Obediah G. Baker
Deputy Administrator
Multifamily Housing Programs
Rural Housing Service, USDA
Washington, D.C.
Addressing CARH:
“What’s up with the 3560 regulation?”
The first question I was asked when I walked into the room today was:
“What’s up with the 3650 regulation?” Well, it’s not 3650, it’s 3560.
The
next question was: “Last year you told us you would have it out for Proposed
Rule Making before the end of the Fiscal Year. What happened?” Well, we have
good news this year, because it has cleared the Department, and right now we
are preparing the package to send it to OMB.
We had some serious hitches with the Department, primarily with the Office of
Budget and Planning Analysis on budget issues, and ultimately we struck a deal
so the regulation can move forward. The Secretary has signed it, and it is
just a matter of getting it transmitted physically and electronically from the
Department to OMB. That’s where we are.
We can usually work with OMB to speed up the process because we’ve been
working with them a long time. From all indications, the Desk Officer over at
OMB is just as anxious to get this out as we are. There’s a strong
possibility that he will have this out on the street before the Fiscal Year’s
end, on September 30, 2002, but it will be for Proposed Rule. It’s likely to
have a 60-day comment period; please look at it closely. I’m sure you’re
going to look for your tracks as a result of the Stakeholders Meetings and
your involvement.
Please feel free to be candid in making your comments.
538 Status
Another bit of good news is that we issued invitations as a result of
responses to the 538 Guarantee program. This year we received responses in
excess of $131 million. We have authorization for about $100 million. In 1997
we did have what we call “No Year dollars” with about $31 million left over, and that has carried over. In addition to the $100 million in subscriptions that
we received this year, it’s likely we’ll be able to fund most of the ones
that we invited packages for.
Just a word of encouragement: We’ve sent our state offices letters to
contact those of you who have applied through the 538 Guarantee program.
We’ve given you a 90-day turnaround, and I urge you please to pull your information
together to put us in the position to obligate the dollars before September
30. Last year we only obligated about $1.1 million of the $100 million in the
program due to a legal technicality. That technicality is the end of
the Fiscal Year. We had an onslaught of responses to the
538 NOFA in the middle of August, although we had it open most of the year. Shortly after we
formalized the Memorandum of Understanding with Freddie Mac, the floodgates
just opened and hit us. Under the requirements of the
National Environmental Protection Act, we have to go through a process of
publishing and quite a few steps. We just didn’t have the time to actually
legally obligate those Guarantees.
Need to Obligate
We went to the Undersecretary with these comments: We can obligate those
dollars and answer later to OIG and GAO on why we did it, or we can not
obligate the dollars and answer to the Industry as well as to the Congress
on why we didn’t use the money. I recommended the latter, and that’s why you
saw only $1.1 million. It’s not that the program isn’t desirable and
attractive, and not that we didn’t have the subscription for it — we hit a legal
snag. This year we’re on top of it. That’s the reason I’m urging you, if
you have a package, if you receive a letter from me, please turn it around.
If it won’t fly this fiscal year, let us know and we’ll go to another on the
list.
515 New Construction
On 515, we had $49 million for new construction loans. The NOFA closed
April 26th. Last week we issued a Decision Memo regarding those applications
we selected. If your respective States have not contacted you that you were
selected in response to the NOFA, a notification will be forthcoming.
Hopefully they did inform you as to what’s going on. The selections — from seventy applications totaling $48.2 million — were
announced June 5th. Of the
projects selected, six are located on Indian Reservations on Tribal Lands in
Alaska, Arizona, Idaho and South Dakota, two were in Colonias in Texas and New
Mexico, and fourteen are in EZ/EC communities. We also selected twelve non-Rental
Assistance properties this year. On the rehab side, we selected 88 requests,
totaling $49.3 million.
There have been a lot of questions raised about whether 538 will replace 515. I don’t know. That’s
an old issue. It was the original intent and it is still the
intent for it not to replace 515. It was designed to essentially address the
market that we couldn’t address with 515 only. These transactions are highly
leveraged and the more soft money put into the 538 transactions, the
farther we can reach into communities and the lower we can reach in terms of income
strata. But in no way is it a program exactly like the 515 program.
In terms of funding for 515, old programs are receiving a lot of
attention on the Hill. What are our chances of getting an increase in
funding? I’m not in a position to speculate. I can apprise you that whenever
I’m asked whether or not the estimates projected for the 2003 Fiscal Year
in the President’s Budget are enough for new
construction, my response is that based upon the subscriptions we have on
hand, prior activities, and the need out there, the arithmetic is not there.
We look forward to a continued relationship with CARH.
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