
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: 42USC1437aaa-4]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                      CHAPTER 8--LOW-INCOME HOUSING
 
         SUBCHAPTER II-A--HOPE FOR PUBLIC HOUSING HOMEOWNERSHIP
 
Sec. 1437aaa-4. Other program requirements


(a) Sale by public housing agency to applicant or other entity required

    Where the Secretary approves an application providing for the 
transfer of the eligible project from the public housing agency to 
another applicant, the public housing agency shall transfer the project 
to such other applicant, in accordance with the approved homeownership 
program.

(b) Preferences

    In selecting eligible families for homeownership, the recipient 
shall give a first preference to otherwise qualified current tenants and 
a second preference to otherwise qualified eligible families who have 
completed participation in an economic self-sufficiency program 
specified by the Secretary.

(c) Cost limitations

    The Secretary may establish cost limitations on eligible activities 
under this subchapter, subject to the provisions of this subchapter.

(d) Annual contributions

    Notwithstanding the purchase of a public housing project under this 
section, or the purchase of a unit in a public housing project by an 
eligible family, the Secretary shall continue to pay annual 
contributions with respect to the project. Such contributions may not 
exceed the maximum contributions authorized in section 1437c(a) of this 
title.

(e) Amounts from Operating Fund allocation

    Amounts from an allocation from the Operating Fund under section 
1437g of this title shall not be available with respect to a public 
housing project after the date of its sale by the public housing agency.

(f) Use of proceeds from sales to eligible families

    The entity that transfers ownership interests in, or shares 
representing, units to eligible families, or another entity specified in 
the approved application, shall use the proceeds, if any, from the 
initial sale for costs of the homeownership program, including operating 
expenses, improvements to the project, business opportunities for low-
income families, supportive services related to the homeownership 
program, additional homeownership opportunities, and other activities 
approved by the Secretary.

(g) Restrictions on resale by homeowners

                           (1) In general

        (A) Transfer permitted

            A homeowner under a homeownership program may transfer the 
        homeowner's ownership interest in, or shares representing, the 
        unit, except that a homeownership program may establish 
        restrictions on the resale of units under the program.

        (B) Right to purchase

            Where a resident management corporation, resident council, 
        or cooperative has jurisdiction over the unit, the corporation, 
        council, or cooperative shall have the right to purchase the 
        ownership interest in, or shares representing, the unit from the 
        homeowner for the amount specified in a firm contract between 
        the homeowner and a prospective buyer. If such an entity does 
        not have jurisdiction over the unit or elects not to purchase 
        and if the prospective buyer is not a low-income family, the 
        public housing agency or the implementation grant recipient 
        shall have the right to purchase the ownership interest in, or 
        shares representing, the unit for the same amount.

        (C) Promissory note required

            The homeowner shall execute a promissory note equal to the 
        difference between the market value and the purchase price, 
        payable to the public housing agency or other entity designated 
        in the homeownership plan, together with a mortgage securing the 
        obligation of the note.

                         (2) 6 years or less

        In the case of a transfer within 6 years of the acquisition 
    under the program, the homeownership program shall provide for 
    appropriate restrictions to assure that an eligible family may not 
    receive any undue profit. The plan shall provide for limiting the 
    family's consideration for its interest in the property to the total 
    of--
            (A) the contribution to equity paid by the family;
            (B) the value, as determined by such means as the Secretary 
        shall determine through regulation, of any improvements 
        installed at the expense of the family during the family's 
        tenure as owner; and
            (C) the appreciated value determined by an inflation 
        allowance at a rate which may be based on a cost-of-living 
        index, an income index, or market index as determined by the 
        Secretary through regulation and agreed to by the purchaser and 
        the entity that transfers ownership interests in, or shares 
        representing, units to eligible families (or another entity 
        specified in the approved application), at the time of initial 
        sale, and applied against the contribution to equity.

    Such an entity may, at the time of initial sale, enter into an 
    agreement with the family to set a maximum amount which this 
    appreciation may not exceed.

                           (3) 6-20 years

        In the case of a transfer during the period beginning 6 years 
    after the acquisition and ending 20 years after the acquisition, the 
    homeownership program shall provide for the recapture by the 
    Secretary or the program of an amount equal to the amount of the 
    declining balance on the note described in paragraph (1)(C).

                     (4) Use of recaptured funds

        Fifty percent of any portion of the net sales proceeds that may 
    not be retained by the homeowner under the plan approved pursuant to 
    this subsection shall be paid to the entity that transferred 
    ownership interests in, or shares representing, units to eligible 
    families, or another entity specified in the approved application, 
    for use for improvements to the project, business opportunities for 
    low-income families, supportive services related to the 
    homeownership program, additional homeownership opportunities, and 
    other activities approved by the Secretary. The remaining 50 percent 
    shall be returned to the Secretary for use under this subchapter, 
    subject to limitations contained in appropriations Acts. Such entity 
    shall keep and make available to the Secretary all records necessary 
    to calculate accurately payments due the Secretary under this 
    subsection.

(h) Third party rights

    The requirements under this subchapter regarding quality standards, 
resale, or transfer of the ownership interest of a homeowner shall be 
judicially enforceable against the grant recipient with respect to 
actions involving rehabilitation, and against purchasers of property 
under this subsection or their successors in interest with respect to 
other actions by affected low-income families, resident management 
corporations, resident councils, public housing agencies, and any 
agency, corporation, or authority of the United States Government. The 
parties specified in the preceding sentence shall be entitled to 
reasonable attorney fees upon prevailing in any such judicial action.

(i) Dollar limitation on economic development activities

    Not more than an aggregate of $250,000 from amounts made available 
under sections 1437aaa-1 and 1437aaa-2 of this title may be used for 
economic development activities under sections 1437aaa-1(b)(6) \1\ and 
1437aaa-2(b)(9) \1\ of this title for any project.
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    \1\ See References in Text note below.
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(j) Timely homeownership

    Recipients shall transfer ownership of the property to tenants 
within a specified period of time that the Secretary determines to be 
reasonable. During the interim period when the property continues to be 
operated and managed as rental housing, the recipient shall utilize 
written tenant selection policies and criteria that are consistent with 
the public housing program and that are approved by the Secretary as 
consistent with the purpose of improving housing opportunities for low-
income families. The recipient shall promptly notify in writing any 
rejected applicant of the grounds for any rejection.

(k) Capability of resident management corporations and resident councils

    To be eligible to receive a grant under section 1437aaa-2 of this 
title, a resident management corporation or resident council shall 
demonstrate to the Secretary its ability to manage public housing by 
having done so effectively and efficiently for a period of not less than 
3 years or by arranging for management by a qualified management entity.

(l) Records and audit of recipients of assistance

                           (1) In general

        Each recipient shall keep such records as may be reasonably 
    necessary to fully disclose the amount and the disposition by such 
    recipient of the proceeds of assistance received under this 
    subchapter (and any proceeds from financing obtained in accordance 
    with subsection (b) of this section or sales under subsections (f) 
    and (g)(4) of this section), the total cost of the homeownership 
    program in connection with which such assistance is given or used, 
    and the amount and nature of that portion of the program supplied by 
    other sources, and such other sources as will facilitate an 
    effective audit.

                     (2) Access by the Secretary

        The Secretary shall have access for the purpose of audit and 
    examination to any books, documents, papers, and records of the 
    recipient that are pertinent to assistance received under this 
    subchapter.

                (3) Access by the Comptroller General

        The Comptroller General of the United States, or any of the duly 
    authorized representatives of the Comptroller General, shall also 
    have access for the purpose of audit and examination to any books, 
    documents, papers, and records of the recipient that are pertinent 
    to assistance received under this subchapter.

(Sept. 1, 1937, ch. 896, title III, Sec. 305, as added Pub. L. 101-625, 
title IV, Sec. 411, Nov. 28, 1990, 104 Stat. 4155; amended Pub. L. 105-
276, title V, Sec. 519(c)(2), Oct. 21, 1998, 112 Stat. 2561.)

                       References in Text

    This subchapter, referred to in subsec. (g)(4), was in the original 
``this subtitle'', and was translated as reading ``this title'', meaning 
title III of act Sept. 1, 1937, ch. 896, as added by Pub. L. 101-625, to 
reflect the probable intent of Congress, because title III of act Sept. 
1, 1937, does not contain subtitles.
    Section 1437aaa-1(b)(6) of this title, referred to in subsec. (i), 
was redesignated section 1437aaa-1(b)(7) of this title by Pub. L. 102-
550, title X, Sec. 1012(h)(1)(A), Oct. 28, 1992, 106 Stat. 3906.
    Section 1437aaa-2(b)(9) of this title, referred to in subsec. (i), 
was redesignated section 1437aaa-2(b)(10) of this title by Pub. L. 102-
550, title X, Sec. 1012(h)(2)(A), Oct. 28, 1992, 106 Stat. 3906.


                               Amendments

    1998--Subsec. (e). Pub. L. 105-276 substituted ``Amounts from an 
allocation from the Operating Fund'' for ``Operating subsidies''.


                    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.
