[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1508 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1508

   To reform the multifamily rental assisted housing programs of the 
 Federal Government and maintain the affordability and availability of 
              low-income housing, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 1, 1997

 Ms. Pryce of Ohio (for herself and Mr. Moran of Virginia) introduced 
the following bill; which was referred to the Committee on Banking and 
Financial Services, and in addition to the Committee on Ways and Means, 
for a perod to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of 
                        the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To reform the multifamily rental assisted housing programs of the 
 Federal Government and maintain the affordability and availability of 
              low-income housing, and for other purposes.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Multifamily 
Housing Restructuring and Affordability Act of 1997''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Authority of participating administrative entities.
Sec. 5. Mortgage restructuring and rental assistance sufficiency plans.
Sec. 6. Exemptions from restructuring.
Sec. 7. Section 8 renewals and long-term affordability commitment by 
                            owner of project.
Sec. 8. Prohibition on restructuring.
Sec. 9. Restructuring tools.
Sec. 10. Deferral of inclusion in income on debt restructuring or 
                            forgiveness.
Sec. 11. Management standards.
Sec. 12. Monitoring of compliance.
Sec. 13. Review.
Sec. 14. GAO audit and review.
Sec. 15. Regulations.
Sec. 16. Technical and conforming amendments.
Sec. 17. Treatment of FHA multifamily housing restructuring 
                            demonstration.
Sec. 18. Termination of authority.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) there exists throughout the Nation a need for decent, 
        safe, and affordable housing;
            (2) it is currently estimated that--
                    (A) the insured multifamily housing portfolio of 
                the Federal Housing Administration consists of 14,000 
                rental properties, having an aggregate unpaid principal 
                mortgage balance of $38,000,000,000; and
                    (B) approximately 10,000 of these properties 
                contain housing units that are assisted with project-
                based rental assistance under section 8 of the United 
                States Housing Act of 1937;
            (3) FHA-insured multifamily rental properties are a major 
        Federal investment, providing affordable rental housing to an 
        estimated 2,000,000 low- and very low-income families;
            (4) approximately 1,600,000 of these families live in 
        dwelling units that are assisted with project-based rental 
        assistance under section 8 of the United States Housing Act of 
        1937;
            (5) a substantial number of housing units receiving 
        project-based rental assistance have rents that are higher than 
        the rents of comparable, unassisted rental units in the same 
        housing rental market;
            (6) many of the contracts for project-based assistance will 
        expire during the next several years;
            (7) it is estimated that--
                    (A) if no changes in the terms and conditions of 
                the contracts for project-based rental assistance are 
                made before fiscal year 2000, the cost of renewing all 
                expiring rental assistance contracts under section 8 of 
                the United States Housing Act of 1937 (including both 
                project-based and tenant-based rental assistance) will 
                increase from approximately $4,000,000,000 in fiscal 
                year 1997 to more than $17,000,000,000 by fiscal year 
                2000 and approximately $23,000,000,000 by fiscal year 
                2006;
                    (B) such renewal amounts include an increase in the 
                cost of renewing project-based assistance from 
                $1,200,000,000 in fiscal year 1997 to almost 
                $8,000,000,000 by fiscal year 2006; and
                    (C) without changes in the manner in which project-
                based rental assistance is provided, renewals of 
                expiring contracts for project-based rental assistance 
                will require an increasingly larger portion of the 
                discretionary budget authority of the Department of 
                Housing and Urban Development in each subsequent fiscal 
                year for the foreseeable future;
            (8) absent new budget authority for the renewal of expiring 
        contracts for project-based rental assistance, many of the FHA-
        insured multifamily housing projects that are assisted with 
        project-based assistance will likely default on their FHA-
        insured mortgage payments, resulting in substantial claims to 
        the FHA General Insurance Fund and Special Risk Insurance Fund;
            (9) more than 15 percent of federally assisted multifamily 
        housing projects are physically or financially distressed, 
        including a number which suffer from mismanagement;
            (10) due to Federal budget constraints, the downsizing of 
        the Department of Housing and Urban Development, and diminished 
        administrative capacity, the Department lacks the ability to 
        ensure the continued economic and physical well-being of the 
        stock of federally insured and assisted multifamily housing 
        projects; and
            (11) the economic, physical, and management problems facing 
        the stock of federally insured and assisted multifamily housing 
        projects will be best served by reforms that--
                    (A) reduce the cost of Federal rental assistance, 
                including project-based assistance, to these projects 
                while reducing the debt service and operating costs of 
                these projects and retaining the low-income 
                affordability and availability of the projects;
                    (B) address physical and economic distress of the 
                projects and the failure of some project managers and 
                owners to comply with management and ownership 
                regulations and requirements; and
                    (C) transfer and share many of the loan and 
                contract administration functions and responsibilities 
                of the Secretary with capable State, local, and other 
                entities.
    (b) Purposes.--The purposes of this Act are--
            (1) to preserve low-income rental housing affordability and 
        availability while reducing the long-term costs of project-
        based rental assistance;
            (2) to reform the design and operation of Federal rental 
        housing assistance programs administered by the Secretary to 
        promote greater multifamily housing project operating and cost 
        efficiencies;
            (3) to encourage owners of eligible multifamily housing 
        projects to restructure their FHA-insured mortgages and 
        project-based rental assistance contracts in a manner which is 
        consistent with this Act before the year in which the contract 
        expires;
            (4) to streamline and improve federally insured and 
        assisted multifamily housing project oversight and 
        administration;
            (5) to resolve the problems affecting financially and 
        physically troubled federally insured and assisted multifamily 
        housing projects through cooperation with residents, owners, 
        State and local governments, and other interested entities and 
        individuals; and
            (6) to provide additional enforcement tools for use against 
        those who violate agreements and program requirements, to 
        ensure that the public interest is safeguarded and that Federal 
        multifamily housing programs serve their intended purposes.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) Comparable properties.--The term ``comparable 
        properties'' means, with respect to an eligible multifamily 
        housing project, properties that are--
                    (A) similar to the eligible multifamily housing 
                project in neighborhood (including risk of crime), 
                location, access, street appeal, age, property size, 
                apartment mix, physical configuration, property 
                amenities, in-apartment rental amenities, and 
                utilities;
                    (B) unregulated by contractual encumbrances or 
                local rent control laws; and
                    (C) occupied predominantly by renters who receive 
                no rent supplements or rental assistance.
            (2) Eligible multifamily housing project.--The term 
        ``eligible multifamily housing project'' means a property 
        consisting of more than 4 dwelling units, which--
                    (A) has rents that, on an average per unit or per 
                room basis, exceed the fair market rent (as such term 
                is defined in this section);
                    (B) is covered in whole or in part by a contract 
                for project-based assistance under--
                            (i) the new construction and substantial 
                        rehabilitation program under section 8(b)(2) of 
                        the United States Housing Act of 1937 (as in 
                        effect before October 1, 1983);
                            (ii) the property disposition program under 
                        section 8(b) of the United States Housing Act 
                        of 1937;
                            (iii) the moderate rehabilitation program 
                        under section 8(e)(2) of the United States 
                        Housing Act of 1937 (as in effect before 
                        October 1, 1991);
                            (iv) the project-based certificate program 
                        under section 8 of the United States Housing 
                        Act of 1937;
                            (v) section 23 of the United States Housing 
                        Act of 1937 (as in effect before January 1, 
                        1975);
                            (vi) the rent supplement program under 
                        section 101 of the Housing and Urban 
                        Development Act of 1965; or
                            (vii) the loan management set-aside program 
                        under section 8 of the United States Housing 
                        Act of 1937, including conversion from 
                        assistance under section 101 of the Housing and 
                        Urban Development Act of 1965 and under section 
                        236(f)(2) of the National Housing Act; and
                    (C) is subject to a mortgage insured under the 
                National Housing Act.
            (3) Expiring contract.--The term ``expiring contract'' 
        means a contract for project-based assistance that is attached 
        to a multifamily housing project and that, under the terms of 
        the contract, will terminate.
            (4) Expiration date.--The term ``expiration date'' means 
        the date on which an expiring contract will terminate.
            (5) Fair market rent.--The term ``fair market rent'' means 
        the applicable fair market rental established under section 
        8(c) of the United States Housing Act of 1937. For eligible 
        multifamily housing projects located in nonmetropolitan areas, 
        the fair market rent shall be the higher of the fair market 
        rent for (A) the county in which the project is located, or (B) 
        the nearest metropolitan area.
            (6) Knowing or knowingly.--The term ``knowing'' or 
        ``knowingly'' means having actual knowledge of or acting with 
        deliberate ignorance or reckless disregard to.
            (7) Local government.--The term ``local government'' has 
        the meaning given the term ``unit of general local government'' 
        in section 104 of the Cranston-Gonzalez National Affordable 
        Housing Act.
            (8) Low-income families.--The term ``low-income families'' 
        has the meaning given the term in section 3(b)(2) of the United 
        States Housing Act of 1937.
            (9) Multifamily housing management agreement.--The term 
        ``multifamily housing management agreement'' means an agreement 
        entered by between the Secretary and a participating 
        administrative entity pursuant to section 4.
            (10) Participating administrative entity.--The term 
        ``participating administrative entity'' means a public agency, 
        including a State housing finance agency or local housing 
        agency, which meets the requirements under section 4(b).
            (11) Project-based assistance.--The term ``project-based 
        assistance'' means rental assistance under section 8 (excluding 
        assistance under section 8(f)) of the United States Housing Act 
        of 1937 that is attached to a multifamily housing project.
            (12) Renewal.--The term ``renewal'' means the replacement 
        of an expiring contract with a new contract for rental 
        assistance under section 8 of the United States Housing Act of 
        1937, consistent with the requirements of this Act.
            (13) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (14) State.--The term ``State'' has the meaning given the 
        term in section 104 of the Cranston-Gonzalez National 
        Affordable Housing Act.
            (15) Tenant-based assistance.--The term ``tenant-based 
        assistance'' has the meaning given the term in section 8(f) of 
        the United States Housing Act of 1937.
            (16) Very low-income family.--The term ``very low-income 
        family'' has the meaning given the term in section 3(b) of the 
        United States Housing Act of 1937.

SEC. 4. AUTHORITY OF PARTICIPATING ADMINISTRATIVE ENTITIES.

    (a) Participating Administrative Entities.--
            (1) In general.--The Secretary shall enter into multifamily 
        housing management agreements with participating administrative 
        entities for the implementation of mortgage restructuring and 
        rental assistance sufficiency plans to restructure FHA-insured 
        multifamily housing mortgages, to--
                    (A) reduce the costs of current and expiring 
                contracts for assistance under section 8 of the United 
                States Housing Act of 1937;
                    (B) address financially and physically troubled 
                projects; and
                    (C) correct management and ownership deficiencies.
            (2) Multifamily housing management agreement.--Each 
        multifamily housing management agreement entered into under 
        this subsection shall--
                    (A) be a cooperative agreement to establish the 
                obligations and requirements between the Secretary and 
                the participating administrative entity;
                    (B) identify the eligible multifamily housing 
                projects or groups of such projects for which the 
                participating administrative entity is responsible for 
                assisting in developing and implementing approved 
                mortgage restructuring and rental assistance 
                sufficiency plans under section 5;
                    (C) require the participating administrative entity 
                to review and certify whether the comprehensive needs 
                assessment submitted by the owner of an eligible 
                multifamily housing project, in accordance with the 
                requirements of section 403 of the Housing and 
                Community Development Act of 1992, and includes such 
                other data, information, and requirements as the 
                Secretary may require to be included as part of the 
                comprehensive needs assessment;
                    (D) identify the responsibilities of the 
                participating administrative entity and the Secretary 
                in implementing a mortgage restructuring and rental 
                assistance sufficiency plan, including any actions 
                proposed to be taken under section 5 or 7;
                    (E) require each mortgage restructuring and rental 
                assistance sufficiency plan overseen and approved by 
                the participating administrative entity to be prepared 
                in accordance with the requirements of section 5 for 
                each eligible multifamily housing project;
                    (F) indemnify the participating administrative 
                entity against lawsuits and penalties for actions taken 
                pursuant to the agreement, including actions involving 
                gross negligence or willful misconduct; and
                    (G) include compensation for all reasonable 
                expenses incurred by the participating administrative 
                entity necessary to perform its duties under this Act.
    (b) Selection of Participating Administrative Entity.--
            (1) Selection criteria.--The Secretary shall select 
        participating administrative entities based on the following 
        criteria:
                    (A) Location in the State or local jurisdiction in 
                which an eligible multifamily housing project or 
                projects are located.
                    (B) Demonstrated expertise in the development and 
                management of low-income affordable rental housing.
                    (C) A history of stable, financially sound, and 
                responsible administrative performance.
                    (D) Demonstrated financial strength in terms of 
                asset quality, capital adequacy, and liquidity.
                    (E) Determination by the Secretary that the entity 
                is otherwise qualified to carry out the requirements of 
                this Act.
            (2) Selection of mortgage risk sharing entities.--Any State 
        housing finance agency or local housing agency which is 
        designated as a qualified participating entity under section 
        542 of the Housing and Community Development Act of 1992 shall 
        be considered to qualify as a participating administrative 
        entity under this section.
            (3) Alternative administrators.--With respect to any 
        eligible multifamily housing project that is located in a State 
        or local jurisdiction in which the Secretary determines that a 
        participating administrative entity is not located, is 
        unavailable, or does not qualify, the Secretary shall carry out 
        the requirements of this Act relating to a participating 
        administrative entity with respect to such project.
            (4) Preference for state housing finance agencies as 
        participating administrative entities.--For each State in which 
        eligible multifamily housing projects are located, the 
        Secretary shall give preference to the housing finance agency 
        of that State or, if a State housing finance agency is 
        unqualified or has declined to participate, a local housing 
        agency, to act as the participating administrative entity for 
        that State or for the jurisdiction in which the agency is 
        located.
            (5) State portfolio requirements.--
                    (A) In general.--If the housing finance agency of a 
                State is selected as the participating administrative 
                entity, that agency shall act as such entity for all 
                eligible multifamily housing projects in that State, 
                except that a local housing agency selected as a 
                participating administrative agency shall act as such 
                entity for all eligible multifamily housing projects in 
                the jurisdiction of the agency.
                    (B) Delegation.--A participating administrative 
                entity may delegate or transfer responsibilities and 
                functions under this Act to one or more interested and 
                qualified public entities.
                    (C) Waiver.--A State housing finance agency or 
                local housing agency may request a waiver from the 
                Secretary from the requirements of this paragraph for 
                good cause.

SEC. 5. MORTGAGE RESTRUCTURING AND RENTAL ASSISTANCE SUFFICIENCY PLANS.

    (a) In General.--
            (1) Development of procedures and requirements.--The 
        Secretary shall develop procedures and requirements for the 
        submission to a participating administrative entity of a 
        mortgage restructuring and rental assistance sufficiency plan 
        for each eligible multifamily housing project with an expiring 
        contract and for approval of such plans by participating 
        administrative entities.
            (2) Terms and conditions.--Each mortgage restructuring and 
        rental assistance sufficiency plan submitted under this 
        subsection shall be developed at the initiative of an owner of 
        an eligible multifamily housing project, in conjunction with 
        the FHA-approved mortgagee currently servicing the loan 
        (provided such mortgagee is willing), with oversight and 
        approval of such proposed mortgage restructuring and rental 
        assistance sufficiency plan to be made by a participating 
        administrative entity, under such terms and conditions as the 
        Secretary shall require.
            (3) Consolidation.--Mortgage restructuring and rental 
        assistance sufficiency plans submitted under this subsection 
        may be consolidated as part of an overall strategy for more 
        than one property.
    (b) Notice Requirement.--
            (1) Establishment.--The Secretary shall establish notice 
        procedures and hearing requirements for tenants and owners 
        concerning the expiration dates for the expiring contracts for 
        any eligible multifamily housing project.
            (2) 12-month notice.--Under the hearing requirements 
        established under paragraph (1), the participating 
        administrative entity or owner for an eligible multifamily 
        housing project shall, not later than 12 months before such 
        expiration date, provide notice in writing of the expiration 
        date of the initial expiring contract to tenants of the 
        project.
            (3) Extension of contract term.--Subject to agreement by a 
        project owner and the availability of amounts provided in 
        advance in appropriation Acts, the Secretary shall extend the 
        term of any expiring contract under the current contract terms 
        or provide a section 8 contract with rent levels established in 
        accordance with subsection (f)(2), for a period sufficient to 
        facilitate the implementation of a mortgage restructuring and 
        rental assistance sufficiency plan as determined by the 
        Secretary.
    (c) Tenant Rent Protection.--If the owner of an eligible 
multifamily housing project with an expiring contract does not agree to 
extend the contract, the Secretary shall make tenant-based assistance 
available to tenants residing in units assisted under the expiring 
contract on the expiration date. Any tenants receiving tenant-based 
assistance under subsection may elect--
            (1) to remain in the unit in the project and, if at any 
        time during their tenancy, if the rent exceeds the fair market 
        rent or payment standard, as applicable, the rent shall be 
        deemed to be the applicable standard, but only if the agency 
        administering the tenant-based assistance finds that the rent 
        is reasonable in comparison with rents charged for comparable 
        unassisted housing units in the market; or
            (2) to move from the project and the rent of their new 
        dwelling unit shall be subject to the fair market rent or the 
        payment standard, as applicable, under existing program rules 
        and procedures.
    (d) Contents of Plan.--Each mortgage restructuring and rental 
assistance sufficiency plan shall--
            (1) except as otherwise provided, restructure the project-
        based assistance rents for the eligible multifamily housing 
        property in a manner consistent with subsection (f);
            (2) require the owner or purchaser of an eligible 
        multifamily housing project with an expiring contract to submit 
        to the participating administrative entity a comprehensive 
        housing needs assessment, in accordance with the information 
        and data requirements of section 403 of the Housing and 
        Community Development Act of 1992, except that--
                    (A) any such needs assessment prepared within the 
                last 5 years shall satisfy the requirement under this 
                paragraph; and
                    (B) no such needs assessment shall be required 
                where the restructuring plan would, in the judgment of 
                the participating administrative entity, make minimal 
                changes to the FHA-insured mortgage;
            (3) require the owner or purchaser of the project to 
        provide, or contract for, competent management of the project;
            (4) require the owner or purchaser of the project to take 
        such actions as may be necessary to rehabilitate the project, 
        maintain adequate reserves for the project, and maintain the 
        project in decent and safe condition, based on housing quality 
        standards established by the Secretary;
            (5) require the owner or purchaser of the project to 
        maintain affordability and use restrictions in accordance with 
        section 7(d), which restrictions shall be consistent with the 
        long-term physical and financial viability and character of the 
        project as affordable housing; and
            (6) provide for any restructuring actions authorized under 
        section 9 that are proposed to be taken with respect to the 
        project.
    (e) Tenant and Community Participation and Capacity Building.--
            (1) Procedures.--The Secretary shall establish procedures 
        to provide an opportunity for tenants of the eligible 
        multifamily housing project and other affected parties, 
        including the local government, to participate effectively in 
        the restructuring process for the project carried out under 
        this Act.
            (2) Content.--Such procedures shall include--
                    (A) the rights to timely and adequate written 
                notice of the proposed decisions of the owner or the 
                Secretary or participating administrative entity;
                    (B) timely access to all relevant information 
                (except for information determined to be proprietary 
                under standards established by the Secretary);
                    (C) an adequate period to analyze this information 
                and provide comments to the Secretary or participating 
                administrative entity (which comments shall be taken 
                into consideration by the participating administrative 
                entity); and
                    (D) if requested, a meeting with a representative 
                of the participating administrative entity.
            (3) Effective participation.--The procedures established 
        under this subsection shall permit tenant, local government, 
        and community participation in physical inspections, 
        comprehensive needs assessments, management reviews, and other 
        matters, as deemed necessary by the participating 
        administrative entity, in connection with restructuring plans 
        submitted by owners and lenders and decisions made by the 
        Secretary and participating administrative entities pursuant to 
        this Act.
            (4) Funding.--
                    (A) In general.--From any amounts made available 
                under appropriation Acts to carry out this Act, the 
                Secretary may provide not more than $10,000,000 in each 
                fiscal year to tenant groups, nonprofit and for-profit 
                organizations, and public entities for building the 
                capacity of tenant organizations, technical assistance 
                in furthering any of the purposes of this Act 
                (including transfer of projects to new owners), and 
                tenant services.
                    (B) Allocation.--The Secretary may allocate any 
                funds made available under subparagraph (A) through 
                existing technical assistance programs and procedures 
                developed pursuant to any other Federal law, including 
                the Low-Income Housing Preservation and Resident 
                Homeownership Act of 1990 and the Multifamily Housing 
                Property Disposition Reform Act of 1994.
                    (C) Prohibition.--None of the funds made available 
                under subparagraph (A) may be used directly or 
                indirectly to pay for any personal service, 
                advertisement, telegram, telephone, printed or written 
                letter, or other device, intended or designed to 
                influence in any manner a Member of Congress, to favor 
                or oppose, by vote or otherwise, any legislation or 
                appropriation by the Congress, whether before or after 
                the introduction of any bill or resolution proposing 
                such legislation or appropriation.
    (f) Rent Levels.--
            (1) In general.--Except as provided in paragraph (2), each 
        mortgage restructuring and rental assistance sufficiency plan, 
        pursuant to the terms, conditions, and requirements of this Act 
        shall establish, for units assisted with project-based 
        assistance in eligible multifamily housing projects, adjusted 
        rent levels that--
                    (A) are equivalent to rents derived from comparable 
                properties, if--
                            (i) the participating administrative entity 
                        makes the rent determination not later than 60 
days after the owner submits a mortgage restructuring and rental 
assistance sufficiency plan; and
                            (ii) the market rent determination is based 
                        on not less than 2 comparable properties or, if 
                        not based on 2 or more comparable properties, 
                        is acceptable to the owner; or
                    (B) if the rents referred to in subparagraph (A) 
                cannot be determined or have not been determined by the 
                participating administrative entity within the 
                applicable timeframe, are equal to 90 percent of the 
                fair market rent or are less than 90 percent of the 
                fair market rent, assuming that the owner, lender, and 
                participating administrative entity agree that the 
                mortgage restructuring and rental assistance 
                sufficiency plan is feasible with rents set below 90 
                percent of the fair market rent.
            (2) Exception projects.--A contract under this section may 
        include rent levels that exceed the applicable rent level 
        determined under paragraph (1) if the participating 
        administrative entity--
                    (A) determines that the housing needs of the 
                tenants and the community cannot be adequately 
                addressed through implementation of the rent limitation 
                required to be established through a mortgage 
                restructuring and rental assistance sufficiency plan 
                under paragraph (1); and
                    (B) follows the procedures under paragraph (3).
            (3) Rent level for exception project.--The rent levels for 
        a project eligible under paragraph (2) for an exception rent 
        shall be calculated, for purposes of this subsection, on the 
        actual and projected costs of operating the project, at a level 
        that provides income sufficient to support a budget-based rent 
        that consists of--
                    (A) the debt service of the project following 
                restructuring;
                    (B) the operating expenses of the project, based on 
                historical data and reasonable projections of the 
                owner, including--
                            (i) contributions to adequate reserves 
                        consistent with the comprehensive housing needs 
                        assessment completed pursuant to subsection 
                        (d)(2);
                            (ii) the costs of maintenance and necessary 
                        rehabilitation; and
                            (iii) other eligible costs permitted under 
                        section 8 of the United States Housing Act of 
                        1937;
                    (C) an allowance for potential operating losses due 
                to vacancies and failure to collect rents, equal to 7 
                percent of gross potential rents or, for high vacancy 
                areas, an adequate allowance as determined by the 
                participating administrative entity;
                    (D) an allowance for a rate of return to the owner 
                or purchaser of the project in an amount equal to 8 
                percent of 100 percent of the fair market rent, to be 
                adjusted annually, based on adjustments to the fair 
                market rent; and
                    (E) other expenses determined by the participating 
                administrative entity to be necessary for the operation 
                of the project.

SEC. 6. EXEMPTIONS FROM RESTRUCTURING.

    Subject to section 7 and the availability of amounts provided in 
advance in appropriation Acts, the Secretary shall renew an expiring 
contract for a multifamily housing project at existing rents (as 
adjusted pursuant to section 8(c)(2) of such Act) and without 
restructuring the mortgage, if--
            (1) the project is an eligible multifamily housing project 
        and the owner agrees to accept a renewal of the expiring 
        contract at rent levels that are equal to those under the 
        expiring contract on the date of contract expiration, provided 
        that such rent levels do not exceed 120 percent of the fair 
        market rent or, where rent levels under the expiring contract 
        exceed 120 percent of the fair market rent, the owner agrees to 
        renew the expiring contract equal to 120 percent of the fair 
        market rent; except that if any owner does not agree to accept 
        a renewal at the rent levels provided for in this paragraph, 
        the owner may submit a mortgage restructuring and rental 
        assistance sufficiency plan under section 5;
            (2) the primary financing or mortgage insurance for the 
        project was provided by a public agency;
            (3) the project was financed through obligations such that 
        the implementation of a mortgage restructuring and rental 
        assistance plan under this section is inconsistent with 
        applicable law or agreements governing such financing;
            (4) in the determination of the Secretary or the 
        participating administrative entity, the refinancing would not 
        result in significant savings to the Secretary; or
            (5) the project is subject to an expiring contract but is 
        not an eligible multifamily project for purposes of this Act.

SEC. 7. SECTION 8 CONTRACT RENEWALS AND LONG-TERM AFFORDABILITY 
              COMMITMENT BY OWNER OF PROJECT.

    (a) Section 8 Renewal of Restructured Projects.--Subject to the 
availability of amounts provided in advance in appropriation Acts, the 
Secretary shall enter into contracts with participating administrative 
entities pursuant to which--
            (1) such entities shall offer to renew or extend expiring 
        section 8 contracts on eligible multifamily housing projects; 
        and
            (2) the owner of the project shall accept the offer, 
        provided the initial renewal is in accordance with the terms 
        and conditions specified in the mortgage restructuring and 
        rental sufficiency plan, except for renewals pursuant to 
        section 6.
    (b) Rents for Subsequent Renewals.--With respect to any subsequent 
renewal of a section 8 contract after the initial renewal pursuant to 
this Act, the rents under each renewal contract shall be the same as 
those determined pursuant to section 5(f), adjusted on an annual basis 
to reflect, at the owner's option--
            (1) adjustments to the Consumer Price Index prepared by the 
        Bureau of Labor Statistics of the Department of Labor; or
            (2) reasonable and necessary expenses of the project 
        pursuant to the requirements of section 5(f)(2)(B).
    (c) Required Commitment.--After the initial renewal of a section 8 
contract pursuant to this section, the owner shall accept each offer 
made pursuant to subsection (a) to renew the contract, for a period of 
20 years from the date of the initial renewal, if the offer to renew is 
on terms and conditions specified in the mortgage restructuring and 
rental assistance sufficiency plan.
    (d) Rent and Use Restrictions.--If an offer to renew the contract 
is not made or is rejected by the owner because it is not on terms and 
conditions specified in the mortgage restructuring and rental 
assistance sufficiency plan, the owner shall, for the remaining portion 
of the 20-year period referred to in subsection (c), be required to 
comply with the following rent and use restrictions:
            (1) Such restrictions shall be consistent with the long-
        term financial and physical viability of the project and shall 
        be consistent with the maximum rent restriction in paragraph 
        (2) and the tenant admission preference in paragraph (3).
            (2) The maximum rent on such units shall be limited, 
        provided that such maximum rents shall exceed the restructured 
        rents by at least 10 percent (as adjusted annually), as 
        determined by the participating administrative entity.
            (3) To the extent practicable, the owner shall rent--
                    (A) 40 percent of the units to residents with 
                incomes at or below 60 percent of median income, as 
                determined by the Secretary, with adjustments for 
                larger or smaller families; or
                    (B) 20 percent of the units to residents with 
                incomes at or below 50 percent of median income, as 
                determined by the Secretary, with adjustments for 
                larger or smaller families.
    (e) Exception.--If an owner of a project subject to rent and use 
restrictions demonstrates to the satisfaction of the participating 
administrative entity that the project cannot be adequately operated in 
compliance with the rent and use restrictions under subsection (d), the 
participating administrative entity shall modify those requirements to 
the extent necessary to assure the long-term financial and physical 
viability of the project.

SEC. 8. PROHIBITION ON RESTRUCTURING.

    (a) In General.--The Secretary shall not consider any mortgage 
restructuring and rental assistance sufficiency plan or request for 
contract renewal if the participating administrative entity determines 
that--
            (1) the owner or purchaser of the project has engaged in 
        material adverse financial or managerial actions or omissions 
        with regard to this project, including--
                    (A) knowingly and materially violating any Federal, 
                State, or local law or regulation with regard to the 
                project;
                    (B) knowingly and materially breaching a contract 
                for assistance under section 8 of the United States 
                Housing Act of 1937;
                    (C) knowingly and materially violating any 
                applicable regulatory or other agreement with the 
                Secretary or a participating administrative entity;
                    (D) repeatedly failing to make mortgage payments at 
                times when project income was sufficient to maintain 
                and operate the property;
                    (E) materially failing to maintain the property 
                according to housing quality standards at times when 
                project income was sufficient to maintain and operate 
                the property and after receipt of notice and a 
                reasonable opportunity to cure; or
                    (F) committing any action or omission resulting in 
                suspension or debarment by the Secretary at the time of 
                submission or implementation of a mortgage 
                restructuring and rental assistance sufficiency plan;
            (2) the owner or purchaser of the property materially 
        failed to follow the procedures and requirements of this Act, 
        after receipt of notice and an opportunity to cure; or
            (3) the poor condition of the project cannot be remedied in 
        a cost effective manner, as determined by the participating 
        administrative entity.
    (b) Opportunity to Dispute Findings.--
            (1) In general.--During the 30-day period beginning on the 
        date on which the owner or purchaser of an eligible multifamily 
        housing project receives notice of a rejection under subsection 
        (a) or of a mortgage restructuring and rental assistance 
        sufficiency plan under section 5, the Secretary or 
        participating administrative entity shall provide the owner or 
        purchaser with an opportunity to dispute the basis for the 
        rejection and an opportunity to cure. Any such notice of 
        rejection shall identify the reasons for rejection.
            (2) Affirmation, modification, or reversal.--
                    (A) In general.--After providing an opportunity to 
                dispute under paragraph (1), the Secretary or the 
                participating administrative entity may affirm, modify, 
                or reverse any rejection under subsection (a) or 
                rejection of a mortgage restructuring and rental 
                assistance sufficiency plan under section 5. The appeal 
                decision shall be made by a knowledgeable and impartial 
                person who was not involved in the decision to reject. 
                The owner may be represented by counsel, may subpoena 
                witnesses, and may require the production of documents 
                relevant to the reasons for rejection. The appeal 
                decision shall be solely based on the reasons 
                identified in the notice of rejection.
                    (B) Reason for decision.--The Secretary or the 
                participating administrative entity, as applicable, 
                shall identify the reasons for any final decision under 
                this paragraph.
                    (C) Review process.--The Secretary shall establish 
                an administrative review process to appeal any final 
                decision under this paragraph.
    (c) Final Determination.--Any final determination under this 
section shall be subject to judicial review.
    (d) Displaced Tenants.--Subject to the availability of amounts 
provided in advance in appropriation Acts, for any low-income family 
that is a tenant in a project or receiving assistance under section 8 
of the United States Housing Act of 1937 at the time of rejection under 
this section, the Secretary shall provide that tenant with tenant-based 
assistance and reasonable moving expenses, as determined by the 
Secretary.
    (e) Transfer of Property.--For properties disqualified from the 
consideration of a mortgage restructuring and rental assistance 
sufficiency plan under this section because of actions by an owner or 
purchaser described in paragraph (1) or (2) of subsection (a), the 
Secretary shall establish procedures to facilitate the voluntary sale 
or transfer of property as part of a mortgage restructuring and rental 
assistance sufficiency plan, with a preference for sale or transfer to 
a tenant organization and tenant-endorsed community-based nonprofit, 
for-profit, and public agency purchaser meeting such reasonable 
qualifications as may be established by the Secretary.

SEC. 9. RESTRUCTURING TOOLS.

    (a) In General.--For purposes of this Act, an approved mortgage 
restructuring and rental assistance sufficiency plan may include one or 
more of the following actions:
            (1) Full or partial payment of claim.--Making a full 
        payment of claim or partial payment of claim under section 
        541(b) of the National Housing Act; except that, at the request 
        of the owner, the Secretary shall use all or a portion of the 
        funds that would otherwise be used to make such full or partial 
        payment of claim as a debt service reserve, investing same in 
        debentures or other prudent investments and using the principal 
        and interest of said reserve to pay a portion of the project's 
        debt service.
            (2) Refinancing of debt.--Refinancing of all or part of the 
        debt on a project, if the refinancing would result in 
        significant subsidy savings under section 8 of the United 
        States Housing Act of 1937, including through the provision of 
        a direct loan from the Secretary financed by the General 
        Insurance Fund or Special Risk Insurance Fund.
            (3) Mortgage insurance.--Providing FHA multifamily mortgage 
        insurance, reinsurance, or other credit enhancement 
        alternatives, including under the multifamily risk-sharing 
        mortgage programs under section 542 of the Housing and 
        Community Development Act of 1992. Any limitations on the 
        number of units available for mortgage insurance under section 
        542 shall not apply to eligible multifamily housing projects. 
        Any credit subsidy costs of providing mortgage insurance shall 
        be paid from the General Insurance Fund and the Special Risk 
        Insurance Fund.
            (4) Credit enhancement.--Establishing State or local 
        mortgage credit enhancements and risk-sharing arrangements with 
        State or local housing finance agencies, the Federal Housing 
        Finance Board, the Federal National Mortgage Association, and 
        the Federal Home Loan Mortgage Corporation.
            (5) Compensation of third parties.--Entering into 
        agreements, incurring costs, or making payments, as may be 
        reasonably necessary, to compensate participating 
        administrative entities and other parties in undertaking 
        actions authorized by this Act. Upon request, participating 
        administrative entities shall be considered to be contract 
        administrators under section 8 of the United States Housing Act 
        of 1937 for purposes of any housing assistance payments 
        contracts entered into as part of an approved mortgage 
        restructuring and rental assistance sufficiency plan.
            (6) Residual receipts.--Applying any acquired residual 
        receipts to maintain the long-term affordability and physical 
        conditions of the property or of other eligible multifamily 
        housing. The participating administrative entity shall expedite 
        the acquisition of residual receipts by entering into 
        agreements with owners of housing covered by an expiring 
        contract to provide an owner with a share of the receipts, not 
        to exceed 10 percent.
            (7) Rehabilitation needs.--Rehabilitating the project using 
        amounts from grants provided from residual receipts and the 
        General and Special Needs Insurance Funds under the National 
        Housing Act, as approved by the Secretary; to the extent 
        provided in appropriation Acts, using budget authority provided 
        for increases in the budget authority for assistance contracts 
        under section 8 of the United States Housing Act of 1937; 
        through interest reduction payments that are not longer needed 
        to cover restructured mortgages that are or were insured under 
        section 236 of the National Housing Act; or through the debt 
        restructuring transaction.
            (8) Mortgage restructuring.--Restructuring mortgages to 
        provide--
                    (A) a restructured first mortgage that is fully 
                amortizing within the remaining term of the existing 
                FHA-insured first mortgage and that has a principal 
                amount consistent with--
                            (i) rents at levels that are established in 
                        section 5(f); and
                            (ii) reasonable costs of operation as set 
                        forth in section 5(f)(3)(B) through 5(f)(3)(E); 
                        and
                    (B) to the extent that the debt is restructured 
                through a partial payment of claim, a second mortgage 
                equal to the difference between the restructured first 
                mortgage and the mortgage balance of the eligible 
                multifamily housing project at the time of 
                restructuring, subject to the following requirements:
                            (i) the second mortgage shall bear interest 
                        at a rate not to exceed the applicable Federal 
                        rate for a term not to exceed 50 years;
                            (ii) during the period in which the first 
                        mortgage remains outstanding, no payments of 
                        interest or principal shall be required or paid 
                        on the second mortgage;
                            (iii) 50 percent of the net distributable 
                        proceeds of any sale or refinancing of the 
                        project shall be payable, first toward accrued 
                        interest, and, to the extent there are any 
                        proceeds remaining, to principal due under the 
                        second mortgage;
                            (iv) the second mortgage shall be assumable 
                        by any subsequent purchaser of any multifamily 
                        housing project, pursuant to guidelines 
                        established by the Secretary;
                            (v) the principal and accrued interest due 
                        under the second mortgage shall be fully 
                        payable upon disposition of the property, 
                        unless the mortgage is assumed under the 
                        preceding sentence;
                            (vi) upon full payment of the first 
                        mortgage, the owner shall begin repayment of 
                        the second mortgage in monthly installments 
                        equal to the monthly payments formerly made 
                        under the first mortgage;
                            (vii) the principal and interest of the 
                        second mortgage shall be immediately due and 
                        payable upon a finding by the Secretary, 
                        subject to judicial review, that an owner has 
                        failed to materially comply with this Act or 
                        any requirements of the United States Housing 
                        Act of 1937, as those requirements apply to the 
                        applicable project, after receipt of notice of 
                        such failure and a reasonable opportunity to 
                        cure such failure and which failure is 
                        sufficiently serious that the project is no 
                        longer suitable as affordable housing; and
                            (viii) any credit subsidy costs of 
                        providing a second mortgage shall be paid from 
                        the General Insurance Fund and the Special Risk 
                        Insurance Fund;
                    (C) to the extent that the project cannot support 
                any debt service payments, a restructured first 
                mortgage with terms and conditions conforming to those 
                set forth in subparagraph (B), under which payments of 
                principal or interest shall not be required or made 
                until such time as the rental and use restrictions on 
                the property are terminated; and
                    (D) that any interest accruing on mortgages 
                restructured pursuant to subparagraphs (B) and (C) or 
                any portion of the debt on the project that exceeds the 
                amount of the restructured first mortgage provided 
                pursuant to subparagraph (A) may be forgiven by the 
                Secretary or the designated administrative entity for 
                good cause and at the request of the owner.
    (b) Role of FNMA and FHLMC.--Section 1335 of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4565) 
is amended--
            (1) in paragraph (3), by striking ``and'' at the end;
            (2) in paragraph (4), by striking the period at the end and 
        inserting ``; and'';
            (3) in the matter preceding paragraph (1), by striking 
        ``To'' and inserting the following: ``(a) In General.--To''; 
        and
            (4) by adding at the end of the following:
            ``(5) assist in maintaining the affordability of assisted 
        units in eligible multifamily housing projects with expiring 
        contracts, as defined under the Multifamily Housing 
        Restructuring and Affordability Act of 1997.
    ``(b) Affordable Housing Goals.--The Secretary shall give credit, 
as determined by the Secretary, toward achievement of the affordable 
housing goals under sections 1332, 1333, and 1334 (for purposes of 
section 1336) to activities taken under subsection (a)(5) by each 
enterprise.''.
    (c) Prohibition on Equity Sharing by the Secretary.--The Secretary 
may not participate in any equity agreement or profit sharing agreement 
in connection with any eligible multifamily housing project.

SEC. 10. DEFERRAL OF INCLUSION IN INCOME ON DEBT RESTRUCTURING OR 
              FORGIVENESS.

    Subsection (e) of section 108 of the Internal Revenue Code of 1986 
(relating to income from discharge of indebtedness) is amended by 
adding at the end the following new paragraph:
            ``(11) Income from discharges under multifamily housing 
        restructuring and affordability act of 1997.--Any amount 
        includible in gross income by reason of any discharge of 
        indebtedness under the Multifamily Housing Restructuring and 
        Affordability Act of 1997 shall be so includible as if such 
        discharge occurred immediately before the earliest date the 
        taxpayer disposes of any portion of its interest in the 
        property to which such indebtedness relates.''

SEC. 11. MANAGEMENT STANDARDS.

    Pursuant to guidelines established by the Secretary, each 
participating administrative entity shall implement management 
standards applicable to eligible multifamily housing projects subject 
to mortgage restructuring and rental assistance sufficiency plans 
administered by such entity, including requirements governing conflicts 
of interest between owners, managers, and contractors with an identity 
of interest, pursuant to guidelines established by the Secretary and 
consistent with industry standards.

SEC. 12. MONITORING OF COMPLIANCE.

    (a) Compliance Agreements.--Pursuant to regulations issued by the 
Secretary after public notice and comment, each participating 
administrative entity, through binding contractual agreements with 
owners and otherwise, shall ensure long-term compliance with the 
provisions of this Act. Each agreement, shall, at a minimum, provide 
for--
            (1) enforcement of the provisions of this Act; and
            (2) remedies for the breach of such provisions.
    (b) Periodic Monitoring.--
            (1) In general.--Unless otherwise inspected or reviewed by 
        the Secretary, State or local housing agency, or an FHA-insured 
        lender, on an annual basis, each participating administrative 
        entity shall review the status of all multifamily housing 
        projects for which a mortgage restructuring and rental 
        assistance sufficiency plan has been implemented.
            (2) Inspection.--Each review under this subsection shall 
        include an annual on-site inspection of a sample of units to 
        determine compliance with housing quality standards and other 
        requirements as provided in this Act and the multifamily 
        housing management agreements.
    (c) Audit by Secretary.--The Comptroller General of the United 
States, the Secretary, and the Inspector General of the Department of 
Housing and Urban Development may conduct an audit, not more frequently 
than on an annual basis, of any multifamily housing project for which a 
mortgage restructuring and rental assistance sufficiency plan has been 
implemented.

SEC. 13. REVIEW.

    To ensure compliance with this Act, the Secretary shall conduct an 
annual review and report to the Congress on actions taken under this 
Act and the status of eligible multifamily housing projects.

SEC. 14. GAO AUDIT AND REVIEW.

    (a) Initial Audit.--Not later than 18 months after the effective 
date of interim or final regulations promulgated under this Act, the 
Comptroller General of the United States shall conduct an audit to 
evaluate a representative sample of eligible multifamily housing 
projects and the implementation of all mortgage restructuring and 
rental assistance sufficiency plans.
    (b) Report.--
            (1) In general.--Not later than 18 months after the audit 
        conducted under subsection (a), the Comptroller General of the 
        United States shall submit to the Congress a report on the 
        status of all eligible multifamily housing projects and the 
        implementation of all mortgage restructuring and rental 
        assistance sufficiency plans.
            (2) Contents.--The report submitted under paragraph (1) 
        shall include--
                    (A) a description of the initial audit conducted 
                under subsection (a); and
                    (B) recommendations for any legislative action to 
                increase the financial savings to the Federal 
                Government of the restructuring of eligible multifamily 
                housing projects balanced with the continued 
                availability of the maximum number of affordable low-
                income housing units.
    (c) Compliance Study.--Not later than 6 months after the effective 
date of this Act, the GAO shall issue a report addressing the 
effectiveness of the enforcement mechanisms that are currently 
available to the Secretary to ensure compliance with mortgage 
covenants, regulatory agreements, section 8 housing assistance payments 
contracts, and other agreements entered into between the Secretary, the 
participating administrative entity, or an FHA-approved lender, and 
owners or managers of eligible multifamily housing. This report shall 
also evaluate the Secretary's use of such enforcement mechanisms.

SEC. 15. REGULATIONS.

    The Secretary shall issue interim regulations necessary to 
implement this Act and the amendments made by this Act not later than 
the expiration of the 6-month period beginning on the date of enactment 
of this Act. Not later than 1 year after the date of enactment of this 
Act, in accordance with the negotiated rulemaking procedures set forth 
in subchapter III of chapter 5 of title 5, United States Code, the 
Secretary shall implement final regulations implementing this Act. If 
the Secretary fails to issue such final regulations within such period, 
the Secretary shall renew expiring contracts for 1 year on current 
contract terms.

SEC. 16. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Calculation of Limit on Project-Based Assistance.--Section 8(d) 
of the United States Housing Act of 1937 (42 U.S.C. 1437f(d)) is 
amended by adding at the end of the following new paragraph:
    ``(5) Any contract entered into under section 6 of the Multifamily 
Housing Restructuring and Affordability Act of 1997 shall be included 
in computing the limit on project-based assistance under this 
subsection.''.
    (b) Extension of Temporary Provisions Relating to Public Housing 
and Section 8 Rental Assistance.--
            (1) Minimum rents.--Section 402(a) of the Balanced Budget 
        Downpayment Act, I (Public Law 104-99; 110 Stat. 40) is 
        amended, in the matter preceding paragraph (1)--
                    (A) by striking `` and subsection (f) of this 
                section,''; and
                    (B) by inserting ``and fiscal years thereafter'' 
                after ``1997''.
            (2) General rule for applicability.--Section 402(f) of the 
        Balanced Budget Downpayment Act, I (42 U.S.C. 1437aa note) is 
        amended--
            (1) by striking ``This section'' and inserting 
        ``Subsections (b) and (c) of this section''; and
            (2) by adding at the end the following new sentence: ``The 
        provisions of and the amendments made by subsections (a) and 
        (d) of this section shall be effective upon the enactment of 
        this Act and thereafter.''.
    (c) Partial Payment of Claims on Multifamily Housing Projects.--
Section 541 of the National Housing Act (12 U.S.C. 1735f-19) is 
amended--
            (1) in subsection (a), in the subsection heading by 
        striking ``Authority'' and inserting ``Defaulted Mortgages'';
            (2) by redesignating subsection (b) as subsection (c); and
            (3) by inserting after subsection (a) the following new 
        subsection:
    ``(b) Existing Mortgage.--Notwithstanding any other provision of 
law, the Secretary, in connection with a mortgage restructuring 
pursuant to section 5 of the Multifamily Housing Restructuring and 
Affordability Act of 1997, may make a one time, nondefault partial 
payment of the claim under the mortgage insurance contract, which shall 
include a determination by the Secretary or the participating 
administrative entity, in accordance with such Act, of the market value 
of the project and a restructuring of the mortgage, under such terms 
and conditions as the Secretary may establish.''.
    (d) Preservation of FHA Insurance Fund.--Notwithstanding any other 
provision of or amendment made by this Act, no mortgage restructuring 
carried out pursuant to this Act shall impact the credit scoring of 
loans insured by the Secretary for multifamily housing that is not 
assisted under section 8 of the United States Housing Act of 1937.

SEC. 17. TREATMENT OF FHA MULTIFAMILY HOUSING RESTRUCTURING 
              DEMONSTRATION.

    (a) Termination.--Section 212 of the Departments of Veterans 
Affairs and Housing and Urban Development, and Independent Agencies 
Appropriations Act, 1997 (42 U.S.C. 1437f note) is amended by striking 
subsection (k) and inserting the following new subsection:
    ``(k) Termination.--The demonstration program under this section 
shall terminate upon a determination by the Secretary that the program 
under the Multifamily Housing Restructuring and Affordability Act of 
1997 has been implemented.''.
    (b) Continuation of Funding.--Section 212 of the Departments of 
Veterans Affairs and Housing and Urban Development, and Independent 
Agencies Appropriations Act, 1997 (42 U.S.C. 1437f note) is amended--
            (1) in subsection (a)(1)(B), by striking ``through the end 
        of fiscal year 1997'' and inserting ``until the termination of 
        the demonstration program under this section pursuant to 
        subsection (k)''; and
            (2) in subsection (l)--
                    (A) by inserting ``(1)'' before ``$10,000,000'' and
                    (B) by striking ``September 30, 1998.'' and 
                inserting the following: ``the termination of the 
                demonstration program pursuant to subsection (k); and 
                (2) only to the extent that the other amounts referred 
                to in this subsection have been used, amounts in the 
                General Insurance Fund (established under section 519 
                of the National Housing Act) and the Special Risk 
                Insurance Fund (established under section 238(b) of 
                such Act) shall be available, until the termination of 
                the demonstration program pursuant to subsection (k), 
                to cover such costs with respect to multifamily 
                projects subject to mortgages that are obligations of 
                such Funds.''.

SEC. 18. TERMINATION OF AUTHORITY.

    (a) In General.--This Act is repealed effective October 1, 2002.
    (b) Exception.--Notwithstanding the repeal under subsection (a), 
the provisions of this Act (as in effect immediately before such 
repeal) shall apply with respect to projects and programs for which 
binding commitments have been entered into under this Act before 
October 1, 2002.
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