[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1715z-1a]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER II--MORTGAGE INSURANCE
Sec. 1715z-1a. Assistance for troubled multifamily housing
projects
(a) Purpose
The purposes of this section are to provide assistance to restore or
maintain the financial soundness, to assist in the improvement of the
management, to permit capital improvements to be made to maintain
certain projects as decent, safe, and sanitary housing, and to maintain
the low- to moderate-income character of certain projects assisted or
approved for assistance under the National Housing Act [12 U.S.C. 1701
et seq.], the United States Housing Act of 1937 [42 U.S.C. 1437 et
seq.], the Housing Act of 1959, or the Housing and Urban Development Act
of 1965, without regard to whether such projects are insured under the
National Housing Act.
(b) Availability of financial assistance
The Secretary of Housing and Urban Development (hereinafter referred
to in this section as the ``Secretary'') may make available, and
contract to make available, to such extent and in such amounts as may be
approved in appropriation Acts, financial assistance to owners of rental
or cooperative housing projects meeting the requirements of this
section. Such assistance shall be made on an annual basis and in
accordance with the provisions of this section, without regard to
whether such projects are insured under the National Housing Act [12
U.S.C. 1701 et seq.].
(c) Eligibility for financial assistance
A rental or cooperative housing project is eligible for assistance
under this section only if such project--
(1)(A) is assisted under section 236 [12 U.S.C. 1715z-1] or the
proviso of section 221(d)(5) of the National Housing Act [12 U.S.C.
1715l(d)(5)], or under section 101 of the Housing and Urban
Development Act of 1965 [12 U.S.C. 1701s], or received a loan under
section 202 of the Housing Act of 1959 [12 U.S.C. 1701q] more than
15 years before the date on which assistance is made available under
this section;
(B) is assisted under section 23 of the United States Housing
Act of 1937 [42 U.S.C. 1421b], as in effect immediately before
January 1, 1975, section 8 of the United States Housing Act of 1937
[42 U.S.C. 1437f] following conversion to such assistance from
assistance under section 236 of the National Housing Act [12 U.S.C.
1715z-1] or section 101 of the Housing and Urban Development Act of
1965 [12 U.S.C. 1701s]; or
(C) met the criteria specified in subparagraph (A) of this
paragraph before the acquisition of such project by the Secretary
and has been sold by the Secretary, subject to a mortgage insured or
held by the Secretary and subject to an agreement (in effect during
the period of assistance under this section) which provides that the
low- and moderate-income character of the project will be
maintained; except that, with respect to projects sold after October
1, 1978, assistance shall be available for a period not to exceed
three years; and
(2) meets such other requirements consistent with the purposes
of this section as the Secretary may prescribe.
(d) Criteria for granting financial assistance
No assistance may be made available under this section unless the
Secretary has determined that--
(1) such assistance, when considered with other resources
available to the project, is necessary and, in the determination of
the Secretary, will restore or maintain the financial or physical
soundness of the project and maintain the low- and moderate-income
character of the project, and the owner has agreed to maintain the
low- and moderate-income character of such project for a period at
least equal to the remaining term of the project mortgage;
(2) the assistance which could reasonably be expected to be
provided over the useful life of the project will be less costly to
the Federal Government than other reasonable alternatives by which
the Secretary could maintain the low- and moderate-income character
of the project;
(3) the owner of the project, together with the mortgagee in the
case of a project not insured under the National Housing Act [12
U.S.C. 1701 et seq.], has provided or has agreed to provide
assistance to the project in such manner as the Secretary may
determine;
(4) the project is or can reasonably be made structurally sound,
as determined on the basis of information obtained as a result of an
onsite inspection of the project;
(5) the management of the project is being conducted by persons
who meet minimum levels of competency and experience prescribed by
the Secretary;
(6) the project is being operated and managed in accordance with
a management-improvement-and-operating plan which is designed to
reduce the operating costs of the project, which has been approved
by the Secretary, and which includes the following: (A) a detailed
maintenance schedule; (B) a schedule for correcting past
deficiencies in maintenance, repairs, and replacements; (C) a plan
to upgrade the project to meet cost-effective energy efficiency
standards prescribed by the Secretary; (D) a plan to improve
financial and management control systems; (E) a detailed annual
operating budget taking into account such standards for operating
costs in the area as may be determined by the Secretary; and (F)
such other requirements as the Secretary may determine; except that
the Secretary may excuse an owner from compliance with the plan
requirement set forth in this paragraph in any case in which such
owner seeks only assistance for capital improvements under this
section; and except that the Secretary shall review and approve or
disapprove each plan not later than the expiration of the 30-day
period beginning upon the date of submission of the plan to the
Secretary by the owner, but if the Secretary fails to inform the
owner of approval or disapproval of the plan within such period the
plan shall be considered to have been approved;
(7) all reasonable attempts have been made to take all
appropriate actions and provide suitable housing for project
residents;
(8) the project has a feasible plan to involve the residents in
project decisions;
(9) the affirmative fair housing marketing plan meets applicable
requirements; and
(10) the owner certifies that it will comply with various equal
opportunity statutes.
(e) Consultation with local officials
Prior to making assistance available to a project, the Secretary
shall consult with the appropriate officials of the unit of local
government in which such project is located and seek assurances that--
(1) the community in which the project is located is or will
provide essential services to the project in keeping with the
community's general level of such services;
(2) the real estate taxes on the project are or will be no
greater than would be the case if the property were assessed in a
manner consistent with normal property assessment procedures for the
community; and
(3) assistance to the project under this section would not be
inconsistent with local plans and priorities.
(f) Amount of financial assistance
(1) The Secretary may, with respect to any year, provide assistance
under this section, and make commitments to provide such assistance,
with respect to any project (except a project assisted only for capital
improvements) in any amount which the Secretary determines is consistent
with the project's management-improvement-and-operating plan described
in subsection (d)(6) of this section and which does not exceed the sum
of--
(A) an amount determined by the Secretary to be necessary to
correct deficiencies in the project which exist at the beginning of
the first year with respect to which assistance is made available
for the project under this section, which were caused by the
deferral of regularly scheduled maintenance and repairs or the
failure to make necessary and timely replacements of equipment and
other components of the project, and for which payment has not
previously been made;
(B) an amount determined by the Secretary to be necessary to
maintain the low- and moderate-income character of the project by
reducing deficiencies, which exist at the beginning of the first
year with respect to which assistance is made available for the
project under this section and for which payment has not previously
been made, in the reserve funds established by the project owner for
the purpose of replacing capital items;
(C) an amount not greater than the amount by which the estimated
operating expenses (as described in paragraph (2) of this
subsection) for the year with respect to which such assistance is
made available exceeds the estimated revenues to be received (as
described in paragraph (2) of this subsection) by the project during
such year; and
(D) an amount determined by the Secretary to be necessary to
carry out a plan to upgrade the project to meet cost-effective
energy efficiency standards prescribed by the Secretary.
(2) The estimated revenues for any project under paragraph (1)(C) of
this subsection with respect to any year shall be equal to the sum of--
(A) the estimated amount of rent which is to be expended by the
tenants of such project during such year, as determined by the
Secretary without regard to section 236(f)(1) of the National
Housing Act [12 U.S.C. 1715z-1(f)(1)];
(B) the estimated amount of rental assistance payments to be
made on behalf of such tenants during such year, other than
assistance made under this section;
(C) the estimated amount of assistance payments to be made on
behalf of the owner of such project under section 221(d)(5) or
section 236 of the National Housing Act [12 U.S.C. 1715l(d)(5) or
1715z-1] during such year; and
(D) other income attributable to the project as determined by
the Secretary;
except that--
(E) in computing the estimated amount of rent to be expended by
tenants, the Secretary shall provide that (i) at least 25 percent
(or such lesser percentage as is provided for under any other
Federal housing assistance program in which such tenant is
participating) of the income of each such tenant is included, or
(ii) in the case of a tenant paying his or her own utilities, a
percentage of income which is less than 25 percent and which takes
into account the reasonable costs of such utilities; except that no
amount shall be provided for any tenant under clause (i) or (ii)
which exceeds the fair market rental charge as determined pursuant
to section 236(f)(1) of the National Housing Act [12 U.S.C. 1715z-
1(f)(1)] for such tenant; and
(F) in computing the estimated amount of rent to be expended by
tenants and the estimated amount of rental assistance payments to be
made on behalf of such tenants, the Secretary may permit a
delinquency-and-vacancy allowance of not more than 6 per centum of
the estimated amount of such rent and payments computed without
regard to such allowance; except that, with respect to the first
three years in which assistance is provided to a project under this
section, the Secretary may permit such allowance for such project to
exceed such 6 percent by an amount which the Secretary determines is
appropriate to carry out the purposes of this section.
For purposes of computing estimated operating expenses of any such
project with respect to any year, the Secretary shall include all
estimated operating costs which the Secretary determines to be necessary
and consistent with the management-improvement-and-operating plan for
the project for such year, including, but not limited to, taxes,
utilities, maintenance and repairs (except for maintenance and repairs
which should have been performed in previous years), management,
insurance, debt service, and payments made by the owner for the purpose
of establishing or maintaining a reserve fund for replacement costs. The
Secretary may not include in such estimated operating expenses any
return on the equity investment of the owner in such project.
(3) In order to carry out the purposes of this section, the
Secretary may, notwithstanding the provisions of section 236(f)(1) of
the National Housing Act [12 U.S.C. 1715z-1(f)(1)], provide that, for
purposes of establishing a rental charge under such section, there may
be excluded from the computation of the cost of operating a project an
amount equivalent to the amount of assistance payments made for the
project under this section.
(4) Any assistance payments made pursuant to this section with
respect to any project shall be made on an annual basis, payable at such
intervals, but at least quarterly, as the Secretary may determine, and
may be in any amount (which the Secretary determines to be consistent
with the purpose of this section), except that the sum of such
assistance payments for any year for a project (other than a project
receiving assistance only for capital improvements) may not exceed the
amount computed pursuant to paragraph (1) of this subsection. The
Secretary shall review the operations of the project at the time of such
payments to determine that such operations are consistent with the
management-improvement-and-operating plan.
(g) Rules and regulations
The Secretary is authorized to issue such rules and regulations as
may be necessary to carry out the provisions and purposes of this
section, including regulations requiring the establishment of a project
reserve or such other safeguards as the Secretary determines to be
necessary for the financial soundness of any project for which
assistance payments are provided, to the extent applicable.
(h) Limitation on use of financial assistance
The Secretary may not use any of the assistance available under this
section during any fiscal year beginning on or after October 1, 1981, to
supplement any contract to make rental assistance payments which was
made pursuant to section 101 of the Housing and Urban Development Act of
1965 [12 U.S.C. 1701s].
(i) Repealed. Pub. L. 103-233, title I, Sec. 103(b)(1), Apr. 11, 1994,
108 Stat. 359
(j) Flexible Subsidy Fund
(1) For purposes of carrying out the provisions of this section,
there is hereby established in the Treasury of the United States a
revolving fund, to be known as the Flexible Subsidy Fund. The Fund
shall, to the extent approved in appropriation Acts, be available to the
Secretary to provide assistance under this section (including assistance
for capital improvements) and shall not (except as provided in Public
Law 100-4-4 \1\ (102 Stat. 1018), as in effect on October 1, 1988) be
available for any other purpose.
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\1\ See References in Text note below.
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(2) The Fund shall consist of (A) any amount appropriated to carry
out the purposes of this section; (B) any amount repaid on any
assistance provided under this section; (C) any amounts credited to the
reserve fund described in section 236(g) of the National Housing Act [12
U.S.C. 1715z-1(g)]; (D) any other amount received by the Secretary under
this section (including any amount realized under paragraph (3)),\2\ and
(E) any amount received by the Secretary pursuant to section 537 of the
National Housing Act [12 U.S.C. 1735f-15] and section 202a of the
Housing Act of 1959 [12 U.S.C. 1701q-1].
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\2\ So in original. The comma probably should be a semicolon.
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(3) Any amounts in the Fund determined by the Secretary to be in
excess of the amounts currently required to carry out the provisions of
this section shall be invested by the Secretary in obligations of, or
obligations guaranteed as to both principal and interest by, the United
States or any agency of the United States.
(4) The Secretary shall, to the extent of approvable applications
and subject to paragraph (1), use not less than $30,000,000 or 40
percent (whichever is less) of the amounts available from the Fund in
any fiscal year for purposes of providing assistance for capital
improvements in accordance with this section. Any amount reserved under
this paragraph for assistance for capital improvements that is not used
before the last 60 days of a fiscal year shall become available for
other assistance under this section.
(5) There is authorized to be appropriated for assistance under the
flexible subsidy fund not to exceed $52,200,000 for fiscal year 1993 and
$54,392,400 for fiscal year 1994.
(k) Assistance for capital improvements; loans as medium of assistance;
owner contributions; priority of projects
(1) Assistance for capital improvements under this section shall
include assistance for any major repair or replacement of a capital item
in a multifamily housing project, including any such repair or
replacement required as a result of deferred or inadequate maintenance.
Capital improvements do not include maintenance of any such item.
Assistance for capital improvements under this section shall be in the
form of a loan.
(2) The owner of a project receiving assistance for capital
improvements shall agree to contribute assistance to such project in
such amounts, from such sources, and in such manner as the Secretary
determines to be appropriate.
(3) The Secretary may provide assistance for capital improvements
under this section if the Secretary finds that the reserve funds
established by the owner of a project for the purpose of making capital
improvements are insufficient to finance both the capital improvements
for which such assistance is to be used and other capital improvements
that are reasonably expected to be required in the near future, and such
insufficiency is not the result of the failure of such owner to comply
with any standard established by the Secretary for management of such
reserve funds.
(l) Amount of assistance for capital improvements; term of loan; rate of
interest; allowance for administrative costs and probable
program losses; nondischargeable liability; other forms for
loans
(1) The principal amount of any assistance for capital improvements
under this section that is provided to the owner of a project shall not
exceed the difference between the contribution made by the owner in
accordance with subsection (k)(2) of this section and the sum of--
(A) the amount determined by the Secretary to be necessary for
such owner to make capital improvements with respect to capital
items that have failed, or are likely to deteriorate seriously or
fail in the near future, in such projects;
(B) the amount determined by the Secretary to be necessary to
carry out a plan to upgrade the capital items being improved, and
any other capital items determined by the Secretary to be associated
with such capital items being improved and to require upgrading, to
meet cost-effective energy efficiency standards prescribed by the
Secretary; and
(C) the amount determined by the Secretary to be necessary to
comply with the requirements of section 794 of title 29.
(2)(A) The term of any assistance for capital improvements in the
form of a loan under this section shall not exceed the remaining term of
the mortgage of the project with respect to which such loan is provided.
(B) Each loan for capital improvements provided under this section
shall bear interest at a rate determined by the Secretary to be
appropriate, except that--
(i) such rate shall not be more than 3 percentage points below a
rate determined by the Secretary of the Treasury taking into
consideration the average interest rate on all interest bearing
obligations of the United States then forming a part of the public
debt, computed at the end of the fiscal year next preceding date on
which the loan is made, adjusted to the nearest 1/8 of 1 percent,
plus an allowance adequate in the judgment of the Secretary of
Housing and Urban Development to cover administrative costs and
probable losses under the program; and
(ii) such interest rate plus such allowance shall not exceed 6
percent per annum nor be less than 3 percent per annum.
(C) Each loan for capital improvements provided under this section
shall be considered to be a liability of the project involved, and shall
not be dischargeable in any bankruptcy proceeding under section 727,
1141, or 1328(b) of title 11.
(D) The Secretary may establish such additional conditions on loans
provided under this section as the Secretary determines to be
appropriate. The Secretary may require owners receiving assistance for
capital improvements under this section to retain the housing 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 the housing. For purposes of this section, the term
``remaining useful life'' means, with respect to housing assisted under
this section, the period during which the physical characteristics of
the housing remain in a condition suitable for occupancy, assuming
normal maintenance and repairs are made and major systems and capital
components are replaced as becomes necessary.
(E) The Secretary may provide more than one loan or assistance in
any other form to any project under this section, if each loan or other
assistance complies with the provisions of this section.
(m) Rental payment increases; minimization of increases
(1) Increases in rental payments that may occur as a result of the
debt service and other expenses of a loan for capital improvements
provided under this section for a project subject to a plan of action
approved under subtitle B of the Emergency Low Income Housing
Preservation Act of 1987 shall be governed by the rent agreements
entered into under such subtitle.
(2) In order to minimize any increases in rental payments that may
occur as a result of the debt service and other expenses of a loan for
capital improvements provided under this section for a project and that
would be incurred by lower income residents of the project involved
whose rental payments are, or would as a result of such expenses be, in
excess of the amount allowable if section 3(a) of the United States
Housing Act of 1937 [42 U.S.C. 1437a(a)] were applicable to such
residents, or where appropriate to implement a plan of action under
subtitle B of the Emergency Low Income Housing Preservation Act of 1987,
the Secretary may take any or all of the following actions:
(A) Provide assistance with respect to such project under
section 8 of the United States Housing Act of 1937 [42 U.S.C.
1437f], to the extent amounts are available for such assistance and
without regard to section 16 of such Act [42 U.S.C. 1437n].
(B) Notwithstanding subsection (l)(2)(B) of this section, reduce
the rate of interest charged on such loan to a rate of not less than
1 percent.
(C) Increase the term of such loan to a term that does not
exceed the remaining term of the mortgage on such project.
(D) Increase the amount of assistance to be provided by the
owner of such project under subsection (k)(2) of this section, if
applicable, to an amount not to exceed 30 percent of the total
estimated cost of the capital improvements involved.
(E) Permit repayment of the debt service to be deferred as long
as the low and moderate income character of the project is
maintained in accordance with subsection (d) of this section.
(n) Allocation of assistance
(1) Set-aside
In providing, and contracting to provide, assistance for capital
improvements under this section, in each fiscal year the Secretary
shall set aside an amount, as determined by the Secretary, for
projects that are eligible for incentives under section 224(b) of
the Emergency Low Income Housing Preservation Act of 1987, as such
section existed before November 28, 1990. The Secretary may make
such assistance available on a noncompetitive basis.
(2) General rules for allocation
Except as provided in paragraph (3), with respect to assistance
under this section not set aside for projects under paragraph (1),
the Secretary--
(A) may award assistance on a noncompetitive basis; and
(B) shall award assistance to eligible projects on the basis
of--
(i) the extent to which the project is physically or
financially troubled, as evidenced by the comprehensive
needs assessment submitted in accordance with title IV of
the Housing and Community Development Act of 1992; and
(ii) the extent to which such assistance is necessary
and reasonable to prevent the default of federally insured
mortgages.
(3) Exceptions
The Secretary may make exceptions to selection criteria set
forth in paragraph (2)(B) to permit the provision of assistance to
eligible projects based upon--
(A) the extent to which such assistance is necessary to
prevent the imminent foreclosure or default of a project whose
owner has not submitted a comprehensive needs assessment
pursuant to title IV of the Housing and Community Development
Act of 1992;
(B) the extent to which the project presents an imminent
threat to the life, health, and safety of project residents; or
(C) such other criteria as the Secretary may specify by
regulation or by notice printed in the Federal Register.
(4) Considerations
In providing assistance under this section, the Secretary shall
take into consideration--
(A) the extent to which there is evidence that there will be
significant opportunities for residents (including a resident
council or resident management corporation, as appropriate) to
be involved in the management of the project (except that this
paragraph shall have no application to projects that are owned
as cooperatives); and
(B) the extent to which there is evidence that the project
owner has provided competent management and complied with all
regulatory and administrative requirements.
(o) Coordination of assistance
The Secretary shall coordinate the allocation of assistance under
this section with assistance made available under section 8(v) of the
United States Housing Act of 1937 [42 U.S.C. 1437f(v)] and section
1701z-11 of this title to enhance the cost effectiveness of the Federal
response to troubled multifamily housing.
(p) Enhanced voucher eligibility
Notwithstanding any other provision of law, any project that
receives or has received assistance under this section and which is the
subject of a transaction under which the project is preserved as
affordable housing, as determined by the Secretary, shall be considered
eligible low-income housing under section 229 of the Low-Income Housing
Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4119) for
purposes of eligibility of residents of such project for enhanced
voucher assistance provided under section 8(t) of the United States
Housing Act of 1937 (42 U.S.C. 1437f(t)) (pursuant to section 223(f) of
the Low-Income Housing Preservation and Resident Homeownership Act of
1990 (12 U.S.C. 4113(f))).
(Pub. L. 95-557, title II, Sec. 201, Oct. 31, 1978, 92 Stat. 2084; Pub.
L. 96-153, title II, Secs. 205(a), 211(c), Dec. 21, 1979, 93 Stat. 1108,
1110; Pub. L. 96-399, title II, Sec. 204(a), Oct. 8, 1980, 94 Stat.
1629; Pub. L. 97-35, title III, Secs. 321(f)(1), (2), 329C, Aug. 13,
1981, 95 Stat. 399, 400, 409; Pub. L. 98-181, title II, Sec. 217(a),
(b), Nov. 30, 1983, 97 Stat. 1186; Pub. L. 98-479, title II,
Sec. 204(n)(1), (2), Oct. 17, 1984, 98 Stat. 2234; Pub. L. 100-242,
title I, Secs. 185, 186(b), Feb. 5, 1988, 101 Stat. 1873, 1877; Pub. L.
100-628, title X, Sec. 1011(a), Nov. 7, 1988, 102 Stat. 3268; Pub. L.
101-235, title I, Sec. 109(c), title II, Sec. 203(a)(2), Dec. 15, 1989,
103 Stat. 2011, 2037; Pub. L. 101-625, title V, Sec. 578(b), (c), Nov.
28, 1990, 104 Stat. 4244, 4245; Pub. L. 102-550, title IV, Secs. 405,
406, 408(a), Oct. 28, 1992, 106 Stat. 3776, 3778; Pub. L. 103-233, title
I, Sec. 103(b), Apr. 11, 1994, 108 Stat. 359; Pub. L. 105-276, title V,
Sec. 550(g), Oct. 21, 1998, 112 Stat. 2610; Pub. L. 106-74, title V,
Sec. 536, Oct. 20, 1999, 113 Stat. 1121.)
References in Text
The National Housing Act, as amended, referred to in subsecs. (a),
(b), (c)(1)(A), and (d)(3), is act June 27, 1934, ch. 847, 48 Stat.
1246, as amended, which is classified principally to this chapter
(Sec. 1701 et seq.). For complete classification of this Act to the
Code, see section 1701 of this title and Tables.
The United States Housing Act of 1937, referred to in subsec. (a),
is act Sept. 1, 1937, ch. 896, as revised generally by Pub. L. 93-383,
title II, Sec. 201(a), Aug. 22, 1974, 88 Stat. 653, which is classified
generally to chapter 8 (Sec. 1437 et seq.) of Title 42, The Public
Health and Welfare. For complete classification of this Act to the Code,
see Short Title note set out under section 1437 of Title 42 and Tables.
The Housing Act of 1959, referred to in subsec. (a), is Pub. L. 86-
372, Sept. 23, 1959, 73 Stat. 654, as amended. For complete
classification of this Act to the Code, see Short Title of 1959
Amendment note set out under section 1701 of this title and Tables.
The Housing and Urban Development Act of 1965, as amended, referred
to in subsecs. (a), (c)(1)(A), (B), and (h), is Pub. L. 89-117, Aug. 10,
1965, 79 Stat. 451, as amended. Section 101 of the Act enacted section
1701s of this title and amended sections 1451 and 1465 of Title 42, The
Public Health and Welfare. For complete classification of this Act to
the Code, see Short Title of 1965 Amendment note set out under section
1701 of this title and Tables.
Section 23 of the United States Housing Act of 1937, referred to in
subsec. (c)(1)(B), was classified to section 1421b of Title 42 and was
omitted in the general revision of the United States Housing Act of 1937
by Pub. L. 93-383, title II, Sec. 201(a), Aug. 22, 1974, 88 Stat. 653.
Public Law 100-4-4 (102 Stat. 1018), referred to in subsec. (j)(1),
probably means Pub. L. 100-404, Aug. 19, 1988, 102 Stat. 1014, known as
the Department of Housing and Urban Development--Independent Agencies
Appropriations Act, 1989. Provisions appearing on 102 Stat. 1018 of Pub.
L. 100-404 relating to transfer of funds from the ``Flexible subsidy
fund'' for carrying out community development grants programs are not
classified to the Code.
The Emergency Low Income Housing Preservation Act of 1987, referred
to in subsecs. (m) and (n)(1), is title II of Pub. L. 100-242, Feb. 5,
1988, 101 Stat. 1877, which, as amended by Pub. L. 101-625, is known as
the Low-Income Housing Preservation and Resident Homeownership Act of
1990, and is classified principally to chapter 42 (Sec. 4101 et seq.) of
this title. Section 224(b) and subtitle B of title II, which were
formerly set out as a note under section 1715l of this title and which
amended section 1715z-6 of this title, were amended generally by Pub. L.
101-625 on Nov. 28, 1990, and are classified generally to subchapter I
(Sec. 4101 et seq.) of chapter 42 of this title. For provisions similar
to those contained in former section 224(b), see section 4109(b) of this
title. For complete classification of this Act to the Code, see Short
Title note set out under section 4101 of this title and Tables.
The Housing and Community Development Act of 1992, referred to in
subsec. (n)(2)(B)(i), (3)(A), is Pub. L. 102-550, Oct. 28, 1992, 106
Stat. 3672. Title IV of the Act amended this section, section 1715z-1 of
this title, and section 12710 of Title 42, The Public Health and
Welfare, and enacted provisions set out as a note below. For complete
classification of this Act to the Code, see Short Title of 1992
Amendment note set out under section 5301 of Title 42 and Tables.
Codification
Another subsec. (k) of section 201 of Pub. L. 95-557 amended section
1715z-1 of this title.
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
1999--Subsec. (p). Pub. L. 106-74 added subsec. (p).
1998--Subsec. (m)(2)(A). Pub. L. 105-276 substituted ``section 8''
for ``section 8(b)(1)''.
1994--Subsec. (i). Pub. L. 103-233, Sec. 103(b)(1), struck out
subsec. (i) which read as follows: ``Notwithstanding any other provision
of law, in exercising any authority relating to the approval or
disapproval of rentals charged tenants residing in projects which are
eligible for assistance under this section, the Secretary--
``(1) shall consider whether the mortgagor could control
increases in utility costs by securing more favorable utility rates,
by undertaking energy conservation measures which are financially
feasible and cost effective, or by taking other financially feasible
and cost-effective actions to increase energy efficiency or to
reduce energy consumption; and
``(2) may, in his discretion, adjust the amount of a proposed
rental increase where he finds the mortgagor could exercise such
control.''
Subsec. (k)(2). Pub. L. 103-233, Sec. 103(b)(2), substituted a
period for ``, except that--
``(A) such contribution shall not be less than 20 percent of the
total estimated cost of the capital improvements involved, unless
the Secretary, upon application of the owner, determines that such
contribution is financially infeasible and waives or reduces such
contribution to the extent necessary;
``(B) the Secretary may not require an amount to be contributed,
from the reserve funds established by the owner of such projects for
the purpose of making capital improvements, in excess of 50 percent
of the amount of such reserve funds on the date of such loan;
``(C) The Secretary shall waive the requirements of this
paragraph if such owner is a private nonprofit corporation or an
association; and
``(D) the Secretary shall give owners credit for advances made
to the project during a 3-year period prior to the application for
assistance.''
Subsec. (n). Pub. L. 103-233, Sec. 103(b)(3), amended subsec. (n)
generally. Prior to amendment, subsec. (n) read as follows:
``(n)(1) The Secretary shall award assistance under this section to
eligible projects on the basis of the following selection criteria:
``(A) The extent to which the project presents an imminent
threat to the life, health, and safety of project residents.
``(B) The extent to which the project is financially troubled.
``(C) The extent of physical improvements needed by the project
as evidenced by the comprehensive needs assessment submitted in
accordance with title IV of the Housing and Community Development
Act of 1992.
``(D) The extent to which there is evidence that there will be
significant opportunities for residents (including a resident
council or resident management corporation, as appropriate) to be
involved in management of the project (except that this paragraph
shall have no application to projects that are owned as
cooperatives).
``(E) The extent to which there is evidence that the project
owner has provided competent management and complied with all
regulatory and administrative instructions (including such
instructions with respect to the comprehensive servicing of
multifamily projects as the Secretary may issue).
``(F) Such other criteria as the Secretary may specify by
regulation or in a Federal Register notice of fund availability.
``(2) Eligible projects that have federally insured mortgages in
force are to be selected for award of assistance under this section
before any other eligible project.''
Subsecs. (o), (p). Pub. L. 103-233, Sec. 103(b)(4) redesignated
subsec. (p) as (o) and struck out former subsec. (o) which read as
follows: ``Projects receiving assistance under this section are not
eligible for prepayment incentives under the Emergency Low-Income
Housing Preservation Act of 1987 or the Low-Income Housing Preservation
and Resident Homeownership Act of 1990. Projects receiving financial
assistance under such Acts are not eligible for assistance under this
section.''
1992--Subsec. (d)(5). Pub. L. 102-550, Sec. 405(a)(1), struck out
``and'' at end.
Subsec. (d)(6). Pub. L. 102-550, Sec. 406, which directed insertion,
before period at end, of ``; and except that the Secretary shall review
and approve or disapprove each plan not later than the expiration of the
30-day period beginning upon the date of submission of the plan to the
Secretary by the owner, but if the Secretary fails to inform the owner
of approval or disapproval of the plan within such period the plan shall
be considered to have been approved'', was executed by making the
insertion before the concluding semicolon to reflect the probable intent
of Congress and the intervening amendment by Pub. L. 102-550,
Sec. 405(a)(2). See below.
Pub. L. 102-550, Sec. 405(a)(2), substituted semicolon for period at
end.
Subsec. (d)(7) to (10). Pub. L. 102-550, Sec. 405(a)(3), added pars.
(7) to (10).
Subsec. (j)(5). Pub. L. 102-550, Sec. 408(a), amended par. (5)
generally. Prior to amendment, par. (5) read as follows: ``There are
authorized to be appropriated for assistance under the flexible subsidy
fund not to exceed $50,000,000 for fiscal year 1991 and $52,200,000 for
fiscal year 1992.''
Subsec. (k)(2)(D). Pub. L. 102-550, Sec. 405(e), added subpar. (D).
Subsec. (k)(4). Pub. L. 102-550, Sec. 405(b)(1), struck out par. (4)
which read as follows: ``In providing, and contracting to provide,
assistance for capital improvements under this section, the Secretary
shall--
``(A) give priority to projects that are eligible for incentives
under section 224(b) of the Emergency Low Income Housing
Preservation Act of 1987; and
``(B) with respect to any amounts not required for projects
under subparagraph (A), give priority among other projects based on
the extent to which--
``(i) the capital improvements for which such assistance is
requested are immediately required;
``(ii) the projects serve as the residences of lower income
families, and the extent which other suitable housing is
unavailable for such families in the areas in which such
projects are located;
``(iii) the capital improvements for which such assistance
is requested involve the life, safety, or health of the
residents of the project or involve major capital improvements
in the projects; and
``(iv) the projects demonstrate the greatest financial
distress, while continuing to meet the requirements of
subsection (d)(1) of this section.''
Subsec. (l)(2)(D). Pub. L. 102-550, Sec. 405(c), inserted at end
``The Secretary may require owners receiving assistance for capital
improvements under this section to retain the housing 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 the housing. For purposes of this section, the term
`remaining useful life' means, with respect to housing assisted under
this section, the period during which the physical characteristics of
the housing remain in a condition suitable for occupancy, assuming
normal maintenance and repairs are made and major systems and capital
components are replaced as becomes necessary.''
Subsec. (n). Pub. L. 102-550, Sec. 405(b)(2), added subsec. (n).
Subsec. (o). Pub. L. 102-550, Sec. 405(d), added subsec. (o).
Subsec. (p). Pub. L. 102-550, Sec. 405(f), added subsec. (p).
1990--Subsec. (j)(1). Pub. L. 101-625, Sec. 578(c), inserted before
period at end ``and shall not (except as provided in Public Law 100-4-4
(102 Stat. 1018), as in effect on October 1, 1988) be made available for
any other purpose''.
Subsec. (j)(5). Pub. L. 101-625, Sec. 578(b), added par. (5).
1989--Subsec. (j)(2). Pub. L. 101-235, Sec. 109(c), added cl. (E).
Subsec. (m)(2). Pub. L. 101-235, Sec. 203(a)(2)(B)(i), (ii), struck
out ``not subject to paragraph (1)'' after ``for a project'' and
inserted ``, or where appropriate to implement a plan of action under
subtitle B of the Emergency Low Income Housing Preservation Act of
1987'' after second reference to ``residents''.
Subsec. (m)(2)(B). Pub. L. 101-235, Sec. 203(a)(2)(A), substituted
``Notwithstanding subsection (l)(2)(B) of this section, reduce'' for
``Reduce''.
Subsec. (m)(2)(E). Pub. L. 101-235, Sec. 203(a)(2)(B)(iii), added
subpar. (E).
1988--Pub. L. 100-242, Sec. 185(h), struck out ``Operating'' before
``assistance'' in section catchline.
Subsec. (a). Pub. L. 100-242, Sec. 185(a), inserted ``to permit
capital improvements to be made to maintain certain projects as decent,
safe, and sanitary housing,'' after ``management,''.
Pub. L. 100-242, Sec. 186(b)(1), inserted reference to Housing Act
of 1959.
Subsec. (c)(1)(A). Pub. L. 100-242, Sec. 186(b)(2), inserted before
semicolon at end ``, or received a loan under section 202 of the Housing
Act of 1959 more than 15 years before the date on which assistance is
made available under this section''.
Subsec. (c)(1)(B). Pub. L. 100-242, Sec. 185(b), inserted ``section
23 of the United States Housing Act of 1937, as in effect immediately
before January 1, 1975,'' after ``is assisted under''.
Subsec. (d)(1). Pub. L. 100-242, Sec. 185(c)(1), inserted ``or
physical'' after ``maintain the financial''.
Subsec. (d)(6). Pub. L. 100-242, Sec. 185(c)(2), inserted at end ``;
except that the Secretary may excuse an owner from compliance with the
plan requirement set forth in this paragraph in any case in which such
owner seeks only assistance for capital improvements under this
section''.
Subsec. (f)(1). Pub. L. 100-242, Sec. 185(d)(1), inserted
parenthetical exception relating to projects assisted only for capital
improvements.
Subsec. (f)(4). Pub. L. 100-242, Sec. 185(d)(2), substituted
``payments for any year for a project (other than a project receiving
assistance only for capital improvements) may not exceed'' for
``payments for any year may not exceed''.
Subsec. (g). Pub. L. 100-242, Sec. 185(e), inserted ``, to the
extent applicable'' after ``provided''.
Subsec. (j). Pub. L. 100-242, Sec. 185(f), in amending subsec. (j)
generally, substituted provisions relating to the establishment,
contents, and use of a revolving fund to be known as the Flexible
Subsidy Fund, for provisions authorizing appropriations under this
section for fiscal years 1979 through 1982.
Subsec. (j)(4). Pub. L. 100-628 substituted ``shall, to the extent
of approvable applications and subject to paragraph (1), use not less
than $30,000,000 or 40 percent (whichever is less) of the amounts
available'' for ``may use not more than $50,000,000''; and inserted at
end ``Any amount reserved under this paragraph for assistance for
capital improvements that is not used before the last 60 days of a
fiscal year shall become available for other assistance under this
section.''
Subsecs. (k) to (m). Pub. L. 100-242, Sec. 185(g), added subsecs.
(k) to (m).
1984--Subsec. (c). Pub. L. 98-479, Sec. 204(n)(1), substituted ``A''
for ``a'' in provisions before subpar. (A).
Subsec. (j). Pub. L. 98-479, Sec. 204(n)(2), substituted ``section
236(f)(3)'' for ``section 236(f)(3)(B)''.
1983--Subsec. (a). Pub. L. 98-181, Sec. 217(a)(1), (b)(1), inserted
``without regard to whether such projects are insured under the National
Housing Act'', and substituted ``, the United States Housing Act of
1937, or'' for ``or under''.
Subsec. (b). Pub. L. 98-181, Sec. 217(a)(2), inserted ``, without
regard to whether such projects are insured under the National Housing
Act''.
Subsec. (c)(1)(A). Pub. L. 98-181, Sec. 217(a)(3), struck out ``;
except that, in the case of any such project which is not insured under
the National Housing Act such assistance may not be provided before
October 1, 1979'' after ``Act of 1965''.
Subsec. (c)(1)(B), (C). Pub. L. 98-181, Sec. 217(b)(2), added
subpar. (B) and redesignated former subpar. (B) as (C).
1981--Subsec. (f)(1)(D). Pub. L. 97-35, Sec. 329C(1), added subpar.
(D).
Subsec. (h). Pub. L. 97-35, Sec. 321(f)(2), added subsec. (h).
Former subsec. (h) redesignated (j).
Subsec. (i). Pub. L. 97-35, Sec. 329C(2), added subsec. (i).
Subsec. (j). Pub. L. 97-35, Sec. 321(f)(1), (2)(A), redesignated
former subsec. (h) as (j) and authorized appropriation for fiscal year
1982.
1980--Subsec. (h). Pub. L. 96-399 authorized appropriations for
fiscal year 1981.
1979--Subsec. (d)(1). Pub. L. 96-153, Sec. 211(c), inserted
requirement that the owner agree to maintain the low- and moderate-
income character of such project for a period at least equal to the
remaining term of the project mortgage.
Subsec. (h). Pub. L. 96-153, Sec. 205(a), authorized appropriations
for fiscal year 1980.
Effective Date of 1998 Amendment
Amendment by title V of Pub. L. 105-276 effective and applicable
beginning upon Oct. 1, 1999, except as otherwise provided, with
provision that Secretary may implement amendment before such date,
except to extent that such amendment provides otherwise, and with
savings provision, see section 503 of Pub. L. 105-276, set out as a note
under section 1437 of Title 42, The Public Health and Welfare.
Effective Date of 1994 Amendment
Section 103(c) of Pub. L. 103-233 provided that:
``(1) In general.--Except as provided in paragraph (2), the
amendments made by subsections (a) and (b) [amending this section and
provisions set out below] shall apply with respect to amounts made
available for fiscal year 1994 and fiscal years thereafter.
``(2) Exception.--Section 201(n)(1) of the Housing and Community
Development Amendments of 1978 [subsec. (n)(1) of this section] (as
added by the amendment made by subsection (b)(3) of this section) shall
take effect on the date of enactment of this Act [Apr. 11, 1994].
``(3) Notice.--The Secretary shall, by notice published in the
Federal Register, establish any requirements necessary to implement the
amendments made by subsections (a) and (b). The notice shall invite
public comments and, not later than 12 months after the date on which
the notice is published, the Secretary shall issue final regulations
based on the initial notice, taking into consideration any public
comments received.''
Effective Date of 1981 Amendment
Amendment by Pub. L. 97-35 effective Oct. 1, 1981, see section 371
of Pub. L. 97-35, set out as an Effective Date note under section 3701
of this title.
Alternative Uses for Prevention of Default
Section 103(h) of Pub. L. 103-233 provided that:
``(1) In general.--Subject to notice to and comment by existing
tenants, to prevent the imminent default of a multifamily housing
project subject to a mortgage insured under title II of the National
Housing Act [12 U.S.C. 1707 et seq.], the Secretary may authorize the
mortgagor to use the project for purposes not contemplated by or
permitted under the regulatory agreement, if--
``(A) such other uses are acceptable to the Secretary;
``(B) such other uses would be otherwise insurable under title
II of the National Housing Act;
``(C) the outstanding principal balance on the mortgage covering
such project is not increased;
``(D) any financial benefit accruing to the mortgagor shall,
subject to the discretion of the Secretary, be applied to project
reserves or project rehabilitation; and
``(E) such other use serves a public purpose.
``(2) Displacement protection.--The Secretary may take actions under
paragraph (1) only if--
``(A) tenant-based rental assistance under section 8 of the
United States Housing Act of 1937 [42 U.S.C. 1437f] is made
available to each eligible family residing in the project that is
displaced as a result of such actions; and
``(B) the Secretary determines that sufficient habitable,
affordable (as such term is defined in section 203(b) of the Housing
and Community Development Amendments of 1978 [12 U.S.C. 1701z-
11(b)]) rental housing is available in the market area in which the
project is located to ensure use of such assistance.
``(3) Implementation.--The Secretary shall, by notice published in
the Federal Register, which shall take effect upon publication,
establish such requirements as may be necessary to implement the
amendments made by this subsection. The notice shall invite public
comments and, not later than 12 months after the date on which the
notice is published, the Secretary shall issue final regulations based
on the initial notice, taking into account any public comments
received.''
Multifamily Housing Planning and Investment Strategies
Pub. L. 102-550, title IV, Secs. 401-404, Oct. 28, 1992, 106 Stat.
3773-3775, as amended by Pub. L. 103-233, title I, Sec. 103(a)(1)-(5),
Apr. 11, 1994, 108 Stat. 358, 359, provided that:
``SEC. 401. DEFINITIONS.
``For purposes of this title [amending this section, section 1715z-1
of this title and section 12710 of Title 42, The Public Health and
Welfare]:
``(1) Covered multifamily housing property.--The term `covered
multifamily housing property' means any housing--
``(A) that is--
``(i) reserved for occupancy by very low-income elderly
persons pursuant to section 202(d)(1) of the Housing Act of
1959 [12 U.S.C. 1701q(d)(1)];
``(ii) assisted under the provisions of section 202 of
the Housing Act of 1959 (as such section existed before the
effectiveness of the amendment made by section 801(a) of the
Cranston-Gonzalez National Affordable Housing Act [Pub. L.
101-625]);
``(iii) financed by a loan or mortgage insured,
assisted, or held by the Secretary or a State or State
agency under section 236 of the National Housing Act [12
U.S.C. 1715z-1]; or
``(iv) financed by a loan or mortgage insured or held by
the Secretary pursuant to section 221(d)(3) of the National
Housing Act [12 U.S.C. 1715l(d)(3)]; and
``(B) that is not eligible for assistance under--
``(i) the Low-Income Housing Preservation and Resident
Homeownership Act of 1990 [12 U.S.C. 4101 et seq.];
``(ii) the provisions of the Emergency Low Income
Housing Preservation Act of 1987 [see References in Text
note above] (as in effect immediately before the date of the
enactment of the Cranston-Gonzalez National Affordable
Housing Act [Nov. 28, 1990]); or
``(iii) the HOME Investment Partnerships Act [42 U.S.C.
12721 et seq.].
``(2) Covered multifamily housing property for the elderly.--The
term `covered multifamily housing property for the elderly' means
any multifamily housing project that was designed or designated to
serve, or is serving, elderly persons or families and is assisted
under a program administered by the Secretary.
``(3) Secretary.--The term `Secretary' means the Secretary of
Housing and Urban Development.
``SEC. 402. REQUIRED SUBMISSION.
``(a) In General.--The owner of each covered multifamily housing
property, and the owner of each covered multifamily housing property for
the elderly, shall submit to the Secretary of Housing and Urban
Development a comprehensive needs assessment of the property under this
title. The assessment shall be prepared by an entity that does not have
an identity of interest with the owner.
``(b) Timing.--To ensure that assessments for all covered
multifamily housing properties will be submitted on or before the
conclusion of fiscal year 1997, the Secretary shall require the owners
of such properties, including covered multifamily housing properties for
the elderly, to submit the assessments for the properties in accordance
with the following schedule:
``(1) For fiscal year 1994, 10 percent of the aggregate number
of such propert
