[Federal Register Volume 64, Number 87 (Thursday, May 6, 1999)]
[Rules and Regulations]
[Pages 24476-24482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11256]
[[Page 24475]]
_______________________________________________________________________
Part V
Department of Agriculture
_______________________________________________________________________
Rural Housing Service
_______________________________________________________________________
Rural Business-Cooperative Service
_______________________________________________________________________
Rural Utilities Service
_______________________________________________________________________
Farm Service Agency
_______________________________________________________________________
7 CFR Parts 1940 and 1944
Processing Requests for Farm Labor Housing (LH) Loans and Grants; Final
Rule
Notice of Funds Availability (NOFA) for Section 514 Farm Labor Housing
Loans and Section 516 Farm Labor Housing Grants for Off-farm Housing;
Notice
Federal Register / Vol. 64, No. 87 / Thursday, May 6, 1999 / Rules
and Regulations
[[Page 24476]]
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: Final rule.
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SUMMARY: The Rural Housing Service (RHS), formerly Rural Housing and
Community Development Service (RHCDS), a successor Agency to the
Farmers Home Administration (FmHA), amends its regulations for the Farm
Labor Housing (LH) program. This action is taken to implement an annual
competitive funding cycle for off-farm proposals that will be announced
elsewhere in this Federal Register. The intended outcome is to improve
the effectiveness and efficiency of the application process and enable
the Agency to process applications in a more efficient and timely
manner. This rule also implements the provision of Public Law 105-276,
enacted October 21, 1998, that permits as an eligible LH borrower
entity a limited partnership with a nonprofit general partner.
EFFECTIVE DATE: June 7, 1999.
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, DC 20250-0781, telephone (202)
720-1604 (voice) or (800) 877-8339 (TDD-Federal Information Relay
Service).
SUPPLEMENTARY INFORMATION:
Classification
This rule has been determined to be not significant for purposes of
Executive Order 12866 and therefore has not been reviewed by 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 0575-0045, in accordance with the
Paperwork Reduction Act of 1995. Under the Paperwork Reduction Act of
1995, no persons are required to respond to a collection of information
unless it displays a valid OMB number. The valid OMB control number
assigned to the collection of information in these final regulations is
displayed at the end of the affected section of the regulation. This
rule does not impose any additional burden on the public.
The new competitive application process should increase the number
of applications each year, and only those applicants selected for
further processing for funding within the fiscal year will need to
submit a full application. The net effect is no new information
collection requirements from those approved by OMB.
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) except as specifically provided, 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),
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 1 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 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 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
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. As provided by the authorizing
statute, section 514 loans are subsidized to borrowers to a one percent
interest rate. The program also has tenant subsidies (rental
assistance, or RA) available through section 521 (42 U.S.C. 1490a).
Both ``on-farm'' and ``off-farm'' housing are financed by the LH
program. Occupancy in both is restricted to United States citizens or
aliens legally admitted for permanent residence.
[[Page 24477]]
On-farm housing is financed with section 514 loans to a farmer or
farm entity. Housing built is typically a single family dwelling unit,
and 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.
Off-farm housing proposals, which may be financed with both section
514 loans and section 516 grants, are typically designed like
conventional apartment complexes; however, occupancy is restricted to
farmworker households. Rental assistance is typically available to
occupants to assure unit affordability.
On October 29, 1998, the Agency published a proposed rule in the
Federal Register (63 FR 57932) to change to an annual competitive
funding cycle from the current system of accepting and processing off-
farm labor housing proposals on a first-come, first-served basis. These
regulation changes do not affect on-farm housing loan requests, which
will continue to be accepted and processed on a first-come, first-
served basis.
Discussion of Comments
Fifteen commentors responded during the comment period, three of
whom submitted duplicate letters. An additional comment was received
after the comment period had closed, expressing support of another
commentor's letter, making a total of sixteen responses. Commentors
included State agencies, farm labor housing technical assistance
providers, nonprofit groups, developers, and RHS field staff. The
Agency wishes to thank all respondents for their thorough and
constructive comments and suggestions. We have carefully considered all
comments in developing this final rule.
The comments we received are summarized and discussed below by
topic.
Annual Competitive Funding Cycle
The majority of commentors agreed with the Agency's proposal to
adopt an annual competitive funding cycle, with only two commentors
opposing this alternative to the current first-come, first-served
application process. The Agency is implementing the annual competitive
funding cycle as proposed.
Two commentors, while agreeing with the annual competitive process,
felt that the proposed 60-to 90-day application period was too short,
and offered suggestions for ways to give applicants more time to
complete and submit their loan requests. The first commentor suggested
that the Agency issue the notice of funding earlier in the year, based
on preliminary appropriations estimates, before funds actually become
available. The notice would specify that funds were subject to the
amount of the final appropriations. The second commentor suggested that
the Agency accept applications and issue letters of commitment in FY
1999 for FY 2000 funds; FY 1999 funds could then be used to fund
applications on hand for which the Agency has already issued an AD-622,
``Notice of Preapplication Review Action'', inviting a formal
application. A third commentor on this issue offered an opposing
opinion, stating that the Agency should not announce the availability
of funds prior to the appropriation of funds because funding levels can
vary from year to year.
The Agency feels that the funding announcement can be made as soon
as there is reasonable assurance of funding levels. The funding notice
will be published in the Federal Register as quickly as possible
thereafter to allow the maximum application period.
Several commentors stated that a minimum of 90 days should be
allowed for the application cycle to allow smaller or inexperienced
applicants time to complete their applications. We agree that a 90-day
Notice of Funds Availability (NOFA) is preferable and will make every
effort to accommodate this recommendation by publishing NOFA as soon as
funding levels are known. The Agency will also attempt to ensure,
through outreach efforts, that potential applicants are aware of the
program's annual funding cycle so that preliminary groundwork can be
done prior to the Agency's funding announcement.
Three-Stage Application Process
The Agency proposed adopting a three-stage application process with
a preliminary proposal stage. The majority of commentors were opposed
to this and recommended retaining the current two-stage process. They
noted that the preliminary stage was nearly as extensive as the
Agency's current first stage (preapplication) requirements and
unnecessarily complicated the process. Two commentors also noted that,
if the applicant is applying for other funds to leverage with RHS
funds, the information required in the Agency's current preapplication
stage is generally required by the other lenders. Based on these
comments, the Agency has decided to retain the current two-stage
application process.
Description of Proposed Financing
Three respondents commented on the provisions of
Sec. 1944.170(a)(2)(ii), ``Description of proposed financing.'' One
questioned whether the requirement that leveraged funds not exceed the
cost of 100 percent LH loan financing was realistic. Based on our
experience with the section 515 Rural Rental Housing program, we have
found this to be a realistic requirement, with many applicants
obtaining grants, deferred loans, or 1 percent loans. We have modified
this provision, however, to indicate that this condition applies only
if RHS Rental Assistance is being provided. Regarding the provisions
for donated land, one commentor felt that the requirement that site
costs cannot exceed the cost of purchasing and developing an
alternative site was too inflexible, citing instances where no other
site is available or the site is mandated by local conditions. The
Agency agrees there may be exceptional cases; however, these will be
handled on a case-by-case exception basis. A third commentor objected
to the requirement that the funding dates of leveraged funds permit
funding within the current funding cycle, noting that this was not
appropriate for on-going operating subsidies. The same commentor also
noted that, for many leveraged sources, the funds may be committed but
not actually received in the funding cycle. The Agency feels there is
merit to these criticisms and has modified the language for this
requirement accordingly.
Environmental Review
Two commentors recommended that the Agency require Form RD 1940-20,
``Request for Environmental Information,'' at the initial application
stage and consider requiring a Phase I Environmental Review at this
stage. The Agency agrees that the environmental process should begin
with the initial loan request. Form RD 1940-20 is required with the
preapplication submission, and Agency staff will be required to conduct
a site visit to establish preliminary site eligibility and to identify
potential environmental concerns. In coordination with the
environmental site review, Agency staff will be required to conduct a
civil rights impact analysis in accordance with RD Instruction 2006-P.
Appraisal Requirements
One commentor noted that Sec. 1944.169(a)(1) requires appraisals to
be performed by RHS employees and questioned whether this precluded
contract appraisals. We agree that the
[[Page 24478]]
Agency may wish to use contract appraisers in some instances and have
changed the wording in this section to remove the reference to RHS
employees.
Loan Selection Criteria
The Agency proposed awarding points in nine different loan
selection categories: (1) the presence and extent of leveraged
assistance; (2) units to be built in communities with a high need for
farmworker housing; (3) proposals in support of an Agency initiative
announced in Notice of Funds Availability (NOFA); (4) proposals with
support services; (5) proposals with a minimum ten percent private
agriculture producer leveraged funds; (6) projects whose occupants will
derive the highest percentage of income from on-farm agriculture work;
(7) proposals in market areas not previously served by LH projects; (8)
seasonal, temporary, or migrant housing; and (9) for FY 1999 and FY
2000, proposals 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 (the
date the proposed rule was published in the Federal Register). The
comments on each category are discussed below:
The presence and extent of leveraged assistance, and proposals with
a minimum ten percent private agriculture producer leveraged funds. The
majority of commentors felt that the two criteria dealing with
leveraged assistance should be combined into one, both to simplify the
process and to preclude giving too much weight to leveraged assistance.
In addition, commentors felt that the Agency should establish point
ranges for percentages of leveraging, rather than the proposed method
of comparing applications to each other. The Agency agrees with both of
these suggestions and has adopted them in this rule.
High-need areas for farmworker housing. Seven commentors objected
to the proposed loan score factor for projects that would be located in
high need areas for farmworker housing as identified in the state
Consolidated Plan or state needs assessment. It was noted that many
states do not identify farmworker housing needs at all, or do not give
these needs any special priority. Several commentors noted that the
Agency should rely on the market analysis to determine need and demand.
Because of the strong opposition by commentors, and in the absence of
uniformly available data or state plans, the Agency is not adopting
this factor.
Agency initiative. Five comments were received on the proposal to
award zero to twenty points for an optional Agency initiative announced
in NOFA. One commentor suggested that the Agency announce any
initiative well in advance of NOFA and keep the same initiative for
more than one year. Three commentors noted that, since applicants would
not be able to plan ahead for the initiative, twenty points gave it too
much weight. Another commentor objected to the range of scores, feeling
that the proposal would either comply with the initiative or not. The
Agency appreciates these comments and concerns and will take them into
consideration in developing any Agency initiatives. In addition, we
have modified the point score for this factor so that ten points will
be awarded to proposals that support the Agency initiative and zero
points for those that do not.
Supportive services. Commentors expressed a variety of opinions on
the proposal to award five points for one supportive service and ten
points for two or more. One commentor supported this factor as
proposed, while two others felt the Agency needed to better define
supportive services and should differentiate between simple and more
complex services. One suggested using a range of points for each
service based on the financial investment or value. One commentor noted
that a services package should be required of all multi-family housing
and updated every few years. Another commented that services should not
be required on-site if they are available in close proximity to the
housing and the service providers have committed that the services are
available, accessible, and affordable to farmworkers and their
families. Still another commentor suggested a change in regulations to
make the provision of services an eligible operating expense. Although
the suggestions varied, all commentors agreed that a supportive
services package is critical to the successful operation of multi-
family housing. Based on this and the lack of consensus on a fair way
to distinguish between services in awarding points, the Agency has
decided not to use this as a loan scoring factor but, instead, will
require a supportive services plan as part of the application. Services
may be provided on-site or through cooperative agreements with service
providers in the community. At the initial application stage, letters
of intent from service providers will be acceptable documentation.
Highest percentage of income from on-farm agricultural work. Five
respondents commented on this factor. All five objected to its
inclusion in the loan selection criteria, pointing out the difficulty
in projecting future occupancy and the lack of reliable data. One of
the commentors further noted that this factor is more appropriate as a
preliminary eligibility assessment. The Agency feels these are valid
criticisms and, therefore, has not adopted this factor in the final
rule.
Market areas not previously served by LH projects. We received two
comments on this loan scoring factor. Both recommended that the Agency
modify this category to reflect the degree of need for farmworker
housing in the market area based on the number of farmworker households
and available housing units. We considered this suggestion but decided
against adopting it because of the difficulty in obtaining accurate
data on farmworker housing needs. We agree, however, that housing
should go to areas of greatest need based on the market analysis, which
may or may not have existing LH units. Therefore, we have not adopted
this factor in the final rule.
Seasonal, temporary, or migrant housing. The proposed rule provided
that five points would be awarded for proposals with up to 50 percent
of its units serving seasonal, temporary, or migrant farmworkers, and
ten points for 51 percent or more. Three commentors felt that more
weight should be given to this factor, with one noting that this factor
should be on a par with leveraged assistance to help accomplish a
balanced program. Two of these commentors suggested a point range of
zero to twenty points, based on the percentage of units serving
seasonal, temporary, or migrant farmworkers. As mentioned above (under
the heading ``The presence and extent of leveraged assistance and
proposals with a minimum 10 percent private agriculture producer
leveraged funds''), the two proposed leveraging factors have been
combined into one, reducing the maximum points for leveraging from
forty to twenty. Few applications will receive the maximum twenty
points, so we do not believe leveraging will arbitrarily outweigh other
factors. With limited program funds, we have attempted to balance the
need for leveraging with other Agency objectives. Therefore, we have
retained the points for seasonal, temporary, or migrant housing as
proposed.
Loan requests that have been issued an AD-622. The proposed rule
provided that, for Fiscal Years 1999 and 2000, ten points would be
awarded to applications or loan requests that had been issued an AD-
622, ``Notice of Preapplication Review Action,'' inviting a formal
application, or had been authorized by the National Office prior
[[Page 24479]]
to October 29, 1998 (the date the proposed rule was published). Five
respondents commented on this issue. Two agreed with this provision,
with one stressing support for the two-year limitation. One commentor
disagreed with this provision, stating that each proposal should
compete on its own merits. Another commentor felt that proposals with
an AD-622 should not have to compete with other proposals, since they
were developed under the previous regulations. The fifth commentor
suggested funding only those proposals with AD-622s in fiscal year 1999
and implementing the new process in fiscal year 2000.
Commentors were divided on this issue and, after considering the
comments and arguments on both sides, the Agency has decided to
implement this measure as proposed, i.e., to give preference to loan
requests that were issued an AD-622 or authorized by the National
Office by awarding points for two funding cycles. However, to address
the concerns of commentors who felt AD-622s should be given more
consideration, we have increased the number of points from ten to
fifteen.
Other Suggested Loan Selection Criteria
Several commentors suggested other loan selection criteria for the
Agency's consideration. Two commentors suggested project readiness and
development team experience; others suggested cost effectiveness and
construction quality. The Agency considered these and similar criteria
in drafting the proposed rule; however, we found it impossible to
develop standards for factors that require subjective judgments, such
as an assessment of quality or experience. In addition, we were
concerned that the readiness to proceed factor could result in delays
or obstacles by communities that oppose the development of farm labor
housing. Therefore, we have not adopted these suggestions.
Point-score Ties
The proposed rule provided that, in case of point-score ties for
requests from the same State, the proposal with the most supportive
services would be given priority, with further same-State ties
determined by lottery. One commentor objected to these tie breakers,
proposing instead that, with limited funds and the emphasis on
leveraging, primary priority be given to requests that are the most
cost effective and have the most leveraged assistance, with secondary
priority to requests with the greatest market need for LH units. The
same commentor felt the regulation should also address point-score ties
between requests from different States. With regard to the ``most
supportive services'', we are not adopting this loan scoring factor in
the final rule, so it is no longer appropriate as a tie breaker (see
discussion above under ``Loan Selection Criteria''). With regard to the
suggested tie breakers, we believe it would be difficult to obtain
reliable and objective data to establish ``most cost effective'' and
``greatest market need''. We agree, however, that there is merit to
using the actual percentage of leveraged assistance as a tie-breaker.
In addition, the Agency believes there is merit to giving a preference
to applications to develop units in states that have no existing RHS-
financed off-farm LH units. Therefore, the actual percentage of
leveraged assistance will be used as a tie-breaker for point-score ties
within the State; in the case of point-score ties in the National
ranking, preference will be given to applications in States that have
no existing RHS-financed off-farm LH units. In the event of further
point-score ties at the National level, preference will be given to
States that have not been selected in the current cycle.
Geographic Diversity
The proposed rule provided that the Agency could select a lower
scoring loan request over one with a higher score in order to achieve
geographic diversity. Five commentors strongly objected to this
provision, stating that it undermined the objectivity of the point
system. We agree that the selection process should be fair and
objective and, therefore, we have not adopted this provision in the
final rule.
Statutory Amendments
Public Law 105-276, enacted October 21, 1998, included two
amendments to the Farm Labor Housing (LH) program. The first extends
eligibility for low-income housing tax credit financing to the LH
program by adding as eligible borrowers for section 514 loans ``any
nonprofit limited partnership in which the general partner is a
nonprofit entity''. This wording is interpreted by the Agency to mean
``any limited partnership in which the general partner is a nonprofit
entity.'' We have included this provision in the final rule and will
interpret ``nonprofit limited partnership'' to mean ``any limited
partnership in which the general partner is a nonprofit entity.'' This
will be consistent with the wording found in section 515(w) (42 U.S.C.
1485(w)). The second LH legislative amendment provides that rental
assistance payments may be used for project operating costs in housing
for migrant farmworkers financed under section 514 or section 516. This
provision is not included in this rule because of the need to make
changes to the Agency's project management regulations and automated
systems but will be included in the Agency's reinvented regulation,
which is scheduled to be published as a proposed rule in fall of 1999.
Implementation Proposal
Under the annual competitive system that is being implemented with
this rule, the amount of available funds and application deadlines will
be announced each funding cycle in the Federal Register through a NOFA.
Loan requests received by the application deadline 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.
Applications on hand are subject to the new competitive process. In
fiscal years 1999 and 2000, points will be awarded to applications on
hand that were issued an AD-622 inviting a formal application or that
had been reviewed and authorized by the National Office as of October
29, 1998 (the publication date of the proposed rule). A new proposal
that ranks higher under the selection criteria than an existing
application will take priority over the existing one.
Agency staff were directed by the proposed rule to return proposals
on hand that had not been issued an AD-622 or reviewed and authorized
by the National Office as of October 29, 1998 (the publication date of
the proposed rule). Loan requests thus returned may, of course, be
submitted for consideration during the application period announced in
NOFA.
List of Subjects
7 CFR Part 1940
Administrative practice and procedure, Agriculture, Grant
programs--housing and community development, Loan programs--
agriculture, Reporting and recordkeeping requirements, 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, Reporting and
recordkeeping requirements.
Therefore, chapter XVIII, title 7, Code of Federal Regulations is
amended to read as follows:
[[Page 24480]]
PART 1940--GENERAL
1. The authority citation for part 1940 is revised 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. Revise section 1940.579 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. Amend section 1944.153 in the definition of ``Domestic farm
laborer'' by revising the words ``FmHA or its successor agency under
Public Law 103-354'' to read ``Rural Housing Service''; in the
definition of ``Farm owner'' by revising the words ``subpart A of part
1944 of this chapter'' to read ``this section''; in the definition of
``Self-employed'' by revising the words ``FmHA or its successor agency
under Public Law 103-354'' to read ``Rural Housing Service'' and the
words ``District or State Director'' to read ``Loan Official or State
Director''; 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.
* * * * *
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.
* * * * *
HUD. The U.S. Department of Housing and Urban Development.
* * * * *
LH. Farm Labor Housing.
* * * * *
MFH. Multi-Family Housing.
* * * * *
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. Amend section 1944.157 to revise paragraphs (a)(1) and (a)(3) to
read as follows:
Sec. 1944.157 Eligibility requirements.
(a) * * *
(1) Be a farmowner, family farm partnership, family farm
corporation, or an association of farmers whose farming operations
demonstrate a need for farm labor housing, or an organization, as these
terms are defined in Sec. 1944.153, which will own the housing and
operate it on a nonprofit basis; or a nonprofit limited partnership in
which the general partner is a nonprofit entity.
* * * * *
(3) Provide from its own resources the borrower contribution
required by Sec. 1944.160 and have sufficient initial operating capital
to pay costs such as property and liability insurance premiums,
fidelity bond premiums if required, utility hookup deposits,
maintenance equipment, movable furnishings and equipment, printing
lease forms, and other initial expenses. LH loans made to nonprofit
organizations and to State or local public agencies or political
subdivisions thereof may include up to 2 percent of the development
cost for initial operating expenses.
* * * * *
6. Add section 1944.160 to read as follows:
Sec. 1944.160 Off-farm loan limits.
(a) For all applicants, including its members, who will be
receiving any benefits from Low-Income Housing Tax Credits (LIHTC), the
amount of the RHS loan will be limited to no more than 95 percent of
the total development cost or 95 percent of the security value,
whichever is less.
(b) For all applicants, including its members, not receiving any
benefits from LIHTC, who are nonprofit entities or State or local
public agencies, the amount of the RHS loan will be limited to the
total development cost or the security value, whichever is less, plus
the 2 percent initial operating capital.
(c) For all other applicants, including its members, not receiving
any benefits from LIHTC, the amount of the RHS loan will be limited to
no more than 97 percent of the development cost or the security value,
whichever is less.
7. Amend section 1944.164 in the introductory text of paragraph (d)
in the first sentence to revise 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 to revise 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 lesser 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 which low-income farmworker
families can be reasonably expected to be able to pay. The availability
of rental assistance and HUD section 8 subsidies will be considered in
determining the rentals that farmworkers will pay.
* * * * *
8. Amend section 1944.169 to revise paragraph (a)(1) to read as
follows:
Sec. 1944.169 Technical, legal, and other services.
(a) * * *
(1) An appraisal is required when real estate is taken as security.
The appraisal must be made in accordance with the Uniform Standards of
Professional Appraisal Practices (available in any Rural Development
office).
* * * * *
9. Amend section 1944.170 to redesignate paragraph (c) as paragraph
(f); in newly redesignated paragraph (f)(5)(i) to revise the reference
``Sec. 1944.164(b)(2)'' to read ``Sec. 1944.164(b)'', in newly
redesignated paragraph (f)(5)(ii)(B) to revise the words ``an LH loan''
to read ``a LH loan''; in newly redesignated paragraph
[[Page 24481]]
(f)(5)(ii)(C) to revise the reference ``paragraph (c)(5)(ii)(A)'' to
read ``paragraph (f)(5)(ii)(A)''; to remove newly redesignated
paragraph (f)(7); to revise the section heading, the introductory text,
and paragraphs (a) and (b); and to add new paragraphs (c) through (e)
to read as follows:
Sec. 1944.170 Preapplication requirements and processing.
A two-stage application process is used. In stage one, applicants
submit a preapplication, which is used to determine preliminary
eligibility and feasibility. Preapplications selected for further
processing will be invited to submit an application. The preapplication
consists of SF-424.2, ``Application for Federal Assistance (For
Construction)'' and the information listed in exhibit A-1 or A-2 of
this subpart, as applicable. Preapplications for off-farm new
construction loans and grants will be accepted and processed in
accordance with this section when NOFA is announced in the Federal
Register. Applicants are advised to read the notice carefully for any
restrictions on loan or grant amounts. Preapplications for repair and
rehabilitation of existing off-farm LH units and new units of on-farm
housing may be submitted any time during the year and will be processed
on a first-come, first-served basis in accordance with subpart L of
part 1940 of this chapter.
(a) Preapplications for new units in off-farm facilities. (1) The
Agency will publish NOFA annually in the Federal Register with
deadlines for submitting preapplications. The notice will include the
amount of funds available, any limit on the amount of individual loan
and grant requests, any limit on the amount of funds that any one State
may receive, and the loan scoring criteria.
(2) The preapplication must be submitted in accordance with NOFA
and consists of SF-424.2, ``Application for Federal Assistance (For
Construction)'', and the information required by exhibit A-1 of this
subpart. The preapplication will be used by the Agency to determine
preliminary eligibility and to score and rank proposals.
(b) Preliminary eligibility assessment of preapplications received
in response to NOFA. The Agency will make a preliminary eligibility
assessment using the following criteria:
(1) The preapplication was received by the submission deadline
specified in NOFA;
(2) The preapplication 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 off-farm preapplications. The Agency will
score and rank off-farm preapplications for new units that meet the
criteria of paragraph (b) of this section.
(1) The following criteria 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,
calculated as a percentage of the RHS total development cost (TDC). RHS
TDC excludes non-RHS eligible costs such as a developer's fee.
Leveraged assistance includes, but is not limited to, funds for hard
construction costs, Section 8 or other non-RHS tenant subsidies, and
state or federal funds. A minimum of ten percent leveraged assistance
is required to earn points. (0 to 20 points)
(A) To count as leveraged funds for purpose of the selection
criteria:
(1) A commitment of funds must be received within a timeframe that
permits processing of the loan request within the current funding cycle
(the latest commitment date for leveraged funds will be announced in
NOFA); and
(2) If RHS RA is being provided, the interest cost to the project
using leveraged loan funds may not exceed the cost of 100 percent LH
loan financing.
(B) For donated land to be scored as leveraged assistance, all of
the following conditions must be met.
(1) Based on a preliminary review, the land is suitable and meets
Agency requirements. Final site acceptance is subject to a completed
environmental review.
(2) Site development costs do not exceed what they would be to
purchase and develop an alternative site.
(3) The overall cost of the project is reduced by the donation of
the land.
(C) Points for leveraged assistance will be awarded in accordance
with the following table. Percentages will be rounded to the nearest
whole number, rounding up at .50 and above and down at .49 and below.
For example, 25.50 becomes 26; 25.49 becomes 25. If the total
percentage of leveraged assistance is less than ten percent, and it
includes donated land, two points will be awarded for the donated land.
------------------------------------------------------------------------
Percentage Points
------------------------------------------------------------------------
75 or more................................................... 20
60-74........................................................ 18
50-59........................................................ 16
40-49........................................................ 12
30-39........................................................ 10
20-29........................................................ 8
10-19........................................................ 5
0-9.......................................................... 0
Donated land in proposals with less than ten percent total 2
leveraged assistance........................................
------------------------------------------------------------------------
(ii) The loan request is in support of an Agency initiative
announced in NOFA. (10 points)
(iii) Seasonal, temporary, or migrant housing. (5 points for up to
and including 50 percent of the units; 10 points for 51 percent or
more)
(iv) For Fiscal Year 1999 and Fiscal Year 2000 funding cycles,
outstanding applications or 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. (15 points)
(2) The Agency will rank preapplications by point score. For point-
score ties within the State, rank order will be determined by giving
first preference to the application with the greatest actual percentage
of leveraged assistance. In case of further same-State ties, rank order
will be determined by lottery.
(d) Selection of preapplications for further processing. (1) States
will make a preliminary eligibility and feasibility assessment, score
and rank the preapplications, and provide this information to the
National Office with their review comments.
(2) The National Office will rank the preapplications nationwide.
In case of point-score ties in the National ranking, first preference
will be given to a preapplication to develop units in a state that does
not have existing RHS-financed off-farm LH units; second preference to
a preapplication from a State that has not yet been selected in the
current funding cycle. In the event there are multiple preapplications
in either category, one preapplication from each State (the highest
State-ranked) will compete by computer-based random lottery. If
necessary, the process will be completed until all same-pointed
preapplications are selected or funds are exhausted.
(3) The Agency will not select a preapplication 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;
[[Page 24482]]
(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) 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 committed within the timeframe established in NOFA, the
Agency will select the next ranked preapplication 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 notified and
processed in accordance with this section and Sec. 1944.171.
(2) Project proposals not selected for further processing,
including incomplete proposals or those that failed to meet 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.
* * * * *
10. 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
Introduction
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. Notice of Funds Availability (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.
* * * * *
11. Exhibit A-1 to subpart D is amended by revising paragraphs
I.A.1 and I.A.3, the introductory text of paragraph I.B., paragraph
I.B.3, the text of paragraph I.B.6 preceding the note, paragraph I.C.,
and paragraph I.E. 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).
A. * * *
1. Financial Statement--A current, dated, and signed financial
statement showing assets and liabilities with information on the
repayment schedule and status of all debts. If the applicant is an
association of farmers, a current financial statement will also be
required from each member who holds an interest in the association
in excess of 10 percent. If the applicant is a limited partnership,
financial statements are required from each general partner who
holds an interest in the organization, and from each limited partner
who will have 10 percent or more ownership. The financial statement
must reflect sufficient financial capacity to meet the initial
operating capital requirements. Loan or grant funds may be used to
provide the required initial operating capital for nonprofit
entities and State or local public agencies. If the applicant is a
limited partnership, the financial statement must also demonstrate
sufficient capacity to meet the applicant's equity contribution.
* * * * *
3. If a Labor Housing (LH) grant is requested, the applicant
should provide a statement on their projected use of Rental
Assistance (RA) and their need for a LH grant. This statement should
include preliminary estimates of the rents required with and without
a grant and the relative need for a grant if RA is provided to
supplement market rents for eligible farmworkers. [LH grants and RA
are not available to associations of farmers; LH grants are not
available to limited partnerships.]
* * * * *
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.
* * * * *
6. A description of the units proposed, including number, type,
size, rental rates, 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; estimated development timeline;
estimated total development cost and applicant contribution. If the
application includes leveraged funds, include documentation of the
dollar amount, source, and commitment status.
* * * * *
C. Environmental Information
The applicant will complete Form RD 1940-20, ``Request for
Environmental Information,'' along with a description of anticipated
environmental issues or concerns.
* * * * *
E. Additional Information
1. Evidence of site control such as an option or sales contract;
a map and description of the proposed site, including the
availability of water, sewer, and utilities, and proximity to
community facilities and services such as shopping, schools,
transportation, doctors, dentists, and hospitals.
2. Preliminary plans and specifications, including plot plans,
building layouts, and type of construction and materials.
3. A supportive services plan describing services that will be
provided on-site or made available to tenants through cooperative
agreements with service providers in the community, such as a health
clinic or day care facility. Off-site services must be accessible
and affordable to farmworkers and their families. Letters of intent
from service providers are acceptable documentation at the
preapplication stage.
* * * * *
Dated: April 29, 1999.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 99-11256 Filed 5-5-99; 8:45 am]
BILLING CODE 3410-XV-U