oper, subject to approval by the Secretary of

(1) The initial investors (in the case of a private sale of such obligations) or the terms and conditions of the underwriting (in the case of a public sale of such obligations);

(2) The rate of interest to be borne by such obligations or the formula by which such rate will be determined;

(3) The repayment and maturity provisions of such obligations;

(4) The specific measures for the protection of the security interests of the United States, liens and releases of liens, and payment of taxes; and

(5) All other terms and conditions of the financing arrangements which might affect the interest of the United States; and subject to such further conditions as the Secretary may prescribe.

(c) Acceptance of offer of commitment. The offer to commit contained in any such letter shall expire 90 days after the issuance thereof unless accepted by the applicant prior to such expiration by payment of the commitment charge specified in § 710.25. Within 90 days after the expiration of such offer to commit, it may be reopened and accepted by the applicant by request in writing to the Secretary accompanied by tender of the commitment charge and the reopening charge, if the Secretary in his discretion approves such request. An accepted offer to commit shall remain effective as a commitment to enter into a project agreement pursuant to § 710.20 for 6 months, at which time the commitment shall expire unless the applicant has taken all steps that the Secretary determines to be required under this part as a prerequisite to the execution of such project agreement or unless such 6month period is extended at the discretion of the Secretary.

Following satisfaction of all conditions stated in any commitment of the Secretary, and before the making of any guarantees, the developer will be required to enter a project agreement which shall be in a form satisfactory to the Secretary. The agreement shall set forth the understandings of the Secretary and the developer with respect to the entire project, including the understandings, if any, as to how the project is to be carried out in stages. The agreement shall also set forth the developer's agreement to carry out the project in accordance with speci

fied plans, as approved by the Secretary, and the Secretary's agreement to guarantee obligations of the developer issued pursuant to those plans, subject to the limitations set forth in the Act and this part. The agreement shall further include

(a) An express covenant to the effect that the Government's interests in the project are not limited to its financial interests as guarantor but extend to accomplishment of the public purposes of the Act;

(b) Provisions setting forth the duties and responsibilities of the developer with respect to parts or portions of the project which will not be carried out by the developer;

(c) Provisions governing the security to be provided to the United States;

(d) Provisions setting forth the rights and remedies of the United States in the event of default, including rights to seek injunctive or other equitable relief;

(e) Special provisions as necessary to assure compliance with equal opportunity, labor standards, and other particular requirements;

(f) Duties of the developer to provide information, data, and reports as required by the Secretary; to maintain adequate books and records; and to permit and provide as necessary for inspections and on-site examinations by or on behalf of the Secretary; and

(g) Such other provisions as the Secretary may require as necessary or appropriate to assure adherence to the project as approved, or the provisions of the Act or of this part, or to protect the Government against loss.

At the request of the developer pursuant to the project agreement and upon satisfaction of the conditions specified in such agreement, the Secretary will endorse his guarantee upon obligations duly issued by the developer pursuant to a purchase or underwriting agreement approved by the Secretary. The guarantee fee specified in § 710.27 must be paid at the time the guarantee is made.

§ 710.22 Project execution and monitoring.

(a) Inspections and reports. To insure that the project is being executed in a manner consistent with the objectives of the Act and as provided in the project

agreement, the developer will be required to submit periodic financial and other reports on project execution. The Secretary will also be afforded access to the project site at all reasonable times for purposes of inspection.

(b) Use of proceeds of guaranteed obligations-(1) Land valuation and cost certification. Disbursement to the developer of proceeds from the sale of obligations guaranteed under the Act must be supported by prior submission to the Secretary of an independent valuation of land acquired or to be acquired by the developer or certification of actual costs of land acquisition or land development, or a combination of such valuation and certification. Any such valuation must be prepared in accordance with the principles set forth in § 710.11 to the satisfaction of the Secretary. Any such certification must be in the form satisfactory to the Secretary and must be accompanied by such documentation as he may deem necessary to assure that such costs (1) have in fact been incurred by the developer for the project and (ii) are eligible for financing under the Act. If it is expected that guaranteed obligations will be issued and sold in anticipation of land acquisition or of costs for land development incurred in the future, appropriate provisions must be made for escrow or trusteeship of the proceeds of sale to the extent and so long as disbursement of such proceeds is unsupported by valuation of land actually acquired or certification of actual costs incurred.

(2) Loan disbursements. Funds to be derived from obligations which the Secretary has guaranteed or agreed to guarantee shall be disbursed or made available to the developer in accordance with limitations as to disbursements approved by the Secretary. Such limitations shall be based upon project needs, the progress of work completed as against work planned, the maintenance by the developer of required equity and working capital, the possibility of overruns or unanticipated costs, the extent to which allowable land values exceed land costs, and such other matters as the Secretary may deem relevant. Amounts properly allowable and credited, but withheld pursuant to such limitations and not otherwise paid to the developer for approved purposes, will be made available upon conclusion of the project, or the stage of a project to which such amounts re

late, or are apportioned, as the Secretary may determine.

(c) Records. The developer must maintain, to the satisfaction of the Secretary, records of all costs incurred for the project and must require his contractors and subcontractors to maintain similar records. Upon request, all such records and all agreements relevant thereto shall be made available at all reasonable times for examination by the Secretary. Insofar as such records and agreements relate to any grants or guarantees made pursuant to this part, the financial transactions of recipients of Federal grants or of developers whose obligations are guaranteed by the United States, pursuant to this title, may be audited by the General Accounting Office under such rules and regulations as may be prescribed by the Comptroller General of the United States. The representatives of the General Accounting Office shall have access to all books, accounts, records, files, and all other papers, things, or property belonging to or in use by such developers or recipients of grants pertaining to such financial transactions and necessary to facilitate the audit.

(d) Amendments. As a result of changes in market demand, employment patterns, costs and revenues or other factors or conditions, it may become desirable to make certain amendments to the plans initially approved by the Secretary. All proposals for amendments by the developer must be submitted to the Secretary for approval, together with full justification therefor. Such approval will be based upon the same criteria, and will take account of the same purposes, as are set forth in this part for consideration of the initial application. The Secretary may recommend, or require, subject to conditions set forth in the project agreement, amendments to an approved plan when, in his opinion, such amendments are necessary or desirable to insure the financial stability of the project or to prevent situations which would impair the value of the project or its ability to carry out the purposes of the Act.

Subpart E-Fee and Charge Schedule § 710.24 Application charge.

guaranteed by the Government shall be paid at the time of the issuance of such obligations.

§ 710.28 Annual fee.

An annual fee equal to 0.5 percent of the average principal amount of guaranteed obligations outstanding during the preceding year shall be paid on the first anniversary date of the initial guarantee and on each following anniversary date of the guarantee, until the seventh such date; and, thereafter, an annual fee of 1 percent of the average principal amount of guaranteed obligations outstanding during the preceding year shall be paid on each subsequent anniversary date of the initial guarantee until the total obligation is paid in full.

§ 710.29 Transfer charge.

Upon application for approval of a case involving the substitution of developers, a transfer charge of 0.05 percent of the unused portion of the commitment shall be paid.