funds unless such assistance will provide ownership or employment opportunities to low-income residents of the special impact area.

§ 1076.20-4 Procedures, requirements, and limitations.

(a) No CDC administrative funds under Section 712 (cost categories other than 2.5) may be used for financial assistance, whether direct loans or loan guarantees, to non-equity business programs. Note: This does not preclude the use of administrative funds for technical assistance, e.g., by CDC staff, to non-equity business programs.

(b) Except as provided in any venture autonomy agreement approved by OED, or as provided in any revolving loan guarantee funds approved by OED, no CDC investment capital funds (cost category 2.5) may be used for any individual loan or loan guarantee for any non-equity business program without prior written approval by OED.

(c) In requesting OED approval for any non-equity business program, whether it be an individual loan, individual loan guarantee, or revolving loan guarantee fund, the CDC must demonstrate how the program will directly benefit low-income residents of the special impact area, by providing either ownership or employment opportunities, or both. The CDC must also demonstrate, in requesting approval for any loan guarantee, that loans from commercial or other public sources would not be available without such guarantee. The CDC must also demonstrate, in requesting approval for any direct loan, that either loans from commercial or other public sources would not be available even if the CDC were to guarantee such loans, or that control rights necessary to promote the purposes of Title VII would be obtainable only through a direct loan.

(d) No loan guarantee may exceed 50% of the loan(s) to any recipient, thereby providing at a minimum twofor-one leverage. Where the CDC can devise effective relationships with the lending institution and/or SBA, guarantees of less than 50% providing

much greater leverage, should be arranged.

Subpart 1076.41-Waiver of NonFederal Share of Program Costs for Certain Title VII Programs (CSA Instruction 7641-1)

AUTHORITY: Sec. 602, 78 Stat. 530; 42 U.S.C. 2942.

SOURCE: 44 FR 56586, Oct. 1, 1979, unless otherwise noted.

§ 1076.41-1 Applicability.

This subpart applies to all grantees financially assisted under Title VII of the Economic Opportunity Act of 1964, as amended, if such assistance is administered by the Community Services Administration.

§ 1076.41-2 Effective date.

October 16, 1972 (CSA Instruction 7641-1).

§ 1076.41-3 Purpose.

The purpose of this subpart is to set forth the criteria for waiving the requirement of non-Federal share of program costs for programs carried out with financial assistance pursuant to Title VII of the Economic Opportunity Act of 1964, as amended (EOA).

§ 1076.41-4 Background.

(a) Section 714 of the EOA prescribes two types of non-Federal share requirements. The first requirement relates to the cost of the program including costs of administration. Section 714 permits the Director of CSA to issue regulations establishing objective criteria under which more than 90 per cent of the cost of Title VII program may be supported by Federal Assistance. This subpart sets forth those criteria and is limited to the program costs non-Federal share requirements.

(b) The second non-Federal share requirement in Section 714 states that where capital investment is required under a contract with a private organization (other than a non-profit organization) the Federal share of such capital investment shall not exceed 90 per cent. That requirement is not affected by this subpart.

§ 1076.41-5 Policy.

(a) General. Each recipient of financial assistance under Title VII is ordinarily required to provide from nonFederal sources 10% of the cost of operating its program. However, under certain circumstances this requirement may be waived. A request for waiver shall be submitted by the applicant or recipient's Chairperson of the Board or comparable official to the Associate Director of Economic Development or other officer having authority to make the grant or otherwise furnish the financial assistance in question (hereinafter referred to as the responsible officer) and a determination shall be made by such officer.

(b) Operating program. (1) The requirement for a non-Federal share of program costs shall be waived in whole or in part where it is shown to the satisfaction of the responsible officer that:

(i) The applicant for financial assistance or recipient of financial assistance has made a vigorous effort to raise the non-Federal share but has not been and will not be able to do so in whole or in part.

(ii) The per capita income in the community served by the program is less than one-half the per capita income in the U.S. as a whole. (On the basis of the 1970 Census, one-half the per capita income was $1570 and in February 1972, one-half the estimated per capita income in the U.S. as a whole was approximately $1800). For programs operating in Alaska, the figure representing the per capita income for the United States as a whole shall be adjusted upward by 25% and in Hawaii by 15% to allow for the substantially higher cost of living in those States.

(iii) If the per capita income figures submitted in support of the request for waiver are other than direct U.S. Census data, Census data shall be shown. The Officer determining the request for a waiver may request a full description of the procedures used in developing such data.

(c) Support Programs. The requirement of non-Federal share program costs shall also be waived in whole or in part for programs funded to conduct evaluations or research or to fur

nish support services to other Title VII programs or to CSA, the Department of Commerce, the Department of Labor or the Department of Agriculture, provided that the applicant for financial assistance has made a vigorous effort to raise the non-Federal share but has not been and will not be able to do so in whole or in part.

(d) Procurement Contracts. No nonFederal share is required for procurement contracts. Accordingly no waiver is needed.

§ 1076.41-6 Valuation of non-Federal share.

Non-Federal contributions may be in cash or in-kind, fairly evaluated, including but not limited to plant, equipment and services. See Part 1050 of this chapter, Subpart F-Cost Sharing and Matching (CSA Instruction 68006).

Subpart 1076.50-Rural Development Loan Program

AUTHORITY: Sec. 602, 78 Stat. 530 (42 U.S.C. 2942).

SOURCE: 45 FR 62067, Sept. 18, 1980, unless otherwise noted.

§ 1076.50-1 Definitions.

For the purpose of providing assistance under this subpart:

(a) "Business facilities and community development projects" means ventures, including community development credit unions, located in rural areas. Such projects are primarily aimed at providing increased income, ownership, or employment opportunities for low-income rural area residents and which either (1) are organized to earn a profit or on a cooperative basis, or (2) directed primarily to improving the physical or environmental infrastructure such as land development, community facilities and industrial and commercial projects. The term does not embrace social service projects operated on a not-for-profit basis such as job training, day-care or health services.

(b) "Community action agency" means an organization as defined in Section 210(a) of the Economic Oppor

tunity Act of 1964, (EOA), as amended.

(c) "Community-based organization" means a cooperative or private nonprofit organization at least 50 per centum of whose governing body is composed of local area residents and which is eligible for financial assistance under Title II of the EOA. The term shall also include a national, regional or state organization at least 50 per centum of whose governing board is composed of representatives of other community-based organizations.

(d) "Community development corporation" means an organization receiving assistance from CSA under Part A of Title VII, of the EOA which includes any organization more than 50 per centum of which is owned or controlled by such a community development corporation.

(e) "Community development credit union" means a type of business facility and community development project which is a credit union participating in the Community Development Credit Union Program jointly administered by CSA and NCUA whose membership consists predominantly of rural area residents; or any Federal or state chartered credit union whose membership consists predominantly of low-income rural residents.

(f) "Cooperative" means an incorporated or unincorporated association, in existence or being organized: (1) Whose members are allowed only one vote each; (2) at least 50 per centum of which is owned or controlled by lowincome rural residents; (3) which conducts for the mutual benefit of its members such operations as producing, purchasing, marketing, processing and other activities primarily aimed at improving its members' income as producers or their purchasing power as consumer.

(g) "Indian groups" shall mean public and non-profit private agencies, including but not limited to, governing bodies of Indian tribes on Federal and State reservations, Alaska Native Claims Settlement Act, and such public and non-profit private agencies serving Hawaiian Natives, and Indian organizations in rural non-reservation

areas.

(h) "Director" means the Director of the Community Services Administration (CSA).

(i) "Private non-profit" means an organization which is eligible for or has received exemption from Federal income taxes under Internal Revenue Code (IRC) section 501(c)(3).

(j) "Rural" includes all territory of a state that is not within the outer boundary of any city having a population of fifty thousand or more and its immediately adjacent urban area with a population density of more than one hundred persons per square mile as determined by the Secretary of Agriculture according to the latest decennial census.

(k) "Supportive organization of cooperatives" means an organization whose purpose is to provide economic, technical, or financial assistance to cooperatives.

§ 1076.50-2 Objective of the Rural Development Loan Fund Program.

(a) The objective of the Fund is to test the premise of community economic development financing concepts in rural areas. The program emphasizes an attack on rural poverty by organizations, representative of lowincome area residents, experienced in dealing with economic development problems. It stresses group, rather than individual, efforts to provide expanded opportunities for rural residents to increase their ownership of, employment in, or income from local economic enterprise.

(b) In accomplishing this objective, the program seeks to coordinate and leverage its own resources with those of other government agencies and private sources. The Fund's monies should be complemented by provision of ample technical assistance in order to enhance the ability of rural group ventures to grow and prosper. However, while encouraging the development of new and imaginative community development ventures, CSA will assure that the program's operations are conducted on a sound business basis.

(c) The Program's purpose is not only provision of loans and guaranties to eligible borrowers at the lowest reasonable cost, but also embraces the

broader objectives of arresting tendencies toward dependency, chronic unemployment, and community deterioration in rural areas. To this end, the Program seeks to attract additional private capital into rural communities, build and expand the ability of rural institutions to better serve the economic needs of local residents, and provide new employment and ownership opportunities for low-income persons through group ventures and community development financing techniques.

§ 1076.50-3 Organizations eligible for fi nancial assistance under this program. (a) CSA will provide financial assistance in the form of loans or guaranties under this Program to carry out eligible activities directly or indirectly through relending or guarantying to the following types of organizations.

(1) Community development corporations;

(2) Community action agencies; (3) Supportive organizations of cooperatives;

(4) Local cooperatives;

(5) Public agencies;

(6) Private non-profit groups;

(7) Community-based organizations eligible for financial assistance under Title II of the EOA;

(8) Community development credit unions;

(9) Indian groups;

(b) Recipients who have received financial assistance for the purpose of re-lending or guaranteeing loans, may make loans and guaranties to:

(1) The type of organizations listed in (a) above;

(2) Low-income families; or

(3) Businesses organized for-profit which are 50% owned or controlled by low-income rural residents; or businesses organized for-profit which provide for significant increased income, or ownership, and/or employment opportunities for low-income rural residents and would not be retained, expanded, or moved into the rural areas without such assistance.

§ 1076.50-4 Eligible activities.

(a) Loans and guaranties from CSA to a recipient under this program may be used only for business facilities and

community development projects in rural areas. These also are the only acceptable activities for use of the monies which recipients have received for re-lending or guarantying purposes.

(b) Guaranties may be made for the purpose of (1) guarantying principal only, interest only, or both principal and interest; or (2) guarantying up to 90 per centum of any loan in either an exposed or subordinated position. Deposits in financial institutions to collateralize guaranties also may be made.

(c) Loans and guaranties under this program generally will not be made for refinancing existing debts of borrowers. Relenders must obtain prior CSA approval for any such exceptional refinancing activities.

(d) CSA encourages the use of flexible financing techniques. Thus, loans may be subordinated, or "wrapped around"; relenders may participate with banks and other financial institutions in extending credit or in purchasing existing loans. Loan or guaranty proceeds also may be used to invest in corporate stocks or debentures provided, of course, that such investment furthers the purposes of the Rural Development Loan Fund.

In making assistance available to eligible organizations for business facilities and community development projects, CSA will give priority to those applications which can best demonstrate one or more of the following:

(a) Program Priorities. (1) A program emphasis which is likely to provide increased income, ownership and employment opportunities for lowincome rural residents;

(2) A national, regional, or local approach to community economic development which enables institutions to become more sensitive and responsive to the economic needs of low-income rural residents.

(3) A strategy which will leverage other sources of financial and technical assistance so as to appreciably affect the creation of increased ownership and provide employment and income opportunities for low-income rural residents.

(4) The creation of a model-type of non-profit community economic development finance corporation which would be controlled by a governing body which meets the organizational priorities in (b)(2) below, independent and professionally operated, and provide long-term financial support for eligible economic development organizations.

(b) Organizational priorities. (1) A history of rural community economic development efforts or concern for the problems of low-income residents.

(2) A governing body representative of the organizations or persons to be served by the program.

(3) The ability to get low-income rural residents to cooperate and pool their talents and resources and to create or expand economic enterprise of a significant scale.

§ 1076.50-6 Loans, interest on; allowable costs.

(a) Loans made under this subpart shall bear interest at a rate not less than a rate determined by the Secretary of the Treasury taking into consideration the average market yield of outstanding Treasury obligations of comparable maturity, plus such additional charge if any toward covering other costs of the program as the Director may determine to be consistent with its purposes, except that, for the five years following the date on which funds are initially available to the borrower, the rate of interest shall be set at a rate considered appropriate by the Director in light of the particular needs of the borrower which rate shall not be lower than 1 per centum.

(b) Interest repaid on loans, premiums earned on guaranties, investment or interest income, service fees or other authorized financing charges collected may be retained by those recipients re-lending or guarantying funds with written CSA approval, and may be used to cover the costs of administering the loan and guaranty program authorized hereunder.

(c) Costs of administering the loan and guaranty program authorized hereunder shall include, but not be limited to, costs of program administration and management: i.e., monitoring and evaluation; costs of collection,

other charges and provision of technical assistance and training; legal and accounting services; preparation of financial, planning, management, feasibility, technical, product development and marketing reports and studies, and development of additional grant, loan or guaranty applications and proposals.

§ 1076.50-7 Terms of loans and guaranties.

No loan or guaranty can be extended hereunder by CSA to a recipient for a term exceeding 30 years.

§ 1076.50-8 Application process.

(a) Dates of submission. Annually or more often, CSA will publish in the FEDERAL REGISTER the dates for submission of applications for assistance.

(b) Processing procedures. Applications to CSA for loans or guaranties under the Rural Development Loan Fund may be made at any time by written submission to: Rural Development Loan Fund Program, Office of Economic Development, Community Services Administration, 1200-19th Street, NW., Washington, D.C. 20506.

§ 1076.50-9 Contents of applications.

All applications to CSA for assistance shall contain:

(a) Eligibility documents. (1) Standard Form 424, Financial Assistance.

IRS

(2) Articles of Incorporation (or Association), Bylaws, and where applicable, IRC section 501(c)(3) determination letter. If applicant is a non-profit corporation without such an letter, it must include a certification by an attorney that it is so organized and operated that it would be eligible for a section 501(c)(3) determination. Cooperatives should submit their Articles or Certificate of Incorporation (Charter or Agreement of Association) and Bylaws.

(3) Description of its governing board and its representational nature, if applicable.

(4) Characteristics of the rural area where the project is to be located.

(5) Resumes of management team. (6) Record of concern for and experience with community economic devel