[Federal Register Volume 63, Number 140 (Wednesday, July 22, 1998)]
[Notices]
[Pages 39472-39474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19559]
Federal Register / Vol. 63, No. 140 / Wednesday, July 22, 1998 /
Notices
[[Page 39472]]
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.
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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 have the option, but it is not a requirement, of submitting
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 4:00 PM, Eastern
Daylight Savings Time on August 17, 1998. 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 response/application 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 or wrapper and be submitted to: Director, Multi-Family
Housing Processing Division, Rural Housing Service, US Department of
Agriculture, Room 5337 (STOP 0781), 1400 Independence Ave. SW,
Washington, DC 20250-0781.
FOR FURTHER INFORMATION CONTACT: Obediah G. Baker, Jr., Director,
Multi-Family Housing Processing Division, U. S. Department of
Agriculture, South Agriculture Building, Room 5337 (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 toll-free the Federal Information
Relay Service 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 publishing regulations governing
the program as an interim rule elsewhere in this Federal Register.
Those regulations set forth RHS policies and requirements on the
program, including: lender and borrower requirements, loan and property
requirements and restrictions, purposes 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 interim rule,
RHS's handbook of administrative procedures on origination and
servicing for the program, and the application package. These are
available 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 toll-free the Federal
Information Relay Service 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 split between the lender and the Agency from the first dollar
lost.
II. Allocation
In Fiscal Year (FY) 1998, budget authority will provide
approximately $38 million in program dollars. All FY 1998 funds will be
held in the National Office. There are no set-asides or demonstration
purposes for the GRRHP for FY 1998.
III. Application Process
For FY 1998, 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 August 17, 1998. 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 commitment
amount.
IV. Submission Requirements
All NOFA responses for the GRRHP must meet the requirements of 7
CFR part 3565 and this NOFA. Incomplete submissions will not be
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.
[[Page 39473]]
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 designed to focus the
FY 1998 guarantee program on Presidentially-declared disaster areas, to
promote partnerships creating affordable housing, and to assure the
most cost effective financing packages:
(1) Proposal in a rural Presidentially-declared disaster area (25
points).
(2) 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 is encouraged (up to 20 points with 5 points for each source
of funding contributing 10 percent or more of total development cost).
(3) Loans with interest rates of less than 200 basis points over
the 30 Year Treasury Rate; the lower the basis points, the higher the
priority. Interest rate priority points will be awarded as follows:
------------------------------------------------------------------------
Interest rate Points
------------------------------------------------------------------------
175 to 151 basis points........................................ 5
150 to 100 basis points........................................ 10
99 to 50 basis points.......................................... 15
49 to 0 basis points........................................... 20
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In the event of ties, proposals in rural Presidentially-declared
disaster areas will be selected. In the event of ties between two or
more proposals in such areas, selection between such proposals will be
by lot. If there are ties between two or more NOFA responses not in
rural Presidentially-declared disaster areas, selection will be by lot.
B. For 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 200 basis points. In no instance will the
lender's interest rate be reduced to lower than the Applicable Federal
Rate.
RHS will provide interest credit on up to $1.5 million of a loan
submitted for guarantee. 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.
NOFA responses proposing to receive interest credit will be
selected using the following criteria:
(1) Requests will be ranked using the selection criteria for non-
interest credit proposals (up to 65 points).
(2) Geographical location with emphasis on smaller rural
communities versus larger rural communities. The requests will be
ranked by population with proposals serving the smallest communities
receiving priority. All proposals will be ranked in descending order of
their population. The proposals will be given a point score starting
with the lowest population receiving 20 points, the next 19 points and
so forth until all 20 points are awarded. Those remaining will receive
zero points.
(3) The most needy communities within a State based on census
income data showing the preponderance of low and moderate income
families. The communities to benefit from a guarantee with interest
credit will be ranked by their percentage of the median income within
the State with proposals serving rural communities with the lowest
relative median income in the State compared to proposals serving
communities in other States receiving priority. The proposals will be
given a point score starting with the lowest percentage of median
income receiving 20 points, the next 19 points and so forth until all
20 points are awarded. Those remaining will receive zero points.
(4) Extent of the commitment by the applicant to maintain priority
at initial occupancy for low income families throughout the term of the
loan. All proposals will be ranked by length of commitment with the
longest receiving priority. The proposals will be given a point score
starting with the longest occupancy commitment for low-income families
receiving 20 points, the next 19 points and so forth until all 20
points are awarded. Those remaining will receive zero points.
(5) The lowest overall proportional effective subsidy cost to RHS.
All of the interest credit requests will be ranked by proportional
effective subsidy cost to the government with the lowest cost to RHS
receiving priority. The proposals will be given a point score starting
with the lowest proportional effective subsidy cost to RHS receiving 20
points, the next 19 points and so forth until all 20 points are
awarded. Those remaining will receive zero points.
(6) Preference will be given to family proposals with large bedroom
mixes. All of the proposals will be ranked by percent of units with 3-5
bedrooms with the proposals having the highest percent of 3-5 bedrooms
receiving priority. The proposals will be given a point score starting
with the highest ratio of 3-5 bedroom units to total units receiving 20
points, the next 19 points and so forth until all 20 points are
awarded. Those remaining will receive zero points.
(7) Proposals to be developed in a colonial on tribal land, or 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).
In the event of ties, proposals in rural Presidentially-declared
disaster areas will be selected to receive interest credit assistance.
In the event of ties between two or more proposals in such areas,
selection between such proposals will be by lot. If there are ties
between two or more NOFA responses not in rural Presidentially-declared
disaster areas, selection will be by lot.
VI. Additional Information
A. Regulations
NOFA responses are also subject to the regulatory provisions of the
Interim Final Rule entitled ``Guaranteed Rural Rental Housing
Program,'' which is published elsewhere in this issue of the Federal
Register.
B. Surcharges for Guarantee of Construction Advances
There is no surcharge for guarantee of construction advances for FY
1998.
C. Maximum Interest Rate
The maximum allowable interest rate on a loan submitted for a
guarantee is 200 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 fee for lender approval in FY 1998.
E. Program Fees for FY 1998
(1) There is a guarantee fee of 1% of the total commitment amount
which will be due at closing of the permanent 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. Each calendar year, this fee will be
collected in advance, beginning on the first anniversary of the loan.
(3) There is no site assessment and market analysis or preliminary
feasibility fee in FY 1998.
(4) There is a non-refundable application fee of $2,500 when the
application is submitted following proposal selection under the NOFA.
[[Page 39474]]
(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.
Dated: July 17, 1998.
Jan E. Shadburn,
Administrator, Rural Housing Service.
[FR Doc. 98-19559 Filed 7-21-98; 8:45 am]
BILLING CODE 3410-XV-P
