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acute shortage of decent, safe, and sani- housing, and is required to include a pla tary dwellings for families of low income, for relocating displaced families. An Al in urban and rural nonfarm areas, that nual Contributions Contract is tenderr are injurious to the health, safety, and by HUD to the Local Authority only aft morals of the citizens of the Nation. The approval by the Assistant Secretary objectives are carried out by providing Renewal and Housing Assistance. financial assistance, pursuant to contracts, to Local Authorities applying for

§ 1520.5 Leasing program. such assistance in developing and op- The leasing program involves the * erating low-rent housing projects or for of privately owned housing with the gang leasing of housing in private accom- of subsidy channeled through the LOZE modations. Applications for financial Authority. Pursuant to section 23 of tam assistance, if otherwise proper, are United States Housing Act of 1937 ! approved to the extent permitted by U.S.C. 1421b), HUD is authorized to ma 3 limitations contained in the Act or other annual contributions available to Lose statutes.

Authorities so that privately own lint § 1520.3 Application for financial assist

dwellings may be leased for occupanties ance (other than leasing program).

by low-income families at rents with unist

their means. In such a leasing progra:. owe A Local Authority seeking Federal fi

HUD pays annual contributions to coutho nancial assistance for a low-rent housing the deficiency between the rent payal tith project must submit an application and a to the owner and the rent which the lost in urshowing that the Local Authority has income family can afford to pay. Befta and been organized in accordance with State

dwellings can be provided by leaster uni law, that there is a need for the proposed under section 23, the local govern eintri low-rent housing which is not being met body must adopt a resolution approval. A by private enterprise, and that the gov- application of the section 23 provisions zepa erning body of the locality has by reso- the locality. An application for low-rtation lution approved application for a pre- housing under section 23 of the 4s to le liminary loan and has entered into a Co- should include data on the number aider operation Agreement with the Local

units desired, available supply, and near un Authority satisfactory to the Depart- for the housing, amount of financial exime ment of Housing and Urban Develop- sistance estimated to be necessary, a subsid ment. A Preliminary Loan Contract pro- financial feasibility of the undertakil vides for advances of funds for surveys and planning. Such a contract is tendered

$1520.6 Private participation. by HUD to the Local Authority only after (a) Increased opportunities exist approval by the Assistant Secretary for participation of the private sector in Renewal and Housing Assistance.

low-rent housing program. These rest $ 1520.4 Annual Contributions Contract

from the growing use of new methods (other than leasing program).

providing low-rent housing in additi

to the traditional method of new ca An Annual Contributions Contract pro

struction. These include the acquisitif polia vides for a loan to assist in the develop

and rehabilitation of existing housted ba ment of a low-rent housing project and for low-income occupancy, leasing of Loca for annual contributions to assist in

isting housing under section 23 (describa tirou achieving and maintaining the low-rent

in § 1520.5), as well as the "turnke al osta character of the project. As the basis for such a contract, the Local Authority

technique and joint enterprise betwe malica

Local Authorities and private organik must submit a plan for its project with tions. a showing of its feasibility, including

(b) Under the “turnkey" techniq such matters as description of site, statement of number and types of structures

a private developer or builder, who and dwelling units, estimate of develop

a site or an option, or can obtain of ment cost, and data supporting all fea

can approach the Local Authority tures of the project. The Local Authority

a proposal to build in accordance

plans and specifications prepared by must also show that, except in the case

own architect and the usual commerci of displaced or elderly families, a gap standards of quality and workmansh Le Dee of at least 20 percent has been left be- If the proposal is acceptable, they wereld tween the upper rental limits for the then enter into a contract under whic proposed housing and the lowest rents the Local Authority agrees to purchaluist of at which private enterprise is providing the completed property. This contra : A






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§ 1520.8 Federally owned low-rent hous

ing. 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.

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.


PROGRAM Sec. 1540.1 Definitions. 1540.2 General policy. 1540.3 Eligible projects. 1540.4 Applications. 1540.5 Assistance terms. 1540.6 Assistance agreements. 1540.7 Grants to public educational in

stitutions. 1540.8 Other requirements.

AUTHORITY: The provisions of this part 1540 issued under 79 Stat. 489, as amended; 12 U.S.C. 1749 et seq.; and Secretary's del. of auth. to Assistant Secretary for Renewal and Housing Assistance published at 34 F.R. 17041, October 18, 1969.

SOURCE: The provisions of this Part 1540 appear at 34 F.R. 16871, Oct. 18, 1969, unless otherwise noted. § 1540.1 Definitions.

As used in this part:

(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 (a) Construction must not be of elab- 9 any public or nonprofit private college, orate or extravagant design or materials university, or other institution which and must be undertaken in an economioffers or will offer within a reasonable cal manner. time after completion of the facility' at (b) Construction must not have been and least a 2-year program acceptable for completed at the time the application to full credit toward a bachelor's degree; for assistance is made. any hospital operating a school of nurs- (c) A loan or grant-supported loan iso ing beyond the level of high school ap- cannot be made solely for the purpose : proved by State authority or internship of refunding a long-term loan obtained as and resident programs approved by prior to the filing of an recognized authority providing housing (d) Grant assistance will not accrue for their students; or any nonprofit for any period prior to occupancy of the corporation, student cooperative, or pub- facilities. lic body, eligible under section 404 (b) of (e) Site acquisition is limited to the sun the Act, providing housing and related amount of land reasonably necessary for 2 of facilities for students and faculty of the proposed housing or other educa. Gre educational institutions.

tional facility. (f) “Housing and other educational (f) Projects to provide facilities for facilities” means (1) structures suitable religious purposes or for theological semfor dwelling use, including dormitories, inaries or other schools providing trainapartments, and single family dwellings, ing primarily for religious vocations are and (2) structures suitable for use as ineligible for assistance. cafeterias or dining halls, student cen- (g) Housing for the use of specific ters or student unions, infirmaries, health groups of students, such as fraternities or ?! facilities, or other essential service sororities, is eligible only if such housing and facilities.

is part of the overall housing plan of the 5,2 (g) "Secretary” means the Secretary college and if the housing will be operof Housing and Urban Development or ated under the direct responsibility and any officer authorized to perform the control of the college. functions of the Secretary.

(h) An eligible service facility must (h) "State” means the several States, provide an essential service in connection the District of Columbia, and the Terri- with the institution's housing plan. tories and possessions of the United

§ 1540.4 Applications. States, including the Commonwealth of Puerto Rico.

(a) Information and application forms mnom

may be obtained from and applica sied § 1540.2 General policy.

tions submitted to the Regional Office Au The objective of this program is to of the Department of Housing and Urban ing o assist educational institutions in provid- Development which serves the area in ing housing and other educational facili- which the educational institution is low

Ass ties for students and faculties through cated. A list of HUD Regional Offices with direct loans for the construction or pur- their addresses and areas of jurisdiction chase of such facilities, or through annual debt service grants to reduce the

appears in Appendix A to $ 1500.7 of cost of borrowing from other sources for

this chapter. Applications will be resuch purposes, where private financing

ceived periodically and considered conis not available on terms and conditions

currently for both the direct loan and equally as favorable as for a direct loan.

grant subsidy programs. In order to Assistance is also provided to hospitals

maintain flexibility in the allocation of operating nursing schools beyond the

available funds, HUD reserves the option high school level

approved for

to approve either a direct loan or a grant internships.

to a particular applicant. 8 1540.3 Eligible projects.

(b) Prior to approval of a direct loan

or grant, the applicant educational in. Assistance in financing the construc

stitution must establish that it: tion or purchase of housing and other (1) Has the necessary legal authority educational facilities may be provided

to finance, construct, operate and main. under the following conditions:

tain the proposed facilities, to apply for


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and receive the proposed assistance, and to provide such security as shall be required by the Secretary;

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

(3) Has or will have such interest in or title to the project site, including access thereto, as will assure undisturbed use, possession and operation of the facilities during the period of assistance; and

(4) Will retain title to and all of its right, title, and interest in and to the project during the period of assistance, except as otherwise expressly approved by the Secretary. $ 1540.5 Assistance terms.

(a) Direct loans for eligible development cost shall be for such period not to exceed 40 years (50 years for projects for which funds were reserved prior to July 1, 1958), bear interest at such rate not to exceed 3 percent per annum, and be so secured and subject to such terms and conditions, as shall be determined by the Secretary.

(b) Annual grants shall be made over a fixed period not exceeding 40 years, as determined by the Secretary, in amount equal to the difference between the average annual debt service required to amortize the private market loan to cover eligible development cost and the average annual debt service which would be required to amortize a direct loan of like term. Fund limitations may require the setting of maximum limits for the grant. 1540.6 Assistance agreements.

Upon approval of a direct loan or grant, together with reservation of funds, the Secretary will prepare and forward a loan agreement or grant agreement for execution by the educational institution. The agreement will set forth the terms and conditions of the loan or grant and will also specify conditions which must be fulfilled precedent to making of the loan or grant. The fully executed agreement will constitute the contract between the educational institution and the Secretary during the life of the direct loan or grant, and in the case of a grant will guarantee continuation of the grant payments so long as the related private market 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. $ 1540.8 Other requirements.

(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 reg. ulations 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.


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