Loan Guarantees Under the Section 538 Guaranteed Rural Rental Housing Program

<RULE> DEPARTMENT OF AGRICULTURE <SUBAGY>Rural Housing Service</SUBAGY> <CFR>7 CFR Part 3565</CFR> <DEPDOC>[Docket No. RHS-24-MFH-0043]</DEPDOC> <SUBJECT>Loan Guarantees Under the Section 538 Guaranteed Rural Rental Housing Program</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Rural Housing Service, Department of Agriculture (USDA). <HD SOURCE="HED">ACTION:</HD> Notification of updates in the competitive lender submissions process. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Rural Housing Service (RHS or Agency), an agency within Rural Development (RD), announces updates in the process for competitive lender application submissions regarding proposed properties for the Section 538 Guaranteed Rural Rental Housing Program (GRRHP). The amount of program dollars available for the GRRHP will be determined by the Appropriations Act for each fiscal year. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The effective date of the process updates is December 20, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Applications must be submitted electronically in accordance with the instructions in section IV of this notification. Applications will be accepted on a continuous basis. Complete applications that are deemed eligible for further processing will be funded to the extent an Appropriations Act provides sufficient funding in the fiscal year the application is selected. If funding is not sufficient in any given fiscal year, funding will be provided under the next funding Appropriations Act, subject to the availability of funds. Approved applications are subject to the fee structure in effect when the application is received by the Agency. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Jonathan Bell, Director, Processing and Report Review Branches, Production and Preservation Division, Multifamily Housing Programs, Rural Development, United States Department of Agriculture, via email: <E T="03">MFHprocessing1@usda.gov</E> or telephone: 202-205-9217. Hearing or speech-impaired persons may access that number by calling the 711 Federal Information Relay Service. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Authority</HD> The GRRHP is authorized under section 538 of the Housing Act of 1949, as amended, 42 U.S.C. 1490p-2, and implemented under 7 CFR part 3565. <HD SOURCE="HD1">Background</HD> RHS is committed to helping improve the economy and quality of life in rural areas by offering a variety of programs. The Agency offers loans, grants, and loan guarantees to help create jobs, expand economic development, and provide critical infrastructure investments. RHS also provides technical assistance loans and grants by partnering with agricultural producers, cooperatives, Indian tribes, non-profits, and other local, state, and Federal agencies. The Section 538 GRRHP is a program administered by the RHS, under the authority of the Housing Act of 1949, as amended (42 U.S.C. 1490p-2). The purpose of the GRRHP is to increase the supply of affordable rural rental housing, using loan guarantees that encourage partnerships between the RHS, private lenders, and public agencies. On April 28, 2023 (88 FR 26221), the Agency published a notification in the <E T="04">Federal Register</E> to consolidate all changes to the Section 538 GRRHP program. Pursuant to 7 CFR part 3565, any changes to the selection and/or scoring criteria or fees charged in subsequent years will be announced in a notification published in the <E T="04">Federal Register</E> . Accordingly, this notification replaces the notification published on April 28, 2023 (88 FR 26221), and the correction notification published on July 17, 2023 (88 FR 46047), as the reference for interested parties to follow when submitting GRRHP applications. Expenses incurred in developing applications will be at the applicant's risk. The following paragraphs outline the eligibility requirements, lender responsibilities, and the overall application processes. Any future modifications to this notification, including changes to the selection and/or scoring criteria or fees charged in subsequent years, will be published in the <E T="04">Federal Register</E> . <HD SOURCE="HD1">Discussion of Program Updates</HD> The Agency announces the following updates to the GRRHP: 1. The Agency added a new priority scoring criteria related to maturing mortgages in section 514/515 and section 538 joint transactions. 2. The Agency adjusted the priority scoring criteria points. 3. The Agency added a new priority scoring criteria related to waiving the Qualified Contract rights on applications that are funded using Low Income Housing Tax Credits. 4. The Section 538 GRRHP Response Form will now be titled and referred to as the Section 538 GRRHP Response Template. The Section 538 GRRHP Response Template is not required; however, the Agency encourages applicants to utilize and submit the template along with their complete application to streamline the review process. The template is available on the Agency's Multifamily Housing Loan Guarantees website ( <E T="03">https://www.rd.usda.gov/programs-services/multifamily-housing-programs/multifamily-housing-loan-guarantees</E> ) for applicants that choose to utilize it. If the applicant chooses not to use the template, the information is still required to be submitted with the completed application. 5. The Agency is requiring lenders to include the proposed closing date in their application submission. 6. The Agency is requiring lenders to provide information regarding commercial space associated with the property. 7. The Agency is requiring lenders to identify each principal involved in the Section 538 GRRHP transaction in their application submission. 8. The Agency has modified the instructions for initiating the application process. <HD SOURCE="HD1">I. Funding Opportunity Description</HD> The GRRHP program is administered subject to appropriations by the United States Department of Agriculture (USDA) as authorized under section 538 of the Housing Act of 1949, as amended, 42 U.S.C. 1490p-2, and is implemented under 7 CFR part 3565. The Section 538 GRRH program will continue to follow procedures similar to other RD guaranteed loan programs and accept applications on a continuous basis. The purpose of the GRRHP is to increase the supply of affordable rural rental housing using loan guarantees to encourage partnerships between the Agency, private lenders, and public agencies. <E T="03">Eligibility of Prior Fiscal Year Applications:</E> Prior fiscal year complete applications that were submitted to the Agency but not funded due to lack of available funding will be eligible for review under the current notice without having to submit a new application. If approved, applications submitted under a previous fiscal year notice will be obligated in the order that the request for obligation was received, to the extent of available funding. Once the outstanding prior years approved applications have been funded, the Agency will fund applications approved in the current fiscal year in the order by which the request for obligation was received. If funding is insufficient to serve all applications approved in the current fiscal year, they will be funded according to the priority scoring set forth in section V of this notification. The obligation of program funds is discussed further in section VI of this notification. <HD SOURCE="HD1">II. Award Information</HD> Anyone interested in submitting an application for funding under this program is encouraged to visit the RD website ( <E T="03">https://www.rd.usda.gov/programs-services/multifamily-housing-programs/multifamily-housing-loan-guarantees</E> ) periodically for updated information regarding the status of funding authorized for this program. (1) <E T="03">Qualifying Properties:</E> Qualifying properties include new construction for multifamily housing units and the acquisition of existing structures with a minimum per unit rehabilitation expenditure requirement in accordance with 7 CFR 3565.252. This may include the revitalization, repair, and transfer (as stipulated in 7 CFR 3560.406) of existing Section 515 Rural Rental Housing (RRH) and existing Section 514/516 Farm Labor Housing (FLH). The Agency does not finance acquisition only deals. Transfer costs are subject to Agency approval. All costs must be an eligible use of loan proceeds as listed in 7 CFR 3565.205. Properties involved in the Agency's Multifamily Preservation and Revitalization (MPR) Demonstration are subject to an equity payment, as stipulated in 7 CFR 3560.406(e). In accordance with 7 CFR 3565.252, the property must have a need for repairs of at least $6,500 per dwelling unit and must undergo revitalization. If the transaction includes a transfer of ownership and assumption of loan for a Section 515 RRH property, the complete 538 application and the complete Section 515 RRH transfer of ownership application must be submitted simultaneously, same day, to the Agency. If the complete 538 application is not submitted simultaneously with the Section 515 RRH transfer of ownership application, the 538 application will be rejected and returned to the lender. The lender may resubmit the application when both the complete 538 application and the 515 RRH transfer of ownership application can be submitted simultaneously. (2) <E T="03">Eligible Financing Sources:</E> Any form of Federal, State, and conventional sources of financing can be used in conjunction with the loan guarantee, including HOME Investment Partnerships Program (HOME) grant funds, tax exempt bonds, and Low-Income Housing Tax Credits (LIHTC). (3) <E T="03">Types of Guarantees:</E> The Agency offers three types of guarantees, which are set forth at 7 CFR 3565.52(c). The Agency liability under any guarantee ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 66k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━