Section 538 Guaranteed Rural Rental Housing Program Notice of Funding Availability Elimination, 55034-55036 [2019-22426]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Housing Service

[Federal Register Volume 84, Number 199 (Tuesday, October 15, 2019)]
[Rules and Regulations]
[Pages 55034-55036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22426]


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DEPARTMENT OF AGRICULTURE

Rural Housing Service

7 CFR Part 3565

[Docket No. RHS-18-MFH-0027]
RIN 0575-AD12


Section 538 Guaranteed Rural Rental Housing Program Notice of 
Funding Availability Elimination

AGENCY: Rural Housing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Housing Service (RHS or Agency) published a proposed 
rule December 12, 2018, proposing to amend its regulation to eliminate 
the requirement for the annual publication of Notice of Funding 
Availability (NOFA). Through this action, RHS finalizes the proposed 
rule without any substantive revisions.

DATES: Effective November 14, 2019.

FOR FURTHER INFORMATION CONTACT: Monica Cole, Finance and Loan Analyst, 
Multi-Family Housing Guaranteed Loan Division, Rural Housing Service, 
United States Department of Agriculture, STOP 0781--Room 1263S, 1400 
Independence Avenue SW, Washington, DC 20250-0781, Telephone: (202) 
720-1251 (this is not a toll-free number); email: [email protected].

SUPPLEMENTARY INFORMATION: 

Background and Summary of Changes

    The annual publication of the NOFA is currently required by 7 CFR 
part 3565. Section 538 of the Housing Act of 1949, as amended (42 
U.S.C. 1490p) (Housing Act) broadly requires a publication of the 
availability of funds, application procedures, and selection criteria 
in the Federal Register, it does not require an annual NOFA. RHS is 
amending its regulation to align with the Housing Act requirements.
    The delay caused by annually publishing a NOFA also creates 
problems regarding the timing of other funders' deadlines. The major 
funding source in the Section 538 portfolio is Low Income Housing Tax 
Credits (LIHTC). Of these properties that are financed with LIHTC, the 
LIHTC equity represents approximately 75 percent of the total 
development cost (TDC). Without the injection of LIHTC equity, rents 
would not be affordable to low income tenants. When developers use the 
Section 538 Guaranteed Rural Rental Housing (GRRH) program with LIHTC, 
they are required to submit a preliminary eligibility letter from Rural 
Development together with the LIHTC application. If the NOFA is 
published after the LIHTC application deadline, the developer will not 
be able to use LIHTC to finance the project.
    In lieu of the NOFA process, the Section 538 GRRH program will 
continue to follow procedures similar to other Rural Development 
guaranteed loan programs and accept applications on a continuous basis. 
The Agency will make an announcement to the public when funds are 
available. Rural Development will use the standards from the last NOFA 
as published in the Federal Register on December 21, 2017 (82 FR 
60579). If Rural Development chooses to change the selection and/or 
scoring criteria or fees charged in subsequent years, it will inform 
the public of those changes through additional Notices in the Federal 
Register.
    Both Empowerment Zone (EZ) and Enterprise Community (EC) 
Initiatives have expired, so reference to those initiatives will also 
be removed from 7 CFR part 3565.
    The Agency published a proposed rule on December 12, 2018 at 83 FR 
64488-64490, proposing to amend its regulation to eliminate the 
requirement for the annual publication of the NOFA. One comment was 
received, and it was in support of the proposed regulatory change. 
Therefore, RHS is moving forward with finalizing this rule with only 
minor stylistic and grammatical changes that do not affect the 
substance of the proposed regulation.

Executive Order 12866--Classification

    This final 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.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

Authority

    The GRRH program is administered subject to appropriations by the 
United States Department of Agriculture (USDA) as authorized under the 
Housing Act of 1949 as amended, Section 538, Public Law 106-569, 42 
U.S.C. 1490 p-2.

Environmental Impact Statement

    This document has been reviewed in accordance with 7 CFR part 1970, 
subpart A, ``Environmental Policies.'' RHS determined that this action 
does not constitute a major Federal action significantly affecting the 
quality of the environment. In accordance with the National 
Environmental Policy Act of 1969, Public Law 91-190, an Environmental 
Impact Statement is not required.

Regulatory Flexibility Act

    The rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act (5 U.S.C. 601-612). The undersigned has 
determined and certified by signature on this document that this rule 
will not have a significant economic impact on a substantial number of 
small entities since this rulemaking action does not involve a new or 
expanded program nor does it require any more action on the part of a 
small business than required of a large entity.

Executive Order 13132--Federalism

    The policies contained in this rule do not have any substantial 
direct effect on

[[Page 55035]]

States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of Government. This rule does not impose substantial 
direct compliance costs on State and local Governments; therefore, 
consultation with States is not required.

Executive Order 12988--Civil Justice Reform

    This rule has been reviewed under Executive Order 12988. In 
accordance with this rule: (1) Unless otherwise specifically provided, 
all State and local laws that conflict with this rule will be 
preempted; (2) no retroactive effect will be given to this rule except 
as specifically prescribed in the rule; and (3) administrative 
proceedings of the National Appeals Division of USDA (7 CFR part 11) 
must be exhausted before bringing suit in court that challenges action 
taken under this rule.

Unfunded Mandate Reform Act (UMRA)

    Title II of the UMRA, Public Law 104-4, establishes requirements 
for Federal Agencies to assess the effects of their regulatory actions 
on State, local, and tribal Governments and on the private sector. 
Under section 202 of the UMRA, Federal Agencies generally must prepare 
a written statement, including cost-benefit analysis, for proposed and 
final rules with ``Federal mandates'' that may result in expenditures 
to State, local, or tribal Governments, in the aggregate, or to the 
private sector, of $100 million or more in any one-year. When such a 
statement is needed for a rule, section 205 of the UMRA generally 
requires a Federal Agency to identify and consider a reasonable number 
of regulatory alternatives and adopt the least costly, more cost-
effective, or least burdensome alternative that achieves the objectives 
of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of title II of the UMRA) for State, local, and tribal 
Governments or for the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of the UMRA.

Paperwork Reduction Act

    The information collection requirements contained in this 
regulation have been approved by OMB and have been assigned OMB control 
number 0575-0189. This final rule contains no new reporting and 
recordkeeping requirements that would require approval under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

E-Government Act Compliance

    RHS is committed to complying with the E-Government Act by 
promoting the use of the internet and other Information Technologies in 
order to provide increased opportunities for citizen access to 
Government information, services, and other purposes.

Programs Affected

    The program affected by this regulation is listed in the Catalog of 
Federal Domestic Assistance under numbers 10.438--Rural Rental Housing 
Guaranteed Loans (Section 538).

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This executive order imposes requirements on RHS in the development 
of regulatory policies that have tribal implications or preempt tribal 
laws. RHS has determined that the rule does not have a substantial 
direct effect on one or more Indian tribe(s) or on either the 
relationship or the distribution of powers and responsibilities between 
the Federal Government and Indian tribes. Thus, this rule is not 
subject to the requirements of Executive Order 13175. If tribal leaders 
are interested in consulting with RHS on this rule, they are encouraged 
to contact USDA's Office of Tribal Relations or Rural Development's 
Native American Coordinator at: [email protected] to request such a 
consultation.

Executive Order 12372--Intergovernmental Consultation

    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.

Non-Discrimination Statement

    In accordance with Federal civil rights law and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Agencies, offices, employees, and institutions participating in or 
administering USDA programs are prohibited from discriminating based on 
race, color, national origin, religion, sex, gender identity (including 
gender expression), sexual orientation, disability, age, marital 
status, familial/parental status, income derived from a public 
assistance program, political beliefs, or reprisal or retaliation for 
prior civil rights activity, in any program or activity conducted or 
funded by USDA (not all bases apply to all programs). Remedies and 
complaint filing deadlines vary by program or incident.
    Persons with disabilities who require alternative means of 
communication for program information (e.g., Braille, large print, 
audiotape, American Sign Language, etc.) should contact the responsible 
Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or 
contact USDA through the Federal Relay Service at (800) 877-8339. 
Additionally, program information may be made available in languages 
other than English.
    To file a program discrimination complaint, complete the USDA 
Program Discrimination Complaint Form, AD-3027, found online at: https://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or 
write a letter addressed to USDA and provide in the letter all of the 
information requested in the form. To request a copy of the complaint 
form, call (866) 632-9992, submit your completed form or letter to USDA 
by:
    (1) Mail: U.S. Department of Agriculture, Director, Office of 
Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410;
    (2) Fax: (202) 690-7442; or
    (3) Email: [email protected].
    USDA is an equal opportunity provider, employer, and lender.

List of Subjects in 7 CFR Part 3565

    Conflict of interest, Credit, Fair housing, Loan programs-housing 
and community development, Low and moderate-income housing, 
Manufactured homes, Mortgages, Rent subsidies, Reporting and 
recordkeeping requirements, Rural areas.

    For the reasons set forth in the preamble, RHS amends 7 CFR part 
3565 as follows:

PART 3565--GUARANTEED RURAL RENTAL HOUSING PROGRAM

0
1. The authority citation for part 3565 continues to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart A--General Provisions


Sec.  3565.3   [Amended]

0
2. Amend Sec.  3565.3 by removing the definition of ``NOFA.''

0
3. Section 3565.4 is revised to read as follows:


Sec.  3565.4  Availability of assistance.

    The Agency's authority to enter into commitments, guarantee loans, 
or

[[Page 55036]]

provide interest credits is limited to the extent that appropriations 
are available to cover the cost of the assistance. The Agency will 
notify the public of the availability of assistance, changes in 
application requirements, or changes in the fee structure.

0
4. Amend Sec.  3565.5 by revising paragraph (b) to read as follows:


Sec.  3565.5  Ranking and selection criteria.

* * * * *
    (b) Priority projects. Priority will be given to projects: In 
smaller rural communities, in the neediest communities having the 
highest percentage of leveraging, having the lowest interest rate, 
having the highest ratio of 3-5-bedroom units to total units, or on 
tribal lands. In addition, the Agency may, at its sole discretion, set-
aside assistance for or rank projects that meet important program 
goals. Assistance will include both loan guarantees and interest 
credits. Priority projects must compete for set-aside funds.

Subpart B--Guarantee Requirements

0
5. Amend Sec.  3565.53 by revising paragraph (c) to read as follows:


Sec.  3565.53  Guarantee fees.

* * * * *
    (c) Surcharge for guarantees on construction advances. The Agency 
may, at its sole discretion, charge an additional fee on the portion of 
the loan advanced during construction. If applicable, this fee will be 
charged in advance at the start of construction.

Subpart C--Lender Requirements


Sec.  3565.104  [Amended]

0
6. Amend Sec.  3565.104 by removing the last sentence.

Subpart E--Loan Requirements

0
7. Section 3565.210 is revised to read as follows:


Sec.  3565.210   Maximum interest rate.

    The interest rate for a guaranteed loan must not exceed the maximum 
allowable rate specified by the Agency. This interest rate must be 
fixed over the term of the loan.

Subpart F--Property Requirements

0
8. Section 3565.252 is revised to read as follows:


Sec.  3565.252  Housing types.

    The property may include new construction or rehabilitation of 
existing structures. The units may be attached, detached, semi-
detached, row houses, modular or manufactured houses, or multifamily 
structures. Manufactured housing must meet Agency requirements 
contained in 7 CFR part 1924, subpart A. The Agency will guarantee 
proposals for new construction or acquisition with moderate or 
substantial rehabilitation of at least $6,500 per dwelling unit. The 
portion of guaranteed funds available for acquisition with 
rehabilitation may be limited.

Subpart G--Processing Requirements

0
9. Amend Sec.  3565.302 by revising paragraph (b) introductory text to 
read as follows:


Sec.  3565.302   Allowable fees.

* * * * *
    (b) Agency fees. The Agency will charge one or more types of fees 
deemed appropriate as reimbursement for reasonable and necessary costs 
incurred in connection with applications received from lenders. Agency 
fees may include, but are not limited to, the following:
* * * * *

Bruce W. Lammers,
Administrator, Rural Housing Service.
[FR Doc. 2019-22426 Filed 10-11-19; 8:45 am]
BILLING CODE 3410-XV-P