12 U.S.C. § 4111 — Mandatory sale for housing exceeding

Page 1603 TITLE 12—BANKS AND BANKING § 4111 such longer period if additional assistance is necessary to cover the costs referred to in paragraph (2)). (Pub. L. 100–242, title II, § 220, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4257; amended Pub. L. 102–550, title III, § 307, Oct. 28, 1992, 106 Stat. 3764.) Editorial Notes REFERENCES IN TEXT This title, referred to in subsec. (d)(2)(E), means title II of Pub. L. 100–242, as amended by Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4249, known as the Low-Income Housing Preservation and Resident Homeownership Act of 1990, which is classified prin- cipally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 4101 of this title and Tables. Section 1715z–6(f) of this title, referred to in subsec. (d)(3)(A), was repealed by Pub. L. 104–204, title II, Sept. 26, 1996, 110 Stat. 2885. AMENDMENTS 1992—Subsec. (d)(2). Pub. L. 102–550, § 307(a), inserted ‘‘(including all priority purchasers other than resident councils acquiring under the homeownership program authorized by section 4116 of this title)’’ after ‘‘pur- chasers’’. Subsec. (d)(2)(D). Pub. L. 102–550, § 307(b), inserted be- fore semicolon at end ‘‘, and in the case of a priority purchaser, meet project oversight costs’’. Subsec. (d)(2)(E), (F). Pub. L. 102–550, § 307(c), (d), amended subpars. (E) and (F) generally. Prior to amendment, subpars. (E) and (F) read as follows: ‘‘(E) receive an adequate return (as determined by the Secretary) on any actual cash investment made to ac- quire the project; ‘‘(F) in the case of a priority purchaser, receive an adequate reimbursement for transaction expenses re- lating to acquisition of the housing, subject to approval by the Secretary; and’’. Subsec. (d)(3)(A). Pub. L. 102–550, § 307(e), struck out ‘‘any residual receipts for the housing transfered [sic] to the selling owner shall be deducted from the sale price of the housing under subsection (b) or (c) of this section and’’ after ‘‘except that’’. § 4111. Mandatory sale for housing exceeding Federal cost limits (a) In general With respect to any eligible low-income hous- ing for which the aggregate preservation rents determined under section 4104(b) of this title ex- ceed the Federal cost limit, the owner shall offer the housing for sale to qualified purchasers as provided in this section. (b) Right of first refusal to priority purchasers (1) Duration and required sale For the 12-month period beginning upon the receipt by the Secretary of the second notice of intent under section 4106(d) of this title with respect to such housing, the owner of the housing may offer to sell and may sell the housing only to priority purchasers. If, during such period, a priority purchaser makes a bona fide offer to purchase the housing for a sale price not less than the preservation value of the housing determined under section 4103(b)(2) of this title, the Secretary shall re- quire the owner to sell the housing pursuant to such offer. (2) Expression of interest During the period under paragraph (1), pri- ority purchasers shall have the opportunity to submit written notice to the owner and the Secretary stating their interest in acquiring the housing. Such written notice shall be in such form and include such information as the Secretary may prescribe. (3) Information from Secretary Not later than 30 days after receipt of any notice under paragraph (2), the Secretary shall provide such purchaser with information on the assistance available from the Federal Gov- ernment to facilitate a transfer and the owner shall provide such purchaser with appropriate information on the housing, as determined by the Secretary. (c) Right of refusal for other qualified pur- chasers If no bona fide offer to purchase any eligible low-income housing subject to this section that meets the requirements of subsection (b) is made during the period under such subsection, during the 3-month period beginning upon the expiration of the 12-month period under sub- section (b)(1), the owner of the housing may offer to sell and may sell the housing only to qualified purchasers. If, during such period, a qualified purchaser makes a bona fide offer to purchase the housing for a sale price not less than the preservation value of the housing de- termined under section 4103(b)(2) of this title, the Secretary shall require the owner to sell the housing pursuant to such offer. (d) Assistance (1) Federal cost limit Subject to the availability of amounts ap- proved in appropriations Acts, the Secretary shall, for approvable plans of action, provide to qualified purchasers assistance under sec- tion 1437f of title 42 sufficient to produce a gross income potential equal to 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 appropriate unit sizes), and any other incen- tives authorized under section 4109(b) of this title that would have been provided to a quali- fied purchaser under section 4110 of this title. (2) Additional assistance From amounts made available under section 4124(b) of this title, the Secretary may make grants to assist in the completion of sales and transfers under this section to any qualified purchasers. Any grant under this paragraph shall be in an amount not exceeding the dif- ference between the preservation value for the housing (determined under section 4103(b)(2) of this title) and the level of assistance under paragraph (1) of this subsection. (3) Securing State and local funding The Secretary shall assist any qualified pur- chaser of such housing in securing funding and other assistance (including tax and assessment reductions) from State and local governments to facilitate a sale under this section. (Pub. L. 100–242, title II, § 221, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4259; amended Pub. L. 102–550, title III, § 317(a)(3), Oct. 28, 1992, 106 Stat. 3772.) Page 1604 TITLE 12—BANKS AND BANKING § 4112 1 See References in Text note below. 2 So in original. The word ‘‘and’’ probably should not appear. Editorial Notes AMENDMENTS 1992—Subsec. (c). Pub. L. 102–550 substituted ‘‘than’’ for ‘‘that’’ before ‘‘the preservation’’. § 4112. Criteria for approval of plan of action in- volving incentives (a) In general The Secretary may approve a plan of action for extension of the low-income affordability re- strictions 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 Fed- eral Government, the least costly alternative that is consistent with the full achievement of the purposes of this title; 1 (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 de- termined under subsection (c)); (B) throughout such period, adequate ex- penditures 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 de- termined by inspections conducted under such subsection by the Secretary; (C) current tenants will not be involun- tarily 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 estab- lished under section 1437f(c) of title 42, whichever is lower, except that the rent con- tributions 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. 1437f] assistance in ac- cordance with subparagraph (E)(ii) of this paragraph); (E)(i) any resulting increase in rents for current tenants (except for increases made necessary by increased operating costs)— (I) shall be phased in equally over a pe- riod of not less than 3 years, if such in- crease is 30 percent or more; and (II) shall be limited to not more than 10 percent per year if such increase is more than 10 percent but less than 30 percent; and (ii) assistance under section 1437f of title 42 shall be provided, to the extent available under appropriation Acts, if necessary to mitigate any adverse effect on current in- come-eligible very low- and low-income ten- ants; and 2 (F)(i) rents for units becoming available to new tenants shall be at levels approved by the Secretary that will ensure, to the extent practicable, that the units will be available and affordable to the same proportions of very low-income families or persons, low-in- come families or persons, and moderate-in- come families or persons (including families or persons whose incomes are 95 percent or more of area median income) as resided in the housing as of January 1, 1987 (based on the area median income limits established by the Secretary in February 1987), or the date the plan of action is approved, which- ever date results in the highest proportion of very low-income families, except that this limitation shall not prohibit a higher pro- portion of very low-income families from oc- cupying the housing; and (ii) in approving rents under this para- graph, the Secretary shall take into account any additional incentives provided under this subchapter; (G) future rent adjustments shall be— (i) made by applying an annual factor (to be determined by the Secretary) to the portion of rent attributable to operating expenses for the housing and, where the owner is a priority purchaser, to the por- tion of rent attributable to project over- sight costs; and (ii) subject to a procedure, established by the Secretary, for owners to apply for rent increases not adequately compensated by annual adjustment under clause (i), under which the Secretary may increase rents in excess of the amount determined under clause (i) only if the Secretary determines such increases are necessary to reflect ex- traordinary necessary expenses of owning and maintaining the housing; and (H) any savings from reductions in oper- ating expenses due to management effi- ciencies shall be deposited in project re- serves for replacement and the owner shall have periodic access to such reserves, to the extent the Secretary determines that the level of reserves is adequate and that the housing is maintained in accordance with the standards established under subsection (d); and (3) no incentives under section 4109 of this title (other than to purchasers under section 4110 of this title) may be provided until the Secretary determines the project meets hous- ing standards under subsection (d), except that incentives under such section and other incen- tives designed to correct deficiencies in the project may be provided. (b) Implementation Any agreement to maintain the low-income affordability restrictions for the remaining use- ful life of the housing may be made through exe- cution of a new regulatory agreement, modifica- tions to the existing regulatory agreement or mortgage, or, in the case of the prepayment of a mortgage or voluntary termination of mortgage insurance, a recorded instrument.