[Federal Register Volume 80, Number 148 (Monday, August 3, 2015)]
[Notices]
[Pages 45933-45942]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18990]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Notice of Solicitation of Applications (NOSA) for the Multifamily
Preservation and Revitalization (MPR) Demonstration Program Under
Section 514, Section 515, and Section 516 for Fiscal Year 2015
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
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SUMMARY: The Rural Housing Service (Agency) announces the timeframe to
submit applications to participate in a demonstration program to
preserve and revitalize existing Rural Rental Housing (RRH) projects
under Section 514, Section 515, and Section 516 of the Housing Act of
1949, as amended. Under this 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 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) will be made available under this program.
DATES: For Fiscal Year 2015, the Agency will facilitate use of the
Fiscal Year 2015 Multifamily Preservation and Revitalization (MPR)
funding tools by holding a competitive application round for MPR
applications requesting other MPR funding tools, in addition to the
available MPR deferral assistance, and by adding a continuous open
application process for any transfer applications that request only the
MPR loan deferral assistance. Application deadlines for these
opportunities are:
(1) For MPR applications requesting debt deferral of eligible
Section 514 or Section 515 loans, plus other MPR funding tools,
complete applications must be received no later than 5:00 p.m. Eastern
Time,120 calendar days after August 3, 2015, and
(2) For any MPR applications requesting debt deferral only for
eligible Section 514 or Section 515 loans, complete applications may be
submitted on an ongoing basis through COB 5:00 p.m. Eastern Time,
December 31, 2015.
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. Applicant's intending to mail
[[Page 45934]]
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.
FOR FURTHER INFORMATION CONTACT: Dean Greenwalt,
[email protected], (314) 457-5933, and/or Abby Boggs
[email protected], (615) 783 1382, 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. All hard copy pre-
applications and required documents (attachments) must be submitted to
this address. (Please note these telephone numbers are not a toll-free
numbers.)
SUPPLEMENTARY INFORMATION: This Fiscal Year (FY) 2015 funding for the
MPR demonstration program will be posted on the Rural Development Web
site, www.rd.usda.gov/newsroom/notices-solicitation-applications-nosas.
The commitment of program dollars will be made to applicants of
selected applications that have fulfilled the necessary requirements
for obligation, to the extent an appropriation act provides funding for
the MPR demonstration program.
Expenses incurred in applying for this Notice will be borne by and
be at the applicant's risk.
Of particular note this year, the Rural Housing Service (the
Agency) will assign additional points to pre-applications for projects
based in or serving census tracts with poverty rates greater than or
equal to 20 percent. This emphasis will support Rural Development's
(RD) mission of improving the quality of life for Rural Americans and
commitment to directing resources to those most in need.
A synopsis of this program and the pre-application's universal
resource locator will be listed by Catalog of Federal Domestic
Assistance Number or at Federal Grants Wire at http://www.federalgrantswire.com.
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
Federal Agency Name: Rural Housing Service, USDA.
Funding Opportunity Title: Multifamily Preservation and
Revitalization Demonstration Program--Section 514, Section 515, and
Section 516 for Fiscal Year 2015.
Announcement Type: Inviting responses in the form of pre-
applications from interested applicants.
Catalog of Federal Domestic Assistance Number (CFDA): 10.447.
I. Funding Opportunity Description
The Consolidated and Further Continuing Appropriations Act, 2015,
Public Law 113-235, signed December 16, 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
and 1486) and provide Rural Development with the authority to provide
financial assistance for low- income MFH and FLH and related
facilities, as described in 7 CFR part 3560.
This Notice solicits pre-applications from interested 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 MPR
demonstration program shall be referred to in this Notice as the
Multifamily Preservation and Revitalization demonstration 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 demonstration program 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.
Note: All pre-applications will be selected by the Agency using
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 MPR 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, support
new debt or to reduce rents, as determined by the Agency.
A. Debt deferral is described as follows:
1. MPR Debt Deferral. A deferral of the existing Section 514 or
Section 515 Agency loan(s), obligated prior to October 1, 1991, for 20
years. If the term of any existing Section 514 or Section 515 loans is
less than 20 years, the Agency will offer a re-amortization of the
existing loans extending the term to a minimum of 20 years. Section 514
or Section 515 loans obligated prior to October 1, 1991, and
subsequently transferred on new rates and terms may not be eligible for
deferral. Any questions on whether or not a loan is eligible for
deferral should be directed to the local RD State Office at: http://teamrd.usda.gov/rd/emp_services/directory/states/Combined.doc. 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 ``Multiple Family Housing Interest
Credit Agreement'' Form RD 3560-9, which is available at http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3560-9.PDF.
B. Other Agency MPR funding 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 2 CFR parts 200 and 400.
2. MPR Zero Percent Loan. A loan at zero percent interest. The
loan's maximum term and amortization will be as authorized by the
respective program authority.
(a) For Section 515 RRH projects, the maximum loan term is 30 years
amortized over a maximum term of 50 years.
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(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 Uniform Federal
Accessibility Standards (UFAS), and the Agency concurs. However, other
funding sources as outlined below in (a) through (f) can be used either
for such revitalization and/or improvements:
4. Other Sources of Funds
(a) Rural Development Section 515 Rehabilitation loan funds;
(b) Rural Development Sections 514/516 Off-Farm rehabilitation
loan/grant funds;
(c) Rural Development Section 538 Guaranteed Rural Rental Housing
(GRRH) program financing;
(d) Rural Development Multi-Family Housing Preservation Revolving
Loan Funds program;
(e) Third-party loans, grants, tax credits and tax-exempt
financing; and
(f) 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 an 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 (RTO),
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 Sections 514/516 or Section 515 loans. After the transfer has
been underwritten and concurred with by the Agency's Multifamily
Housing Preservation and Direct Loan Division, the MPR transaction may
be underwritten.
For the purposes of the MPR demonstration program, the
restructuring transactions will be identified by the Agency in three
categories:
Simple Transactions: These involve no change in ownership.
Complex Transactions: These 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. If a consolidation is proposed, all
projects to be consolidated must be submitted on one pre-application
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(s) where the projects are located
prior to filing their MPR pre-application to ensure Rural Development
concurs with the applicant'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.
Portfolio transactions: These include 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/managing member. Each project included in the portfolio 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
should 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
projects of the stay-in owner or common purchaser must have at least
one general partner/managing member in common.
Transactions within each category may utilize any or all MPR
funding tools described above in paragraph I, ``Funding Opportunity
Description.'' MPR tools available through the MPR demonstration
program will be used to address preservation and rehabilitation needs
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. Payment of any deferred
debt will be required from excess cash generated from project
operations after all other secured debts are satisfied or as directed
by the Agency.
Maturing Mortgage Applications
The Agency recognizes that a number of Section 515 and Sections
514/516 properties are financed through mortgages scheduled to mature
through calendar year 2018. The Agency will make an MPR debt deferral
available to properties with all Agency mortgages maturing on or before
December 31, 2018, in order to extend the affordable use of the housing
and continue its eligibility for Section 521 Rental Assistance.
Notwithstanding any other provisions of this Notice, applicants
applying for a deferral of their eligible mortgage debt will be
required to meet the eligibility requirements in either 7 CFR 3560.55
or 3560.555, as determined applicable by the Agency. Applicants
applying solely for deferral of eligible maturing mortgages will only
be required to submit the MPR pre-application within the established
deadlines set out in the DATES section of this Notice; no additional
supporting documentation is required.
The applicant will complete the MPR pre-application documenting the
date the Agency loans will mature. The Agency reserves the right to
approve an MPR debt deferral under this paragraph in its sole
discretion, based on factors including but not limited to: The
preceding 12-month average physical vacancy; analysis of current
ownership; evidence the property is financially solvent; the current
physical condition of the property; amount of assistance needed to meet
immediate and long term physical needs of the property; and
[[Page 45936]]
the availability of other subsidized housing within the community.
If other MPR tools are needed, in addition to debt deferral, the
Agency will require selected applicants to submit an approved Capital
Needs Assessment to provide a fair and objective review of the
property's projected physical needs.
II. Award Information
All Agency funding of pre-applications selected under this Notice
will carry over to the next fiscal year and be considered for funding.
However, pre-applications selected under this Notice must be approved
by the Agency no later than December 31, 2017. Any pre-applications
selected under this Notice, not approved by the Agency prior to
December 31, 2017, will be considered automatically withdrawn.
Applicants may reapply for funding under future Notices.
Applicants are alerted the Agency has unfunded applications carried
over from prior Notices that will receive priority consideration for
funding approval in FY 2015 based on the terms of those Notices. If
fiscal year funds available for the MPR demonstration program are fully
committed before all eligible pre-applications selected for further
processing under this Notice are funded, the Agency may suspend further
processing of the pre-applications at that time.
MPR funding 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 113-235 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 Notice, the provisions of this Notice will take
precedence.
III. Eligibility Information
A. 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 or 3560.555, as determined appropriate by the Agency.
This Notice requires selected applicants to make the required equity
contribution as outlined in 3560.63(c) for any new Section 515 loan
offered as part of the MPR. Funds committed under Section I may be used
to fund all or a portion of the required equity contribution. Loan
applicants will not be given consideration for any increased equity
value the property may have since the initial loan was made.
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 or extended open findings as defined in Section V, and
recorded in the Agency's automated Multi-Family Information System
(MFIS), will preclude further processing of any MPR applications
associated with the applicant/borrower as well as any affiliated entity
having a 10 percent or more ownership interest 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 this Notice's 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) 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, regardless of reason, 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 section (ii) above, a positive cash
flow for the previous full 3 years of operation is required unless an
exception applies as described section III(A)(2), above.
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 evidence of site control. Evidence may include a
Purchase Agreement, Letter of Intent, or other documentation acceptable
to the Agency.
5. An Agency approved CNA (for guidance refer to http://www.rd.usda.gov/programs-services/housing-preservation-revitalization-demonstration-loans-grants) and an Agency financial evaluation must be
conducted to ensure that utilization of the restructuring tools of the
MPR demonstration 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. 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. 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. Application and Submission Information
A. The general steps of the MPR application process are as follows:
1. Pre-application: Applicants submit a pre-application described
in Section IV below along with any supporting documentation as outlined
in the Notice. Failure to timely submit all required documentation will
result in an incomplete pre-application. 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 VI, the Agency will conduct an additional
eligibility screening later in the application 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 III of this Notice, the Agency will require the
owner to provide a CNA, completed in accordance with the
[[Page 45937]]
Agency's published guidance (available at http://www.rd.usda.gov/programs-services/housing-preservation-revitalization-demonstration-loans-grants) to underwrite the proposal to determine financial
feasibility. Applicants will be informed of any proposals that are
determined to be incomplete, 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 the
MPR 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, as determined by the Agency. 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 (RUC) for a period of 20 years, the
remaining term of any loans, or the remaining term of any existing
RUPs, whichever ends later. The restructuring proposal will be
established in the MPRCC.
6. MPR Agreements: If the offer is accepted by the applicant, the
applicant must sign and return the MPRCC. By signing the offer, the
applicant agrees to the terms of the MPRCC. Any third-party lender will
be required to subordinate to the Agency's RUC 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 demonstration
program.
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 or rehabbed, 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.
B. 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, are as follows:
1. Phase I--The first phase is the pre-application process.
Applicants 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 is received in the correct format and place as described in
this Notice for each existing property 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:
(a) For all transfers of ownership, evidence of site control must
be provided.
(b) 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 sections III(2) and III(3) above. The market data must
demonstrate there is need for the project evidenced by waiting lists
and a housing shortage confirmed by local housing agencies and realtors
and accepted 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.
(c) For a property that has been sold to a non-profit entity under
the Sale to Non-Profit process defined in 3560, Subpart N, a copy of
the recorded Deed.
Unless an exception under this section applies, the requirements
stated in Section III, paragraphs (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 evidence of site control
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.
2. 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 transaction
based on the information submitted on the pre-application, in
accordance with the category descriptions provided in Section I of this
Notice.
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 pre-application as discussed under
section VI. 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. USDA Rural Development MFH State
Office contacts can be found at http://teamrd.usda.gov/rd/emp_services/directory/states/Combined.doc
(Note: Telephone numbers listed in the Web site are not toll-free.)
[[Page 45938]]
The pre-application is in 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 data is required,
these additional documents are to be attached to the resulting email
prior to submission.
Pre-applications may be downloaded from the Agency's Web site at
http://www.rd.usda.gov/programs-services/housing-preservation-revitalization-demonstration-loans-grants or obtained by contacting the
State Office in the State the project is located. Hard copy pre-
applications and additional materials can be mailed to the attention of
Dean Greenwalt or Abby Boggs, 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.
V. Application Review Information
A. Pre-application ranking points will be based on information
provided during the submission process, and in Agency records. Only
timely, complete pre-applications requesting debt deferral of eligible
Section 514 or Section 515 loans plus other MPR funding tools will be
ranked. Points will be awarded as follows:
1. Contribution of other sources of funds. Other funds are those
discussed in Section I.B, ``Other Sources of Funds'' paragraph, items
(a) through (f), above. Points will be awarded based on documented
written evidence that the funds are committed, as determined by the
Agency. ``Commitment'' means an actual award of funds, or another
contractual agreement between a third-party funder and the borrower/
applicant entity to provide funds.] Commitments that include the terms
such as `may' or `intend' will not be acceptable for scoring purposes.
The maximum points awarded for this criterion is 25 points. These
points will be awarded in the following manner:
(a) Evidence of a commitment of at least $3,000 to $5,000 per unit
per project from other sources--15 points, or
(b) 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 RTO may be allowed
for funds committed in accordance with 7 CFR 3560.406(d)(14)(ii). 10
points
4. Maturing Mortgages. Points will be awarded to properties where
all existing RD loans will mature (make their final loan payment) on or
before December 31, 2018. 10 Points.
5. Persistent poverty counties. Points will be awarded to projects
located in persistent poverty counties. A persistent poverty county is
a classification for counties in the United States that have had a
relatively high rate of poverty over a long period. The USDA's Economic
Research Service (ERS) (http://ers.usda.gov/) is the main source of
economic information and research for USDA and a principal agency of
the U.S. Federal Statistical System located in Washington, DC. ERS has
defined counties as being persistently poor if 20 percent or more of
their populations were living in poverty over the last 30 years
(measured by the 1980, 1990, and 2000 decennial censuses and 2006-2010
American Community Survey 5-year estimates). 10 points
6. Points may be awarded to projects that have been adversely
impacted by an event that, as determined by the Agency, directly and
exclusively results from the occurrence of natural causes that could
not have been prevented by the exercise of foresight or caution over
the previous 24 months, or other unavoidable accident causing physical
property damage or failure that is not reimbursable by property,
casualty or liability insurance any other form of third-party
compensation, such as disaster loans and grants from other agencies. 25
points
7. 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 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 generally directly related to physical needs, a maximum
of 30 points will be awarded based on the following criteria:
(a) Projects with initial operational dates prior to December 21,
1979--30 points.
(b) Projects with initial operational dates on or after December
21, 1979, but before December 15, 1989--20 points.
(c) Projects with initial operational dates on or after December
15, 1989, but before October 1, 1991--10 points.
(d) Projects with initial operational dates on or after October 1,
1991--0 points;
8. Projects with Open Physical Findings. An ``Open Physical
Finding'' is a condition at the property, identified by the Agency that
is not in compliance with the Agency standards published in 7 CFR
3560.103. Projects with Open Physical Findings classified ``B'', ``C,''
or ``D'', as defined below, will be awarded points in the following
manner:
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 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.
Class ``C'' Projects
Class ``C'' projects are projects with Open Physical or Financial
findings or violations, which are not associated to an approved workout
and/or transition plan. This can include projects with violations where
a servicing letter has been issued but 60 calendar days have
[[Page 45939]]
not passed since the issuance of the first servicing letter.
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 an approved workout plan and/or transition
plan.
For transfer proposals:
(a) For projects classified a ``C'' or ``D'' for 24 months or more.
20 points
(b) For projects classified as a ``C'' or ``D'' for less than 24
months. 15 points
Stay-in owner proposals:
(a) For projects classified as a ``B'' as a result of a workout
and/or transition plan approved by the Agency prior to April 1, 2015.
25 points.
(b) Projects with an Agency ``C'' classification for 24 months or
longer with Open Findings at the time the MPR pre- application is
filed, will not be eligible to participate in the MPR demonstration
program.
1. 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 filed deed with their
pre-application. 20 points.
2. Prior approved Capital Needs Assessments (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
approved by the Agency. CNAs or updates before October 1, 2013, may not
be used for MPR underwriting without an update approved by the Agency.
Points will be awarded for:
(a) CNAs approved on or after October 1, 2014, but prior to the
publication of this Notice 20 points
(b) CNAs approved on or after October 1, 2013, but prior to October
1, 2014, 10 points
2. 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. 5
points.
3. For portfolio sales and project consolidations, the Agency will
award the following points:
(a) Proposal does not involve a consolidation of properties 0
points;
(b) Proposal involves a consolidation of 2-4 properties 5 points;
(c) Proposal involves a consolidation of 5 or more properties 10
points.
4. 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.
(a) 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.
(1) Participation in the Green Communities program by the
Enterprise Community Partners, http://www.enterprisecommunity.com/solutions-and-innovation/enterprise-green-communities, 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 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. Additional points will be awarded for
checklists that achieve higher levels of energy efficiency
certification as set forth in paragraph 2 below. All checklists must be
accompanied by a signed affidavit by the project architect or engineer
stating that the goals are achievable.
(2) 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:
Documentation may include a signed statement agreeing to replace the
items, when needed, with Energy Star rated items.
(i) 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
(ii) This proposal includes the replacement of windows and doors
with Energy Star qualified windows and doors. 3 points
(iii) 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.
(iv) 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
(v) This proposal includes 100 percent of installed appliances and
exhaust fans that are Energy Star qualified. 2 points
(vi) This proposal includes 100 percent of installed water heaters
that are Energy Star qualified. 2 points
(vii) This proposal included 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
(viii) This proposal includes 100 percent of new showerheads with
EPA Water Sense label. 1 point
(ix) This proposal included 100 percent of new faucets with EPA
Water Sense label. 1 point
(x) This proposal included 100 percent energy-efficient lighting
including, but not limited to, Energy Star qualified fixtures, compact
fluorescent replacement bulbs in standard incandescent fixtures and
Energy Star ceiling fans. 1 point
AND
(3) 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
5. Energy Generation (Maximum 5 Points)
Pre-applications which participate in the Green Communities program
by the Enterprise Community Partners, 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
[[Page 45940]]
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;
(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.
6. 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, or the U.S. Green Building
Council's Leadership in Energy and Environmental Design for Operations
and Maintenance (LEED OM). 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
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 V A 7.
B. Confirmation of Eligibility
For pre-applications submitted under Round 1 of this Notice
requesting debt deferral only of the eligible Section 515 or Section
514 loans, the Agency will conduct eligibility determinations on an
ongoing basis, and eligible applicants will be authorized to proceed,
subject to the availability of appropriated funds under the MPR
program.
For pre-applications submitted under Round 2 of this Notice,
Eligibility will be confirmed after ranking is completed on the
highest-scoring pre-applications in each State. If one or more of the
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 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 be determined
ineligible, those ineligible pre-application(s) will be rejected, but
the overall eligibility of the portfolio will not be affected as long
as the requirements in Section I and other provisions of this Notice
are met, as determined by the Agency.
If one or more of the 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 (ii), that project(s) will be determined ineligible and eliminated
from the proposed consolidation transaction.
VI. Award Administration Information
A. Selection of Pre-Applications for Further Processing
For pre-applications submitted under this Notice and requesting
debt deferral only, the Agency will complete the eligibility
confirmations on an ongoing basis and authorize those applicants
determined eligible to proceed, subject to the availability of
appropriated funds under the MPR program
For pre-applications submitted under this Notice, 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 will be authorized to accept more than ten (10) pre-applications
for submission of formal applications. If an insufficient number of
pre-applications is received to use available funds, the Agency, at its
sole discretion, may exceed the maximum pre-application cap per State.
All MPR funding 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 by State.
STEP TWO: Portfolio transactions will be limited to 3 per State
(either RRH or FLH) and will count as 3 MPR transactions. 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 2 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 10 (RRH or FLH) pre-applications for MPR
transactions is reached.
If there are insufficient funds for all projects selected under any
step, the Agency may suspend further selections.
This demonstration project is subject to the availability of funds.
Any selected eligible applications from this Notice or prior NOFAs will
be carried over to the next fiscal year for consideration. Any such
unfunded pre-applications not approved by the Agency prior to December
31, 2017, will automatically be considered withdrawn by the Agency.
Applicants, however, may
[[Page 45941]]
reapply for funding under future Notices.
B. Pre-Application Selection
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.'' Applications (SF
424s) can be obtained and completed online. An electronic version of
this form may be found at: http://www.epa.gov/ogd/AppKit/index.htm. 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 VIII of this Notice, below, for a
link to all Rural Development State Offices.
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 that
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.
Awards made under this Notice are subject to the provisions
contained in the Agriculture, Consolidated and Further Continuing
Appropriations Act, 2015, Public Law 113-235, Division E, Title 1,
sections 744 and 745, regarding corporate felony convictions and
corporate federal tax delinquencies. In accordance with those
provisions, only selected applicants that are or propose to be
corporations need submit the following form as part of their MPR
application; such applicants must submit an executed form AD-3030,
which can be found online at: http://www.ocio.usda.gov/document/ad3030.
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.
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
processing in accordance with the following:
(a) 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.
(b) 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.rd.usda.gov/programs-services/housing-preservation-revitalization-demonstration-loans-grants 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.
(c) 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 MPR funding tools that
will minimize the cost to the Government consistent with the purposes
of this Notice.
C. 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
six months of the obligation of MPR tools unless extended in writing by
the Agency.
VII. Non-Discrimination Statement
The U.S. Department of Agriculture (USDA) is an equal opportunity
provider, employer, and lender. All borrowers and applicants will
comply with the provisions of 7 CFR 3560.2. All housing must meet the
accessibility requirements found at 7 CFR 3560.60(d). 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 prohibits discrimination against
its customers, employees, and applicants for employment on the basis 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, 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 an employment complaint, you must contact your
Agency's EEO Counselor within 45 days of the date of the alleged
discriminatory act, event, or in the case of a personnel action.
Additional information can be found online at: http://www.ascr.usda.gov/complaint_filing_file.html.
If you wish to file a Civil Rights program complaint of
discrimination, complete the USDA Program Discrimination Complaint Form
(PDF), found online at: http://www.ascr.usda.gov/complaint_filing_cust.html, 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) 720-7442 or email at: [email protected].
Individuals who are deaf, hard of hearing or have speech
disabilities and you wish to file either an EEO or program complaint
please 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).
VIII. Award Agency Contacts
USDA Rural Development MFH State Office contacts can be found at
http://teamrd.usda.gov/rd/emp_services/
[[Page 45942]]
directory/states/Combined.doc. (Note: Telephone numbers listed are not
toll-free.)
Appropriation Act funding will be posted on the Rural Development
Web site.
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: July 28, 2015.
Tony Hernandez,
Administrator, Rural Housing Service.
[FR Doc. 2015-18990 Filed 7-31-15; 8:45 am]
BILLING CODE 3410-XV-P