§4109 Incentives to Extend Low-income Use

Summary

If an owner of eligible low-income housing gives an approved plan to keep the housing affordable longer, the Secretary must, if money is available, make agreements so the owner can receive the yearly authorized return (see section 4104(a)), pay the federally-assisted mortgage and any rehab loan, cover operating costs, and keep reserves. While rents are being phased in under section 4112(a)(2)(E), the Secretary must still make sure the owner gets that return. The preferred steps are: let the owner use residual receipt accounts first, then delay sending excess rent to the government, and lastly raise rents under existing Section 8 contracts (section 1437f). The agreements can include several incentives, such as more access to residual receipts;, subject to available appropriations, rent increases or extra/extended Section 8 or project-based help; higher rents for current tenants under section 4112; financing or insurance for second mortgages to pay for repairs; redirecting certain interest-reduction payments to a second mortgage for some buildings; allowing owners to access part of preservation equity through approved second mortgages; and other incentives allowed by law. When giving rent increases or extra assistance, the Secretary must follow the federal cost limits in section 4105(a). For housing insured under section 1715z–1, fair market rents may be raised under these rules, but the owner must turn over to the Secretary any rent collected above the basic rent, up to the fair market rent that would have applied under section 1715z–1(f).