[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5115 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 5115

   To improve the management of the project-based rental assistance 
   program under section 8 of the United States Housing Act of 1937.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 28, 1994

  Mr. Peterson of Minnesota introduced the following bill; which was 
    referred to the Committee on Banking, Finance and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   To improve the management of the project-based rental assistance 
   program under section 8 of the United States Housing Act of 1937.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Section 8 Project-Based Program 
Management Improvement Act of 1994''.

SEC. 2. CONGRESSIONAL FINDINGS.

    The Congress finds that--
            (1) approximately 30 percent of the multifamily housing 
        projects provided project-based assistance under section 8 of 
        the United States Housing Act of 1937 (in this section referred 
        to as ``assisted projects'') do not meet the housing quality 
        standards established by the Department of Housing and Urban 
        Development (in this section referred to as the 
        ``Department''), but do meet the standards for classification 
        as ``troubled projects'';
            (2) of the current total of more than 20,000 assisted 
        projects, 10,000 are subject to mortgages insured by the 
        Department;
            (3) the Department cannot identify which assisted projects 
        are troubled projects;
            (4) the Department is not adequately inspecting assisted 
        projects nor ensuring that necessary repairs are made to 
        assisted projects;
            (5) the Department is not taking aggressive enforcement 
        action against the owners of such troubled assisted projects;
            (6) the Inspector General of the Department has indicated 
        that aggressive enforcement action is not routinely taken 
        against owners of such troubled assisted projects but is taken 
        only in rare circumstances;
            (7) many of the administrative sanctions available to 
        improve the conditions and operation of assisted projects would 
        not detrimentally affect the tenants of the projects;
            (8) the inability of the Department to remedy the problems 
        of troubled assisted projects results from a variety of 
        factors, including poor management, inadequate data systems, 
        staff shortages, and a lack of program accountability;
            (9) the Department has not conducted a complete assessment 
        of troubled assisted projects, but should conduct such an 
        assessment, which should include--
                    (A) conducting a financial and cost-benefit 
                analysis of each troubled assisted project to determine 
                proper remedial actions; and
                    (B) examining the social impact the projects have 
                on the tenants, owners, and communities of the 
                projects.
            (10) the rents charged for many of the dwelling units in 
        assisted projects are excessive in comparison to comparable 
        unassisted dwelling units located in the same area;
            (11) a report issued by the Department in 1993 which 
        analyzed 4,125 assisted projects determined that, for 42 
        percent of such projects, the rents charged for dwelling units 
        in the project were equal to or exceeded 140 percent of the 
        market rents for dwelling units in the area of the project;
            (12) in 1989 the Congress directed the Department to issue 
        regulations for conducting rent comparability reviews, which 
        examine the difference between the rents charged for dwelling 
        units assisted by the Department and similar unassisted 
        dwelling units in the same neighborhood;
            (13) although the Department issued a proposed rule 
        regarding rent comparability reviews in 1992, a final rule has 
        not been issued before the date of the enactment of this Act; 
        and
            (14) the Department has placed a moratorium on conducting 
        rent comparability reviews until the publication of the final 
        rule and, therefore, owners of dwelling units assisted by the 
        Department are currently receiving automatic rent adjustments 
        without scrutiny by the Department and will continue to receive 
        such automatic adjustments until publication of the final rule.

SEC. 3. IDENTIFICATION AND IMPROVEMENT OF TROUBLED PROJECTS.

    (a) In General.--Title IV of the Housing and Community Development 
Act of 1992 (42 U.S.C. 1715z-1a note) is amended by adding at the end 
the following new subtitle:

   ``Subtitle B--Identification and Improvement of Troubled Projects 
              Receiving Project-Based Section 8 Assistance

``SEC. 421. IDENTIFICATION.

    ``Not later than 30 days after the commencement of the analysis 
period (as such term is defined in section 426), the Secretary shall--
            ``(1) review all housing projects (as such term is defined 
        in section 426) to determine which projects meet the criteria 
        established under section 422 for classification as troubled 
        and severely troubled housing projects;
            ``(2) classify the housing projects meeting such criteria 
        as troubled and severely troubled, as appropriate; and
            ``(3) submit to the Congress a list of the projects 
        classified as troubled and severely troubled.

``SEC. 422. CRITERIA FOR CLASSIFICATION AS TROUBLED AND SEVERELY 
              TROUBLED HOUSING PROJECTS.

    ``(a) Troubled Housing Projects.--A housing project shall be 
classified as troubled if--
            ``(1) the Secretary determines that financial assistance 
        for the project is necessary, in addition to the assistance 
        provided under the contract for project-based assistance for 
        the project, to enable the project--
                    ``(A) to meet the financial obligations secured by 
                or relating to the project; or
                    ``(B) to provide the quality of housing and 
                services required under the contract for project-based 
                assistance for the project or the regulatory agreements 
                relating to the project; and
            ``(2) the project does not meet the criteria established 
        under subsection (b)(2).
    ``(b) Severely Troubled Housing Project.--A housing project shall 
be classified as severely troubled if the Secretary determines that the 
project--
            ``(1) meets the criteria for classification as a troubled 
        housing project; and
            ``(2) meets such additional criteria, as the Secretary 
        shall establish, indicating severe financial or physical 
        problems with the project.

``SEC. 423. FINANCIAL AND SOCIAL IMPACT ANALYSIS.

    ``(a) Severely Troubled Projects.--Not later than the conclusion of 
the 6th month of the analysis period, the Secretary shall conduct a 
financial and social impact analysis under this section for each 
severely troubled housing project. During such 6-month period, the 
Secretary shall complete such analyses for severely troubled housing 
projects at a rate of not less than \1/6\ of the total number of 
severely troubled housing projects per month.
    ``(b) Troubled Projects.--Not later than the expiration of the 
analysis period, the Secretary shall conduct a financial and social 
impact analysis under this section for each troubled housing project. 
During the 12-month period beginning 6 months after the commencement of 
the analysis period, the Secretary shall complete such analyses for 
troubled housing projects at a rate of not less than \1/12\ of the 
total number of troubled housing projects per month.
    ``(c) Contents of Analysis.--Each financial and social impact 
analysis conducted under this section for a troubled or severely 
troubled housing project shall include the following information 
regarding the project:
            ``(1) Background information.--
                    ``(A) The number of units in the project, the 
                number of units in the project of each bedroom size, 
                the number of units in the project assisted under the 
                contract for project-based assistance for the project, 
                the amount of rent charged for each dwelling unit in 
                the project, and the vacancy rate for dwelling units in 
                the project.
                    ``(B) The type and amount of assistance provided 
                monthly and annually for the project under the contract 
                for project-based assistance, the original term of the 
                contract, and the remaining term of the contract.
                    ``(C) Any actions previously taken or assistance 
                previously provided (in addition to assistance under 
                the contract for project-based assistance) to assist 
                the project.
                    ``(D) The rents for comparable unassisted dwelling 
                units in the area in which the project is located.
            ``(2) Financial information.--
                    ``(A) If the project is subject to a mortgage 
                insured under the National Housing Act, the program 
                under which such insurance is provided, whether the 
                loan secured by the mortgage is delinquent, in default, 
                or current, and if delinquent or in default, the amount 
                of arrears, outstanding balance, interest rate, and 
                remaining term of the delinquent or defaulted loan.
                    ``(B) The most recent statement of project income 
                and expenses, which shall be an audited financial 
                statement, if practicable.
                    ``(C) The amount of the balance in any reserve 
                accounts for the project.
                    ``(D) The estimated cost of any rehabilitation 
                necessary to maintain the project in accordance with 
                applicable building and safety standards and codes or 
                to bring the project into compliance with such 
                standards and codes.
                    ``(E) Any Federal, State, local, or private 
                programs or other sources of financing for 
                rehabilitation expenses for the project for which the 
                project is eligible.
                    ``(F) The amount of monthly rental revenue 
                necessary per dwelling unit to fully support the sum of 
                rehabilitation costs under subparagraph (D) for the 
                project, the costs of operating the project, and the 
                costs of maintaining the project in accordance with 
                applicable building and safety standards.
                    ``(G) The estimated revenue losses resulting from 
                vacancies in dwelling units in the project.
            ``(3) Comparison of available options.--A description, 
        analysis, and comparison of the feasibility, effectiveness, and 
        costs of various actions that may be taken to resolve or remedy 
        the factors resulting in the project being classified as 
        troubled or severely troubled, as the case may be, which 
        actions shall include--
                    ``(A) continuing or increasing the amount of 
                assistance provided for the project under the contract 
                for project-based assistance;
                    ``(B) imposing or enforcing sanctions against the 
                owner of the project for failure to comply with 
                conditions of the contract for project-based assistance 
                or regulatory agreements relating to the project;
                    ``(C) providing assistance to rehabilitate the 
                project;
                    ``(D) providing tenant-based assistance for the 
                residents of dwelling units in the project to be used 
                to obtain dwelling units elsewhere;
                    ``(E) providing assistance for the project under 
                other programs administered by the Secretary of Housing 
                and Urban Development;
                    ``(F) if the project is subject to a mortgage 
                insured under the National Housing Act, foreclosing the 
                mortgage; and
                    ``(G) any other actions the Secretary or the owner 
                consider appropriate for the project.
            ``(4) Social impact information.--
                    ``(A) Pursuant to a survey involving direct 
                interviews with a representative number of tenants of 
                the project, a description of the attitudes of tenants 
                of the project regarding residing--
                            ``(i) in the project under the conditions 
                        existing in the project;
                            ``(ii) in the project after the project is 
                        rehabilitated; and
                            ``(iii) in dwelling units not located in 
                        the project using tenant-based assistance 
                        provided under section 8 of the United States 
                        Housing Act of 1937.
                    ``(B) An identification and description of the 
                community or neighborhood in which the project is 
                located and the living conditions in the community or 
                neighborhood.
                    ``(C) A description of the financial investment and 
                interest in the project of the owner of the project and 
                of the extent of control by the owner over the 
                management of the project.
                    ``(D) An analysis of the economic incentives and 
                disincentives for investing additional amounts of 
                Federal assistance in the project.
                    ``(E) A description of the reasons for 
                classification of the project as troubled or severely 
                troubled, as the case may be, and the reasons why the 
                owner failed to prevent the financial and physical 
                conditions of the project from reaching a state 
                requiring such classification.
            ``(5) Additional information.--Any other information that 
        the Secretary considers appropriate.
    ``(d) Plan for Remedial Actions.--Each financial and social impact 
analysis conducted under this section for a troubled or severely 
troubled housing project shall include a plan of actions to be taken 
with respect to the project to resolve or remedy the factors resulting 
in the project being classified as troubled or severely troubled, as 
the case may be, which shall include--
            ``(1) a plan for implementing one or more of the actions 
        described in subsection (c)(3) that the Secretary has 
        determined are feasible, cost-effective, legally viable, and 
        available for the project;
            ``(2) a description of the anticipated effects that taking 
        the actions pursuant to paragraph (1) will have on--
                    ``(A) tenants of project;
                    ``(B) the community or neighborhood in which the 
                project is located; and
                    ``(C) the owner of the project; and
            ``(3) a description of the reasons for selecting the 
        particular actions included in the plan pursuant to paragraph 
        (1).
    ``(e) Compliance With Plan of Action.--
            ``(1) In general.--In making assistance available for a 
        troubled or severely troubled housing project, the Secretary 
        shall comply with the plan of actions established under 
        subsection (d) for the project (to the extent that amounts are 
        available to carry out such plan).
            ``(2) Severely troubled projects.--Not later than the 
        conclusion of the 6th month of the analysis period, the 
        Secretary shall, for each severely troubled housing project, 
        initiate the actions included (pursuant to subsection (d)(1)) 
        in the plan of actions established under subsection (d) for the 
        project (to the extent amounts for such actions are available).
            ``(3) Troubled projects.--Not later than the expiration of 
        the analysis period, the Secretary shall, for each troubled 
        housing project, initiate the actions included (pursuant to 
        subsection (d)(1)) in the plan of actions established under 
        subsection (d) for the project (to the extent amounts for such 
        actions are available).
    ``(f) Submission of Analyses to Congress.--Upon the conclusion of 
each month during the analysis period, the Secretary shall submit to 
the Congress a copy of each financial and social impact analysis 
completed during such month.
    ``(g) Criteria for Choosing Remedial Actions.--Not later than the 
expiration of the 30-day period beginning on the date of the enactment 
of the Section 8 Project-Based Program Management Improvement Act of 
1994, the Secretary shall establish, and submit to the Congress, 
guidelines for determining which remedial actions described in 
subsection (c)(3) are to be included in a plan of actions established 
under subsection (d) for a troubled or severely troubled housing 
project.

``SEC. 424. PROHIBITION OF ADDITIONAL ASSISTANCE BEFORE FINANCIAL AND 
              SOCIAL IMPACT ANALYSIS.

    ``(a) Prohibition.--Notwithstanding any other provision of law, the 
Secretary may not provide assistance described in subsection (b) for 
any housing project before the completion of the financial and social 
impact analysis for the project required under section 423.
    ``(b) Prohibited Assistance.--Assistance described in this 
subsection is assistance provided--
            ``(1) pursuant to a commitment to provide such assistance 
        made after the date of the enactment of the Section 8 Project-
        Based Program Management Improvement Act of 1994; and
            ``(2) under--
                    ``(A) the loan management set-aside program under 
                section 8 of the United States Housing Act of 1937;
                    ``(B) the flexible subsidy program under section 
                201 of the Housing and Community Development Amendments 
                of 1978; or
                    ``(C) section 8 of the United States Housing Act of 
                1937, in the form of--
                            ``(i) increases in maximum rents in excess 
                        of the minimum amount required under the 
                        existing contract for project-based assistance 
                        for the project; or
                            ``(ii) additional amounts for the project 
                        not required under the existing contract for 
                        project-based assistance for the project.

``SEC. 425. REPORT REGARDING LEGISLATIVE CHANGES.

    ``Not later than the expiration of the 12-month period beginning on 
the date of the enactment of the Section 8 Project-Based Program 
Management Improvement Act of 1994, the Secretary shall submit a report 
to the Congress describing any legislative provisions necessary or 
appropriate to assist the Secretary in carrying out the purposes of 
this subtitle.

``SEC. 426. DEFINITIONS.

    ``For purposes of this subtitle, the following definitions shall 
apply:
            ``(1) Analysis period.--The term `analysis period' means 
        the 18-month period beginning on the first day of the first 
        month that commences after the date of the enactment of the 
        Section 8 Project-Based Program Management Improvement Act of 
        1994.
            ``(2) Housing project.--The terms `housing project' and 
        `project' mean a multifamily housing project for which project-
        based assistance is provided pursuant to an existing contract 
        for such assistance.
            ``(3) Project-based assistance.--The term `project-based 
        assistance' means assistance provided under section 8 of the 
        United States Housing Act of 1937 that is attached to the 
        structure pursuant to subsection (d)(2) of such section.
            ``(4) Secretary.--The term `Secretary' means the Secretary 
        of Housing and Urban Development.
            ``(5) Severely troubled housing project.--The term 
        `severely troubled housing project' means a housing project 
        that meets the criteria established under section 422(b) and is 
        classified by the Secretary as severely troubled pursuant to 
        section 421.
            ``(6) Troubled housing project.--The term `troubled housing 
        project' means a housing project that meets the criteria 
        established under section 422(a) and is classified by the 
        Secretary as troubled pursuant to section 421.

``SEC. 427. REGULATIONS.

    ``The Secretary may issue any regulations necessary to carry out 
this subtitle.''.
    (b) Clerical Amendments.--Title IV of the Housing and Community 
Development Act of 1992 (42 U.S.C. 1715z-1a note) is amended
            (1) in sections 401, 402(a), 403(a), 404(a), and 404(e), by 
        striking ``title'' each place it appears and inserting 
        ``subtitle''; and
            (2) by inserting after the title heading the following new 
        subtitle heading:

``Subtitle A--Comprehensive Needs Assessments for Assisted Multifamily 
                               Housing''.

    (c) Conforming Amendment.--Section 201(n) of the Housing and 
Community Development Amendments of 1978 (12 U.S.C. 1715z-1a(n)) is 
amended by inserting ``subtitle A of'' before ``title IV of the Housing 
and Community Development Act of 1992'', each place it appears.

SEC. 4. TERMINATION AND REUSE OF SECTION 8 HAP CONTRACT BUDGET 
              AUTHORITY.

    Section 8 of the United States Housing Act of 1937 (42 U.S.C. 
1437f) is amended by adding at the end the following new subsection:
    ``(z) Termination of Project-Based Contracts and Reuse of 
Recaptured Budget Authority.--
            ``(1) General authority.--The Secretary may reuse any 
        budget authority that is recaptured on account of the 
        termination, in whole or in part, of a housing assistance 
        payments contract (other than a contract for tenant-based 
        assistance) to provide tenant-based assistance under this 
        section to families occupying units formerly assisted under the 
        terminated contract. Such assistance shall be made available 
        only pursuant to a contract for such assistance entered into by 
        the Secretary and a public housing agency.
            ``(2) Families occupying units formerly assisted under 
        terminated contract.--In providing tenant-based assistance 
        pursuant to this section, the Secretary shall make such 
        assistance available first to families occupying units formerly 
        assisted under the terminated contract.
            ``(3) New rents.--Rents established in connection with a 
        contract under this subsection shall be established in 
        accordance with subsection (c)(2), but shall not exceed the 
        amount of rent previously paid under the terminated contract.
            ``(4) Budget savings.--To the extent that new rents 
        established under paragraph (3) are less than the amount of 
        rent previously paid under the terminated contract, any budget 
        authority remaining shall be rescinded.''.

SEC. 5. REPEAL OF PROHIBITION ON LOWERING SECTION 8 RENTS.

    Section 8(c)(2)(C) of the United States Housing Act of 1937 (42 
U.S.C. 1437f(c)(2)(C)) is amended by striking the antepenultimate 
sentence.

SEC. 6. ISSUANCE OF FINAL REGULATIONS FOR COMPARABILITY REVIEWS.

    The Secretary of Housing and Urban Development shall issue final 
regulations to carry out the amendments made by section 801(c) of the 
Department of Housing and Urban Development Reform Act of 1989 
(relating to annual adjustment factors and comparability studies) not 
later than the expiration of the 30-day period beginning upon the date 
of the enactment of this Act. Such regulations shall take effect upon 
the date of issuance.

SEC. 7. LIMITATIONS ON RENT INCREASES FOR NEW CONSTRUCTION AND 
              SUBSTANTIAL REHABILITATION PROJECTS.

    Section 8(c)(2) of the United States Housing Act of 1937 (42 U.S.C. 
1437f(c)(2)) is amended by adding at the end the following new 
subparagraph:
    ``(D) With respect to housing constructed or substantially 
rehabilitated pursuant to assistance provided under subsection (b)(2) 
(as such section was in effect before October 1, 1983), notwithstanding 
the provisions of subparagraph (C), upon the refinancing of the project 
debt secured by a mortgage on the housing the Secretary may (in the 
sole discretion of the Secretary) provide for any subsequent annual (or 
more frequent) adjustments to maximum monthly rents for the project 
required under subparagraph (A) to be made on the basis of--
            ``(i) the reasonable formula established by the Secretary 
        pursuant to subparagraph (A); or
            ``(ii) an operating budget submitted to the Secretary by 
        the owner of the housing reflecting actual and necessary 
        expenses of owning and maintaining the housing.''.
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