(b) A final approving opinion, delivered to the Secretary at the same time as the delivery of the bonds to the Secretary (in the case of a direct loan) or to the lender (in the case of a loan guarantee), stating that the indebtedness of the applicant is duly authorized, sold, and delivered, and that such indebtedness is valid, binding and payable in accordance with the terms on which the direct loan or loan guarantee was approved by the Secretary.

§ 53.149

Length and maturity of loans. The repayment period for direct loans and loans with respect to which a guarantee is made shall be limited to 25 years: Provided, That

(a) The Secretary may, in particular cases where he determines that a repayment period of less than 25 years is more appropriate to an applicant's total financial plan, approve such shorter repayment period; and

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

§ 53.150 Interest on direct loans.

Each direct loan shall require the borrower to pay to the Secretary, or as directed by him, interest thereon at a rate determined by the Secretary to be comparable to the current rate of interest prevailing with respect to loans to nonprofit private agencies which are guaranteed under part B of the Act, for the modernization on construction of similar facilities in the same or similar areas, minus 3 per centum per annum.

Unless otherwise specifically authorized by the Secretary, each direct loan and loan with respect to which a guarantee is made shall be repayable in substantially level total annual installments of principal and interest, sufficient to amortize the loan through the final year of the life of the loan. § 53.152 Loan Guarantee Agreement and Direct Loan Agreement.

(a) Loan Guarantee Agreement. (1) For each application for a loan guarantee which is approved by the Secretary, an offer of a loan guarantee will be sent to the applicant, setting forth the pertinent terms and conditions for the loan guarantee, and will be conditioned upon the fulfillment of these terms and con

ditions. The accepted loan guarantee offer will constitute the Loan Guarantee Agreement between the Secretary and the applicant.

(2) Each Loan Guarantee Agreement shall include the following provisions:

(i) That the loan guarantee evidenced by the Agreement shall be incontestable (a) in the hands of the applicant on whose behalf such loan guarantee is made except for fraud or misrepresentation on the part of such applicant, and (b) as to any person who makes or contracts to make a loan to such applicant in reliance on such loan guarantee, except for fraud or misrepresentation on the part of such other person.

(ii) That if the applicant shall default in making payment, when due, of the principal and interest on the loan with respect to which the guarantee is made, and such default is not cured within 90 days after the happening thereof, the holder of such loan shall have the right to make demand in writing upon the Secretary for the purchase by the Secretary of such loan.

(iii) That each holder of a loan to an applicant on whose behalf the loan guarantee evidenced by such Agreement is made shall have a contractual right to receive from the United States interest payments in an amount sufficient to reduce by 3 per centum per annum the net effective interest rate determined by the Secretary to be otherwise payable on the loan with respect to which such guarantee is made.

(iv) That payments of interest pursuant to subdivision (iii) of this subparagraph will be made by the Secretary, in accordance with the terms of the loan with respect to which the guarantee is made, directly to the holder of such loan or to a trustee or agent designated in writing to the Secretary by such holder until such time as the Secretary is notified in writing by the holder that such loan has been transferred. Pursuant to such written notification of transfer, the Secretary will make such interest payments directly to the new holder (transferee) of the loan.

(v) That the applicant shall be permitted to prepay up to 15 per centum of the original principal amount of such loan in any calendar year without additional charge.

(vi) Such other provisions as the Secretary finds necessary in order to protect

the financial interests of the United States.

(b) Direct Loan Agreement. (1) For each application for a direct loan which is approved by the Secretary, an offer of a direct loan will be sent to the applicant, setting forth the pertinent terms and conditions for the direct loan, and will be conditioned upon the fulfillment of those terms and conditions. The accepted direct loan offer will constitute the Direct Loan Agreement between the Secretary and the applicant.

(2) Each Direct Loan Agreement shall include such provisions as the Secretary finds necessary in order to protect the financial interests of the United States. § 53.153

Loan closing.

(a) Loan guarantees. Closing for any loan with respect to which a guarantee is made shall be accomplished at such time as may be agreed upon by the parties to such loan and found acceptable by the Secretary.

(b) Direct loans. Closing for any direct loan shall be accomplished at such time as may be determined by the Secretary.

§ 53.154 Waiver of right of recovery.

In determining whether there is good cause for waiver of any right of recovery which he may have against a nonprofit private agency by reason of any payments made pursuant to a loan guarantee, or against a public agency by reason of the failure of such agency to make payments of principal and interest on a direct loan to such agency, the Secretary shall take into consideration the extent to which:

(a) The facility with respect to which the loan guarantee or direct loan was made will continue to be devoted by the applicant or other owner to use for the purpose for which it was constructed or another public or nonprofit purpose which will promote the purposes of the Act;

(b) There are reasonable assurances that for the remainder of the repayment period of the loan other public or nonprofit facilities not previously utilized for the purpose for which the facility was constructed will be so utilized and are substantially equivalent in nature and extent for such purposes; and

54.201 54.202 54.203

Designation of poverty areas.

Additional poverty area designations.

Subpart C-Grants for Construction of
Community Mental Health Centers

Definitions.

Allotments; transfer of allotments. State plan; elements of adequate services; facilities; relationship to other planning.

54.204 State plan; areas; determination of relative need; priorities. 54.205 State plan; methods of administration.

54.206 State plan; processing of applications.

54.207 State plan; construction program; design of facilities; minimum standards of operation and maintenance.

54.208 State plan; requests for construction payments; fiscal and accounting requirements.

54.209 54.210 Community service; services for persons unable to pay; nondiscrimination.

State plan; assurances from applicant.

54.211 State plan; approval and certification of application.

54.212 Projects; essential elements of comprehensive mental health services; program requirements.

(c) Such recovery would seriously curtail the provision of medical services to persons in need of such services in the area.

§ 54.1

Definitions.

As used in this part:

(a) All terms shall have the same meaning as given them in the Act.

(b) "Act" means the Mental Retardation Facilities and Community Mental Health Center Construction Act of 1963. (P.L. 88-164.)

(c) "Affiliated hospital" means a hospital which has a written agreement with a college or university providing for effective control by such college or university of the teaching in the hospital.

(d) "Equipment" includes those items which are necessary for the functioning of the facility, but does not include items of current operating expense such as food, fuel, drugs, paper, printed forms, and soap.

(Sec. 122, 77 Stat. 284; 133, 77 Stat. 287; 42 U.S.C. 2662, 2673; Rev. Stat. sec. 161, 5 U.S.C. 22) [29 F.R. 12647, Sept. 5, 1964, as amended at 32 FR. 5676, April 7, 1967]

§ 54.2 Eligibility.

In order to be eligible for consideration for grant assistance:

(a) The application must be for construction of a public or other nonprofit clinical facility for the mentally retarded which will provide, as nearly as practicable, a full range of inpatient and outpatient services for the mentally retarded and which will either:

(1) Aid in the clinical training of physicians and other specialized personnel needed for research, diagnosis and treatment, education, training, or care of the mentally retarded; or

(2) Aid in demonstrating provision of specialized services for the diagnosis and treatment, education, training or care of the mentally retarded.

(b) The applicant must either (1) be a college or university, or an affiliated hospital, which will own and operate a facility for the mentally retarded, or (2) have a written agreement, not of a temporary nature, with a college or university or with an affiliated hospital providing, to the extent practicable, for the integration of the functions and activities of the facility for the mentally retarded with the programs of the college or university or of an affiliated hospital, through, but not limited to, the joint use of certain facilities, services, and equipment, the planning of curriculum and course work for the joint training of personnel, and the interchange of teaching staff and students.

§ 54.3 Nondiscrimination in construction

contracts.

Each construction grant shall be subjusted to the condition that the grantee shall comply with the requirements of, and give the assurances required of, Executive Order 11114, June 22, 1963, 3 CFR, 1959-1963 Comp. (28 F.R. 6485), and the applicable rules, regulations and procedures prescribed pursuant thereto by the President's Committee on Equal Employment Opportunity, 41 CFR Part 60-1 (28 F.R. 9812).

§ 54.4 Terms and conditions.

In addition to any other requirements imposed by law or determined by the Surgeon General to be reasonably necessary with respect to a particular project or projects to fulfill the purpose of the grant, each construction grant shall be subject to the condition that the applicant will furnish and comply with the following assurances. The Surgeon General may, at any time, approve exceptions to these terms and conditions where he finds that such exceptions are consistent with the Act and the purposes of the program:

(a) That applicant (or the public or nonprofit agency which is to operate the facility) has a fee simple or such other estate or interest in the site, including necessary easements and rights-of-way,

sufficient to assure for a period of not less than 50 years undisturbed use and possession for the purpose of the construction and operation of the facility;

(b) That the Surgeon General's approval of the final working drawings and specifications, which conform to the general standards of construction and equipment (§ 54.7), will be obtained before the project is advertised or placed on the market for bidding;

(c) That applicant will perform actual construction work by the lump sum (fixed price) contract method; employ adequate methods of obtaining competitive bidding prior to awarding the construction contract, either by public advertising or circularizing three or more bidders, and award the contract to the responsible bidder submitting the lowest acceptable bid; and will purchase all fixed equipment by adequate methods of competitive bidding (including such fixed equipment as is not purchased through the construction contract) and award the contract to the responsible bidder submitting the lowest acceptable bid, except that competitive bidding procedures need not be employed for the purchase of specific fixed equipment items which are not included in the construction contract where such action is found by the Surgeon General, upon written justification by the applicant, to be required by the needs of the program.

(d) That applicant will enter into no contruction contract or contracts for the project or a part thereof, the cost of which is in excess of the estimated cost approved in the application for that portion of the work covered by the plans and specifications, without the prior approval of the Surgeon General:

(e) That applicant will finance all costs in excess of the estimated costs approved in the application and submit to the Surgeon General for prior approval changes that substantially alter the scope of work, function, utilities, or safety of the facility;

(f) That applicant will construct the project, or cause it to be constructed, to final completion in accordance with the grant application and approved plans and specifications;

(g) That applicant will maintain adequate and separate accounting and fiscal records and accounts for all funds provided from any source to pay the cost of

the project, and permit audit of such records and accounts at any reasonable time;

(h) That applicant will furnish progress reports and such other information as the Surgeon General may require;

(i) That applicant will provide and maintain competent and adequate architectural or engineering supervision and inspection at the construction site to insure that the completed work conforms with the approved plans and specifications;

(j) That sufficient funds will be available to meet the nonfederal share of the cost of constructing the facility;

(k) That sufficient funds will be available when construction is completed for effective use of the facility for the purposes for which it is being constructed;

(1) That for not less than 20 years after completion of construction the facility will continue to be (1) a public or nonprofit facility for the mentally retarded, and (2) owned and operated by the college or university, or associated with the college or university, as provided in § 54.2(b).

(m) (1) That any laborer or mechanic employed by any contractor or subcontractor in the performance of work on the construction of the facility will be paid wages at rates not less than those prevailing on similar construction in the locality as determined in accordance with the Davis-Bacon Act (40 U.S.C. 276a-276a-5) and will receive compensation at a rate not less than one and one-half times his basic rate of pay for all hours worked in any work week in excess of eight hours in any calendar day or forty hours in the work week (40 U.S.C. 327-332); and

(2) That the following conditions and provisions will be included in all construction contracts:

(i) The provisions set forth in "Labor Standards for United States Public Health Service Construction Grant Programs" PHS No. 930-A-5 pertaining to the Copeland Act (Anti-Kickback) Regulations and Labor Standards (prevailing rates of pay and overtime requirements) except in the case of contracts in the amount of $2,000 or less;

(ii) The contractor shall furnish performance and payment bonds in the full amount of the contract price, and shall maintain, during the life of the contract, adequate fire, workmen's compensation.

public liability and property damage insurance;

(iii) Representatives of the Public Health Service and such other persons as the Surgeon General may designate, will have access at all reasonable times to work wherever it is in preparation or progress, and the contractor shall provide proper facilities for such access and inspection.

(Sec. 122, 77 Stat. 284; 133, 77 Stat. 287; 42 U.S.C. 2662, 2673; Rev. Stat. sec. 161, 5 U.S.C. 22) [29 F.R. 12647, Sept. 5, 1964, as amended at 32 F.R. 5676, April 7, 1967]

§ 54.6 Good cause for other use of com. pleted facilities.

If, within twenty years after the completion of construction of any facility with respect to which a construction grant has been made, the facility shall cease to be a public or other nonprofit facility for the mentally retarded, the Surgeon General, in determining whether there is good cause for releasing the applicant or other owner from the obligation to continue as such a facility, shall take into consideration the extent to which:

(a) The facility will be devoted by the applicant or other owner to the provision of comprehensive health services, demonstrations, or clinical training comparable to that provided for the mentally retarded, and the failure of the facility to continue as a public or other nonprofit facility for the mentally retarded was reasonably beyond the control of the applicant; or

(b) There are reasonable assurances that for the remainder of the twentyyear period, other facilities not previously utilized for providing services to the mentally retarded, or for demonstrating the provision of specialized services for the mentally retarded or in the clinical training of physicians and other specialized personnel needed for research, diagnosis and treatment, education, training, or care of the mentally retarded will be so utilized and are substantially the equivalent in nature and extent for such purposes.

$ 54.7 General standards of construction and equipment.

The general standards of construction and equipment applicable to these facilities are those prescribed under section 133 (3) of the Act and set forth in Subpart B of this part.

(a) Using the latest available published data from the Department of Commerce, Bureau of the Census, each State shall determine what percentage of families living in each catchment area within its territorial borders have incomes below the poverty level described in subparagraph (2) of this paragraph.

(1) The term "catchment area" means a geographic area designated by a State which is served or will be served by an existing or proposed community mental health center.

(2) In determining the poverty level, the following standards shall be used: ОЕО (i) Revised income Poverty Guidelines (Published in OEO Instructions, No. 6004-1.b., dated Dec. 1, 1970) for the 50 States and the District of Columbia. Those Guidelines are as follows: