1. “(1)
   upon the enactment of this Act, if the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 2001 [H.R. 5482, as enacted by section 1(a)(1) of Pub. L. 106–377], is enacted before the enactment of this Act; and
2. “(2)
   immediately after the enactment of such appropriations Act, if such appropriations Act is enacted after the enactment of this Act.”

1. “(1)
   upon the enactment of this Act, if the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 2001 [H.R. 5482, as enacted by section 1(a)(1) of Pub. L. 106–377], is enacted before the enactment of this Act; and
2. “(2)
   immediately after the enactment of such appropriations Act, if such appropriations Act is enacted after the enactment of this Act.”

1. “(1)
   with respect to any funds obligated for a viable project under section 8 of the United States Housing Act of 1937 [this section] prior to January 1, 1984; and
2. “(2)
   with respect to any project financed under section 202 of the Housing Act of 1959 [12 U.S.C. 1701q].”

1. “(a)

   Interim Regulations.—

   The Secretary of Housing and Urban Development shall issue such interim regulations as may be necessary to implement the amendments made by this subtitle [subtitle C (§§ 545–559) of title V of Pub. L. 105–276, see Tables for classification] and other provisions in this title [see Tables for classification] which relate to section 8(o) of the United States Housing Act of 1937 [42 U.S.C. 1437f(o)].
2. “(b)

   Final Regulations.—

   The Secretary shall issue final regulations necessary to implement the amendments made by this subtitle and other provisions in this title which relate to section 8(o) of the United States Housing Act of 1937 [42 U.S.C. 1437f(o)] not later then 1 year after the date of the enactment of this Act [Oct. 21, 1998].
3. “(c)

   Factors For Consideration.—

   Before the publication of the final regulations under subsection (b), in addition to public comments invited in connection with the publication of the interim rule, the Secretary shall—

   1. “(1)

      seek recommendations on the implementation of sections 8(o)(6)(B), 8(o)(7)(B), and 8(o)(10)(D) of the United States Housing Act of 1937 [42 U.S.C. 1437f(o)(6)(B), (7)(B), (10)(D)] and of renewals of expiring tenant-based assistance from organizations representing—

      1. “(A)
         State or local public housing agencies;
      2. “(B)
         owners and managers of tenant-based housing assisted under section 8 of the United States Housing Act of 1937;
      3. “(C)
         families receiving tenant-based assistance under section 8 of the United States Housing Act of 1937; and
      4. “(D)
         legal service organizations; and
   2. “(2)
      convene not less than 2 public forums at which the persons or organizations making recommendations under paragraph (1) may express views concerning the proposed disposition of the recommendations.
4. “(d)

   Conversion Assistance.—

   1. “(1)

      In general.—

      The Secretary may provide for the conversion of assistance under the certificate and voucher programs under subsections (b) and (o) of section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f(b), (o)], as in effect before the applicability of the amendments made by this subtitle, to the voucher program established by the amendments made by this subtitle.
   2. “(2)

      Continued applicability.—

      The Secretary may apply the provisions of the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.], or any other provision of law amended by this subtitle, as those provisions were in effect immediately before the date of the enactment of this Act [Oct. 21, 1998] (except that such provisions shall be subject to any amendments to such provisions that may be contained in title II of this Act [see Tables for classification]), to assistance obligated by the Secretary before October 1, 1999, for the certificate or voucher program under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f], if the Secretary determines that such action is necessary for simplification of program administration, avoidance of hardship, or other good cause.
5. “(e)

   Effective Date.—

   This section shall take effect on the date of the enactment of this Act [Oct. 21, 1998].”

1. “(a)

   Authority.—

   The Secretary of Housing and Urban Development (in this section referred to as the ‘Secretary’) may carry out a mobility demonstration program to enable public housing agencies to administer housing choice voucher assistance under section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)) in a manner designed to encourage families receiving such voucher assistance to move to lower-poverty areas and expand access to opportunity areas.
2. “(b)

   Selection of PHAs.—

   1. “(1)

      Requirements.—

      The Secretary shall establish requirements for public housing agencies to participate in the demonstration program under this section, which shall provide that the following public housing agencies may participate:

      1. “(A)

         Public housing agencies that together—

         1. “(i)
            serve areas with high concentrations of holders of rental assistance vouchers under section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)) in poor, low-opportunity neighborhoods; and
         2. “(ii)
            have an adequate number of moderately priced rental units in higher-opportunity areas.
      2. “(B)

         Planned consortia or partial consortia of public housing agencies that—

         1. “(i)
            include at least one agency with a high-performing Family Self-Sufficiency (FSS) program; and
         2. “(ii)
            will enable participating families to continue in such program if they relocate to the jurisdiction served by any other agency of the consortium.
      3. “(C)

         Planned consortia or partial consortia of public housing agencies that—

         1. “(i)
            serve jurisdictions within a single region;
         2. “(ii)
            include one or more small agencies; and
         3. “(iii)
            will consolidate mobility focused operations.
      4. “(D)
         Such other public housing agencies as the Secretary considers appropriate.
   2. “(2)

      Selection criteria.—

      The Secretary shall establish competitive selection criteria for public housing agencies eligible under paragraph (1) to participate in the demonstration program under this section.
   3. “(3)

      Random selection of families.—

      The Secretary may require participating agencies to use a randomized selection process to select among the families eligible to receive mobility assistance under the demonstration program.
3. “(c)

   Regional Housing Mobility Plan.—

   The Secretary shall require each public housing agency applying to participate in the demonstration program under this section to submit a Regional Housing Mobility Plan (in this section referred to as a ‘Plan’), which shall—

   1. “(1)
      identify the public housing agencies that will participate under the Plan and the number of vouchers each participating agency will make available out of their existing programs in connection with the demonstration;
   2. “(2)
      identify any community-based organizations, nonprofit organizations, businesses, and other entities that will participate under the Plan and describe the commitments for such participation made by each such entity;
   3. “(3)
      identify any waivers or alternative requirements under subparagraph (e) requested for the execution of the Plan;
   4. “(4)
      identify any specific actions that the public housing agencies and other entities will undertake to accomplish the goals of the demonstration, which shall include a comprehensive approach to enable a successful transition to opportunity areas and may include counseling and continued support for families;
   5. “(5)
      specify the criteria that the public housing agencies would use to identify opportunity areas under the plan;
   6. “(6)
      provide for establishment of priority and preferences for participating families, including a preference for families with young children, as such term is defined by the Secretary, based on regional housing needs and priorities; and
   7. “(7)
      comply with any other requirements established by the Secretary.
4. “(d)

   Funding for Mobility-Related Services.—

   1. “(1)

      Use of administrative fees.—

      Public housing agencies participating in the demonstration program under this section may use administrative fees under section 8(q) of the United States Housing Act of 1937 (42 U.S.C. 1437f(q)), their administrative fee reserves, and funding from private entities to provide mobility-related services in connection with the demonstration program, including services such as counseling, portability coordination, landlord outreach, security deposits, and administrative activities associated with establishing and operating regional mobility programs.
   2. “(2)

      Use of housing assistance funds.—

      Public housing agencies participating in the demonstration under this section may use housing assistance payments funds under section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)) for security deposits if necessary to enable families to lease units with vouchers in designated opportunity areas.
5. “(e)

   Waivers; Alternative Requirements.—

   1. “(1)

      Waivers.—

      To allow for public housing agencies to implement and administer their Regional Housing Mobility Plans, the Secretary may waive or specify alternative requirements for the following provisions of the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.]:

      1. “(A)
         Sections 8(o)(7)(A) [42 U.S.C. 1437f (o)(7)(A)] and 8(o)(13)(E)(i)[42 U.S.C. 1437f (o)(13)(E)(i)] (relating to the term of a lease and mobility requirements).
      2. “(B)
         Section 8(o)(13)(C)(i) [42 U.S.C. 1437f (o)(13)(C)(i)](relating to the public housing plan for an agency).
      3. “(C)
         Section 8(r)(2) [42 U.S.C. 1437f(r)(2)] (relating to the responsibility of a public housing agency to administer ported assistance).
   2. “(2)

      Alternative requirements for consortia.—

      The Secretary shall provide alternative administrative requirements for public housing agencies in a selected region to—

      1. “(A)
         form a consortium that has a single housing choice voucher funding contract; or
      2. “(B)
         enter into a partial consortium to operate all or portions of the Regional Housing Mobility Plan, which may include agencies participating in the Moving To Work Demonstration program.
   3. “(3)

      Effective date.—

      Any waiver or alternative requirements pursuant to this subsection shall not take effect before the expiration of the 10-day period beginning upon publication of notice of such waiver or alternative requirement in the Federal Register.
6. “(f)

   Implementation.—

   The Secretary may implement the demonstration, including its terms, procedures, requirements, and conditions, by notice.
7. “(g)

   Evaluation.—

   Not later than five years after implementation of the regional housing mobility programs under the demonstration program under this section, the Secretary shall submit to the Congress and publish in the Federal Register a report evaluating the effectiveness of the strategies pursued under the demonstration, subject to the availability of funding to conduct the evaluation. Through official websites and other methods, the Secretary shall disseminate interim findings as they become available, and shall, if promising strategies are identified, notify the Congress of the amount of funds that would be required to expand the testing of these strategies in additional types of public housing agencies and housing markets.
8. “(h)

   Termination.—

   The demonstration program under this section shall terminate on October 1, 2028.”

1. “(a)

   In General.—

   Notwithstanding any other provision of law, the Secretary may, at the request of an owner of a multifamily housing project that exceeds 5,000 units to which a contract for project-based rental assistance under section 8 of the United States Housing Act of 1937 (‘Act’) (42 U.S.C. 1437f) and a Rental Assistance Payment contract is subject, convert such contracts to a contract for project-based rental assistance under section 8 of the Act.
2. “(b)

   Initial Renewal.—

   1. “(1)
      At the request of an owner under subsection (a) made no later than 90 days prior to a conversion, the Secretary may, to the extent sufficient amounts are made available in appropriation Acts and notwithstanding any other law, treat the contemplated resulting contract as if such contract were eligible for initial renewal under section 524(a) of the MultiFamily Assisted Housing Reform and Affordability Act of 1997 [Pub. L. 105–65] (42 U.S.C. 1437f note) (‘MAHRA’) (42 U.S.C. 1437f note).
   2. “(2)
      A request by an owner pursuant to paragraph (1) shall be upon such terms and conditions as the Secretary may require.
3. “(c)

   Resulting Contract.—

   The resulting contract shall—

   1. “(1)
      be subject to section 524(a) of MAHRA [Pub. L. 105–65] (42 U.S.C. 1437f note);
   2. “(2)
      be considered for all purposes a contract that has been renewed under section 524(a) of MAHRA (42 U.S.C. 1437f note) for a term not to exceed 20 years;
   3. “(3)
      be subsequently renewable at the request of an owner, under any renewal option for which the project is eligible under MAHRA (42 U.S.C. 1437f note);
   4. “(4)
      contain provisions limiting distributions, as the Secretary determines appropriate, not to exceed 10 percent of the initial investment of the owner;
   5. “(5)
      be subject to the availability of sufficient amounts in appropriation Acts; and
   6. “(6)
      be subject to such other terms and conditions as the Secretary considers appropriate.
4. “(d)

   Income Targeting.—

   To the extent that assisted dwelling units, subject to the resulting contract under subsection (a), serve low-income families, as defined in section 3(b)(2) of the Act (42 U.S.C. 1437a(b)(2)) the units shall be considered to be in compliance with all income targeting requirements under the Act (42 U.S.C. 1437 et seq[.]).
5. “(e)

   Tenant Eligibility.—

   Notwithstanding any other provision of law, each family residing in an assisted dwelling unit on the date of conversion of a contract under this section, subject to the resulting contract under subsection (a), shall be considered to meet the applicable requirements for income eligibility and occupancy.
6. “(f)

   Definitions.—

   As used in this section—

   1. “(1)
      the term ‘Secretary’ means the Secretary of Housing and Urban Development;
   2. “(2)
      the term ‘conversion’ means the action under which a contract for project-based rental assistance under section 8 of the Act [42 U.S.C. 1437f] and a Rental Assistance Payment contract become a contract for project-based rental assistance under section 8 of the Act (42 U.S.C. 1437f) pursuant to subsection (a);
   3. “(3)
      the term ‘resulting contract’ means the new contract after a conversion pursuant to subsection (a); and
   4. “(4)
      the term ‘assisted dwelling unit’ means a dwelling unit in a multifamily housing project that exceeds 5,000 units that, on the date of conversion of a contract under this section, is subject to a contract for project-based rental assistance under section 8 of the Act (42 U.S.C. 1437f) or a Rental Assistance Payment contract.”

1. “(1)
   to continue the progress of the Multifamily Assisted Housing Reform and Affordability Act of 1997 [title V of Pub. L. 105–65, see Short Title of 1997 Amendment note set out under section 1701 of Title 12, Banks and Banking] (referred to in this section as ‘that Act’);
2. “(2)
   to ensure that properties that undergo mortgage restructurings pursuant to that Act are rehabilitated to a standard that allows the properties to meet their long-term affordability requirements;
3. “(3)
   to ensure that, for properties that undergo mortgage restructurings pursuant to that Act, reserves are set at adequate levels to allow the properties to meet their long-term affordability requirements;
4. “(4)
   to ensure that properties that undergo mortgage restructurings pursuant to that Act are operated efficiently, and that operating expenses are sufficient to ensure the long-term financial and physical integrity of the properties;
5. “(5)
   to ensure that properties that undergo rent restructurings have adequate resources to maintain the properties in good condition;
6. “(6)
   to ensure that the Office of Multifamily Housing Assistance Restructuring of the Department of Housing and Urban Development continues to focus on the portfolio of properties eligible for restructuring under that Act;
7. “(7)
   to ensure that the Department of Housing and Urban Development carefully tracks the condition of those properties on an ongoing basis;
8. “(8)
   to ensure that tenant groups, nonprofit organizations, and public entities continue to have the resources for building the capacity of tenant organizations in furtherance of the purposes of subtitle A of that Act [subtitle A of title V of Pub. L. 105–65, set out in a note below]; and
9. “(9)
   to encourage the Office of Multifamily Housing Assistance Restructuring to continue to provide participating administrative entities, including public participating administrative entities, with the flexibility to respond to specific problems that individual cases may present, while ensuring consistent outcomes around the country.”

1. “(1)

   In general.—

   With the consent of the affected public housing agencies, the Secretary may carry out (or contract with 1 or more entities to carry out) a demonstration program under section 8(y) of the United States Housing Act of 1937 (42 U.S.C. 1437f(y)) to expand homeownership opportunities for low-income families.
2. “(2)

   Report.—

   The Secretary shall report annually to Congress on activities conducted under this subsection.”

1. “(a)

   Findings.—

   Congress finds that—

   1. “(1)
      there exists throughout the Nation a need for decent, safe, and affordable housing;
   2. “(2)

      as of the date of enactment of this Act [Oct. 27, 1997], it is estimated that—

      1. “(A)
         the insured multifamily housing portfolio of the Federal Housing Administration consists of 14,000 rental properties, with an aggregate unpaid principal mortgage balance of $38,000,000,000; and
      2. “(B)
         approximately 10,000 of these properties contain housing units that are assisted with project-based rental assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f];
   3. “(3)
      FHA-insured multifamily rental properties are a major Federal investment, providing affordable rental housing to an estimated 2,000,000 low- and very low-income families;
   4. “(4)
      approximately 1,600,000 of these families live in dwelling units that are assisted with project-based rental assistance under section 8 of the United States Housing Act of 1937;
   5. “(5)
      a substantial number of housing units receiving project-based assistance have rents that are higher than the rents of comparable, unassisted rental units in the same housing rental market;
   6. “(6)
      many of the contracts for project-based assistance will expire during the several years following the date of enactment of this Act;
   7. “(7)

      it is estimated that—

      1. “(A)
         if no changes in the terms and conditions of the contracts for project-based assistance are made before fiscal year 2000, the cost of renewing all expiring rental assistance contracts under section 8 of the United States Housing Act of 1937 for both project-based and tenant-based rental assistance will increase from approximately $3,600,000,000 in fiscal year 1997 to over $14,300,000,000 by fiscal year 2000 and some $22,400,000,000 in fiscal year 2006;
      2. “(B)
         of those renewal amounts, the cost of renewing project-based assistance will increase from $1,200,000,000 in fiscal year 1997 to almost $7,400,000,000 by fiscal year 2006; and
      3. “(C)
         without changes in the manner in which project-based rental assistance is provided, renewals of expiring contracts for project-based rental assistance will require an increasingly larger portion of the discretionary budget authority of the Department of Housing and Urban Development in each subsequent fiscal year for the foreseeable future;
   8. “(8)
      absent new budget authority for the renewal of expiring rental contracts for project-based assistance, many of the FHA-insured multifamily housing projects that are assisted with project-based assistance are likely to default on their FHA-insured mortgage payments, resulting in substantial claims to the FHA General Insurance Fund and Special Risk Insurance Fund;
   9. “(9)
      more than 15 percent of federally assisted multifamily housing projects are physically or financially distressed, including a number which suffer from mismanagement;
   10. “(10)
       due to Federal budget constraints, the downsizing of the Department of Housing and Urban Development, and diminished administrative capacity, the Department lacks the ability to ensure the continued economic and physical well-being of the stock of federally insured and assisted multifamily housing projects;
   11. “(11)

       the economic, physical, and management problems facing the stock of federally insured and assisted multifamily housing projects will be best served by reforms that—

       1. “(A)
          reduce the cost of Federal rental assistance, including project-based assistance, to these projects by reducing the debt service and operating costs of these projects while retaining the low-income affordability and availability of this housing;
       2. “(B)
          address physical and economic distress of this housing and the failure of some project managers and owners of projects to comply with management and ownership rules and requirements; and
       3. “(C)
          transfer and share many of the loan and contract administration functions and responsibilities of the Secretary to and with capable State, local, and other entities; and
   12. “(12)
       the authority and duties of the Secretary, not including the control by the Secretary of applicable accounts in the Treasury of the United States, may be delegated to State, local or other entities at the discretion of the Secretary, to the extent the Secretary determines, and for the purpose of carrying out this title [see Short Title of 1997 Amendment note set out under section 1701 of Title 12, Banks and Banking], so that the Secretary has the discretion to be relieved of processing and approving any document or action required by these reforms.
2. “(b)

   Purposes.—

   Consistent with the purposes and requirements of the Government Performance and Results Act of 1993 [Pub. L. 103–62, see Short Title of 1993 Amendment note set out under section 1101 of Title 31, Money and Finance], the purposes of this subtitle are—

   1. “(1)
      to preserve low-income rental housing affordability and availability while reducing the long-term costs of project-based assistance;
   2. “(2)
      to reform the design and operation of Federal rental housing assistance programs, administered by the Secretary, to promote greater multifamily housing project operating and cost efficiencies;
   3. “(3)
      to encourage owners of eligible multifamily housing projects to restructure their FHA-insured mortgages and project-based assistance contracts in a manner that is consistent with this subtitle before the year in which the contract expires;
   4. “(4)
      to reduce the cost of insurance claims under the National Housing Act [12 U.S.C. 1701 et seq.] related to mortgages insured by the Secretary and used to finance eligible multifamily housing projects;
   5. “(5)
      to streamline and improve federally insured and assisted multifamily housing project oversight and administration;
   6. “(6)
      to resolve the problems affecting financially and physically troubled federally insured and assisted multifamily housing projects through cooperation with residents, owners, State and local governments, and other interested entities and individuals;
   7. “(7)
      to protect the interest of project owners and managers, because they are partners of the Federal Government in meeting the affordable housing needs of the Nation through the section 8 rental housing assistance program;
   8. “(8)
      to protect the interest of tenants residing in the multifamily housing projects at the time of the restructuring for the housing; and
   9. “(9)
      to grant additional enforcement tools to use against those who violate agreements and program requirements, in order to ensure that the public interest is safeguarded and that Federal multifamily housing programs serve their intended purposes.

“In this subtitle:

1. “(1)

   Comparable properties.—

   The term ‘comparable properties’ means properties in the same market areas, where practicable, that—

   1. “(A)
      are similar to the eligible multifamily housing project as to neighborhood (including risk of crime), type of location, access, street appeal, age, property size, apartment mix, physical configuration, property and unit amenities, utilities, and other relevant characteristics; and
   2. “(B)
      are not receiving project-based assistance.
2. “(2)

   Eligible multifamily housing project.—

   The term ‘eligible multifamily housing project’ means a property consisting of more than 4 dwelling units—

   1. “(A)
      with rents that, on an average per unit or per room basis, exceed the rent of comparable properties in the same market area, determined in accordance with guidelines established by the Secretary;
   2. “(B)

      that is covered in whole or in part by a contract for project-based assistance under—

      1. “(i)
         the new construction or substantial rehabilitation program under section 8(b)(2) of the United States Housing Act of 1937 [42 U.S.C. 1437f(b)(2)] (as in effect before October 1, 1983);
      2. “(ii)
         the property disposition program under section 8(b) of the United States Housing Act of 1937;
      3. “(iii)
         the moderate rehabilitation program under section 8(e)(2) of the United States Housing Act of 1937;
      4. “(iv)
         the loan management assistance program under section 8 of the United States Housing Act of 1937;
      5. “(v)
         section 23 of the United States Housing Act of 1937 [42 U.S.C. 1437u] (as in effect before January 1, 1975);
      6. “(vi)
         the rent supplement program under section 101 of the Housing and Urban Development Act of 1965 [12 U.S.C. 1701s]; or
      7. “(vii)
         section 8 of the United States Housing Act of 1937, following conversion from assistance under section 101 of the Housing and Urban Development Act of 1965; and
   3. “(C)
      financed by a mortgage insured or held by the Secretary under the National Housing Act [12 U.S.C. 1701 et seq.].

   Such term does not include any project with an expiring contract described in paragraph (1) or (2) of section 524(e), but does include a project described in section 524(e)(3). Notwithstanding any other provision of this title, the Secretary may treat a project as an eligible multifamily housing project for purposes of this title if (I) the project is assisted pursuant to a contract for project-based assistance under section 8 of the United States Housing Act of 1937 renewed under section 524 of this Act, (II) the owner consents to such treatment, and (III) the project met the requirements of the first sentence of this paragraph for eligibility as an eligible multifamily housing project before the initial renewal of the contract under section 524.
3. “(3)

   Expiring contract.—

   The term ‘expiring contract’ means a project-based assistance contract attached to an eligible multifamily housing project which, under the terms of the contract, will expire.
4. “(4)

   Expiration date.—

   The term ‘expiration date’ means the date on which an expiring contract expires.
5. “(5)

   Fair market rent.—

   The term ‘fair market rent’ means the fair market rental established under section 8(c) of the United States Housing Act of 1937.
6. “(6)

   Low-income families.—

   The term ‘low-income families’ has the same meaning as provided under section 3(b)(2) of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)(2)].
7. “(7)

   Mortgage restructuring and rental assistance sufficiency plan.—

   The term ‘mortgage restructuring and rental assistance sufficiency plan’ means the plan as provided under section 514.
8. “(8)

   Nonprofit organization.—

   The term ‘nonprofit organization’ means any private nonprofit organization that—

   1. “(A)
      is organized under State or local laws;
   2. “(B)
      has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual; and
   3. “(C)
      has a long-term record of service in providing or financing quality affordable housing for low-income families through relationships with public entities.
9. “(9)

   Portfolio restructuring agreement.—

   The term ‘portfolio restructuring agreement’ means the agreement entered into between the Secretary and a participating administrative entity, as provided under section 513.
10. “(10)

    Participating administrative entity.—

    The term ‘participating administrative entity’ means a public agency (including a State housing finance agency or a local housing agency), a nonprofit organization, or any other entity (including a law firm or an accounting firm) or a combination of such entities, that meets the requirements under section 513(b).
11. “(11)

    Project-based assistance.—

    The term ‘project-based assistance’ means rental assistance described in paragraph (2)(B) of this section that is attached to a multifamily housing project.
12. “(12)

    Renewal.—

    The term ‘renewal’ means the replacement of an expiring Federal rental contract with a new contract under section 8 of the United States Housing Act of 1937, consistent with the requirements of this subtitle.
13. “(13)

    Secretary.—

    The term ‘Secretary’ means the Secretary of Housing and Urban Development.
14. “(14)

    State.—

    The term ‘State’ has the same meaning as in section 104 of the Cranston-Gonzalez National Affordable Housing Act [42 U.S.C. 12704].
15. “(15)

    Tenant-based assistance.—

    The term ‘tenant-based assistance’ has the same meaning as in section 8(f) of the United States Housing Act of 1937.
16. “(16)

    Unit of general local government.—

    The term ‘unit of general local government’ has the same meaning as in section 104 of the Cranston-Gonzalez National Affordable Housing Act.
17. “(17)

    Very low-income family.—

    The term ‘very low-income family’ has the same meaning as in section 3(b) of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)].
18. “(18)

    Qualified mortgagee.—

    The term ‘qualified mortgagee’ means an entity approved by the Secretary that is capable of servicing, as well as originating, FHA-insured mortgages, and that—

    1. “(A)
       is not suspended or debarred by the Secretary;
    2. “(B)
       is not suspended or on probation imposed by the Mortgagee Review Board; and
    3. “(C)
       is not in default under any Government National Mortgage Association obligation.
19. “(19)

    Office.—

    The term ‘Office’ means the Office of Multifamily Housing Assistance Restructuring established under section 571.

1. “(a)

   Participating Administrative Entities.—

   1. “(1)

      In general.—

      Subject to subsection (b)(3), the Secretary shall enter into portfolio restructuring agreements with participating administrative entities for the implementation of mortgage restructuring and rental assistance sufficiency plans to restructure multifamily housing mortgages insured or held by the Secretary under the National Housing Act [12 U.S.C. 1701 et seq.], in order to—

      1. “(A)
         reduce the costs of expiring contracts for assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f];
      2. “(B)
         address financially and physically troubled projects; and
      3. “(C)
         correct management and ownership deficiencies.
   2. “(2)

      Portfolio restructuring agreements.—

      Each portfolio restructuring agreement entered into under this subsection shall—

      1. “(A)
         be a cooperative agreement to establish the obligations and requirements between the Secretary and the participating administrative entity;
      2. “(B)
         identify the eligible multifamily housing projects or groups of projects for which the participating administrative entity is responsible for assisting in developing and implementing approved mortgage restructuring and rental assistance sufficiency plans under section 514;
      3. “(C)
         require the participating administrative entity to review and certify to the accuracy and completeness of the evaluation of rehabilitation needs required under section 514(e)(3) for each eligible multifamily housing project included in the portfolio restructuring agreement, in accordance with regulations promulgated by the Secretary;
      4. “(D)
         identify the responsibilities of both the participating administrative entity and the Secretary in implementing a mortgage restructuring and rental assistance sufficiency plan, including any actions proposed to be taken under section 516 or 517;
      5. “(E)
         require each mortgage restructuring and rental assistance sufficiency plan to be prepared in accordance with the requirements of section 514 for each eligible multifamily housing project;
      6. “(F)
         include other requirements established by the Secretary, including a right of the Secretary to terminate the contract immediately for failure of the participating administrative entity to comply with any applicable requirement;
      7. “(G)
         if the participating administrative entity is a State housing finance agency or a local housing agency, indemnify the participating administrative entity against lawsuits and penalties for actions taken pursuant to the agreement, excluding actions involving willful misconduct or negligence;
      8. “(H)
         include compensation for all reasonable expenses incurred by the participating administrative entity necessary to perform its duties under this subtitle; and
      9. “(I)
         include, where appropriate, incentive agreements with the participating administrative entity to reward superior performance in meeting the purposes of this title.
2. “(b)

   Selection of Participating Administrative Entity.—

   1. “(1)

      Selection criteria.—

      The Secretary shall select a participating administrative entity based on whether, in the determination of the Secretary, the participating administrative entity—

      1. “(A)
         has demonstrated experience in working directly with residents of low-income housing projects and with tenants and other community-based organizations;
      2. “(B)
         has demonstrated experience with and capacity for multifamily restructuring and multifamily financing (which may include risk-sharing arrangements and restructuring eligible multifamily housing properties under the fiscal year 1997 Federal Housing Administration multifamily housing demonstration program);
      3. “(C)
         has a history of stable, financially sound, and responsible administrative performance (which may include the management of affordable low-income rental housing);
      4. “(D)
         has demonstrated financial strength in terms of asset quality, capital adequacy, and liquidity;
      5. “(E)
         has demonstrated that it will carry out the specific transactions and other responsibilities under this subtitle in a timely, efficient, and cost-effective manner; and
      6. “(F)
         meets other criteria, as determined by the Secretary.
   2. “(2)

      Selection.—

      If more than 1 interested entity meets the qualifications and selection criteria for a participating administrative entity, the Secretary may select the entity that demonstrates, as determined by the Secretary, that it will—

      1. “(A)

         provide the most timely, efficient, and cost-effective—

         1. “(i)
            restructuring of the mortgages covered by the portfolio restructuring agreement; and
         2. “(ii)
            administration of the section 8 project-based assistance contract, if applicable; and
      2. “(B)
         protect the public interest (including the long-term provision of decent low-income affordable rental housing and protection of residents, communities, and the American taxpayer).
   3. “(3)

      Partnerships.—

      For the purposes of any participating administrative entity applying under this subsection, participating administrative entities are encouraged to develop partnerships with each other and with nonprofit organizations, if such partnerships will further the participating administrative entity’s ability to meet the purposes of this title.
   4. “(4)

      Alternative administrators.—

      With respect to any eligible multifamily housing project for which a participating administrative entity is unavailable, or should not be selected to carry out the requirements of this subtitle with respect to that multifamily housing project for reasons relating to the selection criteria under paragraph (1), the Secretary shall—

      1. “(A)
         carry out the requirements of this subtitle with respect to that eligible multifamily housing project; or
      2. “(B)
         contract with other qualified entities that meet the requirements of paragraph (1) to provide the authority to carry out all or a portion of the requirements of this subtitle with respect to that eligible multifamily housing project.
   5. “(5)

      Priority for public agencies as participating administrative entities.—

      The Secretary shall provide a reasonable period during which the Secretary will consider proposals only from State housing finance agencies or local housing agencies, and the Secretary shall select such an agency without considering other applicants if the Secretary determines that the agency is qualified. The period shall be of sufficient duration for the Secretary to determine whether any State housing finance agencies or local housing agencies are interested and qualified. Not later than the end of the period, the Secretary shall notify the State housing finance agency or the local housing agency regarding the status of the proposal and, if the proposal is rejected, the reasons for the rejection and an opportunity for the applicant to respond.
   6. “(6)

      State and local portfolio requirements.—

      1. “(A)

         In general.—

         If the housing finance agency of a State is selected as the participating administrative entity, that agency shall be responsible for such eligible multifamily housing projects in that State as may be agreed upon by the participating administrative entity and the Secretary. If a local housing agency is selected as the participating administrative entity, that agency shall be responsible for such eligible multifamily housing projects in the jurisdiction of the agency as may be agreed upon by the participating administrative entity and the Secretary.
      2. “(B)

         Nondelegation.—

         Except with the prior approval of the Secretary, a participating administrative entity may not delegate or transfer responsibilities and functions under this subtitle to 1 or more entities.
   7. “(7)

      Private entity requirements.—

      1. “(A)

         In general.—

         If a for-profit entity is selected as the participating administrative entity, that entity shall be required to enter into a partnership with a public purpose entity (including the Department).
      2. “(B)

         Prohibition.—

         No private entity shall share, participate in, or otherwise benefit from any equity created, received, or restructured as a result of the portfolio restructuring agreement.

1. “(a)

   In General.—

   1. “(1)

      Development of procedures and requirements.—

      The Secretary shall develop procedures and requirements for the submission of a mortgage restructuring and rental assistance sufficiency plan for each eligible multifamily housing project with an expiring contract.
   2. “(2)

      Terms and conditions.—

      Each mortgage restructuring and rental assistance sufficiency plan submitted under this subsection shall be developed by the participating administrative entity, in cooperation with an owner of an eligible multifamily housing project and any servicer for the mortgage that is a qualified mortgagee, under such terms and conditions as the Secretary shall require.
   3. “(3)

      Consolidation.—

      Mortgage restructuring and rental assistance sufficiency plans submitted under this subsection may be consolidated as part of an overall strategy for more than 1 property.
2. “(b)

   Notice Requirements.—

   The Secretary shall establish notice procedures and hearing requirements for tenants and owners concerning the dates for the expiration of project-based assistance contracts for any eligible multifamily housing project.
3. “(c)

   Extension of Contract Term.—

   Subject to agreement by a project owner, the Secretary may extend the term of any expiring contract or provide a section 8 contract with rent levels set in accordance with subsection (g) for a period sufficient to facilitate the implementation of a mortgage restructuring and rental assistance sufficiency plan, as determined by the Secretary.
4. “(d)

   Tenant Rent Protection.—

   If the owner of a project with an expiring Federal rental assistance contract does not agree to extend the contract, not less than 12 months prior to terminating the contract, the project owner shall provide written notice to the Secretary and the tenants and the Secretary shall make tenant-based assistance available to tenants residing in units assisted under the expiring contract at the time of expiration. In addition, if after giving the notice required in the first sentence, an owner determines to terminate a contract, an owner shall provide an additional written notice with respect to the termination, in a form prescribed by the Secretary, not less than 120 days prior to the termination. In the event the owner does not provide the 120-day notice required in the preceding sentence, the owner may not evict the tenants or increase the tenants’ rent payment until such time as the owner has provided the 120-day notice and such period has elapsed. The Secretary may allow the owner to renew the terminating contract for a period of time sufficient to give tenants 120 days of advance notice in accordance with section 524 of this Act.
5. “(e)

   Mortgage Restructuring and Rental Assistance Sufficiency Plan.—

   Each mortgage restructuring and rental assistance sufficiency plan shall—

   1. “(1)
      except as otherwise provided, restructure the project-based assistance rents for the eligible multifamily housing project in a manner consistent with subsection (g), or provide for tenant-based assistance in accordance with section 515;
   2. “(2)
      allow for rent adjustments by applying an operating cost adjustment factor established under guidelines established by the Secretary;
   3. “(3)
      require the owner or purchaser of an eligible multifamily housing project to evaluate the rehabilitation needs of the project, in accordance with regulations of the Secretary, and notify the participating administrative entity of the rehabilitation needs;
   4. “(4)
      require the owner or purchaser of the project to provide or contract for competent management of the project;
   5. “(5)

      require the owner or purchaser of the project to take such actions as may be necessary to rehabilitate, maintain adequate reserves, and to maintain the project in decent and safe condition, based on housing quality standards established by—

      1. “(A)
         the Secretary; or
      2. “(B)

         local housing codes or codes adopted by public housing agencies that—

         1. “(i)
            meet or exceed housing quality standards established by the Secretary; and
         2. “(ii)
            do not severely restrict housing choice;
   6. “(6)

      require the owner or purchaser of the project to maintain affordability and use restrictions in accordance with regulations promulgated by the Secretary, for a term of not less than 30 years which restrictions shall be—

      1. “(A)
         contained in a legally enforceable document recorded in the appropriate records; and
      2. “(B)
         consistent with the long-term physical and financial viability and character of the project as affordable housing;
   7. “(7)
      include a certification by the participating administrative entity that the restructuring meets subsidy layering requirements established by the Secretary by regulation for purposes of this subtitle;
   8. “(8)
      require the owner or purchaser of the project to meet such other requirements as the Secretary determines to be appropriate; and
   9. “(9)
      prohibit the owner from refusing to lease a reasonable number of units to holders of certificates and vouchers under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] because of the status of the prospective tenants as certificate and voucher holders.
6. “(f)

   Tenant and Other Participation and Capacity Building.—

   1. “(1)

      Procedures.—

      1. “(A)

         In general.—

         The Secretary shall establish procedures to provide an opportunity for tenants of the project, residents of the neighborhood, the local government, and other affected parties to participate effectively and on a timely basis in the restructuring process established by this subtitle.
      2. “(B)

         Coverage.—

         These procedures shall take into account the need to provide tenants of the project, residents of the neighborhood, the local government, and other affected parties timely notice of proposed restructuring actions and appropriate access to relevant information about restructuring activities. To the extent practicable and consistent with the need to accomplish project restructuring in an efficient manner, the procedures shall give all such parties an opportunity to provide comments to the participating administrative entity in writing, in meetings, or in another appropriate manner (which comments shall be taken into consideration by the participating administrative entity).
   2. “(2)

      Required consultation.—

      The procedures developed pursuant to paragraph (1) shall require consultation with tenants of the project, residents of the neighborhood, the local government, and other affected parties, in connection with at least the following:

      1. “(A)
         the mortgage restructuring and rental assistance sufficiency plan;
      2. “(B)
         any proposed transfer of the project; and
      3. “(C)
         the rental assistance assessment plan pursuant to section 515(c).
   3. “(3)

      Funding.—

      1. “(A)

         In general.—

         The Secretary shall make available not more than $10,000,000 annually in funding, which amount shall be in addition to any amounts made available under this subparagraph and carried over from previous years, from which the Secretary may make obligations to tenant groups, nonprofit organizations, and public entities for building the capacity of tenant organizations, for technical assistance in furthering any of the purposes of this subtitle (including transfer of developments to new owners), for technical assistance for preservation of low-income housing for which project-based rental assistance is provided at below market rent levels and may not be renewed (including transfer of developments to tenant groups, nonprofit organizations, and public entities), for tenant services, and for tenant groups, nonprofit organizations, and public entities described in section 517(a)(5), from those amounts made available under appropriations Acts for implementing this subtitle or previously made available for technical assistance in connection with the preservation of affordable rental housing for low-income persons.
      2. “(B)

         Manner of providing.—

         Notwithstanding any other provision of law restricting the use of preservation technical assistance funds, the Secretary may provide any funds made available under subparagraph (A) through existing technical assistance programs pursuant to any other Federal law, including the Low-Income Housing Preservation and Resident Homeownership Act of 1990 [12 U.S.C. 4101 et seq.] and the Multifamily Housing Property Disposition Reform Act of 1994 [Pub. L. 103–233, see Short Title of 1994 Amendment note set out under section 1701 of Title 12, Banks and Banking], or through any other means that the Secretary considers consistent with the purposes of this subtitle, without regard to any set-aside requirement otherwise applicable to those funds.
      3. “(C)

         Prohibition.—

         None of the funds made available under subparagraph (A) may be used directly or indirectly to pay for any personal service, advertisement, telegram, telephone, letter, printed or written matter, or other device, intended or designed to influence in any manner a Member of Congress, to favor or oppose, by vote or otherwise, any legislation or appropriation by Congress, whether before or after the introduction of any bill or resolution proposing such legislation or appropriation.
7. “(g)

   Rent Levels.—

   1. “(1)

      In general.—

      Except as provided in paragraph (2), each mortgage restructuring and rental assistance sufficiency plan pursuant to the terms, conditions, and requirements of this subtitle shall establish for units assisted with project-based assistance in eligible multifamily housing projects adjusted rent levels that—

      1. “(A)

         are equivalent to rents derived from comparable properties, if—

         1. “(i)
            the participating administrative entity makes the rent determination within a reasonable period of time; and
         2. “(ii)
            the market rent determination is based on not less than 2 comparable properties; or
      2. “(B)
         if those rents cannot be determined, are equal to 90 percent of the fair market rents for the relevant market area.
   2. “(2)

      Exceptions.—

      1. “(A)

         In general.—

         A contract under this section may include rent levels that exceed the rent level described in paragraph (1) at rent levels that do not exceed 120 percent of the fair market rent for the market area (except that the Secretary may waive this limit for not more than five percent of all units subject to portfolio restructuring agreements, based on a finding of special need), if the participating administrative entity—

         1. “(i)
            determines that the housing needs of the tenants and the community cannot be adequately addressed through implementation of the rent limitation required to be established through a mortgage restructuring and rental assistance sufficiency plan under paragraph (1); and
         2. “(ii)
            follows the procedures under paragraph (3).
      2. “(B)

         Exception rents.—

         In any fiscal year, a participating administrative entity may approve exception rents on not more than 20 percent of all units covered by the portfolio restructuring agreement with expiring contracts in that fiscal year, except that the Secretary may waive this ceiling upon a finding of special need.
   3. “(3)

      Rent levels for exception projects.—

      For purposes of this section, a project eligible for an exception rent shall receive a rent calculated on the actual and projected costs of operating the project, at a level that provides income sufficient to support a budget-based rent that consists of—

      1. “(A)
         the debt service of the project;
      2. “(B)

         the operating expenses of the project, as determined by the participating administrative entity, including—

         1. “(i)
            contributions to adequate reserves;
         2. “(ii)
            the costs of maintenance and necessary rehabilitation; and
         3. “(iii)
            other eligible costs permitted under section 8 of the United States Housing Act of 1937;
      3. “(C)
         an adequate allowance for potential operating losses due to vacancies and failure to collect rents, as determined by the participating administrative entity;
      4. “(D)
         an allowance for a reasonable rate of return to the owner or purchaser of the project, as determined by the participating administrative entity, which may be established to provide incentives for owners or purchasers to meet benchmarks of quality for management and housing quality; and
      5. “(E)
         other expenses determined by the participating administrative entity to be necessary for the operation of the project.
8. “(h)

   Exemptions From Restructuring.—

   The following categories of projects shall not be covered by a mortgage restructuring and rental assistance sufficiency plan if—

   1. “(1)
      the primary financing or mortgage insurance for the multifamily housing project that is covered by that expiring contract was provided by a unit of State government or a unit of general local government (or an agency or instrumentality of a unit of a State government or unit of general local government) and the financing involves mortgage insurance under the National Housing Act [42 U.S.C. 1701 et seq.], such that the implementation of a mortgage restructuring and rental assistance sufficiency plan under this subtitle is in conflict with applicable law or agreements governing such financing;
   2. “(2)
      the project is a project financed under section 202 of the Housing Act of 1959 [12 U.S.C. 1701q] or section 515 of the Housing Act of 1949 [42 U.S.C. 1485], or refinanced pursuant to section 811 of the American Homeownership and Economic Opportunity Act of 2000 (12 U.S.C. 1701q note); or
   3. “(3)
      the project has an expiring contract under section 8 of the United States Housing Act of 1937 entered into pursuant to [former] section 441 of the McKinney-Vento Homeless Assistance Act [42 U.S.C. 11401].

1. “(a)

   Section 8 Renewals of Restructured Projects.—

   1. “(1)

      Project-based assistance.—

      Subject to the availability of amounts provided in advance in appropriations Acts, and to the control of the Secretary of applicable accounts in the Treasury of the United States, with respect to an expiring section 8 contract on an eligible multifamily housing project to be renewed with project-based assistance (based on a determination under subsection (c)), the Secretary shall enter into contracts with participating administrative entities pursuant to which the participating administrative entity shall offer to renew or extend the contract, or the Secretary shall offer to renew such contract, and the owner of the project shall accept the offer, if the initial renewal is in accordance with the terms and conditions specified in the mortgage restructuring and rental assistance sufficiency plan and the rental assistance assessment plan.
   2. “(2)

      Tenant-based assistance.—

      Subject to the availability of amounts provided in advance in appropriations Acts and to the control of the Secretary of applicable accounts in the Treasury of the United States, with respect to an expiring section 8 contract on an eligible multifamily housing project to be renewed with tenant-based assistance (based on a determination under subsection (c)), the Secretary shall enter into contracts with participating administrative entities pursuant to which the participating administrative entity shall provide for the renewal of section 8 assistance on an eligible multifamily housing project with tenant-based assistance, or the Secretary shall provide for such renewal, in accordance with the terms and conditions specified in the mortgage restructuring and rental assistance sufficiency plan and the rental assistance assessment plan.
2. “(b)

   Required Commitment.—

   After the initial renewal of a section 8 contract pursuant to this section, the owner shall accept each offer made pursuant to subsection (a) to renew the contract, for the term of the affordability and use restrictions required by section 514(e)(6), if the offer to renew is on terms and conditions specified in the mortgage restructuring and rental assistance sufficiency plan.
3. “(c)

   Determination of Whether To Renew With Project-Based or Tenant-Based Assistance.—

   1. “(1)

      Mandatory renewal of project-based assistance.—

      Section 8 assistance shall be renewed with project-based assistance, if—

      1. “(A)
         the project is located in an area in which the participating administrative entity determines, based on housing market indicators, such as low vacancy rates or high absorption rates, that there is not adequate available and affordable housing or that the tenants of the project would not be able to locate suitable units or use the tenant-based assistance successfully;
      2. “(B)
         a predominant number of the units in the project are occupied by elderly families, disabled families, or elderly and disabled families; or
      3. “(C)
         the project is held by a nonprofit cooperative ownership housing corporation or nonprofit cooperative housing trust.
   2. “(2)

      Rental assistance assessment plan.—

      1. “(A)

         In general.—

         With respect to any project that is not described in paragraph (1), the participating administrative entity shall, after consultation with the owner of the project, develop a rental assistance assessment plan to determine whether to renew assistance for the project with tenant-based assistance or project-based assistance.
      2. “(B)

         Rental assistance assessment plan requirements.—

         Each rental assistance assessment plan developed under this paragraph shall include an assessment of the impact of converting to tenant-based assistance and the impact of extending project-based assistance on—

         1. “(i)
            the ability of the tenants to find adequate, available, decent, comparable, and affordable housing in the local market;
         2. “(ii)
            the types of tenants residing in the project (such as elderly families, disabled families, large families, and cooperative homeowners);
         3. “(iii)
            the local housing needs identified in the comprehensive housing affordability strategy, and local market vacancy trends;
         4. “(iv)
            the cost of providing assistance, comparing the applicable payment standard to the project’s adjusted rent levels determined under section 514(g);
         5. “(v)
            the long-term financial stability of the project;
         6. “(vi)
            the ability of residents to make reasonable choices about their individual living situations;
         7. “(vii)
            the quality of the neighborhood in which the tenants would reside; and
         8. “(viii)
            the project’s ability to compete in the marketplace.
      3. “(C)

         Reports to director.—

         Each participating administrative entity shall report regularly to the Director as defined in subtitle D, as the Director shall require, identifying—

         1. “(i)
            each eligible multifamily housing project for which the entity has developed a rental assistance assessment plan under this paragraph that determined that the tenants of the project generally supported renewal of assistance with tenant-based assistance, but under which assistance for the project was renewed with project-based assistance; and
         2. “(ii)
            each project for which the entity has developed such a plan under which the assistance is renewed using tenant-based assistance.
   3. “(3)

      Eligibility for tenant-based assistance.—

      Subject to paragraph (4), with respect to any project that is not described in paragraph (1), if a participating administrative entity approves the use of tenant-based assistance based on a rental assistance assessment plan developed under paragraph (2), tenant-based assistance shall be provided to each assisted family (other than a family already receiving tenant-based assistance) residing in the project at the time the assistance described in section 512(2)(B) terminates.
   4. “(4)

      Assistance through enhanced vouchers.—

      In the case of any family described in paragraph (3) that resides in a project described in section 512(2)(B), the tenant-based assistance provided shall be enhanced voucher assistance under section 8(t) of the United States Housing Act of 1937 (42 U.S.C. 1437f(t)).
   5. “(5)

      Inapplicability of certain provision.—

      If a participating administrative entity approves renewal with project-based assistance under this subsection, section 8(d)(2) of the United States Housing Act of 1937 shall not apply.

1. “(a)

   Prohibition on Restructuring.—

   The Secretary may elect not to consider any mortgage restructuring and rental assistance sufficiency plan or request for contract renewal if the Secretary or the participating administrative entity determines that—

   1. “(1)
      1. (A)
         the owner or purchaser of the project has engaged in material adverse financial or managerial actions or omissions with regard to such project; or
      2. “(B)
         the owner or purchaser of the project has engaged in material adverse financial or managerial actions or omissions with regard to other projects of such owner or purchaser that are federally assisted or financed with a loan from, or mortgage insured or guaranteed by, an agency of the Federal Government;
   2. “(2)

      material adverse financial or managerial actions or omissions include—

      1. “(A)
         materially violating any Federal, State, or local law or regulation with regard to this project or any other federally assisted project, after receipt of notice and an opportunity to cure;
      2. “(B)
         materially breaching a contract for assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f], after receipt of notice and an opportunity to cure;
      3. “(C)
         materially violating any applicable regulatory or other agreement with the Secretary or a participating administrative entity, after receipt of notice and an opportunity to cure;
      4. “(D)
         repeatedly and materially violating any Federal, State, or local law or regulation with regard to the project or any other federally assisted project;
      5. “(E)
         repeatedly and materially breaching a contract for assistance under section 8 of the United States Housing Act of 1937;
      6. “(F)
         repeatedly and materially violating any applicable regulatory or other agreement with the Secretary or a participating administrative entity;
      7. “(G)
         repeatedly failing to make mortgage payments at times when project income was sufficient to maintain and operate the property;
      8. “(H)
         materially failing to maintain the property according to housing quality standards after receipt of notice and a reasonable opportunity to cure; or
      9. “(I)
         committing any actions or omissions that would warrant suspension or debarment by the Secretary;
   3. “(3)
      the owner or purchaser of the property materially failed to follow the procedures and requirements of this subtitle, after receipt of notice and an opportunity to cure; or
   4. “(4)
      the poor condition of the project cannot be remedied in a cost effective manner, as determined by the participating administrative entity.

   The term ‘owner’ as used in this subsection, in addition to it having the same meaning as in section 8(f) of the United States Housing Act of 1937, also means an affiliate of the owner. The term ‘purchaser’ as used in this subsection means any private person or entity, including a cooperative, an agency of the Federal Government, or a public housing agency, that, upon purchase of the project, would have the legal right to lease or sublease dwelling units in the project, and also means an affiliate of the purchaser. The terms ‘affiliate of the owner’ and ‘affiliate of the purchaser’ means any person or entity (including, but not limited to, a general partner or managing member, or an officer of either) that controls an owner or purchaser, is controlled by an owner or purchaser, or is under common control with the owner or purchaser. The term ‘control’ means the direct or indirect power (under contract, equity ownership, the right to vote or determine a vote, or otherwise) to direct the financial, legal, beneficial or other interests of the owner or purchaser.
2. “(b)

   Opportunity To Dispute Findings.—

   1. “(1)

      In general.—

      During the 30-day period beginning on the date on which the owner or purchaser of an eligible multifamily housing project receives notice of a rejection under subsection (a) or of a mortgage restructuring and rental assistance sufficiency plan under section 514, the Secretary or participating administrative entity shall provide that owner or purchaser with an opportunity to dispute the basis for the rejection and an opportunity to cure.
   2. “(2)

      Affirmation, modification, or reversal.—

      1. “(A)

         In general.—

         After providing an opportunity to dispute under paragraph (1), the Secretary or the participating administrative entity may affirm, modify, or reverse any rejection under subsection (a) or rejection of a mortgage restructuring and rental assistance sufficiency plan under section 514.
      2. “(B)

         Reasons for decision.—

         The Secretary or the participating administrative entity, as applicable, shall identify the reasons for any final decision under this paragraph.
      3. “(C)

         Review process.—

         The Secretary shall establish an administrative review process to appeal any final decision under this paragraph.
3. “(c)

   Final Determination.—

   Any final determination under this section shall not be subject to judicial review.
4. “(d)

   Displaced Tenants.—

   1. “(1)

      Notice to certain residents.—

      The Office shall notify any tenant that is residing in a project or receiving assistance under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f) at the time of rejection under this section, of such rejection, except that the Office may delegate the responsibility to provide notice under this paragraph to the participating administrative entity.
   2. “(2)

      Assistance and moving expenses.—

      Subject to the availability of amounts provided in advance in appropriations Acts, for any low-income tenant that is residing in a project or receiving assistance under section 8 of the United States Housing Act of 1937 at the time of rejection under this section, that tenant shall be provided with tenant-based assistance and reasonable moving expenses, as determined by the Secretary.
5. “(e)

   Transfer of Property.—

   For properties disqualified from the consideration of a mortgage restructuring and rental assistance sufficiency plan under this section in accordance with paragraph (1) or (2) of subsection (a) because of actions by an owner or purchaser, the Secretary shall establish procedures to facilitate the voluntary sale or transfer of a property as part of a mortgage restructuring and rental assistance sufficiency plan, with a preference for tenant organizations and tenant-endorsed community-based nonprofit and public agency purchasers meeting such reasonable qualifications as may be established by the Secretary.

1. “(a)

   Mortgage Restructuring.—

   1. “(1)

      In this subtitle, an approved mortgage restructuring and rental assistance sufficiency plan shall include restructuring mortgages in accordance with this subsection to provide—

      1. “(A)
         a restructured or new first mortgage that is sustainable at rents at levels that are established in section 514(g); and
      2. “(B)

         a second mortgage that is in an amount equal to not more than the greater of—

         1. “(i)
            the full or partial payment of claim made under this subtitle; or
         2. “(ii)
            the difference between the restructured or new first mortgage and the indebtedness under the existing insured mortgage immediately before it is restructured or refinanced, provided that the amount of the second mortgage shall be in an amount that the Secretary or participating administrative entity determines can reasonably be expected to be repaid.
   2. “(2)
      The second mortgage shall bear interest at a rate not to exceed the applicable Federal rate as defined in section 1274(d) of the Internal Revenue Code of 1986 [26 U.S.C. 1274(d)]. The term of the second mortgage shall be equal to the term of the restructured or new first mortgage.
   3. “(3)
      Payments on the second mortgage shall be deferred when the first mortgage remains outstanding, except to the extent there is excess project income remaining after payment of all reasonable and necessary operating expenses (including deposits in a reserve for replacement), debt service on the first mortgage, and any other expenditures approved by the Secretary. At least 75 percent of any excess project income shall be applied to payments on the second mortgage, and the Secretary or the participating administrative entity may permit up to 25 percent to be paid to the project owner if the Secretary or participating administrative entity determines that the project owner meets benchmarks for management and housing quality.
   4. “(4)

      The full amount of the second mortgage shall be immediately due and payable if—

      1. “(A)
         the first mortgage is terminated or paid in full, except as otherwise provided by the holder of the second mortgage;
      2. “(B)
         the project is purchased and the second mortgage is assumed by any subsequent purchaser in violation of guidelines established by the Secretary; or
      3. “(C)
         the Secretary provides notice to the project owner that such owner has failed to materially comply with any requirements of this section or the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.] as those requirements apply to the project, with a reasonable opportunity for such owner to cure such failure.
   5. “(5)
      The Secretary may modify the terms of the second mortgage, assign the second mortgage to the acquiring organization or agency, or forgive all or part of the second mortgage if the Secretary holds the second mortgage and if the project is acquired by a tenant organization or tenant-endorsed community-based nonprofit or public agency, pursuant to guidelines established by the Secretary.
   6. “(6)
      The second mortgage under this section may be a first mortgage if no restructured or new first mortgage will meet the requirement of paragraph (1)(A).
2. “(b)

   Restructuring Tools.—

   In addition to the requirements of subsection (a) and to the extent these actions are consistent with this section and with the control of the Secretary of applicable accounts in the Treasury of the United States, an approved mortgage restructuring and rental assistance sufficiency plan under this subtitle may include one or more of the following actions:

   1. “(1)

      Full or partial payment of claim.—

      Making a full payment of claim or partial payment of claim under section 541(b) of the National Housing Act [12 U.S.C. 1735f–19(b)], as amended by section 523(b) of this Act. Any payment under this paragraph shall not require the approval of a mortgagee.
   2. “(2)

      Refinancing of debt.—

      Refinancing of all or part of the debt on a project. If the refinancing involves a mortgage that will continue to be insured under the National Housing Act [12 U.S.C. 1701 et seq.], the refinancing shall be documented through amendment of the existing insurance contract and not through a new insurance contract.
   3. “(3)

      Mortgage insurance.—

      Providing FHA multifamily mortgage insurance, reinsurance or other credit enhancement alternatives, including multifamily risk-sharing mortgage programs, as provided under section 542 of the Housing and Community Development Act of 1992 [Pub. L. 102–550, 12 U.S.C. 1707 note]. The Secretary shall use risk-shared financing under section 542(c) of the Housing and Community Development Act of 1992 for any mortgage restructuring, rehabilitation financing, or debt refinancing included as part of a mortgage restructuring and rental assistance sufficiency plan if the terms and conditions are considered to be the best available financing in terms of financial savings to the FHA insurance funds and will result in reduced risk of loss to the Federal Government. Any limitations on the number of units available for mortgage insurance under section 542 shall not apply to eligible multifamily housing projects. Any credit subsidy costs of providing mortgage insurance shall be paid from the Liquidating Accounts of the General Insurance Fund or the Special Risk Insurance Fund and shall not be subject to any limitation on appropriations.
   4. “(4)

      Credit enhancement.—

      Providing any additional State or local mortgage credit enhancements and risk-sharing arrangements that may be established with State or local housing finance agencies, the Federal Housing Finance Agency, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation, to a modified or refinanced first mortgage.
   5. “(5)

      Compensation of third parties.—

      Consistent with the portfolio restructuring agreement, entering into agreements, incurring costs, or making payments, including incentive agreements designed to reward superior performance in meeting the purposes of this Act, as may be reasonably necessary, to compensate the participation of participating administrative entities and other parties in undertaking actions authorized by this subtitle. Upon request to the Secretary, participating administrative entities that are qualified under the United States Housing Act of 1937 to serve as contract administrators shall be the contract administrators under section 8 of the United States Housing Act of 1937 [12 U.S.C. 1437f] for purposes of any contracts entered into as part of an approved mortgage restructuring and rental assistance sufficiency plan. Subject to the availability of amounts provided in advance in appropriations Acts for administrative fees under section 8 of the United States Housing Act of 1937, such amounts may be used to compensate participating administrative entities for compliance monitoring costs incurred under section 519.
   6. “(6)

      Use of project accounts.—

      Applying any residual receipts, replacement reserves, and any other project accounts not required for project operations, to maintain the long-term affordability and physical condition of the property or of other eligible multifamily housing projects. The participating administrative entity may expedite the acquisition of residual receipts, replacement reserves, or other such accounts, by entering into agreements with owners of housing covered by an expiring contract to provide an owner with a share of the receipts, not to exceed 10 percent, in accordance with guidelines established by the Secretary.
3. “(c)

   Rehabilitation Needs and Addition of Significant Features.—

   1. “(1)

      Rehabilitation needs.—

      1. “(A)

         In general.—

         Rehabilitation may be paid from the residual receipts, replacement reserves, or any other project accounts not required for project operations, or, as provided in appropriations Acts and subject to the control of the Secretary of applicable accounts in the Treasury of the United States, from budget authority provided for increases in the budget authority for assistance contracts under section 8 of the United States Housing Act of 1937, the rehabilitation grant program established under section 236 of the National Housing Act [12 U.S.C. 1715z–1], as amended by section 531 of subtitle B of this Act, or through the debt restructuring transaction. Rehabilitation under this paragraph shall only be for the purpose of restoring the project to a non-luxury standard adequate for the rental market intended at the original approval of the project-based assistance.
      2. “(B)

         Contribution.—

         Each owner or purchaser of a project to be rehabilitated under an approved mortgage restructuring and rental assistance sufficiency plan shall contribute, from non-project resources, not less than 25 percent of the amount of rehabilitation assistance received, except that the participating administrative entity may provide an exception from the requirement of this subparagraph for housing cooperatives.
   2. “(2)

      Addition of significant features.—

      1. “(A)

         Authority.—

         An approved mortgage restructuring and rental assistance sufficiency plan may require the improvement of the project by the addition of significant features that are not necessary for rehabilitation to the standard provided under paragraph (1), such as air conditioning, an elevator, and additional community space. The Secretary shall establish guidelines regarding the inclusion of requirements regarding such additional significant features under such plans.
      2. “(B)

         Funding.—

         Significant features added pursuant to an approved mortgage restructuring and rental assistance sufficiency plan may be paid from the funding sources specified in the first sentence of paragraph (1)(A).
      3. “(C)

         Limitation on owner contribution.—

         An owner of a project may not be required to contribute from non-project resources, toward the cost of any additional significant features required pursuant to this paragraph, more than 25 percent of the amount of any assistance received for the inclusion of such features.
      4. “(D)

         Applicability.—

         This paragraph shall apply to all eligible multifamily housing projects, except projects for which the Secretary and the project owner executed a mortgage restructuring and rental assistance sufficiency plan on or before the date of the enactment of the Mark-to-Market Extension Act of 2001 [Jan. 10, 2002].
4. “(d)

   Prohibition on Equity Sharing by the Secretary.—

   The Secretary is prohibited from participating in any equity agreement or profit-sharing agreement in conjunction with any eligible multifamily housing project.
5. “(e)

   Conflict of Interest Guidelines.—

   The Secretary may establish guidelines to prevent conflicts of interest by a participating administrative entity that provides, directly or through risk-sharing arrangements, any form of credit enhancement or financing pursuant to subsections [sic] (b)(3) or (b)(4) or to prevent conflicts of interest by any other person or entity under this subtitle.

1. “(a)

   Compliance Agreements.—

   1. (1)

      Pursuant to regulations issued by the Secretary under section 522(a), each participating administrative entity, through binding contractual agreements with owners and otherwise, shall ensure long-term compliance with the provisions of this subtitle. Each agreement shall, at a minimum, provide for—

      1. “(A)
         enforcement of the provisions of this subtitle; and
      2. “(B)
         remedies for the breach of those provisions.
   2. “(2)
      If the participating administrative entity is not qualified under the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.] to be a section 8 contract administrator or fails to perform its duties under the portfolio restructuring agreement, the Secretary shall have the right to enforce the agreement.
2. “(b)

   Periodic Monitoring.—

   1. “(1)

      In general.—

      Not less than annually, each participating administrative entity that is qualified to be the section 8 contract administrator shall review the status of all multifamily housing projects for which a mortgage restructuring and rental assistance sufficiency plan has been implemented.
   2. “(2)

      Inspections.—

      Each review under this subsection shall include onsite inspection to determine compliance with housing codes and other requirements as provided in this subtitle and the portfolio restructuring agreements.
   3. “(3)

      Administration.—

      If the participating administrative entity is not qualified under the United States Housing Act of 1937 to be a section 8 contract administrator, either the Secretary or a qualified State or local housing agency shall be responsible for the review required by this subsection.
3. “(c)

   Audit by the Secretary.—

   The Comptroller General of the United States, the Secretary, and the Inspector General of the Department of Housing and Urban Development may conduct an audit at any time of any multifamily housing project for which a mortgage restructuring and rental assistance sufficiency plan has been implemented.

1. “(a)

   Annual Review.—

   In order to ensure compliance with this subtitle, the Secretary shall conduct an annual review and report to the Congress on actions taken under this subtitle and the status of eligible multifamily housing projects.
2. “(b)

   Semiannual Review.—

   Not less than semiannually during the 2-year period beginning on the date of the enactment of this Act [Oct. 27, 1997] and not less than annually thereafter, the Secretary shall submit reports to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate stating, for such periods, the total number of projects identified by participating administrative entities under each of clauses (i) and (ii) of section 515(c)(2)(C).

1. “(a)

   Initial Audit.—

   Not later than 18 months after the effective date of final regulations promulgated under this subtitle, the Comptroller General of the United States shall conduct an audit to evaluate eligible multifamily housing projects and the implementation of mortgage restructuring and rental assistance sufficiency plans.
2. “(b)

   Report.—

   1. “(1)

      In general.—

      Not later than 18 months after the audit conducted under subsection (a), the Comptroller General of the United States shall submit to Congress a report on the status of eligible multifamily housing projects and the implementation of mortgage restructuring and rental assistance sufficiency plans.
   2. “(2)

      Contents.—

      The report submitted under paragraph (1) shall include—

      1. “(A)
         a description of the initial audit conducted under subsection (a); and
      2. “(B)
         recommendations for any legislative action to increase the financial savings to the Federal Government of the restructuring of eligible multifamily housing projects balanced with the continued availability of the maximum number of affordable low-income housing units.

1. “(a)

   Rulemaking and Implementation.—

   1. “(1)

      Interim regulations.—

      The Director shall issue such interim regulations as may be necessary to implement this subtitle and the amendments made by this subtitle with respect to eligible multifamily housing projects covered by contracts described in section 512(2)(B) that expire in fiscal year 1999 or thereafter. If, before the expiration of such period, the Director has not been appointed, the Secretary shall issue such interim regulations.
   2. “(2)

      Final regulations.—

      The Director shall issue final regulations necessary to implement this subtitle and the amendments made by this subtitle with respect to eligible multifamily housing projects covered by contracts described in section 512(2)(B) that expire in fiscal year 1999 or thereafter before the later of: (A) the expiration of the 12-month period beginning upon the date of the enactment of this Act [Oct. 27, 1997]; and (B) the 3-month period beginning upon the appointment of the Director under subtitle D.
   3. “(3)

      Factors for consideration.—

      Before the publication of the final regulations under paragraph (2), in addition to public comments invited in connection with publication of the interim rule, the Secretary shall—

      1. “(A)

         seek recommendations on the implementation of sections 513(b) and 515(c)(1) from organizations representing—

         1. “(i)
            State housing finance agencies and local housing agencies;
         2. “(ii)
            other potential participating administering entities;
         3. “(iii)
            tenants;
         4. “(iv)
            owners and managers of eligible multifamily housing projects;
         5. “(v)
            States and units of general local government; and
         6. “(vi)
            qualified mortgagees; and
      2. “(B)
         convene not less than 3 public forums at which the organizations making recommendations under subparagraph (A) may express views concerning the proposed disposition of the recommendations.
2. “(b)

   Transition Provision for Contracts Expiring in Fiscal Year 1998.—

   Notwithstanding any other provision of law, the Secretary shall apply all the terms of section 211 and section 212 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 [Pub. L. 104–204, set out below] (except for section 212(h)(1)(G) and the limitation in section 212(k)) contracts for project-based assistance that expire during fiscal year 1998 (in the same manner that such provisions apply to expiring contracts defined in section 212(a)(3) of such Act), except that section 517(a) of the Act shall apply to mortgages on projects subject to such contracts.

1. “(a)

   Calculation of Limit on Project-Based Assistance.—

   [Amended this section.]
2. “(b)

   Partial Payment of Claims on Multifamily Housing Projects.—

   [Amended section 1735f–19 of Title 12, Banks and Banking.]
3. “(c)

   Reuse and Rescission of Certain Recaptured Budget Authority.—

   [Amended this section.]
4. “(d)

   Section 8 Contract Renewals.—

   [Amended section 405(a) of Pub. L. 104–99, set out below.]
5. “(e)

   Renewal Upon Request of Owner.—

   [Amended section 211 of Pub. L. 104–204, set out below.]
6. “(f)

   Extension of Demonstration Contract Period.—

   [Amended section 212 of Pub. L. 104–204, set out below.]

1. “(a)

   In General.—

   1. “(1)

      Renewal.—

      Subject to paragraph (2), upon termination or expiration of a contract for project-based assistance under section 8 for a multifamily housing project (and notwithstanding section 8(v) of the United States Housing Act of 1937 [42 U.S.C. 1437f] for loan management assistance), the Secretary shall, at the request of the owner of the project and to the extent sufficient amounts are made available in appropriation Acts, use amounts available for the renewal of assistance under section 8 of such Act to provide such assistance for the project. The assistance shall be provided under a contract having such terms and conditions as the Secretary considers appropriate, subject to the requirements of this section. This section shall not require contract renewal for a project that is eligible under this subtitle for a mortgage restructuring and rental assistance sufficiency plan, if there is no approved plan for the project and the Secretary determines that such an approved plan is necessary.
   2. “(2)

      Prohibition on renewal.—

      Notwithstanding part 24 of title 24 of the Code of Federal Regulations, the Secretary may elect not to renew assistance for a project otherwise required to be renewed under paragraph (1) or provide comparable benefits under paragraph (1) or (2) of subsection (e) for a project described in either such paragraph, if the Secretary determines that a violation under paragraphs (1) through (4) of section 516(a) has occurred with respect to the project. For purposes of such a determination, the provisions of section 516 shall apply to a project under this section in the same manner and to the same extent that the provisions of such section apply to eligible multifamily housing projects, except that the Secretary shall make the determination under section 516(a)(4).
   3. “(3)

      Contract term for mark-up-to-market contracts.—

      In the case of an expiring or terminating contract that has rent levels less than comparable market rents for the market area, if the rent levels under the renewal contract under this section are equal to comparable market rents for the market area, the contract shall have a term of not less than 5 years, subject to the availability of sufficient amounts in appropriation Acts.
   4. “(4)

      Renewal rents.—

      Except as provided in subsection (b), the contract for assistance shall provide assistance at the following rent levels:

      1. “(A)

         Market rents.—

         At the request of the owner of the project, at rent levels equal to the lesser of comparable market rents for the market area or 150 percent of the fair market rents, in the case only of a project that—

         1. “(i)
            has rent levels under the expiring or terminating contract that do not exceed such comparable market rents;
         2. “(ii)
            does not have a low- and moderate-income use restriction that can not be eliminated by unilateral action by the owner;
         3. “(iii)
            is decent, safe, and sanitary housing, as determined by the Secretary;
         4. “(iv)

            is not—

            1.      “(I)
               owned by a nonprofit entity;
            2.      “(II)
               subject to a contract for moderate rehabilitation assistance under section 8(e)(2) of the United States Housing Act of 1937, as in effect before October 1, 1991; or
            3.      “(III)
               a project for which the public housing agency provided voucher assistance to one or more of the tenants after the owner has provided notice of termination of the contract covering the tenant’s unit; and
         5. “(v)
            has units assisted under the contract for which the comparable market rent exceeds 110 percent of the fair market rent.

           The Secretary may adjust the percentages of fair market rent (as specified in the matter preceding clause (i) and in clause (v)), but only upon a determination and written notification to the Congress within 10 days of making such determination, that such adjustment is necessary to ensure that this subparagraph covers projects with a high risk of nonrenewal of expiring contracts for project-based assistance.
      2. “(B)

         Reduction to market rents.—

         In the case of a project that has rent levels under the expiring or terminating contract that exceed comparable market rents for the market area, at rent levels equal to such comparable market rents.
      3. “(C)

         Rents not exceeding market rents.—

         In the case of a project that is not subject to subparagraph (A) or (B), at rent levels that—

         1. “(i)
            are not less than the existing rents under the terminated or expiring contract, as adjusted by an operating cost adjustment factor established by the Secretary (which shall not result in a negative adjustment), if such adjusted rents do not exceed comparable market rents for the market area; and
         2. “(ii)
            do not exceed comparable market rents for the market area.

           In determining the rent level for a contract under this subparagraph, the Secretary shall approve rents sufficient to cover budget-based cost increases and shall give greater consideration to providing rent at a level up to comparable market rents for the market area based on the number of the criteria under clauses (i) through (iii) of subparagraph (D) that the project meets. Notwithstanding any other provision of law, the Secretary shall include in such budget-based cost increases costs relating to the project as a whole (including costs incurred with respect to units not covered by the contract for assistance), but only (I) if inclusion of such costs is requested by the owner or purchaser of the project, (II) if inclusion of such costs will permit capital repairs to the project or acquisition of the project by a nonprofit organization, and (III) to the extent that inclusion of such costs (or a portion thereof) complies with the requirement under clause (ii).
      4. “(D)

         Waiver of 150 percent limitation.—

         Notwithstanding subparagraph (A), at rent levels up to comparable market rents for the market area, in the case of a project that meets the requirements under clauses (i) through (v) of subparagraph (A) and—

         1. “(i)
            has residents who are a particularly vulnerable population, as demonstrated by a high percentage of units being rented to elderly families, disabled families, or large families;
         2. “(ii)
            is located in an area in which tenant-based assistance would be difficult to use, as demonstrated by a low vacancy rate for affordable housing, a high turnback rate for vouchers, or a lack of comparable rental housing; or
         3. “(iii)
            is a high priority for the local community, as demonstrated by a contribution of State or local funds to the property.

           In determining the rent level for a contract under this subparagraph, the Secretary shall approve rents sufficient to cover budget-based cost increases and shall give greater consideration to providing rent at a level up to comparable market rents for the market area based on the number of the criteria under clauses (i) through (iv) that the project meets.
   5. “(5)

      Comparable market rents and comparison with fair market rents.—

      The Secretary shall prescribe the method for determining comparable market rent by comparison with rents charged for comparable properties (as such term is defined in section 512), which may include appropriate adjustments for utility allowances and adjustments to reflect the value of any subsidy (other than section 8 assistance) provided by the Department of Housing and Urban Development.
2. “(b)

   Exception Rents.—

   1. “(1)

      Renewal.—

      In the case of a multifamily housing project described in paragraph (2), pursuant to the request of the owner of the project, the contract for assistance for the project pursuant to subsection (a) shall provide assistance at the lesser of the following rent levels:

      1. “(A)

         Adjusted existing rents.—

         The existing rents under the expiring contract, as adjusted by an operating cost adjustment factor established by the Secretary (which shall not result in a negative adjustment).
      2. “(B)

         Budget-based rents.—

         Subject to a determination by the Secretary that a rent level under this subparagraph is appropriate for a project, a rent level that provides income sufficient to support a budget-based rent (including a budget-based rent adjustment if justified by reasonable and expected operating expenses).
   2. “(2)

      Projects covered.—

      A multifamily housing project described in this paragraph is a multifamily housing project that—

      1. “(A)
         is not an eligible multifamily housing project under section 512(2); or
      2. “(B)
         is exempt from mortgage restructuring under this subtitle pursuant to section 514(h).
   3. “(3)

      Moderate rehabilitation projects.—

      In the case of a project with a contract under the moderate rehabilitation program, other than a moderate rehabilitation contract under [former] section 441 of the McKinney-Vento Homeless Assistance Act [42 U.S.C. 11401], pursuant to the request of the owner of the project, the contract for assistance for the project pursuant to subsection (a) shall provide assistance at the lesser of the following rent levels:

      1. “(A)

         Adjusted existing rents.—

         The existing rents under the expiring contract, as adjusted by an operating cost adjustment factor established by the Secretary (which shall not result in a negative adjustment).
      2. “(B)

         Fair market rents.—

         Fair market rents (less any amounts allowed for tenant-purchased utilities).
      3. “(C)

         Market rents.—

         Comparable market rents for the market area.
3. “(c)

   Rent Adjustments After Renewal of Contract.—

   1. “(1)

      Required.—

      After the initial renewal of a contract for assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] pursuant to subsection (a), (b)(1), or (e)(2), the Secretary shall annually adjust the rents using an operating cost adjustment factor established by the Secretary (which shall not result in a negative adjustment) or, upon the request of the owner and subject to approval of the Secretary, on a budget basis. In the case of projects with contracts renewed pursuant to subsection (a) or pursuant to subsection (e)(2) at rent levels equal to comparable market rents for the market area, at the expiration of each 5-year period, the Secretary shall compare existing rents with comparable market rents for the market area and may make any adjustments in the rent necessary to maintain the contract rents at a level not greater than comparable market rents or to increase rents to comparable market rents.
   2. “(2)

      Discretionary.—

      In addition to review and adjustment required under paragraph (1), in the case of projects with contracts renewed pursuant to subsection (a) or pursuant to subsection (e)(2) at rent levels equal to comparable market rents for the market area, the Secretary may, at the discretion of the Secretary but only once within each 5-year period referred to in paragraph (1), conduct a comparison of rents for a project and adjust the rents accordingly to maintain the contract rents at a level not greater than comparable market rents or to increase rents to comparable market rents.
4. “(d)

   Enhanced Vouchers Upon Contract Expiration.—

   1. “(1)

      In general.—

      In the case of a contract for project-based assistance under section 8 for a covered project that is not renewed under subsection (a) or (b) of this section (or any other authority), to the extent that amounts for assistance under this subsection are provided in advance in appropriation Acts, upon the date of the expiration of such contract the Secretary shall make enhanced voucher assistance under section 8(t) of the United States Housing Act of 1937 (42 U.S.C. 1437f(t)) available on behalf of each low-income family who, upon the date of such expiration, is residing in an assisted dwelling unit in the covered project.
   2. “(2)

      Definitions.—

      For purposes of this subsection, the following definitions shall apply:

      1. “(A)

         Assisted dwelling unit.—

         The term ‘assisted dwelling unit’ means a dwelling unit that—

         1. “(i)
            is in a covered project; and
         2. “(ii)
            is covered by rental assistance provided under the contract for project-based assistance for the covered project.
      2. “(B)

         Covered project.—

         The term ‘covered project’ means any housing that—

         1. “(i)
            consists of more than four dwelling units;
         2. “(ii)

            is covered in whole or in part by a contract for project-based assistance under—

            1.      “(I)
               the new construction or substantial rehabilitation program under section 8(b)(2) of the United States Housing Act of 1937 (as in effect before October 1, 1983);
            2.      “(II)
               the property disposition program under section 8(b) of the United States Housing Act of 1937;
            3.      “(III)
               the moderate rehabilitation program under section 8(e)(2) of the United States Housing Act of 1937 (as in effect before October 1, 1991);
            4.      “(IV)
               the loan management assistance program under section 8 of the United States Housing Act of 1937;
            5.      “(V)
               section 23 of the United States Housing Act of 1937 [42 U.S.C. 1437u] (as in effect before January 1, 1975);
            6.      “(VI)
               the rent supplement program under section 101 of the Housing and Urban Development Act of 1965 [12 U.S.C. 1701s]; or
            7.      “(VII)
               section 8 of the United States Housing Act of 1937, following conversion from assistance under section 101 of the Housing and Urban Development Act of 1965,

          which contract will (under its own terms) expire during the period consisting of fiscal years 2000 through 2004; and

         1. “(iii)
            is not housing for which residents are eligible for enhanced voucher assistance as provided, pursuant to the ‘Preserving Existing Housing Investment’ account in the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (Public Law 104–204; 110 Stat. 2884) or any other subsequently enacted provision of law, in lieu of any benefits under section 223 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4113).
   3. “(4)

      Authorization of appropriations.—

      There are authorized to be appropriated for each of fiscal years 2000, 2001, 2002, 2003, and 2004 such sums as may be necessary for enhanced voucher assistance under this subsection.
5. “(e)

   Contractual Commitments Under Preservation Laws.—

   Except as provided in subsection (a)(2) and notwithstanding any other provision of this subtitle, the following shall apply:

   1. “(1)

      Preservation projects.—

      Upon expiration of a contract for assistance under section 8 [42 U.S.C. 1437f] for a project that is subject to an approved plan of action under the Emergency Low Income Housing Preservation Act of 1987 (12 U.S.C. 1715l note) or the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4101 et seq.), to the extent amounts are specifically made available in appropriation Acts, the Secretary shall provide to the owner benefits comparable to those provided under such plan of action, including distributions, rent increase procedures, and duration of low-income affordability restrictions. This paragraph shall apply to projects with contracts expiring before, on, or after the date of the enactment of this section [Oct. 27, 1997].
   2. “(2)

      Demonstration projects.—

      1. “(A)

         In general.—

         Upon expiration of a contract for assistance under section 8 for a project entered into pursuant to any authority specified in subparagraph (B) for which the Secretary determines that debt restructuring is inappropriate, the Secretary shall, at the request of the owner of the project and to the extent sufficient amounts are made available in appropriation Acts, provide benefits to the owner comparable to those provided under such contract, including annual distributions, rent increase procedures, and duration of low-income affordability restrictions. This paragraph shall apply to projects with contracts expiring before, on, or after the date of the enactment of this section [Oct. 27, 1997].
      2. “(B)

         Demonstration programs.—

         The authority specified in this subparagraph is the authority under—

         1. “(i)
            section 210 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1996 (Public Law 104–134; 110 Stat. 1321–285; 42 U.S.C. 1437f note);
         2. “(ii)
            section 212 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (Public Law 104–204; 110 Stat. 2897; 42 U.S.C. 1437f note); and
         3. “(iii)
            either of such sections, pursuant to any provision of this title [see Short Title of 1997 Amendment note set out under section 1701 of title 12].
   3. “(3)

      Mortgage restructuring and rental assistance sufficiency plans.—

      Notwithstanding paragraph (1), the owner of the project may request, and the Secretary may consider, mortgage restructuring and rental assistance sufficiency plans to facilitate sales or transfers of properties under this subtitle, subject to an approved plan of action under the Emergency Low Income Housing Preservation Act of 1987 (12 U.S.C. 1715l note) [see Codification note preceding section 4101 of Title 12, Banks and Banking] or the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4101 et seq.), which plans shall result in a sale or transfer of those properties.
6. “(f)

   Preemption of Conflicting State Laws Limiting Distributions.—

   1. “(1)

      In general.—

      Except as provided in paragraph (2), no State or political subdivision of a State may establish, continue in effect, or enforce any law or regulation that limits or restricts, to an amount that is less than the amount provided for under the regulations of the Secretary establishing allowable project distributions to provide a return on investment, the amount of surplus funds accruing after the date of the enactment of this section [Oct. 27, 1997] that may be distributed from any multifamily housing project assisted under a contract for rental assistance renewed under any provision of this section (except subsection (b)) to the owner of the project.
   2. “(2)

      Exception and waiver.—

      Paragraph (1) shall not apply to any law or regulation to the extent such law or regulation applies to—

      1. “(A)
         a State-financed multifamily housing project; or
      2. “(B)
         a multifamily housing project for which the owner has elected to waive the applicability of paragraph (1).
   3. “(3)

      Treatment of low-income use restrictions.—

      This subsection may not be construed to provide for, allow, or result in the release or termination, for any project, of any low- or moderate-income use restrictions that can not be eliminated by unilateral action of the owner of the project.
7. “(g)

   Applicability.—

   Except to the extent otherwise specifically provided in this section, this section shall apply with respect to any multifamily housing project having a contract for project-based assistance under section 8 [42 U.S.C. 1437f] that terminates or expires during fiscal year 2000 or thereafter.

1. “(a)

   In General.—

   The Secretary shall examine the standards and procedures for determining and establishing the rent standards described under subsection (b). Pursuant to such examination, the Secretary shall establish procedures and guidelines that are designed to ensure that the amounts determined by the various rent standards for the same dwelling units are reasonably consistent and reflect rents for comparable unassisted units in the same area as such dwelling units.
2. “(b)

   Rent Standards.—

   The rent standards described in this subsection are as follows:

   1. “(1)

      Enhanced vouchers.—

      The payment standard for enhanced voucher assistance under section 8(t) of the United States Housing Act of 1937 (42 U.S.C. 1437f(t)).
   2. “(2)

      Mark-to-market.—

      The rents derived from comparable properties, for purposes of section 514(g) of this Act.
   3. “(3)

      Contract renewal.—

      The comparable market rents for the market area, for purposes of section 524(a)(4) of this Act.

“[SECS. 571 to 578. Repealed. Pub. L. 105–65, title V, § 579(a)(2), as added by Pub. L. 107–116, title VI, § 621(1), Jan. 10, 2002, 115 Stat. 2226.]

1. “(a)

   Repeals.—

   1. “(1)

      Mark-to-market program.—

      Subtitle A (except for section 524) is repealed effective October 1, 2022.
   2. “(2)

      OMHAR.—

      Subtitle D (except for this section) is repealed effective October 1, 2004.
2. “(b)

   Exception.—

   Notwithstanding the repeal under subsection (a), the provisions of subtitle A (as in effect immediately before such repeal) shall apply with respect to projects and programs for which binding commitments have been entered into under this Act before October 1, 2022.
3. “(c)

   Termination of Director and Office.—

   The Office of Multifamily Housing Assistance Restructuring and the position of Director of such Office shall terminate at the end of September 30, 2004.
4. “(d)

   Transfer of Authority.—

   Effective upon the repeal of subtitle D under subsection (a)(2) of this section, all authority and responsibilities to administer the program under subtitle A are transferred to the Secretary.”

1. “(a)

   The Secretary shall establish fees for the cost of administering the certificate, voucher and moderate rehabilitation programs.

   1. “(1)
      1. (A)
         For fiscal year 1997, the fee for each month for which a dwelling unit is covered by an assistance contract shall be 7.5 percent of the base amount, adjusted as provided herein, in the case of an agency that, on an annual basis, is administering a program of no more than 600 units, and 7 percent of the base amount, adjusted as provided herein, for each additional unit above 600.
      2. “(B)

         The base amount shall be the higher of—

         1. “(i)
            the fair market rental for fiscal year 1993 for a 2-bedroom existing rental dwelling unit in the market area of the agency; and
         2. “(ii)
            such fair market rental for fiscal year 1994, but not more than 103.5 percent of the amount determined under clause (i).
      3. “(C)
         The base amount shall be adjusted to reflect changes in the wage data or other objectively measurable data that reflect the costs of administering the program during fiscal year 1996; except that the Secretary may require that the base amount be not less than a minimum amount and not more than a maximum amount.
   2. “(2)
      For subsequent fiscal years, the Secretary shall publish a notice in the Federal Register, for each geographic area, establishing the amount of the fee that would apply for the agencies administering the program, based on changes in wage data or other objectively measurable data that reflect the cost of administering the program, as determined by the Secretary.
   3. “(3)
      The Secretary may increase the fee if necessary to reflect higher costs of administering small programs and programs operating over large geographic areas.
   4. “(4)
      The Secretary may decrease the fee for PHA-owned units.
2. “(b)

   Beginning in fiscal year 1997 and thereafter, the Secretary shall also establish reasonable fees (as determined by the Secretary) for—

   1. “(1)
      the costs of preliminary expenses, in the amount of $500, for a public housing agency, but only in the first year it administers a tenant-based assistance program under the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.] and only if, immediately before the effective date of this Act [Sept. 26, 1996], it was not administering a tenant-based assistance program under the 1937 Act (as in effect immediately before the effective date of this Act), in connection with its initial increment of assistance received;
   2. “(2)
      the costs incurred in assisting families who experience difficulty (as determined by the Secretary) in obtaining appropriate housing under the program; and
   3. “(3)
      extraordinary costs approved by the Secretary.”

1. “(a)

   Definitions.—

   For purposes of this section—

   1. “(1)
      the term ‘expiring contract’ means a contract for project-based assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] that expires during fiscal year 1997;
   2. “(2)
      the term ‘family’ has the same meaning as in section 3(b) of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)];
   3. “(3)
      the term ‘multifamily housing project’ means a property consisting of more than 4 dwelling units that is covered in whole or in part by a contract for project-based assistance under section 8 of the United States Housing Act of 1937;
   4. “(4)
      the term ‘owner’ has the same meaning as in section 8(f) of the United States Housing Act of 1937;
   5. “(5)
      the term ‘project-based assistance’ means rental assistance under section 8 of the United States Housing Act of 1937 that is attached to a multifamily housing project;
   6. “(6)
      the term ‘public agency’ means a State housing finance agency, a local housing agency, or other agency with a public purpose and status;
   7. “(7)
      the term ‘Secretary’ means the Secretary of Housing and Urban Development; and
   8. “(8)
      the term ‘tenant-based assistance’ has the same meaning as in section 8(f) of the United States Housing Act of 1937.
2. “(b)

   Section 8 Contract Renewal Authority.—

   1. “(1)

      In general.—

      Notwithstanding section 405(a) of the Balanced Budget Downpayment Act, I [Pub. L. 104–99, set out below], upon the request of the owner of a multifamily housing project that is covered by an expiring contract, the Secretary shall use amounts made available for the renewal of assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] to renew the expiring contract as project-based assistance for a period of not more than one year, at rent levels that are equal to those under the expiring contract as of the date on which the contract expires: Provided, That those rent levels do not exceed 120 percent of the fair market rent for the market area in which the project is located. For an FHA-insured multifamily housing project with an expiring contract at rent levels that exceed 120 percent of the fair market rent for the market area, the Secretary shall provide, at the request of the owner, section 8 project-based assistance, for a period of not more than one year, at rent levels that do not exceed 120 percent of the fair market rent.
   2. “(2)

      Exemption for state and local housing agency projects.—

      Notwithstanding paragraph (1), upon the expiration of a contract with rent levels that exceed the percentage described in that paragraph, if the Secretary determines that the primary financing or mortgage insurance for the multifamily housing project that is covered by that expiring contract was provided by a public agency, the Secretary shall, at the request of the owner and the public agency, renew the expiring contract—

      1. “(A)
         for a period of not more than one year; and
      2. “(B)
         at rent levels that are equal to those under the expiring contract as of the date on which the contract expires.
   3. “(3)

      Exemption of certain other projects.—

      Notwithstanding paragraph (1), for section 202 projects, section 515 projects, projects with contracts entered into pursuant to [former] section 441 of the McKinney-Vento Homeless Assistance Act [42 U.S.C. 11401], and projects with rents that exceed 100 percent of fair market rent for the market area, but that are less than rents for comparable projects, upon the expiration of a section 8 contract, the Secretary shall, at the request of the owner, renew the expiring contract—

      1. “(A)
         for a period of not more than one year; and
      2. “(B)
         at rent levels that are equal to those under the expiring contract as of the date on which the contract expires.
   4. “(4)

      Other contracts.—

      1. “(A)

         Participation in demonstration.—

         For a contract covering an FHA-insured multifamily housing project that expires during fiscal year 1997 with rent levels that exceed the percentage described in paragraph (1) and after notice to the tenants, the Secretary shall, at the request of the owner of the project and after notice to the tenants, include that multifamily housing project in the demonstration program under section 212 of this Act [set out below]. The Secretary shall ensure that a multifamily housing project with an expiring contract in fiscal year 1997 shall be allowed to be included in the demonstration.
      2. “(B)

         Effect of material adverse actions and omissions.—

         Notwithstanding paragraph (1) or any other provision of law, the Secretary shall not renew an expiring contract if the Secretary determines that the owner of the multifamily housing project has engaged in material adverse financial or managerial actions or omissions with regard to the project (or with regard to other similar projects if the Secretary determines that such actions or omissions constitute a pattern of mismanagement that would warrant suspension or debarment by the Secretary). The term ‘owner’, as used in this subparagraph, in addition to it having the same meaning as in section 8(f) of the United States Housing Act of 1937 [42 U.S.C. 1437f(f)], also means an affiliate of the owner. The term ‘affiliate of the owner’ means any person or entity (including, but not limited to, a general partner or managing member, or an officer of either) that controls an owner, is controlled by an owner, or is under common control with the owner. The term ‘control’ means the direct or indirect power (under contract, equity ownership, the right to vote or determine a vote, or otherwise) to direct the financial, legal, beneficial, or other interests of the owner.
      3. “(C)

         Transfer of property.—

         For properties disqualified from the demonstration program because of actions by an owner or purchaser in accordance with subparagraph (B), the Secretary shall establish procedures to facilitate the voluntary sale or transfer of the property, with a preference for tenant organizations and tenant-endorsed community-based nonprofit and public agency purchasers meeting such reasonable qualifications as may be established by the Secretary. The Secretary may include the transfer of section 8 project-based assistance.
   5. “(5)

      Tenant protections.—

      Any family residing in an assisted unit in a multifamily housing project that is covered by an expiring contract that is not renewed, shall be offered tenant-based assistance before the date on which the contract expires or is not renewed.”

1. “(a)
   Notwithstanding part 24 of title 24 of the Code of Federal Regulations, for fiscal year 1996 and henceforth, the Secretary of Housing and Urban Development may use amounts available for the renewal of assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f], upon termination or expiration of a contract for assistance under section 8 of such Act of 1937 (other than a contract for tenant-based assistance and notwithstanding section 8(v) of such Act for loan management assistance), to provide assistance under section 8 of such Act, subject to the Section 8 Existing Fair Market Rents, for the eligible families assisted under the contracts at expiration or termination, which assistance shall be in accordance with terms and conditions prescribed by the Secretary.
2. “(b)
   Notwithstanding subsection (a) and except for projects assisted under section 8(e)(2) of the United States Housing Act of 1937 (as it existed immediately prior to October 1, 1991), at the request of the owner, the Secretary shall renew for a period of one year contracts for assistance under section 8 that expire or terminate during fiscal year 1996 at the current rent levels.”

1. “(a)

   In General.—

   1. “(1)

      Repeal.—

      1. “(A)

         In general.—

         Section 210 of the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 1996 (110 Stat. 1321) [section 101(e) [title II, § 210] of Pub. L. 104–134, formerly set out as a note below] is repealed.
      2. “(B)

         Exception.—

         Notwithstanding the repeal under subparagraph (A), amounts made available under section 210(f) [of] the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 1996 shall remain available for the demonstration program under this section through the end of fiscal year 1997.
   2. “(2)

      Savings provisions.—

      Nothing in this section shall be construed to affect any commitment entered into before the date of enactment of this Act [Sept. 26, 1996] under the demonstration program under section 210 of the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 1996.
   3. “(3)

      Definitions.—

      For purposes of this section—

      1. “(A)
         the term ‘demonstration program’ means the program established under subsection (b);
      2. “(B)
         the term ‘expiring contract’ means a contract for project-based assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] that expires during fiscal year 1997;
      3. “(C)
         the term ‘family’ has the same meaning as in section 3(b) of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)];
      4. “(D)
         the term ‘multifamily housing project’ means a property consisting of more than 4 dwelling units that is covered in whole or in part by a contract for project-based assistance;
      5. “(E)
         the term ‘owner’ has the same meaning as in section 8(f) of the United States Housing Act of 1937;
      6. “(F)
         the term ‘project-based assistance’ means rental assistance under section 8 of the United States Housing Act of 1937 that is attached to a multifamily housing project;
      7. “(G)
         the term ‘Secretary’ means the Secretary of Housing and Urban Development; and
      8. “(H)
         the term ‘tenant-based assistance’ has the same meaning as in section 8(f) of the United States Housing Act of 1937.
2. “(b)

   Demonstration Authority.—

   1. “(1)

      In general.—

      Subject to the funding limitation in subsection (l), the Secretary shall administer a demonstration program with respect to multifamily projects—

      1. “(A)
         whose owners agree to participate;
      2. “(B)
         with rents on units assisted under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] that are, in the aggregate, in excess of 120 percent of the fair market rent of the market area in which the project is located; and
      3. “(C)
         the mortgages of which are insured under the National Housing Act [12 U.S.C. 1701 et seq.].
   2. “(2)

      Purpose.—

      The demonstration program shall be designed to obtain as much information as is feasible on the economic viability and rehabilitation needs of the multifamily housing projects in the demonstration, to test various approaches for restructuring mortgages to reduce the financial risk to the FHA Insurance Fund while reducing the cost of section 8 subsidies, and to test the feasibility and desirability of—

      1. “(A)
         ensuring, to the maximum extent practicable, that the debt service and operating expenses, including adequate reserves, attributable to such multifamily projects can be supported at the comparable market rent with or without mortgage insurance under the National Housing Act and with or without additional section 8 rental subsidies;
      2. “(B)
         utilizing section 8 rental assistance, while taking into account the capital needs of the projects and the need for adequate rental assistance to support the low- and very low-income families residing in such projects; and
      3. “(C)
         preserving low-income rental housing affordability and availability while reducing the long-term cost of section 8 rental assistance.
3. “(c)

   Goals.—

   1. “(1)

      In general.—

      The Secretary shall carry out the demonstration program in a manner that will protect the financial interests of the Federal Government through debt restructuring and subsidy reduction and, in the least costly fashion, address the goals of—

      1. “(A)
         maintaining existing affordable housing stock in a decent, safe, and sanitary condition;
      2. “(B)
         minimizing the involuntary displacement of tenants;
      3. “(C)
         taking into account housing market conditions;
      4. “(D)
         encouraging responsible ownership and management of property;
      5. “(E)
         minimizing any adverse income tax impact on property owners; and
      6. “(F)
         minimizing any adverse impacts on residential neighborhoods and local communities.
   2. “(2)

      Balance of competing goals.—

      In determining the manner in which a mortgage is to be restructured or a subsidy reduced under this subsection, the Secretary may balance competing goals relating to individual projects in a manner that will further the purposes of this section.
4. “(d)

   Participation Arrangements.—

   1. “(1)

      In general.—

      In carrying out the demonstration program, the Secretary may enter into participation arrangements with designees, under which the Secretary may provide for the assumption by designees (by delegation, by contract, or otherwise) of some or all of the functions, obligations, responsibilities and benefits of the Secretary.
   2. “(2)

      Designees.—

      In entering into any arrangement under this subsection, the Secretary shall select state housing finance agencies, housing agencies or nonprofits (separately or in conjunction with each other) to act as designees to the extent such agencies are determined to be qualified by the Secretary. In locations where there is no qualified State housing finance agency, housing agency or nonprofit to act as a designee, the Secretary may act as a designee. Each participation arrangement entered into under this subsection shall include a designee as the primary partner. Any organization selected by the Secretary under this section shall have a long-term record of service in providing low-income housing and meet standards of fiscal responsibility, as determined by the Secretary.
   3. “(3)

      Designee partnerships.—

      For purposes of any participation arrangement under this subsection, designees are encouraged to develop partnerships with each other, and to contract or subcontract with other entities, including—

      1. “(A)
         public housing agencies;
      2. “(B)
         financial institutions;
      3. “(C)
         mortgage servicers;
      4. “(D)
         nonprofit and for-profit housing organizations;
      5. “(E)
         the Federal National Mortgage Association;
      6. “(F)
         the Federal Home Loan Mortgage Corporation;
      7. “(G)
         Federal Home Loan Banks; and
      8. “(H)
         other State or local mortgage insurance companies or bank lending consortia.
5. “(e)

   Long-Term Affordability.—

   1. “(1)

      In general.—

      After the renewal of a section 8 contract pursuant to a restructuring under this section, the owner shall accept each offer to renew the section 8 contract, for a period of 20 years from the date of the renewal under the demonstration, if the offer to renew is on terms and conditions, as agreed to by the Secretary or designee and the owner under a restructuring.
   2. “(2)

      Affordability requirements.—

      Except as otherwise provided by the Secretary, in exchange for any mortgage restructuring under this section, a project shall remain affordable for a period of not less than 20 years. Affordability requirements shall be determined in accordance with guidelines established by the Secretary or designee. The Secretary or designee may waive these requirements for good cause.
6. “(f)

   Procedures.—

   1. “(1)

      Notice of participation in demonstration.—

      Not later than 45 days before the date of expiration of an expiring contract (or such later date, as determined by the Secretary, for good cause), the owner of the multifamily housing project covered by that expiring contract shall notify the Secretary or designee and the residents of the owner’s intent to participate in the demonstration program.
   2. “(2)

      Demonstration contract.—

      Upon receipt of a notice under paragraph (1), the owner and the Secretary or designee shall enter into a demonstration contract, which shall provide for initial section 8 project-based rents at the same rent levels as those under the expiring contract or, if practical, the budget-based rent to cover debt service, reasonable operating expenses (including reasonable and appropriate services), and a reasonable return to the owner, as determined solely by the Secretary. The demonstration contract shall be for the minimum term necessary for the rents and mortgages of the multifamily housing project to be restructured under the demonstration program, but shall not be for a period of time to exceed 180 days, unless extended for good cause by the Secretary.
7. “(g)
   1. (1)

      Project-Based Section 8.—

      The Secretary shall renew all expiring contracts under the demonstration as section 8 project-based contracts, for a period of time not to exceed one year, unless otherwise provided under subsection (h) or in paragraph (2).
   2. “(2)

      The Secretary may renew a demonstration contract for an additional period of not to exceed 120 days, if—

      1. “(A)
         the contract was originally executed before February 1, 1997, and the Secretary determines, in the sole discretion of the Secretary, that the renewal period for the contract needs to exceed 1 year, due to delay of publication of the Secretary’s demonstration program guidelines until January 23, 1997 (not to exceed 21 projects); or
      2. “(B)
         the contract was originally executed before October 1, 1997, in connection with a project that has been identified for restructuring under the joint venture approach described in section VII.B.2. of the Secretary’s demonstration program guidelines, and the Secretary determines, in the sole discretion of the Secretary, that the renewal period for the contract needs to exceed 1 year, due to delay in implementation of the joint venture agreement required by the guidelines (not to exceed 25 projects).
8. “(h)

   Demonstration Actions.—

   1. “(1)

      Demonstration actions.—

      For purposes of carrying out the demonstration program, and in order to ensure that contract rights are not abrogated, subject to such third party consents as are necessary (if any), including consent by the Government National Mortgage Association if it owns a mortgage insured by the Secretary, consent by an issuer under the mortgage-backed securities program of the Association, subject to the responsibilities of the issuer to its security holders and the Association under such program, and consent by parties to any contractual agreement which the Secretary proposes to modify or discontinue, the Secretary or, except with respect to subparagraph (B), designee, subject to the funding limitation in subsection (l), shall take not less than one of the actions specified in subparagraphs (G), (H), and (I) and may take any of the following actions:

      1. “(A)

         Removal of restrictions.—

         1. “(i)

            In general.—

            Consistent with the purposes of this section, subject to the agreement of the owner of the project and after consultation with the tenants of the project, the Secretary or designee may remove, relinquish, extinguish, modify, or agree to the removal of any mortgage, regulatory agreement, project-based assistance contract, use agreement, or restriction that had been imposed or required by the Secretary, including restrictions on distributions of income which the Secretary or designee determines would interfere with the ability of the project to operate without above-market rents.
         2. “(ii)

            Accumulated residual receipts.—

            The Secretary or designee may require an owner of a property assisted under the section 8 new construction/substantial rehabilitation program under the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.] to apply any accumulated residual receipts toward effecting the purposes of this section.
      2. “(B)

         Reinsurance.—

         With respect to not more than 5,000 units within the demonstration during fiscal year 1997, the Secretary may enter into contracts to purchase reinsurance, or enter into participations or otherwise transfer economic interest in contracts of insurance or in the premiums paid, or due to be paid, on such insurance, on such terms and conditions as the Secretary may determine. Any contract entered into under this paragraph shall require that any associated units be maintained as low-income units for the life of the mortgage, unless waived by the Secretary for good cause.
      3. “(C)

         Participation by third parties.—

         The Secretary or designee may enter into such agreements, provide such concessions, incur such costs, make such grants (including grants to cover all or a portion of the rehabilitation costs for a project) and other payments, and provide other valuable consideration as may reasonably be necessary for owners, lenders, servicers, third parties, and other entities to participate in the demonstration program. The Secretary may establish performance incentives for designees.
      4. “(D)

         Section 8 administrative fees.—

         Notwithstanding any other provision of law, the Secretary may make fees available from the section 8 contract renewal appropriation to a designee for contract administration under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] for purposes of any contract restructured or renewed under the demonstration program.
      5. “(E)

         Full or partial payment of claim.—

         Notwithstanding any other provision of law, the Secretary may make a full payment of claim or partial payment of claim prior to default.
      6. “(F)

         Credit enhancement.—

         1. “(i)

            In general.—

            The Secretary or designee may provide FHA multifamily mortgage insurance, reinsurance, or other credit enhancement alternatives, including retaining the existing FHA mortgage insurance on a restructured first mortgage at market value or using the multifamily risk-sharing mortgage programs, as provided under section 542 of the Housing and Community Development Act of 1992 [12 U.S.C. 1707 note]. Any limitations on the number of units available for mortgage insurance under section 542 shall not apply to insurance issued for purposes of the demonstration program.
         2. “(ii)

            Maximum percentage.—

            During fiscal year 1997, not more than 25 percent of the units in multifamily housing projects with expiring contracts in the demonstration, in the aggregate, may be restructured without FHA insurance, unless otherwise agreed to by the owner of a project.
         3. “(iii)

            Credit subsidy.—

            Any credit subsidy costs of providing mortgage insurance shall be paid from amounts made available under subsection (l).
      7. “(G)

         Mortgage restructuring.—

         1. “(i)

            In general.—

            The Secretary or designee may restructure mortgages to provide a restructured first mortgage to cover debt service and operating expenses (including a reasonable rate of return to the owner) at the market rent, and a second mortgage equal to the difference between the restructured first mortgage and the mortgage balance of the eligible multifamily housing project at the time of restructuring.
         2. “(ii)

            Credit subsidy.—

            Any credit subsidy costs of providing a second mortgage shall be paid from amounts made available under subsection (l).
      8. “(H)

         Debt forgiveness.—

         The Secretary or designee, for good cause and at the request of the owner of a multifamily housing project, may forgive at the time of the restructuring of a mortgage any portion of a debt on the project that exceeds the market value of the project.
      9. “(I)

         Budget-based rents.—

         The Secretary or designee may renew an expiring contract, including a contract for a project in which operating costs exceed comparable market rents, for a period of not more than one year, at a budget-based rent that covers debt service, reasonable operating expenses (including all reasonable and appropriate services), and a reasonable rate of return to the owner, as determined solely by the Secretary, provided that the contract does not exceed the rent levels under the expiring contract. The Secretary may establish a preference under the demonstration program for budget-based rents for unique housing projects, such as projects designated for occupancy by elderly families and projects in rural areas.
      10. “(J)

          Section 8 tenant-based assistance.—

          For not more than 10 percent of units in multifamily housing projects that have had their mortgages restructured in any fiscal year under the demonstration, the Secretary or designee may provide, with the agreement of an owner and in consultation with the tenants of the housing, section 8 tenant-based assistance for some or all of the assisted units in a multifamily housing project in lieu of section 8 project-based assistance. Section 8 tenant-based assistance may only be provided where the Secretary determines and certifies that there is adequate available and affordable housing within the local area and that tenants will be able to use the section 8 tenant-based assistance successfully.
   2. “(2)

      Offer and acceptance.—

      Notwithstanding any other provision of law, an owner of a project in the demonstration must accept any reasonable offer made by the Secretary or a designee under this subsection. An owner may appeal the reasonableness of any offer to the Secretary and the Secretary shall respond within 30 days of the date of appeal with a final offer. If the final offer is not acceptable, the owner may opt out of the program.
9. “(i)

   Community and Tenant Input.—

   In carrying out this section, the Secretary shall develop procedures to provide appropriate and timely notice, including an opportunity for comment and timely access to all relevant information, to officials of the unit of general local government affected, the community in which the project is situated, and the tenants of the project.
10. “(j)

    Transfer of Property.—

    The Secretary shall establish procedures to facilitate the voluntary sale or transfer of multifamily housing projects under the demonstration to tenant organizations and tenant-endorsed community-based nonprofit and public agency purchasers meeting such reasonable qualifications as may be established by the Secretary.
11. “(k)

    Limitation on Demonstration Authority.—

    The Secretary shall carry out the demonstration program with respect to mortgages not to exceed 50,000 units.
12. “(l)

    Funding.—

    In addition to the $30,000,000 made available under section 210 of the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act, 1996 (110 Stat. 1321) [section 101(e) [title II, § 210] of Pub. L. 104–134, formerly set out as a note below], for the costs (including any credit subsidy costs associated with providing direct loans or mortgage insurance) of modifying and restructuring loans held or guaranteed by the Federal Housing Administration, as authorized under this section, $10,000,000 is hereby appropriated, to remain available until September 30, 1998.
13. “(m)

    Report to Congress.—

    1. “(1)

       In general.—

       1. “(A)

          Quarterly reports.—

          Not less than every 3 months, the Secretary shall submit to the Congress a report describing and assessing the status of the projects in the demonstration program.
       2. “(B)

          Final report.—

          Not later than 6 months after the end of the demonstration program, the Secretary shall submit to the Congress a final report on the demonstration program.
    2. “(2)

       Contents.—

       Each report submitted under paragraph (1)(A) shall include a description of—

       1. “(A)
          each restructuring proposal submitted by an owner of a multifamily housing project, including a description of the physical, financial, tenancy, and market characteristics of the project;
       2. “(B)
          the Secretary’s evaluation and reasons for each multifamily housing project selected or rejected for participation in the demonstration program;
       3. “(C)
          the costs to the FHA General Insurance and Special Risk Insurance funds;
       4. “(D)
          the subsidy costs provided before and after restructuring;
       5. “(E)
          the actions undertaken in the demonstration program, including the third-party arrangements made; and
       6. “(F)
          the demonstration program’s impact on the owners of the projects, including any tax consequences.
    3. “(3)

       Contents of final report.—

       The report submitted under paragraph (1)(B) shall include—

       1. “(A)
          the required contents under paragraph (2); and
       2. “(B)
          any findings and recommendations for legislative action.”

1. “(a)

   Purpose.—

   The purpose of this demonstration is to give public housing agencies and the Secretary of Housing and Urban Development the flexibility to design and test various approaches for providing and administering housing assistance that: reduce cost and achieve greater cost effectiveness in Federal expenditures; give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient; and increase housing choices for low-income families.
2. “(b)

   Program Authority.—

   The Secretary of Housing and Urban Development shall conduct a demonstration program under this section beginning in fiscal year 1996 under which up to 30 public housing agencies (including Indian housing authorities) administering the public or Indian housing program and the section 8 [42 U.S.C. 1437f] housing assistance payments program may be selected by the Secretary to participate. The Secretary shall provide training and technical assistance during the demonstration and conduct detailed evaluations of up to 15 such agencies in an effort to identify replicable program models promoting the purpose of the demonstration. Under the demonstration, notwithstanding any provision of the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.] except as provided in subsection (e), an agency may combine operating assistance provided under section 9 of the United States Housing Act of 1937 [42 U.S.C. 1437g], modernization assistance provided under section 14 of such Act [42 U.S.C. 1437l], and assistance provided under section 8 of such Act for the certificate and voucher programs, to provide housing assistance for low-income families, as defined in section 3(b)(2) of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)(2)], and services to facilitate the transition to work on such terms and conditions as the agency may propose and the Secretary may approve.
3. “(c)

   Application.—

   An application to participate in the demonstration—

   1. “(1)
      shall request authority to combine assistance under sections 8, 9, and 14 of the United States Housing Act of 1937 [42 U.S.C. 1437f, 1437g, 1437l];
   2. “(2)
      shall be submitted only after the public housing agency provides for citizen participation through a public hearing and, if appropriate, other means;
   3. “(3)

      shall include a plan developed by the agency that takes into account comments from the public hearing and any other public comments on the proposed program, and comments from current and prospective residents who would be affected, and that includes criteria for—

      1. “(A)
         families to be assisted, which shall require that at least 75 percent of the families assisted by participating demonstration public housing authorities shall be very low-income families, as defined in section 3(b)(2) of the United States Housing Act of 1937 [42 U.S.C. 1437a(b)(2)];
      2. “(B)
         establishing a reasonable rent policy, which shall be designed to encourage employment and self-sufficiency by participating families, consistent with the purpose of this demonstration, such as by excluding some or all of a family’s earned income for purposes of determining rent;
      3. “(C)
         continuing to assist substantially the same total number of eligible low-income families as would have been served had the amounts not been combined;
      4. “(D)
         maintaining a comparable mix of families (by family size) as would have been provided had the amounts not been used under the demonstration; and
      5. “(E)
         assuring that housing assisted under the demonstration program meets housing quality standards established or approved by the Secretary; and
   4. “(4)
      may request assistance for training and technical assistance to assist with design of the demonstration and to participate in a detailed evaluation.
4. “(d)

   Selection.—

   In selecting among applications, the Secretary shall take into account the potential of each agency to plan and carry out a program under the demonstration, the relative performance by an agency under the public housing management assessment program under section 6(j) of the United States Housing Act of 1937 [42 U.S.C. 1437d(j)], and other appropriate factors as determined by the Secretary.
5. “(e)

   Applicability of 1937 Act Provisions.—

   1. “(1)
      Section 18 of the United States Housing Act of 1937 [42 U.S.C. 1437p] shall continue to apply to public housing notwithstanding any use of the housing under this demonstration.
   2. “(2)
      Section 12 of such Act [42 U.S.C. 1437j] shall apply to housing assisted under the demonstration, other than housing assisted solely due to occupancy by families receiving tenant-based assistance.
6. “(f)

   Effect on Section 8, Operating Subsidies, and Comprehensive Grant Program Allocations.—

   The amount of assistance received under section 8, section 9, or pursuant to section 14 [42 U.S.C. 1437f, 1437g, 1437l] by a public housing agency participating in the demonstration under this part [section] shall not be diminished by its participation.
7. “(g)

   Records, Reports, and Audits.—

   1. “(1)

      Keeping of records.—

      Each agency shall keep such records as the Secretary may prescribe as reasonably necessary to disclose the amounts and the disposition of amounts under this demonstration, to ensure compliance with the requirements of this section, and to measure performance.
   2. “(2)

      Reports.—

      Each agency shall submit to the Secretary a report, or series of reports, in a form and at a time specified by the Secretary. Each report shall—

      1. “(A)
         document the use of funds made available under this section;
      2. “(B)
         provide such data as the Secretary may request to assist the Secretary in assessing the demonstration; and
      3. “(C)
         describe and analyze the effect of assisted activities in addressing the objectives of this part [section].
   3. “(3)

      Access to documents by the secretary.—

      The Secretary shall have access for the purpose of audit and examination to any books, documents, papers, and records that are pertinent to assistance in connection with, and the requirements of, this section.
   4. “(4)

      Access to documents by the comptroller general.—

      The Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall have access for the purpose of audit and examination to any books, documents, papers, and records that are pertinent to assistance in connection with, and the requirements of, this section.
8. “(h)

   Evaluation and Report.—

   1. “(1)

      Consultation with pha and family representatives.—

      In making assessments throughout the demonstration, the Secretary shall consult with representatives of public housing agencies and residents.
   2. “(2)

      Report to congress.—

      Not later than 180 days after the end of the third year of the demonstration, the Secretary shall submit to the Congress a report evaluating the programs carried out under the demonstration. The report shall also include findings and recommendations for any appropriate legislative action.
9. “(i)

   Funding for Technical Assistance and Evaluation.—

   From amounts appropriated for assistance under section 14 of the United States Housing Act of 1937 [42 U.S.C. 1437l] for fiscal years 1996, 1997, and 1998, the Secretary may use up to a total of $5,000,000—

   1. “(1)

      to provide, directly or by contract, training and technical assistance—

      1. “(A)
         to public housing agencies that express an interest to apply for training and technical assistance pursuant to subsection (c)(4), to assist them in designing programs to be proposed for the demonstration; and
      2. “(B)
         to up to 10 agencies selected to receive training and technical assistance pursuant to subsection (c)(4), to assist them in implementing the approved program; and
   2. “(2)
      to conduct detailed evaluations of the activities of the public housing agencies under paragraph (1)(B), directly or by contract.
10. “(j)

    Capital and Operating Fund Assistance.—

    With respect to any public housing agency participating in the demonstration under this section that receives assistance from the Capital or Operating Fund under section 9 of the United States Housing Act of 1937 [42 U.S.C. 1437g] (as amended by the Quality Housing and Work Responsibility Act of 1998), for purposes of this section—

    1. “(1)
       any reference to assistance under section 9 of the United States Housing Act of 1937 shall be considered to refer also to assistance provided from the Operating Fund under section 9(e) of such Act (as so amended); and
    2. “(2)
       any reference to assistance under section 14 of the United States Housing Act of 1937 [former 42 U.S.C. 1437l] shall be considered to refer also to assistance provided from the Capital Fund under section 9(d) of such Act (as so amended).”

1. “(i)
   housing constructed or substantially rehabilitated pursuant to assistance provided under section 8(b)(2) of the United States Housing Act of 1937 [42 U.S.C. 1437f(b)(2)] (as such section existed on the day before October 1, 1983); or
2. “(ii)
   projects financed under section 202 of the Housing Act of 1959 [12 U.S.C. 1701q] (as such section existed on the day before the date of enactment of the Cranston-Gonzalez National Affordable Housing Act [Nov. 28, 1990]).”

1. “(a)

   Demonstration Program.—

   The Secretary shall carry out a demonstration program to attract pension fund investment in affordable housing through the use of project-based rental assistance under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f].
2. “(b)

   Funding Requirements.—

   In carrying out this section, the Secretary shall ensure that not less than 50 percent of the funds appropriated for the demonstration program each year are used in conjunction with the disposition of either—

   1. “(1)
      multifamily properties owned by the Department; or
   2. “(2)
      multifamily properties securing mortgages held by the Department.
3. “(c)

   Contract Terms.—

   1. “(1)

      In general.—

      Project-based assistance under this section shall be provided pursuant to a contract entered into by the Secretary and the owner of the eligible housing that—

      1. “(A)
         provides assistance for a term of not less than 60 months and not greater than 180 months; and
      2. “(B)
         provides for contract rents, to be determined by the Secretary, which shall not exceed contract rents permitted under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f], taking into consideration any costs for the construction, rehabilitation, or acquisition of the housing.
   2. “(2)

      Amendment to section 203.—

      [Amended section 1701z–11 of Title 12, Banks and Banking.]
4. “(d)

   Limitation.—

   1. (1)

      The Secretary may not provide (or make a commitment to provide) more than 50 percent of the funding for housing financed by any single pension fund, except that this limitation shall not apply if the Secretary, after the end of the 6-month period beginning on the date notice is issued under subsection (e)—

      1. “(A)

         determines that—

         1. “(i)
            there are no expressions of interest that are likely to result in approvable applications in the reasonably foreseeable future; or
         2. “(ii)
            any such expressions of interest are not likely to use all funding under this section; and
      2. “(B)
         so informs the Committee on Banking, Finance and Urban Affairs [now Committee on Financial Services] of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate.
   2. “(2)
      If the Secretary determines that there are expressions of interest referred to in paragraph (1)(A)(ii), the Secretary may reserve funding sufficient in the Secretary’s determination to fund such applications and may use any remaining funding for other pension funds in accordance with this section.
5. “(e)

   Implementation.—

   The Secretary shall by notice establish such requirements as may be necessary to carry out the provisions of this section. The notice shall take effect upon issuance.
6. “(f)

   Applicability of ERISA.—

   Notwithstanding section 514(d) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1144(d)], nothing in this section shall be construed to authorize any action or failure to act that would constitute a violation of such Act [29 U.S.C. 1001 et seq.].
7. “(g)

   Report.—

   Not later than 3 months after the last day of each fiscal year, the Secretary shall submit to the Committee on Banking, Finance and Urban Affairs [now Committee on Financial Services] of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report summarizing the activities carried out under this section during that fiscal year.
8. “(h)

   Establishment of Standards.—

   Mortgages secured by housing assisted under this demonstration shall meet such standards regarding financing and securitization as the Secretary may establish.
9. “(i)

   Authorization of Appropriations.—

   There are authorized to be appropriated $100,000,000 for fiscal year 1994 to carry out this section.
10. “[(j)
    Redesignated (i).]
11. “(k)

    Termination Date.—

    The Secretary shall not enter into any new commitment to provide assistance under this section after September 30, 1998.”

1. “(1)
   not less than a fee calculated in accordance with the fair market rents for Federal fiscal year 1993; or
2. “(2)

   not more than—

   1. “(A)
      a fee calculated in accordance with section 8(q) of such Act, except that such fee shall not be in excess of 3.5 percent above the fee calculated in accordance with paragraph (1); or
   2. “(B)
      to the extent approved in an appropriation Act, a fee calculated in accordance with such section 8(q).”

1. “(1)

   Data.—

   The Secretary of Housing and Urban Development shall collect and maintain, in an automated system, data describing the characteristics of families assisted under the certificate and voucher programs established under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f], which data shall include the share of family income paid toward rent.
2. “(2)

   Report.—

   Not less than annually, the Secretary shall submit a report to the Congress setting forth, for each of the certificate program and the voucher program, the percentage of families participating in the program who are paying for rent more than the amount determined under section 3(a)(1) of such Act [42 U.S.C. 1437a(a)(1)]. The report shall set forth data in appropriate categories, such as various areas of the country, types and sizes of public housing agencies, types of families, and types or markets. The data shall identify the jurisdictions in which more than 10 percent of the families assisted under section 8 of such Act pay for rent more than the amount determined under section 3(a)(1) of such Act and the report shall include an examination of whether the fair market rent for such areas is appropriate. The report shall also include any recommendations of the Secretary for legislative and administrative actions appropriate as a result of analysis of the data.
3. “(3)

   Availability of data.—

   The Secretary shall make available to each public housing agency administering assistance under the certificate or voucher program any data maintained under this subsection that relates to the public housing agency.”

1. “(a)

   Assistance Authorized.—

   The Secretary of Housing and Urban Development is authorized to provide assistance, under any housing assistance program administered by the Secretary, to the State of Hawaii, for use by the State in meeting the responsibilities with which it has been charged under the provisions of the Act of July 9, 1921 (42 Stat. 108) [formerly 48 U.S.C. 691–718].
2. “(b)

   Mortgage Insurance.—

   1. “(1)

      In general.—

      Notwithstanding any other provision or limitation of this Act [see Short Title note set out under section 12701 of this title], or the National Housing Act [12 U.S.C. 1701 et seq.], including those relating to marketability of title, the Secretary of Housing and Urban Development may provide mortgage insurance covering any property on lands set aside under the provisions of the Act of July 9, 1921 (42 Stat. 108), upon which there is or will be located a multifamily residence, for which the Department of the Hawaiian Home Lands of the State of Hawaii—

      1. “(A)
         is the mortgagor or co-mortgagor;
      2. “(B)
         guarantees in writing to reimburse the Secretary for any mortgage insurance claim paid in connection with such property; or
      3. “(C)
         offers other security that is acceptable to the Secretary, subject to appropriate conditions prescribed by the Secretary.
   2. “(2)

      Sale on default.—

      In the event of a default on a mortgage insured pursuant to paragraph (1), the Department of Hawaiian Home Lands of the State of Hawaii may sell the insured property or housing unit to an eligible beneficiary as defined in the Act of July 9, 1921 (42 Stat. 108).”

1. “(a)

   Effect of Prior Comparability Studies.—

   1. “(1)

      In general.—

      In any case in which, in implementing section 8(c)(2) of the United States Housing Act of 1937 [42 U.S.C. 1437f(c)(2)]—

      1. “(A)
         the use of comparability studies by the Secretary of Housing and Urban Development or the appropriate State agency as an independent limitation on the amount of rental adjustments resulting from the application of an annual adjustment factor under such section has resulted in the reduction of the maximum monthly rent for units covered by the contract or the failure to increase such contract rent to the full amount otherwise permitted under the annual adjustment factor, or
      2. “(B)
         an assistance contract requires a project owner to make a request before becoming eligible for a rent adjustment under the annual adjustment factor and the project owner certifies that such a request was not made because of anticipated negative adjustment to the project rents,

      for fiscal year 1980, and annually thereafter until regulations implementing this section take effect, rental adjustments shall be calculated as an amount equal to the annual adjustment factor multiplied by a figure equal to the contract rent minus the amount of contract rent attributable to debt service. Upon the request of the project owner, the Secretary shall pay to the project owner the amount, if any, by which the total rental adjustment calculated under the preceding sentence exceeds the total adjustments the Secretary or appropriate State agency actually approved, except that solely for purposes of calculating retroactive payments under this subsection, in no event shall any project owner be paid an amount less than 30 percent of a figure equal to the aggregate of the annual adjustment factor multiplied by the full contract rent for each year on or after fiscal year 1980, minus the sum of the rental payments the Secretary or appropriate State agency actually approved for those years. The method provided by this subsection shall be the exclusive method by which retroactive payments, whether or not requested, may be made for projects subject to this subsection for the period from fiscal year 1980 until the regulations issued under subsection (e) take effect. For purposes of this paragraph, ‘debt service’ shall include interest, principal, and mortgage insurance premium if any.
   2. “(2)

      Applicability.—

      1. “(A)

         In general.—

         Subsection (a) shall apply with respect to any use of comparability studies referred to in such subsection occurring before the effective date of the regulations issued under subsection (e).
      2. “(B)

         Final litigation.—

         Subsection (a) shall not apply to any project with respect to which litigation regarding the authority of the Secretary to use comparability studies to limit rental adjustments under section 8(c)(2) of the United States Housing Act of 1937 has resulted in a judgment before the effective date of this Act [Dec. 15, 1989] that is final and not appealable (including any settlement agreement).
2. “(b)

   3-Year Payments.—

   The Secretary shall provide the amounts under subsection (a) over the 3-year period beginning on the effective date of the regulations issued under subsection (e). The Secretary shall provide the payments authorized under subsection (a) only to the extent approved in subsequent appropriations Acts. There are authorized to be appropriated such sums as may be necessary for this purpose.
3. “(d)

   Determination of Contract Rent.—

   1. (1)

      The Secretary shall upon the request of the project owner, make a one-time determination of the contract rent for each project owner referred to in subsection (a). The contract rent shall be the greater of the contract rent—

      1. “(A)
         currently approved by the Secretary under section 8(c)(2) of the United States Housing Act of 1937 [42 U.S.C. 1437f(c)(2)], or
      2. “(B)
         calculated in accordance with the first sentence of subsection (a)(1).
   2. “(2)
      All adjustments in contract rents under section 8(c)(2) of the United States Housing Act of 1937, including adjustments involving projects referred to in subsection (a), that occur beginning with the first anniversary date of the contract after the regulations issued under subsection (e) take effect shall be made in accordance with the annual adjustment and comparability provisions of sections 8(c)(2)(A) and 8(c)(2)(C) of such Act, respectively, using the one-time contract rent determination under paragraph (1).
4. “(e)

   Regulations.—

   The Secretary shall issue regulations to carry out this section and the amendments made by this section [amending this section], including the amendments made by subsection (c) with regard to annual adjustment factors and comparability studies. The Secretary shall issue such regulations not later than the expiration of the 180-day period beginning on the date of the enactment of this Act [Dec. 15, 1989].”

1. “(a)

   Definition of Qualified Project.—

   For purposes of this section, the term ‘qualified project’ means any State financed project or local government or local housing agency financed project, that—

   1. “(1)

      was—

      1. “(A)
         provided a financial adjustment factor under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f]; or
      2. “(B)
         constructed or substantially rehabilitated pursuant to assistance provided under a contract under section 8(b)(2) of the United States Housing Act of 1937 (as in effect on September 30, 1983) entered into during any of calendar years 1979 through 1984; and
   2. “(2)
      is being refinanced.
2. “(b)

   Availability of Funds.—

   The Secretary shall make available to the State housing finance agency in the State in which a qualified project is located, or the local government or local housing agency initiating the refinancing of the qualified project, as applicable, an amount equal to 50 percent of the amounts recaptured from the project (as determined by the Secretary on a project-by-project basis). Notwithstanding any other provision of law, such amounts shall be used only for providing decent, safe, and sanitary housing affordable for very low-income families and persons.
3. “(c)

   Applicability and Budget Compliance.—

   1. “(1)

      Retroactivity.—

      This section shall apply to refinancings of projects for which settlement occurred or occurs before, on, or after the date of the enactment of the Housing and Community Development Act of 1992 [Oct. 28, 1992], subject to the provisions of paragraph (2).
   2. “(2)

      Budget compliance.—

      This section shall apply only to the extent or in such amounts as are provided in appropriation Acts.”

1. “(b)
   1. [(1)
      Repealed. Pub. L. 105–276, title V, § 582(a)(4), Oct. 21, 1998, 112 Stat. 2643.]
   2. “(2)
      Not later than one year after the date of the enactment of this Act [Aug. 13, 1981], the Secretary shall transmit to the Congress a report indicating alternative methods which may be utilized for recapturing the cost to the Federal Government of front-end investment in those units which are removed from the section 8 program.
2. “[(c)
   Repealed. Pub. L. 105–276, title V, § 582(a)(4), Oct. 21, 1998, 112 Stat. 2643.]
3. “(d)

   Rental Assistance Fraud Recoveries.—

   1. “(1)

      Authority to retain recovered amounts.—

      The Secretary of Housing and Urban Development shall permit public housing agencies administering the housing assistance payments program under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] to retain, out of amounts obtained by the agencies from tenants that are due as a result of fraud and abuse, an amount (determined in accordance with regulations issued by the Secretary) equal to the greater of—

      1. “(A)
         50 percent of the amount actually collected, or
      2. “(B)
         the actual, reasonable, and necessary expenses related to the collection, including costs of investigation, legal fees, and collection agency fees.
   2. “(2)

      Use.—

      Amounts retained by an agency shall be made available for use in support of the affected program or project, in accordance with regulations issued by the Secretary. Where the Secretary is the principal party initiating or sustaining an action to recover amounts from families or owners, the provisions of this section shall not apply.
   3. “(3)

      Recovery.—

      Amounts may be recovered under this paragraph—

      1. “(A)
         by an agency through a lawsuit (including settlement of the lawsuit) brought by the agency or through court-ordered restitution pursuant to a criminal proceeding resulting from an agency’s investigation where the agency seeks prosecution of a family or where an agency seeks prosecution of an owner; or
      2. “(B)
         through administrative repayment agreements with a family or owner entered into as a result of an administrative grievance procedure conducted by an impartial decisionmaker in accordance with section 6(k) of the United States Housing Act of 1937 [42 U.S.C. 1437d(k)].”