Recent
Announcements

USDA Rural Development
Proposes New Regulations
on Self-Help and Other Topics

Section 523 Self-Help Program Proposed Regulations (comment deadline July 17)
Single-Family Thermal Standards Proposed Change (comment deadline July 16)
Multifamily Reserve Requirements Proposed Change (comment deadline June 4)

Section 523 Self-Help Program Proposed Regulations

HAC is offering to facilitate communication among people interested in learning about and discussing the possible changes. We learned on May 18 that the four technical assistance grantees are planning to coordinate communications as well, and we will work with them to avoid duplication.

• HAC's brief summary of the proposal follows.
• HAC will facilitate an e-mail discussion among interested parties, using our existing ruralhousing list. If you would like to be included in the discussion, please join the listserv (or, if you're not sure, check whether you are already a member) at http://lists.ruralhome.org or contact Leslie Strauss at leslie@ruralhome.org or 202-842-8600, ext. 141.
• HAC will post its draft comments here before the submission deadline, and will post other groups' drafts or other relevant documents on request.

HAC's brief summary of the proposed self-help regulations

• Requires a board of directors to include at least one third low-income residents, their elected representatives, or residents of a low-income community. Also, no more than one third of the members can be from the public sector.
• Establishes a competitive funding process. An annual NOFA will list the amount of grant funds available, scoring criteria, and deadlines.
• Requires a participant group to include at least five homes, to be built simultaneously in a mutual effort.
• Lowers the minimum family labor contribution from 65 percent to 50 percent, and plans to provide a more detailed labor task list in a future handbook.
• Allows grantees who meet certain criteria to operate on an ongoing, “production line” basis (rather than “grant-based”), to close out grants with incomplete units and to operate without major lapses between funding cycles. No more than 10 percent of homes can be incomplete at grant close-out.
• Limits the technical assistance cost to 15 percent of the value of a comparable area home. The TA amount, when added to the self-help cost of construction (including grants, excluding land), cannot exceed the value of the comparable home. State Directors may approve up to 20 percent if special conditions exist.
• Requires an applicant to propose only to serve an area that is not currently being served by an existing grantee other than the applicant.
• Eliminates rehabilitation and site option loans as eligible activities.
• Adds 501(c)(4) organizations as eligible grantees.
• Clarifies environmental requirements.
• Requires at least 10 percent equity for participants.
• Expands required direct or indirect homeownership counseling.
• Prohibits g rant agreement amendments to lower the number of homes to be completed.
• Adds a grantee counseling step if the organization does not meet performance goals or comply with program requirements, prior to a “High Risk” designation. Grantees who receive an unsatisfactory rating on their performance evaluation are ineligible for subsequent grants.
• Increases the pre-development grant limit from $10,000 to $15,000.

Single-Family Thermal Standards Proposed Change

USDA RD is proposing to delete its thermal standards from its regulations for existing homes being purchased with Section 502 direct or guaranteed loans. This change is intended to make RD's regulations consistent with HUD's and to remove a possible unnecessary financial burden for homebuyers. The change would not affect the thermal standards for new construction. All new single-family housing construction must comply with HUD's Minimum Property Standards, as well as national model codes adopted by the applicable jurisdiction, locality, or state.

The proposal was published in the Federal Register on May 16, 2007 and is available here.

Comments are due July 16, 2007.

Multifamily Reserve Requirements Proposed Change

USDA RD proposes changing the required contributions to reserve accounts for new construction projects funded by the Section 515 Rural Rental Housing or Section 514/516 Farm Labor Housing programs. Currently, a property owner must contribute 1 percent of total development cost each year to the property's reserve account. The new proposal would base contributions on an analysis of the life cycle costs of the project and its materials. Existing properties would not be affected.

The proposal was published in the Federal Register on April 5, 2007 and is available here.
HAC's summary of the proposal is available here.
HAC's comments are available here.

Comments are due June 4, 2007.

Posted: May 17, 2007
Last updated: July 16, 2007