[Federal Register Volume 71, Number 70 (Wednesday, April 12, 2006)]
[Notices]
[Pages 18813-18821]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-3528]


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DEPARTMENT OF VETERANS AFFAIRS


Notice of Funds Availability (NOFA): Inviting Applications for 
Section 601 Loan Guarantees for Multifamily Transitional Housing

AGENCY: Department of Veterans Affairs (VA).

ACTION: Notice.

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SUMMARY: This NOFA announces the availability, submission requirements, 
and deadlines to submit applications for the VA Multifamily 
Transitional Housing Loan Guarantee Program. This is a pilot program, 
which authorizes VA to guarantee up to 15 loans with an aggregate value 
of $100 million to develop or implement housing and supportive services 
for homeless veterans. This Notice describes the commitment of program 
dollars, application process, eligibility requirements, minimum 
underwriting criteria, and evaluation criteria that VA will employ to 
select applications to receive a guarantee under the program. The 
program is authorized under Title 38 U.S.C. 2051, et. seq.
    A detailed manual outlining the standard operating procedures for 
the program and other program information can be found on the VA Web 
site: http://www1.va.gov/homeless/page.cfm?pg=8.

DATES: Applications will be accepted on an ongoing basis throughout the 
year until all funds available under the program have been committed. 
The application process is a two-staged process commencing with the 
submission of a Stage 1 application. After review and analysis of each 
Stage 1 application received, VA will invite those applicants who have 
demonstrated both eligible and feasible projects to submit the Stage 2 
application.
    VA will not accept facsimile or postage-due applications. VA 
recommends delivery by overnight carrier.
    For the purposes of this NOFA, words used in the singular may 
include the plural, and the plural may include the singular. VA 
reserves the right to cancel or withdraw this NOFA at any time.
    For a Copy of the Application Package: Stage 1 and 2 applications 
may be downloaded from the VA Multifamily Transitional Housing Loan 
Guarantee Program Web site at http://www1.va.gov/homeless/
page.cfm?pg=8. Hard copies may be obtained from VA by calling the 
program hotline at (202) 273-7462 (This is not a toll free number) or 
e-mailing Multifamily.Loan@va.gov.
    VA will be holding free informational sessions to inform the public 
of the program periodically throughout 2006. Details regarding the 
sessions can be found on the VA Multifamily Transitional Housing Loan 
Guarantee Program Web site at http://www1.va.gov/homeless/
page.cfm?pg=8. Applications may also be obtained at these events.
    Submission of Application: Applicants must submit an original 
completed and collated Stage 1 application plus four copies to the 
following address: Office of Mental Health Services (116E), Department 
of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420.
    VA will invite applicants with eligible and feasible proposals to 
submit Stage 2 applications.

FOR FURTHER INFORMATION CONTACT: The Department of Veterans Affairs 
will be holding free informational sessions to introduce its new Loan 
Guarantee Program for Multifamily Transitional Housing. The program 
offers a 100 percent loan guarantee on program funds financed through 
the Federal Financing Bank (FFB). Loan proceeds can be used for 
combination construction and permanent financing or a permanent loan. 
Informational sessions are being held on the following days: Chicago, 
IL--May 11, 2006; Washington DC--June 2006. Register by calling (202) 
273-7462 today or by e-mail at Multifamily.Loan@va.gov. For more 
information about the Program, access the VA Program Web site

[[Page 18814]]

mentioned above or contact the VA Program at (202) 273-7462. Please 
note: ``telephone numbers are not toll free.''


    Note: This is not a single family housing Program.


SUPPLEMENTARY INFORMATION:

Background

    VA's Multifamily Transitional Housing Loan Guarantee Program 
statute, 38 U.S.C. 2051 et seq., authorizes VA to establish a pilot 
program to guarantee up to 15 project loans, subject to total aggregate 
of $100 million program cap. The purpose of this program is to promote 
the development and continued operation of supportive multifamily 
transitional housing for homeless veterans in geographic areas of 
greatest need. It is anticipated that this pilot program will 
positively impact the national goal to end chronic homelessness. 
Although VA already has committed two loan guarantees totaling $7.9 
million, this is the first NOFA issued for the remaining projects in 
this pilot program. This NOFA applies to proposals for new projects 
nationwide. The VA selection process will weigh heavily the size of the 
chronically homeless veteran population in a given location, as well as 
a sponsor's capacity to deliver supportive services to veterans, as 
evidenced by a comprehensive local network of service providers and 
professional staff. VA, at its sole discretion, may guarantee more than 
one loan in each metropolitan statistical area. All eligible loan 
applications will be considered.
    The Federal Financing Bank (FFB), an arm of the U.S. Treasury 
(http://www.ustreas.gov/FFB) will fund the program loans, and VA will 
guarantee up to 100 percent of the maximum FFB loan amount. The maximum 
FFB loan amount may not exceed 80 percent of the total development cost 
of the project and in many cases may be significantly less. Project 
sponsors are required to obtain additional sources of funding or the 
provision of substantial property or services from State or local 
governments or nongovernmental entities. Examples of such funding, 
property, or services include, but are not limited to, grants, real 
estate, private loans, capital contributions, and low-income housing 
tax credits.

Definitions

    Applicant--The sponsor, or its authorized agent, who is applying 
for a loan guarantee under the program.
    Borrower--A single purpose entity, that, (i) receives funds in the 
form of a program loan, (ii) has the obligation of repaying the program 
loan in full, with interest, (iii) is responsible for satisfying all 
other requirements of the program, and (iv) maintains continuing 
control over a multifamily transitional housing project. The Borrower 
must be comprised in full or in part by the Sponsor or its authorized 
agent and must be bankruptcy remote.
    Chronically Homeless--An unaccompanied homeless individual with a 
disabling condition who has either been continuously homeless for a 
year or has had at least four (4) episodes of homelessness in the past 
three (3) years.
    Homeless veteran--A veteran who is a homeless individual.
    Homeless Individual--An individual who lacks a fixed, regular, and 
adequate nighttime residence; also, an individual who has a primary 
nighttime residence that is: (a) A supervised publicly or privately 
operated shelter designed to provide temporary living accommodations 
(including welfare hotels, congregate shelters, and transitional 
housing for the mentally ill); (b) an institution that provides a 
temporary residence for individuals intended to be institutionalized; 
or (c) a public or private place not designed for, or ordinarily used 
as, a regular sleeping accommodation for human beings. The term 
homeless individual does not include any individual imprisoned or 
otherwise detained pursuant to an act of the Congress or a state law.
    Metropolitan statistical area--A geographic area designated by the 
U.S. Census Bureau for purposes of collecting and disseminating 
demographic information.
    Multifamily transitional housing--A supportive housing facility 
that provides transitional housing to homeless veterans. Multifamily 
transitional housing may be single room occupancy, but must, at a 
minimum: provide supportive services at the facility site with the goal 
of assisting residents in becoming self-sufficient; require each 
resident to seek to obtain and maintain employment; charge a reasonable 
fee for occupying a unit; and maintain strict guidelines regarding 
sobriety as a condition of residency.
    Program--The VA Multifamily Transitional Housing Loan Guarantee 
Program established under subchapter VI, chapter 20, of title 38, 
United States Code, and implemented by VA.
    Program Funds--Funds loaned to the borrower by FFB and guaranteed 
by VA for the purposes of the program.
    Project--A project under the auspices of one or more sponsors for 
the development, financing, construction (including renovation or 
rehabilitation), operation, and management of multifamily transitional 
housing, authorized by, and approved and conducted under the program.
    Resident--A homeless veteran who is currently residing in 
multifamily transitional housing provided under the program. Resident 
may also include veterans who are not homeless and homeless individuals 
who are not veterans, if VA, in its sole discretion, has determined 
that the transitional housing needs of homeless veterans in the project 
area have been met and that the housing needs of any such veteran or 
homeless individual can be met in a manner compatible with program 
requirements.
    Sober--A person's body is free of alcohol or controlled substance 
unless such substance is being used under the direction of a physician.
    Sponsor--An artificial person or legal entity that is (i) created 
by or under the authority of the laws of a State, territory, or 
possession of the United States, (ii) comprised of officers, members, 
managers, partners, and/or shareholders who are U.S. Citizens or 
permanent legal residents, (iii) responsible for the coordination of 
the project's financing and construction and, through the borrower, has 
the primary responsibility for a project's long-term operation and 
management, including the coordination and implementation of a 
supportive services program. (Note: A project must have one or more 
sponsors.)
    Supportive housing facility--A facility that assists homeless 
individuals to transition from homelessness to permanent housing by 
providing short-term housing (generally not to exceed 24 months) and 
supportive services. A supportive housing facility may also be referred 
to as ``facility'' in this NOFA.
    Supportive services--Services that may be designated by the sponsor 
that address the needs of homeless veterans to be served by the 
facility and provide appropriate services or assist such persons in 
obtaining appropriate services. Supportive services include: Conducting 
outreach activities; providing food, nutritional counseling, health 
care, mental health treatment, alcohol and other substance abuse 
services, and case management services; where applicable, establishing 
and operating child care services for dependents of residents; 
providing supervision and security arrangements for the protection of 
residents and for homeless veterans using the services; providing 
assistance in obtaining permanent housing; providing education, 
employment counseling, and job training; establishing and operating

[[Page 18815]]

an employment assistance program; providing assistance in obtaining 
other Federal, State and local assistance available for facility 
residents including mental health benefits, employment counseling, 
veterans' benefits, medical assistance, and income support assistance 
such as Supplemental Security Income benefits, Temporary Assistance to 
Needy Families, General Assistance, Food Stamps, etc.; and providing 
housing assistance, legal assistance, advocacy, transportation, and 
other services essential for achieving and maintaining independent 
living. Inpatient acute hospital care does not qualify as a supportive 
service.
    Veteran--A person who served in the active military, naval, or air 
service, and who was discharged or released therefrom under conditions 
other than dishonorable, as defined in section 101(2) of title 38, 
United States Code, for purposes of that title.

Eligible Uses of Funds

    Program funds may be used for acquisition of land, or construction 
of or rehabilitation of multifamily transitional housing or for 
refinancing an existing loan therefore. Loan proceeds may include 
reasonable amounts for financing the acquisition of furniture, 
equipment, supplies, or materials for the project; or, except in the 
case of a refinance, for supplying the borrower with working capital 
relative to the project. The project may include space for neighborhood 
retail services or job training programs.

Eligible Geographic Areas

    Projects must be located within the United States, its territories 
or possessions to be eligible for VA loan guarantees under the program.

General Program Information

    Program Purpose: The program is intended to maintain and increase 
the supply of supportive transitional housing for homeless veterans by 
providing low-cost loans guaranteed by VA.
    Eligible Financing Sources: Any Federal, State, local, and 
conventional sources of financing may be used in conjunction with the 
loan guarantee, including Home Investment Partnership Program (HOME) 
grant funds, Community Development Block Grant (CDBG) funds, low income 
housing tax credits, and private financing such as that provided by 
banks, donations and capital contributions to the extent allowed by 
these providers. (The VA guarantee applies only to program funds.)
    Maximum Guarantee: The maximum VA guarantee for a permanent or 
combination construction/permanent loan will be 100 percent of the 
unpaid principal balance and interest on program funds.
    Maximum Loan Amount: Program funds may not exceed 80 percent of 
total project cost. VA anticipates that program funds will be 
considerably less than 80 percent and most likely between 20 to 40 
percent of total project costs depending upon the specifics of a 
transaction.
    Interest Rate: The basic interest rate applicable to each advance 
of program funds shall be established by FFB at the time the respective 
advance is made on the basis of the determination made by the Secretary 
of the Treasury. The interest rate is determined on the date of the 
disbursement of funds. During the permanent financing period, the 
interest rate is set at the time of loan closing and is fixed for the 
term of the loan. During the construction period, the interest rate 
will be set at the time the funds are drawn. The disbursement of funds 
(amount and timing) will be governed by the draw schedule established 
between the borrower and VA. If the draw schedule identifies multiple 
draws, each draw will be considered a separate disbursement and will be 
assigned a new interest rate. The interest rate on each draw will be 
determined by the interest rate environment at the time of that 
disbursement. The borrower will have the ability to purchase an 
interest rate cap, through FFB, to help mitigate the expected 
volatility in interest rates. The price of the interest rate cap will 
depend on the cap rate and term specified by the sponsor in the 
application.
    Term: The term of the loan shall not exceed 40 years and shall be 
based on VA's perception of the reliability of the project income 
stream. Determination of the term will be at VA's sole discretion.
    Debt Service Coverage Ratio: The targeted minimum debt service 
coverage ratio on the loan is 1.10; however, 1.15 or better is 
preferred.

Program Fees

    Assumption Fee: A non-refundable review fee in the amount of $3,000 
and a transfer fee equal to one percent of the outstanding indebtedness 
due immediately prior to the transfer or sale of the project.
    Application Fees: No application fee will be charged.
    Interest Rate Fee: A fee of one-eighth of one percent per annum 
will be charged (calculated based on the outstanding principal balance 
owed to FFB), in addition to the interest amount. (This fee will not be 
included in the interest rate to be paid to FFB; it is a separate 
charge added by the loan servicer and remitted to VA.)
    Late Fee: If any monthly installment payment is not received by VA 
prior to the 11th calendar day after the same is due (without regard to 
any applicable cure and/or notice period), borrower shall pay to VA 
upon demand an amount equal to the lesser of (a) four percent (4 
percent) of such unpaid sum; or (b) the maximum amount permitted by 
applicable law to defray the expenses incurred by VA in handling and 
processing such delinquent payment, and such late fee shall be secured 
by the loan documents.
    Sponsors will be responsible for paying for all direct costs 
required by the application process including costs associated with 
third party reports, construction drawings, and site control. Should 
the sponsor be successful in obtaining a VA Loan Guarantee, these costs 
may be funded through the loan as mortgaged expenses.
    Authority: The program was enacted by section 601 of Public Law 
105-368 and is codified at 38 U.S.C. 2051, et seq. Funds made available 
under this Notice are subject to the requirements of that law, as well 
as applicable VA and FFB requirements and procedures. (See VA's Program 
Manual found on the program Web site at http://www1.va.gov/ homeless/
page. cfm?pg=8.)
    Allocation: VA is authorized to guarantee up to 15 loans or $100 
million, whichever first occurs, under the program. Funding under the 
program is currently available for up to thirteen (13) remaining 
program loans, to be committed on a first-come, first-served basis, or 
until the remaining $91.9 million in program funds has been guaranteed.
    Funding Priorities: Loan guarantees will be awarded via commitment 
letter on a first-come, first-served basis upon successfully completing 
the two-stage application process. Although all applications will be 
evaluated equally in accordance with the methodology noted below, 
greater weight will be given to those applications that best 
demonstrate a strategy and ability to help VA achieve all of the 
following goals: (1) Increase the number of community beds for homeless 
veterans nationally by at least 5000; (2) help homeless veterans 
transition to permanent housing by providing supportive services and by 
requiring that residents take personal responsibility to remain sober, 
maintain employment, and pay monthly rent; (3) determine whether a 
Federal loan guarantee program is an effective tool

[[Page 18816]]

for facilitating the development of transitional supportive housing for 
homeless veterans.
    Methodology: The application process will occur in two stages. In 
Stage 1, sponsors will submit preliminary proposal information to VA. 
VA will evaluate applications for eligibility and feasibility. VA will 
invite sponsors who submit proposals that meet the evaluation criteria 
to submit Stage 2 applications. At Stage 2, VA will conduct a 
comprehensive feasibility assessment of the applications on the basis 
of their feasibility and their performance on the evaluation criteria 
defined in this Notice.

Evaluation Process

    VA will have sole discretion to make guarantees under the program. 
As noted above, VA will use a two-stage evaluation process that 
includes two sets of criteria per stage. VA will invite those projects 
that meet Stage 1 requirements to submit Stage 2 applications.

1. Stage 1 Application Evaluation

    a. Eligibility Criteria. Eligibility Criteria assess whether a 
proposal can meet the requirements outlined in the program authorizing 
legislation;
    b. Feasibility Criteria. Feasibility Criteria set minimum standards 
for financial and practical viability, development team and service 
provider capacity, and services plan appropriateness;

2. Stage 2 Application Evaluation

    a. Feasibility Criteria. VA will prioritize those proposals that 
are eligible and feasible based on a number of factors including the 
strength of the services plan; minimum standards for site control, 
commitments of support, site suitability and conformance with 
applicable laws, design appropriateness, funding commitments, 
construction costs, availability of transportation, and project 
management.
    b. Evaluation Criteria. VA will evaluate the sponsor's 
creditworthiness, the project's repayment ability, and the Sponsor's 
readiness to proceed.
    Following are detailed explanations of the evaluation criteria:
Stage 1 Eligibility Assessment
    A proposal must satisfy all eligibility criteria in order to 
advance to consideration under the feasibility criteria.

 
------------------------------------------------------------------------
                               Eligibility Criteria--Proposals Must Meet
            Number                            ALL Criteria
------------------------------------------------------------------------
1.                             The application is complete and on time.
                                The application package includes
                                all required information and requested
                                attachments and reports.
2.                             To be considered eligible, the sponsor
                                must meet the following requirements:
                                The sponsor must certify that it
                                is an artificial person or legal entity
                                that is (i) created by or under the
                                authority of the laws of a state,
                                territory, or possession of the United
                                States, (ii) comprised of officers,
                                members, managers, partners, and/or
                                shareholders who are U.S. Citizens or
                                permanent legal residents, (iii) is
                                responsible for the coordination of the
                                project's financing and construction
                                and, through the borrower, has the
                                primary responsibility for a project's
                                long-term operation and management,
                                including the coordination and
                                implementation of a supportive services
                                program.
                                The sponsor must agree to
                                establish before loan closing a single-
                                asset entity to serve as borrower.
                                The sponsor must certify that it
                                is able to, and intends to, maintain and
                                operate the project in accordance with
                                program objectives and requirements
                                identified in the authorizing
                                legislation, in this Notice and in any
                                other applicable rules, regulations and
                                program guidelines.
                                The sponsor must be in
                                compliance with all legal and regulatory
                                requirements and not be in default with
                                respect to any VA program and any
                                Federal debt.
                               In addition, the sponsor and its
                                principals, as well as the development
                                team members and their principals, must
                                meet the following requirements:
                                Are not presently debarred,
                                suspended, proposed for debarment,
                                declared ineligible, or voluntarily
                                excluded from covered transactions by
                                any Federal department or agency;
                                Have not within a three-year
                                period preceding this application been
                                convicted of or had a civil judgment
                                rendered against them for commission of
                                fraud or an offense in connection with
                                obtaining, attempting to obtain, or
                                performing a public (Federal, State, or
                                local) transaction or contract under a
                                public transaction; violation of Federal
                                or State antitrust statutes; or
                                commission of embezzlement, theft,
                                forgery, bribery, falsification or
                                destruction of records, making false
                                statements, or receiving stolen
                                property;
                                Are not presently indicted for
                                or otherwise criminally or civilly
                                charged by a governmental entity
                                (Federal, State, or local) with
                                commission of any of the offenses
                                enumerated in the immediately preceding
                                paragraph; and
                                Have not within a three-year
                                period preceding this application had
                                one or more public transactions
                                (Federal, State, or local) terminated
                                for cause or default.
                               Sponsors will be considered ineligible if
                                they or any of their principals have any
                                outstanding VA audit findings. No
                                organization may receive assistance that
                                has an outstanding obligation to VA that
                                is in arrears or for which a payment
                                schedule has not been agreed to, or
                                whose response to an audit is overdue or
                                unsatisfactory.
3.                             The proposed project is for an allowable
                                purpose. See NOFA section titled
                                ``Eligible Uses of Funds'' for a list of
                                allowable purposes.
4.                             The sponsor has committed to running the
                                proposed facility as multifamily
                                transitional housing for a period of 20
                                years from the date of loan closing or
                                until the loan pays off, whichever is
                                longer or until such time as VA
                                determines that transitional housing for
                                homeless veterans is no longer necessary
                                in the particular location. In no event
                                will the facility be used for something
                                other than multifamily transitional
                                housing so long as any portion of the
                                FFB note remains outstanding.

[[Page 18817]]

 
5.                             The sponsor has committed to providing on-
                                site supportive services with the goal
                                of assisting the residents in becoming
                                self- sufficient. See definition of
                                supportive services at the beginning of
                                the NOFA for guidance.
6.                             The Sponsor has committed to requiring
                                each resident to seek to obtain and
                                maintain employment.
7.                             The Sponsor will charge a reasonable
                                residential occupancy fee, not to exceed
                                thirty percent (30 percent) of a
                                resident's gross monthly income.
                               The project must meet one of the
                                following criteria, as applicable:
                               1. Projects with rent subsidies charge
                                the minimum rent required by the subsidy
                                program.
                               2. Projects without rent subsidies charge
                                rents that when combined with other
                                sources of project revenue allow the
                                project to cover operating costs and
                                debt service. Sponsor must demonstrate
                                that such rents will be affordable to
                                the intended residents.
8.                             The sponsor has committed to maintaining
                                strict guidelines regarding sobriety as
                                a condition of residency.
9.                             The Sponsor has committed to seek funding
                                or the substantial provision of property
                                or services by a state or local
                                government or a nongovernmental entity.
                                Such funding or assistance is in
                                addition to the contemplated program
                                funds. Eligible support by a state or
                                local government or a nongovernmental
                                entity includes, but is not limited to:
                                Commitment of development funds
                                including, but not limited to, low-
                                income housing tax credits, CDBG, HOME,
                                and the Federal Home Loan Bank's
                                Affordable Housing Program funds.
                                Commitment of rent or operating
                                subsidies.
                                Commitment of supportive
                                services funding.
                                Donations that reduce total
                                development costs, including land,
                                leasehold interests, labor, buildings,
                                infrastructure or site improvements,
                                services, furnishings, and other items
                                included in the development budget, or
                                the provision of these at below-market
                                cost.
                                Donation of operating services
                                or the provision of these at below-
                                market cost.
                                Donation of supportive services
                                or the provision of these at below-
                                market cost.
                                Significant local or state
                                government fee or tax waivers.
                                Private financing such as bank
                                loans, capital contributions or
                                donations.
------------------------------------------------------------------------

Stage 1 Feasibility Assessment
    VA will perform a Stage 1 feasibility assessment that comprises a 
number of factors, including the following six criteria:
    A proposed project must satisfy all feasibility criteria in order 
to advance to consideration under Stage 2. The following table explains 
each criterion in detail.

 
------------------------------------------------------------------------
                                         Stage 1 Feasibility Criteria--
                Number                  Proposals Must Meet ALL Criteria
 
------------------------------------------------------------------------
1.                                      The development team has a
                                         proven track record in
                                         supportive housing facility
                                         development and operation. At a
                                         minimum, the development team
                                         includes a sponsor and an
                                         architect. The sponsor will
                                         coordinate the project's
                                         financing and construction and
                                         will have primary
                                         responsibility for its long-
                                         term operation and management,
                                         including the coordination and
                                         implementation of a supportive
                                         services program. Sponsors who
                                         lack experience developing
                                         affordable supportive housing
                                         facilities must retain a
                                         development consultant with
                                         affordable supportive housing
                                         facility development expertise.
                                        A. The core development team is
                                         in place.
                                        B. The sponsor and/or sponsor's
                                         development consultant has a
                                         sufficient development track
                                         record. To meet this
                                         requirement, the Sponsor or its
                                         development consultant must
                                         have completed and placed in
                                         service at least one currently
                                         operating affordable supportive
                                         housing facility of comparable
                                         or larger size. If the Sponsor
                                         seeks a VA construction loan
                                         guarantee, the Sponsor or
                                         development consultant must
                                         have experience managing
                                         construction.
                                        VA will rate proposals relative
                                         to others from the same
                                         metropolitan statistical area,
                                         based on the number of
                                         facilities sponsors have placed
                                         in service and are successfully
                                         operating, with facilities in
                                         service for more than three
                                         years receiving greater
                                         preference than those in
                                         service for three years or
                                         fewer. To receive consideration
                                         under this subsection for
                                         facilities in existence for
                                         more than three years from the
                                         filing deadline for the
                                         application, the sponsor must
                                         submit a certification from a
                                         certified public accountant
                                         that the facilities have
                                         maintained a positive cash flow
                                         for the year in which each
                                         development's last financial
                                         statement has been prepared
                                         (must be no earlier than one
                                         year prior to application
                                         deadline) and demonstrate
                                         funded reserves. Sponsors who
                                         retain a development consultant
                                         must provide track record
                                         information for both themselves
                                         and the consultant.

[[Page 18818]]

 
                                        VA will also consider in its
                                         evaluation whether any of the
                                         sponsor's facilities or those
                                         of its consultant has defaulted
                                         within two years of being
                                         placed in service, and whether
                                         any of the sponsor's facilities
                                         did not complete construction
                                         because of cost overruns or
                                         other factors directly within
                                         the control of the Sponsor or
                                         its consultant.
                                        C. The Sponsor has a
                                         demonstrated track record of
                                         working constructively with
                                         local and/or state governments
                                         to develop housing. Evidence
                                         may include securing government
                                         housing-related funding
                                         (including tax credits),
                                         property donation, reduction or
                                         dismissal of liens on property
                                         to be developed as affordable
                                         housing, and tax relief. Other
                                         compelling evidence will be
                                         considered as well.
                                        D. The Sponsor demonstrates the
                                         financial capacity to undertake
                                         development and operation of
                                         the project.
                                        E. The Sponsor demonstrates
                                         stability in the composition of
                                         its board (if applicable) and
                                         staff.
                                        F. The architect has local
                                         experience designing affordable
                                         housing communities.
                                        G. The Sponsor has successfully
                                         managed at least one supportive
                                         housing facility of similar or
                                         larger size during the last
                                         five years;
                                        OR, if management will be
                                         contracted,
                                        The property management firm has
                                         successfully managed at least
                                         two supportive housing
                                         facilities during the last five
                                         years, one of which is of
                                         comparable or larger size.
2.                                      The supportive services plan is
                                         appropriate for the target
                                         population.
                                        A.The sponsor has conducted a
                                         needs assessment that
                                         identifies the needs of
                                         homeless veterans in the
                                         metropolitan statistical area
                                         and estimated the demand for a
                                         project. The needs assessment
                                         should reflect the findings of
                                         the most recent VA CHALENG
                                         report. VA will use the CHALENG
                                         findings to evaluate the needs
                                         assessment. To access this
                                         report electronically, go to
                                         http://www.va.gov/homeless/
 page. cfm? pg=17.
                                        B.The supportive services plan
                                         addresses needs identified in
                                         the needs assessment and
                                         includes a comprehensive,
                                         realistic strategy to foster
                                         self-sufficiency in the
                                         residents. The plan must:
                                         Identify an ongoing
                                         outreach plan for identifying
                                         and screening potential
                                         residents that ensures the
                                         facility is fully occupied;
                                         Discuss how residents
                                         will be involved in making
                                         facility decisions that affect
                                         their lives, including how they
                                         will be involved in selecting
                                         supportive services,
                                         establishing individuals goals,
                                         and developing plans to achieve
                                         these goals so that they
                                         achieve greater self-
                                         determination;
                                         Include an employment
                                         program designed to help the
                                         residents attain long-term
                                         employment once they leave the
                                         facility.
                                         Clearly identify how
                                         residents will attain and
                                         transition to permanent
                                         housing.
                                         Identify which
                                         supportive services will be
                                         provided on-site and off-site,
                                         as well as who will provide
                                         them.
                                         Include a realistic
                                         budget and a strategy for
                                         obtaining funding.
                                         Include a realistic
                                         staffing plan that identifies
                                         staff qualification
                                         requirements.
                                         Identify how residents
                                         will be provided necessary
                                         follow-up services to help them
                                         achieve stability when
                                         transferred to permanent
                                         housing;
                                         Identify how the
                                         service needs of residents will
                                         be assessed on an ongoing
                                         basis;
                                         Discuss how residents
                                         will be assisted in
                                         assimilating into the community
                                         through access to neighborhood
                                         facilities, activities and
                                         services;
                                         Discuss how and when
                                         the progress of residents
                                         toward meeting their individual
                                         goals will be monitored and
                                         evaluated;
                                         Discuss how and when
                                         the effectiveness of the
                                         overall project in achieving
                                         its goals will be evaluated and
                                         how program modifications will
                                         be made based on those
                                         evaluations; and
                                         Discuss how the
                                         proposed project will be
                                         implemented in a timely
                                         fashion.
3.                                      The service provider has the
                                         resources and experience to
                                         implement the supportive
                                         services plan.
                                        A.The service provider has
                                         experience operating a services
                                         plan of size and scope similar
                                         to the plan being proposed,
                                         with maximum operating
                                         efficiencies.
                                        B.The service provider
                                         demonstrates ability to obtain
                                         government program or private
                                         subsidy funds for services for
                                         homeless and/or other special-
                                         needs populations.
                                        C.The service provider
                                         demonstrates ability in other
                                         fundraising activities to
                                         ensure continued organizational
                                         operations with relative fiscal
                                         stability.
                                        D.The service provider
                                         demonstrates stability in the
                                         composition of its board and
                                         its staff.
                                        E.The service provider
                                         demonstrates ability in
                                         assessing and monitoring the
                                         housing and relevant supportive
                                         service needs of homeless
                                         veterans and/or other special-
                                         needs populations.
4.                                      The financial model is viable.
                                        A.The sources and uses budget is
                                         adequate to implement the
                                         development program.
                                        B.The uses budget includes
                                         reasonable preliminary
                                         estimates for potential
                                         environmental remediation and
                                         geotechnical work.
                                        C.The uses budget funds an
                                         operating escrow account to
                                         carry the project until
                                         occupancy is sustained.
                                        D.The development sources are at
                                         least equal to uses.
                                        E.Rents are affordable to the
                                         target population.
                                        F.The operating budget
                                         adequately covers costs and
                                         includes adequate replacement
                                         reserves.
                                        G.The services budget is
                                         adequate for the proposed
                                         services plan.
                                        H.The applicant's financing
                                         model reflects the requirements
                                         of VA's term sheet, included in
                                         the application package.
                                        I.All key trending, income,
                                         expense, and vacancy
                                         assumptions are realistic and
                                         justified.
5.                                      Disbursement of the developer
                                         fee is structured to help
                                         ensure that the project will be
                                         completed and leased up as
                                         planned. At a minimum,
                                         disbursement of the developer
                                         fee must be tied to developer's
                                         completion of project
                                         milestones, with a 10 percent
                                         holdback until three months of
                                         stabilized occupancy.
6.                                      The market supports the proposed
                                         development program.
                                        A comprehensive market study
                                         conducted by a disinterested
                                         third party demonstrates that
                                         the proposed number and type of
                                         units meet an existing and
                                         identified need and can be
                                         readily absorbed by existing
                                         need in the local area if and
                                         when homelessness among
                                         veterans is no longer a
                                         problem.
------------------------------------------------------------------------


[[Page 18819]]

Stage 2 Feasibility Assessment
    At Stage 2, the sponsor must inform VA of any changes to the 
information submitted at Stage 1. VA will review the changes for their 
impact on the feasibility of the project. Changes that maintain or 
improve the feasibility of the project under Stage 1 feasibility 
criteria are encouraged. Any changes that make the project infeasible 
under Stage 1 feasibility criteria will disqualify the application from 
further consideration.
    VA will review Stage 2 applications for feasibility based on a 
number of factors, including the criteria summarized below.
    A facility must satisfy all Stage 2 feasibility criteria to be 
considered for funding.

 
------------------------------------------------------------------------
                                Stage 2 Feasibility Criteria--Proposals
            Number                       Must Meet ALL Criteria
------------------------------------------------------------------------
1.                             The sponsor has site control. The sponsor
                                must provide evidence that it has and
                                will maintain control of the property
                                for which the VA Loan Guarantee is
                                requested through the anticipated
                                closing date. Acceptable forms of site
                                control may be any one of the following:
                                Deed or other proof of ownership
                                Executed contract of sale
                                Executed capital lease agreement
                                Executed option to purchase or
                                lease.
2.                             The sponsor has secured commitments for
                                funding or the substantial provision of
                                property or services by a State or local
                                government or a nongovernmental entity.
                                See Eligibility Criterion Number 9 for a
                                list of acceptable contributions.
                                Sponsor must have a commitment for at
                                least one of these contributions.
3.                             The site is suitable for the proposed
                                project, and the project complies with
                                all applicable laws and codes.
                               A. The proposed project has all required
                                zoning approvals needed by State and
                                local authorities.
                               B.The proposed project complies with all
                                applicable Federal, state, and local
                                codes, laws, ordinances, zoning
                                requirements, and health and safety
                                standards.
                               C.The site has utilities and
                                infrastructure that are adequate for the
                                needs of the project and that meet all
                                local building and zoning requirements.
                               D.Soil and geological conditions are
                                suitable for the type of construction
                                proposed.
                               E.The site layout adequately addresses
                                environmental issues.
4.                             The project's design is appropriate for
                                the tenant population and the
                                neighborhood.
                               A.The project design is appropriate given
                                community standards, surrounding
                                neighborhood, and site characteristics.
                               B.The design features secure, well-
                                designed unit interiors.
                               C.The design features security and crime
                                prevention measures, which may include
                                but are not limited to strategically
                                placed fencing, keyless entry systems,
                                and security cameras.
                               D.The design accommodates resident
                                privacy needs to the maximum extent
                                feasible given the development program.
                               E.The project design provides adequate
                                space for the supportive services
                                program. The design must consider space
                                needs for case management of residents,
                                meeting and/or classroom space for
                                service and program provision, and
                                integrated community living space.
5.                             The project construction cost is
                                reasonable and construction budget is
                                realistic and cost-efficient, based on
                                local norms. The construction budget
                                must include adequate funding to address
                                all identified and reasonably
                                foreseeable environmental and
                                geotechnical issues.
6.                             The project provides ready access to
                                transportation. The sponsor must
                                demonstrate fulfillment of at least one
                                of the following three criteria:
                                Project is located within
                                reasonable distance of public
                                transportation such as a bus or subway
                                stop.
                                Project provides regular shuttle
                                service to and from public
                                transportation, either directly or
                                through a partnership with a service
                                provider.
                                In areas without adequate public
                                transportation, Sponsor must provide a
                                plan for how residents will be able to
                                meet their transportation needs and have
                                ready access to services provided in the
                                local community.
7.                             The property management plan is
                                comprehensive and workable. The sponsor
                                must submit a plan for managing the
                                project that defines the roles and
                                responsibilities among the sponsor,
                                borrower, property manager, and social
                                services coordinator, and any other key
                                players in project operations, and
                                provides a workable plan for performing
                                the functions of property, financial,
                                and resident management.
                               VA will assess proposals relative to
                                those from the same metropolitan
                                statistical area based on length of
                                property management experience and
                                number of properties managed. Properties
                                managed for more than three years will
                                receive greater preference than
                                properties managed for three years or
                                fewer.
8.                             The proposed project increases the supply
                                of transitional housing available to
                                homeless veterans. VA will assess
                                proposals based on the number of new
                                beds for homeless veterans, prioritizing
                                those with the greatest number of new
                                beds.
9.                             The supportive service plan includes
                                coordination with other homeless and
                                veterans service groups. VA will
                                prioritize projects whose sponsors most
                                clearly demonstrate that they have
                                coordinated with Federal, State, local,
                                private and other entities serving
                                homeless individuals in the planning and
                                operation of supportive services.
                               Sponsors are required to demonstrate that
                                they have coordinated with the VA
                                medical care facility of jurisdiction
                                and VA Regional Offices of jurisdiction
                                in their area. Higher priority will be
                                given to those sponsors who can
                                demonstrate that they are part of an
                                ongoing community-wide planning process
                                that is designed to share information on
                                available resources and reduce
                                duplication among programs that serve
                                Homeless Veterans; and that they have
                                consulted directly with other providers
                                regarding coordination of services for
                                project residents In assessing the
                                strength of the sponsor's coordination
                                with other veterans and homeless groups,
                                VA will give greatest priority to those
                                proposals that have the greatest portion
                                of their supportive services program in
                                place, either through partnership or
                                funding commitments. Sponsors who wish
                                to receive points under this criterion
                                must submit documentation of supportive
                                service resources.
------------------------------------------------------------------------


[[Page 18820]]

Stage 2 Evaluation
    VA will evaluate all feasible Stage 2 applications and make a 
decision to issue a loan commitment based on a number of factors, 
including the evaluation criteria summarized below.
    VA will give greatest consideration to the sponsor's capacity to 
develop and implement the program, the sponsor's ability to ensure 
repayment of the loan, and the sponsor's readiness to proceed. VA 
reserves the right not to issue any loan guarantees.

 
------------------------------------------------------------------------
            Number                        Evaluation Criteria
------------------------------------------------------------------------
1.                             The proposal demonstrates strong
                                repayment ability. VA will prioritize
                                those proposals that represent the least
                                risk of default to the Federal
                                government. VA will evaluate a number of
                                factors, including the following, to
                                assess repayment ability:
                               A.The sponsor shows strong financial
                                capacity through net worth.
                               B.The sponsor has a strong track record
                                of timely debt repayment.
                               C.The project funding sources include a
                                large amount of equity (through sponsor
                                contributions, tax credits, grants, and
                                the like) and cash-flow-based debt.
                               D.The project shows a prolonged debt
                                service coverage ratio in excess of
                                1.10.
2.                             The sponsor demonstrates readiness to
                                proceed. Proposals that are closer to
                                start of construction will receive
                                priority. Proposals that do not include
                                construction and do not require public
                                reviews or approvals will be evaluated
                                only on the extent to which they have
                                secured financing commitments.
                               A.Alternative Funding is in place. VA
                                will prioritize proposals with the
                                greatest share of alternative funding in
                                place. Award letters signed by the
                                awarding entity/authority/institution,
                                indicating rate and term and that the
                                commitment is not subject to any
                                condition outside the control of the
                                developer, will be the only acceptable
                                evidence to receive consideration under
                                this criterion.
                               B.Construction financing is in place. VA
                                will prioritize proposals with the
                                greatest share of construction financing
                                in place. Award letters signed by the
                                awarding entity/authority/institution,
                                indicating rate and term and that the
                                commitment is not subject to any
                                condition outside the control of the
                                developer, will be the only acceptable
                                evidence to receive consideration under
                                this criterion.
                               C.All necessary public reviews and
                                approvals are complete except building
                                permits. The sponsor must provide
                                written evidence from appropriate
                                officials.
------------------------------------------------------------------------

    Applications will be reviewed as they are received. Loan guarantees 
will be awarded on a first-come, first-served basis in accordance with 
the methodology noted above until all remaining program loan guarantees 
or program funds have been awarded.
Timeline

 
------------------------------------------------------------------------
      Number                  ACTION               ESTIMATED TIMING \1\
------------------------------------------------------------------------
1.                 VA issues NOFA..............  Day 1
2.                 Completed Stage 1             Rolling Basis
                    applications are submitted..
3.                 VA reviews completed          Within 60 days of
                    applications for              submission
                    eligibility and feasibility
                    and notifies Stage 1
                    applicants of questions or
                    comments..
4.                 Revised Stage 1 applications  Within 60 to 90 days
                    are due to VA..               from date of
                                                  notification.
5.                 VA either rejects the Stage   Within 60 days of
                    1 application or issues a     receipt of revised
                    conditional commitment and    application.
                    requests Stage 2
                    applications for facilities
                    determined eligible and
                    feasible..
6.                 Stage 2 applications are due  Within 90 to 120 days
                    to VA..                       of receipt of request
                                                  for Stage 2
                                                  application
7.                 VA reviews and evaluates      Within 60 days of
                    completed Stage 2             receipt of Stage 2
                    applications and notifies     application
                    applicants of questions or
                    comments..
8.                 Revised Stage 2 applications  Within 60 to 90 days of
                    are due to VA..               notification
9.                 VA reviews and evaluates      Within 60 days of
                    completed Stage 2             receipt
                    applications and recommends
                    funding action to the
                    Secretary..
10.                VA either rejects the Stage   Within 60 days of
                    2 application or issues a     submission to
                    guarantee commitment..        Secretary.
------------------------------------------------------------------------
\1\ The timing we propose is based on the timing of the first two pilot
  loans.

    Application Requirements: The specific application requirements 
will be specified in the application package. The package includes all 
required forms and certifications. Selections will be made based on 
criteria described in this NOFA as well as the Program Manual found on 
the VA Web site. Applicants will be notified of any additional 
information needed to confirm or clarify information provided in the 
application. Applicants will then be notified of the deadline to submit 
such information. If an applicant is unable to meet any conditions 
required in making a loan

[[Page 18821]]

guarantee under this program within the specified time frame, VA 
reserves the right to not award a commitment and select another 
applicant.

    Dated: April 7, 2006.
R. James Nicholson,
Secretary of Veterans Affairs.
[FR Doc. 06-3528 Filed 4-7-06; 4:45 pm]
BILLING CODE 8320-01-P