§12802 Rental Housing Production

Summary

The Secretary must create a model program that gives repayable advances to public and private sponsors to build, buy, or heavily renovate affordable rental housing, including limited equity co‑ops and mutual housing. Each advance can be no more than 50 percent of the project’s total costs, as set by the local participating jurisdiction. Interest can be up to 3 percent per year, set by the local jurisdiction, starts 1 year after the project is finished, and is paid once a year. Interest (and any unpaid interest) is paid only from the project’s surplus cash flow after the first mortgage, operating costs, required replacement reserves, and a minimum return on equity are paid. Surplus cash flow means the money left after those payments, as set by the local jurisdiction. If in any year the project’s surplus cash plus the return on equity is more than the interest due, half of the extra amount must go to the participating jurisdiction’s HOME Investment Trust Fund as additional interest. The advance principal and any unpaid interest must be repaid when the housing no longer meets the affordable housing rules in section 12749(b). The Secretary must also publish rules for choosing projects that target areas and markets with the greatest need and may consider factors like local rental shortages for low‑income families, serving large families, services for elderly or disabled residents, income targeting, sponsor equity and other public or private assistance. These guidelines had to be published no later than 180 days after November 28, 1990.