[Federal Register Volume 63, Number 140 (Wednesday, July 22, 1998)]
[Notices]
[Pages 39472-39474]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-19559]



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

[[Page 39472]]



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.

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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, 
Multi-Family 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 Multi-Family 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.

[[Page 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 Presidentially-declared 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.

[[Page 39474]]

    (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