Notice of Availability of Funds; Multi-Family Housing, Single Family Housing

Programs Affected

The following programs are subject to the provisions of Executive Order 12372 that requires intergovernmental consultation with State and local officials. These programs or activities are listed in the Catalog of Federal Domestic Assistance under Nos.

10.405 Farm Labor Housing (LH) Loans and Grants 10.410 Very Low to Moderate Income Housing Loans 10.411 Rural Housing Site Loans and Self-Help Housing Land Development Loans 10.415 Rural Rental Housing Loans 10.417 Very Low Income Housing Repair Loans and Grants 10.420 Rural Self-Help Housing Technical Assistance 10.427 Rural Rental Assistance Payments 10.433 Rural Housing Preservation Grants 10.442 Housing Application Packaging Grants

Discussion of Notice

7 CFR chapter XVIII, part 1940, subpart L contains the ``Methodology and Formulas for Allocation of Loan and Grant Program Funds.'' The following guidance has been provided to our State offices on FY 1999 appropriations and access to funds. Separate guidance has been provided to our State offices for assistance available in our Multi-and Single-Family Housing Programs as follows:

Multi-Family Housing (MFH)

I. General

A. This provides guidance on MFH funding for the Rural Rental Housing Program (RRH) for FY 1999. Allocation computations have been performed in accordance with 7 CFR 1940.575 and 1940.578. For FY 1999, State Directors, under the Rural Housing Assistance Grants (RHAG), will have the flexibility to transfer their initial allocations of budget authority between the Single Family Housing (SFH) section 504 Rural Housing Grants and section 533 Housing Preservation Grant (HPG) programs. B. MFH loan levels for FY 1999 are as follows:

MFH Loan Programs Credit Sales.......................... $3,500,000 Section 514 Farm Labor Housing (LH) Loans.............. 20,000,000 Section 515 Rural Rental Housing (RRH)................. 79,321,240 Section 515 Rural Rental Housing (RRH) Rehabilitation or Repair Loans & Equity Loans....... 35,000,000 Section 521 New Construction Rental Assistance (RA).............................. 35,705,890 Section 516 LH Grants (RHAG)........................... 13,500,000 Sections 525 Technical and Supervisory Assistance Grants (TSA) and 509 Housing Application Packaging Grants (HAPG) (Shared between Single and Multi-Family Housing)........................................... 1,355,054 Section 533 Housing Preservation Grants (HPG) (RHAG)... 7,000,000 Section 538 Guaranteed Rural Rental Housing Program*... 74,800,000 * The program has been authorized for FY 1999. Guaranteed loan funds will be made available under a Notice of Funding Availability (NOFA) that will be published with a final rule later this fiscal year. Additional guidance will be provided at that time.

II. Funds not Allocated to States

A. Credit Sales Authority. For FY 1999, $3,500,000 will be set aside for credit sales to program and nonprogram buyers. Credit sale funding will not be allocated by State. B. Section 514 Farm LH Loans. 1. These loans are funded in accordance with 7 CFR 1940.579(a).

FY 1999 Appropriation................................... $20,000,000 Available for Off-Farm Loans............................ 15,500,000 Available for On-Farm Loans............................. 1,500,000 National Office Reserve................................. 3,000,000

2. Off-farm loan fundings will be made available under a NOFA that will be published with a final rule later this fiscal year. Additional guidance will be provided at that time. (A proposed rule was published at 63 FR 57932 on October 29, 1998.) C. Section 516 Farm LH Grants. 1. Grants are funded in accordance with 7 CFR 1940.579(b). Unobligated prior year balances and cancellations will be added to the amount shown.

FY 1999 Appropriation................................... $13,500,000 Available for LH Grants................................. 9,150,000 Available for Technical Assistance Contracts............ 1,350,000 National Office Reserve................................. 3,000,000

2. Labor Housing grant funds for off-farm will be made available under a NOFA that will be published with a final rule later this fiscal year. Additional guidance will be provided at that time. (A Proposed Rule was published on October 29, 1998.) D. Rental Assistance for LH. Labor Housing RA will be held in the National office for use with LH loan and grant applications. RA is only available with an LH loan of at least 5 percent of the total development cost. Projects without a LH loan cannot receive RA.

III. Section 515 RRH Loan Funds

A. Section 515 RRH Loan Funds (for New Construction Loans): New construction loan funds will be made available via a National NOFA using the following parameters: 1. No one State may receive more than $2.5 million under the NOFA. Reserve funds are not considered NOFA funds and therefore, will not be counted toward the $2.5 million State cap. 2. No single loan request may exceed $1 million. The Administrator may waive this limit in cases where a State's average total development costs exceed the National average by 50 percent or more. States may set a lower loan amount. 3. The amount of RA available will be impacted by the amount of leveraging in

applications selected. If no (or insufficient) rental assistance is available, the next ranked request that does not need rental assistance (or falls within the available amount) will be selected. 4. States will continue to score and rank requests by point score in accordance with Sec. 1944.231 of RD Instruction 1944-E. This fiscal year's NOFA will include a National office selection criteria. In States with an on-going formal working relationship, agreement, or memorandum of understanding (MOU) with the State to provide State funds, State RA, HOME funds, Community Development Block Grant (CDBG) funds, or Low Income Housing Tax Credits (LIHTC) for RHS proposals, points will be provided to loan requests that include such funds or RA. No State selection criteria will be used this fiscal year. 5. States will submit a list, in rank order, showing the name of the applicant; location of the project (City & State); if it is located in an Empowerment Zone (EZ) or Enterprise Community (EC), Tribal Land, or Colonia; amount of leveraging; RHS loan amount; point score; number of new construction RA units needed; total project units; number of tax credit units, and other information requested in this NOFA, to the National office. Requests that are eligible for the Nonprofit Set-Aside must be so indicated. Include requests for the Underserved Counties and Colonias Set-Aside and indicate if they are also eligible for regular section 515 funds, i.e., are located in a designated place. 6. The National office will rank the States' requests by point score, Nationwide, using the same tie breaker criteria established in Sec. 1944.231 of RD Instruction 1944-E. 7. Funds will be distributed to the States for loan requests in rank order, up to a maximum of $2.5 million for any one State. B. Amount available for new construction loans is as follows:

Total Available......................................... $79,321,240 Less Set-Aside for Nonprofits........................... 7,138,912 Less Set-Aside for Underserved Counties and Colonias.... 3,966,062 Less Set-Aside for EZ or EC communities................. 7,253,866 Less General Reserve.................................... 5,740,000 Less State RA Designated Reserve........................ 1,500,000 NOFA Balance............................................ 53,722,380

1. National Office Reserves. These reserves are broken down as follows:

General Reserve......................................... $5,740,000 Designated Reserves: State RA........................... 1,500,000 Total National Office Reserve........................... 7,240,000

2. National Office Set-asides. The following legislatively mandated set-asides of funds are part of the National office set-aside:

Nonprofit Set-Aside..................................... $7,560,000 Underserved Counties and Colonias....................... 4,200,000 EZ or EC Communities.................................... 7,250,000

3. Rental Assistance (RA). New construction RA will be held in the National office for use with section 515 Rural Rental Housing loans.

IV. State Allocations for Rehabilitation or Repair Loans

A. Repairs and Rehabilitation. Tenant health and safety continues to be a priority. Repair and rehabilitation funds must be first targeted to RRH facilities that have physical conditions that effect the health and safety of tenants and then made available to facilities that have deferred maintenance. B. Section 515 RRH Loan Funds (for Repairs and Rehabilitation). All funds will be held in the National office and will be distributed based upon indicated rehabilitation needs in the MFH Survey conducted in September 1998. The amount available for rehabilitation or repair loans is as follows:

Rehab and Repair Appropriation.......................... $35,000,000 Designated Equity Reserve............................... 5,000,000 Total Available for Rehabilitation or repair loans...... 30,000,000

V. Section 533 Housing Preservation Grants (HPG)

Amount available for allocation. See end of this Notice for HPG State allocations.

Total Available......................................... $7,000,000 Less General Reserve.................................... 700,000 Less Designated Set-Aside for EZ or EC.................. 1,200,000 Total Available for Distribution........................ 5,100,000

Single Family Housing (SFH)

I. General

A. This notice provides SFH allocations for FY 1999. Allocation computations have been made in accordance with 7 CFR 1940.563 through 1940.568. Information on basic formula criteria, data source and weight, administrative allocation, pooling of funds, and availability of the allocation are located on a chart at the end of this notice. B. The SFH levels authorized for FY 1999 are as follows:

Section 502 Guaranteed Rural Housing (RH) Loans Nonsubsidized Guarantees......................... $3,000,000,000 Section 502 Direct RH Loans Very Low-Income Subsidized Loans................. 424,738,000 Low-Income Subsidized Loans...................... 540,575,000 Nonsubsidized Loans.............................. 0 Credit Sales (Program and Non Program)............... 19,968,000 Section 504 Housing Repair Loans.................... 25,001,000 Section 504 Housing Repair Grants................... 20,000,000 Section 509 Compensation for Construction Defects (RHAG).............................................. 1,433,237 Section 523 Mutual and Self-Help Technical Assistance and Grants 26,000,000 Section 523 Self-Help Site Loans.................... 5,000,000 Section 524 RH Site Loans........................... 5,151,510 Section 306C Water and Waste Disposal (WWD) Grants.. 1,604,800 Sections 525 Technical and Supervisory Assistance Grants.............................................. 1,355,054 (TSA) and 509 Housing Application Packaging Grants (HAPG) (Shared between Single and Multi-Family Housing)

C. SFH funding not allocated to States are: 1. Credit Sale Authority. The distribution of available credit sale authority is outlined on a chart at the end of this notice. States will use loan funds to finance program Real Estate Owned (REO) sales to program applicants when all credit sale authority is exhausted. 2. Section 509 Compensation for Construction Defects. All claims for

compensation for construction defects must be submitted to the National office for authorization of funds prior to approval. 3. Section 523 Mutual and Self-Help Technical Assistance Grants. $26 million has been appropriated for section 523 Mutual and Self-Help Technical Assistance Grants. Of these funds, $1 million is earmarked for EZ or EC communities. In order to receive earmark funds, at least 50 percent of the total homes to be constructed must be located in the EZ or EC community. The State Director must request funding approval from the National office for all requests. A technical review and analysis must be completed by the Technical and Management Assistance (T&MA) contractor on all predevelopment, new, and existing (refunding) grant applications. 4. Section 523 Mutual and Self-Help Site Loans and Section 524 RH Site Loans. The State Director must request funding authority from the National office prior to obligating loan funds. 5. Section 306C WWD Grants to Individuals in Colonias. The objective of the section 306C WWD individual grant program is to facilitate the use of community water or waste disposal systems for the residents of the colonias along the U.S.-Mexico border. The cumulative amount available to Arizona, California, New Mexico, and Texas will be $1,604,800 for FY 1999. This amount includes the carryover unobligated balance of $104,800 and the transferred amount of $1.5 million from the Rural Utilities Service (RUS) to RHS for processing individual grant applications. The above States will have access to the equal quarterly allocation distributions. 6. Section 525 Technical and Supervisory Assistance (TSA) and section 509 Housing Application Packaging Grants (HAPG). $500,000 of new funds and $855,054 of carry-over funds from previous years remain available for the TSA and HAPG programs. State Directors should submit proposals from potential applicants to the National office for review and concurrence prior to authorizing an application. The 29 eligible States under HAPG that have active grantees operating will be able to access up to $17,500 for section 502 or 504 loan and grant programs in order to continue operations. Reserve requests will be considered on a first-come, first-served basis. 7. Deferred Mortgage Payment Demonstration. There is no FY 1999 funding provided for deferred mortgage authority or loans for deferred mortgage assumptions. 8. Section 502 direct nonsubsidized funds (loan making and servicing). There were no FY 1999 funds appropriated for loans for nonsubsidized loan making or servicing.

II. State Allocations

A. Section 502 Nonsubsidized Guaranteed RH (GRH) Loans. 1. Amount Available for Allocation.

Total Available...................................... $3,000,000,000 Less National Office General Reserve............. 640,000,000 Less Special Outreach Area Reserve............... 160,000,000 ------------------ Basic Formula--Administrative Allocation..... 2,200,000,000

2. National Office General Reserve. The Administrator may restrict access to this reserve for States not meeting their goals in Special Outreach Areas. 3. Reservation of Funds. Because it is anticipated that demand will exceed available funds, States must use the reservation of funds system per Sec. 1980.351 of RD Instruction 1980-D. 4. Special Outreach Areas. FY 99 GRH funding is allocated to States in two funding streams (80/20) similar to the 60/40 income split for direct SFH funds. Eighty percent of GRH funds may be used in any eligible area. Twenty percent of GRH funds are to be used Special Outreach Areas. Special Outreach Areas are counties with median incomes at or below the State's nonmetropolitan median income. Each funding stream will independently be subject to pooling. If needed, Special Outreach Area funds may be pooled nationwide on July 16, 1998 and made available to other Special Outreach Areas in the Nation. 5. National Office Special Area Outreach Reserve. A special outreach area reserve fund has been established at the National Office. Funds from this reserve may only be used in special outreach areas. 6. Suballocation by the State Director. The State Director may retain funds at the State Office level or suballocate to the Area or Field Office level. B. Section 502 Direct RH loans. 1. Amount Available for Allocation.

Total Available...................................... $965,313,000 Less Required Set Aside for Underserved Counties and Colonias.................................... 48,266,000 EZ and EC Earmark............................ 45,516,000 Less General Reserve............................. 63,500,000 Administrator's Reserve...................... 30,000,000 Hardships & Homelessness..................... 3,500,000 Homeownership Partnership.................... 25,000,000 Rural Housing Demonstration Program.......... 5,000,000 Less Designated Reserve for Self-Help................ 150,000,000 Basic Formula Administrative Allocation.............. 658,031,000

2. Reserves. a. State office Reserve. State Directors must maintain an adequate reserve to fund the following applications: (i) Hardship and homeless applicants based upon historical data and projected demand. This shall include the direct section 502 Loan and section 504 Loan and Grant Programs. (ii) The State's 25 percent portion of funds for Mutual Self-Help loans. (iii) Subsequent loans for essential improvements or repairs and transfers with assumptions. (iv) Financing for the purchase of program REO's when credit sale authority has been exhausted. (v) State Directors must ensure that not less than 25 percent of the initial low-income allocation and 5 percent of the initial very low allocation are utilized for participation in leveraging section 502 direct loan funds. (vi) Areas targeted by the State. b. National office Reserves. (i) General reserve. The National office has a general reserve of $63.5 million. Of this amount, the Administrator's reserve is $30 million.

One of the purposes of the Administrator's reserve will be for loans in Indian Country. Indian Country is defined as land inside the boundaries of Indian reservations, communities made up mainly of Native Americans, Indian trust and restricted land, and tribal allotted lands. The remaining reserves will be distributed as follows: (ii) Hardship and Homelessness Reserve. $3.5 million has been set aside for Hardships & Homelessness. (iii) Homeownership Partnership. $25 million has been set aside for Homeownership Partnerships. These funds will be used to expand existing partnerships and create new partnerships, such as the following: (A) Department of the Treasury, Community Development Financial Institutions (CDFI)--Funds will be available to fund leveraged loans made in partnership with the Department of the Treasury CDFI participants. (B) Rural Home Loan Partnership (RHLP). Partnership initiatives established to carry out the objectives of the National Partners in Homeownership including the RHLP and other strategies or initiatives. (iv) Rural Housing Demonstration Program. $5 million has been set aside for innovative demonstration initiatives. c. Designated reserve for Self-Help. $150 million has been set aside for matching funds to assist participating Self-Help applicants. The matching funds were established on the basis of the National office contributing 75 percent from the National office reserve and States contributing 25 percent of their allocated section 502 RH funds. d. Underserved counties and colonias. $48,266,000 has been set aside for the 100 underserved counties and colonias. e. Empowerment Zone (EZ) and Enterprise Community (EC) Earmark. These funds are earmarked for loans in EZs and ECs only. Further information will follow. f. Reserve requests. All National office reserve requests should be submitted by the State Director to the National office on a case-by- case basis. g. State office Pooling. If pooling is conducted within a State, it must not take place within the first 30 calendar days of the first, second, or third quarter. (There are no restrictions on pooling in the fourth quarter.) h. Suballocation by the State Director. The State Director may suballocate to each area office using the methodology and formulas required by 7 CFR Part 1940, Subpart L. If suballocated to the area level, the Rural Development Manager will make funds available on a first-come, first-served basis to all offices at the field or area level. No field office will have its access to funds restricted without the prior written approval of the Administrator. C. Section 504 Housing Loans and Grants. Section 504 Grant funds are included in the Rural Housing Assistance Grant Program (RHAG) in the FY 1999 Appropriation. Funds included in RHAG may be transferred in accordance with Part I of this notice. 1. Amount available for allocation.

Section 504 Loans Total Available..................................... $25,001,000 Less 5% for 100 Underserved Counties and Colonias....................................... 1,250,000 EZ and EC Earmark............................... 4,258,000 Less General Reserve............................ 2,500,000 Basic Formula--Administrative Allocation............ 16,993,000 Section 504 Grants Total Available..................................... 20,000,000 Less 5% for 100 Underserved Counties and Colonias....................................... 1,000,000 Less General Reserve............................ 2,500,000 Basic Formula--Administrative Allocation............ 16,500,000

2. Reserves and Set-asides. a. State Office Reserve. State Directors must maintain an adequate reserve to handle all anticipated hardship applicants based upon historical data and projected demand. b. Underserved Counties and Colonias. $1,250,000 and $1,000,000, respectively, have been set aside for the 100 underserved counties and colonias for the section 504 loan and grant programs. c. Empowerment Zone (EZ) and Enterprise Community (EC) Earmark (Loan funds only). These funds are earmarked for EZs and ECs only. d. National Office Reserve. $2.5 million for section 504 loan hardships and $2.5 million for section 504 grant extreme hardships have been set-aside in the General Reserve. For section 504 grants, an extreme hardship case is one requiring a significant priority in funding, ahead of other requests, due to severe health or safety hazards, or physical needs of the applicant. Information on basic formula criteria, data source and weight, administrative allocation, pooling of funds, and availability of the allocation.

-------------------------------------------------------------------------------------------------------------------------------------------------------- Section 502 nonsubsidized guaranteed No. Description RH loans Section 502 direct RH loans Section 504 loans and grants -------------------------------------------------------------------------------------------------------------------------------------------------------- 1.............. Basic formula criteria, See 7 CFR 1940.563(b)............... See 7 CFR 1940.565(b).............. See 7 CFR 1940.566(b) data source, and and 1940.567(b). weight. 2.............. Administrative allocation Western Pacific Area... $1,000,000.......................... $1,100,000......................... $2,400,000 Loan $ 560,000 Grant. 3.............. Pooling of funds a. Mid year pooling.... If Necessary........................ None Anticipated................... None Anticipated. b. Year-end pooling.... July 16, 1999....................... August 13, 1999.................... August 13, 1999. c. Underserved Counties N/A................................. June 30, 1999...................... June 30, 1999. and Colonias. d. EZ & EC............. N/A................................. June 30, 1999...................... June 30, 1999. e. Credit Sales........ N/A................................. June 30, 1999...................... N/A. 4.............. Availability of the allocation a. first quarter....... 50 percent.......................... 50 percent......................... 50 percent. b. second quarter...... 75 percent.......................... 70 percent......................... 70 percent. c. third quarter....... 100 percent......................... 90 percent......................... 90 percent. d. fourth quarter...... N/A................................ 100 percent........................ 100 percent. --------------------------------------------------------------------------------------------------------------------------------------------------------

1. Data derived from the 1990 U.S. Census was provided to each State by the National office on August 12, 1993. 2. Due to the absence of Census Data. 3. All dates are tentative and are as of close of business (COB). Pooled funds will be placed in the National office reserve and made available administratively. 4. Funds will be distributed cumulatively through each quarter listed until the National office year-end pooling date.

Dated: December 11, 1998. Jan E. Shadburn, Administrator, Rural Housing Service.

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