§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 fix up affordable rental housing, including limited equity cooperatives and mutual housing. Each advance can be no more than 50 percent of the project’s total costs, as set by the participating local agency. Interest on advances can be up to 3 percent 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 the first mortgage, operating costs, required replacement reserves, and a minimum return to equity investors. Surplus cash flow means the money left after those payments. If surplus cash plus the return on equity is more than the interest due, half of the extra amount must go to the HOME Investment Trust Fund. The loan principal and any unpaid interest must be repaid if the housing stops meeting the program’s affordable-housing rules. The Secretary must also make rules for how participating local agencies pick projects. The rules must favor areas with the greatest need and may consider factors like shortage of low-income rentals, serving large families, services for elderly or disabled residents, extra low-income occupancy, sponsor equity and other public or private help, and other appropriate factors. The Secretary had to publish these guidelines within 180 days after November 28, 1990.