Representative Erik Paulsen (R-MN) has re-introduced a bill that would provide access to property residual receipts, the accumulated cash surplus that is over and above the allowable limited dividends provided to owners of certain affordable housing projects with project-based rental assistance contracts.
Today, the use of residual receipts at the end of the project’s contract term is governed by regulatory use agreements and is restricted to a small number of uses related to the project itself and to uses that benefit tenants. The bill would expand use of residual receipts by amending LIHPRHA, a 1990 to 1996 federal preservation program, to allow use of the funds for potentially non-preservation purposes.
This bill, H.R. 4146, H.R. 4253 in the 112th Congress, or the “Preservation Enhancement and Savings Opportunity Act of 2014,” would also protect the ability of owners to borrow against their properties if they abide by certain guidelines, including providing adequate rehabilitation to ensure long-term sustainability of their properties, include debt service on their new financing, and limit rental increases for units not covered by project-based rental subsidies to 10%.
This year’s introduction removes two sections from last year’s proposed bill, one relating to the governance of direct capital loans and the other editing language regarding rent setting.
The bill was introduced on March 4, and was referred to the House Committee on Financial Services.