[Code of Federal Regulations]

[Title 7, Volume 15]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR3560.54]



[Page 483-484]

 

                          TITLE 7--AGRICULTURE

 

     CHAPTER XXXV--RURAL HOUSING SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 3560_DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS--Table of Contents

 

               Subpart B_Direct Loan and Grant Origination

 

Sec. 3560.54  Restrictions on the use of funds.



    (a) Ineligible uses of funds. Funds may not be used for:

    (1) Housing intended to serve temporary and transient residents, 

with the exception of housing to serve migrant farm workers in 

accordance with Sec. 3560.554;

    (2) Special care facilities or institutional-type homes;

    (3) Facilities which are not in compliance with the design 

requirements specified in Sec. 3560.60;

    (4) Any costs associated with space in a housing project that is 

leased for commercial use or any commercial facilities except essential 

service-type facilities when otherwise not conveniently available;

    (5) Specialized equipment for training and therapy;

    (6) Operating capital for a central dining facility or any items 

which do not become affixed to the real estate security with the 

exception of household furnishings for farm labor housing units financed 

under sections 514 and 516;

    (7) Compensation to a loan applicant for value of land contributed 

in excess of the equity contribution requirements in Sec. 3560.63(c);



[[Page 484]]



    (8) Refinancing of an applicant's debt except when the debt involves 

interim financing or when refinancing is necessary to obtain a release 

of an existing lien on land owned by a nonprofit organization;

    (9) Payment of any fee, charge, or commission to a broker or anyone 

else as a developer's fee or for referral of a prospective loan 

applicant or solicitation of a loan;

    (10) Payment to any officer, director, trustee, stockholder, member, 

or agent of an applicant; or

    (11) Purchasing land for a site in excess of what is needed, except 

when:

    (i) The applicant cannot acquire an alternate site or cannot acquire 

the needed land as a separate parcel;

    (ii) The applicant agrees to sell the excess land as soon as 

practical and to apply the proceeds to the loan; and

    (iii) Program site density requirements are met in accordance with 

the site requirements established under Sec. 3560.58.

    (b) Obligations incurred before loan approval. Funds may not be used 

for expenses incurred by an applicant prior to approval except when all 

the following conditions are met:

    (1) The debts were incurred for eligible purposes;

    (2) Contracts, materials, construction, and any land purchased meet 

Agency standards and requirements;

    (3) Payment of the debts will remove any attached liens and any 

basis for liens that may attach to the property on account of such 

debts; and

    (4) The appropriate level of environmental review in accordance with 

7 CFR part 1940, subpart G has been completed.