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pdfRD Instruction 1942-A
Table of Contents
Page 1
(Revision 1)
PART 1942 - ASSOCIATIONS
Subpart A - Community Facility Loans
Table of Contents
Sec.
1942.1
1942.2
1942.3
1942.4
1942.5
1942.6
1942.7
Page
General.
Processing applications.
1
2
(a)
(b)
(c)
(d)
(e)
2
5
5
6
6
Preapplications.
Environmental review.
Applications.
Review of decision.
Joint funding.
Preparation of appraisal reports.
Borrower contracts.
Application review and approval.
7
7
7
(a)
(b)
(c)
(d)
7
10
11
12
Procedures for review.
Projects requiring National Office review.
For all applications.
Loan approval and obligating funds.
Preparation for loan closing.
13
(a)
(b)
(c)
(d)
(e)
13
13
14
14
14
Obtaining closing instructions.
Verification of users and other funds.
Initial compliance review.
Ordering loan checks.
Multiple advances of Rural Development funds.
Loan closing.
(a)
(b)
(c)
(d)
(e)
(f)
(09-19-18)
Authority to execute, file, and record legal
instruments.
Preparation of mortgages.
Source of funds for insured loans.
Unused funds.
Loan disbursements.
Supervised bank accounts.
PN 516
15
15
15
15
15
15
15
RD Instruction 1942-A
Table of Contents
Page 2
(Revision 1)
Sec.
1942.8
1942.9
Actions subsequent to loan closing.
Page
15
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
15
16
16
16
16
16
16
17
17
Mortgages.
Notes and bonds.
Multiple advances - bond(s).
Bond registration record.
Disposition of title evidence.
Material for State Office.
State Office review of loan closing.
Safeguarding bond shipments.
Water stock certificates.
Planning, bidding, contracting, and constructing.
17
(a)
(b)
(c)
(d)
17
17
17
17
Review of construction plans and specifications.
Contract approval.
Bid irregularities.
Noncompliance.
1942.10
Strategic economic and community development.
1942.11 [Reserved]
1942.12
Loan cancellation.
(a)
(b)
1942.13
1942.14
1942.15
1942.16
1942.17
1942.18
1942.19
1942.20
1942.21
Form RD 1940-10, "Cancellation of U.S. Treasury
Check and/or Obligation."
Notice of cancellation.
17A
17A
17A
17A
17A
Loan servicing.
Subsequent loans.
Delegation and redelegation of authority.
State supplements and guides.
17A
17A
17B
17B
(a)
(b)
17B
17B
State supplements.
State guides.
Community Facilities.
18
Community Facilities - Planning, Bidding,
Contracting, Constructing.
75
Information pertaining to preparation of notes or bonds and
bond transcript documents for public body applicants.
96
Community Facility Guides.
107
Statewide Nonmetropolitan Median Household Income.
108
RD Instruction 1942-A
Table of Contents
Page 3
Sec.
1942.22
1942.30
1942.31
1942.50
Page
- 1942.29 [Reserved]
Relnding.
- 1942.49
OMB control number.
108
109
109
Exhibit A OMB CIRCULAR NO. A-128
Exhibit B USDA Regional Inspector General (OIG) Contacts for Audits
Automation Supplement Engineering Fee Analysis (Distribution: WS only)
oOo
(09-19-18)
PN 516
RD Instruction 1942-A
PART 1942 - ASSOCIATIONS
Subpart A - Community Facility Loans
§ 1942.1
General.
(a) This subpart outlines the policies and procedures for making and
processing insured loans for community facilities except fire and rescue
and other small essential community facility loans and water and waste
disposal facilities. This subpart applies to Community Facilities loans
for fire and rescue and other small essential community facility loans
only as specifically provided for in subpart C of this part. Water and
waste loans are provided for in part 1780 of this title.
(1) The policies and procedures in this subpart address both loans
between the Agency and the applicant and between the Agency and an
approved eligible re-lender who then relends the funds to eligible
applicants for eligible projects under this subpart. (Revised
09-19-18, PN 516.)
(2) The Agency shall cooperate fully with State, Tribal and local
agencies in making loans to assure maximum support to the State and
Tribal strategies for rural development. State Directors and their
staffs shall maintain coordination and liaison with State agency and
substate planning districts. Funds allocated for use under this
subpart are also for the use of Indian tribes within the State,
regardless of whether State development strategies include Indian
reservations within the State’s boundaries. Indians residing on such
reservations must have equal opportunity to participate in the
benefits of these programs as compared with other residents of the
State. (Revised 09-19-18, PN 516.)
(3) Federal statutes provide for extending Agency financial programs
without regard to race, color, religion, sex, national origin,
marital status, age, or physical/mental handicap. The participants
must possess the capacity to enter into legal contracts under State
and local statutes. (Revised 09-19-18, PN 516.)
(4) Any processing or servicing activity conducted pursuant to this
subpart involving authorized assistance to Agency employees, members
of their families, known close relatives, or business or close
personal associates, is subject to the provisions of subpart D of
part 1900 of this chapter. Applicants for this assistance are
required to identify any known relationship or association with an
Agency employee. (Revised 09-19-18, PN 516.)
_____________________________________________________________________________
DISTRIBUTION: WSAL
Loan and Grant Making
Associations
1
(Revision 11)
(2-6-85) PN 956
RD Instruction 1942-A
§ 1942.1 (Con.)
(b) Indian tribes on Federal and State reservations and other Federally
recognized Indian tribes are eligible to apply for and are encouraged to
participate in this program. Such tribes might not be subject to State
and local laws or jurisdiction. However, any requirements of this subpart
that affect applicant eligibility, the adequacy of the Agency's security
or the adequacy of service to users of the facility and all other
requirements of this subpart must be met.
(c) Loans sold without insurance by the Agency to the private sector will
be serviced in the private sector and will not be serviced under this
subpart. The provisions of this subpart are not applicable to such loans.
Future changes to this subpart will not be made applicable to such loans.
(Revised 10-20-87, SPECIAL PN.)
(d) The Area Office will normally be the entry point for preapplications
and serve as a local contact point. Applications will be filed with the
Area Office and loans will be processed to the maxium extent possible by
the Area Office staff. The applicant's governing body should designate
one person to coordinate the activities of its engineer, architect,
attorney, and any other professional employees and to act as contact
person during loan processing. Agency personnel should make every effort
to involve the applicant's contact person when meeting with the
applicant's professional consultants and/or agents. The State Office
staff will monitor community programs loanmaking and servicing, and will
provide assistance to Area Office personnel to the extent necessary to
assure that the activities are being accomplished in an orderly manner
consistent with the Agency’s regulations. (Revised 05-19-92, SPECIAL PN.)
§ 1942.2
(a)
Processing applications.
Preapplications.
(1) The Area Office may handle initial inquiries and provide basic
information about the program. They are to provide the
preapplication, SF 424.2, "Application for Federal Assistance (For
Construction)." The Rural Development Manager will assist applicants
as needed in completing SF 424.2, and in filing written notice of
intent and request for priority recommendation with the appropriate
clearinghouse. The Rural Development Manager will inform the
applicant that it may be necessary to apply for credit from
commercial sources. It will be explained that if credit for the
project is available from commercial sources at reasonable rates and
terms the applicant is not eligible for the Agency’s financing. The
Rural Development Manager will meet with the applicant, whenever
appropriate to discuss the
2
(Revision 11)
RD Instruction 1942-A
§ 1942.2(a)(1) (Con.)
Agency’s preapplication processing. Guidance and assistance will be
provided by the State Director, as needed, for orderly application
processing. The District Director will determine that the
preapplication is properly completed and fully reviewed. The
District Director will then forward to the State Director:
(Revised 02-14-96, PN 257.)
(i)
Eligibility determination and recommendations.
(ii) One copy of SF 424.2.
(Revised 4-11-90, SPECIAL PN.)
(iii) State intergovernmental review comments and
recommendations (clearinghouse comments).
(iv) Priority recommendations.
(v) Supporting documentation necessary to make an eligibility
determination, such as financial statements, audits, or copies
of organizational documents or existing debt instruments. The
District Director will advise applicants on what documents are
necessary. Applicants should not be required to expend
significant amounts of money or time developing supporting
documentation at the preapplication stage. (Added 3-1-88,
SPECIAL PN.)
(2) The State Director will review each SF 424.2 along with other
information that is deemed necessary to determine whether financing
from commercial sources at reasonable rates and terms is available.
If credit elsewhere is indicated, the State Director will instruct
the District Director to so inform the applicant and recommend the
applicant apply to commercial sources for financing. Projects may be
funded jointly with other lenders provided the requirements of
§1942.17 (g) of this subpart are met. Joint financing occurs when
two or more lenders make separate loans to supply the funds required
by one applicant for a project.
3
(Revision 5)
(2-6-85)
PN 956
RD Instruction 1942-A
§ 1942.2(a)(2) (Con.)
(i) In order to provide a basis for referral of preapplications
of only those applicants who may be able to finance projects
through commercial sources, State Directors should maintain
liaison with representatives of banks, investment bankers,
financial advisors, and other lender representatives in the
State. State Directors should maintain criteria for determining
preapplications which should be referred to commercial lenders.
A list of lenders representatives interested in receiving such
referral should be maintained.
(ii) The State Director shall maintain a working relationship
with the State Office or official that has been designated as
the single point of contact for the intergovernmental review
process and give full consideration to their comments when
selecting preapplications to be processed. (Revised 05-19-92,
SPECIAL PN.)
(iii) The State Director will review the District Director's
eligibility determination and recommendations in sufficient time
for the District Director's use in preparing and issuing Form
AD-622.
(iv) Form AD-622 will be prepared by the District Director
within forty-five (45) calendar days from receipt of the
preapplication by the Agency, stating the results of the review
action. The original will be signed and delivered to the
applicant with a copy to the State Director.
(3) For preapplications eligible for Agency funding which have the
necessary priority to compete with similar preapplications, the
Agency will issue Form AD-622 inviting an application containing the
following statement: (Revised 10-19-88, SPECIAL PN.)
"You are advised against taking any actions or incurring any
obligations which would either limit the range of alternatives
to be considered, or which would have an adverse effect on the
environment. Satisfactory completion of the environmental
review process must occur prior to the issuance of the letter of
conditions."
4
(Revision 5)
RD Instruction 1942-A
§ 1942.2(a) (Con.)
(4) The following statement must be added to Form AD-622 when
notifying preapplicants who are eligible, but do not have the
priority necessary for further consideration at this time:
"You are advised against incurring obligations which would limit
the range of alternatives to be considered, or which cannot be
fulfilled without Rural Development funds until the funds are
actually made available. Therefore, you should refrain from
such actions as initiating engineering and legal work, taking
actions which would have an adverse effect on the environment,
taking options on land rights, developing detailed plans and
specifications, or inviting construction bids until notified by
Rural Development to proceed."
(b) Environmental review requirements. Loans made under this subpart
must comply with the environmental review requirements in accordance with
7 CFR part 1970. Starting with the earliest discussions with prospective
applicants or review of pre-applications and continuing through
application processing, environmental issues must be considered. (Revised
04-01-16, SPECIAL PN.)
(c) Applications. The District Director should assist the applicant in
application assembly and processing.
(1) State Directors should have applications in process representing
approximately 150 percent of the current State allocation.
(2) The application docket will
materials, and information. The
accordance with Guide 15 of this
under §1942.16 of this subpart.
(2-6-85)
PN 956
include SF 424.2 and related forms,
application will be assembled in
subpart or State guides developed
(Revised 4-11-90, SPECIAL PN.)
5
(Revision 6)
RD Instruction 1942-A
§ 1942.2(c) (Con.)
(3) When an applicant is notified to proceed with an application,
the District Director should arrange for a conference with the
applicant to provide copies of appropriate appendices and forms;
furnish guidance necessary for orderly application processing; and to
initiate a processing checklist for establishing a time schedule for
completing items using Form RD 1942-39, "Processing Check List (Other
Than Public Bodies)," or Form RD 1942-40, "Processing Check List
(Public Bodies)," or other checklist adopted for use in the State.
The District Director will confirm decisions made at this conference
by letter to the applicant and by copy of the processing checklist.
The original and a copy of the processing checklist will be retained
in the District Office and a copy will be forwarded to the State
Office. The original and copy of the checklist retained in the
District Office will be kept current as application processing
actions are taken. The copy will be sent to the State Office to use
in updating its copy of this form. The State Office will then return
the District Office's copy. As the application is being processed,
and the need develops for additional conferences, the District
Director will arrange with the applicant for such conferences to
extend and update the processing checklist.
(Revised 11-8-89, PN 121)
(d) Review of decision. If at any time prior to loan approval it is
decided that favorable action will not be taken on a preapplication or
application, the District Director will notify the applicant in writing of
the reasons why the request was not favorably considered. The
notification to the applicant will state that a review of this decision by
Rural Development may be requested by the applicant under Subpart B of
Part 1900 of this chapter. The following statement will also be made on
all notifications of adverse action. "The Federal Equal Credit
Opportunity Act prohibits creditors from discriminating against credit
applicants on the basis of race, color, religion, national origin, sex,
marital status, age (Provided that the applicant has the capacity to enter
into a binding contract); because all or part of the applicant's income is
derived from any public assistance program; or because the applicant has
in good faith exercised any right under the Consumer Credit Protection
Act. The Federal Agency that administers compliance with this law is the
Federal Trade Commission, Equal Credit Opportunity, Washington, D.C.
20580.” (Revised 3/1/88, SPECIAL PN.)
(e) Joint funding. Rural Development may finance projects jointly with
funds from other sources, such as, commercial/private lenders, Federal
agencies, State and local Governments, etc. Other departments, agencies,
and
6
(Revision 6)
RD Instruction 1942-A
§ 1942.2(e) (Con.)
executive establishments of the Federal Government may participate and
provide financial and technical assistance jointly with Rural Development
to any applicant to whom Rural Development is providing assistance. The
amount of participation by the other department, agency, or executive
establishment shall only be limited by its authorities except that any
limitation on joint participation itself is superseded by Section 125 of
PL 95-334 (Section 347, Consolidated Farm and Rural Development Act, as
amended).
§ 1942.3
Preparation of appraisal reports.
When the loan approval official requires an appraisal, Form RD 442-10,
"Appraisal Report - Water and Waste Disposal Systems," may be used with
appropriate supplements. Form RD 442-10 may be modified as appropriate or
other appropriate format may be used for facilities other than water and waste
disposal. Appraisal reports prepared for use in connection with the purchase
of existing essential community facilities or when required by
§ 1942.17(g)(2)(iii)(8)(2), (9)(3)(iii)(B)(2), and (j)(4) of this subpart, may
be prepared by the RD engineer/architect or, if desired by the State Director
or other qualified appraiser. The loan approving official may require an
applicant to provide an appraisal prepared by an independent qualified
appraisers however, the loan approving official must determine that the
appraised value shown in such reports reflects the present market value.
(Revised 3-1-88, SPECIAL PN.)
§ 1942.4
Borrower contracts.
The State Director will, with assistance as necessary by the Office of the
General Counsel (OGC), concur in agreements between borrowers and third parties
such as contracts for professional and technical services and contracts for the
purchase of water or treatment of waste. State Directors are expected to work
closely with representatives or engineering and architectural societies, bar
associations, commercial lenders, accountant associations, and others in
developing standard forms of agreements, where needed, and other such matters
in order to expedite application processing, minimize referrals to OGC, and
resolve problems which may arise.
§ 1942.5
Application review and approval.
(a) Procedures for review. Ordinarily the Rural Development staff review
will proceed as applications are being developed. An overall review of
the applicant's financial status, including a review of all assets and
liabilities, will be a part of the docket review process by the staff and
approval officials. The engineering/architect reports and association
data are to be reviewed by the Rural Development staff engineer or
architect, as appropriate, as soon as available but prior to
(2-6-85)
PN 956
7
(Revision 5)
RD Instruction 1942-A
§ 1942.5(a) (Con.)
the Rural Development Manager's completion of the Project Summary. During
the review, the Rural Development Manager, in all cases, will make certain
that no low-income or minority community within the service area has been
omitted or discouraged from participating in the proposed project. The
Rural Development Manager will also determine how the service area was
defined to ensure that gerrymandering of specific communities or areas has
not occurred. The findings should be documented in the running record.
Prior to presenting the assembled application to the approval official,
the assembled application ordinarily will be processed in the following
sequence:
(1) The Rural Development Manager will complete the automated
Community Facilities Project Summary, including written analysis and
recommendations and will prepare a draft Letter of Conditions listing
all the requirements that the applicant must agree to meet within a
specific time. (Revised 03-19-03, PN 357.)
(i) Requirements listed in the Letter of Conditions will
include the following, unless inappropriate due to the
particular type of funding or entity involved: Maximum amount
of loan and/or grant that may be considered; scheduling of
payments; term of loan and any deferment of principal that may
be allowed; reserve requirements; compliance with Section 504 of
the Rehabilitation Act of 1973; number of users (members) and
verification required; contributions; rates and charges; interim
financing; disbursement of funds; security requirements;
graduation requirements; debt collection policies through the
execution of Form RD 1910-11, "Application Certification,
Federal Collection Policies for Consumer or Commercial Debts";
organization; business operations; insurance and bonding
(including applicant/borrower and contractor); construction
contract documents and bidding requirements; accounts; records;
audit reports required (including requirements of OMB Circulars
A-128 and A-110); adoption of Form RD 1942-47, "Loan Resolution
(Public Bodies)," for public bodies or Form RD 1942-9, "Loan
Resolution (Security Agreement)," for other than public bodies;
closing instructions; and any other requirements. (Revised 811-89, SPECIAL PN.)
(ii) Each Letter of Conditions will contain the following
paragraphs: (Revised 1-31-85, SPECIAL PN.)
This letter establishes conditions that must be understood
and agreed to by you before further
8
(Revision 5)
RD Instruction 1942-A
§ 1942.5(a)(1)(ii) (Con.)
consideration may be given to the application. Any changes
in project cost, source of funds, scope of services, or any
other significant changes in the project or applicant must
be reported and approved by written amendment to this
letter. Any changes not approved by the Agency shall be
cause for discontinuing processing of the application.
This letter is not to be considered as loan approval or as
representation to the availability of funds. The docket
may be completed on the basis of a loan not to exceed
$___________.
If (insert agency name) makes the loan, you may make a
written request that the interest rate be the lower of the
rate in effect at the time of loan approval or the time of
loan closing. If you do not request the lower of the two
interest rates, the interest rate charged will be the rate
in effect at the time of loan approval. The loan will be
considered approved on the date a signed copy of Form RD
1940-1, "Request for Obligation of Funds," is mailed to
you. If you want the lower of the two rates, your written
request should be submitted to the Agency as soon as
practical. In order to avoid possible delays in loan
closing, such a request should ordinarily be submitted at
least 30 calendar days before loan closing.
Please complete and return the attached Form RD 1942-46,
“Letter of Intent to Meet Conditions,” if you desire
further consideration be given to your application.
(Revised 11-08-89, PN 121.)
(iii) Rural Development Managers may add the following:
If the conditions set forth in this letter are not met
within _________ days from the date hereof, Rural
Development reserves the right to discontinue the
processing of the application.
(2) The State staff engineer or architect, as appropriate, will
include a written analysis and recommendations on the automated
Community Facilities Project Summary. (Revised 03-19-03, PN 357.)
9
(Revision 6)
(2-6-85)
PN 956
RD Instruction 1942-A
§ 1942.5(a) (Con.)
(3) The Chief, Community Programs or Community and Business
Programs, will review the assembled application and include in the
automated Community Facilities Project Summary a written analysis and
recommendations, including the availability of other credit and other
eligibility determinations. The draft Letter of Conditions will be
reviewed and any necessary modifications made. (Revised
03-19-03, PN 357.)
(b) Project requiring National Office review. Prior National Office
review is required for certain proposals. (See subpart A of part 1901 of
this chapter.)
(1) The Rural Development Manager should assemble
the National Office review in the following order,
bottom, and forward them to the State Director for
recommendation prior to submission to the National
(i)
(ii)
applications for
from top to
review and
Office:
Transmittal memorandum including:
(A)
Recommendation.
(B)
Date of expected obligation.
(C)
Any unusual circumstances.
Copies of the following:
(A)
Proposed Letter of Conditions.
(B) Applicable State Intergovernmental Review comments.
(RD Instruction 1970-I, available in any Rural Development
office.) (Revised 01-18-12, SPECIAL PN.)
(C) A copy of the automated Community Facilities Project
Summary. (Revised 03-19-03, PN 357.)
(D) Preliminary architectural or engineering report.
(Renumbered 04-02-98, SPECIAL PN.)
(E) Form RD 442-3, "Balance Sheet," or a financial
statement or audit that includes a balance sheet.
(Renumbered 04-02-98, SPECIAL PN.)
(F) For other essential community facility loan
applicants whose proposals do not meet the assured income
or tax-based security requirements of
10
(Revision 6)
RD Instruction 1942-A
§ 1942.5(b)(1)(ii)(F) (Con.)
§ 1942.17(g)(2)(iii) and (g)(3)(iii) of this subpart,
financial information for the last 5 years of operation
will be submitted if available. The type of financial
information to be submitted should be determined based on
what is available, in the following order of preference:
(Renumbered 04-02-98, SPECIAL PN.)
(1)
Complete audits.
(2) Unaudited financial statements, including balance
sheets and statements of income and expenses.
(3) Lists of income and expenses.
03-01-88, SPECIAL PN.)
(Revised
(G) For other essential community facility loans secured
under paragraph (b)(l)(ii)(F) of this section, submit a
detailed explanation of the proposed security, evidence
that the application cannot be processed and the loan
secured under paragraph (b)(l)(ii)(F) of this section,
evidence supporting the efforts by the applicant in
persuading appropriate public bodies to provide the
proposed facility and services, and the results and
comments of the Regional Attorney concurring in the
applicant's legal authority to give the proposed security.
(Revised and renumbered 04-02-98, SPECIAL PN.)
(H) Financial Feasibility Report when required by
§ 1942.17(h)(l). (Renumbered 04-02-98, SPECIAL PN.)
(I) Proposed lease agreements, management agreements, or
other agreements when facility management will be provided
by other than the applicant. (Renumbered 04-02-98, SPECIAL
PN.)
(J) Other forms and documents on which there are specific
questions. (Renumbered 04-02-98, SPECIAL PN.)
(K) Environmental impact analysis and documentation.
(Renumbered 04-02-98, SPECIAL PN.)
(L) Civil Rights Impact Analysis.
SPECIAL PN.)
(2-6-85)
PN 956
11
(Revision 5)
(Added 04-02-98,
RD Instruction 1942-A
§ 1942.5(b) (Con.)
(2) For applications to be reviewed in the State or field, at least
those items in paragraph (b)(l)(ii) of this section should be
available.
(c) For all applications. All Letters of Conditions will be addressed to
the applicant, signed by the Rural Development Manager or other Agency
representative designated by the State Director, and delivered to the
applicant. Upon signing the Letter of Conditions, the Rural Development
Manager will send two copies of the Letter of Conditions and two copies of
the automated Community Facilities Project Summary to the State Director.
The State Director will immediately send one copy of the automated
Community Facilities Project Summary and a copy of the Letter of
Conditions to the National Office, Attention: Community Facilities
Division. The Rural Development Manager, with assistance as needed from
the State Office, will discuss the requirements of the Letter of
Conditions with the applicant's representatives and afford them an
opportunity to execute Form RD 1942-46. (Revised 03-19-03,
PN 357.)
(1) The Letter of Conditions should not ordinarily be issued unless
the State Director expects to have adequate funds in the State
allocation to fund the project within the next 12 months, based on
historic allocations or other reliable projections.
(2) If the applicant declines to execute Form RD 1942-46, the Rural
Development Manager will immediately notify the State Director and
provide complete information of the reasons for such declination.
(Revised 11-08-89, PN 121.)
(3) If the applicant accepts the letter of conditions by executing
Form RD 1942-46, the Rural Development Manager will forward the
executed Form RD 1942-46 and a signed and an unsigned copy of Form RD
1940-1 to the State Director. (Revised 03-19-03, PN 357.)
(d) Loan approval and obligating funds. Loans will be approved under
this subpart and subpart A of part 1901 of this chapter (available in any
Rural Development office). The loan will be considered approved on the
date the signed copy of Form RD 1940-1 is mailed to the applicant. The
State Director or designee may request an obligation of funds when
available within their State allocation and according to the following:
(1) Form RD 1940-1, authorizing funds to be reserved, may be
executed by the loan approval official providing the applicant has
the legal authority to contract for a loan, enter into required
agreements, and has signed Form RD 1940-1.
12
(Revision 5)
RD Instruction 1942-A
§ 1942.5(d) (Con.)
(2) If approval was concurred in by the National Office, a copy of
the concurring memorandum will be attached to the original of Form RD
1940-1.
(3) The State Director or designee will request an obligation of
loan and/or grant funds via the automated system after signing
Form RD 1940-1. The requesting official will furnish security
identification as necessary. The requesting official will record the
date, time of request, and their initials on the original Form RD
1940-1. (Revised 03-19-03, PN 357.)
(4) The date the applicant is notified of the loan and/or grant
approval is 6 working days from the date funds are reserved unless an
exception is granted by the National Office. (Revised 08-29-19, PN
527.)
(5) Immediately after verifying that funds have been reserved,
utilizing the Rural Development field office terminal system status
inquiry function, the State Director or designee will notify, by
telephone, the Legislative and Public Affairs Staff in the National
Office as required by RD Instruction 2015-C. (Revised 03-19-03,
PN 357.)
(6) Loan approval and applicant notification will be accomplished by
the State Director or designee by mailing to the applicant,
6 working days from the obligation date, a copy of Form RD 1940-1
which has been previously signed by the applicant and loan approval
official. The date the applicant is notified is also the date
interest rate at loan approval is established. The State Director or
designee will record the date of applicant notification and the
interest rate in effect at the time on the original of Form RD 1940-1
and include it as a permanent part of the District Office project
file with a copy placed in the Stare Office file. (Revised
08-29-19, PN 527.)
(02-06-85)
PN 956
12A
(Revision 2)
RD Instruction 1942-A
§ 1942.5(d) (Con.)
(7) If a transfer of obligation of funds is necessary, complete Form
RD 450-10, "Advice of Borrower's Change of Address, Name, Case
Number, or Loan Number," and process via the Rural Development field
office terminal system. An obligation of funds established for and
applicant may be transferred to a different (substituted) applicant
provided:
(i) The substituted applicant is eligible to receive the
assistance approved for the original applicant;
(ii) The substituted applicant bears a close and genuine
relationship to the original applicant (such as two
organizations that are controlled by the same individuals); and
(iii) The need for and scope of the project and the purpose(s)
for which Rural Development funds will be used remain
substantially unchanged. (Added 3-1-88, SPECIAL PN.)
1942.6
Preparation for loan closing
(a) Obtaining closing instructions. Completed dockets will be reviewed
by the State Director. The information required by OGC will be
transmitted to OGC with a request for closing instructions. Upon receipt
of the closing instructions from OGC, the State Director will forward them
along with any appropriate instructions co the District Director. Upon
receipt of closing instructions, the District Director will discuss with
the applicant and its architect or engineer, attorney, and other
appropriate representatives, the requirements contained therein and any
actions necessary to proceed with closing.
(b)
Verification of users and other funds.
(1) In connection with a loan for a utility type project to be
secured by a pledge of user fees or revenues, the District Director
will authenticate the number of users prior to loan closing or the
commencement of construction, whichever occurs first. Such
individual will review each signed user agreement and check evidence
of cash contributions. If during the renew any indication is
received that all signed users may not connect to the system, there
will be such additional investigation made as deemed necessary to
determine the number of users who will connect to the system. The
District Director will record the determination in memorandum to the
State Director.
13
(Revision 4)
(2-6-85)
PN 956
RD Instruction 1942-A
§ 1942.6(b)(1) (Con.)
(2) In all cases the availability and amount of other funds to be
used in the project will be verified by Rural Development.
(c) Initial compliance review. An initial compliance review should be
completed under Subpart E of Part 1901 of this chapter.
(d) Ordering loan checks.
(Revised 7-12-88, PN 89.)
Checks will not be ordered until:
(1) The applicant has complied with approval conditions and closing
instructions, except for those actions which are to be completed on
the date of loan closing or subsequents thereto; and
(2) The applicant is ready to start construction or funds are needed
to pay interim financing obligations.
(e) Multiple advances of Rural Development funds. When Rural Development
provides loan funds during the construction period using interim
(temporary) instruments described in § 1942.19(g) of this subpart, the
following action will be taken prior to the issuance of the permanent
instruments:
(1) The Finance Office will be notified of the anticipated date for
retirement of the interim instruments and issuance of permanent
instruments of debt.
(2) The Finance Office will prepare a statement of account including
accrued interest through the proposed date of retirement and also
show the daily interest accrual. The statement of account and the
interim financing instrument will be forwarded to the District
Director.
(3) The District Director will collect interest through the actual
date of the retirement and obtain the permanent instrument(s) of debt
in exchange for the interim financing instruments. The permanent
instruments and the cash collection will be forwarded to the Finance
Office immediately, except that for promissory notes and single
instrument bonds fully registered as to principal and interest the
original will be retained in the District Office and a copy will be
forwarded to the Finance Office. In developing the permanent
instruments, the sequence of preference set out in
§ 1942.19(e) of this subpart will be followed. (Revised 8-10-88,
PN 92.)
14
(Revision 4)
RD Instruction 1942-A
§ 1942.7
Loan closing.
Loans will be closed in accordance with the closing instructions issued by
the OGC and § 1942.17(o) of this subpart and as soon as possible after
receiving the check.
(a) Authority to execute, file, and record legal instruments. Area
Office employees are authorized to execute and file or record any legal
instruments necessary to obtain or preserve security for loans. This
includes, as appropriate, mortgages and other lien instruments, as well as
affidavits, acknowledgments, and other certificates.
(Revised 05-18-05, PN 386.)
(b) Preparation of mortgages. Unless otherwise required by State law or
unless an exception is approved by the State Director with advice of the
OGC, only one mortgage will be taken even though the indebtedness is to be
evidenced by more than one instrument.
(c) Source of funds for insured loans. All loans will be made from the
Rural Development Insurance Fund (RDIF).
(d) Unused funds. Obligated funds planned for project development, which
remain after all authorized costs have been provided for, will be disposed
of in accordance with § 1942.17(p)(6) of this subpart. See Subpart B of
Part 1951 of this chapter as to the method of returning loan and grant
funds.
(e) Loan disbursements. Whenever a loan disbursement is received, lost,
or destroyed, the Rural Development Manager will take appropriate actions
outlined in RD Instruction 2018-D. (Revised 05-18-05, PN 386.)
(f) Supervised bank accounts. Supervised bank accounts will be handled
under Subpart A of Part 1902 of this chapter. (Revised 3-1-88,
SPECIAL PN.)
§ 1942.8
Actions subsequent to loan closing.
(a) Mortgages. Real estate or chattel mortgages or security instruments
will be delivered to the recording office for recordation or filing, as
appropriate. A copy of such instruments will be delivered to the
borrower. The original instrument, if returnable after recording or
filing, will be retained in the borrower's case folder.
(2-6-85)
PN 956
15
(Revision 3)
RD Instruction 1942-A
§ 1942.8 (Con.)
(b) Notes and bonds. When the debt instrument is a promissory note or
single instrument bond fully registered as to principal and interest, a
conformed copy will be sent to the Finance Office immediately after loan
losing and the original instrument will be stored in the District Office.
When other types of bonds are used, the original bond(s) will be forwarded
to the Finance Office immediately after loan closing. (Revised 3-1-88,
SPECIAL PN.)
(c) Multiple advances -- bond(s). When temporary paper, such as bond
anticipation notes or interim receipts, is used to conform with the
multiple advance requirement, the original temporary paper will be
forwarded to the Finance Office after each advance is made to the
borrower. The borrower's case number will be entered in the upper righthand corner of such paper by the District Office. The permanent debt
instrument(s) should be forwarded to the Finance Office as soon as
possible after the last advance is made, except that for promissory notes
and single instrument bonds fully registered as to principal and interest,
the original will be retained in the District Office and a copy will be
forwarded to the Finance Office. (Revised 3-1-88,
SPECIAL PN.)
(d) Bond registration record. Form RD 442-28, "Bond Registration Book,"
may be used as a guide to assist borrowers in the preparation of a bond
registration book in those cases where a registration book is required and
a book is not provided in connection with the printing of the bonds.
(e) Disposition of title evidence. All title evidence other than the
opinion of title, mortgage title insurance policy, and water stock
certificates will be returned to the borrower when the loan has been
closed.
(f) Material for State Office. When the loan has been closed, the
District Director will submit to the State Director:
(1)
The completed docket; and
(2) A statement covering information other than the completion of
legal documents showing what was done in carrying out loan closing
instructions.
(g) State Office review of loan closing. The State Director will
review the District Director's statement concerning loan closing, the
security instruments, and other documents used in closing to
determine whether the transaction was closed properly. All material
submitted by the District Director, including the executed contract
documents (if required by OGC) with the certification of the
borrower's attorney, along with a statement by the State Director
16
(Revision 3)
RD Instruction 1942-A
§ 1942.8(g) (Con.)
that all administrative requirements have been met, will be referred to
OGC for post closing review. OGC will review the submitted material to
determine whether all legal requirements have been met. OGC's review of
Rural Development's standard forms will be only for proper execution
thereof, unless the State Director brings specific questions or deviations
to the attention of OGC. It is not expected that facility development
including construction will be held up pending receipt of the opinion from
OGC. When the opinion from OGC is received, the State Director will
advise the District Director of any deficiencies that must be corrected
and return all material that was submitted for review. (Revised 3-1-88,
SPECIAL PN.)
16A
(Added 11-02-94, PN 236)
(2-6-85)
PN 956
§ 1942.8 (Con.)
RD Instruction 1942-A
(h) Safeguarding bond shipments. Rural Development personnel will follow the
procedures for safeguarding mailings and deliveries of bonds and coupons outlined
in RD Instruction 2018-E (available in any Rural Development office), whenever
they mail or deliver these items.
(i) Water stock certificates. Water stock certificates will be filed in the loan
docket in the Area Office. (Revised 09-24-12, PN 458.)
§ 1942.9
1942.18]
Planning, bidding, contracting, and constructing.
[See §§ 1942.17(p) and
(a) Review of construction plans and specifications. All plans and
specifications will be submitted as soon as available to the State Office for
review and comments.
(b) Contract approval. The State Director or designee is responsible for
approving all construction contracts using legal advice and guidance of OGC as
necessary. The use of a contracting method under §1942.18 (1) of this subpart
exceeding $250,000 must be concurred by the National Office. When an applicant
requests such concurrence, the State Director will submit the following to the
National Office along with Guide 27, Attachment 7: (Revised 09-24-12, PN 458.)
(1) State Director's and Rural Development engineer/architect's comments
and recommendations, and if noncompetitive negotiation per 1942.18(k)(4) is
accepted by the Agency, submit an evaluation of previous work of the
proposed construction firm. (Revised 09-24-12, PN 458.)
(2) Regional attorney's opinion and comments regarding the legal adequacy
of the proposed procurement method and proposed contract documents.
(3) Copy of owner's written request and description of the procurement
method proposed.
(4)
Copy of the proposed contract.
(c) Bid irregularities. Any irregularities in the bids received or other matters
pertaining to the contract award having legal implications will be cleared with
OGC before the State Director consents to the contract award.
(d) Noncompliance. State Directors, upon receipt of information indicating
borrowers or their officers, employees, or agents are not performing in compliance
with § 1942.18 (j)(l) of this subpart, may request the Regional Office of the
Inspector General (OIG) to investigate the matter and provide a report. The State
Director is responsible for resolving the issue.
(2-6-85, PN 856)
17
(Revision 3)
RD Instruction 1942-A
§ 1942.10
Strategic economic and community development.
Applicants with projects that support the implementation of strategic
community investment plans are encouraged to review and consider 7 CFR part
1980, subpart K, which contains provisions for providing priority to projects
that support the implementation of strategic community investment plans on a
Multi-jurisdictional and Multi-sectoral basis. (Revised 09-29-20, SPECIAL PN.)
§ 1942.11
[Reserved]
§ 1942.12
Loan cancellation.
Loans which have been approved and obligations which have been established
may be cancelled before closing as follows:
(a) Form RD 1940-10, "Cancellation of U.S. Treasury Check and/or
Obligation." The Rural Development Manager or State Director may prepare
and execute Form RD 1940-10 in accordance with the Forms Manual Insert
(FMI). If the disbursement has been received or is subsequently received
in the Area Office, the Rural Development Manager will return it as
prescribed in RD Instruction 2018-D. (Revised 05-18-05, PN 386.)
(b) Notice of Cancellation. If the docket has been forwarded to OGC,
that office will be notified of the cancellation by copy of Form RD 194010. Any application for title insurance, if ordered, will be cancelled.
The borrower's attorney and engineer/architect, if any, should be notified
of the cancellation. The Rural Development Manager may provide the
borrower's attorney and engineer/architect with a copy of the notification
to the applicant. The State Director will notify the Director of
Legislative Affairs and Public Information by telephone or electronic mail
and give the reason for such cancellation. (Revised 05-18-05, PN 386.)
§ 1942.13
Loan servicing.
Loans will be serviced under Subpart E of Part 1951 of this chapter.
§ 1942.14
Subsequent loans.
Subsequent loans will be processed under this subpart.
(2-6-85)
PN 956
17A
(Revision 6)
RD Instruction 1942-A
§ 1942.15
Delegation and redelegation of authority.
The State Director is responsible for implementing the authorities in this
subpart and for issuing State supplements redelegating authorities. Loan and
grant approval authority is in Subpart A of Part 1901 of this chapter. Except
for loan and grant approval authority, Rural Development Manager may redelegate
their duties to qualified staff members. (Revised 05-18-05, PN 386.)
§ 1942.16
State supplements and guides.
State Directors will obtain National Office clearance for all State
supplements and guides under RD Instruction 2006-B, (available in any Rural
Development office).
(a) State supplements. State Directors may supplement this subpart to
meet State and local laws and regulations and to provide for orderly
application processing and efficient service to applicants. State
supplements shall not contain any requirements pertaining to bids,
contract awards, and materials more restrictive than those in § 1942.18 of
this subpart.
(b) State guides. State Directors may develop guides for use by
applicants if the guides to this subpart are not adequate. State Director
may prepare guides for items needed for the application, items necessary
for the docket, and items required prior to loan closing or start of
construction.
17B
(Revision 6)
RD Instruction 1942-A
Table of Contents
Sec.
Page
1942.17
(a)
(b)
- Community Facilities
21
General.
Eligibility.
21
21
(1)
(2)
(3)
(4)
(5)
(6)
21
22
22
22A
22A
Applicant.
Facility.
Credit elsewhere.
Legal authority and responsibility.
Refinancing debt.
Expanded eligibility for timber-dependent
communities in Pacific Northwest.
(c) Priorities.
23
(1) Truly rural areas.
(2) Project selection process.
(d) Eligible loan purposes.
(e) Facilities for public use.
(f) Rates and terms.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
General.
Poverty line rate.
Intermediate rate.
Market rate.
Prime farmland.
Income determination.
Repayment terms.
34
34
35
35
35
35
36
36A
(1) Joint financing security.
(2) Public bodies.
(3) Other-than-public bodies.
(h) Economic feasibility requirements.
(1) Financial feasibility reports.
(2) Applicants for loans for utility-type
facilities.
(3) Utility-type facilities for new developing
communities or areas.
PN 956
23
23
28
32
34
(g) Security.
(2-6-85)
22
18
(Revision 4)
37
38
41
44
44
44
47
RD Instruction 1942-A
Table of Contents (Con.)
Sec.
Page
1942.17 (Con.)
(i)
Reserve requirements.
(1)
(2)
(j)
48
General obligation or special assessment bonds.
Other than general obligation or special
assessment bonds.
General requirements.
Membership authorization.
Planning, bidding, contracting, constructing.
Insurance and fidelity bonds.
Acquisition of land, easements, water rights,
and existing facilities.
(5) Lease agreements.
(6) Notes and bonds.
(7) Environmental requirements.
(8) Health care facilities.
(9) Public information.
(10) Service through individual installation.
(11) Funds from other sources.
Other Federal,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
48
48
(1)
(2)
(3)
(4)
(k)
48
State, and local requirements.
Compliance with special laws and regulations.
Compliance exceptions.
State Pollution Control or Environmental
Protection Agency Standards.
Consistency with other development plans.
State agency regulating water rights.
Civil Rights Act of 1964.
Title IX of the Education Amendments of 1972.
Section 504 of the Rehabilitation Act of 1973.
Age Discrimination Act of 1975.
19
(Revision 4)
48
49
49
50B
53
54
54
54
54
55
55
56
56
56
56
56
56
57
57
57
57
RD Instruction 1942-A
Table of Contents (Con.)
Sec.
Page
1942.17 (Con.)
(l)
Professional services and contracts related to the
facility.
(1)
(2)
(3)
(4)
(m)
Professional services.
Bond counsel.
Contracts for other services.
Fees.
Applying for loans.
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(2-6-85)
58
58
58
58
58
Preapplication.
Preapplication review.
Incurring obligations.
Results of preapplication review.
Application conference.
Application completion and assembling.
Review of decision.
PN 956
58
19A
(Added 09-06-95, PN 250)
58
58
59
59
59
59
59
Table of Contents (Con.)
RD Instruction 1942-A
1942.17 (Con.)
Sec.
(n)
Page
Actions prior to loan closing and start of
construction.
(1)
(2)
(3)
(4)
(5)
(6)
(o)
(p)
64
(1)
(2)
(3)
(4)
64
64
64
64
Closing instructions.
Obtaining insurance and fidelity bonds.
Distribution of recorded documents.
Review of loan closing.
Project monitoring and fund delivery during
construction.
Coordination of funding sources.
Multiple advances.
Use and accountability of funds.
Development inspections.
Payment for construction.
Use of remaining funds.
Borrower accounting methods, management reporting
and audits.
(1)
(2)
(3)
(4)
(5)
(r)
59
60
62
63
63
63
Loan closing.
(1)
(2)
(3)
(4)
(5)
(6)
(q)
Excess Rural Development loan and grant funds.
Loan resolutions.
Interim financing.
Obtaining closing instructions.
Applicant contribution.
Evidence of and disbursement of other funds.
59
64
64
64
65
66
67
67
68
Accounting methods and records.
Management reports.
Substitute for management reports.
Audits.
Borrowers exempt from audits.
68
68
69
70
71
Rural Development actions for borrower supervision and
servicing.
71
(1)
(2)
(3)
(4)
(5)
(2-6-85)
Management assistance and management reports.
Audits and financial statements.
Security inspections.
Civil rights compliance reviews.
Other loan servicing actions.
PN 956
20
(Revision 2)
71
73
73
74
74
RD Instruction 1942-A
§1942.17
Community Facilities.
(a) General. This section includes information and procedures
specifically designed for use by applicants, including their professional
consultants and/or agents who provide such assistance and services as
architectural, engineering, financial, legal, or other services related to
application processing and facility planning and development. This
section is made available as needed for such use. It includes Rural
Development policies and requirements pertaining to loans for community
facilities. It provides applicants with guidance for use in proceeding
with their application. Rural Development shall cooperate fully with
appropriate State agencies to give maximum support of the State's
strategies for development of rural areas. (Revised 05-19-92, SPECIAL
PN.)
(b) Eligibility. Financial assistance to areas or communities adjacent
to, or closely associated with, nonrural areas is limited by §1942.17 (c)
of this subpart. (Revised 05-19-92, SPECIAL PN.)
(1)
Applicant.
(i) A public body, such as a municipality, county, district,
authority, or other political subdivision of a state.
(A) Loans for water or waste disposal facilities will not
be made to a city or town with a population in excess of
10,000 inhabitants, according to the latest decennial
Census of the United States.
(B) Loans for essential community facilities will not be
made to a city or town with a population in excess of
20,000 inhabitants, according to the latest decennial
Census of the United States.
(ii) An organization operated on a not-for-profit basis, such
as an association, cooperative, or private corporation.
Applicants organized under the general profit corporation laws
may be eligible if they actually will be operated on a not-forprofit basis under their charter, bylaws, mortgage, or
supplemental agreement provisions as may be required as a
condition of loan approval. Essential community facility
applicants other than utility-type must have significant ties
with the local rural community. Such ties are necessary to
ensure to the greatest extent possible that a facility under
private control will carry out a public purpose and continue to
primarily serve rural areas. Ties may be evidenced by items
such as:
(2-6-85)
PN 956
21
(Revision 2)
RD Instruction 1942-A
§1942.17 (b)(1)(ii) (Con.)
(A) Association with or controlled by a local public body
or bodies, or broadly based ownership and controlled by
members of the community.
(B) Substantial public funding through taxes, revenue
bonds, or other local Government sources, and/or
substantial voluntary community funding, such as would be
obtained through a community-wide funding campaign.
(iii) Indian tribes on Federal and State reservations and other
Federally recognized Indian tribes.
(2)
Facility.
(i) Facilities must be located in rural areas, except for
utility-type services such as water, sewer, natural gas, or
hydroelectric, serving both rural and non-rural areas. In such
cases, Rural Development funds may be used to finance only that
portion serving rural areas, regardless of facility location.
(ii) Essential community facilities must primarily serve rural
areas.
(iii) For water or waste disposal facilities, the terms "rural"
and "rural area" will not include any area in any city or town
with a population in excess of 10,000 inhabitants, according to
the latest decennial Census of the United States.
(iv) For essential community facilities, the terms "rural" and
"rural area" will not include any area in any city or town with
a population in excess of 20,000 inhabitants, according to the
latest decennial Census of the United States.
(3) Credit elsewhere. Applicants must certify in writing and Rural
Development shall determine and document that the applicant is unable
to finance the proposed project from their own resources or through
commercial credit at reasonable rates and terms.
22
(Revision 2)
RD Instruction 1942-A
§1942.17 (b) (Con.)
(4) Legal authority and responsibility. Each applicant must have or
will obtain the legal authority necessary for constructing operating
and maintaining the proposed facility or service and for obtaining
giving security for and repaying the proposed loan. The applicant
shall be responsible for operating maintaining and managing the
facility and providing for its continued availability and use at
reasonable rates and terms. This responsibility shall be exercised
by the applicant even though the facility may be operated maintained
or managed by a third party under contract management agreement or
written lease. Leases may be used when this is the only feasible way
to provide the service and is the customary practice. Management
agreements should provide for at least those items listed in Guide 24
of this subpart (available in any Agency office). Such contracts
management agreements or leases must not contain options or other
provisions for transfer of ownership.
(5) Refinancing debt. The Government shall require an agreement
that if at any time it shall appear to the Government that the
borrower is able to refinance the amount of the indebtedness then
outstanding in whole or in part by obtaining a loan for such purposes
from responsible cooperative or private credit sources at reasonable
rates and terms for loans for similar purposes and periods of time
the borrower will upon request of the Government apply for and accept
such loan in sufficient amount to repay the Government and will take
all such actions as may be required in connection with such loan.
(6) Expanded eligibility for timber-dependent communities in Pacific
Northwest. In the Pacific Northwest defined as an area containing
national forest covered by the Federal document entitled Forest Plan
for a Sustainable Economy and a Sustainable Environment, dated July 1
1993; the population limits contained §1942.17(b) are expanded to
include communities with not more than 25,000 inhabitants until
September 30, 1998 if: (Added 09-06-95, PN 250.)
(i) Part or all of the community lies within 100 miles of the
boundary of a national forest covered by the Federal document
entitled Forest Plan for a Sustainable Economy and a Sustainable
Environment, dated July 1, 1993; and
(ii) The community is located in a county in which at least 15
percent of the total primary and secondary labor and proprietor
income is derived from forestry, wood products, or
forest-related industries such as recreation and tourism.
(2-6-85)
PN 956
22A
(Revision 1)
§1942.17 (Con.)
(c)
RD Instruction 1942-A
Priorities.
(1) Truly rural areas. Rural Development program assistance will be
directed toward truly rural areas and rural communities. Normally,
priority will not be given to preapplications for projects that will
serve other than truly rural areas. Truly rural areas are areas
other than densely settled areas or communities adjacent to, or
closely associated with, a city or town with a population exceeding
10,000 residents for water or waste disposal assistance, or 20,000
residents for essential community facility assistance. When
determining whether a rural area or rural community is adjacent to,
or closely associated with, a city or town with a population
exceeding 10,000 residents for water and waste disposal, or 20,000
residents for essential community facility assistance, minor open
spaces such as those created by physical or legal barriers,
commercial or industrial development, parks, areas reserved for
convenience or appearance, or narrow strips of cultivated land, will
be disregarded. An area or community shall be considered adjacent to
or closely related with a nonrural area when it constitutes for
general, social, and economic purposes a single community having a
contiguous boundary.
(2) Project selection process. The following paragraphs indicate
items and conditions which must be considered in selecting
preapplications for further development. When ranking eligible
preapplications for consideration for limited funds, Rural
Development officials must consider the priority items met by each
preapplication and the degree to which those priorities are met, and
apply good judgment.
(i) Preapplications. The preapplication and supporting
information submitted with it will be used to determine the
proposed project's priority for available funds.
(ii) State Office review. All preapplications will be reviewed
and scored and Form AD-622, "Notice of Preapplication Review
Action," issued within the time limits in §1942.2 (a)(2)(iv) of
this subpart. When considering authorizing the development of
an application for funding, the State Director should consider
the remaining funds in the State allocation, and the anticipated
allocation of funds for the next fiscal year as well as the
amount of time necessary to complete that application.
Applicants whose preapplications are found to be ineligible will
be so advised. These applicants will be given adverse notice
through Form AD-622 and advised of their appeal rights under
Subpart B of Part 1900
23
(2-6-85, PN 956)
RD Instruction 1942-A
§1942.17 (c) (2) (ii) (Con.)
of this chapter. Those applicants with eligible lower scoring
preapplications which obviously cannot be funded within an
eighteen month period of time, and are not within 150 percent of
the State's allocation, should be notified that funds are not
available; and requested to advise whether they wish to have
their preapplication maintained in an active file for future
consideration. The State Director may request an additional
allocation of funds from the National Office for such
preapplications. Such requests will be considered along with
all others on hand.
(iii) Selection priorities. The priorities described below
will be used by the State Director to rate preapplications. The
priorities should be applied to water and waste disposal or
community facilities preapplications as directed. The format
found in Part I of Guide 26 of this subpart should be followed
in scoring each preapplication. A copy of the score sheet
should be placed in the case file for future reference.
(A) Population priorities. The following priorities apply
to both Water and Waste Disposal and Community Facilities
preapplications. Points will be distributed as indicated.
(1) The proposed project is located in a rural
community having a population not in excess of 2,500 25 points.
(2) The proposed project is located in a rural
community having a population not in excess of 5,500 20 points. (Points under this priority should not be
assigned to a preapplication if points were assigned
under paragraph (c)(2)(iii) (A) (1) of this section.
(B) Health priorities.
indicated.
Points will be distributed as
(1) Water and Waste Disposal preapplications only.
The proposed project is:
(i) needed to alleviate the sudden unexpected
diminution or deterioration of a water supply, or
to meet health or sanitary standards which
pertain to a community's water supply - 25
points.
24
§1942.7 (c) (2) (iii) (B) (1) (Con.)
RD Instruction 1942-A
(ii) required to correct an inadequate waste
disposal system due to unexpected occurrences, or
to meet health or sanitary standards which
pertain to a community's waste disposal system 25 points.
(2) Community Facility preapplication only. The
proposed project is required either to correct a
health or sanitary problem, or to meet a health or
sanitary standard - 25 points.
(C) Income priorities. The following priorities apply to
both Water and Waste Disposal and Community Facilities
preapplications. Points will be distributed as indicated.
The median income of the population to be served by the
proposed facility is:
(1) Less than the poverty line for a family of four,
as defined in Section 673 (2) of the Community
Services Block Grant Act (42 U.S.C. 9902 (2)), or less
than 80% of the statewide nonmetropolitan median
household income - 25 points. (Revised 3-1-88,
SPECIAL PN.)
(2) Equal to or more than the poverty line and
between 80% and 100%, inclusive, of the State's
nonmetropolitan median household income - 20 points.
(Revised 3-1-88, SPECIAL PN.)
(D) Other factors.
indicated.
Points will be distributed as
(1) Water and Waste Disposal preapplication only.
The proposed project will: merge ownership,
management, and operation of smaller facilities
providing for more efficient management and economical
service; and/or enlarge, extend, or otherwise modify
existing facilities to provide service to additional
rural residents - 10 points.
(2) Community Facilities preapplications only. The
purpose of the proposed project is to construct,
enlarge, extend or otherwise improve the following
types of facilities. (Select only the factor most
applicable to the proposed project.)
(2-6-85) PN 956
25
(Revision 3)
§1942.17 (c) (2) (iii) (D) (2) (Con.)
RD Instruction 1942-A
(i) Public safety - 10 points. (Examples
include police services and fire, rescue and
ambulance services as authorized by Subpart C of
this Part.) (Revised 11-4-87, PN 68.)
(ii) Health care - 5 points. (Examples include
clinics, nursing homes, convalescent facilities,
and hospital projects designed to make the
facility conform with life/safety codes, Medicare
and Medicaid requirements, and minor expansions
needed to meet the immediate requirements of the
community. Points under this authority should
not be awarded to a preapplication if points were
awarded under §1942.17 (c)(2)(iii)(B)(2) of this
subpart.)
(3) Water and Waste Disposal and Community Facilities
preapplications.
(i) Applicant is a public body or Indian tribe 5 points.
(ii) Project is located in a "truly rural area"
as described in §1942.17(c)(l) of this subpart 10 points.
(iii) Amount of joint financing committed to the
project is:
(a) 20% or more private, local or
state funds except federal funds
channeled through a state agency - 10
points.
(b) 5% - 19% private, local or state
funds except federal funds channeled
through a state agency - 5 points.
(E) In certain cases the State Director may assign up to
15 points to a preapplication, in addition to those that
may be scored under paragraphs (c)(2)(iii)(A) through (D),
of this section. These points are primarily intended to
address an unforeseen exigency or emergency, such as the
loss of a community facility due to accident or natural
disaster or the loss of joint financing if Rural
Development funds are not committed in a timely fashion.
However, the points may also be awarded to projects in
order to improve compatibility/coordination between Rural
Development's and other agencies' selection systems and to
assist those projects that are the most cost effective. A
written justification must be prepared and placed in the
project file each time the State Director assigns these
points.
26
(Revision 3)
§1942.17 (c)(2) (Con.)
RD Instruction 1942-A
(iv) Results of State Office review. After completing the review,
the State Director will normally select the eligible
preapplications with the highest scores for further processing. In
cases where preliminary cost estimates indicate that an eligible,
high scoring preapplication is unfeasible or would require an
amount of funding from Rural Development that exceeds either 25
percent of a State's current annual allocation or an amount greater
than that remaining in the State's allocation, the State Director
may instead select the next lower scoring preapplication(s) for
further processing provided the high scoring applicant is notified
of this action and given an opportunity to revise the proposal and
resubmit it. If it is found that there is no effective way to
reduce costs, the State Director, after consultation with
applicant, may submit a request for an additional allocation of
funds for the proposed project to the National Office. The request
should be submitted during the fiscal year in which obligation is
anticipated. Such requests will be considered along with all
others on hand. A written justification must be prepared and
placed in the project file when an eligible preapplication with a
higher rating is not selected for further processing. The State
Director will notify the District Director of the results of the
review action. The State Director will return the pre-application
information with an authorization for the District Director to
prepare and issue Form AD-622 in accordance with §1942.2 (a)(2)(iv)
of this subpart. Priority will be given to those preapplications
and applications for funding which meet criteria in §1942.17 (c)(2)
(iii)(A)(1) or (2); and the criteria in §1942.17 (c)(2)(iii)
(B)(1)(i) or (ii) or (B)(2) of this subpart.
(v) Application development. Applications should be developed
expeditiously following good management practices. Applications
that are not developed in a reasonable period of time taking into
account the size and complexity of the proposed project may be
removed from the State's active file. Applicants will be consulted
prior to taking such action.
(vi) Project obligations. To ensure efficient use of resources,
obligations should occur in a timely fashion throughout the fiscal
year. Projects may be obligated as their applications are
completed and approved.
(vii) Requests for additional funding. All requests for
additional allocations of funds submitted to the National Office
must follow the formats found in Parts I and II of Guide 26. In
selecting projects for funding at the National Office level,
additional points may be scored based on the priority assigned to
the project by the State Office.
(2-6-85)
PN 956
27
(Revision 2)
RD Instruction 1942-A
§1942.17 (c)(2)(vii)
These points will be scored in the manner shown below. Only the
three highest priority projects can score points. In addition,
the Administrator may assign up to 15 additional points to
account for items such as geographic distribution of funds and
emergency conditions caused by economic problems or natural
disasters.
Priority
Points
1
2
3
5
3
1
(viii) Cost overruns. A preapplication may receive
consideration for funding before others at the State Office
level or at the National Office level, if funds are not
available in the State Office, when it is a subsequent request
for a previously approved project which has encountered cost
overruns due to high bids or unexpected construction problems
that cannot be reduced by negotiations, redesign, use of bid
alternatives, rebidding or other means.
(d)
Eligible loan purposes.
(1)
Funds may be used:
(i) To construct, enlarge, extend, or otherwise improve water
or waste disposal and other essential community facilities
providing essential service primarily to rural residents and
rural businesses. Rural businesses would include facilities
such as educational and other publicly owned facilities.
(Revised 05-19-92, SPECIAL PN.)
(A) "Water or waste disposal facilities” include water,
sanitary sewerage, solid waste disposal, and storm
wastewater facilities.
(B) "Essential community facilities" are those public
improvements requisite to the beneficial and orderly
development of a community operated on a nonprofit basis
including but not limited to: (Revised 11-4-87, PN 68.)
(1)
Health services;
(2)
Community, social, or cultural services;
(3) Transportation facilities, such as streets,
roads, and bridges;
28
(Revision 2)
§1942.17 (d)(1)(i)(B) (Con.)
RD Instruction 1942-A
(4) Hydroelectric generating facilities and related
connecting systems and appurtenances, when not
eligible for Rural Electrification Administration
(REA) financing;
28A
(Added 05-19-92, SPECIAL PN)
(2-6-85)
PN 956
§1942.17 (d) (1) (i) (B) (Con.)
RD Instruction 1942-A
(5) Supplemental and supporting structures for other
rural electrification or telephone systems (including
facilities such as headquarters and office buildings,
storage facilities, and maintenance shops) when not
eligible for Rural Electrification Administration
financing:
(6)
Natural gas distribution systems; and
(7) Industrial park sites, but only to the extent of
land acquisition and necessary site preparation,
including access ways and utility extensions to and
throughout the site. Funds may not be used in connection
with industrial parks to finance on-site utility systems,
or business and industrial buildings.
(C) "Otherwise improve" includes but is not limited to the
following:
(1) The purchase of major equipment, such as solid waste
collection trucks, and X-ray machines, which will in
themselves provide an essential service to rural
residents; (Revised 11-4-87, PN 68.)
(2) The purchase of existing facilities when it is
necessary either to improve or to prevent a loss of
service;
(3) Payment of tap fees and other utility connection
charges as provided in utility purchase contracts
prepared under section 1942.18(f) of this subpart.
(ii) To construct or relocate public buildings, roads, bridges,
fences, or utilities, and to make other public improvements
necessary to the successful operation or protection of facilities
authorized in paragraph (d)(l)(i) of this section.
(iii) To relocate private buildings, roads, bridges, fences, or
utilities, and other private improvements necessary to the
successful operation or protection of facilities authorized in
paragraph (d)(l)(i) of this section.
(iv) To pay the following expenses, but only when such expenses
are a necessary part of a loan to finance facilities authorized in
paragraphs (d)(l)(i), (d)(l)(ii), and (d)(l) (iii) of this section:
(2-6-85) PN 956
29
(Revision 1)
RD Instruction 1942-A
§1942.17 (d) (1) (iv) (Con.)
(A) Reasonable fees and costs such as legal, engineering,
architectural, fiscal advisory, recording, environmental
impact analyses, archaeological surveys and possible
salvage or other mitigation measures, planning,
establishing or acquiring rights.
(B) Interest on loans until the facility is selfsupporting, but not for more than three years unless a
longer period is approved by the National Office; interest
on loans secured by general obligation bonds until tax
revenues are available for payment, but not for more than
two years unless a longer period is approved by the
National Office; and interest on interim financing,
including interest charges on interim financing from
sources other than Rural Development.
(C) Costs of acquiring interest in land; rights, such as
water rights, leases, permits, rights-of-way; and other
evidence of land or water control necessary for development
of the facility.
(D) Purchasing or renting equipment necessary to install,
maintain, extend, protect, operate, or utilize facilities.
(E) Initial operating expenses for a period ordinarily not
exceeding one year when the borrower is unable to pay such
expenses.
(F) Refinancing debts incurred by, or on behalf of, a
community when all of the following conditions exist:
(1) The debts being refinanced are a secondary part
of the total loan;
(2) The debts are incurred for the facility or
service being financed or any part thereof;
(3) Arrangements cannot be made with the creditors to
extend or modify the terms of the debts so that a
sound basis will exist for making a loan.
(G) Prepay costs for which Rural Development grant funds
were obligated provided there is:
30
(Revision 1)
§1942.17 (d)(1)(iv)(G) (Con.)
RD Instruction 1942-A
(1) No conflict with the loan resolution, State
statutes, or any other loan requirements; and
(2)
Full documentation showing that:
(i) Loan funds will only be utilized on a
temporary basis; and
(ii) All Rural Development loan funds are restored
at a later date for purpose(s) for which they were
obligated.
(v) To pay obligations for construction incurred before loan
approval. Construction work should not be started and obligations
for such work or materials should not be incurred before the loan
is approved. However, if there are compelling reasons for
proceeding with construction before loan approval, applicants may
request Rural Development approval to pay such obligations. Such
requests may be approved if Rural Development determines that:
(A) Compelling reasons exist for incurring obligations before
loan approval; and
(B) The obligations will be incurred for authorized loan
purposes; and
(C) Contract documents have been approved by Rural
Development; and
(D) All environmental requirements applicable to Rural
Development and the applicant have been met; and
(E) The applicant has the legal authority to incur the
obligations at the time proposed, and payment of the debts
will remove any basis for any mechanic, material or other
liens that may attach to the security property. Rural
Development may authorize payment of such obligations at the
time of loan closing. Rural Development's authorization to
pay such obligations, however, is on the condition that it is
not committed to make the loan; it assumes no responsibility
for any obligations incurred by the applicant; and the
applicant must subsequently meet all loan approval
requirements. The applicant's request and Rural Development
authorization for paying such obligations shall be in writing.
If construction is started without Rural Development approval,
post approval in accordance with this section may be
considered.
(2-6-85)
PN 956
31
(Revision 2)
RD Instruction 1942-A
§1942.17 (d) (Con.)
(2)
Funds may not be used to finance:
(i) On-site utility systems or business and industrial buildings
in connection with industrial parks.
(ii)
Facilities to be used primarily for recreation purposes.
(iii)
Community antenna television services or facilities.
(iv) Electric generation or transmission facilities or telephone
systems, except as provided in paragraph (d)(1)(i) (B)(4) or
(d)(1)(i)(B)(5) of this section; or extensions to serve a
particular essential community facility as provided in paragraph
(d)(1)(ii) or (d)(1)(iii) of this section. (Revised 11-4-87, PN
68.)
(v)
(vi)
Facilities which are not modest in size, design, and cost.
Loan or grant finder's fees.
(vii) Projects located within the Coastal Barriers Resource System
that do not qualify for an exception as defined in Section 6 of the
Coastal Barriers Resource Act, P.L. 97-348.
(viii) New combined sanitary and storm water sewer facilities.
(ix) That portion of a water and/or waste disposal facility
normally provided by a business or industrial user. (Added 05-1992, SPECIAL PN.)
(e) Facilities for public use. All facilities financed under the provisions
of this subpart shall be for public use. (Revised 05-19-92, SPECIAL PN.)
(1) Utility-type service facilities will be installed so as to serve
any user within the service area who desires service and can be feasibly
and legally served. Applicants and borrowers must obtain written
concurrence of the Rural Development prior to refusing service to such
user. Upon failure to provide service which is reasonable and legal,
such user shall have direct right of action against the
applicant/borrower. A notice of the availability of this service should
be given by the applicant/borrower to all persons living within the area
who can feasibly and legally be served by the phase of the project being
financed.
(i) If a mandatory hookup ordinance will be adopted,
the required bond ordinance or resolution advertisement
will be considered adequate notification.
32
(Revision 2)
§ 1942.17 (e)(1) (Con.)
RD Instruction 1942-A
(ii) When any portion of the income will be derived from user
fees and a mandatory hookup ordinance will not be adopted, each
potential user will be afforded an opportunity to request
service by signing a Users Agreement. Those declining service
will be afforded an opportunity to sign a statement to such
effect. Rural Development has guides available for these
purposes in all Rural Development offices.
(2) In no case will boundaries for the proposed service area be
chosen in such a way that any user or area will be excluded because
of race, color, religion, sex, marital status, age, handicap, or
national origin. (Revised 3-1-88, SPECIAL PN.)
(3)
This does not preclude:
(i) Financing or constructing projects in phases when it is not
practical to finance or construct the entire project at one
time, and
(ii) Financing or constructing facilities where it is not
economically feasible to serve the entire area, provided
economic feasibility is determined on the basis of the entire
system and not by considering the cost of separate extensions to
or parts thereof; the applicant publicly announces a plan for
extending service to areas not initially receiving service from
the system; and potential users located in the areas not to be
initially served received written notice from the applicant that
service will not be provided until such time as it is
economically feasible to do so, and (Revised 05-19-92, SPECIAL
PN.)
(iii) Extending services to industrial areas when service is
made available to users located along the extensions.
(4) The State Director will determine that, when feasibly and
legally possible, inequities within the proposed project's service
area for the same type service proposed (i.e., water or waste
disposal) will be remedied by the owner on or before completion of
the project that includes Rural Development funding. Inequities are
defined as flagrant variations in availability, adequacy or quality
of service. User rate schedules for portions of existing systems
that were developed under different financing, rates, terms or
conditions, as determined by the State Director, do not necessarily
constitute inequities.
(2-6-85)
(5) Before a loan is made to an applicant other than a public body,
for other than utility type projects, the articles of incorporation
or loan agreement will include a condition similar to the following:
33
(Revision 6)
PN 956
RD Instruction 1942-A
§ 1942.17(e)(5) (Con.)
"In the event of dissolution of this corporation, or in the
event it shall cease to carry out the objectives and purposes
herein set forth, all business, property, and assets of the
corporation shall go and be distributed to one or more nonprofit corporations or public bodies as may be selected by the
board of directors of this corporation and approved by at least
75 percent of the users or members to be used for, and devoted
to, the purpose of a community facility project or other purpose
to serve the public welfare of the community. In no event shall
any of the assets or property, in the event of dissolution
thereof, go or be distributed to members, directors,
stockholders, or others having financial or managerial interest
in the corporation either for the reimbursement of any sum
subscribed, donated or contributed by such members or for any
other purposes, provided that nothing herein shall prohibit the
corporation from paying its just debts."
(f)
Rates and terms.
(1) General. Each loan will bear interest at the rate prescribed in
RD Instruction 440.1, Exhibit B (available in any Rural Development
office). The interest rates will be set by Rural Development at
least for each quarter of the fiscal year. All rates will be
adjusted to the nearest one-eighth of one percent. For each loan,
the basis for determining what interest rate is appropriate will be
completely documented on the automated Community Facilities Project
Summary. The applicant may submit a written request prior to loan
closing that the interest rate charged on the loan be the lower of
the rate in effect at the time of loan approval or the rate in effect
at the time of loan closing. If the interest rate is to be that in
effect at loan closing, the interest rate charged on a loan involving
multiple advances of Rural Development funds, using temporary debt
instruments, shall be that in effect on the date when the first
temporary debt instrument is issued. If no written request is
received from the applicant prior to loan closing, the interest rate
charged on the loan will be the rate in effect at the time of loan
approval. (Revised 03-19-03, PN 357.)
(2) Poverty line rate. The poverty line interest rate will not
exceed 5 per centum per annum. The provisions of paragraph (f)(2)(i)
of this section do not apply to health care and related facilities
that provide direct health care to the public. Otherwise, all loans
must comply with the following conditions: (Revised 05-19-92, SPECIAL
PN.)
34
(Revision 6)
§1942.17 (f)(2) (Con.)
RD Instruction 1942-A
(i) The primary purpose of the loan is to upgrade existing
facilities or construct new facilities required to meet
applicable health or sanitary standards. Documentation will be
obtained from the appropriate regulatory agency with
jurisdiction to establish the standard, to verify that a bona
fide standard exists, what that standard is, and that the
proposed improvements are needed and required to meet the
standard; and (Revised 3-1-88, SPECIAL PN.)
(ii) The median household income of the service area is below
the poverty line for a family of four, as defined in Section 673
(2) of the Community Services Block Grant Act (42 U.S.C.
9902(2)), or below 80 percent of the Statewide nonmetropolitan
median household income. (Revised 3-25-86, SPECIAL PN.)
(2-6-85)
PN 956
34A
(Added 05-19-92, SPECIAL PN)
§1942.17 (f) (Con.)
RD Instruction 1942-A
(3) Intermediate rate. The intermediate interest rate will be set
at the poverty line rate plus one-half of the difference between the
poverty line rate and the market rate, not to exceed 7 percent per
annum. It will apply to loans that do not meet the requirements for
the poverty line rate and for which the median household income of
the service area is below the poverty line or not more than 100
percent of the nonmetropolitan median household income of the State.
(Revised 10-28-87, PN 67.)
(4) Market rate. The market interest rate will be set using as
guidance the average of the Bond Buyer Index for the four weeks prior
to the first Friday of the last month before the beginning of the
quarter. The market rate will apply to all loans that do not qualify
for a different rate under paragraph (f)(2) or (f)(3) of this
section. It may be adjusted as provided in paragraph (f)(5) of this
section.
(5) Prime farmland. For essential community facilities loans, the
rate indicated by paragraphs (f)(2), (f)(3) or (f)(4) of this section
will be increased by two per centum per annum if the project being
financed will involve the use of, or construction on, prime or unique
farmland in accordance with RD Instruction 440.1,
Exhibits B and J (available in any Rural Development office).
(6) Income determination. The income data used to determine median
household income should be that which most accurately reflects the
income of the service area. The service area is that area reasonably
expected to be served by the facility being financed by Rural
Development. The median household income of the service area and the
nonmetropolitan median household income of the State will be
determined from income data from the most recent decennial census of
the U.S. If there is a reason to believe that the census data is not
an accurate representation of the median household income within the
area to be served, the reasons will be documented and the applicant
may furnish, or Rural Development may obtain, additional information
regarding such median household income. Information will consist of
reliable data from local, regional, State or Federal sources or from
a survey conducted by a reliable impartial source. The
nonmetropolitan median household income of the State may only be
updated on a national basis by the Rural Development National Office.
This will be done only when median household income data for the same
year for all Bureau of the Census areas is available from the Bureau
of the Census, or other reliable sources. Bureau of the Census areas
would include areas such as: Counties, County Subdivisions, Cities,
Towns, Townships, Boroughs, and other places. (Revised 10-28-87, PN
67.)
(02-06-85)
PN 956
35
(Revision 5)
RD Instruction 1942-A
§1942.17 (f) (Con.)
(7) Repayment terms. The loan repayment period shall not exceed the
useful life of the facility, State statute or 40 years from the date of
the note(s) or bond(s), whichever is less. Where Rural Development
grant funds are used in connection with an Rural Development loan, the
loan will be for the maximum term permitted by this subpart, State
statute, or the useful life of the facility, whichever is less, unless
there is an exceptional case where circumstances justify making an Rural
Development loan for less than the maximum term permitted. In such
cases, the reasons must be fully documented. In all cases, including
those in which the Rural Development is jointly financing with another
lender, the Rural Development payments of principal and interest should
approximate amortized installments. (Revised 06-26-91, PN 168.)
(i) Principal payments may be deferred, in whole or in part, for a
period not to exceed 36 months following the date the first
interest installment is due. If for any reason it appears
necessary to permit a longer period of deferment, the State
Director may authorize such deferment with the prior approval of
the National Office. Deferments of principal will not be used to:
(Revised and Renumbered 03-01-88, SPECIAL PN.)
(A)
Postpone the levying of taxes or assessments.
(B) Delay collection of the full rates which the borrower has
agreed to charge users for its services as soon as major
benefits or the improvements are available to those users.
(C)
Create reserves for normal operation and maintenance.
(D) Make any capital improvements except those approved by
Rural Development determined to be essential to the repayment
of the loan or to the obtaining of adequate security thereof.
(E)
Accelerate the payment of other debts.
(ii) Payment date. Loan payments will be scheduled to coincide
with income availability and be in accordance with State law. If
consistent with the foregoing, monthly payments will be required
and will be enumerated in the bond, other evidence of indebtedness,
or other supplemental agreement. However, if State law only
permits principal plus interest (P&I) type bonds, annual or
seminannual payments will be used.
36
(Revision 5)
§1942.17 (f)(7)(ii) (Con.)
RD Instruction 1942-A
Insofar as practical monthly payments will be scheduled one full
month following the date of loan closing; or semiannual or
annual payments will be scheduled six or twelve full months
respectively, following the date of loan closing or any
deferment period. Due dates falling on the 29th, 30th or 31st
day of the month will be avoided. (Revised 06-26-91, PN 168.)
(g) Security. Loans will be secured by the best security position
practicable in a manner which will adequately protect the interest of
Rural Development during the repayment period of the loan. Specific
requirements for security for each loan will be included in a letter of
conditions.
36A
(Added 06-26-91, PN 168)
(02-06-85)
PN 956
§1942.17 (g) (Con.)
RD Instruction 1942-A
(1) Joint financing security. For projects utilizing joint financing,
when adequate security of more than one type is available, the other
lender may take one type of security with the United States taking
another type. For projects utilizing joint financing with the same
security to be shared by the United States and another lender, the
United States will obtain at least a parity position with the other
lender. A parity position is to ensure that with joint security, in the
event of default, each lender will be affected on a proportionate basis.
A parity position will conform with the following unless an exception is
granted by the National Office:
(i) Terms. It is not necessary for loans to have the same
repayment terms to meet the parity requirements. Loans made by
other lenders involved in joint financing with the United States
for facilities should be scheduled for repayment on terms similar
to those customarily used in the State for financing such
facilities.
(ii) Use of trustee or other similar paying agent. The use of a
trustee or other similar paying agent by the other lender in a
joint financing arrangement is acceptable to the United States. A
trustee or other similar paying agent will not normally be used for
the United States portion of the funding unless required to comply
with State law. The responsibilities and authorities of any
trustee or other similar paying agent on projects that include
United States funds must be clearly specified by written agreement
and approved by the State Director and Regional Attorney. The
United States must be able to deal directly with the borrower to
enforce the provisions of loan and grant agreements and perform
necessary servicing actions.
(iii) Regular payments. In the event adequate funds are not
available to meet regular installments on parity loans, the funds
available will be apportioned to the lenders based on the
respective current installments of principal and interest due.
(iv) Disposition of property. Funds obtained from the sale or
liquidation of secured property or fixed assets will be apportioned
to the lenders on the basis of the pro rata amount loaned, but not
to exceed their respective outstanding balances; provided, however,
funds obtained from such sale or liquidation for a project that
included grant funds will be apportioned as may be required by the
grant agreement.
(v) Protective advances. Protective advances are payments made by
a lender for items such as insurance or taxes, to protect the
financial interest of the lender,
(2-6-85)
PN 956
37
(Revision 3)
RD Instruction 1942-A
§1942.17 (g)(1)(v) (Con.)
and charged to the borrower's loan account. To the extent
consistent with State law and customary lending practices in the
area, repayment of protective advances made by either lender,
for the mutual protection of both lenders, should receive first
priority in apportionment of funds between the lenders. To
ensure agreement between lenders, efforts should be made to
obtain the concurrence of both lenders before one lender makes a
protective advance.
(2) Public bodies. Loans to such borrowers will be evidenced by
notes, bonds, warrants, or other contractual obligations as may be
authorized by relevant State statutes and by borrower's documents,
resolutions, and ordinances.
(i) Utility-type facilities such as water and sewer systems,
natural gas distribution systems, electric systems, etc., will
be secured by:
(A) The full faith and credit of the borrower when the
debt is evidenced by general obligation bonds; and/or
(B)
Pledges of taxes or assessments; and/or
(C) Pledges of facility revenue and, when it is the
customary financial practice in the State, liens will be
taken on the interest of the applicant in all land,
easements, rights-of-way, water rights, water purchase
contracts, water sales contracts, sewage treatment
contracts, and similar property rights, including leasehold
interest, used or to be used in connection with the
facility whether owned at the time the loan is approved or
acquired with loan funds; and/or (Revised 3-1-88, SPECIAL
PN.)
(D) In those cases involving water and waste disposal
projects where there is a substantial number of other than
full-time users and facility costs result in a higher than
reasonable rate for such full-time users, the loan will be
secured by the full faith and credit of the borrower or by
an assignment or pledge of taxes or assessments from public
bodies or other organizations having the authority to issue
or pledge such taxes or assessments. (Revised 05-19-92,
SPECIAL PN.)
(ii) Solid waste projects. The type of security required will
be based on State law and what is determined adequate to protect
the interest of the United States during the repayment period of
the loan. (Revised 03-01-95, PN 241.)
38
(Revision 3)
§1942.17 (g) (2) (Con.)
RD Instruction 1942-A
(iii) Other essential community facilities other than utility
type, such as those for public health and safety, social, and
cultural needs and the like will meet the following security
requirements:
(A) Such loans will be secured by one or a combination of the
following and in the following order of preference:
(1)
General obligation bonds.
(2)
Assessments.
(3)
Bonds which pledge other taxes.
(4) Bonds pledging revenues of the facility being
financed when such bonds provide for the mandatory levy
and collection of taxes in the event revenues later
become insufficient to properly operate and maintain the
facility and to retire the loan.
(5) Assignment of assured income which will be available
for the life of the loan, from such sources as insurance
premium rebates, income from endowments, irrevocable
trusts, or commitments from industries, public bodies, or
other reliable sources.
(6) Liens on real and chattel property when legally
permissible and an assignment of the borrowers income
from applicants who have been in existence and are able
to present evidence of a financially successful operation
of a similar facility for a period of time sufficient to
indicate project success. National Office concurrence is
required when the applicant has been in existence for
less than five years or has not operated on a financially
successful basis for five years immediately prior to loan
application.
(7) Liens on real and chattel property when legally
permissible and an assignment of income from an
organization receiving Health and Human Services (HHS)
operating grants under the "Memorandum of Understanding
Between Health Resources and Services Administration, U.
S. Department of Health and Human Services and Rural
Development, U. S. Department of Agriculture" (see RD
Instruction 2000-T, available in any Rural Development
office.)
39
(2-6-85, PN 956)
RD Instruction 1942-A
§1942.17 (g) (2) (iii) (A) (Con.)
(8) Liens on real and chattel property when legally
permissible and an assignment of income from an
organization proposing a facility whose users receive
reliable income from programs such as social security,
supplemental security income (SSI), retirement plans,
long-term insurance annuities, Medicare or Medicaid.
Examples are homes for the handicapped or institutions
whose clientele receive State or local government
assistance.
(9) When the applicant cannot meet the criteria in
paragraph (g)(2)(iii)(A)(1) through (8) of this
section, such proposals may be considered when all the
following are met:
(i) The applicant is a new organization or one
that has not operated the type of facility being
proposed.
(ii) There is a demonstration of exceptional
community support such as substantial financial
contributions, and aggressive leadership in the
formation of the organization and proposed
project which indicates a commitment of the
entire community.
(iii) The State Director has determined that
adequate and dependable revenues will be
available to meet all operation expenses, debt
repayment, and the required reserve.
(iv) Prior National Office review and
concurrence is obtained.
(B) Real estate and chattel property taken as security in
accordance with paragraphs (g)(2)(iii)(A)(6) through (9) of
this section:
(1) Ordinarily will include the property that is used
in connection with the facility being financed; and
(2) Will have an as-developed present market value
determined by a qualified appraiser equal to or
exceeding the amount of the loan to be obtained plus
any other indebtedness against the proposed security;
and
40
§1942.17 (g)(2)(iii)(B) (Con.)
RD Instruction 1942-A
(3) May have one of the lien requirements deleted
when the loan approval official determines that the
loan will be adequately secured with a lien on either
the real estate or chattel property.
(C) When security is not available in accordance with
paragraphs (g)(2)(iii)(A)(1) through (5) of this section
and State law precludes securing the loan with liens on
real or chattel property, the loan will be secured in the
best manner consistent with State law and customary
security taken by private lenders in the State, such as
revenue bonds, and any other security the loan approval
official determines necessary for a sound loan. Such loans
will otherwise meet the requirements of (g)(2)(iii)(A)(6)
through (9) of this section as appropriate.
(3) Other-than-public bodies. Loans to other-than-public body
applicants will be secured as follows:
(i) Utility-type facilities eligible for financial assistance
under paragraph (d) of this section such as water and sewer
systems, natural gas distribution systems, electric systems,
etc., will be secured as follows:
(A) Assignments of borrower income will be taken and
perfected by filing, if legally permissible; and
(B) A lien will be taken on the interest of the applicant
in all land, easements, rights-of-way, water rights, water
purchase contracts, water sales contracts, sewage treatment
contracts and similar property rights, including leasehold
interest, used, or to be used in connection with the
facility whether owned at the time the loan is approved or
acquired with loan funds. In unusual circumstances where
it is not feasible to obtain a lien on such land (such as
land rights obtained from Federal or local government
agencies, and from railroads) and the loan approval
official determines that the interest of the United States
otherwise is secured adequately, the lien requirement may
be omitted as to such land rights. (Revised 3-1-88,
SPECIAL PN.)
(2-6-85)
PN 956
41
(Revision 3)
RD Instruction 1942-A
§1942.17 (g)(3)(i) (Con.)
(C) When the loan is approved or the acquisition of real
property is subject to an outstanding lien indebtedness,
the next highest priority lien obtainable will be taken if
the loan approval official determines that the loan is
adequately secured.
(D) Other security. Promissory notes from individuals,
stock or membership subscription agreements, individual
member's liability agreements, or other evidences of debt,
as well as mortgages or other security instruments
encumbering the private property of members of the
association may be pledged or assigned to the United States
as additional security in any case in which the interest of
the United States will not be otherwise adequately
protected.
(E) In those cases where there is a substantial number of
other than full-time users and facility costs result in a
higher than reasonable rate for such full-time users, the
loan will be secured by an assignment or pledge of general
obligation bonds, taxes, or assessments from public bodies
or other organizations having the authority to issue bonds
or pledge such taxes, or assessments. (Revised 05-19-92,
SPECIAL PN.)
(ii) Solid waste projects. The type of security required will
be based on State law and what is determined adequate to protect
the interest of the United States during the repayment period of
the loan. (Revised 03-01-95, PN 241.)
(iii) Essential community facilities other than utility type
such as those for public health and safety, social, and cultural
needs and the like will meet the following security
requirements:
(A) Such loans will be secured by one or a combination of
the following and in the following order of preference:
(1) An assignment of assured income that will be
available for the life of the loan, from sources such
as insurance premium rebates, income from endowments,
irrevocable trusts, or commitments from industries,
public bodies, or other reliable sources.
42
(Revision 3)
§1942.17 (g)(3)(iii)(A) (Con.)
RD Instruction 1942-A
(2) Liens on real and chattel property with an
assignment of income from applicants who have been in
existence and are able to present evidence of a
financially successful operation of a similar facility
for a period of time sufficient to indicate project
success. National Office concurrence is required when
the applicant has been in existence for less than five
years or has not operated on a financially successful
basis for at least the five years immediately prior to
loan application.
(3) Liens on real and chattel property and an
assignment of income from an organization receiving
HHS operating grants under the "Memorandum of
Understanding Between Health Resources and Services
Administration, U.S. Department of Health and Human
Services and Rural Development, U.S. Department of
Agriculture" (see RD Instruction 2000-T, available in
any Rural Development office).
(4) Liens on real and chattel property when legally
permissible and an assignment of income from an
organization proposing a facility whose users receive
reliable income from programs such as social security,
supplemental security income (SSI), retirement plans,
long-term insurance annuities, Medicare or Medicaid.
Examples are homes for the handicapped or institutions
whose clientele receive State or local government
assistance.
(5) When the applicant cannot meet the criteria in
paragraphs (g)(3)(iii)(A)(1) through (4) of this
section, such proposals may be considered when all the
following are met:
(i) The applicant is a new organization or one
that has not operated the type of facility being
proposed.
(ii) There is a demonstration of exceptional
community support such as substantial financial
contributions, and aggressive leadership in the
formation of the organization and proposed
project which indicates a commitment of the
entire community.
(2-6-85)
PN 956
43
(Revision 1)
RD Instruction 1942-A
§1942.17 (g)(3)(iii)(A)(5) (Con.)
(iii) The State Director has determined that
adequate and dependable revenues will be
available to meet all operation expenses, debt
repayment, and the required reserve.
(iv) Prior National Office review and
concurrence is obtained.
(6) Additional security may be taken as determined
necessary by the loan approval official.
(B)
Real estate and chattel property taken as security:
(1) Ordinarily will include the property that is used
in connection with the facility being financed; and
(2) Will have an as-developed present market value
determined by a qualified appraiser equal to or
exceeding the amount of the loan to be obtained plus
any other indebtedness against the proposed security;
and
(3) May have one of the lien requirements deleted
when the loan approval official determines that the
loan will be adequately secured with a lien on either
the real estate or the chattel property.
(h) Economic feasibility requirements. All projects financed under the
provisions of this section must be based on taxes, assessments, revenues,
fees or other satisfactory sources of revenues in an amount sufficient to
provide for facility operation and maintenance, a reasonable reserve, and
debt payment. An overall review of the applicant's financial status,
including a review of all assets and liabilities, will be a part of the
docket review process by the Rural Development staff and approval
official. If the primary use of the facility is by business and the
success or failure of the facility is dependent on the business, then the
economic viability of that business must be assessed. The number of users
for a rural business will be based on equivalent dwelling units, which is
the level of service provided to a typical rural residential dwelling.
(Revised 05-19-92,
SPECIAL PN.)
(1) Financial feasibility reports. All applicants will be expected
to provide a financial feasibility report prepared by a qualified
firm or individual. These financial feasibility reports will
normally be:
44
(Revision 1)
§1942.17 (h)(1) (Con.)
RD Instruction 1942-A
(i) Included as part of the preliminary engineer/ architectural
report using Guides 6 through 10 as applicable; or
(ii) Prepared by a qualified firm or individual not having a
direct interest in the management or construction of the
facility using Guide 5 when:
(A) The project will significantly affect the applicant's
financial operations and is not a utility-type facility but
is dependent on revenues from the facility to repay the
loan; or
(B)
It is specifically requested by Rural Development.
(2) Applicants for loans for utility-type facilities dependent on
users fees for debt payment shall base their income and expense
forecast on realistic user estimates in accordance with the
following:
(i) In estimating the number of users and establishing rates or
fees on which the loan will be based for new systems and for
extensions or improvements to existing systems, consideration
should be given to the following:
44A
(Added 05-19-92, SPECIAL PN)
(2-6-85)
PN 956
§1942.17 (h) (2) (i) (Con.)
RD Instruction 1942-A
(A) An estimated number of maximum initial users should
not be used when setting user fees and rates since it may
be several years before all residents in the community will
need the services provided by the system. In establishing
rates a realistic number of initial users should be
employed.
(B) User agreements from individual vacant property owners
will not be considered when determining project feasibility
unless:
(1) The owner has plans to develop the property in a
reasonable period of time and become a user of the
facility; and
(2) The owner agrees in writing to make a monthly
payment at least equal to the proportionate share of
debt service attributable to the vacant property until
the property is developed and the facility is utilized
on a regular basis. A bond or escrowed security
deposit must be provided to guarantee this monthly
payment and to guarantee an amount at least equal to
the owner's proportionate share of construction costs.
If a bond is provided, it must be executed by a surety
company that appears on the Treasury Department's most
current list (Circular 570, as amended) and be
authorized to transact business in the State where the
project is located. The guarantee shall be payable
jointly to the borrower and Rural Development; and
(3) Such guarantee will mature not later than 4 years
from the date of execution and will be finally due and
payable upon default of a monthly payment or at
maturity, unless the property covered by the guarantee
has been developed and the facility is being utilized
on a regular basis.
(C) Income from other vacant property owners will be
considered only as extra income.
(ii)
Realistic user estimates will be established as follows:
(A) Meaningful potential user cash contributions.
Potential user cash contributions are required except:
(2-6-85, PN 956)
45
RD Instruction 1942-A
§1942.17 (h)(2)(ii)(A) (Con.)
(1)
For users presently receiving service, or
(2) Where Rural Development determines that the
potential users as a whole in the applicant's service
area cannot make cash contributions, or
(3) Where State statutes or local ordinances require
mandatory use of the system and the applicant or legal
entity having such authority agrees in writing to enforce
such statutes, or ordinances.
(B) The amount of cash contributions required in paragraph
(h)(2)(ii)(A) of this section will be set by the applicant and
concurred in by Rural Development. Contributions should be an
amount high enough to indicate sincere interest on the part of
the potential user, but not so high as to preclude service to
low income families. Contributions ordinarily should be an
amount approximating one year's minimum user fee, and shall be
paid in full before loan closing or commencement of
construction, whichever occurs first. Once economic
feasibility is ascertained based on a demonstration of
meaningful potential user cash contributions, the
contribution, membership fee or other fees that may be imposed
are not a requirement of Rural Development under this section.
However, borrowers do have an additional responsibility
relating to generating sufficient revenues as set forth in
paragraph (n)(2)(iii) of this section.
(C) Enforceable user agreement. Except for users presently
receiving service, an enforceable user agreement with a
penalty clause is required unless State statutes or local
ordinances require mandatory use of the system and the
applicant or legal entity having such authority agrees in
writing to enforce such statutes or ordinances.
(iii) In those cases where all or part of the borrower's debt
payment revenues will come from user fees, applicants must provide
a positive program to encourage connection by all users as soon as
service is available. The program will be available for review and
approval by Rural Development before loan closing or commencement
of construction, whichever occurs first. Such a program shall
include:
(A) An aggressive information program to be carried out
during the construction period. The borrower should send
written notification to all signed users
46
§1942.17 (h) (2) (iii) (A) (Con.)
RD Instruction 1942-A
at least three weeks in advance of the date service will be
available, stating the date users will be expected to have
their connections completed, and the date user charges will
begin.
(B) Positive steps to assure that installation services
will be available. These may be provided by the contractor
installing the system, local plumbing companies, or local
contractors.
(C) Aggressive action to see that all signed users can
finance their connections. This might require collection
of sufficient user contributions to finance connections.
Extreme cases might necessitate additional loan funds for
this purpose; however, loan funds should be used only when
absolutely necessary and when approved by Rural Development
prior to loan closing.
(3) Utility-type facilities for new developing communities or areas.
Developers are normally expected to provide utility-type facilities
in new or developing areas and such facilities shall be installed in
compliance with appropriate State statutes and regulations. Rural
Development financing will be considered to an eligible applicant in
such cases when failure to complete development would result in an
adverse economic condition for the rural area (not the community
being developed); the proposal is necessary to the success of an area
development plan; and loan repayment can be assured by:
(i) The applicant already having sufficient assured revenues to
repay the loan; or
(ii) Developers providing a bond or escrowed security deposit
as a guarantee sufficient to meet expenses attributable to the
area in question until a sufficient number of the building sites
are occupied and connected to the facility to provide enough
revenues to meet operating, maintenance, debt service, and
reserve requirements. Such guarantees from developers will meet
the requirements in paragraph (h)(2)(i)(B) of this section; or
(iii) Developers paying cash for the increased capital cost and
any increased operating expenses until the developing area will
support the increased costs; or
(iv) The full faith and credit of a public body where the debt
is evidenced by general obligation bonds; or
(2-6-85, PN 956)
47
RD Instruction 1942-A
§1942.17 (h) (3) (Con.)
(v) The loan is to a public body evidenced by a pledge of tax
assessments; or
(vi) The user charges can become a tax lien upon the property
being served and income from such lien can be collected in
sufficient time to be used for its intended purposes.
(i) Reserve requirements. Provision for the accumulation of necessary
reserves over a reasonable period of time will be included in the loan
documents and in assessments, tax levies, or rates charged for services.
In those cases where statutes providing for extinguishing assessment liens
of public bodies when properties subject to such liens are sold for
delinquent State or local taxes, special reserves will be established and
maintained for the protection of the borrower's assessment lien.
(1) General obligation or special assessment bonds. Ordinarily, the
requirements for reserves will be considered to have been met if
general obligation or other bonds which pledge the full faith and
credit of the political subdivision are used, or special assessment
bonds are used, and if such bonds provide for the annual collection
of sufficient taxes or assessments to cover debt service, operation
and maintenance, and a reasonable amount for emergencies and to
offset the possible nonpayment of taxes or assessments by a
percentage of the property owners, or a statutory method is provided
to prevent the incurrence of a deficiency.
(2) Other than general obligation or special assessment bonds. Each
borrower will be required to establish and maintain reserves
sufficient to assure that loan installments will be paid on time, for
emergency maintenance, for extensions to facilities, and for
replacement of short-lived assets which have a useful life
significantly less than the repayment period of the loan. It is
expected that borrowers issuing bonds or other evidences of debt
pledging facility revenues as security will ordinarily plan their
reserve to provide for a total reserve in an amount at least equal to
one average loan installment. It is also expected that ordinarily
such reserve will be accumulated at the rate of at least one-tenth of
the total each year until the desired level is reached.
(j)
General requirements.
(1) Membership authorization. For organizations other than public
bodies, the membership will authorize the project and its financing
except that the State Director may, with the concurrence of OGC,
48
§1942.17 (j) (1) (Con.)
RD Instruction 1942-A
accept the loan resolution without such membership authorization when
State statutes and the organization's charter and bylaws do not
require such authorization; and
(i) The organization is well established and is operating with
a sound financial base; or
(ii) For utility-type projects the members of the organization
have all signed an enforceable user agreement with a penalty
clause and have made the required meaningful user cash
contribution, except for members presently receiving service or
when State statutes or local ordinances require mandatory use of
the facility.
(2)
Planning, bidding, contracting, constructing.
(See §1942.18).
(3) Insurance and fidelity bonds. The purpose of Rural
Development's insurance and fidelity bond requirements is to protect
the government's financial interest based on the facility financed.
The requirements below apply to all types of coverage determined
necessary. The National Office may grant exceptions to normal
requirements when appropriate justification is provided establishing
that it is in the best interest of the applicant/borrower and will
not adversely affect the government's interest. (Revised 5-3-89,
SPECIAL PN)
(i)
General.
(A) Applicants must provide evidence of adequate insurance
and fidelity bond coverage by loan closing or start of
construction, whichever occurs first. Adequate coverage in
accordance with this section must then be maintained for
the life of the loan. It is the responsibility of the
applicant/borrower and not that of Rural Development to
assure that adequate insurance and fidelity bond coverage
is maintained.
(B) Insurance and fidelity bond requirements by Rural
Development shall normally not exceed those proposed by the
applicant/borrower if the Rural Development loan approval
or servicing official determines that proposed coverage is
adequate to protect the government's financial interest.
Applicants/borrowers are encouraged
(2-6-85, PN 956)
49
(Revision 2)
RD Instruction 1942-A
§1942.17 (j) (3) (i) (B) (Con.)
to have their attorney, consulting engineer/architect,
and/or insurance provider(s) review proposed types and
amounts of coverage, including any deductible provisions.
If the Rural Development official and the
applicant/borrower cannot agree on the acceptability of
coverage proposed, a decision will be made by the State
Director.
(C) The use of deductibles, i.e., an initial amount of
each claim to be paid by the applicant/borrower, may be
allowed by Rural Development providing the
applicant/borrower has financial resources which would
likely be adequate to cover potential claims requiring
payment of the deductible.
(D) Borrowers must provide evidence to Rural Development
that adequate insurance and fidelity bond coverage is being
maintained. This may consist of a listing of policies and
coverage amounts in yearend reports submitted with
management reports required under section 1942.17(q)(2) or
other documentation. The borrower is responsible for
updating and/or renewing policies or coverage which expire
between submissions to Rural Development. Any monitoring
of insurance and fidelity bond coverage by Rural
Development is solely for the benefit of Rural Development,
and does not relieve the applicant/borrower of its
obligation under the loan resolution to maintain such
coverage.
(ii) Fidelity bond. Applicants/borrowers will provide fidelity
bond coverage for all persons who have access to funds.
Coverage may be provided either for all individual positions or
persons, or through "blanket" coverage providing protection for
all appropriate employees and/or officials. An exception may be
granted by the State Director when funds relating to the
facility financed are handled by another entity and it is
determined that the entity has adequate coverage or the
government's interest would otherwise be adequately protected.
(A) The amount of coverage required by Rural Development
will normally approximate the total annual debt service
requirements for the Rural Development loans.
50
(Revision 2)
§1942.17 (j) (3) (ii) (Con.)
RD Instruction 1942-A
(B) Form RD 440-24, "Position Fidelity Schedule Bond" may
be used. Similar forms may be used if determined
acceptable to Rural Development. Other types of coverage
may be considered acceptable if it is determined by Rural
Development that they fulfill essentially the same purpose
as a fidelity bond.
(iii) Insurance. The following types of coverage must be
maintained if appropriate for the type of project and entity
involved:
(A) Property insurance. Fire and extended coverage will
normally be maintained on all structures except as noted in
§§(j)(3)(iii)(A)(1) and (2) below. Ordinarily, Rural
Development should be listed as mortgagee on the policy
when Rural Development has a lien on the property.
Normally, major items of equipment or machinery located in
the insured structures must also be covered. Exceptions:
(1) Reservoirs, standpipes, elevated tanks, and other
structures built entirely of noncombustible materials
if such structures are not normally insured.
(2) Subsurface lift stations except for the value of
electrical and pumping equipment therein.
(B) Liability and property damage insurance, including
vehicular coverage.
(C) Malpractice insurance. The need and requirements for
malpractice insurance will be carefully and thoroughly
considered in connection with each health care facility
financed.
(D) Flood insurance. Facilities located in special floodand mudslide-prone areas must comply with the eligibility
and insurance requirements of Subpart B of Part 1806 of
this chapter (RD Instruction 426.2).
(E) Worker's compensation. The borrower will carry
worker's compensation insurance for employees in accordance
with State laws.
50A
(Added 5-3-89, SPECIAL PN)
RD Instruction 1942-A
§1942.17 (j) (Con.)
(4) Acquisition of land, easements, water rights, and existing
facilities. Applicants are responsible for acquisition of all
property rights necessary for the project and will determine that
prices paid are reasonable and fair. Rural Development may require
an appraisal by an independent appraiser or Rural Development
employee.
(i) Title for land, rights-of-way, easements, or existing
facilities. The applicant must certify and provide a legal
opinion relative to the title to rights-of-way and easements.
Form RD 442-21, "Rights-of-Way Certificate," and Form RD 442-22,
"Opinion of Counsel Relative to Rights-of-Way," may be used.
(A) Rights-of-way and easements. Applicants are
responsible for and will obtain valid, continuous and
adequate rights-of-way and easements needed for the
50B
(Added 5-3-89, SPECIAL PN)
§1942.17 (j)(4)(i)(A) (Con.)
RD Instruction 1942-A
construction, operation, and maintenance of the facility.
Form RD 442-20, "Right-of-Way Easement," may be used. When a
site is for major structures for utility-type facilities such
as a reservoir or pumping station and the applicant is able to
obtain only a right-of-way or easement on such a site rather
than a fee simple title, the applicant will furnish a title
report thereon by the applicant's attorney showing ownership
of the land and all mortgages or other lien defects,
restrictions, or encumbrances, if any. It is the
responsibility of the applicant to obtain and record such
releases, consents or subordinations to such property rights
from holders of outstanding liens or other instruments as may
be necessary for the construction, operation, and maintenance
of the facility and give Rural Development the required
security.
(B) Title for land or existing facilities. Title to land
essential to the successful operation of facilities or title
to facilities being purchased, must not contain any
restrictions that will adversely affect the suitability,
successful operation, security value, or transferability of
the facility. Title opinions must be provided by the
applicant's attorney. The opinions must be in sufficient
detail to assess marketability of the property. Form RD 19279, "Preliminary Title Opinion," and Form RD 1927-10, "Final
Title Opinion," may be used to provide the required title
opinions. If other forms are used they must be reviewed and
approved by Rural Development and OGC.
(Revised 03-31-92 SPECIAL PN.)
(1) In lieu of receiving title opinions from the
applicant's attorney, the applicant may use a title
insurance company. If a title insurance company is used,
the company must provide Rural Development a title
insurance binder, disclosing all title defects or
restrictions, and include a commitment to issue a title
insurance policy. The policy should be in an amount at
least equal to the market value of the property as
improved. The title insurance binder and commitment
should be provided to Rural Development prior to
requesting closing instructions. Rural Development will
be provided a title insurance policy which will insure
Rural Development's interest in the property without any
title defects or restrictions which have not been waived
by Rural Development.
(2-6-85, PN 956)
51
(Revision 1)
RD Instruction 1942-A
§1942.17 (j)(4)(i)(B) (Con.)
(2) The loan approval official may waive title
defects or restrictions, such as utility easements,
that do not adversely affect the suitability,
successful operation, security value, or
transferability of the facility. If the District
Director is the loan approval official and is unable
to waive the defect or restriction, the title opinion
or title insurance binder will be forwarded to the
State Director. If the State Director, with the
advice of the OGC, determines that the defect or
restriction cannot be waived, the defect or
restriction must be removed.
(ii) Water rights. When legally permissible, an assignment
will be taken on water rights owned or to be acquired by the
applicant. The following will be furnished as applicable:
(A) A statement by the applicant's attorney regarding the
nature of the water rights owned or to be acquired by the
applicant (such as conveyance of title, appropriation and
decree, application and permit, public notice and
appropriation and use).
(B) A copy of a contract with another company or
municipality to supply water; or stock certificates in
another company which represents the right to receive
water.
(iii)
Land purchase contract:
(A) A land purchase contract (known in some areas as a
contract for deed) is an agreement between two or more
parties which obligates the purchaser to pay the purchase
price, gives the purchaser the rights of immediate
possession, control, and beneficial use of the property,
and entitles the purchaser to a deed upon paying all or a
specified part of the purchase price.
(B) Applicants may obtain land through land purchase
contracts when all of the following conditions are met:
(1) The applicant has exhausted all reasonable means
of obtaining outright fee simple title to the
necessary land.
52
(Revision 1)
§1942.17 (j)(4)(iii)(B) (Con.)
RD Instruction 1942-A
(2) The applicant cannot obtain the land through
condemnation.
(3)
There are no other suitable sites available.
52A
(Added 03-31-92, SPECIAL PN)
(2-6-85, PN 956)
§1942.17 (j) (4) (iii) (B) (Con.)
RD Instruction 1942-A
(4) National Office concurrence is obtained in
accordance with paragraph (j)(4)(iii)(D)(2) of this
section.
(C) The land purchase contract must provide for the
transfer of ownership by the seller without any
restrictions, liens or other title defects. The contract
must not contain provisions for future advances (except for
taxes, insurance, or other costs needed to protect the
security), summary cancellations, summary forfeiture, or
other clauses that may jeopardize the Government's interest
or the purchaser's ability to pay the Rural Development
loan. The contract must provide that if the purchaser
fails to make payment that Rural Development will be given
at least 90 days written notice with an option to cure the
default before the contract can be canceled, terminated or
foreclosed. Then Rural Development must have the option of
making the payment and charging it to the purchaser's
account, making the payment and taking over the ownership
of the purchase contract, or taking any other action
necessary to protect the Government's interest.
(D) Prior to loan closing or the beginning of
construction, whichever occurs first, the following actions
must be taken in the order listed below:
(1) The land purchase contract and any appropriate
title opinions must be reviewed by the Regional
Attorney to determine if they are legally sufficient
to protect the interest of the Government.
(2) The land purchase contract, the Regional
Attorney's comments, and the State Director's
recommendations must be submitted to the National
Office for concurrence.
(3)
The land purchase contract must be recorded.
(5) Lease agreements. Where the right of use or control of real
property not owned by the applicant/borrower is essential to the
successful operation of the facility during the life of the loan,
such right will be evidenced by written agreements or contracts
between the owner(s) of the property and the applicant/borrower.
Lease agreements shall not contain provisions for restricted use of
the site or facility, forfeiture or summary cancellation clauses and
shall provide for the right to transfer and lease without
restriction. Lease agreements will ordinarily be written for a term
at least equal to the term of the loan. Such lease
53
(Revision 1)
(2-6-85, PN 956)
RD Instruction 1942-A
§1942.17 (j) (5) (Con.)
contracts or agreements will be approved by the Rural Development
loan approval official with the advice and counsel of the Regional
Attorney, OGC, as to the legal sufficiency of such documents. A copy
of the lease contract or agreement will be included in the loan
docket.
(6) Notes and bonds. Notes and bonds will be completed on the date
of loan closing except for the entry of subsequent multiple advances
where applicable. The amount of each note will be in multiples of
not less than $100. The amount of each bond will ordinarily be in
multiples of not less than $1,000.
(i) Form RD 440-22, "Promissory Note (Association or
Organization)," will ordinarily be used for loans to nonpublic
bodies.
(ii) §1942.19 contains instructions for preparation of notes
and bonds evidencing indebtedness of public bodies.
(7) Environmental review requirements. Loans made under this
subpart must comply with the environmental review requirements in
accordance with 7 CFR part 1970. (Revised 04-01-16, SPECIAL PN.)
(8) Health care facilities. The applicant will be responsible for
obtaining the following documents:
(i) A statement from the responsible State agency certifying
that the proposed health care facility is not inconsistent with
the State Medical Facilities Plan.
(ii) A statement from the responsible State agency or regional
office of the Department of Health and Human Services certifying
that the proposed facility meets the standards in §1942.18
(d)(4)
(9) Public information. Applicants should inform the general public
regarding the development of any proposed project. Any applicant not
required to obtain authorization by vote of its membership or by
public referendum, to incur the obligations of the proposed loan or
grant, will hold at least one public information meeting. The public
meeting must be held after the preapplication is filed and not later
than loan approval. The meeting must give the citizenry an
opportunity to become acquainted with the proposed project and to
comment on such items as economic and environmental impacts, service
area, alternatives to the project, or any other issue identified by
Rural Development. The applicant will be required, at least 10 days
prior to the meeting, to publish a notice of the meeting in a
newspaper of
54
(Revision 1)
§1942.17 (j) (9) (Con.)
RD Instruction 1942-A
general circulation in the service area, to post a public notice at the
applicant's principal office, and to notify Rural Development. The
applicant will provide Rural Development a copy of the published notice
and minutes of the public meeting. A public meeting is not normally
required for subsequent loans which are needed to complete the financing
of the project.
(10) Service through individual installation. Community owned water or
waste disposal systems may provide service through individual
installations or small clusters of users within the applicant's service
area. When individual installations or small clusters are proposed, the
loan approval official should consider items such as: quantity and
quality of the individual installations that may be developed; cost
effectiveness of the individual facility compared with the initial and
long term user cost on a central system; health and pollution problems
attributable to individual facilities; operational or management
problems peculiar to individual installations; and permit and regulatory
agency requirements.
(i) Applicants providing service through individual facilities
must meet the eligibility requirements in §1942.17 (b).
(ii) Rural Development must approve the form of agreement between
the owner and individual users for the installation, operation and
payment for individual facilities.
(iii) If taxes or assessments are not pledged as security, owners
providing service through individual facilities must obtain
security as necessary to assure collection of any sum the
individual user is obligated to pay the owner.
(iv) Notes representing indebtedness owed the owner by a user for
an individual facility will be scheduled for payment over a period
not to exceed the useful life of the individual facility or the
loan, whichever is shorter. The interest rate will not exceed the
interest rate charged the owner on the Rural Development
indebtedness.
(v) Owners providing service through individual or cluster
facilities must obtain:
(A) Easements for the installation and ingress to and egress
from the facility; and
(B) An adequate method for denying service in the event of
nonpayment of user fees.
(11) Funds from other sources. Rural Development loan funds may be
used along with or in connection with funds provided by the applicant or
from
(2-6-85, PN 956)
55
(Revision 1)
RD Instruction 1942-A
§1942.17 (j) (Con.)
other sources. Since "matching funds" is not a requirement for Rural
Development loans, shared revenues may be used with Rural Development funds
for project construction.
(k) Other Federal, State, and local requirements. Each application shall
contain the comments, necessary certifications and recommendations of
appropriate regulatory or other agency or institution having expertise in the
planning, operation, and management of similar facilities. Proposals for
facilities financed in whole or in part with Rural Development funds will be
coordinated with appropriate Federal, State, and local agencies in accordance
with the following:
(1) Compliance with special laws and regulations. Except as provided
in paragraph (k)(2) of this section, applicants will be required to
comply with Federal, State, and local laws and any regulatory commission
rules and regulations pertaining to: (Revised 3-1-88, SPECIAL PN.)
(i) Organization of the applicant and its authority to construct,
operate, and maintain the proposed facilities;
(ii) Borrowing money, giving security therefore, and raising
revenues for the repayment thereof;
(iii) Land use zoning; and
(iv) Health and sanitation standards and design and installation
standards unless an exception is granted by Rural Development.
(2) Compliance exceptions. If there are conflicts between this subpart
and State or local laws or regulatory commission regulations, the
provisions of this subpart will control. (Revised 3-1-88, SPECIAL PN.)
(3) State Pollution Control or Environmental Protection Agency
Standards. Water and waste disposal facilities will be designed,
installed, and operated in such a manner that they will not result in
the pollution of water in the State in excess of established standards
and that any effluent will conform with appropriate State and Federal
Water Pollution Control Standards. A certification from the appropriate
State and Federal agencies for water pollution control standards will be
obtained showing that established standards are met. (Renumbered 3-188, SPECIAL PN.)
(4) Consistency with other development plans. Rural Development
Financed facilities will not be inconsistent with any development plans
of State, multijurisdictional areas, counties, or municipalities in
which the proposed project is located. (Renumbered 3-1-88, SPECIAL PN.)
(5) State agency regulating water rights. Each Rural Development
financed facility will be in compliance with appropriate State agency
regulations which have control of the appropriation, diversion,
56
(Revision 1)
RD Instruction 1942-A
§ 1942.17(k)(5) (Con.)
storage and use of water and disposal of excess water. All of the
rights of any landowners, appropriators, or users of water from any
source will be fully honored in all respects as they may be affected
by facilities to be installed. (Renumbered 03-01-88, SPECIAL PN.)
(6) Civil Rights Act of 1964. The Act states that no person shall,
on the ground of race, color or national origin, be excluded from
participation in, be denied the benefits to, or be subject to
discrimination under any program or activity receiving financial
assistance. All borrowers are subject to, and facilities must be
operated in accordance with, Title VI of the Act and Subpart E of
Part 1901 of this chapter, etc. (Renumbered 03-01-88, SPECIAL PN.)
(7) Title IX of the Education Amendments of 1972. No person in the
United States shall, on the basis of sex, be excluded from
participation in, be denied the benefits of, or be subject to
discrimination under any education program or education activity
receiving agency financial assistance except as otherwise provided
for in the Education Amendments of Title IX. The State Director will
provide guidance and technical assistance to carry out the intent of
this paragraph. (Renumbered 03-01-88, SPECIAL PN.)
(8) Section 504 of the Rehabilitation Act of 1973. Under section
504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 794), no
handicapped individual in the United States shall, solely by reason
of their handicap, be excluded from participation in, be denied the
benefits of, or be subject to discrimination under any program or
activity receiving agency financial assistance. (Renumbered 03-0188, SPECIAL PN.)
(9) Age Discrimination Act of 1975. This Act provides that no
person in the United States shall on the basis of age, be excluded
from participation in, be denied the benefits of, or be subjected to
discrimination under any program or activity receiving Federal
financial assistance. This Act also applies to programs or
activities funded under the State and Local Fiscal Assistance Act
of 1972 (31 U.S.C. 1221 et. seq.). This Act does not apply to:
(a) age distinctions contained in Federal, State or local statutes or
ordinances adopted by an elected, general purpose legislative body
which provides benefits or assistance based on age; (b) established
intended beneficiaries or target groups in age-related terms; and,
(d) any employment practice of any employer, employment agency, labor
organization, or any labor-management joint apprenticeship training
program except for any program or activity receiving Federal
financial assistance for public service employment under the
Comprehensive Employment and Training Act of 1974 (CETA) (29 U.S.C.
801 et seq.). (Renumbered 03-01-88, SPECIAL PN.)
(02-06-85)
PN 956
57
(Revision 5)
RD Instruction 1942-A
§ 1942.17 (Con.)
(l)
Professional services and contracts related to the facility.
(1) Professional services. Applicants will be responsible for
providing the services necessary to plan projects including design of
facilities, preparation of cost and income estimates, development of
proposals for organization and financing, and overall operation and
maintenance of the facility. Professional services of the following
may be necessary: engineer, architect, attorney, bond counsel,
accountant, auditor, appraiser, and financial advisory or fiscal
agent (if desired by applicant). Contracts or other forms of
agreement between the applicant and its professional and technical
representatives are required and are subject to agency concurrence.
Form RD 1942-19, "Agreement for Engineering Services," may be used
when appropriate. Guide 20, "Agreement for Engineering Services
(Agency/EPA - Jointly Funded Projects)," may be used on projects
jointly funded by the Agency and EPA. Guide 14 may be used in the
preparation of the legal services agreement. Guide 27, Attachment 1
to AIA Document B141, 1997 Edition, "Standard Form of Agreement
Between owner and Architect," may be used when appropriate. (Revised
08-26-98, PN 296.)
(2) Bond counsel. Unless otherwise provided by § 1942.19(b), public
bodies are required to obtain the services of recognized bond counsel
in the preparation of evidence of indebtedness.
(3) Contracts for other services. Contracts or other forms of
agreements for other services including management, operation, and
maintenance will be developed by the applicant and presented to
agency for review and approval. Management agreements should provide
at least those items in Guide 24.
(4) Fees. Fees provided for in contracts or agreements shall be
reasonable. They shall be considered to be reasonable if not in
excess of those ordinarily charged by the professional for similar
work when agency financing is not involved. An Engineer Fee Analysis
described in the attached Automation Supplement may be used as an aid
in reviewing the engineer fees described herein.
(m)
Applying for Agency loans.
(1) Preapplication. Applicants desiring loans will file SF 424.2
and comments from the appropriate A-95 clearinghouse agency normally
with the appropriate agency County Office. The County Supervisor
will immediately forward all documents to the District Office. The
District Director has prime responsibility for all community program
loan making and servicing activities within the District.
(Revised 04-11-90, SPECIAL PN.)
58
(Revision 5)
RD Instruction 1942-A
§ 1942.17(m) (Con.)
(2) Preapplication review. Upon receipt of the preapplication, the
agency will tentatively determine eligibility including the
likelihood of credit elsewhere at reasonable rates and terms and
availability of agency loan funds. The determination as to the
availability of
58A
(Added 08-26-98, PN 296)
(02-06-85)
PN 956
§1942.17 (m)(2) (Con.)
RD Instruction 1942-A
other credit will be made after considering present rates and terms
available for similar proposals (not necessarily based upon rates and
terms available from Rural Development); the repayment potential of
the applicant; long-term cost to the applicant; and average user or
other charges. In those cases where Rural Development determines
that loans at reasonable rates and terms should be available from
commercial sources, Rural Development will notify the applicant so
that it may apply for such financial assistance. Such applicants may
be reconsidered for Rural Development loans upon their presenting
satisfactory evidence of inability to obtain commercial financing at
reasonable rates and terms.
(3) Incurring obligations. Applicants should not proceed with
planning nor obligate themselves for expenditures until authorized by
Rural Development.
(4) Results of preapplication review. After Rural Development has
reviewed the preapplication material and any additional material that
may be requested, Form AD-622 will be sent to the applicant.
Ordinarily the review will not exceed 45 days.
(5) Application conference. Before starting to assemble the
application and after the applicant selects its professional and
technical representatives, it should arrange with Rural Development
for an application conference to provide a basis for orderly
application assembly. Rural Development will provide applicants with
a list of documents necessary to complete the application. Guide 15
may be used for this purpose. Applications will be filed with the
District Office.
(6) Application completion and assembling. This is the
responsibility of the applicant with guidance from Rural Development.
The applicant may utilize their professional and technical
representatives or other competent sources.
(7) Review of decision. If an application is rejected, the
applicant may request a review of this decision under Subpart B of
Part 1900 of this chapter.
(n)
Actions prior to loan closing and start of construction.
(1) Excess Rural Development loan and grant funds. If there is a
significant reduction in project cost, the applicant's funding needs
will be reassessed before loan closing or the start of construction,
whichever occurs first. In such cases applicable Rural Development
forms, the letter of conditions, and other items will be revised.
Decreases in Rural Development funds will be based on revised
project costs and current number of users, however, other factors
including Rural Development regulations used at the time of
loan/grant approval will remain the same. Obligated loan or grant
funds not needed to complete the proposed project will be
deobligated.
59
(Revision 1)
(2-6-85, PN 956)
RD Instruction 1942-A
§1942.17 (n) (Con.)
(2) Loan resolutions. Loan resolutions will be adopted by both
public and other-than-public bodies using Form RD 1942-47, "Loan
Resolution (Public Bodies)," or Form RD 1942-9, "Loan Resolution
(Security Agreement)." These resolutions supplement other provisions
in this subpart. The applicant will agree:
(i) To indemnify the Government for any payments made or losses
suffered by the Government on behalf of the association. Such
indemnification shall be payable from the same source of funds
pledged to pay the bonds or any other legally permissible
source.
(ii) To comply with applicable local, State and Federal laws,
regulations, and ordinances.
(iii) To provide for the receipt of adequate revenues to meet
the requirements of debt service, operation and maintenance,
establishment of adequate reserves, and to continually operate
and maintain the facility in good condition. Except for
utility-type facilities, free service use may be permitted. If
free services are extended, no distinctions will be made in the
extension of those services because of race, color, religion,
sex, national origin, marital status, or physical or mental
handicap.
(iv) To acquire and maintain such insurance coverage including
fidelity bonds, as may be required by the Government.
(v) To establish and maintain such books and records relating
to the operation of the facility and its financial affairs and
to provide for required audit thereof in such a manner as may be
required by the Government and to provide the Government without
its request, a copy of each such audit and to make and forward
to the Government such additional information and reports as it
may, from time to time, require.
(vi) To provide the Government at all reasonable times, access
to all books and records relating to the facility and access to
the property of the system so that the Government may ascertain
60
(Revision 1)
§1942.17 (n) (2) (vi) (Con.)
RD Instruction 1942-A
that the association is complying with the provisions hereof and of
the instruments incident to the making or insuring of the loan.
(vii) To provide adequate service to all persons within the
service area who can feasibly and legally be served and to obtain
Rural Development's concurrence prior to refusing new or adequate
services to such persons. Upon failure of the applicant to provide
services which are feasible and legal, such person shall have a
direct right of action against the applicant organization.
(viii) To have prepared on its behalf and to adopt an ordinance or
resolution for the issuance of its bonds or notes or other debt
instruments or other such items and in such forms as are required
by State statutes and as are agreeable and acceptable to the
Government.
(ix) To refinance the unpaid balance, in whole or in part, of its
debt upon the request of the Government if at any time it should
appear to the Government that the association is able to refinance
its bonds by obtaining a loan for such purposes from responsible
cooperative or private sources at reasonable rates and terms.
(x) To provide for, execute, and comply with Form RD 400-4,
"Assurance Agreement," and Form RD 400-1, "Equal Opportunity
Agreement," including an "Equal Opportunity Clause," which is to be
incorporated in or attached as a rider to each construction
contract and subcontract in excess of $10,000.
(xi) To place the proceeds of the loan on deposit in a manner
approved by the Government. Funds may be deposited in institutions
insured by the State or Federal Government as invested in readily
marketable securities backed by the full faith and credit of the
United States. Any income from these accounts will be considered
as revenues of the system.
(xii) Not to sell, transfer, lease, or otherwise encumber the
facility or any portion thereof or interest therein, and not to
permit others to do so, without the prior written consent of the
Government.
(xiii) Not to borrow any money from any source, enter into any
contract or agreement, or incur any other liabilities in connection
with making enlargements, improvements or extensions to, or for any
other purpose in connection with the facility (exclusive of normal
maintenance) without the prior written consent of the Government if
such undertaking would involve the source of funds pledged to repay
the debt to Rural Development.
(2-6-85, PN 956)
61
(Revision 1)
RD Instruction 1942-A
§1942.17 (n) (2) (Con.)
(xiv) That upon default in the payments of any principal and
accrued interest on the bonds or in the performance of any
covenant or agreement contained herein or in the instruments
incident to making or insuring the loan, the Government, at its
option, may:
(A) Declare the entire principal amount then outstanding
and accrued interest, due and payable;
(B) For the account of the association (payable from the
source of funds pledged to pay the bonds or notes or any
other legally permissible source), incur and pay reasonable
expenses for repair, maintenance and operation of the
facility and such other reasonable expenses as may be
necessary to cure the cause of default; and/or
(C) Take possession of the facility, repair, maintain and
operate, or otherwise dispose of the facility. Default
under the provisions of the resolution or any instrument
incident to the making or insuring of the loan may be
construed by the Government to constitute default under any
other instrument held by the Government and executed or
assumed by the association and default under any such
instrument may be construed by the Government to constitute
default hereunder.
(3) Interim financing. In all loans exceeding $50,000, where funds
can be borrowed at reasonable interest rates on an interim basis from
commercial sources for the construction period, such interim
financing will be obtained so as to preclude the necessity for
multiple advances of Rural Development funds. Guide 1 or Guide la,
as appropriate, may be used to inform the private lender of Rural
Development's commitment. When interim commercial financing is used,
the application will be processed, including obtaining construction
bids, to the stage where the Rural Development loan would normally be
closed, that is immediately prior to the start of construction. The
Rural Development loan should be closed as soon as possible after the
disbursal of all interim funds. Interim financing may be for a fixed
term provided the fixed term does not extend beyond the time
projected for completion of construction. For this purpose, a fixed
term is when the interim lender cannot be repaid prior to the end of
the stipulated term of the interim instruments. When an Rural
Development Water and Waste Disposal grant is included, any interim
financing involving a fixed term must be for the total Rural
Development loan amount. Multiple advances may be used in
conjunction with interim commercial financing when the applicant is
unable to obtain sufficient funds through interim commercial
financing in an amount equal to the loan. The Rural Development loan
proceeds (including advances) will be used to retire
62
(Revision 1)
§1942.17 (n) (3) (Con.)
RD Instruction 1942-A
the interim commercial indebtedness. Before the Rural Development
loan is closed, the applicant will be required to provide Rural
Development with statements from the contractor, engineer, architect,
and attorney that they have been paid to date in accordance with
their contracts or other agreements and, in the case of the
contractor, that any suppliers and subcontractors have been paid. If
such statements cannot be obtained, the loan may be closed provided:
(i)
Statements to the extent possible are obtained; and
(ii) The interest of Rural Development can be adequately
protected and its security position is not impaired; and
(iii) Adequate provisions are made for handling the unpaid
accounts by withholding or escrowing sufficient funds to pay
such claims.
(4) Obtaining closing instructions. After loan approval, the
completed docket will be reviewed by the State Director. The
information required by OGC will be transmitted to OGC with request
for closing instructions. Upon receipt of the closing instructions
from OGC, the State Director will forward them along with any
appropriate instructions to the District Director. Upon receipt of
closing instructions, the District Director will discuss with the
applicant and its architect or engineer, attorney, and other
appropriate representatives, the requirements contained therein and
any actions necessary to proceed with closing.
(5) Applicant contribution. An applicant contributing funds toward
the project cost shall deposit these funds in its construction
account on or before loan closing or start of construction, whichever
occurs first. Project costs paid prior to the required deposit time
with applicant funds shall be appropriately accounted for.
(6) Evidence of and disbursement of other funds. Applicants
expecting funds from other sources for use in completing projects
being partially financed with Rural Development funds will present
evidence of the commitment of these funds from such other sources.
This evidence will be available before loan closing, or the start of
construction, whichever occurs first. Ordinarily, the funds provided
by the applicant or from other sources will be disbursed prior to the
use of Rural Development loan funds. If this is not possible, funds
will be disbursed on a pro rata basis. Rural Development funds will
not be used to pre-finance funds committed to the project from other
sources.
63
(Revision 1)
(2-6-85, PN 956)
RD Instruction 1942-A
§1942.17 (o)
(o)
Loan closing.
(1) Closing instructions. Loans will be closed in accordance with
the closing instructions issued by OGC.
(2) Obtaining insurance and fidelity bonds. Required property
insurance policies, liability insurance policies, and fidelity bonds
will be obtained by the time of loan closing or start of
construction, whichever occurs first.
(3) Distribution of recorded documents. The originals of the
recorded deeds, easements, permits, certificates of water rights,
leases, or other contracts and similar documents which are not to be
held by Rural Development will be returned to the borrower. The
original mortgage(s) and water stock certificates, if any, if not
required by the recorder's office will be retained by Rural
Development.
(4) Review of loan closing. In order to determine that the loan has
been properly closed, the loan docket will be reviewed by the State
Director and OGC.
(p)
Project monitoring and fund delivery during construction.
(1) Coordination of funding sources. When a project is jointly
financed, the State Director will reach any needed agreement or
understanding with the representatives of the other source of funds
on distribution of responsibilities for handling various aspects of
the project. These responsibilities will include supervision of
construction, inspections and determinations of compliance with
appropriate regulations concerning equal employment opportunities,
wage rates, nondiscrimination in making services or benefits
available, and environmental compliance. If any problems develop
which cannot be resolved locally, complete information should be sent
to the National Office for advice.
(2) Multiple advances. In the event interim commercial financing is
not legally permissible or not available, multiple advances of Rural
Development loan funds are required. An exception to this
requirement may be granted by the National Office when a single
advance is necessitated by State law or public exigency. Multiple
advances will be used only for loans in excess of $50,000. Advances
will be made only as needed to cover disbursements required by the
borrower over a 30-day period. Advances should not exceed 24 in
number nor
64
(Revision 1)
§1942.17 (p) (2) (Con.)
RD Instruction 1942-A
extend longer than two years beyond loan closing. Normally, the
retained percentage withheld from the contractor to assure
construction completion will be included in the last advance.
(i) §1942.19 contains instructions for making multiple advances
to public bodies.
(ii) Advances will be requested by the borrower in writing.
The request should be in sufficient amounts to pay cost of
construction, rights-of-way and land, legal, engineering,
interest, and other expenses as needed. The applicant may use
Form RD 440-11, "Estimate of Funds Needed for 30 Day Period
Commencing _________," to show the amount of funds needed during
the 30-day period.
(iii) Rural Development loan funds obligated for a specific
purpose, such as the paying of interest, but not needed at the
time of loan closing will remain in the Finance Office until
needed unless State statutes require all funds to be delivered
to the borrower at the time of closing. Loan funds may be
advanced to prepay costs under paragraph (d)(l)(iv)(G) of this
section. If all funds must be delivered to the borrower at the
time of closing to comply with State statutes, funds not needed
at loan closing will be handled as follows:
(A) Deposited in an appropriate borrower account, such as
the debt service account, or
(B) Deposited in a supervised bank account under paragraph
(p)(3)(i) of this section.
(3)
Use and accountability of funds.
(i) Supervised bank account. Rural Development loan funds and
any funds furnished by the applicant/borrower to supplement the
loan including contributions to purchase major items of
equipment, machinery, and furnishings may be deposited in a
supervised bank account if determined necessary as provided in
Subpart A of Part 1902 of this chapter. When Rural Development
has a memorandum of understanding with another agency that
provides for the use of supervised bank accounts, or when Rural
Development is the primary source of funds for a project and has
determined that the use of a supervised bank account is
necessary, project funds from other sources may also be
deposited in the supervised bank account. Rural Development
shall not be accountable to the source of the other funds nor
shall Rural Development undertake responsibility to administer
the funding program of the other entity. Supervised bank
accounts should not be used for funds advanced by an interim
lender. (Revised 3-1-88, SPECIAL PN.)
(2-6-85) PN 956
65
(Revision 2)
RD Instruction 1942-A
§1942.17 (p) (3) (Con.)
(ii) Other than supervised bank account. If a supervised bank
account is not used, arrangement will be agreed upon for the prior
concurrence by Rural Development of the bills or vouchers upon
which warrants will be drawn, so that the payments from loan funds
can be controlled and Rural Development records are current. If a
supervised bank account is not used, use Form RD 402-2, "Statement
of Deposits and Withdrawals," or a similar form to monitor funds.
Periodic reviews of nonsupervised accounts shall be made by Rural
Development at the times and in the manner as Rural Development
prescribes in the conditions of loan approval. State laws
regulating the depositories to be used shall be complied with.
(iii) Use of minority owned banks. Applicants are encouraged to
use minority banks (a bank which is owned at least 50 percent by
minority group members) for the deposit and disbursement of funds.
A list of minority owned banks can be obtained from the Office of
Minority Business Enterprise, Department of Commerce, Washington,
D.C. 20230 and is also available in all Rural Development offices.
(4) Development inspections. The District Director will be responsible
for monitoring the construction of all projects being financed, wholly
or in part, with Rural Development funds. Technical assistance will be
provided by the State Director's staff. Project monitoring will include
construction inspections and a review of each project inspection report,
each change order and each partial payment estimate and other invoices
such as payment for engineering/ architectural and legal fees and other
materials determined necessary to effectively monitor each project.
These activities will not be performed on behalf of the
applicant/borrower, but are solely for the benefit of Rural Development
and in no way are intended to relieve the applicant/borrower of
corresponding obligations to conduct similar monitoring and inspection
activities. Project monitoring will include periodic inspections to
review partial payment estimates prior to their approval and to review
project development in accordance with plans and specifications. Each
inspection will be recorded using Form RD 1924-12, "Inspection Reports."
The original Form RD 1924-12 will be filed in project case folder and a
copy furnished to the State Director. The State Director will review
inspection reports and will determine that the project is being
effectively monitored. The District Director is authorized to review
and accept partial payment estimates prepared by the contractor and
approved by the borrower, provided the consulting engineer or architect,
if one is being utilized for the project, has approved the estimates and
certified that all material purchased or work performed is in accordance
with the plans and specifications, or if a consulting engineer or
architect is not being utilized, the District Director has determined
that the funds requested are for authorized purposes. If there is any
indication that construction
66
(Revision 2)
RD Instruction 1942-A
§ 1942.17(p)(4) (Con.)
is not being completed in accordance with the plans and
specifications or that any other problems exist, the District
Director should notify the State Director immediately and withhold
all payments on the contract. (Revised 5-12-87, SPECIAL PN.)
(5) Payment for construction. Each payment for project costs must
be approved by the borrower's governing body. Payment for
construction must be for amounts shown on payment estimate forms.
Form RD 1924-18, "Partial Payment Estimate," may be used for this
purpose or other similar forms may be used with the prior approval of
the State Director or designee. However, the State Director or
designee cannot require a greater reporting burden than is required
by Form RD 1924-18. Advances for contract retainage will not be made
until such retainage is due and payable under the terms of the
contract. The review and acceptance of project costs, including
construction partial payment estimates by the agency, does not attest
to the correctness of the amounts, the quantities shown, or that the
work has been performed under the terms of agreements or contracts.
(Revised 5-12-87, SPECIAL PN.)
(6) Use of remaining funds. Funds remaining after all costs
incident to the basic project have been paid or provided for will not
include applicant contributions. Applicant contributions will be
considered as funds initially expended for the project. Funds
remaining, with exception of applicant contributions, may be
considered in direct proportion to the amounts obtained from each
source. Remaining funds will be handled as follows:
(i) Agency loan and/or grant funds. Remaining funds may be
used for purposes authorized by paragraph (d) of this section,
provided the use will not result in major changes to the
facility design or project and that the purpose of the loan
and/or grant remains the same. (Revised 06-19-97, SPECIAL PN.)
(A) On projects that only involve an agency loan and no
agency grant, funds that are not needed will be applied as
an extra payment on the agency indebtedness unless other
disposition is required by the bond ordinance, resolution,
or State statute.
(B) On projects that involve an agency grant, all
remaining agency funds will be considered to be grant funds
up to the full amount of the grant. Grant funds not
expended under paragraph (p)(6)(i) of this section will be
deobligated.
(2-6-85)
PN 956
67
(Revision 5)
RD Instruction 1942-A
§ 1942.17(p)(6) (Con.)
(ii) Funds from other sources. Funds remaining from other
sources will be handled according to rules, regulations and/or
the agreement governing their participation in the project.
(q)
Borrower accounting methods, management reporting and audits.
(1)
Accounting methods and records.
(i) Method of accounting and financial statements. Financial
statements must be prepared on the accrual basis of accounting
unless State statutes or regulatory agencies provide otherwise,
or an exception is made by the agency. This requirement is for
accrual basis financial statements and not for accrual basis
accounting systems. Organizations may keep their books on an
accounting basis other than accrual and then make adjustments so
that the financial statements are presented on the accrual
basis.
(ii) Approval requirement. Before loan closing or start of
construction, whichever is first, each borrower shall provide
to, and obtain approval from the agency loan approval official
for its accounting and financial reporting system, including the
agreement with its auditor, if an auditor is required.
(iii) Record retention. Each borrower shall retain all records,
books, and supporting material for 3 years after the issuance of
the audit reports and financial statements. Upon request, this
material will be made available to the agency, the Comptroller
General, or to their representatives. (Renumbered 02-24-05,
SPECIAL PN.)
(2) Management reports. These reports will furnish the management
with a means of evaluating prior decisions and serve as a basis for
planning future operations and financial conditions. In those cases
where revenues from multiple sources are pledged as security for an
agency loan, two reports will be required; one for the project being
financed by the agency and one combining the entire operation of the
borrower. In those cases where agency loans are secured by general
obligation bonds or assessments and the borrower combines revenues
from all sources, one management report combining all such revenues
will suffice. The following management data will be submitted by the
borrower to the District Director.
68
(Revision 5)
§1942.17 (q) (2) (Con.)
(i)
RD Instruction 1942-A
Financial information.
(A) Form RD 442-2, "Statement of Budget, Income and
Equity," which includes Schedule I, "Statement of Budget,
Income and Equity," and Schedule 2, "Projected Cash Flow."
(B) Prior to the beginning of each fiscal year, two
copies, with data entered in column three only of Schedule
1, page one, "Annual Budget," and all of Schedule 2, will
be submitted to the District Director. Twenty (20) days
after the end of each of the first three quarters of each
year, two copies with all information furnished on Schedule
1 will be submitted. For the fourth quarter of each year,
submit together with the year-end financial requirements of
paragraphs (q)(4) and (5) of this section. More frequent
submissions may be required by Rural Development when
necessary. The submission dates to the District Director
will be 90 days following year-end for audited statements
and 60 days following year-end for unaudited statements.
The fourth quarter submission may serve the dual purpose of
management report and year-end financial requirement for
Statement of Income. (Revised 3-1-88, SPECIAL PN.)
(ii)
Additional information.
(A) A list of the names and addresses of all members of
the governing body as appropriate, also indicating the
officers and their terms of office, will be included with
the other information required at the end of the year.
(B) Borrowers delinquent on payment to Rural Development
or experiencing financial problems, will develop a positive
action plan to resolve financial problems. The plan will
be reviewed with Rural Development and updated at least
quarterly. Guide 22 may be used for developing a positive
action plan.
(3) Substitute for management reports. When Rural Development loans
are secured by the general obligation of the public body or tax
assessments which total 100 percent of the debt service requirements,
the State Director may authorize an annual audit to substitute for
other management reports if the audit is received within 90 days
following the period covered by the audit. (Revised 3-1-88, SPECIAL
PN.)
(2-6-85, PN 956)
69
(Revision 1)
RD Instruction 1942-A
§1942.17 (q)
(4) Audits. All audits are to be performed in accordance with
generally accepted government auditing standards (GAGAS), using the
publication, "Standards for Audit of Governmental Organizations,
Programs, Activities and Functions," developed by the Comptroller
General of the United States in 1981, and any subsequent revisions. In
addition, the audits are also to be performed in accordance with various
Office of Management and Budget (OMB) Circulars and Rural Development
requirements as specified in the separate sections of this subpart.
(Revised 3-1-88, SPECIAL PN.)
(i) Audits based upon Federal financial assistance received. The
following requirements shall apply to audits of the years in which
funds are received by the borrower.
(A) Local governments and Indian tribes. These organizations
are to be audited in accordance with this subpart and OMB
Circular A-128, with copies of the audits being forwarded by
the borrower to the Rural Development District Director and
the appropriate Federal cognizant agency. The Circular is
attached as Exhibit A (available in any Rural Development
office). For years in which an audit is not required by OMB
Circular A-128, see paragraph (q)(4)(ii) of this section.
(1)
Cognizant agency.
(i) "Cognizant agency" means the Federal agency
assigned by OMB Circular A-128. Within the
Department of Agriculture (USDA), the OIG shall
fulfill cognizant agency responsibilities.
(ii) Cognizant agency assignments. Smaller
borrowers not assigned a cognizant agency by OMB
should contact the Federal agency that provided the
most funds. When USDA is designated as the
cognizant agency or when it has been determined by
the borrower that Rural Development provided the
major portion of Federal financial assistance, the
appropriate USDA OIG Regional Inspector General
shall be contacted. Rural Development and the
borrower shall coordinate all proposed audit plans
with the appropriate USDA OIG. A list of OIG
contact persons is attached as Exhibit B (available
in any Rural Development office).
(2) Audit requirements. It is not intended that audits
required by this subpart be separate and apart from
audits performed in accordance with State and local laws.
To the extent feasible, the audit work should be done in
conjunction with those audits.
70
(Revision 1)
RD Instruction 1942-A
§1942.17 (q)(4)(i)(A)(2) (Con.)
(i) Local governments and Indian tribes that
receive $100,000 or more a year in Federal
financial assistance shall have an audit made in
accordance with OMB Circular A-128.
(ii) Local governments and Indian tribes that
receive between $25,000 and $100,000 a year in
Federal financial assistance shall have an audit
made in accordance with OMB Circular A-128 or in
accordance with Rural Development audit
requirements. This is an option of the local
government or Indian tribe. If the election is
made to have an audit performed in accordance
with Rural Development requirements, the audit
shall be in accordance with paragraph
(q)(4)(i)(B) of this section.
(iii) Local governments and Indian tribes that
receive less than $25,000 a year in Federal
financial assistance shall be exempt from both
OMB Circular A-128 audits and Rural Development
audit requirements, except for those based upon
annual gross income which may apply in paragraph
(q)(4)(ii) of this section. However, any audits
performed shall be governed by the requirements
prescribed by State or local law or regulation.
(Revised 05-26-93, PN 207.)
(iv) Public hospitals and public colleges and
universities may be excluded from OMB Circular A128 audit requirements. If such entities are
excluded, audits shall be made in accordance with
paragraph (q)(4)(i)(B) of this section.
(3) Fraud, abuse, and illegal acts. If the auditor
becomes aware of any indication of fraud, abuse, or
illegal acts in Rural Development financed projects,
prompt written notice shall be given to the
appropriate USDA OIG Regional Inspector General and
the Rural Development District Director.
(2-6-85, PN 956)
70A
(Revision 1)
RD Instruction 1942-A
§1942.17 (q)(4)(i) (Con.)
(B) Nonprofit organizations and others. These
organizations are to be audited in accordance with Rural
Development requirements, and OMB Circular A-110, "Uniform
Requirements for Grants to Universities, Hospitals, and
Other Nonprofit Organizations." These requirements also
apply to public hospitals and public colleges and
universities if they are excluded from the audit
requirements of paragraph (q)(4)(i)(A) of this section.
(1) Audits shall be annual unless otherwise
prohibited and supplied to the Rural Development
District Director as soon as possible but in no case
later than 150 days following the period covered by
the audit. (Revised 05-26-93,
PN 207.)
(2)
Audit requirements.
(i) Borrowers which receive $25,000 or more a
year in Federal financial assistance shall have
an audit. Also, refer to paragraph (q)(4)(ii) of
this section for additional audit requirements.
(ii) Borrowers which receive less than $25,000 a
year in Federal financial assistance shall be
exempt from audits, except for those based upon
annual gross income which may apply in paragraph
(q)(4)(ii) of this section. (Revised 05-26-93,
PN 207.)
(iii) Indications of fraud, abuse, and illegal
acts shall be processed in accordance with
paragraph (q)(4)(i)(A)(3) of this section.
(ii) Audits based upon annual gross income. The following
annual gross income audit requirements shall apply to all
borrowers (local government, Indian tribes, and nonprofit
organizations) for all years except the ones in which there is
an audit requirement based upon the amount of Federal assistance
received as required by paragraphs (q)(4)(i)(A) and (q)(4)(i)(B)
of this section. Audits shall be on an annual basis unless
otherwise prohibited and shall be supplied to the Rural
Development District Director as soon as possible but in no case
later than 150 days following the period covered by the audit.
(Revised 05-26-93, PN 207.)
70B
(Revision 1)
RD Instruction 1942-A
§1942.17 (q)(4)(ii) (Con.)
(A) Gross annual income of $500,000 or more and an unpaid
loan balance exceeding $100,000.
(1) Local governments and Indian tribes shall have
audits made in accordance with State or local law or
regulation or regulatory agency requirements. If no
such requirements exist, audits shall be made in
accordance with OMB Circular A-110 and paragraphs
(q)(4)(i)(B)(1) and (2)(iii) of this section.
(2) All other organizations shall have audits in
accordance with OMB Circular A-110 and paragraph
(q)(4)(i)(B)(1) and (2)(iii) of this section.
(B) Gross annual income of less than $500,000. For
borrowers that have gross annual income of less than
$500,000, the requirements for audits shall be at the
discretion of the State Director. However, when audits are
required, they shall be in accordance with paragraph
(q)(4)(ii)(A) of this section. (Revised 06-30-93, PN 208.)
70C
(Revision 1)
(2-6-85, PN 956)
§1942.17 (q) (5)
RD Instruction 1942-A
(5) Borrowers exempt from audits. All borrowers who are exempt from
Rural Development audit requirements and who do not otherwise have
annual audits, will within 60 days following the end of each fiscal
year, furnish the Rural Development District Director with annual
financial statements, consisting of a verification of the organization's
balance sheet and statement of income and expense by an appropriate
official of the organization. Forms Rural Development 442-2 and 442-3
may be used. For borrowers using Form RD 442-2, the dual purpose of
fourth quarter management reports, when required, and annual statements
of income will be met with this one submission. (Revised 3-1-88,
SPECIAL PN)
(r)
Rural Development actions for borrower supervision and servicing.
(1) Management assistance and management reports. Management
assistance will be based on such factors as observation of borrower
operations and review of the periodic financial reports. The amount and
type of assistance provided will be that needed to assure borrower
success and compliance with its agreements with Rural Development.
(i) The District Director is responsible for obtaining all
management report data from the borrower, promptly reviewing it and
making any necessary recommendations to the borrower within 40
calendar days. However, after receiving management reports for
borrowers whose Rural Development indebtedness exceeds $1,000,000
and for delinquent and problem case borrowers, the District
Director will forward them with comments to the State Director for
review. (Revised 3-1-88, SPECIAL PN.)
(ii)
District Director reviews of borrower operations.
(A) A review of the borrower's total operational and
management practices, including records and accounts to be
maintained, will be made between the beginning of the ninth
and the end of the eleventh full month of the first year of
operation. A report will be made to the State Director by
sending a copy of Form RD 442-4, "District Director Report."
Earlier reviews will be made when needed to resolve
operational and management problems that may arise.
(B) Subsequent reviews will be made for all delinquent and
other borrowers having financial problems and reported to the
State Director by a copy of Form RD 442-4. These borrowers
will adopt a positive action plan (see Guide 22). The plan
will be reviewed quarterly by the District Director until the
delinquency is eliminated or other servicing actions are
recommended.
(2-6-85, PN 956)
71
(Revision 1)
RD Instruction 1942-A
§1942.17 (r) (1) (ii) (Con.)
(C) The District Director may, after the end of the
borrower's third fiscal year of operation, exempt it from
submitting management reports provided it:
(1) Is current on its loan payments.
(2) Is meeting the conditions of its agreements with
Rural Development.
(3) Has demonstrated its ability to successfully operate
and manage the organization and has not obtained
subsequent loans in the last 3 years which have
significantly altered the scope of the project.
(4) Has the State Director's written concurrence for all
borrowers whose Rural Development indebtedness exceeds
$1,000,000. (Revised 3-1-88, SPECIAL PN.)
(D) Borrowers qualifying for this exemption will still be
required to submit a copy of their audits or annual financial
statements.
(E) Ordinarily an exception will not be made to the
requirement for the borrower to submit a copy of its annual
budget.
(F) The District Director or State Director may reinstate the
requirements for submission of periodic management reports for
those borrowers who became delinquent or otherwise are not
carrying out their agreements with Rural Development or
require more frequent submission of management reports. This
requirement will be reinstated for borrowers receiving a
subsequent loan which will significantly alter the scope of
the project.
(G) The District Director may accept management reports which
are not prepared on page 1 of Form RD 442-2 Schedule 1 but
contain like information. However, page 2 of this form must
be used by all borrowers required to furnish management
reports.
(iii)
The State Director is responsible for:
(A) The review of the District Director's submission for all
borrowers whose indebtedness exceeds $1,000,000. The State
Director will forward comments to the District Director in
order that a response, if necessary, can be sent to the
borrower within 40 calendar days after the borrower's
submission of its management reports. (Revised 3-1-88,
SPECIAL PN.)
72
(Revision 1)
§1942.17 (r)(1)(iii) (Con.)
RD Instruction 1942-A
(B) The review of all delinquent and problem case borrower
management reports. Ordinarily, review findings and
instructions regarding further management assistance will
be determined and provided to the District Office within 20
calendar days of submission for delinquent and problem
borrowers. (Revised 3-1-88, SPECIAL PN.)
(C) Forwarding to the National Office copies of review
findings, instructions for further assistance, and positive
action plans on delinquent borrowers and borrowers
experiencing financial problems at the same time the
findings and instructions are provided to the District
Office. (Revised 3-1-88, SPECIAL PN.)
(2)
Audits and financial statements.
(i) The District Director is responsible for obtaining all
audit reports and financial statements from the borrower. Those
received from borrowers whose Rural Development indebtedness
exceeds $1,000,000 and from delinquent and problem case
borrowers will be promptly reviewed and forwarded to the State
Director with appropriate comments. (Revised 3-1-88, SPECIAL
PN.)
(ii) The District Director is responsible for the review of
audits and financial statements and for recommendations and
instructions for borrower assistance. For borrowers required to
have audits, in accordance with paragraph (q)(4)(i)(A) of this
section, the District Director is also responsible for any
necessary follow up required because of audit resolution items
received from the cognizant agencies. The borrower will be
required to furnish any additional information necessary to
satisfy the requirement. Guide 21 may be used in the audit
review process. (Revised 3-1-88, SPECIAL PN.)
(iii) The State Director is responsible for the review of
audits of borrowers whose indebtedness exceeds $1,000,000 and
delinquent and problem case borrowers. The State Director may
recommend to the District Director any necessary actions to be
taken. (Revised 3-1-88, SPECIAL PN)
(3) Security inspections. A representative of the borrower will
ordinarily accompany the District Director during each inspection.
(2-6-85)
PN 956
73
(Revision 5)
RD Instruction 1942-A
§1942.17 (r)(3) (Con.)
(i) Post construction inspection. The District Director will
inspect each facility between the beginning of the ninth and the
end of the eleventh full month of the first year of operation.
This will normally coincide with the District Director's review
of the borrower's total operational and management practices
described in paragraph (r)(1)(ii)(A) of this section. The
results of this inspection will be reported to the State
Director on Form RD 1924-12. Earlier inspections will be made
when operational or other problems indicate a need. The State
Director will provide guidance to the District Director to
assure that action will be taken to correct project
deficiencies. (Revised 5-12-87, SPECIAL PN.)
(ii) Subsequent inspections. The District Director will make
subsequent inspections of borrower security property and
facilities during each third year after the post construction
inspection. The results of this inspection will be reported to
the State Director on Form RD 1924-12. (Revised 5-12-87,
SPECIAL PN.)
(iii) Special inspections. The District Director may request,
or the State Director may determine, the need for a member of
the State staff to make certain security inspections. In such
cases, the State Director will detail a staff member to make
such inspections.
(iv) Follow-up inspections. If any inspection discloses
deficiencies or exceptions, or otherwise indicates a need for
subsequent inspections prior to the third year, the State
Director will prescribe the type and frequency of follow-up
inspections. These inspections will be made until all
deficiencies and exceptions have been corrected.
(4) Civil rights compliance reviews will be performed under Subpart
E of Part 1901 of this chapter for the life of the loan.
(5) Other loan servicing actions will be in accordance with Subpart
E of Part 1951 of this chapter.
74
(Revision 5)
RD Instruction 1942-A
Table of Contents
Sec.
Page
1942.18 - Community Facilities - Planning, Bidding,
Contracting, Constructing.
(a)
(b)
(c)
(d)
General.
Technical services.
Preliminary reports.
Design policies.
76
76
76
76
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
76
77
77
77
78
78
78
78
78
78
78
79
79
79
79
79
79
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(02-06-85)
Natural resources.
Historic preservation.
Architectural barriers.
Health Care Facilities.
Energy conservation.
Lead base paints.
Fire protection.
Growth capacity.
Water conservation.
Water quality.
Combined sewers
Compliance.
Dam safety.
Pipe.
Water system testing.
Metering devices.
Seismic safety.
Construction contracts.
Utility purchase contracts.
Sewage treatment and bulk water sales contracts.
Performing construction.
Owner's contractual responsibility.
Owner's procurement regulations.
Procurement methods.
Contracting methods.
Contracts awarded prior to preapplications.
Contract provisions.
Contract administration.
79A
80
82
82
83
83
86
88
89
90
92
(1)
(2)
(3)
(4)
(5)
(6)
(7)
92
93
93
94
94
94
94
Preconstruction conference.
Monitoring reports.
Inspection.
Inspector's daily diary.
Prefinal inspections.
Final inspection.
Changes in development plans.
PN 956
75
(Revision 2)
RD Instruction 1942-A
§1942.18 Community Facilities - Planning, Bidding, Contracting,
Constructing.
(a) General. This section is specifically designed for use by owners
including the professional or technical consultants and/or agents who
provide assistance and services such as architectural, engineering,
inspection, financial, legal or other services related to planning,
bidding, contracting, and constructing community facilities. These
procedures do not relieve the owner of the contractual obligations that
arise from the procurement of these services. For this section, an owner
is defined as an applicant, borrower, or grantee.
(b) Technical services. Owners are responsible for providing the
engineering or architectural services necessary for planning, designing,
bidding, contracting, inspecting, and constructing their facilities.
Services may be provided by the owner's "in house" engineer or architect
or through contract, subject to Rural Development concurrence. Architects
and engineers must be licensed in the State where the facility is to be
constructed.
(c) Preliminary reports. Preliminary architectural and engineering
reports must conform with customary professional standards. Preliminary
report guidelines for water, sanitary sewer, solid waste, storm sewer, and
other essential community facilities are available from Rural Development.
(d) Design policies. Facilities financed by Rural Development will be
designed and constructed in accordance with sound engineering and
architectural practices, and must meet the requirements of Federal, State
and local agencies.
(1) Natural resources. Facility planning should be responsive to
the owner's needs and should consider the long-term economic, social
and environmental needs as set forth in this section. The Agency’s
environmental review requirements are found at 7 CFR part 1970.
(Revised 04-01-16, SPECIAL PN.)
(2-6-85, PN 956)
76
(Revision 2)
§1942.18 (d)(l)(i) (Con.)
RD Instruction 1942-A
(2) Historic preservation. Facilities should be designed and
constructed in a manner which will contribute to the preservation and
enhancement of sites, structures, and objects of historical,
architectural, and archaeological significance. All facilities must
comply with Section 106 of the National Historic Preservation Act of
1966 (16 U.S.C 470), as implemented by 36 CFR part 800, and Executive
Order 11593, “Protection and Enhancement of the Cultural
Environment.” 7 CFR part 1970 sets forth procedures for the
protection of historic and archaeological properties. (Revised
04-01-16, SPECIAL PN.)
(3) Architectural barriers. All facilities intended for or
accessible to the public or in which physically handicapped persons
may be employed or reside must be developed in compliance with the
Architectural Barriers Act of 1968 (P.L. 90-480) as implemented by
the General Services Administration regulations 41 CFR 101-19.6 and
Section 504 of the Rehabilitation Act of 1973 (P.L. 93-112) as
implemented by 7 CFR, Parts 15 and 15b.
(4) Health Care Facilities. The proposed facility must meet the
minimum standards for design and construction contained in the
American Institute of Architects Press Publication No. ISBN 091396296-1, "Guidelines for Construction and Equipment of
77
(Revision 2)
RD Instruction 1942-A
§1942.18(d)(4) (Con.)
Hospital and Medical Facilities," 1987 Edition. The facility must
also meet the life/safety aspects of the 1985 edition of the National
Fire Protection Association (NFPA) 101 Life Safety Code, or any
subsequent code that may be designated by the Secretary of HHS. All
publications referenced in this section are available in all Agency
State Offices. Under §1942.17(j)(8)(ii) of this subpart, a statement
by the responsible regulatory agency that the facility meets the
above standards will be required. Any exceptions must have prior
National Office concurrence. (Revised 05-03-89,
SPECIAL PN)
(5) Energy conservation. Facility design should consider cost
effective energy saving measures or devices.
(6) Lead base paints. Lead base paints shall not be used in
facilities designed for human habitation. Owners must comply with
the Lead Base Paints Poisoning and Prevention Act of 1971 (42 U.S.C.
4801) and the National Consumer Health Information and Health
Promotion Act of 1976 (Pub. L. 94-317) with reference to paint
specifications used according to Exhibit H of Subpart A of Part 1924
of this chapter.
(7) Fire protection. Water facilities must have sufficient capacity
to provide reasonable fire protection to the extent practicable.
(8) Growth capacity. Facilities must have sufficient capacity to
provide for reasonable growth to the extent practicable.
(9) Water conservation. Owners are encouraged, when economically
feasible, to incorporate water conservation practices into a
facility's design. For existing water systems, evidence must be
provided showing that the distribution system water losses do not
exceed reasonable levels.
(10) Water quality. All water facilities must meet the requirements
of the Safe Drinking Water Act (Pub. L. 93-523) and provide water of
a quality that meets the current Interim Primary Drinking Water
Regulations (40 CFR 141).
(11) Combined sewers. New combined sanitary and storm water sewer
facilities will not be financed by the Agency. Extensions to
existing combined systems can only be financed when separate systems
are impractical.
(02-06-85)
PN 956
78
(Revision 2)
RD Instruction 1942-A
§1942.18(d) (Con.)
(12) Compliance. All facilities must meet the requirements of
Federal, State, and local agencies having the appropriate
jurisdiction.
(13) Dam safety. Projects involving any artificial barrier which
impounds or diverts water, or the rehabilitation or improvement of
such a barrier, should comply with the provisions for dam safety as
discussed in the Federal Guidelines for Dam Safety (Government
Printing Office stock No. 041-001-00187-5) as prepared by the Federal
Coordinating Council for Science, Engineering and Technology.
(14) Pipe. All pipe used shall meet current American Society for
Testing Materials (ASTM) or American Water Works Association (AWWA)
standards.
(15) Water system testing. For new water systems or extensions to
existing water systems, leakage shall not exceed 10 gallons per inch
of pipe diameter per mile of pipe per 24 hours when tested at 1 1/2
times the working pressure or rated pressure of the pipe, whichever
is greater.
(16) Metering devices. Water facilities financed by RUS will have
metering devices for each connection. An exception to this
requirement may be granted by the Agency’s State Director when the
owner demonstrates that installation of metering devices would be a
significant economic detriment and that environmental consideration
would not be adversely affected by not installing such devices.
(17)
Seismic safety. (Added 01-10-97, SPECIAL PN.)
(i) All new building construction shall be designed and
constructed in accordance with the seismic provisions of one of
the following model building codes or the latest edition of that
code providing an equivalent level of safety to that contained
in the latest edition of the National Earthquake Hazard
Reduction Program’s (NEHRP) Recommended Provisions for the
Development of Seismic Regulations for New Building (NEHRP
Provisions):
(A) 1991 International Conference of Building Officials
(ICBO) Uniform Building Code;
(B) 1993 Building Officials and Code Administrators
International, Inc. (BOCA) National Building Code; or
79
(Revision 2)
RD Instruction 1942-A
§1942.18(d)(17)(i) (Con.)
(C) 1992 Amendments to the Southern Building Code Congress
International (SBCCI) Standard Building Code.
(ii) The date, signature, and seal of a registered architect or
engineer and the identification and date of the model building
code on the plans and specifications will be evidence of
compliance with the seismic requirements of the appropriate
building code.
(e) Construction contracts. Contract documents must be sufficiently
descriptive and legally binding in order to accomplish the work as
economically and expeditiously as possible.
(1) Standard construction contract documents are available from the
Agency. When the Agency's standard construction contract documents
are used, it will normally not be necessary for the Office of the
General Counsel (OGC) to perform a detailed legal review. If the
construction contract documents utilized are not in the format of
guide forms previously approved by the Agency, OGC's review of the
construction contract documents will be obtained prior to their use.
(2) Contract review and approval. The owner's attorney will review
the executed contract documents, including performance and payment
bonds, and will certify that they are adequate, and that the persons
executing these documents have been properly authorized to do so.
The contract documents, bid bonds, and bid tabulation sheets will be
forwarded to the Agency for approval prior to awarding. All
contracts will contain a provision that they are not in full force
and effect until they have been approved by the Agency. The Agency
State Director or designee is responsible for approving construction
contracts with the legal advice and guidance of the OGC when
necessary.
79A
(Added 01-10-97, SPECIAL PN)
(02-06-85)
PN 956
RD Instruction 1942-A
§1942.18 (e) (Con.)
(3) Separate contracts. Arrangements which split responsibility of
contractors (separate contracts for labor and material, extensive
subcontracting and multiplicity of small contracts on the same job),
should be avoided whenever it is practical to do so. Contracts may
be awarded to suppliers or manufacturers for furnishing and
installing certain items which have been designed by the manufacturer
and delivered to the job site in a finished or semifinished state
such as prefabricated buildings and lift stations. Contracts may
also be awarded for material delivered to the job site and installed
by a patented process or method.
(f) Utility purchase contracts. Applicants proposing to purchase water
or other utility service from private or public sources shall have written
contracts for supply or service which are reviewed and approved by the
Rural Development State Director or designee. To the extent practical,
Rural Development review and approval of such contracts should take place
prior to their execution by the owner. Form RD 442-30, "Water Purchase
Contract," may be used when appropriate. If the Rural Development loan
will be repaid from system revenues, the contract will be pledged to Rural
Development as part of the security for the loan. Such contracts will:
(1) Include a commitment by the supplier to furnish, at a specified
point, an adequate quantity of water or other service and provide
that, in case of shortages, all of the supplier's users will
proportionately share shortages. If it is impossible to obtain a
firm commitment for either an adequate quantity or sharing shortages
proportionately, a contract may be executed and approved provided
adequate evidence is furnished to enable Rural Development to make a
determination that the supplier has adequate supply and/or treatment
facilities to furnish its other users and the applicant for the
foreseeable future; and
(i) The supplier is subject to regulations of the Federal
Energy Regulatory Commission or other Federal or State agency
whose jurisdiction can be expected to prevent unwarranted
curtailment of supply; or
(ii) A suitable alternative supply could be arranged within the
repayment ability of the borrower if it should become necessary;
or
(iii) Prior approval is obtained from the National Office.
following information should be submitted to the National
Office:
(A)
Transmittal memorandum including:
(1)
(2-6-85, PN 956)
Alternative supplies considered; and
80
The
§1942.18 (f) (1) (iii) (A) (Con.)
(B)
RD Instruction 1942-A
(2)
Recommendations and comments; and
(3)
Any other necessary supporting information.
Copies of the following:
(1)
Proposed letter of conditions; and
(2)
Form RD 442-7, "Operating Budget"; and
(3)
Form RD 442-3, "Balance Sheet"; and
(4)
Preliminary Engineering Report; and
(5)
Proposed Contract.
(C) Owner and Rural Development engineer's comments and
recommendations.
(D) Documentation and statement from the supplier that it
has an adequate supply and treatment facilities available
to meet the needs of its users and the owner for the
foreseeable future.
(2) Set out the ownership and maintenance responsibilities of the
respective parties including the master meter if a meter is installed
at the point of delivery.
(3) Specify the initial rates and provide some kind of escalator
clause which will permit rates for the association to be raised or
lowered proportionately as certain specified rates for the supplier's
regular customers are raised or lowered. Provisions may be made for
altering rates in accordance with the decisions of the appropriate
State agency which may have regulatory authority.
(4) Run for a period of time which is at least equal to the
repayment period of the loan. State Directors may approve contracts
for shorter periods of time if the supplier cannot legally contract
for such period, or if the owner and supplier find it impossible or
impractical to negotiate a contract for the maximum period
permissible under State law, provided:
(i) The supplier is subject to regulations of the Federal
Energy Regulatory Commission or other Federal or State agency
whose jurisdiction can be expected to prevent unwarranted
curtailment of supply; or
81
RD Instruction 1942-A
§1942.18 (f) (4) (Con.)
(ii)
The contract contains adequate provisions for renewal; or
(iii) A determination is made that in the event the contract is
terminated, there are or will be other adequate sources available
to the owner that can feasibly be developed or purchased.
(5) Set out in detail the amount of connection or demand charges, if
any, to be made by the supplier as a condition to making the service
available to the owner. However, the payment of such charges from loan
funds shall not be approved unless Rural Development determines that it
is more feasible and economical for the owner to pay such a connection
charge than it is for the owner to provide the necessary supply by other
means.
(6) Provide for a pledge of the contract to Rural Development as part
of the security for the loan.
(7)
Not contain provisions for:
(i) Construction of facilities which will be owned by the
supplier. This does not preclude the use of money paid as a
connection charge for construction to be done by the supplier.
(ii) Options for the future sale or transfer. This does not
preclude an agreement recognizing that the supplier and owner may
at some future date agree to a sale of all or a portion of the
facility.
(g) Sewage treatment and bulk water sales contracts. Owners entering into
agreements with private or public parties to treat sewage or supply bulk water
shall have written contracts for such service and all such contracts shall be
subject to Rural Development concurrence. Paragraph (f) of this section
should be used as a guide to prepare such contracts. (Revised 3-1-88, SPECIAL
PN.)
(h) Performing construction. Owners are encouraged to accomplish
construction through contracts with recognized contractors. Owners may
accomplish construction by using their own personal and equipment provided the
owners possess the necessary skills, abilities and resources to perform the
work and provided a licensed engineer or architect prepares design drawings
and specifications and inspects construction and furnishes inspection reports
as required by paragraph (o) of this section. For other than utility-type
facilities, inspection services may be provided by individuals as approved by
the Rural Development State Director. In either case, the requirements of
paragraph (j) of this section apply. Payments for construction will be
handled under §1942.17(p)(5) of this part.
(2-6-85, PN 956)
82
(Revision 1)
§1942.18 (Con.)
RD Instruction 1942-A
(i) Owner's contractual responsibility. This subpart does not relieve
the owner of any contractual responsibilities under its contract. The
owner is responsible for the settlement of all contractual and
administrative issues arising out of procurements entered into in support
of a loan or grant. These include, but are not limited to: source
evaluation, protests, disputes, and claims. Matters concerning violation
of laws are to be referred to the local, State, or Federal authority as
may have jurisdiction.
(j) Owner's procurement regulations. Owner's procurement regulations
must comply with the following standards: (Revised 3-1-88, SPECIAL PN.)
(1) Code of conduct. Owners shall maintain a written code or
standards of conduct which shall govern the performance of their
officers, employees or agents engaged in the award and administration
of contracts supported by Rural Development funds. No employee,
officer or agent of the owner shall participate in the selection,
award, or administration of a contract supported by Rural Development
funds if a conflict of interest, real or apparent, would be involved.
Examples of such conflicts would arise when: the employee, officer or
agent or agent; any member of their immediate family; their partner;
or an organization which employs, or is about to employ, any of the
above; has a financial or other interest in the firm selected for the
award.
(i) The owner's officers, employees or agents shall neither
solicit nor accept gratuities, favors or anything of monetary
value from contractors, potential contractors, or parties to
subagreements.
(ii) To the extent permitted by State or local law or
regulations, the owner's standards of conduct shall provide for
penalties, sanctions, or other disciplinary actions for
violations of such standards by the owner's officers, employees,
agents, or by contractors or their agents.
(2) Maximum open and free competition. All procurement
transactions, regardless of whether by sealed bids or by negotiation
and without regard to dollar value, shall be conducted in a manner
that provides maximum open and free competition. Procurement
procedures shall not restrict or eliminate competition. Examples of
what are considered to be restrictive of competition include, but are
not limited to: placing unreasonable requirements on firms in order
for them to qualify to do business; noncompetitive practices between
firms; organizational conflicts of interest; and unnecessary
experience and bonding requirements. In specifying material(s), the
83
(Revision 1)
RD Instruction 1942-A
§1942.18 (j) (2) (Con.)
owner and its consultant will consider all materials normally
suitable for the project commensurate with sound engineering
practices and project requirements. For a water or waste disposal
facility, Rural Development shall consider fully any recommendation
made by the loan applicant or borrower concerning the technical
design and choice of materials to be used for such a facility. If
Rural Development determines that a design or material, other than
those that were recommended should be considered by including them in
the procurement process as an acceptable design or material in the
water or waste disposal facility, Rural Development shall provide
such applicant or borrower with a comprehensive justification for
such a determination. The justification will be documented in
writing. (Revised 3-1-88, SPECIAL PN.)
(3) Owner's review. Proposed procurement actions shall be reviewed by
the owner's officials to avoid the purchase of unnecessary or duplicate
items. Consideration should be given to consolidation or separation of
procurement items to obtain a more economical purchase. Where
appropriate, an analysis shall be made of lease versus purchase
alternatives, and any other appropriate analysis to determine which
approach would be the most economical. To foster greater economy and
efficiency, owners are encouraged to enter into State and local
intergovernmental agreements for procurement or use of common goods and
services.
(4) Solicitation of offers, whether by competitive sealed bids or
competitive negotiation, shall:
(i) Incorporate a clear and accurate description of the
technical requirements for the material, product, or service to
be procured. The description shall not, in competitive
procurements, contain features which unduly restrict
competition. The description may includes a statement of the
qualitative nature of the material, product or service to be
procured, and when necessary, shall set forth those minimum
essential characteristics and standards to which it must conform
if it is to satisfy its intended use. Detailed product
specifications should be avoided if at all possible. When it is
impractical or uneconomical to make a clear and accurate
description of the technical requirements, a "brand name or
equal" description may be used to define the performance or
other salient requirements of a procurement. The specific
features of the named brands which must be met by offerors shall
be clearly stated.
(ii) Clearly specify all requirements which offerors must
fulfill and all other factors to be used in evaluating bids or
proposals.
(5) Small, minority, and women's businesses and labor surplus area
firms.
84
(Revision 1)
(2-6-85, PN 956)
§1942.18 (j) (5) (Con.)
RD Instruction 1942-A
(i) Affirmative steps should be taken to assure that small and
minority businesses are utilized when possible as sources of
supplies, equipment, construction and services. Affirmative
steps shall include the following:
(A) Include qualified small and minority businesses on
solicitation lists.
(B) Assure that small and minority businesses are
solicited whenever they are potential sources.
(C) When economically feasible, divide total requirements
into smaller tasks or quantities so as to permit maximum
small and minority business participation.
(D) Where the requirement permits, establish delivery
schedules which will encourage participation by small and
minority businesses.
(E) Use the services and assistance of the Small Business
Administration and the Office of Minority Business
Enterprise of the Department of Commerce.
(F) If any subcontracts are to be let, require the prime
contractor to take the affirmative steps in paragraphs
(j)(5)(i)(A) through (E) of this section.
(ii) Owners shall take similar appropriate affirmative action
in support of women's businesses.
(iii) Owners are encouraged to procure goods and services from
labor surplus areas.
(iv) Owners shall submit a written statement or other evidence
to Rural Development of the steps taken to comply with
paragraphs (j)(5)(i)(A) through (F), (j)(5)(ii), and (j)(5)(iii)
of this section.
(6) Contract pricing. Cost plus a percentage of cost method of
contracting shall not be used.
(7) Unacceptable bidders. The following will not be allowed to bid
on, or negotiate for, a contract or subcontract related to the
construction of the project:
(i) An engineer or architect as an individual or firm who has
prepared plans and specifications or who will be responsible for
monitoring the construction;
85
(Revision 1)
RD Instruction 1942-A
§1942.18 (j) (7)(Con.)
(ii) Any firm or corporation in which the owner's architect or
engineer is an officer, employee, or holds or controls a
substantial interest;
(iii) The governing body's officers, employees, or agents;
(iv) Any member of the immediate family or partners in
paragraphs (j)(7)(i), (j)(7)(ii) or (j)(7)(iii) of this section;
or
(v) An organization which employs, or is about to employ, any
person in paragraph (j)(7)(i), (j)(7)(ii), (j)(7)(iii) or
(j)(7)(iv) of this section.
(8) Contract award. Contracts shall be made only with responsible
parties possessing the potential ability to perform successfully
under the terms and conditions of a proposed procurement.
Consideration shall include but not be limited to matters such as
integrity, record of past performance, financial and technical
resources, and accessibility to other necessary resources. Contracts
shall not be made with parties who are suspended or debarred.
(Revised 4-11-89, SPECIAL PN)
(k) Procurement methods. Procurement shall be made by one of the
following methods: small purchase procedures; competitive sealed bids
(formal advertising); competitive negotiation; or noncompetitive
negotiation. Competitive sealed bids (formal advertising) is the
preferred procurement method for construction contracts.
(1) Small purchase procedures. Small purchase procedures are those
relatively simple and informal procurement methods that are sound and
appropriate for a procurement of services, supplies or other
property, costing in the aggregate not more than $10,000. If small
purchase procedures are used for a procurement, written price or rate
quotations shall be obtained from an adequate number of qualified
sources.
(2) Competitive sealed bids. In competitive sealed bids (formal
advertising), sealed bids are publicly solicited and a firm-fixedprice contract (lump sum or unit price) is awarded to the responsible
bidder whose bid, conforming with all the material terms and
conditions of the invitation for bids, is lowest, price and other
factors considered. When using this method the following shall
apply:
(i) At a sufficient time prior to the date set for opening of
bids, bids shall be solicited from an adequate number of
qualified sources. In addition, the invitation shall be
publicly advertised.
(2-6-85, PN 956)
86
(Revision 1)
§1942.18 (k) (2) (Con.)
RD Instruction 1942-A
(ii) The invitation for bids, including specifications and
pertinent attachments, shall clearly define the items or
services needed in order for the bidders to properly respond to
the invitation under paragraph (j)(4) of this section.
(iii) All bids shall be opened publicly at the time and place
stated in the invitation for bids.
(iv) A firm-fixed-price contract award shall be made by written
notice to that responsible bidder whose bid, conforming to the
invitation for bids, is lowest. When specified in the bidding
documents, factors such as discounts and transportation costs
shall be considered in determining which bid is lowest.
(v) Any or all bids may be rejected by the owner when it is in
their best interest.
(3) Competitive negotiation. In competitive negotiations, proposals
are requested from a number of sources and the Request for Proposal
is publicized. Negotiations are normally conducted with more than
one of the sources submitting offers. Competitive negotiation may be
used if conditions are not appropriate for the use of formal
advertising and where discussions and bargaining with a view to
reaching agreement on the technical quality, price, other terms of
the proposed contract and specifications may be necessary. If
competitive negotiation is used for a procurement, the following
requirements shall apply:
(i) Proposals shall be solicited from an adequate number of
qualified sources to permit reasonable competition consistent
with the nature and requirements of the Procurement. The
Request for Proposal shall be publicized and reasonable requests
by other sources to compete shall be honored to the maximum
extent practicable.
(ii) The Request for Proposal shall identify all significant
evaluation factors, including price or cost where required, and
their relative importance.
(iii) The owner shall provide mechanisms for technical
evaluation of the proposals received, determination of
responsible offerors for the purpose of written or oral
discussions, and selection for contract award.
(2-6-85, PN 956)
87
(Revision 2)
RD Instruction 1942-A
§1942.18 (k) (3) (Con.)
(iv) Award may be made to the responsible offeror whose
proposal will be most advantageous to the owner, price and other
factors considered. Unsuccessful offerors should be promptly
notified.
(v) Owners may utilize competitive negotiation procedures for
procurement of architectural/engineering and other professional
services, whereby competitors' qualifications are evaluated and
the most qualified competitor is selected, subject to
negotiations of fair and reasonable compensation.
(4) Noncompetitive negotiation. Noncompetitive negotiation is
procurement through solicitation of a proposal from only one source,
or after solicitation of a number of sources competition is
determined inadequate. Noncompetitive negotiation may be used when
the award of a contract is not feasible under small purchase,
competitive sealed bids (formal advertising) or competitive
negotiation procedures. Circumstances under which a contract may be
awarded by noncompetitive negotiations are limited to the following:
(Revised 3-1-88, SPECIAL PN.)
(i)
The item is available only from a single source; or
(ii) There exists a public exigency or emergency and the
urgency for the requirement will not permit a delay incident to
competitive solicitation; or
(iii) After solicitation of a number of sources, competition
is determined inadequate; or
(iv) No acceptable bids have been received after formal
advertising; or
(v) The procurement of architectural/engineering and other
professional services; or
(vi) The aggregate amount does not exceed $50,000.
88, SPECIAL PN.)
(Added 3-1-
(5) Additional procurement methods. Additional innovative
procurement methods may be used by the owner with prior written
approval of the Rural Development National Office.
(l) Alternate contracting methods. The services of the consulting
engineer or architect and the general construction contractor shall
normally be procured from unrelated sources in accordance with paragraph
88
(Revision 2)
§ 1942.18 (l) (Con.)
RD Instruction 1942-A
(j)(7) of this section. Alternate contracting methods which combine or
rearrange design, inspection or construction services (such as
design/build or construction management/constructor) may be used with
Rural Development written approval. (Revised 09-24-12, PN 458.)
(1) The owner will request Rural Development approval by providing
the following information to the State Office for review and approval
by the State Architect: (Revised 09-24-12, PN 458.)
(i)
The owner’s written request to use an unconventional
contracting method with a description of the proposed method and
the selection process used to acquire the CM or DB services.
(Revised 09-24-12, PN 458.)
(ii) A proposed scope of work describing in clear, concise
terms the technical requirements for the contract. This would
include a nontechnical statement summarizing the work to be
performed by the contractor and the results expected. Also
include the sequence in which the work is to be performed and a
proposed construction schedule. (Revised 09-24-12, PN 458.)
(iii) A proposed firm-fixed-price contract for the entire
project which provides that the contractor shall be responsible
for any extra cost which may result from errors or omissions in
the services provided under the contract and compliance with all
Federal, State, and local requirements effective on the contract
execution date. (Revised 09-24-12, PN 458.)
(iv) An evaluation of the contractor's performance on previous
similar projects in which the contractor acted in a similar
capacity. (Revised 09-24-12, PN 458.) (Revised 09-24-12, PN
458.)
(v) A detailed listing and cost estimate of equipment and
supplies not included in the construction contract but which are
necessary to properly operate the facility. (Revised 09-24-12,
PN 458.)
(vi) Evidence that a qualified construction inspector who is
independent of the contractor has or will be hired. (Revised
09-24-12, PN 458.)
(2-6-85, PN 956)
89
(Revision 2)
RD Instruction 1942-A
§1942.18 (l) (Con.)
(vii) Preliminary plans and outline specifications. However,
final plans and specifications must be completed and reviewed by
Rural Development prior to the start of construction. (Revised
09-24-12, PN 458.)
(viii) The owner's attorney's opinion and comments regarding
the legal adequacy of the proposed contract documents and
evidence that the owner has the legal authority to enter into
and fulfill the contract. (Revised 09-24-12, PN 458.)
(2) The State Office may approve design/build or construction
management/constructor projects if the contract amount is equal to or
less than $250,000. (Revised 09-24-12, PN 458.)
(3) If the contract amount exceeds $250,000, National Office prior
concurrence must be obtained in accordance with § 1942.9(b) of this
subpart. Only that information required under § 1942.9(b) of this
subpart and Guide 27, Attachment 7, completed by the State Office
must be provided to National Office Program Support Staff for review.
Additional information, such as plans and specifications, may be
submitted by the State Office, if a review of those items is desired.
(Revised 09-24-12, PN 458.)
(4) The Design/Build method of construction is one in which the
architectural and engineering services, normally provided by an
independent consultant to the owner, are combined with those of the
General Contractor under a single source contract. These services
are commonly provided by a design/build firm, a joint venture between
an architectural firm and a construction firm, or a company providing
pre-engineered buildings and design services. (Revised 09-24-12, PN
458.)
(5) The Construction Management/constructor (CMc) acts in the
capacity of a General Contractor and is actually responsible for the
construction. This type of construction management is also referred
to as Construction Manager “At Risk”. The construction contract is
between the owner and the CMc. The CMc, in turn, may subcontract for
some or all of the work. (Revised 09-24-12, PN 458.)
90
(Revision 3)
§ 1942.18 (l) (Con.)
RD Instruction 1942-A
(7) All alternate contracting method projects must comply with the
requirements for “maximum open and free competition” in paragraph
(j)(2) of this section. Choosing an alternate contracting method is
not a way to avoid competition. Further information on procurement
methods, which must be followed, is provided in paragraph (k) of this
section. (Revised 09-24-12, PN 458.)
(m) Contracts awarded prior to preapplications. Owners awarding
construction or other procurement contracts prior to filing a
preapplication with Rural Development must comply with the following:
(1) Evidence. Provide conclusive evidence that the contract was
entered into without intent to circumvent the requirements of Rural
Development regulations. The evidence will consist of at least the
following:
(2-6-85, PN 956)
90A
(Added 09-24-12, PN 458)
RD Instruction 1942-A
§1942.18 (m)
(i) The lapse of a reasonable period of time between the date
of contract award and the date of filing the preapplication
which clearly indicates an irreconcilable failure of previous
financial arrangements; or
(ii) A written statement explaining initial plans for financing
the project and reasons for failure to obtain the planned
credit.
(2) Modifications. Modify the outstanding contract to conform with
the provisions of the subpart. Where this is not possible,
modifications will be made to the extent practicable and, as a
minimum, the contract must comply with all State and local laws and
regulations as well as statutory requirements and executive orders
related to the Rural Development financing. When all construction is
complete and it is impracticable to modify the contracts, the owner
must provide the certification required by paragraph (m)(4) of this
section.
(3) Consultant's certification. Provide a certification by an
engineer or architect that any construction performed complies fully
with the plans and specifications.
(4) Owner's certification. Provide a certification by the owner
that the contractor has complied with all statutory and executive
requirements related to Rural Development financing for construction
already performed even though the requirements may not have been
included in the contract documents.
(n) Contract provisions. In addition to provisions defining a sound and
complete contract, any recipient of Rural Development funds shall include
the following contract provisions or conditions in all contracts.
(1) Remedies. Contracts other than small purchases shall contain
provisions or conditions which will allow for administrative,
contractual, or legal remedies in instances where contractors violate
or breach contract terms, and provide for such sanctions and
penalties as may be appropriate. A realistic liquidated damage
provision should also be included.
(2) Termination. All contracts exceeding $10,000, shall contain
suitable provisions for termination by the owner including the manner
by which it will be affected and the basis for settlement. In
addition, such contracts shall describe conditions under which the
contract may be terminated for default as well as conditions where
the contract may be terminated because of circumstances beyond the
control of the contractor.
90B
(Added 09-24-12, PN 458)
§1942.18 (n) Con.)
RD Instruction 1942-A
(3) Surety. In all contracts for construction or facility
improvements exceeding $100,000, the owner shall require bonds, a
bank letter of credit or cash deposit in escrow assuring performance
and payment each in the amount of 100 percent of the contract cost.
The surety will normally be in the form of performance bonds and
payment bonds; however, when other methods of surety may be
necessary, bid documents must contain provisions for such alternative
types of surety. The use of surety other than performance bonds and
payment bonds requires concurrence by the National Office after
submission of a justification by the State Director together with the
proposed form of escrow agreement or letter of credit. For contracts
of lesser amounts, the owner may require surety. When a surety is
not provided, contractors will furnish evidence of payment in full
for all materials, labor, and any other items procured under the
contract. Form RD 1924-10, "Release by Claimants," and Form RD
1924-9, "Certificate of Contractor's Release," may be obtained at the
local Rural Development office and used for this purpose. The United
States, acting trough Rural Development, will be named as co-obligee
on all surety unless prohibited by State law. Companies providing
performance bonds and payment bonds must hold a certificate of
authority as an acceptable surety on Federal bonds as listed in
Treasury Circular 570 as amended and be legally doing business in the
State where the facility is located. (Revised 5-3-89, SPECIAL PN)
(4) Equal Employment Opportunity. All contracts awarded in excess
of $10,000 by owners shall contain a provision requiring compliance
with Executive Order 11246, entitled, "Equal Employment Opportunity,"
as amended by Executive Order 11375, and as supplemented by
Department of Labor regulations 41 CFR Part 60. (Revised 5-3-89,
SPECIAL PN)
(5) Anti-kickback. All contracts for construction shall include a
provision for compliance with the Copeland "Anti-Kickback" Act (18
U.S.C. 874). This Act provides that each contractor shall be
prohibited from inducing, by any means, any person employed in the
construction, completion, or repair of public work, to give up any
part of the compensation to which they are otherwise entitled. The
owner shall report suspected or reported violations to Rural
Development.
(6) Records. All negotiated contracts (except those of $2,500 or
less) awarded by owners shall include a provision to the effect that
the owner, Rural Development, the Comptroller General of the United
States, or any of their duly authorized representatives, shall have
access to any books, documents, papers, and records of the contractor
which are directly pertinent to a specific Federal loan program for
the purpose of making audits, examinations, excerpts, and
transcriptions. Owners shall require contractors to maintain all
required records for 3 years after owners make final payments and all
other pending matters are closed.
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§1942.18 (n) (Con.)
(7) State Energy Conservation Plan. Contracts shall recognize
mandatory standards and policies relating to energy efficiency which
are contained in the State energy conservation plan issued in
compliance with the Energy Policy and Conservation Act (P.L. 94-163).
(8) Change orders. The construction contract shall require that all
contract change orders be approved by Rural Development.
(9) Rural Development concurrence. All contracts must contain a
provision that they shall not be effective unless and until the Rural
Development State Director or designee concurs in writing.
(10) Retainage. All construction contracts shall contain adequate
provisions for retainage. No payments will be made that would
deplete the retainage nor place in escrow any funds that are required
for retainage nor invest the retainage for the benefit of the
contractor. The retainage shall not be less than an amount equal to
10 percent of an approved partial payment estimate until 50 percent
of the work has been completed. If the job is proceeding
satisfactorily at 50 percent completion, further partial payments
shall be made in full, however, previously retained amounts shall not
be paid until construction is substantially complete. Additional
amounts may be retained if the job is not proceeding satisfactorily,
but in no event shall the total retainage be more than 10 Percent of
the value of the work completed.
(11) Other compliance requirements. Contracts in excess of $100,000
shall contain a provision which requires compliance with all
applicable standards, orders, or requirements issued under Section
306 of the Clean Air Act (42 U.S.C. 1857(h)), Section 508 of the
Clean Water Act (33 U.S.C. 1368), Executive Order 11738, and
Environmental Protection Agency (EPA) regulations 40 CFR Part 15,
which prohibit the use under non-exempt Federal contracts, grants or
loans of facilities included on the EPA List of Violating Facilities.
The provision shall require reporting of violations to Rural
Development and to the U.S. Environmental Protection Agency,
Assistant Administrator for Enforcement. Solicitations and contract
provisions shall include the requirements of 4 CFR Part 15.4 (c) as
set forth in Guide 18 of this subpart which is available in all Rural
Development offices.
(o) Contract administration. Owners shall be responsible for maintaining
s contract administration system to monitor the contractors' performance
and compliance with the terms, conditions, and specifications of the
contracts.
(1) Preconstruction conference. Prior to beginning construction,
the owner will schedule a preconstruction conference where Rural
Development will review the planned development with the owner, its
architect or
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§1942.18 (o) (1) (Con.)
RD Instruction 1942-A
engineer, resident inspector, attorney, contractor(s), and other
interested parties. The conference will thoroughly cover applicable
items included in Form RD 1924-16, "Record of Pre-construction
Conference," and the discussions and agreements will be documented.
Form RD 1924-16 may be used for this purpose. (Revised 5-12-87,
SPECIAL PN.)
(2) Monitoring reports. Each owner will be required to monitor and
provide reports to Rural Development on actual performance during
construction for each project financed, or to be financed, in whole
or in part with Rural Development funds to include:
(i) A comparison of actual accomplishments with the
construction schedule established for the period. The partial
payment estimate may be used for this purpose.
(ii) A narrative statement giving full explanation of the
following:
(A) Reasons why established goals were not met.
(B) Analysis and explanation of cost overruns or high unit
costs and how payment is to be made for the same.
(iii) If events occur between reports which have a significant
impact upon the project, the owner will notify Rural Development
as soon as any of the following conditions are known:
(A) Problems, delays, or adverse conditions which will
materially affect the ability to attain program objectives
or prevent the meeting of project work units by
established time periods. This disclosure shall be
accompanied by a statement of the action taken, or
contemplated, and any Federal assistance needed to resolve
the situation.
(B) Favorable developments or events which enable meeting
time schedules and goals sooner than anticipated or
producing more work units than originally projected or
which will result in cost underruns or lower unit costs
than originally planned and which may result in less Rural
Development assistance.
(3) Inspection. Full-time resident inspection is
required for all construction unless a written exception
is made by Rural Development upon written request of the
owner. Unless otherwise agreed, the resident inspector
will be provided by the consulting architect/engineer.
Prior to the preconstruction conference, the
architect/engineer will submit a resume of qualifications
of the resident inspector to the owner and to Rural
Development for acceptance in writing. If the owner
provides the resident inspector, it must submit a resume
of the inspector's qualifications to the project
architect/engineer and Rural Development
93
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§1942.18(o)(3) (Con.)
for acceptance in writing prior to the preconstruction conference.
The resident inspector will work under the general supervision of the
project architect/engineer. A guide format for preparing daily
inspection reports (Guide 11 of this subpart) and Form RD 1924-18
"Partial Payment Estimate," are available on request from Rural
Development. (Revised 5-12-87, SPECIAL PN.)
(4) Inspector's daily diary. The resident inspector will maintain a
record of the daily construction progress in the form of a daily
diary and daily inspection reports as follows:
(i) A complete set of all daily construction records will be
maintained and the original set furnished to the owner upon
completion of construction.
(ii)
All entries shall be legible and shall be made in ink.
(iii) Daily entries shall include but not be limited to the
date, weather conditions, number and classification of personnel
working on the site, equipment being used to perform the work,
persons visiting the site, accounts of substantive discussions,
instructions given to the contractors, directions received, all
significant or unusual happenings involving the work, any
delays, and daily work accomplished.
(iv) The daily entries shall be made available to Rural
Development personnel and will be reviewed during project
inspections.
(5) Prefinal inspections. A prefinal inspection will be made by the
owner, resident inspector, project architect or engineer,
representatives of other agencies involved, the District Director and
a Rural Development State Office staff representative, preferably the
State staff architect or engineer. Prefinal inspections may be made
without Rural Development State Office staff participation if the
State Director or a designee determines that the facility does not
utilize complicated construction techniques, materials or equipment
for (facilities such as small fire stations, storage buildings or
minor utility extensions, and that an experienced District Office
staff representative will be present. The inspection results will be
recorded on Form RD 1924-12, "Inspection Report," and a copy
provided to all interested parties. (Revised 5-12-87, SPECIAL PN.)
(6) Final inspection. A final inspection will be made by Rural
Development before final payment is made.
(7)
(02-06-85)
Changes in development plans.
(i) Changes in development plans may be approved by Rural
Development when requested by owners, provided:
94
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§1942.18 (o) 5
RD Instruction 1942-A
(A)
Funds are available to cover any additional costs; and
(B)
The change is for an authorized loan purpose; and
(C) It will not adversely affect the soundness of the
facility operation or Rural Development's security; and
(D)
The change is within the scope of the contract,
(ii) Changes will be recorded on Form RD 1924-7, "Contract
Change Order," or, other similar forms may be used with the
prior approval of the State Director or designee. Regardless of
the form, change orders must be approved by the Rural
Development State Director or a designated representative.
(Revised 5-12-87, SPECIAL PN.)
(iii) Changes should be accomplished only after Rural
Development approval on all changes which affect the work and
shall be authorized only by means of contract change order. The
change order will include items such as:
(A) Any changes in labor and material and their respective
cost.
(B)
Changes in facility design.
(C) Any decrease or increase in quantities based on final
measurements that are different from those shown in the
bidding schedule.
(D) Any increase or decrease in the time to complete the
project.
(iv) All changes shall be recorded on chronologically numbered
contract change orders as they occur. Change orders will not be
included in payment estimates until approved by all parties.
95
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RD Instruction 1942-A
Table of Contents
Sec.
Page
1942.19 - Information Pertaining to Preparation of Notes or Bonds
and Bond Transcript Documents for Public Body Applicants.
(a)
(b)
(c)
(d)
(e)
General.
Policies related to use of bond counsel.
97
97
(1)
(2)
(3)
97
97
98
Bond transcript documents.
98
Interim financing from commercial sources
during construction period for loans of $50,000 or more.
100
Permanent instruments for Rural Development loans to repay
interim commercial financing.
100
(1)
(2)
(3)
(4)
(f)
(g)
(h)
Issues of $250,000 or less.
Issues of $50,000 or less.
For loans of less than $500,000.
First preference - Form RD 440-22.
Second preference - single instruments with
amortized installments.
Third preference - single instruments with installments of principal plus interest.
Fourth preference - serial bonds with installments
of principal plus interest.
100
102
103
Multiple advances of Rural Development funds using permanent
instruments.
103
Multiple advances of Rural Development funds using temporary debt
instruments.
103
Minimum bond specifications.
103
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(i)
100
Type and denominations.
Bond registration.
Size and quality.
Date and Bond.
Payment date.
Place of payment.
Redemptions.
Additional revenue bonds.
Scheduling of Rural Development payments when joint
financing is involved.
Precautions.
Multiple loan instruments.
Bidding by Rural Development.
96
(2-6-85, PN 956)
103
104
104
104
105
105
105
105
105
105
106
106
RD Instruction 1942-A
§1942.19 Information Pertaining to Preparation of Notes or Bonds and Bond
Transcript Documents for Public Body Applicants.
(a) General. This section includes information for use by public body
applicants in the preparation and issuance of evidence of debt (bonds,
notes, or debt instruments, herein referred to as bonds). This section is
made available to applicants as appropriate for application processing and
loan docket preparation.
(b) Policies related to use of bond counsel. Preparation of the bonds
and the bond transcript documents will be the responsibility of the
applicant. Public body applicants will obtain the services and opinion of
recognized bond counsel with respect to the validity of a bond issue,
except as provided in (b)(1) through (3) below. The applicant normally
will be represented by a local attorney who will obtain the assistance of
a recognized bond counsel firm which has experience in municipal financing
with such investors as investment dealers, banks, and insurance companies.
(1) Issues of $250,000 or less. At the option of the applicant for
issues of $250,000 or less, bond counsel may be used for the issuance
of a final opinion only and not for the preparation of the bond
transcript and other documents when the applicant, Rural Development,
and bond counsel have agreed in advance as to the method of
preparation of the bond transcript documents. Under such
circumstances the applicant will be responsible for the preparation
of the bond transcript documents.
(2) Issues of $50,000 or less. At the option of the applicant and
with the prior approval of the Rural Development State Director, the
applicant need not use bond counsel if:
(i) The amount of the issue does not exceed $50,000 and the
applicant recognizes and accepts the fact that processing the
application may require additional legal and administrative
time.
(ii) There is a significant cost saving to the applicant
particularly with reference to total legal fees after
determining what bond counsel would charge as compared with what
the local attorney will charge without bond counsel.
(iii) The local attorney is able and experienced in handling
this type of legal work.
(iv) The applicant understands that, if it is required by Rural
Development to refinance its loan pursuant to the statutory
refinancing requirements, it will probably have to obtain at its
expense a bond counsel's opinion at that time.
(2-6-85, PN 956)
97
RD Instruction 1942-A
§1942.19 (b) (2) (Con.)
(v) All bonds will be prepared in accordance with this
regulation and will conform as nearly as possible to the
preferred methods of preparation stated in paragraph (e) of this
section but still be consistent with State law.
(vi) Many matters necessary to comply with Rural Development
requirements such as land rights, easements, and organizational
documents will be handled by the applicant's local attorney.
Specific closing instructions will be issued by the Office of
the General Counsel of the U. S. Department of Agriculture for
the guidance of Rural Development.
(3) For loans of less than $500,000. The applicant shall not be
required to use bond counsel in a straight mortgage-note situation
where competitive bidding is not required for the sale of the debt
instrument, unless a complicated financial situation exists with the
applicant. In addition, if there is a known backlog in a particular
OGC regional office the applicant will be advised of such backlog and
it will be suggested to the applicant that the appointment of bond
counsel may be more expeditious. However, it will be the decision of
the applicant whether or not to appoint bond counsel. The applicant
must comply with (b)(2)(iii) through (vi) of this section.
(c) Bond transcript documents. Any questions with respect to Rural
Development requirements should be discussed with the Rural Development
representatives. The bond counsel (or local counsel where no bond counsel is
involved) is required to furnish at least two complete sets of the following to
the applicant, who will furnish one complete set to Rural Development:
(1)
Copies of all organizational documents.
(2)
Copies of general incumbency certificate.
(3) Certified copies of minutes or excerpts therefrom of all
meetings of the applicant's governing body at which action was taken
in connection with the authorization and issuance of the bonds.
(4) Certified copies of documents evidencing that the applicant has
complied fully with all statutory requirements incident to calling
and holding of a favorable bond election, if such an election is
necessary in connection with bond issuance.
(5) Certified copies of the resolutions or ordinances or other
documents, such as the bond authorizing resolutions or ordinance and
any resolution establishing rates and regulating the use of the
improvement, if such documents are not included in the minutes
furnished.
98
§1942.19 (c) (Con.)
RD Instruction 1942-A
(6) Copies of official Notice of Sale and affidavit of publication
of Notice of Sale where a public sale is required by State statute.
(7)
Specimen bond, with any attached coupons.
(8)
Attorney's no-litigation certificate.
(9) Certified copies of resolutions or other documents pertaining to
the bond award.
(10) Any additional or supporting documents required by bond
counsel.
(11) For loans involving multiple advances of Rural Development loan
funds a preliminary approving opinion of bond counsel (or local
counsel if no bond counsel is involved) if a final unqualified
opinion cannot be obtained until all funds are advanced. The
preliminary opinion for the entire issue shall be delivered on or
before the first advance of loan funds and state that the applicant
has the legal authority to issue the bonds, construct, operate and
maintain the facility, and repay the loan subject only to changes
during the advance of funds such as litigation resulting from the
failure to advance loan funds, and receipt of closing certificates.
(12) Preliminary approving opinion, if any, and final unqualified
approving opinion of recognized bond counsel (or local counsel if no
bond counsel is involved) including opinion regarding interest on
bonds being exempt from Federal and any State income taxes. On
approval of the Administrator, a final opinion may be qualified to
the extent that litigation is pending relating to Indian claims that
may affect title to land or validity of the obligation. It is
permissible for such opinions to contain language referring to the
last sentence of Section 306 (a)(1) or to Section 309A (h) of the
Consolidated Farm and Rural Development Act [7 U.S.C. 1926 (a)(1) or
1929a (h)], and providing that if the bonds evidencing the
indebtedness in question are acquired by the Federal Government and
sold on an insured basis from the Agriculture Credit Insurance Fund,
or the Rural Development Insurance Fund, the interest on such bonds
will be included in gross income for the purpose of the Federal
income tax statutes.
99
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RD Instruction 1942-A
§1942.19 (Con.)
(d) Interim financing from commercial sources during construction period
for loans of $50,000 or more. In all cases where it is possible for funds
to be borrowed at current market interest rates on an interim basis from
commercial sources, such interim financing will be obtained so as to
preclude the necessity for multiple advances of Rural Development funds.
(e) Permanent instruments for Rural Development loans to repay interim
commercial financing. Rural Development loans will be evidenced by the
following types of instruments chosen in accordance with the following
order of preference:
(1) First preference - Form RD
(Association or Organization)".
440-22 for insured loans.
440-22, "Promissory Note
If legally permissible use Form RD
(2) Second preference - single instruments with amortized
installments. If Form RD 440-22 is not legally permissible, use a
single instrument providing for amortized installments. Show the
full amount of the loan on the face of the document and provide for
entering the date and amount of each Rural Development advance on the
reverse thereof or on an attachment to the instrument. Form RD 44022 should be followed to the extent possible. When principal payment
is deferred, no attempt should be made to compute in dollar terms the
amount of interest due on these installment dates. Rather the
instrument should provide that "interest only" is due on these dates.
The appropriate amortized installment computed as follows will be
shown due on the installment dates thereafter.
(i) Annual payments - Subtract the due date of the last annual
interest only installment from the due date of the final
installment to determine the number of annual payments
applicable. When there are no interest only installments, the
number of annual payments will equal the number of years over
which the loan is amortized. Then multiply the amount of the
note by the applicable amortization factor shown in Rural
Development Amortization Tables and round to the next higher
dollar. Example of Computation of Annual Payment:
Date of Loan Closing:
Amount of Loan:
Interest Rate:
Amortization Period:
Interest Only Installments:
First Regular Installment:
Final Installment:
100
7-5-1976
$100,000.00
5%
40 years
7-5-1977 and
7-5-1978
7-5-1979
7-5-2016
§1942.19 (e) (2)(i)(Con.)
RD Instruction 1942-A
Computation:
$100,000.00 x .05929 =
2016-1978 =
38 annual payments
$5,929.00 annual
payment due
(ii) Semiannual payments - Multiply by two the number of years
between the due date of the last annual interest only
installment and the due date of the final installment to
determine the correct number of semiannual periods applicable.
When there are no interest only installments, multiply by two
the number of years over which the loan is amortized. Then
multiply the amount of the note by the applicable amortization
factor shown in Rural Development Amortization Tables and round
to the next higher dollar.
Example of Computation of Semiannual Payment:
Date of Loan Closing:
Amount of Loan:
Interest Rate:
Amortization Period:
Interest Only Installments:
7-5-1976
$100,000.00
5%
40 years
7-5-1977 and
7-5-1978
First Regular Installment:
7-5-1979
Final Installment:
7-5-2016
Computation:
2016 - 1978 = 38 x 2 =
76 semiannual periods
$100,000.00 x .02952 = $2,952.00 semiannual
payment due
(iii) Monthly payments - Multiply by twelve the number of years
between the due date of the last annual interest only
installment and the final installment to determine the number of
monthly payments applicable. When there are no interest only
installments, multiply by twelve the number of years over which
the loan is amortized. Then multiply the amount of the note by
the applicable amortization factor shown in Rural Development
Amortization Tables and round to the next higher dollar.
Example of Computation of Monthly Payment:
Date of Loan Closing:
Amount of the Loan:
Interest Rate:
Amortization Period:
Interest Only Installments:
(2-6-85, PN 956)
101
7-5-1976
$100,000.00
5%
40 years
7-5-1977 and
7-5-1978
RD Instruction 1942-A
§1942.19 (e) (2) (iii) (Con.)
First Regular Installment:
Final Installment:
Computation:
7-5-1979
7-5-2016
2016 - 1978 =
38 x 12 = 456 monthly payments
$100,000.00 x .00491 = $491.00 monthly
payment due
(3) Third preference - single instrument with installments of
principal plus interest. If a single instrument with amortized
installments is not legally permissible, use a single instrument
providing for installments of principal plus interest accrued on the
unmatured principal balance. The principal should be in an amount
best adapted to making principal retirement and interest payments
which closely approximate equal installments of combined interest and
principal as required by the first two preferences.
(i) The repayment terms concerning interest only installments
described in paragraph (e)(2) of this section, "Second
preference" applies.
(ii) The instrument shall contain in substance the following
provisions:
(A)
A statement of principal maturities and due dates.
(B) Payments made on indebtedness evidenced by this
instrument shall be applied to the interest due through the
next installment due date and the balance to principal in
accordance with the terms of the bond. Payments on
delinquent accounts will be applied in the following
sequence:
(1)
billed delinquent interest,
(2)
past due interest installments,
(3)
past due principal installments,
(4)
interest installment due, and
(5)
principal installment due.
Extra payments and payments made from security depleting
sources shall be applied to the principal last to come due
or as specified in the bond instrument.
102
§1942.19 (e) (Con.)
RD Instruction 1942-A
(4) Fourth preference serial bonds with installments of principal
plus interest. If instruments described under the first, second, and
third preferences are not legally permissible, use serial bonds with
a bond or bonds delivered in the amount of each advance. Bonds will
be delivered in the order of their numbers. Such bonds will conform
with the minimum requirements of paragraph (h) of this section.
Rules for application of payments on serial bonds will be the same as
those for principal installment single bonds as set out in the
preceding paragraph (e)(3) of this section.
(f) Multiple advances of Rural Development funds using permanent
instruments. Where interim financing from commercial sources is not
available, Rural Development loan proceeds will be disbursed on an "as
needed by borrower" basis in amounts not to exceed the amount needed
during 30-day periods.
(g) Multiple advances of Rural Development funds using temporary debt
instrument. When none of the instruments described in paragraph (e) of
this section are legally permissible or practical, a bond anticipation
note or similar temporary debt instrument may be used. The debt
instrument will provide for multiple advances of Rural Development loan
funds and will be for the full amount of the Rural Development loan. The
instrument will be prepared by bond counsel (or local counsel if bond
counsel is not involved and approved by the State Director and OGC. At
the same time Rural Development delivers the last advance, the borrower
will deliver the permanent bond instrument and the canceled temporary
instrument will be returned to the borrower. The approved debt instrument
will show at least the following:
(1)
The date from which each advance will bear interest.
(2)
The interest rate.
(3) A payment schedule providing for interest on outstanding
principal at least annually.
(4) A maturity date which shall be no earlier than the anticipated
issuance date of the permanent instrument(s).
(h) Minimum bond specifications. The provisions of this paragraph
are minimum specifications only, and must be followed to the extent
legally permissible.
(1) Type and denominations. Bond resolutions or ordinances will
provide that the instrument(s) be either a bond representing the
total amount of the indebtedness or serial bonds in denominations
customarily accepted in municipal financing (ordinarily in multiples
of not less than $1000). Single bonds may provide for repayment of
(2-6-85, PN 956)
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§1942.19 (h) (1) (Con.)
principal plus interest or amortized installments; amortized
installments are preferable from the standpoint of Rural Development.
Coupon bonds will not be used unless required by State statute.
(i) To compute the value of each coupon when the bond
denomination is consistent:
(A) Multiply the amount of the loan or advance by the
interest rate and divide the product by 365 days.
(B) Multiply the daily accrual factor determined in (A) by
the number of days from the date of advance or last
installment date to the next installment date.
(C) Divide the interest computed in (B) by the number of
bonds securing the advance; this is the individual coupon
amount.
(ii) To compute the value of each coupon when the bond
denomination varies:
(A) Multiply the denomination of the bond by the interest
rate and divide the product by 365 days.
(B) Multiply the daily accrual factor determined in (A) by
the number of days from the date of advance or last
installment date to the next installment due date; this is
the individual coupon amount.
(2) Bond registration. Bonds will contain provisions permitting
registration as to both principal and interest. Bonds purchased by
Rural Development will be registered in the name of "United States of
America, Rural Development," and will remain so registered at all
time while the bonds are held or insured by the United States. The
address of Rural Development for registration purposes will be that
of the appropriate Rural Development State Office. (Revised 3-1-88,
SPECIAL PN.)
(3) Size and quality. Size of bonds and coupons should conform to
standard practice. Paper must be of sufficient quality to prevent
deterioration through ordinary handling over the life of the loan.
(4) Date of bond. Bonds will preferably be dated as of the day of
delivery, however, may be dated another date at the option of the
borrower and subject to approval by Rural Development. If the date
of delivery is other than the date of the bond, the date of delivery
will be stated in the bond. In all cases, interest will accrue from
the date of delivery of the funds.
104
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RD Instruction 1942-A
§1942.19 (h) (Con.)
(5) Payment date. Loan payments will be scheduled to coincide with
income availability and be in accordance with State law. If
consistent with the foregoing, monthly payments will be required and
will be enumerated in the bond, other evidence of indebtedness, or
other supplemental agreement. However, if State law only permits
principal plus interest (P&I) type bonds, annual or seminannual
payments will be used. Insofar as practical monthly payments will be
scheduled one full month following the date of loan closing; or
semiannual or annual payments will be scheduled six or twelve full
months respectively, following the date of loan closing or any
deferment period. Due dates falling on the 29th, 30th or 31st day of
the month will be avoided. (Revised 06-26-91, PN 168.)
(6) Place of payment. Payments on bonds purchased by Rural
Development should be submitted to the Rural Development District
Office by the borrower. The District Office will then remit the
payments to the Finance Office or deposit them in a Treasury General
Account in accordance with Subpart B of Part 1951 of this chapter.
(7) Redemptions. Bonds should contain customary redemption
provisions; subject, however, to unlimited right of redemption
without premium of any bonds held by Rural Development except to the
extent limited by the provisions under the "Third Preference" and
"Fourth Preference" in paragraph (e) of this section.
(8) Additional revenue bonds. Parity bonds may be issued to
complete the project. Otherwise, parity bonds may not be issued
unless the net revenues (that is, unless otherwise defined by the
State statute, gross revenues less essential operation and
maintenance expense) for the fiscal year preceding the year in which
such parity bonds are to be issued, were 120 percent of the average
annual debt service requirements on all bonds then outstanding and
those to be issued; provided, that this limitation may be waived or
modified by the written consent of bondholders representing 75
percent of the then outstanding principal indebtedness. Junior and
subordinate bonds may be issued in accordance with the loan
agreement.
(9) Scheduling of Rural Development payments when joint financing is
involved. In all cases in which Rural Development is participating
with another lender in the joint financing of the project to supply
funds required by one applicant, the Rural Development payments of
principal and interest should approximate amortized installments.
(10) Precautions. The following types of provisions in debt
instruments should be avoided.
105
(Revision 3)
(02-06-85) PN 956
RD Instruction 1942-A
§1942.19 (h)(10) (Con.)
(i) Provisions for the holder to manually post each payment to
the instrument.
(ii) Provisions for returning the permanent or temporary debt
instrument to the borrower in order that it, rather than Rural
Development, may post the date and amount of each advance or
repayment on the instrument.
(iii) Defeasance provisions in loan or bond resolutions. When
a bond issue is defeated, a new issue is sold which supersedes
the contractual provisions of the prior issue, including the
refinancing requirement and any lien on revenues. Since
defeasance in effect precludes Rural Development from requiring
graduation before the final maturity date, it represents a
violation of the statutory refinancing requirement, therefore it
is disallowed. (Revised 05-03-89, SPECIAL PN.)
(iv) Provisions that amend covenants contained in Forms RD
1942-47, "Loan Resolution (Public Bodies)," or RD 1942-9, "Loan
Resolution Security Agreement." (Revised 06-26-91, PN 168.)
(11) Multiple Loan Instruments.
when preparing debt instruments:
The following will be adhered to
(i) When more than one loan type is used in financing a
project, each type of loan will be evidenced by a separate debt
instrument or series of debt instruments.
(ii) Loan funds obligated in different fiscal years and those
obligated with different interest rates or terms in the same
fiscal year will be evidenced by separate debt instruments.
(iii) Loan funds obligated for the same loan type in the same
fiscal year at the same interest rate and term may be combined
in the same debt instrument; provided the borrower has been
notified on Form RD 1940-1, "Request for Obligation of Funds,"
of the action.
(i) Bidding by Rural Development. Bonds offered for public sale shall be
offered in accordance with State law, in such a manner to encourage public
bidding. Rural Development will not submit a bid at the advertised sale
unless required by State law, nor will reference to Rural Development's
rates and terms be included. If no acceptable bid is received, Rural
Development will negotiate the purchase of the bonds.
106
(Revision 3)
RD Instruction 1942-A
§ 1942.20
Community Facility Guides.
(a) The following documents are attached and made part of this subpart
and may be used in administering this program.
(1)
Guide 1 and 1a
GUIDE LETTER FOR USE IN INFORMING PRIVATE
LENDER OF AGENCY'S COMMITMENT
(2)
Guide 2
WATER USERS AGREEMENT
(3)
Guide 3
SERVICE DECLINATION STATEMENT
(4)
Guide 4
BYLAWS
(5)
Guide 5
FINANCIAL FEASIBILITY REPORT
(6)
Guide 6
PRELIMINARY ARCHITECTURAL FEASIBILITY
REPORT
(7)
Guide 7
PRELIMINARY ENGINEERING REPORT
WATER FACILITY
(8)
Guide 8
PRELIMINARY ENGINEERING REPORT
SEWERAGE SYSTEMS
(9)
Guide 9
PRELIMINARY ENGINEERING REPORT
SOLID WASTE DISPOSAL SYSTEMS
(10)
Guide 10
PRELIMINARY ENGINEERING REPORT
STORM WASTE-WATER DISPOSAL
(11)
Guide 11
DAILY INSPECTION REPORT
(12)
Guide 12
MEMORANDUM OF UNDERSTANDING BETWEEN THE
ECONOMIC DEVELOPMENT ADMINISTRATION DEPARTMENT OF COMMERCE AND THE DEPARTMENT
OF AGRICULTURE PERTAINING TO EPA PUBLIC
WORKS PROJECTS ASSISTED BY AN AGENCY LOAN
(13)
Guide 13
MEMORANDUM OF UNDERSTANDING BETWEEN THE
ECONOMIC DEVELOPMENT ADMINISTRATION DEPARTMENT OF COMMERCE AND THE DEPARTMENT
OF AGRICULTURE REGARDING SUPPLEMENTARY
GRANT ASSISTANCE FOR THE CONSTRUCTION OF
PUBLIC WORKS AND DEVELOPMENT FACILITIES
(02-06-85)
PN 956
107
(Revision 5)
RD Instruction 1942-A
§ 1942.20(a) (Con.)
(14)
Guide 14
LEGAL SERVICES AGREEMENT
(15)
Guide 15
COMMUNITY FACILITY BORROWERS APPLICATION
(16)
Guide 16
COMMUNITY FACILITY LOAN DOCKET
(17)
Guide 17
CONSTRUCTION CONTRACT DOCUMENTS - SHORT
FORM
(18)
Guide 18
AGENCY SUPPLEMENTAL GENERAL CONDITIONS
(19)
Guide 19
CONSTRUCTION CONTRACT DOCUMENTS
(20)
Guide 20
AGREEMENT FOR ENGINEERING SERVICES
(AGENCY/EPA JOINTLY FUNDED PROJECTS)
(21)
Guide 21
REVIEW OF AUDIT REPORTS
(22)
Guide 22
DELINQUENT ACCOUNTS POSITIVE ACTION PLAN
(24)
Guide 24
MINIMUM SUGGESTED CONTENTS OF MANAGEMENT
AGREEMENTS
(25)
Guide 25
JOINT POLICY STATEMENT BETWEEN
ENVIRONMENTAL PROTECTION AGENCY AND AGENCY
(26)
Guide 26
COMMUNITY PROGRAMS PROJECT SELECTION
CRITERIA
(27)
Guide 27
ATTACHMENTS TO AIA DOCUMENT
(Revised 09-24-12, PN 458.)
(28)
Exhibit A
CIRCULAR NO. A-128
SPECIAL PN.)
(29)
Exhibit B
DEPARTMENT OF AGRICULTURE REGIONAL
INSPECTOR GENERAL (OIG) (Added 03-01-88,
SPECIAL PN.)
108
(Revision 5)
(Added 03-01-88,
RD Instruction 1942-A
§ 1942.20 (Con.)
(b) These guides and exhibits are for use by agency officials, applicants
and applicant’s officials and agents on certain matters related to the
planning, development, and operation of essential community facilities
which involve the use of loans and grants from the agency. This includes
activities related to applying for and obtaining such financial
assistance. These guides and exhibits are not published in the Federal
Register; however, they are available in any agency office. (Revised 0826-98, PN 296.)
§
1942.21
Statewide Nonmetropolitan Median Household Income
Statewide Nonmetropolitan Median Household Income means the median
household income of the State’s nonmetropolitan counties and portions of
metropolitan counties outside of cities, towns or places, of 50,000 or more
population. (Added 11-17-04, SPECIAL PN.)
§§ 1942.22 - 1942.29
§ 1942.30
[Reserved]
Re-lending.
(Revised 09-19-18, PN 516.)
The provisions in this section establish the process by which the Agency
may make loans to eligible re-lenders who then in turn re-loan the funds to
eligible applicants for eligible projects under this subpart. This section may
be supplemented by provisions in annual notices published in the FEDERAL
REGISTER. In such notices, the Agency may impose, among other things, limits on
the total amount of funds to be used through this process and the amount of the
loan funding that will be provided to each re-lender.
(a) Re-lender eligibility.
requirements:
Re-lenders must meet each of the following
(1) Demonstrate the legal authority necessary to make and service
loans involving community infrastructure and development similar to
the type of projects listed in § 1942.17(d);
(2) Meet federal, state and local requirements in accordance with
§ 1942.17(k);
(3) As specified in the annual FEDERAL REGISTER notice, demonstrate
that a percent of its portfolio is for projects located in or serving
Persistent Poverty County(ies) or High Poverty Areas, or that the Relender has a minimum amount of experience making loans for projects
located in or serving Persistent Poverty County(ies) or High Poverty
Area(s);
(02-06-85)
PN 956
109
(Revision 3)
RD Instruction 1942-A
§ 1942.30(a) (Con.)
(4) Agree to provide adequate collateral, as determined by the
Agency, to support the loan request;
(5) Provide a Letter of Intent from a financial institution that an
Irrevocable Letter of Credit (or performance guarantee) acceptable to
the Agency will be issued by the financial institution if the Relender is approved for funding;
(6) As specified in the annual FEDERAL REGISTER notice, agree to
provide an Irrevocable Letter of Credit (or performance guarantee)
acceptable to the Agency in the minimum amount equal to the principal
and interest installments due the Agency during the first five (5)
years of the loan, prior to receiving loan disbursements;
(7) Demonstrate one of the following, as provided in the annual
FEDERAL REGISTER notice:
(i) Re-lender is regulated and supervised by a Federal or State
Banking Regulatory Agency that is subject to credit examination,
AND the institution, its subsidiaries, holding companies, and
affiliates are not on their respective regulatory agency’s watch
list and have no regulatory actions outstanding against them;
(ii) Re-lender has a strong Financial Strength and Performance
Rating as specified in the annual FEDERAL REGISTER notice. The
achieved rating must indicate financial strength, performance,
and risk management practices that consistently provide for safe
and sound operations; or
(iii) At the time of application, Relender provides written
documentation, acceptable to the Agency, from a financial
institution that an Irrevocable Letter of Credit (or performance
guarantee) acceptable to the Agency will be issued by the
financial institution, if the Re-lender is approved for funding;
and the Re-lender:
(A) Obtains a strong Financial Strength and Performance
Rating as specified in the Annual FEDERAL REGISTER notice
prior to any funds being
advanced; or
(B) Proves to be a financially sound institution as
determined by the Agency in accordance with the annual
FEDERAL REGISTER notice;
110
(Revision 3)
RD Instruction 1942-A
§ 1942.30(a) (Con.)
(8) Be a legal, non-governmental entity at the time of application
(with the exception of Tribal governmental entities);
(9) Be a member of a national organization that provides training,
technical assistance and credit evaluation of member organizations,
such as FDIC, NCUA or other similar organizations; or be certified by
a Government agency as having a primary mission of promoting
community development in low-income target markets and perform
training and technical assistance as part of that mission;
(10) Agrees to loan a majority of Agency funds, as specified in the
annual FEDERAL REGISTER notice, to applicants whose projects are
located in or serve Persistent Poverty County(ies) or High Poverty
Area(s); and
(11) Meet any other criteria specified by the Agency in the annual
Notice published in the FEDERAL REGISTER.
(b) Applicant and project eligibility. To be eligible for a CF Direct
loan from a re-lender under this section,
(1) The applicant must meet the eligibility requirements found in
this subpart, including but not limited to those in § 1942.2(a)(2)
regarding the inability to obtain credit elsewhere and
§ 1942.17(b) and (k);
(2) The applicant must comply with any other criteria specified by
the Agency in the annual Program Notice published in the FEDERAL
REGISTER; and
(3)
The project must:
(i) Meet all of the eligibility requirements for a project
found in this subpart, including but not limited to
§ 1942.17(b)(2), (d), (e), and (g) and all environmental review
requirements as specified in § 1942.2(b) and 7 CFR part 1970;
and
(ii) Meet any additional requirements that may be specified in
the program’s annual Notice published in the FEDERAL REGISTER.
(c) Application submission requirements. To apply for funds under this
section, a Re-lender must timely submit all items as specified in the
annual FEDERAL REGISTER notice.
110A
(Added 09-19-18, PN 516)
RD Instruction 1942-A
§ 1942.30 (Con.)
(d) Evaluation criteria. The Agency will score and rank all eligible and
complete Re-lender applications based upon the evaluation factors set out
in the annual FEDERAL REGISTER notice, including but not limited to:
Lending experience and strength of the re-lender, poverty and project
service area, and Administrator’s discretionary points.
(e) Other Re-lender requirements. Prior to receiving a direct loan from
the Agency, the eligible re-lender must:
(1)
Enter into a Re-lender’s agreement provided by the Agency;
(2)
Execute a promissory note;
(3) Provide an Agency approved Irrevocable Letter of Credit (or
performance guarantee) acceptable to the Agency in the minimum amount
equal to the principal and interest installments due during the first
five (5) years of the loan, prior to receiving any loan
disbursements;
(4)
Provide adequate collateral satisfactory to the agency; and
(5) Meet any other loan conditions as described in the annual Notice
published in the FEDERAL REGISTER.
(f)
Loan origination and servicing.
(1) Re-lenders. After the Agency loan is made to the Re-lender, the
Re-lender is responsible for:
(i) Presenting to the Agency eligible CF direct loan
applications in accordance with this subpart and any additional
terms established in the applicable annual Notice published in
the FEDERAL REGISTER;
(ii) Underwriting and servicing each loan reviewed and approved
by the Agency under this section;
(iii) Submitting reports to the Agency after any loan
disbursement as specified in the annual FEDERAL REGISTER notice;
(iv) Certifying to the Agency that the Re-lender and Borrower
have met the requirements of 7 CFR 3575.42 and 3575.43 for
planning, bidding, contracting and construction, as specified in
the annual FEDERAL REGISTER Notice;
110B
(Added 09-19-18, PN 516)
RD Instruction 1942-A
§ 1942.30(f)(1) (Con.)
(v) Complying with other Agency requirements as specified in
the annual FEDERAL REGISTER notice concerning environmental,
civil rights, and other applicable Federal state, and local law;
(vi) Obtaining disbursement of loan funds according to this
section and the annual FEDERAL REGISTER notice within 5 years.
Any loan funds not disbursed within that time will be
deobligated and become unavailable for disbursement.
(2)
Agency responsibilities.
(i) Based on the information presented by the Relender and any
additional information that may be requested by the Agency, the
Agency will determine the eligibility of the applicant and
project under this subpart.
(ii) The Agency will notify the relender of its determination
and any administrative review or appeal rights for Agency
decisions made under this subpart. Programmatic decisions based
on clear and objective statutory or regulatory requirements are
not appealable; however, such decisions are reviewable for
appealability by the National Appeals Division (NAD). The
applicant and re-lender may appeal any Agency decision that
directly and adversely impacts them. For an adverse decision
that impacts the applicant, the re-lender and applicant must
jointly execute a written request for appeal for an alleged
adverse decision made by the Agency. An adverse decision that
only impacts the re-lender may be appealed by the re-lender
only. A decision by a re-lender adverse to the interest of an
applicant or borrower is not a decision by the Agency, whether
or not concurred in by the Agency. Appeals will be conducted by
USDA NAD and will be handled in accordance with 7 CFR part 11.
(iii) For approved eligible borrowers and projects, the Agency
will confirm that all environmental requirements as specified in
this subpart and 7 CFR part 1970 have been met and that the Relender has provided adequate security for its loan, before the
Agency will disburse funds to the Re-lender;
110C
(Added 09-19-18, PN 516)
RD Instruction 1942-A
§ 1942.30(f)(2) (Con.)
(iv) The Agency will service each relender’s loan in accordance
with 7 CFR part 1951, subpart E. The Agency may suspend further
disbursements, and pursue any other available and appropriate
remedies, if any of the re-lender loans become troubled,
delinquent, or otherwise in default status, or if the relender
is not meeting the terms of its Relender’s Agreement.
§§ 1942.31 - 1942.49
§ 1942.50
[Reserved]
OMB control number.
The reporting and recordkeeping requirements contained in this regulation
have been approved by the Office of Management and Budget (OMB) and have been
assigned OMB control number 0575-0015. Public reporting burden for this
collection of information is estimated to vary from five minutes to 15 hours
per response, with an average of 2.7 hours per response, including time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the collection of
information. Send comments regarding this burden estimate or any other aspect
of this collection of information, including suggestions for reducing this
burden to the Department of Agriculture, Clearance Officer, OIRM, Ag Box 7630,
Washington, D.C. 20250; and to the Office of Management and Budget, Paperwork
Reduction Project (OMB #0575-0015), Washington, D.C. 20503.
Attachments:
Guides 1 through 22 and 24 through 27
Exhibits A and B
o0o
(02-06-85)
PN 956
110D
(Added 09-19-18, PN 516)
(Guide 1)
RD Instruction 1942-A
GUIDE LETTER FOR USE IN INFORMING PRIVATE LENDER OF
RURAL DEVELOPMENT'S COMMITMENT
(Name and Address of Private Lender)
________________________________________________________
________________________________________________________
Dear ______________________:
Reference is made to a request from the ______(Town of Friendly)__________
through _________(John Smith)__________ its Mayor, for interim financing from
your bank to construct its water (and/or sewer) system at the interest rate and
terms and conditions agreed upon, as reflected in the attached copy of your
letter.
This letter is to confirm certain understandings on behalf of Rural
Development.
Final plans and specifications have been prepared and approved, bids have been
taken, and the town council is prepared to award the construction contract to
the qualified low bidder. It has been determined by the applicant and Rural
Development that the conditions of loan (and/or grant) closing can be met.
Funds have been obligated for the project, as evidenced by the attached copy of
Form RD 440-57, "Acknowledgment of Obligated Funds/Check Request."
It is proposed by the town with the approval of Rural Development that the bank
advance funds, in accordance with the agreed terms and conditions stated in the
attached letter, as needed to pay for construction and other authorized and
legally eligible expenses incurred by the town, upon presentation of proper
statements or work estimates approved by the town's authorized representative
and the authorized official of Rural Development.
We have scheduled Rural Development loan to be closed when construction to be
financed with loan funds is substantially complete, so that funds will be
available to pay off the total amount of advances your bank has made for
authorized approved purposes, including accrued interest to the date of
closing.
We appreciate your assistance to the community and look forward to working with
you on this project.
Sincerely,
State Director or District Director
Farmers Home Administration
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 1a)
GUIDE LETTER FOR USE IN INFORMING OTHER LENDERS OF RURAL DEVELOPMENT'S
COMMITMENT
TO:
_____________________(NAME AND ADDRESS OF LENDER)___________________
____________________________________________________________________
SUB: INTERIM FINANCING FOR THE (TOWN OF FRIENDLY)________________________
The__(Town of Friendly)____________(the "applicant") proposes to sell ___(type
of debt instrument)____________ in order to obtain interim financing for the
construction of a __(description of project)______ . The _________(debt
instrument)____ , in the aggregate principal amount of $__________________, is
being issued pursuant to a certain _______(authorizing document) Resolution
adopted by the applicant on _________________, 19___. On the same date the
applicant adopted a bond resolution pursuant to which it will issue bonds for
permanent financing.
This letter is to confirm certain understandings on behalf of Rural
Development.
Final plans and specifications have been prepared and approved, bids have been
taken and the applicant has awarded the construction contract to the qualified
low bidders. It has been determined by the applicant and Rural Development
that the conditions of a permanent loan closing can be met. Presently, Rural
Development has no reason to believe that such conditions will not be met.
Funds have been obligated for the project, as evidenced by the attached copy of
Form RD 440-57, "Acknowledgment of Obligated Funds/Check Request."
It is proposed by the applicant, with the approval of Rural Development, that
the proceeds from the purchase of the ____(type of debt instrument)__ will be
used to provide for interest on the __(type of debt instrument)__ to maturity
and to pay for construction and other authorized and legally eligible expenses
incurred by the applicant upon presentation of proper statements or work
estimates approved by the applicant, its authorized representatives and the
District Director, or other authorized official of Rural Development.
(1-15-79)
SPECIAL PN
We have scheduled disbursement of the permanent loan to the applicant for
later than ______________, 19___, in immediately available funds, so that funds
will be available to pay the __(type of debt instrument)__ in full upon their
maturity on ________________, 19___. Upon meeting the loan conditions, at the
permanent loan closing Rural Development will disburse the permanent loan by
purchasing the applicant's (permanent debt instrument) issued pursuant to the
Bond Resolution.
We appreciate your assistance to the applicant and look forward to working with
you on this project.
Sincerely yours,
State Director or District Director
Rural Development
oOo
RD Instruction 1942-A
(Guide 2)
WATER USERS AGREEMENT
This agreement entered into between the ___________________________, a
nonprofit corporation, hereinafter called the "Association," and
_________________________________________________________________, member(s) of
the Association, hereinafter called "Member."
W I T N E S S E T H
Whereas, the Member desires to purchase water from the Association and to
enter into a water users agreement as required by the Bylaws of the
Association.
NOW THEREFORE, in consideration of the mutual covenants, promises, and
agreements herein contained, it is hereby understood and agreed by the parties
hereto as follows:
The Association shall furnish, subject to the limitation set out in its
Bylaws and Rules and Regulations now in force or as hereafter amended, such
quantity of water as Member may desire in connection with Member's occupancy of
the following described priority:
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 2) (Page 2)
EXAMPLE:
Lot 1 Section 1 of the Green Valley Subdivision
fronting 52 feet on Highway No. 620 containing 1/2 acre
joined on the East by John Jones and on the West by Pete
Smith; or 162 N. South Street, Springfield, Virginia
The Member agrees to grant to the Association, its successors and
assigns, a perpetual easement in, over, under and upon the above-described and,
with the right to erect, construct, install, and lay, and thereafter use,
operate, inspect, repair, maintain, replace, and remove water pipelines and
appurtenant facilities, together with the right to utilize adjoining lands
belonging to the Member for the purpose of ingress to and egress from the
above-described lands.
The Member shall install and maintain at the member's expense a service
line which shall begin at the meter and extend to the dwelling or place of use.
The service line shall connect with the distribution system of the Association
at the nearest place of desired use by the Member, provided the Association has
determined in advance that the system has sufficient capacity to permit
delivery of water at that point.
The Member agrees to comply with and be bound by the Articles, Bylaws,
Rules and Regulations of the Association, now in force, or as hereafter duly
and legally supplemented, amended, or changed. The
(Guide 2) (Page 3)
RD Instruction 1942-A
Member also agrees to pay for water at such rates, time, and place as shall be
determined by the Association, and agrees to the imposition of such penalties
for noncompliance as are now set out in the Association's Bylaws and Rules and
Regulations, or which may be hereafter adopted and imposed by the Association.
The Member agrees to pay a deposit in the amount of $________. In the
event service to the Member is terminated, either voluntarily by the Member, or
by the Association for cause, the deposit shall be held and applied by the
Association to any unpaid balance then owing on the Member's account. Should
the account be fully paid at the time of termination of service to the Member,
the deposit shall be refunded by the Association within a reasonable time
thereafter.
The Association shall purchase and install a cutoff valve and may also
include a water meter in each service. The Association shall have exclusive
right to use such cutoff and water meter.
The Association shall have final authority in any question of location of
any service line connection to its distribution system; shall determine the
allocation of water to Members in the event of a water shortage; and may shut
off water to a Member who allows a connection or extension to be made of the
member's service line for the purpose of supplying water to another user. In
the event the total water supply shall be insufficient to meet
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 2) (Page 4)
all of the needs of the Members, or in the event there is a shortage of water,
the Association may prorate the water available among the various Members on
such basis as is deemed equitable by the Board of Directors, and may also
prescribe a schedule of hours covering use of water for garden purposes by
particular Members and require adherence thereto or prohibit the use of water
for garden purposes; provided that, if at any time the total water supply shall
be insufficient to meet all of the needs of all of the Members, the Association
must first satisfy all of the needs of all Members for domestic purposes before
supplying any water for livestock purposes and must satisfy all the needs of
all Members for both domestic and livestock purposes before supplying any water
for garden purposes.
The Member agrees that
connected to any waterlines
disconnect from the present
to the Association's system
connections in the member's
no other present or future source of water will be
served by the Association's waterlines and will
water supply prior to connecting to and switching
and shall eliminate their present or future crosssystem.
The Member shall connect the service lines to the Association's
distribution system and shall commence to use water from the system on the date
the water is made available to the Member by the Association. Water charges to
the Member shall commence on the date service is made available, regardless of
whether the Member connects to the system.
(Guide 2) (Page 5)
RD Instruction 1942-A
In the event the Member shall breach this contract by refusing or failing,
without just cause, to connect a service line to the Association's distribution
system as set forth above, the Member agrees to pay the Association a lump sum
of Three Hundred Dollars ($300.00) as liquidated damages. It is expressly
understood and agreed by the parties hereto that the said amount is agreed upon
as liquidated damages in that a breach by the Member in either of the respects
set forth above would be difficult, if not impossible, to prove the amount of
such damages. The parties hereto have computed, estimated, and agreed upon
said sum in an attempt to make a reasonable forecast of probable actual loss
because of the difficulty of estimating with exactness the resulting damages.
The failure of a customer to pay water charges duly imposed shall result
in the automatic imposition of the following penalties:
1. Nonpayment within ten days from the due date will be subject to a
penalty of ten percent of the delinquent account.
2. Nonpayment within thirty days from the due date will result in the
water being shut off from the customer's property.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 2) (Page 6)
3. In the event it becomes necessary for the Association to shut off the
water from a Member's property, a fee set by the corporation in its rate
schedule will be charged for a reconnection of the service.
IN WITNESS WHEREOF, we have executed this agreement this ________
______ day of ________________, 19___________.
SEAL
ATTEST:
____________________________
__________________________________
(Name of Association)
By:
__________________________________
President
__________________________________
Member
__________________________________
Member
oOo
RD Instruction 1942-A
(Guide 3)
SERVICE DECLINATION STATEMENT
I understand that the ____________(Name of Association)________________
proposes to build a (water) (sewer) system to serve my area. I have been given
an opportunity to sign a (Water) (Sewer) Users Agreement so that I might obtain
service. I do not wish to be served because _____
______________________________________________________________________
______________________________________________________________________
___________________________
Date
_________________________________
Signature
_______________________________________________________________________
(Mailing Address)
_______________________________________________________________________
(Location)
_______________________________________________________________________
_______________________________________________________________________
The information inserted above is correct to the best of my knowledge.
not possible to obtain the signature of this potential user because
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_________________________
Date
_________________________________
*Signature
*To be completed and signed by a representative of the association when
applicable.
oOo
(1-15-79)
SPECIAL PN
It was
(Guide 4)
RD Instruction 1942-A
BYLAWS
of
_________________________________________________
ARTICLE I
General Purposes
The purposes for which this corporation is formed, and the powers which it
may exercise are set forth in the articles of incorporation of the corporation.
ARTICLE II
Name and Location
Section 1. The name of this corporation is the_____________________
__________________________________________________________________.
Section 2. The principal office of this corporation shall be located in
the City (Village) or ___________________________, County of
______________________ State of _________________________________.
ARTICLE III
Seal
Section 1. The seal of the corporation shall have inscribed thereon the
name of the corporation, the year of its organization and the words,
"Corporation Not For Profit,________________________________________."
Section 2.
seal.
The secretary of the corporation shall have custody of the
Section 3. The seal may be used for causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 4) (Page 2)
ARTICLE IV
Fiscal Year
The fiscal year of the corporation shall begin the _____________ day of
____________________ in each year.
ARTICLE V
Membership
Section 1. Membership will be limited to those who obtain the
organization's services, acquire a tangible interest in its assets in
proportion to the business done with the organization and have a voice in its
management.
Section 2. Every person (which word as used herein includes any legal
entity) who is a record owner of a fee or undivided fee interest, or having a
substantial possessory interest, in a property served by the water system may
become a member of the corporation upon signing such applications and
agreements for the purchase of water as may be provided and required by the
corporation and upon the payment of such connection fee as may be imposed by
the board of directors provided that only one membership at a time may be held
for each property served. A single membership may be issued to all persons
owning or having a substantial possessory interest in the property. Only one
membership may be held with respect to property at one time. The board of
directors shall cause to be issued appropriate certificates of membership,
provided that membership shall not be denied because of the applicant's race,
color, creed, sex, age, marital status, or national origin. Membership may be
denied if capacity of the corporation's water system is exhausted by the need
of its existing members, or, if the proposed use of the applicant is such that
it would interfere with existing uses previously authorized by the board of
directors.
A. A substantial possessory interest is one where the person or persons
have a legal right to control and occupancy of a property but do not have the
legal or the equitable ownership of the property. It may be under a lease or
similar right to possession.
(1) Before membership is allowed to one or more persons claiming such an
interest, the corporation will endeavor to obtain the application for
membership from the owner of such property.
(Guide 4) (Page 3)
RD Instruction 1942-A
(2) Where membership is granted to one or more persons having a
substantial possessory interest, the corporation, as a condition to the
membership, may require such applicant to post such collateral or bond as the
directors determine necessary to fully protect the corporation from any
additional risk that may be involved to the corporation by reason of the lack
of legal ownership in the applicant.
Section 3. Each member shall have only one membership for each property
served, regardless of the number of service connections the member may obtain
to serve the property. Each membership certificate shall represent one vote.
When more than one person holds the interest in a property served, the vote
shall be exercised by the person in whose name the certificate is registered or
by such person as the several persons may designate, but in no event shall more
than one vote be cast with respect to any property.
Section 4. Membership shall be transferable but the transfer will be
effective only when noted on the books of the corporation. Such transfer will
be made only to a person who obtains a qualifying interest in the property. A
member will transfer membership in the corporation to a successor in interest
as part of the transaction whereby the member disposes of any interest to said
property. The secretary, upon request, will make note of such transfer upon
the records of the corporation but need not issue a new certificate to the
successor in interest of the previous existing member.
Section 5. When membership in the corporation is not transferred, it
shall terminate upon the disposition or other termination of the member's
interest in the property, regardless of whether or not the certificate is
surrendered to the corporation. Membership also may be terminated by action of
the board of directors where the use of the property is changed so as to
materially increase the amount of water consumed to the prejudice of other
existing members or to the prejudice of the orderly operation of the system.
Section 6. Termination of membership will not result in forfeiture of the
former member's rights and interest in the organization's assets and the former
member will not be precluded from receiving a proportionate share of any
subsequent distribution of such assets by the organization.
Section 7. The termination of the membership of any member shall not
disqualify for membership any other person who has or obtains an interest in
the property of the terminated member and who otherwise meets the requirements
of these bylaws.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 4) (Page 4)
Section 8. In the event a member's property interest is divested other
than by voluntary means, such member's membership will pass to the trustee,
receiver, executor, or the like who will be entitled either in person or
through a designated representative to exercise all of the rights incident to
such membership, but subject to such duties and liabilities also applicable to
the membership. The trustee, receiver, executor, or the like, may terminate
such membership by written notice to such effect delivered or mailed to the
secretary of the corporation. Upon the final disposition of such property
rights, the owner thereof shall be entitled to membership in like manner as if
the membership had been transferred to the owner by the original member as set
forth in Section 4 above.
Section 9. Upon the transfer of a membership, the corporation will not
look to the successor in interest for the payment of any past due amounts. The
corporation will seek collection only from the individual who incurred such
charges or assessments or from the property itself if a judgment lien had been
duly perfected against such property.
ARTICLE VI
Membership Certificates
Section 1. This corporation shall not have capital stock. Membership in
the corporation shall be represented by membership certificates. Such
certificates shall represent the right to use and enjoy the benefits of the
corporation's water supply system upon the payment of necessary assessments, if
any, and of reasonable charges based upon such use, provided such use and
enjoyment are consistent with the rules, regulations, and contracts affecting
the same as may from time to time be prescribed by the board of directors.
Section 2. A membership certificate shall be issued to each holder of
fully paid membership, numbered consecutively in accordance with the order of
issue, and bear on its face the following statement:
This membership certificate is issued and accepted in accordance with and
subject to the conditions and restrictions stipulated in the articles of
incorporation and bylaws and amendments to the same
of the ______________________________________________________________
Water Association.
(Guide 4) (Page 5)
RD Instruction 1942-A
ARTICLE VII
Meetings of Members
Section 1. The annual meeting of the members of this corporation shall be
held at the City (Village) of __________________________, County of
_____________________, State of _______________________, at ____________
o'clock ____.m., on the __________________ in ____________________ of each
year, if not a Sunday or legal holiday, or if a Sunday or legal holiday on the
next business day following. The place, day, and time of the annual meeting
may be changed to any other convenient place, day, and time in the county by
the board of directors giving notice thereof to each member not less than ten
(10) days in advance thereof.
Section 2. Special meetings of the members may be called at any time by
the action of the board of directors and such meetings must be called whenever
a petition requesting such meetings is signed by at least ten percent of the
members and presented to the secretary or to the board of directors. The
purpose of every special meeting shall be stated in the notice thereof, and no
business shall be transacted thereat except such as is specified in the notice.
Section 3. Notice of meetings of members of the corporation, both regular
and special, shall be given by notice mailed by first-class mail to each member
of record, directed to the address shown upon the books of the corporation, not
less than ten (10) nor more than forty (40) days prior to such meeting. Such a
notice shall state the nature, time, place and purpose of the meeting, but no
failure or irregularity of notice of any annual meeting, regularly held, shall
affect any proceedings taken thereat.
Section 4. The presence at a meeting of members entitled to cast in their
own right or by proxy ________ percent of the total number of votes shall
constitute a quorum. All proxies shall be in writing and filed with the
secretary. Such proxies may be general or restrictive. Proxies shall be
revocable and shall not be valid beyond 11 months, nor after termination of the
membership by cessation of the member's interest in the property.
Section 5. Directors of this corporation shall be elected at the annual
meeting of the members as provided in Article VIII, Section 1. No cumulative
voting shall be allowed.
Section 6. The order of business at the regular meetings and so far as
possible at all other meetings shall be:
(I-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 4) (Page 6)
1.
Calling to order and proof of quorum
2.
Proof of notice of meeting
3.
Reading and action on any unapproved minutes
4.
Reports of officers and committees
5.
Election of directors
6.
Unfinished business
7.
New business
8.
Adjournment
ARTICLE VIII
Directors and Officers
Section 1. The board of directors of this corporation shall consist of
five members, all of whom shall be members of the corporation. The directors
named in the articles of incorporation shall serve until the first annual
meeting of the members and until their successors are elected and have
qualified. At the first annual meeting of the members, one director shall be
elected for a term of one year; two directors for a term of two years; and two
directors for a term of three years. At each annual meeting thereafter, the
members shall elect for a term of three years the number of directors whose
terms of office have expired. Each director shall hold office for the term for
which elected and until a successor shall have been elected and qualified.
Section 2. The board of directors shall meet within ten (10) days after
the annual election of directors and shall elect a president and vice-president
from among themselves and secretary-treasurer who need not be a member of the
board of directors, each of whom shall hold office until the next annual
meeting and until the election and qualification of a successor unless sooner
removed by death, resignation, or for cause.
Section 3. If the office of any director becomes vacant by reason of
death, resignation, retirement, disqualification, or otherwise, except by
removal from office, a majority of the remaining directors, shall by a majority
vote, choose a successor who shall hold office until the next regular meeting
of the members of the corporation, at which time the members shall elect a
director for the unexpired term or terms.
(Guide 4) (Page 7)
RD Instruction 1942-A
Section 4. A majority of the board of directors shall constitute a quorum
at any meeting of the board. The affirmative vote of the majority of the
directors at a meeting at which a quorum is present shall be the act of the
board.
Section 5. Compensation of officers may be fixed only at any regular or
special meeting of the members of the corporation. Directors shall receive no
compensation for their services as such.
Section 6. Officers and directors may be removed from office in the
following manner: Any member, officer, or director may present charges against
a director or officer by filing them in writing with the secretary of the
corporation. If presented by a member, the charges must be accompanied by a
petition signed by ten percent of the members of the corporation. Such removal
shall be voted on at the next regular or special meeting of the members and
shall be effective if approved by a vote of a majority of those voting if a
quorum is present. The director or officer against whom such charges have been
presented shall be informed, in writing, of such charges at least twenty days
prior to the meeting, and shall have the opportunity at such meeting to be
heard in person or by counsel and to present witnesses; and the person or
persons presenting such charges shall have the same opportunity. If the
removal of a director is approved, such action shall also vacate any other
office held by the removed director in the corporation. A vacancy in the board
thus created shall immediately be filled by a vote of a majority of the members
present and voting at such meeting. A vacancy in any office thus created shall
be filled by the board of directors from among their number so constituted
after the vacancy in the board has been filled.
ARTICLE IX
Duties of Directors
Section 1. The board of directors, subject to restrictions of law, the
articles of incorporation, and these bylaws, shall exercise all of the powers
of the corporation, and, without prejudice to or limitation upon their general
powers, it is hereby expressly provided that the board of directors shall have,
and are hereby given full power and authority in respect to the matters as
hereinafter set forth to be exercised by resolution duly adopted by the board:
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 4) (Page 8)
A. To approve membership applications and to cause to be issued
appropriate certificates and to permit the connection of properties to the
system in the future in cases involving proposed construction or may issue such
certificates prior to the commencement of the proposed construction.
B. To select and appoint all agents or employees of the corporation,
remove such agents or employees of the corporation, prescribe such duties and
designate such powers as may not be inconsistent with these bylaws, fix their
compensation and pay for faithful services.
C. To borrow from any source, money, goods, or services and to make and
issue notes and other negotiable or nonnegotiable instruments evidencing
indebtedness of the corporation; to make and issue mortgages, deeds of trust,
pledges of revenue, trust agreements, security agreements and financing
statements and other instruments evidencing a security interest in the assets
of the corporation; and, to do every act and thing necessary to effectuate the
same.
D. To prescribe, adopt and amend, from time to time such equitable
uniform rules and regulations as, in its discretion, may be deemed essential or
convenient for the conduct of the business and affairs of the corporation and
the guidance and control of its officers and employees, and to prescribe
adequate penalties for the breach thereof.
E. To order, at least once each year, an audit of the books and accounts
of the corporation by a competent public auditor or accountant. The report
prepared by such auditor or accountant shall be submitted to the members of the
corporation at their annual meeting, together with a proposed budget for the
ensuing year. Copies of such audits and budgets shall be submitted to such
parties as may be required by other agreements.
F. To fix and alter the charges to be paid by each member for services
rendered by the corporation to the member, including connection or reconnection
fees where such are deemed to be necessary by the directors, and to fix and
alter the method of billing, time of payment, manner of connection, and
penalties for late or nonpayment of the same. The board may establish one or
more classes of users. All charges shall be uniform and nondiscriminating
within each class of users.
(Guide 4) (Page 9)
RD Instruction 1942-A
G. To require all officers, agents, and employees charged with
responsibility for the custody of any of the funds of the corporation to give
adequate bonds, the cost thereof to be paid by the corporation, and it shall be
mandatory upon the directors to so require.
H. To select one or more banks to act as depositories of the funds of the
corporation and to determine the manner of receiving, depositing, and
disbursing the funds of the corporation and the form of checks and the person
or persons by whom the same shall be signed, with the power to change such
banks and the person or persons signing such checks and the form thereof at
will.
I. To levy assessments against the members of the corporation in such
manner and upon such proportionate basis as the directors deem equitable, and
to enforce collection of such assessments by the suspension of water service or
other legal methods. The board of directors shall have the option to suspend
the service of any member who has not paid such assessment within 30 days from
the date the assessment was due, provided the corporation must give the member
at least 15 days' written notice at the address of the member on the books of
the corporation of its intention to suspend such service if the assessment is
not paid. Upon payment of such assessments, any penalties applicable thereto,
and a reconnection charge, if one is in effect, service will be promptly
restored to such a member.
ARTICLE X
Duties of Officers
Section 1. Duties of President. The President shall preside over all
meetings of the corporation and the board of directors, call special meetings
of the board of directors, perform all acts and duties usually performed by an
executive and presiding officer, and sign all membership certificates and such
other papers of the corporation as may be authorized or directed to sign by the
board of directors, provided the board of directors may authorize any person to
sign any or all checks, contracts, and other instruments in writing on behalf
of the corporation. The President shall perform such other duties as may be
prescribed by the board of directors.
Section 2. Duties of the Vice-President. In the absence or disability of
the President, the Vice-President shall perform the duties of the President;
provided, however, that in case of death, resignation, or disability of the
President, the board of directors may declare the office vacant and elect a
successor.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 4) (Page 10)
Section 3. Duties of the Secretary-Treasurer. The Secretary-Treasurer
shall keep a complete record of all meetings of the corporation and of the
board of directors and shall have general charge and supervision of the books
and records of the corporation. The Secretary-Treasurer shall attest the
President's signature on all membership certificates and other papers
pertaining to the corporation unless otherwise directed by the board of
directors. The Secretary-Treasurer shall serve, mail, or deliver all notices
required by law and by these bylaws and shall make a full report of all matters
and business pertaining to the office to the members at the annual meeting or
at such other time or times as the board of directors may require. The
Secretary-Treasurer shall keep the corporate seal and membership certificates
issued and affix said corporate seal to all papers requiring a seal. The
Secretary-Treasurer all keep a proper membership certificate record, showing
the name of each member of the corporation and date of issuance, surrender,
transfer, termination, cancellation, or forfeiture. The Secretary-Treasurer
shall make all reports required by law and shall perform such other duties as
may be required by the corporation or the board of directors. Upon the
election of a successor, the Secretary-Treasurer shall turn over to the
successor all books and other property belonging to the corporation that the
Secretary Treasurer may possess. The Secretary-Treasurer shall also perform
such duties with respect to the finances of the corporation as may be
prescribed by the board of directors.
ARTICLE XI
Benefits and Duties of Members
Section 1. The corporation will install, maintain and operate a main
distribution pipeline or lines from the source of the water supply and service
lines from the main distribution pipeline or lines to the property line of each
member of the corporation, at which points, designated as delivery points,
meters to be purchased, installed, owned, and maintained by the corporation
shall be placed. The cost of the service line or lines from the main
distribution pipeline or lines of the corporation to the property line of each
member shall be paid by the corporation. The corporation also may purchase and
install a cutoff valve in each service line from its main distribution line or
lines, such cutoff valve to be owned and maintained by the corporation and to
be installed on some portion of the service line owned by the corporation. The
corporation shall have the sole and exclusive right to use of such cutoff
valve. However, the provisions of this section shall not be construed to
require the acquisition or installation of meters or cutoff valves where the
directors determine under the circumstances of the system and the nature of the
membership that the use of either or both devices is impractical, unnecessary
to protect the system and the rights of the membership, and/or economically not
feasible.
(Guide 4) (Page 11)
RD Instruction 1942-A
Section 2. Each member will be required, at the members expense, to have
dug a ditch for the connection of the service line or lines from the property
line of the member to member's dwelling or other portion of the member's
premises, and to purchase and have installed the portion of the service line or
lines from the member's property line to the place of use on the member's
premises. The member will maintain such portion of such service line or lines
which shall be owned by the member, at the member's own expense. The
corporation may, if the board of directors so determines, purchase the pipe for
and install such portion of such service line or lines, the cost of which will,
however, be paid by the individual members. In addition, each member shall pay
such connection charge, if any, as may have been imposed by the board of
directors before such member will be entitled to receive water from the system.
Section 3. Each member may be permitted to have additional service lines
from the corporation's water system in the discretion of the board of directors
upon proper application therefore and the tender or payment not to exceed the
then existing connection charge. The approval by the board of directors of
additional service lines to an existing member may be made conditional upon
such provisions as the board of directors determines necessary to protect the
interests of other members and to allow for the orderly expansion and extension
of the system. Each service line shall connect with the corporation's water
system at the nearest available place to the place of desired use by the member
if the corporation's water system has sufficient capacity to permit the
delivery of water through a service line at that point without interfering with
the delivery of water through a prior service line. If the corporation's water
system is inadequate to permit the delivery of water through a service line
installed at such place without interfering with the delivery of water through
a prior service line, then such service line shall be installed at such place
designated by the corporation.
Section 4. Each member may be permitted to purchase from the corporation,
pursuant to such agreement as may from time to time be provided and required by
the corporation, such water as is needed for domestic, commercial,
agricultural, industrial or other purposes as a member may desire, subject,
however, to the provisions of these bylaws and to such rules and regulations as
may be prescribed by the board of directors. Each member shall be entitled to
have delivered, through the member's service lines, only such water as may be
necessary to supply the needs of each member, including the member's family,
business, agricultural or industrial requirements. The water delivered through
each service line may be metered separately, irrespective of the number of
service lines owned by a member.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 4) (Page 12)
Section 5. In the event the total water supply shall be insufficient to
meet all of the needs of the members or in the event there is a shortage of
water, the corporation may prorate the water available among the various
members on such basis as is deemed equitable by the board of directors, and may
also prescribe a schedule of hours covering use of water for commercial,
agricultural or industrial purposes by particular members and require adherence
thereto or prohibit the use of water for commercial, agricultural or industrial
purposes; provided, that if at any time the total water supply shall be
insufficient to meet all of the needs of all of the members for domestic,
livestock, commercial, agricultural or industrial purposes, the corporation
must first satisfy all of the reasonable needs of the members for domestic
purposes before supplying any water for livestock purposes and must satisfy all
of the needs of all of the members for domestic and livestock purposes before
supplying any water for commercial or industrial purposes; and, provided
further, that where a member has more than one service line, the corporation
may cut off the flow of water to the nondomestic service lines until such time
as the supply of water from the system is sufficient to meet the needs of all
of the members for domestic and livestock purposes. During such periods of
shutoff of additional service lines there shall be no minimum fee charged to
the members having such additional service lines and the cost, if any, of
resuming the flow of water to such additional service lines shall be borne by
the corporation.
Section 6. The board of directors shall, with the consent of Rural
Development, so long as it shall either hold any obligations or insure any
financing of the system, prior to the beginning of each calendar year,
determine the flat minimum monthly rate to be charged each member during the
following calendar year for a specified quantity of water, such flat minimum
monthly rate to be payable irrespective of whether any water is used by a
member during any month, the amount of additional charges, if any, for
additional water which may be supplied the members, and the amount of penalty
for late payments, and shall fix the date for the payment of such charges. A
member to be entitled to the delivery of water shall pay such charges at the
office designated by the corporation at or prior to the dates fixed by the
board of directors. The failure to pay water charges duly imposed shall result
in the automatic imposition of the following penalties.
A. Nonpayment within ten days from the due date will be subject to a
penalty of ten (10) percent of the delinquent account, which percent may be
changed at the discretion of the board of directors.
(Guide 4) (Page 13)
RD Instruction 1942-A
B. Nonpayment within thirty days from the due date will result in the
water being shut off from the member's property without any notice thereof to
such delinquent member. Upon the payment by the delinquent member of past due
water charges, penalties thereon and any reconnection charge, such member shall
be entitled to resumption of the water supply. During the time of such
suspension of water to a member, such member shall have no right to vote in the
affairs of the corporation.
Section 7. The board of directors shall be authorized to require each
member to enter into water users agreements which shall embody the principles
set forth in the foregoing provisions of these bylaws.
ARTICLE XII
Distribution of Surplus Funds
Section 1. It is not anticipated that there will be any surplus funds or
net income to the corporation at the end of the fiscal year after provisions
are made for the payment of the expenses of operation and maintenance and the
funding of the various reserves for depreciation, debt retirement, and other
purposes, including those required by the terms of any borrowing transaction.
The occurrence in subsequent fiscal years of surplus funds or net income above
the requirements of the corporation as above mentioned, including, if any, a
reserve for improvements and extension of the facilities shall be taken into
consideration by the board of directors in determining the water rates to be
charged the members.
Section 2. The organization will provide services substantially at cost.
Dividends shall not be paid on the basis of membership or shares of stock in
the organization. All funds from whatever sources remaining at the end of the
year in excess of those needed to meet current losses and expenses will be
distributed to members in proportion to the amount of business done by them
during the year subject to concurrence of Rural Development or will be retained
for such purposes as retiring indebtedness incurred in acquiring assets,
expanding the organization's services, maintaining reserves for necessary
purposes or reducing subsequent year's water rates. However, the organization
will maintain records from which each member's rights and interest in the
retained funds and assets acquired with such funds in proportion to the
member's business with the organization can be determined at any time.
Required records for this purpose include financial records that show the
organization's revenues from all sources for each year and records, such as
bills or receipts, showing the amount of each member's business annually with
the organization.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 4) (Page 14)
Section 3. Upon dissolution, after paying off all debts and obligations,
members and former members will be entitled to receive their equitable share of
all the proceeds remaining to the extent practicable as reflected by the
records.
ARTICLE XIII
Amendments
These bylaws may be repealed or amended by a vote of the majority of the
members present at any regular meeting of the corporation, or at any special
meeting of the corporation called for that purpose, except that so long as any
indebtedness is held by or guaranteed by Rural Development, the members shall
not have the power to change the purposes of the corporation so as to decrease
its rights and powers under the laws of the State, or to waive any requirement
of bond or other provision for the safety and security of the property and
funds of the corporation or its members, or so to amend the bylaws as to effect
a fundamental change in the policies of the corporation without the prior
approval of Rural Development in writing.
________________________________________________________________________
We certify that the foregoing bylaws were duly adopted by the members on
__________________, 19___, that the same are in full force and
Given under our hands and the seal of the corporation, this
______________________ day of ____________________, 19____.
_________________________________________
Secretary-Treasurer
o0o
_______________________
President
(Guide 5)
RD Instruction 1942-A
FINANCIAL FEASIBILITY REPORT
I
General.
The following may be used as a guide for the preparation of financial
feasibility reports as required for Rural Development financed facilities. The
guide contains minimal requirements and the report writer is expected to fully
disclose and analyze all significant factors which will likely have a favorable
or adverse effect on the financial success of the proposed facility.
A
Need for the facility.
B
Existing facilities.
Explain current capacities, rates or usage, activities, suitability for
continued use, alternate usage, deficiencies in services, staffing, physical
conditions, and any other pertinent information.
C
Proposed facility.
1
Description of construction and renovation by component parts including
capacity of each component part and physical limiting factors.
2
Explain and document the need for the facility.
regarding the following:
D
a
Service area
b
Population trends
c
Similar facilities and services in the area
d
Usage trends
e
Community support
f
Regulatory agency approval
g
Economy in the service area
h
Analysis of staff and consultants
Include comments
Financial information.
1
Explain all assumptions underlying the expected demand, use, and
projections of financial data, such as:
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 5) (Page 2)
a
Changes in usage
b
All income and expense
c
Rate structure
d
Allowance for uncollectible accounts
e
Depreciation life and method
f
Description of long-term debts
2
Financial statements. The following financial statements must be prepared
reflecting five years projections:
a
Balance sheet for all funds
b
Statement of income and expense
c
Statement of cash flow (cash receipts and disbursements)
d
Comparison data for facilities in service area (latest year
only)
o0o
(Guide 6)
RD Instruction 1942-A
PRELIMINARY ARCHITECTURAL FEASIBILITY REPORT
I
GENERAL. The following may be used as a guide for preparation of the
Preliminary Architectural Feasibility Report as required for Rural Development
financed facilities.
A
Need for the facility.
B
Existing facilities. Describe - include condition, adequacy,
suitability for continued use and other pertinent information.
C
Proposed facility. General description of proposed facility
including design criteria adopted for continued use and other pertinent
information.
D
E
(1-15-79)
Building sites.
1
Amount of land required.
2
Location - Alternate locations.
3
Site plan.
4
Site suitability.
Cost estimate.
1
Development and construction.
2
Land and rights.
3
Legal.
4
Architect fees.
5
Interest.
6
Equipment.
7
Contingencies.
8
Refinancing.
9
Other (described).
SPECIAL PN
RD Instruction 1942-A
(Guide 6) (Page 2)
F
Annual operating budget.
1
Income - Include rate schedule.
Project income realistically.
2
Operation and maintenance costs - Project costs realistically.
In the absence of other data, base on actual costs of other existing facilities
of similar size and complexity. Include facts in the report to substantiate
operation and maintenance cost estimates.
G
Maps, drawings, sketches, and photographs.
1
Maps - Show locations, boundaries, elevations, population
distribution, existing and proposed facility, right-of-way, and land ownership.
2
elevations.
3
Drawings and sketches - Show preliminary design and layout
Photographs - As needed.
H
Construction problems. Discuss in detail - Include information on
items which may affect the cost of construction.
I
Conclusions and recommendations.
proposed plans.
oOo
Discuss possible alternatives to
RD Instruction 1942-A
(Guide 7)
PRELIMINARY ENGINEERING REPORT
WATER FACILITY
I. GENERAL. A Preliminary Engineering Report should clearly describe the
owner's present situation, analyze alternatives, and propose a specific course
of action, from an engineering perspective. The level of effort required to
prepare the report and the depth of analysis within the report are proportional
to the size and complexity of the proposed project. Rural Development projects
must be modest in design, size and cost, and be constructed and operated in an
environmentally responsible manner. The following should be used as a guide
for the preparation of Preliminary Engineering Reports for Rural Development
financed water systems.
II. PROJECT PLANNING AREA. Describe the area under consideration. The
project planning area may be larger than the service area determined to be
economically feasible. The description should include information on the
following:
A. Location. Maps, photographs, and sketches. These materials should
indicate legal and natural boundaries, major obstacles, elevations, etc.
B. Environmental Resources Present. Maps, photographs, studies and
narrative. These materials should provide information on the location and
significance of important land resources (farmland, rangeland, forestland,
wetlands and 100/500 year floodplains, including stream crossings),
historic sites, endangered species/critical habitats, etc., that must be
considered in project planning.
C. Growth Areas and Population Trends. Specific areas of concentrated
growth should be identified. Population projections for the project
planning area and concentrated growth areas should be provided for the
project design period. These projections should be based on historical
records with justification from recognized sources.
III. EXISTING FACILITIES.
the following information:
Describe the existing facilities including at least
A. Location Map. Provide a schematic layout and general service area map
(may be identified on project planning area maps).
B.
History.
C. Condition of Facilities. Describe present condition; suitability for
continued use; adequacy of water supply; and, if any existing central
facilities, the treatment, storage, and distribution capabilities. Also,
describe compliance with Safe Drinking Water Act and applicable State
requirements.
(07-08-92)
PN 188
RD Instruction 1942-A
(Guide 7) (Page 2)
D. Financial Status of any Operating Central Facilities. Provide
information regarding rate schedules, annual operating and maintenance
(o&m) cost, tabulation of users by monthly usage categories and revenue
received for last three fiscal years. Give status of existing debts and
required reserve accounts.
IV.
NEED FOR PROJECT.
Describe the needs in the following order of priority:
A. Health and Safety. Describe concerns and include relevant regulations
and correspondence from/to Federal, and State regulatory agencies.
B. System O&M. Describe the concerns and indicate those with the
greatest impact. Investigate water loss, management adequacy, inefficient
designs, and problem elimination prior to adding additional capacity.
C. Growth. Describe the reasonable growth capacity that is necessary to
meet needs during the planning period. Facilities proposed to be
constructed to meet future growth needs should generally be supported by
additional revenues. Consideration should be given to desiging for phased
capacity increases. Provide number of new customers committed to this
project.
V. ALTERNATIVES CONSIDERED. This section should contain a description of the
reasonable alternatives that were considered in planning a solution to meet the
identified need. The description should include the following information on
each alternative:
A. Description. Describe the facilities associated with the alternative.
Describe all feasible water supply sources and provide comparison of such
sources. Also, describe treatment, storage and distribution facilities.
B. Design Criteria. State the design parameters used for evaluation
purposes. These parameters must follow the criteria established in RD
Instruction 1942-A.
C. Map. Schematic layout.
D. Environmental Impacts. Do not duplicate the information in the
applicant's submittal of environmental information. Describe unique
direct and indirect impacts on floodplains, wetlands, other important land
resources, endangered species, historical and archaeological properties,
etc., as they relate to a specific alternative. Rural Development must
conduct an environmental assessment prior to project approval.
E. Land Requirements. Identify sites and easements required. Further
specify whether these properties are currently owned, to be acquired or
leased.
F. Construction Problems. Discuss concerns such as subsurface rock, high
water table, limited access, or other conditions which may affect cost of
construction or operation of facility.
RD Instruction 1942-A
(Guide 7) (Page 3)
G.
Cost Estimates.
1.
2.
2.
3.
Construction.
Non-Construction and Other Projects.
Annual Operation and Maintenance.
Present Worth, based on Federal discount rates.
H. Advantages/Disadvantages. Describe the specific alternative's ability
to meet the owner's needs within its financial and operational resources,
comply with regulatory requirements, compatibility with existing
comprehensive area_wide development plans, and satisfy public and
environmental concerns. A matrix rating system could be useful in
displaying the information.
VI. PROPOSED PROJECT (RECOMMENDED ALTERNATIVE). This section should contain a
fully developed description of the proposed project based on the preliminary
description under the evaluation of alternatives. At least the following
information should be included:
A.
Project Design.
1. Water Supply. Include requirements for quality and quantity.
Describe recommended source, including site.
2. Treatment. Describe process in detail and identify location of
plant and site of any process discharges.
3.
Storage.
Identify size, type and site location.
4. Pumping Stations. Identify size, type, site location and any
special power requirements.
5. Distribution Layout. Identify general location of line
improvements: lengths, sizes and key components.
6. Hydraulic Calculations. This information should provide
sufficient detail in a tabular format to determine compliance with
Rural Development design requirements. Automation tools may be used
by the engineer. The submittal should include a map with a list of
nodes and pipes and the associated characteristics, such as elevation
of node, pipe diameter, pipe segment length, reservoir elevation,
domestic and industrial water demands, fire flow, etc.
B. Cost Estimate. Provide an itemized estimate of the project cost based
on the anticipated period of construction. Include development and
construction, land and rights, legal, engineering, interest, equipment,
contingencies, refinancing, and other costs associated with the proposed
project. (For projects containing both water and waste disposal systems,
provide a separate cost estimate for each system.)
(07-08-92) PN 188
RD Instruction 1942-A
(Guide 7) (Page 4)
C.
Annual Operating Budget.
1. Income. Provide a rate schedule. Project income realistically,
based on user billings, water treatment contracts, and other sources
of incomes. In the absence of other reliable information, for budget
purposes, base water use on 60 gallons per capita per day, or 150
gallons per residential_sized connection per day, or 4,500 gallons
per residential_sized connection per month. When large agricultural
or commercial users are projected, the report should include facts to
substantiate such projections and evaluate the impact of such users
on the economic viability of the project. The number of users should
be based on equivalent dwelling units, which is the level of service
provided to a typical rural residential dwelling.
2. Operations and Maintenance Costs. Project costs realistically.
In the absence of other reliable data, base on actual costs of other
existing facilities of similar size and complexity. Include facts in
the report to substantiate operation and maintenance cost estimates.
Include salaries, wages, taxes, accounting and auditing fees, legal
fees, interest, utilities, gasoline, oil and fuel, insurance, repairs
and maintenance, supplies, chemicals, office supplies and printing,
and miscellaneous.
3. Capital Improvements. If purchasing water or if water is being
treated by other, these costs should be included in o&m costs.
4. Debt repayments. Describe existing and proposed project
financing from all sources. All estimates of Rural Development
funding should be based on loans, not grants. Rural Development will
evaluate the proposed project for the possible inclusion of Rural
Development grant funds.
5. Reserve. Unless otherwise required by State statute establish at
one-tenth (1/10) of annual debt repayment requirement.
VII. CONCLUSIONS AND RECOMMENDATIONS. Provide any additional findings and
recommendations that should be considered in development of the project. This
may include recommendations for special studies, highlight the need for special
coordination, a recommended plan of action to expedite project development,
etc.
oOo
RD Instruction 1942-A
(Guide 8)
PRELIMINARY ENGINEERING REPORT
SEWERAGE SYSTEMS
I. GENERAL. A Preliminary Engineering Report should clearly describe the
owner's present situation, analyze alternatives, and propose a specific course
of action, from an engineering perspective. The level of effort required to
prepare the report and the depth of analysis within the report are proportional
to the size and complexity of the proposed project. Rural Development projects
must be modest in design, size and cost, and constructed and operated in an
environmentally responsible manner. The following should be used as a guide
for the preparation of Preliminary Engineering Reports for Rural Development
financed wastewater systems.
II. PROJECT PLANNING AREA. Describe the area under consideration. The
project planning area may be larger than the service area determined to be
economically feasible. The description should include information on the
following:
A. Location. Maps, photographs, and sketches. These materials should
indicate legal and natural boundaries, major obstacles, elevations, etc.
B. Environmental resources present. Maps, photographs, studies and
narrative. These materials should provide information on the location and
significance of important land resources (farmland, rangeland, forestland,
wetlands and 100/500 year floodplains, including stream crossings),
historic sites, endangered species/critical habitats, etc. that must be
considered in project planning.
C. Growth areas and population trends. Specific areas of concentrated
growth should be identified. Population projections for the project
planning area and concentrated growth areas should be provided for the
project design period. These projections should be based on historical
records with justification from recognized sources.
III. EXISTING FACILITIES. Describe the existing facilities, including at
least the following information:
A. Location map. Provide a schematic layout and general service area map
(may be identified on project planning area maps).
B.
History.
C. Condition of facilities. Describe present condition; suitability for
continued use; adequacy of current facilities; and, if there are any
existing central facilities, the treatment, storage, and disposal
capabilities. Also, describe compliance with Clean Water Act and other
applicable State requirements.
(07-08-92)
PN 188
RD Instruction 1942-A
(Guide 8) (Page 2)
D. Financial status of any operating central facilities. Provide
information regarding rate schedules, annual operating and maintenance
cost (O&M), tabulation of users by monthly usage categories and revenue
received for last three fiscal years. Give status of existing debts, and
required reserve accounts.
IV.
NEED FOR PROJECT.
Describe the needs in the following order of priority:
A. Health and safety. Describe concerns and include relevant regulations
and correspondence from/to Federal, and State regulatory agencies.
B. System O&M. Describe the concerns and indicate those with the
greatest impact. Investigate infiltration and inflow, management
adequacy, inefficient designs, and problem elimination prior to adding
additional capacity.
C. Growth. Describe the reasonable growth capacity that is necessary to
meet needs during the planning period. Facilities proposed to be
constructed to meet future growth needs should generally be supported by
additional revenues. Consideration should be given to designing for
phased capacity increases. Provide number of new customers committed to
this project.
V. ALTERNATIVES CONSIDERED. This section should contain a description of the
reasonable alternatives that were considered in planning a solution to meet the
identified need. The description should include the following information on
each alternative:
A. Description. Describe the facilities associated with the alternative.
Describe all feasible wastewater treatment technologies and provide
comparison of such. Also, describe collection facilities. A feasible
alternative may be a combination of central facilities and management of
on-site facilities or only the latter.
B. Design criteria. State the design parameters used for evaluation
purposes. These parameters must follow the criteria established in RD
Instruction 1942-A.
C.
Map.
Schematic layout.
D. Environmental impacts. Do not duplicate the information in the
applicant's submittal of environmental information. Describe unique
direct and indirect impacts on floodplains, wetlands, other important land
resources, endangered species, historical and archaeological properties,
etc., as they relate to a specific alternative. Rural Development must
conduct an environmental assessment prior to project approval.
RD Instruction 1942-A
(Guide 8) (Page 3)
E. Land requirements. Identify sites and easements required. Further
specify whether these properties are currently owned, to be acquired, or
leased.
F. Construction problems. Discuss concerns such as subsurface rock, high
water table, limited access, or other conditions which may affect cost of
construction or operation of facility.
G.
Cost estimates (Separate estimates for collection and treatment).
1.
Construction.
2.
Non-Construction and Other Projects.
3.
Annual Operation and Maintenance.
4.
Present Worth, based on Federal discount rates.
H. Advantages/disadvantages. Describe the specific alternative's ability
to meet the owner's needs within its financial and operational resources,
comply with regulatory requirements, compatibility with existing
comprehensive area_wide development plans, and satisfy public and
environmental concerns. A matrix rating system could be useful in
displaying the information.
VI. PROPOSED PROJECT (RECOMMENDED ALTERNATIVE). This section should contain a
fully developed description of the proposed project based on the preliminary
description under the evaluation of alternatives. At least the following
information should be included:
A.
Project design.
1. Treatment. Describe process in detail and identify location of
plant and site of any discharges.
2. Pumping Stations. Identify size, type, site location and any
special power requirements.
3. Collection System Layout. Identify general location of line
improvements: lengths, sizes and key components.
4. Hydraulic Calculations. This information should provide
sufficient detail in a tabular format to determine compliance with
Rural Development design requirements. Automation tools may be used
by the engineer. The submittal should include a map with a list of
manholes and pipes and the associated characteristics, such as
elevation of inverts, pipe diameter, pipe segment length, etc.
(07-08-92)
PN 188
RD Instruction 1942-A
(Guide 8) (Page 4)
B. Cost estimate. Provide an itemized estimate of the project cost based
on the anticipated period of construction. Include development and
construction, land and rights, legal, engineering, interest, equipment,
contingencies, refinancing, and any other costs associated with the
proposed project. (For projects containing both water and waste disposal
systems, provide a separate cost estimate for each system.)
C.
Annual operating budget.
1. Income. Provide a rate schedule. Project income realistically,
based on user billings, wastewater treatment contracts, and other
sources of income. In the absence of other reliable information, for
budget purposes, base wastewater generation on 60 gallons per capita
per day, or 150 gallons per residential_sized connection per day, or
4,500 gallons per residential_sized connection per month. When large
users are projected, the report should include facts to substantiate
such projections and evaluate the impact of such users on the
economic viability of the project. The number of users should be
based on equivalent dwelling units, which is the level of service
provided to a typical rural residential dwelling.
2. Operations and Maintenance Costs. Project costs realistically.
In the absence of other reliable data, base on actual costs of other
existing facilities of similar size and complexity. Include facts in
the report to substantiate operation and maintenance cost estimates.
Include salaries, wages, taxes, accounting and auditing fees, legal
fees, interest, utilities, gasoline, oil and fuel, insurance, repairs
and maintenance, supplies, chemicals, office supplies and printing,
and miscellaneous.
3.
Capital Improvements.
4. Debt Repayments. Describe existing and proposed project
financing from all sources. All estimates of Rural Development
funding should be based on loans, not grants. Rural Development will
evaluate the proposed project for the possible inclusion of Rural
Development grant funds.
5. Reserve. Unless otherwise required by State statute establish at
one-tenth (1/10) of annual debt repayment requirement.
VII. CONCLUSIONS AND RECOMMENDATIONS. Provide any additional findings and
recommendations that should be considered in development of the project. This
may include recommendations for special studies, highlight the need for special
coordination, a recommended plan of action to expedite project development,
etc.
oOo
RD Instruction 1942-A
(Guide 9)
PRELIMINARY ENGINEERING REPORT
SOLID WASTE DISPOSAL SYSTEMS
I. GENERAL. A Preliminary Engineering Report should clearly describe the
owner's present situation, analyze alternatives, and propose a specific course
of action, from an engineering perspective. The level of effort required to
prepare the report and the depth of analysis within the report are proportional
to the size and complexity of the proposed project. Rural Development projects
must be modest in design, size and cost, and constructed and operated in an
environmentally responsible manner. The following should be used as a guide
for the preparation of Preliminary Engineering Reports for Rural Development
financed solid waste disposal facilities.
II. PROJECT PLANNING AREA. Describe the area under consideration. The
project planning area may be larger than the service area determined to be
economically feasible. The description should include information on the
following:
A. Location. Maps, photographs, and sketches. These materials should
indicate legal and natural boundaries, major obstacles, etc.
B. Environmental resources present. Maps, photographs, studies and
narrative. These materials should provide information on the location and
significance of important land resources (farmland, rangeland, forestland,
wetlands and 100/500 year floodplains) historic sites, endangered
species/critical habitats, etc., that must be considered in project
planning.
C. Growth areas and population trends. Specific areas of concentrated
growth should be identified. Population projections for the project
planning area and concentrated growth areas should be provided for the
project design period. These projections should be based on historical
records with justification from recognized sources.
III. EXISTING FACILITIES. Describe the existing facilities, including at
least the following information:
A. Location map. Provide a schematic layout and general service area map
(may be identified on project planning area maps).
B.
History.
C. Condition of facilities. Describe present condition and suitability
for continued use and any existing central facilities used for collection,
storage, and disposal. Also, describe compliance with applicable Federal
and State requirements.
(07-08-92)
PN 188
RD Instruction 1942-A
(Guide 9) (Page 2)
D. Financial status of any operating central facilities. Provide
information regarding rate schedules, annual operating and maintenance
cost (O&M), tabulation of users by monthly usage categories and revenue
received for last three fiscal years. Give status of existing debts and
required reserve accounts.
IV.
NEED FOR PROJECT.
Describe the needs in the following order of priority:
A. Health and safety. Describe concerns and include relevant regulations
and correspondence from/to Federal, and State regulatory agencies.
B. System O&M. Describe the concerns and indicate those with the
greatest impact. Investigate management adequacy, inefficient designs,
and problem elimination prior to adding additional capacity.
C. Growth. Describe the reasonable growth capacity that is necessary to
meet needs during the planning period. Facilities proposed to be
constructed to meet future growth needs should generally be supported by
additional revenues. Consideration should be given to designing for
phased capacity increases. Provide number of new customers committed to
this project.
V. ALTERNATIVES CONSIDERED. This section should contain a description of the
reasonable alternatives that were considered in planning a solution to meet the
identified need. The description should include the following information on
each alternative:
A. Description. Describe the facilities associated with the alternative,
including collection, storage and disposal facilities.
B. Design criteria. State the design parameters used for evaluation
purposes. These parameters must follow the criteria established in RD
Instruction 1942-A.
C.
Map.
Schematic layout.
D. Environmental impacts. Do not duplicate the information in the
applicant's submittal of environmental information. Describe unique
direct and indirect impacts on floodplains, wetlands, other important land
resources, endangered species, historical and archaeological properties,
etc., as they relate to a specific alternative. Rural Development must
conduct an environmental assessment prior to project approval.
E. Land requirements. Identify sites and easements required. Further
specify whether these properties are currently owned, to be acquired, or
leased.
RD Instruction 1942-A
(Guide 9) (Page 3)
F. Construction problems. Discuss concerns such as subsurface rock, high
water table, limited access, or other conditions which may affect cost of
construction or operation of facility.
G.
Cost estimates.
1.
Construction.
2.
Non-Construction and Other Projects.
3.
Annual Operation and Maintenance.
4.
Present Worth, based on Federal discount rates.
H. Advantages/disadvantages. Describe the specific alternative's ability
to meet the owner's needs within its financial and operational resources,
comply with regulatory requirements, compatibility with existing
comprehensive area_wide development plans, and satisfy public and
environmental concerns. A matrix rating system could be useful in
displaying the information.
VI. PROPOSED PROJECT (RECOMMENDED ALTERNATIVE). This section should contain a
fully developed description of the proposed project based on the preliminary
description under the evaluation of alternatives. At least the following
information should be included:
A.
Project design.
1. Collection. Describe process in detail and identify quantities
of material, length of transport, and any special handling
requirements. Describe equipment required and plans for equipment
rotation.
2.
Storage.
If any, identify size, type and site location.
3. Disposal System. Describe process in detail and identify permit
requirements, quantities of material, recycling processes, location
of plant and site of any process discharges.
B. Cost estimate. Provide an itemized estimate of the project cost based
on the anticipated period of construction. Include development and
construction, land and rights, legal, engineering, interest, equipment,
contingencies, refinancing, and any other costs associated with the
proposed project.
(07-08-92)
PN 188
RD Instruction 1942-A
(Guide 9) (Page 4)
C.
Annual operating budget.
1. Income. Provide a rate schedule. Project income realistically,
based on user billings, disposal contracts and other sources of
income. When large users are projected, the report should include
facts to substantiate such projections and evaluate the impact of
such users on the economic viability of the project.
2. Operations and Maintenance Costs. Project costs realistically.
In the absence of other reliable data, base on actual costs of other
existing facilities of similar size and complexity. Include facts in
the report to substantiate operation and maintenance cost estimates.
Include salaries, wages, taxes, accounting and auditing fees, legal
fees, interest, utilities, gasoline, oil and fuel, insurance, repairs
and maintenance, supplies, chemicals, office supplies and printing,
and miscellaneous.
3.
Capital Improvements.
4. Debt Repayments. Describe existing and proposed project
financing from all sources. All estimates of Rural Development
funding should be based on loans, not grants. Rural Development will
evaluate the proposed project for the possible inclusion of Rural
Development grant funds.
5. Reserve. Unless otherwise required by State statute establish at
one-tenth (1/10) of annual debt repayment requirement.
VII. CONCLUSIONS AND RECOMMENDATIONS. Provide any additional findings and
recommendations that should be considered in development of the project. This
may include recommendations for special studies, highlight the need for special
coordination, a recommended plan of action to expedite project development,
etc.
oOo
RD Instruction 1942-A
(Guide 10)
PRELIMINARY ENGINEERING REPORT
STORM WASTE-WATER DISPOSAL
I. GENERAL. A Preliminary Engineering Report should clearly describe the
owner's present situation, analyze alternatives, and propose a specific course
of action, from an engineering perspective. The level of effort required to
prepare the report and the depth of analysis within the report are proportional
to the size and complexity of the proposed project. Rural Development projects
must be modest in design, size and cost, and constructed and operated in an
environmentally responsible manner. The following should be used as a guide
for the preparation of Preliminary Engineering Reports for Rural Development
financed storm water facilities.
II. PROJECT PLANNING AREA. Describe the area under consideration. The
project planning area may be larger than the service area determined to be
economically feasible. The description should include information on the
following:
A. Location. Maps, photographs, and sketches. These materials should
indicate legal and natural boundaries, major obstacles, elevations, etc.
B. Environmental resources present. Maps, photographs, studies and
narrative. These materials should provide information on the location and
significance of important land resources (farmland, rangeland, forestland,
wetlands and 100/500 year floodplains) historic sites, endangered
species/critical habitats, etc. that must be considered in project
planning.
C. Growth areas and population trends. Specific areas of concentrated
growth should be identified. Population projections for the project
planning area and the concentrated growth areas should be provided for the
project design period. These projections should be based on historical
records with justification from recognized sources.
III. EXISTING FACILITIES. Describe the existing facilities, including at
least the following information:
A. Location map. Provide a schematic layout and general service area map
(may be identified on project planning area maps).
B.
History.
C. Condition of facilities. Describe present condition and suitability
for continued use. Also, describe compliance with applicable Federal and
State requirements.
(07-08-92)
PN 188
RD Instruction 1942-A
(Guide 10) (Page 2)
D. Financial status of any operating facilities. Provide information
regarding annual operating and maintenance cost and revenue received for last
three fiscal years. Give status of existing debts and required reserve
accounts.
IV.
NEED FOR PROJECT.
Describe the needs in the following order of priority:
A. Health and safety. Describe concerns and include relevant regulations and
correspondence from/to Federal, and State regulatory agencies.
B. System O&M. Describe the concerns and indicate those with the greatest
impact. Investigate management adequacy, inefficient designs, and problem
elimination prior to adding additional capacity.
C. Growth. Describe the reasonable growth capacity that is necessary to meet
needs during the planning period. Facilities proposed to be constructed to
meet future growth needs should generally be supported by additional revenues.
Consideration should be given to designing for phased capacity increases.
V.
ALTERNATIVES CONSIDERED. This section should contain a description of the
reasonable alternatives that were considered in planning a solution to meet the
identified need. The description should include the following information on each
alternative:
A. Description. Describe the facilities associated with the alternative.
Also, describe collection, storage and disposal facilities.
B. Design criteria. State the design parameters used for evaluation
purposes. These parameters must follow the criteria established in RD
Instruction 1942-A.
C.
Map.
Schematic layout.
D. Environmental impacts. Do not duplicate the information in the
applicant's submittal of environmental information. Describe unique direct
and indirect impacts on floodplains, wetlands, other important land resources,
endangered species, historical and archaeological properties, etc., as they
relate to a specific alternative. Rural Development must conduct an
environmental assessment prior to project approval.
E. Land requirements. Identify sites and easements required. Further specify
whether these properties are currently owned, to be acquired or leased.
F. Construction problems. Discuss concerns such as subsurface rock, high
water table, limited access, or other conditions which may affect cost of
construction or operation of facility.
G.
Cost estimates.
RD Instruction 1942-A
(Guide 10) (Page 3)
1.
Construction.
2.
Non-Construction and Other Projects.
3.
Annual Operation and Maintenance.
4.
Present Worth, based on Federal discount rates.
H. Advantages/disadvantages. Describe the specific alternative's ability
to meet the owner's needs within its financial and operational resources,
comply with regulatory requirements, compatibility with existing
comprehensive area_wide development plans, and satisfy public and
environmental concerns. A matrix rating system could be useful in
displaying the information.
VI. PROPOSED PROJECT (RECOMMENDED ALTERNATIVE). This section should contain a
fully developed description of the proposed project based on the preliminary
description under the evaluation of alternatives. At least the following
information should be included:
A.
Project design.
1. Collection Layout. Identify general location of line
improvements: lengths, sizes and key components.
2. Pumping Stations. Identify size, type, site location and any
special power requirements.
3.
Storage.
Identify size, type and site location.
4. Treatment, if required. Describe process in detail and identify
location of plant and site of any process discharges in addition to
storm water.
5. Hydraulic Calculations. This information should provide
sufficient detail in a tabular format to determine compliance with
Rural Development design requirements. Rural Development may use
automation tools to evaluate collection and storage systems. The
submittal should include a map with a list of inlets and pipes and
the associated characteristics, such as elevation of inverts, pipe
diameter, pipe segment length, reservoir elevation, etc.
B. Cost estimate. Provide an itemized estimate of the project cost based
on the anticipated period of construction. Include development and
construction, land and rights, legal, engineering, interest, equipment,
contingencies, refinancing, and any other costs associated with the
proposed project.
(07-08-92)
PN 188
RD Instruction 1942-A
(Guide 10) (Page 4)
C.
Annual operating budget.
1.
Income.
Project income realistically.
2. Operations and Maintenance Costs. Project costs realistically.
In the absence of other reliable data, base on actual costs of other
existing facilities of similar size and complexity. Include facts in
the report to substantiate operation and maintenance cost estimates.
Include salaries, wages, taxes, accounting and auditing fees, legal
fees, interest, utilities, gasoline, oil and fuel, insurance, repairs
and maintenance, supplies, chemicals, office supplies and printing
contracts, and miscellaneous.
3.
Capital Improvements.
4. Debt Repayments. Describe existing and proposed project
financing from all sources. All estimates of Rural Development
funding should be based on loans, not grants. Rural Development will
evaluate the proposed project for the possible inclusion of Rural
Development grant funds.
5. Reserve. Unless otherwise required by State statute establish at
one-tenth (1/10) of annual debt repayment requirement.
VII. CONCLUSIONS AND RECOMMENDATIONS. Provide any additional findings and
recommendations that should be considered in development of the project. This
may include recommendations for special studies, highlight the need for special
coordination, a recommended plan of action to expedite project development,
etc.
oOo
DAILY INSPECTION REPORT
Borrower Information
RD Instruction 1942-A
(Guide 11)
Job No.________________________
(1)
_____________________________________
Name
_____________________________________
Street
County
State
Zip
Date_____________
Report No._______
(2)
Project Information
Type of Project _______________________
Contractor(s) Name ____________________
Project Location _______________
Superintendent _________________
Weather Conditions _________________________________________________________
Description of Work Accomplished ___________________________________________
__________________________________________________________________________
__________________________________________________________________________
Items of Interest Occurred _________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Delays or Work Restraining Orders __________________________________________
__________________________________________________________________________
__________________________________________________________________________
Change Orders ______________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Additional Remarks _________________________________________________________
(Include problems, delays and controversies on orders)
__________________________________________________________________________
_________________________________________________________________________
______________________
Resident Inspector
BY _______________________
Note to Resident Inspector:
The original Daily Inspection Report shall be submitted to the borrower at
intervals not exceeding one (1) week with copies of the report furnished the
project engineer, Contractor(s), and Rural Development District Director.
(1)
(2)
Assigned by Rural Development.
Assigned by Resident Inspector in consecutive order beginning with No. 1.
(1-15-79)
SPECIAL PN
oOo
(Guide 12)
RD Instruction 1942-A
MEMORANDUM OF UNDERSTANDING
BETWEEN
THE ECONOMIC DEVELOPMENT ADMINISTRATION DEPARTMENT OF COMMERCE
AND
RURAL DEVELOPMENT DEPARTMENT OF AGRICULTURE
PERTAINING TO
EDA PUBLIC WORKS PROJECTS ASSISTED BY AN FHA LOAN
I
INTRODUCTION. In order to provide efficient service to Grantee/
Borrowers, eliminate duplication of effort, and reduce administrative costs
during the construction of projects jointly financed by a grant from the
Economic Development Administration and a loan from Rural Development, EDA Area
Directors and FHA State Directors are authorized to enter into Project
Management Agreements, as they deem appropriate, covering the project
construction phase. Projects involving an EDA supplementary grant to an FHA
grant are covered under a separate Memorandum.
II
GENERAL.
A
Prior to authorizing advertisement for bids, it is the responsibility
of each agency to assure the other that all approval conditions have been met.
B
The total project cost for the purpose of this Memorandum will
include only those costs eligible for EDA financial assistance.
C
Any changes in location, scope, line items or cost of the project
shall be approved by both EDA and FHA.
D
All construction contracts for project work financed in any part by
EDA shall contain binding provisions for payment of prevailing wage rates as
determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as
amended (40 USC 267a - 276a-5).
E
Certifications:
1. EDA will obtain required certifications from the Federal
Water Pollution Control Administration under Section 106 of Public Law 89136.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 12) (Page 2)
2. FHA will be responsible for assuring that the applicant has
obtained the required certifications from the State Water Pollution
Control Agency under Section 306(a) (9&10) of the ConsolidatedRural
Development Act of 1961 (Public Law 87-128, as amended).
F
All bidders and subcontractors must sign certifications of compliance
with Executive Order 11246 (EDA Forms 119 and 120).
III
SUGGESTED ITEMS FOR INCLUSION IN A PROJECT MANAGEMENT AGREEMENT.
A
EDA will have primary responsibility for managing the project during
the construction phase.
B
The EDA Area Office will notify the FHA State Director of the date,
time and location of the Planning Conference.
C
FHA will be represented at the Planning Conference.
D
EDA will obtain FHA concurrence of the approval of final plans,
specifications and bid documents.
E
EDA will notify FHA of the date of advertising for construction bids.
F
EDA will notify FHA of the date, time and location of bid opening.
G
FHA will be represented at the bid opening.
H
Both EDA and FHA will concur in the awarding of construction
contracts.
I
EDA will notify FHA of the date, time and location of the Pre
Construction Conference.
J
EDA will notify FHA of the date of start of construction.
K
EDA will notify FHA of any unusual problems which may be encountered
during the construction phase.
(Guide 12) (Page 3)
RD Instruction 1942-A
L
FHA will concur on the progress of construction and final inspection.
EDA will furnish FHA with copies of Progress Reports and will permit FHA to
make any additional inspections necessary in connection with the FHA loan.
M
EDA will advise the State Director of the date and time of final
inspection. Such inspection will be conducted by both EDA and FHA.
N
The FHA County Supervisor will establish an FHA Supervised Bank
Account for the Grantee/Borrower and will be responsible for disbursement of
both the EDA grant funds and FHA loan funds.
a
EDA will be responsible for timely deposits of the grant
funds. However, since EDA grant funds are not made available until all
construction contracts have been awarded, and then only for project costs
incurred, it is recognized that some, if not all, of the FHA loan funds
may be disbursed before receipt of any or all of the EDA grant funds.
b
Funds will be disbursed only on certification of the EDA
field engineer of "Costs incurred to date."
O
Final determination of the eligibility of costs incurred will be made
by EDA after completion of the project and final audit. The EDA Area Office
will furnish the FHA State Director a copy of any EDA audit findings.
IV
Services performed by either agency for the other shall be without cost to
the other agency.
FOR THE
ECONOMIC DEVELOPMENT
ADMINISTRATION
FOR THE
FARMERS HOME
ADMINISTRATION
/s/ Ross Davis__________________
Assistant Secretary for
Economic Development
/s/ Howard Bertsch________
Administrator
August 27, 1968_________________
Date
October 11, 1968__________
Date
oOo
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 13)
MEMORANDUM OF UNDERSTANDING
BETWEEN
THE ECONOMIC DEVELOPMENT ADMINISTRATION DEPARTMENT OF COMMERCE
AND
RURAL DEVELOPMENT DEPARTMENT OF AGRICULTURE
REGARDING
SUPPLEMENTARY GRANT ASSISTANCE FOR THE CONSTRUCTION OF
PUBLIC WORKS AND DEVELOPMENT FACILITIES
I
INTRODUCTION.
1
Section 101 of the Public Works and Economic Development Act of 1965
(Public Law 89-136, as amended) authorizes the Secretary of Commerce to make
direct grants, grants supplementary thereto, and grants supplementary to basic
grants from other Federal programs. Notwithstanding any requirement that may
otherwise be applicable to the Federal program involved, supplementary grants
shall be used for the sole purpose of increasing the Federal contribution to
specific projects in eligible areas under such programs above the fixed maximum
portion of the cost of such project otherwise authorized by the applicable law,
but in no event shall the non-Federal share of the aggregate cost of any
project be less than 20 percent of such cost.
2
In determining the amount of any supplementary grant available to
any project, consideration will be given to the (a) relative needs of the area,
(b) the nature of the project to be assisted, and (c) the amount of such fair
user charges or other revenues as the project may reasonably be expected to
generate in excess of those which would amortize the local share of initial
costs and provide for its successful operation and maintenance (including
depreciation).
II
PROJECTS RECEIVING A BASIC GRANT FROM RURAL DEVELOPMENT UNDER THE
CONSOLIDATED FmHA ACT OF 1961 (Public Law 87-128, as amended):
1
If an area qualifies under Public Law 89-136, as amended, for a
maximum grant rate in excess of the fixed maximum portion authorized under
Public Law 87-128, as amended, for development costs, as defined in Section
306(a) (4) (A) of that Act, the applicant may request additional grant funds
from the Economic Development Administration to supplement the basic grant
requested from Rural Development. Total Federal participation may not exceed
the maximum grant rate established by EDA for the area in which the project is
located.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 13) (Page 2)
2
If the amount of grant assistance requested from FHA is available and
the project appears approvable, the Rural Development State Office will refer
the
applicant to the appropriate EDA Area Office to discuss the proposed project
and the need for supplementary grant assistance.
3
At the time EDA decides it will consider the project for a
supplementary grant, it will advise FHA and furnish the applicant with EDA
application forms, together with pertinent instructions, and advise the
applicant to show on these forms the amount of the basic grant being requested
from FHA. The method of financing and project costs shown on both the FHA
application and the EDA application must be identical.
4
Prior to EDA approval of a supplementary grant, FHA will provide EDA
with the following statements:
a
That the estimated cost of the project is reasonable and
that the requested basic grant and the supplementary grant, together with
the funds to be supplied by the applicant, are, in Rural Development's
judgment, sufficient to complete the project.
b
That the funds to be supplied by the applicant are
available or that FHA is reasonably satisfied that the applicant has the
capability of supplying such funds.
c
That FHA is reasonably satisfied that the applicant will
provide sufficient operating funds to assure the successful and continuing
operation of the facility.
d
That adequate safeguards have been established to eliminate
the possibility of the supplementary grant exceeding the authorized
percentage relationship to the total cost of the project.
e
That the amount of the supplementary grant will be reduced
to the extent actual costs of a project fall below estimated costs;
however, the savings in such cases may be applied to a proportionate
reduction of the supplementary grant and basic grant when necessary to
conform to limitations imposed by statute.
f
That the amount of the FHA grant for the particular project
is as great as would have been approved in the absence of the
supplementary grant. If the basic grant is less than the 50% maximum
portion authorized under Public Law 87-128, as amended, FHA will include a
statement certifying that grant funds uncommitted for its current fiscal
year are insufficient to permit approval of the maximum authorized
portion.
(Guide 13) (Page 3)
RD Instruction 1942-A
g
That the construction contract(s) for project work will
contain binding provisions for payment of prevailing wage rates as
determined by the Secretary of Labor in accordance with the Davis-Bacon
Act as amended, (40 USC 276a - 276a-5).
5
If EDA will not make a supplementary grant, it will advise FHA and
the applicant accordingly.
6
Prior to approval of the supplementary grant, EDA will obtain from
the applicant and substantial beneficiaries, if any, executed assurances of
compliance with the regulations of Title 15, Subtitle A, Part 8, of the Code of
Federal Regulations issued by the Department of Commerce in effectuation of
Title VI of the Civil Rights Act of 1964. EDA will also obtain executed
Certificates of Non-Relocation from the applicant and substantial
beneficiaries, where applicable.
7
When EDA approves a supplementary grant, it will inform FHA of such
approval and will take immediate steps to transfer the funds to the U. S.
Treasury account of Rural Development on Standard Form 1151. At the same time,
EDA will inform the applicant that an EDA supplementary grant has been
authorized, and that the EDA Grant Offer, together with the terms and
conditions of the EDA Offer, will be transmitted to the applicant by FHA.
8
FHA will tender the EDA Grant Offer within a sufficient period of
time to allow acceptance of the offer before the end of the fiscal year within
which the EDA project has been approved. The FHA State Director will notify
the EDA Area Director immediately upon receipt of acceptance of the offer.
9
After acceptance of the EDA grant offer, FHA will assume full
responsibility for the supervision of the project and disbursement of the grant
funds.
10
FHA will supply the EDA Area Office at reasonable intervals with
progress reports on the project and advise the Area Office whenever unusual
problems are encountered. The EDA Area Office will advise the FHA State Office
of the reports needed.
11
FHA will comply with the reporting requirements for transferred
funds as outlined in Economic Development Memorandum 2.03-7, "Reporting of
Funds Transfers by Participating Agencies," a copy of which is attached hereto.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 13) (Page 4)
12
Should an EDA loan also be involved, FHA will, upon request of EDA,
furnish a current construction status report to EDA at the time loan advances
are requested and at the time of the loan closing. FHA will notify the EDA
Area Office when final inspection is to take place and permit an EDA
representative to be present at the final inspection. Also, FHA will, upon
request of the EDA Area Office, permit an EDA representative to inspect the
project during construction where such inspection is necessary in connection
with the loan.
13
FHA will advise EDA of the completion of the project and submit a
final report on the costs of the project in sufficient detail to permit a
reasonable review of expenditures.
14
Since maximum use of local labor in construction of the project will
facilitate attainment of the objectives of the Public Works and Economic
Development Act of 1965, this matter should be given consideration in
arrangements with all contractors retained in connection with project
construction.
FOR THE
ECONOMIC DEVELOPMENT
ADMINISTRATION
FOR THE
FARMERS HOME
ADMINISTRATION
/s/ Ross D. Davis______________
Assistant Secretary for
Economic Development
/s/ Howard Bertsch___________
Administrator
August 27, 1968_________________
Date
October 11, 1968_______________
Date
Attachment 1
oOo
RD Instruction 1942-A
(Guide 13) (Attachment 1)
UNITED STATES OF AMERICA
DEPARTMENT OF COMMERCE
ASSISTANT SECRETARY AND DIRECTOR OF ECONOMIC DEVELOPMENT
MANUAL OF ECONOMIC DEVELOPMENT ORDERS
________________________ECONOMIC DEVELOPMENT ORDER 2.03-7_________________
SUBJECT
REPORTING OF FUND TRANSFERS BY PARTICIPATING AGENCIES
_______________________________________________________________________
REFERENCES
EFFECTIVE DATE:___3-3-67___
SUPPLEMENT:________________
SUPERSEDES: MEDO Memorandum
2.03-7, "Reporting by Participating Agencies," dated
August 1, 1966
_______________________________________________________________________
APPROVED
Chief, Accounting Division
Director, Office of Administration
_______________________________________________________________________
Section
Section Title
1
2
3
4
Page
Purpose------------------------------------------General------------------------------------------Transfers of Supplementary Grant Funds-----------Transfers of Funds for Administrative Support, and for
Specific Projects or Studies Pertaining to Technical
Assistance, Management, or Research---------------Mailing Address for Reports-----------------------Effect on Other Orders-----------------------------
5
6
1
2
2
3
4
4
SECTION 1. PURPOSE
The purpose of the Order is to prescribe reporting requirements which must
be included in all agreements to advance funds to other Federal agencies
for:
a.
Supplementary grants.
_______________________________________________________________________
(1-15-79)
SPECIAL PN
(Guide 13) (Attachment 1) (Page 2)
RD Instruction 1942-A
2.03-7
3-3-67
lb
b. Technical assistance and management research projects and/or
studies.
c.
Support activity (administrative and operating expenses).
SECTION 2. GENERAL
This Order, which provides a schedule showing financial reporting
requirements, shall be made a part of each agreement to transfer funds to
another agency for the purposes listed in Section 1. Performing agencies
need not submit reports for work performed on a reimbursable basis if EDA
is billed monthly and bills are received by the tenth of the following
month. Such billings will suffice as a source of accrued expenditure
data.
SECTION 3. TRANSFERS OF SUPPLEMENTARY GRANT FUNDS
.01
SF-1151, "Nonexpenditure Transfer Authorization":
SF-1151, "Nonexpenditure Transfer Authorization," will be
used for transfers of supplementary grant funds.
.02
Required Reports:
The following reports shall be required in all agreements involving
transfers of supplementary grant funds:
a.
Monthly Reports due by the tenth day after the end of the
month showing cumulative totals, first by appropriation, and
then by projects thereunder, of:
(1)
Obligations.
(2)
Accrued expenditures.
(3)
Cash disbursements.
Estimated amounts may be reported for obligations and accrued
expenditures, but actual amounts which agree with the SF-224
"Statement of Transactions," must be reported for cash disbursements.
Attached as Exhibit 1 is the suggested form for the monthly report.
RD Instruction 1942-A
(Guide 13) (Attachment 1) (Page 3)
3.02
2.03-0
3-3-67
b.
Quarterly Report on SF-133, "Report of Budget Status," due
by the 15th day after the end of the quarter, supported by a
schedule showing by project:
(1)
Obligations.
(2)
Accrued expenditures.
(3)
Cash disbursements in agreement with those reported on
the SF-224, "Statement of Transactions."
NOTE: A supporting schedule for SF-133 will not be
required if the monthly report shows actual obligations and
accrued expenditures.
c.
Annual Reports, as follows:
(1)
SF-220, "Statement of Financial Condition," as
required by Treasury Circular No. 966, due by September 20
for the year ending June 30.
(2)
Treasury Form BA-R 2108, as required by Treasury
Circular No. 965, due by September 20 for the year ending
June 30.
(3)
Report on Federal grants-in-aid to States and payments
to individuals, as required by Treasury Circular No. 1014,
due by September 20 for the year ending June 30.
(4)
Report to be submitted by May 31, showing estimated
unobligated funds as of June 30. Upon receipt of the
report, the Accounting Division will make a determination
as to disposal of the unobligated funds.
SECTION 4. TRANSFERS OF FUNDS FOR ADMINISTRATIVE SUPPORT, AND FOR SPECIFIC
PROJECTS OR STUDIES PERTAINING TO TECHNICAL ASSISTANCE, MANAGEMENT, OR RESEARCH
.01
Use of SF-1081, "Voucher and Schedule of Withdrawals and
Credits":
SF-1081 will be used for transfers of funds for administrative
support and for specific projects or studies pertaining to
technical assistance, management, or research.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 13) (Attachment 1) (Page 4)
2.03-0
3-3-67
.02
4.02
Required Reports
The following reports shall be required in agreements involving
transfers of funds for the purposes cited in paragraph 4.01:
SECTION 5.
a.
Monthly Report, due by the 10th day after the end of
the month, listing estimated accrued expenditures by
appropriation and projects thereunder.
b.
Quarterly Report, due by the 15th day after the end of
the quarter, listing actual accrued expenditures by
appropriation and projects thereunder.
c.
Annual Report, due by May 31, showing estimated
unobligated funds as of June 30. Upon receipt of the
report, the Accounting Division will make a determination
as to disposal of the unobligated funds.
MAILING ADDRESS FOR REPORTS
Agencies should mail the reports required in this Order to the following
address:
Chief, Accounting Division
Office of Administration
Economic Development Administration
U.S. Department of Commerce
Washington, D.C. 20230
SECTION 6.
EFFECT ON OTHER ORDERS
This Order supersedes MEDO Memorandum 2.03-7, "Reporting by Participating
Agencies," dated August 1, 1966, and any other instructions which may be
in conflict with its provisions.
INDEX CHANGE
Change M/2.03-7 to 2.03-7 (page 20)
Exhibit 1
Guide 13, Attachment 1, page 5 not automated see manual
RD Instruction 1942-A
(Guide 14)
UNITED STATES DEPARTMENT OF AGRICULTURE
Rural Development
LEGAL SERVICES AGREEMENT
This agreement made this ___________ day of _________________,
19____________
between __________________________________________________
__________________________________________________________________________
(sponsors)
(organizing committee) (Name of organization)
hereinafter referred to as "Owners," and _______________________________,
attorney at law, of ________________________________, hereinafter referred
to as "Attorney":
WHEREAS, Owners are intending to ________(have formed)________
("public water supply
__________________________________________________________________________
district," "public service district," "not for profit corporation," or
_______________________________________, a _______________________________
other official designation)
("body politic," "municipal
__________________________________________________________________________
corporation," "nonprofit corporation," or other organization)
in _________________________
County _____________________________________
under the provisions of __________________________________________________
(Cite statute(s) under which applicant will be
____________________________________________________________________; and
organized)
WHEREAS, the Attorney agrees to perform all legal services necessary
to organize and incorporate said _________________________________________
____________________________________________ under the provisions of
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 14) (Page 2)
said statutes and to perform all other customary legal services necessary
to the organization, financing, construction, and initial operation of
a ______________________________ system;
WITNESSETH:
That for and in consideration of the mutual covenants and promises between
the parties hereto, it is hereby agreed:
SECTION A - LEGAL SERVICES
That the Attorney will perform such services as are necessary to
accomplish the above recited objectives including, but not limited to, the
following:
1.
Preparation and filing of petition for incorporation and
supervision and assistance in the taking of such other actions as may
be necessary or incidental to cause the Owners to become duly
organized and incorporated and to be authorized to undertake the
proposed system.
2.
Furnish advice and assistance to the governing body of the duly
incorporated association in connection with (a) the notice for and
conduct of meetings; (b) the preparation of minutes of meetings; (c)
the preparation and enactment of such resolutions as may be necessary
in connection with the authorization, financing, construction, and
initial operation of the system; (d) the preparation of such
affidavits, publication notices, ballots, reports, certifications,
and other instruments and advice as may be needed in the conduct of
such bond elections as may be necessary; (e) the preparation and
completion of such bonds or other obligations as may be necessary to
finance the system; (f) the completion and execution of documents for
obtaining a loan made or insured or a grant made by the United States
of America, acting through the Rural Development, U. S. Department of
Agriculture; (g) entering into construction contracts; (h)
preparation and adoption of By-Laws, Rules and Regulations, and rate
schedules; (i) such other corporate action as may be necessary in
connection with the financing, construction, and initial operation of
the system.
RD Instruction 1942-A
(Guide 14) (Page 3)
3.
Review of construction contracts, bid-letting procedure, and
surety and contractual bonds in connection therewith.
4.
Preparation, negotiation, or review of contract with a city or
other source of water supply when necessary.
5.
Preparation, where necessary, and review of deeds, easements and
other rights-of-way documents, and other instruments for sites for
source of water supply, pumping stations, treatment plants, and other
facilities necessary to the system and to provide continuous rightsof-way therefore; rendering title opinions with reference thereto;
and providing for the recordation thereof.
6.
Obtain necessary permits and certificates from county and
municipal bodies, from State regulatory agencies, and from other
public or private sources with respect to the approval of the system,
the construction and operation thereof, pipeline crossings, and the
like.
7.
Cooperate with the engineer employed by Owners in connection
with preparation of tract sheets, easements, and other necessary
title documents, construction contracts, water supply contracts,
health permits, crossing permits, and other instruments.
8.
When applicable, secure assistance of and cooperate with
recognized bond counsel in the preparation of the documents necessary
for the financing aspects of the system. The attorney shall pay all
bond counsel in perfecting the financing aspects, e.g., assessment
procedures and completion of documents. Where bond counsel is
retained, the Attorney will not be responsible for the preparation
and approval of those documents pertaining to the issuance of the
Owner's obligations.
SECTION B - COMPENSATION
1.
Owners will pay to the Attorney for professional services
rendered in accordance herewith, fees as follows:
_____________________________________________________________________
_____________________________________________________________________
Said fees to be payable in the following manner and at the following
times:
______________________________________________________________________
______________________________________________________________________
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 14) (Page 4)
______________________________________________________________
______________________________________________________________
SECTION C - OTHER PROVISIONS
1.
That upon organization and incorporation the association shall
by appropriate resolution adopt and ratify this Agreement, that the
association shall be substituted for the individual Owners as a party
to this Agreement, and that the Owners as individuals shall thereupon
be relieved of all personal liability existing or arising from this
Agreement.
2.
That upon organization and incorporation should the association
fail or refuse to adopt and ratify this Agreement by appropriate
resolution within ________ days from the date of the commencement of
its legal existence, this Agreement shall terminate and Owners shall
be liable to the Attorney for payment of $_____________, which sum
represents payment in full for the organization and incorporation of
the association and for all other legal services rendered to Owners
under the terms of this Agreement to the date of said termination.
Attorney:
_______________________
Owners:
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
oOo
RD Instruction 1942-A
(Guide 15)
UNITED STATES DEPARTMENT OF AGRICULTURE
Rural Development
COMMUNITY FACILITY BORROWERS
APPLICATION
1.
SF 424.2, "Application for Federal Assistance (For Construction)."
2.
Clearinghouse Comments.
3.
Financial Feasibility Study.
4.
Form RD 442-7, "Operating Budget," including projected cash flow.
5.
Form RD 442-3, "Balance Sheet," or a financial statement or audit
that includes a balance sheet.
6.
Evidence of organization: Articles of Incorporation and Bylaws;
special legislation creating an entity; general legislation under which it
is created, charter, court order; or other basic data of similar nature.
7.
Written evidence of compliance with State statutes.
8.
Written evidence of compliance with Federal, State, areawide, local
and municipal requirements, as appropriate.
9.
Contracts for professional services.
10. Environmental review documentation as required in accordance with 7 CFR
part 1970. (Revised 04-01-16, SPECIAL PN.)
11. Preliminary engineering or architectural report.
This Guide is prepared only for use by State Directors in the preparation of
documents which will inform applicants and Rural Development personnel of the
items to be included in the application. State Directors will need separate
documents for each different type applicant such as municipalities, districts,
and nonprofit corporations.
oOo
(04-01-16)
SPECIAL PN
RD Instruction 1942-A
(Guide 16)
(Page 1)
(Revision 1)
COMMUNITY FACILITY LOAN DOCKET
SF 424.2, "Application for Federal Assistance (For Construction)" (for
preapplication submission)
Form RD 1910-11, "Application Certification, Federal Collection Policies for
Consumer or Commercial Debts"
Clearinghouse Comments
Environmental review documentation as required in accordance with 7 CFR part
1970. (Revised 04-01-16, SPECIAL PN.)
SF 424.2 (For application submission)
Letter of Conditions
Form RD 1942-46, "Letter of Intent to Meet Conditions"
Any required agreement for services such as engineering, architectural,
legal, accounting, auditing, maintenance, management, plant operations,
water purchase or water treatment.
Construction contract and bidding documents
Required evidence of compliance with any required State and local laws or
regulations and not inconsistent with applicable development plans.
Legal Documents:
Promissory note/bond
Bond Transcript
Notice of sale of bond (if applicable)
Form RD 442-28, "Bond Registration Book"
Evidence of title to pledged assets
Form RD 442-20, "Right-of-way Easement"
(5-16-90)
PN 134
RD Instruction 1942-A
(Guide 16)
(Page 2)
(Revision 1)
Form RD 442-21, "Right-of-way Certificate"
Form RD 442-22, "Opinion of Counsel Relative to Rights-of-way"
Form RD 440-34, "Option to Purchase Real Property"
Deeds Leases
Liens
Benefit Assessment Rolls
Assignment of Water Rights
Evidence of Organization:
Other than public body:
Articles of Incorporation
Bylaws
Rules and regulations
Charter
List of applicant officers
Membership or user
certificate
Certified List of all members of the governing body indicating the
officers and term of office
Certified List of users or members (utility type projects only)
Form RD 1942-8, "Resolution of Members or Stockholders"
Form RD 1942-9, "Loan Resolution (Security Agreement)"
Other basic organization data
Public Body:
Legislation, court order, referendum, evidencing organization and
authority.
Certified List of users.
projects only)
Benefit assessment roll.
(Utility type
Form RD 1942-47, "Loan Resolution (Public Bodies)"
Fiscal:
Form RD 442-3, "Balance Sheet"
Form RD 442-7, "Operating Budget," including projected cash flow
Evidence of user cash contribution and user agreements
RD Instruction 1942-A
(Guide 16)
(Page 3)
(Revision 2)
Automated Community Facility Project Summary (Added 03-19-03, PN 357.)
Provision for interim financing
Evidence of collateral pledge
Additional Forms:
Form RD
400-1, "Equal opportunity Agreement"
Form RD
440-4, "Assurance Agreement"
Form RD
440-8, "Compliance Review"
Form RD
400-6, "Compliance Statement"
(Added 04-02-98, SPECIAL PN.)
Form AD-622, "Notice of Preapplication Review Action"
Form RD
1942-39, "Processing Check List (Other Than Public Bodies)"
Form RD
1942-40, "Processing Check List (Public Bodies)"
Form RD
442-10, "Appraisal Report - Water and Waste Disposal System"
Form RD
1940-1, "Request for obligation of Funds"
Form RD
440-57, "Acknowledgement of Obligated Funds/Check Request"
Form RD
1924-16, "Record of Pre-Construction Conference"
Form RD 2006-38, "Civil Rights Impact Analysis"
(Added 04-02-98, SPECIAL PN.)
This Guide is prepared only for use by State Directors in the preparation of
documents which will inform applicants and Agency. personnel on the items to be
included in the docket. State Directors will need separate documents for each
different type applicant such as municipalities, districts and nonprofit
corporations.
oOo
(05-16-90)
PN 134
RD Instruction 1942-A
(Guide 17)
CONSTRUCTION CONTRACT DOCUMENTS
ITEM I
NOTICE AND INSTRUCTIONS TO BIDDERS
Date:___________________
1.
Sealed bids will be received by the ________________________________,
hereinafter referred to as the "Owner," for performing the work
as described as follows:_____________________________________________
_____________________________________________________________________
_____________________________________________________________________
as described more fully in the Plans and Specifications attached
hereto, on or before ____________ o'clock, in the ___________________
_______________________________________ , at which time said bids will be
publicly opened and read.
2.
All bids must be made on the blank form of proposal attached hereto.
3.
If the contract bid exceeds $10,000, a bidder must submit Form RD
400-6. "Compliance Statement," with the bid. "Equal Opportunity Clause,"
will be a part of all construction contracts exceeding $10,000.
4.
A bidder may withdraw any proposal submitted prior to the hour set
for the closing of the bids provided the request is signed in a manner
identical with the proposal being withdrawn.
5.
It is understood that Rural Development must concur in this contract.
6.
The owner will be responsible for payment in accordance with the
terms of the contract when the work is completed.
__________________________
(Owner)
By __________________________
Title __________________________
(1-15-79)
SPECIAL PN
(Guide 17) (Page 2)
RD Instruction 1942-A
ITEM II
BIDDER'S PROPOSAL
Place _______________________
Date _______________________
1.
In compliance with your invitation for bids dated _______________
___________________ and subject to all the conditions thereof, the
undersigned ______________________________________________________
__________________________________________________________________
__________________________________________________________________
_________(hereinafter called BIDDER)______________doing business as
________________________________________________________________*,"
_________________________________________________________________
of the City of___________, State of ______________________________
___________________ hereby proposes to furnish and complete work required
by the Contract Documents for the construction of all structures listed at
the prices shown for each bid item on the Bid Schedule. Any total cost
found inconsistent with the unit cost when the bids are examined will be
deemed in error and corrected to agree with the unit cost which shall be
considered correct.
2.
The undersigned BIDDER does hereby declare and stipulate that this
proposal is made in good faith, without collusion or connection with any
other person or persons bidding for the same work, and that it is made in
pursuance of and subject to all the terms and conditions of the Notice and
Instructions to Bidders, the Construction Contract, the Detailed
Specifications, and the Plans pertaining to the work to be done, all of
which have been examined by the undersigned.
3.
The undersigned BIDDER agrees to abide by the requirements of
Executive Order No. 11246, as amended. To that end, the BIDDER submits a
completed Form RD 400-6, "Compliance Statement," as ITEM (X) of the
Contract Documents. The BIDDER agrees to execute "Equal Opportunity
Clause," as part of the Construction Contract.
4.
If the work to be performed under this contact is in hometown plan or
imposed plan area the undersigned BIDDER agrees to abide by the "Model
Special Bid Conditions" attached hereto as item VI.
5.
All the various phases of work enumerated in the Detailed
Specifications with their individual jobs and overhead, whether
specifically mentioned, included by implication or appurtenant thereto,
are to be performed by the BIDDER under one of the items listed in the Bid
Schedule, irrespective of whether it is named in said list.
6.
Payment for work performed will be in accordance with the bid
Schedule, subject to changes as provided for in the Construction Contract.
(Guide 17) (Page 3)
RD Instruction 1942-A
7.
The undersigned BIDDER understands that this contract must be
concurred in by Rural Development.
8.
The BIDDER will submit a construction schedule and execute the
contract within 10 days after notification of contract award.
9.
It is understood that time is of the essence in this contract and the
BIDDER agrees to commence within 10 days after the Notice to Proceed and
complete work within ___________ calendar days.
__________________________________
BIDDER'S License No. (if applicable)
Seal (if a corporation)
______________________________
BIDDER
By_______________________________
_______________________________
Title
________________________________
(Business Address)
*Insert: "a corporation incorporated in the State of____________________," "a
partnership" or an individual, as applicable.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 17) (Page 4)
BID SCHEDULE
NOTE:
Bids shall include sales tax and all other applicable
taxes and fees.
________________________________________________________________________
________________________________________________________________________
Item
No.
Description
Estimated
Total
Unit
Quantity
Price
Price
Total
________________________________________________________________________
________________________________________________________________________
TOTAL BID PRICE $_______________
(Guide 17) (Page 5)
RD Instruction 1942-A
ITEM III
NOTICE OF AWARD
Description of work: Construction of _______________________________
_______________________________________ for the _____________________
_____________________________________________________________________
To:__________________________________________________________________
_____________________________________________________________________
The Owner has considered the Proposal submitted by you for the above described
work in response to its Notice and Instructions to Bidders dated
_________________19___.
It is to the best interest of said Owner to accept your Proposal in the amount
of _______________
($_______________________); you are hereby notified that your Proposal has been
accepted for items _________________________________
______________________________________________________________________
______________________________________________________________________
You are required by the Notice and Instruction to Bidders to execute the
contract within ten days from the date of the delivery of this Notice to you.
Dated this ____________________ day of ______________________
19 _____
_________________________
Owner
ACCEPTANCE OF NOTICE
Receipt of the above Notice of
Award is hereby acknowledged this
_______________________________ day
of ____________________, 19______ .
__________________________________
By _______________________________
Title ____________________________
(1-15-79)
SPECIAL PN
By _________________________
Title _________________________
RD Instruction 1942-A
(Guide 17) (Page 6)
ITEM IV
C 0 N T R A C T
THIS AGREEMENT, made this _________ day of ___________________ , 19____,
by and between ________________________________________________________,
hereinafter referred to as the OWNER, and _____________________________
________________________________________, hereinafter referred to as the
CONTRACTOR:
WITNESSETH:
That for and in consideration of the mutual covenants and promises
between the parties hereto, it is hereby agreed that:
1. The CONTRACTOR will furnish all of the materials and supplies,
equipment, and labor and other services necessary in conformance with
these contract documents for the construction and completion of the
project described in general as follows:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
2. COMPLETION OF WORK. The Contractor shall commence the work
covered by this contract within ten (10) calendar days after the date of
receipt of the Notice to Proceed and shall complete the same within
_______________ calendar days unless the period for completion is extended
as provided for in the General Conditions.
(Guide 17) (Page 7)
(Revision 1)
RD Instruction 1942-A
3.
CONTRACT SUM. The Owner shall pay the Contractor for the
performance of said work, subject to additions or deductions provided
herein _____________________________________________
__________________________ dollars ($__________________) in conformity
with the bid schedule in Item II.
4.
The Contract Documents include the following:
(a) Notice and Instructions to Bidders - Item I
(b) Bidder's Proposal - Item II
(c) Notice of Award - Item III
(d) Contract - Item IV
(e) General Conditions - Item V
(f) Model - Special Bid Conditions - Item VI (for hometown or
imposed plan areas)
(g) Rural Development Supplemental General
Conditions.
5.
(h)
Plans prepared by ________________________________________,
numbered _______ through ________, and dated ______, 19__.
(i)
Specifications prepared or issued by_______________________
________________, dated __________________, 19___.
The OWNER will pay to the CONTRACTOR in the manner and at such
times as set forth in the General Conditions and in such amounts as
required by the Contract Documents.
6.
This contract shall be binding upon all parties hereto and their
respective heirs, executors, administrators, successors, and assigns.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 17) (Page 8)
(Revision 1)
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized officials, this Contract in duplicate,
on the date first above written.
OWNER:
_______________________________
By_____________________________
(SEAL)
ATTEST:
Type Name______________________
Title__________________________
_____________________________________
Type Name ___________________________
Title________________________________
CONTRACTOR:
______________________________
By____________________________
Approved as lender or insurer of
fund to defray the costs of this
contract, and without liability for
any payments thereunder, the Farmers
Home Administration hereby concurs
in the award of this contract to
Type Name_____________________
Title_________________________
Employer Identification
Number________________________
_____________________________________________.
U. S. Department of Agriculture
Rural Development
By _________________________________ Title _______________________________
This contract shall not be effective unless and until approved by the State
Director of Rural Development, U. S. Department of Agriculture, or a delegated
representative.
RD Instruction 1942-A
(Guide 17) (Page 9)
ITEM V
GENERAL CONDITIONS
1.
The contractor shall furnish and pay the cost, including sales tax
and all other applicable taxes and fees, of all the necessary materials
and shall furnish and pay for all the superintendence, labor, tools,
equipment and transportation and perform all the work required for the
construction of all items listed and itemized under the bid schedule of
the Bidder's Proposal attached hereto as Item II in strict accordance with
the Plans, Specifications and requirements, general conditions and special
conditions which are attached hereto and made a part hereof, and any
amendments thereto and such supplemental plans and specifications which
may hereafter be approved.
2.
The Owner shall provide the land upon which the work under this
contract is to be done, and will, so far as is convenient, permit the
Contractor to use as much of the land as is required for the erection of
temporary construction facilities and storage of materials, together with
the right of access to same, but beyond this, the Contractor shall provide
at the contractor's cost and expense any additional land required.
3.
In the event the Owner is dissatisfied with the slow progress or
incompetency in the performance of the work in accordance with the
schedule for completion of the various aspects of construction, the Owner
shall give the Contractor written notice in which the owner shall specify
in detail the cause of dissatisfaction. Should the Contractor fail or
refuse to remedy the matters complained of within five days after the
written notice is received by the Contractor the Owner shall have the
right to take control of the work and either make good the deficiencies of
the Contractor itself or direct the activities of the Contractor in doing
so, employing such additional help as the Owner deems advisable. In such
event the Owner shall be entitled to collect from the Contractor any
expenses in completing the work.
4.
The owner will withhold $________ as liquidated damages from the
amount payable to the Contractor for each calendar day that the contractor
is in default after the time of completion stipulated in these Contract
Documents. It is understood that the amount is approximately equal to the
interest and other charges incurred by the Owner.
5.
The Contractor guarantees all material and equipment furnished and
all work performed for a period of 1 year from the date of substantial
completion of the contract. The contractor's guarantees that the facility
is free from defects due to faulty materials or workmanship and the
contractor shall make the necessary corrections to correct these defects.
(1-15-79)
SPECIAL PN
(Guide 17) (Page 10)
RD Instruction 1942-A
6.
The contractor should give all notices and comply with all laws,
ordinances, rules, and regulations bearing on the conduct of the work as
specified in the Contract Documents. If the contractor observes that the
Contract Documents are at variation with any laws, ordinances, rules or
regulations, the contractor should promptly notify the owner in writing
and any necessary changes shall be adjusted through the use of contract
change orders.
7.
The Contractor agrees to pay all claims for labor, materials,
services and supplies and agrees to allow no such charge to be fixed on
the property of the Owner.
8.
The Contractor agrees to comply with all laws, rules and regulations
that apply to related work.
9.
The actual performance of work and superintendence shall be performed
by the Contractor but the owner shall, at all times, have access to the
premises for the purpose of observing or inspecting the work performed by
the Contractor.
10.
It is fully understood and agreed that none of the requirements of
this contract shall be considered as waived unless changes are made in
writing and then only by the persons executing this contract upon
concurrence of Rural Development.
11.
The Contractor agrees not to sublet or assign this work without the
written consent of the owner.
12.
The Contractor shall have full responsibility under these conditions,
general provisions, Plans and Specifications for any subcontracts which
the Contractor may let.
13.
All questions or controversies which may arise between the Contractor
and the Owner, under or in reference to this contract, should be resolved,
to the fullest extent possible at a meeting between the Contractor, the
Owner, and a representative of Rural Development. The agreements reached
at such meetings shall be carefully documented and become final and
binding on all parties concerned. However, should the Owner and
Contractor be unable to agree, a board of three arbitrators shall be
chosen. One shall be chosen by the Contractor, one shall be chosen by the
Owner, and the third shall be selected through mutual agreement by the
first two. Should either party neglect or fail to select an arbitrator
within ten days, the arbitrator selected by the other party shall have
power to decide the dispute in the same manner as though a board of three
arbitrators had been selected.
14.
The Contractor shall indemnify and save harmless the Owner and the
Owner's agents and employees, from and against all losses and all claims,
demands, payments, suits, actions, recoveries, and judgments of every
nature, and description brought or recovered against them by reasons of
any act or omission of the said Contractor, its agents, or employees, in
the execution of the work or in guarding the same.
(Guide 17) (Page 11)
15.
RD Instruction 1942-A
Payment. Final payment shall be made to the Contractor when the work
is completed and accepted by the owner and Rural Development. The total
amount of the payment shall be the amount of the contract plus the value
of all changes as reflected in approved contract change orders. The
entire balance found to be due the Contractor but excepting such sums as
may be lawfully retained by the Owner, shall be paid to the Contractor.
Such payment shall be conditioned, however, upon the submission by the
Contractor of evidence satisfactory to the Owner that all claims for
labor, material, and any other outstanding indebtedness in connection with
this Contract have been paid.
The Owner will make payments as follows: (Check (X) proper payment clause
and effectively cross out all of the clauses not applicable.)
______
______
______
______
16.
A. ONE LUMP SUM will be made for the whole contract, upon
acceptance by the owner and Rural Development, of all work
required hereunder and compliance by the Contractor with all the
terms and conditions of this contract.
B.
PARTIAL PAYMENTS NOT TO EXCEED 60 PERCENT of the value
of the work in place (less the aggregate of previous payments)
will be made at intervals of_______. The value of work in place
shall be as estimated by the contractor and approved by Rural
Development. Prior to receiving any partial payment, the
contractor must furnish the owner with a statement showing the
total amount owed to date for materials and labor procured under
this contract and, if required by the owner or Rural
Development, must also submit evidence showing that previous
partial payments were properly applied and that the current
payment will be properly applied. Upon completion of the whole
contract and acceptance of the work as required hereunder, by
the owner and Rural Development, and compliance by the
contractor with all terms and conditions of this contract, the
amount due the contractor will be paid.
Upon completion or termination of the work, the Contractor
remove from the vicinity of the work all equipment and all
structures, waste materials and rubbish resulting from its
leaving the premises in a neat and presentable condition.
failure to do so, the same may be done by the Owner at the
Contractor.
(1-15-79)
SPECIAL PN
shall
temporary
operations,
In the event of
expense of the
(Guide 17) Attachment I
RD Instruction 1942-A
ITEM VI
MODEL
SPECIAL BID CONDITIONS
AFFIRMATIVE ACTION REQUIREMENTS
EQUAL EMPLOYMENT OPPORTUNITY
THE FOLLOWING NOTICE SHALL BE INCLUDED IN ALL INVITATIONS AND OTHER
SOLICITATIONS FOR BIDS ON (NON-EXEMPT) FEDERAL AND FEDERALLY-ASSISTED
CONSTRUCTION CONTRACTS TO BE AWARDED ON THE _______________ _____________, TO
INSURE EQUAL EMPLOYMENT OPPORTUNITY.
NOTICE OF REQUIREMENT
EACH BIDDER, CONTRACTOR OR SUBCONTRACTOR (HEREINAFTER THE CONTRACTOR) MUST
FULLY COMPLY WITH THE REQUIREMENTS, TERMS AND CONDITIONS OF THE ____________
AFFIRMATIVE ACTION PLAN (HEREINAFTER ____________________ PLAN) INCLUDING THE
GOALS FOR MINORITY MANPOWER UTILIZATION AS TO EACH CONSTRUCTION TRADE IT
INTENDS TO USE ON THIS CONSTRUCTION CONTRACT AND ALL OTHER CONSTRUCTION WORK
(BOTH FEDERAL AND NONFEDERAL) IN THE _____________ AREA DURING THE PERFORMANCE
OF THIS CONTRACT OR SUBCONTRACT. THE CONTRACTOR COMMITS ITSELF TO THE GOALS
FOR MINORITY MANPOWER UTILIZATION CONTAINED HEREIN AND ALL OTHER REQUIREMENTS,
TERMS AND CONDITIONS OF THESE BID CONDITIONS BY SUBMITTING A PROPERLY SIGNED
BID.
THE CONTRACTOR WILL APPOINT A COMPANY EXECUTIVE TO ASSUME THE
RESPONSIBILITY FOR THE IMPLEMENTATION OF SUCH REQUIREMENTS, TERMS AND
CONDITIONS.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 17) Attachment 1 (Page 2)
PART 1 (GOALS FOR MINORITY UTILIZATION)
A. THE FOLLOWING GOALS FOR MINORITY MANPOWER UTILIZATION SHALL EXPRESS
THE CONTRACTOR'S COMMITMENT TO THE PERCENTAGE OF MINORITY WORKHOURS TO BE
WORKED IN EACH SPECIFIED CRAFT ON ALL WORK PERFORMED BY THE CONTRACTOR IN THE
___________________ AREA DURING THE PERFORMANCE OF THIS CONTRACT. "MINORITY"
IS DEFINED AS INCLUDING BLACKS, SPANISH-SURNAMED AMERICANS, ORIENTALS, AND
AMERICAN INDIANS AND INCLUDES BOTH MINORITY MEN AND WOMEN.
FOR ALL TRADES THE FOLLOWING GOALS AND TIMETABLES SHALL BE APPLICABLE:
GOALS FOR MINORITY
___UTILIZATION____
UNTIL DECEMBER 31, 19____
FROM JANUARY 1, 19____ to DECEMBER 31, 19___
FROM JANUARY 1, 19____ to DECEMBER 31, 19___
FROM JANUARY 1, 19____ to DECEMBER 31, 19___
FROM JANUARY 1, 19____ to DECEMBER 31, 19___
B. THE GOALS FOR MINORITY MANPOWER UTILIZATION ABOVE ARE EXPRESSED IN
TERMS OF WORKHOURS OF TRAINING AND EMPLOYMENT AS A PROPORTION OF THE TOTAL
WORKHOURS TO BE WORKED BY THE CONTRACTOR'S AGGREGATE WORKFORCE IN THAT TRADE ON
ALL PROJECTS (BOTH FEDERAL AND NON-FEDERAL) IN THE _____________ AREA DURING
THE PERFORMANCE OF ITS CONTRACT OR SUBCONTRACT (i.e. THE PERIOD BEGINNING WITH
THE FIRST DAY OF WORK ON THE FEDERAL OR FEDERALLY-ASSISTED CONSTRUCTION
CONTRACT AND ENDING WITH THE LAST DAY OF WORK).
(Guide 17) Attachment I (Page 3)
RD Instruction 1942-A
C. THE WORKHOURS OF MINORITY WORK MUST BE SUBSTANTIALLY UNIFORM
THROUGHOUT THE LENGTH OF THE CONTRACT IN EACH TRADE, AND MINORITIES SHOULD BE
EMPLOYED EVENLY ON EACH OF A CONTRACTOR'S PROJECTS. NEVERTHELESS, FAILURE OF A
CONTRACTOR TO EMPLOY MINORITIES EVENLY ON EACH OF ITS PROJECTS SHALL NOT
CONSTITUTE NONCOMPLIANCE PROVIDED THE PERCENTAGE OF MINORITY WORKHOURS EMPLOYED
BY THE CONTRACTOR IN ITS AGGREGATE WORKFORCE IN THE _______________ AREA MEETS
OR EXCEEDS ITS COMMITMENT TO THE GOALS FOR MINORITY MANPOWER UTILIZATION IN THE
_______________ PLAN AND THE CONTRACTOR HAS NOT VIOLATED THE EQUAL OPPORTUNITY
CLAUSE OF THE CONTRACT IN THE ASSIGNMENT OF MINORITIES TO ITS PROJECTS. THE
TRANSFER OF MINORITY EMPLOYEES FROM EMPLOYER-TO-EMPLOYER OR FROM PROJECT-TOPROJECT FOR THE PURPOSE OF MEETING THE CONTRACTOR'S GOAL SHALL BE A VIOLATION
OF THE ____________ PLAN. OTHERWISE, THE CONTRACTOR SHALL BE DEEMED TO BE IN
COMPLIANCE WITH THE REQUIREMENTS, TERMS, AND CONDITIONS OF THE ___________ PLAN
IF THE MINORITY MANPOWER UTILIZATION RATE OF THE CONTRACTOR MEETS OR EXCEEDS
ITS COMMITMENT TO THE GOALS FOR MINORITY MANPOWER UTILIZATION IN ITS AGGREGATE
WORKFORCE, BOTH FEDERALLY INVOLVED AND NON-FEDERAL, WITHIN THE
_________________ AREA. HOWEVER, IF THE CONTRACTOR HAS DENIED EQUAL EMPLOYMENT
OPPORTUNITY IN VIOLATION OF THE EQUAL OPPORTUNITY CLAUSE OF THIS CONTRACT, IT
SHALL NOT BE IN COMPLIANCE WITH THE ___________ PLAN.
D. IN THE EVENT THAT WORK IS PERFORMED AFTER THE EXPIRATION DATE OF
THE________________ PLAN ON A CONSTRUCTION CONTRACT AWARDED PURSUANT TO THE
REQUIREMENTS, TERMS AND CONDITIONS OF THE PLAN THE GOALS FOR MINORITY MANPOWER
UTILIZATION FOR 1980 SHALL BE APPLICABLE TO SUCH WORK.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 17) Attachment I (Page 4)
E. THE CONTRACTORS COMMITMENT TO GOALS OF MINORITY MANPOWER UTILIZATION
IS INTENDED TO MEET ITS AFFIRMATIVE ACTION OBLIGATIONS UNDER EXECUTIVE ORDER
11246, AS AMENDED, AND IS NOT INTENDED AND SHALL NOT BE USED TO DISCRIMINATE
AGAINST ANY QUALIFIED APPLICANT OR EMPLOYEE. WHENEVER, IT COMES TO THE
CONTRACTOR'S ATTENTION THAT THE GOALS ARE BEING USED IN A DISCRIMINATORY
MANNER, IT SHALL IMMEDIATELY REPORT THAT FACT TO THE OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS, EMPLOYMENT STANDARDS ADMINISTRATION, U.S. DEPARTMENT OF
LABOR, AND THE COMPLIANCE AGENCY SO THAT APPROPRIATE PROCEEDINGS MAY BE
INSTITUTED.
PART II
SPECIFIC AFFIRMATIVE ACTION STEPS (GOOD FAITH EFFORTS)
THE CONTRACTOR SHALL BE DEEMED TO BE IN COMPLIANCE WITH THE REQUIREMENTS,
TERMS, AND CONDITIONS OF THE ______________ PLAN IF IT MEETS OR EXCEEDS ITS
COMMITMENT TO THE GOALS FOR MINORITY MANPOWER UTILIZATION IN ITS AGGREGATE
WORKFORCE IN THE _____________ AREA FOR EACH TRADE FOR WHICH IT IS COMMITTED TO
A GOAL UNDER THE ____________ PLAN. THE CONTRACTOR'S COMMITMENT TO THE GOALS
FOR MINORITY MANPOWER UTILIZATION AS REQUIRED BY THE ___________ PLAN
CONSTITUTES A COMMITMENT THAT IT WILL MAKE EVERY GOOD FAITH EFFORT TO MEET SUCH
GOALS. NO CONTRACTOR SHALL BE FOUND TO BE IN NON-COMPLIANCE SOLELY ON ACCOUNT
OF THE CONTRACTOR'S FAILURE TO MEET ITS GOALS, BUT SHALL BE GIVEN THE
OPPORTUNITY TO DEMONSTRATE THAT THE CONTRACTOR HAS INSTITUTED ALL THE SPECIFIC
AFFIRMATIVE ACTION STEPS SPECIFIED IN THE __________ PLAN AND MADE EVERY GOOD
FAITH EFFORT TO MAKE THESE STEPS WORK TOWARD THE ATTAINMENT OF ITS GOALS WITHIN
THE TIMETABLES, ALL TO THE PURPOSE OF EXPANDING MINORITY MANPOWER UTILIZATION
IN ITS AGGREGATE WORKFORCE IN THE _______________ AREA. CONTRACTORS WHO FAIL
TO ACHIEVE THEIR COMMITMENTS TO THE GOALS FOR MINORITY MANPOWER UTILIZATION
MUST HAVE ENGAGED IN
(Guide 17) Attachment I (Page 5)
RD Instruction 1942-A
AFFIRMATIVE ACTION DIRECTED AT INCREASING MINORITY MANPOWER UTILIZATION, WHICH
IS AT LEAST AS EXTENSIVE AS THE FOLLOWING STEPS:
1.
SPECIFIC WRITTEN NOTIFICATION OF MINORITY RECRUITMENT SOURCES
AND COMMUNITY ORGANIZATION WHEN THE CONTRACTOR OR ITS UNIONS HAVE
EMPLOYMENT OPPORTUNITIES AVAILABLE AND MAINTENANCE OF RECORDS
REGARDING THE ORGANIZATIONS' RESPONSE.
2.
MAINTENANCE OF A FILE OF THE NAMES AND ADDRESSES OF EACH
MINORITY WORKER REFERRED BY THE UNION, MINORITY RECRUITMENT SOURCE(S)
AND COMMUNITY ORGANIZATION(S) TO THE CONTRACTOR AND WHAT ACTION HAS
BEEN TAKEN WITH RESPECT TO EACH SUCH REFERRED WORKER. IF SUCH WORKER
WAS NOT EMPLOYED BY THE CONTRACTOR, THE FILE SHOULD DOCUMENT THIS AND
THE REASONS THEREFOR.
3.
WRITTEN NOTIFICATION TO BOTH THE CONTRACTING AGENCY AND THE
OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS WHEN THE UNION OR
UNIONS WITH WHOM THE CONTRACTOR HAS A COLLECTIVE BARGAINING AGREEMENT
HAS NOT REFERRED TO THE CONTRACTOR A MINORITY WORKER SENT BY THE
CONTRACTOR, OR THE CONTRACTOR HAS OTHER INFORMATION THAT THE UNION
REFERRAL PROCESS HAS IMPEDED ITS EFFORTS TO MEET ITS GOALS.
4.
PARTICIPATION IN TRAINING PROGRAMS IN THE AREA, INCLUDING
APPRENTICESHIP, TRAINEE, AND JOURNEYMEN UPGRADING PROGRAMS,
ESPECIALLY THOSE FUNDED BY THE DEPARTMENT OF LABOR.
5.
DISSEMINATION OF THE CONTRACTOR'S OR UNION'S EEO POLICY BY
INCLUDING IT IN ANY POLICY MANUAL AND COLLECTIVE BARGAINING
AGREEMENT(S); BY PUBLICIZING IT IN THE COMPANY OR UNION
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 17) Attachment I (Page 6)
6.
7.
8.
9.
10.
11.
12.
13.
NEWSPAPER, ANNUAL REPORT, ETC.; BY POSTING OF THE POLICY: AND BY
SPECIFIC REVIEW OF THE POLICY WITH MINORITY EMPLOYEES AT LEAST ONCE A
YEAR.
DISSEMINATION OF THE CONTRACTOR'S EEO POLICY EXTERNALLY BY
ADVERTISING IN NEWS MEDIA, SPECIFICALLY INCLUDING MINORITY NEWS
MEDIA, IF THE CONTRACTOR HAS A NEED TO ADVERTISE; AND BY NOTIFYING
AND DISCUSSING IT WITH OTHER CONTRACTORS, AND SUBCONTRACTORS WITH
WHOM THE CONTRACTOR DOES OR ANTICIPATES DOING BUSINESS.
ENCOURAGE PRESENT MINORITY EMPLOYEES TO RECRUIT THEIR FRIENDS
AND RELATIVES.
VALIDATION OF ALL TESTS AND OTHER SELECTION REQUIREMENTS AS
REQUIRED BY THE TESTING AND SELECTION ORDER (41 CFR PART 60-3).
MAKING EVERY EFFORT TO PROVIDE AFTER SCHOOL, SUMMER AND VACATION
EMPLOYMENT TO MINORITY YOUTH - BOTH ON THE JOB SITE AND IN OTHER
AREAS OF A CONTRACTOR'S WORKFORCE.
CONDUCT INVENTORY AND EVALUATION OF ALL MINORITY PERSONNEL FOR
PROMOTIONAL OPPORTUNITIES ON A QUARTERLY BASIS AND ENCOURAGE MINORITY
EMPLOYEES TO SEEK SUCH OPPORTUNITIES.
ENSURING THAT SENIORITY PRACTICES, JOB CLASSIFICATIONS,
ETC., DO NOT HAVE A DISCRIMINATORY EFFECT.
ENSURING THAT ALL FACILITIES AND COMPANY ACTIVITIES ARE
NONSEGREGATED.
CONTINUAL MONITORING OF ALL PERSONNEL ACTIVITIES TO ENSURE THAT
ITS EEO POLICY IS BEING CARRIED OUT.
(Guide 17) Attachment I (Page 7)
14.
RD Instruction 1942-A
DOCUMENTATION OF SOLICITATION OF BIDS FOR SUBCONTRACTORS FROM
AVAILABLE MINORITY SUBCONTRACTORS ENGAGED IN THE TRADES COVERED BY
THE ___________ PLAN, INCLUDING CIRCULATION TO MINORITY CONTRACTOR
ASSOCIATIONS.
THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS ASSISTANT REGIONAL
ADMINISTRATOR AND THE CONTRACTING AGENCY COMPLIANCE STAFF WILL PROVIDE
TECHNICAL ASSISTANCE, UPON REQUEST, PERTAINING TO MINORITY RECRUITMENT SOURCES,
COMMUNITY ORGANIZATIONS AND MINORITY NEWS MEDIA.
PART III
ADMINISTRATIVE PROCEDURES FOR ENFORCEMENT
A.
THE AGENCY SHALL REVIEW THE CONTRACTOR'S EMPLOYMENT PRACTICES DURING
THE PERFORMANCE OF THE CONTRACT. IF THE CONTRACTOR MEETS ITS GOAL(S) OR CAN
DEMONSTRATE THAT IT HAS MADE IN GOOD FAITH EVERY EFFORT TO MEET THE GOAL(S) AND
IS NOT OTHERWISE VIOLATING THE EQUAL OPPORTUNITY CLAUSE OF THIS CONTRACT OR ANY
OTHER FEDERAL EQUAL EMPLOYMENT OPPORTUNITY LAWS OR REGULATIONS, THE CONTRACTOR
SHALL BE PRESUMED TO BE IN COMPLIANCE WITH EXECUTIVE ORDER 11246, AS AMENDED,
AND THE __________ PLAN. IN THAT EVENT, NO FORMAL SANCTIONS OR PROCEEDINGS
LEADING TOWARD SANCTIONS SHALL BE INSTITUTED UNLESS THE AGENCY OTHERWISE
DETERMINES THAT THE CONTRACTOR IS NOT PROVIDING EQUAL EMPLOYMENT OPPORTUNITIES.
B.
WHERE THE AGENCY FINDS THAT THE CONTRACTOR HAS FAILED TO COMPLY WITH
REQUIREMENTS OF EXECUTIVE ORDER 11246, THE IMPLEMENTING REGULATIONS AND THE
_________ PLAN, THE AGENCY SHALL TAKE SUCH ACTION AND IMPOSE
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 17) Attachment I (Page 8)
SUCH SANCTIONS, WHICH INCLUDE SUSPENSION, TERMINATION, CANCELLATION, AND
DEBARMENT, AS MAY BE APPROPRIATE UNDER THE EXECUTIVE ORDER AND ITS REGULATIONS.
C. WHEN THE AGENCY PROCEEDS WITH SUCH FORMAL ACTION, IT HAS THE BURDEN OF
PROVIDING THAT THE CONTRACTOR HAS NOT MET THE REQUIREMENTS OF THE ________
PLAN. THE CONTRACTOR'S FAILURE TO MEET ITS GOAL(S) SHALL, HOWEVER, SHIFT TO
THE REQUIREMENT TO COME FORWARD WITH EVIDENCE TO SHOW THAT IT HAS MADE EVERY
"GOOD FAITH" EFFORT TO MEET SUCH GOALS.
D. THE PENDENCY OF SUCH FORMAL PROCEEDINGS SHALL BE TAKEN INTO
CONSIDERATION BY FEDERAL AGENCIES BY DETERMINING WHETHER SUCH CONTRACTOR CAN
COMPLY WITH THE REQUIREMENTS OF EXECUTIVE ORDER 11246, AS AMENDED, AND IS
THEREFORE, A "RESPONSIBLE PROSPECTIVE CONTRACTOR" WITHIN THE MEANING OF THE
FEDERAL PROCUREMENT ACT.
E. IT SHALL BE NO EXCUSE THAT THE UNION WITH WHICH THE CONTRACTOR HAS A
COLLECTIVE BARGAINING AGREEMENT PROVIDES FOR THE EXCLUSIVE REFERRAL OF MINORITY
EMPLOYEES. DISCRIMINATION IN REFERRAL FOR EMPLOYMENT, EVEN IF PURSUANT TO
PROVISIONS OF A COLLECTIVE BARGAINING AGREEMENT, IS PROHIBITED BY THE NATIONAL
LABOR RELATIONS ACT, AS AMENDED, AND TITLE VII OF THE CIVIL RIGHTS ACT FOR
1964. IT IS THE POLICY OF THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS
THAT CONTRACTORS HAVE A RESPONSIBILITY TO PROVIDE EQUAL EMPLOYMENT OPPORTUNITY
IF THEY WISH TO PARTICIPATE IN FEDERALLY-INVOLVED CONTRACTS. TO THE EXTENT
THEY HAVE DELEGATED THE RESPONSIBILITY FOR SOME OF THEIR EMPLOYMENT PRACTICES
TO A LABOR ORGANIZATION AND, AS A RESULT, ARE PREVENTED FROM MEETING THEIR
OBLIGATIONS PURSUANT TO EXECUTIVE ORDER 11246, AS AMENDED, SUCH CONTRACTORS
(Guide 17) Attachment I (Page 9)
RD Instruction 1942-A
CANNOT BE CONSIDERED TO BE IN COMPLIANCE WITH EXECUTIVE ORDER 11246, AS
AMENDED, AND ITS IMPLEMENTING RULES AND REGULATIONS.
CONTRACTOR OBLIGATIONS
A. ALL CONTRACTORS SHALL INCLUDE THE _____________ PLAN IN ALL BID
INVITATIONS OR OTHER PRE-BID COMMUNICATIONS, WRITTEN OR OTHERWISE, WITH THEIR
PROSPECTIVE SUBCONTRACTORS. WHENEVER A CONTRACTOR SUBCONTRACTS A PORTION OF
THE WORK IN ANY TRADE COVERED BY THE _____________ PLAN IT SHALL INCLUDE THE
PLAN IN SUCH SUBCONTRACTS AND EACH SUBCONTRACTOR SHALL BE BOUND BY THE
______________ PLAN TO THE FULL EXTENT AS IF IT WERE THE PRIME CONTRACTOR. THE
CONTRACTOR SHALL NOT BE ACCOUNTABLE FOR THE FAILURE OF ITS SUBCONTRACTOR TO
FULFILL ITS AFFIRMATIVE ACTION COMMITMENTS. HOWEVER, THE PRIME CONTRACTOR
SHALL GIVE NOTICE TO THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS OF THE
DEPARTMENT OF LABOR AND THE CONTRACTING AGENCY OF ANY REFUSAL OR FAILURE OF ANY
SUBCONTRACTOR TO FULFILL ITS OBLIGATIONS UNDER THE _________ PLAN.
NONCOMPLIANCE WITH THESE REQUIREMENTS BY A SUBCONTRACTOR WILL BE TREATED IN THE
SAME MANNER AS SUCH FAILURE BY THE PRIME CONTRACTOR.
B. CONTRACTORS HEREBY AGREE TO REFRAIN FROM ENTERING INTO ANY CONTRACT
OR CONTRACT MODIFICATION SUBJECT TO EXECUTIVE ORDER 11246, AS AMENDED, WITH A
CONTRACTOR DEBARRED FROM, OR WHO IS DETERMINED NOT TO BE A "RESPONSIBLE" BIDDER
FOR GOVERNMENT CONTRACTS AND FEDERALLY-ASSISTED CONSTRUCTION CONTRACTS PURSUANT
TO THE EXECUTIVE ORDER.
C. THE CONTRACTOR SHALL CARRY OUT SUCH SANCTIONS AND PENALTIES FOR
VIOLATION OF THESE BID CONDITIONS AND THE EQUAL OPPORTUNITY CLAUSE INCLUDING
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 17) Attachment I (Page 10)
SUSPENSION. TERMINATION AND CANCELLATION OF EXISTING SUBCONTRACTS AND
DEBARMENT FROM FUTURE CONTRACTS AS MAY BE IMPOSED OR ORDERED PURSUANT TO
EXECUTIVE ORDER 11246, AS AMENDED, AND ITS IMPLEMENTING REGULATIONS BY THE
CONTRACTING OR ADMINISTERING AGENCY AND THE OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS. ANY CONTRACTOR WHO FAILS TO CARRY OUT SUCH SANCTIONS AND
PENALTIES SHALL ALSO BE DEEMED TO BE IN NONCOMPLIANCE WITH THESE BID CONDITIONS
AND EXECUTIVE ORDER 11246, AS AMENDED.
D. NOTHING HEREIN IS INTENDED TO RELIEVE ANY CONTRACTOR DURING THE TERM
OF ITS CONTRACT FROM COMPLIANCE WITH EXECUTIVE ORDER 11246, AS AMENDED, AND THE
EQUAL OPPORTUNITY CLAUSE OF ITS CONTRACT WITH RESPECT TO MATTERS NOT COVERED IN
THE ____________ PLAN.
E.
CONTRACTORS MUST KEEP SUCH RECORDS AND FILE SUCH REPORTS RELATING TO
PROVISIONS OF THE ___________ PLAN AS SHALL BE REQUIRED BY THE CONTRACTING OR
ADMINISTERING AGENCY OR THE OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS.
OBLIGATIONS OF THE FEDERAL GOVERNMENT
A. NOTHING IN THE ____________ PLAN SHALL BE INTERPRETED TO DIMINISH OR
RELIEVE THE RESPONSIBILITIES OF THE CONTRACTING AND ADMINISTERING AGENCIES
PURSUANT TO EXECUTIVE ORDER 11246, AS AMENDED, WITH RESPECT TO MATTERS NOT
COVERED IN THESE BID CONDITIONS.
B. THE PROCEDURES SET FORTH IN THE ___________ PLAN SHALL NOT APPLY TO
ANY CONTRACT WHEN THE HEAD OF THE AGENCY DETERMINES THAT SUCH CONTRACT IS
ESSENTIAL TO THE NATIONAL SECURITY AND THAT ITS AWARD WITHOUT FOLLOWING SUCH
PROCEDURE IS NECESSARY TO THE NATIONAL SECURITY. UPON MAKING SUCH A
DETERMINATION, THE AGENCY HEAD WILL NOTIFY, IN WRITING, THE DIRECTOR OF THE
OFFICE
(Guide 17) Attachment I (Page 11)
RD Instruction 1942-A
OF FEDERAL CONTRACT COMPLIANCE PROGRAMS WITHIN 30 DAYS.
C. NOTHING IN THE ________________ PLAN SHALL BE INTERPRETED TO DIMINISH
THE PRESENT CONTRACT COMPLIANCE REVIEW AND COMPLIANT PROGRAMS.
D. REQUESTS FOR EXEMPTIONS FROM THE _______________ PLAN MUST BE MADE IN
WRITING, WITH JUSTIFICATION, TO THE DIRECTOR, OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS, U.S. DEPARTMENT OF LABOR, WASHINGTON, D.C., 20210, AND
SHALL BE FORWARDED THROUGH AND WITH THE ENDORSEMENT OF THE HEAD OF THE
CONTRACTING OR ADMINISTERING AGENCY.
SIGNED THIS _________________ DAY OF _____________.
_____________________________
DIRECTOR, OFFICE OF FEDERAL
Contract Compliance Programs
oOo
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
Guide 18
Page 1
(Revision 1)
Rural Development Supplemental General Conditions
The provisions of the Rural Development Supplemental General Conditions as
described herein change, amend, or supplement the General Conditions and shall
supersede any conflicting provisions of this CONTRACT. All provisions of the
General Conditions which are not changed, amended, or supplemented, remain in
full force.
1. CONTRACT APPROVAL
9. SMALL, MINORITY AND WOMEN'S
2. CONTRACT CHANGE ORDERS
BUSINESSES
3. PARTIAL PAYMENT ESTIMATES
10. ANTI-KICKBACK
4. CONFLICT OF INTEREST
11. VIOLATING FACILITIES
5. PROTECTION OF LIVES AND PROPERTY
12. STATE ENERGY POLICY
6. REMEDIES
13. EQUAL OPPORTUNITY REQUIREMENTS
7. GRATUITIES
14. CERTIFICATE OF OWNER'S ATTORNEY
8. AUDIT AND ACCESS TO RECORDS
15. RURAL DEVELOPMENT CONCURRENCE
1.
Contract Approval.
1.1 The OWNER and the CONTRACTOR will furnish the OWNER'S Attorney such
evidence as required so that the OWNER'S Attorney can complete and execute
"Certificate of Owner's Attorney" (Section 14) before the OWNER submits
the executed Contract Documents to Rural Development for approval.
1.2 Concurrence by the Rural Development State Director or designee in
the award of the CONTRACT is required before it is effective and the
"Rural Development Concurrence" (Section 15), shall be attached and made a
part of the Agreement.
1.3 When a Performance BOND and Payment BOND are provided, the United
States acting through Rural Development will be named as co-obligee in
these BONDS unless prohibited by State law. Surety companies executing
BONDS must appear on the Treasury Department's most current list (Circular
570 as amended) and be authorized to transact business in the State where
the project is located.
1.4 This CONTRACT is expected to be funded in part with funds from the
Rural Development. Neither the United States nor any of its departments,
agencies, or employees is or will be a party to this CONTRACT or any
SUBCONTRACT.
2.
Contract Change Orders.
2.1 All changes affecting the project's construction cost or
modifications of the terms or conditions of the contract must be
authorized by means of a written contract change order which is mutually
agreed to by the OWNER and CONTRACTOR and is approved by Rural
Development. The contract change order will include extra work, work for
which quantities have been altered from those shown in the bidding
schedule, as well as decreases or increases in the quantities of installed
units which are different than those shown in the bidding schedule because
of final measurements. All changes must be recorded on a contract change
order before they can be included in a partial payment estimate.
RD Instruction 1942-A
Guide 18
Page 2
(Revision 1)
2.2 Form RD 1924-7, "Contract Change Order" or similar form approved by
Rural Development shall be used to record CONTRACT changes. (Revised 512-87, SPECIAL PN.)
2.3 When the CONTRACT sum is, in whole or in part, based on unit prices,
the OWNER reserves the right to increase or decrease a unit price quantity
as may be deemed reasonable or necessary in order to complete the work
contemplated by this CONTRACT.
3.
Partial Payment Estimates.
3.1 Form RD 1924-18, "Partial Payment Estimate," or similar form approved
by Rural Development shall be used when periodic payments due the
CONTRACTOR. (Revised 5-12-87, SPECIAL PN.)
3.2 The OWNER may after consultation with the ARCHITECT/ENGINEER withhold
or, on account of subsequently discovered evidence, nullify the whole or
part of any approved partial payment estimate to such extent as may be
necessary to protect the OWNER from loss on account of:
3.2.1
Defective work not remedied.
3.2.2
Claims filed.
3.2.3 Failure of CONTRACTOR to make payments properly to
subcontractors or suppliers.
3.2.4 A reasonable doubt that the WORK can be completed for the
balance then unpaid.
3.2.5
Damage to another CONTRACTOR.
3.2.6 Performance of WORK in violation of the terms of the CONTRACT
DOCUMENTS.
3.3 Where WORK on unit price items is substantially complete but
lacks testing, clean-up and/or corrections, amounts shall be deducted
from unit prices in partial payment estimates to amply cover such
testing, clean-up and/or corrections.
3.4 When the items in 3.2 and 3.3 are cured, payment shall be made
for amounts withheld because of them.
3.5 Payments will not be made that would deplete the retainage nor
place in escrow any funds that are required for retainage nor invest
the retainage for the benefit of the CONTRACTOR.
RD Instruction 1942-A
Guide 18
Page 3
4.
Conflict of Interest.
4.1. Unacceptable bidders. An ENGINEER or ARCHITECT (individual or firm
including persons they employ) who has prepared plans and specifications
will not be considered an acceptable bidder. Any firm or corporation in
which such ENGINEER or ARCHITECT (including persons they employ) is an
officer, employee, or holds or controls a substantial interest will not be
considered an acceptable bidder. Contracts or purchases by the CONTRACTOR
shall not be awarded or made to a supplier or manufacturer if the ENGINEER
or ARCHITECT (firm or individual) who prepared the plans and
specifications has a corporate or financial affiliation with the supplier
or manufacturer. Bids will not be awarded to firms or corporations which
are owned or controlled wholly or in part by a member of the governing
body of the OWNER or to an individual who is such a member.
4.2. The OWNER'S officers, employees, or agents shall not engage in the
award or administration of this CONTRACT if a conflict of interest, real
or apparent, would be involved. Such a conflict would arise when: (a)
the employee, officer or agent; (b) any member of their immediate family;
(c) their partner or (d) an organization which employs, or is about to
employ, any of the above baa financial or interest in the CONTRACTOR. The
OWNER'S officers, employees, or agents shall neither solicit nor accept
gratuities, favors or anything of monetary value from the CONTRACTOR or
subcontractor.
5.
Protection of Lives and Property
5.1 In order to protect the lives and health of its employees under the
CONTRACT, the CONTRACTOR shall comply with all pertinent provisions of the
Occupational Safety and Health Administration (OSHA) and any State Safety
and Health agency requirements.
5.2 The CONTRACTOR alone shall be responsible for the safety, efficiency,
and adequacy of its plant, appliances, and methods, and for any damage
which may result from their failure or their improper construction,
maintenance or operation.
6.
Remedies. Unless otherwise provided in this CONTRACT, all claims,
counterclaims, disputes, and other matters in question between the OWNER
and
(2-19-86)
PN 998
RD Instruction 1942-A
Guide 18
Page 4
the CONTRACTOR arising out of or relating to this CONTRACT or the breach
thereof will be decided by arbitration if the parties mutually agree, or
in a court of competent jurisdiction within the State in which the OWNER
is located.
6.1 The arbitration provisions of this section may be initiated by either
party to this CONTRACT by filing with the other party and the
ENGINEER/ARCHITECT a WRITTEN REQUEST for arbitration.
6.2 Each party to this CONTRACT will appoint one arbitrator; the two
arbitrators will select a third arbitrator.
6.3 The arbitrators will select a hearing location as close to the
OWNER'S locale as possible.
6.4 The procedure for conducting the hearings will follow the
Construction Industry Arbitration Rules of the American Arbitration
Association.
7.
Gratuities.
7.1 If the OWNER finds after a notice and hearing that the CONTRACTOR, or
any of the CONTRACTOR'S agents or representatives, offered or gave
gratuities (in the form of entertainment, gifts, or otherwise) to any
official, employee, or agent of the OWNER, the State, or Rural Development
officials in an attempt to secure this CONTRACT or favorable treatment in
awarding, amending, or making any determinations related to the
performance of this CONTRACT, the OWNER may, by written notice to the
CONTRACTOR, terminate this CONTRACT. The OWNER may also pursue other
rights and remedies that the law or this CONTRACT provides. However, the
existence of the facts on which the OWNER bases such findings shall be an
issue and may be reviewed in proceedings under the Remedies clause of this
CONTRACT.
7.2 In the event this CONTRACT is terminated as provided in paragraph 7.1
the OWNER may pursue the same remedies against the CONTRACTOR as it could
pursue in the event of a breach of the CONTRACT by the CONTRACTOR. As a
penalty, in addition to any other damages to which it may be entitled by
law, the OWNER may pursue exemplary damages in an amount has determined by
the OWNER) which shall be not less than three nor more than ten times the
costs the CONTRACTOR incurs in providing any such gratuities to any such
officer or employee.
RD Instruction 1942-A
Guide 18
Page 5
8.
Audit and Access to Records. For all negotiated contracts (except
those of $10,000 or less), the Rural Development, the Comptroller General,
the OWNER or any of their duly authorized representatives, shall have
access to any books, documents, papers, and records of the CONTRACTOR,
which are pertinent to the CONTRACT, for the purpose of making audits,
examinations, excerpts and transcriptions. The CONTRACTOR shall maintain
all required records for three years after final payment is made and all
other pending matters are closed.
9.
Small, Minority and Women's Businesses. If the CONTRACTOR intends to
let any subcontracts for a portion of the work, the CONTRACTOR shall take
affirmative steps to assure that small, minority and women's businesses
are used when possible as sources of supplies, equipment, construction,
and services. Affirmative steps shall consist of (1) including qualified
small minority, and women's businesses on solicitation lists; (2) assuring
that small, minority and women's businesses are solicited whenever they
are potential sources; (3) dividing total requirements when economically
feasible, into small tasks or quantities to permit maximum participation
of small, minority and women's businesses; (4) establishing delivery
schedules, where the requirements of the work permit, which will encourage
participation by small, minority and women's businesses; (5) using the
services and assistance of the Small Business Administration, and the
Minority Business Development Agency of the U.S. Department of Commerce;
(6) requiring each party to a subcontract to take the affirmative steps of
this section; and (7) CONTRACTORS are encouraged to procure goods and
services from labor surplus area firms.
10.
Anti-Kickback. The CONTRACTOR shall comply with the Copeland AntiKickback Act (18 USC 874) as supplemented in Department of Labor
regulations (29 CFR, Part 3). This act provides that each CONTRACTOR
shall be prohibited from inducing, by any means, any person employed in
the construction, completion, or repair of public facilities, to give up
any part of the compensation to which they are otherwise entitled. The
OWNER shall report all suspected or reported violations to Rural
Development.
11.
Violating Facilities. Where this CONTRACT exceeds $100,000 the
CONTRACTOR shall comply with all applicable standards, orders or
requirements issued under section 306 of the Clean Air Act (42 U.S.C.
1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive
Order 11738, and Environmental Protection Agency regulations 40 CFR Part
15 which prohibit the awarding of non-exempt federal contracts, grants, or
loans to facilities included on EPA's list of violating facilities. The
CONTRACTOR will report violations to the EPA.
(2-19-86)
PN 998
RD Instruction 1942-A
Guide 18
Page 6
12.
State Energy Policy. The CONTRACTOR shall comply with the Energy
Policy and Conservation Act (P.L. 94-163). Mandatory standards and
policies relating to energy efficiency, contained in the State Energy
Conservation Plan, shall be utilized.
13.
Equal Opportunity Requirements. For all contracts in excess of
$10,000, the CONTRACTOR shall comply with Executive Order 11246, entitled
"Equal Employment Opportunity," as amended by Executive Order 11375, and
as supplemented in Department of Labor regulations (41 CFR Part 60).
13.1 If the CONTRACT exceeds $10,000, the CONTRACTOR will execute Form RD
400-6, "Compliance Statement."
13.2 The CONTRACTOR'S compliance with Executive Order 11246 shall be based
on its implementation of the Equal Opportunity Clause, specific
affirmative action obligations required by the Standard Federal Equal
Employment Opportunity Construction Contract Specifications, as set forth
in 41 CFR Part 60-4 and its efforts to meet the goals established for the
geographical area where the CONTRACT is to be performed. The hours of
minority and female employment and training must be substantially uniform
throughout the length of the CONTRACT, and in each trade, and the
CONTRACTOR shall make a good faith effort to employ minorities and women
evenly on each of its projects. The transfer of minority or female
employees or trainees from contractor to contractor or from project to
project for the sole purpose of meeting the CONTRACTOR'S goals shall be a
violation of the CONTRACT, the Executive Order and the regulations in 41
CFR Part 60-4. Compliance with the goals will be measured against the
total work hours performed.
13.3 The CONTRACTOR shall provide written notification to the Director of
the Office of Federal Contract Compliance Programs within 10 working days
of award of any construction subcontract in excess of $10,000 at any tier
for construction work under the CONTRACT resulting from this solicitation.
The notification shall list the name, address and telephone number of the
subcontractor; employer identification number; estimated dollar amount of
subcontract; estimated starting and completion dates of the subcontract;
and the geographical area in which the CONTRACT is to be performed.
RD Instruction 1942-A
Guide 18
Page 7
14.
Certificate of Owner's Attorney.
I, the undersigned, ________________________ , the duly authorized and
acting legal representative of_____________________________________
________________________, do hereby certify as follows
I have examined the attached contract(s) and performance and payment
bond(s) and the manner of execution thereof, and I am of the opinion that each
of the aforesaid agreements are adequate and have has been duly executed by the
proper parties thereto acting through their duly authorized representatives;
that said representatives have full power and authority to execute said
agreements on behalf of the respective parties named thereon; and that the
foregoing agreements constitute valid and legally binding obligations upon the
parties executing the same in accordance with terms, conditions, and provisions
thereof.
___________________________________
Date:____________________
NOTE:
Delete phrase "performance and payment bonds" when not applicable.
(2-19-86)
PN 998
RD Instruction 1942-A
Guide 18
Page 8
15.
Rural Development Concurrence.
As lender or insurer of funds to defray the costs of this contract, and
without liability for any payments thereunder, Rural Development (Rural
Development) hereby concurs in the award of this CONTRACT to
____________________________________
U.S. Department of Agriculture
Rural Development
By__________________________________
Title _____________________
Date________________________________
This CONTRACT shall not be effective unless and until concurred in by the State
Director of Rural Development, U.S. Department of Agriculture or a delegated
representative.
RD Instruction 1942-A
(Guide 19)
AGREEMENT
THIS AGREEMENT, made this ____________ day of ___________, 19 ____, by
and between ______________________________ , hereinafter called "OWNER"
(name of Owner), (an Individual)
and ________________________________ doing business as (an individual,) or
(a partnership,) or (a corporation) hereinafter called "CONTRACTOR".
WITNESSETH:
That for and in consideration of the payments and agreements
herein after mentioned:
1.
The CONTRACTOR will commence and complete the construction of
__________________________________________________________________________
2. The CONTRACTOR will furnish all of the materials, supplies, tools,
equipment, labor, and other services necessary for the construction and
completion of the PROJECT described herein.
3. The CONTRACTOR will commence the work required by the CONTRACT
DOCUMENTS within _________ calendar days after the date of the NOTICE TO
PROCEED and will complete the same within ______________ calendar days unless
the period for completion is extended otherwise by the CONTRACT DOCUMENTS.
4. The CONTRACTOR agrees to perform all of the WORK described in the
CONTRACT DOCUMENTS and comply with the terms therein for the sum of
$_____________ or as shown in the BID schedule.
5.
(1-15-79)
The term "CONTRACT DOCUMENTS" MEANS and includes the following:
SPECIAL PN
RD Instruction 1942-A
(Guide 19) (Page 2)
(A)
Advertisement For BIDS
(B)
Information For BIDDERS
(C)
BID
(D)
BID BOND
(E)
Agreement
(F)
General Conditions
(G)
SUPPLEMENTAL GENERAL CONDITIONS
(H)
Payment BOND
(I)
Performance BOND
(J)
NOTICE OF AWARD
(K)
NOTICE TO PROCEED
(1)
CHANGE ORDER
(M)
DRAWINGS prepared by _________________________________________
numbered ________ through ________, and dated _________________,
(N)
SPECIFICATIONS prepared or issued by ___________________________
_______________________________________________________________,
dated ___________, 19________________
(O)
ADDENDA:
No.____________,
dated __________, 19 ___________
____________,
__________,
___________
____________,
__________,
___________
____________,
__________,
___________
____________,
__________,
___________
____________,
__________,
___________
RD Instruction 1942-A
(Guide 19) (Page 3)
(Revision 1)
6. The OWNER will pay to the CONTRACTOR in the manner and at such times
as set forth in the General Conditions such amounts as required by the CONTRACT
DOCUMENTS.
7. This Agreement shall be binding upon all parties hereto and their
respective heirs, executors, administrators, successors, and assigns.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be executed
by their duly authorized official, this Agreement in
(__________________) copies each of which shall be deemed an original on the
(Number of Copies) date first above written.
OWNER:
__________________________
BY________________________
Name______________________
(Please Type)
Title______________________
(SEAL)
ATTEST:
____________________________________
Name _______________________________
(Please Type)
Title ______________________________
(1-15-79)
SPECIAL PN
(Guide 19) (Page 4)
(Revision 1)
RD Instruction 1942-A
CONTRACTOR:
____________________________
BY__________________________
Name________________________
(Please Type)
Address_____________________
____________________________
(SEAL)
ATTEST:
________________________________________
Name____________________________________
(Please Type)
________________________________________
Employer Identification
Number _____________________
RD Instruction 1942-A
(Guide 19) (Attachment 1)
ADVERTISEMENT FOR BIDS
___________________________
Owner
___________________________
Address
___________________________
Separate sealed BIDS for the construction of (briefly describe nature,
scope, and major elements of the work)__________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
will be received by ____________________________________________________
at the office of _______________________________________________________
until _______, (Standard Time - Daylight Savings Time)__________________
19_______, and then at said office publicly opened and read aloud.
The CONTRACT DOCUMENTS may be examined at the following locations:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
Copies of the CONTRACT DOCUMENTS may be obtained at the office of
_____________________ located at ________________________________________
upon payment of $_______ for each set.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19) (Attachment 1) (Page 2)
Any BIDDER, upon returning the CONTRACT DOCUMENTS promptly and in
good condition, will be refunded the payment, and any non-bidder upon
so returning the CONTRACT DOCUMENTS will be refunded $_____________.
________________________
DATE
______________________________________
RD Instruction 1942-A
(Guide 19 - Attachment 2)
INFORMATION FOR BIDDERS
BIDS will be received by ____________________________________________
(herein called the "OWNER"), at __________________________________________
until____________________, 19_____, and then at said office publicly
opened and read aloud.
Each BID must be submitted in a sealed envelope, addressed to _______
____________________________________ at _________________________________.
Each sealed envelope containing a BID must be plainly marked on the outside as
BID for ________________________________________________and the envelope should
bear on the outside the BIDDER'S name, address, and license number if
applicable, and the name of the project for which the BID is submitted. If
forwarded by mail, the sealed envelope containing the BID must be enclosed in
another envelope addressed to the OWNER at _____________
__________________________________________________________.
All BIDS must be made on the required BID form. All blank spaces for BID
prices must be filled in, in ink or typewritten, and the BID form must be fully
completed and executed when submitted. Only one copy of the BID form is
required.
The OWNER may waive any informalities or minor defects or reject any and
all BIDS. Any BID may be withdrawn prior to the above scheduled time for the
opening of BIDS or authorized postponement thereof. Any BID received after the
time and date specified shall not be considered. No BIDDER may withdraw a BID
within 60 days after the actual date of the opening thereof. Should there be
reasons why the contract cannot be awarded within the specified period, the
time may be extended by mutual agreement between the OWNER and the BIDDER.
BIDDERS must satisfy themselves of the accuracy of the estimated
quantities in the BID Schedule by examination of the site and a review of the
drawings and specifications including ADDENDA. After BIDS have been submitted,
the BIDDER shall not assert that there was a misunderstanding concerning the
quantities of WORK or of the nature of the WORK to be done.
The OWNER shall provide to BIDDERS prior to BIDDING, all information which
is pertinent to, and delineates and describes, the land owned and rights-of-way
acquired or to be acquired.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 2) (Page 2)
The CONTRACT DOCUMENTS contain the provisions required for the
construction of the PROJECT. Information obtained from an officer, agent, or
employee of the OWNER or any other person shall not affect the risks or
obligations assumed by the CONTRACTOR or relieve the contractor from fulfilling
any of the conditions of the contract.
Each BID must be accompanied by a BID bond payable to the OWNER for five
percent of the total amount of the BID. As soon as the BID prices have been
compared, the OWNER will return the BONDS of all except the three lowest
responsible BIDDERS. When the Agreement is executed the bonds of the two
remaining unsuccessful BIDDERS will be returned. The BID BOND of the
successful BIDDER will be retained until the payment BOND and performance BOND
have been executed and approved, after which it will be returned. A certified
check may be used in lieu of a BID BOND.
A performance BOND and a payment BOND each in the amount of 100 percent of
the CONTRACT PRICE, with a corporate surety approved by the OWNER, will be
required for the faithful performance of the contract.
Attorneys-in-fact who sign BID BONDS or payment BONDS and performance
BONDS must file with each BOND a certified and effective dated copy of their
power of attorney.
The party to whom the contract is awarded will be required to execute the
Agreement and obtain the performance BOND and payment BOND within ten (10)
calendar days from the date when NOTICE OF AWARD is delivered to the BIDDER.
The NOTICE OF AWARD shall be accompanied by the necessary Agreement and BOND
forms. In case of failure of the BIDDER to execute the Agreement, the OWNER
may consider the BIDDER in default, in which case the BID BOND accompanying the
proposal shall become the Property of the OWNER.
The OWNER within ten (10) days of receipt of acceptable performance BOND,
payment BOND and Agreement signed by the party to whom the Agreement was
awarded shall sign the Agreement and return to such party an executed duplicate
of the Agreement. Should the OWNER not execute the Agreement within such
period, the BIDDER may by WRITTEN NOTICE withdraw the signed Agreement. Such
notice of withdrawal shall be effective upon receipt of the notice by the
OWNER.
The NOTICE TO PROCEED shall be issued within ten (10) days of the
execution of the Agreement by the OWNER. Should there be reasons why the
NOTICE TO PROCEED cannot be issued within such period, the time may be extended
by mutual agreement between the OWNER AND CONTRACTOR. If the NOTICE TO PROCEED
has not been issued within the ten (10) day period or within the period
mutually agreed upon, the CONTRACTOR may terminate the Agreement without
further liability on the part of either party.
The OWNER may make such investigations as deemed necessary to determine
the ability of the BIDDER to perform the WORK, and the BIDDER shall furnish to
the OWNER all such information and data for this purpose as the OWNER
RD Instruction 1942-A
(Guide 19 - Attachment 2) (Page 3)
may request. The OWNER reserves the right to reject any BID if the evidence
submitted by, or investigation of, such BIDDER fails to satisfy the OWNER that
such BIDDER is properly qualified to carry out the obligations of the Agreement
and to complete the WORK contemplated therein.
A conditional or qualified BID will not be accepted.
Award will be made to the lowest responsible BIDDER.
All applicable laws, ordinances, and the rules and regulations of all
authorities having jurisdiction over construction of the PROJECT shall apply to
the contract throughout.
Each BIDDER is responsible for inspecting the site and for reading and
being thoroughly familiar with the CONTRACT DOCUMENTS. The failure or omission
of any BIDDER to do any of the foregoing shall in no way relieve any BIDDER
from any obligation in respect to its BID.
Further, the BIDDER agrees to abide by the requirements under Executive
Order No. 11246, as amended, including specifically the provisions of the equal
opportunity clause set forth in the SUPPLEMENTAL GENERAL CONDITIONS.
The low BIDDER shall supply the names and addresses of major material
SUPPLIERS and SUBCONTRACTORS when required to do so by the OWNER.
Inspection trips for prospective BIDDERS will leave from the office of the
__________________________________________________________________
at _____________________________________.
The ENGINEER IS ____________________________________.
The ENGINEER'S
address is ______________________________________________________________.
(1-15-79)
SPECIAL PN
(Guide 19 - Attachment 3)
RD Instruction 1942-A
BID
Proposal of _____________________________________________ (hereinafter called
"BIDDER"), organized and existing under the laws of the State of
__________________ doing business as __________________________________*. To
the __________________________________________________________________
_________________________________ (hereinafter called "OWNER").
In compliance with your Advertisement for Bids, BIDDER hereby proposes to
perform all WORK for the construction of _____________________
__________________________________________________________________________ in
strict accordance with the CONTRACT DOCUMENTS, within the time set forth
therein, and at the prices stated below.
By submission of this BID, each BIDDER certifies, and in the case of a
joint BID each party thereto certifies as to its own organization, that this
BID has been arrived at independently, without consultation, communication, or
agreement as to any matter relating to this BID with any other BIDDER or with
any competitor.
BIDDER hereby agrees to commence WORK under this contract on or before a
date to be specified in the NOTICE TO PROCEED and to fully complete the PROJECT
within ____________________ consecutive calendar days thereafter. BIDDER
further agrees to pay as liquidated damages, the sum of $________ for each
consecutive calendar day thereafter as provided in Section 15 of the General
Conditions.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 3) (Page 2)
BIDDER acknowledges receipt of the following ADDENDUM:
__________________________________________________________________________
_______________________________________________________________________
__________________________________________________________________________
* Insert "a corporation", "a partnership", or "an individual" as applicable.
BIDDER agrees to perform all the work described in the CONTRACT DOCUMENTS
for the following unit prices or lump sum:
NOTE:
BID SCHEDULE
BIDS shall include sales tax and all other applicable taxes and
fees.
__________________________________________________________________________
NO._______ITEM___________UNIT_____UNIT PRICE_______AMOUNT______TOTAL PRICE
(Guide 19 - Attachment 3) (Page 3)
RD Instruction 1942-A
__________________________________________________________________________
NO.______ITEM___________UNIT_________UNIT PRICE_____AMOUNT_____TOTAL PRICE
TOTAL OF BID . . . . . . . . . . . . . . . . . . . . . . . . . $_________
LUMP SUM PRICE (if applicable) . . . . . . . . . . . . . . . . $_________
Respectfully submitted:
_____________________________
Signature
_____________________________
Title
__________________________
Address
__________________________
Date
_____________________________
License number (if applicable)
__________________________
SEAL - (if BID is by a corporation)
(1-15-79)
SPECIAL PN
(Guide 19 - Attachment 4)
BID BOND
RD Instruction 1942-A
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned,_________________
_____________________________________________ as Principal, and
____________________________________________ as Surety, are hereby held and
firmly bound unto __________________________ as OWNER in the penal sum of
___________________________________________________________ for the payment of
which, well and truly to be made, we hereby jointly and severally bind
ourselves, successors and assigns.
Signed, this __________________ day of _____________________, 19_________. The
Condition of the above obligation is such that whereas the Principal has
submitted to ______________________________________________ a certain BID,
attached hereto and hereby made a part hereof to enter into a contract in
writing, for the
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
NOW, THEREFORE,
(a) If said BID shall be rejected, or
(b) If said BID shall be accepted and the Principal shall execute
and deliver a contract in the Form of Contract attachment hereto (Properly
completed in accordance with said BID) and shall furnish a BOND for
faithful performance of said contract, and for the payment of all persons
performing labor furnishing materials in connection therewith, and shall
in all other respects perform the agreement created by the acceptance of
said BID, then this obligation shall be void, otherwise the same shall
remain in force and effect; it being expressly understood and agreed that
the liability of the Surety for any and all claims hereunder shall, in no
event, exceed the penal amount of this obligation as herein stated.
(1-15-79)
SPECIAL PN
(Guide 19 - Attachment 4) (Page 2)
RD Instruction 1942-A
The Surety, for value received, hereby stipulates and agrees that the
obligations of said Surety and its BOND shall be in no way impaired or affected
by any extension of the time within which the OWNER may accept such BID; and
said Surety does hereby waive notice of any such extension.
IN WITNESS WHEREOF, the Principal and the Surety have hereunto set their hands
and seals, and such of them as are corporations have caused their corporate
seals to be hereto affixed and these presents to be signed by their proper
officers, the day and year first set forth above.
__________________________________(L.S.)
Principal
_________________________________
Surety
By:______________________________
IMPORTANT - Surety companies executing BONDS must appear on the Treasury
Department's most current list (Circular 570 as amended) and be authorized to
transact business in the state where the project is located.
oOo
RD Instruction 1942-A
(Guide 19 - Attachment 5)
PERFORMANCE BOND
KNOW ALL PERSONS BY THESE PRESENTS:
that
__________________________________________________________________________
(Name of Contractor)
__________________________________________________________________________
(Address of Contractor)
a _____________________________________________, hereinafter called Principal,
and
(Corporation, Partnership, or Individual)
__________________________________________________________________________
(Name of Surety)
__________________________________________________________________________
(Address of Surety)
hereinafter called Surety, are held and firmly bound unto ________________
__________________________________________________________________________
(Name of Owner)
__________________________________________________________________________
(Address of Owner)
hereinafter called OWNER, and the United States of America acting through Rural
Development hereinafter referred to as the Government in the total aggregate
penal sum of ______________________________________
__________________________________________ Dollars ($____________________)
in lawful money of the United States, for the payment of which sum well and
truly to be made, we bind ourselves, our heirs, executors, administrators,
successors, and assigns, jointly and severally, firmly by these presents.
THE CONDITION OF THIS OBLIGATION is such that whereas, the Principal entered
into a certain contract with the OWNER, dated the __________ day of _____
19___, a copy of which is hereto attached and made a part hereof for the
construction of:
_________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(5-23-79)
PN 675
RD Instruction 1942-A
(Guide 19 - Attachment 5) (Page 2)
NOW, THEREFORE, if the Principal shall well, truly and faithfully perform its
duties, all the undertakings, covenants, terms, conditions, and agreements of
said contract during the original term thereof, and any extensions thereof
which may be granted by the OWNER, or GOVERNMENT, with or without notice to the
SURETY and during the one year guaranty period and if the PRINCIPAL shall
satisfy all claims and demands incurred under such contract, and shall fully
indemnify and save harmless the OWNER and GOVERNMENT from all costs and damages
which it may suffer by reason of failure to do so, and shall reimburse and
repay the OWNER and GOVERNMENT all outlay and expense which the OWNER and
GOVERNMENT may incur in making good any default, then this obligation shall be
void, otherwise to remain in full force and effect.
PROVIDED, FURTHER, that the liability of the PRINCIPAL AND SURETY hereunder to
the GOVERNMENT shall be subject to the same limitations and defenses as may be
available to them against a claim hereunder by the OWNER, provided, however,
that the GOVERNMENT may, at its option, perform any obligations of the OWNER
required by the contract.
PROVIDED, FURTHER, that the said SURETY, for value received hereby stipulates
and agrees that no change, extension of time, alteration or addition to the
terms of the contract or to WORK to be performed thereunder or the
SPECIFICATIONS accompanying same shall in any way affect its obligation on this
BOND, and it does hereby waive notice of any such change, extension of time,
alteration or addition to the terms of the contract or to the WORK or to the
SPECIFICATIONS.
PROVIDED, FURTHER, that it is expressly agreed that the BOND shall be deemed
amended automatically and immediately, without formal and separate amendments
hereto, upon amendment to the Contract not increasing the contract price more
than 20 percent, so as to bind the PRINCIPAL and the SURETY to the full and
faithful performance of the CONTRACT as so amended. The term "Amendment",
wherever used in this BOND, and whether referring to this BOND, the Contract or
the Loan Documents shall include any alteration, addition, extension, or
modification of any character whatsoever.
PROVIDED, FURTHER, that no final settlement between the OWNER or GOVERNMENT and
the PRINCIPAL shall abridge the right of the other beneficiary hereunder, whose
claim may be unsatisfied. The OWNER and GOVERNMENT are the only beneficiaries
hereunder.
RD Instruction 1942-A
(Guide 19 Attachment 5) (Page 3)
IN WITNESS WHEREOF, this instrument is executed in ________ counterparts, each
Number
one of which shall be deemed an original, this the __________ day of _____
_______________ .
ATTEST:
__________________________________
Principal
________________________________________
(Principal) Secretary
(SEAL)
By______________________________(s)
________________________________
_________________________________
(Witness as to Principal)
_________________________________
(Address)
_________________________________
________________________________
(Address)
________________________________
Surety
ATTEST:
_________________________________
Witness to Surety
BY______________________________
Attorney-in-Fact
_________________________________
(Address)
________________________________
(Address)
_________________________________
________________________________
NOTE:
Date of BOND must not be prior to date of Contract.
If CONTRACTOR is partnership, all partners should execute BOND.
IMPORTANT: Surety companies executing BONDS must appear on the Treasury
Department's most current list (Circular 570 as amended) and be authorized to
transact business in the state where the Project is located.
oOo
(5-23-79)
PN 675
RD Instruction 1942-A
(Guide 19 - Attachment 6)
PAYMENT BOND
KNOW ALL PERSONS BY THESE PRESENTS: that
__________________________________________________________________________
(Name of Contractor)
__________________________________________________________________________
(Address of Contractor)
a ____________________________________ hereinafter called PRINCIPAL and
(Corporation, Partnership or Individual)
__________________________________________________________________________
(Name of Surety)
hereinafter called SURETY, are held and firmly bound unto ________________
__________________________________________________________________________
(Name of Owner)
__________________________________________________________________________
(Address of Owner)
hereinafter called OWNER and the United States of America acting through Rural
Development hereinafter referred to as GOVERNMENT, and unto all persons, firms,
and corporations who or which may furnish labor, or who furnish materials to
perform as described under the contract and to their successors and assigns in
the total aggregate penal sum of _________
_________________________________ Dollars ($________________)
in lawful money of the United States, for the payment of which sum well and
truly to be made, we bind ourselves, our heirs, executors, administrators,
successors, and assigns, jointly and severally, firmly by these presents.
THE CONDITION OF THIS OBLIGATION is such that whereas, the PRINCIPAL entered
into a certain contract with the OWNER, dated the ________________ day of
_______19___, a copy of which is hereto attached and made a part hereof for the
construction of:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
NOW, THEREFORE, if the PRINCIPAL shall promptly make payment to all persons,
firms, and corporations furnishing materials for or performing labor in the
prosecution of the WORK provided for in such contract, and any authorized
extensions or modification thereof, including all amounts due for materials,
lubricants, oil, gasoline, coal and coke, repairs on machinery, equipment and
tools, consumed or used in connection with the construction of such WORK, and
for all labor cost incurred in such WORK including that by a SUBCONTRACTOR, and
to any mechanic or materialman lienholder whether it acquires its lien by
operation of State or Federal law; then this obligation shall be void,
otherwise to remain in full force and effect.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 6) (Page 2)
PROVIDED, that beneficiaries or claimants hereunder shall be limited to the
SUBCONTRACTORS, and persons, firms, and corporations having a direct contract
with the PRINCIPAL or its SUBCONTRACTORS.
PROVIDED, FURTHER, that the said SURETY for value received hereby stipulates
and agrees that no change, extension of time, alteration or addition to the
terms of the contract or to the WORK to be performed thereunder or the
SPECIFICATIONS accompanying the same shall in any way affect its obligation on
this BOND, and it does hereby waive notice of any such change, extension of
time, alteration or addition to the terms of this contract or to the WORK or to
the SPECIFICATIONS.
PROVIDE, FURTHER, that no suit or action shall be commenced hereunder by any
claimant: (a) Unless claimant, other than one having a direct contract with the
PRINCIPAL (or with the GOVERNMENT in the event the GOVERNMENT Is performing the
obligations of the OWNER), shall have given written notice to any two of the
following: The PRINCIPAL, the OWNER, or the SURETY above named within ninety
(90) days after such claimant did or performed the last of the work or labor,
or furnished the last of the materials for which said claim is made, stating
with substantial accuracy the amount claimed and the name of the party to whom
the materials were furnished, or for whom the work or labor was done or
performed. Such notice shall be served by mailing the same by registered mail
or certified mail, postage prepaid, in an envelope addressed to the PRINCIPAL,
OWNER, or SURETY, at any place where an office is regularly maintained for the
transaction of business, or served in any manner in which legal process may be
served in the state in which the aforesaid project is located, save that such
service need not be made by a public officer. (b) After the expiration of one
(1) year following the date of which PRINCIPAL ceased work on said CONTRACT, is
being understood, however, that if any limitation embodied in the BOND is
prohibited by any law controlling the construction hereof, such limitation
shall be deemed to be amended so as to be equal to the minimum period of
limitation permitted by such law.
PROVIDED, FURTHER, that it is expressly agreed that this BOND shall be deemed
amended automatically and immediately, without formal and separate amendments
hereto, upon amendment to the Contract not increasing the contract price more
than 20 percent, so as to bind the PRINCIPAL and the SURETY to the full and
faithful performance of the Contract as so amended. The term "Amendment",
wherever used in this BOND and whether referring to this BOND, the contract or
the loan Documents shall include any alteration, addition, extension or
modification of any character whatsoever.
PROVIDED, FURTHER, that no final settlement between the OWNER or GOVERNMENT and
the CONTRACTOR shall abridge the right of any beneficiary hereunder, whose
claim may be unsatisfied.
RD Instruction 1942-A
(Guide 19 - Attachment 6) (Page 3)
WITNESS WHEREOF, this instrument is executed in ____ counterparts, each of
Number
which shall be deemed an original, this the ____ day of _________________.
ATTEST:
________________________________
Principal
___________________________________
(Principal) Secretary
(SEAL)
By_____________________________(s)
_______________________________
(Address)
_______________________________
____________________________________
Witness as to Principal
____________________________________
(Address)
____________________________________
________________________________
Surety
ATTEST:
____________________________________
Witness as to Surety
____________________________________
(Address)
____________________________________
By_____________________________
Attorney-in-Fact
_____________________________
(Address
_____________________________
NOTE:
Date of BOND must not be prior to date of Contract.
If CONTRACTOR Is partnership, all partners should execute BOND.
IMPORTANT: Surety companies executing BONDS must appear on the Treasury
Department's most current list (Circular 570 as amended) and be authorized to
transact business in the State where the Project is located.
oOo
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 7)
NOTICE OF AWARD
TO:________________________________
________________________________
________________________________
________________________________
PROJECT Description:_____________________________________________________
_________________________________________________________________________
_________________________________________________________________________
The OWNER has considered the BID submitted by you for the above described
WORK in response to its Advertisement for Bids dated _______________, 19_____,
and Information for Bidders.
You are hereby notified that your BID has been accepted for items in the
amount of $________________.
You are required by the Information for Bidders to execute the Agreement
and furnish the required CONTRACTOR'S Performance BOND, Payment BOND and
certificates of insurance within ten (10) calendar days from the date of this
Notice to you.
If you fail to execute said Agreement and to furnish said BONDS within ten
(10) days from the date of this Notice, said OWNER will be entitled to consider
all your rights arising out of the OWNER's acceptance of your BID as abandoned
and as a forfeiture of your BID BOND. The OWNER will be entitled to such other
rights as may be granted by law.
You are required to return an acknowledged copy of this NOTICE OF AWARD to
the OWNER.
Dated this____________ day of______________, 19____.
___________________________
Owner
By_________________________
Title______________________
ACCEPTANCE OF NOTICE
Receipt of the above NOTICE OF AWARD is hereby acknowledged
by_______________________________________________________________________.
this the____________________________ day of_______________, 19___________.
By___________________________
Title________________________
(1-15-79)
SPECIAL PN
(Guide 19 - Attachment 8)
RD Instruction 1942-A
NOTICE TO PROCEED
TO:
___________________________
DATE: ______________________________
___________________________
Project: ___________________________
___________________________
____________________________________
___________________________
____________________________________
You are hereby notified to commence WORK in accordance with the Agreement
dated ___________, 19___, on or before _________________, 19__, and you are to
complete the WORK within __________________ consecutive calendar days
thereafter. The date of completion of all WORK is therefore ________________,
19__.
____________________________
Owner
By _________________________
Title________________________
ACCEPTANCE OF NOTICE
Receipt of the above NOTICE TO PROCEED is hereby acknowledged by ______
_____________________________________,
this the____________________, 19_____
_____________________________________
By___________________________________
Title________________________________
Employer Identification
Number_______________________________
oOo
(1-28-81)
PN 763
RD Instruction 1942-A
(Guide 19 - Attachment 9)
GENERAL CONDITIONS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Definitions
Additional Instructions and Detail
Drawings
Schedules, Reports, and Records
Drawings and Specifications
Shop Drawings
Materials, Services, and Facilities
Inspection and Testing
Substitutions
Patents
Surveys, Permits, Regulations
Protection of Work, Property, Persons
Supervision by Contractor
Changes in the Work
Changes in Contract Price
Time for Completion and Liquidated
Damages
Correction of Work
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
Subsurface Conditions
Suspension of Work,
Termination, and Delay
Payments to Contractor
Acceptance of Final
Payment as Release
Insurance
Contract Security
Assignments
Indemnification
Separate Contracts
Subcontracting
Engineer's Authority
land and Rights-of-Way
Guaranty
Arbitration
Taxes
1. DEFINITIONS
1.1 Wherever used in the CONTRACT DOCUMENTS, the following terms shall have the
meanings indicated and shall be applicable to both the singular and plural
thereof:
1.2 ADDENDA - Written or graphic instruments issued prior to the execution of
the Agreement which modify or interpret the CONTRACT DOCUMENTS, DRAWINGS and
SPECIFICATIONS, by additions, deletions, clarifications, or corrections.
1.3 BID - The offer or proposal of the BIDDER submitted on the prescribed form
setting forth the prices for the WORK to be performed.
1.4
BIDDER - Any person, firm, or corporation submitting a BID for the WORK.
1.5 BONDS - Bid, Performance, and Payment Bonds and other instruments of
surety, furnished by the CONTRACTOR and the CONTRACTOR'S surety in accordance
with the CONTRACT DOCUMENTS.
1.6 CHANGE ORDER - A written order to the CONTRACTOR authorizing an addition,
deletion, or revision in the WORK within the general scope of the CONTRACT
DOCUMENTS, or authorizing an adjustment in the CONTRACT PRICE or CONTRACT TIME.
1.7 CONTRACT DOCUMENTS - The contract, including Advertisement For BIDS,
Information For BIDDERS, BID, BID BOND, Agreement, Payment BOND, Performance
BOND, NOTICE OF AWARD, NOTICE TO PROCEED, CHANGE ORDER, DRAWINGS,
SPECIFICATIONS, and ADDENDA.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 2)
1.8 CONTRACT PRICE - The total monies payable to the CONTRACTOR under the
terms and conditions of the CONTRACT DOCUMENTS.
1.9 CONTRACT TIME - The number of calendar days stated in the CONTRACT
DOCUMENTS for the completion of the WORK.
1.10 CONTRACTOR - The person, firm, or corporation with whom the OWNER has
executed the Agreement.
1.11 DRAWINGS - The parts of the CONTRACT DOCUMENTS which show the
characteristics and scope of the WORK to be performed and which have been
prepared or approved by the ENGINEER.
1.12 ENGINEER - The person, firm, or corporation named as such in the CONTRACT
DOCUMENTS.
1.13 FIELD ORDER - A written order effecting a change in the WORK not
involving an adjustment in the CONTRACT PRICE or an extension of the CONTRACT
TIME, issued by the ENGINEER to the CONTRACTOR during construction.
1.14 NOTICE OF AWARD - The written notice of the acceptance of the BID from
the OWNER to the successful BIDDER.
1.15 NOTICE TO PROCEED - Written communication issued by the OWNER to the
CONTRACTOR authorizing him/her to proceed with the WORK and establishing the
date for commencement of the WORK.
1.16 OWNER - A public or quasi-public body or authority, corporation,
association, partnership, or an individual for whom the WORK is to be
performed.
1.17 PROJECT - The undertaking to be performed as provided in the CONTRACT
DOCUMENTS.
1.18 RESIDENT PROJECT REPRESENTATIVE - The authorized representative of the
OWNER who is assigned to the PROJECT site or any part thereof.
1.19 SHOP DRAWINGS - All drawings, diagrams, illustrations, brochures,
schedules and other data which are prepared by the CONTRACTOR, a SUBCONTRACTOR,
manufacturer, SUPPLIER or distributor, which illustrate how specific portions
of the WORK shall be fabricated or installed.
1.20 SPECIFICATIONS - A part of the CONTRACT DOCUMENTS consisting of written
descriptions of a technical nature of materials, equipment, construction
systems, standards and workmanship.
(Guide 19 - Attachment 9) (Page 3)
RD Instruction 1942-A
1.21 SUBCONTRACTOR - An individual, firm, or corporation having a direct
contract with CONTRACTOR or with any other SUBCONTRACTOR for the performance of
a part of the WORK at the site.
1.22 SUBSTANTIAL COMPLETION - That date certified by the ENGINEER when the
construction of the PROJECT or a specified part thereof is sufficiently
completed, in accordance with the CONTRACT DOCUMENTS, so that the PROJECT or
specified part can be utilized for the purposes for which it is intended.
1.23 SUPPLEMENTAL GENERAL CONDITIONS - Modifications to General Conditions
required by a Federal agency for participation in the PROJECT and approved by
the agency in writing prior to inclusion in the CONTRACT DOCUMENTS, or such
requirements that may be imposed by applicable state laws.
1.24 SUPPLIER - Any person or organization who supplies materials or equipment
for the WORK, including that fabricated to a special design, but who does not
perform labor at the site.
1.25 WORK - All labor necessary to produce the construction required by the
CONTRACT DOCUMENTS, and all materials and equipment incorporated or to be
incorporated in the PROJECT.
1.26 WRITTEN NOTICE - Any notice to any party of the Agreement relative to any
1 part of this Agreement in writing and considered delivered and the service
thereof completed, when posted by certified or registered mail to the said
party at their last given address, or delivered in person to said party or
their authorized representative on the WORK.
2.
ADDITIONAL INSTRUCTIONS AND DETAIL DRAWINGS
2.1 The CONTRACTOR may be furnished additional instructions and detail
drawings, by the ENGINEER, as necessary to carry out the WORK required by the
CONTRACT DOCUMENTS.
2.2 The additional drawings and instructions thus supplied will become a part
of the CONTRACT DOCUMENTS. The CONTRACTOR shall carry out the WORK in
accordance with the additional detail drawings and instructions.
3.
SCHEDULES, REPORTS AND RECORDS
3.1 The CONTRACTOR shall submit to the OWNER such schedule of quantities and
costs, progress schedules, payrolls, reports, estimates, records and other data
where applicable as are required by the CONTRACT DOCUMENTS for the WORK to be
performed.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 4)
3.2 Prior to the first partial payment estimate the CONTRACTOR shall submit
construction progress schedules showing the order in which the CONTRACTOR
proposes to carry on the WORK, including dates at which the various parts of
the WORK will be started, estimated date of completion of each part and, as
applicable:
3.2.1
The dates at which special detail drawings will be required; and
3.2.2 Respective dates for submission of SHOP DRAWINGS, the beginning of
manufacture, the testing and the installation of materials, supplies and
equipment.
3.3 The CONTRACTOR shall also submit a schedule of payments that the
CONTRACTOR anticipates will be earned during the course of the WORK.
4.
DRAWINGS AND SPECIFICATIONS
4.1 The intent of the DRAWINGS and SPECIFICATIONS is that the CONTRACTOR shall
furnish all labor, materials, tools, equipment, and transportation necessary
for the proper execution of the WORK in accordance with the CONTRACT DOCUMENTS
and all incidental work necessary to complete the PROJECT in an acceptable
manner, ready for use, occupancy or operation by the OWNER.
4.2 In case of conflict between the DRAWINGS and SPECIFICATIONS, the
SPECIFICATIONS shall govern. Figure dimensions on DRAWINGS shall govern over
general DRAWINGS.
4.3 Any discrepancies found between the DRAWINGS and SPECIFICATIONS and site
conditions or any inconsistencies or ambiguities in the DRAWINGS or
SPECIFICATIONS shall be immediately reported to the ENGINEER, in writing, who
shall promptly correct such inconsistencies or ambiguities in writing. WORK
done by the CONTRACTOR after discovery of such discrepancies, inconsistencies
or ambiguities shall be done at the CONTRACTOR'S risk.
5.
SHOP DRAWINGS
5.1 The CONTRACTOR shall provide SHOP DRAWINGS as may be necessary for the
prosecution of the WORK as required by the CONTRACT DOCUMENTS. The ENGINEER
shall promptly review all SHOP DRAWINGS. The ENGINEER'S approval of any SHOP
DRAWING shall not release the CONTRACTOR from responsibility for deviations
from the CONTRACT DOCUMENTS. The approval of any SHOP DRAWING which
substantially deviates from the requirement of the CONTRACT DOCUMENTS shall be
evidenced by a CHANGE ORDER.
5.2 When submitted for the ENGINEER'S review, SHOP DRAWINGS shall bear the
CONTRACTOR'S certification that he has reviewed, checked and approved the SHOP
DRAWINGS and that they are in conformance with the requirements of the CONTRACT
DOCUMENTS.
(Guide 19 - Attachment 9) (Page 5)
RD Instruction 1942-A
5.3 Portions of the WORK requiring a SHOP DRAWING or sample submission shall
not begin until the SHOP DRAWING or submission has been approved by the
ENGINEER. A copy of each approved SHOP DRAWING and each approved sample shall
be kept in good order by the CONTRACTOR at the site and shall be available to
the ENGINEER.
6.
MATERIALS, SERVICES AND FACILITIES
6.1 It is understood that, except as otherwise specifically stated in the
CONTRACT DOCUMENTS, the CONTRACTOR shall provide and pay for all materials,
labor, tools, equipment, water, light, power, transportation, supervision,
temporary construction of any nature, and all other services and facilities of
any nature whatsoever necessary to execute, complete, and deliver the WORK
within the specified time.
6.2 Materials and equipment shall be so stored as to insure the preservation
of their quality and fitness for the WORK. Stored materials and equipment to
be incorporated in the WORK shall be located so as to facilitate prompt
inspection.
6.3 Manufactured articles, materials, and equipment shall be applied,
installed, connected, erected, used, cleaned and conditioned as directed by the
manufacturer.
6.4 Materials, supplies, and equipment shall be in accordance with samples
submitted by the CONTRACTOR and approved by the ENGINEER.
6.5 Materials, supplies, or equipment to be incorporated into the WORK shall
not be purchased by the CONTRACTOR or the SUBCONTRACTOR subject to a chattel
mortgage or under a conditional sale contract or other agreement by which an
interest is retained by the seller.
7.
INSPECTION AND TESTING
7.1 All materials and equipment used in the construction of the PROJECT shall
be subject to adequate inspection and testing in accordance with generally
accepted standards, as required and defined in the CONTRACT DOCUMENTS.
7.2 The OWNER shall provide all inspection and testing services not required
by the CONTRACT DOCUMENTS.
7.3 The CONTRACTOR shall provide at the CONTRACTOR'S expense the testing and
inspection services required by the CONTRACT DOCUMENTS.
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SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 6)
7.4 If the CONTRACT DOCUMENTS, laws, ordinances, rules, regulations or orders
of any public authority having jurisdiction require any WORK to specifically be
inspected, tested, or approved by someone other than the CONTRACTOR, the
CONTRACTOR will give the ENGINEER timely notice of readiness. The CONTRACTOR
will then furnish the ENGINEER the required certificates of inspection, testing
or approval.
7.5 Inspections, tests, or approvals by the engineer or others shall not
relieve the CONTRACTOR from the obligations to perform the WORK in accordance
with the requirements of the CONTRACT DOCUMENTS.
7.6 The ENGINEER and the ENGINEER'S representatives will at all times have
access to the WORK. In addition, authorized representatives and agents of any
participating Federal or State agency shall be permitted to inspect all work,
materials, payrolls, records or personnel, invoices of materials, and other
relevant data and records. The CONTRACTOR will provide proper facilities for
such access and observation of the WORK and also for any inspection or testing
thereof.
7.7 If any WORK is covered contrary to the written instructions of the
ENGINEER it must, if requested by the ENGINEER, be uncovered for the ENGINEER'S
observation and replaced at the CONTRACTOR'S expense.
7.8 If the ENGINEER considers it necessary or advisable that covered WORK be
inspected or tested by others, the CONTRACTOR, at the ENGINEER'S request, will
uncover, expose or otherwise make available for observation, inspection or
testing as the ENGINEER may require, that portion of the WORK in question,
furnishing all necessary labor, materials, tools, and equipment. If it is
found that such WORK is defective, the CONTRACTOR will bear all the expenses of
such uncovering, exposure, observation, inspection and testing and of
satisfactory reconstruction, if, however, such WORK is not found to be
defective, the CONTRACTOR will be allowed an increase in the CONTRACT PRICE or
an extension of the CONTRACT TIME, or both, directly attributable to such
uncovering, exposure, observation, inspection, testing and reconstruction and
an appropriate CHANGE ORDER shall be issued.
8.
SUBSTITUTIONS
8.1 Whenever a material, article, or piece of equipment is identified on the
DRAWINGS or SPECIFICATIONS by reference to brand name or catalogue numbers, it
shall be understood that this is referenced for the purpose of defining the
performance or other salient requirements and that other products of equal
capacities, quality and function shall be considered. The CONTRACTOR may
recommend the substitution of a material, article, or piece of equipment of
equal substance and function for those referred to in the CONTRACT DOCUMENTS
(Guide 19 - Attachment 9) (Page 7)
RD Instruction 1942-A
by reference to brand name or catalogue number, and if, in the opinion of the
ENGINEER, such material, article, or piece of equipment is of equal substance
and function to that specified, the ENGINEER may approve its substitution and
use by the CONTRACTOR. Any cost differential shall be deductible from the
CONTRACT PRICE and the CONTRACT DOCUMENTS shall be appropriately modified by
CHANGE ORDER. The CONTRACTOR warrants that if substitutes are approved, no
major changes in the function or general design of the PROJECT will result.
Incidental changes or extra component parts required to accommodate the
substitute will be made by the CONTRACTOR without a change in the CONTRACT
PRICE or CONTRACT TIME.
9.
PATENTS
9.1 The CONTRACTOR shall pay all applicable royalties and license fees, and
shall defend all suits or claims for infringement of any patent rights and save
the OWNER harmless from loss on account thereof, except that the OWNER shall be
responsible for any such loss when a particular process, design, or product of
a particular manufacturer or manufacturers is specified, however, if the
CONTRACTOR has reason to believe that the design, process or product specified
is an infringement of a patent, the CONTRACTOR shall be responsible for such
loss unless the CONTRACTOR promptly gives such information to the ENGINEER.
10.
SURVEYS, PERMITS, REGULATIONS
10.1 The OWNER shall furnish all boundary surveys and establish all base lines
for locating the principal component parts of the WORK together with a suitable
number of bench marks adjacent to the WORK as shown in the CONTRACT DOCUMENTS.
From the information provided by the OWNER, unless otherwise specified in the
CONTRACT DOCUMENTS, the CONTRACTOR shall develop and make all detail surveys
needed for construction such as slope stakes, batter boards, stakes for pipe
locations and other working points, lines, elevations and cut sheets.
10.2 The CONTRACTOR shall carefully preserve bench marks, reference points and
stakes and, in case of willful or careless destruction, shall be charged with
the resulting expense and shall be responsible for any mistake that may be
caused by their unnecessary loss or disturbance.
10.3 Permits and licenses of a temporary nature necessary for the prosecution
of the WORK shall be secured and paid for by the CONTRACTOR unless otherwise
stated in the SUPPLEMENTAL GENERAL CONDITIONS. Permits, licenses and easements
for permanent structures or permanent changes in existing facilities shall be
secured and paid for by the OWNER, unless otherwise specified. The
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SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 8)
CONTRACTOR shall give all notices and comply with all laws, ordinances, rules
and regulations bearing on the conduct of the WORK as drawn and specified. If
the CONTRACTOR observes that the CONTRACT DOCUMENTS are at variance therewith,
the CONTRACTOR shall promptly notify the ENGINEER in writing, and any necessary
changes shall be adjusted as provided in Section 13, CHANGES IN THE WORK.
11.
PROTECTION OF WORK, PROPERTY, AND PERSONS
11.1 The CONTRACTOR will be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with the WORK.
The CONTRACTOR will take all necessary precautions for the safety of, will
provide the necessary precautions for the safety of, and will provide the
necessary protection to prevent damage, injury or loss to all employees on the
WORK and other persons who may be affected thereby, all the WORK and all
materials or equipment to be incorporated therein, whether in storage on or off
the site, and other property at the site or adjacent thereto, including trees,
shrubs, lawns, walks, pavements, roadways, structures and utilities not
designated for removal, relocation or replacement in the course of
construction.
11.2 The CONTRACTOR will comply with all applicable laws, ordinances, rules,
regulations and orders of any public body having jurisdiction. The CONTRACTOR
will erect and maintain, as required by the conditions and progress of the
WORK, all necessary safeguards for safety and protection. The CONTRACTOR will
notify owners of adjacent utilities when prosecution of the WORK may affect
them. The CONTRACTOR will remedy all damage, injury or loss to any property
caused, directly or indirectly, in whole or part, by the CONTRACTOR, any
SUBCONTRACTOR or anyone directly or indirectly employed by any of them or
anyone directly or indirectly employed by any of them or anyone of whose acts
any of them be liable, except damage or loss attributable to the fault of the
CONTRACT DOCUMENTS or to the acts or omissions of the OWNER, of the ENGINEER or
anyone employed by either of them or anyone for whose acts either of them may
be liable, and not attributable, directly or indirectly, in whole or in part,
to the fault or negligence of the CONTRACTOR.
11.3 In emergencies affecting the safety of persons or the WORK or property at
the site or adjacent thereto, the CONTRACTOR, without special instructions or
authorization from the ENGINEER or OWNER, shall act to prevent threatened
damage, injury or loss. The CONTRACTOR will give the ENGINEER prompt WRITTEN
NOTICE of any significant changes in the WORK or deviations from the CONTRACT
DOCUMENTS caused thereby, and a CHANGE ORDER shall thereupon be issued covering
the changes and deviations involved.
12.
SUPERVISION BY CONTRACTOR
12.1 The CONTRACTOR will supervise and direct the WORK. He will be solely
responsible for the means, methods, techniques, sequences and procedures of
(Guide 19 - Attachment 9) (Page 9)
RD Instruction 1942-A
construction. The CONTRACTOR will employ and maintain on the WORK a qualified
supervisor or superintendent who shall have been designated in writing by the
CONTRACTOR as the CONTRACTOR'S representative at the site. The supervisor
shall have full authority to act on behalf of the CONTRACTOR and all
communications given to the supervisor shall be as binding as if given to the
CONTRACTOR. The supervisor shall be present on the site at all times as
required to perform adequate supervision and coordination of the WORK.
13.
CHANGES IN THE WORK
13.1 The OWNER may at any time, as the need arises, order changes within the
scope of the WORK without invalidating the Agreement. If such changes increase
or decrease the amount due under the CONTRACT DOCUMENTS, or in the time
required for performance of the WORK, an equitable adjustment shall be
authorized by CHANGE ORDER.
13.2 The ENGINEER, also, may at any time, by issuing a FIELD ORDER, make
changes in the details of the WORK. The CONTRACTOR shall proceed with the
performance of any changes in the WORK so ordered by the ENGINEER unless the
CONTRACTOR believes that such FIELD ORDER entitles the CONTRACTOR to a change
in CONTRACT PRICE or TIME, or both, in which event the CONTRACTOR shall give
the ENGINEER WRITTEN NOTICE thereof within seven (7) days after the receipt of
the ordered change. Thereafter the CONTRACTOR shall document the basis for the
change in CONTRACT PRICE or TIME within thirty (30) days. The CONTRACTOR shall
not execute such changes pending the receipt of an executed CHANGE ORDER or
further instruction from the OWNER.
14.
CHANGES IN CONTRACT PRICE
14.1 The CONTRACT PRICE may be changed only by a CHANGE ORDER. The value of
any WORK covered by a CHANGE ORDER or of any claim for increase or decrease in
the CONTRACT PRICE shall be determined by one or more of the following methods
in the order of precedence listed below:
15.
a.
Unit prices previously approved.
b.
An agreed lump sum.
TIME FOR COMPLETION AND LIQUIDATED DAMAGES
15.1 The date of beginning and the time for completion of the WORK are
essential conditions of the CONTRACT DOCUMENTS and the WORK embraced shall be
commenced
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SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 10)
on a date specified in the NOTICE TO PROCEED.
15.2 The CONTRACTOR will proceed with the WORK at such rate of progress to
insure full completion within the CONTRACT TIME. It is expressly understood
and agreed, by and between the CONTRACTOR and the OWNER, that the CONTRACT TIME
for the completion of the WORK described herein is a reasonable time, taking
into consideration the average climatic and economic conditions and other
factors prevailing in the locality of the WORK.
15.3 If the CONTRACTOR shall fail to complete the WORK within the CONTRACT
TIME, or extension of time granted by the OWNER, then the CONTRACTOR will pay
to the OWNER the amount for liquidated damages as specified in the BID for each
calendar day that the CONTRACTOR shall be in default after the time stipulated
in the CONTRACT DOCUMENTS.
15.4 The CONTRACTOR shall not be charged with liquidated damages or any excess
cost when the delay in completion of the WORK is due to the following and the
CONTRACTOR has promptly given WRITTEN NOTICE of such delay to the OWNER or
ENGINEER.
15.4.1
OWNER.
To any preference, priority or allocation order duly issued by the
15.4.2 To unforeseeable causes beyond the control and without the fault or
negligence of the CONTRACTOR, including but not restricted to, acts of God, or
of the public enemy, acts of the OWNER, acts of another CONTRACTOR in the
performance of a contract with the OWNER, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, and abnormal and unforeseeable
weather; and
15.4.3 To any delays of SUBCONTRACTORS occasioned by any of the causes
specified in paragraphs 15.4.1 and 15.4.2 of this article.
16.
CORRECTION OF WORK
16.1 The CONTRACTOR shall promptly remove from the premises all WORK rejected
by the ENGINEER for failure to comply with the CONTRACT DOCUMENTS, whether
incorporated in the construction or not, and the CONTRACTOR shall promptly
replace and reexecute the WORK in accordance with the CONTRACT DOCUMENTS and
without expense to the OWNER and shall bear the expense of making good all WORK
of other CONTRACTORS destroyed or damaged by such removal or replacement.
16.2 All removal and replacement WORK shall be done at the CONTRACTOR'S
expense. If the CONTRACTOR does not take action to remove such rejected WORK
within ten (10) days after receipt of WRITTEN NOTICE, the OWNER may remove such
(Guide 19 - Attachment 9) (Page 11)
RD Instruction 1942-A
WORK and store the materials at the expense of the CONTRACTOR.
17.
SUBSURFACE CONDITIONS
17.1 The CONTRACTOR shall promptly, and before such conditions are disturbed,
except in the event of an emergency, notify the OWNER by WRITTEN NOTICE of:
17.1.1 Subsurface or latent physical conditions at the site differing
materially from those indicated in the CONTRACT DOCUMENTS; or
17.1.2 Unknown physical conditions at the site, of an unusual nature,
differing materially from those ordinarily encountered and generally recognized
as inherent in WORK of the character provided for in the CONTRACT DOCUMENTS.
17.2 The OWNER shall promptly investigate the conditions, and if it is found
that such conditions do so materially differ and cause an increase or decrease
in the cost of, or in the time required for, performance of the WORK, an
equitable adjustment shall be made and the CONTRACT DOCUMENTS shall be modified
by a CHANGE ORDER. Any claim of the CONTRACTOR for adjustment hereunder shall
not be allowed unless the required WRITTEN NOTICE has been given; provided that
the OWNER may, if the OWNER determines the facts so justify, consider and
adjust any such claims asserted before the date of final payment.
18.
SUSPENSION OF WORK, TERMINATION, AND DELAY
18.1 The OWNER may suspend the WORK or any portion thereof for a period of not
more than ninety days or such further time as agreed upon by the CONTRACTOR, by
WRITTEN NOTICE to the CONTRACTOR and the ENGINEER which shall fix the date on
which WORK shall be resumed. The CONTRACTOR will resume that WORK on the date
so fixed. The CONTRACTOR will be allowed an increase in the CONTRACT PRICE or
an extension of the CONTRACT TIME, or both, directly attributable to any
suspension.
18.2 If the CONTRACTOR is adjudged a bankrupt or insolvent, or makes a general
assignment for the benefit of its creditors, or if a trustee or receiver is
appointed for the CONTRACTOR or for any of its property, or if CONTRACTOR files
a petition to take advantage of any debtor's act, or to reorganize under the
bankruptcy or applicable laws, or repeatedly fails to supply sufficient skilled
workmen or suitable materials or equipment, or repeatedly fails to make prompt
payments to SUBCONTRACTORS or for labor, materials or equipment or disregards
laws, ordinances, rules, regulations or orders of any public body having
jurisdiction of the WORK or disregards the authority of the ENGINEER, or
otherwise violates any provision of the CONTRACT DOCUMENTS, then the OWNER may,
without prejudice to any other right or remedy and after giving the
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SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 12)
CONTRACTOR and its surety a minimum of ten (10) days from delivery of a WRITTEN
NOTICE, terminate the services of the CONTRACTOR and take possession of the
PROJECT and of all materials, equipment, tools, construction equipment and
machinery thereon owned by the CONTRACTOR, and finish the WORK by whatever
method the OWNER may deem expedient. In such case the CONTRACTOR shall not be
entitled to receive any further payment until the WORK is finished. If the
unpaid balance of the CONTRACT PRICE exceeds the direct and indirect costs of
completing the PROJECT, including compensation for additional professional
services, such excess SHALL BE PAID TO THE CONTRACTOR. If such costs exceed
such unpaid balance, the CONTRACTOR will pay the difference to the OWNER. Such
costs incurred by the OWNER will be determined by the ENGINEER and incorporated
in a CHANGE ORDER.
18.3 Where the CONTRACTOR'S services have been so terminated by the OWNER,
said termination shall not affect any right of the OWNER against the CONTRACTOR
then existing or which may thereafter accrue. Any retention or payment of
monies by the OWNER due the CONTRACTOR will not release the CONTRACTOR from
compliance with the CONTRACT DOCUMENTS.
18.4 After ten (10) days from delivery of a WRITTEN NOTICE to the CONTRACTOR
and the ENGINEER, the OWNER may, without cause and without prejudice to any
other right or remedy, elect to abandon the PROJECT and terminate the CONTRACT.
In such case the CONTRACTOR shall be paid for all WORK executed and any expense
sustained plus reasonable profit.
18.5 If, through no act or fault of the CONTRACTOR, the WORK is suspended for
a period of more than ninety (90) days by the OWNER or under an order of court
or other public authority, or the ENGINEER fails to act on any request for
payment within thirty (30) days after it is submitted, or the OWNER fails to
pay the CONTRACTOR substantially the sum approved by the ENGINEER or awarded by
arbitrators within thirty (30) days of its approval and presentation, then the
CONTRACTOR may, after ten (10) days from delivery of a WRITTEN NOTICE to the
OWNER and the ENGINEER terminate the CONTRACT and recover from the OWNER
payment for all WORK executed and all expenses sustained. In addition and in
lieu of terminating the CONTRACT, if the ENGINEER has failed to act on a
request for payment or if the OWNER has failed to make any payment as
aforesaid, the CONTRACTOR may upon ten (10) days written notice to the OWNER
and the ENGINEER stop the WORK until paid all amounts then due, in which event
and upon resumption of the WORK CHANGE ORDERS shall be issued for adjusting the
CONTRACT PRICE or extending the CONTRACT TIME or both to compensate for the
costs and delays attributable to the stoppage of the WORK.
18.6 If the performance of all or any portion of the WORK is suspended,
delayed, or interrupted as a result of a failure of the OWNER or ENGINEER to
act within the time specified in the CONTRACT DOCUMENTS, or if no time is
specified, within a reasonable time, an adjustment in the CONTRACT PRICE or
§1933.20 (a) (Guide 19 - Attachment 9) (Page 13)
RD Instruction 1933-A
an extension of the CONTRACT TIME, or both, shall be made by CHANGE ORDER to
compensate the CONTRACTOR for the costs and delays necessarily caused by the
failure of the OWNER or ENGINEER.
19.
PAYMENT TO CONTRACTOR
19.1 At least ten (10) days before each progress payment falls due (but not more
often than once a month), the CONTRACTOR will submit to the ENGINEER a partial
payment estimate filled out and signed by the CONTRACTOR covering the WORK
performed during the period covered by the partial payment estimate and supported
by such data as the ENGINEER may reasonably require. If payment is requested on
the basis of materials and equipment not incorporated in the WORK but delivered and
suitably stored at or near the site, the partial payment estimate shall also be
accompanied by such supporting data, satisfactory to the OWNER, as will establish
the OWNER'S title to the material and equipment and protect the OWNER'S interest
therein, including applicable insurance. The ENGINEER will, within ten (10) days
after receipt of each partial payment estimate, either indicate in writing approval
of payment, and present the partial payment estimate to the OWNER, or return the
partial payment estimate to the CONTRACTOR indicating in writing the reasons for
refusing to approve payment. In the latter case, the CONTRACTOR may make the
necessary corrections and resubmit the partial payment estimate. The OWNER will,
within ten (10) days of presentation of an approved partial payment estimate, pay
the CONTRACTOR a progress payment on the basis of the approved partial payment
estimate less the retainage. The retainage shall be an amount equal to 10% of said
estimate until 50% of the work has been completed. At 50% completion, further
partial payments shall be made in full to the CONTRACTOR and no additional amounts
may be retained unless the ENGINEER certifies that the job is not proceeding
satisfactorily, but amounts previously retained shall not be paid to the
CONTRACTOR. At 50% completion or any time thereafter when the progress of the WORK
is not satisfactory, additional amounts may be retained but in no event shall the
total retainage be more than 10% of the value of the work completed. Upon
substantial completion of the work, any amount retained may be paid to the
CONTRACTOR. When the WORK has been substantially completed except for WORK which
cannot be completed because of weather conditions, lack of materials or other
reasons which in the judgment of the OWNER are valid reasons for noncompletion, the
OWNER may make additional payments, retaining at all times an amount sufficient to
cover the estimated cost of the WORK still to be completed.
19.2 The request for payment may also include an allowance for the cost of such
major materials and equipment which are suitably stored either at or near the site.
19.3 Prior to SUBSTANTIAL COMPLETION, the OWNER, with the approval of the ENGINEER
and with the concurrence of the CONTRACTOR, may use any completed or substantially
completed portions of the WORK. Such use shall not constitute an acceptance of
such portions of the WORK.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 14)
19.4 The OWNER shall have the right to enter the premises for the purpose of
doing work not covered by the CONTRACT DOCUMENTS. This provision shall not be
construed as relieving the CONTRACTOR of the sole responsibility for the care
and protection of the WORK, or the restoration of any damaged WORK except such
as may be caused by agents or employees of the OWNER.
19.5 Upon completion and acceptance of the WORK, the ENGINEER shall issue a
certificate attached to the final payment request that the WORK has been
accepted under the conditions of the CONTRACT DOCUMENTS. The entire balance
found to be due the CONTRACTOR, including the retained percentages, but except
such sums as may be lawfully retained by the OWNER, shall be paid to the
CONTRACTOR within thirty (30) days of completion and acceptance of the WORK.
19.6 The CONTRACTOR will indemnify and save the OWNER or the OWNER'S agents
harmless from all claims growing out of the lawful demand of SUBCONTRACTORS,
laborers, workmen, mechanics, materialmen, and furnishers of machinery and
parts thereof, equipment, tools, and all supplies, incurred in the furtherance
of the performance of the WORK. The CONTRACTOR shall, at the OWNER'S request,
furnish satisfactory evidence that all obligations of the nature designated
above have been paid, discharged, or waived. If the CONTRACTOR fails to do so
the OWNER may, after having notified the CONTRACTOR, either pay unpaid bills or
withhold from the CONTRACTOR'S unpaid compensation a sum of money deemed
reasonably sufficient to pay any and all such lawful claims until satisfactory
evidence is furnished that all liabilities have been fully discharged whereupon
payment to the CONTRACTOR shall be resumed in accordance with the terms of the
CONTRACT DOCUMENTS, but in no event shall the provisions of this sentence be
construed to impose any obligations upon the OWNER to either the CONTRACTOR,
the CONTRACTOR'S Surety, or any third party. In paying any unpaid bills of the
CONTRACTOR, any payment so made by the OWNER shall be considered as a payment
made under the CONTRACT DOCUMENTS by the OWNER to the CONTRACTOR and the OWNER
shall not be liable to the CONTRACTOR for any such payments made in good faith.
19.7 If the OWNER fails to make payment thirty (30) days after approval by the
ENGINEER, in addition to other remedies available to the CONTRACTOR, there
shall be added to each such payment interest at the maximum legal rate
commencing on the first day after said payment is due and continuing until the
payment is received by the CONTRACTOR.
20.
ACCEPTANCE OF FINAL PAYMENT AS RELEASE
20.1 The acceptance by the CONTRACTOR of final payment shall be and shall
operate as a release to the OWNER of all claims and all liability to the
CONTRACTOR other than claims in stated amounts as may be specifically excepted
by the CONTRACTOR for all things done or furnished in connection with
(Guide 19 - Attachment 9) (Page 15)
RD Instruction 1942-A
this WORK and for every act and neglect of the OWNER and others relating to or
arising out of this WORK. Any payment, however, final or otherwise, shall not
release the CONTRACTOR or its sureties from any obligations under the CONTRACT
DOCUMENTS or the Performance and Payment BONDS.
21.
INSURANCE
21.1 The CONTRACTOR shall purchase and maintain such insurance as will protect it
from claims set forth below which may arise out of, or result from, the
CONTRACTOR'S execution of the WORK, whether such execution be by the CONTRACTOR,
any SUBCONTRACTOR, or by anyone directly or indirectly employed by any of them, or
by anyone for whose acts any of them may be liable:
21.1.1 Claims under workmen's compensation, disability benefit and other similar
employee benefit acts;
21.1.2 Claims for damages because of bodily injury, occupational sickness or
disease, or death of employees;
21.1.3 Claims for damages because of bodily injury, sickness or disease, or death
of any person other than employees;
21.1.4 Claims for damages insured by usual personal injury liability coverage
which are sustained (1) by any person as a result of an offense directly or
indirectly related to the employment of such person by the CONTRACTOR, or (2) by
any other person; and
21.1.5 Claims for damages because of injury to or destruction of tangible
property, including loss of use resulting therefrom.
21.2 Certificates of Insurance acceptable to the OWNER shall be filed with the
OWNER prior to commencement of the WORK. These Certificates shall contain a
provision that coverages afforded under the policies will not be canceled unless at
least fifteen (15) days prior WRITTEN NOTICE has been given to the OWNER.
21.3 The CONTRACTOR shall procure and maintain, at the CONTRACTOR'S own expense,
during the CONTRACT TIME, Liability insurance as hereinafter specified:
21.3.1 CONTRACTOR'S General Public Liability and Property Damage Insurance
including vehicle coverage issued to the CONTRACTOR and protecting the CONTRACTOR
from all claims for personal injury, including death, and all claims for
destruction of or damage to property, arising out of or in connection with any
operations under the CONTRACT DOCUMENTS, whether such operations be by the
CONTRACTOR or by any SUBCONTRACTOR employed by the CONTRACTOR or anyone directly
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SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 16)
or indirectly employed by the CONTRACTOR or by a SUBCONTRACTOR employed by the
CONTRACTOR. Insurance shall be written with a limit of liability of not less
than $500,000 for all damages arising out of bodily injury, including death, at
any time resulting therefrom, sustained by any one person in any one accident;
and a limit of liability of not less than $500,000 aggregate for any such
damages sustained by two or more persons in any one accident. Insurance shall
be written with a limit of liability of not less than $200,000 for all property
damage sustained by any one person in any one accident; and a limit of
liability of not less than $200,000 aggregate for any such damage sustained by
two or more persons in any one accident.
21.3.2 The CONTRACTOR shall acquire and maintain, if applicable, Fire and
Extended Coverage insurance upon the PROJECT to the full insurable value
thereof for the benefit of the OWNER, the CONTRACTOR, and SUBCONTRACTORS as
their interest may appear. This provision shall in no way release the
CONTRACTOR or CONTRACTOR'S surety from obligations under the CONTRACT DOCUMENTS
to fully complete the PROJECT.
21.4 The CONTRACTOR shall procure and maintain, at the CONTRACTOR'S own
expense, during the CONTRACT TIME, in accordance with the provisions of the
laws of the state in which the WORK is performed, Workmen's Compensation
Insurance, including occupational disease provisions, for all of the
CONTRACTOR'S employees at the site of the PROJECT and in case any WORK is
sublet, the CONTRACTOR shall require such SUBCONTRACTOR similarly to provide
Workmen's Compensation Insurance, including occupational disease provisions for
all of the latter's employees unless such employees are covered by the
protection afforded by the CONTRACTOR. In case any class of employees engaged
in hazardous work under this contract at the site of the PROJECT is not
protected under Workmen's Compensation statue, the CONTRACTOR shall provide,
and shall cause each SUBCONTRACTOR to provide, adequate and suitable insurance
for the protection of its employees not otherwise protected.
21.5 The CONTRACTOR shall secure, if applicable, "All Risk" type Builder's
Risk Insurance for WORK to be performed. Unless specifically authorized by the
OWNER, the amount of such insurance shall not be less than the CONTRACT PRICE
totaled in the BID. The policy shall cover not less than the losses due to
fire, explosion, hail, lightning, vandalism, malicious mischief, wind,
collapse, riot, aircraft, and smoke during the CONTRACT TIME, and until the
WORK is accepted by the OWNER. The policy shall name as the insured the
CONTRACTOR, and the OWNER.
22.
CONTRACT SECURITY
22.1 The CONTRACTOR shall within ten (10) days after the receipt of the NOTICE
OF AWARD furnish the OWNER with a Performance BOND and a Payment BOND in penal
sums equal to the amount of the CONTRACT PRICE, conditioned upon the
performance
(Guide 19 - Attachment 9) (Page 17)
RD Instruction 1942-A
by the CONTRACTOR of all undertakings, covenants, terms, conditions and
agreements of the CONTRACT DOCUMENTS, and upon the prompt payment by the
CONTRACTOR to all persons supplying labor and materials in the prosecution of
the WORK provided by the CONTRACT DOCUMENTS. Such BONDS shall be executed by
the CONTRACTOR and a corporate bonding company licensed to transact such
business in the state in which the WORK is to be performed and named on the
current list of "Surety Companies Acceptable on Federal Bonds" as published in
the Treasury Department Circular Number 570. The expense of these BONDS shall
be borne by the CONTRACTOR. If at any time a surety on any such BOND is
declared a bankrupt or loses its right to do business in the state in which the
WORK is to be performed or is removed from the list of Surety Companies
accepted on Federal Bonds, CONTRACTOR shall within ten (10) days after notice
from the OWNER to do so, substitute an acceptable BOND (or BONDS) in such form
and sum and signed by such other surety or sureties as may be satisfactory to
the OWNER. The premiums on such BOND shall be paid by the CONTRACTOR. No
further payment shall be deemed due nor shall be made until the new surety or
sureties shall have furnished an acceptable BOND to the OWNER.
23.
ASSIGNMENTS
23.1 Neither the CONTRACTOR nor the OWNER shall sell, transfer, assign, or
otherwise dispose of the Contract or any portion thereof, or of any right,
title or interest therein, or any obligations thereunder, without written
consent of the other party.
24.
INDEMNIFICATION
24.1 The CONTRACTOR will indemnify and hold harmless the OWNER and the ENGINEER
and their agents and employees from and against all claims, damages, losses and
expenses including attorney's fees arising out of or resulting from the
performance of the WORK, provided that any such claims, damage, loss or expense
is attributable to bodily injury, sickness, disease or death, or to injury to
or destruction of tangible property including the loss of use resulting
therefrom; and is caused in whole or in part by any negligent or willful act or
omission of the CONTRACTOR, and SUBCONTRACTOR, anyone directly or indirectly
employed by any of them or anyone for whose acts any of them may be liable.
24.2 In any and all claims against the OWNER or the ENGINEER, or any of their
agents or employees, by any employee of the CONTRACTOR, any SUBCONTRACTOR,
anyone directly or indirectly employed by any of them, or anyone for whose acts
any of them may be liable, the indemnification obligation shall not be limited
in any way by any limitation on the amount or type of damages, compensation or
benefits payable by or for the CONTRACTOR or any SUBCONTRACTOR under workmen's
compensation acts, disability benefit acts or other employee benefits acts.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 18)
24.3 The obligation of the CONTRACTOR under this paragraph shall not extend to
the liability of the ENGINEER, its agents or employees arising out of the
preparation or approval of maps, DRAWINGS, opinions, reports, surveys, CHANGE
ORDERS, designs or SPECIFICATIONS.
25.
SEPARATE CONTRACTS
25.1 The OWNER reserves the right to let other contracts in connection with
this PROJECT. The CONTRACTOR shall afford other CONTRACTORS reasonable
opportunity for the introduction and storage of their materials and the
execution of their WORK, and shall poorly connect and coordinate the WORK with
theirs. If the proper execution or results of any part of the CONTRACTOR'S
WORK depends upon the WORK of any other CONTRACTOR, the CONTRACTOR shall
inspect and promptly report to the ENGINEER any defects in such WORK that
render it unsuitable for such proper execution and results.
25.2 The OWNER may perform additional WORK related to the PROJECT or the OWNER
may let other contracts containing provisions similar to these. The CONTRACTOR
will afford the other CONTRACTORS who are parties to such Contracts (or the
OWNER, if the OWNER is performing the additional WORK) reasonable opportunity
for the introduction and storage of materials and equipment and the execution
of WORK, and shall properly connect and coordinate the WORK with theirs.
25.3 If the performance of additional WORK by other CONTRACTORS or the OWNER is
not noted in the CONTRACT DOCUMENTS prior to the execution of the CONTRACT,
written notice thereof shall be given to the CONTRACTOR prior to starting any
such additional WORK. If the CONTRACTOR believes that the performance of such
additional WORK by the OWNER or others involves it in additional expense or
entitles it to an extension of the CONTRACT TIME, the CONTRACTOR may make a
claim thereof as provided in Sections 14 and 15.
26.
SUBCONTRACTING
26.1 The CONTRACTOR may utilize the services of specialty SUBCONTRACTS on those
parts of the WORK which, under normal contracting practices, are performed by
specialty SUBCONTRACTORS.
26.2 The CONTRACTOR shall not award WORK to SUBCONTRACTOR(s), in excess of
fifty (50%) percent of the CONTRACT PRICE, without prior written approval of
the OWNER.
(Guide 19 - Attachment 9)
(Revision 1)
(Page 19)
RD Instruction 1942-A
26.3 The CONTRACTOR shall be fully responsible to the OWNER for the acts and
omissions of its SUBCONTRACTORS, and of persons either directly or indirectly
employed by them, as the CONTRACTOR is for the acts and omissions of persons
directly employed by the CONTRACTOR.
26.4 The CONTRACTOR shall cause appropriate provisions to be inserted in all
subcontracts relative to the WORK to bind SUBCONTRACTORS to the CONTRACTOR by
the terms of the CONTRACT DOCUMENTS insofar as applicable to the WORK of
SUBCONTRACTORS and to give the CONTRACTOR the same power as regards terminating
any subcontract that the OWNER may exercise over the CONTRACTOR under any
provision of the CONTRACT DOCUMENTS.
26.5 Nothing contained in this CONTRACT shall create any contractual
relationship between any SUBCONTRACTOR and the OWNER. (Revised 2-16-83, PN
869.)
27.
ENGINEER'S AUTHORITY
27.1 The ENGINEER shall act as the OWNER'S representative during the
construction period, shall decide questions which may arise as to quality and
acceptability of materials furnished and WORK performed, and shall interpret
the intent of the CONTRACT DOCUMENTS in a fair and unbiased manner. The
ENGINEER will make visits to the site and determine if the WORK is proceeding
in accordance with the CONTRACT DOCUMENTS.
27.2 The CONTRACTOR will be held strictly to the intent of the CONTRACT
DOCUMENTS in regard to the quality of materials, workmanship, and execution of
the WORK. Inspections may be made at the factory or fabrication plant of the
source of material supply.
27.3 The ENGINEER will not be responsible for the construction means,
controls, techniques, sequences, procedures, or construction safety.
27.4 The ENGINEER shall promptly make decisions relative to interpretation of
the CONTRACT DOCUMENTS.
28.
LAND AND RIGHTS-OF-WAY
28.1 Prior to issuance of NOTICE TO PROCEED, the OWNER shall obtain all land
and rights-of-way necessary for carrying out and for the completion of the WORK
to be performed pursuant to the CONTRACT DOCUMENTS, unless otherwise mutually
agreed.
28.2 The OWNER shall provide to the CONTRACTOR information which delineates
and describes the lands owned and rights-of-way acquired.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 20)
(Revision 1)
28.3 The CONTRACTOR shall provide at its own expense and without liability to
the OWNER any additional land and access thereto that the CONTRACTOR may desire
for temporary construction facilities, or for storage of materials.
29.
GUARANTEE
29.1 The CONTRACTOR shall guarantee all materials and equipment furnished and
WORK performed for a period of one (1) year from the date of SUBSTANTIAL
COMPLETION. The CONTRACTOR warrants and guarantees for a period of one (1)
year from the date of SUBSTANTIAL COMPLETION of the system that the completed
system is free from all defects due to faulty materials or workmanship and the
CONTRACTOR shall promptly make such corrections as may be necessary by reason
of such defects including the repairs of any damage to other parts of the
system resulting from such defects. The OWNER will give notice of observed
defects with reasonable promptness. In the event that the CONTRACTOR should
fail to make such repairs, adjustments, or other WORK that may be made
necessary by such defects, the OWNER may do so and charge the CONTRACTOR the
cost thereby incurred. The Performance BOND shall remain in full force and
effect through the guarantee period.
30.
ARBITRATION BY MUTUAL AGREEMENT
(Revised 2-16-83, PN 869.)
30.1 All claims, disputes, and other matters in question arising out of, or
relating to, the CONTRACT DOCUMENTS or the breach thereof, except for claims
which have been waived by making an acceptance of final payment as provided by
Section 20, may be decided by arbitration if the parties mutually agree. Any
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law. The award rendered by the arbitrators shall be final, and
judgment may be entered upon it in any court having jurisdiction thereof.
(Revised 2-16-83, PN 869.)
30.2 Notice of the request for arbitration shall be filed in writing with the
other party to the CONTRACT DOCUMENTS and a copy shall be filed with the
ENGINEER. Request for arbitration shall in no event be made on any claim,
dispute, or other matter in question which would be barred by the applicable
statute of limitations. (Revised 2-16-83, PN 869.)
30.3 The CONTRACTOR will carry on the WORK and maintain the progress schedule
during any arbitration proceedings, unless otherwise mutually agreed in
writing.
31.
TAXES
31.1 The CONTRACTOR will pay all sales, consumer, use, and other similar taxes
required by the laws of the place where the WORK is performed.
oOo
RD Instruction 1942-A
(Guide 19 - Attachment 9) (Page 21)
(Added 09-16-92, PN 191)
32.
ENVIRONMENTAL REQUIREMENTS (Added 09-16-92, PN 191.)
The CONTRACTOR, when constructing a project involving trenching and/or other
related earth excavation, shall comply with the following environmental
constraints.
32.1 WETLANDS - The CONTRACTOR, when disposing of excess, spoil, or other
construction materials on public or private property, WILL NOT FILL IN or
otherwise CONVERT WETLANDS.
32.2 FLOODPLAINS - The CONTRACTOR, when disposing of excess, spoil, or other
construction materials on public or private property, WILL NOT FILL IN or
otherwise CONVERT 100 YEAR FLOODPLAIN areas delineated on the latest FEMA
Floodplain Maps.
32.3 HISTORIC PRESERVATION - Any excavation by the Contractor that uncovers an
historical or archaeological artifact shall be immediately reported to the
PROJECT ENGINEER and a representative of Rural Development. Construction shall
be temporarily halted pending the notification process and further directions
issued by Rural Development after consultation with the State Historic
Preservation Officer (SHPO).
32.4 ENDANGERED SPECIES - The CONTRACTOR shall comply with the Endangered
Species Act, which provides for the protection of endangered and/or threatened
species and critical habitat. Should any evidence of the presence of
endangered and/or threatened species or their critical habitat be brought to
the attention of the CONTRACTOR, the CONTRACTOR will immediately report this
evidence to the PROJECT ENGINEER and a representative of Rural Development.
Construction shall be temporarily halted pending the notification process and
further directions issued by Rural Development after consultation with the U.S.
Fish and Wildlife Service.
oOo
(1-15-79)
SPECIAL PN
Guide 20 and 21 not automated see manual
(Guide 22)
RD Instruction 1942-A
DELINQUENT ACCOUNTS
POSITIVE ACTION PLAN
__________________________________________________________________________
__________________________________________________________________________
Name of Borrower
Case
State County
__________________________________________________________________________
__
Type of Loan
Insured
/_/
__
Guaranteed
/_/
__
Direct
/_/
Initial Rural Development Debt
pmt
Amt. Paid
Unpaid Balance
Amt. Delinquent
Amt. Annual
__________________________________________________________________________
__________________________________________________________________________
OTHER DEBTS OWED
To Whom Owed
Amount
Amount Del.
Purpose of Debt
How Secure
____________
___________
______________
______________
__________
____________
___________
______________
______________
__________
____________
___________
______________
______________
__________
__________________________________________________________________________
Reason for Delinquency (Explain):
__________________________________________________________________________
__________________________________________________________________________
Option(s) Selection to Remove Delinquency - (Specify Completion Dates for
Goals)__
1.
2.
3.
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 22) (Page 2)
Acknowledgement of the adoption of the positive action plan by:
___________________________
Borrower
Date
________
Date
_______________________
Rural Development
________
______________________________________________________________________________
Progress Made Toward Accomplishing Goals: (Give Details & Revised Completion
Date)
1.
2.
3.
4.
oOo
(Guide 24)
RD Instruction 1942-A
Minimum Suggested
Contents of Management Agreements
1. Manage and operate the project subject to the operating and employment
procedures adopted by the owner.
2. Operate facility based on the annual budget and fee schedule adopted
by the owner.
3. Set out the handling of funds. All reserve, depreciation, debt
payment, and surplus funds should be transferred to the owner on at least a
monthly basis.
4. Provide for monthly and annual reports to the owner covering
appropriate financial and operational statistics and inspection of books and
records by owner and government.
5. Set out the responsibilities for maintenance and amounts of insurance
and bonds.
6. Provide for reasonable limits on expenditures for emergency repairs to
the facility.
7. Set out the term of the agreement and compensation of the manager
including specific positions included in that fee.
8. Set out the remedies for default of the agreement.
9. Require operation in accordance with all Federal, State and local
government requirements.
10. For health facilities, require compliance with appropriate thirdparty requirements such as Medicare-Medicaid.
11. Require the manager to comply with all requirements related to the
Federal financial assistance as if it were the recipient of the assistance.
12. Set out responsibilities for obtaining and maintaining all necessary
licenses, certifications, and accreditations as may be necessary to operate,
maintain, or manage the project.
(1-15-79)
SPECIAL PN
oOo
(Guide 25)
RD Instruction 1942-A
Joint Policy Statement
Between
The Environmental Protection Agency and Rural Development
The Safe Drinking Water Act (SDWA) was passed on December 16, 1974, to provide
for the safety of drinking water supplies throughout the United States by
establishing and enforcing national drinking water standards. Congress
authorized the Environmental Protection Agency (EPA) to support State and local
community drinking water programs by providing financial and technical
assistance to undertake research and study efforts. The SDWA, however, did not
provide any funds for construction of new water treatment systems or upgrading
existing treatment systems to meet the National Interim Primary Drinking Water
Regulations.
The National Interim Primary Drinking Water Regulations were published in the
Federal Register on December 24, 1975, and became effective on June 24, 1977.
The regulations set limits for bacteriology, turbidity and chemical
contaminants in finished water. These regulations or equivalent State
regulations are applicable to all public water systems defined as one that
provides piped water for human consumption and has at least 15 service
connections or serves at least 25 people a day for at least 60 days out of the
year. There are approximately 50,000 such community water systems in the
United States. EPA estimates that some 12,000 community water systems will
need additional treatment of some type to meet the current water standards.
The majority of these systems are located in small and/or rural communities and
thus could qualify for financial assistance through Rural Development of the
U.S. Department of Agriculture.
The Rural Development program of loans and grants is designed to assist in the
development of water and waste disposal facilities serving rural areas
consisting of open country or cities and towns having a population not in
excess of 10,000 inhabitants. The Rural Development can provide assistance to
a wide range of community based organizations operated on a not-for-profit
basis, such as districts, authorities, associations, and Indian tribes that are
unable to obtain credit elsewhere at reasonable rates and terms to construct,
enlarge, extend, or otherwise improve community water facilities. This may
include the extension of existing facilities to provide additional customers
with an adequate supply of safe drinking water.
Rural Development and EPA have agreed to adopt the following policy statements
as part of the priority system used to determine where, when, and how loans
and/or grants are made to eligible communities under 7 CFR Parts 1823 and 1933:
(1-15-79)
SPECIAL PN
RD Instruction 1942-A
(Guide 25) (Page 2)
Subpart A - Community Facility Loans or Subpart P - Development Grants for
Community Domestic Water and Waste Disposal Systems.
1.
Improvements or additions to water treatment systems needed to
meet the requirements of the Safe Drinking Water Act will be accorded
priority in determining the commitment of available funds.
2.
The quality of drinking water for projects financed in whole or
in part by Rural Development must meet the applicable primary
drinking water regulations after completion of any proposed
improvements. In those States where primary enforcement
responsibility bas been assumed by the State, a certification by the
State will be required at the time the final design plans and
specifications are reviewed. In all other States, such certification
will be made by the consulting engineer and will accompany the final
assign plans and specifications when submitted to the appropriate
State regulatory agency for review.
Signed:
Environmental Protection Agency
Rural Development
/s/ Thomas C. Jorling______________
Thomas C. Jorling
Assistant Administrator for
Water and Hazardous Materials
/s/ Gordon Cavanaugh_________
Gordon Cavanaugh
Administrator
7/23/78____________________________
Date
7/13/78_______________________
Date
o0o
(Guide 26 - Part I)
(Page 1)
RD Instruction 1942-A
Community Programs
Project Selection Criteria
Project Score_________
Name of Applicant ________________________________________________________
Case Number:______________________________________________________________
__
__
Project Type /_/ Water and Waste Disposal (WWD) /_/Community Facilities (CF)
State __________
County ______________ Congressional District No.______
Loan $__________
Grant $___________ Initial or Subsequent _____________
Amount of previous Rural Development funding for this project:
grant $___.
Anticipated interest level:
loan $____,
Poverty____, Intermediate____, Market ______.
Brief description of the proposed facility _______________________________
__________________________________________________________________________
Priorities
A.
Population priorities. The priorities in this
section apply to both Water and Waste Disposal and
Community Facilities preapplications
1.
2.
B.
Points
Proposed project is located in a rural
community having a population not in
excess of 2,500.
Proposed project is located in a rural
community having a population not in
excess of 5,500.
(Do not award points under this priority
if points were awarded under Priority A-1).
25
20
Health priorities.
1.
Water and Waste Disposal preapplication only a.
(10-19-88)
Proposed project is needed to alleviate
the sudden unexpected diminution or
deterioration of a water supply, or
to meet health or sanitary standards
which pertain to a community's water
supply.
SPECIAL PN
25
RD Instruction 1942-A
(Guide 26 - Part I) (Page 2)
Priorities
b.
2.
Points
Proposed project is required to correct
an inadequate waste disposal system due
to unexpected occurrences, or to meet
health or sanitary standards which pertain
to a community's waste disposal systems.
25
Community Facilities preapplication onlyProposed project is required either to correct
a health or sanitary problem, or to meet a
health or sanitary standard.
25
C. Income priorities. The priorities in this section apply to both Water and
Waste Disposal and Community Facilities preapplications. The median income of
the population to be served by the proposed facility is:
1.
2.
D.
Less than the poverty line for a family of
four as defined in section 673(2) of the
Community Services Block Grant Act (42 U.S.C.
9902(2), or less than 80% of the statewide
nonmetropolitan median household income.
25
Equal to or more than the poverty line and
between 80% and 100%, inclusive, of the State's
nonmetropolitan median household income.
20
Other factors.
1.
2.
Water and Waste Disposal preapplications
only - The proposed project will: merge
ownership, management, and operation of
smaller facilities providing for more
sufficient management and economical service;
and/or enlarge, extend, or otherwise modify
existing facilities to provide service to
additional rural residents.
10
Community Facilities preapplication only - The
purpose of the proposed project is to construct,
enlarge, extend or otherwise improve the
following types of facilities. (Select only
the factor most applicable to the proposed
project.)
a.
Public safety.
10
(Guide 26 - Part I)
(Page 3)
RD Instruction 1942-A
Priorities
b.
3.
E.
Points
Health care.
(Do not award points under this priority
if points were awarded under priority B-2.)
5
Water and Waste Disposal and Community Facilities
preapplications a.
Applicant is a public body or Indian tribe.
5
b.
Project is located in a "truly rural area"
as described in Section 1942.17(c)(l).
10
c.
Amount of joint financing committed to the
project is:
i.
20% or more private, local or State funds.
ii.
5% - 19% private, local or State funds.
State Director's discretionary points.
Give written justification.
(Up to 15).
10
5
___
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
________________________________________________
Chief, Community (and Business) Programs
__________________
Date
Directions: Complete the information requested on Page 1. In paragraphs
A-D circle the points for those priorities which apply to and
are met by the preapplication under consideration. Determine
and justify the number of discretionary points, if any, to be
awarded in paragraph E and add up the total number of points
scored.
oOo
(10-19-88)
SPECIAL PN
(Guide 26 - Part II)
TO:
(Page 1)
RD Instruction 1942-A
Administrator, Rural Development
Washington, DC 20250
Attention: _______ Water and Waste Disposal Division
_______ Community Facilities Division
State:______________________
Name of Applicant:____________________________________
A.
Amount of additional funds requested:
B.
Are funds being requested for an approved project that has
encountered cost overruns due to high bids or unexpected construction
problems that cannot be reduced by negotiation, redesign or other means?
_____ yes _____no
C.
State the priority of this project in relation to all others for
which requests are pending in the National Office. (Attach a revised
priority listing for previously submitted projects if
necessary.)_____________
D.
Is this project ready for obligation? ____ yes _____no.
If no, give estimated date project will be ready for obligation of
funds.___________________________
E.
Has the appropriate environmental review documentation as required in
accordance with 7 CFR part 1970, including the public notice
requirements (if applicable), been completed for the project? ______
yes______no. (Revised 04-01-16, SPECIAL PN.)
F.
If other funds are involved in this project, have they been
committed? ______ yes _____no.
G.
Has all of the State's fund allocation been obligated? ___yes
____no. If no, attach specific explanation of plans to use funds.
Include a list of projects and planned dates of obligation.
_____________________________________
State Director
Loan $________ Grant $_______
________________________
Date
Directions: To request an additional allocation of funds from the National
Office Reserve, State Offices should complete this Part of
Guide 26, attach it to the front of a completed copy of Part I
and submit both to the National Office.
(04-01-16)
SPECIAL PN
oOo
RD Instruction 1942-A
Guide 27
(INSTRUCTION SHEET ONLY - NOT TO BE INCLUDED AS PART OF THE CONTRACT DOCUMENTS)
This Guide modifies selected documents published by the American Institute of
Architects (AIA) to conform with USDA/Rural Development / Rural Housing Service
(RHS) regulations and policy. The AIA documents, as modified by this Guide,
may be used on RHS financed building construction projects such as those
administered under this subpart. The AIA documents must be used in accordance
with current copyright rules.
The need to witness the agreements will depend upon State and local
requirements for validation of the document. Where appropriate, a copy of the
resolution authorizing the individual to act on behalf of the firm or entity
should be attached to the agreement.
Questions regarding the use of these documents should be referred to the RHS
National Office Program Support Staff.
Attachments:
1.
Attachment to AIA DOCUMENT B101-2007, Standard Form of Agreement
Between Owner and Architect
2.
Attachment to AIA DOCUMENT A701-1997, Instructions to Bidders.
3.
Attachment to AIA DOCUMENT A101-2007, Standard Form of Agreement
Between Owner and Contractor.
4.
Attachment to AIA Document A201-2007, General Conditions of the
Contract for Construction.
5.
Attachment to AIA Document A121/CMc-2003,Standard Form of Agreement
Between Owner and Construction Manager where the Construction Manager
is also the Constructor.
6.
Attachment to AIA Document A141-2004, Standard Form of Agreement
Between the Owner and Design/Builder.
7.
Community Facilities Design/Build or Construction Management
Concurrence Checklist.
oOo
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 1
Page 1
ATTACHMENT TO AIA DOCUMENT B101-2007, Standard Form of Agreement Between Owner
and Architect
The provisions of this Attachment shall delete, modify and supplement the
provisions contained in the "Standard Form of Agreement Between Owner and
Architect,” AIA Document B101-2007. The provisions contained in this
Attachment will supersede any conflicting provisions of the AIA Document. The
term "Agency,” as used in this Attachment, shall mean the United States of
America, acting through the United States Department of Agriculture.
ARTICLE 3,
SCOPE OF ARCHITECT’S BASIC SERVICES
Add the words "and concurrence by the Agency" after “Owner’s approval" in
subparagraph 3.2.5, subparagraph 3.3.1 and subparagraph 3.4.1.
Delete subparagraphs 3.2.6 and 3.2.7
Add the following subparagraphs:
3.2.6. The Architect shall provide the Owner with the appropriate
documentation showing the Schematic Design and the estimated Project
cost to the Owner to seek the concurrence of the Agency. When the
Owner has accepted and the Agency has concurred on the Schematic
Design studies and estimated Project cost, the project Architect may
be authorized to proceed with the Design Development Documents.
3.2.7. The Architect shall attend conferences with the Owner,
representatives of the Agency and other interested parties as may be
reasonably necessary.
3.4
CONSTRUCTION DOCUMENTS PHASE SERVICES
3.4.6 The Architect shall certify in writing, to the best of the
Architect's knowledge, information and belief, that the Drawings and
Specifications are in conformance with the applicable development
standard, as defined in Agency regulations furnished by the Owner
under subparagraph 5.1.
3.4.7 Prior to advertisement for bids, the Architect shall
provide_____sets of Construction Documents for use by the Owner, the
Agency and the appropriate Federal, State and local agencies from
whom approval of the Project must be obtained. The reproduction cost
of such Construction Documents shall be included in the compensation
paid to the Architect, not withstanding subparagraph 11.8. The Owner
shall obtain Agency concurrence with the Construction Documents,
estimated Project costs, and authorization to proceed in writing
prior to advertisement for bids.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 1
Page 2
3.5
BIDDING OR NEGOTIATING PHASE SERVICES
Add the following subparagraph to 3.5.2.2:
.6
3.6
furnishing additional copies of the Construction Documents as
requested by the prospective bidders, and other interested
parties, and may charge them a reasonable cost for such copies.
CONSTRUCTION PHASE SERVICES
Add the following to subparagraph 3.6.1.1 after the words "Contract
for Construction": "and the conditions of RD Instruction 1942-A,
Guide 27, Attachment 4".
Delete the first sentence of subparagraph 3.6.1.2 and substitute the
following:
3.6.1.2 The Architect shall be a representative of and shall advise
and consult with the Owner during construction until final payment to
the Contractor is paid, and at the Owner's direction during the
period of correction of the Work described in the Contract for
Construction. The Architect shall furnish architectural services and
consultations necessary to correct minor construction defects
encountered during such correction period. The Architect shall
assist the Owner in performing a review of the Project during the
11th month after the date of substantial completion. Such services
shall be furnished without additional charge except for travel and
subsistence costs.
Delete the following words from subparagraph 3.6.1.3 after the word,
"terminates": "on the date the Architect issues the final Certificate for
Payment" and substitute the words "at the expiration of
the period of correction of the Work described in the Contract for
Construction."
Add the following subparagraph to paragraph 3.6.1:
3.6.1.4 Upon award of the construction contract, the Architect
shall furnish to the Owner _______ sets of Construction Contract
Documents for execution. The costs of these sets shall be
included in the compensation to the Architect notwithstanding
subparagraph 11.8.
3.6.1.5 The Architect shall participate in the Preconstruction
Conference and shall advise and consult with the Owner and the
Agency.
RD Instruction 1942-A
Guide 27
Attachment 1
Page 3
Add to subparagraph 3.6.2.1 following the first sentence, “Such visits to
the site shall be documented in writing on inspection report forms
acceptable to the Owner and the Agency. Copies shall be furnished to the
Owner, Contractor and the Agency.”
Add the following subparagraph to paragraph 3.6.2:
3.6.2.6 The Architect shall advise the Owner and the Agency of
required tests, inspections and test results; shall furnish
coordination of such tests and inspections; and shall advise the
Owner and the Agency of the results of same. Copies of tests results
shall be furnished upon request to the Owner, and the Agency.
Add the following subparagraph to paragraph 3.6.3:
3.6.3.4 The Architect shall obtain Agency concurrence on all
Certificates of Payment before payment is made.
Modify subparagraph 3.6.5.1 as follows: Add the following to the end of
the subparagraph: “Preparation of Change Orders which do not
substantially affect the Project shall be included in the compensation
computed in paragraph 11.1. The Owner, with the assistance of the
Architect, shall obtain Agency concurrence in writing for all change
orders prior to the performance of the Work.”
Delete subparagraphs 3.6.6.1, and substitute the following:
3.6.6.1 The Architect shall conduct an inspection prior to the
issuance of the Certificate of Substantial Completion and shall
submit a written report of work to be completed to the Owner, the
Agency and the Contractor prior to final acceptance. The Architect
shall notify the Agency about inspection allowing reasonable time for
the Agency's representative to attend. Such services shall be
coordinated with the Agency. Prior to submitting the final
Certificate for Payment, the Architect shall; 1) conduct an
inspection to determine compliance with the requirements of the
Contract Documents, and 2) receive and forward to the Owner, for the
Owner's review and records, written warranties and related documents
required by the Contract Documents and assembled by the Contractor.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 1
Page 4
ARTICLE 4, ADDITIONAL SERVICES
Delete items .3 and .6 from paragraph 4.3.2.
Insert the word “Architect” under the heading “Responsibility” for line
items 4.1.11, 4.1.12, and 4.1.15 in the chart.
Add the following subparagraphs to paragraph 4.2 below the chart:
4.2.1 The Architect shall provide a cost estimate based on
Construction Contract Documents. The estimate shall show a breakdown
of the project cost in accordance with Rural Development requirements
and procedures.
4.2.2 The selection and compensation of the Project Representative,
if required, shall be concurred in by the Agency.
4.2.3 _____ sets of Record Drawings shall be provided to the Owner.
The costs of these sets shall be included in the compensation to the
Architect not withstanding Subparagraph 11.8.
ARTICLE 5,
OWNER’S RESPONSIBILITIES
Add the following subparagraph to Article 5:
5.13 Owner shall provide Agency design and construction document
regulations and guides to the Architect, upon request. The Owner
shall provide information on requirements and procedures of the
Agency.
ARTICLE 6,
COST OF THE WORK
Add the following paragraph to Article 6:
6.8 The Architect shall consult with the Agency Architect or
Engineer about the Agency’s requirements and procedures.
RD Instruction 1942-A
Guide 27
Attachment 1
Page 5
ARTICLE 8,
CLAIMS AND DISPUTES
Delete the words "unless the parties mutually agree otherwise" and
substitute the words "if the parties mutually agree" in the first sentence
of subparagraph 8.3.1.
ARTICLE 9,
TERMINATION OR SUSPENSION
Delete the second sentence in subparagraph 9.2 and substitute the
following:
When the Project is resumed, the Architect's compensation may be
equitably adjusted, as mutually agreed, to provide for expenses
incurred in the interruption and resumption of the Architect's
services.
Insert the words "as mutually agreed" after "Termination Expenses" in
subparagraph 9.7.
ARTICLE 10,
MISCELLANEOUS PROVISIONS
Add the following subparagraphs:
10.9 This Agreement and any amendments to this Agreement shall not
be in full force and effect until concurred with in writing by the
Agency State Director or the State Director's delegate. Such
concurrence shall be evidenced by the signature of such a
representative of the Agency in the space provided at the end of this
Agreement.
10.10 If applicable, the Architect shall comply with section 319 of
Public Law 101-121, as supplemented by the Department of Agriculture
regulations (7 CFR part 3018). This statute pertains to restrictions
on lobbying and applies to the recipients of contracts and
subcontracts that exceed $100,000 at any tier under a Federal loan
that exceeds $150,000 or a Federal grant that exceeds $100,000. If
applicable, the Architect must complete a certification form on
lobbying activities related to a specific Federal loan or grant that
is a funding source for this Contract. The certification and
disclosure forms shall be provided by the Owner.
(09-24-12)
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RD Instruction 1942-A
Guide 27
Attachment 1
Page 6
10.11: The Architect agrees to abide by the requirements under
Executive Order 12549, which pertains to the debarment or suspension
of a person from participating in a Federal program or activity. If
the total compensation described in Article 1.5 exceeds $25,000, the
Architect shall complete the relevant certification form provided by
the Owner.
ARTICLE 11, COMPENSATION
Add the words "or representatives of the United States of America" after
the words "Owner" in subparagraph 11.10.4.
Add the following subparagraph to paragraph 11.10:
11.10.5 The Architect shall provide a detailed cost estimate for
Reimbursable Expenses as defined in subparagraph 11.8., which shall
be attached and made a part of this Agreement. The cost estimate
must be approved in writing by the Owner and shall be concurred with
in writing by the Agency before the services are rendered. The
billings for reimbursable services shall not exceed the budgeted
amount without prior approval of the Owner with the concurrence of
the Agency. The Agency may not concur in requests for payments which
exceed the budgeted amount unless it is established that funds are
available for such expenditures.
ARTICLE 12,
SPECIAL TERMS AND CONDITIONS
Add the following subparagraph 12.1:
12.1 This Agreement is modified and supplemented by RD Instruction
1942-A, Guide 27, Attachment 1.
ARTICLE 13,
SCOPE OF THE AGREEMENT
Delete the word "both" from the end of the second sentence in subparagraph
13.1 and conclude the sentence with "Owner, Architect and Agency".
SIGNATURE BLOCK:
Delete the signature block on page 18 of this Agreement and substitute the
following:
RD Instruction 1942-A
Guide 27
Attachment 1
Page 7
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed
by their duly authorized officials, this Agreement in duplicate on the
respective dates indicated below.
OWNER:
ATTEST: __________________________
By ________________________________
Type Name ________________________
Type Name _________________________
Title ____________________________
Title _____________________________
Date _____________________________
Date ______________________________
ARCHITECT:
ATTEST: __________________________
By ________________________________
Type Name ________________________
Type Name _________________________
Title ____________________________
Title _____________________________
Date _____________________________
Date ______________________________
The United States of America, as potential lender or insurer of funds to defray
the costs of this agreement and without liability for any payments thereunder,
hereby concurs in the form, content and the execution of this agreement.
U.S. Department of Agriculture
Rural Development
Rural Housing Service
By ________________________________
Type Name _________________________
Title _____________________________
Date ______________________________
o0o
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 2
Page 1
ATTACHMENT TO AIA DOCUMENT A701-1997, Instructions to Bidders
The provisions of this Attachment shall delete, modify and supplement the
provisions contained in the "Instructions to Bidders,” AIA Document A701-1997
Edition. The provisions contained in this Attachment will supersede any
conflicting provisions of the AIA Document. The term "Agency,” as used in this
Attachment, shall mean the United States of America, acting through the United
States Department of Agriculture.
ARTICLE 2,
2.1
BIDDER'S REPRESENTATIONS
Add the following subparagraph to paragraph 2.1:
2.1.5 This Bid has been arrived at independently, without consultation,
communication, or agreement as to any matter relating to this Bid, with
any other Bidder or with any competitor.
ARTICLE 4,
BIDDING PROCEDURES
4.1.1 Add the following sentence to subparagraph 4.1.1:
Only one copy of the Bid is to be submitted.
4.2.1 Delete subparagraph 4.2.1 and substitute the following:
4.2.1 Each Bid must be accompanied by a Bid Bond payable to the Owner
for five percent of the total amount of the Bid.
4.2.2 Delete Subparagraph 4.2.2 and substitute the following:
4.2.2 The Bid Bond shall be written on a form identical to that included
in the Bidding Documents, and the attorney-in-fact who executes the Bid
Bond on behalf of the surety shall affix to the Bid Bond a certified and
current copy of the power of attorney.
4.2.3 Add the words "payment and performance" before the word "bonds"; and add
the following to subparagraph 4.2.3:
As soon as the Bid prices have been compared, the Owner will return the
Bid Bonds of all except the three lowest responsible Bidders. When the
Agreement is executed, the Bid Bonds of the two remaining unsuccessful
Bidders will be returned.
(08-26-98)
PN 296
RD Instruction 1942-A
Guide 27
Attachment 2
Page 2
4.2
Add the following subparagraph to paragraph 4.2:
4.2.4 If a Bidder refuses to execute the Agreement or obtain the
Performance and Payment Bonds within the agreed time, the Owner may
consider the Bidder in default, in which case the Bid Bond accompanying
the Bid shall become the property of the Owner.
4.3
Add the following subparagraphs to paragraph 4.3:
4.3.5 All applicable laws, ordinances, and the rules and regulations of
all authorities having jurisdiction over construction of the Project,
shall apply to the Contract throughout.
4.3.6 The Bidder agrees to abide by the requirements of Executive Order
11246, specifically including the provisions of the Equal Opportunity
Clause and the Standard Federal Equal Employment Construction Contract
Specifications set forth in the Supplementary Conditions.
4.3.7 The Bidder agrees to abide by the requirements of section 319 of
Public Law 101-121, which pertains to lobbying activities and applies to
recipients of contracts or subcontracts that exceed $100,000 at any tier
under a Federal loan that exceeds $150,000 or a Federal grant that
exceeds $100,000. Each Bid shall be accompanied by a completed lobbying
certification form identical to that included in the Bidding Documents.
4.3.8 The Bidder agrees to abide by the requirements under 7 C.F.R. part
3017, which pertains to the debarment or suspension of a person from
participating in a Federal program or activity. Each Bid exceeding
$25,000 shall be accompanied by a relevant completed certification form
identical to that included in the Bidding Documents.
4.4.1 Delete subparagraph 4.4.1 and substitute the following:
4.4.1 No Bidder may withdraw, modify or cancel a Bid within 60 calendar
days after the actual date of the opening thereof. Should there be
reasons why the Contract cannot be awarded within the specified period,
the time may be extended by mutual agreement between the Owner and the
Bidder, and the concurrence of the Agency.
4.4.4 Delete the words ", if required," from Subparagraph 4.4.4.
RD Instruction 1942-A
Guide 27
Attachment 2
Page 3
ARTICLE 5,
CONSIDERATION OF BIDS
5.3.2 Delete subparagraph 5.3.2 and substitute the following:
5.3.2 The Owner shall have the right to accept Alternates in the
sequence or combinations listed and to determine the low Bidder on the
basis of the sum of the Base Bid and the Alternates accepted.
ARTICLE 7,
PERFORMANCE BOND AND PAYMENT BOND
7.1.1 Delete subparagraph 7.1.1 and substitute the following:
7.1.1 Prior to execution of the Contract, the Bidder shall furnish Bonds
covering the faithful performance of the Contract and the payment of all
obligations arising thereunder. Both Bonds shall be separately written,
each in the amount of the Contract Sum. The cost shall be included in
the Bid.
7.1.2 Delete subparagraph 7.1.2 and substitute the following:
7.1.2 Surety companies executing Bonds must hold a certificate of
authority as a acceptable surety on Federal Bonds as listed in Treasury
Circular 570, as amended, and be authorized to transact business in the
State where the Project is located.
7.1.3 Delete subparagraph 7.1.3.
7.2.1 Delete subparagraph 7.2.1 and substitute the following:
7.2.1 The Bidder to whom the Contract is awarded will be required to
execute the Agreement and obtain Performance and Payment Bonds within ten
(10) calendar days from the date when the Notice of Award is delivered to
the Bidder. The Notice shall be accompanied by the necessary Agreement
and Bond forms.
7.2.2 Delete subparagraph 7.2.2 and substitute the following:
7.2.2 The Bonds shall be written on forms identical to those included in
the Bidding Documents.
(Note: Any additional provisions that are necessary to remain effective after
execution of the Contract for Construction will be inserted here and continue
in the same format.)
o0o
(08-26-98)
PN 296
RD Instruction 1942-A
Guide 27
Attachment 3
Page 1
ATTACHMENT TO AIA DOCUMENT A101-2007, Standard Form of Agreement Between Owner
and Contractor
The provisions of this Attachment shall delete, modify and supplement the
provisions contained in the “Standard Form of Agreement Between Owner and
Contractor,” AIA Document A101-2007 Edition. The provisions contained in this
attachment shall supersede any conflicting provisions of the AIA Document.
ARTICLE 3, DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
Delete paragraph 3.1 and substitute the following:
3.1 The date of commencement shall be contained in the Notice to
Proceed.
Add the following to paragraph 3.3:
If the work is not substantially complete on or before this date,
or within this period of time, or extension thereof granted by the
Owner, damage will be sustained by the Owner and that it is and
will be impracticable and extremely difficult to fix the actual
damage which the Owner will sustain in the event of and by reason
of such delays. The Contractor shall pay to the Owner liquidated
damages in the sum of $ _____________ for each calendar day of
delay. Any sums that may be due the Owner as liquidated damages
may be deducted from any monies due or to become due the Contractor
under the Contract or may be collected from the Contractor's
surety.
ARTICLE 5, PAYMENTS
Insert "ten" and "10" in the appropriate spaces in clauses 5.1.6.1 and
subparagraph 5.1.6.2.
Delete the last sentence of clause 5.1.6.1.
Delete the following from clause 5.1.6.2:
(or, if approved in advance by the Owner, suitably stored off the
site at a location agreed upon in writing)
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 3
Page 2
Insert the following sentences in subparagraph 5.1.8:
The amount retained shall be 10% of the value of Work until 50% of
the Work has been completed. At 50% completion, further partial
payments shall be made in full to the Contractor and no additional
amounts may be retained unless the Architect certifies that the
Work is not proceeding satisfactorily, but amounts previously
retained shall not be paid to the Contractor. At 50% completion or
any time thereafter when the progress of the Work is not
satisfactory, additional amounts may be retained but in no event
shall the total retainage be more than 10% of the value of Work
completed.
ARTICLE 8, MISCELLANEOUS PROVISIONS
Add the following subparagraph to paragraph 8.6:
8.6.1 This Agreement shall not become effective until concurred in
writing by the Agency. Such concurrence shall be evidences by the
signature of a duly authorized representative of the Agency in the
space provided at the end of this Attachment to the Agreement. The
concurrence so evidenced by the Agency shall in no way commit the
Agency to render financial assistance to the Owner and is without
liability to the Agency for any payment thereunder, but in the
event such assistance is provided, the concurrence shall signify
the provisions of this Agreement are consistent with Agency
requirements.
ARTICLE 9, ENUMERATION OF CONTRACT DOCUMENTS
The following Documents should be referenced, if applicable:
Subparagraph 9.1.3:
Attachment to the Standard Form of Agreement Between Owner
and Contractor (this Attachment)
General Conditions of the Contract for Construction, AIA
A201-2007
Attachment to the General Conditions of the Contract for
Construction (RD Instruction 1942-A, Guide 27, Attachment
4)
Special Conditions
RD Instruction 1942-A
Guide 27
Attachment 3
Page 3
Subparagraph 9.1.7:
Invitation for Bids (Form RD 1924-5)
Instructions to Bidders, AIA A701-1997
Attachment to the Instructions to Bidders (RD Instruction
1924-A, Guide 27, Attachment 2)
Bid Form
Bid Bond
Compliance Statement (Form RD 400-6)
Payment Bond
Performance Bond
Certification Regarding Debarment, Suspension,
Ineligibility and Voluntary Exclusion - Lower Tier
Covered Transactions (Form AD 1048)
Disclosure of Lobbying Activities (SF-LLL)
Certification for Contracts, Grants and Loans (RD
Instruction 1940-Q, Exhibit A-1)
Delete the signature block on page 7 of this Agreement, and substitute the
block on the following page:
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 3
Page 4
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed
by their duly authorized officials, this Agreement in duplicate on the
respective dates indicated below:
OWNER:
ATTEST: _____________________
By _______________________________
Type Name ___________________
Type Name ________________________
Title _______________________
Title ____________________________
Date ________________________
Date _____________________________
CONTRACTOR:
ATTEST: _____________________
By _______________________________
Type Name ___________________
Type Name ________________________
Title _______________________
Title ____________________________
Date ________________________
Date _____________________________
AGENCY CONCURRENCE:
By ________________________________
Type Name _________________________
Title _____________________________
Date ______________________________
The concurrence so evidenced by the Agency shall in no way commit the Agency to
render financial assistance to the Owner and is without liability to the Agency
for any payment hereunder, but in the event such assistance is provided, the
concurrence shall signify the provisions of this Agreement are consistent with
Agency requirements.
o0o
RD Instruction 1942-A
Guide 27
Attachment 4
Page 1
ATTACHMENT TO AIA DOCUMENT A201-2007, General Conditions of the Contract for
Construction
The provisions of this attachment shall delete, modify and supplement the
provisions contained in the "General Conditions of the Contract for
Construction,” AIA Document A201-2007 Edition. The provisions contained in
this attachment will supersede any conflicting provisions of the AIA Document.
The term "Agency,” as used in this Attachment, shall mean the United States of
America, acting through the United States Department of Agriculture.
ARTICLE 1,
GENERAL PROVISIONS
Add the following subparagraph:
1.2.4 Concurrence of the Contract by the Agency is required before
it is effective.
ARTICLE 2,
OWNER
Delete subparagraph 2.2.5 and substitute the following:
2.2.5 The Contractor will be furnished, free of charge, ________
copies of the Drawings and Projects Manuals necessary for execution
of the Work. Additional copies will be available from the
Architect at the cost of reproduction and handling.
ARTICLE 4, ARCHITECT
Add the following to subparagraph 4.1.1:
The term "Architect" means the Architect, or the Engineer when the
nature of the work is within the authority granted engineers by the
State licensure law, or an authorized representative of the
Architect or Engineer.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 4
Page 2
ARTICLE 5, SUBCONTRACTORS
Add the following to subparagraph 5.2.2:
The Contractor shall not contract with any party who is suspended
or debarred by any Federal government agency from participating in
Federally assisted construction projects
or to whom the Owner or the Architect has made reasonable and
timely objection.
ARTICLE 7, CHANGES IN THE WORK
Delete the words ", Construction Change Directive" from subparagraph
7.1.1.
Insert the words ", Agency " after the word "Owner,” and delete the words
"; a Construction Change Directive requires agreement by the Owner and
Architect and may or may not be agreed to by the Contractor" in
subparagraph 7.1.2.
Delete the words "Construction Change Directive" from subparagraph 7.1.3.
Delete subparagraph 7.2.1 and substitute the following:
7.2.1 A Change Order is a written order to the Contractor
utilizing Form RD 1924-7, "Contract Change Order," or AIA G-701
signed by the Owner, Architect, Contractor, and the Agency
representative. It is issued after the execution of the Contract,
authorizing a change in the Work or an adjustment in the Contract
Sum or the Contract Time. The Contract Sum and the Contract Time
may be changed only by Change Order. The Contractor's signing of a
Change Order indicates complete agreement therein.
Add subparagraph 7.2.2:
7.2.2 Methods used in determining adjustments to the Contract Sum
may include any of the following:
.1
Mutual acceptance of a lump sum properly
itemized and supported by sufficient
substantiating data to permit evaluating.
RD Instruction 1942-A
Guide 27
Attachment 4
Page 3
.2
Unit prices stated in the Contract Documents
or subsequently agreed upon.
Add the following sentence to paragraph 7.3: “A Construction Change
Directive may be used only for a change in response to an emergency as
described in paragraph 10.4.
ARTICLE 8, TIME
Add the following subparagraphs:
8.2.4 The Notice to Proceed shall be issued within twenty (20)
calendar days of the execution of the Agreement by the Owner.
Should there be reasons why the Notice to Proceed cannot be issued
within such period, the time may be extended by mutual agreement of
the Owner and Contractor, with the concurrence of the Agency. If
the Notice to Proceed has not been issued within the twenty (20)
calendar day period or within the period mutually agreed, the
Contractor may terminate the Agreement without further liability on
the part of either party.
8.3.4 As outlined in Article 3 of the Agreement, the Contractor
agrees to pay liquidated damages to the Owner for each calendar day
the Contractor shall be in default.
ARTICLE 9, PAYMENTS AND COMPLETION
Delete clause 9.3.1.1 and substitute the following:
9.3.1.1 Work performed and materials supplied under a Change Order
may be included for payment only after the Change Order has been
approved by all appropriate parties, including the Agency.
Add the words ", using AIA Document 702, 'Application and Certificate for
Payment' or Form RD 1924-18, 'Partial Payment Estimate'," after
"Certificate for Payment" in subparagraph 9.4.1.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 4
Page 4
Add the following subparagraph:
9.6.8 No progress payments will be made that deplete the
retainage, nor place in escrow any funds that are required for
retainage, nor invest the retainage for the benefit of the
Contractor. Retainage will not be adjusted until after
construction is substantially complete.
Replace the word "seven" with the words "fifteen (15)" in the first
sentence , third line of subparagraph 9.7.
Delete subparagraph 9.8.5, after the first sentence, and substitute the
following:
9.8.5 When the Work has been substantially completed, except for
Work which cannot be completed because of weather conditions, lack
of materials or other reasons, which, in the judgment of the Owner,
are valid reasons for non-completion, the Owner may make additional
payments, retaining at all times an amount sufficient to cover the
estimated cost of the Work still to be completed. Provide a copy of
the Certificate to the Agency.
Delete subparagraphs 9.9.1 through 9.9.3 and substitute the following:
9.9.1 The Contractor agrees to the use and occupancy of a portion
or unit of the Project before formal acceptance by the Owner under
the following conditions:
.1
A “Certificate of Substantial Completion” shall be
prepared and executed as provided in subparagraph 9.8.4,
except that when, in the opinion of the Architect, the
Contractor is chargeable with unwarranted delay in
completing the Work or other Contract requirements, the
signature of the Contractor will not be required. The
Certificate of Substantial Completion shall be
accompanied by a written endorsement of the Contractor's
insurance carrier and surety permitting occupancy by the
Owner during the remaining period of the Project Work.
Occupancy and use by the Owner shall not commence until
authorized by public authorities having jurisdiction
over the Work.
RD Instruction 1942-A
Guide 27
Attachment 4
Page 5
.2
Occupancy by the Owner shall not be construed by the
Contractor as being an acceptance of that part of the
Project to be occupied.
.3
The Contractor shall not be held responsible for any
damage to the occupied part of the Project resulting
from the Owner's occupancy.
.4
Occupancy by the Owner shall not be deemed to constitute
a waiver of existing claims in behalf of the Owner or
Contractor against each other.
.5
If the Project consists of more than one building, and
one of the buildings is to be
occupied, the Owner, prior to occupancy of that
building, shall secure permanent property insurance on
the building to be occupied and necessary permits which
may be required for use and occupancy.
9.9.2 With the exception of clause 9.9.1.5, use and occupancy by
the Owner prior to Project acceptance does not relieve the
Contractor of responsibility to maintain all insurance and bonds
required of the Contractor under the Contract Documents until the
Project is completed and accepted by the Owner.
Delete the second and third sentences of subparagraph 9.10.2.
ARTICLE 11, INSURANCE AND BONDS
Replace the words "the Contract Documents" with the words "subparagraph
11.1.5" in the first sentence of subparagraph 11.1.2.
Add the following subparagraph:
11.1.5.
.1
(09-24-12)
Insurance shall be:
Written with a limit of liability of not less than
$500,000 for all damages arising out of bodily injury,
including death, at any time resulting therefrom,
sustained by any one person in any one accident; and a
limit of liability of not less than $500,000 aggregate
PN 458
RD Instruction 1942-A
Guide 27
Attachment 4
Page 6
for any such damages sustained by two or more persons in
any one accident. Insurance shall be written with a
limit of liability of not less than $200,000 for all
property damage sustained by any one person in any one
accident; and a limit of liability of not less than
$200,000 aggregate for any such damage sustained by two
or more persons in any one accident, or
.2
Written with a combined bodily injury and damage
liability of not less than $700,000 per occurrence; and
with an aggregate of not less than $700,000 per
occurrence.
Modify the first sentence of subparagraph 11.3.1 as follows:
11.3.1 Delete “Unless otherwise provided, the Owner” and substitute “The
Contractor”.
Add the following sentences to the end of subparagraph 11.3.1
The policy shall name as the insured the Contractor and the Owner.
If the Owner is damaged by the failure of the Contractor to
purchase and maintain such insurance without so notifying the Owner
in writing, then the Contractor shall bear all reasonable costs
attributable thereto.
Insert the word "Owner" after the words "protect the interests of the" in
the second sentence of subparagraph 11.3.1.2.
Add the following sentence to the end of subparagraph 11.3.6:
The provisions of this subparagraph shall apply to the Contractor
if the Contractor purchases and maintains said insurance coverage.
Delete subparagraph 11.3.7 in its entirety.
RD Instruction 1942-A
Guide 27
Attachment 4
Page 7
Delete subparagraph 11.4.1 and substitute the following:
11.4.1 The Contractor shall furnish the Owner bonds covering
faithful performance of the Contract and payment of obligations
arising thereunder within ten (10) calendar days after receipt of
the Notice of Award. The surety company executing the bonds must
hold a certificate of authority as an acceptable surety on Federal
bonds as listed in Treasury Circular 570, and be authorized to
transact business in the State where the Project is located. The
bonds (using the forms included in the Bidding Documents) shall
each be equal to the amount of the Contract Sum. The cost of these
bonds shall be included in the Contract Sum
Add the following subparagraphs:
11.4.1.1 The Contractor shall require the attorney-in-fact who
executes the required bonds on behalf of the surety to affix
thereto a certified and current power of attorney.
11.4.1.2 If at any time a surety on any such bond is declared
bankrupt or loses its right to do business in the State in which
the work is to be performed or is removed from the list of surety
companies accepted on Federal Bonds, the Contractor shall within
ten (10) calendar days after notice from the Owner to do so,
substitute an acceptable bond in such form and sum and signed by
such other surety or sureties as may be satisfactory to the Owner.
The premiums of such bond shall be paid by any Contractor. No
further payment shall be deemed due nor shall be made until the new
surety or sureties shall have furnished an acceptable bond to the
Owner.
ARTICLE 13, MISCELLANEOUS PROVISIONS
Add the following paragraphs:
13.8
LANDS AND RIGHTS-OF WAY
13.8.1 Prior to the start of construction, the Owner shall obtain
all lands and rights-of-way necessary for the execution and
completion of work to be performed under this contract.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 4
Page 8
13.9
EQUAL OPPORTUNITY REQUIREMENTS
Non-discrimination in Employment by Federally Assisted Construction
Contractors, by Executive Order 11246.
13.9.1 This section summarizes Executive Order 11246, which
prohibits employment discrimination and requires employers holding
non-exempt Federal contracts and subcontracts and federallyassisted construction contracts and subcontracts in excess of
$10,000 to take affirmative action to ensure equal employment
opportunity without regard to race, color, religion, sex, or
national origin. The Executive Order requires, as a condition for
the approval of any federally assisted construction contract, that
the applicant incorporate nondiscrimination and affirmative action
clauses into its non-exempt federally assisted construction
contracts.
13.9.2 Executive Order 11246, is administered and enforced by the
Office of Federal Contract Compliance Programs (OFCCP), an agency
in the U.S. Department of Labor's Employment Standards
Administration. OFCCP has issued regulations at 41 CFR chapter 60
implementing the Executive Order. The regulations at 41 CFR part
60-4 establish the procedures which the Agency, as an administering
agency, must follow when making grants, contracts, loans, insurance
or guarantees involving federally assisted construction which is
not exempt from the requirements of Executive Order 11246. The
regulations which apply to Federal or federally assisted
construction contractors also are published at 41 CFR part 60-4.
13.9.3 OFCCP has established numerical goals for minority and
female utilization in construction work. The goals are expressed
in percentage terms for the contractor's aggregate workforce in
each trade. OFCCP has set goals for minority utilization based on
the percentage of minorities in the civilian labor force in the
relevant area. There is
a single nationwide goal of 6.9 percent for utilization of women.
The goals apply to all construction work in the covered geographic
area, whether or not it is federal, federally assisted or nonfederal. A notice advises bidders of the applicable goals for the
area where the project is to be located.
RD Instruction 1942-A
Guide 27
Attachment 4
Page 9
13.9.4 Application. This section applies to all of a construction
contractor's or subcontractor's employees who are engaged in onsite construction including those construction employees who work
on a non-Federal or non-Federally assisted construction site.
13.9.4.1 Agency officials will notify the appropriate Regional
Director of OFCCP that an Agency financed construction contract has
been awarded, and that the equal opportunity clauses are included
in the contract documents.
13.9.4.2 The Regional Director, OFCCP-DOL, will enforce the nondiscrimination requirements of Executive Order 11246.
13.9.5 The prospective contractor or subcontractor must comply
with the Immigration Reform and Control Act of 1986, by completing
and retaining Form I-9, "Employment Eligibility Verification," for
employees hired. This form is available from the Immigration and
Naturalization Service, and Department of Justice.
13.9.6 The prospective contractor or subcontractor must submit
Form RD 400-6, "Compliance Statement," to the applicant and an
Agency official as part of the bid package, prior to any contract
bid negotiations and comply with the Executive Order 11246 as
stated in the contract documents.
13.10
STATUTES
13.10.1 The Contractor and each Subcontractor shall comply with
the following statutes (and with regulations issued pursuant
thereto, which are incorporated herein by reference):
13.10.1.1 Copeland Anti-Kickback Act (18 U.S.C. 874) as
supplemented in Department of Labor regulations (29 CFR part 3).
This Act provides that each Contractor shall be prohibited from
inducing, by any means, any person in connection with construction
to give up any part of the compensation to which the person is
otherwise entitled.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 4
Page 10
13.10.1.2 Clean Air Act (42 U.S.C. 7414), section 114, and Water
Pollution Control Act (33 U.S.C. 1813), section 308. Under
Executive Order 11738 and Environmental Protection Agency (EPA)
regulations 40 C.F.R. part 15, all Contracts in excess of $100,000
are required to comply with these Acts. The Acts require the
Contractor to:
.1
Notify the Owner of the receipt of any communication from
EPA indicating that a facility to be utilized in the
performance of the Contract is under consideration to be
listed on the EPA list of Violating Facilities.
.2
Certify that any facility to be utilized in the
performance of any nonexempt Contractor or Subcontractor
is not listed on the EPA list of Violating Facilities as
of the date of the Contract Award.
.3
Include or cause to be included the above criteria and
requirements of paragraphs .1 and .2 in every nonexempt
subcontract, and that the Contractor will take such
action as the Government may direct as a means of
enforcing such provisions.
13.10.1.3 Restrictions on Lobbying (Public Law 101-121, section
319) as supplemented in Department of Agriculture regulations (7
CFR part 3018). This statute applies to the recipients of
contracts or subcontracts that exceed $100,000 at any tier under a
Federal loan that exceeds $150,000 or a Federal grant that exceeds
$100,000. If applicable, the Contractor must complete a
certification form on lobbying activities related to the specific
Federal loan or grant that is a funding source for this contract.
The certification and disclosure forms shall be provided by the
Owner.
13.11
RECORDS
13.11.1 If the Contract is based on a negotiated Bid, the Owner,
the Agency, the Comptroller General of the United States, or any of
their duly authorized representatives, shall have access to any
books, documents, papers, and records of the Contractor which are
pertinent to a specific Federal loan program for the purpose of
making audit, examination, excerpts, and transcriptions. The
Contractor shall maintain records for at least three years after
the Owner makes final payment and all other pending matters are
closed.
RD Instruction 1942-A
Guide 27
Attachment 4
Page 11
13.12
ENVIRONMENTAL REQUIREMENTS
13.12.1 Mitigation Measures – The contractor shall comply with
applicable mitigation measures established in the environmental
assessment for the project. These may be obtained from the Agency
representative.
13.12.2 The Contractor, when constructing a Project involving
trenching, excavating, or other earth moving activity, shall comply
with the following environmental constraints:
13.12.2.1 Endangered Species, Historic Preservation, Human Remains
and Cultural Items, Hazardous Materials, and Paleontology – Any
excavation or other earth moving activity by the Contractor that
provides evidence of the presence of endangered or threatened
species or their critical habitat, uncovers a historical or
archaeological artifact, human remains or cultural items, hazardous
materials, a fossil or other paleontological materials will require
the Contractor to:
.1
Temporarily stop work;
.2 Provide immediate notice to the Architect and the Agency,
and in the case of potentially hazardous materials, provide
immediate notice to local first responders and take such
measures as necessary to protect the public and workers;
.3 Take reasonable measures as necessary to protect the
discovered materials or protected resource;
.4 Abide by such direction as provided by the Agency, or
Agencies responsible for resource protection or hazardous
materials management; and
.5 Resume work only upon notice from the Architect and the
Agency.
13.12.3 Lead-Based Paint - The Contractor and Owner shall comply
with applicable Agency requirements of the Lead-Based Paint
Poisoning Prevention Act, as amended (42 U.S.C. 4821), and the
Residential Lead-Based Paint Hazard Reduction Act of 1992 (42
U.S.C. 4851) for rehabilitation work on residential property built
prior to 1978.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 4
Page 12
13.13
DEBARMENT AND SUSPENSION
13.13.1 The Contractor shall comply with the requirements of 7 CFR
part 3017, which pertains to the debarment or suspension of a
person from participating in a Federal program or activity.
ARTICLE 15 CLAIMS AND DISPUTES
Add the words "may be" after "on the parties but" in the last sentence of
subparagraph 15.2.5.
Replace the word "shall" with the word "may" in the first sentence, first
occurrence of subparagraph 15.3.2
15.4.1.2 The arbitrators will select a hearing location as close to the
Owner's locale as possible.
o0o
RD Instruction 1942-A
Guide 27
Attachment 5
Page 1 of 4
ATTACHMENT TO AIA DOCUMENT A133-2009, Standard Form of Agreement Between Owner
and Construction Manager as Constructor where the basis of payment is the Cost
of the Work Plus a Fee with a Guaranteed Maximum Price.
The provisions of this Attachment shall delete, modify, and supplement the
provisions contained in the “Standard Form of Agreement Between Owner and
Construction Manager as Constructor", AIA Document A133-2009 Edition. The
provisions contained in these Modifications shall supersede any conflicting
provisions of the AIA Document. The term "Agency," as used in these
Modifications, shall mean the United States of America, acting through the
United States Department of Agriculture.
ARTICLE 2, CONSTRUCTION MANAGER’S RESPONSIBILITIES
2.3.2.5 Add a sentence to the end of subparagraph 2.3.2.5 reading “The
Construction Manager shall attend on-site progress meetings no less than
once a month during the periods of active construction.”
ARTICLE 7, PAYMENTS FOR CONSTRUCTION PHASE SERVICES
7.1.7.3 and 7.1.7.4–Delete both of these paragraphs. Reference insert
7.1.11 for retainage on each pay application.
7.1.8 Delete existing paragraph and replace with the following:
The Owner and Construction Manager shall agree upon a mutually
acceptable procedure for review and approval of payments to
Subcontractors. Except with the Owner’s prior approval, payments
to Subcontractors shall be subject to retention of not less than
ten percent (10%). The Construction Manager shall execute
subcontracts in accordance with those agreements.
7.1.11 Insert the following subparagraph:
7.1.11 The amount retained, on each pay application, shall be 10%
of the value of Work until 50% of the Work has been completed. At
50% completion, further partial payments shall be made in full to
the Construction Manager and no additional amounts may be retained
unless the Architect certifies that the Work is not proceeding
satisfactorily, but amounts previously retained shall not be paid
to the Construction Manager. At 50% completion or any time
thereafter when the progress of the Work is not satisfactory,
additional amounts may be retained but in no event shall the total
retainage be more than 10% of the value of Work completed.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 5
Page 2 of 4
7.2.2 Replace the word "seven" with the word "ten (10)" in the second
sentence; and add the words, "using AIA Document G702, 'Application
and Certificate for Payment,' or Form RD 1924-18, 'Partial Payment
Estimate,'" after "Certificate for Payment" in that sentence.
7.2.3 Delete the first two sentences of section 7.2.3 and replace them
with the following sentences:
If the Owner's auditors report the Cost of the Work as
substantiated by the Construction Manager's final accounting to be
less than claimed by the Construction Manager, the Construction
Manager shall not be entitled to request mediation of the disputed
amount without seeking an initial decision pursuant to Section 15.2
of A201-2007 unless the Owner specifically authorizes such action
in writing. If such action has been authorized by the Owner, the
Construction Manager may make a request for mediation within 30
days after the Construction Manager's receipt of a copy of the
Architect's final Certificate for Payment.
7.2.5 Insert the following subparagraph:
7.2.5 Amounts withheld from the final payment to cover any
incomplete Work are not considered retainage and shall not be paid
to the Construction Manager until the work is actually completed
and accepted by the Owner. Such withholdings shall not be less
than 150% of the estimated cost to complete the Work.
ARTICLE 11, MISCELLANEOUS PROVISIONS
11.5
Delete “Other Provisions:” and insert the following paragraph:
11.5 The date of Substantial Completion established by this
contract is:
11.6
Insert the following paragraph:
11.6 If the Work is not substantially complete on or before the
date of Substantial Completion established in paragraph 11.5, or
extension thereof granted by the Owner, the Construction Manager
shall pay to the Owner liquidated damages in the sum of $______ for
each calendar day of delay. Any sums that may be due by the
Construction Manager to the Owner as liquidated damages may be
deducted from any monies due or to become due to the Construction
Manager under the Contract or may be collected from the
Construction Manager’s surety.
RD Instruction 1942-A
Guide 27
Attachment 5
Page 3 of 4
11.7
Insert the following paragraph:
11.7 This Agreement shall not become effective until concurred with
in writing by the Agency. Such concurrence shall be evidenced by
the signature of a duly authorized representative of the Agency in
the space provided at the end of the Agency Attachment to this
Agreement.
ARTICLE 12, SCOPE OF THE AGREEMENT
12.1
Delete the last sentence of section 12.1 and replace it with the
following sentence:
“This Agreement may be amended only by written instrument signed by
Agency, the Owner, and the Construction Manager.”
12.2.5
The following Documents should be referenced, if applicable:
Attachment to the Standard Form of Agreement Between Owner and
Construction Manager as Constructor (this Attachment)
General Conditions of the Contract for Construction, AIA A201-2007
Attachment to the General Conditions of the Contract for
Construction (RD Instruction 1942-A, Guide 27, Attachment 4)
Invitation for Bids
Instructions to Bidders (AIA Document A701-1997)
Attachment to Instructions to Bidders (RD Instruction 1942-A,
Guide 27, Attachment 2)
Bid Form
Bid Bond
Compliance Statement (Form RD 400-6)Payment Bond
Performance Bond
Certification Regarding Debarment, Suspension, Ineligibility and
Voluntary Exclusion - Lower Tier Covered Transactions (Form AD
1048)
Disclosure of Lobbying Activities (Form SF-LLL)
Certification for Contracts, Grants and Loans (RD Instruction
1940-Q, Exhibit A-1)
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 5
Page 4 of 4
SIGNATURE BLOCK:
The following signature block shall replace the signature block following
paragraph 12.2:
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be executed
by their duly authorized officials, this Agreement in duplicate on the
respective dates indicated below:
OWNER:
ATTEST: ___________________________
By _______________________________
Type Name _________________________
Type Name ________________________
Title _____________________________
Title ____________________________
Date ______________________________
Date _____________________________
CONSTRUCTION MANAGER:
ATTEST: ___________________________
By _______________________________
Type Name _________________________
Type Name ________________________
Title _____________________________
Title ____________________________
Date ______________________________
Date _____________________________
AGENCY CONCURRENCE:
By ________________________________
Type Name _________________________
Title _____________________________
Date ______________________________
The concurrence so evidenced by the Agency shall in no way commit the Agency to
render financial assistance to the Owner and is without liability to the Agency
for any payment hereunder, but in the event such assistance is provided, the
concurrence shall signify that the provisions of this Agreement are consistent
with Agency requirements.
o0o
RD Instruction 1942-A
Guide 27
Attachment 6
Page 1
(Added 09-24-12, PN 458)
ATTACHMENT TO AIA DOCUMENT A141-2004, Standard Form of Agreement Between Owner
and Design/Builder
The provisions of this Attachment shall delete, modify and supplement the
provisions contained in the “Standard Form of Agreement between Owner and
Design/Builder”, AIA Document A141 – 2004 Edition. The provisions contained in
this Attachment will supercede any conflicting provisions of the AIA Document.
The term “Agency”, as used in this Attachment, shall mean the United States of
America, acting through the United States Department of Agriculture.
ARTICLE 1:
THE DESIGN/BUILD DOCUMENTS
Modify paragraph 1.1 by inserting the words “and concurred with by the Agency”
after “by the Owner” in the first sentence.
Modify paragraph 1.3 by inserting the words “and the Agency” after “by both
parties” in the second sentence.
ARTICLE 3:
DATE OF COMENCEMENT AND SUBSTANTIAL COMPLETION
Modify paragraph 3.2 by inserting the following sentences in the appropriate
space:
If the Work is not substantially complete on or before this date,
or within this period of time, or extension thereof granted by the
Owner, the Design/Builder shall pay to the Owner liquidated damages
in the sum of $______ for each calendar day of delay. Any sums
that may be due the Owner as liquidated damages may be deducted
from any monies due or to become due the Design/Builder under the
Contract or may be collected from the Design/Builder's surety.
ARTICLE 4:
CONTRACT SUM
Delete the choice “Cost of the Work Plus Design/Builder’s Fee in accordance
with Section 4.3 below” from paragraph 4.1.
Delete paragraph 4.3 in its’ entirety.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 2
(Added 09-24-12, PN 458)
ARTICLE 5: PAYMENTS
Add the following sentence to the end of paragraph 5.1.1: “Agency concurrence
is required on all Certificates of Payment before payment is made.”
Modify subparagraph 5.1.3 by inserting “ten (10)” in the last space.
Modify clause 5.2.2.1 by inserting "ten" and "10" in the appropriate space.
Modify clause 5.2.2.2 by inserting "ten" and "10" in the appropriate space.
Modify subparagraph 5.2.4 by inserting the following sentences in the
appropriate space.
The amount retained shall be 10% of the value of Work until 50% of
the Work has been completed. At 50% completion, further partial
payments shall be made in full to the Design/Builder and no
additional amounts may be retained unless the Owner certifies that
the Work is not proceeding satisfactorily, but amounts previously
retained shall not be paid to the Design/Builder. At 50%
completion or any time thereafter when the progress of the Work is
not satisfactory, additional amounts may be retained but in no
event shall the total retainage be more than 10% of the value of
Work completed.
Delete paragraph 5.3 in its entirety.
Modify clause 5.4.2.3 by inserting "ten percent" and "10" in the appropriate
space.
Modify clause 5.4.3 by inserting "ten percent" and "10" in the appropriate
space.
ARTICLE 7:
MISCELLANEOUS PROVISIONS
Modify paragraph 7.7 by inserting the following in the appropriate space:
This Agreement will not become effective until concurred with in
writing by the Agency. Such concurrence shall be evidenced by the
signature of a duly authorized representative of the Agency in the
space provided at the end of this attachment to the Agreement. The
concurrence so evidenced by the Agency shall in no way commit the
Agency to render financial assistance to the Owner and is without
liability to the Agency for payment hereunder.
RD Instruction 1942-A
Guide 27
Attachment 6
Page 3
(Added 09-24-12, PN 458)
But in the event such assistance is provided, the concurrence shall
signify the provisions of this Agreement are consistent with the
requirements of the Agency.
Modify subparagraph 7.7.2 by inserting the following in the appropriate space:
Interest at 1% per month or 12% per year for pay estimates
outstanding for 60 days will be paid to the Design/Builder.
ARTICLE 8: ENUMERATION OF THE DESIGN/BUILD DOCUMENTS
Modify subparagraph 8.1.2 by inserting the following in the appropriate space:
Attachment to the Standard Form of Agreement between Owner and
Design/Builder (USDA Rural Development)
Modify subparagraph 8.1.7 by inserting the following in the appropriate space:
Payment Bond
Performance Bond
Modify subparagraph 8.1.10 by inserting the following in the appropriate
space:
Compliance Statement (Form RD 400-6)
Certification Regarding Debarment, Suspension, Ineligibility and
Voluntary Exclusion – Lower Tier Covered Transactions (Form AD
1048)
Disclosure of Lobbying Activities (SF-LLL)
Certification for Contracts, Grants and Loans (RD Instruction 1940Q, Exhibit A-1)
Delete Exhibit B in its entirety. (Exhibit B describes conditions where
the contract sum is the cost of the work plus the Design/Builder’s Fee
without a Guaranteed Maximum Price. That option is deleted from
paragraph 4.1 of the contract.)
Delete Exhibit C in its entirety. (Exhibit C describes the Insurance and
Bonding requirements, which we have enumerated in the Attachment to
Exhibit A in Article A.11.)
(09-24-12) PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 4
(Added 09-24-12, PN 458)
SIGNATURE BLOCK:
Delete the signature block on page 10 of this Agreement and substitute the
following signature block:
This Agreement is entered into as of the day and year first written above and
is executed in at least three original copies, of which one is to be delivered
to the Design/Builder, one to the Owner and one to the Agency. Concurrence in
the Contract by the Agency is required before the contract is effective.
OWNER:
ATTEST: ____________________________
BY: ____________________________
Print Name: ______________________
Print Name: ______________________
Title: ____________________________
Title: ____________________________
Date: ____________________________
Date: ____________________________
DESIGN/BUILDER:
ATTEST: ____________________________
BY: ____________________________
Print Name: ______________________
Print Name: ______________________
Title: ____________________________
Title: ____________________________
Date: ____________________________
Date: ____________________________
RD Instruction 1942-A
Guide 27
Attachment 6
Page 5
(Added 09-24-12, PN 458)
OWNER’S ATTORNEY REVIEW:
I have examined this design/build contract and performance and payment bond(s)
and the manner of execution thereof, and I am of the opinion that each of the
aforesaid agreements are adequate and has been duly executed by the proper
parties thereto acting through their duly authorized representatives; that said
representatives have full power and authority to execute said agreements on
behalf of the respective parties named thereon; and that the foregoing
agreements constitute valid and legally binding obligations upon the parties
executing the same in accordance with terms, conditions, and provisions
thereof.
By:
_________________________
Print Name: _____________________
Date: _______________________
AGENCY CONCURRENCE:
Approved as lender or insurer of fund to defray the costs of this contract and
without liability for any payments thereunder, the USDA Rural Development
hereby concurs in the award of this contract.
By:
___________________________Title: _________________________
Print Name: ____________________Date:
(09-24-12) PN 458
_________________________
RD Instruction 1942-A
Guide 27
Attachment 6
Page 6
(Added 09-24-12, PN 458)
This page is intentionally blank.
RD Instruction 1942-A
Guide 27
Attachment 6
Page 7
(Added 09-24-12, PN 458)
ARTICLE A.1:
GENERAL PROVISIONS
Add the following subparagraphs and clauses to paragraph A.1.1:
A1.1.9 Agency
The term “Agency”, as used in this Attachment, shall mean the
United States of America, acting through United States Department
of Agriculture.
A1.1.10 Independent Inspector
The term “Independent Inspector,” as used in this Attachment, shall
mean the Inspector hired independent from the Design/Builder by the
Owner to represent the Owner’s interests. The Agency requires a
construction inspector independent of the Design/Builder.
A.1.1.10.1 The Independent Inspector shall be a representative of
and shall advise and consult with the Owner during construction
until final payment is due to the Design/Builder, and at the
Owner's direction during the period of correction of the Work
described in the design/build documents. The Independent Inspector
shall furnish consultations necessary to identify construction
defects, and correct unforeseen conditions normally encountered
during this period. The Independent Inspector shall assist the
Owner in performing a review of the Project during the 11th month
after the date of Substantial Completion.
A.1.1.10.2 The Independent Inspector shall conduct an inspection
prior to the issuance of the Acknowledgement of Substantial
Completion and shall submit a written report to the Owner, Agency
and the Design/Builder about Work to be completed prior to final
acceptance. Such services shall be coordinated with the Agency.
Prior to submitting the final Application for Payment, the
Independent Inspector shall conduct an inspection, submit a
Statement of Completion, receive and forward to the Owner, for the
Owner's review and records, written warranties and related
documents required by the Contract Documents and assembled by the
Design/Builder.
A.1.1.10.3 Visits to the site shall be documented in writing on
standard inspection report forms with copies furnished to the
Owner, Design/Builder and Agency. Visits to the site shall be in
accordance with Agency requirements and procedures.
Add the words "and concurred with by the Agency" after “Design/Builder" in
subparagraph A.1.5.1.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 8
(Added 09-24-12, PN 458)
ARTICLE A.2:
OWNER
Add the following subparagraph to Paragraph A.2.2:
A.2.2.12 The Owner shall provide the Design/Builder with Agency
standard Contract Document Guides.
ARTICLE A.3: DESIGN/BUILDER
Add the following sentence to subparagraph A.3.2.3: “Any extra
cost that may result from errors and omissions in the services
provided under the contract will be the responsibility of the
Design/Builder.”
Add the following subparagraph to subparagraph A.3.2.4:
A.3.2.4.1 The Design/Builder shall consult with the Agency
Architect or Engineer about the Agency’s requirements and
procedures.
In subparagraph A.3.2.5, add the words "and written concurrence by the
Agency" after “Owner’s written approval" and add the following sentence
after the first sentence: Two (2) sets for the Agency are required.
Add the words "and written concurrence by the Agency" at the end of the
first sentence in subparagraph A.3.2.6.
Add the words "and written concurrence by the Agency" after “Owner’s
written approval" in subparagraph A.3.2.8.
Add the words "and written concurrence by the Agency" after “Owner’s
review and approval" in subparagraph A.3.3.1.
Add the following clauses to subparagraph A.3.3.6:
A.3.3.6.1 The Design/Builder shall conduct a Preconstruction
Conference prior to the beginning of construction to familiarize
all parties involved with the necessary work. This meeting shall be
held with the Design/Build representative, Owner, Owner’s
Independent Inspector, Agency representative(s) and other
interested parties as appropriate. The Agency ‘Record of
Preconstruction Conference’ may be used to document the meeting.
RD Instruction 1942-A
Guide 27
Attachment 6
Page 9
(Added 09-24-12, PN 458)
A.3.3.6.2 The Design/Builder shall conduct on-site pay/progress
meetings no less than once a month during the periods of active
construction. These meetings shall be held with the Design/Build
representative, Owner, Owner’s Independent Inspector, Agency
representative(s) and other interested parties as appropriate, to
review and discuss the application for payment, work progress
schedule, construction problems or disputes and other appropriate
matters.
A.3.3.8 Add the following subparagraph to subparagraph A.3.3.8:
A.3.3.8.1 The Design/Builder shall advise the Owner of required
tests, inspections and reports, shall furnish coordination of such
tests and inspections, and shall advise the Owner and Agency of the
results of same. Copies of test results shall be furnished to the
Owner, Owner’s Independent Inspector and Agency, as appropriate.
In subparagraph A.3.4.1, add the following subparagraph:
A.3.4.1.1 The Design/Builder shall not contract with any person or
entity declared ineligible under Federal laws or regulations from
participating in federally assisted construction projects for to
whom the Owner has made reasonable objection. The Design/Builder
shall not be required to contract with anyone to whom the
Design/Builder has reasonable objection.
ARTICLE A.4:
DISPUTE RESOLUTION
In subparagraph A.4.4.1, delete the first sentence and replace it with:
“Claims, except those waived as provided for in subparagraphs A.4.1.10,
A.9.10.4 and A.9.10.5, for which initial decisions have not become final
and binding, and which have not been resolved by mediation but which are
subject to arbitration pursuant to paragraphs 6.2 and 6.3 of the
Agreement or elsewhere in the Design/Build documents, may be decided by
arbitration in accordance with the Construction Industry Arbitration
Rules of the American Arbitration Association currently in effect at the
time of the arbitration.”
(09-24-12) PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 10
(Added 09-24-12, PN 458)
Delete subparagraph A.4.4.2 and substitute the following subparagraphs:
A.4.4.2 The arbitration provisions in this subsection may be
initiated by either party to this Contract by filing with the other
party a written request for arbitration. The other party may
accept or reject the request by filing a written answering
statement with the requesting party within fourteen (14) calendar
days of the receipt of such request. If the request is accepted
the provisions of this section shall apply. If the request is
rejected or an answering statement is not filed within the fourteen
(14) day period, the provisions in this subsection will not apply.
A.4.4.2.1 Within fourteen (14) calendar days or any mutually
agreeable time period thereafter, each party to this Contract will
appoint one arbitrator. Within fourteen (14) calendar days or any
mutually agreeable time period thereafter, the two arbitrators will
select a third arbitrator. Failure to appoint an arbitrator within
the mutually agreeable time periods will terminate further actions
under this subsection.
A.4.4.2.2 The arbitrators will select a hearing location as close
to the Owner's locale as possible.
In subparagraph A.4.4.4, replace the word "demand" with the word
"request" in each occurrence in the first sentence.
ARTICLE A.7:
CHANGES IN THE WORK
Insert the word ", Agency” after the word "Owner" in its first occurrence
in subparagraph A.7.1.2.
A.7.2.1
Delete subparagraph A.7.2.1 and substitute the following:
A.7.2.1 A change order is a written order to the Design/Builder
utilizing Form RD 1924-7, "Contract Change Order," signed by the
Owner, Independent Inspector, Design/Builder, and the Agency
representative. It is issued after the execution of the Contract,
authorizing a change in the Work or an adjustment in the Contract
Sum or the Contract Time. The Contract Sum and the Contract Time
may be changed only by Change Order. The Design/Builder's signing
of the change order indicates complete agreement therein.
RD Instruction 1942-A
Guide 27
Attachment 6
Page 11
(Added 09-24-12, PN 458)
Add the following sentence to subparagraph A.7.3.1: “A Construction
Change Directive may be used only for a change in response to an
emergency, as described in Paragraph A.10.6.”
Delete subparagraph A.7.3.3.
Delete subparagraph A.7.3.4.
Delete subparagraph A.7.3.6.
ARTICLE A.9:
PAYMENTS AND COMPLETION
Add the words, "using AIA Document G-702, 'Application and Certificate
for Payment' or Form RD 1924-18, 'Partial Payment Estimate'," after
"Application for Payment" in the first sentence of subparagraph A.9.3.1.
Under subparagraph A.9.3.1, add the following subparagraph:
A.9.3.1.3 The Design/Builder shall obtain Agency concurrence on
all Applications of Payment before payment is made.
Add the following subparagraph to paragraph A.9.6:
A.9.6.8 No progress payments will be made that deplete the
retainage, nor place in escrow any funds that are required for
retainage, nor invest the retainage for the benefit of the
Design/Builder.
Replace the word "seven" with the word "ten (10)" in the first sentence,
second and third lines of subparagraph A.9.7.1.
Add the words ", in collaboration with the Agency Architect or Engineer,"
after "prepare" in the first sentence of subparagraph A.9.8.5.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 12
(Added 09-24-12, PN 458)
Delete subparagraph A.9.8.6 and substitute the following:
A.9.8.6 When the Work has been substantially completed, except for
the Work which cannot be completed because of weather conditions,
lack of materials or other reasons, which, in the judgment of the
Owner, are valid reasons for non-completion, the Owner may make
additional payments, retaining at all times an amount sufficient to
cover the estimated cost of the Work still to be completed.
Delete subparagraph A.9.9.1 and substitute the following subparagraphs:
A.9.9.1 The Design/Builder agrees to the use and occupancy of a
portion or unit of the Project before formal acceptance by the
Owner under the following conditions:
A.9.9.1.1 A Certificate of Substantial Completion shall be
prepared and executed as provided in subparagraph 9.8.4, except
that when, in the opinion of the Inspecting Architect, the
Design/Builder is chargeable with unwarranted delay in completing
the Work or the Contract requirements, the signature of the
Design/Builder will not be required. The Certificate of
Substantial Completion shall be accompanied by copies of
Design/Builder’s insurance policies, written endorsements of the
Design/Builder's insurance carrier, and the surety permitting
occupancy by the Owner during the remaining period of the Project
Work. Occupancy and use by the Owner shall not commence until
authorized by public authorities having jurisdiction over the Work.
A.9.9.1.2 Occupancy by the Owner shall not be construed by the
Design/Builder as being an acceptance of that part of the Project
to be occupied.
A.9.9.1.3 The Design/Builder shall not be held responsible for any
damage to the occupied part of the Project resulting from the
Owner's occupancy.
A.9.9.1.4 Occupancy by the Owner shall not be deemed to constitute
a waiver of existing claims in behalf of the Owner or
Design/Builder against each other.
RD Instruction 1942-A
Guide 27
Attachment 6
Page 13
(Added 09-24-12, PN 458)
A.9.9.1.5 If the Project consists of more than one building, and
one of the buildings is to be occupied, the Owner, prior to
occupancy of that building, shall secure permanent property
insurance on the building to be occupied and necessary permits
which may be required for use and occupancy.
Delete subparagraph A.9.9.2 and substitute the following:
A.9.9.2 With the exception of clause 9.9.1.5, use and occupancy by
the Owner prior to Project acceptance does not relieve the
Design/Builder of the responsibility to maintain all insurance and
bonds required of the Design/Builder under the Contract Documents
until the Project is completed and accepted by the Owner.
Delete subparagraph A.9.10.1 and substitute the following:
A.9.10.1 Upon receipt of written notice that the Work is ready for
final inspection and acceptance and upon receipt of a final
Application for Payment, the Owner, Owner’s Independent Inspector
and Agency representative shall promptly make such inspection and,
and when the Owner finds the Work acceptable under the Design/Build
documents and fully performed, the Owner with Agency concurrence
shall, subject to Section A.9.10.2, promptly make final payment to
the Design/Builder.
Delete the second and third sentences of subparagraph A.9.10.2.
ARTICLE A.11:
A.11.2.1
INSURANCE AND BONDS
Add subparagraph A.11.2.1.9:
A.11.2.1.9
insurance.
A.11.2
The Owner shall be named as co-insured on the liability
Add the following clauses to A.11.2.
A.11.2.4 The insurance required in subparagraph A.11.2 shall be
written for not less than the following limits, or greater if required
by law:
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 14
(Added 09-24-12, PN 458)
.1
Workers’ Compensation:
(a)
(b)
State:
Applicable Federal
(E.g. Longshoremen’s)
(c) Employer’s Liability:
.2
Statutory
Statutory
$
$
$
per Accident
Disease, Policy Limit
Disease, Each Employee
Comprehensive or Commercial General Liability (Including PremisesOperations; Independent Design/Builders’ Protective; Products and
Completed Operations; Broad Form Property Damage):
(a)
(b)
(c)
(d)
(e)
.3
Bodily Injury:
$
Each Occurrence
$
Aggregate
Property Damage
$
Each Occurrence
$
Aggregate
Products and Completed Operations to be maintained for years
after final payment:
$
Aggregate
Property Damaged Liability Insurance shall provide X, C and U
coverage.
Broad Form Property Damage Coverage shall include Completed
Operations.
Contractual Liability:
(a)
Bodily Injury
(b)
Property Damage
.4
$
$
$
$
Each Occurrence
Aggregate
Each Occurrence
Aggregate
Personal Injury, with Employment Exclusion deleted:
$
Aggregate
.5 Business Auto Liability (including owned, non-owned and hired
vehicles):
(a)
Bodily Injury
(b)
Property Damage
$
$
$
Each Person
Each Occurrence
Each Occurrence
RD Instruction 1942-A
Guide 27
Attachment 6
Page 15
(Added 09-24-12, PN 458)
.6
If the General Liability Coverages are provided by a Commercial
Liability policy, the:
(a)
(b)
(c)
General Aggregate shall be not less than $
and
it shall apply, in total, to this Project only.
Fire Damage Limit shall be not less than $
on
any one fire.
Medical Expense Limit shall be not less than $___________
on any one person
.7
Umbrella Excess Liability:
$
over primary insurance
$
retention for self-insured hazards each
occurrence.
.8
If an exposure exists, Aircraft Liability (owned and non-owned)
and Watercraft Liability (owned and non-owned) with limits
approved by the Owner shall be provided.
Delete the last sentence in subparagraph A.11.4.3.
Delete subparagraph A.11.4.5.
Delete subparagraph A.11.4.7.
Add the following subparagraphs to subparagraph A.11.5.1:
A.11.5.1.1 The Design/Builder shall furnish the Owner Bonds
covering faithful performance of the Contract and payment of
obligations arising thereunder with such bonds dated on or before
the date of this agreement. The surety company executing the Bonds
must hold a certificate of authority as an acceptable surety on
Federal Bonds as listed in Treasury Circular 570, as amended, and
be authorized to transact business in the State where the Project
is located. The Bonds (using the latest AIA forms) shall each be
equal to the amount of the Contract Sum. The cost of these Bonds
shall be included in the Contract Sum.
A.11.5.1.2 The Design/Builder shall require the attorney-in-fact
who executes the required Bonds on behalf of the surety to affix
thereto a certified and current power of attorney.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 16
(Added 09-24-12, PN 458)
A.11.5.1.3 If at any time a surety on any such Bond is declared
bankrupt or loses its right to do business in the State in which
the Work is to be performed or is removed from the list of surety
companies accepted on Federal Bonds, the Design/Builder shall
within ten (10) calendar days after notice from the Owner to do so,
substitute an acceptable Bond in such form and sum and signed by
such other surety or sureties as may be satisfactory to the Owner.
The premiums of such Bond shall be paid by the Design/Builder. No
further payment shall be deemed due nor shall be made until the new
surety or sureties shall have furnished an acceptable Bond to the
Owner.
ARTICLE A.13:
MISCELLANEOUS PROVISIONS
Add the following paragraphs A.13.7 through A.13.11.1 to Article A.13.
A.13.7 EQUAL OPPORTUNITY REQUIREMENTS – Non-discrimination in
Employment by Federally Assisted Construction Contractors, by
Executive Order 11246.
A.13.7.1 This section summarized Executive Order 11246, as
amended, which prohibits employment discrimination and requires
employers holding non-exempt Federal contracts and subcontracts and
federally-assisted construction contracts and subcontracts in
excess of $10,000 to take affirmative action to ensure equal
employment opportunity without regard to race, color, religion,
sex, or national origin. The Executive Order requires, as a
condition for the approval of any federally assisted construction
contract, that the applicant incorporate nondiscrimination and
affirmative action clauses into its non-exempt federally assisted
construction contracts.
A.13.7.2 Executive Order 11246, as amended, is administered and
enforced by the Office of Federal Contract Compliance Programs
(OFCCP), an agency in the U.S. Department of Labor’s Employment
Standards Administration. OFCCP has issued regulations at 41 CFR
chapter 60 implementing the Executive Order. The regulations at 41
CFR part 60-4 establish the procedures which the Agency, as an
administering agency, must follow when making grants, contracts,
loans, insurance or guarantees involving federally assisted
construction which is not exempt from the requirements of Executive
Order 11246. The regulations which apply to Federal or federally
assisted construction contractors also are published at 41 CFR part
60-4.
RD Instruction 1942-A
Guide 27
Attachment 6
Page 17
(Added 09-24-12, PN 458)
A.13.7.3 OFCCP has established numerical goals for minority and
female utilization in construction work. The goals are expressed in
percentage terms for the contractor’s aggregate workforce in each
trade. OFCCP has set goals for minority utilization based on the
percentage of minorities in the civilian labor force in the
relevant area. There is a single nationwide goal of 6.9 percent for
utilization for women. The goals to all construction work in the
covered geographic area, whether or not it is federal, federally
assisted or non-federal. A notice advises bidders of the applicable
goals for the area where the project is to be located.
A.13.7.4 Application. This section applies to all of a
construction contractor’s or subcontractor’s employees who are
engaged in on-site construction including those construction
employees who work on a non-Federal or non-Federally assisted
construction site.
A.13.7.4.1 Agency officials will notify the appropriate Regional
Director of OFCCP that an Agency financed construction contract has
been awarded, and that the equal opportunity clauses are included
in the contract documents.
A.13.7.4.2 The Regional Director, OFCCP-DOL, will enforce the nondiscrimination requirements of Executive Order 11246.
A.13.7.4.3 The prospective contractor or subcontractor must comply
with the Immigration Reform and Control Act of 1986 by completing
and retaining Form I-9, “Employment Eligibility Verification,” for
employees hired. This form is available from the Immigration and
Naturalization Service, and Department of Justice.
A.13.7.4.4 The prospective contractor or subcontractor must submit
Form RD 400-6, “Compliance Statement,” to the applicant and an
Agency official as part of the bid package, prior to any contract
bid negotiations and comply with the Executive Order 11246 as
stated in the contract documents.
A.13.8
STATUTES
A.13.8.1 The Design/Builder and each subcontractor shall comply
with the following statutes (and the regulations issued pursuant
thereto, which are incorporated herein by reference):
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 18
(Added 09-24-12, PN 458)
A.13.8.2 The Design/Builder agrees to abide by the requirements of
7 CFR part 3017 and under Executive Order 12549, which pertains to
the debarment or suspension of a person from participating in a
Federal program or activity. If the total compensation exceeds
$25,000, the Design/Builder shall complete the relevant
certification form provided by the Owner.
A.13.8.3 If applicable, the Design/Builder shall comply with
Section 319 of Public Law 101-121, as supplemented by the
Department of Agriculture regulations (7 CFR 3018 and DR 2400-5).
This Law pertains to restrictions on lobbying and applies to the
recipients of Contracts and Subcontracts that exceed $100,000 at
any tier under a Federal loan that exceeds $150,000 or a Federal
grant that exceeds $100,000. If applicable, the Design/Builder must
complete a certification form on lobbying activities related to a
specific Federal loan or grant that is a funding for this Contract.
The certification and disclosure forms shall be provided by the
Owner.
A.13.8.4 Copeland Anti-Kickback Act (18 U.S.C. 874) as
supplemented in Department of Labor regulations (29 CFR part 3).
This Act provides that each Contractor shall be prohibited from
inducing, by any means, any person in connection with the
construction to give up any part of the compensation to which the
person is otherwise entitled.
A.13.8.5 Clean Air Act (42 U.S.S. 7414), section 114, and the
Water Pollution Control Act (33 U.S.C. 1813), section 308. Under
Executive Order, 11738 and Environmental Protection Agency (EPA)
regulations 40 CFR part 15, all Contracts in excess of $100,000 are
required to comply with these Acts. The Acts require the Contractor
to:
A.13.8.5.1 Notify the Owner of the receipt of any communication
from EPA indicating that a facility to be utilized in the
performance of the Contract is under consideration to be listed on
the EPA list of Violating Facilities,
A.13.8.5.2 Certify that any facility to be utilized in the work by
any nonexempt contractor or subcontractor is not listed on the EPA
list of Violating Facilities as of the date of the Contract Award.
RD Instruction 1942-A
Guide 27
Attachment 6
Page 19
(Added 09-24-12, PN 458)
A.13.8.5.3 Include or cause to be included the above criteria and
requirements of clauses A.13.3.5.1 and A.13.3.5.2 in every
nonexempt Subcontract, and that the Contractor will take such
actions as the Agency may direct as a means of enforcing such
provisions.
A.13.8.6 The Contractor shall be required to comply with Section
107 of the Contract Work Hours and Safety Standards Act (40 U.S.C.
333) entitle “Safety and Health Regulations for Construction” (29
CFR Part 1926) to the extent that any resulting Contract involves
construction.
A.13.9
ENVIRONMENTAL REQUIREMENTS
A.13.9.1 Mitigation Measures – The Design/Builder shall comply
with applicable mitigation measures established in the
environmental assessment for the project. These may be obtained
from the Agency representative.
A.13.9.2 The Design/Builder, when constructing a Project involving
trenching, excavating, or other earth moving activity, shall comply
with the following environmental constraints:
A.13.9.2.1 Endangered Species, Historic Preservation, Human
Remains and Cultural Items, Hazardous Materials, and Paleontology –
Any excavation or other earth moving activity by the Design/Builder
that provides evidence of the presence of endangered or threatened
species or their critical habitat, uncovers a historical or
archaeological artifact, human remains or cultural items, hazardous
materials, a fossil or other paleontological materials will require
the Design/Builder to:
.1
Temporarily stop work;
.2 Provide immediate notice to the Architect and the Agency,
and in the case of potentially hazardous materials, provide
immediate notice to local first responders and take such
measures as necessary to protect the public and workers;
.3 Take reasonable measures as necessary to protect the
discovered materials or protected resource;
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 6
Page 20
(Added 09-24-12, PN 458)
.4 Abide by such direction as provided by the Agency, or
Agencies responsible for resource protection or hazardous
materials management; and
.5 Resume work only upon notice from the Architect and the
Agency.
A.13.10 Compliance with all Federal, State, and local requirements
effective on the contract execution date will be the responsibility
of the Design/Builder.
A.13.11
RECORDS
A.13.11.1 If the Contract is based on a negotiated Bid, the Owner,
the United States Department of Agriculture, the Comptroller
General of the United States, or any of their duly authorized
representatives, shall have access to any books, documents, papers,
and records of the Design/Builder which are directly pertinent to a
specific Federal loan program for the purpose of making audit,
examination, excerpts, and transcriptions. The Design/Builder
shall maintain records for at least three years after the Owner
makes final payment and all other pending matters are closed.
A.14
TERMINATION OR SUSPENSION OF THE DESIGN/BUILD CONTRACT
Insert the words "as mutually agreed" after "Contract Sum" in the first
sentence of subparagraph A.14.3.2.
o0o
RD Instruction 1942-A
Guide 27
Attachment 7
Page 1
(Added 09-24-12, PN 458)
COMMUNITY FACILITIES
DESIGN/BUILD OR CONSTRUCTION MANAGEMENT
CONCURRENCE CHECKLIST
(Comments may be attached or entered on this form. Items in italics are
explanatory in nature.)
1. State Director’s and Agency Architect/Engineer’s comments and
recommendations. (When noncompetitive negotiation is
proposed, submit an evaluation of previous work of the
proposed construction firm.)
2. Regional attorney’s opinion and comments regarding the legal
adequacy of the proposed procurement method and proposed
contract documents. (If this review is being requested
concurrently to expedite the process, please so indicate.)
3. A copy of the owner’s written request and description of the
procurement method proposed. (This may be the same “written
request” listed as #1 below.)
4. A copy of the proposed contract. (If standard industry
contract forms, such as AIA, DBIA or AGC are used, submittal
of entire contract is not required. Indicate type of
contract, publisher, and what, if any, additions, deletions,
changes, or addenda have been made.)
Section 1942.18(l) requires the owner to provide the following
information to the Agency. State Architect/Engineer will initial each
item reviewed: (The following items are not required to be sent to the
National Office for review.)
____
1. The owner’s written request to use an unconventional
contracting method with a description of the proposed
method.
(09-24-12)
PN 458
RD Instruction 1942-A
Guide 27
Attachment 7
Page 2
(Added 09-24-12, PN 458)
____
2. A proposed scope of work describing in clear, concise terms the
technical requirements for the contract. It should include such
items as:
____
a)
____
b)
____
A non-technical statement summarizing the work to be
performed by the contractor and the results expected.
The sequence in which the work is to be performed and a
proposed construction schedule.
3. A proposed firm-fixed-price contract for the entire project which
provides that the contractor shall be responsible for:
____
a)
____
b)
Any extra cost that may result from errors or omissions in
the services provided under the contract.
Compliance with all Federal, State, and local requirements
effective on the contract execution date.
____
4. An evaluation of the contractor’s performance on previous similar
projects in which the contractor acted in a similar capacity.
____
5. A detailed listing and cost estimate of equipment and supplies
not included in the construction contract but which are necessary
to properly operate the facility.
____
6. Evidence that a qualified construction inspector who is
independent of the contractor has or will be hired.
____
7. Preliminary plans and outline specifications.
____
8. The owner’s attorney’s opinion and comments regarding the legal
adequacy of the proposed contract documents and evidence that the
owner has the legal authority to enter into and fulfill the
contract.
COMMENTS: ___________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________________________________
RD Instruction 1942-A
Guide 27
Attachment 7
Page 3
(Added 09-24-12, PN 458)
The State Office has reviewed the above materials and makes a recommendation
for concurrence of the use of the design/build or construction management
method (circle one or the other) of development for this proposal.
Project:
___________________________________________________
Submitted by: ___________________
Date: _________
Fax Number:
___________________
NATIONAL OFFICE REVIEW
CP / PSS Comments on Submittal: _____________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________
__________________
Program Support Staff
Date:
___________
The proposal to use the design / build or construction management method is
concurred in by:
___________________
Community Programs
Date:
____________
o0o
(09-24-12) PN 458
Guide 13, Attachment 1: Page 5 and Guides 20 and 21 in PDF ONLY.
Exhibits A and B in PDF ONLY.
RD Instruction 1942-A
Automation Supplement
ENGINEERING FEE ANALYSIS
Part 1:
Overview of System
This program was designed by the Program Support Staff to aid State Offices in
tracking current trends in market rates for engineering fees on water and waste
disposal projects. This program may be used by the State Office to produce
graphs to be used in determining reasonable engineering fee on proposed
projects.
All necessary instructions and information will appear on the computer screen
as needed by the user. The system is menu driven to be user friendly, and
"help" is available throughout the system:
1) an information option appears on menu, and
2) each data entry field has "help" available on the type of data
to be entered in that field.
The system performs checks on the data entered and displays error messages as
necessary.
Although helpful, typing is not required to use this system.
predominantly menu driven.
Part 2:
The system is
Data Guide
The information which may be stored in the Engineering Fee Analysis System is
organized into two separate data entry screens. The first screen contains
information on individual projects. The second screen contains specifications
for graph options.
Screen 1 The following information is required:
Project name
Bid opening date
Construction cost
Engineering fee
The system performs tests on required fields, and will not accept an incomplete
entry. All fields must be entered. The project's name must be unique. In
cases where the same name is used for multiple projects, some convention (such
as incorporating the town name, adding a number, etc.) must be used to make
each name unique. The name may not include asterisks (*), apostrophes ('), or
question marks (?).
(9-21-88)
PN 96
RD Instruction 1942-A
Automation Supplement
Page 2
Screen 2 Screen 2, "Graph Options", contains data fields which may be changed to control
the range of the graph axes. The upper and lower limits can be changed for
both axes. The increments along both axes can also be adjusted within
specified limits.
Part 3:
Limitations of the System
The Engineering Fee Analysis System was designed for single user. Only one
user may access the data at a time: adding new projects, editing existing
projects, or producing graphs.
There is no limit on the number of projects which may be added to the data base
within the system. The only limit would be the storage capacity of the
minicomputer used (AT&T 3B2).
Part 4:
System Administration Information
This software was developed in accordance with the Software Development Guide,
and as such is located in the /usr/workaid directory. The shell script which
operates the software is /usr/workaid/bin/engfee file. All other files are
located in /usr/workaid/lib/engfee directory.
Root has write permissions in all these directories. The individual user bas
write permissions only in the lib directory, where data is stored. The data
entered on projects is located in the file
/usr/workaid/lib/engfee/EFw.tbl and EFs.tbl. The version number and date of
the software is stored in the file /usr/workaid/bin/engfee.
The Primary Office in developing this software was the Program Support Staff.
Technical Support was provided by the Program Support Staff, Decision Support
Branch. Enhancements will be incorporated in future versions.
oOo
| File Type | application/pdf |
| File Title | FmHA Instruction 1942-A |
| Author | Brigitte Sumter |
| File Modified | 2020-09-29 |
| File Created | 2020-09-29 |