Village of Bear Lake Minutes

The March 18, Special Meeting Minutes were received April 29.

Village of Bear Lake Council


March 18, 2016

Bear Lake Village Hall

Present: President: Jeff Bair Treasurer: Sally King, Clerk: Cindi McPherson.

Guests: Blake Smith, USDA and Ken Micek, Fleis & VanderBrink.

No meeting was called to order, no pledge of allegiance was said nor roll call done.

This was a meeting with representatives from USDA and Fleis & VanderBrink.  Smith delivered a packet from USDA regarding the Water System Improvements.  The purpose was to provide an updated list of documents needed for the water project.  The documents are required before a loan closing can be scheduled.

Discussion was held.

No action was taken at the meeting.

Cindi McPherson, clerk


The following was provided by the Village Clerk following a FOIA request.

March 18, 2016

Village of Bear Lake
PO Box 175
Bear Lake, MI 49614

RE: Water System Improvements

Dear Mr. Bair,

The purpose of this letter is to provide an updated list of documents that have not been received to date for the above referenced project. Please provide the documents at your earliest convenience.

These documents are required before a loan closing can be scheduled.

  1. Signed Engineering Agreement
  2. Opinion on Engineering Agreement
  3. Three signed Legal Services Agreements
  4. Certify to the Number of Users
  5. Certify to Zoning
  6. Certification on Adequacy of Accounting System
  7. Preliminary Title Opinion (PTO)
  8. Copies of Deeds – normally in PTO’s
  9. Right-of Way Easement (copy of a typical one)
  10. Color-coded R-O-W Map
  11. Right of Way Certificate
  12. Opinion of Counsel Relative to the Rights-of-Way
  13. Audit Engagement Letter – FY 2018 signed, dated and accepted/approved on the last page by the Village.
  14. RD 442-7 “Operating Budget” or similar format—signed, attested and sealed
  15. Copy of Rate resolution/Ordinance
  16. Submit Plans & Specification to RD
  17. Bond Counsel Application filed w/Treasury or qualified status
  18. Proof of insurance
    1. Public liability
    2. Property damage & extended warranties
    3. Flood—if necessary
    4. Worker’s compensation
    5. Fidelity/dishonesty/embezzlement
  19. Letter certifying that the Village has completed an Emergency Response Plan & Vulnerability Assessment.  Contact MRWA for this 989-539-4111.
  20. Self-evaluation regarding accessibility of applicant’s facilities
  21. Transition plan for all items that hinder accessibility
  22. Compliance Review information
    1. A listing (numbers only) of Village employees broken down by the following categories
      1. Male or female
      2. Hispanic or non-Hispanic
      3. American Indian/Alaskan Native, Asian,  Black or African American, Native Hawaiian, White
    2. A listing (numbers only) of Village Council members broken down by the following categories
      1. Male or female
      2. Hispanic or non-Hispanic
      3. American Indian/Alaskan Native, Asian,  Black or African American, Native Hawaiian, White
  23. Documentation regarding bidding process
    1. Sealed bids require the following information
    2. Affidavit of publication of request for bids
    3. Tabulation of bids received
    4. Recommendation from Engineer regarding award of contract
    5. Minutes from board meeting authorizing award of contract
  24. Loan Resolution
  25. Fidelity Bond
  26. Permit to Construct from MDEQ
  27. Permit to Construct from the County
  28. SF 3881 “ACH Enrollment” form—Separate account designated for this project
  29. RD 3550-28 “Authorization for Preauthorized Payments”
  30. Final Title Opinion – dated with the closing date
  31. Resume of proposed project inspector
  32. Attorney’s opinion on contracts – at closing

Please feel free to contact me if you have any questions or need any assistance completing these documents. I would be happy to help however I can.


Blake Smith
Area Specialist

Rural Development • Traverse City Area Office

1501 S Cass St, Suite A • Traverse City, MI 49684

Voice (231) 941-0951 •Toll Free (800) 944-8119 • Fax (231) 929-7890

USDA is an equal opportunity provider and employer.

If you wish to file a Civil Rights program complaint of discrimination, complete the USDA Program Discrimination Complaint Form (PDF), found online at, or at any USDA office, or call (866) 632-9992 to request the form. You may also write a letter containing all of the information requested in the form. Send your completed complaint form or letter to us by mail at U.S. Department of Agriculture, Director, Office of Adjudication, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410, by fax (202) 690-7442 or email at


March 11, 2016

Jeff Bair, President
Village of Bear Lake
PO Box 175
Bear Lake, MI  49614

SUBJECT: Water Project    

Loan $ 1,463,000 (Section 6025); 1.875% Poverty Interest Rate; 40 Years

Grant$ 2,000,000 (Section 6025); $547,000 (Regular Funds)

Dear Mr. Bair:

This letter establishes conditions which must be understood and agreed to by you before further consideration may be given to your application.  The loan and/or grant will be administered on behalf of the Rural Utilities Service (RUS) by the State and Area staff of USDA, Rural Development.  Any changes in project cost, source of funds, scope of services or any other significant changes in the project or applicant, must be reported to an approved by USDA, Rural Development, by written amendment to this letter.  If significant changes are made without obtaining such approval, Rural Development may discontinue processing of the application.

This letter does not constitute loan and/or grant approval, nor does it ensure that funds are or will be available for the project.

The interest rate will be the lower of the rate in effect at the time of loan approval or the time of loan closing.  The loan will be considered approved on the date a signed copy of Form RD 1940-1, “Request for Obligation of Funds”, is mailed to you.

Please complete, sign and return the following forms if you agree to meet these conditions and desire that further consideration be given to your application:

Form RD 1942-46, “Letter of Intent to Meet Conditions,”

Form RD 1940-1, “Request for Obligation of Funds,”

Within 180 days of this letter, you must meet all of the conditions set forth which can be met prior to calling for construction bids.  If you have not done so, Rural Development reserves the right to discontinue the processing of your application.

The conditions referred to above are as follows:

Project Budget – Funding from all sources has been budgeted for the estimated project cost of $ 4,020,000.  The project, as described is the approved Preliminary Engineering Report, is as follows:

On behalf of the Village of Bear Lake, the above-mentioned firm has prepared a preliminary engineering report for improvements to their water system.  The preliminary engineering report (PER) is generally based on Rural Development guidelines.  The report reviewed was March, 2015.   

Bear Lake has had a municipal water system since the late 1930’s.  Water is provided by two wells with a firm capacity of 0.281 MGD.  Average day demand is 0.06 MGD, max day demand is 0.19 MGD.  Water quality is acceptable.  Storage is provided by a 150,000-gallon ground storage tank constructed in 2011.  The tank is in excellent condition.  Bear Lake has 5 miles of water main serving 158 customers, 36% of which is undersized 4” cast iron, 78 years old.

The challenge facing Bear Lake is that the water system has undersized, old, tuberculated, cast iron watermain, that is incapable of adequate flow at system pressure.  They have multiple old and inoperable valves and hydrants.  Both wells are aging and performance is declining, well pumping capacity is insufficient for fire flow.  The disinfection and other equipment at the well houses is old and unreliable.  The village has been cited by the Michigan Department of Environmental Quality for violations of the Safe Drinking Water Act administrative rules.  Finally, the village water system isn’t metered.

The report included discussion of the current situation, projected demand, project alternatives, and recommendations.  The proposed project includes: 11,580 feet of 8” watermain with valves, hydrants, service leads, and restoration; two new wells and a wellhouse; and water meters/reading system. The proposed project has a total cost of $4,020,000; total engineering services as stipulated in the draft engineering agreement are $594,100.  O&M is $43,620/year; short lived assets are $12,133/year. See CPAP underwriting, Project Costs, for complete project budget.

PER is acceptable, project is modest in size, design, and cost.

If, during the design engineering phase, the scope of the project is revised, the Preliminary Engineering Report will need to be also revised with the following items:

  1. Revised project budget
  2. Addendum to the Preliminary Engineering Report with narrative outlining revisions

Your funding needs will be reassessed if there are changes in project costs after bids are received.  Obligated loan or grant funds not needed to complete the proposed project will be deobligated.  Any reduction will be applied to grant funds first.   An “Amended Letter of Conditions” will be issued for any revised project budget.

Project Funds – Project funding is planned from the following sources:

Rural Development Loan/Grant  $1,463000/$2,000,000 grant/$547,000 grant

Village of Bear Lake               $10,000

Any changes in funding sources following obligation of RUS funds must be reported to the processing official.  Prior to advertisement for construction bids, you must provide evidence of applicant contributions and approval of other funding sources.  This evidence should include a copy of the commitment letter.

Disbursement of Funds –Any applicant contribution will be considered as the first funds expended.  An agreement should be reached with all other funding sources on how funds are to be disbursed before the start of construction.  RUS loan funds will be used prior to the use of RUS grant funds.

You must establish a separate construction account, with an acceptable financial institution or depository that meets the requirements of 31 CFR Part 202.  All project funds will be deposited into this account.  Financial institutions or depositaries accepting deposits of public funds and providing other financial agency services to the Federal Government are required to pledge adequate, acceptable securities as collateral.  All funds in the account will be secured by a collateral pledge equaling at least 100% of the highest amount of funds expected to be deposited in the constructions account at any one time. Additional guidance on collateral acceptability and valuation are available at Treasury’s Bureau of the public debt website at

Any Agency grant funds not disbursed immediately upon receipt must be deposited in an interest bearing account except as follows:

  1. Federal grant awards (includes all federal funding sources) are less than $120,000 per year.
  2. The best available interest bearing account would not be expected to earn in excess of $100 per year will be submitted to the Agency at least quarterly as required in 7CFR3016.
  3. The depository would require a minimum balance so high that it would not be feasible.

Security – The loan will be secured by a revenue bond as authorized under PA 94 of 1933, as amended.   The bond will be fully registered as to both principal and interest in the name of the “United States of America”.

The bond and any ordinance or resolution relating thereto must not contain any provision in conflict with the RD Loan Resolution, applicable regulations, and law.  In particular, there must be no defeasance or refinancing clause in conflict with the graduation requirements of 7 USC 1983 (c).

Additional security requirements are contained in RUS Bulletin 1780-12, “Water or Waste System Grant Agreement” and RUS Bulletin 1780-27, “Loan Resolution (Public Bodies)”.

Qualified Status under Section 303(3) of Public Act 34 of 2011 – Prior to bidding, you and/or your bond counsel must verify that “Qualified Status” has been obtained or is ready to file an application with the Local Audit and Finance Division, Michigan Department of Treasury.

Loan Repayment – Your loan will be scheduled for repayment over a period of 40 years at the interest rate of 1.875%.  The first interest payment will be scheduled no later than six months from the bond closing date.

The interest during construction will not be capitalized.  Principal repayment will not be deferred.

The interest rate will be the lower of the rate in effect at the time of loan approval or the time of loan closing, whichever is less, unless you choose otherwise. 

You will be required to complete RD-3550-28, “Authorization Agreement for Preauthorized Payments” for all new and existing indebtedness to the Agency.  Your loan payment will be electronically debited from your designated bank account on the day your payment is due.

Reserves – Reserves must be properly budgeted to maintain the financial viability and sustainability of any operation.  Reserves are important to fund unanticipated emergency maintenance and repairs, and assist with debt service thru a debt service reserve should the need arise.  Reserves can also be established and maintained for the anticipated and expected expenses including but not limited to operation and maintenance and customer deposits.

The annual bond reserve requirement is determined to be $5,300. This will accumulate at the rate of one-tenth of one annual payment per year until the balance is equal to $53,000.

The annual Repair, Replacement and Improvement (RRI) reserve requirement is determined to be $12,133.

When the Bond Reserve Fund is fully funded the entire $17,133 annual requirement must be deposited in the RRI Fund for the life of the loan.

Users – This letter of conditions is based upon you providing evidence or a certification that there will be at least 142 residential users and 16 commercial users on the system when construction has been completed.  Rural Development funding commitment is based on providing service to a total of 158 users.  Before the Agency can agree to the project being advertised for construction bids, you must provide evidence or a certification that the total required number of users are currently using the system or signed up to use the system.

Effective Collection Policy:  The facility needs to be operated on a sound business plan.  You will be required to develop an “Effective Collection Policy,” which can be included in a “Rate Ordinance,” which will address accounts not paid in full within a specified number of days after the date of billing.  The plan should include appropriate late fees, specified timeframes for disconnection of service, and reconnection fees.

Proposed Operating Budget and User Rate Analysis – You must maintain a rate schedule that provides adequate income to meet the minimum requirements for operation and maintenance, debt service, and reserves.  You will be required to submit a copy of your proposed annual operating budget and rate analysis to the Agency which supports the proposed loan repayment prior to the Agency giving you written authorization to proceed with the bidding phase.  The operating budget should be based on a typical year cash flow after completion of the construction phase.  Form RD 442-7 – “Operating Budget” attached or similar form may be utilized for this purpose.  The rate analysis will be required to show the number of users, their average consumption based on a twelve month consecutive average, and rate structure to support the necessary revenue to make the operating budget cash flow.  It is expected that O&M will change over each successive year and user rates will need to be adjusted on a regular basis. 

Assistance is available from technical assistance resources to help you evaluate and complete a rate analysis on your system.  This assistance is available free to your organization.  If you are interested please contact our office for phone numbers and contacts of these organizations

Insurance and Bonding Requirements – Prior to loan closing or start of construction, whichever occurs first, you must acquire the types of insurance and bond coverage shown below.  The use of deductibles may be allowed providing you have the financial resources to cover potential claims requiring payment of the deductible.  The Agency strongly recommends that you have your engineer, attorney, and insurance provider(s) review proposed types and amounts of coverage, including any exclusions and deductible provisions.  It is your responsibility and not that of the Agency to assure that adequate insurance and fidelity or employee dishonesty bond coverage is maintained.

  1. General Liability Insurance – Include vehicular coverage.
  2. Workers’ Compensation – In accordance with appropriate State laws.
  3. Position Fidelity Bond(s) – All positions occupied by persons entrusted with the receipt and/or disbursement of funds must be bonded.  You should have each position bonded in an amount equal to the maximum amount of funds to be under the control of that position at any one time.  The coverage may be increased during construction of this project based on the anticipated monthly advances.  The minimum coverage acceptable to the Agency will be for each position to be bonded for an amount at least equal to one annual installment on your Agency loan(s).  The amount of coverage should be discussed and approved by the Agency.  Form RD 440-24, “Position Fidelity Bond” may be used for this purpose.
  4. National Flood Insurance – If the project involves acquisition or construction in designated special flood or mudslide prone areas, you must purchase a flood insurance policy at the time of loan closing.
  5. Real Property Insurance – Fire and extended coverage will normally be maintained on all structures except reservoirs, pipelines and other structures if such structures are not normally insured and subsurface lift stations except for the value of electrical and pumping equipment.  Prior to the acceptance of the facility from the contractor(s), you must obtain real property insurance (fire and extended coverage) on all facilities identified above.

Accounting Services – You may be required to obtain the services of an independent licensed Certified Public Accountant (CPA).  When permitted by state statutes or with the approval of the Agency, a state or Federal auditor may perform the audit in lieu of a CPA.

Audit Agreement You must enter into a written audit agreement with the auditor and submit a copy to the Agency prior to advertisement of bids.  The audit agreement may include terms and conditions that the borrower and auditor deem appropriate; however, the agreement should include the type of audit or financial statements to be completed, the time frame in which the audit or financial statements will be completed, what type of reports will be generated from the services provided and how irregularities will be reported.  Prior to the advertisement for bids, your accountant must certify to you and the Agency that the accounts and records as required by your bond resolution/ordinance have been established and are operational.

Audit Requirements The following management data will be required from you on an annual basis and be submitted to the Agency as specified below:

  1. A borrower that expends more than the current threshold in federal financial assistance per fiscal year shall submit an audit performed in accordance with the requirements of OMB Circular A-133.  As described above, the total federal funds expended from all sources shall be used to determine federal financial assistance expended.  Projects financed with interim financing are considered federal expenditures.
  2. A borrower that expends less than the current threshold in Federal financial assistance per fiscal year and an outstanding Agency loan balance of $1,000,000 or more shall submit an audit performed in accordance with Generally Accepted Government Auditing Standards, (GAGAS).
  3. A borrower that expends less than the current threshold in Federal financial assistance per fiscal year and has an outstanding Agency loan balance of less than $1,000,000 may submit a management report, which includes at a minimum a Balance Sheet and an Income and Expense Statement.

Annual Budget and Projected Cash Flow – Thirty days prior to the beginning of each fiscal year, you will be required to submit an annual budget and projected cash flow to this office.  With the submission of the annual budget, you will be required to provide a current rate schedule, a current listing of the Board or Council Members and their terms.

Quarterly Reports – Quarterly management reports will be required until the processing office waives the required reports.  You may use RD form 442-2 or other similar format.  The area office will notify you in writing when the Quarterly reports are no longer required.

Property Rights – Prior to advertisement for construction bids, you must furnish satisfactory evidence that you have or can obtain adequate continuous and valid control over the lands and rights-of-ways needed for the project.  Acquisitions of necessary land and rights must be accomplished in accordance with the Uniform Relocation and Real Property Acquisition Act.  Such evidence of control over the lands and rights must be in the following form:

Right-of-Ways – A right-of-way map will be required showing clearly the location of all lands and right-of-ways needed for the project.  The map must designate public and private lands and rights and the appropriate legal ownership thereof.  A certification and legal opinion relative to title to right-of-ways and easements is required.  Form RD 442-22, “Opinion of Counsel Relative to Rights-of-Way”, and Form RD 442-21, “Right-of-Way Certificate” are to be used.  These forms may contain a few exceptions such as properties that must be condemned; however, prior to the start of construction or loan closing, whichever occurs first, new forms must be provided which do not provide for any exceptions.

Title Work – All title opinions and/or title commitments should be coordinated with the color-coded right-of-way map. An opinion of title is required on all land essential to the successful operation of the system. This includes land owned, optioned, or easements where major structures, other than pipe material or small on-site pumps or tanks, exist or are to be built.

  1. (Preliminary Title Opinions) Form MI RD 1927-9, “Preliminary Title Opinion” along with copies of deeds, contracts or options for any lands needed other than rights-of-way, may be used for each property currently owned or to be acquired.  The title search period must cover a minimum of 40 years, be unqualified, and not contain any restrictions, including reverter clauses, which will adversely affect the system.
    (Title Commitments) A title insurance commitment will be required on all real estate now owned and property to be acquired in connection with this project.  Title insurance commitments must be owner’s policies and equal the value of the property as improved.  The commitment will name the borrower as the proposed insured.  Any exceptions must be reviewed by the attorney, who must provide certification that the exceptions will not adversely affect the operation and maintenance of the facility.
  2. (Final Title Opinion) Form MI RD 1927-10, “Final Title Opinion” – On the day of loan closing, your attorney must furnish a separate final title opinion on all existing land(s) and those to be acquired on the day of loan closing.
    (Final Title Policy) – At or immediately after loan closing, a Title Insurance Policy showing no exceptions that would adversely affect the use of the real property in connection with the proposed project must be provided. 

Engineering Services – The Agency must approve any agreements and modifications to agreements for professional engineering services.  The agreement for engineering services should consist of the Engineers Joint Contract Documents Committee (EJCDC) documents as indicated in RUS Bulletin 1780-26, “Guidance for the Use of EJCDC  Documents on Water and Waste Projects with RUS Financial Assistance” or other approved form of agreement.  The engineer must also provide Form AD-1048 “Certification Regarding Debarment, Suspension, Ineligibility, and Voluntary Exclusion – Lower Tier Covered Transactions.”

Resident Inspector(s) – Full-time inspection is required unless a written exception is made by the Agency upon your written request.  This service is to be provided by the consulting engineer or other arrangements as approved by the Agency.  Prior to the pre-construction conference, a resume of qualifications of the resident inspector(s) will be submitted to the owner and Agency for review and approval.  The owner will provide a letter of acceptance for all proposed observers to the engineer and Agency.  The resident inspector(s) must attend the pre-construction conference.

Restrictions on Lobbying

In order to comply with Section 319 of Public Law 101-121 which prohibits applicants and recipients of Federal contracts, grants and loans from using Federal appropriated funds for lobbying, the Federal Government in connection with the award of a specific contract, grant or loan, the Applicant, and all contractors and subcontractors must:

  1. Execute the attached Certification for Contracts, Grants, and Loans.
  2. Complete Standard Form LLL, “Disclosure of Lobbying Activities”, if they have made, or agreed to make payment, using funds other than Federal appropriated funds, to influence or attempt to influence a decision in connection with the contract.
  3. The Certification (and, if appropriate, the Disclosure) must be provided to USDA, Rural Development.

Environmental Requirements

Mitigation At the conclusion of the proposal’s environmental review process, no adverse items were identified that would require mitigation measures for this project.


Project Modifications – The project as proposed has been evaluated to be consistent with all applicable environmental requirements.  If the project or any project element deviates from or is modified from the original approved project, additional environmental review may be required.

Vulnerability Assessments (VA) and Emergency Response Plans (ERP)The Agency requires all financed water and wastewater systems to have a vulnerability assessment (VA) and an emergency response plan (ERP) in place.  New water or wastewater systems must provide a certification that an ERP is complete prior to the start of operations.  A certification that a VA is complete must be submitted within one year of the start of operations.  Borrowers with existing systems must provide a certification that a VA and ERP are completed prior to bid authorization.  Technical assistance is available in preparing these documents at no cost to you.

Permits – The owner, contractor or responsible party will be required to obtain all required permits for the project prior to advertisement for construction bids.  A narrative opinion from your attorney concerning all permits, certificates, licenses and other items necessary to show that all legal requirements can be met and stating how they will be met.

Contract Documents, Final Plans and Specifications

The contract documents should consist of the EJCDC Construction Contract Documents as indicated in RUS Bulletin 1780-26 or other approved form of agreement.

The contract documents, final plans, and specifications must comply with RUS Instruction 1780, Subpart C – Planning, Designing, Bidding, Contracting, Construction and Inspections and be submitted to the Agency for approval prior to advertisement for bids.

The use of any procurement method other than competitive bidding must be requested in writing and approved by the Agency.

The Agency requires a pre-construction conference, pre-final, final, and warranty inspection.

The Agency requires prior agency concurrence with all Change Orders, Invoices, and Payment Estimates.

Graduation By accepting this loan, you are also agreeing to refinance (graduate) the unpaid loan balance in whole, or in part, upon request of the Government.  If at any time the Agency determines your entity is able to obtain a loan for such purposes from responsible cooperative or private sources at reasonable rates and terms, you will be requested to refinance.

Applicable State Statutes and Requirements – Evidence must also be provided indicating your system has a licensed operator, meeting State requirements, will be available prior to the system becoming operational or a suitable supervisory agreement with a licensed operator is in effect.

Civil Rights & Equal Opportunity – You should be aware of and will be required to comply with other federal statute requirements including but not limited to:

  1. Section 504 of the Rehabilitation Act of 1973 – Under section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 794), no handicapped individual in the United States shall, solely by reason of their handicap, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Agency financial assistance.
  2. Civil Rights Act of 1964Posting and Notice
    The Non-Discrimination Statement shown below shall be posted in all recipient offices and included in full, on all materials regarding such recipients’ programs that are produced by the recipient for public information, public education, and public distribution.A recipient is any State, political subdivision of any State or instrumentality of any State or political subdivision; any public or private agency, institution, or organizations; or other entity or any individual in any State, to whom Federal financial assistance is extended, directly or through another recipient, for any program, including any successor, assignee, or transferee thereof.

    In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs).  Remedies and complaint filing deadlines vary by program or incident.

Persons with disabilities who require alternative means of communication for program information (e.g., Braille, large print, audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA’s TARGET Center at (202) 720-2600 (voice and TTY) or contact USDA through the Federal Relay Service at (800) 877-8339.  Additionally, program information may be made available in languages other than English.

To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at and at any USDA office or write a letter addressed to USDA and provide in the letter all of the information requested in the form.  To request a copy of the complaint form, call (866) 632-9992.  Submit your completed form or letter to USDA by:

  1. mail:  U.S. Department of Agriculture

Office of the Assistant Secretary for Civil Rights

1400 Independence Avenue, SW

Washington, D.C. 20250-9410;

  1. fax: (202) 690-7442; or
  1. email:

USDA is an equal opportunity provider, employer, and lender.

Bid AuthorizationOnce all the conditions outlined in this letter have been met, the Agency may authorize you to advertise the project for construction bids.  Such advertisement must be in accordance with appropriate State statutes.  Immediately after bid opening you must provide the Agency with the following:

  1. Bid tabulation
  2. Consulting engineer’s evaluation of bids and award of contract recommendation to the owner
  3. Your recommendations for contract awards.
  4. Revised project budget including bid award amounts.

If the Agency agrees that the construction bids received are acceptable, adequate funds are available to cover the total project costs, and all the administrative conditions of loan approval have been satisfied, loan closing instructions will be issued to you setting forth any further requirements that must be met before a Notice of Award may be issued.

Cost OverrunsCost overruns exceeding 20% of the development cost at time of loan or grant approval or where the scope of the original purpose has changed will compete for funds with all other applications on hand as of that date.  Cost overruns must be due to high bids or unexpected construction problems that cannot be reduced by negotiations, redesign, use of bid alternatives, rebidding or other means prior to consideration by the Agency for subsequent funding.  Such requests will be contingent on the availability of funds.

Use of Remaining Funds – When the water project is substantially complete and it appears that there will be remaining loan and/or grant funds after all approved costs are paid, it is the policy of Rural Development (§1780.45(f)) to close out the project as follows:

  1. Remaining funds may be used for eligible loan or grant purposes as approved in the Preliminary Engineering Report and subsequent addendums, provided the use will not result in major changes to the facility(s) and the purpose of the loan and grant remains the same.
  2. RUS loan funds that are not needed will be applied as an extra payment on the RUS indebtedness unless other disposition is required by bond ordinance, resolution, or State statute.
  3. RUS grant funds not expended for authorized purposes will be cancelled within 30 days of project completion.  Prior to actual cancellation, you and your attorney and engineer will be notified of the Agency’s intent to cancel the remaining funds and given appropriate appeal rights.

We look forward to continue working with you to complete this project and if you have any questions please contact Blake Smith, Area Specialist at 1-800-944-8119 or by e-mail at .

Sincerely yours,

Michelle Collins
Acting Area Director
USDA, Rural Development

cc:  Community Programs S/O
Bond Counsel

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.