§4104 Annual Authorized Return and Preservation Rents

Summary

The Secretary must set a yearly allowed return for appraised preservation housing. That return is 8 percent of the preservation equity. The Secretary also must calculate an aggregate “preservation rent” for each appraised project. Those rent figures are only used to compare the project to Federal cost limits. Actual tenant rents are decided under other rules. For extending low-income rules, the preservation rent is the gross income needed to pay the 8 percent return, any rehab loan payments, the federally‑assisted mortgage, operating costs, and reserves. For sales, it is the gross income needed to pay acquisition loan payments plus rehab debt, the federally‑assisted mortgage, operating costs, and reserves. Owners may get new loans or refinance and use the proceeds. Refinancing must include a capital needs assessment and needed repairs approved by the lender. Any budgeted rent rise must cover the new loan payments, reasonable debt coverage, and replacement reserves. For tenants without subsidies, rent hikes from refinancing cannot exceed 10 percent per year. Tenants in place at refinancing cannot be charged more than the greater of 30 percent of their income or what they paid before, unless they do not give proof of income.