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State commission and to all institutions within the State. Whenever supplemental forms or definitions or data in published reports or publications are to be used in connection with optional State plan standards, the State plan shall include a section setting forth such definitions and supplementary data sources and an appendix illustrating the supplemental State forms.

(h) In no event shall an Institution's readiness to admit out-of-State students be considered as a priority factor adverse to such institution and in no event may the nature of the control or sponsorship of the institution, or the fact that construction of the project has commenced, or that part of the cost of a project has been incurred before or under a contract entered into prior to the date of the application, be considered as a priority factor either in favor of, or adverse to, an institution.

§ 170.16 Criteria for standards and methods to determine Federal shares of eligible projects.

(a) Unless the Federal share is specified in the State plan as a uniform percentage of the costs eligible for Federal financial participation, the State plan shall prescribe the standards and methods in accordance with which the State commission shall determine the Federal share of such costs, but in no event may the Federal share of a project exceed the percentage of the eligible project development cost specified by the Act.

(b) Standards and methods for determining the Federal share pursuant to paragraph (a) of this section: (1) Must be objective and simple to apply; (2) may involve the use only of data which are to be submitted on the application form prescribed by the Commissioner, required by the State commission to be submitted on supplemental State forms to accompany the application, or contained in reports or publications readily available to the State commission and the institutions of higher education in the State; (3) must be such as will enable an applicant to calculate in advance (on the assumption that sufficient funds will be available to cover all applications) the minimum Federal share of the estimated eligible project development cost which the State commission will certify to the Commissioner if it recommends the project for a Federal grant; and (4) must be consistent with criteria

published by the Commissioner with respect to the determination of relative priorities among projects and be promotive of the purposes of the Act. § 170.17 State plans.

(a) The Commissioner shall approve a State plan only after he has received satisfactory assurance and explanation regarding the basis on which the State commission submitting the plan meets the requirements of section 105 (a) of the Act. A new or revised State plan submitted in accordance with section 105 of the Act shall be submitted on forms or in a format supplied by the Commissioner and shall contain all provisions required by the Commissioner pursuant to section 105 of the Act and other sections of the regulations in this part, together with such additional organizational and administrative information as the Commissioner may request.

(b) All proposed amendments to the State plan shall be submitted to the Commissioner for his approval in such form and in accordance with such instructions as are established for that purpose. Such amendments shall apply uniformly to all applications to be considered together as of any closing date, and, unless otherwise provided in the State plan, shall become effective immediately upon approval by the Commissioner, except that in no event shall any amendment which affects the standards and methods for determining priorities or Federal shares or any amendment providing for an additional closing date or for the change in an existing closing date become effective sooner than 60 days after the date the proposal to make such amendment is received by the Commissioner and 30 days after the date of the Commissioner's approval of the amendments as a part of the State plan: Provided, however, That amendments which are required by amendments of the Act or of these regulations or are designed to implement promptly amendments of the Act or of these regulations may be made effective immediately upon their approval by the Commissioner.

(c) State plan amendments conforming to the provisions in these regulations regarding closing dates and determination of priorities shall be submitted and approved prior to State commission actions on any Title I applications for closing dates later than December 31, 1966.

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§ 170.18 Adjustments in amount of Federal share.

For all Title I grants approved after July 1, 1966, the following procedures shall apply:

(a) In any case where the costs eligible for Federal participation, as determined by the final audit, exceed those provided for in the grant agreement for the project, the Federal share entitlement of the applicant shall be limited to that provided by the grant award.

(b) In any case where the costs eligible for Federal participation, as determined by the final audit, are less than those provided for in the grant award, the Commissioner shall redetermine the amount of the Federal share which would have been recommended for the project, based on the lesser eligible cost, under State plan provisions in effect at the time the project was recommended for a grant, if sufficient funds had been available in the State allotment at that time to provide the maximum Federal share provided for by the plan. If such redetermined Federal share entitlement is less than the maximum amount authorized by the grant award the grant shall be reduced accordingly, and any overpayment of Federal funds shall immediately be due to the Government of the United States. If such redetermined Federal share is equal to or greater than the maximum amount of the Federal share authorized by the grant award, the final settlement shall be based on the Federal share amount authorized by the grant award.

(c) The Commissioner may from time to time, after award of the grant and prior to final settlement, adjust the grant amount to take into account any reductions of eligible project development cost which occur or are identified subsequent to the award of the grant.

§ 170.19 Payment of grant funds on approved projects.

The commissioner shall provide for payment of grant funds for approved projects pursuant to such methods as he determines will best make the funds available as needed and eliminate unnecessary expense to the Federal Government.

Subpart C-Grants for Construction of Graduate Academic Facilities

§ 170.41 Eligibility for grants.

Grants for construction of academic facilities from funds appropriated under

Title II of the Act may be made only to assist institutions of higher education and cooperative graduate center boards in the construction of such academic facilities, including facilities essential to their operation, as will be dedicated to the provision of graduate education. § 170.42

Submission of applications.

Applications covered by this subpart may be submitted by institutions of higher education or by cooperative graduate center boards as defined in section 401 (i) of the Act. Such applications shall be submitted at such time and in such manner as may be prescribed by the Commissioner and will be processed by the staff of the Office of Education in the order of their receipt. Upon the completion of such processing as is appropriate, each application will be submitted to the advisory committee at its next meeting.

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In determining whether, to what extent and in what order to approve applications consideration shall be given, but not limited to, the following factors which are not necessarily listed in the order of their importance:

(a) The extent to which the program or programs to be assisted by the proposed construction will contribute toward the establishment or development of a graduate school or cooperative graduate center of excellence, or the extent to which such program or programs will contribute toward the improvement of an existing graduate school or cooperative graduate center.

(b) The extent to which the proposed construction will increase the capacity of the institution to supply highly qualified personnel critically needed by the community, industry, government, research, and teaching.

(c) The extent to which the proposed construction will assist in attaining a wider distribution throughout the United

States of graduate schools and cooperative graduate centers.

(d) The capability of the applicant to give full financial support to its programs generally, and specifically to the program or programs of graduate education to be assisted by the proposed construction.

(e) The extent to which the program or programs to be assisted by the proposed construction are likely to draw to the institution both graduate students and faculty of a high level of competence.

(f) The adequacy of applicant's existing academic facilities with respect to the present demands made on them and the demands that can reasonably be expected to be made on them in the foreseeable future, with particular reference to the adequacy of those facilities, if any, available for the conduct of the program or programs to be assisted by the proposed construction.

(g) The extent to which the proposed construction would contribute significantly to the increase in both or either the quantity or quality of graduate education in a relatively wide geographical

area.

§ 170.45 Special terms and conditions.

Before approving a Title II grant the Commissioner will require:

(a) Satisfactory evidence that the applicant has or will have a fee simple or such other estate or interest in the facilities and site, including access thereto, sufficient in the opinion of the Commissioner to assure undisturbed use and possession for the purpose of the construction and operation of the facilities for not less than 75 years from the date of application.

(b) Satisfactory evidence that the applicant has the necessary legal authority to finance, construct, and maintain the proposed facilities, and to apply for and receive the proposed grant. Subpart D-Loans for Construction of Academic Facilities

$ 170.51 Eligibility for loans.

Loans may be made only for construction of academic facilities for institutions of higher education or for cooperative graduate centers. § 170.52

Submission of applications. Each institution, cooperative graduate center board or higher education build

ing agency desiring a loan for the construction of academic facilities shall submit an application for such assistance, in the manner and containing the information specified by the Commissioner.

§ 170.53

Special terms and conditions. Before approving a loan the Commissioner will require:

(a) Satisfactory evidence that the applicant has or will have a fee simple or such other estate or interest in the facilities and site, including access thereto, sufficient in the opinion of the Commissioner to assure undisturbed use and possession for the purpose of the construction and operation of the facilities for not less than 75 years from the date of application.

(b) Satisfactory evidence of the ability of the applicant to comply with the appropriate terms and conditions for repayment of the loan.

(c) Satisfactory evidence that the applicant has the necessary legal authority to finance, construct, and maintain the proposed facilities, to apply for and receive the proposed loan, and to pledge or mortgage any assets or revenues to be given as security for the proposed loan.

(d) Satisfactory assurances that the project for which the loan is requested is related to a plan for development of the institution, branch campus or cooperative graduate center for which it will be constructed, and is associated with either a planned increase in student enrollment or a planned improvement in the instructional programs offered by the institution, branch campus or cooperative graduate center.

(e) Satisfactory assurance that the applicant will not mortgage to others the facility to be constructed with the assistance of the loan during the life of the loan.

§ 170.54 Determination of nonavailability of equally as favorable terms and conditions.

No loan will be made unless the Commissioner finds that the applicant is unable to secure the amount of such loan from other sources upon terms and conditions equally as favorable as the terms and conditions applicable to loans under this part. For the purpose of making such determination, the applicant shall be required to comply with such procedures as the Commissioner may establish, including, where deemed nec

essary, public advertising for bids from other sources.

§ 170.55 Forms of evidence of indebted

ness.

The evidences of indebtedness shall be in such form as may be prescribed by the Commissioner.

§ 170.56 Security for loans.

All loans shall be secured in a manner which the Commissioner finds sufficient to reasonably assure repayment. The security may be one or a combination of the following:

(a) A first mortgage on the facilities and site thereof.

(b) Negotiable stocks or bonds of a quality and value acceptable to the Commissioner.

(c) A pledge of unrestricted and unencumbered income from an endowment or other trust funds acceptable to the Commissioner.

(d) A pledge of a specified portion of annual general or special revenues of the institution, acceptable to the Commissioner.

(e) Full faith and credit (tax supported) obligations of a State or local public body.

(f) Such other types of security as the Commissioner may find acceptable in specific instances.

§ 170.57 Length and maturity of loans. (a) The maximum repayment period for loans under Title III of the Act shall be 30 years, except where the Commissioner finds that a longer repayment period is required in order for the loan to be feasible.

(b) Substantially level total annual installments of principal and interest, sufficient to amortize the loan from the third year through the final year of the life of the loan, will be required unless otherwise authorized by the Commissioner.

(c) Loans maturing in less than 30 years, or loans which do not mature serially, may be considered by the Commissioner in order to fit the loan into an applicant's total financial plan.

(d) In no case shall a loan repayment period exceed the estimated useful life of the facilities to be constructed with the assistance of the loan.

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legal memorandum or opinion of bond counsel will be required with respect to the legality of the proposed bond or note issue, the legal authority to offer the issue and secure it by the proposed collateral, and the legality of the issue upon delivery. "Bond Counsel" means either a law firm or individual lawyer, thoroughly experienced in the financing of construction projects by the issuance of bonds, and whose approving opinions have previously been accepted by purchasers of bonds offered at public sales. In addition, where the borrower is a public institution or agency, the proposed bond counsel shall be a recognized bond counsel in the municipal field. The legal memorandum or opinion to be provided by such an acceptable bond counsel in each case generally shall be as follows:

(a) A memorandum by bond counsel, submitted with the loan application, stating that there is or will be authority to finance, construct, maintain the project, and to issue the proposed obligations and to pledge or mortgage the assets and/or revenues offered to secure the loan, citing the basis for such authority.

(b) A preliminary approving opinion of bond counsel, submitted at the time the applicant proposes to advertise for construction bids for the project, to the effect that when the bonds or notes described in the loan agreement are sold and delivered they will comply with the applicable provisions of the loan agreement and will be valid and binding obligations of the issuer and will be payable in accordance with thei. terms.

(c) The final approving opinion of bond counsel, delivered at the same time as the delivery of the bonds or notes, stating that the bonds or notes (1) are those described in the loan agreement and the authorizing proceedings, (2) have been duly authorized, sold, and delivered to the Commissioner, and (3) constitute the valid and binding obligations of the issuer payable in accordance with their terms.

§ 170.59 Determination of priorities for loan approvals.

Loan applications shall be processed in such order and according to such standards and methods as the Commissioner may determine. Such standards and methods shall be developed as may be necessary and appropriate to encourage distribution of the available loan funds in accordance with actual needs and may include establishment of clos

ing dates for consideration of applica- § 170.64 Investment of idle constructions and for determination of priorities.

§ 170.60 Loan agreement.

For project applications which meet all requirements of the Act and of the regulations governing the administration of the Act, and upon approval by the Commissioner together with a reservation of Federal funds, a loan offer will be prepared by the Commissioner and sent to the applicant. The loan offer will set forth the pertinent terms and conditions for the loan, and will be conditioned upon the fulfillment of these terms and conditions. The accepted loan - offer will constitute the Loan Agreement between the Commissioner and the applicant for the partial financing of the construction of the approved project. § 170.61 Loan closing.

Loan closing shall be accomplished at such time as may be determined by the Commissioner.

= § 170.62 Interim financing.

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If necessary, the applicant shall arrange for interim financing, subject to the approval of the Commissioner, to cover the cost of construction pending the loan closing. Where the Commissioner finds that an applicant is unable to secure necessary interim financing on reasonable terms, he may provide for advances against the approved loan.

* § 170.63 Construction fund.

The proceeds of the sale of the bonds or notes, any interim advances against the approved loans, and all other moneys to be used in paying for the construction of which the project is a part, shall be deposited into a separate bank account to be maintained in a bank of the applicant's choice and to be known as the Construction Fund. All expenditures for the construction shall be made from this fund. Accounting for this fund shall be in accordance with generally accepted accounting principles. When necessary and appropriate, the Commissioner may approve other arrangements for the deposit of construction funds and the construction fund accounting, provided such arrangements provide adequate accountability for the total construction receipts and expenditures.

tion funds.

Where the moneys on deposit in the construction fund exceed the estimated disbursements for the project for the next 90 days, the borrower shall, if permitted by State or local law, direct the depository bank to invest such excess funds in direct obligations of the U.S. Government, or obligations the principal of and interest on which are guaranteed by the U.S. Government, which shall mature not later than eighteen (18) months from the date of such investment. § 170.65 Disposal of balance remaining in the construction fund.

The balance of moneys remaining in the construction fund at the completion of construction shall be disposed of in accordance with the provisions of the loan agreement.

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