[Federal Register Volume 65, Number 213 (Thursday, November 2, 2000)]
[Proposed Rules]
[Pages 65790-65793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27978]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Parts 1930 and 1944

RIN 0575-AC24


Operating Assistance for Off-Farm Migrant Farmworker Projects

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

ACTION: Proposed rule.

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

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

ADDRESSES: Written comments may be submitted, in duplicate, to the 
Regulations and Paperwork Management Branch, Attention: Jean Mosley, 
Rural Development, U.S. Department of Agriculture, Stop 0742, 1400 
Independence Avenue SW, Washington, DC 20250-0742. Comments may be 
submitted via the Internet by addressing them to 
``<a href="/cdn-cgi/l/email-protection#b8dbd7d5d5ddd6cccbf8cacdcb96cdcbdcd996dfd7ce"><span class="__cf_email__" data-cfemail="2645494b4b4348525566545355085355424708414950">[email protected]</span></a>'' and must contain the word ``migrant'' in the 
subject. All written comments will be available for public inspection 
during normal working hours at 300 E Street, SW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Linda Armour, Senior Loan Specialist, 
Multi-Family Housing Processing Division, Rural Housing Service, U.S. 
Department of Agriculture, Room 5349-South Building, Stop 0781, 1400 
Independence Avenue, SW, Washington, DC 20250-0781, telephone (202) 
720-1608.

SUPPLEMENTARY INFORMATION:

Classification

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

Paperwork Reduction Act

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

Civil Justice Reform

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

Unfunded Mandates Reform Act

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

[[Page 65791]]

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

National Performance Review

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

Programs Affected

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

Intergovernmental Consultation

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

Environmental Impact Statement

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

Regulatory Flexibility Act

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

Executive Order 13132, Federalism

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

Background/Discussion

    The farm labor housing (LH) program is authorized by title V of the 
Housing Act of 1949 under section 514 (42 U.S.C. 1484) for loans and 
section 516 (42 U.S.C. 1486) for grants. The program also has tenant 
subsidies available through section 521 (42 U.S.C. 1490a).
    The LH program finances both ``on-farm'' and ``off-farm'' housing, 
which may be for either seasonal or year-round occupancy. Occupancy of 
both types is restricted to United States citizens or legally admitted 
aliens. On-farm housing loans are made to farmers or farm entities to 
provide housing for farmworker families employed by the farm. On-farm 
housing is typically a single-family dwelling and does not include 
tenant subsidies. Off-farm housing, typically apartment complexes, is 
open to eligible farmworker households of any farming operation. Rental 
assistance is available to many tenants of off-farm housing to make 
rents affordable. Off-farm housing is financed with section 514 loans 
and section 516 grants to nonprofit organizations and public agencies 
such as local housing authorities, and with section 514 loans to 
nonprofit limited partnerships in which the general partner is a 
nonprofit entity.
    Off-farm migrant housing serves farmworkers who perform 
agricultural work at one or more locations away from their home base 
throughout the year for periods ranging from a few weeks to several 
months. The Agency's rental assistance (RA) program is available to 
assist tenants with housing costs, which is especially critical for 
migrant farmworkers, who are among the lowest-paid laborers in the 
workforce. However, the RA program, which provides assistance based on 
each household's income, is difficult to administer in housing for 
migrant workers because of the frequent tenant turnover and short 
periods of occupancy.
    Section 599C(e) of Pub. L. 105-276, enacted October 21, 1998, 
authorizes owners of off-farm migrant housing projects financed under 
sections 514 or 516 to use section 521 RA funds to provide operating 
assistance to the project instead of providing individual RA to each 
household. Operating assistance, by reducing operating costs, allows 
rents to be set at rates that are affordable to tenants based on the 
average wages of migrant farmworkers in the area. Tenants will still be 
required to provide income verification, and household income must be 
within the very-low or low-income limits to qualify for the reduced 
operating assistance rents. Owners will be required to provide 
documentation to the Agency on the incomes of tenants served.
    In developing this proposed rule, the Agency conducted an informal 
teleconference with stakeholders, including nonprofit groups, 
developers, and Agency staff in States with active migrant farm labor 
housing programs. Following is a summary of their comments on key 
issues:

Project Eligibility for the Operating Assistance Program

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

Establishing the Prevailing Incomes of Farmworkers in the Area

    The statute stipulates that operating assistance will be provided 
in an amount that makes rents affordable to migrant farmworkers based 
on the prevailing incomes of migrant farmworkers in the area. Several 
possible sources of income data were mentioned, including the 
Association of Farmworkers and the U.S. Department of Labor. However, 
most participants felt that the most readily available, current data 
could be obtained from the Agency's Multi-Family Tenant File System 
(MTFS).
    The MTFS is an automated system used to record household data, 
including income, to determine the tenant's shelter cost based on 30 
percent of adjusted monthly income. It was suggested that existing 
Agency-financed properties serving migrant workers use the project's 
prior year MTFS data and new properties use MTFS data for like-type 
properties in the same or a similar area. After the first year, 
adjustments would be made to the amount of operating assistance based 
on the actual income levels of the tenants served and

[[Page 65792]]

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

Overcrowding

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

Procedures for Requesting operating Assistance

    The majority of stakeholders felt that requests for operating 
assistance should be submitted on the monthly ``Project Worksheet for 
Credit and Rental Assistance'', Form RD 1944-29, and netted against the 
loan payment in the same manner as rental assistance. The Agency has 
incorporated this suggestion into this proposed rule. Only one 
stakeholder recommended paying the assistance on an annual basis. We 
welcome comments on the pros and cons of an annual payment method, 
which will be taken into consideration in determining whether this 
option should be included in the final rule.
    Participants noted that the operating assistance program would be 
beneficial for project budgeting purposes, especially for properties 
that are unoccupied for a portion of the year because of seasonal farm 
work, if owners are permitted to average the year's projected income 
and expenses and receive monthly payments throughout the year. We 
concur, and have included the suggestion in this proposed rule.

Implementation Proposal

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

List of Subjects

7 CFR Part 1930

    Accounting, Administrative practice and procedure, Grant programs--
Housing and community development, Loan programs--Housing and community 
development, Low and moderate income housing--Rental, Reporting 
requirements.

7 CFR Part 1944

    Farm labor housing, Grant programs--Housing and community 
development, Loan programs--Housing and community development, Migrant 
labor, Nonprofit organizations, Public housing, Rent subsidies, Rural 
housing.

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

PART 1930--GENERAL

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

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

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

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

Exhibit B of Subpart C--Multiple Housing Management Handbook

* * * * *

II. Definitions

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

IV. Rent Subsidy Opportunities * * *

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

XIII. Accounting and Reporting Requirements and Financial 
Management Analysis

* * * * *
    C. Borrower reporting requirements. * * *
    2. Management reports and review processes. * * *
    f. Project worksheets. * * *
    (2). For LH projects, a project worksheet for interest credit 
and rental or operating assistance, on a form provided by the 
Agency, will be submitted monthly for projects with tenants who 
receive RA and for off-farm migrant housing projects that receive 
operating assistance. * * *
* * * * *

PART 1944--HOUSING

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

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

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

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


Sec. 1944.153  Definitions.

* * * * *
    Multi-Family Tenant File System (MTFS). The MTFS is an automated 
system used by the Agency to record household data, including income, 
to determine the tenant's shelter cost based on 30 percent of adjusted 
monthly income.
* * * * *
    Operating assistance. Assistance toward the cost of operating off-
farm labor housing projects serving migrant farmworkers exclusively, 
financed under sections 514 or 516, that would otherwise be provided to 
tenants as rental assistance (RA). Detailed guidance on the operating 
assistance program is provided in Sec. 1944.182(b).
* * * * *
    Rental assistance (RA). RA is the portion of a specific tenant's 
approved shelter cost paid by the Agency and is the difference between 
the approved shelter cost and the monthly tenant contribution 
calculated in accordance with exhibit B to subpart C of part 1930 of 
this chapter.
* * * * *
    5. Section 1944.182 is amended by revising the heading, designating 
the existing text as paragraph (a), and adding a new paragraph (b) to 
read as follows:


Sec. 1944.182  Assistance payments under section 521.

* * * * *
    (b) Operating assistance may be used in lieu of tenant-specific 
rental assistance in off-farm labor housing projects financed under 
section 514 or section 516 of the Housing Act of 1949 that serve 
migrant farmworkers

[[Page 65793]]

exclusively. Owners of eligible projects may choose tenant-specific RA 
or operating assistance, but may not utilize both programs in the same 
project. The objective of this program is to provide assistance toward 
the cost of operating the project so that rents may be set at rates 
that are affordable to very low and low-income migrant farmworkers.
    (1) Project eligibility requirements. To be eligible for the 
operating assistance program, projects must be:
    (i) Off-farm labor housing projects financed under section 514 or 
section 516 serving migrant farmworkers exclusively (projects serving 
both migrant and year-round farmworker households are not eligible); 
and
    (ii) Eligible for the Agency's rental assistance (RA) program as 
defined in paragraph II B of exhibit E of subpart C of part 1930 of 
this chapter.
    (2) Tenant eligibility requirements. To be eligible for operating 
assistance rents, tenants must meet the RA eligibility requirements of 
paragraph II A of exhibit E of subpart C of part 1930 of this chapter.
    (3) Operating assistance limits. The amount of operating assistance 
requested by the owner must be based on the project's actual income and 
expenses and must be approved by the Agency. In no instance may the 
annual amount of operating assistance exceed 90 percent of the 
project's annual operating costs.
    (4) Owner responsibilities--(i) Request for operating assistance 
program. Owners of off-farm migrant housing projects may request 
operating assistance by submitting a request on a form provided by the 
Agency. The request must include a budget in the format prescribed by 
the Agency and prepared in accordance with Agency instructions. The 
budget must include:
    (A) Estimated project operating costs, including authorized 
expenditures such as reserve deposits.
    (B) Proposed rental rates to generate sufficient funds for project 
operating costs, taking into consideration all other sources of project 
income.
    (C) Estimated rental income from tenants, based on a tenant 
contribution of 30 percent of the average adjusted monthly income of 
migrant farmworker households in the area. The average adjusted monthly 
income of migrant farmworker households will be determined as follows:
    (1) For existing RHS-financed projects that have been in operation 
for at least one year, owners will use the average adjusted monthly 
household income for each unit-size (1-, 2-, 3-bedroom, etc.) based on 
the prior year's Multi-Family Tenant File System (MTFS) data.
    (2) For new projects, owners will use the average adjusted monthly 
household income for each unit-size, based on the prior year's MTFS 
data for a like-type property in the same or similar area, as provided 
by the Agency. Owners may request authorization to use other reliable 
income data if available.
    (D) Estimated operating assistance, calculated as the difference 
between estimated project income and estimated project operating costs. 
The annual amount of operating assistance may not exceed 90 percent of 
the annual operating costs.
    (ii) Requesting operating assistance payments. Each month, owners 
will submit a project worksheet for interest credit and rental or 
operating assistance on a form provided by the Agency. The amount of 
operating assistance requested each month will be one-twelfth of the 
annual amount approved by the Agency.
    (iii) Verifying tenant income eligibility. Owners are responsible 
for verifying tenant income in accordance with Sec. 1944.182(a). Only 
very low or low-income households are eligible for the operating 
assistance rents. Income-eligible households with incomes above low 
must pay the full rent.
    (iv) Reporting requirements.--(A) Tenant certification. Owners and 
tenants will complete a tenant certification, on a form provided by the 
Agency, to document tenant income and eligibility. Tenant certification 
forms need not be submitted to the Agency but must be maintained, along 
with income verifications, for at least 3 years. The tenant files must 
be available for the Agency's review upon request. The owner will use 
the income information, along with the project's actual expense 
figures, to complete the next year's operating assistance request.
    (B) Project worksheet. Each month, the borrower will submit to the 
Agency a project worksheet for interest credit and rental or operating 
assistance on a form provided by the Agency, in accordance with 
paragraph XIII C2f (2) of exhibit B of subpart C of part 1930 of this 
chapter.
    (C) Budgets. Prior to the beginning of the project's fiscal year, 
owners must submit an annual planning budget in accordance with 
paragraph XIII C2a of exhibit E of subpart C of part 1930 of this 
chapter, on a form provided by the Agency. The budget must reflect 
actual income and expenses for at least 9 months of the current fiscal 
year and the proposed income and expenses for the coming year. Owners 
must include a summary report showing the income of tenants served on a 
form provided by the Agency. If warranted by the actual income of 
tenants served, a request for rent change should be included, following 
the guidance in paragraph XIII C2b of exhibit E of subpart C of part 
1930 of this chapter. After the first full year of operation, owners 
will use the actual year-end budget figures to make appropriate 
adjustments to the amount of operating assistance requested.

    Dated: October 20, 2000.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 00-27978 Filed 11-1-00; 8:45 am]
BILLING CODE 3410-XV-U


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