ASSISTANCE.

SEC. 532. SECTION 236 ASSISTANCE. (a) Continued Receipt of Subsidies Upon Refinancing.—Section 236(e) of the National Housing Act (12 U.S.C. 1715z–1(e)) is amended— (1) by inserting “(1)” after “(e)”; and (2) by adding at the end the following new paragraph: “(2) A project for which interest reduction payments are made under this section and for which the mortgage on the project has been refinanced shall continue to receive the interest reduction payments under this section under the terms of the contract for such payments, but only if the project owner enters into such binding commitments as the Secretary may require (which shall be applicable to any subsequent owner) to ensure that the owner will continue to operate the project in accordance with all low-income affordability restrictions for the project in connection with the Federal assistance for the project for a period having a duration that is not less than the term for which such interest reduction payments are made plus an additional 5 years.”. (b) Retention of Excess Income.—Section 236(g) of the National Housing Act (12 U.S.C. 1715z–1(g)) is amended— (1) by inserting “(1)” after “(g)”; (2) by striking the last sentence; and (3) by adding at the end the following new paragraphs: “(2) Subject to paragraph (3) and notwithstanding any other requirements of this subsection, a project owner may retain some or all of such excess charges for project use if authorized by the Secretary. Such excess charges shall be used for the project and upon terms and conditions established by the Secretary, unless the Secretary permits the owner to retain funds for non-project use after a determination that the project is well-maintained housing in good condition and that the owner has not engaged in material adverse financial or managerial actions or omissions as described in section 516 of the Multifamily Assisted Housing Reform and Affordability Act of 1997. In connection with the retention of funds for non-project use, the Secretary may require the project owner to enter into a binding commitment (which shall be applicable to any subsequent owner) to ensure that the owner will continue to operate the project in accordance with all low-income affordability restrictions for the project in connection with 113 STAT. 1117the Federal assistance for the project for a period having a duration of not less than the term of the existing affordability restrictions plus an additional 5 years. “(3) The authority under paragraph (2) to retain and use excess charges shall apply— “(A) during fiscal year 2000, to all project owners collecting such excess charges; and “(B) during fiscal year 2001 and thereafter— “(i) to any owner of: (I) a project with a mortgage insured under this section; (II) a project with a mortgage formerly insured under this section if such mortgage is held by the Secretary and the owner of such project is current with respect to the mortgage obligation; or (III) a project previously assisted under subsection (b) but without a mortgage insured under this section if the project was insured under section 207 of this Act before July 30, 1998, pursuant to section 223(f) of this Act and assisted under subsection (b); and “(ii) to other project owners not referred to in clause (i) who collect such excess charges, but only to the extent that such retention and use is approved in advance in an appropriation Act.”. (c) Previously Owed Excess Income.—Section 236(g) of the National Housing Act (12 U.S.C. 1715z–1(g)), as amended by subsection (b) of this section, is further amended by adding at the end the following new paragraph: “(4) The Secretary shall not withhold approval of the retention by the owner of such excess charges because of the existence of unpaid excess charges if such unpaid amount is being remitted to the Secretary over a period of time in accordance with a workout agreement with the Secretary, unless the Secretary determines that the owner is in violation of the workout agreement.”. (d) Flexibility Regarding Basic Rents and Market Rents.—Section 236(f) of the National Housing Act (12 U.S.C. 1715z–1(f)(1)) is amended by striking the subsection designation and all that follows through the end of paragraph (1) and inserting the following: “(f)(1)(A)(i) For each dwelling unit there shall be established, with the approval of the Secretary, a basic rental charge and fair market rental charge. “(ii) The basic rental charge shall be— “(I) the amount needed to operate the project with payments of principal and interest due under a mortgage bearing interest at the rate of 1 percent per annum; or “(II) an amount greater than that determined under clause (ii)(I), but not greater than the market rent for a comparable unassisted unit, reduced by the value of the interest reduction payments subsidy. “(iii) The fair market rental charge shall be— “(I) the amount needed to operate the project with payments of principal, interest, and mortgage insurance premium which the mortgagor is obligated to pay under the mortgage covering the project; or “(II) an amount greater than that determined under clause (iii)(I), but not greater than the market rent for a comparable unassisted unit.113 STAT. 1118 “(iv) The Secretary may approve a basic rental charge and fair market rental charge for a unit that exceeds the minimum amounts permitted by this subparagraph for such charges only if— “(I) the approved basic rental charge and fair market rental charges each exceed the applicable minimum charge by the same amount; and “(II) the project owner agrees to restrictions on project use or mortgage prepayment that are acceptable to the Secretary. “(v) The Secretary may approve a basic rental charge and fair market rental charge under this paragraph for a unit with assistance under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f) that differs from the basic rental charge and fair market rental charge for a unit in the same project that is similar in size and amenities but without such assistance, as needed to ensure equitable treatment of tenants in units without such assistance. “(B)(i) The rental charge for each dwelling unit shall be at the basic rental charge or such greater amount, not exceeding the fair market rental charge determined pursuant to subparagraph (A), as represents 30 percent of the tenant’s adjusted income, except as otherwise provided in this subparagraph. “(ii) In the case of a project which contains more than 5000 units, is subject to an interest reduction payments contract, and is financed under a State or local project, the Secretary may reduce the rental charge ceiling, but in no case shall the rental charge be below the basic rental charge set forth in subparagraph (A)(ii)(I). “(iii) For plans of action approved for capital grants under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 or the Emergency Low Income Housing Preservation Act of 1987, the rental charge for each dwelling unit shall be at the minimum basic rental charge set forth in subparagraph (A)(ii)(I) or such greater amount, not exceeding the lower of: (I) the fair market rental charge set forth in subparagraph (A)(iii)(I); or (II) the actual rent paid for a comparable unit in comparable unassisted housing in the market area in which the housing assisted under this section is located, as represents 30 percent of the tenant’s adjusted income. “(C) With respect to those projects which the Secretary determines have separate utility metering paid by the tenants for some or all dwelling units, the Secretary may— “(i) permit the basic rental charge and the fair market rental charge to be determined on the basis of operating the project without the payment of the cost of utility services used by such dwelling units; and “(ii) permit the charging of a rental for such dwelling units at such an amount less than 30 percent of a tenant’s adjusted income as the Secretary determines represents a proportionate decrease for the utility charges to be paid by such tenant, but in no case shall rental be lower than 25 percent of a tenant’s adjusted income.”. (e) Effective Date of 1998 Provisions.—Section 236(g) of the National Housing Act (12 U.S.C. 1715z–1(g)), as amended by section 227 of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999 (Public Law 105–276; 112 Stat. 2490) shall be effective 113 STAT. 1119on the date of the enactment of such Public Law 105–276, and any excess rental charges referred to in such section that have been collected since such date of the enactment with respect to projects with mortgages insured under section 207 of the National Housing Act (12 U.S.C. 1713) may be retained by the project owner unless the Secretary of Housing and Urban Development specifically provides otherwise. The Secretary may return any excess charges remitted to the Secretary since such date of the enactment. (f) Effective Date.—This section shall take effect, and the amendments made by this section are made and shall apply, on the date of the enactment of this Act.