[Federal Register Volume 60, Number 13 (Friday, January 20, 1995)]
[Rules and Regulations]
[Pages 4069-4070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1420]



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 Rules and Regulations
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  Federal Register / Vol. 60, No. 13 / Friday, January 20, 1995 / Rules 
and Regulations  
[[Page 4069]]

DEPARTMENT OF AGRICULTURE

Rural Housing and Community Development Service

7 CFR Part 1944

RIN: 0575-AB47


Rural Business and Cooperative Development Service, Rural 
Utilities Service, Consolidated Farm Service Agency; Farm Labor Housing 
Loan and Grant Policies, Procedures, and Authorizations

AGENCIES: Rural Housing and Community Development Service, Rural 
Business and Cooperative Development Service, Rural Utilities Service, 
and Consolidated Farm Service Agency, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Housing and Community Development Service (RHCDS) a 
successor Agency to the Farmers Home Administration (FmHA) for these 
programs hereby amends its Farm Labor Housing (LH) Loan and Grant 
regulations. This action needed to change the basic rules of the 
regulations concerning packaging costs. These changes are intended to 
initiate the use of loan and grant funds to defray the costs of 
packaging and/or developing applications by nonprofit groups or public 
bodies.

EFFECTIVE DATE: February 21, 1995.

FOR FURTHER INFORMATION CONTACT: Mary Fox, Loan Specialist, Multi-
Family Housing Processing Division, Rural Housing and Community 
Development Service, USDA, Room 5337--South Agriculture Building, 
Washington, DC 20250, telephone (202) 720-1606.

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be not-significant for purposes of 
Executive Order 12866 and therefore has not been reviewed by OMB.

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been approved by the Office of Management and Budget 
(OMB) under the provisions of 44 U.S.C. Chapter 35 and have been 
assigned OMB control number 0575-0045 in accordance with the Paperwork 
Reduction Act of 1980 (44 U.S.C. 3507). This final rule does not revise 
or impose any new information collection requirement from those 
approved by OMB.

Civil Justice Reform

    This document has been reviewed in accordance with Executive Order 
(E.O.) 12778. It is the determination of this Agency that this action 
does not unduly burden the Federal Court System in that it meets all 
applicable standards provided in section 2 of the E.O.

Background

    This is to revise regulations to add reimbursement for application 
costs as an eligible loan and grant purpose for nonprofit groups or 
public bodies. The intended effect is to enable an applicant to be 
reimbursed with loan/grant funds for their costs in packaging and/or 
developing an application for an LH facility.
    This regulation will clarify the use and amount of loan/grant funds 
for the assistance of developing and packaging applications. Prior to 
this revision, this use of funds was limited to reimbursement of 
packaging services provided by another nonprofit organization with 
experience in housing or community development. This revised regulation 
allows for reimbursement of reasonable costs incurred by the 
applicant's in-house personnel. In addition, the revised rule also 
provides better guidance of the limitations of such costs, either by 
in-house personnel or by another nonprofit.
    Payments for technical assistance from the proceeds of loan/grant 
funds will be limited and must be documented. If the services are 
performed by in-house personnel, there should be an Agency approved 
plan as part of this proposal and documentation of when that assistance 
was performed.
    Payments can be made when the labor housing application is funded 
and loan and/or grant agreements have been executed.

Discussion of Comments

    A proposed rule was published in the Federal Register (58 FR 48330) 
on September 15, 1993, and invited comments for 60 days ending November 
15, 1993. Twelve letters were received commenting on the various 
aspects on the changes in the proposed rule. All letters were received 
within the comment period and were very supportive of the Agency's 
policies and direction.
    Two respondents suggested that packaging fees should be changed to 
``development fee'' since the work involved encompasses much more than 
packaging preapplication/applications. This Agency does not consider 
these costs as either packaging or development ``fees.'' The Agency's 
intentions is to reimburse strictly on an as-needed and documented cost 
basis, not on an automatic ``fee'' basis.
    One respondent suggested that fees should be paid directly to the 
non-profit sponsor, as opposed to a requirement that such a fee is 
available only to a third party development consultant. The revised 
regulation does include reimbursement directly to non-profit sponsor 
for their own costs or a third-party development consultant.
    Six respondents asked to clarify the preamble language limiting 
packaging fees to 1 percent for packaging and development of proposed 
project cost or whatever is reasonable in a typical area or use a scale 
for such calculation. Based upon recommendations from the respondents, 
some of whom are the Agency's Technical Assistance Contractors, the 
Agency has revised the regulations by limiting the packaging costs to 2 
to 4 percent of the total development costs or whatever is reasonable 
in the typical area, not to exceed 4 percent. This provides a more 
reasonable and flexible range of cost-reimbursement to cover staff and 
associated costs in developing the labor housing proposal.
    Several respondents suggested that the rule be flexible to allow a 
combination of an outside technical assistance provider/packager and 
the nonprofit applicant to both receive reimbursement of packaging/
staff fees. The Agency's revision permits [[Page 4070]] reimbursement 
of costs for the development and packaging of the docket and project 
whether it is by outside technical assistance or by the applicant 
itself.
    Two respondents suggested wording change to permit paying for 
technical assistance from a for-profit organization. This is not 
possible since, in accordance with the Housing Act of 1949, this 
assistance is limited to eligible nonprofit private and public 
agencies, not for-profit entities. This does not impact for-profit 
firms providing architectural, engineering and other specific services 
as they do now.
    One respondent asked what type of plan would be needed to implement 
the reimbursement, and who would have the authority to approve such a 
plan? The revised regulation now includes a revision to Exhibit A-1, 
advising that projected technical assistance and in-house costs should 
be incurred only after negotiation with the State/District Office staff 
as soon as possible in the applicant's process of developing a 
preapplication. Based upon what is typical in the area, the Agency will 
respond in writing approving the packaging plan and a range of costs in 
advance. The State Director or the delegated official will have the 
authority to approve the packaging plan. The cost breakdown submitted 
with the preapplication will also include the negotiated and agreed 
upon costs for such plan.
    One respondent asked whether current applications would allow 
documented retroactive costs be reimbursed. The revised rule will be 
effective 30 days after publication and the agency will permit 
reimbursement on a case-by-case basis for projects authorized and not 
yet obligated as of the effective date.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' It is the determination of the 
Agency that the proposed action does not constitute a major Federal 
action significantly affecting the quality of the human environment and 
in accordance with the National Environmental Policy Act of 1969, 
Public Law 91-190, an Environmental Impact Statement is not required.

Intergovernmental Review

    This program/activity is listed in the Catalog of Federal Domestic 
Assistance under Number 10.405, Farm Labor Housing Loans and Grants, 
and as provided for in 7 CFR, part 1940 subpart J, is subject to the 
provisions of Executive Order 12372 which requires intergovernmental 
consultation with State and local officials.

List of Subjects in 7 CFR Part 1944

    Farm labor housing, Grant programs--Housing and community 
development, Loan programs--Housing and community development, Migrant 
labor, Nonprofit organizations, Public housing, Rent subsidies, and 
Rural housing.

    Therefore, chapter XVIII, title 7, Code of Federal Regulations is 
amended as follows:

PART 1944--HOUSING

    1. The authority citation for part 1944 continues to read as 
follows:

    Authority: 42 U.S.C. 1480; 5 U.S.C. 301; 7 CFR 2.23; 7 CFR 2.70.

Subpart D--Farm Labor Housing Loan and Grant Policies, Procedures 
and Authorizations

    2. Section 1944.158 is amended by revising paragraph (i) to read as 
follows:


Sec. 1944.158  Loan and grant purposes.

* * * * *
    (i) Provide loan/grant funds to enable a nonprofit group or public 
body to be reimbursed for technical assistance received from a 
nonprofit organization, with housing and/or community development 
experience, to assist the nonprofit applicant entity in the development 
and packaging of its loan/grant docket and project.
    (1) Loan and grant funds may also be used to reimburse any 
appropriate and necessary legal, architectural, engineering, technical, 
and professional fees.
    (2) Costs incurred by the nonprofit applicant entity for 
development and packaging of its own loan/grant docket and project may 
also be reimbursed. Any costs incurred by the entity for its own 
formation and incorporation are not reimbursable.
    (3) The amount to be reimbursed for developing and packaging the 
loan/grant docket and project are limited by the total development cost 
(excluding initial operating and capital expenses). Reimbursed costs 
may range from 2 to 4 percent of total development costs and should 
reflect costs that are reasonable and typical for the area. In no case 
will the Agency reimburse in excess of 4 percent.
    (4) The packaging costs are not required to be considered a part of 
the security value of the project.
    (5) Related project costs as listed in Sec. 1944.169 of this 
subpart are not included as a part of the costs for development and 
packaging of the loan/grant docket and project.
* * * * *
    3. Exhibit A to subpart D is amended by adding a new paragraph 
immediately following the first undesignated paragraph to read as 
follows:

Exhibit A--Labor Housing Loan and Grant Application Handbook

Introduction

* * * * *
    Payments for technical assistance incurred by a nonprofit group 
or public body applicant entity for developing and packaging an 
application will be reimbursed with loan and grant funds. If the 
services are performed, the proceeds will be limited and must be 
documented. The reimbursable costs should be negotiated and approved 
by the Agency in advance of the applicant entity's process of 
packaging and developing a preapplication. Based upon what is 
typical in the area, the Agency will respond in writing approving 
the packaging plan and a range of costs in advance.
* * * * *
    4. Exhibit A-1 to subpart D is amended in the first sentence of 
paragraph II D. by revising the reference ``Subpart A of Part 1804 of 
this chapter (FmHA Instruction 1924-A)'' to read ``subpart A of part 
1924 of this chapter'' and by revising paragraph II. E. to read as 
follows:

Exhibit A-1--Information to be Submitted by Organizations and 
Associations of Farmers for Labor Housing Loan or Grant

* * * * *

II. * * *

    E. A detailed cost breakdown of the project for items such as 
land purchase, right-of-ways, building construction, equipment, 
utility connections, on-site improvements, architectural and/or 
engineering services, and legal services. Also, if applicable, the 
cost breakdown should include the costs incurred for the development 
and packaging of its own application. These costs may range from 2 
to 4 percent of total development cost (excluding initial operating 
and capital expenses) and should reflect costs that are reasonable 
and typical for the area. Costs in excess of 4 percent will not be 
reimbursed. The cost breakdown should itemize labor and material 
unit costs. If an LH grant is proposed, construction will be subject 
to the provisions of the Davis-Bacon Act. LH grant applicants 
should, therefore, obtain a copy of Subpart D of Part 1901 of this 
chapter which explains the Davis-Bacon requirements.
* * * * *
    Dated: December 29, 1994.
Michael V. Dunn,
Acting Under Secretary for Rural Economic and Community Development.
[FR Doc. 95-1420 Filed 1-19-95; 8:45 am]
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