[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: 7CFR3560.64]



[Page 492-493]

 

                          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. 3560.64  Initial operating capital contribution.



    Borrowers are required to make an initial operating capital 

contribution to the general operating account in the amount of at least 

2 percent of the total development cost or appraised value, whichever is 

less.

    (a) Borrowers that are nonprofit organizations, consumer 

cooperatives, or state or local public agencies and are not receiving 

low-income housing tax credits, may use loan funds for their initial 

operating capital contribution. All other borrowers must fund the 

initial operating capital contribution from their own resources.

    (b) Borrowers must provide to the Agency for approval a list of 

materials and equipment to be funded from the general operating account 

for initial operating expenses. As specified in Sec. 3560.304(b), 

initial operating capital may be used only to pay for approved budgeted 

expenses. If total initial operating expenses exceed 2 percent, the 

additional amount must be paid by the



[[Page 493]]



borrower from its own resources, except that borrowers meeting the 

provisions of Sec. 3560.64(a) who do not have sufficient resources for 

this purpose may request Agency assistance. Withdrawals from the reserve 

account will not be approved for such expenses.

    (c) Borrowers must provide the Agency with documentation of their 

initial operating capital contribution deposited into the general 

operating account prior to the start of construction or loan closing, 

whichever comes first, and such funds thereafter, may only be used for 

authorized budgeted purposes.

    (d) If the conditions specified in Sec. 3560.304(c) are met, funds 

contributed as initial operating capital may be returned to the 

borrower.