[Federal Register Volume 64, Number 115 (Wednesday, June 16, 1999)]
[Notices]
[Pages 32373-32375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15289]
Federal Register / Vol. 64, No. 115 / Wednesday, June 16 1999 /
Notices
[[Page 32373]]
DEPARTMENT OF AGRICULTURE
Rural Housing Service
Notice of Availability of Funding and Requests for Proposals for
Guaranteed Loans Under the Section 538 Guaranteed Rural Rental Housing
Program
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This Notice of Fund Availability (NOFA or Notice) announces
the timeframe to submit proposals in the form of ``NOFA responses'' for
the section 538 Guaranteed Rural Rental Housing Program (GRRHP).
Eligible lenders are invited to submit NOFA proposals for the
development of affordable rental housing to serve rural America.
Lenders may submit their application concurrently with their NOFA
response. This document also describes the overall application process,
including the selection of NOFA responses and the allocation of
interest credits.
DATES: The deadline for receipt of NOFA responses is to be 4:00 PM,
Eastern Daylight Savings Time, 90 days from the date of publication in
the Federal Register or 4:00 PM, Eastern Daylight Savings Time on
August 31, 1999, whichever time comes first. Lenders intending to mail
a NOFA response must provide sufficient time to permit delivery on or
before the closing deadline date and time. Acceptance by a post office
or private mailer does not constitute delivery. Facsimile (FAX), Cash
on Delivery (COD), and postage due NOFA responses or applications will
not be accepted. No NOFA responses will be accepted after the deadlines
previously mentioned, unless that date and time is extended by another
Notice published in the Federal Register.
ADDRESSES: Responses for participation in the program must be
identified as ``Section 538 Guaranteed Rural Rental Housing Program''
on the envelope and be submitted to: Director, Multi-Family Housing
Processing Division, Rural Housing Service, US Department of
Agriculture, Room 1263 (STOP 0781), 1400 Independence Ave. SW,
Washington, DC 20250-0781.
FOR FURTHER INFORMATION CONTACT: Carl W. Wagner, Deputy Director,
Guaranteed Loans, Multi-Family Housing Processing Division, U. S.
Department of Agriculture, South Agriculture Building, Room 1223 (STOP
0781), 1400 Independence Ave. SW, Washington, DC 20250-0781, Telephone:
(202) 720-1604. This number is not toll-free. Hearing or speech
impaired persons may access that number by calling the Federal
Information Relay Service toll-free at (800) 877-8339.
SUPPLEMENTARY INFORMATION: On March 28, 1996, President Clinton signed
the ``Housing Opportunity Program Extension Act of 1996,'' Public Law
104-120, authorizing the section 538 Guaranteed Rural Rental Housing
Program (GRRHP). The program is intended to provide rural America with
affordable housing through the use of loan guarantees and partnering
with other housing programs, including state and local housing finance
agencies and bond issuers.
The Rural Housing Service (RHS) is concurrently publishing
regulations governing the program as a final rule in the Federal
Register. Those regulations set forth RHS policies and requirements for
the program including: lender and borrower requirements, loan and
property requirements and restrictions, purposes for and uses of
guaranteed funds, processing requirements, project management and
servicing requirements, and policies and mandated procedures on
assignments, conveyances and claims. Interested applicants should
carefully review the regulation and the Guaranteed Rural Rental Housing
Program Origination and Servicing Handbook for program origination and
servicing procedures and the application package. The Handbook (HB-1-
3565) can be found on the internet at http://rdinit.usda.gov/regs. As a
service to our customers, copies of the interim and final rule may also
be obtained from the RHS Multi-Family Housing Processing Division at
202-720-1604. This is not a toll-free number. Hearing-or speech-
impaired persons may access that number by calling the Federal
Information Relay Service toll-free at (800) 877-8339.
Discussion of Notice
I. Purpose and Program Summary
The program has been designed to increase the supply of affordable
multifamily housing through partnerships between RHS and major lending
sources, as well as State and local housing finance agencies and bond
issuers. Qualified lenders will be authorized to originate, underwrite,
and close loans for multifamily housing projects requiring new
construction or acquisition with rehabilitation of at least $15,000 per
unit. RHS may guarantee such loans upon presentation and review of
appropriate certifications, project information and satisfactory
completion of the appropriate level of environmental review by RHS.
Lenders will be responsible for the full range of loan management,
servicing, and property disposition activities associated with these
projects. The lender will be expected to provide servicing or contract
for servicing of each loan it underwrites. In turn, RHS will guarantee
the lender's loan up to 90 percent of total development cost and
commits to pay up to a maximum of 90 percent of the outstanding
principal and interest balance of such loan in the case of default of
the loan and filing of a claim. In no event will the Agency pay more
than 90 percent of the original principal amount. This means that the
Agency will have a risk exposure under the GRRHP of approximately 80
percent of the total development cost. Any losses would be split on a
pro-rata basis between the lender and the Agency from the first dollar
lost.
II. Allocation
In Fiscal Year (FY) 1999, budget authority will provide
approximately $74 million in program dollars. All FY 1999 funds will be
held in the National Office. There are no set-asides or demonstration
purposes for the GRRHP for FY 1999.
III. Application Process
For FY 1999, there is limited time between the publication of the
NOFA and the deadline for receipt of applications in time for making
conditional commitments for guaranteed loans. Eligible lenders are
encouraged to submit NOFA responses prior to deadline, as applications
will be reviewed as they are received. Lenders are required to submit
their NOFA response by 4:00 PM, Eastern Daylight Savings Time, 90 days
from the date of publication in the Federal Register or 4:00 PM,
Eastern Daylight Savings Time on August 31, 1999, whichever time comes
first. In the interest of time, lenders have the option of submitting a
combined NOFA response and application. However, the Agency will not
give preference to a submission with both the NOFA response and
application. Upon notice of selection, lenders with the top ranked NOFA
responses will be requested to submit the required application fee of
$2,500.00 and full application if not already submitted. When the
conditions of the conditional commitment are met, the lender will
submit the required information with a separate guarantee fee of 1% of
the total guarantee amount.
IV. Submission Requirements
All NOFA responses for the GRRHP must meet the requirements of 7
[[Page 32374]]
CFR part 3565 and this NOFA. Incomplete submissions will not be
reviewed and will be returned to the lender. Lenders are encouraged,
but not required, to include a checklist and to have their applications
indexed and tabbed to facilitate the review process. RHS will base its
determination of completeness of the application and the eligibility of
each lender on the information provided in the application.
V. Selection Criteria
A. NOFA proposals will be reviewed as received. In the event that
demand exceeds available funds, priorities will be assigned to eligible
proposals on the basis of the following criteria as described in 7 CFR
3565.5(b), and points will be assigned as follows:
(1) Projects located in rural communities with the smallest
population will receive priority. All proposals will be ranked in order
of their population. The proposals will be given a point score starting
with the project located in the area with the lowest population
receiving 20 points, the next 19 points and so forth, until up to 20
projects have received points.
(2) The most needy communities as determined by the median income
from the most recently available census data. The proposals will be
given a point score starting with the community having the lowest
median income receiving 20 points, the next 19 points and so forth
until up to 20 proposals have received points.
(3) Partnering and leveraging in order to develop the maximum
number of housing units and promote partnerships with state and local
communities, including other partners with similar housing goals.
Leveraging points will be awarded as follows:
------------------------------------------------------------------------
Loan to value ratio (percentage %) Points
------------------------------------------------------------------------
75-84........................................................ 10
70-74........................................................ 15
69 or less................................................... 20
------------------------------------------------------------------------
(4) Loans with interest rates less than the maximum allowable 250
basis points over the 30 Year Treasury Rate will be awarded points as
follows:
------------------------------------------------------------------------
Interest rate Points
------------------------------------------------------------------------
250 to 199 basis points, inclusive........................... 0
200 to 151 basis points, inclusive........................... 5
150 to 100 basis points, inclusive........................... 10
99 to 50 basis points, inclusive............................. 15
Less than 50 basis points.................................... 20
------------------------------------------------------------------------
(5) Preference will be given to proposals having a higher percent
of 3-5 bedroom units to total units. The proposals will be ranked in
order of this percent with the proposal with the highest percent
receiving 20 points, the next 19 points and so forth until up to 20
projects have received points.
(6) Proposals to be developed in a colonia, on tribal land, in an
Empowerment Zone or Enterprise Community, or in a place identified in
the State consolidated plan or State needs assessment as a high need
community for multifamily housing (20 points).
(7) The Agency will award points or rank projects that meet the FY
1999 Guaranteed Rural Rental Housing goals of creating affordable
housing and assuring that the most cost effective financing packages
are selected for further processing. The statute requires that the
property remain in affordable housing for the period of the original
term of the guaranteed loan and each loan may be accordingly amortized
for a period of up to 40 years without a balloon payment. Therefore, a
longer amortization period affords a longer commitment to affordable
housing and the creation of more affordable rents.
Projects will be ranked by the length of the amortization period,
with the longest receiving priority as follows:
------------------------------------------------------------------------
Amortization (yrs.) Points
------------------------------------------------------------------------
40........................................................... 20
at least 35.................................................. 15
at least 30.................................................. 10
at least 20.................................................. 5
less than 20................................................. 0
------------------------------------------------------------------------
B. Assistance can include both loan guarantees and interest
credits. For at least 20 percent of the loans made under the program,
RHS shall provide the borrower with interest credits to reduce the
interest rate of the loan by a maximum of 250 basis points. However, in
no instance will the lender's interest rate be reduced to lower than
the applicable Federal Rate as such term is used in section 42(I)(2)(D)
of the Internal Revenue Code of 1986.
RHS will provide interest credit on loans up to $1.5 million.
Lenders with proposals that could be viable with or without interest
credits are encouraged to submit a NOFA response reflecting financial
and market feasibility under both funding options. A request in the
NOFA response to be considered under both options will not affect the
rating of the response for Interest Credit selection. However, once the
interest credit funds are exhausted, only those NOFA responses
requesting consideration under both funding options or the Non-Interest
Credit option will be further considered.
NOFA responses requesting to receive interest credit will be ranked
and scored separately using the same selection criteria for non-
interest credit proposals. In the event of ties, selection between
proposals will be by lot.
VI. Additional Information
A. Regulations
NOFA responses are subject to the regulatory provisions of the
Final Rule entitled ``Guaranteed Rural Rental Housing Program,'' which
is being published simultaneously in the Federal Register.
B. Surcharges for Guarantee of Construction Advances
There is no surcharge for guarantee of construction advances for FY
1999.
C. Maximum Interest Rate
The maximum allowable interest rate on a loan submitted for a
guarantee is 250 basis points over the 30-year Treasury Bond Rate as
published in the Wall Street Journal as of the business day previous to
the business day the rate is set.
D. Lender Application Fee
There is no lender application fee for lender approval in FY 1999.
E. Program Fees for FY 1999
(1) There is an initial guarantee fee of 1% of the total guarantee
amount which will be due at closing of the permanent loan. For purposes
of calculating this fee, the guarantee amount is the product of the
percentage of the guarantee times the initial principal amount of the
guaranteed loan.
(2) There is an annual renewal fee of 0.5% of the guaranteed
outstanding principal balance charged each year or portion of the year
that the guarantee is in effect. This fee will be collected
prospectively on January 1, of the calendar year.
(3) There is no site assessment and market analysis or preliminary
feasibility fee in FY 1999.
(4) There is a non-refundable application fee of $2,500 when the
application is submitted following proposal selection under the NOFA.
(5) There is a flat fee of $500 when a lender requests RHS to
extend the term of a guarantee commitment.
(6) There is a flat fee of $500 when a lender requests RHS to
reopen a guarantee commitment after the period of the commitment
lapses.
(7) There is a flat fee of $1,250 when a lender requests RHS to
approve the transfer of property and assumption of the loan to an
eligible applicant.
[[Page 32375]]
Dated: June 3, 1999.
Inga Smulkstys,
Acting Under Secretary, Rural Development
[FR Doc. 99-15289 Filed 6-15-99; 8:45 am]
BILLING CODE 3410-XV-U
