[Federal Register Volume 73, Number 77 (Monday, April 21, 2008)]
[Notices]
[Pages 21305-21307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-8470]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice of Funds Availability Section 538 Multi-Family Housing 
Guaranteed Rural Rental Housing Program (GRRHP)--Demonstration Program 
for Fiscal Year 2008

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

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SUMMARY: Through this Notice of Funds Availability (NOFA), in 
conjunction with the GRRHP 2007 Notice, published February 26, 2007, 
Volume 72 FR, 8339-8346 and the GRRHP 2008 Notice, published February 
4, 2008, Volume 73 FR, 6469-6477, 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) 2008 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.
    The funding for the Demonstration Program will be approximately 10 
percent of the FY 2008 appropriation. 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 2008 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 
Notice.

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 lenders who submit applications in 
response to the 2008 Demonstration Notice's demonstration program's 
qualifying criteria. The Demonstration guarantee will consist of one 
loan note guarantee that will be issued upon closing of the 
construction loan and 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 guarantee 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. 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

[[Page 21306]]

requirements. The items must be submitted within the timeframe 
stipulated by the Agency and must also be approved by the AGENCY:
    (i) A certificate of substantial completion;
    (ii) A certificate of occupancy or similar evidence of local 
approval;
    (iii) A final cost certification in a form acceptable to the 
Agency;
    (iv) A complete copy of the permanent loan closing docket; and
    (v) 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 and program 
compliance requirements. 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 Notice, 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 obligated in FY 
2008 that meet the following criteria will be eligible for 
consideration 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 a timely response to this Notice 
in accordance with the ``Demonstration Program Response Submission 
Address'' section of this Notice.
    4. A Lender must have submitted its application under the GRRHP's 
2007 Notice published February 26, 2007, Volume 72 FR 8339-8346 or 2008 
Notice published on February 4, 2008, Volume 73 FR 6469-6477.
    5. The application to be considered must have been obligated from 
October 1, 2007 to September 30, 2008. However, if Demonstration funds 
have not been fully utilized, the Agency may consider applications 
obligated on or after October 1, 2006.
    6. The Lender must not have closed the construction loan prior to 
its selection to participate in the Demonstration Program.

Demonstration Program Selection Process

    Selections from qualified applications that have requested 
consideration will be based on interest credit scores, with the highest 
scoring applications, being selected first, until all available 
demonstration 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.
    The first round of selections into the Demonstration Program will 
be made on April 25, 2008, from the qualified pool of applications 
obligated between October 1, 2007 to April 4, 2008. 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 $13 million, then the selection process for any 
remaining funds will be conducted again on July 11, 2008 and will 
include all applications obligated from October 1, 2007 to July 3, 
2008. If needed, an additional selection process will be conducted 
again on September 29, 2008 and will include all applications obligated 
from October 1, 2007 to September 22, 2008. Additionally, on September 
29, 2008 if funds remain available, applications obligated on or after 
October 1, 2006 will be included in the selection process. 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, USDA Rural Development, 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. To be considered for the 
first selection process, requests must be received on or before April 
25, 2008. To be considered for the second selection process, requests 
must be received on or before July 11, 2008. To be considered for the 
third selection process, requests must be received on or before 
September 29, 2008. Acceptance by a U.S. Post Office or private mailer 
does not constitute delivery. Postage due responses and applications 
will not be accepted.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, the 
information collection requirements contained in this Notice is 
approved by the Office of Management and Budget (OMB) under OMB Control 
Number 0575-0174.

Nondiscrimination Statement

    ``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.''


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    Dated: April 11, 2008.
Russell T. Davis,
Administrator, Rural Housing Service.
 [FR Doc. E8-8470 Filed 4-18-08; 8:45 am]
BILLING CODE 3410-XV-P