Notice2022-04442
New Fee Structure for Section 538 Guaranteed Rural Rental Housing Program Initial and Annual Guarantee Fees
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 3, 2022
Effective
April 4, 2022
Issuing agencies
Agriculture DepartmentRural Housing Service
Abstract
The Rural Housing Service (RHS or the Agency), a Rural Development agency of the United States Department of Agriculture (USDA), is announcing a new fee structure for the Section 538 Guaranteed Rural Rental Housing Program (GRRHP) initial and annual guarantee fees.
Full Text
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<title>Federal Register, Volume 87 Issue 42 (Thursday, March 3, 2022)</title>
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[Federal Register Volume 87, Number 42 (Thursday, March 3, 2022)]
[Notices]
[Pages 12077-12078]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-04442]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
[Docket No. RHS-19-MFH-0024]
New Fee Structure for Section 538 Guaranteed Rural Rental Housing
Program Initial and Annual Guarantee Fees
AGENCY: Rural Housing Service, USDA.
ACTION: Notice.
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SUMMARY: The Rural Housing Service (RHS or the Agency), a Rural
Development agency of the United States Department of Agriculture
(USDA), is announcing a new fee structure for the Section 538
Guaranteed Rural Rental Housing Program (GRRHP) initial and annual
guarantee fees.
DATES: The effective date of the revised fees is April 4, 2022.
FOR FURTHER INFORMATION CONTACT: Tammy Daniels, Finance and Loan
Analyst, Multi-Family Housing Production and Preservation Division,
Rural Housing Service, USDA, STOP 0781, 1400 Independence Avenue SW,
Washington, DC 20250-0781, Telephone: (202) 720-0021 (this is not a
toll-free number); email: <a href="/cdn-cgi/l/email-protection#c1b5a0acacb8efa5a0afa8a4adb281b4b2a5a0efa6aeb7"><span class="__cf_email__" data-cfemail="15617478786c3b71747b7c70796655606671743b727a63">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Authority
The RHS administers the 538 Guaranteed Rural Rental Housing Program
(GRRHP) loans under the authority of the Housing Act of 1949, as
amended (42 U.S.C. 1490p-2) and operates under 7 CFR part 3565. As set
forth in 7 CFR part 3565, the Agency will publish any changes to the
fees in a Notice in the Federal Register.
Background
RHS administers the Section 538 Guaranteed Rural Rental Housing
Program (GRRHP) under the authority of the Housing Act of 1949, as
amended (42 U.S.C. 1490p-2). Under the GRRHP, RHS guarantees loans for
the development of housing and related facilities in rural areas.
Section 538(g) authorizes the Secretary of Agriculture to charge
certain fees to lenders for loan guarantees (see, 42 U.S.C. 1490p-
2(g)). The fees charged are used to cover the costs of loan guarantees
pursuant to the provisions of the Credit Reform Act of 1990 (2 U.S.C.
661 et seq.).
On December 3, 2020, the Agency published a final rule in the
Federal Register at 85 FR 77985 with an effective date of January 4,
2021,which amended 7 CFR part 3565 by removing the stated amount that
the Agency will charge for the initial and annual guarantee fees. This
regulation update affords the program the flexibility and ability to
create the maximum housing affordability to residents by lowering
program costs when practical, without the need for a regulatory change.
As stated in the final rule, if changes occur in the fee amounts, the
Agency will release those changes through a Notice in the Federal
Register and will provide guidance on how to process the loans which
will be impacted by the new fee structure. Interested parties will be
able to locate current fees on the Agency's website at: <a href="https://www.rd.usda.gov/programs-services/multifamily-housing-programs/multifamily-housing-loan-guarantees">https://www.rd.usda.gov/programs-services/multifamily-housing-programs/multifamily-housing-loan-guarantees</a>.
New Fee Structure
Projects with a fully executed (signed by both the Agency and
Lender) conditional commitment as of the date this notice is published,
or a loan obligated prior to October 1, 2021 are ineligible for the
reduced fees. Loans in the following three categories will receive a
greater reductions in the fees: (1) Green and Energy Efficient, (2)
Preservation of Existing Section 515, 514/516 Rural Development
Properties, and (3) Workforce Housing. The overall status of the GRRHP
portfolio is healthy. There is a low delinquency rate, the program
operates at a negative subsidy, and the program has used all or most of
its appropriations in the past 5 years. The initial and annual
guarantee fee is usually passed on to the borrower. Reducing the fees
will decrease the debt service for future loans which will ultimately
decrease the rents and provide savings to the tenants, allow more funds
to be allocated toward capital improvements while continuing to offset
the cost to operate the program.
On February 18, 2021, the Agency conducted a forum soliciting
feedback from Section 538 lenders, borrowers, and program stakeholders.
The general feedback was that the new fee structure for the initial and
annual guarantee fees should take into account affordability and target
projects whose rents are at 60 percent Area Median Income (AMI) and
have current government subsidies. The new fee structure being
implemented has taken this into account by providing greater reduced
fees for preservation of existing Section 515, 514/516 Rural
Development properties.
The annual fee will not be changed for existing Section 538 GRRHP
loans. At the discretion of the Agency, Section 538 GRRHP loans that
are refinanced or modified after the revised fee structure goes into
effect and can successfully demonstrate that the reduced fee results
[[Page 12078]]
in capital improvements to the property or a reduction of rents, will
be considered for eligibility of a reduced fee. Existing 538 GRRHP
loans that are refinanced or modified, solely as part of an interest
rate reduction, will not be eligible for reduced annual fees. The three
categories that will receive a greater reduction in the fees are
detailed as follows:
1. Workforce Housing: Workforce Housing is defined as housing
affordable to households earning between 60 and 120 percent of area
median income (AMI). By statute, the income in the 538 program is
capped at 115 percent AMI. Properties with 100 percent of the units
affordable to households at 80 percent-115 percent AMI will be
eligible for the reduced fee.
2. Preservation of Existing Section 515, 514/516 Rural
Development Properties.
3. Green and Energy Efficient Fee Structure: Upon submission of
the application for existing properties that meet the requirement of
the Green/Energy Efficient fee structure, the lender must collect
from the borrower and submit to the Agency evidence that the
specified, independent green building standard has been achieved.
Owners may access the United States Environmental Protection
Agency's ENERGY STAR Portfolio Manager software at no cost. Evidence
will be in the form of a copy of the Portfolio Manager's report
showing that the building performance is at or above 75 on the 1-100
ENERGY STAR score in Portfolio Manager. For new construction and
substantial rehabilitation or renovations, the lender and owner must
certify that it will pursue and achieve an industry recognized
standard for green building. That evidence must be submitted no more
than 15 months after completion of construction or 15 months after
break-even occupancy when those standards have been achieved. If
these standards are not achieved, the Agency may impose protocols or
restrictions to ensure the property is brought into compliance.
Acceptable, independently verified standards include the
Enterprise Green Communities Criteria; U.S. Green Building Council's
LEED-H, LEED-H Midrise, LEED-NC, or LEED for Existing Buildings:
Operations & Maintenance; ENERGY STAR certification; EarthCraft
House; EarthCraft Multifamily; Earth Advantage New Homes; Greenpoint
Rated New Home; Greenpoint Rated Existing Home (Whole House or Whole
Building label); the National Green Building Standard (NGBS);
Passive Building Certification or EnerPHit Retrofits certification
from the Passive House Institute US (PHIUS), International Passive
House Association, or the Passive House Institute; and Living
Building Challenge Certification from the International Living
Future Institute, or other industry-recognized green building
standards, in the sole discretion of Rural Development, Multi-Family
Housing. These programs evolve and newer versions are published,
sometimes annually. Projects must participate in the current version
of the programs and must consult with the program provider for the
most current, applicable and available programs for their project
location.
The Agency announces the new fee structure as follows:
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Initial guarantee fee (due Annual guarantee fee (due
prior to or at closing) each year or portion of the
------------------------------ year the guarantee remains
in effect) *
Basis points -----------------------------
Basis points
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Amended Fee Structure............................... 65 35
Workforce Housing--Rents between 80%-115% AMI....... 60 25
Preservation of Existing Section 515, 514/516 Rural 60 25
Development Properties.............................
Section 538 New Construction/Substantial Rehab w/ 60 25
Green..............................................
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* The annual guarantee fee is paid in advance. (Example: A loan that closes on December 31, 2021 will incur the
annual fee for 2022).
Non-Discrimination Statement
In accordance with Federal civil rights laws and USDA civil rights
regulations and policies, the USDA, its Mission Areas, agencies, staff
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,
family/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.
Program information may be made available in languages other than
English. Persons with disabilities who require alternative means of
communication to obtain program information (e.g., Braille, large
print, audiotape, American Sign Language) should contact the
responsible Mission Area, agency, or staff office; the USDA TARGET
Center at (202) 720-2600 (voice and TTY); or the Federal Relay Service
at (800) 877-8339.
To file a program discrimination complaint, a complainant should
complete a Form AD-3027, USDA Program Discrimination Complaint Form,
which can be obtained online at <a href="https://www.ocio.usda.gov/document/ad-3027">https://www.ocio.usda.gov/document/ad-3027</a>, from any USDA office, by calling (866) 632-9992, or by writing a
letter addressed to USDA. The letter must contain the complainant's
name, address, telephone number, and a written description of the
alleged discriminatory action in sufficient detail to inform the
Assistant Secretary for Civil Rights (ASCR) about the nature and date
of an alleged civil rights violation. The completed AD-3027 form or
letter must be submitted to USDA by:
(1) Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC
20250-9410; or
(2) Fax: (833) 256-1665 or (202) 690-7442; or
(3) Email: OASCR.Program-Intake.
Joaquin Altoro,
Administrator, Rural Housing Service.
[FR Doc. 2022-04442 Filed 3-2-22; 8:45 am]
BILLING CODE 3410-XV-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.