42 U.S.C. § 12745 — Qualification as affordable housing

Page 8458 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12745 1 So in original. 2 So in original. Probably should be ‘‘grandchildren’’. § 12745. Qualification as affordable housing (a) Rental housing (1) Qualification Housing that is for rental shall qualify as af- fordable housing under this subchapter only if the housing— (A) bears rents not greater than the lesser of (i) the existing fair market rent for com- parable units in the area as established by the Secretary under section 1437f of this title, or (ii) a rent that does not exceed 30 percent of the adjusted income of a family whose income equals 65 percent of the me- dian income for the area, as determined by the Secretary, with adjustment for number of bedrooms in the unit, except that the Sec- retary may establish income ceilings higher or lower than 65 percent of the median for the area on the basis of the Secretary’s find- ings that such variations are necessary be- cause of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes; (B) has not less than 20 percent of the units (i) occupied by very low-income fami- lies who pay as a contribution toward rent (excluding any Federal or State rental sub- sidy provided on behalf of the family) not more than 30 percent of the family’s month- ly adjusted income as determined by the Secretary, or (ii) occupied by very low-in- come families and bearing rents not greater than the gross rent for rent-restricted resi- dential units as determined under section 42(g)(2) of title 26; (C) is occupied only by households that qualify as low-income families; (D) is not refused for leasing to a holder of a voucher or certificate of eligibility under section 1437f of this title because of the sta- tus of the prospective tenant as a holder of such voucher or certificate of eligibility; (E) will remain affordable, according to binding commitments satisfactory to the Secretary, for the remaining useful life of the property, as determined by the Sec- retary, without regard to the term of the mortgage or to transfer of ownership, or for such other period that the Secretary deter- mines is the longest feasible period of time consistent with sound economics and the purposes of this Act, except upon a fore- closure by a lender (or upon other transfer in lieu of foreclosure) if such action (i) recog- nizes any contractual or legal rights of pub- lic agencies, nonprofit sponsors, or others to take actions that would avoid termination of low-income affordability in the case of foreclosure or transfer in lieu of foreclosure, and (ii) is not for the purpose of avoiding low income affordability restrictions, as deter- mined by the Secretary; and (F) if newly constructed, meets the energy efficiency standards promulgated by the Secretary in accordance with section 12709 of this title. (2) Adjustment of qualifying rent The Secretary may adjust the qualifying rent established for a project under subpara- graph (A) of paragraph (1), only if the Sec- retary finds that such adjustment is necessary to support the continued financial viability of the project and only by such amount as the Secretary determines is necessary to maintain continued financial viability of the project. (3) Increases in tenant income Housing shall qualify as affordable housing despite a temporary noncompliance with sub- paragraph (B) or (C) of paragraph (1) if such noncompliance is caused by increases in the incomes of existing tenants and if actions sat- isfactory to the Secretary are being taken to ensure that all vacancies are filled in accord- ance with paragraph (1) until such noncompli- ance is corrected. Tenants who no longer qual- ify as low-income families shall pay as rent the lesser of the amount payable by the tenant under State or local law or 30 percent of the family’s adjusted monthly income, as recer- tified annually. The preceding sentence shall not apply with respect to funds made available under this Act for units that have been allo- cated a low-income housing tax credit by a housing credit agency pursuant to section 42 of title 26. (4) Mixed-income project Housing that accounts for less than 100 per- cent of the dwelling units in a project shall qualify as affordable housing if such housing meets the criteria of this section. (5) Mixed-use project Housing in a project that is designed in part for uses other than residential use shall qual- ify as affordable housing if such housing meets the criteria of this section. (6) Waiver of qualifying rent (A) In general For the purpose of providing affordable housing appropriate for families described in subparagraph (B), the Secretary may, upon the application of the project owner, waive the applicability of subparagraph (A) of paragraph (1) with respect to a dwelling unit if— (i) the unit is occupied by such a family, on whose behalf tenant-based assistance is provided under section 1437f of this title; (ii) the rent for the unit is not greater than the existing fair market rent for comparable units in the area, as estab- lished by the Secretary under section 1437f of this title; and (iii) the Secretary determines that the waiver, together with waivers under this paragraph for other dwelling units in the project, will result in the use of amounts described in clause (iii) 1 in an effective manner that will improve the provision of affordable housing for such families. (B) Eligible families A family described in this subparagraph is a family that consists of at least one elderly person (who is the head of household) and one or more of such person’s grand 2 chil- Page 8459 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12745 dren, great grandchildren, great nieces, great nephews, or great great grandchildren (as defined by the Secretary), but does not include any parent of such grandchildren, great grandchildren, great nieces, great nephews, or great great grandchildren. Such term includes any such grandchildren, great grandchildren, great nieces, great nephews, or great great grandchildren who have been legally adopted by such elderly person. (b) Homeownership Housing that is for homeownership shall qual- ify as affordable housing under this subchapter only if the housing— (1) has an initial purchase price that does not exceed 95 percent of the median purchase price for the area, as determined by the Sec- retary with such adjustments for differences in structure, including whether the housing is single-family or multifamily, and for new and old housing as the Secretary determines to be appropriate; (2) is the principal residence of an owner whose family qualifies as a low-income fam- ily— (A) in the case of a contract to purchase existing housing, at the time of purchase; (B) in the case of a lease-purchase agree- ment for existing housing or for housing to be constructed, at the time the agreement is signed; or (C) in the case of a contract to purchase housing to be constructed, at the time the contract is signed; (3) is subject to resale restrictions that are established by the participating jurisdiction and determined by the Secretary to be appro- priate to— (A) allow for subsequent purchase of the property only by persons who meet the qualifications specified under paragraph (2), at a price which will— (i) provide the owner with a fair return on investment, including any improve- ments, and (ii) ensure that the housing will remain affordable to a reasonable range of low-in- come homebuyers; or (B) recapture the investment provided under this subchapter in order to assist other persons in accordance with the re- quirements of this subchapter, except where there are no net proceeds or where the net proceeds are insufficient to repay the full amount of the assistance; and (4) if newly constructed, meets the energy efficiency standards promulgated by the Sec- retary in accordance with section 12709 of this title. (Pub. L. 101–625, title II, § 215, Nov. 28, 1990, 104 Stat. 4101; Pub. L. 102–550, title II, §§ 208, 209, Oct. 28, 1992, 106 Stat. 3754; Pub. L. 103–233, title II, § 203, Apr. 11, 1994, 108 Stat. 364; Pub. L. 105–276, title V, § 599B(b), Oct. 21, 1998, 112 Stat. 2660; Pub. L. 106–569, title IX, § 904, Dec. 27, 2000, 114 Stat. 3027.) Editorial Notes REFERENCES IN TEXT This Act, referred to in subsec. (a)(1)(E), (3), is Pub. L. 101–625, Nov. 28, 1990, 104 Stat. 4079, known as the Cranston-Gonzalez National Affordable Housing Act. For complete classification of this Act to the Code, see Short Title note set out under section 12701 of this title and Tables. AMENDMENTS 2000—Subsec. (a)(6). Pub. L. 106–569 added par. (6). 1998—Subsec. (b)(2). Pub. L. 105–276 amended par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘is the principal residence of an owner whose family qualifies as a low-income family at the time of pur- chase;’’. 1994—Subsec. (b)(3). Pub. L. 103–233, § 203(a), redesig- nated par. (4) as (3) and struck out former par. (3) which read as follows: ‘‘is made available for initial purchase only to first-time homebuyers;’’. Subsec. (b)(3)(B). Pub. L. 103–233, § 203(b), substituted ‘‘subchapter’’ for ‘‘subsection’’ after ‘‘requirements of this’’. Subsec. (b)(4), (5). Pub. L. 103–233, § 203(a)(2), redesig- nated pars. (4) and (5) as (3) and (4), respectively. 1992—Subsec. (a)(1)(A). Pub. L. 102–550, § 208(a)(1), sub- stituted ‘‘number of bedrooms in the unit’’ for ‘‘smaller and larger families’’. Subsec. (a)(1)(E). Pub. L. 102–550, § 208(b), inserted be- fore semicolon ‘‘, except upon a foreclosure by a lender (or upon other transfer in lieu of foreclosure) if such ac- tion (i) recognizes any contractual or legal rights of public agencies, nonprofit sponsors, or others to take actions that would avoid termination of low-income af- fordability in the case of foreclosure or transfer in lieu of foreclosure, and (ii) is not for the purpose of avoiding low income affordability restrictions, as determined by the Secretary’’. Subsec. (a)(3). Pub. L. 102–550, § 208(a)(2), (3), sub- stituted ‘‘the lesser of the amount payable by the ten- ant under State or local law or’’ for ‘‘not less than’’ in second sentence and inserted at end ‘‘The preceding sentence shall not apply with respect to funds made available under this Act for units that have been allo- cated a low-income housing tax credit by a housing credit agency pursuant to section 42 of title 26.’’ Subsec. (b)(4). Pub. L. 102–550, § 209, added par. (4) and struck out former par. (4) which read as follows: ‘‘is made available for subsequent purchase only— ‘‘(A) to persons who meet the qualifications speci- fied under paragraph (2), and ‘‘(B) at a price consistent with guidelines that are established by the participating jurisdiction and de- termined by the Secretary to be appropriate— ‘‘(i) to provide the owner with a fair return on in- vestment, including any improvements, and ‘‘(ii) to ensure that the housing will remain af- fordable to a reasonable range of low income home- buyers; and’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–276 made on, and applica- ble beginning upon, Oct. 21, 1998, see section 599B(c) of Pub. L. 105–276, set out as a note under section 12744 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–233 applicable with re- spect to any amounts made available to carry out this subchapter after Apr. 11, 1994, and any amounts made available to carry out this subchapter before that date that remain uncommitted on that date, with Secretary to issue any regulations necessary to carry out such amendment not later than end of 45-day period begin- ning on that date, see section 209 of Pub. L. 103–233, set out as a note under section 5301 of this title. Page 8460 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12746 EFFECTIVE DATE OF 1992 AMENDMENT Amendment by Pub. L. 102–550 applicable to unex- pended funds allocated under subchapter II of this chapter in fiscal year 1992, except as otherwise specifi- cally provided, see section 223 of Pub. L. 102–550, set out as a note under section 12704 of this title. HOME INVESTMENT PARTNERSHIPS PROGRAM Pub. L. 114–113, div. L, title II, Dec. 18, 2015, 129 Stat. 2878, provided in part: ‘‘That with respect to funds made available under this heading [HOME INVESTMENT PARTNERSHIPS PROGRAM, see 129 Stat. 2878] pursuant to such Act [probably means title II of Pub. L. 101–625] and funds provided in prior and subsequent appropriations acts that were or are used by community land trusts for the development of affordable homeownership hous- ing pursuant to section 215(b) of such Act [42 U.S.C. 12745(b)], such community land trusts, notwithstanding section 215(b)(3)(A) of such Act [42 U.S.C. 12745(b)(3)(A)], may hold and exercise purchase options, rights of first refusal or other preemptive rights to purchase the housing to preserve affordability, including but not limited to the right to purchase the housing in lieu of foreclosure’’. § 12746. Participation by States and local govern- ments The Secretary shall designate a State or unit of general local government to be a partici- pating jurisdiction when it complies with proce- dures that the Secretary shall establish by regu- lation, which procedures shall only provide for the following: (1) Allocation Not later than 20 days after funds to carry out this part become available (or, during the first year after November 28, 1990, not later than 20 days after (A) funds to carry out this part are provided in an appropriations Act, or (B) regulations to implement this part are pro- mulgated, whichever is later), the Secretary shall allocate funds in accordance with section 12747 of this title and promptly notify each ju- risdiction receiving a formula allocation of its allocation amount. If a jurisdiction is not al- ready a participating jurisdiction, the Sec- retary shall inform the jurisdiction in writing how the jurisdiction may become a partici- pating jurisdiction. (2) Consortia A consortium of geographically contiguous units of general local government shall be deemed to be a unit of general local govern- ment for purposes of this subchapter if the Secretary determines that the consortium— (A) has sufficient authority and adminis- trative capability to carry out the purposes of this subchapter on behalf of its member jurisdictions, and (B) will, according to a written certifi- cation by the State (or States, if the consor- tium includes jurisdictions in more than one State), direct its activities to alleviation of housing problems within the State or States. (3) Eligibility (A) Except as provided in paragraph (10), a jurisdiction receiving a formula allocation under section 12747 of this title shall be eligi- ble to become a participating jurisdiction if its formula allocation is $750,000 or greater, or if the Secretary finds that— (i) the jurisdiction has a local housing au- thority and has demonstrated a capacity to carry out provisions of this part, and (ii) the State has authorized the Secretary to transfer to the jurisdiction a portion of the State’s allocation that is equal to or greater than the difference between the ju- risdiction’s formula allocation and $750,000, or the State or jurisdiction has made avail- able from the State’s or jurisdiction’s own sources an equal amount for use by the juris- diction in conformance with the provisions of this part. (B) If a jurisdiction has met the require- ments of subparagraph (A), the jurisdiction’s formula allocation for a fiscal year shall sub- sequently be deemed to equal the sum of the jurisdiction’s allocation under section 12747(a)(1) of this title and the amount made available to the jurisdiction under subpara- graph (A)(ii). (4) Notification If an eligible jurisdiction notifies the Sec- retary in writing, not later than 30 days after receiving notification under paragraph (1), of its intention to become a participating juris- diction, the Secretary shall reserve an amount equal to the jurisdiction’s allocation (plus any reallocations for which the jurisdiction is eli- gible under section 12747(d)(1) of this title) pending the jurisdiction’s designation as a participating jurisdiction. The Secretary shall reallocate, in accordance with paragraph (6) of this section, any funds reserved under the pre- vious sentence if the Secretary determines that the jurisdiction will not meet the re- quirements for designation as a participating jurisdiction within a reasonable period of time. (5) Submission of strategy Not later than 90 days after providing notifi- cation under paragraph (4), an eligible juris- diction shall submit to the Secretary a com- prehensive housing affordability strategy in accordance with section 12705 of this title. (6) Reallocation If the Secretary determines that a jurisdic- tion has failed to meet the requirements of the previous 3 paragraphs or if the Secretary, after providing for amendments and resubmissions in accordance with section 12705(c)(3) of this title, disapproves the jurisdiction’s com- prehensive housing affordability strategy, the Secretary shall reallocate any funds reserved for the jurisdiction as follows: (A) State If a State has failed to meet the require- ments, the Secretary shall— (i) make any funds reserved for the State available by direct reallocation among ap- plications submitted by units of general local government within the State or con- sortia that include units of general local government within the State, insofar as approvable applications meeting the selec- tion criteria under section 12747(c) of this title are received within 12 months after the funds become available for the direct reallocation, and