acute shortage of decent, safe, and sanitary dwellings for families of low income, in urban and rural nonfarm areas, that are injurious to the health, safety, and morals of the citizens of the Nation. The objectives are carried out by providing financial assistance, pursuant to contracts, to Local Authorities applying for such assistance in developing and operating low-rent housing projects or for leasing of housing in private accommodations. Applications for financial assistance, if otherwise proper, are approved to the extent permitted by limitations contained in the Act or other statutes.

§ 1520.3 Application for financial assist

ance (other than leasing program).

A Local Authority seeking Federal financial assistance for a low-rent housing project must submit an application and a showing that the Local Authority has been organized in accordance with State law, that there is a need for the proposed low-rent housing which is not being met by private enterprise, and that the governing body of the locality has by resolution approved application for a preliminary loan and has entered into a Cooperation Agreement with the Local Authority satisfactory to the Department of Housing and Urban Development. A Preliminary Loan Contract provides for advances of funds for surveys and planning. Such a contract is tendered by HUD to the Local Authority only after approval by the Assistant Secretary for Renewal and Housing Assistance. § 1520.4 Annual Contributions Contract (other than leasing program).

An Annual Contributions Contract provides for a loan to assist in the development of a low-rent housing project and for annual contributions to assist in achieving and maintaining the low-rent character of the project. As the basis for such a contract, the Local Authority must submit a plan for its project with a showing of its feasibility, including such matters as description of site, statement of number and types of structures and dwelling units, estimate of development cost, and data supporting all features of the project. The Local Authority must also show that, except in the case of displaced or elderly families, a gap of at least 20 percent has been left between the upper rental limits for the proposed housing and the lowest rents at which private enterprise is providing

housing, and is required to include a pla for relocating displaced families. An A nual Contributions Contract is tender by HUD to the Local Authority only aft approval by the Assistant Secretary f Renewal and Housing Assistance.

§ 1520.5 Leasing program.

The leasing program involves the u of privately owned housing with the a of subsidy channeled through the Loc Authority. Pursuant to section 23 of t United States Housing Act of 1937 ( U.S.C. 1421b), HUD is authorized to ma annual contributions available to Lo Authorities so that privately own dwellings may be leased for occupan by low-income families at rents with their means. In such a leasing progra HUD pays annual contributions to co the deficiency between the rent payal to the owner and the rent which the lo income family can afford to pay. Befe dwellings can be provided by leasi under section 23, the local governi body must adopt a resolution approvi application of the section 23 provisions the locality. An application for low-re housing under section 23 of the A should include data on the number units desired, available supply, and ne for the housing, amount of financial a sistance estimated to be necessary, al financial feasibility of the undertakin §1520.6 Private participation.

(a) Increased opportunities exist participation of the private sector in low-rent housing program. These rest from the growing use of new methods providing low-rent housing in additi to the traditional method of new co struction. These include the acquisiti and rehabilitation of existing housi for low-income occupancy, leasing of a isting housing under section 23 (describ in § 1520.5), as well as the "turnke technique and joint enterprise betwe Local Authorities and private organiz tions.

(b) Under the "turnkey" techniqu a private developer or builder, who h a site or an option, or can obtain can approach the Local Authority wi a proposal to build in accordance wit plans and specifications prepared by own architect and the usual commerci standards of quality and workmanshi If the proposal is acceptable, they w then enter into a contract under whic the Local Authority agrees to purcha the completed property. This contra

is backed by HUD's financial assistance commitment to the Local Authority, thereby enabling the developer to secure commercial construction financing in his usual manner. The "turnkey" technique may also be used in the rehabilitation of existing housing; instead of a Local Authority itself acquiring and rehabilitating existing dwellings, the Local Authority, under the "turnkey" approach, can contract with a private builder or rehabilitator to purchase from him certain dwellings which he has acquired and rehabilitated to HUD standards.

(c) Joint enterprise between Local Authorities and private organizations may consist, for example, of joint undivided ownership of housing by the Local Authority and a private organization, with moderate-income families housed in units used by the private organization and low-income tenants housed in other units with the aid of HUD annual contributions channeled through the Local Authority. Another form of joint enterprise would be for a private organization having full ownership of housing to use a portion of its units to house moderate-income families with the remaining units leased for occupancy by low-income families with the aid of HUD subsidy channeled through the Local Authority. $1520.7

Applications; information.

(a) A Local Authority applying for financial assistance should submit its applications and all related documents to the appropriate HUD Regional Office. Application forms and other forms, procedures, policy statements, and materials issued by HUD for the use or guidance of Local Authorities may be obtained through the appropriate HUD Regional Office; however, after approval of its application, a Local Authority will be sent copies of all relevant materials without specific request.

(b) Information with respect to methods of providing low-rent housing with private participation may be obtained from the Local Authority in the locality or from the appropriate HUD Regional Office. Information may also be obtained from the Department of Housing and Urban Development, Washington, D.C. 20410.

(c) A list of HUD Regional Offices appears as Appendix A to 1500.7 of this chapter.

50-047-71-35

§ 1520.8 Federally owned low-rent housing.

Low-rent housing projects owned by the Federal Government have been disposed of except for project Cherokee Terrace in Enid, Okla. Information on final action on applications for tenancy and information as to final action of the Housing Manager in the procurement of supplies and materials for which such a Manager is authorized to contract shall be kept at the project office and made available to the public by the Housing Manager. Inquiries concerning the project and requests for statements of policy, procedures, and forms should also be directed to the Housing Manager. The address is: Cherokee Terrace, 619 East Main Street, Enid, Okla. 73701.

(a) All terms shall have the same meaning as given them in the Act.

(b) "Act" means title IV of the Housing Act of 1950, as amended (12 U.S.C. 1749 et seq.).

(c) "Construction" means erection of new structures, or rehabilitation, alteration, conversion, or improvement of existing structures.

(d) "Development cost" means the cost of construction, land and site improvements, and includes preliminary development expenses, architect and engineering expense, legal and administrative expense, and interest during construction; except that, in the case of purchase of facilities, such cost shall be as approved by the Secretary.

(e) "Educational institution" means any public or nonprofit private college, university, or other institution which offers or will offer within a reasonable time after completion of the facility at least a 2-year program acceptable for full credit toward a bachelor's degree; any hospital operating a school of nursing beyond the level of high school approved by State authority or internship and resident programs approved by recognized authority providing housing for their students; or any nonprofit corporation, student cooperative, or public body, eligible under section 404(b) of the Act, providing housing and related facilities for students and faculty of educational institutions.

(f) "Housing and other educational facilities" means (1) structures suitable for dwelling use, including dormitories, apartments, and single family dwellings, and (2) structures suitable for use as cafeterias or dining halls, student centers or student unions, infirmaries, health facilities, or other essential service facilities.

(g) "Secretary" means the Secretary of Housing and Urban Development or any officer authorized to perform the functions of the Secretary.

(h) "State" means the several States, the District of Columbia, and the Territories and possessions of the United States, including the Commonwealth of Puerto Rico.

§ 1540.2 General policy.

The objective of this program is to assist educational institutions in providing housing and other educational facilities for students and faculties through direct loans for the construction or purchase of such facilities, or through annual debt service grants to reduce the cost of borrowing from other sources for such purposes, where private financing is not available on terms and conditions equally as favorable as for a direct loan. Assistance is also provided to hospitals operating nursing schools beyond the high school level or approved internships.

§ 1540.3 Eligible projects.

for

Assistance in financing the construction or purchase of housing and other educational facilities may be provided under the following conditions:

(a) Construction must not be of elaborate or extravagant design or materials and must be undertaken in an economical manner.

(b) Construction must not have been completed at the time the application for assistance is made.

(c) A loan or grant-supported loan cannot be made solely for the purpose of refunding a long-term loan obtained prior to the filing of an application.

(d) Grant assistance will not accrue for any period prior to occupancy of the facilities.

(e) Site acquisition is limited to the amount of land reasonably necessary for the proposed housing or other educational facility.

(f) Projects to provide facilities for religious purposes or for theological sem inaries or other schools providing training primarily for religious vocations are ineligible for assistance.

(g) Housing for the use of specific groups of students, such as fraternities or sororities, is eligible only if such housing is part of the overall housing plan of the college and if the housing will be operated under the direct responsibility and control of the college.

(h) An eligible service facility must provide an essential service in connection with the institution's housing plan. § 1540.4

Applications.

(a) Information and application forms may be obtained from and applications submitted to the Regional Office of the Department of Housing and Urban Development which serves the area in which the educational institution is located. A list of HUD Regional Offices with their addresses and areas of jurisdiction appears in Appendix A to § 1500.7 of this chapter. Applications will be received periodically and considered concurrently for both the direct loan and grant subsidy programs. In order to maintain flexibility in the allocation of available funds, HUD reserves the option to approve either a direct loan or a grant to a particular applicant.

(b) Prior to approval of a direct loan or grant, the applicant educational institution must establish that it:

(1) Has the necessary legal authority to finance, construct, operate and maintain the proposed facilities, to apply for

nd receive the proposed assistance, and Oprovide such security as shall be reired by the Secretary;

(2) Has the ability to comply with the rms and conditions governing receipt assistance and operation of the oject;

(3) Has or will have such interest in or le to the project site, including access ereto, as will assure undisturbed use, ssession and operation of the facilities ring the period of assistance; and

(4) Will retain title to and all of its ht, title, and interest in and to the oject during the period of assistance, cept as otherwise expressly approved the Secretary.

540.5 Assistance terms.

(a) Direct loans for eligible developnt cost shall be for such period not to ceed 40 years (50 years for projects for ich funds were reserved prior to July 1, 68), bear interest at such rate not exceed 3 percent per annum, and be so ured and subject to such terms and nditions, as shall be determined by the cretary.

b) Annual grants shall be made over ixed period not exceeding 40 years, as ermined by the Secretary, in an ount equal to the difference between average annual debt service required amortize the private market loan to er eligible development cost and the rage annual debt service which would required to amortize a direct loan of term. Fund limitations may require setting of maximum limits for the

nt.

540.6

Assistance agreements.

[pon approval of a direct loan or nt, together with reservation of funds, Secretary will prepare and forward an agreement or grant agreement for cution by the educational institution. › agreement will set forth the terms I conditions of the loan or grant and also specify conditions which must fulfilled precedent to making of the 1 or grant. The fully executed agreeit will constitute the contract been the educational institution and the retary during the life of the direct 1 or grant, and in the case of a grant guarantee continuation of the grant ments so long as the related private ket bonds are outstanding.

§ 1540.7

Grants to public educational institutions.

All public educational institutions approved for grant assistance must comply with the following requirements except as otherwise expressly approved by the Secretary:

(a) Submit a financing plan in form and substance acceptable to the private bond market and satisfying minimum standards established by the Secretary;

(b) Publicly advertise the bonds in a financial newspaper of general use by the bond market to which the bonds will be offered;

(c) Accept bids only for the entire issue; and

(d) Obtain an unqualified approving opinion of bond counsel experienced in municipal bonds whose opinions are marketable by reason of previous acceptance by investment dealers, banks, or insurance companies.

(a) All laborers and mechanics employed by contractors and subcontractors in the construction of housing and educational facilities assisted under the Act shall be paid wages at rates not less than those prevailing in the locality involved for the corresponding classes of laborers and mechanics employed on construction of a similar character as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a-276a-5), and shall receive overtime compensation in accordance with and subject to the provisions of the Contract Work Hours Standards Act (40 U.S.C. 327-332).

(b) All contracts for construction work paid for in whole or in part from assistance funds provided under the Act shall provide that the contractor shall comply with the Copeland ("Anti-Kickback") Act (40 U.S.C. 276c) and the regulations of the Secretary of Labor thereunder (29 CFR Part 3).

(c) The requirements of title VI of the Civil Rights Act (42 U.S.C. 2000d et seq.) that no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, or be denied the benefits of, or be otherwise subjected to discrimination are applicable to educational institutions receiving assistance under the Act.

(d) All contracts for construction work paid for in whole or in part from assistance funds provided under the Act are subject to Executive Order 11246 (30 F.R. 12319, Sept. 28, 1965), as amended by Executive Order 11375 (32 F.R. 14303, Oct. 17, 1967), providing for equal opportunity in employment, and the rules and regulations of the Department of Labor with respect thereto.

(e) The provisions of title VIII (Fa Housing) of the Civil Rights Act of 19 (Public Law 90-284, 42 U.S.C. 360 3619), prohibiting refusal to rent to discrimination against any person terms or conditions of rental or provisi of services on account of race, colo religion, or national origin, are appl cable to projects assisted under the A