MULTIFAMILY HOUSING CAPITAL IMPROVEMENTS ASSISTANCE.

SEC. 185. MULTIFAMILY HOUSING CAPITAL IMPROVEMENTS ASSISTANCE. (a) Purpose.— Section 201(a) of the Housing and Community Development Amendments of 1978 is amended by inserting after “management,” the following: “to permit capital improvements to be made to maintain certain projects as decent, safe, and sanitary housing,”. (b) Eligibility.— Section 201(c)(1)(B) of the Housing and Community Development Amendments of 1978 is amended by inserting after “is assisted under” the following: “section 23 of the United States Housing Act of 1937, as in effect immediately before January 1, 1975,”. (c) Borrower Requirements.— Section 201(d) of the Housing and Community Development Amendments of 1978 is amended— (1) in paragraph (1), by inserting “or physical” after “maintain the financial”; and (2) in paragraph (6), by striking the final period, and inserting the following: “; except that the Secretary may excuse an owner from compliance with the plan requirement set forth in this 101 STAT. 1874paragraph in any case in which such owner seeks only assistance for capital improvements under this section.”. (d) Amount and Conditions of Assistance.— Section 201(f) of the Housing and Community Development Amendments of 1978 is amended— (1) in paragraph (1), by inserting after “to any project” in the matter preceding subparagraph (A) the following: “(except a project assisted only for capital improvements)”; and (2) in paragraph (4), by inserting after “for any year” the following: “for a project (other than a project receiving assistance only for capital improvements)”. (e) Regulations.— Section 201(g) of the Housing and Community Development Amendments of 1978 is amended by inserting before the period at the end the following: “, to the extent applicable.”. (f) Flexible Subsidy Fund.— Section 201(j) of the Housing and Community Development Amendments of 1978 is amended to read as follows: “(j) (1) For purposes of carrying out the provisions of this section, there is hereby established in the Treasury of the United States a revolving fund, to be known as the Flexible Subsidy Fund. The Fund shall, to the extent approved in appropriation Acts, be available to the Secretary to provide assistance under this section (including assistance for capital improvements). “(2) The Fund shall consist of (A) any amount appropriated to carry out the purposes of this section; (B) any amount repaid on any assistance provided under this section; (C) any amounts credited to the reserve fund described in section 236(g) of the National Housing Act; and (D) any other amount received by the Secretary under this section (including any amount realized under paragraph (3)). “(3) Any amounts in the Fund determined by the Secretary to be in excess of the amounts currently required to carry out the provisions of this section shall be invested by the Secretary in obligations of, or obligations guaranteed as to both principal and interest by, the United States or any agency of the United States. “(4) The Secretary may use not more than $50,000,000 from the Fund in any fiscal year for purposes of providing assistance for capital improvements in accordance with this section.”. (g) Assistance for Capital Improvements— Section 201 of the Housing and Community Development Amendments of 1978 is amended by adding at the end the following new subsections: “(k) (1) Assistance for capital improvements under this section shall include assistance for any major repair or replacement of a capital item in a multifamily housing project, including any such repair or replacement required as a result of deferred or inadequate maintenance. Capital improvements do not include maintenance of any such item. Assistance for capital improvements under this section shall be in the form of a loan. “(2) The owner of a project receiving assistance for capital improvements shall agree to contribute assistance to such project in such amounts, from such sources, and in such manner as the Secretary determines to be appropriate, except that— “(A) such contribution shall not be less than 20 percent of the total estimated cost of the capital improvements involved, unless the Secretary, upon application of the owner, determines that such contribution is financially infeasible and waives or reduces such contribution to the extent necessary; 101 STAT. 1875 “(B) the Secretary may not require an amount to be contributed, from the reserve funds established by the owner of such projects for the purpose of making capital improvements, in excess of 50 percent of the amount of such reserve funds on the date of such loan; and “(C) The Secretary shall waive the requirements of this paragraph if such owner is a private nonprofit corporation or an association. “(3) The Secretary may provide assistance for capital improvements under this section if the Secretary finds that the reserve funds established by the owner of a project for the purpose of making capital improvements are insufficient to finance both the capital improvements for which such assistance is to be used and other capital improvements that are reasonably expected to be required in the near future, and such insufficiency is not the result of the failure of such owner to comply with any standard established by the Secretary for management of such reserve funds. “(4) In providing, and contracting to provide, assistance for capital improvements under this section, the Secretary shall— “(A) give priority to projects that are eligible for incentives under section 224(b) of the Emergency Low Income Housing Preservation Act of 1987; and “(B) with respect to any amounts not required for projects under subparagraph (A), give priority among other projects based on the extent to which— “(i) the capital improvements for which such assistance is requested are immediately required; “(ii) the projects serve as the residences of lower income families, and the extent which other suitable housing is unavailable for such families in the areas in which such projects are located; “(iii) the capital improvements for which such assistance is requested involve the life, safety, or health of the residents of the project or involve major capital improvements in the projects; and “(iv) the projects demonstrate the greatest financial distress, while continuing to meet the requirements of subsection (d)(1). “(l) (1) The principal amount of any assistance for capital improvements under this section that is provided to the owner of a project shall not exceed the difference between the contribution made by the owner in accordance with subsection (k)(2) and the sum of— “(A) the amount determined by the Secretary to be necessary for such owner to make capital improvements with respect to capital items that have failed, or are likely to deteriorate seriously or fail in the near future, in such projects; “(B) the amount determined by the Secretary to be necessary to carry out a plan to upgrade the capital items being improved, and any other capital items determined by the Secretary to be associated with such capital items being improved and to require upgrading, to meet cost-effective energy efficiency standards prescribed by the Secretary; and “(C) the amount determined by the Secretary to be necessary to comply with the requirements of section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). “(2) (A) The term of any assistance for capital improvements in the form of a loan under this section shall not exceed the remaining 101 STAT. 1876term of the mortgage of the project with respect to which such loan is provided. “(B) Each loan for capital improvements provided under this section shall bear interest at a rate determined by the Secretary to be appropriate, except that— “(i) such rate shall not be more than 3 percentage points below a rate determined by the Secretary of the Treasury taking into consideration the average interest rate on all interest bearing obligations of the United States then forming a part of the public debt, computed at the end of the fiscal year next preceding date on which the loan is made, adjusted to the nearest 1/8 of 1 percent, plus an allowance adequate in the judgment of the Secretary of Housing and Urban Development to cover administrative costs and probable losses under the program; and “(ii) such interest rate plus such allowance shall not exceed 6 percent per annum nor be less than 3 percent per annum. “(C) Each loan for capital improvements provided under this section shall be considered to be a liability of the project involved, and shall not be dischargeable in any bankruptcy proceeding under section 727, 1141, or 1328(b) of title 11, United States Code. “(D) The Secretary may establish such additional conditions on loans provided under this section as the Secretary determines to be appropriate. “(E) The Secretary may provide more than one loan or assistance in any other form to any project under this section, if each loan or other assistance complies with the provisions of this section. “(m) (1) Increases in rental payments that may occur as a result of the debt service and other expenses of a loan for capital improvements provided under this section for a project subject to a plan of action approved under subtitle B of the Emergency Low Income Housing Preservation Act of 1987 shall be governed by the rent agreements entered into under such subtitle. “(2) In order to minimize any increases in rental payments that may occur as a result of the debt service and other expenses of a loan for capital improvements provided under this section for a project not subject to paragraph (1) and that would be incurred by lower income residents of the project involved whose rental payments are, or would as a result of such expenses be, in excess of the amount allowable if section 3(a) of the United States Housing Act of 1937 were applicable to such residents, the Secretary may take any or all of the following actions: “(A) Provide assistance with respect to such project under section 8(b)(1) of the United States Housing Act of 1937, to the extent amounts are available for such assistance and without regard to section 16 of such Act. “(B) Reduce the rate of interest charged on such loan to a rate of not less than 1 percent. “(C) Increase the term of such loan to a term that does not exceed the remaining term of the mortgage on such project. “(D) Increase the amount of assistance to be provided by the owner of such project under subsection (k)(2), if applicable, to an amount not to exceed 30 percent of the total estimated cost of the capital improvements involved.”. 101 STAT. 1877 (h) Conforming Amendment.— The section heading for section 201 of the Housing and Community Development Amendments of 1978 is amended by striking “operating”.