Collapse to view only § 4108. Prepayment and voluntary termination
- § 4101. General prepayment limitation
- § 4102. Notice of intent
- § 4103. Appraisal and preservation value of eligible low-income housing
- § 4104. Annual authorized return and preservation rents
- § 4105. Federal cost limits and limitations on plans of action
- § 4106. Information from Secretary
- § 4107. Plan of action
- § 4108. Prepayment and voluntary termination
- § 4109. Incentives to extend low-income use
- § 4110. Incentives for transfer to qualified purchasers
- § 4111. Mandatory sale for housing exceeding Federal cost limits
- § 4112. Criteria for approval of plan of action involving incentives
- § 4113. Assistance for displaced tenants
- § 4114. Permissible prepayment or voluntary termination and modification of commitments
- § 4115. Timetable for approval of plan of action
- § 4116. Resident homeownership program
- § 4117. Delegated responsibility to State agencies
- § 4118. Consultations with other interested parties
- § 4119. Definitions
- § 4120. Notice to tenants
- § 4121. Definitions of qualified and priority purchaser and related party rule
- § 4122. Preemption of State and local laws
- § 4123. Severability
- § 4124. Authorization of appropriations
- § 4125. State preservation project assistance
§ 4101. General prepayment limitation
(a) Prepayment and termination
(b) Foreclosure
(c) Effect of unauthorized prepayment
(Pub. L. 100–242, title II, § 211, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4249.)
§ 4102. Notice of intent
(a) Filing with Secretary
(b) Filing with State or local government, tenants, and mortgagee
(c) Ineligibility for filing
An owner shall not be eligible to file a notice of intent under this section if the mortgage covering the housing—
(1) falls into default on or after November 28, 1990; or
(2)
(A) fell into default before, but is current as of, November 28, 1990; and
(B) the owner does not agree to recompense the appropriate Insurance Fund, in the amount the Secretary determines appropriate, for any losses sustained by the Fund as a result of any work-out or other arrangement agreed to by the Secretary and the owner with respect to the defaulted mortgage.
The Secretary shall carry out this subsection in a manner consistent with the provisions of section 1701z–11 of this title.
(Pub. L. 100–242, title II, § 212, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4249.)
§ 4103. Appraisal and preservation value of eligible low-income housing
(a) Appraisal
Upon receiving notice of intent regarding an eligible low-income housing project indicating an intent to extend the low-income affordability restrictions under section 4109 of this title or transfer the housing under section 4110 of this title, the Secretary shall provide for determination of the preservation value of the housing, as follows:
(1) Appraisers
(2) Notice
Not later than 30 days after the filing of a notice of intent to seek incentives under section 4109 of this title or transfer the property under section 4110 of this title, the Secretary shall provide written notice to the owner filing the notice of intent of—
(A) the need for the owner to acquire an appraisal of the property under paragraph (1);
(B) the rules and guidelines for such appraisals;
(C) the filing deadline for submission of the appraisal under paragraph (1);
(D) the need for an appraiser retained by the Secretary to inspect the housing and project financial records; and
(E) any delegation to the appropriate State agency by the Secretary of responsibilities regarding the appraisal.
(3) Timeliness
(b) Preservation value
For purposes of this subchapter, the preservation value of eligible low-income housing appraised under this section shall be—
(1) for purposes of extending the low-income affordability restrictions and receiving incentives under section 4109 of this title, the fair market value of the property based on the highest and best use of the property as residential rental housing; and
(2) for purposes of transferring the property under section 4110 or 4111 of this title, the fair market value of the housing based on the highest and best use of the property.
(c) Guidelines
The Secretary shall provide written guidelines for appraisals of preservation value, which shall assume repayment of the existing federally assisted mortgage, termination of the existing low-income affordability restrictions, simultaneous termination of any Federal rental assistance, and costs of compliance with any State or local laws of general applicability. The guidelines may permit reliance upon assessments of rehabilitation needs and other conversion costs determined by an appropriate State agency, as determined by the Secretary. The guidelines shall instruct the appraiser to use the greater of actual project operating expenses at the time of the appraisal (based on the average of the actual project operating expenses du
(1) Residential rental value
(2) Highest and best use value
(Pub. L. 100–242, title II, § 213, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4250; amended Pub. L. 102–550, title III, § 302, Oct. 28, 1992, 106 Stat. 3763.)
§ 4104. Annual authorized return and preservation rents
(a) Annual authorized return
(b) Preservation rentsThe Secretary shall also determine the aggregate preservation rents under this subsection for each project appraised under section 4103 of this title. The aggregate preservation rents shall be used solely for the purposes of comparison with Federal cost limits under section 4105 of this title. Actual rents received by an owner (or a qualified purchaser) shall be determined pursuant to section 4109, 4110, or 4111 of this title. The aggregate preservation rents shall be established as follows:
(1) Extension of affordability limitsThe aggregate preservation rent for purposes of receiving incentives pursuant to extension of the low-income affordability restrictions under section 4109 of this title shall be the gross potential income for the project, determined by the Secretary, that would be required to support the following costs:
(A) The annual authorized return determined under subsection (a).
(B) Debt service on any rehabilitation loan for the housing.
(C) Debt service on the federally-assisted mortgage for the housing.
(D) Project operating expenses.
(E) Adequate reserves.
(2) SaleThe aggregate preservation rent for purposes of receiving incentives pursuant to sale under section 4110 or 4111 of this title shall be the gross income for the project determined by the Secretary, that would be required to support the following costs:
(A) Debt service on the loan for acquisition of the housing.
(B) Debt service on any rehabilitation loan for the housing.
(C) Debt service on the federally-assisted mortgage for the housing.
(D) Project operating expenses.
(E) Adequate reserves.
(c) Future financingNeither this section, nor any plan of action or use agreement implementing this section, shall restrict an owner from obtaining a new loan or refinancing an existing loan secured by the project, or from distributing the proceeds of such a loan; except that, in conjunction with such refinancing—
(1) the owner shall provide for adequate rehabilitation pursuant to a capital needs assessment to ensure long-term sustainability of the property satisfactory to the lender or bond issuance agency;
(2) any resulting budget-based rent increase shall include debt service on the new financing, commercially reasonable debt service coverage, and replacement reserves as required by the lender; and
(3) for tenants of dwelling units not covered by a project- or tenant-based rental subsidy, any rent increases resulting from the refinancing transaction may not exceed 10 percent per year, except that—
(A) any tenant occupying a dwelling unit as of time of the refinancing may not be required to pay for rent and utilities, for the duration of such tenancy, an amount that exceeds the greater of—
(i) 30 percent of the tenant’s income; or
(ii) the amount paid by the tenant for rent and utilities immediately before such refinancing; and
(B) this paragraph shall not apply to any tenant who does not provide the owner with proof of income.
Paragraph (3) may not be construed to limit any rent increases resulting from increased operating costs for a project.
(Pub. L. 100–242, title II, § 214, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4251; amended Pub. L. 114–94, div. G, title LXXVII, § 77002, Dec. 4, 2015, 129 Stat. 1790.)
§ 4105. Federal cost limits and limitations on plans of action
(a) Determination of relationship to Federal cost limits
(1) Initial determination
(2) Relevant local markets
(3) Effect
(b) Limitations on action pursuant to Federal cost limits
(1) Housing within Federal cost limits
If the aggregate preservation rents for an eligible low-income housing project do not exceed the Federal cost limit, the owner may not prepay the mortgage on the housing or terminate the insurance contract with respect to the housing, except as permitted under section 4114 of this title. The owner may—
(A) file a plan of action under section 4107 of this title to receive incentives under section 4109 of this title; or
(B) file a second notice of intent under section 4106(d) of this title indicating an intention to transfer the housing under section 4110 of this title and take actions pursuant to such section.
(2) Housing exceeding Federal cost limits
If the aggregate preservation rents for an eligible low-income housing project exceed the Federal cost limit, the owner may—
(A) file a plan of action under section 4107 of this title to receive incentives under section 4109 of this title if the owner agrees to accept incentives under such sections in an amount that shall not exceed the Federal cost limit;
(B) file a second notice of intent under section 4106(d) of this title indicating an intention to transfer the housing under section 4110 of this title and take actions pursuant to such section if the owner agrees to transfer the housing at a price that shall not exceed the Federal cost limit; or
(C) file a second notice of intent under section 4106(d) of this title indicating an intention to prepay the mortgage or voluntarily terminate the insurance, subject to the mandatory sale provisions under section 4111 of this title.
(Pub. L. 100–242, title II, § 215, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4252; amended Pub. L. 102–550, title III, § 317(a)(1), Oct. 28, 1992, 106 Stat. 3772.)
§ 4106. Information from Secretary
(a) Information to owners terminating affordability restrictions
(b) Information to owners extending low-income affordability restrictions
The Secretary shall provide each owner who submits notice of intent to extend the low-income affordability restrictions on the housing under section 4109 of this title or transfer the housing under section 4110 of this title to a qualified purchaser with information under this subsection not later than 9 months after receipt of the notice of intent. The information shall include any information necessary for the owner to prepare a plan of action under section 4107 of this title, including the following:
(1) Preservation values
(2) Preservation rent
(3) Federal cost limits
(4) Federal cost limit analysis
(c) Availability to tenants
(d) Second notice of intent
(1) Filing
(2) Timing
(3) Filing with the State or local government, tenants, and mortgagee
(Pub. L. 100–242, title II, § 216, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4253; amended Pub. L. 102–550, title III, §§ 303, 317(a)(2), Oct. 28, 1992, 106 Stat. 3763, 3772.)
§ 4107. Plan of action
(a) Submission to Secretary
(1) Timing
(2) Copies to tenants
(3) Failure to submit
(b) Contents
(1) Termination of affordability restrictions
If the plan of action proposes to terminate the low-income affordability restrictions through prepayment or voluntary termination in accordance with section 4108 of this title, the plan shall include—
(A) a description of any proposed changes in the status or terms of the mortgage or regulatory agreement;
(B) a description of any proposed changes in the low-income affordability restrictions;
(C) a description of any change in ownership that is related to prepayment or voluntary termination;
(D) an assessment of the effect of the proposed changes on existing tenants;
(E) an analysis of the effect of the proposed changes on the supply of housing affordable to low- and very low-income families or persons in the community within which the housing is located and in the area that the housing could reasonably be expected to serve; and
(F) any other information that the Secretary determines is necessary to achieve the purposes of this title.1
(2) Extension of affordability restrictions
If the plan of action proposes to extend the low-income affordability restrictions of the housing in accordance with section 4109 of this title or transfer the housing to a qualified purchaser in accordance with section 4110 of this title, the plan shall include—
(A) a description of any proposed changes in the status or terms of the mortgage or regulatory agreement;
(B) a description of the Federal incentives requested (including cash flow projections), and analyses of how the owner will address any physical or financial deficiencies and maintain the low-income affordability restrictions of the housing;
(C) a description of any assistance from State or local government agencies, including low-income housing tax credits, that have been offered to the owner or purchaser or for which the owner or purchaser has applied or intends to apply;
(D) a description of any transfer of the property, including the identity of the transferee and a copy of any documents of sale; and
(E) any other information that the Secretary determines is necessary to achieve the purposes of this title.1
(c) Revisions
(Pub. L. 100–242, title II, § 217, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4254; amended Pub. L. 102–550, title III, § 304, Oct. 28, 1992, 106 Stat. 3763.)
§ 4108. Prepayment and voluntary termination
(a) ApprovalThe Secretary may approve a plan of action that provides for termination of the low-income affordability restrictions through prepayment of the mortgage or voluntary termination of the mortgage insurance contract only upon a written finding that—
(1) implementation of the plan of action will not—
(A) materially increase economic hardship for current tenants, and will not in any event result in (i) a monthly rental payment by any current tenant that exceeds 30 percent of the monthly adjusted income of the tenant or an increase in the monthly rental payment in any year that exceeds 10 percent (whichever is lower), or (ii) in the case of a current tenant who already pays more than such percentage, an increase in the monthly rental payment in any year that exceeds the increase in the Consumer Price Index or 10 percent (whichever is lower); or
(B) involuntarily displace current tenants (except for good cause) where comparable and affordable housing is not readily available determined without regard to the availability of Federal housing assistance that would address any such hardship or involuntary displacement; and
(2) the supply of vacant, comparable housing is sufficient to ensure that such prepayment will not materially affect—
(A) the availability of decent, safe, and sanitary housing affordable to low-income and very low-income families or persons in the area that the housing could reasonably be expected to serve;
(B) the ability of low-income and very low-income families or persons to find affordable, decent, safe, and sanitary housing near employment opportunities; or
(C) the housing opportunities of minorities in the community within which the housing is located.
(b) Standards and procedure for written findings
(1) Standards
(2) Procedure and criteria
(c) Disapproval
(Pub. L. 100–242, title II, § 218, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4256; amended Pub. L. 102–550, title III, § 305, Oct. 28, 1992, 106 Stat. 3763.)
§ 4109. Incentives to extend low-income use
(a) Agreements by Secretary
(b) Permissible incentivesSuch agreements may include one or more of the following incentives:
(1) Increased access to residual receipts accounts.
(2) Subject to the availability of amounts provided in appropriations Acts—
(A) an increase in the rents permitted under an existing contract under section 1437f of title 42, or
(B) additional assistance under section 1437f of title 42 or an extension of any project-based assistance attached to the housing; and
(3) An increase in the rents on units occupied by current tenants as permitted under section 4112 of this title.
(4) Financing of capital improvements under section 201 of the Housing and Community Development Amendments of 1978.
(5) Financing of capital improvements through provision of insurance for a second mortgage under section 1715z–6 of this title.
(6) In the case of housing defined in section 4119(1)(A)(iii) of this title, redirection of the Interest Reduction Payment subsidies to a second mortgage.
(7) Access by the owner to a portion of the preservation equity in the housing through provision of insurance for a second mortgage loan insured under section 1715z–6(f) 2
2 See References in Text note below.
of this title or a non-insured mortgage loan approved by the Secretary and the mortgagee.(8) Other incentives authorized in law.
With respect to any housing with a mortgage insured or otherwise assisted pursuant to section 1715z–1 of this title, the provisions of subsections (f) and (g) of section 1715z–1 of this title notwithstanding, the fair market rental charge for each unit in such housing may be increased in accordance with this subsection, but the owner shall pay to the Secretary all rental charges collected in excess of the basic rental charges, in an amount not greater than the fair market rental charges as such charges would have been established under section 1715z–1(f) of this title absent the requirements of this paragraph.
(Pub. L. 100–242, title II, § 219, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4256; amended Pub. L. 102–550, title III, § 306, Oct. 28, 1992, 106 Stat. 3764.)
§ 4110. Incentives for transfer to qualified purchasers
(a) In general
(b) Right of first offer to priority purchasers
(1) Negotiation period
(2) Expression of interest
(3) Information
(c) Right of refusal for other qualified purchasers
(d) Assistance
(1) Approval
(2) Amount
Subject to the availability of amounts approved in appropriations Acts, the Secretary shall, for approvable plans of action, provide assistance sufficient to enable qualified purchasers (including all priority purchasers other than resident councils acquiring under the homeownership program authorized by section 4116 of this title) to—
(A) acquire the eligible low-income housing from the current owner for a purchase price not greater than the preservation equity of the housing;
(B) pay the debt service on the federally-assisted mortgage covering the housing;
(C) pay the debt service on any loan for the rehabilitation of the housing;
(D) meet project operating expenses and establish adequate reserves for the housing, and in the case of a priority purchaser, meet project oversight costs;
(E) receive a distribution equal to an 8 percent annual return on any actual cash investment (from sources other than assistance provided under this title 2
2 See References in Text note below.
) made to acquire or rehabilitate the project;(F) in the case of a priority purchaser, receive a reimbursement of all reasonable transaction expenses associated with the acquisition, loan closing, and implementation of an approved plan of action; and
(G) in the case of an approved resident homeownership program, cover the costs of training for the resident council, homeownership counseling and training, the fees for the nonprofit entity or public agency working with the resident council and costs related to relocation of tenants who elect to move.
(3) Incentives
(A) In general
(B) Priority purchasers
(Pub. L. 100–242, title II, § 220, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4257; amended Pub. L. 102–550, title III, § 307, Oct. 28, 1992, 106 Stat. 3764.)
§ 4111. Mandatory sale for housing exceeding Federal cost limits
(a) In general
(b) Right of first refusal to priority purchasers
(1) Duration and required sale
(2) Expression of interest
(3) Information from Secretary
(c) Right of refusal for other qualified purchasers
(d) Assistance
(1) Federal cost limit
(2) Additional assistance
(3) Securing State and local funding
(Pub. L. 100–242, title II, § 221, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4259; amended Pub. L. 102–550, title III, § 317(a)(3), Oct. 28, 1992, 106 Stat. 3772.)
§ 4112. Criteria for approval of plan of action involving incentives
(a) In generalThe Secretary may approve a plan of action for extension of the low-income affordability restrictions on any eligible low-income housing or transfer the housing to a qualified purchaser (other than a resident council) only upon finding that—
(1) due diligence has been given to ensuring that the package of incentives is, for the Federal Government, the least costly alternative that is consistent with the full achievement of the purposes of this title; 1
1 See References in Text note below.
(2) binding commitments have been made to ensure that—
(A) the housing will be retained as housing affordable for very low-income families or persons, low-income families or persons, and moderate-income families or persons for the remaining useful life of such housing (as determined under subsection (c));
(B) throughout such period, adequate expenditures will be made for maintenance and operation of the housing and that the project meets housing standards established by the Secretary under subsection (d), as determined by inspections conducted under such subsection by the Secretary;
(C) current tenants will not be involuntarily displaced (except for good cause);
(D) any increase in rent contributions for current tenants will be to a level that does not exceed 30 percent of the adjusted income of the tenant or the published existing fair market rent for comparable housing established under section 1437f(c) of title 42, whichever is lower, except that the rent contributions of any tenants occupying the housing at the time of any increase may not be reduced by reason of this subparagraph (except with respect to tenants receiving section 8 [42 U.S.C. 1437f] assistance in accordance with subparagraph (E)(ii) of this paragraph);
(E)
(i) any resulting increase in rents for current tenants (except for increases made necessary by increased operating costs)—(I) shall be phased in equally over a period of not less than 3 years, if such increase is 30 percent or more; and(II) shall be limited to not more than 10 percent per year if such increase is more than 10 percent but less than 30 percent; and
(ii) assistance under section 1437f of title 42 shall be provided, to the extent available under appropriation Acts, if necessary to mitigate any adverse effect on current income-eligible very low- and low-income tenants; and 2
2 So in original. The word “and” probably should not appear.
(F)
(i) rents for units becoming available to new tenants shall be at levels approved by the Secretary that will ensure, to the extent practicable, that the units will be available and affordable to the same proportions of very low-income families or persons, low-income families or persons, and moderate-income families or persons (including families or persons whose incomes are 95 percent or more of area median income) as resided in the housing as of January 1, 1987 (based on the area median income limits established by the Secretary in February 1987), or the date the plan of action is approved, whichever date results in the highest proportion of very low-income families, except that this limitation shall not prohibit a higher proportion of very low-income families from occupying the housing; and
(ii) in approving rents under this paragraph, the Secretary shall take into account any additional incentives provided under this subchapter;
(G) future rent adjustments shall be—
(i) made by applying an annual factor (to be determined by the Secretary) to the portion of rent attributable to operating expenses for the housing and, where the owner is a priority purchaser, to the portion of rent attributable to project oversight costs; and
(ii) subject to a procedure, established by the Secretary, for owners to apply for rent increases not adequately compensated by annual adjustment under clause (i), under which the Secretary may increase rents in excess of the amount determined under clause (i) only if the Secretary determines such increases are necessary to reflect extraordinary necessary expenses of owning and maintaining the housing; and
(H) any savings from reductions in operating expenses due to management efficiencies shall be deposited in project reserves for replacement and the owner shall have periodic access to such reserves, to the extent the Secretary determines that the level of reserves is adequate and that the housing is maintained in accordance with the standards established under subsection (d); and
(3) no incentives under section 4109 of this title (other than to purchasers under section 4110 of this title) may be provided until the Secretary determines the project meets housing standards under subsection (d), except that incentives under such section and other incentives designed to correct deficiencies in the project may be provided.
(b) Implementation
(c) Determination of remaining useful life
(1) “Remaining useful life” defined
(2) Standards
(3) Owner petition
(4) Tenant and community comment and appeal
(d) Housing standards
(1) Establishment and inspection
(2) Sanctions
(A) In generalThe Secretary shall take any action appropriate to require the owner of any housing not in compliance with such standards to bring such housing into compliance with the standards, including—
(i) directing the mortgagee, with respect to an equity take-out loan under section 1715z–6(f) 1 of this title, to withhold the disbursement to the owner of any escrowed loan proceeds and requiring that such proceeds be used for repair of the housing; and
(ii) reduce the amount of the annual authorized return, as determined by the Secretary, for the period ending upon a determination by the Secretary that the project is in compliance with the standards and requiring that such amounts be used for repair.
(B) Continued compliance
(C) Removal of assistanceIf, upon inspection, the Secretary determines that any eligible low income housing project has failed to comply with the standards established under this subsection for 2 consecutive years, the Secretary may take 1 or more of the following actions:
(i) Subject to availability of amounts provided in appropriations Acts, provide assistance under sections 1437f(b) and 1437f(o) of title 42 (other than project-based assistance attached to the housing) for any tenant eligible for such assistance who desires to terminate occupancy in the housing. For each unit in the housing vacated pursuant to the provision of assistance under this clause, the Secretary may, notwithstanding any other law or contract for assistance, cancel the provision of project-based assistance attached to the housing for 1 dwelling unit, if the housing is receiving such assistance.
(ii) In the case of housing for which an equity take-out loan has been made under section 1715z–6(f) 1 of this title, declare such loan to be in default and accelerate the maturity date of the loan.
(iii) Declare any rehabilitation loan insured or provided by the Secretary (with respect to the housing) to be in default and accelerate the maturity date of the loan.
(iv) Suspend payments under or terminate any contract for project-based rental assistance under section 1437f of title 42.
(v) Take any other action authorized by law or the project regulatory agreement to ensure that the housing will be brought into compliance with the standards established under this subsection.
(e) Distribution and residual receipts
(1) AuthorityAfter December 4, 2015, the owner of a property subject to a plan of action or use agreement pursuant to this section shall be entitled to distribute—
(A) annually, all surplus cash generated by the property, but only if the owner is in material compliance with such use agreement including compliance with prevailing physical condition standards established by the Secretary; and
(B) notwithstanding any conflicting provision in such use agreement, any funds accumulated in a residual receipts account, but only if the owner is in material compliance with such use agreement and has completed, or set aside sufficient funds for completion of, any capital repairs identified by the most recent third party capital needs assessment.
(2) Operation of propertyAn owner that distributes any amounts pursuant to paragraph (1) shall—
(A) continue to operate the property in accordance with the affordability provisions of the use agreement for the property for the remaining useful life of the property;
(B) as required by the plan of action for the property, continue to renew or extend any project-based rental assistance contract for a term of not less than 20 years; and
(C) if the owner has an existing multi-year project-based rental assistance contract for less than 20 years, have the option to extend the contract to a 20-year term.
(Pub. L. 100–242, title II, § 222, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4260; amended Pub. L. 102–550, title III, §§ 308, 317(a)(4), Oct. 28, 1992, 106 Stat. 3764, 3772; Pub. L. 103–327, title II, Sept. 28, 1994, 108 Stat. 2316; Pub. L. 114–94, div. G, title LXXVII, § 77001, Dec. 4, 2015, 129 Stat. 1790.)
§ 4113. Assistance for displaced tenants
(a) Section 1437f assistance
(b) Relocation assistance
(c) Continued occupancy
(1) In general
(2) Provision of assistance by owner
(3) Applicability to low-vacancy areas and special needs tenants
The provisions of this subsection shall apply only to—
(A) eligible low income housing located in a low-vacancy area (as such term is defined by the Secretary); and
(B) tenants in any eligible low-income housing in any area who have special needs restricting their ability to relocate (including elderly tenants and tenants with disabilities), as determined under regulations established by the Secretary.
(d) Required acceptance of section 1437f assistance
(e) Regional pools
(f) Enhanced voucher assistance for certain tenants
(1) Authority
(2) Eligible families
A family described in this paragraph is a family that is—
(A)
(i) a low-income family; or
(ii) a moderate-income family that is: (I) an elderly family; (II) a disabled family; or (III) residing in a low-vacancy area; and
(B) residing in eligible low-income housing on the date of the prepayment of the mortgage or voluntary termination of the insurance contract.
(Pub. L. 100–242, title II, § 223, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4264; amended Pub. L. 105–276, title V, § 550(d), Oct. 21, 1998, 112 Stat. 2610; Pub. L. 106–74, title V, § 538(c), Oct. 20, 1999, 113 Stat. 1123.)
§ 4114. Permissible prepayment or voluntary termination and modification of commitments
(a) In general
Notwithstanding any limitations on prepayment or voluntary termination under this subchapter, an owner may terminate the low-income affordability restrictions through prepayment or voluntary termination, subject to compliance with the provisions of section 4113 of this title, under one of the following circumstances:
(1)
(A) The Secretary approves a plan of action under section 4109(a) of this title, but does not provide the assistance approved in such plan during the 15-month period beginning on the date of approval.
(B) After the date that the housing would have been eligible for prepayment pursuant to the terms of the mortgage (notwithstanding this subchapter), the Secretary approves a plan of action under section 4110 or 4111 of this title, but does not provide the assistance approved in such plan before the earlier of (i) the expiration of the 2-month period beginning on the commencement of the 1st fiscal year beginning after such approval, or (ii) the expiration of the 6-month period beginning on the date of approval.
(C) The Secretary approves a plan of action under section 4110 or 4111 of this title for any eligible low-income housing not covered by subparagraph (B), but does not provide the assistance approved in such plan before the earlier of (i) the expiration of the 2-month period beginning on the commencement of the 1st fiscal year beginning after such approval, or (ii) the expiration of the 9-month period beginning on the date of approval.
(2) An owner who intended to transfer the housing to a qualified purchaser under section 4110 or 4111 of this title, and fully complied with the provisions of such section, did not receive any bona fide offers from any qualified purchasers within the applicable time periods.
In the event that the purchaser under the plan of action is unable to consummate the purchase for reasons other than the failure of the Secretary to provide incentives, an owner may terminate the low-income affordability restrictions through prepayment or voluntary termination subject to the provisions of sections 4110 and 4111 of this title.
(b) Section 1437f rental assistance
When providing rental assistance under section 1437f of title 42, the Secretary may enter into a contract with an owner, contingent upon the future availability of appropriations for the purpose of renewing expiring contracts for rental assistance as provided in appropriations Acts, to extend the term of such rental assistance for such additional period or periods necessary to carry out an approved plan of action. The contract and the approved plan of action shall provide that, if the Secretary is unable to extend the term of such rental assistance or is unable to develop a revised package of incentives providing benefits to the owner comparable to those received under the original approved plan of action, the Secretary, upon the request of the owner, shall take the following actions (subject to the limitations under the following paragraphs):
(1) Modification of commitments
(2) Termination of plan of action
At least 30 days before making a request under this subsection, an owner shall notify the Secretary of the owner’s intention to submit the request. The Secretary shall have a period of 90 days following receipt of such notice to take action to extend the rental assistance contract and to continue the binding commitments under section 4112(a)(2) of this title.
(Pub. L. 100–242, title II, § 224, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4265.)
§ 4115. Timetable for approval of plan of action
(a) Notification of deficiencies
(b) Notification of approval
(1) In general
Not later than 180 days after receipt of a plan of action, or such longer period as the owner requests, the Secretary shall notify the owner in writing whether the plan of action, including any revisions, is approved. If approval is withheld, the notice shall describe—
(A) the reasons for withholding approval; and
(B) the actions that could be taken to meet the criteria for approval.
(2) Opportunity to revise
(c) Delayed approval
(Pub. L. 100–242, title II, § 225, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4266.)
§ 4116. Resident homeownership program
(a) Formation of resident council
(b) Other program requirements and limitations
(1) Sales to residents
As a condition of approval of a plan of action involving homeownership program under this subchapter, the resident council shall prepare a workable plan acceptable to the Secretary for giving all residents an opportunity to become owners, which plan shall identify—
(A) the price at which the resident council intends to transfer ownership interests in, or shares representing, units in the housing;
(B) the factors that will influence the establishment of such price;
(C) how such price compares to the estimated appraised value of the ownership interests or shares;
(D) the underwriting standard the resident council plans to use (or reasonably expects a public or private lender to use) for potential tenant purchasers;
(E) the financing arrangements the tenants are expected to pursue or be provided; and
(F) a workable schedule of sale (subject to the limitations of paragraph (8)) based on estimated tenant incomes.
(2) Approval of method of conversion and limitation on conditions of approval
(3) Required conditions
The Secretary shall require that the form of homeownership impose appropriate conditions, including conditions to assure that—
(A) the number of initial owners that are very low-income, lower income, or moderate-income persons at initial occupancy meet standards required or approved by the Secretary;
(B) occupancy charges payable by the owners meet requirements established by the Secretary;
(C) the aggregate incomes of initial and subsequent owners and other sources of funds for the project are sufficient to permit occupancy charges to cover the full operating costs of the housing and any debt service;
(D) each initial owner occupies the unit it acquires; and
(E) the low-income affordability restrictions shall continue to apply to any rental units in the housing for any period during which such units remain rental units.
(4) Use of proceeds from sales to eligible families
(5) Restrictions on resale by homeowners
(A) In general
(i) Transfer permitted
(ii) Right to purchase
(iii) Promissory note required
(B) 6 years or less
In the case of a transfer within 6 years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to assure that an eligible family may not receive any undue profit. The plan shall provide for limiting the family’s consideration for its interest in the property to the total of—
(i) the contribution to equity paid by the family;
(ii) the value, as determined by such means as the Secretary shall determine through regulation, of any improvements installed at the expense of the family during the family’s tenure as owner; and
(iii) the appreciated value determined by an inflation allowance at a rate which may be based on a cost-of-living index, an income index, or market index as determined by the Secretary through regulation and agreed to by the purchaser and the entity that transfers ownership interests in, or shares representing, units to eligible families (or another entity specified in the approved application), at the time of initial sale, and applied against the contribution to equity.
Such an entity may, at the time of initial sale, enter into an agreement with the family to set a maximum amount which this appreciation may not exceed.
(C) 6–20 years
(D) Use of recaptured funds
(6) Protection of nonpurchasing families
(A) Eviction
(B) Rental assistance
(C) Relocation assistance
(7) Qualified management
(8) Timely homeownership
(9) Records and audit of resident councils
(A) Maintenance
(B) Access
(C) Audit
(10) Assumption conditions
(Pub. L. 100–242, title II, § 226, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4267; amended Pub. L. 102–550, title III, § 309, Oct. 28, 1992
§ 4117. Delegated responsibility to State agencies
(a) In general
(b) Approval
State preservation plans shall be submitted in such form and in accordance with such procedures as the Secretary shall establish. The Secretary may approve plans that contain—
(1) an inventory of low-income housing located within the State that is or will be eligible low-income housing under this subchapter within 5 years;
(2) a description of the agency’s experience in the area of multifamily financing and restructuring;
(3) a description of the administrative resources that the agency will commit to the processing of plans of action in accordance with this subchapter;
(4) a description of the administrative resources that the agency will commit to the monitoring of approved plans of action in accordance with this subchapter;
(5) an independent analysis of the performance of the multifamily housing inventory financed or otherwise monitored by the agency;
(6) a certification by the public official responsible for submitting the comprehensive housing affordability strategy under section 12705 of title 42 that the proposed activities are consistent with the approved housing strategy of the State within which the eligible low-income housing is located; and
(7) such other certifications or information that the Secretary determines to be necessary or appropriate to achieve the purposes of this subchapter.
(c) Implementation agreements
(Pub. L. 100–242, title II, § 227, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4270.)
§ 4118. Consultations with other interested parties
The Secretary shall confer with any appropriate State or local government agency to confirm any State or local assistance that is available to achieve the purposes of this title 1
1 See References in Text note below.
and shall give consideration to the views of any such agency when making determinations under this subchapter. The Secretary shall also confer with appropriate interested parties that the Secretary believes could assist in the development of a plan of action that best achieves the purposes of this subchapter.(Pub. L. 100–242, title II, § 228, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4271.)
§ 4119. DefinitionsFor purposes of this subchapter:
(1) The term “eligible low-income housing” means any housing financed by a loan or mortgage—
(A) that is—
(i) insured or held by the Secretary under section 1715l(d)(3) of this title and receiving loan management assistance under section 1437f of title 42 due to a conversion from section 1701s of this title;
(ii) insured or held by the Secretary and bears interest at a rate determined under the proviso of section 1715l(d)(5) of this title;
(iii) insured, assisted, or held by the Secretary or a State or State agency under section 1715z–1 of this title; or
(iv) held by the Secretary and formerly insured under a program referred to in clause (i), (ii), or (iii); and
(B) that, under regulation or contract in effect before February 5, 1988, is or will within 24 months become eligible for prepayment without prior approval of the Secretary.
(2) The term “Federal cost limit” means, for any eligible low-income housing, the amount determined under section 4105(a) of this title.
(3) The term “low-income affordability restrictions” means limits imposed by regulation or regulatory agreement on tenant rents, rent contributions, or income eligibility in eligible low-income housing.
(4) The terms “low-income families or persons” and “very low-income families or persons” mean families or persons whose incomes do not exceed the respective levels established for low-income families and very low-income families, respectively, under section 1437a(b)(2) of title 42.
(5) The term “moderate-income families or persons” means families or persons whose incomes are between 80 percent and 95 percent of the median income for the area, as determined by the Secretary with adjustments for smaller and larger families.
(6) The term “nonprofit organization” means any private, nonprofit organization that—
(A) is organized or chartered under State or local laws;
(B) has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual;
(C) complies with standards of financial accountability acceptable to the Secretary; and
(D) has among its principal purposes significant activities related to the provision of decent housing that is affordable to very low-, low-, and moderate-income families.
(7) The term “owner” means the current or subsequent owner or owners of eligible low-income housing.
(8) The term “preservation equity” means, for any eligible low-income housing—
(A) for purposes of determining the authorized return under section 4104(a) of this title and providing incentives to extend the low-income affordability restrictions on the housing under section 4109 of this title—
(i) the preservation value of the housing determined under section 4103(b)(1) of this title; less
(ii) any debt secured by the property; and
(B) for purposes of determining incentives under section 1
1 So in original. Probably should be “sections”.
4110 and 4111 of this title and determining the amount of an acquisition loan under the provisions of section 1715z–6(f)(3) 22 See References in Text note below.
of this title—(i) the preservation value of the housing determined under section 4103(b)(2) of this title; less
(ii) the outstanding balance of the federally-assisted mortgage or mortgages for the housing.
(9) The term “preservation value” means, for any eligible low-income housing, the applicable value determined under paragraph (1) or (2) of section 4103(b) of this title.
(10) The term “Secretary” means the Secretary of Housing and Urban Development.
(11) The term “resident council” means any incorporated nonprofit organization or association that—
(A) is representative of the residents of the housing;
(B) adopts written procedures providing for the election of officers on a regular basis; and
(C) has a democratically elected governing board, elected by the residents of the housing.
(Pub. L. 100–242, title II, § 229, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4271; amended Pub. L. 102–550, title III, §§ 310, 317(a)(5), Oct. 28, 1992, 106 Stat. 3765, 3772; Pub. L. 103–327, title II, Sept. 28, 1994, 108 Stat. 2316.)
§ 4120. Notice to tenants
Where a provision of this subchapter requires that information or material be given to tenants of the housing, the requirement may be met by (1) posting a copy of the information or material in readily accessible locations within each affected building, or posting notices in each such location describing the information or material and specifying a location, as convenient to the tenants as is reasonably practical, where a copy may be examined, and (2) supplying a copy of the information or material to a representative of the tenants.
(Pub. L. 100–242, title II, § 230, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4273.)
§ 4121. Definitions of qualified and priority purchaser and related party rule
(a) Priority purchaser
(b) Qualified purchaser
(c) Related parties
(d) Management exception
(Pub. L. 100–242, title II, § 231, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4273; amended Pub. L. 102–550, title III, § 317(a)(6), Oct. 28, 1992, 106 Stat. 3772.)
§ 4122. Preemption of State and local laws
(a) In general
No State or political subdivision of a State may establish, continue in effect, or enforce any law or regulation that—
(1) restricts or inhibits the prepayment of any mortgage described in section 4119(1) of this title (or the voluntary termination of any insurance contract pursuant to section 1715t of this title) on eligible low income housing;
(2) restricts or inhibits an owner of such housing from receiving the authorized annual return provided under section 4104 of this title;
(3) is inconsistent with any provision of this subchapter, including any law, regulation, or other restriction that limits or impairs the ability of any owner of eligible low income housing to receive incentives authorized under this subchapter (including authorization to increase rental rates, transfer the housing, obtain secondary financing, or use the proceeds of any of such incentives); or
(4) in its applicability to low-income housing is limited only to eligible low-income housing for which the owner has prepaid the mortgage or terminated the insurance contract.
Any law, regulation, or restriction described under paragraph (1), (2), (3), or (4) shall be ineffective and any eligible low-income housing exempt from the law, regulation, or restriction, only to the extent that it violates the provisions of this subsection.
(b) Effect
(Pub. L. 100–242, title II, § 232, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4273; amended Pub. L. 102–550, title III, § 311, Oct. 28, 1992, 106 Stat. 3765.)
§ 4123. Severability
If any provision of this subchapter, or the application of such provision with respect to any person or circumstance, is held invalid, the remainder of this Act, and the application of such provision to any other person or circumstance, shall not be affected by such holding.
(Pub. L. 100–242, title II, § 233, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4274.)
§ 4124. Authorization of appropriations
(a) In general
(b) Grants
(Pub. L. 100–242, title II, § 234, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4274; amended Pub. L. 102–550, title III, § 301, Oct. 28, 1992, 106 Stat. 3762.)
§ 4125. State preservation project assistance
(1) In general
(2) Section 1437f
(3) Restriction
(Pub. L. 101–625, title VI, § 613(b), Nov. 28, 1990, 104 Stat. 4280; Pub. L. 102–550, title III, § 317(b), Oct. 28, 1992, 106 Stat. 3772.)