INCENTIVES TO EXTEND LOW-INCOME USE.

SEC. 203. INCENTIVES TO EXTEND LOW-INCOME USE. (a) Loans.— (1) Acquisitions by public entities.—Section 236(b) of the National Housing Act is amended by inserting “public entity,” before “or a cooperative housing corporation”. (2) Capital improvement loans.— (A) Section 201(m)(2((B) of the Housing and Community Development Amendments of 1978 is amended by striking “Reduce” and inserting “Notwithstanding subsection (1)(2)(B), reduce”. (B) Section 201(m)(2) of the Housing and Community Development Amendments of 1978 is amended— (i) by striking “not subject to paragraph (1)”; (ii) by inserting after “residents” the second place it appears the following: “, or where appropriate to imple-103 STAT. 2038ment a plan of action under subtitle B of the Emergency Low Income Housing Preservation Act of 1987”; (iii) adding a new subparagraph after subparagraph (D): “(E) Permit repayment of the debt service to be deferred as long as the low and moderate income character of the project is maintained in accordance with subsection (d).”. (b) Approval of Plan of Action.— (1) Tenant profile.—Section 225(b)(3)(F)(i) of the Emergency Low Income Housing Preservation Act of 1987 is amended by inserting before the semicolon the following: “ (based on the area median income limits established by the Secretary in February, 1987), or the date the plan of action is approved, whichever date results in the highest proportion of very low-income families, except that this limitation shall not prohibit a higher proportion of very low-income families from occupying the housing”. (2) Section 8 rental assistance.—Section 225 of the Emergency Low Income Housing Preservation Act of 1987 is amended, by adding at the end the following new subsections: “(c) Section 8 Rental Assistance.—When providing rental assistance under section 8, the Secretary may enter into a contract with an owner, contingent upon the future availability of appropriations for the purpose of renewing expiring contracts for rental assistance as provided in appropriations Acts, to extend the term of such rental assistance for such additional period or periods as is necessary to carry out an approved plan of action. The contract and the approved plan of action shall provide that, if the Secretary is unable to extend the term of such rental assistance or is unable to develop a revised package of incentives providing benefits to the owner comparable to those received under the original approved plan of action, the Secretary, upon the request of the owner, shall take the following actions (subject to the limitations under the following paragraphs):— (1) Modification of the binding commitments made pursuant to subsection (b) that are dependent on such rental assistance. (2) If action under paragraph (1) is not feasible, release of an owner from the binding commitments made pursuant to subsection (b) that are dependent on such rental assistance. (3) If action under paragraphs (1) and (2) would, in the determination of the Secretary, result in the default of the insured loan, approval of the revised plan of action, notwithstanding subsection (a), that involves the termination of low- income affordability restrictions. At least 30 days prior to making a request under the preceding sentence, an owner shall notify the Secretary of the owner’s intention to submit the request. The Secretary shall have a period of 90 days following receipt of such notice to take action to extend the rental assistance contract and to continue the binding commitments under subsection (b). “(d) Relocation of Displaced Tenants.—Any plan of action shall specify actions that the Secretary and the owner shall take to ensure that any tenants, displaced as a result of a plan of action approved under subsection (a) or as a result of modifications taken pursuant to subsection (c), are relocated to affordable housing.”. (c) Insurance for Second Mortgage Financing.— (1) Underwriting.—Section 241(f)(2) of the National Housing Act is amended by adding at the end the following sentence: 103 STAT. 2039 “When underwriting an equity loan under this subsection, the Secretary may assume that the rental assistance provided in accordance with an approved plan of action under section 225(b) of the Emergency Low Income Housing Preservation Act of 1987 will be extended for the full term of the contract entered into under section 225(c) of that Act. The Secretary may accelerate repayment of a loan under this section in the event rental assistance is not extended under section 225(c) of that Act or the Secretary is unable to develop a revised package of incentives to the owner comparable to those received under the original approved plan of action.”. (2) Acquisitions by public entities.—Section 241(f)(3) of the National Housing Act is amended by inserting “public entity,” after “A”. (d) Limitations on Foreclosure.—Section 241(f) of the National Housing Act is amended by adding at the end the following new paragraph: “(6) If the Secretary is unable to extend the term of rental assistance for the full term of the contract entered into under section 225(c) of the Emergency Low Income Housing Preservation Act of 1987, the Secretary is authorized to take such actions as the Secretary deems to be appropriate to avoid default, avoid disruption of the sound ownership and management of the property or otherwise minimize the cost to the Federal Government.”.