Inquiry Into Farmers Home Administration's Selection of Developer To Construct Housing Project in New Hampshire

GAO inquired into the Farmers Home Administration's (FmHA) selection of a proposal to develop a rental housing project for the elderly under the Congregate Housing Demonstration Project.

GAO found while FmHA has not yet developed procedures for implementing an Executive Order on flood plain development, FmHA State offices are required to comply with the order. FmHA officials maintain that the flood plain requirements would have been complied with had the original developer completed the project. The site feasibility analysis was prepared by an FmHA State office architect. This analysis is usually prepared by applicants. While the analysis did not refer to the project's access road, which is located in a flood plain, FmHA State office officials told GAO that they were aware of this problem. Had the project progressed to the next phase in the application cycle, they said that either the road problem would have been solved or the project would not have been built on that site. FmHA notification that project applications were to be processed on a priority basis was intended to inform regular loan applicants that the normal business of FmHA may be suspended while the demonstration project applications were being processed. GAO found no evidence that special considerations were given to applicants. The appraisal form on file was not intended to be a formal appraisal of the project site locations. This form was used by FmHA as a worksheet to capture general site information. The project's funds were mistakenly left obligated to the successful applicant after project termination. This matter was brought to the attention of FmHA officials and the funds were deobligated.