[Federal Register Volume 72, Number 65 (Thursday, April 5, 2007)]
[Proposed Rules]
[Pages 16730-16731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-6287]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 72, No. 65 / Thursday, April 5, 2007 / 
Proposed Rules  

[[Page 16730]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3560

RIN 0575-AC66


Reserve Account

AGENCY: Rural Housing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: Through this action, the Rural Housing Service (RHS) is 
proposing to amend its regulation to change the requirements of the 
Reserve Account for the Sections 514/516 Farm Labor Housing program and 
the Section 515 Rural Rental Housing (RRH) program. The intended effect 
of this action is to address reserve account requirements of new 
construction rental housing funded under Sections 514/516 and Section 
515 and does not affect reserve accounts for existing portfolios.

DATES: Written or e-mail comments must be received on or before June 4, 
2007.

ADDRESSES: You may submit comments to this rule by any of the following 
methods:
     Agency Web site: http://www. rurdev..usda.gov/regs. Follow 
the instructions for submitting comments on the Web site.
     e-mail: [email protected]. Include the RIN number 
(0575-AC66) and the word ``MFH'' in the subject line of the message.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Submit written comments via the U.S. Postal Service 
to the Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, STOP 0742, 1400 Independence Ave. SW., 
Washington, DC 20250-0742.
     Hand Delivery/Courier: Submit written comments via Federal 
Express Mail or another mail courier service requiring a street address 
to the Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, 300 7th Street, SW., 7th Floor, Suite 701, 
Washington DC 20024.
    All written comments will be available for public inspection during 
regular hours at the 300 7th Street, SW., address listed above.

FOR FURTHER INFORMATION CONTACT: Tammy S. Daniels, Senior Loan 
Specialist, Multi-Family Housing Processing Division, Rural Housing 
Service, U.S. Department of Agriculture, STOP 0781, 1400 Independence 
Ave., SW., Washington, DC 20250-0781. Telephone: 202-720-0021 (this is 
not a toll-free number); e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Classification

    This proposed rule has been determined to be not significant and 
was reviewed by the Office of Management and Budget (OMB) under 
Executive Order 12866.

Civil Justice Reform

    This proposed rule has been reviewed under E. O. 12988, Civil 
Justice Reform. If this proposed rule is adopted: (1) Unless otherwise 
specifically provided, all state and local laws that are in conflict 
with this rule will be preempted; (2) no retroactive effect will be 
given to this rule except as specifically prescribed in the rule; and 
(3) administrative proceedings of the National Appeals Division of the 
Department of Agriculture (7 CFR part 11) must be exhausted before 
bringing suit.

Regulatory Flexibility Act

    The proposed rule has been reviewed with regard to the requirements 
of the Regulatory Flexibility Act (5 U.S.C. 601-612). The undersigned 
has determined and certified by signature on this document that this 
rule will not have a significant economic impact on a substantial 
number of small entities. This rulemaking action does not involve a new 
or expanded program nor does it require any more action on the part of 
a small business than required of a large entity.

Paperwork Reduction Act

    There are no new reporting and recordkeeping requirements 
associated with this rule.

E-Government Act Compliance

    RHS is committed to complying with the E-Government Act, by 
promoting the use of the Internet and other information technologies in 
order to provide increased opportunities for citizen access to 
Government information, services, and other purposes.

Unfunded Mandate Reform Act (UMRA)

    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for state, local and tribal 
governments or the private sector. Therefore, this rule is not subject 
to the requirements of Sections 202 and 205 of the UMRA.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1940, 
subpart G, ``Environmental Program.'' RHS determined that the proposed 
action does not constitute a major Federal action significantly 
affecting the quality of the environment. Therefore in accordance with 
the National Environmental Policy Act of 1969, Pub. L. 91-190, an 
Environmental Impact Statement is not required.

Programs Affected

    The programs affected by this regulation are listed in the Catalog 
of Federal Domestic Assistance under numbers 10.405--Farm Labor Housing 
Loans and Grants; 10.415--Rural Rental Housing Loans; and 10.427--Rural 
Rental Assistance Payments.

Federalism

    For the reasons discussed above, this proposed rule does not have 
significant Federalism implications that warrant the preparation of a 
Federalism assessment under Executive Order 13132.

Intergovernmental Consultation

    These loans are subject to the provisions of E.O. 12372 which 
require intergovernmental consultation with state and local officials. 
RHS conducts intergovernmental consultations for each loan in a manner 
delineated in 7 CFR part 1940, subpart J (available in any Rural 
Development office and on the Internet at http://www.rurdev.usda.gov).

[[Page 16731]]

Background Information

    A life-cycle cost analysis that meets Rural Development approval 
will be prepared by the project architect. The life cycle cost analysis 
will be used to determine the expected usable life of a building 
component and furnishing and to determine which building components or 
furnishings are the most cost efficient over the life to the building. 
The reserve account deposit level will be maintained through steady 
deposits to meet the needs of the project as they become due. 
Adjustments may be made at five or ten year intervals, either through 
an updated Comprehensive Needs Assessment or a part of the original 
plan. The requirement for a life cycle cost analysis will be used for 
new construction rental housing funded under Sections 514/516 and 
Section 515 of the Housing Act of 1949. The new requirement is intended 
to assure quality construction as well as long term viability of 
complexes. Reserve levels will be based on life cycle costs in order to 
ensure necessary resources are available when needed to replace 
essential building components. Existing loan agreement forms will have 
an addendum that is properly executed by the borrower establishing the 
terms of the life cycle analysis and reserve requirement. The current 
interim final rule requires an annual minimum deposit of 1 percent of 
the total development cost be put in a reserve account. This regulatory 
change is proposed to assure that we have the reserve accounts properly 
sized to meet the capital needs anticipated at the time of 
construction. This change will only affect reserve account requirements 
of new construction rental housing funded under Sections 515 RRH or 
Sections 514/516 Farm Labor Housing. Due to the recent increase in the 
use of third party money to leverage Rural Development funding, the 
Agency has found that the arbitrary nature of the existing reserve 
account funding formula sometimes causes the reserve account to be set 
artificially high. While the objective of the proposed change is to 
primarily produce an accurately measured reserve account funding 
requirement, the change may actually lead to reduced funding levels in 
MFH new construction projects that utilize leveraged financing.

List of Subjects in 7 CFR 3560

    Accounting, Accounting servicing, Administrative practice and 
procedure, Aged, Farm labor housing, Foreclosure, Grant programs--
Housing and community development, Government acquired property, 
Government property management, Handicapped, Insurance, Loan programs--
Agriculture, Loan programs--Housing and community development, Low and 
moderate income housing, Low and moderate income housing--Rental, 
Migrant labor, Mortgages, Nonprofit organizations, Public housing, Rent 
subsidies, Reporting and recordkeeping requirements, Rural areas, Rural 
housing, Sale of government acquired property, Surplus government 
property.
    Therefore, chapter XXXV, Title 7 of the Code of Federal 
Regulations, is proposed to be amended as follows:

PART 3560--DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS

    1. The authority citation for Part 3560 continues to read as 
follows:

    Authority: 42 U.S.C. 1480.

Subpart B--Direct Loan and Grant Origination

    2. Section 3560.65 is revised to read as follows:


Sec.  3560.65  Reserve account.

    To meet major capital expenses of a housing project, applicants 
must establish and fund a reserve account that meets requirements of 
Sec.  3560.306. The applicant must agree to make monthly contributions 
to the reserve account pursuant to a reserve account analysis developed 
by Rural Development which sets forth how the reserve account funds 
will meet the capital needs of the property over a 20-year period. The 
reserve account analysis is based on either a capital needs assessment 
or life cycle cost analysis, provided to Rural Development by the 
applicant.

     Dated: March 27, 2007.
Russell T. Davis,
Administrator, Rural Housing Service.
 [FR Doc. E7-6287 Filed 4-4-07; 8:45 am]
BILLING CODE 3410-XV-P