§ 1701z–11.
(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
(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].
(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
(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
(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), 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
(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.
(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
(e)
Required assistance
In disposing of multifamily housing property under this section, consistent with the goal of subsection (a)(3)(A), the Secretary shall take, separately or in combination with other actions under this subsection or subsection (f), 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)—
(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) 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) 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
(B)
Limitation for subsidized and formerly subsidized projects
(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) 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
(f)
Discretionary assistance
In addition to the actions required under subsection (e) for a subsidized, formerly subsidized, or unsubsidized multifamily housing project, the Secretary may, pursuant to the disposition plan and the goals in subsection (a), take one or more of the following actions:
(1)
Discounted sales price
(2)
Use and rent restrictions
(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.
(5)
Tenant-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), 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) shall apply to any tenants of the project who are displaced.
(9)
Emergency assistance funds
(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.
(k)
Mortgage and project sales
(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
(5)
Mortgage sale demonstration
(6)
Project sale demonstration
(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) during the preceding year.
([Pub. L. 95–557, title II, § 203], Oct. 31, 1978, [92 Stat. 2088]; [Pub. L. 96–153, title II, § 208], Dec. 21, 1979, [93 Stat. 1109]; [Pub. L. 96–399, title II, § 213], Oct. 8, 1980, [94 Stat. 1636]; [Pub. L. 100–242, title I, § 181], Feb. 5, 1988, [101 Stat. 1868]; [Pub. L. 100–628, title X, § 1010], Nov. 7, 1988, [102 Stat. 3266]; [Pub. L. 101–235, title II, § 204(a)], Dec. 15, 1989, [103 Stat. 2039]; [Pub. L. 101–625, title V, § 579], Nov. 28, 1990, [104 Stat. 4245]; [Pub. L. 103–120, § 6(c)(2)], Oct. 27, 1993, [107 Stat. 1149]; [Pub. L. 103–233, title I, § 101(b)], Apr. 11, 1994, [108 Stat. 343]; [Pub. L. 105–276, title V, § 514(b)(2)(C)], Oct. 21, 1998, [112 Stat. 2548]; [Pub. L. 109–171, title II, § 2003(b)], Feb. 8, 2006, [120 Stat. 9].)