[Federal Register Volume 76, Number 162 (Monday, August 22, 2011)]
[Notices]
[Pages 52305-52311]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-21318]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service


Notice of Funding Availability: Section 515 Multi-Family Housing 
Preservation Revolving Loan Fund (PRLF) Demonstration Program for 
Fiscal Year 2011

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

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SUMMARY: The Rural Housing Service of Rural Development previously 
announced the availability of funds and the timeframe to submit 
applications for loans to private non-profit organizations, and State 
and local housing finance agencies, to carry out a demonstration 
program to provide revolving loans for the preservation and 
revitalization of low-income Multi-Family Housing (MFH) in a Notice 
published November 9, 2010 (75 FR 68748). Rural Development did not 
receive sufficient applications to use all available funds. As a 
result, Rural Development is soliciting additional applications under 
this Notice. Housing that is assisted by this demonstration program 
must be financed by Rural Development through its MFH loan program 
under Sections 515, 514 and 516 of the Housing Act of 1949. The goals 
of this demonstration program will be achieved through loans made to 
intermediaries. The intermediaries will establish their programs for 
the purpose of providing loans to ultimate recipients for the 
preservation and revitalization of low income Sections 515, 514 and 516 
MFH as affordable housing.

DATES: The deadline for receipt of all applications in response to this 
Notice is 5 p.m., Eastern Time, September 21, 2011. The application 
closing deadline is firm as to date and hour. Rural Development will 
not consider any application that is received after the closing 
deadline. Applicants intending to mail applications must provide 
sufficient time to permit delivery on or before the closing deadline. 
Acceptance by a post office or private mailer does not constitute 
delivery. Facsimile, electronic transmissions and postage due 
applications will not be accepted.

FOR FURTHER INFORMATION CONTACT: Sherry Engel, Financial and Loan 
Analyst, Multi-Family Housing, U.S. Department of Agriculture, Rural 
Housing Service, 4949 Kirschling Court, Stevens Point, Wisconsin 54481 
or Timothy James, Financial and Loan Analyst, Multi-Family Housing, 
STOP 0781 (Room 1263-S), U.S. Department of Agriculture, Rural Housing 
Service, 1400 Independence Avenue, SW., Washington, DC 20250-0781 or by 
telephone at: (715) 345-7677 or (202) 720-1610, TDD (302) 857-3585 or 
via e-mail at: <a href="/cdn-cgi/l/email-protection#a1d2c9c4d3d3d88fc4cfc6c4cde1d6c5c28fd4d2c5c08fc6ced7"><span class="__cf_email__" data-cfemail="b3c0dbd6c1c1ca9dd6ddd4d6dff3c4d7d09dc6c0d7d29dd4dcc5">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#1a6e7377756e726334707b777f695a6d7e79346f697e7b347d756c"><span class="__cf_email__" data-cfemail="a8dcc1c5c7dcc0d186c2c9c5cddbe8dfcccb86dddbccc986cfc7de">[email protected]</span></a>. 
(Please note the phone numbers are not toll free numbers.)

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    Under the Paperwork Reduction Act, 44 U.S.C. 3501 (2005) et seq., 
the Office of Management and Budget (OMB) must approve all 
``collections of information'' by Rural Development. The Act defines 
``collection of information'' as a requirement for ``answers to * * * 
identical reporting or recordkeeping requirements imposed on ten or 
more persons * * *.'' (44 U.S.C. 3502(3)(A)) Because this Notice is 
expected to receive less than 10 respondents, the Paperwork Reduction 
Act does not apply.

Programs Affected

    This program is listed in the Catalog of Federal Domestic 
Assistance under Number 10.415.

Overview

    The Agriculture, Rural Development, Food and Drug Administration, 
and Related Agencies Appropriations Act, 2010 (Pub. L. 111-80), October 
21, 2009 provided funding for, and authorized Rural Development to, 
establish a revolving loan fund demonstration

[[Page 52306]]

program for the preservation and revitalization of the Sections 515, 
514 and 516 MFH portfolio. The Department of Defense and Full Years 
Continuing Appropriations Act, 2011 (Pub. L. 112-10) April 15, 2011, 
continued the authority and provided funding for the revolving loan 
fund demonstration program. Sections 514, 515 and 516 of the Housing 
Act of 1949 as amended, provides Rural Development the authority to 
make loans for low income MFH, farm labor housing, and related 
facilities.

Program Administration

I. Funding Opportunities Description

    This Notice requests applications from eligible applicants for 
loans to establish and operate revolving loan funds for the 
preservation of low-income MFH properties within the Rural Development 
Sections 515, 514 and 516 MFH portfolios. Rural Development's 
regulations for the Section 514, 515 and 516 MFH Program are published 
at 7 CFR Part 3560.
    Housing that is constructed or repaired must meet the Rural 
Development design and construction standards and the development 
standards contained in 7 CFR Part 1924, Subparts A and C, respectively. 
Once constructed, Section 514, 515, and 516 MFH must be managed in 
accordance with the program's regulation, 7 CFR Part 3560. Tenant 
eligibility is limited to persons who qualify as a very low-, or low-
income, household or who are eligible under the requirements 
established to qualify for housing benefits provided by sources other 
than Rural Development, such as U.S. Department of Housing and Urban 
Development Section 8 assistance or Low Income Housing Tax Credit 
assistance, when a tenant receives such housing benefits. Additional 
tenant eligibility requirements are contained in 7 CFR 3560.152, 
3560.577, and 3560.624.

II. Award Information

    The Act made funding available for loans to private non-profit 
organizations, or such non-profit organizations' affiliate loan funds 
and State and local housing finance agencies, to carry out a housing 
demonstration program to provide revolving loans for the preservation 
of low income MFH project. The total amount of funding available for 
this program is $7,038,926.76. This funding is a combination of 
carryover from previous fiscal years and FY 2011 funds. Loans to 
intermediaries under this demonstration program shall have an interest 
rate of no more than one percent and the Secretary of Agriculture may 
defer the interest and principal payment to Rural Development for up to 
three years during the first three years of the loan. The term of such 
loans shall not exceed 30 years. Funding priority will be given to 
entities with equal or greater matching funds from third parties, 
including housing tax credits for rural housing assistance and to 
entities with experience in the administration of revolving loan funds 
and the preservation of MFH.

Funding Restrictions

    No loan made to a single intermediary applicant under this 
demonstration program may exceed $2,125,000 and any such loan may be 
limited by geographic area so that multiple loan recipients are not 
providing similar services to the same service areas. All PRLF loan 
obligations will expire two years after the date of obligation.
    Prior fiscal years PRLF loan obligations not closed within the 
above two-year obligation period must be de-obligated to allow more 
immediate program use unless a six-month extension is granted by the 
National Office. The request for an extension will be sent to the 
National Office by the relevant State Office.
    Loans made to the PRLF ultimate recipient must meet the intent of 
providing decent, safe, and sanitary rural housing and be consistent 
with the requirements of Title V of the Housing Act of 1949, as 
amended.

III. Eligibility Information

Applicant Eligibility

(1) Eligibility Requirements--Intermediary
    (a) The types of entities which may become intermediaries are 
private non-profit organizations, which may include faith and community 
based organizations, and State and local housing finance agencies.
    (b) The intermediary must have:
    (i) The legal authority necessary for carrying out the proposed 
loan purposes and for obtaining, giving security, and repaying the 
proposed loan.
    (ii) A proven record of successfully assisting low-income Multi-
Family Housing projects. Such record will include recent experience in 
loan making and loan servicing that is similar in nature to the loans 
proposed for the PRLF demonstration program. The applicant must provide 
documentation of a delinquency and loss rate not which does not exceed 
four percent. The applicant will be responsible for providing such 
information to Rural Development.
    (iii) A staff with loan making and servicing experience.
    (iv) A plan showing Rural Development, that the ultimate recipients 
will only use the funds to preserve low-income MFH projects.
    (c) No loans will be extended to an intermediary unless:
    (i) There is adequate assurance of repayment of the loan evidenced 
by the fiscal and managerial capabilities of the proposed intermediary.
    (ii) The amount of the loan, together with other funds available, 
is adequate to complete the preservation or revitalization of the 
project.
    (iii) The intermediary's prior calendar year audit is an 
unqualified audited opinion signed by an independent certified public 
accountant acceptable to the Agency and performed in accordance with 
Generally Accepted Government Auditing Standards (GAGAS). The 
unqualified audited opinion must provide a statement relating to the 
accuracy of the financial statements.
    (d) Intermediaries, and the principals of the intermediaries, must 
not be suspended, debarred, or excluded based on the ``List of Parties 
Excluded from Federal Procurement and Nonprocurement Programs''. In 
addition, intermediaries and their principals must not be delinquent on 
Federal debt or be Federal judgment debtors.
    (e) The intermediary and its principal officers (including 
immediate family) must have no legal or financial interest in the 
ultimate recipient.
    (f) The intermediary's Debt Service Coverage Ratio (DSCR) must be 
greater than 1.25 for the fiscal year immediately prior to the year of 
application. The DSCR is the financial ratio the loan committee will 
use to determine an applicant's capacity to borrow and service 
additional debt.
    The loan committee will use the intermediary's Earnings Before 
Interest and Taxes (EBIT) to determine DSCR. EBIT is determined by 
adding net income or net loss to depreciation and interest expense. The 
loan committee will compare the principal and interest payment 
multiplied by the DSCR to the EBIT derived from the applicants 
consolidated income statement. For example, if an applicant requests a 
loan amount of $2,000,000 at a one percent interest rate amortized over 
30 years, the principal and interest payments will be $77,193, 
annually. Therefore, an applicant who requests $2,000,000 needs an EBIT 
of at least $96,491.00 ($77,193 x 1.25). Only debt service from

[[Page 52307]]

unrestricted revolving loans will be considered in the above 
calculation. An unrestricted loan is an account in which the 
accumulated revenues are not dictated by a donor or sponsor.
    (g) Intermediaries that have received one or more PRLF loans may 
apply for and be considered for subsequent PRLF loans provided all the 
following are met:
    (i) For prior PRLF loans at least 50 percent of an intermediary's 
PRLF loans must have been disbursed to eligible ultimate recipients;
    (ii) Intermediaries requesting subsequent loans must meet the 
requirements of section III (1) of this NOTICE;
    (iii) The delinquency rate of the outstanding loans of the 
intermediary's PRLF revolving fund does not exceed 4 percent at the 
time of application for the subsequent loan;
    (iv) The intermediary is in compliance with all applicable 
regulations and its loan agreements with Rural Development;
    (v) Subsequent loans will not exceed $1 million each and not more 
than one loan will be approved by Rural Development for an intermediary 
in any single fiscal year unless the request is authorized by a PRLF 
appropriation; and
    (vi) Total outstanding PRLF indebtedness of an intermediary to 
Rural Development will not exceed $15 million at any time.
    Only eligible applicants will be scored and ranked. Funding 
priority will be given to entities with equal or greater matching 
funds, including housing tax credits for rural housing assistance. 
Refer to the Selection Criteria section of the Notice for further 
information on funding priorities.
    (2) Eligibility requirements--Ultimate recipients.
    (a) To be eligible to receive loans from the PRLF, ultimate 
recipients must:
    (i) Currently have a Rural Development Section 515, 514 loans, or 
516 grant for the property to be assisted by the PRLF demonstration 
program.
    (ii) Certify that the principal officers (including their immediate 
family) of the ultimate recipient, hold no legal or financial interest 
in the intermediary.
    (iii) Be in compliance with all Rural Development programs and 
civil rights requirements or have an Agency approved workout plan in 
place which will correct a non-compliance status.
    (b) Any delinquent debt to the Federal Government including a non-
tax judgment lien (other than a judgment in the U.S. tax courts), by 
the ultimate recipient or any of its principals, shall cause the 
proposed ultimate recipient to be ineligible to receive a loan from the 
PRLF. PRLF loan funds may not be used to satisfy the delinquency.
    (c) The ultimate recipient cannot be currently debarred or 
suspended from Federal Government programs.
    (d) There is a continuous need for the property in the community as 
affordable housing.

Other Administrative Requirements

    (1) The following policies and regulations apply to loans to 
intermediaries made in response to this Notice:
    (a) PRLF intermediaries will be required to provide Rural 
Development with the following reports:
    (i) An annual audit;
    (A) The dates of the audit report period need not coincide with 
other reports on the PRLF. Audit reports shall be due 90 days following 
the audit period. The audit period will be set by the intermediary. The 
intermediary will notify Rural Development of the date. Audits must 
cover all of the intermediary's activities. Audits will be performed by 
an independent certified public accountant. An acceptable audit will be 
performed in accordance with GAGAS and include such tests of the 
accounting records as the auditor considers necessary in order to 
express an unqualified audited opinion on the financial condition of 
the intermediary.
    (B) It is not intended that audits required by this program be 
separate from audits performed in accordance with State and local laws 
or for other purposes. To the extent feasible, the audit work for this 
program should be done in connection with these other audits. 
Intermediaries covered by OMB Circular A-133 should submit audits made 
in accordance with that circular.
    (ii) Quarterly or semiannual performance reports (due to Rural 
Development 30 days after the end of the fiscal quarter or half);
    (A) Performance reports will be required quarterly during the first 
year after loan closing. Thereafter, performance reports will be 
required semiannually. Also, Rural Development may resume requiring 
quarterly reports if the intermediary becomes delinquent in repayment 
of its loan or otherwise fails to fully comply with the provisions of 
its workout plan or Loan Agreement, or Rural Development determines 
that the intermediary's PRLF is not adequately protected by the current 
financial status and paying capacity of the ultimate recipients.
    (B) These performance reports shall contain information only on the 
PRLF, or if other funds are included, the PRLF portion shall be 
segregated from the others; and in the case where the intermediary has 
more than one PRLF from Rural Development, a separate report shall be 
made for each PRLF.
    (C) The performance reports will include OMB Standard Form 269, 
Financial Status Report and OMB Standard Form 272, Federal Cash 
Transaction Report. These reports will provide information on the 
intermediary's lending activity, income and expenses, financial 
condition and a summary of names and characteristics of the ultimate 
recipients the intermediary has financed.
    (iii) Annual proposed budget for the following year; and other 
reports as Rural Development may require from time to time regarding 
the conditions of the loan.
    (b) Security will consist of a pledge by the intermediary of all 
assets now or hereafter placed in the PRLF, including cash and 
investments, notes receivable from ultimate recipients, and the 
intermediary's security interest in collateral pledged by ultimate 
recipients. Except for good cause shown, Rural Development will not 
obtain assignments of specific assets at the time a loan is made to an 
intermediary or ultimate recipient. The intermediary will covenant in 
the loan agreement that, in the event the intermediary's financial 
condition deteriorates or the intermediary takes action detrimental to 
prudent fund operation or fails to take action required of a prudent 
lender, the intermediary will provide additional security, execute any 
additional documents, and undertake any reasonable acts Rural 
Development may request to protect Rural Development's interest or to 
perfect a security interest in any asset, including physical delivery 
of assets and specific assignments to Rural Development. All debt 
instruments and collateral documents used by an intermediary in 
connection with loans to ultimate recipients may be assignable.
    (c) RHS may consider, on a case by case basis, subordinating its 
security interest on the ultimate recipient's property to the lien of 
the intermediary so that Rural Development has a junior lien interest 
when an independent appraisal verifies the Rural Development 
subordinated lien will continue to be fully secured.
    (d) The term of the loan to an ultimate recipient may not exceed 
the less of 30 years or the remaining term of the Rural Development 
loan.
    (e) When loans are made to ultimate recipients restrictive-use 
provisions must be incorporated, as outlined in 7 CFR Section 3560.662.
    (f) The policies and regulations contained in 7 CFR Part 1901, 
Subpart

[[Page 52308]]

F regarding historical and archaeological properties apply to all loans 
funded under this Notice.
    (g) The policies and regulations contained in 7 CFR Part 1940, 
Subpart G (and any successor regulation) regarding environmental 
assessments apply to all loans to ultimate recipients funded under this 
Notice. Loans to intermediaries under this program will be considered a 
categorical exclusion under the National Environmental Policy Act, 
requiring the completion of Form RD 1940-22, ``Environmental Checklist 
for Categorical Exclusions,'' by Rural Development.
    (h) An Intergovernmental Review,'' will be conducted in accordance 
with the procedures contained in 7 CFR part 3015, subpart V, if the 
applicant is a cooperative.
    (2) The intermediary agrees to the following:
    (a) To obtain written Rural Development approval, before the first 
lending of PRLF funds to an ultimate recipient, of:
    (i) All forms to be used for relending purposes, including 
application forms, loan agreements, promissory notes, and security 
instruments; and
    (ii) The intermediary's policy with regard to the amount and form 
of security to be required.
    (b) To obtain written approval from Rural Development before making 
any significant changes in forms, security policy, or the 
intermediary's workout plan. Rural Development may approve changes in 
forms, security policy, or workout plans at any time upon a written 
request from the intermediary and determination by Rural Development 
that the change will not jeopardize repayment of the loan or violate 
any requirement of this Notice or other Rural Development regulations. 
The intermediary must comply with the workout plan approved by Rural 
Development so long as any portion of the intermediary's PRLF loan is 
outstanding;
    (c) To allow Rural Development to take a security interest in the 
PRLF, the intermediary's portfolio of investments derived from the 
proceeds of the loan award, and other rights and interests as Rural 
Development may require;
    (d) To return, as an extra payment on the loan any funds that have 
not been used in accordance with the intermediary's workout plan by a 
date two years from the date of the loan agreement. The intermediary 
acknowledges that Rural Development may cancel the approval of any 
funds not yet delivered to the intermediary if funds have not been used 
in accordance with the intermediary's workout plan within the two year 
period. Rural Development, at its sole discretion, may allow the 
intermediary additional time to use the loan funds by delaying 
cancellation of the funds by not more than three additional years. If 
any loan funds have not been used by five years from the date of the 
loan agreement, the approval will be canceled for any funds that have 
not been delivered to the intermediary and the intermediary will 
return, as an extra payment on the loan, any funds it has received and 
not used in accordance with the workout plan. In accordance with the 
Rural Development approved promissory note, regular loan payments will 
be based on the amount of funds actually drawn by the intermediary.
    (e) The intermediary will be required to enter into a Rural 
Development approved loan agreement and promissory note. The 
intermediary will receive a 30-year loan at a one percent interest 
rate. The loan will be deferred for up to three years if requested in 
the intermediary's work plan.
    (f) Loans made to the PRLF ultimate recipient must meet the intent 
of providing decent, safe, and sanitary rural housing by preserving and 
regulating existing properties financed with 514, 515, and 516 funds. 
They must also be consistent with the requirements of Title V of the 
Housing Act of 1949, as amended.
    (g) When an intermediary proposes to make a loan from the PRLF to 
an ultimate recipient, Rural Development concurrence is required prior 
to final approval of the loan. The intermediary must submit a request 
for Rural Development concurrence of a proposed loan to an ultimate 
recipient. Such request must include:
    (i) Certification by the intermediary that:
    (A) The proposed ultimate recipient is eligible for the loan;
    (B) The proposed loan is for eligible purposes;
    (C) The proposed loan complies with all applicable statutes and 
regulations; and
    (D) Prior to closing the loan to the ultimate recipient, the 
intermediary and its principal officers (including immediate family) 
hold no legal or financial interest in the ultimate recipient, and the 
ultimate recipient and its principal officers (including immediate 
family) hold no legal or financial interest in the intermediary.
    (ii) Copies of sufficient material from the ultimate recipient's 
application and the intermediary's related files, to allow Rural 
Development to determine the:
    (A) Name and address of the ultimate recipient;
    (B) Loan purposes;
    (C) Interest rate and term;
    (D) Location, nature, and scope of the project being financed;
    (E) Other funding included in the project;
    (F) Nature and lien priority of the collateral; and
    (G) Environmental impacts of this action. This will include an 
original Form RD 1940-20, ``Request for Environmental Information,'' 
completed and signed by the intermediary. Attached to this form will be 
a statement stipulating the age of the building to be rehabilitated and 
a completed and signed Federal Emergency Management Agency (FEMA) Form 
81-93, ``Standard Flood Hazard Determination.'' If the age of the 
building is over 50 years or if the building is either on or eligible 
for inclusion in the National Register of Historic Places, then the 
intermediary will immediately contact Rural Development to begin 
Section 106 of the National Historic Preservation Act of 1966 
consultation with the State Historic Preservation Officer. If the 
building is located within a 100-year flood plain, then the 
intermediary will immediately contact Rural Development to analyze any 
effects as outlined in 7 CFR part 1940, Subpart G, Exhibit C. The 
intermediary will assist Rural Development in any additional 
requirements necessary to complete the environmental review.
    (ii) Such other information as Rural Development may request on 
specific cases.
    (h) Upon receipt of a request for concurrence in a loan to an 
ultimate recipient Rural Development will:
    (i) Review the material submitted by the intermediary for 
consistency with Rural Development's preservation and revitalization 
principles which include the following;
    (A) There is a continuing need for the property in the community as 
affordable housing. If Rural Development determines there is no 
continuing need for the property the ultimate recipient is ineligible 
for the loan;
    (B) When the transaction is complete, the property will be owned 
and controlled by eligible Section 514, 515, or 516 borrowers;
    (C) The transaction will address the physical needs of the 
property;
    (D) Existing tenants will not be displaced because of increased 
post-transaction rents;
    (E) Post-transaction basic rents will not exceed comparable market 
rents; and
    (F) Any equity loan amount will be supported by a market value 
appraisal.

[[Page 52309]]

    (ii) The Intermediary shall pledge as collateral for non-Rural 
Development funds its PRLF Revolving Fund, including its portfolio of 
investments derived from the proceeds of other funds and this loan 
award.
    (iii) Issue a letter concurring with the loan when all requirements 
have been met or notify the intermediary in writing the reasons for 
denial when Rural Development determines it is unable to concur with 
the loan.

IV. Application and Submission Information

Submission Address

    Applications should be submitted to U.S. Department of Agriculture, 
Rural Housing Service; Attention: Timothy James, Financial and Loan 
Analyst, Multi-Family Housing STOP 0781 (Room 1263-S), U.S. Department 
of Agriculture, Rural Housing Service, 1400 Independence Avenue, SW., 
Washington, DC 20250-0781.
    The application process is a two step process: First, all 
applicants will submit proposals to the National Office for loan 
committee review. The initial loan committee will determine if the 
borrower is eligible, score the application, and rank the applicants 
according to the criteria established in this Notice. Only eligible 
borrowers will be scored. The loan committee will select proposals for 
further processing. In the event that a proposal is selected for 
further processing and the applicant declines, the next highest ranked 
unfunded applicant may be selected.
    Second, after the loan is obligated to the intermediary but prior 
to the loan closing, the State Office in the applicant's residence or 
State where the applicant will be doing its intermediary work will 
provide written approval of all forms to be used for relending 
purposes, including application forms, loan agreements, promissory 
notes, and security instruments. Additionally, the State Office will 
provide written approval of the applicant's binding policy with regard 
to the amount and form of security to be required.
    Once the loan closes, the applicant will be required to comply with 
the terms of its work plan which describes how the money will be used, 
the loan agreement, the promissory note and any other loan closing 
documents. At the time of loan closing, Rural Development and loan 
recipient shall enter into a loan agreement and a promissory note 
acceptable to Rural Development. Loans obligated by State Offices to 
intermediaries must close on or before the second anniversary of the 
obligation. Applicants who have not closed by this date must de-
obligate PRLF funds to allow further program use of funds.

Application Requirements

    The application must contain the following:
    (1) A summary page, that is double-spaced and not in narrative 
form, that lists the following items:
    (a) Applicant's name.
    (b) Applicant's Taxpayer Identification Number.
    (c) Applicant's address.
    (d) Applicant's telephone number.
    (e) Name of applicant's contact person, telephone number, and 
address.
    (f) Amount of loan requested.
    (2) Form RD 4274-1, Application for Loan (Intermediary Relending 
Program).'' This form can be found at: http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD4274-1.PDF.
    (3) A written workout plan and other evidence Rural Development 
require that demonstrates the feasibility of the intermediary's program 
to meet the objectives of this demonstration program. The plan must, at 
a minimum:
    (a) Document the intermediary's ability to administer this 
demonstration program in accordance with the provisions of this Notice. 
In order to adequately demonstrate the ability to administer the 
program, the intermediary must provide a complete listing of all 
personnel responsible for administering this program along with a 
statement of their qualifications and experience. The personnel may be 
either members or employees of the intermediary's organization or 
contract personnel hired for this purpose. If the personnel are to be 
contracted for, the contract between the intermediary and the entity 
providing such service will be submitted for Rural Development review, 
and the terms of the contract and its duration must be sufficient to 
adequately service Rural Development loan through to its ultimate 
conclusion. If Rural Development determines the personnel lack the 
necessary expertise to administer the program, the loan request will be 
denied;
    (b) Document the intermediary's ability to commit financial 
resources under the control of the intermediary to the establishment of 
the demonstration program. This should include a statement of the 
sources of non-Rural Development funds for administration of the 
intermediary's operations and financial assistance for projects;
    (c) Demonstrate a need for loan funds. As a minimum, the 
intermediary should identify a sufficient number of proposed and known 
ultimate recipients to justify Agency funding of its loan request, or 
include well developed targeting criteria for ultimate recipients 
consistent with the intermediary's mission and strategy for this 
demonstration program, along with supporting statistical or narrative 
evidence that such prospective recipients exist in sufficient numbers 
to justify Rural Development funding of the loan request;
    (d) Include a list of proposed fees and other charges it will 
assess to the ultimate recipients;
    (e) Provide documentation to Rural Development the intermediary has 
secured commitments of significant financial support from public 
agencies and private organizations or have received tax credits for the 
calendar year prior to this Notice;
    (f) Include the intermediary's plan (specific loan purposes) for 
relending the loan funds. The plan must be of sufficient detail to 
provide Rural Development with a complete understanding of what the 
intermediary will accomplish by lending the funds to the ultimate 
recipient and the complete mechanics of how the funds will flow from 
the intermediary to the ultimate recipient. The service area, 
eligibility criteria, loan purposes, fees, rates, terms, collateral 
requirements, limits, priorities, application process, method of 
disposition of the funds to the ultimate recipient, monitoring of the 
ultimate recipient's accomplishments, and reporting requirements by the 
ultimate recipient's management must at least be addressed by the 
intermediary's relending plan;
    (g) Provide a set of goals, strategies, and anticipated outcomes 
for the intermediary's program. Outcomes should be expressed in 
quantitative or observable terms such as low-income housing complexes 
rehabilitated or low-income housing units preserved, and should relate 
to the purpose of this demonstration program; and
    (h) Providing technical assistance to ultimate recipients is not 
required as part of this program. However if the intermediary provides 
technical assistance, the intermediary will provide specific 
information as to how and what type of technical assistance the 
intermediary will provide to the ultimate recipients and potential 
ultimate recipients. For instance describe the qualifications of the 
technical assistance providers, the nature of technical assistance that 
will be available, and expected and committed sources of funding for 
technical assistance. If other than the intermediary itself, describe 
the organizations providing such assistance and the arrangements 
between such organizations and the intermediary.

[[Page 52310]]

    (4) A pro forma balance sheet at start-up and projected balance 
sheets for at least three additional years; and projected cash flow and 
earnings statements for at least three years supported by a list of 
assumptions showing the basis for the projections. The projected 
earnings statement and balance sheet must include one set of 
projections that shows the PRLF must extend to include a year with a 
full annual installment on the PRLF loan.
    (5) A written agreement of the intermediary to Rural Development 
agreeing to the audit requirements.
    (6) Form RD 400-4, ``Assurance Agreement.'' A copy of which can be 
obtained at: http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD400-4.PDF.
    (7) Complete organizational documents, including evidence of 
authority to conduct the proposed activities.
    (8) Most recent unqualified audit report signed by a CPA and 
prepared in accordance with GAGAS.
    (9) Form RD 1910-11, Applicant Certification Federal Collection 
Policies for Consumer or Commercial Debts.'' A copy of which can be 
obtained at: http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD1910-11.PDF.
    (10) Form AD-1047, ``Certification Regarding Debarment, Suspension, 
and other Responsibility Matters--Primary Covered Transactions.'' A 
copy of which can be obtained at: http://www.ocio.usda.gov/forms/doc/AD1047-F-01-92.PDF.
    (11) Exhibit A-1 of RD Instruction 1940-Q, ``Certification for 
Contracts, Grants, and Loans.'' A copy of which can be obtained at: 
http://www.rurdev.usda.gov/me/CBP/const/1940qa1.pdf.
    (12) Copies of the applicant's tax returns for each of the three 
years prior to the year of application, and most recent audited 
financial statements.
    (13) A separate one-page information sheet listing each of the 
``Selection Criteria'' contained in this Notice, followed by the page 
numbers of all relevant material and documentation that is contained in 
the proposal that supports these criteria. Applicants are also 
encouraged, but not required; to include a checklist of all of the 
application requirements and to have their application indexed and 
tabbed to facilitate the review process.
    (14) Financial statements (consolidated or unconsolidated) for the 
year prior to this Notice.
    (15) A borrower authorization statement allowing Rural Development 
the authorization to verify past and present earnings with the preparer 
of the intermediary's financial statements.

V. Application Review Information

    All applications will be evaluated by a loan committee. The loan 
committee will make recommendations to the Rural Housing Service 
Administrator concerning preliminary eligibility determinations and for 
the selection of applications for further processing based on the 
selection criteria contained in this Notice and the availability of 
funds. The Administrator will inform applicants of the status of their 
application within 30 days of the loan application closing date set 
forth in this Notice.

Selection Criteria

    Selection criteria points will be allowed only for factors 
evidenced by well documented, reasonable plans which provide assurance 
that the items have a high probability of being accomplished. The 
points awarded will be as specified in paragraphs (1) through (4) of 
this section. In each case, the intermediary's application must provide 
documentation that the selection criteria have been met in order to 
qualify for selection criteria points. If an application does not cover 
one of the categories listed, it will not receive points for that 
criteria.
    (1) Other funds. Points allowed under this paragraph are to be 
based on documented successful history or written evidence that the 
funds are available.
    (a) The intermediary will obtain non-Rural Development loan or 
grant funds or provide housing tax credits (measured in dollars) to pay 
part of the cost of the ultimate recipients' project cost. Points for 
the amount of funds from other sources are as follows:
    (i) At least 10 percent but less than 25 percent of the total 
development cost (as defined in 7 CFR part 3560 Section 3560.11)--5 
points;
    (ii) At least 25 percent but less than 50 percent of the total 
development cost--10 points; or
    (iii) 50 percent or more of the total development cost--15 points.
    (b) The intermediary will provide loans to each ultimate recipient 
from its own funds (not loan or grant) to pay part of the ultimate 
recipients' project cost. The amount of the intermediary's own funds 
will average per project:
    (i) At least 10 percent but less than 25 percent of the total 
development costs--5 points;
    (ii) At least 25 percent but less than 50 percent of total 
development costs--10 points; or
    (iii) 50 percent or more of total development costs--15 points.
    (2) Intermediary contribution. The Intermediary will contribute its 
own funds not derived from Rural Development. The Non-Rural Development 
contributed funds will be placed in a separate account from the PRLF 
loan account. The intermediary shall contribute funds not derived from 
Rural Development into a separate bank account or accounts according to 
their ``workout plan.'' These funds are to be placed into an interest 
bearing counter-signature-account for three years as set forth in the 
loan agreement. The counter-signature-account will require a signature 
from a Rural Development employee and intermediary. After three years, 
these funds shall be commingled with the PRLF to provide loans to the 
ultimate recipient for the preservation and revitalization of Section 
515 Multi-Family Housing.
    The amount of non-Agency derived funds contributed to the PRLF will 
equal the following percentage of Rural Development PRLF loan:
    (a) At least 5 percent but less than 15 percent--15 points;
    (b) At least 15 percent but less than 25 percent--30 points; or
    (c) 25 percent or more--50 points.
    (3) Experience. The intermediary has actual experience in the 
administration of revolving loan funds and the preservation of Multi-
Family Housing, with a successful record, for the following number of 
full years. Applicants must have actual experience in both the 
administration of revolving loan funds and the preservation of Multi-
Family Housing in order to qualify for points under the selection 
criteria. If the number of years of experience differs between the two 
types of above listed experience, the type of experience with the 
lesser number of years will be used for the selection criteria.
    (a) At least one but less than three years--5 points;
    (b) At least three but less than five years--10 points;
    (c) At least five but less than 10 years--20 points; or
    (d) 10 or more years--30 points.
    (4) The DER is the financial ratio used to determine how much debt 
an applicant has relative to its equity. DER is calculated from the 
balance sheet by adding the short term or current debt plus the long 
term debt, and then dividing that number by the intermediary's equity. 
In order to receive points the intermediary must submit a summary of 
how the DER was calculated.

[[Page 52311]]

    (5) Administrative. The Administrator may assign up to 25 
additional points to an application to account for the following items 
not adequately covered by the other priority criteria set out in this 
section. The items that will be considered are the amount of funds 
requested in relation to the amount of need; a particularly successful 
affordable housing development record; a service area with no other 
PRLF coverage; a service area with severe affordable housing problems; 
a service area with emergency conditions caused by a natural disaster; 
an innovative proposal; the quality of the proposed program; economic 
development plan from the local community, particularly a plan prepared 
as part of a request for an Empowerment Zone/Enterprise Community 
designation; or excellent utilization of an existing revolving loan 
fund program. The Administrator will document the reasons for the 
particular point allocation.

VI. Appeal Process

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

Equal Opportunity and Nondiscrimination Requirements

    (1) In accordance with the Fair Housing Act, Title VI of the Civil 
Rights Act of 1964, the Equal Credit Opportunity Act, the Age 
Discrimination Act of 1975, Executive Order 12898, the Americans with 
Disabilities Act, and Section 504 of the Rehabilitation Act of 1973, 
neither the intermediary nor Rural Development will discriminate 
against any employee, proposed intermediary or proposed ultimate 
recipient on the basis of sex, marital status, race, familial status, 
color, religion, national origin, age, physical or mental disability 
(provided the proposed intermediary or proposed ultimate recipient has 
the capacity to contract), because all or part of the proposed 
intermediary's or proposed ultimate recipient's income is derived from 
public assistance of any kind, or because the proposed intermediary or 
proposed ultimate recipient has in good faith exercised any right under 
the Consumer Credit Protection Act, with respect to any aspect of a 
credit transaction anytime Rural Development loan funds are involved.
    (2) The policies and regulations contained in 7 CFR Part 1901, 
Subpart E apply to this program.
    (3) The Rural Housing Service (RHS) Administrator will assure that 
equal opportunity and nondiscrimination requirements are met in 
accordance with the Fair Housing Act, Title VI of the Civil Rights Act 
of 1964, the Equal Credit Opportunity Act, the Age Discrimination Act 
of 1975, Executive Order 12898, the Americans with Disabilities Act, 
and Section 504 of the Rehabilitation Act of 1973.
    (4) All housing must meet the accessibility requirements found at 7 
CFR Section 3560.60(d).
    (5) To file a complaint of discrimination, write to USDA, Assistant 
Secretary for Civil Rights Office of the Assistant Secretary for Civil 
Rights, 1400 Independence Avenue, SW., STOP 9410, Washington, DC 20250-
9410, or call (866) 632-9992 (English) or (800) 877-8339 (TDD) or (866) 
377-8642 (English Federal-relay) or (800) 845-6136 (Spanish Federal-
relay). USDA is an equal opportunity provider, employer, and lender. 
The U.S. Department of Agriculture prohibits discrimination in all its 
programs and activities on the basis of race, color, national origin, 
age, disability, and where applicable, sex, marital status, familial 
status, parental status, religion, sexual orientation, genetic 
information, political beliefs, reprisal, or because all or part of an 
individual's income is derived from any public assistance program. (Not 
all prohibited bases apply to all programs.)
    Persons with disabilities who require alternative means for 
communication of program information (Braille, large print, audiotape, 
etc.) should contact USDA's TARGET Center at (202) 720-2600 (voice and 
TDD).

    Dated: August 16, 2011.
Robert Lewis,
Acting Administrator, Rural Housing Service.
[FR Doc. 2011-21318 Filed 8-19-11; 8:45 am]
BILLING CODE 3410-XV-P


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