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385 Mr. Manuel Kiser spoke in favor of the establishment of a service district for those areas'of the county which are scheduled to receive the water lines funded by the Farmers Home Administration grant/loan and stated he would support a bond referendum if the service district is established. Motion was made by Commissioner Payne and seconded by Commissioner Lentz to accept the Farmers Home Administration grant agreement and to sponsor a general obligation bond referendum. UPON SUBSTITUTE MOTION of Commissioner Barnhardt, seconded by Commissioner Milloway with Commissioners Barnhardt, Milloway, and Payne and Chairman Nash voting for and Commissioner Lentz voting against, the Board agreed by resolution that the County establish a service district including the seven (7) service areas that the water service delivery would cover and that if any tax monies are needed to pay for the bond retirement or operations then the service district residents would be taxed. The Board agreed that the County call for a bond referendum in the amount of $7,274,000.00 for general obligation bonds and accepted the Farmers Home Adminstration grant agreement in the planned amount of $11,060,000.00. The Farmers Home Administration grant agreement as accepted by the Board is as follows. Form FmHA 1942-31 (1-29-79) UNITED STATES DEPARTMENT OF AGRICULTURE FARMERS HOME ADMINISTRATION ASSOCIATION WATER OR SEWER SYSTEM GRANT AGREEMENT THIS AGREEMENT dated September 19, 1983, between THE COUNTY OF CABARRUS, a public corporation organized and operating under N.C. General Statutes herein called "Grantee," and the United States of America acting through the Farmers Home Administration, Department of Agriculture, herein called "Grantor," WITNESSETH: WHEREAS Grantee has determined to undertake a project of acquisition, construction, enlargement, or capital improvement of a (water) (sewer) system to serve the area under its jurisdiction at an estimated cost of $11,060,000.00 and has duly authorized the undertaking of such project. Grantee is able to finance not more than $9,634,000.00 of the development costs through revenues, charges, taxes or assessments, or funds otherwise available to Grantee resulting in a reasonable user charge. Said sum of $9,634,000.00 has been committed to and by Grantee for such project development costs. Grantor has agreed to grant the Grantee a sum not to exceed $1,426,000.00 or 12.89 percent of said development costs, whichever is the lesser, subject to the terms and conditions established by the Grantor. Provided, however, that the proportionate share of any grant funds actually advanced and not needed for grant purposes shall be returned immediately to the Grantor. The Grantor may terminate the grant in whole, or in part, at any time before the date of completion, whenever it is determined that the Grantee has failed to comply with the conditions of the grant. NOW, THEREFORE, In consideration of said grant by Grantor to Grantee, to be made pursuant to Section 306(a) of the Consolidated Farm and Rural Development Act for the purpose only of defraying a part not to exceed 12.89 percent of the development costs, as defined by applicable Farmers Home Administration instructions. GRANTEE AGREES THAT GRANTEE WILL: A. Cause said project to be constructed within the total sums available to it, including said grant, in accordance with the project plans and specifications and any modifications thereof prepared by Grantee and approved by Grantor. B. Permit periodic inspection of the construction by a representative of Grantor during construction.