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DOCUMENT RESUME
03504 - [A2493620]
Improvements Needed in the Administration of Farmers Home
Administration's Water and Waste Disposal Program. CED-77-116;
B-114P73. September 1, 1977. 20 pp.
Report to Secretary, Department of Agriculture; by Henry
Eschwege, Director, Ccmunity and Economic Development Div.
Issue Area: Domestic Housing and Community Development (2100);
Environmental Protection Programs (2200) ;Water and -ater
Belated Programs (2500).
Contact: Community and Economic Development Div.
Budget Function: Community and Legional Development: Area and
Regional Development (452).
Congressional Relevance: House Committee on Agriculture; Senate
Committee on Agriculture, Nutrition, and Forestry.
Authority: Consolidated Farm and Rural Development Act, as
amended (7 U.S.C. 1926 (Supp. V); 7 U.S.C. 1983 (Supp. V)).
Federal Property and AdmiListrative Services Act of 1949 (40
U.S.C. 471 et seg.).
Lack of documentaticn prevents determlination as to
whetter the Farmers Home Administratin (FmHA) is complying with
the credit elsewhere provision of tLe water and waste disposal
rrogram. Borrowers' files are not always reviewed to determine
the ability of borrowers to refinancr. their water and waste
disposal lcans. Findings/Conclusions: Borrowers were not
requested to refinance their lcans, and it could not be
determined whether borrowers were being asked to seek credit
elsewhere. Agency requirements for using reserve funds to repair
cr replace system components did not insure that water and waste
disposal systems would remain viable for the loan repayment
period. 2ecommendations: The Secretary of Agriculture should
direct the Administrator of the FmHA to make recommendations to
the Congress ccncerning the reasonableness of the statutory
credit elsewhere provision as it applies to nonpublic water and
waste dispcsal borrowers; require State offices to document all
credit elsewhere determinations in borrowers' files and to
reiiew periodically water and waste loans for refinancing
through other credit sources; establish procedures requiring
the.t reserve funds consider the usefil life and future
replacement costs ol system components; insure that all
borrowers meet reserve fund provisions placed on them; stop
using the percentage-of-construction-cost method of compensating
engineers and require that all engineering fees be a fixed
amount; and establish procedures to require State or district
cff:.ce audits of all final engineering fee payments to prevent
engineers from receiving fees in excess of allowable amounts.
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