§12745 — Title 42 The Public Health and Welfare | U.S. Code

Summary

Sets rules for when rental housing counts as affordable. Rents must not be higher than the lower of two things: the area’s fair market rent or an amount equal to 30% of the monthly income of a family at 65% of the area median (adjusted by bedrooms). The Secretary can change the income ceiling if needed because of local costs. At least 20% of the units must be for very low-income families who pay no more than 30% of their adjusted income for rent (not counting rental subsidies) or who meet tax-credit rent limits. The owner must rent only to low-income households, must not turn away people with housing vouchers, and must promise the units will stay affordable for the property’s useful life or the longest feasible time (except certain foreclosures that protect public or nonprofit rights). New units must meet energy rules. The Secretary can raise rents for a project only if needed to keep it financially sound and only by the needed amount. Short gaps in meeting the 20% or low-income rules are allowed if caused by tenant income increases and steps are being taken to fill vacancies with eligible tenants; tenants who outgrow eligibility must pay the lesser of local law or 30% of adjusted income, rechecked each year. Projects that are partly affordable, or partly nonresidential, can still qualify. A special waiver can allow a different rent rule for units occupied by certain multigenerational elderly families with tenant-based aid if the rent is at or below fair market rent and the waiver helps house such families. Homeownership counts as affordable if the first sale price is no more than 95% of the area median (with adjustments for type and age of housing), the buyer is low-income at the time required by the contract, resale limits are in place so future buyers are low-income and the original owner gets a fair return (or the subsidy can be recaptured to help others), and new homes meet the energy rules.

Title 42, §12745

The Public Health and Welfare — Source: USLM XML via OLRC

(a)(1)Housing that is for rental shall qualify as affordable housing under this subchapter only if the housing—

(A)bears rents not greater than the lesser of (i) the existing fair market rent for comparable units in the area as established by the Secretary under section 1437f of this title, or (ii) a rent that does not exceed 30 percent of the adjusted income of a family whose income equals 65 percent of the median income for the area, as determined by the Secretary, with adjustment for number of bedrooms in the unit, except that the Secretary may establish income ceilings higher or lower than 65 percent of the median for the area on the basis of the Secretary’s findings that such variations are necessary because of prevailing levels of construction costs or fair market rents, or unusually high or low family incomes;

(B)has not less than 20 percent of the units (i) occupied by very low-income families who pay as a contribution toward rent (excluding any Federal or State rental subsidy provided on behalf of the family) not more than 30 percent of the family’s monthly adjusted income as determined by the Secretary, or (ii) occupied by very low-income families and bearing rents not greater than the gross rent for rent-restricted residential units as determined under section 42(g)(2) of title 26;

(C)is occupied only by households that qualify as low-income families;

(D)is not refused for leasing to a holder of a voucher or certificate of eligibility under section 1437f of this title because of the status of the prospective tenant as a holder of such voucher or certificate of eligibility;

(E)will remain affordable, according to binding commitments satisfactory to the Secretary, for the remaining useful life of the property, as determined by the Secretary, without regard to the term of the mortgage or to transfer of ownership, or for such other period that the Secretary determines is the longest feasible period of time consistent with sound economics and the purposes of this Act, except upon a foreclosure by a lender (or upon other transfer in lieu of foreclosure) if such action (i) recognizes any contractual or legal rights of public agencies, nonprofit sponsors, or others to take actions that would avoid termination of low-income affordability in the case of foreclosure or transfer in lieu of foreclosure, and (ii) is not for the purpose of avoiding low income affordability restrictions, as determined by the Secretary; and

(F)if newly constructed, meets the energy efficiency standards promulgated by the Secretary in accordance with section 12709 of this title.

(2)The Secretary may adjust the qualifying rent established for a project under subparagraph (A) of paragraph (1), only if the Secretary finds that such adjustment is necessary to support the continued financial viability of the project and only by such amount as the Secretary determines is necessary to maintain continued financial viability of the project.

(3)Housing shall qualify as affordable housing despite a temporary noncompliance with subparagraph (B) or (C) of paragraph (1) if such noncompliance is caused by increases in the incomes of existing tenants and if actions satisfactory to the Secretary are being taken to ensure that all vacancies are filled in accordance with paragraph (1) until such noncompliance is corrected. Tenants who no longer qualify as low-income families shall pay as rent the lesser of the amount payable by the tenant under State or local law or 30 percent of the family’s adjusted monthly income, as recertified annually. The preceding sentence shall not apply with respect to funds made available under this Act for units that have been allocated a low-income housing tax credit by a housing credit agency pursuant to section 42 of title 26.

(4)Housing that accounts for less than 100 percent of the dwelling units in a project shall qualify as affordable housing if such housing meets the criteria of this section.

(5)Housing in a project that is designed in part for uses other than residential use shall qualify as affordable housing if such housing meets the criteria of this section.

(6)(A)For the purpose of providing affordable housing appropriate for families described in subparagraph (B), the Secretary may, upon the application of the project owner, waive the applicability of subparagraph (A) of paragraph (1) with respect to a dwelling unit if—

(i)the unit is occupied by such a family, on whose behalf tenant-based assistance is provided under section 1437f of this title;

(ii)the rent for the unit is not greater than the existing fair market rent for comparable units in the area, as established by the Secretary under section 1437f of this title; and

(iii)the Secretary determines that the waiver, together with waivers under this paragraph for other dwelling units in the project, will result in the use of amounts described in clause (iii) 11 So in original. in an effective manner that will improve the provision of affordable housing for such families.

(B)A family described in this subparagraph is a family that consists of at least one elderly person (who is the head of household) and one or more of such person’s grand 22 So in original. Probably should be “grandchildren”. children, great grandchildren, great nieces, great nephews, or great great grandchildren (as defined by the Secretary), but does not include any parent of such grandchildren, great grandchildren, great nieces, great nephews, or great great grandchildren. Such term includes any such grandchildren, great grandchildren, great nieces, great nephews, or great great grandchildren who have been legally adopted by such elderly person.

(b)Housing that is for homeownership shall qualify as affordable housing under this subchapter only if the housing—

(1)has an initial purchase price that does not exceed 95 percent of the median purchase price for the area, as determined by the Secretary with such adjustments for differences in structure, including whether the housing is single-family or multifamily, and for new and old housing as the Secretary determines to be appropriate;

(2)is the principal residence of an owner whose family qualifies as a low-income family—

(A)in the case of a contract to purchase existing housing, at the time of purchase;

(B)in the case of a lease-purchase agreement for existing housing or for housing to be constructed, at the time the agreement is signed; or

(C)in the case of a contract to purchase housing to be constructed, at the time the contract is signed;

(3)is subject to resale restrictions that are established by the participating jurisdiction and determined by the Secretary to be appropriate to—

(A)allow for subsequent purchase of the property only by persons who meet the qualifications specified under paragraph (2), at a price which will—

(i)provide the owner with a fair return on investment, including any improvements, and

(ii)ensure that the housing will remain affordable to a reasonable range of low-income homebuyers; or

(B)recapture the investment provided under this subchapter in order to assist other persons in accordance with the requirements of this subchapter, except where there are no net proceeds or where the net proceeds are insufficient to repay the full amount of the assistance; and

(4)if newly constructed, meets the energy efficiency standards promulgated by the Secretary in accordance with section 12709 of this title.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This Act, referred to in subsec. (a)(1)(E), (3), is Pub. L. 101–625, Nov. 28, 1990, 104 Stat. 4079, known as the Cranston-Gonzalez National Affordable Housing Act. For complete classification of this Act to the Code, see

Short Title

note set out under section 12701 of this title and Tables.

Amendments

2000—Subsec. (a)(6). Pub. L. 106–569 added par. (6). 1998—Subsec. (b)(2). Pub. L. 105–276 amended par. (2) generally. Prior to amendment, par. (2) read as follows: “is the principal residence of an owner whose family qualifies as a low-income family at the time of purchase;”. 1994—Subsec. (b)(3). Pub. L. 103–233, § 203(a), redesignated par. (4) as (3) and struck out former par. (3) which read as follows: “is made available for initial purchase only to first-time homebuyers;”. Subsec. (b)(3)(B). Pub. L. 103–233, § 203(b), substituted “subchapter” for “subsection” after “requirements of this”. Subsec. (b)(4), (5). Pub. L. 103–233, § 203(a)(2), redesignated pars. (4) and (5) as (3) and (4), respectively. 1992—Subsec. (a)(1)(A). Pub. L. 102–550, § 208(a)(1), substituted “number of bedrooms in the unit” for “smaller and larger families”. Subsec. (a)(1)(E). Pub. L. 102–550, § 208(b), inserted before semicolon “, except upon a foreclosure by a lender (or upon other transfer in lieu of foreclosure) if such action (i) recognizes any contractual or legal rights of public agencies, nonprofit sponsors, or others to take actions that would avoid termination of low-income affordability in the case of foreclosure or transfer in lieu of foreclosure, and (ii) is not for the purpose of avoiding low income affordability restrictions, as determined by the Secretary”. Subsec. (a)(3). Pub. L. 102–550, § 208(a)(2), (3), substituted “the lesser of the amount payable by the tenant under State or local law or” for “not less than” in second sentence and inserted at end “The preceding sentence shall not apply with respect to funds made available under this Act for units that have been allocated a low-income housing tax credit by a housing credit agency pursuant to section 42 of title 26.” Subsec. (b)(4). Pub. L. 102–550, § 209, added par. (4) and struck out former par. (4) which read as follows: “is made available for subsequent purchase only— “(A) to persons who meet the qualifications specified under paragraph (2), and “(B) at a price consistent with guidelines that are established by the participating jurisdiction and determined by the Secretary to be appropriate— “(i) to provide the owner with a fair return on investment, including any improvements, and “(ii) to ensure that the housing will remain affordable to a reasonable range of low income homebuyers; and”.

Statutory Notes and Related Subsidiaries

Effective Date

of 1998 AmendmentAmendment by Pub. L. 105–276 made on, and applicable beginning upon, Oct. 21, 1998, see section 599B(c) of Pub. L. 105–276, set out as a note under section 12744 of this title.

Effective Date

of 1994 AmendmentAmendment by Pub. L. 103–233 applicable with respect to any amounts made available to carry out this subchapter after Apr. 11, 1994, and any amounts made available to carry out this subchapter before that date that remain uncommitted on that date, with Secretary to issue any

Regulations

necessary to carry out such amendment not later than end of 45-day period beginning on that date, see section 209 of Pub. L. 103–233, set out as a note under section 5301 of this title.

Effective Date

of 1992 AmendmentAmendment by Pub. L. 102–550 applicable to unexpended funds allocated under subchapter II of this chapter in fiscal year 1992, except as otherwise specifically provided, see section 223 of Pub. L. 102–550, set out as a note under section 12704 of this title. HOME Investment Partnerships Program Pub. L. 114–113, div. L, title II, Dec. 18, 2015, 129 Stat. 2878, provided in part: “That with respect to funds made available under this heading [home investment partnerships program, see 129 Stat. 2878] pursuant to such Act [probably means title II of Pub. L. 101–625] and funds provided in prior and subsequent appropriations acts that were or are used by community land trusts for the development of affordable homeownership housing pursuant to section 215(b) of such Act [42 U.S.C. 12745(b)], such community land trusts, notwithstanding section 215(b)(3)(A) of such Act [42 U.S.C. 12745(b)(3)(A)], may hold and exercise purchase options, rights of first refusal or other preemptive rights to purchase the housing to preserve affordability, including but not limited to the right to purchase the housing in lieu of foreclosure”.

§12745 Qualification as affordable housing

Summary

Title 42, §12745

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Regulations

Effective Date

Citations & Metadata