Rural Housing Service Accepting Applications for Multifamily Preservation and Revitilization (MPR)

On August 3, 2015, the Rural Housing Service published a Notice in the Federal Register announcing the timeframe to submit applications to participate in a demonstration program to preserve and revitalize existing Rural Rental Housing (RRH) projects under Section 514, Section 515, and Section 516 of the Housing Act of 1949. Under this program, existing Section 515 Multi-Family Housing (MFH) loans and Sections 514/516 Off-Farm Labor Housing (FLH) will be restructured to ensure sufficient resources are available to preserve the ability of rental projects to provide safe and affordable housing for very low, low, or moderate income residents. Projects participating in this program will be expected to be revitalized to extend their affordable use without displacing tenants due to increased rents. No additional Agency Rental Assistance (RA) will be made available under the program.

 

Application deadlines for the demonstration program are:

1. For MPR applications requesting debt deferral of eligible Section 514 or 515 loans, plus other MPR funding tools, complete applications must be received no later than 5:00 PM Eastern Time, December 1, 2015; and
2. For any MPR applications requesting debt deferral only for eligible Section 514 or 515 loans, applications may be submitted on an ongoing basis through COB 5:00 PM Eastern Time, December 31, 2015.

Fax and postage-due pre-applications will not be accepted. The address to which the applications must be sent is:

Multi-Family Housing Preservation and Direct Loan Division

STOP 0782 (Room 1263-S)

U.S. Department of Agriculture

Rural Development

1400 Independence Avenue SW

Washington, DC 20250-0782

 

Attn: Dean Greenwalt or Abby Boggs

 

Additional points will be awarded to pre-applications for projects in or serving census tracts with poverty rates greater than or equal to 20 percent.

 

Program Description

 

The intent of the MPR demonstration program is to ensure that existing rental projects will continue to deliver sound affordable rental housing for 20 years, the remaining term of any Agency loan, or the remaining term of any existing Restrictive-Use Provisions (RUP) or prohibition, whichever ends later. Upon written notification to the Agency from the selected applicant of their acceptance to participate, an independent third party Capital Needs Assessment (CNA) will be conducted to determine capital needs.

 

One of the MPR tools to be used in this program is debt deferral for up to 20 years of the existing loan obligated prior to October 1, 1991. The cash flow from the deferred payment will be deposited to the reserve account to help meet future physical needs of the project, support new debt, or to reduce rents.

 

In addition to debt deferral, other MPR funding tools include:

1. MPR Grants: Grants will be limited to non-profit borrowers only, and will be limited to the cost of correcting health and safety violations identified by the CAN.
2. Zero Percent Loan;
   1. For Section 515 Projects, the maximum loan term is 30 years amortized over a maximum term of 50 years.
   2. For Section 514/516 projects, the loan will be amortized over a maximum term of 33 years.
3. Soft-Second Loan: A loan with a one percent interest rate that will have its accrued interest and principal deferred to a balloon payment. The balloon payment will be due at the same time the latest maturing loan already in place at the time of closing, or the maturity date on any current loan being re-amortized as part of the restructuring, is due.

MPR funds cannot be used to build community rooms, add additional parking areas, playgrounds, laundry rooms or additional new units, unless the additional units are needed for the project to meet the Section 505 five percent fully accessible requirement.

 

Award Information

 

Pre-applications selected under this Notice must be approved by the Agency no later than December 31, 2017. Applicants not approved under this Notice may apply for funding under future Notices. Applicants should be aware that unfunded applications carried over from prior Notices may receive priority consideration under this Notice.

 

Eligibility Requirements

 

Applicants must meet the following requirements:

1. All applicants must make the required equity contribution for any new Section 515 loan. The continued ability of the borrower to provide acceptable management is also required. This will include an evaluation of any current deficiencies. Any outstanding violations or extended open findings will preclude further processing of any MPR applications associated with the borrower as well as any affiliated entity having a ten percent or more ownership interest unless there is a current, approved workout plan in place and the plan has been satisfactorily followed for a minimum of six consecutive months.
2. For Section 515 projects, the average physical vacancy rate for the 12 months preceding August 3, 2015, can be no more than ten percent for projects with 16 or more revenue producing units and no more than 15 percent for projects with fewer than 16 revenue producing units unless an exception applies. If a project consolidation is involved, the consolidation will remain eligible as long as the average vacancy rate for each individual project meets the occupancy standard noted above.
3. For Section 514/516 projects, rather than an average physical vacancy rate, a positive cash flow for the previous three full years of operation is required unless an exception applies.
4. Ownership of, and ability to operate the project after the transaction is completed.
5. An Agency approved CAN.
6. All grant-eligible applicants must obtain a Dun and Bradstreet Data Universal Numbering System (DUNS) number and register in the Central Contractor Registration (CCR) prior to submitting a pre-application.

 

Pre-applications may be submitted either electronically or in hard copy. Electronic pre-applications will be recorded based on the actual date and time received in the MPR Web site mail box. Assistance for filing electronic and hard copy pre-applications can be obtained from any Rural Development State Office.

 

All borrowers with Section 514, 515, or 516 loans that are interested in the demonstration program should obtain a copy of the Federal Register Notice