[Federal Register Volume 61, Number 11 (Wednesday, January 17, 1996)]
[Proposed Rules]
[Pages 1153-1162]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-328]



 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 61, No. 11 / Wednesday, January 17, 1996 / 
Proposed Rules  

[[Page 1153]]


DEPARTMENT OF AGRICULTURE

Rural Housing Service and Community Development
Rural Business and Cooperative Development Service
Rural Utilities Service
Farm Service Agency

7 CFR Part 1944

RIN 0575-AB93


Processing Requests for Section 515 Rural Rental Housing (RRH) 
Loans

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Housing Service (RHS), formerly Rural Housing and 
Community Development Service (RHCDS), a successor Agency to the 
Farmers Home Administration (FmHA), proposes to amend its regulations 
for processing loan requests for Rural Rental Housing (RRH) assistance. 
This action is taken to strengthen the priority point system and 
improve loan processing procedures to better accomplish the program's 
purpose of providing rental housing to rural areas of greatest need.

DATES: Written comments on this Proposed Rule must be received on or 
before March 8, 1996.

ADDRESSES: Submit written comments, in duplicate, to the Office of the 
Chief, Regulation Analysis and Control Branch, Rural Housing Service, 
U.S. Department of Agriculture, Ag Box 0743, 14th Street and 
Independence Avenue, S.W., Washington, D.C. 20250. All written comments 
will be available for public inspection at the above address during 
normal working hours.

FOR FURTHER INFORMATION CONTACT: Linda Armour, Loan Specialist, Multi-
Family Housing Processing Division, Rural Housing Service, USDA, Room 
5349--South Building, Ag Box 0781, Washington, D.C. 20250, telephone 
(202) 720-1608.

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be not-significant for purposes of 
Executive Order 12886 and therefore has not been reviewed by the Office 
of Management and Budget.

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been previously 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 0575-0047, in accordance with the 
Paperwork Reduction Act of 1995. This proposed rule does not impose any 
new information collection requirements from those approved by OMB.

Civil Justice Reform

    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. If this proposed rule is adopted: (1) All state 
and local laws and regulations that are in conflict with this rule will 
be preempted; (2) no retroactive effect will be given to this rule; and 
(3) administrative proceedings in accordance with Sub-title H of Title 
II of Pub. L. 103-354 must be exhausted before bringing suit in court 
challenging action taken under this rule.

Unfunded Mandate Reform Act

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, or tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. When such a statement is needed for a rule, section 205 of 
the UMRA generally requires RHS to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, more 
cost-effective or least burdensome alternative that achieves the 
objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, and tribal 
governments or the private sector. Therefore, this rule is not subject 
to the requirements of sections 202 and 205 of the UMRA.

National Performance Review

    This regulatory action is being taken as part of the National 
Performance Review program to eliminate unnecessary regulations and 
improve those that remain in force.
Programs Affected
    The affected program is listed in the Catalog of Federal Domestic 
Assistance under Number 10.415, Rural Rental Housing Loans.
Intergovernmental Consultation
    For the reasons set forth in the Final Rule related Notice(s) to 7 
CFR part 3015, subpart V, this program is subject to Executive Order 
12372 which requires intergovernmental consultation with State and 
local officials.

Environmental Impact Statement
    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' It is the determination of RHS 
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.
Regulatory Flexibility Act
    This proposed rule has been reviewed with regard to the 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The 
undersigned has determined and certified by signature of this document 
that this rule will not have a significant economic impact on a 
substantial number of small entities since this rulemaking action does 
not involve a new or expanded program.
Background/Discussion
    RHS utilizes a point-score system to prioritize rural areas 
according to their potential need for RRH assistance, based on 
statutory requirements and preferences. Priority points ranging from 

[[Page 1154]]
0 to 40 are assigned to rural counties and places based on their rural 
median household income compared to the state's rural median income; 
priority points ranging from 0 to 40 are similarly assigned based on 
the county's or place's percentage of substandard housing compared to 
the state's percentage. In addition, points are used to accomplish two 
preferences required by statute: (1) Section 515(z) of the Housing Act 
of 1949 (7 U.S.C. 1485(z)) requires the Secretary to give preference to 
any project that will serve the needs of a rural community located 20 
or more miles from an urban area. Twenty-five points are given for this 
purpose. (2) Section 515(j) of the Housing Act of 1949 (7 U.S.C. 
1485(j)) requires that, ``For the purpose of achieving the lowest cost 
in providing units in newly constructed projects assisted under this 
section, the Secretary shall give a preference in entering into 
contracts under this section for projects which are to be located on 
specific tracts of land provided by states, units of local government, 
or others if the Secretary determines that the tract of land is 
suitable for such housing, and that affording such preference will be 
cost effective.'' Five points are given to accomplish this preference.
    Recent findings indicate that the priority point system is not 
always effective in directing RRH funds to rural areas with the 
greatest need for affordable housing. One reason cited for this is 
that, by awarding 25 points for proposals located 20 or more miles from 
an urban area, other eligible rural communities with equal or higher 
scores for income and substandard housing, and with comparable or 
greater demand, have been excluded from successfully competing for 
funds. The large number of points given for the mileage preference has 
also led, in some cases, to the development of units in remote areas 
with insufficient demand, resulting in slow rent-up and/or vacancy 
problems. Another concern is the overdevelopment of these high-pointed 
areas because of the competition to submit preapplications with the 
highest point score.
    Recent regulatory revisions have addressed the latter concern. 
Effective October 1, 1993, (58 FR 44255) the Agency implemented its 
``build and fill'' policy which prohibits the authorization of RRH 
units in communities where similar-type units are already approved, 
under construction, or have not achieved their projected occupancy 
level; or where similar-type units are experiencing vacancy problems or 
have a Servicing Market Rate Rent (SMR) pending or in effect. This 
policy has been effective in deterring overdevelopment of high-pointed 
areas and will continue to be followed by the Agency.
    To address concerns that the large number of points awarded to 
proposals located 20 or more miles from urban areas has excluded other 
eligible rural areas, we propose to reduce the number of points for 
this factor. This will enable more areas to compete on the basis of 
income and substandard housing.
    The Agency will continue to award 5 points for proposals with 
donated land. However, we propose to modify this section to award 5 
points for proposals with donated land or proposals that provide grants 
for at least 10 percent of the total development cost.
    A recent legislative amendment contained in H.R. 3838 and S. 2049 
in FY 95 which would have allowed the Secretary to discontinue the 
priority point system and, instead, select rural areas for RRH 
assistance based on objective criteria, failed to be enacted. The 
Agency supports and continues to seek this statutory authority, which 
would give RHS more flexibility in directing Section 515 funds to rural 
areas of greatest need. The regulatory revisions in this proposed rule 
partially address concerns raised over the priority point system. To 
fully address these concerns, statutory changes are needed. The 
proposed revisions represent an improved system based upon significant 
input from the public and RHS field employees.
    In addition to the revisions to the priority point system, we are 
proposing modifications to the market analysis requirements and the 
market review process. The changes are intended to improve the Agency's 
ability to evaluate market demand and reduce the risk of developing 
units in areas with insufficient demand.
    In recent years Section 515 funding levels have been severely 
reduced while the need and demand for affordable rental units in rural 
areas continues to grow. To develop as many RRH units as possible, it 
has become increasingly important to develop partnerships with state 
and local communities and other parties with an interest in developing 
low-income housing. The proposed rule includes guidance on loan 
proposals in which the Agency is participating with other funding 
sources.
    1. The following revisions are proposed to the priority point 
system:
    a. The Agency plans to award 10 points for proposals that will 
serve rural communities 20 or more miles from an urban area. Ten points 
gives preference to truly rural areas but is not so great that it 
excludes other rural communities from competing.
    b. The Agency is proposing to award priority points for loan 
requests in areas with the highest share or percentage of rural renter 
households at or below 60 percent of the county median income who are 
paying in excess of 30 percent of their household income for rent. 
Along with income and substandard housing, this is a statistically 
measurable indicator of potential need for affordable housing. A 
further consideration, however, is whether the need is for additional 
units or for additional subsidies to make existing units more 
affordable. The Agency's build and fill policy prohibits development of 
new units if the need is for rent subsidies and not for additional 
units. If this option is implemented, points will be calculated in a 
manner consistent with the method used for income and substandard 
housing.
    2. The Agency is inviting comments on the following additional 
factors which are being considered for inclusion in the priority point 
system. These changes are not included in the proposed rule text; 
however, the Agency is interested in comments, for and against the 
proposed changes, and may include some form of the changes in the final 
rule.
    a. To maximize program funds, encourage partnerships with states 
and local communities, and provide service to areas and/or households 
that are underserved, we are considering awarding points for proposals 
that are partially funded from other sources. Proposals would be 
subject to specific conditions: (1) The total debt service would need 
to be comparable to that of a RHS loan; (2) For limited profit 
borrowers, the profit base for determining return to owner would be 
made in accordance with Sec. 1944.215(n). The borrower contribution 
would be based on the total development cost or security value and 
could not exceed the 3 or 5 percent borrower contribution required by 
Sec. 1944.213 (b), except as permitted by Sec. 1944.215 (n); (3) The 
total of all loans and grants could not exceed the amount needed to 
make the project affordable; and (4) Construction would be subject to 
the cost containment provisions of Sec. 1944.215(a).
    b. To ensure that underserved areas receive consideration, the 
Agency is considering awarding points to projects located in 
underserved counties identified by the Secretary using specific, 
objective criteria. Points awarded under this provision would be 
retained even if the preapplication is not authorized in the fiscal 
year the area was designated underserved. This factor 

[[Page 1155]]
would not be implemented if the set aside for targeted areas is 
included in the program reauthorization in the future.
    c. We are soliciting comments on the merits of modifying the 
present method of awarding points for income and substandard housing. 
The Agency presently awards points for income based on the county's or 
area's rural median income compared to the State's rural median income. 
The method under consideration awards points for income based on the 
place's or county's share of rural households with incomes at or below 
60 percent of the county rural median income. The place's or county's 
share would be based on one of three different approaches, which 
produce different results in point scores. The first approach 
calculates the percentage of rural households at or below the county 
rural median income as a percentage of the place's or county's total 
rural households. For example, in County 1, Place A has 1,600 
households, of which 450 are at or below 60 percent of the county rural 
median income. Place A has a percentage of 28 for income (450/1,600). 
Place B, with 9,000 households and 450 households at or below 60 
percent of the county rural median income, has a percentage of 5 for 
income (450/9,000). Using this approach, although both places have the 
same number of households at or below 60 percent of county rural 
median, Place A would receive the higher number of priority points for 
income. The second approach calculates the place's percentage of rural 
households at or below 60 percent of the county rural median income as 
a percentage of the county's total rural households at or below 60 
percent of the county rural median income. Using the same two places as 
an example, if County 1 has a total of 1,200 rural households that are 
at or below 60 percent of the county rural median income, both Place A 
and Place B would have a percentage for income of 37.5 (450/1,200) and 
would score the same number of priority points for income. The county's 
percentage would be calculated as a percentage of the State's total. 
The third approach calculates the percentage of the place's or county's 
rural households at or below 60 percent of the county rural median 
income as a percentage of the State's total rural households at or 
below 60 percent of the county rural median income. Continuing with the 
same example, if the State has a total of 200,000 households that are 
at or below 60 percent of the county rural median income, Place A and 
Place B would again have the same percentage of the total (450/200,000) 
and score the same number of priority points. However, Place C in 
County 2, with a population of 8,000 and 800 households at or below 60 
percent of the county rural median income, has a higher percentage of 
the State's total than Places A and B and scores a higher number of 
priority points. The Agency would like comments on the merits of 
considering the place's or county's share of households at or below 60 
percent of the county rural median income and, if implemented, which of 
the three approaches should be used as the basis for calculating the 
place's and county's percentage. The third approach, which calculates 
the place's or county's percentage as a percentage of the State's 
total, has the potential of directing points to larger rural 
communities or counties but would reach the largest numbers of 
households that are at or below 60 percent of the county rural median 
income. Based on the comments received, the Agency will decide if the 
proposed method should be implemented and, if so, which of the three 
approaches for calculating points should be used. The method and 
approach that is used to award points for income will also be used to 
award points for substandard housing and for rent overburden if the 
rent-overburden option is implemented. Again, the three approaches for 
calculating percentages for income, substandard housing, and rent-
overburden are: (1) as a percentage of the place's or county's total 
households; (2) as a percentage of, respectively, the county's total 
rural households at or below 60 percent of the county rural median 
income, the county's total rural households in substandard housing, or 
the county's total rural households at or below 60 percent of income 
paying in excess of 30 percent of their income for rent; and (3) as a 
percentage of, respectively, the State's total rural households at or 
below 60 percent of county rural median income, the State's total rural 
households in substandard housing, or the State's total rural 
households at or below 60 percent of county rural median income who are 
paying in excess of 30 percent of their income for rent.
    3. The Agency is considering implementing a preliminary 
preapplication stage and/or preliminary market analysis process. The 
objective is to require sufficient information to enable the Agency to 
make a preliminary determination of eligibility and feasibility, while 
reducing the cost to the applicant for proposals that lack sufficient 
priority for funding, as well as reducing Agency review time. Proposals 
that appear to be eligible and feasible, and have sufficient priority 
to be potentially funded within 24 months, would be invited to submit a 
full preapplication and/or market study. No further preapplications 
would be considered for the market area pending receipt of the complete 
preapplication and/or market study within a specified timeframe. 
Further processing would be based on a full eligibility and feasibility 
review.
    We are considering: (1) A simplified preliminary preapplication 
stage, including a simplified preliminary market analysis, or (2) A 
full preapplication with a simplified market analysis. If the second 
option is implemented, a full market analysis will be required for the 
eligibility and feasibility determination.
    Information required at the preliminary preapplication stage would 
include:
    a. A description of the proposed project: type; number and bedroom 
size of units; related facilities, if any; loan amount; number of RA 
units requested; and number of units that will be targeted for Low-
Income Housing Tax Credits (LIHTC).
    b. Site information: site plan; evidence of site control; evidence 
that the site is, or will be, appropriately zoned; evidence of 
existing, or soon to be available, utilities; and location map showing 
relationship to facilities and services.
    c. Preliminary budget and construction cost figures.
    d. Preliminary applicant eligibility information: draft 
organizational papers and financial statements for each principal.
    e. Preliminary plans and specifications.
    f. Preliminary market information:
    (1) A description of the community (population growth or decline, 
current economic conditions, types of employment, services and 
facilities).
    (2) The number of households by tenure (owner or renter) and 
income.
    (3) A survey of existing rental units including rent structure, 
vacancies, and, when possible, rent-up history and extent of waiting 
lists. The survey must include all RHS and similar assisted multifamily 
units and a representative sampling of conventionally financed 
multifamily units.
    4. The Agency intends to establish a minimum priority point score 
of 30 for retaining preapplications. The State Director will have the 
authority to establish a higher or lower threshold by state, county, or 
other division, which must be published in a State Instruction. 

[[Page 1156]]

    5. Section 1944.211 (a)(15) is added to include specific 
eligibility requirements for existing or former RHS borrowers.
    6. Section 1944.213 (f)(3) is revised to clarify that the 
provisions of this section apply to both preapplications and 
applications.
    7. Section 1944.231 (c)(5) is revised to permit states to use a 
computerized tracking system to supplement or replace Form FmHA 1905-
11, ``Application and Processing Card - Association'', provided 
tracking requirements are met.
    8. Section 1944.231 (i) is revised to clarify that the next 
preapplication selected for further processing is the highest ranked 
preapplication as of the date that processing levels permitted (i.e., 
as of the date that one or more loans were obligated, making sufficient 
funds available within authorized funding limits).
    9. Section 1944.233, ``Participation with other funding sources'', 
is added to provide guidance on RRH loans that are funded jointly by 
RHS and other partners with interests in developing low-income housing. 
With reduced program levels, joint funding allows the Agency to develop 
the maximum possible number of units.
    10. Section 1944.234, ``Actions prior to loan approval'', is added 
to clarify that eligibility and feasibility requirements must be 
reviewed prior to loan approval.
    11. Exhibit A-7 is modified to:
    a. Require documentation regarding the availability of other credit 
at the servicing official's discretion.
    b. Allow the State Director to authorize use of a market survey for 
small projects of 12 or fewer units.
    c. Specify that the market analysis must address need and demand 
for both family and elderly households. The proposed complex type 
(family or elderly) will be determined by the greater need of the 
market.
    12. Revisions are proposed to Exhibit A-8, ``Outline of a 
Professional Market Study'', to: (1) Modify the demand forecast; (2) 
place more emphasis on the recommended unit mix based on an analysis of 
household sizes and the unit mix of existing units; (3) allow current 
year estimates from reliable sources, which must be identified by the 
analyst; and (4) require the analyst to include analytical text with 
the demographic data.

Summary of Proposed Changes for Comments

    Following is a summary of the major changes in this rule for which 
comments are invited:
    1. A reduction in priority points from 25 points to 10 for 
proposals that will be located 20 or more miles from an ineligible 
area.
    2. A proposal to award priority points based on the area's share of 
the state's or county's total income-eligible households who are paying 
in excess of 30 percent of their household income for rent.
    3. While not included in the text of the proposed rule, the Agency 
is inviting comments on the merits of:
    a. Changing the method of awarding priority points for income from 
the current method of comparing the place's or county's rural median 
income to the state's rural median income to a method that takes into 
consideration the place's or county's share of households below 60 
percent of the county rural median income. Three approaches are being 
considered for calculating the place's or county's share: as a 
percentage of the place's or county's total households; as a percentage 
of the county's total rural households below 60 percent of the county 
rural median income; or as a percentage of the state's total rural 
households below 60 percent of the county rural median income. If the 
revised method is implemented, the same approach selected for 
calculating the place's or county's percentage will be implemented for 
substandard housing and for rent-overburden if, based on comments 
received, the Agency determines that rent-overburden will be added to 
the priority point score system.
    b. Awarding points for proposals that will be partially funded from 
other sources.
    c. Awarding points for proposals that will be located in 
underserved areas identified by the Secretary.
    4. Implementation of a preliminary preapplication and/or market 
analysis process.
    5. A revision to the market analysis requirements that will permit 
the State Director to authorize the use of a market survey for small 
proposals of 12 or less units under certain conditions.
    6. A requirement that the market analysis address both family and 
elderly need and demand, which will be used in determining the type of 
project that is proposed.

Implementation Proposal

    The subject rule proposes changes to the manner in which 
preapplications are processed, including the priority point system. The 
Agency intends to implement the revised priority point system on 
October 1, 1996. As of that date, all preapplications on hand, where an 
AD-622 inviting a formal application has not been issued, will be 
subject to the revised system. All preapplications will be rerated and 
reranked based upon the priority point system in the final rule without 
regard to previous priority processing score or ranking. We do not 
intend to ``grandfather'' existing preapplications or have a ``phase-
in'' period. RHS recognizes the impact of this action on 
preapplications which are in process. Potential applicants should be 
aware of the proposed changes when they are developing a proposal. RHS 
loan officials are encouraged to include information on the proposed 
changes to potential applicants. All other provisions of the final rule 
will become effective 30 days after publication of the final rule.

List of Subjects in 7 CFR Part 1944

    Administrative practice and procedure, Aged, Handicapped, Loan 
programs--Housing and community development, Low and moderate income 
housing--Rental, Mortgages, Nonprofit organizations, Rent subsidies, 
Rural housing.
    Therefore, as proposed, part 1944, 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. 1489.

Subpart E--Rural Rental and Rural Cooperative Housing Loan 
Policies, Procedures, and Authorizations

    2. Section 1944.211 is amended by revising the introductory text of 
paragraph (a)(2) and adding paragraph (a)(15) to read as follows:


Sec. 1944.211  Eligibility requirements.

    (a) * * *
    (2) Be unable to obtain the necessary credit from private or 
cooperative sources on terms and conditions that allow establishment of 
rent or occupancy charges within the payment ability of eligible 
tenants or members.
* * * * *
    (15) The applicant, including the principals, must be in compliance 
with the requirements of existing RHS debts and must provide regular 
financial and other required reports.
    (i) In unusual circumstances, an applicant or principal with an 
approved workout plan in effect to correct deficiencies in an existing 
RHS debt may be considered for eligibility if the applicant or 
principal has been in compliance with the provisions of the workout 
plan for a period of time consistent with the extent of the 

[[Page 1157]]
deficiencies; however, in no case will the period of compliance be less 
than 6 months. The State Director may request a waiver to this 
requirement for borrowers who have acted in good faith but are in non-
compliance through circumstances beyond their control. The State 
Director will submit a request for exception to the Deputy 
Administrator, Multi-Family Housing, with clear documentation to 
support the request.
    (ii) Applicants or principals, including former borrowers or 
principals, with serious violations such as fraud, embezzlement, or 
consistent fair housing violations will not meet eligibility 
requirements regardless of compliance with existing workout plans. Fair 
housing violations include, but are not limited to: racial or other 
discrimination or segregation in tenant selection, project location, 
maintenance of units, amenities, handicap accessibility, recreational 
facilities, or management services; failure to maintain units in a safe 
and sanitary condition; failure to maintain and utilize a current and 
meaningful Affirmative Fair Housing Marketing Plan; unacceptable 
Compliance Reviews.
* * * * *
    3. Section 1944.213 is amended by revising paragraph (f)(3) to read 
as follows:


Sec. 1944.213  Limitations.

* * * * *
    (f) * * *
    (3) Status. When a loan proposal or project exists in the market 
area which meets any of the criteria established in paragraph (f)(2) of 
this section, loan requests in the same market area will be processed 
in accordance with this paragraph (f)(3) and Sec. 1944.231 of this 
subpart. This does not affect the processing of loan requests in other 
market areas. Deferred loan requests will be kept on file subject to 
the same time restrictions contained in Sec. 1944.231 (c) of this 
subpart.
    (i) For preapplications, a preliminary eligibility and feasibility 
determination will be made if the priority point score warrants. If the 
proposal does not appear eligible and/or feasible, the preapplication 
will be rejected. If the proposal appears eligible and feasible but the 
market meets any of the conditions of paragraph (f)(2) of this section, 
the applicant will be informed that the preapplication appears eligible 
and feasible but further processing is deferred until the conditions of 
paragraph (f)(2) of this section no longer apply.
    (ii) For applications to finance new units, if the market meets any 
of the conditions of paragraph (f)(2) of this section, further 
processing of the application will be deferred until the conditions of 
paragraph (f)(2) of this section no longer apply.
* * * * *
    4. Section 1944.215 is amended by revising paragraphs (n)(1) and 
(n)(2) to read as follows:


Sec. 1944.215  Special conditions.

* * * * *
    (n) * * *
    (1) Cash contributions made by the applicant, which, when added to 
the loan and grant amounts from all sources, does not exceed the 
security value of the project.
    (2) The value of the building site or essential related facilities 
contributed by the applicant up to the amount which, when added to the 
loan and grant amounts from all sources, is not in excess of the 
security value of the project. An appraisal will be done by an RHS 
employee authorized to make appraisals or an RHS authorized 
representative in accordance with applicable RHS regulations. Value of 
the applicant's contribution will be determined on an ``as is'' basis 
less any amount owed on the property.
* * * * *
    5. Section 1944.221 is amended by revising the introductory text of 
paragraph (a) to read as follows:


Sec. 1944.221  Security.

    (a) Mortgage. Each loan will be secured in a manner that adequately 
protects the financial interest of the Government. A first mortgage 
will be taken on the property purchased or improved with the loan, 
except as indicated in paragraphs (a)(1) and (a)(3) of this section 
and, for projects that are funded jointly by RHS and other sources, as 
indicated in Sec. 1944.233 (b) of this subpart.
* * * * *
    6. Section 1944.231 is amended by revising the heading and the 
introductory text, the introductory text of paragraph (c)(5), 
paragraphs (d)(3), (d)(4), (e)(1), (i)(1)(i), (i)(2)(i), (i)(3)(i), 
(i)(4)(i), and (k)(5); and by adding a new paragraph (d)(5), to read as 
follows:


Sec. 1944.231  Processing loan requests.

    Loan requests will be processed in accordance with this section to 
assure that program intent is achieved and loan funds are utilized 
expeditiously and prudently. A 2-stage application process is used. A 
preapplication is used to determine the applicant's eligibility, 
project feasibility, and potential priority for loan funds, thereby 
eliminating proposals which have little to no chance of success or 
funding. Selected preapplications will be invited to submit a formal 
application in accordance with this section. The State Director is 
responsible to coordinate efforts with HUD in accordance with Exhibit K 
(available in any RHS office) to determine if HUD is considering a 
similar request for funding or has funded a similar proposal. The State 
Director will provide the state agency responsible for administering 
LIHTC with information on projects that are allocated LIHTC, in 
accordance with Exhibit A-10 of this subpart. Paragraphs (a), (c)(5), 
(c)(6), (c)(7), (d), and (e) of this section do not apply to RCH loan 
requests.
* * * * *
    (c) * * *
    (5) The servicing official will rate the complete preapplication in 
accordance with the priority point system contained in paragraph (d) of 
this section. The priority point score, and any annotation, will be 
utilized for ranking purposes. In the event multiple preapplications of 
the same priority point score are received on the same day, they will 
be considered to be received at the same time. The order of receipt 
will be determined by the type of applicant and by random drawing if 
necessary, as follows:
* * * * *
    (d) * * *
    (3) Projects which will serve the needs of rural communities 
located at least 20 miles from the RHS eligibility line around urban 
areas (regardless of state boundaries) considered ineligible for RHS 
housing loans as determined by Sec. 1944.10 of subpart A of part 1944 
of this chapter. Ten points will be granted for complexes which are at 
least 20 miles from an ineligible area line over normally traveled 
roads. Mileage will not be rounded up or down to the nearest whole 
mile. In cases where the preapplication covers development of units on 
sites in different locations, points will be awarded based upon the 
location of the site in which the majority of the units will be 
developed. In cases of equal number of units in different locations, 
the distances will be averaged:

------------------------------------------------------------------------
                              Miles                               Points
------------------------------------------------------------------------
20.0 or more....................................................     10 
Less than 20.0..................................................      0 
------------------------------------------------------------------------

    (4) Projects in which a specific tract of land will be donated in 
accordance with Sec. 1944.215 (r)(4) of this subpart or projects that 
include grants equal to at least 10 percent of the total 

[[Page 1158]]
development cost (TDC). Five points will be distributed as follows:

Complexes with donated land or grants of    5 points.                   
 at least 10 percent of TDC.                                            
Complexes without donated land or grants    0 points.                   
 of at least 10 percent of TDC.                                         
                                                                        

    (5) Projects in areas with the highest percentage of households at 
or below 60 percent of the county rural median income who are paying in 
excess of 30 percent of their household income for rent. For this 
purpose, each state will use place or county data based upon the latest 
published census obtained from the National Office. If no place data is 
available, county data will be used. The State Director may request 
authority from the National Office to utilize other state-wide data 
when it is available, reliable, and determined to be in the best 
interest of the Agency. Up to 25 points will be awarded for households 
at or below 60 percent of the county rural median income paying in 
excess of 30 percent of the household's income for rent as follows:

------------------------------------------------------------------------
         Percentage of households                      Points           
------------------------------------------------------------------------
25 and above..............................  25                          
20-24.9...................................  20                          
15-19.9...................................  15                          
10-14.9...................................  10                          
5-9.9.....................................  5                           
Less than.................................  5 0                         
------------------------------------------------------------------------

    (e) * * *
    (1) The feasibility determination will include a review of feedback 
on the market area from:
    (i) HUD (and similar lenders, if applicable), in accordance with 
exhibit K (available in any RHS office) and Sec. 1944.213 (f) of this 
subpart.
    (ii) Local RHS office(s) closest to the market area.
* * * * *
    (i) * * *
    (1) * * *
    (i) Rated preapplications which have been reviewed for eligibility 
and feasibility will be ranked numerically from highest to lowest based 
upon points received in the priority processing system. When processing 
levels permit, the servicing official will review the list and select 
the highest ranking preapplication, as of the date processing levels 
permit, i.e., as of the date one or more proposals were obligated, for 
continued processing.
* * * * *
    (2) * * *
    (i) Rated preapplications which have been reviewed for eligibility 
and feasibility will be ranked numerically from highest to lowest based 
upon points received in the priority processing system. When processing 
levels permit, the servicing official will review the list and select 
the highest ranking preapplication, as of the date processing levels 
permit, i.e., as of the date one or more proposals are obligated, for 
continued processing.
* * * * *
    (3) * * *
    (i) The state will maintain ranking lists by district. Rated 
preapplications which have been reviewed for eligibility and 
feasibility will be ranked numerically from highest to lowest based 
upon points received in the priority processing system. When processing 
levels permit, the servicing official will review the list and select 
the highest ranking preapplication, as of the date processing levels 
permit, i.e., as of the date one or more proposals are obligated, for 
continued processing.
* * * * *
    (4) * * *
    (i) Rated preapplications which have been reviewed for eligibility 
and feasibility will be ranked numerically from highest to lowest based 
upon points received in the priority processing system. When processing 
levels permit, the servicing official will review the list and select 
the highest ranking preapplication, as of the date processing levels 
permit, i.e., as of the date one or more proposals are obligated, for 
continued processing.
* * * * *
    (k) * * *
    (5) A current copy of Form FmHA 1905-11 or State-approved automated 
processing or tracking card.
* * * * *
    7. Section 1944.233 is added to read as follows:


Sec. 1944.233  Participation with other funding sources.

    In order to develop the maximum number of affordable housing units 
and promote partnerships with states, local communities, and other 
partners with similar housing goals, participation loans are 
encouraged. Apartment complexes developed with participation loans may 
serve lower income households exclusively or may be marketed to 
households with mixed incomes. The following will apply:
    (a) Amount of RHS loan participation. RHS loan participation may 
not be less than 25 percent of the total development costs.
    (b) Amount of RHS RA participation. RHS RA can be provided on any 
unit where the debt service does not exceed what the debt service would 
have been on that unit if RHS had provided full financing. The number 
of RHS RA units available for participation loans is limited and 
established annually through FmHA Instruction 1940-L (available in any 
RHS office).
    (c) General conditions:
    (1) The total funds provided by all sources may not exceed what is 
necessary to make the project feasible in accordance with Sec. 1944.213 
(a) of this subpart.
    (2) The total debt from all sources is limited to the State 
Director's approval authority unless written authorization is obtained 
from the National Office in accordance with Sec. 1944.213 (b) of this 
subpart.
    (3) Complexes that will serve only lower income households must 
comply with the cost containment provisions of Sec. 1944.215 (a) of 
this subpart. Proposals which will also serve higher income households 
and include additional amenities to ensure marketability must contain a 
portion of units that comply with RHS cost containment standards. The 
number of units that comply with RHS cost standards will be determined 
by dividing the RHS loan amount by the state's average new construction 
cost per unit for units developed without participation funding. For 
example, on a $1 million proposal where RHS is financing $400,000 and 
the state's average per-unit cost on non-participation loans is 
$40,000, a minimum of 10 units must meet RHS cost containment 
standards.
    (4) The minimum borrower contribution will be based on the RHS loan 
amount and determined in accordance with Sec. 1944.213 (b) of this 
subpart.
    (5) For limited profit borrowers, the return on investment (ROI) 
will be calculated in accordance with Sec. 1944.215 (n) of this subpart 
on the amount actually contributed by the borrower (excluding loans and 
grants from other sources), not to exceed the limits established in 
Sec. 1944.213 (b) of this subpart, i.e., a maximum of 3 or 5 percent of 
the total development cost or the security value, whichever is smaller.
    (6) If Low Income Housing Tax Credits are anticipated on a 
proportion of units higher than the percentage receiving RA or similar 
tenant subsidy, the market study must clearly reflect a need and market 
for units without deep subsidy. It is not the intent of RHS to provide 
servicing RA in the future nor can RHS provide RA on units which have a 
debt service higher than those if RHS had provided full financing.
    (d) Security requirements: 
    
[[Page 1159]]

    (1) RHS will take a first or parity lien in all instances where the 
Agency's participation is 50 percent or more.
    (2) If RHS participation is less than 50 percent, every effort 
should be made to obtain a parity lien position. If a parity lien 
cannot be negotiated, RHS may consider securing its debt in second 
position. The State Director will submit requests to accept a second 
lien position to the Deputy Administrator, Multi-Family Housing with 
comments and recommendations.
    (3) All lienholders must agree in writing that foreclosure action 
under their lien will not be initiated without first discussing with 
RHS and providing a reasonable notice.
    (4) Security for a second or parity lien may not include project 
income or revenue.
    8. Section 1944.234 is added to read as follows:


Sec. 1944.234  Actions prior to loan approval.

    Prior to loan approval the application will be reviewed for 
continued eligibility. The applicant may be required to submit updated 
information at that time.
    9. Exhibit A-7 of subpart E is amended by revising paragraph E of 
section I and by revising section II to read as follows:

Exhibits to Subpart E

Exhibit A-7--Information to be Submitted with Preapplication for a 
Rural Rental Housing (RRH) or a Rural Cooperative Housing (RCH) Loan

* * * * *
    I. * * *
    E. Evidence Concerning the Test for Other Credit--Applicants 
must be unable to obtain other credit at rates and terms that will 
allow a unit rent or occupancy charge within the payment ability of 
the occupants. Based upon a review of the applicant's financial 
condition, the servicing official may require the applicant to 
provide documentation regarding the availability of other credit.
* * * * *
    II. Need and demand.
    A. Economic justification, the number of units, and the type of 
facility (i.e., family, elderly, congregate, mixed, group home, or 
cooperative) will be based on the housing need and demand of 
eligible prospective tenants or members who are permanent residents 
of the community and its surrounding trade area. Since the intent of 
the program is to provide housing for the eligible permanent 
residents of the community, temporary residents of a community (such 
as college students in a college town, military personnel stationed 
at a military installation within the trade area, or others not 
claiming their current residence as their legal domicile) may not be 
included in determining need and project size. Similarly, homeowners 
may not be included in determining need and project size. The market 
study must include a discussion of the current market for single 
family houses and how sales, or the lack of sales, will affect the 
demand for elderly rental units. The market study may discuss how 
elderly homeowners may reinforce the need for rental housing, but 
only as a secondary market and not as the primary market. The market 
study must assess need and demand for both family and elderly renter 
households. The type of complex (family, elderly, etc.) that is 
proposed by the applicant must reflect the greater need and demand 
of the community. The bedroom mix of the proposed units must reflect 
the need in the market area based on renter household size. For 
example, if the market study shows a need for one-bedroom, two-
bedroom, three-bedroom, and four-bedroom units, the preapplication 
must contain a corresponding percentage of each size unit. Market 
feasibility for the proposed units will be determined by RHS based 
on the market information provided by the applicant, RHS' knowledge 
of the market area and judgment concerning the need for new units, 
RHS' experience with the housing market in the State and local area, 
and the U.S. Department of Housing and Urban Development's (HUD's) 
or similar lender's analysis of market feasibility for the proposed 
units.
    B. The applicant must provide a schedule of the proposed rental 
or occupancy rates and, for congregate housing proposals, a separate 
schedule listing the proposed cost of any nonshelter service to be 
provided.
    C. For proposals where the applicant is requesting Low-Income 
Housing Tax Credits (LIHTC), the applicant must provide the number 
of LIHTC units and the maximum LIHTC incomes and rents by unit size. 
This information will determine the levels of incomes in the market 
area which will support the basic rents while also qualifying the 
borrower for tax credits.
    D. For Rural Cooperative Housing (RCH) proposals, market 
feasibility will be evidenced by the names and addresses of 
prospective members who have definitely affirmed their intention of 
becoming cooperative members in the proposed project. In the event 
some persons cannot be accepted for membership for financial or 
other reasons, the cooperative should obtain more names than the 
number of proposed units in order to assure adequate feasibility 
coverage. The Cooperative Housing Survey form found at Exhibit A-4 
of this subpart and in ``A Guide to Cooperative Housing'' may be 
used for this purpose.
    E. For Rural Rental Housing (RRH) proposals, except as permitted 
by Section II. G. of this exhibit, a professional market study is 
required. The qualifications of the person preparing the market 
study should include some housing or demographic experience. The 
following requirements apply:
    (1) A table of contents, the analyst's statement of 
qualifications, and a certification of the accuracy of the study 
must be included.
    (2) The market analyst must affirm that he/she will receive no 
fees which are contingent upon approval of the project by RHS, 
before or after the fact, and that he/she will have no interest in 
the housing project. An analyst with an identity of interest with 
the developer will need to fully disclose the nature of the 
identity.
    (3) The analyst must personally visit the market area and 
project site and must certify to same in the market study. Failure 
to do so may result in the denial of further participation by the 
analyst in the Section 515 program.
    (4) A detailed study based upon data obtained from census 
reports, state or county data centers, individual employers, 
industrial directories, and other sources of local economic and 
housing information such as newspapers, Realtors, apartment owners 
and managers, community groups, and chambers of commerce is 
required. Exhibit A-8 of this subpart details the specific 
information which professional market studies are required to 
provide. The study must be presented in clear, understandable 
language. Negative as well as positive market trends must be 
disclosed and discussed. Statistical data must be accompanied by 
analytical text which explains the data and its significance to the 
proposed housing. Mathematical calculations must be expressed in 
actual numbers and may be accompanied by percentages. Each table or 
section must identify the source of the data. A brief statement of 
the methodology used in the study should be included in the foreword 
and in other sections where necessary for clarity. RHS personnel 
will utilize the market study checklist found at Exhibit A-12 
(available in any RHS office) as a means of measuring market study 
credibility.
    (5) The market study will include:
    a. A complete description of the proposed site and its location 
with respect to city boundary lines, residential developments, 
employment centers, and transportation; the location and description 
of available services and facilities and their distances from the 
site; a discussion of the site's desirability and marketability 
based on its location in the community, adjacent land uses, traffic 
conditions, air or noise pollution, and the location of competitive 
housing units; and a description of the site in terms of its size, 
accessibility, and terrain.
    b. Pertinent employment data, including the name and location of 
each major employer within the community and market area, its 
product or service, number of employees and salary range, commute 
times and distances, and the year the employer was established at 
the location. If income data cannot be obtained from individual 
employers, salary information for the community can be obtained from 
the state employment commission.
    c. Population data required by Exhibit A-8, of this subpart, 
including population figures by year, number and percentage of 
increase or decrease, and population characteristics by age.
    d. Household data required by Exhibit A-8, of this subpart, 
including number of households by year, tenure (owner or renter), 
age, income groups, and number of persons per household.
    e. Building permits issued and demolitions by year by single 
unit dwelling and multiple unit dwelling. In nonreporting 
jurisdictions, this information may be substituted with the 

[[Page 1160]]
number of requests for electric service connections, number of water or 
sewer hookups, etc., obtained from local suppliers.
    f. Housing stock by tenure and vacancy rates for total number of 
units, one-unit buildings, two- or more-unit buildings, mobile 
homes, and number lacking some or all plumbing facilities.
    g. A survey of existing rental housing by name, location, year 
built, number of units, amenities, bedroom mix, type (family, 
elderly, etc.), rental rates, and rental subsidies if any.
    h. A projection of housing need and demand and the analyst's 
recommendation for the number, type, and size of units, based on the 
number of RHS and LIHTC income-eligible renter households, the 
existing comparable housing supply and vacancy rates, the absorption 
rate of recently completed units, the number of comparable units 
currently proposed or under construction, and current and projected 
economic conditions.
    F. For congregate housing proposals with central dining area or 
housing involving a group living arrangement, a narrative statement 
from local, state, or federal government agencies supporting the 
current and long-range need for the facilities in the community and 
its trade area is required.
    G. For RRH proposals of 12 or fewer units, the State Director 
may authorize the use of a market survey to establish market 
feasibility on a case-by-case basis. This authority may be used when 
there is evidence of strong market demand, for example, very low 
vacancy rates and long waiting lists in existing assisted or 
comparable rental units. The casefile must be documented 
accordingly. Exhibits A-2, A-3, and A-5 of this subpart may be used 
for the market survey.
* * * * *
    10. Exhibit A-8 of subpart E is amended by revising the second, 
third, and fourth paragraphs of the introductory text of the exhibit 
and the introductory paragraph of section I; by adding an 
introductory sentence to section III; by revising in section III 
paragraphs B.3., B.7., C.2., and C.3.; and by revising section IV to 
read as follows:

Exhibit A-8--Outline of Professional Market Study

* * * * *
    This outline is to be used by analysts in the preparation of 
market studies for the section 515 housing program. Need and demand 
for both family and elderly households must be addressed in the 
market study. The information will be used by the Rural Housing 
Service (RHS) in evaluating the feasibility of the proposed housing. 
The analyst must provide a statement of his/her experience and 
qualifications for preparing a market analysis. All segments of this 
outline must be addressed. Data sources and/or methodology must be 
identified. Charts and tables must be accompanied by text which 
analyzes the data and discusses its significance in relationship to 
the proposed housing. The market study should include a summary of 
the analyst's findings and recommendations, preferably at the 
beginning of the study.
    The outline provides for the demonstration of historical trends 
and allows the analyst to use reliable current year estimates and 
project 2 years into the future. Estimates and projections made by 
the analyst must be supported by reliable data and methodology. The 
analyst must include the most recent population and household 
estimates and projections from the State data center, or similar 
data source, when available. If State or other reliable estimates 
are not available, the analyst must provide a statement to that 
effect. RHS may require additional information if estimates or 
projections depart from historical trends and are not supported by 
data from reliable sources.
    The estimate of need and demand will be made for both family and 
elderly households in accordance with section IV of this exhibit. 
The estimate is based on the number of renter households in the 
appropriate age and/or income ranges, the existing comparable rental 
supply, and current or planned construction of rental units. The 
analyst's recommendation must take into consideration existing 
vacancies, economic projections, and other factors that affect 
demand. The analyst must discuss the number of renter households 
that can afford and/or would be willing (based on rental rates in 
the market) to pay the maximum tax credit rents without rental 
assistance and the number of rental assistance income eligible 
renter households. The analyst must also take into consideration the 
sources of demand in determining the number of units that are 
recommended, i.e., the number that can be expected to be absorbed 
within the normal rent-up period. The absorption rate will be slower 
if a large portion of the demand is expected to come from households 
in substandard housing rather than from household growth. 
Substandard housing is defined as: (1) Units lacking complete 
plumbing; and (2) Overcrowded (1.01 or more per room).
    In addition to recommending the total number of units, the 
analyst must provide a recommendation for the unit mix, which must 
be supported by appropriate documentation, e.g., statistics on the 
growth rate of renter households by household size, information on 
the absorption rate of recently completed rental units, vacancy 
rates by unit size, etc.
* * * * *
    I. * * *
    The market area will be the community where the project will be 
located and only those outlying rural areas which will be impacted 
by the project (excluding all other established communities). The 
market area must be realistic. The criteria should be described by 
the analyst. When a difference of opinion exists in the market area 
determined by RHS personnel and the market analyst, the market area 
established by RHS will prevail. Except in specific cases of 
congregate housing projects where an expanded market may be 
justified, the market area will not include the entire county (or 
parish, township, or other subdivision). Any deviation from this 
definition must be coordinated with the servicing office. The 
analyst will discuss the market area in terms of its economic base 
and how it relates to surrounding communities, the county, and the 
State. For example, describe whether the market area is a small 
agricultural community, the county seat, a trade center, a seasonal 
recreational area, and so forth. A map showing the market area is 
required. The following is an example of a market area description:
* * * * *
    III. * * *
    The data presented in this section must be accompanied by 
analytical text which discusses the significance of the data and its 
relationship to the proposed housing.
* * * * *
    B. * * *
    3. Households. Provide a breakdown of households by town, market 
area, and county for the last 2 census years, a current year 
estimate, and a 2-year projection. Identify the source/method for 
the current year estimate and the 2-year projection.

----------------------------------------------------------------------------------------------------------------
                                                                             In group                Persons per
                            Year                               Population    quarters    Households   household 
----------------------------------------------------------------------------------------------------------------
1980                                                                                                            
1990                                                                                                            
19____                                                                                                          
PROJECTED: 19____ (2 years)                                                                                     
----------------------------------------------------------------------------------------------------------------

* * * * *
    7. Households by size. Provide the number of households by 
household size and tenure in the town and market area. This data 
should be used in conjunction with the unit mix of existing 
comparable units (Section III. C. of this exhibit) to determine the 
appropriate unit mix for the proposed complex.

                                                                                                                

[[Page 1161]]
------------------------------------------------------------------------
                                      Total                             
          Household size            households     Owner        Renter  
------------------------------------------------------------------------
1 person                                                                
2 person                                                                
3 person                                                                
4 person                                                                
5 person                                                                
6 person                                                                
7 person                                                                
8 person                                                                
9 person                                                                
10 person                                                               
------------------------------------------------------------------------


* * * * *
    C. * * *

    2. Housing stock. Provide, by tenure (owner/renter), the number 
of units and the vacancy rates for single family homes, mobile 
homes, multi-family units, and substandard units, from the 2 most 
recent census years.
    Example:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Single family         Vacancy rate                                 Mobile home          Vacancy rate    
                   Year                    --------------------------------------------   Multi-    Vacancy  -------------------------------------------
                                               Own        Rent       Own        Rent      family      rate       Own        Rent       Own        Rent  
--------------------------------------------------------------------------------------------------------------------------------------------------------
1980                                                                                                                                                    
1990                                                                                                                                                    
                                                                                                                                                        
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------

    3. Existing rental housing. The analyst must determine where the 
proposed project will fit into the present housing stock. To 
accomplish this, the analyst will survey the existing units and 
discuss if the units:
    (a) Are generally comparable with the proposed units in rents 
and amenities;
    (b) Are less than desirable because of age or upkeep;
    (c) Are inconveniently located;
    (d) Do not provide the appropriate bedroom mix for the community 
need, etc.
* * * * *
    IV. Housing demand forecast.
    The analyst must provide a projection of the rental housing 
needs for a specified forecast period, which may not be longer than 
2 years from the date the market analysis is completed or updated. 
The source and method used in estimating the current number of 
households and projecting the number of households for the forecast 
period must be stated. The analyst must include a recommendation for 
the number of units needed based on the low-income housing tax 
credit (LIHTC) rents and income limits if the applicant is applying 
for LIHTC; the number of units that can be supported with and 
without rental assistance; and the recommended bedroom mix. The 
recommendation for the number of units must take into consideration 
the expected sources of demand (i.e., household growth, households 
in substandard rental units), current and projected economic 
conditions, the absorption rates of recently completed units, and 
the vacancy rate of comparable units.

                          Calculation of Demand                         
------------------------------------------------------------------------
                                                  Town       Market area
------------------------------------------------------------------------
a. Total renter households based on current                             
 estimate plus 2-year projection (for                                   
 elderly proposals, total age-eligible                                  
 renter households).........................     ________      ________ 
b. RHS income eligible:                                                 
    X ________%.............................     ________      ________ 
LIHTC income eligible:                                                  
    X ________%.............................     ________      ________ 
RA income eligible:                                                     
    X ________%.............................     ________      ________ 
c. Plus vacancy rate of 5 percent of:                                   
    RHS income eligible renter households...     ________      ________ 
    LIHTC income eligible renter households.     ________      ________ 
    RA income eligible renter households....     ________      ________ 
d. Total demand (RHS).......................     ________      ________ 
      Total demand (LIHTC)..................     ________      ________ 
      Total demand (RA).....................     ________      ________ 
e. Less number of comparable units..........     ________      ________ 
f. Less number of units under construction                              
 or in the planning stage...................     ________      ________ 
g. Net demand (RHS).........................     ________      ________ 
    Net demand (LIHTC)......................     ________      ________ 
    Net demand (RA).........................     ________      ________ 
h. Recommended number of units..............     ________      ________ 
i. Recommended number RA units..............     ________      ________ 
j. Recommended number of units by unit size                             
 based on the size of income eligible renter                            
 households and the existing supply of units                            
 by bedroom size:...........................                            
                                                                        

[[Page 1162]]
                                                                        
    1-Bedroom  ________                                                 
    2-Bedroom  ________                                                 
    3-Bedroom  ________                                                 
    4-Bedroom  ________                                                 
    5-Bedroom  ________                                                 
                                                                        
  The source and/or methodology for the estimated and projected number  
of renter households: ________________                                  
------------------------------------------------------------------------


    Dated: January 2, 1996.
Jill Long Thompson,
Under Secretary, Rural Economic and Community Development.
[FR Doc. 96-328 Filed 1-16-96; 8:45 am]
BILLING CODE 3410-07-P