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section 152(c) and shall enter into a new con-
tract for the project; and
(B) if the owner’s proposal under section
152(c) does not provide for establishing maxi-
mum monthly rents under the contract for
dwelling units in the project pursuant to the
procedure under section 156(b) or otherwise
fails to comply with the requirements of this
title, or the owner has failed to submit a pro-
posal, the Secretary shall make an offer to
enter into a new contract for the project (by
modifying the owner’s proposal under section
152(c), if the owner has submitted a proposal)
and, if the owner accepts, the Secretary shall
enter into such a new contract for the project.
(3) MARKET RENT CONTRACTS FOR HIGH-COST
AREAS.—Notwithstanding paragraphs (1) and (2),
in the case of a qualified project for which the Sec-
retary determines that the maximum monthly rents
for units in the project offered (or to be offered) by
the Secretary under paragraph (1) or (2), as appli-
cable, are less than the monthly rents for com-
parable units in comparable unassisted housing
projects in the relevant metropolitan market area,
the Secretary may offer to enter into a new contract
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for the qualified project that provides for the estab-
lishment of the maximum monthly rents at amounts
not exceeding the monthly rents for such comparable
units. Each new contract entered into under this
paragraph shall provide that the maximum monthly
rents for the qualified project shall be adjusted an-
nually by applying the annual adjustment factor es-
tablished by the Secretary under section 156(a)(2)
to the entire amount of the maximum monthly rents.
(4) CONTRACTS
FOR
PARTIALLY
ASSISTED
PROJECTS.—Notwithstanding paragraphs (1) and
(2), in the case of a qualified project for which as-
sistance is provided under an expiring contract for
some, but not all, of the dwelling units in the
project, the Secretary may offer to enter into a new
contract for the qualified project that provides for
the establishment of the maximum monthly rents for
units in the project assisted under the expiring con-
tract at amounts not exceeding the sum of (A) the
monthly rents for comparable unassisted units in the
project, and (B) an allowance for unique costs as de-
termined under section 156(b)(1)(G). Each new con-
tract entered into under this paragraph shall provide
that the maximum monthly rents for the qualified
project shall be adjusted annually by applying the
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annual adjustment factor established by the Sec-
retary under section 156(a)(2) to the entire amount
of the maximum monthly rents.
(5) AVOIDING OVERCONCENTRATION OF LOW-
INCOME HOUSING.—Notwithstanding paragraphs (1)
and (2), with respect to a qualified project for which
the Secretary is to provide a new contract under ei-
ther such paragraph, the Secretary may reduce the
number of dwelling units otherwise required to be
assisted under the new contract (pursuant to section
155(a)(3)) if—
(A) the Secretary determines that the
project is located in a market area in which
there is a high concentration of dwelling units
occupied by or affordable to very low-income
families;
(B) the Secretary consults with the owner
of the project, the tenants of the project (in-
cluding any resident council), and representa-
tives of the community in which the project is
located regarding such reduction and action
under subparagraph (D);
(C) the owner and affected tenants consent
to the reduction and action under subparagraph
(D);
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(D) the Secretary provides project-based
assistance for a number of dwelling units that
is not less than the difference between the num-
ber of units otherwise required to be assisted
under the new contract and the number actu-
ally assisted under the new contract; and
(E) the dwelling units assisted under sub-
paragraph (D) are located in market areas
other than the area in which the qualified
project is located and such areas do not have a
high concentration of dwelling units occupied by
or affordable to very low-income families.
The Secretary shall determine the maximum month-
ly rents for dwelling units assisted under subpara-
graph (D) using the procedures under paragraph (2)
of this subsection and section 156. In determining
the maximum monthly rents under the new contract
for any dwelling units in the qualified project, the al-
lowance under section 156(b)(1)(G) may be in-
creased to reflect higher costs per unit assisted at-
tributable to assisting less units.
(c) REJECTION OF OWNER’S PROPOSAL.—The Sec-
retary may reject a proposal submitted pursuant to section
152(c) only for a reason contained in the regulations is-
sued under section 154.
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(d) NOTICE
OF SECRETARY’S ACTION.—The Sec-
retary shall simultaneously—
(1) submit written notice of any action under
subsection (b) or (c) to the owner of the qualified
project for which such action is taken; and
(2) submit a copy of the notice to the chief ex-
ecutive officer of the appropriate State or unit of
general local government for the jurisdiction within
which the project is located, any mortgagee of the
project, the tenants of the project (including any
resident council for the project), and such other indi-
viduals or entities as the Secretary may require.
Notice under this subsection shall be submitted not later
than the expiration of the period for the qualified project
referred to in subsection (a). If the Secretary does not pro-
vide notice to the owner as required under this subsection,
the proposal of the owner shall be considered to have been
accepted without modification. Any notice rejecting a pro-
posal by the owner shall clearly state the reason for reject-
ing the proposal.
(e) MODIFICATIONS TO OWNER’S PROPOSAL.—The
Secretary may propose modifications to an owner’s pro-
posal submitted pursuant to section 152(c) only to the ex-
tent necessary to make the proposal comply with the re-
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quirements under this subtitle for acceptance by the Sec-
retary.
(f) LIMITATION ON SECRETARY’S AUTHORITY TO RE-
JECT OR MODIFY.—The Secretary may not reject or pro-
pose modifications to a proposal submitted pursuant to
section 152(c) because an enforcement action is pending
against the owner. Notwithstanding any other provision
of this subtitle, in such event, the Secretary shall, subject
only to the availability of budget authority, extend the ap-
plicable expiring contract for the period until the enforce-
ment action is concluded.
SEC. 154. LIMITATION ON NEW CONTRACTS.
(a) IN GENERAL.—The Secretary may refuse to enter
into a new contract with the owner of a qualified project
if the Secretary determines that the owner of the project
submitting the proposal has committed—
(1) violations of laws, regulations, regulatory
agreements, or other agreements for which the Sec-
retary may impose suspension, debarment, civil
money penalties, and such other major forms of en-
forcement action available to the Secretary under
law; or
(2) other substantial and repeated violations of
laws, regulations, regulatory agreements or other
agreements that have not been cured within a rea-
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sonable period of time after notice was provided to
the owner.
(b) REGULATIONS.—Not later than 45 days after the
date of enactment of this Act, the Secretary shall publish
for comment proposed regulations identifying the viola-
tions that, under subsection (a), prohibit the Secretary
from entering into a new contract.
SEC. 155. REQUIRED TERMS OF NEW CONTRACTS.
(a) IN GENERAL.—The Secretary may accept the
proposal of an owner (made under section 152(c) or nego-
tiations pursuant to such a proposal), and may propose
modifications to such a proposal and make an offer to
enter into a new contract for qualified housing, only if the
agreement provides for a new contract for the qualified
housing that complies with the following requirements:
(1) RENEWAL FOR REMAINING USEFUL LIFE OF
PROPERTY.—A new contract shall contain binding
commitments necessary to ensure that—
(A) the contract shall be renewed as pro-
vided in paragraph (5) upon expiration for the
entire remaining useful life of the qualified
project subject to the contract, subject only to
the availability of budget authority, the provi-
sions of this subtitle, and the provisions of the
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contract or law regarding termination of the
contract for cause; and
(B) renewal of the contract under para-
graph (5) shall not alter or affect the terms of
the contract.
(2) PROJECT-BASED ASSISTANCE.—A new con-
tract shall provide that the Secretary shall provide
project-based assistance under this subtitle for dwell-
ing units in the qualified project subject to the con-
tract based upon maximum monthly rents (including
utilities and all maintenance and management
charges) that the owner may receive for the dwelling
units.
(3) LOW-INCOME OCCUPANCY.—A new contract
shall provide that, during the term of the contract,
the owner shall make available for occupancy only by
families that (at the time of their initial occupancy)
are low-income families or very low-income families
(as the contract shall provide) the number of dwell-
ing units in the qualified project subject to the con-
tract for which assistance is provided under the ex-
piring contract.
(4) MAINTENANCE OF HOUSING.—The new con-
tract shall—
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(A) require the owner of the qualified
project to maintain the housing in compliance
with housing quality standards established by
the Secretary for housing assisted under section
8 of the United States Housing Act of 1937;
(B) provide that the provisions of section
8(h)(10) of such Act shall apply to the qualified
project, except that in the case of a qualified
project—
(i) any reference in such section to a
public housing agency shall be construed to
refer also to the Secretary; and
(ii) any reference in such section to
assistance under section 8 shall be con-
strued to refer to assistance under a new
contract; and
(C) provide that upon a request by the
owner, the Secretary shall provide for a review
of any determination of a serious noncompli-
ance of the project with such housing quality
standards, which review shall—
(i) determine whether (I) a serious
noncompliance has occurred, (II) the
owner was permitted a reasonable period
of time to correct the noncompliance, and
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(III) the owner has the responsibility to
correct the noncompliance;
(ii) be conducted by an officer or em-
ployee of the Department of Housing and
Urban Development who is not the officer
or employee who made the initial deter-
mination of the noncompliance and is not
subject to the supervision of such officer or
employee; and
(iii) include a written decision of the
finding pursuant to the review.
(5) CONTRACT
TERM.—A new contract shall
have a term of 60 months and shall be renewable for
additional 60-month terms without limitation.
(6) SECTION 8 REQUIREMENTS.—A new con-
tract shall provide that the qualified project subject
to the contract shall be subject to the requirements
applicable to housing assisted under section 8(i) of
the United States Housing Act of 1937.
(7) CAPITAL
NEEDS.—A new contract shall
contain such terms as the Secretary and the owner
agree to regarding conducting rehabilitation and re-
placement activities for the project and may provide
amounts to the owner for meeting immediate reha-
bilitation and replacement needs of the qualified
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project if the Secretary determines that providing
such amounts would be more cost effective to the
Secretary than financing such activities through in-
creased project debt.
(8) MAXIMUM MONTHLY RENTS.—A new con-
tract shall provide that the maximum monthly rents
for the project under the contract shall be the
amount determined under section 156 (or, in the
case of a new contract entered into under paragraph
(3) or (4) of section 153(b), the amount determined
under such paragraph) upon entering into the con-
tract, and shall be adjusted annually as provided
under such section (or paragraph (3) or (4) of sec-
tion 153(b), if applicable), except that—
(A) the maximum monthly rents shall be
redetermined in the manner provided under sec-
tions 153(b) and 156 upon each renewal of the
contract;
(B) the owner of the project may, at any
time, submit a written request to the Secretary
for a redetermination of the maximum monthly
rents for the project using the procedure under
section 156(b) and, after such request, the
rents shall be determined using such method for
the remainder of the term of the contract; and
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(C) in the case of a project that is subject
to a mortgage insured by the Secretary and for
which the maximum monthly rents under the
new contract are determined and adjusted
under section 156(a), if at any time the Sec-
retary determines that such rents are not suffi-
cient to provide for the sound operation of the
project while maintaining payment of debt serv-
ice for the project, the Secretary may require
redetermination of the maximum monthly rents
for the project using the procedure under sec-
tion 156(b) and, after such request, the rents
shall be determined using such method for the
remainder of the term of the contract and the
provisions of section 159(b) shall apply to the
project.
(9) CONSIDERATION OF TENANT CONCERNS.—
A new contract shall provide that the owner of the
qualified housing shall—
(A) establish and, in good faith, carry out
a procedure, acceptable to the tenants (includ-
ing any resident council) of the project, for ten-
ants to submit to the owner comments, ques-
tions, and requests regarding any issues con-
cerning the project (including the condition,
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management, and ownership of the project);
and
(B) make a good faith effort to respond to
such comments, questions, and requests within
a reasonable period of time.
(b) PROPERTY INSPECTIONS AND MANAGEMENT RE-
VIEWS REQUIRED BY SECRETARY.—The Secretary shall
conduct an inspection of the physical condition of each
qualified project for which a new contract is entered into
under this subtitle and shall conduct a review of the man-
agement of each such qualified project, not less than once
every 3 years. The Secretary shall also conduct such an
inspection or review of a project when requested by the
unit of general local government for the jurisdiction in
which the project is located or by a petition signed by not
less than 10 percent of the tenants of occupied units in
the project.
SEC. 156. MAXIMUM MONTHLY RENT UNDER NEW CON-
TRACTS.
(a) STATUS QUO RENT DETERMINATION.—
(1) PROCEDURE.—If the maximum monthly
rents under a new contract for a qualified project
are to be established under this subsection, the rents
shall be established at the amount equal to the maxi-
mum monthly rents under the expiring contract ex-
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isting at the time 24 months before the date of the
expiration of the contract (or an amount mutually
agreed to by the Secretary and the owner that is less
than such amount).
(2) RENT ADJUSTMENTS.—
(A) IN GENERAL.—The maximum monthly
rents for any qualified project for which the
rents under a new contract are to be deter-
mined under this subsection shall be adjusted
annually by applying the annual adjustment
factor established by the Secretary under sub-
paragraph (B) to the entire amount of the max-
imum monthly rents.
(B) ANNUAL ADJUSTMENT FACTOR.—The
annual adjustment factor shall—
(i) measure the annual change for a
market area in the prevailing unsubsidized
market rents for various sizes and types of
dwelling units and shall be based solely on
such measure;
(ii) provide for decreases and in-
creases in the maximum monthly rents;
and
(iii) not provide for adjustment in the
maximum monthly rents based on any fac-
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tor other than the factor described in
clause (i).
The Secretary shall establish market areas for
purposes of establishing annual adjustment fac-
tors under this paragraph.
(3) SERVICE COORDINATORS.—Notwithstanding
paragraph (1), the maximum monthly rents estab-
lished (and adjusted) under this subsection for a
qualified project shall be increased to the extent nec-
essary to provide for the total costs of a service coor-
dinator under section 161 for the project.
(b) BUDGET-BASED RENT DETERMINATION.—
(1) PROCEDURE.—If the maximum monthly
rents under a new contract for a qualified project
are to be established under this subsection, the rents
shall be established at such a level or levels that
would provide income sufficient to cover the sum of
the following actual and projected costs of operating
the project:
(A) DEBT SERVICE.—The debt service on
any federally-insured or assisted loans for the
qualified project or any other loans for the
project approved by the Secretary at the time
the loans were entered into or subsequently, ex-
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cept that the Secretary may provide that such
debt service shall not include—
(i) any debt service attributable to
any equity loan insured under section
241(f) of the National Housing Act or any
similar loan made for the purposes of liq-
uidating the equity of the owner in the
qualified project; and
(ii) if the Secretary requires refinanc-
ing of debt under section 159 and the
owner does not refinance as provided in
such section, any debt service relating to
such debt in excess of the amount that the
Secretary determines is appropriate under
prevailing market conditions at the time
such refinancing was required to occur.
(B) OPERATING EXPENSES.—The operat-
ing expenses for the qualified project, including
costs of measures to reduce or control crime,
and the total costs of a service coordinator
under section 161 for the project.
(C) RESERVES.—An amount for adequate
reserves for the qualified project, as determined
pursuant to a comprehensive needs assessment
for the project prepared and approved in ac-
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cordance with title IV of the Housing and Com-
munity Development Act of 1992 or in such
other manner as the Secretary may require.
(D) ALLOWANCE FOR LOSSES.—An allow-
ance for potential operating losses of the quali-
fied project caused by vacancies and failure to
collect rents, which shall be an amount equal to
5 percent of any rental income from the project
(including any amounts paid in rent for utili-
ties).
(E) DISTRIBUTION TO OWNER.—An allow-
ance for a distribution to the owner of the
qualified project, which shall be an amount for
each dwelling unit in the project equal to the
higher of—
(i) $350 per year; or
(ii) 6 percent of the fair market rental
for dwelling units of the applicable size
and type in the relevant metropolitan mar-
ket area.
(F) TENANT ORGANIZATION.—An amount
for technical assistance to the resident council
(if any) of the qualified project or for technical
assistance in organizing or operating a resident
council, which shall be an amount equal to $20
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per dwelling unit in the project per year. The
Secretary shall provide that such amounts shall
not be made available to the owner but shall be
accessible only by resident councils or by ten-
ants for establishment or operation of resident
councils.
(G) ALLOWANCE FOR UNIQUE COSTS.—An
allowance for unique costs specific to and char-
acteristic of qualified housing or other housing
for low-income families receiving project-based
assistance from the Secretary, in the amount
agreed to by the Secretary and the owner.
(H) 
ALLOWANCE
FOR
HIGH-RENT
AREAS.—If the Secretary determines that the
prevailing rents in the market area in which a
qualified project is located exceed the fair mar-
ket rentals for dwelling units of the applicable
sizes and types of dwelling units in the relevant
metropolitan market area—
(i) an allowance may be provided (at
the discretion of the Secretary) in an
amount necessary to provide maximum
monthly rents under this subsection in an
amount equal to the prevailing market
rents in the area; and
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(ii) an allowance in the amount re-
ferred to in clause (i) shall be provided if
the Secretary determines that there is a
lack of sufficient housing in the market
area in which the project is located that is
affordable to low-income families.
(2) RENT ADJUSTMENTS.—
(A) IN GENERAL.—The maximum monthly
rents for any qualified project for which the
rents under a new contract are to be deter-
mined under this subsection shall be adjusted
annually by applying the operating cost adjust-
ment factor established by the Secretary under
subparagraph (B) to the entire amount of the
maximum monthly rents.
(B) OPERATING COST ADJUSTMENT FAC-
TOR.—The operating cost adjustment factor for
any 12-month period shall be equal to—
(i) the percent increase or decrease, if
any, in the Consumer Price Index pub-
lished for the 6th month preceding the be-
ginning of such period over such index
published for the 18th month preceding
such period, adjusted to the nearest 1⁄10 of
1 percent; or
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(ii) any other equivalent measure of
change in operating costs determined by
the Secretary.
For purposes of this subparagraph, the term
‘‘Consumer Price Index’’ means the Consumer
Price Index for All Urban Consumers, United
States City Average, Housing Component, pre-
pared by the Bureau of Labor Statistics of the
Department of Labor.
(C) EXCESSIVE ADJUSTMENTS.—The Sec-
retary may require the owner of a qualified
project for which a new contract has been pro-
vided to submit a proposal in the manner pro-
vided under paragraph (3) for redetermination
of maximum monthly rents for the project if—
(i) not less than 2 rent adjustments
have been made pursuant to subparagraph
(A) for the project;
(ii) an intervening redetermination of
maximum monthly rents for the project
pursuant to paragraph (1) has not oc-
curred; and
(iii) the Secretary determines that the
rents resulting from the rent adjustments
are materially in excess of the rents nec-
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essary to support the costs for the project
described in paragraph (1).
If pursuant to such a redetermination the Sec-
retary determines that the rents for the project
are greater than the amount described in clause
(iii), the Secretary may reduce the maximum
monthly rents for the project to the amount de-
scribed in clause (iii), effective on the first day
of the month following written notification by
the Secretary to the owner of such new rents.
(3) TIMING.—If the Secretary requests an
owner of a qualified project or a project for which
a new contract is to be provided to submit a pro-
posal for maximum monthly rents based on costs de-
scribed in paragraph (1) and the owner fails to sub-
mit such a proposal during the 90-day period begin-
ning upon receipt of such request, the Secretary may
establish the maximum monthly rents for the project
based on such information as is available to the Sec-
retary from the owner’s most recent audited finan-
cial statements, without the agreement of the owner.
(4) 
ADDITIONAL
INFORMATION
FROM
OWNER.—The owner of a qualified project (including
a project for which a new contract has been pro-
vided) may, at any time, submit to the Secretary in-
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formation regarding prevailing rent levels for com-
parable dwelling units in the relevant metropolitan
market area and the Secretary shall consider such
information in making any determinations or agree-
ments under this subsection regarding the project.
SEC. 157. ACTIONS IN CASES OF FAILURE TO ENTER INTO
NEW CONTRACT.
(a) NOTICE.—If—
(1) the owner of a qualified project indicates, in
the notice required under section 152(b), an inten-
tion not to enter into a new contract,
(2) the Secretary and the owner fail to agree to
enter into a new contract after a reasonable period
of negotiation, or
(3) the Secretary refuses to enter into a new
contract with the owner pursuant to section 154,
the Secretary shall provide notice containing the informa-
tion under subsection (b) to the owner, the chief executive
officer of the State or unit of general local government
for the jurisdiction within which the project is located, any
mortgagee of the project, the tenants of the project (in-
cluding any resident council for the project), and such
other individuals or entities as the Secretary considers ap-
propriate.
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(b) CONTENTS OF NOTICE.—Notice under subsection
(a) shall identify the qualified project, state the intention
of the Secretary to enter into a new contract for the
project with an owner of the project acceptable to the Sec-
retary, state that the Secretary may take either of the ac-
tions authorized under subsection (c) with respect to the
project, and propose maximum monthly rents for the
project subject to the requirements of sections 153(b) and
156.
(c) ATTEMPTED SALE OF PROJECT.—After providing
notice under subsection (b) for a qualified project—
(1) the Secretary shall negotiate with the owner
and other interested parties to develop a plan for
sale of the project in a timely manner to a new
owner who agrees to enter into a new contract with
the Secretary and who may be a nonprofit or for-
profit entity, a State or local governmental entity, a
tenant (or group of tenants) or a resident council;
a new contract under this paragraph may be pro-
vided pursuant to the loan management program
under section 8(q)(2) of the United States Housing
Act of 1937 or a contract through a public housing
agency for project-based assistance under section
8(i) of such Act; and
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(2) notwithstanding paragraph (1), the Sec-
retary may acquire the qualified project by con-
demnation, under judicial process, pursuant to the
first section of the Act of August 1, 1888 (Chapter
728, 25 Stat. 357; 40 U.S.C. 257).
(d) FAILURE TO SELL PROJECT.—
(1) TRANSFER OF PROJECT-BASED ASSISTANCE
TO
OTHER
HOUSING.—If, after providing notice
under subsection (b) for a qualified project and
making reasonable efforts under subsection (c)(1)
the Secretary fails to enter into a new contract for
the project (and determines that action under sub-
section (c)(2) is not appropriate), the Secretary
shall, subject only to the availability of budget au-
thority and the absence of qualified requests for
such assistance, provide project-based rental assist-
ance for at least the same number of dwelling units
in housing located within the same market area as
the qualified project as were assisted under the ex-
piring contract for the project. Tenants of the quali-
fied project shall be offered initial occupancy in
dwelling units assisted pursuant to this paragraph.
(2) 
CONSULTATION.—In 
providing 
project-
based assistance under this subsection, the Secretary
shall consult with nonprofit and for-profit entities,
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State and local governmental entities, and tenants
and any resident council of the project, regarding
acquisition and operation of housing to be assisted
under this subsection.
(e) ASSISTANCE FOR PROJECT TENANTS.—
(1) RIGHT TO RECEIVE ASSISTANCE.—If, in the
notice required by section 152(b), the owner indi-
cates a preference not to enter into a new contract
or the Secretary fails to enter into a new contract
for the project, the Secretary shall provide assist-
ance under paragraphs (2) and (3), subject only to
the availability of budget authority, for each family
who on the date occurring 12 months before the ex-
piration of the expiring contract resides in a dwell-
ing unit in the project that is assisted under the ex-
piring contract.
(2) TYPE OF ASSISTANCE.—Assistance required
under this paragraph shall be provided, as deter-
mined by the Secretary, in one of the following
forms:
(A) TENANT-BASED ASSISTANCE.—Assist-
ance may be provided as tenant-based rental as-
sistance under the provisions of section 8(b) of
the United States Housing Act of 1937, as in
effect on June 1, 1994, except that in providing
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such assistance the Secretary shall increase the
maximum monthly rental amount to the extent
necessary to permit families remain in the
dwelling unit they occupy in the qualified
project or to obtain a comparable dwelling unit
in the same market area.
(B) OCCUPANCY
IN
A
UNIT
RECEIVING
PROJECT-BASED ASSISTANCE.—The family may
be offered occupancy of an available dwelling
unit that is assisted under a contract pursuant
to subsection (c)(1) or (d).
(3) RELOCATION ASSISTANCE.—Assistance re-
quired under this section is assistance to the tenant
of a qualified project in the amount of the total cost
of relocating to a unit assisted under paragraph (2).
SEC. 158. CONTRACT EXTENSION.
Subject to the availability of budget authority, the
Secretary may extend any expiring contract in force on
the date of enactment of this Act, under identical terms
and conditions, for not more than 24 months if the Sec-
retary determines that such extension is necessary to pro-
tect tenants of the qualified project subject to the contract
or the General Insurance Fund established under section
519 of the National Housing Act, except that—
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(1) the authority under this section may be ex-
ercised only once for any contract or qualified
project; and
(2) such authority may not be exercised for a
qualified project for which the owner has provided
timely notification under section 152(b) indicating
an intention not to enter into a new contract for the
project, unless the owner expressly agrees to the ex-
tension or the Secretary is taking action pursuant to
section 152(e)(5) or 153(f).
SEC. 159. FINANCING AND RESTRUCTURING UNDERLYING
DEBT AND TREATMENT OF RESIDUAL RE-
CEIPTS.
(a) IN GENERAL.—Before entering into a new con-
tract with a present or future owner of a qualified project,
the Secretary shall encourage and, subject to the excep-
tions in subsection (d), may require—
(1) the restructuring of debt if the costs to the
Federal Government of such restructuring are less
than the costs incurred by the Federal Government
under a contract for assistance under section 8 of
the United States Housing Act of 1937 at the
project’s current debt level; and
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(2) the refinancing of all debt that is financed
at a rate 250 basis points in excess of prevailing
market rates for debt with a similar maturity.
Any project refinancing or debt restructuring shall be ac-
companied by a corresponding reduction in the maximum
monthly rents for the project. The authority of the Sec-
retary under this section to restructure or refinance mort-
gages shall be effective for any fiscal year only to such
extent or in such amounts as are or have been provided
for such costs in appropriation Acts for such fiscal year.
(b) FHA-INSURED PROJECTS.—Subject to the excep-
tions set forth in subsection (d), the Secretary shall re-
quire an owner of a project subject to a mortgage insured
by the Secretary which is to be assisted under a new con-
tract to certify that any debt that, in the determination
of the Secretary, meets the conditions of paragraph (1)
or (2) of subsection (a) will be restructured or refinanced,
as applicable.
(c) STATE-FINANCED
PROJECTS.—The Secretary
shall establish procedures to inform State agencies that
insure or finance mortgages of the provisions of this sub-
title, and shall encourage such agencies to refinance or
otherwise restructure debt which meets the conditions of
paragraph (1) or (2) of subsection (a).
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(d) EXCEPTIONS.—The Secretary shall not require
the refinancing or debt restructuring of any project, if—
(1) the project was financed through obligations
issued by a State or local housing agency or the
Government National Mortgage Association and
such refinancing or debt restructuring is inconsistent
with applicable law or agreements governing such fi-
nancing; and
(2) in the Secretary’s determination, the refi-
nancing will not result in significant savings to the
Department of Housing and Urban Development or
to the mortgagor.
(e) DISCRETIONARY ASSISTANCE.—To facilitate re-
newal consistent with this section and section 156(b), the
Secretary may, from amounts appropriated under this
subtitle—
(1) pay the owner’s nonmortgageable trans-
action costs;
(2) provide the State insuring agency or the
mortgagee with an equitable share of the savings re-
captured from the refinancing;
(3) apply a share of the savings recaptured
from the refinancing to the project’s reserves or cap-
ital expenses;
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(4) bifurcate the note to leave a first note serv-
iceable within rents reflective of the local market;
and
(5) assist in financing a project’s rehabilitation
needs through the provision of up-front grants
from—
(A) residual receipts distributed to the Sec-
retary;
(B) the budget authority provided for in-
creases in new contracts to pay for rehabilita-
tion, if the Secretary determines that the provi-
sion of such grants in addition to rental assist-
ance under section 8 of the United States
Housing Act of 1937 would be cost-effective;
and
(C) savings resulting from refinancing or
otherwise restructuring the debt.
(f) RESIDUAL RECEIPTS.—
(1) IN GENERAL.—Residual receipts distributed
to the Secretary shall be retained by the Secretary
for use under this subtitle.
(2) EXPEDITED ACQUISITION.—The Secretary
may expedite the acquisition of residual receipts for
a qualified project by entering into an agreement
with the owner of the project that provides—
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(A) for the owner to retain a portion of
any residual receipts accumulated for the
project, which shall not to exceed 15 percent of
such accumulated receipts;
(B) for the Secretary to acquire the por-
tion of the accumulated residual receipts for the
project not retained by the owner not less than
12 months before the expiration of the expiring
contract for the project, unless the Secretary
provides otherwise; and
(C) for any residual receipts accumulated
for the project after the date of the acquisition
under subparagraph (B) to be distributed to the
owner and the Secretary, and to be acquired pe-
riodically by the Secretary, in the same percent-
ages as the residual receipts for the project are
distributed pursuant to subparagraphs (A) and
(B).
SEC. 160. RETENTION OF PROGRAM SAVINGS BY SEC-
RETARY.
Any savings achieved through implementation of the
provisions of this Act, except for such savings made avail-
able to State or local housing agencies pursuant to section
159, shall be retained by the Secretary to increase afford-
able housing opportunities, in such manner as may be de-
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termined by statute, or as may be determined by the Sec-
retary.
SEC. 161. SUPPORTIVE SERVICES AND TECHNICAL ASSIST-
ANCE.
(a) PROVISION OF SERVICE COORDINATOR.—
(1) REQUIREMENT.—Each owner of a qualified
project or a project for which a new contract has
been provided shall provide, to the extent amounts
are available pursuant to paragraph (2) or another
provision of this subtitle, that the project is served
(on a full- or part-time basis in a manner approved
by the Secretary) by a service coordinator under sec-
tion 671 of the Housing and Community Develop-
ment Act of 1992. The preceding sentence shall
apply only after the expiration of the 270-day period
beginning on the date of the enactment of this Act.
(2) PAYMENT OF COSTS.—Notwithstanding any
other provision of law, the salary and other costs as-
sociated with employing a service coordinator shall
be considered an eligible project expense for a quali-
fied project which may be fully funded under the ex-
piring contract, as provided by the Secretary.
(b) TECHNICAL ASSISTANCE.—
(1) REQUIRED ASSISTANCE.—Using a portion
of any amounts in an account for residual receipts
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established for a qualified project and any amounts
made available for new contracts under this subtitle,
the Secretary shall (subject to the availability of
such amounts) provide for technical assistance for
tenants of the project (including any resident coun-
cils), nonprofit organizations, nonprofit developers of
affordable housing, and State and local govern-
mental agencies to the extent necessary to—
(A) develop the capacity and ability of such
entities to carry out activities pursuant to this
subtitle; and
(B) assist such entities in preparing sub-
missions, proposals, and such other documents
and entering into contracts, agreements, and
other arrangements involved in such activities.
(2) USE OF EXISTING PROGRAM FOR DELIV-
ERY.—The Secretary may provide technical assist-
ance under this subsection with respect to qualified
projects through the program and procedures estab-
lished under subtitle C of the Low-Income Housing
Preservation and Resident Homeownership Act of
1990 (as added by section 312 of the Housing and
Community Development Act of 1992) for technical
assistance with respect to eligible low-income hous-
ing.