Proposed Rule2025-10305
Multifamily Housing Guaranteed Rural Rental Housing Program Requirement To Submit a Market Study
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 30, 2025
Issuing agencies
Agriculture DepartmentRural Housing Service
Abstract
The Rural Housing Service (RHS or Agency), an agency of the Rural Development (RD), within the United States Department of Agriculture (USDA), is issuing a proposed rule to amend its regulation that will require applicants (lenders) to submit a market study as part of the complete application for the Guaranteed Rural Rental Housing Program (GRRHP) loan guarantee. This change will require all applicants to use a market study when demonstrating market need for new construction.
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 123 (Monday, June 30, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 123 (Monday, June 30, 2025)]
[Proposed Rules]
[Pages 27819-27822]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-10305]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 3565
[Docket No. RHS-24-MFH-0024]
RIN 0575-AD42
Multifamily Housing Guaranteed Rural Rental Housing Program
Requirement To Submit a Market Study
AGENCY: Multifamily Housing, Rural Housing Service, U.S. Department of
Agriculture (USDA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Rural Housing Service (RHS or Agency), an agency of the
Rural Development (RD), within the United States Department of
Agriculture (USDA), is issuing a proposed rule to amend its regulation
that will require applicants (lenders) to submit a market study as part
of the complete application for the Guaranteed Rural Rental Housing
Program (GRRHP) loan guarantee. This change will require all applicants
to use a market study when demonstrating market need for new
construction.
DATES: Comments must be submitted electronically on or before August
29, 2025 by using the Federal eRulemaking Portal: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Details on how to submit comments to the Federal
eRulemaking Portal are in the ADDRESSES section of this proposed rule.
ADDRESSES: Comments may be submitted electronically by the Federal
eRulemaking Portal: Go to <a href="http://www.regulations.gov">http://www.regulations.gov</a> and, in the
``Search Field'' box, labeled ``Search for dockets and documents on
agency actions,'' enter the following docket number: (RHS-24-MFH-0024)
or RIN# 0575-AD42, then click search. To submit or view public
comments, select the following document title: (Guaranteed Rural Rental
Housing Program Requirement to Submit a Market Study) from the ``Search
Results,'' and select the ``Comment'' button. Before inputting your
comments, you may also review the ``Commenter's Checklist'' (optional).
Insert your comments under the ``Comment'' title, click ``Browse'' to
attach files (if available). Input your email address and select
``Submit Comment.'' Information on using <a href="http://www.regulations.gov">http://www.regulations.gov</a>,
including instructions for accessing documents, submitting comments,
and viewing the docket after the close of the comment period, is
available through the site's ``FAQ'' link.
[[Page 27820]]
Other Information: Additional information about Rural Development
and its programs is available on the internet at <a href="http://rd.usda.gov">rd.usda.gov</a>.
All comments will be available for public inspection online at the
Federal eRulemaking Portal (<a href="http://www.http">http://www.http</a>://www.regulations.gov).
FOR FURTHER INFORMATION CONTACT: Abby Boggs, Program Support Branch,
Production and Preservation Division, Rural Housing Service, Stop 0782,
1400 Independence Avenue SW, Washington, DC 20250-0782, Telephone:
(615) 490-1371 or Email: <a href="/cdn-cgi/l/email-protection#3a5b5858431458555d5d497a4f495e5b145d554c"><span class="__cf_email__" data-cfemail="fe9f9c9c87d09c9199998dbe8b8d9a9fd0999188">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
Rural Development is an advocate for rural America, administering a
multitude of programs, ranging from housing and community facilities to
infrastructure and business development. The Agency's mission is to
increase economic opportunity and improve the quality of life in rural
communities by providing the leadership, infrastructure, capital, and
technical support that enables rural communities to prosper. To achieve
its mission, the Agency provides financial support, including loan
guarantees, direct loans and grants, and technical assistance to
enhance the quality of life and provide the foundation for economic
development in rural areas.
The RHS offers a variety of programs to build or improve housing
and essential community facilities in rural areas. RHS offers loans,
grants, and loan guarantees for single- and multifamily housing,
childcare centers, fire and police stations, hospitals, libraries,
nursing homes, schools, first responder vehicles and equipment, housing
for farm laborers and much more. RHS also provides technical
assistance, loans, and grants in partnership with non-profit
organizations, Indian Tribes, State and Federal government agencies,
and local communities.
GRRHP, a program in the RHS, provides up to a 90 percent guarantee
for loans made by commercial lenders to borrowers developing or
rehabilitating multifamily rental housing for low- and moderate-income
tenants in rural areas. The program works with qualified private-sector
lenders to provide financing to qualified borrowers to increase the
supply of affordable rental housing for low- and moderate-income
individuals and families in eligible rural areas and towns.
II. Purpose of the Proposed Rule
The intent of this proposed rulemaking is for the GRRHP to increase
the supply of affordable rural rental housing by using loan guarantees
to encourage partnerships between the RHS, private lenders, and public
agencies. GRRHP is authorized by Section 538 of the Housing Act of
1949. 7 CFR part 3565 sets forth the regulatory requirements for the
GRRHP.
7 CFR part 3565 currently requires that applications for a loan
guarantee submitted by lenders must include a loan request for projects
that demonstrate market feasibility for affordable rental housing.
Currently, the regulation makes references to market assessment but
does not specify the type of documentation the lender must submit to
demonstrate the need. Some provide it in the form of a market study,
while others provide the information in other formats, but there is no
specific requirement that a market study be submitted. This creates
inconsistencies of submitted documentation to the Agency to demonstrate
market demand.
The purpose of a market study is to assure there is enough
sustainable demand for additional rental housing units without
adversely impacting the existing supply and to maintain a balanced
overall market. A typical market study includes an assessment of the
impact the proposed project will have on existing rental developments.
The Agency is proposing to amend 7 CFR 3565.254(b) to require that
applicants (lenders) submit a market study to demonstrate market need
as part of the complete application for a Section 538 Guaranteed Rural
Rental Housing loan guarantee for a new construction property to create
consistency in the application process.
Lenders must provide documentation during the application process
that there is a need for the affordable rental housing in the defined
market area in which new units are proposed to be built as one of the
conditions for receiving a loan guarantee. 7 CFR part 3565 does not
specify the documentation that should be submitted to the Agency. In
keeping with the precedent of other affordable housing programs, the
Agency currently accepts a market study from applicants seeking a loan
guarantee, but there is no regulatory requirement to do so. The Agency
anticipates that this regulatory change will allow the Agency to
enforce the requirement that applicants must submit a market study as a
part of a complete Section 538 GRRHP application to determine
feasibility of the project.
Request for Comment
Stakeholder input is vital to ensure the changes in the proposed
rule would support the Agency's mission, while ensuring that new
regulations and policies are reasonable and do not overly burden the
Agency's lenders and its customers. Comments must be submitted on or
before August 29, 2025 and must be submitted electronically by going to
the Federal eRulemaking Portal: Details on how to submit comments to
the Federal eRulemaking Portal are in the ADDRESSES section of this
proposed rule.
III. Summary of Changes
The proposed changes are intended to amend 7 CFR 3565.254(b) by
adding the requirement that a market study must be submitted with a
complete application for new construction. The market study determines
the need and feasibility of housing in a particular rural area, which
would allow the Agency to be more responsive to the needs of the
program's rural stakeholders and housing market.
IV. Regulatory Information
Statutory Authority
Section 510(k), Title V, of the Housing Act of 1949 42 U.S.C.
1480(k)), authorizes the Secretary of the Department of Agriculture to
promulgate rules and regulations as deemed necessary to carry out the
purpose of that title. The Secretary is further authorized to prescribe
regulations for the operation of the Department of Agriculture by 5
U.S.C. 301.
Executive Order 12372, Intergovernmental Review of Federal Programs
These loans are subject to the provisions of Executive Order 12372,
which require intergovernmental consultation with State and local
officials. RHS conducts intergovernmental consultations for each loan
in accordance with 2 CFR part 415, subpart C.
Executive Orders 12866
Executive Orders 12866 (Regulatory Planning and Review) directs
agencies to assess the costs and benefits of available regulatory
alternatives and, if a regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety effects, distributive impacts,
and equity). This proposed rule has been determined to be non-
significant and, therefore, was not reviewed by the Office of
Management and Budget (OMB) under Executive Order 12866.
[[Page 27821]]
Executive Order 12988, Civil Justice Reform
This proposed rule has been reviewed under Executive Order 12988.
In accordance with this proposed rule: (1) unless otherwise
specifically provided, all State and local laws that conflict with this
proposed rule will be preempted; (2) no retroactive effect will be
given to this proposed rule except as specifically prescribed in the
proposed rule; and (3) administrative proceedings of the National
Appeals Division of the Department of Agriculture (7 CFR part 11) must
be exhausted before bringing suit in court that challenges action taken
under this proposed rule.
Executive Order 13132, Federalism
The policies contained in this proposed rule do not have any
substantial direct effect on states, on the relationship between the
national government and states, or on the distribution of power and
responsibilities among the various levels of government. This proposed
rule does not impose substantial direct compliance costs on state and
local governments. Therefore, consultation with the states is not
required and a federal summary impact statement is not required.
Executive Order 13175, Consultation and Coordination With Indian Tribal
Governments
Reforming Federal Funding and Support for Tribal Nations to Better
Embrace Our Trust Responsibilities and Promote the Next Era of Tribal
Self-Determination. This proposed rule has been reviewed in accordance
with the requirements of Executive Order 13175, Consultation and
Coordination with Indian Tribal Governments. Executive Order 13175
requires Federal agencies to consult and coordinate with tribes on a
government-to-government basis on policies that have tribal
implications, including regulations, legislative comments or proposed
legislation, and other policy statements or actions that have
substantial direct effects on one or more Indian tribes, on the
relationship between the Federal government and Indian tribes or on the
distribution of power and responsibilities between the Federal
government and Indian tribes. Consultation is also required for any
regulation that preempts tribal law or that imposes substantial direct
compliance costs on Indian tribal governments and that is not required
by statute.
The Agency has determined that this proposed rule does not, to our
knowledge, have Tribal implications that require formal Tribal
consultation under Executive Order 13175. If a Tribe requests
consultation, the RHS will work with the Office of Tribal Relations and
USDA Rural Development's Tribal Relations Team to ensure meaningful
consultation is provided where changes, additions and modifications
identified herein are not expressly mandated by Congress.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-602) (RFA) generally
requires an agency to prepare a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements under the
Administrative Procedure Act (``APA'') or any other statute. The
Administrative Procedures Act exempts from notice and comment
requirements rules ``relating to agency management or personnel or to
public property, loans, grants, benefits, or contracts'' (5 U.S.C.
553(a)(2)); therefore, an analysis has not been prepared for this
proposed rule.
Unfunded Mandates Reform Act
Title II of the UMRA, Public Law 104-4, establishes requirements
for Federal Agencies to assess the effects of their regulatory actions
on State, local, and Tribal Governments and on the private sector.
Under section 202 of the UMRA, Federal Agencies generally must prepare
a written statement, including cost-benefit analysis, for proposed and
final rules with ``Federal mandates'' that may result in expenditures
to State, local, or Tribal Governments, in the aggregate, or to the
private sector, of $100 million or more in any, one-year. When such a
statement is needed for a rule, section 205 of the UMRA generally
requires a Federal Agency to identify and consider a reasonable number
of regulatory alternatives and adopt the least costly, more cost-
effective, or least burdensome alternative that achieves the objectives
of the rule.
This proposed rule contains no Federal mandates (under the
regulatory provisions of title II of the UMRA) for State, local, and
Tribal Governments or for the private sector. Therefore, this proposed
rule is not subject to the requirements of sections 202 and 205 of the
UMRA.
National Environmental Policy Act
In accordance with the National Environmental Policy Act of 1969,
Public Law 91-190, this proposed rule has been reviewed in accordance
with 7 CFR part 1970 (``Environmental Policies and Procedures''). The
Agency has determined that (i) this action meets the criteria
established in 7 CFR 1970.53(f); (ii) no extraordinary circumstances
exist; and (iii) the action is not ``connected'' to other actions with
potentially significant impacts, is not considered a ``cumulative
action'' and is not precluded by 40 CFR 1506.1. Therefore, the Agency
has determined that the action does not have a significant effect on
the human environment, and therefore neither an Environmental
Assessment nor an Environmental Impact Statement is required.
Civil Rights Impact Analysis
RD has reviewed this proposed rule in accordance with USDA
Regulation 4300-4, Civil Rights Impact Analysis,'' to identify any
major civil rights impacts the rule might have on program participants
on the basis of age, race, color, national origin, sex, disability,
marital status, familial status, parental status, veteran status,
religion, reprisal and/or resulting from all or a part of an
individual's income being derived from any public assistance program.
This proposed rule is within a Guarantee-based program. Guarantees are
not covered under Title VI of the Civil Rights Act of 1964, Section 504
of the Rehabilitation Act of 1973, and Title IX of the Education
Amendments Act of 1972, as amended, when the Federal assistance does
not include insurance or interest credit loans. Lenders must comply
with other applicable Federal laws, including Equal Employment
Opportunities, the Equal Credit Opportunity Act, the Fair Housing Act,
and the Civil Rights Act of 1964. Guaranteed loans that involve the
construction of or addition to facilities that accommodate the public
must comply with the Architectural Barriers Act Accessibility Standard.
The borrower and lender are responsible for ensuring compliance with
these requirements.
Assistance Listing
The program affected by this proposed rule is listed in the
Assistance Listing (AL) (formerly Catalog of Federal Domestic
Assistance) for Guaranteed Number 10.438 Rural Rental Housing
Guaranteed Loans (Section 538).
Paperwork Reduction Act
This proposed rule contains no new reporting or recordkeeping
burdens under OMB control number 0575-0179 that would require approval
under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).
E-Government Act Compliance
Rural Development is committed to the E-Government Act, which
requires
[[Page 27822]]
Government agencies in general to provide the public the option of
submitting information or transacting business electronically to the
maximum extent possible and to promote the use of the internet and
other information technologies to provide increased opportunities for
citizen access to Government information and services, and for other
purposes.
USDA Non-Discrimination Policy
In accordance with Federal civil rights law and U.S. Department of
Agriculture (USDA) civil rights regulations and policies, the USDA, its
Agencies, offices, and employees, and institutions participating in or
administering USDA programs are prohibited from discriminating based on
race, color, national origin, religion, sex, 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.
Persons with disabilities who require alternative means of
communication for program information (e.g., Braille, large print,
audiotape, American Sign Language, etc.) should contact the State or
local Agency that administers the program or contact USDA through the
Telecommunications Relay Service at 711 (voice and TTY). Additionally,
program information may be made available in languages other than
English.
To file a program discrimination complaint, a complainant should
complete a Form AD-3027, USDA Program Discrimination Complaint Form,
which can be obtained online at <a href="https://www.usda.gov/sites/default/files/documents/ad-3027.pdf">https://www.usda.gov/sites/default/files/documents/ad-3027.pdf</a> 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 the complaint form, call
(866) 632-9992. Submit your completed form or letter to USDA by:
a. Mail: U.S. Department of Agriculture, Office of the Assistant
Secretary for Civil Rights, 1400 Independence Avenue SW, Mail Stop
9410, Washington, DC 20250-9410; or
b. Fax: (202) 690-7442; or
c. Email: <a href="/cdn-cgi/l/email-protection#0e7e7c61697c6f632067607a6f656b4e7b7d6a6f20696178"><span class="__cf_email__" data-cfemail="a3d3d1ccc4d1c2ce8dcacdd7c2c8c6e3d6d0c7c28dc4ccd5">[email protected]</span></a>.
Severability
It is USDA's intention that the provisions of this proposed rule
shall operate independently of each other. If this proposed rule or any
portion of this proposed rule is ultimately declared invalid or stayed
as to a particular provision, it is USDA's intent that the proposed
rule nonetheless be severable and remain valid with respect to those
provisions not affected by a declaration of invalidity or stayed. USDA
concludes it would separately adopt all the provisions contained in
this proposed rule.
List of Subjects in 7 CFR Part 3565
Conflict of interest, Credit, Fair housing, Loan programs--housing
and community development, Low- and moderate-income housing,
Manufactured homes, Mortgages, Rent subsidies, Reporting and
recordkeeping requirements, Rural areas.
For the reasons discussed in the preamble, the Agency is proposing
to amend 7 CFR part 3565 as follows:
PART 3565--GUARANTEED RURAL RENTAL HOUSING PROGRAM
0
1. The authority citation for part 3565 continues to read as follows:
Authority: 5 U.S.C. 301 42 U.S.C. 1480.
0
2. Amend Sec. 3565.254 by revising paragraphs (b)(2) and (3) and
adding paragraph (b)(5) to read as follows:
Sec. 3565.254 Property Standards.
* * * * *
(b) * * *
(2) A Phase I Environmental Site Assessment (American Society of
Testing and Materials) in accordance with 7 CFR part 1970.
(3) A Standard Flood Hazard Determination in accordance with 7 CFR
part 1970.
* * * * *
(5) In the case of new construction, a market study is required.
The market study will be used to determine market feasibility. This is
separate from the review outlined in Sec. 3565.303(a) which allows the
applicant the option to request a preliminary feasibility review by the
Agency when required loan documentation is submitted.
Christine Mechtly,
Acting Administrator, Rural Housing Service.
[FR Doc. 2025-10305 Filed 6-27-25; 8:45 am]
BILLING CODE 3410-XV-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on June 30, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.