Preservation Enhancement and Savings Opportunity Act of 2014

Preservation Enhancement and Savings Opportunity Act of 2014 - Amends the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA) with respect to a plan of action the Secretary of Housing and Urban Development (HUD) may approve for extension of the low-income affordability restrictions on any eligible low-income housing.

Entitles the owner of a property subject to a plan of action or use agreement to distribute:

• annually all surplus cash generated by the property; and
• any funds accumulated in a residual receipts account, upon request made to the Secretary and notwithstanding any conflicting provision in the use agreement, but only if the individual is in material compliance with the use agreement.

Requires an owner distributing any such amounts to:

• continue to operate the property in accordance with the affordability requirements of its use agreement for its remaining useful life;
• continue to renew or extend any project-based rental assistance contract for at least 20 years, as required by the property's plan of action; and
• have the option to extend the contract to a 20-year term, if he or she has an existing multi-year project-based rental assistance contract for less than 20 years.

Declares that neither LIHPRHA, nor any plan of action or use agreement implementing it, shall restrict an owner from obtaining a new loan or refinancing an existing loan secured by a low-income housing project, or from distributing the proceeds of such a loan, except that, in conjunction with such refinancing:

• 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;
• 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
• rent increases for units not covered by a project-based rental subsidy contract or tenant-based rental subsidy shall be limited to 10%.

[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4146 Introduced in House (IH)]

113th CONGRESS
  2d Session
                                H. R. 4146

To amend the Low-Income Housing Preservation and Resident Homeownership 
                              Act of 1990.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 4, 2014

 Mr. Paulsen introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To amend the Low-Income Housing Preservation and Resident Homeownership 
                              Act of 1990.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Preservation Enhancement and Savings 
Opportunity Act of 2014''.

SEC. 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.''.

SEC. 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.''.
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