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khammond on DSKJM1Z7X2PROD with RULES

Federal Register / Vol. 86, No. 37 / Friday, February 26, 2021 / Rules and Regulations agreements, guarantees, any existing management or service agreements, and any other agreements with parents, subsidiaries and affiliates, including but not limited to debt instruments that use the applicants assets, revenues or stock as collateral must be included in the application.
3 Applicants must provide evidence of all funding, other than the RUS
award, necessary to support the project, such as bank account statements, firm letters of commitment from equity participants, or outside loans, which must evidence the timely availability of funds. If outside loans are used to cover any matching requirement, they may only be secured by assets other than those used for collateral under this regulation. Equity partners that are not specifically identified by name will not be considered in the financial analysis of the application. If the application states that other funds are required for the broadband project in addition to the Program funding requested, evidence must be included in the application identifying the source of funds and when the funds will be available. If the additional funding is not clearly identified, the application may not be considered for an award. If the applicant is providing non-telecommunication services and is proposing expansion to those services and states that additional funds are required to support sustainability of the overall operation of the applicant, then evidence must be submitted supporting the availability of these funds or the application may not be considered for funding.
4 Historical financial statements for the last four years consisting of a balance sheet, income statement, and cash flow statement must be provided.
If an entity has not been operating for four years, historical statements for the period of time the entity has been operating are acceptable.
5 Pro Forma financial analysis prepared in conformity with GAAP and the Agencys guidance on grant accounting can be found at https
www.rd.usda.gov/files/
AccountingGuidance10.pdf. The Pro Forma should validate the sustainability of the project by including subscriber estimates related to all proposed service offerings; annual financial projections with balance sheets, income statements, and cash flow statements; supporting assumptions for a five-year forecast period and a depreciation schedule for existing facilities, those facilities funded with federal assistance, matching funds, and other funds. This pro forma should indicate the committed sources of capital funding and include a bridge year prior to the start of the forecast
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period. This bridge year shall be used as a buffer between the historical financial information and the forecast period and is the year in which the application is submitted.
i The financial projections must demonstrate that by the end of the forecast period, the project will meet at least two of the requirements described in 1740.61a.
ii The financial projections must also demonstrate positive cash flow from operations at the end of the forecast period.
iii Based on the financial evaluation, additional conditions may be added to the Award documents to ensure financial feasibility and security on the award.
b Publicly traded companies that have a bond rating from Moodys, Standard and Poors, or Fitch of Investment Grade at the time an application is submitted do not have to complete the pro forma financial projections. In addition, applicants with this classification that elect not to submit financial projections do not need to submit NFSAs.

1740.651740.76

1740.64

1740.79 Servicing of grants, loans and loan/grant combinations.

Network design.

a Only projects that RUS determines to be technically feasible will be eligible for an award.
b The network design must include a description of the proposed technology used to deliver the broadband service, demonstrating that all premises in the PFSA can be offered broadband service; a network diagram, identifying cable routes, wireless access points, and any other equipment required to operate the network; a buildout timeline and milestones for implementation of the project; and a capital investment schedule showing that the system can be built within five years. All of these items must be certified by a professional engineer who is certified in at least one of the states where there is or will be project construction. The certification from the professional engineer must clearly state that the proposed network can deliver the broadband service to all premises in the PFSA at the minimum required service level. In addition, a list of all required licenses and regulatory approvals needed for the proposed project and how much the applicant will rely on contractors or vendors to deploy the network facilities must be submitted. Note that in preparing budget costs for equipment and materials, RUS Buy American requirements apply, as referenced in 1740.46.

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Subpart FClosing, Servicing and Reporting 1740.77

Offer and closing.

Successful applicants will receive an offer letter and award documents from RUS following award notification.
Applicants may view sample award documents on the Agencys web page.
1740.78

Construction.

a All project assets must comply with 7 CFR part 1788 and 7 CFR part 1970, the Program Construction Procedures located on the Agencys web page, any successor regulations found on the agencys website, and any other guidance from the Agency.
b The build-out of the project must be completed within five years from the date funds are made available. Build-out is considered complete when the network design has been fully implemented, the service operations and management systems infrastructure is operational, and the awardee is ready to support the activation and commissioning of individual customers to the new system.

a Awardees must make payments on the loan as required in the note and Award Documents.
b Awardees must comply with all terms, conditions, affirmative covenants, and negative covenants contained in the Award Documents.
c The sale or lease of any portion of the Awardees facilities must be approved in writing by RUS prior to initiating the sale or lease.
1740.80 Accounting, monitoring, and reporting requirements.

a Awardees must adopt a system of accounts for maintaining financial records acceptable to the Agency, as described in 7 CFR part 1770, subpart B.
b Awardees must submit annual comparable audited financial statements along with a report on compliance and on internal control over financial reporting, and management letter in accordance with the requirements of 7
CFR part 1773 using the RUS on-line reporting system. The Certified Public Accountant CPA conducting the annual audit is selected by the borrower and must be satisfactory to RUS as set forth in 7 CFR 1773, subpart B, RUS
Audit Requirements.
c Thirty 30 calendar days after the end of each calendar year quarter, Awardees must submit to RUS, balance sheets, income statements, statements of cash flow, rate package summaries, and
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