Bill Reintroduced to Expand Use of Residual Receipts
Currently, the use of residual receipts at the end of a 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. A bill reintroduced by Representative Erik Paulsen (R-MN) would expand the use of residual receipts by amending the Low Income Housing Preservation and Resident Homeownership Act to allow use of the funds for potentially non-preservation purposes. The bill was introduced on March 4, and was referred to the House Committee on Financial Services.
The proposed bill would give owners access to property residual receipts, the accumulated cash surplus that’s over and above the allowable limited dividends provided to owners of certain affordable housing projects with project-based rental assistance contracts. This bill, the Preservation Enhancement and Savings Opportunity Act of 2014, would also: (1) 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 sites; (2) include debt service on their new financing; and (3) limit rental increases for units not covered by project-based rental subsidies to 10 percent.