42 U.S.C. § 12742 — Eligible uses of investment

Page 8454 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12723 (10) to leverage those funds insofar as prac- ticable with State and local matching con- tributions and private investment; (11) to establish for each participating juris- diction a HOME Investment Trust Fund with a line of credit for investment in affordable housing, with repayments back to its HOME Investment Trust Fund being made available for reinvestment by the jurisdiction; (12) to provide credit enhancement for af- fordable housing by utilizing the capacities of existing agencies and mortgage finance insti- tutions when most efficient and supplementing their activities when appro- priate; and (13) to assist very low-income and low-in- come families to obtain the skills and knowl- edge necessary to become responsible home- owners and tenants. (Pub. L. 101–625, title II, § 203, Nov. 28, 1990, 104 Stat. 4095.) § 12723. Coordinated Federal support for housing strategies The Secretary shall make assistance under this subchapter available to participating juris- dictions, through the Office of the Assistant Secretary for Housing-FHA Commissioner of the Department of Housing and Urban Development, to the maximum extent practicable, in coordina- tion with mortgage insurance, rental assistance, and other housing assistance appropriate to the efficient and timely completion of activities under this subchapter. (Pub. L. 101–625, title II, § 204, Nov. 28, 1990, 104 Stat. 4096.) § 12724. Authorization There are authorized to be appropriated to carry out this subchapter $2,086,000,000 for fiscal year 1993, and $2,173,612,000 for fiscal year 1994, of which— (1) not more than $14,000,000 for fiscal year 1993, and $25,000,000 for fiscal year 1994, shall be for community housing partnership activities authorized under section 12773 of this title; and (2) not more than $11,000,000 for fiscal year 1993, and $22,000,000 for fiscal year 1994, shall be for activities in support of State and local housing strategies authorized under part C. (Pub. L. 101–625, title II, § 205, Nov. 28, 1990, 104 Stat. 4096; Pub. L. 102–550, title II, § 201, Oct. 28, 1992, 106 Stat. 3751; Pub. L. 103–120, § 5, Oct. 27, 1993, 107 Stat. 1148.) Editorial Notes AMENDMENTS 1993—Pub. L. 103–120 substituted ‘‘$25,000,000 for fiscal year 1994’’ for ‘‘$14,000,000 for fiscal year 1994’’ in par. (1) and ‘‘$22,000,000 for fiscal year 1994’’ for ‘‘$11,000,000 for fiscal year 1994’’ in par. (2). 1992—Pub. L. 102–550 amended section generally. Prior to amendment, section read as follows: ‘‘There are au- thorized to be appropriated to carry out this sub- chapter $1,000,000,000 for fiscal year 1991, and $2,086,000,000 for fiscal year 1992, of which— ‘‘(1) not more than $14,000,000 for fiscal year 1991, and $14,000,000 for fiscal year 1992, shall be for com- munity housing partnership activities authorized under section 12773 of this title; and ‘‘(2) not more than $11,000,000 for fiscal year 1991, and $11,000,000 for fiscal year 1992, shall be for activi- ties in support of State and local housing strategies authorized under part C of this subchapter.’’ § 12725. Notice The Secretary shall issue regulations to im- plement the provisions of this subchapter after notice and an opportunity for comment pursu- ant to section 553 of title 5. Such regulations shall become effective not later than 180 days after November 28, 1990. (Pub. L. 101–625, title II, § 206, Nov. 28, 1990, 104 Stat. 4096.) PART A—HOME INVESTMENT PARTNERSHIPS § 12741. Authority The Secretary is authorized to make funds available to participating jurisdictions for in- vestment to increase the number of families served with decent, safe, sanitary, and afford- able housing and expand the long-term supply of affordable housing in accordance with provisions of this part. (Pub. L. 101–625, title II, § 211, Nov. 28, 1990, 104 Stat. 4096.) § 12742. Eligible uses of investment (a) Housing uses (1) In general Funds made available under this part may be used by participating jurisdictions to pro- vide incentives to develop and support afford- able rental housing and homeownership afford- ability through the acquisition, new construc- tion, reconstruction, or moderate or substan- tial rehabilitation of affordable housing, in- cluding real property acquisition, site im- provement, conversion, demolition, and other expenses, including financing costs, relocation expenses of any displaced persons, families, businesses, or organizations, to provide for the payment of reasonable administrative and planning costs, to provide for the payment of operating expenses of community housing de- velopment organizations, and to provide ten- ant-based rental assistance. For the purpose of this part, the term ‘‘affordable housing’’ in- cludes permanent housing for disabled home- less persons, transitional housing, and single room occupancy housing. (2) Preference to rehabilitation A participating jurisdiction shall give pref- erence to rehabilitation of substandard hous- ing unless the jurisdiction determines that— (A) such rehabilitation is not the most cost effective way to meet the jurisdiction’s need to expand the supply of affordable housing; and (B) the jurisdiction’s housing needs cannot be met through rehabilitation of the avail- able stock. The Secretary shall not restrict a partici- pating jurisdiction’s choice of rehabilitation, substantial rehabilitation, new construction, Page 8455 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12742 1 See References in Text note below. reconstruction, acquisition, or other eligible housing use unless such restriction is explic- itly authorized under section 12753(2) of this title. (3) Tenant-based rental assistance (A) In general A participating jurisdiction may use funds provided under this part for tenant-based rental assistance only if— (i) the jurisdiction certifies that the use of funds under this part for tenant-based rental assistance is an essential element of the jurisdiction’s annual housing strategy for expanding the supply, affordability, and availability of decent, safe, sanitary, and affordable housing, and specifies the local market conditions that lead to the choice of this option; and (ii) the tenant-based rental assistance is provided in accordance with written ten- ant selection policies and criteria that are consistent with the purposes of providing housing to very low- and low-income fami- lies and are reasonably related to pref- erence rules established under section 1437d(c)(4)(A) 1 of this title. (B) Fair share not affected A jurisdiction’s section 8 [42 U.S.C. 1437f] fair share allocation shall be unaffected by the use of assistance under this subchapter. (C) 24-month contracts Rental assistance contracts made avail- able with assistance under this subchapter shall be for not more than 24 months, except that assistance to a family may be renewed. (D) Use of section 1437f assistance In any case where assistance under section 1437f of this title becomes available to a par- ticipating jurisdiction, recipients of rental assistance under this subchapter shall qual- ify for tenant selection preferences to the same extent as when they received the rent- al assistance under this subchapter. A rental assistance program under this subchapter shall meet minimum criteria prescribed by the Secretary, such as housing quality standards and standards regarding the rea- sonableness of the rent. (E) Security deposit assistance A jurisdiction using funds provided under this part for tenant-based rental assistance may use such funds to provide loans or grants to very low- and low-income families for security deposits for rental of dwelling units. Assistance under this subparagraph does not preclude assistance under any other provision of this paragraph. (4) Redesignated (3) (5) Lead-based paint hazards A participating jurisdiction may use funds provided under this part for the evaluation and reduction of lead-based paint hazards, as defined in section 4851b of this title. (b) Investments Participating jurisdictions shall have discre- tion to invest funds made available under this part as equity investments, interest-bearing loans or advances, noninterest-bearing loans or advances, interest subsidies or other forms of as- sistance that the Secretary has determined to be consistent with the purposes of this sub- chapter. Each participating jurisdiction shall have the right to establish the terms of assist- ance. (c) Administrative costs In each fiscal year, each participating jurisdic- tion may use not more than 10 percent of the funds made available under this part to the ju- risdiction for such year for any administrative and planning costs of the jurisdiction in car- rying out this part, including the costs of the salaries of persons engaged in administering and managing activities assisted with funds made available under this part. (d) Prohibited uses Funds made available under this part may not be used to— (1) defray any administrative cost of a par- ticipating jurisdiction that exceed the amount specified under subsection (c), (2) provide tenant-based rental assistance for the special purposes of the existing section 8 [42 U.S.C. 1437f] program, including replacing public housing that is demolished or disposed of, preserving federally assisted housing, as- sisting in the disposition of housing owned or held by the Secretary, preventing displace- ment from rental rehabilitation projects, or extending or renewing tenant-based assistance under section 1437f of this title, (3) provide non-Federal matching contribu- tions required under any other Federal pro- gram, (4) provide assistance authorized under sec- tion 1437g of this title, (5) carry out activities authorized under sec- tion 1437g(d)(1) 1 of this title, or (6) provide assistance to eligible low-income housing under the Emergency Low Income Housing Preservation Act of 1987 or the Low- Income Housing Preservation and Resident Homeownership Act of 1990 [12 U.S.C. 4101 et seq.]. (e) Cost limits (1) In general The Secretary shall establish limits on the amount of funds under this part that may be invested on a per unit basis. For multifamily housing, such limits shall not be less than the per unit dollar amount limitations set forth in section 1715l(d)(3)(ii) of title 12, as such limita- tions may be adjusted in accordance there- with, except that for purposes of this sub- section the Secretary shall, by regulation, in- crease the per unit dollar amount limitations in any geographical area by an amount, not to exceed 140 percent, that equals the amount by which the costs of multifamily housing con- struction in the area exceed the national aver- age of such costs. The limits shall be estab- lished on a market-by-market basis, with ad- justments made for number of bedrooms, and shall reflect the actual cost of new construc- tion, reconstruction, or rehabilitation of hous- ing that meets applicable State and local Page 8456 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 12743 housing and building codes and the cost of land, including necessary site improvements. Adjustments shall be made annually to reflect inflation. Separate limits may be set for dif- ferent eligible activities. (2) Criteria In calculating per unit limits, the Secretary shall take into account that assistance under this subchapter is intended to— (A) provide nonluxury housing with suit- able amenities; (B) operate effectively in all jurisdictions; (C) facilitate mixed-income housing; and (D) reflect the costs associated with meet- ing the special needs of tenants or home- owners that the housing is designed to serve. (3) Consultation In calculating cost limits, the Secretary shall consult with organizations that have ex- pertise in the development of affordable hous- ing, including national nonprofit organiza- tions and national organizations representing private development firms and State and local governments. (f) Certification of compliance The requirements of section 3545(d) of this title shall be satisfied by a certification by a participating jurisdiction to the Secretary that the combination of Federal assistance provided to any housing project shall not be any more than is necessary to provide affordable housing. (g) Limitation on operating assistance A participating jurisdiction may not use more than 5 percent of its allocation under this part for the payment of operating expenses for com- munity housing development organizations. (Pub. L. 101–625, title II, § 212, Nov. 28, 1990, 104 Stat. 4097; Pub. L. 102–550, title II, §§ 203(a), 204–207(b), (d), title X, § 1012(e), Oct. 28, 1992, 106 Stat. 3752–3754, 3905; Pub. L. 105–276, title V, § 522(b)(5), Oct. 21, 1998, 112 Stat. 2565.) Editorial Notes REFERENCES IN TEXT Section 1437d(c)(4)(A) of this title, referred to in sub- sec. (a)(3)(A)(ii), was in the original ‘‘section 6(c)(4)(A) of the Housing Act of 1937’’, and was translated as read- ing ‘‘section 6(c)(4)(A) of the United States Housing Act of 1937’’, act Sept. 1, 1937, ch. 896, to reflect the probable intent of Congress. Section 1437g(d)(1) of this title, referred to in subsec. (d)(5), was in the original ‘‘section 9(d)(1) of the Hous- ing Act of 1937’’, and was translated as reading ‘‘section 9(d)(1) of the United States Housing Act of 1937’’, act Sept. 1, 1937, ch. 896, to reflect the probable intent of Congress. The Emergency Low Income Housing Preservation Act of 1987, referred to in subsec. (d)(6), is title II of Pub. L. 100–242, Feb. 5, 1988, 102 Stat. 1877, which was classified principally as a note under section 1715l of Title 12, Banks and Banking. Title II of Pub. L. 100–242, was amended generally by Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4249, and is now known as the Low-Income Housing Preservation and Resident Homeownership Act of 1990, which is classified prin- cipally to chapter 42 (§ 4101 et seq.) of Title 12. For com- plete classification of this Act to the Code, see Short Title note set out under section 4101 of Title 12 and Ta- bles. AMENDMENTS 1998—Subsec. (d)(5). Pub. L. 105–276 substituted ‘‘sec- tion 1437g(d)(1)’’ for ‘‘section 1437l’’. 1992—Subsec. (a)(1). Pub. L. 102–550, § 207(a), inserted ‘‘to provide for the payment of reasonable administra- tive and planning costs, to provide for the payment of operating expenses of community housing development organizations,’’ after ‘‘or organizations,’’. Pub. L. 102–550, § 205, inserted at end ‘‘For the purpose of this part, the term ‘affordable housing’ includes per- manent housing for disabled homeless persons, transi- tional housing, and single room occupancy housing.’’ Subsec. (a)(2). Pub. L. 102–550, § 203(a)(1), struck out ‘‘under paragraph (3) of this subsection or’’ after ‘‘au- thorized’’ in concluding provisions. Subsec. (a)(3). Pub. L. 102–550, § 204(b), added cl. (ii) of par. (3)(A) and struck out former cl. (ii) which read as follows: ‘‘the tenant-based rental assistance is provided to persons from the waiting lists eligible for section 8 assistance in accordance with the applicable pref- erences.’’ Pub. L. 102–550, § 204(a), added subpar. (E). Pub. L. 102–550, § 203(a)(2), (3), redesignated par. (4) as (3) and struck out former par. (3) which provided for conditions for new construction of housing. Subsec. (a)(4). Pub. L. 102–550, § 203(a)(3), redesignated par. (4) as (3). Subsec. (a)(5). Pub. L. 102–550, § 1012(e), added par. (5). Subsec. (c). Pub. L. 102–550, § 207(b)(3), added subsec. (c). Former subsec. (c) redesignated (d). Pub. L. 102–550, § 207(b)(1), inserted before comma at end of par. (1) ‘‘that exceed the amount specified under subsection (c)’’. Subsec. (d). Pub. L. 102–550, § 207(b)(2), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (e). Pub. L. 102–550, § 206, inserted after first sentence of par. (1) ‘‘For multifamily housing, such limits shall not be less than the per unit dollar amount limitations set forth in section 1715l(d)(3)(ii) of title 12, as such limita- tions may be adjusted in accordance therewith, except that for purposes of this subsection the Secretary shall, by regulation, increase the per unit dollar amount limi- tations in any geographical area by an amount, not to exceed 140 percent, that equals the amount by which the costs of multifamily housing construction in the area exceed the national average of such costs.’’ Subsecs. (e), (f). Pub. L. 102–550, § 207(b)(2), redesig- nated subsecs. (d) and (e) as (e) and (f), respectively. Subsec. (g). Pub. L. 102–550, § 207(d), added subsec. (g). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Amendment by title V of Pub. L. 105–276 effective and applicable beginning upon Oct. 1, 1999, except as other- wise provided, with provision that Secretary may im- plement amendment before such date, except to extent that such amendment provides otherwise, and with sav- ings provision, see section 503 of Pub. L. 105–276, set out as a note under section 1437 of this title. EFFECTIVE DATE OF 1992 AMENDMENT Amendment by sections 203–207 of Pub. L. 102–550 ap- plicable to unexpended funds allocated under sub- chapter II of this chapter in fiscal year 1992, except as otherwise specifically provided, see section 223 of Pub. L. 102–550, set out as a note under section 12704 of this title. § 12743. Development of model programs (a) In general The Secretary shall— (1) in cooperation with participating juris- dictions, government-sponsored mortgage fi- nance corporations, nonprofit organizations, the private sector, and other appropriate par- ties, develop, test, evaluate, refine, and, as