RD: Proposed Rule – Multifamily Housing Section 538 Guaranteed Rural Rental Housing Prioritization Criteria – Updated

Updated February 9, 2023:

On February 7, 2023, RD held a Listening Session where this subject was briefly mentioned. Click here to view the PowerPoint that was used in the listening session. Additionally, a representative from Nixon Peabody, CARH’s General Counsel, took notes during the session, which are included here.

Please note, the Federal Register proposed rule mentioned below was included in CARH’s Electronic AN Express. To subscribe to the Electronic AN Express, click here:

On January 31, 2023, RD’s Office of Multifamily Housing issued the following information.

The Rural Housing Service Office of Multifamily Housing published a proposed rule on Tuesday, January 31, 2023 (Federal Register /Vol. 88, No. 20) to amend the current regulation for the MFH Section 538 Guaranteed Rural Rental Housing Program (GRRHP).  This proposed rule is to align the prioritization criteria for applications in the Section 538 regulations with the prioritization criteria identified in the Housing Act of 1949.

The proposed rule will remove the specific prioritization language in 7 CFR Part 3565.  This language will be replaced with the criteria of priority projects that is currently in the Housing Act of 1949.  This will position the Agency to better meet the current and future demands of the housing market.  In accordance with federal requirements, the Agency will continue to use scoring prioritization in the application evaluation process. The specific criteria for scoring will be published in the Federal Register notice and will no longer appear in the regulation.

Comments on the Proposed Rule may be submitted to the Agency as outlined in the Federal Register Proposed Rule.  The comment period for the proposed rule will end on April 3, 2023.

If implemented, the regulation will read as follows:

• 3565.5 Ranking and selection criteria
  (b) Priority will be given to projects in rural areas in which borrowers can best utilize and where loan guarantees are needed the most, as determined by the Agency based on information the Secretary considers appropriate. In addition, the Agency may, at its sole discretion, set-aside assistance for or rank projects that meet important program goals. Assistance will include both loan guarantees and interest credits. Priority projects must compete for set-aside funds. The Agency will announce the priority criteria in an announcement in the Federal Register.

Please contact Tammy Daniels, Finance and Loan Analyst, Program Support Branch at tammy.daniels@usda.gov with any questions or requests for clarification.