[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 3538 Introduced in Senate (IS)]

112th CONGRESS
  2d Session
                                S. 3538

To reform laws relating to small public housing agencies, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 13, 2012

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

_______________________________________________________________________

                                 A BILL


 
To reform laws relating to small public housing agencies, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Public Housing Agency 
Opportunity Act of 2012''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds the following:
            (1) Although small public housing agencies are numerous, 
        they administer only a small fraction of the financial 
        resources provided under the Federal housing programs.
            (2) The oversight of small public housing agencies by the 
        Department of Housing and Urban Development is disproportionate 
        to the financial risk the operations of these agencies pose to 
        the Federal Government.
            (3) Small public housing agencies perform better than 
        larger agencies, as public housing agency performance is 
        presently measured by the Federal Government.
            (4) The Department of Housing and Urban Development should 
        deploy its administrative oversight resources in a manner that 
        reflects relative risk to the Federal Government.
            (5) Regulatory and administrative burdens that may be 
        reasonable for larger public housing agencies may not be so for 
        smaller public housing agencies with more limited resources.
            (6) Eliminating unnecessary or unreasonable regulatory and 
        administrative burdens will improve the effectiveness of small 
        public housing agencies as providers of housing assistance to 
        low income families.
            (7) Small public housing agencies and their residents would 
        benefit from, and small public housing agencies should be 
        afforded, maximum flexibility in the use of their resources.
            (8) Congress and the Department of Housing and Urban 
        Development should reduce administrative and regulatory burdens 
        on small public housing agencies.
            (9) Public housing revitalization funding has been largely 
        unavailable to small public housing agencies.
            (10) Congress should establish a program of assistance to 
        enable public housing revitalization activities by small public 
        housing agencies.
            (11) Small public housing agencies and their residents 
        would benefit from conversion of their public housing projects 
        to projects assisted with project-based section 8 rental 
        assistance.
    (b) Purposes.--The purposes of this Act are--
            (1) to assure the long-term viability and effectiveness of 
        the small public housing agencies and the housing assistance 
        programs they operate;
            (2) to ensure that small public housing agencies are not 
        subject to unnecessary Federal regulatory control and 
        administrative requirements;
            (3) to afford flexibility to small public housing agencies 
        in the use of their resources;
            (4) to adjust Federal oversight requirements for small 
        public housing agencies to better reflect financial risk to the 
        Federal Government and the relative resources of such agencies;
            (5) to explore innovative approaches to simplifying 
        determination of income and tenant rents; and
            (6) to ensure that small public housing agencies have 
        access to the resources necessary for the modernization and 
        revitalization of their public housing stock.

SEC. 3. SMALL PUBLIC HOUSING AGENCIES.

    (a) In General.--Title I of the United States Housing Act of 1937 
(42 U.S.C. 1437 et seq.) is amended by adding at the end the following:

``SEC. 37. SMALL PUBLIC HOUSING AGENCIES.

    ``(a) Definitions.--In this section, the following definitions 
shall apply:
            ``(1) Housing voucher program.--The term `housing voucher 
        program' means a program for tenant-based assistance under 
        section 8.
            ``(2) Small public housing agency.--
                    ``(A) In general.--The term `small public housing 
                agency' means a public housing agency for which the sum 
                of the number of public housing dwelling units 
                administered by the agency and the number of vouchers 
                under section 8(o) administered by the agency is 550 or 
                fewer.
                    ``(B) Transition.--A public housing agency that 
                qualifies as an eligible small public housing agency 
                but subsequently fails to meet the qualification 
                criterion in subsection (a) shall remain an eligible 
                small public housing agency for 3 additional years to 
                provide for a transition to noneligible status in order 
                to avoid disruption in the plans and projects 
                undertaken by the agency.
            ``(3) Troubled small public housing agency.--The term 
        `troubled small public housing agency' means a small public 
        housing agency designated by the Secretary as a troubled small 
        public housing agency under subsection (c)(4).
    ``(b) Applicability.--Except as otherwise provided in this section, 
a small public housing agency shall be subject to the same requirements 
as a public housing agency.
    ``(c) Program Inspections and Evaluations.--
            ``(1) Public housing projects.--
                    ``(A) Physical inspections.--
                            ``(i) Frequency.--
                                    ``(I) Inspection by the 
                                secretary.--The Secretary shall carry 
                                out an inspection of the physical 
                                condition of a small public housing 
                                agency's public housing projects not 
                                more frequently than once every 3 
                                years, unless the agency has been 
                                designated by the Secretary as troubled 
                                small public housing agency based on 
                                deficiencies in the physical condition 
                                of its public housing projects.
                                    ``(II) Inspection by agencies.--A 
                                small public housing agency shall not 
                                be subject to section 6(f)(3), and the 
                                Secretary may not otherwise require the 
                                small public housing agency to inspect 
                                its public housing units.
                            ``(ii) Standards.--The Secretary shall 
                        apply to small public housing agencies the same 
                        standards for the acceptable condition of 
                        public housing projects that apply to projects 
                        assisted under section 8.
                    ``(B) Financial condition.--The Secretary shall 
                determine the financial condition of a small public 
                housing agency's public housing program solely on the 
                basis of the ratio of current assets to current 
                liabilities. A ratio of at least 1 shall result in a 
                determination that the financial condition of a small 
                public housing agency is acceptable.
                    ``(C) Management condition.--
                            ``(i) Determination.--
                                    ``(I) In general.--Except as 
                                provided in clause (ii), the Secretary 
                                shall determine the management 
                                condition of a small public housing 
                                agency's public housing program solely 
                                on the basis of the ratio of vacant 
                                unit months to eligible unit months.
                                    ``(II) Ratio.--Except as provided 
                                in subclause (III), a ratio of not more 
                                than 10 percent shall result in a 
                                determination that the management 
                                condition of a small public housing 
                                agency is acceptable.
                                    ``(III) Exception.--In determining 
                                the management condition of a program 
                                or project of a small public housing 
                                agency with an extremely low number of 
                                public housing units, the Secretary may 
                                apply a ratio or standard that is 
                                different than the standard under this 
                                subparagraph.
                            ``(ii) Changing market conditions.--In 
                        determining the management condition of a small 
                        public housing agency's public housing program, 
                        the Secretary shall take into consideration a 
                        demonstration by the small public housing 
                        agency that its inability to lease an adequate 
                        number of units is a result of changes in 
                        market conditions.
            ``(2) Housing voucher program.--
                    ``(A) Physical inspection of assisted units.--A 
                small public housing agency administering assistance 
                under section 8(o) shall make periodic physical 
                inspections of each assisted dwelling unit not less 
                frequently than once every 3 years, to determine 
                whether the unit is maintained in accordance with the 
                requirements under section 8(o)(8)(A).
                    ``(B) Management assessment.--The Secretary shall 
                evaluate the management of a voucher program of a small 
                public housing agency solely on the basis of the lease-
                up rate or the budget utilization rate of the small 
                public housing agency. A lease-up rate or budget 
                utilization rate of at least 90 percent shall result in 
                a determination that the management of the voucher 
                program is acceptable.
            ``(3) High-performing agencies.--The Secretary shall 
        designate a small public housing agency as a high-performing 
        agency if the Secretary determines that the small public 
        housing agency exceeds the criteria for acceptability 
        established under paragraphs (1) and (2) by an extent 
        established by the Secretary, by rule.
            ``(4) Troubled small public housing agencies.--
                    ``(A) Public housing program.--Notwithstanding any 
                other provision of law, the Secretary may designate a 
                small public housing agency as a troubled small public 
                housing agency with respect to the public housing 
                program of the small public housing agency only if the 
                Secretary determines that the agency--
                            ``(i) has failed--
                                    ``(I) to maintain its public 
                                housing units in a satisfactory 
                                physical condition, based upon an 
                                inspection conducted by the Secretary; 
                                and
                                    ``(II) to correct deficiencies 
                                before the date that is 90 days after 
                                the date on which the Secretary 
                                verifies the inspection results;
                            ``(ii) does not have at the end of its 
                        fiscal year an acceptable ratio of current 
                        assets to current liabilities, as determined 
                        under paragraph (1)(B);
                            ``(iii) has failed to maintain an 
                        acceptable average ratio of vacant unit months 
                        to eligible unit months during any calendar 
                        year, as determined under paragraph (1)(C), and 
                        that the failure is not the result of changes 
                        in market conditions; or
                            ``(iv) has failed to account for its 
                        revenues and expenses, misappropriated Federal 
                        funds, or otherwise failed to comply with 
                        applicable Federal law.
                    ``(B) Housing voucher program.--Notwithstanding any 
                other provision of law, the Secretary may designate a 
                small public housing agency as a troubled small public 
                housing agency with respect to the housing voucher 
                program of the small public housing agency only if the 
                Secretary determines that the agency--
                            ``(i) has failed to comply with the 
                        inspection requirements under paragraph (2)(A);
                            ``(ii) during the calendar year has failed 
                        to maintain an acceptable lease-up rate or 
                        budget utilization rate, as determined under 
                        paragraph (2)(B); or
                            ``(iii) has failed to account for its 
                        revenues and expenses, misappropriated Federal 
                        funds, or otherwise failed to comply with 
                        applicable Federal law.
                    ``(C) Appeals.--
                            ``(i) Establishment.--The Secretary shall 
                        establish an appeals process under which a 
                        small public housing agency may dispute a 
                        determination of deficiency.
                            ``(ii) Official.--The appeals process 
                        established under clause (i) shall provide for 
                        a decision by an official who has not been 
                        involved, and is not subordinate to a person 
                        who has been involved, in the original 
                        determination of deficiency.
                    ``(D) Corrective action agreement.--
                            ``(i) Agreement required.--Not later than 
                        60 days after the date on which a small public 
                        housing agency is designated as a troubled 
                        public housing agency, the Secretary and the 
                        small public housing agency shall enter in to a 
                        corrective action agreement under which the 
                        small public housing agency shall undertake 
                        actions to correct the deficiencies upon which 
                        the designation is based.
                            ``(ii) Terms of agreement.--A corrective 
                        action agreement entered into under clause (i) 
                        shall--
                                    ``(I) have a term of 1 year, and 
                                shall be renewable at the option of the 
                                Secretary;
                                    ``(II) provide, where feasible, for 
                                technical assistance to assist the 
                                public housing agency in curing its 
                                deficiencies;
                                    ``(III) provide for--
                                            ``(aa) reconsideration of 
                                        the designation of the small 
                                        public housing agency as a 
                                        troubled small public housing 
                                        agency not less frequently than 
                                        annually; and
                                            ``(bb) termination of the 
                                        agreement when the Secretary 
                                        determines that the small 
                                        public housing agency is no 
                                        longer a troubled small public 
                                        housing agency; and
                                    ``(IV) provide that in the event of 
                                substantial noncompliance by the small 
                                public housing agency under the 
                                agreement, the Secretary may--
                                            ``(aa) contract with 
                                        another public housing agency 
                                        or a private entity to manage 
                                        the public housing of the 
                                        troubled small public housing 
                                        agency;
                                            ``(bb) withhold funds 
                                        otherwise distributable to the 
                                        troubled small public housing 
                                        agency;
                                            ``(cc) assume possession 
                                        of, and direct responsibility 
                                        for, managing the public 
                                        housing of the trouble small 
                                        public housing agency;
                                            ``(dd) petition for the 
                                        appointment of a receiver, in 
                                        accordance with section 
                                        6(j)(3)(A)(ii); and
                                            ``(ee) exercise any other 
                                        remedy available to the 
                                        Secretary in the event of 
                                        default under the public 
                                        housing annual contributions 
                                        contract entered into by the 
                                        small public housing agency 
                                        under section 5.
                    ``(E) Emergency actions.--Nothing in this paragraph 
                may be construed to prohibit the Secretary from taking 
                any emergency action necessary to protect Federal 
                financial resources or the health or safety of 
                residents of public housing projects.
    ``(d) Reduction of Administrative Burdens.--
            ``(1) Reports.--
                    ``(A) Comparability with section 8 requirements.--
                Notwithstanding any other provision of law, and except 
                as otherwise provided in this section, the Secretary 
                may not require a small public housing agency to submit 
                any report, plan, or other information with respect to 
                the public housing units, projects, or programs of the 
                small public housing agency if the report, plan, or 
                other information is not required to be submitted by 
                the owner of a project assisted under section 8 that is 
                covered by a mortgage insured by the Secretary.
                    ``(B) Exception for designated housing for elderly 
                and disabled families.--A small public housing agency 
                shall submit to the Secretary the plan required by 
                section 7 in order to designate occupancy in public 
                housing units in accordance with section 7.
                    ``(C) Compliance.--For purposes of determining the 
                benefits or funding available to a small public housing 
                agency, the small public housing agency shall be deemed 
                to be in compliance with a requirement under Federal 
                law to submit a report, plan, or other information with 
                respect to the public housing units, projects, or 
                programs of the small public housing agency if the 
                small public housing agency submits the reports, plans, 
                or other information required under subparagraphs (A) 
                and (B).
            ``(2) Community service.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, a small public housing agency may 
                elect to comply with the requirements under section 
                12(c)(3) through the use of tenant certifications.
                    ``(B) Monitoring of compliance.--The Secretary may 
                not impose any administrative burden or requirement 
                with respect to the monitoring of compliance with 
                section 12(c) on a small public housing agency that has 
                made an election under subparagraph (A), except a 
                requirement to obtain tenant certifications and make 
                the tenant certifications available to the Secretary. 
                For purposes of this subparagraph, the term 
                `administrative burden or requirement' includes a 
                requirement to review or verify information contained 
                in a tenant certification.
                    ``(C) Determination of noncompliance.--A small 
                public housing agency may not make an election under 
                subparagraph (A) if the Secretary determines that there 
                is substantial noncompliance by the tenants at the 
                small public housing agency with the requirements of 
                section 12(c).
            ``(3) Economic opportunity.--Section 3 of the Housing and 
        Urban Development Act of 1968 (12 U.S.C. 1701u) shall apply to 
        a small public housing agency only to the extent that such 
        section 3 applies to the owner of a project assisted under 
        section 8 of this Act.
            ``(4) Asset management.--At the request of a small public 
        housing agency or a public housing agency that administers not 
        more than 400 public housing dwelling units, the Secretary 
        shall exempt the small public housing agency or public housing 
        agency from any asset management requirement otherwise imposed 
        by the Secretary on public housing agencies.
            ``(5) Environmental reviews.--
                    ``(A) Exemption.--Notwithstanding any other 
                provision of law, a small public housing agency shall 
                be exempt from any environmental review requirements 
                with respect to a development or modernization project 
                having a total cost of not more than $100,000.
                    ``(B) Streamlined procedures.--The Secretary shall, 
                by rule, establish streamlined procedures for 
                environmental reviews of small public housing agency 
                development and modernization projects having a total 
                cost of more than $100,000.
    ``(e) Fungibility.--
            ``(1) In general.--Notwithstanding any other provision of 
        law and subject to paragraph (2), a small public housing agency 
        may--
                    ``(A) combine funds provided to the small public 
                housing agency for voucher assistance under section 
                8(o), from the Capital Fund, and from the Operating 
                Fund; and
                    ``(B) use the funds combined under subparagraph (A) 
                for any activity authorized under section 8(o) or 
                subsection (d) or (e) of section 9.
            ``(2) Limitation.--In using funds combined under paragraph 
        (A), a small public housing agency shall assist substantially 
        the same number of low-income families, with a comparable mix 
        of families by family size, as it did in the year preceding its 
        qualification as a small public housing agency, with 
        appropriate adjustments made by the Secretary on the basis of 
        any increase or decrease in the number of vouchers or units 
        assisted.
    ``(f) Project-Based Vouchers.--With respect to a program carried 
out by a small public housing agency under section 8(o)--
            ``(1) section 8(o)(13)(B) shall be applied by substituting 
        `50 percent' for `20 percent'; and
            ``(2) section 8(o)(13)(C) shall not apply.
    ``(g) Conversion to Section 8.--
            ``(1) In general.--A small public housing agency may, 
        subject to the availability of appropriations and approval by 
        the Secretary, convert all or a portion of the public housing 
        units of the small public housing agency to project-based 
        voucher assistance under section 8(o)(13) or to project-based 
        assistance under section 8.
            ``(2) Project-based voucher assistance.--
                    ``(A) Inapplicable provisions.--Subparagraphs (B), 
                (C), and (D) of section 8(o)(13) shall not apply to 
                public housing units converted to project-based voucher 
                assistance under paragraph (1).
                    ``(B) Rent calculation for tax-credit projects.--
                Rents for public housing units converted to project-
                based voucher assistance under paragraph (1) shall be 
                established in accordance with section 8(o)(13)(H), 
                without regard to whether or not a project is located 
                in a qualified census tract.
            ``(3) Project-based assistance.--
                    ``(A) Initial rents.--
                            ``(i) Establishment.--Initial rents for 
                        public housing units converted to section 8 
                        project-based assistance under paragraph (1) 
                        shall be established, at the option of the 
                        small agency--
                                    ``(I) at the comparable rent for 
                                unassisted units in the area; or
                                    ``(II) on a budget basis.
                            ``(ii) Budget-based rents.--In approving a 
                        budget-based rent under clause (i)(II), the 
                        Secretary shall take into account the need to 
                        provide for sufficient replacement reserves to 
                        offset a reduction or elimination of capital 
                        subsidy funds for a project and for debt 
                        service on loans to fund capital improvements.
                    ``(B) Rent adjustments.--The Secretary shall 
                annually adjust the rents established under 
                subparagraph (A) using an operating cost adjustment 
                factor established by the Secretary (which shall not 
                result in a negative adjustment) or, at the request of 
                the owner, on a budget basis.
                    ``(C) Term.--The term of any contract for 
                assistance payments pursuant to this paragraph shall be 
                the longer of 20 years or the remaining period during 
                which the project would have been required to be 
                operated as public housing (as calculated immediately 
                prior to the conversion).
                    ``(D) Other provisions.--Except as otherwise 
                provided in this subsection, a project converted under 
                paragraph (1) shall be subject to the provisions of 
                section 524 of the Multifamily Assisted Housing Reform 
                and Affordability Act of 1997 (42 U.S.C. 1437f note).
            ``(4) Release of encumbrances.--At the time of conversion 
        of a project under paragraph (1), the Secretary shall release 
        the project from any applicable annual contributions contract 
        and release and cancel of record all deeds of trust and other 
        instruments encumbering the project in favor of the Federal 
        Government. Upon conversion, a project shall no longer be 
        subject to Federal laws and requirements applicable solely to 
        public housing projects. Administrative oversight of public 
        housing units converted to section 8 project-based assistance 
        under paragraph (1) shall be transferred to the Office of 
        Housing within the Department of Housing and Urban Development.
            ``(5) Transfer of funds.--Upon conversion of a project 
        under paragraph (1), the Secretary shall reprogram to the 
        appropriate section 8 account--
                    ``(A) an amount of public housing Operating Fund 
                budget authority equal to that which would otherwise be 
                allocated to the converted project; and
                    ``(B) an amount of public housing Capital Fund 
                budget authority otherwise allocable to the small 
                public housing agency with respect to the converted 
                project.
    ``(h) Replacement Housing Factor Funds.--During the first year of 
each 5-year period for which a small public housing agency qualifies 
for the addition of a replacement housing factor under section 
905.10(i) of title 24, Code of Federal Regulations, the Secretary shall 
pay to the small public housing agency the portion of the total amount 
that the Secretary plans to make available to the small public housing 
agency from the Capital Fund established under section 9(d) during that 
5-year period that is attributable to the addition of the replacement 
housing factor.''.
    (b) Technical and Conforming Amendments.--Section 5A of the United 
States Housing Act of 1937 (42 U.S.C. 1437c-1) is amended--
            (1) in subsection (b), by striking paragraph (3);
            (2) in subsection (e), by striking paragraph (4); and
            (3) in subsection (f), by striking paragraph (5).

SEC. 4. RENT REFORM DEMONSTRATION PROJECT FOR SMALL PUBLIC HOUSING 
              AGENCIES.

    (a) Definitions.--In this section, the following definitions shall 
apply:
            (1) Extremely low-income family.--The term ``extremely low 
        income family'' means a family whose income does not exceed 30 
        percent of the median income for the area, as determined by the 
        Secretary with adjustments for smaller and larger families, 
        except 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 such variations are 
        necessary because of unusually high or low family incomes in 
        the area.
            (2) Income.--The term ``income'' shall have the meaning 
        given that term by section 3(b)(4) of the United States Housing 
        Act of 1937 (42 U.S.C. 1437a(b)(4)).
            (3) Low-income family.--The term ``low-income family'' 
        means a family whose income does not exceed 80 percent of the 
        median income for the area, as determined by the Secretary with 
        adjustments for smaller and larger families, except the 
        Secretary may establish income ceilings higher or lower than 80 
        percent of the median incomes for the area on the basis of the 
        Secretary's findings that such variations are necessary because 
        of unusually high or low family incomes in the area.
            (4) Median income for the area.--The term ``median income 
        for the area'' means the median income of all families in a 
        geographic area, as determined by the Secretary.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Housing and Urban Development.
            (6) Small public housing agency.--The term ``small public 
        housing agency'' has the same meaning as in section 37(a) of 
        the United States Housing Act of 1937, as added by this Act.
            (7) Very low-income family.--The term ``very low-income 
        family'' means a family whose income does not exceed 50 percent 
        of the median income for the area, as determined by the 
        Secretary with adjustments for smaller and larger families, 
        except the Secretary may establish income ceilings higher or 
        lower than 50 percent of the median income for the area on the 
        basis of the Secretary's findings that such variations are 
        necessary because of unusually high or low family incomes in 
        the area.
    (b) In General.--The Secretary shall carry out a demonstration 
project to examine how various methods of determining rent in public 
housing affect--
            (1) the administrative burden on small public housing 
        agencies; and
            (2) the residents of public housing.
    (c) Scope of Demonstration Project.--
            (1) Request to participate.--The Secretary shall select 
        small public housing agencies to participate in the 
        demonstration project from among small public housing agencies 
        that request to participate in the project.
            (2) Number.--The Secretary shall select not more than 20 
        percent of the total number of small public housing agencies to 
        participate in the demonstration project.
            (3) Representation.--The Secretary shall select small 
        public housing agencies representing a broad range of 
        geographic areas and urban and rural locations.
    (d) Rent-Setting Mechanisms.--A small public housing agency 
participating in the demonstration project shall select 1 or more of 
the following methods for establishing a family's rent contribution for 
a dwelling unit in public housing:
            (1) Tiered system.--
                    (A) Initial rents.--A tiered system under which the 
                amount of initial rent is as follows:
                            (i) For an extremely low-income family, an 
                        amount equal to 30 percent of 10 percent of the 
                        median income for the area.
                            (ii) For a very low-income family, an 
                        amount equal to 30 percent of 30 percent of the 
                        median income for the area.
                            (iii) For a low-income family, an amount 
                        equal to 30 percent of 50 percent of the median 
                        income for the area.
                    (B) Subsequent rents.--The rent determined in 
                accordance with subparagraph (A) shall be adjusted 
                annually by the small public housing agency on the 
                basis of changes in area median incomes and shall apply 
                to the continued occupancy of an assisted family.
                    (C) Over-income families.--A family assisted under 
                a tiered system established under subparagraph (A) 
                whose income exceeds 80 percent of the median income 
                for the area shall pay a rent equal to the higher of 30 
                percent of 80 percent of the median income for the area 
                or the market rent for the unit as determined by the 
                small public housing agency.
            (2) Gross income.--
                    (A) Initial rents.--A method under which rent is 
                established in an amount that varies between 26 to 28 
                percent of a family's income, based on family 
                characteristics as determined by the small public 
                housing agency.
                    (B) Subsequent rents.--The rent determined in 
                accordance with subparagraph (A) shall be adjusted 
                annually between income recertifications on the basis 
                of factors selected by a small public housing agency 
                that are most relevant to the status of a resident.
                    (C) Minimum rent.--In establishing rents in 
                accordance with subparagraph (A), a small public 
                housing agency may impose a minimum rent.
            (3) Existing rent mechanisms.--A small public housing 
        agency may use 1 or more of the above methods for determining 
        rents in combination with the method for establishing rents 
        pursuant to section 3 of the United States Housing Act of 1937 
        (42 U.S.C. 1437a).
    (e) Income Recertifications.--Reviews of family income under 
paragraphs (1), (2), and (3) of subsection (d) shall be made at least 
once every 5 years, except a family may request a recertification and 
adjustment in rent at any time if the family income has changed by an 
amount established by the small public housing agency. In determining 
family income, the small public housing agency may use the income of 
the family as determined by the small public housing agency for the 
preceding year.
    (f) Hardship Exception.--A small public housing agency shall adopt 
a hardship policy, comparable to the policy contained in section 
3(a)(3)(B) of the United States Housing Act of 1937 (42 U.S.C. 
1437a(a)(3)(B)), for use in connection with a minimum rent imposed 
under subsection (d)(2)(C) and in connection with rents established 
under paragraphs (1), (2), and (3) of subsection (d).
    (g) Reports.--
            (1) In general.--Not later than 5 years after the date of 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the results of the demonstration project carried out 
        under this section.
            (2) Recommendations for action.--The report submitted under 
        paragraph (1) shall contain recommendations that Congress take 
        1 or more of the following actions:
                    (A) Continue the demonstration project for a 
                specified period of time.
                    (B) Expand the number of participants in the 
                demonstration project.
                    (C) Apply the terms of the demonstration project to 
                all small public housing agencies.
                    (D) Change any of the terms of the demonstration 
                project.
                    (E) Terminate the demonstration project.
            (3) Recommendations for permanent legislation.--The 
        Secretary shall submit to Congress recommendations for 
        permanent legislation that implements rent reform for small 
        public housing agencies--
                    (A) with the report required under paragraph (1); 
                or
                    (B) before the date on which the Secretary submits 
                the report required under paragraph (1).

SEC. 5. ENERGY CONSERVATION.

    Section 9(e)(2) of the United States Housing Act of 1937 (42 U.S.C. 
1437g(e)(2)) is amended by adding at the end the following:
                    ``(D) Freeze of consumption levels.--
                            ``(i) In general.--A small public housing 
                        agency, as defined in section 37(a), may elect 
                        to be paid for its utility and waste management 
                        costs under the formula for a period, at the 
                        discretion of the small public housing agency, 
                        of up to 20 years based on the small public 
                        housing agency's average annual consumption 
                        during the 3-year period preceding the year in 
                        which the election is made (hereafter referred 
                        to as `consumption base level').
                            ``(ii) Initial adjustment in consumption 
                        base level.--The Secretary shall make an 
                        initial one-time adjustment in the consumption 
                        base level to account for differences in the 
                        heating degree day average over the most recent 
                        20-year period compared to the average in the 
                        consumption base level.
                            ``(iii) Adjustments in consumption base 
                        level.--The Secretary shall make adjustments in 
                        the consumption base level to account for an 
                        increase or reduction in units, a change in 
                        fuel source, a change in resident controlled 
                        electricity consumption, or for other reasons.
                            ``(iv) Savings.--All cost savings resulting 
                        from an election made pursuant to this 
                        subparagraph shall accrue to the small agency 
                        and may be used for any public housing purpose 
                        at the discretion of the small public housing 
                        agency.
                            ``(v) Third parties.--A small public 
                        housing agency making an election under this 
                        subparagraph may use, but shall not be required 
                        to use, the services of a third party in its 
                        energy conservation program. The small public 
                        housing agency shall have the sole discretion 
                        to determine the source, and terms and 
                        conditions, of any financing used for its 
                        program.''.

SEC. 6. CONSORTIA.

    Not later than 180 days after the date of enactment of this Act, 
the Secretary of Housing and Urban Development shall develop and deploy 
all electronic information systems necessary to accommodate full 
consolidated reporting by public housing agencies electing to operate 
in consortia under section 13(a) of the United States Housing Act of 
1937 (42 U.S.C. 1437k(a)).

SEC. 7. EFFECTIVE DATE.

    This Act, and the amendments made by this Act, shall take effect 60 
days after the date of enactment of this Act.
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