REHABILITATION GRANTS FOR CERTAIN INSURED PROJECTS.

SEC. 531. REHABILITATION GRANTS FOR CERTAIN INSURED PROJECTS. Section 236 of the National Housing Act (12 U.S.C. 1715z–1) is amended by adding at the end the following: “(s) Grant Authority.— “(1) In general.—The Secretary may make grants for the capital costs of rehabilitation to owners of projects that meet the eligibility and other criteria set forth in, and in accordance with, this subsection. “(2) Project eligibility.—A project may be eligible for capital grant assistance under this subsection— “(A) if— “(i) the project is or was insured under any provision of title II of the National Housing Act; “(ii) the project was assisted under section 8 of the United States Housing Act of 1937 on the date of enactment of the Multifamily Assisted Housing Reform and Affordability Act of 1997; and “(iii) the project mortgage was not held by a State agency as of the date of enactment of the Multifamily Assisted Housing Reform and Affordability Act of 1997; “(B) if the project owner agrees to maintain the housing quality standards as required by the Secretary; “(C)(i) if the Secretary determines that the owner or purchaser of the project has not engaged in material adverse financial or managerial actions or omissions with regard to such project; or “(ii) if the Secretary elects to make such determination, that the owner or purchaser of the project has not 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; “(iii) material adverse financial or managerial actions or omissions, as the terms are used in this subparagraph, include— “(I) 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; “(II) materially breaching a contract for assistance under section 8 of the United States Housing Act of 1937, after receipt of notice and an opportunity to cure; “(III) 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; “(IV) repeatedly failing to make mortgage payments at times when project income was sufficient to maintain and operate the property;111 STAT. 1410 “(V) materially failing to maintain the property according to housing quality standards after receipt of notice and a reasonable opportunity to cure; or “(VI) committing any act or omission that would warrant suspension or debarment by the Secretary; and “(iv) 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, 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; and “(D) if the project owner demonstrates to the satisfaction of the Secretary— “(i) using information in a comprehensive needs assessment, that capital grant assistance is needed for rehabilitation of the project; and “(ii) that project income is not sufficient to support such rehabilitation. “(3) Eligible purposes.—The Secretary may make grants to the owners of eligible projects for the purposes of— “(A) payment into project replacement reserves; “(B) debt service payments on non-Federal rehabilitation loans; and “(C) payment of nonrecurring maintenance and capital improvements, under such terms and conditions as are determined by the Secretary. “(4) Grant agreement.— “(A) In general.—The Secretary shall provide in any grant agreement under this subsection that the grant shall e terminated if the project fails to meet housing quality standards, as applicable on the date of enactment of the Multifamily Assisted Housing Reform and Affordability Act of 1997, or any successor standards for the physical conditions of projects, as are determined by the Secretary. “(B) Affordability and use clauses.—The Secretary shall include in a grant agreement under this subsection a requirement for the project owners to maintain such affordability and use restrictions as the Secretary determines to be appropriate. “(C) Other terms.—The Secretary may include in a grant agreement under this subsection such other terms and conditions as the Secretary determines to be necessary. “(5) Delegation.—111 STAT. 1411 “(A) In general.—In addition to the authorities set forth in subsection (p), the Secretary may delegate to State and local governments the responsibility for the administration of grants under this subsection. Any such government may carry out such delegated responsibilities directly or under contracts. “(B) Administration costs.—In addition to other eligible purposes, amounts of grants under this subsection may be made available for costs of administration under subparagraph (A). “(6) Funding.— “(A) In general.—For purposes of carrying out this subsection, the Secretary may make available amounts that are unobligated amounts for contracts for interest reduction payments— “(i) that were previously obligated for contracts for interest reduction payments under this section until the insured mortgage under this section was extinguished; “(ii) that become available as a result of the outstanding principal balance of a mortgage having been written down; “(iii) that are uncommitted balances within the limitation on maximum payments that may have been, before the date of enactment of the Multifamily Assisted Housing Reform and Affordability Act of 1997, permitted in any fiscal year; or “(iv) that become available from any other source. “(B) Liquidation authority.—The Secretary may liquidate obligations entered into under this subsection under section 1305(10) of title 31, United States Code. “(C) Capital grants.—In making capital grants under the terms of this subsection, using the amounts that the Secretary has recaptured from contracts for interest reduction payments, the Secretary shall ensure that the rates and amounts of outlays do not at any time exceed the rates and amounts of outlays that would have been experienced if the insured mortgage had not been extinguished or the principal amount had not been written down, and the interest reduction payments that the Secretary has recaptured had continued in accordance with the terms in effect immediately prior to such extinguishment or writedown.”.