§ 514. MORTGAGE RESTRUCTURING AND RENTAL ASSISTANCE SUFFICIENCY PLAN.

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In General.— Development of procedures and requirements .— The Secretary shall develop procedures and requirements for the submission of a mortgage restructuring and rental assistance sufficiency plan for each eligible multifamily housing project with an expiring contract. Terms and conditions .— Each mortgage restructuring and rental assistance sufficiency plan submitted under this subsection shall be developed by the participating administrative entity, in cooperation with an owner of an eligible multifamily housing project and any servicer for the mortgage that is a qualified mortgagee, under such terms and conditions as the Secretary shall require.

Consolidation .— Mortgage restructuring and rental assistance sufficiency plans submitted under this subsection may be consolidated as part of an overall strategy for more than 1 property. Notice Requirements .— The Secretary shall establish notice procedures and hearing requirements for tenants and owners concerning the dates for the expiration of project-based assistance contracts for any eligible multifamily housing project. Extension of Contract Term .— Subject to agreement by a project owner, the Secretary may extend the term of any expiring contract or provide a section 8 contract with rent levels set in accordance with subsection

(g)for a period sufficient to facilitate the implementation of a mortgage restructuring and rental assistance sufficiency plan, as determined by the Secretary. Tenant Rent Protection .— If the owner of a project with an expiring Federal rental assistance contract does not agree to extend the contract, not less than 12 months prior to terminating the contract, the project owner shall provide written notice to the Secretary and the tenants and the Secretary shall make tenant-based assistance available to tenants residing in units assisted under the expiring contract at the time of expiration. In addition, if after giving the notice required in the first sentence, an owner determines to terminate a contract, an owner shall provide an additional written notice with respect to the termination, in a form prescribed by the Secretary, not less than 120 days prior to the termination. In the event the owner does not provide the 120-day notice required in the preceding sentence, the owner may not evict the tenants or increase the tenants’ rent payment until such time as the owner has provided the 120-day notice and such period has elapsed. The Secretary may allow the owner to renew the terminating contract for a period of time sufficient to give tenants 120 days of advance notice in accordance with section 524 of this Act. Mortgage Restructuring and Rental Assistance Sufficiency Plan .— Each mortgage restructuring and rental assistance sufficiency plan shall— except as otherwise provided, restructure the project-based assistance rents for the eligible multifamily housing project in a manner consistent with subsection (g), or provide for tenant-based assistance in accordance with section 515; allow for rent adjustments by applying an operating cost adjustment factor established under guidelines established by the Secretary; require the owner or purchaser of an eligible multifamily housing project to evaluate the rehabilitation needs of the project, in accordance with regulations of the Secretary, and notify the participating administrative entity of the rehabilitation needs; require the owner or purchaser of the project to provide or contract for competent management of the project; require the owner or purchaser of the project to take such actions as may be necessary to rehabilitate, maintain adequate reserves, and to maintain the project in decent and safe condition, based on housing quality standards established by— the Secretary; or local housing codes or codes adopted by public housing agencies that— meet or exceed housing quality standards established by the Secretary; and do not severely restrict housing choice; require the owner or purchaser of the project to maintain affordability and use restrictions in accordance with regulations promulgated by the Secretary, for a term of not less than 30 years which restrictions shall be— contained in a legally enforceable document recorded in the appropriate records; and consistent with the long-term physical and financial viability and character of the project as affordable housing; include a certification by the participating administrative entity that the restructuring meets subsidy layering requirements established by the Secretary by regulation for purposes of this subtitle; require the owner or purchaser of the project to meet such other requirements as the Secretary determines to be appropriate; and prohibit the owner from refusing to lease a reasonable number of units to holders of certificates and vouchers under section 8 of the United States Housing Act of 1937 [ 42 U.S.C. 1437f ] because of the status of the prospective tenants as certificate and voucher holders. Tenant and Other Participation and Capacity Building.— Procedures.— In general .— The Secretary shall establish procedures to provide an opportunity for tenants of the project, residents of the neighborhood, the local government, and other affected parties to participate effectively and on a timely basis in the restructuring process established by this subtitle. Coverage .— These procedures shall take into account the need to provide tenants of the project, residents of the neighborhood, the local government, and other affected parties timely notice of proposed restructuring actions and appropriate access to relevant information about restructuring activities. To the extent practicable and consistent with the need to accomplish project restructuring in an efficient manner, the procedures shall give all such parties an opportunity to provide comments to the participating administrative entity in writing, in meetings, or in another appropriate manner (which comments shall be taken into consideration by the participating administrative entity). Required consultation .— The procedures developed pursuant to paragraph

(1)shall require consultation with tenants of the project, residents of the neighborhood, the local government, and other affected parties, in connection with at least the following: the mortgage restructuring and rental assistance sufficiency plan; any proposed transfer of the project; and the rental assistance assessment plan pursuant to section 515(c). Funding.— In general .— The Secretary shall make available not more than $10,000,000 annually in funding, which amount shall be in addition to any amounts made available under this subparagraph and carried over from previous years, from which the Secretary may make obligations to tenant groups, nonprofit organizations, and public entities for building the capacity of tenant organizations, for technical assistance in furthering any of the purposes of this subtitle (including transfer of developments to new owners), for technical assistance for preservation of low-income housing for which project-based rental assistance is provided at below market rent levels and may not be renewed (including transfer of developments to tenant groups, nonprofit organizations, and public entities), for tenant services, and for tenant groups, nonprofit organizations, and public entities described in section 517(a)(5), from those amounts made available under appropriations Acts for implementing this subtitle or previously made available for technical assistance in connection with the preservation of affordable rental housing for low-income persons. Manner of providing .— Notwithstanding any other provision of law restricting the use of preservation technical assistance funds, the Secretary may provide any funds made available under subparagraph

(A)through existing technical assistance programs pursuant to any other Federal law, including the Low-Income Housing Preservation and Resident Homeownership Act of 1990 [ 12 U.S.C. 4101 et seq.] and the Multifamily Housing Property Disposition Reform Act of 1994 [ Pub. L. 103–233 , see Short Title of 1994 Amendment note set out under section 1701 of Title 12 , Banks and Banking], or through any other means that the Secretary considers consistent with the purposes of this subtitle, without regard to any set-aside requirement otherwise applicable to those funds. Prohibition .— None of the funds made available under subparagraph

(A)may be used directly or indirectly to pay for any personal service, advertisement, telegram, telephone, letter, printed or written matter, or other device, intended or designed to influence in any manner a Member of Congress, to favor or oppose, by vote or otherwise, any legislation or appropriation by Congress, whether before or after the introduction of any bill or resolution proposing such legislation or appropriation. Rent Levels.— In general .— Except as provided in paragraph (2), each mortgage restructuring and rental assistance sufficiency plan pursuant to the terms, conditions, and requirements of this subtitle shall establish for units assisted with project-based assistance in eligible multifamily housing projects adjusted rent levels that— are equivalent to rents derived from comparable properties, if— the participating administrative entity makes the rent determination within a reasonable period of time; and the market rent determination is based on not less than 2 comparable properties; or if those rents cannot be determined, are equal to 90 percent of the fair market rents for the relevant market area. Exceptions.— In general .— A contract under this section may include rent levels that exceed the rent level described in paragraph

(1)at rent levels that do not exceed 120 percent of the fair market rent for the market area (except that the Secretary may waive this limit for not more than five percent of all units subject to portfolio restructuring agreements, based on a finding of special need), if the participating administrative entity— determines that the housing needs of the tenants and the community cannot be adequately addressed through implementation of the rent limitation required to be established through a mortgage restructuring and rental assistance sufficiency plan under paragraph (1); and follows the procedures under paragraph (3). Exception rents .— In any fiscal year, a participating administrative entity may approve exception rents on not more than 20 percent of all units covered by the portfolio restructuring agreement with expiring contracts in that fiscal year, except that the Secretary may waive this ceiling upon a finding of special need. Rent levels for exception projects .— For purposes of this section, a project eligible for an exception rent shall receive a rent calculated on the actual and projected costs of operating the project, at a level that provides income sufficient to support a budget-based rent that consists of— the debt service of the project; the operating expenses of the project, as determined by the participating administrative entity, including— contributions to adequate reserves; the costs of maintenance and necessary rehabilitation; and other eligible costs permitted under section 8 of the United States Housing Act of 1937; an adequate allowance for potential operating losses due to vacancies and failure to collect rents, as determined by the participating administrative entity; an allowance for a reasonable rate of return to the owner or purchaser of the project, as determined by the participating administrative entity, which may be established to provide incentives for owners or purchasers to meet benchmarks of quality for management and housing quality; and other expenses determined by the participating administrative entity to be necessary for the operation of the project. Exemptions From Restructuring .— The following categories of projects shall not be covered by a mortgage restructuring and rental assistance sufficiency plan if— the primary financing or mortgage insurance for the multifamily housing project that is covered by that expiring contract was provided by a unit of State government or a unit of general local government (or an agency or instrumentality of a unit of a State government or unit of general local government) and the financing involves mortgage insurance under the National Housing Act [ 42 U.S.C. 1701 et seq.], such that the implementation of a mortgage restructuring and rental assistance sufficiency plan under this subtitle is in conflict with applicable law or agreements governing such financing; the project is a project financed under section 202 of the Housing Act of 1959 [ 12 U.S.C. 1701q ] or section 515 of the Housing Act of 1949 [ 42 U.S.C. 1485 ], or refinanced pursuant to section 811 of the American Homeownership and Economic Opportunity Act of 2000 ( 12 U.S.C. 1701q note); or the project has an expiring contract under section 8 of the United States Housing Act of 1937 entered into pursuant to [former] section 441 of the McKinney-Vento Homeless Assistance Act [ 42 U.S.C. 11401 ].

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