[Code of Federal Regulations]

[Title 7, Volume 15]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR3560.66]



[Page 493-494]

 

                          TITLE 7--AGRICULTURE

 

     CHAPTER XXXV--RURAL HOUSING SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 3560_DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS--Table of Contents

 

               Subpart B_Direct Loan and Grant Origination

 

Sec. 3560.66  Participation with other funding or financing sources.



    (a) General requirements. The Agency encourages the use of funding 

or financing from other sources in conjunction with Agency loans. When 

the Agency is not the sole source of financing for MFH, the following 

conditions must be met.

    (1) The Agency will enter into a participation (or intercreditor) 

agreement with the other participants that clearly defines each party's 

relationship and responsibilities to the others.

    (2) The rental units that will serve tenants eligible for housing 

under the Agency's income standards must meet Agency standards and the 

number of units that will serve the Agency's tenants are at least equal 

to the units financed by the Agency.

    (3) All rental units must be operated and managed in compliance with 

the requirements of the Agency and the other sources. To the extent 

these requirements overlap, the most stringent requirement must be met. 

The Agency may negotiate the resolution of overlapping requirements on a 

case-by-case basis; however, at a minimum, Agency requirements must be 

met.

    (4) If the number of units subject to the LIHTC rent and income 

restrictions is greater than the number of units projected to receive 

Agency rental assistance (RA) or similar tenant subsidy, the market 

feasibility documentation must clearly reflect a need and demand by 

LIHTC income-eligible households financially able to afford the 

projected rents without such a subsidy for the units not receiving RA or 

similar tenant subsidy.

    (b) Rental assistance. The Agency may provide rental assistance with 

MFH loans participating with other sources of funding under the 

following conditions:

    (1) The Agency's loan equals at least 25 percent of the housing's 

total development cost.

    (2) The rental assistance is provided only to those rental units 

where the basic rents do not exceed what basic rents would have been had 

the Agency provided full financing.

    (3) The provisions of subpart F of this part are met.

    (c) Security requirements. The security requirements of Sec. 

3560.61 must be met for all Agency-financed MFH participating with other 

sources of funding.

    (d) Reserve requirements. Reserve account requirements will be 

determined on a case-by-case basis, taking into consideration the 

reserve requirements of the other participating lenders, so that the 

aggregate fully funded reserve account is consistent with the 

requirements of Sec. 3560.65. Reserve requirements and procedures for 

reserve account withdrawals must be agreed upon by all lenders and 

included in the intercreditor or participation agreement.

    (e) Design requirements. Housing and related facilities must be 

planned and constructed in accordance with 7 CFR 1924, subparts A and C. 

If housing includes non-Agency financed common facilities, the following 

conditions must be met:

    (1) The non-Agency-financed common facility's operating and 

maintenance costs must be paid through collection



[[Page 494]]



of a user fee from residents who use the facility,

    (2) The non-Agency-financed common facility must be designed and 

operated with appropriate safeguards for the health and safety of 

tenants, and

    (3) The facility must be fully available and accessible to all 

tenants.