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 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 acquisi- tion 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 re- habilitation pursuant to a capital needs as- sessment 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 financ- ing, commercially reasonable debt service cov- erage, 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 refi- nancing 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 re- quired 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 oper- ating costs for a project. (Pub. L. 100–242, title II, § 214, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4251; amended Pub. L. 114–94, div. G, title LXXVII, § 77002, Dec. 4, 2015, 129 Stat. 1790.) Editorial Notes AMENDMENTS 2015—Subsec. (c). Pub. L. 114–94 added subsec. (c). Statutory Notes and Related Subsidiaries IMPLEMENTATION Pub. L. 114–94, div. G, title LXXVII, § 77003, Dec. 4, 2015, 129 Stat. 1791, provided that: ‘‘The Secretary of Housing and Urban Development shall issue any guid- ance that the Secretary considers necessary to carry out the provisions added by the amendments made by this title [amending this section and section 4112 of this title] not later than the expiration of the 120-day period beginning on the date of the enactment of this Act [Dec. 4, 2015].’’ § 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, the Secretary shall determine whether the ag- gregate preservation rents for the project de- termined under paragraph (1) or (2) of section 4104(b) of this title exceed the amount deter- mined by multiplying 120 percent of the fair market rental (established under section 1437f(c) of title 42) for the market area in which the housing is located by the number of dwelling units in the project (according to ap- propriate unit sizes). (2) Relevant local markets If the aggregate preservation rents for a project exceeds the amount determined under