39472 Federal Register / Vol. 63, No. 140 /Wednesday, July 22, 1998 / Notices

DEPARTMENT OF AGRICULTURE

Rural Housing Service

Notice of Availability of Funding and

Requests for Proposals for Guaranteed

Loans Under the Section 538

Guaranteed Rural Rental Housing

Program

AGENCY: Rural Housing Service, USDA.

ACTION: Notice.

SUMMARY: This Notice of Fund

Availability (NOFA or Notice)

announces the timeframe to submit

proposals in the form of ‘‘NOFA

responses’’ for the section 538

Guaranteed Rural Rental Housing

Program (GRRHP). Eligible lenders are

invited to submit NOFA proposals for

the development of affordable rental

housing to serve rural America. Lenders

have the option, but it is not a

requirement, of submitting their

application concurrently with their

NOFA response. This document also

describes the overall application

process, including the selection of

NOFA responses and the allocation of

interest credits.

DATES: The deadline for receipt of

NOFA responses is 4:00 PM, Eastern

Daylight Savings Time on August 17,

1998. Lenders intending to mail a NOFA

response must provide sufficient time to

permit delivery on or before the closing

deadline date and time. Acceptance by

a post office or private mailer does not

constitute delivery. Facsimile (FAX),

Cash on Delivery (COD), and postage

due NOFA response/application will

not be accepted. No NOFA responses

will be accepted after the deadlines

previously mentioned, unless that date

and time is extended by another Notice

published in the Federal Register.

ADDRESSES: Responses for participation

in the program must be identified as

‘‘Section 538 Guaranteed Rural Rental

Housing Program’’ on the envelope or

wrapper and be submitted to: Director,

Multi-Family Housing Processing

Division, Rural Housing Service, US

Department of Agriculture, Room 5337

(STOP 0781), 1400 Independence Ave.

SW, Washington, DC 20250–0781.

FOR FURTHER INFORMATION CONTACT:

Obediah G. Baker, Jr., Director, MultiFamily Housing Processing Division, U.

S. Department of Agriculture, South

Agriculture Building, Room 5337 (STOP

0781), 1400 Independence Ave. SW,

Washington, DC 20250–0781.

Telephone: (202) 720–1604 (this number

is not toll-free). Hearing or speech

impaired persons may access that

number by calling toll-free the Federal

Information Relay Service at (800) 877–

8339.

SUPPLEMENTARY INFORMATION: On March

28, 1996, President Clinton signed the

‘‘Housing Opportunity Program

Extension Act of 1996,’’ Public Law

104–120, authorizing the section 538

Guaranteed Rural Rental Housing

Program (GRRHP). The program is

intended to provide rural America with

affordable housing through the use of

loan guarantees and partnering with

other housing programs, including state

and local housing finance agencies and

bond issuers.

The Rural Housing Service (RHS) is

publishing regulations governing the

program as an interim rule elsewhere in

this Federal Register. Those regulations

set forth RHS policies and requirements

on the program, including: lender and

borrower requirements, loan and

property requirements and restrictions,

purposes and uses of guaranteed funds,

processing requirements, project

management and servicing

requirements, and policies and

mandated procedures on assignments,

conveyances and claims. Interested

applicants should carefully review the

interim rule, RHS’s handbook of

administrative procedures on

origination and servicing for the

program, and the application package.

These are available from the RHS MultiFamily Housing Processing Division at

202–720–1604. This is not a toll-free

number. Hearing- or speech-impaired

persons may access that number by

calling toll-free the Federal Information

Relay Service at (800) 877–8339.

Discussion of Notice

I. Purpose and Program Summary

The program has been designed to

increase the supply of affordable

multifamily housing through

partnerships between RHS and major

lending sources, as well as State and

local housing finance agencies and bond

issuers. Qualified lenders will be

authorized to originate, underwrite, and

close loans for multifamily housing

projects requiring new construction or

acquisition with rehabilitation of at least

$15,000 per unit. RHS may guarantee

such loans upon presentation and

review of appropriate certifications,

project information and satisfactory

completion of the appropriate level of

environmental review by RHS. Lenders

will be responsible for the full range of

loan management, servicing, and

property disposition activities

associated with these projects. The

lender will be expected to provide

servicing or contract for servicing of

each loan it underwrites. In turn, RHS

will guarantee the lender’s loan up to 90

percent of total development cost and

commits to pay up to a maximum of 90

percent of the outstanding principal and

interest balance of such loan in the case

of default of the loan and filing of a

claim. In no event will the Agency pay

more than 90 percent of the original

principal amount. This means that the

Agency will have a risk exposure under

the GRRHP of approximately 80 percent

of the total development cost. Any

losses would be split on a pro-rata split

between the lender and the Agency from

the first dollar lost.

II. Allocation

In Fiscal Year (FY) 1998, budget

authority will provide approximately

$38 million in program dollars. All FY

1998 funds will be held in the National

Office. There are no set-asides or

demonstration purposes for the GRRHP

for FY 1998.

III. Application Process

For FY 1998, there is limited time

between the publication of the NOFA

and the deadline for receipt of

applications in time for making

conditional commitments for

guaranteed loans. Eligible lenders are

encouraged to submit NOFA responses

prior to deadline, as applications will be

reviewed as they are received. Lenders

are required to submit their NOFA

response by August 17, 1998. In the

interest of time, lenders have the option

of submitting a combined NOFA

response and application. However, the

Agency will not give preference to a

submission with both the NOFA

response and application. Upon notice

of selection, lenders with the top ranked

NOFA responses will be requested to

submit the required application fee of

$2,500.00 and full application if not

already submitted. When the conditions

of the conditional commitment are met,

the lender will submit the required

information with a separate guarantee

fee of 1% of the total commitment

amount.

IV. Submission Requirements

All NOFA responses for the GRRHP

must meet the requirements of 7 CFR

part 3565 and this NOFA. Incomplete

submissions will not be reviewed and

will be returned to the lender. Lenders

are encouraged, but not required, to

include a checklist and to have their

applications indexed and tabbed to

facilitate the review process. RHS will

base its determination of completeness

of the application and the eligibility of

each lender on the information provided

in the application.
Federal Register / Vol. 63, No. 140 /Wednesday, July 22, 1998 / Notices 39473

V. Selection Criteria

A. NOFA proposals will be reviewed

as received. In the event that demand

exceeds available funds, priorities will

be assigned to eligible proposals on the

basis of the following criteria designed

to focus the FY 1998 guarantee program

on Presidentially-declared disaster

areas, to promote partnerships creating

affordable housing, and to assure the

most cost effective financing packages:

(1) Proposal in a rural Presidentiallydeclared disaster area (25 points).

(2) Partnering and leveraging in order

to develop the maximum number of

housing units and promote partnerships

with state and local communities,

including other partners with similar

housing goals. Leveraging is encouraged

(up to 20 points with 5 points for each

source of funding contributing 10

percent or more of total development

cost).

(3) Loans with interest rates of less

than 200 basis points over the 30 Year

Treasury Rate; the lower the basis

points, the higher the priority. Interest

rate priority points will be awarded as

follows:

Interest rate Points

175 to 151 basis points .................... 5

150 to 100 basis points .................... 10

99 to 50 basis points ........................ 15

49 to 0 basis points .......................... 20

In the event of ties, proposals in rural

Presidentially-declared disaster areas

will be selected. In the event of ties

between two or more proposals in such

areas, selection between such proposals

will be by lot. If there are ties between

two or more NOFA responses not in

rural Presidentially-declared disaster

areas, selection will be by lot.

B. For 20 percent of the loans made

under the program, RHS shall provide

the borrower with interest credits to

reduce the interest rate of the loan by a

maximum of 200 basis points. In no

instance will the lender’s interest rate be

reduced to lower than the Applicable

Federal Rate.

RHS will provide interest credit on up

to $1.5 million of a loan submitted for

guarantee. Lenders with proposals that

could be viable with or without interest

credits are encouraged to submit a

NOFA response reflecting financial and

market feasibility under both funding

options.

NOFA responses proposing to receive

interest credit will be selected using the

following criteria:

(1) Requests will be ranked using the

selection criteria for non-interest credit

proposals (up to 65 points).

(2) Geographical location with

emphasis on smaller rural communities

versus larger rural communities. The

requests will be ranked by population

with proposals serving the smallest

communities receiving priority. All

proposals will be ranked in descending

order of their population. The proposals

will be given a point score starting with

the lowest population receiving 20

points, the next 19 points and so forth

until all 20 points are awarded. Those

remaining will receive zero points.

(3) The most needy communities

within a State based on census income

data showing the preponderance of low

and moderate income families. The

communities to benefit from a guarantee

with interest credit will be ranked by

their percentage of the median income

within the State with proposals serving

rural communities with the lowest

relative median income in the State

compared to proposals serving

communities in other States receiving

priority. The proposals will be given a

point score starting with the lowest

percentage of median income receiving

20 points, the next 19 points and so

forth until all 20 points are awarded.

Those remaining will receive zero

points.

(4) Extent of the commitment by the

applicant to maintain priority at initial

occupancy for low income families

throughout the term of the loan. All

proposals will be ranked by length of

commitment with the longest receiving

priority. The proposals will be given a

point score starting with the longest

occupancy commitment for low-income

families receiving 20 points, the next 19

points and so forth until all 20 points

are awarded. Those remaining will

receive zero points.

(5) The lowest overall proportional

effective subsidy cost to RHS. All of the

interest credit requests will be ranked

by proportional effective subsidy cost to

the government with the lowest cost to

RHS receiving priority. The proposals

will be given a point score starting with

the lowest proportional effective

subsidy cost to RHS receiving 20 points,

the next 19 points and so forth until all

20 points are awarded. Those remaining

will receive zero points.

(6) Preference will be given to family

proposals with large bedroom mixes. All

of the proposals will be ranked by

percent of units with 3–5 bedrooms

with the proposals having the highest

percent of 3–5 bedrooms receiving

priority. The proposals will be given a

point score starting with the highest

ratio of 3–5 bedroom units to total units

receiving 20 points, the next 19 points

and so forth until all 20 points are

awarded. Those remaining will receive

zero points.

(7) Proposals to be developed in a

colonial on tribal land, or in an

Empowerment Zone or Enterprise

Community, or in a place identified in

the State consolidated plan or State

needs assessment as a high need

community for multifamily housing (20

points).

In the event of ties, proposals in rural

Presidentially-declared disaster areas

will be selected to receive interest credit

assistance. In the event of ties between

two or more proposals in such areas,

selection between such proposals will

be by lot. If there are ties between two

or more NOFA responses not in rural

Presidentially-declared disaster areas,

selection will be by lot.

VI. Additional Information

A. Regulations

NOFA responses are also subject to

the regulatory provisions of the Interim

Final Rule entitled ‘‘Guaranteed Rural

Rental Housing Program,’’ which is

published elsewhere in this issue of the

Federal Register.

B. Surcharges for Guarantee of

Construction Advances

There is no surcharge for guarantee of

construction advances for FY 1998.

C. Maximum Interest Rate

The maximum allowable interest rate

on a loan submitted for a guarantee is

200 basis points over the 30-year

Treasury Bond Rate as published in the

Wall Street Journal as of the business

day previous to the business day the

rate is set.

D. Lender Application Fee

There is no lender fee for lender

approval in FY 1998.

E. Program Fees for FY 1998

(1) There is a guarantee fee of 1% of

the total commitment amount which

will be due at closing of the permanent

loan.

(2) There is an annual renewal fee of

0.5% of the guaranteed outstanding

principal balance charged each year or

portion of the year that the guarantee is

in effect. Each calendar year, this fee

will be collected in advance, beginning

on the first anniversary of the loan.

(3) There is no site assessment and

market analysis or preliminary

feasibility fee in FY 1998.

(4) There is a non-refundable

application fee of $2,500 when the

application is submitted following

proposal selection under the NOFA.
39474 Federal Register / Vol. 63, No. 140 /Wednesday, July 22, 1998 / Notices

(5) There is a flat fee of $500 when a

lender requests RHS to extend the term

of a guarantee commitment.

(6) There is a flat fee of $500 when a

lender requests RHS to reopen a

guarantee commitment after the period

of the commitment lapses.

(7) There is a flat fee of $1,250 when

a lender requests RHS to approve the

transfer of property and assumption of

the loan to an eligible applicant.

Dated: July 17, 1998.

Jan E. Shadburn,

Administrator, Rural Housing Service.

[FR Doc. 98–19559 Filed 7–21–98; 8:45 am]

BILLING CODE 3410–XV–P