66 1 Security Act and thereby qualify for participation in, or 2 maintain certification under, the hospital insurance program 3 under such title. 4 5 6 7 8 9 10 11 (f) A loan insured under this section shall (1) be secured in such manner as the Secretary may require; and (2) contain such other terms, conditions, and restrictions as the Secretary may prescribe. MORTGAGE INSURANCE FOR LAND DEVELOPMENT SEC. 505. (a) For the purposes of this section(1) The term "land development" means the process 12 of making, installing, or constructing improvements. 13 14 (2) The term "improvements" means waterlines and water supply installations, sewerlines and sewage disposal 15 installations, steam, gas, and electric lines and installations, 16 roads, streets, curbs, gutters, sidewalks, storm drainage facil17 ities, and other installations or work, whether on or off the 18 site, which the Secretary deems necessary or desirable to 19 prepare land primarily for residential and related uses or to 20 provide facilities for public or common use. Related uses may 21 include industrial and commercial uses, with sites for such 22 uses to be in proper proportion to the size and scope of the 23 development. The term "improvements" shall not include 24 any building unless it is (i) a building which is needed in 25 connection with a water supply or sewage disposal instal 67 1 lation or a steam, gas, or electric line or installation, or (ii) 2 a building, other than a school, which is to be owned and 3 maintained jointly by the property owners. 4 (b) The Secretary is authorized to insure a mortgage 5 (including advances) which shall 6 7 8 9 10 11 121 13 14 15 16 17 (1) cover the land to be developed and the improvements to be made, except facilities intended for public use and in public ownership; (2) be executed by a mortgagor, other than pub lic body, approved by the Secretary; (3) contain repayment provisions satisfactory to the Secretary within such term as the Secretary shall 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 19 exceed the sum of 80 per centum of the Secretary's estimate 20 of the value of the land before development and 90 per cen 18 21 22 22 tum of his estimate of the cost of such development. (d) The land development shall involve improvements 23 that comply with all applicable State and local governmental 24 25 requirements and with minimum standards approved by the Secretary and shall be undertaken 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 222 68 (1) pursuant to a schedule, conforming to such requirements and procedures as the Secretary may pre scribe, 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 . acceptable to the Secretary as providing reasonable as 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 cov ers, 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. (e) The Secretary shall adopt such requirements as he 20 deems necessary in connection with the land development 21 22 to encourage the maintenance of a diversified local homebuild ing industry, broad participation by builders, including small 23 builders, and the inclusion of a proper balance of housing for 24 families of moderate or low income. 25 (f) After development of the land, it shall be served 69 1 by public or private systems for water and sewerage which 2 are consistent with other existing or prospective systems 3 within the area and which are approved by the Secretary. 4 (g) The Secretary may consent to the release or sub5 ordination of a part or parts of the mortgaged property 6 from the lien of the mortgage. 10 7 (h) The Secretary shall adopt such requirements as he 8 determines necessary to assure, at reasonable intervals of 9 time during land development, that the amount of the mortgage loan outstanding at each such interval does not exceed 11 with respect to that portion of the land remaining under the 12 lien of the mortgage (1) 80 per centum of the Secretary's 13 estimate of the value of such remaining land before develop14 ment, plus (2) 90 per centum of the actual costs of the 15 development allocated by the Secretary to such remaining 16 land. As used in this section, the term "actual costs" means 17 the costs (exclusive of rebates or discounts) to the mortgagor 18 of the improvements involved. These costs include amounts 19 paid for labor, materials, construction contracts, land plan20 ning, engineers' and architect's fees, surveys, taxes, and in21 terest during development, organizational, and legal expenses, such allocation of general overhead expenses as are acceptable to the Secretary, and other items of expense 24 incidental to development which may be approved by the 25 Secretary. If the Secretary determines there is an identity 22 23 70 1 of interest between the mortgagor and the contractor, there 2 3 4 may be included an allowance for the contractor's profit in an amount deemed reasonable by the Secretary. COST CERTIFICATION 5 SEC. 506. (a) The Secretary shall adopt such require6 ments as he determines necessary to assure that the amount 7 of any mortgage or loan finally endorsed for insurance under 8 this Act which involves multifamily housing or a health 9 facility does not exceed the approved percentage of (1) 10 the Secretary's approved actual cost of such construction or 11 rehabilitation and (2) the amount of the allowances for the 12 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 in terest 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 improve ments 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 79-555 O 72-6 |