Rule2023-26654
Single Family Housing Section 502 Direct Loan Program-Community Land Trust Pilot
Primary source
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Published
December 8, 2023
Effective
December 8, 2023
Issuing agencies
Agriculture DepartmentRural Housing Service
Abstract
The Rural Housing Service (RHS or the Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), is announcing a pilot for the Section 502 Direct Home Loan program to test alternative eligibility criteria related to community representation for Community Land Trust (CLT) organizations. The Agency intends to evaluate the impact of allowing eligibility criteria other than membership open to all residents of the geographic area which could meet the intent of the statutory requirements for CLTs to have specific community representation. This notification outlines the pilot parameters and provides contact information for additional details about the pilot.
Full Text
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<title>Federal Register, Volume 88 Issue 235 (Friday, December 8, 2023)</title>
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[Federal Register Volume 88, Number 235 (Friday, December 8, 2023)]
[Rules and Regulations]
[Pages 85470-85472]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-26654]
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DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 3550
[Docket No. RHS-23-SFH-0026]
Single Family Housing Section 502 Direct Loan Program--Community
Land Trust Pilot
AGENCY: Rural Housing Service, USDA.
ACTION: Notification of waivers.
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SUMMARY: The Rural Housing Service (RHS or the Agency), a Rural
Development (RD) agency of the United States Department of Agriculture
(USDA), is announcing a pilot for the Section 502 Direct Home Loan
program to test alternative eligibility criteria related to community
representation for Community Land Trust (CLT) organizations. The Agency
intends to evaluate the impact of allowing eligibility criteria other
than membership open to all residents of the geographic area which
could meet the intent of the statutory requirements for CLTs to have
specific community representation. This notification outlines the pilot
parameters and provides contact information for additional details
about the pilot.
DATES: The effective date of this pilot is December 8, 2023. The
duration of the pilot is anticipated to continue until December 8,
2025, at which time the RHS may extend the pilot program (with or
without modifications) or terminate it depending on the workload and
resources needed to administer the program, feedback from the public,
and the effectiveness of the program. If the pilot program is extended
or terminated early, the RHS will notify the public.
FOR FURTHER INFORMATION CONTACT: Jeremy Anderson, Finance and Loan
Analyst, Direct Loan Origination Branch, Single Family Housing Direct
Loan Division, Rural Development, U.S. Department of Agriculture,
Email: <a href="/cdn-cgi/l/email-protection#f8929d8a9d9581d699969c9d8a8b9796b88d8b9c99d69f978e"><span class="__cf_email__" data-cfemail="d9b3bcabbcb4a0f7b8b7bdbcabaab6b799acaabdb8f7beb6af">[email protected]</span></a>; Phone: (202) 302-3092.
SUPPLEMENTARY INFORMATION:
Authority
The RHS Single Family Housing Direct Division administers the Sec.
502 Direct Loan Program under the authority of Section 502 of the
Housing Act of 1949, as amended; and operates under 7 CFR 3550, subpart
B. Section 506(b) of Title V of the Housing Act of 1949, as amended (42
U.S.C. 1476(b)), permits the Secretary to conduct demonstrations
relating to national housing goals. All statutory or regulatory program
[[Page 85471]]
requirements that are not waived in this document will remain in
effect.
Overview
The RHS offers a variety of programs to build or improve housing
and essential community facilities in rural areas. The Agency offers
loans, grants, and loan guarantees for single- and multifamily housing,
child-care 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.
The RHS administers the Section 502 Direct Loan Program to assist
low- and very low-income applicants who currently do not own adequate
housing and cannot obtain other credit the opportunity to acquire,
build, rehabilitate, improve, or relocate dwellings in rural areas.
Homes financed through the Section 502 Direct loan program can be
located on land owned by a Community Land Trust (CLT). CLTs are a
growing land management tool used by affordable housing providers
nationwide and are recognized for their use of ground leases and/or
long-term deed restrictions as mechanisms to achieve lasting
affordability. CLTs were traditionally organized as member nonprofits
but are increasingly organized as entities without members and/or
without strict representation on governing boards, because they meet
community accountability standards through other means. Similarly,
mission-driven affordable housing developers other than CLTs use ground
leases or deed restrictions to maintain lasting affordability of the
housing units developed and initially sold to income-eligible
homebuyers to ensure the units remain affordable after the initial
sale.
To receive agency supported financing, eligible dwellings located
on land owned by a CLT must comply with 7 CFR 3550.72. Additional
requirements for a community housing development organization
identifying as a CLT are found at 42 U.S.C. 1472(a)(3)(B), which also
incorporates definitions provided at 42 U.S.C. 12704 as described.
These requirements include, in part, that a CLT's governing board
maintains representation of low-income community residents and, to the
extent practicable, low-income beneficiaries. 42 U.S.C. 1472(a)(3)(B);
42 U.S.C. 12704(6)(B). The Act also requires the CLT to have its
corporate membership open to any adult resident of a particular
geographic area specified in its bylaws. 42 U.S.C. 1472(a)(3)(B)(iv).
As written, the community representation requirements are prohibitive
for some affordable housing providers also acting as a CLT.
As land prices increase and availability decreases, many affordable
housing providers are exploring various model to achieve lasting
affordability in the housing stock they contribute to their community,
including CLTs, ground leases and long-term deed restrictions. Some
affordable housing providers that utilize ground leases do not meet the
governing board membership requirements and/or requirement of open
corporate membership required of CLTs in the Housing Act of 1949 and
are therefore unable to access the Section 502 program for their low to
very low-income clients in rural communities when using a land trust
ownership model.
To ensure applicants working with affordable housing providers have
access to the Section 502 program when using a land trust ownership
model, RHS will approve affordable housing providers, under this pilot,
that meet the eligibility criteria described in this document. The goal
of this pilot is to test the viability of aligning the Section 502
program CLT requirements with affordable housing providers' current
strategies to provide lasting affordability in homeownership.
Discussion of the New Section 502 CLT Pilot Regulatory Waivers
RHS has determined that the following two waivers are to be tested
under the new pilot (demonstration) program for the Single-Family
Housing Section 502 Direct Loan Program under the demonstration program
authority provided in Section 506(b) of Title V of the Housing Act of
1949, as amended (42 U.S.C. 1476(b)) and at 7 CFR 3550.7):
1. The first waiver approved for this pilot is for affordable
housing providers to be exempt from the requirement that a CLT maintain
accountability to low-income community residents with regard to
decisions on the design, siting, development, and management of
affordable housing through significant representation on the
organization's governing board. (42 U.S.C. 1472(a)(3)(B); 42 U.S.C.
12704(6)(B)).
Instead, organizations may propose to the Agency through this
pilot, other methods by which the organization will maintain this
accountability and ensure low-income community residents are included
in these decisions. This could be demonstrated through community
meetings, public notice for comment, a community advisory board, etc.
Organizations should include detailed information related to the
activities it will undertake to ensure community involvement is
comparable to the input afforded the organizations board members. The
Agency will evaluate these proposals and determine whether they are
sufficient to maintain accountability.
2. The second waiver approved for this pilot is for affordable
housing providers to be exempt from the requirements that a CLT be a
membership organization with its corporate membership open to any adult
resident of a particular geographic area specified in the by-laws of
the organization (1472(a)(3)(B)(iv))).
Affordable housing providers who meet the eligibility criteria
described in this document may request approval to take part in this
pilot by providing information sufficient to determine their
eligibility as described in this document to the applicable state
office. State office information can be found online at--<a href="https://www.rd.usda.gov/browse-state">https://www.rd.usda.gov/browse-state</a>.
Eligibility Requirements
To be eligible to participate in this pilot, organizations must be
a private nonprofit entity, state or local government, Indian tribe or
Tribal corporation; that meets all other requirements provided at 7 CFR
3550.72, and at 42 U.S.C. 1472(a)(3)(B), except item (iv), and
satisfactorly demonstrates to the Agency the steps they will take to be
accountable to low income residences with regard to decisions on the
design, siting, development, and management of affordable housing.
Except as specified in this document, affordable housing providers
seeking approval as a CLT must abide by all applicable statutory and
regulatory requirements. Eligible participants in the Section 502
Direct program must otherwise abide by all statutory requirements and
by the regulatory requirements outlined in 7 CFR 3550.
Paperwork Reduction Act
The regulatory waivers for this pilot contain no new reporting or
recordkeeping burdens under OMB control number 0575-0179 that would
require approval under the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35).
Non-Discrimination Statement
In accordance with Federal civil rights laws and USDA civil rights
regulations and policies, the USDA, its
[[Page 85472]]
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, staff office; 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.usda.gov/sites/default/files/documents/ad-3027.pdf">https://www.usda.gov/sites/default/files/documents/ad-3027.pdf</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: <a href="/cdn-cgi/l/email-protection#78280a171f0a19155631160c19131d380d0b1c19561f170e"><span class="__cf_email__" data-cfemail="7222001d1500131f5c3b1c0613191732070116135c151d04">[email protected]</span></a>.
USDA is an equal opportunity provider, employer, and lender.
Yvonne Hsu,
Acting Administrator, Rural Housing Service.
[FR Doc. 2023-26654 Filed 12-7-23; 8:45 am]
BILLING CODE 3410-XV-P
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