54 1 respect to a low-income housing project shall provide that 2 no annual contributions by the Secretary shall be 3 made available for such project unless such project (ex4 clusive of any portion thereof which is not assisted by an5 nual contributions under this Act) is exempt from all real 6 and personal property taxes levied or imposed by the State, 7 city, county, or other political subdivisions, but such con8 tract shall require the public housing agency to make pay9 ments in lieu of taxes equal to 10 per centum of the sum 10 of (A) the annual shelter rents charged in such project 11 (during any period) plus (B) the annual contributions 12 provided for such project under section 9 (a) of this Act 13 (with respect to the same period), or such lesser amount 14 as (i) is prescribed by State law, or (ii) is agreed to by 15 the local governing body in its agreement for local coopera16 tion with the public housing agency required under subsection 17 5(e) (2) of this Act, or (iii) is due to failure of a local 18 public body or bodies other than the public housing agency 19 to perform any obligation under such agreement. If any such 20 project is not exempt from all real and personal property 21 taxes levied or imposed by the State, city, county, or other 22 political subdivisions, such contract shall provide, in lieu of 23 the requirement for tax exemption and payments in lieu of 24 taxes, that no annual contributions by the Secretary shall be 25 made available for such project unless and until the State, 55 1 city, county, or other political subdivision in which such 2 project is situated shall contribute, in the form of cash or 3 tax remission, the amount by which the taxes paid with 4 respect to the project exceed 10 per centum of the sum of 5 (A) the annual shelter rents charged in such project (during 6 any period) plus (B) the annual contributions provided for 7 such project under section 9 (a) of this Act (with respect 8 to the same period). 9 "(e) Every contract for annual contributions shall pro10 vide that whenever in any year the receipts of a public hous11 ing agency in connection with a low-income project exceed 12 its expenditures (including debt service, operation, maintenance, establishment of reserves, and other costs and 14 charges), an amount equal to such excess shall be applied or set aside for application, to purposes which, in the deter 16 mination of the Secretary, will effect a reduction in the 17 amount of subsequent annual contributions. 13 15 18 "(f) Every contract for annual contributions (includ 19 ing contracts which amend or supersede contracts previously 20 made) may provide that 21 22 2 2 2 2 2 2 5 23 24 "(1) upon the occurrence of a substantial default in respect to the covenants or conditions to which the pub lic housing agency is subject (as such substantial default shall be defined in such contract), the public 25 housing agency shall be obligated, at the option of the 56 Secretary, either to convey title in any case where, in the determination of the Secretary (which determination shall be final and conclusive), such conveyance of title is necessary to achieve the purposes of this Act, or to deliver possession to the Secretary of the project, as then constituted, to which such contract relates; and "(2) the Secretary shall be obligated to reconvey or to redeliver possession of the project, as constituted at the time of reconveyance or redelivery, to such public housing agency or to its successor (if such public housing agency or a successor exists) upon such terms as shall be prescribed in such contract, and as soon as practicable— "(A) after the Secretary is satisfied that all defaults with respect to the project have been cured, and that the project will, in order to fulfill the purposes of this Act, thereafter be operated in accordance with the terms of such contract; or "(B) after the termination of the obligation to make annual contributions available unless there are any obligations or covenants of the public housing agency to the Secretary which are then in default. Any prior conveyances and reconveyances, deliveries and redeliveries of possession shall not exhaust the right to require a conveyance or delivery of posses + + 57 13 1 2 3 sion of the project to the Secretary pursuant to sub paragraph (1), upon the subsequent occurrence of a substantial default. 4 Whenever such contract for annual contributions includes 5 provisions which the Secretary (in the contract) determines 6 are in accordance with this subsection, and the portion of 7 annual contributions payable for debt service requirements, 8 pursuant to such contract, have been pledged by the public 9 housing agency as security for the payment of the principal 10 and interest on any of its obligations, the Secretary (not11 withstanding any other provisions of this Act) shall continue 12 to make such annual contributions available for the project. so long as any of such obligations remain outstanding and 14 may covenant in such contract that in any event such 15 annual contributions shall in each year be at least equal to an amount which, together with such income or other funds as are actually available from the project for the purpose at 18 the time such annual contribution is made, will suffice for 19 the payment of all installments, falling due within the next 20 succeeding twelve months, of principal and interest on the 21 obligations for which the annual contributions provided for in the contract shall have been pledged as security. In 16 17 22 2 2 2 2 23 24 no case shall such annual contributions be in excess of the maximum sum specified in the contract involved, nor for 58 1 longer than the remainder of the maximum period fixed by 4 "SEC. 7. The Secretary shall encourage public housing 5 agencies, in providing housing predominantly for displaced, 6 elderly, or handicapped families, to design, develop, or other7 wise acquire such housing to meet the special needs of the 8 occupants and, wherever practicable, for use in whole or in 9 part as congregate housing: Provided, That not more than 10 10 per centum of the total amount of contracts for annual 11 contributions entered into in any fiscal year pursuant to the 12 new authority granted under section 202 of the Housing 13 and Urban Development Act of 1970 or under any law 14 subsequently enacted shall be entered into with respect to 15 units in congregate housing. As used in this paragraph the 16 term 'congregate housing' means low-income housing (A) 17 in which some or all of the dwelling units do not have 18 kitchen facilities, and (B) connected with which there is 19 a central dining facility to provide wholesome and econom20 ical meals for elderly, handicapped, and displaced families 21 under terms and conditions prescribed by the public housing 22 agency to permit a generally self-supporting operation. Ex23 penditures incurred by a public agency in the operation of 24 a central dining facility in connection with congregate hous |