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1 (2) The term "improvements" means waterlines and 2 water supply installations, sewerlines and sewage or waste 3 disposal installations, steam, gas, and electric lines and in4 stallations, roads, streets, curbs, gutters, sidewalks, storm 5 drainage facilities, neighborhood central heating or air6 conditioning systems, and other installations or work, 7 whether on or off the site, which the Secretary deems neces8 sary or desirable to prepare land primarily for residential 9 and related uses or to provide facilities for public or common use. Related uses may include industrial and commercial 11 uses, with sites for such uses to be in proper proportion to 12 the size and scope of the development. The term "improve13 ments" includes the construction of public facilities, but does 14 not include the construction of any building unless it is (i) needed in connection with a water supply or sewage dis16 posal installation or a steam, gas, or electric line or installa17 tion, or (ii) is to be owned and maintained jointly by the 18 property owners.

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19 (b) The Secretary is authorized to insure a mortgage (including advances) which shall—

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(1) cover the land to be developed and the im

provements to be made;

(2) be executed by a mortgagor, other than a pub

lic body, approved by the Secretary;

(3) contain repayment provisions satisfactory to

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1 the Secretary within such term as the Secretary shall

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prescribe; and

(4) contain such terms and provisions with respect

to the security, payment of taxes, delinquency charges, prepayment, additional and secondary liens, and other

matters as the Secretary may in his discretion prescribe.

(c) The principal obligation of the mortgage shall not 8 exceed the sum of 80 per centum of the Secretary's estimate 9 of the value of the land before development and 90 per 10 centum of his estimate of the cost of such development. 11 (d) The land development shall involve improvements 12 that comply with all applicable State and local governmental 13 requirements and with minimum standards approved by the 14 Secretary and shall be undertaken

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(1) pursuant to a schedule, conforming to such requirements and procedures as the Secretary may prescribe, that will assure the use of the land for the

purposes for which it is to be developed within the short

est reasonable period consistent with the objectives of sound and economic community growth or urban development; and

(2) in accordance with an overall development plan which (i) has received all governmental approvals required by State or local law or by the Secretary, (ii) is

25 acceptable to the Secretary as providing reasonable as

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surance that the land development will contribute to good living conditions in the area being developed, and (iii) is consistent with a comprehensive plan which covers, or with comprehensive planning being carried on for, the area in which the land is situated, and which meets criteria established by the Secretary for such plans or planning.

8 (e) The Secretary shall adopt such requirements as he 9 deems necessary in connection with the land development 10 to encourage the maintenance of a diversified local homebuild11 ing industry, broad participation by builders, including small 12 builders, and the inclusion of a proper balance of housing for 13 families of moderate or low income.

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(f) After development of the land, it shall be served 15 by public or private systems for water and sewerage which are consistent with other existing or prospective systems 17 within the area and which are approved by the Secretary.

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(g) The Secretary may consent to the release or sub19 ordination of a part or parts of the mortgaged property

20 from the lien of the mortgage.

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21 (h) The Secretary shall adopt such requirements as he

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determines necessary to assure, at reasonable intervals of 23 time during land development, that the amount of the mort24 gage loan outstanding at each such interval does not exceed 25 with respect to that portion of the land remaining under the

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lien of the mortgage (1) 80 per centum of the Secretary's

estimate of the value of such remaining land before develop3 ment, plus (2) 90 per centum of the actual costs of the 4 development allocated by the Secretary to such remaining land. As used in this section, the term "actual costs" means

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the costs (exclusive of rebates or discounts) to the mortgagor 7 of the improvements involved. These costs include amounts 8 paid for labor, materials, construction contracts, land plan9 ning, engineers' and architect's fees, surveys, taxes, and in10 terest during development, organizational, and legal ex11 penses, such allocation of general overhead expenses as are 12 acceptable to the Secretary, and other items of expense 13 incidental to development which may be approved by the 14 Secretary. If the Secretary determines there is an identity 15 of interest between the mortgagor and the contractor, there 16 may be included an allowance for the contractor's profit in 17 an amount deemed reasonable by the Secretary.

19 SEC. 506. (a) The Secretary shall adopt such require20 ments as he determines necessary to assure that the amount 21 of any mortgage or loan finally endorsed for insurance under 22 this Act which involves multifamily housing or a health facil23 ity does not exceed the approved percentage of (1) the 24 Secretary's approved actual cost of such construction or re

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1 habilitation and (2) the amount of the allowances for the

2 following:

(A) The Secretary's estimate of the value of the

land or property prior to the beginning of construction; or in case the land included in the property or project is held by the mortgagor under a leasehold or other interest less than a fee, such amount as the mortgagor paid for the acquisition of such leasehold or other interest but in no event in excess of the Secretary's estimate of the fair market value of such leasehold or other interest exclusive of the proposed improvements; or in the case of rehabilitation where the land and improvements are to be acquired by the mortgagor and the

purchase price thereof is to be financed with part of the

proceeds of the mortgage, the purchase price of such land and improvements prior to such repair or rehabili

tation; or in case the land and improvements are owned

by the mortgagor subject to an outstanding indebtedness

to be refinanced with part of the proceeds of the mort

gage, the amount of such outstanding indebtedness secured by such land and improvements.

(B) An amount for profit and risk as prescribed pursuant to section 501 (a) (2), and an amount repre

senting such allocation of general overhead items as are