Processing Requests for Farm Labor Housing (LH) Loans and Grants

DEPARTMENT OF AGRICULTURE

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Parts 1940 and 1944

RIN 0575-AC19

Processing Requests for Farm Labor Housing (LH) Loans and Grants

AGENCIES: Rural Housing Service, Rural Business-Cooperative Service,

Rural Utilities Service, and Farm Service Agency, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Housing Service (RHS), formerly Rural Housing and

Community Development Service (RHCDS), a successor Agency to the

Farmers Home Administration (FmHA), proposes to amend its regulations

for the Farm Labor Housing (LH) program. This action is taken to

implement a simplified application process in conjunction with an

annual competitive funding cycle that will be announced in the Federal

Register. The intended outcome is a streamlined application process

that will be simpler and less costly for the applicant and will enable

the Agency to process applications in a more efficient and timely

manner.

DATES: Written comments on this proposed rule must be received on or

before December 28, 1998.

ADDRESSES: Written comments may be submitted, in duplicate, to the

Branch Chief, Regulations and Paperwork Management Branch, Rural

Development, U.S. Department of Agriculture, Stop 0742, 1400

Independence Avenue SW, Washington, D.C. 20250-0742. Comments may be

submitted via the Internet by addressing them to

``[email protected]'' and must contain the word ``LH'' in the

subject. All written comments will be available for public inspection

at 3rd floor, 300 E Street, SW, Washington, D.C. 20546 during normal

working hours.

FOR FURTHER INFORMATION CONTACT: Linda Armour, Senior Loan Specialist,

Multi-Family Housing Processing Division, Rural Housing Service, U.S.

Department of Agriculture, Room 5349--South Building, Stop 0781, 1400

Independence Avenue, SW, Washington, D.C. 20250-0781, telephone (202)

720-1608.

SUPPLEMENTARY INFORMATION:

Classification

This rule has been determined to be significant for purposes of

Executive Order 12886 and therefore has been reviewed by the Office of

Management and Budget (OMB).

Paperwork Reduction Act

The reporting requirements contained in this regulation have been

approved by the Office of Management and Budget under OMB Control

Number 0575-0045. A Notice of Request for Extension of a Currently

Approved Information Collection was published in the Federal Register

(63 FR 28984) on May 27, 1998. This Notice did not contain the new

provision of the regulation. Therefore, in accordance with the

Paperwork Reduction Act of 1995, RHS is opening a 60-Day

[[Page 57933]]

comment period on the paperwork burden associated with this regulation.

Abstract: The Rural Housing Service (RHS) is authorized under

Section 514, 516, and 521 of Title V of the Housing Act of 1949, as

amended, to make initial and subsequent loans and grants to provide

housing and related facilities for domestic farm labor. A loan only can

be made to a farmowner, family farm partnership, family farm

corporation, or an association of farmers whose farming operations

demonstrate a need for farm labor housing and that is engaged in

agricultural or aquacultural farming operations and which will own the

housing and operate it on a nonprofit basis. A loan and/or grant can be

made to public, private nonprofit organizations for domestic farm labor

in areas where need exists. In some cases, rental assistance may be

provided to eligible tenants.

RHS has the responsibility of assuring the public that funds for LH

projects are financed to build, buy, improve, or repair farm labor

housing and related facilities. The facilities financed are to have

decent, safe and sanitary living conditions and are managed and

operated as mandated by Congress. 7 CFR part 1944, subpart D was issued

to set forth the policies and procedures and delegation of authority

for making initial and subsequent insured loans under Section 514 and

grants under Section 516 to provide housing and related facilities for

domestic farm labor and to assure that applicable laws and authorities

are carried out as intended.

With the provison of this regulation, RHS will be able to provide

the financial assistance and necessary guidance to applicants in the

development of their project proposals. It provides the Agency the

capacity to meaningfully evaluate the feasibility of the proposed

projects RHS will be able to assure Congress and the general public

that all LH projects will be operated for purposes that are intended,

and for the benefit of those they are mandated to serve.

There are no new requirements with this rule. However, it does

restructure the submission of applicant information and supporting

documentation for the proposed facility to be financed with RHS

assistance. It also changes the timing of the submissions. For example,

with a competitive NOFA system, we can be more applicant-friendly by

requesting only essential information that responds to the selection

criteria up front, relying on applicant certifications for eligibility,

market, environmental data, and leverage. Only those applicants

preliminarily selected under the competitive process would have to

submit the specific information the agency would use in underwriting

and approving the application.

The required information is collected on a project-by-project basis

and is done so in accordance with the amended Housing Act of 1949, so

that RHS can provide guidance and be assured of compliance with terms

and conditions of loan, grant, and or subsidy agreements.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 11 hours per response.

Respondents: Farms, Not-for profit Institutions, and State, Local

or Tribal Government.

Estimated Number of Respondents: 95.

Estimated Number of Responses per Respondent: 8.

Estimated Total Annual Burden on Respondents: 8,610 hours.

Copies of this information collection can be obtained from Michele

Brooks, Regulations and Paperwork Management Branch, Support Services

Division, as (202) 692-0036.

Comments are invited on: (a) whether the proposed collection of

information is necessary for the proper performance of the functions of

RHS, including whether the information will have practical utility; (b)

the accuracy of RHS's estimate of the burden of the proposed collection

of information including the validity of the methodology and

assumptions used; (c) ways to enhance the quality, utility and clarity

of the information to be collected; and (d) ways to minimize the burden

of the collection of information on those who are to respond, including

through the use of appropriate automated, electronic, mechanical, or

other technological collection techniques or other forms of information

technology.

All responses to this notice will be summarized, included in the

request for OMB approval, and will become a matter of public record.

Comments should be submitted to the Desk Officer for Agriculture,

Office of Information and Regulatory Affairs, Office of Management and

Budget, Washington, DC 20503 and to Michele Brooks, Regulations and

Paperwork Management Branch, U.S. Department of Agriculture, Rural

Development, STOP 0742, 1400 Independence Ave. SW, Washington, DC

20250.

Civil Justice Reform

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. In accordance with this rule: (1) All state and local

laws and regulations that are in conflict with this rule will be

preempted; (2) no retroactive effect will be given to this rule; and

(3) administrative proceedings in accordance with 7 CFR part 11 must be

exhausted before bringing suit in court challenging action taken under

this rule.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.

L. 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, RHS

generally must prepare a written statement, including a 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 RHS 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 rule contains no Federal mandates (under the regulatory

provisions of title II of the UMRA) for State, local, and tribal

governments or the private sector. Therefore, this rule is not subject

to the requirements of sections 202 and 205 of the UMRA.

National Performance Review

This regulatory action is being taken in part as a result of the

National Performance Review program to eliminate unnecessary

regulations and improve those that remain in force.

Programs Affected

The affected program is listed in the Catalog of Federal Domestic

Assistance under number 10.405, Farm Labor Housing Loans and Grants.

Intergovernmental Consultation

For the reasons set forth in the Final Rule related Notice to 7 CFR

part 3015, subpart V, this program is subject to Executive Order 12372

which requires intergovernmental consultation with State and local

officials. RHS has conducted intergovernmental consultation in the

manner delineated in RD Instruction 1940-J.

Environmental Impact Statement

This document has been reviewed in accordance with 7 CFR part 1940,

subpart G, ``Environmental Program.'' It is the determination of RHS

that this

[[Page 57934]]

action does not constitute a major Federal action significantly

affecting the quality of the human environment and in accordance with

the National Environmental Policy Act of 1969, Pub. L. 91-190, an

Environmental Impact Statement is not required.

Regulatory Flexibility Act

This proposed rule has been reviewed with regard to the

requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The

undersigned has determined and certified by signature of this document

that this rule will not have a significant economic impact on a

substantial number of small entities since this rulemaking action does

not involve a new or expanded program nor does it require any more

action on the part of a small business than required of a large entity.

Background/Discussion

The farm labor housing program has two authorities in Title V of

the Housing Act of 1949: section 514 (42 U.S.C. 1484) for loans and

section 516 (42 U.S.C. 1486) for grants. The program also has tenant

subsidies (rental assistance, or RA) available through section 521 (42

U.S.C. 1490a). The loans and grants authorized in sections 514 and 516

are the only sources of direct Federal financing available to public

and private nonprofit organizations to construct housing and related

facilities for America's farmworkers.

Both ``off-farm'' and ``on-farm'' housing are financed by the LH

program. Off-farm housing is financed with loans and grants to

nonprofit organizations (broad based, community development agencies)

or to public agencies (such as local housing authorities). Housing

built typically looks like conventional apartment complexes; however,

occupancy is restricted to farmworkers. Rental assistance is available

to occupants to assure unit affordability. On-farm housing is financed

only with loans to a farmer or farm entity. Housing built typically is

a single family dwelling unit. Occupancy is restricted to farmworkers

or a farmworker family with at least one member of the household

employed by the farm. No tenant subsidies are available. As provided by

the authorizing statute, section 514 loans are subsidized to all

borrowers with a one percent interest rate. Occupancy in both types of

labor housing is restricted to United States citizens or legally

admitted aliens.

The Rural Housing Service (RHS) proposes to revise current

regulations for the LH program by establishing a competitive selection

process for awarding funds to applicants for off-farm housing

complexes. As the demand for program funds has steadily increased, it

has become apparent that the first-come, first-served funding process

in the current regulations is no longer a practical way of allocating

funds for the construction of new off-farm units. It precludes setting

priorities in awarding funds and has created long waiting periods by

applicants for funds. On-farm housing will continue to be funded on a

first-come, first-served basis, as the demand for these funds is more

limited. Subsequent loans for repair and rehabilitation of existing LH

facilities will be funded from a National Office reserve as needed.

Several factors have contributed to the increasing disparity

between available funding in the LH program and demand. First, there is

a large unmet demand for the program. Second, the Agency's efforts to

encourage the development of LH units in underserved areas through

technical assistance contractors has increased the number of

applications from areas with a high farmworker population and limited

housing. And finally, a growing number of existing LH units need

upgrading and repair. Rehabilitation needs further strain the Agency's

capacity to respond to requests for new facilities.

In the early 1990's, the application process took from 12 to 18

months from initial contact to obligation of funds. The increasing

number of applications and declining amount of funds has increased the

waiting period from initial contact to obligation of funds for some

applicants. While the proposed regulations will not change the fact

that some applicants may have to wait a year or more for funding, they

will allow the Agency to prioritize funding to assure the highest

priority applicants are funded as quickly as possible and reduce the

burden on those not selected by returning applications not likely to be

funded.

The Agency has spent considerable time assessing the different

approaches to a competitive process and has informally solicited views

from potential applicants on the proposed process. Potential applicants

have indicated that they have limited funds to develop applications and

do not have the resources to spend on market analyses, architectural

and engineering services, and purchase of land unless they can be

reimbursed for these expenses in a timely manner. Generally, these

costs are eligible for inclusion in the loan or grant. Accordingly, RHS

proposes to improve the application process by establishing a system

that will move quickly to determine the highest priority proposals to

be funded, to underwrite the application, and then to obligate funds

within the same fiscal year.

Concerning the selection criteria within the competitive process,

current and potential applicants and others familiar with the program

have offered the following views which have been taken into account in

the proposed regulation:

Funds must continue to be available to serve areas with

traditionally high use of the program and high farmworker populations

based on local studies.

Areas without a large concentration of farmworkers may

have an unmet need for housing for farmworkers.

Leveraged funds are needed to stretch LH resources and

must be available within a timely manner to assure project feasibility.

Not all areas or applicants have access to other

resources, so other criteria are needed to balance leveraging.

Community support is important for leveraging and zoning,

but such support should not be a selection criterion.

Given fund availability, the selection process should be

done at the National level.

Preference needs to be given to outstanding applications

in the initial years of the new application process.

The Agency is particularly interested in comments and

recommendations on the selection criteria and their relative weights.

With a national competitive process, selection criteria would ideally

compare different states and communities within the states and their

relative needs for farmworker housing. However, reliable sources of

national data are limited and, in order for the selection criteria to

remain objective, the applicant's proposal must be able to be

substantiated by reasonably available data. The proposed approach

relies on the state's Consolidated Plan (used by states for housing

needs funded by HUD), the state government's assessment of need for

farmworker housing within the state, or other indicators of need

identified in the notice of funding availability (NOFA). In the absence

of state support and identification of need for such housing, are there

other sources of information and indicators of need that the Agency

could use as a fair selection criteria so that the program will reach

proposals for high need areas within the state?

The Agency is interested, as well, in comments on the selection

criterion providing 10 additional points to applications with leveraged

funds from agriculture producers. Its purpose is to

[[Page 57935]]

encourage partnerships and support from the producers, who benefit by

having good housing available to their farmworkers, even though no

preference can be given to the workers of any individual producer or

group of producers.

Under the proposed regulations, the Agency outlines a three-part

process under a NOFA system. Annually, the Agency will announce the

availability of funds and provide a timeframe for applicants to submit

proposals (generally ranging from 45 to 90 days, depending on when

funds are appropriated). The proposal must contain basic information on

the applicant and the proposed housing complex to assure the applicant

is eligible and the proposal feasible. Also, applicants will be asked

to provide information that responds to the selection criteria. Points

will be awarded for the selection criteria as specified in the

regulation, and applications will be ranked in point score order. Those

meeting the basic eligibility and feasibility requirements and ranking

high enough to fall within the available funds will be requested to

submit an initial application. Upon review and approval of the initial

application, which includes comprehensive detail on the housing

proposal, the Agency will request final documentation for application

approval. Through this process, only applicants with a high potential

for funding approval will be developing a complete application.

Moreover, funding should be available within the fiscal year for all

applicants invited to develop a complete application. However, to

assure full use of funds, some applicants will also be selected as

back-ups in case the selected proposals cannot meet the application

submission schedule or are disapproved upon review of their

application. Those applicants not selected will be advised of the

reasons why and will be given the opportunity to reapply the following

year.

Implementation Proposal

When the final rule becomes effective, the Agency will change from

its current method of accepting loan requests to a NOFA system. The

Agency anticipates publishing a final rule as soon as possible in FY

1999 to use FY 1999 funding. Under the current method, loan requests

may be submitted throughout the year and are kept on hand until funds

are available. Under the NOFA system, the amount of funds and

application deadlines will be announced each funding cycle in the

Federal Register. Loan requests will be reviewed and selected based on

objective criteria in accordance with the revised regulations. Loan

requests not selected for funding will be returned to the applicant.

The Agency proposes to advise LH applicants that have an unfunded

application on hand at the end of FY 1998 that they are subject to the

competitive process. The Agency requests comments on its intention to

give points under the selection criteria for two years to applications

that were issued an AD-622, ``Notice of Preapplication Review Action,''

inviting a formal application or had been reviewed and authorized by

the National Office as of the publication date of this proposed rule.

Furthermore, if a new proposal is submitted that ranks higher than an

existing application or proposal under the selection criteria, the

Agency will select it over the existing one.

Proposals on hand that have not been issued an AD-622 or reviewed

and authorized by the National Office as of the publication date of

this proposed rule will be returned to the applicant. Loan requests

thus returned may, of course, be submitted for consideration when the

NOFA is published.

List of Subjects

7 CFR Part 1940

Administrative practice and procedure, Agriculture, Grant

programs--Housing and community development, Loan programs--

Agriculture, Rural areas.

7 CFR Part 1944

Grant programs--Housing and community development, Loan programs--

Housing and community development, Migrant labor, Nonprofit

organizations, Public housing, Rent subsidies.

Therefore, chapter XVIII, title 7, Code of Federal Regulations is

proposed to be amended to read as follows:

PART 1940--GENERAL

1. The authority citation for part 1940 continues to read as

follows:

Authority: 5 U.S.C. 301, 7 U.S.C. 1989, and 42 U.S.C. 1480.

Subpart L--Methodology and Formulas for Allocation of Loan and

Grant Program Funds

2. Section 1940.579 is revised to read as follows:

Sec. 1940.579 Multiple Family Housing appropriations not allocated by

State.

Funds are not allocated to States. The following program funds are

kept in a National Office reserve and are available as determined

administratively:

(a) Section 514 Farm Labor Housing Loans.

(b) Section 516 Farm Labor Housing Grants.

PART 1944--HOUSING

3. The authority citation for part 1944 continues to read as

follows:

Authority: 5 U.S.C. 301; 42 U.S.C. 1480.

Subpart D--Farm Labor Housing Loan and Grant Policies, Procedures,

and Authorizations

4. Section 1944.153 is amended in the definition of ``Domestic farm

laborer'' by revising the words ``FmHA or its successor agency under

Public Law 103-354'' to read ``Rural Development''; in the definition

of ``Farm owner'' by revising the words ``subpart A of part 1944'' to

read ``this section''; in the definition of ``Self-employed'' by

revising the words ``District or State Director'' to read ``Loan

Official or State Director'' and the words ``FmHA or its successor

agency under Public Law 103-354'' to read ``Rural Development''; in the

definition of ``Substantial portion of income'' by revising the two

occurrences of the words ``FmHA or its successor agency under Public

Law 103-354'' to read ``Rural Development''; and by adding in

alphabetical order definitions to read as follows:

Sec. 1944.153 Definitions.

Agency. The Rural Housing Service, an agency of the U.S. Department

of Agriculture which administers section 514 loans and section 516

grants.

* * * * *

Consolidated Plan. A plan developed by a community or state,

addressing community planning and development that is used to support

requests for assistance from the Department of Housing and Urban

Development.

* * * * *

Farm. A tract or tracts of land, improvements, and other

appurtenances considered to be farm property which is used or will be

used in the production of crops or livestock, including the production

of fish under controlled conditions, for sale in sufficient quantities

so that the property is recognized as a farm rather than a rural

residence. It may also include a residence which, although physically

separate from the farm acreage, is ordinarily treated as part of the

farm in the local community.

* * * * *

[[Page 57936]]

HUD. The U.S. Department of Housing and Urban Development.

* * * * *

LH. Farm Labor Housing.

* * * * *

MFH. Multi-Family Housing.

* * * * *

Needs assessment. A housing needs assessment completed by the state

government.

NOFA. Notice of funds availability.

* * * * *

Off-Farm Labor Housing. Housing for farm laborers regardless of the

farm where they work.

On-Farm Labor Housing. Housing for farm laborers specific to the

farm where they work.

* * * * *

RHS. Rural Housing Service.

* * * * *

5. Section 1944.164 is amended in the introductory text of

paragraph (d) in the first sentence by revising the words ``District

Director'' to read ``Loan Official'' and the words ``FmHA or its

successor agency under Public Law 103-354'' to read ``RHS''; in

paragraph (d)(1)(i) by revising the words ``FmHA or its successor

agency under Public Law 103-354'' to read ``RHS''; and by revising

paragraph (b) to read as follows:

Sec. 1944.164 Limitations and conditions.

* * * * *

(b) Maximum amount of grant. The amount of any grant may not exceed

the lessor of:

(1) Ninety percent of the total development cost, or

(2) That portion of the total cash development cost which exceeds

the sum of any amount the applicant can provide from its own resources

plus the amount of a loan which the applicant will be able to repay,

with interest, from income from rentals within the reach of low-income

farmworker families. The availability of rental assistance and HUD

section 8 subsidies will be considered in determining the rentals that

farmworkers will pay.

* * * * *

6. Section 1944.169 is amended by revising paragraph (a)(1) to read

as follows:

Sec. 1944.169 Technical, legal, and other services.

(a) * * *

(1) When real estate is taken as security, the property will be

appraised by a RHS employee authorized to make real estate apppraisals.

* * * * *

7. Section 1944.170 is amended by redesignating paragraphs (b) and

(c) as (f) and (g) respectively; in newly redesignated paragraph (f) by

revising all occurrences of the words ``District Director'' to read

``Loan Official'' and revising the two occurrences of ``an'' to read

``a''; in newly redesignated paragraph (g)(5)(i) by revising the

reference ``Sec. 1944.164(b)(2)'' to read ``Sec. 1944.164(b)''; in

newly redesignated paragraph (g)(5)(ii)(B) by revising the words ``an

LH loan'' to read ``a LH loan''; in newly redesignated paragraph

(g)(5)(ii)(C) by revising the reference ``paragraph (c)(5)(ii)(A)'' to

read ``paragraph (g)(5)(i)''; and by revising the heading, the

introductory paragraph, paragraph (a), and newly redesignated paragraph

(g)(7), and by adding new paragraphs (b) through (e) to read as

follows:

Sec. 1944.170 Application requirements and processing.

A three-stage application process will be used for new units in

off-farm facilities. The first stage consists of a project proposal

submitted by the applicant when the availability of funds is announced

in the Federal Register. The project proposal is basic information that

is used by the Agency to score and rank proposals and to determine

preliminary eligibility. Applicants with the highest ranked proposals

will be requested to submit a preapplication with more detailed

information for underwriting (stage two). If the preapplication is

determined eligible and feasible, the applicant will be invited to

submit an application package (stage three). Loan requests for repair

and rehabilitation of off-farm units and new units of on-farm housing

will begin with the preapplication stage in accordance with paragraph

(f) of this section. On-farm housing proposals will be processed on a

first-come, first-served basis. Subsequent loans for repair and

rehabilitation of existing LH facilities will be funded from a National

Office reserve as needed.

(a) Project proposals for new units in off-farm facilities. (1) The

Agency will publish NOFA annually in the Federal Register with

deadlines for submitting project proposals. The notice will include the

amount of funds available, any limits on the amount of individual loan

and grant requests, the Agency's approach to assuring geographic

diversity in the use of loan and grant funds, and the loan scoring

criteria.

(2) Project proposals will be submitted in accordance with NOFA.

Applicants will be required to provide the following information to

describe their proposal and organizational structure which will be used

by the Agency to determine preliminary eligibility and to score and

rank proposals:

(i) Description of the project, including:

(A) The location of the project, including a description of the

site, the availability of water, sewer, and utilities, and proximity to

community facilities and services.

(B) Description of the proposed development, including the number

of units by bedroom type, amenities such as carpets and drapes, related

facilities such as a laundry room or community room, and other

facilities providing supportive services in connection with the housing

and the needs of the prospective tenants such as a health clinic or day

care facility.

(C) An economic feasibility analysis demonstrating the financial

viability of the proposal, including the proposed rent structure, loan

and grant ratio and need for rental assistance.

(D) Development time line.

(E) A description of the intended market area and a need and demand

analysis in accordance with paragraph I.B. of Exhibit A-1 of this

subpart.

(F) Development budget, including total and per unit cost.

(G) Evidence of site control, such as an option or sales contract.

(H) Description of any anticipated environmental issues based on a

preliminary review.

(ii) Description of proposed financing, including:

(A) Amount of Agency funds requested.

(B) Information on leveraged funds, including the source, type,

amount, rates and terms, and commitment status. To count as leveraged

funds for purpose of the selection criteria:

(1) The funding date of the leveraged funds will permit processing

of the loan request within the current funding cycle (the latest

funding date for leveraged funds will be announced in NOFA), and

(2) The interest cost to the project using leveraged loan funds may

not exceed the cost of 100 percent LH loan financing.

(3) For donated land to be scored as leveraged assistance, all of

the following conditions must be met:

(i) Based on a preliminary review, the land is suitable and meets

Agency requirements. Final site acceptance is subject to a completed

environmental review.

(ii) Site development costs do not exceed what they would be to

purchase and develop an alternative site.

(iii) The overall cost of the project is reduced by the donation of

the land.

(iii) Preliminary documentation of the applicant's eligibility,

including:

[[Page 57937]]

(A) Applicant name and type of organization, including contact

person and title.

(B) Statement by applicant of its general financial condition.

(C) Statement of housing experience.

(iv) Any additional information specified in NOFA necessary to

score and rank the applicant's proposal under the selection criteria.

(b) Preliminary eligibility assessment of project proposals. The

Agency will make a preliminary eligibility assessment using the

following criteria:

(1) The project proposal was received by the submission deadline

specified in NOFA;

(2) The project proposal is complete as specified in NOFA;

(3) The applicant is an eligible entity and is not currently

debarred, suspended, or delinquent on any Federal debt; and

(4) The proposal is for authorized purposes.

(c) Scoring and ranking project proposals. The Agency will score

and rank off-farm project proposals for new units that meet the

criteria of paragraph (b) of this section.

(1) The following criteria as specified in NOFA will be used to

score project proposals:

(i) The presence and extent of leveraged assistance, including

donated land, for the units that will serve program eligible tenants at

basic rents comparable to those if RHS provided full financing.

Eligible types of leveraged assistance include loans and grants from

other sources, contributions from the borrower, and tax abatements or

other savings in operating costs provided that, when the benefit is no

longer available, the basic rents are comparable to or lower than the

basic rents if RHS provided full financing. Scoring will be based on

the presence and extent of leveraged assistance for each proposal

compared to the other proposals being reviewed, computed as a percent

of the total development cost of the units. A total monetary value will

be determined for leveraged assistance such as tax abatements or

services in order to compare such items equitably with leveraged funds.

As part of the loan application, the applicant must include specific

information on the source and value of the services for this purpose.

Proposals will then be ranked in order of the percent of leveraged

funds and assigned a point score accordingly. (0 to 20 points)

(ii) The proposed units will be developed in a place identified in

the state Consolidated Plan, a needs assessment prepared by the state

government, or other indicator of need (as published in NOFA) as a high

need community for farmworker housing. (20 points)

(iii) The loan request is in support of an Agency initiative

announced in NOFA. (0 to 20 points)

(iv) The housing proposal includes support services (such as health

or child care) on-site, or the proposed housing complex is planned to

be adjacent to such services in the community and the services are made

available to the residents at an affordable cost under a cooperative

agreement. (5 points for one service; 10 points for two or more

services)

(v) The proposal reflects a minimum of 10 percent private

agriculture producer contribution to the total development cost as

leveraged funds (meeting the same timing and commitment requirements as

other leveraged funds). (10 points over and above the points awarded

under paragraph (c)(1)(i) of this section)

(vi) Projects whose occupants will derive the highest percentage of

their income from on-farm agriculture work, compared to the other

proposals being reviewed. (0 to 10 points)

(vii) Market areas not previously served by LH projects. (10

points)

(viii) Seasonal, temporary, or migrant housing. (5 points for up to

50 percent of the units; 10 points for 51 percent or more)

(ix) For Fiscal Year 1999 and Fiscal Year 2000 funding cycles,

outstanding applications or loan requests that were issued an AD-622,

``Notice of Preapplication Review Action,'' inviting a formal

application, or had been reviewed and authorized by the National Office

prior to October 29, 1998. (10 points)

(2) The Agency will rank project proposals by point score. In the

case of a point-score tie for proposals from the same State, the

proposal offering the most support services will be given priority.

Further same-State ties will be resolved by lottery.

(d) Selection of project proposals for further processing. (1)

States will make a preliminary eligibility assessment and submit the

proposals with their review comments to the National Office for

selection through the National Office selection process.

(2) The National Office will score and rank the project proposals

using the project selection criteria. For the purpose of achieving

geographic or program diversity, the Agency reserves the right to

select a loan request with a lower point score, as published in NOFA.

(3) The Agency will not select a proposal for a new LH loan in an

area with competing or problem projects when:

(i) The Agency has selected another LH proposal in the same market

area for further processing;

(ii) A previously authorized or approved Agency, HUD, or similar

assisted MFH project in the same market area serving farmworkers has

not been completed or reached its projected occupancy level; or

(iii) An existing Agency, HUD, or similar assisted MFH project in

the same market area serving farmworkers is experiencing high vacancy

levels, unless such vacancy is planned as part of the occupancy cycle

of a seasonally-operated migrant farmworker facility.

(4) The National Office will notify States of the proposals that

have been selected and those that may be held as a back-up in the event

a selected proposal is later withdrawn or rejected.

(5) Preapplications submitted by selected applicants will be

processed in accordance with paragraph (f) of this section. If any

selected preapplications cannot meet the processing deadlines

established by the Agency to enable processing and fund obligation

within the current funding cycle, or if requested leveraged funds are

not received within the timeframe established in the NOFA, the Agency

will select the next ranked proposal for processing.

(e) Notification to applicants. States will notify all applicants

of the results of the selection process.

(1) Applicants selected for further processing will be sent a

letter inviting them to submit a preapplication package consisting of

SF 424.2, ``Application for Federal Assistance (For Construction),''

and the information outlined in exhibit A-1 or A-2 of this subpart, as

applicable. The applicant should be advised not to prepare a final

application until notified to proceed.

(2) Applicants selected as back-ups will be sent a letter advising

them that their proposal will be kept on hand in the event a selected

proposal is withdrawn or rejected in the current funding cycle. Back-

ups not processed in the current cycle will be returned to the

applicant.

(3) Project proposals not selected for further processing,

including incomplete proposals or those that failed to meet the NOFA

requirements, or those that could not be reached because of

insufficient funds, will be returned to the applicant with the reason

they were not selected.

* * * * *

(g) * * *

(7) After completing review of the preapplication material and

determining

[[Page 57938]]

the amount of grant, the State Director will notify the Loan Official

of the State Director's determination and authorize the Loan Official

to prepare and execute Form AD-622. The Loan Official will forward the

original to the applicant, a copy to the State Director, and a copy to

the case file.

8. Exhibit A to subpart D is amended by revising the first

paragraph to read as follows:

Exhibit A to Subpart D--Labor Housing Loan and Grant Application

Handbook

* * * * *

The section 514 Labor Housing loan and section 516 Labor Housing

grant programs are administered by the Rural Development's Rural

Housing Service (RHS), herein referred to as the Agency. Interested

parties are advised to contact any Rural Development office

processing Labor Housing (LH) loans and grants to obtain information

on program and application requirements prior to developing an

application. A notice of the availability of funds (NOFA) for off-

farm facilities will be announced annually in the Federal Register,

along with application requirements and the deadline for applying.

Requests received during the application period will be selected

competitively, based on the objective selection criteria in the

regulation and announced in the NOFA. Applications for on-farm

facilities are accepted any time during the year and are funded on a

first-come, first-served basis, based on the availability of funds.

* * * * *

9. Exhibit A-1 to subpart D is amended by revising the introductory

paragraph of section I.B. and paragraph I.B.3 to read as follows:

Exhibit A-1 to Subpart D--Information to be Submitted by Organizations

and Associations of Farmers for Labor Housing Loan or Grant

I. Information to be submitted with SF 424.2 (for preapplication

submission).

* * * * *

B. * * *

A preliminary survey should be conducted to identify the supply

and demand for LH in the market area. The market area must be

clearly identified and may include only the area from which tenants

can reasonably be drawn for the proposed project. The applicant must

provide documentation to justify need within the intended market

area. The market survey should address or include the following

items:

* * * * *

3. General information concerning the type of labor intensive

crops grown in the area and prospects for continued demand for farm

laborers (i.e., prospects for mechanization, etc.). Information may

be available from the local U.S. Department of Agriculture (USDA)

Cooperative, State, Research, Education and Extension Service office

or from the Farm Service Agency.

* * * * *

Dated: October 22, 1998.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 98-28995 Filed 10-28-98; 8:45 am]

BILLING CODE 3410-XV-U