12 U.S.C. § 1701s — Rent supplement payments for qualified lower income families

(a) Authorization; maximum term; maximum aggregate amount. The Secretary of Housing and Urban Development (“Secretary”) may make, and may contract to make, annual payments to a “housing owner” for “qualified tenants,” in the amounts and under the conditions provided by or under this section. A contract may not provide payments with respect to any housing for more than 40 years. The total amount of payment contracts may not exceed amounts approved in appropriation Acts. Before July 1, 1969, payments under those contracts could not exceed $150,000,000 per year. That maximum increased by $40,000,000 on July 1, 1969, by $100,000,000 on July 1, 1970, and by $40,000,000 on July 1, 1971.

(b) “Housing owner” defined; limitation on payments. In this section, “housing owner” means: a private nonprofit corporation or other private nonprofit legal entity; a limited-dividend corporation or other limited-dividend legal entity; or a cooperative housing corporation, if it is a mortgagor under 12 U.S.C. § 1715l(d)(3), was approved for mortgage insurance after August 10, 1965, and was approved for this section’s benefits. Except as subsection (j) provides, payments may not concern property financed by a mortgage receiving the interest-rate benefit described in the proviso of 12 U.S.C. § 1715l(d)(5).

“Housing owner” also includes those kinds of organizations when they own a rental or cooperative housing project financed under a State^* or local program that assists through loans, loan insurance, or tax abatement, whether the project uses new or existing construction, and the project is approved for this section’s benefits. Subject to subsection (j), the term also has the meaning given there.

Nothing here prevents payments for projects in which some or all dwelling units lack kitchen facilities. But, of the total payment contracts approved after December 31, 1970, under subsection (a), no more than 10 percent in total may concern such projects.

(c) Definitions

(1) “Qualified tenant” means an individual or family whose income would qualify for assistance under 42 U.S.C. § 1437f. It also includes an individual or family receiving assistance under this section on December 20, 1979, if the individual or family continues to meet the assistance conditions in effect that day.

(2) “Income” means income from every source of each household member, as the Secretary determines under prescribed criteria. In deciding what income to exclude, the Secretary may consider the number of minor children and other factors the Secretary finds appropriate. “Qualified tenant” and “tenant” also include a cooperative member who meets these requirements and who, when selling the membership back to the cooperative, will not be repaid any equity increase accumulated through payments under this section. For cooperative members, “rental” and “rental charges” mean the charges under the occupancy agreements between the members and the cooperative.

(d) Annual payment amount. For a dwelling unit, the annual payment is the smaller of: (1) 70 percent of the fair-market rent; or (2) the amount by which the unit’s fair-market rent is greater than 30 percent of the tenant’s adjusted income.

(e) Eligibility, rent, income review, services, and certificates

(1) The Secretary must establish criteria and procedures for deciding occupant eligibility and rental charges. They must include periodic reviews of tenant income and periodic rent adjustments.

(2) The procedures must require income recertification at least once a year so rent and annual payments can be adjusted to income. Adjusted rent for a unit may never exceed that unit’s fair-market rent.

(3) The Secretary may make agreements, or authorize housing owners to make agreements, with public or private agencies for services needed to select qualified tenants and establish rents. This includes selecting people who may be approved, because their incomes are likely to rise in the future, to lease a home under an option to buy that gives them the exclusive right to buy at a price set or determined by the option. The Secretary may delegate to such an agency the authority to issue certificates under this subsection.

(4) No payment may concern property whose operating costs, including wages and salaries, the Secretary finds higher than similar operating costs for similar housing in the community.

(f) Omitted.

(g) Authority of Secretary. The Secretary may issue rules and regulations, make agreements, and adopt procedures needed or desirable to carry out this section. Nothing here changes the Secretary’s other authority over housing assisted under this section, 12 U.S.C. § 1715l(d)(3), § 1715v(c)(3), § 1715z-1, or § 1701q, including authority under other laws to set occupancy requirements or decide what portion may be occupied by qualified tenants.

To ensure that qualified tenants occupying the number of units assisted immediately before November 30, 1983, receive the benefit of assistance contracted under this section, the Secretary must annually offer to amend contracts with owners of projects assisted under this section but not covered by title II National Housing Act-insured mortgages. The amendments must provide enough payment to cover 100 percent of necessary rent increases and changes in qualified tenants’ incomes, subject to available authority under 42 U.S.C. § 1437c(c). The Secretary must take needed action to ensure timely payments, including payments reflecting necessary rent increases and tenant-income changes, for all units covered by contracts under this section.

(h) Authorization of appropriations. Congress may appropriate amounts needed to carry out this section, including annual payments, services under subsection (e) or agreements under it, and administrative expenses.

(i) Omitted.

(j) Additional definition of housing owner; restrictions

(1) For experimental assistance under this section, and subject to this subsection’s limits, “housing owner” also includes: (A) an eligible organization that is a mortgagor under a mortgage receiving the interest-rate benefit in the proviso of 12 U.S.C. § 1715l(d)(5), was approved for mortgage insurance under § 1715l(d)(3) after August 10, 1965, and was approved for this section’s benefits; (B) an eligible private nonprofit organization that is a mortgagor under a mortgage insured under § 1715v(c)(3), obtained final mortgage-insurance endorsement after August 10, 1965, and was approved for this section’s benefits; (C) an eligible private nonprofit corporation, public body or agency, or cooperative housing corporation that is a borrower under § 1701q and was approved for this section’s benefits. For properties financed by loans under § 1701q made on or before August 10, 1965, payments may concern no more than 20 percent of the dwelling units in a property; and (D) an eligible organization assisted under § 1715z-1 and approved for this section’s benefits. Payments may concern no more than 20 percent of units in such a property, but the Secretary may raise the limit to 40 percent if the Secretary finds the increase necessary and desirable to provide additional housing for people meeting subsection (c).

(2) Of the amounts approved for payments in any year, no more than 5 percent in total may be paid for properties of owners under paragraph (1)(A), and no more than 5 percent in total may be paid for properties of owners under paragraphs (1)(B) and (C).

(k) Repealed. Pub. L. 105-276, title V, § 514(d), October 21, 1998, 112 Stat. 2548.

(l) Additional available assistance authority. Despite subsection (a) and other law, the Secretary may use additional authority under 42 U.S.C. § 1437c(c) made available by appropriation Acts on or after October 1, 1979, to supplement assistance authority under this section. After September 30, 1984, the Secretary must use, as necessary, authority under this section recaptured because projects convert to 42 U.S.C. § 1437f assistance contracts or for another reason: (1) first, to make assistance payments, including subsection (g) amendments, for projects assisted under this section that are not subject to National Housing Act-insured mortgages and remain under this section; and (2) if it is not needed for this section, despite other law, to contract for payments under 12 U.S.C. § 1715z-1(f)(2).

(m) Payments for certain projects with State or local agency mortgages. Within 45 days after a mortgagee applies, the Secretary must provide interest-reduction and rental-assistance payments for projects assisted under this section whose mortgages were made by State or local housing-finance or government agencies. The payment term must equal the remaining mortgage term to maturity. The payments may use: (1) unspent authority balances described in certain letter agreements between HUD and those agencies; and (2) existing allocations under § 1715z-1 contracts for such projects that are not being funded, to the extent of excess allocation, for purposes allowed by this section.

An application qualifies only if the mortgagee submitted it within 548 days after February 5, 1988, and certified that the amounts will be used either (A) to reduce tenants’ rents or rent increases, or (B) to make repairs or otherwise increase the economic viability of a related project. Any unspent balance described in the first sentence that remains after all applications have been favorably resolved must be rescinded. This subsection’s authority is available only to the extent approved in appropriation Acts.