[Federal Register Volume 87, Number 42 (Thursday, March 3, 2022)]
[Notices]
[Pages 12077-12078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04442]


-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Rural Housing Service

[Docket No. RHS-19-MFH-0024]


New Fee Structure for Section 538 Guaranteed Rural Rental Housing 
Program Initial and Annual Guarantee Fees

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Rural Housing Service (RHS or the Agency), a Rural 
Development agency of the United States Department of Agriculture 
(USDA), is announcing a new fee structure for the Section 538 
Guaranteed Rural Rental Housing Program (GRRHP) initial and annual 
guarantee fees.

DATES: The effective date of the revised fees is April 4, 2022.

FOR FURTHER INFORMATION CONTACT: Tammy Daniels, Finance and Loan 
Analyst, Multi-Family Housing Production and Preservation Division, 
Rural Housing Service, USDA, STOP 0781, 1400 Independence Avenue SW, 
Washington, DC 20250-0781, Telephone: (202) 720-0021 (this is not a 
toll-free number); email: [email protected].

SUPPLEMENTARY INFORMATION: 

Authority

    The RHS administers the 538 Guaranteed Rural Rental Housing Program 
(GRRHP) loans under the authority of the Housing Act of 1949, as 
amended (42 U.S.C. 1490p-2) and operates under 7 CFR part 3565. As set 
forth in 7 CFR part 3565, the Agency will publish any changes to the 
fees in a Notice in the Federal Register.

Background

    RHS administers the Section 538 Guaranteed Rural Rental Housing 
Program (GRRHP) under the authority of the Housing Act of 1949, as 
amended (42 U.S.C. 1490p-2). Under the GRRHP, RHS guarantees loans for 
the development of housing and related facilities in rural areas. 
Section 538(g) authorizes the Secretary of Agriculture to charge 
certain fees to lenders for loan guarantees (see, 42 U.S.C. 1490p-
2(g)). The fees charged are used to cover the costs of loan guarantees 
pursuant to the provisions of the Credit Reform Act of 1990 (2 U.S.C. 
661 et seq.).
    On December 3, 2020, the Agency published a final rule in the 
Federal Register at 85 FR 77985 with an effective date of January 4, 
2021,which amended 7 CFR part 3565 by removing the stated amount that 
the Agency will charge for the initial and annual guarantee fees. This 
regulation update affords the program the flexibility and ability to 
create the maximum housing affordability to residents by lowering 
program costs when practical, without the need for a regulatory change. 
As stated in the final rule, if changes occur in the fee amounts, the 
Agency will release those changes through a Notice in the Federal 
Register and will provide guidance on how to process the loans which 
will be impacted by the new fee structure. Interested parties will be 
able to locate current fees on the Agency's website at: https://www.rd.usda.gov/programs-services/multifamily-housing-programs/multifamily-housing-loan-guarantees.

New Fee Structure

    Projects with a fully executed (signed by both the Agency and 
Lender) conditional commitment as of the date this notice is published, 
or a loan obligated prior to October 1, 2021 are ineligible for the 
reduced fees. Loans in the following three categories will receive a 
greater reductions in the fees: (1) Green and Energy Efficient, (2) 
Preservation of Existing Section 515, 514/516 Rural Development 
Properties, and (3) Workforce Housing. The overall status of the GRRHP 
portfolio is healthy. There is a low delinquency rate, the program 
operates at a negative subsidy, and the program has used all or most of 
its appropriations in the past 5 years. The initial and annual 
guarantee fee is usually passed on to the borrower. Reducing the fees 
will decrease the debt service for future loans which will ultimately 
decrease the rents and provide savings to the tenants, allow more funds 
to be allocated toward capital improvements while continuing to offset 
the cost to operate the program.
    On February 18, 2021, the Agency conducted a forum soliciting 
feedback from Section 538 lenders, borrowers, and program stakeholders. 
The general feedback was that the new fee structure for the initial and 
annual guarantee fees should take into account affordability and target 
projects whose rents are at 60 percent Area Median Income (AMI) and 
have current government subsidies. The new fee structure being 
implemented has taken this into account by providing greater reduced 
fees for preservation of existing Section 515, 514/516 Rural 
Development properties.
    The annual fee will not be changed for existing Section 538 GRRHP 
loans. At the discretion of the Agency, Section 538 GRRHP loans that 
are refinanced or modified after the revised fee structure goes into 
effect and can successfully demonstrate that the reduced fee results

[[Page 12078]]

in capital improvements to the property or a reduction of rents, will 
be considered for eligibility of a reduced fee. Existing 538 GRRHP 
loans that are refinanced or modified, solely as part of an interest 
rate reduction, will not be eligible for reduced annual fees. The three 
categories that will receive a greater reduction in the fees are 
detailed as follows:

    1. Workforce Housing: Workforce Housing is defined as housing 
affordable to households earning between 60 and 120 percent of area 
median income (AMI). By statute, the income in the 538 program is 
capped at 115 percent AMI. Properties with 100 percent of the units 
affordable to households at 80 percent-115 percent AMI will be 
eligible for the reduced fee.
    2. Preservation of Existing Section 515, 514/516 Rural 
Development Properties.
    3. Green and Energy Efficient Fee Structure: Upon submission of 
the application for existing properties that meet the requirement of 
the Green/Energy Efficient fee structure, the lender must collect 
from the borrower and submit to the Agency evidence that the 
specified, independent green building standard has been achieved. 
Owners may access the United States Environmental Protection 
Agency's ENERGY STAR Portfolio Manager software at no cost. Evidence 
will be in the form of a copy of the Portfolio Manager's report 
showing that the building performance is at or above 75 on the 1-100 
ENERGY STAR score in Portfolio Manager. For new construction and 
substantial rehabilitation or renovations, the lender and owner must 
certify that it will pursue and achieve an industry recognized 
standard for green building. That evidence must be submitted no more 
than 15 months after completion of construction or 15 months after 
break-even occupancy when those standards have been achieved. If 
these standards are not achieved, the Agency may impose protocols or 
restrictions to ensure the property is brought into compliance.
    Acceptable, independently verified standards include the 
Enterprise Green Communities Criteria; U.S. Green Building Council's 
LEED-H, LEED-H Midrise, LEED-NC, or LEED for Existing Buildings: 
Operations & Maintenance; ENERGY STAR certification; EarthCraft 
House; EarthCraft Multifamily; Earth Advantage New Homes; Greenpoint 
Rated New Home; Greenpoint Rated Existing Home (Whole House or Whole 
Building label); the National Green Building Standard (NGBS); 
Passive Building Certification or EnerPHit Retrofits certification 
from the Passive House Institute US (PHIUS), International Passive 
House Association, or the Passive House Institute; and Living 
Building Challenge Certification from the International Living 
Future Institute, or other industry-recognized green building 
standards, in the sole discretion of Rural Development, Multi-Family 
Housing. These programs evolve and newer versions are published, 
sometimes annually. Projects must participate in the current version 
of the programs and must consult with the program provider for the 
most current, applicable and available programs for their project 
location.

    The Agency announces the new fee structure as follows:

----------------------------------------------------------------------------------------------------------------
                                                       Initial guarantee fee  (due   Annual guarantee fee  (due
                                                         prior to or at closing)     each year or portion of the
                                                     ------------------------------  year the guarantee  remains
                                                                                            in effect) *
                                                              Basis points         -----------------------------
                                                                                            Basis points
----------------------------------------------------------------------------------------------------------------
Amended Fee Structure...............................                            65                            35
Workforce Housing--Rents between 80%-115% AMI.......                            60                            25
Preservation of Existing Section 515, 514/516 Rural                             60                            25
 Development Properties.............................
Section 538 New Construction/Substantial Rehab w/                               60                            25
 Green..............................................
----------------------------------------------------------------------------------------------------------------
* The annual guarantee fee is paid in advance. (Example: A loan that closes on December 31, 2021 will incur the
  annual fee for 2022).

Non-Discrimination Statement

    In accordance with Federal civil rights laws and USDA civil rights 
regulations and policies, the USDA, its Mission Areas, agencies, staff 
offices, 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.
    Program information may be made available in languages other than 
English. Persons with disabilities who require alternative means of 
communication to obtain program information (e.g., Braille, large 
print, audiotape, American Sign Language) should contact the 
responsible Mission Area, agency, or staff office; the USDA TARGET 
Center at (202) 720-2600 (voice and TTY); or the Federal Relay Service 
at (800) 877-8339.
    To file a program discrimination complaint, a complainant should 
complete a Form AD-3027, USDA Program Discrimination Complaint Form, 
which can be obtained online at https://www.ocio.usda.gov/document/ad-3027, from any USDA office, by calling (866) 632-9992, or by writing a 
letter addressed to USDA. The letter must contain the complainant's 
name, address, telephone number, and a written description of the 
alleged discriminatory action in sufficient detail to inform the 
Assistant Secretary for Civil Rights (ASCR) about the nature and date 
of an alleged civil rights violation. The completed AD-3027 form or 
letter must be submitted 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; or
    (2) Fax: (833) 256-1665 or (202) 690-7442; or
    (3) Email: OASCR.Program-Intake.

Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2022-04442 Filed 3-2-22; 8:45 am]
BILLING CODE 3410-XV-P