[Federal Register Volume 77, Number 138 (Wednesday, July 18, 2012)]
[Notices]
[Pages 42265-42271]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17527]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice of Funding Availability: Section 515 Multi-Family Housing 
Preservation Revolving Loan Fund Demonstration Program for Fiscal Year 
2012

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

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SUMMARY: The Rural Housing Service of Rural Development previously 
announced in a Notice published August 22, 2011 (76 FR 52305) the 
availability of funds and the timeframe to submit applications for 
loans to private non-profit organizations, and State and local housing 
finance agencies, to carry out a demonstration program to provide 
revolving loans for the preservation and revitalization of low-income 
Multi-Family Housing (MFH). Rural Development did not receive 
sufficient applications to use all the available funds. As a result, 
Rural Development is soliciting additional applications under this 
Notice for the remaining funding. Housing that is assisted by this 
demonstration program must be financed by Rural Development through its 
MFH loan program under Sections 515, 514, and 516 of the Housing Act of 
1949. The goals of this demonstration program will be achieved through 
loans made to intermediaries. The intermediaries will establish their 
programs for the purpose of providing loans to ultimate recipients for 
the preservation and revitalization of low-income Section 515, 514, and 
516 MFH as affordable housing.

DATES: The deadline for receipt of all applications in response to this 
Notice is 5 p.m., Eastern Time, August 17, 2012. The application 
closing deadline is firm as to date and hour. Rural Development 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

[[Page 42266]]

not constitute delivery. Facsimile, electronic transmissions, and 
postage due applications will not be accepted.

FOR FURTHER INFORMATION CONTACT: Sherry Engel, Finance and Loan 
Analyst, Multi-Family Housing, U.S. Department of Agriculture, Rural 
Housing Service, 4949 Kirschling Court, Stevens Point, Wisconsin 54481 
or by telephone at (715) 345-7677 or via email at: 
[email protected] or Tiffany Tietz, Finance and Loan Analyst, 
Multi-Family Housing, U.S. Department of Agriculture, Rural Housing 
Service, 3260 Eagle Park Drive, Suite 107, Grand Rapids, Michigan 49525 
or by telephone at (616) 942-4111, Extension 126, TDD (302) 857-3585 or 
via email at [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 (2005) et seq., 
the Office of Management and Budget (OMB) must approve all 
``collections of information'' by 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 Notice will 
receive less than ten respondents, the Paperwork Reduction Act does not 
apply.

Overview Information

    Federal Agency Name: Rural Housing Service, USDA.
    Funding Opportunity Title: Notice of Funding Availability: Section 
515 Multi-Family Housing Preservation Revolving Loan Fund Demonstration 
Program for Fiscal Year 2012.
    Announcement Type: Initial Announcement.

Catalog of Federal Domestic Assistance Numbers (CFDA): 10.415.

DATES: The deadline for receipt of all applications in response to this 
Notice is 5 p.m., Eastern Time, August 17, 2012. The application 
closing deadline is firm as to date and hour. Rural Development 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, electronic transmissions and postage due 
applications will not be accepted.

Overview

    Past fiscal years' appropriations acts provided funding for, and 
authorized Rural Development to conduct a revolving loan fund 
demonstration program for the preservation and revitalization of the 
Sections 515, 514, and 516 MFH portfolio. The money provided under the 
previous appropriations acts was authorized to be used until expended. 
Sections 514, 515 and 516 of the Housing Act of 1949 as amended, 
provide Rural Development the authority to make loans for low-income 
Multi-Family Housing, Farm Labor Housing (FLH), and related facilities.

I. Funding Opportunities Description

    This Notice requests applications from eligible applicants for 
loans to establish and operate revolving loan funds for the 
preservation of low-income MFH properties within the Rural Development 
Sections 514, 515, and 516 MFH portfolios. Rural Development's 
regulations for the Section 514, 515, and 516 MFH Program are published 
at 7 CFR part 3560.
    Housing that is constructed or repaired must meet the Rural 
Development design and construction standards and the development 
standards contained in 7 CFR part 1924, subparts A and C, respectively. 
Once constructed, Section 514, 515, and 516 MFH must be managed in 
accordance with 7 CFR part 3560. Tenant eligibility is limited to 
persons who qualify as a very low- or low-income household or who are 
eligible under the requirements established to qualify for housing 
benefits provided by sources other than Rural Development, such as U.S. 
Department of Housing and Urban Development Section 8 assistance or Low 
Income Housing Tax Credits assistance, when a tenant receives such 
housing benefits. Additional tenant eligibility requirements are 
contained in 7 CFR parts 3560.152, 3560.577, and 3560.624.

II. Award Information

    Past appropriations acts 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 low-income MFH project. The total amount of 
funding available for this program is $7,898,875. This funding consists 
of carryover funds from previous fiscal years. Loans to intermediaries 
under this demonstration program shall have an interest rate of no more 
than 1 percent and the Secretary of Agriculture may defer the interest 
and principal payment to Rural Development for up to 3 years during the 
first 3 years of the loan. The term of such loans shall not exceed 30 
years. Funding priority will be given to entities with equal or greater 
matching funds from third parties, including housing tax credits for 
rural housing assistance and to entities with experience in the 
administration of revolving loan funds and the preservation of MFH.
Funding Restrictions
    No loan made to a single intermediary applicant under this 
demonstration program may exceed $2,125,000 and any such loan may be 
limited by geographic area so that multiple loan recipients are not 
providing similar services to the same service areas. All Preservation 
Revolving Loan Fund (PRLF) obligations will have an obligation 
expiration period of 2 years from the date of obligation.
    Prior Fiscal Years PRLF loans that were obligated and not closed 
within the above 2-year obligation period must be de-obligated to allow 
more immediate program use unless a 6-month extension is granted by the 
National Office. The request for an extension will be sent to the 
National Office by the relevant State Office.
    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, as 
amended.

III. Eligibility Information

(1) Eligibility Requirements--Intermediary
    (a) The types of entities which may become intermediaries are 
private non-profit organizations, which may include faith and community 
based 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, and repaying the 
proposed loan.
    (ii) A proven record of successfully assisting low-income MFH 
projects. Such record will include recent experience in loan making and 
loan servicing that is similar in nature to the loans proposed for the 
PRLF demonstration program. The applicant must provide documentation of 
a

[[Page 42267]]

delinquency and loss rate note which does not exceed 4 percent. The 
applicant will be responsible for providing such information to Rural 
Development.
    (iii) A staff with loan making and servicing experience.
    (iv) A plan showing Rural Development, that the ultimate recipients 
will only use the funds to preserve low-income MFH projects.
    (c) No loans will be extended to an intermediary unless:
    (i) There is adequate assurance of repayment of the loan evidenced 
by the fiscal and managerial capabilities of the proposed intermediary.
    (ii) The amount of the loan, together with other funds available, 
is adequate to complete the preservation or revitalization of the 
project.
    (iii) The intermediary's prior calendar year audit is an 
unqualified audited opinion signed by an independent Certified Public 
Accountant (CPA) acceptable to the Agency and performed in accordance 
with Generally Accepted Government Auditing Standards (GAGAS). The 
unqualified audited opinion must provide a statement relating to the 
accuracy of the financial statements.
    (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.'' In 
addition, intermediaries and their principals must not be delinquent on 
Federal debt or be Federal judgment debtors.
    (e) The intermediary and its principal officers (including 
immediate family) must have no legal or financial interest in the 
ultimate recipient.
    (f) The intermediary's Debt Service Coverage Ratio (DSCR) must be 
greater than 1.25 for the fiscal year immediately prior to the year of 
application. The DSCR is the financial ratio the loan committee will 
use to determine an applicant's capacity to borrow and service 
additional debt. The loan committee will use the intermediary's 
Earnings Before Interest and Taxes (EBIT) to determine DSCR. EBIT is 
determined by adding net income or net loss to depreciation and 
interest expense. The loan committee will compare the principal and 
interest payment multiplied by the DSCR to the EBIT derived from the 
applicant's consolidated income statement. For example, if an applicant 
requests a loan amount of $2,000,000 at a 1 percent interest rate 
amortized over 30 years, the principal and interest payments will be 
$77,193 annually. Therefore, an applicant who requests $2,000,000 needs 
an EBIT of at least $96,491 ($77,193 x 1.25). Only debt service from 
unrestricted revolving loans will be considered in the above 
calculation. An unrestricted loan is an account in which the 
accumulated revenues are not dictated by a donor or sponsor.
    (g) Intermediaries that have received one or more PRLF loans may 
apply for and be considered for subsequent PRLF loans provided all the 
following are met:
    (i) For prior PRLF loans at least 50 percent of an intermediary's 
PRLF loans must have been disbursed to eligible ultimate recipients;
    (ii) Intermediaries requesting subsequent loans must meet the 
requirements of section III(1), Applicant Eligibility, of this Notice;
    (iii) The delinquency rate of the outstanding loans of the 
intermediary's PRLF revolving fund does not exceed 4 percent at the 
time of application for the subsequent loan;
    (iv) The intermediary is in compliance with all applicable 
regulations and its loan agreements with Rural Development;
    (v) Subsequent loans will not exceed $1 million each and not more 
than one loan will be approved by Rural Development for an intermediary 
in any single fiscal year unless the request is authorized by a PRLF 
appropriation; and
    (vi) Total outstanding PRLF indebtedness of an intermediary to 
Rural Development will not exceed $15 million at any time.
    Only eligible applicants will be scored and ranked. Funding 
priority will be given to entities with equal or greater matching 
funds, including housing tax credits for rural housing assistance. 
Refer to the Selection Criteria section of the Notice for further 
information on funding priorities.
(2) Eligibility Requirements--Ultimate Recipients
    (a) To be eligible to receive loans from the PRLF, ultimate 
recipients must:
    (i) Currently have a Rural Development Sections 515, 514 loan, or 
516 grant for the property to be assisted by the PRLF demonstration 
program.
    (ii) Certify that the principal officers (including their immediate 
family) of the ultimate recipient, hold no legal or financial interest 
in the intermediary.
    (iii) Be in compliance with all Rural Development program 
requirements or have an Agency approved work plan in place which will 
correct a non-compliance status.
    (b) Any delinquent debt to the Federal Government including a non-
tax judgment lien (other than a judgment in the U.S. tax courts), 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 may not be used to satisfy the delinquency.
    (c) The ultimate recipient cannot be currently debarred or 
suspended from Federal Government programs.
    (d) There is a continuous need for the property in the community as 
affordable housing.

IV. Administrative Requirements

    (1) The following applies to loans to intermediaries made in 
response to this Notice:
    (a) PRLF intermediaries will be required to provide Rural 
Development 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. The audit period will be set by the intermediary. The 
intermediary will notify Rural Development of the date. Audits must 
cover all of the intermediary's activities. Audits will be performed by 
an independent CPA. An acceptable audit will be performed in accordance 
with GAGAS and include such tests of the accounting records as the 
auditor considers necessary in order to express an unqualified audited 
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 OMB Circular A-133 should submit audits made 
in accordance with that circular.
    (ii) Quarterly or semiannual performance reports (due to Rural 
Development 30 days after the end of the fiscal quarter or half);
    (A) Performance reports will be required quarterly during the first 
year after loan closing. Thereafter, performance reports will be 
required semiannually. Also, Rural Development 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 Rural Development determines that 
the intermediary's PRLF is not adequately protected by the current 
financial status and paying capacity of the ultimate recipients.
    (B) These performance reports shall contain information only on the 
PRLF,

[[Page 42268]]

or if other funds are included, the PRLF portion shall be segregated 
from the others; and in the case where the intermediary has more than 
one PRLF from Rural Development, a separate report shall be made for 
each PRLF.
    (C) The performance report will include OMB Standard Form 425, 
Federal Financial Report. This report will provide 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 other 
reports as Rural Development may require from time to time regarding 
the conditions of the loan.
    (b) Security will consist of a pledge by the intermediary of all 
assets now or hereafter placed in the PRLF, including cash and 
investments, notes receivable from ultimate recipients, and the 
intermediary's security interest in collateral pledged by ultimate 
recipients. Except for good cause shown, Rural Development will not 
obtain assignments of specific assets at the time a loan is made to an 
intermediary or ultimate recipient. The intermediary will covenant in 
the loan agreement that, in the event the intermediary's financial 
condition deteriorates, the intermediary takes action detrimental to 
prudent fund operation, or the intermediary fails to take action 
required of a prudent lender, it will provide additional security, 
execute any additional documents, and undertake any reasonable acts 
Rural Development may request to protect Rural Development's interest 
or to perfect a security interest in any asset, including physical 
delivery of assets and specific assignments to Rural Development. All 
debt instruments and collateral documents used by an intermediary in 
connection with loans to ultimate recipients may be assignable.
    (c) RHS may consider, on a case by case basis, subordinating its 
security interest on the ultimate recipient's property to the lien of 
the intermediary so that Rural Development has a junior lien interest 
when an independent appraisal verifies the Rural Development 
subordinated lien will continue to be fully secured.
    (d) The term of the loan to an ultimate recipient may not exceed 
the less of 30 years or the remaining term of the Rural Development 
loan.
    (e) When loans are made to ultimate recipients restrictive-use 
provisions must be incorporated, as outlined in 7 CFR part 3560.662.
    (f) 7 CFR part 1901, subpart F regarding historical and 
archaeological properties apply to all loans funded under this Notice.
    (g) 7 CFR part 1940, subpart G regarding environmental assessments 
apply to all loans to ultimate recipients funded under this Notice. 
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 Rural Development.
    (h) An Intergovernmental Review, will be conducted in accordance 
with the procedures contained in 7 CFR part 3015, subpart V, if the 
applicant is a cooperative.
    (2) The intermediary agrees to the following:
    (a) To obtain written Rural Development 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
    (ii) The intermediary's policy with regard to the amount and form 
of security to be required.
    (b) To obtain written approval from Rural Development before making 
any significant changes in forms, security policy, or the 
intermediary's work plan. Rural Development may approve changes in 
forms, security policy, or work plans at any time upon a written 
request from the intermediary and determination by Rural Development 
that the change will not jeopardize repayment of the loan or violate 
any requirement of this Notice or other Rural Development regulations. 
The intermediary must comply with the work plan approved by Rural 
Development so long as any portion of the intermediary's PRLF loan is 
outstanding;
    (c) To allow Rural Development to take a security interest in the 
PRLF, the intermediary's portfolio of investments derived from the 
proceeds of the loan award, and other rights and interests as Rural 
Development 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, unless an extension has 
been granted. The intermediary acknowledges that Rural Development may 
cancel the approval of any funds not yet delivered to the intermediary 
if funds have not been used in accordance with the intermediary's work 
plan within the 2-year period. Rural Development, at its sole 
discretion, may allow the intermediary additional time to use the loan 
funds by delaying cancellation of the funds by no more than 3 
additional years. If any 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, in 
addition, the intermediary will return, as an extra payment on the 
loan, any funds it has received and not used in accordance with the 
work plan. In accordance with the Rural Development approved promissory 
note, regular loan payments will be based on the amount of funds 
actually drawn by the intermediary.
    (e) The intermediary will be required to enter into a Rural 
Development approved loan agreement and promissory note. The 
intermediary will receive a 30-year loan at a 1 percent interest rate. 
The loan will be deferred for up to three years if requested in the 
intermediary's work plan.
    (f) Loans made to the PRLF ultimate recipient must meet the intent 
of providing decent, safe, and sanitary rural housing by preserving and 
regulating existing properties financed with Sections 514, 515, and 516 
funds. They must also be consistent with the requirements of Title V of 
the Housing Act of 1949, as amended.
    (g) When an intermediary proposes to make a loan from the PRLF to 
an ultimate recipient, Rural Development concurrence is required prior 
to final approval of the loan. The intermediary must submit a request 
for Rural Development concurrence of a proposed loan to an ultimate 
recipient. Such request must include:
    (i) Certification by the intermediary that:
    (A) The proposed ultimate recipient is eligible for the loan;
    (B) The proposed loan is for eligible purposes;
    (C) The proposed loan complies with all applicable statutes and 
regulations; and
    (D) Prior to closing the loan to the ultimate recipient, the 
intermediary and its principal officers (including immediate family) 
hold no legal or financial interest in the ultimate recipient, and the 
ultimate recipient and its principal officers (including immediate 
family) hold no legal or financial interest in the intermediary.
    (ii) Copies of sufficient material from the ultimate recipient's 
application and the intermediary's related files, to allow Rural 
Development to determine the:
    (A) Name and address of the ultimate recipient;

[[Page 42269]]

    (B) Loan purposes;
    (C) Interest rate and term;
    (D) Location, nature, and scope of the project being financed;
    (E) Other funding included in the project;
    (F) Nature and lien priority of the collateral; and
    (G) 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 Federal Emergency Management Agency (FEMA) Form 
81-93, ``Standard Flood Hazard Determination.'' If the age of the 
building is over 50 years or if the building is either on or eligible 
for inclusion in the National Register of Historic Places, then the 
intermediary will immediately contact Rural Development to begin 
Section 106 of the National Historic Preservation Act of 1966 
consultation with the State Historic Preservation Officer. If the 
building is located within a 100-year flood plain, then the 
intermediary will immediately contact Rural Development to analyze any 
effects as outlined in 7 CFR part 1940, subpart G, Exhibit C. The 
intermediary will assist Rural Development in any additional 
requirements necessary to complete the environmental review.
    (iii) Such other information as Rural Development may request on 
specific cases.
    (h) Upon receipt of a request for concurrence in a loan to an 
ultimate recipient Rural Development will:
    (i) Review the material submitted by the intermediary for 
consistency with Rural Development's preservation and revitalization 
principles which include the following;
    (A) There is a continuing need for the property in the community as 
affordable housing. If Rural Development determines there is no 
continuing need for the property the ultimate recipient is ineligible 
for the loan;
    (B) When the transaction is complete, the property will be owned 
and controlled by eligible Section 514, 515, or 516 borrowers;
    (C) The transaction will address the physical needs of the 
property;
    (D) Existing tenants will not be displaced because of increased 
post transaction rents;
    (E) Post transaction basic rents will not exceed comparable market 
rents; and
    (F) Any equity loan amount will be supported by a market value 
appraisal.
    (ii) The intermediary shall pledge as collateral for non-Rural 
Development funds its PRLF, including its portfolio of investments 
derived from the proceeds of other funds and this loan award.
    (iii) Issue a letter concurring with the loan when all requirements 
have been met or notify the intermediary in writing the reasons for 
denial when Rural Development determines it is unable to concur with 
the loan.

V. Application and Submission Information

Submission Address
    Applications should be submitted to USDA Rural Housing Service; 
Attention: Norma Gavin, Administrative Assistant; Multi-Family Housing 
STOP 0782 (Room 1263-S); 1400 Independence Avenue SW., Washington, DC 
20250-0782.
    The application process is a two-step process: First, all 
applicants will submit proposals to the National Office for loan 
committee review. The initial loan committee will determine if the 
borrower is eligible, score the application, and rank the applicants 
according to the criteria established in this Notice. Only eligible 
borrowers will be scored. The loan committee will select proposals for 
further processing. In the event that a proposal is selected for 
further processing and the applicant declines, the next highest ranked 
unfunded applicant may be selected. Second, after the loan is obligated 
to the intermediary but prior to loan closing, the State Office in the 
applicant's area of residence or State where the applicant will be 
doing its intermediary work will provide written approval of all forms 
to be used for relending purposes, including application forms, loan 
agreements, promissory notes, and security instruments. Additionally, 
the State Office will provide written approval of the applicant's 
binding policy with regard to the amount and form of security to be 
required.
    Once the loan closes, the applicant will be required to comply with 
the terms of its work plan which describes how the money will be used, 
the loan agreement, the promissory note and any other loan closing 
documents. At the time of loan closing, Rural Development and loan 
recipient shall enter into a loan agreement and a promissory note 
acceptable to Rural Development. Loans obligated by State Offices to 
intermediaries must close on or before the second anniversary of the 
dated pre-approval letter mentioned above. Applicants who have not 
closed by this date must de-obligate PRLF funds to allow further 
program use of funds.

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).'' This form can be found at: http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD4274-1.PDF.
    (3) A written work plan and other evidence Rural Development 
requires that demonstrates the feasibility of the intermediary's 
program to meet the objectives of this demonstration program. The plan 
must, at a minimum, include all of the following:
    (a) Document the intermediary's ability to administer this 
demonstration program in accordance with the provisions of this Notice. 
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 Rural Development review, 
and the terms of the contract and its duration must be sufficient to 
adequately service Rural Development loan through to its ultimate 
conclusion. If Rural Development determines the personnel lack the 
necessary expertise to administer the program, the loan request will be 
denied.
    (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-Rural Development funds for administration of the 
intermediary's operations and financial assistance for projects.
    (c) Demonstrate a need for loan funds. As a minimum, the 
intermediary should identify a sufficient number of proposed and known 
ultimate recipients to justify Agency funding of its loan request, or 
include well developed targeting criteria

[[Page 42270]]

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 Rural Development funding of the 
loan request.
    (d) Include a list of proposed fees and other charges it will 
assess to the ultimate recipients.
    (e) Provide documentation to Rural Development that the 
intermediary has secured commitments of significant financial support 
from public agencies and private organizations or have received tax 
credits for the calendar year prior to this Notice.
    (f) Include the intermediary's plan (specific loan purposes) for 
relending the loan funds. The plan must be of sufficient detail to 
provide Rural Development 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 flow 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) If the intermediary provides technical assistance, (providing 
technical assistance to ultimate recipients is not required as part of 
this program), the intermediary will provide specific information as to 
how and what type of technical assistance the intermediary will provide 
to the ultimate recipients and potential ultimate recipients. For 
instance, 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 the 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; 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 that shows the PRLF must extend to include a year with a 
full annual installment on the PRLF loan.
    (5) A written agreement of the intermediary to Rural Development 
agreeing to the audit requirements.
    (6) Form RD 400-4, ``Assurance Agreement,'' a copy of which can be 
obtained at:  http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD400-4.PDF.
    (7) Complete organizational documents, including evidence of 
authority to conduct the proposed activities.
    (8) Most recent unqualified audit report signed by a CPA and 
prepared in accordance with GAGAS.
    (9) Form RD 1910-11, ``Applicant Certification Federal Collection 
Policies for Consumer or Commercial Debts,'' a copy of which can be 
obtained at: http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD1910-11.PDF.
    (10) Form AD-1047, ``Certification Regarding Debarment, Suspension, 
and other Responsibility Matters--Primary Covered Transactions,'' a 
copy of which can be obtained at: http://www.ocio.usda.gov/forms/doc/AD1047-F-01-92.PDF.
    (11) Exhibit A-1 of RD Instruction 1940-Q, ``Certification for 
Contracts, Grants, and Loans,'' a copy of which can be obtained at: 
http://www.rurdev.usda.gov/me/CBP/const/1940qa1.pdf.
    (12) Copies of the applicant's tax returns for each of the 3 years 
prior to the year of application, and most recent audited financial 
statements.
    (13) A separate one-page information sheet listing each of the 
``Selection 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 
application requirements and to have their application indexed and 
tabbed to facilitate the review process.
    (14) Financial statements (consolidated or unconsolidated) for the 
year prior to this Notice.
    (15) A borrower authorization statement allowing Rural Development 
the authorization to verify past and present earnings with the preparer 
of the intermediary's financial statements.

VI. Application Review Information

    All applications will be evaluated by a loan committee. The loan 
committee will make recommendations to the Rural Housing Service 
Administrator concerning preliminary eligibility determinations and for 
the selection of applications for further processing based on the 
selection criteria contained in this Notice and the availability of 
funds. The Administrator will inform applicants of the status of their 
application within 30 days of the loan application closing date set 
forth in this Notice.

Selection Criteria

    Selection criteria points will be allowed only for factors 
evidenced by well documented, reasonable work plans which 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 application must 
provide documentation that the selection criteria have been met in 
order to qualify for selection criteria points. If an application does 
not cover one of the categories listed, it will not receive points for 
those criteria.
    (1) Other funds. Points allowed under this paragraph are to be 
based on documented successful history or written evidence that the 
funds are available.
    (a) The intermediary will obtain non-Rural Development loan or 
grant funds or provide housing tax credits (measured in dollars) to pay 
part of the cost of the ultimate recipients' project cost. Points for 
the amount of funds from other sources are as follows:
    (i) At least 10 percent but less than 25 percent of the total 
development cost (as defined in 7 CFR part 3560.11)--5 points;
    (ii) At least 25 percent but less than 50 percent of the total 
development cost--10 points; or
    (iii) 50 percent or more of the total development cost--15 points.
    (b) The intermediary will provide loans to each 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 per project:
    (i) At least 10 percent but less than 25 percent of the total 
development cost--5 points;
    (ii) At least 25 percent but less than 50 percent of total 
development cost--10 points; or

[[Page 42271]]

    (iii) 50 percent or more of total development cost--15 points.
    (2) Intermediary contribution. The intermediary will contribute its 
own funds not derived from Rural Development. The non-Rural Development 
contributed funds will be placed in a separate account from the PRLF 
account. The intermediary shall contribute funds not derived from Rural 
Development into a separate bank account or accounts according to their 
``work plan.'' These funds are to be placed into an interest bearing 
counter-signature-account for 3 years as set forth in the loan 
agreement. The counter-signature-account will require a signature from 
a Rural Development employee and intermediary. After 3 years, these 
funds shall be commingled with the PRLF to provide loans to the 
ultimate recipient for the preservation and revitalization of Section 
514, 515, or 516 Multi-Family Housing.
    The amount of non-Agency derived funds contributed to the PRLF will 
equal the following percentage of Rural Development PRLF:
    (a) At least 5 percent but less than 15 percent--5 points;
    (b) At least 15 percent but less than 25 percent--30 points; or
    (c) 5 percent or more--50 points.
    (3) Experience. The intermediary has actual experience in the 
administration of revolving loan funds and the preservation of MFH, 
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 MFH in order to qualify 
for points under the selection criteria. If the number of years of 
experience differs between the two types of above listed experience, 
the type of experience with the lesser number of years will be used for 
the 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) Debt/Equity Ratio. The Debt/Equity Ratio (DER) is the financial 
ratio used to determine how much debt an applicant has relative to its 
equity. DER is calculated from the balance sheet by adding the short 
term or current debt plus the long term debt, and then dividing that 
number by the intermediary's equity. In order to receive points, the 
intermediary must submit a summary of how the DER was calculated.
    (5) Administrative. The Administrator may assign up to 25 
additional points to an application to account for the following items 
not adequately covered by the other priority criteria set out in this 
section. The items that will be considered are 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; economic 
development plan from the local community, particularly a plan prepared 
as part of a request for an Empowerment Zone/Enterprise Community (EZ/
EC) designation; or excellent utilization of an existing revolving loan 
fund program. The Administrator will document the reasons for the 
particular point allocation.

VII. Appeal Process

    All adverse determinations 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 an 
applicant is notified of the adverse action.

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 Rural Development will discriminate 
against any employee, proposed intermediary or proposed ultimate 
recipient on the basis of sex, marital status, race, familial status, 
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 Rural Development loan funds are involved.
    (2) 7 CFR part 1901, subpart E applies to this program.
    (3) The Rural Housing Service (RHS) 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 part 3560.60(d).
    (5) To file a complaint of discrimination, write to USDA, Director, 
Office of Civil Rights, 1400 Independence Avenue SW., Washington, DC 
20250-9410, or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). 
USDA is an equal opportunity provider, employer, and lender. The U.S. 
Department of Agriculture prohibits discrimination in all its programs 
and activities on the basis of race, color, national origin, age, 
disability, and where applicable, sex, marital status, familial status, 
parental status, religion, sexual orientation, genetic information, 
political beliefs, reprisal, or because all or part of an individual's 
income is derived from any public assistance program. (Not all 
prohibited bases apply to all programs.)
    Persons with disabilities who require alternative means for 
communication of program information (Braille, large print, audiotape, 
etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and 
TDD).

     Dated: July 11, 2012.
Tammye Trevi[ntilde]o,
Administrator, Rural Housing Service.
[FR Doc. 2012-17527 Filed 7-17-12; 8:45 am]
BILLING CODE 3410-XV-P