proceeds plus required escrows to build the project, and (2) that the rental or project income will be sufficient to meet all operating expenses and mortgage payments during the full term. Nonprofit sponsors should understand, however, that owning and operating a housing project involves difficult and trying problems, including the possibility that some unforeseen circumstances could cause project funds to run short. They should understand that FHA would expect them to cope with these problems at the time of need by all means at their disposal, such as promotional help, contributive management or services, appeals to membership or affiliated organizations. They are not legally required to provide such support, but any nonprofit sponsor should by definition feel a strong sense of moral duty to help in these circumstances. There is no reason to distinguish between a housing project and any other social purpose asset of a nonprofit organization, such as an elderly home, a medical facility, a convalescent center or a day-care facility.

It is stressed, however, that FHA does not insist upon or require a pledge or guaranty, except in rare cases where deficits are anticipated during "rent-up." What is required is a full understanding of responsibility on the part of the nonprofit sponsor. Sponsors must, of course, establish that they have the capabilities to meet expenses prior to the drawdown of mortgage funds, including expenses for architectural services, legal and other professional services, etc. Such expenses need not be covered by the sponsor's funds alone. They may be met through assured advances from such other parties as a bank, a federal, state or municipal fund, a foundation, a chuch hierarchy, or another nonprofit organization.

It is permissible to borrow funds from the contractor or other parties connected with the project if they are for items to be covered by the insured mortgage and if such sums are paid in full at the time the mortgage proceeds are advanced.

Potential sponsors. Although it is not desirable to attempt to establish rigid criteria for determining eligibility of nonprofit sponsors, certain factors will indicate strength, other factors will suggest weakness, and some factors will make the sponsor ineligible. An evaluation of factors applicable to a particular sponsor will assist in reaching a judgment about the eligibliity of the sponsor and his ability to successfully carry out the proposed project.

Among factors which indicate strength are: (1) A serious desire to provide housing for qualified low- and moderate-income families and individuals, (2) deep roots in the neighborhood and community, (3) previous experience in successfully operating housing projects, (4) widespread support for the proposal within the membership of the non

profit organization, (5) professional expertise within the nonprofit organization or available to it from qualified outside sources, (6) adequate financial capacity to meet initial expenses and to provide for unforeseen contingencies during construction and operation of the project, and (7) absence of conflicts of interest.

Among factors which suggest weakness are: (1) No previous housing experience, (2) no previous experience or contracts in the neighborhood in which the proposed project would be located, (3) evidence that a builder, landowner, consultant, or some other party expecting to benefit financially had initiated the project and dominates the sponsorship, (4) lack of assured continuity of support by the nonprofit group as a whole, or the support of individuals who may not continue their association with the sponsoring organization, (5) heavy commitments in other fields which would tax the financial capacity of the group and weaken its support of the proposed project in times of stress, and (6) lack of professional competence to build and operate the project successfully.

Eligible nonprofit sponsors will be found among organizations such as:

A strong local chapter of a national service organization.

A broadly based community action group-such could be recently formed if there is positive assurance of continuity.

An established church with a good record of social services.

A National or State church organization. An active charitable foundation of long standing-such could be a family foundation with unquestionable motivation, continuity, and no relationship to profit parties.

A labor union with an active local and full support of the membership.

An outstanding local service organization such as a Junior Chamber of Commerce.

Some sponsors are clearly ineligible without considering factors of strength and weakness, such as a nonprofit foundation controlled by the builder or his family, or by any other person or persons who would derive a profit or fee from the project.

Special Considerations for Section 221(h) Rehabilitation Sales Sponsorship. The nature of the program; i.e., the rehabilitation and sale of properties to low-income purchasers, requires a special type of sponsorship.

The responsibility as it pertains to the real estate is relatively short term; whereas the responsibility for continued social services to the individual low-income owners is a long-term one. The sponsor must have the capacity or ability to arrange for the continued services required to aid the purchasers to become responsible home owners.

§ 50.1 Purpose and authority.

(a) The National Environmental Policy Act of 1969 (Pub. L. 91-190, 42 U.S.C. 4321 et seq.) as amended (hereinafter called NEPA) establishes national policy, goals and procedures for protecting and enhancing environmental quality. It directs the Federal Government to use all practicable means, including financial and technical assistance, to implement the national policy. NEPA, as implemented by Executive Order 11514 (March 5, 1970) and amended by Executive Order 11991 (May 24, 1977), and the National Environmental Policy Act Regulations (40 CFR Parts 1500-1508, dated November 29, 1978), requires that all agencies of the Federal Government adopt implementing procedures and prepare detailed environmental statements on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment.

(b) The purpose of these regulations is to establish Departmental environmental policy, to assign responsibilities, and to provide procedural guidance to all headquarters and field offices for HUD environmental clearances under NEPA, and establish a procedure for commenting on Environmental Impact Statements (EIS) initi

ated by other Federal Agencies. These regulations apply to HUD legislative proposals, guidance documents, and individual project approval actions on insurance, loans and grants, subsidies, and certain demonstration projects.

(c) These regulations do not apply to projects carried out by the applicant under Title I of the Housing and Community Development Act of 1974, as amended, which has special environmental regulations for applicant review as set forth in 24 CFR Part 58.

(d) Other applicable authorities. The environmental review process must also consider, where applicable, the criteria, standards, policies and regulations under the following:

(1) Historic properties. The National Historic Preservation Act of 1966 (Pub. L. 89-665); Preservation of Historic and Archeological Data Act of 1974 (Pub. L. 93-291); Executive Order 11593, Protection and Enhancement of the Cultural Environment, 1971; Procedures for Protection of Historic and Cultural Properties, Advisory Council on Historic Preservation, 36 CFR Part 800. HUD Counterpart Regulations (24 CFR Part 59) shall be used when they become effective;

(2) Noise. Noise Abatement and Control (24 CFR Part 51), Subpart B;

(3) Floodplains. Flood Disaster Protection Act of 1973 (Pub. L. 93-234) and Implementing Regulations; National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001 et seq.); Executive Order 11988 Floodplain Management (May 24, 1977); and applicable HUD implementing regulations;

(4) Wetlands. Executive Order 11990 Protection of Wetlands (May 24, 1977) and applicable HUD implementing regulations;

(5) Coastal zones. Coastal Zone Management Act of 1972 as amended (16 U.S.C. 1451 et seq.); Management and Approval Regulations (15 CFR Part 923, dated March 28, 1979); and applicable State legislation or regulations;

(6) Air quality. Clean Air Act (Pub. L. 90-148) and Clean Air Act Amendments of 1970 (Pub. L. 91-604) as amended; and the applicable implementing regulations of the U.S. Environmental Protection Agency (EPA);

(7) Water quality. Federal Water Pollution Control Act (Pub. L. 93-500);

Safe Drinking Water Act of 1974 (Pub. L. 93-523); and applicable U.S. Environmental Protection Agency implementing regulations;

(8) Wildlife. Fish and Wildlife Coordination Act (Pub. L. 85-624);

(9) Endangered species. The Endangered Species Act of 1973 (Pub. L. 93205); and the Endangered Species Act Amendments of 1978 (Pub. L. 95-632); and The Procedural Regulations Governing Interagency Cooperation (43 FR 870);

(10) Solid waste disposal. The Solid Waste Disposal Act as amended by the Resource Conservation and Recovery Act (Pub. L. 94-580) and applicable U.S. Environmental Protection Agency

implementing regulations.

§ 50.2 [Reserved]

§ 50.3 Terminology.

For the purpose of this part, the following terminology shall apply and supplement the uniform terminology provided in the NEPA Regulations (40 CFR Part 1508).

Areas of jurisdiction by law or special expertise. The areas in which one agency is asked to comment on major actions by another agency in accordance with NEPA.

Comments. Formal reactions transmitted by one Federal Agency to the proposed action or the Draft EIS; also formal reactions of State and local agencies or of public or private groups or individuals to the proposed action. Each Federal Agency, including HUD, which receives comments on its Draft EIS shall take them into account in the Final EIS and in the approval or disapproval of the proposal.

Cooperating Agency. "Cooperating Agency" means any Federal Agency other than a Lead Agency which has jurisdiction by law or special expertise with respect to any environmental impact involved in a proposal (or a reasonable alternative) for legislation or other major Federal action significantly affecting the quality of the human environment.

Cumulative impact. "Cumulative impact" is the impact on the environment which results from the incremental impact of the action when added to present, and reasonably fore

seeable future actions regardless of what agency (Federal or non-Federal) or person undertakes such other actions. Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time.

Decision points. Those points of Federal commitment in the decisionmaking process concerning proposed projects and undertakings before which environmental assessments and historic preservation procedures must be completed. Specific decision points under HUD's various types of programs are set forth in Appendices A-1 and A-2 of these regulations. HUD compliance with these regulations at the prescribed decision point shall be final.

Environmental Assessment. A concise, documented analysis of environmental conditions sufficient to determine whether to prepare an EIS or to prepare a Finding of No Significant Impact. For HUD purposes, the Environmental Assessment may include both the Normal and Special Clearance, or either one.

The Environmental Assessment shall also include brief discussions of the need for the proposal; for Special Clearances, alternatives as required by section 102(2)(E) of the National Environmental Policy Act of 1969; and the environmental impacts of the proposed action.

Environmental impact. An environmental impact is any alteration of environmental conditions or creation of a new set of environmental conditions, adverse or beneficial, caused or induced by the actions or set of actions under consideration. Environmental impact includes the secondary or indirect, as well as the primary or direct consequences of a proposed action, such as the effects of the proposed action on population and growth. Assessment of the significance of the environmental impact generally involves two major elements: A quantitative measure of magnitude and a qualitative measure of importance. Such a determination is a matter of judgment and is governed by HUD environmental policies and standards.

Environmental Impact Statement Supplement. For the purpose of these

procedures, the term "EIS Supplement" shall be used to identify a product and a two-stage process, for updating a Final EIS when additional information is discovered or when actions are being contemplated which would change the basic assumptions of the most recent Final EIS. The EIS Supplement is limited to contemplated actions which are subsequent to HUD's approval of, or commitment to, the project's original proposals.

Finding of No Significant Impact. A determination made in accordance with this part that no EIS is required for the proposed HUD action under consideration. The Finding of No Significant Impact is the result of an Environmental Assessment.

HUD Environmental Policies and Standards. National, Departmental, and program objectives, policies, standards, and procedures. These include: (1) National environmental goals and policies as expressed in NEPA, other statutes and Executive Orders, and Regulations issued by the Council on Environmental Quality; (2) Department-wide standards and policies; and (3) environmental considerations contained in program policy and guidance documents, including environment-related project selection criteria, minimum property standards, and environmental elements of program circulars, handbooks and other issuances.

Human environment. Human environment is defined in § 1508.14 of the NEPA Regulations. It is also clear from section 102(2) of NEPA that the term "Environment" is meant to be interpreted broadly and is to include physical, social, cultural, and aesthetic dimensions. Examples are: Air and water quality, erosion control, preservation of floodplain and wetland values, natural hazards, land use planning, site selection and design, subdivision development, conservation of flora and fauna, urban congestion, overcrowding, displacement and relocation resulting from public or private action or natural disaster, noise pollution, urban blight, code violations and building abandonment, urban sprawl, urban growth policy, social services and amenities, preservation of cultural resources, including properties on, or

eligible for listing on, the National Register of Historic Places, urban design and quality of the built environment, and the impact of the environment on people and their activities.

Major amendatory. A change by HUD in the approved Urban Renewal Plan which:

(1) Increases the overall building density (Floor Area Ratio) of any primary land use by 20% or more; or

(2) Changes the area within project boundaries devoted to any one of the primary land uses (i.e., commercial, residential, industrial, or public) by 20% or more; or

(3) Changes in project boundaries or project area by 20% or more; or

(4) Adds or deletes a public facility which serves the Plan or project; or

(5) Involves the acquisition and/or demolition of property which had not been part of the previously approved Urban Renewal Plan.

An Environmental Assessment and/or an EIS carried out pursuant to § 50.1 and Appendix A-1 of this part shall be limited to the factor or factors requiring the environmental review.

Major Federal actions. Those actions taken by a Federal Agency which require EISS in accordance with section 102(2)(C) of NEPA. AS HUD processes thousands of applications per year at the project level, not including insurance actions on individual houses, the two level environmental assessment process defined in this part shall be used to determine which action is a major Federal action significantly affecting the quality of the human environment.

Scoping. "Scoping" is a process as defined in § 50.31 (e) and (f) that aims to identify the range of significant actions, alternatives impacts which an EIS should address and which identifies related projects and environmental data as well as cooperating agencies that may aid in preparing the EIS. The process involves appropriate Notices, communications and meetings deemed feasible or necessary for the proposed action.

Significantly. The word "significantly" as used in the phrase "significantly affecting the quality of the human environment" is defined in § 1508.27 of the NEPA Regulations. For the pur

pose of this part it is used to describe the qualitative effect of an action on the human environment.

Threshold. A criterion of size or environmental impact above which an Environmental Assessment for a Special Clearance or an EIS is required. Thresholds for EISS represent a scale of action that automatically is regarded as a major Federal action significantly affecting the quality of the human environment. The threshold is designed to screen out the more important HUD actions for special attention. HUD thresholds are set forth in Appendix A-1 of this part.

Tiering. "Tiering" refers to the coverage of general matters in broader EIS with subsequent narrower Statements of Environmental Assessments incorporating only by reference the analysis of the broader statement. The subsequent narrower statement normally will concentrate on issues specific to the project being proposed.

§ 50.4 [Reserved]

§ 50.5 General policy.

(a) It is the policy of the Department to reject proposals which have unacceptable environmental impacts, based on HUD environmental policies and standards, which cannot be avoided, and to encourage modification of project proposals or plans in order to enhance environmental quality and minimize environmental harm. At each stage of the environmental clearance HUD officials shall work with the applicant to seek means for avoiding adverse environmental impact, maximizing environmental quality, and considering superior alternatives.

(b) When Environmental Assessments or EISS reveal conditions or safeguards which should be implemented once a project is approved in order to protect and enhance environmental quality or minimize adverse environmental impacts, such conditions or safeguards shall be set forth as requirements in the contract, grant, or other documents which delineate the obligations of the recipient. The contractor's performance in meeting such conditions shall be monitored and evaluated as part of HUD's project in