[Federal Register Volume 65, Number 178 (Wednesday, September 13, 2000)]
[Notices]
[Pages 55217-55220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23504]


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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 and submission requirements and deadlines to submit 
proposals in the form of ``NOFA responses'' for the section 538 
Guaranteed Rural Rental Housing Program (GRRHP). Eligible lenders, as 
defined in paragraph VII(D) of this NOFA are invited to submit NOFA 
proposals for the development of affordable rental housing to serve 
rural America. Only responses submitted by eligible lenders, on the 
lender's letterhead, and signed by both the applicant and the lender 
will be reviewed.
    This document describes the overall application process, including 
the selection and identification of any priorities for selection of 
proposed applications, and the process by which the Rural Housing 
Service (RHS or Agency) will score and rank the proposals. Information 
will also be included concerning the submission requirements. Lenders 
may submit their application concurrently with their NOFA response.

DATES: The deadline for receipt of NOFA responses is 4:00 PM, Eastern 
Daylight Savings Time on September 20, 2000. 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), Cash 
on Delivery (COD), and postage due NOFA responses or applications will 
not be accepted. NOFA responses will not be accepted after the 
deadlines previously mentioned, unless that date and time is extended 
by another Notice published in the Federal Register.

ADDRESSES: Responses for participation in the program must be 
identified as ``Section 538 Guaranteed Rural Rental Housing Program'' 
on the envelope and 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, Deputy Director, 
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 is operated under 7 CFR part 3565. 
The Guaranteed Rural Rental Housing Program Origination and Servicing 
Handbook (HB-1-3565) is available to provide lenders and the general 
public with the ``how to'' administrative guidance needed to administer 
the program. HB-1-3565, which contains a copy of 7 CFR part 3565 in 
Appendix 1, may be found on the Rural Development Regulation web site 
internet address of ``http://rdinit.usda.gov/regs''or copies 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

[[Page 55218]]

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, when the acquisition 
results in the creation of new affordable housing units. 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

    This NOFA announces the availability of approximately $10.44 
million in Non-Interest Credit section 538 program dollars for FY 2000. 
There are no Interest Credit funds remaining for FY 2000. Responses 
requesting interest credit assistance will not be considered in this 
NOFA. The Fiscal Year (FY) 2000 budget authority provided approximately 
$100 million in program dollars. Approximately $89.56 million dollars 
in NOFA awards have been awarded to date and all interest credit funds 
have been expended. 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

    Lenders should respond to section 538 NOFA's only when they have 
completed a preliminary underwriting analysis and are willing to make 
the proposed loan subject only to the issuance of a guarantee by the 
Agency. Unfortunately, the Agency has found that in some instances, 
this has not been the case. In an effort to reduce the number of 
unacceptable NOFA responses and judiciously commit program dollars to 
projects that demonstrate a readiness to proceed, the Agency will 
strictly adhere to the submission requirements.
    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 containing both a NOFA response and an 
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.
    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

    NOFA submission requirements are subject to change and it is 
important to note that all responses must be submitted in accordance 
with the terms of this NOFA which are different from the last published 
NOFA.
    Incomplete submissions will not be considered, and the lender will 
be notified of the reason the response was incomplete. The required 
information is listed as follows:
A. The Project
    (1) A brief description of the proposed location of the project, 
including town, county, state, and congressional district.
    (2) A description of the property and improvements, including lot 
size, number of units and bids, building type, type of construction, 
etc., including preliminary drawings, if available.
    (3) The proposed development schedule.
    (4) Total project development cost.
    (5) The proposed rent structure and area median income--(HUD 
published area median incomes can be found online at http://www.huduser.org).
    (6) Evidence of site control by the proposed borrower or a purchase 
option.
    (7) Description of any environmental issues that may affect the 
project.
    (8) Amount of loan to be guaranteed.
B. The Proposed Financing
    (1) Proposed loan amount and the proposed borrower's equity.
    (2) Estimated development budget (total and cost per unit), and the 
proposed sources and uses of funds. This information should include all 
proposed financing sources--the amount, type, rates and terms of loans, 
tax credits, or grant funds. Letters of application and commitment 
letters should be included, if available.
    (3) Estimated loan-to-value ratio for guaranteed loan.
    (4) Proposed Agency guarantee percentage for guaranteed loan (under 
no condition can the percentage exceed 90 percent of the loan amount).
    (5) Collateral--all security, in addition to the real property, 
proposed to secure the loan.
C. The Proposed Borrower
    (1) The name of the borrower and the type of ownership entity--list 
the general partners if a limited partnership, officers if a 
corporation or members of an LLC.
    (2) Borrower's contact name, mailing address, phone and fax 
numbers, and e-mail address.
    (3) Statement of borrower's housing development experience.
D. Lender Eligibility and Approval Status
    Evidence that the lender is either an approved lender for the 
purposes of the GRRHP or that the lender is eligible to apply for 
approved lender status as defined in paragraph VII(D) of this NOFA. The 
application for lender approval must be made at the same time as the 
first loan application.
E. Competitive Criteria
    Information that shows how the proposal is responsive to the 
selection criteria specified in the NOFA. (See paragraph V of this 
NOFA).
F. Lender Certification
    A commitment letter or certification by the lender that will make a 
loan to the borrower for the proposed project, under specified terms 
and conditions subject only to the issuance of a guarantee by the 
Agency. The lender certification must be on the lender's letterhead, 
and be signed by both the lender and the applicant, and be submitted by 
the lender to the Agency.

V. Competitive Criteria

    In order to expedite the review of the applications, RHS suggests 
using the following sample NOFA response checklist to ensure that you 
have addressed all the submission requirements and competitive criteria 
of this NOFA.

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[GRAPHIC] [TIFF OMITTED] TN13SE00.044

BILLING CODE 3410-XV-C

VI. Selection Criteria

    NOFA proposals will be reviewed as received. Priorities will be 
assigned to eligible proposals on the basis of the following criteria 
as contained 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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More than 75...................................................       10
70-75..........................................................       15
Less than 70...................................................       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 (fractional basis points will be rounded to the nearest whole 
basis point):

------------------------------------------------------------------------
                         Interest rate                            Points
------------------------------------------------------------------------
More than 200 basis points.....................................        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 
percentage of 3-5 bedroom units to total units. The proposals will be 
ranked in order of this percentage 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:

------------------------------------------------------------------------
                      Amortization (Yrs.)                         Points
------------------------------------------------------------------------
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. 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.
B. Surcharges for Guarantee of Construction Advances
    There is no surcharge for guarantee of construction advances for FY 
2000.
C. Program Fees for FY 2000
    (1) There is an initial guarantee fee for 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 fee for site assessment and market analysis for 
preliminary feasibility 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 a flat fee of $500 when a lender requests RHS to 
extend the term of a guarantee commitment.
    (6) There is a flat fee of $500 when a lender requests RHS to 
reopen a guarantee commitment after the period of the commitment 
lapses.
    (7) 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.
D. Eligible Lenders for Section 538 Approval
    The application for lender approval must be made at the same time 
as the

[[Page 55220]]

first loan application. The first loan application means: (1) The first 
application for a loan guarantee for a new loan; or (2) The first 
application before ownership of any GRRHP loan is transferred to that 
lender. A lender must be approved before a loan guarantee is issued or 
a guaranteed loan is acquired.
    An eligible lender must be a licensed business entity or Housing 
Finance Authority (HFA) in good standing in the state or states where 
it conducts business; be approved by the Agency; and meet at least one 
of the criteria contained below. Lenders who are not eligible may 
participate in the program if they maintain a correspondent 
relationship with a lender who is eligible. An eligible lender must:
    (a) Meet the qualifications of, and be approved by, the Secretary 
of Housing and Urban Development to make multifamily housing loans that 
are to be insured under the National Housing Act;
    (b) Meet the qualifications and be approved by Fannie Mae or 
Freddie Mac to make multifamily housing loans that are to be sold to 
such corporations;
    (c) Be a state or local HFA, or a member of the Federal Home Loan 
Bank system, with a demonstrated ability to underwrite, originate, 
process, close, service, manage, and dispose of multifamily housing 
loans in a prudent manner;
    (d) Be a lender who meets the requirements for Agency approval 
contained in 7 CFR part 3565 subpart B and has a demonstrated ability 
to underwrite, originate, process, close, service, manage, and dispose 
of multifamily housing loans in a prudent manner; or
    (e) Be a lender who meets the following requirements in addition to 
the other requirements of 7 CFR part 3565 subpart B and of subpart I:
    (1) Have qualified staff to perform multifamily housing servicing 
and asset management;
    (2) Have facilities and systems that support servicing and asset 
management functions; and
    (3) Have documented procedures for carrying out servicing and asset 
management responsibilities.

    Dated: September 7, 2000.
James C. Kearney,
Administrator, Rural Housing Service.
[FR Doc. 00-23504 Filed 9-12-00; 8:45 am]
BILLING CODE 3410-XV-U