[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2967 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2967

      To promote the production of affordable low-income housing.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 19, 2002

 Mr. Bond (for himself and Ms. Collins) introduced the following bill; 
which was read twice and referred to the Committee on Banking, Housing, 
                           and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
      To promote the production of affordable low-income housing.

    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 ``Affordable Housing Expansion Act of 
2002''.

SEC. 2. PURPOSE.

    The purposes of this Act are to expand the production of affordable 
low income housing for extremely 
low-, very low-, and low-income families--
            (1) through the creation of a housing production block 
        grant program that will be administered through state housing 
        finance agencies;
            (2) through new section 8 ``thrifty'' voucher authority; 
        and
            (3) through new loan guarantee authority for public housing 
        agencies.

SEC. 3. DEFINITIONS.

    For purposes of this Act, the following definitions shall apply:
            (1) The term ``extremely low-income families'' shall mean 
        persons and families (as that term is defined in section 
        3(b)(3) of the United States Housing Act of 1937) whose incomes 
        do not exceed--
                    (A) 30 percent of the area medium as determined by 
                the Secretary with adjustments for smaller and larger 
                families and for unusually high or low family incomes; 
                or
                    (B) 30 percent of the national nonmetropolitan 
                medium income, if it is higher than the area medium 
                income.
            (2) The term ``insular areas'' shall mean the Commonwealth 
        of the Northern Mariana Islands, Guam, the Virgin Islands, 
        America Samoa, and any other territory of possession of the 
        United States.
            (3) The term ``low-income families'' shall have the same 
        meaning as provided under section 3(b)(2) of the United States 
        Housing Act of 1937.
            (4) The term ``project-based assistance'' shall have the 
        meaning given such term in section 16(c)(6) of the United 
        States Housing Act of 1937, except that such term includes 
        assistance under any successor programs to the programs 
        referred to in such section.
            (5) The term ``public housing agency'' shall have the 
        meaning given such term in section 3(b) of the United States 
        Housing Act of 1937.
            (6) The term ``Secretary'' shall mean the Secretary of 
        Housing and Urban Development.
            (7) The term ``section 8 assistance'' or ``voucher'' shall 
        have the meaning given such term in section 8(f) of the United 
        States Housing Act of 1937.
            (8) The term ``State'' shall mean any State of the United 
        States, the District of Columbia, and the Commonwealth of 
        Puerto Rico.
            (9) The term ``State housing finance agency'' shall mean 
        any State or local housing finance agency that has been 
        designated by a State or insular area to administer this 
        program.
            (10) The term ``very low-income families'' shall have the 
        same meaning as provided under section 3(b) of the United 
        States Housing Act of 1937.

TITLE I--PRODUCTION OF AFFORDABLE HOUSING FOR EXTREMELY LOW-INCOME AND 
                        VERY LOW-INCOME FAMILIES

SEC. 101. AUTHORITY.

    The Secretary of Housing and Urban Development shall make funds 
available to State housing finance agencies as provided under section 
102 for the rehabilitation of existing low-income housing, for the 
development of new affordable low-income housing units, and for the 
preservation of existing low-income housing units that are at risk of 
becoming unavailable for low-income families.

SEC. 102. ALLOCATION OF RESOURCES.

    (a) In General.--The Secretary shall allocate funds approved in 
appropriations Acts to State housing finance agencies to carry out this 
title. Subject to the requirements of subsection (b) and as otherwise 
provided in this subsection, each State housing finance agency shall be 
eligible to receive an amount of funds equal to the proportion of the 
per capita population of the State in relation to the population of the 
United States which shall be determined on the basis of the most recent 
decennial census for which data are available. For each fiscal year, 
the Secretary shall reserve for grants to Indian tribes 1 percent of 
the amount appropriated under the applicable appropriations Act. The 
Secretary shall provide for distribution of amounts under this 
subsection to Indian tribes on the basis of a competition conducted 
pursuant to specific criteria developed after notice and public 
comment.
    (b) Minimum State Allocation.--If the allocation under subsection 
(a), when applied to the funds approved under this section in 
appropriations Acts for a fiscal year, would result in funding of less 
than $6,000,000 for any State, the allocation for such State shall be 
$6,000,000 and the increase shall be deducted pro rata from the 
allocation of all the other States.
    (c) Criteria for Reallocation.--The Secretary shall reallocate any 
funds previously allocated to a State housing finance agency for any 
fiscal year in which the State housing finance agency fails to provide 
its match requirements or fails to submit an affordable housing 
expansion plan that is approved by the Secretary. All such funds shall 
be reallocated pursuant to the formula provided under subsection (a).

SEC. 103. AFFORDABLE HOUSING EXPANSION PLAN.

    (a) Submission of Affordable Housing Expansion Plan.--The Secretary 
shall allocate funds under section 102 to a State housing finance 
agency only if the State housing finance agency has submitted an 
affordable housing expansion plan, with annual updates, approved by the 
Secretary and designed to meet the overall very low- and low-income 
housing needs of both the rural and urban areas of the State in which 
the State housing finance agency is located. This plan shall be 
developed in conjunction with the housing strategies developed for the 
applicable States and localities under section 105 of Cranston-Gonzalez 
National Affordable Housing Act.
    (b) Citizen Participation.--Before submitting an affordable housing 
expansion plan to the Secretary, a State housing finance agency shall--
            (1) make available to citizens of the State, public 
        agencies and other interested parties information regarding the 
        amount of assistance expected to be made available under this 
        title and the range of investment or other uses of such 
        assistance that the State housing finance agency may undertake;
            (2) publish the proposed plan in a manner that, in the 
        determination of the Secretary, affords affected citizens, 
        public agencies, and other interested parties a reasonable 
        opportunity to review its contents and to submit comments on 
        the proposed plan;
            (3) hold one or more public hearings to obtain the views of 
        citizens, public agencies, and other interested parties on the 
        housing needs of the State; and
            (4) provide citizens, public agencies, and other interested 
        parties with reasonable access to records regarding the uses of 
        any assistance that the State housing finance agency may have 
        received under this title during the preceding 5 years.

SEC. 104. ELIGIBLE USE OF FUNDS.

    Funds made available under this title shall be used for--
            (1) the acquisition, new construction, reconstruction, or 
        moderate or substantial rehabilitation of affordable housing 
        for mixed income rental housing where the assistance provided 
        under section 102 shall be used to assist units targeted to 
        very low-
        income and extremely low-income families, including large 
        families, the elderly, and persons with disabilities;
            (2) the moderate and substantial rehabilitation of rental 
        housing units that are currently assisted under State or 
        Federal low-income housing programs;
            (3) the preservation of Federal and State low-income 
        housing units that are at risk of being no longer affordable to 
        low-income families;
            (4) the purchase and creation of land trusts to allow low-
        income families an opportunity to rent homes in areas of low-
        vacancy;
            (5) conversion of public housing to assisted 
        living facilities for the very low- and extremely low-income 
        elderly;
            (6) conversion of section 202 elderly housing to assisted 
        living facilities for the very low- and extremely low-income 
        elderly;
            (7) conversion of HUD-owned or HUD-held multifamily 
        properties upon disposition to housing for the very low- and 
        extremely low-income elderly, housing for very low-income and 
        extremely low-
        income persons with disabilities and to assisted living 
        facilities for the very low- and extremely low-
        income elderly; and
            (8) creation of sinking funds to maintain reserves held by 
        State housing finance agencies to preserve the low-income 
        character of the housing.

SEC. 105. MATCHING REQUIREMENTS.

    (a) In General.--Each State housing finance agency shall make 
contributions for activities under this title that total, throughout a 
fiscal year, not less than 25 percent of the funds made available under 
this title.
    (b) Allowable Amounts.--
            (1) Application to housing.--A contribution shall be 
        recognized for purposes of a match under subsection (a) only 
        if--
                    (A) made with respect to housing that qualifies as 
                affordable housing under section 107; or
                    (B) made with respect to any portion of a project 
                for which not less than 50 percent of the units qualify 
                as affordable housing under section 107.
            (2) Form.--A contribution may be in the form of--
                    (A) cash contributions from non-Federal sources, 
                which may not include funds from a grant under section 
                106(b) or section 106(d) of the Housing and Community 
                Development Act of 1974 or from the value of low income 
                tax credits allocated pursuant to the Internal Revenue 
                Code;
                    (B) the value of taxes, fees or other charges that 
                are normally and customarily imposed but are waived, 
                forgone, or deferred in a manner that achieves 
                affordability of housing assisted under this title;
                    (C) the value of land or other real property as 
                appraised according to procedures acceptable to the 
                Secretary;
                    (D) the value of investment in on-site and off-site 
                infrastructure directly required for affordable housing 
                assisted under this title;
                    (E) the reasonable value of any site-preparation 
                and construction materials and any donated or voluntary 
                labor in connection with the site-preparation for, 
                construction or rehabilitation of affordable housing; 
                and
                    (F) such other contributions to affordable housing 
                as the Secretary considers appropriate.
            (3) Administrative expenses.--Contributions for 
        administrative expenses may not be recognized for purposes of 
        this section.

SEC. 106. DISTRIBUTION OF ASSISTANCE.

    Each State housing finance agency shall ensure that the development 
of new housing under this section is designed to meet both urban and 
rural needs, and prioritize funding, to the extent practicable, in 
conjunction with the economic redevelopment of an area.

SEC. 107. ELIGIBLE AFFORDABLE HOUSING.

    (a) Production of Affordable Housing.--In the case of new 
construction, housing shall qualify for assistance under this title 
only if the housing--
            (1) is required to have not less than 30 percent of the 
        assisted units occupied by extremely low-income families who 
        pay as a contribution towards rent (not including any Federal 
        or State rental subsidy provided on behalf of the family) not 
        more than 25 percent of the adjusted income of a family whose 
        income equals 30 percent of the median income for the area, as 
        determined by the Secretary, with adjustments for the number of 
        bedrooms in the unit, except that the Secretary may establish 
        income ceilings higher or lower than 30 percent of the median 
        income for the area on the basis of the Secretary's findings 
        that variations are necessary because of the prevailing levels 
        of construction costs or fair market rents, or unusually high 
        or low family incomes;
            (2) except as provided under paragraph (1), is required to 
        have all assisted units be occupied by very low-income families 
        who pay as a contribution towards rent (not including any 
        Federal or State rental subsidy provided on behalf of the 
        family) not more than 25 percent of 50 percent of the median 
        income for an area; and
            (3) will remain affordable under the requirements provided 
        in paragraphs (1) and (2), according to legally binding 
        commitments satisfactory to the Secretary, for not less than 40 
        years, without regard to the term of the mortgage or to the 
        transfer of ownership, or for such period that the Secretary 
        determines is the longest feasible period of time consistent 
        with sound economics and the purposes of this Act, including 
        foreclosure where the responsibility for maintaining the low-
        income character of the property will be the responsibility of 
        the State housing finance agency.
    (b) Priority for Extremely Low-Income Families.--State housing 
finance agencies shall give priority for funding to those projects that 
maximize the availability and affordability of housing for extremely 
low-income families.

SEC. 108. TENANT SELECTION.

    An owner of any housing assisted under this title shall establish 
tenant selection procedures consistent with the affordable housing 
expansion plan of the State housing finance agency.

SEC. 109. PROHIBITION ON USE OF FUNDS FOR SERVICE COORDINATORS OR 
              SUPPORTIVE SERVICES.

    No funds under this Act may be used for service coordinators or 
supportive services.

SEC. 110. PENALTIES FOR MISUSE OF FUNDS.

    The Secretary shall recapture any assistance awarded under this 
title to the extent the assistance has been used for impermissible 
purposes. To the extent the Secretary identifies a pattern and practice 
regarding the misuse of funds awarded under this title, the Secretary 
shall deny assistance to that State for up to 5 years, subject to 
notice and an opportunity for judicial review.

SEC. 111. SUBSIDY LAYERING REQUIREMENTS.

    The requirements of section 102(d) of the Department of Housing and 
Urban Development Reform Act of 1989 may be satisfied in connection 
with assistance, including a commitment to insure a mortgage, provided 
under this title by a certification of a State housing finance agency 
to the Secretary that the combination of assistance within the 
jurisdiction of the Secretary and other government assistance provided 
in connection with a property assisted under this title shall not be 
any greater than is necessary to provide affordable housing.

SEC. 112. MULTIFAMILY RISK-SHARING MORTGAGE INSURANCE PROGRAM.

    The Secretary shall carry out a mortgage insurance program through 
the Federal Housing Administration in conjunction with State housing 
finance agencies to insure multifamily mortgages for housing that 
qualifies under this title. This program shall be consistent with the 
requirements established under section 542 of the Housing and Community 
Development Act of 1992, except that housing that meet the requirements 
of this title shall be eligible for mortgage insurance.

SEC. 113. EFFECTIVE DATE AND REGULATIONS.

    (a) Effective Date.--This title shall take effect upon the date of 
enactment of this Act.
    (b) Rules.--The Secretary shall issue notice and comment rulemaking 
with final regulations issued no later than 6 months after the date of 
enactment of this Act.

SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

    There is authorized to be appropriated $1,000,000,000 for fiscal 
year 2003, of which no more than 20 percent of such funds may be used 
for rehabilitation needs and to preserve existing housing for low-
income families.

                 TITLE II--SECTION 8 HOUSING PRODUCTION

SEC. 201. PROJECT-BASED VOUCHERS AND THRIFTY VOUCHERS.

    (a) In General.--Section 8(o)(13) of the United States Housing Act 
of 1937 is amended--
            (1) in subparagraph (C)(ii), by inserting before the period 
        at the end the following: ``, revitalizing a low-income 
        community, or preventing the displacement of extremely low-
        income families'';
            (2) in subparagraph (D)(ii), by striking ``apply in the 
        case of'' and all that follows through the period and inserting 
        the following: ``apply--
                                    ``(I) in the case of assistance 
                                under a contract for housing consisting 
                                of single family properties (buildings 
                                with 1 to 4 units);
                                    ``(II) for dwelling units that are 
                                specifically made available for 
                                households comprised of elderly 
                                families or disabled families; or
                                    ``(III) outside of a qualified 
                                census tract, for buildings with 5 to 
                                25 units or with dwelling units that 
                                are specifically made available for 
                                families receiving supportive services.
                For purposes of this clause, the term `qualified census 
                tract' has the same meaning given that term in section 
                42(d) of the Internal Revenue Code of 1986. The 
                Secretary may waive the limitations of this clause, 
                consistent with the obligation to affirmatively further 
                fair housing practices.'';
            (3) in subparagraph (F), by striking ``10 years'' and 
        inserting ``15 years'';
            (4) by adding the following to the end:
                    ``(L) Use of assistance in conjunction with public 
                housing capital funds.--
                            ``(i) Capital fund.--Notwithstanding any 
                        provision to the contrary in this Act, a public 
                        housing agency may attach assistance under this 
                        paragraph to a structure or unit that receives 
                        assistance allocated to the public housing 
                        agency under the Capital Fund, established by 
                        section 9(d).
                            ``(ii) Operating fund.--A unit that 
                        receives assistance under this paragraph shall 
                        not be eligible for assistance under the 
                        Operating Fund established by section 9(e).
                    ``(M) Thrifty vouchers.--
                            ``(i) In general.--For the purpose of 
                        encouraging the production or preservation of 
                        housing affordable to extremely low-income 
                        families, a public housing agency may use 
                        amounts provided under an annual contributions 
                        contract under this subsection to enter into a 
                        housing assistance payment contract for Thrifty 
                        Voucher assistance that is attached to the 
                        structure. Except as otherwise specified in 
                        this paragraph, such housing assistance 
                        contract shall be subject to the limitations 
                        and requirements of subparagraphs (A), (B), 
                        (C), (D), (E), (F), (G), (J), (K), and (L).
                            ``(ii) Use for new production, substantial 
                        rehabilitation, and preservation.--Assistance 
                        under this paragraph may only be attached to a 
                        structure that is newly constructed, acquired 
                        for preservation as affordable housing, or 
                        substantially rehabilitated.
                            ``(iii) Eligible families.--A prospective 
                        tenant of a unit that is assisted under this 
                        subparagraph must qualify as an extremely low-
                        income family at the commencement of the 
                        proposed occupancy by the tenant.
                            ``(iv) Limitation.--Assistance under this 
                        subparagraph may not be attached to more than 
                        25 percent of the units in a building. For 
                        purposes of this clause, a project consisting 
                        of single family structures shall be treated as 
                        1 building if the single family structures are 
                        owned, and constructed, substantially 
                        rehabilitated, or acquired for preservation 
                        under a common plan.
                            ``(v) Rent calculation.--
                                    ``(I) In general.--A housing 
                                assistance payment contract entered 
                                into under this subparagraph shall 
                                establish the gross rent for each unit 
                                assisted in an amount equal to the per 
                                unit operating cost of the property 
                                plus the applicable utility allowance 
                                of the public housing agency for 
                                tenant-paid utilities. An owner may 
                                accept a gross rent that is less than 
                                the per unit operating cost of the 
                                property plus the applicable utility 
                                allowance, if the gross rent exceeds 
                                the limitation under subclause (IV).
                                    ``(II) Unit operating cost.--As 
                                used in this subparagraph, the unit 
                                operating cost is the allocable share 
                                of the ordinary and customary expenses 
                                of the unit incurred to operate the 
                                property, including applicable owner-
                                paid utilities, contribution to the 
                                replacement reserve, asset management 
                                fees, and a cash flow allowance equal 
                                to 15 percent of all other allocable 
                                operating costs. A public housing 
                                agency shall require an owner to 
                                demonstrate that the unit operating 
                                cost for units assisted under this 
                                subparagraph does not exceed the 
                                operating cost of other units in the 
                                property that are not assisted under 
                                this subparagraph, with appropriate 
                                adjustments for unit size, and shall 
                                establish policies to ensure that 
                                expenses included in the unit operating 
                                cost that are paid to the owner or a 
                                related entity are reasonable and 
                                consistent with prevailing costs in the 
                                community in which the property is 
                                located. Required verification shall be 
                                determined by the public housing 
                                agency.
                                    ``(III) Adjustment.--A public 
                                housing agency shall, upon request, 
                                make an appropriate annual adjustment 
                                in the rent established under this 
                                clause based on documented changes in 
                                unit operating costs and any increase 
                                in the applicable fair market rent or 
                                payment standard.
                                    ``(IV) Limitation.--Gross rent 
                                established under this paragraph shall 
                                not exceed the greater of--
                                            ``(aa) 75 percent of the 
                                        payment standard used by the 
                                        public housing agency for a 
                                        dwelling unit of the same size; 
                                        or
                                            ``(bb) 75 percent of the 
                                        applicable fair market rental.
                                    ``(V) Exception.--The Secretary is 
                                authorized to approve an exception to 
                                the 75 percent limitation in subclause 
                                (IV) for not more than 2 percent of the 
                                total number of vouchers funded under 
                                this subsection, not to exceed 90 
                                percent of the payment standard or 
                                applicable fair market rental, if the 
                                permitted maximum rent could not 
                                otherwise support the reasonable 
                                operating cost of rental housing, and 
                                the public housing agency can 
                                demonstrate a need for production or 
                                preservation of affordable housing.
                            ``(vi) Renewal of assistance.--
                                    ``(I) In general.--The Secretary 
                                shall increase the adjusted allocation 
                                baseline for renewal of funding under 
                                subsection (dd) for public housing 
                                agencies that attach assistance under 
                                this paragraph to a structure.
                                    ``(II) Increase equivalent.--An 
                                increase under subclause (I) shall 
                                equal the number of additional families 
                                that a public housing agency can assist 
                                as a result of the reduced payments 
                                permitted under this paragraph.
                                    ``(III) Exception to limitation on 
                                project-based assistance.--The 
                                additional units assisted as a result 
                                of the reduced payments permitted under 
                                this paragraph shall not be considered 
                                in determining the compliance of a 
                                public housing agency with the 
                                percentage limitation in subparagraph 
                                (B).
                                    ``(IV) Applicability.--This 
                                subparagraph shall not apply to 
                                incremental assistance initially issued 
                                under this paragraph.
                            ``(vii) Allocation of incremental 
                        assistance for use under this paragraph.--
                                    ``(I) In general.--Incremental 
                                assistance appropriated for use under 
                                this paragraph--
                                            ``(aa) shall be allocated 
                                        for public housing agencies 
                                        within each State, after 
                                        reserving appropriate amounts 
                                        for insular areas, in 
                                        accordance with the formula 
                                        established by the Secretary 
                                        under section 217(b) of the 
                                        Cranston-Gonzalez National 
                                        Affordable Housing Act (42 
                                        U.S.C. 12747(b)); and
                                            ``(bb) the Secretary shall 
                                        obligate amounts that are 
                                        available for public housing 
                                        agencies within each State, as 
                                        determined under item (aa), to 
                                        qualified public housing 
                                        agencies within the State 
                                        pursuant to specific criteria 
                                        for the selection of recipients 
                                        for assistance in a notice 
                                        published in the Federal 
                                        Register.
                                    ``(II) Recipients.--Subject to the 
                                allocation referred to in subclause (I) 
                                and any additional criteria that the 
                                Secretary may establish, the Secretary 
                                shall award such incremental assistance 
                                for use under this paragraph to a 
                                public housing agency that administers 
                                a program of tenant-based assistance 
                                under this subsection and--
                                            ``(aa) administers funds 
                                        for the construction, 
                                        preservation, or substantial 
                                        rehabilitation of rental 
                                        housing other than public 
                                        housing; or
                                            ``(bb) has an agreement 
                                        with an agency or entity that 
                                        administers funds for the 
                                        construction, preservation, or 
                                        substantial rehabilitation of
                                    ``(III) Limitation.--Incremental 
                                assistance for use under this paragraph 
                                shall not be considered in determining 
                                compliance by a public housing agency 
                                with the limitation in subparagraph 
                                (B).
                                    ``(IV) National competition.--If 
                                the Secretary determines that 
                                sufficient funds for incremental 
                                assistance for use under this paragraph 
                                have not been appropriated for public 
                                housing agencies within each State in 
                                accordance with the formula established 
                                under section 217(b) of the Cranston-
                                Gonzalez National Affordable Housing 
                                Act (42 U.S.C. 12747(b)), the Secretary 
                                may award such funds to qualified 
                                public housing agencies through a 
                                national competition.
                            ``(viii) Definitions.--In this 
                        subparagraph--
                                    ``(I) the term `substantial 
                                rehabilitation' means rehabilitation 
                                expenditures paid or incurred with 
                                respect to a unit, including its 
                                prorated share of work on common areas 
                                or systems, of at least $25,000, which 
                                amount shall be increased annually by 
                                the Secretary to reflect inflation, and 
                                such increased amount shall be 
                                published in the Federal Register; and
                                    ``(II) the term `extremely low-
                                income families' means persons and 
                                families (as that term is defined in 
                                section 3(b)(3)) whose incomes do not 
                                exceed--
                                            ``(aa) 30 percent of the 
                                        area median income, as 
                                        determined by the Secretary 
                                        with adjustments for smaller 
                                        and larger families and for 
                                        unusually high or low family 
                                        incomes; or
                                            ``(bb) 30 percent of the 
                                        national nonmetropolitan median 
                                        income, if it is higher than 
                                        the area median income.''.
    (b) Effective Date.--
            (1) In general.--This section and the amendments made by 
        this section shall take effect upon the date of enactment of 
        this Act.
            (2) Rules.--The Secretary shall promulgate rules, as may be 
        necessary, to carry out section 8(o)(13) of the United States 
        Housing Act of 1937, as amended by this Act, and shall 
        publish--
                    (A) either proposed rules or interim rules not 
                later than 6 months after the date of enactment of this 
                Act; and
                    (B) final rules not later than 1 year after the 
                date of enactment of this Act.

SEC. 202. REALLOCATION OF VOUCHERS.

    (a) In General.--Section 8(dd) of the United States Housing Act of 
1937 (42 U.S.C. 1437f(dd)) is amended--
            (1) by striking ``Subject to'' and inserting the following:
            ``(1) In general.--Subject to''; and
            (2) by adding at the end the following:
            ``(2) Reallocation of chronically unutilized vouchers.--
                    ``(A) In general.--The Secretary may reduce the 
                allocation baseline, only to the extent that the 
                reduction reflects the lesser of the unutilized portion 
                of tenant-based subsidies or of budget authority 
                provided under this section, of a public housing agency 
                that--
                            ``(i) fails, in a fiscal year, beginning in 
                        the fiscal year in which this Act is enacted, 
                        to utilize at least 90 percent of its allocated 
                        number of tenant-based subsidies or at least 90 
                        percent of the budget authority provided under 
                        this section that has been under annual 
                        contributions contract for 12 months on the 
                        first day of the fiscal year, not taking into 
                        account, in the numerator, funds used for 
                        services and other activities under section 4; 
                        and
                            ``(ii) fails, within 16 months after 
                        written notice by the Secretary of a failure 
                        described in clause (i), to utilize at least 95 
                        percent of allocated vouchers for rental 
                        assistance provided under this section or 
                        contracted budget authority provided under this 
                        section with respect to vouchers that have been 
                        under annual contributions contract for 12 
                        months on the first day of the fiscal year, not 
                        taking into account, in the numerator, funds 
                        used for services and other activities under 
                        section 4.
                    ``(B) Notice to tenants and community.--When the 
                Secretary provides written warning to a public housing 
                agency of a failure described in subparagraph (A)(i), 
                the Secretary shall also publish notice of such failure 
                in the Federal Register and shall provide written 
                notice of such failure to the chairman of the subject 
                public housing agency's resident advisory board 
                established pursuant to section 5A(e). Not later than 
                14 days after the date of receipt by the public housing 
                agency of notice of a failure described in subparagraph 
                (A)(i), that public housing agency shall provide a copy 
                of such notice to all members of its resident advisory 
                board or boards.
                    ``(C) Utilization rate determination.--
                            ``(i) In general.--At the request of a 
                        public housing agency, the Secretary shall 
                        determine the voucher utilization rate of the 
                        public housing agency for use under 
                        subparagraph (A), based on data regarding the 
                        utilization of vouchers from the period 
                        beginning 6 months prior to the request of the 
                        public housing agency.
                            ``(ii) Eligibility of a PHA to request a 
                        new survey of fair market rents.--If a public 
                        housing agency requests, within 60 days of 
                        receipt of the written notice by the Secretary 
                        of a failure described in subparagraph (A)(i), 
                        that the Secretary conduct a further survey of 
                        market rents in the area to determine the 
                        accuracy of the applicable fair market rent or 
                        the need for an exception payment standard, and 
                        the Secretary determines as a result of such 
                        survey to increase the fair market rent or 
                        payment standard, the written notice shall be 
                        considered null and void. Whether a public 
                        housing agency complies with the standard under 
                        subparagraph (A)(i) shall be determined based 
                        on the first complete fiscal year in which the 
                        agency has the opportunity to use the increased 
                        fair market rent or approved exception payment 
                        standard. To be eligible to request a rent 
                        survey under this clause, a public housing 
                        agency must use the maximum allowable payment 
                        standard for that area for a period of not less 
                        than 6 months prior to such request.
                    ``(D) Determination of ineffective performance.--A 
                reallocation of chronically unutilized vouchers under 
                this subsection shall be deemed to be a determination 
                that the agency is not performing effectively under 
                section 3(b)(6)(B)(iii).
            ``(3) Reallocation.--
                    ``(A) In general.--The Secretary shall allocate the 
                contracts for the vouchers made available by the 
                reduction in baseline authority authorized under 
                paragraph (2) in a manner that ensures that applicants 
                on the waiting list of the public housing agency from 
                which vouchers are reallocated may continue to be 
                served, consistent with this paragraph.
                    ``(B) Metropolitan area.--
                            ``(i) Designation of metropolitan 
                        administrator.--If vouchers are reallocated 
                        from a public housing agency located in a 
                        metropolitan area, the Secretary shall, based 
                        on a public competitive process, designate a 
                        metropolitan administrator for all or a portion 
                        of the metropolitan statistical area in which 
                        that public housing agency is located, in a 
                        manner consistent with clause (iv).
                            ``(ii) Distribution of vouchers.--A 
                        metropolitan administrator designated under 
                        clause (i) shall receive all vouchers in that 
                        administrator's region made available pursuant 
                        to paragraph (2).
                            ``(iii) Eligible administrators.--The 
                        Secretary may select as a metropolitan 
                        administrator an agency--
                                    ``(I) that--
                                            ``(aa) currently 
                                        administers a voucher program 
                                        serving residents of the 
                                        geographic area served by the 
                                        agency whose voucher allocation 
                                        has been reduced;
                                            ``(bb) has the legal 
                                        ability to serve such area; or
                                            ``(cc) has an agreement 
                                        with the Secretary to serve 
                                        such area pursuant to section 
                                        3(b)(6)(B)(iii); and
                                    ``(II) that is--
                                            ``(aa) a public housing 
                                        agency that administers a 
                                        voucher program;
                                            ``(bb) a State or local 
                                        agency that has experience in 
                                        administering tenant-based 
                                        assistance programs; or
                                            ``(cc) a nonprofit or for-
                                        profit agency that has 
                                        experience in administering 
                                        tenant-based assistance 
                                        programs.
                            ``(iv) Selection process.--
                                    ``(I) Preference for certain public 
                                housing agencies.--The Secretary may 
                                give preference in a competitive 
                                selection to a public housing agency 
                                described in clause (iii)(II)(aa) over 
                                other eligible administrators described 
                                in items (bb) and (cc) of that clause 
                                (iii)(II), if the public housing 
                                agency--
                                            ``(aa) is a well-managed 
                                        agency, based on objective 
                                        indicators, including a high 
                                        rate of utilization of 
                                        allocated vouchers or 
                                        contracted budget authority 
                                        provided under this section, 
                                        and a high rate of compliance 
                                        with eligibility and rent 
                                        determination requirements; and
                                            ``(bb) has demonstrated an 
                                        ability to increase the number 
                                        of voucher holders residing in 
                                        low poverty areas.
                                    ``(II) Selection criteria.--In 
                                selecting a metropolitan administrator, 
                                the Secretary shall take into account--
                                            ``(aa) whether the entity 
                                        has operated tenant-based 
                                        assistance programs in a manner 
                                        that has not led to an 
                                        overconcentration of tenant-
                                        based subsidy holders in 
                                        certain areas;
                                            ``(bb) whether the entity 
                                        has the administrative capacity 
                                        to administer the number of 
                                        additional vouchers it is 
                                        likely to receive if it is 
                                        selected as a metropolitan 
                                        administrator and to serve the 
                                        geographic area served by 
                                        agencies from which vouchers 
                                        are reallocated;
                                            ``(cc) the relative need 
                                        for assistance under subsection 
                                        (o) of the eligible population 
                                        not receiving housing 
                                        assistance in the area 
                                        currently served by the entity; 
                                        and
                                            ``(dd) any other criteria 
                                        for choosing a metropolitan 
                                        administrator that the 
                                        Secretary determines to be 
                                        appropriate.
                    ``(C) Nonmetropolitan area.--
                            ``(i) In general.--If vouchers are 
                        reallocated pursuant to this subsection from a 
                        public housing agency that is located in a 
                        nonmetropolitan area, the Secretary shall 
                        reallocate such authority to a public housing 
                        agency or other eligible administrator as 
                        specified in subparagraph (B)(iii). The 
                        Secretary may designate an entity to receive 
                        vouchers reallocated from all or a portion of 
                        the nonmetropolitan area in a State.
                            ``(ii) Selection.--In selecting an entity 
                        to receive vouchers reallocated from a 
                        nonmetropolitan area, the Secretary shall 
                        utilize the preferences and criteria in 
                        subparagraph (B)(iv), and shall consider the 
                        relative administrative costs likely to be 
                        incurred to serve families that reside in the 
                        geographic area of the agency from which the 
                        vouchers were reallocated.
                    ``(D) Designation of a new administrator.--If, at 
                any time, the Secretary determines that the criteria 
                established under this paragraph for a metropolitan or 
                nonmetropolitan administrator are not met, the 
                Secretary shall designate another administrator.
                    ``(E) Additional vouchers.--The Secretary shall 
                ensure that certain criteria or benchmarks regarding 
                voucher success rates and concentration of voucher 
                holders are met each year before providing an 
                administrator with additional vouchers.
                    ``(F) Lack of eligible families.--If the Secretary 
                determines that the primary cause of voucher 
                underutilization by a public housing agency under 
                paragraph (2)(A) is a lack of eligible families in the 
                area of operation of the public housing agency, the 
                Secretary may establish criteria and procedures to 
                reallocate vouchers from that agency to another public 
                housing agency or another metropolitan or 
                nonmetropolitan administrator outside of the area of 
                operation of the public housing agency. First priority 
                for vouchers reallocated under this subparagraph shall 
                be given to an entity that has previously voluntarily 
                relinquished to the Secretary a portion of its 
                allocated voucher budget authority and has subsequently 
                demonstrated a need for, and an ability to use, such 
                budget authority under criteria established by the 
                Secretary. Second priority shall be given to an entity 
                that serves a jurisdiction in the same State as the 
                agency from which vouchers are being reallocated.
            ``(4) Special populations.--Vouchers that have been 
        designated by the Secretary to be used by special populations 
        shall--
                    ``(A) retain such designation on reallocation; and
                    ``(B) be reallocated, if there is an eligible 
                applicant within the State or area that has experience 
                administering a voucher program for a special 
                population, in accordance with paragraphs (2) and (3).
            ``(5) Prompt reallocation.--Within 60 days of reducing a 
        public housing agency's allocation of vouchers pursuant to 
        paragraph (2) in an area for which the Secretary has designated 
        an administrator to receive vouchers reallocated pursuant to 
        this subsection, the Secretary shall enter into a contract with 
        the designated administrator for the reallocated vouchers.''.
    (b) Rules of the Secretary.--The Secretary shall promulgate rules 
to carry out this section not later than 6 months after the date of 
enactment of this Act.

SEC. 203. DISPOSITION OF HUD-HELD AND HUD-OWNED MULTIFAMILY PROJECTS.

    Notwithstanding any other provision of law, the Secretary of 
Housing and Urban Development shall maintain any rental assistance 
payments attached to any dwelling units under section 8 of the United 
States Housing Act of 1937 for all multifamily properties owned by the 
Secretary and multifamily properties held by the Secretary for purposes 
of management and disposition of such properties. To the extent, the 
Secretary determines that a multifamily property owned by the Secretary 
or held by the Secretary is not feasible for continued rental 
assistance payments under section 8, the Secretary may, in consultation 
with the tenants of that property, contract for project-based rental 
assistance payments with an owner or owners of other existing housing 
properties.

            TITLE III--PUBLIC HOUSING LOAN GUARANTEE PROGRAM

SEC. 301. PUBLIC HOUSING LOAN GUARANTEE PROGRAM.

    (a) Section 9 of the United States Housing Act of 1937 is amended 
by inserting at the end the following new subsection:
    ``(o) Loan Guarantee Development Funding.--
            ``(1) In order to facilitate the financing of the 
        rehabilitation and development needs of public housing, the 
        Secretary is authorized, upon such terms and conditions as the 
        Secretary may prescribe, to guarantee and make commitments to 
        guarantee, only to the extent or in such amounts as the 
        provided in appropriations Acts, loans or other financial 
        obligations entered between financial institutions and public 
        housing agencies, for the purpose of financing the 
        rehabilitation of a portion of public housing or the 
        development off-site of public housing in mixed income 
        developments (including demolition costs of the public housing 
        units to be replaced), provided that the number of public 
        housing units developed off-site replaces no less than an equal 
        number of on-site public housing units in a project. Loans or 
        other obligations guaranteed pursuant to this subsection shall 
        be in such form and denominations, have such maturities, and be 
        subject to such conditions as may be prescribed by regulations 
        issued by the Secretary.
            ``(2) Subject to the availability of appropriated funds, 
        the Secretary may not object to making a loan guarantee under 
        this subsection unless the rehabilitation or replacement 
        housing proposed by a public housing agency is inconsistent 
        with its Public Housing Agency Plan, as submitted under section 
        5A, or the proposed terms of the guaranteed loan constitutes an 
        unacceptable financial risk to the public housing agency or for 
        repayment of the loan under this subsection.
            ``(3) Notwithstanding any other provision of this title, 
        funding allocated to a public housing agency under subsections 
        (d)(2) and (e)(2) of this section for the capital and operating 
        funds are authorized for use in the payment of the principal 
        and interest due (including such servicing, underwriting or 
        other costs as may be specified in the regulations of the 
        secretary) on the loans or other obligations guaranteed 
        pursuant to this subsection.
            ``(4) The amount of any loan or other obligation guaranteed 
        under this subsection shall not exceed in total the pro-rata 
        amount of funds that would be allocated over a period not to 
        exceed 30 years under subsections (d)(2) and (e)(2) of this 
        section on a per unit basis as a percentage of the number of 
        units that are designated to be rehabilitated or replaced under 
        this subsection by a public housing agency as compared to the 
        total number of units in the public housing development, as 
        determined on the basis of funds made available under such 
        subsections (d)(2) and (e)(2) in the previous year. Any 
        reduction in the total amount of funds provided to a public 
        housing agency under this section in subsequent years shall not 
        reduce the amount of funds to be paid under a loan guaranteed 
        under this subsection but instead shall reduce the capital and 
        operating funds which are available for the other housing units 
        in the public housing development in that fiscal year. Any 
        additional income, including the receipt of rental income from 
        tenants, generated by the rehabilitated or replaced units may 
        be used to establish a loan loss reserve for the public housing 
        agency to assist in the repayment of the guaranteed loans or 
        other obligations under this subsection or to address any 
        shortfall in the operating or capital needs of the public 
        housing agency in any fiscal year. The Secretary may require 
        the payment of guaranteed loan premiums by a public housing 
        agency to support the creation of a loan loss reserve account 
        within the Department of Housing and Urban Development to 
        minimize the risk of loss associated with the repayment of 
        these guaranteed loans.
            ``(5) Subject to appropriations, the Secretary may use 
        funds from the Public Housing Capital Fund to (A) establish a 
        loan loss reserve account within the Department of Housing and 
        Urban Development to minimize the risk of loss associated with 
        the repayment of guaranteed loans made under this subsection, 
        or (B) make grants to a public housing agency for capital 
        investment needs or for the creation of a loan loss reserve 
        account to be used in conjunction with a loan guarantee made 
        under this subsection for the rehabilitation of a portion of 
        public housing or the development off-site of public housing in 
        mixed income developments (including demolition costs of the 
        public housing units to be replaced).
            ``(6) To assure the repayment of loans or other obligations 
        and charges incurred under this subsection and as a condition 
        for receiving such guarantees, the Secretary shall require the 
        public housing agency to enter into a contract, in a form 
        acceptable to the Secretary, for the repayment of notes or 
        other obligations guaranteed under this subsection and furnish, 
        at the discretion of the Secretary, such security as may be 
        deemed appropriate by the Secretary in making such guarantees.
            ``(7) The full faith and credit of the United States is 
        pledged to the payment of all guarantees under this subsection. 
        Any such guarantee made by the Secretary shall be conclusive 
        evidence of the eligibility of the obligations for such 
        guarantee with respect to principal and interest, and the 
        validity of such guarantee so made shall be incontestable in 
        the hand of the holder of the guaranteed obligations.
            ``(8) The Secretary may, to the extent approved in 
        appropriations Acts, assist in the payment of all or a portion 
        of the principal and interest amount due under the note or 
        other obligation guaranteed under this subsection, if the 
        Secretary determines that the public housing agency is unable 
        to pay the amount it owes because of circumstances of extreme 
        hardship beyond the control of the public housing agency.''.
    (b) Effective Date.--
            (1) In general.--This section and the amendments made by 
        this section shall take effect upon the date of enactment of 
        this Act.
            (2) Rules.--The Secretary shall promulgate rules, as may be 
        necessary, to carry out section 8(o)(13) of the United States 
        Housing Act of 1937, as amended by this Act, and shall 
        publish--
                    (A) either proposed rules or interim rules not 
                later than 6 months after the date of enactment of this 
                Act; and
                    (B) final rules not later than 1 year after the 
                date of enactment of this Act.
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