OneRD Guarantee Loan

<RULE> DEPARTMENT OF AGRICULTURE <SUBAGY>Rural Utilities Service</SUBAGY> <CFR>7 CFR Part 5001</CFR> <DEPDOC>[Docket No. RUS-19-Agency-0030]</DEPDOC> <RIN>RIN 0572-AC63</RIN> <SUBJECT>OneRD Guarantee Loan</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Rural Business-Cooperative Service, Rural Housing Service, Rural Utilities Service, USDA. <HD SOURCE="HED">ACTION:</HD> Final rule; request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> Rural Development's Rural Business-Cooperative Service, Rural Housing Service, and Rural Utilities Service, agencies of the United States Department of Agriculture (USDA), collectively referred to as the Agency in this document, are publishing this final rule for the OneRD Guarantee Loan Program (OneRD). The intent of this rule is to make necessary revisions to the policy and procedures which will strengthen oversight and management of the growing Community Facilities (CF), Water and Waste Disposal (WWD), Business and Industry (B&I), and Rural Energy for America (REAP) guarantee portfolios. This action is part of a continuing effort by the Agency to improve customer service for its lenders and create a more efficient work process for its staff. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective date:</E> This final rule is effective November 29, 2024. <E T="03">Comments due date:</E> Comments must be submitted on or before October 30, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit comments, identified by docket number RUS-19-Agency-0030 and Regulatory Information Number (RIN) number 0572-AC63 through <E T="03">https://www.regulations.gov.</E> <E T="03">Instructions:</E> All submissions received must include the Agency name and docket number or RIN for this rulemaking. All comments received will be posted without change to <E T="03">https://www.regulations.gov,</E> including any personal information provided. <E T="03">Docket:</E> For access to the docket to read background documents or comments received, go to <E T="03">https://www.regulations.gov.</E> Additional information about Rural Development and its programs is available on the internet at <E T="03">https://www.rd.usda.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Susan L. Woolard, Regulations Management Division, Rural Development Innovation Center, U.S. Department of Agriculture, 1400 Independence Ave. SW, Stop 1522, Washington, DC 20250; telephone 202-720-9631; email <E T="03">susan.woolard@usda.gov</E> . </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> The Rural Housing Service (RHS), the Rural Business-Cooperative Service (RBCS), and the Rural Utilities Service (RUS), agencies of the USDA Rural Development mission area, hereinafter collectively referred to as the Agency, published a final rule with comment on July 14, 2020 (85 FR 42494) that created a unified guaranteed loan platform for enhanced delivery of four existing guaranteed loan programs: Community Facilities (CF) administered by RHS; Water and Waste Disposal (WWD) administered by RUS; and Business and Industry (B&I) and Rural Energy for America (REAP) administered by RBCS. The final rule was effective on October 1, 2020, and Rural Development began operating under the new guaranteed loan platform on that date. Collectively, Rural Development's guaranteed loan programs work to assist in building and maintaining sustainable rural communities. Through the public comment period and monthly office hours with lenders and staff, the Agency has solicited feedback on the requirements and policies contained in the rule implemented on October 1, 2020. The Agency has identified areas for revision or clarification that are amended with this final rule with comment. This OneRD final rule with comment incorporates revisions intended to simplify, clarify, improve, expand, and enhance the delivery of the four guaranteed loan programs. <HD SOURCE="HD1">II. Summary of Changes to Regulation</HD> <HD SOURCE="HD2">1. § 5001.3 Definitions</HD> a. The definition of “affiliate” is updated to provide additional information on affiliation determination and include a reference to 13 CFR 121.03. b. The definition of “agricultural producer” is updated to include additional information regarding what constitutes agricultural operations income for the calculation of the five-year average for eligibility determinations. Additional information on the location of an agricultural producer for eligibility determinations is also added. c. The definition of “collateral” is updated to include assignments of relevant agreements as acceptable collateral. d. The definition of “Debt Collection Improvement Act” is updated to correct the title of the act and provide additional information on the Debt Collection Improvement Act of 1996. e. The definition of “delinquency” is updated to provide additional information on how this term is used in the Part. f. The definition of “energy efficient equipment and systems” is updated to include clear demonstration of energy efficiency as an application requirement. g. The definition of “federal debt” is updated to include additional information on the Debt Collection Improvement Act of 1996. h. The definition of “guarantor” is updated to include responsibility for repayment as an undertaking of a guarantor. i. The definition of “hospital” is updated to include additional information on Certification Numbers. j. The definition of “hybrid” is updated to include additional information and an example on the eligibility of hybrid systems. k. The definition of “local owner” is updated to include information on what constitutes a normal commuting area. l. The definition of “matching funds” is updated to include the percentage of matching funds required to be eligible for a REAP guaranteed loan. m. The definition of “natural resource value-added product” is updated to provide non-definitive examples of eligible and ineligible projects. n. The definition of “professional service” is updated to include that a loan finder fee is not considered a professional service under the Part. o. The definition of “refurbished” is updated to provide an example of an acceptable refurbishment and also to provide information on what is considered as ineligible. p. The definition of “renewable energy system (RES)” is updated to include information on items that are not considered RES. q. The definition of “retrofitting” is updated to include examples of eligible projects. r. The definition of “rural and rural area” is updated to include additional information to identify ineligible areas, define rural-in-character determinations as project specific determinations, provide additional information on “strings” or areas that are attached to the urbanized are by a contiguous area of urbanized blocks, and to specify that applications cannot be approved subject to meeting rural area requirements. s. The definition of “simple payback” is updated to include additional information on items to include in the calculation and calculating shared meter proration. t. The definition of “small business” is updated to include additional information on average net income, net worth thresholds and to update the size standard to meet the new Small Business Administration's definition. u. The definition of “total project costs” is updated to include additional information on ineligible project costs and retrofitting for existing RES. v. The definition of “underserved communities” is updated to expand on populations that should be considered for awarding of priority points. <HD SOURCE="HD2">2. Section 5001.9 Standards for Financial Information</HD> a. The Agency added language at § 5001.9(a) to reinforce that the loan is the lender's, and their standard operating procedures apply. b. “For those situations,” is added to § 5001.9(b) to clarify the subject of the last sentence. c. At § 5001.9(c) additional language is added to provide information on the use of tax returns as financial statements and their suitability for eligibility determinations. <HD SOURCE="HD2">3. Section 5001.101 Introduction</HD> a. § 5001.101(a) is amended to add “. . . through 5001.119 . . .” to include all four program areas. b. § 5001.101(f) is added to identify the location in the regulation of eligible and ineligible uses of funds respectively. <HD SOURCE="HD2">4. Section 5001.102 Project Eligibility—General</HD> a. To direct REAP applicants to refinancing information specific to the REAP program, language is added to § 5001.102(d). b. § 5001.102(d)(1) is modified to provide further clarification on refinancing limits on debts owed to another creditor and (d)(2) provides an expanded description of “better rates or repayment terms”. c. “Special conditions and limitations on loans” and “Loan Guarantees for Water, Wastewater, and Essential Community Facilities Loans” is added to paragraph 5001.102(d)(3) to further identify sections 333 and 306(a)(24)(C), respectively, of the Consolidated Farm and Rural Development Act. d. § 5001.102(d)(4)(iii) is modified to provide additional information for loans where debt refinancing is the majority purpose. e. § 5001.102(d)(5) is modified to specify program applicability, lender's responsibility for providing the requested information and update information on total debt service coverage ration as the current language implies an acceptable ratio that is not intended. <HD SOURCE="HD2">5. Section 5001.103 Eligible CF Projects and Requirements</HD> a. Assisted living facilities are added to § 5001.103(a)(1) to identify them, in certain situations, as health care facilities. b. § 5001.103(a)(3) is updated to include eligibility requirements for business incubators (when not inherently commercial), thrift stores, a ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 233k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━