MANAGEMENT AND PRESERVATION OF HUDOWNED MULTI-FAMILY HOUSING PROJECTS.

SEC. 181. MANAGEMENT AND PRESERVATION OF HUDOWNED MULTI-FAMILY HOUSING PROJECTS. (a) Goals.— Section 203(a) of the Housing and Community Development Amendments of 1978 is amended by striking “(a)” and all that follows through the semicolon at the end of paragraph (1) and inserting the following: “(a) The Secretary of Housing and Urban Development (in this section referred to as the ‘Secretary’) shall manage or dispose of multifamily housing projects that are owned by the Secretary, or that are subject to a mortgage held by the Secretary that is either delinquent, under a workout agreement, or being foreclosed upon by the Secretary, in a manner that is consistent with the National Housing Act and this section and that will, in the least costly fashion among the reasonable alternatives available, further the goals of— “(1) preserving so that they are available to and affordable by low- and moderate-income persons— “(A) all units in multifamily housing projects that are subsidized projects or formerly subsidized projects; “(B) in other multifamily housing projects owned by the Secretary, at least the units that are occupied by low- and moderate-income persons or vacant; and “(C) in all other multifamily housing projects, at least the units that are, on the date of assignment, occupied by low- and moderate-income persons;”. (b) Management Services.— Section 203(b)(2) of the Housing and Community Development Amendments of 1978 is amended— (1) by inserting “(A)” after the paragraph designation; (2) by redesignating clauses (A) through (D) as clauses (i) through (iv), respectively; (3) by striking “, owned by the Secretary” and inserting the following: “subject to subsection (a) that is owned by the Secretary (or for which the Secretary is mortgagee in possession)”; (4) by striking the period at the end and inserting “; and”; and (5) by adding at the end the following new subparagraph: “(B) to require the owner of a multifamily housing project subject to subsection (a) that is not owned by the Secretary (and for which the Secretary is not mortgagee in possession), to contract for management services for the project in the manner described in subparagraph (A).”. (c) Maintaining of Projects.— Section 203(c) of the Housing and Community Development Amendments of 1978 is amended to read as follows: “(c) (1) In the case of multifamily housing projects subject to subsection (a) that are owned by the Secretary (or for which the Secretary is mortgagee in possession), the Secretary shall— “(A) to the greatest extent possible, maintain all such occupied projects in a decent, safe, and sanitary condition; “(B) to the greatest extent possible, maintain full occupancy in all such projects; and “(C) maintain all such projects for purposes of providing rental or cooperative housing for the longest feasible period. 101 STAT. 1869 “(2) In the case of any multifamily housing project subject to subsection (a) that is not owned by the Secretary (and for which the Secretary is not mortgagee in possession), the Secretary shall require the owner of the project to carry out the requirements of paragraph (1).”. (d) Financial Assistance.— Section 203 of the Housing and Community Development Amendments of 1978 is amended— (1) by redesignating subsections (d) through (g) as subsections (e) through (h), respectively; and (2) by inserting after subsection (c) the following new subsection: “(d) In carrying out the goals specified in subsection (a)(1) the Secretary shall take not less than one of the following actions: “(1) Enter into contracts under section 8 of the United States Housing Act of 1937, to the extent budget authority is available for such section 8, with owners of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure or after sale by the Secretary. Such contracts shall provide assistance to the project involved for a period of not less than 15 years. Such contracts shall be sufficient to assist all units in subsidized or formerly subsidized projects, and all units in other projects that are occupied by lower income families eligible for assistance under such section 8 at the time of foreclosure or sale, as the case may be, and all units that are vacant at such time (which units shall be made available for such families as soon as possible). In order to make available to families any units in subsidized or formerly subsidized projects that are occupied by persons not eligible for assistance under such section 8, but that subsequently become vacant, the contract shall also provide that when any such vacancy occurs the owner involved shall lease the available unit to a family eligible for assistance under such section 8. The Secretary shall provide such contracts at contract rents that, consistent with subsection (a), provide for the rehabilitation of such project and do not exceed the most recently adjusted fair market rents for substantially rehabilitated units published by the Secretary in the Federal Register. “(2) In accordance with the authority provided under the National Housing Act, provide purchase-money mortgages, reduce the selling price, or provide other financial assistance to the owners of multifamily housing projects that are acquired by a purchaser other than the Secretary at foreclosure, or after sale by the Secretary, on terms that will ensure that, for a period of not less than 15 years (A) the project will remain available to and affordable by low- and moderate-income persons; and (B) such persons shall pay not more than the amount payable as rent under section 3(a) of the United States Housing Act of 1937.”. (e) Right of First Refusal.— Section 203 of the Housing and Community Development Amendments of 1978 is amended— (1) by redesignating subsections (e) through (h) (as so redesignated by this section) as subsections (f) through (i); and (2) by inserting before such subsection (f) the following new subsection: “(e) Upon receipt of a bona fide offer to purchase a project subject to subsection (a), the Secretary shall notify the local government and the State housing finance agency (or other agency or agencies 101 STAT. 1870designated by the Governor) of the proposed terms and conditions of the offer, including the assistance that the Secretary plans to make available to the prospective purchaser. The local government and the designated State agency shall have 90 days to match the offer and purchase the project. In administering the right of first refusal provided in this subsection, the Secretary shall offer assistance to the local government or designated State agency on terms and conditions at least as favorable as made available to the prospective purchaser. Notwithstanding any other provision of law to the contrary, a local government (including a public housing agency) or designated State agency may purchase a subsidized project or formerly subsidized project in accordance with this subsection.”. (f) Displacement Protection.— Section 203(f)(1) of the Housing and Community Development Amendments of 1978 (as so redesignated by this section) is amended— (1) by striking “owned by the Secretary” and inserting the following: “subject to subsection (a) that is owned by the Secretary (or for which the Secretary is mortgagee in possession)”; and (2) by adding at the end the following new sentence: “In the case of a multifamily housing project subject to subsection (a) that is not owned by the Secretary (and for which the Secretary is not mortgagee in possession), the Secretary shall require the owner of the project to carry out the requirements of this paragraph.”. (g) Limitations on Certain Project, Loan, and Mortgage Sales.— Section 203 of the Housing and Community Development Amendments of 1978 is amended— (1) by redesignating subsections (h) and (i) (as so redesignated by this section) as subsections (i) and (j); and (2) by inserting before such subsection (i) the following new subsection: “(h) (1) The Secretary may not approve the sale of any loan or mortgage held by the Secretary (including any loan or mortgage owned by the Government National Mortgage Association) on any subsidized project or formerly subsidized project unless such sale is made as part of a transaction that will ensure that such project will continue to operate at least until the maturity date of such loan or mortgage in a manner that will provide rental housing on terms at least as advantageous to existing and future tenants as the terms required by the program under which the loan or mortgage was made or insured prior to the assignment of the loan or mortgage on such project to the Secretary. “(2) The Secretary may not approve the sale of any subsidized project (A) that is subject to a mortgage held by the Secretary; or (B) if the sale transaction involves the provision of any additional subsidy funds by the Secretary or a recasting of the mortgage, unless such sale is made as part of a transaction that will ensure that such project will continue to operate at least until the maturity date of the loan or mortgage in a manner that will provide rental housing on terms at least as advantageous to existing and future tenants as the terms required by the program under which the loan or mortgage was made or insured prior to the proposed sale of the project. “(3) Notwithstanding any provision of law that may require competitive sales or bidding, the Secretary may carry out negotiated sales of subsidized or formerly subsidized mortgages held by the 101 STAT. 1871Secretary, without the competitive selection of purchasers or intermediaries, to agencies of State or local government, or groups of investors that include at least 1 such agency of State or local government, if the negotiations are conducted with such agencies, except that— “(A) the terms of any such sale shall include the agreement of the purchasing agency or agencies of State or local government to act as mortgagee or owner of a beneficial interest in such mortgages in a manner consistent with maintaining the projects that are subject to such mortgages for occupancy by the general tenant group intended to be served by the applicable mortgage insurance program, including, to the extent the Secretary determines appropriate, authorizing such agency of State or local government to enforce the provisions of any regulatory agreement or other program requirements applicable to the related projects; and “(B) the sales prices for such mortgages shall be, in the determination of the Secretary, the best price that may be obtained for such mortgages from an agency of State or local government, consistent with the expectation and intention that the projects financed will be retained for use under the applicable mortgage insurance program for the life of the initial mortgage insurance contract.”. (h) Definitions.— Section 203(i) of the Housing and Community Development Amendments of 1978 (as so redesignated by this section) is amended— (1) by inserting “(1)” after the subsection designation; and (2) by adding at the end the following new paragraphs: “(2) For the purpose of this section, the term ‘subsidized project’ means a multifamily housing project receiving any of the following assistance immediately prior to the assignment of the mortgage on such project to, or the acquisition of such mortgage by, the Secretary: “(A) below market interest rate mortgage insurance under the proviso of section 221(d)(5) of the National Housing Act; “(B) interest reduction payments made in connection with mortgages insured under section 236 of the National Housing Act; “(C) rent supplement payments under section 101 of the Housing and Urban Development Act of 1965; “(D) direct loans at below market interest rates, made under section 202 of the Housing Act of 1959 or to a multifamily housing project under section 312 of the Housing Act of 1964; or “(E) housing assistance payments made under section 23 of the United States Housing Act of 1937 (as in effect before January 1, 1975) or section 8 of the United States Housing Act of 1937 (other than subsection (b)(1) of such section), without regard to whether such payments are made to all or a portion of the units in the project. “(3) For the purpose of this section, the term ‘formerly subsidized project’ means a multifamily housing project owned by the Secretary that was a subsidized project immediately prior to its acquisition by the Secretary.”.