CONGRESSWOMAN ELISE STEFANIK
On Tuesday, July 14, 2015, the House will consider H.R. 2482, the Preservation Enhancement and Savings Opportunity Act of 2015, under suspension of the rules. H.R. 2482 was introduced on May 20, 2015 by Rep. Erik Paulsen (R-MN) and was referred to the Committee on Financial Services.
H.R. 2482 amends the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA) to allow owners (including nonprofits) of HUD federally-subsidized multifamily developments access to remaining profits after all operating expenses and maintenance costs while ensuring long-term affordability and compliance with HUD standards.
The bill entitles the owner of a property subject to a plan of action or use agreement to distribute:
The bill also requires an owner distributing any such amounts to:
The bill also specifies 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 bill also requires the HUD Secretary to issue any guidance necessary to carry out the amendments made to LIHPRHA by the bill not later than 120 days after enactment.
The Low-Income Housing Preservation and Resident Homeownership Act of 1990 is an example of a HUD-administered program designed to preserve affordable assisted housing. The term assisted housing preservation refers to efforts to “maintain the affordability of rental properties financed or subsidized by the Department of Housing and Urban Development (HUD) but owned by private for-profit or nonprofit organizations.”
Congress enacted the Emergency Low-Income Housing Preservation Act (ELIHPA) in 1987 to stop the loss of affordable housing units. Among its provisions, the law “prevented owners from prepaying their mortgages in many circumstances, and was described by some as a moratorium on mortgage prepayment.” The law allowed the prepayment of the mortgage, along with the termination of affordability restrictions, only if certain conditions were met.
LIHPRHA superseded ELIHPA and “covered the same types of housing developments and, like ELIHPA, limited the occasions on which owners could prepay their mortgages and terminate affordability restrictions, and it also provided incentives for building owners to offer affordable housing. However, LIHPRHA differed from ELIHPA by providing owners with a third potential option: selling their properties to qualified purchasers under certain circumstances.” The law also included requirements that owners notify HUD, state or local governments, and residents of their intent.
H.R. 2482 removes certain limitations under LIHPRHA and provides the ownership entity of a HUD insured, multifamily mortgage the ability to access its own funds to address tax liabilities or other expenses while ensuring continued preservation and adherence to the properties’ use agreements. HUD has administratively removed limitations on distributions where it had the authority to do so for the past 15 years, but has concluded that it lacks this authority with the LIHPRHA portfolio.
 See CRS Report—“Preservation of HUD-Assisted Housing,” January 6, 2012 at Summary.
 Id. at 20.
 Id. at 21.
A Congressional Budget Office (CBO) cost estimate is currently unavailable.
For questions or further information please contact Jerry White with the House Republican Policy Committee by email or at 5-0190.