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NOTICE: NOTICES

DOCUMENT ACTION: Notice.

SUBJECT CATEGORY: Notice of Funds Availability Section 538 Multi-Family Housing Guaranteed Rural Rental Housing Program (GRRHP)--Demonstration Program for Fiscal Year 2008

DOCUMENT SUMMARY: Through this Notice of Funds Availability (NOFA), in conjunction with the GRRHP 2007 Notice, published February 26, 2007, Volume 72 FR, 83398346 and the GRRHP 2008 Notice, published February 4, 2008, Volume 73 FR, 64696477, the Agency announces the
implementation of a demonstration program under the section 538 Guaranteed Rural Rental Housing Program (GRRHP) pursuant to 7 CFR 3565.4 for Fiscal Year (FY) 2008 and 7 CFR 3565.17 demonstration programs. The Demonstration Program's purpose is to test the viability and efficacy of the concept of a continuous loan note guarantee through the construction and permanent loan financing phases of a project. Those applications that meet the Demonstration Program's qualifying criteria and are selected to participate will be offered one loan note guarantee upon closing of the construction loan that will be in effect throughout both of the project's construction and permanent phases without interruption.

The funding for the Demonstration Program will be approximately 10 percent of the FY 2008 appropriation. Expenses incurred in developing applications will be at the applicant's risk. The following paragraphs outline the timeframes, eligibility requirements, lender
responsibilities, and the overall response and application processes.

Eligible Lenders wishing to have their FY 2008 obligations considered for the Demonstration Program must send a signed request on its letterhead with the proposed project details as outlined in the ``Demonstration Program Response Submission Address'' section of this Notice.

Demonstration Program Guidelines

The following guidelines are being provided to facilitate a structured implementation of the program:

1. Demonstration guarantee. The Demonstration guarantee is a guarantee that will be offered to lenders who submit applications in response to the 2008 Demonstration Notice's demonstration program's qualifying criteria. The Demonstration guarantee will consist of one loan note guarantee that will be issued upon closing of the construction loan and will be in effect throughout both of the project's construction and permanent financing phases without interruption.

2. Upon approval of an application from an approved lender, the Agency will commit to providing a demonstration guarantee for the construction and permanent financing phases of the project, subject to the availability of funds.

3. Guarantee percentage and payment. Both construction loan advances and permanent loans are eligible for a guarantee subject to the following limitations:

Construction loan advances and permanent loans. The Agency may guarantee a construction contract which has credit enhancements to protect the Government's interest. The Agency can guarantee the ``construction and permanent'' financing phases of a project. The Agency cannot, however, guarantee only the ``construction'' financing phase of a project. Guarantees under the demonstration guarantee will cover construction loan advances and the subsequent permanent loan. The maximum guarantee of construction advances will not at any time exceed the lesser of 90 percent of the amount of principal and interest up to default advanced for eligible uses of loan proceeds or 90 percent of the original principal amount and interest up to default of a loan. Penalties incurred as a result of default are not covered by the guarantee. The Agency may provide a lesser guarantee based upon its evaluation of the credit quality of the loan.

4. A lender making a construction loan must demonstrate an ability to originate and service construction loans.

5. Guarantee during construction. The Agency will issue a demonstration guarantee only to an approved lender.

6. Demonstration guarantee program compliance requirement. For a demonstration guarantee, the following items will have to be submitted in order to remain compliant with program
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requirements. The items must be submitted within the timeframe stipulated by the Agency and must also be approved by the AGENCY: (i) A certificate of substantial completion;
(ii) A certificate of occupancy or similar evidence of local approval;
(iii) A final cost certification in a form acceptable to the Agency;
(iv) A complete copy of the permanent loan closing docket; and (v) Necessary information to complete an updated necessary assistance review by the Agency.

The Agency may declare the loan in default if the Lender fails to comply with the demonstration guarantee program guidelines and program compliance requirements. The Agency may also declare the loan in default if the Agency's final inspection is not satisfactory. To facilitate the implementation of the program, certain program forms may be addended to include relevant Demonstration Program requirements.

The selected applicants will be subject to the Demonstration Program guidelines in this Notice, and GRRHP's controlling statute, regulations, and handbook as amended. The GRRHP operates under the Housing Act of 1949 and regulations at 7 CFR part 3565. The GRRHP Origination and Servicing Handbook (HB13565) is available to provide lenders and the general public with guidance on program administration. HB13565, which contains a copy of 7 CFR part 3565 in Appendix 1, can be found at the Rural Development Instructions Web site address http:// www.rurdev.usda.gov/regs/hblist.html#hbw6.

Demonstration Program Eligibility: Applications obligated in FY 2008 that meet the following criteria will be eligible for consideration to be selected into the Demonstration Program:

1. The project must have been awarded tax credits.

2. The project must have a loan to cost (LTC) ratio equal to or lower than 50%.

3. The Lender must have submitted a timely response to this Notice in accordance with the ``Demonstration Program Response Submission Address'' section of this Notice.

4. A Lender must have submitted its application under the GRRHP's 2007 Notice published February 26, 2007, Volume 72 FR 83398346 or 2008 Notice published on February 4, 2008, Volume 73 FR 64696477.

5. The application to be considered must have been obligated from October 1, 2007 to September 30, 2008. However, if Demonstration funds have not been fully utilized, the Agency may consider applications obligated on or after October 1, 2006.

6. The Lender must not have closed the construction loan prior to its selection to participate in the Demonstration Program.

Demonstration Program Selection Process

Selections from qualified applications that have requested consideration will be based on interest credit scores, with the highest scoring applications, being selected first, until all available demonstration funds are allocated. In the event of a tie, priority will be given to the project that: Is in the smaller rural community, and in case of a subsequent tie has the lowest LTC ratio.

The first round of selections into the Demonstration Program will be made on April 25, 2008, from the qualified pool of applications obligated between October 1, 2007 to April 4, 2008. In the event there are not enough qualified requests for selection into the Demonstration Program to utilize all the available Demonstration Program setaside funds of approximately $13 million, then the selection process for any remaining funds will be conducted again on July 11, 2008 and will include all applications obligated from October 1, 2007 to July 3, 2008. If needed, an additional selection process will be conducted again on September 29, 2008 and will include all applications obligated from October 1, 2007 to September 22, 2008. Additionally, on September 29, 2008 if funds remain available, applications obligated on or after October 1, 2006 will be included in the selection process. All applicants will be notified of the selection results no later than 15 business days from the date of selection.

Demonstration Program Response Submission Address

Eligible lenders wishing to have their obligated applications considered for selection into the Demonstration Program must submit a signed request (not to exceed one page) on its letterhead that includes the following information:

1. Developer's Name.

2. Borrower's Name.

3. Project's Name.

4. Project's Address (City and State).

5. Project Type (Family, Senior, or Mixed).

6. Project's Total Units.

7. Project's Total Development Cost (TDC).

8. Amount of 538 Loan Guarantee.

9. Amount of Tax Credits Awarded.

10. Amount and Source of Other Financing.

11. Loan to Cost (LTC) %.

12. Area Population.

13. Date obligated or date of Conditional Commitment.

Send the Demonstration Program Response Submission Letter with all of the information listed above, along with a copy of the State Office's ``Proceed with Application/NOFA Response Selection'' letter and a copy of the tax credit award notification to: C.B. Alonso, Senior Loan Specialist, MultiFamily Housing Processing Division, Guaranteed Rural Rental Housing Program, USDA Rural Development, South Agriculture Building, Room 1271, STOP 0781, 1400 Independence Avenue, SW., Washington, DC 202500781.

Requests may also be faxed to 2022055066 or sent by email (signed PDF copies of the above submissions) to cb.alonso@wdc.usda.gov. Eligible lenders mailing a request must provide sufficient time to permit delivery to the Submission Address. To be considered for the first selection process, requests must be received on or before April 25, 2008. To be considered for the second selection process, requests must be received on or before July 11, 2008. To be considered for the third selection process, requests must be received on or before September 29, 2008. Acceptance by a U.S. Post Office or private mailer does not constitute delivery. Postage due responses and applications will not be accepted.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995, the information collection requirements contained in this Notice is approved by the Office of Management and Budget (OMB) under OMB Control Number 05750174.
Nondiscrimination Statement
``The U.S. Department of Agriculture (USDA) prohibits
discrimination in all its programs and activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, marital status or family status (not all prohibited basis apply to all programs). Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact the USDA's Target Center at (202) 7202600 (voice or TDD). To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326W, Whitten Building, 1400 Independence Avenue, SW., Washington, DC 202509410, or call toll free, (866) 6329992 (Voice). TDD users can contact USDA through local relay (800) 7206382 (TDD) or (866) 3778642 (relay voice users). USDA is an equal opportunity provider and employer.''
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Dated: April 11, 2008.
Russell T. Davis,
Administrator, Rural Housing Service.
[FR Doc. E88470 Filed 41808; 8:45 am]
BILLING CODE 3410XVP

SUMMARY: Funds Availability Section 538 Multi-Family Housing Guaranteed Rural Rental Housing Program - Demonstration Program for 2008 Fiscal Year,