1951.232—Water and waste disposal systems which have become part of an urban area.
A water and/or waste disposal system serving an area which was formerly a rural area as defined in § 1942.17(b)(2)(iii) and (iv) of subpart A of part 1942 of this chapter, but which has become in its entirety part of an urban area, will be serviced in accordance with this section.
(a) Curtailment or limitation of service.
Service may not be curtailed or limited by the inclusion of a system within an urban area.
(b) Sale or transfer and assumption.
(1)
The urban community or another entity may purchase the facility involved and immediately pay the FmHA or its successor agency under Public Law 103-354 debt in full; or
(2)
The urban community or another entity may accept a transfer of the FmHA or its successor agency under Public Law 103-354 debt on an ineligible applicant basis.
(3)
When a grant is involved, the entity will agree in writing to assume all rights and obligations of the original grantee. See § 1951.215 for additional guidance on grant agreements.
(c) Lease-purchase arrangement.
If § 1951.232(b) (l) and (2) of this section are not practicable, the urban community may, with prior approval of the National Office, operate and maintain the system under a lease-purchase arrangement which provides that:
(i)
Assume responsibility for operation and maintenance of the facility, subject to nondiscrimination and all other requirements which are applicable to the borrower, which are to be specified in the agreement between the parties; and
(ii)
Pay the association annually an amount sufficient to enable it to meet all its obligations, including reserve account requirements.
(i)
Meet its debt service and reserve account requirements to FmHA or its successor agency under Public Law 103-354;
(ii)
Retain its corporate existence until FmHA or its successor agency under Public Law 103-354 has been paid in full; and
(iii)
If agreed upon by both parties, convey title to the facility to the urban community when the FmHA or its successor agency under Public Law 103-354 debt has been paid in full.
(d) Processing.
(1)
Sale of a borrower's assets will be handled in accordance with § 1951.226 of this subpart.
(2)
Transfer and assumption of a borrower's assets and indebtedness will be handled in accordance with § 1951.230 of this subpart.
(4)
When a lease-purchase arrangement is proposed, the State Director will obtain a proposed agreement drafted by either the borrower or the urban community. The following will be forwarded to the Administrator, Attention: Water and Waste Disposal Division, for review and approval authorization:
(ii)
Exhibit A of this subpart (available in any FmHA or its successor agency under Public Law 103-354 office), appropriately completed;
(iv)
The case file, including all documentation appropriate for the type of servicing action involved.