[Federal Register Volume 88, Number 82 (Friday, April 28, 2023)]
[Rules and Regulations]
[Pages 26221-26228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08952]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 
 ========================================================================
 

  Federal Register / Vol. 88, No. 82 / Friday, April 28, 2023 / Rules 
and Regulations  

[[Page 26221]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3565

[Docket No. RHS-23-MFH-0008]


Loan Guarantees Under the Section 538 Guaranteed Rural Rental 
Housing Program

AGENCY: Rural Housing Service, USDA.

ACTION: Notification of updates in the competitive lender submissions 
process.

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

SUMMARY: The Rural Housing Service (RHS or Agency), an agency within 
Rural Development (RD), announces updates in the process for 
competitive lender submissions (responses) regarding proposed projects 
for the Section 538 Guaranteed Rural Rental Housing Program (GRRHP). 
The amount of program dollars available for the GRRHP will be 
determined by the Appropriations Act for each fiscal year.

DATES: The effective date of the process updates is April 28, 2023.

ADDRESSES: Responses and applications must be submitted electronically 
in accordance with the instructions in Section IV of this Notice. 
Section 538 GRRHP Response Form/Application Submission Information.

FOR FURTHER INFORMATION CONTACT: Jonathan Bell, Director, Processing 
and Report Review Branches, Production and Preservation Division, 
Multifamily Housing Programs, Rural Development, United States 
Department of Agriculture, via email: usda.gov">MFHprocessing1@usda.gov or 
telephone: (254) 742-9764. This number is not toll-free. Hearing or 
speech-impaired persons may access that number by calling the Federal 
Information Relay Service at 711 Relay Service.

SUPPLEMENTARY INFORMATION:

Authority

    The GRRHP is authorized under the Housing Act of 1949 as amended, 
Section 538, Public Law 106-569, 42 U.S.C. 1490p-2; implemented under 7 
CFR part 3565.

Background

    The RHS is committed to helping improve the economy and quality of 
life in rural areas by offering a variety of programs. The Agency 
offers loans, grants, and loan guarantees to help create jobs, expand 
economic development, and provide critical infrastructure investments. 
RHS also provides technical assistance loans and grants by partnering 
with agricultural producers, cooperatives, Indian Tribes, non-profits, 
and other local, State, and Federal agencies.
    The Section 538 GRRHP is a program administered by the RHS, under 
the authority of the Housing Act of 1949, as amended (42 U.S.C. 1490p-
2). The purpose of the GRRHP is to increase the supply of affordable 
rural rental housing, using loan guarantees that encourage partnerships 
between the RHS, private lenders, and public agencies.
    On October 15, 2019 (84 FR 55034), the Agency published a final 
rule in the Federal Register eliminating the requirement to publish an 
annual Notice of Funding Availability (NOFA). The final rule states 
that RD will use the standards from the previous NOFA as published in 
the Federal Register on December 21, 2017 (82 FR 60579). If RD chooses 
to change the selection and/or scoring criteria or fees charged in 
subsequent years, it will inform the public of those changes through 
additional notices in the Federal Register.
    Since the publication of the final rule on October 15, 2019, there 
have been changes, including but not limited to, submission addresses, 
contact person, and fee structure. This Notice will consolidate all 
changes and replace the notice as published on December 21, 2017, as 
the reference for interested parties to follow when submitting GRRHP 
applications.
    Expenses incurred in developing applications will be at the 
applicant's risk. The following paragraphs outline the eligibility 
requirements, lender responsibilities, and the overall response and 
application processes.
    Any modifications to this document, including changes to the 
selection and/or scoring criteria or fees charged in subsequent years, 
will be published in the Federal Register.

Discussion of Program Updates

    The Agency announces the following updates to the GRRHP:
    1. The NOSA Response Form will now be titled and referred to as the 
Section 538 GRRHP Response Form. The Section 538 GRRHP Response Form 
and the complete application must be submitted to the Agency at the 
same time. The obligation of available funds, via the issuance of 
Conditional Commitments for loan guarantees, will be made in the 
following order: (1) to outstanding approved applications from prior 
years for which Conditional Commitments have not been issued; then (2) 
to approved applications in the chronological order on which they were 
approved.
    2. Applications will be accepted on a continual basis. Selected 
responses and applications that are deemed eligible for further 
processing will be funded to the extent an Appropriations Act provides 
sufficient funding in the fiscal year the response and application is 
selected. If funding is not sufficient in any given fiscal year, 
funding will be provided under the next funding Appropriations Act, 
subject to the availability of funds. Approved applications are subject 
to the fee structure in effect when the response and application were 
received by the Agency.
    3. If the transaction includes a transfer of ownership and 
assumption of a Section 515 Rural Rental Housing (RRH) property, the 
complete 538 application and the complete Section 515 RRH transfer of 
ownership application must be submitted simultaneously on the same day 
to the Agency. If the complete 538 application is not submitted 
simultaneously with the Section 515 RRH transfer of ownership 
application, the 538 application will be rejected and returned to the 
lender. The lender may resubmit the application when both the complete 
538 application and the 515 RRH transfer of ownership application can 
be submitted simultaneously.
    4. A Conditional Commitment must be issued by the Agency before any 
construction begins on the project. Drawings (plans) and specifications 
for building construction must be submitted to the Agency and concurred 
by the Agency before any construction begins on the project. Applicants 
are reminded that in accordance with 7 CFR

[[Page 26222]]

3565.206(g), refinancing of an existing debt is not an eligible use of 
Section 538 GRRHP loan funds, except in the case of an existing 
guaranteed loan where the Agency determines that the refinancing is in 
the government's interest or furthers the objectives of the program.
    5. The scores awarded for each priority criteria have been 
significantly decreased.
    6. The Agency has modified the Energy priority criteria. Points may 
be awarded if applicants enroll in the US Environmental Protection 
Agency's (EPA) ENERGY STAR Portfolio Manager and track and report 
energy consumption to the Agency annually.
    7. The Agency has reinstated the priority criteria that points will 
be awarded to projects located on Tribal lands.
    8. The address for lenders to submit applications for lender 
approval has changed. Applications for lender approval can only be 
submitted electronically to the address listed in the Lender 
Eligibility section of this Notice.

I. Funding Opportunity Description

    The GRRHP program is administered subject to appropriations by the 
United States Department of Agriculture (USDA) as authorized under the 
Housing Act of 1949 as amended, section 538, Public Law 106-569, 42 
U.S.C. 1490p-2, and as implemented under 7 CFR part 3565. Section 538 
GRRH program will continue to follow procedures similar to other RD 
guaranteed loan programs and accept applications on a continuous basis.
    The purpose of the GRRHP is to increase the supply of affordable 
rural rental housing using loan guarantees to encourage partnerships 
between the Agency, private lenders, and public agencies.
    ELIGIBILITY OF PRIOR YEAR SELECTED RESPONSES: Prior fiscal year 
response selections that did not develop into complete applications 
within the time constraints stipulated by the Agency will be cancelled. 
The Agency will notify lenders of the cancellation. A new application 
for the project may be submitted subject to the conditions of this 
document.
    Prior years' responses that were selected by the Agency, with a 
complete application submitted by the lender within 90 days from the 
date of notification of response selection (unless an extension was 
granted by the Agency), will be eligible for review, approval, and 
available current fiscal year program dollars without having to submit 
a new response.
    If approved, applications that accompanied a response submitted 
under a previous fiscal year notice (outstanding prior years approved 
applications) will be obligated in the order that the request for 
obligation was received, to the extent of available funding.
    Once the outstanding prior years approved applications have been 
funded, the Agency will fund applications approved in the current 
fiscal year in the order by which the request for obligation was 
received. If funding is insufficient to serve applications approved in 
the current fiscal year, they will be funded according to the priority 
scoring set forth in Section V of this document.
    The obligation of program funds is discussed further in Section VI 
of this document.

II. Award Information

    Anyone interested in submitting a response and application for 
funding under this program is encouraged to visit the RD website 
Multifamily Housing Loan Guarantees [bond] Rural Development (usda.gov) 
periodically for updated information regarding the status of funding 
authorized for this program.
    (1) QUALIFYING PROPERTIES: Qualifying properties include new 
construction for multi-family housing units and the acquisition of 
existing structures with a minimum per unit rehabilitation expenditure 
requirement in accordance with 7 CFR 3565.252. The Agency does not 
finance acquisition only deals. 7 CFR 3565.205(a)
    Also eligible is the revitalization, repair, and transfer (as 
specified in 7 CFR 3560.406) of existing Section 515 RRH and Section 
514/516 Farm Labor Housing (FLH) (transfer costs are subject to Agency 
approval and must be an eligible use of loan proceeds as specified in 7 
CFR 3565.205), and properties involved in the Agency's Multifamily 
Preservation and Revitalization (MPR) Demonstration program. Equity 
payment, as stipulated in 7 CFR 3560.406, in the transfer of existing 
direct Section 515 and Section 514/516 FLH, is an eligible use of 
guaranteed loan proceeds. In order to be considered, the transfer of 
Section 515 and Section 514/516 FLH and MPR projects must need repairs 
and undergo revitalization of a minimum of $6,500 per unit.
    (2) ELIGIBLE FINANCING SOURCES: Any form of Federal, State, and 
conventional sources of financing can be used in conjunction with the 
loan guarantee, including HOME Investment Partnerships Program (HOME) 
grant funds, tax exempt bonds, and Low-Income Housing Tax Credits 
(LIHTC).
    (3) TYPES OF GUARANTEES: The Agency offers three types of 
guarantees which are set forth at 7 CFR 3565.52(c). The Agency 
liability under any guarantee will decrease or increase, in proportion 
to any decrease or increase in the amount of the unpaid portion of the 
loan, up to the maximum amount specified in the Loan Note Guarantee. 
Penalties incurred as a result of default are not covered by any of the 
program's guarantees. The Agency may provide a lesser guarantee based 
upon its evaluation of the credit quality of the loan.
    (4) INTEREST CREDIT: There will be no interest credit. Consolidated 
Appropriations Act, 2023, Public Law 117-328, Division A, Title III.
    (5) PROGRAM FEES: The following fees have been determined necessary 
to cover the projected cost of loan guarantees. These fees may be 
adjusted based on the Appropriation requirements and in future years to 
cover the projected costs of loan guarantees in those future years, or 
additional fees may be charged. Any changes to the program fees will be 
announced in a document published in the Federal Register. The fees are 
as follows:
    (a) Initial guarantee fee. The Agency will charge an initial 
guarantee fee as specified at 7 CFR 3565.53(b). For purposes of 
calculating this fee, the guarantee amount is the product of the 
percentage of the guarantee times the initial principal amount of the 
guaranteed loan.
    (b) Annual guarantee fee. An annual guarantee fee (the outstanding 
principal amount of the loan as of December 31 times the annual 
guarantee fee) will be charged each year or portion of a year that the 
guarantee is outstanding. This fee will be collected, in advance, no 
later than February 28th of each calendar year.
    (c) As permitted under 7 CFR 3565.302(b)(5), there is a non-
refundable service fee of $1,500 for the review of a lender's first 
request to extend the term of a guarantee commitment beyond its 
original expiration (the request must be received by the Agency prior 
to the commitment's expiration). For any subsequent extension request, 
the fee will be $2,500.
    (d) As permitted under 7 CFR 3565.302(b)(5), there is a non-
refundable service fee of $3,500 for the review of a lender's first 
request to reopen an application when a commitment has expired. For any 
subsequent extension request to reopen an application after

[[Page 26223]]

the commitment has expired, the fee will be $3,500.
    (e) As permitted under 7 CFR 3565.302(b)(4), there is a non-
refundable service fee of $1,500 in connection with a lender's request 
to approve the transfer of property or a change in composition of the 
ownership entity.
    (f) There is no application fee.
    (g) There is no lender application fee for lender approval.
    (h) There is no surcharge for the guarantee of construction 
advances.
    The current initial and annual guarantee fees can be found in a 
notice published in the Federal Register on March 3, 2022 (87 FR 
12077).

III. Lender Eligibility Information

    ELIGIBLE LENDERS: Lenders must satisfy the eligibility requirements 
set forth in 7 CFR 3565.102 and must be approved by the Agency pursuant 
to 7 CFR 3565.103. In order to be eligible as required by 7 CFR 
3565.102, a lender must be a licensed business entity or Housing 
Finance Agency (HFA) in good standing in the State or States where it 
conducts business and meet the other requirements contained in 7 CFR 
3565.102. Please review that section for a list of the criteria. The 
Agency will only consider responses and applications from GRRHP 
eligible lenders, or approved lenders as described in 7 CFR 3565.102 
and 3565.103 respectively.
    Lenders who do not have GRRHP approved lender status and whose 
responses are selected will be notified by the Agency to submit a 
request for GRRHP lender approval within 30 days of notification. 
Alternately, lenders may submit a request for GRRHP approved lender 
status with the Section 538 GRRHP Response and application submission. 
Lenders must meet the standards in 7 CFR 3565.103 to obtain GRRHP 
approved-lender status.
    Lenders that have received GRRHP lender approval, and that remain 
in good standing in accordance with 7 CFR 3565.105, do not need to 
reapply for GRRHP lender approval.
    (1) SUBMISSION OF DOCUMENTATION FOR GRRHP LENDER APPROVAL: All 
lenders that have not yet received GRRHP lender approval must submit a 
complete lender application to: Multi-Family Housing Asset Management 
Division, Branch Chief, Risk and Counterparty Oversight, 
[email protected]. Lender applications must be identified as 
``Lender Application--Section 538 Guaranteed Rural Rental Housing 
Program'' in the subject line.

IV. Section 538 GRRHP Response Form/Application Submission Information

    The Section 538 GRRHP Response Form and application Complete 
responses and complete applications must be submitted to the applicable 
mailbox based on the location of the project (as outlined below).
    (1) The Section 538 GRRHP Response Form is available on the 
Multifamily Housing Loan Guarantees website https://www.rd.usda.gov/programs-services/multifamily-housing-programs/multifamily-housing-loan-guarantees.

Processing and Report Review Branch 1 usda.gov">MFHprocessing1@usda.gov

    (CT, DE, IA, IL, IN, KS, MA, MD, ME, MI, MN, MO, ND, NE, NH, NJ, 
NY, OH, PA, RI, SD, VA, VT, WI, WV).

Processing and Report Review Branch 2 usda.gov">MFHprocessing2@usda.gov

    (AK, AL, AR, AZ, CA, CO, FL, GA, HI, ID, KY, LA, MS, MT, NC, NM, 
NV, OK, OR, PR, SC, TN, TX, UT, VI, WA, WY).
    (2) The following instructions will be used to for electronic 
submission for the Section 538 GRRHP Response Form and the Application:
    Once the Section 538 GRRHP Response Form and complete application 
are complete and ready for submission to the applicable Processing and 
Report Review (PRR) Branch, please take the following steps to submit 
the Section 538 GRRHP Response Form, application and supporting 
documentation:
    (a) Email usda.gov">MFHprocessing1@usda.gov or usda.gov">MFHprocessing2@usda.gov, as 
applicable, to request a shared folder in CloudVault. The email must 
contain the following information:
    i. Subject line: Type of Section 538 GRRHP Response Form/
Application Submission.
    ii. Body of email: Borrower Name, Project Name, Borrower Contact 
Information, Project State.
    iii. Request language: ``Please create a shared CloudVault folder 
so that we may submit our Section 538 GRRHP Response Form, complete 
application and supporting documents.''
    (b) Once the email request to create a shared CloudVault folder has 
been received, a shared folder will be created within 2 business days. 
When the shared CloudVault folder is created, an email will be sent to 
the applicant's submission email address with a link to the shared 
folder.
    (c) The applicant will upload all required documents for the 
applicable Section 538 GRRHP Response Form and application to the 
shared CloudVault folder. The applicant must also upload a Table of 
Contents of all the documents that have been uploaded to the shared 
CloudVault folder.
    (d) Once all required documents for the applicable Section 538 
GRRHP Response Form and complete application have been uploaded to the 
CloudVault shared folder, the applicant will email 
usda.gov">MFHprocessing1@usda.gov or usda.gov">MFHprocessing2@usda.gov, as applicable.
    (e) The email must contain the following information:
    i. Subject line: Type of Section 538 GRRHP Response/Application 
Submission. (Same wording as the first email)
    ii. Body of email: Borrower Name, Project Name, Borrower Contact 
Information, Project State.
    iii. Request language: ``We have completed our upload to the shared 
CloudVault folder for our Section 538 GRRHP Response Form, complete 
application and all required documentation and it is ready for 
review.''
    Please note: CloudVault is a USDA[hyphen]approved cloud-based file 
sharing and synchronization system. CloudVault folders are not suitable 
nor intended for file storage due to agency file retention policies and 
space limitations. Therefore, the agency will remove all application-
related files stored in shared CloudVault folders the latter of either 
180 days from the application date, or once the application has been 
processed and the transaction has been closed.
    (3) Content of Responses: All responses require lender information 
and project specific data as set out in this Notice. Complete responses 
must include a signed cover letter from the lender, on the lender's 
letterhead. The lender must provide the requested information 
concerning the project, to establish the purpose of the proposed 
project, its location, and how it meets the established priorities for 
funding.
    In compliance with Agency guidance to determine the lender's 
(participants) eligibility, the Agency is responsible for screening 
lenders and its principals for debarment and suspension. Screening will 
take place when the lender submits a complete application to the Agency 
and prior to obligation of the loan. As a part of the complete 
application package and in accordance with 2 CFR part 25, the lender 
must be registered in the System for Award Management (SAM) and include 
the Unique Entity Identifier (UEI). Lenders currently registered in SAM 
have automatically been assigned a UEI. New lenders will be assigned a 
UEI during registration. This is only required for the lender and

[[Page 26224]]

is not required for the lender's principals.
    Also, as part of the complete application package, the lender must 
provide a list of all the lender's principals (in accordance with the 
definition below) in the organization. This information will be used to 
screen the lender's principals for debarment and suspension.
    As specified at 2 CFR 180.995, ``Principal'' is defined as:
     An officer, director, owner, partner, principal 
investigator, or other person within a participant with management or 
supervisory responsibilities related to a covered transaction; or
     a consultant or other person, whether or not employed by 
the participant or paid with Federal funds, who--
    [cir] Is in a position to handle Federal funds;
    [cir] Is in a position to influence or control the use of those 
funds; or
    [cir] Occupies a technical or professional position capable of 
substantially influencing the development or outcome of an activity 
required to perform the covered transaction.
    (a) Lender Certification: The lender must certify that the lender 
will make a loan to the prospective borrower for the proposed project, 
under specified terms and conditions subject to the issuance of the 
GRRHP guarantee. Lender certification must be on the lender's 
letterhead and signed by both the lender and the prospective borrower.
    (b) Project Specific Data: The lender must submit the project 
specific data below in the Section 538 GRRHP Response Form:

------------------------------------------------------------------------
            Data element               Information that must be included
------------------------------------------------------------------------
Lender Name.........................  Insert the lender's name.
Lender Tax ID #.....................  Insert lender's tax ID number.
Lender Unique Entity Identifier       Insert lender's (UEI).
 (UEI).
Lender Contact Name.................  Name of the lender contact for
                                       loan.
Mailing Address.....................  Lender's complete mailing address.
Phone #.............................  Phone number for lender contact.
Fax #...............................  Insert lender's fax number.
Email Address.......................  Insert lender contact Email
                                       address.
Borrower Name and Organization Type.  State whether borrower is a
                                       Limited Partnership, Corporation,
                                       Indian Tribe, etc.
Equal Opportunity Survey............  Optional Completion.
Tax Classification Type.............  State whether borrower is for
                                       profit, not for profit, etc.
Borrower Tax ID #...................  Insert borrower's tax ID number.
Borrower UEI (if applicable)........  Insert borrower's UEI.
Borrower Address, including County..  Borrower's complete address and
                                       county.
Borrower Phone #, Fax # and Email     Insert borrower's phone number,
 Address.                              fax number and email address.
Principal or Key Member for the       Insert name and title. List the
 Borrower.                             general partners if a limited
                                       partnership, officers if a
                                       corporation or members of a
                                       Limited Liability Corporation.
Borrower Information and Statement    Attach relevant information.
 of Housing Development Experience.
New Construction, Acquisition with    State whether the project is new
 Rehabilitation.                       construction or acquisition with
                                       rehabilitation.
Revitalization, Repair, and Transfer  Yes or No (Transfer costs,
 (as stipulated in 7 CFR 3560.406)     including equity payments, are
 of Existing Direct Section 515 and    subject to Agency approval and
 Section 514/516 FLH or MPR.           must be an eligible use of loan
                                       proceeds in 7 CFR 3565.205).
Project Location Town or City.......  Town or city in which the project
                                       is located.
Project County......................  County in which the project is
                                       located.
Project State.......................  State in which the project is
                                       located.
Project Zip Code....................  Insert zip code where the project
                                       is located.
Project Congressional District......  Congressional District for project
                                       location.
Project Name........................  Insert project name.
Project Type........................  Family, senior (all residents 55
                                       years or older), or mixed.
Property Description and Proposed     Provide as an attachment.
 Development Schedule.
Total Project Development Cost......  Enter amount for total project.
# of Units..........................  Insert the number of units in the
                                       project.
Ratio of 3-5 Bedroom Units to Total   Insert percentage of 3-5 bedroom
 Units.                                units to total units.
Cost Per Unit.......................  Total development cost divided by
                                       number of units.
Rent................................  Proposed rent structure.
Median Income for Community.........  Provide median income for the
                                       community.
Evidence of Site Control............  Attach relevant information.
Description of Any Environmental      Attach relevant information.
 Issues.
Loan Amount.........................  Insert the loan amount.
Borrower's Proposed Equity..........  Insert amount and source.
Low Income Housing Tax Credits......  Have tax credits been awarded?
                                      If tax credits were awarded,
                                       submit a copy of the award/
                                       evidence of award with your
                                       response.
                                      If not, when do you anticipate an
                                       award will be made (announced)?
                                      What is the [estimated] value of
                                       the tax credits?
                                      Letters of application and
                                       commitment letters should be
                                       included, if available.
Other Sources of Funds..............  List all funding sources other
                                       than tax credits and amounts for
                                       each source, type, rates and
                                       terms of loans or grant funds.
Loan to Total Development Cost......  Guaranteed loan divided by the
                                       total development costs of
                                       project.
Debt Coverage Ratio.................  Net Operating Income divided by
                                       debt service payments.
Percentage of Guarantee.............  Percentage guarantee requested.
Collateral..........................  Attach relevant information.
Colonia, Tribal Lands, or State's     Colonia, on an Indian Reservation,
 Consolidated Plan or State Needs      or in a place identified in the
 Assessment.                           State's Consolidated Plan or
                                       State Needs Assessment as a high
                                       need community for multi-family
                                       housing.

[[Page 26225]]

 
Is the Property Located in a          If yes, please provide
 Federally Declared Disaster Area?     documentation (i.e., Presidential
                                       Declaration document).
Population..........................  Provide the population of the
                                       county, city, or town where the
                                       project is or will be located.
What Type of Guarantee is Being       Enter the type of guarantee.
 Requested, Permanent Only (Option
 1), Construction and Permanent
 (Option 2), or Continuous (Option
 3).
Loan Term...........................  Minimum 25-year term.
                                      Maximum 40-year term (includes
                                       construction period).
                                      May amortize up to 40 years.
                                      Balloon mortgages permitted after
                                       the 25th year.
Guarantee Fee Structure Designation.  Indicate the Guarantee Fee
                                       Structure:
                                      Standard Fee.
                                      Preservation of 514/515/516.
                                      Workforce Housing.
                                      Energy Efficient/Green.
                                      (Documentation is required).
Participation in Energy Efficient     Initial checklist indicating
 Programs.                             prerequisites to register for
                                       participation in a particular
                                       energy efficient program. All
                                       checklists must be accompanied by
                                       a signed affidavit by the project
                                       architect stating that the goals
                                       are achievable. If property
                                       management is certified for green
                                       property management, the
                                       certification must be provided.
------------------------------------------------------------------------

    (c) The Proposed Borrower Information:
    i. Lender certification that the borrower and principals are not 
barred or suspended from participating in State or Federal loan 
programs and are not delinquent on any Federal debt.
    ii. Borrower's unaudited or audited financial statements.
    iii. Statement of borrower's housing development experience.
    (d) Lender Eligibility and Approval Status: Evidence that the 
lender is either an approved lender for the purposes of the GRRHP or 
that the lender is eligible to apply for approved lender status. The 
lender's application package requesting approved lender status can be 
submitted with the response and application. If a lender who has not 
yet been approved by the Agency submits a Section 538 GRRHP Response 
Form and complete application, the lender approval application must be 
submitted to the Multi-Family Housing Asset Management Division, Risk 
and Counterparty Oversight Branch, [email protected] within 30 
calendar days of application submission (see SUBMISSION OF 
DOCUMENTATION FOR GRRHP LENDER APPROVAL above). The Agency will not 
issue a loan note guarantee until the lender is approved by the Agency.
    (e) Competitive Criteria: Information that shows how the proposal 
is responsive to the priority scoring criteria specified in this 
Notice.
    (4) Content of Application: The lender must submit a complete 
application which consists of the following:
    (1) Completed GRRHP Response Form (available on the Multifamily 
Housing Loan Guarantees website https://www.rd.usda.gov/programs-services/multifamily-housing-programs/multifamily-housing-loan-guarantees).
    (2) The lender's certification will serve as assurance to the 
Agency that the borrower, the project, and the proposed financing meet 
the lender's standards for loan making. The lender must certify the 
following on the lender's letterhead:
    [ballot] The information contained in the application is consistent 
with the lender's underwriting and loan making standards.
    [ballot] Current List of Lender's Officers and Principals.
    [ballot] The lender has completed the lender's review and has 
identified any significant findings in a narrative attached to this 
certification.
    [ballot] The lender agrees to make a loan to the borrower for the 
proposed project, subject to the Agency's issuance of an appropriate 
guarantee option.
    [ballot] The lender must provide to the Agency a certification from 
the borrower that the borrower is not under any State or Federal order 
suspending or debarring participation in State or Federal loan programs 
and that the borrower is not delinquent on any non-tax obligation to 
the United States.
    [ballot] The lender must certify that the proposed loan amount (for 
such part of the property attributable to dwelling use) and the 
applicable maximum per unit dollar amount limitations under section 
207(c) of the National Housing Act (12 U.S.C. 1713(c)) have not been 
exceeded.
    [ballot] The lender must certify that the owner and development 
team have the qualifications and experience sufficient to carry out 
development, management, and ownership responsibilities.
    [ballot] The lender must certify that if it is applying for a 
continuous guarantee, the project has the appropriate low loan-to-cost 
ratio as determined by the Agency (7 CFR 3565.52(c)(3)).
    [ballot] The lender must certify that the property is located in an 
eligible rural area.
    [ballot] The lender must certify that it has conducted due 
diligence and the results have been taken into consideration in the 
appraisal.
    [ballot] The lender must certify that it has reviewed and approved 
the management plan and agreement and confirmed that they are 
consistent with Agency requirements.
    [ballot] Prior to the issuance of the guarantee, the lender must 
certify that construction meets basic construction requirements.
    (3) Exhibits and Supporting Information (Forms to be included in 
the application package):
    [ballot] Form RD 3565-1, Application for Loan and Guarantee.
    [ballot] Form RD 3565-3, Lender's Agreement.
    [ballot] RD Instruction 1940-Q, Exhibit A-2, Statement for Loan 
Guarantees.
    [ballot] Attachment 4-D, Housing Allowances for Utilities and Other 
Public Services.
    [ballot] Form RD 1944-37, Previous Participation Certification.
    [ballot] Form RD 3560-30, Certification of No Identity of Interest 
(IOI), if applicable.
    [ballot] Form RD 3560-31, Identity of Interest Disclosure/
Qualification Certification, if applicable.
    [ballot] Form RD 1910-11, Applicant Certification, Federal 
Collection Policies for Consumer or Commercial Debts.

[[Page 26226]]

    [ballot] Form HUD 9832, Management Entity Profile.
    [ballot] Form HUD 935.2, Affirmative Fair Housing Marketing Plan.
    [ballot] FEMA Form 086-0-32, Special Flood Hazard Determination (7 
CFR 3565.254).
    [ballot] Form RD 1924-13, Estimate and Certificate of Actual Cost.
    [ballot] Form RD 400-4, Assurance Agreement.
    [ballot] Form RD 1924-25, Plan Certification Form.
    [ballot] Form RD 400-1, Equal Opportunity Agreement.
    [ballot] Form RD 400-6, Compliance Statement.
    [ballot] Form RD 400-3, Notice to Contractors and Applicants 
(prepared by the Agency).
    Other Required Supporting Information:
    Borrower information:
    [ballot] Financial statements with certification(s) (newly formed 
entities applying for a construction/permanent guarantee do not need to 
provide financial statements at the time of application).
    [ballot] Credit report for the entity and any guarantor.
    [ballot] Proposed limited partnership agreement and certificate of 
limited partnership (if applicable). Agency requirements should be 
contained in one section of the agreement and their location identified 
by the borrower or their attorney in a cover sheet.
    [ballot] If a corporate entity, its Articles of Organization and 
its Operating Agreement.
    If the borrower is a nonprofit organization:
    [ballot] Tax-exempt ruling from the IRS designating them as a 
501(c)(3) or 501(c)(4) organization. If the designation is pending, a 
copy of the designation request must be submitted.
    [ballot] Evidence of organization under State law or copies of 
pending applications.
    [ballot] A list of board members.
    If the borrower is a public body:
    [ballot] The enabling statute or the State law of organization.
    Project Information:
    [ballot] An application fee, if applicable.
    [ballot] An appraisal and market study.
    [ballot] Project information including project name, location, 
number and type of units, the development team, property manager, 
lawyer, and syndicator. The development team includes the developer 
(including all principals), architect, and contractor.
    [ballot] Capital Needs Assessment (for rehabilitation loans only). 
Does the Capital Needs Assessment and Capital Improvement Plan call for 
a replacement reserve escrow that meets or exceeds the $1,000/unit 
threshold by year three? If not, document underwriting explanation (7 
CFR 3565.254(b)(4)). Include a Reserve for Replacement schedule.
    [ballot] State Clearinghouse comments or recommendations.
    [ballot] Site plan, including contour lines.
    [ballot] Plot plan.
    [ballot] Floor plan of each living unit type and other type spaces.
    [ballot] Building exterior elevations.
    [ballot] FEMA Form 086-0-33, Elevation Certificate.
    [ballot] Typical building exterior wall section.
    [ballot] Description and justification of any related facilities 
and schedule of separate charges for related facilities, if any.
    [ballot] Design development/working plans/construction 
specifications. Plans, specifications, and estimates must fully 
describe all of the work to be completed, including all landscaping, 
construction, repairs, and site development work. The plans must be 
clear and accurate with adequate dimensions and sufficient scale for 
estimating purposes.
    Technical data, tests, or engineering evaluations needed to support 
the design of the development must be included.
    Property Management Information:
    [ballot] Management plan as specified by 7 CFR 3656.351. A complete 
management plan will include: Details for managing a project with 
scattered sites (if applicable); completion of Form HUD 935.2; 
procedures for determining applicant eligibility; demonstrated capacity 
to manage the unique leasing occupancy restrictions of the guaranteed 
program; description of rent collection; lease provisions covering 
termination and eviction; provision of a copy of tenant protection and 
grievance procedures to tenants; description of security plan; plans 
for maintenance, repair, replacement, tenant work requests, management 
and maintenance staffing plans; detailed compliance with Federal and 
State environmental laws; description of energy conservation measures 
including recycling; detailed management and maintenance staffing 
plans; and information on staff training programs. The plan must 
include a statement confirming that it includes a provision for access 
to project's books and records by USDA staff, USDA-IG, GAO, and the 
Department of Justice; information on accounting, record keeping, data 
systems, and software. 7 CFR 3565.351(a)(7).
    [ballot] Proposed management agreement
    [ballot] Qualifications of the property manager.
    [ballot] The lender must confirm and provide documentation that 
neither the property management entity nor the property management 
entity's principals are debarred or suspended from Federal work by 
accessing the GSA debarment list and CAIVRS (Credit Voice Response 
System) in the Do Not Pay portal at http://donotpay.treas.gov/portal.html.
    Contractor Information:
    [ballot] Demonstrated experience of the general contractor in 
building multifamily housing of the size design, scope, and complexity 
of the project proposed in the application.
    Financing Information:
    [ballot] Lender's conditional commitment on the lender's letterhead 
with lender's signature specifying the GRRHP option under which the 
project loan is to be guaranteed.
    [ballot] Sources and Uses, proforma statement or a comparable 
document.
    [ballot] Lender's narrative.
    [ballot] A copy of the proforma budget detailing the first year and 
a typical year's operation (Proformas with and without the interest 
credit award will serve as justification for the interest credit 
award.).
    [ballot] Disclosure of any change in financing since response to 
the Notice submission.
    [ballot] Type of utilities and utility allowances, if applicable.
    [ballot] Confirm that Operating and Maintenance (O&M) Reserve is at 
least two percent (see 7 CFR 3565.3) of the total loan amount (not just 
guaranteed portion). Calculation of O&M reserve for congregate care 
facilities and larger projects should reflect absorption rates in the 
market study to cover shortfalls between estimated operating budget 
calculations and rent-up assumptions. Funds contributed as O&M reserves 
are contributed from the borrower's own resources or an irrevocable 
letter of credit and are not to be included as part of the total 
development cost calculation. 7 CFR 3565.52(e); 7 CFR 3565.402(a)(2).
    [ballot] For Option Two and Option Three guarantees, confirm that 
the construction contingency equal to two percent of the construction 
contract, inclusive of the contractor's fee and hard and soft costs 
(see 7 CFR 3565.3). This is to be funded at or prior to closing by the 
contractor 7 CFR 3565.402(a)(2).
    [ballot] Ensure the loan meets the regulatory requirements 
according to applicable classification under 7 CFR 3565.251-254. 
Provide evidence of adequate insurance for the project (7 CFR 
3565.351(a)(5)).
    [ballot] Interest Credit Request, if applicable.

[[Page 26227]]

    Environmental Information:
    [ballot] Most current version of the ASTM Standard E 1528-14, Phase 
I Environmental Site Assessment Process published by the American 
Society for Testing and Materials (ASTM).
    [ballot] Environmental Information in accordance with 7 CFR part 
1970--Environmental Policies and Procedures.
    [ballot] Compliance with historic and architectural laws, if 
applicable.
    [ballot] Comments regarding relevant off-site conditions.
    [ballot] Land survey.
    Legal and Regulatory Items:
    [ballot] Standard Regulatory Agreement approved by the Agency. (7 
CFR 3565.303(d)(11).
    [ballot] Non-Standard Regulatory Agreement(s) containing provisions 
for transferability between lenders, binding on the borrower and their 
successors (7 CFR 3565.351(a)), and requires that the borrower: make 
all principal and interest payments under the note, maintain the 
project as affordable housing in good physical condition; maintain 
complete project books and records; and comply with all Federal Fair 
Housing requirements under the terms of the note (7 CFR 3565.351(a)).
    [ballot] Confirmation in writing that the borrower is in compliance 
with the Affirmative Fair Housing Marketing Plan (7 CFR 3565.353).
    [ballot] Verify use of security instruments prepared, executed, 
recorded and/or delivered per program guidelines and that those 
instruments are in compliance with the terms of the conditional 
commitment.
    [ballot] Verify use of the construction contract based on standard 
AIA Document A-101. If this document is used, it should be modified as 
described in Form RD 1924-25 or a similar form.
    [ballot] Verify use of contract specifications, documents and 
forms. Use Form RD 1924-6 ``Construction Contract'' or similar document 
as required by Executive Order 11246, Non-Discrimination in Employment 
by Construction Contractors.

V. Response and Application Review Information

    (1) SCORING OF PRIORITY CRITERIA FOR SELECTION: Complete 
applications received will be scored based on the criteria set forth 
below to establish priority in the event there is insufficient funding. 
As specified at 7 CFR 3565.5(b), priority will be given to projects: in 
smaller rural communities, in the neediest communities having the 
highest percentage of leveraging, having the lowest interest rate, or 
having the highest ratio of 3-5 bedroom units to total units, or on 
Tribal lands. In addition, as permitted in 7 CFR 3565.5(b), to meet 
important program goals, priority points will be given for projects 
that qualify for reduced annual fees, including workforce housing, 
Section 515 or Section 514/516 preservation and green and energy 
efficient housing projects.
    The priority scoring criteria for projects are listed below.
    Priority 1--Projects located in eligible rural communities with the 
lowest populations. Two points are awarded if the city or town 
population is under 10,000 people.
    Priority 2--Projects in the most-needy communities. Two points are 
awarded if the property is located in a persistent poverty county as 
defined by the USDA Economic Research Service.
    Priority--Projects that demonstrate partnering and leveraging of 
third-party funding. Two points are awarded if the loan to total 
development cost ratio is less than 50%.
    Priority 4--Projects with the highest ratio of 3-5 bedroom units to 
total units. Two points are awarded if the ratio of 3-5 bedroom units 
to total units is 25% or more.
    Priority 5--Projects on Tribal land. Two points are awarded if the 
project is located on Tribal land.
    Priority 6--Projects with a lower Section 538 guaranteed loan 
interest rate. One point is awarded if the interest rate is equal to or 
less than 130% of the long-term annual applicable Federal rate (AFR 
Table 1) at the time of application submission to the Agency.
    Priority 7--Projects determined eligible for reduced annual Section 
538 fees under the Federal Register notice published on March 3, 2022 
(87 FR 12077). Two points awarded for each of the criteria met for 
reduced annual fees: (1) Workforce Housing (Rents Between 80%-115% Area 
Median Income), or (2) Preservation of Existing Section 515 and Section 
514/516 Rural Development Properties or (3) Section 538 New 
Construction or Substantial Rehabilitation Meeting Green or Energy 
Efficiency Requirements. Projects will be held to the energy program 
standards in effect the year the Loan Note Guarantee is issued.
    Priority 8--Energy consumption performance. Two points will be 
awarded if the lender obtains the borrower's agreement to enroll in the 
United States EPA's ENERGY STAR Portfolio Manager and document and 
report energy consumption for the property to the Agency. Along with 
the collection of the borrower's annual reports (outlined in 7 CFR 
3565.351), to obtain the priority points the lender must collect the 
Statement of Energy Performance (SEP) report from the borrower and 
submit it to the Agency for review. This will allow the Agency to track 
the energy consumption performance of the project. Borrowers may access 
the EPA's ENERGY STAR Portfolio Manager software at no cost.
    If there is insufficient funding available to fund all approved 
projects and projects have equal scores based on the priority criteria, 
the Agency will rank the tied projects based on the scores for Priority 
7. If there is still a tie, the Agency will obligate funds in order 
from the smallest to largest amount of Agency funding needed.
    (2) NOTIFICATIONS: Responses and applications will be reviewed 
concurrently for completeness and eligibility. The Agency will notify 
the lender generally within 30 days of receipt of a complete 
application of the determination of award. Incomplete applications, 
which includes the Section 538 GRRHP Response Form and supporting 
documentation, will be returned to the lender. The lender may reapply 
in the future with a new and complete application.

VI. Award Administration Information

    (1) OBLIGATION OF PROGRAM FUNDS: The Agency will only obligate 
funds to projects that meet the requirements under 7 CFR part 3565 and 
this Notice that have submitted a complete application and have 
undergone a satisfactory environmental review in accordance with the 
National Environmental Protection Act (NEPA). If there is sufficient 
funding, once a complete application is received and approved (and any 
request for GRRHP approved lender status is granted), the Agency will 
obligate funds. The Agency considers the program to have insufficient 
funds when the program's annually appropriated funding amount has ten 
percent or less remaining. If there is insufficient funding, the Agency 
will review the scores for each approved project and rank them 
accordingly. As funding becomes available, funding for approved 
projects will be obligated based on the rankings from high to low 
scores as described in Section V. Response and Application Review 
Information.
    In the event that the Agency suspends the ability to receive 
applications until sufficient funding becomes available, a notice will 
be made to the industry via GovDelivery and/or some other form of 
acceptable electronic notice.
    (2) CONDITIONAL COMMITMENT: Once the required documents for 
obligation are received and all applicable requirements have been met, 
including NEPA requirements, and to

[[Page 26228]]

the extent funding is available, the Agency will issue a Conditional 
Commitment. The Conditional Commitment will stipulate the conditions 
that must be fulfilled before the issuance of a guarantee, in 
accordance with 7 CFR 3565.303.
    (3) ISSUANCE OF GUARANTEE: The Agency will issue a guarantee to the 
lender for a project in accordance with 7 CFR 3565.303. No guarantee 
can be issued without a complete application, review of appropriate 
certifications, satisfactory assessment of the appropriate level of 
environmental review, and the completion of any conditional 
requirements.
    (4) TRACKING OF AVERAGE RENTS: After the loan closes, the lender 
will track the initial affordable rent at each property funded and the 
average market rent in the area. The difference between these two rents 
will provide the lender with a measure of the impact the GRRHP has on 
affordable rents. 7 CFR 3565.203.

Build America, Buy America

    Funding to Non-Federal Entities. Awardees that are Non-Federal 
Entities, defined pursuant to 2 CFR 200.1 as any State, local 
government, Indian Tribe, Institution of Higher Education, or nonprofit 
organization, shall be governed by the requirements of section 70914 of 
the Build America, Buy America Act (BABAA) within the IIJA. Any 
requests for waiver of these requirements must be submitted pursuant to 
USDA's guidance available online at https://www.usda.gov/ocfo/federal-financial-assistance-policy/USDABuyAmericaWaiver.

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, 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, familial/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 711 Relay Service. 
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:
    Mail: U.S. Department of Agriculture, Director, Office of 
Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410;
    Fax: (202) 690-7442; or
    Email: usda.gov">program.intake@usda.gov.
    USDA is an equal opportunity provider, employer, and lender.

Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2023-08952 Filed 4-27-23; 8:45 am]
BILLING CODE 3410-XV-P