Revitalization of multifamily housing

(a)

Revitalization program

Title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) is amended by adding at the end the following new section:

544.

Revitalization and tenant protection vouchers

(a)

Purpose

The purposes of this section are— (1)to protect tenants who live in multifamily housing projects that are subsidized under this title and, in the case of prepayments of loans under section 515, to protect tenants that are displaced when the projects cease being eligible projects; (2)to strengthen the long-term viability of eligible projects; (3)to promote the revitalization of rural multifamily housing projects; and (4)to accomplish such several purposes— (A)by providing a voluntary mechanism for project owners to enter into loan restructuring agreements with the Secretary to obtain new types of financial assistance to rehabilitate and maintain the projects; and (B)by deregulating certain projects in a manner that still provides measurable performance standards and effective financing and rehabilitation of multifamily housing. (b)

Revitalization

(1)

In general

The Secretary shall, subject to the availability of amounts appropriated, carry out a revitalization program in accordance with this subsection to provide financial incentives and other assistance to owners of eligible projects through voluntary long-term use agreements entered into between the project owners and the Secretary. (2)

Applications to participate

The Secretary may accept applications from owners of eligible projects to participate in the revitalization program under this section. (3)

Long-term viability plan

(A)

Requirement

The Secretary may prepare and approve a long-term viability plan under this paragraph with respect to each eligible project for which the owner requests to participate. (B)

Contents

Each long-term viability plan for an eligible project shall include the following information: (i)

Physical needs assessment

A physical needs assessment of the project that identifies and projects, for the following 20 years— (I)all necessary repairs, improvements, maintenance, and management standards for the project, and when they will be made, in order to meet the requirements of this title; and (II)the costs associated with the items referred to in this subparagraph (A). (ii)

Financial plan

A financial plan for the project that— (I)reviews the financial stability of the project; (II)includes the loan restructuring elements, rent adjustments, management and operational efficiencies, and other financial adjustments to the project that are necessary to cover operating expenses for the project and maintain an adequate financial reserve for the future maintenance and capital needs of the project; (III)provides the project owner with a long-term rate of return on new capital, as determined by the Secretary, commensurate to comparable commercial multifamily housing projects; (IV)meets the physical needs for the project determined under the physical needs assessment; (V)ensures that rents available under the plan are affordable to eligible households in accordance with paragraph (7); and (VI)addresses any costs associated with any temporary tenant displacement resulting from renovations or rehabilitation undertaken as a result of participation of the project in the revitalization program. (C)

Development through participating administrative entities

The Secretary may develop long-term viability plans through the use of third-party participating administrative entities, who may be a private contractor, a State housing finance agency, or a nonprofit organization. (D)

Revitalization determination

Based on the long-term viability plan for an eligible project, the Secretary shall determine whether to offer the project owner a financial restructuring plan under paragraph (4) and the financial incentives to be included in any such plan offered. (E)

Final review and comment

With respect to any long-term viability plan prepared by the Secretary, the Secretary shall provide the project owner an opportunity to review the plan and discuss the plan with the Secretary or its agent before a determination is made under subparagraph (D). (F)

Fees

The Secretary may charge the project owner a fee for preparation of the long-term viability plan. (G)

Payment of fees

If a long-term viability for a project is approved, the payment of such fee may be incorporated into a project owner’s financial restructuring plan for the project provided by the Secretary pursuant to paragraph (4) (4)

Financial restructuring plan; revitalization incentives

Based on the long-term viability plan for an eligible project, the Secretary may offer a project owner a financial restructuring plan for the project. Such a plan may include one or more of the following revitalization incentives: (A)Reduction or elimination of interest on the loan or loans for the project made under section 515. (B)Partial or full deferral of payments due under such loan or loans. (C)Forgiveness of such loan or loans. (D)Subordination of such loan or loans, subject to such terms and conditions as the Secretary shall determine. (E)Reamortization of loan payments under such loan or loans over extended terms. (F)A grant from the Secretary for the project. (G)Payment of project costs associated with developing the long-term viability plan. (H)Opportunity for project owners to obtain further investment equity from third parties in the project. (I)A direct loan or guarantee of a loan for the project, with a subsidized interest rate without regard to the value of the project. (5)

Long-term use agreement

(A)

In general

If the owner of an eligible project agrees to the terms of a financial restructuring plan for the project providing revitalization benefits under paragraph (4), in exchange for such benefits, the Secretary and the project owner shall enter into a long-term use agreement under this paragraph for the project. (B)

Agreement

A long-term use agreement for an eligible project shall include— (i)the terms of the financial restructuring plan for the project, including any revitalization incentives to be provided; (ii)an agreement by the project owner— (I)to continue the property use restrictions with respect to the project in accordance with this title for a period of (aa) 20 years, or (bb) the remaining term of any loans under this title for the project, whichever ends later; (II)to comply with the long-term viability plan for the project; (III)to comply with the rent terms under paragraph (7) for the project; and (IV)to make value payments under paragraph (6) to the Secretary, and the terms of such payments; (iii)provisions terminating the agreement if any revitalization incentives for the project to be provided under the agreement are no longer available and the Secretary determines that such unavailability is not the fault of the owner; (iv)any rent terms for the project pursuant to paragraph (7); (v)a covenant which runs with the land; and (vi)such other terms as the Secretary determines are necessary to implement the purposes of this section. (6)

Shared value agreements

Each long-term use agreement shall include a shared value agreement secured by the property of the eligible project that is the subject of the long-term use agreement, which shall determine how proceeds are divided at the end of the term of the loan or loans and shall require the project owner, at the end of such loan term or terms, to pay the lesser of— (A)the sum of— (i)the amounts of any loan writedowns, write-offs, and interest subsidies provided in connection with the loan restructuring under this subsection, at the closing of revitalization; (ii)any outstanding principal and interest; and (iii)any non-loan funds provided by the Secretary under this subsection; or (B)75 percent of the appraised value of the eligible project. (7)

Rents under long-term use agreement

In any eligible project that is subject to a long-term use agreement, rents for eligible households shall comply with the following requirements: (A)

Minimum rent

The Secretary, acting through the director of the applicable local agency or office of the Department responsible for carrying out the programs under this title in such area, may provide that each eligible household is charged a minimum monthly rent in an amount determined by such local director that does not in any case exceed $25. The Secretary may allow exceptions to such minimum rent for an eligible household or groups of eligible households for demonstrated hardship, as determined by the Secretary, which hardship exceptions, if allowed by the Secretary, shall include the hardship exceptions provided or established by the Secretary of Housing and Urban Development, as appropriate, under subclauses (I) through (V) of section 3(a)(3)(B)(i) of the United States Housing Act of 1937 (42 U.S.C. 1437a(a)(3)(B)(i)). (B)

Maximum household contribution to rent

Notwithstanding any minimum monthly rent established pursuant to subparagraph (A), the maximum household contribution to monthly rent for any eligible household may not exceed 30 percent of the adjusted income of the eligible household. Such local director may take actions as may be necessary to verify tenant incomes for purposes of carrying out this subparagraph. (C)

Rent adjustments

The rents for eligible households may be increased or decreased only on an annual basis and only in accordance with standards incorporated in such agreement. The Secretary shall issue regulations establishing such standards, which shall include standards for rents that are considered affordable for eligible households for the area in which a project is located and for establishing rents that conform to such standards. (8)

Lowest cost requirement

In determining the terms of a restructuring plan, and the type and amount of revitalization benefits under such plan to approve under this subsection for an eligible project, the Secretary shall, to the extent practicable, approve assistance that imposes the least cost to the Secretary while meeting the requirements of the long-term viability plan for the project. (9)

Authorization of appropriations

There are authorized to be appropriated for each fiscal year such sums as may be necessary to carry out the revitalization program under this subsection. (c)

Homeownership opportunities

The owner of an eligible project may, in conjunction with revitalization of the project pursuant to this section, propose a sale to a tenant-based condominium or cooperative. Any such proposal shall be subject to a notice to tenants under terms that the Secretary shall establish. (d)

Determination of ineligibility

(1)

Procedure

The Secretary may determine that a project owner is ineligible for participation in the revitalization program under this section in accordance with the standards under paragraph (2). (2)

Standards

The Secretary may determine that a project owner is ineligible if— (A)the project owner has a history of poor management or maintenance of multifamily housing properties; (B)the project owner is in default on a loan made available under the section 514 or 515 housing program; (C)the Secretary is unable to enter into a long-term use agreement for the project that is the subject of the application with the project owner within a reasonable time; (D)the project owner is suspended or debarred from participating in Federal contracts or programs; or (E)the Secretary has other good cause for withholding from the project owner the benefits made available under this section. (e)

Definitions

For purposes of this section, the following definitions shall apply: (1)

Eligible household

The term eligible household means a household that, under section 515, is eligible to reside in a project funded with a loan made by the Secretary under such section. (2)

Eligible project

The term eligible project means a housing project funded with a loan made at any time by the Secretary under section 515, the principal obligation of which has not been fully repaid. (3)

Project owner; owner

The terms project owner and owner mean, with respect to an eligible project, an individual or entity, or principals thereof that own, or plan to purchase, the project.

(b)

Priority for section 515 financing

Subsection (j) of section 515 of the Housing Act of 1949 (42 U.S.C. 1485(j)) is amended— (1)by inserting (1) before For; and (2)by adding at the end the following new paragraph:

(2)The Secretary may give priority, in entering into contracts under this section involving financing for new construction of a project, for projects located in areas having a need for affordable low-income rental housing due to prepayment of loans made or insured under this section.

(c)

Partial repeal of prepayment restrictions; administration of prepayment requests

Section 502 of the Housing Act of 1949 (42 U.S.C. 1472) is amended— (1)in subsection (c)— (A)by striking or 515 each place such term appears; (B)in paragraph (4)(B)— (i)by striking clause (iv); (ii)by redesignating clauses (v) and (vi) as clauses (iv) and (v), respectively; and (iii)by realigning clause (v) (as so redesignated by clause (ii) of this subparagraph) so as to be indented two ems from the left margin; and (C)in paragraph (5)(G)(i)(I), by striking , as the case may be,; and (2)by adding at the end the following new subsection:

(i)

Prepayment of section 515 multifamily housing loans

(1)

Administration

(A)

Plan

The Secretary shall develop a plan to administer requests to prepay (not made in connection with any revitalization under section 544) any loan made under section 515. The plan shall provide for administration of voucher assistance in accordance with paragraph (3). The plan shall encourage and facilitate owners of projects to maintain the projects, or to transfer projects to owners who will maintain projects, as housing affordable to low-income residents, but shall not prevent an owner from prepaying. (B)

Implementation

The Secretary shall implement this subsection not later than the expiration of the 90-day period beginning on the date of the enactment of the Saving America’s Rural Housing Act of 2006. Notwithstanding that full implementation of this subsection may not have been completed, the Secretary may not delay the processing of any request to prepay a loan made under section 515. (2)

Notice of prepayment or sale

In preparation for prepayment of a loan made or insured under section 515, the project owner shall, not less than 120 days before the date of prepayment of the loan or sale of the project for which the loan was made, provide the following notices: (A)

Notice to tenants

To the tenants of the project, notice of the prepayment, as follows: (i)The notice shall include information sufficient to inform each tenant of the plan after prepayment for the project, in which they reside as a tenant, and whether such plan may result in, or is likely to result in, the tenant being required to move and the earliest date that the tenant's lease will expire or the tenant may have to move, and of the availability of vouchers pursuant to paragraph (3), actions tenants must take to receive voucher assistance, the date prepayment is expected to take place, a telephone number and electronic mail address at which to contact the owner of the project, and any limitations, use, and other terms the Secretary considers appropriate. (ii)In the case of any prepayment involving transfer of the ownership of a project, the notice shall include the name of the transferee, the date that the transfer was agreed to, the date the transfer is to take place, and telephone numbers and electronic mail addresses at which to contact the transferor and transferee. (B)

Notice to secretary

To the Secretary, notice that the requirements under subparagraph (A) have been met, which shall identify the date that notice under such subparagraph was made and the names of each tenant to which such notice was provided. (3)

Rural tenant protection vouchers

(A)

In general

In the case of a housing project subject to a loan made under section 515, if the loan is prepaid or foreclosed upon, the Secretary shall, to the extent that amounts for assistance under this paragraph are provided in advance in appropriation Acts, offer voucher assistance to each low-income family who on the date that notice is provided in accordance with paragraph (2)(A) is residing in a dwelling unit in the project. (B)

Use

A voucher under this paragraph for a family may be used for rental of a dwelling unit in the project that the family resides in on the date of the notice in accordance with paragraph (2)(A) or for a dwelling unit elsewhere. (C)

Renewal

Vouchers under this paragraph shall be renewed annually, subject to the availability of appropriations for such renewal, during the period that the family assisted remains eligible for such assistance. (D)

Right to use

In the case of a project for which a loan made under section 515 is prepaid— (i)a family residing in such project on the date of prepayment may elect to remain in the unit in which the family was residing on such date; and (ii)the owner of the project may not refuse to lease, to a family for whom voucher assistance under this paragraph is made available, any available rental dwelling unit in the project. (E)

Amount of assistance

The amount of rental assistance provided under a voucher under this paragraph on behalf of a tenant shall be the amount by which— (i)the lesser of (I)the rent for the dwelling unit rented using such voucher, or (II)the rent for a comparable unit in the same market area as the housing project for which the loan was prepaid; exceeds (ii)the lesser of (I)the amount of rent paid by the tenant for the dwelling unit occupied by the tenant at the time of the prepayment referred to in paragraph (1), or (II)the amount equal to 30 percent of the tenant’s 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)). (F)

Rural affordable voucher

For communities with insufficient affordable housing alternatives, and in the case of any elderly or disabled tenant who is eligible for a voucher under this paragraph and has a need to move to another community to be near immediate family or necessary medical services, as determined by the Secretary, voucher assistance under this paragraph may be provided in accordance with section 8(t)(1) of the United States Housing Act of 1937 (42 U.S.C. 1437f(t)(1)). (G)

Administration

To the maximum extent practicable, the Secretary shall administer voucher assistance under this paragraph in accordance with, but not subject to, regulations and administrative guidance for housing vouchers administered by the Secretary of Housing and Urban Development under section 8 of such Act. (H)

Homeownership opportunities

A voucher under this paragraph may be used by a tenant to make payments towards the purchase of a single-family home anywhere in the United States, subject to subsidy limits for vouchers under this title and the same limitations applicable under section 8(y) of the United States Housing Act of 1937 (42 U.S.C. 1437f(y)) to the use of tenant-based assistance under such section 8 for homeownership. (I)

Authorization of appropriations

There is authorized to be appropriated for tenant protection vouchers under this paragraph— (i)for fiscal year 2007, $74,000,000; and (ii)for each of fiscal years 2008 through 2011, the amount necessary to provide vouchers in each such fiscal year for all of the families identified in subparagraph (A). (4)

Prepayment standards for pre-1989 loans

In the case of a loan made or insured under section 515 pursuant to a contract entered into before December 15, 1989: (A)

In general

Subject to subparagraph (B), the Secretary shall approve any offer to prepay such a loan that meets the following requirements: (i)The borrower under the loan has not been provided any assistance to extend low-income use pursuant to section 502(c)(4) of this Act, as such section was in effect before the date of the enactment of the Saving America’s Rural Housing Act of 2006. (ii)The loan was not at any time restricted by servicing actions, including transfers. (iii)The 20-year period during which the project is subject to use restrictions under the loan has concluded. (B)

Prohibition

The Secretary may not approve any offer to prepay such a loan during the 20-year period during which the project is subject to use restrictions under the loan. (5)

Sale restrictions and marketing assistance

(A)

Sale restrictions

During the period that begins upon the owner providing notice to the Secretary under paragraph (2)(B) and having a duration of 75 days, the owner may not sell the property except to a purchaser who enters into such binding agreements for purchase at market rates as the Secretary considers necessary to continue the property use restrictions with respect to the project in accordance with this title for a period of 20 years. This paragraph may not be construed to prohibit an owner, during such period, from soliciting or receiving any offers of sale or purchase. (B)

Marketing assistance

(i)

Database of potential buyers

The Secretary shall establish and maintain a database of potential buyers of projects with loans made under section 515. Such database shall include only persons who have expressed an interest to the Secretary in purchasing such projects at fair market value and maintaining the projects for use as affordable housing. (ii)

Public notification of prepayment

Upon notification to the Secretary under paragraph (2)(B) regarding prepayment of a loan for a project, the Secretary shall make publicly available, on the appropriate World Wide Web site of the Department or by other appropriate electronic method, including individual notification, a notice containing information sufficient, in the determination of the Secretary, to notify persons with an interest in purchasing the project of the prepayment.