rental and cooperative housing for lower income families

rental and cooperative housing for lower income families Sec. 201. (a) Title II of the National Housing Act is amended by adding after section 235 (as added by section 101 of this Act) the following new section: “rental and cooperative housing for lower income families “Sec. 236. (a) For the purpose of reducing rentals for lower income families, the Secretary is authorized to make, and to contract to make, periodic interest reduction payments on behalf of the owner of a 82 Stat. 499rental housing project designed for occupancy by lower income families, which shall be accomplished through payments to morgagees holding mortgages meeting the special requirements specified in this section. “(b) Interest reduction payments with respect to a project shall only be made during such time as the project is operated as a rental housing project and is subject to a mortgage which meets the requirements of, and is insured under, subsection (j) of this section Provided, That interest reduction payments may be made with respect to a rental or cooperative housing project owned by a private nonprofit corporation or other private nonprofit entity, a limited dividend corporation or other limited dividend entity, or a cooperative housing corporation, which is financed under a State or local program providing assistance through loans, loan insurance, or tax abatements, and which prior to completion of construction or rehabilitation is approved for receiving the benefits of this section) “(c) The interest reduction payments to a mortgagee by the Secretary on behalf of a project owner shall lie in an amount not exceeding the difference between the monthly payment for principal, interest, and mortgage insurance premium which the project owner as a mortgagor is obligated to pay under the mortgage and the monthly payment for principal and interest such project owner would be obligated to pay if the mortgage were to bear interest at the rate of 1 per centum per annum. “(d) The Secretary may include in the payment to the mortgagee such amount, in addition to the amount computed under subsection .(c), as he deems appropriate to reimburse the mortgagee for its expenses in handling the mortgage. “(e) As a condition for receiving the benefits of interest reduction payments, the project owner shall operate the project in accordance with such requirements with respect to tenant eligibility and rents as the Secretary may prescribe. Procedures shall be adopted by the Secretary for review of tenant incomes at intervals of two years (or at shorter intervals where the Secretary deems it desirable). “(f) For each dwelling unit there shall be established with the approval of the Secretary (1) a basic rental charge determined on the basis of operating the project with payments of principal and interest due under a mortgage bearing interest at the rate of 1 per centum per annum: and (2) a fair market rental charge determined on the basis of operating the project with payments of principal, interest, and mortgage insurance premium which the mortgagor is obligated to pay under the mortgage covering the project. The rental for each dwelling unit shall be at the basic rental charge or such greater amount, not exceeding the fair market rental charge, as represents 25 per centum of the tenant’s income. “(g) The project owner shall, as required by the Secretary, accumulate, safeguard, and periodically pay to the Secretary all rental charges collected in excess of the basic rental charges. Such excess charges shall be deposited by the Secretary in a fund which may be used by him as a revolving fund for the purpose of making interest reduction payments with respect to any rental housing project receiving assistance under this section, subject to limits approved in appropriation Acts pursuant to subsection (i). Moneys in such fund not needed for current operations may be invested in bonds or other obligations of the United States or in bonds or other obligations guaranteed as to principal and interest by the United States. “(h) In addition to establishing the requirements specified in subsection (e), the Secretary is authorized to make such rules and regulations, to enter into such agreements, and to adopt such procedures as 82 Stat. 500he may deem necessary or desirable to carry out the provisions of this section. “(i) (1) There are authorized to be appropriated such sums as may lie necessary to carry out the provisions of this section, including such sums as may be necessary to make interest reduction payments under contracts entered into under this section. The aggregate amount of contracts to make such payments shall not exceed amounts approved in appropriation Acts, and payments pursuant to such contracts shall not exceed $75,000,000 per annum prior to July 1, 1969, which maximum dollar amount shall be increased by $100,000,000 on July 1, 1969, and by $125,000,000 on July 1, 1970. “(2) Not more than 20 per centum of the total amount of interest reduction payments authorized to be contracted to be made pursuant to appropriation Acts shall be contracted to be made with respect to families, occupying rental housing projects assisted under this section, whose incomes at the time of the initial renting of the projects exceed 135 per centum of the maximum income limits which ran lie established in the area, pursuant to the limitations prescribed in sections 2(2) and 15(7) (b) (ii) of the United States Housing Act of 1937, for initial occupancy in public housing dwellings, but the income of such families at the time of the initial renting of the projects shall in no case exceed 90 per centum of the limits prescribed by the Secretary for occupants of projects financed with mortgages insured under section 221(d)(3) which bear interest at the below-market interest rate prescribed in the proviso of section 221(d)(5). The limitations prescribed in this paragraph shall be administered by the Secretary so as to accord a preference to those families whose incomes are within the lowest practicable limits for obtaining rental accommodations in projects assisted under this section. The Secretary shall report annually to the respective Committees on Banking and Currency of the Semite and House of Representatives with respect to the income levels of families living in projects assisted under this section. “(j) (1) The Secretary is authorized, upon application by the mortgagee, to insure a mortgage (including advances on such mortgage during construction) which meets the requirements of this subsection. Commitments for the insurance of such mortgages may lie issued by the Secretary prior to the date of their execution or disbursment thereon, upon such terms and conditions as he may prescribe. “(2) As used in this subsection— “(A) the terms ‘family’ and ‘families’ shall have the same meaning as in section 221; “(B) the term ‘elderly or handicapped families’ shall have the same meaning as in section 202 of the Housing Act of 1959; and “(C) the terms ‘mortgage’, ‘mortgagee’, and ‘mortgagor’ shall have the same meaning as in section 201. “(3) To be eligible for insurance under this subsection, a mortgage shall meet the requirements specified in subsections (d)(1) and (d)(3) of section 221, except as such requirements are modified by this subsection. In the case of a project financed with a mortgage insulting under this subsection which involves a mortgagor other than a cooperative or a private nonprofit corporation or association and which is sold to a cooperative or a nonprofit corporation or association, the Secretary is further authorized to insure under this subsection a mortgage given by such purchaser in an amount not exceeding the appraised value of the property at the time of purchase, which value shall be based upon a mortgage amount on which the debt service can be met from the income of the property when operated on a nonprofit basis, after payment of all operating expenses, taxes, and required reserves. “(4) A mortgage to be insured under this subsection shall— 82 Stat. 501 “(A) be executed by a private mortgagor eligible under subsection (d) (3) or (e) of section 221; “(B) bear interest (exclusive of premium charges for insurance and service charges, if any) at not to exceed such per centum per annum (not in excess of 6 per centum), on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary to meet the mortgage market; and “(C) provide for complete amortization by periodic payments within such term as the Secretary may prescribe. “(5) The property or project shall— “(A) comply with such standards and conditions as the Secretary may prescribe to establish the acceptability of the property for mortgage insurance and may include such nondwelling facilities as the Secretary deems adequate and appropriate to serve the occupants and the surrounding neighborhood: Provided, That the project shall be predominantly residential and any nondwelling facility included in the mortgage shall be found by the Secretary to contribute to the economic feasibility of the project, and the Secretary shall give due consideration to the possible effect of the project on other business enterprises in the, community: Provided further, That, in the case of a project designed primarily for occupancy by elderly or handicapped families, the project may include related facilities for use by elderly or handicapped families, including cafeterias or dining halls, community rooms, workshops, infirmaries, or other inpatient or outpatient health facilities, and other essential service facilities; “(B) include five or more dwelling units; and “(C) be designed primarily for use as a rental project to lie occupied by lower income families or by elderly or handicapped families: Provided, That lower income persons who are less than sixty-two years of age shall be eligible for occupancy in such a project, but not more than 10 per centum of the dwelling units in any such project shall be available for occupancy by such persons. “(6) With the approval of the Secretary, the mortgagor may sell the individual dwelling units to lower income or elderly or handicapped purchasers. The Secretary may consent to the release of the mortgagor from his liability under the mortgage and the credit instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the mortgage, upon such terms and conditions as he may prescribe, and the mortgage may provide for such release. “(k) As used in this section the term ‘tenant’ includes a member of a cooperative; the term ‘rental housing project’ includes a cooperative housing project; and the terms’rental’ and ’rental charge’ mean, with respect to members of a cooperative, the charges under the occupancy agreements between such members and the cooperative. “(l) The Secretary shall from time to time allocate and transfer to the Secretary of Agriculture, for use (in accordance with the terms and conditions of this section) in rural areas and small towns, a reasonable portion of the total authority to contract to make periodic interest reduction payments as approved in appropriation Acts under subsection (i). “(m) In determining the income of any person for the purposes of this section, there shall be deducted an amount equal to $3,000 for each minor person who is a member of the immediate family of such person and living with such family, and the earnings of any such minor person shall not be included in the income of such person or his family.” (b) (1) Section 212(a) of the National Housing Act is amended by82 Stat. 502striking out “or 232” in the first sentence of the second paragraph and inserting in lieu thereof “, 232, or 236”. (2) Section 227(a) of such Act is amended by striking out “or (viii) under section 234(d)” and inserting in lieu thereof “(viii) under section 234 (d), or (ix) under section 236”. (3) Section 227 (c) of such Act is amended by striking out “or section 233(b)(2)” each place it appears and inserting in lieu thereof “section 233, or sect ion 236”. (c) The Secretary of Housing and Urban Development is authorized, upon such terms and conditions as he may prescribe, to transfer to section 236(j) of the National Housing Act the insurance of a mortgage which has not be finally endorsed for insurance under section 221(d) (3) of such Act and which has been approved for the below-market interest rate prescribed in the proviso of section 221(d) (5) of such Act. (d) The Secretary of Housing and Urban Development is authorized, upon such terms and conditions as he may prescribe, to insure under section 236 (j) of the National Housing Act a mortgage meeting the requirements of such section which is given to refinance a mortgage loan made under section 202 of the Housing Act of 1959: Provided, That the application for such insurance is filed with the Secretary on or before the date of project completion, or within such reasonable time thereafter as the Secretary may permit. (e) (1) Section 101(d) of the Housing and Urban Development Act of 1965 is amended by adding at the end thereof the following: “In determining the income of any tenant for the purposes of this section, there shall be deducted an amount equal to $300 for each minor person who is a member of the immediate family of such tenant and living with such tenant, and the earnings of any such minor person shall not be included in the income of such tenant.” (2) Section 101(g) of such Act is amended by striking out “or section 231 (c) (3)” and inserting in lieu thereof “, section 231 (c) (3), or section 236”. (3) Section 101 (j) (1) of such Act is amended— (A) by striking out “and” at the end of subparagraph (B); (B) by striking out the period at the end of subparagraph (C) and inserting in lieu thereof “; and”; and (C) by inserting after subparagraph (C) a new subparagraph as follows: “(D) a private nonprofit corporation or other private nonprofit legal entity, a limited dividend corporation or other limited divided legal entity, or a cooperative housing corporation, which is assisted under section 236 of the National Housing Act and which has been approved for receiving the benefits of this section: Provided, That payments shall not be made with respect to more than 20 per centum of the dwelling units in any property so financed.” (f) Section 207 of the Appalachian Regional Development Act of 1965 is amended— (1) by inserting in the heading “and section 23«” immediately after “section 221”; (2) by inserting “or section 236” after “section 221” each place it appears; (3) by inserting “or ‘section 236’ ” after “ ‘section 221’ ” in subsection (a);and (4) by inserting “, Government National Mortgage Association,” immediately after “Federal Housing Administration” in subsection (c). 82 Stat. 503 (g) The first sentence of section 3050) of the National Housing Act is amended— (1) by striking out “or (3)” and inserting in lieu thereof “(3)”; and (2) by inserting after “221(e)” the following: “, or (4) a mortgage insured under section 236”.