Us Code § 4104 - Annual authorized return and preservation rents
Full text of Us Code United States Code § 4104 — Annual authorized return and preservation rents, with citation guidance and answers to common questions.
§ 4104. Annual authorized return and preservation rents
(a) Annual authorized return
Pursuant to an appraisal under section 4103 of this title, the Secretary shall determine the annual authorized return on the appraised housing, which shall be equal to 8 percent of the preservation equity (as such term is defined in section 4119(8) of this title).
(b) Preservation rents
The Secretary shall also determine the aggregate preservation rents under this subsection for each project appraised under section 4103 of this title. The aggregate preservation rents shall be used solely for the purposes of comparison with Federal cost limits under section 4105 of this title. Actual rents received by an owner (or a qualified purchaser) shall be determined pursuant to section 4109, 4110, or 4111 of this title. The aggregate preservation rents shall be established as follows:
(1) Extension of affordability limits
The aggregate preservation rent for purposes of receiving incentives pursuant to extension of the low-income affordability restrictions under section 4109 of this title shall be the gross potential income for the project, determined by the Secretary, that would be required to support the following costs:
(A) The annual authorized return determined under subsection (a).
(B) Debt service on any rehabilitation loan for the housing.
(C) Debt service on the federally-assisted mortgage for the housing.
(D) Project operating expenses.
(E) Adequate reserves.
(2) Sale
The aggregate preservation rent for purposes of receiving incentives pursuant to sale under section 4110 or 4111 of this title shall be the gross income for the project determined by the Secretary, that would be required to support the following costs:
(A) Debt service on the loan for acquisition of the housing.
(B) Debt service on any rehabilitation loan for the housing.
(C) Debt service on the federally-assisted mortgage for the housing.
(D) Project operating expenses.
(E) Adequate reserves.
(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) for tenants of dwelling units not covered by a project- or tenant-based rental subsidy, any rent increases resulting from the refinancing transaction may not exceed 10 percent per year, except that—
(A) any tenant occupying a dwelling unit as of time of the refinancing may not be required to pay for rent and utilities, for the duration of such tenancy, an amount that exceeds the greater of—
(i) 30 percent of the tenant's income; or
(ii) the amount paid by the tenant for rent and utilities immediately before such refinancing; and
(B) this paragraph shall not apply to any tenant who does not provide the owner with proof of income.
Paragraph (3) may not be construed to limit any rent increases resulting from increased operating costs for a project.
(Pub. L. 100–242, title II, §214, as added Pub. L. 101–625, title VI, §601(a), Nov. 28, 1990, 104 Stat. 4251; amended Pub. L. 114–94, div. G, title LXXVII, §77002, Dec. 4, 2015, 129 Stat. 1790.)
Editorial Notes
Amendments
2015—Subsec. (c). Pub. L. 114–94 added subsec. (c).
Statutory Notes and Related Subsidiaries
Implementation
Pub. L. 114–94, div. G, title LXXVII, §77003, Dec. 4, 2015, 129 Stat. 1791, provided that: "The Secretary of Housing and Urban Development shall issue any guidance that the Secretary considers necessary to carry out the provisions added by the amendments made by this title [amending this section and section 4112 of this title] not later than the expiration of the 120-day period beginning on the date of the enactment of this Act [Dec. 4, 2015]."
About This Section
12 U.S.C. § 4104 is part of Title 12 of the United States Code. The United States Code is the official codification of federal statutes maintained by the Office of the Law Revision Counsel of the U.S. House of Representatives. Congress amends the Code through new public laws, which are eventually incorporated into the relevant title.
This section may be cited in legal writing as 12 U.S.C. § 4104. For the most current official text, including any recent amendments, use the official source links below. Do not rely on this page as the sole authority for legal citation or litigation.
How to Read This Statute
Statutes are organized by title, chapter, section, and subsection. Pay attention to words like "shall," "may," "and," and "or," because they determine whether a requirement is mandatory or permissive and whether multiple conditions must all be met. Historical notes and amendments often appear at the end of a section.
Using This Page
This page is intended for research and educational use. Lawyers, students, journalists, and compliance professionals can use it as a starting point, but should always verify the current text through an official government source before relying on it for legal advice, filings, or compliance decisions.