2024-05505. Section 514 Off-Farm Labor Housing Subsequent Loans and Section 516 Off-Farm Labor Housing Subsequent Grants To Improve, Repair, or Make Modifications to Existing Off-Farm Labor Housing Properties for Fiscal Year 2024

AGENCY:

Rural Housing Service, USDA.

ACTION:

Notice of solicitation of applications (NOSA).

SUMMARY:

The Rural Housing Service (RHS or Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), announces that it is accepting applications for subsequent Section 514 Off-Farm Labor Housing (Off-FLH) loans and subsequent Section 516 Off-FLH grants to improve, repair, or make modifications to existing Off-Farm Labor Housing Properties for fiscal year 2024. This Notice describes the method used to distribute funds, the application process, and submission requirements.

DATES:

Eligible applications submitted to the Production and Preservation Division, Processing and Report Review Branch, for this Notice will be accepted until June 18, 2024, 12 p.m., Eastern Time. Applications that are deemed eligible but are not selected for further processing due to inadequate funding will be withdrawn from processing. RHS will not consider any application that is received after the established deadlines unless the date and time are extended by another Notice published in the Federal Register . The RHS may at any time supplement, extend, amend, modify, or supersede this Notice by publishing another Notice in the Federal Register . Additional information about this funding opportunity can be found on the Grants.gov website at https://www.grants.gov.

At least three business days prior to the application deadline, the applicant must email the RHS a request to create a shared folder in CloudVault. Please refer to the ADDRESSES section of this notice for further details.

The application deadlines are as follows:

1. Available loan and grant funding posted to the MFH website by March 18, 2024.

2. Applications must be submitted by June 18, 2024, 12 p.m., Eastern Time.

3. Awards and non-selections communicated to applicants by September 30, 2024.

4. Awards posted to the RHS website by October 15, 2024.

Concept meetings will be scheduled between the dates of April 1, 2024 and April 29, 2024. No concept meetings will be scheduled outside of the specified dates.

Requests for concept meetings can be sent to the following email address: [e-mail] and must be received by April 15, 2024. Please refer to Section E. Applicant Assistance of this notice for further details.

ADDRESSES:

Applications to this Notice must be submitted electronically to the Production and Preservation Division, Processing and Report Review Branch.

At least three business days prior to the application deadline, the applicant must email the RHS a request to create a shared folder in CloudVault. The email must be sent to the following address: [e-mail]. The email must contain the following information:

(1) Subject line: “Off-FLH Repair Application Submission.”

(2) Body of email: Borrower Name, Project Name, Borrower Contact Information, Project State.

(3) Request language: “Please create a shared CloudVault folder so that we may submit our repair application documents.”

Once the email request to create a shared CloudVault folder has been received, a shared folder will be created within two business days. When the shared CloudVault folder is created by the RHS, the system will automatically send an email to the applicant's submission email address with a link to the shared folder. All required application documents in accordance with this Notice must be loaded into the shared CloudVault folder. The applicant's access to the shared CloudVault folder will be removed when the submission deadline is reached. Any document uploaded to the shared CloudVault folder after the application deadline will not be reviewed or considered. Please note: CloudVault is a USDA‐approved cloud‐based file sharing and synchronization system. CloudVault folders are neither 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 later of either 180 days from the application date, or once the application has been processed and the transaction has been closed.

For further instructions, please refer to Section C. Application and Submission Information of this Notice.

FOR FURTHER INFORMATION CONTACT:

For information regarding this Notice and the Addendum: Capital Needs Assessment Process located at the end of this notice, 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: [e-mail] or telephone: [phone]. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

Rural Development: Key Priorities

RD will continue to support and promote activities and investments that will achieve the following:

(1) Creating More and Better Markets: Assist rural communities to recover economically through more and better market opportunities and through improved infrastructure.

(2) Addressing Climate Change and Environmental Justice: Reduce climate pollution and increase resilience to the impacts of climate change through economic support for rural communities.

(3) Advancing Racial Justice, Place-Based Equity, and Opportunity: Ensure all rural residents have equitable access to RD programs and benefits from RD funded projects. For further information, visit https://www.rd.usda.gov/​priority-points.

Background

USDA's RD Agencies, comprising of the Rural Business-Cooperative Service (RB–CS), RHS, and the Rural Utilities Service (RUS), are leading the way in helping rural America improve the quality of life and increase the economic opportunities for rural people. RHS offers a variety of programs to build or improve housing and essential community facilities in rural areas. The Agency also offers loans, grants, and loan guarantees for single-family and multi-family housing, child-care centers, fire and police stations, hospitals, libraries, nursing homes, schools, first responder vehicles and equipment, housing for farm laborers and much more. The Agency also provides technical assistance loans and grants in partnership with non-profit organizations, Indian tribes, state and Federal Government agencies, and local communities.

Sections 514 and 516 of the Housing Act of 1949 allows the RHS to provide competitive loan and grant financing, respectively, for affordable multifamily rental housing. The program objective is to administer repair funds in a fair, equitable, and transparent manner. Funds will be used to improve, repair, or make modifications to existing Off-FLH properties currently financed by the RHS that serve domestic farm laborers, retired domestic farm laborers, or disabled domestic farm laborers.

To focus investments in areas where the need for increased prosperity is greatest, the RHS will set aside 10 percent of the available funds for applications that will serve persistent poverty counties. The term “persistent poverty counties” means any county that has had 20 percent or more of its population living in poverty over the past 30 years, as measured by the 1990 and 2000 decennial censuses and 2007–2011 American Community Survey 5-year average, or any territory or possession of the United States.” Information on which counties are considered persistent poverty counties can be found through using the following link ( https://ruraldevelopment.maps.arcgis.com/​apps/​webappviewer/​index.html?​id=​a0bcd25194434ac784493fd5dc7f8191) provided by the USDA's RD Innovation Center. Set-aside funds will be awarded in point score order, starting with the highest score. Once the set-aside funds are exhausted, any further set-aside applications will be evaluated and ranked with the other applications submitted in response to this Notice. If the RHS does not receive enough eligible applications to fully utilize the 10 percent set aside in the service of these areas, the RHS will award any unused set aside funds to other eligible applicants.

Overview

Federal Agency: Rural Housing Service.

Funding Opportunity Title: Section 514 Off-Farm Labor Housing Subsequent Loans and Section 516 Off-Farm Labor Housing Subsequent Grants to Improve, Repair, or Make Modifications to Existing Off-Farm Labor Housing Properties for Fiscal Year 2024.

Funding Opportunity Number: USDA–RD–HCFP–OFFFLH–REPAIR–2024.

Available Funds: Available subsequent loan and subsequent grant funding amounts can be found at the following link: https://www.rd.usda.gov/​programs-services/​farm-labor-housing-direct-loans-grants.

Maximum Award: Award may not exceed $40,000 per unit (total loan and grant). There is no minimum award. At the sole discretion of the RHS, the maximum award may be limited to $4,000,000 per project based on funding availability and volume of qualified applications.

Announcement Type: Request for applications from qualified applicants for Fiscal Year 2024.

Assistance Listing Number: 10.405.

Please Note: Expenses incurred in developing applications will be at the applicant's sole risk.

A. Federal Award Description

(1) Applications will only be accepted through the date and time listed in this Notice. The maximum award may not exceed $40,000 per unit per project (total loan and grant). At the sole discretion of the RHS, the maximum award may be limited to $4,000,000 per project based on funding availability and volume of qualified applications. There is no minimum award requirement. Proposals for limited improvements, repairs, and/or modifications to address accessibility compliance and health & safety issues will be considered under this Notice.

(2) A State will not receive more than 30 percent of the Off-FLH funding unless there are remaining section 514 and section 516 funds after all eligible applications from other States have been funded. In this case, funds will be awarded to the next highest-ranking eligible applications among all remaining unfunded applications nationwide. The allocation of these funds may result in a State or States exceeding the 30 percent funding limitation.

(3) Section 516 Off-FLH subsequent grants must not exceed the limits set forth in 7 CFR 3560.562(c). Total development cost (TDC) is defined in 7 CFR 3560.11. Section 514 Off-FLH loans may not exceed the limits set forth in 7 CFR 3560.562(b).

(4) Applications that propose the use of Low-Income Housing Tax Credits (LIHTC) will not be considered and are not eligible under this Notice.

(5) Any proposed leveraged funds must be in the form of a grant, non-amortizing leveraged funds, or similar funding source with no debt service. No source of leveraged funds that require a debt service is acceptable. Applications that propose the use of a grant, non-amortizing leveraged funds, or similar funding source should include firm commitment letters within their application, if available. If not included with the application, the applicant must provide firm commitment letters for any proposed leveraged funds no later than 180 calendar days from the date of issuance of the award letter under this NOSA. If the applicant is unable to secure a third-party firm commitment letter within 180 calendar days from the issuance of the award letter under this NOSA, the application will be deemed incomplete, and the award letter will be considered null and void.

(6) A firm commitment letter is defined as a lender's unqualified pledge to the applicant that they meet the lender's guidelines, and the lender is willing to offer the applicant a grant, non-amortizing leveraged funds, or similar funding source under specified terms. The letter validates that the applicant's funding has been fully approved and that the lender is prepared to close the transaction. Preliminary commitment letters, term sheets, or any other letter from the lender that does not meet the definition above for a “firm commitment letter” will not meet the requirements specified in this Notice.

(7) To maximize the use of the limited supply of FLH funds, the RHS may contact eligible applicants selected for an award with proposals to modify the transaction's proportions of subsequent loan and subsequent grant funds. Such applicants will be contacted in point score order, starting with the highest score. In addition, if funds remain after the highest scoring eligible applications are selected for awards, the RHS may contact those eligible applicants selected for the awards, in point score order, starting with the highest score, to ascertain whether those respondents will accept the remaining funds.

(8) To enhance customer service and the transparency of this program, the RHS will publish a list of awardees including the project name and location and the subsequent loan and/or subsequent grant amounts of their respective awards in accordance with the date listed in this Notice. This information can be found at: https://www.rd.usda.gov/​programs-services/​farm-labor-housing-direct-loans-grants. The RHS reserves the right to post all information submitted as part of the application package that is not protected under the Privacy Act on a public website with free and open access to any member of the public.

B. Eligibility Information

(1) Project Eligibility

This Notice solicits applications from the current borrowers/owners of existing Off-FLH projects currently participating in the RHS's Section 514 Off-FLH portfolio for the purpose of improving, repairing, modifying, revitalizing, and preserving the facility to ensure that it will continue to provide decent, safe, and sanitary housing. Any project that is not already participating in the RHS's Section 514 Off-FLH portfolio, as evidenced by currently having an outstanding Section 514 Off-FLH loan, is not eligible under this Notice.

(a) On-Farm Labor Housing projects are not eligible under this Notice.

(b) This Notice is for stay-in owner transactions only where the current owner, with an outstanding Section 514 Off-FLH loan, may apply for subsequent loan and/or subsequent grant funds to improve, repair, or make modifications to their Off-FLH property. Proposals that are for a transfer of ownership, to sell the property, to complete a recapitalization, or for an identity of interest (IOI) or third-party acquisition transaction will not be considered and are not eligible under this Notice.

(c) Applications that propose the use of Low-Income Housing Tax Credits (LIHTC), will not be considered and are not eligible under this Notice as stated above.

(d) The project must meet the occupancy requirements outlined in section C(2)(l) below.

(e) The project must have a positive cash flow for the previous full three (3) years of operations as outlined in section C(2)(m) below.

(f) Proposals to develop or construct additional units within the existing building envelope to comply with accessibility requirements will be considered and are eligible under this Notice. Funds may be used to address health, safety and accessibility needs and to repair or renovate existing project items identified in the Capital Needs Assessment (CNA). Additional items may be added to the scope of work, if practical and feasible, at the sole discretion of the RHS.

(g) A tenant protection account will be required for existing unsubsidized tenants residing at the property on the day the transaction closes, to the extent necessary to reduce the rental payment to the pre-transaction rent, or thirty (30) percent of adjusted income, if higher. Subsequent Section 514 Off-FLH loan funds may be used to establish a tenant protection account. The applicant will only be required to subsidize the difference in rents that exists at the time of the transaction closing for any unsubsidized tenant that is negatively impacted by the post-transaction rents. If a tenant protection account is required by the RHS:

(i) Applicants will provide their proposal for funding the tenant protection account based on their proposed new rents. The Agency will confirm the tenants adversely affected and determine the tenant protection amount that will be required. If the Agency requires funding for the tenant protection account that is different than the amount calculated by the applicant, the Agency will allow an adjustment to the applicant's proposal.

(ii) All tenant protection costs must be included in the Sources and Uses analysis for the full amount needed to fund the initial two-year minimum period following the transaction closing date.

(iii) The applicant must agree to protect currently eligible tenants affected by the rent increase as long as the tenant resides in the project. The obligation with respect to each unsubsidized tenant in place at the time of the transaction closing will end when the tenant receives rental assistance, receives a housing voucher, voluntarily leaves the property, is evicted for proper cause, or has income increased to pay the post-transaction basic rent without being rent over-burdened.

(h) Grant Limit—the amount of any Off-FLH grant must not exceed the limits set forth in 7 CFR 3560.562(c).

(i) Other Requirements—the following requirements apply to subsequent loans and subsequent grants made in response to this Notice:

(i) 7 CFR part 1901, subpart E, regarding equal opportunity requirements.

(ii) For grants only, 2 CFR parts 200 and 400, which establishes the uniform administrative and audit requirements for grants and cooperative agreements to State and local Governments and to non-profit organizations.

(iii) 7 CFR part 1901, subpart F, regarding historical and archaeological properties.

(iv) 7 CFR 1970.11, Timing of the environmental review process. Please note, the environmental information must be submitted by the applicant to the RHS. The RHS must review and determine that the environmental information is acceptable before the obligation of funds.

(v) 7 CFR part 3560, subpart L, regarding the loan and grant authorities of the Off-FLH program.

(vi) 7 CFR part 1924, subpart A, regarding planning and performing construction and other development work.

(vii) 7 CFR part 1924, subpart C, regarding the planning and performing of site development work.

(viii) For construction utilizing a section 516 grant, the provisions of the Davis-Bacon Act (40 U.S.C. 3142) and implementing regulations published at 29 CFR parts 1, 3, and 5.

(ix) Borrowers and grantees must take reasonable steps to ensure that tenants receive the language assistance necessary to afford them meaningful access to USDA programs and activities, free of charge. Failure to provide this assistance to tenants who can effectively participate in or benefit from federally assisted programs or activities may violate the prohibition under title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq. and title VI regulations against national origin discrimination.

(x) In accordance with 7 CFR 3560.60, the housing repairs must be economical to construct, operate, and maintain and must not be of elaborate design or materials.

(xi) All other requirements contained in 7 CFR part 3560, applicable to the Sections 514/516 Off-FLH programs.

(2) Applicant Eligibility

All eligible applicants must meet the following requirements:

(a) To be eligible to receive a subsequent section 514 loan for Off-FLH, the applicant must meet the requirements of 7 CFR 3560.555(a) and (1) be a broad-based nonprofit organization, a nonprofit organization of farmworkers, a federally recognized Indian tribe, a community organization, or an agency or political subdivision of State or local government, and must meet the requirements of § 3560.55, excluding § 3560.55(a)(6), or (2) be a limited partnership with a non-profit general partner which meets the requirements of § 3560.55(d). A broad-based nonprofit organization is a nonprofit organization that has a membership that reflects a variety of interests in the area where the housing will be located.

(b) To be eligible to receive a subsequent section 516 grant for Off-FLH, the applicant must meet the requirements of 7 CFR 3560.555(b) and (1) be a broad-based nonprofit organization, a nonprofit organization of farmworkers, a federally recognized Indian tribe, a community organization, or an agency or political subdivision of State or local government, and must meet the requirements of § 3560.55, excluding § 3560.55(a)(6), and (2) be able to contribute at least one-tenth of the total farm labor housing development cost from its own or other resources. A broad-based nonprofit organization is a nonprofit organization that has a membership that reflects a variety of interests in the area where the housing will be located. The applicant's contribution must be available at the time of the grant closing. An Off-FLH loan financed by the RHS may be used to meet this requirement; however, an RHS grant cannot be used to meet this requirement. Limited partnerships with a non-profit general partner are eligible for section 514 loans; however, they are not eligible for section 516 grants.

(c) The applicant must be unable to obtain similar credit elsewhere at rates that would allow for rents within the payment ability of eligible residents.

(d) Possess the legal and financial capacity to carry out the obligations required for the subsequent loan and/or grant.

(e) Broad-based non-profit organizations must have a membership that reflects a variety of interests in the area where the housing will be located.

(f) Be able to maintain, manage, and operate the Off-FLH for its intended purpose and in accordance with all RHS requirements as demonstrated by its compliance with RHS servicing requirements. Non-compliance with RHS servicing requirements by 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 this Notice nationwide until the non-compliance event(s) is/are remedied or are in compliance with an RHS approved workout plan.

(g) With the exception of applicants who are non-profit organizations, housing cooperatives or public bodies, be able to provide the borrower contribution from their own resources (this contribution must be in the form of cash).

(h) Not be suspended, debarred, or otherwise excluded from, or ineligible for, participation in Federal assistance programs under 2 CFR parts 180 and 417.

(i) Not be delinquent on Federal debt or a Federal judgment debtor, with the exception of those debtors described in 7 CFR 3560.55(b).

(j) Be in compliance with the requirements of the Improper Payments Elimination and Recovery Improvement Act (IPERIA) as applied by RHS.

(k) If an applicant, the applicant's general partner, the applicant's managing member, any key principal with decision-making, operational authority, and/or financial control over the applicant and/or any sub-applicant entities, any entity exercising management and/or financial control of an applicant borrower, or any affiliated entity having a 10 percent or more ownership interest of the applicant borrower, has a prior or existing RHS debt, the following additional requirements must be met:

(i) The applicant must be in compliance with any existing loan or grant agreements and with all legal and regulatory requirements or be compliant with an RHS approved workout plan. The RHS will require that applicants with monetary or non-monetary deficiencies be in compliance with a RHS approved workout plan for a minimum of six (6) consecutive months before becoming eligible for further assistance.

(ii) The applicant must be in compliance with title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, and all other applicable civil rights laws. Under this Notice, the project will also be considered eligible to apply if there is a current and accepted Self-Evaluation Transition Plan for the project.

(l) Additional requirements for non-profit organizations. In addition to the eligibility requirements of the paragraphs above, non-profit organizations must meet the following criteria:

(i) 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.

(ii) The applicant must have in its charter the provision of affordable housing.

(iii) No part of the applicant's earnings may benefit any of its members, founders, or contributors.

(iv) The applicant must be legally organized under State and local law.

(v) The applicant must be a broad-based nonprofit organization, as defined above.

(m) Additional requirements for limited partnerships. In addition to the applicant eligibility requirements of the paragraphs above, limited partnership loan applicants must meet the following criteria:

(i) 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.

(ii) The general partners must maintain a minimum 5 percent financial interest in the residuals or refinancing proceeds in accordance with the partnership organizational documents.

(iii) The partnership must agree that new general partners can be brought into the organization only with the prior written consent of the RHS.

(iv) The limited partnership must have a non-profit general partner.

(n) This Notice requires selected applicants to make the required equity contribution as outlined in § 3560.63(c) for any new section 514 loan. Applicants eligible to receive Return to Owner (RTO) may be eligible to receive additional RTO for this required contribution.

(o) Eligibility also includes the continued ability of the borrower/applicant to provide acceptable management and will include an evaluation of any current outstanding deficiencies. Any outstanding violations or extended open operational findings associated with the applicant/borrower or any affiliated entity having an IOI with the project ownership and which are recorded in RHS's automated Multifamily Information System (MFIS), will preclude further processing of any application, unless there is a current and approved RHS workout plan and the applicant is in compliance with the provisions of the workout plan. The RHS will require that applicants with deficiencies be in compliance with an RHS approved workout plan for a minimum of six (6) consecutive months.

(p) All program applicants, unless exempt under 2 CFR 25.110(b), (c), or (d), are required to:

(i) Be registered in SAM before submitting their applications;

(ii) Provide a valid UEI in their applications; and

(iii) Continue to maintain an active SAM registration with current information at all times during which they have an active Federal award or an application or plan under consideration by a Federal awarding agency.

The Federal awarding agency may not make a Federal award to an applicant until the applicant has complied with all applicable SAM requirements and, if an applicant has not fully complied with the requirements by the time the Federal awarding agency is ready to make a Federal award, the Federal awarding agency may determine that the applicant is not qualified to receive a Federal award and use that determination as a basis for making a Federal award to another applicant. The System for Award Management (SAM) is the Official U.S. Government system for collection of forms for acceptance of a Federal award through the registration or annual recertification process. Applicants may register for SAM at https://www.sam.gov or by calling 1–866–606–8220. The applicant must ensure that the information in the database is current, accurate, and complete. On April 4, 2022, the unique entity identifier used across the Federal Government changed from the DUNS Number to the Unique Entity ID (UEI) (generated by SAM.gov). As required by the Office of Management and Budget (OMB), all applications must provide a UEI number when applying for Federal assistance. Instructions for obtaining the UEI are available at https://sam.gov/​content/​entity-registration. Applicants must ensure they complete the Financial Assistance General Certifications and Representations in SAM. Similarly, all recipients of Federal financial assistance are required to report information about first-tier subawards 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).

Additional information concerning these requirements can be obtained on the Grants.gov website at https://www.grants.gov. The applicant must provide documentation that they are registered in SAM and their UEI number or the application will not be considered for funding. The following forms for acceptance of a Federal award are now collected through the registration or annual recertification in SAM.gov in the Financial Assistance General Certifications and Representations section:

• Form AD–1047, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters-Primary Covered Transactions.”
• Form AD–1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion. Lower Tier Covered Transactions.”
• Form AD–1049, “Certification Regarding Drug-Free Workplace Requirements (Grants).”
• Form AD–3031, “Assurance Regarding Felony Conviction or Tax Delinquent Status for Corporate Applicants.”
• Form AD–3030, “Representations Regarding Felony Conviction and Tax Delinquent Status for Corporate Applicants.”

C. Application and Submission Information

All applications for section 514 and 516 funds must meet the requirements of this Notice. Incomplete applications will be rejected and returned to the applicant. No application will be accepted after the deadline unless the date and time are extended by another Notice published in the Federal Register .

Applicants are encouraged to include a checklist of all the application requirements and to index and tab their application to facilitate the review process.

(1) Submission process. Applications must be submitted electronically. The process for submitting an electronic application to the RHS is as follows:

(a) At least three business days prior to the application deadline, the applicant must email the RHS a request to create a shared folder in CloudVault. The email must be sent to the following address: [e-mail]. The email must contain the following information:

i. Subject line: “Off-FLH Repair 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 application 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 by the RHS, the system will automatically send an email to the applicant's submission email with a link to the shared folder. All required application documents in accordance with this Notice must be loaded into the shared CloudVault folder. The applicant's access to the shared CloudVault folder will be removed when the submission deadline is reached. Any document uploaded to the shared CloudVault folder after the application deadline will not be reviewed or considered.

(c) The applicant should upload a Table of Contents of all of the documents that have been uploaded to the shared CloudVault folder. Last-minute requests and submissions may not allow adequate time for the applicant to upload documents prior to the deadline. Note: Applicants are reminded that all submissions must be received by the deadline and the application will be rejected if it is not received by the deadline date and time.

(2) Application Requirements. The application must contain the following:

(a) An executed and dated Executive Summary on the applicant's letterhead that must include at least the following:

i. Brief description of the project and its history. Include the borrower's name, project name, project location, number of units, number of Rental Assistance (RA) or Operating Assistance (OA) units, and unit mix. Be sure to address whether the project operates year-round or on a seasonal basis. Also provide the year the property was built and placed into service, the original sources of funding, and the original amounts of funding received. Include a description of any significant improvements, repairs, or modifications that have been made since the property was placed in service, including substantial rehabilitations and significant repairs that were needed due to natural disasters, floods, fires, or other casualties. Provide any other information that you may want to disclose regarding the project and its history.

ii. Brief description of the proposed transaction. Provide a narrative of the loan and/or grant funds that the applicant is seeking from the RHS, as well as funds sought from any other third-party grant source, and a description of what the funds will be utilized for. Describe the scope of work and explain how the transaction will come together overall, including information on how the project will absorb any additional debt service, if applicable.

iii. Description of the current ownership structure with a detailed organizational chart.

iv. Narrative verifying the applicant's ability to meet the applicant eligibility requirements stated earlier in this Notice.

v. A statement of the applicant's experience in operating labor housing or other rental housing.

vi. Description of the applicant's legal and financial capability to carry out the obligation of the subsequent loan and/or grant.

vii. Current management. A brief description of how the property is currently managed. As stated earlier in this Notice, the housing must be managed in accordance with the management regulations, 7 CFR part 3560.

viii. Any financial commitments, financial concessions, or other economic benefits proposed to be provided by the RHS.

ix. Third-party grant, non-amortizing leveraged funds, or similar funding source, if applicable. For each third-party funding source, briefly discuss the provider, amount, terms, commitment status, timing issues, any restrictions that will be applicable to the project, and whether any accommodation from the RHS is requested, such as a subordination in lien position. The desired lien position of any third-party funding source must be clearly disclosed, as well as any request for the RHS to subordinate its lien position.

x. Any proposed compensation to parties having an identity of interest with either the consultant or technical assistance provider.

xi. Any proposed construction financing, for example, a construction or bridge loan or the use of multiple advances.

xii. Type and method of construction, such as owner builder, negotiated bid, or contractor method.

xiii. If an FLH grant is desired, a statement concerning the need for an FLH grant. The statement must include estimates of the rents required with a grant and rents required without a grant. Documentation to demonstrate how the rent figures were computed must be provided. Documentation must be in the form of a Form RD 3560–7, “Multiple Family Housing Project Budget/Utility Allowance,” completed as if a grant were received, and another Form RD 3560–7 completed as if a grant were not received. The RHS will review each budget to determine that the income and expenses are reasonable and customary for the area.

xiv. Statement by the applicant that they will pay any cost overruns.

xv. Estimated development timeline to include estimated start and end date, as well as any other important milestones such as the proposed closing date.

xvi. Description of any required state or local approvals, if applicable.

xvii. Description of the required and intended applicant contribution, if applicable.

xviii. Any other pertinent information the applicant wishes to disclose as part of this proposal, if applicable.

xix. A separate one-page information sheet listing each of the application scoring criteria contained in this Notice, followed by a reference to the page numbers of all relevant material and documentation contained in the proposal that supports the outlined criteria.

(b) The following forms and certifications are required:

i. Form RD 3560–1, “Application for Partial Release, Subordination, or Consent”, if applicable, can be obtained at: https://formsadmin.sc.egov.usda.gov/​/efcommon/​eFileServices/​eFormsAdmin/​RD3560-0001.pdf.

ii. Standard Form 424, “Application for Federal Assistance,” can be obtained at: https://www.grants.gov/​.

iii. Form RD 3560–30, “Certification of no Identity of Interest (IOI),” can be found at: http://forms.sc.egov.usda.gov/​efcommon/​eFileServices/​eForms/​RD3560-30.PDF.

iv. Form RD 3560–31, “Identity of Interest Disclosure/Qualification Certificate,” can be found at: http://forms.sc.egov.usda.gov/​efcommon/​eFileServices/​eForms/​RD3560-31.PDF.

An IOI is defined in 7 CFR 3560.11. The RHS must review Form RD 3560–30 and Form RD 3560–31, as applicable, to determine if they are completed in accordance with the Forms Manual Insert and to determine that all IOI's have been disclosed.

v. Form HUD 2530, “Previous Participation Certification,” if applicable, can be found at: https://www.hud.gov/​sites/​dfiles/​OCHCO/​documents/​2530.pdf.

vi. Form RD 400–4, “Assurance Agreement,” can be found at: http://forms.sc.egov.usda.gov/​efcommon/​eFileServices/​eForms/​RD400-4.PDF.

vii. RD Instruction 1940–Q, Exhibit A–1, “Certification for contracts, grants and loans,” can be found at: https://www.rd.usda.gov/​files/​1940q.pdf.

viii. Form RD 1910–11, “Applicant Certification, Federal Collection Policies for Consumer or Commercial Debts” can be found at: https://forms.sc.egov.usda.gov/​/efcommon/​eFileServices/​eForms/​RD1910-11.PDF.

ix. Form RD 400–1, “Equal Opportunity Agreement,” can be found at: https://formsadmin.sc.egov.usda.gov/​eFormsAdmin/​browseFormsAction.do?​pageAction=​displayPDF&​formIndex=​2.

x. Form RD 400–6, “Compliance Statement,” if available, can be found at: https://formsadmin.sc.egov.usda.gov/​eFormsAdmin/​browseFormsAction.do?​pageAction=​displayPDF&​formIndex=​5.

(c) Provide the following financial and organizational information:

i. Current (within 6 months of this Notice's application submission due date) financial statements for each entity within the ownership structure with the following paragraph certified by the applicant's designated and legally authorized signer:

“I/we certify the above is a true and accurate reflection of our financial condition as of the date stated herein. This statement is given for the purpose of inducing the United States of America to make a loan or to enable the United States of America to make a determination of continued eligibility of the applicant for a loan as requested in the loan application of which this statement is a part.”

ii. Submit a current (within 6 months from the date of issuance) comprehensive credit reports that contain details of both current open credit accounts and closed accounts for both the entity and the actual individual principals, partners, and members within the applicant entity, including any sub-entities who are responsible for controlling the ownership and operations of the entity. If any of the principals in the applicant entity are not natural persons (including but not limited to corporations, limited liability companies, trusts, partnerships, or limited partnerships), separate comprehensive commercial credit reports must be submitted on those organizations as well. Only credit reports provided by one of the three accredited major credit bureaus (Experian, Equifax, or TransUnion) will be accepted. The Agency will also accept combination comprehensive credit reports which provides a comprehensive view of the applicant's credit profile by combining data from all three major credit bureaus (Experian, Equifax, and TransUnion). If the credit report(s) is not submitted by the application deadline, the application will be considered incomplete and will not be considered for funding.

iii. Letter from the IRS indicating the applicant's tax identification number.

iv. Organizational applicants must provide to their attorney acceptable evidence of U.S. citizenship and/or qualified alien status. Acceptable evidence of U.S. citizenship may include a valid U.S. birth certificate, a valid U.S. Passport, a valid U.S. Certificate of Naturalization, or other acceptable evidence of U.S. citizenship proposed by the applicant and determined by the Agency. Acceptable evidence of qualified alien status may include valid documentation issued by the U.S. Citizenship and Immigration Services (USCIS), or other acceptable documentation of qualified alien status proposed by the applicant and determined by the Agency.

Attorney Certification. The applicant's attorney must review all applicable evidence to verify U.S. citizenship and/or qualified alien status, must certify that the Agency's U.S. citizenship and/or qualified alien status eligibility requirements are met by all applicants, and must submit the certification for Agency review.

v. Documentation verifying the applicant is registered in SAM and the applicant's UEI number (unless exempt under 2 CFR 25.110(b), (c), or (d)).

vi. If the applicant is a limited partnership, current and fully executed limited partnership agreement and certificates of limited partners.

vii. If the applicant is a nonprofit organization:

a. Tax-exempt ruling from the IRS designating the applicant as a 501(c)(3) or 501(c)(4) organization.

b. Purpose statement, including the provision of low-income housing.

c. Evidence of organization under state and local law and a copy of the applicant's charter, Articles of Incorporation, and By-laws.

d. List of members of applicant's Board of Directors including names, occupations, phone numbers, and addresses.

e. If the applicant is a member or subsidiary of another organization, the parent organization's name, address, and nature of business.

viii. Certificate of Good Standing.

ix. Attorney Certification. Letter from the applicant's attorney certifying the legal sufficiency of the organizational documents. The attorney must certify:

a. The applicant's legal capacity to successfully operate the proposed project for the life of the loan and/or grant.

b. That the organizational documents comply with RHS regulations.

c. For partnership applicants, that the term of the partnership extends at least through the latest maturity of all proposed RHS debt.

d. That the organizational documents require prior written RHS approval for any of the following: withdrawal of a general partner of a partnership or limited partnership applicant, withdrawal of any member of a limited liability company applicant, admission of a new general partner to a partnership or limited partnership applicant, admission of any new member to a limited liability company applicant, amending the applicant's organizational documents, and selling all or substantially all of the assets of the applicant.

e. That there have been no changes to either the ownership entity or the property that have not been approved by the RHS.

(d) Provide the following information about the Project:

i. Document the need for the project. The applicant must provide documentation that the average physical vacancy rate for the twelve (12) months preceding this Notice's application submission due date has been no more than ten (10) percent for projects consisting of sixteen (16) or more revenue units, and no more than fifteen (15) percent for projects with less than sixteen (16) revenue units, unless the project is seasonal Off-FLH, or unless the applicant has an RHS approved workout plan and is in compliance with the provisions of the workout plan, and provides documentation that clearly demonstrates to the RHS that sufficient market demand exists. If the project is seasonal Off-FLH, the applicant must provide detailed documentation for the twenty-four (24) months preceding this Notice's application submission due date that verifies the project's operations, including information regarding the open and close date, lease-up, vacancy, rent rolls, operating budgets, and any other information the applicant can provide to document the need for the seasonal Off-FLH project.

If the project does not meet the vacancy requirements above, a description of the cause of the vacancy rate and the plan to increase the occupancy rate must be submitted. The requested loan or grant funds must be needed to stabilize occupancy. In addition, the project's waiting list and documentation regarding the market area must be submitted to support the need for the project. The market area must be clearly identified and may include only the area from which tenants can reasonably be drawn to the project. Documentation must be provided to justify the need within the primary market area for the housing of domestic farm laborers. The documentation must also consider disabled and retired farm workers and adjusted median incomes of very-low, low, and moderate.

ii. Documentation that the project has a positive cash flow. The applicant must provide documentation that the project had a positive cash flow for the previous full three (3) years of operations preceding this Notice's application submission due date unless the applicant has an RHS approved workout plan and is in compliance with the provisions of the workout plan. The RHS will require that applicants with monetary or non-monetary deficiencies be in compliance with the RHS approved workout plan for a minimum of six (6) consecutive months before becoming eligible for a loan and/or grant under this Notice. Additionally, an exception will apply to projects that have a negative cash flow in operations if surplus cash exists in either the general operating account as defined in 7 CFR 3560.306(d)(1) or the reserve account. Surplus cash exists when the balance is greater than the required deposits minus authorized withdrawals. The applicant must provide the project's annual financial report(s) to document the project complies with this exception for any year the project has a negative cash flow. Seasonal Off-FLH properties that receive OA are exempt from this requirement.

(e) Provide the following construction related documents:

i. Plans and specifications along with the proposed manner of construction. The housing must meet RHS's design and construction standards contained in 7 CFR part 1924, subparts A and C, the design requirements in 7 CFR 3560.559, and all applicable Federal, State, and local accessibility standards and applicable building codes. The plans and specifications along with the proposed manner of construction must be submitted prior to the approval of the application. The RHS will notify eligible applicants of the deadline to submit these materials. Note: For projects that do not currently have interior/exterior washing facilities, applicants should consider incorporating interior/exterior washing facilities for tenants, as necessary to protect the asset and the tenants from excess dirt and chemical exposure. Such facilities might include a boot washing station or hose bibs, among others.

ii. Construction planning, bidding, and contract documents, including the construction contract and architectural agreement. The construction planning, bidding, and contract documents, including the construction contract and architectural agreement must be submitted prior to the approval of the application. The RHS will notify eligible applicants of the deadline to submit these materials.

iii. A checklist, certification, and signed affidavit by the project architect or engineer, as applicable, for any energy programs in which the applicant intends to participate.

iv. An estimate of development costs utilizing Form RD 1924–13, “Estimate and Certificate of Actual Cost,” which can be found at: https://forms.sc.egov.usda.gov/​efcommon/​eFileServices/​eForms/​RD1924-13.PDF.

(f) Provide the following project financing information:

i. A Sources and Uses Statement which shows all sources of funding included in the proposed transaction. The terms and schedules of all sources included in the project should be included in the Sources and Uses Statement. (Note: A section 516 grant may not exceed 90 percent of the TDC of the transaction, as defined in 7 CFR 3560.11).

ii. All applications that propose the use of any grant, non-amortizing leveraged funds, or similar funding source should submit commitment letters with their application, if available. If commitment letters are not available, the applicant should include a statement that firm commitment letters will be provided within 180 calendar days of issuance of the award letter. If the applicant is unable to secure third-party firm commitment letters within 180 calendar days from the issuance of the award letter under this NOSA, the application will be deemed incomplete, the award letter will be considered null and void, and the applicant will be notified in writing that the application will be rejected.

iii. Description of how the applicant will meet any applicable equity contribution requirement.

(g) Provide the following environmental information:

i. Environmental information in accordance with the requirements in 7 CFR part 1970. The applicant is responsible for preparing and submitting the environmental review document in accordance with the format and standards provided by RHS in 7 CFR part 1970. Applicants may employ a design or environmental professional or technical service provider to assist them in the preparation of their environmental review documents at their own expense.

ii. Evidence of the submission of the project description to the applicable State Housing Preservation Office (SHPO), and/or Tribal Historic Preservation Officer (THPO) with the request for comments. A letter from the SHPO and/or THPO where the Off-FLH project is located stating they have reviewed the site and made a determination, signed by their designee, will serve as evidence of compliance.

iii. Intergovernmental review. Evidence of compliance with Executive Order 12372. The applicant must initiate the intergovernmental review by submitting the required information to the applicable State Clearinghouse. The applicant must provide documentation that the intergovernmental review process was completed. The applicant must also submit any comments that were received as part of this review to the RHS. If no comments are received, the applicant must provide documentation that the review was properly initiated and that the required comment period has expired. Applications from federally recognized Indian tribes are not subject to this requirement.

(h) Provide the following budget and project management information:

i. A proposed post-transaction operating budget utilizing Form RD 3560–7, “Multiple Family Housing Project Budget/Utility Allowance”. Form can be found at: https://forms.sc.egov.usda.gov/​efcommon/​eFileServices/​eForms/​RD3560-7.PDF. The budget must include the debt service of the new RHS loan, if applicable. This will be a post transaction budget that must include a narrative which provides justification for any changes between the current budget and proposed budget.

The RHS will review the budget to determine that the income and expenses are reasonable and customary for the area. The RHS will also verify that the budget reflects the new RHS loan debt service, if applicable, the existing RHS loan debt service, if applicable, the number of units, unit mix, and rents. Overall, the RHS will review the budget for feasibility, accuracy, and reasonableness.

ii. Form RD 3560–13, “Multifamily Project Borrower's/Management Agent's Management Certification,” if applicable, can be found at: https://forms.sc.egov.usda.gov/​/efcommon/​eFileServices/​eForms/​RD3560-13.PDF. This document is required only if the owner is changing the management agent or the management fee as part of this proposal.

iii. Management plan with all attachments, including the proposed record keeping system, the proposed lease with an attorney's certification, and the proposed occupancy rules. This document is required only if the owner is changing the management agent or revising the management plan and/or any attachments as part of this proposal.

iv. Management Agreement. This document is required only if the owner is changing the management agent or revising the management agreement and any attachments as part of this proposal.

v. Tenant relocation plan, if applicable. Subsequent Section 514 Off-FLH loans or subsequent Section 516 Off-FLH grants that are made for major repair may require the temporary relocation of tenants while the project is undergoing work. The applicant must provide a plan and financial assistance for relocation of displaced persons from a site on which a project will be located. The plan must meet the requirements of HB–1–3560, Chapter 3, Paragraph 3.19.

(i) Provide the following third-party reports:

i. Acceptable appraisal. Please refer to the Agency's appraisal assignment guidance under the “To Apply” tab on the Off-Farm Labor Housing Direct Loans & Grants website ( https://www.rd.usda.gov/​programs-services/​multifamily-housing-programs/​farm-labor-housing-direct-loans-grants#to-apply).

Project funds may be used to obtain the appraisal if there are adequate funds available and the request to use project funds is approved by the Field Operations Division servicing official. No appraisal is required for subsequent Section 516 Off-FLH grant only requests.

ii. An acceptable As-Is CNA in accordance with the requirements set forth in the “Addendum: Capital Needs Assessment Process” at the end of this notice.

Project funds may be used to obtain the As-Is CNA if there are adequate funds available and the request to use project funds is approved by the Field Operations Division servicing official. The repair plan should be developed in accordance with the CNA and the applicant should submit documentation of the detailed plan and timeline for completion of the repair work.

If any of the required items listed above are not submitted within the application in accordance with this Notice, or are incomplete, the application will be considered incomplete and will not be considered for funding. If the application is incomplete or deemed ineligible, the applicant will be notified of appeal rights under 7 CFR part 11. Applications that are deemed eligible but are not selected for further processing will be withdrawn from processing and will be encouraged to apply to future Notices. This action is not appealable.

The RHS will not consider information from the applicant after the application deadline. The RHS may contact the applicant to clarify items in its application. The RHS will uniformly notify applicants of each curable deficiency. A curable deficiency is an error or oversight that if corrected it would not alter, in a positive or negative fashion, the review and rating of the application. An example of a curable (correctable) deficiency would be inconsistencies in the amount of the funding request. Non-curable deficiencies are threshold components that effect the review and rating of the application, including but not limited to, evidence of an eligible entity and evidence of the need for the project.

D. Application Review and Scoring Information

The RHS will accept, review, and score applications in accordance with this Notice. The maximum score that can be obtained is 100 points.

Section 514 Off-FLH subsequent loan funds and Section 516 Off-FLH subsequent grant funds will be distributed based on a national competition, as follows:

(1) Health, safety, and accessibility repairs (up to 35 points). High priority is placed on addressing health, safety, and accessibility repairs identified in the CNA. To claim points, all health, safety, and accessibility items identified in the CNA must be addressed in the scope of work. Points will be awarded as follows:

(a) 100% of project hard costs are for health, safety, and accessibility repairs identified in the CNA (35 points).

(b) 75% or more of project hard costs are for health, safety, and accessibility repairs identified in the CNA (25 points).

(c) 50% or more of project hard costs are for health, safety, and accessibility repairs identified in the CNA (15 points).

(d) 25% or more of project hard costs are for health, safety, and accessibility repairs identified in the CNA (5 points).

(2) Uninhabitable unit repairs (up to 10 points). Priority is placed on repairing uninhabitable units in projects where there is documented demand for housing as evidenced by a waiting list. The applicant must provide a waiting list documenting interest from prospective tenants in order to receive points. Points are awarded as follows:

(a) Three or more units that are currently documented as uninhabitable, by RHS or a code-enforcement agency, will be repaired to a habitable standard (10 points).

(b) One or two units that are currently documented as uninhabitable, by RHS or a code-enforcement agency, will be repaired to a habitable standard (5 points).

(3) Owner and management capacity (up to 10 points). RHS seeks to provide financing to applicants that have the experience and organizational resources to successfully own, operate and manage FLH on a long-term basis. In the case of co-sponsored applications, the rating will be based upon the combination of the experience of all co-sponsors in the area under review. Demonstrated experience and organizational resources by the owner, including the General Partner for partnership applicants, and the management company, will be considered in awarding points.

In order to obtain points, applicants must submit a firm resume for the applicant and all Sponsors/Co-Sponsors, including the management agent. Each resume must include FLH and MFH ownership and management experience, as applicable.

(4) Development/rehabilitation experience (up to 10 points). Applicants should demonstrate the team's (owner, including the General Partner of a partnership applicant, Developer and Management Company) recent experience in successfully completing the development, repair, and rehabilitation of FLH and/or MFH projects in a timely manner. RHS will consider the applicant's experience with utilizing Federal financing programs. In order to obtain points, applicants must submit a firm resume for all of the sponsors/co-sponsors, including the management agent. The description or firm resumes must include any rental housing projects facilities that the applicant team sponsored, owns, or operates.

To score the highest number of points for this factor, applicants must describe significant previous experience implementing development activities with the type of financing proposed.

(5) Project occupancy (10 points). Ten (10) points will be awarded to projects with a 12-month physical vacancy rate (for the twelve (12) months preceding this Notice's application submission due date) of 10% or less (for projects with 16+ units) or 15% or less (for projects with fewer than 16 units). For seasonal projects, the vacancy rates will be calculated based on the twenty-four (24) months preceding this Notice's application submission due date that the property was open and operating.

(6) Occupancy by qualified farmworkers (5 points). Five (5) points will be awarded to projects in which all tenants are eligible farm workers and a partial or full Diminished Needs Waiver (DNW) has not been approved or in place at any time during the twelve (12) months preceding this Notice's application submission due date.

(7) Creating More and Better Markets: Assisting Rural communities to recover economically through more and better market opportunities and through improved infrastructure. (5 points). Priority points will be awarded if the project is located in or serving a rural community whose economic well-being ranks in the most distressed tier of the Distressed Communities Index. The Distressed Communities Index provides a score between 1–100 for every community at the zip code level. The most distressed tier of the index are those communities with a score over 80. Please use the Distressed Communities Index Look-Up Map to determine if your project qualifies for priority points. Provide a copy of the map showing the project is eligible to claim points. Note: US Territories are considered distressed and qualify for priority points. For additional information on data sources used for this priority determination, please download the Data Sources for Rural Development Priorities document. Additional information for priority points can be found on the following website: https://www.rd.usda.gov/​priority-points.

(8) Advancing Racial Justice, Place-Based Equity, and Opportunity: Ensuring all rural residents have equitable access to RD programs and benefits from RD funded projects. (5 points). Priority points will be awarded if the project is located in or serving a community with score 0.75 or above on the CDC Social Vulnerability Index. Please use Social Vulnerability Index Map to look up map or list to determine if your project qualifies for priority points. Provide a copy of the map showing the project is eligible to claim points. Applications from Federally Recognized Tribes, including Tribal instrumentalities and entities that are wholly owned by Tribes will receive priority points. Federally Recognized Tribes are classified as any Indian or Alaska Native tribe, band, nation, pueblo, village, or community as defined by the Federally Recognized Indian Tribe List Act (List Act) of 1994 (Pub. L. 103–454). Please refer to the Bureau of Indian Affairs for a listing of Federally Recognized Tribes. Additionally, projects where at least 50% of the project beneficiaries are members of Federally Recognized Tribes, will receive priority points if applications from non-Tribal applicants include a Tribal Resolution of Consent from the Tribe or Tribes that the applicant is proposing to serve. Note: US Territories are considered socially vulnerable and qualify for priority points. For additional information on data sources used for this priority determination, please download the Data Sources for Rural Development Priorities document. Additional information for priority points can be found on the following website: https://www.rd.usda.gov/​priority-points.

(9) Addressing Climate Change and Environmental Justice: Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities. (up to 10 points). Applicants can receive priority points through one of the options listed below. A maximum of 10 points can be received even if the applicant meets the requirements for additional points:

(a) Option 1 (5 points): Priority points will be awarded if the project is located in or serves a Disadvantaged Community as defined by the Climate and Economic Justice Screening Tool (CEJST), from the White House Council on Environmental Quality (CEQ). CEJST is a tool to help Federal agencies identify disadvantaged communities that will benefit from programs included in the Justice40 initiative. Census tracts are considered disadvantaged if they meet the thresholds for at least one of the CEJST's eight (8) categories of burden: Climate, Energy, Health, Housing, Legacy Pollution, Transportation, Water and Wastewater, or Workforce Development.

(b) Option 2 (5 points): Priority points will be awarded if the project is located in or serves an Energy Community as defined by the Inflation Reduction Act (IRA). The IRA defines energy communities as:

• A “brownfield site” (as defined in certain subparagraphs of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)).
• A “metropolitan statistical area” or “non-metropolitan statistical area” that has (or had at any time after 2009.)

• 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas; and has an unemployment rate at or above the national average unemployment rate for the previous year.

A census tract (or directly adjoining census tract) in which a coal mine has closed after 1999; or in which a coal-fired electric generating unit has been retired after 2009.

To determine if your project qualifies for priority points under Option 1 or Option 2, please use the Disadvantaged Community & Energy Community Look-Up Map on the following website: https://www.rd.usda.gov/​priority-points. Provide a copy of the map showing the project is eligible to claim points.

(c) Option 3 (5 points): Priority points will be awarded to applicants demonstrating through written narrative how the proposed repair project meets pollution mitigation or clean energy goals through the following programs. The applicant must submit a checklist, certification, and signed affidavit by the project architect or engineer, as applicable, for any energy programs in which the applicant intends to participate. All projects awarded scoring points for energy initiatives must enroll the project in the Environmental Protection Agency (EPA) Portfolio Manager program to track post construction energy consumption data. More information about this program may be found at: https://www.energystar.gov/​buildings/​benchmark. Participation in any of the following programs will qualify the applicant for priority points under Option 3:

• Participation in the EPA's Energy Star Multifamily Certification or Energy Star Next Gen Process. https://www.energystar.gov/​partner_​resources/​residential_​new/​homes_​prog_​reqs/​multifamily_​national_​page.

or

• Participation in the Green Communities program by the Enterprise Community Partners (2020 Criteria, EGC + Zero Ready/Phius). https://www.enterprisecommunity.org/​solutions-and-innovation/​green-communities.

or

• Participation in the Department of Energy (DOE) Zero Energy Ready Homes program. https://www.energy.gov/​eere/​buildings/​zero-energy-ready-homes.

or

• Earth Advantage https://www.earthadvantage.org/​.

or

• Earthcraft Gold or Platinum https://earthcraft.org/​programs/​earthcraft-house/​.

or

• Passive House Institute US, Inc. (PHIUS Core, *Phius Zero) https://multifamily.phius.org/​service-category/​phius-within-reach.

or

• Greenpoint Gold or Platinum. https://www.greenpointrated.com/​greenpoint-rated/​.

or

• The National Green Building Standard (NGBS)—Multifamily and Mixed Use (four levels of base certification, plus *NGBS Green + NET ZERO ENERGY CERTIFICATION) https://www.homeinnovation.com/​services/​certification/​green_​homes/​multifamily_​certification.

or

• LEED V4 Homes and Multifamily Midrise, or LEED BD+C: Homes and Multifamily Lowrise LEED BD+C: Multifamily Midrise (four levels of certification, plus *LEED Zero) https://www.usgbc.org/​resources/​leed-v4-homes-and-multifamily-midrise-current-version

or

• International Living Future Institute (ILFI) Living Building Challenge (LBC 4.0—Core Building Certification, *Zero Energy, *Zero Carbon) https://living-future.org/​lbc/​.

E. Applicant Assistance

The RHS plans to host a workshop to discuss this Notice, the application process, and the borrower's responsibilities, among other topics. Further information regarding the date and time of this workshop, as well as information on how to participate in the workshop will be issued at a later date in a public notice via GovDelivery. Click here to sign up for notifications from Rural Development.

Prior to the submission of an application, the applicant is encouraged to schedule a concept meeting with RHS to discuss the application process, the specifics of the proposed project, and the borrower's responsibilities under the Off-FLH Repair program, and other topics they may wish to discuss relating to the Notice.

Concept meetings will be scheduled between the dates of April 1, 2024 and April 29, 2024. No concept meetings will be scheduled outside of the specified dates.

Requests for concept meetings can be sent to the following email address: [e-mail] and must be received by April 15, 2024. The email must contain the following information:

(1) Subject line: “Off-FLH Repair Concept Call Request.”

(2) Body of email: Borrower Name, Project Name, Borrower Contact Information, Project State.

(3) Request language: “We request to schedule a concept call to discuss our proposed application for the Off-FLH Repair NOSA.”

F. Federal Award Administration Information

(1) Review and Selection Process

(a) All applications must be received by the due date specified in this Notice. Applications submitted after the deadline will not be considered.

(b) Each application will be reviewed for overall completeness, as well as compliance with eligibility and program requirements set forth in this Notice. If an application does not meet these requirements, it will be removed from consideration and will not be scored.

(c) The RHS will rank all eligible applications nationwide by score, highest to lowest. Taking into account available funding, the 10 percent persistent poverty counties set-aside, and the 30 percent funding limitation per State, the RHS will determine which applications will be selected for further processing starting with the highest scoring application. When proposals have equal scores and not all applications can be funded, preference will be given first to Indian tribes as defined in § 3560.11, then to local non-profit organizations or public bodies whose principal purposes include low-income housing and that meet the conditions of § 3560.55(c) and the following conditions:

(i) Is exempt from Federal income taxes due to its status as a governmental entity or under section 501(c)(3) or 501(c)(4) of the Internal Revenue Code;

(ii) Is not wholly or partially owned or controlled by a for-profit or limited-profit type entity;

(iii) Whose members, or the entity, do not share an identity of interest with a for-profit or limited-profit type entity; and

(iv) Is not co-venturing with another for-profit entity.

If after all the above evaluations are completed and there are two or more applications that have the same score, but all cannot be funded, a lottery will be used to break the tie. The lottery will consist of the names of each application with equal scores printed onto pieces of paper equal in size, which will then be placed into a receptacle that fully obstructs the view of the names. The Director of the RHS Production and Preservation Division, in the presence of two witnesses, will draw a piece of paper from the receptacle. The name on the piece of paper drawn will be the applicant to be funded.

(d) If the remaining funding is insufficient for the next ranked proposal, that applicant will be given a chance to modify their application funding request amount to bring it within the remaining available funding. This will be repeated for each next ranked eligible proposal until an award can be made or the list is exhausted.

(e) If an application is selected and the applicant declines, the next highest ranked application will be selected.

(f) If an application is not selected for funding, the applicant will be notified in writing via postal or electronic mail and informed of any appeal rights. Applicants will be notified if there are insufficient funds available for the proposal and such notification is not appealable. For applications found ineligible or incomplete, the RHS will send notices of ineligibility that provide notice of any applicable appeal rights under 7 CFR part 11.

(2) Administrative and National Policy

(a) Projects receiving subsequent Off-FLH loans and/or grants are subject to additional restrictive-use provisions contained in 7 CFR 3560.72(a)(2).

(b) For Section 516 Off-FLH grant awardees, a FLH grant agreement, prepared by the RHS, must be dated, and executed by the applicant on the date of closing. The grant agreement will remain in effect for so long as there is a need for the housing and will not expire until an official determination has been made by the RHS that there is no longer a need for the housing.

(c) The applicant's Board of Directors must adopt a resolution in a form acceptable to the RHS stating that the Board has read and fully understands the grant agreement and understands that the grant agreement will remain in effect until RHS determines that there is no longer a need for the housing.

G. 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 0575–0189.

H. Build America, Buy America Act

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 Infrastructure Investment and Jobs Act (Pub. L. 117–58), and its implementing regulations at 2 CFR part 184 . 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.

The Infrastructure Investment and Jobs Act (IIJA) (Pub. L. 117–58), requires the following Buy America preference for the Section 514 Off-Farm Labor Housing Subsequent Loans (Assistance Listing 10.405) and Section 516 Off-Farm Labor Housing Subsequent Grants to Improve, Repair, or Make Modifications to existing Off-Farm Labor Housing Properties (Assistance Listing 10.405).

(a) All iron and steel used in the project are produced in the United States. This means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.

(b) All manufactured products used in the project are produced in the United States. This means the manufactured product was manufactured in the United States, and the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation.

(c) All construction materials are manufactured in the United States. This means that all manufacturing processes for the construction material occurred in the United States.

In accordance with BABAA, however, USDA has determined that de minimis, small grants, and minor components shall be waived from the requirements of BABAA, pursuant to a public interest waiver that was granted to the Department on September 13, 2022. See https://www.usda.gov/​sites/​default/​files/​documents/​usdA-Cepartmentwide-de-minimis-small-grants-minor-components-waiver-final-approved-09132022.pdf. Under such waiver, small grants below the Simplified Acquisition Threshold, which is currently set at $250,000 shall not be subject to BABAA. Additionally, de minimis and minor components, as described in the Department waiver, are also not subject to BABAA. Applicants and projects that are subject to BABAA may request other specific waivers, pursuant to the requirements posted at the USDA Office of the Chief Financial Officer Office website: https://www.usda.gov/​ocfo/​federal-financial-assistance-policy/​USDABuyAmericaWaiver.

I. Equal Opportunity and Non-Discrimination Requirements

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, staff office; or the 711 Federal Relay Service.

To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD–3027, found online at: https://www.usda.gov/​sites/​default/​files/​documents/​ad-3027.pdf, 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 a complaint form, call, (866) 632–9992. Submit your completed form or letter to USDA by:

(1) Mail: United States Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250–9410;

(2) Fax: [phone]; or

(3) Email at: [e-mail].

USDA is an equal opportunity provider, employer, and lender.

Addendum: Capital Needs Assessment Process

A Capital Needs Assessment (CNA) provides a repair schedule for the property in its present condition, indicating repairs and replacements necessary for a property to function properly and efficiently over a span of 20 years.

The purpose of this Addendum is to provide clarification and guidance on the Rural Development (RD) CNA process. The document includes general instructions used in completing CNA reports, specific instructions on how to use the expected useful life tables, and a set of applicable forms including the Terms of Reference form; Systems and Conditions forms; and Evaluator's Summary forms.

1. Definitions

The following definitions are provided to clarify terms used in conjunction with the CNA process:

CNA Recipient: This will be who enters into the contract with the CNA Provider. The Recipient can be either the property owner or applicant/transferee.

“As-Is” CNA: This type of CNA is prepared for an existing MFH property and reports the physical condition including all Section 504 Accessibility and Health and Safety items of the property based on that moment in time. This CNA can be useful for many transactions, including but not limited to, the MPR Demonstration program, an ownership transfer, determining whether to offer pre-payment aversion incentive and evaluating or resizing the reserve account. The “as-is” report will include all major repairs and likely some minor repairs that are typically associated with the major work: each major component, system, equipment item, etc. inside and outside; building(s); property; access and amenities in their present condition. A schedule of those items showing the anticipated repair or replacement timeframe and the associated hard costs for the ensuing 20-year term of the CNA serves as the basis or starting point in evaluating the underwriting that will be necessary to determine the feasibility and future viability of the property to continue serving the needs of eligible tenants.

“Post Rehabilitation” CNA: This type of CNA builds on the findings of the accepted “as-is” CNA and is typically prepared for a project that will be funded for major rehabilitation. The Post Rehabilitation CNA is adjusted to reflect the work intended to be performed during the rehabilitation. The assessment must be developed from the rehabilitation project plans and any construction contract documents to reflect the full extent of the planned rehabilitation.

Life Cycle Cost Analysis (LCCA): A LCCA is an expanded version of a CNA and is defined at 7 CFR 3560.11. The LCCA will determine the initial purchase cost, the operation and maintenance cost, the “estimated useful life”, and the replacement cost of an item selected for the project. The LCCA provides the borrower with the information on repair or replacement costs and timeframes over a 20-year period. It also provides information that will assist with a more informed component selection and can provide the borrower with a more complete financial plan based on the predictive maintenance needs associated with those components. If the newly constructed project has already been completed without any previous LCCA requirements, either an “as-is” CNA or LCCA can be provided to establish program mandated reserve deposits. An Architect or Engineer is the best qualified person(s) to prepare this report.

Consolidation: In some circumstances, RD may permit two or more properties to be consolidated as defined in 7 CFR 3560.410 when it is in the best interests of the Government. The CNA Recipient must consult with the RD loan official before engaging the CNA Provider in any case where the CNA intends to encompass more than a single (one) existing RD property to determine if a consolidated CNA may be acceptable for RD underwriting.

2. Contract Addendum

RD uses a Contract Addendum to supplement the basic CNA Agreement or “Contract”, between the CNA Recipient and CNA Provider, with additional details and conditions. It can be found in Attachment A, Addendum to Capital Needs Assessment Contract and must accompany all contracts executed between the CNA Recipient and CNA Provider for CNAs used in RD transactions. If any conflicts arise between the “Contract” and “Contract Addendum”, the “Contract Addendum” will supersede.

The Contract Addendum identifies the responsibilities and requirements for both the CNA Recipient and the CNA Provider. To assure proper completion of the contract documents the following key provisions must be completed:

a. The Contract Addendum will include the contract base amount for the CNA Provider's cost for services on page A–2, and provisions for additional services to establish the total price for the CNA.

b. Item I e, will require an itemized listing for any additional anticipated services and their unit costs including future updates and revisions that may be required before the CNA is accepted by RD. Note: Any cost for updating a CNA must be included, in the “additional services” subpart, of the original CNA Contract.

c. The selection criteria boxes in II a, will identify the type of CNA being provided.

d. In III a, the required language for the blank on “report format” is: “ USDA RD CNA Template, current RD version, in Microsoft Excel format”. This format will import directly into the RD underwriting template for loan underwriting purposes.

3. Requirements and Statement of Work (SOW) for a CNA

Minimum requirements for a CNA acceptable to RD can be found in Attachment B, Capital Needs Assessment Statement of Work. This is supplemented by Attachment C, Fannie Mae Physical Needs Assessment Guidance to the Property Evaluator. To resolve any inconsistency in the two documents, Attachment B, the CNA SOW, will in all cases prevail over Attachment C, Fannie Mae Physical Needs Assessment Guidance to the Property Evaluator. (For example, on page C–2 of Attachment C, Fannie Mae defines the “term” as “term of the mortgage and two years beyond”. For USDA, the “term” will be 20 years, as defined in the CNA SOW.)

Attachment B includes the required qualifications for the CNA Provider, the required SOW for a CNA assignment, and general distribution and review instructions to the CNA Provider. The CNA Providers must be able to report the current physical condition of the property and not base their findings on the financial condition of either the property or the CNA Recipient.

Attachment C is a three-part document RD has permission from Fannie Mae to use as reference to the CNA process throughout the RD MFH program efforts. The three key components of this Attachment are: (1) guidance to the property evaluator; (2) expected useful life tables; and (3) a set of forms.

An acceptable CNA must appropriately address within the report and narrative all Accessibility Laws and Requirements that apply to Section 515 and Sections 514/516 MFH properties. The CNA Provider must assess how the property meets the requirements of accessibility to persons with disabilities in accordance the Uniform Federal Accessibility Standards (UFAS) and Section 504 Accessibility Requirements. It is the responsibility of the Provider to inspect and verify whether all accessibility features are compliant.

4. The CNA Review Process

A CNA used by RD will be reviewed by the designated RD CNA Reviewer with experience in construction, rehabilitation, and repair of MFH properties, especially as it relates to repair and replacement.

A CNA report must be obtained by the CNA Recipient from an independent third-party CNA Provider that has no identity of interest with the property owner, management agent, applicant/transferee or any other principle or affiliate defined in 7 CFR 3560.11. The CNA Recipient will contract with the CNA Provider and is therefore the client of the provider. However, the CNA Recipient must consult with RD, before contracting with a CNA Provider to review Guidance Regarding Contracting for a CNA. The RD CNA Reviewer will evaluate a proposed agreement or engagement letter between the CNA Recipient and the CNA Provider using Attachment D, Capital Needs Assessment Guidance to the Reviewer, prior to reviewing any CNA report. Unacceptable CNA proposals, contracts or reports will be returned to the CNA Recipient for appropriate corrections before they will be used for any underwriting determinations.

The CNA Reviewer will also review the cost of the CNA contract. The proposed fee for the CNA must be approved as an eligible housing project expense under 7 CFR 3560.103(c) for the agreement to be acceptable and paid using project funds. In most cases, the CNA service contract amount has not exceeded $3,500 based on the Agency's most recent cost analysis.

Borrowers and applicants are encouraged to obtain multiple bids in all cases. However, there is no Agency requirement to select the “low bidder” under this NOSA and the CNA Recipient may select a CNA Provider that will provide the best value, based on qualifications as well as price, after reviewing references and past work.

If the CNA is funded by the property's reserve account, a minimum of two bids is required if the CNA service contract amount is estimated to exceed $5,000 as specified in HB–2–3560, Chapter 4, Paragraph 4.13. If the CNA contract under this NOSA is funded by another source, or will be under $5,000, a single bid is acceptable.

If the proposed agreement is acceptable, the reviewer will advise the appropriate RD servicing official, who will in turn inform the CNA Recipient. If the proposed agreement is unacceptable, the reviewer will notify the servicing official, who will notify the CNA Recipient and the CNA Provider in writing and identify actions necessary to make the proposed CNA agreement acceptable to RD. Upon receipt of a satisfactory agreement, the RD CNA Reviewer should advise the appropriate RD servicing official or underwriting official to accept the proposal.

The CNA Reviewer will review the preliminary CNA report submitted to RD by the CNA Provider using Attachment D and write the preliminary CNA review report. During the CNA review process, the CNA Reviewer and underwriter will consult with the servicing field office most familiar with the property for their input and knowledge of the property. Any differences of opinion that exist regarding the findings must be mutually addressed by RD staff. If corrections are needed, the loan official will notify the CNA Recipient, in writing, of any revisions necessary to make the CNA report acceptable to RD. The CNA Reviewer will review the final CNA report and deliver it to the loan official. The final report must be signed by both the CNA Reviewer and the loan official (underwriter). Upon signature by both, this report becomes the “accepted” CNA indicating the actual condition of the property at the time of the CNA inspection—a “snapshot” in time—and will be marked “Current Property Condition” for indefinite retention in the borrower case file.

A CNA Provider should be fully aware of the intended use for the CNA because it can impact the calculations necessary to perform adequate accessibility assessments and can impact the acceptability of the report by RD. Unacceptable reports will not be used for any RD underwriting purposes even though they may otherwise be acceptable to the CNA Recipient or another third-party lender or participant in the transaction being proposed.

5. Guidance Regarding Contracting for a CNA

CNA Recipients are responsible for choosing the CNA Provider they wish to contract with, and for delivering an acceptable CNA to Rural Development. RD in no way guarantees the performance of any Provider nor the acceptability of the Provider's work.

CNA Recipients are advised to request an information package from several CNA Providers and to evaluate the information before selecting a provider. At a minimum, the information package should include a list of qualifications, a list of references, a client list, and a sample CNA report. However, the CNA Recipient may request any additional information they feel necessary to evaluate potential candidates and select a suitable provider for this service. Consideration for the type of CNA required should be part of the CNA Recipient's selection criteria and inserted into the contract language as well. The necessary skill set to perform the “as-is” versus the Post Rehabilitation CNA or a LCCA needs to be considered carefully. Knowledge of the accessibility laws and standards and the ability to read and understand plans and specifications should also be among the critical skill elements to consider.

Attachment A, Contract Addendum must be submitted to RD with the contract and signed by the CNA Recipient and CNA Provider. The proposed agreement with the CNA Recipient and CNA Provider must meet RD's qualification requirements for both the provider and the CNA SOW, as specified in Attachment B, Capital Needs Assessment Statement of Work. RD must review the proposed agreement between the CNA Recipient and the CNA Provider, and will concur only if all of the RD requirements and conditions are met. (See the previous section 3 of this Addendum, The CNA Review Process.)

Please note: It is in the CNA Recipient's best interest to furnish the CNA Provider with the most current and up-to-date property information for a more comprehensive and thorough CNA report. RD recommends that the CNA Recipient conduct a pre-inspection meeting with the Owner, Property Manager, maintenance persons familiar with the property, CNA Provider, and Agency Representatives at the site. This meeting will allow a forum to discuss specific details about the property that may not be readily apparent to all parties involved during the review process, as well as making some physical observations on-site. Any issues that may not be evident to the CNA Provider due to weather conditions at the time of review should also be discussed and included in the report. Other issues that will need to be addressed if present include environmental hazards, structural defects, and complex accessibility issues. It is imperative that the Agency be fully aware of the current physical condition of the property at the time the CNA is prepared. An Agency representative must make every effort to attend the CNA Provider's on-site inspection of the property unless the Agency has performed a physical inspection of the property within the previous 12 months.

This pre-inspection meeting also allows the CNA Provider to discuss with the CNA Recipient the total number of units to be inspected, as well as identifying any specific units that will be inspected in detail. The minimum number of inspected units required by the Agency for an acceptable CNA is 50 percent. However, inspecting a larger number of units generally provides more accurate information to identify the specific line items to be addressed over the “term” being covered by the CNA report. CNA Recipients are encouraged to negotiate with the CNA Provider to achieve inspection of all units whenever possible. The ultimate goal for the CNA Recipient and CNA Provider, as well as the Agency, is to produce the most accurate “baseline or snapshot” of current physical property conditions for use as a tool in projecting future reserve account needs.

6. Revising an Accepted CNA During Underwriting (Applies to RD Actions)

During transaction underwriting and analysis, presentation of the information contained in the “accepted” CNA may need to be revised by RD to address financing and other programmatic issues. The loan underwriter and the CNA Reviewer will work together to determine if revisions are necessary to meet the financial and physical needs of the property, and established RD underwriting or servicing standards and principals. These may involve shifting individual repair line items reported in the CNA, moving work from year to year, or other adjustments that will improve cash flow. The revised underwriting CNA will be used to establish reserve funding schedules as well as operating budget preparation and analysis and will be maintained by RD as supporting documentation for the loan underwriting.

The initial CNA, prepared by the CNA Provider, will be maintained as an independent third-party record of the current condition of the property at the beginning of the 20-year cycle.

Original CNAs will be maintained in the case file, clearly marked as either “Current Property Condition” (“As-is”), “Post Rehabilitation Condition”, or “Revised Underwriting/Replacement Schedule”, as applicable. Note: The CNA Provider is not the appropriate party to “revise” a CNA which has already been approved by the CNA Recipient and concurred with by the Agency. The CNA Provider's independent opinion was the basis of the “As is” or “Post Rehabilitation” CNA. The CNA developed for underwriting may only be revised by RD staff during the underwriting process or as part of a post-closing servicing action.

7. Updating a CNA (Applies to “As-Is” and “Post-Rehabilitation” That Have Not Been Accepted by RD)

A completed CNA more than a year old at the time of the RD CNA review and approval must be “updated' prior to RD approval. Likewise, if at the time of underwriting the CNA is more than a year old (but less than two years old), it must be updated before the transaction can be approved. If the CNA age exceeds two years at the time of the RD CNA review and approval, the CNA Provider will need to repeat the site visit process to re-evaluate the condition of the property. The original report can remain the basis of the findings.

To update a CNA, the CNA Provider must review property changes (repairs, improvements, or failures) that have occurred since the date of the original CNA site visit with the CNA Recipient, review costs and quantities, and submit an updated CNA for approval. However, if the site visit for the CNA occurred more than two years prior to the loan underwriting, the CNA Provider should perform a new site visit to verify the current project condition.

Once the CNA has been updated, the CNA Provider will include a statement noting “This is an updated CNA of the earlier CNA dated ___,” at the beginning of the CNA's Narrative section. The CNA Provider should reprint the CNA with a new date for the updated CNA, and provide a new electronic copy to the CNA Recipient and RD.

8. Incorporating a Property's Rehabilitation Into a CNA

A CNA provides a repair schedule for the property in its present condition, indicating repairs and replacements necessary for a property to function properly and efficiently over a span of 20 years. It is not an estimate of existing rehabilitation needs, or an estimate of rehabilitation costs. If any rehabilitation of a MFH development is planned as part of the proposed transaction, a rehabilitation repair list (also called a “Scope of Work”) must be developed independently based on the CNA repair schedule. This rehabilitation repair list may be developed by the CNA Recipient, a project Architect, or an outside party (such as the CNA Provider, when qualified) hired by the CNA Recipient.

The CNA Recipient must not use repair line-item costs taken from the CNA to develop the rehabilitation cost estimates for the rehabilitation loan, as these costs will not be accurate. The repair costs in a CNA are based on estimated costs for the property. Typically, these costs include the labor, materials, overhead and profit, but do not include applicable “soft costs.” For example, for CNA purposes, the probable cost is to send a repairman out, remove an appliance, and put a new one in its place. For rehabilitation cost estimates, the CNA Recipient typically intends to hire a general contractor to oversee and supervise the rehabilitation work, which is then considered a “soft cost”. The cost of rehabilitation includes the costs for that general contractor, the general contractor's requirements, the cost of a project Architect (if one is used), tenant relocation (if needed), and interim financing (if used), which are considered “soft costs” attributed to the rehabilitation costs for the project.

If a “Post Rehabilitation” CNA is required and authorized by RD, a copy of the rehabilitation repair list or SOW must be provided to the CNA Provider. The CNA Provider will prepare a “Post Rehabilitation” CNA indicating what repairs are planned for the property in the coming 20 years based on conditions after the rehabilitation is completed. Items to be replaced during rehabilitation that will need to be replaced again within the 20 years, such as appliances, will be included in the “Post Rehabilitation” CNA. Items that will not need replacement during the coming 20 years, such as a new roof, will not need to be calculated in the “Post Rehabilitation” CNA. The line item should not be removed from the CNA, but the cost data should be zeroed out. Appropriate comments should be included in the CNA report to acknowledge the SOW or rehabilitation/repairs that were considered.

9. Repair and Replacement Schedule

A CNA is not a formal repair and replacement schedule and cannot be used as an exact replacement schedule. A CNA is an estimate of the anticipated replacement needs for the property over time, and the associated replacement costs. The goal of a CNA is to estimate the replacement times based on the Expected Useful Life (EUL) to assure funds are available to replace equipment as it is needed. Hopefully, materials will be well maintained and last longer than estimated in the CNA. The CNA cannot be used to mandate replacement times for the identified building components. The RD underwriter may find it necessary to adjust the proposed replacement schedule during the course of the underwriting to allow for an adequate Annual Deposit to Replacement Reserves (ADRR) payment that will sustain the property over a 20-year period and keep rents below the maximum rents that are allowed.

Authority

This solicitation is authorized pursuant to the Title V of the Housing Act of 1949 (Pub. L. 81–171), as amended, 42 U.S.C. 1471 et seq.;7 CFR 3560, subpart L; 42 U.S.C. 1484; 42 U.S.C. 1486 and 42 U.S.C. 1480.

Yvonne Hsu,

Acting Administrator, Rural Housing Service.