[Federal Register Volume 72, Number 111 (Monday, June 11, 2007)]
[Notices]
[Pages 32070-32071]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-11169]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Section 538 Multi-Family Housing Guaranteed Rural Rental Housing 
Program (GRRHP) Demonstration Program for Fiscal Year 2007

AGENCY: Rural Housing Service, USDA.

ACTION: Notice of Funds Availability.

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SUMMARY: Through this Notice of Funds Availability (NOFA), the Agency 
announces the implementation of a demonstration program under the 
section 538 Guaranteed Rural Rental Housing Program (GRRHP) pursuant to 
7 CFR 3565.4 for Fiscal Year (FY) 2007 and 7 CFR 3565.17 Demonstration 
programs. The Demonstration Program's purpose is to test the viability 
and efficacy of the concept of a continuous loan note guarantee through 
the construction and permanent loan financing phases of a project. 
Those applications that meet the Demonstration Program's qualifying 
criteria and are selected to participate will be offered one loan note 
guarantee upon closing of the construction loan that will be in effect 
throughout both of the project's construction and permanent phases 
without interruption.
    To be considered for participation in the Demonstration Program, in 
addition to responding to this NOFA, a Lender must have first submitted 
its application under either the GRRHP's 2007 Notice at 72 FR 8339 
(Feb. 26, 2007) or the GRRHP's 2006 Notice at 71 FR 4559 (Jan. 27, 
2006). Furthermore, the application to be considered must have been 
obligated from October 1, 2006 to July 31, 2007.
    The funding for the Demonstration Program will be approximately $10 
million. 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.
    Eligible Lenders wishing to have their FY 2007 obligations 
considered for the Demonstration Program must send a signed request on 
its letterhead with the proposed project details as outlined in the 
``Demonstration Program Response Submission Address'' section of this 
NOFA.
    Demonstration Program Guidelines: The following guidelines are 
being provided to facilitate a structured implementation of the 
program:
    1. Demonstration guarantee. The Demonstration guarantee is a 
guarantee that will be offered to those applications that apply for and 
meet the 2007 Demonstration NOFA's demonstration program's qualifying 
criteria. The Demonstration guarantee will consist of one loan note 
guarantee upon closing of the construction loan that will be in effect 
throughout both of the project's construction and permanent financing 
phases without interruption.
    2. Upon approval of an application from an approved lender, the 
Agency will commit to providing a demonstration guarantee for the 
construction and permanent financing phases of the project, subject to 
the availability of funds.
    3. Guarantee percentage and payment. Both construction loan 
advances and permanent loans are eligible for a guaranty subject to the 
following limitations:
    Construction loan advances and permanent loans. The Agency may 
guarantee a construction contract which has credit enhancements to 
protect the Government's interest. The Agency can guarantee the 
``construction and permanent'' financing phases of a project. The 
Agency cannot, however, guarantee only the ``construction'' financing 
phase of a project. Guarantees under the demonstration guarantee will 
cover construction loan advances and the subsequent permanent loan. A 
demonstration guarantee requires an additional operating reserve equal 
to 2% of the appraised value of the project or total development costs, 
whichever is greater, to be set aside prior to closing the construction 
loan. This cash contribution is an additional amount, over and above 
the required initial operating and maintenance contribution. The 
maximum guarantee of construction advances will not at any time exceed 
the lesser of 90 percent of the amount of principal and interest up to 
default advanced for eligible uses of loan proceeds or 90 percent of 
the original principal amount and interest up to default of a loan. 
Penalties incurred as a result of default are not covered by the 
guarantee. The Agency may provide a lesser guarantee based upon its 
evaluation of the credit quality of the loan.
    4. A lender making a construction loan must demonstrate an ability 
to originate and service construction loans.
    5. Guarantee during construction. The Agency will issue a 
demonstration guarantee only to an approved lender.
    6. Demonstration guarantee program compliance requirement. For a 
demonstration guarantee, the following items will have to be submitted 
in order to remain compliant with program requirements. The items must 
be submitted within the timeframe stipulated by the Agency and must 
also be approved by the Agency:
    (1) A certificate of substantial completion;
    (2) A certificate of occupancy or similar evidence of local 
approval;
    (3) A final cost certification in a form acceptable to the Agency;
    (4) A complete copy of the permanent loan closing docket; and
    (5) Necessary information to complete an updated necessary 
assistance review by the Agency.
    The Agency may declare the loan in default if the Lender fails to 
comply with the demonstration guarantee program guidelines. The Agency 
may also declare the loan in default if the Agency's final inspection 
is not satisfactory. To facilitate the implementation of the program, 
certain program forms may be addended to include relevant Demonstration 
Program requirements.
    The selected applicants will be subject to the Demonstration 
Program guidelines in this NOFA, and GRRHP's controlling statute, 
regulations, and handbook as amended. The GRRHP operates under the 
Housing Act of 1949 and regulations at 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 address http://www.rurdev.usda.gov/regs/hblist.html#hbw6.
    Demonstration Program Eligibility: Applications that meet the 
following criteria will be eligible for consideration

[[Page 32071]]

to be selected into the Demonstration Program:
    1. The project must have been awarded tax credits.
    2. The project must have a loan to cost (LTC) ratio equal to or 
lower than 50%.
    3. The Lender must have submitted [for this project] a loan 
guarantee application under either the GRRHP's 2007 Notice at 72 FR 
8339 (Feb. 26, 2007) or the GRRHP's 2006 Notice at 71 FR 4559 (Jan. 27, 
2006). Additionally, the application to be considered must have been 
obligated from October 1, 2006 to July 31, 2007.
    4. The Lender must have submitted a timely response to this NOFA in 
accordance with the ``Demonstration Program Response Submission 
Address'' section of this NOFA.
    Demonstration Program Selection Process: Selections from qualified 
obligations that have requested consideration will be made based on 
their interest credit scores, with the highest scoring obligations, 
being selected first, until all available Demonstration Program funds 
are allocated. In the event of a tie, priority will be given to the 
project that: is in the smaller rural community, and in case of a 
subsequent tie has the lowest LTC ratio.
    Selections into the Demonstration Program will be made on August 
14, 2007, from the qualified pool of applications that were obligated 
from October 1, 2006 to July 31, 2007. In the event there are not 
enough qualified requests for selection into the Demonstration Program 
to utilize all the available Demonstration Program set-aside funds of 
approximately $10 million, then the selection process for any remaining 
funds will be conducted again on September 11, 2007, and will include 
all applications obligated from October 1, 2006 to August 31, 2007. All 
applicants will be notified of the selection results no later than 15 
business days from the date of selection.
    Demonstration Program Response Submission Address: Eligible lenders 
wishing to have their obligated applications considered for selection 
into the Demonstration Program must submit a signed request (not to 
exceed one page) on its letterhead that includes the following 
information:
    1. Developer's Name.
    2. Borrower's Name.
    3. Project's Name.
    4. Project's Address (City and State).
    5. Project Type (Family, Senior, or Mixed).
    6. Project's Total Units.
    7. Project's Total Development Cost (TDC).
    8. Amount of 538 Loan Guarantee.
    9. Amount of Tax Credits Awarded.
    10. Amount and Source of Other Financing.
    11. Loan to Cost (LTC) %.
    12. Area Population.
    13. Date obligated or date of Conditional Commitment.
    Send the Demonstration Program Response Submission Letter with all 
of the information listed above, along with a copy of the State 
Office's ``Proceed with Application/NOFA Response Selection'' letter 
and a copy of the tax credit award notification to: C.B. Alonso, Senior 
Loan Specialist, Multi-Family Housing Processing Division, Guaranteed 
Rural Rental Housing Program, U.S. Department of Agriculture, South 
Agriculture Building, Room 1271, Stop 0781, 1400 Independence Avenue, 
SW., Washington, DC 20250-0781.
    Requests may also be faxed to 202-205-5066 or sent by e-mail 
(signed PDF copies of the above submissions) to [email protected]. 
Eligible lenders mailing a request must provide sufficient time to 
permit delivery to the SUBMISSION ADDRESS on or before August 13, 2007. 
Acceptance by a U.S. Post Office or private mailer does not constitute 
delivery. Postage due responses and applications will not be accepted.
    The U.S. Department of Agriculture (USDA) prohibits discrimination 
in all its programs and activities on the basis of race, color, 
national origin, sex, religion, age, disability, political beliefs, 
sexual orientation, marital status or family status (not all prohibited 
basis apply to all programs). Persons with disabilities who require 
alternative means for communication of program information (Braille, 
large print, audiotape, etc.) should contact the USDA's Target Center 
at (202) 720-2600 (voice or TDD).
    To file a complaint of discrimination, write USDA, Director, Office 
of Civil Rights, Room 326-W, Whitten Building, 1400 Independence 
Avenue, SW., Washington, DC 20250-9410, or call toll free (866) 632-
9992 (Voice). TDD users can contact USDA through local relay (800) 720-
6382 (TDD) or (866) 377-8642 (relay voice users). USDA is an equal 
opportunity provider and employer.

    Dated: June 4, 2007.
David J. Villano,
Acting Administrator, Rural Housing Service.
 [FR Doc. E7-11169 Filed 6-8-07; 8:45 am]
BILLING CODE 3410-XV-P