Preservation Enhancement and Savings Opportunity Act of 2014

To amend the Low-Income Housing Preservation and Resident Homeownership Act of 1990. 1. Short title This Act may be cited as the Preservation Enhancement and Savings Opportunity Act of 2014 2. Distributions and residual receipts Section 222 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4112) is amended by adding at the end the following new subsection: (e) Distribution and residual receipts (1) Authority After the date of the enactment of the Preservation Enhancement and Savings Opportunity Act of 2014 (A) annually, all surplus cash generated by the property; and (B) upon request made to the Secretary and notwithstanding any conflicting provision in such use agreement; any funds accumulated in a residual receipts account, but only if the owner is in material compliance with such use agreement. (2) Operation of property An owner that distributes any amounts pursuant to paragraph (1) shall— (A) continue to operate the property in accordance with the affordability provisions of the use agreement for the property for the remaining useful life of the property; (B) as required by the plan of action for the property, continue to renew or extend any project-based rental assistance contract for a term of not less than 20 years; and (C) if the owner has an existing multi-year project-based rental assistance contract for less than 20 years, have the option to extend the contract to a 20-year term. . 3. Future refinancings Section 214 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4104) is amended by adding at the end the following new subsection: (c) Future financing Neither this section, nor any plan of action or use agreement implementing this section, shall restrict an owner from obtaining a new loan or refinancing an existing loan secured by the project, or from distributing the proceeds of such a loan; except that, in conjunction with such refinancing— (1) the owner shall provide for adequate rehabilitation pursuant to a capital needs assessment to ensure long-term sustainability of the property satisfactory to the lender or bond issuance agency; (2) any resulting budget-based rent increase shall include debt service on the new financing, commercially reasonable debt service coverage, and replacement reserves as required by the lender; and (3) rent increases for units not covered by a project-based rental subsidy contract or tenant-based rental subsidy shall be limited to 10 percent. .

Summary: Preservation Enhancement and Savings Opportunity Act of 2014 - Amends the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA) with respect to a plan of action the Secretary of Housing and Urban Development (HUD) may approve for extension of the low-income affordability restrictions on any eligible low-income housing. Entitles the owner of a property subject to a plan of action or use agreement to distribute: annually all surplus cash generated by the property; and any funds accumulated in a residual receipts account, upon request made to the Secretary and notwithstanding any conflicting provision in the use agreement, but only if the individual is in material compliance with the use agreement. Requires an owner distributing any such amounts to: continue to operate the property in accordance with the affordability requirements of its use agreement for its remaining useful life; continue to renew or extend any project-based rental assistance contract for at least 20 years, as required by the property's plan of action; and have the option to extend the contract to a 20-year term, if he or she has an existing multi-year project-based rental assistance contract for less than 20 years. Declares that neither LIHPRHA, nor any plan of action or use agreement implementing it, shall restrict an owner from obtaining a new loan or refinancing an existing loan secured by a low-income housing project, or from distributing the proceeds of such a loan, except that, in conjunction with such refinancing: the owner shall provide for adequate rehabilitation pursuant to a capital needs assessment to ensure long-term sustainability of the property satisfactory to the lender or bond issuance agency; any resulting budget-based rent increase shall include debt service on the new financing, commercially reasonable debt service coverage, and replacement reserves as required by the lender; and rent increases for units not covered by a project-based rental subsidy contract or tenant-based rental subsidy shall be limited to 10%.