[Federal Register Volume 83, Number 241 (Monday, December 17, 2018)]
[Proposed Rules]
[Pages 64488-64490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27138]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 83, No. 241 / Monday, December 17, 2018 / 
Proposed Rules

[[Page 64488]]



DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3565

RIN 0575-AD12


Section 538 Guaranteed Rural Rental Housing Program Notice of 
Funding Availability Elimination

AGENCY: Rural Housing Service, USDA.

ACTION: Proposed rule

-----------------------------------------------------------------------

SUMMARY: The Rural Housing Service (RHS or Agency) is amending its 
regulation to eliminate the requirement for the annual publication of 
Notice of Funding Availability (NOFA). Additionally, RHS will remove 
all references to the term NOFA in other various sections. The intended 
effect of this action is to allow the Agency to accept and start 
processing applications in a more fluid manner.

DATES: Written or email comments must be received on or before February 
15, 2019.

ADDRESSES: You may submit comments to this rule by any of the following 
methods:
    <bullet> Federal eRulemaking Portal: Go to http://www.regulations.gov and, in the lower ``Search Regulations and Federal 
Actions'' box, select ``Rural Utilities Service'' from the agency drop-
down menu, then click on ``Submit.'' In the Docket ID column, select 
RHS-18-MFH-0025 to submit or view public comments and to view 
supporting and related materials available electronically. Information 
on using Regulations.gov, including instructions for accessing 
documents, submitting comments, and viewing the docket after the close 
of the comment period, is available through the site's ``User Tips'' 
link.
    <bullet> Postal Mail/Commercial Delivery: Submit written comments 
to Michele L. Brooks, Team Lead, RD Innovation Center--Regulatory Team, 
Rural Development, U.S. Department of Agriculture, STOP 1522, 1400 
Independence Avenue SW, Washington, DC 20250-1522. All written comments 
will be available for public inspection during regular work hours at 
1400 Independence Avenue SW, Mailstop 1522, Washington, DC 20250.

FOR FURTHER INFORMATION CONTACT: Monica Cole, Finance and Loan Analyst, 
Multi-Family Housing Guaranteed Loan Division, Rural Housing Service, 
U.S. Department of Agriculture, STOP 0781-Room# 1263S, 1400 
Independence Avenue SW, Washington, DC 20250-0781, Telephone: (202) 
720-1251 (this is not a toll-free number); email: 
<a href="/cdn-cgi/l/email-protection#a2cfcdcccbc1c38cc1cdcec7e2d5c6c18cd7d1c6c38cc5cdd4"><span class="__cf_email__" data-cfemail="a5c8cacbccc6c48bc6cac9c0e5d2c1c68bd0d6c1c48bc2cad3">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Executive Order 12866--Classification

    This proposed rule has been determined to be non-significant and; 
therefore, was not reviewed by the Office of Management and Budget 
(OMB) under Executive Order 12866.

Authority

    The Guaranteed Rural Rental Housing (GRRH) program is administered 
subject to appropriations by the U.S. Department of Agriculture (USDA) 
as authorized under the Housing Act of 1949 as amended, Section 538, 
Public Law 106-569, 42 U.S.C. 1490 p-2.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1970, 
subpart A, ``Environmental Policies.'' RHS determined that this action 
does not constitute a major Federal action significantly affecting the 
quality of the environment. In accordance with the National 
Environmental Policy Act of 1969, Public Law 91-190, an Environmental 
Impact Statement is not required.

Regulatory Flexibility Act

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

Executive Order 13132--Federalism

    The policies contained in this rule do not have any substantial 
direct effect on States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of Government. This rule does 
not impose substantial direct compliance costs on State and local 
Governments; therefore, consultation with States is not required.

Executive Order 12988--Civil Justice Reform

    This rule has been reviewed under Executive Order 12988. In 
accordance with this rule: (1) Unless otherwise specifically provided, 
all State and local laws that conflict with this rule will be 
preempted; (2) no retroactive effect will be given to this rule except 
as specifically prescribed in the rule; and (3) administrative 
proceedings of the National Appeals Division of the Department of 
Agriculture (7 CFR part 11) must be exhausted before bringing suit in 
court that challenges action taken under this rule.

Unfunded Mandate Reform Act (UMRA)

    Title II of the UMRA, Public Law 104-4, establishes requirements 
for Federal Agencies to assess the effects of their regulatory actions 
on State, local, and tribal Governments and on the private sector. 
Under section 202 of the UMRA, Federal Agencies generally must prepare 
a written statement, including cost-benefit analysis, for proposed and 
Final Rules with ``Federal mandates'' that may result in expenditures 
to State, local, or tribal Governments, in the aggregate, or to the 
private sector, of $100 million or more in any one-year. When such a 
statement is needed for a rule, section 205 of the UMRA generally 
requires a Federal Agency to identify and consider a reasonable number 
of regulatory alternatives and adopt the least costly, more cost-
effective, or least burdensome alternative that achieves the objectives 
of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of title II of the UMRA) for State, local, and tribal 
Governments or for the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

[[Page 64489]]

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been approved by OMB and have been assigned OMB control 
number 0575-0189. This final rule contains no new reporting and 
recordkeeping requirements that would require approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

E-Government Act Compliance

    RHS is committed to complying with the E-Government Act by 
promoting the use of the internet and other Information Technologies in 
order to provide increased opportunities for citizen access to 
Government information, services, and other purposes.

Programs Affected

    The program affected by this regulation is listed in the Catalog of 
Federal Domestic Assistance under numbers 10.438--Rural Rental Housing 
Guaranteed Loans (Section 538).

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This executive order imposes requirements on RHS in the development 
of regulatory policies that have tribal implications or preempt tribal 
laws. RHS has determined that the rule does not have a substantial 
direct effect on one or more Indian tribe(s) or on either the 
relationship or the distribution of powers and responsibilities between 
the Federal Government and Indian tribes. Thus, this rule is not 
subject to the requirements of Executive Order 13175. If tribal leaders 
are interested in consulting with RHS on this rule, they are encouraged 
to contact USDA's Office of Tribal Relations or RD's Native American 
Coordinator at: <a href="/cdn-cgi/l/email-protection#c7868e868987b0a3a4e9b2b4a3a6e9a0a8b1"><span class="__cf_email__" data-cfemail="602129212e201704034e151304014e070f16">[email protected]</span></a> to request such a consultation.

Executive Order 12372--Intergovernmental Consultation

    These loans are subject to the provisions of Executive Order 12372, 
which require intergovernmental consultation with State and local 
officials. RHS conducts intergovernmental consultations for each loan 
in accordance with 2 CFR part 415, subpart C.

Non-Discrimination Statement

    In accordance with Federal civil rights law and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Agencies, offices, employees, and institutions participating in or 
administering USDA programs are prohibited from discriminating based on 
race, color, national origin, religion, sex, gender identity (including 
gender expression), sexual orientation, disability, age, marital 
status, familial/parental status, income derived from a public 
assistance program, political beliefs, or reprisal or retaliation for 
prior civil rights activity, in any program or activity conducted or 
funded by USDA (not all bases apply to all programs). Remedies and 
complaint filing deadlines vary by program or incident.
    Persons with disabilities who require alternative means of 
communication for program information (e.g., Braille, large print, 
audiotape, American Sign Language, etc.) should contact the responsible 
Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or 
contact USDA through the Federal Relay Service at (800) 877-8339. 
Additionally, program information may be made available in languages 
other than English.
    To file a program discrimination complaint, complete the USDA 
Program Discrimination Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or 
write a letter addressed to USDA and provide in the letter all of the 
information requested in the form. To request a copy of the complaint 
form, call (866) 632-9992, submit your completed form or letter to USDA 
by:
    (1) Mail: U.S. Department of Agriculture, Director, Office of 
Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410;
    (2) Fax: (202) 690-7442; or
    (3) Email: <a href="/cdn-cgi/l/email-protection#6f1f1d00081d0e024106011b0e040a2f1a1c0b0e41080019"><span class="__cf_email__" data-cfemail="e9999b868e9b8884c780879d88828ca99c9a8d88c78e869f">[email protected]</span></a>.
    USDA is an equal opportunity provider, employer, and lender.

I. Background and Summary of Changes

    The annual publication of the NOFA is currently required by 7 CFR 
part 3565. While, Section 536 of the Housing Act of 1949, as amended 
(42 U.S.C. 1490p) (Housing Act) broadly requires a publication of the 
availability of funds, application procedures, and selection criteria 
in the Federal Register, it does not contain the annual notification 
requirement. RHS is amending its regulation to align with the Housing 
Act requirements, which will allow RHS to continue its application 
process under circumstances such as a Continuing Resolution.
    The delay caused by requiring an annual NOFA also creates a 
disconnect, in regards to the timing of deadlines, with the application 
process of tax credit financed properties, which represent 
approximately 85 percent of the Section 538 portfolio. Of these 
properties that are financed with tax credits, the tax credit equity 
represents approximately 75 percent of the total development cost 
(TDC). Without the injection of tax credit equities, rents would not be 
affordable to low income tenants. When developers use the Section 538 
program with tax credits, they are required to submit a preliminary 
eligibility letter from Rural Development together with the tax credit 
application. If the NOFA is published after the tax credit application 
deadline, the developer will not be able to use tax credits to finance 
the project.
    In lieu of the NOFA process, the Section 538 GRRH program will 
follow procedures similar to other Rural Development guaranteed loan 
programs and accept applications on a continuous basis. The Agency will 
make an announcement to the public when funds are available. Rural 
Development will use the standards from the last NOFA as published in 
the Federal Register on December 21, 2017 (82 FR 60579). If Rural 
Development chooses to change the selection and/or scoring criteria or 
fees charged in subsequent years, it will inform the public of those 
changes through additional notices in the Federal Register. Both 
Empowerment Zone (EZ) and Enterprise Community (EC) Initiatives have 
expired, so reference to those initiatives will also be removed from 7 
CFR part 3565.

List of Subjects in 7 CFR Part 3565

    Conflict of interest, Credit, Fair housing, Loan programs-housing 
and community development, Low and moderate-income housing, 
Manufactured homes, Mortgages, Rent subsidies, Reporting and 
recordkeeping requirements, Rural areas.

    For the reasons set forth in the preamble, RHS proposes to amend 7 
CFR part 3565, as follows:

PART 3565--GUARANTEED RURAL RENTAL HOUSING PROGRAM

0
1. The authority citation for part 3565 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart A--General Provisions


Sec.  3565.3   [Amended]

0
2. Amend Sec.  3565.3 by removing the definition of ``NOFA.''

[[Page 64490]]

0
3. Section 3565.4 is revised to read as follows:


Sec.  3565.4   Availability of assistance.

    The Agency's authority to enter into commitments, guarantee loans, 
or provide interest credits is limited to the extent that 
appropriations are available to cover the cost of the assistance. The 
Agency will notify the public of the availability of assistance, 
changes in application requirements, or changes in the fee structure.
0
4. Amend Sec.  3565.5 by revising paragraph (b) to read as follows:


Sec.  3565.5   Ranking and selection criteria.

* * * * *
    (b) Priority projects. Priority will be given to projects: In 
smaller rural communities, in the most needy communities having the 
highest percentage of leveraging, having the lowest interest rate, 
having the highest ratio of 3-5 bedroom units to total units, or on 
tribal lands. In addition, the Agency may, at its sole discretion, set 
aside assistance for or rank projects that meet important program 
goals. Assistance will include both loan guarantees and interest 
credits. Priority projects must compete for set-aside funds.

Subpart B--Guarantee Requirements

0
5. Amend Sec.  3565.53 by revising paragraph (c) to read as follows:


Sec.  3565.53   Guarantee fees.

* * * * *
    (c) Surcharge for guarantees on construction advances. The Agency 
may, at its sole discretion, charge an additional fee on the portion of 
the loan advanced during construction. If applicable, this fee will be 
charged in advance at the start of construction.

Subpart C--Lender Requirements


Sec.  3565.104   [Amended]

0
6. Amend Sec.  3565.104 by removing the last sentence.

Subpart E--Loan Requirements

0
7. Section 3565.210 is revised to read as follows:


Sec.  3565.210   Maximum interest rate.

    The interest rate for a guaranteed loan must not exceed the maximum 
allowable rate specified by the Agency. This interest rate must be 
fixed over the term of the loan.

Subpart F--Property Requirements

0
8. Section 3565.252 is revised to read as follows:


Sec.  3565.252   Housing types.

    The property may include new construction or rehabilitation of 
existing structures. The units may be attached, detached, semi-
detached, row houses, modular or manufactured houses, or multifamily 
structures. Manufactured housing must meet Agency requirements 
contained in 7 CFR part 1924, subpart A or a successor regulation. The 
Agency will guarantee proposals for new construction or acquisition 
with moderate or substantial rehabilitation of at least $6,500 per 
dwelling unit. The portion of guaranteed funds available for 
acquisition with rehabilitation may be limited.

Subpart G--Processing Requirements

0
9. Amend Sec.  3565.302 by revising paragraph (b) introductory text to 
read as follows:


Sec.  3565.302   Allowable fees.

* * * * *
    (b) Agency Fees. The Agency will charge one or more types of fees 
deemed appropriate as reimbursement for reasonable and necessary costs 
incurred in connection with applications received from lenders. Agency 
fees may include, but are not limited to, the following:
* * * * *

    Dated: November 20, 2018.
Joel C. Baxley,
Administrator, Rural Housing Service.
[FR Doc. 2018-27138 Filed 12-14-18; 8:45 am]
 BILLING CODE 3410-XV-P


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