104 STAT. 4252 PUBLIC LAW 101-625—NOV. 28, 1990 percent of the preservation equity (as such term is defined in section 229(8)). "(b) PRESERVATION RENTS. — The Secretary shall also determine the aggregate preservation rents under this subsection for each project appraised under section 213. The aggregate preservation rents shall be used solely for the purposes of comparison with Federal cost limits under section 215. Actual rents received by an owner (or a qualified purchaser) shall be determined pursuant to section 219, 220, or 221. The aggregate preservation rents shall be established as follows: "(1) EXTENSION OF AFFORDABILTTY LIMITS.—The aggregate preservation rent for purposes of receiving incentives pursuant to extension of the low-income affordability restrictions under section 219 shall be the gross potential income for the project, determined by the Secretary, that would be required to support the following costs: "(A) The annual authorized return determined under subsection (a). "(B) Debt service on any rehabilitation loan for the housing. '(C) Debt service on the federally-assisted mortgage for the housing. "(D) Project operating expenses. "(E) Adequate reserves. "(2) SALE.—The aggregate preservation rent for purposes of receiving incentives pursuant to SEile under section 220 or 221 shall be the gross income for the project determined by the Secretary, that would be required to support the following costs: "(A) Debt service on the loan for acquisition of the housing. "(B) Debt service on any rehabilitation loan for the housing. "(C) Debt service on the federally-assisted mortgage for the housing. "(D) Project operating expenses. "(E) Adequate reserves. 12 USC 4105. "SEC. 215. FEDERAL COST LIMITS AND LIMITATIONS ON PLANS OF ACTION. " (a) DETERMINATION OF RELATIONSHIP TO FEDERAL COST LIMITS. — "(1) INITIAL DETERMINATION.— For each eligible low-income housing project appraised under section 213(a), the Secretary shall determine whether the aggregate preservation rents for the project determined under paragraph (1) or (2) of section 214(b) exceed the amount determined by multiplying 120 percent of the fair market rental (established under section 8(c) of the United States Housing Act of 1937) for the market area in which the housing is located by the number of dwelling units in the project (according to appropriate unit sizes). "(2) RELEVANT LOCAL MARKETS.— I f the aggregate preservation rents for a project exceeds the amount determined under paragraph (1), the Secretary shall determine whether such Eiggregate rents exceed the amount determined by multiplying 120 percent of the prevailing rents in the relevant loc^ market area in which the housing is located by the number of units in the project (according to the appropriate unit sizes). A relevant local market area shall be an area geographically smaller than a
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