
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC12742]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                CHAPTER 130--NATIONAL AFFORDABLE HOUSING
 
             SUBCHAPTER II--INVESTMENT IN AFFORDABLE HOUSING
 
                  Part A--HOME Investment Partnerships
 
Sec. 12742. Eligible uses of investment


(a) Housing uses

                           (1) In general

        Funds made available under this part may be used by 
    participating jurisdictions to provide incentives to develop and 
    support affordable rental housing and homeownership affordability 
    through the acquisition, new construction, reconstruction, or 
    moderate or substantial rehabilitation of affordable housing, 
    including real property acquisition, site improvement, conversion, 
    demolition, and other expenses, including financing costs, 
    relocation expenses of any displaced persons, families, businesses, 
    or organizations, to provide for the payment of reasonable 
    administrative and planning costs, to provide for the payment of 
    operating expenses of community housing development organizations, 
    and to provide tenant-based rental assistance. For the purpose of 
    this part, the term ``affordable housing'' includes permanent 
    housing for disabled homeless persons, transitional housing, and 
    single room occupancy housing.

                  (2) Preference to rehabilitation

        A participating jurisdiction shall give preference to 
    rehabilitation of substandard housing unless the jurisdiction 
    determines that--
            (A) such rehabilitation is not the most cost effective way 
        to meet the jurisdiction's need to expand the supply of 
        affordable housing; and
            (B) the jurisdiction's housing needs cannot be met through 
        rehabilitation of the available stock.

    The Secretary shall not restrict a participating jurisdiction's 
    choice of rehabilitation, substantial rehabilitation, new 
    construction, reconstruction, acquisition, or other eligible housing 
    use unless such restriction is explicitly authorized under section 
    12753(2) of this title.

                 (3) Tenant-based rental assistance

        (A) In general

            A participating jurisdiction may use funds provided under 
        this part for tenant-based rental assistance only if--
                (i) the jurisdiction certifies that the use of funds 
            under this part for tenant-based rental assistance is an 
            essential element of the jurisdiction's annual housing 
            strategy for expanding the supply, affordability, and 
            availability of decent, safe, sanitary, and affordable 
            housing, and specifies the local market conditions that lead 
            to the choice of this option; and
                (ii) the tenant-based rental assistance is provided in 
            accordance with written tenant selection policies and 
            criteria that are consistent with the purposes of providing 
            housing to very low- and low-income families and are 
            reasonably related to preference rules established under 
            section 1437d(c)(4)(A) \1\ of this title.
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    \1\ See References in Text note below.
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        (B) Fair share not affected

            A jurisdiction's section 8 [42 U.S.C. 1437f] fair share 
        allocation shall be unaffected by the use of assistance under 
        this subchapter.

        (C) 24-month contracts

            Rental assistance contracts made available with assistance 
        under this subchapter shall be for not more than 24 months, 
        except that assistance to a family may be renewed.

        (D) Use of section 1437f assistance

            In any case where assistance under section 1437f of this 
        title becomes available to a participating jurisdiction, 
        recipients of rental assistance under this subchapter shall 
        qualify for tenant selection preferences to the same extent as 
        when they received the rental assistance under this subchapter. 
        A rental assistance program under this subchapter shall meet 
        minimum criteria prescribed by the Secretary, such as housing 
        quality standards and standards regarding the reasonableness of 
        the rent.

        (E) Security deposit assistance

            A jurisdiction using funds provided under this part for 
        tenant-based rental assistance may use such funds to provide 
        loans or grants to very low- and low-income families for 
        security deposits for rental of dwelling units. Assistance under 
        this subparagraph does not preclude assistance under any other 
        provision of this paragraph.

                        (4) Redesignated (3)

                    (5) Lead-based paint hazards

        A participating jurisdiction may use funds provided under this 
    part for the evaluation and reduction of lead-based paint hazards, 
    as defined in section 4851b of this title.

(b) Investments

    Participating jurisdictions shall have discretion to invest funds 
made available under this part as equity investments, interest-bearing 
loans or advances, noninterest-bearing loans or advances, interest 
subsidies or other forms of assistance that the Secretary has determined 
to be consistent with the purposes of this subchapter. Each 
participating jurisdiction shall have the right to establish the terms 
of assistance.

(c) Administrative costs

    In each fiscal year, each participating jurisdiction may use not 
more than 10 percent of the funds made available under this part to the 
jurisdiction for such year for any administrative and planning costs of 
the jurisdiction in carrying out this part, including the costs of the 
salaries of persons engaged in administering and managing activities 
assisted with funds made available under this part.

(d) Prohibited uses

    Funds made available under this part may not be used to--
        (1) defray any administrative cost of a participating 
    jurisdiction that exceed the amount specified under subsection (c) 
    of this section,
        (2) provide tenant-based rental assistance for the special 
    purposes of the existing section 8 [42 U.S.C. 1437f] program, 
    including replacing public housing that is demolished or disposed 
    of, preserving federally assisted housing, assisting in the 
    disposition of housing owned or held by the Secretary, preventing 
    displacement from rental rehabilitation projects, or extending or 
    renewing tenant-based assistance under section 1437f of this title,
        (3) provide non-Federal matching contributions required under 
    any other Federal program,
        (4) provide assistance authorized under section 1437g of this 
    title,
        (5) carry out activities authorized under section 1437g(d)(1) 
    \1\ of this title, or
        (6) provide assistance to eligible low-income housing under the 
    Emergency Low Income Housing Preservation Act of 1987 or the Low-
    Income Housing Preservation and Resident Homeownership Act of 1990 
    [12 U.S.C. 4101 et seq.].

(e) Cost limits

                           (1) In general

        The Secretary shall establish limits on the amount of funds 
    under this part that may be invested on a per unit basis. For 
    multifamily housing, such limits shall not be less than the per unit 
    dollar amount limitations set forth in section 1715l(d)(3)(ii) of 
    title 12, as such limitations may be adjusted in accordance 
    therewith, except that for purposes of this subsection the Secretary 
    shall, by regulation, increase the per unit dollar amount 
    limitations in any geographical area by an amount, not to exceed 140 
    percent, that equals the amount by which the costs of multifamily 
    housing construction in the area exceed the national average of such 
    costs. The limits shall be established on a market-by-market basis, 
    with adjustments made for number of bedrooms, and shall reflect the 
    actual cost of new construction, reconstruction, or rehabilitation 
    of housing that meets applicable State and local housing and 
    building codes and the cost of land, including necessary site 
    improvements. Adjustments shall be made annually to reflect 
    inflation. Separate limits may be set for different eligible 
    activities.

                            (2) Criteria

        In calculating per unit limits, the Secretary shall take into 
    account that assistance under this subchapter is intended to--
            (A) provide nonluxury housing with suitable amenities;
            (B) operate effectively in all jurisdictions;
            (C) facilitate mixed-income housing; and
            (D) reflect the costs associated with meeting the special 
        needs of tenants or homeowners that the housing is designed to 
        serve.

                          (3) Consultation

        In calculating cost limits, the Secretary shall consult with 
    organizations that have expertise in the development of affordable 
    housing, including national nonprofit organizations and national 
    organizations representing private development firms and State and 
    local governments.

(f) Certification of compliance

    The requirements of section 3545(d) of this title shall be satisfied 
by a certification by a participating jurisdiction to the Secretary that 
the combination of Federal assistance provided to any housing project 
shall not be any more than is necessary to provide affordable housing.

(g) Limitation on operating assistance

    A participating jurisdiction may not use more than 5 percent of its 
allocation under this part for the payment of operating expenses for 
community housing development organizations.

(Pub. L. 101-625, title II, Sec. 212, Nov. 28, 1990, 104 Stat. 4097; 
Pub. L. 102-550, title II, Secs. 203(a), 204-207(b), (d), title X, 
Sec. 1012(e), Oct. 28, 1992, 106 Stat. 3752-3754, 3905; Pub. L. 105-276, 
title V, Sec. 522(b)(5), Oct. 21, 1998, 112 Stat. 2565.)

                       References in Text

    Section 1437d(c)(4)(A) of this title, referred to in subsec. 
(a)(3)(A)(ii), was in the original ``section 6(c)(4)(A) of the Housing 
Act of 1937'', and was translated as reading ``section 6(c)(4)(A) of the 
United States Housing Act of 1937'', act Sept. 1, 1937, ch. 896, to 
reflect the probable intent of Congress.
    Section 1437g(d)(1) of this title, referred to in subsec. (d)(5), 
was in the original ``section 9(d)(1) of the Housing Act of 1937'', and 
was translated as reading ``section 9(d)(1) of the United States Housing 
Act of 1937'', act Sept. 1, 1937, ch. 896, to reflect the probable 
intent of Congress.
    The Emergency Low Income Housing Preservation Act of 1987, referred 
to in subsec. (d)(6), is title II of Pub. L. 100-242, Feb. 5, 1988, 102 
Stat. 1877, as amended, which was classified principally as a note under 
section 1715l of Title 12, Banks and Banking. Title II of Pub. L. 100-
242, was amended generally by Pub. L. 101-625, title VI, Sec. 601(a), 
Nov. 28, 1990, 104 Stat. 4249, and is now known as the Low-Income 
Housing Preservation and Resident Homeownership Act of 1990, which is 
classified principally to chapter 42 (Sec. 4101 et seq.) of Title 12. 
For complete classification of this Act to the Code, see Short Title 
note set out under section 4101 of Title 12 and Tables.


                               Amendments

    1998--Subsec. (d)(5). Pub. L. 105-276 substituted ``section 
1437g(d)(1)'' for ``section 1437l''.
    1992--Subsec. (a)(1). Pub. L. 102-550, Sec. 207(a), inserted ``to 
provide for the payment of reasonable administrative and planning costs, 
to provide for the payment of operating expenses of community housing 
development organizations,'' after ``or organizations,''.
    Pub. L. 102-550, Sec. 205, inserted at end ``For the purpose of this 
part, the term `affordable housing' includes permanent housing for 
disabled homeless persons, transitional housing, and single room 
occupancy housing.''
    Subsec. (a)(2). Pub. L. 102-550, Sec. 203(a)(1), struck out ``under 
paragraph (3) of this subsection or'' after ``authorized'' in concluding 
provisions.
    Subsec. (a)(3). Pub. L. 102-550, Sec. 204(b), added cl. (ii) of par. 
(3)(A) and struck out former cl. (ii) which read as follows: ``the 
tenant-based rental assistance is provided to persons from the waiting 
lists eligible for section 8 assistance in accordance with the 
applicable preferences.''
    Pub. L. 102-550, Sec. 204(a), added subpar. (E).
    Pub. L. 102-550, Sec. 203(a)(2), (3), redesignated par. (4) as (3) 
and struck out former par. (3) which provided for conditions for new 
construction of housing.
    Subsec. (a)(4). Pub. L. 102-550, Sec. 203(a)(3), redesignated par. 
(4) as (3).
    Subsec. (a)(5). Pub. L. 102-550, Sec. 1012(e), added par. (5).
    Subsec. (c). Pub. L. 102-550, Sec. 207(b)(3), added subsec. (c). 
Former subsec. (c) redesignated (d).
    Pub. L. 102-550, Sec. 207(b)(1), inserted before comma at end of 
par. (1) ``that exceed the amount specified under subsection (c) of this 
section''.
    Subsec. (d). Pub. L. 102-550, Sec. 207(b)(2), redesignated subsec. 
(c) as (d). Former subsec. (d) redesignated (e).
    Pub. L. 102-550, Sec. 206, inserted after first sentence of par. (1) 
``For multifamily housing, such limits shall not be less than the per 
unit dollar amount limitations set forth in section 1715l(d)(3)(ii) of 
title 12, as such limitations may be adjusted in accordance therewith, 
except that for purposes of this subsection the Secretary shall, by 
regulation, increase the per unit dollar amount limitations in any 
geographical area by an amount, not to exceed 140 percent, that equals 
the amount by which the costs of multifamily housing construction in the 
area exceed the national average of such costs.''
    Subsecs. (e), (f). Pub. L. 102-550, Sec. 207(b)(2), redesignated 
subsecs. (d) and (e) as (e) and (f), respectively.
    Subsec. (g). Pub. L. 102-550, Sec. 207(d), added subsec. (g).


                    Effective Date of 1998 Amendment

    Amendment by title V of Pub. L. 105-276 effective and applicable 
beginning upon Oct. 1, 1999, except as otherwise provided, with 
provision that Secretary may implement amendment before such date, 
except to extent that such amendment provides otherwise, and with 
savings provision, see section 503 of Pub. L. 105-276, set out as a note 
under section 1437 of this title.


                    Effective Date of 1992 Amendment

    Amendment by sections 203-207 of Pub. L. 102-550 applicable to 
unexpended funds allocated under subchapter II of this chapter in fiscal 
year 1992, except as otherwise specifically provided, see section 223 of 
Pub. L. 102-550, set out as a note under section 12704 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 12747, 12772 of this title; 
title 12 section 4116.
