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12 U.S.C. § 4104 — Annual authorized return and preservation rents

Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4104 — Annual authorized return and preservation rents

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Source file: Laws/federal/codes/united-states-code/title-12/section-4104-annual-authorized-return-and-preservation-rents--44554a0d6c.md
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Source location: Title 12, Chapter 42, § 4104; chapter-042-low-income-housing-preservation-and-resident-homeownership.md

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**(a) Annual authorized return** Pursuant to an appraisal under [section 4103 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4103&num=0&edition=prelim), the Secretary shall determine the annual authorized return on the appraised housing, which shall be equal to 8 percent of the preservation equity (as such term is defined in [section 4119(8) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4119/8&num=0&edition=prelim)). **(b) Preservation rents** The Secretary shall also determine the aggregate preservation rents under this subsection for each project appraised under [section 4103 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4103&num=0&edition=prelim). The aggregate preservation rents shall be used solely for the purposes of comparison with Federal cost limits under [section 4105 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4105&num=0&edition=prelim). Actual rents received by an owner (or a qualified purchaser) shall be determined pursuant to section 4109, 4110, or 4111 of this title. The aggregate preservation rents shall be established as follows: (1) **Extension of affordability limits** — The aggregate preservation rent for purposes of receiving incentives pursuant to extension of the low-income affordability restrictions under [section 4109 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109&num=0&edition=prelim) shall be the gross potential income for the project, determined by the Secretary, that would be required to support the following costs: (A) The annual authorized return determined under subsection (a). (B) Debt service on any rehabilitation loan for the housing. (C) Debt service on the federally-assisted mortgage for the housing. (D) Project operating expenses. (E) Adequate reserves. (2) **Sale** — The aggregate preservation rent for purposes of receiving incentives pursuant to sale under section 4110 or 4111 of this title shall be the gross income for the project determined by the Secretary, that would be required to support the following costs: (A) Debt service on the loan for acquisition of the housing. (B) Debt service on any rehabilitation loan for the housing. (C) Debt service on the federally-assisted mortgage for the housing. (D) Project operating expenses. (E) Adequate reserves. **(c) Future financing** Neither this section, nor any plan of action or use agreement implementing this section, shall restrict an owner from obtaining a new loan or refinancing an existing loan secured by the project, or from distributing the proceeds of such a loan; except that, in conjunction with such refinancing— (1) the owner shall provide for adequate rehabilitation pursuant to a capital needs assessment to ensure long-term sustainability of the property satisfactory to the lender or bond issuance agency; (2) any resulting budget-based rent increase shall include debt service on the new financing, commercially reasonable debt service coverage, and replacement reserves as required by the lender; and (3) for tenants of dwelling units not covered by a project- or tenant-based rental subsidy, any rent increases resulting from the refinancing transaction may not exceed 10 percent per year, except that— (A) any tenant occupying a dwelling unit as of time of the refinancing may not be required to pay for rent and utilities, for the duration of such tenancy, an amount that exceeds the greater of— (i) 30 percent of the tenant’s income; or (ii) the amount paid by the tenant for rent and utilities immediately before such refinancing; and (B) this paragraph shall not apply to any tenant who does not provide the owner with proof of income. Paragraph (3) may not be construed to limit any rent increases resulting from increased operating costs for a project.

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4105 — Federal cost limits and limitations on plans of action

**(a) Determination of relationship to Federal cost limits** (1) **Initial determination** — For each eligible low-income housing project appraised under [section 4103(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4103/a&num=0&edition=prelim), the Secretary shall determine whether the aggregate preservation rents for the project determined under paragraph (1) or (2) of [section 4104(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4104/b&num=0&edition=prelim) exceed the amount determined by multiplying 120 percent of the fair market rental (established under [section 1437f(c) of title 42](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1437f/c&num=0&edition=prelim)) for the market area in which the housing is located by the number of dwelling units in the project (according to appropriate unit sizes). (2) **Relevant local markets** — If the aggregate preservation rents for a project exceeds the amount determined under paragraph (1), the Secretary shall determine whether such aggregate rents exceed the amount determined by multiplying 120 percent of the prevailing rents in the relevant local market area in which the housing is located by the number of units in the project (according to the appropriate unit sizes). A relevant local market area shall be an area geographically smaller than a market area established by the Secretary under [section 1437f(c)(1) of title 42](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1437f/c/1&num=0&edition=prelim) that is identifiable as a distinct rental market area. The Secretary may rely on the appraisal to determine the relevant local market areas and prevailing rents in such local area

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4105

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4103 — Appraisal and preservation value of eligible low-income housing

**(a) Appraisal** Upon receiving notice of intent regarding an eligible low-income housing project indicating an intent to extend the low-income affordability restrictions under [section 4109 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109&num=0&edition=prelim) or transfer the housing under [section 4110 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4110&num=0&edition=prelim), the Secretary shall provide for determination of the preservation value of the housing, as follows: (1) **Appraisers** — The preservation value shall be determined by 2 independent appraisers, one of whom shall be selected by the Secretary and one of whom shall be selected by the owner. The appraisals shall be conducted not later than 4 months after filing the notice of intent under [section 4102 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4102&num=0&edition=prelim), and the owner shall submit to the Secretary the appraisal made by the owner’s selected appraiser not later than 90 days after receipt of the notice under paragraph (2). If the 2 appraisers fail to agree on the preservation value, and the Secretary and the owner also fail to agree on the preservation value, the Secretary and the owner shall jointly select and jointly compensate a third appraiser, whose appraisal shall be binding on the parties. (2) **Notice** — Not later than 30 days after the filing of a notice of intent to seek incentives under [section 4109 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4109&num=0&edition=prelim) or transfer the property under [section 4110 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-t

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4103

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4112 — Criteria for approval of plan of action involving incentives

**(a) In general** The Secretary may approve a plan of action for extension of the low-income affordability restrictions on any eligible low-income housing or transfer the housing to a qualified purchaser (other than a resident council) only upon finding that— (1) due diligence has been given to ensuring that the package of incentives is, for the Federal Government, the least costly alternative that is consistent with the full achievement of the purposes of this title; 11 See References in Text note below. (2) binding commitments have been made to ensure that— (A) the housing will be retained as housing affordable for very low-income families or persons, low-income families or persons, and moderate-income families or persons for the remaining useful life of such housing (as determined under subsection (c)); (B) throughout such period, adequate expenditures will be made for maintenance and operation of the housing and that the project meets housing standards established by the Secretary under subsection (d), as determined by inspections conducted under such subsection by the Secretary; (C) current tenants will not be involuntarily displaced (except for good cause); (D) any increase in rent contributions for current tenants will be to a level that does not exceed 30 percent of the adjusted income of the tenant or the published existing fair market rent for comparable housing established under [section 1437f(c) of title 42](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title42-section1437f/c&num=0&edition=prelim), whichever is lower, except that the rent contributions of any tenants occupying the housing at the time of any increase may not be reduced by reason of this subparagraph (except with respect to tenants receiving section 8 [[42 U.S.C.

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4112

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4109 — Incentives to extend low-income use

**(a) Agreements by Secretary** After approving a plan of action from an owner of eligible low-income housing that includes the owner’s plan to extend the low-income affordability restrictions of the housing, the Secretary shall, subject to the availability of appropriations for such purpose, enter into such agreements as are necessary to enable the owner to receive (for each year after the approval of the plan of action) the annual authorized return for the housing determined under [section 4104(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4104/a&num=0&edition=prelim), pay debt service on the federally-assisted mortgage covering the housing, pay debt service on any loan for rehabilitation of the housing, and meet project operating expenses and establish adequate reserves. The Secretary shall take into account the Federal cost limits under [section 4105(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4105/a&num=0&edition=prelim) for the housing when providing incentives under subsections 11 So in original. Probably should be “subsection”. (b)(2) and (3) of this section. The Secretary shall take such actions as are necessary to ensure that owners receive the annual authorized return for the housing determined under [section 4104(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4104/a&num=0&edition=prelim) during the period in which rent increases are phased in as provided in [section 4112(a)(2)(E) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4112/a/2/E&num=0&edition=prelim), including (in order of preference) (1) allowing the owner access to residual receipt accounts (pursuant to subsecti

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4109

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4122 — Preemption of State and local laws

**(a) In general** No State or political subdivision of a State may establish, continue in effect, or enforce any law or regulation that— (1) restricts or inhibits the prepayment of any mortgage described in [section 4119(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4119/1&num=0&edition=prelim) (or the voluntary termination of any insurance contract pursuant to [section 1715t of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1715t&num=0&edition=prelim)) on eligible low income housing; (2) restricts or inhibits an owner of such housing from receiving the authorized annual return provided under [section 4104 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section4104&num=0&edition=prelim); (3) is inconsistent with any provision of this subchapter, including any law, regulation, or other restriction that limits or impairs the ability of any owner of eligible low income housing to receive incentives authorized under this subchapter (including authorization to increase rental rates, transfer the housing, obtain secondary financing, or use the proceeds of any of such incentives); or (4) in its applicability to low-income housing is limited only to eligible low-income housing for which the owner has prepaid the mortgage or terminated the insurance contract. Any law, regulation, or restriction described under paragraph (1), (2), (3), or (4) shall be ineffective and any eligible low-income housing exempt from the law, regulation, or restriction, only to the extent that it violates the provisions of this subsection. **(b) Effect** This section shall not prevent the establishment, continuing in effect, or enforcement of any law or regulation of any Sta

Source: Supplied U.S. Code snapshot — release unconfirmed · 12 U.S.C. § 4122

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Federal law — U.S. Code and appendices · legal_authorities

12 U.S.C. § 4104 — Annual authorized return and preserva-

Page 1597 TITLE 12—BANKS AND BANKING § 4105 Editorial Notes AMENDMENTS 1992—Subsec. (c). Pub. L. 102–550 inserted ‘‘simulta- neous termination of any Federal rental assistance,’’ before ‘‘and costs’’ in first sentence. § 4104. Annual authorized return and preserva- tion rents (a) Annual authorized return Pursuant to an appraisal under section 4103 of this title, the Secretary shall determine the an- nual authorized return on the appraised housing, which shall be equal to 8 percent of the preser- vation equity (as such term is defined in section 4119(8) of this title). (b) Preservation rents The Secretary shall also determine the aggre- gate preservation rents under this subsection for each project appraised under section 4103 of this title. The aggregate preservation rents shall be used solely for the purposes of comparison with Federal cost limits under section 4105 of this title. Actual rents received by an owner (or a qualified purchaser) shall be determined pursu- ant to section 4109, 4110, or 4111 of this title. The aggregate preservation rents shall be estab- lished as follows: (1) Extension of affordability limits The aggregate preservation rent for purposes of receiving incentives pursuant to extension of the low-income affordability restrictions under section 4109 of this title shall be the gross potential income for the project, deter- mined by the Secretary, that would be re- quired to support the following costs: (A) The annual authorized return deter- mined under subsection (a). (B) Debt service on any rehabilitation loan for the housing. (C) Debt service on the federally-assisted mortgage for the housing. (D) Project operating expenses. (E) Adequate reserves. (2) Sale The aggregate preservation rent for purposes of receivi

Source: Supplied 2024 U.S. Code historical extraction · 12 U.S.C. § 4104

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