[Federal Register Volume 82, Number 170 (Tuesday, September 5, 2017)]
[Notices]
[Pages 41914-41925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18753]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
Notice of Solicitation of Applications (NOSA or Notice) for the
Multifamily Preservation and Revitalization (MPR) Demonstration Program
Under Section 514, Section 515, and Section 516
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
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SUMMARY: The Rural Housing Service (Agency) announces the timeframes to
submit pre-applications to participate in a demonstration program to
preserve and revitalize existing Multi-Family Housing (MFH) projects
currently financed under Section 514, Section 515, and Section 516 of
the Housing Act of 1949, as amended. Under this demonstration program,
existing Section 515 Rural Rental Housing (RRH) and Sections 514/516
Off-Farm Labor Housing (FLH) projects may be revitalized to preserve
the ability of rental projects to provide safe and affordable housing
for very-low, low, or moderate-income residents. The goal for projects
participating in this program will be to extend their affordable use
without displacing tenants because of increased rents. RRH projects
include properties designated as senior, family, mixed, congregate and
cooperative housing with currently outstanding Section 515 loans. FLH
projects include only off-farm properties with currently outstanding
Section 514 loans.
This Notice does not provide any additional units of Agency Rental
Assistance (RA) for projects financed under Section 514, Section 515,
and Section 516.
DATES: Pre-applicants selected under this Notice to submit final
applications will be funded to the extent an appropriation act provides
sufficient funding at the time of final application approval. The
amount of funding available will be posted in the Rural Development
(RD) Web site, http://www.rd.usda.gov/programs-services/housingpreservation-revitalization-demonstration-loans-grants.
Pre-application submission deadlines for these opportunities are:
(1) For pre-applications requesting multiple MPR funding tools
[including debt deferral of eligible Section 514 or Section 515 loans]
complete pre-applications as defined in this Notice must be received no
later than 5:00 p.m. Eastern Time December 1, 2017.
(2) For any MPR applicants requesting debt deferral only for
eligible Section 514 or Section 515 loans, complete MPR pre-
applications may be submitted on
[[Page 41915]]
an ongoing basis through 5:00 p.m. Eastern Time, September 28, 2018.
The Agency will not consider any pre-application received after the
closing deadlines. MPR pre-applications will only be accepted
electronically. All supporting documents must also be delivered
electronically in PDF format by these deadlines to be considered for
acceptance.
FOR FURTHER INFORMATION CONTACT: Dean Greenwalt,
[email protected], (314) 457-5933, and/or Abby Boggs,
[email protected], (615) 783 1382, 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: This Notice will be posted on the RD Web
site, www.rd.usda.gov/newsroom/notices-solicitation-applications-nosas.
To the extent an Appropriation Act provides funding for the MPR
demonstration program, program dollar commitments will only be made to
the MPR pre-applicants selected to submit formal applications. The
Agency will publish, as necessary, any revisions and amendments
reflecting program modifications, in the Federal Register within the
period this Notice remains open.
Expenses incurred in applying for this NOSA Notice will be borne by
and be at the applicant's sole risk.
The Agency will assign additional points to pre-applications from
existing RD-financed projects based in or serving census tracts in
persistent poverty counties as well as other areas with special housing
needs. This emphasis supports RD's mission of improving the quality of
life for Rural Americans and an ongoing commitment to direct 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 or more specifically at https://www.cfda.gov/index?s=program&mode=form&tab=step1&id=4c4fe0f56eb9b21c
e519a6c4104933bc.
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 2017 and any subsequent funding
appropriation of funds made available during the term this NOSA is
outstanding.
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 Appropriations Act, 2017, Public Law 115-31,
signed May 5, 2017, authorized USDA to conduct a demonstration program
for the preservation and revitalization of the sections 514, 515, and
516 multi-family rental housing properties (off-farm FLH properties) to
restructure existing USDA MFH loans expressly to ensure the project has
sufficient resources to provide safe and affordable housing for low-
income residents and farm laborers under the programs authorized by the
Housing Act of 1949, as amended (42 U.S.C. 1484, 1485 and 1486).
This Notice solicits pre-applications from interested borrowers/
applicants of 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. Eligibility for MPR funding
under this NOSA includes current RD borrowers that have received a loan
from the Agency and eligible applicants who are applying to assume
ownership and the associated presently outstanding RD loans on RD-
financed MFH properties. Eligible applicants for the MPR program
include individuals, partnerships or limited partnerships, consumer
cooperatives, trusts, State or local public agencies, corporations,
limited liability companies, non-profit organizations, Indian tribes,
associations, or other entities that own or will be the owner of the
project for which an application for transfer of ownership by the
Agency is submitted.
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 eligible tenants over the
remaining term of any Agency loan, or the remaining term of any
existing Restrictive-Use Provisions (RUP) or prohibition, whichever
ends later.
MPR funds cannot be used to build community rooms, add additional
parking areas, playgrounds, or laundry rooms. MPR funds may be used to
repair or renovate existing project items identified in the Capital
Needs Assessment (CNA) and to satisfy accessibility transition and fair
housing requirements.
To fulfill an existing need for additional affordable rental
housing as documented in a market study and/or another information
source acceptable to the Agency, MPR funds may be used to add new
units, and/or reconfigure the present units, within the existing
footprint of a project's current or previously resident-occupied
structure(s) (e.g., converting the non-residential portion of mixed-
used space into residential units). With Agency concurrence, MPR funds
may also be used to meet the project's five (5) percent fully
accessible requirement as defined by Uniform Federal Accessibility
Standards (UFAS).
All pre-applications will be reviewed by the Agency using the
process described in this NOSA and 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, the applicant will engage a
qualified independent third-party to conduct a comprehensive Capital
Needs Assessment (CNA) acceptable to RD (unless an existing CNA
acceptable to the Agency was included as part of the pre-application
submission) which should provide a fair and objective review of
projected capital needs in any case where the applicant indicates
additional MPR tools are also being requested. Applicants determined
eligible to receive deferral-only MPR assistance for Exiting
Projects and transfers will be processed on a continuous basis as
described in this Notice so long as funds remain available. The
Agency shall implement any other 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 available in this program is debt payment
deferral for up to 20 years for presently outstanding Section 514 or
Section 515 loans. The cash flow from the deferred RD direct loan
principal and interest payment will be deposited to the RD project's
reserve account or used as directed by the Agency to help meet the
specific project's future physical needs, support new debt or to reduce
rents, or as otherwise directed and determined by the Agency to be in
the best interests of the tenants and Government.
[[Page 41916]]
A. Debt deferral is described as follows:
1. MPR Debt Deferral. A deferral for up to 20 years of the existing
Section 514 or Section 515 Agency loan(s). 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 up to
20 years based on an analysis of the individual needs of the specific
property. If an MPR debt deferral is necessary as part of an ownership
transfer under the provisions of 7 CFR 3560.406, debt deferral only for
eligible loans as described herein may be included in the transfer
underwriting when:
a. The deferral of such loans will assure the continued feasibility
of preserving needed rental units based on criteria described in 7 CFR
3560.57(a)(3), and
b. The new owner, including all principles, does not share any
identity of interest (IOI) with the selling entity in any other RD
properties not fully compliant with all Agency requirements and
conditions for any other outstanding RD indebtedness, or
c. In those cases where the IOI seller, including the principles of
the acquiring applicant, are fully compliant on any outstanding RD
approved workout agreements.
Any questions on whether or not a loan is eligible for deferral
should be directed to the local RD State Office at: http://www.rd.usda.gov/contact-us/state-offices.
2. All terms and conditions of the deferral will be described in
the MPR Debt Deferral Agreement. A balloon payment of principal and
accrued interest (deferral balloon) will be due at the end of the
deferral period, or upon default pursuant to the terms contained
therein. 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.
3. At the time of the deferral balloon, RHS intends to use the
available servicing tools to preserve any needed projects as affordable
rental housing.
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, including accessibility and fair
housing mandates 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. This
loan is not deferred. Monthly payments are required for the maximum
term and amortization period will be as authorized by the respective
program authority.
a. The maximum term for the Zero Percent Loan will not extend
beyond the latest maturity date of any existing Section 515 RRH or
Section 514 FLH loan term already in place at the time of closing, or
the modified maturity date of any current loan being re-amortized.
b. For Section 515 RRH projects, the maximum loan term is 30 years
amortized over a maximum term of 50 years.
c. 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 as the latest
maturing Section 514 or Section 515 loan already in place at the time
of closing, or the modified maturity date of any current loan being
reamortized.
4. Other Possible Sources of Funds:
a. Rural Development Section 515 Rehabilitation loan funds for RRH
projects;
b. Rural Development Sections 514/516 Off-Farm rehabilitation loan/
grant funds for FLH projects;
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;
f. Owner-provided capital contributions in the form of a cash
infusion. A cash infusion cannot be a loan; and
g. Excess funds as defined by the then current respective RD
program servicing regulations from the project's reserve or operating
fund accounts, or donated services provided by the applicant.
5. Transfers/Subordinations/Consolidations. Transfers,
subordinations, and consolidations may be approved as part of a MPR
transaction for the selected pre-applicants in accordance with 7 CFR
part 3560 and the following:
If a transfer is part of the MPR transaction, and the transfer
includes a seller payment and/or an increase in the allowable Return to
Owner (RTO), the transfer must first be underwritten to meet the
requirements of 7 CFR 3560.406 to establish the maximum RTO amount RD
will recognize for the buyer and seller. When it is in the best
interests of the Government and the tenants to meet preservation goals,
the transferee may request RD to reconsider the initial transfer
authorization and grant use of MPR debt deferral only of all eligible
RRH or FLH loans.
Transfers using only MPR loan deferral funds in the underwriting do
not require review by the RD Headquarters MPR Loan Review Committee.
The RD State Office will submit these transfer requests through its HQ
Review Underwriter to the Deputy Administrator, MFH for concurrence.
a. This Notice will allow transfer transaction applicants to submit
a second feasibility scenario using multiple MPR tools in addition to
their primary proposal with MPR Deferral only. Applicants may include,
at their own risk, MPR Zero Percent and/or MPR Soft Second loans in
their transfer proposals. The combined total of the Zero Percent and
Soft Second loans may not exceed the amount posted on the RD Web site
at the beginning of each Round. Notwithstanding the aforementioned, if
the transfer proposes a seller payment and/or an increase in the
allowable Return to Owner (RTO), the transfer must first be
underwritten to meet the requirements of 7 CFR 3560.406 to establish
the maximum RTO amount RD will recognize for the buyer and seller. RD
has added a feature to its Transfer Preliminary Assessment Tool (PAT)
that provides users the ability to include the second feasibility
scenario using multiple MPR tools within the same template.
b. An applicant that chooses to include MPR Zero Percent and/or MPR
Soft Second loans in their transfer proposal will formally acknowledge
that they understand inclusion of those funds in the underwriting
constitutes neither an approval nor a commitment of any MPR funds by
the Agency. They must also submit a transfer proposal for the
transaction consistent with other proposals using other types of
currently available financing, so the Agency can determine the
feasibility of the transfer using such alternative forms of financing
(e.g., Section 538). If MPR funds are not available or the transfer is
not feasible without those funds, the applicant may choose to wait for
MPR funds to become available. If the applicant must move forward with
the transaction and is unable to wait for MPR funds to become
available, it will be the applicant's responsibility, not the Agency's,
to secure additional equity
[[Page 41917]]
and/or funding comparable to the rates and terms of the MPR loan funds
from other non-Agency sources to replace the MPR tools. The applicant
may also choose to modify its transaction and exclude the use of MPR
funds if the transaction remains financially feasible.
c. The Agency will evaluate all transfers applying to participate
in the MPR program equally, whether they chose to use MPR tools at
underwriting or not. Every transfer application, regardless of the use
of MPR tool in the underwriting, applying to participate in the MPR
program will be evaluated and selected in accordance to the selection
process outlined in this Notice. The MPR funds amount limit [mentioned
in b. above] will not apply to transfers approved by the Agency that do
not use MPR Zero percent and MPR Soft Second loans in its proposal.
MPR funds will not be used to pay equity on MFH transfers.
d. Prior RD Headquarters concurrence is required for any transfer
with equity loan payments, increased RTO, or waivers for unusual
transactions that fall outside of the normal transfer transaction
principles of 7 CFR 3560.406 or revitalization related policy issues
not otherwise addressed.
1. For the purposes of the MPR demonstration program, the Agency
will identify transactions in four (4) categories:
i. Exiting Project Deferral Only Transactions: These involve no
change in ownership and only defer payments to the final due date
authorized by statutory and program regulations unless otherwise
modified under the terms of this Notice. This tool is available only to
project owners where all Agency mortgages on the property are maturing
on or before December 31, 2023.
A CNA will not be required for these transactions unless the RD
debt payments are being deferred to allow additional capital repairs
and improvements to fund work beyond the scope of the servicing
requirement for reserve account use as in servicing the annual
operating budget under 7 CFR 3560.306 (g).
Exiting Project deferral only transactions do not require review by
the RD Headquarters MPR Loan Review Committee. The RD State Office will
submit these transfer requests through its HQ Review Underwriter to the
Deputy Administrator, MFH for concurrence.
ii. Simple Transactions: These involve no change in ownership where
the borrower is seeking one or more of the available MPR tools to meet
the specific project's present and future physical need, support new
debt or to reduce rents, or as otherwise directed as determined by the
Agency to be in the best interests of the tenants and Government.
Simple transactions involve a single project but may include the
consolidation of project phases owned by the same entity into one
project under 7 CFR 3560.410.
iii. Complex Transactions: These may consist of one or more project
transfers within the same market area to a single new owner processed
in accordance with 7 CFR 3560.406, with or without a consolidation; or
single-owner transactions requiring a subordination agreement because
of third-party funds. A complex transaction may involve more than one
project but results in only a single project upon closing the
transaction. The applicant will submit one pre-application.
A. If a consolidation of existing properties is simultaneously
proposed, all projects being consolidated must be submitted on one pre-
application and must also be located in the same market area. Market
area is defined in 7 CFR 3560.11 as the geographic or locational
delineation for a specific project, including outlying areas that will
be impacted by the project including the area in which alternative,
similar properties effectively compete with the subject property.
B. For a MPR consolidation, all projects must be of the same type,
be in a neighborhood or similar area where the properties compete for
the same tenants; managed under one management plan and one management
agreement; and, in sufficiently close proximity to permit convenient
and efficient management of the property.
C. 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 applicant's market area estimation.
D. Removal of one or more projects from the proposal by either the
Agency or the owner does not affect the eligibility of the complex
transaction. To be a complex transaction, the Agency assumes only one
project remains at the MPR closing.
iv. Portfolio transactions: These include two or more projects with
one stay-in owner that will not be consolidated into a single property
under 7 CFR 3560.11, or two or more projects with multiple projects
located in one State sale transactions to a common purchaser. 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 capable of securing all necessary approvals
from other partners, investors, etc. as may be required in the entity's
organizational documents for participation in the MPR program prior to
closing. Each project in the portfolio will be submitted on a separate
pre-application form unless those located in the same market area are
being consolidated as defined above. Any projects being 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
unconsolidated projects remaining. The projects of the stay-in owner or
common purchaser must have at least one general partner/managing member
in common capable of securing the consent of all other partners or
members prior to closing the MPR in accordance with the entity
organizational documents.
6. Transactions, other than Exiting Project deferral only MPR
assistance, 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 address preservation and rehabilitation needs identified in the
Agency-accepted CNA, including any accessibility transition plans and
fair housing requirements not previously satisfied.
7. The total of all 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
in 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 in the MPR
program. 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, required reserves and operational costs are
satisfied or as directed by the Agency.
8. All exiting RD direct loans with payments being deferred will be
reamortized or restructured to the maximum term allowed under the
[[Page 41918]]
respective RRH or FLH loan program authorities prior to debt deferral.
C. MPR Applicants
Pre-applicants selected under this Notice to submit formal
applications will be subsequently referred to as ``Applicants'', and
will be considered for available funding as described in this Notice
subject to the availability of MPR funds or other program funds for
which they may be eligible.
D. Exiting Project Applicants
The Agency recognizes that a number of Section 515 and Sections
514/516 properties are financed through mortgages scheduled to mature
through calendar year 2023. The Agency will make an MPR debt deferral
available to properties with all Agency mortgages maturing on or before
December 31, 2023, that are not already being reamortized as part of an
RD servicing action to extend the affordable use of the housing and
continue its eligibility for Section 521 Rental Assistance.
Notwithstanding any other provisions of this Notice, MPR pre-applicants
applying for a deferral of their eligible mortgage debt and any other
MPR tools will be required to meet the continuing eligibility
requirements as outlined in ``Section III Eligibility Information'' of
this Notice. Applicants applying solely for deferral of eligible
Exiting Projects 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 the
availability of other subsidized housing within the community. The RD
State Office will submit Exiting Project deferral only requests through
its HQ Review Underwriter to the Deputy Administrator, MFH for
concurrence.
II. Award Information
Pre-applications selected under this Notice that become an Agency
approved application may be funded with current or future fiscal year
funds subject to the availability of a funding appropriation.
Any pre-applications selected under this Notice, will be considered
withdrawn on December 31, 2018, if not approved by the Agency. This
deadline will not be extended, so please plan your transaction's
timeline accordingly. Applicants may reapply for funding under future
rounds and/or Notices as may be made available.
Awards under this Notice mean any loan or grant approved and
obligated. Awardees receiving loans or grants under the MPR program are
subject to 2 CFR 25.200. All Awardees of any nature under this Notice
are subject to the applicable requirements of the Office of Management
and Budget (OMB)-approved USDA Suspension and Debarment, and Drug-Free
Workplace Certifications as prescribed under Title 2 CFR parts 417 and
421.
Applicants are advised that the Agency has unfunded applications
carried over from prior Notices that will receive priority
consideration for funding approval from available fiscal year
appropriations based on the terms of those Notices. If fiscal year
funds available for the MPR demonstration program are fully committed
before funding all remaining eligible pre-applications selected for
further processing under this Notice, the Agency may continue to
process pre-applications that if approved, may receive conditional
commitments subject to the future appropriation and availability of MPR
funds.
Applicants are further advised that the Agency anticipates it may
not have sufficient funding under this Notice to fund every approved
application. If the Agency depletes the available MPR funds before
funding every approved application, then every approved application not
funded will be incorporated into a funding priority queue. The queue
will prioritize approved applications by receipt date and score and it
will be maintained by the HQ Review Underwriter Team Leader (Team
Leader).
The queue process begins when HQ Review Underwriters email approved
applications to the Team Leader, who accumulates the approved
applications for placement in the queue throughout the week until the
weekly submission deadline of midnight Eastern Time every Thursday. The
Team Leader then incorporates the approved applications received
through Thursday into the queue no later than the following Tuesday
(e.g., requests received from Friday, April 13, 2018 to Thursday, April
19, 2018 will be reviewed and placed into the queue in scoring order by
Tuesday, April 24, 2018). To the extent that MPR funds become
available, they will be allocated starting with the first approved
application on the queue until all funds are exhausted. As long as MPR
funds remain available or when MPR funds become available once again,
the Agency will continue to allocate those funds in the manner
aforementioned. However, if an application is not approved by the HQ
Loan Review Committee and the application is returned to the State
Office, the application will be reassigned a new place in the queue
based on the [email] date and time the HQ Review Underwriter resubmits
the application to the Team Leader. In the event of a tie, priority
will be given to the request for the project that: First--has the
highest percentage of leveraging (lowest Loan to Cost); second--is in
the smaller rural community.
In order to maximize the distribution of MPR funds among as many
States as possible, the Director, MFH PDLD, may authorize a State with
four (4) or less funded applications to be funded ahead of any State
with five (5) or more funded applications even when the application
from the State with (4) or less funded applications has a later queue
date and time than the application from a State with five (5) or more
funded applications.
MPR funding tools are only for authorized purposes in the
respective RRH and FLH programs in accordance with 7 CFR 3560 unless
otherwise determined to be in the best interests of the government. The
program will be administered within the resources available to the
Agency through Public Law 114-113 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
Applicant eligibility requirements. For the purpose of this Notice,
``applicant'' includes the applying entity (e.g., ABC LLP) and the
entity's principals (e.g., John Doe, General Partner of ABC LLP; XYZ,
Inc., General Partner of ABC LLP; John Doe Jr., President of XYZ,
Inc.). In the case of a single asset entity that is not a natural
person, the Agency will rely solely on the qualifications of the
natural person(s) managing/controlling the entity (whether directly or
indirectly through other entities) to establish the applicant's
eligibility.
These eligibility requirements include substantial and verifiable
favorable experience and creditworthiness, but do
[[Page 41919]]
not require the test for other credit. Appropriate credit reports will
be ordered by RD upon receipt of the MPR application selected for
further processing in all cases, unless a current credit report has
been included as part of a RD transfer application file. In the case of
FLH applicants, eligibility requirements are included in 7 CFR
3560.555.
1. All applicants must meet the following requirements:
a. Be a U.S. citizen or qualified alien(s); a corporation; a State
or local public Agency; an Indian tribe as defined in Sec. 3560.11; or
a limited liability company (LLC), non-profit organization, consumer
cooperative, trust, partnership, or limited partnership in which the
principals are U.S. citizens or qualified aliens;
b. Be unable to obtain similar credit elsewhere at rates that would
allow for rents within the payment ability of eligible residents;
c. Possess the legal and financial capacity to carry out the
obligations required for the loan or grant;
d. Be able to maintain, manage, and operate the housing for its
intended purpose and in accordance with all Agency requirements as
demonstrated with its compliance with Agency servicing requirements.
Non-compliance with Agency servicing requirements with other projects
owned and/or managed by natural person(s) managing/controlling (whether
directly or indirectly through other entities) the borrowing entity,
will render the applicant ineligible to participate in the MPR program
nationwide until the non-compliance event(s) is/are remedied;
e. With the exception of applicants who are a non-profit
organization, housing cooperative or public body, be able to provide
the borrower contribution from their own resources (this contribution
must be in the form of cash, or land, or a combination thereof);
f. Not be suspended, debarred, or excluded based on the ``List of
Parties Excluded from Federal Procurement and Non-Procurement
Programs.'' The list is available to Federal agencies from the U.S.
Government Printing Office. Non-Federal parties should contact the
Superintendent of Documents, U.S. Government Printing Office,
Washington, DC 20402, (202) 512-1800;
g. Not be delinquent on Federal debt or a Federal judgment debtor,
with the exception of those debtors described in 7 CFR 3560.55 (b); and
h. Be in compliance with the requirements of the Improper Payments
Elimination and Recovery Improvement Act (IPERIA) as applied by USDA.
Additional requirement for applicants with prior debt. If an
applicant, the managing general partner, managing member, or key
principal in the organization decision-making and operational authority
that may control the applicant and any sub-applicant entities involved
including the actual natural person(s) of any sub-entity (i.e., other
organizations, partnerships, etc.) excising management and/or financial
control of an applicant borrower, as well as any affiliated entity
having a 10 percent or more ownership interest, having a prior or
existing Agency debt, the following additional requirements must be
met:
a. The applicant must be in compliance with any existing loan or
grant agreements and with all legal and regulatory requirements or must
have an Agency approved workout agreement and be in compliance with the
provisions of the workout agreement. The Agency may require that
applicants with monetary or non-monetary deficiencies be in compliance
with an Agency-approved workout agreement for a minimum of six (6)
consecutive months before becoming eligible for further assistance.
b. The applicant must be in compliance with the Title VI of the
Civil Rights Act of 1964, section 504 of the Rehabilitation Act of
1973, and all other applicable civil rights laws.
Additional requirements for non-profit organizations. In addition
to the eligibility requirements of paragraphs above, non-profit
organizations must meet the following criteria:
a. The applicant must have received a tax-exempt ruling from the
IRS designating the applicant as a 501(c)(3) or 501(c)(4) organization.
b. The applicant must have in its charter the provision of
affordable housing.
c. No part of the applicant's earnings may benefit any of its
members, founders, or contributors.
d. The applicant must be legally organized under State and local
law.
e. In the case of off-farm labor housing loans and grants, non-
profit organizations must be ``broad-based'' non-profit organizations
(refer to Sec. 3560.555(a)(1)).
Additional requirements for limited partnerships. In addition to
the applicant eligibility requirements aforementioned, limited
partnership loan applicants must meet the following criteria:
a. The general partners must be able to meet the borrower
contribution requirements if the partnership is not able to do so at
the time of loan request.
b. The general partners must maintain a minimum 5 percent financial
interest in the residuals or refinancing proceeds in accordance with
the partnership organizational documents.
c. The partnership must agree that new general partners can be
brought into the organization only with the prior written consent of
the Agency.
Additional requirements for Limited Liability Companies (LLCs). In
addition to the applicant eligibility requirements aforementioned, LLC
loan applicants must meet the following criteria:
a. One member who holds at least a five (5) percent financial
interest in the LLC must be designated the authorized agent to act on
the LLC's behalf to bind the LLC and carry out the management functions
of the LLC.
b. No new members may be brought into the organization without
prior consent of the Agency.
c. The members must commit to meet the equity contribution
requirements if the LLC is not able to do so at the time of loan
request.
1. 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. Applicant funds committed under
Section I, may be used to fund all or a portion of the required RD
equity contribution for the subsequent direct program loan. Loan
applicants will not receive any increased equity value attributed to
the property since the initial RD loan closing and will not receive
additional RTO for this contribution.
2. Eligibility also includes the continued ability of the borrower/
applicant to provide acceptable management and will include an
evaluation of any current outstanding deficiencies. As defined in
Section V of this Notice, any outstanding violations or extended open
operational findings associated with the applicant/borrower or any
affiliated entity having an identity of interest (IOI) with the project
ownership and which are recorded in the Agency's automated Multi-Family
Information System (MFIS), will preclude further processing of any MPR
applications unless there is a current, approved workout plan in place
and the plan has been satisfactorily followed for a minimum of six (6)
consecutive months, as determined by the Agency.
3. For Section 515 RRH projects, the average physical vacancy rate
for the 12 months preceding this Notice's pre-application submission
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
[[Page 41920]]
exception applies under Section IV B 1(b) of this Notice. The Agency
may require additional information, which may include a current market
study, to assess the need of the project and its continued financial
feasibility. 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. Any individual project selected under the complex or
portfolio pre-application submission that does not continue to meet the
occupancy threshold at the time of filing the formal application,
regardless of reason, may be withdrawn by the owner or the Agency from
complex or portfolio applicant package without jeopardizing the formal
application so long as the application continues to meet the
eligibility conditions otherwise described in this Notice.
4. 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 three (3) years of operation is required
unless an exception applies as described section III(A)(3), above for
projects with an approved work out plan.
5. MPR tools will only be awarded if the pre-applicant will meet
applicable program ownership requirements, including the ability to
operate the project after the transaction is completed. In the event of
a MFH transfer, the proposed transferee must submit evidence of site
control together with a copy of the borrower's written request signed
by both the proposed buyer and the seller describing the general terms
of the proposed transfer. Evidence may include a Purchase Agreement,
Letter of Intent, or other documentation acceptable to the Agency.
6. An Agency approved CNA (for guidance refer to http://www.rd.usda.gov/programs-services/housing-preservation-revitalizationdemonstration-loans-grants) and an Agency financial
evaluation/analysis must be conducted to ensure that utilization of the
MPR demonstration program tools is financially feasible, and necessary
for the revitalization and preservation of the project as affordable
housing.
7. Initial eligibility for any 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.
8. All selected applicants must obtain a Dun and Bradstreet Data
Universal Numbering System (DUNS) number and register in the Central
Contractor Registration (CCR) prior to submitting an application
pursuant to 2 CFR 25.200. In addition, all entity applicants 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 as required by OMB in 2 CFR 25.200 and
25.305. 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: All applicants for MPR funds submit a pre-
application as described in Section VI along with any supporting
documentation as outlined in this 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. Selection of a pre-application for
further processing is not an award or commitment for funding, except
for Exiting Project deferrals cited in Section I D of this Notice.
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 this
Notice, 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 formal 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 this Notice.
4. Formal Applications: All complete, eligible and timely filed
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 Agency's published guidance (available at http://www.rd.usda.gov/programs-services/housing-preservation-revitalizationdemonstration-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 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. The Agency will use 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, except when
necessary to meet normal and necessary operating expenses, as
determined by the Agency.
6. If the Agency determines the transaction is financially
feasible, it may be able to offer the borrower a revitalization
proposal, subject to available funding. This will include a requirement
that the borrower execute and record, an Agency-approved Restrictive-
Use Covenant (RUC) for a period equivalent to the longest term of any
MPR funding being authorized, the remaining term of any non-deferred
existing loans, or the remaining term of any existing RUPs, whichever
ends later. The proposal will be established in the offer presented to
the applicant as part of a MPR Conditional Commitment (MPRCC) using a
format determined by RD.
7. MPR Agreements: If the applicant accepts the offer, 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
[[Page 41921]]
not compromise the purpose of the MPR demonstration program.
8. General Requirements: The MPR transactions are 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. Upon completion, Section 515 MFH and Sections 514/516 FLH
projects must be managed in accordance with 7 CFR 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 MPR application submission and scoring will be completed in
two phases in order to avoid unnecessary effort and expense on the part
of applicants. The two phases are as follows:
1. Phase I--The first phase is the pre-application process.
Applicants, including applicants seeking deferral only, 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.
When the MPR proposal involves a project consolidation, the
consolidation 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. Pre-applications must include all applicable information
requested on the MPR pre-application form and must be provided to be
complete for consideration. 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.
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 an MPR 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 A(1) and (2) 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 valid and unexpired
evidence of site control for transfer proposals, or current market
data for projects that do not meet the occupancy standards of
Section III A(1) and (2) of this Notice, will be considered
incomplete and will be returned to the applicant without further
action or appeal rights.
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
the application process. Further, the Agency will categorize each MPR
proposal as being an Exiting Project Deferral, 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.
All pre-applications will only be submitted electronically. Pre-
applications received electronically will be recorded by the actual
date and time received in the MPR Web site and used in ranking the pre-
application as discussed under section I A 3.
Assistance with filing electronic pre-applications can be obtained
from any Rural Development State Office. USDA Rural Development MFH
State Office contacts can be found at http://www.rd.usda.gov/contact-us/state-offices.
(Note: Telephone numbers listed in the Web site are not toll-free.)
The pre-application is in Adobe Acrobat format and will be
completed as a fillable form online. The form contains a button labeled
``Submit by Email'' and must be clicked to receive an email indicating
a pre-application has been sent to the MPR Web site and acknowledging
that the pre-applicant will submit to the electronic mail box any
required attachments 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-revitalizationdemonstration-loans-grants or obtained by contacting the
State Office in the State the project is located to assist the pre-
applicant in gathering the details necessary to complete and submit
their electronic application. Additional information may also be
obtained in writing by contacting Dean Greenwalt or Abby Boggs, 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 both debt deferral of
eligible Section 514 or Section 515 loans AND 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, 4 ``Other Sources of Funds'' paragraph, items
(a) through (g), 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 evidenced by a
documented approval, obligation, 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
[[Page 41922]]
criterion is 30 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--10 points, or
b. Evidence of a commitment greater than $5,000 to $10,000 per unit
per project from other sources--15 points.
c. Evidence of a commitment greater than $10,000 to $15,000 per
unit per project from other sources--20 points.
d. Evidence of a commitment greater than $15,000 per unit per
project from other sources--30 points.
2. Owner contribution. Points will be awarded if the owner agrees
to make a contribution of at least $500 per unit 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, RD MPR credit report and associated MPR document
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. The maximum points awarded for
this criterion is 30 points. These points will be awarded in the
following manner:
a. Evidence of a contribution of at least $500 to $650 per unit--10
points, or
b. Evidence of a contribution greater than $651to $900 per unit--20
points, or
c. Evidence of a contribution greater than $901 per unit--30
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. Owner
contributions under this criteria are not eligible for a Return on
Investment (ROI) under 7 CFR 3560.68 if they are part of the minimum 3
percent or 5 percent initial investment required in conjunction with
any Section 515 direct loan or have been contributed as any amount used
to establish the RTO in a MFH transfer authorized under 7 CFR 3560.406.
Owner contributions of the minimum 3 percent or 5 percent initial
investment required in conjunction with any new Section 515 direct loan
used toward hard costs of construction may be included in the
contribution amount of this section to qualify for points. 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, and 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). The
maximum points awarded for this criterion is 15 points. These points
will be awarded in the following manner:
a. Evidence of a contribution of at least $1,000 to $2,500 per
unit--5 points, or
b. Evidence of a contribution greater than $2,500 to $5,000 per
unit--10 points, or
c. Evidence of a contribution greater than $5,000 per unit--15
points.
4. Exiting Projects. Points will be awarded to properties where all
existing RD loans will mature (make their final loan payment) on or
before December 31, 2023, and which are also competing for other MPR
tools. 25 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). Projects in RD designated
Strike Force and Promise Zones, Colonias, tribal lands, Rural Economic
Area Partnership (REAP) Zone communities, or in a place identified in
the State Consolidated Plan or a State needs assessment as a high need
community for will also qualify for points under this priority. 15
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 or 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, no pre-
application will receive more than a maximum of 30 points 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, 1999--10 points.
d. Projects with initial operational dates on or after October 1,
1999--0 points;
8. Projects with Open Physical Findings. An ``Open Physical
Finding'' is a physical condition to the property buildings or
improvements, 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 not passed
since the issuance of the first servicing letter.
[[Page 41923]]
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'' because of a workout and/or
transition plan approved by the Agency for not more than 12 months
prior to the application closing dates contained in this Notice. 25
points
b. Projects with an Agency ``C'' classification for 24 months or
longer with Open Findings that were within the owner's ability/control
to cure at the time the MPR pre-application is filed will not be
eligible to participate in the MPR demonstration program.
9. Closed Sale of Section 515 projects to non-profit/Public Housing
Authority. The Agency will award 30 points for projects that have been
sold to nonprofit organizations under the prepayment process as
explained in 7 CFR 3560, Subpart N. To receive points, the borrower/
applicant must provide a copy of the filed deed with their pre-
application. 30 points
10. 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 approved by
the Agency. CNAs or updates previously approved more than 12 months
prior to the pre-application submission, may not be used for MPR
underwriting without an update approved by the Agency. Points will be
awarded for:
a. CNAs approved no earlier than 12 months before MPR closing date
specified in this NOTICE for which the MPR pre-application is filed, 20
points
b. CNAs approved no earlier than 24 months before MPR closing date
specified in this NOTICE for which the MPR pre-application is filed, 10
points
11. 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, afterschool day care services or after-school tutoring. 5
points.
12. For portfolio sales with project consolidations as defined in
this Notice, 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.
13. Energy Conservation, Energy Generation, and Green Property
Management. Project may receive a maximum total of not more than a
combined 42 points under three categories: Energy Conservation, Energy
Generation, and Green Property Management. 42 Points
a. Energy Conservation. Under the MPR Energy Initiatives, projects
participating in the Green Communities program by the Enterprise
Community Partners, http://www.enterprisecommunity.com/solutions-and-innovation/enterprise-greencommunities, will be awarded 40 points for
any project that qualifies for the program provided at least 30 percent
of the points needed to qualify for the Green Communities program are
being earned under the Energy Efficiency section of the Green
Communities program. Participation in 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. 40 Points
b. Other Energy Conservation. 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 30 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. 4 points
ii. This proposal includes the replacement of windows and doors
with Energy Star qualified windows and doors. 4 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. Three
points will be awarded if all exterior walls exceed insulation code,
and 2 points will be awarded if attic insulation exceeds code for a
maximum of 5 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. 4 points
v. This proposal includes 100 percent of installed appliances and
exhaust fans that are Energy Star qualified. 3 points
vi. This proposal includes 100 percent of installed water heaters
that are
vii. Energy Star qualified. 3 points
viii. 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. 2 points
ix. This proposal includes 100 percent of new showerheads with EPA
Water Sense label. 2 points
x. This proposal included 100 percent of new faucets with EPA Water
Sense label. 1 point
xi. 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. 2 points
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
14. 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
[[Page 41924]]
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. 10 to 20 percent commitment to energy generation receives 1
point;
b. 21 to 40 percent commitment to energy generation receives 2
points;
c. 41 to 60 percent commitment to energy generation receives 3
points;
d. 61 to 80 percent commitment to energy generation receives 4
points;
e. 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.
15. 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.
16. Sponsor Bonus.
Pre-applications submitted solely by an Indian tribe or non-profit
Organization as defined in 7 CFR 3560.11 and providing appropriate
documentation with the pre-application will receive an additional 10
points.
The Agency will total the points awarded to each pre-application
and rank them according to their respective 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 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 this Notice, eligibility will
be confirmed after ranking is completed. If one or more of the pre-
applications is determined ineligible then the next highest-scoring
pre-application will be confirmed for eligibility.
If one or more of the 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 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 A (4) and
(5), that project(s) will be determined ineligible and eliminated from
the proposed consolidation transaction.
1. 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.
B. Pre-Application Selection.
State offices will score complete pre-applications, received on or
prior to the submission deadlines in the ``DATES'' section of this
Notice, using the criteria in Section ``V. Application Review
Information'' in this Notice. State Offices will process the pre-
applications selected under this Notice to submit an application in
``highest score to lowest score'' order. Pre-applications selected
under this Notice to submit an application that request and receive
application submission extensions will not be processed in ``highest
score to lowest score'' order. Rather, they will be processed after
those pre-applications selected under this Notice to submit an
application not requesting extensions and in the order their complete
application is received by the State Office.
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://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/SF424.PDF. Refer to Section VIII of this Notice,
below, for a link to all Rural Development State Offices.
Applicants rejected will be notified that their pre-applications
were not selected and advised of their appeal rights under 7 CFR part
11.
Awards made under this Notice are subject to the provisions
contained in the Agriculture, Consolidated and Further Continuing
Appropriations Act, 2015, Public Law 113235, 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 formal
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
[[Page 41925]]
Notice and other pertinent RRH or FLH transfer and program provisions
consistent with 7 CFR part 3560, prior to the issuance of any MPR
offer. In the case of transfers, the transferee must comply with the
requirements of 7 CFR 3560.406 including all Agency approval and
closing conditions prior to closing any of the MPR tools. 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. MPR
transfer applicants must submit a preliminary transfer request as
required by 7 CFR 3560.406 (c) within 45 days of the RD notification
and will be allowed a total of 180 days in which to submit the final
transfer MPR application. If the State Office determines there exists
compelling reasons the full transfer application cannot be delivered
within the stated timeframe and upon the receipt of the applicant's
written request the MPR due date may be extended for an additional
period of 90 days (Section VI. B. will apply). Any extensions beyond
the former must recommended by the State Office and concurred by the HQ
Review Underwriter assigned to the State.
Notwithstanding the aforementioned, any pre-applications selected
under this Notice's, will be considered withdrawn on December 31, 2018,
if not approved by the Agency. These deadlines will not be extended, so
please plan your transaction's timeline accordingly. Applicants may
reapply for funding under future rounds and/or Notices as they may be
made available.
Failure to submit the required information in a timely manner will
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-revitalizationdemonstration-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 or if the applicant fails to accept or
reject the offer presented, 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. All Offers are explicitly made subject to the availability of
appropriated funds. Should sufficient funds not be available at any
time to funds any authorized MPR offers for which funds have not been
obligated, including those with only transfer debt deferral, the Agency
may notify the applicant accordingly and the authorization may be
cancelled.
VI. Non-Discrimination Statement
In accordance with Federal civil rights law and U.S. Department of
Agriculture (USDA) civil rights regulations and policies, the USDA, its
Agencies, offices, and employees, and institutions participating in or
administering USDA programs are prohibited from discriminating based on
race, color, national origin, religion, sex, gender identity (including
gender expression), sexual orientation, disability, age, marital
status, family/parental status, income derived from a public assistance
program, political beliefs, or reprisal or retaliation for prior civil
rights activity, in any program or activity conducted or funded by USDA
(not all bases apply to all programs). Remedies and complaint filing
deadlines vary by program or incident.
Persons with disabilities who require alternative means of
communication for program information (e.g., Braille, large print,
audiotape, American Sign Language, etc.) should contact the responsible
Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or
contact USDA through the Federal Relay Service at (800) 877-8339.
Additionally, program information may be made available in languages
other than English.
To file a program discrimination complaint, complete the USDA
Program Discrimination Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or
write a letter addressed to USDA and provide in the letter all of the
information requested in the form. To request a copy of the complaint
form, call (866) 632-9992. Submit your completed form or letter to USDA
by:
(1) Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW., Washington,
DC 20250-9410;
(2) fax: (202) 690-7442; or
(3) email: [email protected].
VII. Award Agency Contacts
USDA Rural Development MFH State Office contacts can be found at:
http://rd.udsa.gov/contact-us/state-offices. (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: August 29, 2017.
Richard A. Davis,
Acting Administrator, Rural Housing Service.
[FR Doc. 2017-18753 Filed 9-1-17; 8:45 am]
BILLING CODE 3410-XV-P