[Federal Register Volume 63, Number 141 (Thursday, July 23, 1998)]
[Notices]
[Pages 39682-39683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19675]



[[Page 39681]]

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Part III





Department of Housing and Urban Development





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Office of the Assistant Secretary for Public and Indian Housing, Notice 
of Title VI Loan Guarantee Demonstration Program; Notice

  Federal Register / Vol. 63, No. 141 / Thursday, July 23, 1998 / 
Notices  

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4384-N-01]


Notice of Title VI Loan Guarantee Demonstration Program

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Notice.

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SUMMARY: The FY 1998 HUD Appropriations Act provided a $5 million 
appropriation for the funding of a demonstration program which could 
guarantee up to $45 million in Title VI loan guarantees. This notice 
announces HUD's loan guarantee demonstration program under Title VI of 
the Native American Housing Assistance and Self-Determination Act of 
1996 (NAHASDA). Through the demonstration program, HUD is seeking to 
develop models which will provide innovative ways to enhance 
development of affordable, accessible, and visitable housing in Indian 
areas, while increasing access to private capital, economic growth, and 
the investment and participation of traditional financial institutions 
not customarily serving Indian reservations and other Native American 
areas. Indian tribes and Tribally Designated Housing Entities (TDHEs) 
are encouraged to form partnerships (financial, service/supportive and 
economic development oriented) with investors or financial institutions 
and submit model Title VI demonstration projects to be evaluated in 
accordance with criteria listed in this notice. Applications for Title 
VI loans may be submitted to HUD at any time during the demonstration 
program, and will be processed on a first-come, first-served basis.

EFFECTIVE DATE: This notice is effective July 23, 1998.

FOR FURTHER INFORMATION CONTACT: Karen Garner-Wing, Director, Office of 
Loan Guarantee, Department of Housing and Urban Development, 1999 
Broadway--Suite 3390, Box 90, Denver, CO 80202-3390; telephone (303) 
675-1600 (this is not a toll free number). Persons with speech or 
hearing impediments may access this number via TTY by calling the toll-
free Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Authority; Background; Definitions; and Eligibility

(A) Authority

    Title VI of the Native American Housing Assistance and Self-
Determination Act of 1996 (NAHASDA) (25 U.S.C. 4101 et seq.); Title II 
of the Departments of Veterans Affairs and Housing and Urban 
Development, and Independent Agencies Appropriations Act, 1998 (Pub. L. 
105-65; 111 Stat. 1344, 1355, approved October 27, 1997).

(B) Background

    Title VI of NAHASDA (entitled ``Federal Guarantees for Financing 
for Tribal Housing Activities'') establishes a Native American loan 
guarantee program. Title VI authorizes the Department to guarantee 
financial obligations issued by Indian tribes or their Tribally 
Designated Housing Entities (TDHEs) to finance affordable housing 
activities as defined in Title II of NAHASDA and outlined in their 
Indian Housing Plan (IHP). To assure the repayment of notes or other 
obligations, NAHASDA requires Title VI applicants to pledge their 
Indian Housing Block Grant (IHBG) funds and other security as required 
by the Department.

(C) Applicability of 24 CFR Part 1000, Subpart E

    HUD's regulations implementing Title VI of NAHASDA are located at 
24 CFR part 1000, subpart E. Unless specifically referenced in this 
notice, these regulations do not apply to the Title VI Demonstration 
Program.

(D) Definitions

    (1) Definitions in 24 CFR part 1000, subpart E. Unless otherwise 
defined in this notice, the definitions set forth in 24 CFR part 1000 
apply to the Title VI Demonstration Program.
    (2) Definition of ``Visitability''. The following definition also 
applies to the Title VI Demonstration Program:
    Visitability means at least one entrance at grade (no steps), 
approached by an accessible route such as a sidewalk; the entrance door 
and all interior passage doors provide a minimum 36-inch clear opening. 
Allowing use of 36-inch doors is consistent with the Fair Housing Act 
(at least for the interior doors), and may be more acceptable than 
requiring the 3 foot doors that are required in fully accessible areas 
under the Uniform Federal Accessibility Standards for a small 
percentage of units.

(E) Eligible Activities for the Title VI Demonstration Program

    Loans and bond issuances are authorized and guaranteed by HUD for 
the purposes of financing affordable housing activities as planned in 
the Tribes/TDHEs IHP. For the FY 1998 demonstration program, Title VI 
activities shall be limited in scope as described in this notice. The 
activities authorized in this notice are those which include:
    (1) Indian housing assistance. The provision of modernization or 
rehabilitation for housing previously developed or operated pursuant to 
a contract between the Secretary of HUD and an Indian Housing 
Authority.
    (2) Development. The acquisition, new construction, reconstruction, 
or moderate or substantial rehabilitation of affordable housing, which 
may include real property acquisition, site improvement, development of 
utilities and utility services, conversion, demolition, financing, 
administration and planning, and other related activities.
    (3) Model Activities. Housing activities under model programs that 
are designed to carry out the purposes of the NAHASDA and are 
specifically approved by the Secretary and/or approved in connection 
with the IHP process.
    In undertaking any of the above activities, program participants 
should design construction, rehabilitation or modifications to 
buildings and facilities to be accessible and visitable for persons 
with disabilities and others who may also benefit, such as mothers with 
strollers or persons delivering appliances. In providing technical 
assistance, educational opportunities, and loans, training and 
informational materials related to program activities should be made 
available in appropriate video, audio, or braille formats, if approved 
by HUD. If job opportunities are provided through this program, 
reasonable efforts should be made to employ Native Americans with 
disabilities in a variety of jobs. Employers should make reasonable 
accommodations for employees with disabilities.

(F) Eligible Borrowers to Participate in the Demonstration Program

    To be eligible to participate in the demonstration program, a 
borrower must:
    (1) Be a Federally recognized Indian tribe or TDHE that is an 
approved recipient for IHBG funds;
    (2) Have experience with complex financial transactions;
    (3) Certify that the borrower was unable to obtain financing 
without the use of this guarantee and cannot complete such financing 
consistent with the timely execution of the program plans without such 
guarantee;
    (4) Have tribal approval that authorizes the borrower to issue or 
undertake financial obligations;

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    (5) Have the capacity to repay the obligation (i.e. to meet the 
debt service requirement); and
    (6) Pledge IHBG grants as security. Although a borrower is required 
by the NAHASDA to pledge current and future IHBG funds as collateral 
for the Title VI guarantee, the borrower will be required to furnish 
additional security to satisfy HUD requirements. Examples of additional 
security include:
    (a) Funding Reserves. IHBG or other grant funds may be used to 
provide capital reserves to provide resource funds to enhance the 
economic feasibility of a project's early years. This capital advance 
can be made as a loan, with the intent to repay funds when the project 
begins to earn sufficient income.
    (b) Over-Collateralization. The use of grant funds may be 
structured so that project-generated cash flow will be sufficient to 
cover debt service and directly enhance the guaranteed loan. One 
technique for accomplishing this approach is over-collateralization.
    An example of this is where grant funds are combined and the 
borrower makes affordable housing loans to tribal members at an 
interest rate equal to or greater than the rate on the Title VI loan. 
The total loan portfolio would be pledged to the repayment of the Title 
VI loan.
    (c) Letter of Credit. IHBG and Title VI Loan Guarantee Capacity-
Building Grants (see the separate Notice of Funding Availability 
published elsewhere in today's Federal Register) may be used to cover 
the cost of a letter of credit, issued in favor of HUD. This letter of 
credit is then available to fund any amounts due on the Title VI loan 
provided a default should occur and debt obligations remain outstanding 
after 30 days.
    (d) Interest Rate Subsidy. Title VI funds may be used to provide an 
interest rate subsidy to make financing affordable for low-income 
families or the borrower. NAHASDA funds could be used to ``buy down'' 
the interest rate or make full or partial interest payments, allowing 
the reduction and enhancement of the long term affordability of 
homeownership for eligible families and for borrowers to carry out 
approved affordable housing activities.

II. Submission Requirements

    Applications may be submitted to HUD at any time and must contain, 
at a minimum, the information required under 24 CFR Sec. 1000.424. 
Applicants are reminded that Sec. 1000.424(d)(6) requires the borrower 
to submit a certification of compliance with all of the requirements 
described in 24 CFR part 1000, subpart A, including the environmental 
review requirements set forth in Secs. 1000.18, 1000.20, 1000.22, and 
1000.24. No funds may be committed to a project (other than for certain 
nonphysical activities) before the completion of the environmental 
review and, where the Indian tribe assumes responsibility for the 
environmental review, before approval of the request for release of 
funds and related certification required by sections 105(b) and 105(c) 
of NAHASDA.

III. Clarifications

    HUD will contact an applicant to clarify an item in the 
application. Applicants must submit clarifications in accordance with 
the request made by HUD or the Department will reject the application 
as incomplete.

IV. Notification of Title VI Approval or Disapproval

    Upon completion of its review, HUD will notify the Title VI 
applicant of HUD's decision to approve or disapprove the proposed 
demonstration project, with an explanation of the reasons for the 
disapproval. Those applications that HUD approves will include a Firm 
Commitment notice from HUD to the applicant. Applicants will have 30 
days in which to submit an appeal in the event of a disapproval. The 
appeal must include a narrative statement, with supporting 
documentation, that addresses the issues in HUD's disapproval and 
serves to mitigate HUD's reasons for disapproval.

V. Findings and Certifications

(A) Paperwork Reduction Act Statement

    The information collection requirements contained in this notice 
have been submitted to the Office of Management and Budget in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520). The OMB approval number, once assigned, will be published in the 
Federal Register. An agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless the 
collection displays a valid control number.

(B) Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
implementing section 102(2)(C) of the National Environmental Policy Act 
of 1969 (42 U.S.C. 4332). The Finding of No Significant Impact is 
available for public inspection during business hours in the Office of 
the Rules Docket Clerk, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410-0500.

(C) Federalism, Executive Order 12612

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this notice will not have substantial direct effects on 
States or their political subdivisions, or the relationship between the 
Federal Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. As a result, 
the notice is not subject to review under the Order.

    Dated: July 20, 1998.
Deborah Vincent,
General Deputy, Assistant Secretary for Public and Indian Housing.
[FR Doc. 98-19675 Filed 7-20-98; 2:24 pm]
BILLING CODE 4210-33-P