[Federal Register Volume 64, Number 244 (Tuesday, December 21, 1999)]
[Notices]
[Pages 71601-71604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32958]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Rural Housing Service
Notice of Availability of Funding and Requests for Proposals for
Guaranteed Loans Under the Section 538 Guaranteed Rural Rental Housing
Program
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This Notice of Fund Availability (NOFA or Notice) announces
the timeframe to submit proposals in the form of ``NOFA responses'' for
the section 538 Guaranteed Rural Rental Housing Program (GRRHP).
Eligible lenders are invited to submit NOFA proposals for the
development of affordable rental housing to serve rural America.
Lenders may submit their application concurrently with their NOFA
response. This document also describes the overall application process,
including the selection of NOFA responses and the allocation of
interest credits.
DATES: Fiscal Year (FY) 2000 program dollars will be divided into two
selection pools: an ``early selection pool'' of $40 million which will
close at 4:00 PM Eastern Time on February 21, 2000 and the ``standard
selection pool'' of $60 million which will close at 4:00 PM Eastern
Time, on May 8, 2000. See paragraph III., ``Application Process'' of
this NOFA for more information on this topic.
The final deadline for a FY 2000 NOFA response will be 4:00 PM
Eastern Time on May 8, 2000. No NOFA responses will be accepted after
4:00 PM Eastern Time on May 8, 2000, unless that date and time is
extended by Notice published in the Federal Register. Lenders intending
to mail a NOFA response must provide sufficient time to permit delivery
on or before the closing deadline date and time. Acceptance by a post
office or private mailer does not constitute delivery. Facsimile (FAX)
and postage due NOFA responses or applications will not be accepted.
ADDRESSES: Responses for participation in the program must be
identified as ``Section 538 Guaranteed Rural Rental Housing Program''
on the envelope and
[[Page 71602]]
be submitted to: Director, Multi-Family Housing Processing Division,
Rural Housing Service, U.S. Department of Agriculture, Room 1263 (STOP
0781), 1400 Independence Ave. SW, Washington, DC 20250-0781.
FOR FURTHER INFORMATION CONTACT: Joyce Allen, Senior Loan Officer,
Guaranteed Loans, Multi-Family Housing Processing Division, U.S.
Department of Agriculture, South Agriculture Building, Room 1271 (STOP
0781), 1400 Independence Ave. SW, Washington, DC 20250-0781. E-mail:
jallen@rdmail.rural.usda.gov. Telephone: (202) 690-4499. This number is
not toll-free. Hearing or speech impaired persons may access that
number by calling the Federal Information Relay Service toll-free at
(800) 877-8339.
SUPPLEMENTARY INFORMATION: The GRRHP will be operated under the
direction of Title 7 CFR Code of Federal Regulations part 3565 (7 CFR
part 3565). In addition, this NOFA will identify any priorities for
selection of proposed applications, and the process by which the Agency
will score and rank the proposals. Information will also be included
about submission forms and deadlines.
The Guaranteed Rural Rental Housing Program Origination and
Servicing Handbook (HB-1-3565) is available to provide lenders and
Agency personnel with the ``how to'' administrative guidance needed to
administer the program. As a service to our customers, copies of HB-1-
3565, which contains a copy of 7 CFR part 3565 in Appendix 1, may be
obtained from the Rural Housing Service Multi-Family Housing Processing
Division at 202-720-1604. This is not a toll-free number. Hearing- or
speech-impaired persons may access that number by calling the Federal
Information Relay Service toll-free at (800) 877-8339.
Discussion of Notice
I. Purpose and Program Summary
On March 28, 1996, President Clinton signed the ``Housing
Opportunity Program Extension Act of 1996,'' Public Law 104-120,
authorizing the section 538 Guaranteed Rural Rental Housing Program
(GRRHP). The program is designed to increase the supply of affordable
multifamily housing through partnerships between Rural Housing Service
(RHS) and major lending sources, as well as State and local housing
finance agencies and bond issuers. Qualified lenders will be authorized
to originate, underwrite, and close loans for multifamily housing
projects requiring new construction or acquisition with rehabilitation
of at least $15,000 per unit. RHS may guarantee such loans upon
presentation and review of appropriate certifications, project
information and satisfactory completion of the appropriate level of
environmental review by RHS. Lenders will be responsible for the full
range of loan management, servicing, and property disposition
activities associated with these projects. The lender will be expected
to provide servicing or contract for servicing of each loan it
underwrites. In turn, RHS will guarantee the lender's loan up to 90
percent of total development cost and commits to pay up to a maximum of
90 percent of the outstanding principal and interest balance of such
loan in the case of default of the loan and filing of a claim. In no
event will the Agency pay more than 90 percent of the original
principal amount. This means that the Agency will have a risk exposure
under the GRRHP of approximately 80 percent of the total development
cost. Any losses would be split on a pro-rata basis between the lender
and the Agency from the first dollar lost.
II. Allocation
Fiscal Year (FY) 2000 budget authority provides approximately $100
million in program dollars. All FY 2000 funds will be held in the
National office. There are no set-asides or demonstration purposes for
the GRRHP for FY 2000.
III. Application Process
FY 2000 budget authority will provide approximately $100 million in
program dollars. In order to better assist lenders who are currently
working with an applicant, the FY 2000 program dollars will be divided
into two selection pools; an ``early selection pool'' of $40 million,
which will close 4 p.m. Eastern Standard Time, February 21, 2000 and a
``standard selection pool'' of $60 million, which will close 4 p.m.
Eastern Daylight Time, May 8, 2000. Any funds not used in the early
selection pool will be transferred to the standard selection pool.
To be eligible for early selection, NOFA responses must have a
minimum score of 20 points and must be received prior to 4:00 PM,
Eastern Standard Time on February 21, 2000. NOFA responses not scoring
a minimum of 20 points, responses received after the deadline for the
early pool, and responses not selected due to insufficient funds in
this pool will be retained for the standard selection pool with the
closing deadline of May 8, 2000. The final deadline for a FY 2000 NOFA
response will be 4 p.m., Eastern Daylight Time on May 8, 2000. No
exceptions will be made to the above NOFA closing deadlines unless
those deadlines are extended by notice published in the Federal
Register.
In the event that there are insufficient funds available in either
selection pool, priorities will be assigned to the NOFA responses on
the basis of the criteria assigned in 7 CFR 3565.5(b) and in paragraph
VI., ``Selection Criteria'' of this NOFA. In the event that there are
insufficient funds available to fully fund the next NOFA proposal in
the ranking list, the Agency will offer the lender the opportunity to
accept a loan note guarantee for less than the requested amount. If the
lender declines, the same offer will be made to the next lender on the
ranking list, until all the funds are expended. In the event of ties,
selection will be by lot.
In the interest of time, lenders have the option of submitting a
combined NOFA response and application. However, the Agency will not
give preference to a submission with both the NOFA response and
application. Lenders who submit complete applications are encouraged,
but not required, to include a checklist and to have their applications
indexed and tabbed to facilitate the review process. RHS will base its
determination of the completeness of the application and the
eligibility of the lender on the information provided in the
application.
Upon notice of selection, lenders with the top ranked NOFA
responses will be requested to submit the required application fee of
$2,500.00 and full application if not already submitted. When the
conditions of the conditional commitment are met, the lender will
submit the required information with a separate guarantee fee of 1% of
the total guarantee amount.
IV. Submission Requirements
All NOFA responses for the GRRHP must meet the requirements of 7
CFR part 3565 and this NOFA. Incomplete submissions will not be
considered, and the lender will be notified of the reason the response
was incomplete.
Assistance can include both loan guarantees and interest credits.
For at least 20 percent of the loans made under the program, RHS shall
provide the borrower with interest credits to reduce the interest rate
of the loan by a maximum of 250 basis points. However, in no instance
will the lender's interest rate be reduced to lower than the applicable
Federal Rate as such term is used in section 42(i)(2)(D) of the
Internal Revenue Code of 1986.
RHS will provide interest credit on loans up to $1.5 million.
Lenders with proposals that could be viable with or without interest
credits are encouraged
[[Page 71603]]
to submit a NOFA response reflecting financial and market feasibility
under both funding options. A request in the NOFA response to be
considered under both options will not affect the rating of the
response for Interest Credit selection. However, once the interest
credit funds are exhausted, only those NOFA responses requesting
consideration under both funding options or the Non-Interest Credit
option will be further considered.
NOFA responses requesting interest credit will be ranked and scored
separately using the same selection criteria for non-interest credit
responses. In the event that there are insufficient funds available to
fully fund the next interest credit response in the ranking list, the
Agency will offer the lender the opportunity to accept a loan note
guarantee for less than the requested amount. If the lender declines,
the same offer will be made to the next rated response on the list
until all the funds are expended. In the event of ties, selection will
be by lot.
V. Sample NOFA Response
In order to expedite the review of the applications, RHS suggests
using the following NOFA response guidelines. The NOFA response should
be on the lender's letterhead, signed by both the lender and the
applicant, and be submitted by the lender to the Agency.
Sample NOFA Response:
LENDER NAME--Lender organization name.
LENDER CONTACT NAME--Name of the lender contact for loan.
MAILING ADDRESS--Complete mailing address for lender.
PHONE NUMBER--Phone number for lender contact.
FAX NUMBER--Fax number.
E-MAIL ADDRESS--E-mail address.
APPLICANT NAME--Show official name, list any trade name as ``d/b/
a.''
APPLICANT TAX ID NUMBER--Insert number.
NEW CONSTRUCTION OR REPAIR/REHAB. OF AT LEAST $15,000/UNIT.--State
whether the project is new construction or repair/rehab.
PROJECT LOCATION TOWN--Town 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--Project zip code.
PROJECT CONGRESSIONAL DISTRICT--Congressional District for project
location.
EZ/EC--Is the project in EZ/EC community? (Yes or No)
COLONIA OR TRIBAL LANDS--Is the project in a Colonia or on tribal
lands? (Yes or No)
PRESIDENTIAL DECLARED DISASTER AREA--Is the project in a
Presidentially declared Disaster Area? (Yes or No)
POPULATION--What is the population of the community in which the
project is located? (Note: Population must be in an eligible rural area
as defined in HB-1-3565, paragraph 1.6, ``Eligible Rural Area.'')
MEDIAN INCOME FOR COMMUNITY--Provide median income for the project
community.
LOAN AMOUNT--Insert the loan amount.
PERCENTAGE OF GUARANTEE--Percentage guarantee requested.
IS A GUARANTEE FOR CONSTRUCTION ADVANCES BEING REQUESTED?--(Yes or
No) (Note: Agency will guarantee construction advances, only as part of
a combination construction and permanent loan.)
TOTAL PROJECT DEVELOPMENT COST--Enter amount for total project.
TAX CREDITS--Are tax credits to be provided to project?
LOAN TERM--Provide the loan term. (Note: Term may be up to 40
years.)
INTEREST RATE--Provide the interest rate. (Note: Max. rate is 250
basis points over treasury bond yield. Rate must be fixed rate and
fully amortizing, i.e., balloon mortgages are not eligible.)
BASIS POINTS OVER 30 YEAR TREASURY--Insert number.
OTHER SOURCES OF FUNDS--List all funding sources.
NUMBER OF UNITS--What is the total number of units in the project?
BEDROOM MIX--Number of units by number of bedrooms.
INTEREST CREDIT (IC)--Is interest credit requested for this loan
(Yes or No)?
IF ABOVE IS ``YES,'' SHOULD PROPOSAL BE CONSIDERED UNDER NON-IC
SELECTION, IF IC FUNDS ARE EXHAUSTED?--(Yes or No) (Note: If ``Yes,''
proposal must show financial feasibility for NON-IC consideration.)
RENT--What is the proposed rent structure?
COST PER UNIT--Total development cost divided by number of units.
DEBT COVERAGE RATIO--Net Operating Income divided by debt payments.
LOAN TO VALUE--Guarantee loan divided by value.
VI. Selection Criteria
NOFA proposals will be reviewed as received. In the event that
demand exceeds available funds, priorities will be assigned to eligible
proposals on the basis of the following criteria as described in 7 CFR
3565.5(b), and points will be assigned as follows:
(A) Projects located in rural communities with the smallest
population will receive priority. All proposals will be ranked in order
of their population. The proposals will be given a point score starting
with the project located in the area with the lowest population
receiving 20 points, the next 19 points and so forth, until up to 20
projects have received points.
(B) The most needy communities as determined by the median income
from the most recently available census data. The proposals will be
given a point score starting with the community having the lowest
median income receiving 20 points, the next 19 points and so forth
until up to 20 proposals have received points.
(C) Partnering and leveraging in order to develop the maximum
number of housing units and promote partnerships with state and local
communities, including other partners with similar housing goals.
Leveraging points will be awarded as follows:
------------------------------------------------------------------------
Loan to value ratio (percentage %) Points
------------------------------------------------------------------------
75-84......................................................... 10
70-74......................................................... 15
69 or less.................................................... 20
------------------------------------------------------------------------
(D) Loans with interest rates less than the maximum allowable 250
basis points over the 30 Year Treasury Rate will be awarded points as
follows:
------------------------------------------------------------------------
Interest rate Points
------------------------------------------------------------------------
250 to 201 basis points, inclusive............................ 0
200 to 151 basis points, inclusive............................ 5
150 to 100 basis points, inclusive............................ 10
99 to 50 basis points, inclusive.............................. 15
Less than 50 basis points..................................... 20
------------------------------------------------------------------------
(E) Preference will be given to proposals having a higher percent
of 3-5 bedroom units to total units. The proposals will be ranked in
order of this percent with the proposal with the highest percent
receiving 20 points, the next 19 points and so forth until up to 20
projects have received points.
(F) Proposals to be developed in a colonia, on tribal land, in an
Empowerment Zone or Enterprise Community, or in a place identified in
the State consolidated plan or State needs assessment as a high need
community for multifamily housing (20 points).
(G) Projects will be ranked by the length of the amortization
period, with the longest receiving priority as follows:
[[Page 71604]]
------------------------------------------------------------------------
Amortization (Yrs.) Points
------------------------------------------------------------------------
40............................................................ 20
At least 35................................................... 15
At least 30................................................... 10
At least 20................................................... 5
Less than 20.................................................. 0
------------------------------------------------------------------------
VII. Additional Information
A. National Environmental Policy Act (NEPA)
The lender will provide the applicant's completed Form RD 1940-20,
``Request for Environmental Information,'' available by contacting the
Rural Development State Environmental Coordinator (SEC) at any RD State
office and submit it with the NOFA response. A description of any known
environmental issues that may affect the project must also be included.
This step is necessary in order for the NOFA response to be complete.
The Agency's environmental review of the property, as required
under NEPA and 7 CFR part 1940, subpart G will be initiated as early as
possible, but no later than the selection of the proposal for further
processing. This environmental impact review must be completed prior to
the Agency's issuance of a conditional commitment. The environmental
review is considered complete when the environmental documents have
been properly executed, when all applicable public notices have been
published, the associated public comment periods have expired, and the
Agency has taken any necessary actions to address the comments
received.
Lenders have a responsibility to become familiar with Federal
environmental requirements so that they can advise applicants and
reduce the probability of unacceptable NOFA responses being submitted
to the Agency. Lenders are also expected to cooperate in the collection
of any environmental data which the Agency determines is necessary and
in the resolution of potential environmental problems.
B. Surcharges for Guarantee of Construction Advances
There is no surcharge for guarantee of construction advances for FY
2000.
C. Maximum Interest Rate
The maximum allowable interest rate on a loan submitted for a
guarantee is 250 basis points over the 30-year Treasury Bond Yield as
published in the Wall Street Journal as of the business day prior to
the business day the rate is set.
D. Program Fees for FY 2000
(1) There is an initial guarantee fee of 1% of the total guarantee
amount which will be due when the loan guarantee is issued. 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.
(2) There is an annual renewal fee of 0.5% of the guaranteed
outstanding principal balance charged each year or portion of the year
that the guarantee is in effect. This fee will be collected
prospectively on January 1, of the calendar year.
(3) There is no site assessment and market analysis or preliminary
feasibility fee in FY 2000.
(4) There is a non-refundable application fee of $2,500 when the
application is submitted following proposal selection under the NOFA.
(5) There is no lender application fee for lender approval in FY
2000.
(6) There is a flat fee of $500 when a lender requests RHS to
extend the term of a guarantee commitment.
(7) There is a flat fee of $500 when a lender requests RHS to
reopen a guarantee commitment after the period of the commitment
lapses.
(8) There is a flat fee of $1,250 when a lender requests RHS to
approve the transfer of property and assumption of the loan to an
eligible applicant.
Dated: December 10, 1999.
Eileen M. Fitzgerald,
Acting Administrator, Rural Housing Service.
[FR Doc. 99-32958 Filed 12-20-99; 8:45 am]
BILLING CODE 3410-XV-U
