(x) Energy Policy and Conservation Act of 1975 (15 U.S.C. 753 et seq.);

(xi) Coastal Zone Management Act of 1972 (16 U.S.C. 1451 et seq.;

(xii) Solid Waste Disposal Act as amended by the Resources Recovery Act of 1970 (42 U.S.C. 3259);

(xiii) Noise Control Act of 1972 (42 U.S.C. 4901-18); and

(xiv) Fish and Wildlife Coordination Act of 1958 (16 U.S.C. 661 et seq.),

(d) Management. To assure that environmental quality requirements will be achieved, management systems and controls shall be instituted to provide for the monitoring and analysis of components of the Development Plan affecting the environment, particularly major changes in environmental impact over the life of the Project. Such systems and controls may involve coordination or participation by State, regional or local government.

(e) Project agreement restrictions. Reservations and restrictions which are considered by the Secretary to be necessary to assure the achievement of environmental quality objectives shall be incorporated in the Project Agreement.

§ 720.18 Welfare of the area.

The Project must contribute to the welfare of the entire area which will be substantially affected by the Project and of which the land to be developed is a part. Among the factors which the Secretary will consider in determining whether a Project meets this requirement are:

(a) The estimated fiscal impact of the Project on local units of government which are, or will be, responsible for meeting the on-site and off-site needs for public facilities and services generated by the Project. In determining this impact, both the estimated expenditures and revenues, on- and offsite, incident to the development of the Project will be considered. Due to its importance, particular and detailed consideration will be given to the fiscal impact associated with the provision of educational facilities and services;

(b) The estimated fiscal impact of development which would be likely to occur in the absence of the Project, on

local units of government which would be responsible for meeting the projected on-site and off-site needs for public facilities and services generated by such development. The factors indicated in paragraph (a) of this section will be considered for this purpose; and

(c) Other benefits and costs to the area generated by the Project such as jobs created and similar economic benefits, increased availability and accessibility of transportation, commercial, recreational, health, educational and other community facilities and services, and the anticipated overall effects of the new community upon the quality of development growth of the area as a whole.

and

§ 720.19 Area planning and development. (a) If the area within which the Project is to be located is covered by a comprehensive areawide plan or by an on-going planning effort by an authorized agency, the Project must be consistent with such comprehensive plan or planning and must reflect consideration of any economic development programs, physical plans, social and service delivery plans and programs, and public works programs of relevant Federal, State, regional, city or county agencies for the area, provided such planning is, in the Secretary's judgment, sufficiently detailed to provide a reasonable basis for evaluating the relationship of the proposed new community to such other plans.

(b) Throughout the development period of the Project, there shall be continued planning coordination by the Developer with the appropriate local, area-wide or State planning agencies.

§ 720.20 Advances in design and technology.

(a) General requirement. A Project shall make significant use of advances in design and technology with respect to land utilization, materials and methods of construction, and the provision of community facilities and services.

(b) Scope and nature of advances. Advances meeting the requirements of this section need not be limited to physical elements of a Project, but

may include the Project as a whole, if it involves an advanced general concept or approach to community building, or any significant advance in the planning, design, financing or management of systems and institutional arrangements for meeting the needs of the community.

(c) Factors to be considered. The Secretary shall take the following factors into account in determining whether a given element of a Project meets the requirements of this section:

(1) A proposed element may meet this requirement if it constitutes an advance over general practice in the area in which the Project is located, even though it may have been instituted or applied in other areas of the country.

(2) While some degree of risk may be inherent, the probable impact of a proposed advance on marketability or other aspects of the Project shall be considered in relation to the overall economic feasibility of the Project. To the extent that a high risk advance is proposed for an element critical to the success of the entire Project, other feasible options shall be available in the event the advance shall prove to be infeasible.

(3) An advance accepted for the purposes of meeting the requirements of the Act shall, subsequent to its implementation, be subject to evaluation by the Developer or by outside groups, and to arrangements satisfactory to the Secretary for dissemination of information about the advance.

(d) Financial assistance for advances. (1) Where substantial costs for studies and implementation are involved, the Project shall include a plan for financing of such costs by the Developer, by outside sources or by a combination thereof. Commitments of financing by the Developer shall be subject to overall economic feasibility requirements as set forth in § 720.23.

(2) It is the policy of the Secretary to assist the Developer, within budgetary constraints, in instituting or applying advances approved by the Secretary.

§ 720.21 Capacity and ownership of the developer.

The Developer shall possess the financial, technical, and administrative ability which demonstrates its capacity to carry out the Project with reasonable assurance of its completion in accordance with the Project Agreement. Such capacity shall in part be determined by the criteria and standards set forth in this section and elsewhere in these Regulations.

(a) Management structure. The Developer shall establish and maintain throughout the development period a management structure and system which, in the judgment of the Secretary, is appropriate to:

(1) The size and complexity of the Project;

(2) The amount of the debt obligations to be guaranteed or other assistance given;

(3) The current development status of the Project;

(4) The purposes, criteria, requirements and standards of the Act and the Regulations;

(5) Project Documents; and

(6) Principles of sound business practice.

Such plan shall identify the various components of its operation, including kinds and levels of expertise required over the development period. Consideration shall be given to projections of overhead costs, contingencies, and realistic schedules (especially during the initial state of development) in establishing the workload and expertise needed for efficient and economical management during each stage of development.

(b) Management system. The management system shall include the following components:

(1) Establishment of goals and functions to be performed in planning, development and management of the new community;

(2) An identification of the roles to be performed in carrying out these functions by the Developer and by any entities outside the immediate control of the Developer, such as Local Public Bodies or affiliates and Subsidiaries;

(3) Planning and programming techniques, including a sound mechanism for long-range planning, which will permit proper phasing of diverse activities and the ability to adapt to changing requirements of the development process;

(4) A mechanism for measuring results against established criteria and standards;

(5) Provision of accurate and current data and analysis of changing conditions, and the utilization of this data in further decision-making;

(6) Establishment of management control mechanisms to execute the program in an efficient manner.

(c) Personnel resources. (1) The Developer shall have, either in its own organization or available to it, personnel with the requisite managerial, administrative and technical ability and background appropriate to the implementation of the management structure and system as set forth under paragraphs (a) and (b) of this section. Proposed use of consultants, number and profession, as a supplement to the Developer's management organization, shall be identified by development stage cost.

by

(2) Prior to acceptance of the offer of commitment (see § 720.46), person(s) approved by the Secretary, who shall exercise the responsibilities of a chief executive officer for the Project, shall be under contract to the Developer. Such approval shall be based upon consideration of background and experience indicating managerial ability and the probity of such individuals as determined pursuant to paragraph (d)(2) of this section.

(d) Probity of owners and management staff-(1) Owners. Prior to acceptance of the offer of commitment, the Developer shall submit such information as the Secretary may require in order to conduct a background investigation of the stockholders, partners and any other Person having a direct or indirect ownership interest in the Developer. In the event that the results of any such investigation are adverse as to the probity of any such Person, the Secretary reserves the right to disapprove any such stockholder, partner or other Person. No

sale, transfer, pledge or other disposition of all or any portion of a Private Developer's stock or other equity interest may be made without the approval of the Secretary. No sale, transfer, pledge or other disposition of the stock or other equity interest of any entity which directly or indirectly owns or controls any interest in a Private Developer may be made without the approval of the Secretary where either a change in control of the Private Developer may result or the transaction involves a Person or entity whom the Secretary deems to have a substantial relationship to the Project. In approving any such sale, transfer, pledge or disposition, the Secretary may take into consideration, among other things, the probity of any Person taking an interest in any such stock or equity interest, the extent to which the Developer has met the requirements and goals of the Project Documents and the possible effect on the Developer's future ability to meet the requirements and goals of the Project Documents if such transfer, pledge or other disposition is completed.

(2) Management staff. Prior to acceptance of the offer of commitment (and at any time thereafter that a change is proposed), the Developer shall submit such information as the Secretary may require in order to conduct a background investigation of the officers, directors, managing or general partners, and any other individual having a management function with respect to the Developer. In the event that the results of any such investigation are, in the judgment of the Secretary, adverse as to the probity of such Person, the Secretary reserves the right to disapprove any such Person. § 720.22 Equal opportunity.

(a) General requirement. A Project must be specifically designed and implemented so as to assure compliance with all requirements imposed by or pursuant to any applicable statute, executive order or regulation (as they have been or may be amended from time to time) concerning discrimination on the basis of race, creed, color, religion, sex, or national origin. These

include Title VIII of the Civil Rights Act of 1968 (42 U.S.C. 3601-3619); Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000(e)); the Civil Rights Acts of 1866 and 1870 (42 U.S.C. 1981-2); Executive Order 11063 (27 FR 11527); and Executive Order 11625 (36 FR 19967); Executive Order 11246 (30 FR 12319) and Executive Order 11375 (32 FR 14303). These authorities apply variously so as to prohibit discrimination and promote equal opportunity in the use, sale, lease or other disposition of land, housing, or facilities in the Project and in employment in, or in the development of, the Project. Pursuant to the authority in each executive department to issue regulations and take other appropriate action under Executive Order 11063 with respect to its programs, discrimination on the basis of race, color, creed, or national origin in the use, sale, lease cr other disposition of any land developed for residential or related uses with assistance under the Act hereby specifically made a violation of that order enforceable under the terms of section 302 of the order after due notice and hearing. A Project must also be specifically designed and implemented to comply with all requirements imposed by or pursuant to section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701(u)), as it may be amended from time to time, regarding job and business opportunities for Project area residents.

is

(b) Affirmative action program. In furtherance of paragraph (a) of this section, and as a condition of the granting or continuation of assistance by the Secretary, the Developer shall formulate and implement an affirmative action program. Such program shall be in addition to any other requirements imposed by or pursuant to the authorities cited in paragraph (a) of this section. Such program shall include: (1) Planning and construction activities as well as marketing practices which provide a full range of individual housing choice and encourage members of various ethnic and racial minorities to live and work in the new community, cooperation cooperation with civil rights and civic groups, action to pro

vide equal opportunity within the Developer's staff, and inclusion of equal opportunity provisions in pertinent contracts, subcontracts, covenants, and other documents; (2) An affirmative action program for equal employment opportunity in direct employment by the Developer and employment by contractors and subcontractors of the Developer. In addition, the Developer is encouraged to take all feasible steps to involve minority entrepreneurs in planning and development of the Project.

(c) Monitoring of Affirmative Action Program. The Developer shall establish methods to periodically assess the results of each portion of his affirmative action program. He shall incorporate, in a timely manner, appropriate adjustments to achieve the goals of such program.

§ 720.23 Economic feasibility and financial risk.

A Project must be determined by the Secretary to be economically feasible and to constitute an acceptable financial risk to the U.S. Government based upon consideration of the following factors:

(a) The economic potential of the Project, as measured against the criteria and other considerations described in § 720.24 for marketing land in accordance with assumptions as to prices, quantities, types, timing, and other factors specified in the plan for development of the Project;

(b) The Financial Plan for the Project prepared in accordance with § 720.25; and

(c) Other factors, including, without limitation, those set forth in § 720.26, affecting the financial risk to the United States.

§ 720.24 Economic base and growth potential.

A proposed Project must be determined by the Secretary to be likely to accomplish the marketing of land to be developed within the Project in accordance with assumptions as to prices, quantities, types, timing and other factors specified in a plan for development of the Project. Such determination shall be based upon consider

ation of studies and analyses included as part of the Developer's application, of the following market criteria and factors and such other information, studies and analyses as may be available to the Secretary:

(a) Market criteria. The size of the potential market for various categories of land use in the area must be determined, together with expected capture rates for the proposed Project, based upon consideration of the Project relative to other existing and probable development in the area. For each major land use category, consideration shall be given to the following factors:

(1) Residential land-(i) Demand factors. Historic absorption rates of residential units by type and price range, the current status and the historic and projected growth rate for each of the following market indicators: population, household size, employment, family income, personal income, housing preference and

demand by type of units, including subsidized sale and rental housing units.

(ii) Supply factors. With respect to probable as well as existing supply within the market area: sales of residential land comparable as to location, price per unit and per acre by type of dwelling unit; size, accessibility, and availability of other residential sites; utilities and amenities of other residential sites compared with the proposed Project; amount and condition of the housing stock by resident income; housing permits and starts; rental units by type and monthly rent; and vacancy rates by type.

(2) Industrial land—(i) Demand factors. With respect to the market area for industrial land, which may constitute a larger area than that identified for the residential market: employment growth rates by types of industries; sizes and types of major industries located in the market area; capital investment and value added to the local tax base by these industries; the historic absorption rate of land zoned industrial; the size, growth rate and wage rates of the major industrial employers; availability of raw materials, transportation and markets for prod

ucts; prevailing tax policies in the area, and other relevant factors.

(ii) Supply factors. With respect to probable as well as existing supply: availability of industrial sites in the market area by location and size; comparable historical sales and rental activity, including sale price per acre and per square foot rental rates; and availability of utilities and amenities.

(3) Commercial land-(i) Demand factors. Projections of retail sales to expected residents of the new community; identification of population in the trade area by driving time intervals, income profile and area consumer expenditure patterns; conversion of retail sales projections into space and land requirements; identification of existing and proposed commercial developments; capital investment by commercial center; and historic absorption rates of land zoned for commercial use.

(ii) Supply factors. Comparable sales and rental data and availability of sites outside the Project but within the trade area; generally the same type of information indicated in paragraph (a)(2)(ii) of this section.

(4) Office land—(i) Demand factors. Size of the market area; projections of white collar employment; space requirements per employee, industry or service; identification of existing and proposed office building centers; capital investment for office building; absorption rates of land zoned for office use; and historic vacancy rates.

(ii) Supply factors. Comparable sales and rental data and availability of sites outside the Project but within the market area; generally the same type of information indicated in paragraph (a)(2)(ii) of this section.

(b) Non-market criteria. In addition to the market criteria specified in paragraph (a) of this section, the following special criteria shall be considered in determining the economic base or potential for economic growth in the indicated types of Projects.

(1) Free-standing and growth center projects. In the case of free-standing and small town growth centers, as described in § 720.12(b)(3), prior to the issuance of guarantees there shall be reasonable assurance, in the form of