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U.S. Code as of:
01/19/04
Section 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.
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