(A) be considered for all purposes a con-
tract entered into under section 8 of the United 
States Housing Act of 1937 (42 U.S.C. 1437f); 
(B) have a term of at least 20 years; 
(C) provide such assistance at rent levels 
established as provided under section 524 of the 
Multifamily Assisted Housing Reform and Af-
fordability Act of 1997 (42 U.S.C. 1437f note); 
(D) be subsequently renewable at the re-
quest of the owner under such section 524; 
(E) be subject to the availability of 
amounts provided in appropriations Acts; and 
(F) be subject to such other terms as the 
Secretary considers appropriate. 
(3) INCOME TARGETING.—To the extent that 
dwelling units subject to an assistance contract 
under this paragraph are occupied by families eligi-
ble for enhanced voucher assistance under section 
8(t) of the United States Housing Act of 1937 (42 
U.S.C. 1437f(t)), the units shall be considered to be 
in compliance with all income targeting requirements 
under the United States Housing Act of 1937. 
(4) 
TENANT
ELIGIBILITY.—Notwithstanding 
any other provision of law, in the multifamily hous-
ing project for which project-based assistance is pro-
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vided pursuant to this subsection, each eligible fam-
ily described in subsection (a)(2) of this section that 
resides in a dwelling unit in such project on the date 
such assistance contract first becomes effective shall 
be considered to meet any applicable requirements 
for income eligibility and occupancy. 
(5) 
CONTRACT
ADMINISTRATION.—Notwith-
standing any other provision of law, any contract for 
project-based assistance entered into pursuant to 
this subsection shall be administered by the project- 
based contract administrator of the State in which 
the multifamily housing project is located. 
SEC. 104. PROJECT-BASED PRESERVATION ASSISTANCE. 
(a) ENHANCED VOUCHERS.—Section 8(t) of the 
United States Housing Act of 1937 (42 U.S.C. 1437f(t)) 
is amended— 
(1) by redesignating paragraph (4) as para-
graph (5); and 
(2) by inserting after paragraph (3) the fol-
lowing new paragraph: 
‘‘(4) PROJECT-BASED
PRESERVATION
ASSIST-
ANCE.— 
‘‘(A) AUTHORITY.—Notwithstanding any 
other provision of law, in the case of a multi-
family housing project eligible under subpara-
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graph (C), the Secretary shall, subject to the 
availability of amounts provided in advance in 
appropriation Acts and at the request of the 
owner of the project, provide project-based pres-
ervation assistance in accordance with this 
paragraph, in such form authorized in subpara-
graph (B) as is requested by the owner, in lieu 
of enhanced voucher assistance under this sub-
section. Such owner of the project shall agree to 
accept such project-based preservation assist-
ance for a period of not less than 20 years: Pro-
vided, That any renewal contract during such 
period is offered on terms and conditions com-
parable to the original contract. 
‘‘(B) FORMS.—Project-based preservation 
assistance provided in accordance with this 
paragraph shall be in one of the following 
forms: 
‘‘(i) PROJECT-BASED
PRESERVATION 
VOUCHERS.—Project-based voucher assist-
ance, which shall be provided in accordance 
with subsection (o)(13)(N). 
‘‘(ii) PROJECT-BASED ASSISTANCE.— 
Project-based assistance under the terms 
and conditions in section 524 of the Multi-
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family Assisted Housing Reform and Af-
fordability Act of 1997 (42 U.S.C. 1437f 
note). In determining the initial rent levels 
for a contract for project-based assistance 
under this subparagraph, the Secretary 
shall establish initial contract rents at the 
comparable market rents for the area (as 
such term is defined in section 524(a)(5) 
of the Multifamily Assisted Housing Re-
form and Affordability Act of 1997 (42 
U.S.C. 1437f note)). 
‘‘(C) ELIGIBLE PROJECTS.—A multifamily 
housing project is eligible under this subpara-
graph if— 
‘‘(i)(I) an eligibility event for the 
project occurs; and 
‘‘(II) the project is not a project for 
which the owner has opted not to renew a 
contract for project-based rental assistance 
under this section; or 
‘‘(ii) enhanced voucher assistance has 
already been provided for the project pur-
suant to the conditions specified in sub-
paragraph (F)(ii). 
‘‘(D) ELIGIBLE UNITS.— 
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‘‘(i) INCOME ELIGIBILITY.—Assistance 
pursuant to this paragraph may be pro-
vided for all dwelling units in a multifamily 
housing project for which tenants residing 
in the project at the time assistance is ini-
tially provided meet income eligibility re-
quirements for enhanced voucher assist-
ance under this subsection. 
‘‘(ii) ADDITIONAL UNITS.— At the re-
quest of the owner of a multifamily hous-
ing project for which assistance pursuant 
to this paragraph is provided, the Sec-
retary may approve assistance for addi-
tional dwelling units, which may include 
units that are vacant at the time of the eli-
gibility event, subject to a determination 
by the Secretary that such additional as-
sistance is necessary or desirable to further 
the purposes reflected in subparagraph 
(E). 
‘‘(iii) 
RENT
PAYMENTS.—Eligible 
families residing in a project at the time 
assistance pursuant to this paragraph is 
provided shall be subject to the provisions 
of subparagraphs (A) and (D) of para-
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graph (1) of this subsection. Notwith-
standing the preceding sentence, an eligible 
family that is a low-income family shall not 
be required to pay as rent for a dwelling 
unit assisted pursuant to this paragraph 
an amount that exceeds 30 percent of the 
family’s adjusted monthly income. 
‘‘(iv) INCOME ELIGIBILITY.—For pur-
poses of income targeting requirements 
under section 16 of the United States 
Housing Act of 1937 (42 U.S.C. 1437n), 
tenants initially assisted under this para-
graph shall not be considered new tenants. 
‘‘(E) REQUIRED DETERMINATIONS.—As a 
condition of entering into a contract pursuant 
to this paragraph, the Secretary shall have de-
termined, pursuant to standards established by 
the Secretary and before entering into such 
contract, that— 
‘‘(i) the housing to be assisted under 
the contract is economically viable; and 
‘‘(ii)(I) there is a significant demand 
for the housing; 
‘‘(II) the housing will contribute to a 
community 
revitalization 
plan 
or 
to 
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deconcentrating poverty and expanding 
housing and economic opportunities; or 
‘‘(III) the continued affordability of 
the housing otherwise is an important 
asset to the community. 
The Secretary may delegate the authority to 
make the determination under this subpara-
graph to the public housing agency or project- 
based contract administrator that would admin-
ister project-based assistance for such project. 
Such public housing agency or project-based 
contract administrator shall apply such stand-
ards as the Secretary shall establish in making 
such determination. 
‘‘(F) TIMING OF REQUEST.— 
‘‘(i) PROJECTS FOR WHICH REQUEST 
IS MADE BEFORE ELIGIBILITY EVENT.—In 
the case of a project eligible for assistance 
under subparagraph (C)(i) that is re-
quested prior to the occurrence of the eligi-
bility event, a contract for assistance pur-
suant to this paragraph shall be provided 
upon the occurrence of the eligibility event. 
‘‘(ii) 
REQUEST
MADE
AFTER 
ISSUANCE OF ENHANCED VOUCHERS.—In 
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the case of a project eligible for assistance 
under subparagraph (C)(ii) that is re-
quested after the issuance of enhanced 
voucher assistance for the project, a con-
tract for assistance pursuant to this para-
graph shall be provided only— 
‘‘(I) if the eligibility event for the 
project occurred before the date of the 
enactment of the Housing Preserva-
tion and Tenant Protection Act of 
2010 and a request for such assist-
ance is made within 12 months after 
such date of enactment (or such 
longer period as the Secretary may 
permit to facilitate preservation of the 
project as affordable housing); 
‘‘(II) if the project is sold or oth-
erwise transferred and the new owner 
requests such assistance within 12 
months (or such longer period as the 
Secretary may permit to facilitate 
preservation of the project as afford-
able housing) of such purchase; or 
‘‘(III) 
in 
such 
other 
cir-
cumstances as the Secretary may de-
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termine are necessary or appropriate 
to facilitate preservation of the project 
as affordable. 
Assistance for projects eligible pursuant to 
subparagraph (C)(ii) may only be provided 
as project-based preservation voucher as-
sistance under subparagraph (B)(i). Such 
contract shall cover all dwelling units in 
the project that are occupied by tenants re-
ceiving enhanced voucher assistance at the 
time the contract is effective, plus any ad-
ditional units as may be approved for the 
project 
pursuant 
to 
subparagraph 
(D)(ii).’’. 
(b) PHA PROJECT-BASED VOUCHER ASSISTANCE.— 
Paragraph (13) of section 8(o) of the United States Hous-
ing Act of 1937 (42 U.S.C. 1437f(o)(13)) is amended by 
adding at the end the following new subparagraph: 
‘‘(N) PRESERVATION ASSISTANCE.— 
‘‘(i) 
AUTHORITY.—Project-based 
voucher assistance in accordance with this 
subparagraph shall be provided for projects 
eligible for such assistance pursuant to 
subsection (t)(4). 
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‘‘(ii) 
AUTHORITY
FOR
HIGHER 
RENTS.—At the request of the owner of a 
multifamily housing project for a contract 
for assistance in accordance with this sub-
paragraph to establish rents at levels above 
those permitted by subparagraph (H) of 
this paragraph, a public housing agency 
may request, and the Secretary may ap-
prove, higher unit rents if necessary to 
preserve housing opportunities that further 
the purposes of subsection (t)(4)(E). 
‘‘(iii) PROJECTS
IN
MULTIPLE
PHA 
JURISDICTIONS.—If the Secretary has not 
entered into a contract with a public hous-
ing agency to provide enhanced voucher as-
sistance under subsection (t) for the 
project at the time the owner of a multi-
family housing project requests assistance 
in accordance with this subparagraph, and 
the project is located within the jurisdic-
tion for the program under this subsection 
of more than one public housing agency, in 
determining which agency will administer 
such assistance, the Secretary shall— 
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‘‘(I) consider the ratio of the 
number of vouchers to be awarded 
under this subparagraph and of other 
project-based vouchers administered 
under this paragraph to the total 
number of vouchers administered by 
an agency; and 
‘‘(II) among other factors, pro-
vide preference to an agency for which 
the total number of project-based 
vouchers 
administered 
under 
this 
paragraph, including vouchers to be 
awarded pursuant to this subpara-
graph, would not exceed 50 percent of 
the total number of all vouchers to be 
administered by the agency after such 
award. 
The Secretary shall establish guidelines for 
determining which agency will administer 
assistance if a unit is not located within 
the jurisdiction of any public housing agen-
cy that administers vouchers. 
‘‘(iv) INAPPLICABILITY
OF
GOALS.— 
Subparagraph (C) shall not apply to a 
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housing assistance payment contract pur-
suant to this subparagraph. 
‘‘(v) 
DISREGARD
OF
ASSISTANCE 
UNDER
PERCENTAGE
LIMITATION.— 
Amounts provided pursuant to this sub-
paragraph shall not be considered for pur-
poses of calculating the limitation under 
subparagraph (B). 
‘‘(vi) INAPPLICABILITY
OF
INCOME- 
MIXING
REQUIREMENT.—Subparagraph 
(D) shall not apply with respect to a hous-
ing assistance payments contract pursuant 
to this subparagraph.’’. 
SEC. 105. PRESERVATION OF STATE-FINANCED AFFORD-
ABLE HOUSING. 
(a) MAXIMUM CONTRACT TERM.—In the case of a 
State housing finance agency that has entered into a hous-
ing assistance payments contract with the owner of a 
housing project for project-based rental assistance under 
section 8 of the United States Housing Act of 1937 (42 
U.S.C. 1437f), using the November 1975 version of form 
HUD 52645A of the Department of Housing and Urban 
Development, under the Section 8 Housing Assistance 
Payment Program for State Housing Finance and Devel-
opment Agencies, if such contract provides that the max-
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dcolon on DSK2BSOYB1PROD with BILLS
imum total term of the contract for any dwelling unit shall 
not exceed a period terminating on the date of the last 
payment of principal due on the permanent financing, the 
Secretary of Housing and Urban Development shall treat 
such provision as providing for a maximum term extending 
to the originally scheduled maturity date of the permanent 
financing, without regard to any prepayment of such per-
manent financing. 
(b) AMENDMENT
TO
MARK-TO-MARKET
PROVI-
SIONS.—Section 524 of the Multifamily Assisted Housing 
Reform and Affordability Act of 1997 is amended— 
(1) by redesignating subsection (g) as sub-
section (i); and 
(2) by inserting after subsection (f) the fol-
lowing new subsection: 
‘‘(g) STATE HOUSING AGENCY CONTRACTS.— 
‘‘(1) RENT ADJUSTMENTS FOR EXTENDED CON-
TRACTS.—In the case of a contract for project-based 
assistance under section 8 of the United States 
Housing Act of 1937 pursuant to the State Housing 
Agencies program governed by part 883 of the Sec-
retary’s regulations (24 C.F.R. 883), the provisions 
of this section authorizing the increase of rent levels 
to comparable market rents shall apply upon the ex-
piration of any contract term, notwithstanding the 
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renewal provisions of the contract. If, at any time 
during the five-year period ending upon the final ex-
piration date of any such contract, the owner of the 
housing project assisted under the contract enters 
into a binding commitment to renew the contract at 
the rent levels authorized under subsection (a)(4)(A) 
for an additional five-year term beginning upon the 
final expiration of the contract, the annual rent ad-
justment during such five-year period ending upon 
such final expiration date may be to such rent levels. 
‘‘(2) PROJECTS
WITH
DEBT
FINANCING.—In 
the case of a contract for project-based assistance 
under section 8 for a project with debt financing 
provided by a State housing agency or local housing 
authority, with the approval of the State housing 
agency or local authority, the owner may terminate 
the contract and enter into a new contract for 
project-based assistance under this section for a 
term of 20 years, subject to the availability of 
amounts provided by appropriation Acts, but only if 
the owner enters into an enforceable commitment to 
preserve the affordability of the project for not fewer 
than 55 years from the date of such contract, sub-
ject to the continued provision of rental assistance 
under section 8 or a comparable program.’’. 
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SEC. 106. PRESERVATION EXCHANGE PROGRAM. 
(a) ESTABLISHMENT OF PROGRAM.—The Secretary 
of Housing and Urban Development shall carry out a pres-
ervation exchange program under this section to provide 
for the transfer of preservation projects to purchasers who 
agree to maintain the projects for use for affordable hous-
ing. 
(b) PARTICIPATION.— 
(1) ELECTION.—The Secretary shall provide for 
owners of preservation projects to elect, in accord-
ance with such procedures as the Secretary shall es-
tablish, to participate in the preservation exchange 
program under this section. 
(2) TRANSFER OF PRESERVATION PROJECTS.— 
A selling owner of a preservation project may, in ac-
cordance with this section, enter into a contract for 
transfer of the project to a preservation purchaser 
during the 12-month period beginning upon such 
election. 
(3) OFFER PERIOD.—A selling owner of a pres-
ervation project shall agree not to sell, transfer, or 
further encumber the preservation project during the 
period of the owner’s participation in the program, 
with respect to such project, except as otherwise pro-
vided in this section. 
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(4) COMPLIANCE
WITH
PROGRAM
REQUIRE-
MENTS.—Except as otherwise provided by the Sec-
retary, a preservation project may be sold under the 
program only if all of the parties to the transaction 
comply with the requirements of this section. 
(c) NOTICE
OF
PARTICIPATION
AND
CERTIFI-
CATION.— 
(1) RECIPIENTS; TIMING.—Each selling owner 
shall of a preservation project shall— 
(A) not later than the date that is 12 
months before the date of maturity or expira-
tion of the mortgage on the preservation 
project, provide written notice of election to 
participate in the program with respect to the 
project to— 
(i) the Secretary; 
(ii) each tenant of the project; 
(iii) any public housing agency or 
other organization representing tenants of 
the preservation project; and 
(iv) qualified State and local authori-
ties; and 
(B) post such notice conspicuously in the 
common area of the preservation project for the 
duration of the 12-month period beginning on 
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the date that notice is required to be provided 
pursuant to subparagraph (A). 
(2) CONTENTS.—Notice required under sub-
paragraph (A) shall— 
(A) include a statement that the selling 
owner has elected to participate in the preserva-
tion exchange program and to seek a contract 
for sale of the preservation project to a preser-
vation purchaser within the 12-month period 
following the date of the notice, or within such 
other time period as permitted by this section; 
(B) 
clearly 
identify 
the 
preservation 
project; 
(C) identify, and provide contact informa-
tion for, the selling owner; and 
(D) include such other information regard-
ing the preservation project and its potential 
sale under the program as the Secretary may 
require, which shall include information con-
cerning any applicable subsidies or restrictions 
applicable to the preservation project. 
(3) CERTIFICATION.—Not later than 7 days 
after completion of all notice requirements of para-
graph (1) with respect to a preservation project, the 
selling owner shall certify in writing to the Secretary 
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that notice to all recipients has been provided as re-
quired under this section. 
(4) NOTIFICATION
TO
CONGRESS
AND
PUB-
LIC.—Not later than 14 days after certification pur-
suant to paragraph (3) is provided to the Secretary 
regarding a preservation project, the Secretary 
shall— 
(A) provide to the Member of the House of 
Representatives representing the district in 
which the project is located, and to the Mem-
bers of the Senate for the State in which the 
project is located, a copy of such notice and cer-
tification; and 
(B) make such notice and certification 
publicly available at an easily identifiable World 
Wide Web location of the Department of Hous-
ing and Urban Development. 
(d) OPPORTUNITY TO PURCHASE.— 
(1) NOTIFICATION; OFFER.—During the offer 
period referred to in subsection (b)(3) with respect 
to a preservation project— 
(A) the Secretary shall post on an easily 
identifiable World Wide Web location of the De-
partment of Housing and Urban Development 
information that identifies the preservation 
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If the parties do not receive such notice of such de-
termination from the Secretary during the review pe-
riod, notwithstanding subsection (i)(1), the offer 
shall be considered for purposes of this section to be 
a bona fide preservation purchase offer. 
(3) TOLLING OF OTHER PERIODS.—During the 
review period for an offer to purchase a preservation 
project or until earlier receipt of a determination 
from the Secretary under paragraph (2), all other 
time periods set forth in this section shall be tolled 
with respect to such preservation project. 
(4) ACTION ON OFFER.—With respect to a bona 
fide offer to purchase a preservation project made by 
a potential preservation purchase, during the 30-day 
period that begins upon the earlier of the receipt of 
a determination from the Secretary under paragraph 
(2) regarding the offer or the expiration of the re-
view period, the selling owner shall accept or reject 
the offer, subject to the conditions and requirements 
set forth in this section. 
(5) ACCEPTED OFFER; CONTRACT.—If a selling 
owner accepts a bona fide preservation purchase 
offer made by a potential preservation purchaser, 
such parties shall promptly enter into a binding con-
tract that reflects the terms of the accepted offer. 
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(6) DECLINED OFFER.—If a selling owner de-
clines to accept any bona fide preservation purchase 
offer made to the owner, such owner shall— 
(A) provide to the Secretary a written ex-
planation of the basis for its decision; and 
(B) repay to the Secretary all funds it re-
ceived as a participant in the program, plus in-
terest at rate determined by the Secretary at 
the time the funds were made available. 
(e) 
BONA
FIDE
PRESERVATION
PURCHASE 
OFFER.—An offer to purchase a preservation project shall 
constitute a bona fide preservation purchase offer meeting 
the requirements of this subsection only if the offer— 
(1) includes an agreement by the preservation 
purchaser to enter into such agreements, which shall 
be contained in the deed or other recorded instru-
ments for the preservation project, as specified by 
the Secretary, that ensure that the preservation 
project will remain affordable for very-low income 
families for a period of not less than 40 years from 
the date of transfer pursuant to sale under such 
offer, utilizing all available assistance, including re-
newal of existing Federal assistance contracts and 
leasing to holders of tenant-based assistance; 
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(2) includes an agreement by the preservation 
purchaser to accept any contract for project-based 
rental assistance applicable to the preservation 
project, notwithstanding the transfer of the preser-
vation housing to the preservation purchaser, includ-
ing the renewal of such contract upon expiration, for 
a period of not less than 40 years from the date of 
transfer; 
(3) requires that the preservation purchaser 
execute such agreements, which shall be contained in 
the deed or other recorded instruments for the pres-
ervation housing, as specified by the Secretary, that 
ensure that the preservation project and related fa-
cilities will remain affordable for very-low income 
households for a period of not less that 40 years 
from the date of transfer, using all available assist-
ance, including renewal of existing Federal assist-
ance contracts and leasing to holders of tenant- 
based assistance; and 
(4) includes such other terms and conditions as 
may be required by the Secretary. 
(f) INCENTIVES.—Notwithstanding any other provi-
sion of law or regulation, the Secretary may, with respect 
to a preservation project— 
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(1) suspend physical inspections and manage-
ment reviews of the project, during the period that 
begins upon the provision to the Secretary by the 
selling owner notice of its election to participate in 
the program and ending upon the completion of the 
transfer of the preservation project to a preservation 
purchaser or termination of participation of the sell-
ing owner in the program; 
(2) streamline approval of requests for prepay-
ment, assignment of Housing Assistance Payments 
contracts, transfer of physical assets, and other ac-
tivities and functions, to facilitate the sale or trans-
fer under the program to a preservation purchaser; 
(3) release project resources, in the form of re-
serve for replacement funds or project residual re-
ceipts, to the selling owner for purposes related to 
preparation of the preservation project for sale 
under the program, applicable pre-development 
costs, or transaction costs related to sale or transfer 
of the preservation project under the program; 
(4) provide advances in the form of a forgivable 
loan for the selling owner to be used for direct 
predevelopment and administrative costs for prepa-
ration of the preservation project for sale under the 
program, and the transfer of the preservation 
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project to the preservation purchaser, but not in-
cluding compensation for property value beyond the 
purchase price; 
(5) provide grants or loans to a preservation 
purchaser who has entered into a bona fide preserva-
tion purchase contact under the program with the 
selling owner, which grant or loan funds shall be 
used for to purchase or rehabilitate the preservation 
project; and 
(6) provide grants or loans pursuant to section 
102(a) of this Act to a preservation purchaser who 
has entered into a bona fide preservation purchase 
contract under the program with the selling owner. 
(g) RELEASE OF SELLING OWNER.—Upon closing of 
the sale or transfer of the preservation project pursuant 
to this section— 
(1) the selling owner shall be released from obli-
gations with respect to the preservation project 
under— 
(A) the new construction, substantial reha-
bilitation, moderate rehabilitation, property dis-
position, and loan management set-aside pro-
grams, and any other program providing 
project-based assistance, under section 8 of the 
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dcolon on DSK2BSOYB1PROD with BILLS
United States Housing Act of 1937 (42 U.S.C. 
1437f); 
(B) the below-market interest rate pro-
gram under paragraphs (3) and (5) of section 
221(d)(3) of the National Housing Act (12 
U.S.C. 1715(d)); 
(C) section 236 of the National Housing 
Act (12 U.S.C. 1715z–1); 
(D) section 202 of the Housing Act of 
1959 (12 U.S.C. 1701q); 
(E) the rent supplement program under 
section 101 of the Housing and Urban Develop-
ment Act of 1965 (12 U.S.C. 1701s); or 
(F) other Federal affordable housing pro-
grams, as identified by the Secretary; and 
(2) the preservation purchaser agrees— 
(A) to operate the preservation project in 
accordance with the provisions of this section 
and any agreements entered into pursuant to 
this section; and 
(B) to maintain any existing limits or re-
strictions on the amount of tenant rents, rent 
contributions, or income eligibility of tenants, or 
on the use of the preservation project, as re-
quired by the Secretary, for a period of not less 
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than 40 years from the transfer date, except 
that rents may be increased to the extent that 
additional project-based assistance is provided 
by the Secretary. 
(h) RENEWAL OF PARTICIPATION IN PROGRAM.— 
(1) IN
GENERAL.—A selling owner who has 
participated in the program in good faith for 12 
months and does not receive or does not reject a 
bona fide preservation purchase offer during that 
12-month period of participation may seek approval 
of the Secretary to renew its participation for an ad-
ditional 12-month period. A request for renewal 
under this paragraph shall be subject to the same 
provisions of subsection (c) applicable to a notice of 
election to participate in the program. 
(2) TIMING.—A request for renewal may be 
made, but shall not be required to be made, imme-
diately upon the expiration of the selling owner’s ini-
tial 12-month period of participation in the program. 
(3) APPROVAL.—The Secretary may, at the dis-
cretion of the Secretary, approve or reject a renewal 
request under this subsection. A renewal request 
that is not accepted or rejected by the Secretary 
during the 30-day period beginning upon receipt of 
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the request by the Secretary shall be considered for 
purposes of this section to have been accepted. 
(4) TERMS.—A selling owner who renews par-
ticipation in the program shall be subject to the re-
quirements and procedures for participation under 
this section for the initial term of participation. 
(i) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) BONA
FIDE
PRESERVATION
PURCHASE 
OFFER.—The term ‘‘bona fide preservation purchase 
offer’’ means an offer to purchase a preservation 
project that has been determined by the Secretary, 
pursuant to subsection (d)(2) to meet the require-
ments under subsection (e). 
(2) ELIGIBLE JURISDICTION.—The term ‘‘eligi-
ble jurisdiction’’ means an area so designated by the 
Secretary for purposes of this section. 
(3) 
PRESERVATION
CONTRACT.—The 
term 
‘‘preservation contract’’ means any contract for sale 
or transfer of a preservation project pursuant to the 
provisions of this section. 
(4) PRESERVATION EXCHANGE PROGRAM.—The 
terms ‘‘preservation exchange program’’ and ‘‘pro-
gram’’ mean the preservation exchange program au-
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thorized by, and established pursuant to, this sec-
tion. 
(5) PRESERVATION PROJECT.—The term ‘‘pres-
ervation project’’ means any multifamily housing 
project that— 
(A) has been specifically identified to the 
Secretary by a selling owner as available for 
purchase or transfer under the preservation ex-
change program; 
(B) is located in an eligible jurisdiction; 
(C) is financed by a loan or mortgage that 
will mature or expire within 5 years of the elec-
tion by the selling owner to participate in the 
preservation exchange program; and 
(D) is insured or assisted under— 
(i) the new construction, substantial 
rehabilitation, 
moderate 
rehabilitation, 
property disposition, and loan management 
set-aside programs, or any other program 
providing project-based assistance, under 
section 8 of the United States Housing Act 
of 1937 (42 U.S.C. 1437f); 
(ii) the below-market interest rate 
program under paragraphs (3) and (5) of 
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section 221(d)(3) of the National Housing 
Act (12 U.S.C. 1715(d)); 
(iii) section 236 of the National Hous-
ing Act (12 U.S.C. 1715z–1); 
(iv) section 202 of the Housing Act of 
1959 (12 U.S.C. 1701q); 
(v) the rent supplement program 
under section 101 of the Housing and 
Urban Development Act of 1965 (12 
U.S.C. 1701s); or 
(vi) any other Federal affordable 
housing program, as identified by the Sec-
retary. 
(6) PRESERVATION
PURCHASER.—The term 
‘‘preservation purchaser’’ means any person or enti-
ty that acquires a preservation project pursuant to 
an agreement to participate in the preservation ex-
change program. 
(7) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(8) SELLING
OWNER.—The 
term 
‘‘selling 
owner’’ means, with respect to a preservation 
project, the person or entity that owns the project 
and that has elected to participate in the preserva-
tion exchange program with respect to such project. 
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(j) EFFECT OF PARTICIPATION.—During the time 
that the owner is participating in the preservation ex-
change program with respect to a preservation project, 
such owner and such project shall not be subject to the 
requirements under section 107 of this Act. 
(k) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to the Secretary such 
sums as may be necessary to carry out this section, includ-
ing amounts for the provision of additional educational 
services and training and technical assistance and to pro-
vide information to the public and to potential participants 
in the preservation exchange program to facilitate partici-
pation in the program, and for other activities to promote 
the preservation of affordable housing. 
(l) REGULATIONS.—The Secretary shall issue any 
regulations necessary to carry out this section. 
SEC. 107. FEDERAL FIRST RIGHT OF REFUSAL. 
(a) NOTICE OF TERMINATION OF AFFORDABILITY 
RESTRICTIONS.— 
(1) NOTICE OF TERMINATION.— 
(A) REQUIREMENT.—Except as provided 
in subparagraph (D), an owner of covered hous-
ing shall provide written notice under subpara-
graph (B) of any termination of the afford-
ability restrictions affecting the covered hous-
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ing, not later than one year, but no earlier than 
three years, before such termination to— 
(i) all tenants and the resident coun-
cil, if any, of the covered housing; 
(ii) the State housing agency or com-
parable State agency of the State in which 
the housing is located; and 
(iii) the Secretary. 
Nothing in this section shall prohibit an owner 
from taking actions to terminate an afford-
ability restriction during any notice period 
under this section; except that an owner shall 
comply with all of the notice terms and restric-
tions pursuant to paragraphs (2) and (3). 
(B) CONTENTS.—Written notice under this 
subparagraph with respect to covered housing 
shall include— 
(i) the address of the covered housing; 
(ii) the name and address of the 
owner; 
(iii) a statement identifying that an 
affordability restriction may terminate; 
(iv) the date on which each afford-
ability restriction may terminate; and 
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(v) such other information as may be 
required by the Secretary. 
(C) SINGLE NOTICE COVERING MULTIPLE 
TERMINATIONS.—In any case in which more 
than one termination is scheduled to occur 
within a 12-month period, an owner may pro-
vide a single written notice covering all such 
terminations, but only if the notice is provided 
in accordance with subparagraph (A) at least 
one year before the earliest such termination 
and the notice otherwise complies with this 
paragraph. 
(D) TRANSITION.—Subparagraph (A) shall 
not apply with respect to covered housing sub-
ject to an affordability restriction that, as of 
the effective date under subsection (j), has less 
than two years of applicability remaining. Such 
covered housing shall be subject to paragraph 
(5). 
(2) NOTICE OF INTENT TO COMPLETE TERMI-
NATION.—An owner of covered housing shall not 
complete a termination or allow a termination to 
occur with respect to such housing unless, not later 
than one year before the completion of the last ter-
mination event affecting the covered housing, the 
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owner provides the entities identified in paragraph 
(1) with written notice of intent to complete such 
termination. The notice shall include— 
(A) the address of the covered housing; 
(B) the name and address of the owner; 
(C) the date on which the owner intends to 
complete termination; and 
(D) such other information as may be re-
quired by the Secretary. 
(3) OPPORTUNITY
FOR
PURCHASE
BY
SEC-
RETARY.—Except as provided in subsection (d), an 
owner of covered housing shall not sell the covered 
housing at any time before— 
(A) providing notice, in writing, to the par-
ties identified in paragraph (1) of the owner’s 
intention to sell the property; and 
(B) offering the Secretary the opportunity 
to purchase the property pursuant to subsection 
(b). 
(4) DELIVERY OF NOTICE.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), any notice required by this 
subsection shall be deemed to have been pro-
vided when delivered in person or mailed by cer-
tified or registered mail, return receipt re-
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dcolon on DSK2BSOYB1PROD with BILLS
quested, to the party to whom notice is re-
quired. 
(B) NOTICE TO TENANT.—With respect to 
any notice to tenants required by this sub-
section, any such notice shall be deemed to have 
been provided upon the when— 
(i) the notice is delivered in hand to 
the tenant or an adult member of the ten-
ant’s household; 
(ii) the notice is sent by first class 
mail; or 
(iii) a copy is left in or under the door 
of the tenant’s dwelling unit. 
(5) TRANSITION.—Notwithstanding paragraph 
(1) of this subsection, an owner of covered housing 
who, on the effective date under subsection (j), has 
less than one year remaining before the date when 
the affordability restriction will cease to apply to 
such housing, shall not be required to give the one- 
year notice required by paragraph (1), but shall pro-
vide such notice within 90 days after the effective 
date under subsection (j). Notwithstanding para-
graph (2) of this subsection, an owner who, on the 
effective date under subsection (j), has less than one 
year remaining before a termination shall not be re-
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dcolon on DSK2BSOYB1PROD with BILLS
quired to give the one-year notice required by para-
graph (2), but shall provide such notice within 90 
days after such effective date. 
(6) EFFECT OF OFFER, PURCHASE, OR SALE.— 
The notice requirements of this subsection shall not 
be affected by the status of an offer, purchase con-
tract, or sale under subsection (b) or (c). 
(b) RIGHT OF SECRETARY TO MAKE OFFER.— 
(1) OPPORTUNITY
FOR
PURCHASE
BY
SEC-
RETARY.—An owner of covered housing shall offer 
the Secretary an opportunity to purchase the cov-
ered housing, in accordance with this subsection, be-
fore entering into any agreement to sell such hous-
ing to a third party. This paragraph may not be 
construed to establish any obligation on the part of 
an owner of covered housing to enter into an agree-
ment to sell such housing to the Secretary. 
(2) ASSIGNEE OF SECRETARY.— 
(A) AUTHORITY
TO
SELECT.—The Sec-
retary may select an assignee to act on behalf 
of the Secretary under this subsection as the 
purchaser of covered housing and shall give the 
owner written notice of any assignee selected. 
(B) AGREEMENT.—The Secretary shall 
enter into a written agreement with any as-
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signee selected, which shall provide that the as-
signee, and any of its successors or assigns, 
agree to preserve the affordability of the cov-
ered housing. Upon entering into such an 
agreement, the assignee shall assume all rights 
and responsibilities of the Secretary as a pro-
spective purchaser under this subsection and 
subsection (c). 
(C) REVOCATION.—At any time before a 
sale of covered housing under this subsection or 
subsection (d), the Secretary may revoke the se-
lection and designation of an assignee with re-
spect to the covered housing pursuant to this 
paragraph and assume the rights and respon-
sibilities in the Secretary’s own capacity or se-
lect a new assignee and enter into an agreement 
under subparagraph (B) with such assignee. No 
action under this subparagraph shall operate to 
extend or alter any time periods for perform-
ance under this section or in any purchase con-
tract entered into pursuant to this section. 
(3) PURCHASE OFFER.— 
(A) TIMING.—During the 90-day period 
with respect to covered housing that begins 
upon receipt of notice pursuant to subsection 
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dcolon on DSK2BSOYB1PROD with BILLS
(a)(3) of the owner’s intention to sell the cov-
ered housing, the Secretary may submit an 
offer to the owner to purchase the covered 
housing. 
(B) FAILURE TO SUBMIT.—Failure by the 
Secretary to submit an offer to purchase cov-
ered housing during the period under subpara-
graph (A) shall constitute an irrevocable waiver 
of the Secretary’s rights under this subsection 
and the owner may sell the covered housing 
subject to subsection (c). 
(C) ACCEPTANCE.—If the owner accepts 
the initial or any revised offer of the Secretary, 
the owner and the Secretary shall enter into 
such other agreements as are necessary and ap-
propriate to complete the purchase. If the 
owner and the Secretary have not entered into 
an agreement for the Secretary to purchase the 
property within 90 days after receipt of the no-
tice pursuant to subsection (a)(3), the owner 
may enter into an agreement to sell the prop-
erty to a purchaser of the owner’s choice, sub-
ject to subsection (c). 
(4) AVAILABILITY OF DOCUMENTS.— 
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(A) 
REQUIREMENT.—If 
the 
Secretary 
makes a request pursuant to this subparagraph 
to the owner of covered housing at any time 
after notice required under subsection (a)(1) 
has been provided, the owner shall, within 10 
days after receiving the request, make the docu-
ments described in subparagraph (B) available 
to the Secretary for review and photocopying 
during normal business hours at the owner’s 
principal place of business or at a commercial 
photocopying facility. 
(B) COVERED
DOCUMENTS.—The docu-
ments described in this subparagraph with re-
spect to covered housing shall include— 
(i) any existing architectural plans 
and specifications of the covered housing; 
(ii) itemized lists of monthly operating 
expenses and capital expenditures for the 
covered housing in each of the two pre-
ceding calendar years; 
(iii) any capital needs studies or mar-
ket studies for the covered housing that 
have been submitted to a Federal, State, 
or local agency in the preceding three 
years; 
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dcolon on DSK2BSOYB1PROD with BILLS
(iv) utility consumption rates for the 
covered housing for preceding year; 
(v) the last two audited annual finan-
cial statements and physical inspection re-
ports for the covered housing filed with 
Federal, State, or local agencies; 
(vi) the most recent rent roll for the 
covered housing showing then-current va-
cancies and rent arrearages; 
(vii) a statement of the approximate 
annualized vacancy rate for the covered 
housing for each of the two preceding cal-
endar years; and 
(viii) any other documents relating to 
the covered housing that the Secretary 
considers appropriate. 
(C) PROTECTION OF INFORMATION.—Doc-
uments obtained pursuant to a request under 
this paragraph shall not be considered public 
records, and the Secretary shall not make such 
documents available to the public without the 
written consent of the owner or pursuant to a 
court order, except that disclosure of such docu-
ments may be made to potential funding 
sources, regulatory agencies, or agents or con-
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dcolon on DSK2BSOYB1PROD with BILLS
sultants of the Secretary in connection with a 
purchase transaction pursuant to this sub-
section, subject to appropriate confidentiality 
agreements. 
(5) INSPECTIONS.— 
(A) IN GENERAL.—Subject to execution of 
an access and confidentiality agreement in ac-
cordance with subparagraph (B), upon request 
by the Secretary and with appropriate notice, 
the owner shall permit reasonable inspections of 
the dwelling units, building systems, common 
areas, and common grounds of the covered 
housing by agents, consultants, and representa-
tives of the Secretary or the assignee of the 
Secretary, including inspections related to envi-
ronmental, engineering, structural, or zoning 
matters. 
(B) 
ACCESS
AND
CONFIDENTIALITY 
AGREEMENT.—An access and confidentiality 
agreement in accordance with this subpara-
graph is an agreement, entered into by the 
owner of covered housing and any agents, con-
sultants, or representatives of the Secretary or 
the assignee of the Secretary, in a form ap-
proved by the Secretary, with respect to such 
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dcolon on DSK2BSOYB1PROD with BILLS
matters as insurance to be carried by the in-
spectors of the covered housing, indemnities of 
the owner, restrictions on invasive testing, res-
toration requirements, the timing of such in-
spections, and the requirement to maintain con-
fidentiality with respect to all matters discov-
ered. 
(6) NOTIFICATION
TO
TENANTS.—Not later 
than 30 days after the Secretary submits an offer to 
purchase the covered housing pursuant to subsection 
(c), the Secretary shall notify tenants in the housing 
development of its plans. 
(c) FIRST RIGHT OF REFUSAL.— 
(1) SALE TO THIRD PARTY.—An owner of cov-
ered housing may execute a purchase contract with 
a third party to sell the covered housing pursuant to 
this subsection during the one-year period that be-
gins upon the date on which notice for such housing 
was provided to the Secretary pursuant to sub-
section (a)(3). After such period expires, the owner 
may not sell the housing without providing notice of 
such sale in accordance with subsection (a)(3)(A). 
(2) MATCHING
OF
THIRD
PARTY
OFFER
BY 
SECRETARY OR OTHER PARTY.— 
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(A) NOTICE OF THIRD PARTY PURCHASE 
CONTRACT.—Upon execution of a third party 
purchase contract for covered housing, the 
owner shall, within 7 days, submit a copy of the 
contract to the Secretary, the resident council, 
if any, all tenants, and the State housing agen-
cy. 
(B) PURCHASE
BY
SECRETARY
AND
AS-
SIGNMENT
OF
RIGHT
TO
MATCH
OFFER.—In 
the case of covered housing for which a third 
party purchase contract is executed, the Sec-
retary may— 
(i) elect to purchase the housing 
under a contract under subparagraph (D); 
or 
(ii) assign the right to match the 
third party offer for the covered housing 
under a contract under subparagraph (D). 
If the Secretary elects to take action under 
clause (i) or (ii), the Secretary shall take such 
action, or execute such other agreement as is 
acceptable to the owner and the Secretary, dur-
ing the 30-day period that begins upon receipt 
by the Secretary of a copy of the third party 
purchase contract. 
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(C) EXTENSION OF TIME PERIODS.—The 
time periods set forth in this paragraph may be 
extended by agreement between the owner and 
the Secretary. 
(D) TERMS
OF
MATCHING
CONTRACT.— 
The purchase contract between the owner and 
the Secretary or the Secretary’s assignee pursu-
ant to this paragraph shall contain the same 
material terms and conditions as the executed 
third party purchase contract, except that the 
purchase contract between the owner and the 
assignee shall provide at least the following 
terms: 
(i) AMOUNT OF EARNEST MONEY DE-
POSIT.—The amount of the earnest money 
deposit shall not exceed the lesser of— 
(I) the amount of the deposit 
provided under the third party pur-
chase contract; 
(II) 2 percent of the sale price; 
or 
(III) $250,000. 
(ii) ESCROW OF EARNEST MONEY DE-
POSIT.—The earnest money deposit shall 
be held under commercially reasonable 
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dcolon on DSK2BSOYB1PROD with BILLS
terms by an escrow agent selected jointly 
by the owner and the Secretary or the as-
signee of the Secretary. 
(iii) REFUNDING OF EARNEST MONEY 
DEPOSIT.—The earnest money deposit 
shall be refundable for not less than 90 
days from the date of execution of the pur-
chase contract or such longer period as 
provided for in the third party purchase 
contract; except that if the owner unrea-
sonably delays the buyer’s ability to con-
duct due diligence during the 90-day pe-
riod, the earnest money deposit shall con-
tinue to be refundable for a period greater 
than 90 days. 
(iv) TIME FOR PERFORMANCE.—The 
time for performance shall be no sooner 
than 240 days after the date of the execu-
tion of the purchase contract, or such later 
date provided for in the third party pur-
chase contract. 
(3) FAILURE
TO
EXECUTE
PURCHASE
CON-
TRACT BY SECRETARY OR ASSIGNEE.—If the Sec-
retary, or the assignee, fails to execute a proposed 
purchase contract during the 30-day period under 
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dcolon on DSK2BSOYB1PROD with BILLS
paragraph (2)(B) (as such period may be extended 
pursuant to paragraph (2)(C)), the owner may, dur-
ing the 2-year period beginning upon expiration of 
such 30-day (or extended) period, complete a sale of 
the owner’s covered housing to a third party, except 
as provided in paragraph (5). After the expiration of 
such 2-year period, the owner may not sell the hous-
ing without, after such expiration, complying with 
paragraph (3) of subsection (a) and with this sub-
section. 
(4) FAILURE
TO
PERFORM
PURCHASE
CON-
TRACT BY SECRETARY OR ASSIGNEE.—If the Sec-
retary, or the assignee, executes the proposed pur-
chase contract as provided in paragraph (2) but fails 
to perform as provided in the executed purchase con-
tract, the owner may, during the 2-year period be-
ginning upon the date on which the executed pur-
chase contract terminated, complete a sale of the 
owner’s covered housing to a third party. After the 
expiration of such 2-year period, the owner may not 
sell the housing without, after such expiration, com-
plying with paragraph (3) of subsection (a) and with 
this subsection. 
(5) COUNTEROFFER.— 
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dcolon on DSK2BSOYB1PROD with BILLS
(A) OPPORTUNITY.—After receipt of the 
third party purchase contract provided for in 
paragraph (2), the Secretary may, during the 
30-day period under paragraph (2), make a 
counteroffer by executing and submitting to the 
owner an amended proposed purchase contract, 
or by assigning the right to make such a 
counteroffer to an assignee. 
(B) ASSIGNMENT.—If the Secretary as-
signs the right under subparagraph (A) to 
make a counteroffer, the assignee may, during 
the 15-day period that begins upon such assign-
ment or the remaining period remaining in the 
30-day period under paragraph (2), whichever 
is longer, make such a counteroffer. 
(C) FAILURE BY SECRETARY TO EXECUTE 
OR ASSIGN.—Failure by the Secretary to exe-
cute or assign the purchase contract or submit 
a counteroffer during the 30-day period under 
paragraph (2) shall constitute a waiver of the 
Secretary’s right to purchase under this sub-
section. 
(D) PERIOD FOR OWNER RESPONSE.—If 
the Secretary or an assignee submits a 
counteroffer pursuant to this paragraph, the 
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owner may, during the 30-day period beginning 
upon receipt of the amended proposed purchase 
contract, execute the amended proposed pur-
chase contract or reject the counteroffer in 
writing. 
(E) REJECTION BY OWNER.—If the owner 
rejects the counteroffer, the owner may, during 
the 2-year period beginning on the date of such 
rejection, complete a sale of the covered housing 
to a third party. If such sale is upon economic 
terms and conditions that are the same as, or 
materially more favorable to the proposed pur-
chaser than, the economic terms and conditions 
in the proposed purchase contract offered by 
the Secretary or assignee in the Secretary’s or 
assignee’s counteroffer, the owner shall, within 
7 days after such execution, provide a copy of 
the new third party purchase contract, along 
with a proposed purchase contract for execution 
by the Secretary or assignee, which shall con-
tain the same terms and conditions as the exe-
cuted third party purchase contract. The Sec-
retary or assignee may, during the 30-day pe-
riod beginning upon receipt of the third party 
purchase contract and the proposed purchase 
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contract, execute the proposed purchase con-
tract or such other agreement as is acceptable 
to the owner and the Secretary or assignee. 
(6) PROVISION OF THIRD PARTY CONTRACT TO 
SECRETARY.—If any owner executes any purchase 
contract with a third party during any of the 2-year 
periods referred to paragraph (3), (4), or (5), the 
owner shall— 
(A) not later than 7 after such execution, 
provide the Secretary with a copy of the new or 
amended purchase contract executed with re-
spect to the covered housing; and 
(B) not later than 7 days after the record-
ing or filing of the deed or other document with 
the registry of deeds or the registry district of 
the land court of the county in which the af-
fected covered housing is located, provide the 
Secretary with a copy of any such deed or other 
document transferring the owner’s interest in 
the covered housing. 
(7) CERTIFICATION
BY
OWNER.—Any third 
party purchase contract, amended third party pur-
chase contract, deed, or any other document trans-
ferring the owner’s interest in covered housing shall 
include a certification by the owner that the docu-
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ment is accurate and complete and that there are no 
other agreements between the owner and the third 
party buyer, or an affiliate of either, with respect to 
the sale of the covered housing. 
(d) EXEMPTIONS.— 
(1) INAPPLICABILITY OF FIRST RIGHT OF RE-
FUSAL.—Subsection (b) and (c) shall not apply to 
any of the following actions: 
(A) A government taking of covered hous-
ing by eminent domain or a negotiated pur-
chase in lieu of eminent domain. 
(B) A forced sale of covered housing pur-
suant to a foreclosure. 
(C) A deed-in-lieu of foreclosure for cov-
ered housing. 
(D) A proposed sale of covered housing to 
a purchaser pursuant to terms and conditions 
that preserve affordability, as determined by 
the Secretary (including sales or transfers pur-
suant to section 106 of this Act). 
(E) A proposed sale of covered housing— 
(i) that the Secretary has determined 
was not, as of the effective date under sub-
section (j), receiving Federal assistance nor 
subject to regulation by any of the pro-
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dcolon on DSK2BSOYB1PROD with BILLS
grams identified in subsection (g)(4), other 
than the program identified in subsection 
(g)(4)(A); and 
(ii) under which the buyer has agreed, 
as provided in a regulatory agreement, to 
renew in whole, all contracts for project- 
based assistance under section 8 of the 
United States Housing Act of 1937 (42 
U.S.C. 1437f) or any successor program 
thereto; such renewal shall be subject to 
the availability, at the time of such re-
newal, of such assistance to the owner on 
economic terms and conditions that are 
comparable to the existing project-based 
rental assistance contract. 
(F) A proposed sale of covered housing to 
an affiliate of the owner that is not a termi-
nation, as determined by the Secretary. 
(G) A proposed sale of covered housing 
with respect to which the first scheduled termi-
nation will occur more than 15 years after the 
date of the sale. 
(H) A bona fide proposed sale pursuant to 
a purchase contract in effect on the effective 
date under subsection (j). 
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(2) REQUIREMENT TO SUBMIT REQUEST.—The 
Secretary shall make a determination that an ex-
emption under subparagraph (D), (E), or (F) of 
paragraph (1) applies only pursuant to a written re-
quest for such an exemption submitted by the owner 
of the covered housing. Such a request shall include 
the name and address of any resident council for the 
covered housing. The Secretary shall provide a copy 
of the Secretary’s determination under subparagraph 
(D), (E), or (F) of paragraph (1) to the owner and 
the resident council. 
(e) REGULATORY AGREEMENT.—A purchase of cov-
ered housing by the Secretary or an assignee of the Sec-
retary pursuant to this section shall be subject to a regu-
latory agreement. Such a regulatory agreement shall not 
contain any terms or conditions that would preclude an 
owner or purchaser from participating in, or diminishing 
the benefits that an owner would otherwise receive by par-
ticipating in the mark-to-market program of the Depart-
ment under Multifamily Assisted Housing Reform and Af-
fordability Act of 1997 (42 U.S.C. 1437f note). 
(f) CERTIFICATE OF COMPLIANCE.— 
(1) ISSUANCE.—An owner of covered housing 
who has complied with subsections (a), (b), and (c), 
which has not resulted in a purchase by the Sec-
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dcolon on DSK2BSOYB1PROD with BILLS
retary or the assignee of the Secretary of the cov-
ered housing, or which has resulted in a sale of the 
covered housing pursuant to subsection (c), may 
apply to the Secretary for a certificate of compliance 
by submitting a written request for the certificate, in 
such form and together with such documentation as 
the Secretary shall require. The Secretary shall issue 
the certificate of compliance within 30 days after re-
ceipt of the application if the Secretary determines 
that the owner has complied with said subsections 
(a), (b), and (c) and such certificate shall establish 
the owner’s compliance to the satisfaction of the 
Secretary. 
(2) FILING.—An owner obtaining a certificate 
of compliance with respect to covered housing shall 
file the certificate with the registry of deeds or the 
registry district of the land court of the county in 
which the covered housing is located not later than 
one year after the date of issuance. 
(3) PROVISION TO TENANTS.—Upon request by 
any tenant of the affected covered housing, the 
owner shall provide a copy of the owner’s request for 
a certificate of compliance. 
(g) RELATIONSHIP WITH OTHER LAWS.—This sec-
tion shall not preempt any State or local law that has es-
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dcolon on DSK2BSOYB1PROD with BILLS
tablished a right of first refusal to preserve affordable 
housing that is on terms and conditions that are com-
parable to this section, establishes such a right after the 
effective date under subsection (j). Any covered housing 
located in a State or locality with such a right of first 
refusal shall not be subject to this section. 
(h) DEFINITIONS.—For the purposes of this section, 
the following definitions shall apply: 
(1) AFFILIATE.—The term ‘‘affiliate’’ means an 
entity owned or controlled by an owner or under 
common control with the owner. 
(2) AFFORDABILITY RESTRICTION.—The term 
‘‘affordability restriction’’ means, with respect to 
covered housing, a limit on rents that an owner may 
charge for occupancy of a rental unit in the housing 
or a limit on tenant income for persons or families 
seeking to qualify for admission to such housing. 
(3) ASSIGNEE.—The term ‘‘assignee’’ means a 
State agency, local or regional housing authority, 
nonprofit or for profit corporation, or other entity 
qualified to do business in the affected State, that 
is selected by the Secretary to operate covered hous-
ing that is decent, safe, and sanitary affordable 
housing in a manner to be determined by the Sec-
retary. 
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(4) COVERED
HOUSING.—The term ‘‘covered 
housing’’ means a housing unit or development that 
receives Federal assistance under any of the fol-
lowing programs or provisions: 
(A) The programs under section 8 of the 
United States Housing Act of 1937 (42 U.S.C. 
1437f) for new construction, substantial reha-
bilitation, moderate rehabilitation, property dis-
position, and loan management set-aside, and 
any other Federal program providing project- 
based rental assistance. 
(B) The Federal program for low-income 
housing tax credits under section 42 of the In-
ternal Revenue Code of 1986 (26 U.S.C. 42). 
(C) The program for rent supplement as-
sistance under section 101 of the Housing and 
Urban Development Act of 1965 (12 U.S.C. 
1701s). 
(D) Section 202 of the Housing Act of 
1959 (12 U.S.C. 1701q). 
(E) The below-market interest rate pro-
gram under paragraphs (3) and (5) of 
221(d)(3) of the National Housing Act (12 
U.S.C. 1715(d) (3) and (5)). 
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dcolon on DSK2BSOYB1PROD with BILLS
(F) Section 221(d)(4) of the National 
Housing Act (12 U.S.C. 1715(d)(4)), to the ex-
tent the project’s rents are restricted pursuant 
to a government agreement. 
(G) A contract under section 236(f)(2) of 
the National Housing Act (12 U.S.C. 1715z– 
1(f)(2)). 
(H) Section 236 of the National Housing 
Act (12 U.S.C. 1715z–1) and any comparable 
State program providing for interest reduction 
payments or rental assistance payments. 
(I) Sections 514, 515, and 516 of the 
Housing Act of 1949 (42 U.S.C. 1484, 1485, 
and 1486). 
(J) Section 521 of the Housing Act of 
1949 (42 U.S.C. 1490a). 
(K) The urban development action grant 
program under section 119 of the Housing and 
Community Development Act of 1974 (42 
U.S.C. 5318), to the extent that the afford-
ability of dwelling units subject to such pro-
gram are restricted pursuant to a government 
agreement. 
(L) The rental development grant program 
under section 17(d) of the United States Hous-
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dcolon on DSK2BSOYB1PROD with BILLS
ing Act of 1937 (42 U.S.C. 1437o), as in effect 
before October 1, 1989, to the extent that rents 
of a project assisted under such program are 
restricted pursuant to a government agreement. 
(5) DEPARTMENT.—The term ‘‘Department’’ 
means the Department of Housing and Urban De-
velopment. 
(6) LOW-INCOME FAMILY.—The term ‘‘low-in-
come family’’ has the meaning given such term in 
section 3(b) of the Unites States Housing Act of 
1937 (42 U.S.C. 1437a(b)). 
(7) OWNER.—The term ‘‘owner’’ means, with 
respect to covered housing, the person, firm, part-
nership, corporation, trust, organization, limited li-
ability company, or other entity, or its successors or 
assigns, that holds title to the housing. 
(8) PREPAYMENT.—The term ‘‘prepayment’’ 
means— 
(A) the payment in full, or the refinancing, 
of a federally insured or federally held mortgage 
loan indebtedness prior to the original maturity 
date, 
(B) the voluntary cancellation of mortgage 
insurance on covered housing, or 
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(C) the payment in full of a government 
contract, 
any of which would have the effect of removing (i) 
the affordability restrictions applicable to covered 
housing, or (ii) a requirement to renew any such af-
fordability restrictions 
(9) PURCHASE
CONTRACT.—The term ‘‘pur-
chase contract’’ means a binding written agreement 
under which an owner agrees to sell covered housing 
including, without limitation, a purchase and sale 
agreement, contract of sale, purchase option, or 
other similar instrument. 
(10) RESIDENT COUNCIL.— 
(A) IN
GENERAL.—The term ‘‘resident 
council’’ means, with respect to covered hous-
ing, any incorporated nonprofit organization or 
association that— 
(i) is representative of the residents of 
the covered housing; 
(ii) adopts written procedures pro-
viding for the election of officers on a reg-
ular basis; and 
(iii) has a democratically elected gov-
erning board, elected by the residents of 
the covered housing. 
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(B) LIMITATION.—No owner of covered 
housing or other third party shall be required 
to ascertain an organization’s or association’s 
compliance with the requirements of subpara-
graph (A). 
(11) SALE.— 
(A) IN GENERAL.—The term ‘‘sale’’ means 
an act by which an owner conveys, transfers, or 
disposes property by deed or otherwise, whether 
through a single transaction, or a series of 
transactions, during a 2-year period. 
(B) LIMITATION.—Such term does not in-
clude disposition of covered housing by an 
owner to an affiliate of such owner. 
(12) 
SECRETARY.—The 
term 
‘‘Secretary’’ 
means the Secretary of Housing and Urban Develop-
ment. 
(13) STATE
HOUSING
AGENCY.—The term 
‘‘State housing agency’’ means the department of 
housing or department of housing and community 
development of a State, or any comparable State 
agency. 
(14) TENANT.—The term ‘‘tenant’’ means, with 
respect to covered housing, a person entitled to pos-
session or occupancy of a rental unit within the cov-
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dcolon on DSK2BSOYB1PROD with BILLS
ered housing, including a subtenant, lessee, and sub-
lessee. 
(15) TERMINATION.—The term ‘‘termination’’ 
means, with respect to covered housing, the date 
that— 
(A) the mortgage or loan for the housing 
matures and the affordability restrictions appli-
cable to the housing because of assistance for 
the housing pursuant to a program referred to 
in paragraph (4) terminate with respect to the 
housing; 
(B) an assistance contract under a pro-
gram referred to in paragraph (4) for the hous-
ing that is not renewed, terminates, or expires; 
(C) in the case of housing that is not eligi-
ble low-income housing, as such term is defined 
in section 229 of the Low-Income Housing 
Preservation and Resident Homeownership Act 
of 1990 (12 U.S.C. 4119), the mortgage or 
loan that covers the housing is prepaid or an 
insurance contract that covers the housing ter-
minates; or 
(D) use restrictions imposed with respect 
to the housing pursuant to the Emergency Low 
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dcolon on DSK2BSOYB1PROD with BILLS
Income Housing Preservation Act of 1987 ex-
pire. 
(i) REGULATIONS.—The Secretary shall issue regula-
tions to carry out this section not later than the effective 
date under subsection (j). This subsection shall take effect 
upon the date of the enactment of this Act. 
(j) EFFECTIVE DATE.—Except as otherwise specifi-
cally provided in this section, this section shall take upon 
the expiration of the 180-day period beginning on the date 
of the enactment of this Act. 
SEC. 108. AMENDMENT TO LOW-INCOME HOUSING PRESER-
VATION AND RESIDENT HOMEOWNERSHIP 
ACT OF 1990. 
Section 232 of the Low-Income Housing Preservation 
and Resident Homeownership Act of 1990 (12 U.S.C. 
4122) is amended— 
(1) in subsection (a), by striking ‘‘No State’’ 
and inserting ‘‘Except as provided in subsection (c), 
no State’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(c) INAPPLICABILITY TO HOUSING FOR WHICH NO 
PLAN OF ACTION IS EXECUTED.—Preemption under sub-
section (a) shall not apply to eligible low-income housing 
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dcolon on DSK2BSOYB1PROD with BILLS
for which an owner has not executed a plan of action for 
incentives under this subtitle. 
‘‘(d) CLARIFICATION
OF CONGRESSIONAL INTENT 
REGARDING FEDERAL PREEMPTION.—State and local 
laws intended to further the preservation of affordable 
housing or to protect tenants when owners propose to ter-
minate their participation in Federal affordable housing 
programs are not preempted by Federal law, except as ex-
pressly required by the terms of any applicable Federal 
statute.’’. 
SEC. 109. PRESERVATION OF HUD-HELD AND HUD-OWNED 
BUILDINGS. 
(a) USE OF ALL AVAILABLE ENFORCEMENT AND 
INTERVENTION TOOLS.—To maximize the preservation of 
existing housing assisted by the Department of Housing 
and Urban Development, the Secretary of Housing and 
Urban Development shall utilize all available enforcement 
and intervention tools to stabilize properties in distress, 
including acting as mortgagee-in-possession, accepting 
deeds in lieu of foreclosure from owners, and exercising 
rights under applicable program contacts and regulations. 
(b) MANAGEMENT AND DISPOSITION AUTHORITY.— 
Subsection (a) of 204 of the Departments of Veterans Af-
fairs and Housing and Urban Development, and Inde-
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dcolon on DSK2BSOYB1PROD with BILLS
pendent Agencies Appropriations Act, 1997 (12 U.S.C. 
1715z–11a(a)) is amended— 
(1) by striking ‘‘During’’ and all that follows 
through ‘‘and thereafter, the provision of’’ and in-
serting ‘‘In managing and disposing of multifamily 
properties that are owned by the Secretary or that 
have mortgages held by the Secretary, during any 
fiscal year, the Secretary may provide’’; 
(2) by striking ‘‘and multifamily mortgages held 
by the Secretary’’; and 
(3) by striking ‘‘notwithstanding any other pro-
vision’’ and inserting ‘‘consistent with other applica-
ble provisions’’. 
SEC. 110. AUTHORITY FOR HUD TO ASSIGN FLEXIBLE SUB-
SIDY LOANS. 
The Secretary of Housing and Urban Development 
may, in connection with a preservation transaction or 
transfer of an assisted project to an owner that commits 
to long-term use and affordability restrictions with respect 
to the property to forgive or assign to the transferee any 
debt held by the Secretary that was created pursuant to 
section 201 of the Housing and Community Development 
Amendments of 1978 (12 U.S.C. 1715z–1a), if required 
for the financial viability of the preservation transaction 
or the transfer. If any low-income housing tax credits 
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dcolon on DSK2BSOYB1PROD with BILLS
under section 42 of the Internal Revenue Code of 1986 
(26 U.S.C. 42), State or local funds, tax-exempt housing 
bonds, or other affordable housing resources are being uti-
lized by the purchaser in connection with the transfer of 
the property, the Secretary shall not require any repay-
ment in connection with the assignment or forgiveness of 
the mortgages to the purchaser. 
SEC. 111. USE OF EXISTING SECTION 8 FUNDS TO PRE-
SERVE AND REVITALIZE AFFORDABLE HOUS-
ING. 
Section 8 of the United States Housing Act of 1937 
(42 U.S.C. 1437f) is amended by adding at the end the 
following: 
‘‘(ff) AFFORDABLE HOUSING PRESERVATION
AND 
REVITALIZATION PROGRAM.— 
‘‘(1) IN GENERAL.—The Secretary of Housing 
and Urban Development shall ensure that funds in 
the residual receipts account of an eligible multi-
family housing property are, at the time of a quali-
fied sale or pursuant to an approved rehabilitation 
plan approved by the Secretary or the section 8 con-
tract administrator, transferred or released, in con-
junction with an approved rehabilitation plan, to the 
acquiring owner. 
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‘‘(2) USE
OF
RESIDUAL
RECEIPT
FUNDS
BY 
PURCHASER.—An owner that acquires an assisted 
multifamily housing property through a qualified 
sale shall, subject to the approval of the Secretary, 
use the funds in the residual receipts account trans-
ferred to it, or for its benefit— 
‘‘(A) to pay for rehabilitation costs; 
‘‘(B) to deposit funds into the replacement 
reserve account of the property; 
‘‘(C) to pay for social and other services 
that directly benefit the tenants of such prop-
erty; 
‘‘(D) to pay for costs associated with the 
acquisition of the property; and 
‘‘(E) to pay for any other costs, as deter-
mined eligible by the Secretary. 
‘‘(3) USE OF RESIDUAL RECEIPTS BY OWNERS 
TO
PRESERVE
AND
RENEW
AFFORDABLE
HOUS-
ING.—Subject to approval and any requirements es-
tablished by the Secretary, an owner of an eligible 
multifamily housing property may use funds in the 
residual receipts account for the property to— 
‘‘(A) reduce operating or cash flow deficits 
when such use would prevent an increase in 
rental rates for tenants; 
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‘‘(B) make a mortgage payment when a 
mortgage default is actual or imminent; 
‘‘(C) pay for rehabilitation costs, which 
may include— 
‘‘(i) making repairs to the property 
not otherwise covered by a reserve for re-
placements or other similar fund; 
‘‘(ii) 
providing 
additional 
project 
amenities and improvements, such as air 
conditioning, a sprinkler system, fire or 
smoke detectors, energy saving devices or 
improvements, office equipment, and com-
puters and associated software; and 
‘‘(iii) making enhancements to the 
property or retrofit units to enhance acces-
sibility; 
‘‘(D) pay accrued, allowable distributions 
in cases in which insufficient surplus cash is 
available; 
‘‘(E) repay residual receipt notes approved 
by the Secretary; 
‘‘(F) repay flexible subsidy operating as-
sistance or capital improvements loans provided 
under section 201 of the Housing and Commu-
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dcolon on DSK2BSOYB1PROD with BILLS
nity Development Amendments of 1978 (12 
U.S.C. 1715z–1a); 
‘‘(G) provide for testing or abatement of 
lead-based paint at the property; 
‘‘(H) provide for social and other services 
that directly benefit the tenants of such prop-
erty; and 
‘‘(I) pay for any costs or purposes, as de-
termined eligible by the Secretary. 
‘‘(4) DELEGATION OF AUTHORITY TO SECTION 
8 CONTRACT ADMINISTRATOR OR OTHER ENTITY.— 
At the request of a section 8 contract administrator 
or other appropriate entity, as determined by the 
Secretary, that administers assistance referred to in 
paragraph (5)(A)(i) with respect to an eligible multi-
family housing property, the Secretary may delegate 
to such agency the authority of the Secretary under 
paragraph (2) or (3), or both, to approve the use of 
funds in residual receipt accounts for properties so 
assisted by such agency as provided in such para-
graph or paragraphs. 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section, the following definitions shall apply: 
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‘‘(A) ELIGIBLE
MULTIFAMILY
HOUSING 
PROPERTY.—The term ‘eligible multifamily 
housing property’ means a property that— 
‘‘(i) is assisted under any program 
providing project-based assistance under 
section 8 of the United States Housing Act 
of 1937 (42 U.S.C. 1437f); and 
‘‘(ii) is subject to regulations of the 
Secretary in effect on the date of enact-
ment of this subsection that require remit-
tance of excess funds to the Secretary 
upon termination of the project-based as-
sistance contract. 
‘‘(B) QUALIFIED SALE.— 
‘‘(i) IN GENERAL.—The term ‘quali-
fied sale’ means the sale or other transfer 
of an eligible multifamily housing property 
to an owner who agrees to maintain afford-
ability and use restrictions regarding the 
property that are— 
‘‘(I) for a term of not less than 
30 years from the time of the quali-
fied sale; and 
‘‘(II) legally enforceable. 
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‘‘(ii) FUTURE APPLICABILITY OF RE-
STRICTIONS.—The restrictions under sub-
paragraph (A) shall be— 
‘‘(I) binding on all successors 
and assigns of the qualified preserva-
tion owner; and 
‘‘(II) recorded as a restrictive 
covenant on the property pursuant to 
State law. 
‘‘(C) RESIDUAL RECEIPTS.—The term ‘re-
sidual receipts’ means— 
‘‘(i) funds generated by a property in 
excess of the amount needed for operating 
expenses, operating reserve requirements, 
and allowable distributions to project own-
ers; and 
‘‘(ii) includes any other funds that the 
Secretary, in his or her discretion, des-
ignates as residual receipts. 
‘‘(6) RESIDUAL
RECEIPTS
NOT
TREATED
AS 
FEDERAL FUNDS.—For the purposes of section 42 
of the Internal Revenue Code of 1986, residual re-
ceipts used or transferred under this section shall 
not be considered Federal funds.’’. 
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SEC. 112. AUTHORITY FOR GINNIE MAE TO SECURITIZE 
FHA RISK-SHARING MORTGAGES. 
(a) AUTHORITY.—Section 542 of the Housing and 
Community Development Act of 1992 (12 U.S.C. 1715z– 
22) is amended— 
(1) in subsection (b), by striking paragraph (8) 
and inserting the following new paragraph: 
‘‘(8) GINNIE MAE SECURITIZATION.—The Gov-
ernment 
National 
Mortgage 
Association 
may 
securitize any multifamily loan insured or reinsured 
under this subsection under the same terms and 
conditions as if the loan were insured under the Na-
tional Housing Act.’’; and 
(2) in subsection (c), by striking paragraph (6) 
and inserting the following new paragraph: 
‘‘(6) GINNIE MAE SECURITIZATION.—The Gov-
ernment 
National 
Mortgage 
Association 
may 
securitize any multifamily loan insured under this 
subsection under the same terms and conditions as 
if the loan were insured under the National Housing 
Act.’’. 
(b) LIMITATION.—Section 542 of the Housing and 
Community Development Act of 1992 is amended by add-
ing at the end the following new subsection: 
‘‘(d) LIMITATION.—In carrying out subsections 
(b)(8) and (c)(6), the Secretary shall prohibit State hous-
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100 
ing finance agencies from giving preference to, or condi-
tioning the approval of, awards of subordinate debt funds, 
allocation of tax credits, or tax exempt bonds based on 
the use of financing for the first mortgage that is provided 
by such State housing finance agency.’’. 
(c) CONFORMING AMENDMENT.—Clause (ii) of the 
first sentence of section 306(g)(1) of the National Hous-
ing Act (12 U.S.C. 1721(g)(1)) is amended by inserting 
before the period at the end the following: ‘‘; or insured 
or reinsured under subsection (b) or (c) of section 542 
of the Housing and Community Development Act of 1992, 
subject to the terms of paragraph (8) or (6), respectively, 
of such subsection’’. 
TITLE 
II—RESTORATION 
OF 
HOUSING AT RISK OF LOSS 
DUE TO DETERIORATION 
SEC. 201. AUTHORITY TO TRANSFER RENTAL ASSISTANCE 
TO OTHER PROPERTIES. 
(a) AUTHORITY.—Subject to subsection (b) and not-
withstanding any other provision of law, the Secretary of 
Housing and Urban Development may authorize the 
transfer of some or all of project-based assistance, debt, 
interest reduction payments, and statutorily required low- 
income and very low-income use restrictions, associated 
with one or more covered multifamily housing properties 
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101 
to another covered multifamily housing property or prop-
erties located in the same metropolitan area. 
(b) PHASED
TRANSFERS.—Transfers of project- 
based assistance under this section may be done in phases 
to accommodate the financing and other requirements re-
lated to improving or constructing the property or prop-
erties to which the assistance is transferred to ensure that 
such property or properties meet the standards under sub-
section (c). 
(c) CONDITIONS.—A transfer authorized in sub-
section (a) shall be subject to the following conditions: 
(1) TOTAL NUMBER OF LOW-INCOME UNITS.— 
The number of low-income and very low-income 
dwelling units provided by the transferring property 
or properties shall remain the same as the number 
of such dwelling units in the receiving property or 
properties. Upon transfer of subsidy, vacant, non-
viable, or obsolete units may be replaced with units 
that meet the demands of the local waiting list for 
assistance under section 8 of the United States 
Housing Act of 1937 (42 U.S.C. 1437f) or current 
market demand, but only if there is no impact on as-
sisted residents of such units. 
(2) NET
AMOUNT
OF
ASSISTANCE.—The net 
dollar amount of Federal assistance provided to the 
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102 
transferring property or properties shall remain the 
same as the net dollar amount of Federal assistance 
provided to the receiving property or properties, un-
less an increase in Federal assistance is necessary to 
secure project financing, to allow rent increases per-
mitted under the Multifamily Affordable Housing 
Reform and Affordability Act of 1997 (42 U.S.C. 
1437f note), to accommodate allowable reconfigura-
tions of the units and bedrooms, or to allow stand-
ard contract extensions, or simultaneous termination 
of current contracts with extensions of new contract 
authority, similar to that extended to comparable 
properties, as determined by the Secretary. 
(3) CONDITION
OF
TRANSFERRING
PROP-
ERTY.—The transferring property shall, as deter-
mined by the Secretary, be physically obsolete or 
economically non-viable. 
(4) CONDITION OF RECEIVING PROPERTY.—The 
receiving property shall meet or exceed applicable 
physical standards established by the Secretary with-
in a reasonable period of time, as determined by the 
Secretary. 
(5) TENANT PROTECTION.— 
(A) NOTIFICATION AND CONSULTATION.— 
The owner or mortgagor of the transferring 
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103 
property shall notify and consult with the ten-
ants of the transferring property concerning all 
significant elements of the transfer plan, includ-
ing the identification of receiving properties and 
any proposed additional ownership entities. 
(B) BEST
INTEREST
OF
TENANTS; FAIR 
HOUSING.—The transfer shall, as determined 
by the Secretary— 
(i) be in the best interest of the ten-
ants; and 
(ii) comply with applicable statutes 
and regulations relating to fair housing. 
(6) AVAILABILITY OF NEW UNITS.—The ten-
ants of the transferring property shall not be re-
quired to vacate their dwelling units in the transfer-
ring property until new units in the receiving prop-
erty or properties are available for occupancy, in-
cluding a phase or phases of a multi-phase project 
or projects that are available for occupancy. Tenants 
may choose to be temporarily relocated to facilitate 
their transition to the receiving property according 
to relocation procedures set forth in the Uniform 
Relocation Assistance and Real Property Acquisition 
Act of 1970 (42 U.S.C. 4601 et seq.). 
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104 
(7) MORTGAGES
UNDER
NATIONAL
HOUSING 
ACT.—Any lien on the receiving property resulting 
from additional financing obtained by the owner 
shall be subordinate to any lien under a mortgage 
insured under the National Housing Act that is 
transferred to, or placed on, such property by the 
Secretary, except that the Secretary may waive this 
requirement upon determination that such waiver is 
necessary to facilitate the financing of acquisition, 
construction, or rehabilitation of the receiving prop-
erty. 
(8) HOUSING
SUBJECT
TO
A
USE
AGREE-
MENT.—The owner or mortgagor of the receiving 
property shall execute and record a continuation of 
the existing use agreement or a new use agreement 
for the property containing use restrictions having a 
duration at least as long as the existing restrictions. 
(9) NO
INCREASE
OF
RISK
TO
INSURANCE 
FUNDS.—The transfer under this section shall result 
in no increase in financial risk to the General and 
Special Risk Insurance Funds of the Secretary, as 
determined by the Secretary, except that the Sec-
retary may waive this requirement upon determina-
tion that such waiver is necessary to facilitate the fi-
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nancing of acquisition, construction, or rehabilitation 
of the receiving property. 
(10) NO INCREASE OF FEDERAL LIABILITY.— 
Federal liability with regard to the receiving prop-
erty shall not be increased, as determined by the 
Secretary, except as provided in paragraph (2). 
(d) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) COVERED
MULTIFAMILY
HOUSING
PROP-
ERTY.—The term ‘‘covered multifamily housing 
property’’ means housing that is assisted or insured 
under one or more of the following programs: 
(A) The rent supplement program under 
section 101 of the Housing and Urban Develop-
ment Act of 1965 (12 U.S.C. 1701s). 
(B) The below-market interest rate mort-
gage 
insurance 
program 
under 
section 
221(d)(3) of the National Housing Act (12 
U.S.C. 17151(d)(3)). 
(C) The program for assistance provided 
under the proviso in section 221(d)(5) of the 
National Housing Act (12 U.S.C. 17151(d)(5)). 
(D) A contract under section 236(f)(2) of 
the National Housing Act (12 U.S.C. 1715z– 
1(f)(2)). 
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106 
(E) The program for interest reduction 
payments under section 236 of the National 
Housing Act (12 U.S.C. 1715z–1) or a com-
parable State program providing for interest re-
duction payments. 
(F) Any other mortgage insurance pro-
gram provided under the National Housing Act 
for which the insured property is subject to 
budget-based rent restrictions. 
(G) The program for supportive housing 
for the elderly under section 202 of the Hous-
ing Act of 1959 (12 U.S.C. 1701q), including 
assistance under such section as was in effect 
before the enactment of the Cranston-Gonzales 
National Affordable Housing Act. 
(H) The program for rural rental housing 
under section 515 of the Housing Act of 1949 
(42 U.S.C. 1485). 
(I) Any program providing project-based 
assistance that is attached to the structure. 
(J) Any other program under which the 
Secretary provides any rental assistance, mort-
gage insurance, subsidy, or other financial as-
sistance. 
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107 
(2) LOW-INCOME; 
VERY
LOW-INCOME.—The 
terms ‘‘low-income’’ and ‘‘very low-income’’, with re-
spect to a covered multifamily housing property, 
shall have the meanings provided under the laws and 
regulations governing the program under which the 
covered multifamily housing property is insured or 
assisted. 
(3) PROJECT-BASED
ASSISTANCE.—The term 
‘‘project-based assistance’’ means— 
(A) assistance provided under section 8(b) 
of the United States Housing Act of 1937 (42 
U.S.C. 1437f(b)), including the additional as-
sistance program; 
(B) assistance for housing constructed or 
substantially rehabilitated pursuant to assist-
ance provided under section 8(b)(2) of such Act 
(as such section was in effect immediately be-
fore October 1, 1983); 
(C) rent supplement payments under sec-
tion 101 of the Housing and Urban Develop-
ment Act of 1965 (12 U.S.C. 1701s); 
(D) additional assistance payments under 
section 236(f)(2) of the National Housing Act 
(12 U.S.C. 1715z–1(f)(2)) or a comparable 
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108 
State program providing for interest reduction 
payments; 
(E) 
payments 
made 
under 
section 
202(c)(2) of the Housing Act of 1959 (12 
U.S.C. 1701q(c)(2)); and 
(F) payments made under any other Fed-
eral program under which rental assistance is 
attached to the structure. 
(4) RECEIVING PROPERTY.—The term ‘‘receiv-
ing property’’ means, with respect to a transfer of 
project-based assistance, debt, and statutorily re-
quired low-income and very low-income use restric-
tions under this section, the covered multifamily 
housing property or properties to which the assist-
ance, debt, and use restrictions are to be trans-
ferred. 
(5) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Housing and Urban Development. 
(6) 
TRANSFERRING
PROPERTY.—The 
term 
‘‘transferring property’’ means, with respect to a 
transfer of project-based assistance, debt, and statu-
torily required low-income and very low-income use 
restrictions under this section, the covered multi-
family housing property or properties from which 
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the assistance, debt, and use restrictions are to be 
transferred. 
SEC. 202. BUILDING TRANSFERS: REQUIREMENTS FOR PUR-
CHASERS OF FHA INSURED PROJECTS AND 
SECTION 8 PROJECTS. 
(a) 
REQUIREMENTS
FOR
POTENTIAL
PUR-
CHASERS.—Not later than 90 days after the date of the 
enactment of this Act, the Secretary of Housing and 
Urban Development shall issue a proposed rulemaking, in 
accordance with title 5, United States Code, that applies 
the participation and certification requirements for poten-
tial purchasers required under section 219 of Division G 
of the Consolidated Appropriations Act, 2004 (Public Law 
108–199; 118 Stat. 397) to the sale or transfer of any 
multifamily housing having a mortgage that is insured or 
receives assistance under the National Housing Act or for 
which project-based assistance is provided under section 
8 of the United States Housing Act of 1937 (42 U.S.C. 
1437f). 
(b) NOTICE
TO LOCAL GOVERNMENT
AND RESI-
DENTS OF APPLICATION FOR TRANSFER.—The Secretary 
shall provide notice of an owner’s application for approval 
of any such transfer to the unit of local government where 
the property is located, and to the residents of the prop-
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110 
erty, using procedures required under the Housing and 
Community Development Amendments of 1978. 
(c) GROUNDS FOR DISAPPROVAL.—Grounds for dis-
approval of a transfer may include— 
(1) a purchaser’s record of pervasive or con-
tinuing noncompliance under housing, health, and 
safety codes with respect to other housing owned or 
managed by the purchaser, regardless of location, 
except where the Secretary determines that such 
noncompliance did not result from the actions of the 
purchaser and would be satisfactorily remedied by a 
plan approved by the Secretary; and 
(2) a risk of financial instability for the project 
under the terms of the acquisition, such as indicated 
by the application of conventional underwriting 
standards. 
SEC. 203. USE OF INTEREST REDUCTION PAYMENTS FOR 
REHABILITATION GRANTS. 
The Secretary of Housing and Urban Development 
may obligate any amounts recaptured from the termi-
nation of a contract for interest reduction payments under 
section 236 of the National Housing Act (12 U.S.C. 
1715z–1), for the use under subsection (s) of such section, 
except that the Secretary shall take immediate action to 
issue appropriate guidelines to make such funds available 
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111 
within 180 days after the date of the enactment of this 
Act, which shall include the availability of both loans and 
grants. 
SEC. 204. CLARIFICATION OF BUDGET-BASED RENT IN-
CREASES FOR REHABILITATED PROJECTS. 
(a) APPROVAL OF RENT INCREASES.— 
(1) APPROVAL.—At the request of an owner of 
a covered multifamily housing property (which term, 
for purposes of this section, shall have the same 
meaning given such term in section 201(c) of this 
Act) that meets the requirements of paragraph (2), 
the Secretary of Housing and Urban Development 
shall, prior to rehabilitation and subject to sub-
section (b), adjust project rents on a budget-based 
basis to support the cost of the rehabilitation, any 
increased debt service, and other appropriate costs. 
(2) REQUIREMENTS.—The requirements of this 
paragraph with respect to a covered multifamily 
housing property are that— 
(A) the project is to undergo rehabilitation; 
and 
(B) the owner or purchaser of the project 
executes a binding agreement to preserve the 
project as affordable housing at least until the 
later of the maturity date of the original mort-
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112 
gage for the project or the termination of an as-
sistance contract on the property. 
(b) CONDITIONS.—Rent adjustments pursuant to this 
section for a covered multifamily housing property shall 
be subject to the following conditions and requirements: 
(1) EFFECTIVENESS.—Such rent adjustments 
shall not become effective until completion of the re-
habilitation of the property. 
(2) AMOUNT.—Such rent adjustments shall— 
(A) be subject to adjustment by the Sec-
retary based on differences between estimated 
and actual costs; and 
(B) with respect to units that are assisted 
under section 8 of the United States Housing 
Act of 1937 (42 U.S.C. 1437) that are subject 
to a renewal contract under section 524(a) of 
the Multifamily Assisted Housing Reform and 
Affordability Act of 1997 (42 U.S.C. 1437f 
note), not exceed, after rehabilitation, the rent 
for comparable unassisted units in the area. 
(3) TENANT
NOTICE
AND
OPPORTUNITY
TO 
COMMENT.—Tenants in the property shall be pro-
vided notice and an opportunity to comment on such 
rent adjustments in accordance with rent increase 
procedures of the Department of Housing and 
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113 
Urban Development issued pursuant to the authority 
under section 202(b) of the Housing and Commu-
nity Development Amendments of 1978 (12 U.S.C. 
1715z–1b(b)). 
(4) PROVISION OF RENTAL ASSISTANCE.—Rent-
al assistance shall be provided for all affected eligi-
ble tenants of the property in the form of new 
project-based assistance for previously unassisted 
units and legally authorized contract rent increases 
under existing project-based contracts. 
(c) EFFECT ON OTHER TRANSACTIONS.—This sec-
tion shall not have any effect on transactions not meeting 
the terms and conditions of this section. 
SEC. 205. INTEREST REDUCTION PAYMENTS FOR SECTION 
236 PROJECTS EXPERIENCING A REDUCTION 
OF UNITS. 
(a) IN GENERAL.—Section 236(e)(2) of the National 
Housing Act (12 U.S.C. 1715z–1(e)(2)) is amended— 
(1) by striking ‘‘under the terms’’ and inserting 
‘‘for the remaining term’’; and 
(2) by adding at the end the following new sen-
tence: ‘‘The Secretary may continue to provide the 
interest reduction payments in their entirely, not-
withstanding a reduction of total units, if the project 
owner is able to demonstrate that such an action will 
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114 
contribute to the long-term physical or financial via-
bility of the property.’’. 
(b) APPLICABILITY.—The amendments made by sub-
section (a) shall apply to all interest reduction payments 
made after October 1, 2006. 
TITLE III—PROTECTION OF 
RESIDENTS 
SEC. 301. TENANT PROTECTION VOUCHER TO REPLACE 
LOST SUBSIDIZED UNITS ON 1-FOR-1 BASIS. 
Subject only to the availability of amounts provided 
for such purpose in appropriation Acts, the Secretary of 
Housing and Urban Development shall provide replace-
ment vouchers for rental assistance under section 8 of the 
United States Housing Act of 1937 (42 U.S.C. 1437f) for 
all dwelling units in projects that cease to be covered mul-
tifamily housing properties (as such term is defined in sec-
tion 201 of this Act) due to demolition, disposition, or con-
version. 
SEC. 302. MAINTENANCE OF HOUSING. 
Section 8(d) of the United States Housing Act of 
1937 (42 U.S.C. 1437f(d)) is amended by adding at the 
end the following new paragraphs: 
‘‘(7) ENFORCEMENT OF HOUSING STANDARDS RE-
LATED TO PHYSICAL CONDITION OF PROPERTY.—If the 
Secretary determines, upon any inspection or management 
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review for any multifamily housing project covered by a 
housing assistance payments contract under this section, 
that there are serious violations of housing standards ap-
plicable to such project that are not corrected after reason-
able notice, or any other substantial or repeated violations 
of other program requirements, including residents right 
to organize, the Secretary may take one or more of the 
following actions: 
‘‘(A) Withhold all or part of the housing assist-
ance payments due under the contract. 
‘‘(B) Withhold any rent increases otherwise 
due. 
‘‘(C) Assume possession and management of 
the project and take any actions necessary to correct 
the violations, including using such withheld pay-
ments to effectuate repairs or to reimburse others 
who make repairs. 
‘‘(D) Use such withheld payments to pay for 
utilities and other services that are the responsibility 
of the owner under the lease or applicable law. 
‘‘(8) ESCROW OF TENANT RENTS.—If the Secretary 
determines that there are serious violations of housing 
standards applicable to any multifamily housing project 
covered by a housing assistance payments contract under 
this section or any other substantial or repeated violations 
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of other program requirements, any tenants in assisted 
units in the project may withhold the tenant contribution 
toward rent and pay such amount, when due, into an es-
crow fund, or use such withheld payments to effectuate 
repairs, in accordance with procedures established by the 
Secretary. If a tenant withholds the tenant contribution 
toward rent in accordance with this paragraph, the Sec-
retary shall withhold all or part of the housing assistance 
payments due under the contract until the violation is 
remedied. An owner of a project shall not evict tenants 
for nonpayment of rent for exercising rights under this 
paragraph. 
‘‘(9) PROTECTION
OF TENANTS.—An owner of a 
multifamily housing project covered by a housing assist-
ance payments contract under this subsection may not ter-
minate the tenancy of any tenant because of the with-
holding or abatement of assistance pursuant to this sub-
section. During the period that assistance is abated pursu-
ant to this subsection, the tenant may terminate the ten-
ancy by notifying the owner. 
‘‘(10) INSPECTIONS UPON REQUEST OR PETITION.— 
In addition to periodic inspections by the Secretary, the 
Secretary shall conduct an inspection or management re-
view of any multifamily housing project covered by a hous-
ing assistance payments contract under this section when 
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117 
requested by the local government in which the project is 
located or by a petition signed by not less than 25 percent 
of the tenants of the occupied units in the project.’’. 
SEC. 303. RESIDENT ENFORCEMENT OF PUBLIC HOUSING 
AGENCY OR PROJECT OWNER AGREEMENTS 
WITH HUD. 
(a) IN GENERAL.—In each covered agreement de-
scribed in subsection (c), any resident, or resident or ten-
ant association, of an affected project shall be permitted 
to petition the Secretary of Housing and Urban Develop-
ment requesting enforcement of alleged violations of the 
covered agreement. 
(b) JUDICIAL RELIEF.—If the Secretary, or the des-
ignee of the Secretary, fails to issue a determination re-
garding an enforcement request within 90 days after re-
ceipt of the petition, the resident, or resident or tenant 
association, may seek appropriate judicial relief in connec-
tion with the alleged violation and enforcement of a cov-
ered agreement in any forum of competent jurisdiction. 
In the case of any alleged violation that threaten the 
health or safety of tenants, the time period for making 
such a determination shall be no longer than 15 days. 
(c) COVERED AGREEMENTS.—A covered agreement 
described in this subsection is any— 
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(1) contract between the Secretary and any 
public housing agency for housing assistance pay-
ments under section 8 of the United States Housing 
Act of 1937 (42 U.S.C. 1437f); 
(2) agreement under the Multifamily Assisted 
Housing Reform and Affordability Act of 1997 (42 
U.S.C. 1437f note) for— 
(A) Mark-to-Market Restructuring Com-
mitments or renewal of section 8 rental assist-
ance for a project involving any action under 
section 517(b) of such Act; or 
(B) Rehabilitation Escrow Deposit Agree-
ments for Mark-to-Market; or 
(3) contract for mortgage insurance executed by 
the Secretary and any owner or purchaser of a mul-
tifamily housing project. 
(d) REGULATIONS.—Within 180 days after the date 
of the enactment of this Act, the Secretary shall issue reg-
ulations providing procedures for— 
(1) receiving tenant petitions to enforce the 
terms of a covered agreement; 
(2) evaluating alleged violations of a covered 
agreement; and 
(3) providing notice to residents, and resident 
and tenant associations. 
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119 
SEC. 304. RESIDENT ACCESS TO BUILDING INFORMATION. 
(a) ACCESS TO INFORMATION.—Upon a written re-
quest by a legitimate residents association established with 
respect to a multifamily housing property to which part 
245 of the regulations of the Secretary of Housing and 
Urban Development (24 C.F.R. Part 245), by or through 
its duly appointed designee or representative, the Sec-
retary shall make available, for the property represented 
by the association— 
(1) information identifying the legal entities 
that own and manage the property, including identi-
fication of general partners and other principals, and 
their other properties assisted by the Department of 
Housing and Urban Development, including previous 
participation certifications (with Social Security 
numbers redacted); 
(2) an annual operating statement of profit and 
loss, and project budgets submitted to the Depart-
ment of Housing and Urban Development; 
(3) subsidy contracts and regulatory agree-
ments, use agreements. or other contracts referred 
to in section 303(c) of this Act between owners and 
the Department of Housing and Urban Develop-
ment, including correspondence between owners and 
the Department; 
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120 
(4) management reviews, capital needs assess-
ments, and physical inspection reports conducted of 
entities identified in paragraph (1) by the Depart-
ment or a contractor of the Department; and 
(5) an annual statement, prepared by the De-
partment’s contract administrator for the subject 
property, of the balances of, and expenditures from, 
any replacement reserves and other escrow funds for 
the property. 
(b) PROTECTION
OF PERSONAL INFORMATION.— 
Subsection (a) shall not be construed to require disclosure 
of Social Security numbers, personal tax returns, or any 
other personal financial information of or concerning indi-
viduals who have an interest in the ownership or manage-
ment entities referred to in subsection (a). 
TITLE 
IV—PRESERVATION 
OF 
TROUBLED 
PROJECTS 
FAC-
ING FORECLOSURE 
SEC. 
401. 
MAINTAINING 
AFFORDABILITY 
THROUGH 
ESCROWING OF RENTAL ASSISTANCE. 
In the case of any transfer of a distressed multifamily 
property that does not comply with housing quality stand-
ards applicable to the property, the Secretary of Housing 
and Urban Development may not recapture any rental as-
sistance that is attached to any dwelling units in the prop-
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121 
erty and provided under a contract for the property under 
section 8 of the United States Housing Act of 1937 or 
under any other program administered by the Secretary, 
but shall hold any such assistance in escrow for the prop-
erty during the period of noncompliance and, upon deter-
mining that the property complies with such standards 
make such assistance available for the property. 
SEC. 
402. 
MULTIFAMILY 
HOUSING 
MORTGAGE 
FORE-
CLOSURE. 
The Multifamily Mortgage Foreclosure Act of 1981 
is amended— 
(1) in section 362 (12 U.S.C. 3701)— 
(A) in paragraph (5), by striking ‘‘and’’ at 
the end; 
(B) in paragraph (6), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(7) mortgages transferred by the Secretary to 
State and local governments should be foreclosed in 
the same manner as mortgages held by the Sec-
retary.’’; 
(2) in section 363 (12 U.S.C. 3702)— 
(A) in paragraph (9), by striking ‘‘and’’ at 
the end; 
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122 
(B) in paragraph (10), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(11) ‘State or local government transferee’ 
means any State or unit of general local govern-
ment, any public housing authority, or any State or 
local housing finance agency that has acquired mort-
gages pursuant to section 203 of the Housing and 
Community Development Amendments of 1978 (12 
U.S.C. 1701z–11), section 204 of the Departments 
of Veterans Affairs and Housing and Urban Devel-
opment, and Independent Agencies Appropriations 
Act, 1997 (12 U.S.C. 1715z–11a), or any other pro-
vision of law, that were previously held by the Sec-
retary.’’; 
(3) in section 364 (12 U.S.C. 3703)— 
(A) by inserting ‘‘, or any State or local 
government transferee,’’ after ‘‘Secretary’’ the 
first and fourth places such term appears; and 
(B) by inserting ‘‘, or the State or local 
government transferee,’’ after ‘‘Secretary’’ the 
second, third, and fifth places such term ap-
pears; 
(4) in section 365 (12 U.S.C. 3704)— 
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123 
(A) by inserting ‘‘, or any State or local 
government transferee,’’ after ‘‘Secretary’’ the 
first place such term appears; 
(B) by inserting ‘‘, or the State or local 
government transferee,’’ after ‘‘Secretary’’ each 
other place such term appears; and 
(C) by striking the last 3 sentences and in-
serting the following: ‘‘The entity designating 
the foreclosure commissioner, whether the Sec-
retary or any State or local government trans-
feree, shall be a guarantor of payment of any 
judgment against the foreclosure commissioner 
for damages based upon the commissioner’s 
failure properly to perform the commissioner’s 
duties. As between the entity designating the 
foreclosure commissioner, whether the Secretary 
or any State or local government transferee, 
and the mortgagor, the entity designating the 
foreclosure commissioner shall bear the risk of 
any financial default by the foreclosure commis-
sioner. In the event that the Secretary or any 
State or local government transferee makes any 
payment pursuant to the preceding two sen-
tences, the Secretary or any State or local gov-
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156 
units to the fair market rent established under sec-
tion 8(c) of the United States Housing Act of 1937 
for such size dwelling units for the area in which the 
property is located. 
(13) The most recent 3 scores for the property 
for any physical inspections, including any real es-
tate assessment center (REAC) scores for the prop-
erty, and the dates of such inspections. 
(14) Indicators of the financial condition of the 
property, which may include notification of any fore-
closure proceedings on the property and any bank-
ruptcy filings by the entity holding title to the prop-
erty. 
(15) The form or forms of assistance identified 
in subsection (i) that are provided for the property. 
(16) For each form of assistance identified in 
subsection (i) that is provided for the property, the 
total number of dwelling units in the property for 
which such assistance is provided. 
(17) For each form of assistance identified in 
subsection (i) that is provided for the property, the 
total number of assisted dwelling units in the prop-
erty of each size (such as studio units, 1-bedroom 
units, and 2-bedroom units). 
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