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Notice2024-05505

Section 514 Off-Farm Labor Housing Subsequent Loans and Section 516 Off-Farm Labor Housing Subsequent Grants To Improve, Repair, or Make Modifications to Existing Off-Farm Labor Housing Properties for Fiscal Year 2024

Primary source

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Published

March 18, 2024

Issuing agencies

Agriculture DepartmentRural Housing Service

Abstract

The Rural Housing Service (RHS or Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), announces that it is accepting applications for subsequent Section 514 Off-Farm Labor Housing (Off-FLH) loans and subsequent Section 516 Off- FLH grants to improve, repair, or make modifications to existing Off- Farm Labor Housing Properties for fiscal year 2024. This Notice describes the method used to distribute funds, the application process, and submission requirements.

Full Text

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<title>Federal Register, Volume 89 Issue 53 (Monday, March 18, 2024)</title>
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[Federal Register Volume 89, Number 53 (Monday, March 18, 2024)]
[Notices]
[Pages 19400-19468]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-05505]

[[Page 19399]]

Vol. 89

Monday,

No. 53

March 18, 2024

Part II

Department of Agriculture

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Rural Housing Service

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Section 514 Off-Farm Labor Housing Subsequent Loans and Section 516
Off-Farm Labor Housing Subsequent Grants To Improve, Repair, or Make
Modifications to Existing Off-Farm Labor Housing Properties for Fiscal
Year 2024; Notice

Federal Register / Vol. 89, No. 53 / Monday, March 18, 2024 /
Notices

[[Page 19400]]

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DEPARTMENT OF AGRICULTURE

Rural Housing Service

[Docket No.: RHS-24-MFH-0008]

Section 514 Off-Farm Labor Housing Subsequent Loans and Section
516 Off-Farm Labor Housing Subsequent Grants To Improve, Repair, or
Make Modifications to Existing Off-Farm Labor Housing Properties for
Fiscal Year 2024

AGENCY: Rural Housing Service, USDA.

ACTION: Notice of solicitation of applications (NOSA).

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SUMMARY: The Rural Housing Service (RHS or Agency), a Rural Development
(RD) agency of the United States Department of Agriculture (USDA),
announces that it is accepting applications for subsequent Section 514
Off-Farm Labor Housing (Off-FLH) loans and subsequent Section 516 Off-
FLH grants to improve, repair, or make modifications to existing Off-
Farm Labor Housing Properties for fiscal year 2024. This Notice
describes the method used to distribute funds, the application process,
and submission requirements.

DATES: Eligible applications submitted to the Production and
Preservation Division, Processing and Report Review Branch, for this
Notice will be accepted until June 18, 2024, 12 p.m., Eastern Time.
Applications that are deemed eligible but are not selected for further
processing due to inadequate funding will be withdrawn from processing.
RHS will not consider any application that is received after the
established deadlines unless the date and time are extended by another
Notice published in the Federal Register. The RHS may at any time
supplement, extend, amend, modify, or supersede this Notice by
publishing another Notice in the Federal Register. Additional
information about this funding opportunity can be found on the
<a href="http://Grants.gov">Grants.gov</a> website at <a href="https://www.grants.gov">https://www.grants.gov</a>.
At least three business days prior to the application deadline, the
applicant must email the RHS a request to create a shared folder in
CloudVault. Please refer to the ADDRESSES section of this notice for
further details.
The application deadlines are as follows:
1. Available loan and grant funding posted to the MFH website by
March 18, 2024.
2. Applications must be submitted by June 18, 2024, 12 p.m.,
Eastern Time.
3. Awards and non-selections communicated to applicants by
September 30, 2024.
4. Awards posted to the RHS website by October 15, 2024.
Concept meetings will be scheduled between the dates of April 1,
2024 and April 29, 2024. No concept meetings will be scheduled outside
of the specified dates.
Requests for concept meetings can be sent to the following email
address: <a href="/cdn-cgi/l/email-protection#3d707b754d4f525e584e4e54535a0c7d484e595c135a524b">[email&#160;protected]</a> and must be received by April 15,
2024. Please refer to Section E. Applicant Assistance of this notice
for further details.

ADDRESSES: Applications to this Notice must be submitted electronically
to the Production and Preservation Division, Processing and Report
Review Branch.
At least three business days prior to the application deadline, the
applicant must email the RHS a request to create a shared folder in
CloudVault. The email must be sent to the following address: <a href="/cdn-cgi/l/email-protection#0f406969224943476e7f7f63666c6e7b6660614f7a7c6b6e21686079">[email&#160;protected]</a>. The email must contain the following
information:
(1) Subject line: ``Off-FLH Repair Application Submission.''
(2) Body of email: Borrower Name, Project Name, Borrower Contact
Information, Project State.
(3) Request language: ``Please create a shared CloudVault folder so
that we may submit our repair application documents.''
Once the email request to create a shared CloudVault folder has
been received, a shared folder will be created within two business
days. When the shared CloudVault folder is created by the RHS, the
system will automatically send an email to the applicant's submission
email address with a link to the shared folder. All required
application documents in accordance with this Notice must be loaded
into the shared CloudVault folder. The applicant's access to the shared
CloudVault folder will be removed when the submission deadline is
reached. Any document uploaded to the shared CloudVault folder after
the application deadline will not be reviewed or considered. Please
note: CloudVault is a USDA[hyphen]approved cloud[hyphen]based file
sharing and synchronization system. CloudVault folders are neither
suitable nor intended for file storage due to agency file retention
policies and space limitations. Therefore, the agency will remove all
application-related files stored in shared CloudVault folders the later
of either 180 days from the application date, or once the application
has been processed and the transaction has been closed.
For further instructions, please refer to Section C. Application
and Submission Information of this Notice.

FOR FURTHER INFORMATION CONTACT: For information regarding this Notice
and the Addendum: Capital Needs Assessment Process located at the end
of this notice, contact: Jonathan Bell, Director, Processing and Report
Review Branches, Production and Preservation Division, Multifamily
Housing Programs, Rural Development, United States Department of
Agriculture, via email: <a href="/cdn-cgi/l/email-protection#c68b808eb6b4a9a5a3b5b5afa8a1f786b3b5a2a7e8a1a9b0">[email&#160;protected]</a> or telephone: (254)
727-5647. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

Rural Development: Key Priorities

RD will continue to support and promote activities and investments
that will achieve the following:
(1) Creating More and Better Markets: Assist rural communities to
recover economically through more and better market opportunities and
through improved infrastructure.
(2) Addressing Climate Change and Environmental Justice: Reduce
climate pollution and increase resilience to the impacts of climate
change through economic support for rural communities.
(3) Advancing Racial Justice, Place-Based Equity, and Opportunity:
Ensure all rural residents have equitable access to RD programs and
benefits from RD funded projects. For further information, visit
<a href="https://www.rd.usda.gov/priority-points">https://www.rd.usda.gov/priority-points</a>.

Background

USDA's RD Agencies, comprising of the Rural Business-Cooperative
Service (RB-CS), RHS, and the Rural Utilities Service (RUS), are
leading the way in helping rural America improve the quality of life
and increase the economic opportunities for rural people. RHS offers a
variety of programs to build or improve housing and essential community
facilities in rural areas. The Agency also offers loans, grants, and
loan guarantees for single-family and multi-family 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. The Agency also provides technical assistance
loans and grants in partnership with non-profit organizations, Indian
tribes, state and Federal Government agencies, and local communities.
Sections 514 and 516 of the Housing Act of 1949 allows the RHS to
provide competitive loan and grant financing, respectively, for
affordable multifamily rental housing. The program objective is to
administer repair funds in a fair, equitable, and transparent manner.

[[Page 19401]]

Funds will be used to improve, repair, or make modifications to
existing Off-FLH properties currently financed by the RHS that serve
domestic farm laborers, retired domestic farm laborers, or disabled
domestic farm laborers.
To focus investments in areas where the need for increased
prosperity is greatest, the RHS will set aside 10 percent of the
available funds for applications that will serve persistent poverty
counties. The term ``persistent poverty counties'' means any county
that has had 20 percent or more of its population living in poverty
over the past 30 years, as measured by the 1990 and 2000 decennial
censuses and 2007-2011 American Community Survey 5-year average, or any
territory or possession of the United States.'' Information on which
counties are considered persistent poverty counties can be found
through using the following link (<a href="https://ruraldevelopment.maps.arcgis.com/apps/webappviewer/index.html?id=a0bcd25194434ac784493fd5dc7f8191">https://ruraldevelopment.maps.arcgis.com/apps/webappviewer/index.html?id=a0bcd25194434ac784493fd5dc7f8191</a>) provided by the USDA's
RD Innovation Center. Set-aside funds will be awarded in point score
order, starting with the highest score. Once the set-aside funds are
exhausted, any further set-aside applications will be evaluated and
ranked with the other applications submitted in response to this
Notice. If the RHS does not receive enough eligible applications to
fully utilize the 10 percent set aside in the service of these areas,
the RHS will award any unused set aside funds to other eligible
applicants.

Overview

Federal Agency: Rural Housing Service.
Funding Opportunity Title: Section 514 Off-Farm Labor Housing
Subsequent Loans and Section 516 Off-Farm Labor Housing Subsequent
Grants to Improve, Repair, or Make Modifications to Existing Off-Farm
Labor Housing Properties for Fiscal Year 2024.
Funding Opportunity Number: USDA-RD-HCFP-OFFFLH-REPAIR-2024.
Available Funds: Available subsequent loan and subsequent grant
funding amounts can be found at the following link: <a href="https://www.rd.usda.gov/programs-services/farm-labor-housing-direct-loans-grants">https://www.rd.usda.gov/programs-services/farm-labor-housing-direct-loans-grants</a>.
Maximum Award: Award may not exceed $40,000 per unit (total loan
and grant). There is no minimum award. At the sole discretion of the
RHS, the maximum award may be limited to $4,000,000 per project based
on funding availability and volume of qualified applications.
Announcement Type: Request for applications from qualified
applicants for Fiscal Year 2024.
Assistance Listing Number: 10.405.
Please Note: Expenses incurred in developing applications will be
at the applicant's sole risk.

A. Federal Award Description

(1) Applications will only be accepted through the date and time
listed in this Notice. The maximum award may not exceed $40,000 per
unit per project (total loan and grant). At the sole discretion of the
RHS, the maximum award may be limited to $4,000,000 per project based
on funding availability and volume of qualified applications. There is
no minimum award requirement. Proposals for limited improvements,
repairs, and/or modifications to address accessibility compliance and
health & safety issues will be considered under this Notice.
(2) A State will not receive more than 30 percent of the Off-FLH
funding unless there are remaining section 514 and section 516 funds
after all eligible applications from other States have been funded. In
this case, funds will be awarded to the next highest-ranking eligible
applications among all remaining unfunded applications nationwide. The
allocation of these funds may result in a State or States exceeding the
30 percent funding limitation.
(3) Section 516 Off-FLH subsequent grants must not exceed the
limits set forth in 7 CFR 3560.562(c). Total development cost (TDC) is
defined in 7 CFR 3560.11. Section 514 Off-FLH loans may not exceed the
limits set forth in 7 CFR 3560.562(b).
(4) Applications that propose the use of Low-Income Housing Tax
Credits (LIHTC) will not be considered and are not eligible under this
Notice.
(5) Any proposed leveraged funds must be in the form of a grant,
non-amortizing leveraged funds, or similar funding source with no debt
service. No source of leveraged funds that require a debt service is
acceptable. Applications that propose the use of a grant, non-
amortizing leveraged funds, or similar funding source should include
firm commitment letters within their application, if available. If not
included with the application, the applicant must provide firm
commitment letters for any proposed leveraged funds no later than 180
calendar days from the date of issuance of the award letter under this
NOSA. If the applicant is unable to secure a third-party firm
commitment letter within 180 calendar days from the issuance of the
award letter under this NOSA, the application will be deemed
incomplete, and the award letter will be considered null and void.
(6) A firm commitment letter is defined as a lender's unqualified
pledge to the applicant that they meet the lender's guidelines, and the
lender is willing to offer the applicant a grant, non-amortizing
leveraged funds, or similar funding source under specified terms. The
letter validates that the applicant's funding has been fully approved
and that the lender is prepared to close the transaction. Preliminary
commitment letters, term sheets, or any other letter from the lender
that does not meet the definition above for a ``firm commitment
letter'' will not meet the requirements specified in this Notice.
(7) To maximize the use of the limited supply of FLH funds, the RHS
may contact eligible applicants selected for an award with proposals to
modify the transaction's proportions of subsequent loan and subsequent
grant funds. Such applicants will be contacted in point score order,
starting with the highest score. In addition, if funds remain after the
highest scoring eligible applications are selected for awards, the RHS
may contact those eligible applicants selected for the awards, in point
score order, starting with the highest score, to ascertain whether
those respondents will accept the remaining funds.
(8) To enhance customer service and the transparency of this
program, the RHS will publish a list of awardees including the project
name and location and the subsequent loan and/or subsequent grant
amounts of their respective awards in accordance with the date listed
in this Notice. This information can be found at: <a href="https://www.rd.usda.gov/programs-services/farm-labor-housing-direct-loans-grants">https://www.rd.usda.gov/programs-services/farm-labor-housing-direct-loans-grants</a>. The RHS reserves the right to post all information submitted as
part of the application package that is not protected under the Privacy
Act on a public website with free and open access to any member of the
public.

B. Eligibility Information

(1) Project Eligibility

This Notice solicits applications from the current borrowers/owners
of existing Off-FLH projects currently participating in the RHS's
Section 514 Off-FLH portfolio for the purpose of improving, repairing,
modifying, revitalizing, and preserving the facility to ensure that it
will continue to provide decent, safe, and sanitary housing. Any
project that is not already participating in the RHS's Section 514 Off-
FLH

[[Page 19402]]

portfolio, as evidenced by currently having an outstanding Section 514
Off-FLH loan, is not eligible under this Notice.
(a) On-Farm Labor Housing projects are not eligible under this
Notice.
(b) This Notice is for stay-in owner transactions only where the
current owner, with an outstanding Section 514 Off-FLH loan, may apply
for subsequent loan and/or subsequent grant funds to improve, repair,
or make modifications to their Off-FLH property. Proposals that are for
a transfer of ownership, to sell the property, to complete a
recapitalization, or for an identity of interest (IOI) or third-party
acquisition transaction will not be considered and are not eligible
under this Notice.
(c) Applications that propose the use of Low-Income Housing Tax
Credits (LIHTC), will not be considered and are not eligible under this
Notice as stated above.
(d) The project must meet the occupancy requirements outlined in
section C(2)(l) below.
(e) The project must have a positive cash flow for the previous
full three (3) years of operations as outlined in section C(2)(m)
below.
(f) Proposals to develop or construct additional units within the
existing building envelope to comply with accessibility requirements
will be considered and are eligible under this Notice. Funds may be
used to address health, safety and accessibility needs and to repair or
renovate existing project items identified in the Capital Needs
Assessment (CNA). Additional items may be added to the scope of work,
if practical and feasible, at the sole discretion of the RHS.
(g) A tenant protection account will be required for existing
unsubsidized tenants residing at the property on the day the
transaction closes, to the extent necessary to reduce the rental
payment to the pre-transaction rent, or thirty (30) percent of adjusted
income, if higher. Subsequent Section 514 Off-FLH loan funds may be
used to establish a tenant protection account. The applicant will only
be required to subsidize the difference in rents that exists at the
time of the transaction closing for any unsubsidized tenant that is
negatively impacted by the post-transaction rents. If a tenant
protection account is required by the RHS:
(i) Applicants will provide their proposal for funding the tenant
protection account based on their proposed new rents. The Agency will
confirm the tenants adversely affected and determine the tenant
protection amount that will be required. If the Agency requires funding
for the tenant protection account that is different than the amount
calculated by the applicant, the Agency will allow an adjustment to the
applicant's proposal.
(ii) All tenant protection costs must be included in the Sources
and Uses analysis for the full amount needed to fund the initial two-
year minimum period following the transaction closing date.
(iii) The applicant must agree to protect currently eligible
tenants affected by the rent increase as long as the tenant resides in
the project. The obligation with respect to each unsubsidized tenant in
place at the time of the transaction closing will end when the tenant
receives rental assistance, receives a housing voucher, voluntarily
leaves the property, is evicted for proper cause, or has income
increased to pay the post-transaction basic rent without being rent
over-burdened.
(h) Grant Limit--the amount of any Off-FLH grant must not exceed
the limits set forth in 7 CFR 3560.562(c).
(i) Other Requirements--the following requirements apply to
subsequent loans and subsequent grants made in response to this Notice:
(i) 7 CFR part 1901, subpart E, regarding equal opportunity
requirements.
(ii) For grants only, 2 CFR parts 200 and 400, which establishes
the uniform administrative and audit requirements for grants and
cooperative agreements to State and local Governments and to non-profit
organizations.
(iii) 7 CFR part 1901, subpart F, regarding historical and
archaeological properties.
(iv) 7 CFR 1970.11, Timing of the environmental review process.
Please note, the environmental information must be submitted by the
applicant to the RHS. The RHS must review and determine that the
environmental information is acceptable before the obligation of funds.
(v) 7 CFR part 3560, subpart L, regarding the loan and grant
authorities of the Off-FLH program.
(vi) 7 CFR part 1924, subpart A, regarding planning and performing
construction and other development work.
(vii) 7 CFR part 1924, subpart C, regarding the planning and
performing of site development work.
(viii) For construction utilizing a section 516 grant, the
provisions of the Davis-Bacon Act (40 U.S.C. 3142) and implementing
regulations published at 29 CFR parts 1, 3, and 5.
(ix) Borrowers and grantees must take reasonable steps to ensure
that tenants receive the language assistance necessary to afford them
meaningful access to USDA programs and activities, free of charge.
Failure to provide this assistance to tenants who can effectively
participate in or benefit from federally assisted programs or
activities may violate the prohibition under title VI of the Civil
Rights Act of 1964, 42 U.S.C. 2000d et seq. and title VI regulations
against national origin discrimination.
(x) In accordance with 7 CFR 3560.60, the housing repairs must be
economical to construct, operate, and maintain and must not be of
elaborate design or materials.
(xi) All other requirements contained in 7 CFR part 3560,
applicable to the Sections 514/516 Off-FLH programs.

(2) Applicant Eligibility

All eligible applicants must meet the following requirements:
(a) To be eligible to receive a subsequent section 514 loan for
Off-FLH, the applicant must meet the requirements of 7 CFR 3560.555(a)
and (1) be a broad-based nonprofit organization, a nonprofit
organization of farmworkers, a federally recognized Indian tribe, a
community organization, or an agency or political subdivision of State
or local government, and must meet the requirements of Sec. 3560.55,
excluding Sec. 3560.55(a)(6), or (2) be a limited partnership with a
non-profit general partner which meets the requirements of Sec.
3560.55(d). A broad-based nonprofit organization is a nonprofit
organization that has a membership that reflects a variety of interests
in the area where the housing will be located.
(b) To be eligible to receive a subsequent section 516 grant for
Off-FLH, the applicant must meet the requirements of 7 CFR 3560.555(b)
and (1) be a broad-based nonprofit organization, a nonprofit
organization of farmworkers, a federally recognized Indian tribe, a
community organization, or an agency or political subdivision of State
or local government, and must meet the requirements of Sec. 3560.55,
excluding Sec. 3560.55(a)(6), and (2) be able to contribute at least
one-tenth of the total farm labor housing development cost from its own
or other resources. A broad-based nonprofit organization is a nonprofit
organization that has a membership that reflects a variety of interests
in the area where the housing will be located. The applicant's
contribution must be available at the time of the grant closing. An
Off-FLH loan financed by the RHS may be used to meet this requirement;
however, an RHS grant cannot be used to meet this requirement. Limited
partnerships with a non-profit general partner are eligible

[[Page 19403]]

for section 514 loans; however, they are not eligible for section 516
grants.
(c) The applicant must be unable to obtain similar credit elsewhere
at rates that would allow for rents within the payment ability of
eligible residents.
(d) Possess the legal and financial capacity to carry out the
obligations required for the subsequent loan and/or grant.
(e) Broad-based non-profit organizations must have a membership
that reflects a variety of interests in the area where the housing will
be located.
(f) Be able to maintain, manage, and operate the Off-FLH for its
intended purpose and in accordance with all RHS requirements as
demonstrated by its compliance with RHS servicing requirements. Non-
compliance with RHS servicing requirements by other projects owned and/
or managed by natural person(s) managing/controlling (whether directly
or indirectly through other entities) the borrowing entity will render
the applicant ineligible to participate in this Notice nationwide until
the non-compliance event(s) is/are remedied or are in compliance with
an RHS approved workout plan.
(g) With the exception of applicants who are non-profit
organizations, housing cooperatives or public bodies, be able to
provide the borrower contribution from their own resources (this
contribution must be in the form of cash).
(h) Not be suspended, debarred, or otherwise excluded from, or
ineligible for, participation in Federal assistance programs under 2
CFR parts 180 and 417.
(i) Not be delinquent on Federal debt or a Federal judgment debtor,
with the exception of those debtors described in 7 CFR 3560.55(b).
(j) Be in compliance with the requirements of the Improper Payments
Elimination and Recovery Improvement Act (IPERIA) as applied by RHS.
(k) If an applicant, the applicant's general partner, the
applicant's managing member, any key principal with decision-making,
operational authority, and/or financial control over the applicant and/
or any sub-applicant entities, any entity exercising management and/or
financial control of an applicant borrower, or any affiliated entity
having a 10 percent or more ownership interest of the applicant
borrower, has a prior or existing RHS debt, the following additional
requirements must be met:
(i) The applicant must be in compliance with any existing loan or
grant agreements and with all legal and regulatory requirements or be
compliant with an RHS approved workout plan. The RHS will require that
applicants with monetary or non-monetary deficiencies be in compliance
with a RHS approved workout plan for a minimum of six (6) consecutive
months before becoming eligible for further assistance.
(ii) The applicant must be in compliance with title VI of the Civil
Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, and
all other applicable civil rights laws. Under this Notice, the project
will also be considered eligible to apply if there is a current and
accepted Self-Evaluation Transition Plan for the project.
(l) Additional requirements for non-profit organizations. In
addition to the eligibility requirements of the paragraphs above, non-
profit organizations must meet the following criteria:
(i) The applicant must have received a tax-exempt ruling from the
IRS designating the applicant as a 501(c)(3) or 501(c)(4) organization.
(ii) The applicant must have in its charter the provision of
affordable housing.
(iii) No part of the applicant's earnings may benefit any of its
members, founders, or contributors.
(iv) The applicant must be legally organized under State and local
law.
(v) The applicant must be a broad-based nonprofit organization, as
defined above.
(m) Additional requirements for limited partnerships. In addition
to the applicant eligibility requirements of the paragraphs above,
limited partnership loan applicants must meet the following criteria:
(i) The general partners must be able to meet the borrower
contribution requirements if the partnership is not able to do so at
the time of loan request.
(ii) The general partners must maintain a minimum 5 percent
financial interest in the residuals or refinancing proceeds in
accordance with the partnership organizational documents.
(iii) The partnership must agree that new general partners can be
brought into the organization only with the prior written consent of
the RHS.
(iv) The limited partnership must have a non-profit general
partner.
(n) This Notice requires selected applicants to make the required
equity contribution as outlined in Sec. 3560.63(c) for any new section
514 loan. Applicants eligible to receive Return to Owner (RTO) may be
eligible to receive additional RTO for this required contribution.
(o) Eligibility also includes the continued ability of the
borrower/applicant to provide acceptable management and will include an
evaluation of any current outstanding deficiencies. Any outstanding
violations or extended open operational findings associated with the
applicant/borrower or any affiliated entity having an IOI with the
project ownership and which are recorded in RHS's automated Multifamily
Information System (MFIS), will preclude further processing of any
application, unless there is a current and approved RHS workout plan
and the applicant is in compliance with the provisions of the workout
plan. The RHS will require that applicants with deficiencies be in
compliance with an RHS approved workout plan for a minimum of six (6)
consecutive months.
(p) All program applicants, unless exempt under 2 CFR 25.110(b),
(c), or (d), are required to:
(i) Be registered in SAM before submitting their applications;
(ii) Provide a valid UEI in their applications; and
(iii) Continue to maintain an active SAM registration with current
information at all times during which they have an active Federal award
or an application or plan under consideration by a Federal awarding
agency.
The Federal awarding agency may not make a Federal award to an
applicant until the applicant has complied with all applicable SAM
requirements and, if an applicant has not fully complied with the
requirements by the time the Federal awarding agency is ready to make a
Federal award, the Federal awarding agency may determine that the
applicant is not qualified to receive a Federal award and use that
determination as a basis for making a Federal award to another
applicant. The System for Award Management (SAM) is the Official U.S.
Government system for collection of forms for acceptance of a Federal
award through the registration or annual recertification process.
Applicants may register for SAM at <a href="https://www.sam.gov">https://www.sam.gov</a> or by calling 1-
866-606-8220. The applicant must ensure that the information in the
database is current, accurate, and complete. On April 4, 2022, the
unique entity identifier used across the Federal Government changed
from the DUNS Number to the Unique Entity ID (UEI) (generated by
<a href="http://SAM.gov">SAM.gov</a>). As required by the Office of Management and Budget (OMB), all
applications must provide a UEI number when applying for Federal
assistance. Instructions for obtaining the UEI are available at <a href="https://sam.gov/content/entity-registration">https://sam.gov/content/entity-registration</a>. Applicants must ensure they
complete the Financial Assistance General Certifications and
Representations in SAM. Similarly, all recipients of Federal

[[Page 19404]]

financial assistance are required to report information about first-
tier subawards and executive compensation in accordance with 2 CFR part
170. So long as an entity applicant does not have an exception under 2
CFR 170.110(b), the applicant must have the necessary processes and
systems in place to comply with the reporting requirements should the
applicant receive funding. See 2 CFR 170.200(b).
Additional information concerning these requirements can be
obtained on the <a href="http://Grants.gov">Grants.gov</a> website at <a href="https://www.grants.gov">https://www.grants.gov</a>. The
applicant must provide documentation that they are registered in SAM
and their UEI number or the application will not be considered for
funding. The following forms for acceptance of a Federal award are now
collected through the registration or annual recertification in <a href="http://SAM.gov">SAM.gov</a>
in the Financial Assistance General Certifications and Representations
section:
<bullet> Form AD-1047, ``Certification Regarding Debarment,
Suspension, and Other Responsibility Matters-Primary Covered
Transactions.''
<bullet> Form AD-1048, ``Certification Regarding Debarment,
Suspension, Ineligibility and Voluntary Exclusion. Lower Tier Covered
Transactions.''
<bullet> Form AD-1049, ``Certification Regarding Drug-Free
Workplace Requirements (Grants).''
<bullet> Form AD-3031, ``Assurance Regarding Felony Conviction or
Tax Delinquent Status for Corporate Applicants.''
<bullet> Form AD-3030, ``Representations Regarding Felony
Conviction and Tax Delinquent Status for Corporate Applicants.''

C. Application and Submission Information

All applications for section 514 and 516 funds must meet the
requirements of this Notice. Incomplete applications will be rejected
and returned to the applicant. No application will be accepted after
the deadline unless the date and time are extended by another Notice
published in the Federal Register.
Applicants are encouraged to include a checklist of all the
application requirements and to index and tab their application to
facilitate the review process.
(1) Submission process. Applications must be submitted
electronically. The process for submitting an electronic application to
the RHS is as follows:
(a) At least three business days prior to the application deadline,
the applicant must email the RHS a request to create a shared folder in
CloudVault. The email must be sent to the following address: <a href="/cdn-cgi/l/email-protection#327d54541f747e7a5342425e5b5153465b5d5c72474156531c555d44">[email&#160;protected]</a>. The email must contain the following
information:
i. Subject line: ``Off-FLH Repair Application Submission.''
ii. Body of email: Borrower Name, Project Name, Borrower Contact
Information, Project State.
iii. Request language: ``Please create a shared CloudVault folder
so that we may submit our application documents.''
(b) Once the email request to create a shared CloudVault folder has
been received, a shared folder will be created within 2 business days.
When the shared CloudVault folder is created by the RHS, the system
will automatically send an email to the applicant's submission email
with a link to the shared folder. All required application documents in
accordance with this Notice must be loaded into the shared CloudVault
folder. The applicant's access to the shared CloudVault folder will be
removed when the submission deadline is reached. Any document uploaded
to the shared CloudVault folder after the application deadline will not
be reviewed or considered.
(c) The applicant should upload a Table of Contents of all of the
documents that have been uploaded to the shared CloudVault folder.
Last-minute requests and submissions may not allow adequate time for
the applicant to upload documents prior to the deadline. Note:
Applicants are reminded that all submissions must be received by the
deadline and the application will be rejected if it is not received by
the deadline date and time.
(2) Application Requirements. The application must contain the
following:
(a) An executed and dated Executive Summary on the applicant's
letterhead that must include at least the following:
i. Brief description of the project and its history. Include the
borrower's name, project name, project location, number of units,
number of Rental Assistance (RA) or Operating Assistance (OA) units,
and unit mix. Be sure to address whether the project operates year-
round or on a seasonal basis. Also provide the year the property was
built and placed into service, the original sources of funding, and the
original amounts of funding received. Include a description of any
significant improvements, repairs, or modifications that have been made
since the property was placed in service, including substantial
rehabilitations and significant repairs that were needed due to natural
disasters, floods, fires, or other casualties. Provide any other
information that you may want to disclose regarding the project and its
history.
ii. Brief description of the proposed transaction. Provide a
narrative of the loan and/or grant funds that the applicant is seeking
from the RHS, as well as funds sought from any other third-party grant
source, and a description of what the funds will be utilized for.
Describe the scope of work and explain how the transaction will come
together overall, including information on how the project will absorb
any additional debt service, if applicable.
iii. Description of the current ownership structure with a detailed
organizational chart.
iv. Narrative verifying the applicant's ability to meet the
applicant eligibility requirements stated earlier in this Notice.
v. A statement of the applicant's experience in operating labor
housing or other rental housing.
vi. Description of the applicant's legal and financial capability
to carry out the obligation of the subsequent loan and/or grant.
vii. Current management. A brief description of how the property is
currently managed. As stated earlier in this Notice, the housing must
be managed in accordance with the management regulations, 7 CFR part
3560.
viii. Any financial commitments, financial concessions, or other
economic benefits proposed to be provided by the RHS.
ix. Third-party grant, non-amortizing leveraged funds, or similar
funding source, if applicable. For each third-party funding source,
briefly discuss the provider, amount, terms, commitment status, timing
issues, any restrictions that will be applicable to the project, and
whether any accommodation from the RHS is requested, such as a
subordination in lien position. The desired lien position of any third-
party funding source must be clearly disclosed, as well as any request
for the RHS to subordinate its lien position.
x. Any proposed compensation to parties having an identity of
interest with either the consultant or technical assistance provider.
xi. Any proposed construction financing, for example, a
construction or bridge loan or the use of multiple advances.
xii. Type and method of construction, such as owner builder,
negotiated bid, or contractor method.
xiii. If an FLH grant is desired, a statement concerning the need
for an FLH grant. The statement must include estimates of the rents
required with a

[[Page 19405]]

grant and rents required without a grant. Documentation to demonstrate
how the rent figures were computed must be provided. Documentation must
be in the form of a Form RD 3560-7, ``Multiple Family Housing Project
Budget/Utility Allowance,'' completed as if a grant were received, and
another Form RD 3560-7 completed as if a grant were not received. The
RHS will review each budget to determine that the income and expenses
are reasonable and customary for the area.
xiv. Statement by the applicant that they will pay any cost
overruns.
xv. Estimated development timeline to include estimated start and
end date, as well as any other important milestones such as the
proposed closing date.
xvi. Description of any required state or local approvals, if
applicable.
xvii. Description of the required and intended applicant
contribution, if applicable.
xviii. Any other pertinent information the applicant wishes to
disclose as part of this proposal, if applicable.
xix. A separate one-page information sheet listing each of the
application scoring criteria contained in this Notice, followed by a
reference to the page numbers of all relevant material and
documentation contained in the proposal that supports the outlined
criteria.
(b) The following forms and certifications are required:
i. Form RD 3560-1, ``Application for Partial Release,
Subordination, or Consent'', if applicable, can be obtained at: <a href="https://formsadmin.sc.egov.usda.gov//efcommon/eFileServices/eFormsAdmin/RD3560-0001.pdf">https://formsadmin.sc.egov.usda.gov//efcommon/eFileServices/eFormsAdmin/RD3560-0001.pdf</a>.
ii. Standard Form 424, ``Application for Federal Assistance,'' can
be obtained at: <a href="https://www.grants.gov/">https://www.grants.gov/</a>.
iii. Form RD 3560-30, ``Certification of no Identity of Interest
(IOI),'' can be found at: <a href="http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3560-30.PDF">http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3560-30.PDF</a>.
iv. Form RD 3560-31, ``Identity of Interest Disclosure/
Qualification Certificate,'' can be found at: <a href="http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3560-31.PDF">http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3560-31.PDF</a>.
An IOI is defined in 7 CFR 3560.11. The RHS must review Form RD
3560-30 and Form RD 3560-31, as applicable, to determine if they are
completed in accordance with the Forms Manual Insert and to determine
that all IOI's have been disclosed.
v. Form HUD 2530, ``Previous Participation Certification,'' if
applicable, can be found at: <a href="https://www.hud.gov/sites/dfiles/OCHCO/documents/2530.pdf">https://www.hud.gov/sites/dfiles/OCHCO/documents/2530.pdf</a>.
vi. Form RD 400-4, ``Assurance Agreement,'' can be found at: <a href="http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD400-4.PDF">http://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD400-4.PDF</a>.
vii. RD Instruction 1940-Q, Exhibit A-1, ``Certification for
contracts, grants and loans,'' can be found at: <a href="https://www.rd.usda.gov/files/1940q.pdf">https://www.rd.usda.gov/files/1940q.pdf</a>.
viii. Form RD 1910-11, ``Applicant Certification, Federal
Collection Policies for Consumer or Commercial Debts'' can be found at:
<a href="https://forms.sc.egov.usda.gov//efcommon/eFileServices/eForms/RD1910-11.PDF">https://forms.sc.egov.usda.gov//efcommon/eFileServices/eForms/RD1910-11.PDF</a>.
ix. Form RD 400-1, ``Equal Opportunity Agreement,'' can be found
at: <a href="https://formsadmin.sc.egov.usda.gov/eFormsAdmin/browseFormsAction.do?pageAction=displayPDF&formIndex=2">https://formsadmin.sc.egov.usda.gov/eFormsAdmin/browseFormsAction.do?pageAction=displayPDF&formIndex=2</a>.
x. Form RD 400-6, ``Compliance Statement,'' if available, can be
found at: <a href="https://formsadmin.sc.egov.usda.gov/eFormsAdmin/browseFormsAction.do?pageAction=displayPDF&formIndex=5">https://formsadmin.sc.egov.usda.gov/eFormsAdmin/browseFormsAction.do?pageAction=displayPDF&formIndex=5</a>.
(c) Provide the following financial and organizational information:
i. Current (within 6 months of this Notice's application submission
due date) financial statements for each entity within the ownership
structure with the following paragraph certified by the applicant's
designated and legally authorized signer:
``I/we certify the above is a true and accurate reflection of our
financial condition as of the date stated herein. This statement is
given for the purpose of inducing the United States of America to make
a loan or to enable the United States of America to make a
determination of continued eligibility of the applicant for a loan as
requested in the loan application of which this statement is a part.''
ii. Submit a current (within 6 months from the date of issuance)
comprehensive credit reports that contain details of both current open
credit accounts and closed accounts for both the entity and the actual
individual principals, partners, and members within the applicant
entity, including any sub-entities who are responsible for controlling
the ownership and operations of the entity. If any of the principals in
the applicant entity are not natural persons (including but not limited
to corporations, limited liability companies, trusts, partnerships, or
limited partnerships), separate comprehensive commercial credit reports
must be submitted on those organizations as well. Only credit reports
provided by one of the three accredited major credit bureaus (Experian,
Equifax, or TransUnion) will be accepted. The Agency will also accept
combination comprehensive credit reports which provides a comprehensive
view of the applicant's credit profile by combining data from all three
major credit bureaus (Experian, Equifax, and TransUnion). If the credit
report(s) is not submitted by the application deadline, the application
will be considered incomplete and will not be considered for funding.
iii. Letter from the IRS indicating the applicant's tax
identification number.
iv. Organizational applicants must provide to their attorney
acceptable evidence of U.S. citizenship and/or qualified alien status.
Acceptable evidence of U.S. citizenship may include a valid U.S. birth
certificate, a valid U.S. Passport, a valid U.S. Certificate of
Naturalization, or other acceptable evidence of U.S. citizenship
proposed by the applicant and determined by the Agency. Acceptable
evidence of qualified alien status may include valid documentation
issued by the U.S. Citizenship and Immigration Services (USCIS), or
other acceptable documentation of qualified alien status proposed by
the applicant and determined by the Agency.
Attorney Certification. The applicant's attorney must review all
applicable evidence to verify U.S. citizenship and/or qualified alien
status, must certify that the Agency's U.S. citizenship and/or
qualified alien status eligibility requirements are met by all
applicants, and must submit the certification for Agency review.
v. Documentation verifying the applicant is registered in SAM and
the applicant's UEI number (unless exempt under 2 CFR 25.110(b), (c),
or (d)).
vi. If the applicant is a limited partnership, current and fully
executed limited partnership agreement and certificates of limited
partners.
vii. If the applicant is a nonprofit organization:
a. Tax-exempt ruling from the IRS designating the applicant as a
501(c)(3) or 501(c)(4) organization.
b. Purpose statement, including the provision of low-income
housing.
c. Evidence of organization under state and local law and a copy of
the applicant's charter, Articles of Incorporation, and By-laws.
d. List of members of applicant's Board of Directors including
names, occupations, phone numbers, and addresses.
e. If the applicant is a member or subsidiary of another
organization, the parent organization's name, address, and nature of
business.
viii. Certificate of Good Standing.

[[Page 19406]]

ix. Attorney Certification. Letter from the applicant's attorney
certifying the legal sufficiency of the organizational documents. The
attorney must certify:
a. The applicant's legal capacity to successfully operate the
proposed project for the life of the loan and/or grant.
b. That the organizational documents comply with RHS regulations.
c. For partnership applicants, that the term of the partnership
extends at least through the latest maturity of all proposed RHS debt.
d. That the organizational documents require prior written RHS
approval for any of the following: withdrawal of a general partner of a
partnership or limited partnership applicant, withdrawal of any member
of a limited liability company applicant, admission of a new general
partner to a partnership or limited partnership applicant, admission of
any new member to a limited liability company applicant, amending the
applicant's organizational documents, and selling all or substantially
all of the assets of the applicant.
e. That there have been no changes to either the ownership entity
or the property that have not been approved by the RHS.
(d) Provide the following information about the Project:
i. Document the need for the project. The applicant must provide
documentation that the average physical vacancy rate for the twelve
(12) months preceding this Notice's application submission due date has
been no more than ten (10) percent for projects consisting of sixteen
(16) or more revenue units, and no more than fifteen (15) percent for
projects with less than sixteen (16) revenue units, unless the project
is seasonal Off-FLH, or unless the applicant has an RHS approved
workout plan and is in compliance with the provisions of the workout
plan, and provides documentation that clearly demonstrates to the RHS
that sufficient market demand exists. If the project is seasonal Off-
FLH, the applicant must provide detailed documentation for the twenty-
four (24) months preceding this Notice's application submission due
date that verifies the project's operations, including information
regarding the open and close date, lease-up, vacancy, rent rolls,
operating budgets, and any other information the applicant can provide
to document the need for the seasonal Off-FLH project.
If the project does not meet the vacancy requirements above, a
description of the cause of the vacancy rate and the plan to increase
the occupancy rate must be submitted. The requested loan or grant funds
must be needed to stabilize occupancy. In addition, the project's
waiting list and documentation regarding the market area must be
submitted to support the need for the project. The market area must be
clearly identified and may include only the area from which tenants can
reasonably be drawn to the project. Documentation must be provided to
justify the need within the primary market area for the housing of
domestic farm laborers. The documentation must also consider disabled
and retired farm workers and adjusted median incomes of very-low, low,
and moderate.
ii. Documentation that the project has a positive cash flow. The
applicant must provide documentation that the project had a positive
cash flow for the previous full three (3) years of operations preceding
this Notice's application submission due date unless the applicant has
an RHS approved workout plan and is in compliance with the provisions
of the workout plan. The RHS will require that applicants with monetary
or non-monetary deficiencies be in compliance with the RHS approved
workout plan for a minimum of six (6) consecutive months before
becoming eligible for a loan and/or grant under this Notice.
Additionally, an exception will apply to projects that have a negative
cash flow in operations if surplus cash exists in either the general
operating account as defined in 7 CFR 3560.306(d)(1) or the reserve
account. Surplus cash exists when the balance is greater than the
required deposits minus authorized withdrawals. The applicant must
provide the project's annual financial report(s) to document the
project complies with this exception for any year the project has a
negative cash flow. Seasonal Off-FLH properties that receive OA are
exempt from this requirement.
(e) Provide the following construction related documents:
i. Plans and specifications along with the proposed manner of
construction. The housing must meet RHS's design and construction
standards contained in 7 CFR part 1924, subparts A and C, the design
requirements in 7 CFR 3560.559, and all applicable Federal, State, and
local accessibility standards and applicable building codes. The plans
and specifications along with the proposed manner of construction must
be submitted prior to the approval of the application. The RHS will
notify eligible applicants of the deadline to submit these materials.
Note: For projects that do not currently have interior/exterior washing
facilities, applicants should consider incorporating interior/exterior
washing facilities for tenants, as necessary to protect the asset and
the tenants from excess dirt and chemical exposure. Such facilities
might include a boot washing station or hose bibs, among others.
ii. Construction planning, bidding, and contract documents,
including the construction contract and architectural agreement. The
construction planning, bidding, and contract documents, including the
construction contract and architectural agreement must be submitted
prior to the approval of the application. The RHS will notify eligible
applicants of the deadline to submit these materials.
iii. A checklist, certification, and signed affidavit by the
project architect or engineer, as applicable, for any energy programs
in which the applicant intends to participate.
iv. An estimate of development costs utilizing Form RD 1924-13,
``Estimate and Certificate of Actual Cost,'' which can be found at:
<a href="https://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD1924-13.PDF">https://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD1924-13.PDF</a>.
(f) Provide the following project financing information:
i. A Sources and Uses Statement which shows all sources of funding
included in the proposed transaction. The terms and schedules of all
sources included in the project should be included in the Sources and
Uses Statement. (Note: A section 516 grant may not exceed 90 percent of
the TDC of the transaction, as defined in 7 CFR 3560.11).
ii. All applications that propose the use of any grant, non-
amortizing leveraged funds, or similar funding source should submit
commitment letters with their application, if available. If commitment
letters are not available, the applicant should include a statement
that firm commitment letters will be provided within 180 calendar days
of issuance of the award letter. If the applicant is unable to secure
third-party firm commitment letters within 180 calendar days from the
issuance of the award letter under this NOSA, the application will be
deemed incomplete, the award letter will be considered null and void,
and the applicant will be notified in writing that the application will
be rejected.
iii. Description of how the applicant will meet any applicable
equity contribution requirement.
(g) Provide the following environmental information:
i. Environmental information in accordance with the requirements in
7 CFR part 1970. The applicant is responsible for preparing and
submitting the environmental review

[[Page 19407]]

document in accordance with the format and standards provided by RHS in
7 CFR part 1970. Applicants may employ a design or environmental
professional or technical service provider to assist them in the
preparation of their environmental review documents at their own
expense.
ii. Evidence of the submission of the project description to the
applicable State Housing Preservation Office (SHPO), and/or Tribal
Historic Preservation Officer (THPO) with the request for comments. A
letter from the SHPO and/or THPO where the Off-FLH project is located
stating they have reviewed the site and made a determination, signed by
their designee, will serve as evidence of compliance.
iii. Intergovernmental review. Evidence of compliance with
Executive Order 12372. The applicant must initiate the
intergovernmental review by submitting the required information to the
applicable State Clearinghouse. The applicant must provide
documentation that the intergovernmental review process was completed.
The applicant must also submit any comments that were received as part
of this review to the RHS. If no comments are received, the applicant
must provide documentation that the review was properly initiated and
that the required comment period has expired. Applications from
federally recognized Indian tribes are not subject to this requirement.
(h) Provide the following budget and project management
information:
i. A proposed post-transaction operating budget utilizing Form RD
3560-7, ``Multiple Family Housing Project Budget/Utility Allowance''.
Form can be found at: <a href="https://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3560-7.PDF">https://forms.sc.egov.usda.gov/efcommon/eFileServices/eForms/RD3560-7.PDF</a>. The budget must include the debt
service of the new RHS loan, if applicable. This will be a post
transaction budget that must include a narrative which provides
justification for any changes between the current budget and proposed
budget.
The RHS will review the budget to determine that the income and
expenses are reasonable and customary for the area. The RHS will also
verify that the budget reflects the new RHS loan debt service, if
applicable, the existing RHS loan debt service, if applicable, the
number of units, unit mix, and rents. Overall, the RHS will review the
budget for feasibility, accuracy, and reasonableness.
ii. Form RD 3560-13, ``Multifamily Project Borrower's/Management
Agent's Management Certification,'' if applicable, can be found at:
<a href="https://forms.sc.egov.usda.gov//efcommon/eFileServices/eForms/RD3560-13.PDF">https://forms.sc.egov.usda.gov//efcommon/eFileServices/eForms/RD3560-13.PDF</a>. This document is required only if the owner is changing the
management agent or the management fee as part of this proposal.
iii. Management plan with all attachments, including the proposed
record keeping system, the proposed lease with an attorney's
certification, and the proposed occupancy rules. This document is
required only if the owner is changing the management agent or revising
the management plan and/or any attachments as part of this proposal.
iv. Management Agreement. This document is required only if the
owner is changing the management agent or revising the management
agreement and any attachments as part of this proposal.
v. Tenant relocation plan, if applicable. Subsequent Section 514
Off-FLH loans or subsequent Section 516 Off-FLH grants that are made
for major repair may require the temporary relocation of tenants while
the project is undergoing work. The applicant must provide a plan and
financial assistance for relocation of displaced persons from a site on
which a project will be located. The plan must meet the requirements of
HB-1-3560, Chapter 3, Paragraph 3.19.
(i) Provide the following third-party reports:
i. Acceptable appraisal. Please refer to the Agency's appraisal
assignment guidance under the ``To Apply'' tab on the Off-Farm Labor
Housing Direct Loans & Grants website (<a href="https://www.rd.usda.gov/programs-services/multifamily-housing-programs/farm-labor-housing-direct-loans-grants#to-apply">https://www.rd.usda.gov/programs-services/multifamily-housing-programs/farm-labor-housing-direct-loans-grants#to-apply</a>).
Project funds may be used to obtain the appraisal if there are
adequate funds available and the request to use project funds is
approved by the Field Operations Division servicing official. No
appraisal is required for subsequent Section 516 Off-FLH grant only
requests.
ii. An acceptable As-Is CNA in accordance with the requirements set
forth in the ``Addendum: Capital Needs Assessment Process'' at the end
of this notice.
Project funds may be used to obtain the As-Is CNA if there are
adequate funds available and the request to use project funds is
approved by the Field Operations Division servicing official. The
repair plan should be developed in accordance with the CNA and the
applicant should submit documentation of the detailed plan and timeline
for completion of the repair work.
If any of the required items listed above are not submitted within
the application in accordance with this Notice, or are incomplete, the
application will be considered incomplete and will not be considered
for funding. If the application is incomplete or deemed ineligible, the
applicant will be notified of appeal rights under 7 CFR part 11.
Applications that are deemed eligible but are not selected for further
processing will be withdrawn from processing and will be encouraged to
apply to future Notices. This action is not appealable.
The RHS will not consider information from the applicant after the
application deadline. The RHS may contact the applicant to clarify
items in its application. The RHS will uniformly notify applicants of
each curable deficiency. A curable deficiency is an error or oversight
that if corrected it would not alter, in a positive or negative
fashion, the review and rating of the application. An example of a
curable (correctable) deficiency would be inconsistencies in the amount
of the funding request. Non-curable deficiencies are threshold
components that effect the review and rating of the application,
including but not limited to, evidence of an eligible entity and
evidence of the need for the project.

D. Application Review and Scoring Information

The RHS will accept, review, and score applications in accordance
with this Notice. The maximum score that can be obtained is 100 points.
Section 514 Off-FLH subsequent loan funds and Section 516 Off-FLH
subsequent grant funds will be distributed based on a national
competition, as follows:
(1) Health, safety, and accessibility repairs (up to 35 points).
High priority is placed on addressing health, safety, and accessibility
repairs identified in the CNA. To claim points, all health, safety, and
accessibility items identified in the CNA must be addressed in the
scope of work. Points will be awarded as follows:
(a) 100% of project hard costs are for health, safety, and
accessibility repairs identified in the CNA (35 points).
(b) 75% or more of project hard costs are for health, safety, and
accessibility repairs identified in the CNA (25 points).
(c) 50% or more of project hard costs are for health, safety, and
accessibility repairs identified in the CNA (15 points).
(d) 25% or more of project hard costs are for health, safety, and
accessibility repairs identified in the CNA (5 points).
(2) Uninhabitable unit repairs (up to 10 points). Priority is
placed on repairing uninhabitable units in projects

[[Page 19408]]

where there is documented demand for housing as evidenced by a waiting
list. The applicant must provide a waiting list documenting interest
from prospective tenants in order to receive points. Points are awarded
as follows:
(a) Three or more units that are currently documented as
uninhabitable, by RHS or a code-enforcement agency, will be repaired to
a habitable standard (10 points).
(b) One or two units that are currently documented as
uninhabitable, by RHS or a code-enforcement agency, will be repaired to
a habitable standard (5 points).
(3) Owner and management capacity (up to 10 points). RHS seeks to
provide financing to applicants that have the experience and
organizational resources to successfully own, operate and manage FLH on
a long-term basis. In the case of co-sponsored applications, the rating
will be based upon the combination of the experience of all co-sponsors
in the area under review. Demonstrated experience and organizational
resources by the owner, including the General Partner for partnership
applicants, and the management company, will be considered in awarding
points.
In order to obtain points, applicants must submit a firm resume for
the applicant and all Sponsors/Co-Sponsors, including the management
agent. Each resume must include FLH and MFH ownership and management
experience, as applicable.
(4) Development/rehabilitation experience (up to 10 points).
Applicants should demonstrate the team's (owner, including the General
Partner of a partnership applicant, Developer and Management Company)
recent experience in successfully completing the development, repair,
and rehabilitation of FLH and/or MFH projects in a timely manner. RHS
will consider the applicant's experience with utilizing Federal
financing programs. In order to obtain points, applicants must submit a
firm resume for all of the sponsors/co-sponsors, including the
management agent. The description or firm resumes must include any
rental housing projects facilities that the applicant team sponsored,
owns, or operates.
To score the highest number of points for this factor, applicants
must describe significant previous experience implementing development
activities with the type of financing proposed.
(5) Project occupancy (10 points). Ten (10) points will be awarded
to projects with a 12-month physical vacancy rate (for the twelve (12)
months preceding this Notice's application submission due date) of 10%
or less (for projects with 16+ units) or 15% or less (for projects with
fewer than 16 units). For seasonal projects, the vacancy rates will be
calculated based on the twenty-four (24) months preceding this Notice's
application submission due date that the property was open and
operating.
(6) Occupancy by qualified farmworkers (5 points). Five (5) points
will be awarded to projects in which all tenants are eligible farm
workers and a partial or full Diminished Needs Waiver (DNW) has not
been approved or in place at any time during the twelve (12) months
preceding this Notice's application submission due date.
(7) Creating More and Better Markets: Assisting Rural communities
to recover economically through more and better market opportunities
and through improved infrastructure. (5 points). Priority points will
be awarded if the project is located in or serving a rural community
whose economic well-being ranks in the most distressed tier of the
Distressed Communities Index. The Distressed Communities Index provides
a score between 1-100 for every community at the zip code level. The
most distressed tier of the index are those communities with a score
over 80. Please use the Distressed Communities Index Look-Up Map to
determine if your project qualifies for priority points. Provide a copy
of the map showing the project is eligible to claim points. Note: US
Territories are considered distressed and qualify for priority points.
For additional information on data sources used for this priority
determination, please download the Data Sources for Rural Development
Priorities document. Additional information for priority points can be
found on the following website: <a href="https://www.rd.usda.gov/priority-points">https://www.rd.usda.gov/priority-points</a>.
(8) Advancing Racial Justice, Place-Based Equity, and Opportunity:
Ensuring all rural residents have equitable access to RD programs and
benefits from RD funded projects. (5 points). Priority points will be
awarded if the project is located in or serving a community with score
0.75 or above on the CDC Social Vulnerability Index. Please use Social
Vulnerability Index Map to look up map or list to determine if your
project qualifies for priority points. Provide a copy of the map
showing the project is eligible to claim points. Applications from
Federally Recognized Tribes, including Tribal instrumentalities and
entities that are wholly owned by Tribes will receive priority points.
Federally Recognized Tribes are classified as any Indian or Alaska
Native tribe, band, nation, pueblo, village, or community as defined by
the Federally Recognized Indian Tribe List Act (List Act) of 1994 (Pub.
L. 103-454). Please refer to the Bureau of Indian Affairs for a listing
of Federally Recognized Tribes. Additionally, projects where at least
50% of the project beneficiaries are members of Federally Recognized
Tribes, will receive priority points if applications from non-Tribal
applicants include a Tribal Resolution of Consent from the Tribe or
Tribes that the applicant is proposing to serve. Note: US Territories
are considered socially vulnerable and qualify for priority points. For
additional information on data sources used for this priority
determination, please download the Data Sources for Rural Development
Priorities document. Additional information for priority points can be
found on the following website: <a href="https://www.rd.usda.gov/priority-points">https://www.rd.usda.gov/priority-points</a>.
(9) Addressing Climate Change and Environmental Justice: Reducing
climate pollution and increasing resilience to the impacts of climate
change through economic support to rural communities. (up to 10
points). Applicants can receive priority points through one of the
options listed below. A maximum of 10 points can be received even if
the applicant meets the requirements for additional points:
(a) Option 1 (5 points): Priority points will be awarded if the
project is located in or serves a Disadvantaged Community as defined by
the Climate and Economic Justice Screening Tool (CEJST), from the White
House Council on Environmental Quality (CEQ). CEJST is a tool to help
Federal agencies identify disadvantaged communities that will benefit
from programs included in the Justice40 initiative. Census tracts are
considered disadvantaged if they meet the thresholds for at least one
of the CEJST's eight (8) categories of burden: Climate, Energy, Health,
Housing, Legacy Pollution, Transportation, Water and Wastewater, or
Workforce Development.
(b) Option 2 (5 points): Priority points will be awarded if the
project is located in or serves an Energy Community as defined by the
Inflation Reduction Act (IRA). The IRA defines energy communities as:
<bullet> A ``brownfield site'' (as defined in certain subparagraphs
of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (CERCLA)).
<bullet> A ``metropolitan statistical area'' or ``non-metropolitan
statistical area'' that has (or had at any time after 2009.)
<bullet> 0.17% or greater direct employment or 25% or greater local
tax revenues related to the extraction, processing,

[[Page 19409]]

transport, or storage of coal, oil, or natural gas; and has an
unemployment rate at or above the national average unemployment rate
for the previous year.
<bullet<ls-thn-eq> A census tract (or directly adjoining census
tract) in which a coal mine has closed after 1999; or in which a coal-
fired electric generating unit has been retired after 2009.
To determine if your project qualifies for priority points under
Option 1 or Option 2, please use the Disadvantaged Community & Energy
Community Look-Up Map on the following website: <a href="https://www.rd.usda.gov/priority-points">https://www.rd.usda.gov/priority-points</a>. Provide a copy of the map showing the
project is eligible to claim points.
(c) Option 3 (5 points): Priority points will be awarded to
applicants demonstrating through written narrative how the proposed
repair project meets pollution mitigation or clean energy goals through
the following programs. The applicant must submit a checklist,
certification, and signed affidavit by the project architect or
engineer, as applicable, for any energy programs in which the applicant
intends to participate. All projects awarded scoring points for energy
initiatives must enroll the project in the Environmental Protection
Agency (EPA) Portfolio Manager program to track post construction
energy consumption data. More information about this program may be
found at: <a href="https://www.energystar.gov/buildings/benchmark">https://www.energystar.gov/buildings/benchmark</a>. Participation
in any of the following programs will qualify the applicant for
priority points under Option 3:
<bullet> Participation in the EPA's Energy Star Multifamily
Certification or Energy Star Next Gen Process. <a href="https://www.energystar.gov/partner_resources/residential_new/homes_prog_reqs/multifamily_national_page">https://www.energystar.gov/partner_resources/residential_new/homes_prog_reqs/multifamily_national_page</a>.
or
<bullet> Participation in the Green Communities program by the
Enterprise Community Partners (2020 Criteria, EGC + Zero Ready/Phius).
<a href="https://www.enterprisecommunity.org/solutions-and-innovation/green-communities">https://www.enterprisecommunity.org/solutions-and-innovation/green-communities</a>.
or
<bullet> Participation in the Department of Energy (DOE) Zero
Energy Ready Homes program. <a href="https://www.energy.gov/eere/buildings/zero-energy-ready-homes">https://www.energy.gov/eere/buildings/zero-energy-ready-homes</a>.
or
<bullet> Earth Advantage <a href="https://www.earthadvantage.org/">https://www.earthadvantage.org/</a>.
or
<bullet> Earthcraft Gold or Platinum <a href="https://earthcraft.org/programs/earthcraft-house/">https://earthcraft.org/programs/earthcraft-house/</a>.
or
<bullet> Passive House Institute US, Inc. (PHIUS Core, *Phius Zero)
<a href="https://multifamily.phius.org/service-category/phius-within-reach">https://multifamily.phius.org/service-category/phius-within-reach</a>.
or
<bullet> Greenpoint Gold or Platinum. <a href="https://www.greenpointrated.com/greenpoint-rated/">https://www.greenpointrated.com/greenpoint-rated/</a>.
or
<bullet> The National Green Building Standard (NGBS)--Multifamily
and Mixed Use (four levels of base certification, plus *NGBS Green +
NET ZERO ENERGY CERTIFICATION) <a href="https://www.homeinnovation.com/services/certification/green_homes/multifamily_certification">https://www.homeinnovation.com/services/certification/green_homes/multifamily_certification</a>.
or
<bullet> LEED V4 Homes and Multifamily Midrise, or LEED BD+C: Homes
and Multifamily Lowrise LEED BD+C: Multifamily Midrise (four levels of
certification, plus *LEED Zero) <a href="https://www.usgbc.org/resources/leed-v4-homes-and-multifamily-midrise-current-version">https://www.usgbc.org/resources/leed-v4-homes-and-multifamily-midrise-current-version</a>
or
<bullet> International Living Future Institute (ILFI) Living
Building Challenge (LBC 4.0--Core Building Certification, *Zero Energy,
*Zero Carbon) <a href="https://living-future.org/lbc/">https://living-future.org/lbc/</a>.

E. Applicant Assistance

The RHS plans to host a workshop to discuss this Notice, the
application process, and the borrower's responsibilities, among other
topics. Further information regarding the date and time of this
workshop, as well as information on how to participate in the workshop
will be issued at a later date in a public notice via GovDelivery.
Click here to sign up for notifications from Rural Development.
Prior to the submission of an application, the applicant is
encouraged to schedule a concept meeting with RHS to discuss the
application process, the specifics of the proposed project, and the
borrower's responsibilities under the Off-FLH Repair program, and other
topics they may wish to discuss relating to the Notice.
Concept meetings will be scheduled between the dates of April 1,
2024 and April 29, 2024. No concept meetings will be scheduled outside
of the specified dates.
Requests for concept meetings can be sent to the following email
address: <a href="/cdn-cgi/l/email-protection#08454e40787a676b6d7b7b61666f39487d7b6c69266f677e">[email&#160;protected]</a> and must be received by April 15,
2024. The email must contain the following information:
(1) Subject line: ``Off-FLH Repair Concept Call Request.''
(2) Body of email: Borrower Name, Project Name, Borrower Contact
Information, Project State.
(3) Request language: ``We request to schedule a concept call to
discuss our proposed application for the Off-FLH Repair NOSA.''

F. Federal Award Administration Information

(1) Review and Selection Process

(a) All applications must be received by the due date specified in
this Notice. Applications submitted after the deadline will not be
considered.
(b) Each application will be reviewed for overall completeness, as
well as compliance with eligibility and program requirements set forth
in this Notice. If an application does not meet these requirements, it
will be removed from consideration and will not be scored.
(c) The RHS will rank all eligible applications nationwide by
score, highest to lowest. Taking into account available funding, the 10
percent persistent poverty counties set-aside, and the 30 percent
funding limitation per State, the RHS will determine which applications
will be selected for further processing starting with the highest
scoring application. When proposals have equal scores and not all
applications can be funded, preference will be given first to Indian
tribes as defined in Sec. 3560.11, then to local non-profit
organizations or public bodies whose principal purposes include low-
income housing and that meet the conditions of Sec. 3560.55(c) and the
following conditions:
(i) Is exempt from Federal income taxes due to its status as a
governmental entity or under section 501(c)(3) or 501(c)(4) of the
Internal Revenue Code;
(ii) Is not wholly or partially owned or controlled by a for-profit
or limited-profit type entity;
(iii) Whose members, or the entity, do not share an identity of
interest with a for-profit or limited-profit type entity; and
(iv) Is not co-venturing with another for-profit entity.
If after all the above evaluations are completed and there are two
or more applications that have the same score, but all cannot be
funded, a lottery will be used to break the tie. The lottery will
consist of the names of each application with equal scores printed onto
pieces of paper equal in size, which will then be placed into a
receptacle that fully obstructs the view of the names. The Director of
the RHS Production and Preservation Division, in the presence of two
witnesses, will draw a piece of paper from the receptacle. The name on
the piece of paper drawn will be the applicant to be funded.
(d) If the remaining funding is insufficient for the next ranked

[[Page 19410]]

proposal, that applicant will be given a chance to modify their
application funding request amount to bring it within the remaining
available funding. This will be repeated for each next ranked eligible
proposal until an award can be made or the list is exhausted.
(e) If an application is selected and the applicant declines, the
next highest ranked application will be selected.
(f) If an application is not selected for funding, the applicant
will be notified in writing via postal or electronic mail and informed
of any appeal rights. Applicants will be notified if there are
insufficient funds available for the proposal and such notification is
not appealable. For applications found ineligible or incomplete, the
RHS will send notices of ineligibility that provide notice of any
applicable appeal rights under 7 CFR part 11.

(2) Administrative and National Policy

(a) Projects receiving subsequent Off-FLH loans and/or grants are
subject to additional restrictive-use provisions contained in 7 CFR
3560.72(a)(2).
(b) For Section 516 Off-FLH grant awardees, a FLH grant agreement,
prepared by the RHS, must be dated, and executed by the applicant on
the date of closing. The grant agreement will remain in effect for so
long as there is a need for the housing and will not expire until an
official determination has been made by the RHS that there is no longer
a need for the housing.
(c) The applicant's Board of Directors must adopt a resolution in a
form acceptable to the RHS stating that the Board has read and fully
understands the grant agreement and understands that the grant
agreement will remain in effect until RHS determines that there is no
longer a need for the housing.

G. Paperwork Reduction Act

The information collection requirements contained in this Notice
have received approval from the Office of Management and Budget (OMB)
under Control Number 0575-0189.

H. Build America, Buy America Act

Funding to Non-Federal Entities. Awardees that are Non-Federal
Entities, defined pursuant to 2 CFR 200.1 as any State, local
government, Indian tribe, Institution of Higher Education, or nonprofit
organization, shall be governed by the requirements of section 70914 of
the Build America, Buy America Act (BABAA) within the Infrastructure
Investment and Jobs Act (Pub. L. 117-58), and its implementing
regulations at 2 CFR part 184 . Any requests for waiver of these
requirements must be submitted pursuant to USDA's guidance available
online at <a href="https://www.usda.gov/ocfo/federal-financial-assistance-policy/USDABuyAmericaWaiver">https://www.usda.gov/ocfo/federal-financial-assistance-policy/USDABuyAmericaWaiver</a>.
The Infrastructure Investment and Jobs Act (IIJA) (Pub. L. 117-58),
requires the following Buy America preference for the Section 514 Off-
Farm Labor Housing Subsequent Loans (Assistance Listing 10.405) and
Section 516 Off-Farm Labor Housing Subsequent Grants to Improve,
Repair, or Make Modifications to existing Off-Farm Labor Housing
Properties (Assistance Listing 10.405).
(a) All iron and steel used in the project are produced in the
United States. This means all manufacturing processes, from the initial
melting stage through the application of coatings, occurred in the
United States.
(b) All manufactured products used in the project are produced in
the United States. This means the manufactured product was manufactured
in the United States, and the cost of the components of the
manufactured product that are mined, produced, or manufactured in the
United States is greater than 55 percent of the total cost of all
components of the manufactured product, unless another standard for
determining the minimum amount of domestic content of the manufactured
product has been established under applicable law or regulation.
(c) All construction materials are manufactured in the United
States. This means that all manufacturing processes for the
construction material occurred in the United States.
In accordance with BABAA, however, USDA has determined that de
minimis, small grants, and minor components shall be waived from the
requirements of BABAA, pursuant to a public interest waiver that was
granted to the Department on September 13, 2022. See <a href="https://www.usda.gov/sites/default/files/documents/usdA-Cepartmentwide-de-minimis-small-grants-minor-components-waiver-final-approved-09132022.pdf">https://www.usda.gov/sites/default/files/documents/usdA-Cepartmentwide-de-minimis-small-grants-minor-components-waiver-final-approved-09132022.pdf</a>. Under such waiver, small grants below the Simplified
Acquisition Threshold, which is currently set at $250,000 shall not be
subject to BABAA. Additionally, de minimis and minor components, as
described in the Department waiver, are also not subject to BABAA.
Applicants and projects that are subject to BABAA may request other
specific waivers, pursuant to the requirements posted at the USDA
Office of the Chief Financial Officer Office website: <a href="https://www.usda.gov/ocfo/federal-financial-assistance-policy/USDABuyAmericaWaiver">https://www.usda.gov/ocfo/federal-financial-assistance-policy/USDABuyAmericaWaiver</a>.

I. Equal Opportunity and Non-Discrimination Requirements

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, staff office; or the 711 Federal
Relay Service.
To file a program discrimination complaint, complete the USDA
Program Discrimination Complaint Form, AD-3027, found 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>, 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 a complaint form, call, (866) 632-9992. Submit your completed form
or letter to USDA by:
(1) Mail: United States Department of Agriculture, Office of the
Assistant Secretary for Civil Rights, 1400 Independence Avenue SW,
Washington, DC 20250-9410;
(2) Fax: (202) 690-7442; or
(3) Email at: <a href="/cdn-cgi/l/email-protection#3d4d4f525a4f5c50135453495c56587d484e595c135a524b">[email&#160;protected]</a>.
USDA is an equal opportunity provider, employer, and lender.

Addendum: Capital Needs Assessment Process

A Capital Needs Assessment (CNA) provides a repair schedule for the
property in its present condition, indicating repairs and replacements
necessary for a property to function properly and efficiently over a
span of 20 years.
The purpose of this Addendum is to provide clarification and
guidance on the Rural Development (RD) CNA process. The document
includes general

[[Page 19411]]

instructions used in completing CNA reports, specific instructions on
how to use the expected useful life tables, and a set of applicable
forms including the Terms of Reference form; Systems and Conditions
forms; and Evaluator's Summary forms.

1. Definitions

The following definitions are provided to clarify terms used in
conjunction with the CNA process:
CNA Recipient: This will be who enters into the contract with the
CNA Provider. The Recipient can be either the property owner or
applicant/transferee.
``As-Is'' CNA: This type of CNA is prepared for an existing MFH
property and reports the physical condition including all Section 504
Accessibility and Health and Safety items of the property based on that
moment in time. This CNA can be useful for many transactions, including
but not limited to, the MPR Demonstration program, an ownership
transfer, determining whether to offer pre-payment aversion incentive
and evaluating or resizing the reserve account. The ``as-is'' report
will include all major repairs and likely some minor repairs that are
typically associated with the major work: each major component, system,
equipment item, etc. inside and outside; building(s); property; access
and amenities in their present condition. A schedule of those items
showing the anticipated repair or replacement timeframe and the
associated hard costs for the ensuing 20-year term of the CNA serves as
the basis or starting point in evaluating the underwriting that will be
necessary to determine the feasibility and future viability of the
property to continue serving the needs of eligible tenants.
``Post Rehabilitation'' CNA: This type of CNA builds on the
findings of the accepted ``as-is'' CNA and is typically prepared for a
project that will be funded for major rehabilitation. The Post
Rehabilitation CNA is adjusted to reflect the work intended to be
performed during the rehabilitation. The assessment must be developed
from the rehabilitation project plans and any construction contract
documents to reflect the full extent of the planned rehabilitation.
Life Cycle Cost Analysis (LCCA): A LCCA is an expanded version of a
CNA and is defined at 7 CFR 3560.11. The LCCA will determine the
initial purchase cost, the operation and maintenance cost, the
``estimated useful life'', and the replacement cost of an item selected
for the project. The LCCA provides the borrower with the information on
repair or replacement costs and timeframes over a 20-year period. It
also provides information that will assist with a more informed
component selection and can provide the borrower with a more complete
financial plan based on the predictive maintenance needs associated
with those components. If the newly constructed project has already
been completed without any previous LCCA requirements, either an ``as-
is'' CNA or LCCA can be provided to establish program mandated reserve
deposits. An Architect or Engineer is the best qualified person(s) to
prepare this report.
Consolidation: In some circumstances, RD may permit two or more
properties to be consolidated as defined in 7 CFR 3560.410 when it is
in the best interests of the Government. The CNA Recipient must consult
with the RD loan official before engaging the CNA Provider in any case
where the CNA intends to encompass more than a single (one) existing RD
property to determine if a consolidated CNA may be acceptable for RD
underwriting.

2. Contract Addendum

RD uses a Contract Addendum to supplement the basic CNA Agreement
or ``Contract'', between the CNA Recipient and CNA Provider, with
additional details and conditions. It can be found in Attachment A,
Addendum to Capital Needs Assessment Contract and must accompany all
contracts executed between the CNA Recipient and CNA Provider for CNAs
used in RD transactions. If any conflicts arise between the
``Contract'' and ``Contract Addendum'', the ``Contract Addendum'' will
supersede.
The Contract Addendum identifies the responsibilities and
requirements for both the CNA Recipient and the CNA Provider. To assure
proper completion of the contract documents the following key
provisions must be completed:
a. The Contract Addendum will include the contract base amount for
the CNA Provider's cost for services on page A-2, and provisions for
additional services to establish the total price for the CNA.
b. Item I e, will require an itemized listing for any additional
anticipated services and their unit costs including future updates and
revisions that may be required before the CNA is accepted by RD. Note:
Any cost for updating a CNA must be included, in the ``additional
services'' subpart, of the original CNA Contract.
c. The selection criteria boxes in II a, will identify the type of
CNA being provided.
d. In III a, the required language for the blank on ``report
format'' is: ``USDA RD CNA Template, current RD version, in Microsoft
Excel format''. This format will import directly into the RD
underwriting template for loan underwriting purposes.

3. Requirements and Statement of Work (SOW) for a CNA

Minimum requirements for a CNA acceptable to RD can be found in
Attachment B, Capital Needs Assessment Statement of Work. This is
supplemented by Attachment C, Fannie Mae Physical Needs Assessment
Guidance to the Property Evaluator. To resolve any inconsistency in the
two documents, Attachment B, the CNA SOW, will in all cases prevail
over Attachment C, Fannie Mae Physical Needs Assessment Guidance to the
Property Evaluator. (For example, on page C-2 of Attachment C, Fannie
Mae defines the ``term'' as ``term of the mortgage and two years
beyond''. For USDA, the ``term'' will be 20 years, as defined in the
CNA SOW.)
Attachment B includes the required qualifications for the CNA
Provider, the required SOW for a CNA assignment, and general
distribution and review instructions to the CNA Provider. The CNA
Providers must be able to report the current physical condition of the
property and not base their findings on the financial condition of
either the property or the CNA Recipient.
Attachment C is a three-part document RD has permission from Fannie
Mae to use as reference to the CNA process throughout the RD MFH
program efforts. The three key components of this Attachment are: (1)
guidance to the property evaluator; (2) expected useful life tables;
and (3) a set of forms.
An acceptable CNA must appropriately address within the report and
narrative all Accessibility Laws and Requirements that apply to Section
515 and Sections 514/516 MFH properties. The CNA Provider must assess
how the property meets the requirements of accessibility to persons
with disabilities in accordance the Uniform Federal Accessibility
Standards (UFAS) and Section 504 Accessibility Requirements. It is the
responsibility of the Provider to inspect and verify whether all
accessibility features are compliant.

4. The CNA Review Process

A CNA used by RD will be reviewed by the designated RD CNA Reviewer
with experience in construction, rehabilitation, and repair of MFH
properties, especially as it relates to repair and replacement.

[[Page 19412]]

A CNA report must be obtained by the CNA Recipient from an
independent third-party CNA Provider that has no identity of interest
with the property owner, management agent, applicant/transferee or any
other principle or affiliate defined in 7 CFR 3560.11. The CNA
Recipient will contract with the CNA Provider and is therefore the
client of the provider. However, the CNA Recipient must consult with
RD, before contracting with a CNA Provider to review Guidance Regarding
Contracting for a CNA. The RD CNA Reviewer will evaluate a proposed
agreement or engagement letter between the CNA Recipient and the CNA
Provider using Attachment D, Capital Needs Assessment Guidance to the
Reviewer, prior to reviewing any CNA report. Unacceptable CNA
proposals, contracts or reports will be returned to the CNA Recipient
for appropriate corrections before they will be used for any
underwriting determinations.
The CNA Reviewer will also review the cost of the CNA contract. The
proposed fee for the CNA must be approved as an eligible housing
project expense under 7 CFR 3560.103(c) for the agreement to be
acceptable and paid using project funds. In most cases, the CNA service
contract amount has not exceeded $3,500 based on the Agency's most
recent cost analysis.
Borrowers and applicants are encouraged to obtain multiple bids in
all cases. However, there is no Agency requirement to select the ``low
bidder'' under this NOSA and the CNA Recipient may select a CNA
Provider that will provide the best value, based on qualifications as
well as price, after reviewing references and past work.
If the CNA is funded by the property's reserve account, a minimum
of two bids is required if the CNA service contract amount is estimated
to exceed $5,000 as specified in HB-2-3560, Chapter 4, Paragraph 4.13.
If the CNA contract under this NOSA is funded by another source, or
will be under $5,000, a single bid is acceptable.
If the proposed agreement is acceptable, the reviewer will advise
the appropriate RD servicing official, who will in turn inform the CNA
Recipient. If the proposed agreement is unacceptable, the reviewer will
notify the servicing official, who will notify the CNA Recipient and
the CNA Provider in writing and identify actions necessary to make the
proposed CNA agreement acceptable to RD. Upon receipt of a satisfactory
agreement, the RD CNA Reviewer should advise the appropriate RD
servicing official or underwriting official to accept the proposal.
The CNA Reviewer will review the preliminary CNA report submitted
to RD by the CNA Provider using Attachment D and write the preliminary
CNA review report. During the CNA review process, the CNA Reviewer and
underwriter will consult with the servicing field office most familiar
with the property for their input and knowledge of the property. Any
differences of opinion that exist regarding the findings must be
mutually addressed by RD staff. If corrections are needed, the loan
official will notify the CNA Recipient, in writing, of any revisions
necessary to make the CNA report acceptable to RD. The CNA Reviewer
will review the final CNA report and deliver it to the loan official.
The final report must be signed by both the CNA Reviewer and the loan
official (underwriter). Upon signature by both, this report becomes the
``accepted'' CNA indicating the actual condition of the property at the
time of the CNA inspection--a ``snapshot'' in time--and will be marked
``Current Property Condition'' for indefinite retention in the borrower
case file.
A CNA Provider should be fully aware of the intended use for the
CNA because it can impact the calculations necessary to perform
adequate accessibility assessments and can impact the acceptability of
the report by RD. Unacceptable reports will not be used for any RD
underwriting purposes even though they may otherwise be acceptable to
the CNA Recipient or another third-party lender or participant in the
transaction being proposed.

5. Guidance Regarding Contracting for a CNA

CNA Recipients are responsible for choosing the CNA Provider they
wish to contract with, and for delivering an acceptable CNA to Rural
Development. RD in no way guarantees the performance of any Provider
nor the acceptability of the Provider's work.
CNA Recipients are advised to request an information package from
several CNA Providers and to evaluate the information before selecting
a provider. At a minimum, the information package should include a list
of qualifications, a list of references, a client list, and a sample
CNA report. However, the CNA Recipient may request any additional
information they feel necessary to evaluate potential candidates and
select a suitable provider for this service. Consideration for the type
of CNA required should be part of the CNA Recipient's selection
criteria and inserted into the contract language as well. The necessary
skill set to perform the ``as-is'' versus the Post Rehabilitation CNA
or a LCCA needs to be considered carefully. Knowledge of the
accessibility laws and standards and the ability to read and understand
plans and specifications should also be among the critical skill
elements to consider.
Attachment A, Contract Addendum must be submitted to RD with the
contract and signed by the CNA Recipient and CNA Provider. The proposed
agreement with the CNA Recipient and CNA Provider must meet RD's
qualification requirements for both the provider and the CNA SOW, as
specified in Attachment B, Capital Needs Assessment Statement of Work.
RD must review the proposed agreement between the CNA Recipient and the
CNA Provider, and will concur only if all of the RD requirements and
conditions are met. (See the previous section 3 of this Addendum, The
CNA Review Process.)
Please note: It is in the CNA Recipient's best interest to furnish
the CNA Provider with the most current and up-to-date property
information for a more comprehensive and thorough CNA report. RD
recommends that the CNA Recipient conduct a pre-inspection meeting with
the Owner, Property Manager, maintenance persons familiar with the
property, CNA Provider, and Agency Representatives at the site. This
meeting will allow a forum to discuss specific details about the
property that may not be readily apparent to all parties involved
during the review process, as well as making some physical observations
on-site. Any issues that may not be evident to the CNA Provider due to
weather conditions at the time of review should also be discussed and
included in the report. Other issues that will need to be addressed if
present include environmental hazards, structural defects, and complex
accessibility issues. It is imperative that the Agency be fully aware
of the current physical condition of the property at the time the CNA
is prepared. An Agency representative must make every effort to attend
the CNA Provider's on-site inspection of the property unless the Agency
has performed a physical inspection of the property within the previous
12 months.
This pre-inspection meeting also allows the CNA Provider to discuss
with the CNA Recipient the total number of units to be inspected, as
well as identifying any specific units that will be inspected in
detail. The minimum number of inspected units required by the Agency
for an acceptable CNA is 50 percent. However, inspecting a larger
number of units generally provides more accurate information to
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the specific line items to be addressed over the ``term'' being covered
by the CNA report. CNA Recipients are encouraged to negotiate with the
CNA Provider to achieve inspection of all units whenever possible. The
ultimate goal for the CNA Recipient and CNA Provider, as well as the
Agency, is to produce the most accurate ``baseline or snapshot'' of
current physical property conditions for use as a tool in projecting
future reserve account needs.

6. Revising an Accepted CNA During Underwriting (Applies to RD Actions)

During transaction underwriting and analysis, presentation of the
information contained in the ``accepted'' CNA may need to be revised by
RD to address financing and other programmatic issues. The loan
underwriter and the CNA Reviewer will work together to determine if
revisions are necessary to meet the financial and physical needs of the
property, and established RD underwriting or servicing standards and
principals. These may involve shifting individual repair line items
reported in the CNA, moving work from year to year, or other
adjustments that will improve cash flow. The revised underwriting CNA
will be used to establish reserve funding schedules as well as
operating budget preparation and analysis and will be maintained by RD
as supporting documentation for the loan underwriting.
The initial CNA, prepared by the CNA Provider, will be maintained
as an independent third-party record of the current condition of the
property at the beginning of the 20-year cycle.
Original CNAs will be maintained in the case file, clearly marked
as either ``Current Property Condition'' (``As-is''), ``Post
Rehabilitation Condition'', or ``Revised Underwriting/Replacement
Schedule'', as applicable. Note: The CNA Provider is not the
appropriate party to ``revise'' a CNA which has already been approved
by the CNA Recipient and concurred with by the Agency. The CNA
Provider's independent opinion was the basis of the ``As is'' or ``Post
Rehabilitation'' CNA. The CNA developed for underwriting may only be
revised by RD staff during the underwriting process or as part of a
post-closing servicing action.

7. Updating a CNA (Applies to ``As-Is'' and ``Post-Rehabilitation''
That Have Not Been Accepted by RD)

A completed CNA more than a year old at the time of the RD CNA
review and approval must be ``updated' prior to RD approval. Likewise,
if at the time of underwriting the CNA is more than a year old (but
less than two years old), it must be updated before the transaction can
be approved. If the CNA age exceeds two years at the time of the RD CNA
review and approval, the CNA Provider will need to repeat the site
visit process to re-evaluate the condition of the property. The
original report can remain the basis of the findings.
To update a CNA, the CNA Provider must review property changes
(repairs, improvements, or failures) that have occurred since the date
of the original CNA site visit with the CNA Recipient, review costs and
quantities, and submit an updated CNA for approval. However, if the
site visit for the CNA occurred more than two years prior to the loan
underwriting, the CNA Provider should perform a new site visit to
verify the current project condition.
Once the CNA has been updated, the CNA Provider will include a
statement noting ``This is an updated CNA of the earlier CNA dated
___,'' at the beginning of the CNA's Narrative section. The CNA
Provider should reprint the CNA with a new date for the updated CNA,
and provide a new electronic copy to the CNA Recipient and RD.

8. Incorporating a Property's Rehabilitation Into a CNA

A CNA provides a repair schedule for the property in its present
condition, indicating repairs and replacements necessary for a property
to function properly and efficiently over a span of 20 years. It is not
an estimate of existing rehabilitation needs, or an estimate of
rehabilitation costs. If any rehabilitation of a MFH development is
planned as part of the proposed transaction, a rehabilitation repair
list (also called a ``Scope of Work'') must be developed independently
based on the CNA repair schedule. This rehabilitation repair list may
be developed by the CNA Recipient, a project Architect, or an outside
party (such as the CNA Provider, when qualified) hired by the CNA
Recipient.
The CNA Recipient must not use repair line-item costs taken from
the CNA to develop the rehabilitation cost estimates for the
rehabilitation loan, as these costs will not be accurate. The repair
costs in a CNA are based on estimated costs for the property.
Typically, these costs include the labor, materials, overhead and
profit, but do not include applicable ``soft costs.'' For example, for
CNA purposes, the probable cost is to send a repairman out, remove an
appliance, and put a new one in its place. For rehabilitation cost
estimates, the CNA Recipient typically intends to hire a general
contractor to oversee and supervise the rehabilitation work, which is
then considered a ``soft cost''. The cost of rehabilitation includes
the costs for that general contractor, the general contractor's
requirements, the cost of a project Architect (if one is used), tenant
relocation (if needed), and interim financing (if used), which are
considered ``soft costs'' attributed to the rehabilitation costs for
the project.
If a ``Post Rehabilitation'' CNA is required and authorized by RD,
a copy of the rehabilitation repair list or SOW must be provided to the
CNA Provider. The CNA Provider will prepare a ``Post Rehabilitation''
CNA indicating what repairs are planned for the property in the coming
20 years based on conditions after the rehabilitation is completed.
Items to be replaced during rehabilitation that will need to be
replaced again within the 20 years, such as appliances, will be
included in the ``Post Rehabilitation'' CNA. Items that will not need
replacement during the coming 20 years, such as a new roof, will not
need to be calculated in the ``Post Rehabilitation'' CNA. The line item
should not be removed from the CNA, but the cost data should be zeroed
out. Appropriate comments should be included in the CNA report to
acknowledge the SOW or rehabilitation/repairs that were considered.

9. Repair and Replacement Schedule

A CNA is not a formal repair and replacement schedule and cannot be
used as an exact replacement schedule. A CNA is an estimate of the
anticipated replacement needs for the property over time, and the
associated replacement costs. The goal of a CNA is to estimate the
replacement times based on the Expected Useful Life (EUL) to assure
funds are available to replace equipment as it is needed. Hopefully,
materials will be well maintained and last longer than estimated in the
CNA. The CNA cannot be used to mandate replacement times for the
identified building components. The RD underwriter may find it
necessary to adjust the proposed replacement schedule during the course
of the underwriting to allow for an adequate Annual Deposit to
Replacement Reserves (ADRR) payment that will sustain the property over
a 20-year period and keep rents below the maximum rents that are
allowed.
BILLING CODE 3410-XV-P

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Authority

This solicitation is authorized pursuant to the Title V of the
Housing Act of 1949 (Pub. L. 81-171), as amended, 42 U.S.C. 1471 et
seq.; 7 CFR 3560, subpart L; 42 U.S.C. 1484; 42 U.S.C. 1486 and 42
U.S.C. 1480.

Yvonne Hsu,
Acting Administrator, Rural Housing Service.
[FR Doc. 2024-05505 Filed 3-15-24; 8:45 am]
BILLING CODE 3410-XV-C

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