[Federal Register Volume 71, Number 53 (Monday, March 20, 2006)]
[Notices]
[Pages 13954-13958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-3963]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice of Funding Availability (NOFA): Section 515 Multi-Family 
Housing Preservation Revolving Loan Fund (PRLF) Demonstration Program 
for Fiscal Year 2006

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

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SUMMARY: The Rural Housing Service, (RHS), an Agency under USDA Rural 
Development, announces the availability of funds and the timeframe to 
submit applications for loans to private non-profit organizations, or 
such non-profit organizations' affiliate loan funds and State and local 
housing finance agencies, to carry out a housing demonstration program 
to provide revolving loans for the preservation and revitalization of 
low-income multi-family housing. Housing that is assisted by this 
demonstration program must be financed by USDA Rural Development 
through its multi-family housing loan program under section 515 of the 
Housing Act of 1949. This demonstration program will be achieved 
through loans made to intermediaries that establish programs for the 
purpose of providing loans to ultimate recipients for the preservation 
and revitalization of section 515 multi-family housing as affordable 
housing.

DATES: The deadline for receipt of all applications in response to this 
NOFA is 5 p.m., Eastern Time, June 19, 2006. The application closing 
deadline is firm as to date and hour. The Agency will not consider any 
application that is received after the closing deadline. Applicants 
intending to mail applications must provide sufficient time to permit 
delivery on or before the closing deadline. Acceptance by a post office 
or private mailer does not constitute delivery. Facsimile (FAX), and 
postage due applications will not be accepted.

FOR FURTHER INFORMATION CONTACT: Henry Searcy, Jr., Senior Loan 
Specialist, Multi-Family Housing Processing Division, STOP 0781 (Room 
1263-S), or Bonnie Edwards-Jackson, Senior Loan Specialist, Multi-
Family Housing Processing Division, STOP 0781 (Room 1239-S), U.S. 
Department of Agriculture, USDA Rural Development, 1400 Independence 
Ave., SW., Washington, DC 20250-0781 or by telephone at (202) 720-1753 
or (202) 690-0759, or via e-mail at [email protected] or 
[email protected]. (Please note the phone numbers are not 
toll free numbers.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    Under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., OMB must 
approve all ``collections of information'' by USDA Rural Development. 
The Act defines ``collection of information'' as a requirement for 
``answers to * * * identical reporting or recordkeeping requirements 
imposed on ten or more persons * * *.'' (44 U.S.C. 3502(3)(A)) Because 
this NOFA will receive less than 10 respondents, the Paperwork 
Reduction Act does not apply.

Equal Opportunity and Nondiscrimination Requirements

    (1) In accordance with the Fair Housing Act, title VI of the Civil 
Rights Act of 1964, the Equal Credit Opportunity Act, the Age 
Discrimination Act of 1975, Executive Order 12898, the Americans with 
Disabilities Act, and section 504 of the Rehabilitation Act of 1973, 
neither the intermediary nor the Agency will discriminate against any 
employee, proposed intermediary or proposed ultimate recipient on the 
basis of sex, marital status, race, color, religion, national origin, 
age, physical or mental disability (provided the proposed intermediary 
or proposed ultimate recipient has the capacity to contract), because 
all or part of the proposed intermediary's or proposed ultimate 
recipient's income is derived from public assistance of any kind, or 
because the proposed intermediary or proposed ultimate recipient has in 
good faith exercised any right under the Consumer Credit Protection 
Act, with respect to any aspect of a credit transaction anytime Agency 
loan funds are involved.
    (2) The policies and regulations contained in 7 CFR part 1901, 
subpart E apply to this program.
    (3) The Agency Administrator will assure that equal opportunity and 
nondiscrimination requirements are met in accordance with the Fair 
Housing Act, title VI of the Civil Rights Act of 1964, the Equal Credit 
Opportunity Act, the Age Discrimination Act of 1975, Executive Order 
12898, the Americans with Disabilities Act, and section 504 of the 
Rehabilitation Act of 1973.
    (4) All housing must meet the accessibility requirements found at 7 
CFR 3560.60(d).

Programs Affected

    This program is listed in the Catalog of Federal Domestic 
Assistance under Number 10.415.

Overview

    The Agriculture, Rural Development, Food and Drug Administration, 
and Related Agencies Appropriations Act, 2006 (Division A of Pub. L. 
109-97) provides funding for, and authorizes USDA Rural Development to, 
establish a revolving loan fund demonstration program for the 
preservation and revitalization of the section 515 multi-family housing 
portfolio. The section 515 multi-family housing program is authorized 
by section 515 of the Housing Act of 1949 (42 U.S.C. 1485) and provides 
USDA Rural Development the authority to make loans for low income 
multi-family housing and related facilities.

Program Administration

I. Funding Opportunities Description

    This NOFA requests applications from eligible applicants for loans 
to establish and operate revolving loan funds for the preservation of 
low-income multi-family housing within the Agency's section 515 multi-
family housing portfolio. Agency regulations for the section 515 multi-
family housing program are published at 7 CFR part 3560.
    Housing that is constructed or repaired must meet the Agency design 
and construction standards and the development standards contained in 7 
CFR part 1924, subparts A and C, respectively. Once constructed, 
section 515 multi-family housing must be managed in accordance with the 
program's management regulation, 7 CFR part 3560, subpart C. Tenant 
eligibility is limited to persons who qualify as a very low-, low-, or 
moderate-income household or who are eligible under the requirements 
established to qualify for housing benefits provided by sources other 
than the Agency, such as U.S. Department of Housing and Urban 
Development section 8 assistance or Low Income Housing Tax Credit 
Assistance, when a tenant receives such housing benefits. Additional 
tenant eligibility requirements are contained in 7 CFR 3560.152.

[[Page 13955]]

II. Award Information

    Public Law 109-97 (November 10, 2005) made funding available for 
loans to private non-profit organizations, or such non-profit 
organizations' affiliate loan funds and State and local housing finance 
agencies, to carry out a housing demonstration program to provide 
revolving loans for the preservation of the section 515 multi-family 
housing portfolio. The total amount of funding available for this 
program is $6,364,414.02. As required by this statute, loans to 
intermediaries under this demonstration program shall have an interest 
rate of no more than one percent, and the Secretary of Agriculture may 
defer the interest and principal payment to USDA Rural Development for 
up to three years during the first three years of the loan. The term of 
such loans shall not exceed 30 years. Payments will be made on an 
annual basis. Funding priority will be given to entities with equal or 
greater matching funds, including housing tax credits for rural housing 
assistance and to entities with experience in the administration of 
revolving loan funds and the preservation of multi-family housing.

III. Eligibility Information

Applicant Eligibility

    (1) Eligibility requirements--Intermediary.
    (a) The types of entities which may become intermediaries are 
private nonprofit organizations or such non-profit organizations' 
affiliate loan funds and State and local housing finance agencies.
    (b) The intermediary must have:
    (i) The legal authority necessary for carrying out the proposed 
loan purposes and for obtaining, giving security for, and repaying the 
proposed loan.
    (ii) A proven record of successfully assisting low-income multi-
family housing projects. Such record will include recent experience in 
loan making and servicing loans that are similar in nature to those 
proposed for the PRLF demonstration program and a delinquency and loss 
rate acceptable to the Agency.
    (iii) The services of a staff with loan making and servicing 
expertise acceptable to the Agency.
    (iv) Capitalization acceptable to the Agency.
    (c) No loans will be extended to an intermediary unless:
    (i) There is adequate assurance of repayment of the loan based on 
the fiscal and managerial capabilities of the proposed intermediary.
    (ii) The amount of the loan, together with other funds available, 
is adequate to assure completion of the project or achieve the purposes 
for which the loan is made.
    (iii) At least 51 percent of the outstanding interest or membership 
in any nonpublic body intermediary must be composed of citizens of the 
United States or individuals who reside in the United States after 
being legally admitted for permanent residence.
    (iv) The Intermediary's Debt Service Coverage Ratio (DSCR) must be 
greater than 1.1 for the fiscal year immediately prior to the year of 
application and a minimum DSCR of 1 for the fiscal year two years prior 
and the fiscal year three years prior to application.
    (v) The Intermediary's prior calendar year audit indicates an 
unqualified audited opinion as a result of the audit.
    (d) Intermediaries, and the principals of the intermediaries, must 
not be suspended, debarred, or excluded based on the ``List of Parties 
Excluded from Federal Procurement and Nonprocurement Programs.''
    (e) Intermediaries and their principals must not be delinquent on 
Federal debt or be a Federal judgment debtor.
    (2) Eligibility requirements--Ultimate recipients.
    (a) To be eligible to receive loans from the PRLF, ultimate 
recipients must:
    (i) Currently have a USDA Rural Development section 515 loan for 
the property to be assisted by the PRLF demonstration program, or be a 
transferee of such a loan before receiving any benefits from the PRLF 
demonstration program.
    (ii) Be unable to provide the necessary housing from its own 
resources and, except for State or local public agencies and Indian 
tribes, be unable to obtain the necessary credit from other sources 
upon terms and conditions the applicant could reasonably be expected to 
fulfill.
    (iii) Along with its principal officers (including their immediate 
family), hold no legal or financial interest or influence in the 
intermediary. Also, the intermediary and its principal officers 
(including immediate family) must hold no legal or financial interest 
or influence in the ultimate recipient.
    (iv) Be in compliance with all Agency program requirements at 7 CFR 
part 3560 or have an Agency approved workout plan in place which will 
correct a non-compliance status.
    (b) Any delinquent debt to the Federal Government, by the ultimate 
recipient or any of its principals, shall cause the proposed ultimate 
recipient to be ineligible to receive a loan from the PRLF. PRLF loan 
funds may not be used to satisfy the delinquency.
    (c) The ultimate recipient or any of its principals may not be a 
Federal judgment debtor.

IV. Application and Submission Information

Application Requirements

    The application must contain the following:
    (1) A summary page, that is double-spaced and not in narrative 
form, that lists the following items:
    (a) Applicant's name.
    (b) Applicant's Taxpayer Identification Number.
    (c) Applicant's address.
    (d) Applicant's telephone number.
    (e) Name of applicant's contact person, telephone number, and 
address.
    (f) Amount of loan requested.
    (2) Form RD 4274-1, ``Application for Loan (Intermediary Relending 
Program).''
    (3) A written work plan and other evidence the Agency requires to 
demonstrate the feasibility of the intermediary's program to meet the 
objectives of this demonstration program. The plan must, at a minimum:
    (a) Document the intermediary's ability to administer this 
demonstration program in accordance with the provisions of this NOFA. 
In order to adequately demonstrate the ability to administer the 
program, the intermediary must provide a complete listing of all 
personnel responsible for administering this program along with a 
statement of their qualifications and experience. The personnel may be 
either members or employees of the intermediary's organization or 
contract personnel hired for this purpose. If the personnel are to be 
contracted for, the contract between the intermediary and the entity 
providing such service will be submitted for Agency review, and the 
terms of the contract and its duration must be sufficient to adequately 
service the Agency loan through to its ultimate conclusion. If the 
Agency determines the personnel lack the necessary expertise to 
administer the program, the loan request will not be approved;
    (b) Document the intermediary's ability to commit financial 
resources under the control of the intermediary to the establishment of 
the demonstration program. This should include a statement of the 
sources of non-Agency funds for administration of the intermediary's 
operations and financial assistance for projects;
    (c) Demonstrate a need for loan funds. At a minimum, the 
intermediary must either (1) identify a sufficient number of

[[Page 13956]]

proposed and known ultimate recipients to justify Agency funding of its 
loan request; or (2) include well-developed targeting criteria for 
ultimate recipients consistent with the intermediary's mission and 
strategy for this demonstration program, along with supporting 
statistical or narrative evidence that such prospective recipients 
exist in sufficient numbers to justify Agency funding of the loan 
request;
    (d) Include a list of proposed fees and other charges it will 
assess the ultimate recipients;
    (e) Demonstrate to Agency satisfaction that the intermediary has 
secured commitments of significant financial support from public 
agencies and private organizations;
    (f) Include the intermediary's plan for relending the loan funds. 
The plan must be of sufficient detail to provide the Agency with a 
complete understanding of what the intermediary will accomplish by 
lending the funds to the ultimate recipient and the complete mechanics 
of how the funds will get from the intermediary to the ultimate 
recipient. The service area, eligibility criteria, loan purposes, fees, 
rates, terms, collateral requirements, limits, priorities, application 
process, method of disposition of the funds to the ultimate recipient, 
monitoring of the ultimate recipient's accomplishments, and reporting 
requirements by the ultimate recipient's management must at least be 
addressed by the intermediary's relending plan;
    (g) Provide a set of goals, strategies, and anticipated outcomes 
for the intermediary's program. Outcomes should be expressed in 
quantitative or observable terms such as low-income housing complexes 
rehabilitated or low-income housing units preserved, and should relate 
to the purpose of this demonstration program; and
    (h) Provide specific information as to whether and how the 
intermediary will ensure that technical assistance is made available to 
ultimate recipients and potential ultimate recipients. Describe the 
qualifications of the technical assistance providers, the nature of 
technical assistance that will be available, and expected and committed 
sources of funding for technical assistance. If other than the 
intermediary itself, describe the organizations providing such 
assistance and any arrangements between such organizations and the 
intermediary.
    (4) A pro forma balance sheet at start-up and projected balance 
sheets for at least 3 additional years; financial statements for the 
last 3 years (or from inception of the operations of the intermediary 
if less than 3 years); and projected cash flow and earnings statements 
for at least 3 years supported by a list of assumptions showing the 
basis for the projections. The projected earnings statement and balance 
sheet must include one set of projections which takes into 
consideration a full annual installment on the PRLF loan.
    (5) Form RD 400-4, ``Assurance Agreement.''
    (6) Complete organizational documents, including evidence of 
authority to conduct the proposed activities.
    (7) Latest audit report.
    (8) Form RD 1910-11, ``Applicant Certification Federal Collection 
Policies for Consumer or Commercial Debts.''
    (9) Form AD-1047, ``Certification Regarding Debarment, Suspension, 
and other Responsibility Matters--Primary Covered Transactions.''
    (10) Exhibit A-1 of RD Instruction 1940-Q, ``Certification for 
Contracts, Grants, and Loans.''
    (11) Tax Returns for three years prior to application, and a 
current financial statement.
    (12) A separate one-page information sheet listing each of the 
``Application Scoring Criteria'' contained in this Notice, followed by 
the page numbers of all relevant material and documentation that is 
contained in the proposal that supports these criteria. Applicants are 
also encouraged, but not required, to include a checklist of all of the 
selection criteria as set out in more detail under Section V. 
Application Review Information in this NOFA and to have their 
application indexed and tabbed to facilitate the review process.
    Submission address. Applications should be submitted to USDA Rural 
Housing Service; Attention: Henry Searcy, Jr., Senior Loan Specialist, 
Multi-Family Housing Processing Division STOP 0781 (Room 1263-S), or 
Bonnie Edwards-Jackson, Senior Loan Specialist, Multi-Family Housing 
Processing Division, STOP 0781 (Room 1239-S), U.S. Department of 
Agriculture, USDA Rural Development, 1400 Independence Ave., SW., 
Washington, DC 20250-0781 or by telephone at (202) 720-1753 or (202) 
690-0759 or via e-mail at [email protected] or 
[email protected]. (Please note the phone numbers are not 
toll free numbers.)

V. Application Review Information

    All applications will be evaluated by a loan committee. The loan 
committee will make recommendations to the Agency Administrator 
concerning eligibility determinations and for the selection of 
applications based on the selection criteria contained in this NOFA and 
the availability of funds. The Administrator will inform applicants of 
the selection status of their application within 30 days of the loan 
application closing date of the NOFA.

Selection Criteria

    Selection criteria points will be allowed only for factors 
indicated by well documented, reasonable plans which, in the opinion of 
the Agency, provide assurance that the items have a high probability of 
being accomplished. The points awarded will be as specified in 
paragraphs (1) through (4) of this section. In each case, the 
intermediary's work plan must provide documentation that the selection 
criteria have been met in order to qualify for selection criteria 
points. If an application does not fit one of the categories listed, it 
receives no points for that paragraph.
    (1) Other funds. Points allowed under this paragraph are to be 
based on documented successful history or written evidence acceptable 
to the Agency that the other funds are available.
    (a) The intermediary will obtain non-Agency loan or grant funds or 
provide housing tax credits (measured in dollars) to pay part of the 
cost of the ultimate recipients' project cost. The Intermediary shall 
pledge as collateral its PRLF Revolving Fund, including its portfolio 
of investments derived from the proceeds of other funds and this loan 
award.
    Points for the amount of funds from other sources are as follows:
    (i) At least 10% but less than 25% of the total project cost--5 
points;
    (ii) At least 25% but less than 50% of the total project cost--10 
points; or
    (iii) 50% or more of the total project cost--15 points.
    (b) The intermediary will provide loans to the ultimate recipient 
from its own funds (not loan or grant) to pay part of the ultimate 
recipients' project cost. The amount of the intermediary's own funds 
will average:
    (i) At least 10% but less than 25% of the total project costs--5 
points;
    (ii) At least 25% but less than 50% of total project costs--10 
points; or
    (iii) 50% or more of total project costs--15 points.
    (2) Intermediary pledged security funds. The Intermediary will 
pledge security funds not derived from the Agency and will be 
considered security funds. The pledged security funds will be placed in 
a separate account from the PRLF loan account and will remain in this 
account until the PRLF revolves as described in the loan agreement. The

[[Page 13957]]

Intermediary shall contribute the pledged security funds into a 
separate bank account or accounts according to their work plan. These 
pledged security funds are to be placed into an interest bearing 
counter-signature account until the PRLF revolves. No other funds shall 
be commingled with such money.
    The amount of the pledged security funds contributed to the PRLF 
will equal the following percentage of the Agency PRLF loan:
    (a) At least 5% but less than 15%--15 points;
    (b) At least 15% but less than 25%--30 points; or
    (c) 25% or more--50 points.
    (3) Experience. The intermediary has actual experience in the 
administration of revolving loan funds and the preservation of multi-
family housing, with a successful record, for the following number of 
full years. Applicants must have actual experience in both the 
administration of revolving loan funds and the preservation of multi-
family housing in order to qualify for points under this selection 
criteria. If the number of years of experience differs between the two 
types of experience, the type with the least number of years will be 
used for this selection criteria.
    (a) At least 1 but less than 3 years--5 points;
    (b) At least 3 but less than 5 years--10 points;
    (c) At least 5 but less than 10 years--20 points; or
    (d) 10 or more years--30 points.
    (4) Administrative. The Administrator may assign up to 35 
additional points to an application to account for the following items 
not adequately covered by the other priority criteria set out in this 
section, including: The amount of funds requested in relation to the 
amount of need; a particularly successful affordable housing 
development record; a service area with no other PRLF coverage; a 
service area with severe affordable housing problems; a service area 
with emergency conditions caused by a natural disaster; an innovative 
proposal; the quality of the proposed program; a work plan that is in 
accord with a strategic plan, particularly a plan prepared as part of a 
request for an Empowerment Zone/Enterprise Community designation; or 
excellent utilization of an existing revolving loan fund program. The 
Administrator will document his reasons for the points allocated.

VI. Other Administrative Requirements

    (1) The following policies and regulations apply to loans to 
intermediaries made in response to this NOFA:
    (a) The PRLF intermediary may draw down up to 25 percent of USDA 
PRLF loan funds at loan closing. Thereafter, the intermediary may draw 
down, under this award, only such funds as are necessary to cover a 30-
day period in implementing its approved work plan. Advances will be 
requested by the intermediary in writing. The date of such draw down 
shall constitute the date the funds are advanced under the PRLF Loan 
Agreement for purposes of computing interest payments.
    (b) PRLF intermediaries will be required to provide the Agency with 
the following reports:
    (i) An annual audit;
    (A) The dates of the audit report period need not coincide with 
other reports on the PRLF. Audit reports shall be due 90 days following 
the audit period. Audits must cover all of the intermediary's 
activities. Audits will be performed by an independent certified public 
accountant. An acceptable audit will be performed in accordance with 
Generally Accepted Government Auditing Standards and include such tests 
of the accounting records as the auditor considers necessary in order 
to express an opinion on the financial condition of the intermediary.
    (B) It is not intended that audits required by this program be 
separate from audits performed in accordance with State and local laws 
or for other purposes. To the extent feasible, the audit work for this 
program should be done in connection with these other audits. 
Intermediaries covered by the Office of Management and Budget Circular 
A-133 should submit audits made in accordance with that circulars.
    (ii) Quarterly or semiannual Performance Reports (due 30 days after 
the end of the period);
    (A) Performance Reports will be required quarterly during the first 
year after loan closing. Thereafter, reports will be required 
semiannually. Also, the Agency may resume requiring quarterly reports 
if the intermediary becomes delinquent in repayment of its loan or 
otherwise fails to fully comply with the provisions of its work plan or 
Loan Agreement, or the Agency determines that the intermediary's PRLF 
is not adequately protected by the current financial status and paying 
capacity of the ultimate recipients.
    (B) These reports shall contain information only on the PRLF loan. 
If other funds are included, the PRLF portion shall be segregated from 
the others. If the intermediary has more than one PRLF loan from the 
Agency, a separate report shall be made for each PRLF loan.
    (C) The reports will include, on a form to be provided by the 
Agency, information on the intermediary's lending activity, income and 
expenses, financial condition and a summary of names and 
characteristics of the ultimate recipients the intermediary has 
financed.
    (iii) Annual proposed budget for the following year; and
    (iv) Other reports as the Agency may require from time to time 
regarding the conditions of the loan.
    (c) USDA Rural Development may consider, on a case by case basis, 
subordinating its security interest on the property to the lien of the 
intermediary so that USDA Rural Development has a junior lien interest 
when an independent appraisal documents that USDA Rural Development 
will continue to be fully secured.
    (d) The term of the loan to the ultimate recipient may not exceed 
the remaining term of the USDA Rural Development loan.
    (e) When loans are made to the ultimate recipients for preservation 
purposes, Restrictive Use Provisions must be incorporated into the loan 
documents, as outlined in 7 CFR 3560.662.
    (f) The policies and regulations contained in 7 CFR part 1901, 
subpart F regarding historical and archaeological properties apply to 
all loans funded under this NOFA.
    (g) The policies and regulations contained in 7 CFR part 1940, 
subpart G regarding environmental assessments apply to all loans funded 
under this NOFA. Loans to intermediaries under this program will be 
considered a Categorical Exclusion under the National Environmental 
Policy Act, requiring the completion of Form RD 1940-22, 
``Environmental Checklist for Categorical Exclusions,'' by the Agency.
    (h) These loans are subject to the provisions of Executive Order 
12372 that require intergovernmental consultation with state and local 
officials. USDA Rural Development conducts intergovernmental 
consultations for each loan in a manner delineated in RD Instruction 
1940-J which is available in any Rural Development office.
    (2) The intermediary agrees to the following:
    (a) To obtain the written Agency approval, before the first lending 
of PRLF funds to an ultimate recipient, of:
    (i) All forms to be used for relending purposes, including 
application forms, loan agreements, promissory notes, and security 
instruments; and

[[Page 13958]]

    (ii) Intermediary's policy with regard to the amount and form of 
security to be required.
    (b) To obtain written approval from the Agency before making any 
significant changes in forms, security policy, or the work plan. The 
Agency may approve changes in forms, security policy, or work plans at 
any time upon a written request from the intermediary and determination 
by the Agency that the change will not jeopardize repayment of the loan 
or violate any requirement of this NOFA or other Agency regulations. 
The intermediary must comply with the work plan approved by the Agency 
so long as any portion of the intermediary's PRLF loan is outstanding;
    (c) To secure the indebtedness by pledging the PRLF, including its 
portfolio of investments derived from the proceeds of the loan award, 
and other rights and interests as the Agency may require;
    (d) To return, as an extra payment on the loan any funds that have 
not been used in accordance with the intermediary's work plan by a date 
2 years from the date of the loan agreement. The intermediary 
acknowledges that the Agency may cancel the approval of any funds not 
yet delivered to the intermediary if revolving loan funds have not been 
used in accordance with the intermediary's work plan within the 2 year 
period. The Agency, at its sole discretion, may allow the intermediary 
additional time to use the revolving loan funds by not more than 3 
additional years. If any revolving loan funds have not been used by 5 
years from the date of the loan agreement, the approval will be 
canceled for any funds that have not been delivered to the intermediary 
and the intermediary will return, as an extra payment on the loan, any 
revolving loan funds it has received and not used in accordance with 
the work plan. In accordance with the Agency approved promissory note, 
regular loan payments will be based on the amount of funds actually 
drawn by the intermediary.
    (3) The intermediary will be required to enter into an Agency 
approved loan agreement and promissory note. The promissory note will 
have a term not to exceed 30 years, bear interest at no more than one 
percent per annum, and provide for annual payments, provided that 
interest and principal due to the Government during the first three 
years of the loan may be deferred.
    (4) Loans made to the PRLF ultimate recipient must meet the intent 
of providing decent, safe, and sanitary rural housing and be consistent 
with the requirements of title V of the Housing Act of 1949.
    (5) When an intermediary proposes to make a loan from the PRLF to 
an ultimate recipient, Agency concurrence is required prior to final 
approval of the loan. A request for Agency concurrence in approval of a 
proposed loan to an ultimate recipient must include:
    (a) Certification by the intermediary that:
    (i) The proposed ultimate recipient is eligible for the loan;
    (ii) The proposed loan is for eligible purposes;
    (iii) The proposed loan complies with all applicable statutes and 
regulations; and
    (iv) Prior to closing the loan to the ultimate recipient, the 
intermediary and its principal officers (including immediate family) 
hold no legal or financial interest or influence in the ultimate 
recipient, and the ultimate recipient and its principal officers 
(including immediate family) hold no legal or financial interest or 
influence in the intermediary.
    (b) Copies of sufficient material from the ultimate recipient's 
application and the intermediary's related files, to allow the Agency 
to determine the:
    (i) Name and address of the ultimate recipient;
    (ii) Loan purposes;
    (iii) Interest rate and term;
    (iv) Location, nature, and scope of the project being financed;
    (v) Other funding included in the project; and
    (vi) Nature and lien priority of the collateral.
    (vii) Environmental impacts of this action. This will include an 
original Form RD 1940-20, ``Request for Environmental Information,'' 
completed and signed by the intermediary. Attached to this form will be 
a statement stipulating the age of the building to be rehabilitated and 
a completed and signed FEMA Form 81-93, ``Standard Flood Hazard 
Determination.'' If the age of the building is over 50 years old or if 
the building is either on or eligible for inclusion in the National 
Register of Historic Places, then the intermediary will immediately 
contact the Agency to begin section 106 consultation with the State 
Historic Preservation Officer. If the building is located within a 100-
year flood plain, then the intermediary will immediately contact the 
Agency to analyze any effects as outlined in 7 CFR part 1940, subpart 
G, Exhibit C. The intermediary will assist the Agency in any additional 
requirements necessary to complete the environmental review.
    (c) Such other information as the Agency may request on specific 
cases.
    (6) Upon receipt of a request for concurrence in a loan to an 
ultimate recipient the Agency will:
    (a) Review the material submitted by the intermediary for 
consistency with the Agency's preservation and revitalization 
principals which include the following;
    (i) There is a continuing need for the property in the community as 
affordable housing.
    (ii) When the transaction is complete, the property will be owned 
and controlled by eligible section 515 borrowers.
    (iii) The transaction will address the physical needs of the 
property.
    (iv) Existing tenants will not be displaced because of increased 
post transaction rents.
    (v) Post transaction basic rents will not exceed comparable market 
rents.
    (vi) Any equity loan amount will be supported by a market value 
appraisal.
    (b) Issue a letter concurring in the loan when all requirements 
have been met or notify the intermediary in writing of the reasons for 
denial when the Agency determines it is unable to concur in the loan.

Funding Restrictions

    Loans made to the PRLF intermediary under this demonstration 
program may not exceed $2,125,000 and may be limited by geographic area 
so that multiple loan recipients are not providing similar services to 
the same service areas.
    Loans made to the PRLF ultimate recipient must meet the intent of 
providing decent, safe, and sanitary rural housing and be consistent 
with the requirements of title V of the Housing Act of 1949.

VII. Appeal Process

    All adverse determination regarding applicant eligibility and the 
awarding of points as part of the selection process are appealable. 
Instructions on the appeal process will be provided at the time the 
applicant is notified of the decision.

    Dated: March 14, 2006.
Russell T. Davis,
Administrator, Rural Housing Service.
 [FR Doc. E6-3963 Filed 3-17-06; 8:45 am]
BILLING CODE 3410-XV-P