39682 Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 / Notices

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

[Docket No. FR–4384–N–01]

Notice of Title VI Loan Guarantee

Demonstration Program

AGENCY: Office of the Assistant

Secretary for Public and Indian

Housing, HUD.

ACTION: Notice.

SUMMARY: The FY 1998 HUD

Appropriations Act provided a $5

million appropriation for the funding of

a demonstration program which could

guarantee up to $45 million in Title VI

loan guarantees. This notice announces

HUD’s loan guarantee demonstration

program under Title VI of the Native

American Housing Assistance and SelfDetermination Act of 1996 (NAHASDA).

Through the demonstration program,

HUD is seeking to develop models

which will provide innovative ways to

enhance development of affordable,

accessible, and visitable housing in

Indian areas, while increasing access to

private capital, economic growth, and

the investment and participation of

traditional financial institutions not

customarily serving Indian reservations

and other Native American areas. Indian

tribes and Tribally Designated Housing

Entities (TDHEs) are encouraged to form

partnerships (financial, service/

supportive and economic development

oriented) with investors or financial

institutions and submit model Title VI

demonstration projects to be evaluated

in accordance with criteria listed in this

notice. Applications for Title VI loans

may be submitted to HUD at any time

during the demonstration program, and

will be processed on a first-come, firstserved basis.

EFFECTIVE DATE: This notice is effective

July 23, 1998.

FOR FURTHER INFORMATION CONTACT:

Karen Garner-Wing, Director, Office of

Loan Guarantee, Department of Housing

and Urban Development, 1999

Broadway—Suite 3390, Box 90, Denver,

CO 80202–3390; telephone (303) 675–

1600 (this is not a toll free number).

Persons with speech or hearing

impediments may access this number

via TTY by calling the toll-free Federal

Information Relay Service at 1–800–

877–8339.

SUPPLEMENTARY INFORMATION:

I. Authority; Background; Definitions;

and Eligibility

(A) Authority

Title VI of the Native American

Housing Assistance and SelfDetermination Act of 1996 (NAHASDA)

(25 U.S.C. 4101 et seq.); Title II of the

Departments of Veterans Affairs and

Housing and Urban Development, and

Independent Agencies Appropriations

Act, 1998 (Pub. L. 105–65; 111 Stat.

1344, 1355, approved October 27, 1997).

(B) Background

Title VI of NAHASDA (entitled

‘‘Federal Guarantees for Financing for

Tribal Housing Activities’’) establishes a

Native American loan guarantee

program. Title VI authorizes the

Department to guarantee financial

obligations issued by Indian tribes or

their Tribally Designated Housing

Entities (TDHEs) to finance affordable

housing activities as defined in Title II

of NAHASDA and outlined in their

Indian Housing Plan (IHP). To assure

the repayment of notes or other

obligations, NAHASDA requires Title VI

applicants to pledge their Indian

Housing Block Grant (IHBG) funds and

other security as required by the

Department.

(C) Applicability of 24 CFR Part 1000,

Subpart E

HUD’s regulations implementing Title

VI of NAHASDA are located at 24 CFR

part 1000, subpart E. Unless specifically

referenced in this notice, these

regulations do not apply to the Title VI

Demonstration Program.

(D) Definitions

(1) Definitions in 24 CFR part 1000,

subpart E. Unless otherwise defined in

this notice, the definitions set forth in

24 CFR part 1000 apply to the Title VI

Demonstration Program.

(2) Definition of ‘‘Visitability’’. The

following definition also applies to the

Title VI Demonstration Program:

Visitability means at least one

entrance at grade (no steps), approached

by an accessible route such as a

sidewalk; the entrance door and all

interior passage doors provide a

minimum 36-inch clear opening.

Allowing use of 36-inch doors is

consistent with the Fair Housing Act (at

least for the interior doors), and may be

more acceptable than requiring the 3

foot doors that are required in fully

accessible areas under the Uniform

Federal Accessibility Standards for a

small percentage of units.

(E) Eligible Activities for the Title VI

Demonstration Program

Loans and bond issuances are

authorized and guaranteed by HUD for

the purposes of financing affordable

housing activities as planned in the

Tribes/TDHEs IHP. For the FY 1998

demonstration program, Title VI

activities shall be limited in scope as

described in this notice. The activities

authorized in this notice are those

which include:

(1) Indian housing assistance. The

provision of modernization or

rehabilitation for housing previously

developed or operated pursuant to a

contract between the Secretary of HUD

and an Indian Housing Authority.

(2) Development. The acquisition,

new construction, reconstruction, or

moderate or substantial rehabilitation of

affordable housing, which may include

real property acquisition, site

improvement, development of utilities

and utility services, conversion,

demolition, financing, administration

and planning, and other related

activities.

(3) Model Activities. Housing

activities under model programs that are

designed to carry out the purposes of

the NAHASDA and are specifically

approved by the Secretary and/or

approved in connection with the IHP

process.

In undertaking any of the above

activities, program participants should

design construction, rehabilitation or

modifications to buildings and facilities

to be accessible and visitable for persons

with disabilities and others who may

also benefit, such as mothers with

strollers or persons delivering

appliances. In providing technical

assistance, educational opportunities,

and loans, training and informational

materials related to program activities

should be made available in appropriate

video, audio, or braille formats, if

approved by HUD. If job opportunities

are provided through this program,

reasonable efforts should be made to

employ Native Americans with

disabilities in a variety of jobs.

Employers should make reasonable

accommodations for employees with

disabilities.

(F) Eligible Borrowers to Participate in

the Demonstration Program

To be eligible to participate in the

demonstration program, a borrower

must:

(1) Be a Federally recognized Indian

tribe or TDHE that is an approved

recipient for IHBG funds;

(2) Have experience with complex

financial transactions;

(3) Certify that the borrower was

unable to obtain financing without the

use of this guarantee and cannot

complete such financing consistent with

the timely execution of the program

plans without such guarantee;

(4) Have tribal approval that

authorizes the borrower to issue or

undertake financial obligations;
Federal Register / Vol. 63, No. 141 /Thursday, July 23, 1998 / Notices 39683

(5) Have the capacity to repay the

obligation (i.e. to meet the debt service

requirement); and

(6) Pledge IHBG grants as security.

Although a borrower is required by the

NAHASDA to pledge current and future

IHBG funds as collateral for the Title VI

guarantee, the borrower will be required

to furnish additional security to satisfy

HUD requirements. Examples of

additional security include:

(a) Funding Reserves. IHBG or other

grant funds may be used to provide

capital reserves to provide resource

funds to enhance the economic

feasibility of a project’s early years. This

capital advance can be made as a loan,

with the intent to repay funds when the

project begins to earn sufficient income.

(b) Over-Collateralization. The use of

grant funds may be structured so that

project-generated cash flow will be

sufficient to cover debt service and

directly enhance the guaranteed loan.

One technique for accomplishing this

approach is over-collateralization.

An example of this is where grant

funds are combined and the borrower

makes affordable housing loans to tribal

members at an interest rate equal to or

greater than the rate on the Title VI loan.

The total loan portfolio would be

pledged to the repayment of the Title VI

loan.

(c) Letter of Credit. IHBG and Title VI

Loan Guarantee Capacity-Building

Grants (see the separate Notice of

Funding Availability published

elsewhere in today’s Federal Register)

may be used to cover the cost of a letter

of credit, issued in favor of HUD. This

letter of credit is then available to fund

any amounts due on the Title VI loan

provided a default should occur and

debt obligations remain outstanding

after 30 days.

(d) Interest Rate Subsidy. Title VI

funds may be used to provide an

interest rate subsidy to make financing

affordable for low-income families or

the borrower. NAHASDA funds could

be used to ‘‘buy down’’ the interest rate

or make full or partial interest

payments, allowing the reduction and

enhancement of the long term

affordability of homeownership for

eligible families and for borrowers to

carry out approved affordable housing

activities.

II. Submission Requirements

Applications may be submitted to

HUD at any time and must contain, at

a minimum, the information required

under 24 CFR § 1000.424. Applicants

are reminded that § 1000.424(d)(6)

requires the borrower to submit a

certification of compliance with all of

the requirements described in 24 CFR

part 1000, subpart A, including the

environmental review requirements set

forth in §§ 1000.18, 1000.20, 1000.22,

and 1000.24. No funds may be

committed to a project (other than for

certain nonphysical activities) before

the completion of the environmental

review and, where the Indian tribe

assumes responsibility for the

environmental review, before approval

of the request for release of funds and

related certification required by sections

105(b) and 105(c) of NAHASDA.

III. Clarifications

HUD will contact an applicant to

clarify an item in the application.

Applicants must submit clarifications in

accordance with the request made by

HUD or the Department will reject the

application as incomplete.

IV. Notification of Title VI Approval or

Disapproval

Upon completion of its review, HUD

will notify the Title VI applicant of

HUD’s decision to approve or

disapprove the proposed demonstration

project, with an explanation of the

reasons for the disapproval. Those

applications that HUD approves will

include a Firm Commitment notice from

HUD to the applicant. Applicants will

have 30 days in which to submit an

appeal in the event of a disapproval.

The appeal must include a narrative

statement, with supporting

documentation, that addresses the

issues in HUD’s disapproval and serves

to mitigate HUD’s reasons for

disapproval.

V. Findings and Certifications

(A) Paperwork Reduction Act Statement

The information collection

requirements contained in this notice

have been submitted to the Office of

Management and Budget in accordance

with the Paperwork Reduction Act of

1995 (44 U.S.C. 3501–3520). The OMB

approval number, once assigned, will be

published in the Federal Register. An

agency may not conduct or sponsor, and

a person is not required to respond to,

a collection of information unless the

collection displays a valid control

number.

(B) Environmental Impact

A Finding of No Significant Impact

with respect to the environment has

been made in accordance with HUD

regulations at 24 CFR part 50,

implementing section 102(2)(C) of the

National Environmental Policy Act of

1969 (42 U.S.C. 4332). The Finding of

No Significant Impact is available for

public inspection during business hours

in the Office of the Rules Docket Clerk,

Room 10276, Department of Housing

and Urban Development, 451 Seventh

Street, SW, Washington, DC 20410–

0500.

(C) Federalism, Executive Order 12612

The General Counsel, as the

Designated Official under section 6(a) of

Executive Order 12612, Federalism, has

determined that the policies contained

in this notice will not have substantial

direct effects on States or their political

subdivisions, or the relationship

between the Federal Government and

the States, or on the distribution of

power and responsibilities among the

various levels of government. As a

result, the notice is not subject to review

under the Order.

Dated: July 20, 1998.

Deborah Vincent,

General Deputy, Assistant Secretary for Public

and Indian Housing.

[FR Doc. 98–19675 Filed 7–20–98; 2:24 pm]

BILLING CODE 4210–33–P