[Federal Register Volume 65, Number 248 (Tuesday, December 26, 2000)]
[Notices]
[Pages 81650-81656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32624]


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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 IX.(D) of this NOFA, are invited to submit NOFA 
responses 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 Notice describes the overall NOFA response and 
application process, including the selection and identification of any 
priorities for selection of NOFA responses, and the process by which 
the Rural Housing Service (RHS or Agency) will score and rank the NOFA 
responses. Information will also be included concerning the submission 
requirements. Lenders may submit a complete application concurrently 
with the NOFA response.

DATES: The Fiscal Year (FY) 2001 program dollars will be allocated 
through a continuous selection process. On a monthly basis starting 
with the third Thursday of January (January 18, 2001) and each third 
Thursday of the month through August 16, 2001, or until all funds are 
expended, the agency will review all NOFA responses that have been 
received monthly.
    Lenders will submit responses that are ready to be processed to a 
complete application once the NOFA selection is made. NOFA responses 
will be reviewed for completeness and eligibility, and if so deemed, 
lenders will be requested to submit a full application and the required 
application fee of $2,500.00 within 90 days of selection, if not 
already submitted.
    Applications will be sent to the Rural Development State office in 
which the project is located. If an application is not submitted within 
90 days from the date of the letter notifying the lender of the NOFA 
selection, the selection is subject to cancellation, thereby allowing 
another NOFA response that is ready to proceed with processing to be 
selected. A completed application may be submitted with the NOFA 
response. However, a completed application and application fee must be 
submitted by the August 16, 2001 NOFA response date. The deadline for 
receipt of NOFA responses is 4:00 PM, Eastern Standard or Daylight 
Time, whichever is then applicable, each third Thursday of the month. 
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 U. S. Post Office or private mailer does not constitute 
delivery. Postage due NOFA responses or applications will not be 
accepted. NOFA responses received after the deadlines previously 
mentioned and before August 16, 2001, will be held for the next month's 
review if funds remain. The NOFA submission deadline dates are as 
follows:
     Thursday, January 18, 2001, 4:00 P.M. EDT/EST
     Thursday, February 15, 2001, 4:00 P.M. EDT/EST
     Thursday, March 15, 2001, 4:00 P.M. EDT/EST
     Thursday, April 19, 2001, 4:00 P.M. EDT/EST
     Thursday, May 17, 2001, 4:00 P.M. EDT/EST
     Thursday, June 21, 2001, 4:00 P.M. EDT/EST
     Thursday, July 19, 2001, 4:00 P.M. EDT/EST
     Thursday, August 16, 2001, 4:00 P.M. EDT/EST
    When all funds have been exhausted, a notice will be placed in the 
Federal Register to notify the public.

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 affordable multi-family 
housing through partnerships between Rural Housing Service (RHS) and 
major lending sources, as well as state and local housing finance 
agencies and bond issuers. Tax exempt financing can be used as a source 
of capital for the guaranteed loan. Qualified lenders will be 
authorized to originate, underwrite, and close loans for multi-family 
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

[[Page 81651]]

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. The maximum guarantee for a permanent loan will be 90 
percent of the unpaid principal and interest of the loan, and in the 
case of a construction loan, the maximum guarantee will be 90 percent 
of the work in place, or up to 90 percent of the amounts actually 
advanced by the lender, whichever is less. 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) 2001 budget authority provides approximately $100 
million in program dollars. All FY 2001 funds will be held in the 
National office. There are no set-asides for the GRRHP for FY 2001.

III. The NOFA Response Process

    Lenders should respond to the section 538 NOFA only when they have 
completed a preliminary underwriting analysis and are willing to make 
the proposed loan, subject to, among other conditions, 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 found in 
chapter 4 of HB-1-3565.
    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 of the items listed in 
paragraph 4.9, of HB-1-3565 and to have their applications indexed and 
tabbed to facilitate the review process.
    NOFA responses will be reviewed for completeness and eligibility, 
and if so deemed, the lender will be asked to submit a full application 
and the required application fee of $2,500.00. The application and fee 
must be submitted within 90 days of the date the lender receives the 
selection letter, unless the Agency has agreed to an extension because 
the applicant is waiting for a determination of their application for 
tax credits, or other sources of project funds, from an allocating 
governmental or quasi-governmental Agency and the applicant is 
scheduled to be notified after the initial 90 day time frame has 
expired. Applications and fees will be sent to the Rural Development 
State office in which the project is located. If an application is not 
submitted within 90 days from the date of the letter notifying the 
lender of the NOFA selection, the selection is subject to cancellation, 
thereby allowing another NOFA response that is ready to proceed with 
processing to be selected.
    To submit a complete application, the lender will work with the 
Agency to complete the appropriate level of environmental review in 
accordance with 7 CFR part 1940, subpart G, prior to the issuance of 
the Conditional Commitment, loan approval, or obligation of funds, 
whichever occurs first. In addition, the Agency will determine that the 
Civil Rights Impact Analysis Certification and all other Federal 
requirements, including intergovernmental review (RD Instruction 1940-
J) and flood insurance requirements (7 CFR part 1806 subpart B), both 
available in any Rural Development office, have been met prior to 
taking any official action on an application for a loan guarantee.

IV. Interest Credit

    Assistance can include both loan guarantees and interest credits. 
For at least 20 percent of the loans made under the program, RHS will 
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 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.
    Due to limited interest credit funds and the Agency's 
responsibility to target and give priority to rural areas most in need, 
NOFA responses requesting to receive interest credit must score a 
minimum threshold of 70 points. The NOFA responses will be scored on 
the basis of the criteria as described in 7 CFR 3565.5(b) and as 
published in paragraph VIII of this NOFA. In the event that requests 
exceed available funds, the interest credit NOFA responses will be 
ranked and scored separately using the same selection criteria as 
described above. In the event of ties, selection between proposals will 
be by lot.

V. NOFA Response Requirements

    NOFA response requirements are subject to change. It is important 
to note that all responses must be submitted in accordance with the 
terms of this NOFA, which are different from the NOFA issued in FY 
2000.
    Selections will be based on the lender's review of project 
feasibility and merit.
    At a minimum, the information contained in the following sample 
NOFA Response must be submitted by the lender, on lender's letterhead, 
and be signed by both the lender and the applicant. Incomplete 
responses will not be considered, and the lender will be notified of 
the reason that the response was incomplete. The required NOFA Response 
information is listed as follows:

    Sample NOFA Response:
BILLING CODE 3410-XY-J

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VI. Lender Submission Requirements

    (A) 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 IX.(D) of this NOFA will be submitted.
    (B) Lender Certification: A commitment letter or certification by 
the lender that the lender will make a loan to the borrower for the 
proposed project, under specified terms and conditions subject 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 will be submitted by the lender to the Agency.

VII. Competitive Criteria

    To expedite the review of the NOFA responses, RHS suggests using 
the sample NOFA response checklist found in paragraph V. of this NOFA 
to ensure that all the submission requirements and competitive criteria 
of this NOFA have been addressed.

VIII. Selection Criteria

    NOFA responses will be reviewed as received on a first come first 
serve basis on the third Thursday of each month. 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 as published in this NOFA. In the event of ties, 
selection between proposals will be by lot. 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 10 Year Treasury Bond Yield will be awarded 
points as follows (fractional basis points will be rounded to the 
nearest whole basis point):

[[Page 81656]]



------------------------------------------------------------------------
                         Interest rate                            Points
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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
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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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IX. Additional Information

(A). Maximum Interest Rate
    The maximum allowable interest rate on a loan submitted for a 
guarantee is 250 basis points over the 10-year Treasury Bond Yield as 
published in the Wall Street Journal as of the business day prior to 
the business day the yield is set.
(B). Surcharges for Guarantee of Construction Advances
    There is no surcharge for guarantee of construction advances for FY 
2001.
(C). Program Fees for FY 2001
    (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 fee for site assessment and market analysis or 
preliminary feasibility in FY 2001.
    (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.
    (8) There is no lender application fee for lender approval in FY 
2001.
(D). Eligible Lenders for section 538 Approval
    The application for lender approval must be made at the same time 
as the 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:
    (1) Meet the qualifications of, and be approved by, the Secretary 
of Housing and Urban Development to make multi-family housing loans 
that are to be insured under the National Housing Act;
    (2) Meet the qualifications and be approved by Fannie Mae or 
Freddie Mac to make multi-family housing loans that are to be sold to 
such corporations;
    (3) Be a state or local Housing Finance Authority, 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;
    (4) Be a lender who meets the requirements for Agency approval 
contained in 7 CFR part 3565 subpart C and has a demonstrated ability 
to underwrite, originate, process, close, service, manage, and dispose 
of multifamily housing loans in a prudent manner; or
    (5) Be a lender who meets the following requirements in addition to 
the other requirements of 7 CFR part 3565 subparts C and I:
    (a) Have qualified staff to perform multi-family housing servicing 
and asset management;
    (b) Have facilities and systems that support servicing and asset 
management functions; and
    (c) Have documented procedures for carrying out servicing and asset 
management responsibilities.

    Dated: December 15, 2000.
James C. Kearney,
Administrator, Rural Housing Service
[FR Doc. 00-32624 Filed 12-22-00; 8:45 am]
BILLING CODE 3410-XV-U