Improvements Needed in the Administration of Farmers Home Administration's Water and Waste Disposal Program

CED-77-116: Published: Sep 1, 1977. Publicly Released: Sep 1, 1977.

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Lack of documentation prevents determination as to whether the Farmers Home Administration (FmHA) is complying with the "credit elsewhere" provision of the water and waste disposal program. Borrowers' files are not always reviewed to determine the ability of borrowers to refinance their water and waste disposal loans.

Borrowers were not requested to refinance their loans, and it could not be determined whether borrowers were being asked to seek credit elsewhere. Agency requirements for using reserve funds to repair or replace system components did not insure that water and waste disposal systems would remain viable for the loan repayment period.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: The Secretary of Agriculture should direct the Administrator of the FmHA to make recommendations to the Congress concerning the reasonableness of the statutory credit elsewhere provision as it applies to nonpublic water and waste disposal borrowers; require State offices to document all credit elsewhere determinations in borrowers' files and to review periodically water and waste loans for refinancing through other credit sources; establish procedures requiring that reserve funds consider the useful life and future replacement costs of system components; insure that all borrowers meet reserve fund provisions placed on them; stop using the percentage-of-construction-cost method of compensating engineers and require that all engineering fees be a fixed amount; and establish procedures to require State or district office audits of all final engineering fee payments to prevent engineers from receiving fees in excess of allowable amounts.


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