[Federal Register Volume 64, Number 244 (Tuesday, December 21, 1999)]
[Notices]
[Pages 71601-71604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32958]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice of Availability of Funding and Requests for Proposals for 
Guaranteed Loans Under the Section 538 Guaranteed Rural Rental Housing 
Program

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

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SUMMARY: This Notice of Fund Availability (NOFA or Notice) announces 
the timeframe to submit proposals in the form of ``NOFA responses'' for 
the section 538 Guaranteed Rural Rental Housing Program (GRRHP). 
Eligible lenders are invited to submit NOFA proposals for the 
development of affordable rental housing to serve rural America. 
Lenders may submit their application concurrently with their NOFA 
response. This document also describes the overall application process, 
including the selection of NOFA responses and the allocation of 
interest credits.

DATES: Fiscal Year (FY) 2000 program dollars will be divided into two 
selection pools: an ``early selection pool'' of $40 million which will 
close at 4:00 PM Eastern Time on February 21, 2000 and the ``standard 
selection pool'' of $60 million which will close at 4:00 PM Eastern 
Time, on May 8, 2000. See paragraph III., ``Application Process'' of 
this NOFA for more information on this topic.
    The final deadline for a FY 2000 NOFA response will be 4:00 PM 
Eastern Time on May 8, 2000. No NOFA responses will be accepted after 
4:00 PM Eastern Time on May 8, 2000, unless that date and time is 
extended by Notice published in the Federal Register. Lenders intending 
to mail a NOFA response must provide sufficient time to permit delivery 
on or before the closing deadline date and time. Acceptance by a post 
office or private mailer does not constitute delivery. Facsimile (FAX) 
and postage due NOFA responses or applications will not be accepted.

ADDRESSES: Responses for participation in the program must be 
identified as ``Section 538 Guaranteed Rural Rental Housing Program'' 
on the envelope and

[[Page 71602]]

be submitted to: Director, Multi-Family Housing Processing Division, 
Rural Housing Service, U.S. Department of Agriculture, Room 1263 (STOP 
0781), 1400 Independence Ave. SW, Washington, DC 20250-0781.

FOR FURTHER INFORMATION CONTACT: Joyce Allen, Senior Loan Officer, 
Guaranteed Loans, Multi-Family Housing Processing Division, U.S. 
Department of Agriculture, South Agriculture Building, Room 1271 (STOP 
0781), 1400 Independence Ave. SW, Washington, DC 20250-0781. E-mail: 
[email protected]. Telephone: (202) 690-4499. This number is 
not toll-free. Hearing or speech impaired persons may access that 
number by calling the Federal Information Relay Service toll-free at 
(800) 877-8339.

SUPPLEMENTARY INFORMATION: The GRRHP will be operated under the 
direction of Title 7 CFR Code of Federal Regulations part 3565 (7 CFR 
part 3565). In addition, this NOFA will identify any priorities for 
selection of proposed applications, and the process by which the Agency 
will score and rank the proposals. Information will also be included 
about submission forms and deadlines.
    The Guaranteed Rural Rental Housing Program Origination and 
Servicing Handbook (HB-1-3565) is available to provide lenders and 
Agency personnel with the ``how to'' administrative guidance needed to 
administer the program. As a service to our customers, copies of HB-1-
3565, which contains a copy of 7 CFR part 3565 in Appendix 1, may be 
obtained from the Rural Housing Service Multi-Family Housing Processing 
Division at 202-720-1604. This is not a toll-free number. Hearing- or 
speech-impaired persons may access that number by calling the Federal 
Information Relay Service toll-free at (800) 877-8339.

Discussion of Notice

I. Purpose and Program Summary

    On March 28, 1996, President Clinton signed the ``Housing 
Opportunity Program Extension Act of 1996,'' Public Law 104-120, 
authorizing the section 538 Guaranteed Rural Rental Housing Program 
(GRRHP). The program is designed to increase the supply of affordable 
multifamily housing through partnerships between Rural Housing Service 
(RHS) and major lending sources, as well as State and local housing 
finance agencies and bond issuers. Qualified lenders will be authorized 
to originate, underwrite, and close loans for multifamily housing 
projects requiring new construction or acquisition with rehabilitation 
of at least $15,000 per unit. RHS may guarantee such loans upon 
presentation and review of appropriate certifications, project 
information and satisfactory completion of the appropriate level of 
environmental review by RHS. Lenders will be responsible for the full 
range of loan management, servicing, and property disposition 
activities associated with these projects. The lender will be expected 
to provide servicing or contract for servicing of each loan it 
underwrites. In turn, RHS will guarantee the lender's loan up to 90 
percent of total development cost and commits to pay up to a maximum of 
90 percent of the outstanding principal and interest balance of such 
loan in the case of default of the loan and filing of a claim. In no 
event will the Agency pay more than 90 percent of the original 
principal amount. This means that the Agency will have a risk exposure 
under the GRRHP of approximately 80 percent of the total development 
cost. Any losses would be split on a pro-rata basis between the lender 
and the Agency from the first dollar lost.

II. Allocation

    Fiscal Year (FY) 2000 budget authority provides approximately $100 
million in program dollars. All FY 2000 funds will be held in the 
National office. There are no set-asides or demonstration purposes for 
the GRRHP for FY 2000.

III. Application Process

    FY 2000 budget authority will provide approximately $100 million in 
program dollars. In order to better assist lenders who are currently 
working with an applicant, the FY 2000 program dollars will be divided 
into two selection pools; an ``early selection pool'' of $40 million, 
which will close 4 p.m. Eastern Standard Time, February 21, 2000 and a 
``standard selection pool'' of $60 million, which will close 4 p.m. 
Eastern Daylight Time, May 8, 2000. Any funds not used in the early 
selection pool will be transferred to the standard selection pool.
    To be eligible for early selection, NOFA responses must have a 
minimum score of 20 points and must be received prior to 4:00 PM, 
Eastern Standard Time on February 21, 2000. NOFA responses not scoring 
a minimum of 20 points, responses received after the deadline for the 
early pool, and responses not selected due to insufficient funds in 
this pool will be retained for the standard selection pool with the 
closing deadline of May 8, 2000. The final deadline for a FY 2000 NOFA 
response will be 4 p.m., Eastern Daylight Time on May 8, 2000. No 
exceptions will be made to the above NOFA closing deadlines unless 
those deadlines are extended by notice published in the Federal 
Register.
    In the event that there are insufficient funds available in either 
selection pool, priorities will be assigned to the NOFA responses on 
the basis of the criteria assigned in 7 CFR 3565.5(b) and in paragraph 
VI., ``Selection Criteria'' of this NOFA. In the event that there are 
insufficient funds available to fully fund the next NOFA proposal in 
the ranking list, the Agency will offer the lender the opportunity to 
accept a loan note guarantee for less than the requested amount. If the 
lender declines, the same offer will be made to the next lender on the 
ranking list, until all the funds are expended. In the event of ties, 
selection will be by lot.
    In the interest of time, lenders have the option of submitting a 
combined NOFA response and application. However, the Agency will not 
give preference to a submission with both the NOFA response and 
application. Lenders who submit complete applications are encouraged, 
but not required, to include a checklist and to have their applications 
indexed and tabbed to facilitate the review process. RHS will base its 
determination of the completeness of the application and the 
eligibility of the lender on the information provided in the 
application.
    Upon notice of selection, lenders with the top ranked NOFA 
responses will be requested to submit the required application fee of 
$2,500.00 and full application if not already submitted. When the 
conditions of the conditional commitment are met, the lender will 
submit the required information with a separate guarantee fee of 1% of 
the total guarantee amount.

IV. Submission Requirements

    All NOFA responses for the GRRHP must meet the requirements of 7 
CFR part 3565 and this NOFA. Incomplete submissions will not be 
considered, and the lender will be notified of the reason the response 
was incomplete.
    Assistance can include both loan guarantees and interest credits. 
For at least 20 percent of the loans made under the program, RHS shall 
provide the borrower with interest credits to reduce the interest rate 
of the loan by a maximum of 250 basis points. However, in no instance 
will the lender's interest rate be reduced to lower than the applicable 
Federal Rate as such term is used in section 42(i)(2)(D) of the 
Internal Revenue Code of 1986.
    RHS will provide interest credit on loans up to $1.5 million. 
Lenders with proposals that could be viable with or without interest 
credits are encouraged

[[Page 71603]]

to submit a NOFA response reflecting financial and market feasibility 
under both funding options. A request in the NOFA response to be 
considered under both options will not affect the rating of the 
response for Interest Credit selection. However, once the interest 
credit funds are exhausted, only those NOFA responses requesting 
consideration under both funding options or the Non-Interest Credit 
option will be further considered.
    NOFA responses requesting interest credit will be ranked and scored 
separately using the same selection criteria for non-interest credit 
responses. In the event that there are insufficient funds available to 
fully fund the next interest credit response in the ranking list, the 
Agency will offer the lender the opportunity to accept a loan note 
guarantee for less than the requested amount. If the lender declines, 
the same offer will be made to the next rated response on the list 
until all the funds are expended. In the event of ties, selection will 
be by lot.

V. Sample NOFA Response

    In order to expedite the review of the applications, RHS suggests 
using the following NOFA response guidelines. The NOFA response should 
be on the lender's letterhead, signed by both the lender and the 
applicant, and be submitted by the lender to the Agency.
    Sample NOFA Response:
    LENDER NAME--Lender organization name.
    LENDER CONTACT NAME--Name of the lender contact for loan.
    MAILING ADDRESS--Complete mailing address for lender.
    PHONE NUMBER--Phone number for lender contact.
    FAX NUMBER--Fax number.
    E-MAIL ADDRESS--E-mail address.
    APPLICANT NAME--Show official name, list any trade name as ``d/b/
a.''
    APPLICANT TAX ID NUMBER--Insert number.
    NEW CONSTRUCTION OR REPAIR/REHAB. OF AT LEAST $15,000/UNIT.--State 
whether the project is new construction or repair/rehab.
    PROJECT LOCATION TOWN--Town in which the project is located.
    PROJECT COUNTY--County in which the project is located.
    PROJECT STATE--State in which the project is located.
    PROJECT ZIP CODE--Project zip code.
    PROJECT CONGRESSIONAL DISTRICT--Congressional District for project 
location.
    EZ/EC--Is the project in EZ/EC community? (Yes or No)
    COLONIA OR TRIBAL LANDS--Is the project in a Colonia or on tribal 
lands?    (Yes or No)
    PRESIDENTIAL DECLARED DISASTER AREA--Is the project in a 
Presidentially declared Disaster Area?    (Yes or No)
    POPULATION--What is the population of the community in which the 
project is located? (Note: Population must be in an eligible rural area 
as defined in HB-1-3565, paragraph 1.6, ``Eligible Rural Area.'')
    MEDIAN INCOME FOR COMMUNITY--Provide median income for the project 
community.
    LOAN AMOUNT--Insert the loan amount.
    PERCENTAGE OF GUARANTEE--Percentage guarantee requested.
    IS A GUARANTEE FOR CONSTRUCTION ADVANCES BEING REQUESTED?--(Yes or 
No) (Note: Agency will guarantee construction advances, only as part of 
a combination construction and permanent loan.)
    TOTAL PROJECT DEVELOPMENT COST--Enter amount for total project.
    TAX CREDITS--Are tax credits to be provided to project?
    LOAN TERM--Provide the loan term. (Note: Term may be up to 40 
years.)
    INTEREST RATE--Provide the interest rate. (Note: Max. rate is 250 
basis points over treasury bond yield. Rate must be fixed rate and 
fully amortizing, i.e., balloon mortgages are not eligible.)
    BASIS POINTS OVER 30 YEAR TREASURY--Insert number.
    OTHER SOURCES OF FUNDS--List all funding sources.
    NUMBER OF UNITS--What is the total number of units in the project?
    BEDROOM MIX--Number of units by number of bedrooms.
    INTEREST CREDIT (IC)--Is interest credit requested for this loan    
(Yes or No)?
    IF ABOVE IS ``YES,'' SHOULD PROPOSAL BE CONSIDERED UNDER NON-IC 
SELECTION, IF IC FUNDS ARE EXHAUSTED?--(Yes or No) (Note: If ``Yes,'' 
proposal must show financial feasibility for NON-IC consideration.)
    RENT--What is the proposed rent structure?
    COST PER UNIT--Total development cost divided by number of units.
    DEBT COVERAGE RATIO--Net Operating Income divided by debt payments.
    LOAN TO VALUE--Guarantee loan divided by value.

VI. Selection Criteria

    NOFA proposals will be reviewed as received. In the event that 
demand exceeds available funds, priorities will be assigned to eligible 
proposals on the basis of the following criteria as described in 7 CFR 
3565.5(b), and points will be assigned as follows:
    (A) Projects located in rural communities with the smallest 
population will receive priority. All proposals will be ranked in order 
of their population. The proposals will be given a point score starting 
with the project located in the area with the lowest population 
receiving 20 points, the next 19 points and so forth, until up to 20 
projects have received points.
    (B) The most needy communities as determined by the median income 
from the most recently available census data. The proposals will be 
given a point score starting with the community having the lowest 
median income receiving 20 points, the next 19 points and so forth 
until up to 20 proposals have received points.
    (C) Partnering and leveraging in order to develop the maximum 
number of housing units and promote partnerships with state and local 
communities, including other partners with similar housing goals. 
Leveraging points will be awarded as follows:

------------------------------------------------------------------------
              Loan to value ratio (percentage %)                 Points
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75-84.........................................................        10
70-74.........................................................        15
69 or less....................................................        20
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    (D) Loans with interest rates less than the maximum allowable 250 
basis points over the 30 Year Treasury Rate will be awarded points as 
follows:

------------------------------------------------------------------------
                         Interest rate                           Points
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250 to 201 basis points, inclusive............................         0
200 to 151 basis points, inclusive............................         5
150 to 100 basis points, inclusive............................        10
99 to 50 basis points, inclusive..............................        15
Less than 50 basis points.....................................        20
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    (E) Preference will be given to proposals having a higher percent 
of 3-5 bedroom units to total units. The proposals will be ranked in 
order of this percent with the proposal with the highest percent 
receiving 20 points, the next 19 points and so forth until up to 20 
projects have received points.
    (F) Proposals to be developed in a colonia, on tribal land, in an 
Empowerment Zone or Enterprise Community, or in a place identified in 
the State consolidated plan or State needs assessment as a high need 
community for multifamily housing (20 points).
    (G) Projects will be ranked by the length of the amortization 
period, with the longest receiving priority as follows:

[[Page 71604]]



------------------------------------------------------------------------
                      Amortization (Yrs.)                        Points
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40............................................................        20
At least 35...................................................        15
At least 30...................................................        10
At least 20...................................................         5
Less than 20..................................................         0
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VII. Additional Information

A. National Environmental Policy Act (NEPA)
    The lender will provide the applicant's completed Form RD 1940-20, 
``Request for Environmental Information,'' available by contacting the 
Rural Development State Environmental Coordinator (SEC) at any RD State 
office and submit it with the NOFA response. A description of any known 
environmental issues that may affect the project must also be included. 
This step is necessary in order for the NOFA response to be complete.
    The Agency's environmental review of the property, as required 
under NEPA and 7 CFR part 1940, subpart G will be initiated as early as 
possible, but no later than the selection of the proposal for further 
processing. This environmental impact review must be completed prior to 
the Agency's issuance of a conditional commitment. The environmental 
review is considered complete when the environmental documents have 
been properly executed, when all applicable public notices have been 
published, the associated public comment periods have expired, and the 
Agency has taken any necessary actions to address the comments 
received.
    Lenders have a responsibility to become familiar with Federal 
environmental requirements so that they can advise applicants and 
reduce the probability of unacceptable NOFA responses being submitted 
to the Agency. Lenders are also expected to cooperate in the collection 
of any environmental data which the Agency determines is necessary and 
in the resolution of potential environmental problems.
B. Surcharges for Guarantee of Construction Advances
    There is no surcharge for guarantee of construction advances for FY 
2000.
C. Maximum Interest Rate
    The maximum allowable interest rate on a loan submitted for a 
guarantee is 250 basis points over the 30-year Treasury Bond Yield as 
published in the Wall Street Journal as of the business day prior to 
the business day the rate is set.
D. Program Fees for FY 2000
    (1) There is an initial guarantee fee of 1% of the total guarantee 
amount which will be due when the loan guarantee is issued. For 
purposes of calculating this fee, the guarantee amount is the product 
of the percentage of the guarantee times the initial principal amount 
of the guaranteed loan.
    (2) There is an annual renewal fee of 0.5% of the guaranteed 
outstanding principal balance charged each year or portion of the year 
that the guarantee is in effect. This fee will be collected 
prospectively on January 1, of the calendar year.
    (3) There is no site assessment and market analysis or preliminary 
feasibility fee in FY 2000.
    (4) There is a non-refundable application fee of $2,500 when the 
application is submitted following proposal selection under the NOFA.
    (5) There is no lender application fee for lender approval in FY 
2000.
    (6) There is a flat fee of $500 when a lender requests RHS to 
extend the term of a guarantee commitment.
    (7) There is a flat fee of $500 when a lender requests RHS to 
reopen a guarantee commitment after the period of the commitment 
lapses.
    (8) There is a flat fee of $1,250 when a lender requests RHS to 
approve the transfer of property and assumption of the loan to an 
eligible applicant.

    Dated: December 10, 1999.
Eileen M. Fitzgerald,
Acting Administrator, Rural Housing Service.
[FR Doc. 99-32958 Filed 12-20-99; 8:45 am]
BILLING CODE 3410-XV-U