SEC-611 -- SECTION 236 RENTAL ASSISTANCE. 

 
 (a) Definition of Income.-Section 236(m) of the National Housing Act
(12 U.S.C. 1715z-1) is amended by inserting before the period at the end
of the first sentence the following: ", except that any amounts not
actually received by the family may not be considered as income under
this subsection".
 
 (b) Rent Charges.-
 
 (1) Projects assisted under section 236.-Section 236(f) of the National
Housing Act (12 U.S.C. 1715z-1(f)) is amended by adding at the end the
following new paragraph:
 
 "(5)(A) In order to induce advances by owners for capital improvements
(excluding any owner contributions that may be required by the Secretary
as a condition for assistance under section 201 of the Housing and
Community Development Amendments of 1978) to benefit projects assisted
under this section, in establishing basic rental charges and fair market
rental charges under paragraph (1) the Secretary may include an amount
that would permit a return of such advances with interest to the owner
out of project income, on such terms and conditions as the Secretary may
determine. Any resulting increase in rent contributions shall be-
 
 "(i) to a level not exceeding the lower of 30 percent of the adjusted
income of the tenant or the published existing fair market rent for
comparable housing established under section 8(c) of the United States
Housing Act of 1937;
 
 "(ii) phased in equally over a period of not less than 3 years, if
such increase is 30 percent or more; and
 
 "(iii) limited to not more than 10 percent per year if such increase
is more than 10 percent but less than 30 percent.
 
 "(B) Assistance under section 8 of the United States Housing Act of
1937 shall be provided, to the extent available under appropriations
Acts, if necessary to mitigate any adverse effects on income-eligible
tenants.".
 
 (2) Insured projects.-Section 221(f) of the National Housing Act (12
U.S.C. 1715l(f)) is amended by adding at the end the following new
undesignated paragraph:
 
 "In order to induce advances by owners for capital improvements
(excluding any owner contributions that may be required by the Secretary
as a condition for assistance under section 201 of the Housing and
Community Development Amendments of 1978) to benefit projects covered
by a mortgage under the provisions of subsection (d)(3) that bears a
below market interest rate prescribed in the proviso to subsection
(d)(5), in establishing the rental charge for the project the Secretary
may include an amount that would permit a return of such advances with
interest to the owner out of project income, on such terms and
conditions as the Secretary may determine. Any resulting increase in
rent contributions shall be-
 
 "(A) to a level not exceeding the lower of 30 percent of the adjusted
income of the tenant or the published existing fair market rent for
comparable housing established under section 8(c) of the United States
Housing Act of 1937;
 
 "(B) phased in equally over a period of not less than 3 years, if such
increase is 30 percent or more; and
 
 "(C) limited to not more than 10 percent per year if such increase is
more than 10 percent but less than 30 percent.
Assistance under section 8 of the United States Housing Act of 1937
shall be provided, to the extent available under appropriations Acts,
if necessary to mitigate any adverse effects on income-eligible
tenants.".