[Federal Register Volume 63, Number 209 (Thursday, October 29, 1998)]
[Proposed Rules]
[Pages 57932-57938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28995]


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

DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Parts 1940 and 1944

RIN 0575-AC19


Processing Requests for Farm Labor Housing (LH) Loans and Grants

AGENCIES: Rural Housing Service, Rural Business-Cooperative 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 the Farm Labor Housing (LH) program. This action is taken to 
implement a simplified application process in conjunction with an 
annual competitive funding cycle that will be announced in the Federal 
Register. The intended outcome is a streamlined application process 
that will be simpler and less costly for the applicant and will enable 
the Agency to process applications in a more efficient and timely 
manner.

DATES: Written comments on this proposed rule must be received on or 
before December 28, 1998.

ADDRESSES: Written comments may be submitted, in duplicate, to the 
Branch Chief, Regulations and Paperwork Management Branch, Rural 
Development, U.S. Department of Agriculture, Stop 0742, 1400 
Independence Avenue SW, Washington, D.C. 20250-0742. Comments may be 
submitted via the Internet by addressing them to 
``[email protected]'' and must contain the word ``LH'' in the 
subject. All written comments will be available for public inspection 
at 3rd floor, 300 E Street, SW, Washington, D.C. 20546 during normal 
working hours.

FOR FURTHER INFORMATION CONTACT: Linda Armour, Senior Loan Specialist, 
Multi-Family Housing Processing Division, Rural Housing Service, U.S. 
Department of Agriculture, Room 5349--South Building, Stop 0781, 1400 
Independence Avenue, SW, Washington, D.C. 20250-0781, telephone (202) 
720-1608.

SUPPLEMENTARY INFORMATION:

Classification

    This rule has been determined to be significant for purposes of 
Executive Order 12886 and therefore has been reviewed by the Office of 
Management and Budget (OMB).

Paperwork Reduction Act

    The reporting requirements contained in this regulation have been 
approved by the Office of Management and Budget under OMB Control 
Number 0575-0045. A Notice of Request for Extension of a Currently 
Approved Information Collection was published in the Federal Register 
(63 FR 28984) on May 27, 1998. This Notice did not contain the new 
provision of the regulation. Therefore, in accordance with the 
Paperwork Reduction Act of 1995, RHS is opening a 60-Day

[[Page 57933]]

comment period on the paperwork burden associated with this regulation.
    Abstract: The Rural Housing Service (RHS) is authorized under 
Section 514, 516, and 521 of Title V of the Housing Act of 1949, as 
amended, to make initial and subsequent loans and grants to provide 
housing and related facilities for domestic farm labor. A loan only can 
be made to a farmowner, family farm partnership, family farm 
corporation, or an association of farmers whose farming operations 
demonstrate a need for farm labor housing and that is engaged in 
agricultural or aquacultural farming operations and which will own the 
housing and operate it on a nonprofit basis. A loan and/or grant can be 
made to public, private nonprofit organizations for domestic farm labor 
in areas where need exists. In some cases, rental assistance may be 
provided to eligible tenants.
    RHS has the responsibility of assuring the public that funds for LH 
projects are financed to build, buy, improve, or repair farm labor 
housing and related facilities. The facilities financed are to have 
decent, safe and sanitary living conditions and are managed and 
operated as mandated by Congress. 7 CFR part 1944, subpart D was issued 
to set forth the policies and procedures and delegation of authority 
for making initial and subsequent insured loans under Section 514 and 
grants under Section 516 to provide housing and related facilities for 
domestic farm labor and to assure that applicable laws and authorities 
are carried out as intended.
    With the provison of this regulation, RHS will be able to provide 
the financial assistance and necessary guidance to applicants in the 
development of their project proposals. It provides the Agency the 
capacity to meaningfully evaluate the feasibility of the proposed 
projects RHS will be able to assure Congress and the general public 
that all LH projects will be operated for purposes that are intended, 
and for the benefit of those they are mandated to serve.
    There are no new requirements with this rule. However, it does 
restructure the submission of applicant information and supporting 
documentation for the proposed facility to be financed with RHS 
assistance. It also changes the timing of the submissions. For example, 
with a competitive NOFA system, we can be more applicant-friendly by 
requesting only essential information that responds to the selection 
criteria up front, relying on applicant certifications for eligibility, 
market, environmental data, and leverage. Only those applicants 
preliminarily selected under the competitive process would have to 
submit the specific information the agency would use in underwriting 
and approving the application.
    The required information is collected on a project-by-project basis 
and is done so in accordance with the amended Housing Act of 1949, so 
that RHS can provide guidance and be assured of compliance with terms 
and conditions of loan, grant, and or subsidy agreements.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 11 hours per response.
    Respondents: Farms, Not-for profit Institutions, and State, Local 
or Tribal Government.
    Estimated Number of Respondents: 95.
    Estimated Number of Responses per Respondent: 8.
    Estimated Total Annual Burden on Respondents: 8,610 hours.
    Copies of this information collection can be obtained from Michele 
Brooks, Regulations and Paperwork Management Branch, Support Services 
Division, as (202) 692-0036.
    Comments are invited on: (a) whether the proposed collection of 
information is necessary for the proper performance of the functions of 
RHS, including whether the information will have practical utility; (b) 
the accuracy of RHS's estimate of the burden of the proposed collection 
of information including the validity of the methodology and 
assumptions used; (c) ways to enhance the quality, utility and clarity 
of the information to be collected; and (d) ways to minimize the burden 
of the collection of information on those who are to respond, including 
through the use of appropriate automated, electronic, mechanical, or 
other technological collection techniques or other forms of information 
technology.
    All responses to this notice will be summarized, included in the 
request for OMB approval, and will become a matter of public record. 
Comments should be submitted to the Desk Officer for Agriculture, 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Washington, DC 20503 and to Michele Brooks, Regulations and 
Paperwork Management Branch, U.S. Department of Agriculture, Rural 
Development, STOP 0742, 1400 Independence Ave. SW, Washington, DC 
20250.

Civil Justice Reform

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. In accordance with this rule: (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 7 CFR part 11 must be 
exhausted before bringing suit in court challenging action taken under 
this rule.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates 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, RHS 
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 in part as a result 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 10.405, Farm Labor Housing Loans and Grants.

Intergovernmental Consultation

    For the reasons set forth in the Final Rule related Notice to 7 CFR 
part 3015, subpart V, this program is subject to Executive Order 12372 
which requires intergovernmental consultation with State and local 
officials. RHS has conducted intergovernmental consultation in the 
manner delineated in RD Instruction 1940-J.

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 this

[[Page 57934]]

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, Pub. L. 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 nor does it require any more 
action on the part of a small business than required of a large entity.

Background/Discussion

    The farm labor housing program has two authorities in Title V of 
the Housing Act of 1949: section 514 (42 U.S.C. 1484) for loans and 
section 516 (42 U.S.C. 1486) for grants. The program also has tenant 
subsidies (rental assistance, or RA) available through section 521 (42 
U.S.C. 1490a). The loans and grants authorized in sections 514 and 516 
are the only sources of direct Federal financing available to public 
and private nonprofit organizations to construct housing and related 
facilities for America's farmworkers.
    Both ``off-farm'' and ``on-farm'' housing are financed by the LH 
program. Off-farm housing is financed with loans and grants to 
nonprofit organizations (broad based, community development agencies) 
or to public agencies (such as local housing authorities). Housing 
built typically looks like conventional apartment complexes; however, 
occupancy is restricted to farmworkers. Rental assistance is available 
to occupants to assure unit affordability. On-farm housing is financed 
only with loans to a farmer or farm entity. Housing built typically is 
a single family dwelling unit. Occupancy is restricted to farmworkers 
or a farmworker family with at least one member of the household 
employed by the farm. No tenant subsidies are available. As provided by 
the authorizing statute, section 514 loans are subsidized to all 
borrowers with a one percent interest rate. Occupancy in both types of 
labor housing is restricted to United States citizens or legally 
admitted aliens.
    The Rural Housing Service (RHS) proposes to revise current 
regulations for the LH program by establishing a competitive selection 
process for awarding funds to applicants for off-farm housing 
complexes. As the demand for program funds has steadily increased, it 
has become apparent that the first-come, first-served funding process 
in the current regulations is no longer a practical way of allocating 
funds for the construction of new off-farm units. It precludes setting 
priorities in awarding funds and has created long waiting periods by 
applicants for funds. On-farm housing will continue to be funded on a 
first-come, first-served basis, as the demand for these funds is more 
limited. Subsequent loans for repair and rehabilitation of existing LH 
facilities will be funded from a National Office reserve as needed.
    Several factors have contributed to the increasing disparity 
between available funding in the LH program and demand. First, there is 
a large unmet demand for the program. Second, the Agency's efforts to 
encourage the development of LH units in underserved areas through 
technical assistance contractors has increased the number of 
applications from areas with a high farmworker population and limited 
housing. And finally, a growing number of existing LH units need 
upgrading and repair. Rehabilitation needs further strain the Agency's 
capacity to respond to requests for new facilities.
    In the early 1990's, the application process took from 12 to 18 
months from initial contact to obligation of funds. The increasing 
number of applications and declining amount of funds has increased the 
waiting period from initial contact to obligation of funds for some 
applicants. While the proposed regulations will not change the fact 
that some applicants may have to wait a year or more for funding, they 
will allow the Agency to prioritize funding to assure the highest 
priority applicants are funded as quickly as possible and reduce the 
burden on those not selected by returning applications not likely to be 
funded.
    The Agency has spent considerable time assessing the different 
approaches to a competitive process and has informally solicited views 
from potential applicants on the proposed process. Potential applicants 
have indicated that they have limited funds to develop applications and 
do not have the resources to spend on market analyses, architectural 
and engineering services, and purchase of land unless they can be 
reimbursed for these expenses in a timely manner. Generally, these 
costs are eligible for inclusion in the loan or grant. Accordingly, RHS 
proposes to improve the application process by establishing a system 
that will move quickly to determine the highest priority proposals to 
be funded, to underwrite the application, and then to obligate funds 
within the same fiscal year.
    Concerning the selection criteria within the competitive process, 
current and potential applicants and others familiar with the program 
have offered the following views which have been taken into account in 
the proposed regulation:
     Funds must continue to be available to serve areas with 
traditionally high use of the program and high farmworker populations 
based on local studies.
     Areas without a large concentration of farmworkers may 
have an unmet need for housing for farmworkers.
     Leveraged funds are needed to stretch LH resources and 
must be available within a timely manner to assure project feasibility.
     Not all areas or applicants have access to other 
resources, so other criteria are needed to balance leveraging.
     Community support is important for leveraging and zoning, 
but such support should not be a selection criterion.
     Given fund availability, the selection process should be 
done at the National level.
     Preference needs to be given to outstanding applications 
in the initial years of the new application process.
    The Agency is particularly interested in comments and 
recommendations on the selection criteria and their relative weights. 
With a national competitive process, selection criteria would ideally 
compare different states and communities within the states and their 
relative needs for farmworker housing. However, reliable sources of 
national data are limited and, in order for the selection criteria to 
remain objective, the applicant's proposal must be able to be 
substantiated by reasonably available data. The proposed approach 
relies on the state's Consolidated Plan (used by states for housing 
needs funded by HUD), the state government's assessment of need for 
farmworker housing within the state, or other indicators of need 
identified in the notice of funding availability (NOFA). In the absence 
of state support and identification of need for such housing, are there 
other sources of information and indicators of need that the Agency 
could use as a fair selection criteria so that the program will reach 
proposals for high need areas within the state?
    The Agency is interested, as well, in comments on the selection 
criterion providing 10 additional points to applications with leveraged 
funds from agriculture producers. Its purpose is to

[[Page 57935]]

encourage partnerships and support from the producers, who benefit by 
having good housing available to their farmworkers, even though no 
preference can be given to the workers of any individual producer or 
group of producers.
    Under the proposed regulations, the Agency outlines a three-part 
process under a NOFA system. Annually, the Agency will announce the 
availability of funds and provide a timeframe for applicants to submit 
proposals (generally ranging from 45 to 90 days, depending on when 
funds are appropriated). The proposal must contain basic information on 
the applicant and the proposed housing complex to assure the applicant 
is eligible and the proposal feasible. Also, applicants will be asked 
to provide information that responds to the selection criteria. Points 
will be awarded for the selection criteria as specified in the 
regulation, and applications will be ranked in point score order. Those 
meeting the basic eligibility and feasibility requirements and ranking 
high enough to fall within the available funds will be requested to 
submit an initial application. Upon review and approval of the initial 
application, which includes comprehensive detail on the housing 
proposal, the Agency will request final documentation for application 
approval. Through this process, only applicants with a high potential 
for funding approval will be developing a complete application. 
Moreover, funding should be available within the fiscal year for all 
applicants invited to develop a complete application. However, to 
assure full use of funds, some applicants will also be selected as 
back-ups in case the selected proposals cannot meet the application 
submission schedule or are disapproved upon review of their 
application. Those applicants not selected will be advised of the 
reasons why and will be given the opportunity to reapply the following 
year.

Implementation Proposal

    When the final rule becomes effective, the Agency will change from 
its current method of accepting loan requests to a NOFA system. The 
Agency anticipates publishing a final rule as soon as possible in FY 
1999 to use FY 1999 funding. Under the current method, loan requests 
may be submitted throughout the year and are kept on hand until funds 
are available. Under the NOFA system, the amount of funds and 
application deadlines will be announced each funding cycle in the 
Federal Register. Loan requests will be reviewed and selected based on 
objective criteria in accordance with the revised regulations. Loan 
requests not selected for funding will be returned to the applicant.
    The Agency proposes to advise LH applicants that have an unfunded 
application on hand at the end of FY 1998 that they are subject to the 
competitive process. The Agency requests comments on its intention to 
give points under the selection criteria for two years to applications 
that were issued an AD-622, ``Notice of Preapplication Review Action,'' 
inviting a formal application or had been reviewed and authorized by 
the National Office as of the publication date of this proposed rule. 
Furthermore, if a new proposal is submitted that ranks higher than an 
existing application or proposal under the selection criteria, the 
Agency will select it over the existing one.
    Proposals on hand that have not been issued an AD-622 or reviewed 
and authorized by the National Office as of the publication date of 
this proposed rule will be returned to the applicant. Loan requests 
thus returned may, of course, be submitted for consideration when the 
NOFA is published.

List of Subjects

7 CFR Part 1940

    Administrative practice and procedure, Agriculture, Grant 
programs--Housing and community development, Loan programs--
Agriculture, Rural areas.

7 CFR Part 1944

    Grant programs--Housing and community development, Loan programs--
Housing and community development, Migrant labor, Nonprofit 
organizations, Public housing, Rent subsidies.
    Therefore, chapter XVIII, title 7, Code of Federal Regulations is 
proposed to be amended to read as follows:

PART 1940--GENERAL

    1. The authority citation for part 1940 continues to read as 
follows:

    Authority: 5 U.S.C. 301, 7 U.S.C. 1989, and 42 U.S.C. 1480.

Subpart L--Methodology and Formulas for Allocation of Loan and 
Grant Program Funds

    2. Section 1940.579 is revised to read as follows:


Sec. 1940.579  Multiple Family Housing appropriations not allocated by 
State.

    Funds are not allocated to States. The following program funds are 
kept in a National Office reserve and are available as determined 
administratively:
    (a) Section 514 Farm Labor Housing Loans.
    (b) Section 516 Farm Labor Housing Grants.

PART 1944--HOUSING

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

    Authority: 5 U.S.C. 301; 42 U.S.C. 1480.

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

    4. Section 1944.153 is amended in the definition of ``Domestic farm 
laborer'' by revising the words ``FmHA or its successor agency under 
Public Law 103-354'' to read ``Rural Development''; in the definition 
of ``Farm owner'' by revising the words ``subpart A of part 1944'' to 
read ``this section''; in the definition of ``Self-employed'' by 
revising the words ``District or State Director'' to read ``Loan 
Official or State Director'' and the words ``FmHA or its successor 
agency under Public Law 103-354'' to read ``Rural Development''; in the 
definition of ``Substantial portion of income'' by revising the two 
occurrences of the words ``FmHA or its successor agency under Public 
Law 103-354'' to read ``Rural Development''; and by adding in 
alphabetical order definitions to read as follows:


Sec. 1944.153  Definitions.

    Agency. The Rural Housing Service, an agency of the U.S. Department 
of Agriculture which administers section 514 loans and section 516 
grants.
* * * * *
    Consolidated Plan. A plan developed by a community or state, 
addressing community planning and development that is used to support 
requests for assistance from the Department of Housing and Urban 
Development.
* * * * *
    Farm. A tract or tracts of land, improvements, and other 
appurtenances considered to be farm property which is used or will be 
used in the production of crops or livestock, including the production 
of fish under controlled conditions, for sale in sufficient quantities 
so that the property is recognized as a farm rather than a rural 
residence. It may also include a residence which, although physically 
separate from the farm acreage, is ordinarily treated as part of the 
farm in the local community.
* * * * *

[[Page 57936]]

    HUD. The U.S. Department of Housing and Urban Development.
* * * * *
    LH. Farm Labor Housing.
* * * * *
    MFH. Multi-Family Housing.
* * * * *
    Needs assessment. A housing needs assessment completed by the state 
government.
    NOFA. Notice of funds availability.
* * * * *
    Off-Farm Labor Housing. Housing for farm laborers regardless of the 
farm where they work.
    On-Farm Labor Housing. Housing for farm laborers specific to the 
farm where they work.
* * * * *
    RHS. Rural Housing Service.
* * * * *
    5. Section 1944.164 is amended in the introductory text of 
paragraph (d) in the first sentence by revising the words ``District 
Director'' to read ``Loan Official'' and the words ``FmHA or its 
successor agency under Public Law 103-354'' to read ``RHS''; in 
paragraph (d)(1)(i) by revising the words ``FmHA or its successor 
agency under Public Law 103-354'' to read ``RHS''; and by revising 
paragraph (b) to read as follows:


Sec. 1944.164  Limitations and conditions.

* * * * *
    (b) Maximum amount of grant. The amount of any grant may not exceed 
the lessor of:
    (1) Ninety percent of the total development cost, or
    (2) That portion of the total cash development cost which exceeds 
the sum of any amount the applicant can provide from its own resources 
plus the amount of a loan which the applicant will be able to repay, 
with interest, from income from rentals within the reach of low-income 
farmworker families. The availability of rental assistance and HUD 
section 8 subsidies will be considered in determining the rentals that 
farmworkers will pay.
* * * * *
    6. Section 1944.169 is amended by revising paragraph (a)(1) to read 
as follows:


Sec. 1944.169  Technical, legal, and other services.

    (a) * * *
    (1) When real estate is taken as security, the property will be 
appraised by a RHS employee authorized to make real estate apppraisals.
* * * * *
    7. Section 1944.170 is amended by redesignating paragraphs (b) and 
(c) as (f) and (g) respectively; in newly redesignated paragraph (f) by 
revising all occurrences of the words ``District Director'' to read 
``Loan Official'' and revising the two occurrences of ``an'' to read 
``a''; in newly redesignated paragraph (g)(5)(i) by revising the 
reference ``Sec. 1944.164(b)(2)'' to read ``Sec. 1944.164(b)''; in 
newly redesignated paragraph (g)(5)(ii)(B) by revising the words ``an 
LH loan'' to read ``a LH loan''; in newly redesignated paragraph 
(g)(5)(ii)(C) by revising the reference ``paragraph (c)(5)(ii)(A)'' to 
read ``paragraph (g)(5)(i)''; and by revising the heading, the 
introductory paragraph, paragraph (a), and newly redesignated paragraph 
(g)(7), and by adding new paragraphs (b) through (e) to read as 
follows:


Sec. 1944.170  Application requirements and processing.

    A three-stage application process will be used for new units in 
off-farm facilities. The first stage consists of a project proposal 
submitted by the applicant when the availability of funds is announced 
in the Federal Register. The project proposal is basic information that 
is used by the Agency to score and rank proposals and to determine 
preliminary eligibility. Applicants with the highest ranked proposals 
will be requested to submit a preapplication with more detailed 
information for underwriting (stage two). If the preapplication is 
determined eligible and feasible, the applicant will be invited to 
submit an application package (stage three). Loan requests for repair 
and rehabilitation of off-farm units and new units of on-farm housing 
will begin with the preapplication stage in accordance with paragraph 
(f) of this section. On-farm housing proposals will be processed on a 
first-come, first-served basis. Subsequent loans for repair and 
rehabilitation of existing LH facilities will be funded from a National 
Office reserve as needed.
    (a) Project proposals for new units in off-farm facilities. (1) The 
Agency will publish NOFA annually in the Federal Register with 
deadlines for submitting project proposals. The notice will include the 
amount of funds available, any limits on the amount of individual loan 
and grant requests, the Agency's approach to assuring geographic 
diversity in the use of loan and grant funds, and the loan scoring 
criteria.
    (2) Project proposals will be submitted in accordance with NOFA. 
Applicants will be required to provide the following information to 
describe their proposal and organizational structure which will be used 
by the Agency to determine preliminary eligibility and to score and 
rank proposals:
    (i) Description of the project, including:
    (A) The location of the project, including a description of the 
site, the availability of water, sewer, and utilities, and proximity to 
community facilities and services.
    (B) Description of the proposed development, including the number 
of units by bedroom type, amenities such as carpets and drapes, related 
facilities such as a laundry room or community room, and other 
facilities providing supportive services in connection with the housing 
and the needs of the prospective tenants such as a health clinic or day 
care facility.
    (C) An economic feasibility analysis demonstrating the financial 
viability of the proposal, including the proposed rent structure, loan 
and grant ratio and need for rental assistance.
    (D) Development time line.
    (E) A description of the intended market area and a need and demand 
analysis in accordance with paragraph I.B. of Exhibit A-1 of this 
subpart.
    (F) Development budget, including total and per unit cost.
    (G) Evidence of site control, such as an option or sales contract.
    (H) Description of any anticipated environmental issues based on a 
preliminary review.
    (ii) Description of proposed financing, including:
    (A) Amount of Agency funds requested.
    (B) Information on leveraged funds, including the source, type, 
amount, rates and terms, and commitment status. To count as leveraged 
funds for purpose of the selection criteria:
    (1) The funding date of the leveraged funds will permit processing 
of the loan request within the current funding cycle (the latest 
funding date for leveraged funds will be announced in NOFA), and
    (2) The interest cost to the project using leveraged loan funds may 
not exceed the cost of 100 percent LH loan financing.
    (3) For donated land to be scored as leveraged assistance, all of 
the following conditions must be met:
    (i) Based on a preliminary review, the land is suitable and meets 
Agency requirements. Final site acceptance is subject to a completed 
environmental review.
    (ii) Site development costs do not exceed what they would be to 
purchase and develop an alternative site.
    (iii) The overall cost of the project is reduced by the donation of 
the land.
    (iii) Preliminary documentation of the applicant's eligibility, 
including:

[[Page 57937]]

    (A) Applicant name and type of organization, including contact 
person and title.
    (B) Statement by applicant of its general financial condition.
    (C) Statement of housing experience.
    (iv) Any additional information specified in NOFA necessary to 
score and rank the applicant's proposal under the selection criteria.
    (b) Preliminary eligibility assessment of project proposals. The 
Agency will make a preliminary eligibility assessment using the 
following criteria:
    (1) The project proposal was received by the submission deadline 
specified in NOFA;
    (2) The project proposal is complete as specified in NOFA;
    (3) The applicant is an eligible entity and is not currently 
debarred, suspended, or delinquent on any Federal debt; and
    (4) The proposal is for authorized purposes.
    (c) Scoring and ranking project proposals. The Agency will score 
and rank off-farm project proposals for new units that meet the 
criteria of paragraph (b) of this section.
    (1) The following criteria as specified in NOFA will be used to 
score project proposals:
    (i) The presence and extent of leveraged assistance, including 
donated land, for the units that will serve program eligible tenants at 
basic rents comparable to those if RHS provided full financing. 
Eligible types of leveraged assistance include loans and grants from 
other sources, contributions from the borrower, and tax abatements or 
other savings in operating costs provided that, when the benefit is no 
longer available, the basic rents are comparable to or lower than the 
basic rents if RHS provided full financing. Scoring will be based on 
the presence and extent of leveraged assistance for each proposal 
compared to the other proposals being reviewed, computed as a percent 
of the total development cost of the units. A total monetary value will 
be determined for leveraged assistance such as tax abatements or 
services in order to compare such items equitably with leveraged funds. 
As part of the loan application, the applicant must include specific 
information on the source and value of the services for this purpose. 
Proposals will then be ranked in order of the percent of leveraged 
funds and assigned a point score accordingly. (0 to 20 points)
    (ii) The proposed units will be developed in a place identified in 
the state Consolidated Plan, a needs assessment prepared by the state 
government, or other indicator of need (as published in NOFA) as a high 
need community for farmworker housing. (20 points)
    (iii) The loan request is in support of an Agency initiative 
announced in NOFA. (0 to 20 points)
    (iv) The housing proposal includes support services (such as health 
or child care) on-site, or the proposed housing complex is planned to 
be adjacent to such services in the community and the services are made 
available to the residents at an affordable cost under a cooperative 
agreement. (5 points for one service; 10 points for two or more 
services)
    (v) The proposal reflects a minimum of 10 percent private 
agriculture producer contribution to the total development cost as 
leveraged funds (meeting the same timing and commitment requirements as 
other leveraged funds). (10 points over and above the points awarded 
under paragraph (c)(1)(i) of this section)
    (vi) Projects whose occupants will derive the highest percentage of 
their income from on-farm agriculture work, compared to the other 
proposals being reviewed. (0 to 10 points)
    (vii) Market areas not previously served by LH projects. (10 
points)
    (viii) Seasonal, temporary, or migrant housing. (5 points for up to 
50 percent of the units; 10 points for 51 percent or more)
    (ix) For Fiscal Year 1999 and Fiscal Year 2000 funding cycles, 
outstanding applications or loan requests that were issued an AD-622, 
``Notice of Preapplication Review Action,'' inviting a formal 
application, or had been reviewed and authorized by the National Office 
prior to October 29, 1998. (10 points)
    (2) The Agency will rank project proposals by point score. In the 
case of a point-score tie for proposals from the same State, the 
proposal offering the most support services will be given priority. 
Further same-State ties will be resolved by lottery.
    (d) Selection of project proposals for further processing. (1) 
States will make a preliminary eligibility assessment and submit the 
proposals with their review comments to the National Office for 
selection through the National Office selection process.
    (2) The National Office will score and rank the project proposals 
using the project selection criteria. For the purpose of achieving 
geographic or program diversity, the Agency reserves the right to 
select a loan request with a lower point score, as published in NOFA.
    (3) The Agency will not select a proposal for a new LH loan in an 
area with competing or problem projects when:
    (i) The Agency has selected another LH proposal in the same market 
area for further processing;
    (ii) A previously authorized or approved Agency, HUD, or similar 
assisted MFH project in the same market area serving farmworkers has 
not been completed or reached its projected occupancy level; or
    (iii) An existing Agency, HUD, or similar assisted MFH project in 
the same market area serving farmworkers is experiencing high vacancy 
levels, unless such vacancy is planned as part of the occupancy cycle 
of a seasonally-operated migrant farmworker facility.
    (4) The National Office will notify States of the proposals that 
have been selected and those that may be held as a back-up in the event 
a selected proposal is later withdrawn or rejected.
    (5) Preapplications submitted by selected applicants will be 
processed in accordance with paragraph (f) of this section. If any 
selected preapplications cannot meet the processing deadlines 
established by the Agency to enable processing and fund obligation 
within the current funding cycle, or if requested leveraged funds are 
not received within the timeframe established in the NOFA, the Agency 
will select the next ranked proposal for processing.
    (e) Notification to applicants. States will notify all applicants 
of the results of the selection process.
    (1) Applicants selected for further processing will be sent a 
letter inviting them to submit a preapplication package consisting of 
SF 424.2, ``Application for Federal Assistance (For Construction),'' 
and the information outlined in exhibit A-1 or A-2 of this subpart, as 
applicable. The applicant should be advised not to prepare a final 
application until notified to proceed.
    (2) Applicants selected as back-ups will be sent a letter advising 
them that their proposal will be kept on hand in the event a selected 
proposal is withdrawn or rejected in the current funding cycle. Back-
ups not processed in the current cycle will be returned to the 
applicant.
    (3) Project proposals not selected for further processing, 
including incomplete proposals or those that failed to meet the NOFA 
requirements, or those that could not be reached because of 
insufficient funds, will be returned to the applicant with the reason 
they were not selected.
* * * * *
    (g) * * *
    (7) After completing review of the preapplication material and 
determining

[[Page 57938]]

the amount of grant, the State Director will notify the Loan Official 
of the State Director's determination and authorize the Loan Official 
to prepare and execute Form AD-622. The Loan Official will forward the 
original to the applicant, a copy to the State Director, and a copy to 
the case file.
    8. Exhibit A to subpart D is amended by revising the first 
paragraph to read as follows:

Exhibit A to Subpart D--Labor Housing Loan and Grant Application 
Handbook

* * * * *
    The section 514 Labor Housing loan and section 516 Labor Housing 
grant programs are administered by the Rural Development's Rural 
Housing Service (RHS), herein referred to as the Agency. Interested 
parties are advised to contact any Rural Development office 
processing Labor Housing (LH) loans and grants to obtain information 
on program and application requirements prior to developing an 
application. A notice of the availability of funds (NOFA) for off-
farm facilities will be announced annually in the Federal Register, 
along with application requirements and the deadline for applying. 
Requests received during the application period will be selected 
competitively, based on the objective selection criteria in the 
regulation and announced in the NOFA. Applications for on-farm 
facilities are accepted any time during the year and are funded on a 
first-come, first-served basis, based on the availability of funds.
* * * * *
    9. Exhibit A-1 to subpart D is amended by revising the introductory 
paragraph of section I.B. and paragraph I.B.3 to read as follows:

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

    I. Information to be submitted with SF 424.2 (for preapplication 
submission).
* * * * *
    B. * * *
    A preliminary survey should be conducted to identify the supply 
and demand for LH in the market area. The market area must be 
clearly identified and may include only the area from which tenants 
can reasonably be drawn for the proposed project. The applicant must 
provide documentation to justify need within the intended market 
area. The market survey should address or include the following 
items:
* * * * *
    3. General information concerning the type of labor intensive 
crops grown in the area and prospects for continued demand for farm 
laborers (i.e., prospects for mechanization, etc.). Information may 
be available from the local U.S. Department of Agriculture (USDA) 
Cooperative, State, Research, Education and Extension Service office 
or from the Farm Service Agency.
* * * * *
    Dated: October 22, 1998.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 98-28995 Filed 10-28-98; 8:45 am]
BILLING CODE 3410-XV-U