Multifamily Housing Guaranteed Rural Rental Housing Program Requirement To Submit a Market Study

DEPARTMENT OF AGRICULTURE <SUBAGY>Rural Housing Service</SUBAGY> <CFR>7 CFR Part 3565</CFR> <DEPDOC>[Docket No. RHS-24-MFH-0024]</DEPDOC> <RIN>RIN 0575-AD42</RIN> <SUBJECT>Multifamily Housing Guaranteed Rural Rental Housing Program Requirement To Submit a Market Study</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Multifamily Housing, Rural Housing Service, U.S. Department of Agriculture (USDA). <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Rural Housing Service (RHS or Agency), an agency of the Rural Development (RD), within the United States Department of Agriculture (USDA), is issuing a proposed rule to amend its regulation that will require applicants (lenders) to submit a market study as part of the complete application for the Guaranteed Rural Rental Housing Program (GRRHP) loan guarantee. This change will require all applicants to use a market study when demonstrating market need for new construction. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be submitted electronically on or before August 29, 2025 by using the Federal eRulemaking Portal: <E T="03">http://www.regulations.gov.</E> Details on how to submit comments to the Federal eRulemaking Portal are in the <E T="02">ADDRESSES</E> section of this proposed rule. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments may be submitted electronically by the Federal eRulemaking Portal: Go to <E T="03">http://www.regulations.gov</E> and, in the “Search Field” box, labeled “Search for dockets and documents on agency actions,” enter the following docket number: (RHS-24-MFH-0024) or RIN# 0575-AD42, then click search. To submit or view public comments, select the following document title: (Guaranteed Rural Rental Housing Program Requirement to Submit a Market Study) from the “Search Results,” and select the “Comment” button. Before inputting your comments, you may also review the “Commenter's Checklist” (optional). Insert your comments under the “Comment” title, click “Browse” to attach files (if available). Input your email address and select “Submit Comment.” Information on using <E T="03">http://www.regulations.gov,</E> including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “FAQ” link. <E T="03">Other Information:</E> Additional information about Rural Development and its programs is available on the internet at <E T="03">rd.usda.gov.</E> All comments will be available for public inspection online at the Federal eRulemaking Portal ( <E T="03">http://www.http://www.regulations.gov</E> ). <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Abby Boggs, Program Support Branch, Production and Preservation Division, Rural Housing Service, Stop 0782, 1400 Independence Avenue SW, Washington, DC 20250-0782, Telephone: (615) 490-1371 or Email: <E T="03">abby.boggs@usda.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> Rural Development is an advocate for rural America, administering a multitude of programs, ranging from housing and community facilities to infrastructure and business development. The Agency's mission is to increase economic opportunity and improve the quality of life in rural communities by providing the leadership, infrastructure, capital, and technical support that enables rural communities to prosper. To achieve its mission, the Agency provides financial support, including loan guarantees, direct loans and grants, and technical assistance to enhance the quality of life and provide the foundation for economic development in rural areas. The RHS offers a variety of programs to build or improve housing and essential community facilities in rural areas. RHS offers loans, grants, and loan guarantees for single- and multifamily housing, childcare centers, fire and police stations, hospitals, libraries, nursing homes, schools, first responder vehicles and equipment, housing for farm laborers and much more. RHS also provides technical assistance, loans, and grants in partnership with non-profit organizations, Indian Tribes, State and Federal government agencies, and local communities. GRRHP, a program in the RHS, provides up to a 90 percent guarantee for loans made by commercial lenders to borrowers developing or rehabilitating multifamily rental housing for low- and moderate-income tenants in rural areas. The program works with qualified private-sector lenders to provide financing to qualified borrowers to increase the supply of affordable rental housing for low- and moderate-income individuals and families in eligible rural areas and towns. <HD SOURCE="HD1">II. Purpose of the Proposed Rule</HD> The intent of this proposed rulemaking is for the GRRHP to increase the supply of affordable rural rental housing by using loan guarantees to encourage partnerships between the RHS, private lenders, and public agencies. GRRHP is authorized by Section 538 of the Housing Act of 1949. 7 CFR part 3565 sets forth the regulatory requirements for the GRRHP. 7 CFR part 3565 currently requires that applications for a loan guarantee submitted by lenders must include a loan request for projects that demonstrate market feasibility for affordable rental housing. Currently, the regulation makes references to market assessment but does not specify the type of documentation the lender must submit to demonstrate the need. Some provide it in the form of a market study, while others provide the information in other formats, but there is no specific requirement that a market study be submitted. This creates inconsistencies of submitted documentation to the Agency to demonstrate market demand. The purpose of a market study is to assure there is enough sustainable demand for additional rental housing units without adversely impacting the existing supply and to maintain a balanced overall market. A typical market study includes an assessment of the impact the proposed project will have on existing rental developments. The Agency is proposing to amend 7 CFR 3565.254(b) to require that applicants (lenders) submit a market study to demonstrate market need as part of the complete application for a Section 538 Guaranteed Rural Rental Housing loan guarantee for a new construction property to create consistency in the application process. Lenders must provide documentation during the application process that there is a need for the affordable rental housing in the defined market area in which new units are proposed to be built as one of the conditions for receiving a loan guarantee. 7 CFR part 3565 does not specify the documentation that should be submitted to the Agency. In keeping with the precedent of other affordable housing programs, the Agency currently accepts a market study from applicants seeking a loan guarantee, but there is no regulatory requirement to do so. The Agency anticipates that this regulatory change will allow the Agency to enforce the requirement that applicants must submit a market study as a part of a complete Section 538 GRRHP application to determine feasibility of the project. <HD SOURCE="HD2">Request for Comment</HD> Stakeholder input is vital to ensure the changes in the proposed rule would support the Agency's mission, while ensuring that new regulations and policies are reasonable and do not overly burden the Agency's lenders and its customers. Comments must be submitted on or before August 29, 2025 and must be submitted electronically by going to the Federal eRulemaking Portal: Details on how to submit comments to the Federal eRulemaking Portal are in the <E T="02">ADDRESSES</E> section of this proposed rule. <HD SOURCE="HD1">III. Summary of Changes</HD> The proposed changes are intended to amend 7 CFR 3565.254(b) by adding the requirement that a market study must be submitted with a complete application for new construction. The market study determines the need and feasibility of housing in a particular rural area, which would allow the Agency to be more responsive to the needs of the program's rural stakeholders and housing market. <HD SOURCE="HD1">IV. Regulatory Information</HD> <HD SOURCE="HD2">Statutory Authority</HD> Section 510(k), Title V, of the Housing Act of 1949 42 U.S.C. 1480(k)), authorizes the Secretary of the Department of Agriculture to promulgate rules and regulations as deemed necessary to carry out the purpose of that title. The Secretary is further authorized to prescribe regulations for the operation of the Department of Agriculture by 5 U.S.C. 301. <HD SOURCE="HD2">Executive Order 12372, Intergovernmental Review of Federal Programs</HD> These loans are subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. RHS conducts intergovernmental consultations for each loan in accordance with 2 CFR part 415, subpart C. <HD SOURCE="HD2">Executive Orders 12866</HD> Executive Orders 12866 (Regulatory Planning and Review) directs agencies to assess the costs and benefits of available regulatory alternatives and, if a regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). This proposed rule has been determined to be non-significant and, therefore, was not reviewed by the Office of Management and Budget (OMB) under Executive Order 12866. <HD SOURCE="HD2">Executive Order 12988, Civil Justice Reform</HD> This proposed rule has been reviewed under Executive Order 12988. In accordance with this proposed rule: (1) unless otherwise specifically provided, all State and local laws that conflict with this proposed rule will be preempted; (2) no retroactive effect will be given to this propose ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 21k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━