[Federal Register Volume 79, Number 184 (Tuesday, September 23, 2014)]
[Notices]
[Pages 56741-56761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-22476]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice of Funding Availability: Multi-Family Housing Preservation 
and Revitalization Demonstration Program--Section 514, Section 515, and 
Section 516 for Fiscal Year 2014

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

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SUMMARY: USDA Rural Development, which administers the programs of the 
Rural Housing Service (Agency), announces the availability of $20 
million in budget authority and the timeframe to submit applications to 
participate in a demonstration program to preserve and revitalize 
existing Rural Rental Housing (RRH) projects under Section 515, Section 
514, and Section 516 of the Housing Act of 1949, as amended. Under the 
demonstration program, existing Section 515 Multi-Family Housing (MFH) 
loans and Sections 514/516 Off-Farm Labor Housing (FLH) loans will be 
restructured to ensure that sufficient resources are available to 
preserve the ability of rental projects to provide safe and affordable 
housing for very low-, low-, or moderate-income residents. Projects 
participating in this program will be expected to be revitalized to 
extend their affordable use without displacing tenants because of 
increased rents. No additional Agency Rental Assistance (RA) units will 
be made available under this program.

DATES: Pre-applications in response to this Notice will be accepted 
until November 24, 2014, 5:00 p.m., Eastern Time. The pre-application 
closing deadline is firm as to date and hour. The Agency will not 
consider any pre-application that is received after the closing 
deadline. Applicants intending to mail pre-applications must allow 
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 pre-applications will not be 
accepted.

ADDRESSES: All hard copy pre-applications and additional materials must 
be mailed to the attention of Sherry Engel or Tiffany Tietz, Finance 
and Loan Analyst, Multi-Family Housing Preservation and Direct Loan 
Division, STOP 0782, (Room 1263-S), U.S. Department of Agriculture, 
Rural Development, 1400 Independence Avenue SW., Washington, DC 20250-
0782.
    Assistance for filing electronic and hard copy pre-applications can 
be

[[Page 56742]]

obtained from any Rural Development State Office. USDA Rural 
Development MFH State Office Contacts can be found at http://www.rurdev.usda.gov/StateOfficeAddresses.html.

    (Note: Telephone numbers listed are not toll-free.)

FOR FURTHER INFORMATION CONTACT: Sherry Engel or Tiffany Tietz, 
[email protected] or [email protected], (715) 345-7677 
or (616) 942-4111, extension 126, Finance and Loan Analyst, Multi-
Family Housing Preservation and Direct Loan Division, STOP 0782, (Room 
1263-S) U.S. Department of Agriculture, Rural Development, 1400 
Independence Avenue SW., Washington, DC 20250-0782. (Please note these 
telephone numbers are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The information collection requirements contained in this Notice 
have received approval from the Office of Management and Budget (OMB) 
under Control Number 0570-0190.

Overview Information

    Federal Agency Name: Rural Housing Service, USDA.
    Funding Opportunity Title: Multi-Family Housing Preservation and 
Revitalization Demonstration Program--Section 514, Section 515, and 
Section 516 for Fiscal Year 2014.
    Announcement Type: Inviting applications from eligible applicants 
for Fiscal Year 2014, Funding.

Catalog of Federal Domestic Assistance Number (CFDA): 10.447.

    Dates: Pre-applications in response to this Notice will be accepted 
until November 24, 2014, 5:00 p.m., Eastern Time. The pre-application 
closing deadline is firm as to date and hour. The Agency will not 
consider any pre-application that is received after the closing 
deadline. Applicants intending to mail pre-applications must allow 
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 pre-applications will not be 
accepted.

I. Funding Opportunities Description

    The Consolidated Appropriations Act, 2014, Public Law 113-76 
(January 17, 2014) authorized the Agency to conduct a demonstration 
program for the preservation and revitalization of the Section 515 MFH 
portfolio and Sections 514/516 Off-FLH portfolio. Section 514, Section 
515 and Section 516 MFH programs are authorized by the Housing Act of 
1949, as amended (42 U.S.C. 1484, 1485, 1486) and provide Rural 
Development with the authority to provide financial assistance for low-
income MFH and FLH and related facilities as defined in 7 CFR Part 
3560.
    A synopsis of this program and the pre-application's universal 
resource locator (URL) will be listed by Catalog of Federal Domestic 
Assistance Number or at Federal GrantsWire at http://www.federalgrantswire.com.
    This Notice solicits pre-applications from eligible borrowers/
applicants to restructure existing MFH projects already participating 
in the Agency's Section 515 MFH portfolio and Sections 514/516 FLH 
portfolio for the purpose of revitalization and preservation. Eligible 
borrowers are sometimes referred to in this Notice as ``applicants,'' 
``borrowers,'' ``applicant/borrowers,'' or ``owners'' as seems most 
appropriate for the context of the relevant Notice provision. The 
demonstration program shall be referred to in this Notice as the Multi-
Family Housing Preservation and Revitalization Demonstration (MPR) 
Program. Agency regulations for the Section 515 MFH program and the 
Sections 514/516 FLH program are published at 7 CFR Part 3560.
    The intent of the MPR is to ensure that existing rental projects 
will continue to deliver decent, safe and sanitary affordable rental 
housing for 20 years, the remaining term of any Agency loan, or the 
remaining term of any existing Restrictive-Use Provisions (RUP) or 
prohibition, whichever ends later. Applications will be selected by the 
Agency by the process described in this Notice, and the selected 
applicants will be invited to participate in the MPR demonstration 
program. Upon written notification to the Agency from the selected 
applicant of their acceptance to participate, an independent third-
party Capital Needs Assessment (CNA) will be conducted to provide a 
fair and objective review of projected capital needs. The Agency shall 
implement any restructuring proposal that may be offered under this 
Notice through an MPR Conditional Commitment (MPRCC) with the eligible 
borrower/applicant, which will include all the terms and conditions 
offered by the Agency.
    One of the restructuring tools to be used in this program is debt 
deferral for up to 20 years of the existing Section 514 or Section 515 
loans obligated prior to October 1, 1991. The cash flow from the 
deferred payment will be deposited, as directed by the Agency, to the 
reserve account to help meet the future physical needs of the project 
or to reduce rents.
    Debt deferral is described as follows:
    MPR Debt Deferral: A deferral of the existing Section 514 or 
Section 515 Agency loan(s), obligated on or before October 1, 1991, for 
the lesser of either the remaining term of the existing Section 514 or 
Section 515 loan, or 20 years. All terms and conditions of the deferral 
will be described in the MPR Debt Deferral Agreement. A balloon payment 
of principal and accrued interest will be due at the end of the 
deferral period. Interest will accrue at the promissory note rate and, 
if applicable, the subsidy will be applied as set out in the Agency's 
Interest Credit and Rental Assistance Agreement.
    Other Agency MPR tools are as follows:
    1. MPR Grant: A grant limited to non-profit applicants/borrowers 
only. The grant will be limited to the cost of correcting health and 
safety violations of a project identified by a CNA accepted by the 
Agency. The grant administration will be in accordance with applicable 
provisions of 7 CFR parts 3015 and 3019.
    2. MPR Zero Percent Loan: A loan at zero percent interest. The 
loan's maximum term and maximum amortization will be as authorized by 
the respective program authority.
    (a) For Section 515 RRH projects, the maximum term will be 30 
years, and will be amortized over a maximum term of 50 years.
    (b) For Sections 514/516 projects, the loan will be amortized over 
a maximum term of 33 years.
    3. MPR Soft-Second Loan: A loan with a one percent interest rate 
that will have its accrued interest and principal deferred to a balloon 
payment. The balloon payment will be due at the same time the latest 
maturing Section 514 or Section 515 loan already in place at the time 
of closing, or the maturity date of any current loan being re-amortized 
as part of the restructuring, is due.
    MPR funds cannot be used to build community rooms, add additional 
parking areas, playgrounds, laundry rooms or additional new units, 
unless the additional unit(s) are needed for the project to meet the 5 
percent fully accessible requirement as defined by the Uniform Federal 
Accessibility Standards (UFAS), and the Agency concurs. However, other 
funding sources as outlined below in (i) through (vi) can be used 
either for such revitalization and/or improvements:
    i. Rural Development Section 515 Rehabilitation loan funds;
    ii. Rural Development Sections 514/516 Off-Farm rehabilitation 
loan/grant funds;

[[Page 56743]]

    iii. Rural Development Section 538 Guaranteed RRH program 
financing;
    iv. Rural Development Multi-Family Housing Preservation Revolving 
Loan Program funds;
    v. Third-party loans, grants, tax credits and tax-exempt financing; 
and
    vi. Owner-provided capital contributions in the form of a cash 
infusion. A cash infusion cannot be a loan.
    Transfers, subordinations, and consolidations may be approved as 
part of a MPR transaction in accordance with 7 CFR Part 3560. If a 
transfer is part of the MPR transaction, and the transfer includes a 
seller payment and/or increase in the allowable Return to Owner, the 
transfer must first be underwritten to meet the requirements of 7 CFR 
3560.406. The transfer underwriting may assume the deferral of all 
eligible Section 515 loans. After the transfer has been underwritten 
and concurred with by the Multi-Family Housing Preservation and 
Revitalization Demonstration (MPR) program, the MPR transaction may be 
underwritten.
    For the purposes of the MPR, the restructuring transactions will be 
identified in three categories:
    1. Simple transactions, which involve no change in ownership.
    2. Complex transactions, which may consist of a project transfer to 
a new ownership, processed in accordance with 7 CFR 3560.406, with or 
without a consolidation, or transactions requiring a subordination 
agreement as a result of third-party funds. The applicant will submit 
one pre-application form. If a consolidation is proposed, all projects 
to be consolidated must be submitted on one pre-application form and be 
located in the same market area.
    To be considered in the same market area, projects must be: in a 
neighborhood or similar area where the property competes for tenants; 
managed under one management plan and one management agreement; and, in 
sufficiently close proximity to permit convenient and efficient 
management of the property.
    Applicants should discuss proposed consolidations with the Rural 
Development State Office in the State where the projects are located 
prior to filing their MPR pre-application to ensure Rural Development 
concurs with the application's market area estimation.
    If either the Agency or the owner chooses to remove one or more 
projects from the proposal, this may be done without affecting the 
eligibility of the complex transaction. To be a complex transaction, 
the Agency assumes only one project remains at the MPR closing.
    3. Portfolio transactions includes two or more projects with one 
stay-in owner, or two or more projects with multiple project sale 
transactions to a common purchaser all located in one State: a stay-in-
owner is defined as an existing Section 515 or Sections 514/516 
borrower who owns two or more properties either as a single ownership 
entity or as separate legal entities with at least one common general 
partner. Each project included in the transaction will be submitted on 
a separate pre-application form unless some projects are located in the 
same market area, as defined above, and are being consolidated. Any 
projects in the portfolio proposed to be consolidated will be listed on 
the same pre-application form. Each pre-application must have the same 
portfolio name. If the owner chooses to remove one or more projects 
from the proposal, at least two projects must remain in order to be 
classified as a portfolio transaction. At the end of the transaction, 
the Agency assumes there will be two or more projects. The stay-in 
owner or common purchaser must have at least one general partner in 
common.
    A transaction within each category may utilize any or all 
restructuring tools. Restructuring tools available through the MPR 
program will be used to address preservation and rehabilitation items 
identified in the Agency-accepted CNA.
    Liens against the project, with the exception of Agency-deferred 
debt, cannot exceed the Agency-approved security value of the project. 
All Agency debt, either in first lien position or a subordinated lien 
position, must be secured by the project, except deferred debt, which 
is not included in the Agency's total lien position for computation of 
the Agency's security value. Payment of any deferred debt will not be 
required from normal project operations income, but from excess cash 
from project operations after all other secured debts are satisfied or 
as directed by the Agency.
    The general steps of the MPR application process are as follows:
    1. Pre-application: Applicants must submit a pre-application as 
described in Section VI below. This pre-application process is designed 
to lessen the cost burden on all applicants, including those who may 
not be eligible or whose proposals may not be feasible.

    Note: If you receive a loan or grant award under this Notice, 
USDA reserves the right to post all information submitted as part of 
the pre-application/application package, which is not protected 
under the Privacy Act, on a public Web site with free and open 
access to any member of the public.

    2. Eligible Projects: Using criteria described below in Section 
III, the Agency will conduct an initial screening for eligibility. As 
described in Section VIII below, the Agency will conduct an additional 
eligibility screening later in the selection process.
    3. Scoring and Ranking: All complete, eligible and timely-filed 
pre-applications will be scored, ranked and put in potential funding 
categories as discussed in Sections VI and VII below.
    4. Formal Applications: Top ranked pre-applicants will receive a 
letter from the Agency inviting them to submit a formal application. As 
discussed in Section VIII paragraph (2) of this Notice, the Agency will 
require the owner to provide a CNA completed in accordance with the 
Agency's published guidance (available at http://www.rurdev.usda.gov/HMF_MPR.html) to underwrite the proposal to determine financial 
feasibility. Applicants will be informed of any proposals that are 
determined to be ineligible or financially infeasible. Any proposal 
denied by the Agency will be returned to the applicant, and the 
applicant will be given appeal rights pursuant to 7 CFR part 11.
    5. Financial Feasibility: The Agency will use the results of the 
CNA to help identify the need for resources and applicant provided 
information regarding anticipated or available third-party financing, 
in order to determine the financial feasibility of each potential 
transaction, using restructuring tools available either through 
existing regulatory authorities or specifically authorized through this 
demonstration program. A project is financially feasible when it can 
provide affordable, decent, safe, and sanitary housing for 20 years or 
the remaining term of any Agency loan, whichever ends later, by using 
the authorities of this program while minimizing the cost to the 
Agency, and without increasing rents for eligible tenants or farm 
laborers, except when necessary to meet normal and necessary operating 
expenses. If the transaction is determined financially feasible by the 
Agency, the borrower will be offered a restructuring proposal, subject 
to available funding. This will include a requirement that the borrower 
execute, for recordation, an Agency-approved restrictive-use covenant 
for a period of 20 years, the remaining term of any loans, or the 
remaining term of any existing restrictive-use provisions, whichever 
ends later. The restructuring proposal will be established in the 
MPRCC.

[[Page 56744]]

    6. MPR Agreements: If the offer is accepted by the applicant, the 
applicant must sign and return the MPRCC. By accepting the offer, the 
applicant agrees to the terms of the MPRCC. Any third-party lender will 
be required to subordinate to the Agency's restrictive-use covenant 
unless the Agency determines, on a case-by-case basis, that the 
lender's refusal to subordinate will not compromise the purpose of the 
MPR.
    7. General Requirements: The MPR transactions may be conducted with 
a stay-in owner (simple) or may involve a change in ownership (complex 
or portfolio). Any housing or related facilities that are 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 MFH and Sections 514/516 
FLH projects must be managed in accordance with 7 CFR part 3560. Tenant 
eligibility will be limited to persons who qualify as an eligible 
household under Agency regulations. Tenant eligibility requirements are 
contained in 7 CFR 3560.152.

II. Award Information

    The Consolidated Appropriations Act, 2014, Public Law 113-76 
(January 17, 2014), appropriated $20 million in budget authority to 
operate the MPR demonstration program. The budget authority is 
anticipated to make approximately $37.8 million available in program 
funds depending on the funding tools used. This funding remains 
available until expended.
    All Agency funding of applications selected under this Notice must 
be approved no later than September 30, 2016. Any pre-applications 
selected under this Notice, not approved by the Agency prior to 
September 30, 2016, will be considered withdrawn automatically, 
however, the applicants may reapply for funding under future Notices.
    Applicants are alerted that the Agency has unfunded applications 
carried over from prior Notices that will receive priority based on 
those Notices. If funds available for the MPR are fully committed 
before all eligible pre-applications selected for further processing 
under this Notice, or prior Notices, are funded, the Agency shall 
suspend further processing of the pre-applications at that time.

III. Eligibility Information

    Applicants (and the principals associated with each applicant) must 
meet the following requirements:
    1. All applicants must meet the eligibility requirements included 
in 7 CFR 3560.55 and 3560.555. This Notice will require the selected 
applicants to make the required equity contribution as outlined in 
3560.63(c). Loan applicants will not be given consideration for any 
increased equity value the property may have since the initial loan. 
Eligibility also includes the continued ability of the borrower/
applicant to provide acceptable management and will include an 
evaluation of any current outstanding deficiencies. Any outstanding 
violations, recorded in the Agency's Automated MFH Information System 
(MFIS), will preclude further processing of any MPR applications 
associated with the borrower or Identity of Interest (IOI) management 
agent unless there is a current, approved workout plan in place and the 
plan has been satisfactorily followed for a minimum of 6 consecutive 
months, as determined by the Agency.
    2. For Section 515 RRH projects, the average physical vacancy rate 
for the 12 months preceding the NOFA publication date can be no more 
than 10 percent for projects consisting of 16 or more revenue units and 
no more than 15 percent for projects less than 16 revenue units unless 
an exception applies under Section VI paragraph (1)(iii) of this 
Notice. If a project consolidation is involved, the consolidation will 
remain eligible so long as the average vacancy rate for each individual 
project meets the occupancy standard noted in this paragraph. Projects 
that do not meet the occupancy threshold at the time of filing the 
application may be withdrawn by the owner or the Agency without 
jeopardizing the application.
    3. For Sections 514/516 FLH projects, rather than an average 
physical vacancy rate as noted in III(2) above, a positive cash flow 
for the previous full 3 years of operation is required unless an 
exception applies under Section VI paragraph (1)(iii) of this Notice.
    4. Ownership of and ability to operate the project after the 
transaction is completed. In the event of a transfer, the proposed 
transferee must submit an executed purchase agreement or other evidence 
of site control in the name of the individual or entity proposing to 
purchase the property.
    5. An Agency-approved CNA (for guidance refer to http://www.rurdev.usda.gov/HMF_MPR.html) and an Agency financial 
evaluation must be conducted to ensure that utilization of the 
restructuring tools of the MPR program is financially feasible and 
necessary for the revitalization and preservation of the project for 
affordable housing. Initial eligibility for processing will be 
determined as of the date of the pre-application filing deadline. The 
Agency reserves the right to discontinue processing any application due 
to material changes in the applicant's status occurring at any time 
after the initial eligibility determination.
    6. Please note that all grant-eligible applicants must obtain a Dun 
and Bradstreet Data Universal Numbering System (DUNS) number and 
register in the Central Contractor Registration (CCR) prior to 
submitting a pre-application pursuant to 2 CFR 25.200(b). In addition, 
an entity applicant must maintain registration in the CCR database at 
all times during which it has an active Federal award or an application 
or plan under consideration by the Agency. Similarly, all recipients of 
Federal Financial Assistance are required to report information about 
first-tier sub-awards and executive compensation, in accordance with 2 
CFR part 170. So long as an entity applicant does not have an exception 
under 2 CFR 170.110(b), the applicant must have the necessary processes 
and systems in place to comply with the reporting requirements should 
the applicant receive funding. See 2 CFR 170.200(b).

IV. Equal Opportunity and Nondiscrimination Requirements

    USDA is an equal opportunity provider, employer, and lender.
    1. Borrowers and applicants will comply with the provisions of 7 
CFR 3560.2.
    2. All housing must meet the accessibility requirements found at 7 
CFR 3560.60(d).
    3. All MPR participants must submit or have on file a valid Form RD 
400-1, ``Equal Opportunity Agreement'' and Form RD 400-4, ``Assurance 
Agreement.''
    The U.S. Department of Agriculture (USDA) prohibits discrimination 
against its customers, employees, and applicants for employment on the 
bases of race, color, national origin, age, disability, sex, gender 
identity, religion, reprisal, and where applicable, political beliefs, 
marital status, familial or parental status, sexual orientation, or all 
or part of an individual's income is derived from any public assistance 
program, or protected genetic information in employment or in any 
program or activity conducted or funded by the Department. (Not all 
prohibited bases will apply to all programs and/or employment 
activities).
    If you wish to file a Civil Rights program complaint of 
discrimination, complete the USDA Program

[[Page 56745]]

Discrimination Complaint Form (PDF), found online at http://www.ascr.usda.gov/complaint_filing_cust.html, or at any 
USDA office, or call (866) 632-9992 to request the form. You may also 
write a letter containing all of the information requested in the form. 
Send your completed complaint form or letter to us by mail at U.S. 
Department of Agriculture, Director, Office of Adjudication, 1400 
Independence Avenue SW., Washington, DC 20250-9410, by fax (202) 690-
7442 or email at [email protected].
    Individuals who are deaf, hard of hearing or have speech 
disabilities and who wish to file either an EEO or program complaint 
may contact USDA through the Federal Relay Service at (800) 877-8339 or 
(800) 845-6136 (in Spanish). Persons with disabilities who wish to file 
a program complaint, please see information above on how to contact us 
by mail directly or by email. If you require alternative means of 
communication for program information (e.g., Braille, large print, 
audiotape, etc.) please contact USDA's TARGET Center at (202) 720-2600 
(voice and TDD).

V. Authorities Available for MPR

    MPR tools will be used in accordance with 7 CFR part 3560. The 
program will be administered within the resources available to the 
Agency through Public Law 113-76 and any future appropriations for the 
preservation and revitalization of Sections 514/516 and Section 515-
financed projects. In the event that any provisions of 7 CFR part 3560 
conflict with this demonstration program, the provisions of the MPR 
will take precedence.

VI. Application and Submission Information

    1. The application submission and scoring process will be completed 
in two phases in order to avoid unnecessary effort and expense on the 
part of applicants.
    Phase I--The first phase is the pre-application process. The 
applicant must submit a complete pre-application by the deadline listed 
under the ``DATES'' section of this Notice. The applicant's submission 
will be classified as ``complete'' when the MPR pre-application form is 
received in the correct format and place as described in this Notice 
for each MPR proposal the applicant wishes to be considered in the 
demonstration program. In the event the MPR proposal involves a project 
consolidation, it will be completed in accordance with 7 CFR 3560.410. 
One pre-application for the proposed consolidated project is required 
and must identify each project included in the consolidation. If the 
MPR proposal involves a portfolio transaction (sale or stay-in owner), 
one pre-application for each project in the portfolio is required and 
each pre-application must identify each project included in the 
portfolio transaction. In order for the pre-application to be 
considered complete, all applicable information requested on the MPR 
pre-application form must be provided. Additional information that must 
be provided with the pre-application to be considered complete, when 
applicable, includes:
    i. For all transfers of ownership, a copy of a signed purchase 
agreement in the name of the purchasing entity must be provided.
    ii. A copy of a signed statement by all partners, agreeing to 
participate in the program.
    iii. Current market data (defined as no more than 6 months old at 
time of filing) for any project not meeting the occupancy standards 
cited in Section III (2) and (3) above. The market data must 
demonstrate there is market demand for the project evidenced by waiting 
lists and a housing shortage confirmed by local housing agencies and 
realtors, as determined by the Agency. The market data must show a 
clear need and demand for the project once a restructuring transaction 
is completed. The results of the survey of existing or proposed rental 
or labor housing, including complex name, location, number of units, 
bedroom mix, family or elderly type, year built, and rent charges must 
be provided, as well as the existing vacancy rate of all available 
rental units in the community, their waiting lists and amenities, and 
the availability of RA or other subsidies. The Agency will determine 
whether or not the proposal has market feasibility based on the data 
provided by the applicant. Any costs associated with the completion of 
the market data is NOT an eligible program project expense.
    Unless an exception under this section applies, the requirements 
stated in Section III, paragraph (2) and (3) of this Notice must be 
met.

    Note: All documents must be received on or before the pre-
application closing deadline to be considered complete and timely 
filed. Pre-applications that do not include a Purchase Agreement for 
transfer proposals or current market data for projects that do not 
meet the occupancy standards of Section III paragraphs (2) and (3) 
of this Notice, will be considered incomplete and will be returned 
to the applicant with appeal rights.

    Phase II--The second phase of the application process will be 
completed by the Agency based on Agency records and the pre-application 
information submitted. All complete, eligible, and timely-filed pre-
applications will be scored and ranked based on points received during 
this two-phase application process. Further, the Agency will categorize 
each MPR proposal as being a Simple, Complex, or Portfolio transactions 
based on the information submitted on the pre-application, in 
accordance with the category descriptions provided in Section I of this 
Notice.
    2. Pre-applications can be submitted either electronically or in 
hard copy. The Agency will record pre-applications received 
electronically by the actual date and time received in the MPR Web site 
mail box. This date may impact ranking of the application as discussed 
under section VII. For all hard copy pre-applications received, the 
recorded receipt time will be the close of business time for the day 
received, for the location to which the pre-applications are sent. 
Assistance for filing electronic and hard copy pre-applications can be 
obtained from any Rural Development State Office. A listing of State 
Offices, their addresses, telephone numbers and person to contact is 
included under the ADDRESSES of this Notice.
    The pre-application is an Adobe Acrobat format and may be completed 
as a fillable form. The form contains a button labeled ``Submit by 
Email.'' Clicking on the button will result in an email containing a 
completed pre-application being sent to the MPR Web site mail box for 
consideration. If a purchase agreement or market survey is required, 
these additional documents are to be attached to the resulting email 
prior to submission.
    Pre-application forms may be downloaded from the Agency's Web site 
at http://www.rurdev.usda.gov/HMF_MPR.html or obtained by 
contacting the State Office in the State the project is located.

VII. Selection for Processing

    A. Pre-application ranking points will be based on information 
provided during the submission process and in Agency records. Only 
timely, complete pre-applications will be ranked. Points will be 
awarded as follows:
    1. Contribution of other sources of funds. Other funds are those 
discussed in items (i) through (vi) of Section I of this Notice. Points 
will be awarded based on documented written evidence that the funds are 
committed, as determined by the Agency. The maximum points awarded for 
this criterion is 25 points. These points will be awarded in the 
following manner:
    i. Evidence of a commitment of at least $3,000 to $5,000 per unit 
per

[[Page 56746]]

project from other sources--15 points, or
    ii. Evidence of a commitment greater than $5,000 per unit per 
project from other sources--25 points.
    2. Owner contribution. Points will be awarded if the owner agrees 
to make a contribution of at least $10,000 per project to pay 
transaction costs. (These funds cannot be from the project's reserve, 
operating funds, tax credit equity or be in the form of donated 
services provided by the applicant.) Transaction costs are defined as 
those Agency-approved costs required to complete the transaction under 
this Notice and include, but are not limited to the CNA, legal and 
closing costs, appraisal costs and filing/recording fees. This 
contribution must be deposited into the respective project reserve 
account prior to closing the MPR transaction from the owner's non-
project resources. 20 points.
    3. Owner contribution for the hard costs of construction. (These 
funds cannot be from the project's reserve account or project's general 
operating account or in the form of a loan.) Hard costs of construction 
are defined as those costs for materials, equipment, property or 
machinery required to complete the proposal under this Notice. Hard 
costs must be itemized on Form RD 1924-13, ``Estimate and Certificate 
of Actual Cost''. Form RD 1924-13 can be found at: http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD1924-13.PDF.
    The minimum contribution required to receive these points is $1,000 
per unit per project, which will be required to be deposited in the 
project reserve account or supervised/construction account, as directed 
by Rural Development, prior to closing. An increased Return to Owner 
(RTO) may be budgeted and allowed for funds committed in accordance 
with 7 CFR 3560.406(d)(14)(ii). 10 points.
    4. Special Initiatives and Memorandum of Understanding--Points may 
be awarded to applications received from any State where there is a 
recognized, State-funded program to be used for preservation and 
rehabilitation of existing Section 514 or Section 515 housing. To be 
eligible for these points, the State funds must be provided in the form 
of a grant and must be for a minimum of 30 percent of the total 
development cost. State funds do not need to be committed at the time 
of the application, however, if selected to proceed, the applicant must 
provide a written commitment of the funds from the State Agency within 
45 days of selection. Failure to provide this information may result in 
the Agency withdrawing the pre-application. 15 points.
    5. Age of project. For a project consolidation (including portfolio 
transactions) proposal, the project with the earliest operational date 
(operational date is the date the project initially placed in service 
and documented in the Agency's Multi-Family Housing Information System 
(MFIS)) will be used in determining the age of the project. Since the 
age of the project and the date the project placed in service are 
directly related to physical needs, a maximum of 30 points will be 
awarded based on the following criteria:
    i. Projects with initial operational dates prior to December 21, 
1979--30 points.
    ii. Projects with initial operational dates on or after December 
21, 1979, but before December 15, 1989--20 points.
    iii. Projects with initial operational dates on or after December 
15, 1989, but before October 1, 1991--10 points.
    iv. Projects with initial operational dates on or after October 1, 
1991--0 points.
    6. Projects with open physical findings. The Agency may award up to 
25 points to pre-applications involving projects that have been 
adversely impacted by an act of nature or where physical and/or 
financial deterioration or management deficiencies exist. Projects with 
Open Physical Findings classified ``B'', ``C'' or ``D'', as defined 
below, will be awarded in the following manner:

i. CLASS ``D'' PROJECTS

    Class ``D'' projects are those projects that are in default and may 
be taken into inventory, be lost to the program, or cause the 
displacement of tenants. Defaults can be monetary or non-monetary. 
Projects in non-monetary default are those where the Agency has 
notified the borrower of a violation using the Agency's servicing 
letter process, and the borrower has not addressed the violation to the 
Agency's satisfaction.

ii. CLASS ``C'' PROJECTS

    Class ``C'' projects are projects with open physical findings or 
violations, which are not associated to a workout plan and/or 
transition plan. This can include projects with violations where a 
servicing letter has been issued but 60 days have not passed since the 
issuance of the first servicing letter.

iii. CLASS ``B'' PROJECTS

    Class ``B'' projects indicate the Agency has taken servicing steps 
and the borrower is cooperating to resolve identified findings or 
violations by associating a workout plan and/or transition plan.
    (a) For transfer proposals:
    1. For projects classified as a ``C'' or ``D'' for 24 months or 
more--20 points.
    2. For projects classified as a ``C'' or ``D'' for less than 24 
months--15 points.
    (b) Stay-in owner proposals:
    1. For projects classified as a ``B'' as a result of a workout plan 
and/or transition plan approved by the Agency prior to January 1, 
2014--25 points.
    2. Projects with an Agency ``C'' classification for 12 months or 
longer with open physical findings at the time the MPR pre-application 
is filed, will not be eligible to participate in the MPR.
    7. Proposed or Closed Sale of Section 515 projects to Non-Profit/
Public Housing Authority. The Agency will award 20 points for projects 
that have been sold to non-profit organizations under the prepayment 
process as explained in 7 CFR part 3560, Subpart N. To receive points, 
the borrower/applicant must provide a copy of the purchase agreement 
and filed deed (if sale is already closed to an eligible non-profit or 
public body)--20 points.
    8. Prior approved CNAs. In the interest of ensuring timely 
application processing and underwriting, the Agency will award up to 20 
points for projects with CNAs already approved by the Agency. 
``Approved'' means the date the CNA or an updated CNA was previously 
reviewed and approved by the Agency. CNAs or updates before October 1, 
2012, may not be used for MPR underwriting without an update approved 
by the Agency. Points will be awarded for:
    i. CNAs approved on or after October 1, 2013, but prior to the 
publication of this Notice--20 points.
    ii. CNAs approved on or after October 1, 2012, but prior to October 
1, 2013--10 points.
    9. Tenant service provision. The Agency will award 5 points for 
applications that include new services provided by either a for-profit 
or a non-profit organization, which may include a faith-based 
organization, or by another Government agency. Such services shall be 
provided at no cost to the project and shall be made available to all 
tenants. Examples of such services may include transportation for the 
elderly, after-school day care services or after-school tutoring.
    10. For portfolio sales and project consolidations, the Agency will 
award the following points: Proposal does not involve a consolidation 
of properties (0 points); proposal involves a consolidation of 2-4 
properties (5 points); proposal involves a

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consolidation of 5 or more properties (10 points).
    11. Energy Conservation, Energy Generation, and Green Property 
Management. Under the MPR Energy Initiatives, projects may receive a 
maximum of 42 points under three categories: Energy Conservation, 
Energy Generation, and Green Property Management.

i. Energy Conservation--30 points

    Pre-applications for rehabilitation and preservation of projects 
may be eligible to receive a maximum of 30 points for the following 
energy conservation measures.
    (a) Participation in the Green Communities program by the 
Enterprise Community Partners, http://www.enterprisecommunity.com/solutions-and-innovation/enterprise green-communities, or an equivalent 
Agency-approved program will be awarded 30 points for any project that 
qualifies for the program. At least 30 percent of the points needed to 
qualify for the Green Communities program must be earned under the 
Energy Efficiency section of the Green Communities qualification 
program. Green Communities has an initial checklist indicating 
prerequisites for participation. Each applicant must provide a 
checklist establishing that the prerequisites for each program's 
participation will be met. All checklists must be accompanied by a 
signed affidavit by the project architect or engineer stating that the 
goals are achievable.
    (b) If you are not enrolling in the Green Communities program, then 
points can be accumulated for each of the following items up to a total 
of 20 points. Provide documentation to substantiate your answers below:
    1. This proposal includes the replacement of heating, ventilation, 
and air conditioning (HVAC) equipment with Energy Star qualified 
heating, ventilation, and air conditioning equipment. 3 points.
    2. This proposal includes the replacement of windows and doors with 
Energy Star qualified windows and doors. 3 points.
    3. This proposal includes additional attic and wall insulation that 
exceeds the required R-Value of these building elements for your areas 
as per the International Energy Conservation Code 2012. Two points will 
be awarded if all exterior walls exceed insulation code, and 1 point 
will be awarded if attic insulation exceeds code for a maximum of 3 
points.
    4. This proposal includes the reduction in building shell air 
leakage by at least 15 percent as determined by pre- and post-rehab 
blower door testing on a sample of units. Building shell air leakage 
may be reduced through materials such as caulk, spray foam, gaskets and 
house-wrap. Sealing of duct work with mastic, foil-backed tape, or 
aerosolized duct sealants can also help reduce air leakage. 3 points.
    5. This proposal includes 100 percent of installed appliances and 
exhaust fans that are Energy Star qualified. 2 points.
    6. This proposal includes 100 percent of installed water heaters 
that are Energy Star qualified. 2 points.
    7. This proposal includes replacement of 100 percent of toilets 
with flush capacity of more than 1.6 gallon flush capacity with new 
toilets having 1.6 gallon flush capacity or less, and with Environment 
Protection Agency (EPA) Water Sense label. 1 point.
    8. This proposal includes 100 percent of new showerheads with EPA 
Water Sense label. 1 point.
    9. This proposal includes 100 percent of new faucets with EPA Water 
Sense label. 1 point.
    10. This proposal includes 100 percent energy-efficient lighting 
including Energy Star qualified fixtures, compact fluorescent 
replacement bulbs in standard incandescent fixtures and Energy Star 
ceiling fans. 1 point.
    and
    (c) Participation in local green/energy efficient building 
standards. Applicants who participate in a city, county, or 
municipality program will receive an additional 2 points. The applicant 
should be aware and look for additional requirements that are sometimes 
embedded in the third-party program's rating and verification systems. 
2 points.

ii. Energy Generation (Maximum 5 Points)

    Pre-applications which participate in the Green Communities program 
by the Enterprise Community Partners or an equivalent Agency-approved 
program or receive at least 20 points for Energy Conservation measures 
are eligible to earn additional points for installation of on-site 
renewable energy sources. Renewable, on-site energy generation will 
complement a weather-tight, well-insulated building envelope with 
highly efficient mechanical systems. Possible renewable energy 
generation technologies include, but are not limited to: wind turbines 
and micro-turbines, micro-hydro power, photovoltaic (capable of 
producing a voltage when exposed to radiant energy, especially light), 
solar hot water systems and biomass/biofuel systems that do not use 
fossil fuels in production. Geo-exchange systems are highly encouraged 
as they lessen the total demand for energy and, if supplemented with 
other renewable energy sources, can achieve zero energy consumption 
more easily.
    Points under this paragraph will be awarded as follows. Projects 
with preliminary or rehabilitation building plans and energy analysis 
that propose a 10 percent to 100 percent energy generation commitment 
(where generation is considered to be the total amount of energy needed 
to be generated on-site to make the building a net-zero consumer of 
energy) may be awarded points corresponding to their percent of 
commitment as follows:
    (a) 0 to 9 percent commitment to energy generation receives 0 
points;
    (b) 10 to 20 percent commitment to energy generation receives 1 
point;
    (c) 21 to 40 percent commitment to energy generation receives 2 
points;
    (d) 41 to 60 percent commitment to energy generation receives 3 
points;
    (e) 61 to 80 percent commitment to energy generation receives 4 
points; or
    (f) 81 to 100 percent or more commitment to energy generation 
receives 5 points.
    In order to receive more than 1 point for this energy generation 
paragraph, an accurate energy analysis prepared by an engineer will 
need to be submitted with the pre-application. Energy analysis of 
preliminary building plans using industry-recognized simulation 
software must document the projected total energy consumption of the 
building, the portion of building consumption which will be satisfied 
through on-site generation, and the building's Home Energy Rating 
System (HERS) score.

iii. Green Property Management Credentials--5 Points

    Pre-applications may be awarded an additional 5 points if the 
designated property management company or individuals that will assume 
maintenance and operations responsibilities upon completion of 
construction work have a Credential for Green Property Management. 
Credentialing can be obtained from the National Apartment Association 
(NAA), National Affordable Housing Management Association, The 
Institute for Real Estate Management, U.S. Green Building Council's 
Leadership in Energy and Environmental Design for Operations and 
Maintenance (LEED OM), or another Agency-approved source with a 
certifiable credentialing program. Credentialing must be illustrated in 
the resume(s) of the property management team and included with the 
pre-application.
    The Agency will total the points awarded to each pre-application

[[Page 56748]]

received within the timeframes of this Notice and rank each pre-
application according to total score. If point totals are equal, the 
earliest time and date the pre-application was received by the Agency 
will determine the ranking. In the event pre-applications are still 
tied, they will be further ranked by giving priority to those projects 
with the earliest Rural Development operational date as defined under 
section VII (5).

B. Confirmation of Eligibility

    Eligibility will be confirmed after ranking is completed on the 10 
highest-scoring pre-applications in each State. If one or more of the 
10 highest-scoring pre-applications is determined ineligible (i.e., the 
applicant is a borrower that is not in good standing with the Agency or 
has been debarred or suspended by the Agency, etc.), then the next 
highest-scoring pre-application will be confirmed for eligibility.
    If one or more of the 10 highest-ranking pre-applications is a 
portfolio transaction, eligibility determinations will be conducted on 
each pre-application associated with the portfolio. Should any of the 
pre-applications associated with the portfolio sale be determined 
ineligible, those ineligible pre-application(s) will be rejected, but 
the overall eligibility of the portfolio sale will not be affected as 
long as the requirements in Section I and other provisions of this 
Notice are met.
    If one or more of the 10 highest-ranking pre-applications in a 
State is a project consolidation, and one of the projects involved in 
the consolidation does not meet the occupancy standards cited in 
Section III (2), that project(s) will be determined ineligible and 
eliminated from the proposed consolidation transaction.

C. Selection of Pre-Applications for Further Processing

    Once ranking and eligibility confirmations are complete, the Agency 
will conduct a four-step process, described below, to select eligible 
pre-applications for submission of formal applications. This process 
will allow the Agency to develop a representative sampling of 
revitalization transaction types, assure geographic distribution, and 
assure an adequate pipeline of transactions to use all available 
funding. No State may have more than four pre-applications selected for 
submission of formal applications (3-MFH pre-applications and 1-FLH). 
If an insufficient number of pre-applications are received to use 
available funds, the Agency, at its sole discretion, may exceed the 
maximum pre-application cap per State. All MPR tools are available to 
be used on both Sections 514/516 and Section 515 projects.
    Step One: The Agency will review the eligible pre-applications, 
categorize each pre-application as either Simple, Complex, or Portfolio 
(see section I), and sort them by State.
    Step Two: The Agency will select, for further processing, the top-
ranked portfolio transactions until a total of $50,000,000 in potential 
debt deferral is reached. Portfolio transactions will be limited to one 
per State (either RRH or FLH) and will count as one MPR transaction. A 
portfolio transaction, as defined in section I, will be limited to a 
maximum of 15 projects.
    Step Three: The highest ranked complex transactions (RRH or FLH) 
will be selected for further processing, not to exceed one per State.
    Step Four: Additional projects will be selected from the highest 
ranked eligible pre-applications involving simple transactions in each 
State until a total of three RRH pre-applications for MPR transactions 
are reached. If a FLH complex transaction has not been selected in Step 
Three above, one additional FLH project will be selected from the 
highest ranked eligible pre-applications involving FLH simple 
transactions, until a total of four MPR pre-applications per State is 
reached. States that do not have a FLH pre-application will be limited 
to three MPR pre-applications.
    If there are insufficient funds for all projects under any step, 
the Agency may suspend further selections.
    Any selected eligible applications from this Notice or prior 
Notices will be carried over to the next fiscal year for consideration. 
Any such unfunded pre-applications not approved by the Agency prior to 
September 30, 2016, will automatically be considered withdrawn by the 
Agency. Applicants, however, may reapply for funding under future 
Notices.

VIII. Processing of Selected Pre-Applications

    Those eligible pre-applications that are ranked and then selected 
for further processing will be invited to submit a formal application 
on SF 424, ``Application for Federal Assistance.'' Those eligible pre-
applications that are not selected for further processing will be 
retained by the Agency unless they are withdrawn according to this 
Notice. Applicants rejected will be notified their pre-applications 
were not selected and advised of their appeal rights under 7 CFR part 
11. In the event a pre-application is selected for further processing 
and the applicant declines, the next highest ranked pre-application of 
the same transaction type in that State will be selected provided there 
is no change in the preliminary eligibility of the pre-applicant. If 
there are no other pre-applications of the same transaction type, then 
the next highest-ranked pre-application, regardless of transaction 
type, will be selected.
    Applications (SF 424s) can be obtained and completed online. An 
electronic version of this form may be found on the internet at http://www.grants.gov/web/grants/forms.html. A hard copy may be obtained by 
contacting the State Office in the State where the project is located 
and can be submitted either electronically or in hard copy (refer to 
Section X for a listing of State Offices).
    Awards made under this Notice are subject to the provisions 
contained in the Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations Act, 2012, Public 
Law 112-55, Division A sections 738 and 739 regarding corporate felony 
convictions and corporate Federal tax delinquencies. In accordance with 
those provisions, only selected applicants that are or propose to be 
corporations will submit this form as part of their MPR application. To 
comply with these provisions, all corporate applicants must submit an 
executed for AD-3030 which can be found online at: http://www.ocio.usda.gov/forms/ocio_forms.html.
    If a pre-application is accepted for further processing, the 
applicant must submit additional information needed to demonstrate 
eligibility and feasibility (such as a CNA), consistent with this 
Notice and 7 CFR part 3560, prior to the issuance of any restructuring 
offer. The Agency will provide additional guidance to the applicant and 
request information and documents necessary to complete the 
underwriting and review process. Since the character of each 
application may vary substantially depending on the type of transaction 
proposed, information requirements will be provided as appropriate. 
Complete project information must be submitted as soon as possible, but 
in no case later than 45 calendar days from the date of Agency 
notification of the applicant's selection for further processing or 
September 1, 2015, whichever occurs first. Failure to submit the 
required information in a timely manner may result in the Agency 
discontinuing the processing of the request.
    The Agency will work with the applicants selected for further

[[Page 56749]]

processing in accordance with the following:
    1. Based on the feasibility of the type of transaction that will 
best suit the project and the availability of funds, further 
eligibility confirmation determinations will be conducted by the 
Agency.
    2. If an Agency-approved CNA has not already been submitted to the 
Agency, an Agency-approved CNA will be required (see 7 CFR 3560.103(c) 
and the Agency's published ``Guidance on the Capital Needs Assessment 
Process'' available at http://www.rurdev.usda.gov/HMF_MPR.html 
and the CNA Statement of Work together with any non-conflicting 
amendments). Agency-approved CNAs must be prepared by a qualified 
independent contractor, and are obtained to determine needed repairs 
and any necessary adjustments to the reserve account for long-term 
project viability.
    3. Underwriting will be conducted by the Agency. The feasibility 
and structure of each revitalization proposal will be based on the 
Agency's underwriting and determination of the restructuring tools that 
will minimize the cost to the Government consistent with the purposes 
of this Notice.

IX. MPR Offers

    Approved MPR offers will be presented to successful applicants who 
will then have up to 15 calendar days to accept or reject the offer in 
writing. If no offer is made, the application will be rejected and 
appeal rights will be given. Closing of MPR offers will occur within 90 
days of acceptance by the applicant unless extended in writing by the 
Agency.

X. Appeal Process

    All adverse determinations are appealable pursuant to 7 CFR part 
11. Instructions on the appeal process will be provided at the time an 
applicant is notified of the adverse action.

    Dated: September 15, 2014.
Tony Hernandez,
Administrator, Rural Housing Service.
BILLING CODE 3410-XV-P

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[FR Doc. 2014-22476 Filed 9-22-14; 8:45 am]
BILLING CODE 3410-XV-C