§12802 Rental housing production

Summary

The Secretary must offer a ready-made program that lets public and private sponsors get repayable advances to build, buy, or heavily fix up rental housing that stays affordable. The program covers projects like limited equity cooperatives and mutual housing. Each advance can be no more than 50% of the project’s total cost, as decided by the local participating jurisdiction. Interest can be set by that jurisdiction but cannot exceed 3% per year. Interest starts one year after the project is finished and is paid once a year. Interest (and any unpaid interest) can only be paid from the project’s surplus cash flow after the project pays its first mortgage, operating costs, required replacement reserves, and a minimum return on equity set by the jurisdiction. If in any year the surplus cash flow plus the return on equity exceeds the interest due, half of the excess must go into the participating jurisdiction’s HOME Investment Trust Fund. The loan principal and any unpaid interest must be repaid when the housing no longer meets the law’s definition of affordable housing. The Secretary must also create rules for how jurisdictions pick projects, aiming to serve areas with the biggest need. Those rules may consider things like local rental shortages, serving large families, services for elderly or disabled residents, levels of very low‑ and low‑income occupancy, the sponsor’s equity and other public or private help, and other appropriate factors. The Secretary had to publish these program rules no later than 180 days after November 28, 1990.