RD Instruction 1944-N Table of Contents Page 1 PART 1944 - HOUSING Subpart N - Housing Preservation Grants Table of Contents Sec. Page 1944.651 General. 1 1944.652 Policy. 2 1944.653 Objective. 2 1944.654 Debarment and suspension -- drug-free workplace. 3 1944.655 [Reserved]. 3 1944.656 Definitions. 3 Adjusted annual income. 3 Applicant or grantee. 3 Cooperative (co-op). 4 Grant agreement. 4 Homeowner. 4 Household. 4 Housing preservation. 4 HPG. 4 Low-income. 5 Organization. 5 Overcrowding. 6 Rental properties. 6 Replacement housing. 6 Rural area. 6 RHS. 6 Tenant. 6 Very low-income. 6 1944.657 Restrictions on lobbying. 6A 1944.658 Applicant eligibility. 6A 1944.659 Replacement housing. 7 1944.660 Authorized representative of the HPG applicant and RHS point of contact. 8 1944.661 Individual homeowners - eligibility for HPG assistance. 9 (a) Income. 9 (b) Ownership. 10 (c) Other evidence of ownership. 10 1944.662 Eligibility of HPG assistance on rental properties or co-ops. 10 (a) Ownership. 10 (b) Tenant eligibility. 10A (c) Identity of interest. 10A (06-12-97) SPECIAL PN RD Instruction 1944-N Table of Contents Page 2 Sec. Page 1944.663 Ownership agreement between HPG grantee and rental property owner or co-op. 11 (a) Ownership agreement. 11 (b) Responsibilities of the grantee. 12 1944.664 Housing preservation and replacement housing assistance. 13 1944.665 Supervision and inspection. 17 1944.666 Administrative activities and policies. 17 1944.667 Relocation and displacement. 19 (a) Relocation. 19 (b) Displacement. 19 1944.668 Term of grant. 20 1944.669 [Reserved] 20 1944.670 Project income. 20 1944.671 Equal opportunity requirements and outreach efforts. 20 (a) Fair housing. 20 (b) Outreach. 21 (c) Additional requirements. 21 1944.672 Environmental requirements. 22 1944.673 Historic preservation and replacement housing requirements and procedures. 23 1944.674 Public participation and intergovernmental review. 24 1944.675 Allocation of HPG funds to States and unused HPG funds. 24A 1944.676 Preapplication procedures. 25 1944.677 [Reserved] 29 1944.678 Preapplication submission deadline. 30 1944.679 Project selection criteria. 30 1944.680 Limitation on grantee selection. 33 1944.681 Application submission. 33 1944.682 Preapplication/application review, grant approval, and requesting HPG funds. 33 1944.683 Reporting requirements. 35 1944.684 Extending grant agreement and modifying the statement of activities. 37 1944.685 [Reserved] 37 1944.686 Additional grants. 37 1944.687 [Reserved] 38 1944.688 Grant evaluation, closeout, suspension and termination. 38 1944.689 Long-term monitoring by grantee. 38 1944.690 Exception authority. 39 1944.691 - 1944.699 [Reserved] 39 1944.700 [Reserved] 40 RD Instruction 1944-N Table of Contents Page 3 EXHIBITS Exhibit A Housing Preservation Grant Agreement. Exhibit B Amendment to Housing Preservation Grant Agreement. Exhibit C Administrative Instructions for Rural Development Field Offices Regarding Their Responsibilities in the Administration of the Housing Preservation Grant (HPG) Program. Exhibit D Project Selection Criteria - Outline Rating. Exhibit E-1 Quarterly (and Final) Performance Report. Exhibit E-2 Quarterly (and Final) Performance Report [example and explanation]. Exhibit F-1 Guide for Completing Form RD 1940-20, "Request for Environmental Information" for a Preapplication for Housing Preservation Grant (HPG). Exhibit F-2 Guide: Grantee's Process for Identifying Properties Requiring RD Environmental Assessments Exhibit G Housing Preservation Grant Program State Office Listing of Preapplications Exhibit H Housing Preservation Grant (HPG) Program: Guidelines to HPG Grantees on the use of Recipient Application Forms and Appeal Rights oOo (06-12-97) SPECIAL PN RD Instruction 1944-N PART 1944 - HOUSING Subpart N - Housing Preservation Grants § 1944.651 General. (a) This subpart sets forth the policies and procedures for making grants under Section 533 of the Housing Act of 1949, 42 U.S.C. 1490(m), to provide funds to eligible applicants (hereafter also referred to as grantee(s)) to conduct housing preservation programs benefiting very low- and low-income rural residents. Program funds cover part or all of the grantee's cost of providing loans, grants, interest reduction payments or other assistance to eligible homeowners, owners of single or multiple unit rental properties or for the benefit of owners (as occupants) of consumer cooperative housing projects (hereafter also referred to as co-ops). Such assistance will be used to reduce the cost of repair and rehabilitation, to remove or correct health or safety hazards, to comply with applicable development standards or codes, or to make needed repairs to improve the general living conditions of the residents, including improved accessibility by persons with a disability. Individual housing that is owner occupied may qualify for replacement housing when it is determined by the grantee that the housing is not economically feasible for repair or rehabilitation. (Revised 06-12-97, SPECIAL PN.) (b) The Rural Housing Service (RHS) will provide Housing Preservation Grant (HPG) assistance to grantees who are responsible for providing assistance to eligible persons without discrimination because of race, color, religion, sex, national origin, age, familial status, or disability. (Revised 06-12-97, SPECIAL PN.) (c) The preapplication must only address a proposal to finance repairs and rehabilitation activities to individual housing or rental properties or co-ops. Any combination proposal will not be accepted. (d) Any processing or servicing activity conducted pursuant to this subpart involving authorized assistance to RHS 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 RHS employee. ______________________________________________________________________________ DISTRIBUTION: WSDC Loan and Grant Making Housing 1 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.652 Policy. (Revised 06-12-97, SPECIAL PN.) (a) The policy of RHS is to provide HPG's to grantees to operate a program which finances repair and rehabilitation activities to individual housing, rental properties, or co-ops for very low- and low-income persons. Individual housing that is owner occupied may qualify for replacement housing when it is determined by the grantee that the housing is not economically feasible for repair or rehabilitation. Grantees are expected to: (1) Coordinate and leverage funding for repair and rehabilitation activities, as well as replacement, with housing and community development organizations or activities operating in the same geographic area; and (2) Focus the program on rural areas and smaller communities so that it serves very low- and low-income persons. (b) RHS intends to permit grantees considerable latitude in program design and administration. The forms or types of assistance must provide the greatest long term benefit to the greatest number of persons residing in individual housing, rental properties, or co-ops needing repair and rehabilitation or replacement of individual housing. (c) Repairs and rehabilitation or replacement activities affecting properties on or eligible for listing on the National Register of Historic Places will be accomplished in a manner that supports national historic preservation objectives as specified in § 1944.673 of this subpart. § 1944.653 Objective. The objective of the HPG program is to repair or rehabilitate individual housing, rental properties, or co-ops owned and/or occupied by very low- and low-income rural persons. Grantees will provide eligible homeowners, owners of rental properties, and owners of co-ops with financial assistance through loans, grants, interest reduction payments or other comparable financial assistance for necessary repairs and rehabilitation. Further, individual housing that is owner occupied may qualify for replacement housing when it is determined by the grantee that the housing is not economically feasible for repair or rehabilitation, except as specified in § 1944.659 of this subpart. (Revised 06-12-97, SPECIAL PN.) 2 (Revision 1) RD Instruction 1944-N § 1944.654 Debarment and suspension -- drug-free workplace. (a) For purposes of this subpart, Exhibit A of RD Instruction 1940-M requires all RHS applicants for an HPG to sign and submit with their preapplication, Form AD-1047, "Certification Regarding Debarment, Suspension, and Other Responsibility Matters - Primary Covered Transactions," which basically states that the applicant has not been debarred or suspended from Government assistance. Further, all grantees after receiving a HPG must obtain a signed certification (Form AD-1048, "Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion - Lower Tier Covered Transactions") from all persons or entities (excluding homeowner recipients) that the grantee does business with as a result of the HPG. Grantees are responsible for informing these persons or entities of the provisions of Exhibit A of RD Instruction 1940-M and of maintaining Form AD-1048 in the grantee's office. (b) Grantees must also be made aware of the Drug-free Workplace Act of 1988 requirements found in Exhibit A of RD Instruction 1940-M. For this subpart, a grantee is defined as any organization who applies for or receives a direct grant from RHS. All preapplications must include a signed Form AD-1049, "Certification Regarding Drug-free Workplace Requirements (Grants) Alternative I - Grantees Other Than Individuals." § 1944.655 [Reserved] (Revised 06-12-97, SPECIAL PN.) § 1944.656 Definitions. References in this subpart to District, State, National and Finance Offices, and to District Director, State Director, and Administrator refer to Rural Development offices and officials and should be read as prefaced by Rural Development. Terms used in this subpart have the following meanings: Adjusted income. As defined in 7 CFR 3550.54 (c). (Added 06-12-97, SPECIAL PN.) Applicant or grantee. Any eligible organization which applies for or receives HPG funds under a grant agreement. 3 (Revision 3) (09-01-93) PN 212 RD Instruction 1944-N § 1944.656 (Con.) Cooperative (co-op). For the purposes of the HPG program, a cooperative (co-op) is one which: (1) Is a corporation organized as a consumer cooperative; (2) Will operate the housing on a nonprofit basis solely for the benefit of the occupants; and (3) Is legally precluded from distributing, for a minimum period of 5 years from the date of HPG assistance from the grantee, any gains or profits from operation of the co-op. For this purpose, any patronage refunds to occupants of the co-op would not be considered gains or profits. A co-op may accept non-members as well as members for occupancy in the project. Grant agreement. The contract between RHS and the grantee which sets forth the terms and conditions under which HPG funds will be made available. (See Exhibit A of this subpart.) Homeowner. For the purposes of the HPG program, a homeowner is one who can meet the conditions of income and ownership under § 1944.661 of this subpart. Household. For the purposes of the HPG program, a household is defined as all persons living all or part of the next 12 months in a unit or dwelling assisted with HPG funds. Housing preservation. The repair and rehabilitation activities that contribute to the health, safety, and well-being of the occupant, and contribute to the structural integrity or long-term preservation of the unit. As a result of these activities, the overall condition of the unit or dwelling must be raised to meet RHS Thermal Standards for existing structures adopted by the locality/jurisdiction and applicable development standards for existing housing recognized by RHS in subpart A of part 1924 or standards contained in any of the voluntary national model codes acceptable upon review by RHS. Properties included on or eligible for inclusion on the National Register of Historic Places are subject to the standards and conditions of § 1944.673 of this subpart. The term "housing preservation" does not apply to replacement housing. (Revised 12-19-07, PN 416.) HPG. HPG means Housing Preservation Grant (see section 1944.652). (Added 06-12-97, SPECIAL PN.) 4 (Revision 3) RD Instruction 1944-N § 1944.656 (Con.) Low-income. An adjusted annual income that does not exceed the "lower" income limit according to size of household as established by the United States Department of Housing and Urban Development (HUD) for the county or Metropolitan Statistical Area (MSA) where the property is located. Maximum low-income limits are set forth in Appendix 9 of HB-1-3550 (available in any Rural Development Office). (Revised 01-23-03, SPECIAL PN) Organization. An organization is defined as one of the following: (1) A State, commonwealth, trust territory, other political subdivision, or public nonprofit corporation authorized to receive and administer HPG funds; (2) An American Indian tribe, band, group, nation, including Alaskan Indians, Aleuts, Eskimos and any Alaskan Native Village, of the United States which is considered an eligible recipient under the Indian Self-Determination and Education Assistance Act (Public Law (Pub. L.) 93-638) or under the State and Local Fiscal Assistance Act of 1972 (Pub. L. 92-512); (3) A private nonprofit corporation that is owned and controlled by private persons or interests for purposes other than making gains or profits for the corporation, is legally precluded from distributing any gains or profits to its members, and is authorized to undertake housing development activities; or (4) A consortium of units of government and/or private nonprofit organizations which is otherwise eligible to receive and administer HPG funds and which meets the following conditions: (i) Be comprised of units of government and/or private nonprofit corporations that are close together, located in the same state, and serve areas eligible for RHS housing assistance; and (ii) Have executed an agreement among its members designating one participating unit of government or private nonprofit corporation as the applicant or designating a legal entity (such as a Council of Governments) to be the applicant. 5 (Revision 4) (09-01-93) PN 212 RD Instruction 1944-N § 1944.656 (Con.) Overcrowding. Guidance is provided at 7 CFR part 3460.155, Subpart E. These guidelines should result in an ideal range of persons per housing unit. (Revised 02-24-05, SPECIAL PN.) Rental properties. Rental properties are defined as single-unit or multi-unit dwellings used for occupancy by tenants, owners, or members of an owner's immediate family. Replacement housing. The replacement of existing, individual owner occupied housing where repair and rehabilitation assistance is not economically feasible or practical. The term replacement housing does not apply to housing preservation. The overall condition of the unit or dwelling must meet RHS Thermal Standards adopted by the locality/jurisdiction for new or existing structures and applicable development standards for new or existing housing recognized by RHS in subpart A of part 1924 or standards contained in any of the voluntary national model codes acceptable upon review by RHS. Properties included on or eligible for inclusion on the National Register of Historic Places are subject to the standards and conditions of § 1944.673 of this subpart prior to replacement. (Revised 12-19-07, PN 416.) RHS. RHS means the Rural Housing Service, or a successor agency. Rural area. The definition in 7 CFR part 3550 applies. Tenant. Any person who resides in a single- or multi-unit rental property. Very low-income. An adjusted annual income that does not exceed the very low-income limit according to size of household as established by HUD for the county or MSA where the property is located. Maximum very low-income limits are set forth in 7 CFR part 3550. 6 (Revision 4) RD Instruction 1944-N § 1944.657 Restrictions on lobbying. All applicants must comply with RD Instruction 1940-Q which prohibits applicants of Federal grants from using appropriated funds for lobbying the Federal Government in connection with a specific grant. § 1944.658 Applicant eligibility. (a) To be eligible to receive a grant, the applicant must: (1) Be an organization as defined in § 1944.656 of this subpart; 6A (Added 06-12-97, SPECIAL PN) (09-01-93) PN 212 RD Instruction 1944-N § 1944.658(a) (Con.) (2) Have the necessary background and experience on the part of its staff or governing body with proven ability to perform responsibly in the field of low-income rural housing development, repair and rehabilitation or have other business management or administrative experience which indicates an ability to operate a program providing repair and rehabilitation financial assistance as well as for replacement housing; (Revised 06-12-97, SPECIAL PN.) (3) Legally obligate itself to administer HPG funds, provide an adequate accounting of the expenditure of such funds in compliance with the terms of this regulation, the grant agreement, and 7 CFR parts 3015 or 3016, as appropriate, and comply with the grant agreement and RHS regulations; and (4) If the applicant is engaged in or plans to become engaged in any other activities, provide sufficient evidence and documentation that they have adequate resources, including financial resources, to carry on any other programs or activities to which they are committed without jeopardizing the success and effectiveness of the HPG project. (b) An applicant will not be considered eligible if it is a nonprofit entity and its proposal is based solely on an identity of interest, as defined in § 1924.4 (i) of subpart A of part 1924, between the applicant and the owner(s) of the proposed dwelling or co-op to be rehabilitated or repaired. § 1944.659 Replacement housing. (Added 06-12-97, SPECIAL PN.) Replacement housing applies only to existing, individual owner occupied housing. Replacement housing does not apply to rental properties (single-unit or multiple-unit) or to cooperative housing projects. The grantee is responsible for determining the extent of the repairs and rehabilitation prior to any assistance given to an individual homeowner. If the cost of such repairs and rehabilitation is not economically feasible or practical, then the grantee may consider replacing the existing housing with replacement housing, subject to the following: (a) The HPG grantee: (1) Shall document the total costs for all repairs and rehabilitation on the existing housing; and 7 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.659(a) (Con.) (2) Shall document the basis for the determination that the costs for all repairs and rehabilitation for the existing housing are not economically feasible or practical. (b) The individual homeowner: (1) Must meet all requirements of § 1944.661; (2) Must lack the income and repayment ability to replace their existing home without the assistance of the HPG grantee; (3) Must have been determined by the HPG grantee and RHS to be unable to afford a loan under Section 502 for replacement housing; and (4) Must be able to afford the replacement housing on terms set forth by the HPG grantee. (c) The existing home: (1) Must be demolished as part of the process of providing replacement housing. It will be determined by the grantee and individual homeowner when is the best time for demolition; and (2) May not be sold to make way for the replacement housing. (d) The replacement housing: (1) May be either new housing or a dwelling brought onto the site of the existing housing; (2) May use no more than $15,000 in HPG funds; (3) Must meet all applicable requirements of 7 CFR 3550.57 (c); and (4) May not be sold within 5 years of completion of the project. (e) Any moneys received by the homeowner from selling salvaged material after demolishing the existing home must be used towards the replacement housing. § 1944.660 Authorized representative of the HPG applicant and RHS point of contact. (a) RHS will deal only with authorized representatives designated by the HPG applicant. 8 (Revision 1) RD Instruction 1944-N § 1944.660 (Con.) (b) The State Director will designate either the State Office and/or the District Office as the processing office and/or the servicing office for the HPG program. The State Director's selection may be based on staffing, total program size, number of preapplications anticipated, type of applicants, or similar criteria. The State Director must publish this designation each year at the time the Federal Register is published informing the public of the open period for acceptance of preapplications as outlined in § 1944.678 of this subpart. § 1944.661 Individual homeowners - eligibility for HPG assistance. The individual homeowners assisted must have income that meets the very low- or low-income definitions, be the owner of an individual dwelling at least 1 year prior to the time of assistance, and be the intended occupant of the dwelling subsequent to the time of assistance. The dwelling must be located in a rural area and be in need of housing preservation assistance. Each homeowner is required to submit evidence of income and ownership for retention in the grantee's files. (a) Income. Determination of income will be made in accordance with 7 CFR 3550.54 (c). All members of the household, as defined in § 1944.656 of this subpart, must be included when determining income. Grantees must use certifications, may require additional information from the homeowner, and should seek advice from their attorney. (Revised 06-12-97, SPECIAL PN.) (b) Ownership. Evidence of ownership may be a photostatic copy of the instrument evidencing ownership. Methods for assuring the intention of the homeowner to continue to occupy the dwelling after assistance will be established by the grantee. Any of the following will satisfy or fulfill this requirement of ownership: (1) Full marketable title. (2) An undivided or divided interest in the property to be repaired, rehabilitated or replaced when not all of the owners are occupying the property. HPG assistance may be made in such cases when: (Revised 06-12-97, SPECIAL PN.) (i) The occupant has been living in the house for at least 1 year prior to the date of requesting assistance; (ii) The grantee has no reason to believe the occupant's position of owner occupant will be jeopardized as a result of the improvements to be made with HPG funds; and 9 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.661(b)(2) (Con.) (iii) In the case of a loan, and to the extent possible, the co-owner(s) should also sign the security instrument. (3) A leasehold interest in the property to be repaired, rehabilitated or replaced. When the potential HPG recipient's "ownership" interest in the property is based on a leasehold interest, the lease must be in writing and a copy must be included in the grantee's file. The unexpired portion of the lease must not be less than 5 years and must permit the recipient to make modifications to the structure without increasing the recipient's lease cost. (Revised 06-12-97, SPECIAL PN.) (4) A life estate, with the right of present possession, control, and beneficial use of the property. (5) Land assignments may be accepted as evidence of ownership only for American Indians living on a reservation, when historically the permits have been used by the tribe and have had the comparable effect of a life estate. (c) Other evidence of ownership. The following items may be accepted as evidence of ownership if a recorded deed cannot be provided: (1) Any legal instrument, whether or not recorded, which is commonly considered evidence of ownership. (2) Evidence that the person(s) receiving assistance from the HPG grantee is listed as the owner of the property by the local taxing authority and is responsible for any real estate taxes. (3) Affidavits by others in the community that the person(s) receiving assistance from the HPG grantee has occupied the property as the apparent owner for a period of not less than 10 years, and is generally believed to be the owner. § 1944.662 Eligibility of HPG assistance on rental properties or co-ops. (a) Ownership. The owner(s) of rental properties or co-ops must own the dwelling at the time of receiving assistance from the HPG grantee. The dwelling must be located in a rural area and be in need of housing preservation assistance. Evidence of ownership may be a photostatic copy of the instrument evidencing ownership. Owners of rental properties and co-ops are required to submit evidence of ownership for retention in the grantee's files. Any of the following will satisfy or fulfill this requirement of ownership: 10 (Revision 1) RD Instruction 1944-N § 1944.662(a) (Con.) (1) Full marketable title. (2) An undivided or divided interest in the property to be repaired or rehabilitated. (3) A leasehold interest in the property to be repaired or rehabilitated. Ownership interest in the property is based on a leasehold interest. The lease must be in writing and a copy must be included in the grantee's file. The unexpired portion of the lease must not be less than 5 years and must permit the recipient to make modifications to the structure without increasing the recipient's lease cost. (4) Land assignments may be accepted as evidence of ownership only for American Indians living on a reservation, when historically the permits have been used by the tribe and have had the comparable effect of a life estate. (b) Tenant eligibility. The following requirements must be met in order for a unit within a rental property or co-op to be assisted with HPG funds: (1) The tenant must have income that meets the very low- or low-income definition. (2) The tenant must be the intended occupant of the unit, but is not required to have resided previously in the dwelling. (3) Any owner(s) who receives assistance from an HPG grantee or a member of the immediate family of the owner(s), who also resides in a unit within the dwelling to be repaired or rehabilitated is eligible to have their unit repaired or rehabilitated, if they are income eligible and meet all other requirements. (c) Identity of interest. When an identity of interest, as defined in § 1924.4 (i) of subpart A of part 1924, exists between a nonprofit entity and the owner(s) of a dwelling, the property is not eligible for assistance. 10A (Added 06-12-97, SPECIAL PN) (09-01-93) PN 212 RD Instruction 1944-N §1944.663 Ownership agreement between HPG grantee and rental property owner or co-op. HPG assistance may be provided by a grantee with respect to rental properties or co-ops only if the following conditions are met by the rental property owner(s) or by the co-op during a minimum 5 year restrictive period beginning on the date agreed upon in the agreement between the grantee and the rental property owner (or co-op). The HPG grantee is responsible for preparing, executing, and monitoring for compliance, the ownership agreement with the owner(s) of the rental property or the co-op. The rental property owner(s) or the co-ops are required to enter into an ownership agreement with the grantee to assure compliance with the requirements of this section. (a) Ownership agreement. At a minimum, the ownership agreement must include the following clauses: (1) The owner(s) agrees to make the units repaired or rehabilitated available for occupancy to very low- or low-income persons for a period of not less than 5 years, such restrictive period beginning on the date agreed upon in the agreement between the grantee and the rental property owner(s) or co-op. (2) The owner(s) agrees to pass on to the tenants any reduction in the debt service payments resulting from the HPG assistance provided by the HPG grantee to the owner(s). (3) The owner(s) of rental properties agrees not to convert the units to condominium ownership. In the case of co-ops, the owner(s) agrees not to convert the dwelling(s) to condominium ownership or any form of cooperative ownership not eligible under this section. This paragraph is subject to the restrictive period noted in paragraph (a)(1) of this section. (4) The owner(s) agrees not to refuse to rent a unit to any person solely because the person is receiving or is eligible to receive assistance under any Federal, State, or local housing assistance program. (5) The owner(s) agrees that the units repaired or rehabilitated will be occupied or available for occupancy by persons of very low- or low-income. 11 (09-01-93) PN 212 RD Instruction 1944-N §1944.663 (a) (Con.) (6) The owner(s) agrees to enter into and abide by written leases with the tenants and that such leases shall provide that the tenants may be evicted only for good cause. (7) The owner(s) agrees that, in the event the owner(s) or the owner's successors in interest fail to carry out the requirements of this section during the applicable period, they shall make a payment to Rural Development in an amount that equals the total amount of assistance provided by the grantee plus interest thereon (without compounding) for each year and any fraction thereof that the assistance was outstanding. The interest rate shall be that as determined by Rural Development at the time of infraction taking into account the average yield on outstanding marketable long-term obligations of the United States during the month preceding the date on which the assistance was initially made available. (8) The owner(s) agrees that, notwithstanding any other provisions of law, the HPG assistance provided to the owner(s) shall constitute a debt which is payable in the case of any failure of this section and shall be secured by a security instrument provided by the owner(s) or co-op to the grantee, that provides for Rural Development to take such action upon incapacity or dissolution of the grantee. (9) The owner(s) agrees and certifies that the assistance is being made available in conformity with Pub. L. 88-352, the "Civil Rights Act of 1964," and Pub. L. 90-284, the "Civil Rights Act of 1968." (b) Responsibilities of the grantee. The grantee is responsible for insuring through verification and monitoring that the areas listed below are in compliance: (1) That HPG funds used for loans, grants, or interest reduction payments providing repair or rehabilitation assistance to owners of rental properties or co-ops are not in excess of 75 percent of the total cost of all repairs and rehabilitation activities eligible for HPG assistance. (2) That the owner(s) is not repairing and/or rehabilitating any unit unless it meets the requirements of §1944.662 (b)(3) of this subpart. 12 RD Instruction 1944-N § 1944.663(b) (Con.) (3) That rental property units being repaired and/or rehabilitated and occupied by owners or members of the owner's immediate family meet all other requirements of this subpart. (4) That, for multi-units not considered eligible as a result of paragraph (b)(2) or (b)(3) of this section, the grantee and owner(s) shall agree on a method, if any is needed, of determining the prorata share of repairs and rehabilitation activities to the dwelling, based on a percentage of the ineligible units to the total dwelling. § 1944.664 Housing preservation and replacement housing assistance. (Revised 06-12-97, SPECIAL PN.) (a) Grantees are responsible for providing loans, grants, or other comparable assistance to homeowners, owners of rental properties, or co-ops for housing preservation or for replacement housing as described in § 1944.656 of this subpart. (b) HPG funds used for loans, grants, or interest reduction payments to provide rental repair and/or rehabilitation assistance to owners of rental properties or co-ops shall not exceed the requirement noted in § 1944.663 (b)(1) of this subpart. (c) Authorized housing preservation assistance includes, but is not limited to, cost of labor and materials for: (1) Installation and/or repair of sanitary water and waste disposal systems, together with related plumbing and fixtures, which will meet local health department requirements; (2) Energy conservation measures such as: (i) Insulation; and (ii) Combination screen-storm windows and doors; (3) Repair or replacement of the heating system including the installation of alternative systems such as woodburning stoves or space heaters, when appropriate and if local codes permit; (4) Electrical wiring; (5) Repair of, or provision for, structural supports and foundations; 13 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.664(c) (Con.) (6) Repair or replacement of the roof; (7) Replacement of severely deteriorated siding, porches or stoops; (8) Alterations of the unit's interior or exterior to provide greater accessibility for any handicapped person; (9) For properties listed on or eligible for the National Register of Historic Places, activities associated with conforming repair and rehabilitation activities to the standards and/or design comments resulting from the consultation process contained in §1944.673 of this subpart; (10) Necessary repairs to manufactured housing provided: (i) For homeowners only, the recipient owns the home and the site on which the home is situated and the homeowner has occupied that home on that site for at least 1 year prior to receiving HPG assistance; and (ii) For homeowners, owners of single- or multiple- unit rental properties, and co-ops, the manufactured housing is on a permanent foundation or will be put on a permanent foundation with HPG funds. Advice on the requirements for a permanent foundation is available from RHS. Guidance may be found in § 1944.223 (e) of subpart E of this part and in exhibit J of subpart A of part 1924; (11) Additions to any dwelling (conventional or manufactured) only when it is clearly necessary to alleviate overcrowding or to remove health hazards to the occupants; or (12) Relocation costs either permanent or temporary for assistance to rental properties or co-ops, as noted in §1944.667 of this subpart. (d) Authorized replacement housing assistance includes, but is not limited to: (1) Building a dwelling and providing related facilities for use by the individual homeowner as a permanent resident; (2) Providing a safe and sanitary water and waste disposal system, together with related plumbing and fixtures, which will meet local health department requirements; 14 (Revision 1) RD Instruction 1944-N § 1944.664(d) (Con.) (3) Providing minimum site preparation and other on-site improvement including grading, foundation plantings, minimal landscaping, and other on-site improvements required by local jurisdictions; (4) Providing special design features or equipment when necessary because of physical handicap or disability of the HPG recipient or member of the household; (5) Purchasing and installing approved energy saving measures and approved furnaces and space heaters which use a type of fuel that is commonly used, and is economical and dependably available; (6) Providing storm cellars and similar protective structures, if typical for the area; (7) Paying real estate taxes which are due and payable on the existing dwelling or site at the time of closing, if this amount is not a substantial part of the HPG assistance; (8) Providing living area for the HPG recipient and all members of the household as specified in 7 CFR 3550.54 (c); and (9) Moving a dwelling onto the site of the demolished, previously existing housing and meeting all HPG housing preservation requirements for repair and rehabilitation; (10) Providing funds for demolishing the existing housing; and (11) Any other cost that is reasonable and justifiable directly related to replacement activities. (e) HPG funds may be used for payment of incidental expenses directly related to accomplishing authorized activities such as fees for connection of utilities (water, sewer, gas, electric), credit reports, surveys, title clearance, loan closing, inspections, and architectural or other technical services. All fees will be in accordance with local prevailing rates and so documented. (f) HPG funds may be used where they do not contribute to the health, safety and well being of the occupant or do not materially contribute to the structural integrity or long-term preservation of the unit. The percentage of the funds to be used for such purposes must not exceed 20 percent of the total funding for the unit(s) and/or dwelling, and such 15 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.664(f) (Con.) work must be combined with improvements listed as eligible under paragraph (c) of this section. These improvements may include, but are not limited to the following: (1) Painting; (2) Paneling; (3) Floor covering, including carpeting; (4) Improving clothes closets or shelving; (5) Improving kitchen cabinets; (6) Air conditioning; or (7) Landscape plantings. (g) Under the following conditions, HPG funds may be used to reimburse the grantee for authorized housing preservation or replacement housing activities performed by employees of the grantee where the grantee acts as a construction contractor and furnishes construction services: (1) The grantee must demonstrate that such work performed by the grantee results in cost savings in terms of time and labor over cost for such work prevailing in the area; (2) The grantee has established a process for third party review of all performance by a local government, building inspector or other independent party; (3) The grantee has established or makes available a process that provides for consumer protection to the individual homeowner, owner of a rental property, or co-op assisted; and (4) The grantee's accounting system provides a clear delineation between administrative costs and construction contractor (non-administrative) costs. (h) HPG funds may not be used to: (1) Assist in the construction or completion of an addition (excluding paragraph (c)(11) of this section) or a new dwelling. This paragraph does not apply to replacement housing. (2) Refinance any debt or obligation of the grantee, the individual homeowner, owners of a rental property, or co-ops other than 16 (Revision 1) RD Instruction 1944-N § 1944.664(h) (Con.) obligations incurred for eligible items covered by this section entered into after the date of agreement with the HPG grantee. (3) Repair or rehabilitate as well as replace any property located in the Coastal Barrier Resources System. § 1944.665 Supervision and inspection of work. (Revised 06-12-97, SPECIAL PN.) Grantees are responsible for supervising all rehabilitation and repair work, as well as replacement housing financed with HPG assistance. After all HPG work has been completed, a final inspection must be done by a disinterested third party, such as local building and code enforcement officials. If there are no such officials serving the area where HPG activities will be undertaken, or if the grantee would also normally make such inspections, the grantee must use qualified contract or fee inspectors. § 1944.666 Administrative activities and policies. Grant funds are to be used primarily for housing repair and rehabilitation activities. Use of grant funds for direct and indirect administrative costs is a secondary purpose and must not exceed 20 percent of the HPG funds awarded to the grantee. (a) Administrative expenses may include: (1) Payment of reasonable salaries or contracts for professional, technical, and clerical staff actively assisting in the delivery of the HPG project. (2) Payment of necessary and reasonable office expenses such as office rental, supplies, utilities, telephone services, and equipment. (Any item of nonexpendable personal property having a unit value of $1,000 or more, acquired with HPG funds, will be specifically identified to RHS in writing.) (3) Payment of necessary and reasonable administrative costs such as workers' compensation, liability insurance, and the employer's share of Social Security and health benefits. Payments to private retirement funds are permitted if the grantee already has such a fund established and ongoing. (4) Payment of reasonable fees for necessary training of grantee personnel. (5) Payment of necessary and reasonable costs for an audit upon expiration of the grant agreement. 17 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.666(a) (Con.) (6) Other reasonable travel and miscellaneous expenses necessary to accomplish the objectives of the specific HPG grant which were anticipated in the individual HPG grant proposal and which have been approved as eligible expenses at the time of grant approval. (b) HPG administrative funds may not be used for: (1) Preparing housing development plans and strategies except as necessary to accomplish the specific objectives of the HPG project. (2) Substitution of any financial support previously provided or currently available from any other source. (3) Reimbursing personnel to perform construction related to housing preservation assistance. Non-administrative funds may be used if construction is for housing preservation assistance under the provisions of § 1944.664 (g) of this subpart. (Revised 06-12-97, SPECIAL PN.) (4) Buying property of any kind from persons receiving assistance from the grantee under the terms of the HPG agreement. (5) Paying for or reimbursing the grantee for any expense or debts incurred before RHS executes the grant agreement. (6) Paying any debts, expenses, or costs which should be the responsibility of the individual homeowner, owner, tenant or household member of a rental property, or owner (member) or non-member of a co-op receiving HPG assistance outside the costs of repair and rehabilitation as well as for replacement housing (individual homeowners only). (Revised 06-12-97, SPECIAL PN.) (7) Any type of political activities prohibited by the Office of Management and Budget (OMB) Circular A-122. (8) Other costs including contributions and donations, entertainment, fines and penalties, interest and other financial costs unrelated to the HPG assistance to be provided, legislative expenses, and any excess of cost from other grant agreements. (9) Paying added salaries for employees paid by other sources, i.e., public agencies who pay employees to handle grants. 18 (Revision 1) RD Instruction 1944-N § 1944.666 (Con.) (c) Advice concerning ineligible costs may be obtained from RHS as part of the HPG preapplication review or when a proposed cost appears ineligible. (d) The grantee may not charge fees or accept any compensation or gratuities from HPG recipients for the grantee's technical or administrative services under this program. Where the grantee performs as a construction contractor, the grantee may be paid such compensation directly related to construction services provided and limited to authorized housing preservation activities. (e) The policies, guidelines and requirements of 7 CFR parts 3015 and 3016 apply to the acceptance and use of HPG funds. § 1944.667 Relocation and displacement. (a) Relocation. Public bodies and agencies must comply with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Act of 1970. The grantee must provide assistance for permanent or temporary relocation of displaced persons for units repaired or rehabilitated or for individual homes replaced with HPG assistance. HPG funds may be used to cover costs incurred in the relocation of displaced persons. The applicant shall include in its statement of activities, a statement concerning the temporary relocation of homeowners and/or tenants during the period of repairs and/or rehabilitation to the units or dwellings. Any contract or agreement between the homeowner and the grantee, as well as between the grantee and the owner(s) of rental properties and co-ops shall include a statement covering at a minimum: (Revised 06-12-97, SPECIAL PN.) (1) The period of relocation (if any); (2) The name(s) of the party (or parties) who shall bear the cost of temporarily relocating; and (3) The name(s) of the party (or parties) who shall bear the cost of permanent relocation; and (4) If paragraphs (a) (2) or (3) of this section is the grantee, the maximum amount of temporary or permanent relocation costs proposed to be allowed. 19 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.667 (Con.) (b) Displacement. The applicant shall include in its statement of activities, a statement as to how its proposed HPG financial assistance program shall keep to a minimum the displacement of homeowners and/or tenants. § 1944.668 Term of grant. HPG projects may be funded under the terms of a grant agreement for a period of up to 2 years commencing on the date of execution of the grant agreement by the RHS approval official. Term of the project will be based upon HPG resources available for the proposed project and the accomplishability of the applicant's proposal within 1 or 2 years. Applicants requesting a 2-year term may be asked to develop a feasible 1-year program if sufficient funds are not available for a 2 year program. § 1944.669 [Reserved] § 1944.670 Project income. (a) Project income during the grant period from loans made to homeowners, owners of rental properties, and co-ops is governed by 7 CFR parts 3015 and 3016. All income during the grant period, including amounts recovered by the grantee due to breach of agreements between the grantee and the HPG recipient, must be used under (and in accordance with) the requirements of the HPG program. (b) Grantees are encouraged to establish a program which reuses income from loans after the grant period for continuing repair and rehabilitation activities, as well as for individual housing replaced. (Revised 06-12-97, SPECIAL PN.) § 1944.671 Equal opportunity requirements and outreach efforts. The policies and regulations contained in subpart E of part 1901 apply to grantees under this subpart. (a) Fair housing. The Fair Housing Act prohibits any person or entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making loans, grants, or other financial assistance for a unit or dwelling, or which will be secured by a unit or dwelling, because of race, color, religion, sex, national origin, age, familial status, or handicap/disability. Prohibited practices under this section include: (Revised 06-12-97, SPECIAL PN.) 20 (Revision 1) RD Instruction 1944-N § 1944.671(a) (Con.) (1) Failing to provide any person in connection with a residential real estate-related transaction, information regarding the availability of loans, grants, or other financial assistance, or providing information that is inaccurate or different from that provided others; and (2) The term "residential real estate-related transaction" includes the making or purchasing of loans, grants, or other financial assistance for purchasing, constructing, improving, repairing, or rehabilitating a unit or dwelling, as well as for replacement housing for individual homeowners. (Revised 06-12-97, SPECIAL PN.) (b) Outreach. In addition, the HPG grantee is required to address an outreach effort in their program. The amount of outreach should sufficiently reach the entire service area. As a measure of compliance, the percentages of the individuals served by the HPG grantee should be in proportion to the percentages of the population of the service area by race/national origin. If the percentages are not proportional, then adequate justification is to be made. Exhibit E-1 of this subpart will be used to monitor these requirements. (Further explanation and guidance of Exhibit E-1 can be found in Exhibit E-2 of this subpart.) A separate file will be maintained by the grantee that will include the following outreach activities: (1) Community contacts to community organizations, community leaders, including minority leaders, by name, race, and date contacted; (2) Copies of all advertising in local newspapers, and through other media. Any advertising must reach the entire service area. RHS encourages the use of minority-owned radio stations and other types of media, if available, in the service area. The grantee's file shall also include the name of the media used, and the percentage of its patronage by race/national origin; and (3) Copies of any other advertising or other printed material, including the application form used. The application form shall include the nondiscrimination slogan: "This is an equal opportunity program. Discrimination is prohibited by Federal Law." (c) Additional requirements. In order to meet the Fair Housing requirements and the nondiscrimination requirements of Title VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act of 1975, the HPG grantee will need to adhere to the recommendations of Exhibit H of this subpart. 21 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.672 Environmental requirements. Subpart G of part 1940 will be followed regarding environmental requirements. The following is additional information on how to approach HPG projects under those requirements: (a) The approval of an HPG grant for the repair, rehabilitation, or replacement of dwellings shall be a Class I action. As part of their preapplication materials, applicants shall submit Form RD 1940-20, "Request for Environmental Information," for the geographical areas proposed to be served by the program. The applicant shall refer to Exhibit F-1 of this subpart when completing Form RD 1940-20. Further guidance on completing this form is available from the Agency office servicing the program. (Revised 06-12-97, SPECIAL PN.) (b) The use of HPG funds by the grantee to repair, rehabilitate, or replace on the same site specific dwellings is generally exempt from an RHS environmental review. However, if such dwellings are located in a floodplain, wetland, or the proposed work is not concurred in by the Advisory Council on Historic Preservation under the requirements of § 1944.673 of this subpart, an RHS environmental review is required. Dwellings within the Coastal Barrier Resources System are not eligible for HPG assistance. Applicants must include in their preapplication a process for identifying dwellings that may receive housing preservation or replacement housing assistance that will require an environmental assessment. This may be accomplished by adoption of Exhibit F-2 of this subpart or another process supplying similar information acceptable to RHS. (Revised 06-12-97, SPECIAL PN.) (c) If a specific dwelling is not located in a floodplain, wetland, or the proposed work is concurred in by the Advisory Council on Historic Preservation under the requirements of §1944.673 of this subpart, no environmental review is required by RHS. The grantee only needs to indicate its review and compliance with this subpart, indicating such in each recipient's file in accordance with paragraph (e) of this section. (d) When a dwelling requiring an environmental assessment is proposed for HPG assistance, the grantee will immediately contact the RHS office designated to service the HPG grant. Prior to approval of HPG assistance to the recipient by the grantee, RHS will prepare the environmental assessment in accordance with subpart G of part 1940 with the assistance of the grantee, as necessary. Paragraph VIII of Exhibit C of this subpart provides further guidance in this area. (Revised 06-12-97, SPECIAL PN.) 22 (Revision 1) RD Instruction 1944-N § 1944.672 (Con.) (e) If RHS is required to make an environmental assessment, the grantee will be provided with a copy of the assessment which will be made part of the recipient's file. The grantee must also include in each recipient's file: (1) Documentation on how the process for historic preservation review under § 1944.673 of this subpart has been complied with, including all relevant reviews and correspondence; and (2) Determination as to whether the unit is located in a 100-year floodplain or a wetland. (3) Documentation of this review. Suggested language is: "We have considered this dwelling under RHS's environmental and historic preservation requirements for a HPG (§§ 1944.672 and 1944.673 of this subpart) and an environmental assessment is not required. The review was completed in accordance with the process to identify properties requiring an RHS environmental assessment approved with our statement of activities." (f) Proposed use of funds by an applicant to use moneys for additions under § 1944.664 (c)(11) of this subpart must be addressed in the statement of activities. (g) Grantees must contact RHS prior to actual usage of funds by the grantees under § 1944.664 (c)(11) of this subpart. RHS must complete the appropriate level of environmental review in accordance with subpart G of part 1940. § 1944.673 Historic preservation and replacement housing requirements and procedures. (Revised 06-12-97, SPECIAL PN.) (a) RHS has entered into a Programmatic Memorandum of Agreement (PMOA) with the National Conference of State Historic Preservation Officers (SHPO) and the Advisory Council on Historic Preservation in order to implement the specific requirements regarding historic preservation contained in Section 533 of the Housing Act of 1949, 42 U.S.C. 1490(m) of the enabling legislation. The PMOA, with attachments, can be found in RD Instruction 2000-FF. A copy of the PMOA will be provided to each applicant for a HPG as part of the preapplication package specified in paragraph II of Exhibit C of this subpart. 23 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.673 (Con.) (b) Accordingly, each applicant for a HPG grant will provide, as part of its preapplication documentation submitted to RHS, a description of its proposed process for assisting very low- and low-income persons owning historic properties needing rehabilitation, repair, or replacement. "Historic properties" are defined as properties that are listed or eligible for listing on the National Register of Historic Places. Each HPG proposal shall comply with the provisions of Stipulation I, A-G of the PMOA (RD Instruction 2000-FF). Should RHS be required to assume responsibility for compliance with 36 CFR part 800 in accordance with Stipulation III of the PMOA, the grantee will assist RHS in preparing an environmental assessment. RHS will work with the grantee to develop alternative actions or mitigation measures, as appropriate. (Revised 06-12-97, SPECIAL PN.) (c) Such assumption of responsibility by RHS on a particular property shall not preclude the grantee from carrying out the requirements of 36 CFR part 800 on other properties as though it were a Federal agency, but no work may be commenced on any unit or dwelling in controversy until and unless so advised by RHS. § 1944.674 Public participation and intergovernmental review. (a) In preparing its statement of activities, the applicant is responsible for consulting with leaders from the county, parish and/or township governments of the area where HPG activities will take place for the purpose of assuring that the proposed HPG program is beneficial and does not duplicate current activities. American Indian nonprofit organization applicants should obtain the written concurrence of the tribal governing body in lieu of consulting with the county governments when the program is operated only on tribal land. (b) The applicant must also make its statement of activities available to the public for comment. The applicant must announce the availability of its statement of activities for review in a newspaper of general circulation in the project area and allow at least 15 days for public comment. The start of this 15-day period must occur no later than 16 days prior to the last day for acceptance of preapplications by RHS. (c) The HPG program is subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. Under RD Instruction 1940-J, prospective applicants for HPG grants must submit its statement of activities to the State single point of contact prior to submitting their preapplication to RHS. Evidence of submittal of the statement of activities to the State single point of contact is to be submitted with a preapplication. Comments and recommendations made through the intergovernmental review process are for the purpose of assuring consideration of State and local government 24 (Revision 1) RD Instruction 1944-N § 1944.674(c) (Con.) views. The name of the State single point of contact is available from any Rural Development office. This section does not apply to American Indian tribes, bands, groups, etc., as noted in §1944.656 of this subpart. § 1944.675 Allocation of HPG funds to States and unused HPG funds. The allocation and distribution of HPG funds is found in § 1940.578 of subpart L of part 1940. 24A (Added 06-12-97, SPECIAL PN) (09-01-93) PN 212 RD Instruction 1944-N §1944.676 Preapplication procedures. (a) All applicants will file an original and two copies of Standard Form (SF) 424.1, "Application For Federal Assistance (For Nonconstruction)," and supporting information with the appropriate Rural Development office. A preapplication package, including SF-424.1, is available in any Rural Development Office. (b) All preapplications shall be accompanied by the following information which Rural Development will use to determine the applicant's eligibility to undertake the HPG program and to evaluate the preapplication under the project selection criteria of §1944.679 of this subpart. (1) A statement of activities proposed by the applicant for its HPG program as appropriate to the type of assistance the applicant is proposing, including: (i) A complete discussion of the type of and conditions for financial assistance for housing preservation, including whether the request for assistance is for a homeowner assistance program, a rental property assistance program, or a co-op assistance program; (ii) The process for selecting recipients for HPG assistance, determining housing preservation needs of the dwelling, performing the necessary work, and monitoring/inspecting work performed; (iii) A description of the process for identifying potential environmental impacts in accordance with §1944.672 of this subpart, and the provisions for compliance with Stipulation I, A-G of the PMOA (RD Instruction 2000-FF available in any Rural Development office) in accordance with §1944.673 (b) of this subpart. With the exception of Stipulation I, D of the PMOA, this may be accomplished by adoption of Exhibit F-2 of this subpart (available in any Rural Development office), or another process supplying similar information acceptable to Rural Development; (iv) The development standard(s) the applicant will use for the housing preservation work; and, if not the Rural Development standards for existing dwellings, the evidence of its acceptance by the jurisdiction where the grant will be implemented; 25 (09-01-93) PN 212 RD Instruction 1944-N §1944.676 (b)(1) (Con.) (v) The time schedule for completing the program; (vi) The staffing required to complete the program; (vii) The estimated number of very low- and low-income minority and nonminority persons the grantee will assist with HPG funds; and, if a rental property or co-op assistance program, the number of units and the term of restrictive covenants on their use for very low- and low-income; (viii) The geographical area(s) to be served by the HPG program; (ix) The annual estimated budget for the program period based on the financial needs to accomplish the objectives outlined in the proposal. The budget should include proposed direct and indirect administrative costs, such as personnel, fringe benefits, travel, equipment, supplies, contracts, and other cost categories, detailing those costs for which the grantee proposes to use the HPG grant separately from non-HPG resources, if any. The applicant budget should also include a schedule (with amounts) of how the applicant proposes to draw HPG grant funds, i.e., monthly, quarterly, lump sum for program activities, etc.; (x) A copy of a indirect cost proposal as required in 7 CFR Parts 3015 and 3016, when the applicant has another source of federal funding in addition to the Rural Development HPG program; (xi) A brief description of the accounting system to be used; (xii) The method of evaluation to be used by the applicant to determine the effectiveness of its program which encompasses the requirements for quarterly reports to Rural Development in accordance with §1944.683 (b) of this subpart and the monitoring plan for rental properties and co-ops (when applicable) according to §1944.689 of this subpart; 26 §1944.676 (b)(1) (Con.) RD Instruction 1944-N (xiii) The source and estimated amount of other financial resources to be obtained and used by the applicant for both HPG activities and housing development and/or supporting activities; (xiv) The use of program income, if any, and the tracking system used for monitoring same; (xv) The applicant's plan for disposition of any security instruments held by them as a result of its HPG activities in the event of its loss of legal status; (xvi) Any other information necessary to explain the proposed HPG program; and (xvii) The outreach efforts outlined in §1944.671 (b) of this subpart. (2) Complete information about the applicant's experience and capacity to carry out the objectives of the proposed HPG program. (3) Evidence of the applicant's legal existence, including, in the case of a private nonprofit organization, a copy of, or an accurate reference to, the specific provisions of State law under which the applicant is organized; a certified copy of the applicant's Articles of Incorporation and Bylaws or other evidence of corporate existence; certificate of incorporation for other than public bodies; evidence of good standing from the State when the corporation has been in existence 1 year or more; and, the names and addresses of the applicant's members, directors and officers. If other organizations are members of the applicant-organization, or the applicant is a consortium, preapplications should be accompanied by the names, addresses, and principal purpose of the other organizations. If the applicant is a consortium, documentation showing compliance with §1944.656 of this subpart will also be included. 27 (09-01-93) PN 212 RD Instruction 1944-N §1944.676 (b) (Con.) (4) For a private nonprofit entity, the most recent audited statement and a current financial statement dated and signed by an authorized officer of the entity showing the amounts and specific nature of assets and liabilities together with information on the repayment schedule and status of any debt(s) owed by the applicant. If the applicant is an organization being assisted by another private nonprofit organization, the same type of financial statement should also be provided by that organization. (5) A brief narrative statement which includes information about the area to be served and the need for improved housing (including both percentage and actual number of both low-income and low-income minority households and substandard housing), the need for the type of housing preservation assistance being proposed, the anticipated use of HPG resources for historic properties, the method of evaluation to be used by the applicant in determining the effectiveness of its efforts (according to paragraph (b)(1)(xii) of this section). (6) A statement containing the component for alleviating overcrowding as defined by §1944.656 of this subpart. (7) A list of other activities the applicant is engaged in and expects to continue, a statement as to any other funding, and whether it will have sufficient funds to assure continued operation of the other activities for at least the period of the HPG grant agreement. (8) Any other information necessary that specifically addresses the selection criteria in §1944.679 of this subpart. (c) The applicant must submit an original and one copy of Form RD 1940-20 prepared in accordance with Exhibit F-1 of this subpart (available in any Rural Development office). (d) The applicant must submit a description of its process for: (1) Identifying and rehabilitating properties that are listed on or eligible for listing on the National Register of Historic Places. (2) Identifying properties that are located in a floodplain or wetland. 28 §1944.676 (d) (Con.) RD Instruction 1944-N (3) Identifying properties located within the Coastal Barrier Resources System. (4) Coordinating with other public and private organizations and programs that provide assistance in the rehabilitation of historic properties (Stipulation I, D, of the PMOA, RD Instruction 2000-FF, available in any Rural Development office). (5) Paragraphs (d)(1), (2), and (3) of this section may be accomplished by adoption of Exhibit F-2 of this subpart (available in any Rural Development office), or another process supplying similar information acceptable to Rural Development. (e) The applicant must submit evidence of SHPO concurrence in the proposal, or in the event of nonconcurrence, a copy of SHPO's comments together with evidence that the applicant has sought the Advisory Council on Historic Preservation's advice as to how the disagreement might be resolved, and a copy of any advice provided by the Council. (f) The applicant must submit written statements and related correspondence reflecting compliance with §1944.674 (a) and (c) of this subpart regarding consultation with local government leaders in the preparation of its program and the consultation with local and state government pursuant to the provisions of Executive Order 12372. (g) The applicant is to make its statement of activities available to the public for comment prior to submission to Rural Development pursuant to §1944.674 (b) of this subpart. The application must contain a description of how the comments (if any were received) were addressed. (h) The applicant must submit an original and one copy of Form RD 400-1, "Equal Opportunity Agreement," and Form RD 400-4, "Assurance Agreement," in accordance with §1944.674 (c) of this subpart. §1944.677 [Reserved] 29 (09-01-93) PN 212 RD Instruction 1944-N §1944.678 Preapplication submission deadline. Dates governing the invitation and review of HPG preapplications will be published annually in the Federal Register and may be obtained from Rural Development offices processing HPG preapplications. Preapplications received after the date specified in the Federal Register will not be considered for funding in that fiscal year and will be returned. §1944.679 Project selection criteria. (a) Applicants must meet all of the following threshold criteria: (1) Provide a financially feasible program of housing preservation assistance. "Financially feasible" is defined as proposed assistance which will be affordable to the intended recipient or result in affordable housing for very low- and low-income persons; (2) Serve eligible rural areas with a concentration of substandard housing for households with very low- and low-income; (3) Be an eligible applicant entity as defined in §1944.658 of this subpart; (4) Meet the requirements of consultation and public comment in accordance with §1944.674 of this subpart; and (5) Submit a complete preapplication as outlined in §1944.676 of this subpart. (b) For applicants meeting all of the requirements listed in paragraph (a) of this section, Rural Development will use the weighted criteria in this paragraph in the selection of grant recipients. Each preapplication and its accompanying statement of activities will be evaluated and, based solely on the information contained in the preapplication, the applicant's proposal will be numerically rated on each criteria within the range provided. The highest ranking applicant(s) will be selected based on allocation of funds available to the State. Exhibit D of this subpart (available in any Rural Development office) will be used to document the rating. 30 §1944.679 (b) (Con.) RD Instruction 1944-N (1) Points are awarded based on the percentage of very low-income persons that the applicant proposes to assist, using the following scale: (i) More than 80%: 20 points. (ii) 61% to 80%: 15 points. (iii) 41% to 60%: 10 points. (iv) 20% to 40%: 5 points. (v) Less than 20%: 0 points. (2) The applicant's proposal may be expected to result in the following percentage of HPG fund use (excluding administrative costs) to total cost of unit preservation. This percentage reflects maximum repair or rehabilitation with the least possible HPG funds due to leveraging, innovative financial assistance, owner's contribution or other specified approaches. Points are awarded based on the following percentage of HPG funds (excluding administrative costs) to total funds: (i) 50% or less: 20 points. (ii) 51% to 65%: 15 points. (iii) 66% to 80%: 10 points. (iv) 81% to 95%: 5 points. (v) 96% to 100%: 0 points. (3) The applicant has demonstrated its administrative capacity in assisting very low- and low-income persons to obtain adequate housing based on the following: (i) The organization or a member of its staff has 2 or more years experience successfully managing and operating a rehabilitation or weatherization type program, including Rural Development's HPG program: 10 points. (ii) The organization or a member of its staff has 2 or more years experience successfully managing and operating a program assisting very low- and low-income persons obtain housing assistance: 10 points. 31 (09-01-93) PN 212 RD Instruction 1944-N §1944.679 (b)(3) (Con.) (iii) If the organization has administered grant programs, there are no outstanding or unresolved audit or investigative findings which might impair carrying out the proposal: 10 points. (4) The proposed program will be undertaken entirely in rural areas outside MSAs identified by Rural Development as having populations below 10,000 or in remote parts of other rural areas (i.e., rural areas contained in MSAs with less than 5,000 population) as defined in §1944.656 of this subpart: 10 points. (5) The program will use less than 20 percent of HPG funds for administration purposes: (i) More than 20%: Not Eligible. (ii) 20%: 0 points. (iii) 19%: 1 point. (iv) 18%: 2 points. (v) 17%: 3 points. (vi) 16%: 4 points. (vii) 15% or less: 5 points. (6) The proposed program contains a component for alleviating overcrowding as defined in §1944.656 of this subpart: 5 points. (c) In the event more than one preapplication receives the same amount of points, those preapplications will then be ranked based on the actual percentage figure used for determining the points under paragraph (b)(1) of this section. Further, in the event that preapplications are still tied, then those preapplications still tied will be ranked based on the percentage figures used (low to high) in paragraph (b)(2) of this section. Further, for applications where assistance to rental properties or co-ops is proposed, those still tied will be further ranked based on the number of years the units are available for occupancy under the program (a minimum of 5 years is required). For this part, ranking will be based from most to least number of years. Finally, if there is still a tie, then a "lottery" system will be used. 32 RD Instruction 1944-N §1944.680 Limitation on grantee selection. After all preapplications have been reviewed under the selection criteria and if more than one preapplication has met the criteria of §1944.679 (a) of this subpart, the State Director or approval official may not approve more than 50 percent of the State's allocation to a single entity. §1944.681 Application submission. Applicants selected by Rural Development will be advised to submit a full application in an original and two copies of SF 424.1, and are to include any condition or amendments that must be incorporated into the statement of activities prior to submitting a full application. Instructions on submission and timing will be provided by Rural Development. §1944.682 Preapplication/application review, grant approval, and requesting HPG funds. The Rural Development offices processing HPG preapplications/applications will review the preapplications and applications submitted. Further review and actions will be taken by Rural Development personnel in accordance with Exhibit C of this subpart (available in any Rural Development office). Exhibit G of this subpart (available in any Rural Development office) will be used by the State Office to notify the National Office of preapplications received, eligibility, ranking, number of proposed units, amount requested by applicants, and amount recommended by State Office. Preapplications determined not eligible and/or not meeting the selection criteria will be notified in the manner prescribed in Exhibit C of this subpart (available in any Rural Development office). In addition, Rural Development will document its findings and advise the applicant of its review rights or appeal rights (if applicable).00-00 PN#) Applications determined not eligible will be handled in the same manner. The preapplications or applications determined incomplete will be notified in the manner prescribed in Exhibit C of this subpart (available in any Rural Development office) and will not be given appeal rights. The State Director is authorized to approve an HPG in accordance with this subpart and Subpart A of Part 1901 of this chapter. The State Director may delegate this authority in writing to designated State Office personnel and District Directors. Further: 33 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N §1944.682 (Con.) (a) Grant approval is the process by which Rural Development determines that all applicable administrative and legal conditions for making a grant have been met, the grant agreement is signed, and funds have been obligated for the HPG project. If acceptable, the approval official will inform the applicant of approval, having the applicant sign Form RD 1940-1, "Request for Obligation of Funds," and Exhibit A of this subpart (available in any Rural Development office). The applicant will be sent a copy of the executed grant agreement and Form RD 1940-1. Should any conditions be attached to the grant agreement that must be satisfied prior to the applicant receiving any HPG funds, the grant agreement and the conditions will be returned to the applicant for acceptance and acknowledgement on the grant agreement prior to execution by the approval official. (b) The application may be disapproved before execution of the grant agreement if the applicant is no longer eligible, the proposal is no longer feasible, or the applicant requests cancellation of its project. Except when the applicant requests cancellation, Rural Development will document its findings and advise the applicant of its appeal rights. (c) With the executed grant agreement and Form RD 1940-1, Rural Development will send the approved applicant (now the "grantee") copies of SF-270, "Request for Advance or Reimbursement". The grantee must submit an original and two copies of SF-270 to the Rural Development office servicing the project. In addition, the grantee must submit SF-272, "Federal Cash Transactions Report," each time an advance of funds is made. This report shall be used by Rural Development to monitor cash advances made to the grantee. Advances or reimbursements must be in accordance with the grantee's budget and statement of activities, including any amendments, prior approved by Rural Development. Requests for reimbursement or advances must be at least 30 calendar days apart. (d) If the grantee fails to submit required reports pursuant to §1944.683 of this subpart or is in violation of the grant agreement, Rural Development may suspend HPG reimbursements and advances or terminate the grant in accordance with §1944.688 of this subpart and the grant agreement. 34 (Revision 1) RD Instruction 1944-N § 1944.683 Reporting requirements. (a) SF-269, "Financial Status Report," is required of all grantees on a quarterly basis. Grantees shall submit an original and two copies of the report to the designated Rural Development servicing office. When preparing the Financial Status Report, the total program outlays (Item 10, g, of SF-269) should be less any rebates, refunds, or other discounts. Reports must be submitted no later than 15 days after the end of each calendar quarter. (b) Quarterly performance reports shall be submitted by grantees with SF-269, in an original and two copies (see Exhibit E-1 of this subpart). The quarterly report should relate the activities during the report period to the project's objectives and analyze the effectiveness of the program. As part of the grantee's preapplication submission, as required by §1944.676 (b) of this subpart, the grantee establishes its objectives for the HPG program, including its method of evaluation to determine its effectiveness. Accordingly, the report must include, but need not be limited to, the following: (1) Use of HPG funds for administration and housing preservation activities. (2) The following specific information for each unit or dwelling assisted: (i) Name(s), address, and income(s) of each homeowner assisted or the name and address of the owner(s) or co-op for each rental property (single or multi-unit) or co-op assisted; (ii) Total cost of repair/rehabilitation, a list of major repairs made, amount financed by HPG, and amount financed from which other sources; (iii) Type of assistance provided (interest subsidy, loan, grant, etc.); and (iv) Results of implementing the environmental process contained in § 1944.672 of this subpart and the historic preservation process contained in § 1944.673 of this subpart. 35 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.683(b)(Con.) (3) The use of HPG and any other funds for replacement housing. (Added 06-12-97, SPECIAL PN.) (4) A comparison of actual accomplishments to the objectives set for that period, including: (Renumbered 06-12-97, SPECIAL PN.) (i) The number of very low- and low-income, minority and nonminority persons assisted in obtaining adequate housing by the HPG program through repair, rehabilitation as well as for replacement housing; and (Revised 06-12-97, SPECIAL PN.) (ii) The average cost of assistance provided to each household. (5) Reasons why, if established objectives are not met. (Renumbered 06-12-97, SPECIAL PN.) (6) Problems, delays, or adverse conditions which will materially affect attainment of the HPG grant objectives, prevent the meeting of time schedules or objectives, or preclude the attainment of program work elements during established time periods. This disclosure shall be accompanied by a statement of the action taken or contemplated and any Federal or other assistance needed to relieve the situation. (Renumbered 06-12-97, SPECIAL PN.) (7) Objectives established for the next reporting period, sufficiently detailed to identify the type of assistance to be provided, the number and type of households to be assisted, etc. (Renumbered 06-12-97, SPECIAL PN.) (8) A certification that the final building inspection reports for each rehabilitation or repair work financed as well as for replacement housing with HPG funds for that quarter is on file. (Revised and renumbered 06-12-97, SPECIAL PN.) (c) The grantee should be prepared to meet with the Rural Development office servicing the project to discuss its quarterly report shortly after submission. (d) If the reports are not submitted in a timely manner or if the reports indicate that the grantee has made unsatisfactory progress or the grantee is not meeting its established objectives, the RHS official servicing the grant will recommend to the State Director appropriate action to resolve the indicated problem(s). If appropriate corrective action is not taken by the grantee, the State Director has the discretion to not authorize further advances by suspending the project in accordance with §1944.688 of this subpart and the grant agreement. 36 (Revision 1) RD Instruction 1944-N §1944.684 Extending grant agreement and modifying the statement of activities. (a) All requests extending the original grant agreement or modifying the HPG program's statement of activities must be in writing. Such requests will be processed through the designated Rural Development office servicing the project. The approval official will respond to the applicant within 30 days of receipt of the request. (b) A grantee may request an extension of the grant agreement prior to the end of the project term specified in the grant agreement if the grantee anticipates that there will be grant funds remaining and the grantee has demonstrated its ability to conduct its program in a manner satisfactory to Rural Development. The approval official may approve an extension when: (1) The grantee is likely to complete or exceed the goals outlined in the approved statement of activities; and (2) The Rural Development office responsible for servicing the grant recommends continuation of the grant until the grantee has expended all of the remaining grant funds. (c) Modifications to the statement of activities, such as revising the processes the grantee follows in operating the HPG program, may be approved by the approval official when the modifications are for eligible purposes in accordance with §§1944.664 and 1944.666 of this subpart, meet any applicable review and process requirements of this subpart, and the program will continue to serve the geographic area originally approved. The grantee will submit its proposed revisions together with the necessary supporting information to Rural Development prior to modifying its operation from the approved statement of activities. (d) Exhibit B of this subpart (available in any Rural Development office) will be used for all extensions on and modifications to the grant agreement. §1944.685 [Reserved] §1944.686 Additional grants. An additional HPG grant may be made when the grantee has achieved or nearly achieved the goals established for the previous or existing grant. The grantee must file a preapplication for the current fiscal year which will be processed and compared under the project selection criteria to others submitted at that time. 37 (09-01-93) PN 212 RD Instruction 1944-N §1944.687 [Reserved] §1944.688 Grant evaluation, closeout, suspension and termination. (a) Grant evaluation will be an on-going activity performed by both the grantee and Rural Development. The grantee will perform self-evaluations by preparing quarterly performance reports in accordance with §1944.683 of this subpart. Rural Development will also review all reports prepared and submitted by the grantee in accordance with the grant agreement and this subpart. (b) The grant can be suspended or terminated before the grant ending date for the causes specified in the grant agreement. No further grant funds will be advanced when grant suspension or termination procedures have been initiated in accordance with the grant agreement. Grantees may be reimbursed for eligible costs incurred prior to the effective date of the suspension or termination. Grantees are prohibited from incurring additional obligations of funds after notification, pending corrective action by the grantee. Rural Development may allow necessary and proper costs that the grantee could not reasonably avoid during the period of suspension provided they are for eligible HPG purposes. In the event of termination, Rural Development may allow necessary and reasonable costs for an audit. (c) Grantees will have the opportunity to appeal a suspension or termination under Rural Development's appeal procedures.part B of Part 1900 of this chapter. (d) The grantee will complete the closeout procedures as specified in the grant agreement. (e) The grantee will have an audit performed upon termination or completion of the project in accordance with 7 CFR Parts 3015 and 3016, as applicable. As part of its final report, the grantee will address and resolve all audit findings. §1944.689 Long-term monitoring by grantee. (a) The grantee is required to perform long-term monitoring on any housing preservation program involving rental properties and co-ops. This monitoring shall be at least on an annual basis and shall consist of, at a minimum, the following: 38 RD Instruction 1944-N §1944.689(a) (Con.) (1) All requirements noted in §1944.663 of this subpart; (2) All requirements of the "ownership agreement" executed between the grantee and the rental property owner or co-op; and (3) All requirements noted in 7 CFR Parts 3015 and 3016 during the effective period of the grant agreement. (b) The grantee is required to make available to Rural Development any such information as requested by Rural Development concerning the above. The grantee shall submit to the Rural Development servicing office an annual report every year while the ownership agreement is in effect. This report shall be submitted within 15 days after the anniversary date or end of the grant agreement. At a minimum, the report will consist of a statement that the grantee is in compliance with this subpart. (c) All files pertaining to such rental property owner or co-op shall be kept separate and shall be maintained for a period of 3 years after the termination date of the ownership agreement. §1944.690 Exception authority. The Administrator of Rural Development may, in individual cases, make an exception to any requirements of this subpart not required by the authorizing statute if the Administrator finds that application of such requirement would adversely affect the interest of the Government, or adversely affect the accomplishment of the purposes of the HPG program, or result in undue hardship by applying the requirement. The Administrator or the Assistant Administrator for Housing may exercise this exception authority at the request of the State Director. The request must be supported by information demonstrating the adverse impact, citing the particular requirement involved, recommending proper alternative course(s) of action, and outlining how the adverse impact could be mitigated. Exception to any requirement may also be initiated by the Assistant Administrator for Housing. §§1944.691 - 1944.699 [Reserved] 39 (Revision 1) (09-01-93) PN 212 RD Instruction 1944-N § 1944.700 OMB Control Number. According to the Paperwork Reduction Act of 1995, no; persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is 0575-0115. Attachments: Exhibits A, B, C, D, E-1, E-2, F-1, F-2, G, and H o0o 40 (Revision 1) RD Instruction 1944-N Exhibit A HOUSING PRESERVATION GRANT AGREEMENT This agreement dated _______________________________________, is between ________________________________________________________________ (name), _____________________________________________________________ (address), the grantee, organized and operating under _____________________________ ___________________________________________ (authorizing State statute), and the United States of America acting through the Rural Development. Rural Development agrees to grant a sum not to exceed $ __________________________, subject to the terms and conditions of this agreement; provided, however, that the grant funds actually advanced and not needed for grant purposes shall be returned immediately to Rural Development. The Housing Preservation Grant (HPG) statement of activities approved by Rural Development, is attached, and shall commence within 10 days of the date of execution of this agreement by Rural Development and be completed by _______________________ (date). Rural Development may terminate the grant in whole, or in part, at any time before the date of completion, whenever it is determined that the grantee has failed to comply with the conditions of this grant agreement or Rural Development regulations related hereto. The grantee may appeal adverse decisions in accordance with Rural Development's appeal procedures contained in Subpart B of Part 1900 of this chapter. In consideration of said grant by Rural Development to the grantee, to be made pursuant to Section 533 of the Housing Act of 1949, HPG program, the grantee will provide such a program in accordance with the terms of this grant agreement and applicable Rural Development regulations. PART A Definitions. 1. "Beginning date" means the date this agreement is executed by Rural Development and costs can be incurred. 2. "Ending date" means the date this agreement is scheduled to be completed. It is also the latest date grant funds will be provided under this agreement, without an approved extension. 3. "Disallowed costs" are those charges to a grant which Rural Development determines cannot be authorized in accordance with applicable Federal cost principles contained in 7 CFR Parts 3015 and 3016, as appropriate. 4. "Grant closeout" is the process by which the grant operation is concluded at the expiration of the grant period or following a decision to terminate the grant. (09-01-93) PN 212 RD Instruction 1944-N Exhibit A Page 2 5. "Termination" of the grant means the cancellation of Federal assistance, in whole or in part, at any time before the date of completion. PART B Terms of agreement. Rural Development and the grantee agree that: 1. All grant activities shall be limited to those authorized in this subpart. 2. This agreement shall be effective when executed by both parties. 3. The HPG activities approved by Rural Development shall commence and be completed by the date indicated above, unless earlier terminated under paragraph B, 18, of this grant agreement, or extended. 4. The grantee shall carry out the HPG activities and processes as described in the approved statement of activities which is made a part of this grant agreement. Grantee will be bound by the activities and processes set forth in the statement of activities and the further conditions set forth in this grant agreement. If the statement of activities is inconsistent with this grant agreement, then the latter will govern. A change of any activities and processes must be in writing and must be signed by the approval official. 5. The grantee shall use grant funds only for the purposes and activities approved by Rural Development in the HPG budget. Any uses not provided for in the approved budget must be approved in writing by Rural Development in advance. 6. If the grantee is a private nonprofit corporation, expenses charged for travel or per diem will not exceed the rates paid to Federal employees or (if lower) an amount authorized by the grantee for similar purposes. If the grantee is a public body, the rates will be those that are allowable under the customary practice in the government of which the grantee is a party; if none are customary, the Rural Development rates will be the maximum allowed. RD Instruction 1944-N Exhibit A Page 3 7. Grant funds will not be used for any of the following: (a) To pay obligations incurred before the beginning date or after the ending date of this agreement; (b) For any entertainment purposes; (c) To pay for any capital assets, the purchase of real estate or vehicles, the improvement or renovation of the grantee's office space, or for the repair or maintenance of privately owned vehicles; (d) Any other purpose specified in §1944.664 (g) or §1944.666 (b) of this subpart; or (e) For administrative expenses exceeding 20 percent of the HPG grant funds. 8. The grant funds shall not be used to substitute for any financial support previously provided and currently available or assured from any other source. 9. The dispersal of grants will be governed as follows: (a) In accordance with Treasury Circular 1075 (fourth revision) Part 205, Chapter II of Title 31 of the Code of Federal Regulations, grant funds will be provided by Rural Development as cash advances on an as needed basis not to exceed one advance every 30 days. The advance will be made by direct Treasury check to the grantee. In addition, the grantee must submit Standard Form (SF) 272, "Federal Cash Transactions Report," each time an advance of funds is made. This report shall be used by Rural Development to monitor cash advances made to the grantee. The financial management system of the recipient organization shall provide for effective control over and accountability for all Federal funds as stated in 7 CFR Parts 3015 and 3016. (09-01-93) PN 212 RD Instruction 1944-N Exhibit A Page 4 (b) Cash advances to the grantee shall be limited to the minimum amounts needed and shall be timed to be in accord only with the actual, immediate cash requirements of the grantee in carrying out the purpose of the planned project. The timing and amount of cash advances shall be as close as administratively feasible to the actual disbursements by the grantee for direct program costs (as identified in the grantee's statement of activities and budget and fund use plan) and proportionate share of any allowable indirect costs. (c) Grant funds should be promptly refunded to the Rural Development and redrawn when needed if the funds are erroneously drawn in excess of immediate disbursement needs. The only exceptions to the requirement for prompt refunding are when the funds involved: (i) Will be disbursed by the recipient organization within 7 calendar days from the date of the Treasury check; or (ii) Are less than $10,000 and will be disbursed within 30 calendar days from the date of the Treasury check. (d) Grantee shall provide satisfactory evidence to Rural Development that all officers of the grantees' organization authorized to receive and/or disburse Federal funds are covered by fidelity bonds in an amount not to exceed the grant amount to protect Rural Development's interests. 10. The grantee will submit performance, financial, and annual reports as indicated in this subpart to the appropriate Rural Development office. These reports must be reconciled to the grantees' accounting records, especially on the final report. (a) As needed, but not more frequently than once every 30 calendar days, submit an original and two copies of SF-270, "Request for Advance or Reimbursement." In addition, the grantee must submit an SF-272, each time an advance of funds is made. This report shall be used by Rural Development to monitor cash advances made to the grantee. RD Instruction 1944-N Exhibit A Page 5 (b) Quarterly reports will be submitted within 15 days, but no later than 45 days after the end of each calendar quarter. An original and one copy of SF-269, "Financial Status Report," and a quarterly performance report in accordance with §1944.683 of this subpart. Item 10, g (total program outlays) of SF-269, should be less any rebates, refunds, or other discounts. (c) Within 90 days after the termination or expiration of the grant agreement, an original and two copies of SF-269, and a final performance report which will include a summary of the project's accomplishments, problems, and planned future activities of the grantee for HPG. Final reports may serve as the last quarterly report. (d) Rural Development may require performance reports more frequently if deemed necessary. 11. In accordance with Office of Management and Budget (OMB) Circular A-87, "Cost Principles for State and Local Governments" (available in any Rural Development office), compensation for employees will be considered reasonable to the extent that such compensation is consistent with that paid for similar work in other activities of the State or local government. 12. If the grant exceeds $100,000, cumulative transfers among direct cost budget categories totaling more than 5 percent of the total budget must have prior written approval by Rural Development. 13. The results of the program assisted by grant funds may be published by the grantee without prior review by Rural Development, provided that such publications acknowledge the support provided by funds pursuant to the provisions of Title V of the Housing Act of 1949, as amended, and that five copies of each such publications are furnished to Rural Development. 14. The grantee certifies that no person or organization has been employed or retained to solicit or secure this grant for a commission, percentage, brokerage, or contingent fee. (09-01-93) PN 212 RD Instruction 1944-N Exhibit A Page 6 15. No person in the United States shall, on the grounds of race, religion, color, sex, familial status, age, national origin, or handicap, be excluded from participating in, be denied the proceeds of, or be subject to discrimination in connection with the use of grant funds. Grantee will comply with the nondiscrimination regulations of Rural Development contained in Subpart E of Part 1901 of this chapter. 16. In all hiring or employment made possible by or resulting from this grant, the grantee: (a) Will not discriminate against any employee or applicant for employment because of race, religion, color, sex, familial status, age, national origin, or handicap, and (b) Will take affirmative action to insure that employees are treated during employment without regard to their race, religion, color, sex, familial status, age, national origin, or handicap. This requirement shall apply to, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation; and selection for training, including apprenticeship. (c) In the event grantee signs a contract related to this grant which would be covered by any Executive Order, law, or regulation prohibiting discrimination, grantee shall include in the contract the "Equal Employment Clause" as specified by Form RD 400-1, "Equal Opportunity Agreement." 17. The grantee accepts responsibility for accomplishing the HPG program as submitted and included in its preapplication, application, including its statement of activities. The grantee shall also: (a) Endeavor to coordinate and provide liaison with State and local housing organizations, where they exist. (b) Provide continuing information to Rural Development on the status of grantee HPG programs, projects, related activities, and problems. RD Instruction 1944-N Exhibit A Page 7 (c) Inform Rural Development as soon as the following types of conditions become known: (i) Problems, delays, or adverse conditions which materially affect the ability to attain program objectives, prevent the meeting of time schedules or goals, or preclude the attainment of project work units by established time periods. This disclosure shall be accompanied by a statement of the action taken or contemplated, new time schedules required and any Rural Development assistance needed to resolve the situation. (ii) Favorable developments or events which enable meeting time schedules and goals sooner than anticipated or producing more work units than originally projected. 18. The grant closeout and termination procedures will be as follows: (a) Promptly after the date of completion or a decision to terminate a grant, grant closeout actions are to be taken to allow the orderly discontinuation of grantee activity. (i) The grantee shall immediately refund to Rural Development any uncommitted balance of grant funds. (ii) The grantee will furnish to Rural Development within 90 calendar days after the date of completion of the grant, SF-269 and all financial, performance, and other reports required as a condition of the grant, including a final audit report, as required by 7 CFR Parts 3015 and 3016. (iii) The grantee shall account for any property acquired with HPG grant funds or otherwise received from Rural Development. (iv) After the grant closeout, Rural Development retains the right to recover any disallowed costs which may be discovered as a result of an audit. (09-01-93) PN 212 RD Instruction 1944-N Exhibit A Page 8 (b) When there is reasonable evidence that the grantee has failed to comply with the terms of this grant agreement, the State Director can, on reasonable notice, suspend the grant pending corrective action or terminate the grant in accordance with paragraph B, 18 (c) of this grant agreement. In such instances, Rural Development may reimburse the grantee for eligible costs incurred prior to the effective date of the suspension or termination and may allow all necessary and proper costs which the grantee could not reasonably avoid. Rural Development will withhold further advances and grantees are prohibited from further use of grant funds, pending corrective action. (c) Grant termination will be based on the following: (i) Termination for cause. This grant may be terminated in whole, or in part, at any time before the date of completion, whenever Rural Development determines that the grantee has failed to comply with the terms of this agreement. The reasons for termination may include, but are not limited to, such problems as: (A) Failure to make reasonable and satisfactory progress in attaining grant objectives. (B) Failure of grantee to use grant funds only for authorized purposes. (C) Failure of grantee to submit adequate and timely reports of its operation. (D) Violation of any of the provisions of any laws administered by Rural Development or any regulation issued thereunder. (E) Violation of any nondiscrimination or equal opportunity requirement administered by Rural Development in connection with any Rural Development programs. (F) Failure to maintain an accounting system acceptable to Rural Development. RD Instruction 1944-N Exhibit A Page 9 (ii) Termination for convenience. Rural Development or the grantee may terminate the grant in whole, or in part, when both parties agree that the continuation of the project would not produce beneficial results commensurate with the further expenditure of funds. The two parties shall agree upon the termination conditions, including the effective date and, in case of partial termination, the portion to be terminated. (d) Rural Development shall notify the grantee in writing of the determination and the reasons for and the effective date of the suspension or termination. Except for termination for convenience, grantees have the opportunity to appeal a suspension or termination under Rural Development's appeal procedure, Subpart B of Part 1900 of this chapter. 19. Upon any default under its representatives or agreements set forth in this instrument, the grantee, at the option and demand of Rural Development, will, to the extent legally permissible, repay to Rural Development forthwith the grant funds received with interest at the rate of 5 percent per annum from the date of the default. The provisions of this grant agreement may be enforced by Rural Development, at its options and without regard to prior waivers by it or previous defaults of the grantee, by judicial proceedings to require specific performance of the terms of this grant agreement or by such other proceedings in law or equity, in either Federal or State courts, as may be deemed necessary by Rural Development to assure compliance with the provisions of this grant agreement and the laws and regulations under which this grant is made. 20. Extension of this grant agreement, modifications of the statement of activities, or changes in the grantee's budget may be approved by Rural Development provided, in Rural Development's opinion, the extension or modification is justified and there is a likelihood that the grantee can accomplish the goals set out and approved in the statement of activities during the period of the extension and/or modifications as specified in §1944.684 of this subpart. (09-01-93) PN 212 RD Instruction 1944-N Exhibit A Page 10 PART C Grantee agrees: 1. To comply with property management standards for expendable and nonexpendable personal property established by 7 CFR Parts 3015 and 3016. 2. To provide a financial management system which will include: (a) Accurate, current, and complete disclosure of the financial results of each grant. Financial reporting will be on a cash basis. The financial management system shall include a tracking system to insure that all program income, including loan repayments, are used properly. (b) Records which identify adequately the source and application of funds for grant-supported activities. Those records shall contain information pertaining to grant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays, and income. (c) Effecting control over and accountability for all funds, property, and other assets. Grantee shall adequately safeguard all such assets and shall assure that they are solely for authorized purposes. (d) Accounting records supported by source documentation. 3. To retain financial records, supporting documents, statistical records, and all other records pertinent to the grant for a period of at least 3 years after the submission of the final performance report, in accordance with paragraph B 10 (c) of this grant agreement, except in the following situations: (a) If any litigation, claim, audit, or investigation is commenced before the expiration of the 3-year period, the records shall be retained until all litigations, claims, audit, or investigative findings involving the records have been resolved. (b) Records for nonexpendable property acquired by Rural Development, the 3-year retention requirement is not applicable. RD Instruction 1944-N Exhibit A Page 11 (c) When records are transferred to or maintained by Rural Development, the 3-year retention requirement is not applicable. (d) Microfilm copies may be substituted in lieu of original records. Rural Development and 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 grantee which are pertinent to the specific grant program for the purpose of making audits, examinations, excerpts, and transcripts. 4. To provide information as requested by Rural Development concerning the grantee's actions in soliciting citizen participation in the applications process, including published notices of public meetings, actual public meetings held, and content of written comments received. 5. Not to encumber, transfer, or dispose of the property or any part thereof, furnished by Rural Development or acquired wholly or in part with HPG funds without the written consent of Rural Development. 6. To provide Rural Development with such periodic reports of grantee operations as may be required by authorized representatives of Rural Development. 7. To execute Form RD 400-1, and to execute any other agreements required by Rural Development to implement the civil rights requirements. 8. To include in all contracts in excess of $100,000, a provision for compliance with all applicable standards, orders, or regulations issued pursuant to the Clean Air Act, 42 U.S.C. §1875C-9, as amended. Violations shall be reported to Rural Development and the Regional Office of the Environmental Protection Agency. 9. That no member of Congress shall be admitted to any share or part of this grant or any benefit that may arise therefrom, but this provision shall not be construed to bar as a contractor under the grant a public-held corporation whose ownership might include a member of Congress. (09-01-93) PN 212 RD Instruction 1944-N Exhibit A Page 12 10. That all nonconfidential information resulting from its activities shall be made available to the general public on an equal basis. 11. That the purpose for which this grant is made may complement, but shall not duplicate programs for which monies have been received, are committed, or are applied for from other sources, public and private. 12. That the grantee shall relinquish any and all copyrights and/or privileges to the materials developed under this grant, such material being the sole property of the Federal Government. In the event anything developed under this grant is published in whole or in part, the material shall contain a notice and be identified by language to the following effect: "The material is the result of tax-supported research and as such is not copyrightable. It may be freely reprinted with the customary crediting of the source." 13. That the grantee shall abide by the policies promulgated in 7 CFR Parts 3015 or 3016, as applicable, which provides standards for use by grantees in establishing procedures for the procurement of supplies, equipment, and other services with Federal grant funds. 14. That it is understood and agreed that any assistance granted under this grant agreement will be administered subject to the limitations of Title V of the Housing Act of 1949, as amended, 42 U.S.C 1471, et. seq., and related regulations, and that all rights granted to Rural Development herein or elsewhere may be exercised by it in its sole discretion to carry our the purposes of the assistance, and protect Rural Development's financial interest. 15. That the grantee will adopt a standard of conduct that provides that, if an employee, officer, or agency of the grantee, or such person's immediate family members conducts business with the grantee, the grantee must not: (a) Participate in the selection, award, or administration of a contract to such persons for which Federal funds are used; RD Instruction 1944-N Exhibit A Page 13 (b) Knowingly permit the award or administration of the contract to be delivered to such persons or other immediate family members or to any entity (i.e., partnerships, corporations, etc.) in which such persons or their immediate family members have an ownership interest; or (c) Permit such person to solicit or accept gratuities, favors, or anything of monetary value from landlords or developers of rental or ownership housing projects or any other person receiving HPG assistance. 16. That the grantee will be in compliance with and provide the necessary forms concerning the Debarment and Suspension and the Drug-free Workplace requirements found in §1944.654 of this subpart. 17. That the grantee will comply with the requirements in respect to rental properties and cooperatives (co-ops) and will execute an agreement with the owners or co-op as found in §§1944.662 and 1944.663 of this subpart, specifically: (a) If the co-op or rental property owner(s) or their successors in interest fail to carry out the requirements of this grant agreement, the ownership agreement, or any requirements noted in this subpart during the applicable period, they shall make a payment to Rural Development in an amount that equals the total amount of the assistance provided by the grantee plus interest thereon (without compounding) for each year and any fraction thereof that the assistance was outstanding The interest rate shall be that as determined by Rural Development at the time of infraction taking into account the average yield on outstanding marketable long-term obligations of the United States during the month preceding the date on which the assistance was initially made available. (b) Notwithstanding any other provision of law, any assistance provided shall constitute a debt, which is payable in the case of any failure to carry out the agreement between the grantee and the rental property owner(s) or co-op and shall be secured by the security instruments provided by them to Rural Development. 18. That all requirements of this subpart concerning HPG's will be followed. (09-01-93) PN 212 RD Instruction 1944-N Exhibit A Page 14 PART D Rural Development agrees: 1. That it will assist the grantee, within available appropriations, with such technical and management assistance as needed in coordinating the statement of activities with local officials, comprehensive plans, and any State or area plans for improving housing for very low- and low-income households in the area in which the project or program is located. 2. That at its sole discretion, Rural Development may at any time give any consent, deferment, subordination, release, satisfaction, or termination of any or all of the grantee's grant obligations, with or without valuable consideration, upon such terms and conditions as the grantor may determine to be: (a) Advisable to further the purposes of the grant or to protect Rural Development's financial interests therein; and (b) Consistent with the statutory purposes of the grant and the limitations of the statutory authority under which it is made and Rural Development's regulations. PART E Attachments: The statement of activities is attached to and made a part of this grant agreement. RD Instruction 1944-N Exhibit A Page 15 This grant agreement is subject to current Rural Development regulations and any future regulations not inconsistent with the express terms hereof. Grantee has caused this grant agreement to be executed by its duly authorized __________________________________________________________, properly attested to and its corporate seal affixed by its duly authorized __________________________________________________________. Attest: Grantee: By: ____________________________________________ ________________________________________________ (Title) Date of Execution of Grant Agreement by Grantee: ________________________________________________ United States Of America Rural Development By: ____________________________________________ ________________________________________________ (Title) Date of Execution of Grant Agreement by Rural Development: ________________________________________________ oOo (09-01-93) PN 212 RD Instruction 1944-N Exhibit B AMENDMENT TO HOUSING PRESERVATION GRANT AGREEMENT This amendment between ________________________________________________, herein called the "Grantee," and the United States of America acting through the Rural Development, Department of Agriculture, herein called "Rural Development," hereby amends the Housing Preservation Grant Agreement originally executed by said parties on ______________________. Said grant agreement is amended by extending the ending date of the grant agreement to ______________________, and/or by making the following changes noted in the attachments hereto (list and identify proposal(s) and any other documents pertinent to the grant agreement which are attached to this amendments). The grantee has caused this "Amendment To Housing Preservation Grant Agreement" to be executed by its duly authorized ______________________, properly attested to and its corporate seal affixed by its duly authorized ________________________________. Attest: Grantee: By: ____________________________________________ ________________________________________________ (Title) Date of Execution of Amendment to Grant Agreement by Grantee: ________________________________________________ United States of America Rural Development: By: ____________________________________________ ________________________________________________ (Title) Date of Execution of Amendment to Grant Agreement by Rural Development: ________________________________________________ oOo (09-01-93) PN 212 RD Instruction 1944-N Exhibit C (Revision 2) ADMINISTRATIVE INSTRUCTIONS FOR RURAL DEVELOPMENT FIELD OFFICES REGARDING THEIR RESPONSIBILITIES IN THE ADMINISTRATION OF THE HOUSING PRESERVATION GRANT (HPG) PROGRAM I. Overall guidance. This exhibit is intended for use by Rural Development personnel and applicants. It is to be used as a guide to this subpart to detail the duties of Rural Development personnel, reinforce specific Rural Developments, and further explain areas which have in the past been confusing. II. Preapplications. The State Director will designate the office for the processing (and servicing) of HPG preapplications in accordance with §1944.660 of this subpart. Upon receiving the Federal Register and/or Administrative Notice (Processing), the State Office should notify all field offices and have a notice published in the local media. At a minimum, this notice should include the field office where a preapplication package may be obtained, questions answered, and a preapplication submitted; the open dates that preapplications may be received; and the amount of initial allocation received by the State and that "No entity can receive more than 50 percent of the State's allocation." All requests for assistance in completing the preapplication will be forwarded to the appropriate Rural Development office. When District Offices are the processing office, the State Office is responsible for monitoring the District Office. The preapplication must be submitted to the processing office serving the area in which the applicant proposes to operate the HPG program. If the applicant proposes to operate in more than one District office area, the State Director will designate a specific office to process the application. (A) Preapplication package. The State and District Offices will maintain for distribution to potential applicants, upon request, a supply of preapplication packets consisting of: (1) Standard Form (SF) 424.1, "Application for Federal Assistance (for Non-construction)"; (2) Form RD 400-1, "Equal Opportunity Agreement"; (09-01-93) PN 212 RD Instruction 1944-N Exhibit C Page 2 (Revision 2) (3) Form RD 400-4, "Assurance Agreement"; (4) Form RD 1940-20, "Request for Environmental Information" (The attached instructions to the form for preparing the form should be discarded in lieu of Exhibit F-1 of this subpart); (5) Exhibit F-1 of this subpart; (6) Exhibit F-2 of this subpart; (7) A copy of RD Instruction 2000-FF; (8) Forms AD-1047, "Certification Regarding Debarment, Suspension, and Other Responsibility Matters - Primary Covered Transactions," AD-1048, "Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion - Lower Tier Covered Transactions," and AD-1049, "Certification Regarding Drug-free Workplace Requirements (Grants) Alternative I - for Grantees Other Than Individuals"; (9) RD Instruction 1944-N. (10) This exhibit. (B) Preapplication review. The Rural Development official with whom the preapplication is filed will review the preapplication (SF 424.1) and other supporting information from the applicant pursuant to § 1944.676 of this subpart. The reviewing official will prepare a written narrative of the preapplication. These comments will, at a minimum, address the following items: (1) Whether the area to be covered by the project is a "rural area," as defined in 7 CFR part 3550. (Revised 01-23-03, SPECIAL PN.) (2) The need for the proposed activity and its relationship to Rural Development housing activities anticipated in the area to be served. (3) A statement that the applicant was made aware of the Drug-free Workplace Act of 1988 requirements (§ 1944.654(b)), the debarment requirements (§ 1944.654) and a review of the debarment list by the Agency. (Revised 07-31-96, PN 264.) RD Instruction 1944-N Exhibit C Page 3 (4) That all of the requirements of §1944.658 of this subpart are or will be met. (5) The extent of citizen involvement in the development of the preapplication, particularly the involvement of minority and/or low-income groups. (6) A general statement that the applicant is (or is not) eligible and the application is (or is not) feasible, and the amount of funds recommended for approval (if applicable). (7) Any other comments deemed necessary or applicable. Preapplications which meet the project selection criteria outlined in §1944.679 (a) of this subpart will then be further reviewed and rated as outlined in §1944.679 (b) of this subpart. Exhibit D of this subpart will be used to summarize the ratings. Upon completion of the rating (Exhibit D of this subpart), the preapplication, all supporting material, together with the reviewer's written comments, and recommendations will be forwarded to the State Director within 15 calendar days from the final date for receipt of completed preapplications. (C) Review and ranking by State Office. The State Office will re-evaluate all preapplications for completeness and accuracy. In addition, the State Office should also: (1) Have the State Office architect review the preapplications as to the adequacy of the development standards to be used and any other construction related technical matters associated with the preapplication. (2) Review Exhibit D of this subpart for all preapplications to assure that the rating was done in accordance with §1944.679 of this subpart. (3) Complete Exhibit G (ranking) of this subpart listing all preapplications and submit a copy to: Multi-Family Housing Processing Division, Special Authorities Branch, National Office. States may request additional funds from the National Office reserve in accordance with a current Administrative Notice covering funding. (09-01-93) PN 212 RD Instruction 1944-N Exhibit C Page 4 (4) Submit, for all preapplications meeting the criteria of §1944.679 (a) of this subpart, a copy of the organizations' legal documentation to the Office of General Counsel (OGC) for a review and opinion prior to obligation of any Rural Development funds. The State Office will review the opinion from OGC on the applicant's legal existence and authority to conduct the proposed program for all preapplications determined eligible. This review must be done prior to obligation of funds. (5) Notify the applicants for all preapplications not meeting the criteria of §1944.679 (a) of this subpart. Those preapplications which do not meet Rural Development's requirements will be notified in accordance with §1944.682 of this subpart. A copy will be retained in the State Office. (D) National Office reallocation. The National Office will review within 45 days after the final date for submitting the preapplications, review Exhibit G of this subpart received from all State Offices and determine a reallocation of funds including all reserve funds in accordance with the current Administrative Notice (Processing). State Offices will be notified accordingly. III. Applications. Upon notification from the National Office of the reallocation of funds and those applications that are to be funded, the State Director will: (A) For preapplications for which there are not sufficient funds, return the preapplications to the processing office with reasons noted. The Rural Development official will notify those applicants of the reason(s) that their preapplication was not selected using Form AD-622, "Notice of Preapplication Review Action" and advise them of their appeal rights under Subpart B of Part 1900 of this chapter, if applicable. (B) For those preapplications which are selected and for which funds have been set aside, advise the processing office to issue Form AD-622 and request the applicant to submit an application (SF 424.1) for submission to the processing office. The request will include: RD Instruction 1944-N Exhibit C Page 5 (1) Instructions to the applicant for preparation of the full application; (2) Any conditions or amendments that must be incorporated into the statement of activities or budget; and (3) The following statement on Form AD-622: "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 grant approval or obligation of funds, whichever occurs first." (C) For those preapplications which are selected and for which funds have been set aside, the processing office will complete Form RD 1940-21, "Environmental Assessment for Class I Action," in accordance with Subpart G of Part 1940 of this chapter. (1) The State environmental coordinator will review these preapplications for compliance with §§1944.672 and 1944.673 of this subpart and, review Form RD 1940-21 for compliance with subpart G of Part 1940 of this chapter. (2) The approval official will execute Exhibit I of Subpart G of Part 1940 of this chapter. These requirements will be met prior to grant approval or obligation, whichever occurs first. (D) After receipt of Form AD-622, the applicant will submit an application (SF-424.1) in an original and two copies and provide whatever additional information is requested to the processing office within 30 calendar days. (09-01-93) PN 212 RD Instruction 1944-N Exhibit C Page 6 (E) The processing office will review the application upon return from the applicant and determine if it complies with all regulations, is consistent with the information, and that supporting documents required to be submitted are complete. If major problems occur during the dev