§ 1701z-11. — Management and disposition of multifamily housing projects.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1701z-11]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
Sec. 1701z-11. Management and disposition of multifamily housing
projects
(a) Goals
The Secretary of Housing and Urban Development shall manage or
dispose of multifamily housing projects that are owned by the Secretary
or that are subject to a mortgage held by the Secretary in a manner
that--
(1) is consistent with the National Housing Act [12 U.S.C. 1701
et seq.] and this section;
(2) will protect the financial interests of the Federal
Government; and
(3) will, in the least costly fashion among reasonable available
alternatives, address the goals of--
(A) preserving certain housing so that it can remain
available to and affordable by low-income persons;
(B) preserving and revitalizing residential neighborhoods;
(C) maintaining existing housing stock in a decent, safe,
and sanitary condition;
(D) minimizing the involuntary displacement of tenants;
(E) maintaining housing for the purpose of providing rental
housing, cooperative housing, and homeownership opportunities
for low-income persons;
(F) minimizing the need to demolish multifamily housing
projects;
(G) supporting fair housing strategies; and
(H) disposing of such projects in a manner consistent with
local housing market conditions.
In determining the manner in which a project is to be managed or
disposed of, the Secretary may balance competing goals relating to
individual projects in a manner that will further the purposes of this
section.
(b) Definitions
For purposes of this section:
(1) Multifamily housing project
The term ``multifamily housing project'' means any multifamily
rental housing project which is, or prior to acquisition by the
Secretary was, assisted or insured under the National Housing Act
[12 U.S.C. 1701 et seq.], or was subject to a loan under section
1701q of this title.
(2) Subsidized project
The term ``subsidized project'' means a multifamily housing
project that, immediately prior to the assignment of the mortgage on
such project to, or the acquisition of such mortgage by, the
Secretary, was receiving any of the following types of assistance:
(A) Below market interest rate mortgage insurance under the
proviso of section 221(d)(5) of the National Housing Act [12
U.S.C. 1715l(d)(5)].
(B) Interest reduction payments made in connection with
mortgages insured under section 236 of the National Housing Act
[12 U.S.C. 1715z-1].
(C) Direct loans made under section 1701q of this title.
(D) Assistance in the form of--
(i) rent supplement payments under section 101 of the
Housing and Urban Development Act of 1965 [12 U.S.C. 1701s],
(ii) additional assistance payments under section
236(f)(2) of the National Housing Act [12 U.S.C. 1715z-
1(f)(2)],
(iii) housing assistance payments made under section 23
of the United States Housing Act of 1937 [42 U.S.C. 1421b]
(as in effect before January 1, 1975), or
(iv) housing assistance payments made under section 8 of
the United States Housing Act of 1937 [42 U.S.C. 1437f]
(excluding payments made for tenant-based assistance under
section 8),
if (except for purposes of section 183(c) of the Housing and
Community Development Act of 1987) such assistance payments are
made to more than 50 percent of the units in the project.
(3) Formerly subsidized project
The term ``formerly subsidized project'' means a multifamily
housing project owned by the Secretary that was a subsidized project
immediately prior to its acquisition by the Secretary.
(4) Unsubsidized project
The term ``unsubsidized project'' means a multifamily housing
project owned by the Secretary that is not a subsidized project or a
formerly subsidized project.
(5) Affordable
A unit shall be considered affordable if--
(A) for units occupied--
(i) by very low-income families, the rent does not
exceed 30 percent of 50 percent of the area median income,
as determined by the Secretary, with adjustments for smaller
and larger families; and
(ii) by low-income families other than very low-income
families, the rent does not exceed 30 percent of 80 percent
of the area median income, as determined by the Secretary,
with adjustments for smaller and larger families; or
(B) the unit, or the family residing in the unit, is
receiving assistance under section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f].
(6) Low-income families and very low-income families
The terms ``low-income families'' and ``very low-income
families'' shall have the meanings given the terms in section 3(b)
of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)].
(7) Preexisting tenant
The term ``preexisting tenant'' means, with respect to a
multifamily housing project acquired pursuant to this section by a
purchaser other than the Secretary at foreclosure or after sale by
the Secretary, a family that resides in a unit in the project
immediately before the acquisition of the project by the purchaser.
(8) Market area
The term ``market area'' means a market area determined by the
Secretary.
(9) Secretary
The term ``Secretary'' means the Secretary of Housing and Urban
Development.
(c) Disposition of property
(1) Disposition to purchasers
In carrying out this section, the Secretary may dispose of a
multifamily housing project owned by the Secretary on a negotiated,
competitive bid, or other basis, on such terms as the Secretary
deems appropriate considering the low-income character of the
project and consistent with the goals in subsection (a) of this
section, only to a purchaser determined by the Secretary to be
capable of--
(A) satisfying the conditions of the disposition plan
developed under paragraph (2) for the project;
(B) implementing a sound financial and physical management
program that is designed to enable the project to meet
anticipated operating and repair expenses to ensure that the
project will remain in decent, safe, and sanitary condition and
in compliance with any standards under applicable State or local
laws, rules, ordinances, or regulations relating to the physical
condition of the housing and any such standards established by
the Secretary;
(C) responding to the needs of the tenants and working
cooperatively with tenant organizations;
(D) providing adequate organizational, staff, and financial
resources to the project; and
(E) meeting such other requirements as the Secretary may
determine.
(2) Disposition plan
(A) In general
Prior to the sale of a multifamily housing project that is
owned by the Secretary, the Secretary shall develop an initial
disposition plan for the project that specifies the minimum
terms and conditions of the Secretary for disposition of the
project, the initial sales price that is acceptable to the
Secretary, and the assistance that the Secretary plans to make
available to a prospective purchaser in accordance with this
section.
(B) Market-wide plans
In developing the initial disposition plan under this
subsection for a multifamily housing project located in a market
area in which at least 1 other multifamily housing project owned
by the Secretary is located, the Secretary may coordinate the
disposition of all such multifamily housing projects located
within the same market area to the extent and in such manner as
the Secretary determines appropriate to carry out the goals
under subsection (a) of this section.
(C) Sales price
The initial sales price shall be reasonably related to the
intended use of the project after sale, any rehabilitation
requirements for the project, the rents for units in the project
that can be supported by the market, the amount of rental
assistance available for the project under section 8 of the
United States Housing Act of 1937 [42 U.S.C. 1437f], the
occupancy profile of the project (including family size and
income levels for tenant families), and any other factors that
the Secretary considers appropriate.
(D) Community and tenant input
In carrying out this section, the Secretary shall develop
procedures--
(i) to obtain appropriate and timely input into
disposition plans from officials of the unit of general
local government affected, the community in which the
project is situated, and the tenants of the project; and
(ii) to facilitate, where feasible and appropriate, the
sale of multifamily housing projects to existing tenant
organizations with demonstrated capacity, to public or
nonprofit entities that represent or are affiliated with
existing tenant organizations, or to other public or
nonprofit entities.
(E) Technical assistance
To carry out the procedures developed under subparagraph
(D), the Secretary may provide technical assistance, directly or
indirectly, and may use amounts available for technical
assistance under the Emergency Low Income Housing Preservation
Act of 1987, subtitle C of the Low-Income Housing Preservation
and Resident Homeownership Act of 1990 [12 U.S.C. 4141 et seq.],
subtitle B of title IV of the Cranston-Gonzalez National
Affordable Housing Act [42 U.S.C. 12871 et seq.], or this
section, for the provision of technical assistance under this
paragraph. Recipients of technical assistance funding under the
provisions referred to in this subparagraph shall be permitted
to provide technical assistance to the extent of such funding
under any of such provisions or under this subparagraph,
notwithstanding the source of the funding.
(3) Foreclosure sale
In carrying out this section, the Secretary shall--
(A) prior to foreclosing on any mortgage held by the
Secretary on any multifamily housing project, notify both the
unit of general local government in which the property is
located and the tenants of the property of the proposed
foreclosure sale; and
(B) dispose of a multifamily housing project through a
foreclosure sale only to a purchaser that the Secretary
determines is capable of implementing a sound financial and
physical management program that is designed to enable the
project to meet anticipated operating and repair expenses to
ensure that the project will remain in decent, safe, and
sanitary condition and in compliance with any standards under
applicable State or local laws, rules, ordinances, or
regulations relating to the physical condition of the housing
and any such standards established by the Secretary.
(d) Management and maintenance of properties
(1) Contracting for management services
In carrying out this section, the Secretary may--
(A) contract for management services for a multifamily
housing project that is owned by the Secretary (or for which the
Secretary is mortgagee in possession) with for-profit and
nonprofit entities and public agencies (including public housing
authorities) on a negotiated, competitive bid, or other basis at
a price determined by the Secretary to be reasonable, with a
manager the Secretary has determined is capable of--
(i) implementing a sound financial and physical
management program that is designed to enable the project to
meet anticipated operating and maintenance expenses to
ensure that the project will remain in decent, safe, and
sanitary condition and in compliance with any standards
under applicable State or local laws, rules, ordinances, or
regulations relating to the physical condition of the
project and any such standards established by the Secretary;
(ii) responding to the needs of the tenants and working
cooperatively with tenant organizations;
(iii) providing adequate organizational, staff, and
financial resources to the project; and
(iv) meeting such other requirements as the Secretary
may determine; and
(B) require the owner of a multifamily housing project that
is subject to a mortgage held by the Secretary to contract for
management services for the project in the manner described in
subparagraph (A).
(2) Maintenance of projects owned by Secretary
In the case of multifamily housing projects that are owned by
the Secretary (or for which the Secretary is mortgagee in
possession), the Secretary shall--
(A) to the greatest extent possible, maintain all such
occupied projects in a decent, safe, and sanitary condition and
in compliance with any standards under applicable State or local
laws, rules, ordinances, or regulations relating to the physical
condition of the housing and any such standards established by
the Secretary;
(B) to the greatest extent possible, maintain full occupancy
in all such projects; and
(C) maintain all such projects for purposes of providing
rental or cooperative housing.
(3) Projects subject to a mortgage held by Secretary
In the case of any multifamily housing project that is subject
to a mortgage held by the Secretary, the Secretary shall require the
owner of the project to carry out the requirements of paragraph (2).
(e) Required assistance
In disposing of multifamily housing property under this section,
consistent with the goal of subsection (a)(3)(A) of this section, the
Secretary shall take, separately or in combination with other actions
under this subsection or subsection (f) of this section, one or more of
the following actions:
(1) Contract with owner for project-based assistance
In the case of multifamily housing projects that are acquired by
a purchaser other than the Secretary at foreclosure or after sale by
the Secretary, the Secretary may enter into contracts under section
8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] (to the
extent budget authority is available) with owners of the projects,
subject to the following requirements:
(A) Subsidized or formerly subsidized projects receiving
mortgage-related assistance
In the case of a subsidized or formerly subsidized project
referred to in subparagraphs (A) through (C) of subsection
(b)(2) of this section--
(i) the contract shall be sufficient to assist at least
all units covered by an assistance contract under any of the
authorities referred to in subsection (b)(2)(D) of this
section before acquisition or foreclosure, unless the
Secretary acts pursuant to the provisions of subparagraph
(C);
(ii) the contract shall provide that, when a vacancy
occurs in any unit in the project requiring project-based
rental assistance pursuant to this subparagraph that is
occupied by a family who is not eligible for assistance
under such section 8 [42 U.S.C. 1437f], the owner shall
lease the available unit to a family eligible for assistance
under such section 8; and
(iii) the Secretary shall take actions to ensure that
any unit in any such project that does not otherwise receive
project-based assistance under this subparagraph remains
available and affordable for the remaining useful life of
the project, as defined by the Secretary; to carry out this
clause, the Secretary may require purchasers to establish
use or rent restrictions maintaining the affordability of
such units.
(B) Subsidized or formerly subsidized projects receiving rental
assistance
In the case of a subsidized or formerly subsidized project
referred to in subsection (b)(2)(D) of this section that is not
subject to subparagraph (A)--
(i) the contract shall be sufficient to assist at least
all units in the project that are covered, or were covered
immediately before foreclosure on or acquisition of the
project by the Secretary, by an assistance contract under
any of the provisions referred to in such subsection, unless
the Secretary acts pursuant to provisions of subparagraph
(C); and
(ii) the contract shall provide that, when a vacancy
occurs in any unit in the project requiring project-based
rental assistance pursuant to this subparagraph that is
occupied by a family who is not eligible for assistance
under such section 8 [42 U.S.C. 1437f], the owner shall
lease the available unit to a family eligible for assistance
under such section 8.
(C) Exceptions
(i) Authority
In lieu of providing project-based assistance under
section 8 of the United States Housing Act of 1937 [42
U.S.C. 1437f] in accordance with subparagraph (A)(i) or
(B)(i) for a project, the Secretary may, for certain units
in unsubsidized projects located within the same market area
as the project otherwise required to be assisted with such
project-based assistance--
(I) require use and rent restrictions providing that
such units shall be available to and affordable by very
low-income families for the remaining useful life of the
project (as defined by the Secretary), or
(II) provide project-based assistance under section
8 for such units to be occupied by only very low-income
persons,
but only if the requirements under clause (ii) are met.
(ii) Requirements
The requirements under this clause are that--
(I) upon the disposition of the project otherwise
required to be assisted with project-based assistance
under subparagraph (A)(i) or (B)(i), the Secretary shall
make available tenant-based assistance under section 8
[42 U.S.C. 1437f] to low-income families residing in
units otherwise required to be assisted with such
project-based assistance; and
(II) the number of units subject to use restrictions
or provided assistance under clause (i) shall be at
least equivalent to the number of units otherwise
required to be assisted with project-based assistance
under section 8 in accordance with subparagraph (A)(i)
or (B)(i).
(D) Unsubsidized projects
Notwithstanding actions taken pursuant to subparagraph (C),
in the case of unsubsidized projects, the contract shall be
sufficient to provide--
(i) project-based rental assistance for all units that
are covered, or were covered immediately before foreclosure
or acquisition, by an assistance contract under--
(I) the new construction and substantial
rehabilitation program under section 8(b)(2) of the
United States Housing Act of 1937 [42 U.S.C.
1437f(b)(2)] (as in effect before October 1, 1983);
(II) the property disposition program under section
8(b) of such Act;
(III) the project-based certificate program under
section 8 of such Act;
(IV) the moderate rehabilitation program under
section 8(e)(2) of such Act;
(V) section 23 of such Act [42 U.S.C. 1421b] (as in
effect before January 1, 1975);
(VI) the rent supplement program under section 101
of the Housing and Urban Development Act of 1965 [12
U.S.C. 1701s]; or
(VII) section 8 of the United States Housing Act of
1937, following conversion from assistance under section
101 of the Housing and Urban Development Act of 1965;
and
(ii) tenant-based assistance under section 8 of the
United States Housing Act of 1937 for families that are
preexisting tenants of the project in units that,
immediately before foreclosure or acquisition of the project
by the Secretary, were covered by an assistance contract
under the loan management set-aside program under section
8(b) of the United States Housing Act of 1937.
(2) Annual contribution contracts for tenant-based
assistance
In the case of multifamily housing projects that are acquired by
a purchaser other than the Secretary at foreclosure or after sale by
the Secretary, the Secretary may enter into annual contribution
contracts with public housing agencies to provide tenant-based
assistance under section 8 of the United States Housing Act of 1937
[42 U.S.C. 1437f] on behalf of all low-income families who are
otherwise eligible for assistance in accordance with subparagraph
(A), (B), or (D) of paragraph (1) on the date that the project is
acquired by the purchaser, subject to the following requirements:
(A) Requirement of sufficient affordable housing in area
The Secretary may not take action under this paragraph
unless the Secretary determines that there is available in the
area an adequate supply of habitable, affordable housing for
very low-income families and other low-income families using
tenant-based assistance.
(B) Limitation for subsidized and formerly subsidized projects
The Secretary may not take actions under this paragraph in
connection with units in subsidized or formerly subsidized
projects for more than 10 percent of the aggregate number of
units in such projects disposed of by the Secretary in any
fiscal year.
(3) Other assistance
(A) In general
In accordance with the authority provided under the National
Housing Act [12 U.S.C. 1701 et seq.], the Secretary may provide
other assistance pursuant to subsection (f) of this section to
the owners of multifamily housing projects that are acquired by
a purchaser other than the Secretary at foreclosure, or after
sale by the Secretary, on terms that ensure that--
(i) at least the units in the project otherwise required
to receive project-based assistance pursuant to
subparagraphs (A), (B), or (D) of paragraph (1) are
available to and affordable by low-income persons; and
(ii) for the remaining useful life of the project, as
defined by the Secretary, there shall be in force such use
or rent restrictions as the Secretary may prescribe.
(B) Very low-income tenants
If, as a result of actions taken pursuant to this paragraph,
the rents charged to any very low-income families residing in
the project who are otherwise required (pursuant to subparagraph
(A), (B), or (D) of paragraph (1)) to receive project-based
assistance under section 8 of the United States Housing Act of
1937 [42 U.S.C. 1437f] exceed the amount payable as rent under
section 3(a) of the United States Housing Act of 1937 [42 U.S.C.
1437a(a)], the Secretary shall provide tenant-based assistance
under section 8 of such Act to such families.
(f) Discretionary assistance
In addition to the actions required under subsection (e) of this
section for a subsidized, formerly subsidized, or unsubsidized
multifamily housing project, the Secretary may, pursuant to the
disposition plan and the goals in subsection (a) of this section, take
one or more of the following actions:
(1) Discounted sales price
In accordance with the authority provided under the National
Housing Act [12 U.S.C. 1701 et seq.], the Secretary may reduce the
selling price of the project. Such reduced sales price shall be
reasonably related to the intended use of the property after sale,
any rehabilitation requirements for the project, the rents for units
in the project that can be supported by the market, the amount of
rental assistance available for the project under section 8 of the
United States Housing Act of 1937 [42 U.S.C. 1437f], the occupancy
profile of the project (including family size and income levels for
tenant families), and any other factors that the Secretary considers
appropriate.
(2) Use and rent restrictions
The Secretary may require certain units in a project to be
subject to use or rent restrictions providing that such units will
be available to and affordable by low- and very low-income persons
for the remaining useful life of the property, as defined by the
Secretary.
(3) Short-term loans
The Secretary may provide short-term loans to facilitate the
sale of a multifamily housing project if--
(A) authority for such loans is provided in advance in an
appropriation Act;
(B) such loan has a term of not more than 5 years;
(C) the Secretary determines, based upon documentation
provided to the Secretary, that the borrower has obtained a
commitment of permanent financing to replace the short-term loan
from a lender who meets standards established by the Secretary;
and
(D) the terms of such loan are consistent with prevailing
practices in the marketplace or the provision of such loan
results in no cost to the Government, as defined in section 661a
of title 2.
(4) Up-front grants
If the Secretary determines that action under this paragraph is
more cost-effective than establishing rents pursuant to subsection
(h)(2) of this section, the Secretary may utilize the budget
authority provided for contracts issued under this section for
project-based assistance under section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f] to (in addition to providing
project-based section 8 rental assistance) provide up-front grants
for the necessary cost of rehabilitation and other related
development costs.
(5) Tenant-based assistance
The Secretary may make available tenant-based assistance under
section 8 of the United States Housing Act of 1937 to families
residing in a multifamily housing project that do not otherwise
qualify for project-based assistance.
(6) Alternative uses
(A) In general
Notwithstanding any other provision of law, after providing
notice to and an opportunity for comment by preexisting tenants,
the Secretary may allow not more than--
(i) 10 percent of the total number of units in
multifamily housing projects that are disposed of by the
Secretary during any fiscal year to be made available for
uses other than rental or cooperative uses, including low-
income homeownership opportunities, or in any particular
project, community space, office space for tenant or
housing-related service providers or security programs, or
small business uses, if such uses benefit the tenants of the
project; and
(ii) 5 percent of the total number of units in
multifamily housing projects that are disposed of by the
Secretary during any fiscal year to be used in any manner,
if the Secretary and the unit of general local government or
area-wide governing body determine that such use will
further fair housing, community development, or neighborhood
revitalization goals.
(B) Displacement protection
The Secretary may take actions under subparagraph (A) only
if--
(i) 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
(ii) the Secretary determines that sufficient habitable,
affordable rental housing is available in the market area in
which the project is located to ensure use of such
assistance.
(7) Transfer for use under other programs of Secretary
(A) In general
Notwithstanding the provisions of subsection (e) of this
section, the Secretary may, pursuant to an agreement under
subparagraph (B), transfer a multifamily housing project--
(i) to a public housing agency for use of the project as
public housing; or
(ii) to an entity eligible to own or operate housing
assisted under section 1701q of this title or under section
811 of the Cranston-Gonzalez National Affordable Housing Act
[42 U.S.C. 8013] for use as supportive housing under either
of such sections.
(B) Requirements for agreement
An agreement providing for the transfer of a project
described in subparagraph (A) shall--
(i) contain such terms, conditions, and limitations as
the Secretary determines appropriate, including requirements
to ensure use of the project as public housing, supportive
housing under section 1701q of this title, or supportive
housing under section 811 of the Cranston-Gonzalez National
Affordable Housing Act [42 U.S.C. 8013], as applicable; and
(ii) ensure that no tenant of the project will be
displaced as a result of actions taken under this paragraph.
(8) Rebuilding
Notwithstanding any provision of section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f], the Secretary may provide
project-based assistance in accordance with subsection (e) of this
section to support the rebuilding of a multifamily housing project
rebuilt or to be rebuilt (in whole or in part and on-site, off-site,
or in a combination of both) in connection with disposition under
this section, if the Secretary determines that--
(A) the project is not being maintained in a decent, safe,
and sanitary condition;
(B) rebuilding the project would be less expensive than
substantial rehabilitation;
(C) the unit of general local government in which the
project is located approves the rebuilding and makes a financial
contribution or other commitment to the project; and
(D) the rebuilding is a part of a local neighborhood
revitalization plan approved by the unit of general local
government.
The provisions of subsection (j)(2) of this section shall apply to
any tenants of the project who are displaced.
(9) Emergency assistance funds
The Secretary may make arrangements with State agencies and
units of general local government of States receiving emergency
assistance under part A of title IV of the Social Security Act [42
U.S.C. 601 et seq.] for the provision of assistance under such Act
[42 U.S.C. 301 et seq.] on behalf of eligible families who would
reside in any multifamily housing projects.
(g) Protection for unassisted very low-income tenants
For each multifamily housing project disposed of under this section,
the Secretary shall require that, for any very low-income family who is
a preexisting tenant of the project who (upon disposition) would be
required to pay rent in an amount in excess of 30 percent of the
adjusted income (as such term is defined in section 3(b) of the United
States Housing Act of 1937 [42 U.S.C. 1437a(b)]) of the family--
(1) for a period of 2 years beginning upon the date of the
acquisition of the project by the purchaser under such disposition,
the rent for the unit occupied by the family may not be increased
above the rent charged immediately before acquisition;
(2) such family shall be considered displaced for purposes of
any system of preferences established pursuant to section
6(c)(4)(A), 8(d)(1)(A), or 8(o)(6)(A) of the United States Housing
Act of 1937 [42 U.S.C. 1437d(c)(4)(A), 1437f(d)(1)(A), and
1437f(o)(6)(A)]; and
(3) notice shall be provided to such family, not later than the
date of the acquisition of the project by the purchaser--
(A) of the requirements under paragraphs (1) and (2); and
(B) that, after the expiration of the period under paragraph
(1), the rent for the unit occupied by the family may be
increased.
(h) Contract requirements
Contracts for project-based rental assistance under section 8 of the
United States Housing Act of 1937 [42 U.S.C. 1437f] provided pursuant to
this section shall be subject to the following requirements:
(1) Contract term
The contract shall have a term of 15 years, except that the term
may be less than 15 years--
(A) to the extent that the Secretary finds that, based on
the rental charges and financing for the multifamily housing
project to which the contract relates, the financial viability
of the project can be maintained under a contract having such a
term; except that the Secretary shall require that the amount of
rent payable by tenants of the project for units assisted under
such contract shall not exceed the amount payable for rent under
section 3(a) of the United States Housing Act of 1937 [42 U.S.C.
1437a(a)] for a period of at least 15 years; or
(B) if such assistance is provided--
(i) under a contract authorized under section 6 of the
HUD Demonstration Act of 1993; and
(ii) pursuant to a disposition plan under this section
for a project that is determined by the Secretary to be
otherwise in compliance with this section.
(2) Contract rent
The Secretary shall establish the contract rents under such
contracts at levels that, together with other resources available to
the purchasers, provide sufficient amounts for the necessary costs
of rehabilitating and operating the multifamily housing project and
do not exceed the percentage of the existing housing fair market
rentals for the market area in which the project assisted under the
contract is located as determined by the Secretary under section
8(c) of the United States Housing Act of 1937 [42 U.S.C. 1437f(c)].
(i) Right of first refusal for local and State government agencies
(1) Notification
Not later than 30 days after the Secretary acquires title to a
multifamily housing project, the Secretary shall notify the
appropriate unit of general local government (including public
housing agencies) and State agency or agencies designated by the
chief executive officer of the State in which the project is located
of such acquisition of title and that, for a period beginning upon
such notification that does not exceed 90 days, such unit of general
local government and agency or agencies shall have the exclusive
right under this subsection to make bona fide offers to purchase the
project.
(2) Right of first refusal
During the 90-day period, the Secretary may not sell or offer to
sell the multifamily housing project other than to a party notified
under paragraph (1), unless the unit of general local government and
the designated State agency or agencies notify the Secretary that
they will not make an offer to purchase the project. The Secretary
shall accept a bona fide offer to purchase the project made during
such period if it complies with the terms and conditions of the
disposition plan for the project or is otherwise acceptable to the
Secretary.
(3) Procedure
The Secretary shall establish any procedures necessary to carry
out this subsection.
(j) Displacement of tenants and relocation assistance
(1) In general
Whenever tenants will be displaced as a result of the demolition
of, repairs to, or conversion in the use of, a multifamily housing
project that is owned by the Secretary (or for which the Secretary
is mortgagee in possession), the Secretary shall identify tenants
who will be displaced, and shall notify all such tenants of their
pending displacement and of any relocation assistance that may be
available. In the case of a multifamily housing project that is
subject to a mortgage held by the Secretary, the Secretary shall
require the owner of the project to carry out the requirements of
this paragraph, if the Secretary has authorized the demolition of,
repairs to, or conversion in the use of such multifamily housing
project.
(2) Rights of displaced tenants
The Secretary shall ensure for any such tenant (who continues to
meet applicable qualification standards) the right--
(A) to return, whenever possible, to a repaired or rebuilt
unit;
(B) to occupy a unit in another multifamily housing project
owned by the Secretary;
(C) to obtain housing assistance under the United States
Housing Act of 1937 [42 U.S.C. 1437 et seq.]; or
(D) to receive any other available similar relocation
assistance as the Secretary determines to be appropriate.
(k) Mortgage and project sales
(1) In general
The Secretary may not approve the sale of any loan or mortgage
held by the Secretary (including any loan or mortgage owned by the
Government National Mortgage Association) on any subsidized project
or formerly subsidized project, unless such sale is made as part of
a transaction that will ensure that such project will continue to
operate at least until the maturity date of such loan or mortgage,
in a manner that will provide rental housing on terms at least as
advantageous to existing and future tenants as the terms required by
the program under which the loan or mortgage was made or insured
prior to the assignment of the loan or mortgage on such project to
the Secretary.
(2) Sale of certain projects
The Secretary may not approve the sale of any subsidized
project--
(A) that is subject to a mortgage held by the Secretary, or
(B) if the sale transaction involves the provision of any
additional subsidy funds by the Secretary or a recasting of the
mortgage,
unless such sale is made as part of a transaction that will ensure
that the project will continue to operate, at least until the
maturity date of the loan or mortgage, in a manner that will provide
rental housing on terms at least as advantageous to existing and
future tenants as the terms required by the program under which the
loan or mortgage was made or insured prior to the proposed sale of
the project.
(3) Mortgage sales to State and local governments
Notwithstanding any provision of law that requires competitive
sales or bidding, the Secretary may carry out negotiated sales of
mortgages held by the Secretary, without the competitive selection
of purchasers or intermediaries, to units of general local
government or State agencies, or groups of investors that include at
least one such unit of general local government or State agency, if
the negotiations are conducted with such agencies, except that--
(A) the terms of any such sale shall include the agreement
of the purchasing agency or unit of local government or State
agency to act as mortgagee or owner of a beneficial interest in
such mortgages, in a manner consistent with maintaining the
projects that are subject to such mortgages for occupancy by the
general tenant group intended to be served by the applicable
mortgage insurance program, including, to the extent the
Secretary determines appropriate, authorizing such unit of local
government or State agency to enforce the provisions of any
regulatory agreement or other program requirements applicable to
the related projects; and
(B) the sales prices for such mortgages shall be, in the
determination of the Secretary, the best prices that may be
obtained for such mortgages from a unit of general local
government or State agency, consistent with the expectation and
intention that the projects financed will be retained for use
under the applicable mortgage insurance program for the life of
the initial mortgage insurance contract.
(4) Sale of mortgages covering unsubsidized projects
Notwithstanding any other provision of law, the Secretary may
sell mortgages held on projects that are not subsidized or formerly
subsidized projects on such terms and conditions as the Secretary
may prescribe.
(5) Mortgage sale demonstration
The Secretary may carry out a demonstration to test the
feasibility of restructuring and disposing of troubled multifamily
mortgages held by the Secretary through the establishment of
partnerships with public, private, and nonprofit entities.
(6) Project sale demonstration
The Secretary may carry out a demonstration to test the
feasibility of disposing of troubled multifamily housing projects
that are owned by the Secretary through the establishment of
partnerships with public, private, and nonprofit entities.
(l) Report to Congress
Not later than June 1 of each year, the Secretary shall submit to
the Congress a report describing the status of multifamily housing
projects owned by or subject to mortgages held by the Secretary, on an
aggregate basis, which highlights the differences, if any, between the
subsidized and the unsubsidized inventory. The report shall include--
(1) the average and median size of the projects;
(2) the geographic locations of the projects, by State and
region;
(3) the years during which projects were assigned to the
Department, and the average and median length of time that projects
remain in the HUD-held inventory;
(4) the status of HUD-held mortgages;
(5) the physical condition of the HUD-held and HUD-owned
inventory;
(6) the occupancy profile of the projects, including the income,
family size, race, and ethnic origin of current tenants, and the
rents paid by such tenants;
(7) the proportion of units that are vacant;
(8) the number of projects for which the Secretary is mortgagee
in possession;
(9) the number of projects sold in foreclosure sales;
(10) the number of HUD-owned projects sold;
(11) a description of actions undertaken pursuant to this
section, including a description of the effectiveness of such
actions and any impediments to the disposition or management of
multifamily housing projects;
(12) a description of the extent to which the provisions of this
section and actions taken under this section have displaced tenants
of multifamily housing projects;
(13) a description of any of the functions performed in
connection with this section that are contracted out to public or
private entities or to States; and
(14) a description of the activities carried out under
subsection (i) of this section during the preceding year.
(Pub. L. 95-557, title II, Sec. 203, Oct. 31, 1978, 92 Stat. 2088; Pub.
L. 96-153, title II, Sec. 208, Dec. 21, 1979, 93 Stat. 1109; Pub. L. 96-
399, title II, Sec. 213, Oct. 8, 1980, 94 Stat. 1636; Pub. L. 100-242,
title I, Sec. 181, Feb. 5, 1988, 101 Stat. 1868; Pub. L. 100-628, title
X, Sec. 1010, Nov. 7, 1988, 102 Stat. 3266; Pub. L. 101-235, title II,
Sec. 204(a), Dec. 15, 1989, 103 Stat. 2039; Pub. L. 101-625, title V,
Sec. 579, Nov. 28, 1990, 104 Stat. 4245; Pub. L. 103-120, Sec. 6(c)(2),
Oct. 27, 1993, 107 Stat. 1149; Pub. L. 103-233, title I, Sec. 101(b),
Apr. 11, 1994, 108 Stat. 343; Pub. L. 105-276, title V,
Sec. 514(b)(2)(C), Oct. 21, 1998, 112 Stat. 2548.)
References in Text
The National Housing Act, referred to in subsecs. (a)(1), (b)(1),
(e)(3)(A), and (f)(1), 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.
Section 183(c) of the Housing and Community Development Act of 1987,
referred to in subsec. (b)(2)(D), is section 183(c) of Pub. 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 Pub. L. 105-276, title V,
Sec. 582(a)(2), Oct. 21, 1998, 112 Stat. 2643.
Section 101 of the Housing and Urban Development Act of 1965,
referred to in subsecs. (b)(2)(D)(i) and (e)(1)(D)(i)(VI), (VII), is
section 101 of Pub. L. 89-117, title I, Aug. 10, 1965, 79 Stat. 451, as
amended, 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. (b)(2)(D)(iii) and (e)(1)(D)(i)(V), was classified to section
1421b of Title 42 and was omitted from the Code following 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.
The Emergency Low Income Housing Preservation Act of 1987, referred
to in subsec. (c)(2)(E), 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 subchapter I (Sec. 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 Pub. L. 100-242, as added by Pub. L. 102-550,
which is classified generally to subchapter II (Sec. 4141 et seq.) of
chapter 42 of this title. Another subtitle C of title II of Pub. 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 Pub. L. 101-625, Nov. 28, 1990, 104 Stat. 4079.
Subtitle B of title IV of the Act is classified principally to part A
(Sec. 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, as amended, which is classified
generally to chapter 7 (Sec. 301 et seq.) of Title 42. Part A of title
IV of the Act is classified generally to part A (Sec. 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 Pub. 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 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. 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
1998--Subsec. (g)(2). Pub. 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--Pub. L. 103-233 amended section generally, substituting
present provisions for former provisions which related, in subsec. (a)
to goals, in subsec. (b) 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). Pub. L. 103-120 added subsec. (l).
1990--Subsec. (a)(1)(B). Pub. L. 101-625, Sec. 579(a), struck out
``or vacant'' after ``moderate-income persons''.
Subsec. (d)(1). Pub. L. 101-625, Sec. 579(b)(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). Pub. L. 101-625, Sec. 579(b)(2), (3), added
par. (2) and redesignated former par. (2) as (3).
1989--Subsec. (k). Pub. 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). Pub. L. 100-628, Sec. 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).
Pub. L. 100-242, Sec. 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. (b)(2). Pub. L. 100-242, Sec. 181(b), 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). Pub. L. 100-242, Sec. 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). Pub. L. 100-628, Sec. 1010(b), 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).''
Pub. L. 100-242, Sec. 181(d), added subsec. (d). Former subsec. (d)
redesignated (f).
Subsec. (e). Pub. L. 100-628, Sec. 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.''
Pub. L. 100-242, Sec. 181(d)(1), (e), added subsec. (e). Former
subsec. (e) redesignated (g).
Subsec. (f). Pub. L. 100-242, Sec. 181(d)(1), (e)(1), (g)(1),
redesignated former subsec. (d) as (f). Former subsec. (f) redesignated
(i).
Subsec. (f)(1). Pub. L. 100-242, Sec. 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). Pub. L. 100-242, Sec. 181(d)(1), (e)(1), redesignated
former subsec. (e) as (g). Former subsec. (g) redesignated (j).
Subsec. (h). Pub. L. 100-242, Sec. 181(d)(1), (e)(1), (g), added
subsec. (h).
Subsec. (i). Pub. L. 100-628, Sec. 1010(d), (e), substituted
``(excluding payments made for certificates under subsection (b)(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 (b)(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).
Pub. L. 100-242, Sec. 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). Pub. L. 100-242, Sec. 181(g)(1), redesignated former
subsec. (g) as (j).
Subsec. (k). Pub. L. 100-628, Sec. 1010(f), added subsec. (k).
1980--Subsec. (a). Pub. L. 96-399, Sec. 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. (b)(1). Pub. L. 96-399, Sec. 213(b), inserted provisions
relating to the number of project units occupied by low- and moderate-
income persons.
Subsec. (c)(3). Pub. L. 96-399, Sec. 213(c), added par. (3).
Subsec. (d)(2)(B), (C). Pub. L. 96-399, Sec. 213(d), inserted
exception for tenants of above-moderate income.
Subsec. (f). Pub. L. 96-399, Sec. 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 1452b 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). Pub. 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''.
Regulations
Section 101(f) of Pub. L. 103-233 provided that: ``The Secretary
shall issue interim regulations necessary to implement the amendments
made by subsections (b) 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.''
Multifamily Housing Disposition
Section 101(a) of Pub. L. 103-233 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.''
Section 184 of Pub. L. 100-242, as amended by Pub. L. 101-625, title
V, Sec. 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 Pub. L. 103-233, title I, Sec. 102, Apr. 11, 1994, 108 Stat. 358.
Section Referred to in Other Sections
This section is referred to in sections 1713, 1715z-1a, 1715z-11a,
1735f-19, 1735f-20, 3706, 4102 of this title; title 42 section 12877.