Exhibit M to Subpart D of Part 1944

market rent determination for labor housing projects

I. Objective. The objective of this exhibit is to provide guidance for a market rent determination for Labor Housing (LH) when the farmworker is not required to live on the farm (§ 1944.176(d)(5) of this subpart) or when it is necessary to determine a rent for farmer owned housing.

II. Purpose. When an eligible farmworker becomes ineligible because of above-moderate-income and has been granted permission to continue residing in the unit in accordance with paragraph VI B 5 or 6 of exhibit B of subpart C of part 1930 of this chapter, then an appropriate rent must be formulated that must not exceed the market rent for the local area as determined in accordance with the provisions set out in this exhibit.

III. Determination. Whenever a market rent determination is required for one or more LH resident(s), the market rent will be computed by using the most recently approved Form FmHA or its successor agency under Public Law 103-354 1930-7, “Statement of Budget and Cash Flow,” and substituting a new debt service computation based on the project's development cost. The amortization factor for the Farm Labor Housing-State Director Exception interest rate as published in FmHA Instruction 440.1 (available in any FmHA or its successor agency under Public Law 103-354 office) will be used with a 33 year term. The rate used for amortization for debt service in the market rent budget should be rounded down to the nearest eighth of a percent. For example, 9.95 percent would be rounded to 9.875. The market rent is computed on a basis of the project's initial development cost and subsequent loans and grants. In contrast, the “basic” rent debt service is computed 1 percent loans offset by the construction grants.

The market rent determination, one set, will remain in place for the project; therefore, the determination must be recorded in a narrative statement which must be filed with the Promissory Note.

IV. Limitations. If the market rent determined in the proceeding paragraph is found to exceed the conventional market rents in the area (within an approximate 48 kilometer or (30 mile) radius or the effective market area or other appropriate geographical or local boundary) by more than $20, then the LH market rent will be limited to the prevailing market rent. Prevailing market rents may be determined from such sources as recent Rural Rental Housing Market studies or recent area classified advertisements (within the last two months), documented, and adjusted for comparability. Documentation should be similar to the information found in exhibit A-4 of this subpart, with the advertisements attached. The adjustment for comparability should consider unit size, bedroom mix, age, and amenities. This rental determination is not intended to survey housing used exclusively for farm labor rental housing, but to determine a fair conventional market rent for an above-moderate-income farmworker and family.