BILLING CODE (XXXX-XX-X)

DEPARTMENT OF AGRICULTURE

Rural Housing Service

Notice of Funding Availability: Section 514, 515, and 516 Multi-Family
Housing Revitalization Demonstration Program (MPR) for Fiscal Year 2008

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

Announcement Type: Inviting applications from eligible applicants for
Fiscal Year 2008

funding.

Catalog of Federal Domestic Assistance Number (CFDA): 10.447

SUMMARY: USDA Rural Development which administers the programs of the
Rural Housing Service (RHS) announces the availability of funds and the
timeframe to submit applications to participate in a demonstration
program to preserve and revitalize existing rural rental housing
projects financed by Rural Development under Section 515, Section 514,
and Section 516 of the Housing Act of 1949, as amended. The intended
effect is to restructure selected existing Section 515 multi-family
housing loans and Section 514 and 516 off-farm labor housing loans and
grants expressly for the purpose of ensuring that sufficient resources
are available to preserve the rental project for the purpose of
providing safe and affordable housing for very low-, low-, or
moderate-income residents. Expectations are that properties
participating in this program will be revitalized and the affordable use
extended without displacing tenants because of increased rents. No
additional Rural Development rental assistance units will be made
available under this program.

DATES: The deadline for receipt of all pre-applications in response to
this Notice of Funding Availability (NOFA) is 5:00 p.m., Eastern time,
\[Insert date 60 days after date of publication in the
[Federal]{.underline} [Register]{.underline}\]. The pre-application
closing deadline is firm as to date and hour. The Agency will not
consider any pre-application that is received after the closing
deadline. Applicants intending to mail pre-applications must allow
sufficient time to permit delivery on or before the closing deadline.
Acceptance by a post office or private mailer does not constitute
delivery. Facsimile (FAX) and postage-due pre-applications will not be
accepted.

FOR FURTHER INFORMATION CONTACT: Sherry Engel,
<sherry.engel@wi.usda.gov> (715) 345-7677; Carlton Jarratt,
<carlton.jarratt@usda.gov>, (804) 561-0665; Barbara Chism,
<barbara.chism@usda.gov>, (202) 690-1436; or Sandra Mercier,
<sandra.mercier@usda.gov>, (202) 720-1617, Senior Loan Specialists,
Multi-Family Housing Office of Rental Housing Preservation, STOP 0782,
(Room 1263-S), U. S. Department of Agriculture, Rural Housing Service,
1400 Independence Avenue, SW, Washington, DC 20250-0782. (Please note
these telephone numbers are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

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 0570-0190.

Overview

The Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies Appropriations Act, 2008 (Pub. L. 110-161), December
26, 2007, provides funding for and authorizes Rural Development to
conduct a demonstration program for the preservation and revitalization
of the Section 515 multi-family housing portfolio and Section 514 and
516 off-farm labor housing portfolio. Sections 514, 515 and 516
multi-family housing programs are authorized by the Housing Act of 1949,
as amended (42 U.S.C. 1484, 1485, 1486) and provide Rural Development
with the authority to make loans for low-income multi-family housing and
farm labor housing and related facilities.

Program Administration

I. [Funding Opportunities Description]{.underline}

This NOFA solicits pre-applications from eligible borrowers/applicants
to restructure existing multi-family housing within the Agency's Section
515 multi-family housing portfolio and the 514/516 off-farm labor
housing portfolio for the purpose of revitalization and preservation.
The demonstration program shall be referred to in this notice as the
Multi-Family Housing Revitalization Demonstration program (MPR). Agency
regulations for the Section 515 multi-family housing program and for the
Sections 514/516 off farm labor housing program are published at 7 CFR
part 3560.

The MPR is intended to assure that existing rental projects will
continue to deliver decent, safe, and sanitary affordable rental housing
for the lesser of the remaining term of the loan or 20 years from the
date of the MPR transaction closing. Once an applicant has been
confirmed eligible and the project has been selected by the Agency in
the process described in this notice, and the applicant agrees to
participate in the MPR demonstration by written notification to the
Agency, an independent third-party capital needs assessment (CNA) will
be conducted to provide a fair and objective review of projected capital
needs. The Agency shall implement this NOFA through an MPR Conditional
Commitment (MPRCC) with the eligible borrower, which will include all
the terms and conditions under this NOFA, including the MPR Debt
Deferral Agreement.

The primary restructuring tool to be used in this program is debt
deferral up to 20 years of the existing Section 514 and 515 loans
obligated prior to October 1, 1991. The cash flow from the deferred
payment will be deposited, as directed by the Agency, to the reserve
account to help meet the future physical needs of the property or to
reduce rents. Debt deferral is described as follows:

[]{.mark}

[Debt Deferral]{.underline}: A deferral of the existing Agency debt for
the lesser of the remaining term of the loan or 20 years. All terms and
conditions of the deferral will be described in the MPR Debt Deferral
Agreement. A balloon payment of principal and accrued interest will be
due at the end of the deferral period. Interest will accrue at the
promissory note rate and subsidy will be applied as set out in the
Agency's Interest Credit Agreement. Interest will not be charged on the
deferred interest. []{.mark}

If the resulting cash flow is not adequate to address the long-term
needs of the project, the Agency may use the following sources of funds:

\(1\) other Agency restructuring tools as follows:

\(i\) [MPR Revitalization Grant]{.underline}: A revitalization grant
(for non-profit applicants/borrowers only) is limited to the cost of
correcting health and safety violations as identified by the CNA. The
grant administration will be in accordance with applicable provisions of
7 CFR parts 3015 and 3019.

[]{.mark}

\(ii\) [MPR Revitalization Zero Percent Loan]{.underline}: A
revitalization loan at zero percent interest that will be amortized over
30 years.

\(iii\) [MPR Soft-Second Loan]{.underline}: A loan with a one percent
interest rate that will have its accrued interest and principal
deferred, to a balloon payment, due at the time the latest maturing
Section 514 or Section 515 loan becomes due.

MPR funds cannot be used to add new units, community rooms, playgrounds,
and/or laundry rooms. However, other funding sources as outlined below
in (2) through (6) can be used either for revitalization or for
improvements listed above to the projects.

\(2\) Rural Development Section 515 Rehabilitation loan funds;

[]{.mark}

\(3\) Rural Development Section 514/516 rehabilitation loan and grant
funds;

\(4\) Rural Development Section 538 Guaranteed Rural Rental Housing
Program financing;

\(5\) Rural Development Multi-Family Housing Re-lending Demonstration
Program Funds;

\(6\) third-party funds in the form of loans with below market rates
(below the AFR), grants, tax credits, and tax exempt financing; and

\(7\) owner-provided capital contributions in the form of a cash
infusion.

Transfers, subordinations, and consolidations may be approved as part of
a MPR transaction in accordance with existing servicing authorities of
the Agency as available in 7 CFR part 3560. If a transfer is part of the
MPR transaction, the transfer must meet the requirements of 7 CFR part
3560.406 before underwriting of the MPR transaction.

For the purposes of the MPR, the restructuring transactions will be
identified in three categories:

\(1\) Simple transactions involve no change in ownership.

\(2\) Complex transactions will consist of a property transfer to new
ownership processed in accordance with 7 CFR part 3560.406, or
transactions requiring a subordination agreement as a result of third
party funds.

\(3\) Portfolio Sale transactions that are defined as multiple project
sale transactions with a common purchaser all within one state closed no
earlier than September 30, 2007.

Each transactional category may utilize any or all restructuring tools.
Restructuring tools that may be available to address capital needs
during the MPR demonstration are based on the capital needs assessment
process and the underwriting feasibility determination.

While all non-deferred Agency debt, either in first lien position or a
subordinated lien position must be secured within market value, deferred
debt may exceed the market value of the security. Payment of such
deferred debt will not be required from normal project operation income,
but from excess cash from project operations and the value of the
property after all other secured debts are satisfied.

\(1\) [Pre-application]{.underline}: Applicants must submit a
pre-application described in Section VI. This pre-application process is
designed to lessen the cost burden on all applicants including those who
may not be eligible or whose proposals may not be feasible.

\(2\) [Eligible Properties]{.underline}: Using criteria described below
in Section III, USDA will conduct an initial screening for eligibility.
As described in Section VIII, USDA will conduct additional eligibility
screening later in the selection process.

\(3\) [Scoring and Ranking]{.underline}: All eligible, complete and
timely-filed pre-applications will be scored, ranked and put in funding
categories as discussed in Sections VI and VII.

\(4\) [Formal Applications]{.underline}: Top ranked pre-applicants will
be invited to submit a formal application. As discussed in Section VIII
paragraph (2) of this notice, USDA will require the owner to provide a
capital needs assessment in order to determine the proper combination of
tools to be offered to the applicant, to perform additional eligibility
review, and to underwrite the proposal to determine financial
feasibility. Where proposals are found to be ineligible or financially
infeasible, owners will be informed and proposals lower in the funding
categories will be considered.

\(5\) [Financial Feasibility]{.underline}: Using the results of the CNA
to help identify the need for resources and applicant provided
information regarding anticipated or available third-party financing,
the Agency will determine the financial feasibility of each potential
transaction, using restructuring tools available either through existing
regulatory authorities or specifically authorized through this
demonstration program.

Project financial feasibility is determined when a property can provide
affordable, safe, decent, and sanitary housing for 20 years or the
remaining term of any Agency loan whichever ends later, by using the
authorities of this program while minimizing the cost to the Agency, and
without increasing rents for tenants and farm laborers, except when
necessary to meet normal and necessary operating expenses. If the
transaction is determined financially feasible by the Agency, the
borrower will be offered a restructuring proposal, which will include
the requirement that the borrower will execute, for recordation, a
restrictive use covenant for a period of 20 years, the remaining term of
any loans, or the remaining term of any existing restrictive-use
provisions, whichever ends later. The restructuring proposal will be
established in the form of the MPR Conditional Commitment (MPRCC).

MPR Agreements: If the offer is accepted by the applicant, the Agency
and applicant will enter into a MPRCC. The applicant must also agree to
restrict the property use pursuant to Agency direction when the MPR
transaction is closed. Any third-party lender will be required to
subordinate to the Agency's restrictive use covenant unless the Agency
determines on a case-by-case basis that the lender refuses to
subordinate and such refusal will not compromise the purpose of the MPR.
The Agency may also request that the applicant sign an agreement that
would require the owner to escrow reserve, tax, and insurance payments
in accordance with all pertinent current and future Agency regulations.

General Requirements: The MPR transactions may be conducted with a
stay-in owner (simple) or may involve a change in ownership (complex or
portfolio sale). Any housing or related facilities that are constructed
or repaired must meet the Agency design and construction standards and
the development standards contained in 7 CFR part 1924, subparts A and
C, respectively. Once constructed, Section 515 multi-family housing and
Sections 514/516 off farm labor housing must be managed in accordance
with 7 CFR part 3560. Tenant eligibility will be limited to persons who
qualify as an eligible household under Agency regulations or who are
eligible under the requirements established to qualify for housing
benefits provided by sources other than the Agency, such as U. S.
Department of Housing and Urban Development Section 8 assistance or Low
Income Housing Tax Credit Assistance. Additional tenant eligibility
requirements are contained in 7 CFR part 3560.152.

Voluntary Community Market Rent Demonstration (available for Section 515
properties only): In conjunction with this demonstration, Rural
Development also announces the opportunity for all successful Section
515 applicants to participate on a voluntary basis in a viability test
of a 30 percent limitation on tenant rents, as proposed in Section 544
(b) (7) of Saving America's Rural Housing Act of 2006, H.R. 5039, for
post-restructured properties. Owners of properties in the Section 515
restructuring program may elect to participate in the "community market
rent" demonstration which will allow an owner to set a rent above the
approved basic rent for any unit not currently occupied by a tenant
receiving Rural Development rental assistance. Eligible tenants for
these units must have adjusted annual incomes sufficient to allow them
to pay the community market rent using less than 30 percent of their
adjusted income. Tenants would be allowed to occupy without paying
overage, additional sums that would otherwise be required to bring their
rent payment up to 30 percent of income. With Rural Development's
consent, up to 50 percent of the difference between the basic rent and
the new "community market rent" could be retained by the owner as an
increased return.

For example, if the basic rent is \$350, the owner could create a
community market rent at \$410, and market the unit to tenants who could
pay that rent at less than 30 percent of adjusted income. A percentage
of the difference, \$60 could be retained by the owner, as negotiated
with Rural Development, up to \$30.

Prior to implementation of the community market rent demonstrations,
Rural Development will issue guidance to successful applicants who have
indicated an interest in participating in the demonstration providing
further details with respect to the program.

Stay in owners, existing borrowers that will retain their property, who
contribute cash to fund any hard costs of construction to meet immediate
needs identified by the CNA may receive a return on investment on those
funds provided the Agency determines an increased return on investment
is financially feasible, and it approves such a return in the
revitalization plan presented to the borrower as an MPR offer.

II\. [Award Information]{.underline}

Public Law 110-161 makes funding available to the Secretary of
Agriculture for Rural Development to provide the restructuring tools of
the MPR demonstration. \$19,860,000 in budget authority will be
available during FY 2008.

All funding must be approved no later than September 15, 2008, and
obligated by the Agency not later than September 22, 2008. If funds
available for the MPR are fully used before all pre-applications that
have been determined eligible and selected under this NOFA are funded,
the unfunded approved properties may receive priority for funding from
the next fiscal year's resources available for multi-family housing
revitalization if additional funds become available and the selected
properties/owners meet any future eligibility criteria.

III\. [Eligibility Information]{.underline}

Applicants (and the principals associated with each applicant) must meet
the following requirements:

\(1\) Eligibility under 7 CFR part 3560.55; however, the requirements
described in 7 CFR part 3560.55 (a) (5) pertaining to required borrower
contributions and 7 CFR part 3560.55 (a) (6) pertaining to required
contributions of initial operating capital are waived for all MPR
proposals.

\(2\) For Section 515 multi-family housing projects an average physical
vacancy rate over the twelve months preceding the filing of the
pre-application of no more than 10 percent for projects of 16 units or
more and 15 percent for projects under 16 units unless an exception
applies under Section VI paragraph (1) (ii) of this notice. For Sections
514 and 516 off-farm labor housing projects, rather than an average
physical vacancy rate as stated above, the property must have positive
cash flow for the previous full three years of operation unless an
exception applies under Section VI paragraph (1) (ii) of this Notice .

\(3\) Ownership of and ability to operate the facility after the
transaction is completed. (In the event of a transfer, the proposed
transferee with an executed purchase agreement or other evidence of site
control will be the applicant.)

\(4\) A CNA and Agency financial evaluation must be conducted to ensure
that utilization of the restructuring tools of the MPR program is
financially feasible and necessary for the revitalization and
preservation of the property for affordable housing. Eligibility for
processing will be determined as of the date of the pre-application
filing deadline. The Agency reserves the right to discontinue processing
in the event that material changes in the applicant's status occurs any
time after the initial determination.

IV\. [Equal Opportunity and Nondiscrimination Requirements]{.underline}

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

\(1\) Borrowers and applicants will comply with the provisions of 7 part
CFR 3560.2.

\(2\) All housing must meet the accessibility requirements found at 7
CFR part 3560.60 (d).

\(3\) All MPR participants must submit or have on file a valid Form RD
400-1, "Equal Opportunity Agreement" and Form RD 400-4, "Assurance
Agreement."

The U. S. Department of Agriculture (USDA) prohibits discrimination in
all its programs and activities on the basis of race, color, national
origin, age, disability, sex, marital status, familial status, religion,
or because all or part of an individual's income is derived from any
public assistance program. (Not all prohibited bases apply to all
programs.) Persons with disabilities who require alternative means for
communication of program information (Braille, large print, audiotape,
etc.) should contact USDA's TARGET Center at (202) 720-2600 (Voice and
TDD).

To file a complaint of discrimination, write to USDA, Director, Office
of Civil Rights, 1400 Independence Avenue, S.W., Washington, D.C.
20250-9410, or call (800) 795-3272 (Voice) or (202) 720-6382 (TDD).

The policies and regulations contained in 7 CFR part 1901, subpart E,
apply to this program.

V. [Authorities Available for MPR]{.underline}

MPR tools will be used in accordance with 7 CFR part 3560 and its
associated handbooks (available in any Rural Development office). The
program will be administered within the resources available to the
Agency through Pub. L. 110-161 for the preservation and revitalization
of Sections 514/516 and Section 515 financed properties. In the event
that provisions of 7 CFR part 3560 conflict with this demonstration
program, the provisions of the MPR will take precedence.

VI\. [Application and Submission Information]{.underline}

\(1\) The application submission and scoring process will be completed
in two phases in order to avoid unnecessary effort and expense on the
part of interested borrowers/applicants and to allow additional points
for applicants that propose a transfer of a troubled project to an
eligible owner.

The first phase is the pre-application process. The applicant must
submit a complete pre-application by the deadline date under the "DATES"
section of this Notice. The applicant's submission will be classified as
"complete" when a "pre-application" is received by multi-family housing
staff for each MPR proposal the applicant wishes to be considered in the
demonstration. In the event the MPR proposal involves a project
consolidation it will be completed in accordance with 7 CFR 3560.410.
One pre-application for the proposed consolidated project is required
and must identify each project included in the consolidation. If the MPR
proposal involves a portfolio sale, one pre-application for each project
in the portfolio is required and each pre-application must identify each
project to be purchased as part of the portfolio sale. The suggested
form to be used for the pre-application is "MPR Pre-application" and is
attached at the end of this Notice. An electronic version of this form
may be found on the internet at
<http://www.rurdev.usda.gov/rd/nofas/index.html>. In addition, a
synopsis of this program and the pre-application's universal resource
locator (URL) will be listed by Catalog of Federal Domestic Assistance
Number or by FedGrants Funding Opportunity Number at
[http://www.grants.gov](http://www.grants.gov/).

In order for the pre-application to be considered complete, all
applicable information requested on the MPR Pre-application form must be
provided

Additional information that must be provided with the pre-application,
when applicable, includes:

\(i\) A copy of a purchase agreement if a transfer is being considered.

\(ii\) A market survey if the projects' occupancy standards cited in
Section III (2) above are not met and there is an overwhelming market
demand evidenced by waiting lists and a housing shortage confirmed by
local housing agencies and realtors. The market survey must show a clear
need and demand for the project once a restructuring transaction is
completed. The results of the survey of existing or proposed rental or
labor housing, including complex name, location, number of units,
bedroom mix, family or elderly type, year built, rent charges must be
provided as well as the existing vacancy rate of all available rental
units in the community, their waiting lists and amenities, and the
availability of rental assistance or other subsidies. For proposals
where the applicant is requesting low-income housing tax credits
(LIHTC), the number of LIHTC units and the maximum LIHTC incomes and
rents by unit size must be provided. The Rural Development State
Director will determine whether or not the proposal has market
feasibility based on the data provided by the applicant. Any costs
associated with the completion of the market survey will NOT be
considered a project expense.

Unless an exception under this section applies, the requirements stated
in Section III, paragraph (2) of this notice must be met.

The second phase of the application process will be completed by the
Agency based on Agency records and the pre-application information.

All eligible, complete, and timely-filed pre-applications will then be
scored and ranked based on points received during this two-phase
application process.

Further, the Agency will categorize each MPR proposal as being
potentially Simple, Complex, or Portfolio Sale based on the information
submitted on the pre-application and in accordance with the category
description provided in Section I of this Notice.

\(2\) Pre-applications can be submitted either electronically or in hard
copy. The Agency will record pre-applications received electronically by
the actual date and time received in the website mail box. Hard copy
pre-applications received on the deadline date will receive the close of
business time of the day received as the receipt time. Assistance for
filing electronic and hard copy pre-applications can be obtained from
any Rural Development State Office.

The pre-application is stored in the form of an Adobe Acrobat format and
may be completed as a fillable form. The form contains a button labeled
"Submit by Email." Clicking on the button will result in an e-mail
containing a completed pre-application being sent to the Office of
Rental Housing Preservation in Washington, DC for consideration. If a
purchase agreement or market survey is required, these additional
documents are to be attached to the resulting e-mail prior to
submission.

Pre-application forms may be downloaded from the Agency's internet
website <http://www.rurdev.usda.gov/rd/nofas/index.html> or obtained by
contacting the State Office in the state the project is located. Hard
copy pre-applications and additional materials can be mailed to the
attention of Sandra L. Mercier or Barbara Chism, Senior Loan
Specialists, Multi-Family Housing Office of Rental Housing
Preservation-STOP 0782 (Room 1263-S), U. S. Department of Agriculture,
Rural Housing Service, 1400 Independence Avenue, SW, Washington, DC
20250-0781.

**NOTE**: All documents must be received on or before the
pre-application closing deadline to be considered complete and timely
filed. Pre-applications that do not include a Purchase Agreement for
transfer proposals, and/or market surveys for projects that don't meet
the occupancy standards of Section III paragraph (2) of this notice, or
if applicable, the requirements for the exception in Section VI
paragraph (1) (ii) of this notice, will be considered incomplete and
will be returned to the applicant with appeal rights if not submitted by
the closing deadline.

VII\. [Selection Process]{.underline}

Pre-application ranking points will be based on information provided
during the submission process and in Agency records. Points will be
awarded as follows:

\(1\) [Contribution of other sources of funds]{.underline}. Other funds
are those discussed in the third paragraph, of Section I "Funding
Opportunities Description" items (2) through (6). Points awarded are to
be based on documented written evidence that the funds are committed.
The maximum points awarded for this criterion is 20 points. These points
will be awarded in the following manner:

\(i\) Evidence of a commitment of at least \$3,000 to \$5,000 per unit
per property from other sources -- 15 points, or

\(ii\) Evidence of a commitment greater than \$5,000 per unit per
property from other sources -- 20 points.

\(2\) [Owner contribution sufficient to pay transaction
costs]{.underline}. (These funds cannot be from project reserve or
operating funds). Transaction costs are defined as those costs required
to complete the transaction and include, but are not limited to, the
CNA, legal and closing costs, appraisal costs and filing/recording fees.
The minimum contribution required to receive these points is \$5,000 per
project and will be required to be deposited in the property reserve
account prior to closing -- 5 points.

\(3\) [Age of project]{.underline}. Since the age of the project and the
date that the loan was made are directly related to physical needs, a
maximum of 25 points will be awarded on the following criteria:

\(i\) Projects with initial operational dates prior to December 21, 1979
-- 25 points.

\(ii\) Projects with initial operational dates on or after December 21,
1979, but before December 15, 1989 -- 20 points.

\(iii\) Projects with initial operational dates on or after December 15,
1989, but before October 1, 1991 -- 15 points.

**NOTE**: For project consolidation or portfolio sale proposals, the
project with the earliest operational date will be used.

\(4\) [Troubled project points]{.underline}. The Agency may award up to
25 additional points to facilitate the transfer and revitalization of
projects the Agency considers as troubled due to an act of nature or
where physical and/or financial deterioration or management deficiencies
exist. Projects with an Agency classification of "C" or "D" according to
Handbook 2-3560, Chapter 9, Paragraph 9.7 (available at
<http://www.rurdev.usda.gov/regs/hblist.html>) will be considered
troubled. Projects that are classified "B" and do not involve a transfer
will also receive consideration. Points will be awarded in the following
manner:

\(i\) For Stay-in Owners only: If the Agency servicing classification is
B as a result of a workout plan approved by the Agency prior to January
1, 2008 -- 25 points.

\(ii\) If the Agency servicing classification is C or D for 24 months or
more -- 20 points.

\(iii\) If the Agency servicing classification is C or D for less than
24 months -- 15 points.

\(5\) [Prior Agency approvals]{.underline}. In the interest of ensuring
timely application processing and underwriting, the Agency will award up
to 20 points for properties with CNAs already approved by the Agency.
CNAs over 12 months old may not be used for MPR underwriting without an
update approved by the Agency. Points will be awarded for:

\(i\) CNAs approved after October 1, 2006 and [prior]{.underline} to
October 1, 2007 -- 10 points.

\(ii\) CNAs approved [after]{.underline} October 1, 2007 but before
April 1, 2008 -- 20 points.

\(6\) [Energy generation]{.underline}. Applicants will be awarded 5
points if the proposal includes the installation of energy generation
systems to be funded by a third party. The proposal must include an
overview of the energy generation system being proposed. Evidence that
an energy generation system has been funded by a third party and that it
has a quantifiable positive impact on energy consumption will be
required.

\(7\) [Energy conservation]{.underline}. Applicants will be awarded 5
points if the proposal includes rehabilitation that earns the ENERGY
STAR label for residential construction. Units earning the ENERGY STAR
label must be independently verified to meet guidelines for energy
efficiency as set by the U.S. Environmental Protection Agency. All
procedures used in verifying a unit for the ENERGY STAR label must
comply with National Home Energy Ratings System (HERS) guidelines.
ENERGY STAR guidelines for residential construction apply to single or
low-rise multi-family residential buildings.

\(8\) [Tenant service provision]{.underline}. The Agency will award 5
points for applications that include new services provided by a
non-profit organization, which may include a faith-based organization,
or by a Government agency. Such services shall be provided at no cost to
the project and shall be made available to all tenants. Examples of such
services are transportation for the elderly, after-school day care
services or after-school tutoring.

For portfolio sales and project consolidations, the Agency will
calculate the average score for each project within the sale or
consolidation.

The Agency will total the points awarded to each pre-application
received within the timeframes of this Notice and rank each
pre-application according to total score. If point totals are equal, the
earliest time and date the pre-application was received by the Agency
will determine the ranking. In the event pre-applications are still
tied, they will be further ranked by giving priority to those properties
with the earliest Rural Development operational date.

Eligibility will then be confirmed on the 16 highest-scoring and
complete pre-applications in each State. If one or more of the 16
highest-scoring pre-applications is determined ineligible, (i.e. the
applicant is a borrower that is not in good standing with the Agency or
has been debarred or suspended by the Agency, etc.) the next
highest-scoring pre-application will be confirmed for eligibility.

If one or more of the 16 highest-ranking pre-applications is a portfolio
sale, then eligibility determinations will be conducted on all of the
pre-applications associated with the portfolio sale. Should any of the
pre-applications associated with the portfolio sale be determined
ineligible, that pre-application will be dropped, but the overall
eligibility of the portfolio sale will not be affected as long as the
requirements in Section I "Funding Opportunities Description" are met.

If one or more of the 16 highest-ranking pre-applications is a project
consolidation, and one of the projects involved in the consolidation
does not meet the occupancy standards cited in Section III (2), that
project will be determined ineligible and eliminated from the proposed
consolidation transaction.

Once ranking has been established, the Agency will conduct a four-step
process to select pre-applications for submission of formal
applications. This process is needed to assure that the Agency can
process the proposed transactions within available staffing resources,
develop a representative sampling of revitalization transaction types,
assure geographic distribution, and assure an adequate pipeline of
transactions to use all available funding.

[STEP ONE]{.underline}: The Agency will review the eligible
pre-applications, identify pre-applications as either Simple, Complex,
or Portfolio Sale and separate them by state.

[]{.mark}

[STEP TWO]{.underline}: The Agency will select, for further processing,
the top-ranked portfolio sale transactions until a total of
\$150,000,000 in potential debt deferral is reached. Portfolio sale
transactions will be limited to one per State and will count as 1 MPR
transaction.

[STEP THREE]{.underline}: The highest ranked complex transactions in
each state will be selected for further processing, not to exceed 2 per
state.

[]{.mark}

[STEP FOUR]{.underline}: Additional projects will be selected from the
highest ranked eligible pre-applications involving simple transactions
in that state until a total of 5 pre-applications for MPR transactions
per state is reached.

VIII\. [Processing for Selected Pre-applications]{.underline}

Those proposals that are ranked and then selected for further processing
will be invited to submit a formal application on SF 424 "Application
for Federal Assistance." Those pre-applications that are rejected by the
Agency will be returned to the applicant and the applicant will be given
appeal rights pursuant to 7 CFR part 11. Those proposals that are not
selected due to low scores will be retained by the Agency unless they
are withdrawn by the applicant. In the event that a pre-application is
selected for further processing and the pre-applicant declines, the next
highest ranked pre-application of the same transaction type in that
state will be selected provided there is no change in the preliminary
eligibility of the pre-applicant.

If there are no other pre-applications of the same transaction type,
then the next highest-ranked pre-application regardless of transaction
type will be selected.

Applications (SF 424s) can be obtained and completed online. An
electronic version of this form may be found on the internet at
<http://forms.sc.egov.usda.gov/eforms/mainservlet> or a hard copy may be
obtained by contacting the State Office in the state where the project
is located and can be submitted either electronically or in hard copy.

If a pre-application is accepted for further processing, the applicant
will be expected to submit additional information needed to demonstrate
eligibility and feasibility (such as a CNA), consistent with this NOFA
and the appropriate sections of 7 CFR part 3560, prior to the issuance
of a restructuring offer.

Rural Development will work with pre-applicants selected for further
processing in accordance with the following steps:

\(1\) Based on the feasibility of the type of transaction that will best
suit the project and the availability of funds, further eligibility
confirmation determinations will be conducted by the designated
Multi-Family Housing Revitalization Coordinators assigned by each Rural
Development State Director with the assistance of the Office of Rental
Housing Preservation.

\(2\) If one is not already available to the Agency, a CNA will be
required and conducted in accordance with the requirements of 7 CFR
3560.103(c), Handbook 3-3560, Chapter 7, "Guidance on the Capital Needs
Assessment Process," and the CNA Statement of Work together with any
non-conflicting amendments (available in any Rural Development State
Office.) A CNA is prepared by a qualified independent contractor and is
obtained to determine needed repairs and any necessary adjustments to
the reserve account for long-term project viability. While the
requirements of the CNA are described in the materials referenced above,
at a minimum, to be considered acceptable, a CNA must include:

\(i\) a physical inspection of the site, architectural features, common
areas and all electrical and mechanical systems;

\(ii\) an inspection of a sample of dwelling units;

\(iii\) identify repair or replacement needs;

\(iv\) provide a cost estimate of the repair and replacement expenses;
and

\(v\) provide at least a 20-year analysis of the timing and funding for
identified needs which includes reasonable assumptions regarding
inflation. The cost of the CNA will be considered a part of the project
expense and may be paid from the "project reserve" with prior approval
of the Agency. The Agency approval for participation in this program
will be contingent upon the Agency's final approval of the CNA and
concurrence in the scope of work by the owner. The Agency, in its sole
discretion, may choose to obtain a CNA, at its expense, if it determines
that doing so is in the best interest of the Government.

\(3\) Underwriting will be conducted by the designated Multi-Family
Housing Revitalization Coordinator assigned by each Rural Development
State Director with the assistance of the Office of Rental Housing
Preservation. The feasibility and structure of each revitalization
proposal will be determined using this underwriting process and will
include a determination of the restructuring tools that will minimize
the cost to the Government consistent with the purposes of this NOFA. To
help assure a balanced utilization of revitalization tools and the
long-term economic viability of revitalized projects, the MPR
underwriting guidelines include, but are not limited to the following:

\(i\) The maximum soft-second loan is limited to no more than \$5,000
per unit,

\(ii\) The total assistance provided from a revitalization grant,
revitalization zero percent loan, and/or revitalization soft-second loan
is limited to \$10,000 per unit,

\(iii\) The maximum Section 515 loan or Section 514/516 loan and grant
is limited to no more than \$20,000 per unit, and

\(iv\) Properties receiving tax credits are expected to have sufficient
funding sources and generally will receive debt deferral only.

\(4\) Properties with more than 75 percent of the units receiving
significant subsidy such as Rural Development rental assistance or
HUD-funded subsidy will be supplemented with Section 514, 515 and 516
loans and grants before revitalization grants and revitalization
soft-second loans are considered.

\(5\) MPR revitalization grants will be limited to \$5,000 per unit.

\(6\) Any rent increases that may be necessary will not exceed 10
percent in any one year.

\(7\) The approved MPR transaction will include projected revenue
sufficient to cover a

10 percent Operations and Maintenance increase in the second year after
the transaction.

\(8\) Full return to owner will be budgeted pursuant to the Loan
Agreement.

\(9\) Budgeted increases to reserve deposit will not exceed 3 percent
per annum.

\(10\) The remaining reserve balance at the end of the 20-year analysis
period should be at least 2.0 times the average annual needs, including
inflation, over the 20-year analysis period.

These guidelines have been developed based on experience in the FY 2005,
FY 2006 and FY 2007 Demonstrations. The Agency believes that these
guidelines will be appropriate for typical transactions. However, the
Agency reserves the right to waive any of the guidelines if, in the
Agency's judgment, doing so would further the objectives of the MPR and
is in the best interest of the Government.

The Agency expects that some of the transactions proposed by selected
pre-applicants will prove to be infeasible. The applicant entity may be
determined to be ineligible under Section III of this Notice. If a
proposed transaction is determined infeasible or the applicant
determined ineligible, the Agency will then select the next highest
ranked project for processing regardless of transaction type.

Each MPR offer will be approved by the Revitalization Review Committee
chaired by the Deputy Administrator for Multi-Family Housing or an
agency-authorized delegate. Approved MPR offers will be presented to
applicants who will then have up to 15 calendar days to accept or reject
the offer in writing. Offers will expire after 15 days. The Agency will
replace expired applications by selecting the next highest ranked
project. Closing of MPR offers will occur within 90 days of acceptance
by the applicant unless extended by the Agency.

IX\. [Funding Restrictions]{.underline}

Applicants will be selected in accordance with selection criteria and
the four step process identified in Section VII of this Notice. Once
selected to proceed, the Agency will provide additional guidance to the
applicant and request information and documents necessary to complete
the underwriting and review process. Since the character of each
application may vary substantially depending on the type of transactions
proposed, information requirements will be provided as appropriate.
Complete project information must be submitted as soon as possible but
in no case later than 45 days from the date of Agency notification of
the applicant's selection for further processing or September 1, 2008,
whichever occurs first. Failure to submit the required information in a
timely manner may result in the Agency discontinuing the processing of
the request.

Funding under this NOFA will be obligated to selectees that finish the
processing steps outlined above first within each of the 3 funding
categories described in Section VII of this Notice and to result in a
ratio as close as possible to 30 percent portfolio sale transactions, 50
percent complex transactions, and 20 percent simple transactions.

X. [Application Review]{.underline}

A review committee will make recommendations for final decision
regarding funding to the appropriate Rural Development State Director
based on the selection criteria contained in this NOFA.

XI\. [Appeal Process]{.underline}

All adverse determinations regarding applicant eligibility and the
awarding of points as a part of the selection process are appealable.
Instructions on the appeal process will be provided at the time an
applicant is notified of the adverse action.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

PETER D. MORGAN Date

Acting Administrator

Rural Housing Service

Multi-Family Housing Revitalization Demonstration Program

MPR

Pre-application

Instructions: Please provide the information by entering letters and
numbers from left to right. Individuals place last name first, first
name, then middle initial. Allow one space between names and do not use
symbols like (-), (\$), (#), and (,) when entering dollar amounts.
Please note that electronic submittals are not on a secured site.

\(a\) Applicant\'s name.

\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_

\(b\) Name of applicant\'s authorized representative.

\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_

\(c\) Applicant\'s address.

Street\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_

Secondary Address
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_

City\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_

State\_\_/\_\_/

Zip Code\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

\(d\) Applicant\'s telephone number.

\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

\(e\) Email address.

\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_

\(f\) Primary Project Name
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/.

\(g\) Provide the following information for the projects being
considered

in this proposal:

For Section 515 Only: Borrower Project Project Vacancy ID No. ID No.
Name Percentage

\(1\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(2\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(3\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(4\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(5\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(6\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(7\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(8\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(9\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/ \_\_/.\_\_/%

\(10\) \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/
\_\_/\_\_/\_\_/\_\_/ \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/
\_\_/.\_\_/%

For Section 515 multi-family housing projects: If vacancy percentages
for any of the projects listed above that have 16 or more revenue
producing units exceed 10.0%, or 15.0% for projects with less than 16
revenue producing units, attach required market survey documentation.

For Section 514/516 off-farm labor housing projects: If cash flow for
the previous 3 full years of operation is not positive, attach required
market survey documentation.

\(h\) Does this proposed transaction include a transfer of ownership?

Yes\_\_/ No\_\_/ (Check One)

If "yes", attach a copy of the purchase agreement.

\(i\) Does this proposal involve a consolidation of multiple projects?

Yes\_\_/ No\_\_/ (Check One)

If "yes", be sure all properties are listed in (g) above.

\(j\) Is this pre-application part of a portfolio sale?

Yes\_\_/ No\_\_/ (Check One)

If "yes", what is the Portfolio Name?
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

A separate pre-application must be submitted for each project and each
pre-application must have the same "portfolio name".

\(k\) Does this proposal include other funding resources that have been

committed? Yes\_\_/ No\_\_/ (Check One)

If "yes", provide the amounts for the following sources:

Source: Amount:

Tax Credits \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

3rd Party Loan \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

3rd Party Grant \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

Tax Exempt Financing \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

RD Section 515 Traditional Loan
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

RD Section 514/516 Traditional Loan/Grant
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

RD Section 538 \_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

RD Re-lending Demonstration Loan
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

Owner-provided capital contributions
\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

\(k\) Does this proposal include an owner contribution to pay
transaction

costs? (Transaction costs are those soft costs required to complete the
transaction and include, but are not limited to, the capital needs

assessment, legal costs, appraisals, and filing fees.)

Yes\_\_/ No\_\_/ (Check One)

If "yes", provide the amount:
\_\_/\_\_/\_\_/\_\_\_/\_\_/\_\_/\_\_/\_\_/\_\_/

\(l\) Is there an Agency-approved Capital Needs Assessment?

Yes\_\_/ No\_\_/ (Check One)

If "yes", provide the date of the most recent Agency approved CNA:
\_\_/\_\_/\_\_

\(m\) Does this proposal include the installation of energy generation

systems to be funded by a third party?

Yes\_\_/ No\_\_/ (Check One)

\(n\) Does this proposal include rehabilitation that will earn the
ENERGY

STAR label for residential construction?

Yes\_\_/ No\_\_/ (Check One)

\(o\) Does this proposal include new tenant services provided by a non-

profit organization or a Government agency that will not use funding

generated by project rents?

Yes\_\_/ No\_\_/ (Check One)