[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4002 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 4002

 To establish a program to preserve rural multifamily housing assisted 
                     under the Housing Act of 1949.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 30, 2007

Mr. Lincoln Davis of Tennessee (for himself and Mr. Davis of Kentucky) 
 introduced the following bill; which was referred to the Committee on 
                           Financial Services

_______________________________________________________________________

                                 A BILL


 
 To establish a program to preserve rural multifamily housing assisted 
                     under the Housing Act of 1949.

    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 ``Rural Housing Preservation Act of 
2007''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds that--
            (1) the average age of a multifamily housing project with a 
        loan under section 515 of the Housing Act of 1949 is 30 years, 
        and therefore much of the portfolio of such projects is aging 
        and in need of preservation, while the need for affordable 
        rural housing is increasing;
            (2) section 515 projects house some of the poorest families 
        in rural America, with almost 60 percent of the units occupied 
        by senior citizens or persons with disabilities and an average 
        annual household income among all occupants of approximately 
        $10,000;
            (3) in many small towns and communities, rental housing 
        financed by direct loans under section 515 is the only decent, 
        affordable rental housing available; and
            (4) consequently, any preservation or disposition of the 
        multifamily housing portfolio with loans under section 515, 
        which houses approximately 465,000 low-income families and 
        seniors and farmworkers, should be handled with great care.
    (b) Purposes.--The purposes of this Act are--
            (1) to authorize the Secretary of Agriculture to carry out 
        a program that encourages the preservation of section 515 
        housing project developments for long-term affordable use and 
        the repair and revitalization of such properties;
            (2) to provide for voucher assistance for tenants who live 
        in such projects that are preserved under this Act; and
            (3) to provide voucher assistance for tenants who are 
        displaced from such projects as a result of prepayment or 
        foreclosure on a loan for the project.

SEC. 3. PRESERVATION OF MULTIFAMILY HOUSING.

    (a) Preservation Program.--Title V of the Housing Act of 1949 (42 
U.S.C. 1471 et seq.) is amended by adding at the end the following new 
section:

``SEC. 544. PRESERVATION OF MULTIFAMILY HOUSING AND PROTECTION OF 
              TENANTS.

    ``(a) Preservation Program.--The Secretary shall, subject to the 
availability of amounts appropriated, carry out a preservation program 
in accordance with this section to provide financial incentives and 
other assistance to owners of eligible projects through long-term use 
agreements entered into between the project owners and the Secretary.
    ``(b) Applications to Participate.--
            ``(1) In general.--The Secretary shall accept applications 
        from owners of eligible projects to participate in the 
        preservation program under this section.
            ``(2) Priority.--In selecting among applications of 
        eligible projects to participate in the preservation program, 
        the Secretary may give priority to applications for such 
        projects that are located on tribal trust lands or other Indian 
        areas, in colonias (as such term is defined in section 916(e) 
        of the Cranston-Gonzalez National Affordable Housing Act (42 
        U.S.C. 5306 note), or in other small, poor, low-income 
        communities.
    ``(c) Long-Term Viability Plan.--
            ``(1) Requirement.--The Secretary shall prepare and approve 
        a long-term viability plan under this subsection with respect 
        to each eligible project for which the owner requests to 
        participate.
            ``(2) Contents.--Each long-term viability plan for an 
        eligible project shall include the following information:
                    ``(A) Physical needs assessment.--A physical needs 
                assessment of the project that identifies and projects, 
                for the following 30 years--
                            ``(i) all necessary repairs, improvements, 
                        maintenance, and management standards for the 
                        project, and when they will be made, in order 
                        to meet the requirements of this title; and
                            ``(ii) the costs associated with the items 
                        referred to clause (i).
                    ``(B) Financial plan.--A financial plan for the 
                project that--
                            ``(i) reviews the financial stability of 
                        the project;
                            ``(ii) includes the loan restructuring 
                        elements, rent adjustments, management and 
                        operational efficiencies, and other financial 
                        adjustments to the project that are necessary 
                        to cover operating expenses for the project and 
                        maintain an adequate financial reserve for the 
                        future maintenance and capital needs of the 
                        project;
                            ``(iii) provides the project owner with a 
                        long-term rate of return on equity of the 
                        project owner, as determined by the Secretary, 
                        commensurate to comparable rural multifamily 
                        housing projects for which a tax credit is 
                        provided under section 42 of the Internal 
                        Revenue Code of 1986 (26 U.S.C. 42), and 
                        provides that any return in excess of such rate 
                        of return shall be made available to the 
                        Secretary only for use under section 515;
                            ``(iv) meets the physical needs for the 
                        project determined under the physical needs 
                        assessment;
                            ``(v) ensures that rents available under 
                        the plan are affordable to eligible households 
                        in accordance with subsection (f); and
                            ``(vi) addresses any costs associated with 
                        any temporary tenant displacement resulting 
                        from renovations or rehabilitation undertaken 
                        as a result of participation of the project in 
                        the preservation program.
            ``(3) Development through participating administrative 
        entities.--The Secretary may develop long-term viability plans 
        through the use of third-party participating administrative 
        entities, who may be a private contractor, a State housing 
        finance agency, or a nonprofit organization.
            ``(4) Preservation determination.--Based on the long-term 
        viability plan for an eligible project, the Secretary shall 
        determine whether to offer the project owner a financial 
        restructuring plan under subsection (d) and the financial 
        incentives to be included in any such plan offered.
            ``(5) Final review and comment.--Before a determination is 
        made under subparagraph (D) with respect to any long-term 
        viability plan prepared by the Secretary, the Secretary shall--
                    ``(A) provide the project owner an opportunity to 
                review the plan and discuss the plan with the Secretary 
                or its agent;
                    ``(B) make available to the tenants of the project 
                a copy of such plan and provide a period of not less 
                than 30 days for tenants to submit comments regarding 
                the plan to the Secretary; and
                    ``(C) respond in writing to such comments.
            ``(6) Fees.--The Secretary may charge the project owner a 
        fee for preparation of the long-term viability plan.
            ``(7) Payment of fees.--If a long-term viability for a 
        project is approved, the payment of such fee may be 
        incorporated into a project owner's financial restructuring 
        plan for the project provided by the Secretary pursuant to 
        subsection (d).
    ``(d) Financial Restructuring Plan; Preservation Incentives.--Based 
on the long-term viability plan for an eligible project, the Secretary 
may offer a project owner a financial restructuring plan for the 
project. Such a plan may include one or more of the following 
preservation incentives:
            ``(1) Reduction or elimination of interest on the loan or 
        loans for the project made under section 515.
            ``(2) Partial or full deferral of payments due under such 
        loan or loans.
            ``(3) Forgiveness of such loan or loans.
            ``(4) Subordination of such loan or loans, subject to such 
        terms and conditions as the Secretary shall determine.
            ``(5) Reamortization of loan payments under such loan or 
        loans over extended terms.
            ``(6) A grant from the Secretary for the project.
            ``(7) Payment of project costs associated with developing 
        the long-term viability plan.
            ``(8) Opportunity for project owners to obtain further 
        investment equity from third parties.
            ``(9) A direct loan or guarantee of a loan for the project, 
        with a subsidized interest rate without regard to the value of 
        the project.
    ``(e) Long-Term Use Agreement.--
            ``(1) In general.--If the owner of an eligible project 
        agrees to the terms of a financial restructuring plan for the 
        project providing preservation benefits under subsection (d), 
        in exchange for such benefits, the Secretary and the project 
        owner shall enter into a long-term use agreement under this 
        subsection for the project.
            ``(2) Agreement.--A long-term use agreement for an eligible 
        project shall include--
                    ``(A) the terms of the financial restructuring plan 
                for the project, including any preservation incentives 
                to be provided;
                    ``(B) an agreement by the project owner--
                            ``(i) to continue the property use 
                        restrictions with respect to the project in 
                        accordance with this title for a period of--
                                    ``(I) 30 years, or
                                    ``(II) the remaining term of any 
                                loans under this title for the project,
                        whichever ends later;
                            ``(ii) to comply with the long-term 
                        viability plan for the project; and
                            ``(iii) to comply with the rent terms under 
                        subsection (f) for the project;
                    ``(C) provisions terminating the agreement if any 
                material preservation incentives for the project to be 
                provided under the agreement are no longer available 
                and the Secretary determines that such unavailability 
                is not the fault of the owner;
                    ``(D) any rent terms for the project pursuant to 
                subsection (f);
                    ``(E) a covenant which runs with the land;
                    ``(F) a representation and warranty by the owner to 
                provide safe, healthy, clean buildings pursuant to the 
                Secretary's guidelines;
                    ``(G) provisions providing for rural preservation 
                voucher assistance under section 542(c) for low-income 
                households residing in the project who are eligible for 
                such vouchers; and
                    ``(H) such other terms as the Secretary determines 
                are necessary to implement the purposes of this 
                section.
    ``(f) Rents Under Long-Term Use Agreement.--Rents for any eligible 
households residing in dwelling units in any preserved project shall 
comply with the following requirements:
            ``(1) Maximum household contribution to rent and 
        utilities.--The maximum household contribution to monthly rent 
        and utilities for any eligible household may not exceed 30 
        percent of the adjusted income of the eligible household.
            ``(2) Rent adjustments.--The rents for eligible projects 
        may be increased or decreased only on an annual basis and only 
        in accordance with standards incorporated in such agreement.
            ``(3) Lowest cost requirement.--In determining the terms of 
        a restructuring plan, and the type and amount of preservation 
        benefits under such plan to approve under this section for an 
        eligible project, the Secretary shall, to the extent 
        practicable, approve assistance that imposes the least cost to 
        the Secretary while meeting the requirements of the long-term 
        viability plan for the project.
    ``(g) Earned Income Disregard for Residents.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the amount of the contribution toward rent for a dwelling 
        unit payable, by any household described in paragraph (3), for 
        occupancy in a project funded with a loan under section 515 may 
        not be increased as a result of the increased income due to 
        employment during the 12-month period beginning on the date on 
        which the employment is commenced.
            ``(2) Phase-in of rent increases.--Upon the expiration of 
        the 12-month period referred to in paragraph (1), the 
        contribution toward rent payable by a household described in 
        paragraph (3) may be increased due to the continued employment 
        of the household member described in subparagraph (3)(B), 
        except that during the 12-month period beginning upon such 
        expiration the amount of the increase may not be greater than 
        50 percent of the amount of the total increase in contribution 
        toward rent that would be applicable but for this paragraph.
            ``(3) Eligible household.--A household described in this 
        paragraph is a household that--
                    ``(A)(i) is an eligible household who resides in a 
                eligible project; or
                    ``(ii) is provided rural preservation voucher 
                assistance pursuant to section 542(c); and
                    ``(B)(i) whose income increases as a result of 
                employment of a member of the household who was 
                previously unemployed for 1 or more years;
                    ``(ii) whose earned income increases during the 
                participation of a household member in any family self-
                sufficiency or other job training program; or
                    ``(iii) who is or was, within 6 months, assisted 
                under any State program for temporary assistance for 
                needy families funded under part A of title IV of the 
                Social Security Act (42 U.S.C. 601 et seq.) and whose 
                earned income increases.
    ``(h) Ineligibility.--
            ``(1) Procedure for determination.--The Secretary may 
        determine that a project owner is ineligible for participation 
        in the preservation program under this section in accordance 
        with the standards under paragraph (2).
            ``(2) Standards.--The Secretary may determine that a 
        project owner is ineligible if--
                    ``(A) the project owner has a history of poor 
                management or maintenance of multifamily housing 
                properties;
                    ``(B) the project owner is in default on a loan 
                made available under the section 515 housing program;
                    ``(C) the Secretary is unable to enter into a long-
                term use agreement for the project that is the subject 
                of the application with the project owner within a 
                reasonable time;
                    ``(D) the project owner is suspended or debarred 
                from participating in Federal contracts or programs; or
                    ``(E) the Secretary has other good cause for 
                withholding from the project owner the benefits made 
                available under this section.
            ``(3) Ineligibility because of action for prepayment.--A 
        project owner shall be ineligible for participation in the 
        preservation program under this section if the owner--
                    ``(A) is a party to an ongoing civil action brought 
                to authorize the prepayment of the section 515 loan for 
                the eligible project, or is a party to a damages action 
                brought to recover damages caused by the passage of the 
                Emergency Low Income Housing Preservation Act of 1987 
                or amendments to such Act, for which a final judgment, 
                settlement agreement, or consent decree has not yet 
                been issued; or
                    ``(B) was a party to a civil action brought to 
                authorize the prepayment of the section 515 loan for 
                the eligible project, or was a party to a damages 
                action brought to recover damages caused by the passage 
                of the Emergency Low Income Housing Preservation Act of 
                1987 or amendments to such Act, under which damages 
                were awarded to the project owner, and the owner has 
                not agreed to contribute at least 50 percent of such 
                damages, or $100,000, whichever is less, to carrying 
                out the financial restructuring plan and long-term use 
                agreement for the preserved project.
    ``(i) Definitions.--For purposes of this section, the following 
definitions shall apply:
            ``(1) Eligible household.--The term `eligible household' 
        means a household that, under section 515, is eligible to 
        reside in a project funded with a loan made by the Secretary 
        under such section.
            ``(2) Eligible project.--The term `eligible project' means 
        a housing project funded with a loan made at any time by the 
        Secretary under section 515, the principal obligation of which 
        has not been fully repaid.
            ``(3) Project owner; owner.--The terms `project owner' and 
        `owner' mean, with respect to an eligible project, an 
        individual or entity, or principals thereof that own, or plan 
        to purchase, the project.
            ``(4) Preserved project.--The term `preserved project' 
        means an eligible project for which the Secretary and owner 
        have entered into agreement on a financial restructuring plan 
        for the project and into a long-term use agreement for the 
        project, under this section.
    ``(j) Annual Report.--The Secretary shall submit a report to the 
Congress annually regarding the compliance of owners of eligible 
projects participating in the preservation program under this section 
with the requirements of such program, which shall identify and 
describe any significant failures to comply.
    ``(k) Authorization of Appropriations.--There are authorized to be 
appropriated for each of fiscal years 2008 through 2012 such sums as 
may be necessary to carry out the preservation program under this 
section.''.

SEC. 4. RURAL PRESERVATION AND RURAL TENANT PROTECTION VOUCHERS.

    Section 542 of the Housing Act of 1949 (42 U.S.C. 1490r) is amended 
by adding at the end the following new subsections:
    ``(c) Rural Preservation Vouchers.--In the case of a housing 
project subject to a loan made under section 515 that is a preserved 
project (as such term is defined in section 544(i)), the Secretary 
shall, to the extent that amounts for assistance under this subsection 
are provided in advance in appropriation Acts, make available voucher 
assistance to each eligible household (as such term is defined in 
section 544(i)) that is not assisted under the rental assistance 
program under section 521 or the program for rental assistance under 
section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f), 
and is residing in the project upon the date that a long-term use 
agreement is entered into pursuant to section 544(e) between the 
project owner and the Secretary, voucher assistance upon such date, as 
follows:
            ``(1) The amount of assistance provided under the voucher 
        shall be sufficient to allow such household to remain in the 
        project after it is preserved.
            ``(2) The percentage of adjusted income paid by the 
        eligible household for rent and utilities for the assisted 
        dwelling, pursuant to the voucher, shall not exceed 30 percent 
        of adjusted income of the eligible household.
            ``(3) The voucher assistance shall be available to the 
        eligible household only during the period in which the eligible 
        household resides in the preserved project and the long-term 
        use agreement remains in effect.
            ``(4) Upon termination of the participation of the eligible 
        household in the voucher program, the voucher shall remain 
        attached to the preserved project and shall be available for 
        use by another eligible household residing in the preserved 
        project.
    ``(d) Rural Tenant Protection Vouchers.--
            ``(1) In general.--In the case of a housing project subject 
        to a loan made under section 515 that is prepaid or foreclosed 
        upon, the Secretary shall, to the extent that amounts for 
        assistance under this subsection are provided in advance in 
        appropriation Acts, make available to each eligible household 
        (as such term is defined in section 544(i)) that is not 
        assisted under the rental assistance program under section 521 
        or the program for rental assistance under section 8 of the 
        United States Housing Act of 1937 (42 U.S.C. 1437f), and is 
        residing in a dwelling unit in the project upon the date that 
        the Secretary approves the prepayment or submits notice of 
        foreclosure to the project owner, as applicable, voucher 
        assistance upon such date, as follows:
                    ``(A) Relocation vouchers.--In the case of any such 
                eligible household who must relocate from a project for 
                which the loan is being prepaid or foreclosed upon, 
                voucher assistance under this subsection shall be 
                subject to the terms of section 8(o) of the United 
                State Housing Act of 1937 (42 U.S.C. 1437(o)), except 
                that--
                            ``(i) the percentage of adjusted income 
                        paid by the eligible household for rent and 
                        utilities for the assisted dwelling unit shall 
                        not at any time exceed 30 percent of the 
                        adjusted income of the eligible household; and
                            ``(ii) a voucher provided pursuant to this 
                        subparagraph shall be subject to the terms of 
                        section 8(r) of such Act (relating to 
                        portability), except that if an eligible 
                        household uses the voucher to move to a 
                        community other than the community in which the 
                        project from which the family relocated 
                        pursuant to such prepayment or foreclosure is 
                        located, upon termination of the participation 
                        of such eligible family in the voucher program, 
                        the voucher shall be returned for use in the 
                        community in which such project is located.
                    ``(B) Enhanced vouchers.--In the case of any such 
                eligible household who remains in a project for which 
                the loan is prepaid or foreclosed upon, voucher 
                assistance under this subsection shall be subject to 
                the terms of section 8(t) of the United State Housing 
                Act of 1937 (42 U.S.C. 1437f(t)), except that--
                            ``(i) the percentage of adjusted income 
                        paid by the eligible household for rent and 
                        utilities for the assisted dwelling unit shall 
                        not at any time exceed 30 percent of the 
                        adjusted income of the eligible household;
                            ``(ii) the owner of the project may not 
                        refuse to lease, to an eligible household for 
                        whom voucher assistance under this subparagraph 
                        is made available, any available appropriately 
                        sized rental dwelling unit in the project;
                            ``(iii) voucher assistance under this 
                        subparagraph may be used only for dwelling 
                        units in housing that is decent, safe, and 
                        sanitary; and
                            ``(iv) upon termination of participation of 
                        such eligible family in the enhanced voucher 
                        program, the voucher shall convert to a 
                        relocation voucher under subparagraph (A) of 
                        this paragraph, and shall be available with 
                        respect to such project only to provide 
                        assistance in accordance with the provisions of 
                        such subparagraph.
    ``(e) Administration.--The Secretary may contract with a public 
housing agency or a private or nonprofit organization to administer 
vouchers authorized under subsections (c) and (d).
    ``(f) Renewal.--Vouchers under subsections (c) and (d) shall be 
renewed annually, subject to the availability of appropriations for 
such renewal.
    ``(g) Use of Savings.--Notwithstanding any other provision of law, 
any amounts made available for voucher assistance under subsections (c) 
and (d) that remain unused because of increases in the incomes of 
household assisted under such vouchers shall be available to the 
Secretary for eligible activities under this Act.
    ``(h) Applicability of Section 8 Program.--Except as specifically 
provided otherwise in this section, to the maximum extent practicable, 
the Secretary shall administer voucher assistance subsections (c) and 
(d) in accordance with, but not subject to, regulations and 
administrative guidance for housing vouchers administered by the 
Secretary of Housing and Urban Development under section 8(o) of such 
Act.
    ``(i) Authorization of Appropriations.--There is authorized to be 
appropriated for voucher assistance under subsections (c) and (d) such 
sums as may be necessary for each of fiscal years 2008 through 2012.''.

SEC. 5. PRIORITY FOR FINANCING.

    Subsection (j) of section 515 of the Housing Act of 1949 (42 U.S.C. 
1485(j)) is amended--
            (1) by inserting ``(1)'' before ``For''; and
            (2) by adding at the end the following new paragraph:
    ``(2) The Secretary may give priority, in entering into contracts 
under this section involving financing for new construction of a 
project, for projects located in eligible rural areas having a need for 
affordable low-income rental housing due to prepayment of loans made or 
insured under this section.''.

SEC. 6. CONFORMING AMENDMENT.

    Section 537(b)(1) of the Housing Act of 1949 (42 U.S.C. 1490p-
1(b)(1)) is amended by inserting before the semicolon the following: 
``and to administer the preservation program under section 544''.

SEC. 7. REGULATIONS.

    The Secretary of Agriculture shall issue proposed regulations to 
carry out the amendments made by this Act not later than the expiration 
of the 90-day period beginning upon the date of the enactment of this 
Act, and shall issue final regulations to carry out the amendments made 
by this Act not later than the expiration of the 180-day period 
beginning upon such date of enactment.
                                 <all>