12 USC 1701 - Management and disposition of multifamily housing projects

Editorial Notes

References in Text

The National Housing Act, referred to in subsecs. (a)(1), (span)(1), (e)(3)(A), and (f)(1), is act June 27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see section 1701 of this title and Tables.

Section 183(c) of the Housing and Community Development Act of 1987, referred to in subsec. (span)(2)(D), is section 183(c) of Puspan. L. 100–242, which was set out as a note under section 1437f of Title 42, The Public Health and Welfare, prior to repeal by Puspan. L. 105–276, title V, § 582(a)(2), Oct. 21, 1998, 112 Stat. 2643.

Section 101 of the Housing and Urban Development Act of 1965, referred to in subsecs. (span)(2)(D)(i) and (e)(1)(D)(i)(VI), (VII), is section 101 of Puspan. L. 89–117, title I, Aug. 10, 1965, 79 Stat. 451, which enacted section 1701s of this title and amended sections 1451 and 1465 of Title 42.

Section 23 of the United States Housing Act of 1937, referred to in subsecs. (span)(2)(D)(iii) and (e)(1)(D)(i)(V), was classified to section 1421span of Title 42 and was omitted from the Code following the general revision of the United States Housing Act of 1937 by Puspan. L. 93–383, title II, § 201(a), Aug. 22, 1974, 88 Stat. 653.

The Emergency Low Income Housing Preservation Act of 1987, referred to in subsec. (c)(2)(E), is title II of Puspan. L. 100–242, Fespan. 5, 1988, 101 Stat. 1877, which, as amended by Puspan. L. 101–625, is known as the Low-Income Housing Preservation and Resident Homeownership Act of 1990, and is classified principally to subchapter I (§ 4101 et seq.) of chapter 42 of this title. Subtitle C of the Low-Income Housing Preservation and Resident Homeownership Act of 1990, probably means subtitle C of title II of Puspan. L. 100–242, as added by Puspan. L. 102–550, which is classified generally to subchapter II (§ 4141 et seq.) of chapter 42 of this title. Another subtitle C of title II of Puspan. L. 100–242 amended sections 1472, 1485, and 1487 of Title 42. For complete classification of this Act to the Code, see Short Title note set out under section 4101 of this title and Tables.

The Cranston-Gonzalez National Affordable Housing Act, referred to in subsec. (c)(2)(E), is Puspan. L. 101–625, Nov. 28, 1990, 104 Stat. 4079. Subtitle B of title IV of the Act is classified principally to part A (§ 12871 et seq.) of subchapter IV of chapter 130 of Title 42. For complete classification of this Act to the Code, see Short Title note set out under section 12701 of Title 42 and Tables.

The Social Security Act, referred to in subsec. (f)(9), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, which is classified generally to chapter 7 (§ 301 et seq.) of Title 42. Part A of title IV of the Act is classified generally to part A (§ 601 et seq.) of subchapter IV of chapter 7 of Title 42. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.

Section 6 of the HUD Demonstration Act of 1993, referred to in subsec. (h)(1)(B)(i), is section 6 of Puspan. L. 103–120, which is set out as a note under section 1437f of Title 42.

The United States Housing Act of 1937, as amended, referred to in subsec. (j)(2)(C), is act Sept. 1, 1937, ch. 896, as revised generally by Puspan. L. 93–383, title II, § 201(a), Aug. 22, 1974, 88 Stat. 653, which is classified generally to chapter 8 (§ 1437 et seq.) of Title 42. For complete classification of this Act to the Code, see Short Title note set out under section 1437 of Title 42 and Tables.

Codification

Section was enacted as part of the Housing and Community Development Amendments of 1978, and not as part of the National Housing Act which comprises this chapter.

Amendments

2006—Subsec. (f)(4). Puspan. L. 109–171 inserted at end “This paragraph shall be effective during fiscal years 2006 through 2010 only to the extent that such budget authority is made available for use under this paragraph in advance in appropriation Acts.”

1998—Subsec. (g)(2). Puspan. L. 105–276 substituted “any system of preferences established pursuant to section 6(c)(4)(A), 8(d)(1)(A), or 8(o)(6)(A)” for “the preferences for assistance under sections 6(c)(4)(A)(i), 8(d)(1)(A)(i), and 8(o)(3)(B)”.

1994—Puspan. L. 103–233 amended section generally, substituting present provisions for former provisions which related, in subsec. (a) to goals, in subsec. (span) to management or disposal of property by negotiated competitive bids, in subsec. (c) to maintenance of housing projects, in subsec. (d) to financial assistance to owner, in subsec. (e) to right of first refusal, in subsec. (f) to displacement of tenants and relocation assistance, in subsec. (g) to assignment or partial payment of mortgages, in subsec. (h) to limitations on certain project, loan, and mortgage sales, in subsec. (i) to definition of multifamily housing project, in subsec. (j) to rules and regulations, in subsec. (k) to annual report describing status of projects, and in subsec. (l) to project-based assistance.

1993—Subsec. (l). Puspan. L. 103–120 added subsec. (l).

1990—Subsec. (a)(1)(B). Puspan. L. 101–625, § 579(a), struck out “or vacant” after “moderate-income persons”.

Subsec. (d)(1). Puspan. L. 101–625, § 579(span)(1), struck out “or are vacant (which units shall be made available for such families as soon as possible)” before semicolon at end of cl. (B).

Subsec. (d)(2), (3). Puspan. L. 101–625, § 579(span)(2), (3), added par. (2) and redesignated former par. (2) as (3).

1989—Subsec. (k). Puspan. L. 101–235 amended subsec. (k) generally. Prior to amendment, subsec. (k) read as follows: “The Secretary shall annually submit to the Congress a report describing the activities carried out under subsection (e) of this section during the preceding year.”

1988—Subsec. (a). Puspan. L. 100–628, § 1010(a), substituted “occupied by low- and moderate-income persons on the date of assignment or foreclosure (whichever is greater)” for “, on the date of assignment, occupied by low- and moderate-income persons” in par. (1)(C).

Puspan. L. 100–242, § 181(a), substituted introductory provisions and par. (1) for former introductory provisions and par. (1) which read as follows: “It is the policy of the United States that the Secretary of Housing and Urban Development (hereinafter referred to as the ‘Secretary’) shall manage and dispose of multifamily housing projects which are owned by the Secretary in a manner consistent with the National Housing Act and this section. The purpose of the property management and disposition program of the Department of Housing and Urban Development shall be to manage and dispose of projects in a manner which will protect the financial interests of the Federal Government and be less costly to the Federal Government than other reasonable alternatives by which the Secretary can further the goals of—

“(1) preserving the housing units so that at least those units which are occupied by low- and moderate-income persons or which are vacant, at the time of acquisition, are available to and affordable by such persons;”.

Subsec. (span)(2). Puspan. L. 100–242, § 181(span), designated existing provisions as subpar. (A) and redesignated former cls. (A) to (D) as cls. (i) to (iv), substituted “subject to subsection (a) of this section that is owned by the Secretary (or for which the Secretary is mortgagee in possession)” for “, owned by the Secretary”, substituted “may determine; and” for “may determine.”, and added subpar. (B).

Subsec. (c). Puspan. L. 100–242, § 181(c), amended subsec. (c) generally. Prior to amendment, subsec. (c) read as follows: “Except where the Secretary has determined on a case-by-case basis that it would be clearly inappropriate, given the manner by which an individual project is to be managed or disposed of pursuant to subsection (a) of this section, the Secretary shall seek to—

“(1) maintain all occupied multifamily housing projects owned by the Secretary in a decent, safe, and sanitary condition;

“(2) to the greatest extent possible, maintain full occupancy in all multifamily housing projects owned by the Secretary; and

“(3) maintain the project for purposes of providing rental or cooperative housing for the longest feasible period.”

Subsec. (d). Puspan. L. 100–628, § 1010(span), amended third sentence of par. (1) generally. Prior to amendment, third sentence read as follows: “Such contracts shall be sufficient to assist all units in subsidized or formerly subsidized projects, and all units in other projects that are occupied by lower income families eligible for assistance under such section 8 at the time of foreclosure or sale, as the case may be, and all units that are vacant at such time (which units shall be made available for such families as soon as possible).”

Puspan. L. 100–242, § 181(d), added subsec. (d). Former subsec. (d) redesignated (f).

Subsec. (e). Puspan. L. 100–628, § 1010(c), amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows: “Upon receipt of a bona fide offer to purchase a project subject to subsection (a) of this section, the Secretary shall notify the local government and the State housing finance agency (or other agency or agencies designated by the Governor) of the proposed terms and conditions of the offer, including the assistance that the Secretary plans to make available to the prospective purchaser. The local government and the designated State agency shall have 90 days to match the offer and purchase the project. In administering the right of first refusal provided in this subsection, the Secretary shall offer assistance to the local government or designated State agency on terms and conditions at least as favorable as made available to the prospective purchaser. Notwithstanding any other provision of law to the contrary, a local government (including a public housing agency) or designated State agency may purchase a subsidized project or formerly subsidized project in accordance with this subsection.”

Puspan. L. 100–242, § 181(d)(1), (e), added subsec. (e). Former subsec. (e) redesignated (g).

Subsec. (f). Puspan. L. 100–242, § 181(d)(1), (e)(1), (g)(1), redesignated former subsec. (d) as (f). Former subsec. (f) redesignated (i).

Subsec. (f)(1). Puspan. L. 100–242, § 181(f), substituted “subject to subsection (a) of this section that is owned by the Secretary (or for which the Secretary is mortgagee in possession)” for “owned by the Secretary”, and inserted at end “In the case of a multifamily housing project subject to subsection (a) of this section that is not owned by the Secretary (and for which the Secretary is not mortgagee in possession), the Secretary shall require the owner of the project to carry out the requirements of this paragraph.”

Subsec. (g). Puspan. L. 100–242, § 181(d)(1), (e)(1), redesignated former subsec. (e) as (g). Former subsec. (g) redesignated (j).

Subsec. (h). Puspan. L. 100–242, § 181(d)(1), (e)(1), (g), added subsec. (h).

Subsec. (i). Puspan. L. 100–628, § 1010(d), (e), substituted “(excluding payments made for certificates under subsection (span)(1) or vouchers under subsection (o) of this section), if (except for purposes of paragraphs (1) and (2) of subsection (h) of this section), and section 183(c) of the Housing and Community Development Act of 1987) such housing assistance payments are made to more than 50 percent of the units in the project” for “(other than subsection (span)(1) of such section), without regard to whether such payments are made to all or a portion of the units in the project” in par. (2) (E) and added par. (4).

Puspan. L. 100–242, § 181(e)(1), (g)(1), (h), redesignated former subsec. (f) as (i), designated existing provisions as par. (1), and added pars. (2) and (3).

Subsec. (j). Puspan. L. 100–242, § 181(g)(1), redesignated former subsec. (g) as (j).

Subsec. (k). Puspan. L. 100–628, § 1010(f), added subsec. (k).

1980—Subsec. (a). Puspan. L. 96–399, § 213(a), in par. (1) inserted provisions respecting occupation of units by low- and moderate-income persons or units vacant at the time of acquisition, and added par. (6).

Subsec. (span)(1). Puspan. L. 96–399, § 213(span), inserted provisions relating to the number of project units occupied by low- and moderate-income persons.

Subsec. (c)(3). Puspan. L. 96–399, § 213(c), added par. (3).

Subsec. (d)(2)(B), (C). Puspan. L. 96–399, § 213(d), inserted exception for tenants of above-moderate income.

Subsec. (f). Puspan. L. 96–399, § 213(e), substituted provisions respecting applicability to projects assisted or insured under this chapter, or subject to loans under section 1701q of this title or section 1452span of title 42, or projects acquired by the Secretary pursuant to any other provision of law, for provisions respecting applicability to assistance under section 1715z-1 of this title, the proviso of section 1715l(d)(5) of this title, or section 101 of the Housing and Urban Development Act of 1965, and projects insured under this chapter.

1979—Subsec. (d)(2). Puspan. L. 96–153 substituted “assure for any such tenant (who continues to meet applicable qualification standards) the right” for “seek to assure the maximum opportunity for any such tenant”.

Statutory Notes and Related Subsidiaries

Effective Date of 2006 Amendment

Puspan. L. 109–171, title II, § 2003(c), Fespan. 8, 2006, 120 Stat. 9, provided that: “The amendments made by this section [amending this section and section 1715z–11a of this title] shall not apply to any transaction that formally commences within one year prior to the enactment of this section [Fespan. 8, 2006].”

Regulations

Puspan. L. 103–233, title I, § 101(f), Apr. 11, 1994, 108 Stat. 358, provided that: “The Secretary shall issue interim regulations necessary to implement the amendments made by subsections (span) through (d) [amending this section and sections 1437d and 1437f of Title 42, The Public Health and Welfare] not later than 90 days after the date of the enactment of this Act [Apr. 11, 1994]. Such interim regulations shall take effect upon issuance and invite public comment on the interim regulations. The Secretary shall issue final regulations to implement such amendments after opportunity for such public comment, but not later than 12 months after the date of issuance of such interim regulations.”

Appropriated Funds Requirement for Below-market Sales

Puspan. L. 109–171, title II, §§ 2001, 2002, Fespan. 8, 2006, 120 Stat. 7, 8, provided that:

“SEC. 2001. DEFINITIONS.

“For purposes of this subtitle [subtitle A (§§ 2001–2003) of title II of Puspan. L. 109–171, amending this section and section 1715z–11a of this title and enacting provisions set out as notes under this section], the following definitions shall apply:

“(1) The term ‘affordability requirements’ means any requirements or restrictions imposed by the Secretary, at the time of sale, on a multifamily real property or a multifamily loan, such as use restrictions, rent restrictions, and rehabilitation requirements.

“(2) The term ‘discount sale’ means the sale of a multifamily real property in a transaction, such as a negotiated sale, in which the sale price is lower than the property market value and is set outside of a competitive bidding process that has no affordability requirements.

“(3) The term ‘discount loan sale’ means the sale of a multifamily loan in a transaction, such as a negotiated sale, in which the sale price is lower than the loan market value and is set outside of a competitive bidding process that has no affordability requirements.

“(4) The term ‘loan market value’ means the value of a multifamily loan, without taking into account any affordability requirements.

“(5) The term ‘multifamily real property’ means any rental or cooperative housing project of 5 or more units owned by the Secretary that prior to acquisition by the Secretary was security for a loan or loans insured under title II of the National Housing Act [12 U.S.C. 1707 et seq.].

“(6) The term ‘multifamily loan’ means a loan held by the Secretary and secured by a multifamily rental or cooperative housing project of 5 or more units that was formerly insured under title II of the National Housing Act.

“(7) The term ‘property market value’ means the value of a multifamily real property for its current use, without taking into account any affordability requirements.

“(8) The term ‘Secretary’ means the Secretary of Housing and Urban Development.

“SEC. 2002. APPROPRIATED FUNDS REQUIREMENT FOR BELOW-MARKET SALES.

“(a)Discount Sales.—Notwithstanding any other provision of law, except for affordability requirements for the elderly and disabled required by statute, disposition by the Secretary of a multifamily real property during fiscal years 2006 through 2010 through a discount sale under sections 207(l) or 246 of the National Housing Act (12 U.S.C. 1713(l), 1715z–11), section 203 of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z–11), or section 204 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–11a), shall be subject to the availability of appropriations to the extent that the property market value exceeds the sale proceeds. If the multifamily real property is sold, during such fiscal years, for an amount equal to or greater than the property market value then the transaction is not subject to the availability of appropriations.

“(span)Discount Loan Sales.—Notwithstanding any other provision of law and in accordance with the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), a discount loan sale during fiscal years 2006 through 2010 under section 207(k) of the National Housing Act (12 U.S.C. 1713(k)), section 203(k) of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z–11(k)), or section 204(a) of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–11a(a)), shall be subject to the availability of appropriations to the extent that the loan market value exceeds the sale proceeds. If the multifamily loan is sold, during such fiscal years, for an amount equal to or greater than the loan market value then the transaction is not subject to the availability of appropriations.

“(c)Applicability.—This section shall not apply to any transaction that formally commences within one year prior to the enactment of this section [Fespan. 8, 2006].”

Multifamily Housing Disposition

Puspan. L. 103–233, title I, § 101(a), Apr. 11, 1994, 108 Stat. 343, provided that: “The Congress finds that—

“(1) the portfolio of multifamily housing project mortgages insured by the FHA is severely troubled and at risk of default, requiring the Secretary to increase loss reserves from $5,500,000,000 in 1991 to $11,900,000,000 in 1992 to cover estimated future losses;

“(2) the inventory of multifamily housing projects owned by the Secretary has more than quadrupled since 1989, and, by the end of 1994, may exceed 69,000 units;

“(3) the cost to the Federal Government of owning and maintaining multifamily housing projects escalated to $288,000,000 in fiscal year 1993;

“(4) the inventory of multifamily housing projects subject to mortgages held by the Secretary has increased dramatically, to more than 2,400 mortgages, and approximately half of these mortgages, with approximately 219,000 units, are delinquent;

“(5) the inventory of insured and formerly insured multifamily housing projects is deteriorating, potentially endangering tenants and neighborhoods; and

“(6) the current statutory framework governing the disposition of multifamily housing projects effectively impedes the Government’s ability to dispose of properties, protect tenants, and ensure that projects are maintained over time.”

Puspan. L. 100–242, title I, § 184, Fespan. 5, 1988, 101 Stat. 1872, as amended by Puspan. L. 101–625, title V, § 580, Nov. 28, 1990, 104 Stat. 4245, provided for establishment of demonstration program for multifamily housing disposition partnerships, together with requirements relating to participation by State housing finance agencies in sale of such housing and cooperation between Secretary of Housing and Urban Development and such agencies, as well as termination of such program at end of Sept. 30, 1991, with certain exceptions, with report to Congress required to be submitted by Secretary not later than 6 months after Sept. 30, 1991, prior to repeal by Puspan. L. 103–233, title I, § 102, Apr. 11, 1994, 108 Stat. 358.