SEC-613 -- ASSISTANCE TO PREVENT PREPAYMENT UNDER STATE MORTGAGE 

 
PROGRAMS.
 
 (a) Section 8 Assistance.-
 
 (1) Authority.-Section 8(d)(2)(A) of the United States Housing Act of
1937 (42 U.S.C. 1437f(d)(2)(A)) is amended by inserting after the period
at the end the following: "Notwithstanding any other provision of this
section, a public housing agency and an applicable State agency may, on
a priority basis, attach to structures not more than an additional 15
percent of the assistance provided by the public housing agency or the
applicable State agency only with respect to projects assisted under a
State program that permits the owner of the projects to prepay a State
assisted or subsidized mortgage on the structure, except that attachment
of assistance under this sentence shall be for the purpose of (i)
providing incentives to owners to preserve such projects for occupancy
by lower and moderate income families (for the period that assistance
under this sentence is available), and (ii) to assist lower income
tenants to afford any increases in rent that may be required to induce
the owner to maintain occupancy in the project by lower and moderate
income tenants. Any assistance provided to lower income tenants under
the preceding sentence shall not be considered for purposes of the
limitation under paragraph (1)(A) regarding the percentage of families
that may receive assistance under this section who do not qualify for
preferences under such paragraph.".
 
 (2) Contract term.-Section 8(d)(2)(C) of the United States Housing Act
of 1937 (42 U.S.C. 1437f(d)(2)(C)) is amended by inserting after the
period at the end the following: "To the extent assistance is used as
provided in the penultimate sentence of subparagraph (A), the contract
for assistance may, at the option of the public housing agency, have an
initial term not exceeding 15 years.".
 
 (b) State Preservation Project Assistance.-
 
 (1) In general.-Upon application by a State or local housing authority
(including public housing agencies), the Secretary of Housing and Urban
Development may make available, from sources of assistance appropriated
to preserve the low and moderate income status of projects with expiring
Federal use restrictions, assistance to such State or local housing
authorities for use in preventing the loss of housing affordable for low
and moderate income families that is assisted under a State program
under the terms of which the owner may prepay a State assisted or
subsidized mortgage on such housing. The application of the State or
local housing authority shall demonstrate to the Secretary that the
total amount of incentives provided to the owner to induce the owner to
preserve the low and moderate income status of the project shall not
exceed the level of incentives which may be provided to a similarly
situated project with expiring Federal use restrictions under subtitle
B of title II of the Housing and Community Development Act of 1987.
 
 (2) Section 8.-Any assistance under section 8 of the United States
Housing Act of 1937 made available pursuant to this subsection may be
used (i) to supplement any assistance available on existing section 8
contracts, or (ii) to provide additional assistance to structures to
ensure that all units occupied by tenants who are lower income families
(as such term is defined in section 3(b) of the United States Housing
Act of 1937) pay rents not exceeding 30 percent of their adjusted
incomes. Any project receiving assistance hereunder shall be subject to
standards, inspections and sanctions established by the Secretary under
section 224(e) of the Housing and Community Development Act of 1987. Any
such section 8 assistance shall be provided for a term and at the fair
market rent levels or such higher levels used as applicable for eligible
low income housing that receives incentives under subtitle B of title
II of the Housing and Community Development Act of 1987.
 
 (3) Restriction.-Assistance may be provided under this subsection only
to State and local housing authorities that require any housing
receiving such assistance to remain affordable for lower and moderate
income tenants for the period during which assistance under this
subsection is received.
TITLE VII-RURAL HOUSING