termi-nated.

4. The applicant should communicate withofficials of the community early in the de-velopment of the proposal to explain the ben-efits of the proposed housing to the commu-nity. This meeting will serve to remove theuncertainty of the impact of the housing onthe community and may aid in a timelyprocessing of the loan request. The supportof community officials is helpful in obtain-ing environmental clearances, possible zon-ing changes, favorable taxation, etc.

5. Initial operating capital. a. All applicantsmust have enough inital operating capital toget started. When justified, FmHA or its suc-cessor agency under Public Law 103–354 mayinclude these funds in a loan made to a con-sumer cooperative, nonprofit organization orpublic body. Initial operating capital shouldbe sufficient to pay such costs as propertyand liability insurance premiums, fidelitycoverage premiums when the applicant is an


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organization, utility hook-up charges and de-posits, maintenance and other equipment,lease forms, furnishings, loan payments thatmay become due during construction andother initial expenses.

b. At least 2 percent of the total develop-ment cost of the project is required for ini-tial operation and maintenance costs. Theapplicant can determine the amount re-quired by working out a detailed budget ofincome and expenses for the period of timeuntil the housing is ready for occupancy andincome will be available. The actual budgetmay indicate that more than 2 percent isneeded.

6. Analysis of market to determine demand forrental housing. a. Applicants should discusswith the servicing official the type of mar-ket analysis that will be needed. Applicantsmust comply with paragraph II of exhibit A–7 when preparing market information.

b. Exhibits A–2 and A–3 are sample formswhich may be modified by the applicant toassist in the assembly of the information forthe market analysis.

7. Planning to serve the market. a. Planningthe housing to serve the market in the com-munity involves more than obtaining a blue-print of the building. It requires a carefulevaluation of conditions in the communityand careful planning to assure that the re-sult will be good housing designed for inde-pendent living at a cost eligible tenants canafford. Well planned housing is:

(1) Convenient, attractive, safe and com-fortable.

(2) Easily maintained.(3) Located where tenants or members can

have easy access to the goods and servicesthey require for daily living.

(4) Planned to meet all codes, regulations,and acceptable construction practices.

(5) Priced within an affordable range of itsprospective tenants and members.

(6) Energy efficient and complies withFmHA or its successor agency under PublicLaw 103–354’s thermal performance stand-ards.

b. The servicing official and State Officearchitect can provide information that willhelp the applicant in planning the housing.

8. Selecting an architect. a. The services ofan architect are required for all housingprojects which have more than four units.The cost of a registered architect/engineermay be included in the loan.

b. Before anything more than schematicdrawings are prepared, the applicant and itsarchitect, the FmHA or its successor agencyunder Public Law 103–354 architect/engineerand the servicing official should arrange ameeting. This meeting will acquaint the ap-plicant’s architect with the purposes of thehousing and FmHA or its successor agencyunder Public Law 103–354’s requirements.This will be helpful in eliminating misunder-

standings. Among the topics that should bediscussed are:

(1) Objectives of the housing program.(2) Design requirements that will produce

good housing at reasonable cost.(3) Stages at which FmHA or its successor

agency under Public Law 103–354 must reviewplans and specifications.

(4) Services the architect will be expectedto perform.

(5) Agreement between architect and appli-cant.

9. Selecting a site. a. The location of thehousing is an important part of planning toserve the market. Occupants should haveeasy access to required services. A desirableresidential setting within a rural communityis essential.

b. Site cost is also important. The totalcost of the site, including the cost of im-provements and the price of the land, mustbe considered. Both may be included in theloan. However, loan funds made available topurchase land may not exceed the presentmarket value of the land in its present con-dition as determined by an FmHA or its suc-cessor agency under Public Law 103–354 ap-praisal.

c. Before buying a site, the applicantshould consult the architect to determinethe suitability of the site for the proposedhousing. The applicant must consider thesite requirements detailed in paragraph IIIof exhibit A–7 of this instruction. The appli-cant should not enter into any firm agree-ment to buy a site with the expectation ofreceiving an FmHA or its successor agencyunder Public Law 103–354 loan without con-sulting with the servicing official and priorto the Agency’s completion of the environ-mental impact review.

10. Drawings, specifications and cost esti-mates. The size, complexity and cost of hous-ing projects can vary from a duplex locatedon a small building lot to a complex of build-ings located on a site containing severalacres. The applicant must provide drawingsand specifications in accordance with para-graph IV of exhibit A–7 of this subpart.

11. Budgets. a. The initial budget shouldcover the period from the date the first con-struction expenses are incurred until the endof the applicant’s first fiscal year followingcompletion of the housing. After the finalcost estimate has been made and the amountof the loan needed has been determined, abudget for a typical year should be devel-oped.

b. This budget should be based on a typicalannual operation after the project is occu-pied. Budgeting is an important part of themanagement. The applicant should spendenough time working on it to assure that theestimates are realistic. Budgets will be re-quired each year until the FmHA or its suc-cessor agency under Public Law 103–354 loan


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is repaid in full. The budget serves severalpurposes including:

(1) Helps determine rental or occupancyrates.

(2) Indicates financial soundness.(3) Serves as a guide for paying expenses.c. Form FmHA or its successor agency

under Public Law 103–354 1930–7, ‘‘MultipleFamily Housing Project Budget,’’ and its ac-companying exhibit A–6 of this subpart are asample budget form and utility allowanceform.

12. Loan resolution or loan agreement. Whenthe applicant is a corporation or an indi-vidual applying for a loan above certainamounts, a copy of the required loan resolu-tion or loan agreement should be obtainedfrom and discussed with the servicing offi-cial before the loan docket is developed.Among other things, this document outlineshow the income from the housing is to beused. These requirements should be under-stood at the time the budget is developed.

13. Rental management plan. A detailedmanagement plan will be developed whichwill outline the basic policies and proceduresto be followed and the duties of the officersand employees. The applicant must managethe project in accordance with the require-ments of subpart C to part 1930 of this chap-ter.

14. Rental manager and caretaker. a. A com-prehensive management program is essentialto the successful operation of the project. Acarefully written plan should be developed inaccordance with exhibit B of FmHA Instruc-tion 1930–C.

b. The use of an onsite manager should bebased on the size of the project. The managershould be readily available to the tenants.The manager might be one of the tenants ora member of the board of directors of a non-profit corporation. The manager’s dutiesshould be specified in the management plan.

c. The board of directors of a corporation isresponsible for overall supervision and man-agement of all its affairs. The board shoulddelegate actual operating and managementresponsibility to committees or individualsand meet often enough to see that enterpriseis being managed successfully.

15. Cooperative self-management. a. The suc-cess of cooperative housing will depend onhow well the members are able to managethe cooperative themselves with assistancefrom the adviser to the board. The coopera-tive must first develop and designate thoseareas of responsibilities to be delegated tocommittees, a list of the committees, andthe functions of the committees. A copy ofthis information will be provided to eachprospective member.

b. It will be necessary for the proposedboard of directors to become familiar withhow a cooperative is supposed to work beforeit is able to successfully assume the respon-sibilities of running the cooperative. This

can best be achieved by participating in pro-grams designed for the express purpose ofeducating potential board members. The pro-spective board members will be expected totake part in such a training program.

c. Participation on committees by mem-bers will be on a voluntary basis. However, ifit appears a committee does not have suffi-cient numbers for it to adequately operate,then additional members will be expected tovolunteer their time and talents. Thus, par-ticipation on committees is voluntary up toa point. If a member has experience in a par-ticular area, that member should be encour-aged to join the committee which will ben-efit from his/her experience. The cooperativewill need a total commitment from themembership in order to assure success ofself-management. Examples of the types ofcommittees which may be considered are:

(1) Maintenance(2) Groundskeeping(3) Communications(4) Budget and finance(5) Rules(6) Recreation(7) Home serviced. If the cooperative is not successful in

managing itself, professional managementwill be hired by the cooperative.

16. Occupancy policies. a. Applicants shouldreview carefully the occupancy requirementswith the servicing official. Particular atten-tion should be given to the following require-ments:

(1) The housing must be open to all eligiblepersons regardless of race, color, religion,sex, handicap, familial status, age, or na-tional origin.

(2) The incomes of tenants and the initialincomes of cooperative members must bewithin the maximum income limits approvedby FmHA or its successor agency under Pub-lic Law 103–354.

b. Additional guidance concerning occu-pancy in congregate housing projects can befound in exhibit J of subpart C of part 1930 ofthis chapter.

17. Cooperative board of directors. The boardwill essentially be the backbone of the coop-erative structure. In this capacity it will beresponsible for establishing the policies andprocedures which will govern the operationof the cooperative and for enforcing thosepolicies and procedures. The board will becomposed of members of the cooperativewith the same interests and concerns as thegeneral membership. For instance, insti-tuting an increase in the occupancy rates orterminating a member’s right to cooperativeownership because of serious repeated viola-tions of cooperative rules and regulationswill be the types of actions which are takenby the board. The members of the board willbe affected by these same decisions since


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they must adhere to the same rules and reg-ulations as the rest of the cooperative com-munity.

18. Adviser to the board. Resident(s) of thecommunity who is not a member of the coop-erative will serve as an adviser to the boardduring the period of formation and until theboard of directors has effectively dem-onstrated its ability to manage the coopera-tive. At that time, the adviser will maintainclose contact with the cooperative and pro-vide advice and assistance as needed. The ad-viser may also be an organization; however,one specific individual will have sole contactwith the board to eliminate confusion and toprevent one person from countermanding an-other’s instructions. The adviser will closelymonitor the cooperative for at least 2 yearsafter it becomes its own manager. This timemay vary, depending on the circumstances.The adviser must be very carefully selectedto ensure that adequate guidance is given tothe board. The adviser must be able to meetcertain criteria in order to provide the bestpossible counsel. The Qualifications of anAdviser to the Board, Relationship of Ad-viser to Members, and Adviser Responsibil-ities, found at exhibits E, E–1, and F of thissubpart, should be used in evaluating poten-tial advisers. While it may not be possible tofind some one individual or individuals whocan meet all the requirements outlined, thecriteria should be used as guides in deter-mining the best candidate. FmHA or its suc-cessor agency under Public Law 103–354 willprovide counsel to the cooperative duringthe interview period and must approve theselection of the individual(s). We recognizethe adviser will require compensation forservices rendered, however, the amount paidshould not severely limit the amount of pa-tronage capital accruing to the members.

19. Management reserve. The board’s abilityto manage the cooperative will determinewhether members will receive equity frommembership in the cooperative. A set ratefor professional management will be assessedeach month as part of the occupancy rateand will be maintained in a separate reserveaccount. If the cooperative is successful atmanaging its own affairs during the year,the amount accumulated in the reserve willbe assigned equally to each member at theend of the year as patronage capital. Thissame procedure will be followed each year,allowing a buildup of patronage capital. Ifprofessional management is hired by the co-operative to correct deficiencies which havearisen from poor self-management, furtheraccumulations to the management accountwill then be used to pay for professionalmanagement and the amount being accruedto the members’ patronage capital accountwill be suspended. If the amount being accu-mulated for management is not sufficient tomeet the needs, occupancy rates will be in-creased to cover the expense of management.

When the cooperative begins to again man-age itself, the assessment for the manage-ment reserve will resume as previously stat-ed. Any other income remaining at the endof the year will also be assigned as patronagecapital. Assignment from both of thesesources must be accomplished in accordancewith the IRS ruling concerning patronagedistribution. Careful records must be kept totrack the monthly amount being contributedby each member to the management reserveaccount so that the cooperative will knowhow much patronage capital the member isentitled to should membership be terminatedprior to the end of the fiscal year. FmHA orits successor agency under Public Law 103–354 rental assistance proceeds are not to beused to make the member’s contribution tothe management reserve account. Therefore,the member must have sufficient incomefrom which to make this payment. If it be-comes necessary to hire full-time profes-sional management, then the managementfee will be considered part of the shelter costand thus eligible for RA. FmHA or its suc-cessor agency under Public Law 103–354 willassist the adviser to the board in deter-mining if and when professional manage-ment will be hired in lieu of self-manage-ment. In the event the adviser and FmHA orits successor agency under Public Law 103–354 are unable to reach an agreement regard-ing the hiring of professional management,the ultimate decision will rest with FmHAor its successor agency under Public Law103–354. Compensation paid to the adviserwill be shared by members through the de-duction of equal amounts from their man-agement reserve payments.

20. Rules and regulations. The rules and reg-ulations for tenants and members should bedeveloped by the applicant and a copy in-cluded in the loan docket.

21. Lease or occupancy agreement. The appli-cant should develop an application form foroccupancy and a lease or occupancy agree-ment form in accordance with the require-ments of subpart C of part 1930 of this chap-ter. Exhibit J of this subpart is to be used asa guide for developing an occupancy agree-ment. Copies of these forms should be in-cluded in the loan docket.

22. Affirmative fair housing marketing. Inorder to promote proper planning for initialrent-up and occupancy, the servicing officialwill meet with the applicant after loan ap-proval, preferably at the preconstructionand/or the prerent-up or preoccupancy con-ference to discuss the Affirmative Fair Hous-ing Marketing Plan or other similar agree-ment approved for the project. In the case ofa cooperative, the servicing official will dis-cuss the Plan at the loan request stage.

V. REVIEW OF THE COMPLETE DOCKET

A. When the applicant has developed thecomplete loan docket, it should furnish and


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discuss the information with the servicingofficial. SF 424.2, the information and mate-rials listed in exhibit A–9 plus FmHA or itssuccessor agency under Public Law 103–354forms provided by the servicing official be-come the loan docket.

B. If the docket is submitted to the StateOffice for consideration, the State Directorwill indicate any special requirements thatneed to be met before loan approval or loanclosing.

C. Commercial financing should be used forprojects during the interim construction pe-riod if available at reasonable rates andterms, FmHA or its successor agency underPublic Law 103–354 can make a conditionalcommitment to the interim lender that willloan the funds to finance the construction ofthe project. The commitment will be condi-tioned upon acceptable performance by thebuilder and payment of all constructionbills. After the conditions have been met, theFmHA or its successor agency under PublicLaw 103–354 loan will be closed to pay the in-terim construction indebtedness. Draws oninterim loan funds will be made only asneeded and will require the joint approval ofthe applicant and the FmHA or its successoragency under Public Law 103–354 servicingofficial.

D. In other cases FmHA or its successoragency under Public Law 103–354 can makeadvances of loan funds for construction, thenote and mortgage will be signed by the ap-plicant and the loan funds deposited in ajoint bank account at loan closing. The loanfunds are disbursed from the bank account asneeded. Checks on the account must besigned by the borrower and countersigned bythe FmHA or its successor agency underPublic Law 103–354 servicing official.

VI. CONSTRUCTION

The start of construction is the first phys-ical sign that the housing will become a re-ality. The construction period is a most crit-ical period of time.

A. Competitive bidding. 1. Competitive bid-ding is recommended and may be required byFmHA or its successor agency under PublicLaw 103–354 in some cases. If required, theState Director’s letter sent after the loan isauthorized will instruct the servicing officialto have the applicant or its architect com-plete the necessary bid documents.

2. The applicant and the architect shouldinvite competent contractors to bid on thehousing. If bids are within the estimates, thesuccessful bidder will be selected and thecontract for construction will be awarded.During construction, a qualified FmHA or itssuccessor agency under Public Law 103–354representative and the applicant and its ar-chitect will inspect the work to protect theirrespective interests in the project. Paymentwill be made from the FmHA or its successoragency under Public Law 103–354 loan funds,

or interim loan funds, according to provi-sions in the contract.

B. Construction without competitive bidding.When competitive bidding is not required,the loan docket will include reliable cost es-timates or a firm offer to build from a build-er selected by the applicant. A contract con-curred with by FmHA or its successor agencyunder Public Law 103–354 will be executed bythe applicant and the contractor. If full ar-chitectural services are obtained by the ap-plicant, inspection of the work will be per-formed by the architect’s staff. The appli-cant and FmHA or its successor agencyunder Public Law 103–354 will inspect theconstruction to protect their respective in-terests in the project. Payments will bemade to the contractor in accordance withthe terms of the contract.

C. Starting construction. Constructionshould not be started until the FmHA or itssuccessor agency under Public Law 103–354loan is closed or the FmHA or its successoragency under Public Law 103–354 commit-ment has been made to the interim lender.

VII. OPEN HOUSE

Promotion of the housing availabilityshould start at least 90 days prior to comple-tion. The applicant may want to create in-terest in the housing and build up the list ofprospective tenants or members by having adedication ceremony. This will attract at-tention and remind the local residents ofwhat the housing means to the community.This is especially recommended for housingdeveloped by nonprofit corporations.

VIII. EXHIBITS

The following exhibits may be used whenapplicable and, if necessary, adapted to meetthe specific needs of applicants.

ExhibitA–1 Legal Services AgreementA–2 Survey of Existing Rental HousingA–3 Rental Housing SurveyA–4 Cooperative Housing SurveyA–5 Housing Survey SummaryA–6 Housing Allowances for Utilities and

Other Public ServicesA–7 Information to be Submitted with a

Loan Request for a Rural Rental Housing(RRH) or a Rural Cooperative Housing(RCH) Loan

A–8 Outline of Professional Market StudyA–9 Additional Information to be Sub-

mitted for Rural Rental Housing (RRH)and Rural Cooperative Housing (RCH)Loan Requests

A–10 [Reserved]A–11 Processing Guidelines for Loans for

Equity to Avert PrepaymentA–12 Market Study Checklist (Available

in Any FmHA or Its Successor AgencyUnder Public Law 103–354 Office)


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7 CFR Ch. XVIII (1–1–02 Edition)Pt. 1944, Subpt. E, Exh. A–1

A–13 Work Sheet for Loan Calculation(Available in Any FmHA or Its SuccessorAgency Under Public Law 103–354 Office)

A–14 Information To Be Submitted forSubsequent Loans (Available in AnyFmHA or Its Successor Agency UnderPublic Law 103–354 Office)

[56 FR 2241, Jan. 22, 1991; 56 FR 47376, Sept.19, 1991, as amended at 58 FR 40954, July 30,1993; 59 FR 6891, 6897, Feb. 14, 1994; 62 FR25065, 25069, May 7, 1997; 62 FR 67223, Dec. 23,1997]

EXHIBIT A–1 TO SUBPART E—LEGALSERVICES AGREEMENT (FOR COOPER-ATIVE OR OTHER NONPROFIT ORGANI-ZATIONS)

Agreement made this lll day ofllllllll, 19ll between thellllllllll, hereinafter called the(owner) (board of directors), andllllllllll, hereinafter called the at-torney, witnesseth:

Whereas the (owner) (board of directors)intend to form a cooperative or other non-profit corporation, hereinafter called the(corporation) (cooperative), to construct andoperate a rural housing project inllllllllllllllllllllllll

(Town) (County) (State)and to obtain a loan from the Farmers HomeAdministration or its successor agencyunder Public Law 103–354 to finance the con-struction, and the attorney agrees to per-form all legal services necessary to incor-porate the (corporation) (cooperative), andto perform all other customary legal servicesnecessary to the organization, financing,construction, and initial operating of theproposed rural housing project, such servicesto include but not to be restricted to the fol-lowing:

1. Prepare and file incorporating papersand supervise and assist in taking other nec-essary or incidental actions to create the(corporation) (cooperative) and authorize itto finance, construct, and operate and pro-posed housing project.

2. Prepare for and furnish advice and as-sistance to the owner, or to the board of di-rectors and officers of the corporation, inconnection with (a) notices and conduct ofmeetings; (b) preparation of minutes ofmeetings; (c) preparation of adoption of nec-essary resolutions in connection with the au-thorization, financing, construction, and ini-tial operation of a rural housing project; (d)special tax treatment applicable to housingcooperatives; (e) necessary construction con-

tracts; (f) preparation of adoption of bylawsand related documents; (g) any other actionnecessary for organizing the (corporation)(cooperative) or financing, constructing, andinitially operating the proposed housingproject.

3. Review construction contract, bid-let-ting procedure, and surety and performancebonds.

4. Examine real estate titles and prepare,review and record deeds and any other in-struments.

5. Cooperate with the architect employedby the (owner) (board of directors) in connec-tion with preparation of survey sheets, ease-ments, and any other necessary title docu-ments, construction contracts, and other in-struments.

6. Render legal opinions as required by the(owner) (board of directors) or the FarmersHome Administration or its successor agen-cy under Public Law 103–354, United StatesDepartment of Agriculture.

7. (Owner) (board of directors) agree to paythe attorney for professional services in ac-cordance with this agreement, as follows:llllllllllllllllllllllll

llllllllllllllllllllllll

The fees to be payable in the following man-ner and at the following times:llllllllllllllllllllllll


The attorney states and agrees that of theabove total fees, llllll, represents feesfor services in connection with the organiza-tion and incorporation of the (corporation)(cooperative).

The (owner) (board of directors) and the at-torney further covenant and agree that, ifupon organization and incorporation, the(corporation) (cooperative) fails or refuses toadopt and ratify this agreement by appro-priate resolution within lll days, thisagreement shall terminate and (owner)(board of directors) shall be liable only forpayment for legal services rendered in con-nection with such organization and incorpo-ration.

Signed this lll day of llllll 19ll.Attorney: llllllllllllllllll

(Owner)(board of directors)llllllllllllllllllllllll





[56 FR 2245, Jan. 22, 1991]


427

RHS, RBS, RUS, FSA, USDA Pt. 1944, Subpt. E, Exh. A–4

EXHIBIT A–2 TO SUBPART E—SURVEY OF EXISTING RENTAL HOUSING

Name No. of units BR mix Type Year built Rent Vacan-cies Location Amenities

DrapesCarpetCentral coolingDishwasherGarbage disposalTV cable

EXHIBIT A–3 TO SUBPART E—RENTALHOUSING SURVEY

(SAMPLE)

A rental housing project is being plannedfor (name of community.) The project wouldprovide comfortable living at monthly rentalrates of (Indicate proposed basic rent bynumber of bedrooms.) Your opinion on thefollowing will help us to determine whethersuch a project is practical. This informationdoes not obligate you in any way.

1. What age group are you in? 62 or over [ ]50–61 [ ] 35–49 [ ] Under 35 [ ]

2. Are you or members of the householdhandicapped or impaired and in need of spe-cially designed housing arrangements? yes [ ]no [ ]

3. Number of person(s) in your household:lll.

4. Approximate annual income from allsources including any social security pen-sion, payments made on behalf of minor chil-dren, public assistance, etc.: $lll.

5. Do you own ( ) or rent ( ) present resi-dence?

6. Do you live in house ( ) apartment ( )room ( ) mobile home ( ) on a farm ( ) intown ( )?

7. Is your present housing modern ( ) notmodern, but adequate ( ) inadequate ( ). Ifinadequate, in what respect? lll.

8. What amount of monthly rent do youpay with utilities included? $lll.

9. Would you pay 30 percent of your month-ly income for modern housing for your fam-ily? yes ( ) no ( )

10. Would you be willing to move in if anapartment were availablelll, 19ll? yes ( )no ( )

11. Do you have a car? No, 1, 2, 3 (circle)

Name llllllllllllllllllll

Address lllllllllllllllllll

(including city/town)Telephone Number lllllllllllll

Location of employment llllllllll

For Elderly and Congregate Housing

12. Number of meals you would like pre-pared for you per day lll

13. What other services would you like tohave available to you?

Yes No

a. Housekeeping services ....b. Personal care services ....c. Social and recreational

activities services.d. Linen and laundry serv-

ices.e. Health and medical re-

lated services.f. Beauty and barber serv-

ices.g. Transportation or access

services.h. Other (specify) ................

14. List any hobbies or organizationalmembership you have.

NOTE TO APPLICANT: This sample surveyform is for your use in evaluating the needfor new rental units in the community andits market area. You should be prepared toexplain the methodology of the survey sinceFmHA or its successor agency under PublicLaw 103–354 will be spotchecking the re-spondents’ answers. How the survey is per-formed can influence the outcome; therefore,it is encumbent upon you to see that themanner in which it is conducted is suitableand acceptable to FmHA or its successoragency under Public Law 103–354. For in-stance, compensation being paid to someonefor survey work should not be dependentupon the number of respondents who wouldbe willing to move into the project. The sur-vey should be based on a random sampling ofpersons now residing in the market area.Things to avoid are surveying from the tele-phone book listing or a door-to-door canvassof a certain segment of the community. Wewant the development of rental units to bebased upon actual circumstances prevailingin the market area in order that the housingdevelopment will present a secure and eco-nomical living arrangement for the personsin need of the housing.

EXHIBIT A–4 TO SUBPART E—COOPERATIVE HOUSING SURVEY

BEFORE ATTEMPTING TO ANSWERTHESE QUESTIONS, PLEASE READ THEGUIDELINES FOR UNDERSTANDING THEPRINCIPLES OF COOPERATIVE HOUSING.


428


NOW TAKE TIME TO ANSWER THE FOL-LOWING QUESTIONS AS HONESTLY ASYOU CAN.

(Circle yes or no)1. Are you willing to share the responsibil-

ities required of a cooperative member?yes llll nollll

2. If asked, will you serve on the board ofdirectors or on a committee?

yes llll nollll

3. Are you willing to help in maintainingthe cooperaive property?

yes llll nollll

4. Do you now have a better idea of whatcooperative housing really is?

yes llll nollll

5. Do you want to ask more about the cooperative before deciding whether to join?

yes llll nollll

6. If the answer to question 5 is ‘‘yes,’’ willyou come to an information meeting to beheld in town?

yes llll nollll

7. Have you answered the questions truthfully? Did you answer ‘‘no’’ to any of ques-tions 1, 2, or 3? If so, this type of housing isnot for you. If you are interested, please goon to complete the second portion of thissurvey.

1. How many persons in your household?adults llllllllllllllllllll

children lllllllllllllllllll

2. Approximate annual income from allsources: $llllll

3. Are you or members of the householdhandicapped or impaired and in need of spe-cifically designed housing arrangements?

yes llll nollll

4. An informal meeting is scheduled forlll a.m./p.m., on llllll, 19ll, forthe purpose of discussing a proposed ll

-unit cooperative planned for this commu-nity. At that time a representative of the co-operative will be on hand to answer otherquestions you may have.

So that we may know how many persons toexpect at the meeting, we ask that you giveus your name, address, and phone number.NAME llllllllllllllllllll

ADDRESS llllllllllllllllll


PHONE lllllllllllllllllll

[56 FR 2245, Jan. 22, 1991]

EXHIBIT A–5 TO SUBPART E—HOUSING

SURVEY SUMMARY

(SAMPLE)

Item

Age—Head of household

62 orover 50 to 61 35 to 49 Under

35

Handicapped:Yes ................. .............. .............. .............. ..............No .................. .............. .............. .............. ..............

Household Size(BedroomsNeeded):1 or 2 persons

(1 bedroom) .............. .............. .............. ..............3 to 4 persons

(2 bed-rooms) ........ .............. .............. .............. ..............

5 to 6 persons(3 bed-rooms) ........ .............. .............. .............. ..............

7 to 8 persons(4 bed-rooms) ........ .............. .............. .............. ..............

Annual Income:

[53 FR 2159, Jan. 26, 1988. Redesignated andamended at 56 FR 2245, 2246; 56 FR 65985, Dec.20, 1991]

EXHIBIT A–6 TO SUBPART E—HOUSING

ALLOWANCES FOR UTILITIES AND

OTHER PUBLIC SERVICES

Effective Date llllllllllllllll


Name of Borrower


Location and Identification of Project

PART I

Utility or serviceMonthly dollar allowances

O–BR 1–BR 2–BR 3–BR 4–BR 5–BR

Heating:a. Natural Gas ........................................................... ................ ................ ................ ................ ................ ................b. Bottle Gas .............................................................. ................ ................ ................ ................ ................ ................c. Electric ................................................................... ................ ................ ................ ................ ................ ................d. Oil .......................................................................... ................ ................ ................ ................ ................ ................

Air Conditioning ............................................................. ................ ................ ................ ................ ................ ................Cooking:

a. Natural Gas ........................................................... ................ ................ ................ ................ ................ ................b. Bottle Gas .............................................................. ................ ................ ................ ................ ................ ................c. Electric ................................................................... ................ ................ ................ ................ ................ ................

Other electric lighting, refrigeration, etc. ....................... ................ ................ ................ ................ ................ ................Water Heating:

a. Natural Gas ........................................................... ................ ................ ................ ................ ................ ................


429


Utility or serviceMonthly dollar allowances

O–BR 1–BR 2–BR 3–BR 4–BR 5–BR

b. Bottle Gas .............................................................. ................ ................ ................ ................ ................ ................c. Electric ................................................................... ................ ................ ................ ................ ................ ................d. Oil .......................................................................... ................ ................ ................ ................ ................ ................

Water ............................................................................. ................ ................ ................ ................ ................ ................Sewer ............................................................................ ................ ................ ................ ................ ................ ................Trash Collection ............................................................ ................ ................ ................ ................ ................ ................Other (specify) ............................................................... ................ ................ ................ ................ ................ ................Total allowance ............................................................. ................ ................ ................ ................ ................ ................(Round to next highest dollar) ...................................... ................ ................ ................ ................ ................ ................

Prepared by:Borrower or AgentTitleSignatureDate

Approved by Farmers Home Administrationor its successor agency under Public Law103–354

Name llllllllllllllllllll

Title lllllllllllllllllllll

Signature llllllllllllllllll

Date lllllllllllllllllllll

PART II

Block A

To: lllllllllllllllllllll

Name of Tenant


Address of Tenant

No. of Bedrooms lllllllllllllll

You will be billed directly for utilities andservice charges. Block B sets forth the allow-ances credited in your rent for the paymentof utilities. You may be billed for more orless than shown in Block B depending onyour use of utilities


Signature of Borrower or Agent


(Date)

BLOCK B

Allowance for utilities and services billed directly toand paid by tenant

Permonth

Heating ........................................................................ $Air Conditioning ........................................................... ..........Cooking ........................................................................ ..........Other Electric ............................................................... ..........Water Heating .............................................................. ..........Water ........................................................................... ..........Sewer ........................................................................... ..........Trash Collection ........................................................... ..........Other (Specify) ............................................................ ..........Total (Round to next highest dollar) ............................ ..........

INSTRUCTIONS FOR PREPARATION AND USE OFHOUSING ALLOWANCES FOR UTILITIES ANDOTHER PUBLIC SERVICES

I. General. These instructions are for com-pleting exhibit A–5 for the establishment anduse of approved utility allowances for ten-ants. The objective will be to establish al-lowances at levels that will apply to the ma-jority of the households assigned to the spec-ified size unit.

II. Determining allowances.A. Existing construction. The borrower will

provide information which shows the utilitybills and fees for public services which havebeen charged to units in the project in pre-vious years. If possible, this historical datashould cover a period of at least 24 monthsand should show billings to all types andsizes of units in the project. If data is notavailable on the specific project, data fromsimilar projects may be substituted. Consid-eration should be given to making proper ad-justments in the data caused by some ten-ants’ excessive use of utilities. Current rateschedules and known rate increases will beused to estimate utility allowances. The fol-lowing local sources should be contacted asappropriate:

1. Electric utility suppliers.2. Natural gas utility suppliers3. Water and sewer suppliers.4. Fuel oil and bottle gas suppliers.5. Public service commissions.6. Real estate and property management

firms.7. State and local agencies including public

housing authorities.In cases where a project uses a single

meter for more than one living unit or wherea single fuel supply or heating or coolingplant is used for more than one unit, the fol-lowing factors will be used to determine thepro rata share of utility costs or public serv-ice fees per living unit:

Size of unit Factor

0–BR ...................................................................... 0.51–BR ...................................................................... 0.72–BR ...................................................................... 0.93–BR ...................................................................... 1.14–BR ...................................................................... 1.45–BR ...................................................................... 1.6


430


Example: An 8–plex structure containingfour 1–bedroom apartments and four 2–bed-room apartments has an average annual con-sumption of 42,000 kilowatt-hours of elec-tricity. Allowance per unit is calculated asfollows:Four (one-bedroom) @ .7 ....................... =2.8Four (two-bedroom) @ .9 ...................... =3.6

Total ........................................ 6.4

Total use total of factors ll × cost per kilo-watt-hour (kwh)-average billing (assume$.04 per kwh)

42,000/6.4 x .04=262.50unit factor x average billing=¥unit allow-

ance(one bedroom)/.7 x 262.50=$183.75/yr.(two bedroom)/.9 x 262.50=$236.25/yr.

B. New construction. The applicant, with as-sistance from its architect, mechanical engi-neer or other heating and cooling systemspecialists, will provide heating and coolingload calculations for each type and size ofunit. Heating and/or cooling costs will becalculated from these load factors using cur-rent rate schedules and known rate in-creases. Procedures described in the Amer-ican Society of Heating, Refrigeration andAir Conditioning Engineers ‘‘Handbook ofFundamentals,’’ the National Association ofHomebuilders ‘‘Insulation Manual Home,Apartments,’’ or other recognized authoritymay be used.

General appliance and lighting loads andfees for public services should be estimatedusing data from the local utility companiesand from other sources listed in paragraph IIA above.

C. Type of allowance.1. Separate heating and cooling allowances

will be estimated for the various types ofmultiple family housing financed by FmHAor its successor agency under Public Law103–354 in the project. For example, separateallowances may be needed for duplexes, rowor townhouses, or for garden and low and me-dium rise apartments. In addition to estab-lishing different heating and cooling allow-ances for various types of structures, atten-tion should be given to different allowancesfor water depending on whether the tenantswill have responsibility for lawn care.

2. Allowances for air-conditioning will beestablished only for projects in which theowner furnishes a central air-conditioningsystem or other type unit as a part of thepermanent equipment.

3. The cost of gas and electricity varies ac-cording to amounts consumed as shown onthe appropriate rate schedules of the sup-plier. It is not possible to compute exactlythe cost of electricity for any given functionwithout knowing the total electrical usagefor a unit. However, because neither the bor-rower nor the tenants know beforehand whatthe combination of utilities for any unit

rented will be, it will be necessary to approx-imate the allowances for each function (e.g.,heating, cooking, etc.) as follows: For elec-tricity, the rates used for lighting, refrigera-tion and appliances should be from the top ofthe rate schedule or the higher unit costs.Allowances for electric cooling, water heat-ing and space heating should be computedfrom the middle or lower steps in the rateschedules. Similarly, allowances for gas usedfor water heating and cooking should becomputed using rates from the top of therate schedule and for heating from the lowersteps.

III. Preparation by borrower or applicant.A. Applicable projects. Except for projects

operating on a profit basis, exhibit A–5 willbe completed in an original and three copiesin all instances where the tenants pay utili-ties or authorized services directly. Whenthe borrower pays all utilities, part I of ex-hibit A–5 may also be required as part of thebudget submitted for any new project if theloan approval official determines it is neededto properly evaluate projected utility costs.This form will establish the allowances forall size units in the project. The allowanceswill be adequate for all utilities and any au-thorized services which are or will be pay-able directly by the tenants, except tele-phone and cable TV. The forms will be signedby the borrower. The original and two copiesof the form will be submitted to FmHA or itssuccessor agency under Public Law 103–354.Backup data and necessary documentationshould be included with the submission.

B. Submission of supporting data to FmHA orits successor agency under Public Law 103–354.The applicant will submit to FmHA or itssuccessor agency under Public Law 103–354adequate data to justify the utility allow-ances for the project. The data will includethe following:

1. Completed exhibit A–5.2. List of local sources contacted for infor-

mation and copies of any data provided bysuch sources.

3. Any data on allowances already estab-lished for the area.

4. Complete narrative statement and com-putations on method used in arriving at theallowances.

IV. Actions by FmHA or its successor agencyunder Public Law 103–354. If FmHA or its suc-cessor agency under Public Law 103–354 findsthe allowances acceptable, the approval por-tion of part I will be completed. The serv-icing official will keep a copy for the serv-icing office file and return the original to theborrower. If the proposed utility allowance isunacceptable, the borrower will be requestedto revise the data and resubmit it for furtherconsideration.

V. Subsequent action by borrower. After ap-proval by FmHA or its successor agencyunder Public Law 103–354, the borrower willcomplete part II of exhibit A–5 and provide


431


copies for each tenant paying utilities di-rectly by attaching it to the lease enteredinto by the borrower and tenant. The formwill provide the household with the amountof allowance for each utility and servicewhich is to be paid by the tenant. If all utili-ties and services are paid by the borrower,exhibit A–5 need not be attached to thelease.

[53 FR 2159, Jan. 26, 1988. Redesignated at 56FR 2245, Jan. 22, 1991; 56 FR 65985, Dec. 20,1991; 58 FR 40954, July 30, 1993; 59 FR 6896–6897, Feb. 14, 1994]

EXHIBIT A–7 TO SUBPART E—INFORMA-TION TO BE SUBMITTED WITH A LOANREQUEST FOR A RURAL RENTALHOUSING (RRH) OR A RURAL COOP-ERATIVE HOUSING (RCH) LOAN

The following information is to be sub-mitted with SF 424.2:

I. Eligibility.A. Financial Statements for Rental

Projects—Each applicant must submit a cur-rent, signed, and dated financial statement.The financial statement must reflect suffi-cient financial capacity to meet the appli-cant’s equity capital and initial operatingcapital requirements. Applicants may con-tribute cash, free and clear title to the build-ing site, or a combination of both as an eq-uity contribution. The initial operating cap-ital must be furnished in cash.

(1) For a corporation (other than a non-profit corporation) or a trust, financialstatements will be required from each mem-ber, stockholder or beneficiary who holds aninterest in the organization in excess of 10percent.

(2) For a partnership, financial statementswill be required from each general partnerwho holds an interest in the organization.

(3) A financial statement will be requiredfor limited partners in a limited partnershipwho will have 10 percent or more ownership.

(4) For applicants that are not legally or-ganized at the time of filing the loan re-quest, financial statements will be requiredfrom all of the proposed parties in proportionto the proposed ownership interest of eachpart. However, the applicant must be legallyorganized prior to loan approval and mustsubmit financial statements.

(5) For cases in which financial statementsare required from an individual, the finan-cial statements must also include the finan-cial interest and signature of the spouse.

(6) When the applicant and/or general part-ner(s) have multiple applications pendingand/or when the State Director is uncertainof the applicant’s ability to provide the nec-essary borrower contribution required by§ 1944.213 (b) of this subpart, 2 percent initialcapital contribution and/or other assetsneeded for a sound loan, the State Director

may request the applicant to submit addi-tional financial information relative to itsfinancial position.

(7) All financial statements submittedmust contain the following statement imme-diately preceding the signature line:

(A) In new projects in which the loan hasnot been closed:

I/we certify the above is a true and accu-rate reflection of my/our financial conditionas of the date stated herein. This statementis given for the purpose of inducing theUnited States of America to make a loan orto enable the United States of America tomake a determination of continued eligi-bility of the applicant for a loan as requestedin the loan application of which this state-ment is a part.

(B) For projects in which the loan has beenclosed and the applicant has been formed:

I/we certify the above is a true and accu-rate reflection of my/our financial conditionas of the date stated herein. This statementis given for the purpose of enabling theUnited States of America to make a deter-mination of continued eligibility of the bor-rower organization for a loan as requested inthe application of which this statement is apart.

B. Financial Statements for CooperativeMembers—Each prospective member mustprovide a statement of monthly income andexpenses showing the repayment of debts andwhether those payments are current. Thestatement must indicate that the person willhave the financial ability to meet themonthly occupancy rate requirement, whilestill meeting other monetary obligations.FmHA Form 1944–38, ‘‘Application for Coop-erative Housing Assistance,’’ may be used forthis purpose. (See FMI for preparation in-structions.)

C. The names and addresses of persons whohave expressed an interest in becomingmembers of the cooperative. Signature anddate evidencing this interest from each per-son will be obtained to fully document theneed for the cooperative housing. This cer-tification should contain a statement thatthe prospective member understands the co-operative type of organization and the timeand effort each member must spend in its op-erating and maintenance.

D. For all cooperative projects containingover four units, the applicant must submitan Affirmative Fair Housing Marketing Planfor approval in accordance with § 1901.203 ofsubpart E to part 1901 of this chapter. Theplan must be prepared in a complete, mean-ingful, responsive and detailed manner.

E. Evidence Concerning the Test for OtherCredit—Applicants must be unable to obtainother credit at rates and terms that willallow a unit rent or occupancy charge withinthe payment ability of the occupants. Basedupon a review of the applicant’s financialcondition, the servicing official may require


432


the applicant to provide documentation re-garding the availability of other credit.

F. Statement of applicant’s experience inoperating rental housing and related busi-ness, including a statement on the proposedmethod of operation and management.

G. For an Organization Applicant—A copyof, or an accurate citation to, the specificprovisions of State law under which the ap-plicant is, or is to be organized; a certifiedcopy of the applicant’s actual, or a copy ofthe applicant’s proposed charter, articles ofincorporation, bylaws, partnership agree-ment, certification of limited partnership, orother basic authorizing documents; thenames and addresses of the applicant’s mem-bers, directors and officers; and, if a memberof a subsidiary of another organization, itsname, address, and principal business, ifavailable.

H. Farmers Home Administration (FmHA)or its successor agency under Public Law103–354 requires that applicants disclose iden-tities of interest that will exist in the devel-opment of the proposed housing. FormsFmHA 1944–30, ‘‘Identity of Interest (IOI)Disclosure Certificate,’’ and 1944–31, ‘‘Iden-tity of Interest (IOI) Qualification Form,’’(available in any FmHA or its successoragency under Public Law 103–354 office) willbe completed and submitted as part of theloan request package.

I. The social security or tax identificationnumber will be required in all cases. Theloan will be denied for refusal to furnish therequired social security or tax identificationnumber.

(1) In the case of an individual, the socialsecurity number of the applicant must beprovided. The spouse’s social security num-ber must also be provided when they havejoint responsibility for the loan.

(2) In the case of a partnership, the taxidentification number of the partnershipmust be provided if available and also the so-cial security numbers of all the general part-ners and their spouses.

(3) In the case of a limited partnership, thetax identification number of the limitedpartnership is required. The social securitynumber of all the general partners and theirspouses should be secured if possible.

(4) In the case of a company, corporationor nonprofit organization, the tax identifica-tion number of the organization is required.The social security number of the officersshould be secured if possible.

(5) If an organization does not have a taxidentification number, the social securitynumber of one of the officers must be used.

J. All known principals and affiliates arerequired to submit a properly completedForm HUD 2530/FmHA 1944–37, ‘‘PreviousParticipation Certification.’’ Architects andattorneys who have any interest in theproject other than an arms length fee ar-rangement for professional services are also

considered principals. The form will be com-pleted and processed according to the in-structions attached to the form.

II. Need and demand.A. Economic justification, the number of

units, and the type of facility (family, elder-ly, congregate, mixed, group home, or coop-erative) will be based on the housing needand demand of eligible prospective tenantsor members who are permanent residents ofthe community and its surrounding tradearea. Since the intent of the program is toprovide housing for the eligible permanentresidents of the community, temporary resi-dents of a community (such as college stu-dents in a college town, military personnelstationed at a military installation withinthe trade area, or others not claiming theircurrent residence as their legal domicile)may not be included in determining need andproject size. Similarly, homeowners may notbe included in determining need and projectsize. The market study must include a dis-cussion of the current market for single fam-ily houses and how sales, or the lack of sales,will affect the demand for elderly rentalunits. The market study may discuss how el-derly homeowners may reinforce the need forrental housing, but only as a secondary mar-ket and not as the primary market. Themarket study must assess need and demandfor both family and elderly renter house-holds. The conclusions of the market studymust be provided to the community by theapplicant, through direct contact with com-munity officials whenever possible. The typeof complex (family, elderly, etc.) that is pro-posed by the applicant must reflect thegreater proportionate need and demand ofthe community, that is, the share or per-centage of the community’s total rentalunits that are designated for the elderly willbe compared to the community’s share of el-derly households, and the share of total rent-al units for families will be compared to theshare of family households in the commu-nity. (For mixed complexes, the unit mixmust reflect the proportionate need of eachhousehold type.) In unusual circumstances,where there is a compelling need for a com-plex type that does not represent the greaterproportionate need (i.e., family vs. elderlyneed), the State Director may considergranting an exception to this requirement.At least one of the following conditions mustbe met in order to consider an exception: thecommunity’s or State’s housing plan indi-cates that the greater immediate need is forthe complex type of the smaller propor-tionate need and the plan includes a specificproposal to address the housing needs of theother household type; the complex has thesupport of a public community forum rep-resented by diverse interests; or the unitsare needed due to an emergency or hardshipsituation, for example, a loss of housing


433


caused by a natural disaster. The cir-cumstances for the exception must be docu-mented in the casefile. The bedroom mix ofthe proposed units must reflect the need inthe market area based on renter householdsize and the bedroom mix of existing units.Market feasibility for the proposed units willbe determined by RHS based on the marketinformation provided by the applicant (re-quirements are described in section II.E. ofthis exhibit), RHS’ knowledge of the marketarea and judgment concerning the need fornew units, RHS’ experience with the housingmarket in the State and local area, and theU.S. Department of Housing and Urban De-velopment’s (HUD’s) or similar lender’s anal-ysis of market feasibility for the proposedunits.

B. The applicant must provide a scheduleof the proposed rental or occupancy ratesand, for congregate housing proposals, a sep-arate schedule listing the proposed cost ofany nonshelter service to be provided.

C. For proposals where the applicant is re-questing Low-Income Housing Tax Credits(LIHTC), the applicant must provide thenumber of LIHTC units and the maximumLIHTC incomes and rents by unit size. Thisinformation will determine the levels of in-comes in the market area which will supportthe basic rents while also qualifying the bor-rower for tax credits.

D. For Rural Cooperative Housing (RCH)proposals, market feasibility will be evi-denced by the names and addresses of pro-spective members who have definitely af-firmed their intention of becoming coopera-tive members in the proposed project. In theevent some persons cannot be accepted formembership for financial or other reasons,the cooperative should obtain more namesthan the number of proposed units in orderto assure adequate feasibility coverage. Ex-hibit A–4 of this subpart contains a Coopera-tive Housing Survey form which may be usedfor this purpose.

E. For Rural Rental Housing (RRH) pro-posals, except as permitted by section II. G.of this exhibit, a professional market studyis required. The qualifications of the personpreparing the market study should includesome housing or demographic experience.The following requirements apply:

(1) A table of contents, the analyst’s state-ment of qualifications, and a certification ofthe accuracy of the study must be included.

(2) Market analysts must affirm that theywill receive no fees which are contingentupon approval of the project by RHS, beforeor after the fact, and that they will have nointerest in the housing project. An analystwith an identity of interest with the devel-oper will need to fully disclose the nature ofthe identity.

(3) The analyst must personally visit themarket area and project site and must cer-tify to same in the market study. Failure to

do so may result in the denial of further par-ticipation by the analyst in the Section 515program.

(4) A detailed study based upon data ob-tained from census reports, state or countydata centers, individual employers, indus-trial directories, and other sources of localeconomic and housing information such asnewspapers, realtors, apartment owners andmanagers, community groups, and chambersof commerce is required. Exhibit A–8 of thissubpart details the specific informationwhich professional market studies are re-quired to provide. The study must be pre-sented in clear, understandable language.Negative as well as positive market trendsmust be disclosed and discussed. Statisticaldata must be accompanied by analytical textwhich explains the data and its significanceto the proposed housing. Mathematical cal-culations must be expressed in actual num-bers and may be accompanied by percent-ages. Each table or section must identify thesource of the data. A brief statement of themethodology used in the study should be in-cluded in the foreword and in other sectionswhere necessary for clarity. RHS personnelwill utilize the market study checklist foundat exhibit A–12 of this subpart (available inany Rural Development office) as a means ofmeasuring market study credibility.

(5) The market study will include:a. A complete description of the proposed

site and its location with respect to cityboundary lines, residential developments,employment centers, and transportation; thelocation and description of available servicesand facilities and their distances from thesite; a discussion of the site’s desirabilityand marketability based on its location inthe community, adjacent land uses, trafficconditions, air or noise pollution, and the lo-cation of competitive housing units; and adescription of the site in terms of its size, ac-cessibility, and terrain.

b. Pertinent employment data, includingthe name and location of each major em-ployer within the community and marketarea, its product or service, number of em-ployees and salary range, commute timesand distances, and the year the employerwas established at the location. If incomedata cannot be obtained from individual em-ployers, salary information for the commu-nity can be obtained from the state employ-ment commission.

c. Population data required by exhibit A–8of this subpart, including population figuresby year, number and percentage of increaseor decrease, and population characteristicsby age.

d. Household data required by exhibit A–8of this subpart, including number of house-holds by year, tenure (owner or renter), age,income groups, and number of persons perhousehold.


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e. Building permits issued and demolitionsby year by single unit dwelling and multipleunit dwelling. In nonreporting jurisdictions,this information may be substituted withthe number of requests for electric serviceconnections, number of water or sewer hook-ups, etc., obtained from local suppliers.

f. Housing stock by tenure and vacancyrates for total number of units, one-unitbuildings, two- or more-unit buildings, mo-bile homes, and number lacking some or allplumbing facilities.

g. A survey of existing rental housing byname, location, year built, number of units,amenities, bedroom mix, type (family, elder-ly, etc.), rental rates, and rental subsidies ifany.

h. A projection of housing need and de-mand and the analyst’s recommendation forthe number, type, and size of units, based onthe number of RHS and LIHTC income-eligi-ble renter households, the existing com-parable housing supply and vacancy rates,the absorption rate of recently completedunits, the number of comparable units cur-rently proposed or under construction, andcurrent and projected economic conditions.

F. For congregate housing proposals withcentral dining area or housing involving agroup living arrangement, a narrative state-ment from local, state, or federal govern-ment agencies supporting the current andlong-range need for the facilities in the com-munity and its trade area is required.

G. For RRH proposals of 12 or fewer units,the State Director may authorize the use ofa market survey to establish market feasi-bility on a case-by-case basis. This authoritymay be used when there is evidence of strongmarket demand, for example, very low va-cancy rates and long waiting lists in existingassisted or comparable rental units. Thecasefile must be documented accordingly.Exhibits A–2, A–3, and A–5 of this subpartmay be used for the market survey.

III. Site.A. Size of tract and a plot map identifying

its boundaries.B. A map showing the location and other

supporting information on the neighborhoodand existing facilities, such as distance toshopping areas, churches, schools, availabletransportation, drainage, santitation facili-ties, water supply and access to essentialservices such as doctors, dentists, phar-macies and hospitals. The map should alsoshow significant features such as main high-ways, railroads, rivers and lakes. The use ofproperty surrounding the site should also beindicated.

C. The applicant will provide evidence ofhaving control of the proposed site either byownership or by executing an option to buywith the current owner of public record.

D. Appropriate zoning or evidence of capa-bility to be appropriately zoned.

IV. General description of the housingplanned. A brief narrative description of thehousing planned should include the followingitems:

A. The type of project and structures pro-posed, such as garden apartments for elderlyand handicapped persons; townhouses forlow- and moderate-income persons; con-gregate housing for senior citizens andhandicapped persons, or housing designed forcooperative living.

B. The size of each type of rental unitmeasured in square feet of living area.

C. The size and type of other facilities tobe included in the project, such as laundryrooms, storage spaces, etc., and a justifica-tion for any related facilities to be financedwholly or in part by RHS funds.

D. The total number of units and the num-ber of each type of unit proposed.

E. The type of construction proposed andthe method of construction, i.e., owner/build-er, negotiated bid or public bid.

F. A detailed cost breakdown of the projecton Form FmHA or its successor agencyunder Public Law 103–354 1924–13, ‘‘Estimateand Certificate of Actual Cost,’’ will be pre-pared and submitted by all applicants. In ad-dition to completing the individual lineitems, the cost of items such as rights-of-way, equipment, and utility connectionsmust be included and identified with theForm FmHA or its successor agency underPublic Law 103–354 1924–13. Off-site improve-ments and the method of prorating the costbetween eligible and noneligible loan itemsmust be provided with the Form FmHA orits successor agency under Public Law 103–354 1924–13. The cost breakdown must alsoseparately show items not included in theloan, such as furnishings, equipment, and thenoneligible off-site improvements. The tradeitem cost breakdowns must be updated justprior to loan approval.

G. Type of utilities such as water, sewer,gas and electricity and whether each is pub-licly, community or individually owned.

H. The comments and recommendations ofany professional consultants regarding on-or off-site conditions that could affect theproposed project should be submitted, ifavailable. Any comments addressing an ad-verse condition should include recommendedcorrective actions. Any special regulationwaivers or variances that may be necessaryshould also be identified.

I. Schematic design drawings should be in-cluded with the narrative description andcontain, as a minimum:

(1) Site plan, including significant groundcontour lines.

(2) Floor plans of each living unit type andother type spaces.

(3) Building exterior elevations.(4) Typical building exterior wall section.J. A plot plan showing the relationship of

the proposed structures, the property lines,


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streets, utility lines, alleys and adjacentstructures and their uses. It should also showproposed off-street parking for the tenantsor members and their visitors. Other facili-ties, such as private and public walks, pri-vate drives and recreation areas on and offthe property, laundry drying areas, and gar-bage and refuse holding areas which are suf-ficient for the period between collections inthe neighborhood should be shown.

V. The applicant must submit a signedstatement agreeing to pay cost overrunsfrom its own resources.

VI. Form RD 1940–20, ‘‘Request for Envi-ronmental Information.’’

VII. Disclosures by Applicants.(A) Applicants will submit information re-

garding any other government assistance asdefined in § 1944.205 of this subpart from theFederal Government, a State, or a unit ofgeneral local government, or any agency orinstrumentality thereof, that is expected tobe made available with respect to the projectfor which the applicant is seeking.

(B) The applicant will submit the names ofany interested parties as defined in § 1944.205of this subpart.

(C) The applicant will also submit a reportdetailing the expected sources and uses offunds that are to be made available for theproject.

(D) The disclosures required in paragraphs(A)–(C) will be updated within 30 days of anysubstantial change during the period of theapplication process.

VIII. For congregate housing proposals. Ap-plicants must submit information on theservices to be provided in accordance withexhibit E of this subpart.

[53 FR 2159, Jan. 26, 1988, as amended at 53FR 7492, Mar. 9, 1988; 53 FR 36268, Sept. 19,1988; 54 FR 14337, Apr. 11, 1989; 55 FR 13503,Apr. 11, 1990; 55 FR 26647, June 29, 1990; 55 FR29558, and 29562, July 20, 1990. Redesignatedand amended at 56 FR 2245, 2246, Jan. 22, 1991;56 FR 65985, Dec. 20, 1991; 59 FR 6891, Feb. 14,1994; 62 FR 25065, 25070, 25076, May 7, 1997; 62FR 67223, Dec. 23, 1997]

EXHIBIT A–8 TO SUBPART E—OUTLINE OFPROFESSIONAL MARKET STUDY

Market studies which do not address all seg-ments of this outline will not be considered ac-ceptable and may adversely affect the proc-essing of preapplications. Preapplications withunacceptable market studies may be returned,deferred, or rejected, as determined appropriateby the servicing office.

The following information is to be used byanalysts in the preparation of market stud-ies for the Section 515 housing program. Itgenerally contains the type and depth of in-formation which Farmers Home Administra-tion (FmHA) or its successor agency underPublic Law 103–354 requires for evaluating

the feasibility of prospective housing devel-opments. The analyst will be expected toprovide sufficient quantitative data (such ascensus tables), primary data (such as surveyof existing comparables), and qualitativedata (such as local contacts in the commu-nity) to support the conclusions reached.The analyst may present any other discus-sions and/or data which will help support thecomplete analysis of the market.

The outline provides for the demonstrationof historical trends and allows the analyst toproject into the 2 years beyond the last ac-tual year of record. Additional guidance isoffered in individual segments of the outline.You will need to provide a statement of yourexperience and why you think you are quali-fied to prepare such a study.

Determination of need and demand will bederived for prospective rental tenants onlyfrom: (1) Persons migrating into the area, (2)persons dwelling in family units who desireto move into their own units (elderly livingwith family members will only be consideredif evidence of their interest in moving intothe project is furnished with the marketstudy), (3) conservative estimate (not to ex-ceed 20 percent) of households living in sub-standard rental housing, (4) demolition ofrental stock, (5) allowance for a 5 percent va-cancy rate, and (6) conservative estimate(not to exceed 20 percent) of households expe-riencing rent overburden provided the ana-lyst has made a determination there are suf-ficient households in the market area to oc-cupy any rental units vacated by those lowerincome persons who choose to move into theproposed project from the existing units.Substandard is defined as (1) Units lackingcomplete plumbing and (2) overcrowded (1.01or more persons per room).

For proposed congregate projects, the ana-lyst will be responsible for researching thecurrent need for, and usage of, services inthe market area. The types of services beingused, the provider of the services, and theirlocation will be included.

Homeowners will not be included in the deter-mination of need and demand for rental units.The analyst will discuss the current marketfor single family houses and how sales, orthe lack of, will affect the demand for elder-ly rental units. If the economic conditionsreflect a trend toward normal selling timesfor houses in the market area, then the dis-cussion should point to how elderly home-owners may reinforce the need, but only as asecondary market and not as the primarymarket.

A statement, with signature, certifyingthat the analyst (including an individualunder contract to the analyst’s company) ac-tually traveled to and physically surveyedthe community where the proposed projectwill be located is also required.


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I. MARKET AREA—GENERAL

The market area will be the communitywhere the project will be located and onlythose outlying rural areas which will be im-pacted by the project (excluding all other es-tablished communities). Except in specificcases of congregate housing projects wherean expanded market may be justified, themarket area will not include the entire coun-ty (or parish, township, or other subdivi-sion). Any deviation from this definitionmust be coordinated with the servicing of-fice. The market area must be realistic. Thecriteria for selection should be described bythe analyst. A map showing the market areawill be required. The following is an exampleof a market area description:

A. Based on an analysis of population andhousing development patterns, major em-ployers and commuting patterns, the effec-tive market area for the subject proposal isdefined to include all of (Name), 35 percent of(Name) and 25 percent of (Name) census divi-sions. This area is shown on Map 2 followingTable 4 (page 11) in Section II of this report.In 1980, this geographic market area con-tained an estimated 6,350 persons (6.1 percentof the county total of 103,829 persons). Dur-ing the 1970’s decade, the overall marketarea experienced growth of 1,253 persons (rep-resenting 13.5 percent of total gains in thecounty). In 1990, the (Name) market areapopulation of 7,603 represented 6.7 percent ofthe county population of 113,086. (See Table 4and Map 2 in Section II for details.)

B. The effective market area for the sub-ject proposal includes the town of (Name)and a portion of the unincorporated areas tothe east and south. The (Name) River formsa natural barrier restricting development tothe west. Housing development and popu-lation growth have occurred along majortransportation corridors, particularly Inter-state 81 and U.S. 11 between (Name) and(Name). Secondary growth has occurredalong State Roads 63 and 68 to the northwestand southeast of (Name). The Interstate In-dustrial Park, with 16 employers providing999 jobs, is centrally located within the mar-ket area.

II. SITE

This section will contain a full descriptionof the site, its position in the communityand location with respect to residential sup-port services.

A. The proposed site is located in the east-ern section of (Town) on (Major Thorough-fare). The area surrounding the site is pre-dominantly comprised of modest single fam-ily dwellings. The terrain is gently sloped,with grass, oak trees, and some shrubs.

B. The site is currently zoned for commer-cial business and is currently owned by alocal car dealer.

C. The site is approximately .3 mile east ofthe heart of town which contains a grocerystore, drugstore, restaurants, banking facili-ties, the post office, and town hall. Othershopping is available .2 mile south at (Town)Plaza.

D. The medical clinic, which provides serv-ices of an osteopath, X-ray technician, aphysician’s assistant, and a nurse, is ap-proximately .8 mile north of this site. Thisclinic is open daily and also provides 24-houremergency service. The nearest hospitals are(Large Town) and (Town).

E. All public services are available at thesite.

F. Photographs of the site are required.G. Communities suitable for multi-family

projects may have certain smaller businessesnecessary for the day-to-day living conven-ience of the tenants and to supplement theemployment base. For example, these mayinclude, but not be limited to, pharmacy,restaurants and fast food establishments,grocery and department stores, hardwareand sundries, etc. A representative numberof these businesses are to be listed (by name)and location with respect to the proposedsite.Name of business and street address




III. DEMOGRAPHIC CHARACTERISTICS

A. Economic profile.1. Labor force and employment trends between

1980 and the present year. This will providecurrent year estimates and projectedchanges at the county level.

Civilian Labor Force and EmploymentTrends and Forecasts, lllllll County,1980–19ll

1990 19l

1 19l

Civilian Labor Force 2.Unemployment.

Rate of Unemployment.Employment.

Change in Total Employment.

Number lllllllllllllllllll

Percent

Total An-nual Total An-

nual

1980–1990.1990–19l.19l–19l (2-year projec-

tion).

1 Preliminary—based on monthly data through lllll.2 Data based on place of residence.


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Source:

2. Employment data. In order to determinehow employment affects the market area, itwill be necessary to show the number of em-ployed persons for a 3-year period up to thecurrent year, the increase and/or decreaseand the percentage of unemployed at thecounty level. The employment figures can beobtained from the State Employment Com-mission.

Example

County lllllllllllllllllll

Year Num-ber Change

Unem-ploy-ment

%

19l.19l.19l.19l (through current year).

Source

3. Major employers. This section will con-tain information pertinent to an analysis ofthe economic stability of the town. Themajor employers within the town and mar-ket area, the product or service offered byeach employer, location of employer, andyear each employer was established aretypes of data FmHA or its successor agencyunder Public Law 103–354 will need to evalu-ate. It is also important to know if the larg-er employers intend to increase or decreasenumber of employees in the immediate fu-ture or if there have been any significant re-cent changes in number of employees.

Example

Employer Product/Service Location

YearEs-tab-

lished

Washington Air-craft.

Crop Dusting ... Town ............... 1957

In addition, the study will include thenumber of employees and average weeklysalary listed in the place of work employ-ment data for the classification groups ofmanufacturing; construction; trade; services;transportation, communications, and utili-ties (TCU); finance, insurance, and real es-tate (FIRE); and government.

4. Employment outside of county. The ana-lyst will give the percentage of persons em-ployed inside the county and driving times,if appropriate.

Source

B. Demographic profile.1. Population. The analyst will need to

show population changes between 1980 and1990, the reasons for the changes, the currentyear estimate and projected change. This in-formation will be provided for the town, themarket area, and the county. Any change inthe County subdivisions (CCD, Township,Election District, etc.) between census yearswill have to be explained. These are to beshown in numeric characters as well as per-centages.

Example

YearTotal Annual

No. Change % Change %

1980.1990.19l (current

estimate).

Projected: 19l (2 years)

2. Age characteristics.

AgeTown, 1980–1990 County, 1980–1990

1980 1990 Change 1980 1990 Change

Under 18.19–34.35–54.55–61.62–74.75–84.85+.

3. Households. A breakdown by town, mar-ket area, and county for last 2 census years,a current year estimate and a projection tothe year the housing would be built (24months) will have to be illustrated so that

household formations can be tracked. Thisdata will tell us what portion of a housingdemand is being created by an increase innumbers of new households.


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Year*In group

Persons per householdPopulation Quarters Households

1980.1990.19l.

Projected: 19l (2 years)

4. Households by Size/Type/Age of Members(elderly and congregate projects).

Market

Town Area County

Households with:1 or more age 60 years and over.

1 person household.2 or more persons (family).2 or more persons (nonfamily).

1 or more age 65 and over.1 person household.2 or more persons (family).2 or more persons (nonfamily).

5. Household type and relationship—Persons65+ (elderly and congregate projects).

Market

Town Area County

Total.In Households.In Family Households.

Householder.Spouse.Other Relatives.Nonrelatives.

In Nonfamily Households.

Market

Town Area County

Male Householder.Living Alone.Not Living Alone.Female Householder.Living Alone.Not Living Alone.Nonrelatives.

In Group Quarters.Institution (persons).Other Persons in Group

Quarters.

6. Households by tenure. This section is oneof the more important aspects of the marketanalysis. This information will enable FmHAor its successor agency under Public Law103–354 to more closely pinpoint the numberof households which would comprise the tar-get group of its evaluation. If the projectedpercentage of renters exceeds the historicpercentage of renters, the analyst will haveto explain why there is an increase. The in-formation will be provided for town, marketarea, and county.

Example

Year Total households Owner Percent Renter Percent

1980.1990.Estimate: 19 l.Projected: 19 l (2

years).

7. Households by size. The study will providenumber of households by household size forthe town, market area, and county.

8. Tenure by age. Tenure by age of house-holder for town, market area, and county (el-derly and congregate projects).

Owner Renter Total

55–64.65–74.75 years +.

9. Households by income group. With the ad-vent of Low Income Housing Tax Credits(LIHTC), we have found that more emphasismust be placed on analyzing persons whoseincomes qualify for LIHTC. This means fami-lies who earn 60 percent or less of the medianincome as established by the U. S. Depart-

ment of Housing and Urban Development(HUD). Therefore, feasibility for projects ex-pecting to receive tax credits will also bebased on the incomes required to support thetax credits. This could mean a level of in-comes either slightly lower or higher thanFmHA or its successor agency under PublicLaw 103–354 very low-incomes. For those taxcredit units occupied by low-income fami-lies, the monthly gross rent cannot exceed 30percent of the family income. Gross rent in-cludes utilities, but excludes payments ofrental assistance by Federal, State, and localentities. The applicant will be responsiblefor notifying FmHA or its successor agencyunder Public Law 103–354 and the market an-alyst of the amount of tax credits being re-quested, the income percentage on which thecredits will be based, and the percentage of


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project units targeted for tax credit eligiblepersons. In those cases where less than 100percent of the units will be designated fortax credit eligible persons, the incomes need-ed to support the non-LIHTC units will needto be analyzed. Income data will be shownfor total and renter households. This infor-mation will be presented as follows: (It isrecommended that decile distribution of in-comes be obtained from HUD. Other sourcesare acceptable and must be identified.)Incomes Needed to Support Proposed Rents +Utilities (without LIHTC):

1–Bedroom 2–Bedroom 3–Bedroom 4–Bedroom

$lll $lll $lll $lll

Number of Tax Credit Units Requested forProject:llllllllllllllllllllllll

Percentage of Units to be Designated for TaxCredit Eligible Persons:llll lll lll lll

Tax Credit Eligible Incomes: (based on 50% [ ]or 60% [ ] of income)$lll $lll $lll $lll

Tax Credit Eligible Rents:$lll $lll $lll $lll

Proposed Project Rents:$lll $lll $lll $lll

Town or Market Area

Household income groupsAll households Renter households

Number Percent Number Percent

Less than $000.$000–$000.$000–$000.$000–$000.$000–$000.

Total.Median.

Elderly Household Income Groups:Less than $.$000–$000.$000–$000.$000–$000.$000–$000.

Total.

Incomes of those eligible to live in the pro-posed project, considering tax credits andavailability of rental assistance (RA):$000–$000

$000–$000

Source:

County

Household income groupsAll households Renter households

Number Percent Number Percent

Less than $000.$000–$000.$000–$000.$000–$000.$000–$000.

Total.Median.

Elderly Household Income Groups:Less than $.$000–$000.$000–$000.$000–$000.$000–$000.

Total.

Incomes of those eligible to live in the pro-posed project, considering tax credits andavailability of RA:$000–$000$000–$000

Source:

C. Housing supply profile

1. Building permits issued for the last 10years. The Housing Units Authorized byBuilding Permits and Public Contracts (C–40


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Construction Report), furnished by the Bu-reau of the Census, provides a list of permitsissued in all reporting jurisdictions. Thispublication is printed monthly and annually.If available, the number of units which have

been demolished over the last 5 years will beneeded.

Example:

YearTown County

Single family Multifamily Demol. Single family MultiFamily Demol.

19lll.19lll.19lll.19lll.

Through currentyear.

2. Housing stock. The study must includethe number of units within the town andcounty (where available), both single familyand multi-family, the number of mobilehomes by tenure, along with the number ofsubstandard units by tenure, based on themost recent census data. Occasionally, a sit-uation will exist within a community where

a number of detached single family homesare standing vacant. How this condition mayaffect the rental market must be evaluatedand discussed.

Example:

Inventory Change Profile

Single family MultifamilyMobile home

Own Rent

1980 Stock ............................1990 Stock ............................

Annual Percent

Change in Number of Units.

3. Existing rental housing. The analyst mustdetermine where the proposed project will fitinto the present housing stock. To accom-plish this, the analyst will survey the exist-ing units and will discuss how they (a) wouldbe comparable with the proposed project inoverall appeal; (b) are less than desirable be-cause of the age factor or upkeep; (c) are in-conveniently located; (d) do not provide theappropriate bedroom mix for the communityneed, etc.

4. Details of existing stock.a. Additional narrative which describes the

rental stock and provides tenant characteris-tics may be included. The survey will includeboth subsidized and nonsubsidized rentals. Inthose communities containing too manyrental properties to list, all subsidized and arepresentative number of conventionalprojects will be included. Those conventionalprojects which have rent levels comparableto the proposed project will be listed. Be-cause elderly persons may reside in familydesignated projects, the analyst will need tolist all existing units and not just the exist-ing elderly units. Photographs of thecomparables are required.

b. The analyst will explore the availabilityof individual Section 8 certificates with thelocal housing authority since they can be

used on any project to bring the existingrents into an affordable range. For instance,10 to 15 available Section 8 certificates in acommunity could have an influence on thedetermination for new units and the numbershould be reduced to correspond to thisavailability. However, before automaticallyreducing the number of proposed units tomatch the number of available Section 8units, the reason the certificates are avail-able must be explored, (e.g., owners of non-Government subsidized units will not acceptthe certificates). (The bedroom sizes whichthe certificates cover must match the pro-spective bedroom sizes in the proposedproject bedroom mix.)

c. The information needed in the surveymust include the characteristics shownbelow. In conjunction with the survey, theanalyst is expected to discuss the reasons forextended vacancies, either in individual de-velopments or in the community in general.The data needed are:

Name of ProjectNo. of UnitsBedroom MixAmenities: (if available)DrapesCarpetType (i.e., family, elderly)Year BuiltRent levelsVacanciesLocation


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Central CoolingDishwasherGarbage DisposalTV Cable

IV. HOUSING DEMAND FORECASTS

The analyst must give a projection of thehousing needs for a specified forecast period.The information should include the fol-lowing as a minimum:

Sources of demand Town renter Market arearenter

New Households (from the most recent census year plus 2-year projection) ..................................... llll llll

.20 of Households in Substandard Rental Units ................................................................................... +llll +llll

Plus Demolition of Rental Stock ........................................................................................................... +llll +llll

.20 of Households Experiencing Rent Overburden .............................................................................. +llll +llll

Plus Vacancy (.05 of New Household Growth) .................................................................................... +llll +llll

Total demand ........................................................................................................................................ llll llll

Number of Total Demand Determined Income Eligible (tax credit eligible, if applicable) .................... llll llll

Less Number of Units in Planning Stage (FmHA/HUD) ....................................................................... ¥llll ¥llll

Net Demand .......................................................................................................................................... llll llll

If a penetration percentage is used in thestudy analysis, explain how that particularpercentage was chosen.

RECOMMENDED NUMBER BY UNIT

Size One Two Three Four

lll lll lll lll

Names and positions of individuals in thecommunity who provided information for thestudy:• lllllllllllllllllllllll

• lllllllllllllllllllllll



[59 FR 6892, Feb. 14, 1994, as amended at 59FR 49346, Sept. 28, 1994]

EXHIBIT A–9 TO SUBPART E—ADDITIONALINFORMATION TO BE SUBMITTED FORRURAL RENTAL HOUSING (RRH) ANDRURAL COOPERATIVE HOUSING (RCH)LOAN REQUESTS

1. Drawings and specifications, includingany cost containment considerations andspecial design features for elderly or handi-capped persons.

2. Updated cost estimates on Form FmHAor its successor agency under Public Law103–354 1924–13, ‘‘Estimate and Certificate ofActual Cost,’’ will be submitted by all appli-cants, along with the updated estimates ofassociated costs specified in exhibit A–7 ofthis subpart.

3. Information on the method of construc-tion, the proposed contractor if a construc-tion contract is to be negotiated, and the ar-chitectural, engineering and legal servicesincluded in the proposal.

4. Satisfactory evidence of review and ap-proval of the proposed housing by applicableState and local officials whose approval isrequired by State or local laws, ordinances

or regulations. This could be an indication ofapproval to proceed with the development ofthe project rather than final approval ofplans and specifications.

5. If more than 12 months have transpiredsince the market analysis was completed,the State Director may require that it be up-dated if he/she determines it necessary.

6. For all projects containing over fourunits, the applicant must submit an Affirma-tive Fair Housing Marketing Plan for ap-proval in accordance with § 1901.203 of sub-part E to part 1901 of this chapter. The planmust be prepared in a complete, meaningful,responsive and detailed manner.

7. If more than 90 days have transpiredsince the applicant submitted the dated fi-nancial statement, the State Director mayrequire a new one if he/she determines it nec-essary.

8. If there is any change in related assist-ance available to the applicant from othergovernment agencies or in the interestedparties as defined in § 1944.205 of this subpart,it must be disclosed at this time.

9. Detailed operating budgets showing aschedule of proposed rental rates for the firstyear’s operation and a typical year’s oper-ation. The first year’s budget should showthat the applicant has sufficient operatingcapital on hand or sufficient planned incometo pay all operating costs and meet sched-uled payments on debts during the planningand construction period prior to occupancy.The typical year’s budget should show therewill be ample income to pay essential oper-ating costs, meet required debt paymentsand permit accumulation of required re-serves. Form FmHA or its successor agencyunder Public Law 103–354 1930–7, ‘‘MultipleFamily Housing Project Budget,’’ and ex-hibit A–5 of this subpart (or similar forms)may be used for this purpose. The operatingbudgets should be updated if necessary justprior to loan approval.


442


a. The initial budgets should include an al-lowance of 10 percent for vacancies, non-payment of rent and contingency expenses.The allowance in subsequent year budgetsmay be adjusted to be consistent with theactual past experience in vacancy, non-payment of rent and contingency needed forthe project.

b. The budgets should provide for accumu-lating a reserve at the rate of 1 percent perannum of the amount of the loan until aminimum reserve equal to 10 percent of theloan is reached. Budgets should not includean additional item for depreciation since thereserve account is to provide funds for thispurpose.

c. All applicable taxes, including Federaland State income taxes, should be includedin the budgets and separately identified. Ifthe applicant considers itself tax-exempt,evidence of exemption must be included inthe loan docket before the loan is closed. Aneligible nonprofit organization should ordi-narily be able to qualify for Federal incometax exemption under section 501(c) (4) of theInternal Revenue Code.

10. The applicant will submit all proposedagreements for architectural, engineering,and legal services.

11. A statement in narrative form out-lining the proposed manner of managementof the housing, such as whether by owner orby hired management firm or agent. Experi-ence and other factors pertaining to thequalifications of the manager should be setforth and will be taken into consideration. Ifmanagement will be performed by a hiredmanagement firm or agent, a copy of theproposed management agreement should besubmitted. It must contain the clause stat-ing that it is not in full force and effect untilapproved by FmHA or its successor agencyunder Public Law 103–354.

12. A management plan which sets forthclear and concise statements of policy con-cerning management and operation of theproject in accordance with the requirementsof paragraph V of exhibit B of subpart C topart 1930 of this chapter. Copies of the pro-posed application for occupancy, samplewaiting lists, lease or rental agreement, andrules and regulations governing administra-tion, occupancy and pet policies should beincluded. The management plan must be sub-mitted in writing and the applicant mustcertify that it is in compliance with the re-quirements of subpart C to part 1930 of thischapter.

13. A schedule of any separate charges forthe use of any related facilities and, in thecase of congregate housing, a schedule of anyseparate charges for nonshelter services(such as meals, personal care and house-keeping). These schedules should be sup-ported by appropriate operating budgets forservices to be provided.

14. A satisfactory survey of the land to begiven as security prepared by a licensed sur-veyor will be included in the loan docket. Ifnecessary, a new survey will be obtained.

15. Form FmHA or its successor agencyunder Public Law 103–354 1910–11, ‘‘ApplicantCertification, Federal Collection Policies forConsumer or Commercial Debts.’’

16. [Reserved]17. Comments must be submitted in ac-

cordance with 7 CFR, part 3015, subpart V,‘‘Intergovernmental Review of Departmentof Agriculture Programs and Activities.’’ SeeRD Instruction 1940–J (available in anyRural Development office).

[53 FR 2159, Jan. 26, 1988, as amended at 53FR 36268, Sept. 19, 1988; 54 FR 29332, July 12,1989; 55 FR 13503, Apr. 11, 1990; 55 FR 29563,July 20, 1990. Redesignated at 56 FR 2245; 56FR 65985, Dec. 20, 1991; 59 FR 6896, Feb. 14,1994; 62 FR 25070, May 7, 1997; 62 FR 67224,Dec. 23, 1997]

EXHIBIT A–10 TO SUBPART E[RESERVED]

EXHIBIT A–11 TO SUBPART E—PROC-ESSING GUIDELINES FOR LOANS FOREQUITY TO AVERT PREPAYMENT

To apply for an equity loan to avert pre-payment, the borrower should submit thefollowing items in accordance with exhibitA–6 of this subpart and this exhibit:

1. Form SF–424.2 with a narrative discus-sion of the borrower’s equity loan request,

2. Current Financial Statement,3. Proposed budget showing anticipated

rents to cover revised financing package, in-cluding updated figures on required reservecontributions and return on investment (ifany),

4. Data on current tenants’ income, rentsand RA, and incomes of those on the waitinglist to show that new rents will not displaceor prevent occupancy by eligible tenants, un-less sufficient RA is made available.

[58 FR 38925, July 21, 1993]

EXHIBIT B TO SUBPART E—GUIDE LET-TER FOR USE IN INFORMING INTERIMLENDER OF FMHA OR ITS SUCCESSORAGENCY UNDER PUBLIC LAW 103–354’S COMMITMENT

(Name and Address of Private Lender)



Dear Mr./Ms.: llllllllllllllll

(For Organizations)Reference is made to a request from the

(Smith Housing Assoc.)llllllllllllllllllllllll

through


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RHS, RBS, RUS, FSA, USDA Pt. 1944, Subpt. E, Exh. B

1 These words may be omitted for projectsconstructed by the owner-builder method ofconstruction with a construction contract.

(John Smith),llllllllllllllllllllllll

its President, for interim financing fromyour firm to construct a housing facility atthe interest rate and terms and conditionsagreed upon as reflected in the attached let-ter.(For Individuals)

Reference is made to a request for(John Jones)llllllllllllllllllllllll

for interim financing from your firm to con-struct a rental housing facility at the inter-est rate and terms and conditions agreedupon as reflected in the attached letter.

This letter is to confirm certain under-standings on behalf of the Farmers Home Ad-ministration (FmHA) or its successor agencyunder Public Law 103–354.

Final drawings, specifications and all othercontract documents have been prepared andapproved, and the applicant is prepared tostart construction. The applicant and FmHAor its successor agency under Public Law103–354 have determined that the conditionsof loan closing can be met. Funds have beenobligated for the project.

FmHA or its successor agency under Pub-lic Law 103–354 has required the applicant todeposit $llll with your firm to be usedbefore any interim loan funds. The applicanthas proposed and FmHA or its successoragency under Public Law 103–354 has agreedthat you may first advance any applicantfunds on deposit, and then advance the pro-ceeds of the interim loan in accordance withthe terms and conditions stated in your at-tached letter to pay for construction andother authorized and legally eligible ex-penses incurred by the applicant. It is under-stood, however, that advances of both the ap-plicant’s funds and the interim loan fundswill be made only upon presentation of prop-er statements and partial payment estimatesproposed by the builder and approved forpayment by the consulting architect, appli-cant and FmHA or its successor agencyunder Public Law 103–354 servicing official.

We have scheduled the FmHA or its suc-cessor agency under Public Law 103–354 loanto be closed when construction to be fi-nanced with loan funds is substantially com-plete in accordance with the FmHA or itssuccessor agency under Public Law 103–354approved (contract documents), drawingsand specifications, (except for minor punchlist items), and the applicant provides evi-dence and a signed certification indicatingthat there are no unpaid obligations out-standing in connection with the project. Atthat time, funds not exceeding the FmHA orits successor agency under Public Law 103–354 loan amount will be available to pay offthe amount of loan advances your lending in-stitution has made for authorized approvedpurposes, including accrued interest to thedate of closing.

FmHA or its successor agency under Pub-lic Law 103–354 cannot provide you with anunconditional letter of commitment guaran-teeing FmHA or its successor agency underPublic Law 103–354 loan closing. Factors suchas noncompletion, default, unacceptableworkmanship and marked deviation from ap-proved drawings and specifications couldprevent the FmHA or its successor agencyunder Public Law 103–354 loan from beingclosed.

These problems can be minimized by mak-ing a thorough review of the [contract docu-ments] 1 and drawings and specifications,evaluating the qualifications and past per-formance of the builder, and obtaining anadequate corporate surety bond guaran-teeing both payment and performance. If thebuilder is unable to provide a surety bond,we suggest that your lending institutionconsider making advances for partial pay-ments to the builder [in accordance with theprovisions of the construction contract] 1

based upon no less than 60 percent and nomore than 90 percent of the value of accept-able work in place, less the aggregate of pre-vious payments.

The following are additional safeguards tohelp assure FmHA or its successor agencyunder Public Law 103–354 loan closing:

1. We invite you or your representatives toaccompany FmHA or its successor agencyunder Public Law 103–354 personnel duringconstruction inspections so that at leastthree or four joint inspections at criticalpoints during construction, including thefinal inspection, can be made to help assurethat construction is proceeding in accord-ance with the FmHA or its successor agencyunder Public Law 103–354 approved drawingsand specifications.

2. FmHA or its successor agency underPublic Law 103–354 will maintain its commit-ment in the amount of the obligated loanfunds for a reasonable period of time afterthe expiration of any specified completiondates provided work on the project is pro-gressing satisfactorily and any identifiedproblems have been resolved.

3. FmHA or its successor agency underPublic Law 103–354 will not arbitrarily aban-don your lending institution in the event ofdefault. If the contractor defaults, FmHA orits successor agency under Public Law 103–354 will attempt to provide financial assist-ance to the applicant in accordance with ouradministrative procedures and lending re-quirements if a new contractor can completethe project for a total cost within the secu-rity value of the project. If this is not pos-sible or if the FmHA or its successor agency


444

7 CFR Ch. XVIII (1–1–02 Edition)Pt. 1944, Subpt. E, Exh. C

1 If the statute under which the cooperativehousing project is to be incorporated willpermit, it is preferable to state here the min-imum number of directors. The actual num-ber can then be stated in the bylaws whichare more easily amended if it becomes nec-essary to change the number.

under Public Law 103–354 loan applicant be-comes unable or unwilling to continue withthe project, FmHA or its successor agencyunder Public Law 103–354 will attempt toprovide financial assistance to any eligibleapplicant (subject to the availability offunds, our administrative procedures, andour lending requirements) to purchase thecompleted project from your lending institu-tion.

4. FmHA or its successor agency underPublic Law 103–354 is aware that cir-cumstances such as subsurface ground condi-tions and change orders necessitated by re-quired changes in the work to be performedmay cause cost increases after FmHA or itssuccessor agency under Public Law 103–354loan approval and the obligation of FmHA orits successor agency under Public Law 103–354 loan funds. When justified, FmHA or itssuccessor agency under Public Law 103–354may make subsequent loans when necessaryto help cover the eligible costs, provided ad-ditional loan funds are available, the changeorders were approved by FmHA or its suc-cessor agency under Public Law 103–354, theincreased costs are legitimate and are for au-thorized loan purposes, and the total cost ofthe project is within its security value.Your assistance to the applicant is appre-ciated.Sincerely,llllllllllllllllllllllll

State Director

[53 FR 2159, Jan. 26, 1988, as amended at 56FR 2247, Jan. 22, 1991; 59 FR 6897, Feb. 14,1994]

EXHIBIT C TO SUBPART E—ARTICLES OFINCORPORATION FOR RENTAL OR CO-OPERATIVE ORGANIZATIONS (NOT FORPROFIT)

We, the undersigned, incorporators, herebyassociate ourselves together to form and es-tablish a (corporation) (cooperative) not forprofit under the laws of the State ofllllll.

First: The name of the (corporation) (coop-erative) isllllllllllllllllllllllll

Second: The location of its principal placeof business in this State is llllll,llllll County.

Third: The location of its registered officein this State is llllll, llllll

County.Fourth: The name and address of its resi-

dent agent in this State is llllll Coun-ty.

Fifth: This (corporation) (cooperative) isorganized not for profit under ,lllllllll and the objects and pur-poses to be transacted and carried on are topromote the general social welfare of thecommunity and for that purpose:

To acquire, construct, provide, and operate(rental) (cooperative) housing and related fa-cilities suited to the special needs and livingrequirements of eligible occupants as deter-mined by FmHA or its successor agencyunder Public Law 103–354 regulations, with-out regard to race, color, religion, sex, age,handicap, marital or familial status or na-tional origin;

To acquire, improve, and operate any realor personal property or interest or rightherein or appurtenant thereto;

To sell, convey, assign, mortgage, leaseany real and personal property;

To borrow money and to execute such evi-dence of indebtedness and such contracts,agreements, and instruments as may be nec-essary, and to execute and deliver any mort-gage, deed of trust, assignment of income, orother security instrument in connectiontherewith; and to do all things necessary andappropriate for carrying out and exercisingthe foregoing purposes and powers.

Sixth: The number of directors shall beprescribed in the bylaws, but shall not beless than five nor more than nine.1

Seventh: The (corporation) (cooperative)formed hereby shall have no capital stock. Itshall be composed of members rather thanshareholders. The conditions and regulationsof membership and the rights or other privi-leges of the classes of members shall be de-termined and fixed by the bylaws.

Eighth: (Rental only) The corporation isnot organized for pecuniary profit and shallhave no power to declare dividends. No partof its net earnings shall inure to the benefitof any member, director, or individual. Thebalance, if any, of all money received by thecorporation from its operations, after pay-ment in full of all operating expenses, debts,and obligations of the corporation of whatso-ever kind and nature as they become dueshall be used to make advance payments ona llllll owed by the corporation, tolower the lease-rental charge to occupants ofthe housing, to provide additional housingand related facilities, or for some relatedpurpose.

Eighth: (Cooperative only) The cooperativeis not organized for pecuniary profit andshall have no power to declare dividends. Thebalance, if any, of all money received by thecooperative from its operations, after pay-ment in full of all operating expenses, debts,and obligations of the cooperative of whatso-ever kind and nature as they become due,


445

RHS, RBS, RUS, FSA, USDA Pt. 1944, Subpt. E, Exh. D

1 Duration should be perpetual, or longenough to cover the period of the loan plus 5years.

shall accumulate in an interest-bearing ac-count but be equally assigned to each mem-ber as patronage capital.

Ninth: The name and place of residence(post office address) of each of theincorporators and initial directors until thefirst annual meeting:Incorporatorsllllllllllllllllllllllll


Directorsllllllllllllllllllllllll


Tenth: (Rental only) In the event of dis-solution of this corporation, or in the eventit shall cease to carry out the objectives andpurposes herein set forth, all business, prop-erty, and assets of the corporation shall goand be distributed to one or more such non-profit corporations or municipal corpora-tions as may be selected by the board of di-rectors of this corporation, to be used forand devoted to the purpose of carrying on anonprofit housing project for such rural resi-dents or other purposes to promote the gen-eral social welfare of the community. In noevent shall any of the assets or property, inthe event of dissolution thereof, go or be dis-tributed to members, either for the reim-bursement of any sum subscribed, donated,or contributed by such members or for anyother purposes, provided that nothing hereinshall prohibit the corporation from payingits just debts.

Tenth: (Cooperative only) In the event ofdissolution of this cooperative, or in theevent it shall cease to carry out the objec-tives and purposes herein set forth, all busi-ness, property, and assets of the cooperative,except members’ patronage capital andmembership fees, shall be used for providinglow income rental housing or other purposesto promote the general welfare of the com-munity. In no event shall any of the assetsor property, in the event of dissolutionthereof, go or be distributed to members, ex-cept that the membership fee and money ac-crued to members in their patronage capitalaccounts shall be paid to members prior toconversion or satisfaction of the Govern-ment’s debt.

Eleventh: (Cooperative only) At any timeprior to dissolution the member wishes toterminate membership in the cooperative,money which has accrued in the member’spatronage capital account and the member’smembership fee shall be paid to the memberprovided the member’s occupancy account isnot delinquent and that any other charges towhich the member is liable are paid.

Twelfth: The duration of the existence ofthis corporation shall be perpetual.1

IN TESTIMONY WHEREOF, We have hereunto subscribed our names on lllll 19lll.llllllllllllllllllllllll



(Insert acknowledgement or other form if re-quired by State law.)

[56 FR 2247, Jan. 22, 1991]

EXHIBIT D TO SUBPART E—BYLAWS(EXCEPT COOPERATIVE)

(Sample)

BYLAWS OF

A NONPROFIT CORPORATION

Article I

OFFICE

Section 1.01. Principal Office.The principal office of the corporation in

the State of llllll, shall be located atllllll, County of llllll Section1.02. Registered Office and Agent. The cor-poration shall have and continuously main-tain in the State of llllll a registeredoffice and a registered agent whose office isidentical with such registered office.

Article II

MEMBERS

Section 2.01. Eligibility for membership.The corporation shall have one class of

members. Members may be individuals or or-ganizations. Any legally competent person ofgood reputation who resides in the town ofllllll or in the surrounding trade area,applies for membership, and pays the re-quired membership fee shall be eligible.

Section 2.02. Approval of Applications.All applications for membership shall be

approved at: (1) Any special or regular meet-ing of the board of directors, when a quorumis present, by a majority vote of the boardmembers or (2) by a majority vote of the ex-isting membership present at any annual orspecial meeting held in accordance with Ar-ticle III herein.

Section 2.03. Voting Rights.Each member shall be entitled to one vote

on each matter submitted to a vote of themembers.

Section 2.04. Termination of Membership.A member may be suspended or expelled,

for cause, by the vote of not less than three-fourths of the members present at a meetingof the members, provided notice of such pro-posed action shall have been duly given inthe notice of meeting and provided the mem-ber has been informed in writing of thecharges preferred against the member atleast ten days before such meeting. Themembers shall be given an opportunity to be


446

7 CFR Ch. XVIII (1–1–02 Edition)Pt. 1944, Subpt. E, Exh. D

heard at such meeting. The members of theboard, by a majority vote of those present atany regularly constituted meeting, may ter-minate the membership of any member whobecomes ineligible for membership and maysuspend or expel any member who shall be indefault with respect to any financial obliga-tion to the corporation.

Section 2.05. Resignation.Any member may resign by filing a written

resignation with the secretary.Section 2.06. Reinstatement.Upon written request signed by a former

member and filed with the secretary, theboard may reinstate such former member tomembership upon such terms as the boardmay deem appropriate.

Section 2.07. Transfer of Membership.Membership in this corporation is not

transferable or assignable.Section 2.08. Membership—Fees.The membership fee shall be $llllll

or such other amount as may be fixed by themembers at any annual meeting or at anyspecial meeting called for the purpose. Noperson shall attain membership before pay-ing the treasurer the membership fee.

Section 2.09. Membership—Liability for Cor-poration’s Obligations.

Fully paid members shall not be liable forany debts or obligations of the corporationand shall not be subject to any assessment;but the members at any annual meeting orat any special meeting called for the pur-pose, may fix reasonable annual dues to be-come effective after not less than 30 days’notice to all members of such action.

Section 2.10. Membership—Minimum Number.The board will make all reasonable efforts

to maintain a broad community-wide mem-bership of not less than 25 members at anytime.

Section 2.11. Membership—Residence.A majority of the members shall be resi-

dents of the community where the housing isor will be located.

Article III

MEETINGS OF MEMBERS.

Section 3.01. Annual Meeting.An annual meeting of the members shall be

held at llllll, on the llllll of themonth of llllll each year, beginningwith the year 19ll, at the hour of llll

o’clock, for the purpose of electing directorsand for the transaction of such other busi-ness as may come before the meeting. If theday fixed for the annual meeting shall be alegal holiday in said State, such meetingshall be held on the next succeeding businessday. If the election of directors shall not beheld on the day designated herein for any an-nual meeting, or at any adjournment there-of, the board shall cause the election to beheld at a special meeting of the members assoon thereafter as convenient.

Section 3.02. Special Meetings.Special meetings of the members may be

called by the president, the board, or not lessthan one-tenth of the members.

Section 3.03 Place of Meeting.The board of directors may designate any

place within or not more than ll milesfrom lll as the place for an annual meet-ing or for any special meeting called by theboard. If no designation is made or if a spe-cial meeting be otherwise called, the place ofmeeting shall be the registered office of thecorporation in said State.

Section 3.04. Notice of Meetings.Written or printed notice stating the place,

day, and hour of any meeting of membersshall be delivered either personally or bymail, to each member entitled to vote atsuch meeting, not less than seven or morethan thirty days before the date of suchmeeting, by or at the direction of the presi-dent, or the secretary, or the officers or per-sons calling the meeting. In case of a specialmeeting or when required by statute of thesebylaws, the purpose or purposes for whichthe meeting is called shall be stated in thenotice. If mailed, the notice of a meetingshall be deemed to be delivered when depos-ited in the United States mail addressed tothe member at the address as it appears onthe records of the corporation, with postagethereon prepaid.

Section 3.05. Informal Action by Members.Any action required by law to be taken at

a meeting of the members, or any actionwhich may be taken at a meeting of themembers, may be taken without a meetingupon written consent or approval of all themembers, setting forth the action so taken.

Section 3.06. Quorum.At such meeting, a quorum shall consist of

30 percent of the members, or twice the num-ber of directors, whichever is greater. If aquorum is not present at any meeting ofmembers, a majority of the members presentmay adjourn the meeting from time to timewithout further notice.

Section 3.07. Proxies.(a) At any meeting of the members, a

member entitled to vote may vote by proxyexecuted in writing by the member. No proxyshall be valid after eleven months from thedate of its execution. A proxy may be can-celed by notice executed by the member withlike formality and delivered to the sec-retary.

(b) At each meeting of the members, everymember shall be entitled to vote in person orby proxy and shall be entitled to cast onevote. The votes for directors shall be by bal-lot. Only the person in whose name member-ship is standing in the books of the corpora-tion on the day of such meeting shall be en-titled to vote in person or by proxy.

(c) For any person to represent a memberby proxy, such person must submit a powerof attorney to the secretary of the board for


447


examination at least one hour before thetime of meeting. When the secretary has cer-tified the power of attorney is in good order,the proxy holder shall have the right to doany and all things which might be done bythe member were the member present in per-son, which right shall include the establish-ment of a quorum and the organizing of anymeeting.

Article IV

BOARD OF DIRECTORS

Section 4.01. General Powers.The affairs of the corporation shall be

managed by its board of directors.Section 4.02. Number, Tenure, and Qualifica-

tions.The number of directors shall be lll.

The directors elected at the annual meetingto succeed the directors named in the Arti-cles of Incorporation shall be elected forstaggered terms of three, two, and one year.As the terms of such directors expire, theirsuccessors shall be elected for terms of threeyears and until their successors are electedand have qualified. Directors shall be mem-bers of the corporation and residents of thecommunity where the housing is or will belocated. Of the total number of directors, atleast five must be among the leaders in suchcommunity.

Section 4.03. Regular Meetings.A regular annual meeting of the board

shall be held, without other notice thanthese bylaws, immediately after and at thesame place as the annual meeting of themembers. The board may provide by resolu-tion the time and place, within or not morethan lll miles from llll for holding ofadditional regular meetings of the boardwithout other notice than such resolution.

Section 4.04. Special Meetings.Special meetings of the board may be

called by or at the request of the presidentand shall be called by the secretary at therequest of any two directors. The authorizedperson or persons calling a special meetingof the board may fix any place within or notmore than lll miles from llll as theplace for holding such meeting.

Section 4.05. Notice.Notice of any special meeting of the board

shall be given at least two days previouslythereto by written notice delivered person-ally, or four days notice sent by mail or tele-gram, to each director at the director’s ad-dress as shown by the records of the corpora-tion. If mailed, such notice shall be deemedto be delivered when deposited in the UnitedStates mail in a sealed envelope so ad-dressed, with postage thereon prepaid. If no-tice be given by telegram, such notice shallbe deemed to be delivered when the telegramis delivered to the telegraph company. Anydirector may waive notice of any meeting.The attendance of a director at any meeting

shall constitute a waiver of notice of suchmeeting, except where a director attends ameeting for the express purpose of objectingto the transaction of any business becausethe meeting is not lawfully called or con-vened. The business to be transacted at themeeting need not be specified in the noticeor waiver of notice of such meeting, unlessspecifically required by law or these bylaws.

Section 4.06. Quorum.A majority of the board shall constitute a

quorum for the transaction of business atany meeting of the board; but if less than amajority of the directors are present at saidmeeting, a majority of the directors presentmay adjourn the meeting from time to timewithout further notice.

Section 4.07. Manner of Acting.The act of a majority of the directors

present at a meeting at which a quorum ispresent shall be the act of the board, unlessthe act of a greater number is required bylaw or by these bylaws. The board may alsoact by written consent of all the directors ofthe corporation setting forth the actiontaken.

Section 4.08. Vacancies.Any vacancy occurring in the board shall

be filled by the board until the next meetingof the members and until a successor hasbeen elected by the members to fill a va-cancy. Such person shall be elected for theunexpired term of office of the predecessor inoffice.

Section 4.09. Compensation.Directors shall not receive any compensa-

tion for their services as directors.Section 4.10. Director—Absence From Meet-

ings.Any director who is absent from lll con-

secutive meetings without excuse satisfac-tory to the board shall be deemed to havesurrendered the office as director.

Section 4.11. Directors—Residuary Powers.The board shall have the powers and duties

necessary or appropriate for the administra-tion of the affairs of the corporation. Allpowers of the corporation except those spe-cifically granted or reserved to the membersby law, the articles of incorporation, orthese bylaws shall be vested to the board.

Section 4.12. Directors—Removal From Of-fice.

A director may be removed from office, forcause, by the vote of not less than three-fourths of the members present at a meetingof the members, provided notice of such pro-posed action shall have been duly given inthe notice of the meeting and provided thedirector has been informed in writing of thecharges preferred against the director atleast 10 days before such meeting. The direc-tor involved shall be given an opportunity tobe heard at such meeting. Any vacancy cre-ated by the removal of a director shall befilled by a majority vote, which may be


448

7 CFR Ch. XVIII (1–1–02 Edition)Pt. 1944, Subpt. E, Exh. D

taken at the same meeting at which such re-moval takes place.

Article V

OFFICERS

Section 5.01. Officers.The officers of the corporation shall be a

president, a vice president, a secretary, anda treasurer. The board may elect or appointsuch other officers as it shall deem desirable,such officers to have the authority and per-form the duties prescribed, from time totime, by the board. The offices of secretaryand treasurer may be combined and held byone person.

Section 5.02. Election and Term of Office.(a) The officers of the corporation specified

in Section 5.01 shall be elected from themembership of the board by the board at itsannual meeting or as soon thereafter as fea-sible. New offices may be created and filledat any meeting of the board. Each officershall hold office until the next annual elec-tion of directors and until a successor shallhave been duly elected and shall have quali-fied.

(b) The term of office shall be one year.Election of officers shall take place at theannual board meeting and shall be by ballotcast by qualified directors. A plurality ofvotes cast shall elect.

Section 5.03. Removal.Any officer elected or appointed by the

board may be removed by the board by two-thirds vote of the remaining directors when-ever in its judgment the best interests of thecorporation would be served thereby, butsuch removal shall be without prejudice tothe contract rights, if any, of the officer soremoved.

Section 5.04. Vacancies.A vacancy in any office because of death,

resignation, removal, disqualification, orotherwise, may be filled by the board by ma-jority vote for the unexpired portion of theterm.

Section 5.05. President.The president shall be the principal execu-

tive officer of the corporation and shall ingeneral supervise and control all the busi-ness and affairs of the corporation. Thepresident shall preside at all meetings of themembers and of the board. The presidentmay sign, with attestation of the secretaryor any other proper officer of the corporationauthorized by the board, any deeds, mort-gages, bonds, contracts, or other instru-ments which the board authorizes to be exe-cuted, except in cases where the signing andexecution thereof shall be expressly dele-gated by the board of these bylaws or stat-utes to some other officer or agent of thecorporation and in general shall perform allduties incident to the office of president andsuch other duties as may be prescribed bythe board from time to time.

Section 5.06. Vice President.In the absence of the president or in the

event of an inability or refusal to act, thevice president shall perform the duties of thepresident and, when so acting, shall have allthe powers of and be subject to all restric-tions upon the president. Any vice presidentshall perform such other duties as from timeto time may be assigned by the president ofthe board.

Section 5.07. Treasurer.The treasurer shall give a bond for the

faithful discharge of duties in such sum andwith such surety or sureties as the boardshall determine. The treasurer shall havecharge and custody of and be responsible forall funds and securities of the corporation;receive and give receipts for moneys due andpayable to the corporation from any sourcewhatsoever, deposit all such moneys in thename of the corporation in such banks, trustcompanies, or other depositories as shall beselected in accordance with the provisions ofArticle VIII of these bylaws; and in generalperform all duties incident to the office oftreasurer and such other duties as from timeto time may be assigned by the president orthe board.

Section 5.08. Secretary.The secretary shall keep the minutes of

the meeting of the members and the board inone or more books provided for that purpose,see that all notices are duly given in accord-ance with the provisions of these bylaws oras required by law; be custodian of and seethat the seal of the corporation is affixed toall documents the execution of which on be-half of the corporation under its seal is dulyauthorized in accordance with the provisionsof these bylaws; keep a register of the postoffice address of each member, which shallbe furnished to the secretary by such mem-ber; and in general perform all duties inci-dent to the office of secretary and such otherduties as from time to time may be assignedby the president or the board.

Article VI

ORDER OF BUSINESS

Section 6.01. Order of Business.The order of business at any regular or spe-

cial meeting of the members or the boardshall be:

(a) Reading and approval of any unap-proved minutes.

(b) Reports of officers and committees.(c) Unfinished business.(d) New business.(e) Adjournment.Section 6.02. Parliamentary Procedure.On questions of parliamentary procedure

not covered in these bylaws, a ruling by thepresident shall prevail.


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Article VII

COMMITTEE

Section 7.01. Committees of Directors.The board of directors, by resolution

adopted by a majority of the directors in of-fice, may designate one or more committees,each of which shall consist of one or more di-rectors, which committees, to the extentprovided in said resolution, shall have andexercise the authority of the board in themanagement of the corporation; but the des-ignation of such committees and the delega-tion thereto of authority shall not operate torelieve the board, or any individual director,of any responsibility imposed upon theboard, or any individual director, by law.

Section 7.02. Other committees.Other committees not having and exer-

cising the authority of the board in the man-agement of the corporation may be des-ignated by a resolution adopted by a major-ity of the directors present at a meeting atwhich a quorum is present. Except as other-wise provided in such resolution, members ofeach such committee shall be members ofthe corporation, and the president of the cor-poration shall appoint the member thereof.Any member thereof may be removed by theperson or persons authorized to appoint suchmember whenever in their judgment the bestinterest of the corporation shall be served bysuch removal.

Section 7.03. Term of Office.Each member of a committee shall con-

tinue as such until the next annual meetingof the members of the corporation and untila successor is appointed, unless the com-mittee shall be sooner terminated, or unlesssuch member to be removed from such com-mittee, or unless such member shall cease toqualify as a member thereof.

Section 7.04. Chairman.One member of each committee shall be

appointed chairman by the persons author-ized to appoint the members thereof.

Section 7.05. Vacancies.Vacancies in the membership of any com-

mittee may be filled by appointments madein the same manner as provided in the caseof the original appointments.

Section 7.06. Quorum.Unless otherwise provided in the resolution

of the board of directors designating a com-mittee, a majority of the whole committeeshall constitute a quorum and the act of amajority of the members present at a meet-ing at which a quorum is present shall be theact of the committee.

Section 7.07. Rules.Each committee may adopt rules for its

own government not inconsistent with thesebylaws or with rules adopted by the board ofdirectors.

Article VIII

CONTRACTS, CHECKS, DEPOSITS, AND FUNDS

Section 8.01. Contracts.The board may authorize any officer or of-

ficers, agent or agents of the corporation, inaddition to the officers so authorized bythese bylaws, to enter into any contract orexecute and deliver any instrument in thename of and on behalf of the corporation;and such authority may be general or con-fined to specific instance.

Section 8.02. Checks, Drafts, etc.All checks, drafts, or orders for the pay-

ment of money, notes, or other evidence ofindebtedness issued in the name of the cor-poration shall be signed by the officer or of-ficers, agent or agents of the corporation,and in a manner as shall from time to timebe determined by resolution of the board. Inthe absence of determination by the board,these instruments shall be signed by thetreasurer and countersigned by the presidentof the corporation.

Section 8.03. Deposits.All funds of the corporation shall be depos-

ited from time to time to the credit of thecorporation in such banks, trust companiesor other depositories as the board may se-lect.

Section 8.04. Gifts.The board may accept on behalf of the cor-

poration any contribution, gift, bequest, ordevise for the general purposes or for anyspecial purposes of the corporation.

Article IX

CERTIFICATES OF MEMBERSHIP

Section 9.01. Certificates of Membership.The board may provide for the issuance,

and determine the form of certificates evi-dencing membership in the corporation.Such certificates shall be signed by thepresident and the secretary, sealed with theseal of the corporation, and consecutivelynumbered. The name and address of eachmember and the date of issuance of the cer-tificate shall be entered on the records of thecorporation. If any certificate becomes lost,mutilated or destroyed, a new certificatemay be issued upon such terms and condi-tions as the board may determine.

Section 9.02. Issuance of Certificates.When a member has been elected to mem-

bership and has paid any dues that may thenbe required, a certificate of membershipshall be issued in his or her name and deliv-ered to the member by the secretary.

Article X

BOOKS AND RECORDS

The corporation shall keep correct andcomplete books and records of account andshall keep minutes of the proceedings of itsmembers, the board, and committees having


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any of the authority of the board of direc-tors, and shall keep at the registered or prin-cipal office a record giving the names andaddresses of the members. All books andrecords of the corporation may be inspectedby any member, or member’s agent or attor-ney, for any proper purposes at any reason-able time. The board shall cause an audit ofthe records of the corporation to be madeeach year by a competent auditor.

Article XI

FISCAL YEAR

The fiscal year of the corporation shallbegin on the first day of January and end onthe last day of December in each year.

Article XII

SEAL

The board shall provide a corporate seal,which shall be in the form of a circle andshall have inscribed thereon the name of thecorporation and the words, ‘‘corporate seal.’’

Article XIII

WAIVER OF NOTICE

Whenever any notice is required to begiven under the provisions of the statutes ofsaid State or the articles of incorporation orthe bylaws of the corporation, a waiverthereof in writing signed by the person orpersons entitled thereto, whether before orafter the time stated therein, shall bedeemed equivalent to the giving of such no-tice.

Article XIV

REPEAL OR AMENDMENT OF BYLAWS

Section 14.01. These bylaws may be re-pealed or amended by a majority vote of themembers present at any annual meeting ofthe members, or at any special meeting ofthe members called for such purpose, atwhich a quorum is present: provided, how-ever, no such action shall change the pur-poses of the corporation so as to impair itsrights and powers under the laws of saidState, or to waive any requirements of bondor any provision for the safety and securityof the property and funds of the corporationor its members or to deprive any memberwithout any express assent of rights, privi-leges, or immunities then existing. Notice ofany amendment to be offered at any meetingshall be given not less than 7 nor more than30 days before such meeting and shall setforth such amendment.

KNOW ALL MEN BY THESE PRESENTS:

That the undersigned secretary of the cor-poration identified in the foregoing bylawsdoes hereby certify that the foregoing by-laws were duly adopted by the members of

said corporation, as bylaws of said corpora-tion, on the lll day of lll, 19lll at aduly called and constituted meeting of themembers, and that they do now constitutethe bylaws of said corporation.llllllllllllllllllllllll

Secretary

(Corporate Seal)

[53 FR 2159, Jan. 26, 1991, as amended at 56FR 2248, Jan. 22, 1991]

EXHIBIT D–1 TO SUBPART E—BYLAWS(COOPERATIVE)

Bylaws of


(a nonprofit cooperative corporation)

Article I

OFFICE

Section 1.01. Principal office. The principalplace of business of the cooperative in theState of lllll shall be located atllllll, County of lllll.

Section 1.02. Registered office and agent.

Article II

MEMBERS

Section 2.01. Eligibility for membership dur-ing cooperative’s formation. Any natural per-son who is approved by the cooperativeunder its rules and regulations by the boardof directors shall be eligible for membership,provided that he/she executes a SubscriptionAgreement and Occupancy Agreement in theusual form employed by the cooperative cov-ering a specific unit in the housing project.

Section 2.02. Approval of Applications forMembership after the cooperative’s formation.

All applications for membership receivedafter the cooperative has been establishedand in operation shall be approved at anyspecial or regular meeting of the board of di-rectors, when a quorum is present, by a ma-jority vote of the board members.

Section 2.03. Membership certificates. Theboard may provide for the issuance, and de-termine the form of, certificates evidencingmembership in the cooperative. Such certifi-cates shall state that the cooperative is or-ganized under the laws of the State ofllllll, the cooperative’s lien rightsagainst such membership as set forth inthese Bylaws, shall be signed by the presi-dent and the secretary, sealed with the sealof the cooperative, and consecutively num-bered. The name and address of each memberand the date of cooperative. If a certificatebecomes lost, mutilated, or destroyed, a newcertificate may be issued upon such termsand conditions as the board may determine.

Section 2.04. Lien. The cooperative shallhave a lien on the outstanding memberships


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RHS, RBS, RUS, FSA, USDA Pt. 1944, Subpt. E, Exh. D–1

1 In the case of joint membership, eachmember shall be entitled to cast a one-halfvote.

in order to secure payment of any sumswhich shall be due or become due from theholders for any reason whatsoever, includingany sums due under any occupancy agree-ments.

Section 2.05. Voting rights. Each membershall be entitled to one vote on each mattersubmitted to a vote of the members.1

Section 2.06. Patronage capital. All fundsaccruing to the cooperative during the year,above and beyond the costs and expenses ofoperating the cooperative, shall be assignedto each member on the books of the coopera-tive as patronage capital at the end of eachfiscal year. These patronage capital fundsmay not be removed from the patronage cap-ital account except in payment to membersupon termination of membership. Any mem-ber not wishing to renew the OccupancyAgreement will be entitled to receive the pa-tronage capital assigned to the member onthe books of the cooperative. Likewise,members terminated because of violation ofthese bylaws may receive his/her patronagecapital pursuant to provisions of section 2.07.

Section 2.07. Termination of membership. Amember may be suspended or expelled, forviolation of rules set forth in the OccupancyAgreement or these bylaws, by the vote ofnot less than a majority of the board of di-rectors, provided the member has been in-formed in writing of the charges preferredagainst the member at least ten days beforesuch meeting. However, the cooperative shallnot evict any member except by judicial ac-tion pursuant to State or local law and in ac-cordance with the requirements of the Farm-ers Home Administration or its successoragency under Public Law 103–354 TenantGrievance and Appeals Procedure. The mem-ber shall be given an opportunity to be heardat such meeting. Upon termination of mem-bership rights under the Occupancy Agree-ment, the member shall be required to de-liver promptly to the cooperative his/hermembership certificate and OccupancyAgreement endorsed as required by the coop-erative. The retiring member then shall beentitled to receive the amount determined inaccordance with the provisions of section2.10 less the following amounts (the deter-mination of such amounts by the cooperativeto be conclusive):

a. Any amounts due to the cooperativefrom the member under the OccupancyAgreement;

b. The cost or estimate cost of all deferredmaintenance, including painting, redeco-rating, floor finishing, and such repairs andreplacements as are deemed necessary by thecooperative to place the dwelling unit in

suitable condition for another occupancy;and

c. Legal and other expenses incurred by thecooperative in connection with the default ofsuch member. In the event the retiring mem-ber fails, within a 10-day period after de-mand, to deliver to the cooperative his en-dorsed membership certificate, the member-ship certificate shall be deemed to be can-celed and may be reissued by the cooperativeto a new member.

Section 2.08. Resignation. Any member maychoose not to renew the Occupancy Agree-ment by notifying the cooperative 4 monthsin advance of the renewal date.

Section 2.09. Transfer of membership. Mem-bership in this cooperative is not transfer-able or assignable except to the cooperativeunless, upon death of a member, his/hermembership in the cooperative passes by willor intestate distribution to a member of theimmediate family. This is conditioned uponthe person’s eligibility and approval formembership according to FmHA or its suc-cessor agency under Public Law 103–354 regu-lations and by his/her assuming in writingthe terms of the Subscription Agreement andOccupancy Agreement within 60 days aftermember’s death and payment of such debts.

Section 2.10. Transfer value. Whenever amembership is transferred to the coopera-tive, the term transfer value shall mean thesum of:

a. The membership fee paid by the memberon the books of the cooperative, and

b. The amount of the patronage capitalwhich has accrued to the member during his/her period of membership as shown on thebooks of the cooperative.

Section 2.11. Subscription fees. All subscrip-tion funds shall be deposited promptly with-out deduction in a special account or ac-counts of the cooperative as escrow or trust-ee for the subscribers membership. Thesefunds shall not be corporate funds, but shallbe held solely for the benefit of the sub-scribers until transferred to the account ofthe cooperative as hereinafter provided.Such special account or accounts shall be es-tablished with a banking institution wheredeposits are insured by an agency of the Fed-eral Government. Such funds shall be subjectto withdrawal, or transfer to the account ofthe cooperative, or disbursed in a manner di-rected by the cooperative only upon certifi-cation by the president and secretary of thecooperative that:

(a) The subscription agreement of a namedapplicant has been terminated pursuant toits terms and such withdrawal is required torepay the amount paid by him under suchagreement; or

(b) A sufficient number of applicants forllll dwelling units has not been estab-lished and such withdrawal is required torepay established applicants the amountspaid by them; or


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2 For large organizations, a smaller figuremay be used if it will not result in a quorumof less than 20 members.

(c) Applicants for llll dwelling unitshave signed subscription agreements, havebeen approved as to their eligibility by theboard of directors, and have made at least adownpayment on their subscription (mem-bership) fee. If these requirements have beenmet and the mortgage loan has been sched-uled for closing, the entire amount of thefunds in the subscription escrow accountmay be transferred to the cooperative whichshall at that time deliver membership cer-tificates to all members.

Article III

MEETINGS OF MEMBERS.

Section 3.01. Annual meeting. An annualmeeting of the members shall be held atllllll on the llll of the month oflllll each year, beginning with the year19llll at the hour of llll o’clock,??m., for the purpose of electing directorsand for the transaction of such other busi-ness as may come before the meeting. If theday fixed for the annual meeting shall be alegal holiday in said State, such meetingshall be held on the next succeeding businessday. If the election of directors shall not beheld on the day designated herein for any an-nual meeting, or at any adjournment there-of, the board shall cause the election to beheld at a special meeting of the members assoon thereafter as convenient.

Section 3.02. Special meetings. Special meet-ings of the members may be called by thepresident, the board or not less than one-fourth of the members.

Section 3.03. Place of meeting. The board ofdirectors may designate any place within ornot more than llll miles fromllllll as the place for an annual meet-ing or for any special meeting called by theboard.,

Section 3.04. Notice of meetings. Written orprinted notice stating the place, day, andhour of any meeting of members shall be de-livered either personally or by mail, to eachmember entitled to vote at such meeting,not less than ten or more than twenty daysbefore the date of such meeting, by or at thedirection of the president, or the Secretary,or the officers or persons calling the meet-ing. In case of a special meeting or when re-quired by statute of these bylaws, the pur-pose or purposes for which the meeting iscalled shall be stated in the notice. Ifmailed, the notice of a meeting shall bedeemed to be delivered when deposited in theUnited States mail addressed to the memberat the address as it appears on the records ofthe cooperative, with postage thereon pre-paid.

Section 3.05. Informal action by members.Any action required by law to be taken at ameeting of the members, or any action whichmay be taken at a meeting of the members,may be taken without a meeting upon writ-

ten consent or approval of all the members,setting forth the action so taken.

Section 3.06. Quorum. At such a meeting aquorum shall consist of 40 percent 2 of themembers, or twice the number of directors,whichever is greater. If a quorum is notpresent at any meeting of members, a major-ity of the members present may adjourn themeeting from time to time without furthernotice.

Section 3.07. Proxies. (a) At any meeting ofthe members, a member entitled to vote mayvote by proxy executed in writing by themember. No proxy shall be valid after elevenmonths from the date of its execution. Aproxy may be cancelled by notice executedby the member with like formality and de-livered to the secretary.

(b) At each meeting of the members, everymember shall be entitled to vote in person orby proxy and shall be entitled to cast onevote. The votes for Directors shall be by bal-lot. Only the person in whose name member-ship is standing in the books of the coopera-tive on the day of such meeting shall be enti-tled to vote in person or by proxy. If themembership is jointly owned, co-membersare limited to one-half vote each.

(c) For any person to represent a memberby proxy, such person must submit a powerof attorney to the secretary of the board forexamination at least one hour before thetime of meeting. When the secretary has cer-tified the power of attorney is in good order,the proxy holder shall have the right to doany and all things which might be done bythe member were the member present in per-son, which right shall include the establish-ment of a quorum and the organizing of anymeeting.

Article IV

BOARD OF DIRECTORS

Section 4.01. General powers. The affairs ofthe cooperative shall be managed by itsboard of directors.

Section 4.01. Powers and duties. The boardof directors shall have all the powers and du-ties necessary for the administration of theaffairs of the cooperative and may do allsuch acts and things as are not by law or bythese bylaws directed to be exercised anddone by the members. The powers of theboard of directors shall include but not belimited:

a. To accept or reject all applications formembership and admission to occupancy of adwelling unit in the cooperative housingproject, either directly or through an au-thorized representative;


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3 Number of directors must be not less than5 and must be selected by a procedure thatinsures that the interest of minorities andwoman are adequately represented.

b. To establish monthly occupancycharges, subject to approval of FmHA or itssuccessor agency under Public Law 103–354,as provided for in the Occupancy Agreementand based on an operating budget formallyadopted by the board;

c. To engage an agent or employees, sub-ject to the approval of FmHA or its suc-cessor agency under Public Law 103–354, forthe management of the project under suchterms as the board may determine;

d. To authorize the recording of patronagecapital assignments on the cooperative’sbooks to members;

e. To terminate membership and occu-pancy rights for cause; and

f. To promulgate such rules and regula-tions pertaining to use and occupancy of thepremises as may be deemed proper and areconsistent with these bylaws and the Certifi-cate of Incorporation and with any require-ments of FmHA or its successor agencyunder Public Law 103–354 while mortgagee.

The affairs of the cooperative shall bemanaged by its board of directors.

Section 4.02. Number and qualifications. Theboard of directors shall be composed of lll

persons, all of whom shall be members of thecooperative.3

Section 4.03. Election and term of office. Theterm of the directors named in the Certifi-cate of Incorporation shall expire when theirsuccessors have been elected at the first an-nual meeting or any special meeting calledfor that purpose. For a board of five (5) direc-tors, the first annual meeting of the mem-bers the term of office of two (2) directorsshall be fixed for two (2) years, and the termof office of one (1) director shall be fixed at(1) year. At the expiration of the initial termof office of each respective director, his/hersuccessor shall be elected to serve a term ofoffice for three (3) years.

The directors shall hold office until theirsuccessors have been elected and hold theirfirst meeting. (If a larger board of directorsis contemplated, the terms of office shouldbe established in a similar manner so thatthey will expire in different years.) The termof any director who becomes more than 30days delinquent in payment of his occupancycharges shall be automatically terminatedand the remaining directors shall appoint hissuccessor as provided in § 4.11.

Section 4.04. Organization meeting. The firstmeeting of a newly elected board of directorsshall be held within ten (10) days of electionat such place as shall be fixed by the direc-tors at the meeting at which such directorswere elected. No notice shall be necessary tothe newly elected directors in order legally

to constitute such meeting, providing a ma-jority of the whole board shall be present.

Section 4.05. Regular Meetings. Regularmeetings of the board of directors shall beheld each month at such time and placewithin lll miles of llllll. Notice ofregular meetings of the board of directorsshall be given to each director, personally orby mail, telephone or telegraph, at least 5days prior to the day named for such meet-ing.

Section 4.06. Special meetings. Special meet-ing of the board may be called by or at therequest of the president and shall be calledby the secretary at the request of any two di-rectors on three days notice. Such noticeshall be by mail, telephone or telegraph andshall state the time, place (as providedbelow) and purpose of meeting. The author-ized person or persons calling a special meet-ing of the board may fix any place within ornot more than lll miles from llllll

as the place for holding such meeting.Section 4.07. Waiver of notice. Before or at

any meeting of the board of directors, anydirector may, in writing, waive notice ofsuch meeting and such waiver shall bedeemed equivalent to the given of such no-tice. Attendance by a director at any meet-ing of the board shall be a waiver of noticeby him/her of the time and place thereto. Ifall directors are present at any meeting ofthe board, no notice shall be required andany business may be transacted at suchmeeting.

Section 4.08. Quorum. A majority of theboard shall constitute a quorum for thetransaction of business at any meeting of theboard; but if less than a majority of the di-rectors is present at said meeting, a major-ity of the directors present may adjourn themeeting from time to time without furthernotice.

Section 4.09. Fidelity Bonds. The board ofdirectors shall require that all officers andemployees of the cooperative handling or re-sponsible for cooperative or trust funds shallfurnish adequate fidelity bonds. The pre-miums on such bonds shall be paid by the co-operative.

Section 4.10. Manner of acting. The act of amajority of the directors at a meeting atwhich a quorum is present shall be the act ofthe board, unless the act of a greater numberis required by law or by these bylaws. Theboard may also act by written consent of allthe directors of the cooperative setting forththe action taken.

Section 4.11. Vacancies. Any vacancy occur-ring on the board shall be filled by the boarduntil the next meeting of the members anduntil a successor has been elected by themembers to fill a vacancy. Such person shallbe elected for the unexpired term of office ofthe predecessor in office.


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Section 4.12 Directors—removal from office. Adirector may be removed from office for vio-lation of these bylaws or rules set forth inthe Occupancy Agreement, by the vote of notless than three-fourths of the memberspresent at a meeting of the members, pro-vided notice of such proposed action shallhave been duly given in the notice of themeeting and provided the director has beeninformed in writing of the charges preferredagainst the director at least 10 days beforesuch meeting. The director involved shall begiven an opportunity to be heard at suchmeeting. Any vacancy created by the re-moval of a director shall be filled by a ma-jority vote, which may be taken at the samemeeting at which such removal takes place.

Section 4.13. Compensation. Directors shallnot receive any compensation for their serv-ices as directors.

Section 4.14. Directors—absence from meet-ings. Any director who is absent from lll

consecultive meetings without excuse satis-factory to the board shall be deemed to havesurrendered the office of director.

Section 4.15. Directors—Residuary Powers.The board shall have the powers and dutiesnecessary or appropriate for the administra-tion of the affairs of the cooperative. Allpowers of the cooperative except those spe-cifically granted or reserved to the membersby law, the Articles of Incorporation, orthese bylaws shall be vested in the board.

Section 4.16. Adviser to the board. The ad-viser to the board will be a member (or mem-bers) of the community who is not a memberof the cooperative. In that capacity, the indi-vidual will be responsible for maintainingregular contacts with the board as well asbeing available to respond to special needs ofthe board at mutually agreeable times. Theadviser will guide the board in its role ofself-manager until such time as the adviserand FmHA or its successor agency underPublic Law 103–354 determine that such closeguidance is no longer necessary, usually notto exceed 2 years. At that time, the adviserwill continue to counsel the board as appro-priate. If it is apparent to the adviser, duringthis second phase of converting to self-man-agement, that the cooperative is unable toassume such a responsibility, the adviserwill again establish the close supervision re-quired in the first phase of operation. The ul-timate goal of the adviser and the board is toachieve self-management for the coopera-tive. If this goal cannot be realized within atimeframe determined during the first, orsubsequent, year of operation, then the man-agement reserve funds will be used to hireprofessional management, thus relieving theadviser of his/her responsibilities.

Article V

OFFICERS

Section 5.01. Officers. The officers of the co-operative shall be a president, a vice presi-dent, a secretary, and a treasurer. The boardmay elect or appoint such other officers as itshall deem desirable, such officers to havethe authority and perform the duties pre-scribed, from time to time, by the board. Theoffices of secretary and treasurer may becombined and held by one person.

Section 5.02. Election and term of office. (a)The officers of the cooperative specified inSection 5.01 shall be elected from the mem-bership of the board by the board at its an-nual meeting or as soon thereafter as fea-sible. New officers may be created and filledat any meeting of the board. Each officershall hold office until the next annual elec-tion of directors and until a successor shallhave been duly elected and shall have quali-fied.

(b) The term of office shall be one year.Election of officers shall take place at theannual board meeting and shall be by ballotcast by qualified directors. A plurality ofvotes cast shall elect.

Section 5.03. Removal. Any officer electedor appointed by the board may be removedby the board by two-thirds vote of the re-maining directors FmHA or its successoragency under Public Law 103–354 whenever,in its judgment, the best interests of the co-operative would be thereby served. Such re-moval shall be without prejudice to themembership rights, if any, of the officer soremoved.

Section 5.04. Vacancies. A vacancy in anyoffice because of death, resignation, removal,disqualification, or otherwise, may be filledby the board by majority vote for the unex-pired portion of the term.

Section 5.05. President. The president shallbe the principal executive officer of the coop-erative and shall in general supervise andcontrol all the business and affairs of the co-operative. The president shall preside at allmeetings of the members and of the board.The president may sign, with attestation ofthe secretary or any other proper officer ofthe cooperative authorized by the board, anydeeds, mortgages, bonds, contracts, or otherinstruments which the board authorizes tobe executed. In some cases the signing andexecution thereof shall be expressly dele-gated by the board or these bylaws or statuteto some other officers or agent of the cor-poration and in general shall perform all du-ties incident to the office of president andsuch other duties as may be prescribed bythe board from time to time.

Section 5.06. Vice President. In the absenceof the president or in the event of an inabil-ity or refusal to act, the vice president shallperform the duties of the president and,when so acting, shall have all the powers of


455


and be subject to all the restrictions uponthe president. Any vice president shall per-form such other duties as from time to timemay be assigned by the president of theboard.

Section 5.07. Secretary. The secretary shallkeep the minutes of the meeting of the mem-bers and the board in one or more books pro-vided for that purpose, see that all noticesare duly given in accordance with the provi-sions of these bylaws or as required by law;be custodian of and see that the seal of thecooperative is affixed to all documents, theexecution of which is on behalf of the cooper-ative under its seal, is duly authorized in ac-cordance with the provisions of these bylaws;keep a register of the post office address ofeach member, which shall be furnished to thesecretary and such other duties as from timeto time may be assigned by the president ofthe board.

Section 5.08. Treasurer. The treasurer shallhave charge and custody of and be respon-sible for all funds and securities of the coop-erative; receive and give receipts for moneysdue and payable to the cooperative, from anysource whatsoever, deposit all such money inthe name of the cooperative in such banks,trust companies, or other depositories asshall be selected in accordance with the pro-visions of Article VIII of these bylaws; and ingeneral perform all duties incident to the of-fice of treasurer and such other duties asfrom time to time be assigned by the presi-dent of the board.

Article VI

ORDER OF BUSINESS

Section 6.01. Order of business. The order ofbusiness at any regular or special meeting ofthe members or the board shall be:

a. Roll Call.b. Proof of notice of meeting or waiver of no-

tice.c. Reading and approving of any unapproved

minutes.d. Reports of officers and committees.e. Election of inspectors of election (when

applicable)f. Election of directors (when applicable).g. Unfinished business.h. New business.i. Adjournment.

If present, a representative of FmHA or itssuccessor agency under Public Law 103–354will be given an opportunity to address anyregular or special meeting.

Section 6.02. Parliamentary Procedure. Onquestions of parliamentary procedure notcovered in these bylaws, a ruling by thepresident shall prevail.

Article VII

COMMITTEES

Section 7.01. Committees of directors. Theboard of directors, by resolution adopted bymajority of the directors in office, may des-ignate one or more committees, each ofwhich shall consist of one or more directors,which committees, to the extent provided insaid resolution, shall have and exercise theauthority of the board in the management ofthe cooperative; but the designation of suchcommittees and the delegation thereto of au-thority shall not operate to relieve theboard, or any individual director, of any re-sponsibility imposed upon the board or anyindividual director by law.

Section 7.02. Membership committees. Othercommittees not having and exercising theauthority of the board in the management ofthe cooperative will be designated by a reso-lution adopted by a majority of the directorspresent at a meeting at which a quorum ispresent. At the first membership meetingthe members will be solicited by the presi-dent to obtain voluntary commitments toserve on the various committees. As manymembers as possible should be encouraged tobecome involved in committee responsibil-ities. Any member may be removed from acommittee by the president whenever in his/her judgment the best interest of the cooper-ative shall be served by such removal.

Section 7.03. Term of office. Each member ofmembership committees shall continue assuch until the next annual meeting of themembers of the cooperative when membersmay change from one committee to another.Additional members may join a committeeat any time during the year.

Section 7.04. Chairperson. One member ofeach membership committee shall serve aschairperson by decision of the members ofthe committee. The chairperson will reportcommittee activities and receive directionfrom a designated member of the board.

Section 7.05. Vacancies. Vacancies in themembership of any membership committeemay be filled in the same manner as providedin the case of the original members.

Section 7.06. Quorum. Unless otherwise pro-vided in the resolution of the board of direc-tors designating a committee, a majority ofthe whole membership committee shall con-stitute a quorum and the act of a majority ofthe members present at a meeting at whicha quorum is present shall be the act of thecommittee.

Section 7.07. Rules. Each membership com-mittee may adopt rules for its own govern-ment not inconsistent with these bylaws orwith rules adopted by the board of directors.


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Article VIII

CONTRACTS, CHECKS, DEPOSITS, AND FUNDS

Section 8.01. Deposits. All funds of the coop-erative shall be deposited from time to timeto the credit of the cooperative in such Fed-erally insured banks, trust companies, orother Federally insured depositories as boardmay select.

Section 8.02. Gifts. The board may accepton behalf of the cooperative any contribu-tion, gift, bequest, or devise for the generalpurposes or for any special purpose of the co-operative.

Article IX

CERTIFICATES OF MEMBERSHIP

Section 9.01. Issuance of certificates. When aperson has been approved for membershipand has paid any dues that may then be re-quired, a certificate of membership shall beissued in his/her name and delivered to themember by the secretary.

Article X

Section 10.01. Books and accounts. TheTreasurer of the cooperative shall keep cor-rect and complete books and records of ac-count and shall keep minutes of the pro-ceedings of its members, the board, and com-mittees having any of the authority of theboard of directors, and shall keep at the reg-istered or principal office a record giving thenames and addresses of the members. Allbooks and records of the cooperative may beinspected by any member, or member’s agentor attorney, or FmHA or its successor agen-cy under Public Law 103–354 for any properpurposes at any reasonable time.

Section 10.02. Auditing. At the close of eachfiscal year, the books and records of the co-operative shall be audited by a CertifiedPublic Accountant or other person accept-able to FmHA or its successor agency underPublic Law 103–354 whose report will be pre-pared and certified in accordance with therequirements of FmHA or its successor agen-cy under Public Law 103–354. Based on suchreports, the cooperative will furnish itsmembers with an annual financial statementincluding the income and disbursements ofthe cooperative. The cooperative will alsosupply the members, as soon as practicableafter the end of each calendar year, with astatement showing the amount assigned toeach member’s patronage capital account.

Article XI

FISCAL YEAR

The fiscal year of the cooperative shallbegin on the first day of January and end onthe last day of December in each year, ex-cept that the first fiscal year of the coopera-tive shall begin at the date of incorporation.

Article XII

SEAL

The board shall provide a cooperative seal,which shall be in the form of a circle andshall have inscribed thereon the name of thecooperative and the words ‘‘CooperativeSeal.’’ The seal will be kept by the secretary.

Article XIII

WAIVER OF NOTICE

Whenever any notice is required to begiven under the provisions of the statutes ofsaid State or the Articles of Incorporation orthe Bylaws of the cooperative, a waiverthereof in writing signed by the person orpersons entitled thereto, whether before orafter the time stated therein, shall bedeemed equivalent to the giving of such no-tice.

Article XIV

REPEAL OF AMENDMENT OF BYLAWS

Section 14.01. Repeal of amendment of by-laws. These bylaws may be repealed oramended by a majority vote of the memberspresent at any annual meeting of the mem-bers, or at any special meeting of the mem-bers called for such purpose, at which aquorum is present provided that while FmHAor its successor agency under Public Law103–354 is mortgagee no amendment will be-come effective until it has received theFmHA or its successor agency under PublicLaw 103–354 written approval of FmHA or itssuccessor agency under Public Law 103–354and provided no such action shall change thepurposes of the cooperative so as to impairits rights and powers under the laws of saidState, or to waive any requirements of bondor any provision for the safety and securityof the property and funds of the cooperativeor its members, or to deprive any memberwithout an express assent of rights, privi-leges or immunities then existing. Notice ofany amendment to be offered at any meetingshall accompany the notice of any regular orspecial meeting at which proposed amend-ment is to be voted upon.

[56 FR 2248, Jan. 22, 1991]

EXHIBIT E TO SUBPART E—SUPPORTSERVICES FOR CONGREGATE HOUSINGAND GROUP HOMES

I. PURPOSE

This exhibit prescribes support services forcongregate housing and group homes.

II. GENERAL

The success of congregate housing andgroup homes will depend on the quality and


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affordability of the service component. Con-gregate housing applicants should explorethe feasibility of providing services individ-ually to ensure affordability by very low-in-come tenants.

III. EXISTING COMMUNITY SERVICES ANDREQUIREMENTS

Applicants should check local serviceagencies to determine what services are al-ready available in the community. Servicescan often be provided more inexpensivelythrough local service agencies or othergroups which assist in providing services. Inmany communities there are established vol-unteer groups that may be willing to providevolunteer assistance to congregate housingtenants. Volunteer groups with a history ofassisting elderly people may be able to sup-plement the delivery of services and helpkeep the costs affordable. Applicants shouldexplore the availability of volunteers fromthe Retired Senior Volunteer Program(RSVP), local church groups and other com-munity organizations. If volunteer groupsare used, an alternative method of servicedelivery must be addressed in case the avail-ability of volunteers ceases in the future.Applicants must also verify State and locallicensing and certification requirements andinclude relevant information in the loan re-quest.

IV. SERVICE AGREEMENTS

Applicant must submit a service agree-ment(s) for services that will not be providedby employees of the project. If services willbe provided by employees of the project, theapplicant must submit a separate budget forservices and describe how tenants will bebilled for services. Employees of congregatehousing facilities who perform tasks for themanagement of the building and spend an ap-preciable amount of time in providing serv-ices to tenants should have their salariesprorated between the project’s operation andmaintenance budget and the services budget.

V. SERVICES FOR CONGREGATE HOUSING

The following services must be made avail-able to tenants of congregate housingprojects:

A. Meals. At least one nutritious meal aday, 7 days a week, must be provided in ac-cordance with § 1944.224(a)(5)(i) of this sub-part. The following information concerningthe meal service must be included with theloan request.

1. Who will provide the meals (i.e., mealsoffered by a local agency with tenant con-tribution; supplied or contracted for byowner with charge to tenant)?

2. If the service will be provided by employ-ees of the project, a proposed breakdown ofcosts for the meal service. The breakdownshould include the cost of food, personnel

and utilities needed to prepare and serve themeals. Information concerning the proposedstaffing should be included.

3. The cost to the tenant. Will tenants payby the meal or be charged a rate for a speci-fied time?

4. A statement concerning the frequency ofmeals, including the number of meals to beserved per week.

5. Information concerning how the mealswill be served (i.e., waiter style, buffet, trayservice).

6. Any licensing requirement necessary forthe service.

B. Transportation. Adequate transportationmust be provided to shopping, medical andother services to meet the needs of the ten-ants. Applicants are encouraged to locatecongregate housing facilities so that tenantscan use public services. In many cases, serv-ice is available and the applicant can ar-range for the project to be included in theschedule established by the provider. Thefollowing information concerning the trans-portation service must be included with theloan request:

1. Who will provide the service (i.e., trans-portation provided by a local agency withtenant contribution; vehicle leased or pur-chased by applicant with charge to tenant)?

2. If the service will be provided by employ-ees of the project, a proposed breakdown ofcosts for the transportation service. The ap-plicant should address the following costs:vehicle purchase or lease payment; personnelto operate the vehicle; fuel; maintenance;and insurance.

3. The cost to the tenant. Will tenants payfor each trip or will they be charged amonthly rate?

4. A typical proposed schedule.C. Housekeeping. Housekeeping services

must be offered to assist congregate tenantswith household tasks. The applicant mustaddress the following concerning the house-keeping service:

1. Who will provide the service (i.e., house-keeping offered by a local agency with ten-ant contribution; supplied or contracted forby applicant with charge to tenant)?

2. If the service is provided by employees ofthe project, a proposed cost breakdown forthe service which includes the cost of laborand supplies.

3. The type of tasks that will be offered(i.e., light housekeeping, laundry, sham-pooing carpeting). What is the planned fre-quency of the tasks?

4. The cost to the tenant.D. Personal services. Personal services in-

clude such items as assistance with personalhygiene, nutrition counseling and generalhealth screening (blood pressure checks,etc.). The following information concerningthe personal services must be submitted withthe loan request:


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1. Who will provide the service (i.e., per-sonal services offered by a local agency withtenant contribution; volunteer health serv-ices; contracted for by applicant with chargeto tenant)?

2. If the service is provided by employees ofthe project, a proposed cost breakdown forthe service which includes the cost of laborand 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 so-

cial activities must be offered to tenants toencourage interest in a variety of areas. Thefollowing areas could be considered: hobbyand craft classes; dinners for holidays, birth-days, etc.; educational lectures; wellness andexercise programs; and a library. The appli-cant should encourage recreational/social ac-tivities which cause interaction between ten-ants, the project and the community. Thefollowing information concerning the rec-reational/social service must be includedwith the loan request:

1. Who will provide the service (i.e., rec-reational/social activities offered by a localagency with tenant contribution; supplied orcontracted for by applicant with charge tothe tenant)?

2. If the service is provided by employees ofthe project, a proposed cost breakdownwhich 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 avail-able to tenants of a group home:

A. Meals. At least three nutritious meals aday, 7 days a week, must be provided if ten-ants are not capable of preparing theirmeals. If meals are provided, the budget mayinclude only the cost of food if tenants assista staff person in preparing meals. Tenants insome group homes may be able to preparemeals on their own with supervision from aproject personnel. In these cases, applicantsmust ensure that the tenants will be pre-paring nutritious meals.

B. Transportation. Applicants must submitinformation on the transportation service asdetailed in paragraph V B of this exhibit.

C. Housekeeping. Applicants must provide anarrative explaining how housekeeping willbe accomplished. In many cases, group hometenants assist with housekeeping choreswith little expense being borne by theproject. Applicants should detail expensesthat will be part of the service budget.

D. Personal services. A higher percentage oftenants in a group home may require per-sonal services. Applicants must detail theservices to be offered and the cost to ten-ants.

E. Recreational/social. In most cases, therewill be little expense for recreational/socialopportunities in a group home. Applicantsshould explain what will be offered to thetenants and the projected cost to tenants.

VII. ADDITIONAL ITEMS NECESSARY FOR CON-GREGATE HOUSING/GROUP HOMES THAT CAN-NOT BE FINANCED WITH FMHA OR ITS SUC-CESSOR AGENCY UNDER PUBLIC LAW 103–354LOAN FUNDS

Congregate housing/group home projectsrequire additional items that will not be-come affixed to the real estate. These itemscan include special portable equipment, fur-nishings, kitchen bars, dining ware, eatingutensils, movable tables and chairs,steamtables, etc. In accordance with§ 1944.224(a)(3) of this subpart, loan funds can-not be used to finance these items. As a partof the loan request, applicants must includea proposed list of additional items that willbe needed by the project and state how theseitems will be paid for.

[55 FR 26647, June 29, 1990, as amended at 58FR 40954, July 30, 1993; 62 FR 25065, May 7,1997]

EXHIBIT F TO SUBPART E—QUALIFICA-TIONS OF AN ADVISER TO THE BOARD

Qualifications of an Adviser to the Board

In the Board’s analysis of the talents andabilities of a person to handle the job of ad-viser, the first attribute most desirable isthe capacity to be a friend. The definitions ofa friend include (1) A person whom oneknows, likes, and trusts; (2) one with whomone is allied in a struggle or cause; (3) onewho supports, sympathizes with or patron-izes a group, cause, or movement.

The adviser must care about the person heor she is trying to help. That means havingpatience and understanding during the trialand error period of a new cooperative’s oper-ation and also when it becomes necessary toexplain complicated regulations or legal doc-uments more than just once to those whohave had less educational opportunities thanthe adviser.

The adviser must teach a totally new hous-ing concept to persons who have only had ex-perience with a rental environment. Thismeans that the adviser must be able to talkto each and every person who is interested inthe cooperative housing and explain justwhat the person is facing. The adviser mustalso be able to listen to those who rely onsomeone’s ‘‘being there’’ to hear their prob-lems and ideas. The adviser must be someonewho is able to work with low-income personsand one who both understands their par-ticular circumstances and strives to improvetheir well-being. The adviser, in this regard,must be able to learn as well as to teach.


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The adviser must be dedicated to thosepersons with whom he or she is associated aswell as to have the capacity to work withcity officials, Government officials, politi-cians, and other professionals to achieve thegoal of housing the local citizens.

I. EDUCATIONAL BACKGROUND

a. Experience in working with—

Low-income people and with the problemsinherent with this group.

b. Administrative background for—

1. Setting up system for management, in-cluding detailed financial, personal, andactivity records;

2. Setting up system for maintenance forbuildings, grounds, and equipment.

c. Training to—

1. Accept the major responsibility of teach-ing and have the experience to carry thisout.

2. Make certain that members are learningwhile doing, whatever the activity.

3. Know how to use group dynamics.4. Be ready to assist individual members re-

solve problems.5. Recognize a need for social casework when

required, then be able to give or obtainthat assistance. (Individual problemsquickly affect cooperatives.)

6. Have knowledge of and make effective useof resources.

7. Handle the business of a cooperative whileteaching members how to manage itthemselves.

8. Understand complexity of managementand maintenance.

9. Be able to understand, interpret, and teachthe contents of documents from fundingagencies.

Ideally, a background in social work wouldbe the most logical experience, but otherscan be considered.

[56 FR 2252, Jan. 22, 1991]

EXHIBIT F–1 TO SUBPART E—RELATIONSHIP OF ADVISER TO MEMBERS

Relationship of Adviser to Members

I. The adviser must be able to teach themembers and the members must be willingto learn management and maintenance oftotal Cooperative while they gradually as-sume more and more responsibilities, untilthe cooperative is completely self-managed.

II. In order to be effective, the advisershould have the ability to teach to members:

a. The complete procedures and techniquesof management and maintenance.

b. A cooperative approach to everything in-volved while member lives in a coopera-tive.

c. An ability to deal with persons in author-ity.

d. Resources and how to use them.e. Board procedures and specific duties.f. Functions and responsibilities of Commit-

tees.g. Regulatory documents and their impor-

tance.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 decision-making.

4. Cultivate a concern for his or her neigh-bor.

5. Consider the good of the group, ahead ofself-interest.

6. Use his or her vote and know it counts:within the cooperative for directors andofficers 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 whichmust be followed. The adviser must makecertain that the members realize that, bysigning their occupancy agreement, they areagreeing to live up to all aspects of thatagreement. In so doing, they are agreeing toabide by all of the funding agency’s regula-tions pertaining to the cooperative. Theseregulatory documents must be taught overand over and consulted by the members inall major decisions. The adviser would alsobe expected to:a. Work with families or individuals with

specific problems.b. Consider each activity as an opportunity

for the members to learn, learning whiledoing must be the members’ primarygoal.

c. Become involved in the early planningstage of the cooperative.

d. Involve members in decisionmaking dur-ing the planning stage, including the se-lection of living unit.

e. Feel a part of the group of members andbreak down regulations and instructionsinto language understood by them.

f. Give members the freedom and encourage-ment to express ideas and to carry outideas accepted by the majority unlessthey are contrary to Government regula-tions.

g. Interpret Government regulations andguidelines, being able to apply and teachthem.

[56 FR 2252, Jan. 22, 1991]

EXHIBIT G TO SUBPART E—ADVISERRESPONSIBILITIES

Adviser Responsibilities

I. Responsibilities of the adviser to theboard will include—


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a. Serving as backup manager while teachingself-management and maintenance to themembers.

b. Assisting in organizing the board of direc-tors and standing committees and meet-ing regularly with them.

c. Assisting in continual evaluation andmonitoring of operations.

d. Developing an educational plan and beingresponsible for its implementation.

e. Assisting in setting up systems and proce-dures for—

1. Management, including detailed finan-cial, personal, and activity records;

2. Maintenance of buildings, grounds, andequipment.

f. Assisting with financial questions that arenot of sufficient complexity to requirereferral to an outside auditor.

g. Advising in evaluation of new applicantsfor membership.

[56 FR 2252, Jan. 22, 1991]

EXHIBIT H TO SUBPART E—LIMITEDEQUITY AGREEMENT

Limited Equity Agreement

This Agreement, dated llllll, by andbetween llllll (hereinafter ‘‘referred toas the ‘‘Cooperative’’), a corporation havingits principal office and place of business atllllll and Farmers Home Administra-tion or its successor agency under PublicLaw 103–354, United States Department ofAgriculture (hereinafter referred to asFmHA).

Witnesseth Whereas

The purpose of the cooperative is to ownand operate cooperative housing on behalf ofits members, and the cooperative has appliedto FmHA or its successor agency under Pub-lic Law 103–354 for mortgage financing as au-thorized under Section 515 of the HousingAct of 1949, as amended.

The purpose of FmHA or its successoragency under Public Law 103–354 is to pro-vide long term housing financing for very-low, low-, and moderate-income persons andhouseholds, although initially eligible coop-erative members may remain in occupancyafter exceeding the income limit establishedfor moderate income.

The additional purpose of FmHA or its suc-cessor agency under Public Law 103–354 is tomaintain the availability of units financedby FmHA or its successor agency under Pub-lic Law 103–354 for very-low, low-, and mod-erate-income persons for as long as possibleup to the 30-year maximum life of the loan.

As a means for implementing and carryingout these purposes, the cooperative pledgesto FmHA or its successor agency under Pub-lic Law 103–354 that:

(a) Equity accumulated by the cooperative,other than through the appreciation in value

of real estate, furnishings, and equipment ofthe cooperative, will be assigned on the co-operative’s books equally to members at theend of its fiscal year and in accordance withthe IRS ruling concerning patronage capital.

(b) The members will be notified, in writ-ing, of the amount assigned to his or her pa-tronage account each year after the assign-ment has been made.

(c) The officers, board of directors, andmembers of the cooperative may not act todissolve the cooperative for the purpose ofdistributing equity, or for other reasons, ex-cept as necessary due to default or other cir-cumstances beyond the cooperative’s con-trol, and

(d) Should it become necessary to dissolvethe cooperative, all property and assets ofthe cooperative will be transferred to an-other nonprofit or such other municipal or-ganization and be maintained for the samepurposes for which it was started.

(e) Only membership fees and money ac-crued in the member’s patronage capital ac-counts will be distributed to the membersand represents the entire equity payment towhich the members are entitled. The cooper-ative reserves the right to withdraw fromthe equity payment or membership fee anyamount due the cooperative through mem-ber’s delinquency in payment of occupancycharge or through damage to the premises.

In witness thereof, the parties hereto havecaused this agreement to be signed andsealed the day and year first above written.


(Cooperative)


(Witness)

By:llllll (Seal)(Member)

This agreement will be filed with the mem-ber’s record.

[56 FR 2252, Jan. 22, 1991, as amended at 62FR 67224, Dec. 23, 1997]

EXHIBIT I TO SUBPART E—SUBSCRIPTIONAGREEMENT

Subscription Agreement

Dwelling Unit No. llllll

Date llllll

1. Subscription Amount:(a) I/We llllll, a legal resident(s) of

llllll, hereinafter called ‘‘Subscriber,’’hereby subscribe for membership inllllll, a cooperative housing corpora-tion hereinafter called the ‘‘Cooperative,’’and hereby subscribe to a Membership Cer-tificate in said Cooperative having a parvalue of $llllll.

(b) Subscriber hereby agrees to pay for theMembership Certificate, also referred to asMembership Fee, as follows:


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(1) $llllll upon signing this Agree-ment.

(2) $llllll in monthly payments ofllllll payable over llllll con-secutive months (not to exceed 12 months).

2. Ratification of Other Provisions. Sub-scriber has read and agrees to be bound byall provisions of the articles of incorpora-tion, bylaws, and occupancy agreement, cop-ies of which are attached hereto and receiptof which is hereby acknowledged, and agreesto be bound by requirements of the FarmersHome Administration (FmHA) or its suc-cessor agency under Public Law 103–354 aslong as it remains mortgagee.

3. Priority of mortgage lien. This agreementand all rights hereunder are and at all timesshall be subject and subordinate to the lienof the mortgage and accompanying docu-ments to be executed by the Cooperative toFmHA or its successor agency under PublicLaw 103–354 and to any and all modifications,extensions, and renewals thereof; and to anymortgage or deed of trust which may at anytime hereafter be placed on the property ofthe Cooperative or any part thereof.

4. Occupancy agreement. Subscriber, if ap-proved for membership, will be entitled tooccupancy of the above numbered dwellingunit under provisions of the above-men-tioned occupancy agreement. Estimated ini-tial charge per month for said unit will beestablished prior to signing the occupancyagreement. Future charges will be based onfamily income, as provided for in the occu-pancy agreement. I/We agree to execute theoccupancy agreement on demand and tocomply with all the terms thereof.

5. Cancellation rights. (a) The Cooperativereserves the right at any time before it hasnotified the Subscriber of his/her accept-ability for membership, for reasons deemedsufficient by the Cooperative, and approvedby FmHA or its successor agency under Pub-lic Law 103–354, to return the amount paid bythe Subscriber under this Agreement. In theevent the Subscriber shall have died prior tobecoming a member, the Cooperative re-serves the right to return the amount paidby the Subscriber under this Agreement tothe Subscriber’s estate or legal representa-tive, and thereupon all rights of the Sub-scriber shall cease and terminate withoutfurther liability on the part of the Coopera-tive.

(b) It is understood that the Subscriber’scredit is subject to approval by FmHA or itssuccessor agency under Public Law 103–354,and that said Subscriber’s total householdincome must not exceed any limitations forinitial occupancy established by FmHA orits successor agency under Public Law 103–354. In the event FmHA or its successor agen-cy under Public Law 103–354 determines thatthe Subscriber does not meet FmHA or itssuccessor agency under Public Law 103–354credit, income limitation, or other eligi-

bility requirements for participation in thisproject, the Cooperative shall return to Sub-scriber the sums paid hereunder. In the eventFmHA or its successor agency under PublicLaw 103–354 determines that the necessaryloan to finance the Cooperative housingproject cannot be made or insured by FmHAor its successor agency under Public Law103–354, or the Cooperative withdraws its ap-plication for such loan, the Cooperative shallreturn to Subscriber all sums paid by Sub-scriber hereunder. Upon either determina-tion by FmHA or its successor agency underPublic Law 103–354 and the return of thesums to Subscriber as provided in this para-graph (b), this agreement shall become nulland void and all rights and liabilities here-under of the parties shall cease and termi-nate.

(c) If the Subscriber within five (5) daysafter the execution of this subscriptionagreement, notifies the Cooperative in writ-ing that he wishes to withdraw from theagreement, the amounts paid by the Sub-scriber under this agreement will be re-turned to the Subscriber and thereupon allrights and liabilities of the Subscriber here-under shall cease and terminate. If, at theend of the five-day period, the Subscriber hasnot exercised this right to withdraw, theright will be terminated. If FmHA or its suc-cessor agency under Public Law 103–354 de-termines that membership has not beenachieved to the extent required by FmHA orits successor agency under Public Law 103–354, the Subscriber will again have the rightto withdraw within a five-day period.

(d) If the Subscriber defaults in any obliga-tion under this Agreement, and such defaultcontinues for fifteen (15) days after noticesent by registered mail by the Cooperative tothe Subscriber at the address given below,then at the option of the Cooperative, theSubscriber shall lose any and all rightsunder this agreement. Any amount paid to-ward this subscription price at the option ofthe Cooperative may be retained by the Co-operative as liquidated damages or be re-turned, less the Subscriber’s proportionateshare of expenses incurred by the Coopera-tive as determined solely by the Cooperative.The Cooperative may, at its option, releasethe obligations of the Subscriber under thisagreement in the event the Subscriber se-cures an assignee of this agreement who as-sumes the obligations herein contained andis satisfactory to the Cooperative and FmHAor its successor agency under Public Law103–354 while mortgagee. This Agreement isnot otherwise assignable.

6. Oral Representation Not to be Relied Upon.This agreement will supersede any prior un-derstandings and agreements and constitutesthe entire agreement between the Subscriberand the Cooperative, and no oral representa-tion or statements shall be considered a parthereof.


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1 The termination date to be insertedshould be three years from the date of theoccupancy agreement. (These terms may befor periods longer than 3 years if mutuallyagreeable to the member and to the coopera-tive.)

Witness:llllllllllllllllllllllll

Subscriberllllllllllllllllllllllll


Subscriberllllllllllllllllllllllll

Address



Telephone

[56 FR 2253, Jan. 22, 1991]

EXHIBIT J TO SUBPART E—OCCUPANCYAGREEMENT

Occupancy Agreement

This Agreement, dated lllll, by andbetween lllll (hereinafter referred to asthe ‘‘Cooperative’’), at lllll andlllll (hereinafter referred to as ‘‘Mem-ber’’).

Witnesseth: Whereas:The purpose of the Cooperative is to ac-

quire, own, and operate a cooperative hous-ing project and its members shall have theright to occupy its dwelling units under theterms and conditions set forth in this agree-ment:

Member is the owner and holder of a cer-tificate of membership of the Cooperativeand intends to occupy a dwelling unit in theproject as permanent residence; and

Member has certified to the accuracy ofthe statements in Member’s application andagrees and understands that household in-come and other eligibility requirements aresubstantial and material requirements of hisinitial and continuing occupancy.

To Have and To Hold dewelling unit Num-ber lllll on the terms and conditionsset forth in this agreement, in the corporatecharter, bylaws, and any other rules and reg-ulations of the Cooperative. The term of thisagreement shall be for a three-year periodending on lllll, 19 ll,1 renewable forsuccessive three-year periods under the con-ditions provided for in this Agreement.

ARTICLE 1. OCCUPANCY CHARGES

Section 1.01. Commencing at the time indi-cated in ARTICLE 2, the Member agrees topay to the Cooperative a monthly sum re-ferred to as the ‘‘Occupancy Charge.’’ Thisamount will be equal to one-twelfth of theMember’s proportionate share of the totalamount required by the Cooperative, as esti-

mated by its board of directors, to meet itsannual expenses and the requirements of theFmHA or its successor agency under PublicLaw 103–354 loan. These inlcude but are notlimited to, the following items:

(a) Project operating expenses and cost ofservices furnished.

(b) Necessary management reserve and ad-ministrative costs.

(c) Taxes and assessments levied againstthe project or the Cooperative which it is re-quired to pay.

(d) Fire and extended coverage insuranceon the project and any other insurancewhich the Cooperative may require.

(e) The cost of furnishing any water, elec-tricity, heat, gas, garbage and trash collec-tion, and other utilities, if furnished by theCooperative.

(f) Payments to other reserves set up bythe board of directors.

(g) Estimated costs of repairs, mainte-nance, and replacements of project propertyto be made by the Cooperative.

(h) The amount of principal, interest, andany other required payments on any indebt-edness of the Cooperative, including any loanmade or insured by the Farmers Home Ad-ministration (FmHA) or its successor agencyunder Public Law 103–354, United States De-partment of Agriculture.

(i) Any other expenses of the Cooperativeapproved by the board of directors and byFmHA or its successor agency under PublicLaw 103–354, while mortgagee, including op-erating deficiencies, if any, for prior periods.

Section 1.02. The board of directors shall de-termine the amount of the occupancycharges annually, but may do so at more fre-quent intervals should circumstances so re-quire. No Member shall be charged withmore than the appropriate share determinedby the board of directors. That amount ofthe occupancy charge required for paymenton the principal of mortgage of the Coopera-tive or any other capital expenditures shallbe credited upon the books of the Coopera-tive as a capital contribution by the Mem-bers. Until further notice from the Coopera-tive, the monthly charge for the above-men-tioned dwelling unit shall be $lll.

ARTICLE 2. WHEN PAYMENT OF OCCUPANCYCHARGES TO COMMENCE

Section 2.01. After thirty days’ notice bythe Cooperative that the dwelling unit isavailable for occupancy, or upon acceptanceof occupancy, whichever is earlier, Membershall make a payment for occupancy chargecovering the unexpired balance of the month.Thereafter, Member shall pay occupancycharge in advance on the first day of eachmonth. Dates of payments may be changedby mutual agreement of the Cooperative andFmHA or its successor agency under PublicLaw 103–354.


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Section 2.02. The Member agrees to furnishto the Cooperative, each year, a certificateof income on which the Member’s occupancycharge will be determined.

ARTICLE 3. PATRONAGE REFUNDS

Section 3.01. The Board shall, on the booksof the Cooperative, assign to Member in ac-cordance with the IRS ruling concerning pa-tronage capital, a porportionate share ofmoney collected in excess of the amountneeded for Cooperative expenses, includingreserves designated as management reserve,and Members will be notified of the amountassigned each year.

ARTICLE 4. MEMBER’S OPTION TO RENEW

Section 4.01. It is agreed that the term ofoccupancy shall be renewed for further peri-ods of three years from the expiration of theinitial term (or for the term mutually agreedto by the member and the Cooperative). Suchrenewals shall be based upon the same agree-ments as contained in this agreement unless:(1) Notice of Member’s decision not to renewis given to the Cooperative in writing atleast 4 months prior to expiration of the cur-rent terms, and (2) Member, before expira-tion of said term, shall (a) endorse member-ship certificate for transfer to Cooperativeand deposits same with the Cooperative, (b)meet all obligations and pay all amounts dueunder this Agreement before said expiration,and (c) vacate and leave the premises in goodstate of repair. Upon compliance with fore-going provisions (1) and (2), Member shallhave no further liability under this agree-ment. If extenuating circumstances warrant,the Member’s four-month notification of in-tention to vacate may be modified appro-priately. The Member will be entitled to thepatronage capital which has accrued andbeen assigned during the term of this agree-ment provided that provisions (1) and (2)have been met.

ARTICLE 5. PREMISES TO BE USED FORRESIDENTIAL PURPOSES ONLY

Section 5.01. Member shall occupy thedwelling unit covered by this agreement as aprivate dwelling unit for the Member and/orimmediate household and for no other pur-pose. The Member shall have use of all com-mon community property and facilities ofthe project so long as Member continues toown a membership certificate of the Cooper-ative, occupies the assigned dwelling unit,and abides by the terms of this Agreement.Any sublessee of the Member , if approvedpursuant of Article 7 hereof, may enjoy therights to which Member is entitled underthis Article 5, except that the sublessee willhave no voting rights in the affairs of the Co-operative.

Section 5.02. Member shall not permit orsuffer anything to be done or be kept upon

said premises which will increase the rate ofinsurance on the building, or on its contents.Member will not obstruct or interfere withthe rights of other occupants, or annoy themby unreasonable noises or otherwise permitany nuisance on the premises, or allow anyillegal act to be committed. Member shallcomply with all the requirements of theBoard of Health and of all other govern-mental authorities with respect to the saidpremises. If, by reason of the occupancy oruse of these premises by Member, the rate ofinsurance on the building is increased, Mem-ber shall become personally liable for the ad-ditional insurance premiums.

ARTICLE 6. MEMBER’S RIGHT TO PEACEABLE

POSSESSION

Section 6.01. In return for Member’s contin-ued fulfillment of the terms and conditionsof this agreement, the Cooperative agreesthat the Member may at all times while thisagreement remains in effect, have and enjoyfor the Member’s sole use and benefit thedwelling unit and community facilities here-inabove described.

ARTICLE 7. NO SUBLETTING WITHOUT CONSENT

OF CORPORATION

Section 7.01. This agreement shall not beassigned nor Member’s dwelling unit subletwithout the written consent of the Coopera-tive and FmHA or its successor agency underPublic Law 103–354, while mortgagee. Underthis agreement the Member shall be liablefor the conduct of the sublessee. Any unau-thorized subleasing shall, at the option ofthe cooperative and of FmHA or its suc-cessor agency under Public Law 103–354,while mortgagee, result in termination andforfeiture of Member’s rights under this oc-cupancy agreement.

ARTICLE 8. TRANSFERS

Section 8.01. Neither this agreement norMember’s right of occupancy shall betransferrable or assignable except as pro-vided in the bylaws of the Cooperative forthe transfer of membership.

ARTICLE 9. MANAGEMENT, TAXES, AND

INSURANCE

Section 9.01. The Cooperative shall providenecessary management, operation, and ad-ministration of the project; pay or providefor the payment of all taxes or assessmentslevied against the project; procure and payor provide for the payment of fire insuranceand extended coverage, and other insuranceas the Cooperative may deem advisable onproperty in the project. The Cooperative willnot, however, provide insurance on Member’spersonal property.


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ARTICLE 10. UTILITIES

Section 10.01. The Cooperative shall arrangefor utilities (water, electricity, heat, andgas) for common areas of the structure(s) inamounts which it deems reasonable and inconformance with exhibit A–6 to subpart E ofpart 1944 (Strike out any of the foregoingitems in this Article which are not applica-ble.) Each unit will be separately meteredand Member shall pay directly to the sup-plier for the utilities billed to Member.

ARTICLE 11. REPAIRS

Section 11.01. By Member. Member agrees torepair and maintain Member’s dwelling unitat own expense as follows:

(a) Any repairs or maintenance neces-sitated by Members’s own negligence or mis-use;

(b) Any redecoration of own dwelling unitauthorized, done or contracted for by Mem-ber;

(c) Any repairs, maintenance, or replace-ments required on the following items: (In-sert the items desired, subject to FmHA orits successor agency under Public Law 103–354 approval.)

Section 11.02. By cooperative. The Coopera-tive shall provide and pay for all necessaryrepairs, maintenance, and replacements ex-cept as specified in § 11.01. Member agrees tothe right of the officers of the Cooperative toauthorize entrance to Member’s dwellingunit in order to complete necessary repairs,maintenance, and replacements and to au-thorize entrance for such purposes by em-ployees of any contractor, utility company,municipal agency, or others at any reason-able hour of the day, and upon reasonablenotice. In the event of emergency, the unitmay be entered at any time. Notification ofentry will be left for the member by the per-son performing the maintenance or repair.

Section 11.03. Right of cooperative to makerepairs at member’s expense. In case Membershall fail to effect and pay for the repairs,maintenance, or replacement specified in§ 11.01, in a manner satisfactory to the Coop-erative, the board may do so and add thecost of repairs to Member’s next month’s oc-cupancy charge payment.

ARTICLE 12. ALTERATIONS AND ADDITIONS

Section 12.01. The Member shall not, with-out the written consent of the Cooperativemake any structural alterations in the prem-ises or in the water, gas or steampipes, elec-trical conduits, plumbing or other fixturesconnected therewith, or remove any addi-tions, improvements, or fixtures from thepremises.

Section 12.02. If Member for any reasonceases to be an occupant of the premises,Member shall surrender to the Cooperativepossession thereof, including any alter-

ations, additions, fixtures, and improve-ments.

Section 12.03. Member shall not, withoutthe prior written consent of the Cooperativeinstall or use in dwelling unit any air condi-tioning equipment, electric heater, or powertools. Member agrees that the Cooperative orFmHA or its successor agency under PublicLaw 103–354, while mortgagee, may requirethe prompt removal of any such equipmentat any time, and that failure to remove suchequipment upon request shall constitute adefault within the meaning of Article 13 ofthis agreement.

ARTICLE 13. DEFINITION OF DEFAULT BYMEMBER AND EFFECT THEREOF

Section 13.01. If, at any time after the hap-pening of any event specified in clauses (a)through (k), below, the Cooperative gives toMember a 30-day notice of expiration, thisagreement and all Member’s rights underthis agreement will expire on the date speci-fied in such notice. In the meantime the de-fault may be cured in a manner deemed sat-isfactory by the Cooperative. After 10 daysfollowing such expiration of Member’srights, the Cooperative may reenter thedwelling unit and remove all persons andpersonal property therefrom, by any meansavailable to it by law, and may repossess thedwelling unit in its former state as if thisagreement had not been made.

(a) If, during the term of this agreement,Member ceases to be the owner and legalholder of a membership of the Cooperative.

(b) If Member attempts to transfer or as-sign this agreement in a manner incon-sistent with the provisions of the bylaws.

(c) If, during continuance of this agree-ment, Member is declared bankrupt underthe laws of the United States so as to be re-leased from any debt or obligation to the Co-operative or to interfere with his full exer-cise of his rights as Member and occupant.

(d) If, during continuance of this agree-ment, a receiver of Member’s property is ap-pointed under the laws of the United Statesor of any State.

(e) If, during continuance of this agree-ment, Member shall make a general assign-ment for the benefit of creditors.

(f) If, during continuance of this agree-ment, any of the membership rights in theCooperative owned by Member are duly lev-ied upon and sold under the process of anycourt.

(g) If Member fails to effect and/or pay forrepairs and maintenance as provided for inArticle 11.

(h) If Member fails to pay any sum due pur-suant to Article 1.

(i) If default occurs with respect to any ob-ligation of Member under this agreement.

(j) If, during the term of this agreement,Member fails to comply promptly with allrequests by the Cooperative for information


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and certifications concerning the total cur-rent income of Member and Member’s house-hold or any other eligibility requirementsfor membership or occupancy.

(k) If, during the term of this agreement,limitations for continued occupancy are es-tablished from time to time by the FmHA orits successor agency under Public Law 103–354 and are exceeded.

Section 13.02. Member hereby expresslywaives any and all right to reenter the dwell-ing if the eviction is by judgment of anycourt or judge. The words enter, reenter, or re-entry as used in this agreement are not re-stricted to their technical legal meaning. Inthe event of a breach by Member of theterms of this agreement, the Cooperativeshall have the right of injunction and theright to invoke any remedy allowed at law orin equity, as if reentry, summary pro-ceedings, and other remedies were not pro-vided for.

Section 13.03. Failure by the Cooperative toavail itself of any remedy given under thisagreement shall not waive or destroy anyright of the Cooperative to avail itself ofremedies for any similar or other breach ordefault by Member.

Section 13.04. Notice by the Cooperativeunder any of the conditions described in sec-tion 13 shall be in writing. The cooperativeshall not evict any member except by judi-cial action pursuant to State or local lawand in accordance with the requirements ofsubpart C of part 1930 of this chapter.

ARTICLE 14. MEMBER TO COMPLY WITH ALLCORPORATE REGULATIONS

Section 14.01. Member agrees to preserveand promote the cooperative ownership prin-ciples on which the Cooperative has beenfounded and to abide by the charter, bylaws,rules and regulations of the Cooperative, andamendments. The Member agrees to makediligent effort in performing duties and ac-cepting responsibilities either through vol-unteering or by assignment from the boardof directors. By acts of cooperation withother members, Member will strive to bringabout and maintain a high standard in homeand community conditions. The Cooperativeagrees to deliver to Member its rules andregulations and/or to distribute them in suchother manner as to constitute adequate no-tice.

ARTICLE 15. EFFECT OF FIRE LOSS ONINTERESTS OF MEMBER

Section 15.01. In the event of loss or damageby fire or other casualty to Member’s dwell-ing unit without fault or negligence of Mem-ber, the Cooperative shall determine (1)Whether to restore the damaged premisesand, if not to restore (2) the amount to bepaid to Member to redeem membership and

for reimbursement for any loss sustained bythe Member.

Section 15.02. If, under such circumstances,the Cooperative decides to restore the prem-ises, occupancy charges shall stop wholly orpartially, as determined by the Cooperative,until the premises have been restored. If, onthe other hand, the cooperative decides notto restore the premises, the occupancycharges shall cease from the date of such lossor damage.

ARTICLE 16. INSPECTION OF DWELLING UNIT

Section 16.01. Member agrees that the rep-resentatives of any mortgage holding amortgage on the property of the Cooperative,the officers of the Cooperative, or authorizedrepresentative of the Cooperative shall havethe right to enter the dwelling unit of Mem-ber and make inspections and, with the ap-proval of the Cooperative, the employees ofany contractor, utility company, municipalagency, or others shall have the right toenter the dwelling unit of Member and makeinspections at any reasonable hour of theday, upon reasonable notice, and at any timein the event of emergency.

ARTICLE 17. SUBORDINATION CLAUSE

Section 17.01. The Cooperative housingproject of which Member’s dwelling unit is apart is planned to be constructed by the Co-operative with the assistance of a loan to theCooperative made or insured by the FmHAor its successor agency under Public Law103–354. Therefore, this agreement and allrights, privileges, and benefits hereundershall be at all times subject and subordinateto a first mortgage lien or any documentsexecuted by the Cooperative to secure its ob-ligations to FmHA or its successor agencyunder Public Law 103–354 and to any exten-sions and removals and to any security in-strument which may be made in replacementthereof or at any time hereafter be placed onthe property of the corporation. Memberhereby agrees to execute, at the Coopera-tive’s request and expense, any instrumentwhich the Cooperative or any lender or mort-gagee may deem necessary or desirable tosubordinate this Agreement to any such se-curity instrument. Member hereby appointsthe Cooperative and each and every officerthereof, and any future officer, as irrev-ocable attorney-in-fact during the term ofthe agreement to execute any such instru-ment on behalf of Member.

ARTICLE 18. LATE CHARGES AND OTHER COSTSIN CASE OF DEFAULT

Section 18.01. In addition to all other sumsdue or to become due under this agreement,Member shall pay to the Cooperative a latecharge, not to exceed $10.00, at any time pay-ment of occupancy charges, or part thereof,is more than 10 days late. This late fee may


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be waived, depending on the circumstancesand at the discretion of the board.

Section 18.02. If, because of default by Mem-ber under any obligation in this agreement,the Cooperative obtains the services of an at-torney, Member shall pay to the Cooperativeall costs and fees involved, including reason-able attorney’s fees and the costs of any re-sulting law suit, if such an action becomesnecessary.

ARTICLE 19. NOTICES

Section 19.01. Whenever any bylaw of Coop-erative, any law, or this agreement requiresnotice to be given to either party, any noticeor demand by the Cooperative to Membershall be considered to have been duly given ifthe same is delivered to Member at Mem-ber’s unit or to Member’s last known ad-dress. Any notice or demand by Member tothe Cooperative shall be considered to havebeen duly given if delivered to an officer ofthe Cooperative. Such notice may also begiven by depositing same in the UnitedStates mails addressed to Member as shownon the books of the Cooperative, or to thepresident of the cooperative, as the case maybe, and the time of mailing shall be the timeof giving such notice.

ARTICLE 20. ORAL REPRESENTATION NOTBINDING

Section 20.01. No representation other thanthose contained in this Agreement and in thecharter and the bylaws of the Cooperativeshall be binding upon the Cooperative.

In Witness Whereof, the parties heretohave caused this agreement to be signed andsealed the day and year first above written.llllllllllllllllllllllll

CooperativeBy: llllll(Seal)llllllllllllllllllllllll

MemberTo Be Duly Acknowledged

[56 FR 2253, Jan. 22, 1991]

Subpart F—Congregate HousingServices Program

SOURCE: 61 FR 42943, 42949, Aug. 19, 1996, un-less otherwise noted.

§ 1944.251 Purpose.The requirements of this subpart

augment the requirements of section802 of the National Affordable HousingAct of 1990 (approved November 28,1990, Public Law 101–625) (42 U.S.C.8011), (hereinafter, section 802), asamended by the Housing and Commu-nity Development Act of 1992 (Public

Law 102–550, approved October 28, 1992),which authorizes the Congregate Hous-ing Services Program (hereinafter,CHSP or Program).

§ 1944.252 Definitions.

In addition to the definitions in sec-tion 802(k), the following definitionsapply to CHSP:

Activity of Daily Living (ADL) meansan activity regularly necessary for per-sonal care.

(1) The minimum requirements ofADLs include:

(i) Eating (may need assistance withcooking, preparing or serving food, butmust be able to feed self);

(ii) Dressing (must be able to dressself, but may need occasional assist-ance);

(iii) Bathing (may need assistance ingetting in and out of the shower or tub,but must be able to wash self);

(iv) Grooming (may need assistancein washing hair, but must be able totake care of personal appearance);

(v) Getting in and out of bed andchairs, walking, going outdoors, usingthe toilet; and

(vi) Household management activi-ties (may need assistance in doinghousework, grocery shopping or laun-dry, or getting to and from one loca-tion to another for activities such asgoing to the doctor and shopping, butmust be mobile. The mobility require-ment does not exclude persons inwheelchairs or those requiring mobil-ity devices.)

(2) Each of the Activities of DailyLiving noted in paragraph (1) of thisdefinition includes a requirement thata person must be able to perform at aspecified minimal level (e.g., to satisfythe eating ADL, the person must beable to feed himself or herself). The de-termination of whether a person meetsthis minimal level of performancemust include consideration of thoseservices that will be performed by aperson’s spouse, relatives or other at-tendants to be provided by the indi-vidual. For example, if a person re-quires assistance with cooking, pre-paring or serving food plus assistancein feeding himself or herself, the indi-vidual would meet the minimal per-formance level and thus satisfy the


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