00-27978. Operating Assistance for Off-Farm Migrant Farmworker Projects

AGENCIES:

Rural Housing Service, Rural Business-Cooperative Service, Rural Utilities Service, and Farm Service Agency, USDA.

ACTION:

Proposed rule.

SUMMARY:

The Rural Housing Service (RHS), formerly Rural Housing and Community Development Service (RHCDS), a successor Agency to the Farmers Home Administration (FmHA), proposes to amend its regulations for the Farm Labor Housing (LH) program for off-farm migrant housing projects. This action is taken to implement section 599C(e) of Pub. L. 105-276, enacted October 21, 1998, which amends the Housing Act of 1949 to permit section 521 rental assistance funds to be used as operating assistance in migrant farmworker projects financed under sections 514 or 516. The intended result is to reduce operating costs so that rents may be set at rates that are affordable to low-income migrant farmworkers.

DATES:

Written or e-mail comments on this Proposed Rule must be received on or before January 2, 2001 to be assured of consideration.

ADDRESSES:

Written comments may be submitted, in duplicate, to the Regulations and Paperwork Management Branch, Attention: Jean Mosley, Rural Development, U.S. Department of Agriculture, Stop 0742, 1400 Independence Avenue SW, Washington, DC 20250-0742. Comments may be submitted via the Internet by addressing them to “[e-mail]” and must contain the word “migrant” in the subject. All written comments will be available for public inspection during normal working hours at 300 E Street, SW, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Linda Armour, Senior Loan Specialist, Multi-Family Housing Processing Division, Rural Housing Service, U.S. Department of Agriculture, Room 5349-South Building, Stop 0781, 1400 Independence Avenue, SW, Washington, DC 20250-0781, telephone [phone].

SUPPLEMENTARY INFORMATION:

Classification

This proposed rule has been determined to be not significant for purposes of Executive Order 12886 and, therefore, has not been reviewed by the Office of Management and Budget.

Paperwork Reduction Act

The information collection requirements contained in this regulation have been previously approved by the Office of Management and Budget (OMB) under the provisions of 44 U.S.C. chapter 35 and have been assigned OMB control number 0575-0045, in accordance with the Paperwork Reduction Act of 1995. Under the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB number. The valid OMB control number assigned to the collection of information in these regulations is displayed at the end of the affected section of the regulation. This rule does not impose any new information collection requirements from those approved by OMB.

Civil Justice Reform

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. In accordance with this rule: (1) All State and local laws and regulations that are in conflict with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings in accordance with 7 CFR part 11 must be exhausted before bringing suit in court challenging action taken under this rule.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, RHS generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, or tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires RHS to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective or least burdensome alternative that achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

National Performance Review

This regulatory action is being taken as part of the National Performance Review program to eliminate unnecessary regulations and improve those that remain in force.

Programs Affected

The affected program is listed in the Catalog of Federal Domestic Assistance under Number 10.405, Farm Labor Housing Loans and Grants.

Intergovernmental Consultation

For the reasons set forth in the Final Rule related Notice to 7 CFR part 3015, subpart V, this program is subject to Executive Order 12372 which requires intergovernmental consultation with State and local officials. RHS has conducted intergovernmental consultation in the manner delineated in RD Instruction 1940-J.

Environmental Impact Statement

This document has been reviewed in accordance with 7 CFR part 1940, subpart G, “Environmental Program.” It is the determination of RHS that this action does not constitute a major Federal action significantly affecting the quality of the human environment and in accordance with the National Environmental Policy Act of 1969, Pub. L. 91-190, an Environmental Impact Statement is not required.

Regulatory Flexibility Act

This proposed rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The undersigned has determined and certified by signature of this document that this rule will not have a significant economic impact on a substantial number of small entities since this rulemaking action does not involve a new or expanded program nor does it require any more action on the part of a small business than required of a large entity.

Executive Order 13132, Federalism

The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

Background/Discussion

The farm labor housing (LH) program is authorized by title V of the Housing Act of 1949 under section 514 (42 U.S.C. 1484) for loans and section 516 (42 U.S.C. 1486) for grants. The program also has tenant subsidies available through section 521 (42 U.S.C. 1490a).

The LH program finances both “on-farm” and “off-farm” housing, which may be for either seasonal or year-round occupancy. Occupancy of both types is restricted to United States citizens or legally admitted aliens. On-farm housing loans are made to farmers or farm entities to provide housing for farmworker families employed by the farm. On-farm housing is typically a single-family dwelling and does not include tenant subsidies. Off-farm housing, typically apartment complexes, is open to eligible farmworker households of any farming operation. Rental assistance is available to many tenants of off-farm housing to make rents affordable. Off-farm housing is financed with section 514 loans and section 516 grants to nonprofit organizations and public agencies such as local housing authorities, and with section 514 loans to nonprofit limited partnerships in which the general partner is a nonprofit entity.

Off-farm migrant housing serves farmworkers who perform agricultural work at one or more locations away from their home base throughout the year for periods ranging from a few weeks to several months. The Agency's rental assistance (RA) program is available to assist tenants with housing costs, which is especially critical for migrant farmworkers, who are among the lowest-paid laborers in the workforce. However, the RA program, which provides assistance based on each household's income, is difficult to administer in housing for migrant workers because of the frequent tenant turnover and short periods of occupancy.

Section 599C(e) of Pub. L. 105-276, enacted October 21, 1998, authorizes owners of off-farm migrant housing projects financed under sections 514 or 516 to use section 521 RA funds to provide operating assistance to the project instead of providing individual RA to each household. Operating assistance, by reducing operating costs, allows rents to be set at rates that are affordable to tenants based on the average wages of migrant farmworkers in the area. Tenants will still be required to provide income verification, and household income must be within the very-low or low-income limits to qualify for the reduced operating assistance rents. Owners will be required to provide documentation to the Agency on the incomes of tenants served.

In developing this proposed rule, the Agency conducted an informal teleconference with stakeholders, including nonprofit groups, developers, and Agency staff in States with active migrant farm labor housing programs. Following is a summary of their comments on key issues:

Project Eligibility for the Operating Assistance Program

The statute provides that the operating assistance program may be used by migrant farmworker projects. It does not extend eligibility for the operating assistance program to projects that serve both year-round and migrant workers. Based on a survey of the stakeholders who participated in the teleconference, the Agency's existing properties that serve migrant farmworkers are nearly evenly divided between those that serve migrant workers exclusively and those that serve a mix of year-round and migrant workers. Stakeholders recommended that the Agency pursue a statutory correction to permit operating subsidies for mixed LH projects.

Establishing the Prevailing Incomes of Farmworkers in the Area

The statute stipulates that operating assistance will be provided in an amount that makes rents affordable to migrant farmworkers based on the prevailing incomes of migrant farmworkers in the area. Several possible sources of income data were mentioned, including the Association of Farmworkers and the U.S. Department of Labor. However, most participants felt that the most readily available, current data could be obtained from the Agency's Multi-Family Tenant File System (MTFS).

The MTFS is an automated system used to record household data, including income, to determine the tenant's shelter cost based on 30 percent of adjusted monthly income. It was suggested that existing Agency-financed properties serving migrant workers use the project's prior year MTFS data and new properties use MTFS data for like-type properties in the same or a similar area. After the first year, adjustments would be made to the amount of operating assistance based on the actual income levels of the tenants served and the year's actual project operating expense figures.

We have incorporated the suggestion to use MTFS data into this rule. The MTFS is a readily available source of income information for migrant farmworkers served by the Agency's LH program. We are especially interested in comments on the use of this data and suggestions for alternative data sources.

Overcrowding

One stakeholder expressed a concern that overcrowding could result if rents are established for the unit rather than based on each household's income. It was suggested that the Agency emphasize the enforcement of occupancy rules to help prevent this situation. We agree with this suggestion and will incorporate it into the guidance provided to Agency staff and owners. Also, the rule will stipulate that households may not exceed the low-income limit to be eligible for the reduced rent. Therefore, if additional wage earners join a household and the household is within the occupancy standards, total household income cannot exceed the low-income limit to be eligible for the reduced rent.

Procedures for Requesting operating Assistance

The majority of stakeholders felt that requests for operating assistance should be submitted on the monthly “Project Worksheet for Credit and Rental Assistance”, Form RD 1944-29, and netted against the loan payment in the same manner as rental assistance. The Agency has incorporated this suggestion into this proposed rule. Only one stakeholder recommended paying the assistance on an annual basis. We welcome comments on the pros and cons of an annual payment method, which will be taken into consideration in determining whether this option should be included in the final rule.

Participants noted that the operating assistance program would be beneficial for project budgeting purposes, especially for properties that are unoccupied for a portion of the year because of seasonal farm work, if owners are permitted to average the year's projected income and expenses and receive monthly payments throughout the year. We concur, and have included the suggestion in this proposed rule.

Implementation Proposal

When the final rule becomes effective, owners of migrant housing projects with rental assistance contracts may elect to convert to project operating assistance. New applicants for off-farm migrant housing projects will have the option of requesting either rental assistance or operating assistance.

List of Subjects

7 CFR Part 1930

• Accounting
• Administrative practice and procedure
• Grant programs—Housing and community development
• Loan programs—Housing and community development
• Low and moderate income housing—Rental
• Reporting requirements

7 CFR Part 1944

• Farm labor housing
• Grant programs—Housing and community development
• Loan programs—Housing and community development
• Migrant labor
• Nonprofit organizations
• Public housing
• Rent subsidies
• Rural housing

Therefore, chapter XVIII, title 7, Code of Federal Regulations is amended to read as follows:

PART 1930—GENERAL

1. The authority citation for part 1930 continues to read as follows:

Authority: 5 U.S.C. 301, 42 U.S.C. 1480.

Subpart C—Management and Supervision of Multiple Family Housing Borrowers and Grant Recipients

2. Exhibit B of subpart C is amended in paragraph II by adding in alphabetical order the definition of “Operating assistance”, by adding paragraph IV F, and by revising the first sentence of paragraph XIII C2f(2) to read as follows:

Exhibit B of Subpart C—Multiple Housing Management Handbook

* * * * *

II. Definitions

* * * * *

Operating assistance. Assistance toward the cost of operating off-farm migrant farmworker projects financed under sections 514 or 516. Projects that receive operating assistance may not receive tenant-specific rental assistance (RA). Detailed guidance on the operating assistance program is provided in § 1944.182(b) of this chapter.

* * * * *

IV. Rent Subsidy Opportunities * * *

F. Operating assistance program. This is a subsidy program available to off-farm migrant farmworker projects financed under section 514 or section 516. Refer to § 1944.182(b) of this chapter for eligibility requirements and detailed guidance.

* * * * *

XIII. Accounting and Reporting Requirements and Financial Management Analysis

* * * * *

C. Borrower reporting requirements. * * *

2. Management reports and review processes. * * *

f. Project worksheets. * * *

(2). For LH projects, a project worksheet for interest credit and rental or operating assistance, on a form provided by the Agency, will be submitted monthly for projects with tenants who receive RA and for off-farm migrant housing projects that receive operating assistance. * * *

* * * * *

PART 1944—HOUSING

3. The authority citation for part 1944 continues to read as follows:

Authority: 5 U.S.C. 301; 42 U.S.C. 1480.

Subpart D—Farm Labor Housing Loan and Grant Policies, Procedures, and Authorizations

4. Section 1944.153 is amended by adding in alphabetical order definitions to read as follows:

§ 1944.153

Definitions.

* * * * *

Multi-Family Tenant File System (MTFS). The MTFS is an automated system used by the Agency to record household data, including income, to determine the tenant's shelter cost based on 30 percent of adjusted monthly income.

* * * * *

Operating assistance. Assistance toward the cost of operating off-farm labor housing projects serving migrant farmworkers exclusively, financed under sections 514 or 516, that would otherwise be provided to tenants as rental assistance (RA). Detailed guidance on the operating assistance program is provided in § 1944.182(b).

* * * * *

Rental assistance (RA). RA is the portion of a specific tenant's approved shelter cost paid by the Agency and is the difference between the approved shelter cost and the monthly tenant contribution calculated in accordance with exhibit B to subpart C of part 1930 of this chapter.

* * * * *

5. Section 1944.182 is amended by revising the heading, designating the existing text as paragraph (a), and adding a new paragraph (b) to read as follows:

§ 1944.182

Assistance payments under section 521.

* * * * *

(b) Operating assistance may be used in lieu of tenant-specific rental assistance in off-farm labor housing projects financed under section 514 or section 516 of the Housing Act of 1949 that serve migrant farmworkers exclusively. Owners of eligible projects may choose tenant-specific RA or operating assistance, but may not utilize both programs in the same project. The objective of this program is to provide assistance toward the cost of operating the project so that rents may be set at rates that are affordable to very low and low-income migrant farmworkers.

(1) Project eligibility requirements. To be eligible for the operating assistance program, projects must be:

(i) Off-farm labor housing projects financed under section 514 or section 516 serving migrant farmworkers exclusively (projects serving both migrant and year-round farmworker households are not eligible); and

(ii) Eligible for the Agency's rental assistance (RA) program as defined in paragraph II B of exhibit E of subpart C of part 1930 of this chapter.

(2) Tenant eligibility requirements. To be eligible for operating assistance rents, tenants must meet the RA eligibility requirements of paragraph II A of exhibit E of subpart C of part 1930 of this chapter.

(3) Operating assistance limits. The amount of operating assistance requested by the owner must be based on the project's actual income and expenses and must be approved by the Agency. In no instance may the annual amount of operating assistance exceed 90 percent of the project's annual operating costs.

(4) Owner responsibilities— (i) Request for operating assistance program. Owners of off-farm migrant housing projects may request operating assistance by submitting a request on a form provided by the Agency. The request must include a budget in the format prescribed by the Agency and prepared in accordance with Agency instructions. The budget must include:

(A) Estimated project operating costs, including authorized expenditures such as reserve deposits.

(B) Proposed rental rates to generate sufficient funds for project operating costs, taking into consideration all other sources of project income.

(C) Estimated rental income from tenants, based on a tenant contribution of 30 percent of the average adjusted monthly income of migrant farmworker households in the area. The average adjusted monthly income of migrant farmworker households will be determined as follows:

(1) For existing RHS-financed projects that have been in operation for at least one year, owners will use the average adjusted monthly household income for each unit-size (1-, 2-, 3-bedroom, etc.) based on the prior year's Multi-Family Tenant File System (MTFS) data.

(2) For new projects, owners will use the average adjusted monthly household income for each unit-size, based on the prior year's MTFS data for a like-type property in the same or similar area, as provided by the Agency. Owners may request authorization to use other reliable income data if available.

(D) Estimated operating assistance, calculated as the difference between estimated project income and estimated project operating costs. The annual amount of operating assistance may not exceed 90 percent of the annual operating costs.

(ii) Requesting operating assistance payments. Each month, owners will submit a project worksheet for interest credit and rental or operating assistance on a form provided by the Agency. The amount of operating assistance requested each month will be one-twelfth of the annual amount approved by the Agency.

(iii) Verifying tenant income eligibility. Owners are responsible for verifying tenant income in accordance with § 1944.182(a). Only very low or low-income households are eligible for the operating assistance rents. Income-eligible households with incomes above low must pay the full rent.

(iv) Reporting requirements.—(A) Tenant certification. Owners and tenants will complete a tenant certification, on a form provided by the Agency, to document tenant income and eligibility. Tenant certification forms need not be submitted to the Agency but must be maintained, along with income verifications, for at least 3 years. The tenant files must be available for the Agency's review upon request. The owner will use the income information, along with the project's actual expense figures, to complete the next year's operating assistance request.

(B) Project worksheet. Each month, the borrower will submit to the Agency a project worksheet for interest credit and rental or operating assistance on a form provided by the Agency, in accordance with paragraph XIII C2f (2) of exhibit B of subpart C of part 1930 of this chapter.

(C) Budgets. Prior to the beginning of the project's fiscal year, owners must submit an annual planning budget in accordance with paragraph XIII C2a of exhibit E of subpart C of part 1930 of this chapter, on a form provided by the Agency. The budget must reflect actual income and expenses for at least 9 months of the current fiscal year and the proposed income and expenses for the coming year. Owners must include a summary report showing the income of tenants served on a form provided by the Agency. If warranted by the actual income of tenants served, a request for rent change should be included, following the guidance in paragraph XIII C2b of exhibit E of subpart C of part 1930 of this chapter. After the first full year of operation, owners will use the actual year-end budget figures to make appropriate adjustments to the amount of operating assistance requested.

Dated: October 20, 2000.

Jill Long Thompson,

Under Secretary, Rural Development.