[Federal Register Volume 69, Number 25 (Friday, February 6, 2004)]
[Notices]
[Pages 5826-5831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2595]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Notice for Requests for Proposals for Guaranteed Loans Under the
Section 538 Guaranteed Rural Rental Housing Program (GRRHP) for Fiscal
Year 2004
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
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SUMMARY: This is a request for proposals for guaranteed loans under the
section 538 Guaranteed Rural Rental Housing Program (GRRHP) pursuant to
7 CFR 3565.4 for Fiscal Year (FY) 2004 subject to the availability of
funding. FY 2003 funding for the section 538 program was $99.350
million. This notice is being issued prior to passage of a final
appropriations bill to allow applicants sufficient time to leverage
financing and submit proposals in the form of ``RESPONSES'', and give
the Agency maximum time to process applications within the current
fiscal year. A Notice of Funding Availability will be published
announcing the funding level for the GRRHP for FY 2004 once an
appropriation act has been enacted. The commitment of program dollars
will be made to applicants of selected responses that have fulfilled
the necessary requirements for obligation, to the extent an
appropriation act provides funding for GRRHP for FY 2004. Expenses
incurred in developing applications will be at the applicant's risk.
The following paragraphs outline the timeframes, eligibility
requirements, lender responsibilities, and the overall response and
application processes.
The GRRHP operates under 7 CFR part 3565. The GRRHP Origination and
Servicing Handbook (HB-1-3565) is available to provide lenders and the
general public with guidance on program administration. HB-1-3565,
which contains a copy of 7 CFR part 3565 in Appendix 1, can be found at
the Rural Development Instructions Web site at http://rdinit.usda.gov/regs.
Eligible lenders are invited to submit responses for the
development of affordable rental housing to serve rural America. The
Rural Housing Service (RHS) will review responses submitted by eligible
lenders, on the lender's letterhead, and signed by both the prospective
borrower and lender. Although a complete application is not required in
response to this notice, eligible lenders may submit a complete
application concurrently with the response. The submission of a
complete application will not affect the scoring process.
DATES: Program dollars will be allocated through a continuous selection
process to the extent and when an appropriation act provides funding
for GRRHP for FY 2004. The RHS will review all responses on an on-going
basis through May 14, 2004. Those responses that are selected that
subsequently submit complete applications and meet all Federal
environmental requirements will receive commitments to the extent an
appropriation act provides funding for
[[Page 5827]]
GRRHP for FY 2004 until all funds are expended. If any FY 2004 funds
have not been exhausted by May 14, 2004, the Agency will continue
receiving and reviewing responses until all funds are expended. A
notice will be published in the Federal Register when all funds are
committed for FY 2004.
Eligible lenders intending to mail a response or application must
provide sufficient time to permit delivery to the submission address on
or before the closing deadline date. Acceptance by a U.S. Post Office
or private mailer does not constitute delivery. Postage due responses
and applications will not be accepted.
FOR FURTHER INFORMATION CONTACT: Arlene Nunes, Senior Loan Specialist,
Guaranteed Loans, Multi-Family Housing Processing Division, U.S.
Department of Agriculture, South Agriculture Building, Room 1271, STOP
0781, 1400 Independence Avenue, SW., Washington, DC 20250-0781. E-mail:
[email protected]. Telephone: (202) 401-2307. 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.
Eligiblity of Prior Year Selected NOFA Responses: NOFA responses
selected in prior years, but not yet funded, are eligible for FY 2004
program dollars subject to the availability of funds. Prior year NOFA
responses selected by RHS for submission of a complete application may
submit an application for competition for FY 2004 funding without
completing a FY 2004 response. All qualified applications will be
funded on a first come basis until all program funds are exhausted. RHS
will commit and obligate funds only to lenders that submit a complete
application, including all Federal environmental documents required by
7 CFR part 1940, subpart G, Form RD 3565-1, and the $2,500 application
fee.
General Program Information
Program Purpose: The section 538 Guaranteed Rural Rental Housing
Program is designed to increase the supply of affordable multi-family
housing through partnerships between the RHS and major lending sources,
as well as state and local housing finance agencies and bond issuers.
Responses Must be Submitted By: The Agency will only accept
responses from GRRHP eligible or approved lenders as described in 7 CFR
3565.102 and 3565.103 respectively.
Qualifying Properties: Qualifying properties include new
construction for multi-family housing units or acquisition of existing
structures with minimum per unit rehabilitation expenditure
requirements in accordance with 7 CFR 3565.252. The portion of
guaranteed funds for acquisition with rehabilitation is limited to 25
percent of the program authority.
Eligible Financing Sources: Any form of Federal, State, and
conventional sources of financing can be used in conjunction with the
loan guarantee, including Home Investment Partnership Program (HOME)
grant funds, tax exempt bonds, and low income housing tax credits.
Maximum Guarantee: The maximum guarantee for a permanent loan will
be 90 percent of the unpaid balance and interest on the loan. The
maximum guarantee on a construction loan will be 90 percent of the work
in place, which have credit enhancements, or up to 90 percent of the
amount actually advanced by the lender, whichever is less.
Reimbursement of Losses: Any losses will be split on a pro-rata
basis between the lender and the RHS from the first dollar lost.
Interest Rate: RHS will accept the best rate negotiated between the
lender and prospective borrower. The lender is not required to provide
the interest rate in the response unless interest credit assistance is
requested for the project. Priority points will be given for interest
rates less than 250 basis points above the monthly Applicable Federal
Rate (AFR), on the day of closing, when interest credit assistance is
requested. In all cases, interest rates must be fixed over the term of
the loan.
Interest Credit: RHS will award interest credit to at least 20
percent of the loans made under the program. If 20 percent of the loans
have not received interest credit by May 14, 2004, then RHS will award
interest credit to those loans that initially requested interest credit
and have the highest interest credit priority score until at least 20%
of the loans have received interest credit. Requests for interest
credit must be made in the response. Lenders are not permitted to make
requests for interest credit after the selection process has taken
place.
Due to limited funding and in order to distribute interest credit
assistance as broadly as possible, the Agency has decided to limit the
interest credit to $1.5 million per project. For example, if an
eligible request were made for interest credit on a loan of $2.5
million, up to $1.5 million of the loan would receive interest credit.
Interest credit is not available for construction loans. Interest
credit is only available for permanent loans. Lenders with projects
that are viable with or without interest credit are encouraged to
submit a response reflecting financial and market feasibility under
both funding options. Responses requesting consideration under both
options will not affect interest credit selection. However, once the
interest credit funds are exhausted, only those 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 responsibility of RHS
to target and give priority to rural areas most in need, responses
requesting interest credit must score a minimum of 65 points under the
criteria established in this notice. In the event of ties, selection
between responses will be by lot.
Surcharges for Guarantee of Construction Advances: There is no
surcharge for the guarantee of construction advances for FY 2004.
Program Fees for FY 2004: The following information stipulates the
program fees.
(1) There is an initial guarantee fee of 1 percent of the total
guarantee amount, which will be due when the loan guarantee is issued.
In the case of a combination construction and permanent loan guarantee,
the 1 percent initial fee will be paid when the construction loan note
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 percent of the
outstanding principal and interest of the loan. This fee will be
collected annually on January 1st of each calendar year.
(3) There is no fee for site assessment and market analysis or
preliminary feasibility in FY 2004.
(4) There is a non-refundable application fee of $2,500 when the
application is submitted.
(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
extend 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 prospective borrower.
(8) There is no lender application fee for lender approval in FY
2004.
Eligible Lenders: An eligible lender for the section 538 GRRHP as
required by 7 CFR 3565.102 must be a licensed business entity or
Housing Finance Agency (HFA) in good standing in the
[[Page 5828]]
state or states where it conducts business. Lender eligibility
requirements are contained in 7 CFR 3565.102. Below is a list of some
of the eligible lender criteria under 7 CFR 3565.102:
(1) Licensed business entity that meets the qualifications and has
the approval of the Secretary of Housing and Urban Development (HUD) to
make multi-family housing loans that are insured under the National
Housing Act. A complete list of HUD approved lenders can be found on
the HUD Web site at http://www.hud.gov.
(2) A licensed business entity that meets the qualifications and
has the approval of the Freddie Mac or Fannie Mae corporations to make
multi-family housing loans that are sold to the same corporations. A
complete list of Freddie Mac approved lenders can be found on the
Freddie Mac Web site at http://www.freddiemac.com. Fannie Mae approved
lenders are found at http://www.fanniemae.com.
(3) A state or local HFA with a top-tier rating from Moody's or
Standard & Poors, or member of the Federal Home Loan Bank system, and
the demonstrated ability to underwrite, originate, process, close,
service, manage, and dispose of multi-family housing loans in a prudent
manner.
(4) Be a GRRHP approved lender, defined as an entity with an
executed multi-family housing Lender's Agreement with RHS.
(5) Lenders that can demonstrate the capacity to underwrite,
originate, process, close, service, manage, and dispose of multi-family
housing loans in a prudent manner. In order to be approved the lender
will have to have an acceptable level of financial soundness as
determined by a lender rating service. The submission of materials
demonstrating capacity will be required if the lender's response is
selected.
Lenders who are otherwise ineligible may become eligible if they
maintain a correspondent relationship with an eligible lender that does
have the capacity to underwrite, originate, process, close, service,
manage, and dispose of multi-family housing loans in a prudent manner.
In this case, the eligible lender must submit the response and
application. All contractual and legal documentation will be signed
between RHS and the lender that submitted the response and application.
RHS Lender Approval Application: Lenders whose responses are
selected will be notified by the RHS to submit a request for RHS lender
approval application within 30 days of notification. Lenders that have
received RHS lender approval in the past and are in good standing do
not need to reapply for RHS lender approval.
Submission of Documentation for RHS Lender Approval: All lenders
that have not yet received RHS lender approval must submit a complete
application for RHS lender approval to the Director of the Multi-Family
Housing Processing Division at the address provided in the ``NOTICE
SUBMISSION ADDRESS'' section of this notice. As RHS does not have a
formal application form, a complete application will consist of a cover
letter requesting RHS lender approval and the following documentation:
(1) Request for RHS lender approval on the lender's letterhead;
(2) Lenders who are HUD, Freddie Mac or Fannie Mae multi-family
approved lenders are required to show evidence of this status, such as
a copy of a letter designating the distinction;
(3) The lender's Loan Origination, Loan Servicing and Portfolio
Management Handbooks. These handbooks should detail the lender's
policies and procedures on loan origination through termination for
multi-family loans;
(4) Portfolio performance data;
(5) Copies of standard documents that will be used in processing
GRRHP loans;
(6) Resumes and qualifications of key personnel that will be
involved in the GRRHP;
(7) Identification of standards and processes that deviate from
those outlined in the GRRHP Origination and Servicing Handbook (HB-1-
3565) found at http://rdinit.usda.gov/regs;
(8) A copy of the most recent audited financial statements;
(9) Lender specific information including: (a) Legal name and
address, (b) list of principal officers and their responsibilities, (c)
certification that the officers and principals of the lender have not
been debarred or suspended from Federal programs, (d) Form AD 1047, (e)
certification that the lender is not in default or delinquent on any
Federal debt or loan, or possess an outstanding finding of deficiency
in a Federal housing program, and (f) certification of the lender's
credit rating; and
(10) Documentation on bonding and insurance.
RHS Lender Approval Requirements: Lenders who request RHS lender
approval must meet the standards stipulated in the 7 CFR 3565.103.
Lender Responsibilities: Lenders will be responsible for the full
range of loan origination, underwriting, management, servicing,
compliance issues and property disposition activities associated with
their projects. The lender will be expected to provide guidance to the
prospective borrower on the RHS requirements during the application
phase. Once the guarantee is issued, the lender is expected to service
each loan it underwrites or contract these services to another capable
entity.
Discussion of Notice
Content of Notice Responses: All responses require lender
information and project specific data. Incomplete responses will not be
considered for funding. Lenders will be notified of incomplete
responses. Complete responses are to include a signed cover letter from
the lender on the lender's letterhead and the following information:
(1) Lender certification--The lender must certify that the lender
will make a loan to the prospective borrower for the proposed project,
under specified terms and conditions subject to the issuance of the RHS
guarantee. Lender certification must be on the lender's letterhead and
signed by both the lender and the prospective borrower.
(2) Project specific data--The lender must submit the project
specific data below on the lender's letterhead, signed by both the
lender and the prospective borrower.
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Lender Name...................... Insert the lender's name.
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Lender Tax ID .......... Insert lender's tax ID .
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Lender Contact Name.............. Name of the lender contact for loan
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Mailing Address.................. Lender's complete mailing address
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Phone .................. Phone for lender contact.
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[[Page 5829]]
Fax .................... Insert lender's fax .
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E-mail Address................... Insert lender contact e-mail address.
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Borrower Name and Organization State whether borrower is a Limited
Type. Partnership, Corporation, Indian
Tribe, etc.
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Tax Classification Type.......... State whether borrower is for profit,
not for profit, etc.
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Borrower Tax ID ........ Insert borrower's tax ID .
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Borrower Address, including Insert borrower's address and county.
County.
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Borrower Phone ......... Insert borrower's phone .
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Principal or Key Member for the Insert name and title.
Borrower.
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Borrower Information and Attach relevant information.
Statement of Housing Development
Experience.
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New Construction or Acquisition State whether the project is new
or Repair or Rehabilitation. construction or acquisition or
repair or rehabilitation.
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Project Location Town or City.... Town or city in which the project is
located.
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Project County................... County in which the project is
located.
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Project State.................... State in which the project is
located.
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Project Zip Code................. Insert zip code.
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Project Congressional District... Congressional District for project
location.
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Project Name..................... Insert project name.
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Project Type..................... Family, senior (all residents over
55), or mixed.
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Property Description and Proposed Provide as an attachment.
Development Schedule.
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Total Project Development Cost... Enter amount for total project.
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of Units............... Insert the of units in the
project.
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Cost Per Unit.................... Total development cost divided by
of units.
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Bedroom Mix...................... of units by of
bedrooms.
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Rent............................. Proposed rent structure.
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Median Income for Community...... Provide median income for the
community.
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Evidence of Site Control......... Attach relevant information.
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Description of Any Environmental Attach relevant information.
Issues.
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Loan Amount...................... Insert the loan amount.
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Interest Credit (IC)............. Is interest credit requested for this
loan? (Yes or No)
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Interest Rate (for interest Lenders seeking interest credit must
credit requests only). provide the interest rate. Priority
points will be awarded to projects
requesting interest credit for
interest rates less than 250 basis
points over the monthly applicable
federal rate on the day of closing.
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If Above Is Yes, Should Proposal If Yes, proposal must show financial
Be Considered Under Non-IC feasibility for Non-IC
Selection if IC Funds Are consideration.
Exhausted?.
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Borrower's Proposed Equity....... Insert amount.
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Tax Credits...................... Will the project be allocated tax
credits? How much? What is the
estimated value of the tax credits
awarded?
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Other Sources of Funds........... List all funding sources.
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Loan to Value.................... Guaranteed loan divided by value of
project.
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Debt Coverage Ratio.............. Net Operating Income divided by debt
service payments.
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[[Page 5830]]
Percentage of Guarantee.......... Percentage guarantee requested.
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Collateral....................... Attach relevant information.
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Empowerment Zone (EZ) or Yes or No. Is the project in a
Enterprise Community (EC). recognized EZ or EC?
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Colonia or Tribal Land........... Is the project in a Colonia or on an
Indian Reservation? (Yes or No)
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Population....................... Must be within the 20,000 population
limit set for the program.
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Is a Guarantee for Construction State yes or no. The Agency will
Being Requested? Are Advances guarantee construction advances,
Being Requested?. only as part of a combination
construction and permanent loan.
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Loan Term........................ Up to a 40-year amortized loan.
Balloon mortgages with a minimum 25-
year term are eligible.
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Scoring of Priority Criteria for Selection of Projects with
Interest Credit Requests: RHS will allocate points to projects with
requests for interest credit. Projects with no interest credit request
will be reviewed for eligibility and viability on a continuous basis
and without any priority selection criteria.
The seven priority criteria for projects with requests for interest
credit are listed below.
Priority 1--Projects located in eligible rural communities with the
lowest populations will receive the highest points.
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Population size Points
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0-5,000 people................................................ 15
5,001-10,000 people........................................... 10
10,001-15,000 people.......................................... 5
15,001-20,000 people.......................................... 0
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Priority 2--The RHS will award points for projects with 3-5 bedroom
units as follows:
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Number of 3-5 bedroom units Points
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more than 15.................................................. 20
10-15......................................................... 15
5-9........................................................... 10
1-4........................................................... 5
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Priority 3--The most needy communities as determined by the median
income from the most recent census data will receive points. The RHS
will allocate points to projects located in communities having the
lowest median income. Points for median income will be awarded as
follows:
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Median income (dollars) Points
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Less than $35,000............................................. 20
$35,001-$45,000............................................... 15
$45,001-$55,000............................................... 10
$55,001-$65,000............................................... 5
More than $65,000............................................. 0
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Priority 4--Projects that demonstrate partnering and leveraging in
order to develop the maximum number of units and promote partnerships
with state and local communities will also receive points. Points will
awarded as follows:
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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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Priority 5--The development of projects on Tribal Lands, or in an
Empowerment Zone or Enterprise Community will receive points. The RHS
will attribute 20 points to projects that are developed in any of the
locations described in this priority.
Priority 6--The development of projects in a Colonia or in a place
identified in the State's Consolidated Plan or State Needs Assessment
as a high need community for multi-family housing will receive points.
The RHS will attribute 20 points to projects that are developed in any
of the locations described in this priority.
Priority 7--RHS will award points for interest rates above the
applicable Federal rate at the time of loan closing as follows:
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Interest rate Points
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More than 250 basis points.................................... (20)
200 to 250 basis points, inclusive............................ 5
100 to 199 basis points, inclusive............................ 10
0 to 99 basis points, inclusive............................... 15
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Notice Submission Address: Eligible lenders will send responses to:
Director, Multi-Family Housing Processing Division, Rural Housing
Service, U.S. Department of Agriculture, Room 1263, STOP 0781, 1400
Independence Avenue, SW., Washington, DC 20250-0781. Responses for
participation in the program must be identified as ``Section 538
Guaranteed Rural Rental Housing Program'' on the envelope.
Notifications: Responses will be reviewed for completeness and
eligibility. The RHS will notify those lenders whose responses are
selected via letter. The RHS will request lenders without RHS lender
approval to apply for RHS lender approval within 30 days of receipt of
the notification of selection. For information regarding RHS lender
approval, please refer to the section entitled ``Submission of
Documentation for RHS Lender Approval'' in this notice. Requests for
RHS lender approval should be sent to the person and address listed in
the ``Notice Submission Address'' section in this notice.
Lenders will also be invited to submit a complete application and
the required application fee of $2,500 to the Rural Development State
Office where the project is located.
Submission of GRRHP Applications: Notification letters will
instruct lenders to contact the Rural Development State Office
immediately following notification of selection to schedule required
agency reviews. Rural Development State Office addresses can be found
on the Rural Development Web site, http://www.rurdev.usda.gov, under
``State Offices''.
Rural Development State Office staff will work with lenders in the
development of an application package. Required documentation for a
complete application package is stated in Chapter 3 of HB-1-3565.
The deadline for the submission of a complete application and
application fee is 90 days from the date of notification of response
selection. If the application and fee are not submitted within 90 days
from the date of notification, the selection is subject to
cancellation, thereby allowing another response that is ready to
proceed with processing to be selected.
Obligation of Program Funds: The RHS will only obligate funds to
projects that meet the requirements for obligation, including
undergoing a satisfactory environmental review in accordance with the
National Environmental Protection Act (NEPA) and lenders who have
submitted the $2,500 application fee and completed
[[Page 5831]]
Form RD 3565-1 for the selected project.
Conditional Commitment: Once required documents for obligation and
the application fee are received and all NEPA requirements have been
met, the Rural Development State Office will issue a conditional
commitment, which stipulates the conditions that must be fulfilled
before the issuance of a guarantee, in accordance with 7 CFR 3565.303.
Issuance of Guarantee: The RHS will issue a guarantee to the lender
for a project in accordance with 7 CFR 3565.303. No guarantee can be
issued without a complete application, review of appropriate
certifications, satisfactory assessment of the appropriate level of
environmental review, and the completion of any conditional
requirements.
Dated: February 2, 2004.
Arthur A. Garcia,
Administrator, Rural Housing Service.
[FR Doc. 04-2595 Filed 2-5-04; 8:45 am]
BILLING CODE 3410-XV-P