RD Instruction 1940-L
Table of Contents
Page 1

PART 1940 - GENERAL

Subpart L - Methodology and Formulas for Allocation of Loan and Grant 
            Program Funds  

Table of Contents
Sec.		Page

1940.551	Purpose and general policy.	1
1940.552	Definitions.	1

	(a)  Amount available for allocations.	1
	(b)  Basic formula criteria, data source and weight.	1
	(c)  Basic formula allocation.	2
	(d)  Transition formula.	2
	(e)  Base allocation.	2
	(f)  Administrative allocations.	2
	(g)  Reserve.	3
	(h)  Pooling of funds.	3
	(i)  Availability of the allocation.	3
	(j)  Suballocation by the State Director.	3
	(k)  Other documentation.	3

1940.553	-  1940.559  [Reserved]	3

1940.560  Guarantee Rural Rental Housing Program.	13
1940.561	-  1940.562  [Reserved]	14
1940.563	Section 502 non-subsidized guaranteed Rural 
	Housing (RH) loans.	14
1940.564	Section 502 subsidized guaranteed Rural Housing (RH) 
	loans.	14B
1940.565	Section 502 subsidized Rural Housing loans.	15
1940.566	Section 504 Housing Repair loans.	17
1940.567	Section 504 Housing Repair grants.	19
1940.568	Single Family Housing programs appropriations
	not allocated by State.	21
	

(01-09-08)  PN 417

RD Instruction 1940-L
Table of Contents
Page 2

Sec.		Page

1940.569	-  1940.574  [Reserved]	21
1940.575	Section 515 Rural Rental Housing (RRH) loans.	23
1940.576	Rental Assistance (RA) for new construction.	24
1940.577	Rental Assistance (RA) for existing projects.	25
1940.578	Housing Preservation Grant (HPG) program.	26
1940.579	Multiple Family Housing appropriations not
	allocated by State.	27

	(a)  Section 514 Farm Labor Housing Loans.	27
	(b)  Section 516 Farm Labor Housing Grants.	27

1940.580	-  1940.584  [Reserved]	27
1940.585	Community Facility loans.	29
1940.586	-  1940.587  [Reserved]	30
1940.588	Business and Industry guaranteed and direct loans.	35
1940.589	Rural Business Enterprise Grants.	37
1940.590	Community and Business Programs appropriations
	not allocated by State.	39
1940.591	Community Program Guaranteed loans.	40
1940.592	Community Facilities Grants.	41
1940.593  Rural Business Opportunity Grants.	43
1940.594	-  1940.600  [Reserved]	44

Exhibit A  Allocation of Program Funds for Current Fiscal Year.
           (Available in any Rural Development State Office)

Exhibit B  Section 515 Nonprofit Set Aside (NPSA).

Exhibit C  Housing in Underserved Areas.

Exhibit D  Rural Rental Housing Diversity Demonstration Program
           (RRHDDP).

oOo

RD Instruction 1940-L
PART 1940 - GENERAL
Subpart L - Methodology and Formulas for Allocation 
            of Loan and Grant Program Funds

1940.551  Purpose and general policy.

(a)  The purpose of this subpart is to set forth the methodology and formulas by which the Under Secretary of Rural Development allocates program funds to the States.  (The term "State" means any of the States of the United States, the Commonwealth of Puerto Rico, any territory or possession of the United States, or the Western Pacific Areas.)  This subpart is inapplicable to Farm Service Agency, Farm Loan Programs.  (Revised 01-09-08, PN 417.)
(b)  The formulas in this subpart are used to allocate program loan and grant funds to State Offices so that the overall mission of the Agency can be carried out.  Considerations used when developing the formulas include enabling legislation, congressional direction, and administration policies.  Allocation formulas ensure that program resources are available on an equal basis to all eligible individuals and organizations.
(c)  The actual amounts of funds, as computed by the methodology and formulas contained herein, allocated to a State for a funding period, are distributed to each State Office by an exhibit to this subpart.  The exhibit is available for review in any Rural Development State Office.  The exhibit also contains clarifications of allocation policies and provides further guidance to the State Directors on any suballocation within the State.   Rural Development will publish a Notice of Availability of Rural Housing funds in the Federal Register each year.  (Revised 01-27-92, SPECIAL PN.)

1940.552  Definitions.

(a)  Amount available for allocations.  Funds appropriated or otherwise made available to the Agency for use in authorized programs.  On occasion, the allocation of funds to States may not be practical for a particular program due to funding or administrative constraints.  In these cases, funds will be controlled by the National Office.  (Revised 7-12-88, PN 89.)
(b)  Basic formula criteria, data source and weight.  Basic formulas are used to calculate a basic State factor as a part of the methodology for allocating funds to the States.  The formulas take a number of criteria that reflect the funding needs for a particular program and through a normalization and weighting process for each of the criteria calculate the basic State factor (SF).  The data sources used for each criteria are believed to be the most current and reliable information that adequately quantifies the criterion.  The weight, expressed as a percentage, gives a relative value to the importance of each of the criteria.
__________________________________________________________________________
DISTRIBUTION:  WS	 Loan and Grant Making
		   General
1
(Revision 4)
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
1940.552 (Con.)

(c)  Basic formula allocation.  The result of multiplying the amount available for allocation less the total of any amounts held in reserve or distributed by base or administrative allocation times the basic State factor for each State.  The basic formula allocation (BFA) for an individual State is equal to:

BFA = (Amount available for allocation - NO reserve
        	  - total base and administrative allocations) x SF.

(d)  Transition formula.  A formula based on a proportional amount of previous year allocation used to maintain program continuity by preventing large fluctuations in individual State allocations.  The transition formula limits allocation shifts to any particular State in the event of changes from year to year of the basic formula, the basic criteria, or the weights given the criteria.  The transition formula first checks whether the current year's basic formula allocation is within the transition range (+ or - percentage points of the proportional amount of the previous year's BFA).

Transition Range = l.0 + maximum 20%
                            100
	 X (Amount available for allocation this year X State previous
	   (Amount available for allocation previous year) year BFA)

If the current year's State BFA is not within this transition range, the State formula allocation is changed to the amount of the transition range limit closest to the BFA amount.  After having performed this transition adjustment for each State, the sum of the funds allocated to all States will differ from the amount of funds available for BFA.  This difference, whether a positive or negative amount, is distributed to all States receiving a formula allocation by multiplying the difference by the SF.  The end result is the transition formula allocation.  The transition range will not exceed 40% (+ 20%), but when a smaller range is used it will be stated in the individual program section.

(e)  Base allocation.  An amount that may be allocated to each State dependent upon the particular program to provide the opportunity for funding at least one typical loan or grant in each Rural Development State, District, or County Office.  The amount of the base allocation may be determined by criteria other than that used in the basic formula allocation such as Agency historic data.

(f)  Administrative allocations.  Allocations made by the Administrator in cases where basic formula criteria information is not available.  This form of allocation may be used when the Administrator determines the program objectives cannot be adequately met with a formula allocation.

2
(Revision 4)

1940.552 (Cont.)	  RD Instruction 1940-L

(g)  Reserve.  An amount retained under the National Office control for each loan and grant program to provide flexibility in meeting situations of unexpected or justifiable need occurring during the fiscal year.  The Administrator may make distributions from this reserve to any State when it is determined necessary to meet a program need or Agency objective.  The Administrator may retain additional amounts to fund authorized demonstration programs.  When such demonstration programs exist, the information is outlined in Exhibit A of this subpart (available in any Rural Development State Office).  (Revised 7-12-88, PN 89)

(h)  Pooling of funds.  A technique used to ensure that available funds are used in an effective, timely and efficient manner.  At the time of pooling those funds within a State's allocation for the fiscal year of portion of the fiscal year, depending on the type of pooling, that have not been obligated by the State are placed in the National Office reserve.  The Administrator will establish the pooling dates for each affected program.

(1)  Mid-year:  This pooling addresses the need to partially redistribute funds based on use/demand.  Mid-year pooling occurs near the midpoint of the fiscal year.
(2)  Year-end:  This pooling is used to ensure maximum use of program funds on a national basis.  Year-end pooling usually occurs near the first of August.
(3)  Emergency:  the Administrator may pool funds at any time that it is determined the conditions upon the initial allocation was based have changed to such a degree that it is necessary to pool funds in order to efficiently carry out the Agency mission.

(i)  Availability of the allocation.  Program funds are made available to the Agency on a quarterly basis.  In the high demand programs, it is necessary that specific instructions be given to the State Offices regarding the amount which is available for obligation during each quarter.

(j)  Suballocation by the State Director.  Dependent upon the individual program for which funds are being allocated, the State Director may be directed or given the option of suballocating the State allocation to District or County Offices.  When suballocating the State Director may retain a portion of the funds in a State Office reserve to provide flexibility in situations of unexpected or justified need.  When performing a suballocation the State Director will use the same formula, criteria and weights as used by the National Office.

(k)  Other documentation.  Additional instructions given to field offices regarding allocations.

1940.553 - 1940.559  [Reserved]
(Continued on page 13)
3
(Revision 2)
(7-12-85)  SPECIAL PN

RD Instruction 1940-L

 1940.560  Guarantee Rural Rental Housing Program.
(Added 12-18-98, SPECIAL PN)

	When funding levels are under $100,000,000, all funds will all be held in a National Office reserve and made available administratively in accordance with the Notice of Funding Availability (NOFA) and program regulations.  When program levels are sufficient for a nationwide program, funds are allocated based upon the following criteria and weights.

(a)  Amount available for allocations.  See  1940.552(a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See 
 1940.552(b) of this subpart. Each factor will receive a weight respectively of 40%, 40% and 20%.  The criteria used in the basic formula are:

(1)  States percentage of National rural population,

(2)  States percentage of the National number of rural households between 50 and 115 percent of the area median income, and

(3)  States percentage of National average cost per unit.
Data source for the first two of these criterion are based on the latest census data available.  The third criterion is based on the cost per unit data using the applicable maximum per unit dollar amount limitations under section 207(c) of the National Housing Act, which can be obtained from the Department of Housing and Urban Development.  The percentage representing each criterion is multiplied by the weight assigned and totaled to arrive at a State factor.

13
(Revision 4)
(07-12-85)  SPECIAL PN

RD Instruction 1940-L
 1940.560(b)(3) (Con.)

State Factor = (criterion No. 1 x weight of 40%)+
			 (criterion No. 1 x weight of 40%)+
		 	 (criterion No. 1 x weight of 20%)

(c)  Basic formula allocation.  See  1940.552(c).

(d)  Transition formula.  See  1940.552(d).

(e)  Base allocation.  See  1940.552(e).  Jurisdictions receiving administrative allocations do not receive base allocations.

(f)  Administrative allocations.  See  1940.552(f).  Jurisdictions receiving formula allocations do not receive administrative allocations.

(g)  Reserve.  See  1940.552(g).

(h)  Pooling of funds.  See  1940.552(h).

(i)  Availability of the allocation.  See  1940.552(i).

(j)  Suballocation by the State Director.  See  1940.552(j).

(k)  Other documentation.  Not applicable.

 1940.561 - 1940.562 [Reserved]

 1940.563  Section 502 non-subsidized guaranteed Rural Housing (RH) loans.  (Added 03-13-91, PN 159.)

(a)  Amount available for allocations.  See  1940.552(a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See 
 1940.552(b) of this subpart.  The criteria used in the basic formula are:

(1)  State's percentage of the National number of rural occupied substandard units,

(2)  State's percentage of the National rural population in places of less than 2,500 population,

(3)  State's percentage of the national number of rural households between 80 and 100 percent of the area median income, and

14
(Revision 2)

RD Instruction 1940-L
 1940.563(b) (Con.)

(4)  State's percentage of the national number of rural renter households paying more than 35 percent of income for rent.  Data source for each of these criteria is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a basic State factor (SF) as follows:

     SF = (criterion 1 x weight of 30 %) +
		  (criterion 2 x weight of 10 %) +
		  (criterion 3 x weight of 30 %) +
		  (criterion 4 x weight of 30 %) 

(c)  Basic formula allocation.  See  1940.552(c) of this subpart.

(d)  Transitional formula.  See  1940.552(d) of this subpart.  The percentage range used for Section 502 guaranteed RH loans is plus or minus 15.

(e)  Base allocation.  See  1940.552(e) of this subpart.  Jurisdictions receiving administrative allocations do not receive base allocations.

(f)  Administrative allocations.  See  1940.552(f) of this subpart.  Jurisdictions receiving formula allocations do not receive administrative allocations.

(g)  Reserve.  See  1940.552(g) of this subpart.

(h)  Pooling of funds.  See  1940.552(h) of this subpart.

(1)  Mid-year:  If used in a particular fiscal year, available funds unobligated as of the pooling date are pooled and redistributed based on the formula used to allocate funds initially.

(2)  Year-end:  Pooled funds are placed in a National Office reserve and are available as determined administratively.

(i)  Availability of the allocation.  See  1940.552(i) of this subpart.

(j)  Suballocation by the State Director.  See  1940.552(j) of this subpart.  Annually, the Administrator will advise State Director's whether or not suballocation within the State Office jurisdiction will be required for the guaranteed housing program.

(k)  Other documentation.  Not applicable.

14A
(Revision 1)
(07-12-85)  SPECIAL PN

RD Instruction 1940-L

 1940.564  Section 502 subsidized guaranteed Rural Housing (RH) loans.  
(Added 03-13-91, PN 159.)

(a)  Amount available for allocations.  See  1940.552(a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See 
 1940.552(b) of this subpart.  The criteria used in the basic formula are:

(1)  State's percentage of the National number of rural occupied substandard units,

(2)  State's percentage of the National rural population in places of less than 2,500 population,

(3)  State's percentage of the national number of rural households below 80 percent of the area median income, and

(4)  State's percentage of the national number of rural renter households paying more than 35 percent of income for rent.  Data source for each of these criteria is based on the latest census data available. Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a basic State factor (SF) as follows:

          SF = (criterion 1 x weight of 30 %) +
(criterion 2 x weight of 10 %) +
(criterion 3 x weight of 30 %) +
(criterion 4 x weight of 30 %) 

(c)  Basic formula allocation.  See  1940.552(c) of this subpart.

(d)  Transitional formula.  See  1940.552(d) of this subpart.  The percentage range used for Section 502 guaranteed RH loans is plus or minus 15.

(e)  Base allocation.  See  1940.552(e) of this subpart.  Jurisdictions receiving administrative allocations do not receive base allocations.

(f)  Administrative allocations.  See  1940.552(f) of this subpart.  Jurisdictions receiving formula allocations do not receive administrative allocations.

(g)  Reserve. See  1940.552(g) of this subpart.

14B
(Revision 1)

RD Instruction 1940-L
 1940.564 (Con.)

(h)  Pooling of funds.  See  1940.552(h) of this subpart.

(1)  Mid-year:  If used in a particular fiscal year, available funds unobligated as of the pooling date are pooled and redistributed based on the formula used to allocate funds initially.

(2)  Year-end:  Pooled funds are placed in a National Office reserve and are available as determined administratively.

(i)  Availability of the allocation.  See  1940.552(i) of this subpart.

(j)  Suballocation by the State Director.  See  1940.552(j) of this subpart. Annually, the Administrator will advise State Director's whether or not suballocation within the State Office jurisdiction will be required for the guaranteed housing program.

(k)  Other documentation.  Not applicable.

14C
(Revision 1)
(07-12-85)  SPECIAL PN

RD Instruction 1940-L

1940.565 Section 502 subsidized Rural Housing loans.

(a)  Amount available for allocations.  See 1940.552(a)  of this subpart.

(b)  Basic formula criteria, data source and weight.  See 1940.552(b) of this subpart.  The criteria used in the basic formula are:

(1)  State's percentage of the National number of rural occupied substandard units,

(2)  State's percentage of the National rural population,

(3)  State's percentage of the National rural population in places of less than 2,500 population,

(4)  State's percentage of the National number of rural households between 50 and 80 percent of the area median income, and

(5)  State's percentage of the National number of rural households below 50 percent of the area median income.

Data source for each of these criteria is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a basic State factor (SF)

          SF=(criterion 1 x weight of 25%)+
             (criterion 2 x weight of 10%)+
             (criterion 3 x weight of 15%)+
             (criterion 4 x weight of 30%)+
             (criterion 5 x weight of 20%)

(c)  Basic formula allocation.  See 1940.552(c)  of this subpart.

(d)  Transition formula.  See 1940.552(d) of this subpart.  The percentage range used for Section 502 subsidized RH loans is plus or minus 15.

(e)  Base allocation.  See 1940.552(e) of this subpart.  Jurisdictions receiving administrative allocations do not receive base allocations.

(f)  Administrative allocations.  See 1940.552(f) of this subpart.  Jurisdictions receiving formula allocations do not receive administrative allocations.

(g)  Reserve.  See 1940.552(g) of this subpart.

15

(7-12-85)  SPECIAL PN

RD Instruction 1940-L
1940.565 (con.)

(h)  Pooling of funds.  See 1940.552(h) of this subpart.

(1)  Mid-year:  If used in a particular fiscal year, available funds unobligated as of the pooling date are pooled and redistributed based on the formula used to allocate funds initially.

(2)  Year-end:  Pooled funds are placed in a National Office reserve and are available as determined administratively.

(i)  Availability of the allocation.  See 1940.552(i) of this subpart.

(j)  Suballocation by the State Director.  See 1940.552(j) of this subpart.  The State Director will suballocate funds to the District Offices and may, at his/her option, suballocate to the County Offices.  The State Director will use the same basic formula criteria, data source and weight for suballocating funds within the State as used by the National Office in allocating to the States as described in 1940.565(b) and (c) of this section.  The suballocations to District or County Offices will not be reduced or restricted unless written approval is received from the National Office in response to a written request from the State Director.  The State Director's request must include the reasons for the requested action (e.g., high housing inventory and/or high housing delinquency).

(k)  Other documentation.  The percentage distribution of funds to the States by income levels is based on prevailing legislation.

16

RD Instruction 1940-L

1940.566  Section 504 Housing Repair loans.

(a)  Amount available for allocations.  See 1940.552(a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See 1940.552(b).  The criteria used in the basic formula are:

(1)  State's percentage of the National number of rural occupied substandard units, and

(2)  State's percentage of the National number of rural households below 50 percent of area median income.

Data source for each of these criteria is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a basic State factor (SF).

     SF=(criterion No. 1 x weight of 50%)+
        (criterion No. 2 x weight of 50%)

(c)  Basic formula allocation.  See 1940.552(c) of this subpart.

(d)  Transition formula.  See 1940.552(d) of this subpart.  The percentage range used for Section 504 Housing Repair Loans is plus or minus 15.

(e)  Base allocation.  Not used.

(f)  Administrative allocations.  See 1940.552(f) of this subpart.  Jurisdictions receiving formula allocations do not receive administrative allocations.

(g)  Reserve.  See 1940.552(g) of this subpart.

(h)  Pooling of funds.  See 1940.552(h) of this subpart.

(1)  Mid-year:  If used in a particular fiscal year, available funds unobligated as of the pooling date are pooled and redistributed based on the formula used to allocate funds initially.

(2)  Year-end:  Pooled funds are placed in a National Office reserve and are available as determined administratively.

(i)  Availability of the allocation.  See 1940.552(i) of this subpart.

17
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
1940.566 (con.)

(j)  Suballocation by the State Director.  See 1940.552(j) of this subpart.  At the option of the State Director, Section 504 loan funds may be suballocated to the District Offices.  When performing a suballocation, the State Director will use the same basic formula criteria, data source and weight for suballocating funds within the State as used by the National Office in allocating to the States as described in 1940.566(b) and (c) of this section.

(k)  Other documentation.  Not applicable.

18

RD Instruction 1940-L

1940.567  Section 504 Housing Repair grants.

(a)  Amount available for allocations.  See 1940.552(a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See 1940.552(b) of this subpart.  The criteria used in the basic formula are:

(1)  State's percentage of the National number of rural occupied substandard units,

(2)  State's percentage of the National rural population 62 years and older, and

(3)  State's percentage of the National number of rural households below 50 percent of area median income.

Data source for each of these criteria is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a basic State factor (SF).

     SF=(criterion No. 1 x weight of 33 1/3%)+
        (criterion No. 2 x weight of 33 1/3%)+
        (criterion No. 3 x weight of 33 1/3%)

(c)  Basic formula allocation.  See 1940.552(c) of this subpart.

(d)  Transition formula.  See 1940.552(d) of this subpart.  The percentage range used for Section 504 Housing Repair grants is plus or minus 15.

(e)  Base allocation.  Not used.

(f)  Administrative allocations.  See 1940.552(f) of this subpart.  Jurisdictions receiving formula allocations do not receive administrative allocations.

(g)  Reserve.  See 1940.552(g) of this subpart.

(h)  Pooling of funds.  See 1940.552(h) of this subpart.

(1)  Mid-year:  If used in a particular fiscal year, available funds unobligated as of the pooling date are pooled and redistributed based on the formula used to allocate funds initially.

(2)  Year-end:  Pooled funds are placed in a National Office reserve and are available as determined administratively.

19
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
1940.567 (con.)

(i)  Availability of the allocation.  See 1940.552(i) of this subpart.

(j)  Suballocation by the State Director.  See 1940.552(j) of this subpart.  At the option of the State Director, Section 504 grant funds may be suballocated to the District Offices.  When performing a suballocation, the State Director will use the same basic formula criteria, data source and weight for suballocating funds within the State as used by the National Office in allocating to the States as described in 1940.567(b) and (c) of this section.

(k)  Other documentation.  Not applicable.

20

RD Instruction 1940-L

1940.568   Single Family Housing programs appropriations not allocated by State.  The following program funds are kept in a National Office reserve and are available as determined administratively:

(a)  Section 523 Self-Help Technical Assistance Grants.

(b)  Section 523 Land Development Fund.

(c)  Section 524 Rural Housing Site Loans.

(d)  Section 509 Compensation for Construction Defects.

(e)  Section 502 Nonsubsidized Funds.

1940.569 - 1940.574 Reserved.

21

(7-12-85)  SPECIAL PN

RD Instruction 1940-L

1940.575  Section 515 Rural Rental Housing (RRH) loans.  (Revised 7-12-88, PN 89)

(a)  Amount available for allocations.  See 1940.552 (a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See 1940.552 (b) of this subpart.

The criteria used in the basic formula are:

(1)  State's percentage of National rural population,
(2)  State's percentage of National number of rural occupied substandard units, and
(3)  State's percentage of National rural families with incomes below the poverty level.

Data source for each of these criterion is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight assigned and summed to arrive at a State factor (SF).

     SF = (criterion No. 1 x weight of 33 1/3%)+
          (criterion No. 2 x weight of 33 1/3%)+
          (criterion No. 3 x weight of 33 1/3%)

(c)  Basic formula allocation.  See 1940.552 (c) of this subpart.

(d)  Transition formula.  See 1940.552 (d) of this subpart.

(e)  Base allocation.  See 1940.552 (e) of this subpart.  Jurisdictions receiving administrative allocations do not receive base allocations.

(f)  Administrative allocations.  See 1940.552 (f) of this subpart.  Jurisdictions receiving formula allocations do not receive administrative allocations.

(g)  Reserve.  See 1940.552 (g) of this subpart.

(h)  Pooling of funds.  See 1940.552 (h) of this subpart.

(i)  Availability of the allocation.  See 1940.552 (i) of this subpart.

(j)  Suballocation by the State Director.  See 1940.552 (j) of this subpart.

(k)  Other documentation.  Not applicable.
23
(Revision 2)
(7-12-85) SPECIAL PN

RD Instruction 1940-L

1940.576  Rental Assistance (RA) for new construction.  (Revised 7-12-88, PN 89)

(a)  Amount available for allocations.  See 1940.552 (a) of this subpart.
(b)  Basic formula criteria, data source and weight.  See 1940.575 (b) of this subpart.

(c)  Basic formula allocation.  See 1940.552 (c) of this subpart.

(d)  Transition formula.  See 1940.552 (d) of this subpart.

(e)  Base allocation.  See 1940.552 (e) of this subpart.

(f)  Administrative allocations.  See 1940.552 (f) of this subpart.  Jurisdictions receiving formula allocations do not receive administrative allocations.

(g)  Reserve.  See 1940.552 (g) of this subpart.

(h)  Pooling of funds.  See 1940.552 (h) of this subpart.

(i)  Availability of the allocation.  See 1940.552 (i) of this subpart.

(j)  Suballocation by the State Director.  See 1940.552 (j) of this subpart.

(k)  Other documentation.  Not applicable.

24
(Revision 2)

RD Instruction 1940-L

1940.577  Rental Assistance (RA) for existing projects.

(a)  Amount available for allocations.  See 1940.552 (a) of this subpart.  RA appropriated for existing projects will first be used to replace contracts expiring each fiscal year and for the first few months of the following fiscal year.  This is done to assure continued RA funding.  RA units not needed for replacement purposes will be used for existing multiple family housing projects experiencing servicing problems.

(b)  Basic formula criteria, data source and weight.  No formula or weighted criteria is used to allocate replacement RA.  The basic allocation for replacement RA will be made based on the following:

(1)  Criteria.  This allocation is based on the estimated need to replace RA contracts expiring from the depletion of funds.
(2)  Data source.  The most accurate and current information available from Rural Development computerized data sources.

(c)  Basic formula allocation.  While no formula will be used, the basic allocation will be made to each State according to the need determined using the basic criteria.

(d)  Transition formula.  Not applicable.

(e)  Base allocation.  Not applicable.

(f)  Administrative allocation.  Not applicable.

(g)  Reserve.  See 1940.5522 (g) of this subpart.  The National Office maintains a reserve adequate to compensate for the differences between actual and projected replacement activity.  Units will be administratively distributed for existing housing to either satisfy previously unidentified replacement needs or address servicing situations. Units will be distributed to any State when the Administrator determines that additional allocations are necessary and appropriate.

(h)  Pooling of funds.  See 1940.552 (h) of this subpart.  Units will be pooled at the Administrator's discretion.

(i)  Obligation of the allocation.  See 1940.552 (i) of this subpart.  (Revised 7-12-88, PN 89)

(j)  Suballocation by the State Director.  See 1940.552 (j) of this subpart.

(k)  Other documentation.  Not applicable.

25
(Revision 1)
(7-12-85) SPECIAL PN

RD Instruction 1940-L

1940.578  Housing Preservation Grant (HPG) program.  (Revised 7-12-88, PN 89)

(a)  Amount available for allocations.  See 1940.552 (a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See 1940.575 (b) of this subpart.

(c)  Basic formula allocation.  See 1940.552 (c) of this subpart.

(d)  Transition formula.  See 1940.552 (d) of this subpart.

(e)  Base allocation.  See 1940.552 (e) of this subpart.

(f)  Administrative allocations.  See 1940.552 (f) of this subpart.

(g)  Reserve.  See 1940.552 (g) of this subpart.

(h)  Pooling of funds.  See 1940.552 (h) of this subpart.  Funds may be pooled after all HPG applications have been received and HPG fund demand by State has been determined.  Pooled funds will be combined with the National Office reserve to fund eligible projects.  Remaining HPG funds will be available for distribution for use under the Section 504 program.

(i)  Availability of the allocation.  See 1940.552 (i) of this subpart.

(j)  Suballocation by the State Director.  Not applicable.

(k)  Other documentation.  Funds for the HPG program will be available for a limited period each fiscal year.  Due to the requirements by law to allocate funds on a formula basis to all States and to have a competitive selection process for HPG project selection, Rural Development will announce opening and closing dates for receipt of HPG applications.  After the closing date, Rural Development will review and evaluate the proposals, adjust State allocations as necessary to comply with the law and Program demand, and redistribute remaining unused HPG resources for use under Section 504 (as required by statute).

26
(Revision 1)

RD Instruction 1940-L

 1940.579  Multiple Family Housing appropriations not allocated by State.  (Revised 06-07-99, SPECIAL PN.)

	Funds are not allocated to States.  The following program funds are kept in a National Office reserve and are available as determined administratively:

(a)  Section 514 Farm Labor Housing Loans.  

(b)  Section 516 Farm Labor Housing Grants.  

 1940.580 - 1940.584  [Reserved]

(Continued on page 29)

27
(Revision 2)

(07-12-85)  SPECIAL PN

RD Instruction 1940-L

 1940.585  Community Facility loans.

(a)  Amount available for allocations.  See 1940.552(a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See 1940.552(b) of this subpart.  (Revised 10-22-93, SPECIAL PN.)

(1)  The criteria used in the basic formula are:

(i)  State's percentage of national rural population - 50 percent.

(ii)  State's percentage of national rural population with incomes below the poverty level - 25 percent.

(iii)  State's percentage of national nonmetropolitan unemployment - 25 percent.

(2)  Data source for each of these criterion is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a State factor (SF).  The SF cannot exceed .05.

SF =  (criterion (b)(1)(i) x 50 percent) +
      (criterion (b)(1)(ii) x 25 percent) +
      (criterion (b)(1)(iii) x 25 percent)

(c)  Basic formula allocation.  See 1940.552(c) of this subpart.  States receiving administrative allocations do not receive formula allocations.

(d)  Transition formula.  See 1940.552(d) of this subpart.  The percentage range for the transition formula equals 30 percent 
(+ 15%).

(e)  Base allocation.  See 1940.552(e) of this subpart.  States receiving administrative allocations do not receive base allocations.

(f)  Administrative allocation.  See 1940.552(f) of this subpart.  States participating in the formula base allocation procedures do not receive administrative allocations.

29
(Revision 2)
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
 1940.585 (Con.)

(g)  Reserve.  See 1940.552(g) of this subpart.  States may request funds by forwarding a completed copy of Guide 26 of Subpart A of Part 1942 of this chapter (available in any Rural Development office), to the National Office.  Generally, a request for additional funds will not be honored unless the State has insufficient funds to obligate the loan requested.

(h)  Pooling of funds.  See 1940.552(h) of this subpart.  Funds are generally pooled at mid-year and year-end.  Pooled funds will be placed in the National Office reserve and will be made available administratively.

(i)  Availability of the allocation.  See 1940.552(i) of this subpart.  The allocation of funds is made available for States to obligate on an annual basis although the Office of Management and Budget apportions it to the Agency on a quarterly basis.

(j)  Suballocation by the State Director.  See 1940.552(j) of this subpart.  State Director has the option to suballocate to District Offices.

(k)  Other documentation.  Not applicable.

1940.586 - 1940.587  [Reserved]

(Continued on page 35)

30
(Revision 2)

RD Instruction 1940-L

 1940.588  Business and Industry Guaranteed and Direct Loans.  
(Revised 04-25-03, SPECIAL PN.)

(a)  Amount available for allocations.  See  1940.552(a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See  1940.552(b) of this subpart.  (Revised 10-22-93, SPECIAL PN.)

(1)  The criteria used in the basic formula are:    

(i)  State's percentage of national rural population - 50 percent.

(ii)  State's percentage of national rural population with incomes below the poverty level - 25 percent.

(iii)  State's percentage of national nonmetropolitan unemployment - 25 percent.

(2)  Data source for each of these criterion is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a State factor (SF).  The SF cannot exceed .05.

       SF =  (criterion (b)(1)(i) x 50 percent) +
      (criterion (b)(1)(ii) x 25 percent) +
      (criterion (b)(1)(iii) x 25 percent)

(c)  Basic formula allocation.  See  1940.552(c) of this subpart.

(d)  Transition formula. See  1940.522(d) of this subpart.  The percentage range for the transition equals 30 percent (+ 15%). (Revised 02-04-04, PN 370.)

(e)  Base allocations.  See  1940.552(e) of this subpart.  Jurisdictions receiving administrative allocations do not receive base allocations.

(f)  Administrative allocations.  See  1940.552(f) of this subpart.  Jurisdictions receiving formula allocations do not receive initial administrative allocations.

35
(Revision 3)
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
 1940.588 (Con.)

(g)  Reserve.  See  1940.552(g).  States may request reserve funds from the B&I reserve when all of the state allocation has been obligated or will be obligated to the project for which the request is made. 
(Revised 04-25-03, SPECIAL PN.)

(h)  Pooling of funds.  See  1940.552(h).  Funds are pooled near fiscal year-end.  Pooled funds will be placed in a reserve and made available on a priority basis to all States. (Revised 04-25-03, SPECIAL PN.)

(i)  Availability of the allocation.  See  1940.552(i) of this subpart.  There is a 6-day waiting period from the time project funds are reserved to the time they are obligated.

(j)  Suballocation by the State Director.  Suballocation by the State Director is authorized for this program. (Revised 04-25-03, SPECIAL PN.)

36
(Revision 3)

RD Instruction 1940-L

 1940.589  Rural Business Enterprise Grants.  (Revised 08-20-92, 
SPECIAL PN.)

(a)  Amount available for allocations.  See  1940.552(a) of this subpart.

(b)  Basic formula criteria, data source and weight.  See  1940.552(b) of this subpart.  (Revised 10-22-93, SPECIAL PN.)

(1)  The criteria used in the basic formula are:    

(i)  State's percentage of national rural population - 50 percent.

(ii)  States percentage of national rural population with incomes below the poverty level  25 percent.  
(Revised 04-25-03, SPECIAL PN.)

(iii)  State's percentage of national nonmetropolitan unemployment - 25 percent.

(2)  Data source for each of these criterion is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a State factor (SF).  The SF cannot exceed .05.

      SF =  (criterion (b)(1)(i) x 50 percent) +
      (criterion (b)(1)(ii) x 25 percent) +
      (criterion (b)(1)(iii) x 25 percent)

(c)  Basic formula allocation.  See  1940.552(c) of this subpart.

(d)  Transition formula. See  1940.522(d) of this subpart.  The percentage range for the transition equals 30 percent (+ 15%). Revised 02-04-04, PN 370.)

(e)  Base allocation.  See  1940.552(e) of this subpart.

(f)  Administrative allocation.  Not used.

(g)  Reserve.  See  1940.552(g).  States may request funds by written request to the National Office.  Generally, a request for additional funds will not be honored unless the State has insufficient funds to obligate from the State's allocation.  The National Office may also consider requests to provide funds from the National Reserve for projects that will operate in multiple states.  (Revised 04-25-03, SPECIAL PN.)
37
(Revision 8)
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
 1940.589 (Con.)

(h)  Pooling of funds.  See  1940.552(h).  Funds are pooled near fiscal year-end.  Pooled funds will be placed in the National Office reserve and will be made available administratively.  (Revised 04-25-03, 
SPECIAL PN.)

(i)  Availability of the allocation.  See  1940.552(i) of this subpart.  The allocation of funds is made available for States to obligate on an annual basis although the Office of Management and Budget apportions it to the Agency on a quarterly basis.

(j)  Suballocation by the State Director.  See  1940.552(j) of this subpart.  State Director has the option to suballocate to District Offices.

38
(Revision 7)

RD Instruction 1940-L

 1940.590  Community and Business Programs appropriations not allocated by State.  (Revised and renumbered 7-12-88, PN 89.)

(a)  Watershed Protection Loans, Resource Conservation and Development Loans, and Flood Protection Loans.  State allocations will not be made for these type loans.  Instead, obligating documents may be submitted to the Finance Office when a loan is approved.  Only States that are authorized to process P.L. 534 loans may submit obligating documents to the Finance Office for that type loan.  Resource Conservation and Development (RC&D) loan funds will be used in preference to community facility funds in designated RC&D areas for loan purposes included in Subpart A of Part 1942 of this chapter.

(b)  Indian Land Acquisition.  Control of funds will be retained in the National Office and allocated on an individual case basis.  Requests for funds will be made to the Director, Community Facilities Division, when it is determined the loan can be approved.

(c)  Nonprofit National Corporation Guaranteed Loans and Grants.  Control of funds will be retained in the National Office.  These funds are not available for obligation by States.

(d)  Rural Development Loan Fund Relending Program.  Control of funds will be retained in the National Office.  These funds are not available for obligation by States.

(e)  Technical Assistance and Training Grants.  Control of funds will be retained in the National Office and allocated on a project case basis.  These funds are not available for obligation by States.

(f)  Emergency Community Water Assistance Grants.  Control of funds will be retained in the National Office and allocated on a project case basis.  Requests for funds will be made to the Director, Water and Waste Disposal Division.  (Added 4-4-90, SPECIAL PN.)

(g)  System for Delivery of Certain Rural Development Programs Panel Grants.  Control of funds will be retained in the National Office and made available to eligible States.  (Added 05-06-92, SPECIAL PN.)

(h)  Television Demonstration Grants.  Since this is a demonstration program, all funds are being retained in the National Office.  Funds 
may be requested by sending in attachment 1, section C of RD Instruction 1942-G.  (Added 08-20-92, SPECIAL PN.)

39
(Revision 7)
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
 1940.590 (Con.)

(i)  Section 306C WWD loans and grants in subpart E of part 4284 of this title.  Control of funds will be retained in the National Office and allocated on a project case basis.  Requests for funds will be made to the Director, Water and Waste Disposal Division.  (Added 01-22-93, SPECIAL PN.)

(j)  Rural Cooperative Development Grants.  Control of funds will be retained in the National Office and allocated on a project case basis.  Funds may be requested by sending in exhibit B of RD Instruction 4284-F.  (Revised 08-07-97, SPECIAL PN.)

 1940.591  Community Program Guaranteed loans.  (Revised 3-26-90, SPECIAL PN.)

(a)  Amount available for allocations.  See  1940.552(a) of this subpart.

(b)  Basic formula criteria, data source, and weight.  See  1940.552(b) of this subpart.  (Revised 10-22-93, SPECIAL PN.)

(1)  The criteria used in the basic formula are:    

(i)  State's percentage of national rural population - 50 percent.

(ii)  State's percentage of national rural population with incomes below the poverty level - 25 percent.

(iii)  State's percentage of national nonmetropolitan unemployment - 25 percent.

(2)  Data source for each of these criterion is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a State factor (SF).  The SF cannot exceed .05.

SF =  (criterion (b)(1)(i) x 50 percent) +
      (criterion (b)(1)(ii) x 25 percent) +
      (criterion (b)(1)(iii) x 25 percent)

(c)  Basic formula allocation.  See  1940.552(c) of this subpart.  States receiving administrative allocations do not receive formula allocations.

40
(Revision 7)

RD Instruction 1940-L
 1940.591 (Con.)

(d)  Transition formula.  The transition formula for Community Programs Guaranteed loans is not used.  (Revised 3-26-90, SPECIAL PN.)

(e)  Base allocation.  See  1940.552(e) of this subpart.  States receiving administrative allocations do not receive base allocations.

(f)  Administrative allocation.  See  1940.552(f) of this subpart.  States participating in the formula base allocation procedures do not receive administrative allocations.

(g)  Reserve.  See  1940.552(g) of this subpart.  States may request funds by forwarding a request following the format found in Guide 26 of subpart A of Part 1942 of this chapter to the National Office.  Generally, a request for additional funds will not be honored unless the State has insufficient funds from the State's allocation to obligate the loan requested.  (Revised 3-26-90, SPECIAL PN.)

(h)  Pooling of funds.  See  1940.552(h) of this subpart.  Funds are generally pooled at mid-year and year-end.  Pooled funds will be placed in the National Office reserve and will be made available administratively.

(i)  Availability of the allocation.  See 1940.552(i) of this subpart.  The allocation of funds is made available for States to obligate on an annual basis although the Office of Management and Budget apportions it to the Agency on a quarterly basis.

(j)  Suballocation by State Director.  See 1940.552(j) of this subpart.  State Director has the option to suballocate to District Offices.

(k)  Other documentation.  Not applicable.

 1940.592  Community Facilities Grants.  (Added 04-07-97, SPECIAL PN.)

(a)  Amount available for allocation.  See  1940.552(a) of this subpart.

(b)  Basic formula criteria, data source, and weight.  See  1940.552(b) of this subpart.

(1)  The criteria used in the basic formula are:

(i)  States percentage of National rural population - 50 percent.

41
(Revision 4)
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
 1940.592(b) (Con.)

(ii)  States percentage of National rural population with incomes below the poverty level - 50 percent.

(2)  Data source for each of these criterion is based on the latest census data available.  Each criterion is assigned a specific weight according to its relevance in determining need.  The percentage representing each criterion is multiplied by the weight factor and summed to arrive at a State factor (SF).

			SF	(criterion (b)(1)(i) x 50 percent)
				+ (criterion (b)(1)(ii) x 50 percent)

(c)  Basic formula allocation.  See  1940.552(c) of this subpart.  States receiving administrative allocations do not receive formula allocations.

(d)  Transition formula.  The transition formula for Community Facilities Grants is not used.

(e)  Base allocation.  See  1940.552(e) of this subpart.  States receiving administrative allocations do not receive base allocations.

(f)  Administrative allocation.  See  1940.552(f) of this subpart.  States participating in the formula base allocation procedures do not receive administrative allocations.

(g)  Reserve.  See  1940.552(g) of this subpart.  States may request funds by forwarding Form Letter RD 3570-B-1 to the National Office.  Generally, a request for additional funds will not be honored unless the State has insufficient funds from the States allocation to obligate the grant requested.

(h)  Pooling of funds.  See  1940.552(h) of this subpart.  Funds are generally pooled at midyear and yearend.  Pooled funds will be placed in the National Office reserve and will be made available administratively.

(i)  Availability of the allocation.  See  1940.552(i) of this subpart.  The allocation of funds is made available for States to obligate on an annual basis although the Office of Management and Budget apportions it to the Agency on a quarterly basis.

(j)  Suballocation by State Director.  See  1940.552(j) of this subpart.  State Director has the option to suballocate to area offices.

42
(Revision 1)

RD Instruction 1940-L

 1940.593  Rural Business Opportunity Grants.  (Added 04-25-03, SPECIAL PN.)

(a)  Amount available for allocations.  See  1940.552(a).

(b)  Basic formula criteria, data source, and weight.  See 
 1940.552(b).

(1)  The criteria used in the basic formula are:

(i)  States percentage of national rural population - 50 percent.

(ii)  States percentage of national rural population with incomes below the poverty level - 25 percent.

(iii)  States percentage of national nonmetropolitan unemployment - 25 percent.

(2)  The data source for each criterion is based on the latest census data available. The percentage representing each criterion is multiplied by the weight factor and added to arrive at a State Factor (SF).  The SF cannot exceed .05.   

SF =	(criterion (b)(1)(i) x 50 percent) +
			(criterion (b)(1)(ii) x 25 percent) +
			(criterion (b)(1)(iii) x 25 percent)

(c)  Basic formula allocation.  See  1940.552(c).

(d)  Transition formula.  The transition formula is not used for Rural Business Opportunity Grants (RBOG).

(e)  Base allocation.  See  1940.552(e).

(f)  Administrative allocation. The administrative allocation is not used for RBOG.

(g)  Reserve.  See  1940.552(g).  States may request funds by submitting a copy of RD Instruction 4284-G, Exhibit A, to the National Office.  Generally, a request for additional funds will not be honored unless the State has insufficient funds to obligate from the States allocation.  The National Office may also consider requests to provide funds from the National Reserve for projects that will operate in multiple states.

43
(Added 04-25-03, SPECIAL PN.)
(7-12-85)  SPECIAL PN

RD Instruction 1940-L
 1940.593 (Con.)

(h)  Pooling of funds.  See  1940.552(h).  Funds are pooled near fiscal year-end.  Pooled funds will be placed in the National Office reserve and will be made available administratively.

(i)  Availability of the allocation.  See  1940.552(i).  The allocation of funds is made available to States on an annual basis.

(j)  Suballocation by the State Director. Suballocation by the State Director is authorized for this program.

 1940.594 - 1940.600  [Reserved]

Attachments:  Exhibits A, B, C, and D. 

oOo

44
(Added 04-25-03, SPECIAL PN.)

RD Instruction 1940-L
Exhibit A

ALLOCATION OF PROGRAM FUNDS 

This exhibit provides the allocation for program funds and instructions for the use of those funds.  Planning and the commitment of resources should be based on these allocations.

The methodology and formulas for the allocation of funds to the States is as stated in the Instruction.  Only those areas where it was necessary to provide additional information have been addressed in this exhibit.  Refer to the main body of this Instruction for all basic information on the allocation and use of program funds.  Attachments 1 and 2 of this exhibit provide information on the various programs as follows:

Attachment 1 -
Rural Business-Cooperative Service 
 
Attachment 2 -
Rural Housing Service

Part  I - Rural Community Advancement Program/Rural 
          Housing Assistance Grants 

Part II - Rural Housing Service 
    Subpart A -  Rural Community Advancement Program 
                   Community Facilities
    Subpart B -  Multi-Family Housing (MFH)
    Subpart C -  Single Family Housing (SFH) 

The fund control function is performed by the National Office.  Fund control balances can be obtained on the State Office terminal through APROPTN, the acronym for the Appropriation Accounting System, on the Online Subsystem Selection Menu screen.  Should you have any questions regarding your States distribution balances, call the respective program division.  You can monitor your distribution amount via the Detail File Appropriation Screen.

oOo

(02-17-99)  PN 300

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 1

RURAL DEVELOPMENT
BUSINESS AND COOPERATIVE PROGRAMS

I.  General.  This attachment details funding for programs administered by Rural Development, Business and Cooperative Programs, and includes those administered under a State allocation system as well as those not using such allocations.  (Throughout this attachment the reference to Agency Refers to Rural Development, Business and Cooperative Programs).

A.  Funding Computations.  This attachment provides loan and grant funding allocations available for fiscal year (FY) 2008.  Computations for allocations available to individual States have been performed in accordance with  1940.588 and 1940.589 of this instruction.  Every effort will be made to re-emphasize Rural Developments mission as a provider of affordable credit to those areas of greatest need.  

B.  Rural Area Eligibility.  Program assistance under the Rural Business Program Account(RBPA) is limited to rural areas, as defined in applicable program regulations, with the exception of the following:
 
Business and Industry (B&I) Guaranteed Loans may be made to cooperative organizations in non-rural areas provided the primary purpose of the loan guarantee is for a facility that provides value-added processing for agricultural producers that are located within 80 miles of the facility and the applicant demonstrates that the primary benefit of the loan guarantee will provide employment for residents of a rural area.

Until the release of 2010 Decennial Census date, the following areas will be considered rural for these programs, Rural Business Enterprise Grant (RBEG), Rural Business Opportunity Grant (RBOG), Intermediary Relending Program (IRP), Business and Industry Guaranteed Loan Program (B&I), and Rural Economic Development Loan and Grant Program (REDLG):  

-  City of Berlin, New Hampshire
-  City of Guymon, Oklahoma 
-  City of Shawnee, Oklahoma
-  City of Altus, Oklahoma
-  City of Coachella, California
-  County of Honolulu, Hawaii (with certain areas to be 
   excluded)
- City of Great Falls, Montana (for B&I) 

(02-07-08)  PN 418

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 2

- City of St. Joseph, Missouri (for an application submitted 
   by a farmer-owned cooperative for the purchase and 
   operation of a facility beneficial to the purpose of the 
   cooperative)
-  City of Hidalgo, Texas (RBEG-only)
-  Designated census areas for the Upper Kanawha     
   Valley Enterprise Community, West Virginia, are eligible     
   rural areas for purposes of eligibility for Enterprise 
   Zone/Enterprise Community (EZ/EC) funded programs in the 
   Rural Development mission area; 
-  Municipalities of Vega Baja, Manati, Guayama, Fajardo,
   Humacao, and Naguabo, Puerto Rico shall be eligible for 
   RCAP loan and grant programs and Intermediary Relending
   Program (IRP).
- City of Alamo, Texas; the City of Mercedes, Texas; the the City of Weslaco, Texas; the City of Donna, Texas; the City La Feria, Texas; and the city of Northampton, Massachusetts, (including individuals and entities with projects within the cities) eligible for loans and grants funded through the Rural Business Program account.
-  City of Leavenworth, Kansas, and the City of Lansing, 
   Kansas, as separate geographic entities for purposes of 
   REDLG.
-  The county of Lexington, South Carolina, shall be   
   considered to be a rural area for the purposes of
   financing a farmers market under the Business and
   Industry Loan Guarantee Program in a local area that has
   Rural characteristics as determined by the Secretary.

C.  RBPA Budget Authority.  RBPA budget authority has been allotted to the Rural Business Cooperative Programs for B&I Guaranteed Loans, RBEGs and RBOGs.  

D.  Scope of Work Changes.  For any funds obligated for statutorily authorized programs where funds cannot be used in accordance with the original approved plan of work or Scope of Work, the State Director can approve changes in accordance with their delegated authority, regulations, policy, and statutes, subject to review and concurrence of the National Office.  For EZ/EC and Rural Economic Area Partnership (REAP) set-aside funds, the State Director should coordinate with Cooperative Programs to ensure that changes in the project Scope of Work are consistent with approved benchmarks.  The project file should contain a copy of documentation to verify Cooperative Programs concurrence.  Random reviews of selected projects submitted for funding will be conducted by the National Office prior to States being notified of the awards.

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 3

E.  Obligation Dates.  Throughout this instruction, you will find references where funds have to be obligated by certain dates.  There has been some confusion in the past as to whether reserving the funds on the deadline date fulfills obligation requirements; it does not.  The deadline date we refer to is the last possible date your project can be obligated; you must reserve the funds in the Guaranteed Loan System (GLS) 6 working days before the deadline date in order to fulfill the obligation requirement.

F.  Biobased Products and Bioenergy.  Executive Order 13134, Developing and Promoting Biobased Products and Bioenergy, signed by the President on August 12, 1999, attempts to stimulate the creation and adoption of technologies needed to make biobased products and bioenergy cost-competitive in large national and international markets.  One of the fundamental goals articulated in the Executive Order is to promote national economic growth, with specific attention to rural economic interests through the conversion of renewable farm and forestry resources to affordable electricity, fuel, chemicals, pharmaceuticals, and other materials.  The President has further articulated the importance of sustainable biobased products and bioenergy development in goals that have been established in the Advanced Energy Initiative and the Twenty in Ten biofuels and alternative fuels initiative.  States are encouraged to work with these applicants and consider these applications, where allowed under current program regulations.  Further guidance will be provided, under separate cover, outlining guidelines to utilize in evaluating and processing these applications.

II.  State Allocations.  State allocations are made on an annual basis.  
B&I guaranteed loan and RBEG grant allocations have been calculated in accordance with the methodology and formulas stated in  1940.588 and 1940.589 of this instruction and calculated as program level amounts, not budget authority.  The additional information provided here is coordinated with the format of the regulation.  

A.  Business and Industry Guaranteed Loans.

1. Program level available for allocation.  (See Page 20 for program level available for allocation).

(02-07-08)  PN 418

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 4

2.  Basic formula criteria, data source, and weight.  The census information used in the formula is from the 2000 Census data of rural population, rural population with incomes below the poverty level, and non-metropolitan unemployment. 

3.  Basic formula allocation.  State allocations are shown on page 22 of this attachment.

4.  Transition formula.  Not used.

5.  Base allocation.  The amount of base allocation is $5 million.

6.  Administrative allocation.  Not used. 

7.  Unrestricted Reserve.  Funds will be allocated on a twice weekly competitive basis to States from the National Office Reserve for projects that best meet Agency priorities from funds available at the time of the request.  The cutoff for requests for reserve funds is noon eastern time on Wednesdays and Fridays. 

The amount of National Office Reserve funds available quarterly will be divided by three to determine the amount available monthly.  Funds not used in any month will be carried over to the next month.  Highest priority projects must be funded with State allocations to the extent possible.  National Office Reserve funds may only be requested when the State Office allocation is not sufficient to fund projects ready to be obligated.  Requests for National Office Reserve funding must be accompanied by a list of projects funded this fiscal year and those applications currently on hand.  Information provided is to include date received, current status, and priority score, using the same format as Shown on page 31 of this attachment.  

It has been determined that no Administrator Points will be awarded in FY 2008.  A copy of Appendix C to RD Instruction 4279-B must be attached to the request.  A request for funding should not be submitted unless the project is ready to be obligated.  

The State Director or designee may request funds from the Reserve by 
e-mailing a copy of Appendix C to RD Instruction 4279-B and LAPAS Project Information sheet which has been updated to include program specific data required for each program, (See example on page 33 of this attachment) to the National Office contact on pages 26 and 27 of this attachment).  Requests will be processed

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 5

on a twice weekly basis and States notified.  Funds for any projects funded from the National Office Reserve that are subsequently deobligated cannot be used for funding other projects within the State but, instead, must be returned to the National Office Reserve.

All States will be notified of the project selections.  For projects not selected, States should contact the lenders to advise them and determine if the lenders want the projects to be reconsidered in the next funding cycle.  States are responsible for notifying the National Office of projects that lenders do not want considered in the next funding cycle; these projects will be removed from consideration.

8.  Pooling of funds.  Funds not obligated by the close of business June 30, 2008, will be pooled and revert to the National Office Reserve.  Any funds that are deobligated after the close of business June 30, 2008, will also revert to the National Office Reserve.  Pooled funds will be placed in the National Office Reserve and made available to States on a competitive basis.  States are to immediately notify the National Office of any deobligations by sending a copy of Form RD 1940-10, Cancellation of U. S. Treasury Check and/or obligation, to the National Office B&I Division, Attention:  Andrea Patterson.

9.  Certified Lenders Program (CLP).  RD Instruction 4279-A, 
 4279.43(f)(1), provides that a State may hold an amount in reserve, equal to the proposed loan, for a period of 30 days, pending receipt of a complete application from the CLP lender, provided the complete application is not rejected within that time period.  Funds may not be held in reserve for CLP lenders after pooling.  RD Instruction 4279-A, 
 4279.43(f)(1), provides that the Agency will notify a CLP lender if there is sufficient guarantee authority for the CLP lenders proposed guaranteed loan request.  National Office Reserve funds may not be requested for this purpose.  Furthermore, the State may not request funds from the National Office Reserve if the State has funds outstanding that have been set aside for this purpose.

10.  Funding for B&I Guaranteed Loans where the percentage of guarantee is in excess of 80 percent or for 1 percent guarantee fees.  A limited amount of the annual appropriation for the B&I Guaranteed Loan Program with a percentage of guarantee that exceeds 80 percent and loans with a 1 percent guarantee fee will be available.  The amount of funding available will be apportioned on a quarterly basis.  All requests for authority to approve loans

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RD Instruction 1940-L
Exhibit A, Attachment 1
Page 6

where the percentage of guarantee will exceed 80 percent must be 
e-mailed, including a copy of the LAPAS Project Information Sheet which has been updated to include program specific data required for each program (see example on page 33 of this attachment; to obtain a program specific copy, go to http://teamrd.usda.gov/rd/lapas/leg/default.htm and click on the applicable program).  Also, please refer to http://www.house.gov/house/MemStateSearch.shtml and http://www.senate.gov/general/contact_information/senators_cfm.cfm for correct Representative and Senatorial information required for all LAPAS Project Information sheets in advance of reserving or obligating funds.  Attachments are to be e-mailed to the National Office in accordance with the procedures outlined on pages 26 and 27 of this attachment.  Requests on hand will be processed on a twice weekly basis and States notified.  

Requests must include a copy of the priority score sheet, RD Instruction 4279-B, Appendix C, and written documentation from the lender that the loan will not be made and the project will not be completed without the increased percentage of guarantee.  Not more than 15 percent of the total national appropriation of B&I funding authority will be available for guarantees in excess of 80 percent. 

Where the guarantee fee will be 1 percent, all requests for authority to approve loans must be submitted, in advance of reserving or obligating funds, to the National Office.  Requests on hand will be processed on a weekly basis and States notified.  Requests must include a copy of the priority score sheet and RD Instruction 4279-B, Appendix C.  Not more than 12 percent of the total national appropriation of B&I funding authority will be available for loans with a 1 percent guarantee fee.  
A Federal Register notice announcing these restrictions was published on December 31, 2007.  Seventy-five percent of the funds for EZ/EC and REAP have been reserved to be obligated at a percentage of guarantee in excess of 80 percent and 12 percent of the funds with a guarantee fee of 1 percent.  Additionally, projects located in isolated rural areas of the State of Alaska that are not connected by a road system to other communities are eligible for 1 percent guarantee fees and 90 percent guarantees.  

B.  B&I Direct Loan Program.

There are no funds appropriated this fiscal year for this program.

C.  Rural Business Enterprise Grants (RBEG).   

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 7

1.  Program level available for allocation. See Page 20 for program level available for allocation.

2.  Transportation.  There are two earmarks held in the National Office Reserve for the purpose of providing technical assistance for public transportation. (See Page 20 for earmark allocation.  A notice was published in the Federal Register on November 27, 2007, inviting applications and establishing a time schedule for accepting and processing the applications.  The deadline for applications in the State Office is January 31, 2008.

3.  Basic formula criteria, data source, and weight.  The census information used in the formula is from the 2000 Census data for rural population, rural population with incomes below the poverty level, and non-metropolitan unemployment.

4.  Basic formula allocation.  State allocations are shown on page 23 of this attachment. 

5.  Transition formula.  Not used.
	
6.  Base allocation.  The amount of base allocation is $50,000.

7.  Administrative allocation.  Not used.

8.  Reserve.  Funds from the National Office Reserve will be allocated to the States for projects that best meet Agency priorities according to funds available at the time of the request.  No request for funding will be considered unless the project is ready to be obligated.  RBEG funds set-aside for EZ/EC and REAP, Native American Tribes and Rural Transportation, may be requested in the same manner as regular funds (see page 32 of this attachment for funding cycle information).  Applicants must submit their application to the Agency in paper format.  If your application meets more than one earmark, you must inform the National Office from which earmark you want the application to be considered. 

There will be one funding cycle for regular non-set-aside funding.  In order to compete in the National Office Reserve funding cycle, all funds allocated to the State must be obligated in accordance with the funding cycle chart on page 32.  Highest priority projects must be funded with State allocations to the extent possible.  National Office Reserve funds may only be requested when the State Office allocation is not sufficient to fund projects ready to be obligated.  Requests for National Office 

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RD Instruction 1940-L
Exhibit A, Attachment 1
Page 8

Reserve funding must be accompanied by a list of projects funded this fiscal year and those applications currently on hand.    Information provided is to include date received, current status, and priority score, using the same format as shown on page 34 of this attachment.

You may only have up to two requests competing in the National Office Reserve funding cycle; however, this is not applicable to multi-State projects.  This is not applicable for any separate earmark funding cycles, such as EZ/EC and REAP.  Requests for National Office Reserve funding will include a signed Certification for Request of Funds (see page 24 of this attachment); State Project List (see page 34 of this attachment); Priority Score Sheet, RD Instruction 1942-G, Attachment 1, including backup scoring documentation and LAPAS Project Information Sheet which has been updated to include program specific data (see example on page 33 of this attachment; to obtain a Program specific copy, go to http://teamrd.usda.gov/rd/lapas/leg/default.htm and click on the applicable program).  Also, please refer to http://www.house.gov/house/MemStateSearch.shtml and http://www.senate.gov/general/contact_information/senators_cfm.cfm for correct Representative and Senatorial information required for all LAPAS Project Information sheets.    Random reviews of projects selected for funding will be conducted by the National Office prior to States being notified of awards.  The request must be e-mailed to the National Office as outlined on pages 26 and 27 of this attachment after the grant has been developed to the point where it can be approved upon notification that funds are available.  Multi-State projects will be considered for funding from the National Office Reserve.  The originating office will receive a confirmation from the National Office that the National Office received all requests sent via e-mail.  Consideration will not be given to requests received in the National Office after the dates indicated on page 32 of this attachment listing funding cycles for FY 2008. 

All applications on the National Office Reserve list for FY 2007 were removed on October 1, 2007.  Should the State Office determine that those projects are still viable, they may use their State allocation to fund the projects, or, if the State allocation has been committed to higher scoring projects, the State Office may resubmit the requests for competition. 

9. Pooling of funds.  Except for the Native American and Rural
Transportation Earmarks, funds must have an obligation date of no later than June 30, 2008, or they will revert to the National Office for

 
 
RD Instruction 1940-L
Exhibit A, Attachment 1
Page 9

redistribution.  For Native American projects, there will be one funding cycle (see page 32 of this attachment).  Any applications for Native American funds received after the cutoff date will be considered on an individual basis for any remaining available funds.  Any funds not obligated by September 30, 2008, will carry over to FY 2009.

III.  Funds Not Distributed to States.  All funds for these programs are retained in the National Office.  

A. Intermediary Relending Program (IRP). See page 20 for program level.

IRP funds set-aside for EZ/EC and REAP, Native American Tribes, and Mississippi Delta Region Counties may be requested in the same manner as regular program funds and will be allocated according to the schedule on page 32 of this attachment.  If you have any applications that qualify for set-aside funds, including applications for which you have previously submitted a score sheet, be sure to notify the National Office.  Also, please indicate on the Project Information Sheet if a project qualifies for more than one source of funding. 

Pooling of funds.  EZ/EC and REAP, Native American, and Mississippi Delta Region Counties set-aside funds awarded to States must have an obligation date of no later than June 30, 2008, before the funds revert to regular program use.  

Non-set-aside funds will be made available in accordance with the schedule outlined on page 32 of this attachment and based on national competition.  Applications must be received by the National Office prior to the date outlined on page 32 of this attachment to be considered during the referenced periods for an allocation of funds.  For this fiscal year, the initial funding selection will include applications that were received in the National Office by October 31, 2007.  No request for funding will be considered unless the project is ready to be obligated.  E-mail requests for IRP funding will include a Certification for Request of Funds (see page 24); the administrative point justification in accordance with RD Instruction 4274-D,  4274.344(c)(6) and a priority score sheet in accordance with RD Instruction 4274-D, Exhibit C; LAPAS Project Information Sheet which has been updated to include program specific data required for each program (see example on page 33 of this attachment; to obtain a program specific copy, go to http://teamrd.usda.gov/rd/lapas/leg/default.htm and click on the applicable program).  Also, please refer to http://www.house.gov/house/MemStateSearch.shtml and 

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RD Instruction 1940-L
Exhibit A, Attachment 1
Page 10

http://www.senate.gov/general/contact_information/senators_cfm.cfm for correct Representative and Senatorial information required for all LAPAS Project Information sheets. 
Random reviews of selected projects submitted for funding will be conducted by the National Office prior to States being notified of the awards.  Funding requests should be e-mailed to the addresses listed on pages 26 and 27 of this attachment

B.  Rural Business Opportunity Grants (RBOG).  See Page 20 for program level including funding earmarks.  Funds will be allocated to the States for projects that best meet Agency priorities. A Federal Register notice announcing funding for FY 2008 will be published in the near future. In order to distribute limited non-set-aside funds among more communities and applicants, no more than $50,000 in RBOG funds may be allocated to a single State or sub-State applicant or project.  For multi-State projects, no more than $150,000 in RBOG funds may be allocated to a single applicant.  These limits do not, however, apply to set-aside funds.

Requests for funding will include a Certification for Request of Funds (see page 24 of this attachment); a Priority Score Sheet, 
RD Instruction 4284-G, Exhibit B) including backup scoring documentation; and a LAPAS Project Information Sheet which has been updated to include program specific data required for each program (see example on page 33 of this attachment); to obtain a program specific copy, go to http://teamrd.usda.gov/rd/lapas/leg/default.htm and click on the applicable program).  Also, please refer to http://www.house.gov/house/MemStateSearch.shtml and http://www.senate.gov/general/contact_information/senators_cfm.cfm for correct Representative and Senatorial information required for all LAPAS Project Information sheets.  For funding cycle information, see page 22 of this attachment.  The deadline for the receipt of applications in the State Office is March 31, 2008.  Applicants may submit their application to the Agency in either electronic format via Grants.gov or paper format.  There will be one funding cycle for regular, non-set-aside funds.  Random reviews of selected projects for funding will be conducted by the National Office prior to States being notified of awards.  Requests for National Office Reserve funding must be accompanied by a list of applications currently on hand.  The limitation on the number of applications you can submit to the National Office is not applicable for any separate set-aside funding cycles, such as EZ/EC and REAP.  The requests must be e-mailed to the National Office as outlined on pages 26 and 27 of this attachment after the docket has been developed to the point where the grant can be approved upon notification that funds are available.  No request
 
 
 
RD Instruction 1940-L
Exhibit A, Attachment 1
Page 11

for funding will be considered unless the project is ready to be obligated.  All applications on the National Office Reserve list for FY 2007 were removed on October 1, 2007.  Should the State Office determine that those projects are still viable, the State Office may resubmit the requests for competition.  

C.  Rural Economic Development Loan (REDL) Program.  See Page 20 for program level. The maximum amount per any one project will be announced in a Federal Register publication in the near future.  Selections will be made in the National Office based on national competition.  Please refer to page 32 of this attachment for funding cycles for FY 2008.  Each application will continue to be considered each quarter until it has been selected for funding or considered in four consecutive quarterly cycles.  Requests for funds will include a signed Certification for Request of Funds (see page 24 of this attachment); Application Analysis and Project Evaluation Summary; and LAPAS Project Information Sheet which has been updated to include program specific data required for each program (see example on page 33 of this attachment; to obtain a program specific copy, go to http://teamrd.usda.gov/rd/lapas/leg/default.htm and click on the applicable program).  Also, please refer to http://www.house.gov/house/MemStateSearch.shtml and http://www.senate.gov/general/contact_information/senators_cfm.cfm for correct Representative and Senatorial information required for all LAPAS Project Information sheets.  This information is to be e-mailed to the National Office as outlined on pages 26 and 27 of this attachment.  No request for funding will be considered unless the project is ready to be obligated.  

The eligibility requirements under the REDLG program are included under the FY 2008 Appropriations Bill.  Under the FY 2008 appropriation, an organization eligible to apply for REDLG funding is described as:

1.  any former Rural Utilities Service borrower that has repaid or prepaid an insured, direct, or guaranteed loan under the Rural Electrification Act (Act);

2.  any not-for-profit utility that is eligible to receive an insured or direct loan under such Act; or

3.  any borrower under such Act.

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RD Instruction 1940-L
Exhibit A, Attachment 1
Page 12

D.  Rural Economic Development Grant (REDG) Program.  At the present time, no funding is available for this program. Should funding become available, the amount of funding and the maximum amount per any one project will be announced in a Federal Register publication.  Applications will be processed in the State Office.  Selections will be made in the National Office based on national competition.  Each application will continue to be considered each quarter until it has been selected for funding or considered in four consecutive quarterly cycles.  Requests for funding will include a Certification for Request of Funds (see page 24 of this attachment); Application Analysis and Project Evaluation Summary; and a LAPAS Project Information Sheet which has been updated to include program specific data required for each program (see example on page 33 of this attachment); Applicants must submit applications to the Agency in paper format.  These attachments are to be e-mailed to the National Office as outlined on pages 26 and 27 of this document.  No request for funding will be considered unless the project is ready to be obligated.

Applications will be accepted for a combination loan and grant from one Rural Utilities Program borrower to finance the same project under this program as well as dual applications where two Rural Utilities Program borrowers wish to simultaneously participate in financing portions of the same ultimate recipient project.
 
E.  Renewable Energy Systems and Energy Efficiency Improvement Program (Section 9006).  See page 21 for program level.  A Federal Register Notice will be published in the near future announcing the grant program. 

For all loan, grant, and combination packages, the following will apply:  Funding requests must be submitted in accordance with the instructions below. No funding request will be considered unless the environmental assessment and technical merit determinations are complete and the project is otherwise ready to be obligated.  In order to ensureeffective tracking of funding requests, packages must be sent via overnight express utilizing the U.S. Postal Service or a private express carrier, provided the package can be traced with an electronic tracking number.  In addition to submitting the package, an e-mail must be sent to the National Office as outlined on pages 26 and 27 of this attachment.
 
1.  Renewable Energy Systems and Energy Efficiency Improvement Grant (Section 9006 Grants). Applications will be processed in the State Office.  Applicants may submit their application to the Agency in either electronic format via Grants.gov or paper format.  Selections will be made in the National Office in accordance with the Notice of Funding
 

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 13

Availability to be published in the near future.  Please refer to page 32 of this attachment for funding cycles and deadlines.  Requests for funding are to include the following:  (1) The priority score sheet with supporting documentation tabbed and numbered for each criteria, to include all calculations for each scoring criteria.  (The Review Committee will only consider awarding points whenproperly organized supporting documentation and fully understandable calculations are provided); (2) a copy of the executed project summary; (3) a copy of LAPAS Project Selection Notice; (4) a copy of the results of the technical review.The e-mail must include the name of the applicant, the date the package was sent, the tracking number, the type of assistance requested, and the amount of the request; and (5) evidence of demonstrated financial need. 

2.  Renewable Energy Systems and Energy Efficiency Improvements Guaranteed Loan Program (Section 9006 Loans). Funds will be allocated on an on-going basis to States from the National Office Reserve for projects that best meet Agency priorities from funds available at the time of the request.For funding requests within the States approval authority, the State Director or designee mayrequest funds from the reserve by e-mailing a copy of the priority score sheet, with supporting documentation, LAPAS Project Selection Notice; and a copy of the results of the DOEs technical review.

For guaranteed loans that exceed the States delegation of authority, the State Office will be required to submit the complete application to the National Office for review and funding consideration.

All State Offices will be notifiedas to the results of the National Office and Loan Committee reviews. In the event an application for a guarantee is not approved, the National Office will indicate the weaknesses and identify ways to mitigate same. The State Office will notify the lender. Such loan guarantee applications may only be resubmitted after weaknesses are addressed. Weaknesses on fundable applications will be addressed as loan conditions.Any guaranteed loan funds that are not obligated byJuly 15, 2008, will be pooled and revert to the National Office reserve for loan use. 

3.  Combination Renewable Energy Systems and Energy Efficiency Guaranteed Loan and Grant Applications (Section 9006 combination packages).  All combination Guaranteed Loans and Grant packages

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RD Instruction 1940-L
Exhibit A, Attachment 1
Page 14

submitted will be considered through a competitive process in accordance with the Notice of Funding Availability. Requests on hand as of the 1st and 15th of the month will be processed and States notified. The Agency will collect all combination packages submitted and score the grant portion of each under the bi-weekly competition. Those packages, for which the grant portion is deemed acceptable, including demonstrated financial need, will be considered for loan funding. This method will ensure that no loan is approved without the grant leveraging it needs, and minimize delays on the loan portion of application decisions.  Any combination package for which the grant portion is deemed unacceptable may be considered as a loan-only request. 

F.  Biomass Research and Development Grants (Section 9008).  Procedures for applying will be announced in a Federal Register notice to be published by the Department of Energy at a later date.

Through an Interagency Agreement with the Department of Energy, the National Energy Laboratory will be responsible for the intake and processing of applications.  Applications must be submitted using a two-part process that includes pre-applications which are accepted from invited successful pre-applicants only.  All Section 9008 applications should be submitted electronically, via Grants.gov.  

G.  Value-Added Agricultural Market Development Grant Program (VAPG).  See page 21 for program level.  The VAPG program encourages independent agricultural commodity producers to further refine or enhance their products thereby increasing their value to end users and increasing the returns to producers.  Grants may be used for planning purposes such as conducting feasibility analyses or developing business plans, or for working capital accounts to pay salaries, utilities, and other operating costs.  While this program uses extensive resources from the State Offices, no funds are allocated to the States.  

H.  The Agricultural Marketing Resource Center (AgMRC).  See page 21 for program level.  AgMRC is an electronically-based information center to create, process, analyze, and present information on value-added agriculture.  The center is housed at Iowa State University; however, it has partners at Kansas State University and the University of CaliforniaDavis.  The center provides producers, processors, and other interested parties with critical information necessary to build successful value-added businesses.  No funds are allocated to the State Offices; however, the Iowa State Office helps monitor the Center.  Since the passage of the Farm Bill, funding for AgMRC has been set at 

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 15

5 percent of the funding made available to the other value-added programs.  

I.  Rural Cooperative Development Grant Program (RCDG).  See page 21 for program level.  RCDG grants are made to nonprofit corporations including institutions of higher education to establish and operate centers for cooperative development and to improve the operations of existing cooperatives. Centers provide a variety of cooperative development activities that include conducting feasibility and marketing studies, developing business plans, marketing strategies, and by-law provisions, and providing educational and training sessions.  No funds are allocated to the State Offices; however, the State Offices are responsible for monitoring those centers that received grant funds.  

J.  Grants to Assist Small Minority Producer (SMP).  See page 21 for program level.  The SMP makes funding available to cooperatives or associations of cooperatives whose primary focus is to provide assistance to small, minority producers.  No funds are allocated to the State Offices; however, the State Offices are responsible for monitoring those centers that received grant funds.

K.  The Appropriate Technology Transfer for Rural Areas (ATTRA).  See page 21 for program level.  ATTRA provides information to farmers, extension agents, and other rural residents on a variety of sustainable agricultural practices that include both cropping and livestock operations.  The program encourages agricultural producers to adopt sustainable agricultural practices, which allow them to maintain or improve profits, produce high quality food, and reduce adverse impacts to the environment.  This program is administered exclusively in the National Office.  

L.  Cooperative Agreements.  See page 20 for program level.  Cooperative Agreements are contractual agreements between the Federal government and another party to accomplish a specific public purpose in which both the government agency and the recipient must be substantially involved.  While State Offices may participate in the activities, funds are not allocated to the State Offices.  

IV.  Set-aside Funds.  See Page 21 for funding levels.  All set-aside funds will be retained in the National Office and allocated in accordance with page 32 of this attachment.  All funds are retained in the National Office.  See pages 20 and 21 for program level.  Set-aside funds will be kept in a National Reserve fund and allocated on a national competitive basis, in accordance with the schedule outlined on page 32 of this attachment.  Funds cannot

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RD Instruction 1940-L
Exhibit A, Attachment 1
Page 16

be used for purposes other than set-aside program purposes.  The following amounts are available this fiscal year:

A. Native American Set-aside Funds.  Native American set-aside funds will be used for projects where at least 75 percent of the benefits of the project will be received by members of a Federally Recognized Native American Tribe. Waiver of the 75 percent minimum is possible on a case-by-case basis if the project will otherwise provide significant benefits to members of Federally Recognized Native American Tribes.  Requests for exceptions must be submitted to the Administrator.  The Administrator must approve all waiver requests.

Requests should clearly document how the specific project meets the above criteria to qualify for the set-aside funds.  Requests not providing this documentation will be returned to the State. Procedures to be followed in the distribution of these funds are addressed under applicable program funding allocation procedures of this attachment.  Except for IRP, funds not used during FY 2008 will be carried over to 
FY 2009 for funding of Native American projects.   

For IRP, funds will be available for Native American projects through June 30, 2008.  This means that set-aside funds must have an obligation date of no later than June 30, 2008.  After that date, any remaining funds not obligated will revert to the regular IRP reserve.

B. Delta Regional Authority (DRA) Set-aside Funds.  RBPA set-aside funds plus any carryover will be available to the DRA to provide assistance for any purpose under RBPA to businesses and residents residing in the Lower Mississippi Delta designated counties.  Set-aside funds will be kept in the National Office Reserve and awarded to the DRA upon receipt of an application complete with a Scope of Work identifying the intended use of the funds.  Any RBPA set-aside funds not used in FY 2008 will be carried over into FY 2009.  

C. Mississippi Delta Region Counties IRP Set-aside Funds.  IRP set-aside funds will be made available for projects located in designated Mississippi Delta Counties.  Set-aside funds will be kept in the National Reserve and awarded in accordance with the schedule on page 32 of this attachment.  Funds can be used for projects where at least 75 percent of the benefits of this project will be received by residents within one or more of the designated counties.

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 17

D. EZ/EC and REAP Set-aside Funds.  EZ/EC and REAP set-aside funds will be kept in a Reserve fund and controlled by the National Office.  Funds may be requested in the same manner as requesting Reserve funds for regular programs.  The set-aside funds will be available for EZ/EC and REAP projects through June 30, 2008.  This means that set-aside funds must have an obligation date of no later than June 30, 2008.

After that time, any remaining unobligated funds will be pooled and revert to regular program use.  This includes funds that have been allocated to States but have not been obligated (see page 32 of this attachment for funding cycle information).  

The Benchmark Management System (BMS) allows rural communities located throughout the Nation to maintain their own activity work plans, budgets, and status reporting on-line via the web.  In order to be eligible for competition for EZ/EC and REAP set-aside funds, you must submit a copy of the BMS documents identifying your project or include the specific benchmark number in your request for funds.  Please do not submit any requests for projects not specifically identified in the BMS documents.  

EZ/EC and REAP set-aside funds will be used for projects identified in the EZ/EC or REAP Strategic Plan and BMS documents, provided at least 75 percent of the benefits of the project will be received by residents within the EZ/EC and REAP census tract boundaries.  Waiver of the 75 percent minimum is possible on a case-by-case basis if the project would otherwise provide significant benefits to the EZ/EC and REAP areas.  Requests for waivers should be submitted to the Administrator, with a copy to the Cooperative Programs-EZ/EC Program.

E.  Pooling of Set-aside Funds.  

1.  Native American Set-aside Pooling of Funds.  There will not be a pooling of funds for the Native American funds.  For Native American projects, there will be one funding cycle (see page 32 of this attachment).  Any applications for Native American funds received after the cutoff date will be considered on an individual basis for any remaining available set-aside funds.  Any B&I, RBEG, or RBOG funds not obligated by September 30, 2008, will carry over into FY 2009.  Any IRP set-aside funds not obligated by June 30, 2008, will be pooled and revert back to the regular IRP fund.

2. Rural Business Opportunity Grant Set-aside Funds (RBOG).  RBOG funds set-aside for EZ/EC and REAP and Native American Tribes may be requested in the same manner as regular funds and will be 

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RD Instruction 1940-L
Exhibit A, Attachment 1
Page 18

allocated according to the schedule on page 32 of this attachment.  Any awarded EZ/EC and REAP applications not obligated by June 30, 2008, will be pooled and revert to the National Office Reserve.  If your application meets more than one earmark, inform the National Office from which earmark you want that application to be considered.

3. The North American Development Bank (NADBank) Initiative.  Loans made under this authority are processed under provisions of the Memorandum of Understanding (MOU) between USDA and Treasury, Guidelines for the Community Adjustment and Investment Program (CAIP), CAIP Policies and Procedures, and RD Instructions 4279-A and B, as if they were regular B&I Guaranteed Loans.  Loans made under this authority are serviced in accordance with RD Instruction 4287-B.  Funding under this program may be used to assist businesses in CAIP-eligible areas by paying the loan subsidy or the guarantee fee, but not both.  The loan cost-per-job created cannot exceed $70,000 (computed on the guaranteed portion and excluding jobs saved) and any debt refinancing must be less than half the total loan amount. 

Because of the high CAIP subsidy rate of 9.15 percent, NADBank is only interested in providing the loan subsidy for loans to businesses that will have an impact on the community by providing necessary or essential services or by showing the promise for continued growth, either directly or through the catalytic impact of the transaction.  The business should be well positioned in industry sectors considered viable and growing versus mature and declining, e.g., textiles and sewing. The jobs should provide wages that are at least equal to the average wage in the county where the business is located.  The company'semployees should have an opportunity for advancementand they should receive or be eligible for benefits. Therefore, when you receive an application for a business in a CAIP-eligible area, and you would like NADBank to consider paying the loan subsidy, you should call Hugh Loftus, Director, United States Adjustment and Investment Program, at (562) 908-2100 and discuss the merits of the proposal.  Mr. Loftus will then provide you with a letter of findings with a recommendation, and with a copy to Andrea Patterson.  This conversation should take place early in your review of the proposal, well before loan approval.  Up to 50 percent of FY 2008 CAIP funding used to pay loan subsidy can be used for loans with a guarantee percentage exceeding 80 percent, and any such request must include a strong justification.  Therefore, before a loan exceeding 80 percent is obligated, an equal or greater amount must have been obligated at 80 percent or lower.  This limit does not apply to loans where NADBank pays only the guarantee fee.  Requests for funds (guarantee fee or loan 

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 19

subsidy) should be e-mailed to Steve Levy (levysteve@mail.com) and the National Office as outlined on pages 26 and 27 of this ttachment.  The request should include the Endorsement Checklist (pages 28 thru 30 of the attachment).  The National Office will present the request to the CAIP Finance Subcommittee for funding, and advise the State Office when the requested funds are available.  For loans exceeding the State Directors delegated B&I approval authority, prior concurrence of the Administrator should be obtained.  The CAIP guidelines, policies and procedures, and list of CAIP-eligible areas are available on NADBanks Web site at www.nadbank-caip.org.

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RD Instruction 1940-L
Exhibit A, Attachment 1
Page 20

Tomatoes 
A.  Business and Industry Guaranteed Loans
Program level available for allocation. 
Amt avail. including carryover ($465,316,140.27)	 1,458,316,140.27
Less National Office Unrestricted Reserve		   218,784,140.27 
Basic formula amount			             1,239,532,000.00 

B.  Rural Business Enterprise Grants (RBEG)   
Program level available for allocation.
Amount available including carryover ($5,496,026)   $44,223,026.01
Less EZ/EC							     7,251,900.00
     Less MS Delta (DRA)				           2,979,000.00
Less Rural Transportation Earmark 	                   493,000.00
Less Native American Tribes Transportation Earmark      248,250.00
Less Native American Tribes				     2,733,750.00
Less National Office Unrestricted Reserve	           6,658,126.00
Basic formula amount    		                     $23,859,000.01

C. Delta Regional Authority Grants (DRA)
     Program level available for allocation.
Amount      	     						    $2,979,000.00

D.  Intermediary Relending Program
Program level available for allocation.
Amount available						   $33,536,034.00
Less EZ/EC and REAP					     2,037,397.99
     Less MS Delta					           7,985,211.00
     Less IRP Federally Reorganized Native Amer. Tribes    3,991,447.88
     Amount available			                      19,521,977.13

E.  Rural Business Opportunity Grant Program 
Program level available for allocation.
Amt available (including carryover $152,110)   	    $2,634,610.17
Less EZ/EC								 990,000.00
Less Native American						 990,000.00
Amount available							 654,110.17
										
F.  Rural Economic Development Loan Program 
Program level available for allocation.
Amount available (including carryover $43,656)      $33,120,656.53

G.  Rural Economic Development Grant Program 
Program level available for allocation.  
Amount    								      $0.00 

At the present time, no funding is available for this program. Should funding become available, the amount of funding and the 

RD Instruction 1940-L
Exhibit A, Attachment 1
       Page 21

maximum amount per any one project will be announced 
in a Federal Register publication.  

H.  Section 9006 Renewable Energy Systems and Energy 
Efficiency Improvement Grant 
Program level available for allocation.  
Amount		 						    $15,888,000.00

Section 9006 Renewable Energy Systems and Energy
Efficiency Guaranteed Loan Program 
Program level available for allocation.
Amount						               $204,953,560.00

I. Value-Added Agricultural Market Development 
Grant Program
Program level available for allocation.		  
Amount                                               $18,867,000.00 

J.  The Agricultural Marketing Resource Center   
Program level available for allocation.		       
Amount                                                  $943,350.00 

K. Rural Cooperative Development Grant Program
Program level available for allocation.
Amount                               		     $4,424,000.00 

L. Grants to Assist Small Minority Producer
Program level available for allocation.
Amount                                                $1,463,000.00

M. The Appropriate Technology Transfer for Rural
Areas
Program level available for allocation.
Amount                                                $2,582,000.00

N. Cooperative Agreements
Program level available for allocation.               
Amount								       $492,000.00

(02-07-08)  PN 418 

Exhibit A, Attachment 1, Pages 22 and 23 in PDF only.

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 24

CERTIFICATION FOR REQUEST OF FUNDS

Program:   __________________________________________
                                                          
Name of Applicant:   _________________________________

Amount of Funds Requested:   __________________________

Type of Funds:   _____________________________________	

I HEREBY CERTIFY THAT:

1.  All priority points are accurate according to the regulations of the program for which the funds are being requested.

2.  The applicant is eligible under the regulation from which funds are being requested, the proposed loan/grant is for an eligible purpose, and the proposed loan/grant complies with all applicable statutes and regulations.

3.  For funds requested from the EZ/EC/REAP earmark, at least 75 percent of the benefits of the project will be received by residents within the designated boundaries.  Set-aside funds will be used for projects identified in the EZ/EC/REAP Strategic Plan and benchmark documents.  The benchmark and task number is: ______________________.

4.  If funds are requested from the Native American earmark, at least 75 percent of the benefits of the project will be received by members of a Federally Recognized Native American Tribe.

5.  If funds are requested from the Mississippi Delta earmark, at least 75 percent of the benefits of the project will be received by residents within one or more lower Mississippi Delta designated counties.

6.  Adequate documentation to justify points is part of the file and can be clearly discerned if the file is requested for review.

7.  All other sources of funds (leveraging) have been verified and are/or will be available at the start of the project. 

BY:   _______________________________
       State Director, Rural Development 

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 25

Revised Guide for Recommending Administrative Points 
FOR FISCAL YEAR 2008 IRP APPLICATIONS

Applicant:  ____________________________________________________________
State:  ________________________________
	
	Administrative Point Criteria

                                                                 (Points) 	Score
1.	Assuming there is adequate documentation of need for the 
amount requested.  The amount of funds requested in 
	relation to the amount of need:			 4 pts         
      

2.	A particularly successful business development record 
and/or excellent utilization of a previous IRP loan:  	 4 pts

3.	A service area with no other IRP coverage:
(Disregard coverage by multi-State intermediaries or
intermediaries that specialize in indirect business-related
financing, such as only loans for water/sewer or for 
transportation.  

	No coverage:                                        	15 pts  
		
		Some:										 5 pts
 
4.	A service area with severe economic problems:
Such as communities that have remained persistently 
poor over the last 60 years or have experienced long-
term population decline or job deterioration.  			 5 pts

5.	A service area with emergency conditions caused by 
a natural disaster or loss of a major industry:  	 	 2 pts

6.    A work plan that is in accord with a strategic plan:
Particularly a plan prepared as part of a request for 
an Empowerment Zone/Enterprise Community 
designation or Champion Community or work plan  
identified in State Office Strategic Plans.			             5 pts

Any combination may be used up to the maximum of 35 points.

Total Administrative Points Awarded:                                _____     

(02-07-08)  PN 418

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 26

E-mail addresses by task

Acknowledgement of receipt of all e-mail requests will be provided by the National Office.

RBPA Transfer Requests
Original to:  Sylvia Neal, (sylvia.neal@wdc.usda.gov)
Copies to:    Andrea Patterson, (andrea.patterson@wdc.usda.gov) 
	             Maria Cartagena, (maria.cartagena@wdc.usda.gov)	 
			 
Set-aside B&I Funding Requests
Original to:  Andrea Patterson (andrea.patterson@wdc.usda.gov)
Copy to: 	 Fred Kieferle (fred.kieferle@wdc.usda.gov)

Set-aside RBEG and RBOG Funding Requests
Original to:  Cindy Mason, (Cindy.Mason@wdc.usda.gov)
Copy to:      Maria Cartagena, (maria.cartagena@wdc.usda.gov
Copy to:	 Deidra Garris, (deidra.garris@wdc.usda.gov)

IRP Application Submission
At least 5 days prior to submission of an IRP application to the National Office notify via e-mail. 
Original to:  Lori Washington, (Lori.Washington@wdc.usda.gov)  
Copy to:      Maria Cartagena, (maria.cartagena@wdc.usda.gov

IRP Funding Requests
Original to:  Lori Washington (Lori.Washington@wdc.usda.gov)  
Copy to: 	 Maria Cartagena (maria.cartagena@wdc.usda.gov
Copy to:	 Deidra Garris, (deidra.garris@wdc.usda.gov)

REDLG Funding Requests
Original to:  Melvin Padgett (Melvin.padgett@wdc.usda.gov)
Copy to:	 Maria Cartagena (maria.cartagena@wdc.usda.gov

RBEG Funding Requests
Original to:  Cindy Mason(Cindy.Mason@wdc.usda.gov)
Copy to:	 Maria Cartagena (maria.cartagena@wdc.usda.gov)
Copy to:	 Deidra Garris, (deidra.garris@wdc.usda.gov)

9006 Funding Requests
Original to:  Frederick Petok (Frederick.petok@wdc.usda.gov)
Copy to:      Maria Cartagena (maria.cartagena@wdc.usda.gov
Copy to:	 Alice Thompson, (alice.thompson@wdc.usda.gov)
 

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 27

B&I Unrestricted Reserve
Original to:  Andrea Patterson (andrea.patterson@wdc.usda.gov)
1st copy to:   Kenya Nicholas (Kenya.Nicholas@wdc.usda.gov)
2nd copy to:   Fred Kieferle (fred.kieferle@wdc.usda.gov)  

B&I Guaranteed Loans where percent of guarantee exceeds 80 percent 
Original to:   Andrea Patterson (andrea.patterson@wdc.usda.gov)
1st copy to:    Fred Kieferle (fred.kieferle@wdc.usda.gov) 
2nd copy to:    Kenya Nicholas (kenya.nicholas@wdc.usda.gov)

B&I Guaranteed Loans requesting 1 percent guarantee fee 
Original to:   Andrea Patterson (andrea.patterson@wdc.usda.gov)
Copy to:       Fred Kieferle (fred.kieferle@wdc.usda.gov)  

NADBank 
Original to:   Donetta Rigney (Donnetta.Rigney@wdc.usda.gov)
Copy to: 	  Fred Kieferle (fred.kieferle@wdc.usda.gov)
Copy to:       Andrea Patterson (andrea.patterson@wdc.usda.gov)
Copy to:       Pandor Hadjy (pandor.hadjy@wdc.usda.gov)

RBEG National Office Reserve competition
Original to:     Cindy Mason (cindy.mason@wdc.usda.gov)
Copy to:	 Deidra Garris, (deidra.garris@wdc.usda.gov)
E-mail copy to:  Maria Cartagena (maria.cartagena@wdc.usda.gov)

(02-07-08)  PN 418

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 28

ENDORSEMENT CHECKLIST FOR THE CAIP FINANCE COMMITTEE

Borrower Name: 

Request for CAIP to pay:  (Insert guarantee fee or loan subsidy) in the amount of $_______.    See special requirements in 1940-L package if the request is for loan subsidy.

Location:  City, State, (County)

Area Eligibility:  You need to choose the correct description of why the area is eligible.  In some cases you will need to access data on the Internet and fully discuss why the area is eligible.  You should use some variant of ONE of the following three statements, each of which meets the Finance Committee requirement for certification that the area where the borrower will be applying the loan proceeds is eligible for USDA under the CAIP.   

Unemployment data are available at:
http://naid.sppsr.ucla.edu/NADBANK/NDB_COLD_FUSION_ROOT/index.cfm

This area has a rural Beale (Rural-Urban Continuum) Code and is an eligible area designated by the Finance Committee.

This county has an urban Beale Code, but the area in which the new facility [substitute the right description] is being constructed is eligible for B&I loans and the county has an unemployment rate of ___ percent, which is at least 1 percent over the national average.

This county has an urban Beale Code, but the area in which the new facility [substitute the right description] is being constructed is eligible for B&I loans and the Local Area Unemployment Statistics (LAUS) of the U.S. Department of Labor shows an unemployment rate of ___ percent for the immediate ____ [locality or census tract], which is at least 1 percent over the national average.

Amount/Rate/Term:	$ _______ (full loan amount) at __% or WSJ Prime + __% (or other benchmark) for ___ years).  

Case number:	  (Borrower case number as assigned by State Office)

Loan Purpose:  (Describe purpose of loan)  

Jobs:  Clearly describe the jobs that will be created and saved as a result of the loan (within 2 years of loan closing).  In order to count jobs saved, the loan must actually be preventing the loss of those jobs.  The numbers must be realistic.  This is where the CAIP committee most often questions the proposals.  Describe the quality of the jobs, including average wage or range of wages.  

                                          
RD Instruction 1940-L
Exhibit A, Attachment 1
Page 29

Lender name/location:  

Sources and Uses of funds:  Using the following format, reflect the overall scope of the project and the partnering between different sources of funding, not simply the B&I/CAIP portion.  Identify other sources of funds.   

Uses 		CAIP Loan		Borrower	Locality		Entity A	Totals
Land		           $0		  $50,000	$100,000		           $150,000
Buildings	$150,000		  $25,000			$100,000          $275,000
M&E      	$100,000							           $100,000	
W/C		  $75,000		$275,000				           $350,000	
Fees		    $7,200							           $    7,200	    
Other		  $25,000							           $  25,000	  
Totals:    	$357,200		$350,000	$100,000	$100,000          $907,200				
Collateral summary:  Briefly describe the collateral, including lien position.  Provide the market and discounted net collateral values.  

Guarantees/backing:  Provide name(s) of personal/corporate guarantors, (full/unconditional) or (amount of guarantee), and outside net worth(s).  

Tangible balance sheet equity:  The proforma balance sheet indicates the borrower will have ____ percent tangible balance sheet equity when the guarantee is issued.  As a (new)(existing)  business, this meets the regulatory minimum or (10)(20) percent.   

Loan to job ratio:  $_(loan amt) / __ (#) jobs = $______ per job.  
Guaranteed portion to job: $_(loan amt) X 80% guaranteed = $/   jobs = $per job.  

Guarantee fee needed:  $_______ (loan amt) X 80% guaranteed X .02 = $_____.  (Complete only if the request is for CAIP to pay the guarantee fee, otherwise insert N/A.)

Subsidy needed:  $_______ (loan amt) X .9.15 (for FY 2007) = $_______.  
(Complete only if the request is for CAIP to pay the subsidy, otherwise insert N/A.)

(02-07-08)  PN 418

RD Instruction 1940-L
Exhibit A, Attachment 1 
Page 30

Subsidy required per job:  $___________    ($________ / __ jobs = $______ per job).  (Complete only if the request is for CAIP to pay the 
subsidy, otherwise insert N/A.)

FUNDING APPROVED BY VOTE OF THE FINANCE COMMITTEE:

_________________________________________
CHAIR			DATE

________________	[  ]Yes ________________________   [  ] Yes
Agriculture ___  [  ] No   Treasury		    	    [  ] No

____________________________  [  ]  Yes
Small Business Administration [  ]  No

RD Instruction 1940-L
Exhibit A, Attachment 1
Page 31

BUSINESS AND INDUSTRY GUARANTEED LOAN PROGRAM
NATIONAL OFFICE RESERVE PRIORITY PROJECT SCORING INFORMATION SHEET

Projects Obligated in fiscal year 2008 to Date: 

Per RD Instruction 1940-L, Exhibit A, Attachment 1, page 4, highest priority projects must be funded with State allocations to the extent possible.

A listing of all applications on hand indicating the date each was received, current status, priority score, and a brief explanation of why it was funded in the order in which it was presented or has not yet been funded is to be provided.   

A copy of Appendix C of RD Instruction 4279-B should be attached to the memorandum. 

Name
Priority Score
Amount
Date App. Rec.
Date Obligated




















	
Projects Requested to be Obligated from the National Office Reserve:

Name
Priority Score
Amount
Date App. Rec.




















If a project with a lower priority score was funded ahead of a project with a higher priority score, provide an explanation of why this was done.  

Explain __________________________________________________________

(02-07-08)  PN 418

Exhibit A, Attachment 1, Pages 32 and 33 in PDF only.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part I
Page 1
(Revision 1)
RURAL HOUSING SERVICE
RURAL COMMUNITY FACILITY PROGRAM AND RURAL HOUSING ASSISTANCE GRANTS 

I.   General.  

     A.  The Agriculture, Rural Development, Food and Drug Administration, 
         and Related Agencies Appropriations Act, 2008, funded the Rural
         Community Facilities Program Account (RCFPA) and the Rural Housing
Assistance Grants (RHAG).  All of the Community Facilities (CF funds are included in RCFPA.  The housing grant programs, except for section 523  Mutual and Self Help Technical Assistance grants, section 516 Domestic Farm Labor Housing Grants, and section 521 Rental Assistance, are included in RHAG.  The Administrator has allocated RCFPA and RHAG budget authorities into program funds as provided in part II, subparts A, B, and C of this attachment.  Each dollar of budget authority may support a different program level dependent upon whether it is a loan or grant program and the nature of the program.  Program authorities are discussed in part II, subparts A, B, and C of this attachment.  Rural Housing Service, hereinafter referred to as Housing and Community Facilities Programs (HCFP) administering RCFPA or RHAG loan and grant funds are subject to the Equal Credit Opportunity Act, Title VI of the Civil Rights Act of 1964, Title VIII of the Civil Rights Act of 1968 (also known as the Fair Housing Act of 1988, as amended), section 504 of the Rehabilitation Act of 1973, and Executive Orders 11246 and 12898.  

B.  RHAG programs provide flexibility for transfers in budget authority between programs in FY 2008.  Because of the way the funds control system is currently configured, the National Office will have to make these transfers on behalf of the State Directors. 

RHAG transfers.  For FY 2008, State Directors will have the flexibility to transfer their initial allocations of budget authority between the section 504 Rural Housing Repair Grant program and the section 533 Housing Preservation Grant (HPG) program when funds allocated under the HPG program are uncommitted after receipt of HPG applications.  RHAG transfers cannot be considered until the last day for applicants to file HPG applications in order to allow time to determine if funds are available for transfer. If a State Director determines that they cannot fully utilize their section 504 grant allocation, they may request to transfer unusable funds to the section 533 HPG program.  Of the total unusable section 504 grant funds, the maximum transfer to section 533 grant funds will be 25%. The remaining 75% of the section 504 grant funds will be returned to the National Office reserve to meet the section 504 grant needs of senior citizens in other States. 

C.  Public notification.  State Directors are encouraged to notify nonprofit and public agencies of the availability of Rural Development loan and grant funds.  When applicable, State Directors are to ensure these programs comply with Executive Order 12898 and

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part I
Page 2
(Revision 1)

RD Instruction 1901-E by directing outreach activities to low income and minority populations, underserved communities, and colonias.  State Directors are also reminded of the need to emphasize initiatives, such as the Faith-Based and Community Initiatives, and special funding needs, such as critical access hospitals.

D.   Empowerment Zone (EZ), Enterprise Community (EC) and Rural Economic
Area Partnership (REAP) Zone Set-aside.  The Appropriations Act provides for EZ, EC and REAP zones $993,000 in budget authority for Community Facility programs, $2,482,500 for Rural Housing Insurance Fund (RHIF) programs, $993,000 for section 523 Mutual and Self-Help Technical Assistance grants and $1,191,600 in the RHAG programs.  See part II, subpart A of this attachment for RCAP, part II, subparts B and C of this attachment for RHIF programs, and part II, subpart B and C of this attachment for RHAG.  

E.   Underserved counties and colonias.  The Cranston-Gonzalez Affordable Housing Act requires HCFP to set aside 5 percent of its Rural Housing funds for the 100 Underserved Areas and Colonias.  The top 100 counties, as listed on pages 4 and 5 of this part, are eligible for these funds.  Pool counties are listed on page 6.  These funds have been set aside as follows:
      

SFH direct 502 loans: 
$56,074,297
SFH direct 504 loans: 
1,720,450
SFH direct 504 grants: 
1,489,500
MFH direct 515 loans: 
3,475,500
1. Indian Country.  When a county on the list is associated with Indian Country, the entire Indian Country area is eligible even though it crosses into one or more additional counties.  Indian Country is defined as land inside the boundaries of Indian reservations, communities made up mainly of Native Americans, Indian trust and restricted lands, and tribal allotted lands.
  
2.   Pooling. The additional counties listed on page 6 for the underserved counties will be eligible for the pooled funds after June 30, 2008. Funds remaining after an appropriate program pooling date will be pooled and made available with the other program funds.

3.   Single family housing programs.  Section 502 and Section 504 loans and grants should be processed in accordance with Part II, subpart C, paragraph (B)(3)(e) and (C)(2)(b) of this Attachment. 
 
4.   Multi-family housing programs.  Section 515 loans should be processed in accordance with part II, subpart B, paragraph IV.B.1.b. of this attachment.  

RD Instruction 1940-L
Exhibit A
Attachment 2, Part I
Page 3

4.   Multi-family housing programs.  Section 515 loans should be processed in accordance with part II, subpart B, paragraph IV.B.1.b. of this attachment.  

II. Exception authority.  The Administrator, or the Administrator's designee, may, in individual cases, make an exception to any of the requirements of this attachment which are not inconsistent with the authorizing statute if the Administrator finds that application of such requirement would adversely affect the interest of the Government.  The Administrator, or designee, may exercise this authority upon the request of the State Director.  The request must be supported by information that demonstrates the adverse impact or effect on the program.  The Administrator, or designee, also reserves the right to change pooling dates, establish or change minimum or maximum fund usage from set asides and reserves, or restrict participation in set asides and reserves.

(04-01-08)  SPECIAL PN

Exhibit A, Attachment 2, Part I - pages 4, 5, and 6 in PDF ONLY.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart A, Page 1

HOUSING AND COMMUNITY FACILITIES PROGRAMS
RURAL COMMUNITY FACILITIES PROGRAM

I.   General.

A. This attachment provides funding allocations available for fiscal
year (FY) 2008.  All Community Facilities (CF) funds are included in the Rural Community Facilities Program Account (RCFPA). Computations for allocations available to individual States have been performed in accordance with  1940.585, 1940.591, and 1940.592 of this Instruction.  Both the direct and guaranteed loan programs have positive subsidy rates for FY 2008.
    
B. The Appropriations Act provides a set-aside until June 30, 2008, of budget authority that has been converted to $993,000 in grant funds for Empowerment Zones (EZ) and Enterprise Communities (EC) and communities designated by the Secretary of Agriculture as Rural Economic Area Partnership (REAP) Zones.  State Offices may submit Guide 26 of RD Instruction 1942-A or RD Form Letter 3570-B-1, as appropriate, at any time.  The projects must be obligated by June 30, 2008.  For FY 2008, the maximum grant reserve request amount is $100,000.

C. Congress has appropriated $6,255,900 for the Rural Community   Development Initiative.  The funds will be used to develop the capacity and ability of private, nonprofit, community-based housing and community development organizations, low-income rural communities, and Indian tribes to undertake projects to improve housing, community facilities, and community and economic development projects in rural areas.  A Notice of Funds Availability regarding this program was published in the Federal Register on February 4, 2008.  For FY 2008, each State Office or its designated Area Offices will accept and perform the initial screening of RCDI applications before forwarding them to the National Office for scoring and ranking.  The initial screening is designed to determine completeness of the application and eligibility of the applicants, recipients, and beneficiaries.  Further guidance as to processing and deadlines will be forthcoming.

D. A set-aside of $2,037,338 in CF grant funds is provided for child care facilities.  State Offices must forward a general description of the project, Form RD 3570-1 and Letter 3570-B-1 to the National Office by close of business on March 30, 2008.  The grants must be obligated by April 30, 2008.  The maximum grant amount is $50,000.

E. State allocations are made on an annual basis; however, the National Office usually receives apportionment of loan funds on a quarterly basis for these programs.  If States collectively request 

(04-01-08)  SPECIAL PN 

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart A, Page 2

Obligations greater than the amount apportioned for the quarter, there may not be sufficient funds to honor all obligations requested in that particular quarter.

II.   State Allocations.  All allocations have been calculated in accordance        with the methodology and formulas contained in  1940.585, 1940.591, and 1940.592 of this Instruction.

 A.  All Community Facilities Programs.

1.   Basic formula criteria, data source, and weight.  The census information used in the formula is derived from 2000 census data on population and income. 

2.   Basic formula allocation.  State allocations are shown on pages 7, 8, 9, and 10 of this subpart.

3.   Transition formula.   The transition formula is not used. 

4.   Base allocations.  The amounts of the base allocations to each State are $1.275 million for the direct loan program, $850,000 for the guaranteed loan program, and $65,000 for the grant program.  Economic Impact Initiative funds also will be allocated to each State, with a base allocation of $65,000.

5.   Administrative allocation.  An administrative allocation was used to establish an allocation for the U.S. Virgin Islands and the Western Pacific Islands.

6.   Reserve.  Funds will be allocated to the States for those projects which best meet the Agencys priorities, depending on the amount available at the time of the request.  Program Managers may request reserve funds by forwarding a general description of the project with the Guide 26 of RD Instruction 1942-A, Exhibit C of RD Instruction 3575-A, or RD Form Letter 3570-B-1, Form RD 3570-1, and the Legislative and Public Affairs Staff Project Announcement Sheet, as appropriate, to the National Office after the docket has been developed to the point where the loan or grant can be approved upon notification that funds are available.  Requests for direct and guaranteed loan reserves may be made at any time.  Requests for grant reserves will be considered once during the course of the year.  The procedure for requesting grant reserves is contained in section D, paragraph 3, Grant Processing, below.

Reserve funds will only be made available after the States allocation has been allocated or obligated for particular projects.  The Administrator will consider a State Directors utilization of all his or her CF allocations in determining whether to honor requests for funds from the direct or guaranteed loan or grant reserves.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart A, Page 3

7.   Pooling of funds. Year-end pooling is scheduled for August 15, 2008.  All funds for which requests for obligation of funds have not been entered and processed will be pooled.  Further details will be provided prior to pooling.

B.   Community Facilities Direct Loans.

Amount available for allocation.

Amount available                     $294,947,837
Less National Office reserve           28,079,837
Base, Administrative, and
Basic formula amount distributed     $266,868,000

C.   Community Facilities Guaranteed Loans.

Amount available for allocation.

Amount available                      $206,425,271             
Less National Office reserve            19,713,271
Base, Administrative, and
Basic formula amount distributed      $186,712,000

D.   Community Facilities Grants.

1.   Amount available for allocation.

Amount available                      $20,373,381
Less National Office reserve            1,705,043
Less Child Care reserve	             2,037,338
Less EZ/EC and REAP set-aside             993,000
               Base, Administrative, and
               Basic formula amount distributed      $15,638,000

2.   Maximum grant amount.  For FY 2008, the maximum grant reserve request amount is $100,000.  The maximum grant amount for a child care reserve request is $50,000.

3.   Grant processing.  There will be a primary deadline to request Community Facilities grant funds from the National Office Reserve.  Program Managers must forward a general description of the project, Form RD 3570-1, RD Form Letter 3570-B-1, and a separate electronic file copy of the Legislative and Public Affairs Staff Project
Announcement Sheet for each request to the National Office by close of business on June 1, 2008. Indicate clearly the type or types of grant that this request is being submitted for on the Type of Request line on RD Form Letter 3570-B-1.  Any request received after this time period will be held in the National Office to

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart A, Page 4

compete for any additional funds that remain available after all other eligible requests have been funded.  The National Office will transfer the funds and provide verbal notification to the State Office that the funds are available.  The National Office does not maintain unfunded requests beyond the end of the fiscal year.  
  
4.   For each grant application approved, the State Director must document that the minimum grant amount needed to achieve financial feasibility for the project has been determined.  A copy of this analysis must be kept in the project file.

E. Economic Impact Initiative Grants.

1. 
Amount available				$13,206,900  
 Less National Office reserve            1,383,900
       Base, Administrative, and Basic
      formula amount distributed            $11,823,000   

2. Grant processing.  This program is authorized under section
306(a) of the Consolidated Farm and Rural Development Act.  For FY 2008, Congress appropriated $13,206,900 for a Community Facilities grant program for rural communities with extreme unemployment and severe economic depression, hereinafter referred to as the Economic Impact Initiative.  These funds are in addition to the Community Facilities grant programs regular allocation of funds.  These funds will be administered under the same regulations governing the Community Facilities grant program.  Program administration, eligibility, processing, and servicing requirements for this program may be found under 7 CFR part 3570, subpart B.

3.   In addition to those requirements contained in 7 CFR part 3570, the essential community facility must be located in a rural community where the not employed rate is greater than 19.5 percent as mandated by 7 USC 1926(a)(20)(B).  The not employed rate is the percentage of individuals over the age of 18 who reside within the community and are ready, willing, and able to be employed but are unable to find employment, as determined by the Department of Labor of the State in which the community is located.  This department must typically analyze not employed rates or similar data.

4.   The Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2002, expanded eligibility for the Economic Impact Initiative to provide local dial-up Internet access or broadband service where it does not currently exist.  Under this provision, the Agency may make grants

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart A, Page 5

to State agencies for use by regulatory commissions in States with rural communities which do not have those services.  The State agencies will establish a competitive, technologically-neutral grant program for telecommunications carriers or cable operators that establish common carrier facilities and services that, in the commissions determination, will result in the long-term availability of affordable broadband services used for high speed Internet access in these communities.

   	5.   For each grant application approved, the State Director must document that the minimum grant amount needed to achieve financial feasibility for the project has been determined.  A copy of this analysis must be kept in the project file.

6.   Documentation that the Economic Impact Initiative grant project is located in an area where the not employed rate is greater than 19.5 percent must be maintained in each Economic Impact Initiative grant file.  The term not employed rate is defined in paragraph 2 above.

F.   Tribal College Grants

1.   This program is authorized under section 306(a) of the Consolidated Farm and Rural Development Act.  Congress appropriated $3,972,000 for a Community Facilities grant program for the 32 tribal colleges that are 1994 land-grant institutions meeting the criteria of the Equity in Education Land-Grant Status Act of 1994.  Rural Development will administer these funds using the same regulations that govern its Community Facilities grant program.  Program administration, eligibility, processing, and servicing requirements for that program may be found at 7 CFR part 3570, subpart B.

2.   All Tribal College Initiative funds will remain in the National Office reserve for funding consideration in FY 2008.  Project selections will be made on a nation-wide competitive basis.  When a State Office determines that an applicant is eligible, the preapplication will be evaluated competitively and points awarded as specified in the project selection priorities contained in the above-cited regulations.  For FY 2008, the maximum Tribal College grant amount is $400,000. 

3.   The State Director or designee will forward the request to
the National Office to compete for funding consideration.  The request must consist of a general description of the project, 
Form RD 3570-1, RD Form Letter 3570-B-1, and a separate electronic file copy of the Legislative and Public Affairs Staff Project Announcement Sheet for each project.  These items must be forwarded to the National Office by the close of business on June 1, 2008.  

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart A, Page 6

Any request received after this date will be held in the National Office to compete for any additional funds that remain available after all other eligible requests have been funded

4.   All preapplications selected for funding consideration will be notified by the State or field office by issuance of Form AD-622, Notice of Preapplication Review Action.  At that time, the proposed recipient will be invited to submit a complete application, along with instructions related to the agreed-upon award amount.  An application conference will be scheduled to discuss items needed for the formal application and to further clarify issues related to the project.

5.   Final approval is subject to the availability of funds; the submission of a formal, complete application and related materials meeting the program requirements and responsibilities of the grantee (set forth in 7 CFR part 3570, subpart B); the letter of conditions; and the grant agreement.

6.   The National Office does not maintain unfunded requests beyond the end of the fiscal year.  Those preapplications not having sufficient priority to receive funding consideration for          FY 2008 will be notified, in writing, by the State or designated field office.

Exhibit A, Attachment 2, Part II, Subpart A, Pages 7 thru 10 in PDF ONLY.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 1
(Revision 1)

HOUSING AND COMMUNITY FACILITIES PROGRAMS
MULTI-FAMILY HOUSING (MFH)
I.   General.

A.   This Attachment provides guidance on MFH funding for the Rural
Rental Housing program (RRH) for FY 2008.  For fiscal year (FY) 2008, State Directors, under the Rural Housing Assistance Grants (RHAG) will have the flexibility to transfer their initial allocations of budget authority between the Single Family Housing (SFH) section 504 Housing Repair Grants and the section 533 Housing Preservation Grant (HPG) programs in accordance with attachment 2, part I of this exhibit.

B.   MFH loan and grant levels for FY 2008 are as follows:

MFH Loan Programs Credit Sales
$  1,475,864
Section 514 Farm Labor Housing (LH) loans**
$ 27,545,076
Section 515 Rural Rental Housing (RRH)
$ 69,510,000
Section 514, 515 and 516 Multi-Family Housing Revitalization Demonstration Program ****
$ 19,860,000
Section 521 Rental Assistance (RA) and 502(c)(5)(C) Advance 
$472,757,370
Section 516 LH grants 
$  9,930,000
Section 525 Supervisory and Technical 
   Assistance and Section 509 Housing 
   Application Packaging grants** 
   Total Available for Single and Multi-Family   
$        -0- 
Section 533 Housing Preservation
   Grants (HPG)***
$  9,593,704
Section 538 Guaranteed Rural Rental
   Housing Program 
$129,090,000
Rural Housing Voucher Demonstration Program**
$  4,965,000
Preservation Revolving Loan Fund Demonstration Program
$  6,421,642
**Does Not Include Carryover Funds

***Includes Carryover Funds

****Stated at the budget authority level, rather than at the program level

II.  Multi-Family Housing Programs (Funds not allocated to the States).

A.   Credit Sales Authority.  For FY 2008, $1,475,864 will be available for credit sales to program and nonprogram buyers.  Credit sale funding will not be allocated by State.  The State Director must submit requests for authority to approve credit sales using page 9 of this subpart via facsimile (202) 720-0302, to the National Office.  Credit sales funds will be pooled if not obligated/closed by August 11, 2008.

B. Section 538 Guaranteed Rural Rental Housing program.  Guaranteed loan funds have been made available under a Notice of Funding Availability (NOFA) that was published in the Federal Register on 

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 2
(Revision 1)

February 4, 2008.  Additional guidance will be provided at that time.

C. Sections 514, 515 and 516 Multi-family Housing and Revitalization Demonstration Program (MPR) for Fiscal Year 2008.  The MPR program is designed to preserve and revitalize Section 515 multi-family rental housing properties and Sections 514/516 Off-Farm labor housing properties.  The Program is designed to utilize several demonstration revitalization tools to restructure debt and financing of an aging portfolio of rental properties.  The objective is to ensure that properties have sufficient resources to continue providing safe and affordable housing for low-income rural residents.  Funds have been made available under a NOFA published in the Federal Register on March 12, 2008.

D. Rural Housing Voucher Demonstration Program.  This Demonstration Program is designed to provide tenant protections in properties that prepay their mortgages after October 1, 2005.  These Vouchers are portable and will enable tenants to continue to access affordable housing without the benefit of the traditional Rental Assistance Program.  Funds have been made available under a NOFA published in the Federal Register on March 24, 2008. 

III. Farm Labor Program Account. The Farm Labor Housing Program Account
includes budget authority for the Section 514 Loan and Section 516 Grant Programs.  The Administrator has the authority to transfer budget authority between the two programs.  Upon closing of the NOFA, the Administrator will evaluate the responses and determine proper distribution of funds between loans and grants.

A.   Section 514 and Section 516 Program Level Estimates.   These loans
and grants are funded in accordance with  1940.579(a) and 1940.579(b) respectively, of this Instruction.  Unobligated prior year balances and cancellations will be added to the amounts shown.  LH grants for off-farm have been made available under a NOFA that was published in the Federal Register on March 12, 2008.   Additional guidance is provided in the NOFA. On-farm loans will be made available on a first-come-first-served basis.  The total amount available for on-farm loans is $2,000,000 for FY 2008.  States should utilize page 8 of this subpart to request approval to obligate funds.

Loan level
$27,545,076
Available for off-farm        loans
$19,158,807
Available for on-farm loans
$2,000,000
National Office Reserve
$6,386,269 
Grant level 

Available for LH grants for Off-Farm
$7,447,500
National Office Reserve 
$2,482,500
Total Program
$37,475,076

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 3
(Revision 1)

B.  National Office Reserve.  A $2,482,500 LH grant reserve and a $6,386,269 LH loan reserve will be available until fully allocated to selected loan and grant applicants.  Reserve funds are not considered NOFA funds.  All unused section 514 and section 516 funds will be made a part of the National Office Reserve Account.  The National Office Reserve Account will be used for Repair and Rehabilitation, Hardships and Emergencies.

Priority will be given to projects in the following order:  First priority to projects that are leveraged with third party funds and LH loan.  Second priority to projects requesting LH loan.  Third priority to projects with LH loan and LH grant.  Fourth priority to projects with third party funds and LH grant.  Fifth priority to projects requesting LH grant.  State Directors must categorize all repair and rehabilitation request as follows:

1. Health Concerns;
2. Safety Concerns;
3. Deferred Maintenance; and
4. Fair Housing Compliance.

Request for repair and rehabilitation LH loans and LH grants are to be submitted to the National Office.  Selected request will be announced within 30 days after the aforementioned NOFA selections.  Repair and Rehabilitation loan and grant funds are held in the National Office and may be distributed based upon rehabilitation needs to projects selected and processed under the FY 2008 MPR NOFA.

C. RA for LH.  It is anticipated that RA will not be available for Fiscal Year (FY) 2008. 

IV.  Section 515 RRH Loan Funds.  States should use page 9 of this subpart to   request approval to obligate all funds.

Section 515 Rural Rental Housing 
Allocation (Total)
$69,510,000
   New Construction funds and set-asides
$14,529,124
      Non-Restricted
$ 2,341,200
      Set-aside for nonprofits
$ 6,255,900
      Set-aside for underserved counties and colonias
$ 3,475,500
      Set-aside for EZ, EC, or REAP Zones
$ 1,456,524
      Designated Reserve for States with RA programs
$ 1,000,000
   Rehab and repair funds and equity
$40,036,226
      Rehab and repair loans
$35,036,226
      Designated equity loan reserve
$ 5,000,000
   General reserve
$14,944,650
A. New Construction Loan Funds.  New construction loan funds have been made available under a Notice of Funding Availability (NOFA) that was published in the Federal Register on March 12, 2008.  Upon closing of the NOFA, States will submit a list, in rank order of the eligible projects.  The list must show the name of the applicant; 

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 4
(Revision 1)

location of the project (City & State); whether it is located in an Empowerment Zone (EZ) or Enterprise Community (EC), REAP Zone, Tribal Land, or Colonia; amount of leveraging; HCFP loan amount; point score; total project units; number of tax credit units; and other information as requested in the NOFA, to the National Office.  Requests that are eligible for the nonprofit set-aside must be so indicated.  Include requests for the Underserved Counties and Colonias Set-Aside and EZ, EC or REAP Zone set-aside.  Indicate if they are also eligible for regular section 515 funds by being located in a designated place.  The National Office will rank the States requests by point score using the same tie breaker criteria established in 7 CFR 3560.56(c)(2).  Funds will be distributed to the States for loan requests in rank order, up to a maximum of $2.5 million (regardless of Agency funding source) for any one State.  

B.   National Office New Construction Set-asides.  The following funds
     have been set-aside as described below and made available using a
     national NOFA.  

     1.  Nonprofit set-aside.  The following funds have been set-aside
     as described below and made available using a national NOFA.  

	  a.   Nonprofit set-aside.  An amount of $6,255,900 has been set
    aside for nonprofit applicants.

	  b.   Underserved counties and colonias set-aside.  An amount of
    $3,475,500 has been set aside for loan requests to develop units 
     in the underserved 100 most needy counties or colonias as
    defined in section 509(f) of the Housing Act of 1949.  

	  c.   EZ, EC or REAP Zone set-aside.  An amount of $1,456,524 has
    been set-aside for loan requests to develop units in EZ, EC or
    REAP Zones through June 30, 2008.  The State must indicate on
    the list submitted to the National Office if the loan request is
    eligible for both this set-aside and regular section 515 funds.

C.	Rental Assistance (RA). It is anticipated that RA will not be available for Fiscal Year (FY) 2008.

D.	State RA.  An amount of $1,000,000 of the section 515 loan fund is available for matching with projects in which an active State sponsored RA program is available.  The State RA program must be comparable to the HCFP RA program.  To receive this funding, the State Director should submit a written request with specific information about the State RA program; i.e., memorandum of understanding, documentation from the provider, etc., to the Director, Multi-Family Housing Processing Division (MFHPD).  Funds will be distributed to participating States based on a pro rata basis.

E. Repair and Rehabilitation Loans.  All funds will be held in the National Office and will be distributed based upon rehabilitation needs to projects selected and processed under the FY 2008 MPR NOFA.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 5
(Revision 1)

F. Designated reserve for equity loans.  An amount of $5,000,000 has
     been designated for the equity loan preservation incentive
     described in 7 CFR 3560.656.  The $5,000,000 will be further
     divided into $4,000,000 for equity loan requests currently on the
    pending funding list and $1,000,000 to facilitate the transfer of 
    properties from for-profit owners to nonprofit corporations and 
    public bodies.  Funds for such transfers would be authorized only
    for for-profit owners who are currently on the pending funding list
    who agree to transfer to nonprofit corporations or public bodies 
    rather than to remain on the pending list.  If insufficient transfer 
    requests are generated to utilize the full $1,000,000 set aside for 
    nonprofit and public body transfers, the balance will revert to the 
    general reserve.

G.   General Reserve.  There is one general reserve fund of $14,944,650.
     Some examples of immediate allowable uses include, but are not
     limited to the following:

1.   Hardships and Emergencies.  The request must include sufficient documentation to support the hardship or emergency, including reasons why it is in the Government's best interest to favorably consider the request.

2.   HCFP Cooperatives or group homes.  Requests for cooperative housing or group homes must be in designated places and submitted under the NOFA.

3.   RRH preservation.  Funds may be used to promote innovative approaches to preserving existing RRH projects including the provision of equity payments during a transfer.  Requests to use these funds will be considered in accordance with specific standards established by the Administrator and with an agreement to extend the projects restrictive use period at least 20 years.  The Office of Rental Housing Preservation (ORHP) will be responsible for reviewing these requests. 

H.   Requesting Funds for Special Needs.  States should utilize page 9 
     of this subpart to request reserve funds.  This format will ensure
     a prompt turnaround since it can be used for the request and
     National Office approval.

(04-01-08)  SPECIAL PN 

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 6
(Revision 1)

V.   Section 533 Housing Preservation Grants (HPG).  Due to limited funds this
     fiscal year, the funding process will be followed as described in
     paragraph (V) (A) of this subpart. 

A.   State allocation options.  After receipt of applications, States
will have the following options:

1.  Use their allocations as reflected on page 10 of this subpart to make two or more grants so that no one grantee receives more than 50 percent of the State allocation, unless there is a single applicant from that state.
                  
2.  Return the allocation to the National pool.  Once a State returns its allocation to the National pool, the State may request one grant of no more than $50,000 from that pool.  Funds will be limited and States are not guaranteed funding from the National pool.  If the pool is insufficient, selection will be in order of point score.

3.  Transfer a portion of the unused funds to section 504 in accordance with RD Instruction 1940-L, exhibit A, attachment 2, part I, paragraph I.B.1.

B. Amount Available for Allocation.  See page 10 of this subpart for
HPG State allocations.  EZ, EC or REAP Zone set-aside funds will be included in the NOFA.

  Total HPG available
$9,593,704.00
    Less reserve
$  957,570.40
    Less designated set-aside (EZ, EC or REAP Zones)
$  595,800.00
  Total Available for Distribution
$8,040,333.60
C.   Base Allocation. The base allocation is not used.  Distribution of funds is based on the allocation formula in accordance with RD Instruction 1940-L.

D.   Administrative Allocations.  The administrative allocation is not
      used.

E.   Reserve.  The National Office reserve is 10 percent of the total
funds available.  The eligible uses for reserve funds include natural disasters, and targeted areas.  State Directors may request reserve funds with sufficient documentation to support the request, including reasons why it is in the Governments best interest to consider the request.  The National Office reserve may also be used to augment the individual grants or National pool.

F.   National Office Pooling.  Pooling for unused (unobligated) HPG
funds under the RHAG is tentatively scheduled for August 11, 2008.  Further details will be provided in conjunction with pooling.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 7

G. Availability of the Allocation.  A distribution of funds is made to
      all states.  The Agency does not have the authority to waive the
      statutory rule that not more than 50 percent of the states 
      allocation may go to one eligible applicant, unless there is a
      single grantee from that state.

H. HPG is a competitive grant program.  State Directors must implement
maximum outreach measures to ensure 100 percent utilization of HPG funds.  Opening and closing dates for submission of preapplications were announced in the Federal Register on February 20, 2008.  Exhibit G to RD Instruction 1944-N must be submitted to the National Office. (The deadline for submission was announced in the Federal Register on February 20, 2008).

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 8
[On Rural Development Letterhead]
TO:

Michael Steininger
Director, Multi-Family Housing Processing Division

ATTENTION:

MFHPD, STOP 0781
Henry Searcy, Senior Loan Specialist
SUBJECT:

Request for Obligation of FY 2008 Section 514 Loan or 516 Grant Funds
State Name ___________________________________
Authorization is requested for the following application:
Applicant:
Is the Applicant a Non-Profit Organization? Faith-Based or Community Based?  (Yes or No)

Is the property located within a colonia? (Yes or No)

Total HCFP Loan:

Total HCFP Grant:

Total Number of Units in the Complex:

Total Number of Migrant Units:

Total Number of Year Round Units:

Number of Units with Operating Assistance:

Number of Units with Rental Assistance:

Type of Housing (on-farm or off-farm)?

Amount of Funds from Other Sources:

Type of Loan or Grant (new construction or rehab):

I certify that the above information is correct and the borrower represents that uses of this loan (or grant) will meet the requirements of Section 504 of the Rehabilitation Act of 1973, the Fair Housing Amendments Act of 1988, the American with Disabilities Act of 1990, and all applicable regulations.  I certify that the cash flow analysis has been completed for the grant, and has been submitted to the National Office, and is for the minimum amount of assistance necessary.  Please feel free to contact __________________________ at ________________ should you have any questions regarding this matter.  After National Office approval, return signed form to the following fax number:_______________.
_________________________________
___________________________
State Director
Date
####################################################################################
[  ] APPROVED. Use of these funds is authorized solely for the above named applicant and may not be used for other applicants/purposes:
__________________________________________________________________________________________________________________________________________________________________________________________________
[  ] DISAPPROVED.  We regret that our response could not be more favorable for the following reasons:  __________________________________________________________________________________________________________________________________________________________________________________________________
Please feel free to contact Henry Searcy at (202) 720-1753 should you have any questions regarding this matter.  Our FAX number is (202) 690-3444.
________________________________________
Michael Steininger
Director, MFH Processing Division
________________________
DATE

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart B, Page 9
(Revision 1)
[On Rural Development Letterhead]
TO:

Multi-Family Housing Processing Division
ATTENTION:

William K. Coles
Loan Specialist, Multi-Family Housing Processing Division
SUBJECT:

Request for Obligation of FY 2008 Section 515 Funds
State Name:  ________________________________

Authorization is requested for the following:	
Applicant Name:  

Is the Applicant a Non-Profit Organization? Faith-Based or Community Based? (Yes or No)

Is the Property Located Within a Colonia Area? (Yes or No)

Total HCFP Loan:  
$
Source and Amount of Leveraged Funds:
$
RA Units Required & Type (new construction only)

Total Complex Units:

Number of Units to be repaired:

Type of Loan (Please put an X in the appropriate box)

         New Construction

         New Construction funded from EZ/EC Set-aside 
          (Must obligate before June 30, 2008)

         Repair/Rehabilitation

         Inventory/Credit Sale

         Emergency or Hardship

         Other (Describe)

              
              I certify that the above information is correct and the borrower represents that uses of this loan and/or grant will meet the requirements of Section 504 of the Rehabilitation Act of 1973, the Fair Housing Amendments Act of 1988, the Americans with Disabilities Act of 1990, and all applicable regulations.  Please contact ____________________________ at __________________ should you have any questions regarding this matter.  After National Office approval, return signed form to the following fax number:_______________________.

_________________________________
___________________________
State Director
          DATE
------------------------------NATIONAL OFFICE USE-----------------------------
[  ] APPROVED. Type of Assistance Code ___262 ___021.  Use of these funds is authorized solely for the above named applicant and may not be used for other applicants/purposes. 
_____________________________________________________________________________
[  ] DISAPPROVED.  Our response could not be more favorable for the following reasons:
____________________________________________________________________________________________________________________________________________________________________________
Please feel free to contact William K. Coles at 202-720-2554 should you have any questions regarding this matter.  Our FAX number is (202) 690-3444.

________________________________________
Michael Steininger
Director, MFH Processing Division

________________________________
DATE

(04-01-08)  SPECIAL PN

Exhibit A, Attachment 2, Part II, Subpart B, Page 10 in PDF ONLY.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 1
(Revision 1)

HOUSING AND COMMUNITY FACILITIES PROGRAMS
SINGLE FAMILY HOUSING (SFH)

I.   General.

A.   This attachment provides SFH allocations for fiscal year (FY) 2008.  Allocation computations have been made in accordance with 1940.563 through 1940.568 of this Instruction.  State Directors are reminded of their authority to transfer funds between the section 504 Rural Housing Grant program and the section 533 Housing Preservation Grant program in accordance with attachment 2, part I of this exhibit.  Program contacts for funds held in the National Office are located on a chart on page 16 of this subpart.  Information on basic formula criteria, data source and weight, administrative allocation, pooling of funds, and availability of the allocation are located on a chart on page 17 of this subpart. 

B.   The SFH levels authorized for FY 2008 are as follows:
Section 502 Guaranteed Rural Housing (RH) loans

   Nonsubsidized Guarantees Purchase
$4,958,563,379
   Nonsubsidized Guarantees Refinance
$  269,375,804
Section 502 Direct RH loans*

   Very low-income subsidized loans
$  504,668,670
   Low-income subsidized loans
$  616,817,263
Credit sales (Nonprogram)
$   10,000,000
Section 504 Housing Repair Loans*
$   34,409,013
Section 504 Housing Repair Grants*/**
$   29,790,000
Section 509 compensation for

   Construction defects
$          -0-
Section 523 mutual and self-help housing grants and contracts*/**
$   38,727,000
Section 523 Self-Help Site Loans
$    4,965,000
Section 524 RH site loans
$    5,045,000
Section 306C Water and Waste Disposal Grants**
$    1,000,000
 
 
 *Includes funds for EZ/EC and REAP communities.  After June 30, 2008
funds will be available for regular program.
      **Carry over funds are not included.

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 2
(Revision 1)

C.   SFH funding not allocated to States are:

1.   Credit sale authority.  Credit sale funds are available only for nonprogram sales of Real Estate Owned (REO) property.  There will be no state distribution of nonprogram credit sale authority; rather funds will be available on a first-come-first-served basis.  A separate reserve of Section 502 loan funding is being maintained in the National Office for the sale of program property to program applicants.  Requests should be submitted using the National 
Office Reserve Funds (NORF) system as described on page 13, paragraph II.B.3.g. of this attachment.  The requested amount and the amount reflected in MortgageServ must match in order for the request to be considered. 

2.   Section 509 compensation for construction defects.  All claims for compensation for construction defects, along with the borrowers case file, must be submitted to the National Office for authorization of funds prior to approval.  After receipt of the authorization, claims may be approved and submitted to the finance office for funding.

3.   Section 523 mutual and self-help technical assistance grants.  The State Director must request funding approval from the National Office for all requests.  A technical review and analysis must be completed by the Technical and Management Assistance (T&MA) contractor on all predevelopment, new and existing (refunding) grant applications.  In addition to the T&MA contractors review, Agency personnel must also review and evaluate the feasibility of the grantees request and make the appropriate recommendation.  The level of National office review will be based on the amount of the grant:

(a)   For grant requests of $300,000 or less, the State Director should submit:  (1) the analysis from the T&MA contractor, (2) statement indicating whether or not the grant recipient will be working in Empowerment Zones (EZ), Enterprise Communities (EC) or Rural Economic Area Partnerships (REAP) and census tract designation of area; (3) the State Directors recommendation, (4) a copy of the conditions to be met, (5) a copy of Form RD 1940-1, Request for Obligation of Funds, (6) if the grantee is a marginal performer, specific information showing actions to correct performance, and (7) USDA Survey on Ensuring Equal Opportunity for Applicants.

(b)   For grant requests that exceed $300,000, the complete application docket along with the items mentioned above, must be sent to the National Office.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 3

$38,727,000 is available for section 523 Mutual and Self-Help Technical Assistance grants.  This amount includes a $993,000 set-aside for EZ, EC or REAP communities.  All section 523 grants will be obligated in the National Office.  This will enable the National Office staff to monitor fund utilization.

4.   Section 523 mutual and self-help site loans and section 524 RH site loans.  State Directors are responsible for developing an outreach program to increase public awareness of these programs.  The State Director must request and receive funding authority from the National Office prior to obligating loan funds.

5.   Section 306C water and waste disposal (WWD) grants to individuals in colonias.  The objective of the section 306C WWD individual grant program is to facilitate the use of community water or waste disposal systems for the residents of the colonias along the U.S.-Mexico border.  Colonias are located in the States of Arizona, California, New Mexico and Texas.  A colonia is defined as the area of the United States within 150 miles of the border between the United States and Mexico except that the term does not include any standard metropolitan statistical area that has a population exceeding 1,000,000; is determined to be a colonia on the basis of objective criteria, including lack of potable water supply, lack of adequate sewage systems, and lack of decent, safe and sanitary housing; and was existing as a colonia before the date of enactment of the Cranston-Gonzalez National Affordable Housing Act.  Eligible areas under section 306C WWD may be different from areas under the 5 percent set-aside for the 100 underserved counties and colonias. The total amount available to Arizona, California, New Mexico and Texas will be $1,702,105 for FY 2008.  This amount includes the carryover unobligated balance of $702,105 for processing individual grant applications.  Allocation will be evenly distributed to the above states.  

(04-01-08)  SPECIAL PN 

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 4

6.   Section 525 technical and supervisory assistance (TSA) and section 509 housing application packaging grants (HAPG).  There is no new FY 2008 funding for these programs.  There is a carryover unobligated balance of $21,696.00

7.   Natural disaster funds.  Funds from previous appropriations are available until exhausted to those States with active Presidential Declarations.  Any unused portion will be carried over into the next fiscal year. 

8.  Deferred mortgage payment demonstration.  There is no FY 2008 funding provided for deferred mortgage authority or loans for deferred mortgage assumptions.

9.   Section 502 direct funds for families not qualifying for payment assistance.  Funds from States allocation may be used for qualified very-low and low-income applicants when the payment assistance formula shows there is no need for the subsidy.  This assistance will be taken from the State's subsidized regular funding.

D.  Increasing Minority Homeownership in Rural America.  
In FY 2003 the President set a goal for increasing minority home ownership.  These goals are expected to remain in effect or be increased.  Additional guidance will be provided under separate cover.	

II. State Allocations.  State allocation distributions can be found on pages 18 through 23 of this subpart.  

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 5
(Revision 1)

(This area is intentionally left blank.)

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 6
(Revision 1)

A.   Section 502 nonsubsidized guaranteed RH loans.

1.   Purchase - Amount available for allocation.

Total Available - Purchase
$4,958,563,379
   Less National Office General Reserve
$1,090,994,365
   Less Special Outreach Area Reserve
$467,569,014
Basic Formula and Administrative 
  Allocation
$3,400,000,000
(a)   National Office General Reserve.  Requests for National Office reserve funds should be submitted by e-mail to the Guaranteed Loan Divisions e-mail address of sfhgld@wdc.usda.gov with Funding Request or Request for Funds in the subject line.  Your request should be placed in the body of the e-mail message must have the following information: Amount of the request; Purchase or Refinance Funds requested; and under which category: General or Special Outreach.  The NORF system is not used for guaranteed funds.  The Administrator may restrict access to this reserve for States not meeting their goals in special outreach areas.

(b)   Reservation of funds.  States must use the guaranteed rural housing reservation of funds system unless otherwise directed by the National Office.

(c)   Special Outreach Areas.  The intent of special outreach areas is to assure the GRH program reaches applicants residing in areas, which are the most rural in character.  FY 2008 GRH funding is allocated to States in two funding streams.  Seventy percent of GRH funds may be used in any eligible area.  Thirty percent of GRH funds are to be used for special outreach areas.  Special outreach areas for the GRH program are defined as those areas within a State that are not located within a Metropolitan Statistical Area (MSA).  

(d)   National Office Special Area Outreach Reserve.  A special outreach area reserve fund has been established at the National office.  Funds made available from this reserve may only be used in special outreach areas.  The NORF system is not used for guaranteed funds.

(e)   Sub-allocation by the State Director.  The State Director may retain funds at the State office level or sub-allocate to the area or field office level.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 7
  
  
(f)   Pooling of Guaranteed Purchase Loan Funds.  Pooling is scheduled for August 15, 2008.  However, if funds are used at a faster rate than anticipated, the pooling date may be moved forward and the National Office may opt to pool funds more than once.  If funds are used at a slower rate than anticipated, pooling may be delayed.  If it appears that ample funds will remain available for the entire year, the National Office may cancel the pooling of GRH funds.

(g)   Funds Management.  If analysis of the utilization of funds during the fiscal year indicates that, at the rate of current utilization, funds may not be sufficient to sustain that level of activity for the remainder of the fiscal year, the Agency may determine a shortage of funds exists. A determination that a shortage of funds exists will be made if, based on current obligation rates, funds are projected to run out before the end of the fiscal year. Upon the determination that a shortage of funds exists, the Agency may restrict loan guarantees to first-time homebuyers or veterans. First time homebuyers and veterans will be served in the order their applications are received.

2.   Refinance - Amount available for allocation.

Total Available  Refinance
$269,375,804
   Less National office general reserve
$269,375,804
Basic Formula and Administrative 
  Allocation
$       -0-
  
(a)   Refinance Funds.  Refinance funds carry a separate subsidy rate and are tracked using a different Type of Assistance code in the Guaranteed Loan System.  The funds are currently tracked in the Program Funds Control System (PFCS) as a separate allocation.  Refinance loan funds will not be distributed to each State this year due to the inability to track these funds in the Guaranteed Loan System.  Funds will be distributed to each State on a loan by loan basis and will be tracked by the National Office.  The distribution amount listed in GLS will be the combined total allocation distributed to each state for purchase loans, Disaster Purchase Loans (if applicable), and refinance loans until GLS is upgraded to track the refinance loans independent of the purchase loans.

(04-01-08)  SPECIAL PN 

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 8

(b)   National Office general reserve.  Requests for National Office reserve funds should be submitted by e-mail to the Guaranteed Loan Divisions e-mail address of sfhgld@wdc.usda.gov with Funding Request or Request for Funds in the subject line.  Your request should be placed in the body of the e-mail message must have the following information: Amount of the request; Purchase or Refinance Funds requested; and under which category: General or Special Outreach.  The NORF system is not used for guaranteed funds.  The Administrator may restrict access to this reserve for States not meeting their goals in special outreach areas.

(c) Reservation of funds.  States must use the guaranteed
rural housing reservation of funds system unless otherwise directed by the National Office.

(d)   Allocation of funds.  The National Office will not distribute refinance funds to each State this year due to the inability to track these funds in the Guaranteed Loan System.  Funds will be distributed to each State on a loan by loan basis and will be tracked by the National Office.

(e)   Sub-allocation by the State Director.  The State Director may retain funds at the State office level or sub-allocate to the area or field office level.  
 
(f)   Pooling of Guaranteed Refinance Loan Funds.  Pooling is scheduled for August 15, 2008.  However, if funds are used at a faster rate than anticipated, the pooling date may be moved forward and the National Office may opt to pool funds more than once.  If funds are used at a slower rate than anticipated, pooling may be delayed.  If it appears that ample funds will remain available for the entire year, the National Office may cancel the pooling of GRH funds.

(g)   Funds Management.  If analysis of the utilization of funds during the fiscal year indicates that, at the rate of current utilization, funds may not be sufficient to sustain that level of activity for the remainder of the fiscal year, the Agency may determine a shortage of funds exists. A determination that a shortage of funds will be made if, based on current obligation rates, funds are projected to run out before the end of the fiscal year. Upon the determination that a shortage of funds exists, the Agency may restrict loan guarantees to first-time homebuyers or veterans. First time home buyers and veterans will be served in the order their applications are received.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 9
(Revision 1)

B.   Section 502 Direct RH loans.

1. Amount available for allocation.
	


Total available
  $1,121,485,933
 
   Less required set aside for 

      Underserved counties and 
        Colonias  5% 
  $   56,074,297
EZ, EC or REAP set-aside
  $   17,978,388
Less general reserve
  $  170,148,593
  Administrators Reserve
  $   30,000,000
  Hardships & Homelessness
  $    2,000,000
    Rural Housing Demonstration
    Program
       
  $    1,000,000
Homeownership Partnership
  $  112,148,593
Program funds for the sale of REO
  program properties
  $   25,000,000


   Less Designated Reserve for 
   Self-help
  $  175,000,000
 Basic formula  -  administrative
     $  702,284,655  
    Allocation




2.   Base Allocation.  Each State will receive a base allocation in 
     accordance with 1940.552(e).  The base allocation remains at
     the same level as in FY 2005 so that each state receives at
     least $4 million.

3.   Reserves.

a.   State office reserve.  

(i)   State Directors must maintain an adequate reserve to fund the following applications:

(A) Hardship and homeless applicants based upon historical data and projected demand. 

(04-01-08)  SPECIAL PN 

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 10
(Revision 1)

(B)	 The States 25 percent portion of funds for Rural Home Loan Partnerships (RHLP) and Community Development Financial Institutions (CDFI).

(ii)  State Directors must maintain records on how the State office reserves are utilized, including a justification for each hardship and homelessness case authorized.  

b.   National Office Reserves.

(i)   General reserve.  The National Office has a general reserve of $170.1 million.  Of this amount, the Administrators reserve is $30 million.  One of the purposes of the Administrators reserve will be for loans in Indian Country.  Indian Country consists of land inside the boundaries of Indian reservations, communities made up mainly of Native Americans, Indian trust and restricted land, and tribal allotted lands.  Another purpose of the reserve will be to provide funding for subsequent loans for essential improvements or repairs and transfers with assumptions.  

(ii)   Hardship and homelessness reserve.  $2 million has been set aside for hardships & homelessness from 4th quarter funds.  States are expected to fund hardship and homeless cases from their own reserves.  Priority will be given to applicants facing deficient housing hardships including applicants who have been living in deficient housing for more than 6 months, current homeowners in danger of losing a property through foreclosure, and other circumstances determined by HCFP on a case-by-case basis to constitute a hardship.

Priority will be given to homeless cases accompanied by a certification from a third party entity such as an agency for the homeless.  In exceptional cases when State funding is not sufficient to serve such applicants, State Directors may submit hardship and homeless cases for National Office reserve funds. Requests should be submitted using the NORF system as described on page 13, paragraph II.B.3.g. of this attachment.  The National Office will make a review of a States set-aside reserve prior to approving the funding request.

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 11

(iii)   Rural Housing Demonstration Program.  $1 million has been set aside for innovative construction demonstration initiatives. Further instructions are included in the SFH Loan and Grant Field Office Handbook, HB-1-3550, Appendix 15.

(iv)   Program Real Estate Owned (REO) sales.  $25 million has been set aside for program sales of program REO property.  There will be no State distribution of these funds; rather funds will be available on a first-come, first-served basis.  Requests should be submitted using the NORF system as described on page 13, paragraph II.B.3.g. of this attachment.  The requested amount and the amount reflected in MortgageServ must match in order for the request to be considered.

c.   Homeownership partnership.  $112.1 million has been set
  aside for homeownership partnerships.  These funds will be
  used for SFH loans to eligible individuals in connection
  with new and existing partnerships that include long-term
  fixed-rate financing from another lender. Funds will be 
  distributed from this reserve by quarter in the same
  manner as direct 502 funds. 

States will obligate the entire loan amount by utilizing 25 percent funding from the States RHLP/CDFI reserve and 75 percent funding from the National Office reserve.  The National Office contribution will be distributed from the section 502 homeownership partnership reserve by quarter in the same manner as direct 502 funds; however, additional funds will not be distributed until the previous quarters allocation has been utilized.	

(i)   Department of Treasury, Community Development 
Financial Institutions (CDFI) - Funds will be available to fund leveraged loans made in partnership with the Department of Treasury CDFI participants.

(ii)  Partnership initiatives established to carry out the objectives of the RHLP. 

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 12

d. Designated reserve for self-help.  $175 million has been
     set aside to assist participating self-help applicants.
     States will consult with their T&MA Contractor to get 
     planned and historical usage.  Using the correct 
     proportions will help ensure that the State has adequately
     funded the appropriate income categories.  

  States are encouraged to work with self-help grantees and
  participating applicants in leveraging funds to expand the
  amount available for financing section 502 RH loans.

  States will obligate the entire loan amount by utilizing
  100 percent funding from the National Office reserve.  The
  National Office contribution will be distributed from the 
  section 502 self-help reserve by quarter in the same 
  manner as direct 502 funds; however, additional funds will
  not be distributed until the previous quarters allocation
  has been utilized.  

When the National Office reserve is exhausted, states will use allocated funds for additional self-help requirements.

e.   Underserved counties and colonias.  $56,074,297 has been
     set aside for the 100 underserved counties and colonias.
     The underserved counties are identified in part I of this 
     attachment. Requests should be submitted using the NORF 
     system as described on page 13, paragraph II.B.3.g. of
     this attachment.  Additional underserved counties may be
     requested after June 30, 2008.  Allocation amounts for
     underserved and colonias areas are listed on page 24. 

f.   Empowerment Zone (EZ), Enterprise Community (EC) or Rural
     Economic Area Partnership (REAP) set-aside.  $17,978,388
     has been set-aside for loans in EZs, ECs or REAPs only.
     If these funds are not obligated for EZ, EC communities or
     REAP Zones by June 30, 2008, they shall remain available
     for other authorized purposes. Allocation amounts for
     EZ/EC/REAP funds are listed on page 25.  
 

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 13

g.   Reserve requests.  All National Office reserve requests 
     other than Homeownership Partnership and 502 Self-Help 
     should be submitted to the National Office on a case-by-
     case basis utilizing the National Office Reserve Funds 
     (NORF) system.  NORF is an automated, web-based system 
     used for requesting National Office reserve funds.  
     Requests for reserve funds must include the applicant's 
     name, account number, full loan amount, amount being 
     requested, and income category, as well as a justification 
     if applicable.  The information in requests must match 
     exactly what is in MortgageServ.  Requests with 
     inconsistencies between NORF and MortgageServ will not be
     processed.

h.   State Office pooling.  If pooling is conducted within a
     State, it must not take place within the first 30
     calendar days of the first, second, or third quarter.
     (There are no restrictions on pooling in the fourth 
     quarter.)  Pooled funds may be redistributed by the State
     Director provided the State Director has determined that
     the pooled funds could not be used in the field offices
     receiving the funds allocated in accordance with this 
     instruction.  This determination will be in writing,
     filed in the State office, and will include a statement
     that all appropriate efforts were made to use the funds
     as allocated.

  i.   Suballocation by the State Director.  The State Director
       may suballocate to each area office using the 
       methodology and formulas required by this instruction. 
       If suballocated to the area level, the Area Director 
       will make funds available on a first-come, first-served 
       basis to offices at the field or area level.  No field 
       office will have its access to funds restricted without
       the prior written approval of the Administrator.  State
       Directors may hold funds in reserve for leveraging and
       other initiatives.

C.   Section 504 housing loans and grants.  Section 504 grant funds are
          included in the Rural Housing Assistance Grant program (RHAG) in the
          FY 2008 appropriation.  Funds included in RHAG may be transferred in 
          accordance with part I of this attachment.

(04-01-08)  SPECIAL PN

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 14

1.   Amount available for allocation.

Section 504 loans                

 Total available
$34,409,013
   less 5% for 100 underserved

      counties and colonias
$ 1,720,450
   EZ, EC or REAP set-aside
$ 627,666
   less general reserve
$ 733,915
 Basic formula  administrative

    allocation 
$31,326,982 
Section 504 grants 

Total available
$29,790,000
  less 5% for 100 underserved

     counties and colonias
$ 1,489,500
  EZ, EC or REAP set-aside
$   595,800
  less general reserve
$ 1,649,895
Basic formula - administrative

   Allocation
$26,054,805 
2.   Reserves and set-asides.

(a)   State Office Reserve.  State Directors must:

(i)   Maintain an adequate reserve to handle all anticipated hardship applicants as determined by the State Director and based upon historical data and projected demand for section 504 hardship applications (see paragraph II.B.3.a.(i)(A) of this subpart).  

(ii)  Maintain records on how State office section 504 loan and grant funds are utilized.  

(iii) States will leverage an amount equal to 5 percent of their initial section 504 Loan allocation.  For example, if a State receives an initial 504 Loan allocation of $200,000, the amount to be leveraged from other sources would be $10,000 ($200,000 X 5 percent) for a total HCFP and other funding source of $210,000 ($200,000 + $10,000).

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 15
(Revision 1)

  (b)   Underserved counties and colonias.  $1,720,450 and
     $1,489,500 have been set aside for the 100 underserved 
     counties and colonias for the section 504 loan and grant 
     programs respectively.  The underserved counties are 
     identified in part I of this attachment.  Allocation 
     amounts for underserved and colonias areas are listed on 
     page 24.

         (c)   Empowerment Zone (EZ), Enterprise Community (EC) or Rural
     Economic Area Partnership (REAP) Set-aside.  $627,666 and
     $595,800 have been set-aside for EZ, EC or REAPs for the
     section 504 loan and grant programs, respectively.  These
     funds are set-aside for EZs, ECs or REAPs only.  If these
     funds are not obligated for EZ, EC communities or REAP 
     Zones by June 30, 2008, they shall remain available for
     other authorized purposes.  Allocation amounts for 
     EZ/EC/REAP funds are listed on page 25.

              (d)   National Office Reserve.  $733,915 for section 504 loan
     hardships and $1,649,895 for section 504 grant extreme 
     hardships have been set-aside in the general reserve.

(i)   For section 504 grants, an extreme hardship case is one requiring a significant priority in funding, ahead of other requests, due to severe health or safety hazards.  Prior to funding hardship cases, the National Office will review the States reserve account set aside for grants.

(ii)  Section 504 grant requests must be reviewed and sufficient documentation must be provided to support the hardship.  The following information must be considered and included:

(A)   A clear determination that the 504 grant applicant is unable to repay a section 504 loan.  NOTE:  A copy of the applicants Form RD 1944-3, Budget and/or Financial Statement is no longer needed.  

(04-01-08)  SPECIAL PN 

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 16
(Revision 1)

(B)   The grantee is unable to obtain financial assistance from sources other than the HCFP loans or grants.
 
(C)   The grantee lacks personal resources that can be utilized to meet the grantees needs.

(e)  Requesting Section 504 Loan and Grant Funds.  Requests for
     section 504 loan and grant funds from the National reserve
     should be submitted on a case-by-case basis utilizing the
     NORF as described on page 13, paragraph II.B.3.g. of this
     attachment.

National Office contacts for program initiatives. 

Program Initiatives
Contact
Phone #
504 Loan & Grant Requests
Nica Mathes
(202) 205-3656
Compensation for Construction Defects
Myron Wooden
(202) 720-4780
Funds for Sale of Program/Non Program Real Estate Owned (REO) Properties
Renee May
(314) 206-2157
Hardship and Homelessness Requests (502)
Scott Nista
(202) 720-1463
Hardship Requests (504)
Nica Mathes
(202) 205-3656
Homeownership Partnership Fund Usage Report/Requests for additional Funds
Janet Carter
(202) 720-1489
Housing Application Packaging Grants (HAPG)
Nica Mathes
(202) 205-3656
Leveraging Participation 
Janet Carter
(202) 720-1489
Matching funds for States with approved Mutual Self-Help housing grants
Scott Nista
(202) 720-1463
Mutual & Self-Help Technical Assistance Grants
Chris Ketner
(202) 690-1530
Mutual and Self-Help Site Loans
Nica Mathes
(202) 205-3656
National Office Reserve Funds (NORF) System
Scott Nista
(202) 720-1463
HCFP Site Loans
Nica Mathes
(202) 205-3656
Rural Housing Voucher Demonstration Program
Gloria Denson
(202) 720-1487
SFH Guaranteed Loan Division National Office Reserves
Melvin Carroll or Dave Chaput
(202) 690-4742
(202) 720-1456
Technical & Supervisory Assistance (TSA)
Nica Mathes
(202) 205-3656
502 Underserved Counties and Colonias
Scott Nista
(202) 720-1463
504 Underserved Counties and Colonias
Nica Mathes
(202) 205-3656

RD Instruction 1940-L
Exhibit A
Attachment 2, Part II
Subpart C, Page 17
(Revision 1)

Information on basic formula criteria, data source and weight, administrative allocation, pooling of funds, and availability of the allocation

#

DESCRIPTION
SECTION 502 NONSUBSIDIZED GUARANTEED RH LOANS
SECTION 502 DIRECT RH LOANS
SECTION 504 LOANS AND GRANTS
1
Basic formula criteria, data source, and weight
See 1940.563(b) of this instruction.
See 1940.565(b) of this instruction.
See  1940.566(b) and 1940.567(b) of this instruction.





2
Administrative Allocation.




Western Pacific Area
$8,298,821
$2,000,000
$500,000 loan
$500,000 grant





3
Pooling of funds.





a. Year-end pooling
August 15, 2008
July 17, 2008
July 17, 2008

b. Underserved counties & colonias
N/A
June 30, 2008
June 30, 2008

c.  EZ, EC or REAP 
N/A
June 30, 2008
June 30, 2008





4
Availability of the allocation.




a. first quarter
 40 percent
 50 percent
 50 percent

b. second quarter
 70 percent
 75 percent
 75 percent

c. third quarter
 90 percent
100 percent
100 percent

d. fourth quarter
100 percent
100 percent
100 percent
1. Data derived from the 2000 U.S. Census is available on the web at http://census.sc.egov.usda.gov. 
2. Due to the absence of Census data.
3. All dates are tentative and are for the close of business (COB). Pooled funds
 	will be placed in the National office reserve and made available 
   administratively.  The Administrator reserves the right to redistribute 
   funds based upon program performance.
4. Funds will be distributed cumulatively through each quarter listed until
   the National Office year-end pooling date.

(04-01-08)  SPECIAL PN

Exhibit A, Attachment 2, Part II, Subpart C, Pages 18 thru 26 in PDF ONLY.

RD Instruction 1940-L
Exhibit B
Page 1

SECTION 515 NONPROFIT SET ASIDE (NPSA)

I.  Objective:  To provide eligible nonprofit entities with a reasonable opportunity to utilize Section 515 funds.

II.  Background:  The Cranston-Gonzalez National Affordable Housing Act of 1990 established the statutory authority for the Section 515 NPSA funds.

III.  Eligible entities.  Amounts set aside shall be available only for nonprofit entities in the State, which may not be wholly or partially owned or controlled by a for-profit entity.  An eligible entity may include a partnership, including a limited partnership, that has as its general partner a nonprofit entity or the nonprofit entity's for-profit subsidiary which will be receiving low-income housing tax credits authorized under section 42 of the Internal Revenue Code of 1986.  For the purposes of this exhibit, a nonprofit entity is an organization that: 

A.  Will own an interest in a project to be financed under this section and will materially participate in the development and the operations of the project; and

B.  Is a private organization that has nonprofit, tax exempt status under section 501(c)(3) or section 501(c)(4) of the Internal Revenue Code of 1986; and

C.  Has among its purposes the planning, development, or management of low-income housing or community development projects; and

D.  Is not affiliated with or controlled by a for-profit organization; and

E.  May be a consumer cooperative, Indian tribe, or tribal housing authority.

IV.  Nondiscrimination.  Rural Development reemphasizes the nondiscrimination in use and occupancy, and location requirements of 3560.104 of Subpart C of Part 3560 of this chapter.

(02-24-05)  SPECIAL PN

RD Instruction 1940-L
Exhibit B
Page 2

V.  Amount of Set Aside.  See Attachment 1 of this exhibit (available in any Rural Development State Office):

A.  Small State Allocation Set Aside (SSASA).  The allocation for small States has been reserved and combined to form the SSASA, as shown in Attachment 1 of this exhibit (available in any Rural Development State Office).  The definition of small State is included in Attachment 1 of this exhibit (available in any Rural Development State Office).

B.  Large State Allocation Set Aside (LSASA).  The allocation for large States has been reserved in the amounts shown in Attachment 1 of this exhibit (available in any Rural Development State Office).  The definition of large State is included in Attachment 1 of this exhibit (available in any Rural Development State Office).

C.  NPSA Rental Assistance (RA).  NPSA RA has been reserved in the National Office as shown in Attachment 1 of this exhibit (available in any Rural Development State Office). 

VI.  Access to NPSA funds and RA.  RA is available and may be requested, as needed, with eligible loan requests.  NPSA funds and RA should be requested by the State Director using a format similar to Attachment 2 of this exhibit (available in any Rural Development State Office).  Funds are available as follows:

A.  SSASA:  The SSASA is available to any SSASA State on a first-come-first-served basis until pooling.  See Attachment 3 of this exhibit (available in any Rural Development State Office) for information regarding pooling.

B.  LSASA:  LSASA States may request LSASA funds up to the amount the State contributed to LSASA until pooling.  See Attachment 3 of this exhibit (available in any Rural Development State Office) for information regarding pooling.

VII.  General information on priority/processing of preapplications.

A.  Preapplications/applications for assistance from eligible nonprofit entities under this subpart must continue to meet all loan making requirements of Subpart B of Part 3560 of this chapter. 

RD Instruction 1940-L
Exhibit B
Page 3

B.  A separate processing list will be maintained for NPSA loan requests.

C.  The State Director may issue Form AD-622, "Notice of Preapplication Review Action," requesting a formal application to the highest ranking preapplication(s) from eligible nonprofit entities defined in paragraph III of this exhibit as follows:

1.  LSASA.  In LSASA States, AD-622s may not exceed 150 percent of the amount the State contributed to the LSASA.  No single Form 
AD-622 may exceed the amount of funds the State contributed to LSASA.

2.  SSASA.  In SSASA states, AD-622s should not exceed the greater of $750,000 or 150 percent of the amount the State contributed to the SSASA; except that the State Director in a SSASA State may request authorization to issue a Form AD-622, in an amount in excess of $750,000 if additional funds are necessary to finance an average-size proposal based upon average construction costs in the state.  For example, if the average size proposal currently being funded in the state is 24 units, and the average construction cost in the state is $35,000 per unit, the state may request authorization to issue a Form AD-622 for $840,000.  The State Director will submit such requests to the National Office including data reflecting average size/cost projects in the State.  No single Form AD-622 may exceed the amount of funds the State may receive from the SSASA.

D.  All AD-622s issued for proposals to be funded from NPSA will be subject to the availability of NPSA funds.  Form AD-622 should contain the following or similar language:  "This Form AD-622 is issued subject to the availability of Nonprofit Set Aside (NPSA) funds."

E.  If a preapplication requesting NPSA funds has sufficient priority points to compete with non-NPSA loan requests based upon the District or State allocation (as applicable), the preapplication will be maintained on both the NPSA and non-NPSA rating/ranking lists.  

(02-24-05)  SPECIAL PN

RD Instruction 1940-L
Exhibit B
Page 4

F.  Provisions for providing preference to loan requests from nonprofit organizations is contained in 7 CFR part 3560.56, Subpart B.  Limited partnerships, with a nonprofit general partner, do not qualify for nonprofit preference.

VIII.  Exception authority.  The Administrator, or his/her designee, may, in individual cases, make an exception to any requirements of this exhibit which are not inconsistent with the authorizing statute, if he/she finds that application of such requirement would adversely affect the interest of the Government or adversely affect the intent of the authorizing statute and/or Rural Rental Housing program or result in an undue hardship by applying the requirement.  The Administrator, or his/her designee, may exercise this authority upon the request of the State Director, Assistant Administrator for Housing, or Director of the Multi-Family Housing Processing Division.  The request must be supported by information that demonstrates the adverse impact or effect on the program.  The Administrator, or his/her designee, also reserves the right to change pooling dates, establish/change minimum and maximum fund usage from NPSA, or restrict participation in the set aside.

Attachments:  Attachments 1, 2, and 3.

oOo

RD Instruction 1940-L
Exhibit B
Attachment 1

SECTION 515 NONPROFIT SET ASIDE (NPSA) ALLOCATIONS

FISCAL YEARS 1993 AND 1994

I.  Fiscal Year (FY) 93/94 NPSA allocation:  Nine percent of each State's FY 93 and FY 94 allocation has been set aside in the National Office for NPSA, as follows:

A.  Small State Allocation Set Aside (SSASA):  Small States are those in which 9 percent of their allocation is less than $750,000.  Nine percent of each small States allocation has been reserved and combined to form the SSASA.

B.  Large State Allocation Set Aside (LSASA):  Large States are those in which 9 percent of their allocation is more than $750,000.  Nine percent of each large State's allocation has been reserved.

II.  NPSA Rental Assistance:  See the Multi-Family Housing funding attachment to Exhibit A of this subpart (available in any Rural Development State Office).

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(07-21-93)  PN 209

	RD Instruction 1940-L
	Exhibit B
	Attachment 2

SUBJECT:  Request for Nonprofit Set Aside (NPSA)
          Funds and Rental Assistance (RA)

     TO:                               
          Assistant Administrator
          Housing

   ATTN:  Multi-Family Housing Processing Division

We hereby request NPSA funds and RA as follows:

State Name: __________________ County Name: ________________

State Code: _____   District Code: _____  County Code: _____

	Name of Applicant: ____________________________________

	Type of Applicant:  

____ Nonprofit (NP) organization
____ Limited partnership with NP general partner 
____ Indian tribe or tribal housing authority
____ Other (please specify) ______________________

	Project Name: _________________________________________

	Type of Complex: _________________ No. of Units: ______

	Priority Processing Point Score: _______________ points

	Total Loan Request: $___________________ RA Units: ____

	NPSA Request:  $________________________ RA Units: ____

Other comments/information:

The applicant is an entity which meets the requirements of RD Instruction 1940-L, Exhibit B.

State Director

(Instructions:  Submit a separate request for each NPSA request.)

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(07-21-93)  PN 209

RD Instruction 1940-L
Exhibit B
Attachment 3
Page 1

SECTION 515 NONPROFIT SET ASIDE (NPSA) POOLING

FISCAL YEAR (FY) 1994 AND THEREAFTER

Pooling for Small State Set Aside (SSASA) and Large State Set Aside (LSASA):  Beginning with FY 94, unused SSASA and LSASA funds will be pooled as follows:

A.  On or after July 1, of each year, unused funds from the SSASA and the LSASA States will be combined and made available, on a first-come-first-served basis, in any State, for eligible nonprofit entities meeting the requirements of paragraph III of Exhibit B of this subpart.  The exact pooling date will be established annually and will be included in the Multi-Family Housing (MFH) funding attachment to Exhibit A of this subpart (available in any Rural Development State Office).  The MFH funding attachment is also published annually as a Notice in the Federal Register.

B.  Unused funds remaining 30 days after the pooling date will be returned to the States for use for any Section 515 proposal ready for obligation, without regard to the type of applicant entity.  Funds will be returned to States that did not use the full amount contributed, in an amount proportionate to the amount contributed.

(07-21-93)  PN 209

RD Instruction 1940-L
Exhibit B 
Attachment 3
Page 2

SECTION 515 NPSA POOLING

FY 1993

I.  Pooling for SSASA States:

A.  June 18, 1993, is the last date for SSASA States to request SSASA funds and RA units.  At close of business (COB) June 18, 1993, any unused SSASA funds will be pooled and made available to any SSASA State on a first-come-first-served basis until COB July 19, 1993.

B.  Unused funds, as of COB July 19, 1993, will be returned to SSASA States which did not use the full amount of set aside funds they contributed, in an amount proportionate to the amount contributed.  The returned funds may be used for Section 515 proposals ready for obligation, without regard to the type of applicant entity.

II.  Pooling for LSASA States:

A.  LSASA States may request LSASA funds, up to the amount contributed, until COB July 19, 1993.

B.  Unused LSASA funds will be returned to the States as of COB 
July 19, 1993.  These funds may be used for Section 515 proposals ready for obligation, without regard to the type of applicant entity.

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RD Instruction 1940-L
Exhibit C
Page 1

HOUSING IN UNDERSERVED AREAS

I.	Objective.

A.  To improve the quality of affordable housing by targeting funds under Rural Housing Targeting Set Aside (RHTSA) to designated areas that have extremely high concentrations of poverty and substandard housing and have severe, unmet rural housing needs.

B.  To provide for the eligibility of certain
colonias for rural housing funds.

II.  Background.  The Cranston-Gonzalez National Affordable Housing Act of 1990 (herein referred to as the "Act") requires that Rural Development set aside Section 502, 504, 514, 515, and 524 funds for assistance in targeted, underserved areas.  An appropriate amount of Section 521 new construction rental assistance (RA) is set aside for use with Section 514 and 515 loan programs.  Under the Act, certain colonias are now eligible for Rural Development housing assistance.  

III. Colonias.

A.  Colonia is defined as any identifiable community that:

1.  is in the State of Arizona, California, New Mexico or Texas;

2.  is in the area of the United States within 150 miles of the border between the United States and Mexico, except that the term does not include any standard metropolitan statistical area that has a population exceeding 1 million;

3.  is designated by the State or county in which it is located as a colonia;

4.  is determined to be a colonia on the basis of objective criteria, including lack of potable water supply, lack of adequate sewage systems, and lack of decent, safe, and sanitary housing; and

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RD Instruction 1940-L
Exhibit C
Page 2

5.  was in existence and generally recognized as a colonia before November 28, 1990.

B.  Requests for housing assistance in colonias have priority as follows:

1.  When the State did not obligate its allocation in one or more of its housing programs during the previous two fiscal years (FYs), priority will be given to requests for assistance, in the affected program(s), from regularly allocated funds, until an amount equal    to 5 percent of the current FY program(s) allocation is obligated in colonias.  This priority takes precedence over other processing priority methods.

2.  When the State did obligate its allocation in one or more of its housing programs during the previous 2 FYs, priority will be given to requests for assistance, in the affected program(s), from RHTSA funds, until an amount equal to 5 percent of the current FY program(s) allocation is obligated in colonias.  This priority    takes precedence over other processing priority methods.

C.  Colonias may access pooled RHTSA funds as provided in paragraph IV G of this exhibit.

IV.  RHTSA.

A.  Amount of Set Aside.  Set asides for RHTSA from the current FY allocations are established in Attachment 1 of this exhibit (available in any Rural Development State Office). 

B.  Selection of Targeted Counties.

1.  Eligibility.  Eligible counties met the following criteria:  (1) 20 percent or more of the county population is at or below poverty level; (2) 10 percent or more of the occupied housing units are substandard; and (3) the average funds received on a per capita basis in the county during the previous 5 FYs were more than 40 percent below the State per capita average during the same period.  Data from the most recent available Census was used for all three criteria, with criteria (2) and (3) based on the Rural Development rural area definition.

RD Instruction 1940-L
Exhibit C
Page 3

2.  Selection.  The Act requires that 100 of the most underserved counties be initially targeted for RHTSA funds.  In establishing the 100 counties, those with 28 percent or more of their population at or below poverty level and 13 percent or more of their occupied housing units substandard, have preference.  If less than 100 counties meet this criteria, the remaining counties    meeting the criteria in paragraph IV B 1 of this exhibit will be ranked, based upon a total of their substandard housing and poverty level percentages.  The highest-ranking counties are then selected until the list reaches 100.  The remaining counties are eligible    for pool funds only.  

C.  State RHTSA Levels.  In the Section 502, 504, and 515 programs, each State's RHTSA level will be based on its number of eligible counties, with each county receiving a pro rata share of the total funds available.  In order to ensure that a meaningful amount of assistance is available to each State, minimum funding levels may be established.  When minimum levels are established, they are set forth on Attachment 1 of this exhibit (available in any Rural Development State Office).  

D.  Use of Funds.  To maximize the assistance to targeted counties, allocated program funds should be used in addition to RHTSA funds, where possible.  The State Director has the discretion to determine the most effective delivery of RHTSA funds among the targeted counties within his/her jurisdiction.  The 100 counties listed in Attachment 2 of this exhibit (available in any Rural Development State Office) are eligible for RHTSA funding consideration immediately.  Colonias are also eligible for RHTSA funds as described in Paragraph III of this exhibit.  

E.  National Office RHTSA Reserve.  A limited National Office reserve is available on an individual case basis when the State is unable to fund a request from its regular or RHTSA allocation.  The amount of the reserve, and the date it can be accessed and any conditions thereof, if applicable, are contained in Attachment 1 of this exhibit (available in any Rural Development State Office).  

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RD Instruction 1940-L
Exhibit C
Page 4

F.  Requests for Funds and RA.  All RHTSA funds are reserved in the National Office and requests for these funds and/or units must be submitted by the State Director using the applicable format shown on Attachments 4 or 5 of this exhibit (available in any Rural Development State Office).  The State Director is responsible for notifying the Director of Single Family Housing Processing Division (SFHPD) or Multi-Family Housing Processing Division (MFHPD) of any RHTSA funds and RA units authorized, but not obligated, by RHTSA pooling date.

G.  Pooling.  Unused RHTSA funds and RA will be pooled. Pooling dates and any pertinent information thereof are available on Attachment 1 of this exhibit (available in any Rural Development State Office).  Pooled funds will be available on a first-come, first-served basis to all eligible colonias and all counties listed on Attachments 2 and 3 of this exhibit (available in any Rural Development State Office).  Pooled RHTSA funds will remain available until the year-end pooling date. 

H.  Outreach.  Outreach efforts publicizing the availability of loan and grant funds for the eligible RHTSA counties will be aggressively carried out.  Each affected State Director will develop an outreach plan which includes such techniques as news releases, community meetings, coordination with other Federal, State, and local government organizations, to promote full utilization of these targeted funds by all qualified applicants regardless of race, color, and sex.  In addition to the above outreach efforts, States with eligible colonias should establish liaison with community groups in order to leverage support and assistance provided to residents of colonias.

I.  Monitoring Performance.

1.  National Office:  The National Office will track the use of targeted funds on a regular basis throughout the FY and take necessary follow-up actions to facilitate the delivery of the program.

2.  State Office:

a.  The State Director will designate a staff member to coordinate all efforts under RHTSA.

RD Instruction 1940-L
Exhibit C
Page 5

b.  Adequate records will be maintained for each of the eligible RHTSA counties, in all programs with RHTSA set asides. 

c.  The State Directors for Arizona, California, New Mexico, and Texas will submit quarterly reports of funds usage in colonias to SFHPD and MFHPD.  Negative reports will be required.  

J.  Requests for Assistance.  Requests for assistance in targeted counties must meet all loan making requirements of the applicable program Instructions, except as modified for colonias in paragraph III of this exhibit.  For Section 515, States may:  

1.  Issue Form AD-622, "Notice of Preapplication Review Action," up to 150 percent of the amount shown in Attachment 1 of this exhibit (available in any Rural Development State Office).  

2.  All AD-622s issued for applicants in targeted counties will be annotated, in Item 7, under "Other Remarks," with the following:  "Issuance of this AD-622 is contingent upon receiving funds from the Rural Housing Targeting Set Aside (RHTSA).  Should RHTSA funds be unavailable, or the county in which this project will be located is no longer considered a targeted county, this AD-622 will no longer be valid.  In these cases, the request for assistance will need to compete with other preapplications in non-targeted counties, based upon its priority point score." 

V.  Exception Authority.  The Administrator, or his/her designee, may, in individual cases, make an exception to any requirements of this exhibit which are not inconsistent with the authorizing statute, if he/she finds that application of such requirement would adversely affect the interest of the Government.  The Administrator, or his/her designee, may exercise this authority upon the request of the State Director, Assistant Administrator for Housing, Director of the SFHPD or Director of the MFHPD.  The request must be supported by information that demonstrates the adverse 

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RD Instruction 1940-L
Exhibit C
Page 6

impact or effect on the program.  The Administrator, or his/her designee, also reserves the right to change the pooling date, establish/change minimum and maximum fund usage from set asides and/or the reserve, or restrict participation in set asides and/or reserves.

Attachments:  1, 2, 3, 4, and 5     

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Exhibit C:  Attachments 1, 2, and 3 in PDF ONLY.

RD Instruction 1940-L
Exhibit C, Attachment 4

SUBJECT:  Request for Rural Housing Targeting 
	     Set Aside (RHTSA) Funds

	TO:  Ronnie O. Tharrington
	     Assistant Administrator
	     Housing

   ATTN:  Single Family Housing Processing Division

We hereby request RHTSA funds as follows:

State Name: ________________  

Program							Amount of RHTSA Requested

Section 502 Very Low-Income Funds         $  _____________________

Section 502 Low-Income Funds              $  _____________________

Section 504 Loan Funds                    $  _____________________

Section 504 Grant Funds                   $  _____________________

Section 524 Loan Funds                    $  _____________________

State Director

(General Instructions - Individual listing of counties or applicants not required.  Requests should be grouped and submitted on a periodic basis.)

(02-20-91)  SPECIAL PN

RD Instruction 1940-L
Exhibit C, Attachment 5

SUBJECT:  Request for Rural Housing Targeting Set Aside (RHTSA)
          Funds and Rental Assistance (RA) 

	TO:  Ronnie O. Tharrington
          Assistant Administrator
          Housing

   ATTN:  Multi-Family Housing Processing Division

We hereby request funds and RA from the RHTSA as follows:  

State Name: ___________ County Name: _________ Colonia: __________________

State Code: __________  County Code: ________   District Code: ___________

     
	Name of Applicant: __________________________________________________

	Project Name: _______________________________________________________

     Project Physical Location: __________________________________________

	Type of Project: _________________ No. of rental units: _____________

	Priority Processing Point Score: _______________ points

	Total Loan Request: $__________________  RA units ___________________

     RHTSA Request: $________________________ RHTSA RA Request ___________

     Projected Obligation Date: _____________________

Other comments/information:

State Director

[General Instructions - Complete a separate Attachment 5 for each RHTSA request.]

(02-20-91)  SPECIAL PN

RD Instruction 1940-L
Exhibit D
Page 1

RURAL RENTAL HOUSING DIVERSITY DEMONSTRATION PROGRAM (RRHDDP)

I.	Objectives.

A.  To encourage applicants of limited gross incomes which have little or no participation in the Section 515 program.

B.  To provide housing in unserved areas.

C.  To provide an economic stimulus to the local economy by encouraging procurement of labor, goods, and services from the local community.  

II.  Background.  In accordance with Section 506 (b) of the Housing Act of 1949, as amended, the Secretary is authorized and directed to conduct research, technical studies, and demonstrations relating to the mission and programs of Rural Development and the national housing goals defined in section 2 of this Act.  In connection with such activities, the Secretary shall seek to promote the construction of adequate farm and other rural housing.  The Secretary shall conduct such activities for the purposes of stimulating construction and improving the architectural design and utility of dwellings and buildings.  In furtherance of this goal, the Rural Rental Housing Diversity Demonstration Program (RRHDDP) is implemented.  An appropriate amount of Section 521 new construction rental assistance (RA) is set aside for use with Section 515 loan funds.  

III.	RRHDDP.

A.  Amount of Set Aside.  Set asides for RRHDDP from the current fiscal year (FY) allocations are established in Attachment 1 of this exhibit. 

B.  Selection of States.  All States were considered using the following criteria:  

1.  Highest percentage of poverty; 

2.  Highest percentage of substandard housing; 

3.  Highest unemployment rates; 

4.  Lowest rural median income; and 

5.  Number of places with population of 2,500 or fewer.

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RD Instruction 1940-L
Exhibit D
Page 2

Each State selected for RRHDDP had to be in the top 10 of at least 3 of the 5 criteria.  Data from the 1990 census was used for all criteria.  The States selected are listed in Attachment 1 of this exhibit.

C.  State RRHDDP Levels.  See Attachment 1 of this exhibit.

D.  Use of Funds.  To ensure the success of RRHDDP, the State Director may leverage funds from the RRHDDP with allocated funds from the Section 515 and 521 allocations held in the State Office reserve.  The State Director has the discretion to determine the most effective delivery of RRHDDP funds; however, the intent and scope of the program should be ever present in the implementation and application processes.

E.  National Office RRHDDP Reserve.  There is no RRHDDP reserve available when the State is unable to fund a request from its regular or RRHDDP allocation. 

F.  Pooling.  Unused RRHDDP funds and RA will be pooled.  Pooling dates and any pertinent information thereof are available on Attachment 1 of this exhibit.  Pooled funds will be available on a first-come-first-served basis to all eligible States listed on Attachment 1 of this exhibit.  Pooled RRHDDP funds will remain available until the year-end pooling date.

IV. Eligibility.  Applicants and proposals will need to meet the following requirements, in addition to those found in 7 CFR part 3560, Subpart B: 

A.  The applicant must have had an interest (including family members) in no more than one Section 515 loan over the past 3 years.  For entity applicants, this restriction applies to all general partners and their family members.  For the purposes of this program, interest means a Section 515 loan which has been approved and funds obligated.

B.  The applicant must have had a gross aggregate income from business and personal operations of less than $500,000 in the previous calendar year.  For entity applicants, the aggregate income of all general partners will be considered.  American Indian tribes and tribal housing authorities are exempt from these income requirements.

C.  At least 51 percent of the labor, goods, and services to develop the proposed housing must come from the market area as described in paragraph V B of this exhibit.

RD Instruction 1940-L
Exhibit D
Page 3

D.  The housing must be constructed in a market area without similar subsidized housing.  Market area is defined in 7 CFR part 3560, 
Subpart A. 

E.  The proposed complex must contain no more than 50 percent of the average number of units of the average size Section 515 complex in the State based on the previous FY average.  

V.	Processing Preapplications.

A.  Requirements.  To be eligible for participation in this demonstration program, applicants must ensure that the preapplication meets all requirements set forth in 7 CFR part 3560 and this exhibit. 

1.  All complete preapplications must be received in the place designated by the State Director by the date listed in Attachment 1 of this exhibit.  Incomplete preapplications will not be considered.  A complete preapplication consists of all items specified in THC Notice of Funding Availability that will be published in the Federal Register each Fiscal Year. 

2.  Based upon projected demand for the RRHDDP, the State Director will select the manner in which preapplications will be rated prior to implementation and/or announcement of the program to ensure the public is aware of how requests will be prioritized.  The State Director may elect one of the following systems to prioritize and select proposals for further processing:

a.  The priority point system contained in 7 CFR 3560.56 or 

b.  The following priority point scoring system; 

(i)Interest in Section 515 loans over the past 3 FYs as specified in paragraph IV A of this exhibit.

No Interest                   - 5 points
Interest in 1 project         - 2 points

(ii) Gross incomes as defined in paragraph IV B of this exhibit.

Income:  $400,001-499,999      - 1 point
         $300,000-400,000      - 2 points
         $299,999 or less      - 3 points
   American Indian Tribes/Tribal
     Housing Authorities   - 3 points

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RD Instruction 1940-L
Exhibit D
Page 4

(iii)  Percent of the labor, goods, and services must come from the local market described in paragraph V B of this exhibit.

   100% from local market     - 5 points
 90-99% from local market     - 4 points
 80-89% from local market     - 3 points
 70-79% from local market     - 2 points
 51-69% from local market     - 1 point

(iv) Size of proposed complex compared to average size complex obligated in previous FY.

40-50% average size           - 3 points
30-39% average size           - 4 points
less than 30%                 - 5 points

c.  A combination of the points received in paragraphs V A 2 a and b of this exhibit.

3.  In the event of a tie, the proposal with the earliest date of complete preapplication will take preference.

B.  Procurement of labor, goods, and services.  One of the intents of the RRHDDP is to stimulate the local economy by encouraging procurement of labor, goods, and services from the local area.  Rural Development recognizes that defining a local trade area in which to procure the labor, goods, and services to build an apartment complex is difficult in rural America.  To be responsive to the application procedures, applicants must procure labor, goods, and services from Level One of this paragraph.  If labor, goods, and services are not available in Level One of this paragraph, the applicant may use the trade area defined in Level Two of this paragraph.  Documentation as to why the labor, goods, and services are not available in Level One of this paragraph must be included in the case file.  The applicant may propose to secure labor, goods, and services from Level Three or Four of this paragraph; however, documentation as to why same is not available in all of the previous levels must be included in the case file.

1.  Level One:  Labor, goods, and services must be procured within 15 miles of the proposed site of the apartments.

2.  Level Two:  Labor, goods, and services must be procured within the county where the proposed apartments will be located.

RD Instruction 1940-L
Exhibit D
Page 5

3.  Level Three:  Labor, goods, and services must be procured within the lesser of 50 miles from the site of the proposed complex OR the boundaries of any adjacent county (regardless of State boundary).

4.  Level Four:  Labor, goods, and services must be procured within 100 miles of the proposed site (regardless of State boundary).

C.  Outreach.  Outreach efforts publicizing the availability of loan funds for the eligible RRHDDP States will be aggressively carried out.  Each affected State Director will develop an outreach plan which includes such techniques as news releases, community meetings, coordination with other Federal, State, and local government organizations, to promote full utilization of these funds by all qualified applicants regardless of race, color, religion, national origin, marital status, age, and sex.  In addition to the above outreach efforts, States with eligible colonias and/or tribal lands should establish liaison with community groups in order to leverage support and assistance provided to residents of colonias and tribal lands.
                                       
D.  Monitoring Performance.

1.  National Office:  The National Office will track the use of targeted funds on a regular basis throughout the FY and take necessary follow-up actions to facilitate the delivery of the program.

2.  State Office:  The State Director will designate a staff member to coordinate all efforts under RRHDDP.

E.  Issuance of Form AD-622, "Notice of Preapplication Review Action," inviting a formal application.

1.  The State Director may issue AD-622s up to 100 percent of the amount shown in Attachment 1 of this exhibit and any funds made available from the State Office reserve.

2.  All AD-622s issued for applicants under this demonstration program will be annotated, in Item 7 of the form, under "Other Remarks," with the following: 

"Issuance of this AD-622 is contingent upon receiving funds from the Rural Rental Housing Diversity Demonstration Program (RRHDDP).  Should RRHDDP funds be unavailable or the program discontinued, 

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RD Instruction 1940-L
Exhibit D
Page 6

this AD-622 will no longer be valid.  In these cases, the request for assistance will need to compete with other preapplications based upon its priority point score established in accordance with 7 CFR 3560.56. 

VI.   Exception Authority.  The Administrator, or his/her designee, may, in individual cases, make an exception to any requirements of this exhibit which are not inconsistent with the authorizing statute, if he/she finds that application of such requirement would adversely affect the interest of the Government.  The Administrator, or his/her designee, may exercise this authority upon the request of the State Director, Assistant Administrator for Housing, or Director of the Multi-Family Housing Processing Division (MFHPD).  The request must be supported by information that demonstrates the adverse impact or affect on the program.  The Administrator, or his/her designee, also reserves the right to change the pooling date, establish/change minimum and maximum fund usage from set asides and/or the reserve, or restrict participation in set asides and/or reserves.

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