1. Short title
This Act may be cited as the “Preservation Enhancement and Savings Opportunity Act of 2014”.
Preservation Enhancement and Savings Opportunity Act of 2014
A BILL
To amend the Low-Income Housing Preservation and Resident Homeownership Act of 1990.
2. Distributions and residual receipts
Section 222 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4112) is amended by adding at the end the following new subsection:
“(e) Distribution and residual receipts
“(1) Authority—After the date of the enactment of the Preservation Enhancement and Savings Opportunity Act of 2014, the owner of a property subject to a plan of action or use agreement pursuant to this section shall be entitled to distribute—
“(A) annually, all surplus cash generated by the property; and
“(B) upon request made to the Secretary and notwithstanding any conflicting provision in such use agreement; any funds accumulated in a residual receipts account, but only if the owner is in material compliance with such use agreement.
“(2) Operation of property—An owner that distributes any amounts pursuant to paragraph (1) shall—
“(A) continue to operate the property in accordance with the affordability provisions of the use agreement for the property for the remaining useful life of the property;
“(B) as required by the plan of action for the property, continue to renew or extend any project-based rental assistance contract for a term of not less than 20 years; and
“(C) if the owner has an existing multi-year project-based rental assistance contract for less than 20 years, have the option to extend the contract to a 20-year term.”
3. Future refinancings
Section 214 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4104) is amended by adding at the end the following new subsection:
“(c) Future financing—Neither this section, nor any plan of action or use agreement implementing this section, shall restrict an owner from obtaining a new loan or refinancing an existing loan secured by the project, or from distributing the proceeds of such a loan; except that, in conjunction with such refinancing—
“(1) the owner shall provide for adequate rehabilitation pursuant to a capital needs assessment to ensure long-term sustainability of the property satisfactory to the lender or bond issuance agency;
“(2) any resulting budget-based rent increase shall include debt service on the new financing, commercially reasonable debt service coverage, and replacement reserves as required by the lender; and
“(3) rent increases for units not covered by a project-based rental subsidy contract or tenant-based rental subsidy shall be limited to 10 percent.”